Exhibit 99.6
Mortgage Guaranty Insurance Corporation
[GRAPHIC OMITTED]
250 E. Kilbourn Avenue
P.O. Box 488, Milwaukee, Wisconsin 53201-0488
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Declaration Page for Use With
Mortgage Guaranty Select Master Policy for
Multiple Loan Transactions
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Mortgage Guaranty Insurance Corporation (a stock insurance company
hereinafter
called the "Company") agrees to pay to the Insured identified
below, in
consideration of the premium or premiums to be paid as specified in
this
Policy and in reliance on the Insured's Application for coverage
under this
Policy any Loss due to the Default by a Borrower on a Loan, subject
to the
terms and conditions in this Policy.
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Insured's Name and Mailing Address:
Master Policy Number:
The Bank of New York Trust Co. N.A. as co-Trustee
04-355-5-3107
CWABS Asset-Backed Certificates, Series 2006-20
5730 Katella Avenue
Effective Date of Policy:
Cypress, California
90630
October 1, 2006
Security: CWABS Asset-Backed Certificates Trust 2006-20
Asset-Backed
Certificates, Series 2006-20
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Includes Terms and Conditions #71-70283 (2/05)
Includes Endorsement(s): #71-70304 (10/06)
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In Witness Whereof, the Company has caused its Corporate Seal to be
hereto
affixed and these presents to be signed by its duly authorized
officers in
facsimile to become effective as its original seal and signatures
and binding
on the Company.
/s/ Patrick Sinks
[SEAL]
/s/ Jeffrey H. Lane
---------------------
[GRAPHIC OMITTED]
----------------------
Patrick
Sinks
Jeffrey G, Lane
MORTGAGE GUARANTY INSURANCE CORPORATION
/s/ Steven M. Thompson
----------------------------------
Steven M. Thompson, Vice President
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Form #71-70282 (2/06)
<PAGE>
Table of Contents
Mortgage Guaranty Select Master Policy for Multiple Loan
Transactions
<TABLE>
<CAPTION>
<S>
<C>
1
Definitions
1.1 Application
1.2
Appropriate Proceedings
1.3
Borrower
1.4
Borrower's Own Funds
1.5
Borrower's Title
1.6
Certificate
1.7
Certificate Effective Date
1.8
Certificate Number
1.9
Certificate Schedule
1.10
Claim
1.11
Claim
Amount
1.12
Collateral
1.13
Conveyance
of Title
1.14
Default
1.15
Eligibility Criteria
1.16
Environmental Condition
1.17
Good and
Merchantable Title
1.18
Insured
1.19
Loan
1.20
Loan
File
1.21
Loss
1.22
Original
LTV
1.23
Per Loan
Loss Percentage
1.24
Perfected
Claim
1.25
Person
1.26
Physical
Damage
1.27
Policy
1.28
Possession
of the Property
1.29
Primary
First Layer Policy
1.30
Property
1.31
Residential
1.32
Security
1.33
Servicer
1.34
Settlement
Period
1.35
Value
2
Obtaining Coverage and Payment of Premiums
2.1
Obtaining Coverage
2.2
Representations of the Insured
2.3
Company's Remedies for Misrepresentation
2.4
Incontestability for Certain Misrepresentations
2.5
Initial Premium and Term of Coverage
2.6
Renewal of Certificate and Termination for Non-Payment of Renewal
Premium
2.7
Special Procedures for Receipt and Deposit of Initial and Renewal
Premiums
2.8
Cancellation by the Insured of a Certificate
2.9
Cancellation of Policy
2.10
Cancellation of Policy and Coverage of Loans Upon Termination of
Security
or Removal of Loans from Security
2.11
Refund of
Premium for Certain Circumstances
2.12
Post
Underwriting Review and Copies of Loan Files
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Form #71-70283
(2/05)
Page i
<PAGE>
3
Changes in Various Loan Terms, Servicing and Insured; Coordination
and Duplication of Benefits
3.1
Loan
Modifications
3.2
Open
End Provisions
3.3
Assumptions
3.4
Servicing
3.5
Change of Insured of this Policy
3.6
Assignment of Coverage of a Loan under this Policy
3.7
Coordination and Duplication of Insurance Benefits
3.8
Indebtedness and Liens with Respect to Collateral
4
Exclusions From Coverage
4.1
Balloon Payment
4.2
Effective Date
4.3
First Payment Default
4.4
Incomplete Construction
4.5
Fraud, Misrepresentation and Negligence
4.6
Non-Approved Servicer
4.7
Physical Damage (Other than Relating to Pre-Existing Environmental
Conditions)
4.8
Pre-Existing Environmental Conditions
4.9
First Lien Status
4.10
Payment of
the Full Benefit of the Primary First Layer Policy
4.11
Non-Eligible Loans
4.12
Breach of
the Insured's Obligations or Failure to Comply with Terms
5
Conditions Precedent to Payment of Claim
5.1
Notice of Default
5.2
Monthly Reports
5.3
Company's Option to Accelerate Filing of a Claim
5.4
Voluntary Conveyance
5.5
Appropriate Proceedings
5.6
Mitigation of Damages
5.7 Advances
5.8
Claim Information and Other Requirements
5.9
Acquisition of Borrower's Title Not Required
5.10
Sale of a
Property by the Insured Before End of Settlement Period
5.11
Foreclosure Bidding Instructions Given by the Company
5.12
Effect of
Unexpired Redemption Period on Payment of a Claim
5.13
Collection
Assistance
6
Loss Payment Procedure
6.1
Filing of Claim
6.2
Calculation of Claim Amount
6.3
Payment of Loss; Company's Options
6.4
Claim Settlement Period
6.5
Payment by the Company After the Settlement Period
6.6
Discharge of Obligation
7
Additional Conditions
7.1
Proceedings of Eminent Domain
7.2
Pursuit of Deficiencies
7.3
Subrogation
7.4
Policy for Exclusive Benefit of the Insured
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Form #71-70283
(2/05)
Page ii
<PAGE>
7.5
Effect of Borrower Insolvency or Bankruptcy on Principal
Balance
7.6
Arbitration of Disputes; Suits and Actions Brought by the
Insured
7.7
Release of Borrower; Defenses of Borrower
7.8
Amendments; No Waiver; Rights and Remedies; Use of Term
"Including"
7.9
No
Agency
7.10
Successors
and Assigns
7.11
Applicable
Law and Conformity to Law
7.12
Notice
7.13
Reports
and Examinations
7.14
Electronic
Media
</TABLE>
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Form #71-70283
(2/05)
Page iii
<PAGE>
Terms and Conditions
1
Definitions
1.1
Application
means only those documents, materials, statements,
representations,
warranties, data and information (a) identified as
being included in the Application in a notice to the Insured by
the
Company prior to the issuance of coverage on the applicable
Loan,
and (b) submitted to the Company by or on behalf of the Insured
in
connection with the Insured's request for insurance under this
Policy, irrespective of the Person or Persons who prepared
same.
1.2
Appropriate
Proceedings means any legal or administrative action by
the Insured affecting either a Loan or title to a Property,
including:
(a) Preserving a
deficiency recovery by making a bid at the
foreclosure sale and pursuing a deficiency judgment until the
end of the Settlement Period, where appropriate and
permissible and where directed by the Company; or
(b) Enforcing
the terms of the Loan as allowed by the laws where
the Property is
located or those laws affecting either the
Loan or, if applicable, the Collateral; or
(c) Acquiring
Borrower's Title or Good and Merchantable Title to
the Property, as either may be required under this Policy,
but excluding such title as may be acquired by a voluntary
conveyance from the Borrower; or
(d) Asserting
the Insured's interest in the Property in a
Borrower's bankruptcy.
1.3
Borrower means
any Person legally obligated to repay the debt
obligation created by a Loan, including any co-signer or
guarantor
of the Loan.
1.4
Borrower's Own
Funds means any funds used by the Borrower for the
purpose of making installment payments, but will not include
funds
provided directly or indirectly by any Person (other than the
Borrower) who is or was a party to the Loan or to the related
Property transaction, unless expressly set forth in the
Application.
1.5
Borrower's Title
means such title to a Property as was vested in
the Borrower at the time of a conveyance to the Insured arising
out
of or pursuant to a foreclosure of the Loan; provided, however,
if
the Insured so elects, the redemption period need not have
expired.
Borrower's Title as conveyed to the Insured may be, but need
not
be, the equivalent of Good and Merchantable Title, and the deed
evidencing Borrower's Title need not be recorded unless required
by
applicable law.
1.6
Certificate
means the document issued by the Company pursuant to
this Policy extending the coverage indicated therein to one or
more
Loans as listed on a Certificate Schedule. A Certificate may
take
the form, without limitation, of a facsimile, electronic
computer
file, or other agreed-upon data interchange medium. As used in
this
Policy, the term "Certificate" shall mean the Certificate and
the
Certificate Schedule attached thereto and listing the
Certificate
Number assigned to each Loan to which coverage is extended.
1.7 Certificate Effective Date
means 12:01 a.m. on the date upon which
coverage of a Loan under this Policy begins, as specified in
the
Certificate.
1.8
Certificate
Number means the identification number issued by the
Company for a Loan to which coverage is extended as shown on
the
Certificate Schedule for such Loan.
1.9
Certificate
Schedule means a list of Loans to which coverage has
been extended under this Policy, and which is attached to the
Certificate.
1.10
Claim means the timely
filed written request, made on a form or in
a format provided or approved by the Company, to receive the
benefits of this Policy.
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Form #71-70283 (2/05)
Page 1 of 22
<PAGE>
1.11
Claim Amount means the
amount calculated in accordance with Section
6.2 of this Policy.
1.12
Collateral means
(a) the stock or
membership certificate issued to a
tenant-stockholder or resident-member by a completed fee
simple or leasehold cooperative housing corporation; and
(b) the
proprietary lease relating to one (1) unit in the
cooperative housing corporation executed by such
tenant-stockholder or resident-member and any other rights of
such stockholder or member relating to any of the foregoing.
1.13
Conveyance of Title
means the transfer of title to the Property
through
(a) voluntary
conveyance to the Insured of Borrower's Title;
(b) Appropriate
Proceedings or exercise of rights of redemption;
or
(c) approved
sale of the Property.
1.14
Default means the
failure by a Borrower
(a) to pay when
due any monthly or other regular periodic payment
under the terms of a Loan; or
(b) to pay all
amounts due on acceleration of the Loan by the
Insured after breach by the Borrower of a due-on-sale
provision in the Loan, granting the Insured the right to
accelerate the Loan upon transfer of title to, or an interest
in, the Property and to institute Appropriate Proceedings.
Violation by the Borrower of any other term or condition of the
Loan which is a basis for Appropriate Proceedings shall not be
considered to be a Default.
A Loan is deemed to be in Default for that month as of the close
of
business on the installment due date for which a scheduled
monthly
or other regular periodic payment has not been made or as of
the
close of business on the due date stated in the notice of
acceleration given pursuant to the due-on-sale provision in the
Loan. The Loan will be considered to remain in Default until
filing
of a Claim so long as such periodic payment has not been made
or
such basis for Appropriate Proceedings remains. For example, a
Loan
is "four (4) months in Default" if the monthly installments due
on
January 1 through April 1 remain unpaid as of the close of
business
on April 1 or if a basis for acceleration and Appropriate
Proceedings exists for a continuous period of four months.
1.15
Eligibility Criteria
means the requirements established by the
Company for the insurability of a Loan under this Policy and of
which the Company has notified the Insured prior to issuance of
the
Policy.
1.16
Environmental
Condition means the presence of environmental
contamination, including nuclear reaction or radioactive waste,
toxic waste, poisoning, or mold, contamination or pollution of
the
Property or of the earth or water subjacent to the Property or
of
the atmosphere above the Property; or the presence, on or under
a
Property, of any "Hazardous Substance" as that term is defined
by
the federal Comprehensive Environmental Response, Compensation,
and
Liability Act (42 U.S.C. Sec. 9601 et. seq., as amended from
time
to time) or as defined by any similar state law, or of any
"Hazardous Waste" or "Regulated Substance" as those terms are
defined by the federal Resource Conservation and Recovery Act
(42
U.S.C. sec. 6901, et seq., as amended from time to time) or as
defined by any similar state law. Environmental Condition does
not
mean the presence of radon, lead paint, or asbestos.
1.17
Good and Merchantable
Title means title to a Property (or, with
respect to the Collateral securing a Loan, the title to both
the
Collateral and the Property), free and clear of all liens,
encumbrances, covenants, conditions, restrictions, easements
and
rights of redemption, except for any of the following or as
permitted in writing by the Company:
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Form #71-70283 (2/05)
Page 2 of 22
<PAGE>
(a) Any lien
established by public bond, assessment or tax, when
no installment, call or payment of or under such bond,
assessment or tax is delinquent;
(b) Any
municipal and zoning ordinances and exceptions to title
waived by the regulations of federal mortgage insurers and
guarantors with respect to mortgages on one-to-four family
residences in effect on the date on which the Loan was closed
and all documents were executed;
(c) With respect
to Collateral, a first mortgage lien on the
entire real
estate owned by the cooperative housing
corporation which has been disclosed to the Person
originating the Loan secured by the Collateral; and
(d) Any other
impediments which will not have a materially
adverse effect on either the transferability of the Property
or the sale thereof (or, if applicable, the transferability
or sale of the Collateral) to a bona fide purchaser.
Good and Merchantable Title will not exist if (i) there is any
lien
pursuant to the Comprehensive Environmental Response,
Compensation,
and Liability Act, or similar federal or state law, as in
effect
from time to time, providing for liens in connection with the
removal and clean-up of environmental conditions, or if notice
has
been given of commencement of proceedings which could result in
such a lien, or (ii) there are limitations on ingress and egress
to
the Property or on use of utilities. Any action or proceeding
after
a foreclosure sale relating to establishing a deficiency
judgment
will not be considered in determining whether the Insured has
acquired Good and Merchantable Title.
1.18
Insured means:
(a) the Person
designated on the face of this Policy; or
(b) any Person
to whom coverage has been assigned as permitted by
Sections 3.5 or 3.6 resulting in a change in the Insured
named on a Certificate for a Loan in accordance with this
Policy.
1.19
Loan means any note,
bond, or other evidence of indebtedness
secured by a mortgage, deed of trust, or other similar
instrument,
which constitutes or is equivalent to a first lien or charge on
a
Property and which the Company has approved for insurance and
to
which coverage under this Policy has been extended.
1.20
Loan File means, with
respect to a Loan, copies of all documents
and information (irrespective of form or medium) created or
received by any Person in connection with the origination or
closing of the Loan, including the Borrower's loan application,
purchase contract, appraisal or other evidence of valuation,
credit
report, verifications of employment, income and deposit, and
HUD-1
or other settlement statement.
1.21
Loss means the
liability of the Company with respect to a Loan for
payment of a Perfected Claim which is calculated in accordance
with
Section 6.3. A Loss will be deemed to have occurred when a
Default
on a Loan occurs, even though the amount of Loss is not then
either
presently ascertainable or due and payable.
1.22
Original LTV means the
ratio of the principal balance of a Loan at
its origination to the Value of the Property.
1.23 Per Loan Loss Percentage means the
indicated percentage as set
forth for a Loan on the applicable Certificate.
1.24
Perfected Claim means
a Claim received by the Company which
contains all information or proof required by the Company and
for
which all requirements of this Policy applicable to payment of
a
Claim are satisfied.
1.25
Person means any
individual, corporation, partnership, association
or other entity.
1.26
Physical Damage means
any tangible injury to a Property, whether
caused by accident, natural occurrence, or any other reason,
including damage caused by defects in construction, land
subsidence, earth movement or slippage, fire, flood,
earthquake,
riot, vandalism or any Environmental Condition.
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Form #71-70283 (2/05)
Page 3 of 22
<PAGE>
1.27
Policy means this
contract of insurance and all Applications,
endorsements, schedules, and Certificates, which are
incorporated
in this Policy, related to Loans insured under this Policy.
1.28
Possession of the
Property means, if the Company elects to acquire
the Property, physical and undisputed occupancy and control of
the
Property at the time of acquisition, or in the case of a Loan
secured by Collateral, subject to the terms of the proprietary
lease from the cooperative housing corporation.
1.29
Primary First Layer
Policy means the policy or guarantee issued by
a mortgage guaranty insurance company approved for insurance of
mortgage loans sold to either the Federal National Mortgage
Association ("Fannie Mae"), or the Federal Home Loan Mortgage
Corporation ("Freddie Mac"), which for a Loan provides coverage
(a)
in at least the coverage percent set forth for such Loan on the
applicable Certificate, (b) that is issued under a form of
policy
issued by such company, approved by Fannie Mae or Freddie Mac
and
in general use for the mortgage loans sold to Fannie Mae or
Freddie
Mac, as applicable, and (c ) that is maintained in full force
and
effect until cancellation thereof is required under applicable
law.
Upon the Company's request, from time to time, the Insured
shall
provide to
the Company a copy of the form of each Primary First
Layer Policy under which it obtains coverage.
1.30
Property means a
Residential real property and all improvements
thereon which secure a Loan, together with all easements and
appurtenances, all rights of access, all rights to use common
areas, recreational and other facilities, and all of their
replacements or additions. In the case of a Loan secured by
Collateral, Property means the Residential real property,
including
all improvements thereon, which is owned by the cooperative
housing
corporation, and which is leased to the Borrower who holds an
ownership or membership interest in such cooperative housing
corporation, which lease and interest secure the related Loan,
together with all easements and appurtenances, all rights of
access, all rights to use common areas, recreational and other
facilities, and all replacements or additions to any of the
foregoing.
For purposes of this Policy, wherever the term "Property" is
used
in reference to the stock or membership certificate, the lease,
or
any other asset or right related thereto (but not the physical
condition or structure of the Property), it shall be deemed to
be
changed to "Collateral", including for purposes of provisions
relating to foreclosure, Appropriate Proceedings, or
redemption;
acquisition of title or other status of title, lien or
ownership
(including Borrower's Title and Good and Merchantable Title);
or
acquisition, disposition or Conveyance of Title by any Person.
1.31
Residential means a
type of building or a portion thereof which is
designed for occupancy by not more than four (4) families, or a
single-family condominium, or a unit in a planned unit
development.
In the case of a cooperative housing corporation, Residential
means
a type of building or a portion thereof which is designed for
occupancy by more than one family, with ownership by a
cooperative
housing corporation.
1.32
Security means a bond,
certificate or other security instrument for
which a Loan is security or in which a Loan is otherwise
included
and which is identified on the face of this Policy.
1.33
Servicer means that
Person acting on behalf of the Insured of a
Loan (or on behalf of the Insured's designee, if any) to
service
the Loan. The Servicer acts as a representative of the Insured
of
the Loan (and the Insured's designee, if any) and will bind the
Insured and its designee for all purposes of this Policy,
including
providing information to the Company, receiving any notices,
paying
premiums, accepting Loss payments, and performing any other
acts
under this Policy. For purposes of the Policy, the term
"Servicer"
shall include the master servicer for a Loan of whom the
Company
has been notified, as well as any servicer acting on behalf of
the
master servicer of whom the Company has been notified.
References
in this Policy to a Servicer's obligations will not be construed
as
relieving the Insured or its designee of responsibility for the
Servicer's performance.
1.34
Settlement Period
means the sixty (60) day period as determined
under Section 6.4, at the end of the which a Loss is payable by
the
Company; provided that if the Company pays a Loss prior to
expiration of such sixty (60) day period, the Settlement Period
ends with such payment.
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Form #71-70283 (2/05)
Page 4 of 22
<PAGE>
1.35
Value means the lesser
of the sales price of a Property (only
applicable in the case of a Loan to finance the purchase of
such
Property) or the value of the Property as determined from an
appraisal or other method of valuation, as set forth in the
Certificate.
Any
pronouns, when used in this Policy, will mean the singular or
plural,
masculine
or feminine, as the case may be.
2
Obtaining Coverage and Payment of Premiums
2.1
Obtaining Coverage - This Policy
shall extend to each Loan which
the Insured submits for coverage under this Policy, provided
that
it is made in accordance with the terms and provisions of this
Policy, including the Eligibility Criteria, and is accepted for
insurance by the Company, as evidenced by a Certificate issued
by
the Company. In order to obtain coverage under this Policy for
a
Loan, the Insured or the Person acting on its behalf must submit
a
duly completed Application to the Company and notify the Company
of
the Servicer of the Loan, all of which must be acceptable to
the
Company. If all applicable requirements are satisfied, extension
of
coverage to a Loan under this Policy shall be evidenced by
issuance
of a Certificate Number on the Certificate Schedule.
2.2
Representations
of the Insured - The Insured represents that:
(a) all
statements made and information provided to the Company
in the Application (including as such is related to
continuation of coverage upon assumption of a Loan) are
supported by statements and information in the Loan File;
(b) all
statements made and information in the Application when
provided to the Company are not false in any material respect
as of the date provided; and
(c) the Loan
complies with the Eligibility Criteria, if any,
applicable to the Loan. For purposes of this subparagraph
(c), Section 2.4 of this Policy shall not apply to a
determination as to whether a Loan complies with the
Eligibility Criteria.
The foregoing representations will apply to all statements and
information provided to the Company in the Application, whether
made or submitted by the Insured, the Borrower or any other
Person,
and will be deemed to have been made and provided for and on
behalf
of the Insured. The foregoing representations shall be
effective
whether or not they are made by the Insured or other Person
with
the intent to deceive or mislead, or with the knowledge that
they
are not true and correct.
It is understood and agreed that such statements and information
in
the Application in the aggregate are, and in certain instances
individually may be, material to the Company's decision to offer
or
provide coverage of the related Loan; the Company issues the
related Certificate in reliance on the accuracy and completeness
of
such statements and information submitted to it; and the
Company's
reliance on the representations in this Section 2.2 survive the
issuance of a Certificate or such continuation of coverage and
any
later review or audit of the Insured's files by the Company.
2.3
Company's
Remedies for Misrepresentation - Subject to Section 2.4,
if any of the Insured's representations as described in Section
2.2
are materially false with respect to a Loan, the Company will
have,
at its option, the right to defend against a Claim, or to the
extent permitted by applicable law, to cancel or rescind
coverage
for such Loan under the Certificate retroactively to
commencement
of coverage (or if the
misrepresentation occurs with respect to
continuation of coverage upon assumption of a Loan, to so
defend,
cancel or rescind retroactively to the date of such
continuation).
In the case of such cancellation or rescission, the Company
shall
return at that time all paid premiums for such Loan
retroactively
to such applicable date.
2.4
Incontestability
for Certain Misrepresentations --- Notwithstanding
Sections 2.2 or 2.3, no Claim for Loss will be denied or
adjusted,
nor will the Certificate's coverage be rescinded or canceled,
by
reason of any
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Form #71-70283 (2/05)
Page 5 of 22
<PAGE>
misrepresentations contained in an Application, provided that
all
of the following requirements, conditions and circumstances, to
the
extent not waived in writing at the option of the Company, are
satisfied:
(a) The
misrepresentation must not have been:
(1) knowingly
made, or knowingly participated in, by
(i) the Insured
or any other Person which originated
the Loan;
(ii) a correspondent
lender, mortgage loan broker or
other intermediary underwriting or processing the
Loan on behalf of the Insured or any other Person
which originated the Loan; or
(iii) an escrow or closing agent, or any other agent
of, or broker for, the Insured or any other
Person which originated the Loan acting with
respect to the Loan or the related Property
transaction; or
(2) made,
whether or not knowingly, by an appraiser,
provider of an automated valuation model, or any other
Person providing a valuation of the Property that is
used in underwriting, processing or originating the
Loan and that is submitted to the Company for the
purpose of establishing the Value of the Property.
(b) This Section
2.4 shall not be construed to limit the
applicability of Section 4.5(b) to a misrepresentation which
is subject to this Section 2.4, except to the extent
otherwise agreed to in writing by the Company and the
Insured.
(c) The
Company's payment of a Claim will not limit any rights
which the Company has against the Borrower or any other
Person (other than the Insured) for any misrepresentation.
2.5
Initial Premium
and Term of Coverage - Within fifteen (15) days
from the Certificate Effective Date, or such other date as the
Company and the Insured may agree to in writing, the Insured
must
forward to the Company the appropriate initial premium. Payment
of
the
initial premium shall be a condition precedent to coverage
being extended to the Loan. Subject to cancellation by the
Insured
or the Company as provided in this Policy, coverage shall remain
in
full force and effect for the period covered by the initial
premium.
2.6
Renewal of
Certificate and Termination for Non-Payment of Renewal
Premium - The Insured is obligated to continue coverage in
effect
and pay any premium which is due, as required by Section 2.7 of
this Policy. The entire premium for all Loans (including all
Loans
then in Default) must be paid within a forty-five (45) day
grace
period (or such longer grace period generally allowed by the
Company) after the due date for payment. Upon payment of the
entire
premium for all Loans within such grace period, this Policy will
be
in effect for the applicable period of coverage and a Default on
a
Loan occurring within said grace period which is not cured, and
which results in a Claim being filed, will be covered. If the
entire premium for all Loans is not paid within the grace
period,
at the option of the Company, the coverage of this Policy and
the
Company's liability as to all Loans will terminate effective as
of
12:01 a.m. on the first day following the date through which
the
applicable premium has been paid and as a result, any future
Defaults on any of the Loans will not be covered under this
Policy.
If the applicable premium on a Loan in Default has been paid for
a
renewal term following the renewal term during which such
Default
occurred, and if such Default is not cured and results in a
Claim,
such premium paid shall be refunded in connection with the
settlement of the Claim. If such premium on such Loan in Default
is
not paid, coverage on such Loan shall be cancelled retroactive
to
the date through which the premium has been paid, but a Claim
resulting from a Default which occurred before the date through
which the applicable premium has been paid shall be covered,
subject to the terms and conditions of this Policy.
2.7
Special
Procedures for Receipt and Deposit of Initial and Renewal
Premiums - The Insured acknowledges that the Company deposits
initial and renewal premium checks immediately upon receipt and
agrees that
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the receipt and deposit of a premium check by the Company after
the
time specified in this Policy for receipt, does not constitute
a
waiver of the requirements of this Policy for timely receipt or
an
acceptance of premium by the Company. The Company will have the
right to return such late premium payment, but only within
sixty
(60) days after receipt, in which case coverage of all Loans
(including all Loans then in Default) will be cancelled
retroactively to the Certificate Effective Date for a late
initial
premium, or to the last day of the period covered by the
previous
premium payment for a late renewal premium. Receipt, deposit
and
retention
of a premium check will not constitute a waiver of any
defenses with respect to any other matters which the Company
may
have under this Policy.
2.8
Cancellation by
the Insured of a Certificate - Notwithstanding any
provision to the contrary in this Policy, the Insured shall be
obligated to maintain coverage of a Certificate for a Loan (and
to
pay corresponding premiums for continuation of such coverage
for
each month or partial month coverage is in effect) unless or
until
(a) the Loan is paid in full or (b) the ratio of the
outstanding
principal balance of the Loan to the Value (as defined in
Section
1.35 of this Policy) of the Property securing the Loan is at
least
five (5) percentage points less than the Original LTV minus the
product of the Per Loan Loss Percentage and the Original LTV
for
such Loan under this Policy or (c) otherwise permitted in
writing
by the Company. Subject to the foregoing obligation of the
Insured
to maintain coverage, the Insured may obtain cancellation of
coverage on a Loan by making a written notification in the case
of
(a) or (b) above or a
written request in the case of (c) above.
However, no refund will be paid upon cancellation of coverage on
a
Loan. Cancellation of coverage on a Loan will not cancel this
Policy.
2.9
Cancellation of
Policy - Either the Insured or the Company may
cancel their respective right or obligation to receive or issue
new
Certificates immediately upon written notice of cancellation of
this Policy. However, Certificates issued prior to such
cancellation of this Policy will continue in force so long as
all
premiums are paid and all other terms and conditions of this
Policy
for coverage are complied with by the Insured.
Notwithstanding the foregoing, at the Insured's option, the
Insured
may cancel coverage on all, but not less than all, Loans (which
must include all Loans in Default), if the financial strength
rating of the Company is either withdrawn or downgraded below
"AA-"
by Standard & Poor's Rating Services or "Aa3" by Moody's
Investors
Service. Upon cancellation of this Policy as provided herein,
no
refund of premium will be paid and the Company shall have no
liability for any Default existing at the time of cancellation
other than Defaults on Loans for which a Claim had been filed
in
accordance with Section 6.1 of this Policy prior to the date of
cancellation of coverage.
2.10
Cancellation of Policy
and Coverage of Loans Upon Termination of
Security or Removal of Loans from Security - Except as
otherwise
specified below, in the event that
(a) the bonds,
certificates or other security instruments
designated or referred to in this Policy as the Security are
redeemed, paid in full, cancelled or otherwise terminated, or
the trust created in connection with the issuance of the
Security is terminated for any reason (individually, a
"Redemption"), or
(b) there are no
longer any Loans that are security for, or
represented by, the Security,
this Policy and the coverage of all Loans under this Policy
shall
automatically be terminated without further action being
required
by either the Insured or the Company, and the Company shall have
no
liability for any Default existing at the time of cancellation,
other than Defaults on Loans for which a Claim had been filed
in
accordance with Section 6.1 of this Policy prior to the date of
termination of coverage.
The Insured
shall notify the Company within thirty (30) days after
the occurrence of either (a) or (b) above. The provisions of
this
Section 2.9 shall control, notwithstanding the right of the
Insured
to cancel coverage on some or all of the Loans and the exercise
of
such right by the Insured. No refund will be paid upon
cancellation
of this Policy and coverage of Loans under this Section 2.9.
Notwithstanding the foregoing, coverage of Loans insured under
this
Policy shall not automatically terminate in the event of a
Redemption, if a change of Insured for all, but not less than
all,
of the Loans
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<PAGE>
then insured under this Policy, is requested by the Insured and
approved by the Company as provided for in Section 3.5 within
thirty (30) days after the effective date of the Redemption.
2.11
Refund of Premium for
Certain Circumstances - If, because of a
provision in Sections 2, 3, or 4 (other than Sections 4.4, 4.7,
or
4.8), no Loss is payable to the Insured, the Company shall
return
to the Insured all paid premiums retroactively and pro rata to
the
date when the event or circumstance occurred which resulted in
no
Loss being payable.
2.12
Post Underwriting
Review and Copies of Loan Files - The Company or
representatives designated by it will have the right, from time
to
time, upon thirty (30) days advance notice to the Insured, to
conduct a post underwriting review (including inspection) of
the
Loan Files and other information, papers, files, documents,
books,
records, agreements, and electronically stored data pertaining
to
or in connection with Loans insured under this Policy prepared
or
maintained by or in the possession of the Insured or of the
Servicer, or which the Insured or the Servicer has a legal right
to
obtain. The Company will have the right to conduct the review
on
the Insured's premises during normal business hours. The
Insured
must cooperate fully with the review.
In addition, either in connection with such review or
separately,
the Company will have the right upon ninety (90) days prior
written
notice to obtain from the Insured a copy of the Loan File for
any
Loan for which a Certificate has been issued pursuant to this
Policy. If for any reason the Insured fails to provide a copy of
a
Loan File at the time of the Company's review or upon the
Company's
other notice, the Company will provide a second notice to the
Insured, allowing the Insured to provide it within an
additional
ninety (90) day period. If for any reason the Insure
