EXHIBIT 4
--------------------------------------------------------------------------------
HSI ASSET SECURITIZATION CORPORATION,
Depositor,
JPMORGAN CHASE BANK, N.A.,
Servicer,
NEW CENTURY MORTGAGE CORPORATION,
Servicer,
NC CAPITAL CORPORATION,
Mortgage Loan Seller,
WELLS FARGO BANK, N.A.,
Master Servicer and Securities Administrator
and
DEUTSCHE
BANK NATIONAL TRUST COMPANY,
Trustee
-------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2005
-------------------------------
HSI ASSET SECURITIZATION CORPORATION TRUST 2005-NC1
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2005-NC1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage
Loans.................................
Section 2.02 Acceptance by the Trustee of the
Mortgage Loans..............
Section 2.03 Representations, Warranties and
Covenants of the
Mortgage Loan Seller and the Servicer; Remedies
for Breaches of Representations and Warranties
with Respect to the Mortgage Loans..........................
Section 2.04 Execution and Delivery of
Certificates.......................
Section 2.05 REMIC
Matters................................................
Section 2.06 Representations and Warranties of
the Depositor..............
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicer to Service Mortgage
Loans...........................
Section 3.02 Subservicing Agreements between
the Servicer and
Subservicers................................................
Section 3.03 Successor
Subservicers.......................................
Section 3.04 Liability of the
Servicer....................................
Section 3.05 No Contractual Relationship
between Subservicers
and the Master Servicer.....................................
Section 3.06 Assumption or Termination of
Subservicing
Agreements by Master Servicer...............................
Section 3.07 Collection of Certain Mortgage
Loan Payments.................
Section 3.08 Subservicing
Accounts........................................
Section 3.09 Collection of Taxes, Assessments
and Similar Items;
Escrow Accounts.............................................
Section 3.10 Collection
Account...........................................
Section 3.11 Withdrawals from the Collection
Account......................
Section 3.12 Investment of Funds in the
Collection Account,
Escrow Accounts and the Distribution Account................
Section 3.13 Maintenance of Hazard Insurance
and Errors and
Omissions and Fidelity Coverage.............................
Section 3.14 Enforcement of Due-On-Sale
Clauses; Assumption
Agreements..................................................
Section 3.15 Realization upon Defaulted
Mortgage Loans....................
Section 3.16 Release of Mortgage
Files....................................
Section 3.17 Title, Conservation and
Disposition of REO Property..........
Section 3.18 Notification of
Adjustments..................................
Section 3.19 Access to Certain Documentation
and Information
Regarding the Mortgage Loans................................
Section 3.20 Documents, Records and Funds in
Possession of the
Servicer to Be Held for the Trustee.........................
Section 3.21 Servicing
Compensation.......................................
Section 3.22 Annual Statement as to
Compliance............................
Section 3.23 Annual Independent Public
Accountants' Servicing
Statement; Financial Statements.............................
Section 3.24 Back-up
Certification........................................
Section 3.25 Master Servicer to Act as
Servicer...........................
Section 3.26 Compensating
Interest........................................
Section 3.27 Credit Reporting;
Gramm-Leach-Bliley Act.....................
Section 3.28 Transfer of Servicing of Mortgage
Loans......................
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
Section 4.01
Advances.....................................................
Section 4.02 Priorities of
Distribution...................................
Section 4.03 Monthly Statements to
Certificateholders.....................
Section 4.04 Certain Matters Relating to the
Determination of
LIBOR.......................................................
Section 4.05 Allocation of Applied Realized
Loss Amounts..................
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates.............................................
Section 5.02 Certificate Register; Registration
of Transfer and
Exchange of Certificates....................................
Section 5.03 Mutilated, Destroyed, Lost or
Stolen Certificates............
Section 5.04 Persons Deemed
Owners........................................
Section 5.05 Access to List of
Certificateholders' Names and
Addresses...................................................
Section 5.06 Maintenance of Office or
Agency..............................
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
Section 6.01 Respective Liabilities of the
Depositor and the
Servicer....................................................
Section 6.02 Merger or Consolidation of the
Depositor or the
Servicer....................................................
Section 6.03 Limitation on Liability of the
Depositor, the
Servicer and Others.........................................
Section 6.04 Limitation on Resignation of the
Servicer....................
Section 6.05 Additional Indemnification by the
Servicer; Third
Party Claims................................................
ARTICLE VII
DEFAULT
Section 7.01 Events of
Default............................................
Section 7.02 Master Servicer to Act;
Appointment of Successor.............
Section 7.03 Notification to
Certificateholders...........................
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the
Trustee........................................
Section 8.02 Certain Matters Affecting the
Trustee........................
Section 8.03 Trustee Not Liable for
Certificates or Mortgage
Loans.......................................................
Section 8.04 Trustee May Own
Certificates.................................
Section 8.05 Trustee's Fees Indemnification and
Expenses..................
Section 8.06 Eligibility Requirements for the
Trustee.....................
Section 8.07 Resignation and Removal of the
Trustee.......................
Section 8.08 Successor
Trustee............................................
Section 8.09 Merger or Consolidation of the
Trustee.......................
Section 8.10 Appointment of Co-Trustee or
Separate Trustee................
Section 8.11 Tax
Matters..................................................
Section 8.12 Periodic
Filings.............................................
Section 8.13 Tax Classification of the Excess
Reserve Fund
Account and the Cap Agreements..............................
ARTICLE IX
ADMINISTRATION OF THE MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01 Duties of the Master Servicer;
Enforcement of
Servicer's Obligations......................................
Section 9.02 Annual Statement as to
Compliance............................
Section 9.03
[Reserved]...................................................
Section 9.04 Maintenance of Fidelity Bond and
Errors and
Omissions Insurance.........................................
Section 9.05 Representations and Warranties of
the Master
Servicer....................................................
Section 9.06 Master Servicer Events of
Default............................
Section 9.07 Waiver of
Default............................................
Section 9.08 Successor to the Master
Servicer.............................
Section 9.09 Compensation of the Master
Servicer..........................
Section 9.10 Merger or
Consolidation......................................
Section 9.11 Resignation of the Master
Servicer...........................
Section 9.12 Assignment or Delegation of Duties
by the Master
Servicer....................................................
Section 9.13 Limitation on Liability of the
Master Servicer...............
Section 9.14 Indemnification; Third Party
Claims..........................
ARTICLE X
CONCERNING THE SECURITIES ADMINISTRATOR
Section 10.01 Duties of Securities
Administrator...........................
Section 10.02 Certain Matters Affecting the
Securities
Administrator...............................................
Section 10.03 Securities Administrator Not
Liable for
Certificates or Mortgage Loans..............................
Section 10.04 Securities Administrator May
Own Certificates................
Section 10.05 Securities Administrator's
Fees and Expenses.................
Section 10.06 Eligibility Requirements for
Securities
Administrator...............................................
Section 10.07 Resignation and Removal of
Securities Administrator..........
Section 10.08 Successor Securities
Administrator...........................
Section 10.09 Merger or Consolidation of
Securities Administrator..........
Section 10.10 Assignment or Delegation of
Duties by the
Securities Administrator....................................
ARTICLE XI
TERMINATION
Section 11.01 Termination upon Liquidation
or Purchase of the
Mortgage Loans..............................................
Section 11.02 Final Distribution on the
Certificates.......................
Section 11.03 Additional Termination
Requirements..........................
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01
Amendment....................................................
Section 12.02 Recordation of Agreement;
Counterparts.......................
Section 12.03 Governing
Law................................................
Section 12.04 Intention of
Parties.........................................
Section 12.05
Notices......................................................
Section 12.06 Severability of
Provisions...................................
Section 12.07
Assignment...................................................
Section 12.08 Limitation on Rights of
Certificateholders...................
Section 12.09 Inspection and Audit
Rights..................................
Section 12.10 Certificates Nonassessable
and Fully Paid....................
Section 12.11 Assignment; Sales; Advances
Facilities.......................
Section 12.12 Rule of
Construction.........................................
Section 12.13 Waiver of Jury
Trial.........................................
<PAGE>
SCHEDULES
Schedule I
Mortgage Loan Schedule
Schedule II
Representations and Warranties of JPMorgan Chase Bank, N.A.
Schedule III
Representations and Warranties of New Century Mortgage
Corporation
Schedule IV
Representations and Warranties of the Mortgage Loan Seller as
to the Individual Mortgage Loans
Schedule V
Representations and Warranties as to the Mortgage Loan Seller
EXHIBITS
Exhibit A
Form of Class A and Class M Certificates
Exhibit B
Form of Class P Certificate
Exhibit C
Form of Class R Certificate
Exhibit D
Form of Class X Certificate
Exhibit E
Form of Initial Certification of Trustee
Exhibit F
Form of Document Certification and Exception Report of Trustee
Exhibit G
Form of Residual Transfer Affidavit
Exhibit H
Form of Transferor Certificate
Exhibit I
Form of Rule 144A Letter
Exhibit J
Form of Request for Release
Exhibit K
Form of Contents for Each Mortgage File
Exhibit L
Form of Certification to be provided with Form 10-K
Exhibit M
Form of Back-Up Certification
Exhibit N-1 Form
of Monthly Remittance Advice
Exhibit N-2
Standard Layout for Monthly Defaulted Loan Report
Exhibit N-3 Form
332 Realized Loss Report
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of August 1,
2005,
among HSI ASSET SECURITIZATION CORPORATION,
a Delaware corporation, as depositor
(the "Depositor"), JPMORGAN CHASE BANK,
N.A., a national banking association, as
servicer ("JPMorgan"), NEW CENTURY MORTGAGE
CORPORATION, a California
corporation, as interim servicer ("New
Century" and together with JPMorgan, the
"Servicers"), NC CAPITAL CORPORATION, a
California corporation, as mortgage loan
seller (the "Mortgage Loan Seller"), WELLS
FARGO BANK, N.A., a national banking
association, as master servicer (in such
capacity, the "Master Servicer") and as
securities administrator (in such capacity,
the "Securities Administrator"), and
DEUTSCHE BANK NATIONAL TRUST COMPANY, a
national banking association, as trustee
(the "Trustee").
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Securities Administrator on behalf of the Trust shall elect
that
two segregated asset pools within the Trust
Fund be treated for federal income
tax purposes as comprising two REMICs
(each, a "REMIC" or, in the alternative,
the Lower Tier REMIC and the Upper Tier
REMIC, respectively). Each Class of
Certificates (other than the Class P and
Class R Certificates), other than the
right of each Class of LIBOR Certificates
to receive Basis Risk Carryover
Amounts and the right of the Class X
Certificates to receive payments from the
Cap Agreements, represents ownership of a
regular interest in the Upper Tier
REMIC for purposes of the REMIC Provisions.
The Class R Certificate represents
ownership of the sole class of residual
interest in each of the Lower Tier REMIC
and the Upper Tier REMIC for purposes of
the REMIC Provisions. The Startup Day
for each REMIC described herein is the
Closing Date. The latest possible
maturity date for each Certificate is the
latest date referenced in Section
2.05. The Upper Tier REMIC shall hold as
assets the several classes of
uncertificated Lower Tier REMIC Regular
Interests, set out below. Each such
Lower Tier REMIC Regular Interest is hereby
designated as a regular interest in
the Lower Tier REMIC. The Class P
Certificates represent beneficial ownership of
the Prepayment Charges, each Class of LIBOR
Certificates represents beneficial
ownership of a regular interest in the
Upper Tier REMIC and the right to receive
Basis Risk Carryover Amounts and the Class
X Certificates represent beneficial
ownership of a regular interest in the
Upper Tier REMIC, the Excess Reserve Fund
Account and the Cap Agreements, which
portions of the Trust Fund shall be
treated as a grantor trust.
Lower Tier REMIC
Corresponding
Lower Tier
Upper Tier
Lower Tier REMIC
REMIC
Initial Lower Tier
REMIC Regular
Class Designation Interest Rate REMIC Principal
Amount
Interest
----------------- -------------
----------------------
-------------
Class LT-I-A-1
(1) 1/4
Corresponding Upper Tier
I-A-1
REMIC Regular Interest
initial Class Principal
Balance
Class LT-I-A-2
(1) 1/4
Corresponding Upper Tier
I-A-2
REMIC Regular Interest
initial Class Principal
Balance
Class LT-II-A-1
(1) 1/4
Corresponding Upper Tier
II-A-1
REMIC Regular Interest
initial Class Principal
Balance
Class LT-II-A-2
(1) 1/4
Corresponding Upper Tier
II-A-2
REMIC Regular Interest
initial Class Principal
Balance
Class LT-II-A-3
(1) 1/4
Corresponding Upper Tier
II-A-3
REMIC Regular Interest
initial Class Principal
Balance
Class LT-II-A-4
(1) 1/4
Corresponding Upper Tier
II-A-4
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-1
(1) 1/4
Corresponding Upper Tier
M-1
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-2
(1) 1/4
Corresponding Upper Tier
M-2
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-3
(1) 1/4
Corresponding Upper Tier
M-3
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-4
(1) 1/4
Corresponding Upper Tier
M-4
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-5
(1) 1/4
Corresponding Upper Tier
M-5
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-6
(1) 1/4
Corresponding Upper Tier
M-6
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-7
(1) 1/4
Corresponding Upper Tier
M-7
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-8
(1) 1/4
Corresponding Upper Tier
M-8
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-9
(1) 1/4
Corresponding Upper Tier
M-9
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-10
(1) 1/4
Corresponding Upper Tier M-10
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-11
(1) 1/4
Corresponding Upper Tier
M-11
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-12
(1) 1/4
Corresponding Upper Tier
M-12
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-13
(1) 1/4
Corresponding Upper Tier
M-13
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-14
(1) 1/4
Corresponding Upper Tier
M-14
REMIC Regular Interest
initial Class Principal
Balance
Class LT-Accrual
(1) 1/4
Pool Stated Principal
N/A
Balance plus 1/4
Overcollateralization
Amount
Class LT-
(1)
0.01% initial
N/A
Group I(SUB)
Group Subordinate Amount of
the Group I Mortgage Loans
Class LT-
(2)
0.01% initial aggregate
N/A
Group I
Stated Principal Balance of
the Group I Mortgage Loans
Class LT-
(1)
0.01% initial
N/A
Group II(SUB)
Group Subordinate Amount of
the Group II Mortgage Loans
Class LT-
(3)
0.01% initial aggregate
N/A
Group II
Stated Principal Balance of
the Group II Mortgage Loans
Class LT-XX
(1) 1/2
initial aggregate Stated
N/A
Principal Balance of the
Mortgage Loans, less
aggregate Initial Lower-Tier
REMIC Principal Amounts of
Class LT-Group I(SUB),
Class LT-Group I,
Class LT-Group II(SUB) and
Class LT-Group II Interests
Class LT-R
(4)
(4)
N/A
----------
(1) The interest rate with
respect to any Distribution Date for these
interests
is a per annum variable rate equal to the Lower-Tier REMIC WAC
Cap.
(2) The interest rate with
respect to any Distribution Date for the Class
LT-Group I
Interest is a per annum variable rate (expressed as a
percentage
rounded to eight decimal places) equal to the Group I Available
Funds
Cap.
(3) The interest rate with
respect to any Distribution Date for the Class
LT-Group
II Interest is a per annum variable rate (expressed as a
percentage
rounded to eight decimal places) equal to the Group II
Available
Funds Cap.
(4) The Class LT-R Interest is
the sole class of residual interest in the
Lower Tier
REMIC and it does not have a principal amount or an interest
rate.
The Lower Tier REMIC shall hold as assets all of the assets
included
in the Trust Fund other than Prepayment
Charges, the Cap Agreements, the Excess
Reserve Fund Account, and the Lower Tier
REMIC Regular Interests.
The Class LT-I-A-1, Class LT-I-A-2, Class LT-II-A-1, Class
LT-II-A-2, Class LT-II-A-3, Class
LT-II-A-4, Class LT-M-1, Class LT-M-2, Class
LT-M-3, Class LT-M-4, Class LT-M-5, Class
LT-M-6, Class LT-M-7, Class LT-M-8,
Class LT-M-9, Class LT-M-10, Class LT-M-11,
Class LT-M-12, Class LT-M-13 and
Class LT-M-14 Interests are hereby
designated the LT Accretion Directed Classes
(the "LT Accretion Directed Classes"). On
each Distribution Date, 25% of the
increase in the Overcollateralization
Amount will be payable as a reduction of
the Lower-Tier REMIC Principal Amount of
the LT Accretion Directed Classes (each
such Class will be reduced by an amount
equal to 25% of any increase in the
Overcollateralization Amount that is
attributable to a reduction in the Class
Certificate Balance of its Corresponding
Class) and will be accrued and added to
the Lower-Tier REMIC Principal Amount of
the Class LT-Accrual Interest. On each
Distribution Date, the increase in the
Lower-Tier REMIC Principal Amount of the
Class LT-Accrual Interest may not exceed
interest accruals for such Distribution
Date for the Class LT-Accrual Interest. All
payments of scheduled principal and
prepayments of principal generated by the
Mortgage Loans and all Subsequent
Recoveries allocable to principal shall be
allocated (i) 25% to the Class
LT-Accrual Interest, (ii) 25% to the LT
Accretion Directed Classes (such
principal payments and Subsequent
Recoveries shall be allocated among such LT
Accretion Directed Classes in an amount
equal to 25% of the principal amounts
allocated to their respective Corresponding
Classes), until paid in full and
(iii) 50% to Class LT-Group I(SUB)
Interest, Class LT-Group I Interest, Class
LT-Group II(SUB) Interest, Class LT-Group
II Interest and Class LT-XX Interest
(and further allocated among these
Lower-Tier REMIC Regular Interests in the
manner described in the next sentence). As
among the Class LT-Group I(SUB)
Interest, Class LT-Group I Interest, Class
LT-Group II(SUB) Interest, Class
LT-Group II Interest and Class LT-XX
Interest, all payments of scheduled
principal and prepayments of principal
generated by the Mortgage Loans and
Subsequent Recoveries referred to in clause
(iii) of the previous sentence shall
be allocated (i) first, to the Class
LT-Group I(SUB) Interest, and Class
LT-Group II(SUB) Interest, each from the
related Loan Group, so that their
respective Lower-Tier REMIC Principal
Amount (computed to at least eight decimal
places) is equal to 0.01% of the related
Group Subordinate Amount (except that
if any such amount is a larger number than
in the preceding distribution period,
the least amount of principal shall be
distributed to the Class LT-Group I(SUB)
Interest and Class LT-Group II(SUB)
Interest, as applicable, such that the Lower
Tier REMIC Subordinate Balance Ratio is
maintained); (ii) second, to the Class
LT-Group I Interest and the Class LT-Group
II Interest 0.01% of the principal
collected in respect of the related Loan
Group; and (iii) third, any remaining
amounts of principal shall be distributed
to the Class LT-XX Interest.
Notwithstanding the above, principal
payments allocated to the Class X Interest
that result in the reduction in the
Overcollateralization Amount shall be
allocated (i) 50% to the Class LT-Accrual
Interest (until paid in full) and (ii)
50% to the Class LT-Group I(SUB) Interest,
the Class LT-Group II(SUB) Interest,
the Class LT-Group I Interest, the Class
LT-Group II Interest and the Class
LT-XX Interest (and allocated among these
Lower-Tier REMIC Regular Interests in
a manner similar to that described in the
immediately preceding sentence).
Reductions to Lower-Tier REMIC Principal Amounts as a result of
Realized Losses and increases in Lower-Tier
REMIC Principal Amounts as a result
of Subsequent Recoveries shall be applied
so that after all distributions have
been made on each Distribution Date (i) the
Lower Tier REMIC Principal Amount of
each LT Accretion Directed Class is equal
to 25% of the Class Certificate
Balance of its Corresponding Class, (ii)
the Class LT-Accrual Interest is equal
to 25% of the aggregate Stated Principal
Balance of the Mortgage Loans plus 25%
of the Overcollateralization Amount, (iii)
the Class LT-Group I(SUB) Interest is
equal to 0.01% of the Group Subordinate
Amount of the Group I Mortgage Loans,
(iv) the Class LT-Group II(SUB) Interest is
equal to 0.01% of the Group
Overcollateralization Amount of the Group
II Mortgage Loans, (v) the Class
LT-Group I Interest is equal to 0.01% of
the aggregate Stated Principal Balance
of the Group I Mortgage Loans, (vi) the
Class LT-Group II Interest is equal to
0.01% of the aggregate Stated Principal
Balance of the Group II Mortgage Loans
and (vii) the remainder shall be applied to
the Class LT-XX Interest.
The Upper Tier REMIC shall issue the following classes of Upper
Tier
REMIC Regular Interests and each such
interest, other than the Class UT-R
Interest, is hereby designated as a regular
interest in the Upper Tier REMIC.
Upper Tier REMIC
Initial Upper
Upper Tier REMIC Tier
REMIC
Interest Rate and Principal Amount
Corresponding and Corresponding
Corresponding
Upper Tier REMIC Class
Interest Class
Certificate
Class of
Class Designation
Rate
Balance
Certificates
-----------------
----
-------
------------
Class I-1-A
(1)
$181,669,000 Class
I-1A(10)
Class I-A-2
(2)
$ 10,248,000 Class
I-A-2(10)
Class II-A-1
(3)
$162,565,000 Class
II-A-1(10)
Class II-A-2
(4)
$123,256,000 Class
II-A-2(10)
Class II-A-3
(5)
$ 25,210,000 Class
II-A-3(10)
Class II-A-4
(6)
$ 17,545,000 Class
II-A-4(10)
Class M-1
(7)
$ 18,318,000 Class
M-1(10)
Class M-2
(7)
$ 13,265,000 Class
M-2(10)
Class M-3
(7)
$ 12,001,000 Class
M-3(10)
Class M-4
(7)
$ 10,422,000 Class
M-4(10)
Class M-5
(7)
$ 9,475,000
Class
M-5(10)
Class M-6
(7)
$ 8,211,000
Class
M-6(10)
Class M-7
(7)
$ 7,264,000
Class
M-7(10)
Class M-8
(7)
$ 3,790,000
Class
M-8(10)
Class M-9
(7)
$ 3,159,000
Class
M-9(10)
Class M-10
(7)
$ 6,000,000
Class
M-10(10)
Class M-11
(7)
$ 4,421,000
Class
M-11(10)
Class M-12
(7)
$ 5,053,000
Class
M-12(10)
Class M-13
(7)
$ 5,053,000
Class
M-13(10)
Class M-14
(7)
$ 4,741,891
Class
M-14(10)
Class X
(8)
$
0 Class
X(9)
Class UT-R
(9)
$
0 Class
R
(1) The Class I-1A Interest will
bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group I Available Funds Cap or (b) after the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group I Available Funds Cap.
(2) The Class I-A-2 Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group I Available Funds Cap or (b) after the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group I Available Funds Cap.
(3) The Class II-A-1 Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap or (b) after the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap.
(4) The Class II-A-2 Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap or (b) after the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap.
(5) The Class II-A-3 Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap or (b) after the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap.
(6) The Class II-A-4 Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap or (b) after the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the Group II Available Funds Cap.
(7) The Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7,
Class M-8, Class M-9, Class M-10, Class M-11, Class M-12, Class
M-13 and
Class M-14 Interests will bear interest during each Interest
Accrual
Period at a per annum rate equal to (a) on or prior to the
Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through Margin and (ii) the Available Funds Cap or (b) after
the
Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through Margin and (ii) the Available Funds Cap.
(8) The Class X Interest has an
initial principal balance of $0. The Class X
Interest
will not accrue interest on its principal balance from time to
time, but
will accrue interest on a notional principal balance. As of any
Distribution Date, the Class X Interest shall have a notional
principal
balance
equal to the aggregate of the principal balances of the Lower
Tier
REMIC
Regular Interests as of the first day of the related Interest
Accrual
Period. With respect to any Interest Accrual Period, the Class
X
Interest
shall bear interest at a rate equal to the excess, if any, of
the
Lower-Tier
REMIC WAC Cap over the product of (i) 2 and (ii) the weighted
average
Lower Tier REMIC Interest Rate of the Lower Tier REMIC Regular
Interests
(other than Class LT-Group I(SUB), Class LT-Group I, Class
LT-Group
II(SUB), Class LT-Group II and Class LT-XX Interests), where
the
Lower Tier
REMIC Interest Rate on the Class LT-Accrual Interest is subject
to a cap
equal to zero and each LT Accretion Directed Class is subject
to
a cap
equal to the Interest Rate on its Corresponding Class. With
respect
to any
Distribution Date, interest that so accrues on the notional
principal
balance of the Class X Interest shall be deferred in an amount
equal to
any increase in the Overcollateralization Amount on such
Distribution Date. Such deferred interest shall not itself bear
interest.
The Class
X Certificates will represent beneficial ownership of the Class
X
Interest, the Cap Agreements, and amounts in the Excess Reserve
Fund
Account,
subject to the obligation to make payments from the Excess
Reserve
Fund Account in respect of Basis Risk Carryover Amounts. For
federal
income tax purposes, the Securities Administrator will treat a
Class X
Certificateholder's obligation to make payments from the Excess
Reserve
Fund Account as payments made pursuant to an interest rate cap
contract
written by the Class X Certificateholders in favor of each
Class
of LIBOR
Certificates. Such rights of the Class X Certificateholders and
LIBOR
Certificateholders shall be treated as held in a portion of the
Trust Fund
that is treated as a grantor trust under subpart E, Part I of
subchapter
J of the Code.
(9) The Class UT-R Interest is
the sole class of residual interest in the
Upper Tier
REMIC. The Class UT-R Interest does not have an interest rate.
(10) Each of these Certificates will
represent not only the ownership of the
Corresponding Class of Upper Tier REMIC Regular Interest but also
the
right to
receive payments from the Excess Reserve Fund Account in
respect
of any Basis
Risk Carryover Amounts. For federal income tax purposes, the
Securities
Administrator will treat a Certificateholder's right to receive
payments
from the Excess Reserve Fund Account as payments made pursuant
to
an
interest rate cap contract written by the Class X
Certificateholders.
The minimum denomination for each Class of Certificates, other
than
the Class P, Class R and the Class X
Certificates, will be $25,000 with integral
multiples of $1 in excess thereof except
that one Certificate in each Class may
be issued in a different amount. The
minimum denomination for each of the Class
P and Class X Certificates will be a 1%
Percentage Interest in such Class, and
the minimum denomination for the Class R
Certificates shall be 100% Percentage
Interest in such Class.
Set forth below are designations of Classes of Certificates to
the
categories used herein:
Book-Entry Certificates...... All Classes
of Certificates other than the
Physical Certificates.
Class A Certificates......... Class I-A-1,
Class I-A-2, Class II-1A-1,
Class II-A-2, Class II-A-3 and Class II-A-4
Certificates.
Class M Certificates......... Class M-1,
Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6, Class M-7, Class M-8, Class M-9,
Class M-10, Class M-11, Class M-12, Class M-13 and
Class M-14 Certificates.
Delay Certificates........... None.
ERISA-Restricted
Certificates............... Class
M-13, Class M-14, Class R, Class P and Class
X Certificates; any certificate with a rating
below the lowest applicable permitted rating under
the Underwriters' Exemption.
LIBOR Certificates........... Class A and
Class M Certificates.
Non-Delay Certificates....... Class A,
Class X and Class M Certificates.
Offered Certificates......... All Classes
of Certificates other than the
Private Certificates.
Physical Certificates........ Class P,
Class X and Class R Certificates.
Private Certificates......... Class M-12,
Class M-13, Class M-14, Class P,
Class X and Class R Certificates.
Rating Agencies.............. Moody's,
Fitch and Standard & Poor's.
Regular Certificates......... All Classes
of Certificates other than the
Class P and Class R Certificates.
Residual Certificates........ Class R
Certificates.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases,
unless the context otherwise requires,
shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan,
the
servicing and administration of such
Mortgage Loan (i) in the same manner in
which, and with the same care, skill,
prudence and diligence with which the
Servicer generally services and administers
similar mortgage loans with similar
mortgagors (A) for other third parties,
giving due consideration to customary
and usual standards of practice of prudent
institutional residential mortgage
lenders servicing their own mortgage loans
or (B) held in the Servicer's own
portfolio, whichever standard is higher,
and (ii) in accordance with applicable
local, state and federal laws, rules and
regulations.
Account: Any
of the Collection Account, the Distribution
Account, any Escrow Account or the Excess
Reserve Fund Account.
Each Account
shall be an Eligible Account.
Adjustment Date: As to any Mortgage Loan, the first Due Date on
which the related Mortgage Rate adjusts as
set forth in the related Mortgage
Note and each Due Date thereafter on which
the Mortgage Rate adjusts as set
forth in the related Mortgage Note.
Advance: Any P&I
Advance or Servicing Advance.
Advance Facility: A financing or other facility as described in
Section 12.11.
Advancing Person: The Person to whom the Servicer's rights
under
this Agreement to be reimbursed for any
P&I Advances or Servicing Advances have
been assigned pursuant to Section
12.11.
Affiliate: With respect to any Person, any other Person
controlling,
controlled by or under common control with
such first Person. For the purposes
of this definition, "control" means the
power to direct the management and
policies of such Person, directly or
indirectly, whether through the ownership
of voting securities, by contract or
otherwise; and the terms "controlling" and
"controlled" have meanings correlative to
the foregoing.
Aggregate Cap Agreement: The interest rate cap agreement, dated
August 25, 2005, between the Cap Provider
and the Securities Administrator,
relating to the LIBOR Certificates.
Agreement: This Pooling and Servicing Agreement and all
amendments
or supplements hereto.
Amount Held for Future Distribution: As to the Certificates on
any
Distribution Date, the aggregate amount
held in the Collection Account at the
close of business on the related
Determination Date on account of (i) Principal
Prepayments, Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds and
Subsequent Recoveries on the Mortgage Loans
received after the end of the
related Prepayment Period and (ii) all
Scheduled Payments on the Mortgage Loans
due after the end of the related Due
Period.
Applied Realized Loss Amount: With respect to any Distribution
Date,
the amount, if any, by which the aggregate
Class Certificate Balance of the
LIBOR Certificates after distributions of
principal on such Distribution Date
exceeds the aggregate Stated Principal
Balance of the Mortgage Loans for such
Distribution Date.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the
related Mortgage Loan as the value of the
Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice
of
transfer or equivalent instrument in
recordable form (other than the assignee's
name and recording information not yet
returned from the recording office),
reflecting the sale of the Mortgage to the
Trustee.
Available Funds: With respect to any Distribution Date and the
Mortgage Loans to the extent received by
the Master Servicer (x) the sum of (i)
all scheduled installments of interest (net
of the related Expense Fees) and
principal due on the Due Date on such
Mortgage Loans in the related Due Period
and received by the Servicer on or prior to
the related Determination Date,
together with any P&I Advances in
respect thereof; (ii) all Condemnation
Proceeds, Insurance Proceeds, Liquidation
Proceeds and Subsequent Recoveries
received by the Servicer during the related
Prepayment Period (in each case, net
of unreimbursed expenses incurred in
connection with a liquidation or
foreclosure and unreimbursed Advances, if
any); (iii) all partial or full
prepayments on the Mortgage Loans received
by the Servicer during the related
Prepayment Period together with all
Compensating Interest paid by the Servicer
in connection therewith (excluding any
Prepayment Charges); (iv) all
Substitution Adjustment Amounts with
respect to the substitutions of Mortgage
Loans that occur on or prior to the related
Determination Date; (v) all amounts
received with respect to such Distribution
Date as the Repurchase Price in
respect of a Mortgage Loan repurchased by
the Mortgage Loan Seller or the
Purchaser on or prior to the related
Determination Date; and (vi) the proceeds
with respect to the termination of the
Trust Fund pursuant to clause (a) of
Section 11.01; reduced by (y) amounts in
reimbursement for Advances previously
made with respect to the Mortgage Loans and
other amounts as to which the
Servicer, the Depositor, the Master
Servicer, the Securities Administrator or
the Trustee are entitled to be paid or
reimbursed pursuant to this Agreement.
Available Funds Cap: With respect to the Mortgage Loans as of
any
Distribution Date, the product of (i) the
weighted average of (x) the Expense
Adjusted Mortgage Rates for the Group I
Mortgage Loans and (y) the Expense
Adjusted Mortgage Rates for the Group II
Mortgage Loans then in effect on the
beginning of the related Due Period, in
each case weighted on the basis of the
related Group Subordinate Amount, and (ii)
a fraction, the numerator of which is
30 and the denominator of which is the
actual number of days in the Interest
Accrual Period related to such Distribution
Date. For federal income tax
purposes, the economic equivalent of the
Available Funds Cap shall be expressed
as the weighted average of the Lower Tier
REMIC Interest Rate on (a) the Class
LT-Group I(SUB), subject to a cap and floor
equal to the Lower Tier REMIC
Interest Rate of the Class LT-Group I
Interest and (b) the Class LT-Group
II(SUB), subject to a cap and floor equal
to the Lower Tier REMIC Interest Rate
of the Class LT-Group II Interest, weighted
on the basis of the respective Lower
Tier REMIC Principal Amounts of the Class
LT-Group I(SUB) and Class LT-Group
II(SUB), respectively.
Basic Principal Payment Amount: With respect to any
Distribution
Date, the excess of (i) the Principal
Remittance Amount for such Distribution
Date over (ii) the Excess
Overcollateralization Amount, if any, for such
Distribution Date.
Basis Risk Carryover Amount: With respect to each Class of
LIBOR
Certificates, as of any Distribution Date,
the sum of (A) if on such
Distribution Date the Interest Rate for any
Class of LIBOR Certificates is based
upon a Group Available Funds Cap or the
Available Funds Cap, as applicable, the
excess of (i) the amount of interest such
Class of Certificates would otherwise
be entitled to receive on such Distribution
Date had such rate been calculated
as the sum of LIBOR and the applicable
Interest Margin on such Class of
Certificates for such Distribution Date,
over (ii) the amount of interest
payable on such Class of Certificates at,
with respect to the Class I-A-1 and
Class I-A-2 Certificates, the Group I
Available Funds Cap, with respect to the
Class II-A-1, Class II-A-2, Class II-A-3
and Class II-A-4 Certificates, the
Group II Available Funds Cap, and with
respect to each other Class of LIBOR
Certificates, the Available Funds Cap, as
applicable, for such Distribution Date
and (B) the portion of any such excess
described in clause (A) for such Class of
Certificates from all previous Distribution
Dates not previously paid, together
with interest thereon at a rate equal to
the sum of LIBOR and the applicable
Interest Margin for such Class of
Certificates for such Distribution Date.
Basis Risk Payment: For any Distribution Date, an amount equal
to
the lesser of (i) the aggregate of the
Basis Risk Carryover Amounts for such
Distribution Date and (ii) the Class X
Distributable Amount (prior to any
reduction for Basis Risk Payments).
Best's: Best's Key Rating Guide, as the same shall be amended
from
time to time.
Book-Entry Certificates: As specified in the Preliminary
Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii)
a
day on which banking and savings and loan
institutions, in (a) the State of New
York, California, Maryland, Minnesota,
Arizona or Delaware, (b) the State in
which the Servicer's servicing operations
are located, or (c) any State in which
the Corporate Trust Office is located, are
authorized or obligated by law or
executive order to be closed.
Cap Agreements: The Aggregate Cap Agreement, the Group I Cap
Agreement, the Group II Cap Agreement and
the Class M Cap Agreement.
Cap Provider: Bear Stearns Financial Products, Inc., a Delaware
corporation, and its successors in
interest.
Certificate: Any one of the Certificates executed by the
Securities
Administrator in substantially the forms
attached hereto as exhibits.
Certificate Balance: With respect to any Class of Certificates,
other than the Class X, Class P or Class R
Certificates, at any date, the
maximum dollar amount of principal to which
the Holder thereof is then entitled
hereunder, such amount being equal to the
Denomination thereof minus all
distributions of principal previously made
with respect thereto and in the case
of any Certificates, reduced by any Applied
Realized Loss Amounts allocated to
such Class of Certificates pursuant to
Section 4.05; provided, however, that
immediately following the Distribution Date
on which a Subsequent Recovery is
distributed, the Class Certificate Balances
of any Class or Classes of
Certificates that have been previously
reduced by Applied Realized Loss Amounts
will be increased, in order of seniority,
by the amount of the Subsequent
Recovery distributed on such Distribution
Date (up to the amount of Unpaid
Realized Loss Amount for such Class or
Classes for such Distribution Date). The
Class P, Class X and Class R Certificates
have no Certificate Balance.
Certificate Group: The Group I Certificates or the Group II
Certificates, as applicable.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such
Book-Entry Certificate.
Certificate Register: The register maintained pursuant to
Section
5.02.
Certificateholder or Holder: The person in whose name a
Certificate
is registered in the Certificate Register,
except that, solely for the purpose
of giving any consent pursuant to this
Agreement, any Certificate registered in
the name of the Depositor or any affiliate
of the Depositor shall be deemed not
to be Outstanding and the Percentage
Interest evidenced thereby shall not be
taken into account in determining whether
the requisite amount of Percentage
Interests necessary to effect such consent
has been obtained; provided, however,
that if any such Person (including the
Depositor) owns 100% of the Percentage
Interests evidenced by a Class of
Certificates, such Certificates shall be
deemed to be Outstanding for purposes of
any provision hereof that requires the
consent of the Holders of Certificates of a
particular Class as a condition to
the taking of any action hereunder. The
Securities Administrator is entitled to
rely conclusively on a certification of the
Depositor or any affiliate of the
Depositor in determining which Certificates
are registered in the name of an
affiliate of the Depositor.
Certification: As
defined in Section 8.12(c).
Class: All Certificates bearing the same class designation as
set
forth in the Preliminary Statement.
Class I-A-1 Certificates: All Certificates bearing the class
designation of "Class I-A-1".
Class I-A-2 Certificates: All Certificates bearing the class
designation of "Class I-A-2".
Class II-A-1 Certificates: All Certificates bearing the class
designation of "Class II-A-1".
Class II-A-2 Certificates: All Certificates bearing the class
designation of "Class II-A-2".
Class II-A-3 Certificates: All Certificates bearing the class
designation of "Class II-A-3".
Class II-A-4 Certificates: All Certificates bearing the class
designation of "Class II-A-4".
Class A Certificates:
As specified in the Preliminary Statement.
Class Certificate Balance: With respect to any Class and as to
any
date of determination, the aggregate of the
Certificate Balances of all
Certificates of such Class as of such
date.
Class LT-R Interest: The sole class of "residual interest" in
the
Lower Tier REMIC evidenced by the Class R
Certificates.
Class M Cap Agreement: The interest rate cap agreement, dated
August
25, 2005, between the Cap Provider and the
Securities Administrator, relating to
the Class M Certificates.
Class M Certificates: As specified in the Preliminary
Statement.
Class M Principal Payment Amount: With respect to any
Distribution
Date and any Class of Class M Certificates
is the lesser of (i) the excess of
(a) the Principal Payment Amount over (b)
the aggregate amount distributed on
that Distribution Date as principal to all
Classes of Certificates more senior
than that Class of Class M Certificates and
(ii) the excess of (a) the sum of
the aggregate Class Certificate Balances of
all Class of Certificates more
senior than that Class of Class M
Certificates (after giving effect to all
amounts distributed on that Distribution
Date to those Classes of more senior
certificates) and the Class Certificate
Balance of that Class of Class M
Certificates immediately prior to that
Distribution Date over (b) the lesser of:
(x) the
percentage set forth in the table below for the applicable
Class of
Class M Certificates multiplied by the aggregate Stated
Principal
Balance of
the Mortgage Loans for that Distribution Date:
Class
Percentage
----------
------------
M-1
69.60%
M-2
73.80%
M-3
77.60%
M-4
80.90%
M-5
83.90%
M-6
86.50%
M-7
88.80%
M-8
90.00%
M-9
91.00%
M-10
92.90%
M-11
94.30%
M-12
95.90%
M-13
97.50%
M-14
99.00%
and
(y) the excess,
if any, of the aggregate Stated Principal Balance
of the
Mortgage Loans for that Distribution Date over 0.50% of the
aggregate
Stated Principal Balance of the Mortgage Loans as of the
Cut-off
Date,
until the Class Certificate Balance of that Class of Class M
Certificates has been reduced to zero.
Class M-1 Certificates: All Certificates bearing the class
designation of "Class M-1".
Class M-2 Certificates: All Certificates bearing the class
designation of "Class M-2".
Class M-3 Certificates: All Certificates bearing the class
designation of "Class M-3".
Class M-4 Certificates: All Certificates bearing the class
designation of "Class M-4".
Class M-5 Certificates: All Certificates bearing the class
designation of "Class M-5".
Class M-6 Certificates: All Certificates bearing the class
designation of "Class M-6".
Class M-7 Certificates: All Certificates bearing the class
designation of "Class M-7".
Class M-8 Certificates: All Certificates bearing the class
designation of "Class M-8".
Class M-9 Certificates: All Certificates bearing the class
designation of "Class M-9".
Class M-10 Certificates: All Certificates bearing the class
designation of "Class M-10".
Class M-11 Certificates: All Certificates bearing the class
designation of "Class M-11".
Class M-12 Certificates: All Certificates bearing the class
designation of "Class M-12".
Class M-13 Certificates: All Certificates bearing the class
designation of "Class M-13".
Class M-14 Certificates: All Certificates bearing the class
designation of "Class M-14".
Class P Certificates: All Certificates bearing the class
designation
of "Class P".
Class R Certificates: All Certificates bearing the class
designation
of "Class R".
Class UT-R Interest: The sole class of "residual interest" in
the
Upper Tier REMIC evidenced by the Class R
Certificate.
Class X Certificates: All Certificates bearing the class
designation
of "Class X".
Class X Distributable Amount: On any Distribution Date, the sum
of
(i) as a distribution in respect of
interest, the amount of interest that has
accrued on the Class X Interest (as set
forth in the Preliminary Statement) and
not applied as an Extra Principal Payment
Amount on such Distribution Date, plus
any such accrued interest remaining
undistributed from prior Distribution Dates,
plus (without duplication), (ii) as a
distribution in respect of principal, any
portion of the principal balance of the
Class X Interest which is distributable
as an Overcollateralization Reduction
Amount, minus (iii) any amounts paid as a
Basis Risk Payment.
Class X Interest: The Upper Tier REMIC Regular Interest
represented
by the Class X Certificates as specified
and described in the Preliminary
Statement and the related footnote
thereto.
Closing Date: August 25, 2005.
Code: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
Collection Account: As defined in Section 3.10(a).
Compensating Interest: For any Distribution Date, the lesser of
(a)
the amount, if any, by which the Prepayment
Interest Shortfall, if any, for such
Distribution Date, with respect to all
voluntary Principal Prepayments
(excluding any payments made upon
liquidation of any Mortgage Loan) exceeds all
Prepayment Interest Excesses for such
Distribution Date, and (b) the aggregate
amount of the Servicing Fee payable to the
Servicer for such Distribution Date.
Condemnation Proceeds: All awards or settlements in respect of
a
Mortgaged Property, whether permanent or
temporary, partial or entire, by
exercise of the power of eminent domain or
condemnation.
Corporate Trust Office: With respect to the Securities
Administrator, to the office of the
Securities Administrator at (i) for
certificate transfer purposes, Wells Fargo
Center, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479,
Attention: Corporate Trust Services -
HASCO 2005-NC1, and (ii) for all other
purposes, 9062 Old Annapolis Road,
Columbia, Maryland 21045, Attention:
Corporate Trust Services - HASCO 2005-NC1
or at such other address as the Securities
Administrator may designate from time
to time by notice to the
Certificateholders, the Depositor, the Master Servicer
and the Trustee. With respect to the
Trustee, to the designated office of the
Trustee in the State of California at which
any particular time its corporate
trust business with respect to this
Agreement is administered, which office at
the date of the execution of this Agreement
is located at 1761 East St. Andrew
Place, Santa Ana, California 92705-4934,
Attention: Trust Administration -
HB0501, facsimile number (714) 247-6329,
and its telephone number is
714-247-6000 and which is the address to
which notices to and correspondence
with the Trustee should be directed.
Corresponding Class: The class of interests in either REMIC
created
under this Agreement that corresponds to
the Class of interests in the other
such REMIC or to a Class of Certificates in
the manner set out below:
Corresponding
Corresponding
Lower Tier REMIC
Upper Tier REMIC
Corresponding Class of
Class
Designation
Regular Interest
Certificates
-----------------
----------------
------------
Class LT-I-1-A
Class I-1-A
Class I-1-A
Class LT-I-A-2
Class I-A-2
Class I-A-2
Class LT-II-A-1
Class II-A-1
Class II-A-1
Class LT-II-A-2
Class II-A-2
Class II-A-2
Class LT-II-A-3
Class II-A-3
Class II-A-3
Class LT-II-A-4
Class II-A-4
Class II-A-4
Class LT-M-1
Class M-1
Class M-1
Class LT-M-2
Class M-2
Class M-2
Class LT-M-3
Class M-3
Class M-3
Class LT-M-4
Class M-4
Class M-4
Class LT-M-5
Class M-5
Class M-5
Class LT-M-6
Class M-6
Class M-6
Class LT-M-7
Class M-7
Class M-7
Class LT-M-8
Class M-8
Class M-8
Class LT-M-9
Class M-9
Class M-9
Class LT-M-10
Class M-10
Class M-10
Class LT-M-11
Class M-11
Class M-11
Class LT-M-12
Class M-12
Class M-12
Class LT-M-13
Class M-13
Class M-13
Class LT-M-14
Class M-14
Class M-14
N/A
Class X
Class X
Corresponding Upper
Tier REMIC Regular
Interest: As defined in
the Preliminary Statement.
Credit Enhancement Percentage: With respect to any Distribution
Date, the percentage obtained by dividing
(x) the sum of (i) the aggregate Class
Certificate Balance of the Class M
Certificates and (ii) the
Overcollateralization Amount (in each case
after taking into account the
distributions of the Principal Payment
Amount for such Distribution Date) by (y)
the aggregate Stated Principal Balance of
the Mortgage Loans for such
Distribution Date.
Cumulative Loss Percentage: With respect to any Distribution
Date,
the percentage equivalent of a fraction,
the numerator of which is the aggregate
amount of Realized Losses incurred from the
Cut-off Date to the last day of the
calendar month preceding the month in which
such Distribution Date occurs and
the denominator of which is the Cut-off
Date Pool Principal Balance of the
Mortgage Loans.
Cumulative Loss Trigger Event: If, with respect to any
Distribution
Date, the quotient (expressed as a
percentage) of (x) the aggregate amount of
Realized Losses incurred since the Cut-off
Date through the last day of the
related Prepayment Period, divided by (y)
the Cut-off Date Pool Principal
Balance, exceeds the applicable Cumulative
Loss Percentages set forth below with
respect to such Distribution Date:
Distribution Date Occurring In
Loss Percentage
----------------------------------
------------------------------------
September 2007 through August 2008
1.20% for the first month, plus an
additional 1/12th of 1.50% for each
month thereafter
September 2008 through August 2009
2.70% for the first month, plus an
additional 1/12th of 1.50% for
each month thereafter
September 2009 through August 2010
4.20% for the first month, plus an
additional 1/12th of 0.80% for each
month thereafter
September 2010 through August 2011
5.00% for the first month, plus an
additional 1/12th of 0.50% for each
month thereafter
September 2011 and thereafter
5.50%
Custodial File: With respect to each Mortgage Loan, the file
retained by the Trustee consisting of the
items in Section 2.01(b).
Cut-off Date: August 1, 2005.
Cut-off Date Pool Principal Balance: The aggregate Stated
Principal
Balances of all Mortgage Loans as of the
Cut-off Date.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
Stated
Principal Balance thereof as of the close
of business on the Cut-off Date.
Data Tape Information: With respect to each Mortgage Loan, the
following information as of the Cut-off
Date provided by the Mortgage Loan
Seller to the Purchaser pursuant to the New
Century Purchase Agreement: (1) the
Mortgage Loan Seller's Mortgage Loan
identifying number; (2) the Mortgagor's
first and last name; (3) the street address
of the Mortgaged Property including
the state and zip code; (4) a code
indicating whether the Mortgaged Property is
owner-occupied; (5) the type of residential
dwelling constituting the Mortgaged
Property; (6) the original months to
maturity; (7) the original date of the
Mortgage Loan and the remaining months to
maturity from the Cut-off Date, based
on the original amortization schedule; (8)
the Loan-to-Value Ratio at
origination; (9) the Mortgage Rate in
effect immediately following the Cut-off
Date; (10) the date on which the first
Scheduled Payment was due on the Mortgage
Loan; (11) the stated maturity date; (12)
the amount of the Scheduled Payment at
origination; (13) the amount of the
Scheduled Payment as of the Cut-off Date;
(14) the last Due Date on which a Scheduled
Payment was actually applied to the
unpaid Stated Principal Balance; (15) the
original principal amount of the
Mortgage Loan; (16) the Stated Principal
Balance of the Mortgage Loan as of the
close of business on the Cut-off Date; (17)
the first Adjustment Date; (18) the
Gross Margin; (19) a code indicating the
purpose of the loan (i.e., purchase
financing, rate/term refinancing, cash-out
refinancing); (20) Maximum Mortgage
Rate under the terms of the Mortgage Note;
(21) the Minimum Mortgage Rate under
the terms of the Mortgage Note; (22) the
Mortgage Rate at origination; (23) the
Periodic Mortgage Rate Cap; (24) the first
Adjustment Date immediately following
the Cut-off Date; (25) the Index; (26) the
date on which the first Scheduled
Payment was due on the Mortgage Loan and,
if such date is not consistent with
the Due Date currently in effect, such Due
Date; (27) a code indicating the
documentation style (i.e., full (providing
two years employment verification - 2
years W-2's and current paystub or 2 years
1040's for self employed borrowers),
alternative or reduced); (28) the Appraised
Value of the Mortgaged Property;
(29) the sale price of the Mortgaged
Property, if applicable; (30) a code
indicating whether the Mortgage Loan is
subject to a Prepayment Charge; (31) the
amount and the term of any Prepayment
Charge; (32) with respect to each MERS
Designated Mortgage Loan, the related MIN;
(33) a code indicating if the
Mortgage Loan is a negative amortization
Mortgage Loan; (34) the term of the
interest-only period of such Mortgage Loan;
and (35) a code indicating whether
the Mortgage Loan is a Group I Morgtgage
Loan or a Group II Mortgage Loan. With
respect to the Mortgage Loans in the
aggregate, the Data Tape Information shall
set forth the following information, as of
the Cut-off Date: (1) the number of
Mortgage Loans; (2) the current principal
balance of the Mortgage Loans; (3) the
weighted average Mortgage Rate of the
Mortgage Loans; and (4) the weighted
average maturity of the Mortgage Loans.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent
jurisdiction in a proceeding under the United
States Bankruptcy Code in the Scheduled
Payment for such Mortgage Loan which
became final and non-appealable, except
such a reduction resulting from a
Deficient Valuation or any reduction that
results in a permanent forgiveness of
principal.
Deficient Valuation: With respect to any Mortgage Loan, a
valuation
of the related Mortgaged Property by a
court of competent jurisdiction in an
amount less than the then outstanding
principal balance of the Mortgage Loan,
which valuation results from a proceeding
initiated under the United States
Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a
Physical
Certificate and any Certificate issued in
lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Deleted Mortgage Loan: As defined in Section 2.03.
Delinquency Rate: For any calendar month, a fraction, expressed as
a
percentage, the numerator of which is the
aggregate Stated Principal Balance of
60+ Day Delinquent Mortgage Loans as of the
close of business on the last day of
such month, and the denominator of which is
the aggregate Stated Principal
Balance of the Mortgage Loans as of the
close of business on the last day of
such month.
Delinquency Trigger Event: With respect to any Distribution
Date,
the circumstances in which the Rolling
Three Month Delinquency Rate as of the
last day of the immediately preceding
calendar month exceeds 40% of the Credit
Enhancement Percentage for the Class A
Certificates.
Denomination: With respect to each Certificate, the amount set
forth
on the face thereof as the "Initial
Certificate Balance of this Certificate" or
the Percentage Interest appearing on the
face thereof.
Depositor: HSI Asset Securitization Corporation, a Delaware
corporation, and its successors in
interest.
Depository: The initial Depository shall be The Depository
Trust
Company, the nominee of which is CEDE &
Co., as the registered Holder of the
Book-Entry Certificates. The Depository
shall at all times be a "clearing
corporation" as defined in Section
8-102(a)(5) of the Uniform Commercial Code of
the State of New York.
Depository
Institution: Any depository institution or trust company,
including the Trustee and the Securities
Administrator, that (a) is incorporated
under the laws of the United States of
America or any State thereof, (b) is
subject to supervision and examination by
federal or state banking authorities
and (c) has outstanding unsecured
commercial paper or other short-term unsecured
debt obligations that are rated P-1 by
Moody's, F1+ by Fitch and A-1 by Standard
& Poor's.
Depository Participant: A broker, dealer, bank or other
financial
institution or other Person for whom from
time to time a Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
Determination Date: With respect to each Remittance Date, the
15th
day (or if such day is not a Business Day,
the immediately preceding Business
Day) in the calendar month in which such
Remittance Date occurs.
Disqualified Non-U.S. Person: With respect to a Class R
Certificate,
any Non-U.S. Person or agent thereof other
than (i) a Non-U.S. Person that holds
the Class R or Class LR Certificate in
connection with the conduct of a trade or
business within the United States and has
furnished the transferor and the
Securities Administrator with an effective
IRS Form W-8ECI or (ii) a Non-U.S.
Person that has delivered to both the
transferor and the Securities
Administrator an opinion of a nationally
recognized tax counsel to the effect
that the transfer of the Class R
Certificate to it is in accordance with the
requirements of the Code and the
regulations promulgated thereunder and that
such transfer of the Class R Certificate
will not be disregarded for federal
income tax purposes.
Distribution Account: The separate Eligible Account created and
maintained by the Securities Administrator
pursuant to Section 3.07(d) in the
name of the Securities Administrator as
paying agent for the benefit of the
Trustee and the Certificateholders and
designated "Wells Fargo Bank, N.A. as
paying agent in trust for registered
holders of HSI Asset Securitization
Corporation Trust 2005-NC1 Mortgage
Pass-Through Certificates, Series 2005-NC1".
Funds in the Distribution Account shall be
held in trust for the
Certificateholders for the uses and
purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:00 noon New York City time on the third
Business Day immediately preceding
such Distribution Date.
Distribution Date: The 25th day of each calendar month, or if
such
day is not a Business Day, the next
succeeding Business Day, commencing in
September 2005.
Document Certification and Exception Report: The report attached
to
Exhibit F hereto.
Due Date: The day of the month on which the Scheduled Payment is
due
on a Mortgage Loan, exclusive of any days
of grace.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the
calendar month preceding the month in which
such Distribution Date occurs and ending on
the first day of the calendar month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account maintained with a federal
or
state-chartered depository institution or
trust company that complies with the
definition of Eligible Institution, (ii) an
account maintained with the
corporate trust department of a federal
depository institution or
state-chartered depository institution
subject to regulations regarding
fiduciary funds on deposit similar to Title
12 of the U.S. Code of Federal
Regulation Section 9.10(b), which, in
either case, has corporate trust powers
and is acting in its fiduciary capacity or
(iii) any other account acceptable to
each Rating Agency. Eligible Accounts may
bear interest, and may include, if
otherwise qualified under this definition,
accounts maintained with the
Securities Administrator.
Eligible Institution: A federal or state-chartered depository
institution or trust company the commercial
paper, short-term debt obligations,
or other short-term deposits of which are
rated at least "A-1+" by Standard &
Poor's if the amounts on deposit are to be
held in the account for no more than
365 days (or at least "A-2" if the amounts
on deposit are to be held in the
account for no more than 30 days), "P-1" by
Moody's and "F1+" by Fitch (or a
comparable rating if another Rating Agency
is specified by the Depositor by
written notice to the Servicer and the
Securities Administrator) or long-term
unsecured debt obligations are rated at
least "AA-" by Standard & Poor's if the
amounts on deposit are to be held in the
account for no more than 365 days.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that
meets the requirements of Prohibited
Transaction Exemption ("PTE") 96-84, 61
Fed. Reg. 58234 (1996), as amended by
PTE 97-34, 62 Fed. Reg. 39021 (1997), PTE
2000-58, 65 Fed. Reg. 67765 (2000) and
PTE 2002-41, 67 Fed. Reg. 54487 (2002) (or
any successor thereto), or any
substantially similar administrative
exemption granted by the U.S. Department of
Labor.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established
and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b).
Event of Default: As defined in Section 7.01.
Excess Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of
(a) the Overcollateralization Amount
on such Distribution Date over (b) the
Overcollateralization Target Amount for
such Distribution Date.
Excess
Reserve Fund Account: The separate Eligible Account created
and maintained by the Securities
Administrator pursuant to Sections 3.07(b) and
3.07(c) in the name of the Securities
Administrator as paying agent for the
benefit of the Regular Certificateholders
and designated "Wells Fargo Bank, N.A.
as paying agent in trust for registered
holders of HSI Asset Securitization
Corporation Trust 2005-NC1, Mortgage
Pass-Through Certificates, Series
2005-NC1". Funds in the Excess Reserve Fund
Account shall be held in trust for
the Regular Certificateholders for the uses
and purposes set forth in this
Agreement. Amounts on deposit in the Excess
Reserve Fund Account shall not be
invested.
Exchange Act: As defined in Section 8.12(b).
Expense Adjusted
Mortgage Rate: With respect to any Distribution
Date and as to each Mortgage Loan, the per
annum rate equal to the Mortgage Rate
as of the first day of the related Due
Period less the Expense Fee Rate.
Expense Fee Rate: As to each Mortgage Loan, a per annum rate
equal
to the sum of the Servicing Fee Rate and
the Master Servicing Fee Rate.
Expense Fees: As to each Mortgage Loan, the sum of the Servicing
Fee
and the Master Servicing Fee.
Extra Principal Payment Amount: As of any Distribution Date,
the
lesser of (x) the related Total Monthly
Excess Spread for such Distribution Date
and (y) the related Overcollateralization
Deficiency for such Distribution Date.
Fannie Mae: The Federal National Mortgage Association, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor
thereto.
Final Recovery Determination: With respect to any defaulted
Mortgage
Loan or any REO Property (other than a
Mortgage Loan or REO Property purchased
by the Mortgage Loan Seller or the
Purchaser as contemplated by this Agreement
or Purchase Agreement, as applicable), a
determination made by the Servicer that
all Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds and other
payments or recoveries which the Servicer,
in its reasonable good faith
judgment, expects to be finally recoverable
in respect thereof have been so
recovered. The Servicer shall maintain
records, prepared by a Servicing Officer,
of each Final Recovery Determination made
thereby.
Final Scheduled Distribution Date: The Final Scheduled
Distribution
Date for each Class of Certificates is the
Distribution Date occurring in July
2035.
Fitch: Fitch, Inc., or any successor thereto. If Fitch is
designated
as a Rating Agency in the Preliminary
Statement, for purposes of Section
12.05(c) the address for notices to Fitch
shall be Fitch, Inc., One State Street
Plaza, New York, New York 10004, Attention:
MBS Monitoring - HSI Asset
Securitization Corporation Trust 2005-NC1,
or such other address as Fitch may
hereafter furnish to the Depositor and the
Securities Administrator.
Freddie Mac: The Federal Home Loan Mortgage Corporation, a
corporate
instrumentality of the United States
created and existing under Title III of the
Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed
percentage amount set forth in the related
Mortgage Note to be added to the
applicable Index to determine the Mortgage
Rate.
Group I Available Funds Cap: With respect to the Group I
Mortgage
Loans as of any Distribution Date, the
product of (i) the weighted average of
the Expense Adjusted Mortgage Rates then in
effect on the beginning of the
related Due Period on the Group I Mortgage
Loans and (ii) a fraction, the
numerator of which is 30 and the
denominator of which is the actual number of
days in the Interest Accrual Period related
to such Distribution Date.
Group I Cap Agreement: The interest rate cap agreement, dated
August
25, 2005, between the Cap Provider and the
Securities Administrator, relating to
the Group I Certificates.
Group I Certificates: The Class I-A-1 Certificates and the
Class
I-A-2 Certificates, collectively.
Group I Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group I Mortgage
Loans.
Group I Principal Payment Amount: With respect to any
Distribution
Date, the Principal Payment Amount
multiplied by the Group Principal Allocation
Percentage for the Group I
Certificates.
Group I Senior Principal Payment Amount: With respect to any
Distribution Date, the lesser of (i) the
Group I Principal Payment Amount for
that Distribution Date and (ii) the excess
of (a) the aggregate Class
Certificate Balance of the Group I
Certificates immediately prior to that
Distribution Date over (b) the lesser of
(x) 63.80% of the aggregate Stated
Principal Balance of the Group I Mortgage
Loans for that Distribution Date and
(y) the excess, if any, of the aggregate
Stated Principal Balance of the Group I
Mortgage Loans for that Distribution Date
over 0.50% of the aggregate State
Principal Balance of the Group I Mortgage
Loans as of the Cut-off Date.
Group II Available Funds Cap: With respect to the Group II
Mortgage
Loans as of any Distribution Date, the
product of (i) the weighted average of
the Expense Adjusted Mortgage Rates then in
effect on the beginning of the
related Due Period on the Group II Mortgage
Loans and (ii) a fraction, the
numerator of which is 30 and the
denominator of which is the actual number of
days in the Interest Accrual Period related
to such Distribution Date.
Group II Cap Agreement: The interest rate cap agreement, dated
August 25, 2005, between the Cap Provider
and the Securities Administrator,
relating to the Group II Certificates.
Group II Certificates: The Class II-A-1 Certificates, the Class
II-A-2 Certificates, Class II-A-3
Certificates and the Class II-A-4
Certificates, collectively.
Group II Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group II Mortgage
Loans.
Group II Principal Payment Amount: With respect to any
Distribution
Date, the Principal Payment Amount
multiplied by the Group Principal Allocation
Percentage for the Group II
Certificates.
Group II Senior Principal Payment Amount: With respect to any
Distribution Date, the lesser of (i) the
Group II Principal Payment Amount for
that Distribution Date and (ii) the excess
of (a) the aggregate Class
Certificate Balance of the Group II
Certificates immediately prior to that
Distribution Date over (b) the lesser of
(x) 63.80% of the aggregate Stated
Principal Balance of the Group II Mortgage
Loans for that Distribution Date and
(y) the excess, if any, of the aggregate
Stated Principal Balance of the Group
II Mortgage Loans for that Distribution
Date over 0.50% of the aggregate State
Principal Balance of the Group II Mortgage
Loans as of the Cut-off Date.
Group II Sequential Certificates: Collectively, the Class
II-A-1,
Class II-A-2 and Class II-A-3
Certificates.
Group Available Funds Cap: The Group I Available Funds Cap or
the
Group II Available Funds Cap, as
applicable.
Group Principal Allocation Percentage: With respect to any
Distribution Date, the percentage
equivalent of a fraction, determined as
follows:
(i)
with respect to
the Group I Certificates, a fraction,
the numerator of which is the portion of the Principal
Remittance
Amount for that Distribution Date that is attributable to the
principal received or advanced on the Group I Mortgage Loans and
the
denominator of which is the Principal Remittance Amount for
that
Distribution Date; and
(ii) with respect to
the Group II Certificates, a fraction,
the numerator of which is the portion of the Principal
Remittance
Amount for that Distribution Date that is attributable to the
principal received or advanced on the Group II Mortgage Loans
and
the denominator of which is the Principal Remittance Amount for
that
Distribution Date.
Group Subordinate Amount: For any Distribution Date and (i) for
the
Group I Mortgage Loans, the excess of the
aggregate Stated Principal Balance of
the Group I Mortgage Loans as of the
beginning of the related Due Period over
the aggregate Class Certificate Balance of
the Class I-A-1 and Class I-A-2
Certificates immediately prior to the
current Distribution Date and (ii) for the
Group II Mortgage Loans, the excess of the
aggregate Stated Principal Balance of
the Group II Mortgage Loans as of the
beginning of the related Due Period over
the aggregate Class Certificate Balance of
the Class II-A-1, Class II-A-2, Class
II-A-3 and Class II-A-4 Certificates
immediately prior to such Distribution
Date.
Index: As to each Mortgage Loan, the index from time to time in
effect for the adjustment of the Mortgage
Rate set forth as such on the related
Mortgage Note.
Initial Certification: As defined in Section 2.02.
Insurance
Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including
all riders and endorsements thereto
in effect, including any replacement policy
or policies for any Insurance
Policies.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds
of
insurance policies insuring the Mortgage
Loan or the related Mortgaged Property.
Interest Accrual Period: With respect to each Class of
Non-Delay
Certificates and the Corresponding Class of
Lower Tier REMIC Regular Interests
and any Distribution Date, the period
commencing on the Distribution Date
occurring in the month preceding the month
in which the current Distribution
Date occurs and ending on the day
immediately preceding the current Distribution
Date (or, in the case of the first
Distribution Date, the period from and
including the Closing Date to but excluding
such first Distribution Date). For
purposes of computing interest accruals on
each Class of Non-Delay Certificates,
each Interest Accrual Period has the actual
number of days in such month and
each year is assumed to have 360 days.
Interest Carry Forward Amount: As of any Distribution Date and
any
Class of LIBOR Certificates, the sum of (i)
the excess of (a) the sum of (x) the
Interest Payment Amount with respect to the
current Distribution Date (excluding
any Basis Risk Carryover Amount with
respect to such Class), plus (y) the
portion of the Interest Payment Amount from
Distribution Dates prior to the
current Distribution Date remaining unpaid
immediately prior to the current
Distribution Date, over (b) the amount
actually paid to such Class with respect
to interest on such prior Distribution
Dates, and (ii) interest on the amount in
clause (i) above at the applicable Interest
Rate (to the extent permitted by
applicable law).
Interest Margin: Except as set forth in the following sentence,
with
respect to each Class of Regular
Certificates, the following percentages: Class
I-A-1 Certificates, 0.250%; Class I-A-2
Certificates, 0.310%; Class II-A-1
Certificates, 0.130%; Class II-A-2
Certificates, 0.250%; Class II-A-3
Certificates, 0.360%; Class II-A-4
Certificates, 0.320%; Class M-1 Certificates,
0.510%; Class M-2 Certificates, 0.540%;
Class M-3 Certificates, 0.640%; Class
M-4 Certificates, 0.660%; Class M-5
Certificates, 0.740%; Class M-6
Certificates, 1.200%; Class M-7
Certificates, 1.340%; Class M-8 Certificates,
1.850%; Class M-9 Certificates, 2.300%;
Class M-10 Certificates, 3.000%; Class
M-11 Certificates, 3.000%; Class M-12
Certificates, 3.000%; Class M-13
Certificates, 3.000%; and Class M-14
Certificates, 3.000%. On the first
Distribution Date after the Optional
Termination Date, the Pass-Through Margins
shall increase to: Class I-A-1
Certificates, 0.500%; Class I-A-2 Certificates,
0.620%; Class II-A-1 Certificates, 0.260%;
Class II-A-2 Certificates, 0.500%;
Class II-A-3 Certificates, 0.720%; Class
II-A-4 Certificates, 0.640%; Class M-1
Certificates, 0.765%; Class M-2
Certificates, 0.810%; Class M-3 Certificates,
0.960%; Class M-4 Certificates, 0.990%;
Class M-5 Certificates, 1.110%; Class
M-6 Certificates, 1.800%; Class M-7
Certificates, 2.010%; Class M-8
Certificates, 2.775%; Class M-9
Certificates, 3.450%; Class M-10 Certificates,
4.500%; Class M-11 Certificates, 4.500%;
Class M-12 Certificates, 4.500%; Class
M-13 Certificates, 4.500%; and Class M-14
Certificates, 4.500%.
Interest Payment Amount: With respect to any Distribution Date
for
each Class of LIBOR Certificates, the
amount of interest accrued during the
related Interest Accrual Period at the
applicable Interest Rate on the related
Class Certificate Balance immediately prior
to such Distribution Date, as
reduced by such Class's share of Net
Prepayment Interest Shortfalls and Relief
Act Interest Shortfalls for such
Distribution Date allocated to such Class
pursuant to Section 4.02.
Interest Rate: For each Class of Certificates, each Class of
Upper
Tier REMIC Regular Interest and each Class
of Lower Tier REMIC Regular Interest,
the per annum rate set forth or calculated
in the manner described in the
Preliminary Statement.
Interest Rate Cap Payment: (a) With respect to the LIBOR
Certificates, for the first 27 Distribution
Dates, the amount, if any, equal to
the product of (i) the excess, if any, of
(A) the one-month LIBOR rate as of the
related reset date under the Aggregate Cap
Agreement over (B) 3.85000%, (ii)
250, and (iii) the lesser of (x) the
applicable aggregate cap notional amount
set forth on Schedule I to such Cap
Agreement for the calculation period
relating to such Distribution Date and (y)
the aggregate Class Certificate
Balance of the LIBOR Certificates for that
Distribution Date, calculated on an
"actual/360" basis; (b) with respect to the
Group I Certificates, for the 28th
to 51st Distribution Date, the amount, if
any, equal to the product of (i) the
excess, if any, of the lesser of (A) the
one-month LIBOR rate as of the related
reset date under the Group I Cap Agreement
and (B) 11.75000%, over the
applicable cap strike rate set forth on
Schedule I to such Cap Agreement for the
calculation period relating to such
Distribution Date, (ii) 250, and (iii) the
lesser of (x) the applicable group I cap
notional amount set forth on Schedule I
to such Cap Agreement for the calculation
period relating to such Distribution
Date and (y) the aggregate Class
Certificate Balance of the LIBOR Certificates
for that Distribution Date, calculated on
an "actual/360" basis; (c) with
respect to the Group II Certificates, for
the 28th to 46th Distribution Dates,
the amount, if any, equal to the product of
(i) the excess, if any, of the
lesser of (A) the one-month LIBOR rate as
of the related reset date under the
Group II Cap Agreement and (B) 11.75000%,
over the applicable cap strike rate
set forth on Schedule I to such Cap
Agreement for the calculation period
relating to such Distribution Date, (ii)
250, and (iii) the lesser of (x) the
applicable group II cap notional amount set
forth on Schedule I to such Cap
Agreement for the calculation period
relating to such Distribution Date and (y)
the aggregate Class Certificate Balance of
the LIBOR Certificates for that
Distribution Date, calculated on an
"actual/360" basis; and (d) with respect to
the Class M Certificates, for the 28th to
51st Distribution Date, the amount, if
any, equal to the product of (i) the
excess, if any, of the lesser of (A) the
one-month LIBOR rate as of the related
reset date under the Class M Cap
Agreement and (B) the applicable cap
ceiling rate set forth on Schedule I to
such Cap Agreement for the calculation
period relating to such Distribution
Date, over the applicable cap strike rate
set forth on Schedule I to such Cap
Agreement for the calculation period
elating to such Distribution Date, (ii)
250, and (iii) the lesser of (x) the
applicable Class M cap notional amount set
forth on Schedule I to such Cap Agreement
for the calculation period relating to
such Distribution Date and (y) the
aggregate Class Certificate Balance of the
LIBOR Certificates for that Distribution
Date, calculated on an "actual/360"
basis.
Interest Remittance Amount: With respect to any Distribution
Date
and the Mortgage Loans in a Loan Group,
that portion of Available Funds
attributable to interest relating to
Mortgage Loans in that Loan Group.
Investment Account: As defined in Section 3.12(a).
Investor: With respect to each MERS Designated Mortgage Loan,
the
Person named on the MERS System as the
investor pursuant to the MERS Procedures
Manual.
IRS: The Internal Revenue Service.
JPMorgan: JPMorgan Chase, N.A., a national banking association,
and
its successors in interest.
Late Collections: With respect to any Mortgage Loan and any Due
Period, all amounts received after the
Determination Date immediately following
such Due Period, whether as late payments
of Scheduled Payments or as Insurance
Proceeds, Condemnation Proceeds,
Liquidation Proceeds, Subsequent Recoveries or
otherwise, which represent late payments or
collections of principal and/or
interest due (without regard to any
acceleration of payments under the related
Mortgage and Mortgage Note) but delinquent
for such Due Period and not
previously recovered.
LIBOR: With respect to any Interest Accrual Period for the
LIBOR
Certificates, the rate determined by the
Securities Administrator on the related
LIBOR Determination Date on the basis of
the offered rate for one-month U.S.
dollar deposits as such rate appears on
Telerate Page 3750 as of 11:00 a.m.
(London time) on such date; provided, that
if such rate does not appear on
Telerate Page 3750, the rate for such date
will be determined on the basis of
the rates at which one-month U.S. dollar
deposits are offered by the Reference
Banks at approximately 11:00 a.m. (London
time) on such date to prime banks in
the London interbank market. In such event,
the Securities Administrator shall
request the principal London office of each
of the Reference Banks to provide a
quotation of its rate. If at least two such
quotations are provided, the rate
for that date will be the arithmetic mean
of the quotations (rounded upwards if
necessary to the nearest whole multiple of
1/16%). If fewer than two quotations
are provided as requested, the rate for
that date will be the arithmetic mean of
the rates quoted by major banks in New York
City, selected by the Securities
Administrator (after consultation with the
Depositor), at approximately 11:00
a.m. (New York City time) on such date for
one-month U.S. dollar loans to
leading European banks.
LIBOR Certificates: As specified in the Preliminary Statement.
LIBOR Determination Date: With respect to any Interest Accrual
Period for the LIBOR Certificates, the
second London Business Day preceding the
commencement of such Interest Accrual
Period.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a
defaulted Mortgage Loan (including any REO
Property) which was liquidated in the
calendar month preceding the month of such
Distribution Date and as to which the
Servicer has certified to the Securities
Administrator that it has received all
amounts it expects to receive in connection
with the liquidation of such
Mortgage Loan including the final
disposition of an REO Property.
Liquidation Proceeds: Cash received in connection with the
liquidation of a Liquidated Mortgage Loan,
whether through a trustee's sale,
foreclosure sale or otherwise.
Loan Group: The Group I Mortgage Loans or the Group II Mortgage
Loans, as applicable.
Loan-to-Value Ratio or LTV: As of any date and as to any
Mortgage
Loan, the ratio (expressed as a percentage)
of the outstanding principal balance
of the Mortgage Loan to (a) in the case of
a purchase, the lesser of (i) the
sale price of the Mortgaged Property and
(ii) its appraised value at the time of
sale or (b) in the case of a refinancing or
modification, the appraised value of
the Mortgaged Property at the time of the
refinancing or modification.
London Business
Day: Any day on which dealings in deposits of United
States dollars are transacted in the London
interbank market.
Lower Tier REMIC: As described in the Preliminary Statement.
Lower Tier REMIC Interest Rate: As described in the Preliminary
Statement.
Lower-Tier REMIC Principal Amount: The principal balance of
each
Lower Tier REMIC Regular Interest,
determined as set forth in the Preliminary
Statement. The Lower-Tier REMIC Principal
Amount shall be computed to at least
eight (8) decimal places.
Lower Tier REMIC Regular Interest: Each of the Class LT-I-A-1,
Class
LT-I-A-2, Class LT-II-A-1, Class LT-II-A-2,
Class LT II-A-3, Class LT II-A-4,
Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10, Class
M-11, Class M-12, Class M-13, Class
M-14, Class LT-Group I (SUB), Class
LT-Group I, Class LT-Group II (SUB), Class
LT-Group II, Class LT-XX and Class
LT-Accrual Interests as described in the
Preliminary Statement.
Lower Tier REMIC Subordinate Balance Ratio: The ratio between
the
Lower Tier REMIC Principal Amounts of the
Class LT-Group I(SUB) Interest and
Class LT-Group II(SUB) Interest, equal to
the ratio between the Group
Subordinate Amount of the Group I Mortgage
Loans and the Group Subordinate
Amount of the Group II Mortgage Loans,
respectively.
Lower-Tier REMIC WAC Cap: With respect to the Mortgage Loans as
of
any Distribution Date, the product of (i)
the weighted average of the Expense
Adjusted Mortgage Rates then in effect on
the beginning of the related Due
Period on the Mortgage Loans and (ii) a
fraction, the numerator of which is 30
and the denominator of which is the actual
number of days in the Interest
Accrual Period related to such Distribution
Date.
Master Servicer: Wells Fargo, and if a successor Master Servicer
is
appointed hereunder, such successor.
Master Servicer Event of Default: As defined in Section 9.06.
Master Servicing Fee: As to any Distribution Date and each
Mortgage
Loan, an amount equal to 1/12th the product
of (a) the Master Servicing Fee Rate
and (b) the outstanding Stated Principal
Balance of such Mortgage Loan as of the
prior Distribution Date (or as of the
Cut-off Date in the case of the first
Distribution Date).
Master Servicing Fee Rate: With respect to any Mortgage Loan, a
per
annum rate equal to 0.010%.
Master Servicing Officer: Any officer of the Master Servicer
involved in, or responsible for, the
administration and master servicing of the
Mortgage Loans.
Maximum Mortgage Rate: With respect to each Mortgage Loan, a
rate
that (i) is set forth on the Data Tape
Information and in the related Mortgage
Note and (ii) is the maximum interest rate
to which the Mortgage Rate on such
Mortgage Loan may be increased during the
lifetime of such Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a
Delaware
corporation, and its successors in
interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Mortgage Loan Seller has designated or will
designate MERS as, and has taken or
will take such action as is necessary to
cause MERS to be, the mortgagee of
record, as nominee for the Mortgage Loan
Seller, in accordance with the MERS
Procedure Manual and (b) the Mortgage Loan
Seller has designated or will
designate the Trustee as the Investor on
the MERS System.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified
from time to time.
MERS(R) System: MERS mortgage electronic registry system, as
more
particularly described in the MERS
Procedures Manual.
MIN: The Mortgage Identification Number of Mortgage Loans
registered
with MERS on the MERS(R) System.
Minimum Mortgage Rate: With respect to each Mortgage Loan, a
rate
that (i) is set forth on the Data Tape
Information and in the related Mortgage
Note and (ii) is the minimum interest rate
to which the Mortgage Rate on such
Mortgage Loan may be decreased during the
lifetime of such Mortgage Loan.
Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 4.03.
Moody's: Moody's Investors Service, Inc. If Moody's is designated
as
a Rating Agency in the Preliminary
Statement, for purposes of Section 12.05(c)
the address for notices to Moody's shall be
Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007,
Attention: Residential Mortgage
Pass-Through Group, or such other address
as Moody's may hereafter furnish to
the Depositor and the Securities
Administrator.
Mortgage: The mortgage, deed of trust or other instrument
identified
on the Mortgage Loan Schedule as securing a
Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan
contained in either the Servicing File or
Custodial File.
Mortgage Loan: An individual Mortgage Loan that is the subject
of
this Agreement, each Mortgage Loan
originally sold and subject to this Agreement
being identified on the Mortgage Loan
Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the
Scheduled Payments, Principal
Prepayments, Liquidation Proceeds,
Subsequent Recoveries, Condemnation Proceeds,
Insurance Proceeds, REO Disposition
proceeds, Prepayment Charges, and all other
rights, benefits, proceeds and obligations
arising from or in connection with
such Mortgage Loan, excluding replaced or
repurchased Mortgage Loans.
Mortgage Loan Schedule: A schedule of Mortgage Loans prepared by
the
Depositor, delivered to the Trustee on the
Closing Date and referred to on
Schedule I, such schedule setting forth,
for each Loan Group, the Data Tape
Information with respect to each Mortgage
Loan.
Mortgage Loan Seller: NC Capital Corporation, a California
corporation, and its successors in
interest.
Mortgage Note: The note or other evidence of the indebtedness of
a
Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne on a Mortgage
Note,
which shall be adjusted from time to
time.
Mortgaged Property: With respect to each Mortgage Loan, the
real
property (or leasehold estate, if
applicable) identified on the Mortgage Loan
Schedule as securing repayment of the debt
evidenced by the related Mortgage
Note.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Monthly Excess Cash Flow: For any Distribution Date, the
amount
remaining for distribution pursuant to
subsection 4.02(a)(iii) (before giving
effect to distributions pursuant to such
subsection).
Net Prepayment Interest Shortfall: For any Distribution Date,
the
amount by which the sum of the Prepayment
Interest Shortfalls for such
Distribution Date exceeds the sum of
Compensating Interest payments made with
respect to such Distribution Date.
New Century: New Century Mortgage Corporation, a California
corporation, and its successors in
interest.
New Century Purchase Agreement: The Master Mortgage Loan
Purchase
and Interim Servicing Agreement, dated as
of June 1, 2005, by and among NC
Capital, as seller, New Century, as interim
servicer, and HSBC Bank, as initial
purchaser.
NIM Issuer: The entity established as the issuer of the NIM
Securities.
NIM Securities: Any debt securities secured or otherwise backed
by
some or all of the Class X and Class P
Certificates that are rated by any Rating
Agency.
NIM Trustee: The trustee for the NIM Securities.
Non-Delay Certificates: As specified in the Preliminary
Statement.
Non-Permitted Transferee: A Person other than a Permitted
Transferee.
Non-U.S. Person: A person that is not a U.S. Person.
Nonrecoverable P&I Advance: Any P&I Advance previously made
or
proposed to be made in respect of a
Mortgage Loan or REO Property that, in the
good faith business judgment of the
Servicer, the Master Servicer, as successor
servicer, or any successor Master Servicer
including the Trustee, as applicable,
will not or, in the case of a proposed
P&I Advance, would not be ultimately
recoverable from related Late Collections
on such Mortgage Loan or REO Property
as provided herein.
Nonrecoverable Servicing Advance: Any Servicing Advances
previously
made or proposed to be made in respect of a
Mortgage Loan or REO Property,
which, in accordance with Accepted
Servicing Practices, will not or, in the case
of a proposed Servicing Advance, would not
be ultimately recoverable from
related Late Collections.
Notice of Final Distribution: The notice to be provided pursuant
to
Section 11.02 to the effect that final
distribution on any of the Certificates
shall be made only upon presentation and
surrender thereof.
Offered Certificates: As specified in the Preliminary
Statement.
Officer's Certificate: A certificate signed by an officer of
the
Servicer or the Master Servicer, as
applicable, with responsibility for the
servicing of the Mortgage Loans and listed
on a list delivered to the Trustee
and the Securities Administrator pursuant
to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
in-house counsel for the Servicer or any
Subservicer, reasonably acceptable to
the Trustee and/or the Securities
Administrator, as applicable (and/or such
other Persons as may be set forth herein);
provided, that any Opinion of Counsel
relating to (a) qualification of either the
Lower Tier REMIC or the Upper Tier
REMIC or (b) compliance with the REMIC
Provisions, must be (unless otherwise
stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact
independent of the Servicer of the Mortgage
Loans or the Master Servicer, (ii)
does not have any material direct or
indirect financial interest in the Servicer
of the Mortgage Loans or the Master
Servicer or in an affiliate of either and
(iii) is not connected with the Servicer of
the Mortgage Loans or the Master
Servicer as an officer, employee, director
or person performing similar
functions.
Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the
Mortgage Loans, as of the last day of
the related Due Period, is less than 10% of
the Cut-off Date Pool Principal
Balance.
OTS: Office of Thrift Supervision, and any successor thereto.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore
executed and authenticated under
this Agreement except:
(i) Certificates
theretofore canceled by the Securities
Administrator or delivered to the Securities Administrator for
cancellation; and
(ii) Certificates in
exchange for which or in lieu of which
other Certificates have been executed and delivered by the
Securities Administrator pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan
with
a Stated Principal Balance greater than
zero which was not the subject of a
Principal Prepayment in Full prior to such
Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due
Date.
Overcollateralization Amount: As of any Distribution Date, the
excess, if any, of (a) the aggregate Stated
Principal Balance of the Mortgage
Loans for such Distribution Date over (b)
the aggregate of the Class Certificate
Balances of the LIBOR Certificates as of
such Distribution Date (after giving
effect to the payment of the Principal
Remittance Amount on such Certificates on
such Distribution Date).
Overcollateralization Deficiency: With respect to any
Distribution
Date, the excess, if any, of (a) the
Overcollateralization Target Amount
applicable to such Distribution Date over
(b) the Overcollateralization Amount
applicable to such Distribution Date.
Overcollateralization Reduction Amount: With respect to any
Distribution Date, an amount equal to the
lesser of (a) the Excess
Overcollateralization Amount and (b) the
Net Monthly Excess Cash Flow.
Overcollateralization Target Amount: Prior to the Stepdown Date,
an
amount equal to 0.50% of the Cut-off Date
Pool Principal Balance. On and after
the Stepdown Date, an amount equal to the
greater of (i) 1.00% of the aggregate
Stated Principal Balance of the Mortgage
Loans as of the last day of the related
Due Period and (ii) $3,158,334; provided,
however, that if, on any Distribution
Date, a Trigger Event exists, the
Overcollateralization Target Amount shall not
be reduced to the applicable percentage of
the then current aggregate Stated
Principal Balance of the Mortgage Loans
until the Distribution Date on which a
Trigger Event no longer exists. When the
Class Certificate Balance of each Class
of LIBOR Certificates has been reduced to
zero, the Overcollateralization Target
Amount will thereafter equal zero.
Ownership Interest: As to any Residual Certificate, any
ownership
interest in such Certificate including any
interest in such Certificate as the
Holder thereof and any other interest
therein, whether direct or indirect, legal
or beneficial.
P&I Advance: As to any Mortgage Loan or REO Property, any
advance
made by the Servicer in respect of any
Remittance Date representing the
aggregate of all payments of principal and
interest, net of the Servicing Fee,
that were due during the related Due Period
on the Mortgage Loans and that were
delinquent on the related Determination
Date, plus certain amounts representing
assumed payments not covered by any current
net income on the Mortgaged
Properties acquired by foreclosure or deed
in lieu of foreclosure as determined
pursuant to Section 4.01.
Percentage Interest: As to any Certificate, the percentage
interest
evidenced thereby in distributions required
to be made on the related Class,
such percentage interest being set forth on
the face thereof or equal to the
percentage obtained by dividing the
Denomination of such Certificate by the
aggregate of the Denominations of all
Certificates of the same Class.
Permitted Investments: Any one or more of the following
obligations
or securities acquired at a purchase price
of not greater than par, regardless
of whether issued by the Servicer, the
Securities Administrator, the Trustee or
any of their respective Affiliates:
(i) direct
obligations of, or obligations fully guaranteed
as to timely payment of principal and interest by, the United
States
or any agency or instrumentality thereof, provided such
obligations
are backed by the full faith and credit of the United States;
(ii) demand and time
deposits in, certificates of deposit of,
or bankers' acceptances (which shall each have an original
maturity
of not more than 90 days and, in the case of bankers'
acceptances,
shall in no event have an original maturity of more than 365 days
or
a remaining maturity of more than 30 days) denominated in
United
States dollars and issued by, any Depository Institution and
rated
F1+ by Fitch, A-1+ by Standard & Poor's and P-1 by Moody's;
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities
bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of
the
United States of America or any state thereof and that are rated
by
Standard & Poor's and Moody's (in each case, to the extent they
are
designated as Rating Agencies in the Preliminary Statement), and
by
each other Rating Agency that rates such securities, in its
highest
long-term unsecured rating categories at the time of such
investment
or contractual commitment providing for such investment;
(v) commercial
paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable
on
demand or on a specified date not more than 30 days after the
date
of acquisition thereof) that is rated by Standard & Poor's
and
Moody's (in each case, to the extent they are designated as
Rating
Agencies in the Preliminary Statement), and by each other
Rating
Agency
that rates such securities, in its highest short-term
unsecured debt rating available at the time of such investment;
(vi) units of money
market funds, including money market
funds managed or advised by the Trustee, the Securities
Administrator or an Affiliate thereof, that have been rated "Aaa"
by
Moody's, "AAA" by Standard & Poor's and, if rated by Fitch,
"AAA" by
Fitch; and
(vii) if previously confirmed in writing to the Securities
Administrator, any other demand, money market or time deposit,
or
any other obligation, security or investment, as may be
acceptable
to each of the Rating Agencies as a permitted investment of
funds
backing "Aaa" or "AAA" rated securities;
provided, however, that no instrument
described hereunder shall evidence either
the right to receive (a) only interest with
respect to the obligations
underlying such instrument or (b) both
principal and interest payments derived
from obligations underlying such instrument
and the interest and principal
payments with respect to such instrument
provide a yield to maturity at par
greater than 120% of the yield to maturity
at par of the underlying obligations.
Permitted Transferee: Any Person other than (i) the United
States,
any State or political subdivision thereof,
or any agency or instrumentality of
any of the foregoing, (ii) a foreign
government, international organization or
any agency or instrumentality of either of
the foregoing, (iii) an organization
(except certain farmers' cooperatives
described in Section 521 of the Code)
which is exempt from tax imposed by Chapter
1 of the Code (including the tax
imposed by Section 511 of the Code on
unrelated business taxable income) on any
excess inclusions (as defined in Section
860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural
electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the
Code, (v) a Person that is a
Disqualified Non-U.S. Person or a U.S.
Person with respect to whom income from a
Residual Certificate is attributable to a
foreign permanent establishment or
fixed base, within the meaning of an
applicable income tax treaty, of such
Person or any other U.S. Person, (vi) an
"electing large partnership" within the
meaning of Section 775 of the Code and
(vii) any other Person so designated by
the Depositor based upon an Opinion of
Counsel that the Transfer of an Ownership
Interest in a Residual Certificate to such
Person may cause either the Lower
Tier REMIC or the Upper Tier REMIC to fail
to qualify as a REMIC at any time
that the Certificates are outstanding. The
terms "United States", "State" and
"international organization" shall have the
meanings set forth in Section 7701
of the Code or successor provisions. A
corporation will not be treated as an
instrumentality of the United States or of
any State or political subdivision
thereof for these purposes if all of its
activities are subject to tax and, with
the exception of Freddie Mac, a majority of
its board of directors is not
selected by such government unit.
Person: Any individual, corporation, partnership, joint
venture,
association, limited liability company,
joint-stock company, trust,
unincorporated organization or government,
or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary
Statement.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances
of the Mortgage Loans for such
Distribution Date that were Outstanding
Mortgage Loans on the Due Date in the
related Due Period.
Prepayment Charge: Any prepayment premium, penalty or charge
collected by the Servicer with respect to a
Mortgage Loan from a Mortgagor in
connection with any Principal Prepayment
pursuant to the terms of the related
Mortgage Note.
Prepayment Interest Excess: With respect to any Distribution
Date,
any interest collected by the Servicer with
respect to any Mortgage Loan
serviced by the Servicer as to which a
Principal Prepayment occurs from the 1st
day of the month through the 15th day of
the month in which such Distribution
Date occurs and that represents interest
that accrues from the 1st day of such
month to the date of such Principal
Prepayment.
Prepayment Interest Shortfall: With respect to any Distribution
Date, the sum of, for each Mortgage Loan
that was, during the portion of the
related Prepayment Period from the first
day of such Prepayment Period through
the last day of the month preceding the
month in which such Distribution Date
occurs, the subject of a Principal
Prepayment which is not accompanied by an
amount equal to one month of interest that
would have been due on such Mortgage
Loan on the Due Date that occurs during
such Prepayment Period and which was
applied by the Servicer to reduce the
outstanding principal balance of such
Mortgage Loan on a date preceding such Due
Date, an amount equal to the product
of (a) the Mortgage Rate net of the
Servicing Fee Rate for such Mortgage Loan,
(b) the amount of the Principal Prepayment
for such Mortgage Loan, (c) 1/360 and
(d) the number of days commencing on the
date on which such Principal Prepayment
was applied and ending on the last day of
the calendar month in which the
related Prepayment Period begins.
Prepayment Period: With respect to any Distribution Date and (a)
any
Principal Prepayments in Full (including
all unscheduled receipts of principal
on the Mortgage Loans), the period from and
including the 16th day of the month
preceding the month in which such
Distribution Date occurs (or, in the case of
the first Distribution Date, from the
Cut-off Date) to and including the 15th
day of the month in which such Distribution
Date occurs or (b) any partial
Principal Prepayments, the calendar month
preceding the month in which such
Distribution Date occurs.
Principal Payment Amount: For any Distribution Date, the sum of
(i)
the Basic Principal Payment Amount for such
Distribution Date and (ii) the Extra
Principal Payment Amount for such
Distribution Date.
Principal Prepayment: Any full or partial payment or other
recovery
of principal on a Mortgage Loan (including
upon liquidation of a Mortgage Loan)
which is received in advance of its
scheduled Due Date, excluding any Prepayment
Charge thereon and which is not accompanied
by an amount of interest
representing scheduled interest due on any
date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment made by
a
Mortgagor of the entire principal balance
of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution
Date,
the amount equal to the sum of the
following amounts (without duplication) with
respect to the related Due Period: (i) each
scheduled payment of principal on a
Mortgage Loan due during such Due Period
and received by the Servicer on or
prior to the related Determination Date or
advanced by the Servicer for the
related Remittance Date, (ii) all Principal
Prepayments received during the
related Prepayment Period; (iii) all net
Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds on the
Mortgage Loans allocable to principal,
and all Subsequent Recoveries, actually
collected by the Servicer during the
related Prepayment Period; (iv) the portion
of the Repurchase Price allocable to
principal with respect to each Mortgage
Loan repurchased by the Mortgage Loan
Seller or the Purchaser that was
repurchased on or prior to the related
Determination Date; and (v) all
Substitution Adjustment Amounts allocable to
principal with respect to the substitutions
of Mortgage Loans that occur on or
prior to the related Determination Date;
(vi) the allocable portion of the
proceeds received with respect to the
termination of the Trust Fund pursuant to
clause (a) of Section 11.01 (to the extent
such proceeds relate to principal).
Private
Certificates: As specified in the Preliminary Statement.
Prospectus Supplement: The Prospectus Supplement, dated August
24,
2005, relating to the Offered
Certificates.
PTCE 95-60: As defined in Section 5.02(b).
Purchase Agreement: The Mortgage Loan Purchase Agreement, dated
as
of August 1, 2005, between the Depositor
and the Purchaser.
Purchaser: HSBC Bank USA, National Association, a national
banking
association, and its successors in
interest.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If such organization
or a successor is no longer in
existence, "Rating Agency" shall be such
nationally recognized statistical
rating organization, or other comparable
Person, as is designated by the
Depositor, notice of which designation
shall be given to the Trustee and the
Securities Administrator. References herein
to a given rating or rating category
of a Rating Agency shall mean such rating
category without giving effect to any
modifiers. For purposes of Section
12.05(c), the addresses for notices to each
Rating Agency shall be the address
specified therefor in the definition
corresponding to the name of such Rating
Agency, or such other address as either
such Rating Agency may hereafter furnish to
the Depositor and the Securities
Administrator.
Realized Losses: With respect to any date of determination and
any
Liquidated Mortgage Loan, the amount, if
any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan
together with accrued and unpaid
interest thereon exceeds (b) the
Liquidation Proceeds with respect thereto net
of the expenses incurred by the Servicer in
connection with the liquidation of
such Liquidated Mortgage Loan and net of
the amount of unreimbursed Servicing
Advances with respect to such Liquidated
Mortgage Loan.
Record Date: With respect to any Distribution Date, the close
of
business on the Business Day immediately
preceding such Distribution Date;
provided, however, that, for any
Certificate issued in definitive form, the
Record Date shall be the close of business
on the last Business Day of the month
preceding the month in which such
applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.04.
Regular Certificates: As specified in the Preliminary
Statement.
Relief Act Interest Shortfall: With respect to any Distribution
Date
and any Mortgage Loan, any reduction in the
amount of interest collectible on
such Mortgage Loan for the most recently
ended Due Period as a result of the
application of the Servicemembers Civil
Relief Act or any similar state
statutes.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating
to real estate mortgage investment
conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1
of the Code, and related provisions,
and regulations promulgated thereunder, as
the foregoing may be in effect from
time to time as well as provisions of
applicable state laws.
Remittance Date: With respect to any Distribution Date, the 21st
day
of the month in which such Distribution
Date occurs, or, if the 21st is not a
Business Day, the immediately succeeding
Business Day.
REO Disposition: The final sale by the Servicer of any REO
Property.
REO Imputed Interest: As to any REO Property, for any period,
an
amount equivalent to interest (at the
Mortgage Rate net of the Servicing Fee
Rate that would have been applicable to the
related Mortgage Loan had it been
outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date
of acquisition thereof (as such balance is
reduced pursuant to Section 3.17 by
any income from the REO Property treated as
a recovery of principal).
REO Mortgage Loan: A Mortgage Loan where title to the related
Mortgaged Property has been obtained by the
Servicer in the name of the Trustee
on behalf of the Certificateholders.
REO Property: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of
foreclosure in connection with a
defaulted Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan, an amount
equal
to the sum of (i) the unpaid principal
balance of such Mortgage Loan as of the
date of repurchase, (ii) interest on such
unpaid principal balance of such
Mortgage Loan at the Mortgage Rate from the
last date through which interest has
been paid to the date of repurchase, (iii)
all unreimbursed Servicing Advances
and (iv) all expenses incurred by the
Master Servicer, Servicer or Trustee
arising out of the Master Servicer's,
Servicer's or Trustee's enforcement of the
Mortgage Loan Seller's repurchase
obligation hereunder.
Request for Release: The Request for Release submitted by the
Servicer to the Trustee, substantially in
the form of Exhibit J.
Residual Certificates: As specified in the Preliminary
Statement.
Responsible Officer: When used with respect to the Trustee, the
Securities Administrator, the Master
Servicer, any vice president, any assistant
vice president, any assistant secretary,
any assistant treasurer, any associate,
or any other officer of the Trustee, the
Securities Administrator or the Master
Servicer customarily performing functions
similar to those performed by any of
the above designated officers who at such
time shall be officers to whom, with
respect to a particular matter, such matter
is referred because of such
officer's knowledge of and familiarity with
the particular subject and who shall
have direct responsibility for the
administration of this Agreement.
Rolling Three Month Delinquency Rate: With respect to any
Distribution Date, the average of the
Delinquency Rates for each of the three
(or one or two, in the case of the first
and second Distribution Dates)
immediately preceding calendar months.
Rule 144A Letter: As defined in Section 5.02(b).
Scheduled Payment: The scheduled monthly payment on a Mortgage
Loan
due on any Due Date allocable to principal
and/or interest on such Mortgage Loan
which, unless otherwise specified herein,
shall give effect to any related Debt
Service Reduction and any Deficient
Valuation that affects the amount of the
monthly payment due on such Mortgage
Loan.
Securities Act: The Securities Act of 1933, as amended.
Securities Administrator: Wells Fargo, and if a successor
Securities
Administrator is appointed hereunder, such
successor.
Securities Administrator Float Period: With respect to the
Distribution Date and the related amounts
in the Distribution Account, the
period commencing on the Remittance Date
immediately preceding such Distribution
Date and ending on such Distribution
Date.
Senior Interest Payment Amount: With respect to any
Distribution
Date and any Class of Class A Certificates,
the sum of the Interest Payment
Amount and the Interest Carry Forward
Amount, if any, for that Distribution Date
for that Class.
Sequential Trigger Event: With respect to any Distribution Date
exists if (i) for any Distribution Date
prior to September 2007, the aggregate
amount of Realized Losses incurred since
the Cut-off Date through the last day
of the related Prepayment Period divided by
the aggregate Stated Principal
Balance of the Mortgage Loans as of the
Cut-off Date exceeds 1.20%, or (ii) for
any Distribution Date in or after September
2007, a Trigger Event exists.
Servicer: When the term "Servicer" is used in this Agreement
prior
to the Servicing Transfer Date, New
Century, and after the Servicing Transfer
Date, JPMorgan, and their respective
successors in interest, and if a successor
servicer is appointed hereunder, such
successor.
Servicer Remittance Report: As defined in Section 4.03(d).
Servicing Advances: The reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by
the Servicer in the performance of
its servicing obligations in connection
with a default, delinquency or other
unanticipated event, including, but not
limited to, the cost of (i) the
preservation, restoration, inspection and
protection of a Mortgaged Property,
(ii) any enforcement or judicial
proceedings, including foreclosures and
litigation, in respect of a particular
Mortgage Loan, (iii) the management
(including reasonable fees in connection
therewith) and liquidation of any REO
Property and (iv) the performance of its
obligations under Sections 3.01, 3.09,
3.13 and 3.15. The Servicing Advances shall
also include any reasonable
"out-of-pocket" costs and expenses
(including legal fees) incurred by the
Servicer in connection with executing and
recording instruments of satisfaction,
deeds of reconveyance or Assignments of
Mortgage in connection with any
satisfaction or foreclosure in respect of
any Mortgage Loan to the extent not
recovered from the Mortgagor or otherwise
payable under this Agreement and
obtaining or correcting any legal
documentation required to be included in the
Mortgage File and necessary for the
Servicer to perform its obligations under
this Agreement. The Servicer shall not be
required to make any Nonrecoverable
Servicing Advances.
Servicing Fee: With respect to each Mortgage Loan and for any
calendar month, an amount equal to one
month's interest (or in the event of any
payment of interest which accompanies a
Principal Prepayment made by the
Mortgagor during such calendar month,
interest for the number of days covered by
such payment of interest) at the Servicing
Fee Rate on the applicable Stated
Principal Balance of such Mortgage Loan as
of the first day of such calendar
month. Such fee shall be payable monthly,
and shall be prorated for any portion
of a month during which the Mortgage Loan
is serviced by the Servicer under this
Agreement. The Servicing Fee is payable
solely from the interest portion
(including recoveries with respect to
interest from Liquidation Proceeds,
Subsequent Recoveries, Insurance Proceeds,
Condemnation Proceeds and proceeds
received with respect to REO Properties) of
such Scheduled Payment collected by
the Servicer, or as otherwise provided
under Section 3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.500%
per
annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Servicer consisting of
originals or copies of all documents in
the Mortgage File which are not delivered
to the Trustee in the Custodial File
and copies of the Mortgage Loan Documents
set forth in Exhibit K hereto.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and
servicing of the Mortgage Loans whose
name and facsimile signature appear on a
list of servicing officers furnished to
the Master Servicer and the Trustee by the
Servicer on the Closing Date pursuant
to this Agreement, as such list may from
time to time be amended.
Servicing Transfer
Date: With respect to each Mortgage Loan,
September 1, 2005.
Similar Law: As defined in Section 5.02(b).
60+ Day Delinquent Mortgage Loan: Each Mortgage Loan with respect
to
which any portion of a Scheduled Payment
is, as of the last day of the prior Due
Period, two months or more past due
(without giving effect to any grace period),
each Mortgage Loan in foreclosure, each
Mortgage Loan related to REO Property
and each Mortgage Loan where the related
Mortgagor has filed for bankruptcy.
Standard & Poor's: Standard & Poor's Ratings Services, a
division of
The McGraw-Hill Companies, Inc. If Standard
& Poor's is designated as a Rating
Agency in the Preliminary Statement, for
purposes of Section 12.05(c) the
address for notices to Standard &
Poor's shall be Standard & Poor's, 55 Water
Street, New York, New York 10041,
Attention: Residential Mortgage Surveillance
Group - HSI Asset Securitization
Corporation Trust 2005-NC1, or such other
address as Standard & Poor's may
hereafter furnish to the Depositor and the
Securities Administrator.
Standard & Poor's Glossary: The Standard & Poor's
LEVELS(R)
Glossary, as may be in effect from time to
time.
Startup Day: The
Closing Date.
Stated Principal Balance: As to each Mortgage Loan and as of
any
date of determination, (i) the principal
balance of the Mortgage Loan at the
Cut-off Date after giving effect to
payments of principal due on or before such
date (whether or not received), minus (ii)
all amounts previously remitted to
the Securities Administrator with respect
to the related Mortgage Loan
representing payments or recoveries of
principal including advances in respect
of scheduled payments of principal. For
purposes of any Distribution Date, the
Stated Principal Balance of any Mortgage
Loan will give effect to any scheduled
payments of principal received by the
Servicer on or prior to the related
Determination Date or advanced by the
Servicer for the related Remittance Date
and any unscheduled principal payments and
other unscheduled principal
collections received during the related
Prepayment Period, and the Stated
Principal Balance of any Mortgage Loan that
has prepaid in full or has become a
Liquidated Mortgage Loan during the related
Prepayment Period shall be zero.
Stepdown Date: The later to occur of (i) the first Distribution
Date
following the Distribution Date on which
the aggregate Class Certificate
Balances of the Class A Certificates have
been reduced to zero and (ii) the
later to occur of (a) the Distribution Date
in September 2008 and (b) the first
Distribution Date on which the Credit
Enhancement Percentage (calculated for
this purpose only after taking into account
payments of principal applied to
reduce the Stated Principal Balance of the
Mortgage Loans for that Distribution
Date but prior to any applications of
Principal Payment Amounts to the
Certificates on that Distribution Date) is
greater than or equal to 36.20%.
Subsequent Recovery: With respect to any Mortgage Loan or
related
Mortgaged Property that became a Liquidated
Mortgage Loan or was otherwise
disposed of, all amounts received in
respect of such Liquidated Mortgage Loan
after an Applied Realized Loss Amount
related to such Mortgage Loan or Mortgaged
Property is allocated to reduce the Class
Certificate Balance of any Class of
Class M Certificates. Any Subsequent
Recovery that is received during a
Prepayment Period will be included as part
of the Principal Remittance Amount
for the related Distribution Date.
Subservicer: As defined in Section 3.02(a).
Subservicing Account: As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a).
Substitute Mortgage Loan: A Mortgage Loan substituted by the
Mortgage Loan Seller or the Purchaser for a
Deleted Mortgage Loan which must, on
the date of such substitution, as confirmed
in a Request for Release,
substantially in the form of Exhibit J, (i)
have a Stated Principal Balance,
after deduction of all Scheduled Payments
due in the month of substitution, not
in excess of the Stated Principal Balance
of the Deleted Mortgage Loan; (ii) be
accruing interest at a rate not lower than
and not more than 1% higher than that
of the Deleted Mortgage Loan; (iii) have a
remaining term to maturity not
greater than (and not more than one year
less than) that of the Deleted Mortgage
Loan; (iv) be of the same type as the
Deleted Mortgage Loan; and (v) comply with
each representation and warranty set forth
in Section 2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
Tax Matters Person: The Holder of the Class R Certificates
designated as "tax matters person" of the
Lower Tier REMIC and the Upper Tier
REMIC, respectively, in the manner provided
under Treasury Regulations Section
1.860F-4(d) and Treasury Regulations
Section 301.6231(a)(7)-1.
Tax Service Contract: As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on
the
Bridge Telerate Service (or such other page
as may replace that page on that
service for displaying comparable rates or
prices).
Termination Price: As defined in Section 11.01.
Total Monthly Excess Spread: As to any Distribution Date, an
amount
equal to the excess, if any, of (i) the
interest on the Mortgage Loans (other
than Prepayment Interest Excesses) received
by the Servicer on or prior to the
related Determination Date or advanced by
the Servicer for the related
Remittance Date (net of Expense Fees) over
(ii) the sum of the amounts payable
to the Certificates pursuant to Section
4.02(a)(i) on such Distribution Date.
Transfer: Any direct or indirect transfer or sale of any
Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: Either a Cumulative Loss Trigger Event or a
Delinquency Trigger Event.
Trust: The express trust created hereunder in Section 2.01(c).
Trust Fund: The corpus of the trust created hereunder consisting
of
(i) the Mortgage Loans and all interest and
principal with respect thereto
received on or after the related Cut-off
Date, other than such amounts which
were due on the Mortgage Loans on or prior
to the related Cut-off Date; (ii) the
Collection Account, Excess Reserve Fund
Account, the Distribution Account, and
all amounts deposited therein pursuant to
the applicable provisions of this
Agreement; (iii) property that secured a
Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or
otherwise; (iv) the Cap Agreements;
(v) the Depositor's rights under the
Purchase Agreement; and (vi) all proceeds
of the conversion, voluntary or
involuntary, of any of the foregoing.
Trustee: Deutsche Bank National Trust Company, a national
banking
association, and its successors in interest
and, if a successor trustee is
appointed hereunder, such successor.
Underwriters' Exemption: Any exemption listed under footnote 1
of,
and amended by, Prohibited Transaction
Exemption 96-84, 61 Fed. Reg. 58234
(1996), as amended by PTE 97-34, 62 Fed.
Reg. 39021 (1997), PTE 2000-58, 65 Fed.
Reg. 67765 (2000) and PTE 2002-41, 67 Fed.
Reg. 54487 (2002), or any successor
exemption.
Unpaid Realized Loss Amount: With respect to any Class of Class
M
Certificates and as to any Distribution
Date, is the excess of (i) Applied
Realized Loss Amounts with respect to such
Class over (ii) the sum of (a) all
distributions in reduction of such Applied
Realized Loss Amounts on all previous
Distribution Dates, and (b) the amount by
which the Class Certificate Balance of
such Class has been increased due to the
distribution of any Subsequent
Recoveries on all previous Distribution
Dates. Any amounts distributed to a
Class of Class M Certificates in respect of
any Unpaid Realized Loss Amount will
not be applied to reduce the Class
Certificate Balance of such Class.
Upper Tier REMIC: As described in the Preliminary Statement.
Upper Tier REMIC Regular Interest: As described in the
Preliminary
Statement.
U.S. Person: (i) A citizen or resident of the United States; (ii)
a
corporation (or entity treated as a
corporation for tax purposes) created or
organized in the United States or under the
laws of the United States or of any
State thereof, including, for this purpose,
the District of Columbia; (iii) a
partnership (or entity treated as a
partnership for tax purposes) organized in
the United States or under the laws of the
United States or of any State
thereof, including, for this purpose, the
District of Columbia (unless provided
otherwise by future Treasury regulations);
(iv) an estate whose income is
includible in gross income for United
States income tax purposes regardless of
its source; or (v) a trust, if a court
within the United States is able to
exercise primary supervision over the
administration of the trust and one or
more U.S. Persons have authority to control
substantial decisions of the trust.
Notwithstanding the last clause of the
preceding sentence, to the extent
provided in Treasury regulations, certain
trusts in existence on August 20,
1996, and treated as U.S. Persons prior to
such date, may elect to continue to
be U.S. Persons.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any
Certificate. As of any date of
determination, (a) 1% of all Voting Rights
shall be allocated to the Class X
Certificates, if any (such Voting Rights to
be allocated among the holders of
Certificates of each such Class in
accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights
shall be allocated to the Class P
Certificates, if any, and (c) the remaining
Voting Rights shall be allocated
among Holders of the remaining Classes of
Certificates in proportion to the
Certificate Balances of their respective
Certificates on such date.
Wells Fargo: Wells Fargo Bank, N.A., a national banking
association,
and its successors in interest.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,
concurrently with the execution and
delivery hereof, hereby sells, transfers,
assigns, sets over and otherwise conveys to
the Trustee for the benefit of the
Certificateholders, without recourse, all
the right, title and interest of the
Depositor in and to the Trust Fund. On the
Closing Date, the Depositor shall
pay, without any right of reimbursement
from the Trust, to the Cap Provider the
"Fixed Amount" (as defined in the related
Cap Agreement) due and payable to the
Cap Provider pursuant to the terms of each
Cap Agreement.
(b) In
connection with the transfer and assignment of each
Mortgage Loan, the Depositor has delivered
or caused to be delivered to the
Trustee for the benefit of the
Certificateholders the following documents or
instruments with respect to each Mortgage
Loan so assigned:
(i) the original
Mortgage Note bearing all intervening
endorsements necessary to show a complete chain of endorsements
from the
original
payee, endorsed in blank, "Pay to the order of _____________,
without
recourse", and, if previously endorsed, signed in the name of
the
last
endorsee by a duly qualified officer of the last endorsee;
(ii) the original
Assignment of Mortgage for each Mortgage Loan, in
form and
substance acceptable for recording. The Mortgage shall be
assigned,
with assignee's name left blank;
(iii) the original of each guarantee executed in connection with
the
Mortgage
Note, if any;
(iv) the original
recorded Mortgage, with evidence of recording
thereon.
If in connection with any Mortgage Loan, the original Mortgage
cannot be
delivered with evidence of recording thereon on or prior to the
Closing
Date because of a delay caused by the public recording office
where such
Mortgage has been delivered for recordation or because such
Mortgage
has been lost or because such public recording office retains
the
original
recorded Mortgage, the Mortgage Loan Seller shall deliver or
cause to
be delivered to the Trustee, (A) in the case of a delay caused
by
the public
recording office, a copy of such Mortgage certified by the
Mortgage
Loan Seller, escrow agent, title insurer or closing attorney to
be a true
and complete copy of the original recorded Mortgage and (B) in
the case
where a public recording office retains the original recorded
Mortgage or in the
case where a Mortgage is lost after recordation in a
public
recording office, a copy of such Mortgage certified by such
public
recording
office to be a true and complete copy of the original recorded
Mortgage;
(v) originals or
a certified copy of each modification agreement,
if
any;
(vi) the originals of
all intervening assignments of Mortgage with
evidence
of recording thereon evidencing a complete chain of ownership
from the
originator of the Mortgage Loan to the last assignee, or if any
such
intervening assignment of Mortgage has not been returned from
the
applicable
public recording office or has been lost or if such public
recording
office retains the original recorded intervening assignments of
Mortgage,
a photocopy of such intervening assignment of Mortgage,
together
with (A)
in the case of a delay caused by the public recording office,
an
officer's
certificate of the Mortgage Loan Seller, escrow agent, closing
attorney
or the title insurer insuring the Mortgage stating that such
intervening assignment of Mortgage has been delivered to the
appropriate
public
recording office for recordation and that such original
recorded
intervening assignment of Mortgage or a copy of such
intervening
assignment
of Mortgage certified by the appropriate public recording
office to
be a true and complete copy of the original recorded
intervening
assignment
of Mortgage will be promptly delivered to the Trustee upon
receipt
thereof by the party delivering the officer's certificate or by
the
Mortgage Loan Seller; or (B) in the case of an intervening
assignment
of
mortgage where a public recording office retains the original
recorded
intervening assignment of Mortgage or in the case where an
intervening
assignment
of Mortgage is lost after recordation in a public recording
office, a
copy of such intervening assignment of Mortgage with recording
information thereon certified by such public recording office to be
a true
and
complete copy of the original recorded intervening assignment
of
Mortgage;
(vii) if the Mortgage Note, the Mortgage, any Assignment of
Mortgage
or any
other related document has been signed by a Person on behalf of
the
Mortgagor,
the copy of the power of attorney or other instrument that
authorized
and empowered such Person to sign;
(viii) the original lender's title insurance policy (or a
marked
title
insurance commitment, in the event that an original lender's
title
insurance
policy has not yet been issued) in the form of an ALTA mortgage
title
insurance policy, containing each of the endorsements required
by
Fannie Mae
and insuring the Trustee and its successors and assigns as to
the first
priority lien of the Mortgage in the original principal amount
of the
Mortgage Loan; and
(ix) original of any
security agreement, chattel mortgage or
equivalent
document executed in connection with the Mortgage, if any.
To the extent not previously delivered to the Purchaser pursuant
to
the New Century Purchase Agreement, the
Mortgage Loan Seller shall promptly upon
receipt from the respective recording
office cause to be delivered to the
Trustee the original recorded document
described in, (iv) and (vi) above.
From time to time, the Mortgage Loan Seller, the Depositor or
the
Servicer, as applicable, shall forward to
the Trustee, additional original
documents, additional documents evidencing
an assumption, modification,
consolidation or extension of a Mortgage
Loan, in accordance with the terms of
this Agreement upon receipt of such
documents. All such mortgage documents held
by the Trustee as to each Mortgage Loan
shall constitute the "Custodial File".
To the extent not previously delivered to the Purchaser pursuant
to
the New Century Purchase Agreement, on or
prior to the Closing Date, the
Mortgage Loan Seller shall deliver to the
Trustee, Assignments of Mortgages, in
blank, for each Mortgage Loan. No later
than thirty (30) Business Days following
the later of the Closing Date and the date
of receipt by the Servicer of the
complete recording information for a
Mortgage, the Servicer shall promptly
submit or cause to be submitted for
recording, at the expense of the Mortgage
Loan Seller and at no expense to the Trust
Fund, the Trustee, the Servicer or
the Depositor, in the appropriate public
office for real property records, each
Assignment of Mortgage referred to in
Section 2.01(b)(ii). Notwithstanding the
foregoing, however, for administrative
convenience and facilitation of servicing
and to reduce closing costs, the
Assignments of Mortgage shall not be required
to be completed and submitted for recording
with respect to any Mortgage Loan if
the Trustee and each Rating Agency have
received an Opinion of Counsel,
satisfactory in form and substance to the
Trustee and each Rating Agency to the
effect that the recordation of such
Assignments of Mortgage in any specific
jurisdiction is not necessary to protect
the Trustee's interest in the related
Mortgage Note. If the Assignment of
Mortgage is to be recorded, the Mortgage
shall be assigned by the Mortgage Loan
Seller, at the expense of the Mortgage
Loan Seller, to "Deutsche Bank National
Trust Company, as trustee under the
Pooling and Servicing Agreement dated as of
August 1, 2005, HSI Asset
Securitization Corporation Trust 2005-NC1".
In the event that any such
Assignment of Mortgage is lost or returned
unrecorded because of a defect
therein, the Mortgage Loan Seller shall
promptly cause to be delivered a
substitute Assignment of Mortgage to cure
such defect and thereafter cause each
such assignment to be duly recorded at no
expense to the Trust Fund.
In the event that such original or copy of any document
submitted
for recordation to the appropriate public
recording office is not so delivered
to the Trustee within 180 days (or such
other time period as may be required by
any Rating Agency) following the Closing
Date, and in the event that the
Mortgage Loan Seller does not cure such
failure within 30 days of discovery or
receipt of written notification of such
failure from the Depositor, the related
Mortgage Loan shall, upon the request of
the Depositor, be repurchased by the
Mortgage Loan Seller at the price and in
the manner specified in Section 2.03.
The foregoing repurchase obligation shall
not apply in the event that the
Mortgage Loan Seller cannot deliver such
original or copy of any document
submitted for recordation to the
appropriate public recording office within the
specified period due to a delay caused by
the recording office in the applicable
jurisdiction; provided, that the Mortgage
Loan Seller shall instead deliver a
recording receipt of such recording office
or, if such recording receipt is not
available, an officer's certificate of an
officer of the Mortgage Loan Seller,
confirming that such document has been
accepted for recording.
Notwithstanding anything to the contrary contained in this
Section
2.01, in those instances where the public
recording office retains or loses the
original Mortgage or assignment after it
has been recorded, the obligations of
the Mortgage Loan Seller shall be deemed to
have been satisfied upon delivery by
the Mortgage Loan Seller to the Trustee,
prior to the Closing Date of a copy of
such Mortgage or assignment, as the case
may be, certified (such certification
to be an original thereof) by the public
recording office to be a true and
complete copy of the recorded original
thereof.
(c) The
Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws
of the State of New York, an express
trust (the "Trust") to be known, for
convenience, as "HSI Asset Securitization
Corporation Trust 2005-NC1" and Deutsche
Bank National Trust Company is hereby
appointed as Trustee in accordance with the
provisions of this Agreement. The
parties hereto acknowledge and agree that
it is the policy and intention of the
Trust to acquire only Mortgage Loans
meeting the requirements set forth in this
Agreement, including without limitation,
the representation and warranty set
forth in paragraph (44) of Schedule IV.
(d) The Trust
shall have the capacity, power and authority, and
the Trustee on behalf of the Trust is
hereby authorized, to accept the sale,
transfer, assignment, set over and
conveyance by the Depositor to the Trust of
all the right, title and interest of the
Depositor in and to the Trust Fund
(including, without limitation, the
Mortgage Loans) pursuant to Section 2.01(a).
The Securities Administrator on behalf of
the Trust is hereby authorized and
directed to enter into the Cap
Agreements.
Section 2.02 Acceptance by the Trustee of the Mortgage Loans.
The
Trustee shall acknowledge, on the Closing
Date, receipt by the Trustee, of the
documents identified in the Initial
Certification in the form annexed hereto as
Exhibit E ("Initial Certification"), and
declares that it holds and will hold
such documents and the other documents
delivered to it pursuant to Section 2.01,
and that it holds or will hold such other
assets as are included in the Trust
Fund, in trust for the exclusive use and
benefit of all present and future
Certificateholders. The Trustee shall
maintain possession of the related
Mortgage Notes in the State of California,
unless otherwise permitted by the
Rating Agencies.
In connection with the Closing Date, the Trustee shall be
required
to deliver via facsimile (with original to
follow the next Business Day) to the
Depositor an Initial Certification prior to
the Closing Date, or, as the
Depositor agrees on the Closing Date,
certifying receipt of a Mortgage Note and
Assignment of Mortgage for each Mortgage
Loan. The Trustee shall not be
responsible to verify the validity,
sufficiency or genuineness of any document
in any Custodial File.
Within 90 days after the Closing Date, the Trustee shall
ascertain
that all documents identified in the
Document Certification and Exception Report
in the form attached hereto as Exhibit F
are in its possession, and shall
deliver to the Depositor, JPMorgan and New
Century a Document Certification and
Exception Report, in the form annexed
hereto as Exhibit F, to the effect that,
as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage
Loan specifically identified in such
certification as an exception and not
covered by such certification): (i) all
documents identified in the Document
Certification and Exception Report and
required to be reviewed by it are in its
possession; (ii) such documents have
been reviewed by it and appear regular on
their face and relate to such Mortgage
Loan; (iii) based on its examination and
only as to the foregoing documents, the
information set forth in items (1), (2),
(3), (15), (18) and (22) of the Data
Tape Information respecting such Mortgage
Loan is correct; and (iv) each
Mortgage Note has been endorsed as provided
in Section 2.01 of this Agreement.
The Trustee shall not be responsible to
verify the validity, sufficiency or
genuineness of any document in any
Custodial File.
The Trustee shall retain possession and custody of each
Custodial
File in accordance with and subject to the
terms and conditions set forth
herein. The Servicer shall promptly deliver
to the Trustee, upon the execution
or receipt thereof, the originals of such
other documents or instruments
constituting the Custodial File as come
into the possession of the Servicer from
time to time.
The Mortgage Loan Seller shall deliver to the Servicer copies of
all
trailing documents required to be included
in the Custodial File at the same
time the original or certified copies
thereof are delivered to the Trustee,
including but not limited to such documents
as the title insurance policy and
any other Mortgage Loan documents upon
return from the public recording office.
The documents shall be delivered by the
Mortgage Loan Seller at the Mortgage
Loan Seller's expense to the Servicer.
Section 2.03 Representations, Warranties and Covenants of the
Mortgage Loan Seller and the Servicer;
Remedies for Breaches of Representations
and Warranties with Respect to the Mortgage
Loans. (a) JPMorgan and New Century,
severally and not jointly, hereby make the
representations and warranties set
forth in Schedule II and Schedule III
hereto, respectively, to the Depositor,
the Master Servicer, the Securities
Administrator and the Trustee, as of the
Closing Date.
(b) The Mortgage
Loan Seller hereby makes the representations and
warranties set forth in Schedule IV and
Schedule V hereto to the Depositor, the
Master Servicer, the Securities
Administrator and the Trustee, as of the
Servicing Transfer Date and the Closing
Date, respectively.
(c) It is
understood and agreed by JPMorgan, New Century and the
Mortgage Loan Seller that the
representations and warranties set forth in this
Section 2.03 shall survive the transfer of
the Mortgage Loans by the Depositor
to the Trustee on the Closing Date, and
shall inure to the benefit of the
Depositor and the Trustee notwithstanding
any restrictive or qualified
endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or
failure to examine any Mortgage File. Upon
discovery by any of the Mortgage Loan
Seller, the Depositor, the Securities
Administrator, the Trustee, the Master
Servicer, JPMorgan or New Century of a
breach of any of the foregoing
representations and warranties, the party
discovering such breach shall give
prompt written notice to the others.
(d) Within 30
days of the earlier of either discovery by or notice
to the Mortgage Loan Seller that any
Mortgage Loan does not conform to the
requirements as determined in the Trustee's
review of the related Custodial File
or within 60 days of the earlier of either
discovery by or notice to the
Mortgage Loan Seller of any breach of a
representation or warranty set forth in
Section 2.03(b) that materially and
adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the
Certificateholders therein, the
Mortgage Loan Seller shall use its best
efforts to cause to be remedied a
material defect in a document constituting
part of a Mortgage File or promptly
to cure such breach in all material
respects and, if such defect or breach
cannot be remedied, the Mortgage Loan
Seller shall, at the Depositor's option as
specified in writing and provided to the
Mortgage Loan Seller and the Trustee,
(i) if such 30- or 60-day period, as
applicable, expires prior to the second
anniversary of the Closing Date, remove
such Mortgage Loan (a "Deleted Mortgage
Loan") from the Trust Fund and substitute
in its place a Substitute Mortgage
Loan, in the manner and subject to the
conditions set forth in this Section
2.03; or (ii) repurchase such Mortgage Loan
at the Repurchase Price; provided,
however, that any such substitution
pursuant to clause (i) above shall not be
effected prior to the delivery to the
Trustee of a Request for Release
substantially in the form of Exhibit J, and
the delivery of the Mortgage File to
the Trustee for any such Substitute
Mortgage Loan. Notwithstanding the
foregoing, a breach (i) which causes a
Mortgage Loan not to constitute a
"qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code or
(ii) by the Mortgage Loan Seller of any of
the representations and warranties
set forth in clause (44), (47), (54), (56),
(57), (58), (59), (63), (82) or (83)
of Schedule IV, in each case, will be
deemed automatically to materially and
adversely affect the value of such Mortgage
Loan and the interests of the
Trustee and Certificateholders in such
Mortgage Loan. In the event that the
Trustee receives notice of a breach by the
Mortgage Loan Seller of any of the
representations and warranties set forth in
clause (44), (47), (54), (56), (57),
(58), (59), (62), (63), (82) or (83) of
Schedule IV, the Trustee shall give
notice of such breach to the Mortgage Loan
Seller and request the Mortgage Loan
Seller to repurchase the Mortgage Loan at
the Repurchase Price within sixty (60)
days of the Mortgage Loan Seller receipt of
such notice. The Mortgage Loan
Seller shall repurchase each such Mortgage
Loan within 60 days of the earlier of
discovery or receipt of notice with respect
to each such Mortgage Loan.
(e) With respect
to any Substitute Mortgage Loan or Loans, the
Mortgage Loan Seller shall deliver to the
Trustee for the benefit of the
Certificateholders the Mortgage Note, the
Mortgage, the related assignment of
the Mortgage, and such other documents and
agreements as are required by Section
2.01, with the Mortgage Note endorsed and
the Mortgage assigned as required by
Section 2.01. No substitution is permitted
to be made with respect to any
Distribution Date after the end of the
related Prepayment Period. Scheduled
Payments due with respect to Substitute
Mortgage Loans in the Due Period of
substitution shall not be part of the Trust
Fund and will be retained by the
Mortgage Loan Seller on the next succeeding
Distribution Date. For the Due
Period of substitution, distributions to
Certificateholders will include the
Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and
thereafter the Mortgage Loan Seller shall
be entitled to retain all amounts
received in respect of such Deleted
Mortgage Loan.
(f) The Servicer
shall amend the Mortgage Loan Schedule for the
benefit of the Certificateholders to
reflect the removal of such Deleted
Mortgage Loan and the substitution of the
Substitute Mortgage Loan or Loans and
the Servicer shall deliver the amended
Mortgage Loan Schedule to the Trustee.
Upon such substitution, the Substitute
Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all
respects, and the Mortgage Loan Seller
shall be deemed to have made with respect
to such Substitute Mortgage Loan or
Loans, as of the date of substitution, the
representations and warranties made
pursuant to Section 2.03(b) with respect to
such Mortgage Loan. Upon any such
substitution and the deposit to the
Collection Account of the amount required to
be deposited therein in connection with
such substitution as described in the
following paragraph, the Trustee shall
release the Mortgage File held for the
benefit of the Certificateholders relating
to such Deleted Mortgage Loan to the
Mortgage Loan Seller and shall execute and
deliver at the Mortgage Loan Seller's
direction such instruments of transfer or
assignment prepared by the Mortgage
Loan Seller, in each case without recourse,
as shall be necessary to vest title
in the Mortgage Loan Seller, of the
Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this
Section 2.03.
(g)
For any month in
which the Mortgage Loan Seller substitutes
one or more Substitute Mortgage Loans for
one or more Deleted Mortgage Loans,
the Servicer will determine the amount (if
any) by which the aggregate unpaid
principal balance of all such Substitute
Mortgage Loans as of the date of
substitution is less than the aggregate
unpaid principal balance of all such
Deleted Mortgage Loans. The amount of such
shortage plus an amount equal to the
aggregate of any unreimbursed Advances with
respect to such Deleted Mortgage
Loans (collectively, the "Substitution
Adjustment Amount") shall be remitted by
the Mortgage Loan Seller to the Servicer
for deposit into the Collection Account
on or before the Distribution Account
Deposit Date for the Distribution Date in
the month succeeding the calendar month
during which the related Mortgage Loan
became required to be purchased or replaced
hereunder.
(h) In addition
to such repurchase or substitution obligation
referred to in Section 2.03(d), the
Mortgage Loan Seller shall indemnify the
Depositor, any of its Affiliates, the
Master Servicer, the Servicer, the
Securities Administrator, the Trustee and
the Trust and hold such parties
harmless against any losses, damages,
penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs,
judgments and other costs and
expenses (including, without limitation,
any taxes payable by the Trust)
resulting from any third party claim,
demand, defense or assertion based on or
grounded upon, or resulting from, a breach
by the Mortgage Loan Seller of any of
its representations and warranties or
obligations contained in this Agreement.
(i) The Servicer
shall amend the Mortgage Loan Schedule for the
benefit of the Certificateholders to
reflect the removal of such Deleted
Mortgage Loan and the Servicer shall
deliver the amended Mortgage Loan Schedule
to the Trustee, the Master Servicer and the
Securities Administrator.
(j) In the event
that a Mortgage Loan shall have been repurchased
pursuant to this Agreement or the Purchase
Agreement, the proceeds from such
repurchase shall be deposited by the
Servicer in the Collection Account pursuant
to Section 3.10 on or before the Remittance
Date for the Distribution Date in
the month following the month during which
the Mortgage Loan Seller became
obligated to repurchase or replace such
Mortgage Loan and upon such deposit of
the Repurchase Price, and receipt of a
Request for Release in the form of
Exhibit J hereto, the Trustee shall release
the related Custodial File held for
the benefit of the Certificateholders to
such Person as directed by the
Servicer, and the Trustee shall execute and
deliver at such Person's direction
such instruments of transfer or assignment
prepared by such Person, in each case
without recourse, as shall be necessary to
transfer title from the Trustee. In
accordance with Section 12.05(b), the
Securities Administrator shall promptly
notify each Rating Agency of a purchase of
a Mortgage Loan pursuant to this
Section 2.03.
It is understood and agreed that the obligation of the Mortgage
Loan
Seller under this Agreement to cure,
repurchase or substitute any Mortgage Loan
as to which a breach of a representation
and warranty has occurred and is
continuing, together with any related
indemnification obligations of the
Mortgage Loan Seller set forth in Section
2.03(h), shall constitute the sole
remedies against such Person respecting
such breach available to
Certificateholders, the Depositor and any
of its Affiliates, or the Trustee on
their behalf.
The provisions of this Section 2.03 shall survive delivery of
the
respective Custodial Files to the Trustee
for the benefit of the
Certificateholders.
Section 2.04 Execution and Delivery of Certificates. The
Trustee
acknowledges the transfer and assignment to
it of the Trust Fund and,
concurrently with such transfer and
assignment, the Securities Administrator has
executed and delivered to or upon the order
of the Depositor, the Certificates
in authorized denominations evidencing
directly or indirectly the entire
ownership of the Trust Fund. The Trustee
agrees to hold the Trust Fund and
exercise the rights referred to above for
the benefit of all present and future
Holders of the Certificates.
Section 2.05 REMIC Matters. The Preliminary Statement sets forth
the
designations for federal income tax
purposes of all interests created hereby.
The "Startup Day" for purposes of the REMIC
Provisions shall be the Closing
Date. The "latest possible maturity date"
is the Distribution Date occurring in
July 2035, which is the Distribution Date
in the month following the month in
which the latest Mortgage Loan maturity
date occurs.
Section 2.06 Representations and Warranties of the Depositor.
The
Depositor hereby represents, warrants and
covenants to the Trustee, the Master
Servicer, JPMorgan, New Century and the
Securities Administrator that as of the
date of this Agreement or as of such date
specifically provided herein:
(a)
The Depositor is
a corporation duly organized, validly
existing and in good standing under the
laws of the State of Delaware;
(b) The
Depositor has the power and authority to convey the
Mortgage Loans and to execute, deliver and
perform, and to enter into and
consummate transactions contemplated by,
this Agreement;
(c) This
Agreement has been duly and validly authorized, executed
and delivered by the Depositor, all
requisite company action having been taken,
and, assuming the due authorization,
execution and delivery hereof by the other
parties hereto, constitutes or will
constitute the legal, valid and binding
agreement of the Depositor, enforceable
against the Depositor in accordance with
its terms, except as such enforcement may
be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar
laws relating to or affecting the
rights of creditors generally, and by
general equity principles (regardless of
whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent,
approval, authorization or order of, or
registration or filing with, or notice to,
any governmental authority or court
is required for the execution, delivery and
performance of or compliance by the
Depositor with this Agreement or the
consummation by the Depositor of any of the
transactions contemplated hereby, except as
have been received or obtained on or
prior to the Closing Date;
(e) None of the
execution and delivery of this Agreement, the
consummation of the transactions
contemplated hereby or thereby, or the
fulfillment of or compliance with the terms
and conditions of this Agreement,
(i) conflicts or will conflict with or
results or will result in a breach of, or
constitutes or will constitute a default or
results or will result in an
acceleration under (A) the charter or
bylaws of the Depositor, or (B) of any
term, condition or provision of any
material indenture, deed of trust, contract
or other agreement or instrument to which
the Depositor or any of its
subsidiaries is a party or by which it or
any of its subsidiaries is bound; (ii)
results or will result in a violation of
any law, rule, regulation, order,
judgment or decree applicable to the
Depositor of any court or governmental
authority having jurisdiction over the
Depositor or its subsidiaries; or (iii)
results in the creation or imposition of
any lien, charge or encumbrance which
would have a material adverse effect upon
the Mortgage Loans or any documents or
instruments evidencing or securing the
Mortgage Loans;
(f) There are no
actions, suits or proceedings before or against
or investigations of, the Depositor
pending, or to the knowledge of the
Depositor, threatened, before any court,
administrative agency or other
tribunal, and no notice of any such action,
which, in the Depositor's reasonable
judgment, might materially and adversely
affect the performance by the Depositor
of its obligations under this Agreement, or
the validity or enforceability of
this Agreement;
(g) The
Depositor is not in default with respect to any order or
decree of any court or any order,
regulation or demand of any federal, state,
municipal or governmental agency that would
materially and adversely affect its
performance hereunder; and
(h) Immediately
prior to the transfer and assignment by the
Depositor to the Trustee on the Closing
Date, the Depositor had good title to,
and was the sole owner of each Mortgage
Loan, free of any interest of any other
Person, and the Depositor has transferred
all right, title and interest in each
Mortgage Loan to the Trustee. The transfer
of the Mortgage Note and the Mortgage
as and in the manner contemplated by this
Agreement is sufficient either (i)
fully to transfer to the Trustee, for the
benefit of the Certificateholders, all
right, title, and interest of the Depositor
thereto as note holder and mortgagee
or (ii) to grant to the Trustee, for the
benefit of the Certificateholders, the
security interest referred to in Section
12.04.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.06
shall survive delivery of the
respective Mortgage Files to the Trustee or
to a custodian, as the case may be,
and shall inure to the benefit of the
Trustee.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicer to Service Mortgage Loans. (a) For and on
behalf of the Certificateholders, the
Servicer shall service and administer the
Mortgage Loans in accordance with the terms
of this Agreement and the respective
Mortgage Loans and, to the extent
consistent with such terms, in accordance with
Accepted Servicing Practices, but without
regard to:
(i) any
relationship that the Servicer, any Subservicer or any
Affiliate
of the Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or
non-ownership of any Certificate by the
Servicer
or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing
Advances;
or
(iv) the Servicer's or
any Subservicer's right to receive
compensation for its services hereunder or with respect to any
particular
transaction.
To the extent consistent with the foregoing, the Servicer shall
seek
to maximize the timely and complete
recovery of principal and interest on the
Mortgage Notes. Subject only to the
above-described servicing standards and the
terms of this Agreement and of the
respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone
or through Subservicers as provided
in Section 3.02, to do or cause to be done
any and all things in connection with
such servicing and administration which it
may deem necessary or desirable.
Without limiting the generality of the
foregoing, the Servicer in its own name
or in the name of a Subservicer is hereby
authorized and empowered by the
Trustee when the Servicer believes it
appropriate in its best judgment in
accordance with Accepted Servicing
Practices, to execute and deliver any and all
instruments of satisfaction or
cancellation, or of partial or full release or
discharge, and all other comparable
instruments, with respect to the Mortgage
Loans and the Mortgaged Properties and to
institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as
to convert the ownership of such
properties, and to hold or cause to be held
title to such properties, on behalf
of the Trustee. The Servicer shall at its
own expense be responsible for
preparing and recording all lien releases
and mortgage satisfactions in
accordance with state and local
regulations. The Servicer shall service and
administer the Mortgage Loans in accordance
with applicable state and federal
law and shall provide to the Mortgagors any
reports required to be provided to
them thereby. The Servicer shall also
comply in the performance of this
Agreement with all reasonable rules and
requirements of each insurer under any
standard hazard insurance policy. Subject
to Section 3.16, the Trustee shall
execute, at the written request of the
Servicer, and furnish to the Servicer and
any Subservicer such documents provided to
the Trustee as are necessary or
appropriate to enable the Servicer or any
Subservicer to carry out their
servicing and administrative duties
hereunder, and the Trustee hereby grants to
the Servicer, and this Agreement shall
constitute, a power of attorney to carry
out such duties including a power of
attorney to take title to Mortgaged
Properties after foreclosure on behalf of
the Trustee. The Trustee shall execute
a separate power of attorney, furnished to
it by the Servicer, in favor of the
Servicer for the purposes described herein
to the extent necessary or desirable
to enable the Servicer to perform its
duties hereunder. The Trustee shall not be
liable for the actions of the Servicer or
any Subservicers under such powers of
attorney. Notwithstanding anything
contained herein to the contrary, no Servicer
or Subservicer shall without the Trustee's
consent: (i) initiate any action,
suit or proceeding solely under the
Trustee's name without indicating such
Servicer's or Subservicer's, as applicable,
representative capacity, or (ii)
knowingly take any action with the intent
to, or which actually does cause, the
Trustee to be registered to do business in
any state.
(b) Subject to
Section 3.09(b), in accordance with the standards
of the preceding paragraph, the Servicer
shall advance or cause to be advanced
funds as necessary for the purpose of
effecting the timely payment of taxes and
assessments on the Mortgaged Properties,
which advances shall be Servicing
Advances reimbursable in the first instance
from related collections from the
Mortgagors pursuant to Section 3.09(b), and
further as provided in Section 3.11.
Any cost incurred by the Servicer or by
Subservicers in effecting the timely
payment of taxes and assessments on a
Mortgaged Property shall not be added to
the unpaid principal balance of the related
Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so
permit.
(c)
Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future
advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and
the Servicer shall not (i) permit any
modification with respect to any Mortgage
Loan that would change the Mortgage
Rate, reduce or increase the principal
balance (except for reductions resulting
from actual payments of principal) or
change the final maturity date on such
Mortgage Loan (except for a reduction of
interest payments resulting from the
application of the Servicemembers Civil
Relief Act or any similar state
statutes) or (ii) permit any modification,
waiver or amendment of any term of
any Mortgage Loan that would both (A)
effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the
Code (or final, temporary or proposed
Treasury regulations promulgated
thereunder) and (B) cause either the Upper Tier
REMIC or the Lower Tier REMIC to fail to
qualify as a REMIC under the Code or
the imposition of any tax on "prohibited
transactions" or "contributions after
the startup day" under the REMIC
Provisions, or (iii) except as provided in
Section 3.07(a), waive any Prepayment
Charges.
(d) The Servicer
may delegate its responsibilities under this
Agreement; provided, however, that no such
delegation shall release the Servicer
from the responsibilities or liabilities
arising under this Agreement.
Section 3.02 Subservicing Agreements between the Servicer and
Subservicers. (a) The Servicer may enter
into subservicing agreements with
subservicers (each, a "Subservicer"), for
the servicing and administration of
the Mortgage Loans ("Subservicing
Agreements"). The Trustee shall not be
required to review or consent to such
Subservicing Agreements and shall have no
liability in connection therewith.
(b) Each
Subservicer shall be (i) authorized to transact business
in the state or states in which the related
Mortgaged Properties it is to
service are situated, if and to the extent
required by applicable law to enable
the Subservicer to perform its obligations
hereunder and under the Subservicing
Agreement, (ii) an institution approved as
a mortgage loan originator by the
Federal Housing Administration or an
institution that has deposit accounts
insured by the FDIC and (iii) a Freddie Mac
or Fannie Mae approved mortgage
servicer. Each Subservicing Agreement must
impose on the Subservicer
requirements conforming to the provisions
set forth in Section 3.08 and provide
for servicing of the Mortgage Loans
consistent with the terms of this Agreement.
The Servicer will examine each Subservicing
Agreement and will be familiar with
the terms thereof. The terms of any
Subservicing Agreement will not be
inconsistent with any of the provisions of
this Agreement. The Servicer and the
Subservicers may enter into and make
amendments to the Subservicing Agreements
or enter into different forms of
Subservicing Agreements; provided, however,
that any such amendments or different forms
shall be consistent with and not
violate the provisions of this Agreement,
and that no such amendment or
different form shall be made or entered
into which could be reasonably expected
to be materially adverse to the interests
of the Trustee, without the consent of
the Trustee. Any variation without the
consent of the Trustee from the
provisions set forth in Section 3.08
relating to insurance or priority
requirements of Subservicing Accounts, or
credits and charges to the
Subservicing Accounts or the timing and
amount of remittances by the
Subservicers to the Servicer, are
conclusively deemed to be inconsistent with
this Agreement and therefore prohibited.
The Servicer shall deliver to the
Master Servicer, the Securities
Administrator, the Trustee and the Depositor
copies of all Subservicing Agreements, and
any amendments or modifications
thereof, promptly upon the Servicer's
execution and delivery of such
instruments.
(c) As part of
its servicing activities hereunder, the Servicer
(except as otherwise provided in the last
sentence of this paragraph), for the
benefit of the Trustee, shall enforce the
obligations of each Subservicer under
the related Subservicing Agreement,
including, without limitation, any
obligation to make advances in respect of
delinquent payments as required by a
Subservicing Agreement. Such enforcement,
including, without limitation, the
legal prosecution of claims, termination of
Subservicing Agreements, and the
pursuit of other appropriate remedies,
shall be in such form and carried out to
such an extent and at such time as the
Servicer, in its good faith business
judgment, would require were it the owner
of the related Mortgage Loans. The
Servicer shall pay the costs of such
enforcement at its own expense, and shall
be reimbursed therefor only (i) from a
general recovery resulting from such
enforcement, to the extent, if any, that
such recovery exceeds all amounts due
in respect of the related Mortgage Loans or
(ii) from a specific recovery of
costs, expenses or attorneys' fees against
the party against whom such
enforcement is directed.
Section 3.03 Successor Subservicers. The Servicer shall be
entitled
to terminate any Subservicing Agreement and
the rights and obligations of any
Subservicer pursuant to any Subservicing
Agreement in accordance with the terms
and conditions of such Subservicing
Agreement. In the event of termination of
any Subservicer, all servicing obligations
of such Subservicer shall be assumed
simultaneously by the Servicer without any
act or deed on the part of such
Subservicer or the Servicer, and the
Servicer either shall service directly the
related Mortgage Loans or shall enter into
a Subservicing Agreement with a
successor Subservicer which qualifies under
Section 3.02.
Any Subservicing Agreement shall include the provision that
such
agreement may be immediately terminated by
the Master Servicer without fee, in
accordance with the terms of this
Agreement, in the event that the Servicer
shall, for any reason, no longer be the
Servicer (including termination due to
an Event of Default).
Section 3.04 Liability of the Servicer. Notwithstanding any
Subservicing Agreement, any of the
provisions of this Agreement relating to
agreements or arrangements between the
Servicer and a Subservicer or reference
to actions taken through a Subservicer or
otherwise, the Servicer shall remain
obligated and primarily liable to the
Trustee for the servicing and
administering of the Mortgage Loans in
accordance with the provisions of Section
3.01 without diminution of such obligation
or liability by virtue of such
Subservicing Agreements or arrangements or
by virtue of indemnification from the
Subservicer and to the same extent and
under the same terms and conditions as if
the Servicer alone were servicing and
administering the Mortgage Loans. The
Servicer shall be entitled to enter into
any agreement with a Subservicer for
indemnification of the Servicer by such
Subservicer and nothing contained in
this Agreement shall be deemed to limit or
modify such indemnification.
Section 3.05 No Contractual Relationship between Subservicers
and
the Master Servicer. Any Subservicing
Agreement that may be entered into and any
transactions or services relating to the
Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to
be between the Subservicer and the
Servicer alone, and neither the Trustee nor
the Master Servicer (nor any
successor Master Servicer) shall be deemed
a party thereto and shall have no
claims, rights, obligations, duties or
liabilities with respect to the
Subservicer except as set forth in Section
3.06. The Servicer shall be solely
liable for all fees owed by it to any
Subservicer, irrespective of whether the
Servicer's compensation pursuant to this
Agreement is sufficient to pay such
fees.
Section 3.06 Assumption or Termination of Subservicing Agreements
by
Master Servicer. In the event the Servicer
at any time shall for any reason no
longer be the Servicer (including by reason
of the occurrence of an Event of
Default), the Master Servicer, or its
designee or the successor Servicer if the
successor is not the Master Servicer, shall
thereupon assume all of the rights
and obligations of the Servicer under each
Subservicing Agreement that the
Servicer may have entered into, with copies
thereof provided to the Master
Servicer or the successor Servicer if the
successor is not the Master Servicer,
prior to the Master Servicer or the
successor Servicer if the successor is not
the Master Servicer, assuming such rights
and obligations, unless the Master
Servicer elects to terminate any
Subservicing Agreement in accordance with its
terms as provided in Section 3.03.
Upon such assumption, the Master Servicer, its designee or the
successor servicer shall be deemed, subject
to Section 3.03, to have assumed all
of the Servicer's interest therein and to
have replaced the Servicer as a party
to each Subservicing Agreement to the same
extent as if each Subservicing
Agreement had been assigned to the assuming
party, except that (i) the Servicer
shall not thereby be relieved of any
liability or obligations under any
Subservicing Agreement that arose before it
ceased to be the Servicer and (ii)
none of the Depositor, the Master Servicer,
their designees or any successor
Servicer shall be deemed to have assumed
any liability or obligation of the
Servicer that arose before it ceased to be
the Servicer.
The Servicer at its expense shall, upon request of the Master
Servicer, its designee or the successor
Servicer deliver to the assuming party
all documents and records relating to each
Subservicing Agreement and the
Mortgage Loans then being serviced and an
accounting of amounts collected and
held by or on behalf of it, and otherwise
use its best efforts to effect the
orderly and efficient transfer of the
Subservicing Agreements to the assuming
party.
Section 3.07 Collection of Certain Mortgage Loan Payments. (a)
The
Servicer shall make reasonable efforts to
collect all payments called for under
the terms and provisions of the Mortgage
Loans, and shall, to the extent such
procedures shall be consistent with this
Agreement and the terms and provisions
of any applicable Insurance Policies,
follow such collection procedures as it
would follow with respect to mortgage loans
comparable to the Mortgage Loans and
held for its own account. Consistent with
the foregoing and Accepted Servicing
Practices, the Servicer may (i) waive any
late payment charge or, if applicable,
any penalty interest, or (ii) extend the
due dates for the Scheduled Payments
due on a Mortgage Note for a period of not
greater than 180 days; provided, that
any extension pursuant to clause (ii) above
shall not affect the amortization
schedule of any Mortgage Loan for purposes
of any computation hereunder, except
as provided below. In the event of any such
arrangement pursuant to clause (ii)
above, the Servicer shall make timely
advances on such Mortgage Loan during such
extension pursuant to Section 4.01 and in
accordance with the amortization
schedule of such Mortgage Loan without
modification thereof by reason of such
arrangements, subject to Section 4.01(d)
pursuant to which the Servicer shall
not be required to make any such advances
that are Nonrecoverable P&I Advances.
Notwithstanding the foregoing, in the event
that any Mortgage Loan is in default
or in the judgment of the Servicer, such
default is reasonably foreseeable, the
Servicer, consistent with the standards set
forth in Section 3.01, may also
waive, modify or vary any term of such
Mortgage Loan (including modifications
that would change the Mortgage Rate,
forgive the payment of principal or
interest, extend the final maturity date of
such Mortgage Loan or waive, in
whole or in part, a Prepayment Charge),
accept payment from the related
Mortgagor of an amount less than the Stated
Principal Balance in final
satisfaction of such Mortgage Loan, or
consent to the postponement of strict
compliance with any such term or otherwise
grant indulgence to any Mortgagor
(any and all such waivers, modifications,
variances, forgiveness of principal or
interest, postponements, or indulgences
collectively referred to herein as
"Forbearance"); provided, however, that the
Servicer's approval of a
modification of a Due Date shall not be
considered a modification for purposes
of this sentence; provided, further, that
the final maturity date of any
Mortgage Loan may not be extended beyond
the Final Scheduled Distribution Date
for the LIBOR Certificates. The Servicer's
analysis supporting any Forbearance
and the conclusion that any Forbearance
meets the standards of Section 3.01
shall be reflected in writing in the
Servicing File or on the Servicer's
servicing records. In addition,
notwithstanding the foregoing, the Servicer may
also waive (or permit a Subservicer to
waive), in whole or in part, a Prepayment
Charge if such waiver would, in the
Servicer's judgment, maximize recoveries on
the related Mortgage Loan or if such
Prepayment Charge is (i) not permitted to
be collected by applicable law, or the
collection of the Prepayment Charge would
be considered "predatory" pursuant to
written guidance published by any
applicable federal, state or local
regulatory authority having jurisdiction over
such matters, or (ii) the enforceability of
such Prepayment Charge is limited
(1) by bankruptcy, insolvency, moratorium,
receivership or other similar laws
relating to creditors' rights or (2) due to
acceleration in connection with a
foreclosure or other involuntary payment.
If a Prepayment Charge is waived other
than as permitted in this Section 3.07(a),
then the Servicer is required to pay
the amount of such waived Prepayment
Charge, for the benefit of the Holders of
the Class P Certificates, by depositing
such amount into the related Collection
Account together with and at the time that
the amount prepaid on the related
Mortgage Loan is required to be deposited
into the related Collection Account;
provided, however, that the Servicer shall
not have an obligation to pay the
amount of any uncollected Prepayment Charge
if the failure to collect such
amount is the direct result of inaccurate
or incomplete information on the
Mortgage Loan Schedule in effect at such
time. The Master Servicer shall have no
responsibility for verifying the accuracy
of the amount of prepayment charges
waived or remitted by the Servicer.
(b) (i) The
Securities Administrator shall establish and maintain
the Excess Reserve Fund Account, on behalf
of the Class X Certificateholders, to
receive any Basis Risk Payment and any
Interest Rate Cap Payment and to secure
their limited recourse obligation to pay to
the LIBOR Certificateholders Basis
Risk Carryover Amounts.
(ii) On each
Distribution Date, the Securities Administrator shall
deposit
the amount of any Basis Risk Payment and any Interest Rate Cap
Payment
for such date into the Excess Reserve Fund Account.
(c) (i) On each
Distribution Date on which there exists a Basis
Risk Carryover Amount on any Class of
Certificates, the Securities Administrator
shall (1) withdraw from the Distribution
Account and deposit in the Excess
Reserve Fund Account, as set forth in
Section 4.02(a)(iii)(B), the lesser of (x)
the Class X Distributable Amount (without
regard to the reduction in the
definition thereof with respect to the
Basis Risk Payment (to the extent
remaining after the distributions specified
in Sections 4.02(a)(iii)(A)-(D)) and
(y) the aggregate Basis Risk Carryover
Amounts for such Distribution Date and
(2) withdraw from the Excess Reserve Fund
Account amounts necessary to pay to
such Class or Classes of Certificates the
Basis Risk Carryover Amount. Such
payments shall be allocated to those
Classes on a pro rata basis based upon the
amount of Basis Risk Carryover Amount owed
to each such Class and shall be paid
in the priority set forth in Sections
4.02(a)(iii)(C)-(D).
(ii) The Securities
Administrator shall account for the Excess
Reserve
Fund Account as an asset of a grantor trust under subpart E,
Part
I of
subchapter J of the Code and not as an asset of any REMIC
created
pursuant to this
Agreement. The beneficial owners of the Excess Reserve
Fund
Account are the Class X Certificateholders. For all federal tax
purposes,
amounts transferred by the Upper Tier REMIC to the Excess
Reserve
Fund Account shall be treated as distributions by the
Securities
Administrator to the Class X Certificateholders.
(iii) Any Basis Risk Carryover Amounts paid by the Securities
Administrator to the LIBOR Certificateholders shall be accounted
for by
the
Securities Administrator as amounts paid first to the Holders of
the
Class X
Certificates and then to the respective Class or Classes of
LIBOR
Certificates. In addition, the Securities Administrator shall
account for
the LIBOR
Certificateholders' rights to receive payments of Basis Risk
Carryover
Amounts as rights in a limited recourse interest rate cap
contract
written by the Class X Certificateholders in favor of the LIBOR
Certificateholders.
(iv) Notwithstanding
any provision contained in this Agreement, the
Securities
Administrator shall not be required to make any payments from
the Excess
Reserve Fund Account except as expressly set forth in this
Section
3.07(c) and Sections 4.02(a)(iii)(C)-(D) and (E).
(d) The
Securities Administrator shall establish and maintain the
Distribution Account on behalf of the
Certificateholders. The Master Servicer
shall, promptly upon receipt, deposit in
the Distribution Account and retain
therein the following:
(i) the
aggregate amount remitted by the Servicer to the Master
Servicer
pursuant to Section 3.11;
(ii) any amount
deposited by the Servicer pursuant to Section
3.12(b) in
connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required to
be
deposited
in the Distribution Account.
In the event that the Servicer shall remit any amount not
required
to be remitted, it may at any time direct
the Securities Administrator in
writing to withdraw such amount from the
Distribution Account, any provision
herein to the contrary notwithstanding.
Such direction may be accomplished by
delivering notice to the Securities
Administrator which describes the amounts
deposited in error in the Distribution
Account. All funds deposited in the
Distribution Account shall be held by the
Securities Administrator in trust for
the Certificateholders until disbursed in
accordance with this Agreement or
withdrawn in accordance with Section
4.02.
(e) The
Securities Administrator may invest the funds in the
Distribution Account during the Securities
Administrator Float Period in one or
more Permitted Investments in accordance
with Section 3.12. The Securities
Administrator may withdraw from the
Distribution Account any income or gain
earned from the investment of funds
deposited therein for its own benefit.
(f) The Servicer
shall give notice to the Securities Administrator
of any proposed change of the location of
the Collection Account not later than
30 days and not more than 45 days prior to
any change thereof and the Securities
Administrator shall forward such notice to
each Rating Agency and the Depositor.
(g) In order to
comply with its duties under the USA Patriot Act
of 2001, the Trustee shall obtain and
verify certain information and
documentation from the other parties to
this Agreement, including, but not
limited to, each such party's name, address
and other identifying information.
Section 3.08 Subservicing Accounts. In those cases where a
Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement,
the Subservicer will be required to
establish and maintain one or more
segregated accounts (collectively, the
"Subservicing Account"). The Subservicing
Account shall be an Eligible Account and
shall otherwise be acceptable to the
Servicer. The Subservicer shall deposit in
the clearing account (which account
must be an Eligible Account) in which it
customarily deposits payments and
collections on mortgage loans in connection
with its mortgage loan servicing
activities on a daily basis, and in no
event more than one Business Day after
the Subservicer's receipt thereof, all
proceeds of Mortgage Loans received by
the Subservicer less its servicing
compensation to the extent permitted by the
Subservicing Agreement, and shall
thereafter deposit such amounts in the
Subservicing Account, in no event more than
two Business Days after the deposit
of such funds into the clearing account.
The Subservicer shall thereafter
deposit such proceeds in the Collection
Account or remit such proceeds to the
Servicer for deposit in the Collection
Account not later than two Business Days
after the deposit of such amounts in the
Subservicing Account. For purposes of
this Agreement, the Servicer shall be
deemed to have received payments on the
Mortgage Loans when the Subservicer
receives such payments.
Section 3.09 Collection of Taxes, Assessments and Similar
Items;
Escrow Accounts. (a) The Servicer shall
enforce the obligations under each
paid-in-full, life-of-the-loan tax service
contract in effect with respect to
each Mortgage Loan (each, a "Tax Service
Contract"). Each Tax Service Contract
shall be assigned to a successor Servicer,
at the Servicer's expense in the
event that the Servicer is terminated as
Servicer of the related Mortgage Loan.
(b) To the
extent that the services described in this paragraph
(b) are not otherwise provided pursuant to
the Tax Service Contracts described
in paragraph (a) hereof, the Servicer
undertakes to perform such functions. To
the extent the related Mortgage provides
for Escrow Payments, the Servicer shall
establish and maintain, or cause to be
established and maintained, one or more
segregated accounts (the "Escrow
Accounts"), which shall be Eligible Accounts.
The Servicer shall deposit in the clearing
account (which account must be an
Eligible Account) in which it customarily
deposits payments and collections on
mortgage loans in connection with its
mortgage loan servicing activities on a
daily basis, and in no event more than one
Business Day after the Servicer's
receipt thereof, all collections from the
Mortgagors (or related advances from
Subservicers) for the payment of taxes,
assessments, hazard insurance premiums
and comparable items for the account of the
Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans
and shall thereafter deposit such
Escrow Payments in the Escrow Accounts, in
no event more than two Business Days
after the deposit of such funds in the
clearing account, for the purpose of
effecting the payment of any such items as
required under the terms of this
Agreement. Withdrawals of amounts from an
Escrow Account may be made only to (i)
effect payment of taxes, assessments,
hazard insurance premiums, and comparable
items; (ii) reimburse the Servicer (or a
Subservicer to the extent provided in
the related Subservicing Agreement) out of
related collections for any advances
made pursuant to Section 3.01 (with respect
to taxes and assessments) and
Section 3.13 (with respect to hazard
insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages;
(iv) pay interest, if required and as
described below, to Mortgagors on balances
in the Escrow Account; (v) clear and
terminate the Escrow Account at the
termination of the Servicer's obligations
and responsibilities in respect of the
Mortgage Loans under this Agreement; or
(vi) recover amounts deposited in error. As
part of its servicing duties, the
Servicer or Subservicers shall pay to the
Mortgagors interest on funds in Escrow
Accounts, to the extent required by law
and, to the extent that interest earned
on funds in the Escrow Accounts is
insufficient, to pay such interest from its
or their own funds, without any
reimbursement therefor. To the extent that a
Mortgage does not provide for Escrow
Payments, the Servicer shall determine
whether any such payments are made by the
Mortgagor in a manner and at a time
that avoids the loss of the Mortgaged
Property due to a tax sale or the
foreclosure of a tax lien. The Servicer
assumes full responsibility for the
payment of all such bills within such time
and shall effect payments of all such
bills irrespective of the Mortgagor's
faithful performance in the payment of
same or the making of the Escrow Payments
and shall make advances from its own
funds to effect such payments; provided,
however, that such advances are deemed
to be Servicing Advances.
Section 3.10 Collection Account. (a) On behalf of the Trustee,
the
Servicer shall establish and maintain, or
cause to be established and
maintained, one or more segregated Eligible
Accounts (such account or accounts,
the "Collection Account"), held in trust
for the benefit of the Trustee. On
behalf of the Trustee, the Servicer shall
deposit or cause to be deposited in
the clearing account (which account must be
an Eligible Account) in which it
customarily deposits payments and
collections on mortgage loans in connection
with its mortgage loan servicing activities
on a daily basis, and in no event
more than one Business Day after the
Servicer's receipt thereof, and shall
thereafter deposit into the Collection
Account, in no event more than two
Business Days after the deposit of such
funds into the clearing account, as and
when received or as otherwise required
hereunder, the following payments and
collections received or made by it
subsequent to the Cut-off Date (other than in
respect of principal or interest on the
related Mortgage Loans due on or before
the Cut-off Date), or payments (other than
Principal Prepayments) received by it
on or prior to the Cut-off Date but
allocable to a Due Period subsequent
thereto:
(i) all payments
on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on
account of interest (net of the related
Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Condemnation Proceeds to the
extent
such
Insurance Proceeds and Condemnation Proceeds are not to be applied
to
the
restoration of the related Mortgaged Property or released to
the
related
Mortgagor in accordance with the express requirements of law or
in
accordance
with Accepted Servicing Practices, Liquidation Proceeds and
Subsequent
Recoveries;
(iv) any amounts
required to be deposited pursuant to Section 3.12
in
connection with any losses realized on Permitted Investments
with
respect to
funds held in the Collection Account;
(v) any amounts
required to be deposited by the Servicer pursuant
to the
second paragraph of Section 3.13(a) in respect of any blanket
policy
deductibles;
(vi) all proceeds of
any Mortgage Loan repurchased or purchased in
accordance
with this Agreement; and
(vii) all Prepayment Charges collected by the Servicer.
The foregoing requirements for deposit in the Collection
Account
shall be exclusive, it being understood and
agreed that, without limiting the
generality of the foregoing, payments in
the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees
and other similar fees and charges need
not be deposited by the Servicer in the
Collection Account and shall, upon
collection, belong to the Servicer as
additional compensation for its servicing
activities. In the event the Servicer shall
deposit in the Collection Account
any amount not required to be deposited
therein, it may at any time withdraw
such amount from the Collection Account,
any provision herein to the contrary
notwithstanding.
(b) Funds in the
Collection Account may be invested in Permitted
Investments in accordance with the
provisions set forth in Section 3.12. The
Servicer shall give notice to the
Securities Administrator, the Master Servicer,
the Trustee and the Depositor of the
location of the Collection Account
maintained by it when established and prior
to any change thereof.
Section 3.11 Withdrawals from the Collection Account. (a) The
Servicer shall, from time to time, make
withdrawals from the Collection Account
for any of the following purposes or as
described in Section 4.01:
(i) on or prior to each Remittance
Date, to remit to the Master
Servicer
(A) the Master Servicing Fee with respect to such Distribution
Date and
(B) all Available Funds in respect of the related Distribution
Date
together with all amounts representing Prepayment Charges (payable
to
the Class
P Certificateholders) from the Mortgage Loans received during
the
related Prepayment Period;
(ii) to reimburse the
Servicer for P&I Advances, but only to the
extent of
amounts received which represent Late Collections (net of the
related
Servicing Fees) of Scheduled Payments on Mortgage Loans with
respect to
which such P&I Advances were made by the Servicer in
accordance
with the
provisions of Section 4.01;
(iii) to pay the Servicer or any Subservicer (A) any unpaid
Servicing
Fees or (B) any unreimbursed Servicing Advances with respect to
each
Mortgage Loan, but only to the extent of any Late Collections
or
other
amounts as may be collected by the Servicer from a Mortgagor,
or
otherwise
received with respect to such Mortgage Loan (or the related REO
Property);
(iv) to pay to the
Servicer as servicing compensation (in addition
to the
Servicing Fee) on each Remittance Date any interest or
investment
income
earned on funds deposited in the Collection Account;
(v) to pay to
the Mortgage Loan Seller, with respect to each
Mortgage
Loan that has previously been repurchased or replaced pursuant
to
this
Agreement, all amounts received thereon subsequent to the date
of
purchase
or substitution, as the case may be;
(vi) to reimburse the
Servicer for (A) any P&I Advance or Servicing
Advance
previously made which the Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance
in
accordance
with the provisions of Section 4.01 and (B) any unpaid
Servicing
Fees to the extent not recoverable from Late Collections or
other
amounts received with respect to the related Mortgage Loan
under
Section
3.11(a)(iii);
(vii) to pay, or to reimburse the Servicer for Servicing Advances
in
respect
of, expenses incurred in connection with any Mortgage Loan
pursuant
to Section 3.15;
(viii) to reimburse the Master Servicer, the Servicer, the
Depositor,
the Securities Administrator or the Trustee for expenses
incurred
by or reimbursable to the Master Servicer, the Servicer, the
Depositor,
the Securities Administrator or the Trustee, as the case may
be,
pursuant to Section 6.03, Section 7.02, Section 8.05, Section 9.13
or
Section
10.02;
(ix) to reimburse the
Master Servicer, the Servicer or the Trustee,
as the
case may be, for expenses reasonably incurred in respect of the
breach or
defect giving rise to the repurchase obligation of the Mortgage
Loan
Seller under this Agreement that were included in the
Repurchase
Price of
the Mortgage Loan, including any expenses arising out of the
enforcement of the repurchase obligation, to the extent not
otherwise paid
pursuant
to the terms hereof;
(x) to withdraw
any amounts deposited in the Collection Account in
error;
and
(xi) to clear and
terminate the Collection Account upon termination
of this
Agreement.
(b) The Servicer
shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for
the purpose of justifying any
withdrawal from the Collection Account, to
the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii),
(v), (vi), (vii), (viii) and (ix)
above. The Servicer shall provide written
notification (as set forth in Section
4.01(d)) to the Master Servicer, on or
prior to the next succeeding Remittance
Date, upon making any withdrawals from the
Collection Account pursuant to
subclause (a)(vi) above.
Section 3.12 Investment of Funds in the Collection Account,
Escrow
Accounts and the Distribution Account. (a)
The Servicer may invest the funds in
the Collection Account and the Escrow
Accounts (to the extent permitted by law
and the related Mortgage Loan documents)
and the Securities Administrator may
invest funds in the Distribution Account
during the Securities Administrator's
Float Period and shall invest such funds in
the Distribution Account (for
purposes of this Section 3.12, each such
Account is referred to as an
"Investment Account"), in one or more
Permitted Investments bearing interest or
sold at a discount, and maturing, unless
payable on demand, no later than the
Business Day immediately preceding the date
on which such funds are required to
be withdrawn from such account pursuant to
this Agreement; provided, however,
that any such Permitted Investment managed
by or advised by the Securities
Administrator or any of its Affiliates may
mature, unless payable on demand, no
later than the date on which such funds are
required to be withdrawn from such
account pursuant to this Agreement. All
such Permitted Investments shall be held
to maturity, unless payable on demand. Any
investment of funds in an Investment
Account shall be made in the name of the
Servicer or the Securities
Administrator, as applicable. The Servicer
or the Securities Administrator, as
applicable, shall be entitled to sole
possession over each such investment, and
any certificate or other instrument
evidencing any such investment shall be
delivered directly to the Servicer or the
Securities Administrator or its agent,
as applicable, together with any document
of transfer necessary to transfer
title to such investment to the Servicer or
the Securities Administrator or its
agent, as applicable. In the event amounts
on deposit in an Investment Account
are at any time invested in a Permitted
Investment payable on demand, the
Servicer or the Securities Administrator,
as applicable, may:
(x) consistent
with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand
payment of all amounts due thereunder that such
Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in an
Investment Account.
(b) All income
and gain realized from the investment of funds
deposited in the Collection Account or
Escrow Account, as applicable, held by or
on behalf of the Servicer, shall be for the
benefit of the Servicer and shall be
subject to its withdrawal in the manner set
forth in Section 3.11. The Servicer
shall deposit in the Collection Account or
Escrow Account, as applicable, the
amount of any loss of principal incurred in
respect of any such Permitted
Investment made with funds in such accounts
immediately upon realization of such
loss.
(c) All income
and gain realized from the investment of funds
deposited in the Distribution Account held
by the Securities Administrator
during the Securities Administrator's Float
Period, shall be for the benefit of
the Securities Administrator, and shall be
subject to the Securities
Administrator's withdrawal in the manner
set forth in Section 3.07(e).
Notwithstanding anything in this Section
3.12(c), the Securities Administrator
shall be liable to the Trust for any such
loss on any funds it has invested
under this Section 3.12(c) only during the
Securities Administrator Float
Period, and the Securities Administrator
shall deposit in the Distribution
Account the amount of any loss of principal
incurred in respect of any such
Permitted Investment made with funds in
such account immediately upon
realization of such loss.
(d) Except as
otherwise expressly provided in this Agreement, if
any default occurs in the making of a
payment due under any Permitted Investment
of funds held in the Escrow Account or the
Collection Account, or if a default
occurs in any other performance required
under any Permitted Investment of funds
held in the Escrow Account or the
Collection Account, the Servicer or the
Securities Administrator, as applicable,
shall take such action as may be
appropriate to enforce such payment or
performance, including the institution
and prosecution of appropriate
proceedings.
(e) The
Securities Administrator or its Affiliates are permitted
to receive additional compensation that
could be deemed to be in the Securities
Administrator's economic self-interest for
(i) serving as investment adviser,
administrator, shareholder, servicing
agent, custodian or sub-custodian with
respect to certain of the Permitted
Investments, (ii) using Affiliates to effect
transactions in certain Permitted
Investments and (iii) effecting transactions
in certain Permitted Investments. Such
compensation shall not be considered an
amount that is reimbursable for payable
pursuant to this Agreement.
Section 3.13 Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage. (a) The
Servicer shall cause to be maintained
for each Mortgage Loan fire insurance with
extended coverage on the related
Mortgaged Property in an amount which is at
least equal to the least of (i) the
outstanding principal balance of such
Mortgage Loan, (ii) the amount necessary
to fully compensate for any damage or loss
to the improvements that are a part
of such property on a replacement cost
basis and (iii) the maximum insurable
value of the improvements which are a part
of such Mortgaged Property, in each
case in an amount not less than such amount
as is necessary to avoid the
application of any coinsurance clause
contained in the related hazard insurance
policy. The Servicer shall also cause to be
maintained fire insurance with
extended coverage on each REO Property in
an amount which is at least equal to
the lesser of (i) the maximum insurable
value of the improvements which are a
part of such property and (ii) the
outstanding principal balance of the related
Mortgage Loan at the time it became an REO
Property, plus accrued interest at
the Mortgage Rate and related Servicing
Advances. The Servicer will comply in
the performance of this Agreement with all
reasonable rules and requirements of
each insurer under any such hazard
policies. Any amounts to be collected by the
Servicer under any such policies (other
than amounts required to be deposited in
the Escrow Account and applied to the
restoration or repair of the property
subject to the related Mortgage or amounts
to be released to the Mortgagor in
accordance with the procedures that the
Servicer would follow in servicing loans
held for its own account, subject to the
terms and conditions of the related
Mortgage and Mortgage Note) shall be
deposited in the Collection Account,
subject to withdrawal pursuant to Section
3.11. Any cost incurred by the
Servicer in maintaining any such insurance
shall not, for the purpose of
calculating distributions to the Master
Servicer, be added to the unpaid
principal balance of the related Mortgage
Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is
understood and agreed that no earthquake
or other additional insurance is to be
required of any Mortgagor other than
pursuant to such applicable laws and
regulations as shall at any time be in
force and as shall require such additional
insurance. If the Mortgaged Property
or REO Property is at any time in an area
identified in the Federal Register by
the Federal Emergency Management Agency as
having special flood hazards and
flood insurance has been made available,
the Servicer will cause to be
maintained a flood insurance policy in
respect thereof. Such flood insurance
shall be in an amount equal to the lesser
of (i) the unpaid principal balance of
the related Mortgage Loan and (ii) the
maximum amount of such insurance
available for the related Mortgaged
Property under the national flood insurance
program (assuming that the area in which
such Mortgaged Property is located is
participating in such program).
In the event that the Servicer shall obtain and maintain a
blanket
policy with an insurer having a general
policy rating of A:VI or better in
Best's (or such other rating that is
comparable to such rating) insuring against
hazard losses on all of the Mortgage Loans,
it shall conclusively be deemed to
have satisfied its obligations as set forth
in the first two sentences of this
Section 3.13, it being understood and
agreed that such policy may contain a
deductible clause, in which case the
Servicer shall, in the event that there
shall not have been maintained on the
related Mortgaged Property or REO Property
a policy complying with the first two
sentences of this Section 3.13, and there
shall have been one or more losses which
would have been covered by such policy,
deposit to the Collection Account from its
own funds the amount not otherwise
payable under the blanket policy because of
such deductible clause. In
connection with its activities as
administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and
present, on behalf of itself and the
Trustee, claims under any such blanket
policy in a timely fashion in accordance
with the terms of such policy.
(b) The Servicer
shall keep in force during the term of this
Agreement a policy or policies of insurance
covering errors and omissions for
failure in the performance of the
Servicer's obligations under this Agreement,
which policy or policies shall be in such
form and amount that would meet the
requirements of Fannie Mae or Freddie Mac
if it were the purchaser of the
Mortgage Loans, unless the Servicer has
obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. The
Servicer shall also maintain a fidelity bond
in the form and amount that would meet the
requirements of Fannie Mae or Freddie
Mac, unless the Servicer has obtained a
waiver of such requirements from Fannie
Mae or Freddie Mac. The Servicer shall
provide the Master Servicer with copies
of any such insurance policies and fidelity
bond. The Servicer shall be deemed
to have complied with this provision if an
Affiliate of the Servicer has such
errors and omissions and fidelity bond
coverage and, by the terms of such
insurance policy or fidelity bond, the
coverage afforded thereunder extends to
the Servicer. Any such errors and omissions
policy and fidelity bond shall by
its terms not be cancelable without thirty
days' prior written notice to the
Master Servicer. The Servicer shall also
cause each Subservicer to maintain a
policy of insurance covering errors and
omissions and a fidelity bond which
would meet such requirements.
Section 3.14 Enforcement of Due-On-Sale Clauses; Assumption
Agreements. The Servicer will, to the
extent it has knowledge of any conveyance
or prospective conveyance of any Mortgaged
Property by any Mortgagor (whether by
absolute conveyance or by contract of sale,
and whether or not the Mortgagor
remains or is to remain liable under the
Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the
maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable
thereto; provided, however, that the
Servicer shall not be required to take such
action if, in its good faith
business judgment, the Servicer believes it
is not in the best interests of the
Trust Fund and shall not exercise any such
rights if prohibited by law from
doing so. If the Servicer, in its good
faith business judgment, believes it is
unable under applicable law to enforce such
"due-on-sale" clause or if any of
the other conditions set forth in the
proviso to the preceding sentence apply,
the Servicer will enter into either (i) an
assumption and modification agreement
from or with the person to whom such
property has been conveyed or is proposed
to be conveyed, pursuant to which such
person becomes liable under the Mortgage
Note and, to the extent permitted by
applicable state law, the Mortgagor remains
liable thereon or (ii) a substitution
agreement as provided in the succeeding
sentence. The Servicer is also authorized
to enter into a substitution of
liability agreement with such person,
pursuant to which the original Mortgagor
is released from liability and such person
is substituted as the Mortgagor and
becomes liable under the Mortgage Note,
provided, that no such substitution
shall be effective unless such person
satisfies the underwriting criteria of the
Servicer and has a credit risk rating at
least equal to that of the original
Mortgagor. In connection with any
assumption, modification or substitution, the
Servicer shall apply such underwriting
standards and follow such practices and
procedures as shall be normal and usual in
its general mortgage servicing
activities and as it applies to other
mortgage loans owned solely by it. The
Servicer shall not take or enter into any
assumption and modification agreement,
however, unless (to the extent practicable
in the circumstances) it shall have
received confirmation, in writing, of the
continued effectiveness of any
applicable hazard insurance policy, or a
new policy meeting the requirements of
this Section is obtained. Any fee collected
by the Servicer in respect of an
assumption or substitution of liability
agreement will be retained by the
Servicer as additional servicing
compensation. In connection with any such
assumption, no material term of the
Mortgage Note (including but not limited to
the related Mortgage Rate and the amount of
the Scheduled Payment) may be
amended or modified, except as otherwise
required pursuant to the terms thereof.
The Servicer shall notify the Master
Servicer that any such substitution,
modification or assumption agreement has
been completed and shall forward to the
Trustee the executed original of such
substitution or assumption agreement,
which document shall be added to the
related Mortgage File and shall, for all
purposes, be considered a part of such
Mortgage File to the same extent as all
other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of
this Agreement, the Servicer shall not be
deemed to be in default, breach or any
other violation of its obligations
hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the
terms of the Mortgage Note or any
assumption which the Servicer may be
restricted by law from preventing, for any
reason whatsoever. For purposes of this
Section 3.14, the term "assumption" is
deemed to also include a sale (of the
Mortgaged Property) subject to the
Mortgage that is not accompanied by an
assumption or substitution of liability
agreement.
Section 3.15 Realization upon Defaulted Mortgage Loans. The
Servicer
shall use its best efforts, consistent with
Accepted Servicing Practices, to
foreclose upon or otherwise comparably
convert (which may include an acquisition
of REO Property) the ownership of
properties securing such of the Mortgage Loans
as come into and continue in default and as
to which no satisfactory
arrangements can be made for collection of
delinquent payments pursuant to
Section 3.07, and which are not released
from this Agreement pursuant to any
other provision hereof. The Servicer shall
use reasonable efforts to realize
upon such defaulted Mortgage Loans in such
manner as will maximize the receipt
of principal and interest by the Securities
Administrator, taking into account,
among other things, the timing of
foreclosure proceedings. The foregoing is
subject to the provisions that the Servicer
shall not be required to expend its
own funds in connection with foreclosure or
other conversion, correction of a
default on a senior mortgage or restoration
of any property unless it shall
determine in its sole discretion (i) that
such foreclosure, correction or
restoration will increase the net
Liquidation Proceeds of the related Mortgage
Loan to the Securities Administrator, after
reimbursement to itself for such
expenses and (ii) that such expenses will
be recoverable by the Servicer through
Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds or Subsequent
Recoveries from the related Mortgaged
Property, as contemplated in Section 3.11.
The Servicer shall be responsible for all
other costs and expenses incurred by
it in any such proceedings; provided,
however, that it shall be entitled to
reimbursement thereof from the related
property, as contemplated in Section
3.11.
The proceeds of any liquidation or REO Disposition, as well as
any
recovery resulting from a partial
collection of Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds or
Subsequent Recoveries or any income from an
REO Property, will be applied in the
following order of priority: first, to
reimburse the Servicer or any Subservicer
for any related unreimbursed Servicing
Advances, pursuant to Section 3.11 or 3.17;
second, to reimburse the Servicer
for any related unreimbursed P&I
Advances, pursuant to Section 3.11; third, to
accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the
Mortgage Rate, to the date of the
liquidation or REO Disposition, or to the Due
Date prior to the Remittance Date on which
such amounts are to be distributed if
not in connection with a liquidation or REO
Disposition; and fourth, as a
recovery of principal of the Mortgage Loan.
If the amount of the recovery so
allocated to interest is less than a full
recovery thereof, that amount will be
allocated as follows: first, to unpaid
Servicing Fees; and second, as interest
at the Mortgage Rate (net of the Servicing
Fee Rate). The portion of the
recovery so allocated to unpaid Servicing
Fees shall be reimbursed to the
Servicer or any Subservicer pursuant to
Section 3.11 or 3.17. The portions of
the recovery so allocated to interest at
the Mortgage Rate (net of the Servicing
Fee Rate) and to principal of the Mortgage
Loan shall be applied as follows:
first, to reimburse the Servicer or any
Subservicer for any related unreimbursed
Servicing Advances in accordance with
Section 3.11 or 3.17, and second, to the
Securities Administrator in accordance with
the provisions of Section 4.02,
subject to paragraph (g) of Section 3.17
with respect to certain excess
recoveries from an REO Disposition.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance
of a deed in lieu of foreclosure, in
the event the Servicer has received actual
notice of, or has actual knowledge of
the presence of, hazardous or toxic
substances or wastes on the related
Mortgaged Property, or if the Trustee or
the Master Servicer otherwise requests,
the Servicer shall cause an environmental
inspection or review of such Mortgaged
Property to be conducted by a qualified
inspector. Upon completion of the
inspection, the Servicer shall promptly
provide the Trustee, the Master Servicer
and the Depositor with a written report of
the environmental inspection.
After reviewing the environmental inspection report, the
Servicer
shall determine consistent with Accepted
Servicing Practices how to proceed with
respect to the Mortgaged Property. In the
event (a) the environmental inspection
report indicates that the Mortgaged
Property is contaminated by hazardous or
toxic substances or wastes and (b) the
Servicer proceeds with foreclosure or
acceptance of a deed in lieu of
foreclosure, the Servicer shall be reimbursed
for all reasonable costs associated with
such foreclosure or acceptance of a
deed in lieu of foreclosure and any related
environmental clean-up costs, as
applicable, from the related Liquidation
Proceeds, or if the Liquidation
Proceeds are insufficient to fully
reimburse the Servicer, the Servicer shall be
entitled to be reimbursed from amounts in
the Collection Account pursuant to
Section 3.11. In the event the Servicer
does not proceed with foreclosure or
acceptance of a deed in lieu of
foreclosure, the Servicer shall be reimbursed
from general collections for all Servicing
Advances made with respect to the
related Mortgaged Property from the
Collection Account pursuant to Section 3.11.
The Trustee shall not be responsible for
any determination made by the Servicer
pursuant to this paragraph or
otherwise.
Section 3.16 Release of Mortgage Files. (a) Upon the payment in
full
of any Mortgage Loan, or the receipt by the
Servicer of a notification that
payment in full shall be escrowed in a
manner customary for such purposes, the
Servicer will, within five (5) Business
Days of the payment in full, notify the
Trustee by a certification (which
certification shall include a statement to the
effect that all amounts received or to be
received in connection with such
payment which are required to be deposited
in the Collection Account pursuant to
Section 3.10 have been or will be so
deposited) of a Servicing Officer and shall
request delivery to it of the Custodial
File by submitting a Request for
Release, which Request for Release may be
in an electronic format in a form
acceptable to the Trustee, to the Trustee.
Upon receipt of such certification
and Request for Release, the Trustee shall
promptly release the related
Custodial File to the Servicer within five
(5) Business Days. No expenses
incurred in connection with any instrument
of satisfaction or deed of
reconveyance shall be chargeable to the
Collection Account.
(b) From time to
time and as appropriate for the servicing or
foreclosure of any Mortgage Loan,
including, for this purpose, collection under
any Insurance Policy relating to the
Mortgage Loans, the Trustee shall, upon
request of the Servicer and delivery to the
Trustee of a Request for Release,
which Request for Release may be in an
electronic format in a form acceptable to
the Trustee, release the related Custodial
File to the Servicer, and the Trustee
shall, at the direction of the Servicer,
execute such documents as shall be
necessary to the prosecution of any such
proceedings and the Servicer shall
retain the Mortgage File in trust for the
benefit of the Trustee. Such Request
for Release shall obligate the Servicer to
return each and every document
previously requested from the Custodial
File to the Trustee when the need
therefor by the Servicer no longer exists,
unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been
deposited in the Collection Account or the
Mortgage File or such document has
been delivered to an attorney, or to a
public trustee or other public official
as required by law, for purposes of
initiating or pursuing legal action or other
proceedings for the foreclosure of the
Mortgaged Property either judicially or
non-judicially, and the Servicer has
delivered to the Trustee a certificate of a
Servicing Officer certifying as to the name
and address of the Person to which
such Mortgage File or such document was
delivered and the purpose or purposes of
such delivery. Upon receipt of a
certificate of a Servicing Officer stating that
such Mortgage Loan was liquidated and that
all amounts received or to be
received in connection with such
liquidation that are required to be deposited
into the Collection Account have been so
deposited, or that such Mortgage Loan
has become an REO Property, a copy of the
Request for Release shall be released
by the Trustee to the Servicer or its
designee.
Upon written certification of a Servicing Officer, the Trustee
shall
execute and deliver to the Servicer copies
of any court pleadings, requests for
trustee's sale or other documents
reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged
Property or to any legal action brought
to obtain judgment against any Mortgagor on
the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce
any other remedies or rights
provided by the Mortgage Note or Mortgage
or otherwise available at law or in
equity, or shall exercise and deliver to
the Servicer a power of attorney
sufficient to authorize the Servicer to
execute such documents on its behalf.
Each such certification shall include a
request that such pleadings or documents
be executed by the Trustee and a statement
as to the reason such documents or
pleadings are required and that the
execution and delivery thereof by the
Trustee will not invalidate or otherwise
affect the lien of the Mortgage, except
for the termination of such a lien upon
completion of the foreclosure or
trustee's sale.
Section 3.17 Title, Conservation and Disposition of REO
Property.
(a) This Section shall apply only to REO
Properties acquired for the account of
the Trustee and shall not apply to any REO
Property relating to a Mortgage Loan
which was purchased or repurchased from the
Trustee pursuant to any provision
hereof. In the event that title to any such
REO Property is acquired, the deed
or certificate of sale shall be issued to
the Trust, or if not permitted by law,
to Deutsche Bank National Trust Company
(or, if applicable, the name of the
successor Trustee) as Trustee for HSI Asset
Securitization Corporation 2005-NC1
Mortgage Pass-Through Certificates, Series
2005-NC1, or to its nominee, for the
benefit of the Certificateholders.
(b) The Servicer
shall manage, conserve, protect and operate each
REO Property for the Trustee solely for the
purpose of its prompt disposition
and sale. The Servicer, either itself or
through an agent selected by the
Servicer, shall manage, conserve, protect
and operate the REO Property in the
same manner that it manages, conserves,
protects and operates other foreclosed
property for its own account, and in the
same manner that similar property in
the same locality as the REO Property is
managed. The Servicer shall attempt to
sell the same (and may temporarily rent the
same for a period not greater than
one year, except as otherwise provided
below) on such terms and conditions as
the Servicer deems to be in the best
interest of the Trustee on behalf of the
Certificateholders. The Servicer shall
notify the Trustee from time to time as
to the status of each REO Property.
(c) The Servicer
shall use Accepted Servicing Practices to dispose
of the REO Property as soon as possible and
shall sell such REO Property in any
event within one year after title has been
taken to such REO Property, unless
the Servicer determines, and gives an
appropriate notice to the Trustee and the
Master Servicer to such effect, that a
longer period is necessary for the
orderly liquidation of such REO Property.
If a period longer than one year is
permitted under the foregoing sentence and
is necessary to sell any REO
Property, the Servicer shall report monthly
to the Master Servicer as to the
progress being made in selling such REO
Property.
(d) The Servicer
shall segregate and hold all funds collected and
received in connection with the operation
of any REO Property separate and apart
from its own funds and general assets and
shall deposit such funds in the
Collection Account.
(e) The Servicer
shall deposit net of reimbursement to the
Servicer for any related outstanding
Servicing Advances and unpaid Servicing
Fees provided in Section 3.11, or cause to
be deposited in the Collection
Account, in no event later than two
Business Days after the deposit of such
funds into the clearing account, all
revenues received with respect to the
related REO Property and shall withdraw
therefrom funds necessary for the proper
operation, management and maintenance of
the REO Property.
(f) The
Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed
Servicing Advances as well as any
unpaid Servicing Fees from proceeds
received in connection with the REO
Disposition, as further provided in Section
3.11.
(g) Any net
proceeds from an REO Disposition which are in excess
of the unpaid principal balance of the
related Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date
of the REO Disposition shall be
retained by the Servicer as additional
servicing compensation.
(h) The Servicer
shall use Accepted Servicing Practices to sell,
or cause the Subservicer to sell, in
accordance with Accepted Servicing
Practices, any REO Property as soon as
possible, but in no event later than the
conclusion of the third calendar year
beginning after the year of its
acquisition by the Lower Tier REMIC unless
(i) the Servicer applies for an
extension of such period from the Internal
Revenue Service pursuant to the REMIC
Provisions and Code Section 856(e)(3), in
which event such REO Property shall be
sold within the applicable extension
period, or (ii) th
