<PAGE>
EXHIBIT 4.1
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
as Depositor,
WELLS FARGO BANK, N.A.,
as Master Servicer and Securities Administrator,
HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee,
and
PHH MORTGAGE CORPORATION,
as a Servicer and Company
----------
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 2006
----------
MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2006-3
MORTGAGE PASS-THROUGH CERTIFICATES
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
<C>
ARTICLE I.
DEFINITIONS....................................................................
4
Section 1.01.
Definitions...........................................................
4
Section 1.02.
Calculations Respecting Mortgage
Loans................................ 33
ARTICLE II. DECLARATION OF TRUST; ISSUANCE OF
CERTIFICATES................................ 34
Section 2.01.
Creation
and Declaration of Trust Fund; Conveyance of Mortgage Loans..
34
Section 2.02.
Acceptance
of Trust Fund by Trustee; Review of Documentation for Trust
Fund..................................................................
37
Section 2.03.
Representations and Warranties of the
Depositor....................... 39
Section 2.04.
Representations and Warranties Concerning the Master Servicer,
the
Securities Administrator and the
Company.............................. 41
Section 2.05.
Discovery
of Breach; Repurchase or Substitution of Mortgage Loans.....
45
Section 2.06.
Grant
Clause..........................................................
47
ARTICLE III. THE
CERTIFICATES.............................................................
48
Section 3.01.
The
Certificates......................................................
48
Section 3.02.
Registration..........................................................
49
Section 3.03.
Transfer
and Exchange of Certificates.................................
49
Section 3.04.
Cancellation of
Certificates.......................................... 53
Section 3.05.
Replacement of
Certificates...........................................
53
Section 3.06.
Persons
Deemed Owners.................................................
54
Section 3.07.
Temporary
Certificates................................................
54
Section 3.08.
Appointment of Paying
Agent........................................... 54
Section 3.09.
Book-Entry
Certificates...............................................
54
ARTICLE IV. ADMINISTRATION OF THE ISSUING
ENTITY.......................................... 56
Section 4.01.
Collection
Accounts; Master Servicer Collection Account; Distribution
Account...............................................................
56
Section 4.02.
Permitted
Withdrawals from the Master Servicer Collection Account and
the Distribution
Account.............................................. 58
Section 4.03
Reports to
Certificateholders.........................................
60
ARTICLE V. DISTRIBUTIONS TO HOLDERS OF
CERTIFICATES....................................... 62
Section 5.01.
Distributions
Generally...............................................
62
Section 5.02.
Distributions from the Distribution
Account........................... 63
Section 5.03.
Allocation
of Losses..................................................
66
Section 5.04.
Advances..............................................................
67
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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----
<S>
<C>
<C>
ARTICLE VI. CONCERNING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR; EVENTS OF DEFAULT.... 68
Section 6.01.
Duties of
Trustee and Securities Administrator........................
68
Section 6.02.
Certain
Matters Affecting the Trustee and the Securities
Administrator.........................................................
70
Section 6.03.
Trustee
and Securities Administrator Not Liable for Certificates or
Mortgage
Loans........................................................
72
Section 6.04.
Trustee
and Securities Administrator May Own Certificates.............
72
Section 6.05.
Eligibility Requirements for Trustee and Securities
Administrator..... 72
Section 6.06.
Resignation and Removal of Trustee and Securities
Administrator....... 73
Section 6.07.
Successor
Trustee or Successor Securities Administrator...............
73
Section 6.08.
Merger or
Consolidation of Trustee or Securities Administrator........
74
Section 6.09.
Appointment of Co-Trustee, Separate Trustee or
Custodian.............. 74
Section 6.10.
Authenticating
Agents.................................................
76
Section 6.11.
Indemnification of Trustee and Securities
Administrator............... 77
Section 6.12.
Fees and
Expenses of the Trustee and Securities Administrator.........
77
Section 6.13.
Collection
of Monies..................................................
77
Section 6.14.
Servicer
Events of Default and Master Servicer Events of Default;
Master Servicer or Trustee to Act; Appointment of Successor
Servicer;
Appointment of Successor Master
Servicer.............................. 78
Section 6.15.
Additional
Remedies of the Master Servicer and the Trustee Upon Event
of
Default............................................................
82
Section 6.16.
Waiver of
Servicer Events of Default and Master Servicer Events of
Default...............................................................
82
Section 6.17.
Notification to
Holders............................................... 83
Section 6.18.
Directions
by Certificateholders and Duties of Trustee During Servicer
and Master Servicer Event
Default..................................... 83
Section 6.19.
Preparation of Tax Returns and Other
Reports.......................... 83
ARTICLE VII. PURCHASE OF MORTGAGE LOANS AND TERMINATION OF THE
ISSUING ENTITY............. 84
Section 7.01.
Purchase
of Mortgage Loans; Termination of Issuing Entity Upon
Purchase or Liquidation of All Mortgage
Loans......................... 84
</TABLE>
ii
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(continued)
<TABLE>
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<C>
Section 7.02.
Procedure
Upon Termination of Issuing Entity..........................
85
Section 7.03.
Additional
Issuing Entity Termination Requirements....................
86
ARTICLE VIII. RIGHTS OF
CERTIFICATEHOLDERS................................................
87
Section 8.01.
Limitation
on Rights of Holders.......................................
87
Section 8.02.
Access to
List of Holders.............................................
87
Section 8.03.
Acts of
Holders of Certificates.......................................
88
ARTICLE IX. ADMINISTRATION AND SERVICING OF THE MORTGAGE
LOANS............................ 89
Section 9.01.
Company to
Act as Servicer............................................
89
Section 9.02.
Title,
Management and Disposition of REO Property.....................
90
Section 9.03.
Master
Servicer's and Depositor's Right to Examine Servicer Records...
91
Section 9.04.
Legal
Proceedings Involving the Servicer and/or the Mortgage Loans....
92
Section 9.05.
Material
Changes......................................................
92
Section 9.06.
Servicer
Shall Provide Information as Reasonably Required.............
93
Section 9.07.
Servicer
Not to Resign................................................
93
Section 9.08.
Collection
Accounts and Escrow Accounts...............................
93
Section 9.09.
Assumption
Processing.................................................
94
Section 9.10.
Books and
Records.....................................................
94
Section 9.11.
Annual
Statement as to Compliance.....................................
94
Section 9.12.
[Reserved]............................................................
95
Section 9.13.
Reports on
Assessment of Compliance and Attestation...................
95
Section 9.14.
Servicing
Compensation................................................
97
Section 9.15.
Indemnification.......................................................
98
Section 9.16.
Non
Solicitation......................................................
99
Section 9.17.
Successor
to the Servicer.............................................
99
Section 9.18.
Statements
to the Master Servicer.....................................
100
Section 9.19.
Merger or Consolidation of
the Servicer............................... 100
Section 9.20.
Limitation
on Liability of the Servicer...............................
101
Section 9.21.
Periodic
Filings......................................................
101
Section 9.22.
Compliance
with Regulation AB.........................................
107
</TABLE>
iii
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TABLE OF CONTENTS
(continued)
<TABLE>
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<C>
<C>
Section 9.23.
Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity
Coverage..............................................................
108
ARTICLE IXA. THE MASTER
SERVICER..........................................................
109
Section 9A.01.
Master
Servicer.......................................................
109
Section 9A.02.
Monitoring of
Servicers...............................................
109
Section 9A.03
Power to
Act; Procedures..............................................
110
Section 9A.04.
Liabilities of
the Master Servicer....................................
111
Section 9A.05.
Merger or
Consolidation of the Master Servicer........................
111
Section 9A.06.
Indemnification
from the Master Servicer.............................. 111
Section 9A.07.
Limitation on
Liability of the Master Servicer and Others.............
112
Section 9A.08.
Master Servicer
Not to Resign......................................... 113
Section 9A.09.
Successor Master
Servicer............................................. 113
Section 9A.10.
Sale and
Assignment of Master Servicing...............................
113
Section 9A.11.
Compensation for
the Master Servicer.................................. 114
ARTICLE X. REMIC
ADMINISTRATION...........................................................
114
Section 10.01.
REMIC
Administration..................................................
114
Section 10.02.
Prohibited
Transactions and Activities................................
116
Section 10.03.
Indemnification
with Respect to Prohibited Transactions or Loss of
REMIC
Status..........................................................
116
Section 10.04.
REO
Property..........................................................
116
ARTICLE XI. MISCELLANEOUS
PROVISIONS......................................................
117
Section 11.01.
Binding Nature
of Agreement; Assignment...............................
117
Section 11.02.
Entire
Agreement......................................................
117
Section 11.03.
Amendment.............................................................
118
Section 11.04.
Voting
Rights.........................................................
119
Section 11.05.
Provision of
Information..............................................
119
Section 11.06.
Governing
Law.........................................................
120
Section 11.07.
Notices...............................................................
120
Section 11.08.
Severability of
Provisions............................................ 120
Section 11.09.
Indulgences; No
Waivers............................................... 121
Section 11.10.
Headings Not To
Affect Interpretation................................. 121
Section 11.11.
Benefits of
Agreement.................................................
121
</TABLE>
iv
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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<C>
<C>
Section 11.12.
Special Notices
to the Rating Agencies................................ 121
Section 11.13.
[Reserved]............................................................
122
Section 11.14.
Counterparts..........................................................
122
Section 11.15.
No
Petitions..........................................................
122
</TABLE>
v
<PAGE>
EXHIBITS
Exhibit A Form
of Certificates
Exhibit B Form
of Residual Certificate Transfer Affidavit (Transferee)
Exhibit C Form
of Residual Certificate Transfer Affidavit (Transferor)
Exhibit D-1 Standard Layout for Monthly Defaulted Loan Report
Exhibit D-2 Standard Layout for Monthly Remittance Advice
Exhibit D-3 Standard Layout for Realized Loss Report
Exhibit E
Mortgage Loan Sale and Assignment Agreement
Exhibit F List
of Limited Purpose Surety Bonds
Exhibit G Form
of Rule 144A Transfer Certificate
Exhibit H Form
of Purchaser's Letter for Institutional Accredited Investor
Exhibit I Form
of ERISA Transfer Affidavit
Exhibit J Form
of Letter of Representations with the Depository Trust Company
Exhibit K Form
of Initial Certification
Exhibit L Form
of Final Certification
Exhibit M List
of Servicing Officers
Exhibit N
Request for Release
Exhibit O
[Reserved]
Exhibit P
[Reserved]
Exhibit Q Form
of Back-up Sarbanes-Oxley Certification
Exhibit R
[Reserved]
Exhibit S-1 Form of Assessment of Compliance
Exhibit S-2 Servicing Criteria to be Addressed in Assessment of
Compliance
Exhibit T Form
of Sarbanes-Oxley Certification
Exhibit U
Additional Disclosure Notification
Exhibit V Form
of Officer's Certificate of Servicer
Exhibit W Form
8-K Disclosure Information
Exhibit X
Additional Form 10-D Disclosure
Exhibit Y
Additional Form 10-K Disclosure
Schedule A Mortgage
Loan Schedule
vi
<PAGE>
This
POOLING AND SERVICING AGREEMENT, dated as of October 1, 2006
(the
"Agreement"), by and among MERRILL LYNCH MORTGAGE INVESTORS, INC.,
a Delaware
corporation, as depositor (the "Depositor"), HSBC BANK USA,
NATIONAL
ASSOCIATION, a national banking association, as trustee (the
"Trustee"), WELLS
FARGO BANK, N.A., as Master Servicer (in such capacity, the "Master
Servicer")
and Securities Administrator (in such capacity, the "Securities
Administrator"),
and PHH MORTGAGE CORPORATION, as a Servicer (a "Servicer" and the
"Company"),
and acknowledged by MERRILL LYNCH MORTGAGE LENDING, INC. a Delaware
corporation,
as sponsor (the "Sponsor"), for purposes of Section 2.05.
PRELIMINARY STATEMENT
The
Depositor has acquired the Mortgage Loans from the Sponsor and at
the
Closing Date is the owner of the Mortgage Loans and the other
property being
conveyed by the Depositor to the Trustee hereunder for inclusion in
the Trust
Fund. On the Closing Date, the Depositor will acquire the
Certificates from the
Trustee as consideration for the Depositor's transfer to the Trust
Fund of the
Mortgage Loans and the other property constituting the Trust Fund.
The Depositor
has duly authorized the execution and delivery of this Agreement to
provide for
the conveyance to the Trustee of the Mortgage Loans and the other
property
constituting the Trust Fund. All covenants and agreements made by
the Sponsor in
the Mortgage Loan Sale and Assignment Agreement and in this
Agreement and all
covenants and agreements made by the Depositor, the Master
Servicer, the
Company, the Securities Administrator 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. The
Depositor, the
Master Servicer, the Company, the Securities Administrator and the
Trustee are
entering into this Agreement, and the Trustee is accepting the
Trust Fund
created hereby, for good and valuable consideration, the receipt
and sufficiency
of which are hereby acknowledged.
As
provided herein, the Securities Administrator shall elect that the
Trust
Fund be treated for federal income tax purposes as comprising two
real estate
mortgage investment conduits (each a "REMIC" or, in the
alternative, "REMIC 1"
and the "Upper Tier REMIC," respectively) in a tiered structure.
The
Certificates, other than the Class A-R Certificate, shall represent
ownership of
regular interests in the Upper Tier REMIC. The Class A-R
Certificate represents
the sole class of residual interest in each of REMIC 1 and the
Upper Tier REMIC.
The
Upper Tier REMIC shall hold as its assets the several classes
of
uncertificated REMIC 1 Regular Interests. REMIC 1 shall hold as its
assets the
property of the Trust Fund other than the REMIC 1 Interests.
Each
Upper Tier REMIC Regular Interest is hereby designated as a
regular
interest in the Upper Tier REMIC for purposes of the REMIC
Provisions. Each
REMIC 1 Regular Interest is hereby designated as a regular interest
in REMIC 1
for purposes of the REMIC Provisions.
The
Class LT1-R Interest is hereby designated as the sole class of
residual
interest in REMIC 1 for purposes of the REMIC Provisions. The Class
A-R
Certificate, other than the portion thereof representing the right
to receive
payments in respect of the Class LT1-R Interest is hereby
designated as the sole
class of residual interest in the Upper Tier REMIC for purposes of
the REMIC
provisions and will also represent the Class LT1-R Interest.
THE REMIC 1 INTERESTS
1
<PAGE>
The
following table sets forth (or describes) the class
designation,
interest rate, initial principal amount, and related pool of
Mortgage Loans for
each class of REMIC 1 Interests:
<TABLE>
<CAPTION>
Interest
Related Mortgage
Class Designation Principal Amount
Rate
Pool
or Pools
----------------- -------------------
--------
-----------------
<S>
<C>
<C>
<C>
LT11A
$
31,059.3364
(2)
Pool 1
LT11B
$
887,129.3364
(3)
Pool 1
LT12A
$
157,229.6391
(2)
Pool 2
LT12B
$ 4,492,069.6391
(4)
Pool 2
LT1Z
$532,352,409.5990
(2)
Pool 1 and Pool 2
LT1-R
(1)
(1)
N/A
</TABLE>
----------
(1) The Class LT1-R
Interest represents the sole class of residual interest in
REMIC 1 and has neither a principal amount nor an interest rate.
The Class
LT1-R Interest shall be represented by the Class A-R
Certificate.
(2) The Class LT11A
Interest, the Class LT12A Interest and the Class LT1Z
Interest shall have an interest rate for each Distribution Date
(and the
related Accrual Period) equal to the Net WAC.
(3) The Class LT11B
Interest shall have an interest rate for any Distribution
Date
(and the related Accrual Period) equal to the Pool 1 Net WAC.
(4) The Class LT12B
Interest shall have an interest rate for any Distribution
Date
(and the related Accrual Period) equal to the Pool 2 Net WAC.
On
each Distribution Date, the Securities Administrator shall first
pay or
charge as an expense of REMIC 1 all expenses of the Issuing Entity
for such
Distribution Date.
Principal distributions shall be deemed to be made on the REMIC 1
Interests
first, so as to keep the uncertificated principal balance of each
REMIC 1
Interest ending with the designation "A" equal to 1% of the excess
of (x) the
aggregate Principal Balance of the Mortgage Loans in the related
Mortgage Pool
over (y) the aggregate class principal amounts of the Certificates
in the
Certificate Group related to such Mortgage Pool (except that if 1%
of any such
excess is greater than the principal amount of the corresponding
REMIC 1
Interest ending with the designation "A", the least amount of
principal shall be
distributed to such REMIC 1 Interests such that the REMIC 1
Subordinate Balance
Ratio is maintained); second, to each REMIC 1 Interest ending with
the
designation "B" so as to keep the uncertificated principal balance
of each such
REMIC 1 Interest equal to 1% of the aggregate Principal Balance of
the Mortgage
Loans in the related Mortgage Pool and finally, all remaining
principal amounts
shall be distributed in respect of the Class LT1Z Interest.
Realized Losses with
respect to principal shall be allocated among the REMIC 1 Interests
first, so as
to keep the uncertificated principal balance of each REMIC 1
Interest ending
with the designation "A" equal to 1% of the excess of (x) the
aggregate
Principal Balance of the Mortgage Loans in the related Mortgage
Pool over (y)
the aggregate class principal amounts of the Certificates in the
Certificate
Group related to such Mortgage Pool (except that if 1% of any such
excess is
greater than the principal amount of the corresponding REMIC 1
Interest ending
with the designation "A", the least amount of losses shall be
allocated to such
REMIC 1 Interests such that the REMIC 1 Subordinate Balance Ratio
is
maintained); second, to each REMIC 1 Interest ending with the
designation "B" so
as to keep the uncertificated principal balance of each such REMIC
1 Interest
equal to 1% of the aggregate
2
<PAGE>
Principal Balance of the Mortgage Loans in the related Mortgage
Pool and
finally, all remaining Realized Losses with respect to principal
shall be
distributed in respect of the Class LT1Z Interest.
If
on any Distribution Date the Certificate Principal Amount of any
Class
of Certificates is increased pursuant to the penultimate sentence
of the
definition of "Certificate Principal Amount", then there shall be
an equivalent
aggregate increase in the principal amounts of the REMIC 1 Regular
Interests,
with such increase allocated (before the making of distributions
and the
allocation of losses on the REMIC 1 Regular Interests on such
Distribution Date)
among the REMIC 1 Regular Interests as follows: (i) first, to each
REMIC 1
Interest ending with the designation "B" so as to keep the
uncertificated
principal balance of each such REMIC 1 Interest equal to 1% of the
aggregate
Principal Balance of the Mortgage Loans in the related Mortgage
Pool, (ii)
second, to each REMIC 1 Regular Interest ending with the
designation "A", so
that the uncertificated principal balance of each REMIC 1 Regular
Interest
ending with the designation "A" is as close as possible to (but
does not exceed)
1% of the excess of (x) the aggregate Principal Balance of the
Mortgage Loans in
related Mortgage Pool over (y) the aggregate class principal
balance of the
Certificates in the Certificate Group related to such Mortgage
Pool; provided,
however, that (a) the REMIC 1 Subordinate Balance Ratio is
maintained and (b)
amounts allocated to any REMIC 1 Regular Interest pursuant to this
clause (ii)
shall not exceed the amount of any previous realized losses
allocated to such
REMIC 1 Regular Interest not previously offset by distributions or
increases in
the principal amount of such REMIC 1 Regular Interest and (iii)
finally, all
remaining amounts to the Class LT1Z Interest.
All
computations with respect to the REMIC 1 Interests shall be
computed to
eight decimal places.
THE CERTIFICATES
The
following table sets forth (or describes) the Class
designation,
Certificate Interest Rate, initial Class Principal Amount, and
minimum
denomination for each Class of Certificates comprising interests in
the Trust
Fund created hereunder.
<TABLE>
<CAPTION>
Related Class or
Classes of interests
Class
in the Upper Tier Certificate
Initial
Class Minimum
Denominations
Designation
REMIC
Interest Rate
Principal Amount
or Percentage Interest
------------
-------------------- ------------- ----------------
----------------------
<S>
<C>
<C>
<C>
<C>
Class I-A
Class I-A
(1)
$ 85,606,900
$ 25,000.00
Class II-A-1
Class II-A-1
(2)
$418,312,000
$ 25,000.00
Class II-A-2
Class II-A-2
(2)
$ 15,172,000
$ 25,000.00
Class A-R
Class A-R
(1)
$
100
100%
Class M-1
Class M-1
(3)
$ 7,801,000
$ 25,000.00
Class M-2
Class M-2
(3)
$ 3,496,000
$ 25,000.00
Class M-3
Class M-3
(3)
$ 2,420,000
$ 25,000.00
Class B-1
Class B-1
(3)
$ 2,420,000
$100,000.00
Class B-2
Class B-2
(3)
$ 1,613,000
$100,000.00
Class B-3
Class B-3
(3)
$ 1,078,897
$100,000.00
</TABLE>
3
<PAGE>
(1) The Certificate
Interest Rate with respect to any Distribution Date (and
the
related Accrual Period) for the Class I-A Certificates and the
Class
A-R Certificate will be the
Pool 1 Net WAC.
(2) The Certificate
Interest Rate with respect to any Distribution Date (and
the
related Accrual Period) for the Class II-A-1 Certificates and the
Class
II-A-2 Certificates will be the Pool 2 Net WAC.
(3) The Certificate
Interest Rates with respect to any Distribution Date (and
the
related Accrual Period) for the Class M-1, Class M-2, Class M-3,
Class
B-1,
Class B-2 and Class B-3 Certificates will be equal to the
Subordinate
Net
WAC.
As
of the Cut-off Date, the Mortgage Loans had an aggregate
Scheduled
Principal Balance of $537,919,897.55.
In
consideration of the mutual agreements herein contained, the
Depositor,
the Master Servicer, the Securities Administrator, the Company and
the Trustee
hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions.
The
following words and phrases, unless the context otherwise
requires,
shall have the following meanings:
10-K
Filing Deadline: As defined in Section 9.21(h).
Accepted Master Servicing Practices: The Master 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.
Accepted Servicing Practices: The Company'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
Accountant: A Person engaged in the practice of accounting who
(except when
this Agreement provides that an Accountant must be Independent) may
be employed
by or affiliated with the Depositor or an Affiliate of the
Depositor.
Accountant's Attestation: As defined in Section 9.13.
Accrual Period: With respect to any Distribution Date, the calendar
month
immediately preceding the month in which the related Distribution
Date occurs.
Interest shall accrue on all Classes of Certificates and on all
Lower Tier REMIC
Interests on the basis of a 360-day year consisting of twelve
30-day months.
Additional Collateral: With respect to any Additional Collateral
Mortgage
Loan, the meaning assigned thereto in the Mortgage Loan Sale and
Assignment
Agreement.
4
<PAGE>
Additional Collateral Mortgage Loan: Each Mortgage Loan identified
as such
in the Mortgage Loan Schedule.
Additional Disclosure Notification: As defined in Section
9.21(b).
Additional Form 10-D Disclosure: As defined in Section 9.21(e).
Additional Form 10-K Disclosure: As defined in Section 9.21(h).
Adjustment Date: As to any Mortgage Loan, the date on which the
related
Mortgage Rate adjusts in accordance with the terms of the related
Mortgage Note.
Advance: With respect to a Mortgage Loan, the payments required to
be made
with respect to any Distribution Date by each Servicer pursuant to
its related
Servicing Agreement, by the Master Servicer, solely in its capacity
as successor
servicer pursuant to this Agreement, or by the Trustee, solely in
its capacity
as successor master servicer pursuant to this Agreement, the amount
of any such
payment being equal to the aggregate of the payments of principal
and interest
(net of the applicable Servicing Fee and net of any net income in
the case of
any REO Property) on the Mortgage Loans that were due on the
related Due Date
and not received as of the close of business on the related
Determination Date,
less the aggregate amount of any such delinquent payment that
either each
Servicer, the Master Servicer or the Trustee has determined would
constitute
Nonrecoverable Advances if advanced.
Adverse REMIC Event: As defined in Section 10.01(f) hereof.
Affiliate: With respect to any specified Person, any other
Person
controlling or controlled by or under common control with such
specified Person.
For the purposes of this definition, "control" when used with
respect to any
specified Person means the power to direct the management and
policies of such
Person, directly or indirectly, whether through the ownership of
voting
securities, by contract or otherwise; and the terms "controlling"
and
"controlled" have meanings correlative to the foregoing.
Aggregate Senior Percentage: As to any Distribution Date, the
percentage
equivalent of a fraction, the numerator of which is the aggregate
of the Class
Principal Amounts of the Class I-A, Class II-A-1, Class II-A-2 and
Class A-R
Certificates and the denominator of which is the Aggregate Stated
Principal
Balance, but in no event greater than 100%.
Aggregate Stated Principal Balance: As to any Distribution Date,
the
aggregate of the Stated Principal Balances for all Mortgage Loans
(and when such
term is used with respect to a particular Mortgage Pool, the
aggregate of the
Stated Principal Balances of the Mortgage Loans in such Mortgage
Pool) which
were outstanding on the Due Date in the month preceding the month
of such
Distribution Date.
Aggregate Subordinate Percentage: As to any Distribution Date,
the
difference between 100% and the Aggregate Senior Percentage for
such
Distribution Date, but in no event less than zero.
Aggregate Voting Interests: The aggregate of the Voting Interests
of all
the Certificates under this Agreement.
5
<PAGE>
Agreement: This Pooling and Servicing Agreement and all amendments
and
supplements hereto.
Ancillary Fees: With respect to any Mortgage Loan, (i) all late
charges,
(ii) all returned-item charges (e.g. insufficient funds charges),
(iii)
modification or conversion fees and (iv) all fees payable pursuant
to PHH's
"Speed Pay" program, .
Applicable Credit Support Percentage: As to any Class of
Subordinate
Certificates and any Distribution Date, the sum of the Class
Subordination
Percentages of such Class and the aggregate Class Subordination
Percentage of
all other Classes of Subordinate Certificates having a more senior
payment
priority than such Class.
Apportioned Principal Balance: As to any Distribution Date and each
Class
of Subordinate Certificates and any Mortgage Pool, the Class
Principal Amount
thereof multiplied by a fraction, the numerator of which is the
applicable Pool
Subordinate Amount (i.e., the Pool 1 Subordinate Amount or the Pool
2
Subordinate Amount, as the case may require), and the denominator
of which is
the sum of such Pool Subordinate Amounts on such date.
Appraised Value: With respect to any Mortgage Loan, the Appraised
Value of
the related Mortgaged Property shall be: (i) with respect to a
Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value
of the
Mortgaged Property based upon the appraisal made at the time of the
origination
of such Mortgage Loan and (b) the sales price of the Mortgaged
Property at the
time of the origination of such Mortgage Loan; and (ii) with
respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property
based upon the
appraisal made at the time of the origination of such Refinancing
Mortgage Loan.
Assessment of Compliance: As defined in Section 9.13.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer
or equivalent instrument, in recordable form, sufficient under the
laws of the
jurisdiction wherein the related Mortgaged Property is located to
reflect the
sale of the Mortgage to the Trustee, which assignment, notice of
transfer or
equivalent instrument may be in the form of one or more blanket
assignments
covering the Mortgage Loans secured by Mortgaged Properties located
in the same
jurisdiction, if permitted by law; provided, however, that the
Trustee shall not
be responsible for determining whether any such assignment is in
recordable
form.
Authenticating Agent: The Securities Administrator or any
authenticating
agent appointed by the Securities Administrator pursuant to Section
6.10 until
any successor authenticating agent for the Certificates is named,
and thereafter
"Authenticating Agent" shall mean any such successor.
Authorized Officer:
Any Person who may execute an Officer's Certificate on
behalf of the Depositor.
Available Distribution Amount: With respect to any Distribution
Date and
each Mortgage Pool, the total amount of all cash received by the
Securities
Administrator on the Mortgage Loans in such Mortgage Pool from the
Master
Servicer or otherwise through the Distribution Account Deposit Date
for deposit
into the Distribution Account in respect of such Distribution Date,
including
(1) all scheduled installments of interest (net of the Servicing
Fee) and
principal collected on the related Mortgage Loans and due during
the Due Period
related to such Distribution Date, together with any Advances in
respect
thereof, (2) all Insurance Proceeds,
6
<PAGE>
Liquidation Proceeds, Subsequent Recoveries and the proceeds of any
Additional
Collateral from the related Mortgage Loans, in each case for such
Distribution
Date, (3) all partial or full Principal Prepayments, together with
any accrued
interest thereon, identified as having been received from the
related Mortgage
Loans during the related Prepayment Period, (4) any amounts
received from the
Servicers in respect of Prepayment Interest Shortfalls with respect
to the
related Mortgage Loans; and (5) the aggregate Purchase Price of all
Defective
Mortgage Loans and Converted Mortgage Loans (if any) in such
Mortgage Pool
purchased from the Issuing Entity during the related Prepayment
Period, minus
the sum of the following amounts:
(A)
all related fees, charges and amounts payable or reimbursable to
the
Trustee, Master Servicer, and Securities Administrator under this
Agreement, to
the extent that, if paid by the Issuing Entity, such fees, charges
or other
amounts would constitute "unanticipated expenses" (within the
meaning of
Treasury Regulations Section 1.860G-1(b)(3)(ii)) of any of the
REMICs provided
for herein and up to an aggregate maximum amount equal to $300,000
annually;
provided, such annual aggregate maximum amount shall exclude (i)
any Servicing
Transfer Costs, or amounts reimbursable to each Servicer under its
related
Servicing Agreement and (ii) any costs, damages or expenses
incurred by the
Trustee in connection with any "high cost" home loans or any
predatory or
abusive lending laws, which amounts shall in no case be subject to
any such
limitation;
(B)
in the case of (2), (3), (4) and (5) above, any related
unreimbursed
expenses incurred by each Servicer in connection with a liquidation
or
foreclosure and any unreimbursed Advances or Servicing Advances due
to each
Servicer (or, pursuant to Section 5.04, the Trustee);
(C)
any related unreimbursed Nonrecoverable Advances due to the
Master
Servicer or each Servicer (or, pursuant to Section 5.04, the
Trustee); and
(D)
in the case of (1) through (4) above, any related amounts
collected
which are determined to be attributable to a subsequent Due Period
or Prepayment
Period.
Bankruptcy: As to any Person, the making of an assignment for the
benefit
of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as
a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or
insolvency proceeding, the seeking of reorganization, arrangement,
composition,
readjustment, liquidation, dissolution or similar relief, or
seeking, consenting
to or acquiescing in the appointment of a trustee, receiver or
liquidator,
dissolution, or termination, as the case may be, of such Person
pursuant to the
provisions of either the Bankruptcy Code or any other similar state
laws.
Bankruptcy Code: The United States Bankruptcy Code of 1986, as
amended.
BBA:
The British Banker's Association.
Book-Entry Certificates: Beneficial interests in Certificates
designated as
"Book-Entry Certificates" in this Agreement, ownership and
transfers of which
shall be evidenced or made through book entries by a Clearing
Agency as
described in Section 3.09; provided, that after the occurrence of a
Book-Entry
Termination whereupon book-entry registration and transfer are no
longer
permitted and Definitive Certificates are to be issued to
Certificate Owners,
such Book-Entry Certificates shall no longer be "Book-Entry
Certificates." As of
the Closing Date, the following Classes of Certificates constitute
Book-Entry
Certificates: Class I-A, Class II-A-1, Class II-A-2, Class M-1,
Class M-2, Class
M-3, Class B-1, Class B-2 and Class B-3.
7
<PAGE>
Book-Entry Termination: The occurrence of any of the following
events: (i)
the Clearing Agency is no longer willing or able to properly
discharge its
responsibilities with respect to the Book Entry Certificates, and
the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at
its option
advises the Trustee and the Certificate Registrar in writing that
it elects to
terminate the book-entry system through the Clearing Agency.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
a day
on which banking institutions in New York, New York or, if other
than New York,
any city in which the Corporate Trust Office of the Trustee or the
Securities
Administrator is located, or the States of Maryland or Minnesota,
are authorized
or obligated by law or executive order to be closed.
Certificate: Any one of the certificates signed by the
Securities
Administrator and authenticated by the Authenticating Agent in
substantially the
forms attached hereto as Exhibit A.
Certificate Group: Each of the Group 1 Certificates and the Group
2
Certificates.
Certificate Interest Rate: With respect to each Class of
Certificates and
any Distribution Date, the applicable per annum rate described in
the
Preliminary Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who
is the owner of such Book-Entry Certificate, as reflected on the
books of the
Clearing Agency, or on the books of a Person maintaining an account
with such
Clearing Agency (directly or as an indirect participant, in
accordance with the
rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate, at
the time
of determination, the maximum specified dollar amount of principal
to which the
Holder thereof is then entitled hereunder, such amount being equal
to the
initial principal amount set forth on the face of such Certificate,
less (i) the
amount of all principal distributions previously made with respect
to such
Certificate; (ii) all Realized Losses allocated to such
Certificate; and (iii)
in the case of a Subordinate Certificate, any Subordinate
Certificate Writedown
Amount allocated to such Certificates. Notwithstanding the
foregoing, on any
Distribution Date relating to a Due Period in which a Subsequent
Recovery has
been received by the related Servicer, the Certificate Principal
Amount of any
Class of Certificates then outstanding for which any Realized Loss
or any
Subordinate Certificate Writedown Amount has been applied will be
increased, in
order of seniority, by an amount equal to the lesser of (i) the
amount such
Class of Certificates has been written down in respect of Realized
Losses or
Subordinate Certificate Writedown Amounts, to the extent not
previously offset
by increases in Certificate Principal Amount pursuant to this
sentence and (ii)
the total of any Subsequent Recovery distributed on such date to
the
Certificateholders (reduced (x) by the amount of the increase in
the Certificate
Principal Amount of any more senior Class of Certificates pursuant
to this
sentence on such Distribution Date and (y) to reflect a
proportionate amount of
the increase in the Certificate Principal Amount of any pari passu
Class of
Certificates on such Distribution Date pursuant to this sentence).
For purposes
of Article V hereof, unless specifically provided to the contrary,
Certificate
Principal Amounts shall be determined as of the close of business
of the
immediately preceding Distribution Date, after giving effect to
all
distributions made on such date.
Certificate Register and Certificate Registrar: The register
maintained and
the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of
"Holder."
8
<PAGE>
Civil Relief Act: The Servicemembers Civil Relief Act.
Class: Collectively, Certificates bearing the same class
designation. In
the case of the REMIC 1 and the Upper Tier REMIC, the term "Class"
refers to all
REMIC Interests having the same alphanumeric designation.
Class A-R Certificate: The Class A-R Certificate executed by the
Securities
Administrator, and authenticated and delivered by the
Authenticating Agent,
substantially in the form annexed hereto as Exhibit A, and
evidencing the
ownership of the Class LT1-R Interest and the residual interest in
the Upper
Tier REMIC.
Class LT1-R Interest: The sole class of "residual interest" in
REMIC 1.
Class Principal Amount: With respect to each Class of Certificates
the
aggregate of the Certificate Principal Amounts of all Certificates
of such Class
at the date of determination.
Class Subordination Percentage: With respect to each Class of
Subordinate
Certificates, for each Distribution Date, the percentage obtained
by dividing
the Class Principal Amount of such Class immediately prior to such
Distribution
Date by the sum of the Class Principal Amounts of all Classes of
Certificates
immediately prior to such Distribution Date.
Clearing Agency: An organization registered as a "clearing agency"
pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended.
As of the
Closing Date, the Clearing Agency shall be The Depository Trust
Company.
Clearing Agency Participant: A broker, dealer, bank, other
financial
institution or other Person for whom from time to time a Clearing
Agency effects
book-entry transfers and pledges of securities deposited with the
Clearing
Agency.
Closing Date: October 30, 2006.
Code: The Internal Revenue Code of 1986, as amended, and as it may
be
further amended from time to time, any successor statutes thereto,
and
applicable U.S. Department of Treasury regulations issued pursuant
thereto in
temporary or final form.
Collection Account: The separate trust account or accounts created
and
maintained by the Company and WFB, which shall be entitled "PHH
Mortgage
Corporation, as a Servicer for HSBC Bank USA, National Association,
as Trustee,
f/b/o the registered holders of the Merrill Lynch Mortgage
Investors Trust
Series MLCC 2006-3 Mortgage Pass-Through Certificates" and "Wells
Fargo Bank,
N.A., as a Servicer for HSBC Bank USA, National Association, as
Trustee, f/b/o
the registered holders of the Merrill Lynch Mortgage Investors
Trust Series MLCC
2006-3 Mortgage Pass-Through Certificates," respectively. The
Collection
Accounts shall be Eligible Accounts.
Commission: Securities and Exchange Commission.
Company: PHH Mortgage Corporation, or its successors in
interest.
Compensating Interest Payment: As to any Distribution Date, the
lesser of
(1) the Servicing Fee for such date and (2) any Prepayment Interest
Shortfall
for such date.
9
<PAGE>
Cooperative Corporation: The entity that holds title (fee or an
acceptable
leasehold estate) to the real property and improvements
constituting the
Cooperative Property and which governs the Cooperative Property,
which
Cooperative Corporation must qualify as a Cooperative Housing
Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares
and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by
the
Cooperative Corporation, that includes the allocation of individual
dwelling
units to the holders of the shares of the Cooperative
Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Corporate Trust Office: With respect to the Trustee, the
principal
corporate trust office of the Trustee at which at any particular
time its
corporate trust business in connection with this Agreement shall
be
administered, which office at the date of the execution of this
instrument is
located at HSBC Bank USA, National Association, 452 Fifth Avenue,
New York, New
York 10018, Attention: Corporate Trust and Loan Agency - Merrill
Lynch Mortgage
Investors, Inc., MLCC Series 2006-3, or at such other address as
the Trustee may
designate from time to time by notice to the Certificateholders,
the Depositor
and the Master Servicer and with respect to the Securities
Administrator, for
Certificate transfer purposes, Wells Fargo Center, Sixth Street and
Marquette
Avenue, Minneapolis, Minnesota 55479, Attn: Corporate Trust
Services - MLCC
2006-3, and for all other purposes, 9062 Old Annapolis Road,
Columbia, Maryland,
21045, Attn: Client Service Manager - MLCC 2006-3.
Credit Support Depletion Date: The first Distribution Date, if any,
on
which the aggregate Certificate Principal Amounts of the
Subordinate
Certificates have been reduced to zero.
Current Interest: With respect to each Class of Certificates on
each
Distribution Date, the aggregate amount of interest accrued at the
applicable
Certificate Interest Rate during the related Accrual Period on the
Class
Principal Amount of such Class.
Custodian: Wells Fargo Bank, National Association or its successors
and
assigns.
Cut-off Date: October 1, 2006.
Cut-off Date Balance: With respect to the Mortgage Loans in the
Issuing
Entity on the Closing Date, the Aggregate Stated Principal Balance
as of the
Cut-off Date.
Debt
Service Reduction: With respect to any Mortgage Loan, a reduction
by a
court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the
Scheduled Payment for such Mortgage Loan which became final and
non-appealable,
except such a reduction resulting from a Deficient Valuation or any
reduction
that results in a permanent forgiveness of principal.
Defective Mortgage Loan: As defined in Section 2.05(a).
Deficiency Amount: As defined in Section 5.03(b)(ii).
10
<PAGE>
Deficient Valuation: With respect to any Mortgage Loan, a valuation
of the
related Mortgaged Property by a court of competent jurisdiction in
an amount
less than the then outstanding indebtedness under the Mortgage
Loan, or any
reduction in the amount of principal to be paid in connection with
any Scheduled
Payment that results in a permanent forgiveness of principal, which
valuation or
reduction results from an order of such court which is final and
non-appealable
in a proceeding under the Bankruptcy Code.
Definitive Certificate: A Certificate of any Class issued in
definitive,
fully registered, certificated form.
Deleted Mortgage Loan: As defined in Section 2.05(a).
Delinquent: Any Mortgage Loan with respect to which the Scheduled
Payment
due on a Due Date is not received.
Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware
corporation,
having its principal place of business at 250 Vesey Street, 4 World
Financial
Center, 10th Floor, New York, New York 10080, or its successors in
interest.
Determination Date: With respect to each Distribution Date, the
15th day of
the month in which such Distribution Date occurs, or, if such 15th
day is not a
Business Day, the next succeeding Business Day.
Disqualified Organization: A "disqualified organization" as defined
in
Section 860E(e)(5) of the Code.
Distribution Account: The trust account or accounts created and
maintained
pursuant to Section 4.01 in the name of the Securities
Administrator for the
benefit of the Certificateholders and entitled "Wells Fargo Bank,
National
Association, as Securities Administrator for HSBC Bank USA,
National
Association, as Trustee, f/b/o holders of Merrill Lynch Mortgage
Investors,
Inc., Mortgage Pass-Through Certificates, MLCC Series 2006-3 -
Distribution
Account." The Distribution Account shall be an Eligible Account.
Funds in the
Distribution Account (exclusive of any earnings on investments made
with funds
deposited in the Distribution Account) shall be held in trust for
the Securities
Administrator and the Certificateholders for the uses and purposes
set forth in
this Agreement.
Distribution Account Deposit Date: The 24th day of each calendar
month
after the initial issuance of the Certificates or, if such 24th day
is not a
Business Day, the immediately preceding Business Day, commencing in
November
2006.
Distribution Date: The 25th day of each month or, if such 25th day
is not a
Business Day, the next succeeding Business Day, commencing in
November 2006.
Due
Date: With respect to any Mortgage Loan, the date on which a
Scheduled
Payment is due under the related Mortgage Note as indicated in the
Mortgage
Note, which is the first day of the calendar month.
Due
Period: As to any Distribution Date, the period beginning on the
second
day of the month preceding the month of such Distribution Date, and
ending on
the first day of the month of such Distribution Date.
11
<PAGE>
EDP:
The electronic data processing system used by the Sponsor and
the
Company, which are licensees of ALLTEL Information Services,
Inc.
Effective Loan-to-Value Ratio: A fraction, expressed as a
percentage, the
numerator of which is the original Stated Principal Balance of the
Mortgage
Loan, less the amount of Additional Collateral required to secure
such Mortgage
Loan at the time of origination, if any, and the denominator of
which is the
Appraised Value of the related Mortgage Property at such date.
Eligible Account: Any of (i) an account or accounts maintained with
a
federal or state chartered depository institution or trust company
the
short-term unsecured debt obligations of which (or, in the case of
a depository
institution or trust company that is the principal subsidiary of a
holding
company, the debt obligations of such holding company) have the
highest
short-term ratings of each Rating Agency at the time any amounts
are held on
deposit therein, or (ii) an account or accounts in a depository
institution or
trust company in which such accounts are insured by the FDIC or the
SAIF (to the
limits established by the FDIC or the SAIF) and the uninsured
deposits in which
accounts are otherwise secured such that, as evidenced by an
Opinion of Counsel
delivered to the Securities Administrator and to each Rating
Agency, the
Certificateholders have a claim with respect to the funds in such
account or a
perfected first priority security interest against any collateral
(which shall
be limited to Permitted Investments) securing such funds that is
superior to
claims of any other depositors or creditors of the depository
institution or
trust company in which such account is maintained, or (iii) a trust
account or
accounts maintained with the trust department of a federal or state
chartered
depository institution or trust company, acting in its fiduciary
capacity or
(iv) any other account acceptable to each Rating Agency. Eligible
Accounts may
bear interest, and may include, if otherwise qualified under this
definition,
accounts maintained with the Securities Administrator, any Paying
Agent, the
Master Servicer or any Servicer.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended, and
as it may be further amended from time to time, any successor
statutes thereto,
and applicable U.S. Department of Labor regulations issued pursuant
thereto in
temporary or final form.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that would satisfy the
requirements of the
Underwriter's Exemption, 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 Certificate: The Class B-1, Class B-2 and Class
B-3
Certificates and any other Certificate, as long as the acquisition
and holding
of such other Certificate is not covered by and exempt under the
Underwriter's
Exemption.
Escrow Account: The separate trust account or accounts created
and
maintained by the Company pursuant to the Fannie Mae Servicing
Guide which shall
be entitled "PHH Mortgage Corporation, as a Servicer for HSBC Bank
USA, National
Association, as Trustee, f/b/o registered holders for Merrill Lynch
Mortgage
Investors Trust Series MLCC 2006-3 Mortgage Pass-Through
Certificates." The
Escrow Account shall be an Eligible Account.
Exchange Act: The Securities Exchange Act of 1934, as amended.
12
<PAGE>
Fannie Mae: The entity formerly known as the Federal National
Mortgage
Association, 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.
FHA:
The Federal Housing Administration or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under
Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor
thereto.
Final Certification: As referred to in Section 2.02(c), the form of
which
is set forth at Exhibit L.
Form
8-K Disclosure Information: As defined in Section 9.21(a).
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.
GNMA: The Government National Mortgage Association, or any
successor
thereto.
Group 1: All of the Group 1 Certificates.
Group 1 Certificate: Any Class I-A or Class A-R Certificate.
Group 2: All of the
Group 2 Certificates.
Group 2 Certificate: Any Class II-A-1 or Class II-A-2
Certificate.
Holder or Certificateholder: The registered owner of any
Certificate as
recorded on the books of the Certificate Registrar except that,
solely for the
purposes of taking any action or giving any consent pursuant to
this Agreement,
any Certificate registered in the name of the Depositor, the
Trustee, the Master
Servicer or the Securities Administrator, or any Affiliate thereof
shall be
deemed not to be outstanding in determining whether the requisite
percentage
necessary to effect any such consent has been obtained, except
that, in
determining whether the Securities Administrator shall be protected
in relying
upon any such consent, only Certificates which a Responsible
Officer of the
Securities Administrator knows to be so owned shall be disregarded.
The
Securities Administrator may request and conclusively rely on
certifications by
the Depositor, the Trustee, each Servicer and the Master Servicer
in determining
whether any Certificates are registered to an Affiliate of the
Depositor, the
Trustee, each Servicer, or the Master Servicer.
HUD:
The United States Department of Housing and Urban Development, or
any
successor thereto.
Indemnified Parties: As defined in Section 9.15.
Independent: When used with respect to any Accountants, a Person
who is
"independent" within the meaning of Rule 2-01(b) of the
Commission's Regulation
S-X. When used with respect to any other Person, a Person who (a)
is in fact
independent of another specified
13
<PAGE>
Person and any Affiliate of such other Person, (b) does not have
any material
direct financial interest in such other Person or any Affiliate of
such other
Person, and (c) is not connected with such other Person or any
Affiliate of such
other Person as an officer, employee, promoter, underwriter,
trustee, partner,
director or Person performing similar functions.
Index: As to each Mortgage Loan, the index from time to time in
effect for
adjustment of the Mortgage Rate as set forth as such on the related
Mortgage
Note.
Initial Certification: As referred to in Section 2.02(a), the form
of which
is set forth at Exhibit K.
Insurance Policy: With respect to any Mortgage Loan, any insurance
policy,
including all names and endorsements thereto in effect, including
any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by any Insurance Policy
(excluding
proceeds required to be applied to the restoration and repair of
the related
Mortgaged Property or released to the Mortgagor), in each case
other than any
amount included in such Insurance Proceeds in respect of Insured
Expenses and
the proceeds, if any, from any Limited Purpose Surety Bond.
Insured Expenses: Expenses covered by an Insurance Policy or any
other
insurance policy with respect to the Mortgage Loans.
Interest Distribution Amount: For each Class of Certificates, on
any
Distribution Date, the Current Interest for such Class, as reduced
by such
Class's share of Net Prepayment Interest Shortfalls and Relief Act
Reductions.
Any such shortfalls and reductions shall be allocated among (i) all
Classes of
Certificates of the related Certificate Group from such Mortgage
Pool and (ii)
the Subordinate Certificates proportionately on the basis of (1) in
the case of
the Senior Certificates, Current Interest otherwise distributable
thereon on
such Distribution Date and (2) in the case of Subordinate
Certificates, interest
accrued at the Net WAC of the applicable Mortgage Pool on their
Apportioned
Principal Balance before taking into account any reductions in such
amounts from
Net Interest Shortfalls for that Distribution Date.
Interest Shortfall: As to any Class of Certificates and any
Distribution
Date, (i) the amount by which the Interest Distribution Amount for
such Class on
such Distribution Date and all prior Distribution Dates exceeds
(ii) amounts
distributed in respect thereof to such Class on prior Distribution
Dates (as
determined without reduction for amounts not paid to such Class as
a result of
the provisos set forth in Sections 5.02(a)(i) and 5.02(b)
hereof).
Intervening Assignments: The original intervening assignments of
the
Mortgage, notices of transfer or equivalent instrument.
Issuing Entity: Merrill Lynch Mortgage Investors Trust, Series MLCC
2006-3.
Latest Possible Maturity Date: The Distribution Date in October
2036.
LIBOR: With respect to each Accrual Period, a per annum rate
determined on
the LIBOR Determination Date in the following manner by the
Securities
Administrator on the basis of the "Interest Settlement Rate" set by
the BBA for
six-month or one-year United States dollar deposits, as such rates
appear on the
Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination
Date.
14
<PAGE>
(a)
If on such a LIBOR Determination Date, the BBA's Interest
Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m.
(London time),
or if the Telerate Page 3750 is not available on such date, the
Securities
Administrator will obtain such rate from Reuters' "page LIBOR 01"
or Bloomberg's
page "BBAM." If such rate is not published for such LIBOR
Determination Date,
LIBOR for such date will be the most recently published Interest
Settlement
Rate. In the event that the BBA no longer sets an Interest
Settlement Rate, the
Securities Administrator will designate an alternative index that
has performed,
or that the Securities Administrator expects to perform, in a
manner
substantially similar to the BBA's Interest Settlement Rate. The
Securities
Administrator will select a particular index as the alternative
index only if it
receives an Opinion of Counsel, which opinion shall be an expense
reimbursed
from the Distribution Account, that the selection of such index
will not cause
any of the REMICs to lose their classification as REMICs for
federal income tax
purposes.
(b)
The establishment of LIBOR by the Securities Administrator for
the
relevant Accrual Period, in the absence of manifest error, will be
final and
binding.
LIBOR Business Day: Any day on which banks in London, England and
The City
of New York are open and conducting transactions in foreign
currency and
exchange.
Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed
in
Exhibit F.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a
defaulted Mortgage Loan (including any REO Property) which was
liquidated in the
calendar month preceding the month of such Distribution Date and as
to which the
related Servicer has certified (in accordance with its related
Servicing
Agreement) that it has received all amounts it expects to receive
in connection
with the liquidation of such Mortgage Loan including the final
disposition of an
REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in
connection with the partial or complete liquidation of defaulted
Mortgage Loans,
whether through trustee's sale, foreclosure sale 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.
Loan-To-Value Ratio: With respect to any Mortgage Loan and as to
any date
of determination, the fraction (expressed as a percentage) the
numerator of
which is the principal balance of the related Mortgage Loan at such
date of
determination and the denominator of which is the Appraised Value
of the related
Mortgaged Property.
Loss: With respect to any indemnification arising under Section
9.15 of
this Agreement, any and all losses, claims, damages, penalties,
liabilities,
obligations, judgments, settlements, awards, demands, offsets,
defenses,
counterclaims, actions or proceedings, reasonable out-of-pocket
costs, expenses
and attorneys' fees of an Indemnified Party (including but not
limited to, (a)
any reasonable costs, expenses and attorneys' fees incurred by such
Indemnified
Party in enforcing such right of indemnification against any
Indemnifying Party
or with respect to any appeal, and (b) interest on any amount for
which an
Indemnified Party is entitled to be indemnified from the date such
Indemnified
Party notifies the related Servicer of the expenditure or such
amounts until
such amounts are paid by the related Servicer; provided, however,
that in no
event shall a "Loss" include a claim for consequential damages,
indirect damages
or lost profits except when the Loss results from the gross
negligence, fraud or
willful misconduct of the Master Servicer.
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Lower Tier REMIC Interests: Any of the REMIC 1 Interests.
Margin: As to each Mortgage Loan, the percentage amount set forth
on the
related Mortgage Note added to the Index in calculating the
Mortgage Rate
thereon.
Master Servicer: Wells Fargo Bank, National Association, or any
successor
in interest.
Master Servicer Collection Account: The separate trust account or
accounts
created and maintained by the Master Servicer pursuant to the
Fannie Mae
Servicing Guide which shall be entitled "Wells Fargo Bank, N.A., as
Master
Servicer for HSBC Bank USA, National Association, as Trustee, in
trust for the
registered holders for Merrill Lynch Mortgage Investors Trust
Series MLCC 2006-3
Mortgage Pass-Through Certificates." The Master Servicer Collection
Account
shall be an Eligible Account.
Master Servicer Event of Default: As defined in Section
6.14(b).
Material Defect: As defined in Section 2.02(b).
Maximum Rate: As to any Mortgage Loan, the maximum rate set forth
on the
related Mortgage Note at which interest can accrue on such Mortgage
Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of the State of Delaware or
any successor
thereto.
MERS
Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS
System.
MERS
System: The system of recording transfers of mortgages
electronically
maintained by MERS.
MLCC: Merrill Lynch Credit Corporation or any successor
thereto.
MLCC
Mortgage Loan: A Mortgage Loan originated or acquired by Merrill
Lynch
Credit Corporation.
MLCC
Mortgage Loan Purchase Agreement: The Master Mortgage Loan
Purchase
Agreement, dated as of August 1, 2004, between Merrill Lynch Credit
Corporation
and Merrill Lynch Mortgage Lending, Inc., as amended by Amendment
Number One
thereto, dated as of September 21, 2005.
Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 4.02.
Moody's: Moody's Investors Service, Inc., or any successor in
interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering
a fee
simple interest in real property securing a Mortgage Note, together
with
improvements thereto.
Mortgage Documents: With respect to each Mortgage Loan, the
mortgage
documents required to be delivered to the Trustee, or its
Custodian, pursuant to
this Agreement.
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Mortgage Loan: A Mortgage and the related notes or other evidences
of
indebtedness secured by each such Mortgage conveyed, transferred,
sold, assigned
to or deposited with the Trustee, or its Custodian, pursuant to
Section 2.01
(including any Replacement Loan and REO Property), including
without limitation,
each Mortgage Loan listed on the Mortgage Loan Schedule, as amended
from time to
time.
Mortgage Loan Sale and Assignment Agreement: The Mortgage Loan Sale
and
Assignment Agreement, dated as of October 1, 2006, between the
Sponsor and the
Depositor with respect to the sale and purchase of the Mortgage
Loans, a copy of
which is attached hereto as Exhibit E.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A,
which
shall identify each Mortgage Loan, as such schedule may be amended
by the
Depositor, the Servicers or the Master Servicer from time to time
to reflect the
addition of Replacement Mortgage Loans to, or the deletion of
Deleted Mortgage
Loans from, the Trust Fund. Such schedule shall, among other things
(1) identify
the designated Mortgage Pool in which such Mortgage Loan is
included and (2)
separately identify One-Year Treasury Loans, Six-Month LIBOR Loans,
One-Year
LIBOR Loans and Additional Collateral Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage
Loan.
Mortgage Pools: Pool 1 and Pool 2.
Mortgaged Property: The underlying property, including any
Additional
Collateral, if any, securing a Mortgage Loan which, with respect to
a
Cooperative Loan, is the related Cooperative Shares and Property
Lease.
Mortgage Rate: As to any Mortgage Loan, the annual rate of interest
borne
by the related Mortgage Notes.
Mortgagor: The obligor on a Mortgage Note.
Net
Interest Shortfalls: With respect to any Distribution Date, any
Net
Prepayment Interest Shortfalls for that Distribution Date and the
amount of
interest that would otherwise have been received with respect to
any Mortgage
Loan which was subject to (i) a Relief Act Reduction or (ii) the
interest
portion of any Debt Service Reduction or Deficient Valuation, after
exhaustion
of the respective amounts of coverage provided by the Subordinate
Certificates
for those type of losses.
Net
Liquidation Proceeds: With respect to any Liquidated Mortgage Loan
or
any other disposition of related Mortgaged Property, the related
Liquidation
Proceeds net of Advances, Servicer Advances, related Servicing Fees
and any
other accrued and unpaid fees received and retained in connection
with the
liquidation of such Mortgage Loan or Mortgaged Property.
Net
Mortgage Rate: With respect to any Mortgage Loan and any
Distribution
Date, the related Mortgage Rate as of the Due Date in the month
preceding the
month of such Distribution Date reduced by the Servicing Fee Rate
for such
Mortgage Loan.
Net
Prepayment Interest Shortfall: With respect to any Mortgage Loan
and
any Distribution Date, the amount by which any Prepayment Interest
Shortfall for
such date exceeds
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<PAGE>
the amount payable by the related Servicer (under its related
Servicing
Agreement) in respect of such shortfall.
Net
WAC: As to any Distribution Date, the weighted average of the
Net
Mortgage Rates of the Mortgage Loans as of the first day of the
calendar month
immediately preceding the calendar month of such Distribution Date,
weighted on
the basis of their outstanding Stated Principal Balances at such
time. When the
term "Net WAC" is used herein with reference to only the One-Year
Treasury Loans
or only the Six-Month LIBOR Loans, such weighted average shall be
computed with
reference solely to the Mortgage Loans in the relevant group.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Nonrecoverable Advance: Any portion of an Advance or Servicer
Advance
previously made or proposed to be made by the applicable Servicer
(as certified
in an Officer's Certificate of the Servicer), or the Master
Servicer as
successor servicer, or the Trustee pursuant to Section 5.04, which
in the good
faith judgment of such party, shall not be ultimately recoverable
by such party
from the related Mortgagor, related Liquidation Proceeds or
otherwise.
Non-U.S. Person: Any person other than a "United States person"
within the
meaning of Section 7701(a)(30) of the Code.
Offering Document: The Prospectus.
Officer's Certificate: A certificate 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 (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) of the Depositor, the Trustee, the Master
Servicer or the
Securities Administrator, as the case may be, and delivered to the
Depositor,
the Trustee, the Master Servicer or the Securities Administrator,
as the case
may be, as required by this Agreement.
Officer's Certificate of the Servicer: A certificate (i) signed by
the
Chairman of the Board, the Vice Chairman of the Board, the
President, a Managing
Director, a Vice President (however denominated), an Assistant Vice
President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or
Assistant
Secretaries of the Servicer, or (ii) if provided for herein, signed
by a
Servicing Officer, as the case may be, and delivered to the Trustee
or the
Depositor, as the case may be.
One-Year LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate
that
adjusts in accordance with LIBOR for one-year U.S. dollar
deposits.
One-Year Treasury Index: The twelve-month moving average monthly
yield on
the United States Treasury Securities adjusted to a constant
maturity of one
year, as published by the Federal Reserve Board in the Federal
Reserve
Statistical Release Selected Interest Rates (H.15) 5 19.
One-Year Treasury Loan: Each Mortgage Loan bearing a Mortgage Rate
that
adjusts in accordance with the One-Year Treasury Index.
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<PAGE>
Opinion of Counsel: A written opinion of counsel, who may be an
employee of
the Depositor or a Servicer, that is reasonably acceptable to each
addressee of
such opinion; provided that any Opinion of Counsel relating to (a)
qualification
of the Mortgage Loans in a REMIC or (b) compliance with the REMIC
Provisions,
must be an opinion of counsel reasonably acceptable to each
addressee of such
opinion, who (i) is in fact independent of such Servicer and the
Depositor, (ii)
does not have any material direct or indirect financial interest in
such
Servicer or the Depositor or in an affiliate of either and (iii) is
not
connected with such Servicer or the Depositor as an officer,
employee, director
or person performing similar functions.
Optional Termination Price: An amount equal to the sum of (i) 100%
of the
Stated Principal Balance of the Mortgage Loans (other than any
Mortgage Loan
that has become an REO Property) plus accrued interest thereon at
the applicable
Mortgage Rate through the Due Date in the month in which the
Optional
Termination Price is to be distributed to the Certificateholders
and the fair
market value of any REO Property plus accrued interest thereon;
(ii) any
unreimbursed costs and damages incurred by the Issuing Entity (or
the Trustee on
behalf of the Issuing Entity) in connection with the violation of
any
anti-predatory or anti-abusive lending laws; and (iii) the payment
of all
amounts (including, without limitation, all previously unreimbursed
Advances and
Servicing Advances and accrued and unpaid Servicing Fees) payable
or
reimbursable to the Master Servicer, the Securities Administrator
or Trustee.
Original Applicable Credit Support Percentage: With respect to each
Class
of Subordinate Certificates, the corresponding percentage set forth
opposite its
Class designation: Class M-1 - 3.50%; Class M-2 - 2.05%; Class M-3
- 1.40%;
Class B-1 - 0.95%; Class B-2 - 0.50%; and Class B-3 - 0.20%.
Originator: With respect to any Mortgage Loan, the entity that (i)
took the
Mortgagor's loan application, (ii) processed the Mortgagor's loan
application,
and (iii) closed and/or funded the Mortgagor's Mortgage Loan.
Overcollateralized Senior Certificates: As defined in Section
5.02(b)(iii).
Parent Power(R) Guaranty and Security Agreement: With respect to
any
Additional Collateral Loan, as defined in the MLCC Mortgage Loan
Purchase
Agreement.
Paying Agent: Any paying agent appointed by the Securities
Administrator
pursuant to Section 3.08.
Percentage Interest: With respect to any Certificate, its
percentage
interest in the undivided beneficial ownership interest in the
Trust Fund
evidenced by all Certificates of the same Class as such
Certificate. With
respect to any Certificate other than the Class A-R Certificate,
the Percentage
Interest evidenced thereby shall equal the initial Certificate
Principal Amount
thereof divided by the initial Class Principal Amount of all
Certificates of the
same Class. With respect to the Class A-R Certificate, the
Percentage Interest
evidenced thereby shall be as specified on the face thereof, or
otherwise, be
equal to 100%.
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 that such obligations are backed by the full faith and
credit of the United States;
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(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia
receiving
the highest long-term debt rating of each Rating Agency, or
such
lower rating as shall not result in the downgrading or
withdrawal
of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by each
Rating Agency;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper
rating
of each Rating Agency rating such paper, or such lower rating
as
shall not result in the downgrading or withdrawal of the
ratings
then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States
or
of
any state thereof and subject to supervision and examination
by federal and/or state banking authorities, provided that the
commercial paper and/or long-term unsecured debt obligations of
such depository institution or trust company (or in the case of
the principal depository institution in a holding company
system,
the commercial paper or long-term unsecured debt obligations of
such holding company, but only if Moody's is not the applicable
Rating Agency) are then rated one of the two highest long-term
and the highest short-term ratings of each Rating Agency for
such
securities, or such lower ratings as shall not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed
writing delivered by each Rating Agency;
(v) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating
Agencies at the time of the issuance of such agreements, as
evidenced by a signed writing delivered by each Rating Agency;
(vi) 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 (iv) above;
(vii) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in excess of
115%
of the face amount thereof) bearing interest or sold at a
discount issued by any corporation incorporated under the laws
of
the United States or any state thereof which, at the time of
such
investment, have one of the two highest ratings of each Rating
Agency (except if the Rating Agency is Moody's, such rating
shall
be the highest commercial paper rating of Moody's for any such
series), or such lower rating as shall not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed
writing delivered by each Rating Agency;
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<PAGE>
(viii) interests in any money market fund 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 rating by each Rating Agency rating such fund or
such
lower rating as shall not result in a change in the rating then
assigned to the Certificates by each Rating Agency including
funds for which the Trustee or any of its Affiliates is
investment manager or adviser;
(ix) 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 which on the
date
of acquisition has been rated by each applicable Rating Agency
in
their respective highest applicable rating category or such
lower
rating as shall not result in a change in the rating then
specified stated maturity and bearing interest or sold at a
discount acceptable to each Rating Agency as shall not result
in
the downgrading or withdrawal of the ratings then assigned to
the
Certificates by the Rating Agencies; and
(x) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable
to
the Rating Agencies as shall not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by
the Rating Agencies;
provided, that no such instrument shall be a Permitted Investment
if (i) such
instrument evidences the right to receive interest only payments
with respect to
the obligations underlying such instrument, (ii) such instrument
would require
the Depositor to register as an investment company under the
Investment Company
Act of 1940, as amended, or (iii) such instrument would not be a
"permitted
investment" within the meaning of such term as provided for in
Section
860G(a)(5) of the Code and the Treasury Regulations thereunder.
Person: Any individual, corporation, partnership, joint
venture,
association, joint-stock company, limited liability company,
trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
PHH:
PHH Mortgage Corporation, or its successor in interest.
Pool
1: The aggregate of Mortgage Loans identified on the Mortgage
Loan
Schedule as being included in Pool 1.
Pool
1 Mortgage Loans: Any Mortgage Loan in Pool 1.
Pool
1 Net WAC: With respect to any Distribution Date, the weighted
average
of the Net Mortgage Rates of the Pool 1 Mortgage Loans as of the
first day of
the calendar month immediately preceding the calendar month of such
Distribution
Date, weighted on the basis of their Stated Principal Balances at
such time.
Pool
1 Subordinate Amount: For any Distribution Date, the excess of (a)
the
Aggregate Stated Principal Balance of the Pool 1 Mortgage Loans as
of the first
day of the month preceding the month in which such Distribution
Date occurs over
(b) the sum of the Class Principal Amounts of the Class I-A and
Class A-R
Certificates immediately before such Distribution Date.
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<PAGE>
Pool
2: The aggregate of Mortgage Loans identified on the Mortgage
Loan
Schedule as being included in Pool 2.
Pool
2 Mortgage Loans: Any Mortgage Loan in Pool 2.
Pool
2 Net WAC: With respect to any Distribution Date, the weighted
average
of the Net Mortgage Rates of the Pool 2 Mortgage Loans as of the
first day of
the calendar month immediately preceding the calendar month of such
Distribution
Date, weighted on the basis of their Stated Principal Balances at
such time.
Pool
2 Subordinate Amount: For any Distribution Date, the excess of (a)
the
Aggregate Stated Principal Balance of the Pool 2 Mortgage Loans as
of the first
day of the month preceding the month in which such Distribution
Date occurs over
(b) the sum of the Class Principal Amounts of the Class II-A-1 and
Class II-A-2
Certificates immediately before such Distribution Date.
Pool
Subordinate Amount: Any of the Pool 1 Subordinate Amount or the
Pool 2
Subordinate Amount.
Prepayment Interest Shortfall: With respect to any full or
partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i)
one full
month's interest at the applicable Mortgage Rate on the outstanding
principal
balance of such Mortgage Loan immediately prior to such Principal
Prepayment
over (ii) the amount of interest actually received with respect to
such Mortgage
Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to each Distribution Date, the
calendar
month immediately preceding the month in which the Distribution
Date occurs.
Primary Mortgage Insurance Policy: Each policy of primary mortgage
guaranty
insurance or any replacement policy therefor with respect to any
Mortgage Loan.
Principal Distribution Amount: With respect to any Mortgage Pool
and any
Distribution Date, the sum of (a) each Scheduled Payment of
principal collected
or advanced on the related Mortgage Loans (before taking into
account any
Deficient Valuations or Debt Service Reductions) and due during the
related Due
Period, (b) that portion of the Purchase Price representing
principal of any
Mortgage Loans in such Mortgage Pool purchased in accordance with
Section 2.05
hereof and received during the related Prepayment Period, (c) the
principal
portion of any related Substitution Amount received during the
related
Prepayment Period, (d) the principal portion of all Insurance
Proceeds received
during the related Prepayment Period with respect to Mortgage Loans
in such
Mortgage Pool that are not yet Liquidated Mortgage Loans, (e) the
principal
portion of all Net Liquidation Proceeds received during the related
Prepayment
Period with respect to Liquidated Mortgage Loans in such Mortgage
Pool, (f) all
Subsequent Recoveries received during the related Prepayment Period
with respect
to Liquidated Mortgage Loans in such Mortgage Pool, (g) the
principal portion of
the proceeds of any Additional Collateral with respect to the
Mortgage Loans in
such Mortgage Pool, (h) the principal portion of all partial and
full principal
prepayments of Mortgage Loans in such Mortgage Pool applied by each
Servicer
(pursuant to its related Servicing Agreement) during the related
Prepayment
Period and (i) on the Distribution Date on which the Issuing Entity
is to be
terminated pursuant to Article VII hereof, that portion of the
Optional
Termination Price in respect of principal for such Mortgage
Pool.
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Principal Prepayment: Any Mortgagor payment of principal or other
recovery
of principal on a Mortgage Loan that is recognized as having been
received or
recovered in advance of its scheduled Due Date and applied to
reduce the
principal balance of the Mortgage Loan in accordance with the terms
of the
Mortgage Note or this Agreement.
Principal Transfer Amount: For any Distribution Date and for
any
Undercollateralized Group, the excess, if any, of the aggregate
Class Principal
Amount of such Undercollateralized Group immediately prior to such
Distribution
Date over the Aggregate Stated Principal Balance of the related
Mortgage Pool
immediately prior to such Distribution Date.
Proceeding: Any suit in equity, action at law or other judicial
or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Property, a
lease or
occupancy agreement between a Cooperative Corporation and a holder
of related
Cooperative Shares.
Pro
Rata Senior Percentage: With respect to each Distribution Date and
each
Mortgage Pool, the percentage equivalent of a fraction the
numerator of which is
the aggregate Class Principal Amount of the Class or Classes of the
Related
Certificate Group immediately prior to such Distribution Date and
the
denominator of which is the Aggregate Stated Principal Balance of
the related
Mortgage Pool for such Distribution Date.
Prospectus: The prospectus supplement, dated October 25, 2006,
together
with the accompanying prospectus dated September 8, 2006, relating
to the
initial sale of the Class I-A, Class II-A-1, Class II-A-2, Class
A-R, Class M-1,
Class M-2 and Class M-3 Certificates.
Purchase Date: Any Distribution Date on which Certificates may
be
repurchased pursuant to Section 7.01(c).
Purchase Price: With respect to any Mortgage Loan required or
permitted to
be purchased by the Depositor pursuant to this Agreement, by the
Master Servicer
pursuant to this Agreement, or by the Sponsor pursuant to the
Transfer
Agreements, an amount equal to the sum of (i) 100% of the unpaid
principal
balance of the Mortgage Loan on the date of such purchase, (ii)
accrued interest
thereon at the applicable Net Mortgage Rate from the date through
which interest
was last paid by the Mortgagor to 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
Issuing Entity in
connection with any violation relating to such Mortgage Loan of any
predatory or
abusive lending law.
Rating Agency: Each of Moody's and S&P.
Realized Loss: With respect to each Liquidated Mortgage Loan, an
amount
(not less than zero or more than the Stated Principal Balance of
the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated
Principal
Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to
which interest
was last paid or advanced (and not reimbursed) to
Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to
be
distributed on the Stated Principal Balance of such Liquidated
Mortgage Loan
from time to time, minus (iii) the Net Liquidation Proceeds and the
proceeds of
any Additional Collateral, if any, received during the month in
which such
liquidation occurred, to the extent applied as recoveries of
interest at the Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan.
With respect to
each Mortgage
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Loan which has become the subject of a Deficient Valuation, if the
principal
amount due under the related Mortgage Note has been reduced, the
difference
between the principal balance of the Mortgage Loan outstanding
immediately prior
to such Deficient Valuation and the principal balance of the
Mortgage Loan as
reduced by the Deficient Valuation.
Record Date: As to any Distribution Date, the last Business Day of
the
month preceding the month of each Distribution Date.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with
the refinancing of an existing mortgage loan.
Regulation AB: Subpart 22.1100 - Asset Backed Securities
(Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from
time to time,
and subject to such clarification and interpretation as have been
provided by
the Commission in the adopting release (Asset-Backed Securities,
Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005) or by
the staff of
the Commission, or as may be provided by the Commission or its
staff from time
to time.
Related Certificate Group: The Certificate Group related to a
particular
Mortgage Pool as indicated by the same numerical designation (i.e.,
Group 1
Certificates are related to Pool 1 and Group 2 Certificates are
related to Pool
2).
Relevant Servicing Criteria: The Servicing Criteria applicable to
the
various parties, as set forth on Exhibit S-2 hereto. For
clarification purposes,
multiple parties can have responsibility for the same Relevant
Servicing
Criteria. With respect to a Servicing Function Participant engaged
by the
Securities Administrator, any Servicer, the Trustee, the Custodian
or the Master
Servicer, the term "Relevant Servicing Criteria" may refer to a
portion of the
Relevant Servicing Criteria applicable to such parties.
Relief Act Reductions: With respect to any Distribution Date and
any
Mortgage Loan as to which there has been a reduction in the amount
of interest
collectible thereon for the most recently ended calendar month as a
result of
the application of the Civil Relief Act, the amount, if any, by
which (i)
interest collectible on such Mortgage Loan for the most recently
ended calendar
month is less than (ii) interest accrued thereon for such month
pursuant to the
Mortgage Note.
REMIC: Each pool of assets in the Trust Fund designated as a REMIC
as
described in the Preliminary Statement.
REMIC Interests: Any regular or residual interest in any of REMIC 1
or the
Upper Tier REMIC, as described in the Preliminary Statement.
REMIC Provisions: The provisions of the federal income tax law
relating to
real estate mortgage investment conduits, which appear at Sections
860A through
860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and
regulations, including proposed regulations and rulings, and
administrative
pronouncements promulgated thereunder, as the foregoing may be in
effect from
time to time.
REMIC 1: As described in the Preliminary Statement.
REMIC 1 Interest: Each class of interest in REMIC 1 as described in
the
Preliminary Statement.
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REMIC 1 Regular Interest: Each of the REMIC 1 Interests other than
the
Class LT1-R Interest.
REMIC 1 Subordinate Balance Ratio: The ratio among the
uncertificated
principal balances of each of the REMIC 1 Interests ending with the
designation
"A" that is equal to the ratio among, with respect to each such
REMIC 1
Interest, the excess of (x) the aggregate Scheduled Principal
Balance of the
Mortgage Loans in the related Mortgage Pool over (y) the aggregate
Class
Principal Amount of the Certificates in the Certificate Group
related to such
Mortgage Pool.
REO
Disposition: The final sale by the related Servicer of an REO
Property.
REO
Property: A Mortgaged Property acquired by the Issuing Entity
through
foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant
to the REMIC
Provisions.
Replacement Mortgage Loan: A mortgage loan substituted by the
Sponsor for a
Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed
in a Request for Release substantially in the form attached to this
Agreement,
(i) have a Stated Principal Balance, after deduction of the
principal portion of
the Scheduled Payment due in the month of substitution, not in
excess of, and
not more than 10% less than, the Stated Principal Balance of the
Deleted
Mortgage Loan; (ii) have a Maximum Rate not less than (and not more
than two
percentage points greater than) the Maximum Rate of the Deleted
Mortgage Loan;
(iii) have a gross margin not less than that of the Deleted
Mortgage Loan and,
if Mortgage Loans equal to 1% or more of the balance of the related
Mortgage
Pool as of the Cut-off Date have become Deleted Mortgage Loans, not
more than
two percentage points more than that of the Deleted Mortgage Loan;
(iv) have an
Effective Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan;
(v) have Adjustment Dates that are no more or less frequent than
the Deleted
Mortgage Loan; (vi) have a remaining term to maturity no greater
than (and not
more than one year less than that of) the Deleted Mortgage Loan;
(vii) not
permit conversion of the related Mortgage Rate to a permanent fixed
Mortgage
Rate; (viii) not be a Cooperative Loan unless the Deleted Mortgage
Loan was a
Cooperative Loan; (ix) have the same or better FICO credit score;
(x) have an
initial interest adjustment date no earlier than five months before
(and no
later than five months after) the initial adjustment date of the
Deleted
Mortgage Loan, (xi) comply with each representation and warranty
set forth in
Sections 2.03 and 2.04 of this Agreement; and (xii) shall be
accompanied by an
Opinion of Counsel that such Replacement Mortgage Loan would not
adversely
affect the REMIC status of any of the REMICs formed pursuant to
this Pooling and
Servicing Agreement or would not otherwise be prohibited by this
Pooling and
Servicing Agreement.
Reportable Event: As defined in Section 9.21(a).
Reporting Servicer: As defined in Section 9.21(h).
Request for Release: A request for release, substantially in the
form of
Exhibit N attached hereto, properly completed and signed by a
Servicing Officer
(or, if delivered on behalf of the Sponsor or Depositor, an
Authorized Officer
thereof).
Residual Certificate: The Class A-R Certificate.
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<PAGE>
Residual Interest: The
Residual Certificate, other than the portion thereof
representing the right to payments in respect of the Class LT1-R
Interest.
RESPA: The Real Estate Settlement Procedures Act, 12 U.S.C Section
2601 et
seq., and Regulation X, 24 C.F.R. Section 3500.21, thereunder, as
the foregoing
may be amended from time to time.
Responsible Officer: With respect to the Trustee or the
Securities
Administrator, any officer in the corporate trust department or
similar group of
the Trustee or the Securities Administrator with direct
responsibility for the
administration of this Agreement and also, with respect to a
particular
corporate trust matter, any other officer to whom such matter is
referred
because of his or her knowledge of and familiarity with the
particular subject.
Restricted Certificate: Any Class B-1, Class B-2 or Class B-3
Certificate.
Restricted Global Security: As defined in Section 3.01(c).
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., or
any successor in interest.
SAIF: The Saving's Association Insurance Fund, or any successor
thereto.
Sarbanes-Oxley Act: means the Sarbanes-Oxley Act of 2002 and the
rules and
regulations of the Commission promulgated thereunder (including
any
interpretations thereof by the Commission's staff).
Sarbanes-Oxley Certification: means a written certification signed
by an
officer of the Master Servicer that complies with (i) the
Sarbanes-Oxley Act,
and (ii) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect
from time to
time; provided that if, after the Closing Date (a) the
Sarbanes-Oxley Act is
amended, (b) the Rules referred to in clause (ii) are modified or
superseded by
any subsequent statement, rule or regulation of the Commission or
any statement
of a division thereof, or (c) any future releases, rules and
regulations are
published by the Commission from time to time pursuant to the
Sarbanes-Oxley
Act, which in any such case affects the form or substance of the
required
certification and results in the required certification being, in
the reasonable
judgment of the Master Servicer, materially more onerous that then
form of the
required certification as of the Closing Date, the Sarbanes-Oxley
Certification
shall be as agreed to by the Master Servicer and the Depositor
following a
negotiation in good faith to determine how to comply with any such
new
requirements
Schedule of Exceptions: As defined in Section 2.02(a) of this
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 which,
unless otherwise specified in this Agreement, shall give effect to
any related
Debt Service Reduction and any Deficient Valuation that affects the
amount of
the monthly payment due on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Securities Administrator: Wells Fargo Bank, National Association
and its
successors and assigns.
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<PAGE>
Senior Certificate: Any one of the Class I-A, Class II-A-1, Class
II-A-2,
or Class A-R Certificates.
Senior Percentage: Except as provided in this definition, for each
Mortgage
Pool with respect to any Distribution Date before November 2013,
100%.
Notwithstanding the foregoing sentence, for any Distribution Date
(i) occurring
prior to the Distribution Date in November 2017 but in or after
November 2009 on
which the Two Times Test is satisfied or (ii) in or after November
2017, the
related Senior Percentage for each Mortgage Pool will be the
related Pro Rata
Senior Percentage. For any Distribution Date occurring prior to
November 2009 on
which the Two Times Test is satisfied, the related Senior
Percentage for such
Mortgage Pool will be equal to the related Pro Rata Senior
Percentage plus 50%
of an amount equal to 100% minus the related Pro Rata Senior
Percentage. With
respect to any Distribution Date after the related Senior
Termination Date, the
related Senior Percentage will be 0%. If on any Distribution Date
the allocation
to the Senior Certificates of the related Certificate Group then
entitled to
distributions of principal of full and partial prepayments and
other amounts in
the percentage required above would reduce the sum of the Class
Principal
Amounts of those Certificates to below zero, the Senior Percentage
for such
Distribution Date shall be limited to the percentage necessary to
reduce such
Class Principal Amounts to zero.
Senior Prepayment Percentage: For the Senior Certificates for
any
Distribution Date and each related Certificate Group occurring in
or after
November 2013, will be as follows:
(i) for any Distribution Date occurring in or after November 2013
but
before November 2014, the related Pro Rata Senior Percentage plus
70% of
the
related Subordinate Percentage for that date;
(ii) for any Distribution Date occurring in or after November 2014
but
before November 2015, the related Pro Rata Senior Percentage plus
60% of
the
related Subordinate Percentage for that date;
(iii) for any Distribution Date occurring in or after November
2015
but
before November 2016, the related Pro Rata Senior Percentage plus
40%
of
the related Subordinate Percentage for that date;
(iv) for any Distribution Date occurring in or after November 2016
but
before November 2017, the related Pro Rata Senior Percentage plus
20% of
the
related Subordinate Percentage for that date; and
(v) for any Distribution Date occurring in November 2017 or
thereafter, the related Pro Rata Senior Percentage for that
date;
(i)
provided however, that any scheduled reduction to the Senior
Prepayment
Percentage for any Mortgage Pool as described above will occur
unless either:
(a)(i)(x) the Stated Principal Balance of Mortgage Loans delinquent
60 days or
more (including for this purpose any such Mortgage Loans in
foreclosure or
Bankruptcy and any REO Properties), averaged over the last six
months, as a
percentage of the aggregate outstanding Class Principal Amount of
the
Subordinate Certificates, is less than 50% or (y) the Stated
Principal Balance
of Mortgage Loans delinquent 60 days or more averaged over the last
six months,
as a percentage of the aggregate Stated Principal Balance of all
Mortgage Loans
averaged over the last six months, does not exceed 2%, and
27
<PAGE>
(ii)
Realized Losses on the Mortgage Loans to date for such
Distribution
Date, if occurring during the eighth, ninth, tenth, eleventh or
twelfth year (or
any year thereafter) after the Closing Date, are less than 30%,
35%, 40%, 45% or
50%, respectively, of the sum of the Class Principal Amount of the
Subordinate
Certificates as of the Closing Date; or (b)(i) the Stated Principal
Balance of
Mortgage Loans delinquent 60 days or more (including for this
purpose any such
Mortgage Loans in foreclosure or Bankruptcy and any REO
Properties), averaged
over the last six months, as a percentage of the aggregate
outstanding principal
balance of all Mortgage Loans averaged over the last six months,
does not exceed
4%, and (ii) Realized Losses on the Mortgage Loans to date for such
Distribution
Date, if occurring during the eighth, ninth, tenth, eleventh or
twelfth year (or
any year thereafter) after the Closing Date, are less than 10%,
15%, 20%, 25% or
30%, respectively, of the sum of the Class Principal Amount of the
Subordinate
Certificates as of the Closing Date and (ii) that for any
Distribution Date on
which the Pro Rata Senior Percentage exceeds the Pro Rata Senior
Percentage as
of the Closing Date, the Senior Prepayment Percentage for all of
the Mortgage
Pools shall be 100%. Notwithstanding the foregoing, upon the
reduction of the
Class Principal Amount of the Senior Certificates to zero, the
Senior Prepayment
Percentage will equal 0%.
In
addition, on any Distribution Date on or after the Distribution
Date
occurring in November 2009, if the current weighted average of the
Subordinate
Percentage of the Mortgage Pools is equal to or greater than two
times the
weighted average of the Subordinate Percentage as of the Closing
Date, and (a)
the Stated Principal Balance of the Mortgage Loans delinquent 60
days or more
(including for this purpose any such Mortgage Loans in foreclosure
or Bankruptcy
and any REO Properties), averaged over the last six months, as a
percentage of
the Subordinate Percentage for that Distribution Date times the
aggregate Stated
Principal Balance of the Mortgage Loans, does not exceed 50% and
(b) cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the
Subordinate
Percentage as of the Closing Date times the aggregate Stated
Principal Balance
of the Mortgage Loans as of the Cut-off Date, then, in each case,
the related
Senior Percentage for such Distribution Date will equal the related
Senior
Prepayment Percentage (such test, the "Two Times Test").
Senior Principal Distribution Amount: With respect to any Mortgage
Pool and
Distribution Date, the sum of:
1. the product of (a) the related Pro Rata Senior Percentage and
(b)
the
principal portion of each Scheduled Payment (without giving effect
to
any
Debt Service Reduction) on each Mortgage Loan in the related
Mortgage
Pool
due during the related Due Period;
2. the product of (a) the related Senior Prepayment Percentage and
(b)
each
of the following amounts: (i) the principal portion of each full
and
partial principal prepayment made by a borrower on a Mortgage Loan
in the
related Mortgage Pool during the related Prepayment Period; (ii)
each other
unscheduled collection, including Insurance Proceeds and net
Liquidation
Proceeds (other than with respect to any Mortgage Loan in the
related
Mortgage Pool that was finally liquidated during the related
Prepayment
Period) representing or allocable to recoveries of principal of the
related
Mortgage Loans received during the related Prepayment Period; and
(iii) the
principal portion of the purchase price of each Mortgage Loan
purchased by
the
Sponsor or any other person pursuant to the Mortgage Loan
Purchase
Agreement due to a defect in documentation or a material breach of
a
representation and warranty with respect to such Mortgage Loan or,
in the
case
of a permitted substitution of a Defective Mortgage Loan, the
amount
representing any principal adjustment in connection with any such
replaced
28
<PAGE>
Mortgage Loan in the related Mortgage Pool with respect to the
related
Prepayment Period;
3. with respect to unscheduled recoveries allocable to principal
of
any
Mortgage Loan in the related Mortgage Pool that was fully
liquidated
during the related Prepayment Period, the lesser of (a) the product
of (i)
the
Senior Percentage for that date and (ii) the remaining Stated
Principal
Balance of the related Mortgage Loan at the time of liquidation and
(b) the
product of (i) the Senior Prepayment Percentage for that date and
(ii) the
net
Liquidation Proceeds allocable to principal; and
4. any amounts described in clauses (1) through (3) above that
remain
unpaid with respect to such Certificate Group from prior
Distribution
Dates.
Senior Termination Date: For each Certificate Group, the
Distribution Date
when the aggregate of the Class Certificate Principal Balances of
that Group has
been reduced to zero.
Servicer: With respect to each MLCC Mortgage Loan, PHH Mortgage
Corporation, and with respect to each WFB Mortgage Loan, Wells
Fargo Bank, N.A.,
as applicable and as specified on the Mortgage Loan Schedule, and
their
respective successors and assigns.
Servicer Advance: The outstanding moneys that have been advanced by
the
related Servicer from its funds in connection with its servicing of
a Mortgage
Loan (including, but not limited to, taxes, ground rents,
assessments, insurance
premiums, release fees, foreclosure and bankruptcy fees and
expenses, and other
expenses) (i) that have been made by such Servicer in accordance
with the terms
and provisions in its related Servicing Agreement, (ii) that are
recoverable
through Liquidation Proceeds and/or Insurance Proceeds, or that are
made at the
direction of the Sponsor or to preserve its security interest in
the related
Mortgaged Property and (iii) for which such Servicer has a right
of
reimbursement.
Servicer Event of Default: As defined in Section 6.14(a).
Servicer Remittance Date: With respect to the Company, the 18th day
of each
calendar month after the initial issuance of the Certificates or,
if such 18th
day is not a Business Day, the immediately preceding Business Day,
commencing in
November 2006, and with respect to WFB, the 18th day of each
calendar month
after the initial issuance of the Certificates or, if such 18th day
is not a
Business Day, the immediately preceding Business Day, commencing in
November
2006.
Servicing Agreement: With respect to the Company, this Agreement,
and with
respect to WFB, the WFB Warranties and Servicing Agreement.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: As to any Distribution Date and each Mortgage Loan,
an
amount equal to the product of (a) one-twelfth of the Servicing Fee
Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the
first day of
the related Due Period.
Servicing Fee Rate: With respect to each Mortgage Loan and any
Distribution
Date, 0.25% per annum.
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<PAGE>
Servicing Function Participant: Any Sub-Servicer or Subcontractor
of a
Servicer, the Custodian, the Master Servicer, the Securities
Administrator and
the Trustee.
Servicing Officer: Any officer of the Company 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 Company on the Closing Date and attached hereto as
Exhibit M, as
such list may from time to time be amended.
Servicing Transfer Costs: As defined in Section 6.14(a).
Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate
that
adjusts in accordance with LIBOR for six-month U.S. dollar
deposits.
Sponsor: Merrill Lynch Mortgage Lending, Inc., or its successor
in
interest.
Startup Day: The day designated as such pursuant to Section
10.01(b)
hereof.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid
principal balance of such Mortgage Loan as of such Due Date as
specified in the
amortization schedule at the time relating thereto (before any
adjustment to
such amortization schedule by reason of any moratorium or similar
waiver or
grace period) after giving effect to any previous Principal
Prepayments and
Liquidation Proceeds allocable to principal and to the payment of
principal due
on such Due Date and irrespective of any delinquency in payment by
the related
Mortgagor.
Subcontractor: Any vendor, subcontractor or other Person that is
not
responsible for the overall servicing of Mortgage Loans but
performs one or more
discrete functions identified in Item 1122(d) of Regulation AB with
respect to
Mortgage Loans under the direction or authority of any Servicer (or
a
Sub-Servicer of any Servicer), the Master Servicer, the Trustee,
the Custodian
or the Securities Administrator.
Subordinate Certificate: Any of the Class M-1, Class M-2, Class
M-3, Class
B-1, Class B-2 or Class B-3 Certificates.
Subordinate Certificate Writedown Amount: The amount described in
Section
5.03(b)(iii).
Subordinate Class Percentage: As to any Distribution Date and any
Class of
Subordinate Certificates, a fraction, expressed as a percentage,
the numerator
of which is the Class Principal Amount of such Class on such date,
and the
denominator of which is the aggregate Class Principal Amount of all
Classes of
Subordinate Certificates on such date.
Subordinate Net WAC:
For any Distribution Date, the weighted average of the
Pool 1 Net WAC and the Pool 2 Net WAC weighted on the basis of the
Pool
Subordinate Amounts for Pool 1 and Pool 2, respectively, for such
Distribution
Date.
Subordinate Percentage: With respect to each Mortgage Pool and
any
Distribution Date, the difference between 100% and the related
Senior Percentage
for such Mortgage Pool for such Distribution Date; provided,
however, that on
any Distribution Date after a Senior Termination Date has occurred
with respect
to a Mortgage Pool, the Subordinate Percentage will represent the
entire
interest of the Subordinate Certificates in the Mortgage Loans and
will be equal
to the
30
<PAGE>
difference between 100% and the Senior Percentage related to the
Mortgage Loans
in the aggregate for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution
Date
and for any Mortgage Pool, the difference between 100% and the
related Senior
Prepayment Percentage for such Mortgage Pool for that Distribution
Date;
provided, however, that on any Distribution Date after a Senior
Termination Date
has occurred with respect to a Mortgage Pool, the Subordinate
Prepayment
Percentage will represent the entire interest of the Subordinate
Certificates in
the Mortgage Loans and will be equal to the difference between 100%
and the
Senior Prepayment Percentage related to the Mortgage Loans in the
aggregate for
such Distribution Date.
Subordinate Principal
Distribution Amount: With respect to any Distribution
Date and each Mortgage Pool, an amount equal to the sum of:
1. the related Subordinate Percentage of all amounts described
in
clause (a) of the definition of "Principal Distribution Amount" for
that
Distribution Date;
2. with respect to each Mortgage Loan in the related Mortgage
Pool
that
became a Liquidated Mortgage Loan during the related Prepayment
Period
the
amount of the Net Liquidation Proceeds allocated to principal
received
with
respect thereto remaining after application thereof pursuant to
clause
(2)
of the definition of "Senior Principal Distribution Amount" for
that
Distribution Date, up to the Subordinate Percentage of the Stated
Principal
Balance of such Mortgage Loan;
3. the related Subordinate Prepayment Percentage of all amounts
described in clauses (b), (c), (d), (f), (g), (h) and (i) of the
definition
of
"Principal Distribution Amount" for that Mortgage Pool and that
Distribution Date; and
4. any amounts described in clauses (1) through (3) for any
previous
Distribution Date that remain unpaid
minus the sum of:
5. if the aggregate Class Principal Amount of any Certificate
Group
has
been reduced to zero, principal paid from the Available
Distribution
Amount from the related Mortgage Pool to the remaining Certificate
Groups;
and
6. the amounts paid from the Available Distribution Amount for
the
Overcollateralized Senior Certificates to the Undercollateralized
Senior
Certificates.
Subsequent Recovery: The amount, if any, recovered by a Servicer or
the
Master Servicer with respect to a Liquidated Mortgage Loan with
respect to which
a Realized Loss has been incurred after liquidation and disposition
of such
Mortgage Loan.
Sub-Servicer: Any Person that services Mortgage Loans on behalf of
a
Servicer, and is responsible for the performance (whether directly
or through
sub-servicers or Subcontractors) of servicing functions required to
be performed
under this Agreement, any related Servicing Agreement or any
sub-servicing
agreement that are identified in Item 1122(d) of Regulation AB.
Substitution Amount: As defined in the second paragraph of Section
2.05(b).
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<PAGE>
Tax
Matters Person: The "tax matters person" as specified in the
REMIC
Provisions which shall initially be the Holder of the Class A-R
Certificate.
Telerate Page 3750: The display currently so designated as "Page
3750" on
the Bridge Telerate Service (or such other page selected by the
Trustee as may
replace Page 3750 on that service for the purpose of displaying
daily comparable
rates on prices).
Transfer Agreements: With respect to the MLCC Mortgage Loans, the
MLCC
Mortgage Loan Purchase Agreement, and with respect to the WFB
Mortgage Loans,
the WFB Warranties and Servicing Agreement.
Transferor: Each of MLCC and WFB, with respect to their individual
Transfer
Agreements.
Trust Fund: The corpus of the Issuing Entity created pursuant to
this
Agreement, consisting of (i) the Mortgage Loans, including the
right to all
payments of principal and interest received on or with respect to
the Mortgage
Loans on and after the Cut-off Date (other than Scheduled Payments
due on or
before such date), and all such payments due after such date but
received prior
to such date and intended by the related Mortgagors to be applied
after such
date; (ii) all of the Depositor's right, title and interest in and
to all
amounts from time to time credited to and the proceeds of the
Distribution
Account, any Collection Accounts, the Master Servicer Collection
Account or any
Escrow Accounts established with respect to the Mortgage Loans;
(iii) all of the
Depositor's rights under the Mortgage Loan Sale and Assignment
Agreement, the
Transfer Agreements, and the WFB Assignment Agreement; (iv) all of
the
Depositor's right, title or interest in REO Property and the
proceeds thereof;
(v) all of the Depositor's rights under any Insurance Policies
relating to the
Mortgage Loans; (vi) all proceeds of the conversion, voluntary or
involuntary,
of any of the foregoing into cash or other liquid assets, including
without
limitation, all Insurance Proceeds, Liquidation Proceeds and
condemnation
awards; and (vii) the Depositor's security interest in any
collateral pledged to
secure the Mortgage Loans, including the Mortgaged Properties and
any Additional
Collateral relating to the Additional Collateral Mortgage Loans,
including, but
not limited to, any pledge, control and guaranty agreements and the
Limited
Purpose Surety Bond and any proceeds of the foregoing.
Trustee: HSBC Bank USA, National Association, and any Person
succeeding the
Trustee hereunder, or if any separate trustee or any co-trustee
shall be
appointed as herein provided, then such separate trustee and such
co-trustee, as
the case may be.
Trustee Mortgage Files: With respect to each Mortgage Loan, the
Mortgage
Documents to be retained in the custody and possession of the
Trustee.
Two
Times Test: As defined in the definition of "Senior Prepayment
Percentage".
UCC:
The Uniform Commercial Code as enacted in the relevant
jurisdiction.
Undercollateralized Amount: As defined in Section 5.02(b)(iii).
Undercollateralized Senior Certificates: As defined in Section
5.02(b)(iii).
Underwriter: Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
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Underwriter's Exemption: Prohibited Transaction Exemption ("PTE")
90-29
(Exemption Application No. D-8019, 55 Fed. Reg. 21459 (1990)) as
amended, or any
substantially similar administrative exemption granted by the U.S.
Department of
Labor to the Underwriter.
Uniform Commercial Code: The Uniform Commercial Code as in effect
in any
applicable jurisdiction from time to time.
Upper Tier REMIC: As described in the Preliminary Statement.
Upper Tier REMIC Regular Interest: Each of the Class I-A
Certificates, the
Class II-A-1 Certificates, the Class II-A-2 Certificates, the Class
M-1
Certificates, the Class M-2 Certificates, the Class M-3
Certificates, the Class
B-1 Certificates, the Class B-2 Certificates and the Class B-3
Certificates.
Voting Interests: The portion of the voting rights of all the
Certificates
that is allocated to any Certificate for purposes of the voting
provisions of
this Agreement. At all times during the term of this Agreement,
100.00% of all
Voting Interests shall be allocated to the Class I-A, Class II-A-1,
Class
II-A-2, Class A-R, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and
Class B-3 Certificates. Voting Interests shall be allocated among
such
Certificates (other than the Class A-R Certificates) based on the
product of (i)
98.0% and (ii) the fraction, expressed as a percentage, the
numerator of which
is the aggregate Class Principal Amounts for each Class then
outstanding and the
denominator of which is the Aggregate Stated Principal Balance
outstanding, and
the remainder of such percentage of Voting Interests shall be
allocated to the
Class A-R Certificates. Voting Interests shall be allocated among
the
Certificates within each such Class in proportion to their
Certificate Principal
Amounts or Percentage Interests.
WFB:
Wells Fargo Bank, N.A. or any successor thereto.
WFB
Assignment Agreement: The assignment, assumption and
recognition
agreement, dated as of October 1, 2006, by and among the Depositor,
as assignee,
the Sponsor, as assignor, and WFB, as servicer.
WFB
Mortgage Loan: Any Mortgage Loan originated or acquired by Wells
Fargo
Bank, N.A.
WFB
Warranties and Servicing Agreement: The Seller's Warranties and
Servicing Agreement, dated July 1, 2006, by and between WFB, as
company, and
Merrill Lynch Mortgage Lending, Inc., as purchaser.
Section 1.02. Calculations Respecting Mortgage Loans.
Calculations required to be made pursuant to this Agreement with
respect to
any Mortgage Loan in the Trust Fund shall be made based upon
current information
as to the terms of the Mortgage Loans and reports of payments
received from the
Mortgagor on such Mortgage Loans and payments to be made to the
Securities
Administrator as provided by the Master Servicer (which in turn was
provided
such information by the related Servicer pursuant to its related
Servicing
Agreement). The Master Servicer and the Securities Administrator
shall not be
required to recompute, verify or recalculate the information
supplied to it by
the related Servicer or the Master Servicer, respectively.
33
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ARTICLE II.
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance
of
Mortgage Loans.
(a)
Concurrently with the execution and delivery of this Agreement,
the
Depositor does hereby establish the Trust Fund and transfer,
assign, set over,
deposit with and otherwise convey to the Trustee, without recourse,
subject to
Sections 2.02 and 2.05, in trust, all the right, title and interest
of the
Depositor in and to the Trust Fund. Such conveyance includes,
without
limitation, (i) the Mortgage Loans, including the right to all
payments of
principal and interest received on or with respect to the Mortgage
Loans on and
after the Cut-off Date (other than Scheduled Payments due on or
before such
date), and all such payments due after such date but received prior
to such date
and intended by the related Mortgagors to be applied after such
date; (ii) all
of the Depositor's right, title and interest in and to all amounts
from time to
time credited to and the proceeds of the Distribution Account, any
Collection
Accounts, the Master Servicer Collection Account or any Escrow
Account
established with respect to the Mortgage Loans; (iii) all of the
Depositor's
rights under the Mortgage Loan Sale and Assignment Agreement, the
Transfer
Agreements and the WFB Assignment Agreement; (iv) all of the
Depositor's right,
title or interest in REO Property and the proceeds thereof; (v) all
of the
Depositor's rights under any Insurance Policies relating to the
Mortgage Loans;
(vi) all proceeds of the conversion, voluntary or involuntary, of
any of the
foregoing into cash or other liquid assets, including, without
limitation, all
Insurance Proceeds, Liquidation Proceeds and condemnation awards;
and (vii) the
Depositor's security interest in any collateral pledged to secure
the Mortgage
Loans, including the Mortgaged Properties and any Additional
Collateral relating
to the Additional Collateral Mortgage Loans, including, but not
limited to, any
pledge, control and guaranty agreements and the Limited Purpose
Surety Bond and
any proceeds of the foregoing, to have and to hold, in trust; and
the Trustee
declares that, subject to the review provided for in Section 2.02,
it has
received and shall hold the Trust Fund, as trustee, in trust, for
the benefit
and use of the Holders of the Certificates and for the purposes and
subject to
the terms and conditions set forth in this Agreement, and,
concurrently with
such receipt, has caused to be executed, authenticated and
delivered to or upon
the order of the Depositor, in exchange for the Trust Fund,
Certificates in the
authorized denominations evidencing the entire ownership of the
Trust Fund.
Notwithstanding anything to the contrary in this Agreement, the
Trust Fund shall
not obtain title to or beneficial ownership of any Additional
Collateral as a
result of or in lieu of the disposition thereof or otherwise.
The
foregoing sale, transfer, assignment, set-over, deposit and
conveyance
does not and is not intended to result in the creation or
assumption by the
Trustee of any obligation of the Depositor, the Sponsor or any
other Person in
connection with the Mortgage Loans or any other agreement or
instrument relating
thereto except as specifically set forth therein.
It
is agreed and understood by the parties hereto that it is not
intended
that any Mortgage Loan be included in the Trust Fund that is a
"High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act, effective
November 27,
2003, the New Mexico Home Loan Protection Act, effective January 1,
2004, the
Massachusetts Predatory Home Loan Practices Act, effective November
7, 2004, and
the Indiana High Cost Home Loan Law, effective January 1, 2005.
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In
connection with such transfer and assignment of the Mortgage Loans,
the
Depositor shall deliver to, and deposit with, or cause to be
delivered to and
deposited with, the Trustee or its Custodian, the following
documents or
instruments; provided that in Section 2.01(a)(i) below, a lost note
affidavit
(including a copy of the original Mortgage Note) may be delivered
in lieu of the
original Mortgage Note (each a "Trustee Mortgage File") so
transferred and
assigned:
(i)
The original Mortgage Note endorsed, "Pay to the order of
___________,
without recourse" and signed in the name of the name of last
endorsee, by
an
authorized officer of the last endorsee. If the Mortgage Loan
was
acquired by the last endorsee in a merger or other type of
acquisition, the
endorsement must be by "[name of last endorsee], successor [by
merger to or
in
interest to, as applicable] [name of predecessor]"; and if the
Mortgage
Loan
was acquired or originated by the last endorsee while doing
business
under another name, the endorsement must be by "[name of last
endorsee],
successor in interest to [previous name]." The Mortgage Note shall
include
all
intervening endorsements showing a complete chain of title from
the
originator to the last endorsee.
(ii)
The original recorded Mortgage, 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 certified by the previous
owner to
be a
true copy of the original of the Mortgage which has been delivered
for
recording in the appropriate recording office of the jurisdiction
in which
the
Mortgaged Property is located.
(iii) The original Assignment of Mortgage, executed in blank. If
the
Mortgage Loan was acquired by the last endorsee in a merger or
other type
of
acquisition, the assignment must be by "[name of last
assignee],
successor [by merger to or in interest to, as applicable] [name
of
predecessor]"; and if the Mortgage Loan was acquired or originated
by the
last
endorsee while doing business under another name, the assignment
must
be
by "[name of last assignee], successor in interest to [previous
name]."
(iv)
The original policy of title insurance (or a preliminary title
report
if
the original title insurance policy has not been received from the
title
insurance company).
(v)
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 by the Depositor to be a true copy of the original of
the
assignment which has been delivered for recording in the
appropriate
recording office of the jurisdiction in which the Mortgaged
Property is
located.
(vi)
With respect to a Mortgage Loan that, according to the Mortgage
Loan
Schedule is covered by a primary mortgage insurance policy, the
original or
a
copy of primary mortgage insurance certificate, if any.
(vii) If indicated on the Mortgage Loan Schedule, originals of
all
assumption and modification agreements, if any, with originals or
copies of
the
underlying instruments being modified.
(viii) With respect to each Additional Collateral Mortgage
Loan,
A. Copy of the related Mortgage 100 Pledge Agreement for
Securities Account or the Parent Power Guaranty and Security
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Agreement for Securities Account or the Parent Power Guaranty
Agreement for Real Estate, as the case may be;
B. copy of the UCC-1 (applicable for South Carolina and Rhode
Island only);
C. an original form UCC-3, if applicable;
D. For loans originated by a correspondent lender, an original
assignment of security interest of the related Mortgage 100
Pledge Agreement or Parent Power Agreement, as the case may be.
(ix)
With respect to each Cooperative Loan:
A. the original
proprietary lease;
B. the original
recognition agreement;
C. the original
security agreement;
D. the original
or copy of the assignment of proprietary lease;
E. the original
cooperative stock certificate and stock power
executed by borrower in blank;
F. the original
UCC-1 financing statements; and
G.
the original
UCC-3 financing statements.
(xi)
Power of attorney, if applicable.
(b)
The Depositor shall cause the Mortgage Notes with respect to
each
Mortgage Loan to be completed either (A) in blank, without
recourse, or (B)
endorsed to "HSBC Bank USA, National Association, as Trustee of the
Merrill
Lynch Mortgage Investors Trust Series MLCC 2006-3, Mortgage
Pass-Through
Certificates, without recourse" and the Depositor shall cause
Assignments of
Mortgage with respect to each Mortgage Loan other than a
Cooperative Mortgage
Loan to be completed either (A) in blank or (B) to "HSBC Bank USA,
National
Association, as Trustee of the Merrill Lynch Mortgage Investors
Trust Series
MLCC 2006-3, Mortgage Pass-Through Certificates," within 30 days of
the Closing
Date for purpose of their recording; provided, however, that such
Assignments of
Mortgage need not be recorded unless required in writing by the
Rating Agencies;
provided, further, that with respect to each MERS Mortgage Loan
where MERS is
not the Mortgagee of record, the original Assignment of Mortgage
showing MERS as
the assignee of the Mortgage, with the evidence of recording
thereon or copies
thereof certified by an officer of the Depositor to have been
submitted for
recordation, shall be delivered to the Trustee, or its
Custodian.
If
any Mortgage has been recorded in the name of MERS or its designee,
no
Assignment of Mortgage in favor of the Trustee will be required to
be prepared
or delivered and instead, the Company shall take all actions as are
necessary to
cause the Trustee to be shown as the owner of the related Mortgage
Loan on the
records of MERS for the purpose of the system of recording transfer
of
beneficial ownership of mortgages maintained by MERS.
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(c)
In instances where a title insurance policy is required to be
delivered
to the Trustee and is not so delivered, the Depositor will provide
a copy of
such title insurance policy to the Trustee, as promptly as
practicable after the
execution and delivery hereof, but in any case within 270 days of
the Closing
Date.
(d)
For Mortgage Loans (if any) that have been prepaid in full after
the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu
of delivering
the above Trustee Mortgage File, shall deliver to the Trustee and
the Securities
Administrator an Officer's Certificate which shall include a
statement to the
effect that all amounts received in connection with such prepayment
that are
required to be deposited in the Distribution Account pursuant to
Section 4.01
have been so deposited. All original documents that are not
delivered to the
Trustee, or its Custodian, or the Securities Administrator shall be
held by the
related Servicer in trust for the benefit of the Trustee, the
Securities
Administrator and the Certificateholders.
(e)
Notwithstanding anything to the contrary contained herein, the
parties
hereto acknowledge that the functions of the Trustee with respect
to the
custody, acceptance, inspection and release of the Trustee Mortgage
Files,
including but not limited to certain insurance policies and
documents
contemplated by this Agreement, and preparation and delivery of
the
certifications shall be performed by the Custodian pursuant to the
terms and
conditions of the Custodial Agreement.
Section 2.02. Acceptance of Trust Fund by Trustee; Review of
Documentation
for Trust Fund.
(a)
The Trustee, by execution and delivery hereof, acknowledges receipt
by
it of the Trustee Mortgage Files pertaining to the Mortgage Loans
listed on the
Mortgage Loan Schedule, subject to review thereof as provided
herein. Upon
receipt by the Trustee, or its Custodian, of each Trustee Mortgage
File, the
Trustee, or its Custodian, shall review each Trustee Mortgage File
in accordance
with the following review procedures:
The
Trustee, or its Custodian, shall review the documents delivered to
it
and
shall deliver to the Depositor, prior to the Closing Date, a
Mortgage
Loan
Schedule and Schedule of Exceptions (as defined below) with respect
to
the
Mortgage Loans, and the delivery of each Mortgage Loan Schedule
and
Schedule of Exceptions by the Trustee, or its Custodian, hereunder
shall be
the
Trustee's certification that such Mortgage Loans are held for the
Trust
Fund
and that, as to each Mortgage Loan listed in the related Mortgage
Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage
Loan
specifically identified in such certification as not covered by
the
Schedule of Exceptions):
(A) all documents described in Sections 2.01(a)(i) through
2.01(a)(v)
and
to the extent provided in the Trustee's Mortgage Files Sections
2.01(a)(vi) through 2.01(a)(xi), if applicable, of this Agreement
are in
its
possession;
(B) such documents have reviewed by it and appear regular on
their
face
and relate to such Mortgage Loan;
(C) based on its examination and only as to the foregoing
documents,
the
information set forth in the Mortgage Loan Schedule corresponding
to
the
loan number for the Mortgage Loan, the Mortgagor's name, including
the
street address but excluding the zip code, the Mortgage Interest
Rate and
the
original principal balance of the Mortgage Loan respecting such
Mortgage Loan is correct; and
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(D) each Mortgage Note has been endorsed and each Assignment has
been
executed as provided in Section 2.01 hereof.
In making such
verifications, the Trustee, or its Custodian, may rely
conclusively on the Mortgage Loan Schedule and the documents
constituting the
Trustee Mortgage File, and the Trustee, and its Custodian, shall
have no
obligation to independently verify the validity, enforceability,
recordability,
sufficiency, due authorization or genuineness of any document in
any Trustee
Mortgage File or any Mortgage Loan hereunder, nor the
collectibility,
insurability, effectiveness or suitability of any Mortgage Loan
hereunder. The
Trustee, or its Custodian, shall prepare an initial certification
to be
delivered to the Depositor, the Sponsor and the Master Servicer on
the Closing
Date in the form annexed hereto as Exhibit K (the "Initial
Certification") with
respect to the Mortgage Loans (other than any Mortgage Loan paid in
full or any
Mortgage Loan specifically identified on the Schedule of Exceptions
attached to
the Initial Certification (the "Schedule of Exceptions") as not
covered by such
Initial Certification) listed on the Mortgage Loan Schedule. If the
Trustee, or
its Custodian, determines from such verification that any
discrepancy or
deficiency exists with respect to a Trustee Mortgage File, the
Trustee, or its
Custodian, shall note such omission, discrepancy or deficiency on
the Schedule
of Exceptions attached to the Initial Certification, and shall
deliver a copy
(which shall be electronic, if requested) of the Schedule of
Exceptions to the
Depositor on the Closing Date. During the life of the Mortgage
Loans (while
subject to this Agreement), in the event the Trustee, or its
Custodian,
discovers any defect with respect to any Trustee Mortgage File, the
Trustee, or
its Custodian, shall give written specification of such defect to
the Depositor.
Except as specifically provided above, the Trustee, and its
Custodian, shall be
under no duty to review, inspect or examine such documents to
determine that any
of them are enforceable or appropriate for their prescribed
purpose.
(b)
If in the course of the review described in paragraph (a) of
this
Section 2.02 the Trustee, or its Custodian, discovers any document
or documents
constituting a part of a Trustee Mortgage File that is missing,
does not appear
regular on its face (i.e., is mutilated, damaged, defaced, torn or
otherwise
physically altered) or appears to be unrelated to the Mortgage
Loans identified
in the Mortgage Loan Schedule (each, a "Material Defect"), the
Trustee, or its
Custodian, upon discovering such Material Defect shall promptly
identify the
Mortgage Loan to which such Material Defect relates to the
Depositor, the
Sponsor and the Master Servicer. Within 90 days of its receipt of
such notice
(but in no case prior to the 270th day following the Closing Date),
the
Depositor shall be required to cure such Material Defect (and, in
such event,
the Depositor shall provide the Trustee with an Officer's
Certificate confirming
that such cure has been effected). If the Company or Master
Servicer notifies
the Depositor and the Trustee in writing that (i) a loss has
occurred and (ii)
such loss relates to a Mortgage Loan for which the Trustee, or its
Custodian,
previously identified a Material Defect or for which the Company or
Master
Servicer has identified a Material Defect and the Depositor has not
cured such
Material Defect, then the Depositor shall repurchase such Mortgage
Loan at the
Purchase Price therefor in the event that such loss would, if such
Mortgage Loan
is not repurchased by the Depositor, constitute a Realized Loss and
such loss is
attributable to the failure of the Depositor to have cured such
Material Defect.
A loss shall be deemed to be attributable to the failure of the
Depositor to
cure a Material Defect if, as determined by the Depositor, acting
in good faith,
absent such Material Defect, such loss would not have been
incurred. Within the
two-year period following the Closing Date, the Depositor may, in
lieu of
repurchasing a Mortgage Loan pursuant to this Section 2.02(b),
substitute for
such Mortgage Loan a Replacement Mortgage Loan subject to the
provisions of
Section 2.05.
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(c)
Within 270 days following the Closing Date, the Trustee or its
Custodian shall deliver to the Depositor, the Sponsor and the
Master Servicer, a
final certification substantially in the form attached as Exhibit L
(the "Final
Certification") evidencing the completeness of the Trustee Mortgage
Files in its
possession or control, with any exceptions noted on the Schedule of
Exceptions
attached to the Final Certification.
(d)
Nothing in this Agreement shall be construed to constitute an
assumption by the Issuing Entity, the Trustee or the
Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or
to any
Mortgagor.
(e)
Upon execution of this Agreement, the Depositor hereby delivers to
the
Trustee and the Trustee acknowledges receipt of the Mortgage Loan
Sale and
Assignment Agreement.
(f)
Notwithstanding anything to the contrary contained herein, the
parties
hereto acknowledge that the functions of the Trustee with respect
to the
custody, acceptance, inspection and release of the Mortgage
Documents, including
but not limited to certain insurance policies and documents
contemplated by this
Agreement, and preparation and delivery of the certifications shall
be performed
by the Custodian pursuant to the terms and conditions of the
Custodial
Agreement.
Section 2.03. Representations and Warranties of the Depositor
(a)
The Depositor hereby represents and warrants to the Master
Servicer,
the Company, the Securities Administrator and to the Trustee, for
the benefit of
the Certificateholders as of the Closing Date or such other date as
is
specified, that:
(i) the Depositor is a corporation duly organized, validly
existing
and
in good standing under the laws governing its creation and
existence
and
has full corporate power and authority to own its property, to
carry on
its
business as presently conducted, to enter into and perform its
obligations under this Agreement, and to create the trust pursuant
hereto;
(ii) the execution and delivery by the Depositor of this
Agreement
have
been duly authorized by all necessary corporate action on the part
of
the
Depositor; neither the execution and delivery of this Agreement,
nor
the
consummation of the transactions herein contemplated, nor
compliance
with
the provisions hereof, will conflict with or result in a breach of,
or
constitute a default under, any of the provisions of any law,
governmental
rule, regulation, judgment, decree or order binding on the
Depositor or its
properties or the certificate of incorporation or bylaws of the
Depositor;
(iii) the execution, delivery and performance by the Depositor of
this
Agreement and the consummation of the transactions contemplated
hereby do
not
require the consent or approval of, the giving of notice to,
the
registration with, or the taking of any other action in respect of,
any
state, federal or other governmental authority or agency, except
such as
has
been obtained, given, effected or taken prior to the date
hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due execution and delivery by the
Trustee,
constitutes a valid and binding obligation of the Depositor
enforceable
against it in accordance with its terms except as such
enforceability may
be
subject to (A) applicable bankruptcy and insolvency laws and
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other similar laws affecting the enforcement of the rights of
creditors
generally and (B) general principles of equity regardless of
whether such
enforcement is considered in a proceeding in equity or at law;
(v) there are no actions, suits or proceedings pending or, to
the
knowledge of the Depositor, threatened or likely to be asserted
against or
affecting the Depositor, before or by any court, administrative
agency,
arbitrator or governmental body (A) with respect to any of the
transactions
contemplated by this Agreement or (B) with respect to any other
matter
which in the judgment of the Depositor will be determined adversely
to the
Depositor and will if determined adversely to the Depositor
materially and
adversely affect it or its business, assets, operations or
condition,
financial or otherwise, or adversely affect its ability to perform
its
obligations under this Agreement;
(vi) immediately prior to the transfer and assignment of the
Mortgage
Loans to the Trustee, the Depositor was the sole owner of record
and holder
of
each Mortgage Loan, and the Depositor had good and marketable
title
thereto, and had full right to transfer and sell each Mortgage Loan
to the
Trustee free and clear, subject only to (1) liens of current real
property
taxes and assessments not yet due and payable and, if the related
Mortgaged
Property is a condominium unit, any lien for common charges
permitted by
statute, (2) covenants, conditions and restrictions, rights of
way,
easements and other matters of public record as of the date or
recording of
such
Mortgage acceptable to mortgage lending institutions in the area
in
which the related Mortgaged Property is located and specifically
referred
to
in the lender's title insurance policy or attorney's opinion f
title and
abstract of title delivered to the Originator of such Mortgage
Loan, and
(3)
such other matters to which like properties are commonly subject
which
do
not, individually or in the aggregate, materially interfere with
the
benefits of the security intended to be provided by the Mortgage,
of any
encumbrance, equity, participation interest, lien, pledge, charge,
claim or
security interest, and had full right and authority, subject to no
interest
or
participation of, or agreement with, any other party, to sell and
assign
each
Mortgage Loan pursuant to this Agreement;
(vii) None of the Mortgage Loans have any marks or notations
indicating that such Mortgage Loans have been pledged, assigned
or
otherwise conveyed to any Person other than the Trustee;
(viii) The Depositor has received all consents and approvals
required
by
the terms of the Mortgage Loans to convey the Mortgage Loans
hereunder
to
the Trustee;
(ix) As of the Closing Date, no Mortgage Loan provides for
interest
other than at either (x) a single fixed rate in effect throughout
the term
of
the Mortgage Loan or (y) a single "variable rate" (within the
meaning of
Treasury Regulations Section 1.860G-1(a)(3)) in effect throughout
the term
of
the Mortgage Loan;
(x) As of the Closing Date, each Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code
(without
regard to Treasury Regulations Section 1.860G-2(f)) or any similar
rule
that
provides that a defective obligation is a qualified mortgage for
a
temporary period);
(xi) As of the Closing Date, no Mortgage Loan is the subject of
pending or final foreclosure proceedings; and
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(xii) As of the Closing Date, the Depositor would not initiate
foreclosure proceedings with respect to any Mortgage Loan based on
such
Mortgage Loan's delinquency status prior to the next scheduled
payment date
for
such Mortgage Loan.
The
foregoing representations made in this Section 2.03 and Section
9.21 by
the Depositor shall survive the termination of this Agreement and
shall not be
waived by any party hereto
(b)
The representations and warranties of each Transferor with respect
to
the related Mortgage Loans in the related Transfer Agreement, which
have been
assigned to the Trustee hereunder, were made as of the date
specified in the
related Transfer Agreement. The representations and warranties of
the Sponsor
with respect to the Mortgage Loans contained in the Mortgage Loan
Sale and
Assignment 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 related Transferor
under the
related Transfer Agreement and (ii) a representation or warranty of
the Sponsor
under the Mortgage Loan Sale and Assignment Agreement, the
obligations of the
Sponsor under the Mortgage Loan Sale and Assignment Agreement shall
be enforced
against the related Transferor or the Sponsor, as applicable, as
set forth in
the Mortgage Loan Sale and Assignment Agreement. The Trustee
acknowledges that
the Sponsor 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, 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, without regard to whether the related
Transferor
fulfills its contractual obligations in respect of such
representation or
warranty. The Trustee also acknowledges that the Sponsor shall have
no
obligation or liability with respect to any breach of a
representation or
warranty made solely by the Transferor 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 Sections 2.03(a)(vii)-(xii))
under any
circumstances.
In
addition to the representations and warranties of the related
Transferor
in the related Transfer Agreement, with respect to each Mortgage
Loan, the
related 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 Sponsor shall
(1) use
reasonable efforts to enforce such covenant against the related
Transferor and
(2) if the Sponsor successfully enforces any obligation of the
related
Transferor to repurchase such Mortgage Loan, the Sponsor shall
repurchase such
Mortgage Loan in accordance with this Section 2.03. If the Sponsor
does not
successfully enforce the obligation, if any, of the related
Transferor to
repurchase a Mortgage Loan with respect to any breach of any such
additional
covenants, the Sponsor shall have no obligation or right to
repurchase or cure
such Mortgage Loan.
Section 2.04. Representations and Warranties Concerning the
Master
Servicer, the Securities Administrator and the Company.
(a)
Wells Fargo Bank, Bank, National Association, in its capacity as
Master
Servicer and Securities Administrator hereby represents and
warrants to the
Seller, the Depositor, the Company and the Trustee as follows, as
of the Closing
Date:
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(i) It is a national banking association duly formed, validly
existing
and in good standing under the laws of the United States of America
and is duly
authorized and qualified to transact any and all business
contemplated by this
Agreement to be conducted by the Master Servicer and the
Securities
Administrator, to the extent necessary to ensure its ability to
master service
the Mortgage Loans in accordance with the terms of this Agreement
and to perform
any of its other obligations under this Agreement in accordance
with the terms
hereof;
(ii) It has the full corporate power and authority to execute,
deliver
and perform, and to enter into and consummate the transactions
contemplated by
this Agreement and has duly authorized by all necessary corporate
action on its
part the execution, delivery and performance of this Agreement; and
this
Agreement, assuming the due authorization, execution and delivery
hereof by the
other parties hereto, constitutes its legal, valid and binding
obligation,
enforceable against it in accordance with its terms, except that
(a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium,
receivership and other similar laws relating to creditors' rights
generally and
(b) the remedy of specific performance and injunctive and other
forms of
equitable relief may be subject to equitable defenses and to the
discretion of
the court before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it, the
consummation of any other of the transactions contemplated by this
Agreement,
and the fulfillment of or compliance with the terms hereof are in
its ordinary
course of business and will not (A) result in a material breach of
any term or
provision of its charter or by-laws or (B) materially conflict
with, result in a
material breach, violation or acceleration of, or result in a
material default
under, the terms of any other material agreement or instrument to
which it is a
party or by which it may be bound, or (C) constitute a material
violation of any
statute, order or regulation applicable to it of any court,
regulatory body,
administrative agency or governmental body having jurisdiction over
it; and it
is not in breach or violation of any material indenture or other
material
agreement or instrument, or in violation of any statute, order or
regulation of
any court, regulatory body, administrative agency or governmental
body having
jurisdiction over it which breach or violation may materially
impair its ability
to perform or meet any of its obligations under this Agreement.
(iv) No litigation is pending or, to the best of its knowledge,
threatened, against it that would materially and adversely affect
the execution,
delivery or enforceability of this Agreement or its ability to
perform any of
its other obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any court
or
governmental agency or body is required for its execution, delivery
and
performance of, or compliance with, this Agreement or the
consummation of the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, it has obtained the same.
(b)
The Company, as a Servicer, hereby represents, warrants, and
covenants
to the Depositor, the Master Servicer, the Securities Administrator
and the
Trustee, for the benefit of the Certificateholders as of the
Closing Date the
following.
(i) PHH is a corporation duly organized, validly existing and in
good
standing under the laws of the State of New Jersey. The Company has
in full
force and effect (without notice of possible suspension, revocation
or
impairment) all required qualifications, permits, approvals,
licenses, and
registrations, or exemption therefrom, to conduct all activities in
all
jurisdictions in which its activities with respect to the Mortgage
Loans require
it to be qualified or licensed;
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(ii) The Company has all requisite corporate power, authority
and
capacity to carry on its business as it is now being conducted, to
execute and
deliver this Agreement, and to perform all of its obligations
hereunder. The
Company does not believe, nor does it have any cause or reason to
believe, that
it cannot perform each and every covenant contained in this
Agreement;
(iii) The execution, delivery and performance of this Agreement by
the
Company and consummation of the transactions contemplated hereby
have been duly
and validly authorized by all necessary corporate, shareholder or
other action
by the Company; this Agreement has been duly and validly executed
and delivered
by the Company; and this Agreement is a valid and legally binding
agreement of
the Company, enforceable against the Company in accordance with its
respective
terms, subject to bankruptcy, insolvency and similar laws affecting
generally
the enforcement of creditors' rights and the discretion of a court
to grant
specific performance of contracts;
(iv) Neither the execution and delivery of this Agreement, nor
the
consummation of the transactions contemplated hereby, nor
compliance with their
respective terms and conditions shall (a) violate, conflict with,
result in the
breach of, constitute a default under, be prohibited by or require
any
additional approval under any terms, conditions or provisions of
the Company's
articles of incorporation or by-laws or any other similar corporate
or
organizational document of the Company; any mortgage, indenture,
deed of trust,
loan or credit agreement or other agreement or instrument to which
the Company
is now a party or by which it is bound; or any law, ordinance,
rule, regulation,
order, judgment or decree of any governmental authority applicable
to the
Company; or (b) result in the creation or imposition of any lien,
charge or
encumbrance of any material nature upon any of the properties or
assets of the
Company;
(v) The Company holds all licenses, approvals, permits and
other
authorizations, or exemptions therefrom, required under applicable
law to assume
responsibility for servicing the Mortgage Loans;
(vi) There is no litigation, claim, demand, proceeding or
governmental
investigation existing or pending, or to the knowledge of the
Company,
threatened, nor is there any order, injunction or decree
outstanding against or
relating to the Company that could (i) have a material adverse
effect upon the
performance by the Company of its obligations under this Agreement
or (ii) to
the Company's knowledge, result in any material loss or liability
to Depositor,
the Trustee, the Trust Fund or the Sponsor. Further, to the
Company's knowledge,
there is no meritorious basis for any such litigation, claim,
demand,
proceeding, or governmental investigation;
(vii) The Company has been approved by GNMA, Fannie Mae and FHLMC
and
will remain approved as an "eligible seller/servicer" of
residential mortgage
loans as provided in GNMA, Fannie Mae, or FHLMC guidelines and in
good standing.
The Company has not received any notification from GNMA, Fannie Mae
or FHLMC
that the Company is not in compliance with the requirements of the
approved
"seller/servicer" status. The Company is a mortgagee approved by
the Secretary
of HUD pursuant to Section 203 and 211 of the National Housing Act.
The Company
has not received any notification from HUD that the Company is not
in compliance
with the requirements of the approved mortgagee status;
(viii) The servicing practices to be used by the Company under
this
Agreement are, and shall remain, in all material respects in
compliance with
Accepted Servicing Practices,
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including without limitation, all federal, state and local laws,
rules, all
regulations and requirements in connection therewith, and Fannie
Mae guidelines,
as applicable;
(ix) The Company has not received written notice from or on behalf
of
FHA, HUD, FDIC, Fannie Mae, FHLMC or GNMA, advising the Company of
its failure
to comply with applicable servicing or claims procedures, or
resulted in a
request for repurchase of mortgage loans or indemnification in
connection with
any mortgage loans;
(x) The Company has in place a contingency plan that will enable it
to
perform its obligations under this Agreement in all material
respects, at
another location within five (5) Business Days in the event its
primary location
is rendered inoperative as a result of a natural or other disaster
or emergency;
(xi) The Company maintains and shall maintain, in good standing,
all
licenses and approvals necessary to service the Mortgage Loans and
maintains and
shall at all times maintain the capital requirements imposed by the
licensing or
approving entities having jurisdiction over the Company;
(xii) The Company maintains and shall at all times maintain error
and
omissions and fidelity insurance coverage of the type and in the
amounts
required by Fannie Mae;
(xiii) The Company has, and shall at all times maintain during
the
term of this Agreement, sufficient systems, including but not
limited to the
Company's EDP, and trained and experienced personnel in place to
perform its
obligations under this Agreement;
(xiv) For so long as, and to the extent that, the Company services
the
Mortgage Loans, the Company will continue to comply with each
applicable
federal, state, or local, law, statute, and ordinance, and any
rule, regulation,
or order issued thereunder, pertaining to the subject matter of
this Agreement,
including, but not limited to, usury, RESPA, Consumer Credit
Reporting Act,
Equal Credit Opportunity Act, Federal Deposit Insurance Corporation
Improvement
Act, Regulation B, Fair Credit Reporting Act, Fair Debt Collection
Practices
Act, Fair Housing Act, Truth in Lending Act and Regulation Z, Flood
Disaster
Protection Act of 1973, and any applicable regulations related
thereto, and such
other fair housing, anti-redlining, equal credit opportunity,
truth-in-lending,
real estate settlement procedures, fair credit reporting, and every
other
prohibition against unlawful discrimination in residential mortgage
lending or
governing consumer credit, and all state consumer credit statutes
and
regulations, as amended. In the event the Depositor or the Master
Servicer has a
reasonable good faith belief in the Company's non-compliance with
this
representation and warranty and upon the Depositor's or the Master
Servicer's
written request, the Company shall deliver to the Depositor or the
Master
Servicer reasonable evidence of compliance with any of the
requirements of this
representation and warranty; and
(xv) Neither the Company, its parent, nor any of its subsidiaries
is
in bankruptcy, receivership or conservatorship. The Company has the
requisite
financial resources and ability to meet its obligations under this
Agreement,
including, but not limited to, any and all indemnification
obligations.
Within sixty (60) days of the earlier of either discovery by or
notice to
the Company of any breach of a representation or warranty set forth
in this
Section 2.04(b), which materially and adversely affects the ability
of the
Company to perform its duties and obligations under this Agreement
or otherwise
materially and adversely affects the value of the Mortgage Loans,
the
44
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Mortgaged Property or the priority of the security interest on such
Mortgaged
Property, the Company shall use its best efforts promptly to cure
such breach in
all material respects and, if such breach cannot be cured, the
Company shall, at
the Master Servicer's option, assign the Company's rights and
obligations under
this Agreement (or respecting the affected Mortgage Loans) to a
successor
servicer selected by the Depositor with the prior consent and
approval of the
Master Servicer. Such assignment shall be made in accordance with
this Agreement
Section 2.05. Discovery of Breach; Repurchase or Substitution of
Mortgage
Loans.
(a)
Upon discovery (i) by the Depositor, the Sponsor, the Master
Servicer,
the Company, the Securities Administrator or the Trustee of a
breach of any
representation or warranty made by the Depositor under Section 2.03
which
materially adversely affects the value of a Mortgage Loan or the
interest
therein of the Certificateholder (a "Defective Mortgage Loan"), or
(ii) by the
Depositor or the Sponsor of the breach by the Sponsor or a
Transferor of any
representation or warranty herein or under the Mortgage Loan Sale
and Assignment
Agreement or a Transfer Agreement, respectively, in respect of any
Mortgage
Loan, which breach results in the Mortgage Loan being a "Defective
Mortgage
Loan" (each of such parties hereby agreeing to give written notice
of such
breach to the Trustee and the other of such parties), the
Securities
Administrator, the Trustee, or its Custodian, shall promptly notify
the
Depositor in writing of such breach and request that the Depositor
cure or cause
the cure of such breach within ninety (90) days from the date that
the Depositor
discovered or was notified of such breach, and if the Depositor
does not cure
such breach in all material respects during such period, the
Trustee shall (i)
in the case of an uncured breach under Section 2.03, cause the
Depositor to
repurchase such Defective Mortgage Loan at the Purchase Price, (ii)
in the case
of an uncured breach by the Sponsor under the Mortgage Loan Sale
and Assignment
Agreement, cause the Depositor to enforce the Sponsor's obligation
under the
Mortgage Loan Sale and Assignment Agreement to repurchase that
Defective
Mortgage Loan from the Trust Fund at the Purchase Price, and (iii)
in the case
of an uncured breach by the Transferor under the related Transfer
Agreement,
cause the Depositor to enforce such Transferor's obligation under
the related
Transfer Agreement to repurchase that Defective Mortgage Loan from
the Trust
Fund at the Purchase Price, in each case on or prior to the
Determination Date
following the expiration of such 90-day period (subject to Section
2.05(b)
below); provided, however, that, in connection with any such breach
under
clauses (ii) or (iii) above that could not reasonably have been
cured within
such 90-day period, if the Sponsor or such Transferor shall have
commenced to
cure such breach within such 90-day period and, if the defective
Mortgage Loan
qualifies as a "qualified mortgage" within the meaning of Section
860G(a)(3) of
the Code following such 90-day period, the Sponsor or such
Transferor shall be
permitted to proceed thereafter diligently and expeditiously to
cure the same
within an additional 90-day period. The Purchase Price for the
repurchased
Defective Mortgage Loan shall be deposited in the Distribution
Account, and the
Trustee, or its Custodian, upon written notice of the receipt of
such deposit by
the Securities Administrator and two copies of a Request for
Release with
respect to such Defective Mortgage Loan by the Trustee or its
Custodian, shall
release to the Sponsor or the Depositor, as applicable, the related
Trustee
Mortgage File and shall execute and deliver such instruments of
transfer or
assignment, in each case without recourse, representation or
warranties, as
either party shall furnish to it and as shall be necessary to vest
in such party
any Defective Mortgage Loan released pursuant hereto and the
Trustee, or its
Custodian, shall have no further responsibility with regard to such
Trustee
Mortgage File (it being understood that the Trustee shall have no
responsibility
for determining the sufficiency of such assignment for its intended
purpose). In
lieu of repurchasing any such Defective Mortgage Loan as provided
above, the
Sponsor may cause such Defective Mortgage Loan to be removed from
the Trust Fund
(in which case it shall become a Deleted Mortgage Loan) and
substitute one or
more Replacement Mortgage Loans in the manner and subject to
the
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<PAGE>
limitations set forth in Section 2.05(b) below. It is understood
and agreed that
the obligation of the Sponsor or the related Transferor (or the
Depositor, if
applicable) to cure or to repurchase (or to substitute for) any
Mortgage Loan as
to which a breach has occurred and is continuing shall constitute
the sole
remedy against the Sponsor or such Transferor (or the Depositor, if
applicable)
respecting such breach available to the Trustee on behalf of
the
Certificateholders. With respect to the representations and
warranties that are
made to the best of the Sponsor's knowledge, if it is discovered by
any of the
Depositor, the Sponsor or the Trustee that the substance of such
representation
and warranty is inaccurate and such inaccuracy materially and
adversely affects
the value of the related Mortgage Loan, then notwithstanding the
Sponsor's lack
of knowledge with respect to the substance of such representation
and warranty,
such inaccuracy shall be deemed a breach of the applicable
representation or
warranty.
(b)
Any substitution of Replacement Mortgage Loans for Deleted
Mortgage
Loans made pursuant to Section 2.05(a) above must be effected prior
to the last
Business Day that is within two years after the Closing Date. As to
any Deleted
Mortgage Loan for which the Sponsor substitutes a Replacement
Mortgage Loan or
Loans, such substitution shall be effected by delivering to the
Trustee or its
Custodian for such Replacement Mortgage Loan or Loans, the Mortgage
Note, the
Mortgage, the Assignment to the Trustee, and such other documents
and
agreements, with all necessary endorsements thereon, together with
an Officers'
Certificate stating that each such Replacement Mortgage Loan
satisfies the
definition thereof and specifying the Substitution Amount (as
described below),
if any, in connection with such substitution. The Trustee, or its
Custodian,
shall acknowledge receipt for such Replacement Mortgage Loan and,
within 45 days
thereafter, shall review such Mortgage Documents as specified in
this Agreement
under Section 2.02(a) and deliver to the Depositor, with respect to
such
Replacement Mortgage Loans, a certification substantially in the
form of a
revised Initial Certification, with any exceptions noted thereon.
Within one
year of the date of substitution, the Trustee, or its Custodian,
shall deliver
to the Depositor a certification substantially in the form of a
revised Final
Certification, with respect to such Replacement Mortgage Loans,
with any
exceptions noted thereon. Monthly Payments due with respect to
Replacement
Mortgage Loans in the month of substitution shall not be included
as part of the
Trust Fund and shall be retained by the Sponsor. For the month of
substitution,
distributions to Certificateholders shall reflect the collections
and recoveries
in respect of such Deleted Mortgage Loan in the Due Period
preceding the month
of substitution and the Sponsor shall thereafter be entitled to
retain all
amounts subsequently received in respect of such Deleted Mortgage
Loan. Upon
such substitution, such Replacement Mortgage Loan shall constitute
part of the
Trust Fund and shall be subject in all respects to the terms of
this Agreement
and the Mortgage Loan Sale and Assignment Agreement, including
all
representations and warranties thereof included in the Mortgage
Loan Sale and
Assignment Agreement, in each case as of the date of
substitution.
For
any month in which the Sponsor substitutes one or more
Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee,
or its
Custodian, based upon information provided by the related Servicer
or Master
Servicer, shall determine the excess (each, a "Substitution
Amount"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage
Loans exceeds
the aggregate Stated Principal Balance of the Replacement Mortgage
Loans
replacing such Deleted Mortgage Loans, together with one month's
interest on
such excess amount at the applicable Net Mortgage Rate. On the date
of such
substitution, the Sponsor shall deliver or cause to be delivered to
the related
Servicer for deposit in the Collection Account an amount equal to
the related
Substitution Amount, if any, and the Trustee, or its Custodian,
upon written
notice of the receipt of the Substitution Amount deposit and the
related
Replacement Mortgage Loan or Loans and two copies of a Request for
Release with
respect to the Deleted Mortgage Loan or Loans, shall release to the
Sponsor the
related Trustee Mortgage File or Files
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<PAGE>
and shall execute and deliver such instruments of transfer or
assignment, in
each case without recourse, as the Sponsor shall deliver to it and
as shall be
necessary to vest therein any Deleted Mortgage Loan released
pursuant hereto.
In
addition, the Sponsor shall obtain at its own expense and deliver
to the
Trustee an Opinion of Counsel to the effect that such substitution
(either
specifically or as a class of transactions) shall not cause (a) any
federal tax
to be imposed on the Trust Fund, including without limitation, any
federal tax
imposed on "prohibited transactions" under Section 860F(a)(l) of
the Code or on
"contributions after the startup date" under Section 860G(d)(l) of
the Code, or
(b) any REMIC created hereunder to fail to qualify as a REMIC at
any time that
any Certificate is outstanding. If such Opinion of Counsel can not
be delivered,
then such substitution may only be effected at such time as the
required Opinion
of Counsel can be given.
(c)
Upon discovery by the Sponsor, the Depositor, the Master Servicer,
the
Company 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 within two (2) Business Days give
written notice
thereof to the other parties. In connection therewith, the Sponsor
or Depositor,
as applicable, shall repurchase, or the Sponsor, subject to the
limitations set
forth in Section 2.05(b), shall substitute one or more Replacement
Mortgage
Loans for the affected Mortgage Loan within ninety (90) days of the
earlier of
discovery or receipt of such notice with respect to such affected
Mortgage Loan.
Any such repurchase or substitution shall be made in the same
manner as set
forth in Sections 2.05(a) and 2.05(b) above. The Trustee, or its
Custodian,
shall re-convey to the Sponsor 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.
The Sponsor
indemnifies and holds the Issuing Entity, the Trustee, the
Depositor, the Master Servicer, the Securities Administrator, the
Company and
each Certificateholder harmless 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 Issuing
Entity, the
Trustee, the Depositor, the Master Servicer, the Securities
Administrator, the
Company and any Certificateholder may sustain in connection with
any actions of
such party relating to a repurchase of a Mortgage Loan other than
in compliance
with the terms of this Section 2.05 and the Mortgage Loan Sale and
Assignment
Agreement, to the extent that any such action causes (i) any
federal or state
tax to be imposed on the Issuing Entity, including without
limitation, any
federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the
Code or on "contributions after the startup date" under Section
860G(d)(1) of
the Code, or (ii) any REMIC formed hereby to fail to qualify as a
REMIC at any
time that any Certificate is outstanding.
(d)
Notwithstanding anything to the contrary in this Agreement, the
Sponsor
shall administer the Additional Collateral, it being understood and
agreed that
only the Sponsor shall service and administer the related
securities accounts,
lines of credit and guarantees with respect to Additional
Collateral.
Section 2.06. Grant Clause.
(a)
It is intended that the conveyance of the Depositor's right, title
and
interest in and to property constituting the Trust Fund pursuant to
this
Agreement shall constitute, and shall be construed as, a sale of
such property
and not a grant of a security interest to secure a loan. However,
if such
conveyance is deemed to be in respect of a loan, it is intended
that: (1) the
rights and obligations of the parties shall be established pursuant
to the terms
of this Agreement;
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(2) the Depositor hereby grants to the Trustee for the benefit of
the Holders of
the Certificates a first priority security interest in all of the
Depositor's
right, title and interest in, to and under, whether now owned or
hereafter
acquired, the Trust Fund and all proceeds of any and all property
constituting
the Trust Fund to secure payment of the Certificates; and (3) this
Agreement
shall constitute a security agreement under applicable law. If such
conveyance
is deemed to be in respect of a loan and the trust created by this
Agreement
terminates prior to the satisfaction of the claims of any Person
holding any
Certificate, 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, and all proceeds shall be distributed as
herein
provided.
(b)
The Depositor shall, to the extent consistent with this Agreement,
take
such reasonable actions as may be necessary to ensure that, if this
Agreement
were deemed to create a security interest in the Mortgage Loans and
the other
property described above, such security interest would be deemed to
be a
perfected security interest of first priority under applicable law
and will be
maintained as such throughout the term of this Agreement. The
Depositor will, at
its own expense, make all initial filings on or about the Closing
Date and shall
forward a copy of such filing or filings to the Trustee. Without
limiting the
generality of the foregoing, the Depositor shall prepare and
forward for filing,
or shall cause to be forwarded for filing, at the expense of the
Depositor, all
filings necessary to maintain the effectiveness of any original
filings
necessary under the relevant UCC to perfect the Trustee's security
interest in
or lien on the Mortgage Loans and the other property described
above, including
without limitation (x) continuation statements, and (y) such other
statements as
may be occasioned by (1) any change of name of Sponsor, the
Depositor or the
Trustee, (2) any change of location of the place of business or the
chief
executive office of the Sponsor or the Depositor, (3) any transfer
of any
interest of the Depositor in any Mortgage Loan or (4) any change
under the
relevant UCC or other applicable laws. The Depositor shall not
organize under
the law of any jurisdiction other than the State under which each
is organized
as of the Closing Date (whether changing its jurisdiction of
organization or
organizing under an additional jurisdiction) without giving 30 days
prior
written notice of such action to its immediate and intermediate
transferee,
including the Trustee. Before effecting such change, the Depositor
proposing to
change its jurisdiction of organization shall prepare and file in
the
appropriate filing office any financing statements or other
statements necessary
to continue the perfection of the interests of its immediate and
mediate
transferees, including the Trustee, in the Mortgage Loans and the
other property
described above. In connection with the transactions contemplated
by this
Agreement, the Depositor authorizes its immediate or mediate
transferee to file
in any filing office any initial financing statements, any
amendments to
financing statements, any continuation statements, or any other
statements or
filings described in this paragraph (b).
ARTICLE III.
THE CERTIFICATES
Section 3.01. The Certificates.
(a)
The Certificates shall be issuable in registered form only and
shall be
securities governed by Article 8 of the New York Uniform Commercial
Code. The
Book-Entry Certificates will be evidenced by one or more
certificates,
beneficial ownership of which will be held in the dollar
denominations in
Certificate Principal Amount or in the Percentage Interests
specified herein.
Each Class of Book-Entry Certificates will be issued in the
minimum
denominations in Certificate Principal Amount specified in the
Preliminary
Statement hereto and in integral multiples of $1 in excess thereof.
The Residual
Certificates shall be issued as single Certificates
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and maintained in definitive, fully registered form in a
denomination equal to
100% of the Percentage Interest of each such Class.
(b)
The Certificates shall be executed by manual or facsimile signature
on
behalf of the Securities Administrator by an authorized officer.
Each
Certificate shall, on original issue, be authenticated by the
Securities
Administrator or an Authenticating Agent upon the order of the
Depositor upon
receipt by the Trustee or its Custodian of the Trustee Mortgage
Files described
in Section 2.01. No Certificate shall be entitled to any benefit
under this
Agreement, or be valid for any purpose, unless there appears on
such Certificate
a certificate of authentication substantially in the form provided
for herein,
executed by an authorized officer of the Securities Administrator
or of an
Authenticating Agent, by manual signature, and such certification
upon any
Certificate shall be conclusive evidence, and the only evidence,
that such
Certificate has been duly authenticated and delivered hereunder.
All
Certificates shall be dated the date of their authentication. At
any time and
from time to time after the execution and delivery of this
Agreement, the
Depositor may deliver Certificates executed by the Securities
Administrator to
the Securities Administrator or the Authenticating Agent for
authentication and
the Securities Administrator or the Authenticating Agent shall
authenticate and
deliver such Certificates as in this Agreement provided and not
otherwise.
(c)
The Class B-1, Class B-2 and Class B-3 certificates offered and
sold in
reliance on the exemption from registration under Rule 144A under
the Securities
Act shall be issued initially in the form of one or more permanent
global
Certificates in definitive, fully registered form without interest
coupons with
the applicable legends set forth in Exhibit A added to the forms of
such
Certificates (each, a "Restricted Global Security").
Section 3.02.
Registration.
The
Securities Administrator is hereby appointed, and the
Securities
Administrator hereby accepts its appointment as, initial
Certificate Registrar
in respect of the Certificates and shall maintain books for the
registration and
for the transfer of Certificates (the "Certificate Register"). The
Securities
Administrator may appoint a bank or trust company to act as
successor
Certificate Registrar. A registration book shall be maintained for
the
Certificates collectively. The Certificate Registrar may resign or
be discharged
or removed and a new successor may be appointed in accordance with
the
procedures and requirements set forth in Sections 6.06 and 6.07
hereof with
respect to the resignation, discharge or removal of the Securities
Administrator
and the appointment of a successor Securities Administrator. The
Certificate
Registrar may appoint, by a written instrument delivered to the
Holders, any
bank or trust company to act as co-registrar under such conditions
as the
Certificate Registrar may prescribe; provided, however, that the
Certificate
Registrar shall not be relieved of any of its duties or
responsibilities
hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates.
(a)
A Certificate (other than Book-Entry Certificates which shall
be
subject to Section 3.09 hereof) may be transferred by the Holder
thereof only
upon presentation and surrender of such Certificate at the office
of the
Certificate Registrar duly endorsed or accompanied by an assignment
duly
executed by such Holder or his duly authorized attorney in such
form as shall be
satisfactory to the Certificate Registrar. Upon the transfer of any
Certificate
in accordance with the preceding sentence, the Securities
Administrator shall
execute, and the Authenticating Agent shall authenticate and
deliver to the
transferee, one or more new Certificates of the same Class and
evidencing, in
the aggregate, the same aggregate Certificate Principal Amount as
the
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Certificate being transferred. No service charge shall be made to
a
Certificateholder for any registration of transfer of Certificates,
but the
Certificate Registrar may require payment of a sum sufficient to
cover any tax
or governmental charge that may be imposed in connection with any
registration
of transfer of Certificates.
(b)
A Certificate may be exchanged by the Holder thereof for any number
of
new Certificates of the same Class, in authorized denominations,
representing in
the aggregate the same Certificate Principal Amount as the
Certificate
surrendered, upon surrender of the Certificate to be exchanged at
the office of
the Certificate Registrar duly endorsed or accompanied by a written
instrument
of transfer duly executed by such Holder or his duly authorized
attorney in such
form as is satisfactory to the Certificate Registrar. Certificates
delivered
upon any such exchange will evidence the same obligations, and will
be entitled
to the same rights and privileges, as the Certificates surrendered.
No service
charge shall be made to a Certificateholder for any exchange of
Certificates,
but the Certificate Registrar may require payment of a sum
sufficient to cover
any tax or governmental charge that may be imposed in connection
with any
exchange of Certificates. Whenever any Certificates are so
surrendered for
exchange, the Securities Administrator shall execute, and the
Authenticating
Agent shall authenticate, date and deliver the Certificates which
the
Certificateholder making the exchange is entitled to receive.
(c)
By acceptance of a Restricted Certificate, whether upon
original
issuance or subsequent transfer, each Holder of such a Certificate
acknowledges
the restrictions on the transfer of such Certificate set forth
thereon and
agrees that it will transfer such a Certificate only as provided
herein.
The
following restrictions shall apply with respect to the transfer
and
registration of transfer of a Restricted Certificate to a
transferee that takes
delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the
Depositor or
an
affiliate (as defined in Rule 405 under the 1933 Act) of the
Depositor
or
(y) being made to a "qualified institutional buyer" (a "QIB") as
defined
in
Rule 144A under the Securities Act by a transferor that has
provided the
Certificate Registrar with a certificate in the form of Exhibit G
hereto;
and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made to
an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under
the
Securities Act, or to any
Person all of the equity owners in which are such
accredited investors, by a transferor who furnishes to the
Certificate
Registrar a letter of the transferee substantially in the form of
Exhibit H
hereto.
(d)
(i) No transfer of an ERISA-Restricted Certificate or a Class
A-R
Certificate shall be made unless the prospective transferee
provides the
Securities Administrator, the Trustee and the Depositor with (I)
a
representation as set forth in Exhibit B or Exhibit I, as
applicable, to the
effect that such transferee is not an employee benefit plan subject
to Title I
of ERISA, a plan subject to Section 4975 of the Code or a plan or
arrangement
subject to any provisions under any federal, state, local, non-U.S.
or other
laws or regulations that are substantively similar to the foregoing
provisions
of ERISA or the Code ("Similar Law") (collectively, a "Plan"), and
is not
directly or indirectly acquiring such Certificate for, on behalf of
or with any
assets of any such
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Plan, or (II) solely in the case of ERISA-Restricted Certificates,
(A) if the
ERISA-Restricted Certificate has been the subject of an
ERISA-Qualifying
Underwriting, a representation as set forth in Exhibit I that such
transferee is
an insurance company that is acquiring the ERISA-Restricted
Certificate with
assets contained in an "insurance company general account," as
defined in
Section V(E) of Prohibited Transaction Class Exemption ("PTCE")
95-60, and the
acquisition and holding of the ERISA-Restricted Certificate are
covered and
exempt under Sections I and III of PTCE 95-60, or (B) solely in the
case of a
Definitive Certificate, an Opinion of Counsel satisfactory to the
Securities
Administrator and the Depositor to the effect that the acquisition
and holding
of such ERISA-Restricted Certificate will not constitute or result
in a
nonexempt prohibited transaction under ERISA or the Code, or a
violation of
Similar Law, and will not subject the Certificate Registrar, the
Depositor, the
Master Servicer, the Securities Administrator or the Trustee to any
obligation
in addition to those expressly undertaken in this Agreement, which
Opinion of
Counsel shall not be an expense of the Certificate Registrar, the
Depositor, the
Master Servicer, the Securities Administrator or the Trustee.
(ii) Except in the case of a Definitive Certificate, the
representations set forth in paragraph (i) of this Subsection
3.03(d),
other than subparagraph (II)(B), and in Exhibit B or Exhibit I,
as
applicable, shall be deemed to have been made to the Securities
Administrator or the Depositor by the transferee's acceptance of
an
ERISA-Restricted Certificate or a Class A-R Certificate (or the
acceptance
by a
Certificate Owner of the beneficial interest in any Class of
ERISA-Restricted Certificates or a Class A-R Certificate).
Notwithstanding
any
other provision herein to the contrary, any purported transfer of
an
ERISA-Restricted Certificate or a Class A-R Certificate to or on
behalf of
a
Plan without the delivery to the Securities Administrator or
the
Depositor of a representation or an Opinion of Counsel satisfactory
to the
Securities Administrator or the Depositor as described above shall
be void
and
of no effect. None of the Certificate Registrar, the Depositor,
the
Master Servicer, the Company, the Trustee or the Securities
Administrator
shall be under any liability to any Person for any registration or
transfer
of
any ERISA-Restricted Certificate or Class A-R Certificate that is
in
fact
not permitted by this Section 3.03(d) nor shall the Paying Agent
be
under any liability for making any payments due on such Certificate
to the
Holder thereof or taking any other action with respect to such
Holder under
the
provisions of this Agreement so long as the transfer was registered
by
the
Certificate Registrar in accordance with the foregoing
requirements.
The
Certificate Registrar, Depositor, Master Servicer, the Company,
Securities Administrator, Paying Agent and/or Trustee shall be
entitled,
but
not obligated, to recover from any Holder of any
ERISA-Restricted
Certificate or Class A-R Certificate that was in fact a Plan and
that held
such
Certificate in violation of this Section 3.03(d) all payments made
on
such
ERISA-Restricted Certificate or Class A-R Certificate at and after
the
time
it commenced such holding. Any such payments so recovered shall
be
paid
and delivered to the last preceding Holder of such Certificate that
is
not
a Plan.
(iii) Notwithstanding the foregoing, no representation or Opinion
of
Counsel shall be required for the initial issuance of the
ERISA-Restricted
Certificates.
(e)
As a condition of the registration of transfer or exchange of
any
Certificate, the Certificate Registrar may require the certified
taxpayer
identification number of the owner of the Certificate and the
payment of a sum
sufficient to cover any tax or other governmental charge imposed in
connection
therewith; provided, however, that the Certificate Registrar shall
have no
obligation to require such payment or to determine whether or not
any such tax
or charge may be applicable. No service charge shall be made to
the
Certificateholder for any registration, transfer or exchange of a
Certificate.
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(f)
Notwithstanding anything to the contrary contained herein, no
Residual
Certificate or beneficial interest therein may be owned, pledged or
transferred,
directly or indirectly, by or to (i) a Disqualified Organization or
(ii) an
individual, corporation or partnership or other person unless, in
the case of
clause (ii), such person is (A) not a Non-U.S. Person or (B) is a
Non-U.S.
Person that holds a Residual Certificate in connection with the
conduct of a
trade or business within the United States and has furnished the
transferor and
the Certificate Registrar with an effective Internal Revenue
Service Form W-8ECI
or successor form at the time and in the manner required by the
Code (any such
person who is not covered by clause (A) or (B) above is referred to
herein as a
"Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer,
sale or
other disposition of a Residual Certificate or a beneficial
interest therein,
the proposed transferee shall deliver to the Securities
Administrator and the
Certificate Registrar an affidavit in substantially the form
attached hereto as
Exhibit B representing and warranting, among other things, that
such transferee
is neither a Disqualified Organization, an agent or nominee acting
on behalf of
a Disqualified Organization, nor a Non-permitted Foreign Holder
(any such
transferee, a "Permitted Transferee"), and the proposed transferor
shall deliver
to the Securities Administrator and the Certificate Registrar an
affidavit in
substantially the form attached hereto as Exhibit C. In addition,
the Securities
Administrator or the Certificate Registrar may (but shall have no
obligation to)
require, prior to and as a condition of any such transfer, the
delivery by the
proposed transferee of an Opinion of Counsel, addressed to the
Securities
Administrator and the Certificate Registrar, that such proposed
transferee or,
if the proposed transferee is an agent or nominee, the proposed
beneficial
owner, is not a Disqualified Organization, agent or nominee
thereof, or a
Non-permitted Foreign Holder. Notwithstanding the registration in
the
Certificate Register of any transfer, sale, or other disposition of
a Residual
Certificate to a Disqualified Organization, an agent or nominee
thereof, or
Non-permitted Foreign Holder, such registration shall be deemed to
be of no
legal force or effect whatsoever and such Disqualified
Organization, agent or
nominee thereof, or Non-permitted Foreign Holder shall not be
deemed to be a
Certificateholder for any purpose hereunder, including, but not
limited to, the
receipt of distributions on such Residual Certificate. The
Depositor, the
Certificate Registrar, the Securities Administrator and the Trustee
shall be
under no liability to any Person for any registration or transfer
of a Residual
Certificate to a Disqualified Organization, agent or nominee
thereof or
Non-permitted Foreign Holder or for the Paying Agent making any
payments due on
such Residual Certificate to the Holder thereof or for taking any
other action
with respect to such Holder under the provisions of the Agreement,
so long as
the transfer was effected in accordance with this Section 3.03(f),
unless the
Certificate Registrar shall have actual knowledge at the time of
such transfer
or the time of such payment or other action that the transferee is
a
Disqualified Organization, or an agent or nominee thereof, or
Non-permitted
Foreign Holder. The Certificate Registrar shall be entitled to
recover from any
Holder of a Residual Certificate that was a Disqualified
Organization, agent or
nominee thereof, or Non-permitted Foreign Holder at the time it
became a Holder
or at any subsequent time became a Disqualified Organization, agent
or nominee
thereof, or Non-permitted Foreign Holder, all payments made on such
Residual
Certificate at and after either of such times (and all costs and
expenses,
including but not limited to attorneys' fees, incurred in
connection therewith).
Any payment (not including any such costs and expenses) so
recovered by the
Certificate Registrar shall be paid and delivered to the last
preceding Holder
of such Residual Certificate.
If
any purported transferee shall become a registered Holder of a
Residual
Certificate in violation of the provisions of this Section 3.03(f),
then upon
receipt of written notice to the Securities Administrator that the
registration
of transfer of such Residual Certificate was not in fact permitted
by this
Section 3.03(f), such transfer shall be absolutely null and void
and shall
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<PAGE>
vest no rights in the purported transferee and the last preceding
Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the
date of such registration of transfer of such Residual Certificate.
The
Depositor, the Certificate Registrar, the Securities Administrator
and the
Trustee shall be under no liability to any Person for any
registration of
transfer of a Residual Certificate that is in fact not permitted by
this Section
3.03(f), or for the Paying Agent making any payment due on such
Certificate to
the registered Holder thereof or for taking any other action with
respect to
such Holder under the provisions of this Agreement so long as the
transfer was
registered upon receipt of the affidavit described in the preceding
paragraph of
this Section 3.03(f).
(g)
Each Holder or Certificate Owner of a Restricted Certificate,
ERISA-Restricted Certificate or Residual Certificate, or an
interest therein, by
such Holder's or Owner's acceptance thereof, shall be deemed for
all purposes to
have consented to the provisions of this section.
Section 3.04. Cancellation
of Certificates.
Any
Certificate surrendered for registration of transfer or exchange
shall
be cancelled and retained in accordance with normal retention
policies with
respect to cancelled certificates maintained by the Securities
Administrator or
the Certificate Registrar.
Section 3.05. Replacement of Certificates.
If
(i) any Certificate is mutilated and is surrendered to the
Securities
Administrator or the Certificate Registrar or (ii) the Securities
Administrator
or the Certificate Registrar receives evidence to its satisfaction
of the
destruction, loss or theft of any Certificate, and there is
delivered to the
Securities Administrator and the Certificate Registrar such
security or
indemnity as may be required by them to save each of them harmless,
then, in the
absence of notice to the Depositor, the Securities Administrator or
the
Certificate Registrar that such destroyed, lost or stolen
Certificate has been
acquired by a protected purchaser, the Securities Administrator
shall execute
and the Authenticating Agent shall authenticate and deliver, in
exchange for or
in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new
Certificate of like tenor and Certificate Principal Amount. Upon
the issuance of
any new Certificate under this Section 3.05, the Securities
Administrator, the
Depositor or the Certificate Registrar may require the payment of a
sum
sufficient to cover any tax or other governmental charge that may
be imposed in
relation thereto and any other expenses (including the fees and
expenses of the
Securities Administrator, the Depositor or the Certificate
Registrar) connected
therewith. Any replacement Certificate issued pursuant to this
Section 3.05
shall constitute complete and indefeasible evidence of ownership in
the
applicable Trust Fund, as if originally issued, whether or not the
lost, stolen
or destroyed Certificate shall be found at any time.
If
after the delivery of such new Certificate, a protected purchaser
of the
original Certificate in lieu of which such new Certificate was
issued presents
for payment such original Certificate, the Depositor, the
Certificate Registrar
and the Securities Administrator or any agent shall be entitled to
recover such
new Certificate from the Person to whom it was delivered or any
Person taking
therefrom, except a protected purchaser, and shall be entitled to
recover upon
the security or indemnity provided therefor to the extent of any
loss, damage,
cost or expenses incurred by the Depositor, the Certificate
Registrar, the
Securities Administrator or any agent in connection therewith.
Section 3.06. Persons Deemed Owners.
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Subject to the provisions of Section 3.09 with respect to
Book-Entry
Certificates, the Depositor, the Securities Administrator, the
Certificate
Registrar, the Paying Agent and any agent of any of them shall
treat the Person
in whose name any Certificate is registered upon the books of the
Certificate
Registrar as the owner of such Certificate for the purpose of
receiving
distributions pursuant to Sections 5.01 and 5.02 and for all other
purposes
whatsoever, and neither the Depositor, the Securities
Administrator, the
Certificate Registrar, the Paying Agent nor any agent of any of
them shall be
affected by notice to the contrary.
Section 3.07. Temporary Certificates.
(a)
Pending the preparation of definitive Certificates, upon the order
of
the Depositor, the Securities Administrator shall execute and the
Authenticating
Agent shall authenticate and deliver temporary Certificates that
are printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized
denomination, substantially of the tenor of the definitive
Certificates in lieu
of which they are issued and with such variations as the authorized
officers
executing such Certificates may determine, as evidenced by their
execution of
such Certificates.
(b)
If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay.
After the
preparation of definitive Certificates, the temporary Certificates
shall be
exchangeable for definitive Certificates upon surrender of the
temporary
Certificates at the office or agency of the Certificate Registrar
without charge
to the Holder. Upon surrender for cancellation of any one or more
temporary
Certificates, the Securities Administrator shall execute and the
Authenticating
Agent shall authenticate and deliver in exchange therefor a like
aggregate
Certificate Principal Amount of definitive Certificates of the same
Class in the
authorized denominations. Until so exchanged, the temporary
Certificates shall
in all respects be entitled to the same benefits under this
Agreement as
definitive Certificates of the same Class.
Section 3.08. Appointment of Paying Agent.
The
Securities Administrator may appoint a Paying Agent (which may be
the
Securities Administrator) for the purpose of making distributions
to
Certificateholders hereunder. The Securities Administrator shall
cause any
Paying Agent to execute and deliver to the Securities Administrator
an
instrument in which such Paying Agent shall agree with the
Securities
Administrator that such Paying Agent will hold all sums held by it
for the
payment to Certificateholders in an Eligible Account (which shall
be the
Distribution Account) in trust for the benefit of the
Certificateholders
entitled thereto until such sums shall be paid to the
Certificateholders. All
funds remitted by the Securities Administrator to any such Paying
Agent for the
purpose of making distributions shall be paid to Certificateholders
on each
Distribution Date and any amounts not so paid shall be returned on
such
Distribution Date to the Securities Administrator. If the Paying
Agent is not
the Securities Administrator, the Securities Administrator shall
cause to be
remitted to the Paying Agent on or before the Business Day prior to
each
Distribution Date, by wire transfer in immediately available funds,
the funds to
be distributed on such Distribution Date. Any Paying Agent shall be
either a
bank or trust company or otherwise authorized under law to exercise
corporate
trust powers.
Section 3.09. Book-Entry Certificates.
(a)
Each Class of Book-Entry Certificates, upon original issuance,
shall be
issued in the form of one or more typewritten Certificates
representing the
Book-Entry Certificates. The Book-Entry Certificates shall
initially be
registered on the Certificate Register in the name of the
54
<PAGE>
nominee of the Clearing Agency, and no Certificate Owner will
receive a
definitive certificate representing such Certificate Owner's
interest in the
Book-Entry Certificates, except as provided in Section 3.09(c).
Unless
Definitive Certificates have been issued to Certificate Owners of
Book-Entry
Certificates pursuant to Section 3.09(c):
(i) the provisions of this Section 3.09 shall be in full force
and
effect;
(ii) the Certificate Registrar, the Paying Agent and the
Securities
Administrator shall deal with the Clearing Agency for all
purposes
(including the making of distributions on the Book-Entry
Certificates) as
the
authorized representatives of the Certificate Owners and the
Clearing
Agency and shall be responsible for crediting the amount of
such
distributions to the accounts of such Persons entitled thereto,
in
accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09
conflict
with
any other provisions of this Agreement, the provisions of this
Section
3.09
shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through
the
Clearing Agency and the Clearing Agency Participants and shall
be
limited to those established by law and agreements between such
Certificate
Owners and the Clearing Agency and/or the Clearing Agency
Participants.
Unless and until Definitive Certificates are issued pursuant to
Section
3.09(c), the initial Clearing Agency will make book-entry transfers
among
the
Clearing Agency Participants and receive and transmit distributions
of
principal of and interest on the Book-Entry Certificates to such
Clearing
Agency Participants.
(b)
Whenever notice or other communication to the Certificateholders
is
required under this Agreement, unless and until Definitive
Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c),
the
Securities Administrator shall give all such notices and
communications
specified herein to be given to Holders of the Book-Entry
Certificates to the
Clearing Agency.
(c)
If (i) (A) the Clearing Agency or the Depositor advises the
Paying
Agent in writing that the Clearing Agency is no longer willing or
able to
discharge properly its responsibilities with respect to the
Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified
successor
satisfactory to the Depositor and the Paying Agent, (ii) the
Depositor, at its
option, advises the Paying Agent in writing that it elects to
terminate the
book-entry system through the Clearing Agency or (iii) after the
occurrence of a
Servicer Event of Default or a Master Servicer Event of Default,
Certificate
Owners representing beneficial interests aggregating not less than
50% of the
Class Principal Amount of a Class of Book-Entry Certificates advise
the Paying
Agent and the Clearing Agency through the Clearing Agency
Participants in
writing that the continuation of a book-entry system through the
Clearing Agency
is no longer in the best interests of the Certificate Owners of a
Class of
Book-Entry Certificates, the Certificate Registrar shall notify the
Clearing
Agency to effect notification to all Certificate Owners, through
the Clearing
Agency, of the occurrence of any such event and of the availability
of
Definitive Certificates to Certificate Owners requesting the same.
Upon
surrender to the Certificate Registrar of the Book-Entry
Certificates by the
Clearing Agency, accompanied by registration instructions from the
Clearing
Agency for registration, the Certificate Registrar shall issue the
Definitive
Certificates. None of the Depositor, the Certificate Registrar or
the Securities
Administrator shall be liable for any delay in delivery of such
instructions and
may conclusively rely on, and shall be protected in relying on,
such
instructions. Upon the issuance of Definitive
55
<PAGE>
Certificates all references herein to obligations imposed upon or
to be
performed by the Clearing Agency shall be deemed to be imposed upon
and
performed by the Certificate Registrar, to the extent applicable,
with respect
to such Definitive Certificates and the Certificate Registrar shall
recognize
the holders of the Definitive Certificates as Certificateholders
hereunder.
Notwithstanding the foregoing, the Certificate Registrar, upon the
instruction
of the Depositor, shall have the right to issue Definitive
Certificates on the
Closing Date in connection with credit enhancement programs.
ARTICLE IV.
ADMINISTRATION OF THE ISSUING ENTITY
Section 4.01. Collection Accounts; Master Servicer Collection
Account;
Distribution Account.
(a)
On or prior to the Closing Date, the Company shall establish
and
maintain one or more Collection Accounts, as provided herein, into
which the
Company shall deposit daily, within two (2) Business Days of
receipt thereof, in
immediately available funds, any Scheduled Payments and unscheduled
payments
with respect to the Mortgage Loans, net of any deductions or
reimbursements
permitted under this Agreement. Prior to 1:00 p.m. New York City
time on each
Servicer Remittance Date, the Company shall remit to the Master
Servicer for
deposit into the Master Servicer Collection Account, all amounts so
required to
be deposited into such account in accordance with the terms of this
Agreement.
(b)
Funds in the Collection Accounts may be invested in Permitted
Investments selected by the Company, which shall mature not later
than one (1)
Business Day prior to the Servicer Remittance Date (except that if
such
Permitted Investment is an obligation of the Company or is managed
or advised by
the Company or their affiliates, then such Permitted Investment
shall mature not
later than such applicable Servicer Remittance Date) and any such
Permitted
Investment shall not be sold or disposed of prior to its maturity.
All such
Permitted Investments shall be made in the name of the Company (in
its capacity
as such) or its nominee. All income and gain realized from any
Permitted
Investment shall be for the benefit of the Company as servicing
compensation and
shall be subject to its withdrawal or order from time to time, and
shall not be
part of the Trust Fund. The amount of any losses incurred in
respect of any such
investments shall be deposited in the Collection Accounts by the
Company out of
its own funds, without any right of reimbursement therefor,
immediately as
realized. Any such funds that are not invested in Permitted
Investments may be
held uninvested.
(c)
On or prior to the Closing Date, the Master Servicer shall
establish
and maintain the Master Servicer Collection Account, as provided
herein, into
which the Master Servicer shall deposit in immediately available
funds, (i) the
aggregate of collections with respect to the Mortgage Loans,
including the
amount of any Advances or Compensating Interest Payments with
respect to the
Mortgage Loans required to be paid by each Servicer under its
related Servicing
Agreement and (ii) any other amounts so required to be deposited in
the related
Due Period pursuant to this Agreement, remitted to the Master
Servicer from the
related Servicer, net of any deductions or reimbursements permitted
under its
related Servicing Agreement. Prior to 1:00 p.m. New York City time
on each
Distribution Account Deposit Date, the Master Servicer shall remit
to the
Securities Administrator for deposit into the Distribution Account,
all amounts
so required to be deposited into such account in accordance with
the terms of
this Agreement.
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<PAGE>
(d)
Funds in the Master Servicer Collection Accounts may be invested
in
Permitted Investments selected by the Master Servicer, which shall
mature not
later than one Business Day prior to the Distribution Account
Deposit Date
(except that if such Permitted Investment is an obligation of the
Master
Servicer or is managed or advised by the Master Servicer or its
affiliates, then
such Permitted Investment shall mature not later than such
applicable
Distribution Account Deposit Date) and any such Permitted
Investment shall not
be sold or disposed of prior to its maturity. All such Permitted
Investments
shall be made in the name of the Master Servicer (in its capacity
as such) or
its nominee. All income and gain realized from any Permitted
Investment shall be
for the benefit of the Master Servicer, as master servicing
compensation, and
shall be subject to its withdrawal or order from time to time, and
shall not be
part of the Trust Fund. The amount of any losses incurred in
respect of any such
investments shall be deposited in the Master Servicer Collection
Account by the
Master Servicer out of its own funds, without any right of
reimbursement
therefor, immediately as realized. Any such funds that are not
invested in
Permitted Investments may be held uninvested. The Master Servicer
Collection
Account shall be a sub-account of the Distribution Account.
(e)
The Securities Administrator, shall establish and maintain an
Eligible
Account entitled "Wells Fargo Bank, National Association, as
Securities
Administrator for HSBC Bank USA, National Association, as Trustee
f/b/o holders
of Merrill Lynch Mortgage Investors, Inc., Mortgage Pass-Through
Certificates,
MLCC Series 2006-3 - Distribution Account." The Securities
Administrator shall,
promptly upon receipt from the Master Servicer on each Distribution
Account
Deposit Date, deposit into the Distribution Account and retain on
deposit until
the related Distribution Date the following amounts:
(i) the aggregate of collections with respect to the Mortgage
Loans
remitted by each Servicer from the related Collection Accounts to
the
Master Servicer Collection Account (pursuant to its related
Servicing
Agreement) and by the Master Servicer from the Master Servicer
Collection
Account in accordance with this Agreement, including the amount of
any
Advances or Compensating Interest Payments with respect to the
Mortgage
Loans required to be paid by each Servicer or the Master Servicer;
and
(ii) any other amounts so required to be deposited in the
Distribution
Account in the related Due Period pursuant to this Agreement.
(f)
In the event that the Company has remitted in error to the
Master
Servicer Collection Account any amount not required to be remitted
in accordance
with the definition of Available Distribution Amount, it may at any
time direct
the Master Servicer to withdraw such amount from the Master
Servicer Collection
Account for repayment to the Company, as applicable, by delivery of
an Officer's
Certificate of the Servicer to the Master Servicer which describes
the amount
deposited in error. In the event the Master Servicer has remitted
in error to
the Distribution Account any amount not required to be remitted in
accordance
with the definition of Available Distribution Amount, it may at any
time direct
the Securities Administrator to withdraw such amount from the
Distribution
Account for repayment to the Master Servicer, as applicable, by
delivery of an
Officer's Certificate of the Master Servicer to the Securities
Administrator
which describes the amount deposited in error.
(g)
On each Distribution Date and Purchase Date, the Securities
Administrator shall distribute the Available Distribution Amount to
the
Certificateholders and any other parties entitled thereto in the
amounts and
priorities set forth in Section 5.02. The Securities Administrator
may from time
to time withdraw from the Distribution Account and pay itself, the
Master
Servicer or each Servicer any amounts permitted to be paid or
reimbursed to such
Person
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from funds in the Distribution Account pursuant to the clauses (A)
through (D)
of the definition of Available Distribution Amount.
(h)
Funds in the Distribution Account may be invested in Permitted
Investments selected by the Securities Administrator, which shall
mature not
later than one Business Day prior to the Distribution Date (except
that if such
Permitted Investment is an obligation of the Securities
Administrator or is
managed or advised by the Securities Administrator or its
affiliates, then such
Permitted Investment shall mature not later than such applicable
Distribution
Date) and any such Permitted Investment shall not be sold or
disposed of prior
to its maturity. All such Permitted Investments shall be made in
the name of the
Securities Administrator (in its capacity as such) or its nominee.
All income
and gain realized from any Permitted Investment shall be for the
benefit of the
Securities Administrator and shall be subject to its withdrawal or
order from
time to time, and shall not be part of the Trust Fund. The amount
of any losses
incurred in respect of any such investments shall be deposited in
such
Distribution Account by the Securities Administrator out of its own
funds,
without any right of reimbursement therefor, immediately as
realized. Any such
funds that are not invested in Permitted Investments may be held
uninvested.
Section 4.02. Permitted Withdrawals from the Master Servicer
Collection
Account and the Distribution Acount.
(a)
(i) The Master Servicer will, from time to time on demand of the
Master
Servicer, the Trustee or the Securities Administrator, make or
cause to be made
such withdrawals or transfers from the Master Servicer Collection
Account as the
Master Servicer has designated for such transfer or withdrawal
pursuant to the
Servicing Agreements. The Master Servicer may clear and terminate
the Master
Servicer Collection Account pursuant to Section 9A.04 and remove
amounts from
time to time deposited in error.
(ii) On an ongoing basis, the Master Servicer shall withdraw from
the
Master Servicer Collection Account (x) any expenses recoverable by
the Trustee,
the Master Servicer or the Securities Administrator pursuant to
this Agreement,
including but not limited to Sections 2.01(a), 9A.02, 9A.07 and
6.12 and (y) any
amounts payable to the Master Servicer.
(iii) In addition, on or before each Distribution Account
Deposit
Date, the Master Servicer shall deposit in the Distribution Account
(or remit to
the Securities Administrator for deposit therein) any Monthly
Advances required
to be made by the Master Servicer with respect to the Mortgage
Loans.
(iv) No later than 3:00 p.m. New York time on each Distribution
Account Deposit Date, the Master Servicer will transfer all
Available Funds on
deposit in the Master Servicer Collection Account with respect to
the related
Distribution Date to the Securities Administrator for deposit in
the
Distribution Account.
(b)
The Securities Administrator will, from time to time on demand of
the
Master Servicer, make or cause to be made such withdrawals or
transfers from the
Distribution Account as the Master Servicer has designated for such
transfer or
withdrawal pursuant to the Servicing Agreements for the following
purposes
(limited in the case of amounts due the Master Servicer to those
not withdrawn
from the Master Servicer Collection Account in accordance with the
terms of this
Agreement):
(i) to reimburse the Master Servicer or any Servicer for any
Monthly
Advance of its own funds or any advance of such Servicer's own
funds, the right
of the Master
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Servicer or a Servicer to reimbursement pursuant to this subclause
(i) being
limited to amounts received on a particular Mortgage Loan
(including, for this
purpose, the Purchase Price therefor, Insurance Proceeds and
Liquidation
Proceeds) which represent late payments or recoveries of the
principal of or
interest on such Mortgage Loan respecting which such Monthly
Advance or advance
was made;
(ii) to reimburse the Master Servicer or any Servicer from
Insurance
Proceeds or Liquidation Proceeds relating to a particular Mortgage
Loan for
amounts expended by the Master Servicer or such Servicer in good
faith as a
Servicing Advance in connection with the restoration of the related
Mortgaged
Property which was damaged by an Uninsured Cause or in connection
with the
liquidation of such Mortgage Loan;
(iii) to reimburse the Master Servicer or any Servicer from
Insurance
Proceeds relating to a particular Mortgage Loan for insured
expenses incurred
with respect to such Mortgage Loan and to reimburse the Master
Servicer or such
Servicer from Liquidation Proceeds from a particular Mortgage Loan
for
Liquidation Expenses incurred with respect to such Mortgage Loan;
provided that
the Master Servicer shall not be entitled to reimbursement for
Liquidation
Expenses with respect to a Mortgage Loan to the extent that (i) any
amounts with
respect to such Mortgage Loan were paid as Excess Liquidation
Proceeds pursuant
to clause (xi) of this Subsection 4.02(b) to the Master Servicer;
and (ii) such
Liquidation Expenses were not included in the computation of such
Excess
Liquidation Proceeds;
(iv) to pay the Master Servicer or any Servicer, as appropriate,
from
Liquidation Proceeds or Insurance Proceeds received in connection
with the
liquidation of any Mortgage Loan, the amount which it or such
Servicer would
have been e
