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EXHIBIT 4.1
MERRILL LYNCH MORTGAGE INVESTORS, INC.
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
WELLS FARGO BANK, N.A.
Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 2005
--------------------------------------
MERRILL LYNCH MORTGAGE INVESTORS TRUST,
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2005-HE3
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ARTICLE I
DEFINITIONS........................................................................................
1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES......................................
44
Section 2.01.
Conveyance of Mortgage
Loans..................................................
44
Section 2.02.
Acceptance by the Trustee of the Mortgage
Loans...............................
46
Section 2.03.
Representations, Warranties and Covenants of the
Depositor....................
47
Section 2.04.
Representations and Warranties of the
Servicer................................
51
Section 2.05.
Substitutions and Repurchases of Mortgage Loans which are not
"Qualified
Mortgages"....................................................................
53
Section 2.06.
Authentication and Delivery of
Certificates...................................
53
Section 2.07.
REMIC
Elections...............................................................
53
Section 2.08.
[RESERVED]....................................................................
57
Section 2.09.
Covenants of the
Servicer.....................................................
57
Section 2.10.
[RESERVED]....................................................................
57
Section 2.11.
Permitted Activities of the
Trust.............................................
57
Section 2.12.
Qualifying Special Purpose
Entity.............................................
58
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS...................................................
58
Section 3.01.
Servicer to Service Mortgage
Loans............................................
58
Section 3.02.
Servicing and Subservicing; Enforcement of the Obligations of
Servicer........
59
Section 3.03.
Rights of the Depositor and the Trustee in Respect of the
Servicer............
60
Section 3.04.
Trustee to Act as
Servicer....................................................
60
Section 3.05.
Collection of Mortgage Loan Payments; Collection Account;
Certificate
Account.......................................................................
61
Section 3.06.
Collection of Taxes, Assessments and Similar Items; Escrow
Accounts...........
64
Section 3.07.
Access to Certain Documentation and Information Regarding the
Mortgage
Loans.........................................................................
65
Section 3.08.
Permitted Withdrawals
from the Collection Account and Certificate Account.....
65
Section 3.09.
[RESERVED]....................................................................
67
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Section 3.10.
Maintenance of Hazard
Insurance...............................................
67
Section 3.11. Enforcement of
Due-On-Sale Clauses; Assumption Agreements.....................
68
Section 3.12.
Realization Upon Defaulted Mortgage Loans; Determination of
Excess
Proceeds; Special Loss
Mitigation.............................................
69
Section 3.13.
Trustee to Cooperate; Release of Mortgage
Files...............................
72
Section 3.14.
Documents, Records and Funds in Possession of Servicer to be Held
for the
Trustee.......................................................................
73
Section 3.15.
Servicing
Compensation........................................................
73
Section 3.16.
Access to Certain
Documentation...............................................
74
Section 3.17.
Annual Statement as to
Compliance.............................................
74
Section 3.18.
Annual Independent Public Accountants' Servicing Statement;
Financial
Statements....................................................................
74
Section 3.19.
[RESERVED]....................................................................
74
Section 3.20.
Periodic
Filings..............................................................
74
Section 3.21.
Annual Certificate by
Trustee.................................................
75
Section 3.22.
Annual Certificate by
Servicer................................................
76
Section 3.23.
Prepayment Charge Reporting
Requirements......................................
76
Section 3.24.
Information to the
Trustee....................................................
76
Section 3.25.
Indemnification...............................................................
77
Section 3.26.
Nonsolicitation...............................................................
77
Section 3.27.
High Cost Mortgage
Loans......................................................
77
Section 3.28.
MI Policies, Claims Under the MI
Policies.....................................
77
ARTICLE IV
DISTRIBUTIONS.....................................................................................
78
Section 4.01.
Advances......................................................................
78
Section 4.02.
Reduction of Servicing Compensation in Connection with
Prepayment
Interest
Shortfalls...........................................................
79
Section 4.03.
Distributions on the REMIC
Interests..........................................
79
Section 4.04.
Distributions.................................................................
79
Section 4.05.
Monthly Statements to
Certificateholders......................................
85
ARTICLE V THE
CERTIFICATES...................................................................................
88
Section 5.01.
The
Certificates..............................................................
88
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Section 5.02.
Certificate Register; Registration of Transfer and Exchange of
Certificates..................................................................
89
Section 5.03.
Mutilated, Destroyed, Lost or Stolen
Certificates.............................
93
Section 5.04.
Persons Deemed
Owners.........................................................
93
Section 5.05.
Access to List of Certificateholders' Names and
Addresses.....................
93
Section 5.06.
Book-Entry
Certificates.......................................................
94
Section 5.07.
Notices to
Depository.........................................................
95
Section 5.08.
Definitive
Certificates.......................................................
95
Section 5.09.
Maintenance of Office or
Agency...............................................
95
Section 5.10.
[RESERVED]....................................................................
96
ARTICLE VI THE DEPOSITOR AND THE
SERVICER....................................................................
96
Section 6.01.
Respective Liabilities of the Depositor and the
Servicer......................
96
Section 6.02.
Merger or Consolidation of the Depositor and the
Servicer.....................
96
Section 6.03.
Limitation on Liability of the Depositor, the Servicer and
Others.............
96
Section 6.04.
Limitation on Resignation of
Servicer.........................................
97
Section 6.05.
Errors and Omissions Insurance; Fidelity
Bonds................................
97
ARTICLE VII DEFAULT; TERMINATION OF
SERVICER.................................................................
97
Section 7.01.
Events of
Default.............................................................
97
Section 7.02.
Trustee to Act; Appointment of
Successor......................................
99
Section 7.03.
Notification to
Certificateholders............................................
100
ARTICLE VIII CONCERNING The
Trustee..........................................................................
100
Section 8.01.
Duties of the
Trustee.........................................................
100
Section 8.02.
Certain Matters Affecting the
Trustee......................................... 101
Section 8.03.
Trustee Not Liable for Certificates or Mortgage
Loans......................... 102
Section 8.04.
Trustee May Own
Certificates..................................................
103
Section 8.05.
Trustee's Fees and
Expenses...................................................
103
Section 8.06.
Indemnification and Expenses of
Trustee....................................... 103
Section 8.07.
Eligibility Requirements for
Trustee.......................................... 104
Section 8.08.
Resignation and Removal of
Trustee............................................ 104
Section 8.09.
Successor
Trustee.............................................................
105
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Section 8.10.
Merger or Consolidation of
Trustee............................................ 106
Section 8.11.
Appointment of Co-Trustee or Separate
Trustee................................. 106
Section 8.12.
Tax
Matters...................................................................
107
ARTICLE IX
TERMINATION.......................................................................................
109
Section 9.01.
Termination upon Liquidation or Repurchase of all Mortgage
Loans.............. 109
Section 9.02.
Final Distribution on the
Certificates........................................ 110
Section 9.03.
Additional Termination
Requirements...........................................
111
ARTICLE X MISCELLANEOUS
PROVISIONS...........................................................................
112
Section 10.01.
Amendment.....................................................................
112
Section 10.02.
Counterparts..................................................................
114
Section 10.03.
Governing
Law.................................................................
114
Section 10.04.
Intention of
Parties..........................................................
114
Section 10.05.
Notices.......................................................................
114
Section 10.06.
Severability of
Provisions....................................................
115
Section 10.07.
Assignment....................................................................
115
Section 10.08.
Limitation on Rights of
Certificateholders.................................... 117
Section 10.09.
Inspection and Audit
Rights...................................................
117
Section 10.10.
Certificates Nonassessable and Fully
Paid..................................... 118
Section 10.11.
Third Party
Rights............................................................
118
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EXHIBIT A
FORMS OF CERTIFICATES
EXHIBIT B-1
MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
EXHIBIT B-2
MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
EXHIBIT B-3
MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
EXHIBIT B-4
MORTGAGE LOAN SCHEDULE - MI MORTGAGE LOANS
EXHIBIT C
FORM OF CUSTODIAL AGREEMENT
EXHIBIT D
FORM OF CUSTODIAN CERTIFICATION
EXHIBIT E-1 FORM
OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM
OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G
FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H
FORM OF RULE 144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I
FORM OF REQUEST FOR RELEASE
EXHIBIT J
[RESERVED]
EXHIBIT K
FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L
FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M-1
[RESERVED]
EXHIBIT M-2 FORM
OF MONTHLY REMITTANCE ADVICE
EXHIBIT N-1 FORM
OF CLASS A-1 CAP CONTRACT
EXHIBIT N-2 FORM
OF CLASS A-2 CAP CONTRACT
EXHIBIT N-3 FORM
OF SUBORDINATE CERTIFICATE CAP CONTRACT
EXHIBIT O-1
ONE-MONTH LIBOR CAP TABLE - CLASS A-1 CAP CONTRACT
EXHIBIT O-2
ONE-MONTH LIBOR CAP TABLE - CLASS A-2 CAP CONTRACT
EXHIBIT O-3
ONE-MONTH LIBOR CAP TABLE - SUBORDINATE CERTIFICATE CAP
CONTRACT
EXHIBIT P
FORM OF MI POLICY
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<PAGE>
POOLING AND SERVICING AGREEMENT (the "Agreement"), dated as of
December 1, 2005, among MERRILL LYNCH MORTGAGE INVESTORS, INC., a
Delaware
corporation, as depositor (the "Depositor"), WILSHIRE CREDIT
CORPORATION, a
Nevada corporation, as servicer (the "Servicer") and WELLS FARGO
BANK, N.A, a
national banking association, as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby
conveyed
to the Trustee in return for the Certificates. The Trust Fund for
federal income
tax purposes will consist of (i) two real estate mortgage
investment conduits,
(ii) the right to receive payments distributable to the Class P
Certificates
pursuant to Section 4.04(b) hereof, (iii) the Cap Contracts and the
Cap Contract
Account and (iv) the grantor trusts described in Section 2.07
hereof. The Lower
Tier REMIC will consist of all of the assets constituting the Trust
Fund (other
than the assets described in clauses (ii), (iii) and (iv) above and
other than
the Lower Tier REMIC Regular Interests), and will be evidenced by
the Lower Tier
REMIC Regular Interests (which will be uncertificated and will
represent the
"regular interests" in the Lower Tier REMIC) and the Class LTR
Interest as the
single "residual interest" in the Lower Tier REMIC. The Trustee
will hold the
Lower Tier REMIC Regular Interests. The Upper Tier REMIC will
consist of the
Lower Tier REMIC Regular Interests and will be evidenced by the
REMIC Regular
Interests (which will represent the "regular interests" in the
Upper Tier REMIC)
and the Residual Interest as the single "residual interest" in the
Upper Tier
REMIC. The Class R Certificate will represent beneficial ownership
of the Class
LTR Interest and the Residual Interest. The "latest possible
maturity date" for
federal income tax purposes of all interests created hereby will be
the Latest
Possible Maturity Date.
All covenants and agreements made by the Transferors in the
Transfer
Agreements, the Seller in the Sale Agreement and by the Depositor
and the
Trustee herein with respect to the Mortgage Loans and the other
property
constituting the Trust Fund are for the benefit of the Holders from
time to time
of the Certificates.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases,
unless the context otherwise requires, shall have the following
meanings:
Accepted
Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent
mortgage
lending institutions which service for their own account mortgage
loans of the
same type as the Mortgage Loans in the jurisdictions in which the
related
Mortgaged Properties are located.
Accrual
Period: With respect to each Class of Certificates and the
Lower
Tier REMIC Interests and any Distribution Date, the period
commencing on the
immediately preceding Distribution Date (or, in the case of the
first
Distribution Date, the Closing Date) and ending on the day
immediately preceding
such Distribution Date. All calculations of interest on each Class
of
Certificates and the Lower Tier REMIC Interests will be made on the
basis of the
actual number of days elapsed in the related Accrual Period and a
360 day year.
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Adjustable
Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is adjustable.
Adjustment
Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as
provided in the
related Mortgage Note.
Advance:
The aggregate of the advances required to be made by the
Servicer
with respect to any Distribution Date pursuant to Section 4.01, the
amount of
any such advances being equal to the sum of the aggregate of
payments of
principal and interest (net of the Servicing Fee Rate) on the
Mortgage Loans
that were due during the applicable Due Period and not received as
of the close
of business on the related Determination Date, less the aggregate
amount of any
such Delinquent payments that the Servicer has determined would
constitute a
Non-Recoverable Advance were an advance to be made with respect
thereto;
provided, however, that with respect to any Mortgage Loan that is
150 days
delinquent or more (whether or not the Mortgage Loan has been
converted to an
REO Property), there will be no obligation to make advances and,
provided
further, however, that with respect to any Mortgage Loan that has
been converted
to an REO Property which is less than 150 days delinquent, the
obligation to
make Advances shall be limited to payments of interest.
Advance
Facility: A financing or other facility as described in Section
10.07(a).
Advancing
Person: The Person to whom the Servicer's rights under this
Agreement to be reimbursed for any Advances or Servicing Advances
have been
assigned pursuant to Section 10.07.
Affiliate:
With respect to any specified Person, any other Person
controlling, controlled by or under common control with such
Person. For the
purposes of this definition, "control" means the power to direct
the management
and policies of a Person, directly or indirectly, whether through
ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate
Certificate Principal Balance: For any date of determination,
the sum of the Class A-1A Certificate Principal Balance, the Class
A-1B
Certificate Principal Balance, the Class A-2A Certificate Principal
Balance, the
Class A-2B Certificate Principal Balance, the Class A-2C
Certificate Principal
Balance, the Class R Certificate Principal Balance, the Class M-1
Certificate
Principal Balance, the Class M-2 Certificate Principal Balance, the
Class M-3
Certificate Principal Balance, the Class M-4 Certificate Principal
Balance, the
Class M-5 Certificate Principal Balance, the Class M-6 Certificate
Principal
Balance and the Class B-1 Certificate Principal Balance, in each
case as of such
date of determination.
Agreement:
This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
Ameriquest: Ameriquest Mortgage Company, or its successor in
interest.
Applied
Realized Loss Amount: With respect to any Distribution Date,
the
amount, if any, by which, the sum of (i) the Aggregate Certificate
Principal
Balance and (ii) the Class C Certificate Principal Balance after
distributions
of principal on such Distribution Date exceeds the aggregate Stated
Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised
Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property, the
"Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based
on an
appraisal made for a Seller by an independent fee appraiser at the
time of the
origination of the related Mortgage Loan, and (2) the sales price
of such
Mortgaged Property at such time
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of origination. With respect to a Mortgage Loan the proceeds of
which were used
to refinance an existing mortgage loan, the "Appraised Value" is
the appraised
value of the Mortgaged Property based upon the appraisal obtained
at the time of
refinancing.
Assignment
of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the
laws of the
jurisdiction where the related Mortgaged Property is located to
reflect of
record the sale and assignment of the Mortgage Loan to the Trustee,
which
assignment, notice of transfer or equivalent instrument may, if
permitted by
law, be in the form of one or more blanket assignments covering
Mortgages
secured by Mortgaged Properties located in the same county.
Auction:
The one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.
Auction
Date: The date on which the Auction occurs.
Available
Funds Cap: Any of the Class A-1 Available Funds Cap, the Class
A-2 Available Funds Cap or the Weighted Average Available Funds
Cap.
Balloon
Loan: A Mortgage Loan having an original term to stated
maturity
of approximately 15 years and that provides for level monthly
payments of
principal and interest generally based on a 30-year amortization
schedule, with
a balloon payment of the remaining outstanding principal balance
due on such
Mortgage Loan at its stated maturity.
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 5.06). As of the Closing
Date, each of
the Class A, Class M and Class B Certificates constitutes a Class
of Book-Entry
Certificates.
Book-Entry
Regulation S Global Securities: As defined in Section 5.01.
Bring Down
Letters: Those certain letter agreements, each dated as of
December 28, 2005 between MLML and the Transferors.
Business
Day: Any day other than (1) a Saturday or a Sunday, or (2) a
day
on which banking institutions in the State of California, State of
Maryland,
State of Minnesota, State of Oregon and in the City of New York,
New York are
authorized or obligated by law or executive order to be closed.
Cap
Contract: Any of the Class A-1 Cap Contract, the Class A-2 Cap
Contract or the Subordinate Certificate Cap Contract.
Cap
Contract Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 4.04(k) in the name of the
Trustee for the
benefit of the Trust Fund and designated "Wells Fargo Bank, N.A.,
as Trustee, in
trust for registered holders of Merrill Lynch Mortgage Investors
Trust, Mortgage
Loan Asset-Backed Certificates, Series 2005-HE3." Funds in the Cap
Contract
Account shall be held in trust for the Trust Fund for the uses and
purposes set
forth in this Agreement.
Cap
Contract Counterparty: The Royal Bank of Scotland, plc.
Cap
Contract Notional Balance: Any of the Class A-1 Cap Contract
Notional
Balance, the Class A-2 Cap Contract Notional Balance or the
Subordinate
Certificate Cap Contract Notional Balance.
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Cap
Contract Termination Date: Any of the Class A-1 Cap Contract
Termination Date, the Class A-2 Cap Contract Termination Date or
the Subordinate
Certificate Cap Contract Termination Date.
Certificate: Any one of the certificates of any Class executed by
the
Trustee and authenticated by the Trustee in substantially the forms
attached
hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 3.05(f) in the name of the
Trustee for the
benefit of the Certificateholders and designated "Wells Fargo Bank,
N.A., as
Trustee, in trust for registered holders of Merrill Lynch Mortgage
Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-HE3."
Funds in the
Certificate Account shall be held in trust for the
Certificateholders for the
uses and purposes set forth in this Agreement.
Certificate Group: Either of Certificate Group One or Certificate
Group
Two.
Certificate Group One: The Class A-1A, Class A-1B and Class R
Certificates. For purposes of Section 2.07 hereof, Certificate
Group One shall
be related to Group One.
Certificate Group Two: The Class A-2A, Class A-2B and Class
A-2C
Certificates. For purposes of Section 2.07 hereof, Certificate
Group Two shall
be related to Group Two.
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 and as of
any
Distribution Date, the Initial Certificate Principal Balance of
such Certificate
less the sum of (1) all amounts distributed with respect to such
Certificate in
reduction of the Certificate Principal Balance thereof on previous
Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss
Amounts
allocated to such Certificate on previous Distribution Dates
pursuant to Section
4.04(i). On each Distribution Date, after all distributions of
principal on such
Distribution Date, a portion of the Class C Interest Carry Forward
Amount in an
amount equal to the excess of the Overcollateralization Amount on
such
Distribution Date over the Overcollateralization Amount as of the
preceding
Distribution Date (or, in the case of the first Distribution Date,
the initial
Overcollateralization Amount (based on the Stated Principal Balance
of the
Mortgage Loans as of the Cut-Off Date)) will be added to the
aggregate
Certificate Principal Balance of the Class C Certificates (on a pro
rata basis).
Notwithstanding the foregoing on any Distribution Date relating to
a Due Period
in which a Subsequent Recovery has been received by the Servicer,
the
Certificate Principal Balance of any Class of Certificates then
outstanding for
which any Applied Realized Loss Amount has been allocated will be
increased, in
order of seniority, by an amount equal to the lesser of (i) the
Unpaid Realized
Loss Amount for such Class of Certificates and (ii) the total of
any Subsequent
Recovery distributed on such date to the Certificateholders
(reduced by the
amount of the increase in the Certificate Principal Balance of any
more senior
Class of Certificates pursuant to this sentence on such
Distribution Date).
Certificate Register: The register maintained pursuant to Section
5.02
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 Class of Regular Certificates or
the Class R
Certificate, except that solely for the purpose of giving any
consent pursuant
to this Agreement, any Certificate registered in the name of the
Depositor or
any Affiliate of the Depositor shall be deemed not to be
Outstanding and the
Percentage Interest evidenced thereby shall not be taken into
account in
determining whether the requisite amount of Percentage Interests
necessary to
effect such consent has been obtained; provided, however, that if
any such
Person (including the
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Depositor) owns 100% of the Percentage Interests evidenced by a
Class of
Certificates, such Certificates shall be deemed to be Outstanding
for purposes
of any provision hereof that requires the consent of the Holders of
Certificates
of a particular Class as a condition to the taking of any action
hereunder. The
Trustee is entitled to rely conclusively on a certification of the
Depositor or
any Affiliate of the Depositor in determining which Certificates
are registered
in the name of an Affiliate of the Depositor.
Class: All
Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A
Certificate Principal Balance: For any date of determination,
the
sum of the Class A-1A Certificate Principal Balance, the Class A-1B
Certificate
Principal Balance, the Class R Certificate Principal Balance, the
Class A-2A
Certificate Principal Balance, the Class A-2B Certificate Principal
Balance and
the Class A-2C Certificate Principal Balance.
Class A
Certificates: Any of the Class A-1A Certificates, the Class
A-1B
Certificates, the Class A-2A Certificates, the Class A-2B
Certificates, the
Class A-2C Certificates and the Class R Certificates
Class A
Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on
which a Stepdown
Trigger Event exists, 100% of the Principal Distribution Amount for
such
Distribution Date and (2) on or after the Stepdown Date where a
Stepdown Trigger
Event does not exist, the excess of (A) the Class A Certificate
Principal
Balance immediately prior to such Distribution Date over (B) the
lesser of (i)
67.90% of the Stated Principal Balance of the Mortgage Loans as of
such
Distribution Date and (ii) the excess of the Stated Principal
Balance of the
Mortgage Loans as of such Distribution Date over the Minimum
Required
Overcollateralization Amount provided, however, that in no event
will the Class
A Principal Distribution Amount with respect to any Distribution
Date exceed the
aggregate Certificate Principal Balance of the Class A
Certificates.
Class A-1
Available Funds Cap: With respect to a Distribution Date, the
per annum rate equal to the product of (i) 12, (ii) the quotient of
(i) the
total scheduled interest on the Group One Mortgage Loans based on
the Net
Mortgage Rates in effect on the related Due Date divided by (y) the
aggregate
Stated Principal Balance of the Group One Mortgage Loans as of the
first day of
the related Accrual Period (or, in the case of the first
Distribution Date, as
of the Cut-off Date) and (iii) a fraction, the numerator of which
is 30, and the
denominator of which is the actual number of days in the related
Accrual Period.
Class A-1
Cap Contract: The confirmation and agreement and any related
confirmation thereto, between the Trustee on behalf of the Trust
Fund and the
Cap Contract Counterparty (in the form of Exhibit N-1 hereto).
Class A-1
Cap Contract Notional Balance: With respect to any Distribution
Date, the lesser of (x) the Class A-1 Cap Contract Notional Balance
set forth
for such Distribution Date in the Class A-1 One-Month LIBOR Cap
Table attached
hereto as Exhibit O-1 and (y) the outstanding Certificate Principal
Balance of
the Class A-1 Certificates.
Class A-1
Cap Contract Termination Date: The Distribution Date in June
2011.
Class A-1
Upper Collar: With respect to a Distribution Date with respect
to which payments are received on the Class A-2 Cap Contract, a
rate equal to
the lesser of One-Month LIBOR and 11.180% per annum.
Class A-1
Certificates: Any of the Class A-1A and Class A-1B
Certificates.
-5-
<PAGE>
Class A-1
Maximum Rate Cap: With respect to any Distribution Date, the
per
annum rate equal to 12 times the quotient of (x) the total
scheduled interest
that would have been due on the Mortgage Loans in Group One during
the related
Due Period had the Adjustable Rate Mortgage Loans in Group One
provided for
interest at their maximum lifetime Net Mortgage Rates and the Fixed
Rate
Mortgage Loans in Group One provided for interest at their Net
Mortgage Rates
divided by (y) the aggregate Stated Principal Balance of the Group
One Mortgage
Loans as of the preceding Distribution Date (or in the case of the
first
Distribution Date, as of the Cut-off Date), multiplied by 30 and
divided by the
actual number of days in the related Accrual Period. The Class A-1
Maximum Rate
Cap shall relate to the Class A-1 and Class R Certificates.
Class A-1
Trigger Event: The situation that exists with respect to any
Distribution Date (a) during the period from the Closing Date
through the
Distribution Date in November 2008, if the aggregate amount of
Realized Losses
incurred from the Cut-off Date through the last day of the related
Due Period
(after giving effect to scheduled payments received or advanced on
or before the
related Determination Date and Principal Prepayments received
during the related
Prepayment Period) divided by the sum of the aggregate Stated
Principal Balance
of the Mortgage Loans as of the Cut-off Date exceeds 2.85%, or (b)
on any
Distribution Date on or after December 2008, if a Stepdown Trigger
Event is in
effect.
Class A-1A
Certificate: Any Certificate designated as a "Class A-1A
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-1A
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1A
Certificates.
Class A-1A
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1A
Pass-Through Rate on
the Class A-1A Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-1A Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1A
Certificates.
Class A-1A
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1A Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-1A Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-1A Pass-Through Rate for the related Accrual Period.
Class A-1A
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.310% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.620% per
annum.
Class A-1A
Pass-Through Rate: For the first Distribution Date, 4.69% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-1A Margin, (2) the Class A-1 Available Funds Cap
and (3) the
Class A-1 Maximum Rate Cap for such Distribution Date.
Class A-1B
Certificate: Any Certificate designated as a "Class A-1B
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-1B
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1B
Certificates.
-6-
<PAGE>
Class A-1B
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1B
Pass-Through Rate on
the Class A-1B Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-1B Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1B
Certificates.
Class A-1B
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1B Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-1B Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-1B Pass-Through Rate for the related Accrual Period.
Class A-1B
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.330% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.660% per
annum.
Class A-1B
Pass-Through Rate: For the first Distribution Date, 4.71% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-1B Margin, (2) the Class A-1 Available Funds Cap
and (3) the
Class A-1 Maximum Rate Cap for such Distribution Date.
Class A-2
Available Funds Cap: With respect to a Distribution Date, the
per annum rate equal to the product of (i) 12, (ii) the quotient of
(x) the
total scheduled interest on the Group Two Mortgage Loans based on
the Net
Mortgage Rates in effect on the related Due Date divided by (y) the
aggregate
Stated Principal Balance of the Group Two Mortgage Loans as of the
first day of
the related Accrual Period (or, in the case of the first
Distribution Date, as
of the Cut-off Date) and (iii) a fraction, the numerator of which
is 30, and the
denominator of which is the actual number of days in the related
Accrual Period.
Class A-2
Cap Contract: The confirmation and agreement, between Trustee
on
behalf of the Trust Fund and the Cap Contract Counterparty (in the
form of
Exhibit N-2 hereto).
Class A-2
Cap Contract Notional Balance: With respect to any Distribution
Date, the lesser of (x) Class A-2 Cap Contract Notional Balance set
forth for
such Distribution Date in the Class A-2 One-Month LIBOR Cap Table
attached
hereto as Exhibit O-2 and (y) the outstanding Certificate Principal
balance of
the Class A-2 Certificates.
Class A-2
Cap Contract Termination Date: The Distribution Date in June
2011.
Class A-2
Certificates: Each of the Class A-2A Certificates, the Class
A-2B Certificates and the Class A-2C Certificates.
Class A-2
Maximum Rate Cap: With respect to any Distribution Date, the
per
annum rate equal to 12 times the quotient of (x) the total
scheduled interest
that would have been due on the Group Two Mortgage Loans during the
related Due
Period had the Adjustable Rate Mortgage Loans in Group Two provided
for interest
at their maximum lifetime Net Mortgage Rates and the Fixed Rate
Mortgage Loans
in Group Two provided for interest at their Net Mortgage Rates over
divided by
(y) the aggregate Stated Principal Balance of the Group Two
Mortgage Loans in as
of the preceding Distribution Date (or in the case of the first
Distribution
Date, as of the Cut-off Date), multiplied by 30 and divided by the
actual number
of days in the related Accrual Period. The Class A-2 Maximum Rate
Cap shall
relate to the Class A-2 Certificates.
-7-
<PAGE>
Class A-2
Upper Collar: With respect to each Distribution Date with
respect to which payments are received on the Class A-2 Cap
Contract, a rate
equal to the lesser of One-Month LIBOR and 9.770% per annum.
Class A-2A
Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-2A
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2A
Certificates.
Class A-2A
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2A
Pass-Through Rate on
the Class A-2A Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-2A Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2A
Certificates.
Class A-2A
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2A Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2A Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-2A Pass-Through Rate for the related Accrual Period.
Class A-2A
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.110% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 0.220% per
annum.
Class A-2A
Pass-Through Rate: For the first Distribution Date, 4.49% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2A Margin, (2) the Class A-2 Available Funds Cap
and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2B
Certificate: Any Certificate designated as a "Class A-2B
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-2B
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2B
Certificates.
Class A-2B
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2B
Pass-Through Rate on
the Class A-2B Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-2B Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2B
Certificates.
Class A-2B
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2B Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2B Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-2B Pass-Through Rate for the related Accrual Period.
-8-
<PAGE>
Class A-2B
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.260% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 0.520% per
annum.
Class A-2B
Pass-Through Rate: For the first Distribution Date, 4.64% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2B Margin, (2) the Class A-2 Available Funds Cap
and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2C
Certificate: Any Certificate designated as a "Class A-2C
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-2C
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2C
Certificates.
Class A-2C
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2C
Pass-Through Rate on
the Class A-2C Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-2C Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2C
Certificates.
Class A-2C
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2C Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2C Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-2C Pass-Through Rate for the related Accrual Period.
Class A-2C
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.360% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 0.720% per
annum.
Class A-2C
Pass-Through Rate: For the first Distribution Date, 4.74% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2C Margin, (2) the Class A-2 Available Funds Cap
and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class B
Certificates: The Class B-1 Certificates.
Class B-1
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans that
have been applied to the reduction of the Certificate Principal
Balance of the
Class B-1 Certificates.
Class B-1 Certificate:
Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class B-1
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1
Certificates.
Class B-1
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1
Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class B-1 Interest Carry Forward Amount that is
recovered as a
voidable preference by a
-9-
<PAGE>
trustee in bankruptcy, less any Non-Supported Interest Shortfall
allocated on
such Distribution Date to the Class B-1 Certificates.
Class B-1
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
B-1 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.
Class B-1
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 1.250% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 1.875% per
annum.
Class B-1
Pass-Through Rate: For the first Distribution Date, 5.63% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class B-1 Margin, (2) the Weighted Average Available Funds
Cap and (3)
the Weighted Average Maximum Rate Cap for such Distribution
Date.
Class B-1
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate
Principal
Balance, the Class M-3 Certificate Principal Balance, the Class M-4
Certificate
Principal Balance, the Class M-5 Certificate Principal Balance and
the Class M-6
Certificate Principal Balance have been reduced to zero and a
Stepdown Trigger
Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess
of (1) the sum of (A) the Class A Certificate Principal Balance
(after taking
into account distributions of the Class A Principal Distribution
Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after
taking into account distributions of the Class M-1 Principal
Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance
(after taking into account distributions of the Class M-2 Principal
Distribution
Amount on such Distribution Date), (D) the Class M-3 Certificate
Principal
Balance (after taking into account distributions of the Class M-3
Principal
Distribution Amount on such Distribution Date), (E) the Class M-4
Certificate
Principal Balance (after taking into account distributions of the
Class M-4
Principal Distribution Amount on such Distribution Date), (F) the
Class M-5
Certificate Principal Balance (after taking into account
distributions of the
Class M-5 Principal Distribution Amount on such Distribution Date),
(G) the
Class M-6 Certificate Principal Balance (after taking into account
distributions
of the Class M-6 Principal Distribution Amount on such Distribution
Date) and
(H) the Class B-1 Certificate Principal Balance immediately prior
to such
Distribution Date over (2) the lesser of (A) 95.40% of the Stated
Principal
Balance of the Mortgage Loans as of such Distribution Date and (B)
the excess of
the Stated Principal Balance of the Mortgage Loans as of such
Distribution Date
over the Minimum Required Overcollateralization Amount.
Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date
on which the
Certificate Principal Balance of each Class of Class A Certificates
and Class M
Certificates has been reduced to zero, the Class B-1 Principal
Distribution
Amount will equal the lesser of (x) the outstanding Certificate
Principal
Balance of the Class B-1 Certificates and (y) 100% of the Principal
Distribution
Amount remaining after any distributions on such Class A and Class
M
Certificates and (II) in no event will the Class B-1 Principal
Distribution
Amount with respect to any Distribution Date exceed the Class B-1
Certificate
Principal Balance.
Class B-1
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
-10-
<PAGE>
Certificate Principal Balance of such Class B-1 Certificates
pursuant to the
last sentence of the definition of "Certificate Principal
Balance."
Class C
Applied Realized Loss Amount: As of any Distribution Date, the
sum
of all Applied Realized Loss Amounts with respect to the Mortgage
Loans which
have been applied to the reduction of the Certificate Principal
Balance of the
Class C Certificates.
Class C
Certificate: Any Certificate designated as a "Class C
Certificate"
on the face thereof, in the form of Exhibit A hereto, representing
the right to
distributions as set forth herein.
Class C
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class C
Certificates.
Class C
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class C
Distributable Interest
Rate on a notional amount equal to the aggregate principal balance
of the Lower
Tier REMIC Regular Interests immediately prior to such Distribution
Date, plus
the interest portion of any previous distributions on such Class
that is
recovered as a voidable preference by a trustee in bankruptcy, less
any
Non-Supported Interest Shortfall allocated on such Distribution
Date to the
Class C Certificates.
Class C
Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC
Regular Interests
over (b) two times the weighted average of the interest rates on
the Lower Tier
REMIC I Marker Interests and the Class LTIX Interest (treating for
purposes of
this clause (b) the interest rate on each of the Lower Tier REMIC I
Marker
Interests as being subject to a cap and a floor equal to the
interest rate of
the Corresponding Certificates and treating the Class LTIX Interest
as being
capped at zero). The averages described in the preceding sentence
shall be
weighted on the basis of the respective principal balances of the
Lower Tier
REMIC Regular Interests immediately prior to any date of
determination.
Class C
Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior
Distribution
Dates over (B) the amount actually distributed to the Class C
Certificates with
respect to interest on such prior Distribution Dates or added to
the aggregate
Certificate Principal Balance of the Class C Certificates.
Class C
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the
sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss
Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class C Certificates pursuant to the last
sentence of
the definition of "Certificate Principal Balance."
Class
LTA-1A Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 1/4 of the
initial
principal balance of its Corresponding Certificates and an interest
rate equal
to the Net Rate.
Class
LTA-1B Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 1/4 of the
initial
principal balance of its Corresponding Certificate and an interest
rate equal to
the Net Rate.
Class
LTA-2A Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 1/4 of the
initial
principal balance of its Corresponding Certificate and an interest
rate equal to
the Net Rate.
-11-
<PAGE>
Class
LTA-2B Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 1/4 of the
initial
principal balance of its Corresponding Certificate and an interest
rate equal to
the Net Rate.
Class
LTA-2C Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 1/4 of the
initial
principal balance of its Corresponding Certificate and an interest
rate equal to
the Net Rate.
Class
LTB-1 Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTIX
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i)
50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over
(ii) the
initial principal balance of the Lower Tier REMIC I Marker
Interests, and with
an interest rate equal to the Net Rate.
Class
LTIIX Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to the excess of (i)
50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over
(ii) the
initial principal balance of the Lower Tier REMIC II Marker
Interests, and with
an interest rate equal to the Net Rate.
Class
LTII1A Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 0.05% of the
excess of (i)
the aggregate Cut-off Date Principal Balance of the Group One
Mortgage Loans
over (ii) the aggregate of the initial Certificate Principal
Balances of
Certificate Group One, and with an interest rate equal to the Net
Rate.
Class
LTII1B Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 0.05% the
aggregate
Cut-off Date Principal Balance of the Group One Mortgage Loans, and
with an
interest rate equal to the Class A-1 Available Funds Cap.
Class
LTII2A Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 0.05% of the
excess of (i)
the aggregate Cut-off Date Principal Balance of the Group Two
Mortgage Loans
over (ii) the aggregate of the initial Certificate Principal
Balances of
Certificate Group Two, and with an interest rate equal to the Net
Rate.
Class
LTII2B Interest: An uncertificated regular interest in the
Lower
Tier REMIC with an initial principal balance equal to 0.05% of the
aggregate
Cut-off Date Principal Balance of the Group Two Mortgage Loans and
with an
interest rate equal to the Class A-2 Available Funds Cap.
Class
LTM-1 Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class
LTM-2 Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class
LTM-3 Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
-12-
<PAGE>
Class
LTM-4 Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class
LTM-5 Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class
LTM-6 Interest: An uncertificated regular interest in the Lower
Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTR
Interest: The sole class of "residual interest" in the Lower
Tier REMIC.
Class M
Certificates: Any of the Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5 and Class M-6 Certificates.
Class M-1
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans that
have been applied to the reduction of the Certificate Principal
Balance of the
Class M-1 Certificates.
Class M-1
Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-1
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1
Certificates.
Class M-1
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1
Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-1 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-1
Certificates.
Class M-1
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-1 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.
Class M-1
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.590% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 0.885% per
annum.
Class M-1
Pass-Through Rate: For the first Distribution Date, 4.97% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-1 Margin, (2) the Weighted Average Available Funds
Cap and (3)
the Weighted Average Maximum Rate Cap for such Distribution
Date.
Class M-1
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance has been
reduced to zero and a Stepdown Trigger Event exists, or as long
as
-13-
<PAGE>
a Stepdown Trigger Event does not exist, the excess of (1) the sum
of (A) the
Class A Certificate Principal Balance (after taking into account
distributions
of the Class A Principal Distribution Amount on such Distribution
Date) and (B)
the Class M-1 Certificate Principal Balance immediately prior to
such
Distribution Date over (2) the lesser of (A) 77.50% of the Stated
Principal
Balances of the Mortgage Loans as of such Distribution Date and (B)
the excess
of the Stated Principal Balances for the Mortgage Loans as of such
Distribution
Date over the Minimum Required Overcollateralization Amount.
Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date
on which the
Certificate Principal Balance of each Class of Class A Certificates
has been
reduced to zero, the Class M-1 Principal Distribution Amount will
equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class M-1
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A Certificates and (II) in no event
will the
Class M-1 Principal Distribution Amount with respect to any
Distribution Date
exceed the Class M-1 Certificate Principal Balance.
Class M-1
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-1 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-2
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans that
have been applied to the reduction of the Certificate Principal
Balance of the
Class M-2 Certificates.
Class M-2
Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-2
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2
Certificates.
Class M-2
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2
Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-2 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-2
Certificates.
Class M-2
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-2 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.
Class M-2
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.700% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 1.050% per
annum.
Class M-2
Pass-Through Rate: For the first Distribution Date, 5.08% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-2 Margin, (2) the Weighted Average Available Funds
Cap and (3)
the Weighted Average Maximum Rate Cap for such Distribution
Date.
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<PAGE>
Class M-2
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance and the
Class M-1 Certificate Principal Balance have been reduced to zero
and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after
taking into account distributions of the Class A Principal
Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance
(after taking into account distributions of the Class M-1 Principal
Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate
Principal
Balance immediately prior to such Distribution Date over (2) the
lesser of (A)
84.00% of the Stated Principal Balances of the Mortgage Loans as of
such
Distribution Date and (B) the excess of the Stated Principal
Balances of the
Mortgage Loans as of such Distribution Date over the Minimum
Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on
any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of Class A Certificates and the Class M-1
Certificates has
been reduced to zero, the Class M-2 Principal Distribution Amount
will equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class M-2
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A and Class M-1 Certificates and
(II) in no
event will the Class M-2 Principal Distribution Amount with respect
to any
Distribution Date exceed the Class M-2 Certificate Principal
Balance.
Class M-2
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-2 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-3
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans that
have been applied to the reduction of the Certificate Principal
Balance of the
Class M-3 Certificates.
Class M-3
Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-3
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-3
Certificates.
Class M-3
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-3
Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-3 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-3
Certificates.
Class M-3
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-3 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-3 Pass-Through Rate for the related Accrual Period.
Class M-3
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.800% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 1.200% per
annum.
-15-
<PAGE>
Class M-3
Pass-Through Rate: For the first Distribution Date, 5.18% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-3 Margin, (2) the Weighted Average Available Funds
Cap and (3)
the Weighted Average Maximum Rate Cap for such Distribution
Date.
Class M-3
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate
Principal Balance
have been reduced to zero and a Stepdown Trigger Event exists, or
as long as a
Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the
Class A Certificate Principal Balance (after taking into account
distributions
of the Class A Principal Distribution Amount on such Distribution
Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account
distributions
of the Class M-1 Principal Distribution Amount on such Distribution
Date), (C)
the Class M-2 Certificate Principal Balance (after taking into
account
distributions of the Class M-2 Principal Distribution Amount on
such
Distribution Date) and (D) the Class M-3 Certificate Principal
Balance
immediately prior to such Distribution Date over (2) the lesser of
(A) 86.10% of
the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date
and (B) the excess of the Stated Principal Balances for the
Mortgage Loans as of
such Distribution Date over the Minimum Required
Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior
to the
Stepdown Date on which the Certificate Principal Balance of each
Class of Class
A Certificates, the Class M-1 Certificates and the Class M-2
Certificates has
been reduced to zero, the Class M-3 Principal Distribution Amount
will equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class M-3
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A, Class M-1 and Class M-2
Certificates and (II)
in no event will the Class M-3 Principal Distribution Amount with
respect to any
Distribution Date exceed the Class M-3 Certificate Principal
Balance.
Class M-3
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-3 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-3 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-4
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans that
have been applied to the reduction of the Certificate Principal
Balance of the
Class M-4 Certificates.
Class M-4
Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-4 Certificate
Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-4
Certificates.
Class M-4
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-4
Pass-Through Rate on
the Class M-4 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-4 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-4
Certificates.
Class M-4
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-4 Certificates with respect to interest on such prior
Distribution Dates
-16-
<PAGE>
and (2) interest on such excess (to the extent permitted by
applicable law) at
the Class M-4 Pass-Through Rate for the related Accrual Period.
Class M-4
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.900% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 1.350% per
annum.
Class M-4
Pass-Through Rate: For the first Distribution Date, 5.28% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-4 Margin, (2) the Weighted Average Available Funds
Cap and (3)
the Weighted Average Maximum Rate Cap for such Distribution
Date.
Class M-4
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate
Principal Balance
and the Class M-3 Certificate Principal Balance have been reduced
to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger
Event does not
exist, the excess of (1) the sum of (A) the Class A Certificate
Principal
Balance (after taking into account distributions of the Class A
Principal
Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate
Principal Balance (after taking into account distributions of the
Class M-1
Principal Distribution Amount on such Distribution Date), (C) the
Class M-2
Certificate Principal Balance (after taking into account
distributions of the
Class M-2 Principal Distribution Amount on such Distribution Date),
(D) the
Class M-3 Certificate Principal Balance (after taking into account
distributions
of the Class M-3 Principal Distribution Amount on such Distribution
Date and (E)
the Class M-4 Certificate Principal Balance immediately prior to
such
Distribution Date over (2) the lesser of (A) 88.30% of the Stated
Principal
Balances of the Mortgage Loans as of such Distribution Date and (B)
the excess
of the Stated Principal Balances for the Mortgage Loans as of such
Distribution
Date over the Minimum Required Overcollateralization Amount.
Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date
on which the
Certificate Principal Balance of each Class of Class A
Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, and the Class M-3
Certificates
have been reduced to zero, the Class M-4 Principal Distribution
Amount will
equal the lesser of (x) the outstanding Certificate Principal
Balance of the
Class M-4 Certificates and (y) 100% of the Principal Distribution
Amount
remaining after any distributions on such Class A, Class M-1, Class
M-2, and
Class M-3 Certificates and (II) in no event will the Class M-4
Principal
Distribution Amount with respect to any Distribution Date exceed
the Class M-4
Certificate Principal Balance.
Class M-4
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-4 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-4 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-4 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-5
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans that
have been applied to the reduction of the Certificate Principal
Balance of the
Class M-5 Certificates.
Class M-5
Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-5
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-5
Certificates.
-17-
<PAGE>
Class M-5
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-5
Pass-Through Rate on
the Class M-5 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-5 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-5
Certificates.
Class M-5
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-5 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-5 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-5 Pass-Through Rate for the related Accrual Period.
Class M-5
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 1.250% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 1.875% per
annum.
Class M-5
Pass-Through Rate: For the first Distribution Date, 5.63% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-5 Margin, (2) the Weighted Average Available Funds
Cap and (3)
the Weighted Average Maximum Rate Cap for such Distribution
Date.
Class M-5
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate
Principal Balance,
the Class M-3 Certificate Principal Balance and the Class M-4
Certificate
Principal Balance have been reduced to zero and a Stepdown Trigger
Event exists,
or as long as a Stepdown Trigger Event does not exist, the excess
of (1) the sum
of (A) the Class A Certificate Principal Balance (after taking into
account
distributions of the Class A Principal Distribution Amount on such
Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after
taking into
account distributions of the Class M-1 Principal Distribution
Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after
taking into account distributions of the Class M-2 Principal
Distribution Amount
on such Distribution Date), (D) the Class M-3 Certificate Principal
Balance
(after taking into account distributions of the Class M-3 Principal
Distribution
Amount on such Distribution Date, (E) the Class M-4 Certificate
Principal
Balance (after taking into account distributions of the Class M-4
Principal
Distribution Amount on such Distribution Date) and (F) the Class
M-5 Certificate
Principal Balance immediately prior to such Distribution Date over
(2) the
lesser of (A) 90.50% of the Stated Principal Balances of the
Mortgage Loans as
of such Distribution Date and (B) the excess of the Stated
Principal Balances
for the Mortgage Loans as of such Distribution Date over the
Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on
any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of Class A Certificates, the Class M-1
Certificates, the
Class M-2 Certificates, the Class M-3 Certificates and the Class
M-4
Certificates have been reduced to zero, the Class M-5 Principal
Distribution
Amount will equal the lesser of (x) the outstanding Certificate
Principal
Balance of the Class M-5 Certificates and (y) 100% of the Principal
Distribution
Amount remaining after any distributions on such Class A, Class
M-1, Class M-2,
Class M-3 and Class M-4 Certificates and (II) in no event will the
Class M-5
Principal Distribution Amount with respect to any Distribution Date
exceed the
Class M-5 Certificate Principal Balance.
Class M-5
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-5 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-5 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
-18-
<PAGE>
Certificate Principal Balance of such Class M-5 Certificates
pursuant to the
last sentence of the definition of "Certificate Principal
Balance."
Class M-6
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans that
have been applied to the reduction of the Certificate Principal
Balance of the
Class M-6 Certificates.
Class M-6
Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-6
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-6
Certificates.
Class M-6
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-6
Pass-Through Rate on
the Class M-6 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-6 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-6
Certificates.
Class M-6
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-6 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-6 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-6 Pass-Through Rate for the related Accrual Period.
Class M-6
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 1.250% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 1.875% per
annum.
Class M-6
Pass-Through Rate: For the first Distribution Date, 5.63% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-6 Margin, (2) the Weighted Average Available Funds
Cap and (3)
the Weighted Average Maximum Rate Cap for such Distribution
Date.
Class M-6
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate
Principal Balance,
the Class M-3 Certificate Principal Balance, the Class M-4
Certificate Principal
Balance and the Class M-5 Certificate Principal Balance have been
reduced to
zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event
does not exist, the excess of (1) the sum of (A) the Class A
Certificate
Principal Balance (after taking into account distributions of the
Class A
Principal Distribution Amount on such Distribution Date), (B) the
Class M-1
Certificate Principal Balance (after taking into account
distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date),
(C) the
Class M-2 Certificate Principal Balance (after taking into account
distributions
of the Class M-2 Principal Distribution Amount on such Distribution
Date), (D)
the Class M-3 Certificate Principal Balance (after taking into
account
distributions of the Class M-3 Principal Distribution Amount on
such
Distribution Date, (E) the Class M-4 Certificate Principal Balance
(after taking
into account distributions of the Class M-4 Principal Distribution
Amount on
such Distribution Date), (F) the Class M-5 Certificate Principal
Balance (after
taking into account distributions of the Class M-5 Principal
Distribution Amount
on such Distribution Date) and (G) the Class M-6 Certificate
Principal Balance
immediately prior to such Distribution Date over (2) the lesser of
(A) 91.90% of
the Stated Principal Balances of the Mortgage
-19-
<PAGE>
Loans as of such Distribution Date and (B) the excess of the Stated
Principal
Balances for the Mortgage Loans as of such Distribution Date over
the Minimum
Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of Class A Certificates, the Class M-1
Certificates, the
Class M-2 Certificates, the Class M-3 Certificates, the Class M-4
Certificates
and the Class M-5 Certificates have been reduced to zero, the Class
M-6
Principal Distribution Amount will equal the lesser of (x) the
outstanding
Certificate Principal Balance of the Class M-6 Certificates and (y)
100% of the
Principal Distribution Amount remaining after any distributions on
such Class A,
Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5
Certificates and (II)
in no event will the Class M-6 Principal Distribution Amount with
respect to any
Distribution Date exceed the Class M-6 Certificate Principal
Balance.
Class M-6
Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-6 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-6 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-6 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class P
Certificate: Any Certificate designated as a Class P
Certificate
on the face thereof, executed by the Trustee and authenticated by
the Trustee in
substantially the form set forth in Exhibit A, representing the
right to
distributions as set forth herein.
Class R
Certificate: The Class R Certificate executed by the Trustee
and
authenticated by the Trustee in substantially the form set forth in
Exhibit A.
Class R
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class R
Certificate.
Class R
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R
Pass-Through Rate on
the Class R Certificate Principal Balance as of such Distribution
Date plus the
portion of any previous distributions on such Class in respect of
Current
Interest or a Class R Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class R
Certificate.
Class R
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class R Current Interest with
respect to prior
Distribution Dates over (B) the amount actually distributed to the
Class R
Certificate with respect to interest on such prior Distribution
Dates and (2)
interest on such excess (to the extent permitted by applicable law)
at the Class
R Pass-Through Rate for the related Accrual Period.
Class R
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.310% per
annum and, as
of any Distribution Date after the Initial Optional Termination
Date, 0.620% per
annum.
Class R
Pass-Through Rate: For the first Distribution Date, 4.69% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class R Margin, (2) the Class A-1 Available Funds Cap and
(3) the Class
A-1 Maximum Rate Cap for such Distribution Date.
Closing
Date: December 28, 2005.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
-20-
<PAGE>
Collection
Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name
of the
Trustee for the benefit of the Certificateholders and designated
"Wilshire
Credit Corporation, as servicer for Wells Fargo Bank, N.A., as
Trustee, in trust
for registered holders of Merrill Lynch Mortgage Investors Trust,
Mortgage Loan
Asset-Backed Certificates, Series 2005-HE3". Funds in the
Collection Account
shall be held in trust for the Certificateholders for the uses and
purposes set
forth in this Agreement.
Combined
Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of
which is the
sum of (1) the original principal balance of the related Mortgage
Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on
which are
senior to the lien on such related Mortgage Loan (such sum
calculated at the
date of origination of such related Mortgage Loan) and the
denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged
Property and
(B) the sales price of the related Mortgaged Property at time of
origination.
Compensating Interest: With respect to any Mortgage Loan and
any
Distribution Date, an amount equal to the portion of any Prepayment
Interest
Shortfalls required to be deposited in the Collection Account by
the Servicer
pursuant to Section 4.02 hereof.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged
Property, whether permanent or temporary, partial or entire, by
exercise of the
power of eminent domain or condemnation, to the extent not required
to be
released either to a Mortgagor in accordance with the terms of the
related
mortgage loan documents or to the holder of a senior lien on the
Mortgaged
Property.
Corresponding Certificates: With respect to the Class LTA-1A
Interest, the
Class A-1A and Class R Certificates. With respect to the Class
LTA-1B Interest,
the Class A-1B Certificates. With respect to the Class LTA-2A
Interest, the
Class A-2A Certificates. With respect to the Class LTA-2B Interest,
the Class
A-2B Certificates. With respect to the Class LTA-2C Interest, the
Class A-2C
Certificates. With respect to the Class LTM-1 Interest, the Class
M-1
Certificates. With respect to the Class LTM-2 Interest, the Class
M-2
Certificates. With respect to the Class LTM-3 Interest, the Class
M-3
Certificates. With respect to the Class LTM-4 Interest, the Class
M-4
Certificates. With respect to the Class LTM-5 Interest, the Class
M-5
Certificates. With respect to the Class LTM-6 Interest, the Class
M-6
Certificates. With respect to the Class LTB-1 Interest, the Class
B-1
Certificates.
Current
Interest: Any of the Class A-1A Current Interest, the Class
A-1B
Current Interest, the Class A-2A Current Interest, the Class A-2B
Current
Interest, the Class A-2C Current Interest, the Class R Current
Interest, the
Class M-1 Current Interest, the Class M-2 Current Interest, the
Class M-3
Current Interest, the Class M-4 Current Interest, the Class M-5
Current
Interest, the Class M-6 Current Interest and the Class B-1 Current
Interest.
Custodian: Deutsche
Bank, National Trust Company.
Custodial
Agreement: The custodial agreement dated as of December 28,
2005
between the Trustee and the Custodian, a form of which is attached
hereto as
Exhibit C
Cut-off
Date: December 1, 2005.
Cut-off
Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the
calendar day
immediately preceding the Cut-off Date after application of all
payments of
principal due on or prior to the Cut-off Date, whether or not
received, and all
Principal Prepayments received prior to the Cut-off Date, but
without giving
effect to any installments of principal received in respect of Due
Dates after
the Cut-off Date.
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Definitive
Certificates: As defined in Section 5.06.
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. With
respect to any Mortgage Loan due on any day other than the first
day of the
month, such Mortgage Loan shall be deemed to be due on the first
day of the
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:
Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or any 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(3) of
the Uniform
Commercial Code of the State of New York.
Depository
Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.
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.
Designated
Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family
residential,
home equity, manufactured housing and/or commercial mortgage
obligations that
are secured by single-family residential, multi-family residential,
commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th
day of
the month of such Distribution Date or, if such 15th day is not a
Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or
political
subdivision thereof, any foreign government, any international
organization, or
any agency or instrumentality of any of the foregoing, (2) any
organization
(other than a cooperative described in Section 521 of the Code)
which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such
organization is
subject to the tax imposed by Section 511 of the Code and (3) any
organization
described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the
initial
issuance of the Certificates, or if such 25th day is not a Business
Day, the
next succeeding Business Day, commencing in January 2006.
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Due Date:
With respect to any Distribution Date and any Mortgage Loan,
the
day during the related Due Period on which a Scheduled Payment is
due.
Due
Period: With respect to any Distribution Date, the period beginning
on
the second day of the calendar month preceding the calendar month
in which such
Distribution Date occurs and ending on the first day of the month
in which such
Distribution Date occurs.
Eligible
Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are
rated by each
Rating Agency in one of its two highest rating categories, or (ii)
maintained
with the corporate trust department of a bank which (A) has a
rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the
corporate trust
department of a national bank or banking corporation which has a
rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or
accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or
accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating
of any Class
of Certificates, as evidenced in writing, by a depository
institution in which
such accounts are insured by the FDIC (to the limit established by
the FDIC),
the uninsured deposits in which accounts are otherwise secured such
that, as
evidenced by an Opinion of Counsel delivered to and acceptable to
the Trustee
and each Rating Agency, the Certificateholders have a claim with
respect to the
funds in such account and a perfected first 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 with which such account is maintained, or
(v) maintained
at an eligible institution whose commercial paper, short-term debt
or other
short-term deposits are rated at least A-1+ by S&P and F-1+ by
Fitch, or (vi)
maintained with a federal or state chartered depository institution
the deposits
in which are insured by the FDIC to the applicable limits and the
short-term
unsecured debt obligations of which (or, in the case of a
depository institution
that is a subsidiary of a holding company, the short-term unsecured
debt
obligations of such holding company) are rated A-1 by S&P or
Prime-1 by Moody's
at the time any deposits are held on deposit therein, or (vii)
otherwise
acceptable to each Rating Agency, as evidenced by a letter from
each Rating
Agency to the Trustee.
ERISA: The
Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that would satisfy the
requirements of
Prohibited Transaction Exemption 90-29, Exemption Application No.
D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted to the Underwriter by
the United
States Department of Labor (or any other applicable underwriter's
exemption
granted by the United States Department of Labor), except, in
relevant part, for
the requirement that the certificates have received a rating at the
time of
acquisition that is in one of the three (or four, in the case of a
"designated
transaction") highest generic rating categories by at least one of
the Rating
Agencies.
ERISA
Restricted Certificates: The Class C Certificates and the Class
P
Certificates and any other Certificate, as long as the acquisition
and holding
of such other Certificate is not covered by and exempt under any
applicable
underwriter's exemption granted by the United States Department of
Labor.
Event of
Default: As defined in Section 7.01 hereof.
Excess
Interest: On any Distribution Date, for the Class A, Class M
and
Class B Certificates, the excess, if any, of (1) the amount of
interest such
Class of Certificates is entitled to receive on such Distribution
Date over (2)
the amount of interest such Class of Certificates would have been
entitled to
receive on such Distribution Date at an interest rate equal to the
REMIC
Pass-Through Rate.
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Excess
Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal
balance of
such Liquidated Loan as of the date of such liquidation plus (2)
interest at the
Mortgage Rate from the Due Date as to which interest was last paid
or advanced
to Certificateholders (and not reimbursed to the Servicer) up to
the Due Date in
the month in which such Liquidation Proceeds are required to be
distributed on
the unpaid principal balance of such Liquidated Loan outstanding
during each Due
Period as to which such interest was not paid or advanced.
Exchange
Act: The Securities Exchange Act of 1934, as amended.
Extra
Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess of (A) the sum of
(i) the
Aggregate Certificate Principal Balance immediately preceding such
Distribution
Date reduced by the Principal Funds with respect to such
Distribution Date and
(ii) $19,862,680 over (B) the Pool Stated Principal Balance of the
Mortgage
Loans as of such Distribution Date and (2) on and after the
Stepdown Date, (A)
the sum of (x) the Aggregate Certificate Principal Balance
immediately preceding
such Distribution Date, reduced by the Principal Funds with respect
to such
Distribution Date and (y) the greater of (a) 4.60% of the Pool
Stated Principal
Balance of the Mortgage Loans and (b) the Minimum Required
Overcollateralization
Amount less (B) the Pool Stated Principal Balance of the Mortgage
Loans as of
such Distribution Date; provided, however, that if on any
Distribution Date a
Stepdown Trigger Event is in effect, the Extra Principal
Distribution Amount
will not be reduced to the applicable percentage of the
then-current Pool Stated
Principal Balance of the Mortgage Loans (and will remain fixed at
the applicable
percentage of the aggregate Stated Principal Balance of the
Mortgage Loans as of
the Due Date immediately prior to the Stepdown Trigger Event) until
the next
Distribution Date on which the Stepdown Trigger Event is not in
effect.
Fannie
Mae: A federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage
Association Charter
Act, or any successor thereto.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
Fitch:
Fitch, Inc., or any successor in interest.
Fixed Rate
Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.
Floating
Rate Certificate Carryover: With respect to a Distribution
Date,
in the event that the Pass-Through Rate for a class of the Class A,
Class M and
Class B-1 Certificates is based upon the related Available Funds
Cap, the excess
of (1) the amount of interest that such class would have been
entitled to
receive on such Distribution Date had the Pass-Through Rate for
that class not
been calculated based on the related Available Funds Cap, up to but
not
exceeding the greater of (a) the related Maximum Rate Cap or (b)
the sum of (i)
the related Available Funds Cap and (ii) the product of (A) a
fraction, the
numerator of which is 360 and the denominator of which is the
actual number of
days in the related Accrual Period and (B) the quotient obtained by
dividing (I)
an amount equal to the proceeds, if any, payable under the related
Cap Contract
with respect to such Distribution Date by (II) the aggregate
Certificate
Principal Balance of each of the Classes of Certificates to which
the Cap
Contract relates for such Distribution Date over (2) the amount of
interest such
class was entitled to receive on such Distribution Date based on
the related
Available Funds Cap together with (A) the unpaid portion of any
such excess from
prior Distribution Dates (and interest accrued thereon at the then
applicable
Pass-Through Rate for such class, without giving effect to the
applicable
Available Funds Cap) and (B) any amount previously distributed with
respect to
Floating Rate Certificate Carryover for such class that is
recovered as a
voidable preference by a trustee in bankruptcy.
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Freddie
Mac: A corporate instrumentality of the United States created
and
existing under Title III of the Emergency Home Finance Act of 1970,
as amended,
or any successor thereto.
Grantor
Trusts: The grantor trusts described in Section 2.07 hereof.
Gross
Margin: The percentage set forth in the related Mortgage Note
for
each of the Adjustable Rate Mortgage Loans which is to be added to
the
applicable index for use in determining the Mortgage Rate on each
Adjustment
Date and which is set forth in the Mortgage Loan Schedule for each
Adjustable
Rate Mortgage Loan.
Group One:
The portion of the Mortgage Pool identified as "Group One" in
the Prospectus Supplement.
Group One
Mortgage Loan: Any Mortgage Loan identified in the Group One
Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One
Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the respective
Certificate
Principal Balances of the Class A-1 and Class R Certificates and
(2) the product
of (x) the Group One Principal Distribution Percentage and (y) the
Class A
Principal Distribution Amount; provided, however, that (A) with
respect to the
Distribution Date on which the Certificate Principal Balance of
each Class of
the Class A-2 Certificates is initially reduced to zero (so long as
the Class
A-1 and Class R Certificates are outstanding), the excess of (i)
the Group Two
Principal Distribution Percentage of the Class A Principal
Distribution Amount
over (ii) the amount necessary to reduce the Certificate Principal
Balance of
each of the Class A-2 Certificates to zero will be added to the
Group One
Principal Distribution Amount and (B) with respect to any
Distribution Date
thereafter, the Group One Principal Distribution Amount shall equal
the Class A
Principal Distribution Amount.
Group One
Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the
numerator of which
is the amount of Principal Funds with respect to such Distribution
Date received
with respect to Group One Mortgage Loans, and the denominator of
which is the
amount of all Principal Funds with respect to such Distribution
Date received on
all the Mortgage Loans.
Group Two:
The portion of the Mortgage Pool identified as "Group Two" in
the Prospectus Supplement.
Group Two
Mortgage Loan: Any Mortgage Loan identified in the Group Two
Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two
Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the Certificate
Principal Balance
of the Class A-2 Certificates and (2) the product of (x) the Group
Two Principal
Distribution Percentage and (y) the Class A Principal Distribution
Amount;
provided, however, that (A) with respect to the Distribution Date
on which the
Certificate Principal Balance of the Class A-1 and Class R
Certificates is
initially reduced to zero (so long as any of the Class A-2
Certificates is
outstanding), the excess of (i) the Group One Principal
Distribution Percentage
of the Class A Principal Distribution Amount over (ii) the amount
necessary to
reduce the Certificate Principal Balances of the Class A-1
Certificates to zero
will be added to the Group Two Principal Distribution Amount and
(B) with
respect to any Distribution Date thereafter, the Group Two
Principal
Distribution Amount shall equal the Class A Principal Distribution
Amount.
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<PAGE>
Group Two
Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the
numerator of which
is the amount of Principal Funds with respect to such Distribution
Date received
with respect to Group Two Mortgage Loans, and the denominator of
which is the
amount of all Principal Funds with respect to such Distribution
Date received on
all the Mortgage Loans.
Indenture:
An indenture relating to the issuance of NIM Notes.
Initial
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage
Loan.
Initial
Certificate Principal Balance: With respect to any Class A,
Class
M, Class B or Class C or Certificate, the Certificate Principal
Balance of such
Certificate or any predecessor Certificate on the Closing Date as
set forth in
Section 5.01 hereof.
Initial
Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Initial
Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is equal
to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage
Loans as of
the Cut-off Date.
Insurance
Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance 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, including, without limitation,
the MI
Policy.
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 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 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
Carry Forward Amount: Any of the Class A-1A Interest Carry
Forward Amount, the Class A-1B Interest Carry Forward Amount, the
Class A-2A
Interest Carry Forward Amount, the Class A-2B Interest Carry
Forward Amount, the
Class A-2C Interest Carry Forward Amount, the Class R Interest
Carry Forward
Amount, the Class M-1 Interest Carry Forward Amount, the Class M-2
Interest
Carry Forward Amount, the Class M-3 Interest Carry Forward Amount,
the Class M-4
Interest Carry Forward Amount, the Class M-5 Interest Carry Forward
Amount, the
Class M-6 Interest Carry Forward Amount, the Class B-1 Interest
Carry Forward
Amount or the Class C Interest Carry Forward Amount, as the case
may be.
Interest
Determination Date: With respect to the Certificates, the
second
LIBOR Business Day preceding the commencement of such Accrual
Period.
Interest
Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related
Due Period and
received before the related Servicer Remittance Date or advanced on
or before
the related Servicer Remittance Date less the Servicing Fee, (2)
all
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Advances relating to interest with respect to the Mortgage Loans,
(3) all
Compensating Interest with respect to the Mortgage Loans, (4)
Liquidation
Proceeds with respect to the Mortgage Loans (to the extent such
Liquidation
Proceeds relate to interest) collected during the related
Prepayment Period, (5)
all proceeds of any purchase pursuant to Section 2.02 or 2.03
during the related
Prepayment Period or pursuant to Section 9.01 not later than the
related
Determination Date (to the extent that such proceeds relate to
interest) less
the Servicing Fee and (6) all Prepayment Charges received with
respect to the
Mortgage Loans during the related Prepayment Period, less (A)
all
Non-Recoverable Advances relating to interest and (B) other amounts
reimbursable
to the Servicer, the Trustee and the Custodian pursuant to this
Agreement.
Latest
Possible Maturity Date: The latest maturity date for any
Mortgage
Loan in the Trust Fund plus one year.
LIBOR
Business Day: Any day on which banks in the City of London,
England
and New York City, U.S.A. are open and conducting transactions in
foreign
currency and exchange.
Liquidated
Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) 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 Servicer has
certified (in
accordance with Section 3.12) in the related Prepayment Period that
it has
received all amounts it expects to receive in connection with such
liquidation
or (b) is not a first lien Mortgage Loan and is delinquent 180 days
or longer,
the Servicer has certified in a certificate of an officer of the
Servicer
delivered to the Depositor and the Trustee that it does not believe
that there
is a reasonable likelihood that any further net proceeds will be
received or
recovered with respect to such Mortgage Loan.
Liquidation Proceeds: Amounts, including Condemnation Proceeds
and
Insurance Proceeds, received in connection with the partial or
complete
liquidation of Mortgage Loans, whether through trustee's sale,
foreclosure sale,
sale by the Servicer pursuant to this Agreement or otherwise or
amounts received
in connection with any condemnation or partial release of a
Mortgaged Property
and any other proceeds received in connection with an REO Property,
less the sum
of related unreimbursed Advances, Servicing Fees, Servicing
Advances and any
other expenses related to such Mortgage Loan.
Losses:
Any losses, claims, damages, liabilities or expenses
collectively.
Lower Tier
REMIC: As described in the Preliminary Statement and Section
2.07.
Lower Tier
REMIC Interests: Each of the Class LTA-1A Interest, the Class
LTA-1B Interest, the Class LTA-2A Interest, the Class LTA-2B
Interest, the Class
LTA-2C Interest, the Class LTM-1 Interest, the Class LTM-2
Interest, the Class
LTM-3 Interest, the Class LTM-4 Interest, the Class LTM-5 Interest,
the Class
LTM-6 Interest, the Class LTB-1 Interest, the Class LTIX Interest,
the Class
LTIIX Interest, the Class LTII1A Interest, the Class LTII1B
Interest, the Class
LTII2A Interest, the Class LTII2B Interest and the Class LTR
Interest.
Lower Tier
REMIC I Marker Interests: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTIX Interest, the
Class LTIIX
Interest, the Class LTII1A Interest, the Class LTII1B Interest, the
Class LTII2A
Interest and the Class LTII2B Interest.
Lower Tier
REMIC II Marker Interests: Each of the Class LTII1A Interest,
the Class LTII1B Interest, the Class LTII2A Interest and the Class
LTII2B
Interest.
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Lower Tier
REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
Lower Tier
REMIC Subordinated Balance Ratio: The ratio of (i) the
principal balance of the Class LTII1A Interest to (ii) the
principal balance of
the Class LTII2A Interest that is equal to the ratio of (i) the
excess of (A)
the aggregate Stated Principal Balance of Group One over (B) the
current
Certificate Principal Balance of the Class A-1 and Class R
Certificates to (ii)
the excess of (A) the aggregate Stated Principal Balance of Group
Two over (B)
the current Certificate Principal Balance of the Class A-2
Certificates.
Maximum
Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan,
the maximum rate of interest set forth as such in the related
Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest
set forth in
the related Mortgage Note.
Maximum
Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class A-2
Maximum Rate Cap or the Weighted Average Maximum Rate Cap.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or
any successor
thereto.
MERS Loan:
Any Mortgage Loan registered with MERS on the MERS System.
MERS
System: The system of recording transfers of mortgage
electronically
maintained by MERS.
MI Insurer
Fee: The amount payable to the MI Insurer on each Distribution
Date, which amount shall equal one-twelfth of the product of (i)
the MI Insurer
Fee Rate and (ii) the Stated Principal Balance of the applicable MI
Mortgage
Loan (or the related REO Property) as of the immediately preceding
Distribution
Date.
MI Insurer
Fee Rate: With respect to each MI Mortgage Loan, the rate
specified for such MI Mortgage Loan on the schedule attached to the
MI Policy,
plus a rate computed so that the MI Insurer Fee would make the MI
Insurer whole
for any taxes imposed on the MI Insurer by the States of Kentucky
or West
Virginia with respect to MI Mortgage Loans located in such
States.
MI
Insurer: PMI Mortgage Insurance Co., or its successor in
interest.
MI
Mortgage Loans: The list of Mortgage Loans insured by the MI
Insurers
attached hereto as Exhibit B-4.
MI Policy:
The PMI primary private mortgage Insurance Policy No.
22510-0008-0 and all endorsements thereto, dated December 28, 2005,
a form of
which is attached hereto as Exhibit P.
MLML Sale
Agreement: The Mortgage Loan Sale and Assignment Agreement
dated
as of December 1, 2005 between the Depositor and MLML.
Minimum
Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan,
the minimum rate of interest set forth as such in the related
Mortgage Note.
Minimum
Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the
Mortgage Loans
as of the Cut-off Date.
MIN: The
loan number for any MERS Loan.
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<PAGE>
MOM Loan: Any Mortgage
Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its
successors
and assigns.
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's:
Moody's Investors Service, Inc. or any successor in interest.
Mortgage:
With respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument creating a second lien or a second 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
Group: Either of Group One or Group Two.
Mortgage
Loan Schedule: The lists of Mortgage Loans (as from time to
time
amended by the Trustee 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, attached hereto as Exhibits B-1,
B-2 and B-3,
setting forth the following information with respect to each
Mortgage Loan:
(i) the
loan number;
(ii) borrower
name and address;
(iii) the unpaid
principal balance of the Mortgage Loans;
(iv) the Initial
Mortgage Rate;
(v) the
original maturity date and the months remaining before
maturity date;
(vi) the
original principal balance;
(vii) the Cut-off Date
Principal Balance;
(viii) the first payment due date of the Mortgage Loan;
(ix) the
Loan-to-Value Ratio at origination with respect to a
first lien Mortgage Loan, or the Combined Loan-to-Value Ratio
with respect to a second lien Mortgage Loan;
(x) a code
indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(xi) a code
indicating the property type;
(xii) with respect to
each Adjustable Rate Mortgage Loan;
(A) the
frequency of each Adjustment Date;
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(B) the next
Adjustment Date;
(C) the Maximum
Mortgage Rate;
(D) the Minimum
Mortgage Rate;
(E) the Mortgage
Rate as of the Cut-off Date;
(F) the related
Periodic Rate Cap;
(G) the Gross
Margin;
(xiii) location of the related Mortgaged Property;
(xiv) a code indicating whether a Prepayment Charge is
applicable
and, if so,
(A) the period
during which such Prepayment Charge is in
effect;
(B) the amount
of such Prepayment Charge;
(C) any
limitations or other conditions on the
enforceability of such Prepayment Charge; and
(D) any other
information pertaining to the Prepayment
Charge specified in the related Mortgage Note;
(xv) the Credit Score
and date obtained;
(xvi) a code indicating whether such loan is a MI Mortgage
Loan;
(xvii) the MI Insurer Fee Rate; and
(xviii) the coverage percentage under the MI Policy.
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 shall continue to be a Mortgage Loan hereunder until the
Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage
Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan
and all amendments, modifications and attachments thereto.
Mortgage
Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule set out on Exhibit B-1.
Mortgaged
Property: The underlying property securing a Mortgage Loan.
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note from
time to time.
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Mortgagor:
The obligor on a Mortgage Note.
Net
Mortgage Rate: As to each Mortgage Loan, and at any time, the
per
annum rate equal to the then current Mortgage Rate less (1) the
Servicing Fee
Rate and (2) the MI Insurer Fee Rate, if applicable.
Net Rate:
With respect to any Distribution Date, the product of (x) the
weighted average Net Mortgage Rate for the Mortgage Loans
calculated based on
the respective Net Mortgage Rates and the Stated Principal Balances
of such
Mortgage Loans as of the preceding Distribution Date (or, in the
case of the
first Distribution Date, as of the Cut-off Date) and (y) a
fraction, the
numerator of which is 30 and the denominator of which is the actual
number of
days in the related Accrual Period.
NIM Notes:
The notes to be issued pursuant to the Indenture.
Non-Recoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Servicer that, in the good faith
judgment of the
Servicer, will not or, in the case of a current delinquency, would
not, be
ultimately recoverable by the Servicer from the related Mortgagor,
related
Liquidation Proceeds or otherwise related to the Mortgage
Loans.
Non-Recoverable Servicing Advance: Any portion of a Servicing
Advance
previously made or proposed to be made by the Servicer that, in the
good faith
judgment of the Servicer, will not or, in the case of a current
Servicing
Advance, would not, be ultimately recoverable by the Servicer from
the related
Mortgagor, related Liquidation Proceeds or otherwise related to the
Mortgage
Loans.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered
Certificates: The Class A, Class M, Class B and Class R
Certificates.
Officer's
Certificate: A certificate (1) 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, the
Servicer or the Trustee (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 (2),
if provided for in this Agreement, signed by a Servicing Officer,
as the case
may be, and delivered to the Depositor, the Servicer 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 Trustee on the related Interest Determination Date on the
basis of (a)
the offered rates for one-month United States dollar deposits, as
such rates
appear on Telerate page 3750, as of 11:00 a.m. (London time) on
such Interest
Determination Date or (b) if such rate does not appear on Telerate
Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference
Banks for
one-month United States dollar deposits, as such rates appear on
the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest
Determination
Date. If One-Month LIBOR is determined pursuant to clause (b)
above, on each
Interest Determination Date, One-Month LIBOR for the related
Accrual Period will
be established by the Trustee as follows:
(i) If on such
Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the
nearest whole multiple of 0.03125%).
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(ii) If on such
Interest Determination Date fewer than two
Reference Banks provide such offered quotations, One-Month
LIBOR for the related Accrual Period shall be the higher of
(i) One-Month LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate.
Opinion of
Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to each
addressee of such
opinion; provided, however, that with respect to Section 6.04 or
10.01, or the
interpretation or application of the REMIC Provisions, such counsel
must (1) in
fact be independent of the Depositor or the Servicer, (2) not have
any direct
financial interest in the Depositor or the Servicer or in any
affiliate of
either and (3) not be connected with the Depositor or the Servicer
as an
officer, employee, promoter, underwriter, trustee, partner,
director or person
performing similar functions.
Option
One: Option One Mortgage Corporation, or its successor in
interest.
Optional
Termination: The termination of the Trust Fund hereunder
pursuant
to clause (a) of Section 9.01 hereof.
Optional
Termination Amount: The repurchase price received by the
Trustee
in connection with any repurchase of all of the Mortgage Loans
pursuant to
Section 9.01.
Optional
Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the sum of (A) the aggregate
Stated
Principal Balance of each Mortgage Loan (other than any Mortgage
Loan that has
become an REO Property) as of the Distribution Date on which the
proceeds of the
Optional Termination are distributed to the Certificateholders,
plus accrued
interest thereon at the applicable Mortgage Rate as of the Due Date
preceding
the Distribution Date on which the proceeds of the Optional
Termination are
distributed to Certificateholders and the fair market value of any
REO Property,
plus accrued interest thereon as of the Distribution Date on which
the proceeds
of the Optional Termination are distributed to Certificateholders,
(B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee
(including any
amounts incurred by the Trustee in connection with conducting the
Auction) or
the Servicer and any unpaid or unreimbursed Servicing Fees,
Advances and
Servicing Advances and (C) any unreimbursed costs, penalties and/or
damages
incurred by the Trust Fund in connection with any violation
relating to any of
the Mortgage Loans of any predatory or abusive lending law.
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: (1) Certificates theretofore canceled by the
Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in
exchange for
which or in lieu of which other Certificates have been executed by
the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, 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 Due Period.
Overcollateralization Amount: As of any date of determination, the
excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2)
the
Certificate Principal Balance of the Certificates (other than the
Class P
Certificates and the Class C Certificates).
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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 any Class of Certificates,
the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage
Interest: With respect to:
(i) any Class,
the percentage interest in the undivided beneficial
ownership interest evidenced by such Class which shall be
equal to the Certificate Principal Balance of such Class
divided by the aggregate Certificate Principal Balance of all
Classes; and
(ii) any Certificate,
the Percentage Interest evidenced thereby of
the related Class shall equal the percentage obtained by
dividing the Denomination of such Certificate by the aggregate
of the Denominations of all Certificates of such Class; except
that in the case of any Class P Certificates, the Percentage
Interest with respect to such Certificate shown on the face of
such Certificate.
Periodic
Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits
permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.
Permitted
Activities: The primary activities of the trust created
pursuant
to this Agreement which shall be:
(i) holding the
Mortgage Loans transferred from the Depositor and
other assets of the Trust Fund, including the Cap Contracts
and any credit enhancement and passive derivative financial
instruments that pertain to beneficial interests issued or
sold to parties other than the Depositor, its Affiliates, or
its agents;
(ii) issuing
Certificates and other interests in the assets of the
Trust Fund;
(iii) receiving collections on the Mortgage Loans and making
payments on such Certificates and interests in accordance with
the terms of this Agreement; and
(iv) engaging in other
activities that are necessary or incidental
to accomplish these limited purposes, which activities cannot
be contrary to the status of the Trust Fund as a qualified
special purpose entity under existing accounting literature.
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 rating the
Certificates;
(iii) commercial or finance company paper, other than commercial
or
finance company paper issued by the Depositor, the Trustee or
any of its Affiliates, which is then receiving the highest
commercial or finance company paper rating of each such Rating
Agency;
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(iv) certificates of
deposit, demand or time deposits, or bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) 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, 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;
(v) 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;
(vi) guaranteed
reinvestment agreements issued by any bank,
insurance company or other corporation rated in the two
highest long-term or the highest short-term ratings of each
Rating Agency 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 as evidenced by a
letter from each
Rating Agency;
(vii) 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;
(viii) 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, other than the Trustee or any of
its Affiliates, 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;
(ix) interests in any
money market fund (including those managed or
advised by the Trustee or its affiliates) 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 rating such
fund, if so rated; and
(x) short term
investment funds sponsored by any trust company or
national banking association incorporated under the laws of
the United States or any state thereof, other than the Trustee
or any of its Affiliates, which on the date of acquisition has
been rated by each such Rating Agency in their respective
highest applicable rating category;
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 above par 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
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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 (ix)
above); and
provided, further, (I) that no amount beneficially owned by any
REMIC
(including, without limitation, any amounts collected by the
Servicer but not
yet deposited in the Collection Account) may be invested in
investments (other
than money market funds) treated as equity interests for Federal
income tax
purposes, unless the Servicer shall receive an Opinion of Counsel,
at the
expense of the party requesting that such investment be made, to
the effect that
such investment will not adversely affect the status of the any
REMIC provided
for herein as a REMIC under the Code or result in imposition of a
tax on the
Trust Fund or any REMIC provided for herein and (II) each such
investment must
be a "permitted investment" within the meaning of Section
860G(a)(5) of the
Code. 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, 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 a
Class R Certificate, (iv) rural electric and telephone cooperatives
described in
Section 1381(a)(2)(C) of the Code, and (v) a Person that is not a
citizen or
resident of the United States, a corporation or partnership (or
other entity
treated as a corporation or partnership for United States federal
income tax
purposes) created or organized in or under the laws of the United
States or any
State thereof or the District of Columbia or an estate whose income
from sources
without the United States is includable 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 trust, unless, in the case of this
clause (v), such
Person has furnished the transferor and the Trustee with a duly
completed
Internal Revenue Service Form W-8ECI or applicable successor form.
The terms
"United States," "State" and "International Organization" shall
have the
meanings set forth in Section 7701 of the Code. A corporation will
not be
treated as an instrumentality of the United States or of any State
thereof for
these purposes if all of its activities are subject to tax and,
with the
exception of the Federal Home Loan Mortgage Corporation, a majority
of its board
of directors is not selected by such government unit.
Person:
Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated
organization or government, or any agency or political subdivision
thereof.
PMI: PMI
Mortgage Insurance Co.
Pool
Stated Principal Balance: As to any Distribution Date, the
aggregate
of the Stated Principal Balances, as of such Distribution Date, of
the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Prepayment
Assumption: A rate or rates of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions,"
relating to
the Offered Certificates.
Prepayment
Charges: Any prepayment premium or charge payable by a
Mortgagor in connection with any Principal Prepayment on a Mortgage
Loan
pursuant to the terms of the related Mortgage Note or Mortgage, as
applicable.
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Prepayment
Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal
Prepayment in full
during the portion of the related Prepayment Period occurring
between the first
day of the calendar month in which such Servicer Remittance Date
occurs and the
last day of the related Prepayment Period, an amount equal to
interest (to the
extent received) at the applicable Net Mortgage Rate on the amount
of such
Principal Prepayment for the number of days commencing on the first
day of the
calendar month in which such Servicer Remittance Date occurs and
ending on the
date on which such Principal Prepayment is so applied.
Prepayment
Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment
in full (other
than a Principal Prepayment in full resulting from the purchase of
a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a
Principal
Prepayment in full on a Mortgage Loan received during the period
from and
including the first day to and including the 14th day of the month
of such
Distribution Date), 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 as of the preceding Distribution Date exceeds (ii) the amount
of interest
paid or collected in connection with such Principal Prepayment.
Prepayment
Period: As to any Distribution Date, the period beginning with
the 15th day of the calendar month preceding the month in which
such
Distribution Date occurs (or in the case of the first Distribution
Date,
beginning with the Cut-off Date) and ending on the 14th day of the
month in
which such Distribution Date occurs.
Principal
Distribution Amount: With respect to each Distribution Date,
the
sum of (i) the Principal Funds for such Distribution Date and (ii)
any Extra
Principal Distribution Amount for such Distribution Date.
Principal
Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal
due during
the related Due Period and received before the related Servicer
Remittance Date
or advanced on or before the related Servicer Remittance Date, (2)
prepayments
collected in the related Prepayment Period, (3) the Stated
Principal Balance of
each Mortgage Loan that was purchased by the Depositor or the
Servicer during
the related Prepayment Period or, in the case of a purchase
pursuant to Section
9.01, on the Business Day prior to such Distribution Date, (4) the
amount, if
any, by which the aggregate unpaid principal balance of any
Replacement Mortgage
Loan is less than the aggregate unpaid principal of the related
Deleted Mortgage
Loans delivered by a Seller in connection with a substitution of a
Mortgage Loan
pursuant to Section 2.03(c), (5) all Liquidation Proceeds collected
during the
related Prepayment Period (to the extent such Liquidation Proceeds
relate to
principal), (6) all Subsequent Recoveries received during the
related Due Period
and (7) all other collections and recoveries in respect of
principal during the
related Prepayment Period less (A) all Non-Recoverable Advances
relating to
principal with respect to the Mortgage Loans and (B) other amounts
reimbursable
to the Servicer, the Trustee and the Custodian pursuant to this
Agreement and
allocable to principal.
Principal
Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including
Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01
hereof) that
is received or recovered 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 Servicer in
accordance
with the terms of the related Mortgage Note.
Prospectus
Supplement: The Prospectus Supplement dated December 21, 2005
relating to the public offering of the Offered Certificates.
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PUD: A
Planned Unit Development.
Purchase
Price: With respect to any Mortgage Loan required to be
repurchased by a Seller or the applicable Transferor pursuant to
Section 2.02 or
2.03 hereof or purchased by the Servicer pursuant to Section
3.12(c) hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance
of the
Mortgage Loan as of the date of such purchase together with any
unreimbursed
Servicing Advances, (ii) accrued interest thereon at the applicable
Mortgage
Rate from (a) the date through which interest was last paid by the
Mortgagor to
(b) the Due Date in the month in which the Purchase Price is to be
distributed
to Certificateholders and (iii) any unreimbursed costs, penalties
and/or damages
incurred by the Trust Fund in connection with any violation
relating to such
Mortgage Loan of any predatory or abusive lending law.
Rating
Agency: Either of S&P or Fitch. 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 (1) a Liquidated Loan, the amount, if
any,
by which the Stated Principal Balance and accrued interest thereon
at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer
with respect
thereto (net of reimbursement of Advances and Servicing Advances)
at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to
a Mortgage
Loan that is not a Liquidated Loan, any amount of principal that
the Mortgagor
is no longer legally required to pay (except for the extinguishment
of debt that
results from the exercise of remedies due to default by the
Mortgagor).
Record
Date: With respect to any Distribution Date, the close of
business
on the last Business Day of the month preceding the month in which
the
applicable Distribution Date occurs (or, in the case of the first
Distribution
Date, the Closing Date).
Reference
Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A., Wells Fargo Bank, N.A. and NatWest, N.A.; provided that if
any of the
foregoing banks are not suitable to serve as a Reference Bank, then
any leading
banks selected by the Trustee which are engaged in transactions in
Eurodollar
deposits in the international Eurocurrency market (i) with an
established place
of business in London, England and (ii) whose quotations appear on
the Reuters
Screen LIBO Page on the relevant Interest Determination Date.
Regular
Certificate: Any one of the Class A, Class M and Class B
Certificates.
Regulation
S: Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case as the same may be
amended from time
to time; and all references to any rule, section or subsection of,
or definition
or term contained in, Regulation S means such rule, section,
subsection,
definition or term, as the case may be, or any successor thereto,
in each case
as the same may be amended from time to time.
Regulation
S Global Securities: The Book-Entry Regulation S Global
Securities and the Definitive Regulation S Global Securities.
Relief
Act: The Servicemembers Civil Relief Act or any similar state
or
local law.
Relief Act
Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest or principal
collectible
on such Mortgage Loan for the most recently ended calendar month as
a result of
the application of the Relief Act.
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REMIC: A
"real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a
REMIC" shall
mean either of (or, as the context requires, both of) the Lower
Tier REMIC and
the Upper Tier REMIC.
REMIC
Pass-Through Rate: The Class A-1 Available Funds Cap (in the case
of
a Class included in Certificate Group One), the Class A-2 Available
Funds Cap
(in the case of a Class included in Certificate Group Two) or the
Weighted
Average Available Funds Cap (in the case of the Subordinate
Certificates).
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 Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R
Certificate and
the Class C Certificates) other than the rights in interest rate
cap contracts
described in Section 2.07 and (ii) the Uncertificated Class C
Interest.
Remittance
Report: As defined in Section 4.04(j) hereof.
REO
Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a Seller
for a
Deleted Mortgage Loan, which must, on the date of such
substitution, as
confirmed in a Request for Release, substantially in the form of
Exhibit I (1)
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; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate
not less than
or no more than 1% per annum higher than the Mortgage Rate of the
Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage
Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower
than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum
Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage
Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate
Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per
annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit
conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F)
currently be accruing
interest at a rate not more than 1% per annum higher or lower than
that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or
credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value
Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in
a second lien
position) no higher than that of the Deleted Mortgage Loan; (5)
have a remaining
term to maturity no greater than (and not more than one year less
than) that of
the Deleted Mortgage Loan; (6) provide for a Prepayment Charge on
terms
substantially similar to those of the Prepayment Charge, if any, of
the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted
Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan;
and (9) comply
with each representation and warranty set forth in Section 2.03
hereof.
Request
for Release: The Request for Release of Documents submitted by
the
Servicer to the Trustee (or its custodian), substantially in the
form of Exhibit
I hereto.
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<PAGE>
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, including, without limitation, in the case of the MI
Mortgage Loans,
the MI Policy.
Required
Percentage: As of any Distribution Date, the quotient of (1)
the
excess of (A) the Stated Principal Balances of the Mortgage Loans
as of such
Distribution Date, over (B) the Certificate Principal Balance of
the most senior
Class of Certificates outstanding, prior to giving effect to
distributions to be
made on such Distribution Date and (2) the Stated Principal Balance
of the
Mortgage Loans as of such Distribution Date.
Reserve
Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the
arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of
0.03125%) of the
one-month United States dollar lending rates which New York City
banks selected
by the Trustee are quoting on the relevant Interest Determination
Date to the
principal London offices of leading banks in the London interbank
market or (2)
in the event that the Trustee can determine no such arithmetic
mean, the lowest
one-month United States dollar lending rate which New York City
banks selected
by the Trustee are quoting on such Interest Determination Date to
leading
European banks.
Residual
Interest: An interest in the Upper Tier REMIC that is entitled
to
all distributions of principal and interest on the Class R
Certificate other
than (i) distributions in respect of the Class LTR Interest and
(ii)
distributions on the Class R Certificate in respect of Excess
Interest.
Responsible Officer: When used with respect to the Trustee or
the
Servicer, any officer of the Trustee or the Servicer with direct
responsibility
for the administration of this Agreement and also means any other
officer 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.
Reuters
Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may
replace such LIBO
page on that service for the purpose of displaying London interbank
offered
rates of major banks.
S&P:
Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., or
any successor in interest.
Sale
Agreement: The MLML Sale Agreement.
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.
Section
302 Requirements: Any rules or regulations promulgated pursuant
to
the Sarbanes-Oxley Act of 2002 (as such may be amended from time to
time).
Securities
Act: The Securities Act of 1933, as amended.
Seller:
Merrill Lynch Mortgage Lending, Inc., a Delaware corporation,
or
its successors in interest.
Servicer:
Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.
Servicer
Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.
Servicer's
Assignee: As defined in Section 10.14(a).
-39-
<PAGE>
Servicer
Remittance Date: With respect to any Distribution Date, the
later
of (x) the date that is two Business Days after the 15th day of the
month in
which the related Distribution Date occurs and (y) the 18th day (or
if such day
is not a Business Day, the next preceding Business Day) of the
month in which
such Distribution Date occurs.
Servicing
Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the
Servicer of its
servicing obligations hereunder, including, but not limited to, the
cost of (1)
the preservation, inspection, restoration and protection of a
Mortgaged
Property, including without limitation advances in respect of real
estate taxes
and assessments, (2) any collection, enforcement or judicial
proceedings,
including without limitation foreclosures, collections and
liquidations, (3) the
conservation, management, sale and liquidation of any REO Property
(4) executing
and recording instruments of satisfaction, deeds of reconveyance,
substitutions
of trustees on deeds of trust or assignments of mortgage to the
extent not
otherwise recovered from the related Mortgagors or payable under
this Agreement,
(5) correcting errors of prior servicers; tax tracking; title
research; flood
certification and lender paid mortgage insurance, (6) obtaining or
correcting
any legal documentation required to be included in the Mortgage
Files and
reasonably necessary for the Servicer to perform its obligations
under this
Agreement and (7) compliance with the obligations under Sections
3.01 and 3.10.
Servicing
Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of (x) the Servicing Fee Rate and (y)
the Stated
Principal Balance of such Mortgage Loan as of the preceding
Distribution Date
or, in the event of any payment of interest that accompanies a
Principal
Prepayment in full made by the Mortgagor, interest at the Servicing
Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the
preceding
Distribution Date for the period covered by such payment of
interest.
Servicing
Fee Rate: 0.50% per annum.
Servicing
Officer: Any officer of the Servicer involved in, or
responsible
for, the administration and servicing of the Mortgage Loans whose
name and
facsimile signature appear on a list of servicing officers
furnished to the
Trustee by the Servicer on the Closing Date pursuant to this
Agreement, as such
lists may from time to time be amended.
Servicing
Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under this Agreement, all costs associated
with the
transfer of servicing from the predecessor Servicer, including,
without
limitation, any costs or expenses associated with the termination
of the
predecessor Servicer, the appointment of a successor servicer, the
complete
transfer of all servicing data and the completion, correction or
manipulation of
such servicing data as may be required by the Trustee or any
successor servicer
to correct any errors or insufficiencies in the servicing data or
otherwise to
enable the Trustee or successor servicer to service the Mortgage
Loans properly
and effectively.
SFAS 140:
Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments
of
Liabilities dated September 2000, published by the Financial
Accounting
Standards Board of the Financial Accounting Foundation.
Startup
Day: As defined in Section 2.07 hereof.
Stated
Principal Balance: With respect to any Mortgage Loan or related
REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal
Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x)
due with
respect to such Mortgage Loan during each Due Period ending prior
to such
Distribution Date and (y) that were received by the Servicer as of
the close of
business on the Determination Date related to such Distribution
Date or with
respect to which Advances were made on the Servicer Advance Date
prior
- 40 -
<PAGE>
to such Distribution Date and (B) all Principal Prepayments with
respect to such
Mortgage Loan received on or prior to the last day of the related
Prepayment
Period, and all Liquidation Proceeds to the extent applied by the
Servicer as
recoveries of principal in accordance with Section 3.12 with
respect to such
Mortgage Loan, that were received by the Servicer as of the close
of business on
the last day of the related Due Period. Notwithstanding the
foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be
zero.
Stepdown
Date: The later to occur of (1) the Distribution Date in
January
2009 or (2) the first Distribution Date on which (A) the Class A
Certificate
Principal Balance (reduced by the Principal Funds with respect to
such
Distribution Date) is less than or equal to (B) 67.90% of the
Stated Principal
Balances of the Mortgage Loans as of such Distribution Date.
Stepdown
Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the
following
table:
<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN
STEPDOWN REQUIRED LOSS PERCENTAGE
-----------------------------
--------------------------------
<S>
<C>
January 2009 - December 2009
2.60% with respect to January 2009,
plus an additional 1/12th of 0.90%
for each month thereafter
January 2010 - December 2010
3.50% with respect to January 2010,
plus an additional 1/12th of 0.50%
for each month thereafter
January 2011 - December 2011
4.00% with respect to January 2010,
plus an additional 1/12th of 0.25%
for each month thereafter
January 2012 and thereafter
4.25%
</TABLE>
Stepdown
Trigger Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A)
the
aggregate Stated Principal Balance of all Mortgage Loans which are
60 or more
days Delinquent measured on a rolling three month basis (including,
for the
purposes of this calculation, Mortgage Loans in foreclosure and REO
Properties)
and (B) the Stated Principal Balance of the Mortgage Loans as of
the last day of
the preceding calendar month, equals or exceeds the product of (i)
46.73% and
(ii) the Required Percentage or (2) the quotient (expressed as a
percentage) of
(A) the aggregate Realized Losses incurred from the Cut-off Date
through the
last day of the calendar month preceding such Distribution Date and
(B) the
aggregate principal balance of the Mortgage Loans as of the Cut-off
Date exceeds
the Required Loss Percentage.
Subordinate Certificates: The Class M and Class B-1
Certificates.
Subordinate Certificate Cap Contract: The confirmation and
agreement and
any related confirmation thereto, between the Trust Fund or Trustee
and the Cap
Contract Counterparty (in the form of Exhibit N-3 hereto).
Subordinate Certificate Cap Contract Notional Balance: With respect
to any
Distribution Date, the lesser of (x) the Subordinate Certificate
Cap Contract
Notional Balance set forth for such Distribution
- 41 -
<PAGE>
Date in the Subordinate Certificate One-Month LIBOR Cap Table
attached hereto as
Exhibit O-3 and (y) the outstanding Certificate Principal Balance
of the
Subordinate Certificates.
Subordinate Certificate Cap Contract Termination Date: The
Distribution
Date in June 2009.
Subordinate Certificate Upper Collar: With respect to each
Distribution
Date with respect to which payments are received on the Subordinate
Certificate
Cap Contract, a rate equal to the lesser of One-Month LIBOR and
[9.150]% per
annum.
Subsequent
Recovery: Any amount received on a Mortgage Loan (net of
amounts reimbursed to the Servicer related to Liquidated Mortgage
Loans)
subsequent to such Mortgage Loan being determined to be a
Liquidated Mortgage
Loan.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant
to Section 2.03(c).
Tax
Matters Person: The Person designated as "tax matters person" in
the
manner provided under Treasury regulation Section 1.860F-4(d) and
Treasury
regulation Section 301.6231(a)(7)-1.
Transfer:
Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Transfer
Agreement: Each of the Mortgage Loan Purchase and Interim
Servicing Agreement, dated as of June 24, 2005, between the Seller
and
Ameriquest and the Master Mortgage Loan Purchase and Servicing
Agreement dated
as of April 1, 2005, by and between the Seller and Option One,
Option One Owner
Trust 2001-1A, Option One Owner Trust 2001-1B, Option One Owner
Trust 2001-2,
Option One Owner Trust 2002-3, Option One Owner Trust 2003-4 and
Option One
Owner Trust 2003-5.
Transferor: Any originator of a Mortgage Loan.
Trust
Fund: The corpus of the trust (the "Merrill Lynch Mortgage
Investors
Trust, Series 2005-HE3") created hereunder consisting of (i) the
Mortgage Loans
and all interest and principal received on or with respect thereto
on and after
the Cut-off Date to the extent not applied in computing the Cut-off
Date
Principal Balance thereof, exclusive of interest not required to be
deposited in
the Collection Account; (ii) the Collection Account and the
Certificate Account
and all amounts deposited therein pursuant to the applicable
provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been
acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the
mortgagee's
rights under the Insurance Policies with respect to the Mortgage
Loans,
including, without limitation, the MI Policy; (v) the Cap Contracts
and Cap
Contract Account; and (vii) all proceeds of the conversion,
voluntary or
involuntary, of any of the foregoing into cash or other liquid
property.
Trustee:
Wells Fargo Bank, N.A., a national banking association, 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.
Uncertificated Class C Interest: An uncertificated interest with
an
initial principal amount equal to the initial Overcollateralization
Amount
having (i) the same rights to payments as the Class C Certificates,
other than
the rights to payments of amounts with respect to the Cap
Contracts, and (ii)
the rights to the payments treated as distributed to the Class C
Certificates
under Section 2.07(d), provided,
- 42 -
<PAGE>
however, that such interest shall have no obligation to make any
payments
treated as paid by the Class C Certificates pursuant to interest
rate cap
agreements under Section 2.07(d).
United
States Person: (i) A citizen or resident of the United States,
(ii)
a corporation, partnership or other entity treated as a corporation
or
partnership for federal income tax purposes organized in or under
the laws of
the United States or any state thereof or the District of Columbia
(unless, in
the case of a partnership, Treasury regulations provide otherwise),
(iii) an
estate the income of which is includible in gross income for United
States tax
purposes regardless of its source or (iv) 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 trust. Notwithstanding the preceding
sentence, to
the extent provided in Treasury regulations, certain trusts in
existence on
August 20, 1996, and treated as United States persons prior to such
date, that
elect to continue to be treated as United States persons will also
be United
States Persons.
Unpaid
Realized Loss Amount: The Class M-1 Unpaid Realized Loss
Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized
Loss Amount,
Class M-4 Unpaid Realized Loss Amount, Class M-5 Unpaid Realized
Loss Amount,
Class M-6 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized
Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
Upper Tier
REMIC: As described in the Preliminary Statement and Section
2.07.
USAP
Report: A report in compliance with the Uniform Single
Attestation
Program for Mortgage Bankers delivered in accordance with Section
3.18.
Weighted
Average Available Funds Cap: With respect to a Distribution
Date,
the per annum rate equal to the weighted average (weighted in
proportion to the
results of subtracting the current Certificate Principal Balance of
the Class
A-1 and Class R Certificates, in the case of Group One, or the
Class A-2
Certificates, in the case of Group Two, from the aggregate Stated
Principal
Balance of the Mortgage Loans in each Mortgage Group as of the
immediately
preceding Distribution Date (or, in the case of the first
Distribution Date, as
of the Cut-off Date)) of the Class A-1 Available Funds Cap and the
Class A-2
Available Funds Cap.
Weighted
Average Maximum Rate Cap: With respect to a Distribution Date,
the per annum rate equal to the weighted average (weighted in
proportion to the
results of subtracting from the aggregate Stated Principal Balance
of the
Mortgage Loans in each Mortgage Group as of the immediately
preceding
Distribution Date (or, in the case of the first Distribution Date,
as of the
Cut-off Date) the current Certificate Principal Balance of the
Class A-1 and
Class R Certificates, in the case of Group One, or the Class A-2
Certificates,
in the case of Group Two) of the Class A-1 Maximum Rate Cap and the
Class A-2
Maximum Rate Cap.
Voting
Rights: The portion of the voting rights of all the
Certificates
that is allocated to any of the Certificates for purposes of the
voting
provisions hereunder. Voting Rights allocated to each Class of
Certificates
shall be allocated as follows: (1) 98% to the Class A, Class M and
Class B
Certificates, with the allocation among such Certificates to be in
proportion to
the Class Certificate Principal Balance of each Class relative to
the Class
Certificate Principal Balance of all other Classes and (2) each
Class of the
Class C and Class P will be allocated 1% of the Voting Rights
Certificates.
Voting Rights will be allocated among the Certificates of each such
Class in
accordance with their respective Percentage Interests.
- 43 -
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof,
does hereby sell, transfer, assign, set over and convey to the
Trustee without
recourse all the right, title and interest of the Depositor in and
to the assets
of the Trust Fund. Such assignment includes all interest and
principal received
on or with respect to the Mortgage Loans on or after the Cut-off
Date (other
than Scheduled Payments due on the Mortgage Loans on or before the
Cut-off
Date).
The parties hereto agree and understand that it is not intended
that
any Mortgage Loan be included in the Trust that is, without
limitation, a
"High-Cost Home Loan" as defined by the Home Ownership and Equity
Protection Act
of 1994 or any other applicable anti-predatory lending laws,
including but not
limited to (i) a "High-Cost Home Loan" as defined in the New Jersey
Home
Ownership Act effective November 27, 2003; (ii) a "High-Cost Home
Loan" as
defined in the New Mexico Home Loan Protection Act effective
January 1, 2004;
(iii) a "High-Cost Home Loan" as defined in the Massachusetts
Predatory Home
Loan Practices Act effective November 7, 2004 or (iv) a "High-Cost
Home Loan" as
defined by the Indiana High Cost Home Loan Law effective January 1,
2005.
In connection with such assignment, the Depositor does hereby
deliver to, and deposit with, the Trustee or its Custodian, the
following
documents or instruments with respect to each Mortgage Loan:
(A) The Original Mortgage Note endorsed in blank or, "Pay to
the
order of
Wells Fargo Bank, N.A., as trustee, without recourse" together
with all
riders thereto. The Mortgage Note shall include all intervening
endorsements showing a complete chain of the title from the
originator to
[___________] or "Pay to the order of Wells Fargo Bank, N.A., as
trustee,
without
recourse."
(B) Except as provided below and for each Mortgage Loan that is
not
a MERS
Loan, the original recorded Mortgage together with all riders
thereto,
with evidence of recording thereon, or, if the original
Mortgage
has not
yet been returned from the recording office, a copy of the
original
Mortgage together with all riders thereto certified to be true
copy of
the original of the Mortgage that has been delivered for
recording
in the
appropriate recording office of the jurisdiction in which the
Mortgaged
Property is located and in the case of each MERS Loan, the
original
Mortgage together with all riders thereto, noting the presence
of
the MIN of
the Loan and either language indicating that the Mortgage Loan
is a MOM
Loan or if the Mortgage Loan was not a MOM Loan at origination,
the
original Mortgage and the assignment thereof to MERS, with evidence
of
recording
indicated thereon, or a copy of the Mortgage certified by the
public
recording office in which such Mortgage has been recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan,
the
original
Assignment of each Mortgage, endorsed either in blank or, to
"Wells
Fargo Bank, N.A., as trustee"
(D) The original policy of title insurance (or a preliminary
title
report,
commitment or binder if the original title insurance policy has
not been
received from the title insurance company).
- 44 -
<PAGE>
(E) Originals of any intervening assignments of the Mortgage,
with
evidence
of recording thereon or, if the original intervening assignment
has not
yet been returned from the recording office, a copy of such
assignment
certified to be a true copy of the original of the assignment
which has
been sent for recording in the appropriate jurisdiction in
which
the
Mortgaged Property is located.
(F) Originals of all assumption and modification agreements, if
any.
(G) If in connection with any Mortgage Loan, the Depositor
cannot
deliver
the Mortgage, Assignments of Mortgage or assumption,
consolidation
or
modification, as the case may be, with evidence of recording
thereon,
if
applicable, concurrently with the execution and delivery of
this
Agreement
solely because of a delay caused by the public recording office
where such
Mortgage, Assignments of Mortgage or assumption, consolidation
or
modification, as the case may be, has been delivered for
recordation,
the Depositor
shall deliver or cause to be delivered to the Trustee or its
Custodian,
if applicable, written notice stating that such Mortgage or
assumption, consolidation or modification, as the case may be, has
been
delivered
to the appropriate public recording office for recordation.
Thereafter, the Depositor shall deliver or cause to be delivered to
the
Trustee or
its Custodian, if applicable, such Mortgage, Assignments of
Mortgage
or assumption, consolidation or modification, as the case may
be,
with
evidence of recording indicated thereon, if applicable, upon
receipt
thereof
from the public recording office. To the extent any required
endorsement is not contained on a Mortgage Note or an Assignment
of
Mortgage,
the Depositor shall make or cause such endorsement to be made.
(H) With respect to any Mortgage Loan, none of the Depositor,
the
Servicer,
the Custodian or the Trustee shall be obligated to cause to be
recorded
the Assignment of Mortgage referred to in this Section 2.01. In
the event
an Assignment of Mortgage is not recorded, the Servicer shall
have no
liability for its failure to receive and act on notices related
to
such
Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the
contents
of the related Mortgage File is vested in the Trustee on behalf of
the
Certificateholders. Neither the Depositor nor the Servicer shall
take any action
inconsistent with such ownership and shall not claim any ownership
interest
therein. The Depositor and the Servicer shall respond to any third
party
inquiries with respect to ownership of the Mortgage Loans by
stating that such
ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage
documents relating to the Mortgage Loans not delivered to the
Trustee or its
Custodian are and shall be held in trust by the Servicer, for the
benefit of the
Trustee as the owner thereof, and the Servicer's possession of the
contents of
each Mortgage File so retained is for the sole purpose of servicing
the related
Mortgage Loan, and such retention and possession by the Servicer is
in a
custodial capacity only. The Depositor agrees to take no action
inconsistent
with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all
inquiring parties that the Mortgage Loans have been sold and to
claim no
ownership interest in the Mortgage Loans.
It is the intention of this Agreement that the conveyance of
the
Depositor's right, title and interest in and to the Trust Fund
pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a
conveyance
of Mortgage Loans from the Seller to the Depositor is characterized
as a pledge
and not a sale, then the Depositor shall be deemed to have
transferred to the
Trustee all of the Depositor's right, title and interest in, to and
under the
obligations of the Seller deemed to be secured by said pledge; and
it is the
intention of this Agreement that the Depositor shall also be deemed
to have
granted to the Trustee a first priority security interest in all of
the
Depositor's right, title, and interest in, to and under the
obligations of the
Seller to the Depositor deemed to be secured by said pledge and
that the Trustee
shall be deemed to be an independent custodian for purposes of
perfection of the
security interest granted to the
- 45 -
<PAGE>
Depositor. If the conveyance of the Mortgage Loans from the
Depositor to the
Trustee is characterized as a pledge, it is the intention of this
Agreement that
this Agreement shall constitute a security agreement under
applicable law, and
that the Depositor shall be deemed to have granted to the Trustee a
first
priority security interest in all of the Depositor's right, title
and interest
in, to and under the Mortgage Loans, all payments of principal of
or interest on
such Mortgage Loans, all other rights relating to and payments made
in respect
of the Trust Fund, and all proceeds of any thereof. If the trust
created by this
Agreement terminates prior to the satisfaction of the claims of any
Person in
any Certificates, the security interest created hereby shall
continue in full
force and effect and the Trustee shall be deemed to be the
collateral agent for
the benefit of such Person.
In addition to the conveyance made in the first paragraph of
this
Section 2.01, the Depositor does hereby convey, assign and set over
to the
Trustee for the benefit of the Certificateholders its rights and
interests under
the Sale Agreement, including the Depositor's right, title and
interest in the
representations and warranties contained in the Sale Agreement, the
rights in
the Transfer Agreements described therein, and the benefit of the
repurchase
obligations and the obligation of the Seller contained in the Sale
Agreement to
take, at the request of the Depositor or the Trustee, all action on
its part
which is reasonably necessary to ensure the enforceability of a
Mortgage Loan.
The Trustee hereby accepts such assignment, and shall be entitled
to exercise
all rights of the Depositor under the Sale Agreement as if, for
such purpose, it
were the Depositor. The foregoing sale, transfer, assignment,
set-over, deposit
and conveyance does not and is not intended to result in creation
or assumption
by the Trustee of any obligation of the Depositor, the Seller, or
any other
Person in connection with the Mortgage Loans or any other agreement
or
instrument relating thereto.
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered
contemporaneously herewith (the "Exception Report"), the Trustee
acknowledges
receipt of the Mortgage Note for each Mortgage Loan and delivery of
a Mortgage
File (but does not acknowledge receipt of all documents required to
be included
in such Mortgage File) with respect to each Mortgage Loan and
declares that it
or its Custodian on its behalf holds and will hold such documents
and any other
documents constituting a part of the Mortgage Files delivered to it
in trust for
the use and benefit of all present and future Certificateholders.
The Depositor
will cause the Seller to repurchase any Mortgage Loan to which a
material
exception was taken in the Exception Report unless such exception
is cured to
the satisfaction of the Trustee within 45 Business Days of the
Closing Date.
The Trustee acknowledges receipt of the Cap Contracts (the form
of
each of which is attached hereto), the Transfer Agreements, the
Bring Down
Letters and the Sale Agreement.
The Trustee agrees, for the benefit of Certificateholders, to
review
or cause to be reviewed by the Custodian, on its behalf (pursuant
to the
Custodial Agreement) each Mortgage File delivered to it within 60
days after the
Closing Date. The Trustee or the Custodian, as applicable, will
ascertain and
certify, within 70 days of the Closing Date, to the Depositor and
the Servicer
that all documents required by Section 2.01 have been executed and
received, and
that such documents relate to the Mortgage Loans identified in
Exhibit B-1 that
have been conveyed to it. If the Trustee or Custodian finds any
document or
documents constituting a part of a Mortgage File to be missing or
defective
(that is, mutilated, damaged, defaced or unexecuted) in any
material respect,
the Trustee or Custodian, as applicable, shall promptly (and in any
event within
no more than five Business Days) after such finding so notify the
other and the
Servicer, the Seller and the Depositor. In addition, the Trustee or
Custodian,
as applicable, shall also notify the other and the Servicer, the
Seller and the
Depositor, if the original Mortgage with evidence of recording
thereon with
respect to a Mortgage Loan is not received within 70 days of the
Closing Date;
if it has not been received because of a delay caused by the public
recording
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office where such Mortgage has been delivered for recordation, the
Depositor
shall deliver or cause to be delivered to the Trustee written
notice stating
that such Mortgage has been delivered to the appropriate public
recording office
for recordation and thereafter the Depositor shall deliver or cause
to be
delivered such Mortgage with evidence of recording thereon upon
receipt thereof
from the public recording office. The Trustee shall request that
the Seller
correct or cure such omission, defect or other irregularity, or
substitute a
Mortgage Loan pursuant to the provisions of Section 2.03, within 90
days from
the date the Seller was notified of such omission or defect and, if
the Seller
does not correct or cure such omission or defect within such
period, that the
Seller purchase such Mortgage Loan from the Trust Fund within 90
days from the
date the Trustee or the Custodian, as applicable, notified the
Seller of such
omission, defect or other irregularity at the Purchase Price of
such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant
to this
Section 2.02 shall be paid to the Servicer and deposited by the
Servicer in the
Certificate Account or Collection Account, as appropriate, promptly
upon
receipt, and, upon receipt by the Trustee of written notification
of such
deposit signed by a Servicing Officer, the Trustee or Custodian,
upon receipt of
a Request for Release, shall promptly release to the Seller the
related Mortgage
File and the Trustee shall execute and deliver such instruments of
transfer or
assignment, without recourse, as shall be requested by the Seller
and necessary
to vest in the Seller or its designee, as the case may be, any
Mortgage Loan
released pursuant hereto, and the Trustee shall have no further
responsibility
with regard to such Mortgage Loan. It is understood and agreed that
the
obligation of the Seller to purchase, cure or substitute any
Mortgage Loan as to
which a material defect in or omission of a constituent document
exists shall
constitute the sole remedy respecting such defect or omission
available to the
Trustee on behalf of Certificateholders. The preceding sentence
shall not,
however, limit any remedies available to the Certificateholders,
the Depositor
or the Trustee pursuant to the Sale Agreement, the Transfer
Agreements and the
Bring-Down Letters. The Trustee shall be under no duty or
obligation to inspect,
review and examine such documents, instruments, certificates or
other papers to
determine that they are genuine, enforceable, recordable or
appropriate to the
represented purpose, or that they have actually been recorded, or
that they are
other than what they purport to be on their face. The Servicer and
the Trustee
shall keep confidential the name of each Mortgagor except as
required by this
Agreement and the Servicer and Trustee shall not solicit any such
Mortgagor for
the purpose of refinancing the related Mortgage Loan;
notwithstanding anything
herein to the contrary, the foregoing shall not be construed to
prohibit (i)
disclosure of any and all information that is or becomes publicly
known, or
information obtained by the Trustee from sources other than the
other parties
hereto, (ii) disclosure of any and all information (A) if required
to do so by
any applicable law, rule or regulation, (B) to any government
agency or
regulatory body having or claiming authority to regulate or oversee
any aspects
of the Trustee's or Custodian's business or that of its affiliates,
(C) pursuant
to any subpoena, civil investigation demand or similar demand or
request of any
court, regulatory authority, arbitrator or arbitration to which
Trustee or the
Custodian, any affiliates of either or an officer, director,
employer or
shareholder thereof is a party or (D) to any affiliate, independent
or internal
auditor, agent, employee or attorney of the Trustee or the
Custodian having a
need to know the same, provided that the Trustee or the Custodian,
as
appropriate, advises such recipient of the confidential nature of
the
information being disclosed, or (iii) any other disclosure
authorized by the
Depositor.
Within 70 days of the Closing Date, the Trustee or the
Custodian)
shall deliver to the Depositor and the Servicer the Final
Certification,
substantially in the form of Exhibit D attached hereto, evidencing
the
completeness of the Mortgage Files, with any exceptions noted
thereto.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a) The Depositor hereby represents and warrants to the Servicer
and
the Trustee as follows, as of the date hereof:
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(i) The
Depositor is duly organized and is validly existing as a
corporation 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 and the Sale
Agreement.
(ii) The
Depositor has the full corporate power and authority to
execute,
deliver and perform, and to enter into and consummate the
transactions
contemplated by, this Agreement and the Sale Agreement and has duly
authorized,
by all necessary corporate action on its part, the execution,
delivery and
performance of this Agreement and the Sale Agreement; and this
Agreement and the
Sale 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 and the Sale Agreement
by the Depositor, the consummation of the transactions contemplated
by this
Agreement and the Sale 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 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
and the Sale
Agreement or the ability of the Depositor to perform its
obligations under this
Agreement and the Sale 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 and the Sale 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 with respect to each Mortgage Loan as
of the Closing
Date, and following the transfer of the Mortgage Loans to it by the
related
Seller, the Depositor had good title to the Mortgage Loans and the
Mortgage
Notes were subject to no offsets, claims, liens, mortgage, pledge,
charge,
security interest, defenses or counterclaims.
(b) The representations and warranties of each Transferor with
respect to the related Mortgage Loans in the applicable Transfer
Agreement,
which have been assigned to the Trustee hereunder, were made as of
the date
specified in the applicable Transfer Agreement and brought forward
to the
Closing Date pursuant to the related Bring Down Letter. The
representations and
warranties of
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each Transferor with respect to the Mortgage Loans contained in the
Bring Down
Letter were made as of the Closing Date. The representations and
warranties of
the Seller with respect to the Mortgage Loans contained in the Sale
Agreement
were made as of the Closing Date. To the extent that any fact,
condition or
event with respect to a Mortgage Loan constitutes a breach of both
(i) a
representation or warranty of the applicable Transferor under the
applicable
Transfer Agreement or Bring Down Letter and (ii) a representation
or warranty of
the Seller under the Sale Agreement, the obligations of the Seller
under the
Sale Agreement shall be enforced against the Transferor or the
Seller, as
applicable, as set forth in such Sale Agreement. The Trustee
acknowledges that
the Seller shall have no obligation or liability with respect to
any breach of a
representation or warranty made by it with respect to any related
Mortgage
Loans, except as otherwise set forth in the Sale Agreement, if the
fact,
condition or event constituting such breach also constitutes a
breach of a
representation or warranty made by the related Transferor in the
related
Transfer Agreement or Bring Down Letter, without regard to whether
the related
Transferor fulfills its contractual obligations in respect of
such
representation or warranty. The Trustee also acknowledges that the
Seller shall
have no obligation or liability with respect to any breach of a
representation
or warranty made solely by the Transferors with respect to the
Mortgage Loans,
without regard to whether the related Transferor fulfills its
contractual
obligations in respect of such representation or warranty. The
Trustee further
acknowledges that the Depositor shall have no obligation or
liability with
respect to any breach of any representation or warranty with
respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(v)) under
any
circumstances.
In addition to the representations and warranties of the
Transferors
in the Transfer Agreements that were brought forward to the Closing
Date
pursuant to the related Bring Down Letter, with respect to each
Mortgage Loan,
each Transferor made certain additional covenants regarding such
Mortgage Loan,
as set forth in the related Transfer Agreement. With respect to any
breach of
such additional covenants that materially and adversely affects the
interests of
the Certificateholders in such Mortgage Loan, the Seller shall (1)
use
reasonable efforts to enforce such covenant against the related
Transferor and
(2) if the related Seller successfully enforces any obligation of
the related
Transferor to repurchase such Mortgage Loan, the Seller shall
repurchase such
Mortgage Loan in accordance with this Section 2.03. If the Seller
does not
successfully enforce the obligation, if any, of the Transferor to
repurchase a
Mortgage Loan with respect to any breach of any such additional
covenants, the
Seller shall have no obligation or right to repurchase or cure such
Mortgage
Loan.
(c) Upon discovery by any of the Depositor, the Servicer, the
Trustee or the Custodian of a breach of any of such representations
and
warranties that adversely and materially affects the value of the
related
Mortgage Loan, Prepayment Charges or the interests of the
Certificateholders,
the party discovering such breach shall give prompt written notice
to the other
parties. Within 90 days of the discovery of such breach of any
representation or
warranty, the applicable Transferor or the Seller, as applicable,
shall either
(a) cure such breach in all material respects, (b) repurchase such
Mortgage Loan
or any property acquired in respect thereof from the Trustee at the
Purchase
Price or (c) within the two year period following the Closing Date,
substitute a
Replacement Mortgage Loan for the affected Mortgage Loan. In the
event of
discovery of a breach of any representation and warranty of any
Transferor or
the Seller, the Trustee's rights shall be enforced under the
applicable Transfer
Agreement and the Sale Agreement for the benefit of
Certificateholders. If a
breach of the representations and warranties set forth in the
Transfer Agreement
hereof exists solely due to the unenforceability of a Prepayment
Charge, the
Trustee or the other party having notice thereof shall notify the
Servicer
thereof and not seek to enforce the repurchase remedy provided for
herein unless
such Mortgage Loan is not current. In the event of a breach of
the
representations and warranties with respect to the Mortgage Loans
set forth in a
Transfer Agreement, the Trustee shall enforce the right of the
Trust Fund to be
indemnified for such breach of representation and warranty. In the
event that
such breach relates solely to the unenforceability of a Prepayment
Charge,
amounts received in respect of such indemnity up to the amount of
such
Prepayment Charge shall be distributed pursuant to Section 4.04(b).
As provided
in the Sale Agreement, if the Seller
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substitutes for a Mortgage Loan for which there is a breach of
any
representations and warranties in the related Transfer Agreement
which adversely
and materially affects the value of such Mortgage Loan and such
substitute
mortgage loan is not a Replacement Mortgage Loan, under the terms
of the Sale
Agreement, the Seller will, in exchange for such substitute
Mortgage Loan, (i)
provide the applicable Purchase Price for the affected Mortgage
Loan or (ii)
within two years of the Closing Date, substitute such affected
Mortgage Loan
with a Replacement Mortgage Loan. Any such substitution shall not
be effected
prior to the additional delivery to the Trustee of a Request for
Release
substantially in the form of Exhibit I and shall not be effected
unless it is
within two years of the Startup Day. The Seller shall indemnify and
hold
harmless the Trust Fund, the Trustee, the Custodian, the Depositor,
the Servicer
and each Certificateholder against any and all taxes, claims,
losses, penalties,
fines, forfeitures, reasonable legal fees and related costs,
judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee,
the Custodian,
the Depositor, the Servicer and any Certificateholder may sustain
in connection
with any actions of such Seller relating to a repurchase of a
Mortgage Loan
other than in compliance with the terms of this Section 2.03 and
the Sale
Agreement, to the extent that any such action causes (i) any
federal or state
tax to be imposed on the Trust Fund or any REMIC provided for
herein, including
without limitation, any federal tax imposed on "prohibited
transactions" under
Section 860F(a)(1) of the Code or on "contributions after the
startup day" under
Section 860G(d)(1) of the Code, or (ii) any REMIC created hereunder
to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
In
furtherance of the foregoing, if the Transferor or a Seller, as
applicable, is
not a member of MERS and repurchases a Mortgage Loan which is
registered on the
MERS System, the Transferor or the Seller, as applicable, at its
own expense and
without any right of reimbursement, shall cause MERS to execute and
deliver an
assignment of the Mortgage in recordable form to transfer the
Mortgage from MERS
to the Transferor or the Seller, as applicable, and shall cause
such Mortgage to
be removed from registration on the MERS System in accordance with
MERS' rules
and regulations.
With respect to any Mortgage Loan repurchased by a Seller
pursuant
to the Sale Agreement or by any Transferor pursuant to the
applicable Transfer
Agreement, the principal portion of the funds received by the
Servicer in
respect of such repurchase of a Mortgage Loan will be considered a
Principal
Prepayment and shall be deposited in the Certificate Account
pursuant to Section
3.05. Upon receipt by the Trustee of notice from the Servicer of
receipt by the
Servicer of the full amount of the Purchase Price for a Deleted
Mortgage Loan,
and upon receipt by the Trustee or the Custodian on behalf of the
Trustee of the
Mortgage File for a Replacement Mortgage Loan substituted for a
Deleted Mortgage
Loan and a Request for Release, the Trustee shall release and
reassign to the
Seller or the applicable Transferor, as applicable, the related
Mortgage File
for the Deleted Mortgage Loan and shall execute and deliver such
instruments of
transfer or assignment, in each case without recourse,
representation or
warranty, as shall be necessary to vest in such party or its
designee or
assignee title to any Deleted Mortgage Loan released pursuant
hereto, free and
clear of all security interests, liens and other encumbrances
created by this
Agreement, which instruments shall be prepared by the Depositor,
the Seller or
the related Transferor, and the Trustee and the Custodian shall
have no further
responsibility with respect to the Mortgage File relating to such
Deleted
Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered
to
the Trustee pursuant to the terms of this Article II in exchange
for a Deleted
Mortgage Loan: (i) the applicable Transferor or the related Seller,
as
applicable, must deliver to the Trustee (or its custodian) the
Mortgage File for
the Replacement Mortgage Loan containing the documents set forth in
Section 2.01
along with a written certification certifying as to the Mortgage
Loan satisfying
all requirements under the definition of Replacement Mortgage Loan
and the
delivery of such Mortgage File and containing the granting language
set forth in
Section 2.01; and (ii) the Depositor will be deemed to have made,
with respect
to such Replacement Mortgage Loan, each of the representations and
warranties
made by it with respect to the related Deleted Mortgage Loan. The
Trustee, or
the Custodian on its behalf, shall review the Mortgage
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File with respect to each Replacement Mortgage Loan and certify to
the Depositor
that all documents required by Section 2.01(A)-(B), (C) (if
applicable), and
(D)-(E) have been executed and received.
For any month in which the Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans,
the Seller
will determine the amount (if any) by which the aggregate principal
balance of
all such Replacement Mortgage Loans as of the date of substitution
and the
aggregate Prepayment Charges with respect to such Replacement
Mortgage Loans is
less than the aggregate Stated Principal Balance (after application
of the
principal portion of the Scheduled Payment due in the month of
substitution) and
aggregate Prepayment Charges of all such Deleted Mortgage Loans. An
amount equal
to the aggregate of the deficiencies described in the preceding
sentence (such
amount, the "Substitution Adjustment Amount") plus an amount equal
to any
unreimbursed costs, penalties and/or damages incurred by the Trust
Fund in
connection with any violation relating to such Deleted Mortgage
Loan of any
predatory or abusive lending law shall be remitted by the Seller to
the Trustee
for deposit into the Certificate Account by the Seller 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.
Notwithstanding any other provision of this Agreement, the right
to
substitute Mortgage Loans pursuant to this Article II shall be
subject to the
additional limitations that no substitution of a Replacement
Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee shall have
received an
Opinion of Counsel (at the expense of the party seeking to make
the
substitution) that, under current law, such substitution will not
(A) affect
adversely the status of any REMIC established hereunder as a REMIC,
or of the
related "regular interests" as "regular interests" in any such
REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or
prohibited
contribution pursuant to the REMIC Provisions.
The Trustee shall amend the Mortgage Loan Schedule to reflect
the
removal of such Deleted Mortgage Loan from the terms of this
Agreement and the
substitution of the Replacement Mortgage Loan or Replacement
Mortgage Loans.
Upon such substitution by the Seller, such Replacement Mortgage
Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage
Pool and shall
be subject in all respects to the terms of this Agreement and the
Sale
Agreement, including all applicable representations and warranties
thereof
included in the Sale Agreement as of the date of substitution.
(d) It is understood and agreed that the representations,
warranties
and indemnification (i) set forth in this Section 2.03, (ii) of the
Seller and
the Depositor set forth in the Sale Agreement and assigned to the
Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the
Seller to the
Depositor pursuant to the Sale Agreement and assigned to the
Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage
Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and
shall continue
throughout the term of this Agreement.
(e) The Depositor shall deliver a copy of the Mortgage Loan
Schedule
to the Servicer on the Closing Date.
(f) The Depositor shall notify the Servicer and the Trustee when
any
NIM Notes are issued and when such NIM Notes are no longer
outstanding.
SECTION 2.04. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Depositor
and the Trustee as follows, as of the date hereof:
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<PAGE>
(i) The Servicer is duly organized and is validly existing as
a corporation in good standing under the laws of the State of
Nevada and is duly
authorized and qualified to transact any and all business
contemplated by this
Agreement to be conducted by the Servicer 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) The Servicer has the 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 the part of the
Servicer 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
Servicer, enforceable against the Servicer 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 hereunder may
be brought.
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans 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 Servicer and will not (A) result in a
material breach
of any term or provision of the charter or by-laws of the Servicer
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 Servicer 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 Servicer of any court, regulatory
body,
administrative agency or governmental body having jurisdiction over
the
Servicer; and the Servicer 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 Servicer's ability to perform
or meet any of
its obligations under this Agreement.
(iv) The Servicer is an approved servicer of mortgage loans
for Fannie Mae and is an approved servicer of mortgage loans for
Freddie Mac.
(v) Except as previously disclosed to the Depositor in the
Prospectus Supplement, no litigation is pending or, to the best of
the
Servicer's knowledge, threatened, against the Servicer that would
materially and
adversely affect the execution, delivery or enforceability of this
Agreement or
the ability of the Servicer to service 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 Servicer of, or compliance by the Servicer with,
this
Agreement or the consummation of the transactions contemplated
hereby, or if any
such consent, approval, authorization or order is required, the
Servicer has
obtained the same.
(vii) The Servicer has fully furnished and will fully furnish
(for the period it serviced the Mortgage Loans), in accordance with
the Fair
Credit Reporting Act and its implementing
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regulations, accurate and complete information (e.g., favorable and
unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union
Credit
Information Company on a monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans
which are not "Qualified Mortgages".
Upon discovery by the Depositor, the Servicer or the Trustee
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. In connection therewith, the
Depositor
shall, at the Depositor's option, 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, upon the written direction of the Depositor,
shall reconvey
to the Depositor the Mortgage Loan to be released pursuant hereto
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. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of
the
Trust Fund and, concurrently with such transfer and assignment, the
Trustee has
caused to be authenticated and delivered to or upon the order of
the Depositor,
in exchange for the Mortgage Loans, Certificates duly authenticated
by the
Trustee in authorized denominations evidencing ownership of the
entire 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 its duties set forth in this Agreement in accordance
with the
provisions hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee
to
make an appropriate election to treat each of the Upper Tier REMIC
and the Lower
Tier REMIC as a REMIC. The Trustee shall sign the returns providing
for such
elections and such other tax or information returns which are
required to be
signed by the Trustee under applicable law. This Agreement shall be
construed so
as to carry out the intention of the parties that each of the Upper
Tier REMIC
and the Lower Tier REMIC be treated as a REMIC at all times prior
to the date on
which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and
"latest possible maturity date" for federal income tax purposes of
all interests
created hereby. The "Startup Day" for purposes of the REMIC
Provisions shall be
the Closing Date. Each REMIC's fiscal year shall be the calendar
year.
The Lower Tier REMIC shall consist of all of the assets of the
Trust
Fund, other than (i) amounts distributable to the Class P
Certificates pursuant
to Section 4.04(b)(i) hereof, (ii) the interests issued by the
Lower Tier REMIC,
(iii) the grantor trusts described in this Section 2.07 hereof and
(iv) each Cap
Contract and the Cap Contract Account. The Lower Tier REMIC shall
issue the
Lower Tier REMIC Regular Interests which shall be designated as
regular
interests of such REMIC and shall issue the Class LTR Interest that
shall be
designated as the sole class of residual interest in the Lower Tier
REMIC. Each
of the Lower Tier REMIC Regular Interests shall have the
characteristics set
forth in its definition.
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The assets of the Upper Tier REMIC shall be the Lower Tier
REMIC
Regular Interests. The REMIC Regular Interests shall be designated
as the
regular interests in the Upper Tier REMIC and the Residual Interest
shall be
designated as the sole class of residual interest in the Upper Tier
REMIC. For
federal income tax purposes, (i) the pass-through rate on the REMIC
Regular
Interests represented by the Class A-1 Certificates and on the sole
class of
residual interest in the Upper Tier REMIC shall be subject to a cap
equal to the
Class A-1 Available Funds Cap; (ii) the pass-through rate on the
REMIC Regular
Interests represented by the Class A-2 Certificates shall be
subject to a cap
equal to the Class A-2 Available Funds Cap; and (iii) the
pass-through rate on
the REMIC Regular Interests represented by the Subordinate
Certificates shall be
subject to a cap equal to the Weighted Average Available Funds
Cap.
The beneficial ownership of the Class LTR Interest and the
Residual
Interest shall be represented by the Class R Certificate. The Class
LTR Interest
shall not have a principal balance or bear interest.
(c) The "tax matters person" with respect to the Lower Tier
REMIC
and the Upper Tier REMIC for purposes of the REMIC Provisions shall
be the
beneficial owner of the Class R Certificate; provided, however,
that the Holder
of the Class R Certificate, by its acceptance thereof, irrevocably
appoints the
Trustee as its agent and attorney-in-fact to act as "tax matters
person" with
respect to each such REMIC for purposes of the REMIC Provisions. If
there is
more than one beneficial owner of the Class R Certificate, the "tax
matters
person" shall be the Person with the greatest percentage interest
in the Class R
Certificate and, if there is more than one such Person, shall be
determined
under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section
301.6231(a)(7)-1.
(d) It is intended that the rights of each Class of the Class
A,
Class M and Class B-1 Certificates to receive payments in respect
of Excess
Interest shall be treated as a right in interest rate cap contracts
written by
the Class C Certificateholders in favor of the holders of each
Class of the
Class A, Class M and Class B-1 Certificates and such shall be
accounted for as
property held separate and apart from the regular interests in the
Upper Tier
REMIC held by the holders of the Class A (other than the Class R
Certificate),
Class M Certificates, Class B-1 Certificates and the residual
interest in the
Upper Tier REMIC held by the holder of the Class R Certificate. For
information
reporting requirements, the rights of the Class A, Class M and
Class B-1
Certificates to receive payments in respect of Excess Interest
shall be assumed
to have zero or a de minimis value. This provision is intended to
satisfy the
requirements of Treasury Regulations Section 1.860G-2(i) for the
treatment of
property rights coupled with REMIC interests to be separately
respected and
shall be interpreted consistently with such regulation. On each
Distribution
Date, to the extent that any of the Class A, Class M and Class B-1
Certificates
receive payments in respect of Excess Interest, such amounts, to
the extent not
derived from payments on the Cap Contracts, will be treated as
distributed by
the Upper Tier REMIC to the Class C Certificates pro rata in
payment of the
amounts specified in Section 4.04(g) and then paid to the relevant
Class of
Certificates pursuant to the related interest rate cap
agreement.
(e) The parties intend that the portion of the Trust Fund
consisting
of the Uncertificated Class C Interest, the Cap Contracts, the Cap
Contract
Account, and the obligation of the holders of the Class C
Certificates to pay
amounts in respect of Excess Interest to the holders of the Class
A, Class M and
Class B-1 Certificates shall be treated as a "grantor trust" under
the Code, for
the benefit of the holders of the Class C Certificates, and the
provisions
hereof shall be interpreted consistently with this intention. In
furtherance of
such intention, the Trustee shall (i) furnish or cause to be
furnished to the
holders of the Class C Certificates information regarding their
allocable share,
if any, of the income with respect to such grantor trust, (ii) file
or cause to
be filed with the Internal Revenue Service Form 1041 (together with
any
necessary attachments) and such other forms as may be applicable
and (iii)
comply with such information reporting obligations with respect to
payments from
such grantor trust to the holders of Class A, Class M, Class B-1
and Class C
Certificates as may be applicable under the Code.
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<PAGE>
(f) The parties intend that the portion of the Trust Fund
consisting
of the right to receive amounts distributable to the Class P
Certificates
pursuant to Section 4.04(b)(i) hereof shall be treated as a
"grantor trust"
under the Code, for the benefit of the holders of the Class P
Certificates, and
the provisions hereof shall be interpreted consistently with this
intention. In
furtherance of such intention, the Trustee shall (i) furnish or
cause to be
furnished to the holders of the Class P Certificates information
regarding their
allocable share of the income with respect to such grantor trust
and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041
(together with
any necessary attachments) and such other forms as may be
applicable.
(g) [RESERVED]
(h) All payments of principal and interest at the Net Mortgage
Rate
on each of the Mortgage Loans (other than amounts distributable to
the Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received from
the Mortgage
Loans shall be paid to the Lower Tier REMIC Regular Interests until
the
principal balance of all such interests have been reduced to zero
and any losses
allocated to such interests have been reimbursed. Any excess
amounts shall be
distributed to the Class LTR Interest. On each Distribution Date,
payments and
losses shall be allocated among the Lower Tier REMIC Regular
Interests so that
(i) each of the Lower Tier REMIC I Marker Interests shall have a
principal
balance equal to 25% of the principal balance of the Corresponding
Certificates,
(ii) the Class LTIX Interest has a principal balance equal to the
excess of (x)
50% of the remaining principal balance of the Mortgage Loans over
(y) the
aggregate principal balance of the Lower Tier REMIC I Marker
Interests (if
necessary to reflect an increase in overcollateralization, accrued
and unpaid
interest on the Class LTIX interest may be added to its principal
amount to
achieve this result) and (iii) the aggregate principal amount of
the Class
LTII1A Interest, Class LTII1B Interest, Class LTII2A Interest,
Class LTII2B
Interest and the Class LTIIX Interest shall equal 50% of the
remaining principal
balance of the Mortgage Loans. Distributions and losses allocated
to the Lower
Tier REMIC Regular Interests described in clause (iii) of the
preceding sentence
will be allocated among such Lower Tier REMIC Regular Interests in
the following
manner: (x) such distributions shall be deemed made to such Lower
Tier REMIC
Regular Interests first, so as to keep the principal balance of the
each such
Lower Tier REMIC Regular Interest with "B" at the end of its
designation equal
to 0.05% of the aggregate scheduled principal balance of the
Mortgage Loans in
the related Mortgage Group and second, to such Lower Tier REMIC
Regular
Interests with "A" at the end of its designation so that the
uncertificated
principal balance of each such Lower Tier REMIC Regular Interest is
equal to
0.05% of the excess of (I) the aggregate scheduled principal
balance of the
Mortgage Loans in the related Mortgage Group over (II) the
aggregate principal
balance of Certificate Group One, in the case of the Class LTII1A
Interest, or
Certificate Group Two, in the case of the Class LTII2A Interest
(except that if
0.05% of any such excess is greater than the principal amount of
the related
Lower Tier REMIC II Marker Interest with "A" at the end of its
designation, the
least amount of principal shall be distributed to each Lower Tier
REMIC II
Marker Interest with "A" at the end of its designation such that
the Lower Tier
REMIC Subordinated Balance Ratio is maintained) and finally, any
remaining
distributions of principal to the Class LTIIX Interest and (y) such
losses shall
be allocated among the Lower Tier REMIC Regular Interests described
in clause
(iii) of the preceding sentence first, so as to keep the principal
balance of
the each such Lower Tier REMIC Regular Interest with "B" at the end
of its
designation equal to 0.05% of the aggregate scheduled principal
balance of the
Mortgage Loans in the related Mortgage Group; second, to such Lower
Tier REMIC
Regular Interests with "A" at the end of its designation so that
the
uncertificated principal balance of each such Lower Tier REMIC
Regular Interest
is equal to 0.05% of the excess of (I) the aggregate scheduled
principal balance
of the Mortgage Loans in the related Mortgage Group over (II) the
aggregate
principal balance of Certificate Group One, in the case of the
Class LTII1A
Interest, or Certificate Group Two, in the case of the Class LTII2A
Interest
(except that if 0.05% of any such excess is greater than the
principal amount of
the related Lower Tier REMIC II Marker Interest with "A" at the end
of its
designation, the least amount of losses shall be allocated to each
Lower REMIC
II Marker Interest with "A" at the end of its designation such that
the
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<PAGE>
Lower Tier REMIC Subordinated Balance Ratio is maintained) and
finally, any
remaining losses to the Class LTIIX Interest. Notwithstanding the
preceding two
sentences, however, losses not allocated to any Class of
Certificates will not
be allocated to any Lower Tier REMIC Regular Interests. All
computations with
respect to the Lower Tier REMIC Regular Interests shall be taken
out to ten
decimal places.
Any available funds remaining in the Lower Tier REMIC on a
Distribution Date after distributions to the Lower Tier REMIC
Regular Interests
shall be distributed to the Class R Certificates in respect of the
Class LTR
Interest.
If on any Distribution Date the Certificate Principal Balance of
any
Class of Certificates is increased pursuant to the last sentence of
the
definition of "Certificate Principal Balance", then there shall be
an equivalent
increase in the principal amounts of the Lower Tier REMIC Regular
Interests,
with such increase allocated (before the making of distributions
and the
allocation of losses on the Lower Tier REMIC Regular Interests on
such
Distribution Date) among the Lower Tier REMIC Regular Interests so
that, to the
greatest extent possible, (i) each of the Lower Tier REMIC I Marker
Interests
has a principal balance equal to 25% of the principal balance of
the
Corresponding Certificates, (ii) the Class LTIX Interest has a
principal balance
equal to the excess of (x) 50% of the remaining principal balance
of the
Mortgage Loans over (y) the aggregate principal balance of the
Lower Tier REMIC
I Marker Interests and (iii) the aggregate principal amount of the
Lower Tier
REMIC II Marker Interests and the Class LTIIX Interest shall equal
50% of the
remaining principal balance of the Mortgage Loans. Allocations in
connection
with clause (iii) shall be made so that, to the greatest extent
possible, (a)
the principal balance of each Lower Tier REMIC II Marker Interest
with "B" at
the end of its designation equals 0.05% of the aggregate scheduled
principal
balance of the Mortgage Loans in related Mortgage Group, (b) the
principal
balance of each Lower Tier REMIC II Marker Interest with "A" at the
end of its
designation equals 0.05% of the excess of (x) the aggregate
scheduled principal
balance of the Mortgage Loans in related Mortgage Group over (y)
the aggregate
principal balance of Certificate Group One in the case of the Class
LTII1A
Interest, or Certificate Group Two in the case of the Class LTII2A
Interest and
(c) any remaining allocations are made to the Class LTIIX
Interest.
For purposes of this Section 2.07, (i) the Class LTII1A Interest
and
Class LTII1B Interest shall be related to Group One, and (ii) the
Class LTII2A
Interest and Class LTII2B Interest shall be related to Group
Two.
(i) In the event that any REMIC provided for herein fails to
qualify
as a REMIC, loses its status as a REMIC or incurs federal, state or
local taxes
as a result of a prohibited transaction or prohibited contribution
under the
REMIC Provisions due to the negligent performance by the Servicer
of its duties
and obligations set forth herein, the Servicer shall indemnify the
Trustee and
the Trust Fund against any and all Losses resulting from such
negligence;
provided, however, that the Servicer shall not be liable for any
such Losses
attributable to the action or inaction of the Trustee, the
Depositor or the
Holder of a Class R Certificate, as applicable, nor for any such
Losses
resulting from misinformation provided by the Holder of such Class
R Certificate
on which the Servicer has relied. The foregoing shall not be deemed
to limit or
restrict the rights and remedies of the Holder of such Class R
Certificate now
or hereafter existing at law or in equity. Notwithstanding the
foregoing,
however, in no event shall the Servicer have any liability (1) for
any action or
omission that is taken in accordance with and in compliance with
the express
terms of, or which is expressly permitted by the terms of, this
Agreement, (2)
for any Losses other than those arising out of a negligent
performance by the
Servicer of its duties and obligations set forth herein, and (3)
for any special
or consequential damages to Certificateholders (in addition to
payment of
principal and interest on the Certificates).
(j) In the event that any REMIC provided for herein fails to
qualify
as a REMIC, loses its status as a REMIC, or incurs federal, state
or local taxes
as a result of a prohibited transaction or
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<PAGE>
prohibited contribution under the REMIC Provisions due to the
negligent
performance by the Trustee of its duties and obligations set forth
herein, the
Trustee shall indemnify the Trust Fund against any and all Losses
resulting from
such negligence; provided, however, that the Trustee shall not be
liable for any
such Losses attributable to the action or inaction of the Servicer,
the
Depositor or the Holder of a Class R Certificate, as applicable,
nor for any
such Losses resulting from misinformation provided by the Holder of
such Class R
Certificate on which the Trustee has relied. The foregoing shall
not be deemed
to limit or restrict the rights and remedies of the Holder of such
Class R
Certificate now or hereafter existing at law or in equity.
Notwithstanding the
foregoing, however, in no event shall the Trustee have any
liability (1) for any
action or omission that is taken in accordance with and in
compliance with the
express terms of, or which is expressly permitted by the terms of,
this
Agreement, (2) for any Losses other than those arising out of a
negligent
performance by the Trustee of its duties and obligations set forth
herein, and
(3) for any special or consequential damages to Certificateholders
(in addition
to payment of principal and interest on the Certificates).
SECTION 2.08. [RESERVED]
SECTION 2.09. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to
this
Agreement as follows:
(a) the Servicer shall comply in the performance of its
obligations
under this Agreement with all reasonable rules and requirements of
the insurer
under each Required Insurance Policy;
(b) no written information, certificate of an officer,
statement
furnished in writing or written report delivered to the Depositor
or the
Trustee, any affiliate of the Depositor or the Trustee and prepared
by the
Servicer pursuant to this Agreement will be inaccurate in any
material respect,
provided, however, that the Servicer shall not be responsible for
inaccurate
information provided to it by third parties.
SECTION 2.10. [RESERVED]
SECTION
2.11. Permitted Activities of the Trust.
The Trust is created for the object and purpose of engaging in
the
Permitted Activities. In furtherance of the foregoing, the Trustee
is hereby
authorized and directed to execute and deliver on behalf of the
Trust, and to
perform the duties and obligations of the Trustee under, the Cap
Contracts and
any other agreement or instrument related thereto, in each case in
such form as
the Depositor shall direct or shall approve, the execution and
delivery of any
such agreement by the Depositor to be conclusive evidence of its
approval
thereof
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<PAGE>
SECTION 2.12. Qualifying Special Purpose Entity.
For purposes of SFAS 140, the parties hereto intend that the
Trust
Fund shall be treated as a "qualifying special purpose entity" as
such term is
used in SFAS 140 and any successor rule thereto and its power and
authority as
stated in Section 2.11 of this Agreement shall be limited in
accordance with
paragraph 35 or SFAS 140.
SECTION 2.13 Depositor Notification of NIM Notes
The Depositor shall notify the Servicer in writing when NIM
Notes
are issued and when all previously issued NIM Notes are no longer
outstanding.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall
service and administer the Mortgage Loans in accordance with
Accepted Servicing
Practices. In connection with such servicing and administration,
the Servicer
shall have full power and authority, acting alone and/or through
subservicers as
provided in Section 3.02 hereof, 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
Mortgaged
Property and assumptions of the Mortgage Notes and related
Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any
Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section
3.12(a), to
effectuate foreclosure or other conversion of the ownership of the
Mortgaged
Property securing any Mortgage Loan; provided that, subject to
Section 6.03, the
Servicer shall not take any action that is inconsistent with or
prejudices the
interests of the Trust Fund or the Certificateholders in any
Mortgage Loan
serviced by it under this Agreement or the rights and interests of
the other
parties to this Agreement except as otherwise required by this
Agreement or by
law. Notwithstanding anything in this Agreement to the contrary,
the Servicer
shall not make or permit any modification, waiver or amendment of
any term of
any Mortgage Loan that would cause any of the REMICs provided for
herein to fail
to qualify as a REMIC or result in the imposition of any tax under
Section
860G(a) or 860G(d) of the Code. The Servicer shall represent and
protect the
interest of the Trust Fund in the same manner as it currently
protects its own
interest in mortgage loans in its own portfolio in any claim,
proceeding or
litigation regarding a Mortgage Loan, but in any case not in any
manner that is
a lesser standard than that provided in the first sentence of this
Section 3.01.
Without limiting the generality of the foregoing, the Servicer, in
its own name
or in the name of the Depositor and the Trustee, is hereby
authorized and
empowered by the Depositor and the Trustee, when the Servicer
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, subordinations and all other comparable instruments,
with respect to
the Mortgage Loans, and with respect to the Mortgaged Properties
held for the
benefit of the Certificateholders. The Servicer 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
Servicer to
service and administer the Mortgage Loans, to the extent that the
Servicer is
not permitted to execute and deliver such documents pursuant to the
preceding
sentence. Upon receipt of such documents, the Depositor and/or the
Trustee shall
execute such
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documents and deliver them to the Servicer. For purposes of this
Section 3.01,
the Trustee hereby grants to the Servicer a limited power of
attorney to execute
and file any and all documents necessary to fulfill the obligations
of the
Servicer under this Section 3.01.
The Servicer shall not
be required to make any Servicing Advance
with respect to a Mortgage Loan that is 150 days or more
delinquent.
The Servicer shall deliver a list of Servicing Officers to the
Trustee by the Closing Date.
The Servicer shall deliver to the MI Insurer all reports required
by
the MI Insurer that are reasonably available to the Servicer.
The Servicer will transmit full-file credit reporting data for
each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and
that for each
Mortgage Loan, the Servicer agrees that it shall report one of the
following
statuses each month as follows: current, delinquent (30-, 60-,
90-days, etc.),
foreclosed or charged-off.
The Servicer further is authorized and empowered by the Trustee,
on
behalf of the Certificateholders and the Trustee, in its own name
or in the name
of the Sub-Servicer, when the Servicer or the Sub-Servicer, as the
case may be,
believes it is appropriate in its best judgment to register any
Mortgage Loan on
the MERS System, or cause the removal from the registration of any
Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the
Trustee and the
Certificateholders or any of them, any and all instruments of
assignment and
other comparable instruments with respect to such assignment or
re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee
and its
successors and assigns. Any reasonable expenses incurred in
connection with the
actions described in the preceding sentence or as a result of MERS
discontinuing
or becoming unable to continue operations in connection with the
MERS System,
shall be subject to withdrawal by the Servicer from the Collection
Account.
With respect to any second lien Mortgage Loan, the Servicer may
consent to the refinancing of the prior senior lien relating to
such Mortgage
Loan, provided that the following requirements are met:
(a) the resulting Combined Loan-to-Value Ratio of such Mortgage
Loan
is no higher than the Combined Loan-to-Value Ratio prior to such
refinancing;
and
(b) the interest rate for the loan evidencing the refinanced
senior
lien is no more than 2.0% higher than the interest rate on the loan
evidencing
the existing senior lien immediately prior to the date of such
refinancing; and
(c) the loan evidencing the refinanced senior lien is not subject
to
negative amortization.
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer.
(a) The Servicer may arrange for the subservicing of any
Mortgage
Loan by a subservicer, which may be an affiliate (each, a
"subservicer")
pursuant to a subservicing agreement (each, a "Subservicing
Agreement")
including, at the Servicer's option, if requested to do so by the
Holder of the
Class C Certificate; provided, however, that (i) such subservicing
arrangement
and the terms of the related subservicing agreement must provide
for the
servicing of such Mortgage Loans in a manner
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consistent with the servicing arrangements contemplated hereunder
and (ii) that
such agreement would not result in a withdrawal or downgrading by
any Rating
Agency of the ratings of any Certificates evidenced by a letter to
that effect
delivered by each Rating Agency to the Depositor. Notwithstanding
the provisions
of any subservicing agreement, any of the provisions of this
Agreement relating
to agreements or arrangements between the Servicer and a
subservicer or
reference to actions taken through a subservicer or otherwise, the
Servicer
shall remain obligated and liable to the Depositor, the Trustee and
the
Certificateholders for the servicing and administration of the
Mortgage Loans in
accordance with the provisions of this Agreement without diminution
of such
obligation or liability by virtue of such subservicing agreements
or
arrangements or by virtue of indemnification from the subservicer
and to the
same extent and under the same terms and conditions as if the
Servicer alone
were servicing and administering the Mortgage Loans. Every
subservicing
agreement entered into by the Servicer shall contain a provision
giving any
successor servicer the option to terminate such agreement in the
event a
successor servicer is appointed. All actions of the each
subservicer performed
pursuant to the related subservicing agreement shall be performed
as an agent of
the Servicer with the same force and effect as if performed
directly by the
Servicer. The Servicer shall deliver to the Trustee copies of all
subservicing
agreements. The Trustee shall have no obligations, duties or
liabilities with
respect to a subservicer, including without limitation, any
obligation, duty or
liability to monitor such subservicer or to pay a subservicer's
fees and
expenses.
(b) For purposes of this Agreement, the Servicer shall be deemed
to
have received any collections, recoveries or payments with respect
to the
Mortgage Loans that are received by a subservicer regardless of
whether such
payments are remitted by the subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in
Respect
of the
Servicer.
Neither the Trustee nor the Depositor shall have any
responsibility
or liability for any action or failure to act by the Servicer, and
neither of
them is obligated to supervise the performance of the Servicer
hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
Subject to Sections 6.04 and 7.02, in the event that the
Servicer
shall for any reason no longer be the Servicer hereunder (including
by reason of
an Event of Default), the Trustee or its designee shall, within a
period of time
not to exceed ninety (90) days from the date of notice of
termination or
resignation, thereupon assume all of the rights and obligations of
the Servicer
hereunder arising thereafter (except that the Trustee shall not be
(i) liable
for losses of the Servicer pursuant to Section 3.10 hereof or any
acts or
omissions of such predecessor Servicer hereunder, (ii) obligated to
make
Advances or Servicing Advances if it is prohibited from doing so by
applicable
law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage
Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof,
(iv)
responsible for any expenses of the Servicer pursuant to Section
2.03 or (v)
deemed to have made any representations and warranties hereunder,
including
pursuant to Section 2.04 or the first paragraph of Section 6.02
hereof;
provided, however that the Trustee (subject to clause (ii) above)
or its
designee, in its capacity as the successor servicer, shall
immediately assume
the terminated or resigning Servicer's obligation to make Advances
and Servicing
Advances). No such termination or resignation shall affect any
obligation of the
Servicer to pay amounts owed under this Agreement and to perform
its duties
under this Agreement until its successor assumes all of its rights
and
obligations hereunder. If the Servicer shall for any reason no
longer be the
Servicer (including by reason of any Event of Default), the Trustee
(or any
other successor servicer) may, at its option, succeed to any rights
and
obligations of the Servicer under any subservicing agreement in
accordance with
the terms thereof; provided, however, that the Trustee (or any
other successor
servicer) shall not incur any liability or have any obligations in
its
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capacity as servicer under a subservicing agreement arising prior
to the date of
such succession unless it expressly elects to succeed to the rights
and
obligations of the Servicer thereunder; and the Servicer shall not
thereby be
relieved of any liability or obligations under the subservicing
agreement
arising prior to the date of such succession. To the extent any
costs or
expenses, including without limitation Servicing Transfer Costs
incurred by the
Trustee in connection with this Section 3.04, are not paid by the
Servicer
pursuant to this Agreement within 30 days of the date of the
Trustee's invoice
thereof, such amounts shall be payable out of the Certificate
Account; provided
that if the Servicer has been terminated by reason of an Event of
Default, the
terminated Servicer shall reimburse the Trust Fund for any such
expense incurred
by the Trust Fund upon receipt of a reasonably detailed invoice
evidencing such
expenses. If the Trustee is unwilling or unable to act as servicer,
the Trustee
shall seek to appoint a successor servicer that is eligible in
accordance with
the criteria specified this Agreement.
The Servicer shall, upon request of the Trustee, but at the
expense
of the Servicer if the Servicer has been terminated by reason of an
Event of
Default, deliver to the assuming party all documents and records
relating to
each subservicing agreement and the Mortgage Loans then being
serviced and
otherwise use its best efforts to effect the orderly and efficient
transfer of
the subservicing agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection
Account; Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance
with
Accepted Servicing Practices 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
Servicer may in
its discretion (i) waive any late payment charge or, if applicable,
any default
interest charge, or (ii) subject to Section 3.01, extend the due
dates for
payments due on a Mortgage Note for a period not greater than 180
days;
provided, however, that any extension pursuant to clause (ii) above
shall not
affect the amortization schedule of any Mortgage Loan for purposes
of any
computation hereunder, except as provided below. In the event of
any such
arrangement pursuant to clause (ii) above, subject to Section 4.01,
the Servicer
shall make any 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.
Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in
the judgment
of the Servicer, such default is reasonably foreseeable, the
Servicer,
consistent with the standards set forth in Section 3.01, may also
waive, modify
or vary any term of such Mortgage Loan (including modifications
that would
change the Mortgage Rate, forgive the payment of principal or
interest or extend
the final maturity date of such Mortgage Loan), accept payment from
the related
Mortgagor of an amount less than the Stated Principal Balance in
final
satisfaction of such Mortgage Loan, or consent to the postponement
of strict
compliance with any such term or otherwise grant indulgence to any
Mortgagor
(any and all such waivers, modifications, variances, forgiveness of
principal or
interest, postponements, or indulgences collectively referred to
herein as
"forbearance"), provided, however, that in determining which course
of action
permitted by this sentence it shall pursue, the Servicer shall
adhere to the
standards of Section 3.01. The Servicer's analysis supporting any
forbearance
and the conclusion that any forbearance meets the standards of
Section 3.01
shall be reflected in writing in the Mortgage File.
(b) The Servicer will not waive any Prepayment Charge or
portion
thereof unless, (i) the enforceability thereof shall have been
limited by
bankruptcy, insolvency, moratorium, receivership or other similar
laws relating
to creditors' rights generally or is otherwise prohibited by law,
or (ii) the
collectability thereof shall have been limited due to acceleration
in connection
with a foreclosure or other involuntary payment, or (iii) the
Servicer has not
been provided with information sufficient to enable it to
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collect the Prepayment Charge, or (iv) in the Servicer's reasonable
judgment as
described in Section 3.01 hereof, (x) such waiver relates to a
default or a
reasonably foreseeable default and (y) such waiver would maximize
recovery of
total proceeds taking into account the value of such Prepayment
Charge and
related Mortgage Loan, or (v) the collection of such Prepayment
Charge or
portion thereof, or of a similar type of Prepayment Charge, would
be considered
"predatory" or "illegal" pursuant to written guidance published by
any
applicable federal, state or local regulatory authority having
jurisdiction over
such matters or has been challenged by any such authority, or only
to the extent
that there are no NIM Notes outstanding or to the extent that the
Depositor has
notified the Servicer in writing that all previously issued NIM
Notes are no
longer outstanding, there is a certificated class action in which a
similar type
of prepayment charge is being challenged. Except as provided in the
preceding
sentence, in no event will the Servicer waive a Prepayment Charge
in connection
with a refinancing of a Mortgage Loan that is not related to a
default or a
reasonably foreseeable default. If the Servicer waives or does not
collect all
or a portion of a Prepayment Charge relating to a Principal
Prepayment in full
or in part due to any action or omission of the Servicer, other
than as provided
above, the Servicer shall deposit the amount of such Prepayment
Charge (or such
portion thereof as had been waived for deposit) into the Collection
Account for
distribution in accordance with the terms of this Agreement.
(c) The Servicer 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.
(d) The Servicer shall establish and initially maintain, on
behalf
of the Certificateholders, the Collection Account. The Servicer
shall deposit
into the Collection Account daily, within two Business Days of
receipt thereof,
in immediately available funds, the following payments and
collections received
or made by it on and after the Cut-Off Date with respect to the
Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage
Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.15,
other than (x)
interest due on the Mortgage Loans on or prior to the Cut-off Date
and (y)
Prepayment Interest Excess;
(iii) all Liquidation 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 Servicer's normal servicing
procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer
pursuant to Section 3.05(g) in connection with any losses on
Permitted
Investments;
(vii) any amounts required to be deposited by the Servicer
pursuant to Section 3.10 hereof;
(viii) all Advances made by the Servicer pursuant to Section
4.01;
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(ix) all Prepayment Charges; and
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into
the
Collection Account shall be exclusive, it being understood and
agreed that,
without limiting the generality of the foregoing, late payment
charges,
insufficient funds charges and payments in the nature of assumption
fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase
of the
related Mortgaged Property and other similar ancillary fees (other
than
Prepayment Charges)) if collected, and any Prepayment Interest
Excess need not
be remitted by the Servicer. Rather, such fees and charges may be
retained by
the Servicer as additional servicing compensation. In the event
that the
Servicer shall remit any amount not required to be remitted and not
otherwise
subject to withdrawal pursuant to Section 3.08 hereof, it may at
any time
withdraw or direct the Trustee, or such other institution
maintaining the
Collection Account, to withdraw such amount from the Collection
Account, any
provision herein to the contrary notwithstanding. The Servicer
shall maintain
adequate records with respect to all withdrawals made pursuant to
this Section.
All funds deposited in the Collection Account shall be held in
trust for the
Certificateholders until withdrawn in accordance with Section 3.08.
In no event
shall the Trustee incur liability for withdrawals from the
Collection Account at
the direction of the Servicer.
The Servicer shall give notice to the Trustee of the location of
the
Collection Account maintained by it when established and prior to
any change
thereof. Not later than twenty days after each Distribution Date,
the Servicer
shall forward to the Trustee and the Depositor the most current
available bank
statement for the Collection Account. Copies of such statement
shall be provided
by the Trustee to any Certificateholder and to any Person
identified to the
Trustee as a prospective transferee of a Certificate, upon request
at the
expense of the requesting party, provided such statement is
delivered by the
Servicer to the Trustee.
(e) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall,
promptly upon
receipt, deposit or cause to be deposited in the Certificate
Account and retain
therein the following:
(i) the aggregate amount withdrawn by the Servicer from the
Collection Account and required to be deposited in the Certificate
Account;
(ii) the Purchase Price and any Substitution Adjustment
Amount;
(iii) any amount required to be deposited by the Trustee
pursuant to Section 3.05(g) in connection with any losses on
Permitted
Investments; and
(iv) the Optional Termination Amount paid by the winning
bidder at the Auction or by the Servicer pursuant to Section
9.01.
Any amounts received by the Trustee prior to 1:00 p.m. New York
City
time (or such earlier deadline for investment in the Permitted
Investments
designated by the Trustee) that are required to be deposited in the
Certificate
Account by the Servicer shall be invested in Permitted Investments
on the
Business Day on which they were received. The foregoing
requirements for
remittance by the Servicer and deposit by the Trustee into the
Certificate
Account shall be exclusive. If the Servicer fails to remit any
funds due by the
time designated herein, the Servicer shall pay to the Trustee, for
its own
account, interest accrued on such funds at the then current prime
rate (as
published by Wells Fargo Bank, N.A.) from and including the
applicable due date,
to but excluding the day such funds are paid to the Trustee. In the
event that
the Servicer shall remit any amount not required to be remitted and
not
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otherwise subject to withdrawal pursuant to Section 3.08 hereof, it
may at any
time cause the Trustee to withdraw such amount from the Certificate
Account, any
provision herein to the contrary notwithstanding. All funds
deposited in the
Certificate Account shall be held by the Trustee in trust for
the
Certificateholders until disbursed in accordance with this
Agreement or
withdrawn in accordance with Section 3.08. In no event shall the
Trustee incur
liability for withdrawals from the Certificate Account at the
direction of the
Servicer. The Trustee shall give notice to the Servicer of the
location of the
Certificate Account maintained by it when established and prior to
any change
thereof.
(f) Each institution that maintains the Collection Account or
the
Certificate Account shall invest the funds in each such account as
directed by
the Servicer or the Trustee, as applicable, in writing, in
Permitted
Investments, which shall mature not later than (i) in the case of
the Collection
Account the Business Day preceding the related Servicer Remittance
Date (except
that if such Permitted Investment is an obligation of the
institution that
maintains such Collection Account or is otherwise immediately
available, then
such Permitted Investment shall mature not later than the Servicer
Remittance
Date) and (ii) in the case of the Certificate Account, the Business
Day
immediately preceding the first Distribution Date that follows the
date of such
investment (except that if such Permitted Investment is an
obligation of the
institution that maintains such Certificate Account or is otherwise
immediately
available, then such Permitted Investment shall mature not later
than such
Distribution Date) and, in each case, 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 amounts on deposit in the Collection
Account shall be
for the benefit of the Servicer as servicing compensation and shall
be remitted
to it monthly as provided herein. The amount of any losses incurred
in the
Collection Account in respect of any such investments shall be
deposited by the
Servicer in the Collection Account out of the Servicer's own funds
immediately
as realized. All income and gain net of any losses realized from
amounts on
deposit in the Certificate Account shall be for the benefit of the
Trustee and
shall be remitted to or withdrawn by it monthly as provided herein.
The amount
of any losses incurred in the Certificate Account in respect of any
such
investments shall be deposited by the Trustee in the Certificate
Account out of
the Trustee's own funds immediately as realized.
SECTION 3.06. Collection of Taxes, Assessments and Similar
Items;
Escrow Accounts.
To the extent required by the related Mortgage Note, the
Servicer
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 Servicer) for the payment of taxes, assessments, hazard
insurance
premiums or comparable items for the account of the Mortgagors.
Nothing herein
shall require the Servicer 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 Servicer out of related collections for any payments made
pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and
insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to
refund to any
Mortgagors 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
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
9.01 hereof. The Escrow Accounts shall not be a part of the Trust
Fund.
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SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
Upon reasonable advance notice in writing if required by
federal
regulation, the Servicer will provide to each Certificateholder
that is a
savings and loan association, bank or insurance company certain
reports and
reasonable access to information and documentation regarding the
Mortgage Loans
sufficient to permit such Certificateholder to comply with
applicable
regulations of the OTS or other regulatory authorities with respect
to
investment in the Certificates; provided, that the Servicer shall
be entitled to
be reimbursed by each such Certificateholder for actual expenses
incurred by the
Servicer in providing such reports and access.
The Servicer may from time to time provide the Depositor, and
any
Person designated by the Depositor, with reports and information
regarding the
Mortgage Loans, including without limitation information requested
by the
Depositor or an originator of the Mortgage Loans for required
institutional risk
control.
In addition, with respect to each MI Mortgage Loan that is
subject
to a modification, the Servicer shall provide the MI Insurer with
written notice
of such modification, which shall include the nature of such
modification.
SECTION 3.08. Permitted Withdrawals from the Collection Account
and Certificate Account.
(a) The Servicer may from time to time, make withdrawals from
the
Collection Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously paid
to or withheld by the Servicer), as servicing compensation in
accordance with
Section 3.15, 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
3.15;
(ii) to reimburse the Servicer for Advances made by it (or to
reimburse the Advance Financing Person for Advances made by it)
with respect to
the Mortgage Loans, such right of reimbursement pursuant to this
subclause (ii)
being limited to amounts received on particular Mortgage Loan(s)
(including, for
this purpose, Liquidation 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 Servicer for any Non-Recoverable
Advance previously made and any Non-Recoverable Servicing Advances
previously
made to the extent that, in the case of Non-Recoverable Servicing
Advances,
reimbursement therefor constitutes "unanticipated expenses" within
the meaning
of Treasury Regulation Section 1.860G-1(b)(3)(ii);
(iv) to pay to the Servicer earnings on or investment income
with respect to funds in or credited to the Collection Account; (v)
to reimburse
the Servicer from Insurance Proceeds for Insured Expenses covered
by the related
Insurance Policy;
(vi) to pay any obligations under the MI Policy;
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(vii) to pay to the Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances (to the extent
that
reimbursement for Servicing Advances would constitute an
"unanticipated expense"
within the meaning of Treasury Regulation Section
1.860-1(b)(3)(ii)), the
Servicer's right to reimbursement of Servicing Advances pursuant to
this
subclause (vi) with respect to any Mortgage Loan being limited to
amounts
received on particular Mortgage Loan(s)(including, for this
purpose, Liquidation
Proceeds and purchase and repurchase proceeds) that represent late
recoveries of
the payments for which such advances were made pursuant to Section
3.01 or
Section 3.06;
(viii) to pay to the Servicer any unpaid Servicing Fees for
any Mortgage Loan upon such Mortgage Loan being charged off and
upon termination
of the obligations of the Servicer.
(ix) to pay to the Depositor or the Servicer, 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 3.12, all
amounts received
thereon and not taken into account in determining the related
Stated Principal
Balance of such repurchased Mortgage Loan;
(x) to reimburse the Servicer or the Depositor for expenses
incurred by either of them in connection with the Mortgage Loans or
Certificates
and reimbursable pursuant to Section 3.04, Section 3.25 or Section
6.03 hereof
provided that reimbursement therefor would constitute
"unanticipated" expenses
within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii);
(xi) to reimburse the Trustee for enforcement expenses
reasonably incurred in respect of a breach or defect giving rise to
the purchase
obligation in Section 2.03 that were incurred in the purchase price
of the
Mortgage Loans including any expenses arising out of the
enforcement of the
purchase obligation; provided that any such expenses will be
reimbursable under
this subclause (xi) only to the extent that such expenses would
constitute
"unanticipated expenses" within the meaning of Treasury Regulation
Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for
herein;
(xii) [RESERVED]
(xiii) to
withdraw pursuant to Section 3.05 any amount
deposited in the Collection Account and not required to be
deposited therein;
and
(xiv) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 2:00 p.m. Eastern Time on the
Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the
Collection
Account the Interest Funds and the Principal Funds, to the extent
on deposit,
and such amount shall be deposited in the Certificate Account;
provided,
however, if the Trustee does not receive such Interest Funds and
Principal Funds
by 2:00 p.m. Eastern Time, such Interest Funds and Principal Funds
shall be
deposited in the Certificate Account on the next Business Day. In
the event such
funds are not deposited by 2:00 p.m. Eastern Time on the Servicer
Remittance
Date, the Servicer shall pay, out of its own funds, interest on
such amount at a
rate equal to the then current "prime rate" (as published by Wells
Fargo Bank,
N.A.) for each date or part thereof until such amount is paid in
full.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any
withdrawal from the Collection Account.
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The Servicer shall provide written notification to the Trustee on
or
prior to the next succeeding Servicer Remittance Date upon making
any
withdrawals from the Collection Account pursuant to subclauses
(iii) and (vii)
above.
Unless otherwise specified, any amounts reimbursable to the
Servicer
or the Trustee from amounts on deposit in the Collection Account or
the
Certificate Accounts shall be deemed to come from first, Interest
Funds, and
thereafter, Principal Funds for the related Distribution Date.
(b) The Trustee shall withdraw funds from the Certificate
Account
for distribution to the Certificateholders in the manner specified
in this
Agreement (and shall withhold from the amounts so withdrawn, the
amount of any
taxes that it is authorized to retain pursuant to this Agreement).
In addition,
prior to making such distributions to the Certificateholders the
Trustee may
from time to time make withdrawals from the Certificate Account for
the
following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited
in the Certificate Account and not required to be deposited
therein;
(ii) to clear and terminate the Certificate Account upon
termination of the Agreement pursuant to Section 9.01 hereof (after
paying all
amounts necessary to the Trustee or the Servicer in connection with
any such
termination);
(iii) to reimburse the Trustee for any fees, expenses and
indemnification reimbursable pursuant to this Agreement, including
without
limitation Sections 3.04, 6.03, 8.05 and 8.06 hereof and to
reimburse the
Custodian for any fees, expenses and indemnification reimburseable
pursuant to
this Agreement, including without limitation Section 8.06
hereof;
(iv) to pay to the Trustee earnings on or investment income
with respect to funds in or credited to the Certificate Account;
and
(v) to pay to the MI Insurer, the MI Insurer Fee.
SECTION 3.09. [RESERVED]
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each Mortgage
Loan
secured by a first lien, fire and hazard insurance with extended
coverage in an
amount, to the extent permitted by applicable law, that is at least
equal to the
lesser of (i) the replacement value of the improvements that are
part of such
Mortgaged Property and (ii) the greater of (a) the outstanding
principal balance
of the Mortgage Loan and (b) an amount such that the proceeds of
such policy
shall be sufficient to prevent the related Mortgagor and/or
mortgagee from
becoming a co-insurer. Each such policy of standard hazard
insurance shall
contain, or have an accompanying endorsement that contains, a
standard mortgagee
clause. The Servicer shall also cause flood insurance to be
maintained on
property acquired upon foreclosure or deed in lieu of foreclosure
of any
Mortgage Loan, to the extent described below. Pursuant to Section
3.05 hereof,
any amounts collected by the Servicer 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 Servicer's normal servicing procedures) shall
be deposited
in the Collection Account. Any cost incurred by the Servicer 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 Mortgage Loan so permit. Such costs shall be
recoverable by the
Servicer as a Servicing Advance to
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the extent provided in Section 3.08(a)(vii) hereof. 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
with respect to a Mortgage Loan secured by a first lien is located
at the time
of origination of the Mortgage Loan in a federally designated
special flood
hazard area and such area is participating in the national flood
insurance
program, the Servicer shall cause flood insurance to be maintained
with respect
to such Mortgage Loan. Such flood insurance shall be in an amount
equal to the
lesser of (i) the original p
