EXHIBIT 4
MORGAN STANLEY ABS CAPITAL I INC.,
Depositor,
HOMEQ SERVICING CORPORATION,
Servicer,
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
Servicer,
FIRST NLC FINANCIAL SERVICES, LLC,
Responsible Party,
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
--------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2006
--------------------------------------------------------------
MORGAN STANLEY HOME EQUITY LOAN TRUST 2006-2
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2006-2
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01
Conveyance of Mortgage Loans.................................
Section 2.02
Acceptance by the Trustee of the Mortgage Loans..............
Section 2.03
Representations and Warranties; Remedies for Breaches of
Representations and Warranties with Respect to the
Mortgage Loans...............................................
Section 2.04 Execution
and Delivery of Certificates.......................
Section 2.05 REMIC
Matters................................................
Section 2.06
Representations and Warranties of the Depositor..............
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicers
to Service Mortgage Loans..........................
Section 3.02
Subservicing Agreements between a Servicer and Subservicers..
Section 3.03 Successor
Subservicers.......................................
Section 3.04 Liability
of the Servicers...................................
Section 3.05 No
Contractual Relationship between Subservicers
and the Trustee..............................................
Section 3.06
Assumption or Termination of Subservicing Agreements
by Trustee...................................................
Section 3.07
Collection of Certain Mortgage Loan Payments.................
Section 3.08
Subservicing Accounts........................................
Section 3.09
Collection of Taxes, Assessments and Similar Items;
Escrow Accounts..............................................
Section 3.10
Collection Accounts..........................................
Section 3.11
Withdrawals from the Collection Accounts.....................
Section 3.12
Investment of Funds in the Collection Accounts
and the Distribution Account.................................
Section 3.13
Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage........................................
Section 3.14
Enforcement of "Due-on-Sale" Clauses; Assumption Agreements..
Section 3.15
Realization upon Defaulted Mortgage Loans....................
Section 3.16 Release
of Mortgage Files....................................
Section 3.17 Title,
Conservation and Disposition of REO Property..........
Section 3.18
Notification of Adjustments..................................
Section 3.19 Access to
Certain Documentation and Information
Regarding the Mortgage Loans.................................
Section 3.20
Documents, Records and Funds in Possession of the
Servicers to Be Held for the Trustee.........................
Section 3.21 Servicing
Compensation.......................................
Section 3.22 Annual
Statement as to Compliance............................
Section 3.23 Annual
Reports on Assessment of Compliance with
Servicing Criteria; Annual Independent Public Accountants'
Attestation Report...........................................
Section 3.24 Trustee
to Act as Servicer...................................
Section 3.25
Compensating Interest........................................
Section 3.26 Credit
Reporting; Gramm-Leach-Bliley Act.....................
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICERS
Section 4.01
Advances.....................................................
Section 4.02
Priorities of Distribution...................................
Section 4.03 Monthly
Statements to Certificateholders.....................
Section 4.04 Certain
Matters Relating to the Determination of LIBOR.......
Section 4.05
Allocation of Applied Realized Loss Amounts..................
Section 4.06 Swap
Account.................................................
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates.............................................
Section 5.02
Certificate Register; Registration of Transfer and
Exchange of Certificates.....................................
Section 5.03
Mutilated, Destroyed, Lost or Stolen Certificates............
Section 5.04 Persons
Deemed Owners........................................
Section 5.05 Access to
List of Certificateholders' Names and Addresses....
Section 5.06
Maintenance of Office or Agency..............................
ARTICLE VI
THE DEPOSITOR AND THE SERVICERS
Section 6.01
Respective Liabilities of the Depositor and the Servicers....
Section 6.02 Merger or
Consolidation of the Depositor or a Servicer.......
Section 6.03
Limitation on Liability of the Depositor, the Servicers
and Others...................................................
Section 6.04
Limitation on Resignation of a Servicer......................
Section 6.05
Additional Indemnification by the Servicers; Third
Party Claims.................................................
ARTICLE VII
DEFAULT
Section 7.01 Events of
Default............................................
Section 7.02 Trustee
to Act; Appointment of Successor.....................
Section 7.03
Notification to Certificateholders...........................
Section 7.04 No
Termination Without Cause.................................
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of
the Trustee........................................
Section 8.02 Certain
Matters Affecting the Trustee........................
Section 8.03 Trustee
Not Liable for Certificates or Mortgage Loans........
Section 8.04 Trustee
May Own Certificates.................................
Section 8.05 Trustee's
Fees and Expenses..................................
Section 8.06
Eligibility Requirements for the Trustee.....................
Section 8.07
Resignation and Removal of the Trustee.......................
Section 8.08 Successor
Trustee............................................
Section 8.09 Merger or
Consolidation of the Trustee.......................
Section 8.10
Appointment of Co-Trustee or Separate Trustee................
Section 8.11 Tax
Matters..................................................
Section 8.12 Periodic
Filings.............................................
Section 8.13 Tax
Treatment of Upper-Tier CarryForward Amounts, Basis
Risk CarryForward Amounts and Class IO Shortfalls; Tax
Classification of the Excess Reserve Fund Account, Swap
Account and the Interest Rate Swap Agreement.................
ARTICLE IX
TERMINATION
Section 9.01
Termination upon Liquidation or Purchase of the
Mortgage Loans...............................................
Section 9.02 Final
Distribution on the Certificates.......................
Section 9.03
Additional Termination Requirements..........................
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01
Amendment...................................................
Section 10.02
Recordation of Agreement; Counterparts......................
Section 10.03
Governing Law...............................................
Section 10.04
Intention of Parties........................................
Section 10.05
Notices.....................................................
Section 10.06
Severability of Provisions..................................
Section 10.07
Assignment; Sales; Advance Facilities.......................
Section 10.08
Limitation on Rights of Certificateholders..................
Section 10.09
Inspection and Audit Rights.................................
Section 10.10
Certificates Nonassessable and Fully Paid...................
Section 10.11 Rule of
Construction........................................
Section 10.12 Waiver
of Jury Trial........................................
Section 10.13 Rights
of the Swap Provider.................................
Section 10.14
Regulation AB Compliance; Intent of the Parties;
Reasonableness..............................................
SCHEDULES
Schedule I Mortgage Loan
Schedule
Schedule II Representations and
Warranties of HomEq Servicing Corporation, as
Servicer
Schedule III
Representations and Warranties of Morgan Stanley ABS Capital I
Inc. as to the Mortgage Loans
Schedule IV Representations and
Warranties of First NLC as to the First NLC
Mortgage Loans
Schedule V Representations
and Warranties of JPMorgan, as Servicer
EXHIBITS
Exhibit A Form of
Class A, Class M and Class B Certificate
Exhibit B Form of
Class P Certificate
Exhibit C Form of
Class R Certificate
Exhibit D Form of
Class X Certificate
Exhibit E Form of
Initial Certification of Trustee
Exhibit F Form of
Document Certification and Exception Report of Trustee
Exhibit G Form of
Residual Transfer Affidavit
Exhibit H Form of
Transferor Certificate
Exhibit I Form of
Rule 144A Letter
Exhibit J Form of
Request for Release
Exhibit K Form of
Contents for Each Mortgage File
Exhibit L Form of
Certification to be provided with Form 10-K
Exhibit M Form of
Certification to be provided by the Trustee to Depositor
Exhibit N Form of
Certification to be provided by the Servicer to Depositor
Exhibit O First NLC
Purchase Agreement
Exhibit P Meritage
Agreements
Exhibit Q AIG
Agreements
Exhibit R Accredited
Agreements
Exhibit S CHL
Agreements
Exhibit T Form of
Servicer Power of Attorney
Exhibit U Servicing
Criteria
Exhibit V Additional
Form 10-D Disclosure
Exhibit W Additional
Form 10-K Disclosure
Exhibit X Form 8-K
Disclosure Information
Exhibit Y Interest
Rate Swap Agreement
Exhibit Z
Subservicing Agreement
Exhibit AA Form of
Additional Disclosure Notification
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of March 1,
2006,
among MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation
(the
"Depositor"), HOMEQ SERVICING CORPORATION, a New Jersey corporation
(the
"Servicer"), FIRST NLC FINANCIAL SERVICES, LLC, a Florida limited
liability
company ("First NLC") and DEUTSCHE BANK NATIONAL TRUST COMPANY, a
national
banking association, as trustee (the "Trustee").
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Trustee shall elect that four segregated asset pools within
the
Trust Fund (exclusive of (i) the Prepayment Premiums, (ii) the Swap
Assets,
(iii) the Excess Reserve Fund Account, and (iv) the right of the
Offered
Certificates to receive Upper-Tier CarryForward Amounts including,
but without
duplication, Basis Risk CarryForward Amounts and the obligation to
pay Class IO
Shortfalls) be treated for federal income tax purposes as
comprising four REMICs
(each, a "Trust REMIC" or, in the alternative, Pooling-Tier
REMIC-1,
Pooling-Tier REMIC-2, the Lower-Tier REMIC and the Upper-Tier
REMIC,
respectively). The Class X Interest, Class IO Interest and each
Class of Offered
Certificates (other than the right of each Class of Offered
Certificates to
receive Upper-Tier CarryForward Amounts including, but without
duplication,
Basis Risk CarryForward Amounts and the obligation to pay Class IO
Shortfalls)
represents ownership of a regular interest in a REMIC for purposes
of the REMIC
Provisions. The Class R Certificates represent ownership of the
sole class of
residual interest in each Trust REMIC for purposes of the REMIC
Provisions. The
Startup Day for each Trust REMIC described herein is the Closing
Date. The
latest possible maturity date for each regular interest is the
latest date
referenced in Section 2.05. The Upper-Tier REMIC shall hold as
assets the
several classes of uncertificated Lower-Tier Regular Interests, set
out below.
The Lower-Tier REMIC shall hold as assets the several classes of
uncertificated
Pooling-Tier REMIC-2 Regular Interests. Pooling-Tier REMIC-2 shall
hold as
assets the several classes of uncertificated Pooling-Tier REMIC-1
Regular
Interests. Pooling-Tier REMIC-1 shall hold as assets the assets of
the Trust
Fund (exclusive of (i) the Prepayment Premiums, (ii) the Swap
Assets, (iii) the
Excess Reserve Fund Account, and (iv) the right of the Offered
Certificates to
receive Upper-Tier CarryForward Amounts including, but without
duplication,
Basis Risk CarryForward Amounts and the obligation to pay Class IO
Shortfalls).
For federal income tax purposes, each Class of Offered
Certificates
represents a beneficial ownership of a regular interest in the
Upper-Tier REMIC,
the right to receive Upper-Tier CarryForward Amounts (including,
but without
duplication, Basis Risk CarryForward Amounts), and the obligation
to pay Class
IO Shortfalls, the Class X Certificates represent beneficial
ownership of the
Class X Interest, the Class IO Interest, the Interest Rate Swap
Agreement, the
Swap Account, the Excess Reserve Fund Account and the right to
receive Class IO
Shortfalls subject to the obligation to pay Upper-Tier CarryForward
Amounts
(including, but without duplication, Basis Risk CarryForward
Amounts), and the
Class P Certificates represent beneficial ownership of the
Prepayment Premiums,
which portions of the Trust Fund shall be treated as a grantor
trust.
Pooling-Tier REMIC-1
--------------------
Pooling-Tier REMIC-1 shall issue the following interests in
Pooling-Tier REMIC-1, and each such interest, other than the Class
PT1-R
Interest is hereby designated as a regular interest in the
Pooling-Tier REMIC-1.
Pooling-Tier REMIC-1 shall also issue the Class PT1-R Interest,
which is hereby
designated as the sole class of residual interest in Pooling-Tier
REMIC-1. The
Class PT1-R Interest shall be represented by the Class R
Certificates, shall not
have a principal balance and shall have no interest rate.
Initial
Pooling-Tier
Pooling-Tier REMIC-1
Pooling-Tier REMIC-1
REMIC-1 Principal
Interest
Interest Rate
Amount
--------------------
--------------------
------------------
Class PT1-1
(1)
$ 54,793,488.20
Class PT1-2A
(2)
$ 19,329,759.45
Class PT1-2B
(3)
$ 19,329,759.45
Class PT1-3A
(2)
$ 17,631,244.40
Class PT1-3B
(3)
$ 17,631,244.40
Class PT1-4A
(2)
$ 17,677,388.60
Class PT1-4B
(3)
$ 17,677,388.60
Class PT1-5A
(2)
$ 16,737,361.20
Class PT1-5B
(3)
$ 16,737,361.20
Class PT1-6A
(2)
$ 15,860,088.70
Class PT1-6B
(3)
$ 15,860,088.70
Class PT1-7A
(2)
$ 15,339,580.15
Class PT1-7B
(3)
$ 15,339,580.15
Class PT1-8A
(2)
$ 14,842,447.45
Class PT1-8B
(3)
$ 14,842,447.45
Class PT1-9A
(2)
$ 14,366,750.50
Class PT1-9B
(3)
$ 14,366,750.50
Class PT1-10A
(2)
$ 13,910,591.95
Class PT1-10B
(3)
$ 13,910,591.95
Class PT1-11A
(2)
$ 13,472,248.35
Class PT1-11B
(3)
$ 13,472,248.35
Class PT1-12A
(2)
$ 13,049,662.35
Class PT1-12B
(3)
$ 13,049,662.35
Class PT1-13A
(2)
$ 12,640,122.45
Class PT1-13B
(3)
$ 12,640,122.45
Class PT1-14A
(2)
$ 12,202,553.70
Class PT1-14B
(3)
$ 12,202,553.70
Class PT1-15A
(2)
$ 11,678,771.80
Class PT1-15B
(3)
$ 11,678,771.80
Class PT1-16A
(2)
$ 11,177,045.85
Class PT1-16B
(3)
$ 11,177,045.85
Class PT1-17A
(2)
$ 10,697,003.35
Class PT1-17B
(3)
$ 10,697,003.35
Class PT1-18A
(2)
$ 10,237,703.20
Class PT1-18B
(3)
$ 10,237,703.20
Class PT1-19A
(2)
$
9,798,242.50
Class PT1-19B
(3)
$
9,798,242.50
Class PT1-20A
(2)
$
9,986,870.75
Class PT1-20B
(3)
$
9,986,870.75
Class PT1-21A
(2)
$ 94,300,024.70
Class PT1-21B
(3)
$ 94,300,024.70
Class PT1-22A
(2)
$ 59,677,496.45
Class PT1-22B
(3)
$ 59,677,496.45
Class PT1-23A
(2)
$
2,229,058.25
Class PT1-23B
(3)
$
2,229,058.25
Class PT1-24A
(2)
$
2,002,993.00
Class PT1-24B
(3)
$
2,002,993.00
Class PT1-25A
(2)
$
1,928,073.25
Class PT1-25B
(3)
$
1,928,073.25
Class PT1-26A
(2)
$
1,855,980.00
Class PT1-26B
(3)
$
1,855,980.00
Class PT1-27A
(2)
$ 1,786,607.90
Class PT1-27B
(3)
$
1,786,607.90
Class PT1-28A
(2)
$
1,720,048.05
Class PT1-28B
(3)
$
1,720,048.05
Class PT1-29A
(2)
$
1,655,912.30
Class PT1-29B
(3)
$
1,655,912.30
Class PT1-30A
(2)
$
1,594,062.20
Class PT1-30B
(3)
$
1,594,062.20
Class PT1-31A
(2)
$
1,534,540.65
Class PT1-31B
(3)
$
1,534,540.65
Class PT1-32A
(2)
$
2,809,909.95
Class PT1-32B
(3)
$
2,809,909.95
Class PT1-33A
(2)
$
8,300,544.00
Class PT1-33B
(3)
$
8,300,544.00
Class PT1-34A
(2)
$
1,286,662.70
Class PT1-34B
(3)
$
1,286,662.70
Class PT1-35A
(2)
$
952,627.55
Class PT1-35B
(3)
$
952,627.55
Class PT1-36A
(2)
$
919,883.50
Class PT1-36B
(3)
$
919,883.50
Class PT1-37A
(2)
$
888,250.95
Class PT1-37B
(3)
$
888,250.95
Class PT1-38A
(2)
$
857,693.80
Class PT1-38B
(3)
$
857,693.80
Class PT1-39A
(2)
$
828,180.00
Class PT1-39B
(3)
$
828,180.00
Class PT1-40A
(2)
$
799,686.45
Class PT1-40B
(3)
$
799,686.45
Class PT1-41A
(2)
$
772,139.55
Class PT1-41B
(3)
$
772,139.55
Class PT1-42A
(2)
$
745,529.35
Class PT1-42B
(3)
$
745,529.35
Class PT1-43A
(2)
$
719,825.45
Class PT1-43B
(3)
$
719,825.45
Class PT1-44A
(2)
$
694,997.70
Class PT1-44B
(3)
$
694,997.70
Class PT1-45A
(2)
$
671,016.05
Class PT1-45B
(3)
$
671,016.05
Class PT1-46A
(2)
$
647,857.00
Class PT1-46B
(3)
$
647,857.00
Class PT1-47A
(2)
$
625,483.85
Class PT1-47B
(3)
$
625,483.85
Class PT1-48A
(2)
$
603,873.90
Class PT1-48B
(3)
$
603,873.90
Class PT1-49A
(2)
$
583,002.15
Class PT1-49B
(3)
$
583,002.15
Class PT1-50A
(2)
$
562,843.65
Class PT1-50B
(3)
$
562,843.65
Class PT1-51A
(2)
$
543,374.25
Class PT1-51B
(3)
$
543,374.25
Class PT1-52A
(2)
$
524,570.85
Class PT1-52B
(3)
$
524,570.85
Class PT1-53A
(2)
$
506,410.80
Class PT1-53B
(3)
$
506,410.80
Class PT1-54A
(2)
$
488,872.50
Class PT1-54B
(3)
$
488,872.50
Class PT1-55A
(2)
$ 13,472,409.00
Class PT1-55B
(3)
$ 13,472,409.00
Class PT1-R
(4)
(4)
-----------------
(1) For any
Distribution Date (and the related Interest Accrual Period),
this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per
annum
rate (its
"Pooling-Tier REMIC-1 Interest Rate") equal to the Pooling-Tier
REMIC-1
WAC Rate.
(2) For any
Distribution Date (and the related Interest Accrual Period),
this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per
annum
rate (its
"Pooling-Tier REMIC-1 Interest Rate") equal to the product of
(i) 2 and
(ii) the Pooling-Tier REMIC-1 WAC Rate, subject to a maximum
rate of
10.30%.
(3) For any
Distribution Date (and the related Interest Accrual Period),
this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per
annum
rate (its
"Pooling-Tier REMIC-1 Interest Rate") equal to the excess, if
any, of
(A) the product of (i) 2 and (ii) the Pooling-Tier REMIC-1 WAC
Rate over
(B) 10.30%.
(4) The Class
PT1-R Interest shall not have a principal balance and shall not
bear
interest.
On each Distribution Date, the interest distributable in respect
of
the Mortgage Loans for such Distribution Date shall be deemed to be
distributed
to the Pooling-Tier REMIC-1 Regular Interests at the rates shown
above.
On each Distribution Date, Realized Losses, Subsequent
Recoveries
and payments of principal in respect of the Mortgage Loans shall be
allocated to
the outstanding Pooling-Tier REMIC-1 Regular Interest with the
lowest numerical
denomination until the Pooling-Tier REMIC-1 Principal Amount of
such interest is
reduced to zero, provided that, with respect to Pooling-Tier
REMIC-1 Regular
Interests with the same numerical denomination, such Realized
Losses, Subsequent
Recoveries and payments of principal shall be allocated pro rata
between such
Pooling-Tier REMIC-1 Regular Interests, until the Pooling-Tier
REMIC-1 Principal
Amount of such interests is reduced to zero.
Pooling-Tier REMIC-2
Pooling-Tier REMIC-2 shall issue the following interests in
Pooling-Tier REMIC-2, and each such interest, other than the Class
PT2-R
Interest, is hereby designated as a regular interest in
Pooling-Tier REMIC-2.
The Class PT2-R Interest is hereby designated as the sole class of
residual
interest in Pooling-Tier REMIC-2 and shall be represented by the
Class R
Certificates.
<TABLE>
<CAPTION>
Corresponding
Pooling-Tier
Pooling-Tier
Pooling-Tier REMIC-2 Pooling-Tier
Corresponding
Corresponding
REMIC-2
REMIC-2
Initial Principal
REMIC-2 IO
Pooling-Tier REMIC-1
Scheduled Crossover
Interest
Interest Rate
Amount
Interest
Regular Interest
Distribution Date
-----------------------------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
<C>
<C>
Class PT2-1
(1)
$ 54,793,488.20
N/A
N/A
N/A
Class PT2-2A
(2)
$ 19,329,759.45
Class PT2-IO-2
N/A
N/A
Class PT2-2B
(3)
$ 19,329,759.45
N/A
N/A
N/A
Class PT2-3A
(2)
$ 17,631,244.40
Class PT2-IO-3
N/A
N/A
Class PT2-3B
(3)
$ 17,631,244.40
N/A
N/A
N/A
Class PT2-4A
(2)
$ 17,677,388.60
Class PT2-IO-4
N/A
N/A
Class PT2-4B
(3)
$ 17,677,388.60
N/A
N/A
N/A
Class PT2-5A
(2)
$ 16,737,361.20
Class PT2-IO-5
N/A
N/A
Class PT2-5B
(3)
$ 16,737,361.20
N/A
N/A
N/A
Class PT2-6A
(2)
$ 15,860,088.70
Class PT2-IO-6
N/A
N/A
Class PT2-6B
(3)
$ 15,860,088.70
N/A
N/A
N/A
Class PT2-7A
(2)
$ 15,339,580.15
Class PT2-IO-7
N/A
N/A
Class PT2-7B
(3)
$ 15,339,580.15
N/A
N/A
N/A
Class PT2-8A
(2)
$ 14,842,447.45
Class PT2-IO-8
N/A
N/A
Class PT2-8B
(3)
$ 14,842,447.45
N/A
N/A
N/A
Class PT2-9A
(2)
$ 14,366,750.50
Class PT2-IO-9
N/A
N/A
Class PT2-9B
(3)
$ 14,366,750.50
N/A
N/A
N/A
Class PT2-10A
(2)
$ 13,910,591.95
Class PT2-IO-10
N/A
N/A
Class PT2-10B
(3)
$ 13,910,591.95
N/A
N/A
N/A
Class PT2-11A
(2)
$ 13,472,248.35
Class PT2-IO-11
N/A
N/A
Class PT2-11B
(3)
$ 13,472,248.35
N/A
N/A
N/A
Class PT2-12A
(2)
$ 13,049,662.35
Class PT2-IO-12
N/A
N/A
Class PT2-12B
(3)
$ 13,049,662.35
N/A
N/A
N/A
Class PT2-13A
(2)
$ 12,640,122.45
Class PT2-IO-13
N/A
N/A
Class PT2-13B
(3)
$ 12,640,122.45
N/A
N/A
N/A
Class PT2-14A
(2)
$ 12,202,553.70
Class PT2-IO-14
N/A
N/A
Class PT2-14B
(3)
$ 12,202,553.70
N/A
N/A
N/A
Class PT2-15A
(2)
$ 11,678,771.80
Class PT2-IO-15
N/A
N/A
Class PT2-15B
(3)
$ 11,678,771.80
N/A
N/A
N/A
Class PT2-16A
(2)
$ 11,177,045.85
Class PT2-IO-16
N/A
N/A
Class PT2-16B
(3)
$ 11,177,045.85
N/A
N/A
N/A
Class PT2-17A
(2)
$ 10,697,003.35
Class PT2-IO-17
N/A
N/A
Class PT2-17B
(3)
$ 10,697,003.35
N/A
N/A
N/A
Class PT2-18A
(2)
$ 10,237,703.20
Class PT2-IO-18
N/A
N/A
Class PT2-18B
(3)
$ 10,237,703.20
N/A
N/A
N/A
Class PT2-19A
(2)
$ 9,798,242.50
Class PT2-IO-19
N/A
N/A
Class PT2-19B
(3)
$ 9,798,242.50
N/A
N/A
N/A
Class PT2-20A
(2)
$ 9,986,870.75
Class PT2-IO-20
N/A
N/A
Class PT2-20B
(3)
$ 9,986,870.75
N/A
N/A
N/A
Class PT2-21A
(2)
$ 94,300,024.70
Class PT2-IO-21
N/A
N/A
Class PT2-21B
(3)
$ 94,300,024.70
N/A
N/A
N/A
Class PT2-22A
(2)
$ 59,677,496.45
Class PT2-IO-22
N/A
N/A
Class PT2-22B
(3)
$ 59,677,496.45
N/A
N/A
N/A
Class PT2-23A
(2)
$ 2,229,058.25
Class PT2-IO-23
N/A
N/A
Class PT2-23B
(3)
$ 2,229,058.25
N/A
N/A
N/A
Class PT2-24A
(2)
$ 2,002,993.00
Class PT2-IO-24
N/A
N/A
Class PT2-24B
(3)
$ 2,002,993.00
N/A
N/A
N/A
Class PT2-25A
(2)
$ 1,928,073.25
Class PT2-IO-25
N/A
N/A
Class PT2-25B
(3)
$ 1,928,073.25
N/A
N/A
N/A
Class PT2-26A
(2)
$ 1,855,980.00
Class PT2-IO-26
N/A
N/A
Class PT2-26B
(3)
$ 1,855,980.00
N/A
N/A
N/A
Class PT2-27A
(2)
$ 1,786,607.90
Class PT2-IO-27
N/A
N/A
Class PT2-27B
(3)
$ 1,786,607.90
N/A
N/A
N/A
Class PT2-28A
(2)
$ 1,720,048.05
Class PT2-IO-28
N/A
N/A
Class PT2-28B
(3)
$ 1,720,048.05
N/A
N/A
N/A
Class PT2-29A
(2)
$ 1,655,912.30
Class PT2-IO-29
N/A
N/A
Class PT2-29B
(3)
$ 1,655,912.30
N/A
N/A
N/A
Class PT2-30A
(2)
$ 1,594,062.20
Class PT2-IO-30
N/A
N/A
Class PT2-30B
(3)
$ 1,594,062.20
N/A
N/A
N/A
Class PT2-31A
(2)
$ 1,534,540.65
Class PT2-IO-31
N/A
N/A
Class PT2-31B
(3)
$ 1,534,540.65
N/A
N/A
N/A
Class PT2-32A
(2)
$ 2,809,909.95
Class PT2-IO-32
N/A
N/A
Class PT2-32B
(3)
$ 2,809,909.95
N/A
N/A
N/A
Class PT2-33A
(2)
$ 8,300,544.00
Class PT2-IO-33
N/A
N/A
Class PT2-33B
(3)
$ 8,300,544.00
N/A
N/A
N/A
Class PT2-34A
(2)
$ 1,286,662.70
Class PT2-IO-34
N/A
N/A
Class PT2-34B
(3)
$ 1,286,662.70
N/A
N/A
N/A
Class PT2-35A
(2)
$
952,627.55
Class PT2-IO-35
N/A
N/A
Class PT2-35B
(3)
$
952,627.55
N/A
N/A
N/A
Class PT2-36A
(2)
$
919,883.50
Class PT2-IO-36
N/A
N/A
Class PT2-36B
(3)
$
919,883.50
N/A
N/A
N/A
Class PT2-37A
(2)
$
888,250.95
Class PT2-IO-37
N/A
N/A
Class PT2-37B
(3)
$
888,250.95
N/A
N/A
N/A
Class PT2-38A
(2)
$
857,693.80
Class PT2-IO-38
N/A
N/A
Class PT2-38B
(3)
$
857,693.80
N/A
N/A
N/A
Class PT2-39A
(2)
$
828,180.00
Class PT2-IO-39
N/A
N/A
Class PT2-39B
(3)
$
828,180.00
N/A
N/A
N/A
Class PT2-40A
(2)
$
799,686.45
Class PT2-IO-40
N/A
N/A
Class PT2-40B
(3)
$
799,686.45
N/A
N/A
N/A
Class PT2-41A
(2)
$
772,139.55
Class PT2-IO-41
N/A
N/A
Class PT2-41B
(3)
$
772,139.55
N/A
N/A
N/A
Class PT2-42A
(2)
$
745,529.35
Class PT2-IO-42
N/A
N/A
Class PT2-42B
(3)
$
745,529.35
N/A
N/A
N/A
Class PT2-43A
(2)
$
719,825.45
Class PT2-IO-43
N/A
N/A
Class PT2-43B
(3)
$
719,825.45
N/A
N/A
N/A
Class PT2-44A
(2)
$
694,997.70
Class PT2-IO-44
N/A
N/A
Class PT2-44B
(3)
$
694,997.70
N/A
N/A
N/A
Class PT2-45A
(2)
$
671,016.05
Class PT2-IO-45
N/A
N/A
Class PT2-45B
(3)
$
671,016.05
N/A
N/A
N/A
Class PT2-46A
(2)
$
647,857.00
Class PT2-IO-46
N/A
N/A
Class PT2-46B
(3)
$
647,857.00
N/A
N/A
N/A
Class PT2-47A
(2)
$
625,483.85
Class PT2-IO-47
N/A
N/A
Class PT2-47B
(3)
$
625,483.85
N/A
N/A
N/A
Class PT2-48A
(2)
$
603,873.90
Class PT2-IO-48
N/A
N/A
Class PT2-48B
(3)
$
603,873.90
N/A
N/A
N/A
Class PT2-49A
(2)
$
583,002.15
Class PT2-IO-49
N/A
N/A
Class PT2-49B
(3)
$
583,002.15
N/A
N/A
N/A
Class PT2-50A
(2)
$
562,843.65
Class PT2-IO-50
N/A
N/A
Class PT2-50B
(3)
$
562,843.65
N/A
N/A
N/A
Class PT2-51A
(2)
$
543,374.25
Class PT2-IO-51
N/A
N/A
Class PT2-51B
(3)
$
543,374.25
N/A
N/A
N/A
Class PT2-52A
(2)
$
524,570.85
Class
PT2-IO-52
N/A
N/A
Class PT2-52B
(3)
$
524,570.85
N/A
N/A
N/A
Class PT2-53A
(2)
$
506,410.80
Class PT2-IO-53
N/A
N/A
Class PT2-53B
(3)
$
506,410.80
N/A
N/A
N/A
Class PT2-54A
(2)
$
488,872.50
Class PT2-IO-54
N/A
N/A
Class PT2-54B
(3)
$
488,872.50
N/A
N/A
N/A
Class PT2-55A
(2)
$ 13,472,409.00
Class PT2-IO-55
N/A
N/A
Class PT2-55B
(3)
$ 13,472,409.00
N/A
N/A
N/A
Class PT2-IO-2
(4)
(4)
N/A
Class PT1-2A
April 2006
Class PT2-IO-3
(4)
(4)
N/A
Class PT1-3A
May 2006
Class PT2-IO-4
(4)
(4)
N/A
Class PT1-4A
June 2006
Class PT2-IO-5
(4)
(4)
N/A
Class PT1-5A
July 2006
Class PT2-IO-6
(4)
(4)
N/A
Class PT1-6A
August
2006
Class PT2-IO-7
(4)
(4)
N/A
Class PT1-7A
September 2006
Class PT2-IO-8
(4)
(4)
N/A
Class PT1-8A
October
2006
Class PT2-IO-9
(4)
(4)
N/A
Class PT1-9A
November 2006
Class PT2-IO-10
(4)
(4)
N/A
Class PT1-10A
December
2006
Class PT2-IO-11
(4)
(4)
N/A
Class PT1-11A
January 2007
Class PT2-IO-12
(4)
(4)
N/A
Class PT1-12A
February 2007
Class PT2-IO-13
(4)
(4)
N/A
Class PT1-13A
March 2007
Class PT2-IO-14
(4)
(4)
N/A
Class PT1-14A
April 2007
Class PT2-IO-15
(4)
(4)
N/A
Class PT1-15A
May 2007
Class PT2-IO-16
(4)
(4)
N/A
Class PT1-16A
June 2007
Class PT2-IO-17
(4)
(4)
N/A
Class PT1-17A
July 2007
Class PT2-IO-18
(4)
(4)
N/A
Class PT1-18A
August 2007
Class PT2-IO-19
(4)
(4)
N/A
Class PT1-19A
September 2007
Class PT2-IO-20
(4)
(4)
N/A
Class PT1-20A
October 2007
Class PT2-IO-21
(4)
(4)
N/A
Class PT1-21A
November 2007
Class PT2-IO-22
(4)
(4)
N/A
Class PT1-22A
December 2007
Class PT2-IO-23
(4)
(4)
N/A
Class PT1-23A
January 2008
Class PT2-IO-24
(4)
(4)
N/A
Class PT1-24A
February 2008
Class PT2-IO-25
(4)
(4)
N/A
Class PT1-25A
March 2008
Class PT2-IO-26
(4)
(4)
N/A
Class PT1-26A
April 2008
Class PT2-IO-27
(4)
(4)
N/A
Class PT1-27A
May 2008
Class PT2-IO-28
(4)
(4)
N/A
Class PT1-28A
June 2008
Class PT2-IO-29
(4)
(4)
N/A
Class PT1-29A
July 2008
Class PT2-IO-30
(4)
(4)
N/A
Class PT1-30A
August 2008
Class PT2-IO-31
(4)
(4)
N/A
Class PT1-31A
September 2008
Class PT2-IO-32
(4)
(4)
N/A
Class PT1-32A
October 2008
Class PT2-IO-33
(4)
(4)
N/A
Class PT1-33A
November 2008
Class PT2-IO-34
(4)
(4)
N/A
Class PT1-34A
December 2008
Class PT2-IO-35
(4)
(4)
N/A
Class PT1-35A
January 2009
Class PT2-IO-36
(4)
(4)
N/A
Class PT1-36A
February 2009
Class PT2-IO-37
(4)
(4)
N/A
Class PT1-37A
March 2009
Class PT2-IO-38
(4)
(4)
N/A
Class PT1-38A
April 2009
Class PT2-IO-39
(4)
(4)
N/A
Class PT1-39A
May 2009
Class PT2-IO-40
(4)
(4)
N/A
Class PT1-40A
June 2009
Class PT2-IO-41
(4)
(4)
N/A
Class PT1-41A
July 2009
Class PT2-IO-42
(4)
(4)
N/A
Class PT1-42A
August 2009
Class PT2-IO-43
(4)
(4)
N/A
Class PT1-43A
September 2009
Class PT2-IO-44
(4)
(4)
N/A
Class PT1-44A
October 2009
Class PT2-IO-45
(4)
(4)
N/A
Class PT1-45A
November 2009
Class PT2-IO-46
(4)
(4)
N/A
Class PT1-46A
December 2009
Class PT2-IO-47
(4)
(4)
N/A
Class PT1-47A
January 2010
Class PT2-IO-48
(4)
(4)
N/A
Class PT1-48A
February 2010
Class PT2-IO-49
(4)
(4)
N/A
Class PT1-49A
March 2010
Class PT2-IO-50
(4)
(4)
N/A
Class PT1-50A
April 2010
Class PT2-IO-51
(4)
(4)
N/A
Class PT1-51A
May 2010
Class PT2-IO-52
(4)
(4)
N/A
Class PT1-52A
June 2010
Class PT2-IO-53
(4)
(4)
N/A
Class PT1-53A
July 2010
Class PT2-IO-54
(4)
(4)
N/A
Class PT1-54A
August 2010
Class PT2-IO-55
(4)
(4)
N/A
Class PT1-55A
September 2010
Class PT2-R
(5)
(5)
N/A
N/A
N/A
-----------------
</TABLE>
(1) For any
Distribution Date (and the related Interest Accrual Period),
this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate (its
"Pooling-Tier REMIC-2 Interest Rate") equal to the Pooling-Tier
REMIC-1
WAC Rate.
(2) For any
Distribution Date (and the related Interest Accrual Period),
this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate (its
"Pooling-Tier REMIC-2 Interest Rate") equal to the weighted
average of
the Pooling-Tier REMIC-1 Interest Rates on the Pooling-Tier
REMIC-1
Regular Interests and having an "A" in their class designation,
provided
that, on each Distribution Date on which interest is
distributable on the Corresponding Pooling-Tier REMIC-2 IO
Interest, this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate equal
to Swap LIBOR subject to a maximum rate equal to the weighted
average of
the Pooling-Tier REMIC-1 Interest Rates on the Pooling-Tier
REMIC-1 Regular
Interests and having an "A" in their class designation.
(3) For any
Distribution Date (and the related Interest Accrual Period),
this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate (its
"Pooling-Tier REMIC-2 Interest Rate") equal to the weighted
average of
the Pooling-Tier REMIC-1 Interest Rates on the Pooling-Tier
REMIC-1
Regular Interests and having a "B" in their class designation.
(4) Each
Pooling-Tier REMIC-2 IO is an interest-only interest and does
not
have a
principal balance but has a notional balance ("Pooling-Tier
REMIC-2
IO
Notional Balance") equal to the Pooling-Tier REMIC-2 Principal
Amount
of the
Corresponding Pooling-Tier REMIC-1 Regular Interest. From the
Closing
Date through and including the Corresponding Scheduled
Crossover
Distribution Date, each Pooling-Tier REMIC-2 IO Interest shall be
entitled
to receive
interest that accrues on the Corresponding Pooling-Tier REMIC-1
Regular Interest at a
rate equal to the excess, if any, of (i) the
Pooling-Tier REMIC-1 Interest Rate for the Corresponding
Pooling-Tier
REMIC-1
Regular Interest over (ii) Swap LIBOR. After the Corresponding
Scheduled
Crossover Distribution Date, the Pooling-Tier REMIC-2 IO
Interest
shall not accrue interest.
(5) The Class
PT2-R Interest shall not have a principal balance and shall not
bear
interest.
On each Distribution Date, the interest distributable in respect
of
the Mortgage Loans for such Distribution Date shall be distributed
to the
Pooling-Tier REMIC-2 Regular Interests at the Pooling-Tier REMIC-2
Interest
Rates shown above.
On each Distribution Date, Realized Losses, Subsequent
Recoveries
and payments of principal in respect of the Mortgage Loans shall be
allocated to
the then outstanding Pooling-Tier REMIC-2 Regular Interests (other
than the
Pooling-Tier REMIC-2 IO Interests) with the lowest numerical
denomination until
the Pooling-Tier REMIC-2 Principal Amount of such interest is
reduced to zero,
provided that, for Pooling-Tier REMIC-2 Regular Interests Mortgage
Loans with
the same numerical denomination, such Realized Losses, Subsequent
Recoveries and
payments of principal shall be allocated pro rata between such
Pooling-Tier
REMIC-2 Regular Interests, until the Pooling-Tier REMIC-2 Principal
Amount of
such interests is reduced to zero.
Lower-Tier REMIC
The Lower-Tier REMIC shall issue the following interests, and
each
such interest, other than the Class LT-R Interest, is hereby
designated as a
regular interest in the Lower-Tier REMIC. The Class LT-R Interest
is hereby
designated as the sole class of residual interest in the Lower-Tier
REMIC and
shall be represented by the Class R Certificates.
<TABLE>
<CAPTION>
Corresponding Upper-Tier
Lower-Tier REMIC Interest Lower-Tier
Interest Rate
Initial Lower-Tier Principal Amount
REMIC Regular Interest
------------------------------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
Class LT-A-1
(1)
1/2 initial Class Certificate Balance of
A-1
Corresponding Upper-Tier Regular Interest
Class LT-A-2
(1)
1/2 initial Class Certificate Balance of
A-2
Corresponding Upper-Tier Regular Interest
Class LT-A-3
(1)
1/2 initial Class Certificate Balance of
A-3
Corresponding Upper-Tier Regular Interest
Class LT-A-4
(1)
1/2 initial Class Certificate Balance of
A-4
Corresponding Upper-Tier Regular Interest
Class LT-M-1
(1)
1/2
initial Class Certificate Balance of
M-1
Corresponding Upper-Tier Regular Interest
Class LT-M-2
(1)
1/2 initial Class Certificate Balance of
M-2
Corresponding Upper-Tier Regular Interest
Class LT-M-3
(1)
1/2 initial Class Certificate Balance of
M-3
Corresponding Upper-Tier Regular Interest
Class LT-M-4
(1)
1/2 initial Class Certificate Balance of
M-4
Corresponding Upper-Tier Regular Interest
Class LT-M-5
(1)
1/2 initial Class Certificate Balance of
M-5
Corresponding Upper-Tier Regular Interest
Class LT-M-6
(1)
1/2 initial Class Certificate Balance of
M-6
Corresponding Upper-Tier Regular Interest
Class LT-B-1
(1)
1/2 initial Class Certificate Balance of
B-1
Corresponding Upper-Tier Regular Interest
Class LT-B-2
(1)
1/2 initial Class Certificate Balance of
B-2
Corresponding Upper-Tier Regular Interest
Class LT-B-3
(1)
1/2 initial Class Certificate Balance of
B-3
Corresponding Upper-Tier Regular Interest
Class LT-Accrual
(1)
1/2 Pool Stated Principal Balance plus 1/2
N/A
Subordinated Amount
Class LT-IO
(2)
(2)
N/A
Class LT-R
(3)
(3)
N/A
-----------------
</TABLE>
(1) The interest
rate with respect to any Distribution Date for these
interests
is a per annum variable rate equal to the weighted average of
the
Pooling-Tier REMIC-2 Interest Rates of the Pooling-Tier REMIC-2
Regular
Interests (other than the Pooling-Tier REMIC-2 IO Interests).
(2) This
Lower-Tier Regular Interest is an interest-only interest and does
not
have a
Lower-Tier Principal Amount. On each Distribution Date, this
Lower-Tier
Regular Interest shall be entitled to receive all interest
distributable on the Pooling-Tier REMIC-2 IO Interests.
(3) The Class
LT-R Interest is the sole class of residual interest in the
Lower-Tier
REMIC and it does not have a principal amount or an interest
rate.
Each Lower-Tier Regular Interest is hereby designated as a
regular
interest in the Lower-Tier REMIC. The Class LT-A-1, Class LT-A-2,
Class LT-A-3,
Class LT-A-4, Class LT-M-1, Class LT-M-2, Class LT-M-3, Class
LT-M-4, Class
LT-M-5, Class LT-M-6, Class LT-B-1, Class LT-B-2 and Class LT-B-3
Interests are
hereby designated the LT-Accretion Directed Classes (the
"LT-Accretion Directed
Classes").
On each Distribution Date, 50% of the increase in the
Subordinated
Amount shall be payable as a reduction of the Lower-Tier Principal
Amount of the
LT-Accretion Directed Classes (each such Class will be reduced by
an amount
equal to 50% of any increase in the Subordinated Amount that is
attributable to
a reduction in the Class Certificate Balance of its Corresponding
Class) and
shall be accrued and added to the Lower-Tier Principal Amount of
the Class
LT-Accrual Interest. On each Distribution Date, the increase in the
Lower-Tier
Principal Amount of the Class LT-Accrual Interest shall not exceed
interest
accruals for such Distribution Date for the Class LT-Accrual
Interest. In the
event that: (i) 50% of the increase in the Subordinated Amount
exceeds (ii)
interest accruals on the Class LT-Accrual Interest for such
Distribution Date,
the excess for such Distribution Date (accumulated with all such
excesses for
all prior Distribution Dates) will be added to any increase in the
Subordinated
Amount for purposes of determining the amount of interest accrual
on the Class
LT-Accrual Interest payable as principal on the LT-Accretion
Directed Classes on
the next Distribution Date pursuant to the first sentence of this
paragraph. All
payments of scheduled principal and prepayments of principal
generated by the
Mortgage Loans and all Subsequent Recoveries allocable to principal
shall be
allocated (i) 50% to the Class LT-Accrual Interest and (ii) 50% to
the
LT-Accretion Directed Classes (such principal payments and
Subsequent Recoveries
shall be allocated among such LT-Accretion Directed Classes in an
amount equal
to 50% of the principal amounts and Subsequent Recoveries allocated
to their
respective Corresponding Classes), until paid in full.
Notwithstanding the
above, principal payments allocated to the Class X Interest that
result in the
reduction in the Subordinated Amount shall be allocated to the
Class LT-Accrual
Interest (until paid in full). Realized Losses shall be applied so
that after
all distributions have been made on each Distribution Date (i) the
Lower-Tier
Principal Amount of each LT-Accretion Directed Class is equal to
50% of the
Class Certificate Balance of its Corresponding Class, and (ii) the
Class
LT-Accrual Interest is equal to 50% of the aggregate Stated
Principal Balance of
the Mortgage Loans plus 50% of the Subordinated Amount. Any
increase in the
Class Certificate Balance of a Class of Offered Certificates as a
result of a
Subsequent Recovery shall increase the Lower-Tier Principal Amount
of the
Corresponding Lower-Tier Regular Interest by 50% of such increase,
and the
remaining 50% of such increase shall increase the Lower-Tier
Principal Amount of
the Class LT-Accrual Interest.
Upper-Tier REMIC
The Upper-Tier REMIC shall issue the following interests, and
each
such interest, other than the Class UT-R Interest, is hereby
designated as a
regular interest in the Upper-Tier REMIC. The Class UT-R Interest
is hereby
designated as the sole class of residual interests in the
Upper-Tier REMIC and
shall be represented by the Class R Certificates.
Corresponding
Upper-Tier REMIC
Upper-Tier
Initial Principal
Class of
Interest
Interest Rate Upper-Tier
Amount Certificates
--------------------------------------------------------------------------------
Class A-1
(1)
$ 401,660,000
Class A-1
Class A-2
(1)
$ 111,040,000
Class A-2
Class A-3
(1)
$ 163,635,000
Class A-3
Class A-4
(1)
$ 92,765,000
Class A-4
Class M-1
(1)
$ 37,857,000
Class M-1
Class M-2
(1)
$ 34,869,000
Class M-2
Class M-3
(1)
$ 20,921,000
Class M-3
Class M-4
(1)
$ 18,431,000
Class M-4
Class M-5
(1)
$ 16,936,000
Class M-5
Class M-6
(1)
$ 16,438,000
Class M-6
Class B-1
(1)
$ 14,944,000
Class B-1
Class B-2
(1)
$ 14,446,000
Class B-2
Class B-3
(1)
$ 10,460,000
Class B-3
Class IO
(2)
(2)
N/A
Class X
(3)
(3)
Class X
Class UT-R
(4)
(4)
Class R
-----------------
(1) For any
Distribution Date (and the related Interest Accrual Period)
this
interest
shall bear interest at the lesser of (i) the Pass-Through Rate
(determined without regard to the WAC Cap) for the Corresponding
Class of
Certificates and (ii) the Upper-Tier REMIC WAC Rate.
(2) This
interest is an interest-only interest and does not have a
principal
balance.
On each Distribution Date, the Class IO Interest shall be
entitled
to receive all interest distributable on the Class LT-IO
Interest.
This interest shall be beneficially owned by the holders of the
Class X
Certificates and shall be held as an asset of the Swap Account.
(3) The Class X
Interest has an initial principal balance of $41,843,245 but
will not
accrue interest on such balance but will accrue interest on a
notional
principal balance. As of any Distribution Date, the Class X
Interest shall
have a notional principal balance equal to the aggregate of
the
Lower-Tier Principal Amounts of the Lower-Tier Regular
Interests
(other
than the Class LT-IO Interest) as of the first day of the
related
Interest
Accrual Period. With respect to any Interest Accrual Period,
the
Class X
Interest shall bear interest at a rate equal to the excess, if
any, of
the Upper-Tier REMIC WAC Rate over the product of (i) 2 and
(ii)
the
weighted average of the Lower-Tier Interest Rates of the
Lower-Tier
REMIC
Interests (other than the Class LT-IO Interest), where the
Lower-Tier
Interest Rate on each of the Class LT-Accrual Interest is
subject to
a cap equal to zero and each LT-Accretion Directed Class is
subject to
a cap equal to the Upper-Tier Interest Rate on its
Corresponding Class of Upper-Tier Regular Interest. With respect to
any
Distribution Date, interest that so accrues on the notional
principal
balance of
the Class X Interest shall be deferred in an amount equal to
any
increase in the Subordinated Amount on such Distribution Date.
Such
deferred
interest shall not itself bear interest.
(4) The Class
UT-R Interest does not have an interest rate or a principal
balance.
On each Distribution Date, interest distributable in respect of
the
Lower-Tier Interests for such Distribution Date shall be deemed to
be
distributed on the interests in the Upper-Tier REMIC at the rates
shown above,
provided that the Class IO Interest shall be entitled to receive
interest before
any other interest in the Upper-Tier REMIC.
On each Distribution Date, all Realized Losses, Subsequent
Recoveries and all payments of principal shall be allocated to the
Upper-Tier
Interests until the outstanding principal balance of each such
interest equals
the outstanding Class Certificate Balance of the Corresponding
Class of
Certificates as of such Distribution Date.
The Certificates
----------------
Class
Class Certificate
Class Designation
Pass-Through Rate
Balance
-----------------------------------------------------------------
Class A-1
(1)
$401,660,000
Class A-2
(1)
$111,040,000
Class A-3
(1)
$163,635,000
Class A-4
(1)
$ 92,765,000
Class M-1
(2)
$ 37,857,000
Class M-2
(2)
$ 34,869,000
Class M-3
(2)
$ 20,921,000
Class M-4
(2)
$ 18,431,000
Class M-5
(2)
$ 16,936,000
Class M-6
(2)
$ 16,438,000
Class B-1
(2)
$ 14,944,000
Class B-2
(2)
$ 14,446,000
Class B-3
(2)
$ 10,460,000
Class X
(3)
$
0(3)
Class R
(4)
$
0(4)
-----------------
(1) The Class
A-1, Class A-2, Class A-3, Class A-4 Interest will bear
interest
during
each Interest Accrual Period at a per annum rate equal to (a) on
or
prior to
the Optional Termination Date, the lesser of (i) LIBOR plus the
applicable
Pass-Through Margin, (ii) the WAC Cap or (b) after the Optional
Termination Date, the least of (i) LIBOR plus the applicable
Pass-Through
Margin and
(ii) the WAC Cap.
(2) The Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1,
Class B-2 and Class B-3 Interests will bear interest during
each
Interest Accrual Period at a per annum rate equal to (a) on or
prior
to the
Optional Termination Date, the lesser of (i) LIBOR plus the
applicable
Pass-Through Margin, and (ii) the WAC Cap or (b) after the
Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through Margin, and (ii) the WAC Cap.
(3) The Class X
Certificates will represent beneficial ownership of the Class
X
Interest, the Class IO Interest, the Interest Rate Swap Agreement,
the
right to
Class IO Shortfalls and amounts in the Excess Reserve Fund
Account
and the Swap Account, subject to the obligation to make
payments
from the
Excess Reserve Fund Account in respect of Basis Risk
CarryForward
Amounts
and amounts in the Swap Account subject to the obligation to
make
Net Swap
Payments, Swap Termination Payments, Basis Risk CarryForward
Amounts
and, without duplication, Upper Tier CarryForward Amounts. For
federal
income tax purposes, the Trustee will treat a Class X
Certificateholder's obligation to make payments from the Excess
Reserve
Fund
Account or the Swap Account as payments made pursuant to an
interest
rate cap
contract written by the Class X Certificateholders in favor of
each Class
of Offered Certificates. Such rights of the Class X
Certificateholders and Offered Certificateholders shall be treated
as held
in a
portion of the Trust Fund that is treated as a grantor trust
under
subpart E,
Part I of subchapter J of the Code.
(4) The Class R
Certificates do not have an interest rate or a principal
balance.
(5) Each of
these Certificates will represent not only the ownership of the
Corresponding Class of Upper-Tier Regular Interest but also the
right to
receive
payments from the Excess Reserve Fund Account and the Swap
Account
in respect
of any Basis Risk CarryForward Amounts and, without
duplication, Upper-Tier CarryForward Amounts. Each of these
Certificates
will also
be subject to the obligation to pay Class IO Shortfalls as
described
in Section 8.13. For federal income tax purposes, any amount
distributed on the Offered Certificates on any such Distribution
Date in
excess of
the amount distributable on their Corresponding Class of
Upper-Tier
Regular Interest on such Distribution Date shall be treated as
having
been paid from the Excess Reserve Fund Account or the Swap
Account,
as
applicable, and any amount distributable on such Corresponding
Class of
Upper-Tier
Regular Interest on such Distribution Date in excess of the
amount
distributable on the Offered Certificates on such Distribution
Date
shall be
treated as having been paid to the Swap Account, all pursuant
to,
and as
further provided in, Section 8.13. For federal income tax
purposes,
the
Trustee will treat a Certificateholder's right to receive
payments
from the
Excess Reserve Fund Account or the Swap Account as payments
made
pursuant
to an interest rate cap contract written by the Class X
Certificateholders.
The minimum denomination for each Class of Certificates, other
than
the Class P, Class R and the Class X Certificates, will be $25,000
with integral
multiples of $1 in excess thereof. The minimum denomination for the
Class P and
the Class X Certificates will each be a 1% Percentage Interest in
such Class.
The Class R Certificate will represent a 100% Percentage Interest
in such Class.
It is expected that each Class of Certificates will receive its
final distribution of principal and interest on or prior to the
Final Scheduled
Distribution Date.
<PAGE>
Set forth below are designations of Classes of Certificates to
the
categories used herein:
Book-Entry Certificates........... All Classes of Certificates
other than the
Physical Certificates.
Class A Certificates.............. Class A-1, Class A-2, Class
A-3 and
Class A-4 Certificates.
Delay Certificates................ None.
ERISA-Restricted Certificates..... Class R Certificates, Class
P Certificates
and Class X Certificates; any certificate
with a rating below the lowest applicable
permitted rating under the Underwriters'
Exemption.
Non-Delay Certificates............ Class A, Class X and
Subordinated
Certificates.
Offered Certificates.............. All Certificates other than
the Private
Certificates.
Physical Certificates............. Class P, Class X and Class R
Certificates.
Private Certificates.............. Class P, Class X and Class R
Certificates.
Rating Agencies................... Fitch, Moody's and Standard
& Poor's.
Regular Certificates.............. All Classes of Certificates
other than the
Class P and Class R Certificates.
Residual Certificates............. Class R Certificates.
Subordinated Certificates......... Class M-1, Class M-2, Class
M-3,
Class M-4, Class M-5, Class M-6,
Class B-1, Class
B-2 and Class B-3
Certificates.
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases,
unless the context otherwise requires, shall have the following
meanings:
Accepted Servicing Practices: With respect to any Mortgage
Loan,
those mortgage servicing practices set forth in Section 3.01(a) of
this
Agreement.
Account: Any of the Collection Accounts, the Distribution
Account,
any Escrow Account, the Excess Reserve Fund Account or the Swap
Account. Each
Account shall be an Eligible Account.
Accredited: Accredited Home Lenders, Inc., a California
corporation,
and its successors in interest.
Accredited Agreements: The Accredited Purchase Agreement and
the
Accredited Assignment Agreement, each of which are attached hereto
as Exhibit R.
Accredited Assignment Agreement: The Assignment and Recognition
Agreement, dated as of the Closing Date, among the Sponsor, the
Depositor and
Accredited.
Accredited Mortgage Loans: The Mortgage Loans purchased by the
Sponsor pursuant to the Accredited Purchase Agreement for which
Accredited is
identified as Originator on the Mortgage Loan Schedule.
Accredited Purchase Agreement: With respect to Accredited
Mortgage
Loans purchased by Sponsor prior to December 1, 2005 (as set forth
on the
Mortgage Loan Schedule), the Fourth Amended and Restated Mortgage
Loan Purchase
and Warranties Agreement, dated as of August 1, 2005, and with
respect to
Accredited Mortgage Loans purchased by Sponsor on or after December
1, 2005 (as
set forth on the Mortgage Loan Schedule), the Fifth Amended and
Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of
December 1, 2005,
in each case by and between Accredited and the Sponsor.
Accrued Certificate Interest Distribution Amount: With respect
to
any Distribution Date for each Class of Offered Certificates, the
amount of
interest accrued during the related Interest Accrual Period at the
applicable
Pass-Through Rate on the related Class Certificate Balance
immediately prior to
such Distribution Date, as reduced by such Class's share of Net
Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution
Date allocated to such Class pursuant to Section 4.02.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage
Loan.
Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Rate less the
Expense Fee Rate.
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first
Due Date on which the related Mortgage Rate adjusts as set forth in
the related
Mortgage Note and each Due Date thereafter on which the Mortgage
Rate adjusts as
set forth in the related Mortgage Note.
Advance: Any P&I
Advance or Servicing Advance.
Advance Facility: A financing or other facility as described in
Section 10.07.
Advancing Person: The Person to whom any Servicer's rights
under
this Agreement to be reimbursed for any P&I Advances or
Servicing Advances have
been assigned pursuant to Section 10.07.
Affiliate: With respect to any Person, any other Person
controlling,
controlled by or under common control with such first Person. For
the purposes
of this definition, "control" means the power to direct the
management and
policies of such Person, directly or indirectly, whether through
the ownership
of voting securities, by contract or otherwise; and the terms
"controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all
amendments
or supplements hereto.
AIG: AIG Federal Savings Bank, a federally chartered savings
bank,
and its successors in interest.
AIG Agreements: The AIG Purchase Agreement and the AIG
Assignment
Agreement, each of which are attached hereto as Exhibit Q.
AIG Assignment Agreement: The Assignment and Recognition
Agreement,
dated as of the Closing Date, among the Sponsor, the Depositor and
AIG.
AIG Mortgage Loans: The Mortgage Loans purchased by the Sponsor
pursuant to the AIG Purchase Agreement for which AIG is identified
as Originator
on the Mortgage Loan Schedule.
AIG Purchase Agreement: The Third Amended and Restated Mortgage
Loan
Purchase and Warranties Agreement, dated as of December 1, 2005, by
and between
AIG and the Sponsor, solely insofar as such agreement relates to
the AIG
Mortgage Loans.
Amount Held for Future Distribution: As to the Certificates on
any
Distribution Date, the aggregate amount held in each Collection
Account at the
close of business on the related Determination Date on account of
(i) Principal
Prepayments, Insurance Proceeds, Condemnation Proceeds and
Liquidation Proceeds
on the Mortgage Loans received after the end of the related
Prepayment Period
and (ii) all Scheduled Payments on the Mortgage Loans due after the
end of the
related Due Period.
Analytics Company: Intex Solutions, Inc., or any other bond
analytics service provider identified to the Trustee by the
Depositor.
Applied Realized Loss Amount: With respect to any Distribution
Date,
the amount, if any, by which the aggregate Class Certificate
Balance of the
Offered Certificates after distributions of principal on such
Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage
Loans for such
Distribution Date.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the
value of the
Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice
of
transfer or equivalent instrument in recordable form (other than
the assignee's
name and recording information not yet returned from the recording
office),
reflecting the sale of the Mortgage to the Trustee.
Available Funds: With respect to any Distribution Date and the
Mortgage Loans to the extent received by the Trustee (x) the sum of
(i) all
scheduled installments of interest (net of the related Expense
Fees) and
principal due on the Due Date on such Mortgage Loans in the related
Due Period
and received by the Servicers and the Countrywide Servicer on or
prior to the
related Determination Date, together with any P&I Advances in
respect thereof;
(ii) all Condemnation Proceeds, Insurance Proceeds and Liquidation
Proceeds
received by the Servicers and the Countrywide Servicer during the
related
Prepayment Period (in each case, net of unreimbursed expenses
incurred in
connection with a liquidation or foreclosure and unreimbursed
Advances, if any);
(iii) all partial or full prepayments on the Mortgage Loans
received by the
Servicers and the Countrywide Servicer during the related
Prepayment Period
together with all Compensating Interest, if applicable, paid by the
Servicers
and the Countrywide Servicer thereon (excluding any Prepayment
Charges); (iv)
all Substitution Adjustment Amounts with respect to the
substitutions of
Mortgage Loans that occur with respect to such Distribution Date;
(v) amounts
received with respect to such Distribution Date as the Repurchase
Price in
respect of a Mortgage Loan repurchased with respect to such
Distribution Date;
(vi) the proceeds received with respect to the termination of the
Trust Fund
pursuant to clause (a) of Section 9.01; and (vii) the Closing Date
Deposit
Amount; reduced by (y) amounts in reimbursement for Advances
previously made
with respect to the Mortgage Loans and other amounts as to which
the Servicers,
the Countrywide Servicer, the Depositor or the Trustee are entitled
to be paid
or reimbursed pursuant to this Agreement or the CHL Sale and
Servicing
Agreement.
Balloon Loan: Any Mortgage Loan that requires only payments of
interest until the stated maturity date of the Mortgage Loan or
Scheduled
Payments of principal which (not including the payment due on its
stated
maturity date) are based on an amortization schedule that would be
insufficient
to fully amortize the principal thereof by the stated maturity date
of the
Mortgage Loan.
Basic Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the Principal Remittance
Amount for such
Distribution Date over (ii) the Excess Subordinated Amount, if any,
for such
Distribution Date.
Basis Risk CarryForward Amount: With respect to each Class of
Certificates, as of any Distribution Date, the sum of (A) if on
such
Distribution Date the Pass-Through Rate for any Class of Offered
Certificates is
based upon the WAC Cap, the excess of (i) the Accrued Certificate
Interest
Distribution Amount such Class of Certificates would otherwise be
entitled to
receive on such Distribution Date had such Pass-Through Rate not
been subject to
any WAC Cap (that is, had such rate been calculated as the sum of
LIBOR and the
applicable Pass-Through Margin on such Class of Certificates for
such
Distribution Date and the resulting amount being reduced by
allocated Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls)
over (ii) the
Accrued Certificate Interest Distribution Amount received on such
Distribution
Date on such Class of Offered Certificates at the WAC Cap for such
Distribution
Date and (B) the Basis Risk CarryForward Amount for such Class of
Certificates
for all previous Distribution Dates not previously paid, together
with interest
thereon at a rate equal to the sum of LIBOR and the applicable
Pass-Through
Margin for such Class of Certificates for such Distribution
Date.
Basis Risk Payment: For any Distribution Date, an amount equal
to
the lesser of (i) the aggregate of the Basis Risk CarryForward
Amounts for such
Distribution Date and (ii) the Class X Distributable Amount (prior
to any
reduction for amounts paid from the Excess Reserve Fund Account to
pay any Basis
Risk CarryForward Amount or any Swap Termination Payment).
Best's: Best's Key Rating Guide, as the same shall be amended
from
time to time.
Book-Entry Certificates: As specified in the Preliminary
Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii)
a
day on which banking and savings and loan institutions, in (a) the
States of
Arizona, New York, California, Texas, Maryland, Minnesota, New
Jersey or
Delaware, (b) a State in which any Servicer's servicing operations
are located,
or (c) the State in which the Trustee's operations are located, are
authorized
or obligated by law or executive order to be closed.
Certificate: Any one of the Certificates executed by the Trustee
in
substantially the forms attached hereto as exhibits.
Certificate Balance: With respect to any Class of Certificates,
other than the Class X, Class P or Class R Certificates, at any
date, the
maximum dollar amount of principal to which the Holder thereof is
then entitled
hereunder, such amount being equal to the Denomination thereof
minus all
distributions of principal previously made with respect thereto and
in the case
of any Certificates, reduced by any Applied Realized Loss Amounts
allocated to
such Class of Certificates pursuant to Section 4.05; provided,
however, that
immediately following the Distribution Date on which a Subsequent
Recovery is
distributed, the Class Certificate Balances of any Class or Classes
of
Certificates that have been previously reduced by Applied Realized
Loss Amounts
will be increased, in order of seniority, by the amount of the
Subsequent
Recovery distributed on such Distribution Date (up to the amount of
the Unpaid
Realized Loss Amount for such Class or Classes for such
Distribution Date). The
Class X, Class P and Class R Certificates have no Certificate
Balance.
Certificate Owner: With respect to a Book-Entry Certificate,
the
Person who is the beneficial owner of such Book-Entry
Certificate.
Certificate Register: The register maintained pursuant to
Section
5.02.
Certificateholder or Holder: The person in whose name a
Certificate
is registered in the Certificate Register, except that, solely for
the purpose
of giving any consent pursuant to this Agreement, any Certificate
registered in
the name of the Depositor or any Affiliate of the Depositor shall
be deemed not
to be Outstanding and the Percentage Interest evidenced thereby
shall not be
taken into account in determining whether the requisite amount of
Percentage
Interests necessary to effect such consent has been obtained;
provided, however,
that if any such Person (including the Depositor) owns 100% of the
Percentage
Interests evidenced by a Class of Certificates, such Certificates
shall be
deemed to be Outstanding for purposes of any provision hereof that
requires the
consent of the Holders of Certificates of a particular Class as a
condition to
the taking of any action hereunder. The Trustee is entitled to rely
conclusively
on a certification of the Depositor or any Affiliate of the
Depositor in
determining which Certificates are registered in the name of an
Affiliate of the
Depositor.
CHL: Countrywide Home Loans, Inc., a New York corporation, and
its
successors in interest.
CHL Agreements: Collectively, the CHL Sale and Servicing
Agreement
and the CHL Assignment Agreement, each of which are attached hereto
as Exhibit
S.
CHL Assignment Agreement: The Assignment and Recognition
Agreement,
dated as of the Closing Date, among the Sponsor, the Depositor, the
Countrywide
Servicer and CHL.
CHL Event of Default: An event of default in the CHL Sale and
Servicing Agreement.
CHL Mortgage Loans: The Mortgage Loans purchased by the Sponsor
pursuant to the CHL Sale and Servicing Agreement for which CHL is
identified as
Originator on the Mortgage Loan Schedule.
CHL Sale and Servicing Agreement: The Mortgage Loan Sale and
Servicing Agreement, dated as of October 1, 2005, by and among CHL,
Countrywide
Servicing and the Sponsor, as amended by the Amendment Regulation
AB, dated as
of January 26, 2006, by and among CHL, Countrywide Servicing and
the Sponsor
solely insofar as such agreement, as so amended, relates to the CHL
Mortgage
Loans.
Class: All Certificates bearing the same class designation as
set
forth in the Preliminary Statement.
Class A Certificates:
As specified in the Preliminary Statement.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the aggregate Class
Certificate Balances of
the Class A Certificates immediately prior to such Distribution
Date over (ii)
the lesser of (A) 54.40% of the aggregate Stated Principal Balance
of the
Mortgage Loans for such Distribution Date and (B) the excess, if
any, of the
aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution
Date over $4,981,226.
Class A-1 Certificates: All Certificates bearing the class
designation of "Class A-1".
Class A-2 Certificates: All Certificates bearing the class
designation of "Class A-2".
Class A-3 Certificates: All Certificates bearing the class
designation of "Class A-3".
Class A-4 Certificates: All Certificates bearing the class
designation of "Class A-4".
Class B Certificates: The Class B-1, Class B-2 and Class B-3
Certificates.
Class B-1 Certificates: All Certificates bearing the class
designation of "Class B-1".
Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date), (C) the Class Certificate
Balance of the
Class M-2 Certificates (after taking into account the distribution
of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D)
the Class
Certificate Balance of the Class M-3 Certificates (after taking
into account the
distribution of the Class M-3 Principal Distribution Amount for
such
Distribution Date), (E) the Class Certificate Balance of the Class
M-4
Certificates (after taking into account the distribution of the
Class M-4
Principal Distribution Amount for such Distribution Date), (F) the
Class
Certificate Balance of the Class M-5 Certificates (after taking
into account the
distribution of the Class M-5 Principal Distribution Amount for
such
Distribution Date), (G) the Class Certificate Balance of the Class
M-6
Certificates (after taking into account the distribution of the
Class M-6
Principal Distribution Amount for such Distribution Date) and (H)
the Class
Certificate Balance of the Class B-1 Certificates immediately prior
to such
Distribution Date over (ii) the lesser of (A) 86.60% of the
aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date
and (B) the
excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans
for such Distribution Date over $4,981,226.
Class B-2 Certificates: All Certificates bearing the class
designation of "Class B-2".
Class B-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date), (C) the Class Certificate
Balance of the
Class M-2 Certificates (after taking into account the distribution
of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D)
the Class
Certificate Balance of the Class M-3 Certificates (after taking
into account the
distribution of the Class M-3 Principal Distribution Amount for
such
Distribution Date), (E) the Class Certificate Balance of the Class
M-4
Certificates (after taking into account the distribution of the
Class M-4
Principal Distribution Amount for such Distribution Date), (F) the
Class
Certificate Balance of the Class M-5 Certificates (after taking
into account the
distribution of the Class M-5 Principal Distribution Amount for
such
Distribution Date), (G) the Class Certificate Balance of the Class
M-6
Certificates (after taking into account the distribution of the
Class M-6
Principal Distribution Amount for such Distribution Date), (H) the
Class
Certificate Balance of the Class B-1 Certificates (after taking
into account the
distribution of the Class B-1 Principal Distribution Amount for
such
Distribution Date), and (I) the Class Certificate Balance of the
Class B-2
Certificates immediately prior to such Distribution Date over (ii)
the lesser of
(A) 89.50% of the aggregate Stated Principal Balance of the
Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate
Stated
Principal Balance of the Mortgage Loans for such Distribution Date
over
$4,981,226.
Class B-3 Certificates: All Certificates bearing the class
designation of "Class B-3".
Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date), (C) the Class Certificate
Balance of the
Class M-2 Certificates (after taking into account the distribution
of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D)
the Class
Certificate Balance of the Class M-3 Certificates (after taking
into account the
distribution of the Class M-3 Principal Distribution Amount for
such
Distribution Date), (E) the Class Certificate Balance of the Class
M-4
Certificates (after taking into account the distribution of the
Class M-4
Principal Distribution Amount for such Distribution Date), (F) the
Class
Certificate Balance of the Class M-5 Certificates (after taking
into account the
distribution of the Class M-5 Principal Distribution Amount for
such
Distribution Date), (G) the Class Certificate Balance of the Class
M-6
Certificates (after taking into account the distribution of the
Class M-6
Principal Distribution Amount for such Distribution Date), (H) the
Class
Certificate Balance of the Class B-1 Certificates (after taking
into account the
distribution of the Class B-1 Principal Distribution Amount for
such
Distribution Date), (I) the Class Certificate Balance of the Class
B-2
Certificates (after taking into account the distribution of the
Class B-2
Principal Distribution Amount for such Distribution Date) and (J)
the Class
Certificate Balance of the Class B-3 Certificates immediately prior
to such
Distribution Date over (ii) the lesser of (A) 91.60% of the
aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date
and (B) the
excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans
for such Distribution Date over $4,981,226.
Class Certificate Balance: With respect to any Class and as to
any
date of determination, the aggregate of the Certificate Balances of
all
Certificates of such Class as of such date.
Class IO Interest: As specified in the Preliminary Statement.
Class IO Shortfalls: As defined in Section 8.13. For the
avoidance
of doubt, the Class IO Shortfall for any Distribution Date shall
equal the
amount payable to the Class X Certificates in respect of amounts
due to the Swap
Provider on such Distribution Date (other than Defaulted Swap
Termination
Payments) in excess of the amount payable on the Class X Interest
(prior to any
reduction for Basis Risk Payments or Defaulted Swap Termination
Payments) on
such Distribution Date, all as further provided in Section
8.13.
Class LT-R Interest: The residual interest in the Lower-Tier
REMIC
as described in the Preliminary Statement and the related footnote
thereto.
Class M Certificates: The Class M-1, Class M-2, Class M-3,
Class
M-4, Class M-5 and Class M-6 Certificates.
Class M-1 Enhancement Percentage: With respect to any
Distribution
Date, the percentage obtained by dividing (x) the sum of (i) the
aggregate Class
Certificate Balances of the Class M and Class B Certificates (other
than the
Class M-1 Certificates) and (ii) the Subordinated Amount, in each
case after
taking into account the distributions of the related Principal
Distribution
Amount and any principal payments on those Classes of Certificates
from the Swap
Account on that Distribution Date, by (y) the aggregate Stated
Principal Balance
of the Mortgage Loans for that Distribution Date.
Class M-1 Certificates: All Certificates bearing the class
designation of "Class M-1".
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), and (B) the Class Certificate Balance of the Class M-1
Certificates
immediately prior to such Distribution Date over (ii) the lesser of
(A) 62.00%
of the aggregate Stated Principal Balance of the Mortgage Loans for
such
Distribution Date and (B) the excess, if any, of the aggregate
Stated Principal
Balance of the Mortgage Loans for such Distribution Date over
$4,981,226.
Class M-2 Certificates: All Certificates bearing the class
designation of "Class M-2".
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date) and (C) the Class Certificate
Balance of the
Class M-2 Certificates immediately prior to such Distribution Date
over (ii) the
lesser of (A) 69.00% of the aggregate Stated Principal Balance of
the Mortgage
Loans for such Distribution Date and (B) the excess, if any, of the
aggregate
Stated Principal Balance of the Mortgage Loans for such
Distribution Date over
$4,981,226.
Class M-3 Certificates: All Certificates bearing the class
designation of "Class M-3".
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date), (C) the Class Certificate
Balance of the
Class M-2 Certificates (after taking into account the distribution
of the Class
M-2 Principal Distribution Amount for such Distribution Date) and
(D) the Class
Certificate Balance of the Class M-3 Certificates immediately prior
to such
Distribution Date over (ii) the lesser of (A) 73.20% of the
aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date
and (B) the
excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans
for such Distribution Date over $4,981,226.
Class M-4 Certificates: All Certificates bearing the class
designation of "Class M-4".
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date), (C) the Class Certificate
Balance of the
Class M-2 Certificates (after taking into account the distribution
of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D)
the Class
Certificate Balance of the Class M-3 Certificates (after taking
into account the
distribution of the Class M-3 Principal Distribution Amount for
such
Distribution Date), and (E) the Class Certificate Balance of the
Class M-4
Certificates immediately prior to such Distribution Date over (ii)
the lesser of
(A) 76.90% of the aggregate Stated Principal Balance of the
Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate
Stated
Principal Balance of the Mortgage Loans for such Distribution Date
over
$4,981,226.
Class M-5 Certificates: All Certificates bearing the class
designation of "Class M-5".
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date), (C) the Class Certificate
Balance of the
Class M-2 Certificates (after taking into account the distribution
of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D)
the Class
Certificate Balance of the Class M-3 Certificates (after taking
into account the
distribution of the Class M-3 Principal Distribution Amount for
such
Distribution Date), (E) the Class Certificate Balance of the Class
M-4
Certificates (after taking into account the distribution of the
Class M-4
Principal Distribution Amount for such Distribution Date) and (F)
the Class
Certificate Balance of the Class M-5 Certificates immediately prior
to such
Distribution Date over (ii) the lesser of (A) 80.30% of the
aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date
and (B) the
excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans
for such Distribution Date over $4,981,226.
Class M-6 Certificates: All Certificates bearing the class
designation of "Class M-6".
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate
Class
Certificate Balances of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount for such
Distribution
Date), (B) the Class Certificate Balance of the Class M-1
Certificates (after
taking into account the distribution of the Class M-1 Principal
Distribution
Amount for such Distribution Date), (C) the Class Certificate
Balance of the
Class M-2 Certificates (after taking into account the distribution
of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D)
the Class
Certificate Balance of the Class M-3 Certificates (after taking
into account the
distribution of the Class M-3 Principal Distribution Amount for
such
Distribution Date), (E) the Class Certificate Balance of the Class
M-4
Certificates (after taking into account the distribution of the
Class M-4
Principal Distribution Amount for such Distribution Date), (F) the
Class
Certificate Balance of the Class M-5 Certificates (after taking
into account the
distribution of the Class M-5 Principal Distribution Amount for
such
Distribution Date) and (G) the Class Certificate Balance of the
Class M-6
Certificates immediately prior to such Distribution Date over (ii)
the lesser of
(A) 83.60% of the aggregate Stated Principal Balance of the
Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate
Stated
Principal Balance of the Mortgage Loans for such Distribution Date
over
$4,981,226.
Class P Certificates: All Certificates bearing the class
designation
of "Class P".
Class PT1-R Interest: The residual interest in Pooling-Tier
REMIC-1
as described in the Preliminary Statement and the related footnote
thereto.
Class PT2-R Interest: The residual interest in Pooling-Tier
REMIC-2
as described in the Preliminary Statement and the related footnote
thereto.
Class R Certificates: All Certificates bearing the class
designation
of "Class R".
Class UT-R Interest: The residual interest in the Upper-Tier
REMIC
as described in the Preliminary Statement and the related footnote
thereto.
Class X Certificates: All Certificates bearing the class
designation
of "Class X".
Class X Distributable Amount: On any Distribution Date, the sum
of
(i) as a distribution in respect of interest, the amount of
interest that has
accrued on the Class X Interest and not applied as an Extra
Principal
Distribution Amount on such Distribution Date, plus any such
accrued interest
remaining undistributed from prior Distribution Dates, plus,
without
duplication, (ii) as a distribution in respect of principal, any
portion of the
principal balance of the Class X Interest which is distributable as
a
Subordination Reduction Amount, minus (iii) any amounts paid from
the Excess
Reserve Fund Account to pay any Basis Risk CarryForward Amount or
any Defaulted
Swap Termination Payment.
Class X Interest: The Upper-Tier Regular Interest represented by
the
Class X Certificates as specified and described in the Preliminary
Statement and
the related footnote thereto.
Closing Date: March 30, 2006.
Closing Date Deposit Amount: $11.39 (all of which is allocable
to
principal) deposited by the Depositor into the Distribution Account
on the
Closing Date.
Code: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
Collection Account: As defined in Section 3.10(a).
Combined Loan to Value Ratio or CLTV: As of any date and as to
any
Second Lien Mortgage Loan, the ratio, expressed as a percentage, of
the (a) sum
of (i) the outstanding principal balance of the Second Lien
Mortgage Loan and
(ii) the outstanding principal balance as of such date of any
mortgage loan or
mortgage loans that are senior or equal in priority to the Second
Lien Mortgage
Loan and which are secured by the same Mortgaged Property to (b)
the Appraised
Value as determined pursuant to the Underwriting Guidelines of the
related
Mortgaged Property as of the origination of the Second Lien
Mortgage Loan.
Commission: The United States Securities and Exchange
Commission.
Compensating Interest: For any Distribution Date and each
Servicer,
the lesser of (a) the amount by which all Prepayment Interest
Shortfalls
resulting from Principal Prepayment exceeds all Prepayment Interest
Excesses for
such Distribution Date on the Mortgage Loans serviced by the
applicable Servicer
and (b) the amount of the aggregate Servicing Fee paid to or
retained by the
applicable Servicer for such Distribution Date. For any
Distribution Date and
the Countrywide Servicer, the amount, if any, required to be paid
by the
Countrywide Servicer pursuant to the CHL Agreements to compensate
for Prepayment
Interest Shortfalls with respect to such Distribution Date.
Condemnation Proceeds: All awards or settlements in respect of
a
Mortgaged Property, whether permanent or temporary, partial or
entire, by
exercise of the power of eminent domain or condemnation.
Convertible Mortgage Loan: Any individual Adjustable Rate
Mortgage
Loan which contains a provision whereby the Mortgagor is permitted
to convert
the Adjustable Rate Mortgage Loan to a Fixed Rate Mortgage Loan in
accordance
with the terms of the related Mortgage Note.
Corporate Trust Office: The designated office of the Trustee in
the
State of California at which at any particular time its corporate
trust business
with respect to this Agreement is administered, which office at the
date of the
execution of this Agreement is located at 1761 East St. Andrew
Place, Santa Ana,
California 92705, Attn: Trust Administration-MS06X2, facsimile no.
(714)
247-6329 and which is the address to which notices to and
correspondence with
the Trustee should be directed.
Corresponding Class: The class of interests in the Lower-Tier
REMIC
or Upper-Tier REMIC that corresponds to the class of interests in
the other such
REMIC or to a Class of Certificates in the manner set out
below:
Corresponding
Corresponding
Lower-Tier
Upper-Tier Regular
Corresponding Class
Class
Designation
Interest
of Certificates
--------------------------------------------------------------------------------
Class LT-A-1
Class A-1
Class A-1
Class LT-A-2
Class A-2
Class A-2
Class LT-A-3
Class A-3
Class A-3
Class LT-A-4
Class A-4
Class A-4
Class LT-M-1
Class M-1
Class M-1
Class LT-M-2
Class M-2
Class M-2
Class LT-M-3
Class M-3
Class M-3
Class LT-M-4
Class M-4
Class M-4
Class LT-M-5
Class M-5
Class M-5
Class LT-M-6
Class M-6
Class M-6
Class LT-B-1
Class B-1
Class B-1
Class LT-B-2
Class B-2
Class B-2
Class LT-B-3
Class B-3
Class B-3
N/A
Class X
Class X
Corresponding Pooling-Tier REMIC-1 Regular Interest: As described
in
the Preliminary Statement.
Corresponding Pooling-Tier REMIC-2 IO Interest: As described in
the
Preliminary Statement.
Corresponding Scheduled Crossover Distribution Date: The
Distribution Date in the month and year specified in the
Preliminary Statement
corresponding to a Pooling-Tier REMIC-2 IO Interest.
Countrywide Servicer: Countrywide Home Loans Servicing LP, a
Texas
limited partnership, and its successors in interest, and if a
successor is
appointed under the CHL Agreements, such successor.
Cumulative Loss Percentage: With respect to any Distribution
Date,
the percentage equivalent of a fraction, the numerator of which is
the aggregate
amount of Realized Losses incurred from the Cut-off Date through
the last day of
the related Prepayment Period and the denominator of which is the
Cut-off Date
Pool Principal Balance of the Mortgage Loans.
Cumulative Loss Trigger Event: With respect to any Distribution
Date, a Cumulative Loss Trigger Event exists if the quotient
(expressed as a
percentage) of (x) the aggregate amount of Realized Losses incurred
since the
Cut-off Date through the last day of the related Prepayment Period
divided by
(y) the Cut-off Date Pool Principal Balance exceeds the applicable
cumulative
loss percentages set forth below with respect to such Distribution
Date:
Distribution Date Occurring In
Cumulative Loss Percentage
--------------------------------------------------------------------------------
April 2008 through March 2009
1.450% for the first month, plus an
additional 1/12th of 1.800% for each
month thereafter (e.g., 2.350% in October
2008)
April 2009 through March 2010
3.250% for the first month, plus an
additional 1/12th of 1.850% for each
month thereafter (e.g., 4.175% in October
2009)
April 2010 through March 2011
5.100% for the first month, plus an
additional 1/12th of 1.500% for each
month thereafter (e.g., 5.850% in October
2010)
April 2011 through March 2012
6.600% for the first month, plus an
additional 1/12th of 0.800% for each
month thereafter (e.g., 7.000% in
October 2011)
April 2012 and thereafter
7.400%
Custodial File: With respect to each Mortgage Loan, the file
retained by the Trustee consisting of items (i) - (viii) as listed
on Exhibit K
hereto.
Cut-off Date: March 1, 2006.
Cut-off Date Pool Principal Balance: The aggregate Stated
Principal
Balances of all Mortgage Loans as of the Cut-off Date plus the
portion of the
Closing Date Deposit Amount allocable to principal.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
Stated
Principal Balance thereof as of the close of business on the
Cut-off Date (after
giving effect to payments of principal due on that date, whether or
not
received).
Data Tape Information: The information provided by the
Originators
as of the Cut-off Date to the Depositor or the Sponsor setting
forth the
following information with respect to each Mortgage Loan: (1) the
Mortgagor's
name; (2) as to each Mortgage Loan, the Scheduled Principal Balance
as of the
Cut-off Date; (3) the Mortgage Rate Cap; (4) the Index; (5) a code
indicating
whether the Mortgaged Property is owner occupied; (6) the type of
Mortgaged
Property; (7) the first date on which the Scheduled Payment was due
on the
Mortgage Loan and, if such date is not consistent with the Due Date
currently in
effect, such Due Date; (8) the "paid through date" based on
payments received
from the related Mortgagor; (9) the original principal amount of
the Mortgage
Loan; (10) with respect to Adjustable Rate Mortgage Loans, the
Maximum Mortgage
Rate; (11) the type of Mortgage Loan (i.e., Fixed Rate or
Adjustable Rate
Mortgage Loan, First Lien Mortgage Loan or Second Lien Mortgage
Loan); (12) a
code indicating the purpose of the loan (i.e., purchase, rate and
term
refinance, equity take out refinance); (13) a code indicating the
documentation
style (i.e., full, asset verification, income verification and
no
documentation); (14) the credit risk score (FICO score); (15) the
loan credit
grade classification (as described in the underwriting guidelines);
(16) with
respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage
Rate; (17)
the Mortgage Rate at origination; (18) with respect to each
Adjustable Rate
Mortgage Loan, the first Adjustment Date immediately following the
Cut-off Date;
(19) the value of the Mortgaged Property; (20) a code indicating
the type of
Prepayment Charges applicable to such Mortgage Loan (including any
prepayment
penalty term), if any; (21) with respect to each Adjustable Rate
Mortgage Loan,
the Periodic Mortgage Rate Cap; (22) the applicable Originator of
such Mortgage
Loan; (23) with respect to each First Lien Mortgage Loan, the LTV
at
origination, and with respect to each Second Lien Mortgage Loan,
the CLTV at
origination; and (24) if such Mortgage Loan is covered by a primary
mortgage
insurance policy or a lender-paid primary mortgage insurance
policy, the primary
mortgage insurance rate. With respect to the Mortgage Loans in the
aggregate,
the Data Tape Information shall set forth the following
information, as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current
aggregate
outstanding principal balance of the Mortgage Loans; (3) the
weighted average
Mortgage Rate of the Mortgage Loans; and (4) the weighted average
maturity of
the Mortgage Loans.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding
under the United
States Bankruptcy Code in the Scheduled Payment for such Mortgage
Loan which
became final and non-appealable, except such a reduction resulting
from a
Deficient Valuation or any reduction that results in a permanent
forgiveness of
principal.
Defaulted Swap Termination Payment: Any Swap Termination
Payment
required to be paid by the Trust to the Swap Provider pursuant to
the Interest
Rate Swap Agreement as a result of an Event of Default (as defined
in the
Interest Rate Swap Agreement) with respect to which the Swap
Provider is the
defaulting party or a Termination Event (as defined in the Interest
Rate Swap
Agreement) (other than Illegality or a Tax Event that is not a Tax
Event Upon
Merger (each as defined in the Interest Rate Swap Agreement )) with
respect to
which the Swap Provider is the sole Affected Party (as defined in
the Interest
Rate Swap Agreement).
Deficient Valuation: With respect to any Mortgage Loan, a
valuation
of the related Mortgaged Property by a court of competent
jurisdiction in an
amount less than the then outstanding principal balance of the
Mortgage Loan,
which valuation results from a proceeding initiated under the
United States
Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a
Physical
Certificate and any Certificate issued in lieu of a Book-Entry
Certificate
pursuant to Section 5.02(e).
Delay Certificates: As
specified in the Preliminary Statement.
Deleted Mortgage Loan:
As defined in Section 2.03.
Delinquency Trigger Event: With respect to any Distribution Date,
a
Delinquency Trigger Event exists if the quotient (expressed as a
percentage) of
(x) the rolling three month average of the aggregate Stated
Principal Balance of
60+ Day Delinquent Mortgage Loans (including Mortgage Loans in
foreclosure and
Mortgage Loans related to REO Property) and (y) (1) until the
aggregate Class
Certificate Balance of the Class A Certificates have been reduced
to zero, the
aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution
Date equals or exceeds 35.09% of the prior period's Senior
Enhancement
Percentage and (2) after the aggregate Class Certificate Balance of
the Class A
Certificates have been reduced to zero, the aggregate Stated
Principal Balance
of the Mortgage Loans for such Distribution Date equals or exceeds
42.11% of the
prior period's Class M Enhancement Percentage.
Denomination: With respect to each Certificate, the amount set
forth
on the face thereof as the "Initial Certificate Balance of this
Certificate" or
the Percentage Interest appearing on the face thereof.
Depositor: Morgan Stanley ABS Capital I Inc., a Delaware
corporation, and its successors in interest.
Depository: The initial Depository shall be The Depository
Trust
Company, the nominee of which is CEDE & Co., as the registered
Holder of the
Book-Entry Certificates. The Depository shall at all times be a
"clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform
Commercial Code of
the State of New York.
Depository Institution: Any depository institution or trust
company,
including the Trustee, that (a) is incorporated under the laws of
the United
States of America or any State thereof, (b) is subject to
supervision and
examination by federal or state banking authorities and (c) has
outstanding
unsecured commercial paper or other short-term unsecured debt
obligations that
are rated "P-1" by Moody's, "F1+" by Fitch and "A-1" by Standard
& Poor's (to
the extent they are Rating Agencies hereunder).
Depository Participant: A broker, dealer, bank or other
financial
institution or other Person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to each Distribution Date, the
18th
day (or if such day is not a Business Day, the immediately
preceding Business
Day) in the calendar month in which such Distribution Date
occurs.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(d) in the name
of the Trustee
for the benefit of the Certificateholders and designated "Deutsche
Bank National
Trust Company in trust for registered Holders of Morgan Stanley
Home Equity Loan
Trust 2006-2 Mortgage Pass-Through Certificates, Series 2006-2."
Funds in the
Distribution Account shall be held in trust for the
Certificateholders for the
uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:00 noon New York City time on the second Business Day
immediately preceding
such Distribution Date.
Distribution Date: The 25th day of each calendar month, or if
such
day is not a Business Day, the next succeeding Business Day,
commencing in April
2006.
Document Certification and Exception Report: The report attached
to
Exhibit F hereto.
Due Date: The day of the month on which the Scheduled Payment is
due
on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the calendar month preceding the
month in which
such Distribution Date occurs and ending on the first day of the
calendar month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account maintained with a federal
or
state-chartered depository institution or trust company that
complies with the
definition of Eligible Institution, (ii) an account maintained with
the
corporate trust department of a federal depository institution
or
state-chartered depository institution subject to regulations
regarding
fiduciary funds on deposit similar to Title 12 of the U.S. Code of
Federal
Regulation Section 9.10(b), which, in either case, has corporate
trust powers
and is acting in its fiduciary capacity or (iii) any other account
acceptable to
each Rating Agency. Eligible Accounts may bear interest, and may
include, if
otherwise qualified under this definition, accounts maintained with
the Trustee.
Each Eligible Account shall be a separate account.
Eligible Institution: A federal or state-chartered depository
institution or trust company the commercial paper, short-term debt
obligations,
or other short-term deposits of which are rated "A-1+" by Standard
& Poor's if
the amounts on deposit are to be held in the account for no more
than 365 days
(or at least "A-2" by Standard & Poor's if the amounts on
deposit are to be held
in the account for no more than 30 days), or the long-term
unsecured debt
obligations of which are rated at least "AA-" by Standard &
Poor's if the
amounts on deposit are to be held in the account for no more than
365 days, and
the commercial paper, short-term debt obligations or other
short-term deposits
of which are rated at least "P-1" by Moody's and "F1+" by Fitch (or
a comparable
rating if another Rating Agency is specified by the Depositor by
written notice
to the Servicers and the Trustee) (in each case, to the extent they
are
designated as Rating Agencies in the Preliminary Statement).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that meets the requirements of
Prohibited
Transaction Exemption ("PTE") 2002-41, 67 Fed. Reg. 54487 (2002)
(or any
successor thereto), or any substantially similar administrative
exemption
granted by the U.S. Department of Labor.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established
and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b).
Event of Default: As defined in Section 7.01 or in the CHL
Agreements, as applicable.
Excess Reserve Fund Account: The separate Eligible Account
created
and maintained by the Trustee pursuant to Sections 3.07(b) and
3.07(c) in the
name of the Trustee for the benefit of the Regular
Certificateholders and
designated "Deutsche Bank National Trust Company in trust for
registered Holders
of Morgan Stanley Home Equity Loan Trust 2006-2, Mortgage
Pass-Through
Certificates, Series 2006-2." Funds in the Excess Reserve Fund
Account shall be
held in trust for the Regular Certificateholders for the uses and
purposes set
forth in this Agreement. Amounts on deposit in the Excess Reserve
Fund Account
shall not be invested.
Excess Subordinated Amount: With respect to any Distribution
Date,
the excess, if any, of (a) the Subordinated Amount on such
Distribution Date
over (b) the Specified Subordinated Amount for such Distribution
Date.
Exchange Act: The
Securities Exchange Act of 1934, as amended.
Expense Fee Rate: As to each Mortgage Loan, a per-annum rate
equal
to the sum of the Servicing Fee Rate, the Trustee Fee Rate and any
lender-paid
primary mortgage insurance fee rate, if applicable.
Expense Fees: As to each Mortgage Loan, the sum of the
Servicing
Fee, the Trustee Fee and any lender-paid primary mortgage insurance
fee, if
applicable.
Extra Principal Distribution Amount: As of any Distribution
Date,
the lesser of (x) the related Total Monthly Excess Spread for such
Distribution
Date and (y) the related Subordination Deficiency for such
Distribution Date.
Fannie Mae: The Federal National Mortgage Association, or any
successor thereto.
Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie
Mae
Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor
thereto.
Final Recovery Determination: With respect to any defaulted
Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO
Property purchased
by the applicable Originator or the Depositor, as applicable, as
contemplated by
this Agreement, the Meritage Agreements, the Accredited Agreements,
the CHL
Agreements or the AIG Agreements, as applicable), a determination
made by the
applicable Servicer that all Insurance Proceeds, Condemnation
Proceeds,
Liquidation Proceeds and other payments or recoveries which the
applicable
Servicer, in its reasonable good faith judgment, expects to be
finally
recoverable in respect thereof have been so recovered. Each
Servicer shall
maintain records, prepared by a Servicing Officer, of each Final
Recovery
Determination made thereby.
Final Scheduled Distribution Date: The Final Scheduled
Distribution
Date for each Class of Certificates is the Distribution Date in
February 2036.
First Lien Mortgage Loan: A Mortgage Loan secured by a first
lien
Mortgage on the related Mortgaged Property.
First NLC: First NLC Financial Services, LLC, a Florida limited
liability company, and its successors in interest.
First NLC Mortgage Loans: The Mortgage Loans purchased by the
Sponsor pursuant to the First NLC Purchase Agreement for which
First NLC is
identified as Originator on the Mortgage Loan Schedule.
First NLC Purchase Agreement: The Amended and Restated Mortgage
Loan
Purchase and Warranties Agreement, dated as of September 29, 2005,
by and
between First NLC and the Sponsor, which is attached hereto as
Exhibit O.
Fitch: Fitch, Inc., and its successors in interest. If Fitch is
designated as a Rating Agency in the Preliminary Statement, for
purposes of
Section 12.05(b) the address for notices to Fitch shall be Fitch,
Inc., One
State Street Plaza, New York, New York 10004, Attention: MBS
Monitoring - Morgan
Stanley Home Equity Loan Trust 2006-2, or such other address as
Fitch may
hereafter furnish to the Depositor, the Trustee and the
Servicers.
Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan.
Freddie Mac: The Federal Home Loan Mortgage Corporation, a
corporate
instrumentality of the United States created and existing under
Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor
thereto.
Gross Margin: With respect to each Adjustable Rate Mortgage
Loan,
the fixed percentage amount set forth in the related Mortgage Note
to be added
to the applicable Index to determine the Mortgage Rate.
HomEq: HomEq Servicing Corporation, a New Jersey corporation,
and
its successors in interest.
Index: As to each Adjustable Rate Mortgage Loan, the index from
time
to time in effect for the adjustment of the Mortgage Rate set forth
as such on
the related Mortgage Note.
Insurance Policy: With respect to any Mortgage Loan included in
the
Trust Fund, any insurance policy, including all riders and
endorsements thereto
in effect, including any replacement policy or policies for any
Insurance
Policies.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds
of
insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Interest Accrual Period: With respect to each Class of
Non-Delay
Certificates and the Corresponding Class of Lower-Tier Regular
Interests and any
Distribution Date, the period commencing on the Distribution Date
occurring in
the month preceding the month in which the current Distribution
Date occurs and
ending on the day immediately preceding the current Distribution
Date (or, in
the case of the first Distribution Date, the period from and
including the
Closing Date to but excluding such first Distribution Date). For
purposes of
computing interest accruals on each Class of Non-Delay
Certificates, each
Interest Accrual Period has the actual number of days in such month
and each
year is assumed to have 360 days.
Interest Rate Adjustment Date: With respect to each Adjustable
Rate
Mortgage Loan, the date, specified in the related Mortgage Note and
the Mortgage
Loan Schedule, on which the Mortgage Rate is adjusted.
Interest Rate Swap Agreement: The interest rate swap agreement,
dated as of the Closing Date, between Morgan Stanley Capital
Services Inc. and
the Trustee, a copy of which is attached hereto as Exhibit Y.
Interest Remittance Amount: With respect to any Distribution
Date
and the Mortgage Loans, that portion of Available Funds
attributable to interest
relating to Mortgage Loans.
Investment Account: As
defined in Section 3.12(a).
Investor: With respect to each MERS Designated Mortgage Loan,
the
Person named on the MERS System as the investor pursuant to the
MERS Procedures
Manual.
Investor-Based Exemption: Any of Prohibited Transaction Class
Exemption ("PTCE") 84-14 (for transactions by independent
"qualified
professional asset managers"), PTCE 90-1 (for transactions by
insurance company
pooled separate accounts), PTCE 91-38 (for transactions by bank
collective
investment funds), PTCE 95-60 (for transactions by insurance
company general
accounts) or PTCE 96-23 (for transactions effected by "in-house
asset
managers"), or any comparable exemption available under Similar
Law.
JPMorgan: JPMorgan Chase Bank, National Association, a national
banking association, and its successors in interest.
Late Collections: With respect to any Mortgage Loan and any Due
Period, all amounts received after the Determination Date
immediately following
such Due Period, whether as late payments of Scheduled Payments or
as Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds or otherwise,
which
represent late payments or collections of principal and/or interest
due (without
regard to any acceleration of payments under the related Mortgage
and Mortgage
Note) but delinquent for such Due Period and not previously
recovered.
LIBOR: With respect to any Interest Accrual Period for the
Offered
Certificates, the rate determined by the Trustee on the related
LIBOR
Determination Date on the basis of the offered rate for one-month
U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00
a.m. (London
time) on such date; provided that if such rate does not appear on
Telerate Page
3750, the rate for such date will be determined on the basis of the
rates at
which one-month U.S. dollar deposits are offered by the Reference
Banks at
approximately 11:00 a.m. (London time) on such date to prime banks
in the London
interbank market. In such event, the Trustee shall request the
principal London
office of each of the Reference Banks to provide a quotation of its
rate. If at
least two such quotations are provided, the rate for that date will
be the
arithmetic mean of the quotations (rounded upwards if necessary to
the nearest
whole multiple of 1/16%). If fewer than two quotations are provided
as
requested, the rate for that date will be the arithmetic mean of
the rates
quoted by major banks in New York City, selected by the Trustee
(after
consultation with the Depositor), at approximately 11:00 a.m. (New
York City
time) on such date for one-month U.S. dollar loans to leading
European banks.
LIBOR Determination Date: With respect to any Interest Accrual
Period for the Offered Certificates, the second London Business Day
preceding
the commencement of such Interest Accrual Period.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a
defaulted Mortgage Loan (including any REO Property) which either
(a) was
liquidated in the calendar month preceding the month of such
Distribution Date
and as to which the applicable Servicer or the Countrywide Servicer
has
certified to the Trustee 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, or (b) is a Second Lien Mortgage
Loan (1) that
is delinquent 180 days or longer, (2) for which the related first
lien mortgage
loan is not a Mortgage Loan, and (3) as to which the applicable
Servicer or the
Countrywide Servicer has certified to the Trustee that it does not
believe there
is a reasonable likelihood that any further net proceeds will be
received or
recovered with respect to such Second Lien Mortgage Loan.
Liquidation Proceeds: Cash received in connection with the
liquidation of a Liquidated Mortgage Loan, whether through a
trustee's sale,
foreclosure sale or otherwise, including any Subsequent
Recoveries.
Loan-to-Value Ratio or LTV: With respect to any First Lien
Mortgage
Loan, the ratio (expressed as a percentage) of the original
outstanding
principal amount of the First Lien Mortgage Loan as of the Cut-off
Date (unless
otherwise indicated), to the lesser of (a) the Appraised Value of
the Mortgaged
Property at origination, and (b) if the First Lien Mortgage Loan
was made to
finance the acquisition of the related Mortgaged Property, the
purchase price of
the Mortgaged Property.
London Business Day: Any day on which dealings in deposits of
United
States dollars are transacted in the London interbank market.
Lower-Tier Interest Rate: As described in the Preliminary
Statement.
Lower-Tier Principal Amount: As described in the Preliminary
Statement.
Lower-Tier Regular Interest: Each of the Class LT-A-1, Class
LT-A-2,
Class LT-A-3, Class LT-A-4, Class LT-M-1, Class LT-M-2, Class
LT-M-3, Class
LT-M-4, Class LT-M-5, Class LT-M-6, Class LT-B-1, Class LT-B-2,
Class LT-B-3,
Class LT-IO and Class LT-Accrual Interests as described in the
Preliminary
Statement.
Lower-Tier REMIC: As described in the Preliminary Statement.
Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and
in the
related Mortgage Note and (ii) is the maximum interest rate to
which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be
increased during the
lifetime of such Adjustable Rate Mortgage Loan.
Meritage: Meritage Mortgage Corporation, an Oregon corporation,
and
its successors in interest.
Meritage Agreements: The Meritage Purchase Agreement and the
Meritage Assignment Agreement, each of which are attached hereto as
Exhibit P.
Meritage Assignment Agreement: The Assignment and Recognition
Agreement, dated as of the Closing Date, among the Sponsor, the
Depositor and
Meritage.
Meritage Mortgage Loans: The Mortgage Loans purchased by the
Sponsor
pursuant to the Meritage Purchase Agreement for which Meritage is
identified as
Originator on the Mortgage Loan Schedule.
Meritage Purchase Agreement: With respect to Meritage Mortgage
Loans
purchased by the Sponsor prior to November 1, 2005 (as set forth on
the Mortgage
Loan Schedule), the Amended and Restated Mortgage Loan Purchase and
Warranties
Agreement, dated as of June 1, 2005, and with respect to Meritage
Mortgage Loans
purchased by the Sponsor on or after November 1, 2005 (as set forth
on the
Mortgage Loan Schedule), the Second Amended and Restated Mortgage
Loan Purchase
and Warranties Agreement, dated as of November 1, 2005, in each
case by and
between Meritage and the Sponsor.
MERS: Mortgage
Electronic Registration System, Inc.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Originators have designated or will designate MERS as, and have
taken or will
take such action as is necessary to cause MERS to be, the mortgagee
of record,
as nominee for the Originators, in accordance with MERS Procedure
Manual and (b)
the Originators have designated or will designate the Trustee as
the Investor on
the MERS(R) System.
MERS Procedures Manual: The MERS Procedures Manual, as it may
be
amended, supplemented or otherwise modified from time to time.
MERS(R) System: MERS mortgage electronic registry system, as
more
particularly described in the MERS Procedures Manual.
Minimum Mortgage Rate: With respect to each Adjustable Rate
Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and
in the
related Mortgage Note and (ii) is the minimum interest rate to
which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be
decreased during the
lifetime of such Adjustable Rate Mortgage Loan.
Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 4.03.
Moody's: Moody's Investors Service, Inc., and its successors in
interest. If Moody's is designated as a Rating Agency in the
Preliminary
Statement, for purposes of Section 10.05(b), the address for
notices to Moody's
shall be Moody's Investors Service, Inc., 99 Church Street, New
York, New York
10007, Attention: Residential Mortgage Pass-Through Group, or such
other address
as Moody's may hereafter furnish to the Depositor, the Trustee and
the
Servicers.
Morgan Stanley: Morgan Stanley, a Delaware corporation.
Mortgage: The mortgage, deed of trust or other instrument
identified
on the Mortgage Loan Schedule as securing a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan
contained in either the Servicing File or Custodial File.
Mortgage Loan: An individual Mortgage Loan which is the subject
of
this Agreement, each Mortgage Loan originally sold and subject to
this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan
includes,
without limitation, the Mortgage File, the Scheduled Payments,
Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds,
REO Disposition proceeds, Prepayment Charges, and all other rights,
benefits,
proceeds and obligations arising from or in connection with such
Mortgage Loan,
excluding replaced or repurchased Mortgage Loans.
Mortgage Loan Schedule: A schedule of Mortgage Loans delivered
to
the Trustee and referred to on Schedule I, such schedule setting
forth the
following information with respect to each Mortgage Loan: (1) the
Mortgage Loan
number; (2) the city, state and zip code of the Mortgaged Property;
(3) the
number and type of residential units constituting the Mortgaged
Property; (4)
the current Mortgage Rate; (5) the current net Mortgage Rate; (6)
the current
Scheduled Payment; (7) with respect to each Adjustable Rate
Mortgage Loan, the
Gross Margin; (8) the original term to maturity; (9) the scheduled
maturity
date; (10) the principal balance of the Mortgage Loan as of the
Cut-off Date
after deduction of payments of principal due on or before the
Cut-off Date
whether or not collected; (11) with respect to each Adjustable Rate
Mortgage
Loan, the next Interest Rate Adjustment Date; (12) with respect to
each
Adjustable Rate Mortgage Loan, the lifetime Mortgage Interest Rate
Cap; (13)
whether the Mortgage Loan is convertible or not; (14) the Servicing
Fee; (15)
the applicable Originator's name; (16) the date such Mortgage Loan
was sold by
the applicable Originator to the Sponsor; (17) whether such
Mortgage Loan
provides for a Prepayment Charge as well as the term and amount of
such
Prepayment Charge, if any; (18) with respect to each First Lien
Mortgage Loan,
the LTV at origination, and with respect to each Second Lien
Mortgage Loan, the
CLTV at origination; (19) a field indicating whether the Mortgage
Loan is
serviced by the JPMorgan, HomEq or the Countrywide Servicer; (20)
the date on
which servicing of the Mortgage Loan was transferred to the
applicable Servicer;
and (21) with respect to each CHL Mortgage Loan, the Servicing Fee
Rate.
Mortgage Note: The note or other evidence of the indebtedness of
a
Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne on a Mortgage
Note,
which shall be adjusted from time to time in the case of an
Adjustable Rate
Mortgage Loan.
Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage
Loan, the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate,
and the Minimum
Mortgage Rate for such Mortgage Loan.
Mortgaged Property: With respect to each Mortgage Loan, the
real
property (or leasehold estate, if applicable) identified on the
Mortgage Loan
Schedule as securing repayment of the debt evidenced by the related
Mortgage
Note.
Mortgagor: The
obligor(s) on a Mortgage Note.
Net Monthly Excess Cash Flow: For any Distribution Date the,
that
portion of the Interest Remittance Amount and Principal Remittance
Amount
remaining for distribution pursuant to subsection 4.02(a)(iii)
(before giving
effect to distributions pursuant to such subsection).
Net Prepayment Interest Shortfall: For any Distribution Date,
the
amount by which the sum of the Prepayment Interest Shortfalls for
such
Distribution Date exceeds the sum of (i) all Prepayment Interest
Excesses for
such Distribution Date and (ii) Compensating Interest payments made
with respect
to such Distribution Date.
Net Swap Payment: With respect to any Distribution Date, any
net
payment (other than a Swap Termination Payment) payable by the
Trust to the Swap
Provider on the related Fixed Rate Payer Payment Date (as defined
in the
Interest Rate Swap Agreement).
Net Swap Receipt: With respect to any Distribution Date, any
net
payment (other than a Swap Termination Payment) made by the Swap
Provider to the
Trust on the related Floating Rate Payer Payment Date (as defined
in the
Interest Rate Swap Agreement).
NIM Issuer: The entity established as the issuer of the NIM
Securities.
NIM Securities: Any debt securities secured or otherwise backed
by
some or all of the Class X and Class P Certificates that are rated
by one or
more Rating Agencies.
NIM Trustee: The trustee for the NIM Securities.
Non-Delay Certificates: As specified in the Preliminary
Statement.
Non-Permitted Transferee: A Person other than a Permitted
Transferee.
Nonrecoverable P&I Advance: Any P&I Advance previously made
or
proposed to be made in respect of a Mortgage Loan or REO Property
that, in the
good faith business judgment of the applicable Servicer, will not
or, in the
case of a proposed P&I Advance, would not be ultimately
recoverable from related
late payments, Insurance Proceeds, Condemnation Proceeds, or
Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein,
or in the
case of the Countrywide Servicer, a P&I Advance determined by
the Countrywide
Servicer to be not recoverable pursuant to the CHL Agreements.
Nonrecoverable Servicing Advance: Any Servicing Advances
previously
made or proposed to be made in respect of a Mortgage Loan or REO
Property,
which, in accordance with Accepted Servicing Practices, will not
or, in the case
of a proposed Servicing Advance, would not be ultimately
recoverable from
related Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds or
otherwise.
Notice of Final Distribution: The notice to be provided pursuant
to
Section 9.02 to the effect that final distribution on any of the
Certificates
shall be made only upon presentation and surrender thereof.
Offered Certificates:
As specified in the Preliminary Statement.
Officer's Certificate: A certificate signed by an officer of
any
Servicer or Subservicer with responsibility for the servicing of
the Mortgage
Loans required to be serviced by such Servicer or Subservicer and
listed on a
list delivered to the Trustee pursuant to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
in-house counsel for the applicable Servicer or a Subservicer,
reasonably
acceptable to the Trustee (and/or such other Persons as may be set
forth
herein), provided that any Opinion of Counsel relating to (a)
qualification of
any Trust REMIC or (b) compliance with the REMIC Provisions, must
be (unless
otherwise stated in such Opinion of Counsel) an opinion of counsel
who (i) is in
fact independent of such Servicer or the Countrywide Servicer, (ii)
does not
have any material direct or indirect financial interest in such
Servicer or the
Countrywide Servicer or in an Affiliate of either and (iii) is not
connected
with such Servicer or the Countrywide Servicer as an officer,
employee, director
or person performing similar functions.
Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans, as of the
last day of
the related Due Period, is equal to 10% or less of the Cut-off Date
Pool
Principal Balance.
Originators: The Responsible Party, CHL, Accredited, Meritage,
AIG,
Aames Capital Corporation and Acoustic Home Loans, LLC.
OTS: Office of Thrift Supervision, and any successor thereto.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered
to
the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other
Certificates have been executed and delivered by the Trustee
pursuant to this
Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan
with
a Stated Principal Balance greater than zero which was not the
subject of a
Principal Prepayment in Full prior to such Due Date and which did
not become a
Liquidated Mortgage Loan prior to such Due Date.
Ownership Interest: As to any Residual Certificate, any
ownership
interest in such Certificate including any interest in such
Certificate as the
Holder thereof and any other interest therein, whether direct or
indirect, legal
or beneficial.
P&I Advance: As to any Mortgage Loan or REO Property, any
advance
made by the applicable Servicer or the Countrywide Servicer in
respect of any
Remittance Date representing the aggregate of all payments of
principal and
interest, net of the Servicing Fee, that were due during the
related Due Period
on the Mortgage Loans and that were delinquent on the related
Determination
Date, plus certain amounts representing assumed payments not
covered by any
current net income on the Mortgaged Properties acquired by
foreclosure or deed
in lieu of foreclosure as determined pursuant to Section 4.01 or
the CHL
Agreements, as applicable.
Pass-Through Margin: With respect to each Class of Regular
Certificates (except as set forth in the following sentence), the
following
percentages: Class A-1, 0.0700%; Class A-2, 0.1100%; Class A-3,
0.1700%; Class
A-4, 0.2800%; Class M-1, 0.3400%; Class M-2, 0.3600%; Class M-3,
0.3800%; Class
M-4, 0.4700%; Class M-5, 0.5000%; Class M-6, 0.5800%; Class B-1,
1.1000%; Class
B-2, 1.2500%; and Class B-3, 2.1500%. On the first Distribution
Date after the
Optional Termination Date, the Pass-Through Margins shall increase
to: Class
A-1, 0.1400%; Class A-2, 0.2200%; Class A-3, 0.3400%; Class A-4,
0.5600%; Class
M-1, 0.5100%; Class M-2, 0.5400%; Class M-3, 0.5700%; Class M-4,
0.7050%; Class
M-5, 0.7500%; Class M-6, 0.8700%; Class B-1, 1.6500%; Class B-2,
1.8750%; and
Class B-3, 3.2250%.
Pass-Through Rate: For each Class of Regular Certificates, each
Pooling-Tier REMIC-1 Regular Interest, each Pooling-Tier REMIC-2
Regular
Interest, each Lower-Tier Regular Interest and each Upper-Tier
Regular Interest,
the per annum rate set forth or calculated in the manner described
in the
Preliminary Statement.
PCAOB: The Public Company Accounting Oversight Board.
Percentage Interest: As to any Certificate, the percentage
interest
evidenced thereby in distributions required to be made on the
related Class,
such percentage interest being set forth on the face thereof or
equal to the
percentage obtained by dividing the Denomination of such
Certificate by the
aggregate of the Denominations of all Certificates of the same
Class.
Periodic Mortgage Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the periodic limit on each Mortgage Rate adjustment
as set forth
in the related Mortgage Note.
Permitted Investments: Any one or more of the following
obligations
or securities acquired at a purchase price of not greater than par,
regardless
of whether issued by any Servicer, the Trustee or any of their
respective
Affiliates:
(i) direct obligations of, or obligations fully guaranteed as
to
timely
payment of principal and interest by, the United States or any
agency or
instrumentality thereof, provided such obligations are backed
by
the full
faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of,
or
bankers'
acceptances (which shall each have an original maturity of not
more than
90 days and, in the case of bankers' acceptances, shall in no
event have
an original maturity of more than 365 days or a remaining
maturity
of more than 30 days) denominated in United States dollars and
issued by,
any Depository Institution and rated "P-1" by Moody's, "F1+" by
Fitch and
"A-1+" by Standard & Poor's (to the extent they are Rating
Agencies
hereunder and are so rated by such Rating Agency);
(iii) repurchase obligations with respect to any security
described
in clause
(i) above entered into with a Depository Institution (acting as
principal);
(iv) securities bearing interest or sold at a discount that are
issued by
any corporation incorporated under the laws of the United
States
of America
or any State thereof and that are rated by each Rating Agency
that rates
such securities in its highest long-term unsecured rating
categories
at the time of such investment or contractual commitment
providing
for such investment;
(v) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified
date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency that rates such securities
in
its
highest short-term unsecured debt rating available at the time of
such
investment;
(vi) units of money market funds, including money market funds
advised by
the Depositor, the Trustee or an Affiliate thereof, that have
been rated "Aaa"
by Moody's, "AAAm" by Standard & Poor's and at least "AA"
by Fitch
(to the extent they are Rating Agencies hereunder and such
funds
are so
rated by such Rating Agency); and
(vii) if previously confirmed in writing to the Trustee, any
other
demand,
money market or time deposit, or any other obligation, security
or
investment, as may be acceptable to the Rating Agencies as a
permitted
investment
of funds backing "Aaa" or "AAA" rated securities;
provided, however, that no instrument described hereunder shall
evidence either
the right to receive (a) only interest with respect to the
obligations
underlying such instrument or (b) both principal and interest
payments derived
from obligations underlying such instrument and the interest and
principal
payments with respect to such instrument provide a yield to
maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations.
Permitted Transferee: Any Person other than (i) the United
States,
any State or political subdivision thereof, or any agency or
instrumentality of
any of the foregoing, (ii) a foreign government, international
organization or
any agency or instrumentality of either of the foregoing, (iii) an
organization
(except certain farmers' cooperatives described in Section 521 of
the Code)
which is exempt from tax imposed by Chapter 1 of the Code
(including the tax
imposed by Section 511 of the Code on unrelated business taxable
income) on any
excess inclusions (as defined in Section 860E(c)(1) of the Code)
with respect to
any Residual Certificate, (iv) rural electric and telephone
cooperatives
described in Section 1381(a)(2)(C) of the Code, (v) a Person that
is not a U.S.
Person or a U.S. Person with respect to whom income from a Residual
Certificate
is attributable to a foreign permanent establishment or fixed base,
within the
meaning of an applicable income tax treaty of such Person or any
other U.S.
Person, (vi) an "electing large partnership" within the meaning of
Section 775
of the Code and (vii) any other Person so designated by the
Depositor based upon
an Opinion of Counsel that the Transfer of an Ownership Interest in
a Residual
Certificate to such Person may cause any Trust REMIC to fail to
qualify as a
REMIC at any time that the Certificates are outstanding. The terms
"United
States", "State" and "international organization" shall have the
meanings set
forth in Section 7701 of the Code or successor provisions. A
corporation will
not be treated as an instrumentality of the United States or of any
State or
political subdivision thereof for these purposes if all of its
activities are
subject to tax and, with the exception of Freddie Mac, a majority
of its board
of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint
venture,
association, limited liability company, joint-stock company,
trust,
unincorporated organization or government, or any agency or
political
subdivision thereof.
Physical Certificates:
As specified in the Preliminary Statement.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans
for such
Distribution Date that were Outstanding Mortgage Loans on the Due
Date in the
related Due Period.
Pooling-Tier Interest Rate: As specified in the Preliminary
Statement.
Pooling-Tier REMIC-1: As described in the Preliminary
Statement.
Pooling-Tier REMIC-1 Interest Rate: As described in the
Preliminary
Statement.
Pooling-Tier REMIC-1 Principal Amount: As described in the
Preliminary Statement.
Pooling-Tier REMIC-1 Regular Interest: As described in the
Preliminary Statement.
Pooling-Tier REMIC-1 WAC Rate: With respect to the Mortgage Loans
as
of any Distribution Date, a per annum rate equal to (a) the
weighted average of
the Adjusted Net Mortgage Rates for each such Mortgage Loan then in
effect on
the beginning of the related Due Period on the Mortgage Loans,
adjusted in each
case to accrue on the basis of a 360-day year and the actual number
of days in
the related Interest Accrual Period.
Pooling-Tier REMIC-2: As described in the Preliminary
Statement.
Pooling-Tier REMIC-2 Interest Rate: As described in the
Preliminary
Statement.
Pooling-Tier REMIC-2 IO Interest: Any of the Pooling-Tier
REMIC-2
Regular Interests with the designation "IO" in its name.
Pooling-Tier REMIC-2 IO Notional Balance: As described in the
Preliminary Statement.
Pooling-Tier REMIC-2 Principal Amount: As described in the
Preliminary Statement.
Pooling-Tier REMIC-2 Regular Interest: As described in the
Preliminary Statement.
Prepayment Charge: Any prepayment premium, penalty or charge
collected by any Servicer with respect to a Mortgage Loan from a
Mortgagor in
connection with any voluntary Principal Prepayment pursuant to the
terms of the
related Mortgage Note.
Prepayment Interest Excess: With respect to any Distribution
Date,
any interest collected by any Servicer with respect to any Mortgage
Loan
serviced by such Servicer as to which a Principal Prepayment in
Full occurs from
the 1st day of the month through the 15th day of the month in which
such
Distribution Date occurs and that represents interest that accrues
from the 1st
day of such month to the date of such Principal Prepayment in
Full.
Prepayment Interest Shortfall: With respect to any Distribution
Date
and the Servicers, the sum of, for each Mortgage Loan that was,
during the
portion of the Prepayment Period from and including the 16th day of
the month
preceding the month in which such Distribution Date occurs (or from
the day
following the Cut-off Date, in the case of the first Distribution
Date) through
the last day of such month, the subject of a Principal Prepayment
which is not
accompanied by an amount equal to one month of interest that would
have been due
on such Mortgage Loan on the Due Date in the following month and
which was
applied by the applicable Servicer to reduce the outstanding
principal balance
of such Mortgage Loan on a date preceding such Due Date an amount
equal to the
product of (a) the Mortgage Rate net of the Servicing Fee Rate for
such Mortgage
Loan, (b) the amount of the Principal Prepayment for such Mortgage
Loan, (c)
1/360 and (d) the number of days commencing on the date on which
such Principal
Prepayment was applied and ending on the last day of the calendar
month in which
the related Prepayment Period begins. With respect to any
Distribution Date and
the Countrywide Servicer, as determined pursuant to the CHL
Agreements.
Prepayment Period: With respect to any Distribution Date and
any
Servicer or the Countrywide Servicer, either (a) the period
commencing on the
16th day of the month preceding the month in which such
Distribution Date occurs
(or in the case of the first Distribution Date, commencing on the
Cut-off Date)
and ending on the 15th day of the month in which such Distribution
Date occurs,
or (b) the calendar month prior to that Distribution Date, with
respect to any
partial principal prepayments in the case of either Servicer or any
involuntary
principal prepayments in full in the case of JPMorgan.
Principal Distribution Amount: For any Distribution Date, the sum
of
(i) the Basic Principal Distribution Amount for such Distribution
Date and (ii)
the Extra Principal Distribution Amount for such Distribution
Date.
Principal Prepayment: Any full or partial payment or other
recovery
of principal on a Mortgage Loan (including upon liquidation of a
Mortgage Loan)
which is received by the applicable Servicer or the Countrywide
Servicer, as
applicable, in advance of its scheduled Due Date, excluding any
Prepayment
Charge thereon.
Principal Prepayment in Full: Any Principal Prepayment made by
a
Mortgagor of the entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution
Date,
the amount equal to the sum of the following amounts (without
duplication) with
respect to the related Due Period: (i) each scheduled payment of
principal on a
Mortgage Loan due during such Due Period and received by the
applicable Servicer
or the Countrywide Servicer, as applicable, on or prior to the
related
Determination Date or advanced by the applicable Servicer for the
related
Remittance Date, and all Principal Prepayments received during the
related
Prepayment Period; (ii) all Liquidation Proceeds, Condemnation
Proceeds and
Insurance Proceeds on the Mortgage Loans allocable to principal
actually
collected by the applicable Servicer or the Countrywide Servicer,
as applicable,
during the related Prepayment Period; (iii) the portion of the
Repurchase Price
allocable to principal with respect to each Mortgage Loan
repurchased with
respect to such Distribution Date; (iv) all Substitution Adjustment
Amounts
allocable to principal received in connection with the
substitutions of Mortgage
Loans with respect to such Distribution Date; (v) with respect to
the
Distribution Date in April 2006 only, the portion of the Closing
Date Deposit
Amount allocable to principal; and (vi) the allocable portion of
the proceeds
received with respect to the termination of the Trust Fund pursuant
to clause
(a) of Section 9.01 (to the extent such proceeds relate to
principal).
Private Certificates: As specified in the Preliminary
Statement.
Prospectus Supplement: The Prospectus Supplement, dated March
24,
2006, relating to the Offered Certificates.
PTCE 95-60: As defined in Section 5.02(b).
Purchase Agreements: Collectively, the Meritage Purchase
Agreement,
the CHL Sale and Servicing Agreement, the Accredited Purchase
Agreement, the AIG
Purchase Agreement and the First NLC Purchase Agreement.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If such organization or a successor is no
longer in
existence, "Rating Agency" shall be such nationally recognized
statistical
rating organization, or other comparable Person, as is designated
by the
Depositor, notice of which designation shall be given to the
Trustee. References
herein to a given rating or rating category of a Rating Agency
shall mean such
rating category without giving effect to any modifiers. For
purposes of Section
10.05(b), the addresses for notices to each Rating Agency shall be
the address
specified therefor in the definition corresponding to the name of
such Rating
Agency, or such other address as either such Rating Agency may
hereafter furnish
to the Depositor, the Trustee and the Servicers.
Realized Losses: With respect to any date of determination and
any
Liquidated Mortgage Loan, the amount, if any, by which (a) the
unpaid principal
balance of such Liquidated Mortgage Loan together with accrued and
unpaid
interest thereon exceeds (b) the Liquidation Proceeds with respect
thereto net
of the expenses incurred by the applicable Servicer in connection
with the
liquidation of such Liquidated Mortgage Loan and net of the amount
of
unreimbursed Servicing Advances with respect to such Liquidated
Mortgage Loan.
Record Date: With respect to any Distribution Date, the close
of
business on the Business Day immediately preceding such
Distribution Date;
provided, however, that for any Certificate issued in definitive
form, the
Record Date shall be the close of business on the last Business Day
of the month
preceding the month in which such applicable Distribution Date
occurs.
Reference Bank: As defined in Section 4.04.
Regular Certificates: As specified in the Preliminary
Statement.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be
amended from
time to time, and subject to such clarification and interpretation
as have been
provided by the Commission in the adopting release (Asset-Backed
Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(January 7, 2005))
or by the staff of the Commission, or as may be provided by the
Commission or
its staff from time to time.
Relief Act Interest Shortfall: With respect to any Distribution
Date
and any Mortgage Loan, any reduction in the amount of interest
collectible on
such Mortgage Loan for the most recently ended Due Period as a
result of the
application of the Servicemembers Civil Relief Act or any similar
state
statutes.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating
to real estate mortgage investment conduits, which appear at
Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions,
and regulations promulgated thereunder, as the foregoing may be in
effect from
time to time as well as provisions of applicable state laws.
Remittance Date: With respect to any Distribution Date, the
second
Business Day immediately preceding such Distribution Date.
REO Disposition: The final sale by the applicable Servicer of
any
REO Property.
REO Imputed Interest: As to any REO Property, for any period,
an
amount equivalent to interest (at the Mortgage Rate net of the
Servicing Fee
Rate that would have been applicable to the related Mortgage Loan
had it been
outstanding) on the unpaid principal balance of the Mortgage Loan
as of the date
of acquisition thereof (as such balance is reduced pursuant to
Section 3.17 by
any income from the REO Property treated as a recovery of
principal).
REO Mortgage Loan: A Mortgage Loan where title to the related
Mortgaged Property has been obtained by the applicable Servicer in
the name of
the Trustee on behalf of the Certificateholders, or obtained by the
Countrywide
Servicer in the manner set forth in the CHL Agreements.
REO Property: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of foreclosure in connection
with a
defaulted Mortgage Loan.
Replacement Swap Provider Payment: Any payments that have been
received by the Trust as a result of entering into a replacement
interest rate
swap agreement following an Additional Termination Event described
in Part
1(h)(ii) of the Interest Rate Swap Agreement.
Reportable Event: As defined in Section 8.12(g).
Repurchase Price: With respect to any Mortgage Loan, (a) in the
case
of any Mortgage Loan repurchased by the Depositor or the
Responsible Party, an
amount equal to the sum of (i) the unpaid principal balance of such
Mortgage
Loan as of the date of repurchase, (ii) interest on such unpaid
principal
balance of such Mortgage Loan at the Mortgage Rate from the last
date through
which interest has been paid and distributed to the Trustee to the
date of
repurchase, (iii) all unreimbursed Servicing Advances and (iv) all
costs and
expenses incurred by the Trustee arising out of or based upon such
breach,
including without limitation, costs and expenses relating to the
Trustee's
enforcement of the repurchase obligation of the Depositor or the
Responsible
Party hereunder, and (b) in the case of any Mortgage Loan
repurchased by
Meritage, CHL, Accredited or AIG, the repurchase price specified in
the Meritage
Agreements, the CHL Agreements, the Accredited Agreements or the
AIG Agreements,
as applicable. In addition to the Repurchase Price, the Responsible
Party is
obligated to make certain indemnification payments for material
breaches of
representations and warranties as further set forth in Section
2.03(o) in this
Agreement, and each of Meritage, Accredited, CHL and AIG is
obligated to make
certain indemnification payments for material breaches of
representations and
warranties as further set forth in the Meritage Agreements, the
Accredited
Agreements, the CHL Agreements and the AIG Agreements, as
applicable.
Request for Release: The Request for Release submitted by the
applicable Servicer to the Trustee substantially in the form of
Exhibit J.
Residual Certificates:
As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any
managing director, any vice president, any assistant vice
president, any
assistant secretary, any assistant treasurer, any associate, or any
other
officer of the Trustee, customarily performing functions similar to
those
performed by any of the above designated officers who at such time
shall be
officers to whom, with respect to a particular matter, such matter
is referred
because of such officer's knowledge of and familiarity with the
particular
subject and who shall have direct responsibility for the
administration of this
Agreement.
Responsible Party: First NLC.
Rule 144A Letter: As defined in Section 5.02(b).
Sarbanes Certification: As defined in Section 8.12(c).
Scheduled Payment: The scheduled monthly payment on a Mortgage
Loan
due on any Due Date allocable to principal and/or interest on such
Mortgage Loan
which, unless otherwise specified herein, shall give effect to any
related Debt
Service Reduction and any Deficient Valuation that affects the
amount of the
monthly payment due on such Mortgage Loan.
Second Lien Mortgage Loan: A Mortgage Loan secured by a second
lien
Mortgage on the related Mortgaged Property.
Securities Act: The Securities Act of 1933, as amended.
Senior Defaulted Swap Termination Payment: As of any date, the
lesser of (x) any Replacement Swap Provider Payment and (y) any
Swap Termination
Payment owed to the Swap Provider.
Senior Enhancement Percentage: With respect to any Distribution
Date, the percentage obtained by dividing (x) the sum of (i) the
aggregate Class
Certificate Balance of the Subordinated Certificates and (ii) the
Subordinated
Amount, in each case after taking into account the distribution of
the Principal
Distribution Amount and any principal payments on those Classes of
Certificates
from the Swap Account on that Distribution Date, by (y) the
aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution
Date.
Senior Specified Enhancement Percentage: As of any date of
determination, 45.60%.
Servicer: JPMorgan or HomEq, as applicable, and if a successor
is
appointed hereunder, such successor. When the term "Servicer" is
used in this
Agreement in connection with the administration of servicing
obligations with
respect to any Mortgage Loan, Mortgaged Property, REO Property or
Mortgage File,
"Servicer" shall mean the Person identified as the Servicer on such
Mortgage
Loan on the Mortgage Loan Schedule.
Servicer Remittance Report: As defined in Section 4.03(d).
Servicing Advances: The reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by the applicable Servicer
or the
Countrywide Servicer in the performance of its servicing
obligations in
connection with a default, delinquency or other unanticipated
event, including,
but not limited to, the cost of (i) the preservation, restoration,
inspection
and protection of a Mortgaged Property, (ii) any enforcement,
administrative or
judicial proceedings, including foreclosures and litigation, in
respect of a
particular Mortgage Loan, (iii) the management (including
reasonable fees in
connection therewith) and liquidation of any REO Property and (iv)
the
performance of its obligations under Sections 3.01, 3.09, 3.13 and
3.15, in the
case of such Servicer, or the applicable provisions of the CHL
Agreements, in
the case of the Countrywide Servicer. The Servicing Advances shall
also include
any reasonable "out-of-pocket" costs and expenses (including legal
fees)
incurred by such Servicer in connection with executing and
recording instruments
of satisfaction, deeds of reconveyance or Assignments of Mortgage
in connection
with any foreclosure in respect of any Mortgage Loan to the extent
not recovered
from the Mortgagor or otherwise payable under this Agreement.
Neither any
Servicer nor the Countrywide Servicer shall be required to make
any
Nonrecoverable Servicing Advances.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB, which as of the Closing Date are listed
on Exhibit U
hereto.
Servicing Fee: With respect to each Servicer and the
Countrywide
Servicer and each Mortgage Loan, and for any calendar month, an
amount equal to
one month's interest (or in the event of any payment of interest
which
accompanies a Principal Prepayment in Full made by the Mortgagor
during such
calendar month, interest for the number of days covered by such
payment of
interest) at the Servicing Fee Rate on the applicable Stated
Principal Balance
of such Mortgage Loan as of the first day of such calendar month.
Such fee shall
be payable monthly, and shall be pro rated for any portion of a
month during
which the Mortgage Loan is serviced by such Servicer under this
Agreement or the
Countrywide Servicer under the CHL Sale and Servicing Agreement.
The Servicing
Fee is payable solely from the interest portion (including
recoveries with
respect to interest from Liquidation Proceeds, Insurance Proceeds,
Condemnation
Proceeds and proceeds received with respect to REO Properties, to
the extent
permitted by Section 3.11) of such Scheduled Payment collected by
such Servicer,
or as otherwise provided under Section 3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50%
per
annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the applicable Servicer or the Countrywide Servicer
consisting of
originals or copies of all documents in the Mortgage File which are
not
delivered to the Trustee in the Custodial File and copies of the
Mortgage Loan
Documents set forth in Exhibit K hereto.
Servicing Function Participant: As defined in Section 3.23(a).
Servicing Officer: Any officer of any Servicer involved in, or
responsible for, the administration and servicing of the Mortgage
Loans whose
name and facsimile signature appear on a list of servicing officers
furnished to
the Trustee by any Servicer on the Closing Date pursuant to this
Agreement, as
such list may from time to time be amended, or in the case of the
Countrywide
Servicer, as defined in the CHL Agreements.
Servicing Transfer Date: With respect to any Mortgage Loan, the
date
on which servicing of such Mortgage Loan was transferred to the
applicable
Servicer (as set forth on the Mortgage Loan Schedule).
Similar Law: As defined in Section 5.02(b).
60+ Day Delinquent Mortgage Loan: (i) Each Mortgage Loan with
respect to which any portion of a Scheduled Payment is, as of the
last day of
the prior Due Period, two months or more past due (without giving
effect to any
grace period), including, without limitation, such Mortgage Loans
that are
subject to bankruptcy proceedings, (ii) each Mortgage Loan in
foreclosure and
(iii) all REO Property.
Specified Subordinated Amount: Prior to the Stepdown Date, an
amount
equal to 4.20% of the Cut-off Date Pool Principal Balance. On and
after the
Stepdown Date, an amount equal to 8.40% of the aggregate Stated
Principal
Balance of the Mortgage Loans for such Distribution Date, subject,
until the
Class Certificate Balance of each Class of Offered Certificates has
been reduced
to zero, to a minimum amount equal to 0.50% of the Cut-off Date
Pool Principal
Balance; provided, however, that if, on any Distribution Date, a
Trigger Event
exists, the Specified Subordinated Amount shall not be reduced to
the applicable
percentage of the then current aggregate Stated Principal Balance
of the
Mortgage Loans until the Distribution Date on which a Trigger Event
no longer
exists. When the Class Certificate Balance of each Class of Offered
Certificates
has been reduced to zero, the Specified Subordinated Amount will
thereafter
equal zero.
Sponsor: Morgan Stanley Mortgage Capital Inc., a New York
corporation, and its successors in interest, as purchaser of the
Mortgage Loans
under each of the Purchase Agreements.
Standard & Poor's: Standard & Poor's Ratings Services, a
division of
The McGraw-Hill Companies, Inc., and its successors in interest. If
Standard &
Poor's is designated as a Rating Agency in the Preliminary
Statement, for
purposes of Section 10.05(b) the address for notices to Standard
& Poor's shall
be Standard & Poor's, 55 Water Street, New York, New York
10041, Attention:
Residential Mortgage Surveillance Group - Morgan Stanley Home
Equity Loan Trust
2006-2, or such other address as Standard & Poor's may
hereafter furnish to the
Depositor, the Trustee and the Servicers.
Standard & Poor's Glossary: The Standard & Poor's
LEVELS(R)
Glossary, as may be in effect from time to time.
Startup Day: The Closing Date.
Stated Principal Balance: As to each Mortgage Loan and as of
any
date of determination, (i) the principal balance of the Mortgage
Loan at the
Cut-off Date after giving effect to payments of principal due on or
before such
date (whether or not received), minus (ii) all amounts previously
remitted to
the Trustee with respect to the related Mortgage Loan representing
payments or
recoveries of principal including advances in respect of scheduled
payments of
principal. For purposes of any Distribution Date, the Stated
Principal Balance
of any Mortgage Loan will give effect to any scheduled payments of
principal
received by the applicable Servicer or the Countrywide Servicer on
or prior to
the related Determination Date or advanced by the applicable
Servicer or the
Countrywide Servicer for the related Remittance Date and any
unscheduled
principal payments and other unscheduled principal collections
received during
the related Prepayment Period, and the Stated Principal Balance of
any Mortgage
Loan that has prepaid in full or has become a Liquidated Mortgage
Loan during
the related Prepayment Period shall be zero.
Stepdown Date: The later to occur of (i) the earlier to occur of
(a)
the Distribution Date in April 2009 and (b) the Distribution Date
following the
Distribution Date on which the aggregate Class Certificate Balances
of the Class
A Certificates have been reduced to zero and (ii) the first
Distribution Date on
which the Senior Enhancement Percentage (calculated for this
purpose only after
taking into account payments of principal on the Mortgage Loans
applied to
reduce the Stated Principal Balances of the Mortgage Loans for the
applicable
Distribution Date but prior to any allocation of the Principal
Distribution
Amount and principal payments from the Swap Account to the
Certificates on such
Distribution Date) is greater than or equal to the Senior Specified
Enhancement
Percentage.
Subcontractor: Any third-party or Affiliated vendor,
subcontractor
or other Person utilized by a Servicer, the Countrywide Servicer, a
Subservicer,
or the Trustee that is not responsible for the overall servicing
(as "servicing"
is commonly understood by participants in the mortgage-backed
securities market)
of Mortgage Loans but performs one or more discrete functions
identified in Item
1122(d) of Regulation AB with respect to Mortgage Loans.
Subordinated Amount: With respect to any Distribution Date, the
excess, if any, of (a) the aggregate Stated Principal Balance of
the Mortgage
Loans for such Distribution Date over (b) the aggregate of the
Class Certificate
Balances of the Offered Certificates as of such Distribution Date
(after giving
effect to the payment of the Principal Remittance Amount on such
Certificates on
such Distribution Date).
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordination Deficiency: With respect to any Distribution Date,
the
excess, if any, of (a) the Specified Subordinated Amount applicable
to such
Distribution Date over (b) the Subordinated Amount applicable to
such
Distribution Date.
Subordination Reduction Amount: With respect to any
Distribution
Date, an amount equal to the lesser of (a) the Excess Subordinated
Amount and
(b) the Net Monthly Excess Cash Flow.
Subsequent Recovery: With respect to any Mortgage Loan or
related
Mortgaged Property that became a Liquidated Mortgage Loan or was
otherwise
disposed of, all amounts received in respect of such Liquidated
Mortgage Loan
after an Applied Realized Loss Amount related to such Mortgage Loan
or Mortgaged
Property is allocated to reduce the Class Certificate Balance of
any Class of
Subordinated Certificates. Any Subsequent Recovery that is received
during a
Prepayment Period will be treated as Liquidation Proceeds and
included as part
of the Principal Remittance Amount for the related Distribution
Date.
Subservicer: Any Person that services Mortgage Loans on behalf of
a
Servicer or the Countrywide Servicer, as applicable, or any
Subservicer and is
responsible for the performance (whether directly or through
Subservicers or
Subcontractors) of a substantial portion of the material servicing
functions
required to be performed by a Servicer under this Agreement or by
the
Countrywide Servicer pursuant to the CHL Agreements, with respect
to some or all
of the Mortgage Loans, that are identified in Item 1122(d) of
Regulation AB.
Subservicing Account:
As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a), or a
subservicing agreement entered into pursuant to the CHL Agreements,
as
applicable.
Substitute Mortgage Loan: A Mortgage Loan (i) substituted by
the
Responsible Party, Meritage, AIG, CHL, Accredited or Depositor for
a Deleted
Mortgage Loan that satisfies the criteria set forth in the
definition of
"Qualified Substitute Mortgage Loan" in the applicable Purchase
Agreement or
(ii) substituted by the Depositor for a Deleted Mortgage Loan,
which, if
substituted by the Depositor, must, on the date of such
substitution, as
confirmed in a Request for Release, substantially in the form of
Exhibit J, (a)
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; (b) be accruing interest at a rate no lower than and not more
than 1% per
annum higher than, that of the Deleted Mortgage Loan; (c) have a
Loan-to-Value
Ratio or a Combined Loan-to-Value Ratio, as applicable, no higher
than that of
the Deleted Mortgage Loan; (d) have a remaining term to maturity no
greater than
(and not more than one year less than that of) the Deleted Mortgage
Loan; and
(e) comply with each representation and warranty set forth in
Section 2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
Swap Account: As defined in Section 4.06.
Swap Assets: Collectively, the Swap Account, the Interest Rate
Swap
Agreement, the Class IO Interest and the right to receive Class IO
Shortfalls,
subject to the obligation to pay amounts specified in Section
4.06.
Swap LIBOR: With respect to any Distribution Date (and the
related
Interest Accrual Period), the product of (i) USD-LIBOR-BBA (as used
in the
Interest Swap Agreement), (ii) two, and (iii) the quotient of (a)
the actual
number of days in the Interest Accrual Period for the Offered
Certificates
divided by (b) 30.
Swap Payment Allocation: For any Class of Certificates and any
Distribution Date, that Class's pro rata share of the Net Swap
Receipts, if any,
for that Distribution Date, based on the Class Certificate Balances
of the
Classes of Certificates.
Swap Payment Rate: For any Distribution Date, a fraction, the
numerator of which is any Net Swap Payment or Swap Termination
Payment (other
than a Defaulted Swap Termination Payment) owed to the Swap
Provider for such
Distribution Date and the denominator of which is the aggregate
Stated Principal
Balance of the Mortgage Loans at the beginning of the related Due
Period,
multiplied by 12.
Swap Provider: Morgan Stanley Capital Services Inc., a Delaware
corporation, and its successors in interest.
Swap Termination Payment: Any payment payable by the Trust or
the
Swap Provider upon termination of the Interest Rate Swap Agreement
as a result
of an Event of Default (as defined in the Interest Rate Swap
Agreement) or a
Termination Event (as defined in the Interest Rate Swap
Agreement).
Tax Matters Person: The Holder of the Class R Certificates
designated as "tax matters person" of each Trust REMIC in the
manner provided
under Treasury Regulations Section 1.860F-4(d) and Treasury
Regulations Section
301.6231(a)(7)-1.
Tax Service Contract:
As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on
the
Bridge Telerate Service (or such other page as may replace that
page on that
service for displaying comparable rates or prices).
Total Monthly Excess Spread: As to any Distribution Date, an
amount
equal to the excess if any, of (i) the interest on the Mortgage
Loans received
by the Servicers or the Countrywide Servicer on or prior to the
related
Determination Date (other than Prepayment Interest Excesses) or
advanced by the
Servicers or the Countrywide Servicer for the related Remittance
Date (net of
Expense Fees) over (ii) the sum of (A) the amounts payable to the
Certificates
pursuant to Section 4.02(a)(i) on such Distribution Date and (B)
any Net Swap
Payments or Swap Termination Payments (other than a Defaulted Swap
Termination
Payment that is not a Senior Defaulted Swap Termination Payment) to
the Swap
Provider.
Transfer: Any direct or indirect transfer or sale of any
Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: Either a Cumulative Loss Trigger Event or a
Delinquency Trigger Event.
Trust: The express trust created hereunder in Section 2.01(c).
Trust Fund: The corpus of the trust created hereunder consisting
of
(i) the Mortgage Loans and all interest and principal with respect
thereto
received on or after the related Cut-off Date, other than such
amounts which
were due on the Mortgage Loans on or prior to the related Cut-off
Date; (ii) the
Collection Accounts, Excess Reserve Fund Account, the Distribution
Account, and
all amounts deposited therein pursuant to the applicable provisions
of this
Agreement; (iii) property that secured a Mortgage Loan and has been
acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise; (iv) the
Closing Date
Deposit Amount; (v) the Interest Rate Swap Agreement; (vi) the Swap
Assets;
(vii) the Depositor's rights under the Meritage Agreements, the
Accredited
Agreements, the CHL Agreements and the AIG Agreements (solely
insofar as such
agreements relate to the Meritage Mortgage Loans, the Accredited
Agreements, the
CHL Agreements or the AIG Mortgage Loans, as applicable); and
(viii) all
proceeds of the conversion, voluntary or involuntary, of any of the
foregoing.
Trust REMIC: Any of Pooling-Tier REMIC-1, Pooling-Tier REMIC-2,
the
Lower-Tier REMIC or the Upper-Tier REMIC, as applicable.
Trustee: Deutsche Bank National Trust Company, a national
banking
association, and its successors in interest and, if a successor
trustee is
appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to
the
product of (a) one-twelfth of the Trustee Fee Rate and (b) (i) the
aggregate
Stated Principal Balance of the Mortgage Loans as of the first day
of the
related Interest Accrual Period and (ii) with respect to the
Distribution Date
in April 2006 only, the portion of the Closing Date Deposit Amount
allocable to
principal.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.0045%
per
annum.
Trustee Float Period: With respect to the Distribution Date and
the
related amounts in the Distribution Account, the period commencing
on the
Business Day immediately preceding such Distribution Date and
ending on such
Distribution Date.
Underwriters' Exemption: Any exemption listed under footnote 1
of,
and amended by, Prohibited Transaction Exemption 2002-41, 67 Fed.
Reg. 54487
(2002), or any successor exemption.
Unpaid Interest Amount: As of any Distribution Date and any Class
of
Certificates, the sum of (a) the portion of the Accrued Certificate
Interest
Distribution Amount from Distribution Dates prior to the current
Distribution
Date remaining unpaid immediately prior to the current Distribution
Date and (b)
interest on the amount in clause (a) above at the applicable
Pass-Through Rate
(to the extent permitted by applicable law).
Unpaid Realized Loss Amount: With respect to any Class of
Subordinated Certificates and as to any Distribution Date, is the
excess of (i)
the Applied Realized Loss Amounts with respect to such Class over
(ii) the sum
of (a) all distributions in reduction of such Applied Realized Loss
Amounts on
all previous Distribution Dates, and (b) the amount by which the
Class
Certificate Balance of such Class has been increased due to the
distribution of
any Subsequent Recoveries on all previous Distribution Dates. Any
amounts
distributed to a Class of Subordinated Certificates in respect of
any Unpaid
Realized Loss Amount will not be applied to reduce the Class
Certificate Balance
of such Class.
Upper-Tier CarryForward Amount: With respect to each Class of
Offered Certificates, as of any Distribution Date, the sum of (A)
if on such
Distribution Date the Upper-Tier Interest Rate for the Class of
Corresponding
Upper-Tier REMIC Regular Interest is based upon the Upper-Tier
REMIC WAC Rate,
the excess, if any, of (i) the amount of interest such Class of
Upper-Tier
Regular Interest would otherwise be entitled to receive on such
Distribution
Date had such Upper-Tier REMIC Regular Interest not been subject to
the
Upper-Tier REMIC WAC Rate, over (ii) the amount of interest payable
on such
Class of Certificates on such Distribution Date taking into account
the
Upper-Tier REMIC WAC Rate and (B) the Upper-Tier CarryForward
Amount for such
Class of Certificates for all previous Distribution Dates not
previously paid,
together with interest thereon at a rate equal to the applicable
Upper-Tier
Interest Rate for such Class of Certificates for such Distribution
Date, without
giving effect to the Upper-Tier REMIC WAC Rate.
Upper-Tier Interest Rate: As described in the Preliminary
Statement.
Upper-Tier Regular Interest: As described in the Preliminary
Statement.
Upper-Tier REMIC: As described in the Preliminary Statement.
Upper-Tier REMIC WAC Rate: For any Distribution Date, the
weighted
average of the Lower-Tier Interest Rates on the Lower-Tier Regular
Interests
(other than the Class LT-IO Interest) as of the first day of the
related
Interest Accrual Period, weighted on the basis of the Lower-Tier
Principal
Amounts of such Lower-Tier Regular Interests as of the first day of
the related
Interest Accrual Period.
U.S. Person: (i) A citizen or resident of the United States; (ii)
a
corporation (or entity treated as a corporation for tax purposes)
created or
organized in the United States or under the laws of the United
States or of any
State thereof, including, for this purpose, the District of
Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes)
organized in
the United States or under the laws of the United States or of any
State
thereof, including, for this purpose, the District of Columbia
(unless provided
otherwise by future Treasury regulations); (iv) an estate whose
income is
includible in gross income for United States income tax purposes
regardless of
its source; or (v) a trust, if a court within the United States is
able to
exercise primary supervision over the administration of the trust
and one or
more U.S. Persons have authority to control substantial decisions
of the trust.
Notwithstanding the last clause of the preceding sentence, to the
extent
provided in Treasury regulations, certain trusts in existence on
August 20,
1996, and treated as U.S. Persons prior to such date, may elect to
continue to
be U.S. Persons.
Voting Rights: The
portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date
of
determination, (a) 1% of all Voting Rights shall be allocated to
the Class X
Certificates, if any (such Voting Rights to be allocated among the
holders of
Certificates of each such Class in accordance with their respective
Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the
Class P
Certificates, if any, and (c) the remaining Voting Rights shall be
allocated
among Holders of the remaining Classes of Certificates in
proportion to the
Certificate Balances of their respective Certificates on such
date.
WAC Cap: With respect to the Mortgage Loans as of any
Distribution
Date, the weighted average of the Adjusted Net Mortgage Rates then
in effect on
the beginning of the related Due Period on the Mortgage Loans minus
the Swap
Payment Rate, adjusted in each case to accrue on the basis of a
360-day year and
the actual number of days in the related Interest Accrual
Period.
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,
concurrently with the execution and delivery hereof, hereby sells,
transfers,
assigns, sets over and otherwise conveys to the Trustee for the
benefit of the
Certificateholders, without recourse, all the right, title and
interest of the
Depositor in and to the Trust Fund, and the Trustee, on behalf of
the Trust,
hereby accepts the Trust Fund.
(b) In connection with the transfer and assignment of each
Mortgage
Loan, the Depositor has delivered or caused to be delivered to the
Trustee, for
the benefit of the Certificateholders the following documents or
instruments
with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note bearing all intervening
endorsements,
endorsed
"Pay to the order of _____________, without recourse" and
signed
(which may
be by facsimile signature) in the name of the last endorsee by
an
authorized officer. To the extent that there is no room on the face
of
the
Mortgage Note for endorsements, the endorsement may be contained on
an
allonge,
unless the Trustee is advised in writing by the applicable
Originator
(pursuant to the applicable Purchase Agreement) or the
Depositor,
as applicable, that state law does not so allow;
(ii) the original of any guaranty executed in connection with
the
Mortgage
Note;
(iii) the original Mortgage with evidence of recording thereon or
a
certified
true copy of such Mortgage submitted for recording. If, in
connection
with any Mortgage Loan, the original Mortgage cannot be
delivered
with evidence of recording thereon on or prior to the Closing
Date
because of a delay caused by the public recording office where
such
Mortgage
has been delivered for recordation or because such Mortgage has
been lost
or because such public recording office retains the original
recorded
Mortgage, the applicable Originator or the Depositor, as
applicable, shall deliver or cause to be delivered to the Trustee
a
photocopy
of such Mortgage certified by the applicable Originator or the
Depositor,
as applicable, to be a true and complete copy of such Mortgage
and shall
forward to the Trustee such original recorded Mortgage within
14
days
following the applicable Originator's or the Depositor's receipt
of
such
Mortgage from the applicable public recording office; or in the
case
of a
Mortgage where a public recording office retains the original
recorded
Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such
Mortgage
certified
by such public recording office to be a true and complete copy
of the
original recorded Mortgage;
(iv) the originals of all assumption, modification, consolidation
or
extension
agreements, with evidence of recording thereon;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed
in blank (except with respect to MERS Designated Mortgage
Loans);
(vi) the originals of all intervening assignments of Mortgage
(if
any)
evidencing a complete chain of assignment from the applicable
originator
(or MERS with respect to each MERS Designated Mortgage Loan) to
the last
endorsee with evidence of recording thereon or a certified true
copy of
such intervening assignments of Mortgage submitted for
recording,
or if any
such intervening assignment has not been returned from the
applicable
recording office or has been lost or if such public recording
office
retains the original recorded assignments of Mortgage, the
Responsible Party or the Depositor, as applicable, shall deliver or
cause
to be
delivered a photocopy of such intervening assignment, certified
by
the
Responsible Party or the Depositor, as applicable, to be a true
and
complete
copy of such intervening assignment and shall forward to the
Trustee
such original recorded intervening assignment within 14 days
following
the Responsible Party or the Depositor's receipt of such from
the
applicable public recording office; or in the case of an
intervening
assignment
where a public recording office retains the original recorded
intervening assignment or in the case where an intervening
assignment is
lost after
recordation in a public recording office, a copy of such
intervening assignment certified by such public recording office to
be a
true and
complete copy of the original recorded intervening assignment;
(vii) the original mortgagee title insurance policy or
attorney's
opinion of
title and abstract of title, or, in the event such original
title
policy is unavailable, a certified true copy of the related
policy
binder or
commitment for title certified to be true and complete by the
title
insurance company; and
(viii) the original of any security agreement, chattel mortgage
or
equivalent
document executed in connection with the Mortgage (if
provided).
The Depositor will use its reasonable efforts to assist the
Trustee
in enforcing the obligations of the Responsible Party under this
Agreement, the
obligations of Meritage under the Meritage Agreements, the
obligations of CHL
under the CHL Agreements, the obligations of Accredited under the
Accredited
Agreements and the obligations of AIG under the AIG Agreements.
The Depositor shall cause to be delivered to the Trustee the
applicable recorded document promptly upon receipt from the
respective recording
office but in no event later than 180 days from the Closing
Date.
If any Mortgage has been recorded in the name of Mortgage
Electronic
Registration System, Inc. ("MERS") or its designee, no Assignment
of Mortgage in
favor of the Trustee will be required to be prepared or delivered
and instead,
the applicable Servicer shall take all reasonable actions as are
necessary at
the expense of the applicable Originator to the extent permitted
under the
related Purchase Agreement and otherwise at the expense of the
Depositor to
cause the Trust to be shown as the owner of the related Mortgage
Loan on the
records of MERS for the purpose of the system of recording
transfers of
beneficial ownership of mortgages maintained by MERS.
From time to time, the Depositor or the applicable Servicer, as
applicable, shall forward to the Trustee additional original
documents,
additional documents evidencing an assumption, modification,
consolidation or
extension of a Mortgage Loan in accordance with the terms of this
Agreement upon
receipt of such documents. All such mortgage documents held by the
Trustee as to
each Mortgage Loan shall constitute the "Custodial File".
No later than thirty (30) Business Days following the later of
the
Closing Date and the date of receipt by the applicable Servicer of
the complete
recording information for a Mortgage and except as set forth below,
such
Servicer shall promptly submit or cause to be submitted for
recording, at the
expense of the applicable Originator as required pursuant to the
related
Purchase Agreement and at no expense to the Trust Fund, the
Trustee, the
Servicers, or the Depositor, in the appropriate public office for
real property
records, each Assignment of Mortgage referred to in Section
2.01(b)(v).
Notwithstanding the foregoing, however, for administrative
convenience and
facilitation of servicing and to reduce closing costs, the
Assignments of
Mortgage shall not be required to be completed and submitted for
recording with
respect to any Mortgage Loan (i) if the Trustee and each Rating
Agency have
received an Opinion of Counsel, satisfactory in form and substance
to the
Trustee and each Rating Agency to the effect that the recordation
of such
Assignments of Mortgage in any specific jurisdiction is not
necessary to protect
the Trustee's interest in the related Mortgage Note, (ii) if such
Mortgage Loan
is a MERS Designated Mortgage Loan or (iii) if the Rating Agencies
have each
notified the Depositor in writing that not recording any such
Assignments of
Mortgage would not cause the initial ratings on any Offered
Certificates to be
downgraded or withdrawn; provided, however, that no Servicer shall
be held
responsible or liable for any loss that occurs because an
Assignment of Mortgage
was not recorded, but only to the extent the applicable Servicer
does not have
prior knowledge of the act or omission that causes such loss.
Unless the
Depositor gives the Servicers notice to the contrary, the Depositor
is deemed to
have given the Servicers notice that the condition set forth in
clause (iii)
above is applicable. However, with respect to the Assignments of
Mortgage
referred to in clauses (i) and (ii) above, if foreclosure
proceedings occur
against a Mortgaged Property, the applicable Servicer shall record
such
Assignment of Mortgage at the expense of the related Originator
(and at no
expense to the applicable Servicer) as required pursuant to the
related Purchase
Agreement. If the Assignment of Mortgage is to be recorded, the
Mortgage shall
be assigned to "Deutsche Bank National Trust Company, as trustee
under the
Pooling and Servicing Agreement dated as of March 1, 2006, Morgan
Stanley Home
Equity Loan Trust 2006-2." In the event that any such Assignment of
Mortgage is
lost or returned unrecorded because of a defect therein, the
Depositor shall
promptly cause to be delivered a substitute Assignment of Mortgage
to cure such
defect and thereafter cause each such assignment to be duly
recorded. If there
is such a defect with respect to a Meritage Mortgage Loan, an
Accredited
Mortgage Loan, a CHL Mortgage Loan or an AIG Mortgage Loan, the
Trustee shall
take such actions, with the Depositor's consent, to enforce the
rights of the
Trust as "Sponsor" under the Meritage Agreements, the Accredited
Agreements, the
CHL Agreements or the AIG Agreements, as applicable.
On or prior to the Closing Date, the Depositor shall deliver to
the
Trustee a copy of the Data Tape Information in an electronic,
machine readable
medium in a form mutually acceptable to the Depositor and the
Trustee.
(c) The Depositor does hereby establish, pursuant to the
further
provisions of this Agreement and the laws of the State of New York,
an express
trust (the "Trust") to be known, for convenience, as "MORGAN
STANLEY HOME EQUITY
LOAN TRUST 2006-2" and Deutsche Bank National Trust Company is
hereby appointed
as Trustee in accordance with the provisions of this Agreement. The
parties
hereto acknowledge and agree that it is the policy and intention of
the Trust to
acquire only Mortgage Loans meeting the requirements set forth in
this
Agreement, including without limitation, the representation and
warranty set
forth in paragraph (aaa) of Schedule IV to this Agreement. The
Trust's fiscal
year is the calendar year.
(d) The Trust shall have the capacity, power and authority, and
the
Trustee on behalf of the Trust is hereby authorized, to accept the
sale,
transfer, assignment, set over and conveyance by the Depositor to
the Trust of
all the right, title and interest of the Depositor in and to the
Trust Fund
(including, without limitation, the Mortgage Loans, the Meritage
Agreements, the
Accredited Agreements, the CHL Agreements and the AIG Agreements)
pursuant to
Section 2.01(a). The Trustee on behalf of the Trust is hereby
directed to enter
into the Interest Rate Swap Agreement.
Section 2.02 Acceptance by the Trustee of the Mortgage Loans.
The
Trustee shall acknowledge, on the Closing Date, receipt by the
Trustee of the
documents identified in the Initial Certification in the form
annexed hereto as
Exhibit E, and declares that it holds and will hold such documents
and the other
documents delivered to it pursuant to Section 2.01, and that it
holds or will
hold such other assets as are included in the Trust Fund, in trust
for the
exclusive use and benefit of all present and future
Certificateholders. The
Trustee shall maintain possession of the related Mortgage Notes in
the State of
California, unless otherwise permitted by the Rating Agencies.
In connection with the Closing Date, the Trustee shall be
required
to deliver via facsimile (with original to follow the next Business
Day) to the
Depositor and the Servicers or the Countrywide Servicer, as
applicable, an
Initial Certification prior to the Closing Date, or, as the
Depositor agrees to,
on the Closing Date, certifying receipt of a Mortgage Note and
Assignment of
Mortgage for each applicable Mortgage Loan. The Trustee shall not
be responsible
to verify the validity, sufficiency or genuineness of any document
in any
Custodial File.
Within 90 days after the Closing Date, the Trustee shall, for
the
benefit of the Holders of the Certificates, ascertain that all
documents
identified in the Document Certification and Exception Report in
the form
attached hereto as Exhibit F are in its possession, and shall
deliver to the
Depositor, the Servicers or the Countrywide Servicer, as
applicable, a Document
Certification and Exception Report, in the form annexed hereto as
Exhibit F, to
the effect that, as to each applicable Mortgage Loan listed in the
Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage
Loan
specifically identified in such certification as an exception and
not covered by
such certification): (i) all documents identified in the Document
Certification
and Exception Report and required to be reviewed by it are in its
possession;
(ii) such documents have been reviewed by it and appear regular on
their face
and relate to such Mortgage Loan; (iii) based on its examination
and only as to
the foregoing documents, the information set forth in items (1),
(2) and (9) of
the Mortgage Loan Schedule and items (1), (9) and (17) of the Data
Tape
Information respecting such Mortgage Loan accurately reflects the
information
set forth in the Custodial File; and (iv) each Mortgage Note has
been endorsed
as provided in Section 2.01 of this Agreement. The Trustee shall
not be
responsible to verify the validity, sufficiency or genuineness of
any document
in any Custodial File.
Within 90 days after the Closing Date, each Servicer (for the
benefit of the Holders of the Certificates, based solely on the
list of MERS
Designated Mortgage Loans and screen printouts from the MERS System
provided to
such Servicer by each applicable Originator no later than 45 days
after the
Closing Date) shall confirm, on behalf of the Trust, that the
Trustee is shown
as the Investor with respect to each MERS Designated Mortgage Loan
on such
screen printouts. If the Trustee is not shown as the Investor with
respect to
any MERS Designated Mortgage Loans on such screen printouts, such
Servicer shall
promptly notify the related Originator of such fact, and such
Person shall then
either cure such defect or repurchase such Mortgage Loan in
accordance with
Section 2.03.
The Trustee shall retain possession and custody of each
applicable
Custodial File in accordance with and subject to the terms and
conditions set
forth herein. The applicable Servicer shall promptly deliver to the
Trustee upon
the execution or receipt thereof, the originals of such other
documents or
instruments constituting the Custodial File as come into the
possession of the
applicable Servicer from time to time.
The Responsible Party shall deliver (or the Depositor, as
applicable, shall use reasonable efforts to cause Meritage,
Accredited and AIG
to deliver) to the applicable Servicer copies of all trailing
documents required
to be included in the Custodial File at the same time the original
or certified
copies thereof are delivered to the Trustee including but not
limited to such
documents as the title insurance policy and any other Mortgage Loan
Documents
upon return from the public recording office. Such documents shall
be delivered
by the Responsible Party at the Responsible Party's expense (or the
Depositor,
as applicable, shall use reasonable efforts to cause Meritage,
Accredited and
AIG to deliver such documents at Meritage's expense, Accredited's
expense or
AIG's expense, as applicable, pursuant to the Meritage Agreements,
the
Accredited Agreements or the AIG Agreements, as applicable) to such
Servicer.
Section 2.03 Representations and Warranties; Remedies for
Breaches
of Representations and Warranties with Respect to the Mortgage
Loans. (a) HomEq
hereby makes the representations and warranties set forth in
Schedule II hereto
to the Depositor and the Trustee as of the dates set forth in such
Schedule and
JPMorgan hereby makes the representations and warranties set forth
in Schedule
IV hereto to the Depositor and the Trustee as of the dates set
forth in such
Schedule. Upon discovery by any of the parties hereto of a breach
of any of the
foregoing representations and warranties, the party discovering
such breach
shall give prompt written notice to the other.
(b) The Depositor hereby makes the representations and
warranties
set forth in Schedules III hereto to the Trustee as of the dates
set forth in
such Schedule.
(c) First NLC hereby makes the representations and warranties
set
forth in Schedule IV hereto to the Depositor, the Servicers and the
Trustee as
of the dates set forth in such Schedule.
(d) It is understood and agreed by the parties hereto that the
representations and warranties set forth in this Section 2.03 shall
survive the
transfer of the Mortgage Loans by the Depositor to the Trustee, and
shall inure
to the benefit of the parties to whom the representations and
warranties were
made notwithstanding any restrictive or qualified endorsement on
any Mortgage
Note or Assignment of Mortgage or the examination or failure to
examine any
Mortgage File.
(e) Upon discovery by any of the parties hereto of a breach of
a
representation or warranty made by the Depositor or the Responsible
Party, as
applicable, under this Agreement, that materially and adversely
affects the
value of any Mortgage Loan or the interests of the Trustee or
the
Certificateholders therein, the party discovering such breach shall
give prompt
written notice thereof to the other parties. Upon receiving written
notice of a
breach of a representation and warranty or written notice that a
Mortgage Loan
does not constitute a "qualified mortgage" within the meaning of
Section
860G(a)(3) of the Code, the Trustee shall in turn notify the
Responsible Party
or the Depositor, as applicable, in writing to correct or cure, in
accordance
with the this Agreement, any such breach of a representation or
warranty made by
the Responsible Party or the Depositor, as applicable, under this
Agreement
within sixty (60) days from the date of notice from the Trustee or
the discovery
by the Responsible Party or the Depositor, as applicable, of the
breach, and if
the Responsible Party or the Depositor, as applicable, fails or is
unable to
correct or cure the defect or breach within such period, the
Trustee shall
notify the Depositor of such failure to correct or cure. Unless
otherwise
directed by the Depositor within five (5) Business Days after
notifying the
Depositor of such failure by the Responsible Party or the
Depositor, as
applicable, to correct or cure, the Trustee shall notify the
Responsible Party
or the Depositor, as applicable, to repurchase the Mortgage Loan (a
"Deleted
Mortgage Loan") at the Repurchase Price or, if permitted hereunder,
substitute a
Substitute Mortgage Loan for such Mortgage Loan, in each case,
pursuant to this
Agreement. Notwithstanding the foregoing, in the event that the
Trustee receives
notice of a breach by First NLC of any of the representations and
warranties set
forth in paragraphs (rr), (zz), (aaa), (ccc), (jjj), (kkk), (lll),
(mmm), (nnn),
(ooo) and (ppp) of Schedule IV, the Trustee shall notify the
Responsible Party
or the Depositor, as applicable, to repurchase the Mortgage Loan at
the
Repurchase Price within sixty (60) days of the Responsible Party's
or the
Depositor's receipt of such notice, as applicable. If, within ten
(10) Business
Days of receipt of such notice by the Responsible Party or the
Depositor, as
applicable, the Responsible Party or the Depositor, as applicable,
fails to
repurchase such Mortgage Loan, the Trustee shall notify the
Depositor of such
failure. The Trustee shall pursue all legal remedies available to
the Trustee
against the Responsible Party under this Agreement, if the Trustee
has received
written notice from the Depositor directing the Trustee to pursue
such remedies.
(f) In the event any Mortgage Loan does not conform to the
requirements as determined in the Trustee's review of the related
Custodial
File, the Trustee shall notify the applicable Originator, the
applicable
Servicer or the Countrywide Servicer, as applicable, the Trustee
(if applicable)
and the Depositor in writing, and request that such Originator
correct or cure
such defect as required under this Agreement, the CHL Agreements,
the Accredited
Agreements, the AIG Agreements or the Meritage Agreements, as
applicable, and if
such Originator fails or is unable to correct or cure the defect
within the
period set forth in this Agreement, the CHL Agreements, the
Accredited
Agreements, the AIG Agreements or the Meritage Agreements, as
applicable, the
Trustee shall notify the Depositor of such failure to correct or
cure. Unless
otherwise directed by the Depositor within five (5) Business Days
after
notifying the Depositor of such failure by the applicable
Originator or the
Depositor, as applicable, to correct or cure, the Trustee shall
notify the
applicable Originator or the Depositor, as applicable, to
repurchase the
Mortgage Loan at the Repurchase Price or, if permitted hereunder,
substitute a
Substitute Mortgage Loan for such Mortgage Loan, in each case,
pursuant to the
terms of this Agreement, as applicable. If, within ten (10)
Business Days of
receipt of such notice by the applicable Originator or the
Depositor, as
applicable, such Originator or the Depositor, as applicable, fails
to repurchase
such Mortgage Loan, the Trustee shall notify the Depositor of such
failure. The
Trustee shall pursue all legal remedies available to the Trustee
against the
applicable Originator or the Depositor, as applicable, under this
Agreement, the
CHL Agreements, the Accredited Agreements, the AIG Agreements or
the Meritage
Agreements, as applicable, if the Trustee has received written
notice from the
Depositor directing the Trustee to pursue such remedies.
(g) Within 90 days of the earlier of either discovery by or
notice
to the Depositor of any breach of a representation or warranty set
forth on
Schedule III hereto that materially and adversely affects the value
of any
Mortgage Loan or the interest of the Trustee or the
Certificateholders therein,
the Depositor shall use its best efforts to promptly cure such
breach in all
material respects and, if such defect or breach cannot be remedied,
the
Depositor shall purchase such Mortgage Loan at the Repurchase Price
or, if
permitted hereunder, substitute a Substitute Mortgage Loan for such
Mortgage
Loan. Within 90 days of the earlier of discovery by the Depositor
or receipt of
notice by the Depositor of the breach of a representation and
warranty set forth
in Schedule IV to this Agreement (with respect to the First NLC
Mortgage Loans),
the Meritage Assignment Agreement (with respect to the Meritage
Mortgage Loans),
the CHL Assignment Agreement (with respect to the CHL Mortgage
Loans), the
Accredited Assignment Agreement (with respect to the Accredited
Mortgage Loans)
or the AIG Assignment Agreement (with respect to the AIG Mortgage
Loans), that
(1) materially and adversely affects the interests of the
Certificateholders in
any Mortgage Loan and (2) has not been cured, repurchased or
substituted for by
the applicable Originator in accordance with the terms of this
Agreement, the
Meritage Agreements, the CHL Agreements, the Accredited Agreements
or the AIG
Agreements, as applicable, (i) the Depositor shall, within the time
period
permitted therefor under such agreement, (A) in the case of a
breach by First
NLC, take such action described in Section 2.03(f) of this
Agreement in respect
of such Mortgage Loan, (B) in the case of Meritage, take such
action described
in Section 5 of the Meritage Assignment Agreement in respect of
such Mortgage
Loan, (C) in the case of CHL, take such action described in Section
5 of the CHL
Assignment Agreement in respect of such Mortgage Loan, (D) in the
case of
Accredited, take such action described in Section 5 of the
Accredited Assignment
Agreement in respect of such Mortgage Loan, or (E) in the case of
AIG, take such
action described in Section 5 of the AIG Assignment Agreement in
respect of such
Mortgage Loan, in each case of clauses (A), (B) or (C), as if the
Depositor were
the applicable Originator, and (ii) the Trustee shall promptly
deliver to the
Depositor or its designee the related Mortgage File in accordance
with the
applicable Servicer's direction in a Request for Release and, upon
Depositor's
request, shall assign to the Depositor all of its rights with
respect to such
Originator's breach under this Agreement, the Meritage Assignment
Agreement, the
CHL Assignment Agreement, the Accredited Assignment Agreement or
the AIG
Assignment Agreement, as applicable, which assignment shall be
evidenced by a
writing prepared by the Depositor and executed by the Trustee in
favor of the
Depositor. Any obligation of the Depositor under this subsection
shall terminate
upon receipt by the Trustee of a confirmation from each Rating
Agency that such
termination will not cause a downgrade, qualification or withdrawal
of the
rating then assigned to any Class of Certificates by any Rating
Agency.
(h) Within 90 days of the earlier of either discovery by or
notice
to the Responsible Party of any breach of a representation or
warranty set forth
on Schedule IV that materially and adversely affects the value of
any Mortgage
Loan or the interest of the Trustee or the Certificateholders
therein, the
Responsible Party shall use its best efforts to promptly cure such
breach in all
material respects and, if such defect or breach cannot be remedied,
the
Responsible Party shall, at the Depositor's option, purchase such
Mortgage Loan
at the Repurchase Price or, if permitted hereunder, substitute a
Substitute
Mortgage Loan for such Mortgage Loan, if applicable.
(i) Any substitution of a Substitute Mortgage Loan by the
Responsible Party shall be made in accordance with the substitution
procedures
set forth in the First NLC Purchase Agreement, which provisions
shall be as set
forth in such agreements as if they were set forth herein. With
respect to any
Substitute Mortgage Loan or Loans substituted by the Depositor or
the
Responsible Party, the Depositor or the Responsible Party, as
applicable, shall
deliver to the Trustee for the benefit of the Certificateholders
the Mortgage
Note, the Mortgage, the related Assignment of Mortgage, and such
other documents
and agreements as are required by Section 2.01, with the Mortgage
Note endorsed
and the Mortgage assigned as required by Section 2.01. With respect
to any
Substitute Mortgage Loan or Loans substituted by Meritage, CHL,
Accredited or
AIG, the Depositor shall use reasonable efforts to cause Meritage,
CHL,
Accredited or AIG, as applicable, to deliver to the Trustee for the
benefit of
the Certificateholders the Mortgage Note, the Mortgage, the related
Assignment
of Mortgage, and such other documents and agreements as are
required by Section
2.01, with the Mortgage Note endorsed and the Mortgage assigned as
required by
Section 2.01. Notwithstanding anything to the contrary set forth in
this
Agreement, no substitution under this Agreement is permitted to be
made (a) in
any calendar month after the Determination Date for such month or
(b) if the
substitution were to be made on or after the second anniversary of
the Closing
Date. Scheduled Payments due with respect to Substitute Mortgage
Loans in the
Due Period of substitution shall not be part of the Trust Fund and
will be
retained by the Depositor or the Responsible Party on the next
succeeding
Distribution Date. For the Due Period of substitution,
distributions to
Certificateholders will include the Scheduled Payment due on any
Deleted
Mortgage Loan for such Due Period and thereafter the Depositor or
the
Responsible Party shall be entitled to retain all amounts received
in respect of
such Deleted Mortgage Loan.
(j) The applicable Servicer, based upon information provided by
the
Depositor or the applicable Originator, shall amend the Mortgage
Loan Schedule
for the benefit of the Certificateholders to reflect the removal of
such Deleted
Mortgage Loan and the substitution of the Substitute Mortgage Loan
or Loans and
the applicable Servicer shall deliver the amended Mortgage Loan
Schedule to the
Trustee. Upon such substitution, the Substitute Mortgage Loan or
Loans shall be
subject to the terms of this Agreement in all respects, and, if the
substitution
is made by the Depositor, the Depositor shall be deemed to have
made with
respect to such Substitute Mortgage Loan or Loans, as of the date
of
substitution, the representations and warranties made pursuant to
Section
2.03(b) with respect to such Mortgage Loan. Upon any such
substitution and the
deposit into the related Collection Account of the amount required
to be
deposited therein in connection with such substitution as described
in Section
2.03(k), the Trustee shall release the Mortgage File held for the
benefit of the
Certificateholders relating to such Deleted Mortgage Loan to the
applicable
Originator and the Trustee shall execute and deliver at the
direction of the
Depositor or the applicable Originator, such instruments of
transfer or
assignment prepared by the Depositor or the applicable Originator,
in each case
without recourse, as shall be necessary to vest title in the
Depositor or the
applicable Originator, of the Trustee's interest in any Deleted
Mortgage Loan
substituted for pursuant to this Section 2.03.
(k) For any month in which the Depositor substitutes one or
more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the applicable
Servicer will determine the amount (if any) by which the aggregate
unpaid
principal balance of all such Substitute Mortgage Loans as of the
date of
substitution is less than the aggregate unpaid principal balance of
all such
Deleted Mortgage Loans. The amount of such shortage, plus an amount
equal to the
sum of (i) any accrued and unpaid interest on the Deleted Mortgage
Loans and
(ii) all unreimbursed Servicing Advances with respect to such
Deleted Mortgage
Loans, or the amount of any similar shortage with respect to a
Substitute
Mortgage Loan substituted by the Responsible Party under this
Agreement
(collectively, the "Substitution Adjustment Amount"), shall be
deposited into
the related Collection Account by the Depositor on or before the
Distribution
Account Deposit Date for the Distribution Date following the
Prepayment Period
during which the related Mortgage Loan became required to be
purchased or
replaced hereunder. The Depositor shall use reasonable efforts to
cause
Meritage, CHL, Accredited or AIG, as the case may be, to remit to
the applicable
Servicer for deposit into the related Collection Account any
Substitution
Adjustment Amount on or before the Distribution Account Deposit
Date for the
Distribution Date following the Prepayment Period during which the
related
Mortgage Loan became required to be purchased or replaced
hereunder.
(l) Any Mortgage Loan repurchased pursuant to this Section 2.03
will
be removed from the Trust Fund. The applicable Servicer shall amend
the Mortgage
Loan Schedule for the benefit of the Certificateholders to reflect
the removal
of any Mortgage Loan repurchased and such Servicer shall deliver
the amended
Mortgage Loan Schedule to the Trustee. For purposes of determining
the
applicable Repurchase Price, any such repurchase shall occur or
shall be deemed
to occur as of the last day of the applicable Prepayment
Period.
(m) In the event that the Depositor or the Responsible Party
shall
have repurchased a Mortgage Loan pursuant to this Agreement, the
Repurchase
Price therefor shall be deposited by the applicable Servicer in the
related
Collection Account pursuant to Section 3.10 on or before the
Distribution
Account Deposit Date for the Distribution Date following the
Prepayment Period
during which the Depositor or the Responsible Party, as applicable,
repurchased
such Mortgage Loan and upon such deposit of the Repurchase Price
and receipt of
a Request for Release in the form of Exhibit J hereto, the Trustee
shall release
the related Custodial File held for the benefit of the
Certificateholders to
such Person as directed by the applicable Servicer, and the Trustee
shall
execute and deliver at such Person's direction such instruments of
transfer or
assignment prepared by such Person, in each case without recourse,
as shall be
necessary to transfer title from the Trustee.
(n) In addition to any repurchase or substitution obligation by
the
Responsible Party under this Agreement, the Responsible Party shall
indemnify
the Depositor and its Affiliates, the Servicers, the Sponsor, the
Trustee and
the Trust for any breach of any representation and warranty of the
Responsible
Party set forth in this Agreement, in accordance with the
indemnification
provisions relating to breaches of representation and warranty
(including
without limitation, the representations and warranties set forth in
paragraph
(aaa) of Schedule IV to this Agreement) and defective Mortgage
Loans set forth
in the First NLC Purchase Agreement as if such indemnification
provisions were
set forth herein for the benefit of the Depositor and its
Affiliates, the
Servicers, the Sponsor, the Trustee and the Trust. This indemnity
shall survive
the termination of this Agreement.
(o) It is understood and agreed by the parties hereto that the
obligation of the Depositor under this Agreement, the Responsible
Party under
this Agreement, Meritage under the Meritage Agreements, CHL under
the CHL
Agreements, Accredited under the Accredited Agreements or AIG under
the AIG
Agreements, to cure, repurchase or substitute any Mortgage Loan as
to which a
breach of a representation and warranty has occurred and is
continuing, together
with any related indemnification obligations set forth herein,
shall constitute
the sole remedies against such Persons respecting such breach
available to
Certificateholders, the Depositor (if applicable), or the Trustee
on their
behalf.
(p) Upon discovery by any of the parties hereto of a breach of
a
representation or warranty made by Meritage, CHL, Accredited or AIG
pursuant to
the Meritage Agreements, the CHL Agreements, the Accredited
Agreements or the
AIG Agreements, as applicable, the party discovering such breach
shall give
prompt written notice thereof to the other parties to this
Agreement and
Meritage, CHL, Accredited or AIG, as applicable. The Trustee shall
take such
action, with the Depositor's consent, with respect to such breach
under the
Meritage Agreements, the CHL Agreements, the Accredited Agreements
or AIG
Agreements, as the case may be, as may be necessary or appropriate
to enforce
the rights of the Trust with respect thereto.
The provisions of this Section 2.03 shall survive delivery of
the
respective Custodial Files to the Trustee for the benefit of
the
Certificateholders.
Section 2.04 Execution and Delivery of Certificates. The
Trustee
acknowledges the transfer and assignment to it of the Trust Fund
and,
concurrently with such transfer and assignment, has executed and
delivered to or
upon the order of the Depositor, the Certificates in authorized
Denominations
evidencing directly or indirectly the entire ownership of the Trust
Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights
referred to above
for the benefit of all present and future Holders of the
Certificates.
Section 2.05 REMIC Matters. The Preliminary Statement sets forth
the
designations for federal income tax purposes of all interests
created hereby.
The "Startup Day" of each Trust REMIC for purposes of the REMIC
Provisions shall
be the Closing Date. The "latest possible maturity date" of the
regular
interests in each Trust REMIC is the Distribution Date occurring in
February
2036, which is the Distribution Date in the month following the
month in which
the latest maturity date of any Mortgage Loan occurs. Amounts
distributable to
the Class X Certificates (prior to any reduction for any Basis Risk
Payment or
Swap Termination Payment), exclusive of any amounts received from
the Swap
Provider, shall be deemed paid from the Upper-Tier REMIC in respect
of the Class
X Interest to the Holders of the Class X Certificates prior to
distribution of
any Basis Risk Payments to the Offered Certificates. For federal
income tax
purposes, any amount distributed on the Offered Certificates on any
Distribution
Date in excess of the amount distributable on their Corresponding
Class of
Upper-Tier Regular Interest on such Distribution Date shall be
treated as having
been paid from the Excess Reserve Fund Account or the Swap Account,
as
applicable, and any amount distributable on such Corresponding
Class of
Upper-Tier Regular Interest on such Distribution Date in excess of
the amount
distributable on the Corresponding Class of Offered Certificates on
such
Distribution Date shall be treated as having been paid to the
Excess Reserve
Fund Account or the Swap Account, all pursuant to and as further
provided in
Section 8.13.
Section 2.06 Representations and Warranties of the Depositor.
The
Depositor hereby represents, warrants and covenants to the Trustee
and the
Servicers that as of the date of this Agreement or as of such date
specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly
existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
convey
the Mortgage Loans and to execute, deliver and perform, and to
enter into and
consummate the transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized,
executed
and delivered by the Depositor, all requisite corporate action
having been
taken, and, assuming the due authorization, execution and delivery
hereof by the
other parties hereto, constitutes or will constitute the legal,
valid and
binding agreement of the Depositor, enforceable against the
Depositor in
accordance with its terms, except as such enforcement may be
limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws
relating to or affecting the rights of creditors generally, and by
general
equity principles (regardless of whether such enforcement is
considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration
or filing with, or notice to, any governmental authority or court
is required
for the execution, delivery and performance of or compliance by the
Depositor
with this Agreement or the consummation by the Depositor of any of
the
transactions contemplated hereby, except as have been made on or
prior to the
Closing Date;
(e) None of the
execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or
the
fulfillment of or compliance with the terms and conditions of this
Agreement,
(i) conflicts or will conflict with or results or will result in a
breach of, or
constitutes or will constitute a default or results or will result
in an
acceleration under (A) the charter or bylaws of the Depositor, or
(B) of any
term, condition or provision of any material indenture, deed of
trust, contract
or other agreement or instrument to which the Depositor or any of
its
subsidiaries is a party or by which it or any of its subsidiaries
is bound; (ii)
results or will result in a violation of any law, rule, regulation,
order,
judgment or decree applicable to the Depositor of any court or
governmental
authority having jurisdiction over the Depositor or its
subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or
encumbrance which
would have a material adverse effect upon the Mortgage Loans or any
documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against
or
investigations of, the Depositor pending, or to the knowledge of
the Depositor,
threatened, before any court, administrative agency or other
tribunal, and no
notice of any such action, which, in the Depositor's reasonable
judgment, might
materially and adversely affect the performance by the Depositor of
its
obligations under this Agreement, or the validity or enforceability
of this
Agreement;
(g) The Depositor is not in default with respect to any order
or
decree of any court or any order, regulation or demand of any
federal, state,
municipal or governmental agency that may materially and adversely
affect its
performance hereunder; and
(h) Immediately prior to the transfer and assignment by the
Depositor to the Trustee on the Closing Date, the Depositor had
good title to,
and was the sole owner of each Mortgage Loan, free of any interest
of any other
Person, and the Depositor has transferred all right, title and
interest in each
Mortgage Loan to the Trustee. The transfer of the Mortgage Note and
the Mortgage
as and in the manner contemplated by this Agreement is sufficient
either (i)
fully to transfer to the Trustee, for the benefit of the
Certificateholders, all
right, title, and interest of the Depositor thereto as note holder
and mortgagee
or (ii) to grant to the Trustee, for the benefit of the
Certificateholders, the
security interest referred to in Section 10.04.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.06 shall survive delivery of
the
respective Custodial Files to the Trustee and shall inure to the
benefit of the
Trustee.
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicers to Service Mortgage Loans. (a) For and
on
behalf of the Certificateholders, each Servicer shall service and
administer the
Mortgage Loans for which it is acting as Servicer in accordance
with the terms
of this Agreement and the respective Mortgage Loans and, to the
extent
consistent with such terms, in the same manner in which it services
and
administers similar mortgage loans for its own portfolio, giving
due
consideration to customary and usual standards of practice of
mortgage lenders
and loan servicers administering similar mortgage loans but without
regard to:
(i) any relationship that such Servicer, any Subservicer or any
Affiliate of such Servicer or any Subservicer may have with the
related
Mortgagor;
(ii) the ownership or
