EXHIBIT 4.2
BEAR STEARNS ASSET BACKED SECURITIES I LLC,
Depositor
[_______________________],
Seller and Company
[_______________________],
Master Servicer and Securities Administrator
and
[_______________________],
Trustee
--------------------
POOLING AND SERVICING AGREEMENT
Dated as of _________ 1, 200__
----------------------------------------
BEAR STEARNS ASSET BACKED SECURITIES TRUST 200__-___
ASSET-BACKED CERTIFICATES, SERIES 200__-___
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
Section 1.01 Defined
Terms............................................................................
Section 1.02 Allocation of Certain Interest
Shortfalls................................................
ARTICLE II CONVEYANCE OF TRUST FUND REPRESENTATIONS AND
WARRANTIES
Section 2.01 Conveyance of Trust
Fund.................................................................
Section 2.02 Acceptance of the Mortgage
Loans.........................................................
Section 2.03 Representations, Warranties and Covenants of the
Company and the Seller..................
Section 2.04 Representations and Warranties of the
Depositor..........................................
Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases..........
Section 2.06 Countersignature and Delivery of
Certificates............................................
Section 2.07 Purposes and Powers of the
Trust.........................................................
ARTICLE III ADMINISTRATION AND SERVICING OF COMPANY MORTGAGE LOANS
BY COMPANY
Section 3.01 The
Company..............................................................................
Section 3.02 Due-on-Sale Clauses; Assumption
Agreements...............................................
Section 3.03
Subservicers.............................................................................
Section 3.04 Documents, Records and Funds in Possession of Company
to Be Held for Trustee.............
Section 3.05 Maintenance of Hazard
Insurance..........................................................
Section 3.06 Presentment of Claims and Collection of
Proceeds.........................................
Section 3.07 Maintenance of the Primary Mortgage Insurance
Policies...................................
Section 3.08 Fidelity Bond, Errors and Omissions
Insurance............................................
Section 3.09 Realization upon Defaulted Mortgage Loans;
Determination of Excess Liquidation Proceeds
and Realized Losses; Repurchases of Certain Mortgage
Loans.............................
Section 3.10 Servicing
Compensation...................................................................
Section 3.11 REO
Property.............................................................................
Section 3.12 Liquidation
Reports......................................................................
Section 3.13 Annual Statement as to
Compliance........................................................
Section 3.14 Assessments of Compliance and Attestation
Reports........................................
Section 3.15 Books and
Records........................................................................
ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY
MASTER SERVICER
Section 4.01 Master
Servicer..........................................................................
Section 4.02 REMIC-Related
Covenants..................................................................
Section 4.03 Monitoring of Company and
Servicer.......................................................
Section 4.04 Fidelity
Bond............................................................................
Section 4.05 Power to Act;
Procedures.................................................................
Section 4.06 Due-on-Sale Clauses; Assumption
Agreements...............................................
Section 4.07 Release of Mortgage
Files................................................................
Section 4.08 Documents, Records and Funds in Possession of Master
Servicer, Company and Servicer
to Be Held for
Trustee.................................................................
Section 4.09 Standard Hazard Insurance and Flood Insurance
Policies...................................
Section 4.10 Presentment of Claims and Collection of
Proceeds.........................................
Section 4.11 Maintenance of the Primary Mortgage Insurance
Policies...................................
Section 4.12 Trustee to Retain Possession of Certain Insurance
Policies and Documents.................
Section 4.13 Realization upon Defaulted Mortgage
Loans................................................
Section 4.14 Compensation for the Master
Servicer.....................................................
Section 4.15 REO
Property.............................................................................
Section 4.16 Annual Statement as to
Compliance........................................................
Section 4.17 Assessments of Compliance and Attestation
Reports........................................
Section 4.18
[Reserved.]..............................................................................
Section 4.19
Company..................................................................................
Section 4.20
UCC......................................................................................
Section 4.21 Optional Purchase of Certain Mortgage
Loans..............................................
Section 4.22 Books and
Records........................................................................
ARTICLE V ACCOUNTS
Section 5.01 Collection of Mortgage Loan Payments; Protected
Account..................................
Section 5.02 Permitted Withdrawals From the Protected
Account.........................................
Section 5.03 Collection of Taxes; Assessments and Similar Items;
Escrow Accounts......................
Section 5.04 Servicer Protected
Accounts..............................................................
Section 5.05 Master Servicer Collection
Account.......................................................
Section 5.06 Permitted Withdrawals and Transfers from the Master
Servicer Collection Account..........
Section 5.07 Distribution
Account.....................................................................
Section 5.08 Permitted Withdrawals and Transfers from the
Distribution Account........................
ARTICLE VI DISTRIBUTIONS AND ADVANCES
Section 6.01
Advances.................................................................................
Section 6.02 Compensating Interest
Payments...........................................................
Section 6.03
[Reserved.]..............................................................................
Section 6.04
Distributions............................................................................
Section 6.05 Monthly Statements to
Certificateholders.................................................
Section 6.06 REMIC
Designation........................................................................
ARTICLE VII THE CERTIFICATES
Section 7.01 The
Certificates.........................................................................
Section 7.02 Certificate Register; Registration of Transfer and
Exchange of Certificates..............
Section 7.03 Mutilated, Destroyed, Lost or Stolen
Certificates........................................
Section 7.04 Persons Deemed
Owners....................................................................
Section 7.05 Access to List of Certificateholders' Names and
Addresses................................
Section 7.06 Book-Entry
Certificates..................................................................
Section 7.07 Notices to
Depository....................................................................
Section 7.08 Definitive
Certificates..................................................................
Section 7.09 Maintenance of Office or
Agency..........................................................
ARTICLE VIII THE COMPANY AND THE MASTER SERVICER
Section 8.01 Liabilities of the Depositor, the Company and the
Master Servicer........................
Section 8.02 Merger or
Consolidation of the Depositor, the Company or the Master
Servicer.............
Section 8.03 Indemnification of the Trustee, the Master Servicer
and the Securities Administrator.....
Section 8.04 Limitations on Liability of the Depositor, the
Company, the Master Servicer and Others...
Section 8.05 Master Servicer and Company Not to
Resign................................................
Section 8.06 Successor Master
Servicer................................................................
Section 8.07 Sale and Assignment of Master
Servicing..................................................
ARTICLE IX DEFAULT; TERMINATION OF MASTER SERVICER; TERMINATION OF
COMPANY
Section 9.01 Events of
Default........................................................................
Section 9.02 Trustee to Act; Appointment of
Successor.................................................
Section 9.03 Notification to
Certificateholders.......................................................
Section 9.04 Waiver of
Defaults.......................................................................
Section 9.05 Company
Default..........................................................................
Section 9.06 Waiver of Company
Defaults...............................................................
ARTICLE X CONCERNING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR
Section 10.01 Duties of Trustee and Securities
Administrator..........................................
Section 10.02 Certain Matters Affecting the Trustee and the
Securities Administrator..................
Section 10.03 Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans......
Section 10.04 Trustee and Securities Administrator May Own
Certificates...............................
Section 10.05 Trustee's and Securities Administrator's Fees and
Expenses..............................
Section 10.06 Eligibility Requirements for Trustee and Securities
Administrator.......................
Section 10.07
Insurance...............................................................................
Section 10.08 Resignation and Removal of Trustee and Securities
Administrator.........................
Section 10.09 Successor Trustee or Securities
Administrator...........................................
Section 10.10 Merger or Consolidation of Trustee or Securities
Administrator..........................
Section 10.11 Appointment of Co-Trustee or Separate
Trustee...........................................
Section 10.12 Tax
Matters.............................................................................
Section 10.13 Reports Filed with Securities and Exchange
Commission...................................
Section 10.14 Intention of the Parties and
Interpretation.............................................
ARTICLE XI TERMINATION
Section 11.01 Termination upon Liquidation or Repurchase of all
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. 58
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...............................................
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Exhibits
--------
Exhibit A-1 Form
of Class A Certificates
Exhibit A-2 Form
of Class M Certificates
Exhibit A-3 Form
of Class B Certificates
Exhibit A-4 Form
of Class R Certificate
Exhibit B
Mortgage Loan Schedule
Exhibit C-1 Form
of Initial Certification of Trustee
Exhibit C-2 Form
of Interim Certification of Trustee
Exhibit C-3 Form
of Final Certification of Trustee
Exhibit D
Form of Transfer Affidavit
Exhibit E
Form of Transferor Certificate
Exhibit F
Form of Investment Letter (Non-Rule 144A)
Exhibit G
Form of Rule 144A Investment Letter
Exhibit H
Form of Request for Release
Exhibit I
DTC Letter of Representations
Exhibit J
Schedule of Mortgage Loans with Lost Notes
Exhibit K
Form of Custodial Agreement
Exhibit L
Form of Back-Up Certification
Exhibit M
Form of Mortgage Loan Purchase Agreement
Exhibit N
Servicing Criteria to Be Addressed in Assessment of Compliance
Exhibit O
Form 10-D, Form 8-K and Form 10-K Reporting Responsibility
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of _____ 1, 200__, among
BEAR
STEARNS ASSET BACKED SECURITIES I LLC, a Delaware limited liability
company, as
depositor (the "Depositor"),
_________________________________________, a
_______________________, as seller (in such capacity, the "Seller")
and as
company (in such capacity, the "Company"),
______________________________________________________, a
_____________________________, as master servicer (in such
capacity, the "Master
Servicer") and as securities administrator (in such capacity, the
"Securities
Administrator") and ________________________________________, a
___________________________________, not in its individual
capacity, but solely
as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to
the Trustee in return for the Certificates.
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of the Mortgage Loans and
certain other
related assets subject to this Agreement as a real estate mortgage
investment
conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of
assets will be designated as the "REMIC Trust." The Class R
Certificate will
represent the sole class of "residual interests" in the REMIC Trust
for purposes
of the REMIC Provisions (as defined herein) under federal income
tax law.
The following table irrevocably sets forth the Class
designation,
Pass-Through Rate and Initial Certificate Principal Balance for
each Class of
Certificates that represents one or more of the "regular interests"
in the REMIC
Trust created hereunder:
Initial Certificate
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Assumed
Final Class
Designation Maturity Date (1)
Principal Balance
Pass-Through Rate
--------------------------------- ------------------------
---------------------------
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[Class A-1]
$
Class A-1 Pass-Through Rate
[Class M-1]
$
Class M-1 Pass Through Rate
[Class M-2]
$
Class M-2 Pass-Through Rate
[Class B-1]
$
Class B-1 Pass Through Rate
</TABLE>
------------
(1) Solely for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the
maturity
date for the Mortgage Loan with the latest maturity date has
been
designated as the "latest possible maturity date" for each Class
of
Certificates that represents one or more of the "regular interests"
in
the REMIC Trust.
The Trust Fund shall be named, and may be referred to as, the
"Bear
Stearns Asset Backed Securities Trust 200__-___." The Certificates
issued
hereunder may be referred to as "Asset-Backed Certificates Series
200__-___"
(including for purposes of any endorsement or assignment of a
Mortgage Note or
Mortgage).
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Securities Administrator, the
Seller, the
Company and the Trustee agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
In addition to those terms defined in Section 1.02, whenever used
in
this Agreement, the following words and phrases, unless the context
otherwise
requires, shall have the following meanings:
Accepted Master Servicing Practices: With respect to any Mortgage
Loan,
as applicable, either (a) those customary mortgage servicing
practices of
prudent mortgage servicing institutions that master service
mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction
where the
related Mortgaged Property is located, to the extent applicable to
the Trustee
or the Master Servicer (except in its capacity as successor to the
Company or
the related Servicer), or (b) as provided in Section 3.01 hereof or
as provided
in the related Servicing Agreement, but, in each case, in no event
below the
standard set forth in clause (a).
Accepted Servicing Practices: With respect to each Company
Mortgage
Loan, those mortgage servicing practices (including collection
procedures) that
are in accordance with all applicable statutes, regulations and
prudent mortgage
banking practices for similar mortgage loans.
Account: The Distribution Account, the Master Servicer
Collection
Account, the Net WAC Reserve Fund and any Protected Account.
Accrual Period: With respect to the Certificates (other than the
Class
[M-2], Class [B-1] and Class R Certificates) and any Distribution
Date, the
calendar month immediately preceding such Distribution Date. With
respect to the
Class [M-2] Certificates and Class [B-1] Certificates and any
Distribution Date,
the period from and including the 25th day of the calendar month
preceding the
calendar month in which the Distribution Date occurs (or with
respect to the
first Accrual Period, the Closing Date) to and including the 24th
day of the
calendar month in which such Distribution Date occurs. All
calculations of
interest on the Certificates (other than the Class [M-2], Class
[B-1] and Class
R Certificates) will be made on the basis of a 360-day year
consisting of twelve
30-day months. All calculations of interest on the Class [M-2]
Certificates and
Class [B-1] Certificates will be made on the basis of the actual
number of days
elapsed in the related Accrual Period.
Advance: An advance of delinquent payments of principal or interest
in
respect of a Mortgage Loan required to be made by the Company as
provided in
Section 6.01(a) hereof, by the related Servicer in accordance with
the related
Servicing Agreement or by the Master Servicer as provided in
Section 6.01(b)
hereof.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms
herein.
Amount Held for Future Distribution: As to any Distribution Date,
the aggregate
amount held in the Company's or the related Servicer's Protected
Account at the
close of business on the immediately preceding Determination Date
on account of
(i) all Scheduled Payments or portions thereof received in respect
of the
Mortgage Loans due after the related Due Period and (ii) Principal
Prepayments,
Liquidation Proceeds and Insurance Proceeds received in respect of
such Mortgage
Loans after the last day of the related Prepayment Period.
Applied Realized Loss Amount: With respect to any Distribution Date
and
a Class of Subordinated Certificates the sum of the Realized Losses
with respect
to the Mortgage Loans which are to be applied in reduction of the
Certificate
Principal Balance of that Class of Certificates pursuant to this
Agreement,
which shall, on any such Distribution Date equal with respect to
the Class
[B-1], Class [M-2] and Class [M-1] Certificates, so long as their
respective
Certificate Principal Balances have not been reduced to zero, the
amount, if
any, by which, (i) the aggregate Certificate Principal Balance of
all of the
Certificates (after all distributions of principal on such
Distribution Date and
the allocation of Realized Losses on such Distribution Date)
exceeds (ii) the
aggregate Stated Principal Balance of all of the Mortgage Loans as
of the last
day of the related Due Period.
Appraised Value: With respect to any Mortgage Loan originated
in
connection with a refinancing, the appraised value of the Mortgaged
Property
based upon the appraisal made at the time of such refinancing or,
with respect
to any other Mortgage Loan, the lesser of (x) the appraised value
of the
Mortgaged Property based upon the appraisal made by a fee appraiser
at the time
of the origination of the related Mortgage Loan, and (y) the sales
price of the
Mortgaged Property at the time of such origination.
Assessment of Compliance: As defined in Section 4.17.
Assignment Agreement: Collectively, the _______________
Assignment
Agreement, the _______________ Assignment Agreement and the
_______________
Assignment Agreement.
Attestation Report: As
defined in Section 4.17.
Available Funds: The sum of Interest Funds and Principal Funds
with
respect to the Mortgage Loans.
Bankruptcy Code: Title 11 of the United States Code.
Basic Principal Distribution Amount: Shall mean, with respect to
any
Distribution Date, the lesser of (a) the excess of (i) the
Available Funds for
such Distribution Date over (ii) the aggregate Monthly Interest
Distributable
Amount for the Certificates (other than the Class R Certificate)
for such
Distribution Date and (b) the excess of (i) the Principal
Remittance Amount for
such Distribution Date over (ii) the Overcollateralization Release
Amount, if
any, for such Distribution Date.
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the
ownership of which
is reflected on the books of the Depository or on the books of a
person
maintaining an account with the Depository (directly, as a
"Depository
Participant", or indirectly, as an indirect participant in
accordance with the
rules of the Depository and as described in Section 7.06). As of
the Closing
Date, each Class of Regular Certificates constitutes a Class of
Book-Entry
Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or
(ii) a
day on which banking institutions in The City of New York, New
York,
_______________, or the city in which the Corporate Trust Office of
the Trustee
or the principal office of the Company or the Master Servicer is
located are
authorized or obligated by law or executive order to be closed.
Certificate: Any one of the certificates of any Class executed
and
authenticated by the Trustee in substantially the forms attached
hereto as
Exhibits A-1 through A-7.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than
the
Class R Certificate) and as of any Distribution Date, the Initial
Certificate
Principal Balance of such Certificate less the sum of (i) all
amounts
distributed with respect to such Certificate in reduction of the
Certificate
Principal Balance thereof on previous Distribution Dates pursuant
to Section
6.04, and (ii) in the case of any Subordinated Certificate, any
Applied Realized
Loss Amounts allocated to such Certificate on previous Distribution
Dates.
Certificate Register: The register maintained pursuant to Section
7.02
hereof.
Certificateholder or Holder: The person in whose name a Certificate
is
registered in the Certificate Register (initially, Cede & Co.,
as nominee for
the Depository, in the case of any Book-Entry Certificates).
Class: All Certificates bearing the same Class designation as set
forth
in Section 7.01 hereof.
Class A-1 Certificate: Any Certificate designated as a "Class
A-1
Certificate" on the face thereof, in the form of Exhibit A-1
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class A-1 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
Class A-1 Pass-Through Rate: Shall mean (i) on any Distribution
Date
which occurs on or prior to the Optional Termination Date, _____%
per annum and
(ii) for each Distribution Date thereafter, _____% per annum[, in
each case
subject to a cap equal to the Net WAC Rate Cap for such
Distribution Date].
Class B-1 Certificate: Any Certificate designated as a "Class
B-1
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class B-1 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
Class B-1 Pass-Through Rate: Shall mean (i) on any Distribution
Date
which occurs on or prior to the Optional Termination Date, the
related LIBOR
Rate and (ii) for each Distribution Date thereafter, the related
LIBOR Rate plus
_____% per annum, [in each case subject to a cap equal to the Net
WAC Rate Cap
for such Distribution Date].
Class M-1 Certificate: Any Certificate designated as a "Class
M-1
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class M-1 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
Class M-1 Pass-Through Rate: Shall mean (i) on any Distribution
Date
which occurs on or prior to the Optional Termination Date, _____%
per annum and
(ii) for each Distribution Date thereafter, _____% per annum[, in
each case
subject to a cap equal to the Net WAC Rate Cap for such
Distribution Date].
Class M-2 Certificate: Any Certificate designated as a "Class
M-2
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class M-2 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
Class M-2 Pass-Through Rate: Shall mean (i) on any Distribution
Date
which occurs on or prior to the Optional Termination Date, the
related LIBOR
Rate and (ii) for each Distribution Date thereafter, the related
LIBOR Rate plus
_____% per annum[, in each case subject to a cap equal to the Net
WAC Rate Cap
for such Distribution Date].
Class R Certificate: The Certificate designated the "Class R
Certificate" on the face thereof, in substantially the form set
forth in Exhibit
A-4 hereto, evidencing the sole class of "residual interests"
(within the
meaning of Section 860G(a)(2) in the REMIC Trust.
Closing Date: _____ __, 200__.
Code: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
Company Assessment of Compliance: As defined in Section 3.14.
Company Attestation Report: As defined in Section 3.14.
Compensating Interest: An amount, not to exceed the Servicing Fee,
to
be deposited in the Master Servicer Collection Account by the
Company or the
related Servicer to the payment of a Prepayment Interest Shortfall
on a Mortgage
Loan subject to this Agreement; provided that in the event the
Company or the
related Servicer fails to make such payment, the Master Servicer
shall be
obligated to do so pursuant to Section 6.02(c) hereof.
Corporate Trust Office: The designated office of the Trustee where
at
any particular time its corporate trust business with respect to
this Agreement
shall be administered, which office at the date of the execution of
this
Agreement is located at ______________________________, or at such
other address
as the Trustee may designate from time to time.
Cross-Over Date: The first Distribution Date on which the
aggregate
Certificate Principal Balance of the Subordinated Certificates has
been reduced
to zero (giving effect to all distributions on such Distribution
Date).
Custodial Agreement: An agreement dated as of the Closing Date
among
the Depositor, the Seller, the Trustee and the Custodian in
substantially the
form of Exhibit K hereto.
Custodian: ____________________________________, or any
successor
custodian appointed pursuant to the provisions hereof and the
Custodial
Agreement.
Cut-off Date: The close of business on _____ 1, 200__.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid
principal balance thereof as of the close of business on the
Cut-off Date after
application of all Principal Prepayments received prior to the
Cut-off Date and
scheduled payments of principal due on or before the Cut-off Date,
whether or
not received, but without giving effect to any installments of
principal
received in respect of Due Dates after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction
by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan that became final
and
non-appealable, except such a reduction resulting from a Deficient
Valuation or
any other reduction that results in a permanent forgiveness of
principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by
a court of competent jurisdiction of the Mortgaged Property in an
amount less
than the then outstanding indebtedness under such Mortgage Loan, or
any
reduction in the amount of principal to be paid in connection with
any Scheduled
Payment that results in a permanent forgiveness of principal, which
valuation or
reduction results from an order of such court that is final and
non-appealable
in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 7.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon
is not made pursuant to the terms of such Mortgage Loan by the
close of business
on the day such payment is scheduled to be due. A Mortgage Loan is
"30 days
delinquent" if such payment has not been received by the close of
business on
the corresponding day of the month immediately succeeding the month
in which
such payment was due, or, if there is no such corresponding day
(e.g., as when a
30-day month follows a 31-day month in which a payment was due on
the 31st day
of such month), then on the last day of such immediately succeeding
month.
Similarly for "60 days delinquent," "90 days delinquent" and so
on.
Denomination: With respect to each Certificate, the amount set
forth on
the face thereof as the "Initial Principal Balance of this
Certificate".
Depositor: Bear Stearns Asset Backed Securities I LLC, a
Delaware
limited liability company, or its successor in interest.
Depository: The initial Depository shall be The Depository
Trust
Company ("DTC"), the nominee of which is Cede & Co., or any
other organization
registered as a "clearing agency" pursuant to Section 17A of the
Securities
Exchange Act of 1934, as amended. The Depository shall initially be
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 Agreement: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and
the initial
Depository, dated as of the Closing Date, substantially in the form
of Exhibit
I.
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 any Distribution Date, the
_____th
day of the month of such Distribution Date or, if such _____th day
is not a
Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 5.07 in the name of
the Trustee
for the benefit of the Certificateholders and designated "[Name of
Trustee], in
trust for registered holders of Bear Stearns Asset Backed
Securities Trust
200__-___, Asset-Backed Certificates, Series 200__-___". 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, on
or
before 3:00 p.m. Eastern time on the Business Day immediately
preceding such
Distribution Date.
Distribution Date: The _____th day of each calendar month after
the
initial issuance of the Certificates, or if such _____th day is not
a Business
Day, the next succeeding Business Day, commencing in _____
200__.
Due Date: As to any Mortgage Loan, the date in each month on which
the
related Scheduled Payment is due, as set forth in the related
Mortgage Note.
Due Period: With respect to any Distribution Date, the period from
the
second day of the calendar month preceding the calendar month in
which such
Distribution Date occurs through close of business on the first day
of the
calendar month in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with
a
federal or state chartered depository institution or trust company,
the
long-term unsecured debt obligations and short-term unsecured debt
obligations
of which (or, in the case of a depository institution or trust
company that is
the principal subsidiary of a holding company, the debt obligations
of such
holding company, so long as Moody's is not a Rating Agency) are
rated by each
Rating Agency in one of its two highest long-term and its highest
short-term
rating categories respectively, at the time any amounts are held on
deposit
therein, or (ii) an account or accounts in a depository institution
or trust
company in which such accounts are insured by the FDIC (to the
limits
established by the FDIC) and the uninsured deposits in which
accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to
the Trustee and to each Rating Agency, the Certificateholders have
a claim with
respect to the funds in such account or a perfected first priority
security
interest against any collateral (which shall be limited to
Permitted
Investments) securing such funds that is superior to claims of any
other
depositors or creditors of the depository institution or trust
company in which
such account is maintained, or (iii) a trust account or accounts
maintained with
the corporate trust department of a federal or state chartered
depository
institution or trust company having capital and surplus of not less
than
$50,000,000, acting in its fiduciary capacity or (iv) any other
account
acceptable to the Rating Agencies. Eligible Accounts may bear
interest, and may
include, if otherwise qualified under this definition, accounts
maintained with
the Trustee.
Company Mortgage Loans: Shall mean those Mortgage Loans serviced by
the
Company pursuant to the terms of this Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Restricted Certificate: The Class R Certificate.
Event of Default: As defined in Section 9.01 hereof.
Exemption: Prohibited Transaction Exemption 90-30, as amended from
time
to time.
Excess Liquidation Proceeds: To the extent not required by law to
be
paid to the related Mortgagor, the excess, if any, of any
Liquidation Proceeds
with respect to a Mortgage Loan over the Stated Principal Balance
of such
Mortgage Loan and accrued and unpaid interest at the related
Mortgage Rate
through the last day of the month in which the Mortgage Loan has
been
liquidated.
Extra Principal Distribution Amount: With respect to any
Distribution
Date (a) on or prior to the earlier of (1) the [10]% Clean-Up Call
Date and (2)
the Distribution Date in _____ 20_____, the lesser of (x) the Net
Monthly Excess
Cashflow for such Distribution Date and (y) the
Overcollateralization Increase
Amount for such Distribution Date; and (b) thereafter, the Net
Monthly Excess
Cashflow for such Distribution Date.
Fannie Mae: Fannie Mae (formerly, 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 Seller or the [Master Servicer] pursuant to or as
contemplated by Section
2.03(c) or Section 11.01), a determination made by the Company
pursuant to this
Agreement or the applicable Servicer pursuant to the related
Servicing Agreement
that all Insurance Proceeds, Liquidation Proceeds and other
payments or
recoveries which the Company or such Servicer, in its reasonable
good faith
judgment, expects to be finally recoverable in respect thereof have
been so
recovered. The Master Servicer shall maintain records, based solely
on
information provided by each Servicer, of each Final Recovery
Determination made
thereby.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement
Act of 1989.
Freddie Mac: Freddie Mac (formerly The Federal Home Loan
Mortgage
Corporation), or any successor thereto.
Indemnified Persons: The Trustee, the Master Servicer, the Company,
the
Trust Fund and the Securities Administrator and their officers,
directors,
agents and employees and, with respect to the Trustee, any separate
co-trustee
and its officers, directors, agents and employees.
Initial Certificate Principal Balance: With respect to any
Certificate,
the Certificate Principal Balance of such Certificate or any
predecessor
Certificate on the Closing Date.
Insurance Policy: With respect to any Mortgage Loan included in
the
Trust Fund, any insurance policy or LPMI Policy, including all
riders and
endorsements thereto in effect with respect to such Mortgage Loan,
including any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage
Loans
pursuant to any Insurance Policy or any other insurance policy
covering a
Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under
the Mortgage, the Company, the related Servicer or the trustee
under the deed of
trust and are not applied to the restoration of the related
Mortgaged Property
or released to the Mortgagor in accordance with the procedures that
the Company
or the related Servicer would follow in servicing mortgage loans
held for its
own account, in each case other than any amount included in such
Insurance
Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
other
insurance policy with respect to the Mortgage Loans.
Interest Determination Date: Shall mean the second LIBOR Business
Day
preceding the commencement of each Accrual Period.
Interest Funds: For any Distribution Date, (i) the sum, without
duplication, of (a) all scheduled interest during the related Due
Period with
respect to the related Mortgage Loans less the Servicing Fee, the
Master
Servicing Fee and the LPMI Fee, if any, (b) all Advances relating
to interest
with respect to the related Mortgage Loans made on or prior to the
related
Distribution Account Deposit Date, (c) all Compensating Interest
with respect to
the related Mortgage Loans and required to be remitted by the
Company or the
Master Servicer pursuant to this Agreement or the related Servicer
pursuant to
the related Servicing Agreement with respect to such Distribution
Date, (d)
Liquidation Proceeds with respect to the related Mortgage Loans
collected during
the related Prepayment Period (to the extent such Liquidation
Proceeds relate to
interest), (e) all amounts relating to interest with respect to
each Mortgage
Loan repurchased by the Seller pursuant to Sections 2.02 and 2.03
and by Company
pursuant to Section 4.21 and (f) all amounts in respect of interest
paid by the
Master Servicer pursuant to Section 11.01, in each case to the
extent remitted
by the Company or the related Servicer, as applicable, to the
Distribution
Account pursuant to this Agreement or the related Servicing
Agreement minus (ii)
all amounts relating to interest required to be reimbursed pursuant
to Sections
5.02, 5.04, 5.06 and 5.08 or as otherwise set forth in this
Agreement.
Interest Shortfall: With respect to any Distribution Date, means
the
aggregate shortfall, if any, in collections of interest (adjusted
to the related
Net Mortgage Rates) on Mortgage Loans resulting from (a) Principal
Prepayments
in full received during the related Prepayment Period, (b) the
partial Principal
Prepayments received during the related Prepayment Period to the
extent applied
prior to the Due Date in the month of the Distribution Date and (c)
interest
payments on certain of the Mortgage Loans being limited pursuant to
the
provisions of the Relief Act or similar state laws.
Last Scheduled Distribution Date: _____ __, 20___.
Latest Possible Maturity Date: The Distribution Date following
the
final scheduled maturity date of the Mortgage Loan in the Trust
Fund having the
latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Shall mean a day on which banks are open
for
dealing in foreign currency and exchange in London and New York
City.
LIBOR Rate: Shall mean (i) with respect to the Class [M-2]
Certificates, [One-Month] LIBOR plus _____% per annum and (ii) with
respect to
the Class [B-1] Certificates, [One-Month] LIBOR plus _____% per
annum.
Liquidated Loan: With respect to any Distribution Date, a
defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure,
foreclosure sale, trustee's sale or other realization as provided
by applicable
law governing the real property subject to the related Mortgage and
any security
agreements and as to which the Company or the related Servicer has
made a Final
Recovery Determination with respect thereto.
Liquidation Proceeds: Amounts, other than Insurance Proceeds,
received
in connection with the partial or complete liquidation of a
Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise, or
in connection
with any condemnation or partial release of a Mortgaged Property
and any other
proceeds received with respect to an REO Property, less the sum of
related
unreimbursed Advances, Servicing Fees, Master Servicing Fees and
Servicing
Advances and all expenses of liquidation, including property
protection expenses
and foreclosure and sale costs, including court and reasonable
attorneys' fees.
Loan-to-Value Ratio: The fraction, expressed as a percentage,
the
numerator of which is the original principal balance of the related
Mortgage
Loan and the denominator of which is the Appraised Value of the
related
Mortgaged Property.
Loss Allocation Limitation: The meaning specified in Section
6.04A(c)
hereof.
LPMI Fee: Shall mean the fee payable to the insurer for each
Mortgage
Loan subject to an LPMI Policy as set forth in such LPMI
Policy.
LPMI Policy: A policy of mortgage guaranty insurance issued by
an
insurer meeting the requirements of Fannie Mae and Freddie Mac in
which the
Company or the related Servicer of the related Mortgage Loan is
responsible for
the payment of the LPMI Fee thereunder from collections on the
related Mortgage
Loan.
Master Servicer: ________________________________, in its capacity
as
master servicer, and its successors and assigns.
Master Servicer Collection Account: The trust accounts or
accounts
created and maintained pursuant to Section 5.05 hereof, which shall
be entitled
"[Name of Servicer], as Trustee f/b/o holders of Bear Stearns Asset
Backed
Securities Trust 200__-___, Asset Backed Certificates, Series
200__-___, Master
Servicer Collection Account".
Master Servicing Fee: As to each Mortgage Loan and any
Distribution
Date, an amount equal to 1/12th of the Master Servicing Fee Rate
multiplied by
the Stated Principal Balance of such Mortgage Loan as of the last
day of the
related Due Period or, in the event of any payment of interest that
accompanies
a Principal Prepayment in full during the related Due Period made
by the
Mortgagor immediately prior to such prepayment, interest at the
Master Servicing
Fee Rate on the Stated Principal Balance of such Mortgage Loan for
the period
covered by such payment of interest.
Master Servicing Fee Rate: ___% per annum.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of the State of Delaware, or
any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans
registered
with MERS on the MERS(R) System.
MOM Loan: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the
originator of such
Mortgage Loan and its successors and assigns, at the origination
thereof.
Monthly Interest Distributable Amount: With respect to the
Certificates
(other than the Class R Certificate) for any Distribution Date,
means an amount
equal to the interest accrued during the related Accrual Period at
the
applicable Pass-Through Rate on the Certificate Principal Balance
of such
Certificate immediately prior to such Distribution Date less such
Certificate's
share of any Unpaid Interest Shortfall and the interest portion of
any Realized
Losses on the Mortgage Loans allocated to such Certificate pursuant
to Section
1.02. Accrued Certificate Interest is calculated on the basis of a
360-day year
consisting of twelve 30-day months. No Accrued Certificate Interest
will be
payable with respect to any Class of Certificates after the
Distribution Date on
which the outstanding Certificate Principal Balance of such
Certificate has been
reduced to zero.
Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 6.05.
Moody's: Moody's Investors Service, Inc.
Mortgage: The mortgage, deed of trust or other instrument creating
a
first lien on or first priority ownership interest in an estate in
fee simple in
real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof
pertaining to a particular Mortgage Loan and any additional
documents delivered
to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loans: Such of the Mortgage Loans transferred and assigned
to
the Trustee pursuant to the provisions hereof, as from time to time
are held as
a part of the Trust Fund (including any REO Property), the mortgage
loans so
held being identified in the Mortgage Loan Schedule,
notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property.
Any mortgage
loan that was intended by the parties hereto to be transferred to
the Trust Fund
as indicated by such Mortgage Loan Schedule which is in fact not so
transferred
for any reason including, without limitation, a breach of the
representation
contained in Section 2.03(b)(v) hereof, shall continue to be a
Mortgage Loan
hereunder until the Purchase Price with respect thereto has been
paid to the
Trust Fund. Mortgage Loan Purchase Agreement: The Mortgage Loan
Purchase
Agreement dated as of ____ __, 200__, between the Seller, as seller
and the
Depositor, as purchaser.
Mortgage Loan Purchase Price: The price, calculated as set forth
in
Section 11.01, to be paid in connection with the repurchase of the
Mortgage
Loans pursuant to Section 11.01.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time
to
time amended by the Company or the Master Servicer to reflect the
deletion of
Deleted Mortgage Loans and the addition of Replacement Mortgage
Loans pursuant
to the provisions of this Agreement) transferred to the Trustee as
part of the
Trust Fund and from time to time subject to this Agreement, the
initial Mortgage
Loan Schedule being attached hereto as Exhibit B, setting forth the
following
information with respect to each Mortgage Loan:
(i) the loan
number;
(ii)
the Mortgage Rate in effect as of the Cut-off Date;
(iii) the
Servicer (or the Company, if it services the Mortgage Loan),the
Servicing Fee Rate and the Master Servicing Fee Rate;
(iv)
the Net Mortgage Rate in effect as of the Cut-off Date;
(v) the
maturity date;
(vi)
the original principal balance;
(vii) the
Cut-off Date Principal Balance;
(viii) the
original term;
(ix)
the remaining term;
(x) the
property type; and
(xi)
the MIN with respect to each Mortgage Loan. Such schedule shall
also
set forth the aggregate Cut-off Date Principal Balance for all of
the
Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage
Note.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligors on a Mortgage Note.
Net Interest Shortfalls: Shall mean Interest Shortfalls net of
payments
by the Company, the Servicer or the Master Servicer in respect of
Compensating
Interest.
Net Monthly Excess Cashflow: With respect to any Distribution Date,
the
sum of (a) any Overcollateralization Release Amount and (b) the
excess of (x)
the Available Funds for such Distribution Date over (y) the sum for
such
Distribution Date of (A) the aggregate amount of the Monthly
Interest
Distributable Amount for the Offered Certificates and (B) the
Principal
Remittance Amount.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the
per
annum rate equal to the related Mortgage Rate less the sum of (i)
the Servicing
Fee Rate, (ii) the Master Servicing Fee Rate and (iii) the rate at
which the
LPMI Fee is calculated, if any.
Net WAC Rate Cap: With respect to each Class of Offered
Certificates
and each Distribution Date shall mean the weighted average of the
Net Mortgage
Rates of the Mortgage Loans, weighted based on their Stated
Principal Balances
as of the first day of the calendar month preceding the month in
which the
Distribution Date occurs.
Non-Book-Entry Certificate: Any Certificate other than a
Book-Entry
Certificate.
Nonrecoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Company or the Master Servicer pursuant
to this
Agreement or the related Servicer pursuant to the related Servicing
Agreement,
that, in the good faith judgment of the Company, the Master
Servicer or the
related Servicer, will not or, in the case of a proposed advance,
would not, be
ultimately recoverable by it from the related Mortgagor, related
Liquidation
Proceeds, Insurance Proceeds or otherwise.
Offered Certificates: The Class [A-1], Class [M-1], Class [M-2]
and
Class [B-1] Certificates.
Officer's Certificate: A certificate (i) signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President, a Vice
President (however
denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor or the
Master Servicer (or any other officer customarily performing
functions similar
to those performed by any of the above designated officers and also
to whom,
with respect to a particular matter, such matter is referred
because of such
officer's knowledge of and familiarity with a particular subject)
or (ii), if
provided for in this Agreement, signed by a Servicing Officer, as
the case may
be, and delivered to the Depositor, the Seller, the Securities
Administrator,
the Master Servicer and/or the Trustee, as the case may be, as
required by this
Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Securities Administrator on the related Interest
Determination
Date on the basis of the rate for U.S. dollar deposits for one
month that
appears on Telerate Screen Page 3750 as of 11:00 a.m. (London time)
on such
Interest Determination Date; provided that the parties hereto
acknowledge that
One-Month LIBOR for the first Accrual Period shall equal _____% per
annum. If
such rate does not appear on such page (or such other page as may
replace that
page on that service, or if such service is no longer offered, such
other
service for displaying One-Month LIBOR or comparable rates as may
be reasonably
selected by the Securities Administrator), One-Month LIBOR for the
applicable
Accrual Period will be the Reference Bank Rate. If no such
quotations can be
obtained by the Securities Administrator and no Reference Bank Rate
is
available, One-Month LIBOR will be One-Month LIBOR applicable to
the preceding
Accrual Period. The establishment of One-Month LIBOR on each
Interest
Determination Date by the Securities Administrator and the
Securities
Administrator's calculation of the rate of interest applicable to
the Class
[M-2] Certificates and Class [B-1] Certificates for the related
Accrual Period
shall, in the absence of manifest error, be final and binding.
Opinion of Counsel: A written opinion of counsel, who may be
counsel
for the Seller, the Depositor, the Company or the Master Servicer,
reasonably
acceptable to each addressee of such opinion; provided that with
respect to
Section 2.05, 8.05, 8.07 or 12.01, or the interpretation or
application of the
REMIC Provisions, such counsel must (i) in fact be independent of
the Seller,
Depositor, the Company and the Master Servicer, (ii) not have any
direct
financial interest in the Seller, Depositor, the Company or the
Master Servicer
or in any affiliate of either, and (iii) not be connected with the
Seller,
Depositor, the Company or the Master Servicer as an officer,
employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.
Optional Termination: The termination of the Trust Fund created
hereunder as a result of the purchase of all of the Mortgage Loans
and any REO
Property pursuant to the last sentence of Section 11.01 hereof.
Optional Termination Date: The first Distribution Date on which
the
Trust Fund may be terminated at the option of the [Master Servicer]
as described
under Section 11.01.
Original Value: The value of the property underlying a Mortgage
Loan
based, in the case of the purchase of the underlying Mortgaged
Property, on the
lower of an appraisal or the sales price of such property or, in
the case of a
refinancing, on an appraisal.
Originator: With respect to each Mortgage Loan, shall mean the
originator set forth in the Mortgage Loan Schedule for such
Mortgage Loan.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Trustee or delivered
to
the Trustee for cancellation; and
(b) Certificates in exchange for which or in lieu of which
other
Certificates have been executed and delivered by the Trustee
pursuant to this
Agreement.
Outstanding Mortgage Loan: As of any date of determination, a
Mortgage
Loan with a Stated Principal Balance greater than zero that was not
the subject
of a Principal Prepayment in full, and that did not become a
Liquidated Loan,
prior to the end of the related Prepayment Period.
Overcollateralized Amount: With respect to any Distribution Date,
is
the excess, if any, of (a) the aggregate Stated Principal Balances
of the
Mortgage Loans as of the last day of the related Due Period over
(b) the
Certificate Principal Balances of the Offered Certificates on such
Distribution
Date (after taking into account the payment of principal other than
any Extra
Principal Distribution Amount on such Certificates).
Overcollateralization Increase Amount: As of any Distribution
Date
after the Distribution Date in ______ 200__ the excess, if any, of
(a) the
Overcollateralization Target Amount over (b) the Overcollateralized
Amount on
such Distribution Date (after taking into account payments to the
Offered
Certificates of the Basic Principal Distribution Amount on such
Distribution
Date).
Overcollateralization Release Amount: With respect to any
Distribution
Date, the lesser of (x) the Principal Remittance Amount for such
Distribution
Date and (y) the excess, if any, of (i) the Overcollateralized
Amount for such
Distribution Date (assuming that 100% of the Principal Remittance
Amount is
applied as a principal payment on such Distribution Date) over (ii)
the
Overcollateralization Target Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution
Date, $________.
Ownership Interest: As to any 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.
Pass-Through Rate: With respect to each Class of Certificates,
the
applicable Pass-Through Rate for each such Class as set forth in
the Preliminary
Statement.
Percentage Interest: With respect to any Certificate of a
specified
Class, the Percentage Interest set forth on the face thereof or the
percentage
obtained by dividing the Denomination of such Certificate by the
aggregate of
the Denominations of all Certificates of the such Class.
Permitted Investments: At any time, any one or more of the
following
obligations and securities:
(i)
obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and
credit of the United States;
(ii)
general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such
lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by
each Rating Agency;
(iii)
[Reserved];
(iv)
commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each
Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency;
(v)
certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of
any state thereof and subject to supervision and examination
by federal and/or state banking authorities (including the
Trustee in its commercial banking capacity), provided that the
commercial paper and/or long term unsecured debt obligations
of such depository institution or trust company are then rated
one of the two highest long-term and the highest short-term
ratings of each such Rating Agency for such securities, or
such lower ratings as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by
any Rating Agency;
(vi)
demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent
that such deposits are fully insured by the FDIC;
(vii)
guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time
of the issuance of such agreements, such terms and conditions
as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates by any such Rating
Agency;
(viii)
repurchase obligations with respect to any security described
in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as
principal) described in clause (v) above;
(ix)
securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of [115]% of
the face amount
thereof) bearing interest or sold at a
discount issued by any corporation incorporated under the laws
of the United States or any state thereof which, at the time
of such investment, have one of the two highest long term
ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper
rating of Moody's for any such securities), or such lower
rating as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any Rating
Agency, as evidenced by a signed writing delivered by each
Rating Agency;
(x) interests
in any money market fund (including any such fund
managed or advised by the Trustee or Master Servicer or any
affiliate thereof) which at the date of acquisition of the
interests in such fund and throughout the time such interests
are held in such fund has the highest applicable long term
rating by each Rating Agency or such lower rating as will not
result in the
downgrading or withdrawal of the ratings then
assigned to the Certificates by each Rating Agency;
(xi)
short term investment funds sponsored by any trust company or
banking association incorporated under the laws of the United
States or any state thereof (including any such fund managed
or advised by the Trustee or any affiliate thereof) which on
the date of acquisition has been rated by each Rating Agency
in their respective highest applicable rating category or such
lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by
each Rating Agency; and
(xii) such
other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to each
Rating Agency as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by
any Rating Agency, as evidenced by a signed writing delivered
by each Rating Agency; provided, that no such instrument shall
be a Permitted Investment if such instrument (i) evidences the
right to receive interest only payments with respect to the
obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided
further that no such instrument shall be a Permitted
Investment (A) if such instrument evidences principal and
interest payments derived from obligations underlying such
instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of
the yield to maturity at par of such underlying obligations,
or (B) if it may be redeemed at a price below the purchase
price (the foregoing clause (B) not to apply to investments in
units of money market funds pursuant to clause (vii) above);
provided further that no amount beneficially owned by the
REMIC Trust may be invested in investments (other than money
market funds) treated as equity interests for federal income
tax purposes, unless the Master Servicer shall receive an
Opinion of Counsel, at the expense of the Master Servicer, to
the effect that such investment will not adversely affect the
status of the REMIC Trust as a REMIC under the Code or result
in imposition of a tax on the REMIC Trust. Permitted
Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
Permitted Transferee: Any person other than (i) the United States,
any
State or political subdivision thereof, any possession of the
United States 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) that 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 the
Class R
Certificate, (iv) rural electric and telephone cooperatives
described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or
resident of the
United States, a corporation, partnership (other than a partnership
that has any
direct or indirect foreign partners) or other entity (treated as a
corporation
or a partnership for federal income tax purposes), created or
organized in or
under the laws of the United States, any state thereof or the
District of
Columbia, an estate whose income from sources without the United
States is
includible in gross income for United States federal income tax
purposes
regardless of its connection with the conduct of a trade or
business within the
United States, or 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 United States persons have authority to control all
substantial decisions
of the trustor and (vi) any other Person so designated by the
Trustee based upon
an Opinion of Counsel addressed to the Trustee (which shall not be
an expense of
the Trustee) that states that the Transfer of an Ownership Interest
in the Class
R Certificate to such Person may cause the REMIC Trust created
hereunder to fail
to qualify as a REMIC at any time that any 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, joint- stock company, limited liability company,
trust,
unincorporated organization or government, or any agency or
political
subdivision thereof.
Prepayment Assumption: The applicable rate of prepayment, as
described
in the Prospectus Supplement relating to each Class of Offered
Certificates.
Prepayment Interest Shortfall: With respect to any Distribution
Date,
for each Mortgage Loan that was the subject of a partial Principal
Prepayment, a
Principal Prepayment in full, or that became a Liquidated Loan
during the
related Prepayment Period, (other than a Principal Prepayment in
full resulting
from the purchase of a Mortgage Loan pursuant to Section 2.02,
2.03, 4.21 or
11.01 hereof), the amount, if any, by which (i) one month's
interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of
such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in
the case of a
partial Principal Prepayment on the amount of such prepayment (or
liquidation
proceeds) exceeds (ii) the amount of interest paid or collected in
connection
with such Principal Prepayment or such liquidation proceeds less
the sum of (a)
the related Servicing Fee and (b) the LPMI Fee, if any.
Prepayment Period: As to any Distribution Date and (i) each
Company
Mortgage Loan, the calendar month immediately preceding the month
in which such
Distribution Date occurs and (ii) any other Mortgage Loan, the
period set forth
in the related Servicing Agreement.
Primary Mortgage Insurance Policy: Any primary mortgage
guaranty
insurance policy issued in connection with a Mortgage Loan which
provides
compensation to a Mortgage Note holder in the event of default by
the obligor
under such Mortgage Note or the related security instrument, if any
or any
replacement policy therefor through the related Accrual Period for
such Class
relating to a Distribution Date.
Principal Distribution Amount: With respect to each Distribution
Date,
is equal to the sum of the Basic Principal Distribution Amount for
such
Distribution Date, plus any Extra Principal Distribution Amount for
such
Distribution Date.
Principal Funds: With respect to any Distribution Date, (i) the
sum,
without duplication, of (a) all scheduled principal collected
during the related
Due Period, (b) all Advances relating to principal made on or prior
to the
Distribution Account Deposit Date, (c) Principal Prepayments
exclusive of
prepayment charges or penalties collected during the related
Prepayment Period,
(d) the Stated Principal Balance of each Mortgage Loan that was
repurchased by
the Seller pursuant to Sections 2.02 or 2.03 or by the Company
pursuant to
Section 4.21, (e) the aggregate of all Substitution Adjustment
Amounts for the
related Determination Date in connection with the substitution of
Mortgage Loans
pursuant to Section 2.03(c), (e) all Liquidation Proceeds collected
during the
related Prepayment Period (to the extent such Liquidation Proceeds
relate to
principal) and remitted by the Company or the related Servicer to
the
Distribution Account pursuant to this Agreement or the related
Servicing
Agreement and (f) amounts in respect of principal paid by the
[Master Servicer]
pursuant to Section 11.01 minus (ii) all amounts required to be
reimbursed
pursuant to Sections 5.02, 5.04, 5.06 and 5.08 or as otherwise set
forth in this
Agreement.
Principal Remittance Amount: With respect to each Distribution
Date,
the sum of the amounts listed in clauses (a) through (e) of the
definition of
Principal Funds.
Principal Prepayment: Any Mortgagor payment or other recovery of
(or
proceeds with respect to) principal on a Mortgage Loan (including
loans
purchased or repurchased under Sections 2.02, 2.03, 4.21 and 11.01
hereof) that
is received in advance of its scheduled Due Date and is not
accompanied by an
amount as to interest representing scheduled interest due on any
date or dates
in any month or months subsequent to the month of prepayment.
Partial Principal
Prepayments shall be applied by the Company or the related
Servicer, as
appropriate, in accordance with the terms of the related Mortgage
Note.
Private Certificate: The Class R Certificate.
Prospectus Supplement: The Prospectus Supplement dated ___________
__,
20__ relating to the public offering of the Offered
Certificates.
Protected Account: Each account established and maintained by
the
Company with respect to receipts on the Mortgage Loans and REO
Property in
accordance with Section 5.01 hereof or by the related Servicer in
accordance
with the related Servicing Agreement.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to
be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof,
an amount
equal to the sum of (i) 100% of the outstanding principal balance
of the
Mortgage Loan as of the date of such purchase plus (ii) accrued
interest thereon
at the applicable Mortgage Rate through the first day of the month
in which the
Purchase Price is to be distributed to Certificateholders, reduced
by any
portion of the Servicing Fee, Master Servicing Fee, Servicing
Advances and
Advances payable to the purchaser of the Mortgage Loan plus and
(iii) any costs
and damages (if any) incurred by the Trust in connection with any
violation of
such Mortgage Loan of any predatory or abusive lending laws.
Rating Agency: Each of [Moody's] and [S&P]. If any such
organization or
its successor is no longer in existence, "Rating Agency" shall be a
nationally
recognized statistical rating organization, or other comparable
Person,
designated by the Depositor, notice of which designation shall be
given to the
Trustee. References herein to a given rating category of a Rating
Agency shall
mean such rating category without giving effect to any
modifiers.
Realized Loss: With respect to each Mortgage Loan as to which a
Final
Recovery Determination has been made, an amount (not less than
zero) equal to
(i) the unpaid principal balance of such Mortgage Loan as of the
commencement of
the calendar month in which the Final Recovery Determination was
made, plus (ii)
accrued interest from the Due Date as to which interest was last
paid by the
Mortgagor through the end of the calendar month in which such Final
Recovery
Determination was made, calculated in the case of each calendar
month during
such period (A) at an annual rate equal to the annual rate at which
interest was
then accruing on such Mortgage Loan and (B) on a principal amount
equal to the
Stated Principal Balance of such Mortgage Loan as of the close of
business on
the Distribution Date during such calendar month, minus (v) the
proceeds, if
any, received in respect of such Mortgage Loan during the calendar
month in
which such Final Recovery Determination was made, net of amounts
that are
payable therefrom to the Company pursuant to this Agreement or the
applicable
Servicer pursuant to the related Servicing Agreement.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal
to (i) the
unpaid principal balance of the related Mortgage Loan as of the
date of
acquisition of such REO Property on behalf of the REMIC Trust, plus
(ii) accrued
interest from the Due Date as to which interest was last paid by
the Mortgagor
in respect of the related Mortgage Loan through the end of the
calendar month
immediately preceding the calendar month in which such REO Property
was
acquired, calculated in the case of each calendar month during such
period (A)
at an annual rate equal to the annual rate at which interest was
then accruing
on the related Mortgage Loan and (B) on a principal amount equal to
the Stated
Principal Balance of the related Mortgage Loan as of the close of
business on
the Distribution Date during such calendar month, plus (iii) REO
Imputed
Interest for such REO Property for each calendar month commencing
with the
calendar month in which such REO Property was acquired and ending
with the
calendar month in which such Final Recovery Determination was made,
minus (iv)
the aggregate of all unreimbursed Advances and Servicing
Advances.
With respect to each Mortgage Loan which has become the subject of
a
Deficient Valuation, the difference between the principal balance
of the
Mortgage Loan outstanding immediately prior to such Deficient
Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the subject of
a
Debt Service Reduction, the portion, if any, of the reduction in
each affected
Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a
court of competent jurisdiction. Each such Realized Loss shall be
deemed to have
been incurred on the Due Date for each affected Monthly
Payment.
Record Date: With respect to the Certificates (other than the
Class
[M-2] Certificates and Class [B-1] Certificates) and any
Distribution Date, the
close of business on the last Business Day of the month preceding
the month in
which such Distribution Date occurs. With respect to any
Distribution Date and
the Class [M-2] Certificates and Class [B-1] Certificates, so long
as the Class
[M-2] Certificates and Class [B-1] Certificates are Book-Entry
Certificates, the
Business Day preceding such Distribution Date, and otherwise, the
close of
business on the last Business Day of the month preceding the month
in which such
Distribution Date occurs.
Reference Banks: Shall mean leading banks selected by the
Securities
Administrator and engaged in transactions in Eurodollar deposits in
the
international Eurocurrency market (i) with an established place of
business in
London, (ii) which have been designated as such by the Securities
Administrator
and (iii) which are not controlling, controlled by, or under common
control
with, the Depositor, the Seller or the Master Servicer.
Reference Bank Rate: With respect to any Accrual Period shall mean
the
arithmetic mean, rounded upwards, if necessary, to the nearest
whole multiple of
[0.03125%], of the offered rates for United States dollar deposits
for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York
City time, on
the related Interest Determination Date to prime banks in the
London interbank
market for a period of one month in an amount approximately equal
to the
aggregate Certificate Principal Balance of the Class [M-2]
Certificates and
Class [B-1] Certificates for such Accrual Period, provided that at
least two
such Reference Banks provide such rate. If fewer than two offered
rates appear,
the Reference Bank Rate will be the arithmetic mean, rounded
upwards, if
necessary, to the nearest whole multiple of [0.03125]%, of the
rates quoted by
one or more major banks in New York City, selected by the
Securities
Administrator, as of 11:00 a.m., New York City time, on such date
for loans in
United States dollars to leading European banks for a period of one
month in
amounts approximately equal to the aggregate Certificate Principal
Balance of
the Class [M-2] Certificates and Class [B-1] Certificates for such
Accrual
Period.
Regular Certificate: Any Certificate other than the Class R
Certificate.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R.
ss.ss.229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have
been provided
by the Commission in the adopting release (Asset-Backed
Securities,
Securities
Act Release No.
33-8518, 70 Fed. Reg.
1,506, 1,531 (Jan. 7, 2005)) or by
the
staff of the
Commission, or as may
be provided by the
Commission or its staff
from time to time.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as
amended or any similar state law.
REMIC: A "real estate mortgage investment conduit" within the
meaning
of section 860D of the Code.
REMIC Trust: The segregated pool of assets described in Section
6.06(a).
REMIC Certificates: The REMIC Regular Certificates and the Class
R
Certificate.
REMIC Opinion: Shall mean an Opinion of Counsel to the effect that
the
proposed action will not have an adverse affect on the REMIC
Trust.
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
proposed, temporary and final regulations and published rulings,
notices and
announcements promulgated thereunder, as the foregoing may be in
effect from
time to time as well as provisions of applicable state laws.
REMIC Regular Certificate: A Class A-1, Class M-[1], Class M-[2]
or
Class [B-1] Certificate.
Remittance Date: Shall mean (i) with respect to the Company,
the
Business Day immediately preceding the Distribution Account Deposit
Date and
(ii) with respect to the related Servicer, the date specified in
the related
Servicing Agreement.
Remittance Report: As defined in Section 6.04(d).
REO Imputed Interest: As to any REO Property, for any calendar
month
during which such REO Property was at any time part of the REMIC
Trust, one
month's interest at the applicable Net Mortgage Rate on the Stated
Principal
Balance of such REO Property (or, in the case of the first such
calendar month,
of the related Mortgage Loan, if appropriate) as of the close of
business on the
Distribution Date in such calendar month.
REO Property: A Mortgaged Property acquired by the Company or
the
related Servicer through foreclosure or deed-in-lieu of foreclosure
in
connection with a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan or Mortgage Loans in
the
aggregate substituted by the Seller for a Deleted Mortgage Loan,
which must, on
the date of such substitution, as confirmed in a Request for
Release, (i) have a
Stated Principal Balance, after deduction of the principal portion
of the
Scheduled Payment due in the month of substitution, not in excess
of, and not
less than [90]% of, the Stated Principal Balance of the Deleted
Mortgage Loan;
(ii) have a fixed Mortgage Rate not less than or more than 1% per
annum higher
than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the
same or
higher credit quality characteristics than that of the Deleted
Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the Deleted
Mortgage
Loan; (v) have a remaining term to maturity no greater than (and
not more than
one year less than) that of the Deleted Mortgage Loan; (vi) not
permit
conversion of the Mortgage Rate from a fixed rate to a variable
rate; (vii) have
the same lien priority as the Deleted Mortgage Loan; (viii)
constitute the same
occupancy type as the Deleted Mortgage Loan or be owner occupied;
and (ix)
comply with each representation and warranty set forth in Section
2.03 hereof.
Repurchase Price: With respect to each Mortgage Loan, a price equal
to
(i) the outstanding principal balance of such Mortgage Loan, plus
(ii) interest
on such outstanding principal balance at the Mortgage Rate (net of
the Servicing
Fee Rate) from the last date through which interest has been paid
to the end of
the month of repurchase, less (iii) amounts advanced by the Company
or the
related Servicer in respect of such repurchased Mortgage Loan which
are being
held in the Master Servicer Collection Account for remittance to
the Trustee
plus (iv) any costs and damages (if any) incurred by the Trust in
connection
with any violation of such Mortgage Loan of any predatory or
abusive lending
laws.
Request for Release:
The Request for Release to be submitted by the
Seller, the Company, the related Servicer or the Master Servicer to
the
Custodian substantially in the form of Exhibit H. Each Request for
Release
furnished to the Custodian by the Seller, the Company, the related
Servicer or
the Master Servicer shall be in duplicate and shall be executed by
an officer of
such Person or a Servicing Officer (or, if furnished electronically
to the
Custodian, shall be deemed to have been sent and executed by an
officer of such
Person or a Servicing Officer) of the Company or the related
Servicer, as
applicable.
Required Insurance Policy: With respect to any Mortgage Loan,
any
insurance policy that is required to be maintained from time to
time under this
Agreement or the related Servicing Agreement.
Responsible Officer: With respect to the Trustee, any Vice
President,
any Assistant Vice President, the Secretary, any Assistant
Secretary, or any
Trust Officer with specific responsibility for the transactions
contemplated
hereby, any other officer customarily performing functions similar
to those
performed by any of the above designated officers or other officers
of the
Trustee specified by the Trustee, as 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.
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.
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.
Securities Act: The Securities Act of 1933, as amended.
Securities Administrator: ________________________________, in
its
capacity as securities administrator hereunder, and its successors
and assigns.
Seller: ________________________, a ____________________, and
its
successors and assigns, in its capacity as seller of the Mortgage
Loans to the
Depositor.
Senior Certificates: The Class [A-1] Certificates.
Servicer: Either ___________________ or _____________.
Servicing Advances: All customary, reasonable and necessary "out
of
pocket" costs and expenses (including reasonable legal fees)
incurred in the
performance by the Company or the related Servicer of its servicing
obligations
hereunder or under the related Servicing Agreement, including, but
not limited
to, the cost of (i) the preservation, restoration and protection of
a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including
foreclosures,
and including any expenses incurred in relation to any such
proceedings that
result from the Mortgage Loan being registered in the MERS(R)
System, (iii) the
management and liquidation of any REO Property (including, without
limitation,
realtor's commissions) and (iv) compliance with any obligations
under Section
3.07 hereof to cause insurance to be maintained.
Servicing Agreement: Shall mean ______________________.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d)
of Regulation AB, as
such may be amended from time to time, or those Servicing
Criteria otherwise
mutually agreed to by EMC and the
applicable
Servicer in
response to evolving
interpretations of
Regulation AB and incorporated into a
revised Exhibit P.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the
Stated
Principal Balance of such Mortgage Loan as of the last day of the
related Due
Period or, in the event of any payment of interest that accompanies
a Principal
Prepayment in full during the related Due Period made by the
Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee
Rate on the
Stated Principal Balance of such Mortgage Loan for the period
covered by such
payment of interest.
Servicing Fee Rate: ___% per annum.
Servicing Modification: With respect to any Mortgage Loan that is
in
default or, in the reasonable judgment of the Company or the
related Servicer,
as to which default is reasonably foreseeable, any modification
which is
effected by the Company or the related Servicer in accordance with
the terms of
this Agreement or the related Servicing Agreement which results in
any change in
the outstanding Stated Principal Balance, any change in the
Mortgage Rate or any
extension of the term of such Mortgage Loan.
Servicing Officer: Any officer of the Company or the related
Servicer
involved in, or responsible for, the administration and servicing
of the
Mortgage Loans (i) in the case of the Company, whose name and
facsimile
signature appear on a list of servicing officers furnished to the
Trustee by the
Company on the Closing Date pursuant to this Agreement, as such
list may from
time to time be amended and (ii) in the case of the related
Servicer, as to
which evidence reasonably acceptable to the Trustee, as applicable,
of due
authorization, by such party has been furnished from time to time
to the
Trustee.
Startup Day: The Startup Day for the REMIC Trust formed hereunder
shall
be the Closing Date.
Stated Principal Balance: With respect to any Mortgage Loan or
related
REO Property and any Distribution Date, the Cut-off Date Principal
Balance
thereof minus the sum of (i) the principal portion of the Scheduled
Payments due
with respect to such Mortgage Loan during each Due Period ending
prior to such
Distribution Date (and irrespective of any delinquency in their
payment), (ii)
all Principal Prepayments with respect to such Mortgage Loan
received prior to
or during the related Prepayment Period, and all Liquidation
Proceeds to the
extent applied by the Company or the related Servicer as recoveries
of principal
in accordance with Section 3.09 or the related Servicing Agreement
with respect
to such Mortgage Loan, that were received by the Company or the
Servicer as of
the close of business on the last day of the Prepayment Period
related to such
Distribution Date and (iii) any Realized Losses on such Mortgage
Loan incurred
during the related Prepayment Period. The Stated Principal Balance
of a
Liquidated Loan equals zero.
Subordinated Certificates: The Class [M-1], Class [M-2] and Class
[B-1]
Certificates.
Subservicer Assignment Agreement: The Assignment, Assumption
and
Recognition Agreement, dated as of _____ ___, 200___, by and among
the Seller,
Subservicer and the Trustee evidencing the assignment of the
Subservicer
Servicing Agreement to the Trust.
Subservicer Loans: Those Mortgage Loans subject to this Agreement
which
were purchased by the Seller from Subservicer pursuant to the
Subservicer
Servicing Agreement.
Subservicer Servicing Agreement: The Servicing Agreement, dated as
of
_____ 1, 200__, by and between the Seller and Subservicer.
Subservicing Agreement: Any agreement entered into between the
Company
and a subservicer with respect to the subservicing of any Mortgage
Loan
hereunder by such subservicer.
Substitution Adjustment Amount: The meaning ascribed to such
term
pursuant to Section 2.03(c).
Successor Master Servicer: The meaning ascribed to such term
pursuant
to Section 9.01.
Tax Matters Person: The person designated as "tax matters person"
in
the manner provided under Treasury regulation ss. 1.860F-4(d) and
temporary
Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the Class
R Certificate
shall be the Tax Matters Person for the REMIC Trust. The
Securities
Administrator, or any successor thereto or assignee thereof shall
serve as tax
administrator hereunder and as agent for the related Tax Matters
Person.
[10%] Clean-up Call Date: Shall mean the first Distribution Date in
or
after __________ 200__ upon which the Stated Principal Balance of
the Mortgage
Loans as of the end of the related Due Period is less than or equal
to [10%] of
the aggregate Cut-off Date Principal Balance of the Mortgage
Loans.
Transfer Affidavit: As defined in Section 7.02(c).
Transfer: Any direct or indirect transfer or sale of any
Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust created hereunder consisting of
(i)
the Mortgage Loans and all interest accruing and principal due with
respect
thereto after the Cut-off Date to the extent not applied in
computing the
Cut-off Date Principal Balance thereof; (ii) the Distribution
Account, the
Master Servicer Collection Account maintained by the Master
Servicer and the
Protected Accounts maintained by the Company and the Servicers and
all amounts
deposited therein pursuant to the applicable provisions of this
Agreement and
the Servicing Agreements; (iii) property that secured a Mortgage
Loan and has
been acquired by foreclosure, deed in lieu of foreclosure or
otherwise; (iv) the
mortgagee's rights under the Insurance Policies with respect to the
Mortgage
Loans; (v) the Servicing Agreement and the Assignment Agreements;
(vi) the
rights under the Mortgage Loan Purchase Agreement, and (vii) all
proceeds of the
foregoing, including proceeds of conversion, voluntary or
involuntary, of any of
the foregoing into cash or other liquid property.
Trustee: ____________________, a ____________________________, not
in
its individual capacity, but solely in its capacity as trustee for
the benefit
of the Certificateholders under this Agreement, and any successor
thereto, and
any corporation or national banking association resulting from or
surviving any
consolidation or merger to which it or its successors may be a
party and any
successor trustee as may from time to time be serving as successor
trustee
hereunder.
Unpaid Interest Shortfalls: Shall mean Interest Shortfalls net
of
payments by the Company, the related Servicer or the Master
Servicer in respect
of Compensating Interest.
Voting Rights: The portion of the voting rights of all the
Certificates
that is allocated to any Certificate for purposes of the voting
provisions
hereunder. All of the Voting Rights shall be allocated to the
Certificates other
than the Class R Certificate, with the allocation among the
Certificates other
than the Class R Certificate to be in proportion to the Certificate
Principal
Balance of each such Class relative to the Certificate Principal
Balance of all
other such Classes. Voting Rights will be allocated among the
Certificates of
each such Class in accordance with their respective Percentage
Interests.
Section 1.02 Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class [A-1], Class [M-1], Class [M-2]
and the Class
[B-1] Certificates for any Distribution Date, (1) the aggregate
amount of any
Unpaid Interest Shortfalls in respect of the Mortgage Loans for any
Distribution
Date shall be allocated among the Certificates in proportion to the
amount of
the Monthly Interest Distributable Amount that would have been
allocated to such
Certificates in the absence of such Unpaid Interest Shortfalls and
(2) the
interest portion of Realized Losses for the Mortgage Loans will be
allocated
first to the Class [B-1] Certificates, second to the Class [M-2]
Certificates,
and third to the Class [M-1] Certificates, and following the
Cross-Over Date to
the Class [A-1] Certificates.
<PAGE>
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Trust Fund.
The Seller hereby sells, transfers, assigns, sets over and
otherwise
conveys to the Depositor, without recourse, all the right, title
and interest of
the Seller in and to the assets in the Trust Fund.
The Seller has entered into this Agreement in consideration for
the
purchase of the Mortgage Loans by the Depositor and has agreed to
take the
actions specified herein.
The Depositor, concurrently with the execution and delivery
hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys
to the Trustee
for the use and benefit of the Certificateholders, without
recourse, all the
right, title and interest of the Depositor in and to the Trust
Fund.
In connection with such sale, the Depositor has delivered to,
and
deposited with, the Trustee or the Custodian, as its agent, the
following
documents or instruments with respect to each Mortgage Loan so
assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed
without recourse
to the order of "[Name of Trustee], as Trustee for
certificateholders of Bear
Stearns Asset Backed Securities Trust 200__-___, Asset Backed
Certificates,
Series 200__-___," and showing to the extent available to the
Seller an unbroken
chain of endorsements from the original payee thereof to the Person
endorsing it
to the Trustee, (ii) the original Mortgage and, if the related
Mortgage Loan is
a MOM Loan, noting the presence of the MIN and language indicating
that such
Mortgage Loan is a MOM Loan, which shall have been recorded (or if
the original
is not available, a copy), with evidence of such recording
indicated thereon (or
if clause (x) in the proviso below applies, shall be in recordable
form), (iii)
unless the Mortgage Loan is a MOM Loan, the assignment (either an
original or a
copy, which may be in the form of a blanket assignment if permitted
in the
jurisdiction in which the Mortgaged Property is located) to the
Trustee of the
Mortgage with respect to each Mortgage Loan in the name of "[Name
of Trustee],
as Trustee for certificateholders of Bear Stearns Asset Backed
Securities Trust
200__-___, Asset Backed Certificates, Series 200__-___," which
shall have been
recorded (or if clause (x) in the proviso below applies, shall be
in recordable
form) (iv) an original or a copy of all intervening assignments of
the Mortgage,
if any, to the extent available to the Seller, with evidence of
recording
thereon, (v) the original policy of title insurance or mortgagee's
certificate
of title insurance or commitment or binder for title insurance, if
available, or
a copy thereof, or, in the event that such original title insurance
policy is
unavailable, a photocopy thereof, or in lieu thereof, a current
lien search on
the related Mortgaged Property and (vi) originals or copies of all
available
assumption, modification or substitution agreements, if any;
provided, however,
that in lieu of the foregoing, the Seller may deliver the following
documents,
under the circumstances set forth below: (x) if any Mortgage,
assignment thereof
to the Trustee or intervening assignments thereof have been
delivered or are
being delivered to recording offices for recording and have not
been returned in
time to permit their delivery as specified above, the Depositor may
deliver a
true copy thereof with a certification by the Seller or the title
company
issuing the commitment for title insurance, on the face of such
copy,
substantially as follows: "Certified to be a true and correct copy
of the
original, which has been transmitted for recording"; and (y) in
lieu of the
Mortgage Notes relating to the Mortgage Loans identified in the
list set forth
in Exhibit J, the Depositor may deliver a lost note affidavit and
indemnity and
a copy of the original note, if available; and provided, further,
however, that
in the case of Mortgage Loans which have been prepaid in full after
the Cut-Off
Date and prior to the Closing Date, the Depositor, in lieu of
delivering the
above documents, may deliver to the Trustee and its Custodian a
certification of
a Servicing Officer to such effect and in such case shall deposit
all amounts
paid in respect of such Mortgage Loans, in the Master Servicer
Collection
Account or in the Distribution Account on the Closing Date. In the
case of the
documents referred to in clause (x) above, the Depositor shall
deliver such
documents to the Trustee or its Custodian promptly after they are
received. The
Seller shall cause, at its expense, the Mortgage and intervening
assignments, if
any, and to the extent required in accordance with the foregoing,
the assignment
of the Mortgage to the Trustee to be submitted for recording
promptly after the
Closing Date; provided that the Seller need not cause to be
recorded any
assignment (a) in any jurisdiction under the laws of which, as
evidenced by an
Opinion of Counsel addressed to the Trustee delivered by the Seller
to the
Trustee and the Rating Agencies, the recordation of such assignment
is not
necessary to protect the Trustee's interest in the related Mortgage
Loan or (b)
if MERS is identified on the Mortgage or on a properly recorded
assignment of
the Mortgage as mortgagee of record solely as nominee for Seller
and its
successors and assigns. In the event that the Seller, the Depositor
or the
Master Servicer gives written notice to the Trustee that a court
has
recharacterized the sale of the Mortgage Loans as a financing, the
Seller shall
submit or cause to be submitted for recording as specified above
or, should the
Seller fail to perform such obligations, the Master Servicer shall
cause each
such previously unrecorded assignment to be submitted for recording
as specified
above at the expense of the Trust. In the event a Mortgage File is
released to
the Company or the Servicer as a result of such Person having
completed a
Request for Release, the Custodian shall, if not so completed,
complete the
assignment of the related Mortgage in the manner specified in
clause (iii)
above.
In connection with the assignment of any Mortgage Loan registered
on
the MERS(R) System, the Seller further agrees that it will cause,
at the
Seller's own expense, within 30 days after the Closing Date, the
MERS(R) System
to indicate that such Mortgage Loans have been assigned by the
Seller to the
Depositor and by the Depositor to the Trustee in accordance with
this Agreement
for the benefit of the Certificateholders by including (or
deleting, in the case
of Mortgage Loans which are repurchased in accordance with this
Agreement) in
such computer files (a) the code in the field which identifies the
specific
Trustee and (b) the code in the field "Pool Field" which identifies
the series
of the Certificates issued in connection with such Mortgage Loans.
The Seller
further agrees that it will not, and will not permit the Company,
the Servicer
or the Master Servicer to, and the Master Servicer agrees that it
will not,
alter the codes referenced in this paragraph with respect to any
Mortgage Loan
during the term of this Agreement unless and until such Mortgage
Loan is
repurchased in accordance with the terms of this Agreement or the
Mortgage Loan
Purchase Agreement.
Section 2.02 Acceptance of the Mortgage Loans.
(a) Based on the Initial Certification received by it from the
Custodian, the Trustee acknowledges receipt of, subject to the
further review
and exceptions reported by the Custodian pursuant to the procedures
described
below, the documents (or certified copies thereof) delivered to the
Trustee or
the Custodian on its behalf pursuant to Section 2.01 and declares
that it holds
and will continue to hold directly or through a custodian those
documents and
any amendments, replacements or supplements thereto and all other
assets of the
Trust Fund delivered to it in trust for the use and benefit of all
present and
future Holders of the Certificates. On the Closing Date, the
Trustee or the
Custodian on its behalf will deliver an Initial Certification in
the form
annexed hereto as Exhibit C-1 confirming whether or not it has
received the
Mortgage File for each Mortgage Loan, but without review of such
Mortgage File,
except to the extent necessary to confirm whether such Mortgage
File contains
the original Mortgage Note or a lost note affidavit and indemnity
in lieu
thereof. No later than [90] days after the Closing Date, the
Trustee or the
Custodian on its behalf shall, for the benefit of the
Certificateholders, review
each Mortgage File delivered to it and execute and deliver to the
Seller and, if
reviewed by the Custodian, the Trustee, an Interim Certification
substantially
in the form annexed hereto as Exhibit C-2. In conducting such
review, the
Trustee or the Custodian on its behalf will ascertain whether all
required
documents have been executed and received and whether those
documents relate,
determined on the basis of the Mortgagor name, original principal
balance and
loan number, to the Mortgage Loans identified in Exhibit B to this
Agreement, as
supplemented (provided, however, that with respect to those
documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations shall
extend only
to documents actually delivered pursuant to such subclauses). In
performing any
such review, the Trustee and the Custodian may conclusively rely on
the
purported due execution and genuineness of any such document and on
the
purported genuineness of any signature thereon. If the Trustee or
the Custodian
on its behalf finds any document constituting part of the Mortgage
File not to
have been executed or received, or to be unrelated to the Mortgage
Loans
identified in Exhibit B or to appear to be defective on its face,
the Trustee or
the Custodian on its behalf shall include such information in the
exception
report attached to Exhibit C-2. The Seller shall correct or cure
any such defect
or, if prior to the end of the second anniversary of the Closing
Date, the
Seller may substitute for the related Mortgage Loan a Replacement
Mortgage Loan,
which substitution shall be accomplished in the manner and subject
to the
conditions set forth in Section 2.03 or shall deliver to the
Trustee an Opinion
of Counsel addressed to the Trustee to the effect that such defect
does not
materially or adversely affect the interests of the
Certificateholders in such
Mortgage Loan within [60] days from the date of notice from the
Trustee of the
defect and if the Seller fails to correct or cure the defect or
deliver such
opinion within such period, the Seller will, subject to Section
2.03, within 90
days from the notification of the Trustee purchase such Mortgage
Loan at the
Purchase Price; provided, however, that if such defect relates
solely to the
inability of the Seller to deliver the Mortgage, assignment thereof
to the
Trustee, or intervening assignments thereof with evidence of
recording thereon
because such documents have been submitted for recording and have
not been
returned by the applicable jurisdiction, the Seller shall not be
required to
purchase such Mortgage Loan if the Seller delivers such documents
promptly upon
receipt, but in no event later than [360] days after the Closing
Date.
(b) No later than [180] days after the Closing Date, the Trustee or
the
Custodian on its behalf will review, for the benefit of the
Certificateholders,
the Mortgage Files and will execute and deliver or cause to be
executed and
delivered to the Seller and, if reviewed by the Custodian, the
Trustee, a Final
Certification substantially in the form annexed hereto as Exhibit
C-3. In
conducting such review, the Trustee or the Custodian on its behalf
will
ascertain whether each document required to be recorded has been
returned from
the recording office with evidence of recording thereon and the
Trustee or the
Custodian on its behalf has received either an original or a copy
thereof, as
required in Section 2.01 (provided, however, that with respect to
those
documents described in subclauses (iv) and (vi) of Section 2.01,
such
obligations shall extend only to documents actually delivered
pursuant to such
subclauses). If the Trustee or the Custodian on its behalf finds
any document
with respect to a Mortgage Loan has not been received, or to be
unrelated,
determined on the basis of the Mortgagor name, original principal
balance and
loan number, to the Mortgage Loans identified in Exhibit B or to
appear
defective on its face, the Trustee or the Custodian on its behalf
shall note
such defect in the exception report attached to the Final
Certification and
shall promptly notify the Seller. The Seller shall correct or cure
any such
defect or, if prior to the end of the second anniversary of the
Closing Date,
the Seller may substitute for the related Mortgage Loan a
Replacement Mortgage
Loan, which substitution shall be accomplished in the manner and
subject to the
conditions set forth in Section 2.03 or shall deliver to the
Trustee an Opinion
of Counsel addressed to the Trustee to the effect that such defect
does not
materially or adversely affect the interests of Certificateholders
in such
Mortgage Loan within [60] days from the date of notice from the
Trustee of the
defect and if the Seller is unable within such period to correct or
cure such
defect, or to substitute the related Mortgage Loan with a
Replacement Mortgage
Loan or to deliver such opinion, the Seller shall, subject to
Section 2.03,
within [90] days from the notification of the Trustee, purchase
such Mortgage
Loan at the Purchase Price; provided, however, that if such defect
relates
solely to the inability of the Seller to deliver the Mortgage,
assignment
thereof to the Trustee or intervening assignments thereof with
evidence of
recording thereon, because such documents have not been returned by
the
applicable jurisdiction, the Seller shall not be required to
purchase such
Mortgage Loan, if the Seller delivers such documents promptly upon
receipt, but
in no event later than [360] days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by the Seller
in
accordance with subsections 2.02(a) or (b) above or Section 2.03,
the Seller
shall remit the applicable Purchase Price to the Master Servicer
for deposit in
the Master Servicer Collection Account and shall provide written
notice to the
Trustee detailing the components of the Purchase Price, signed by a
Servicing
Officer. Upon deposit of the Purchase Price in the Master Servicer
Collection
Account and upon receipt of a Request for Release with respect to
such Mortgage
Loan, the Trustee or the Custodian will release to the Seller the
related
Mortgage File and the Trustee shall execute and deliver all
instruments of
transfer or assignment, without recourse, representation or
warranty furnished
to it by the Seller, as are necessary to vest in the Seller title
to and rights
under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the
date on which the deposit into the Master Servicer Collection
Account was made.
The Trustee shall promptly notify the Rating Agencies of such
repurchase. The
obligation of the Seller to cure, repurchase or substitute for any
Mortgage Loan
as to which a defect in a constituent document exists shall be the
sole remedies
respecting such defect available to the Certificateholders or to
the Trustee on
their behalf.
(d) The Seller shall deliver to the Trustee, and Trustee agrees
to
accept the Mortgage Note and other documents constituting the
Mortgage File with
respect to any Replacement Mortgage Loan, which the Trustee or the
Custodian
will review as provided in subsections 2.02(a) and 2.02(b),
provided, that the
Closing Date referred to therein shall instead be the date of
delivery of the
Mortgage File with respect to each Replacement Mortgage Loan.
Section 2.03 Representations, Warranties and Covenants of the
Company
and
the Seller.
(a) The Company hereby represents and warrants to the Master
Servicer,
the Depositor, the Securities Administrator and the Trustee as
follows, as of
the Closing Date:
(i) It is duly organized and is validly existing and in good
standing under the laws of _______________________ and is duly
authorized and qualified to transact any and all business
contemplated
by this Agreement to be conducted by it in any state in which a
Mortgaged Property is
located or is otherwise not required under
applicable law to effect such qualification and, in any event, is
in
compliance with the doing business laws of any such state, to
the
extent necessary to ensure its ability to enforce each Mortgage
Loan,
to service the Mortgage Loans in accordance with the terms of
this
Agreement and to perform any of its other obligations under
this
Agreement in accordance with the terms hereof.
(ii) It has the full corporate power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to
enter
into and consummate the transactions contemplated by this Agreement
and
has duly authorized by all necessary corporate action on its part
the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and
delivery
hereof by the other parties hereto, constitutes its legal, valid
and
binding obligation, enforceable against it in accordance with
its
terms, except that (a) the enforceability hereof may be limited
by
bankruptcy, insolvency, moratorium, receivership and other similar
laws
relating to creditors' rights generally and (b) the remedy of
specific
performance and injunctive and other forms of equitable relief may
be
subject to equitable defenses and to the discretion of the court
before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it, the
servicing of the Company Mortgage Loans by it under this Agreement,
the
consummation of any other of the transactions contemplated by
this
Agreement, and the fulfillment of or compliance with the terms
hereof
are in its ordinary course of business and will not (A) result in
a
material breach of any term or provision of its charter or by-laws
or
(B) materially conflict with, result in a material breach,
violation or
acceleration of, or result in a material default under, the terms
of
any other material agreement or instrument to which it is a party
or by
which it may be bound, or (C) constitute a material violation of
any
statute, order or regulation applicable to it of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over it; and it is not in breach or violation of any material
indenture
or other material agreement or instrument, or in violation of
any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it
which breach or violation may materially impair its ability to
perform
or meet any of its obligations under this Agreement.
(iv) It is an approved servicer of conventional mortgage loans
for Fannie Mae or Freddie Mac and is a mortgagee approved by
the
Secretary of Housing and Urban Development pursuant to sections 203
and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of its knowledge,
threatened, against it that would materially and adversely affect
the
execution, delivery or enforceability of this Agreement or its
ability
to service the Company Mortgage Loans or to perform any of its
other
obligations under this Agreement in accordance with the terms
hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for its execution,
delivery
and performance of, or compliance with, this Agreement or the
consummation of the transactions contemplated hereby, or if any
such
consent, approval, authorization or order is required, it has
obtained
the same.
(b) The Seller hereby represents and warrants to the Depositor,
the
Securities Administrator, the Master Servicer and the Trustee as
follows, as of
the Closing Date:
(i) The Seller is duly organized as a ____________________ and
is validly existing and in good standing under the laws of
_____________________ and is duly authorized and qualified to
transact
any and all business contemplated by this Agreement to be conducted
by
the Seller in any state in which a Mortgaged Property is located or
is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the
doing
business laws of any such state, to the extent necessary to ensure
its
ability to enforce each Mortgage Loan, to sell the Mortgage Loans
in
accordance with the terms of this Agreement and to perform any of
its
other obligations under this Agreement in accordance with the
terms
hereof.
(ii) The Seller has the full corporate power and authority to
sell each Mortgage Loan, and to execute, deliver and perform, and
to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action
on
the part of the Seller the execution, delivery and performance of
this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto,
constitutes
a legal, valid and binding obligation of the Seller,
enforceable
against the Seller in accordance with its terms, except that (a)
the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to
creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before which
any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Seller, the sale of the Mortgage Loans by the Seller under this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or
compliance
with the terms hereof are in the ordinary course of business of
the
Seller and will not (A) result in a material breach of any term
or
provision of the charter or by-laws of the Seller or (B)
materially
conflict with, result in a material breach, violation or
acceleration
of, or result in a material default under, the terms of any
other
material agreement or instrument to which the Seller is a party or
by
which it may be bound, or (C) constitute a material violation of
any
statute, order or regulation applicable to the Seller of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over the Seller; and the Seller is not in breach
or
violation of any material indenture or other material agreement
or
instrument, or in violation of any statute, order or regulation of
any
court, regulatory body, administrative agency or governmental
body
having jurisdiction over it which breach or violation may
materially
impair the Seller's ability to perform or meet any of its
obligations
under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage
loans for Fannie Mae or Freddie Mac and is a mortgagee approved by
the
Secretary of Housing and Urban Development pursuant to sections 203
and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially
and
adversely affect the execution, delivery or enforceability of
this
Agreement or the ability of the Seller to sell the Mortgage Loans
or to
perform any of its other obligations under this Agreement in
accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by the Seller of, or compliance by the Seller
with,
this Agreement or the consummation of the transactions
contemplated
hereby, or if any such consent, approval, authorization or order
is
required, the Seller has obtained the same.
(vii) With respect to each Mortgage Loan as of the Cut-off
Date (unless otherwise expressly provided):
(A) The information set forth in the Mortgage Loan
Schedule on the Closing Date is complete, true and correct.
(B) All payments required to be made prior to the
Cut-off Date with respect to each Mortgage Loan have been made
and no Mortgage Loan is delinquent ____ or more days; and the
Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds from a party other
than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any
amount required under any Mortgage Loan.
(C) Except with respect to taxes, insurance and other
amounts previously advanced by a prior servicer with respect
to any Mortgage Loan, to the best of Seller's knowledge, there
are no delinquent taxes, water charges, sewer rents,
assessments, insurance premiums, leasehold payments, including
assessments payable in future installments, or other
outstanding charges affecting the related Mortgaged Property.
(D) The terms of the Mortgage Note and the Mortgage
have not been impaired, waived, altered or modified in any
respect, except by written instruments which in the case of
the Mortgage Loans are in the Mortgage File and have been or
will be recorded, if necessary to protect the interests of the
Trustee, and which have been or will be delivered to the
Trustee, all in accordance with this Agreement. The substance
of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the
related policy. No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the
policy, and which assumption agreement in the case of the
Mortgage Loans is part of the Mortgage File.
(E) The Mortgage Note and the Mortgage are not
subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the
Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense,
including the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted
with respect thereto.
(F) All buildings upon, or comprising part of, the
Mortgaged Property are insured by an insurer acceptable to
Fannie Mae and Freddie Mac against loss by fire, hazards of
extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located, and such
insurer is licensed to do business in the state where the
Mortgaged Property is located. All such insurance policies
contain a standard mortgagee clause naming the originator, its
successors and assigns as mortgagee and Seller has received no
notice that all premiums thereon have not been paid. If upon
origination of the Mortgage Loan, the Mortgaged Property was,
or was subsequently deemed to be, in an area identified in the
Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has
been made available), which require under applicable law that
a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration (or
any successor thereto) be obtained, such flood insurance
policy is in effect which policy is with a generally
acceptable carrier in an amount representing coverage not less
than the least of (A) the Stated Principal Balance of the
related Mortgage Loan, (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis, or
(C) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973. The Mortgage
obligates the Mortgagor thereunder to maintain all such
insurance at Mortgagor's cost and expense and, on the
Mortgagor's failure to do so, authorizes the holder of the
Mortgage to maintain such insurance at Mortgagor's cost and
expense and to obtain reimbursement therefor from the
Mortgagor.
(G) Any and all requirements of any federal, state or
local law including, usury, truth in lending, real estate
settlement procedures including, the Real Estate Settlement
Procedures Act of 1974, as amended, consumer credit
protection, equal credit opportunity or disclosure laws
applicable to the
Mortgage Loan have been complied with in all
material respects.
(H) The Mortgage has not been satisfied, canceled,
subordinated, or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation,
subordination or rescission.
(I) The Mortgage is a valid, existing and enforceable
[first] [junior] lien on the Mortgaged Property, including all
improvements on the Mortgaged Property, if any, subject only
to (1) the lien of current real property taxes and assessments
not yet due and payable, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of
the
public record as of the date of recording being acceptable
to mortgage lending institutions generally and specifically
referred to in the lender's title insurance policy delivered
to the originator of the Mortgage Loan and which do not
adversely affect the Appraised Value of the Mortgaged
Property, (3) other matters to which like properties are
commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the
Mortgage [and if a junior lien, the related Senior Liens]. The
Seller has full right to sell and assign the Mortgage to the
Depositor.
(J) The Mortgage Note and the related Mortgage are
genuine and each is the legal, valid and binding obligation of
the maker thereof, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization or general principles
of equity.
(K) All parties to the Mortgage Note and the Mortgage
had the legal capacity to enter into the Mortgage Loan
transaction and to execute and deliver the Mortgage Note and
the Mortgage, and the Mortgage Note and the Mortgage have been
duly and
properly executed by such parties.
(L) The proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances
thereunder and any and all requirements as to completion of
any on-site or off-site improvement and as to disbursements of
any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage
Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or
due under the Mortgage Note or Mortgage.
(M) Immediately prior
to the conveyance of the
Mortgage Loans by the Seller to the Depositor hereunder, the
Seller was the sole owner and holder of the Mortgage Loan; the
related Originator or the Seller or the Servicer was the
custodian of the related escrow account, if applicable; the
Mortgage Loan had neither been assigned nor pledged, and the
Seller had good and marketable title thereto, and had full
right to transfer and sell the Mortgage Loan and the related
servicing rights to the Depositor free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security
interest subject to the related Servicing Agreement, if
applicable, and had full right and authority subject to no
interest or participation of, or agreement with, any other
party, to sell and assign the Mortgage Loan and the related
servicing rights to the Depositor pursuant to the terms of
this Agreement.
(N) All parties which have had any interest in the
Mortgage, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2)
organized under the laws of such state, qualified to do
business in such state, a federal savings and loan association
or national bank having principal offices in such state or not
deemed to be doing business in such state under applicable
law.
(O) The Mortgage Loan is covered by an ALTA lender's
title insurance policy or equivalent form acceptable to the
Department of Housing and Urban Development, or any successor
thereto, and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring (subject to
the exceptions contained in clause (I) above) the Seller (as
assignee), its successors and assigns as to the [first]
priority lien of the Mortgage in the original principal amount
of the Mortgage Loan and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage Note and/or Mortgage providing for
adjustment in the Mortgage Rate and monthly payment.
Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any
interest therein. With respect to each Mortgage Loan, the
Seller (as assignee) is the sole insured of such lender's
title insurance policy, and such lender's title insurance
policy is in full force and effect. No claims have been made
under such lender's title insurance policy, and no prior
holder of the related Mortgage, including the Seller in the
case of a Mortgage Loan, has done, by act or omission,
anything which would impair the coverage of such lender's
title insurance policy. Except as provided in clause (B),
immediately prior to the Cut-off Date, there was no default,
breach, violation or event of acceleration existing under the
Mortgage or the Mortgage Note and there was no event which,
with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach,
violation or event of acceleration, and the Seller has not
waived any default, breach, violation or event of
acceleration.
(P) There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and
no rights are outstanding that under law could give rise to
such lien) affecting the related Mortgaged Property which are
or may be liens prior to or equal with, the lien of the
related Mortgage.
(Q)
All improvements which were considered in any appraisal which
was used in determining the Appraised Value of the related
Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the
Mortgaged Property.
(R) [Reserved]
(S) The origination, servicing and collection
practices with respect to each Mortgage Note and Mortgage
including, the establishment, maintenance and servicing of the
escrow accounts and escrow payments, if any, since
origination, have been conducted in all respects in accordance
with the terms of Mortgage Note and in compliance with all
applicable laws and regulations and, unless otherwise required
by law or Fannie Mae/Freddie Mac standard, in accordance with
the proper, prudent and customary practices in the mortgage
origination and servicing business. With respect to the escrow
accounts and escrow payments, if any, and any Company Mortgage
Loan all such payments are in the possession or under the
control of the Seller and there exists no deficiencies in
connection therewith for which customary arrangements for
repayment thereof have not been made. Any interest required to
be paid pursuant to state and local law has been properly paid
and credited.
(T) The Mortgaged Property is free of material damage
and waste and there is no proceeding pending for the total or
partial condemnation thereof.
(U) The Mortgage contains customary and enforceable
provisions to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged
Property of the benefits of the security intended to be
provided thereby, including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2)
otherwise by judicial foreclosure. There is no other exemption
available to the Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage. The Mortgagor has not
notified the Seller and the Seller has no knowledge of any
relief requested or allowed to the Mortgagor under the Relief
Act.
(V) The Mortgage Note is not and has not been secured
by any collateral except the lien of the applicable Mortgage.
(W) [Reserved]
(X) In the
event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve
as such, has been properly designated and currently so serves
and is named in the Mortgage, and no fees or expenses are or
will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
(Y) No Mortgage Loan contains a permanent or
temporary "buydown" provision. The Mortgage Loan is not a
graduated payment mortgage loan.
(Z) The Mortgagor has received all disclosure
materials required by applicable law with respect to the
making of the Mortgage Loan.
(AA) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property.
(BB) To the best of Seller's knowledge, the Mortgaged
Property is lawfully occupied under applicable law and all
inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy,
have been made or obtained from the appropriate authorities.
(CC) The assignment of Mortgage with respect to a
Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the
Mortgaged Property is located.
(DD) [Reserved].
(EE) [Reserved].
(FF) The Mortgaged Property consists of a single
parcel of real property with or without a detached single
family residence erected thereon, or an individual condominium
unit, or a 2-4 family dwelling, or an individual unit in a
planned unit development as defined by Fannie Mae or a
manufactured dwelling which conforms with Fannie Mae and
Freddie Mac requirements regarding such dwellings, or a
townhouse, each structure of which is permanently affixed to
the Mortgaged Property, and is legally classified as real
estate.
(GG) [Reserved]
(HH) [Reserved]
(II) Each Mortgage Loan at the time of origination
was underwritten in general in accordance with guidelines not
inconsistent with the guidelines set forth in the Prospectus
Supplement and generally accepted prime credit underwriting
guidelines.
(JJ) No error, omission, misrepresentation, fraud or
similar occurrence with respect to a Mortgage Loan has taken
place on the part of the Seller or the related Originator.
(KK) [None of the Mortgage Loans is (i) a loan
subject to 12 CFR Part 226.31, 12 CFR Part 226.32 or 12 CFR
Part 226.34 of Regulation Z, the regulation implementing the
Truth-in-Lending Act, which implements the Home Ownership and
Equity Protection Act of 1994, as amended or (ii) classified
and /or defined as a "high cost", "covered", or "predatory"
loan under any other state, federal or local law or regulation
or ordinance, including, but not limited to, the States of
Georgia or North Carolina, or the City of New York.]
(c) Upon discovery by any of the parties hereto of a breach of
a
representation or warranty set forth in Section 2.03(b)(vii) that
materially and
adversely affects the interests of the Certificateholders in any
Mortgage Loan,
the party discovering such breach shall give prompt written notice
thereof to
the other parties. Any breach of a representation or warranty
contained in
clause (KK) above, shall be automatically deemed to affect
materially and
adversely the interests of the Certificateholders. The Seller
hereby covenants
with respect to the representations and warranties set forth in
Section
2.03(b)(vii), that within 90 days of the discovery of a breach of
any
representation or warranty set forth therein that materially and
adversely
affects the interests of the Certificateholders in any Mortgage
Loan, it shall
cure such breach in all material respects and, if such breach is
not so cured,
(i) if such 90-day period 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 Replacement Mortgage Loan, in the
manner and
subject to the conditions set forth in this Section; or (ii)
repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at the
Purchase Price
in the manner set forth below; provided that any such substitution
pursuant to
(i) above or repurchase pursuant to (ii) above shall not be
effected prior to
the delivery to the Trustee of an Opinion of Counsel if required by
Section 2.05
hereof and any such substitution pursuant to (i) above shall not be
effected
prior to the additional delivery to the Trustee of a Request for
Release. The
Seller shall promptly reimburse the Master Servicer and the Trustee
for any
expenses reasonably incurred by the Master Servicer or the Trustee
in respect of
enforcing the remedies for such breach. To enable the Securities
Administrator
to amend the Mortgage Loan Schedule, the Seller shall, unless it
cures such
breach in a timely fashion pursuant to this Section 2.03, promptly
notify the
Securities Administrator whether it intends either to repurchase,
or to
substitute for, the Mortgage Loan affected by such breach. With
respect to the
representations and warranties in Section 2.03(b)(vii) that are
made to the best
of the Seller's knowledge, if it is discovered by any of the
Depositor, the
Master Servicer, the Seller, the Securities Administrator or the
Trustee that
the substance of such representation and warranty is inaccurate and
such
inaccuracy materially and adversely affects the value of the
related Mortgage
Loan, notwithstanding the Seller's lack of knowledge with respect
to the
substance of such representation or warranty, the Seller shall
nevertheless be
required to cure, substitute for or repurchase the affected
Mortgage Loan in
accordance with the foregoing.
With respect to any Replacement Mortgage Loan or Loans, the
Seller
shall deliver to the Trustee for the benefit of the
Certificateholders such
documents and agreements as are required by Section 2.01. No
substitution will
be made in any calendar month after the Determination Date for such
month.
Scheduled Payments due with respect to Replacement Mortgage Loans
in the Due
Period related to the Distribution Date on which such proceeds are
to be
distributed shall not be part of the Trust Fund and will be
retained by the
Seller. For the month of substitution, distributions to
Certificateholders will
include the Scheduled Payment due on any Deleted Mortgage Loan for
the related
Due Period and thereafter the Seller shall be entitled to retain
all amounts
received in respect of such Deleted Mortgage Loan. The Securities
Administrator
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
Replacement Mortgage Loan or Loans and the Securities Administrator
shall
deliver the amended Mortgage Loan Schedule to the Trustee and the
Custodian.
Upon such substitution, the Replacement Mortgage Loan or Loans
shall be subject
to the terms of this Agreement in all respects, and the Seller
shall be deemed
to have made with respect to such Replacement Mortgage Loan or
Loans, as of the
date of substitution, the representations and warranties set forth
in Section
2.03(b)(vii) with respect to such Mortgage Loan. Upon any such
substitution and
the deposit into the Master Servicer Collection Account of the
amount required
to be deposited therein in connection with such substitution as
described in the
following paragraph and receipt by the Trustee of a Request for
Release for such
Mortgage Loan, the Trustee or the Custodian shall release to the
Seller the
Mortgage File relating to such Deleted Mortgage Loan and held for
the benefit of
the Certificateholders and the Trustee shall execute and deliver at
the Seller's
direction such instruments of transfer or assignment as have been
prepared by
the Seller, in each case without recourse, representation or
warranty as shall
be necessary to vest in the Seller, or its respective designee,
title to the
Trustee's interest in any Deleted Mortgage Loan substituted for
pursuant to this
Section 2.03.
For any month in which the Seller substitutes one or more
Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer
will determine
the amount (if any) by which the aggregate principal balance of all
the
Replacement Mortgage Loans as of the date of substitution is less
than the
Stated Principal Balance (after application of the principal
portion of the
Scheduled Payment due in the month of substitution) of such Deleted
Mortgage
Loan. An amount equal to the aggregate of such deficiencies,
described in the
preceding sentence for any Distribution Date (such amount, the
"Substitution
Adjustment Amount") shall be deposited into the Master Servicer
Collection
Account, by the Seller delivering such Replacement Mortgage Loan on
the
Determination Date for the Distribution Date relating to the
Prepayment Period
during which the related Mortgage Loan became required to be
purchased or
replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage
Loan,
the Purchase Price therefor shall be deposited into the Master
Servicer
Collection Account maintained by the Master Servicer, on the
Determination Date
for the Distribution Date in the month following the month during
which the
Seller became obligated to repurchase or replace such Mortgage Loan
and upon
such deposit of the Purchase Price, the delivery of an Opinion of
Counsel if
required by Section 2.05 and the receipt of a Request for Release,
the Trustee
or the Custodian shall release the related Mortgage File held for
the benefit of
the Certificateholders to the Seller, and the Trustee shall execute
and deliver
at such Person's direction the related instruments of transfer or
assignment
prepared by the Seller, in each case without recourse,
representation or
warranty as shall be necessary to transfer title from the Trustee
for the
benefit of the Certificateholders and transfer the Trustee's
interest to the
Seller to any Mortgage Loan purchased pursuant to this Section
2.03. It is
understood and agreed that the obligation under this Agreement of
the Seller to
cure, repurchase or replace any Mortgage Loan as to which a breach
has occurred
and is continuing shall constitute the sole remedies against the
Seller
respecting such breach available to Certificateholders, the
Depositor or the
Trustee.
(d) The representations and warranties set forth in Section 2.03
hereof
shall survive delivery of the respective Mortgage Loans and
Mortgage Files to
the Trustee or the Custodian for the benefit of the
Certificateholders.
Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master
Servicer,
the Securities Administrator and the Trustee as follows, as of the
date hereof
and as of the Closing Date:
(i) The Depositor is duly organized and is validly existing as
a limited liability company in good standing under the laws of
the
State of Delaware and has full power and authority (corporate
and
other) necessary to own or hold its properties and to conduct
its
business as now conducted by it and to enter into and perform
its
obligations under this Agreement.
(ii) The Depositor has the full power and authority to
execute, deliver and perform, and to enter into and consummate
the
transactions contemplated by, this Agreement and has duly
authorized,
by all necessary corporate action on its part, the execution,
delivery
and performance of this Agreement; and this Agreement, assuming the
due
authorization, execution and delivery hereof by the other
parties
hereto, constitutes a legal, valid and binding obligation of
the
Depositor, enforceable against the Depositor in accordance with
its
terms, subject, as to enforceability, to (i) bankruptcy,
insolvency,
reorganization, moratorium and other similar laws affecting
creditors'
rights generally and (ii) general principles of equity, regardless
of
whether enforcement is sought in a proceeding in equity or at
law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by
this
Agreement, and the fulfillment of or compliance with the terms
hereof
are in the ordinary course of business of the Depositor and will
not
(A) result in a material breach of any term or provision of the
charter
or by-laws of the Depositor or (B) materially conflict with, result
in
a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement
or
instrument to which the Depositor is a party or by which it may
be
bound or (C) constitute a material violation of any statute, order
or
regulation applicable to the Depositor of any court, regulatory
body,
administrative agency or governmental body having jurisdiction over
the
Depositor; and the Depositor is not in breach or violation of
any
material indenture or other material agreement or instrument, or
in
violation of any statute, order or regulation of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over it which breach or violation may materially impair the
Depositor's
ability to perform or meet any of its obligations under this
Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that
would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor
to
perform its obligations under this Agreement in accordance with
the
terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by the Depositor of, or compliance by the
Depositor
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as of
the
Closing Date, following the transfer of the Mortgage Loans to it by
the Seller,
the Depositor had good title to the Mortgage Loans and the related
Mortgage
Notes were subject to no offsets, claims, defenses or
counterclaims.
It is understood and agreed that the representations and warranties
set
forth in the immediately preceding paragraph shall survive delivery
of the
Mortgage Files to the Trustee or the Custodian for the benefit of
the
Certificateholders. Upon discovery by the Depositor or the Trustee
of a breach
of such representations and warranties, the party discovering such
breach shall
give prompt written notice to the others and to each Rating
Agency.
Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement,
with
respect to any Mortgage Loan that is not in default or as to which
default is
not imminent, no repurchase or substitution pursuant to Sections
2.02 or 2.03
shall be made unless the Seller delivers to the Trustee an Opinion
of Counsel,
addressed to the Trustee, to the effect that such repurchase or
substitution
would not (i) result in the imposition of the tax on "prohibited
transactions"
of the REMIC Trust contributions after the Closing Date, as defined
in sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the
REMIC Trust
to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to
this paragraph shall be repurchased or the substitution therefor
shall occur
(subject to compliance with Sections 2.02 or 2.03) upon the earlier
of (a) the
occurrence of a default or imminent default with respect to such
Mortgage Loan
and (b) receipt by the Trustee of an Opinion of Counsel addressed
to the Trustee
to the effect that such repurchase or substitution, as applicable,
will not
result in the events described in clause (i) or clause (ii) of the
preceding
sentence.
(b) Upon
discovery by the Depositor, the Seller or the Master Servicer
that any Mortgage Loan does not constitute a "qualified mortgage"
within the
meaning of section 860G(a)(3) of the Code, the party discovering
such fact shall
promptly (and in any event within 5 Business Days of discovery)
give written
notice thereof to the other parties and the Trustee. In connection
therewith,
the Trustee shall require the Seller, at the Seller's option, to
either (i)
substitute, if the conditions in Section 2.03(c) with respect to
substitutions
are satisfied, a Replacement Mortgage Loan for the affected
Mortgage Loan, or
(ii) repurchase the affected Mortgage Loan within 90 days of such
discovery in
the same manner as it would a Mortgage Loan for a breach of
representation or
warranty contained in Section 2.03. The Trustee shall reconvey to
the Seller the
Mortgage Loan to be released pursuant hereto (and the Custodian
shall deliver
the related Mortgage File) in the same manner, and on the same
terms and
conditions, as it would a Mortgage Loan repurchased for breach of
a
representation or warranty contained in Section 2.03.
Section 2.06 Countersignature and Delivery of Certificates.
The Trustee acknowledges the sale, transfer and assignment to it of
the
Trust Fund and, concurrently with such transfer and assignment, has
executed,
countersigned and delivered, to or upon the order of the Depositor,
the
Certificates in authorized denominations evidencing 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 and to perform the duties set forth in this Agreement
in accordance
with its terms.
Section 2.07 Purposes and Powers of the Trust.
The purpose of the common law trust, as created hereunder, is to
engage
in the following activities:
(a) acquire and hold the Mortgage Loans and the other assets of
the
Trust Fund and the proceeds therefrom;
(b) to issue the Certificates sold to the Depositor in exchange for
the
Mortgage Loans;
(c) to make payments on the Certificates;
(d) to engage in those activities that are necessary, suitable
or
convenient to accomplish the foregoing or are incidental thereto or
connected
therewith; and
(e) subject to compliance with this Agreement, to engage in such
other
activities as may be required in connection with conservation of
the Trust Fund
and the making of distributions to the Certificateholders.
The trust is hereby authorized to engage in the foregoing
activities.
The Trustee shall not cause the trust to engage in any activity
other than in
connection with the foregoing or other than as required or
authorized by the
terms of this Agreement while any Certificate is outstanding, and
this Section
2.07 may not be amended, without the consent of the
Certificateholders
evidencing 51% or more of the aggregate Voting Rights of the
Certificates.
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING OF COMPANY MORTGAGE LOANS BY
COMPANY
Section 3.01 The Company.
The Company shall service and administer the Company Mortgage Loans
in
accordance with customary and usual standards of practice of
prudent mortgage
loan servicers in the respective states in which the related
Mortgaged
Properties are located. In connection with such servicing and
administration,
the Company shall have full power and authority, acting alone
and/or through
subservicers as provided in Section 3.03, to do or cause to be done
any and all
things that it may deem necessary or desirable in connection with
such servicing
and administration, including but not limited to, the power and
authority,
subject to the terms hereof (i) to execute and deliver, on behalf
of the
Certificateholders and the Trustee, customary consents or waivers
and other
instruments and documents, (ii) to consent to transfers of any
related Mortgaged
Property and assumptions of the Mortgage Notes and related
Mortgages (but only
in the manner provided herein), (iii) to collect any Insurance
Proceeds and
other Liquidation Proceeds, and (iv) subject to Section 3.09, to
effectuate
foreclosure or other conversion of the ownership of the Mortgaged
Property
securing any Company Mortgage Loan; provided that the Company shall
take no
action that is inconsistent with or prejudices the interests of the
Trust Fund
or the Certificateholders in any Company Mortgage Loan or the
rights and
interests of the Depositor and the Trustee under this
Agreement.
Without limiting the generality of the foregoing, the Company, in
its
own name or in the name of the Trust, the Depositor or the Trustee,
is hereby
authorized and empowered by the Trust, the Depositor and the
Trustee, when the
Company believes it appropriate in its reasonable judgment, to
execute and
deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any
of them, 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 Company Mortgage Loans, and with respect to the related
Mortgaged
Properties held for the benefit of the Certificateholders. The
Company shall
prepare and deliver to the Depositor and/or the Trustee such
documents requiring
execution and delivery by any or all of them as are necessary or
appropriate to
enable the Company to service and administer the Company Mortgage
Loans. Upon
receipt of such documents, the Depositor and/or the Trustee shall
execute such
documents and deliver them to the Company.
In accordance with the standards of the first paragraph of this
Section
3.01, the Company shall advance or cause to be advanced funds as
necessary for
the purpose of effecting the payment of taxes and assessments on
the Mortgaged
Properties relating to the Company Mortgage Loans, which advances
shall be
reimbursable in the first instance from related collections from
the Mortgagors
pursuant to Section 5.03, and further as provided in Section 5.02.
All costs
incurred by the Company, if any, in effecting the timely payments
of taxes and
assessments on the Mortgaged Properties relating to the Company
Mortgage Loans
and related insurance premiums shall not, for the purpose of
calculating monthly
distributions to the Certificateholders, be added to the Stated
Principal
Balance under the related Company Mortgage Loans, notwithstanding
that the terms
of such Mortgage Loans so permit.
Section 3.02 Due-on-Sale Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.02, when any
property subject to a Mortgage has been or is about to be conveyed
by the
Mortgagor, the Company shall to the extent that it has knowledge of
such
conveyance, enforce any due-on-sale clause contained in any
Mortgage Note or
Mortgage, to the extent permitted under applicable law and
governmental
regulations, but only to the extent that such enforcement will not
adversely
affect or jeopardize coverage under any Required Insurance
Policy.
Notwithstanding the foregoing, the Company is not required to
exercise such
rights with respect to an Company Mortgage Loan if the Person to
whom the
related Mortgaged Property has been conveyed or is proposed to be
conveyed
satisfies the terms and conditions contained in the Mortgage Note
and Mortgage
related thereto and the consent of the mortgagee under such
Mortgage Note or
Mortgage is not otherwise so required under such Mortgage Note or
Mortgage as a
condition to such transfer. In the event that the Company is
prohibited by law
from enforcing any such due-on-sale clause, or if coverage under
any Required
Insurance Policy would be adversely affected, or if nonenforcement
is otherwise
permitted hereunder, the Company is authorized, subject to Section
3.02(b), to
take or enter into an assumption and modification agreement from or
with the
person to whom such property has been or is about to be conveyed,
pursuant to
which such person becomes liable under the Mortgage Note and,
unless prohibited
by applicable state law, the Mortgagor remains liable thereon,
provided that the
Mortgage Loan shall continue to be covered (if so covered before
the Company
enters such agreement) by the applicable Required Insurance
Policies. The
Company, subject to Section 3.02(b), is also authorized with the
prior approval
of the insurers under any Required Insurance Policies 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
Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the
foregoing, the Company shall not be deemed to be in default under
this Section
3.02(a) by reason of any transfer or assumption that the Company
reasonably
believes it is restricted by law from preventing.
(b) Subject to the Company's duty to enforce any due-on-sale clause
to
the extent set forth in Section 3.02(a), in any case in which a
Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such
Person is to
enter into an assumption agreement or modification agreement or
supplement to
the Mortgage Note or Mortgage that requires the signature of the
Trustee, or if
an instrument of release signed by the Trustee is required
releasing the
Mortgagor from liability on the related Company Mortgage Loan, the
Company shall
prepare and deliver or cause to be prepared and delivered to the
Trustee for
signature and shall direct, in writing, the Trustee to execute the
assumption
agreement with the Person to whom the Mortgaged Property is to be
conveyed and
such modification agreement or supplement to the Mortgage Note or
Mortgage or
other instruments as are reasonable or necessary to carry out the
terms of the
Mortgage Note or Mortgage or otherwise to comply with any
applicable laws
regarding assumptions or the transfer of the Mortgaged Property to
such Person.
In connection with any such assumption, no material term of the
Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of
the Scheduled
Payment and any other term affecting the amount or timing of
payment on the
Mortgage Loan) may be changed. In addition, the substitute
Mortgagor and the
Mortgaged Property must be acceptable to the Company in accordance
with its
servicing standards as then in effect. The Company shall notify the
Trustee that
any such substitution or assumption agreement has been completed by
forwarding
to the Trustee the original of such substitution or assumption
agreement, which
in the case of the original 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. Any
fee collected by the Company for entering into an assumption or
substitution of
liability agreement will be retained by the Company as additional
servicing
compensation.
Section 3.03 Subservicers.
The Company shall perform all of its servicing responsibilities
hereunder or may cause a subservicer to perform any such
servicing
responsibilities on its behalf, but the use by the Company of a
subservicer
shall not release the Company from any of its obligations hereunder
and the
Company shall remain responsible hereunder for all acts and
omissions of each
subservicer as fully as if such acts and omissions were those of
the Company.
The Company shall pay all fees of each subservicer from its own
funds, and a
subservicer's fee shall not exceed the Servicing Fee payable to the
Company
hereunder.
At the cost and expense of the Company, without any right of
reimbursement from its Protected Account, the Company shall be
entitled to
terminate the rights and responsibilities of a subservicer and
arrange for any
servicing responsibilities to be performed by a successor
subservicer; provided,
however, that nothing contained herein shall be deemed to prevent
or prohibit
the Company, at the Company's option, from electing to service the
related
Company Mortgage Loans itself. In the event that the Company's
responsibilities
and duties under this Agreement are terminated pursuant to Section
9.03, the
Company shall at its own cost and expense terminate the rights
and
responsibilities of each subservicer effective as of the date of
termination of
the Company. The Company shall pay all fees, expenses or penalties
necessary in
order to terminate the rights and responsibilities of each
subservicer from the
Company's own funds without reimbursement from the Trust Fund.
Notwithstanding the
foregoing, the Company shall not be relieved of its
obligations hereunder and shall be obligated to the same extent and
under the
same terms and conditions as if it alone were servicing and
administering the
Company Mortgage Loans. The Company shall be entitled to enter into
an agreement
with a subservicer for indemnification of the Company by the
subservicer and
nothing contained in this Agreement shall be deemed to limit or
modify such
indemnification.
Any subservicing agreement and any other transactions or
services
relating to the Company Mortgage Loans involving a subservicer
shall be deemed
to be between such subservicer and the Company alone, and neither
the Master
Servicer nor the Trustee shall have any obligations, duties or
liabilities with
respect to such subservicer including any obligation, duty or
liability of
either the Master Servicer or the Trustee to pay such subservicer's
fees and
expenses. For purposes of remittances to the Master Servicer
pursuant to this
Agreement, the Company shall be deemed to have received a payment
on an Company
Mortgage Loan when a subservicer has received such payment.
Section 3.04 Documents, Records and Funds in Possession of Company
to
Be Held for Trustee.
Notwithstanding any other provisions of this Agreement, the
Company
shall transmit to the Trustee as required by this Agreement all
documents and
instruments in respect of an Company Mortgage Loan coming into the
possession of
the Company from time to time and shall account fully to the
Trustee for any
funds received by the Company or that otherwise are collected by
the Company as
Liquidation Proceeds or Insurance Proceeds in respect of any such
Mortgage Loan.
All Mortgage Files and funds collected or held by, or under the
control of, the
Company in respect of any Company Mortgage Loans, whether from the
collection of
principal and interest payments or from Liquidation Proceeds,
including but not
limited to, any funds on deposit in the Protected Account
maintained by the
Company, shall be held by the Company for and on behalf of the
Trustee and shall
be and remain the sole and exclusive property of the Trustee,
subject to the
applicable provisions of this Agreement. The Company also agrees
that it shall
not create, incur or subject any Mortgage File or any funds that
are deposited
in the Protected Account maintained by the Company or the Master
Servicer
Collection Account or in any Escrow Account, or any funds that
otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest,
judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or
otherwise any
claim or right of set off against any Mortgage File or any funds
collected on,
or in connection with, an Company Mortgage Loan, except, however,
that the
Company shall be entitled to set off against and deduct from any
such funds any
amounts that are properly due and payable to the Company under this
Agreement.
Section 3.05 Maintenance of Hazard Insurance.
The Company shall cause to be maintained, for each Company
Mortgage
Loan, hazard insurance on buildings upon, or comprising part of,
the Mortgaged
Property against loss by fire, hazards of extended coverage and
such other
hazards as are customary in the area where the related Mortgaged
Property is
located with an insurer which is licensed to do business in the
state where the
related Mortgaged Property is located. Each such policy of standard
hazard
insurance shall contain, or have an accompanying endorsement that
contains, a
standard mortgagee clause. The Company shall also cause flood
insurance to be
maintained on property acquired upon foreclosure or deed in lieu of
foreclosure
of any Company Mortgage Loan, to the extent described below.
Pursuant to Section
5.01, any amounts collected by the Company under any such policies
(other than
the amounts to be applied to the restoration or repair of the
related Mortgaged
Property or property thus acquired or amounts released to the
Mortgagor in
accordance with the Company's normal servicing procedures) shall be
deposited in
the Protected Account maintained by the Company. Any cost incurred
by the
Company in maintaining any such insurance shall not, for the
purpose of
calculating monthly distributions to the Certificateholders or
remittances to
the Trustee for their benefit, be added to the principal balance of
the Mortgage
Loan, notwithstanding that the terms of the Company Mortgage Loan
so permit.
Such costs shall be recoverable by the Company out of late payments
by the
related Mortgagor or out of Liquidation Proceeds to the extent
permitted by
Section 5.02. It is understood and agreed that no earthquake or
other additional
insurance is to be required of any Mortgagor or maintained on
property acquired
in respect of a Mortgage 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 is located at the
time of
origination of the Company Mortgage Loan in a federally designated
special flood
hazard area and such area is participating in the national flood
insurance
program, the Company shall cause flood insurance to be maintained
with respect
to such Mortgage Loan. Such flood insurance shall be in an amount
equal to the
least of (i) the Stated Principal Balance of the related Mortgage
Loan, (ii)
minimum amount required to compensate for damage or loss on a
replacement cost
basis or (iii) the maximum amount of such insurance available for
the related
Mortgaged Property under the Flood Disaster Protection Act of 1973,
as amended.
In the event that the Company shall obtain and maintain a
blanket
policy 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 sentence of this Section 3.05, it being understood and agreed
that such
policy may contain a deductible clause on terms substantially
equivalent to
those commercially available and maintained by comparable
servicers. If such
policy contains a deductible clause, the Company shall, in the
event that there
shall not have been maintained on the related Mortgaged Property a
policy
complying with the first sentence of this Section 3.05, and there
shall have
been a loss that would have been covered by such policy, deposit in
the
Protected Account maintained by the Company the amount not
otherwise payable
under the blanket policy because of such deductible clause. Such
deposit shall
be from the Company's own funds without reimbursement therefor. In
connection
with its activities as administrator and servicer of the Company
Mortgage Loans,
the Company agrees to present, on behalf of itself, the Depositor
and the
Trustee for the benefit of the Certificateholders, claims under any
such blanket
policy.
Section 3.06 Presentment of Claims and Collection of Proceeds.
The Company shall prepare and present on behalf of the Trustee and
the
Certificateholders all claims under the Insurance Policies and take
such actions
(including the negotiation, settlement, compromise or enforcement
of the
insured's claim) as shall be necessary to realize recovery under
such Insurance
Policies. Any proceeds disbursed to the Company in respect of such
Insurance
Policies shall be promptly deposited in the Protected Account
maintained by the
Company upon receipt, except that any amounts realized that are to
be applied to
the repair or restoration of the related Mortgaged Property as a
condition
precedent to the presentation of claims on the related Mortgage
Loan to the
insurer under any applicable Insurance Policy need not be so
deposited (or
remitted).
Section 3.07 Maintenance of the Primary Mortgage Insurance
Policies.
(a) The Company shall not take any action that would result in
noncoverage under any applicable Primary Mortgage Insurance Policy
of any loss
which, but for the actions of the Company would have been covered
thereunder.
The Company shall use its best efforts to keep in force and effect
(to the
extent that the Mortgage Loan requires the Mortgagor to maintain
such
insurance), Primary Mortgage Insurance applicable to each Company
Mortgage Loan.
The Company shall not cancel or refuse to renew any such Primary
Mortgage
Insurance Policy that is in effect at the date of the initial
issuance of the
Mortgage Note and is required to be kept in force hereunder.
(b) The Company agrees to present on behalf of the Trustee and
the
Certificateholders, claims to the insurer under any Primary
Mortgage Insurance
Policies and, in this regard, to take such reasonable action as
shall be
necessary to permit recovery under any Primary Mortgage Insurance
Policies
respecting defaulted Mortgage Loans. Pursuant to Section 5.01, any
amounts
collected by the Company under any Primary Mortgage Insurance
Policies shall be
deposited in the Protected Account maintained by the Company,
subject to
withdrawal pursuant to Section 5.02 hereof.
Section 3.08 Fidelity Bond, Errors and Omissions Insurance.
The Company shall maintain, at its own expense, a blanket fidelity
bond
and an errors and omissions insurance policy, with broad coverage
with
responsible companies on all officers, employees or other persons
acting in any
capacity with regard to the Company Mortgage Loans and who handle
funds, money,
documents and papers relating to the Company Mortgage Loans. The
fidelity bond
and errors and omissions insurance shall be in the form of the
Mortgage Banker's
Blanket Bond and shall protect and insure the Company against
losses, including
forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of
such persons. Such fidelity bond shall also protect and insure the
Company
against losses in connection with the failure to maintain any
insurance policies
required pursuant to this Agreement and the release or satisfaction
of an
Company Mortgage Loan which is not in accordance with Accepted
Servicing
Practices. No provision of this Section 3.08 requiring the fidelity
bond and
errors and omissions insurance shall diminish or relieve the
Company from its
duties and obligations as set forth in this Agreement. The minimum
coverage
under any such bond and insurance policy shall be at least equal to
the
corresponding amounts required by Accepted Servicing Practices. The
Company
shall deliver to the Master Servicer a certificate from the surety
and the
insurer as to the existence of the fidelity bond and errors and
omissions
insurance policy and shall obtain a statement from the surety and
the insurer
that such fidelity bond or insurance policy shall in no event be
terminated or
materially modified without thirty days prior written notice to the
Master
Servicer and the Trustee. The Company shall notify the Master
Servicer and the
Trustee within five business days of receipt of notice that such
fidelity bond
or insurance policy will be, or has been, materially modified or
terminated. The
Trustee for the benefit of the Certificateholders must be named as
loss payees
on the fidelity bond and as additional insured on the errors and
omissions
policy.
Section 3.09 Realization upon Defaulted Mortgage Loans;
Determination
of Excess Liquidation Proceeds and Realized Losses;
Repurchases of Certain Mortgage Loans.
(a) The Company shall use reasonable efforts to foreclose upon
or
otherwise comparably convert the ownership of properties securing
such of the
Company Mortgage Loans as come into and continue in default and as
to which no
satisfactory arrangements can be made for collection of delinquent
payments. In
connection with such foreclosure or other conversion, the Company
shall follow
such practices and procedures as it shall deem necessary or
advisable and as
shall be normal and usual in its general mortgage servicing
activities and the
requirements of the insurer under any Required Insurance Policy;
provided that
the Company shall not be required to expend its own funds in
connection with any
foreclosure or towards the restoration of any property unless it
shall determine
(i) that such restoration and/or foreclosure will increase the
proceeds of
liquidation of the Company Mortgage Loan after reimbursement to
itself of such
expenses and (ii) that such expenses will be recoverable to it
through Insurance
Proceeds or Liquidation Proceeds (respecting which it shall have
priority for
purposes of withdrawals from the Protected Account maintained by
the Company
pursuant to Section 5.02). If the Company reasonably believes that
Liquidation
Proceeds with respect to any such Mortgage Loan would not be
increased as a
result of such foreclosure or other action, such Mortgage Loan will
be
charged-off and will become a Liquidated Loan. The Company will
give notice of
any such charge-off to the Trustee and the Securities
Administrator. The Company
shall be responsible for all other costs and expenses incurred by
it in any such
proceedings; provided that such costs and expenses shall be
Servicing Advances
and that it shall be entitled to reimbursement thereof from the
proceeds of
liquidation of the related Mortgaged Property, as contemplated in
Section 5.02.
If the Company has knowledge that a Mortgaged Property that the
Company is
contemplating acquiring in foreclosure or by deed- in-lieu of
foreclosure is
located within a one-mile radius of any site with environmental or
hazardous
waste risks known to the Company, the Company will, prior to
acquiring the
Mortgaged Property, consider such risks and only take action in
accordance with
its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale
shall
be taken in the name of the Trustee for the benefit of the
Certificateholders
(or the Trustee's nominee on behalf of the Certificateholders). The
Trustee's
name shall be placed on the title to such REO Property solely as
the Trustee
hereunder and not in its individual capacity. The Company shall
ensure that the
title to such REO Property references this Agreement and the
Trustee's capacity
hereunder. Pursuant to its efforts to sell such REO Property, the
Company shall
either itself or through an agent selected by the Company protect
and conserve
such REO Property in the same manner and to such extent as is
customary in the
locality where such REO Property is located and may, incident to
its
conservation and protection of the interests of the
Certificateholders, rent the
same, or any part thereof, as the Company deems to be in the best
interest of
the Company and the Certificateholders for the period prior to the
sale of such
REO Property. The Company shall prepare for and deliver to the
Trustee and the
Securities Administrator a statement with respect to each REO
Property that has
been rented showing the aggregate rental income received and all
expenses
incurred in connection with the management and maintenance of such
REO Property
at such times as is necessary to enable the Trustee to comply with
the reporting
requirements of the REMIC Provisions. The net monthly rental
income, if any,
from such REO Property shall be deposited in the Protected Account
maintained by
the Company no later than the close of business on each
Determination Date. The
Company shall perform the tax reporting and withholding related to
foreclosures,
abandonments and cancellation of indebtedness income as specified
by Sections
1445, 6050J and 6050P of the Code by preparing and filing such tax
and
information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property
as
aforesaid or otherwise in connection with a default or imminent
default on an
Company Mortgage Loan, the Company shall dispose of such Mortgaged
Property
prior to three years after its acquisition by the Trust Fund or, at
the expense
of the Trust Fund, request more than 60 days prior to the day on
which such
three-year period would otherwise expire, an extension of the
three-year grace
period unless the Trustee shall have been supplied with an Opinion
of Counsel
addressed to the Trustee (such opinion not to be an expense of the
Trustee) to
the effect that the holding by the Trust Fund of such Mortgaged
Property
subsequent to such three-year period will not result in the
imposition of taxes
on "prohibited transactions" of the REMIC Trust as defined in
section 860F of
the Code or cause the REMIC Trust to fail to qualify as a REMIC at
any time that
any Certificates are outstanding, in which case the Trust Fund may
continue to
hold such Mortgaged Property (subject to any conditions contained
in such
Opinion of Counsel). Notwithstanding any other provision of this
Agreement, no
Mortgaged Property acquired by the Trust Fund shall be rented (or
allowed to
continue to be rented) or otherwise used for the production of
income by or on
behalf of the Trust Fund in such a manner or pursuant to any terms
that would
(i) cause such Mortgaged Property to fail to qualify as
"foreclosure property"
within the meaning of section 860G(a)(8) of the Code or (ii)
subject the REMIC
Trust to the imposition of any federal, state or local income taxes
on the
income earned from such Mortgaged Property under section 860G(c) of
the Code or
otherwise, unless the Company has agreed to indemnify and hold
harmless the
Trust Fund with respect to the imposition of any such taxes.
The decision of the Company to foreclose on a defaulted Company
Mortgage Loan shall be subject to a determination by the Company
that the
proceeds of such foreclosure would exceed the costs and expenses of
bringing
such a proceeding. The income earned from the management of any
Mortgaged
Properties acquired through foreclosure or other judicial
proceeding, net of
reimbursement to the Company for expenses incurred (including any
property or
other taxes) in connection with such management and net of
unreimbursed
Servicing Fees, Advances, Servicing Advances and any management fee
paid or to
be paid with respect to the management of such Mortgaged Property,
shall be
applied to the payment of principal of, and interest on, the
related defaulted
Company Mortgage Loans (with interest accruing as though such
Mortgage Loans
were still current) and all such income shall be deemed, for all
purposes in the
Agreement, to be payments on account of principal and interest on
the related
Mortgage Notes and shall be deposited into the Protected Account
maintained by
the Company. To the extent the income received during a Prepayment
Period is in
excess of the amount attributable to amortizing principal and
accrued interest
at the related Mortgage Rate on the related Company Mortgage Loan,
such excess
shall be considered to be a partial Principal Prepayment for all
purposes
hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan,
net
of any payment to the Company as provided above, shall be deposited
in the
Protected Account maintained by the Company on the next succeeding
Determination
Date following receipt thereof for distribution on the related
Distribution
Date, except that any Excess Liquidation Proceeds shall be retained
by the
Company as additional servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery
resulting
from a partial collection of Liquidation Proceeds or any income
from an REO
Property, will be applied in the following order of priority:
first, to
reimburse the Company for any related unreimbursed Servicing
Advances and
Servicing Fees, pursuant to Section 5.02 or this Section 3.09;
second, to
reimburse the Company for any unreimbursed Advances, pursuant to
Section 5.02 or
this Section 3.09; third, to accrued and unpaid interest (to the
extent no
Advance has been made for such amount) on the Company Mortgage Loan
or related
REO Property, at the Net Mortgage Rate to the first day of the
month in which
such amounts are required to be distributed; and fourth, as a
recovery of
principal of the Mortgage Loan.
(b) On each Determination Date, the Company shall determine the
respective aggregate amounts of Excess Liquidation Proceeds and
Realized Losses,
if any, for the related Prepayment Period.
(c) The Company has no intent to foreclose on any Company Mortgage
Loan
based on the delinquency characteristics as of the Closing Date;
provided, that
the foregoing does not prevent the Company from initiating
foreclosure
proceedings on any date hereafter if the facts and circumstances of
such
Mortgage Loans including delinquency characteristics in the
Company's discretion
so warrant such action.
Section 3.10 Servicing Compensation.
As compensation for its activities hereunder, the Company shall
be
entitled to retain or withdraw from its Protected Account out of
each payment of
interest on a Company Mortgage Loan included in the Trust Fund an
amount equal
to the Servicing Fee.
Additional servicing compensation in the form of any Excess
Liquidation
Proceeds, assumption fees, late payment charges, all income and
gain net of any
losses realized from Permitted Investments with respect to funds in
or credited
to the Protected Account maintained by the Company shall be
retained by the
Company to the extent not required to be deposited in the Protected
Account
maintained by the Company pursuant to Section 5.02. The Company
shall be
required to pay all expenses incurred by it in connection with its
servicing
activities hereunder (including payment of any premiums for hazard
insurance, as
required by Section 3.05 and maintenance of the other forms of
insurance
coverage required by Section 3.07) and shall not be entitled to
reimbursement
therefor except as specifically provided in Section 5.02.
Section 3.11 REO Property.
(a) In the event the Trust Fund acquires ownership of any REO
Property
in respect of any related Company Mortgage Loan, the deed or
certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of the
related
Certificateholders. The Company shall sell any REO Property as
expeditiously as
possible and in accordance with the provisions of this Agreement.
Pursuant to
its efforts to sell such REO Property, the Company shall protect
and conserve
such REO Property in the manner and to the extent required herein,
in accordance
with the REMIC Provisions.
(b) The Company shall deposit all funds collected and received
in
connection with the operation of any REO Property into the
Protected Account
maintained by the Company.
(c) The Company, upon the final disposition of any REO Property,
shall
be entitled to reimbursement for any related unreimbursed Advances,
unreimbursed
Servicing Advances or Servicing Fees from Liquidation Proceeds
received in
connection with the final disposition of such REO Property;
provided, that any
such unreimbursed Advances or Servicing Fees as well as any unpaid
Servicing
Fees may be reimbursed or paid, as the case may be, prior to final
disposition,
out of any net rental income or other net amounts derived from such
REO
Property.
Section 3.12 Liquidation Reports.
Upon the foreclosure of any Mortgaged Property relating to an
Company
Mortgage Loan or the acquisition thereof by the Trust Fund pursuant
to a
deed-in-lieu of foreclosure, the Company shall submit a liquidation
report to
the Master Servicer containing such information as shall be
mutually acceptable
to the Company and the Master Servicer with respect to such
Mortgaged Property.
Section 3.13 Annual Statement as to Compliance.
The Company will deliver to the Trustee, not later than March 1st
of
each calendar year beginning in 2007, an Officers' Certificate (an
"Annual
Statement of Compliance") stating, as to each signatory thereof,
that (i) a
review of the activities of the Company during the preceding
calendar year and
of performance under this Agreement or other applicable servicing
agreement has
been made under such officers' supervision and (ii) to the best of
such
officers' knowledge, based on such review, the Company has
fulfilled all of its
obligations under this Agreement or other applicable servicing
agreement in all
material respects throughout such year, or, if there has been a
failure to
fulfill any such obligation in any material respect, specifying
each such
failure known to such officer and the nature and status of cure
provisions
thereof. Such Annual Statement of Compliance shall contain no
restrictions or
limitations on its use. In the event that the Company has delegated
any
servicing responsibilities with respect to the Company Mortgage
Loans to a
subservicer, the Company shall deliver a similar Annual Statement
of Compliance
by that subservicer to the Trustee as described above as and when
required with
respect to the Company.
If the Company cannot deliver the related Annual Statement of
Compliance by March 1st of such year, the Trustee, at its sole
option, may
permit a cure period for the Company to deliver such Annual
Statement of
Compliance, but in no event later than March 10th of such year.
Failure of the Company to timely comply with this Section 3.13
shall be
deemed an Event of Default, and the Trustee may, in addition to
whatever rights
the Trustee may have under this Agreement and at law or equity or
to damages,
including injunctive relief and specific performance, upon notice
immediately
terminate all the rights and obligations of the Company under this
Agreement and
in and to the Company Mortgage Loans and the proceeds thereof
without
compensating the Company for the same. This paragraph shall
supersede any other
provision in this Agreement or any other agreement to the
contrary.
Section 3.14 Assessments of Compliance and Attestation Reports.
On and after January 1, 2006, the Company shall service and
administer
the Company Mortgage Loans in accordance with all applicable
requirements of the
Servicing Criteria.
Pursuant to Rules 13a-18 and 15d-18 of the Exchange Act and
Item 1123 of
Regulation AB, the
Company shall deliver to the Trustee on or
before March 1st of each calendar year beginning in 2007, a report
regarding the
Company's assessment
of compliance (a "Company Assessment of Compliance")
with
the Servicing
Criteria
during the preceding calendar year. The Company
Assessment of
Compliance
as set forth in
Regulation
AB, must contain the
following:
(a) A statement by such officer of its responsibility for
assessing
compliance with the Servicing Criteria applicable to the
Company;
(b) A statement by such officer that such officer used the
Servicing
Criteria attached as Exhibit M hereto, and which will also be
attached to the
Company Assessment of Compliance, to assess compliance with the
Servicing
Criteria applicable to the Company;
(c) An assessment by such officer of the Company's compliance with
the
applicable Servicing Criteria for the period consisting of the
preceding
calendar year, including disclosure of any material instance of
noncompliance
with respect thereto during such period, which assessment shall be
based on the
activities it performs with respect to asset-backed securities
transactions
taken as a whole involving the Company, that are backed by the same
asset type
as the Company Mortgage Loans;
(d) A statement that a registered public accounting firm has issued
an
attestation report on the Company Assessment of Compliance for the
period
consisting of the preceding calendar year; and
(e) A statement
as to which of the Servicing Criteria, if any, are not
applicable to the Company, which statement shall be based on the
activities it
performs with respect to asset-backed securities transactions taken
as a whole
involving the Company, that are backed by the same asset type as
the Company
Mortgage Loans.
Such report at a minimum shall address each of the Servicing
Criteria
specified on Exhibit M hereto which are indicated as applicable to
the Company.
On or before March 1st of each calendar year beginning in 2007,
the
Company shall furnish to the Trustee a report (a "Company
Attestation Report")
by a registered public accounting firm that attests to, and reports
on, the
Company Assessment of Compliance made by the Company, as required
by Rules
13a-18 and 15d-18 of the Exchange Act and Item 1122(b) of
Regulation AB, which
Attestation Report must be made in accordance with standards for
attestation
reports issued or adopted by the Public Company Accounting
Oversight Board.
The Company shall cause any subservicer, and each subcontractor
determined by the Company to be "participating in the servicing
function" within
the meaning of Item 1122 of Regulation AB, to deliver to the
Trustee and the
Depositor a Company Assessment of Compliance and Company
Attestation Report as
and when provided above.
Such Company Assessment of Compliance, as to any subservicer,
shall at
a minimum address each of the Servicing Criteria specified on Exhibit M hereto
which are indicated as applicable to any "primary servicer."
Notwithstanding the
foregoing, as to
any subcontractor (as defined in the related servicing
agreement), an
Assessment of Compliance is not required to be delivered
unless
it is required as part of a Form 10-K with respect to the Trust
Fund.
If the Company cannot deliver any Company Assessment of Compliance
or
Company Attestation Report by March 1st of such year, the Trustee,
at its
sole option, may permit a cure period for the Company to deliver
such Company
Assessment of Compliance or Company Attestation Report, but in no
event later
than March 10th of such year.
Failure of the Company to timely comply with this Section 3.14
shall be
deemed an Event of Default, and the Trustee may, in addition to
whatever rights
the Trustee may have under this Agreement and at law or equity or
to damages,
including injunctive relief and specific performance, upon notice
immediately
terminate all the rights and obligations of the Company under this
Agreement and
in and to the Company Mortgage Loans and the proceeds thereof
without
compensating the Company for the same. This paragraph shall
supersede any other
provision in this Agreement or any other agreement to the
contrary.
The Trustee shall also provide a Company Assessment of Compliance
and
Company Attestation Report, as and when provided above, which shall
at a minimum
address each of the Servicing Criteria specified on Exhibit M
hereto which are
indicated as applicable to the "trustee". In addition, the Trustee
shall cause
the Custodian to deliver to the Trustee and the Depositor a Company
Assessment
of Compliance and Company Attestation Report, as and when provided
above, which
shall at a minimum address each of the Servicing Criteria specified
on Exhibit M
hereto which are indicated as applicable to a "custodian."
Notwithstanding the
foregoing, as to any Custodian, a Company Assessment of Compliance
is not
required to be delivered unless it is required as part of a Form
10-K with
respect to the Trust Fund.
Section 3.15 Books and Records.
The Company shall be responsible for maintaining, and shall
maintain, a
complete set of books and records for the Company Mortgage Loans
which shall be
appropriately identified in the Company's computer system to
clearly reflect the
ownership of the Company Mortgage Loans by the Trust. In
particular, the Company
shall maintain in its possession, available for inspection by the
Master
Servicer and the Trustee and shall deliver to the Master Servicer
and the
Trustee upon demand, evidence of compliance with all federal, state
and local
laws, rules and regulations. To the extent that original documents
are not
required for purposes of realization of Liquidation Proceeds or
Insurance
Proceeds, documents maintained by the Company may be in the form of
microfilm or
microfiche or such other reliable means of recreating original
documents,
including, but not limited to, optical imagery techniques so long
as the Company
complies with the requirements of Accepted Servicing Practices.
The Company shall maintain with respect to each Company Mortgage
Loan
and shall make available for inspection by the Master Servicer and
the Trustee
the related servicing file during the time such Company Mortgage
Loan is subject
to this Agreement and thereafter in accordance with applicable
law.
Payments on the Company Mortgage Loans, including any payoffs, made
in
accordance with the related Mortgage File will be entered in the
Company's set
of books and records no more than two business days after receipt
and
identification, and allocated to principal or interest as specified
in the
related Mortgage File.
<PAGE>
ARTICLE IV
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY MASTER
SERVICER
Section 4.01 Master Servicer
The Master Servicer shall supervise, monitor and oversee the
obligation
of the Company and the related Servicer to service and administer
their
respective Mortgage Loans in accordance with the terms of this
Agreement and the
related Servicing Agreement and shall have full power and authority
to do any
and all things which it may deem necessary or desirable in
connection with such
master servicing and administration. In performing its obligations
hereunder,
the Master Servicer shall act in a manner consistent with Accepted
Master
Servicing Practices. Furthermore, the Master Servicer shall oversee
and consult
with the Company and the related Servicer as necessary from
time-to-time to
carry out the Master Servicer's obligations hereunder, shall
receive, review and
evaluate all reports, information and other data provided to the
Master Servicer
by the Company and the related Servicer and shall cause the Company
and related
Servicer to perform and observe the covenants, obligations and
conditions to be
performed or observed by such Person under this Agreement and the
related
Servicing Agreement. The Master Servicer shall independently and
separately
monitor the Company and the related Servicer's servicing activities
with respect
to each related Mortgage Loan, reconcile the results of such
monitoring with
such information provided in the previous sentence on a monthly
basis and
coordinate corrective adjustments to the Company's, the related
Servicer's and
Master Servicer's records, and based on such reconciled and
corrected
information, prepare the statements specified in Section 6.05 and
any other
information and statements required hereunder. The Master Servicer
shall
reconcile the results of its Mortgage Loan monitoring with the
actual
remittances of the Company and the Servicer to the Protected
Accounts pursuant
to this Agreement and the related Servicing Agreement.
The Trustee shall furnish the Company, the Servicers and the
Master
Servicer with any powers of attorney and other documents in form as
provided to
it necessary or appropriate to enable the Company, the Servicer and
the Master
Servicer to service and administer the related Mortgage Loans and
REO Property.
The Trustee and the Securities Administrator shall provide access
to
the records and documentation in possession of the Trustee or the
Securities
Administrator regarding the related Mortgage Loans and REO Property
and the
servicing thereof to the Certificateholders, the FDIC, and the
supervisory
agents and examiners of the FDIC, such access being afforded only
upon
reasonable prior written request and during normal business hours
at the office
of the Trustee or the Securities Administrator; provided, however,
that, unless
otherwise required by law, neither the Trustee nor the Securities
Administrator
shall be required to provide access to such records and
documentation if the
provision thereof would violate the legal right to privacy of any
Mortgagor. The
Trustee and the Securities Administrator shall allow
representatives of the
above entities to photocopy any of the records and documentation
and shall
provide equipment for that purpose at a charge that covers the
Trustee's or the
Securities Administrator's actual costs.
The Trustee shall execute and deliver to the Company or the
related
Servicer and the Master Servicer any court pleadings, requests for
trustee's
sale or other documents necessary or desirable to (i) the
foreclosure or
trustee's sale with respect to a Mortgaged Property; (ii) any legal
action
brought to obtain judgment against any Mortgagor on the Mortgage
Note or
Security Instrument; (iii) obtain a deficiency judgment against the
Mortgagor;
or (iv) enforce any other rights or remedies provided by the
Mortgage Note or
Security Instrument or otherwise available at law or equity.
Section 4.02 REMIC-Related Covenants.
For as long as the REMIC Trust shall exist, the Trustee and the
Securities Administrator shall act in accordance herewith to assure
continuing
treatment of such REMIC as a REMIC, and the Trustee and the
Securities
Administrator shall comply with any directions of the Seller, the
Company, the
Servicers or the Master Servicer to assure such continuing
treatment. In
particular, the Trustee shall not (a) sell or permit the sale of
all or any
portion of the Mortgage Loans or of any investment of deposits in
an Account
unless such sale is as a result of a repurchase of the Mortgage
Loans pursuant
to this Agreement or the Trustee has received a REMIC Opinion
addressed to the
Trustee prepared at the expense of the Trust Fund; and (b) other
than with
respect to a substitution pursuant to the Mortgage Loan Purchase
Agreement or
Section 2.04 of this Agreement, as applicable, accept any
contribution to the
REMIC Trust after the Startup Day without receipt of a REMIC
Opinion.
Section 4.03 Monitoring of Company and Servicer.
(a) The Master Servicer shall be responsible for reporting to
the
Trustee and the Seller the compliance by the Company and the
related Servicer
with its duties under this Agreement and the related Servicing
Agreement. In the
review of the Company's and the related Servicer's activities, the
Master
Servicer may rely upon an Officer's Certificate of the Company and
the related
Servicer with regard to such Person's compliance with the terms of
this
Agreement or the related Servicing Agreement. In the event that the
Master
Servicer, in its judgment, determines that the Company or the
related Servicer
should be terminated in accordance with this Agreement or the
related Servicing
Agreement, or that a notice should be sent pursuant to this
Agreement or the
related Servicing Agreement with respect to the occurrence of an
event that,
unless cured, would constitute grounds for such termination, the
Master Servicer
shall notify the Seller and the Trustee thereof and the Master
Servicer shall
issue such notice or take such other action as it deems
appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Company
under this
Agreement and the related Servicer under the related Servicing
Agreement, and
shall, in the event that the Company or the related Servicer fails
to perform
its obligations in accordance with this Agreement or the related
Servicing
Agreement, subject to the preceding paragraph, terminate the rights
and
obligations of such Person thereunder and act as servicer of the
related
Mortgage Loans or to cause the Trustee to enter in to a new
Servicing Agreement
with a successor Servicer selected by the Master Servicer;
provided, however, it
is understood and acknowledged by the parties hereto that there
will be a period
of transition (not to exceed 90 days) before the actual servicing
functions can
be fully transferred to such successor Servicer. Such enforcement,
including,
without limitation, the legal prosecution of claims, termination of
the related
Servicing Agreement 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
Master
Servicer, in its good faith business judgment, would require were
it the owner
of the related Mortgage Loans. The Master Servicer shall pay the
costs of such
enforcement at its own expense, subject to its right of
reimbursement pursuant
to the provisions of this Agreement or the related Servicing
Agreement, provided
that the Master Servicer shall not be required to prosecute or
defend any legal
action except to the extent that the Master Servicer shall have
received
reasonable indemnity for its costs and expenses in pursuing such
action.
(c) To the extent that the costs and expenses of the Master
Servicer
related to any termination of the Company or the related Servicer,
appointment
of a successor Servicer or the transfer and assumption of servicing
by the
Master Servicer with respect to this Agreement or the related
Servicing
Agreement (including, without limitation, (i) all legal costs and
expenses and
all due diligence costs and expenses associated with an evaluation
of the
potential termination of the Company or the related Servicer as a
result of an
event of default by such Person and (ii) all costs and expenses
associated with
the complete transfer of servicing, including all servicing files
and all
servicing data and the completion, correction or manipulation of
such servicing
data as may be required by the successor servicer to correct any
errors or
insufficiencies in the servicing data or otherwise to enable the
successor
service to service the Mortgage Loans in accordance with this
Agreement or the
related Servicing Agreement) are not fully and timely reimbursed by
the Company
or the terminated Servicer, the Master Servicer shall be entitled
to
reimbursement of such costs and expenses from the Master Servicer
Collection
Account.
(d) The Master Servicer shall require the Company and the
related
Servicer to comply with the remittance requirements and other
obligations set
forth in this Agreement or the related Servicing Agreement, as
applicable.
(e) If the Master Servicer acts as a servicer, it will not
assume
liability for the representations and warranties of the Company or
the related
Servicer, if any, that it replaces.
Section 4.04 Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect a
blanket
fidelity bond and an errors and omissions insurance policy,
affording coverage
with respect to all directors, officers, employees and other
Persons acting on
such Master Servicer's behalf, and covering errors and omissions in
the
performance of the Master Servicer's obligations hereunder. The
errors and
omissions insurance policy and the fidelity bond shall be in such
form and
amount generally acceptable for entities serving as master
servicers or
trustees.
Section 4.05 Power to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans and
shall
have full power and authority, subject to the REMIC Provisions and
the
provisions of Article XI hereof, to do any and all things that it
may deem
necessary or desirable in connection with the master servicing
and
administration of the Mortgage Loans, including but not limited to
the power and
authority (i) to execute and deliver, on behalf of the
Certificateholders and
the Trustee, customary consents or waivers and other instruments
and documents,
(ii) to consent to transfers of any Mortgaged Property and
assumptions of the
Mortgage Notes and related Mortgages, (iii) to collect any
Insurance Proceeds
and Liquidation Proceeds, and (iv) to effectuate foreclosure or
other conversion
of the ownership of the Mortgaged Property securing any Mortgage
Loan, in each
case, in accordance with the provisions of this Agreement and the
related
Servicing Agreement, as applicable; provided, however, that the
Master Servicer
shall not (and, consistent with its responsibilities under Section
4.03, shall
not permit the Company or the related Servicer to) knowingly or
intentionally
take any action, or fail to take (or fail to cause to be taken) any
action
reasonably within its control and the scope of duties more
specifically set
forth herein, that, under the REMIC Provisions, if taken or not
taken, as the
case may be, would cause the REMIC Trust to fail to qualify as a
REMIC or result
in the imposition of a tax upon the Trust Fund (including but not
limited to the
tax on prohibited transactions as defined in Section 860F(a)(2) of
the Code and
the tax on contributions to a REMIC set forth in Section 860G(d) of
the Code)
unless the Master Servicer has received an Opinion of Counsel (but
not at the
expense of the Master Servicer) to the effect that the contemplated
action will
not would cause the REMIC Trust to fail to qualify as a REMIC or
result in the
imposition of a tax upon the REMIC Trust. The Trustee shall furnish
the Master
Servicer, upon written request from a Servicing Officer, with any
powers of
attorney empowering the Master Servicer, the Company or the related
Servicer to
execute and deliver instruments of satisfaction or cancellation, or
of partial
or full release or discharge, and to foreclose upon or otherwise
liquidate
Mortgaged Property, and to appeal, prosecute or defend in any court
action
relating to the Mortgage Loans or the Mortgaged Property, in
accordance with the
related Servicing Agreement and this Agreement, and the Trustee
shall execute
and deliver such other documents, as the Master Servicer may
request, to enable
the Master Servicer to master service and administer the Mortgage
Loans and
carry out its duties hereunder, in each case in accordance with
Accepted Master
Servicing Practices (and the Trustee shall have no liability for
misuse of any
such powers of attorney by the Master Servicer, the Company or the
related
Servicer). If the Master Servicer or the Trustee has been advised
that it is
likely that the laws of the state in which action is to be taken
prohibit such
action if taken in the name of the Trustee or that the Trustee
would be
adversely affected under the "doing business" or tax laws of such
state if such
action is taken in its name, the Master Servicer shall join with
the Trustee in
the appointment of a co-trustee pursuant to Section 10.11 hereof.
In the
performance of its duties hereunder, the Master Servicer shall be
an independent
contractor and shall not, except in those instances where it is
taking action in
the name of the Trustee, be deemed to be the agent of the
Trustee.
Section 4.06 Due-on-Sale Clauses; Assumption Agreements
To
the extent provided in this Agreement or the related Servicing
Agreement, to the extent Mortgage Loans contain enforceable
due-on-sale clauses,
the Master Servicer shall cause the Company and the related
Servicer to enforce
such clauses in accordance with this Agreement or the related
Servicing
Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause
or such clause is otherwise not enforced in accordance with this
Agreement or
the related Servicing Agreement, and, as a consequence, a Mortgage
Loan is
assumed, the original Mortgagor may be released from liability in
accordance
with this Agreement or the related Servicing Agreement.
Section 4.07 Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage
Loan, or
the receipt by the Company or the related Servicer of a
notification that
payment in full has been escrowed in a manner customary for such
purposes for
payment to Certificateholders on the next Distribution Date, the
Company or the
related Servicer will, if required under the related Servicing
Agreement (or if
the Company or the related Servicer does not, the Master Servicer
may), promptly
furnish to the Custodian, on behalf of the Trustee, two copies of
a
certification substantially in the form of Exhibit H hereto signed
by a
Servicing Officer or in a mutually agreeable electronic format
which will, in
lieu of a signature on its face, originate from a Servicing Officer
(which
certification shall include a statement to the effect that all
amounts received
in connection with such payment that are required to be deposited
in the
Protected Account maintained by the Company or the Servicer
pursuant to Article
V or by the related Servicer pursuant to the related Servicing
Agreement have
been or will be so deposited) and shall request that the Custodian,
on behalf of
the Trustee, deliver to the Company or the related Servicer the
related Mortgage
File. Upon receipt of such certification and request, the
Custodian, on behalf
of the Trustee, shall promptly release the related Mortgage File to
the Company
or the related Servicer and the Trustee and Custodian shall have no
further
responsibility with regard to such Mortgage File. Upon any such
payment in full,
the Company or the related Servicer is authorized, to give, as
agent for the
Trustee, as the mortgagee under the Mortgage that secured the
Mortgage Loan, an
instrument of satisfaction (or assignment of mortgage without
recourse,
representation or warranty) regarding the Mortgaged Property
subject to the
Mortgage, which instrument of satisfaction or assignment, as the
case may be,
shall be delivered to the Person or Persons entitled thereto
against receipt
therefor of such payment, it being understood and agreed that no
expenses
incurred in connection with such instrument of satisfaction or
assignment, as
the case may be, shall be chargeable to the Protected Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with this
Agreement or the
related Servicing Agreement, the Trustee shall execute such
documents as shall
be prepared and furnished to the Trustee by the Company, the
related Servicer or
the Master Servicer (in form reasonably acceptable to the Trustee)
and as are
necessary to the prosecution of any such proceedings. The
Custodian, on behalf
of the Trustee, shall, upon the request of the Company, the related
Servicer or
the Master Servicer, and delivery to the Custodian, on behalf of
the Trustee, of
two copies of a request for release signed by a Servicing Officer
substantially
in the form of Exhibit H (or in a mutually agreeable electronic
format which
will, in lieu of a signature on its face, originate from a
Servicing Officer),
release the related Mortgage File held in its possession or control
to the
Company, the related Servicer or the Master Servicer, as
applicable. Such trust
receipt shall obligate the Company, the related Servicer or the
Master Servicer
to return the Mortgage File to the Custodian on behalf of the
Trustee, when the
need therefor by such Person no longer exists unless the Mortgage
Loan shall be
liquidated, in which case, upon receipt of a certificate of a
Servicing Officer
similar to that hereinabove specified, the Mortgage File shall be
released by
the Custodian, on behalf of the Trustee, to the Company, the
related Servicer or
the Master Servicer.
Section 4.08 Documents, Records and Funds in Possession of
Master
Servicer, Company and Servicer to Be Held for Trustee.
(a) The Master Servicer shall transmit and the Company or the
related
Servicer (to the extent required by this Agreement or the related
Servicing
Agreement) shall transmit to the Trustee or Custodian such
documents and
instruments coming into the possession of such Person from time to
time as are
required by the terms hereof, or in the case of the related
Servicer, the
related Servicing Agreement, to be delivered to the Trustee or
Custodian. Any
funds received by the Master Servicer, the Company or by the
related Servicer in
respect of any Mortgage Loan or which otherwise are collected by
the Master
Servicer, the Company or by the related Servicer as Liquidation
Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held
for the benefit
of the Trustee and the Certificateholders subject to the Master
Servicer's right
to retain or withdraw from the Master Servicer Collection Account
the Master
Servicing Fee and other amounts provided in this Agreement, and to
the right of
the Company and the related Servicer to retain its Servicing Fee
and other
amounts as provided in this Agreement or the related Servicing
Agreement. The
Master Servicer shall, and (to the extent provided in this
Agreement or the
related Servicing Agreement) shall cause the Company and the
related Servicer
to, provide access to information and documentation regarding the
Mortgage Loans
to the Trustee, its agents and accountants at any time upon
reasonable request
and during normal business hours, and to Certificateholders that
are savings and
loan associations, banks or insurance companies, the OTS, the FDIC
and the
supervisory agents and examiners of such Office and Corporation or
examiners of
any other federal or state banking or insurance regulatory
authority if so
required by applicable regulations of the Office of Thrift
Supervision or other
regulatory authority, such access to be afforded without charge but
only upon
reasonable request in writing and during normal business hours at
the offices of
the Master Servicer designated by it. In fulfilling such a request
the Master
Servicer shall not be responsible for determining the sufficiency
of such
information.
(b) All Mortgage Files and funds collected or held by, or under
the
control of, the Master Servicer, in respect of any Mortgage Loans,
whether from
the collection of principal and interest payments or from
Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and
on behalf of
the Trustee and the Certificateholders and shall be and remain the
sole and
exclusive property of the Trustee; provided, however, that the
Master Servicer,
the Company and the related Servicer shall be entitled to setoff
against, and
deduct from, any such funds any amounts that are properly due and
payable to the
Master Servicer or such Servicer under this Agreement or the
related Servicing
Agreement.
Section 4.09 Standard Hazard Insurance and Flood Insurance
Policies.
(a) For each Mortgage Loan, the Master Servicer shall enforce
any
obligation of the Company and the related Servicer under this
Agreement or the
related Servicing Agreement to maintain or cause to be maintained
standard fire
and casualty insurance and, where applicable, flood insurance, all
in accordance
with the provisions of this Agreement or the related Servicing
Agreement. It is
understood and agreed that such insurance shall be with insurers
meeting the
eligibility requirements set forth in this Agreement and the
related Servicing
Agreement and that no earthquake or other additional insurance is
to be required
of any Mortgagor or to be maintained on property acquired in
respect of a
defaulted loan, other than pursuant to such applicable laws and
regulations as
shall at any time be in force and as shall require such additional
insurance.
(b) Pursuant to Sections 5.01, 5.03 and 5.04 any amounts collected
by
the Company, the Servicers or the Master Servicer, or by the
Company or the
Servicers, under any insurance policies (other than amounts to be
applied to the
restoration or repair of the property subject to the related
Mortgage or
released to the Mortgagor in accordance with this Agreement or the
Servicing
Agreements) shall be deposited by the Company in its Protected
Account or by the
related Servicer or the Master Servicer into the Master Servicer
Collection
Account, subject to withdrawal pursuant to Sections 5.02, 5.03,
5.04 and 5.06,
as applicable. Any cost incurred by the Master Servicer, the
Company or the
related Servicer in maintaining any such insurance if the Mortgagor
defaults in
its obligation to do so shall be added to the amount owing under
the Mortgage
Loan where the terms of the Mortgage Loan so permit; provided,
however, that the
addition of any such cost shall not be taken into account for
purposes of
calculating the distributions to be made to Certificateholders and
shall be
recoverable by the Master Servicer, the Company or the related
Servicer pursuant
to Sections 5.02, 5.03, 5.04 and 5.06, as applicable.
Section 4.10 Presentment of Claims and Collection of Proceeds.
The Master Servicer shall (to the extent provided in this Agreement
and
the related Servicing Agreement) cause the Company or the Servicer
to, prepare
and present on behalf of the Trustee and the Certificateholders all
claims under
the Insurance Policies and take such actions (including the
negotiation,
settlement, compromise or enforcement of the insured's claim) as
shall be
necessary to realize recovery under such policies. Any proceeds
disbursed to the
Master Servicer (or disbursed to the Company or the related
Servicer and
remitted to the Master Servicer) in respect of such policies, bonds
or contracts
shall be promptly deposited in the Master Servicer Collection
Account upon
receipt, except that any amounts realized that are to be applied to
the repair
or restoration of the related Mortgaged Property as a condition
precedent to the
presentation of claims on the related Mortgage Loan to the insurer
under any
applicable Insurance Policy need not be so deposited (or
remitted).
Section 4.11 Maintenance of the Primary Mortgage Insurance
Policies.
(a) The Master Servicer shall not take, or permit the Company or
the
related Servicer (to the extent such action is prohibited under
this Agreement
or the related Servicing Agreement) to take, any action that would
result in
noncoverage under any applicable Primary Mortgage Insurance Policy
of any loss
which, but for the actions of the Master Servicer, the Company or
the related
Servicer, would have been covered thereunder. The Master Servicer
shall use its
best reasonable efforts to cause the Company and the related
Servicer (to the
extent required under this Agreement and the related Servicing
Agreement) to
keep in force and effect (to the extent that the Mortgage Loan
requires the
Mortgagor to maintain such insurance), primary mortgage insurance
applicable to
each Mortgage Loan (including any LPMI Policy) in accordance with
the provisions
of this Agreement and the related Servicing Agreement, as
applicable. The Master
Servicer shall not, and shall not permit the Company or the related
Servicer (to
the extent required under this Agreement or the related Servicing
Agreement) to,
cancel or refuse to renew any such Primary Mortgage Insurance
Policy that is in
effect at the date of the initial issuance of the Mortgage Note and
is required
to be kept in force hereunder except in accordance with the
provisions of this
Agreement and the related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to cause the Company and the
related
Servicer (to the extent required under this Agreement and the
related Servicing
Agreement) to present, on behalf of the Trustee and the
Certificateholders,
claims to the insurer under any Primary Mortgage Insurance Policies
and, in this
regard, to take such reasonable action as shall be necessary to
permit recovery
under any Primary Mortgage Insurance Policies respecting defaulted
Mortgage
Loans. Pursuant to Sections 5.01, 5.03 and 5.04, any amounts
collected by the
Company or the related Servicer under any Primary Mortgage
Insurance Policies
shall be deposited by the Company in its Protected Account or by
the related
Servicer in the Master Servicer Collection Account, subject to
withdrawal
pursuant to Section 5.03 or 5.04, as applicable.
Section 4.12 Trustee to Retain Possession of Certain Insurance
Policies
and Documents.
The Trustee (or the Custodian, as directed by the Trustee),
shall
retain possession and custody of the originals (to the extent
available) of any
Primary Mortgage Insurance Policies, or certificate of insurance if
applicable,
and any certificates of renewal as to the foregoing as may be
issued from time
to time as contemplated by this Agreement. Until all amounts
distributable in
respect of the Certificates have been distributed in full and the
Master
Servicer otherwise has fulfilled its obligations under this
Agreement, the
Trustee (or its Custodian, if any, as directed by the Trustee)
shall also retain
possession and custody of each Mortgage File in accordance with and
subject to
the terms and conditions of this Agreement. The Master Servicer
shall promptly
deliver or cause to be delivered to the Trustee (or the Custodian,
as directed
by the Trustee), upon the execution or receipt thereof the
originals of any
Primary Mortgage Insurance Policies, any certificates of renewal,
and such other
documents or instruments that constitute portions of the Mortgage
File that come
into the possession of the Master Servicer from time to time.
Section 4.13 Realization upon Defaulted Mortgage Loans.
The Master Servicer shall cause the Company and the related
Servicer
(to the extent required under this Agreement and the related
Servicing
Agreement) to foreclose upon, repossess or otherwise comparably
convert the
ownership of Mortgaged 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, all in accordance with
this
Agreement or the related Servicing Agreement.
Section 4.14 Compensation for the Master Servicer.
The Master Servicer shall be entitled to the Master Servicing Fee
on
each Distribution Date as compensation for the performance of its
obligations
hereunder. In addition, pursuant to Article V all income and gain
realized from
any investment of funds in the Distribution Account and the Master
Servicer
Collection Account shall be for the benefit of the Master Servicer
as additional
compensation. The Master Servicer will be entitled to retain, as
additional
compensation, any interest remitted by the related Servicer in
connection with a
Principal Prepayment in full or otherwise in excess of amounts
required to be
remitted to the Master Servicer Collection Account. The Master
Servicer shall be
required to pay all expenses incurred by it in connection with its
activities
hereunder and shall not be entitled to reimbursement therefor
except as provided
in this Agreement.
Section 4.15 REO Property.
(a) In the event the Trust Fund acquires ownership of any REO
Property
in respect of any related Mortgage Loan, the deed or certificate of
sale shall
be issued to the Trustee, or to its nominee, on behalf of the
related
Certificateholders. The Master Servicer shall, to the extent
provided in this
Agreement or the related Servicing Agreement, cause the Company or
the related
Servicer to sell, any REO Property as expeditiously as possible and
in
accordance with the provisions of this Agreement and the related
Servicing
Agreement, as applicable. Pursuant to its efforts to sell such REO
Property, the
Master Servicer shall cause the Company or the related Servicer to
protect and
conserve, such REO Property in the manner and to the extent
required by this
Agreement or the related Servicing Agreement, in accordance with
the REMIC
Provisions and in a manner that does not result in a tax on "net
income from
foreclosure property" or cause such REO Property to fail to qualify
as
"foreclosure property" within the meaning of Section 860G(a)(8) of
the Code.
(b) The Master Servicer shall, to the extent required by this
Agreement
or the related Servicing Agreement, cause the Company or the
related Servicer to
deposit all funds collected and received in connection with the
operation of any
REO Property in the Protected Account.
(c) The Master Servicer and the Company or the related Servicer,
upon
the final disposition of any REO Property, shall be entitled to
reimbursement
for any related unreimbursed Advances and other unreimbursed
advances as well as
any unpaid Servicing Fees from Liquidation Proceeds received in
connection with
the final disposition of such REO Property; provided, that any such
unreimbursed
Monthly Advances as well as any unpaid Servicing Fees may be
reimbursed or paid,
as the case may be, prior to final disposition, out of any net
rental income or
other net amounts derived from such REO Property.
(d) To the extent provided in this Agreement or the related
Servicing
Agreement, the Liquidation Proceeds from the final disposition of
the REO
Property, net of any payment to the Master Servicer and the Company
or the
related Servicer as provided above shall be deposited in the
Protected Account
on or prior to the Determination Date in the month following
receipt thereof and
be remitted by wire transfer in immediately available funds to the
Master
Servicer for deposit into the related Master Servicer Collection
Account on the
next succeeding Remittance Date.
Section 4.16 Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Trustee, not later
than
February 28 of each calendar year beginning in 2007, an Officers'
Certificate
(an "Annual Statement of Compliance") stating, as to each signatory
thereof,
that (i) a review of the activities of the Master Servicer during
the preceding
calendar year and of performance under this Agreement or other
applicable
servicing agreement has been made under such officers' supervision
and (ii) to
the best of such officers' knowledge, based on such review, the
Master Servicer
has fulfilled all of its obligations under this Agreement or other
applicable
servicing agreement in all material respects throughout such year,
or, if there
has been a failure to fulfill any such obligation in any material
respect,
specifying each such failure known to such officer and the nature
and status of
cure provisions thereof. Such Annual Statement of Compliance shall
contain no
restrictions or limitations on its use. In the event that the
Master Servicer
has delegated any servicing responsibilities with respect to the
Mortgage Loans
to a subservicer, the Master Servicer shall deliver a similar
Annual Statement
of Compliance by that subservicer to the Trustee as described above
as and when
required with respect to the Master Servicer.
(b) If the Master Servicer cannot deliver the related Annual
Statement
of Compliance by February 28th of such year, the Trustee, at its
sole option,
may permit a cure period for the Master Servicer to deliver such
Annual
Statement of Compliance, but in no event later than March 10th of
such year.
(c) Failure of the Master Servicer to timely comply with this
Section
4.16 shall be deemed an Event of Default, and the Trustee may, in
addition to
whatever rights the Trustee may have under this Agreement and at
law or equity
or to damages, including injunctive relief and specific
performance, upon notice
immediately terminate all the rights and obligations of the Master
Servicer
under this Agreement and in and to the Mortgage Loans and the
proceeds thereof
without compensating the Master Servicer for the same. This
paragraph shall
supersede any other provision in this Agreement or any other
agreement to the
contrary.
Section 4.17 Assessments of Compliance and Attestation Reports.
On and after January 1, 2006, the Master Servicer shall service
and
administer the Mortgage Loans in accordance with all applicable
requirements of
the Servicing Criteria. Pursuant to Rules 13a-18 and 15d-18 of the
Exchange Act
and Item 1123 of Regulation AB, the Master Servicer shall deliver
to the Trustee
on or before February 28 of each calendar year beginning in 2007, a
report
regarding the Master Servicer's assessment of compliance (an
"Assessment of
Compliance") with the Servicing Criteria during the preceding
calendar year. The
Assessment of Compliance must be reasonably satisfactory to the
Trustee, and as
set forth in Regulation AB, the Assessment of Compliance must
contain the
following:
(a) A statement by such officer of its responsibility for
assessing
compliance with the Servicing Criteria applicable to the Master
Servicer;
(b) A statement by such officer that such officer used the
Servicing
Criteria attached as Exhibit M hereto, and which will also be
attached to the
Assessment of Compliance, to assess compliance with the Servicing
Criteria
applicable to the Master Servicer;
(c) An assessment by such officer of the Master Servicer's
compliance
with the applicable Servicing Criteria for the period consisting of
the
preceding calendar year, including disclosure of any material
instance of
noncompliance with respect thereto during such period, which
assessment shall be
based on the activities it performs with respect to asset-backed
securities
transactions taken as a whole involving the Master Servicer, that
are backed by
the same asset type as the Mortgage Loans;
(d) A statement that a registered public accounting firm has issued
an
attestation report on the Master Servicer's Assessment of
Compliance for the
period consisting of the preceding calendar year; and
(e) A statement as to which of the Servicing Criteria, if any, are
not
applicable to the Master Servicer, which statement shall be based
on the
activities it performs with respect to asset-backed securities
transactions
taken as a whole involving the Master Servicer, that are backed by
the same
asset type as the Mortgage Loans.
Such report at a minimum shall address each of the Servicing
Criteria
specified on Exhibit M hereto which are indicated as applicable to
the Master
Servicer.
On or before February 28 of each calendar year beginning in 2007,
the
Master Servicer shall furnish to the Trustee a report (an
"Attestation Report")
by a registered public accounting firm that attests to, and reports
on, the
Assessment of Compliance made by the Company, as required by Rules
13a-18 and
15d-18 of the Exchange Act and Item 1122(b) of Regulation AB, which
Attestation
Report must be made in accordance with standards for attestation
reports issued
or adopted by the Public Company Accounting Oversight Board.
The Master Servicer shall cause any subservicer, and each
subcontractor
determined by the Master Servicer to be "participating in the
servicing
function" within the meaning of Item 1122 of Regulation AB, to
deliver to the
Trustee and the Depositor an Assessment of Compliance and
Attestation Report as
and when provided above.
Such Assessment of Compliance, as to any subservicer, shall at
a
minimum address each of the Servicing Criteria specified on Exhibit
M hereto
which are indicated as applicable to any "primary servicer."
Notwithstanding the
foregoing, as to any subcontractor, an Assessment of Compliance is
not required
to be delivered unless it is required as part of a Form 10-K with
respect to the
Trust Fund.
If the Master Servicer cannot deliver any Assessment of Compliance
or
Attestation Report by February 28th of such year, the Trustee, at
its sole
option, may permit a cure period for the Master Servicer to deliver
such
Assessment of Compliance or Attestation Report, but in no event
later than March
10th of such year.
Failure of the Master Servicer to timely comply with this Section
4.17
shall be deemed an Event of Default, and the Trustee may, in
addition to
whatever rights the Trustee may have under this Agreement and at
law or equity
or to damages, including injunctive relief and specific
performance, upon notice
immediately terminate all the rights and obligations of the Master
Servicer
under this Agreement and in and to the Mortgage Loans and the
proceeds thereof
without compensating the Master Servicer for the same. This
paragraph shall
supersede any other provision in this Agreement or any other
agreement to the
contrary.
The Trustee shall also provide an Assessment of Compliance and
Attestation Report, as and when provided above, which shall at a
minimum address
each of the Servicing Criteria specified on Exhibit M hereto which
are indicated
as applicable to the "trustee" or "securities administrator." In
addition, the
Trustee shall cause the Custodian to deliver to the Trustee and the
Depositor an
Assessment of Compliance and Attestation Report, as and when
provided above,
which shall at a minimum address each of the Servicing Criteria
specified on
Exhibit M hereto which are indicated as applicable to a
"custodian."
Notwithstanding the foregoing, as to any Custodian, an Assessment
of Compliance
is not required to be delivered unless it is required as part of a
Form 10-K
with respect to the Trust Fund
Section 4.18 [Reserved.]
Section 4.19 Company.
On the Closing Date, the Company will receive from the Seller a
payment
of $_____].
Section 4.20 UCC.
The Trustee agrees to file continuation statements for any
Uniform
Commercial Code financing statements which the Seller has informed
the Trustee
were filed on the Closing Date in connection with the Trust. The
Seller shall
file any financing statements or amendments thereto required by any
change in
the Uniform Commercial Code.
Section 4.21 Optional Purchase of Certain Mortgage Loans.
With respect to any Mortgage Loans which as of the first day of
a
Calendar Quarter is delinquent in payment by 90 days or more or is
an REO
Property, the Company shall have the right to purchase any Mortgage
Loan from
the Trust which becomes 90 days or more delinquent or becomes an
REO Property at
a price equal to the Repurchase Price; provided, however, (i) that
such Mortgage
Loan is still 90 days or more delinquent or is an REO Property as
of the date of
such purchase and (ii) this purchase option, if not theretofore
exercised, shall
terminate on the date prior to the last day of the related Calendar
Quarter.
This purchase option, if not exercised, shall not be thereafter
reinstated
unless the delinquency is cured and the Mortgage Loan thereafter
again becomes
90 days or more delinquent or becomes an REO Property, in which
case the option
shall again become exercisable as of the first day of the related
Calendar
Quarter.
In addition, the Company shall, at its option, purchase any
Mortgage
Loan from the Trust if the first Due Date for such Mortgage Loan is
subsequent
to the Cut-off Date and the initial Monthly Payment is not made
within thirty
(30) days of such Due Date. Such purchase shall be made at a price
equal to the
Repurchase Price.
If at any time the Company remits to the Master Servicer a payment
for
deposit in the Master Servicer Collection Account covering the
amount of the
Repurchase Price for such a Mortgage Loan, and the Company provides
to the
Trustee a certification signed by a Servicing Officer stating that
the amount of
such payment has been deposited in the Master Servicer Collection
Account, then
the Trustee shall execute the assignment of such Mortgage Loan
prepared and
delivered to the Trustee, at the request of the Company, without
recourse,
representation or warranty, to the Company which shall succeed to
all the
Trustee's right, title and interest in and to such Mortgage Loan,
and all
security and documents relative thereto. Such assignment shall be
an assignment
outright and not for security. The Company will thereupon own such
Mortgage, and
all such security and documents, free of any further obligation to
the Trustee
or the Certificateholders with respect thereto.
Section 4.22 Books and Records.
The Master Servicer shall be responsible for maintaining, and
shall
maintain, a complete set of books and records for the Mortgage
Loans which shall
be appropriately identified in the Master Servicer's computer
system to clearly
reflect the ownership of the Mortgage Loans by the Trust. In
particular, the
Master Servicer shall maintain in its possession, available for
inspection by
the Trustee and shall deliver to the Trustee upon demand, evidence
of compliance
with all federal, state and local laws, rules and regulations. To
the extent
that original documents are not required for purposes of
realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by
the Master
Servicer may be in the form of microfilm or microfiche or such
other reliable
means of recreating original documents, including, but not limited
to, optical
imagery techniques so long as the Master Servicer complies with the
requirements
of Accepted Servicing Practices.
The Master Servicer shall maintain with respect to each Mortgage
Loan
and shall make available for inspection by the Trustee the related
servicing
file during the time such Mortgage Loan is subject to this
Agreement and
thereafter in accordance with applicable law.
Payments on the Mortgage Loans, including any payoffs, made in
accordance with the related Mortgage File will be entered in the
Master
Servicer's set of books and records no more than two business days
after receipt
and identification, and allocated to principal or interest as
specified in the
related Mortgage File.
<PAGE>
ARTICLE V
ACCOUNTS
Section 5.01 Collection of Mortgage Loan Payments; Protected
Account.
(a) The Company shall make reasonable efforts in accordance
with
customary and usual standards of practice of prudent mortgage
lenders in the
respective states in which the Mortgaged Properties are located to
collect all
payments called for under the terms and provisions of the Mortgage
Loans to the
extent such procedures shall be consistent with this Agreement and
the terms and
provisions of any related Required Insurance Policy. Consistent
with the
foregoing, the Company may in its discretion (i) waive any late
payment charge
and (ii) extend the due dates for payments due on a Mortgage Note
for a period
not greater than 125 days. In the event of any such arrangement,
the Company
shall make Advances on the related Mortgage Loan during the
scheduled period in
accordance with the amortization schedule of such Mortgage Loan
without
modification thereof by reason of such arrangements, and shall be
entitled to
reimbursement therefor in accordance with Section 6.01. The Company
shall not be
required to institute or join in litigation with respect to
collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or
against any
public or governmental authority with respect to a taking or
condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or
other
instrument pursuant to which such payment is required is prohibited
by
applicable law. In addition, if (x) a Mortgage Loan is in default
or default is
imminent or (y) the Company delivers to the Trustee a certification
addressed to
the Trustee, based on the advice of counsel or certified public
accountants, in
either case, that have a national reputation with respect to
taxation of REMICs,
that a modification of such Mortgage Loan will not result in the
imposition of
taxes on or disqualify the REMIC Trust, the Company may, (A) amend
the related
Mortgage Note to reduce the Mortgage Rate applicable thereto,
provided that such
reduced Mortgage Rate shall in no event be lower than ___% with
respect to any
Mortgage Loan and (B) amend any Mortgage Note to extend to the
maturity thereof.
(b) The Company shall establish and maintain a Protected Account
(which
shall at all times be an Eligible Account) with a depository
institution in the
name of the Company for the benefit of the Trustee on behalf of
the
Certificateholders and designated "[Name of Trustee], in trust for
registered
holders of Bear Stearns Asset Backed Securities Trust 200__-___,
Asset-Backed
Certificates Series 200__-___". The Company shall deposit or cause
to be
deposited into the Protected Account on a daily basis within one
Business Day of
receipt, except as otherwise specifically provided herein, the
following
payments and collections remitted by subservicers or received by it
in respect
of the Company Mortgage Loans subsequent to the Cut-off Date (other
than in
respect of principal and interest due on the Company Mortgage Loans
on or before
the Cut-off Date) and the following amounts required to be
deposited hereunder:
(i) all payments on account of principal, including Principal
Prepayments, on the Company Mortgage Loans;
(ii) all payments on account of interest on the Company
Mortgage Loans net of the related Servicing Fee permitted under
Section
3.10 and LPMI Fees, if any;
(iii) all Liquidation Proceeds and Insurance Proceeds, other
than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
the
Company's normal servicing procedures;
(iv) any amount required to be deposited by the Company
pursuant to Section 5.01(c) in connection with any losses on
Permitted
Investments;
(v) any amounts required to be deposited by the Company
pursuant to Section 3.05; and
(vi) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Company into
the
Protected 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 or assumption fees, if collected, need not be
remitted by the
Company. In the event that the Company shall remit any amount not
required to be
remitted and not otherwise subject to withdrawal pursuant to
Section 5.02, it
may at any time withdraw or direct the institution maintaining the
Protected
Account, to withdraw such amount from the Protected Account, any
provision
herein to the contrary notwithstanding. Such withdrawal or
direction may be
accomplished by delivering written notice thereof to the
institution maintaining
the Protected Account, that describes the amounts deposited in
error in the
Protected Account. The Company shall maintain adequate records with
respect to
all withdrawals made pursuant to this Section. All items
requiring
reconciliation will be resolved within 90 calendar days of their
original
identification. All funds deposited in the Protected Account shall
be held in
trust for the Certificateholders until withdrawn in accordance with
Section
5.02.
(c) The institution that maintains the Protected Account shall
invest
the funds in the Protected Account, in the manner directed by the
Company, in
Permitted Investments which shall mature not later than the
Remittance Date and
shall not be sold or disposed of prior to its maturity. All such
Permitted
Investments shall be made in the name of the Trustee, for the
benefit of the
Certificateholders. All income and gain net of any losses realized
from any such
investment shall be for the benefit of the Company as servicing
compensation and
shall be remitted to it monthly as provided herein. The amount of
any losses
incurred in the Protected Account in respect of any such
investments shall be
deposited, by the Company into the Protected Account, out of the
Company's own
funds.
(d) The Company shall give at least 30 days advance notice to
the
Trustee, the Seller, the Master Servicer, each Rating Agency and
the Depositor
of any proposed change of location of the Protected Account prior
to any change
thereof.
Section 5.02 Permitted Withdrawals From the Protected Account.
(a) The Company may from time to time make withdrawals from the
Protected Account for the following purposes:
(i) to pay itself (to the extent not previously paid to or
withheld by the Company), as servicing compensation in accordance
with
Section 3.10, that portion of any payment of interest that equals
the
Servicing Fee for the period with respect to which such
interest
payment was made, and, as additional servicing compensation,
those
other amounts set forth in Section 3.10;
(ii) to reimburse the Company for Advances made by it with
respect to the Mortgage Loans, provided, however, that the
Company's
right of reimbursement pursuant to this subclause (ii) shall be
limited
to amounts received on particular Mortgage Loan(s) (including, for
this
purpose, Liquidation Proceeds and Insurance Proceeds) that
represent
late recoveries of payments of principal and/or interest on
such
particular Mortgage Loan(s) in respect of which any such Advance
was
made;
(iii) to reimburse the Company for any previously made portion
of a Servicing Advance or an Advance made by the Company that, in
the
good faith judgment of the Company, will not be ultimately
recoverable
by it from the related Mortgagor, any related Liquidation
Proceeds,
Insurance Proceeds or otherwise (a "Nonrecoverable Advance"), to
the
extent not reimbursed pursuant to clause (ii) or clause (v);
(iv) to reimburse the Company from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) to pay the Company any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances, provided,
however, that the Company's right to reimbursement for
Servicing
Advances pursuant to this subclause (v) with respect to any
Mortgage
Loan shall be limited to amounts received on particular
Mortgage
Loan(s) (including, for this purpose, Liquidation Proceeds,
Insurance
Proceeds and purchase and repurchase proceeds) that represent
late
recoveries of the payments for which such Servicing Advances were
made;
(vi) to pay to the Seller, the Depositor or itself, as
applicable, with respect to each Mortgage Loan or property acquired
in
respect thereof that has been purchased pursuant to Section 2.02,
2.03
or 4.21 of this Agreement, all amounts received thereon and not
taken
into
account in determining the related Stated Principal Balance of
such repurchased Mortgage Loan;
(vii) to pay any expenses recoverable by the Company pursuant
to Section 8.04 of this Agreement;
(viii) to withdraw pursuant to Section 5.01 any amount
deposited in the Protected Account and not required to be
deposited
therein; and
(ix) to clear and terminate the Protected Account upon
termination of this Agreement pursuant to Section 11.01 hereof.
In addition, no later than 1:00 p.m. Eastern time on the
Remittance
Date, the Company shall withdraw from the Protected Account and
remit to the
Master Servicer the amount required to be withdrawn therefrom
pursuant to
Section 5.04 hereof. In addition, on or before the Remittance Date,
the Company
shall remit to the Master Servicer for deposit in the Master
Servicer Collection
Account any Advances or any payments of Compensating Interest
required to be
made by the Company with respect to the Company Mortgage Loans.
The Company shall keep and maintain separate accounting, on a
Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from
the Protected Account pursuant to subclauses (i), (ii), (iv), (v)
and (vi)
above. Prior to making any withdrawal from the Protected Account
pursuant to
subclause (iii), the Company shall deliver to the Trustee an
Officer's
Certificate of a Servicing Officer indicating the amount of any
previous Advance
or Servicing Advance determined by the Company to be a
Nonrecoverable Advance
and identifying the related Mortgage Loan(s), and their respective
portions of
such Nonrecoverable Advance.
Section 5.02A Reports to Master Servicer.
On or before the tenth calendar day of each month, the Company
shall
furnish to the Master Servicer electronically in a format
acceptable to the
Master Servicer loan accounting reports in the investor's assigned
loan number
order to document the payment activity on each Company Mortgage
Loan on an
individual mortgage loan basis. With respect to each month, such
loan accounting
reports shall contain the following:
(i) With respect to each Scheduled Payment (on both an actual
and
scheduled basis with respect to mortgage loan balances and on
an
actual basis with respect to paid-through dates), the amount of
such
remittance allocable to principal (including a separate breakdown
of
any Principal Prepayment, including the amount of any
Prepayment
Interest Shortfall);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to scheduled interest;
(iii) the amount of servicing compensation received by the
Company during the prior calendar month;
(iv) the aggregate scheduled principal balance of the Company
Mortgage Loans;
(v) the aggregate amount of Advances made by the Company
pursuant to Section 6.01;
(vi) the aggregate of any expenses reimbursed to the Company
during the prior calendar month pursuant to Section 5.02; and
(vii) the number and aggregate outstanding principal balances
of Company Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60
to
89 days, (3) 90 days or more; (b) as to which foreclosure has
commenced; and (c) as to which REO Property has been acquired.
Section 5.03 Collection of Taxes; Assessments and Similar Items;
Escrow
Accounts.
With respect to each Company Mortgage Loan, to the extent required
by
the related Mortgage Note, the Company shall establish and maintain
one or more
accounts (each, an "Escrow Account") and deposit and retain therein
all
collections from the Mortgagors (or advances by the Company) for
the payment of
taxes, assessments, hazard insurance premiums or comparable items
for the
account of the Mortgagors. Nothing herein shall require the Company
to compel a
Mortgagor to establish an Escrow Account in violation of applicable
law.
Withdrawals of amounts so collected from the Escrow Accounts may
be
made only to effect timely payment of taxes, assessments, hazard
insurance
premiums, condominium or PUD association dues, or comparable items,
to reimburse
the Company out of related collections for any payments made with
respect to
each Company Mortgage Loan pursuant to Section 3.01 (with respect
to taxes and
assessments and insurance premiums) and Section 3.05 (with respect
to hazard
insurance), to refund to any Mortgagors for any Company Mortgage
Loans any sums
as may be determined to be overages, to pay interest, if required
by law or the
terms of the related Mortgage or Mortgage Note, to such Mortgagors
on balances
in the Escrow Account or to clear and terminate the Escrow Account
at the
termination of this Agreement in accordance with Section 11.01
thereof. The
Escrow Account shall not be a part of the Trust Fund.
Section 5.04 Servicer Protected Accounts.
(a) The Master Servicer shall enforce the obligation of the Company
and
the Servicers to establish and maintain a Protected Account in
accordance with
this Agreement and the Servicing Agreements, with records to be
kept with
respect thereto on a Mortgage Loan by Mortgage Loan basis, into
which accounts
shall be deposited within one Business Day (or as of such other
time specified
in the Servicing Agreements) of receipt all collections of
principal and
interest on any Mortgage Loan and with respect to any REO Property
received by
the Company or the related Servicer, including Principal
Prepayments, Insurance
Proceeds, Liquidation Proceeds, and advances made from the
Company's or such
Servicer's own funds (less servicing compensation as permitted by
this Agreement
or the related Servicing Agreement) and all other amounts to be
deposited in the
Protected Accounts. Each of the Company and the Servicers are
hereby authorized
to make withdrawals from and deposits to the related Protected
Account for
purposes required or permitted by this Agreement. To the extent
provided in this
Agreement or any Servicing Agreement, the Protected Account shall
be held in a
Designated Depository Institution and segregated on the books of
such
institution in the name of the Trustee for the benefit of
Certificateholders.
(b) To the extent provided in this Agreement or any Servicing
Agreement, amounts on deposit in a Protected Account may be
invested in
Permitted Investments in the name of the Trustee for the benefit
of
Certificateholders and, except as provided in the preceding
paragraph, not
commingled with any other funds, such Permitted Investments to
mature, or to be
subject to redemption or withdrawal, no later than the date on
which such funds
are required to be withdrawn for deposit in the Master Servicer
Collection
Account, and shall be held until required for such deposit. The
income earned
from Permitted Investments made pursuant to this Section 5.04 shall
be paid to
the Company or the related Servicer under this Agreement or the
related
Servicing Agreement, and the risk of loss of moneys required to be
distributed
to the Certificateholders resulting from such investments shall be
borne by and
be the risk of the Company or the related Servicer, as the case may
be. The
Company or the related Servicer (to the extent provided in this
Agreement or the
related Servicing Agreement) shall deposit the amount of any such
loss in the
Protected Account within two Business Days of receipt of
notification of such
loss but not later than the second Business Day prior to the
Distribution Date
on which the moneys so invested are required to be distributed to
the
Certificateholders.
(c) To the extent provided in this Agreement or the related
Servicing
Agreement and subject to this Article V, on or before each
Remittance Date, the
Company or the related Servicer shall withdraw or shall cause to be
withdrawn
from its Protected Account and shall immediately deposit or cause
to be
deposited in the Master Servicer Collection Account amounts
representing the
following collections and payments (other than with respect to
principal of or
interest on the Mortgage Loans due on or before the Cut-off
Date):
(i) Scheduled Payments on the Mortgage Loans received or any
related portion thereof advanced by the Company or the related
Servicer
pursuant to the related Servicing Agreement which were due on or
before
the related Due Date, net of the amount thereof comprising the
Servicing Fees;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Company or the related Servicer with respect to
such
Mortgage Loans in the related Prepayment Period, with interest to
the
date of prepayment or liquidation, net of the amount thereof
comprising
the Servicing Fees and LPMI Fees, if any;
(iii) Partial Principal Prepayments received by the Company or
the related Servicer for such Mortgage Loans in the related
Prepayment
Period; and
(iv) Any amount to be used as an Advance.
(d) Withdrawals may be made from a Protected Account by the Company
as
described in Section 5.02 hereof and by the Master Servicer or the
related
Servicer only to make remittances as provided in Section 5.04(c),
5.05 and 5.06;
to reimburse the Master Servicer or the Servicer for Advances which
have been
recovered by subsequent collection from the related Mortgagor; to
remove amounts
deposited in error; to remove fees, charges or other such amounts
deposited on a
temporary basis; or to clear and terminate the account at the
termination of
this Agreement in accordance with Section 11.01. As provided in
Sections 5.04(c)
and 5.05(b) certain amounts otherwise due to the related Servicer
may be
retained by the related Servicer and need not be deposited in the
Master
Servicer Collection Account.
Section 5.05 Master Servicer Collection Account.
(a) The Master Servicer shall establish and maintain in the name of
the
Trustee, for the benefit of the Certificateholders, the Master
Servicer
Collection Account which shall be an Eligible Account. The Master
Servicer will
deposit in the Master Servicer Collection Account as identified by
the Master
Servicer and as received by the Master Servicer, the following
amounts:
(i) Any amounts withdrawn from a Protected Account;
(ii) Any Advance and any Compensating Interest Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds received
by or on behalf of the Master Servicer or which were not deposited
in a
Protected Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased by the Seller or Section 2.02 or 2.03, any amounts which
are
to be treated pursuant to Section 2.04 of this Agreement as the
payment
of such a Repurchase Price, the Repurchase Price with respect to
any
Mortgage Loans purchased by the Company pursuant to Section 4.21,
and
all proceeds of any Mortgage Loans or property acquired with
respect
thereto repurchased by the Seller or its designee pursuant to
Section
11.01;
(v) Any amounts required to be deposited with respect to
losses on investments of deposits in an Account; and
(vi) Any other amounts received by or on behalf of the Master
Servicer or the
Trustee and required to be deposited in the Master
Servicer Collection Account pursuant to this Agreement.
(b) All amounts deposited to the Master Servicer Collection
Account
shall be held by the Master Servicer in the name of the Trustee in
trust for the
benefit of the Certificateholders in accordance with the terms and
provisions of
this Agreement. The requirements for crediting the Master Servicer
Collection
Account or the Distribution 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 or assumption, tax service,
statement account or
payoff, substitution, satisfaction, release and other like fees and
charges,
need not be credited by the Master Servicer or the related Servicer
to the
Distribution Account or the Master Servicer Collection Account, as
applicable.
In the event that the Master Servicer shall deposit or cause to be
deposited to
the Distribution Account any amount not required to be credited
thereto, the
Trustee, upon receipt of a written request therefor signed by a
Servicing
Officer of the Master Servicer, shall promptly transfer such amount
to the
Master Servicer, any provision herein to the contrary
notwithstanding.
(c) The amount at any time credited to the Master Servicer
Collection
Account may be invested, in the name of the Trustee, or its
nominee, for the
benefit of the Certificateholders, in Permitted Investments or be
held in cash
as directed by Master Servicer. All Permitted Investments shall
mature or be
subject to redemption or withdrawal on or before, and shall be held
until, the
next succeeding Distribution Account Deposit Date. Any and all
investment
earnings from the Master Servicer Collection Account shall be paid
to the Master
Servicer. The risk of loss of moneys required to be distributed to
the
Certificateholders resulting from such investments shall be borne
by and be the
risk of the Master Servicer. The Master Servicer shall deposit the
amount of any
such loss in the Master Servicer Collection Account within two
Business Days of
receipt of notification of such loss but not later than the second
Business Day
prior to the Distribution Date on which the moneys so invested are
required to
be distributed to the Certificateholders.
Section 5.06 Permitted Withdrawals and Transfers from the
Master
Servicer Collection Account.
(a) The Master Servicer will, from time to time on demand of the
Master
Servicer or the Securities Administrator, make or cause to be made
such
withdrawals or transfers from the Master Servicer Collection
Account as the
Master Servicer has designated for such transfer or withdrawal
pursuant to this
Agreement and the related Servicing Agreement. The Master Servicer
may clear and
terminate the Master Servicer Collection Account pursuant to
Section 11.01 and
remove amounts from time to time deposited in error.
(b) On an ongoing basis, the Master Servicer shall withdraw from
the
Master Servicer Collection Account to pay itself as provided in
Section 4.14 and
to pay any expenses recoverable by the Trustee, the Master
Servicer, the
Custodian or the Securities Administrator pursuant to Sections
4.03, 8.03, 8.04
and 10.05.
(c) In addition, on or before each Distribution Account Deposit
Date,
the Master Servicer shall deposit in the Distribution Account (or
remit to the
Trustee for deposit therein) any Advances required to be made by
the Master
Servicer with respect to the Mortgage Loans.
(d) No later than 3:00 p.m. New York time on each Distribution
Account
Deposit Date, the Master Servicer will transfer all available funds
on deposit
in the Master Servicer Collection Account with respect to the
related
Distribution Date to the Trustee for deposit in the Distribution
Account.
Section 5.07 Distribution Account.
(a) The Trustee shall establish and maintain in the name of the
Trustee, for the benefit of the Certificateholders, the
Distribution Account as
a segregated trust account or accounts.
(b) All amounts deposited to the Distribution Account shall be held
by
the Trustee in the name of the Trustee in trust for the benefit of
the
Certificateholders in accordance with the terms and provisions of
this
Agreement.
(c) The Distribution Account shall constitute an Eligible Account
of
the Trust Fund segregated on the books of the Trustee and held by
the Trustee
and the Distribution Account and the funds deposited therein shall
not be
subject to, and shall be protected from, all claims, liens, and
encumbrances of
any creditors or depositors of the Trustee (whether made directly,
or indirectly
through a liquidator or receiver of the Trustee). The amount at any
time
credited to the Distribution Account may be, as directed by the
Master Servicer,
held either uninvested in a trust or deposit account of the Trustee
with no
liability for interest or other compensation thereof, except as
otherwise agreed
in writing with the Master Servicer, or invested in the name of the
Trustee, in
such Permitted Investments which mature not later than the Business
Day next
preceding the succeeding Distribution Date, except if such
Permitted Investment
is an obligation of or is managed by the institution that maintains
such fund or
account, then such Permitted Investment shall mature not later than
such
Distribution Date. Permitted Investments in respect of the
Distribution Account
shall not be sold or disposed of prior to their maturity. All
investment
earnings on amounts on deposit in the Distribution Account or
benefit from funds
uninvested therein from time to time shall be for the account of
the Master
Servicer. The Master Servicer shall be permitted to receive
distribution of any
and all investment earnings from the Distribution Account on each
Distribution
Date. If there is any loss on a Permitted Investment or demand
deposit, the
Master Servicer shall deposit the amount of the loss in the
Distribution
Account. With respect to the Distribution Account and the funds
deposited
therein, the Trustee shall take such action as may be necessary to
ensure that
the Certificateholders shall be entitled to the priorities afforded
to such a
trust account (in addition to a claim against the estate of the
Trustee) as
provided by 12 U.S.C. ss. 92a(e), and applicable regulations
pursuant thereto,
if applicable, or any applicable comparable state statute
applicable to state
chartered banking corporations.
Section 5.08 Permitted Withdrawals and Transfers from the
Distribution
Account.
(a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made
such
withdrawals or transfers from the Distribution Account as the
Master Servicer
has designated for such transfer or withdrawal pursuant to this
Agreement or any
Servicing Agreement or as the Securities Administrator has
instructed hereunder
for the following purposes (limited in the case of amounts due the
Master
Servicer to those not withdrawn from the Master Servicer Collection
Account in
accordance with the terms of this Agreement; provided that the
Trustee shall not
be responsible for such determination and may rely on the Master
Servicer's or
the Securities Administrator's instructions under this Section
5.08):
(i) to reimburse the Master Servicer, the Company or the
related Servicer for any Advance or Servicing Advance of its own
funds,
the right of the Master Servicer, the Company or the related
Servicer
to reimbursement pursuant to this subclause (i) being limited
to
amounts received on a particular Mortgage Loan (including, for
this
purpose, the Repurchase Price therefor, Insurance Proceeds and
Liquidation Proceeds) which represent late payments or recoveries
of
the principal of or interest on such Mortgage Loan respecting
which
such Advance or Servicing Advance was made;
(ii) to reimburse the Master Servicer, the Company or the
related Servicer from Insurance Proceeds or Liquidation
Proceeds
relating to a particular Mortgage Loan for amounts expended by
the
Master Servicer, the Company or the related Servicer in good faith
in
connection with the restoration of the related Mortgaged Property
which
was damaged by an uninsured cause or in connection with the
liquidation
of such Mortgage Loan;
(iii) to reimburse the Master Servicer, the Company or the
related Servicer from Insurance Proceeds relating to a
particular
Mortgage Loan for insured expenses incurred with respect to
such
Mortgage Loan and to reimburse the Master Servicer, the Company or
the
related Servicer from Liquidation Proceeds from a particular
Mortgage
Loan for Liquidation Expenses incurred with respect to such
Mortgage
Loan; provided that the Master Servicer shall not be entitled
to
reimbursement for Liquidation Expenses with respect to a Mortgage
Loan
to the extent that (i) any amounts with respect to such Mortgage
Loan
were paid as Excess Liquidation Proceeds pursuant to clause (x) of
this
Subsection (a) to the Master Servicer; and (ii) such
Liquidation
Expenses were not included in the computation of such Excess
Liquidation Proceeds;
(iv) [reserved];
(v) [reserved];
(vi) to reimburse the Master Servicer, the Company or a
Servicer for advances of funds pursuant to this Agreement or
the
related Servicing Agreement, and the right to reimbursement
pursuant to
this subclause being limited to amounts received on the related
Mortgage Loan (including, for this purpose, the Repurchase
Price
therefor, Insurance Proceeds and Liquidation Proceeds) which
represent
late recoveries of the payments for which such advances were
made;
(vii) to reimburse the Master Servicer, the Company or a
Servicer for any Advance or advance, after a Realized Loss has
been
allocated with respect to the related Mortgage Loan if the Advance
or
advance has not been reimbursed pursuant to clauses (i) and
(vi);
(viii) to pay the Master Servicer as set forth in Section
4.14;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to
Sections
4.03, 8.04(c) and (d) and 12.02 or otherwise reimbursable to it
pursuant to this Agreement;
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not
retained by the Company or the related Servicer;
(xi) to reimburse or pay the Company or the related Servicer
any such amounts as are due thereto under this Agreement or the
related
Servicing Agreement and have not been retained by or paid to
the
Company or the related Servicer, to the extent provided herein and
in
the related Servicing Agreement;
(xii) to reimburse the Trustee, the Custodian or the
Securities Administrator for expenses, costs and liabilities
incurred
by or reimbursable to it pursuant to this Agreement (to the extent
not
reimbursed from the Master Servicer Collection Account in
accordance
with Section 5.06);
(xiii) to remove amounts deposited in error; and
(xiv) to clear and terminate the Distribution Account pursuant
to Section 11.01.
(b) The Master Servicer shall keep and maintain separate
accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of
accounting for any
reimbursement from the Distribution Account pursuant to subclauses
(i) through
(vi), inclusive, and (viii) or with respect to any such amounts
which would have
been covered by such subclauses had the amounts not been retained
by the Master
Servicer without being deposited in the Distribution Account under
Section 5.06.
(c) On each Distribution Date, the Trustee shall distribute the
Available Funds to the extent of funds on deposit in the
Distribution Account to
the holders of the Certificates in accordance with the Remittance
Report upon
which the Trustee may conclusively rely.
<PAGE>
ARTICLE VI
DISTRIBUTIONS AND ADVANCES
Section 6.01 Advances.
(a) The Company shall make an Advance with respect to any
Company
Mortgage Loan and deposit such Advance in the Master Servicer
Collection Account
no later than 1:00 p.m. Eastern time on the Remittance Date in
immediately
available funds. The Master Servicer shall cause the related
Servicer to remit
any such Advance required pursuant to the terms of the related
Servicing
Agreement. The Company or the related Servicer, as applicable,
shall be
obligated to make any such Advance only to the extent that such
advance would
not be a Nonrecoverable Advance. If the Company or the related
Servicer shall
have determined that it has made a Nonrecoverable Advance or that a
proposed
Advance or a lesser portion of such Advance would constitute a
Nonrecoverable
Advance, the Company or the related Servicer, as the case may be,
shall deliver
(i) to the Trustee for the benefit of the Certificateholders funds
constituting
the remaining portion of such Advance, if applicable, and (ii) to
the Depositor,
the Master Servicer, each Rating Agency and the Trustee an
Officer's Certificate
setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own
funds,
the Company may (i) cause to be made an appropriate entry in its
records
relating to the Protected Account that any Amounts Held for Future
Distribution
has been used by the Company in discharge of its obligation to make
any such
Advance and (ii) transfer such funds from the Protected Account to
the
Distribution Account. Any funds so applied and transferred shall be
replaced by
the Company by deposit in the Distribution Account, no later than
the close of
business on the Remittance Date immediately preceding the
Distribution Date on
which such funds are required to be distributed pursuant to this
Agreement.
The Company shall be entitled to be reimbursed from the
Protected
Account for all Advances of its own funds made pursuant to this
Section as
provided in Section 5.02. The obligation to make Advances with
respect to any
Mortgage Loan shall continue until such Mortgage Loan is paid in
full or the
related Mortgaged Property or related REO Property has been
liquidated or until
the purchase or repurchase thereof (or substitution therefor) from
the Trust
Fund pursuant to any applicable provision of this Agreement, except
as otherwise
provided in this Section 6.01.
(b) If the Scheduled Payment on a Mortgage Loan that was due on
a
related Due Date and is delinquent other than as a result of
application of the
Relief Act and for which the Company or the related Servicer was
required to
make an Advance pursuant to this Agreement or the related Servicing
Agreement
exceeds the amount deposited in the Master Servicer Collection
Account which
will be used for an Advance with respect to such Mortgage Loan, the
Master
Servicer will deposit in the Master Servicer Collection Account not
later than
the Distribution Account Deposit Date immediately preceding the
related
Distribution Date an amount equal to such deficiency, net of the
Master
Servicing Fee and Servicing Fee for such Mortgage Loan except to
the extent the
Master Servicer determines any such Advance to be nonrecoverable
from
Liquidation Proceeds, Insurance Proceeds or future payments on the
Mortgage Loan
for which such Advance was made. Subject to the foregoing, the
Master Servicer
shall continue to make such Advances through the date that the
Company or the
related Servicer is required to do so under this Agreement or the
related
Servicing Agreement, as applicable. If applicable, on the
Distribution Account
Deposit Date, the Master Servicer shall present an Officer's
Certificate to the
Trustee (i) stating that the Master Servicer elects not to make an
Advance in a
stated amount and (ii) detailing the reason it deems the advance to
be
nonrecoverable.
Subject to and in accordance with the provisions of Article IX
hereof,
in the event the Master Servicer fails to make such Advance, then
the Trustee,
as Successor Master Servicer, shall be obligated to make such
Advance, subject
to the provisions of this Section 6.01.
Section 6.02 Compensating Interest Payments.
(a) In the event that there is a Prepayment Interest Shortfall
arising
from a voluntary Principal Prepayment in part or in full by the
Mortgagor with
respect to any Company Mortgage Loan, the Company shall, to the
extent of the
Servicing Fee for such Distribution Date, deposit into the Master
Servicer
Collection Account, as a reduction of the Servicing Fee for such
Distribution
Date, no later than the close of business on the Remittance Date
immediately
preceding such Distribution Date, an amount equal to the Prepayment
Interest
Shortfall; and in case of such deposit, the Company shall not be
entitled to any
recovery or reimbursement from the Depositor, the Trustee, the
Seller, the
Securities Administrator, the Trust Fund or the
Certificateholders.
(b) The Master Servicer shall cause each Servicer under the
related
Servicing Agreement to remit any required Compensating Interest
Payments to the
Master Servicer Collection Account on the Remittance Date.
(c) The Master Servicer shall be required to remit the amount of
any
such Prepayment Interest Shortfalls, to the extent of the Master
Servicing Fee
for such Distribution Date, in the event the Company or the related
Servicer is
required to make such payment but fails to do so.
Section 6.03 [Reserved.]
Section 6.04 Distributions.
(a) On each Distribution Date, the Available Funds for such
Distribution Date shall be withdrawn by the Trustee to the extent
of funds on
deposit in the Distribution Account and distributed as directed in
accordance
with the Remittance Report for such Distribution Date, in the
following order of
priority:
first, to pay accrued and unpaid interest on the Offered
Certificates
as follows:
1. To the holders of the Class [A-1] Certificates, the Monthly
Interest Distributable Amount for such Class for such
Distribution
Date;
2. To the holders of the Class [M-1] Certificates, the Monthly
Interest Distributable Amount for such Class for such
Distribution
Date;
3. To the holders of the Class [M-2] Certificates, the Monthly
Interest Distributable Amount for such Class for such
Distribution
Date; and
4. To the holders of the Class [B-1] Certificates, the Monthly
Interest Distributable Amount for such Class for such
Distribution
Date.
second, (a) on each Distribution Date other than the Distribution
Date
in _____, 200__, the Principal Distribution Amount for such
Distribution Date
shall be paid to the holders of the Offered Certificates, allocated
on a pro
rata basis, based on the Certificate Principal Balance of each such
Class, until
the Certificate Principal Balance of each such Class has been
reduced to zero;
and (b) on the Distribution Date in _____, 200__, the Principal
Distribution
Amount for such Distribution Date shall be paid (i) first, to the
holders of the
Class P Certificates, until the Certificate Principal Balance
thereof has been
reduced to zero and (ii) second, to the holders of the Offered
Certificates,
allocated on a pro rata basis, based on the Certificate Principal
Balance of
each such Class, until the Certificate Principal Balance of each
such Class has
been reduced to zero.
third, after the payment of interest and principal to the
Certificates
as described in clauses first and second above, any Net Monthly
Excess Cashflow
for such Distribution Date will be distributed as follows:
1. After the Distribution Date in _____, 200__, to the holders
of the Offered Certificates, in an amount equal to any Extra
Principal
Distribution Amount, payable to such holders as part of the
Principal
Distribution Amount pursuant to clause second above;
2. To the holders of the Class [A-1] Certificates, then to the
holders of the Class [M-1] Certificates, then to the holders of
the
Class [M-2] Certificates, and then to the holders of the Class
[B-1]
Certificates, any Unpaid Interest Shortfall for such Classes of
Certificates on such Distribution Date, to the extent not
previously
reimbursed;
3. To the holders of the Class [M-1] Certificates, in an
amount equal to the Applied Realized Loss Amount for the Class
[M-1]
Certificates;
4. To the holders of the Class [M-2] Certificates, in an
amount equal to the Applied Realized Loss Amount for the Class
[M-2]
Certificates;
5. To the holders of the Class [B-1] Certificates, in an
amount equal to the Applied Realized Loss Amount for the Class
[B-1]
Certificates; and
6. To the holders of the Class R Certificate, any amount of
Net Monthly Excess Cashflow remaining after distributions pursuant
to
items 1 through 5 of this clause third.
(b) [Reserved.]
(c) Subject to Section 11.02 hereof respecting the final
distribution,
on each Distribution Date the Trustee shall make distributions to
each
Certificateholder of record on the preceding Record Date either by
wire transfer
in immediately available funds to the account of such holder at a
bank or other
entity having appropriate facilities therefor, if (i) such Holder
has so
notified the Trustee at least 5 Business Days prior to the related
Record Date
and (ii) such Holder shall hold Regular Certificates with aggregate
principal
denominations of not less than $1,000,000 or evidencing a
Percentage Interest
aggregating 10% or more with respect to such Class or, if not, by
check mailed
by first class mail to such Certificateholder at the address of
such holder
appearing in the Certificate Register. Notwithstanding the
foregoing, but
subject to Section 11.02 hereof respecting the final distribution,
distributions
with respect to Certificates registered in the name of a Depository
shall be
made to such Depository in immediately available funds.
(d) On or before 5:00 p.m. Eastern time on the fifth Business
Day
immediately preceding each Distribution Date, the Master Servicer
shall deliver
a report to the Securities Administrator in the form of a computer
readable
magnetic tape (or by such other means as the Master Servicer and
the Securities
Administrator may agree from time to time) containing such data and
information,
as agreed to by the Master Servicer and the Securities
Administrator such as to
permit the Securities Administrator to prepare the Monthly
Statement to
Certificateholders and to direct the Trustee in writing to make the
required
distributions for the related Distribution Date (the "Remittance
Report"). The
Securities Administrator shall deliver a Remittance Report to the
Trustee on or
before 5:00 p.m. Eastern time on the Business Day immediately
preceding each
Distribution Date.
Section 6.04A Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Master Servicer
shall
determine the amount of any Realized Loss in respect of each
Mortgage Loan that
occurred during the immediately preceding calendar month.
(b)
The interest portion of Realized Losses shall be allocated to
the
Certificates as described in Section 1.02 hereof.
(c) The principal portion of all Realized Losses on the Mortgage
Loans
allocated to any REMIC Regular Interest pursuant to Section
6.04(A)(d) shall be
allocated on each Distribution Date as follows: first, to Net
Monthly Excess
Cashflow; second, to the Class B-1 Certificates, until the
Certificate Principal
Balance thereof has been reduced to zero; third, to the Class M-2
Certificates,
until the Certificate Principal Balance thereof has been reduced to
zero; and
fourth, to the Class M-1 Certificates, until the Certificate
Principal Balance
thereof has been reduced to zero. All such Realized Losses to be
allocated to
the Certificate Principal Balances of all Classes on any
Distribution Date shall
be so allocated after the actual distributions to be made on such
date as
provided above. All references above to the Certificate Principal
Balance of any
Class of Certificates shall be to the Certificate Principal Balance
of such
Class immediately prior to the relevant Distribution Date, before
reduction
thereof by any Realized Losses, in each case to be allocated to
such Class of
Certificates, on such Distribution Date.
Any allocation of the principal portion of Realized Losses to a
Subordinate Certificate on any Distribution Date shall be made by
reducing the
Certificate Principal Balance thereof by the amount so allocated.
No allocations
of any Realized Losses shall be made to the Certificate Principal
Balances of
the Class A-1 Certificates.
All such Realized Losses and all other losses allocated to a Class
of
Certificates hereunder will be allocated among the, Certificates of
such Class
in proportion to the Percentage Interests evidenced thereby.
Section 6.05 Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Securities
Administrator
shall prepare and make available to each Holder of Certificates,
the Trustee,
the Master Servicer and the Depositor a statement setting forth for
the
Certificates:
(i) the applicable record dates, accrual periods,
determination dates for calculating distributions and general
distribution dates;
(ii) the total cash flows received and the general sources
thereof;
(iii) the related amount of the Servicing Fees paid to or
retained by the Master Servicer for the related Due Period;
(iv) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the
aggregate
amount of any Principal Prepayments included therein, (B) the
aggregate
of all scheduled payments of principal included therein and (C)
the
Extra Principal Distribution Amount (if any);
(v) the amount of such distribution to Holders of each Class
allocable to interest;
(vi) the amount of such distribution to Holders of each Class
of Class A Certificates and Class M Certificates allocable to
interest
and the portion thereof, if any, provided by the Derivative
Administration Agreement;
(vii) the Interest Carry Forward Amount and any Basis Risk
Shortfall Carry Forward Amount for each Class of Certificates;
(viii) the Pass-Through Rate for each Class of Class A
Certificates and Class M Certificates with respect to the
current
Accrual Period, and, if applicable, whether such Pass-Through Rate
was
limited by the Net Rate Cap;
(ix) the aggregate of the Stated Principal Balance of (A) all
of the Mortgage Loans and (B) the Adjustable Rate Mortgage Loans,
for
the following Distribution Date;
(x) the Certificate Principal Balance or Certificate Notional
Amount, as applicable, of each Class after giving effect (i) to
all
distributions allocable to principal on such Distribution Date and
(ii)
the allocation of any Applied Realized Loss Amounts for such
Distribution Date;
(xi) the number and Stated Principal Balance of the Mortgage
Loans in each Loan Group in respect of which (A) one Scheduled
Payment
is Delinquent, (B) two Scheduled Payments are Delinquent, (C) three
or
more Scheduled Payments are Delinquent and (D) foreclosure
proceedings
have been commenced, in each case as of the close of business on
the
last day of the calendar month preceding such Distribution Date
and
separately identifying such information for the (1) first lien
Mortgage
Loans, (2) second lien Mortgage Loans, and (3) Adjustable Rate
Mortgage
Loans, in each such Loan Group;
(xii) the amount of Advances included in the distribution on
such Distribution Date (including the general purpose of such
Advances), the aggregate amount of unreimbursed Advances at the
close
of business on the Distribution Date, and the general source of
funds
for reimbursements;
(xiii) the cumulative amount of Applied Realized Loss Amounts
to date;
(xiv) if applicable, material modifications, extensions or
waivers to Mortgage Loan terms, fees, penalties or payments during
the
preceding calendar month or that have become material over
time;
(xv) with respect to any Mortgage Loan that was liquidated
during the preceding calendar month, the loan number and Stated
Principal Balance of, and Realized Loss on, such Mortgage Loan as
of
the close of business on the Determination Date preceding such
Distribution Date;
(xvi) the total number and principal balance of any real
estate owned or REO Properties as of the close of business on
the
Determination Date preceding such Distribution Date;
(xvii) the three month rolling average of the percent
equivalent of a fraction, the numerator of which is the
aggregate
Stated Principal Balance of the Mortgage Loans that are 60 days or
more
delinquent or are in bankruptcy or foreclosure or are REO
Properties,
and the denominator of which is the aggregate Stated Principal
Balance
of all of the Mortgage Loans in each case as of the close of
business
on the last day of the calendar month preceding such Distribution
Date
and separately identifying such information for the (1) first
lien
Mortgage Loans, and (2) Adjustable Rate Mortgage Loans;
(xviii) the Realized Losses during the related Prepayment
Period and the cumulative Realized Losses through the end of
the
preceding month;
(xix) whether a Trigger Event exists;
(xx) the amount of the distribution made on such Distribution
Date to the Holders of the Class P Certificates allocable to
Prepayment
Charges;
(xxi) updated pool composition data including the following
with respect to each Loan Group: average loan balance, weighted
average
mortgage rate, weighted average loan-to-value ratio at
origination,
weighted average FICO at origination weighted average remaining
term;
and [NOTE - Item 1121(a)(8) requires updated pool composition
information, the foregoing is a suggestion of what to provide]
(xxii) information about any additions of, substitutions for
or removal of any Mortgage Loans from the Trust Fund, and any
changes
in the underwriting, acquisition or selection criteria as to
any
Mortgage Loans added to the Trust Fund
The Securities Administrator may make the foregoing Monthly
Statement
(and, at its option, any additional files containing the same
information in an
alternative format) available each month to Certificateholders via
the
Securities Administrator's internet website. The Securities
Administrator's
internet website shall initially be located at "www.[___].com".
Assistance in
using the website can be obtained by calling the Securities
Administrator's
customer service desk at (___) ___-____. Parties that are unable to
use the
above distribution options are entitled to have a paper copy mailed
to them via
first class mail by calling the customer service desk and
indicating such. The
Securities Administrator may change the way Monthly Statements are
distributed
in order to make such distributions more convenient or more
accessible to the
above parties.
To the extent timely received from the Securities Administrator,
the
Trustee will also make the related Monthly Statements available
to
Certificateholders via the Trustee's internet website. The
Trustee's internet
website will initially be located at "www.[ ]/[ ]". Assistance in
using the
Trustee's internet website can be obtained by calling the Trustee's
customer
service desk at (___) _______.
(b) The Securities Administrator's responsibility for making the
above
information available to the Certificateholders is limited to the
availability,
timeliness and accuracy of the information derived from the Master
Servicer, the
Company and the Servicers. The Securities Administrator will make
available a
copy of each statement provided pursuant to this Section 6.05 to
each Rating
Agency.
(c) Within a reasonable period of time after the end of each
calendar
year, the Trustee shall cause to be furnished upon request to each
Person who at
any time during the calendar year was a Certificateholder, based on
information
provided by the Securities Administrator containing the information
set forth in
clauses (a)(i) and (a)(ii) of this Section 6.05 aggregated for such
calendar
year or applicable portion thereof during which such Person was
a
Certificateholder. Such obligation of the Trustee shall be deemed
to have been
satisfied to the extent that substantially comparable information
shall be
provided by the Trustee or the Securities Administrator pursuant to
any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the
Securities
Administrator shall furnish to the Holders of the Residual
Certificates the
applicable Form 1066 and each applicable Form 1066Q and shall
respond promptly
to written requests made not more frequently than quarterly by any
Holder of a
Residual Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual
interests
created hereunder and on the Mortgage Loans, based on the
Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each Class
of
regular and residual interests created hereunder and the
Mortgage
Loans, based on the Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal
and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premiu
