Execution Copy
================================================================================
MORGAN STANLEY ABS CAPITAL I INC.,
as Depositor,
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Master Servicer, Backup Servicer and Securities Administrator,
SAXON MORTGAGE SERVICES INC.
as Servicer,
MASTER FINANCIAL, INC.,
as Servicer,
IXIS REAL ESTATE CAPITAL INC.,
as Unaffiliated Seller,
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee and Custodian.
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2006
IXIS REAL ESTATE CAPITAL TRUST 2006-HE2
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2006-HE2
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS....................................................
20
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES..
69
Section 2.01
Conveyance of Mortgage Loans............................
69
Section 2.02
Acceptance by the Custodian of the Mortgage Loans.......
76
Section 2.03
Representations, Warranties and Covenants of the
Unaffiliated Seller and the Servicers...................
77
Section 2.04
The Depositor and the Mortgage Loans....................
82
Section 2.05
Delivery of Opinion of Counsel in Connection with
Substitutions and Non-Qualified Mortgages...............
82
Section 2.06
Execution and Delivery of Certificates..................
82
Section 2.07
REMIC Matters...........................................
82
Section 2.08
Representations and Warranties of the Depositor.........
82
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS...............
84
Section 3.01
Servicers to Service Mortgage Loans.....................
84
Section 3.02
Subservicing Agreements Between the Servicers and
Subservicers............................................
86
Section 3.03
Successor Subservicers..................................
89
Section 3.04
Liability of the Servicers..............................
89
Section 3.05
No Contractual Relationship Between Subservicers and
the Trustee.............................................
89
Section 3.06
Assumption or Termination of Subservicing Agreements by
Master Servicer.........................................
90
Section 3.07
Collection of Certain Mortgage Loan Payments;
Establishment of Certain Accounts.......................
90
Section 3.08
Subservicing Accounts...................................
94
Section 3.09
Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.........................................
95
Section 3.10
Collection Accounts.....................................
96
Section 3.11
Withdrawals from the Collection Accounts................
97
Section 3.12
Investment of Funds in the Accounts.....................
99
Section 3.13
Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.........................
101
Section 3.14
Enforcement of Due-On-Sale Clauses Assumption
Agreements..............................................
102
Section 3.15
Realization Upon Defaulted Mortgage Loans...............
103
Section 3.16
Release of Mortgage Files...............................
105
Section 3.17
Title, Conservation and Disposition of REO Property.....
106
Section 3.18
Notification of Adjustments.............................
107
Section 3.19
Access to Certain Documentation and Information
Regarding the Mortgage Loans............................
108
Section 3.20
Documents, Records and Funds in Possession of each
Servicer to be Held for the Securities Administrator....
108
Section 3.21
Servicing Compensation..................................
108
Section 3.22
Annual Statement as to Compliance.......................
109
i
Section 3.23
Annual Independent Public Accountants' Servicing
Statement; Financial Statements.........................
109
Section 3.24
Master Servicer to Act as Servicer......................
110
Section 3.25
Compensating Interest...................................
113
Section 3.26
Credit Reporting; Gramm-Leach-Bliley Act................
113
Section 3.27
Advance Facilities......................................
113
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE
SERVICERS...................
115
Section 4.01
Advances................................................
115
Section 4.02
Priorities of Distribution..............................
117
Section 4.03
Monthly Statements to Certificateholders................
125
Section 4.04
Certain Matters Relating to the Determination of LIBOR..
129
Section 4.05
[Reserved]..............................................
130
Section 4.06
[Reserved]..............................................
130
Section 4.07
Allocation of Applied Realized Loss Amounts.............
130
ARTICLE V THE
CERTIFICATES...............................................
130
Section 5.01
The Certificates........................................
130
Section 5.02
Certificate Register; Registration of Transfer and
Exchange of Certificates................................
131
Section 5.03
Mutilated, Destroyed, Lost or Stolen Certificates.......
136
Section 5.04
Persons Deemed Owners...................................
136
Section 5.05
Access to List of Certificateholders' Names and
Addresses...............................................
137
Section 5.06
Maintenance of Office or Agency.........................
137
ARTICLE VI THE DEPOSITOR AND THE
SERVICER................................
137
Section 6.01
Respective Liabilities of the Depositor and the
Servicers...............................................
137
Section 6.02
Merger or Consolidation of the Depositor or the
Servicers...............................................
137
Section 6.03
Limitation on Liability of the Depositor, the Servicers
and Others..............................................
138
Section 6.04
Limitation on Resignation of the Servicers..............
139
Section 6.05
Additional Indemnification by the Servicers; Third
Party Claims............................................
140
ARTICLE VII
DEFAULT......................................................
141
Section 7.01
Events of Default.......................................
141
Section 7.02
Master Servicer to Act; Appointment of Successor........
144
Section 7.03
Notification to Certificateholders......................
146
ARTICLE VIII CONCERNING THE
TRUSTEE......................................
146
Section 8.01
Duties of the Trustee...................................
146
Section 8.02
Certain Matters Affecting the Trustee and the Custodian.
147
Section 8.03
Trustee Not Liable for Certificates or Mortgage Loans...
149
Section 8.04
Trustee May Own Certificates............................
149
Section 8.05
Trustee's and Custodian's Fees and Expenses.............
149
Section 8.06
Eligibility Requirements for the Trustee................
150
Section 8.07
Resignation and Removal of the Trustee..................
150
Section 8.08
Successor Trustee.......................................
151
Section 8.09
Merger or Consolidation of the Trustee..................
151
Section 8.10
Appointment of Co-Trustee or Separate Trustee...........
152
ii
Section 8.11
Tax Matters.............................................
153
Section 8.12
Periodic Filings........................................
156
Section 8.13
Tax Classification of the Supplemental Interest Trust,
the Excess Reserve Fund Account and the Swap Account....
161
Section 8.14 Interest Rate Swap
Agreement.............................
162
ARTICLE IX ADMINISTRATION OF THE MORTGAGE LOANS BY THE MASTER
SERVICER...
162
Section 9.01
Duties of the Master Servicer; Enforcement of the
Servicers' Obligations..................................
162
Section 9.02
Maintenance of Fidelity Bond and Errors and Omissions
Insurance...............................................
163
Section 9.03
Representations and Warranties of the Master Servicer...
163
Section 9.04
Master Servicer Events of Default.......................
165
Section 9.05
Waiver of Default.......................................
166
Section 9.06
Successor to the Master Servicer........................
166
Section 9.07
Compensation of the Master Servicer.....................
168
Section 9.08
Merger or Consolidation.................................
168
Section 9.09
Resignation of the Master Servicer......................
168
Section 9.10
Assignment or Delegation of Duties by the Master
Servicer................................................
169
Section 9.11
Limitation on Liability of the Master Servicer..........
169
Section 9.12
Indemnification; Third Party Claims.....................
170
ARTICLE X CONCERNING THE SECURITIES
ADMINISTRATOR........................
171
Section 10.01 Duties of Securities
Administrator......................
171
Section 10.02 Certain Matters Affecting the Securities
Administrator...........................................
172
Section 10.03 Securities Administrator Not Liable for Certificates
or
Mortgage Loans..........................................
174
Section 10.04 Securities Administrator May Own
Certificates...........
174
Section 10.05 Securities Administrator's Fees and
Expenses............
174
Section 10.06 Eligibility Requirements for Securities
Administrator...
176
Section 10.07 Resignation and Removal of Securities
Administrator.....
176
Section 10.08 Successor Securities
Administrator......................
177
Section 10.09 Merger or Consolidation of Securities
Administrator.....
177
Section 10.10 Assignment or Delegation of Duties by the Securities
Administrator...........................................
178
ARTICLE XI
TERMINATION...................................................
178
Section 11.01 Termination upon Liquidation or Purchase of the
Mortgage
Loans...................................................
178
Section 11.02 Final Distribution on the
Certificates..................
179
Section 11.03 Additional Termination
Requirements.....................
181
ARTICLE XII MISCELLANEOUS
PROVISIONS.....................................
181
Section 12.01
Amendment...............................................
181
Section 12.02 Recordation of Agreement;
Counterparts..................
184
Section 12.03 Governing
Law...........................................
184
Section 12.04 Intention of
Parties....................................
185
Section 12.05
Notices.................................................
185
Section 12.06 Severability of
Provisions..............................
186
Section 12.07
Assignment..............................................
186
Section 12.08 Limitation on Rights of
Certificateholders..............
187
iii
Section 12.09 Inspection and Audit
Rights.............................
187
Section 12.10 Certificates Nonassessable and Fully
Paid...............
188
Section 12.11
[Reserved]..............................................
188
Section 12.12 Third Party
Beneficiary.................................
188
Section 12.13 Waiver of Jury
Trial....................................
188
SCHEDULES
Schedule I
Mortgage Loan Schedule
Schedule IA
Schedule of Master Financial Serviced Loans
Schedule IB
Schedule of Saxon Serviced Loans
Schedule II
Representations and Warranties of Master Financial
Schedule IIA
Further Representations and Warranties of Master Financial
Schedule III
Representations and Warranties of Saxon
Schedule IIIA
Further Representations and Warranties of Saxon
Schedule IV
Representations and Warranties as to the Unaffiliated Seller
EXHIBITS
Exhibit A
Form of Class A-1, Class A-2, Class A-3, Class A-4, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificate
Exhibit B
[Reserved]
Exhibit C
Form of Class P Certificate
Exhibit D
Form of Class R Certificate
Exhibit E
Form of Class X Certificate
Exhibit F
Form of Initial Certification of Custodian
Exhibit G
Form of Final Certification of Custodian
Exhibit H
Form of Residual Transfer Affidavit
Exhibit I
Form of Transferor Certificate
Exhibit J
Form of Rule 144A Letter
Exhibit K
Form of Request for Release
Exhibit L
Form of Subsequent Transfer Agreement
Exhibit M
Depositor Certification
Exhibit N-1
Servicer Certification to be provided to Depositor
Exhibit N-2
Master Servicer Certification to be provided to Depositor
Exhibit O
Trustee Certification to be provided to Depositor
Exhibit P
Form for Calculation of Realized Loss/Gain
Exhibit Q
Servicing Criteria
Exhibit R
Additional Form 10-D Disclosure
Exhibit S
Additional Form 10-K Disclosure
Exhibit T
Form 8-K Disclosure Information
Exhibit U
Interest Rate Swap Agreement
Exhibit V
Form of Advance Reimbursement Notice
iv
THIS POOLING AND SERVICING AGREEMENT, dated as of May 1, 2006,
among
MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation, as
depositor (the
"Depositor"), JPMORGAN CHASE BANK, National Association, a banking
association
organized under the laws of the United States, as master servicer,
backup
servicer and securities administrator (in each such capacity,
respectively, the
"Master Servicer", "Backup Servicer" and the "Securities
Administrator"), SAXON
MORTGAGE SERVICES INC., a Texas corporation ("Saxon"), MASTER
FINANCIAL, INC., a
California corporation ("Master Financial" and together with Saxon,
the
"Servicers"), IXIS REAL ESTATE CAPITAL INC. (f/k/a CDC Mortgage
Capital Inc.), a
New York corporation, as unaffiliated seller (the "Unaffiliated
Seller") and
DEUTSCHE BANK NATIONAL TRUST COMPANY, a national banking
association, as trustee
and custodian (in each such capacity respectively, the "Trustee"
and the
"Custodian").
WITNESSETH:
In consideration of the mutual agreements herein contained, the
parties hereto
agree as follows:
PRELIMINARY STATEMENT
The Securities Administrator on behalf of the Trustee shall elect
that
five segregated asset pools within the Trust Fund be treated for
federal income
tax purposes as comprising five REMICs (each a "REMIC" or, in the
alternative,
REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V, respectively).
Each Class of
Certificates, other than the Class P and Class R Certificates and
other than the
right of each Class of LIBOR Certificates to receive Basis Risk
Carry Forward
Amounts and the right of the Class X Certificates to receive
payments from the
Interest Rate Swap Agreement and the Pre-Funding Reserve Account,
represents
ownership of one or more regular interests in REMIC V for purposes
of the REMIC
Provisions. Additionally, the Class X Certificates represent the
obligation to
make certain payments of Basis Risk Carry Forward Amounts to
Holders of LIBOR
Certificates, and the LIBOR Certificates represent the obligation
to make
certain payments to the Class X Certificateholder to the extent
that the
interest accrued on its corresponding REMIC V Regular Interest is
in excess of
the interest accrued on such LIBOR Certificate. The Class P
Certificates
represent beneficial ownership of the Prepayment Charges, which
portion of the
Trust Fund shall be treated as a grantor trust. The Class I
Interests are
uncertificated REMIC V Regular Interests and are designed to fund
net swap
payments, in full or in part, on the Interest Rate Swap Agreement.
The Class R
Certificate represents ownership of the sole class of residual
interest in each
of REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V for purposes
of the REMIC
Provisions. The Class R-V, Class R-IV, Class R-III, Class R-II and
Class R-I
Interests comprise the Class R Certificate. The Startup Day for
each REMIC
described herein is the Closing Date. The latest possible maturity
date for each
regular interest is the date referenced for such regular interest
in this
preliminary statement.
REMIC V shall hold as assets the several classes of uncertificated
REMIC IV Regular Interests. Each such REMIC IV Regular Interest is
hereby
designated as a regular interest in REMIC IV. The Class IV-A-1,
Class IV-A-2,
Class IV-A-3, Class IV-A-4, Class IV-M-1, Class IV-M-2, Class
IV-M-3, Class
IV-M-4, Class IV-M-5, Class IV-M-6, Class IV-B-1, Class IV-B-2,
Class IV-B-3,
and Class IV-B-4 Interests are hereby designated the REMIC IV
Accretion Directed
Classes.
1
REMIC IV shall hold as assets the several classes of uncertificated
REMIC III Regular Interests. Each such REMIC III Regular Interest
is hereby
designated as a regular interest in REMIC III.
REMIC III shall hold as assets the several classes of
uncertificated
REMIC II Regular Interests. Each such REMIC II Regular Interest is
hereby
designated as a regular interest in REMIC II.
REMIC II shall hold as assets the several classes of uncertificated
REMIC I Regular Interests. Each such REMIC I Regular Interest is
hereby
designated as a regular interest in REMIC I.
REMIC I shall hold as assets all of the assets included in the
Trust
Fund other than the Prepayment Charges, the Supplemental Interest
Trust, the
Excess Reserve Fund Account, the Swap Account, the Pre-Funding
Account, the
Pre-Funding Reserve Account, the Capitalized Interest Account and
the Interest
Rate Swap Agreement.
The REMIC I Regular Interests and the Class R-I Interest shall have
the following tier interest rate, initial tier principal amount and
latest
possible maturity date as set forth in the table below.
REMIC I CLASS
TIER INTEREST
INITIAL TIER
DESIGNATION
RATE
PRINCIPAL AMOUNT
LATEST POSSIBLE MATURITY DATE
-------------
-------------
----------------
-----------------------------
Class I-C1
(1)
$825,149,026.79
August 25, 2037
Class I-PO1
(2)
$174,850,973.21
August 25, 2037
Class I-N
(3)
(4)
August 25, 2006
Class R-I
(5)
(5)
August 25, 2037
(1)
The interest rate with respect to any Distribution Date for this
Class I-C1
Interest is (i) for the first three Distribution Dates, a per annum
variable rate equal to the weighted average of the Adjusted Net
Mortgage
Rates for then in effect on the beginning of the related Prepayment
Period
on the Initial Mortgage Loans, and (ii) thereafter, a per annum
variable
rate equal to the weighted average of the Adjusted Net Mortgage
Rates then
in effect on the beginning of the related Prepayment Period on the
Mortgage
Loans.
(2)
The interest rate with respect to any Distribution Date for the
Class I-PO1
Interest is (i) for the first three Distribution Dates, 0.00% and
(ii)
thereafter, a per annum variable rate equal to the weighted average
of the
Adjusted Net Mortgage Rates then in effect on the beginning of the
related
Prepayment Period on the Mortgage Loans.
(3)
The interest rate with respect to any Distribution Date for the
Class I-N
Interest is (i) for the first three Distribution Dates, all
interest on the
Subsequent Mortgage Loans for such Distribution Date divided by
$174,850,973.21, and (ii) thereafter, 0.00%.
2
(4)
The Class I-N Interest will have a notional principal balance equal
to
$174,850,973.21.
(5)
The Class R-I Interest is the sole class of residual interest in
REMIC I.
The Class R-I does not have a principal amount or an interest rate.
During the Pre-Funding Period, all principal payments (scheduled
and
prepaid) and Realized Losses with respect to the Initial Mortgage
Loans shall be
allocated to the Class I-C1 Interest, until such Class is paid in
full or
eliminated by such losses. All principal payments (scheduled and
prepaid) and
Realized Losses generated with respect to the Subsequent Mortgage
Loans and any
amounts transferred from the Pre-Funding Account to REMIC I shall
be allocated
to the Class I-PO1 Interest.
On each Distribution Date thereafter, all principal payments
(scheduled and prepaid) and Realized Losses generated with respect
to the
Mortgage Loans shall be allocated, pro rata, to the Class I-C1 and
Class I-PO1
Interests, until such Classes are paid in full or eliminated by
such losses..
The REMIC II Regular Interests and the Class R-II Interest shall
have
the following tier interest rate, initial tier principal amount and
latest
possible maturity date as set forth in the table below.
REMIC II CLASS
TIER INTEREST
INITIAL TIER
LATEST POSSIBLE MATURITY
DESIGNATION
RATE
PRINCIPAL AMOUNT
DATE
--------------
-------------
----------------
----------------------------
Class II-C1
(1)
$ 2,832,380.80
August 25, 2037
Class II-C2
(1)
$ 24,503,738.50
August 25, 2037
Class II-C3
(1)
$ 22,765,907.30
August 25, 2037
Class II-C4
(1)
$ 22,462,369.80
August 25, 2037
Class II-C5
(1)
$ 35,538,916.60
August 25, 2037
Class II-C6
(1)
$ 34,069,450.50
August 25, 2037
Class II-C7
(1)
$ 33,462,028.00
August 25, 2037
Class II-C8
(1)
$ 32,736,900.60
August 25, 2037
Class II-C9
(1)
$ 30,235,812.00
August 25, 2037
Class II-C10
(1)
$ 29,046,575.60
August 25, 2037
Class II-C11
(1)
$ 27,851,514.30
August 25, 2037
Class II-C12
(1)
$ 26,663,015.20
August 25, 2037
Class II-C13
(1)
$ 25,579,222.60
August 25, 2037
Class II-C14
(1)
$ 24,489,745.90
August 25, 2037
Class II-C15
(1)
$ 23,430,946.20
August 25, 2037
3
REMIC II CLASS
TIER INTEREST
INITIAL TIER
LATEST POSSIBLE MATURITY
DESIGNATION
RATE
PRINCIPAL AMOUNT
DATE
--------------
-------------
----------------
----------------------------
Class II-C16
(1)
$ 22,407,503.50
August 25, 2037
Class II-C17
(1)
$ 22,056,769.00
August 25, 2037
Class II-C18
(1)
$ 22,860,413.40
August 25, 2037
Class II-C19
(1)
$ 36,014,319.80
August 25, 2037
Class II-C20
(1)
$ 92,531,138.80
August 25, 2037
Class II-C21
(1)
$125,314,408.00
August 25, 2037
Class II-C22
(1)
$ 82,564,461.30
August 25, 2037
Class II-C23
(1)
$ 25,609,750.10
August 25, 2037
Class II-C24
(1)
$ 15,374,336.60
August 25, 2037
Class II-C25
(1)
$
7,241,002.90
August 25, 2037
Class II-C26
(1)
$
2,626,573.30
August 25, 2037
Class II-C27
(1)
$
2,223,256.30
August 25, 2037
Class II-C28
(1)
$
2,253,227.50
August 25, 2037
Class II-C29
(1)
$
2,097,010.90
August 25, 2037
Class II-C30
(1)
$
1,974,458.80
August 25, 2037
Class II-C31
(1)
$
5,667,355.90
August 25, 2037
Class II-C32
(1)
$
4,922,873.80
August 25, 2037
Class II-C33
(1)
$
7,959,917.10
August 25, 2037
Class II-C34
(1)
$
5,002,374.50
August 25, 2037
Class II-C35
(1)
$
2,211,070.30
August 25, 2037
Class II-C36
(1)
$
1,455,047.30
August 25, 2037
Class II-C37
(1)
$
968,937.00
August 25, 2037
Class II-C38
(1)
$
720,099.20
August 25, 2037
Class II-C39
(1)
$
661,175.40
August 25, 2037
Class II-C40
(1)
$
639,150.60
August 25, 2037
Class II-C41
(1)
$
617,838.70
August 25, 2037
Class II-C42
(1)
$
597,218.50
August 25, 2037
Class II-C43
(1)
$
577,269.60
August 25, 2037
Class II-C44
(1)
$
557,971.20
August 25, 2037
4
REMIC II CLASS
TIER INTEREST
INITIAL TIER
LATEST POSSIBLE MATURITY
DESIGNATION
RATE
PRINCIPAL AMOUNT
DATE
--------------
-------------
----------------
----------------------------
Class II-C45
(1)
$
539,303.60
August 25, 2037
Class II-C46
(1)
$
521,245.90
August 25, 2037
Class II-C47
(1)
$
503,779.30
August 25, 2037
Class II-C48
(1)
$
486,884.90
August 25, 2037
Class II-C49
(1)
$
486,593.10
August 25, 2037
Class II-C50
(1)
$
455,167.70
August 25, 2037
Class II-C51
(1)
$
439,864.50
August 25, 2037
Class II-C52
(1)
$
425,064.80
August 25, 2037
Class II-C53
(1)
$ 11,956,146.10
August 25, 2037
Class II-J1
(1)
$ 92,810,496.90
August 25, 2037
Class II-N
(2)
(3)
August 25, 2006
Class R-II
(4)
(4)
(1)
The interest rate with respect to any Distribution Date for these
interests
is the weighted average of the interest rates of the Class I-C1 and
Class
I-PO1 Interests.
(2)
The Class II-N Interest is entitled to all distributions of
interest on the
Class I-N Interest.
(3)
The Class II-N Interest will have a notional principal balance
equal to the
notional principal balance of the Class I-N Interest.
(4)
The Class R-II Interest is the sole class of residual interest in
REMIC II.
The Class R-II Interest does not have a principal amount or an
interest
rate.
On each Distribution Date, all principal payments (scheduled and
prepaid) and Realized Losses generated with respect to the Mortgage
Loans and
any amounts transferred from the Pre-Funding Account to REMIC I
shall be
allocated in the following order: (i) first, to the Class II-J1
Interest until
such Class is paid in full or eliminated by such losses, (ii)
second, to the
Class II-C1, Class II-C2, Class II-C3 and Class II-C4, in reverse
numerical
order, until such Classes are paid in full or eliminated by such
losses and
(iii) third to the Class II-C5 through Class II-C53 Interests,
sequentially,
until such Classes are paid in full or eliminated by such losses.
The REMIC III Regular Interests and the Class R-III Interest shall
have the following, Corresponding REMIC II Regular Interest, tier
interest rate,
initial tier principal amount and latest possible maturity date as
set forth in
the table below.
5
CORRESPONDING
TIER
INITIAL TIER
REMIC III CLASS
REMIC II REGULAR
INTEREST
PRINCIPAL
LATEST POSSIBLE
DESIGNATION
INTEREST
RATE
AMOUNT
MATURITY DATE
---------------
----------------
--------
------------
---------------
Class III-C1a
Class II-C1
(1)
(2)
August 25, 2037
Class III-C1b
Class II-C1
(5)
(3)
August 25, 2037
Class III-C1c
Class II-C1
(6)
(4)
August 25, 2037
Class III-C2a
Class II-C2
(1)
(2)
August 25, 2037
Class III-C2b
Class II-C2
(5)
(3)
August 25, 2037
Class III-C2c
Class II-C2
(6)
(4)
August 25, 2037
Class III-C3a
Class II-C3
(1)
(2)
August 25, 2037
Class III-C3b
Class II-C3
(5)
(3)
August 25, 2037
Class III-C3c
Class II-C3
(6)
(4)
August 25, 2037
Class III-C4a
Class II-C4
(1)
(2)
August 25, 2037
Class III-C4b
Class II-C4
(5)
(3)
August 25, 2037
Class III-C4c
Class II-C4
(6)
(4)
August 25, 2037
Class III-C5a
Class II-C5
(7)
(2)
August 25, 2037
Class III-C5b
Class II-C5
(8)
(3)
August 25, 2037
Class III-C5c
Class II-C5
(9)
(4)
August 25, 2037
Class III-C6a
Class II-C6
(10)
(2)
August 25, 2037
Class III-C6b
Class II-C6
(11)
(3)
August 25, 2037
Class III-C6c
Class II-C6
(12)
(4)
August 25, 2037
Class III-C7a
Class II-C7
(10)
(2)
August 25, 2037
Class III-C7b
Class II-C7
(11)
(3)
August 25, 2037
Class III-C7c
Class II-C7
(12)
(4)
August 25, 2037
Class III-C8a
Class II-C8
(10)
(2)
August 25, 2037
Class III-C8b
Class II-C8
(11)
(3)
August 25, 2037
Class III-C8c
Class II-C8
(12)
(4)
August 25, 2037
Class III-C9a
Class II-C9
(10)
(2)
August 25, 2037
Class III-C9b
Class II-C9
(11)
(3)
August 25, 2037
Class III-C9c
Class II-C9
(12)
(4)
August 25, 2037
Class III-C10a
Class II-C10
(10)
(2)
August 25, 2037
6
CORRESPONDING
TIER
INITIAL TIER
REMIC III CLASS
REMIC II REGULAR
INTEREST
PRINCIPAL
LATEST POSSIBLE
DESIGNATION
INTEREST
RATE
AMOUNT
MATURITY DATE
---------------
----------------
--------
------------
---------------
Class III-C10b
Class II-C10
(11)
(3)
August 25, 2037
Class III-C10c
Class II-C10
(12)
(4)
August 25, 2037
Class III-C11a
Class II-C11
(10)
(2)
August 25, 2037
Class III-C11b
Class II-C11
(11)
(3)
August 25, 2037
Class III-C11c
Class II-C11
(12)
(4)
August 25, 2037
Class III-C12a
Class II-C12
(10)
(2)
August 25, 2037
Class III-C12b
Class II-C12
(11)
(3)
August 25, 2037
Class III-C12c
Class II-C12
(12)
(4)
August 25, 2037
Class III-C13a
Class II-C13
(10)
(2)
August 25, 2037
Class III-C13b
Class II-C13
(11)
(3)
August 25, 2037
Class III-C13c
Class II-C13
(12)
(4)
August 25, 2037
Class III-C14a
Class II-C14
(10)
(2)
August 25, 2037
Class III-C14b
Class II-C14
(11)
(3)
August 25, 2037
Class III-C14c
Class II-C14
(12)
(4)
August 25, 2037
Class III-C15a
Class II-C15
(10)
(2)
August 25, 2037
Class III-C15b
Class II-C15
(11)
(3)
August 25, 2037
Class III-C15c
Class II-C15
(12)
(4)
August 25, 2037
Class III-C16a
Class II-C16
(10)
(2)
August 25, 2037
Class III-C16b
Class II-C16
(11)
(3)
August 25, 2037
Class III-C16c
Class II-C16
(12)
(4)
August 25, 2037
Class III-C17a
Class II-C17
(10)
(2)
August 25, 2037
Class III-C17b
Class II-C17
(11)
(3)
August 25, 2037
Class III-C17c
Class II-C17
(12)
(4)
August 25, 2037
Class III-C18a
Class II-C18
(10)
(2)
August 25, 2037
Class III-C18b
Class II-C18
(11)
(3)
August 25, 2037
Class III-C18c
Class II-C18
(12)
(4)
August 25, 2037
Class III-C19a
Class II-C19
(10)
(2)
August 25, 2037
Class III-C19b
Class II-C19
(11)
(3)
August 25, 2037
7
CORRESPONDING
TIER
INITIAL TIER
REMIC III CLASS
REMIC II REGULAR
INTEREST
PRINCIPAL
LATEST POSSIBLE
DESIGNATION
INTEREST
RATE
AMOUNT
MATURITY DATE
---------------
----------------
--------
------------
---------------
Class III-C19c
Class II-C19
(12)
(4)
August 25, 2037
Class III-C20a
Class II-C20
(10)
(2)
August 25, 2037
Class III-C20b
Class II-C20
(11)
(3)
August 25, 2037
Class III-C20c
Class II-C20
(12)
(4)
August 25, 2037
Class III-C21a
Class II-C21
(10)
(2)
August 25, 2037
Class III-C21b
Class II-C21
(11)
(3)
August 25, 2037
Class III-C21c
Class II-C21
(12)
(4)
August 25, 2037
Class III-C22a
Class II-C22
(10)
(2)
August 25, 2037
Class III-C22b
Class II-C22
(11)
(3)
August 25, 2037
Class III-C22c
Class II-C22
(12)
(4)
August 25, 2037
Class III-C23a
Class II-C23
(10)
(2)
August 25, 2037
Class III-C23b
Class II-C23
(11)
(3)
August 25, 2037
Class III-C23c
Class II-C23
(12)
(4)
August 25, 2037
Class III-C24a
Class II-C24
(10)
(2)
August 25, 2037
Class III-C24b
Class II-C24
(11)
(3)
August 25, 2037
Class III-C24c
Class II-C24
(12)
(4)
August 25, 2037
Class III-C25a
Class II-C25
(10)
(2)
August 25, 2037
Class III-C25b
Class II-C25
(11)
(3)
August 25, 2037
Class III-C25c
Class II-C25
(12)
(4)
August 25, 2037
Class III-C26a
Class II-C26
(10)
(2)
August 25, 2037
Class III-C26b
Class II-C26
(11)
(3)
August 25, 2037
Class III-C26c
Class II-C26
(12)
(4)
August 25, 2037
Class III-C27a
Class II-C27
(10)
(2)
August 25, 2037
Class III-C27b
Class II-C27
(11)
(3)
August 25, 2037
Class III-C27c
Class II-C27
(12)
(4)
August 25, 2037
Class III-C28a
Class II-C28
(10)
(2)
August 25, 2037
Class III-C28b
Class II-C28
(11)
(3)
August 25, 2037
Class III-C28c
Class II-C28
(12)
(4)
August 25, 2037
8
CORRESPONDING
TIER
INITIAL TIER
REMIC III CLASS
REMIC II REGULAR
INTEREST
PRINCIPAL
LATEST POSSIBLE
DESIGNATION
INTEREST
RATE
AMOUNT
MATURITY DATE
---------------
----------------
--------
------------
---------------
Class III-C29a
Class II-C29
(10)
(2)
August 25, 2037
Class III-C29b
Class II-C29
(11)
(3)
August 25, 2037
Class III-C29c
Class II-C29
(12)
(4)
August 25, 2037
Class III-C30a
Class II-C30
(10)
(2)
August 25, 2037
Class III-C30b
Class II-C30
(11)
(3)
August 25, 2037
Class III-C30c
Class II-C30
(12)
(4)
August 25, 2037
Class III-C31a
Class II-C31
(10)
(2)
August 25, 2037
Class III-C31b
Class II-C31
(11)
(3)
August 25, 2037
Class III-C31c
Class II-C31
(12)
(4)
August 25, 2037
Class III-C32a
Class II-C32
(10)
(2)
August 25, 2037
Class III-C32b
Class II-C32
(11)
(3)
August 25, 2037
Class III-C32c
Class II-C32
(12)
(4)
August 25, 2037
Class III-C33a
Class II-C33
(10)
(2)
August 25, 2037
Class III-C33b
Class II-C33
(11)
(3)
August 25, 2037
Class III-C33c
Class II-C33
(12)
(4)
August 25, 2037
Class III-C34a
Class II-C34
(10)
(2)
August 25, 2037
Class III-C34b
Class II-C34
(11)
(3)
August 25, 2037
Class III-C34c
Class II-C34
(12)
(4)
August 25, 2037
Class III-C35a
Class II-C35
(10)
(2)
August 25, 2037
Class III-C35b
Class II-C35
(11)
(3)
August 25, 2037
Class III-C35c
Class II-C35
(12)
(4)
August 25, 2037
Class III-C36a
Class II-C36
(10)
(2)
August 25, 2037
Class III-C36b
Class II-C36
(11)
(3)
August 25, 2037
Class III-C36c
Class II-C36
(12)
(4)
August 25, 2037
Class III-C37a
Class II-C37
(10)
(2)
August 25, 2037
Class III-C37b
Class II-C37
(11)
(3)
August 25, 2037
Class III-C37c
Class II-C37
(12)
(4)
August 25, 2037
Class III-C38a
Class II-C38
(10)
(2)
August 25, 2037
9
CORRESPONDING
TIER
INITIAL TIER
REMIC III CLASS
REMIC II REGULAR
INTEREST
PRINCIPAL
LATEST POSSIBLE
DESIGNATION
INTEREST
RATE
AMOUNT
MATURITY DATE
---------------
----------------
--------
------------
---------------
Class III-C38b
Class II-C38
(11)
(3)
August 25, 2037
Class III-C38c
Class II-C38
(12)
(4)
August 25, 2037
Class III-C39a
Class II-C39
(10)
(2)
August 25, 2037
Class III-C39b
Class II-C39
(11)
(3)
August 25, 2037
Class III-C39c
Class II-C39
(12)
(4)
August 25, 2037
Class III-C40a
Class II-C40
(10)
(2)
August 25, 2037
Class III-C40b
Class II-C40
(11)
(3)
August 25, 2037
Class III-C40c
Class II-C40
(12)
(4)
August 25, 2037
Class III-C41a
Class II-C41
(10)
(2)
August 25, 2037
Class III-C41b
Class II-C41
(11)
(3)
August 25, 2037
Class III-C41c
Class II-C41
(12)
(4)
August 25, 2037
Class III-C42a
Class II-C42
(10)
(2)
August 25, 2037
Class III-C42b
Class II-C42
(11)
(3)
August 25, 2037
Class III-C42c
Class II-C42
(12)
(4)
August 25, 2037
Class III-C43a
Class II-C43
(10)
(2)
August 25, 2037
Class III-C43b
Class II-C43
(11)
(3)
August 25, 2037
Class III-C43c
Class II-C43
(12)
(4)
August 25, 2037
Class III-C44a
Class II-C44
(10)
(2)
August 25, 2037
Class III-C44b
Class II-C44
(11)
(3)
August 25, 2037
Class III-C44c
Class II-C44
(12)
(4)
August 25, 2037
Class III-C45a
Class II-C45
(10)
(2)
August 25, 2037
Class III-C45b
Class II-C45
(11)
(3)
August 25, 2037
Class III-C45c
Class II-C45
(12)
(4)
August 25, 2037
Class III-C46a
Class II-C46
(10)
(2)
August 25, 2037
Class III-C46b
Class II-C46
(11)
(3)
August 25, 2037
Class III-C46c
Class II-C46
(12)
(4)
August 25, 2037
Class III-C47a
Class II-C47
(10)
(2)
August 25, 2037
Class III-C47b
Class II-C47
(11)
(3)
August 25, 2037
10
CORRESPONDING
TIER
INITIAL TIER
REMIC III CLASS
REMIC II REGULAR
INTEREST
PRINCIPAL
LATEST POSSIBLE
DESIGNATION
INTEREST
RATE
AMOUNT
MATURITY DATE
---------------
----------------
--------
------------
---------------
Class III-C47c
Class II-C47
(12)
(4)
August 25, 2037
Class III-C48a
Class II-C48
(10)
(2)
August 25, 2037
Class III-C48b
Class II-C48
(11)
(3)
August 25, 2037
Class III-C48c
Class II-C48
(12)
(4)
August 25, 2037
Class III-C49a
Class II-C49
(10)
(2)
August 25, 2037
Class III-C49b
Class II-C49
(11)
(3)
August 25, 2037
Class III-C49c
Class II-C49
(12)
(4)
August 25, 2037
Class III-C50a
Class II-C50
(10)
(2)
August 25, 2037
Class III-C50b
Class II-C50
(11)
(3)
August 25, 2037
Class III-C50c
Class II-C50
(12)
(4)
August 25, 2037
Class III-C51a
Class II-C51
(10)
(2)
August 25, 2037
Class III-C51b
Class II-C51
(11)
(3)
August 25, 2037
Class III-C51c
Class II-C51
(12)
(4)
August 25, 2037
Class III-C52a
Class II-C52
(10)
(2)
August 25, 2037
Class III-C52b
Class II-C52
(11)
(3)
August 25, 2037
Class III-C52c
Class II-C52
(12)
(4)
August 25, 2037
Class III-C53a
Class II-C53
(10)
(2)
August 25, 2037
Class III-C53b
Class II-C53
(11)
(3)
August 25, 2037
Class III-C53c
Class II-C53
(12)
(4)
August 25, 2037
Class III-J1
Class II-J1
(13)
(14)
August 25, 2037
Class III-N
Class II-N
(15)
(16)
August 25, 2006
Class R-III
(17)
(17)
(1)
The interest rate for these REMIC III Regular Interests will be as
follows:
(i) for all Distribution Dates commencing on the Corresponding
Distribution
Date through and including the Distribution Date in September 2006,
1.5
multiplied by (REMIC III Net WAC minus 5.3390%) and (ii) for all
other
Distribution Dates, REMIC III Net WAC.
(2)
These REMIC III Regular Interests will have an initial principal
balance
equal to the product of (i) the initial principal balance of the
Corresponding REMIC II Regular Interest and (ii) two divided by
three.
11
(3)
These REMIC III Regular Interests will have an initial principal
balance
equal to the initial principal balance of the Corresponding REMIC
II
Regular Interest divided by three.
(4)
These REMIC III Regular Interests will have a notional principal
balance
equal to the principal balance of the Corresponding REMIC II
Regular
Interest.
(5)
The interest rate for these REMIC III Regular Interests will be as
follows:
(i) for all Distribution Dates commencing on the Corresponding
Distribution
Date through and including the Distribution Date in September 2006,
3
multiplied by 1-month LIBOR, subject to a cap of 16.0170% and (ii)
for all
other Distribution Dates, REMIC III Net WAC.
(6)
The interest rate for these REMIC III Regular Interests will be as
follows:
(i) for all Distribution Dates commencing on the Corresponding
Distribution
Date through and including the Distribution Date in September 2006,
5.3390%
minus 1-Month LIBOR, subject to a floor of zero and (ii) for all
other
Distribution Dates, zero.
(7)
The interest rate for this REMIC III Regular Interest will be as
follows:
(i) for all Distribution Dates commencing on the Distribution Date
in
October 2006 through and including the Corresponding Distribution
Date, 1.5
multiplied by (REMIC III Net WAC minus 5.3390%) and (ii) for all
other
Distribution Dates, REMIC III Net WAC.
(8)
The interest rate for this REMIC III Regular Interests will be as
follows:
(i) for all Distribution Dates commencing on the Distribution Date
in
October 2006 through and including the Corresponding Distribution
Date, 3
multiplied by 1-month LIBOR, subject to a cap of 16.0170% and (ii)
for all
other Distribution Dates, REMIC III Net WAC.
(9)
The interest rate for this REMIC III Regular Interests will be as
follows:
(i) for all Distribution Dates commencing on the Distribution Date
in
October 2006 through and including the Corresponding Distribution
Date,
5.3390% minus 1-Month LIBOR, subject to a floor of zero and (ii)
for all
other Distribution Dates, zero.
(10) The interest rate for these REMIC III Regular Interests will
be as follows:
(i) for all Distribution Dates commencing on the first Distribution
Date
through and including the Corresponding Distribution Date, 1.5
multiplied
by (REMIC III Net WAC minus 5.3390%) and (ii) for all other
Distribution
Dates, REMIC III Net WAC.
(11) The interest rate for these REMIC III Regular Interests will
be as follows:
(i) for all Distribution Dates commencing on the first Distribution
Date
through and including the Corresponding Distribution Date, 3
multiplied by
1-month LIBOR, subject to a cap of 16.0170% and (ii) for all other
Distribution Dates, REMIC III Net WAC.
(12) The interest rate for these REMIC III Regular Interests will
be as follows:
(i) for all Distribution Dates commencing on the first Distribution
Date
through and including the Corresponding Distribution Date, 5.3390%
minus
1-Month LIBOR, subject to a floor of zero and (ii) for all other
Distribution Dates, zero.
12
(13) The interest rate for this REMIC III Regular Interest will be
equal to the
REMIC III Net WAC.
(14) These REMIC III Regular Interests will have an initial
principal balance
equal to the initial principal balance of the Corresponding REMIC
II
Regular Interest.
(15) The Class III-N Interest is entitled to all distributions of
interest on
the Class II-N Interest.
(16) The Class III-N Interest will have a notional principal
balance equal to
the notional principal balance of the Class II-N Interest.
(17) The Class R-III Interest is the sole class of residual
interest in REMIC
III. The Class R-III Interest does not have a principal amount or
an
interest rate.
On each Distribution Date, all principal payments (scheduled and
prepaid)
and Realized Losses generated with respect to the Mortgage Loans
and any amounts
transferred from the Pre-Funding Account to REMIC I shall be
allocated in the
following order: (i) first, to the Class III-J1 Interest until such
Class is
paid in full or eliminated by such losses, (ii) second, to the
Class III-C1a
through Class III-C4a and Class III-C1b through Class III-C4b
Interests, first,
pro rata between the two subsets of interests, and second, in
reverse numerical
order among the subsets of interests, until such Classes are paid
in full or
eliminated by such losses and (iii) third, to the Class III-C5a
through Class
III-C53a and Class III-C5b through Class III-C53b Interests, first,
pro rata
between the two subsets of interests, and second, sequentially
among the subsets
of interests, until such Classes are paid in full or eliminated by
such losses.
The REMIC IV Regular Interests and the Class R-IV Interest shall
have
the following tier interest rate, initial principal amount,
Corresponding REMIC
V Interest, and latest possible maturity date as set forth in the
table below.
TIER
CORRESPONDING REMIC V
REMIC IV CLASS
INTEREST
INITIAL TIER PRINCIPAL
INTEREST/ CORRESPONDING
LATEST POSSIBLE
DESIGNATION
RATE
AMOUNT
CLASS
MATURITY DATE
--------------
--------
------------------------
-----------------------
---------------
Class IV-A-1
(1)
1/2 of the Corresponding
Class A-1
August 25, 2037
Class initial principal
balance
Class IV-A-2
(1)
1/2 of the Corresponding
Class A-2
August 25, 2037
Class initial principal
balance
Class IV-A-3
(1)
1/2 of the Corresponding
Class A-3
August 25, 2037
Class initial principal
balance
13
TIER
CORRESPONDING REMIC V
REMIC IV CLASS
INTEREST
INITIAL TIER PRINCIPAL
INTEREST/ CORRESPONDING
LATEST POSSIBLE
DESIGNATION
RATE
AMOUNT
CLASS
MATURITY DATE
--------------
--------
------------------------
-----------------------
---------------
Class IV-A-4
(1)
1/2 of the Corresponding
Class A-4
August 25, 2037
Class initial principal
balance
Class IV-M-1
(1)
1/2 of the Corresponding
Class M-1
August 25, 2037
Class initial principal
balance
Class IV-M-2
(1)
1/2 of the Corresponding
Class M-2
August 25, 2037
Class initial principal
balance
Class IV-M-3
(1)
1/2 of the Corresponding
Class M-3
August 25, 2037
Class initial principal
balance
Class IV-M-4
(1)
1/2 of the Corresponding
Class M-4
August 25, 2037
Class initial principal
balance
Class IV-M-5
(1)
1/2 of the Corresponding
Class M-5
August 25, 2037
Class initial principal
balance
Class IV-M-6
(1)
1/2 of the Corresponding
Class M-6
August 25, 2037
Class initial principal
balance
Class IV-B-1
(1)
1/2 of the Corresponding
Class B-1
August 25, 2037
Class initial principal
balance
Class IV-B-2
(1)
1/2 of the Corresponding
Class B-2
August 25, 2037
Class initial principal
balance
Class IV-B-3
(1)
1/2 of the Corresponding
Class B-3
August 25, 2037
Class initial principal
14
TIER
CORRESPONDING REMIC V
REMIC IV CLASS
INTEREST
INITIAL TIER PRINCIPAL
INTEREST/ CORRESPONDING
LATEST POSSIBLE
DESIGNATION
RATE
AMOUNT
CLASS
MATURITY DATE
--------------
--------
------------------------
-----------------------
---------------
balance
Class IV-B-4
(1)
1/2 of the Corresponding
Class B-4
August 25, 2037
Class initial principal
balance
Class IV-
(1)
(2)
N/A
August 25, 2037
Accrual
Class IV-N
(3)
(4)
Class X-2
August 25, 2006
Class IV-I1
(5)
(5)
Class I-1
March 25, 2007
Class IV-I2
(6)
(6)
Class I-2
March 25, 2008
Class IV-I3
(7)
(7)
Class I-3
March 25, 2009
Class IV-I4
(8)
(8)
Class I-4
March 25, 2010
Class IV-I5
(9)
(9)
Class I-5
March 25, 2011
Class R-IV
(10)
(10)
Class R
(1)
The interest rate with respect to any Distribution Date for these
REMIC IV
Regular Interests is the REMIC IV Net WAC.
(2)
The Class IV-Accrual Interest will have an initial principal
balance equal
to the product of (a) 50% and (b) the sum of (i) the Pool Stated
Principal
Balance (ii) the Subordinated Amount and (ii) the Initial
Pre-Funded
Amount.
(3)
The Class IV-N Interest is entitled to all distributions of
interest on the
Class III-N Interest.
(4)
The Class IV-N Interest will have a notional principal balance
equal to the
notional principal balance of the Class III-N Interest.
(5)
The Class IV-I1 Interest will be an interest-only regular interest
and will
be entitled to receive, on each Distribution Date, the amount
distributable
on the Class III-C1c through Class III-C7c Interests on such
Distribution
Date.
(6)
The Class IV-I2 Interest will be an interest-only regular interest
and will
be entitled to receive, on each Distribution Date, the sum of the
amounts
distributable on the Class III-C8c through Class III-C19c Interests
on such
Distribution Date.
(7)
The Class IV-I3 Interest will be an interest-only regular interest
and will
be entitled to receive, on each Distribution Date, the sum of the
amounts
distributable on the Class III-C20c through Class III-C31c
Interests on
such Distribution Date.
15
(8)
The Class IV-I4 Interest will be an interest-only regular interest
and will
be entitled to receive, on each Distribution Date, the sum of the
amounts
distributable on the Class III-C32c through Class III-C43c
Interests on
such Distribution Date.
(9)
The Class IV-I5 Interest will be an interest-only regular interest
and will
be entitled to receive, on each Distribution Date, the sum of the
amounts
distributable on the Class III-C44c through Class III-C53c
Interests on
such Distribution Date.
(10) The Class R-IV Interest is the sole class of residual interest
in REMIC IV.
The Class R-IV Interest does not have a principal amount or an
interest
rate.
On each Distribution Date, 50% of the increase in the Subordinated
Amount will be payable as a reduction of the principal balances of
the REMIC IV
Accretion Directed Classes and will be accrued and added to the
principal
balance of the Class IV-Accrual Interest. To this end, each REMIC
IV Accretion
Directed 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
principal balance
of its Corresponding Class. On each Distribution Date, the increase
in the
principal balance of the Class IV-Accrual Interest may not exceed
interest
accruals for such Distribution Date for the Class IV-Accrual
Interest. If, with
respect to any Distribution Date, 50% of the increase in the
Subordinated Amount
exceeds accrued interest on the Class IV-Accrual Interest, the
excess
(accumulated with all such excess for all prior Distribution Dates)
will be
added to any increase in the Subordinated Amount for purposes of
calculating
accrued interest on the Class IV-Accrual Interest payable as
principal on the
REMIC IV Accretion Directed Classes on the next Distribution Date.
On each Distribution Date, all principal payments (scheduled and
prepaid)
on the Mortgage Loans and any amounts transferred from the
Pre-Funding Account
to REMIC I shall be allocated as follows: 50% to the Class
IV-Accrual Interest
and 50% to the REMIC IV Accretion Directed Classes, until such
interests are
paid in full. To this end, principal payments shall be allocated
among such
REMIC IV Accretion Directed Classes in an amount equal to 50% of
the principal
amounts allocated to their respective Corresponding Classes.
Notwithstanding the
foregoing, principal payments allocated to the Class X Certificates
that result
in the reduction in the Subordinated Amount shall be allocated to
the Class
IV-Accrual Interest until paid in full. On each Distribution Date,
Realized
Losses shall be applied so that after all distributions have been
made on each
Distribution Date (i) the principal balance of each REMIC IV
Accretion Directed
Class is equal to 50% of the principal balance of its Corresponding
Class, and
(ii) the principal balance of the Class IV-Accrual Interest is
equal to 50% of
the sum of (1) the Pool Stated Principal Balance, (2) the
Subordinated Amount
and (3) the Pre-Funding Amount.
The REMIC V Regular Interests and the Class R-V Interest shall have
the following tier interest rate, initial tier principal amount,
corresponding
classes, and latest possible maturity date as set forth in the
table below.
16
REMIC V CLASS
TIER
INITIAL TIER PRINCIPAL
LATEST POSSIBLE MATURITY
DESIGNATION
INTEREST RATE
AMOUNT
CORRESPONDING CLASS
DATE
-------------
-------------
----------------------
-------------------
------------------------
Class A-1
(1)
$401,770,000
Class A-1(8)
August 25, 2037
Class A-2
(1)
$124,280,000
Class A-2(8)
August 25, 2037
Class A-3
(1)
$168,720,000
Class A-3(8)
August 25, 2037
Class A-4
(1)
$108,225,000
Class A-4(8)
August 25, 2037
Class M-1
(1)
$ 34,500,000
Class M-1(8)
August 25, 2037
Class M-2
(1)
$ 32,000,000
Class M-2(8)
August 25, 2037
Class M-3
(1)
$ 18,500,000
Class M-3(8)
August 25, 2037
Class M-4
(1)
$ 16,500,000
Class M-4(8)
August 25, 2037
Class M-5
(1)
$ 16,000,000
Class M-5(8)
August 25, 2037
Class M-6
(1)
$ 15,000,000
Class M-6(8)
August 25, 2037
Class B-1
(1)
$ 14,000,000
Class B-1(8)
August 25, 2037
Class B-2
(1)
$ 11,500,000
Class B-2(8)
August 25, 2037
Class B-3
(1)
$ 10,000,000
Class B-3(8)
August 25, 2037
Class B-4
(1)
$ 10,000,000
Class B-4(8)
August 25, 2037
Class X-1(7)
(2)
(2)
Class X(9)
August 25, 2037
Class X-2(7)
(3)
(4)
Class X(9)
August 25, 2006
Class V-I1
(5)
(5)
Class I-1
December 25, 2006
Class V-I2
(5)
(5)
Class I-2
December 25, 2007
Class V-I3
(5)
(5)
Class I-3
December 25, 2008
Class V-I4
(5)
(5)
Class I-4
December 25, 2009
Class V-I5
(5)
(5)
Class I-5
October 25, 2010
Class R-V
(6)
(6)
Class R
(1)
These Certificates will bear interest during each Interest Accrual
Period
at a per annum variable rate equal to the least of (a) one-month
LIBOR plus
the applicable Pass-Through Margin or (c) the REMIC Adjusted WAC
Cap.
(2)
The Class X-1 Interest has an initial principal balance of
$19,005,000 but
it will not accrue interest on such balance but will accrue
interest on a
notional principal balance. As of any Distribution Date, the Class
X-1
Interest shall have a notional principal balance equal to the sum
of (i)
the Pool Stated Principal Balance and (ii) any amount remaining in
the
Pre-Funding Account as of the first day of the related Interest
Accrual
Period. With respect to any Interest Accrual Period, the Class X-1
Interest
shall bear interest at a rate
17
equal to the excess, if any, of the REMIC Adjusted WAC Cap over the
product
of (i) 2 and (ii) the weighted average interest rates of the REMIC
IV
Accretion Direction Classes and the Class IV-Accrual Interest,
where each
REMIC IV Accretion Directed Class is subject to a cap equal to the
interest
rate on its Corresponding REMIC V Interest and the Class IV-Accrual
Interest is subject to a cap of zero. With respect to any
Distribution
Date, interest that so accrues on the notional principal balance of
the
Class X-1 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.
(3)
The Class X-2 Interest is entitled to all distributions of interest
on the
Class IV-N Interest.
(4)
The Class X-2 Interest will have a notional principal balance equal
to the
notional principal balance of the Class IV-N Interest.
(5)
These REMIC V Regular Interests will be interest-only regular
interests and
will be entitled to receive on each Distribution Date all
distribution on
its corresponding REMIC IV Regular Interest for such Distribution
Date.
(6)
The Class R-V Interest is the sole class of residual interest in
REMIC V.
The Class R-V Interest does not have a principal amount or an
interest
rate.
(7)
The Class X Certificates will represent two REMIC V Regular
Interests, the
Class X-1 and Class X-2 Interests.
(8)
Each of these Certificates will represent not only the ownership of
the
Corresponding Class of REMIC V Regular Interest but also the right
to
receive payments from the Excess Reserve Fund Account and Swap
Account in
respect of any Basis Risk Carry Forward Amounts. For federal income
tax
purposes, the Trustee will treat a Certificateholder's right to
receive of
Basis Risk Carry Forward Amounts as payments made pursuant to a
notional
principal contract written by the Class X Certificateholders. Each
of these
Certificates will also represent the obligation to make certain
payments on
such notional principal contract to the extent that the interest
accrued on
its Corresponding REMIC V Regular Interest is in excess of the
related
Accrued Certificate Interest.
(9)
The Class X Certificates also represent the right to receive
payments from
the Interest Rate Swap Agreement, the Pre-Funding Reserve Account
and
certain payments from Holders of the LIBOR Certificates as
described in
footnote 8 and the obligation to fund certain Basis Risk Carry
Forward
Amounts.
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.
Delay Certificates.............
None.
18
ERISA-Restricted Certificates..
Class R Certificates, Class P Certificate and
Class X Certificate; any certificate with a
rating below the lowest applicable permitted
rating under the Underwriters' Exemption.
LIBOR Certificates.............
Class A-1, Class A-2, Class A-3, Class A-4 and
Subordinated Certificates.
Non-Delay Certificates.........
Class A-1, Class A-2, Class A-3, Class A-4,
Class X and Subordinated Certificates.
Offered Certificates...........
All Classes of Certificates other than the
Private Certificates.
Physical Certificates..........
Class P, Class X and Class R Certificates.
Private Certificates...........
Class P, Class X and Class R Certificates.
Rating Agencies................
Moody's, Fitch and Standard & Poor's.
Regular Certificates...........
All Classes of Certificates other than the
Class P and Class R Certificates.
Residual Certificates..........
Class R Certificates.
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,
Class B-3 and Class B-4 Certificates.
19
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following
meanings:
10-K Filing Deadline: As defined in Section 8.12(c).
60+ Day Delinquent Loan: Each Mortgage Loan with respect to which
any
portion of a Scheduled Payment is, as of the last day of the prior
Due Period,
two months or more past due (without giving effect to any grace
period), each
Mortgage Loan in foreclosure, all REO Property and each Mortgage
Loan for which
the Mortgagor has filed for bankruptcy.
Accepted Servicing Practices: With respect to each Servicer and any
Mortgage Loan, those mortgage servicing practices set forth in
Section 3.01.
Account: Any of the Capitalized Interest Account, the Collection
Accounts, the Distribution Account, any Escrow Account, the Excess
Reserve Fund
Account, the Swap Account, the Pre-Funding Account or the
Pre-Funding Reserve
Account. Each Account shall be an Eligible Account.
Accredited: Accredited Home Lenders, Inc., a California
corporation,
and its successors in interest.
Accredited Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Accredited, and each other Assignment and Recognition
Agreement,
by and among the Unaffiliated Seller, the Depositor and Accredited
in connection
with any Subsequent Transfer of Accredited Mortgage Loans.
Accredited Mortgage Loan: A Mortgage Loan which was acquired from
Accredited by the Unaffiliated Seller pursuant to the Accredited
Purchase
Agreement, and which has been acquired by the Trust Fund.
Accredited Purchase Agreement: The Mortgage Loan Purchase and
Warranties Agreement, dated as of May 1, 2005, as amended to date,
by and
between the Unaffiliated Seller and Accredited.
Accrued Certificate Interest: With respect to any Distribution Date
for each Class of Certificates (other than the Class P, Class R and
Class X
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
Shortfalls for such Distribution Date allocated to such Class
pursuant to
Section 4.02.
Additional Form 10-K Disclosure: As defined in Section 8.12(c).
20
Addition Notice: A written notice from the Unaffiliated Seller to
the
Trustee, the Rating Agencies, the Securities Administrator that the
Unaffiliated
Seller desires to make a Subsequent Transfer.
Adjustable Rate Mortgage Loan: A Mortgage Loan bearing interest at
an
adjustable rate.
Adjusted Mortgage Rate: As to each Mortgage Loan and at any time,
the
per annum rate equal to the Mortgage Rate less the Servicing Fee
Rate.
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.
Advances: Collectively, the P&I Advances and Servicing
Advances.
Advance Facility: As defined in Section 3.27.
Advance Facility Trustee: As defined in Section 3.27.
Advance Reimbursement Amount: As defined in Section 3.27.
Advancing Person: As defined in Section 3.27.
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.
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 Securities Administrator by the
Depositor.
Applied Realized Loss Amount: With respect to any Distribution
Date,
the
21
amount, if any, by which the aggregate Class Certificate Balance of
the LIBOR
Certificates after distributions of principal on such Distribution
Date exceeds
the aggregate Stated Principal Balance of the Mortgage Loans for
such
Distribution Date.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the
value of the
Mortgaged Property.
Assignment and Recognition Agreement: The Accredited Assignment
Agreement, the Chapel Mortgage Assignment Agreement, the Encore
Assignment
Agreement, the First Bank Assignment Agreement, the First Horizon
Assignment
Agreement, the First NLC Assignment Agreement, the FlexPoint
Assignment
Agreement, the Fremont Assignment Agreement, the Funding America
Assignment
Agreement, the Lenders Direct Assignment Agreement, the Lime
Financial
Assignment Agreement, the Mandalay Assignment Agreement, the Master
Financial
Assignment Agreement, the NC Capital Assignment Agreement, the
Platinum
Assignment Agreement, the Town & Country Assignment Agreement
or the Rose
Assignment Agreement, as applicable.
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 Securities
Administrator (x) the
sum of (i) the aggregate amount of Scheduled Payments on the
Mortgage Loans due
on the related Due Date (net of the related Expense Fees) and
received by the
Servicers on or prior to the related Determination Date, together
with any P&I
Advance in respect thereof, (ii) certain unscheduled payments in
respect of the
Mortgage Loans received by the Servicers during the related
Prepayment Period
and remitted to the Master Servicer, including all partial or full
prepayments,
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds
(excluding
Prepayment Charges), (iii) Compensating Interest payments from the
Servicers to
the Master Servicer in respect of Prepayment Interest Shortfalls
for that
Distribution Date, (iv) for any Distribution Date on or prior to
August 25,
2006, any funds required to be paid from the Capitalized Interest
Account to
make up for any interest shortfalls on the Initial Mortgage Loans,
(v)
immediately following the end of the Pre-Funding Period, all
amounts, if any, on
deposit in the Pre-Funding Account, (vi) the proceeds from
repurchases of
Mortgage Loans, and any Substitution Adjustment Amounts received in
connection
with respect to the substitutions of Mortgage Loans that occur
during the month
in which such Distribution Date occurs at the Repurchase Price and
(vii) all
proceeds received with respect to the termination of the Trust Fund
pursuant to
Section 11.01 hereof, reduced by (y) amounts in reimbursement for
Advances
previously made with respect to the Mortgage Loans and other
amounts, in each
case, as to which the Master Servicer, the Securities
Administrator, the
Servicers, the Depositor, the Backup Servicer, the Custodian or the
Trustee are
entitled to be paid or reimbursed pursuant to the Agreement and any
costs
associated with a transfer of servicing to the extent not paid by
the
predecessor servicer.
Average Net Proceeds: As defined in Exhibit M hereto.
22
Backup Servicer: JPMorgan Chase Bank, National Association, a
banking
association organized under the laws of the United States, and its
successors in
interest, and if a successor backup servicer is appointed
hereunder, such
successor backup servicer.
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 aggregate Principal Remittance Amount
for such
Distribution Date over (ii) the Excess Subordinated Amount, if any,
for such
Distribution Date.
Basis Risk Carry Forward Amount: With respect to each Class of
LIBOR
Certificates, as of any Distribution Date, the sum of (A) if on
such
Distribution Date the Pass-Through Rate for any Class of LIBOR
Certificates is
based upon the WAC Cap, the excess of (i) the amount of interest
such Class of
Certificates would otherwise be entitled to receive on such
Distribution Date
had such rate been calculated as the sum of LIBOR and the
applicable
Pass-Through Margin on such Class of Certificates for such
Distribution Date,
over (ii) the amount of interest payable on such Class of
Certificates
calculated at the WAC Cap for such Distribution Date and (B) the
Basis Risk
Carry Forward 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. For federal income tax
purposes,
with respect to each Class of LIBOR Certificates, as of any
Distribution Date,
the sum of (A) if on such Distribution Date, the interest rate for
any
Corresponding REMIC V Regular Interest is based upon the REMIC
Adjusted WAC Cap,
the excess of (i) the amount of interest such Class of Certificates
would
otherwise be entitled to receive on such Distribution Date had such
rate been
calculated as the sum of LIBOR and the applicable Pass-Through
Margin on such
Class of Certificates for such Distribution Date, over (ii) the
amount of
interest payable on such REMIC V Regular Interest calculated at the
REMIC
Adjusted WAC Cap for such Distribution Date and (B) the Basis Risk
Carry Forward
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, a payment in an
amount
equal to any Basis Risk Carry Forward Amount; provided, however,
that with
respect to any Distribution Date, the payment cannot exceed the
amounts
otherwise available for distribution on the Class X Certificates.
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.
23
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
California, New York, Utah, New Jersey and Florida, (b) the
applicable states in
which the Servicers' servicing operations are located, (c) the
State in which
the Securities Administrator's or Master Servicer's operations are
located or
(d) the State in which the Custodian's operations are located, are
authorized or
obligated by law or executive order to be closed.
Capitalized Interest Account: The separate Eligible Account created
and maintained by the Securities Administrator pursuant to Section
3.07(e) in
the name of the Securities Administrator for the benefit of the
LIBOR
Certificateholders and designated "JPMorgan Chase Bank, National
Association, in
trust for registered holders of IXIS Real Estate Capital Trust
2006-HE2,
Mortgage Pass-Through Certificates, Series 2006-HE2".
Capitalized Interest Requirement: With respect to the Distribution
Dates occurring in June 2006, July 2006 and August 2006, the
excess, if any, of
(x) the Accrued Certificate Interests for all classes of the LIBOR
Certificates
for such Distribution Date over (y) all scheduled installments of
interest (net
of the related Expense Fees) due on the Mortgage Loans in the
related Due
Period. In no event will the Capitalized Interest Requirement be
less than zero.
Certificate: Any one of the Certificates executed by the Securities
Administrator in substantially the forms attached hereto as
exhibits.
Certificate Balance: With respect to any Class of Certificates,
other
than the Class X and 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 4.07; provided, however,
that
immediately following the Distribution Date on which a Subsequent
Recovery is
distributed, the Class Certificate Balances of any Class or Classes
of
Certificates that have been previously reduced by Applied Realized
Loss Amounts
will be increased, in order of seniority, by the amount of the
Subsequent
Recovery distributed on such Distribution Date (up to the amount of
Unpaid
Realized Loss Amounts for such Class or Classes for such
Distribution Date);
provided, that the Certificate Balance of any Class of Certificates
that had
previously been reduced to zero shall not be increased as a result
of any
Subsequent Recoveries. The Class X 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
24
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 the purposes of
any provision
hereof that requires the consent of the Holders of Certificates of
a particular
Class as a condition to the taking of any action hereunder. The
Securities
Administrator is entitled to rely conclusively on a certification
of the
Depositor or any Affiliate of the Depositor in determining which
Certificates
are registered in the name of an Affiliate of the Depositor.
Chapel Mortgage: Chapel Mortgage Corporation, a New Jersey
corporation, and its successors in interest.
Chapel Mortgage Assignment Agreement: The Assignment and
Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Chapel Mortgage, and each other Assignment and
Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and
Chapel
Mortgage in connection with any Subsequent Transfer of Chapel
Mortgage Loans.
Chapel Mortgage Loan: A Mortgage Loan which was acquired from
Chapel
Mortgage by the Unaffiliated Seller pursuant to the Chapel Mortgage
Purchase
Agreement, and which has been acquired by the Trust Fund.
Chapel Mortgage Purchase Agreement: The Amended and Restated
Mortgage
Loan Purchase and Warranties Agreement, dated as of November 1,
2005, as amended
to date, by and between the Unaffiliated Seller and Chapel
Mortgage.
Class: All Certificates bearing the same class designation as set
forth in the Preliminary Statement.
Class A Certificates: The Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates.
Class A Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to the excess of (x) the
aggregate Class
Certificate Balances of the Class A Certificates immediately prior
to such
Distribution Date over (y) the lesser of (A) 60.60% of the Current
Maximum
Amount and (B) the excess, if any, of the Current Maximum Amount
over
$5,000,000.
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."
25
Class A-4 Certificates: All Certificates bearing the class
designation
of "Class A-4."
Class B Certificates: The Class B-1, Class B-2, Class B-3 and Class
B-4 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, an amount equal to 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 on
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 on 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 on 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 on 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 on 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 on 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 on 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) 89.90% of the Current Maximum Amount and (B) the
excess, if any,
of the Current Maximum Amount over $5,000,000.
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, an amount equal to 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 on
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 on 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 on 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 on 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 on 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 on 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
26
Distribution Amount on 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 on 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) 92.20%
of the Current Maximum Amount and (B) the excess, if any, of the
Current Maximum
Amount over $5,000,000.
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, an amount equal to 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 on
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 on 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 on 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 on 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 on 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 on 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 on 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 on 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 on 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) 94.20%
of the Current Maximum Amount and (B) the excess, if any, of the
Current Maximum
Amount over $5,000,000.
Class B-4 Certificates: All Certificates bearing the class
designation
of "Class B-4".
Class B-4 Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to 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 on
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 on 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 on 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 on such Distribution Date), (E) the Class Certificate
Balance of the
Class
27
M-4 Certificates (after taking into account the distribution of the
Class M-4
Principal Distribution Amount on 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 on 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 on 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 on 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 on such
Distribution
Date), (J) the Class Certificate Balance of the Class B-3
Certificates (after
taking into account the distribution of the Class B-3 Principal
Distribution
Amount on such Distribution Date), and (K) the Class Certificate
Balance of the
Class B-4 Certificates immediately prior to such Distribution Date
over (ii) the
lesser of (A) 96.20% of the Current Maximum Amount and (B) the
excess, if any,
of the Current Maximum Amount over $5,000,000.
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 I Interests: As described in the Preliminary Statement.
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 Certificates: All Certificates bearing the class
designation
of "Class M-1".
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 Balance of the Class M-2, Class M-3, Class M-4, Class
M-5, Class
M-6, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates and
(ii) the
Subordinated Amount (in each case after taking into account the
allocation of
the Principal Distribution Amount and any principal payments on
those classes of
certificates from the Swap Account for such Distribution Date) by
(y) the
Current Maximum Amount for that Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to 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 on
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) 67.50% of the Current Maximum Amount and (B) the excess, if
any, of the
Current Maximum Amount over $5,000,000.
Class M-2 Certificates: All Certificates bearing the class
designation
of "Class M-2."
28
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to 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 on
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 on 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) 73.90% of the Current
Maximum
Amount and (B) the excess, if any, of the Current Maximum Amount
over
$5,000,000.
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, an amount equal to 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 on
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 on 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 on 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) 77.60%
of the Current Maximum Amount and (B) the excess, if any, of the
Current Maximum
Amount over $5,000,000.
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, an amount equal to 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 on
such Distribution Date), (B) the Class Certificate Balances of the
Class M-1
Certificates (after taking into account the distribution of the
Class M-1
Principal Distribution Amount on such Distribution Date), (C) the
Class
Certificate Balances of the Class M-2 Certificates (after taking
into account
the distribution of the Class M-2 Principal Distribution Amount on
such
Distribution Date), (D) the Class Certificate Balances of the Class
M-3
Certificates (after taking into account the distribution of the
Class M-3
Principal Distribution Amount on such Distribution Date) and (E)
the Class
Certificate Balances of the Class M-4 Certificates immediately
prior to such
Distribution Date over (ii) the lesser of (A) 80.90% of the Current
Maximum
Amount and (B) the excess, if any, of the Current Maximum Amount
over
$5,000,000.
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, an amount equal to the excess of (i) the sum of
(A) aggregate
Class Certificate Balances of the
29
Class A Certificates (after taking into account the distribution of
the Class A
Principal Distribution Amount on such Distribution Date), (B) the
Certificate
Principal Balance of the Class M-1 Certificates (after taking into
account the
distribution of the Class M-1 Principal Distribution Amount on such
Distribution
Date), (C) the Certificate Principal Balance of the Class M-2
Certificates
(after taking into account the distribution of the Class M-2
Principal
Distribution Amount on such Distribution Date), (D) the Certificate
Principal
Balance of the Class M-3 Certificates (after taking into account
the
distribution of the Class M-3 Principal Distribution Amount on such
Distribution
Date), (E) the Certificate Principal Balance of the Class M-4
Certificates
(after taking into account the distribution of the Class M-4
Principal
Distribution Amount on such Distribution Date) and (F) the
Certificate Principal
Balance of the Class M-5 Certificates immediately prior to such
Distribution
Date over (i) the lesser of (A) 84.10% of the Current Maximum
Amount and (B) the
excess, if any, of the Current Maximum Amount over $5,000,000.
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, an amount equal to 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 on
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 on 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 on 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 on 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 on 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 on 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) 87.10%
of the Current Maximum Amount and (B) the excess, if any, of the
Current Maximum
Amount over $5,000,000.
Class P Certificates: All Certificates bearing the class
designation
of "Class P".
Class R Certificates: All Certificates bearing the class
designation
of "Class R".
Class 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 Regular Interests 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
30
balance of the Class X Regular Interest which is distributable as a
Subordination Reduction Amount, less (iii) any amounts paid as a
Basis Risk
Payment.
Class X Regular Interest: The REMIC V Regular Interests represented
by
the Class X Certificates as specified and described in the
Preliminary Statement
and the related footnote thereto.
Closing Date: May 25, 2006.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Accounts: As defined in Section 3.10(a).
Commission: The United States Securities and Exchange Commission.
Compensating Interest: For any Distribution Date, the lesser of (a)
the amount by which the Prepayment Interest Shortfall, if any, for
such
Distribution Date exceeds all Prepayment Interest Excesses for such
Distribution
Date, with respect to voluntary Principal Prepayments in Full
(excluding any
payments made upon liquidation of the Mortgage Loan) and (b) the
Servicing Fees
payable to the Servicers for such Distribution Date.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or
entire, by
exercise of the power of eminent domain or condemnation.
Corporate Trust Office: The designated office 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 IX0602, facsimile no.
(714)247-6470
and which is the address to which notices to and correspondence
with the Trustee
should be directed.
Corresponding Class: As described in the Preliminary Statement.
Corresponding Distribution Date:
Corresponding Distribution
REMIC III Regular Interest
Date is the Distribution Date occurring in:
--------------------------
-------------------------------------------
Class III-C1a-c
June 2006
Class III-C2a-c
July 2006
Class III-C3a-c
August 2006
31
Class III-C4a-c
September 2006
Class III-C5a-c
October 2006
Class III-C6a-c
November 2006
Class III-C7a-c
December 2006
Class III-C8a-c
January 2007
Class III-C9a-c
February 2007
Class III-C10a-c
March 2007
Class III-C11a-c
April 2007
Class III-C12a-c
May 2007
Class III-C13a-c
June 2007
Class III-C14a-c
July 2007
Class III-C15a-c
August 2007
Class III-C16a-c
September 2007
Class III-C17a-c
October 2007
Class III-C18a-c
November 2007
Class III-C19a-c
December 2007
Class III-C20a-c
January 2008
Class III-C21a-c
February 2008
Class III-C22a-c
March 2008
Class III-C23a-c
April 2008
Class III-C24a-c
May 2008
Class III-C25a-c
June 2008
Class III-C26a-c
July 2008
Class III-C27a-c
August 2008
32
Class III-C28a-c
September 2008
Class III-C29a-c
October 2008
Class III-C30a-c
November 2008
Class III-C31a-c
December 2008
Class III-C32a-c
January 2009
Class III-C33a-c
February 2009
Class III-C34a-c
March 2009
Class III-C35a-c
April 2009
Class III-C36a-c
May 2009
Class III-C37a-c
June 2009
Class III-C38a-c
July 2009
Class III-C39a-c
August 2009
Class III-C40a-c
September 2009
Class III-C41a-c
October 2009
Class III-C42a-c
November 2009
Class III-C43a-c
December 2009
Class III-C44a-c
January 2010
Class III-C45a-c
February 2010
Class III-C46a-c
March 2010
Class III-C47a-c
April 2010
Class III-C48a-c
May 2010
Class III-C49a-c
June 2010
Class III-C50a-c
July 2010
Class III-C51a-c
August 2010
33
Class III-C52a-c
September 2010
Class III-C53a-c
October 2010
Corresponding REMIC V Interest: As described in the Preliminary
Statement.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard and Poor's Glossary.
Cumulative Loss Percentage: With respect to any Distribution Date,
the
percentage equivalent of a fraction, the numerator of which is the
aggregate
amount of Realized Losses incurred from the Cut-off Date to the
last day of the
calendar month preceding the month in which the Distribution Date
occurs less
any amounts received with respect to Realized Losses on the related
Mortgage
Loans subsequent to the Final Recovery Determination being made
with respect to
such Mortgage Loans 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 the aggregate amount of Realized Losses incurred
since the
related Cut-off Date through the last day of the related Prepayment
Period
divided by the Maximum Pool Principal Balance exceeds the
applicable cumulative
loss percentage as follows with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN
CUMULATIVE LOSS PERCENTAGE
------------------------------
-----------------------------------------------
June 2008 through May 2009
1.350% for the first month, plus an additional
1/12th of 1.750% for each month thereafter
(e.g., 2.225% in December 2008)
June 2009 through May 2010
3.100% for the first month, plus an additional
1/12th of 1.750% for each month thereafter
(e.g., 3.975% in December 2009)
June 2010 through May 2011
4.850% for the first month, plus an additional
1/12th of 1.400% for each month thereafter
(e.g., 5.550% in December 2010)
June 2011 through May 2012
6.250% for the first month, plus an additional
1/12th of 0.750% for each month thereafter
(e.g., 6.625% in December 2011)
June 2012 and thereafter
7.000%
Current Maximum Amount: With respect to any date of determination,
the
sum of (i) the aggregate of the Stated Principal Balances of the
Mortgage Loans
held by the Trust at such time, and (ii) with respect to each date
of
determination prior to the Distribution Date on or prior to August
25, 2006, the
Pre-Funding Amount immediately prior to such Distribution Date, net
of
investment earnings on deposit therein.
34
Custodian: Deutsche Bank National Trust Company, a national banking
association, and its successors in interest.
Custodial Fee: With respect to any Distribution Date, an amount
equal
to the product of (a) one-twelfth of the Custodial Fee Rate and (b)
the sum of
(i) the Stated Principal Balance of the Mortgage Loans as of the
prior
Distribution Date (or as of the Cut-off Date in the case of the
first
Distribution Date) and (ii) the Pre-Funding Amount.
Custodial Fee Rate: With respect to any Mortgage Loan, a per annum
rate equal to 0.0015%.
Custodial File: With respect to each Mortgage Loan, the file
retained
by the Custodian consisting of items (i) - (viii) of Section
2.01(b).
Cut-off Date: With respect to the Initial Mortgage Loans, May 1,
2006,
and with respect to each Subsequent Mortgage Loan, the related
Subsequent
Cut-off Date.
Cut-off Date Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the Cut-off Date (after giving
effect to
payments of principal due on that date, whether or not received).
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the
Cut-off Date.
Data File Layouts and Definitions: As defined in Section 3.01.
Data Mapping Matrix: As defined in Section 3.01.
Data Tape Information: The information provided by the Unaffiliated
Seller as of May 1, 2006 to the Depositor 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 Mortgage Loan, 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 and term of
Prepayment
Charges applicable to such Mortgage Loan, if any; and (21) with
respect to each
Adjustable Rate Mortgage Loan, the Periodic Mortgage Rate Cap.
35
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 termination payment
required
to be made by the Trust to the Swap Provider pursuant to the
Interest Rate Swap
Agreement as a result of: either (i) an event of default under the
Interest Rate
Swap Agreement with respect to which the Swap Provider is the
defaulting party
or (ii) a termination event under that agreement (other than
illegality, a tax
event or a tax event upon merger of the Swap Provider) with respect
to which the
Swap Provider is the sole affected party.
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: A Mortgage Loan that is repurchased by the
Unaffiliated Seller or the related Originator, as applicable, or
replaced with a
Substitute Mortgage Loan in accordance with the terms hereof and
the related
Mortgage Loan Purchase Agreement.
Delinquency Trigger Event: With respect to a Distribution Date
after
the Stepdown Date, the event that is in effect if the quotient
(expressed as a
percentage) of (x) the three-month rolling daily average of the
aggregate Stated
Principal Balance of 60+ Day Delinquent Loans as of the last day of
the related
Due Period, over (y) the Current Maximum Amount of the Mortgage
Loans as of the
last day of the related Due Period exceeds (a) 39.70% of the prior
period's
Senior Enhancement Percentage while any Class A Certificates remain
outstanding,
or (b) 49.23% of the prior period's Class M-1 Enhancement
Percentage if the
Class A Certificates are no longer outstanding.
Delinquent: A mortgage loan is "Delinquent" if any Scheduled
Payment
due on a due date is not made by the close of business on the next
scheduled due
date for that mortgage loan (including all Mortgage Loans in
foreclosure,
Mortgage Loans in respect of REO Properties and Mortgage Loans for
which the
related Mortgagor has declared bankruptcy). A mortgage loan is "30
days
Delinquent" if the Scheduled Payment has not been received by the
close of
36
business on the corresponding day of the month immediately
succeeding the month
in which that Scheduled Payment was due or, if there was no
corresponding date
(e.g., as when a 30-day month follows a 31-day month in which the
payment was
due on the 31st day of that month), then on the last day of that
immediately
preceding month; and similarly for "60 days Delinquent" and "90
days
Delinquent," etc.
Delivery Date: With respect to the Initial Mortgage Loans, the
Closing
Date; with respect to any Subsequent Mortgage Loans, the related
Subsequent
Transfer Date therefor.
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 Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to each Remittance Date, the 15th
of
each month, or if the 15th is not a Business Day, the immediately
preceding
Business Day.
Distribution Account: The separate Eligible Account created and
maintained by the Securities Administrator pursuant to Section
3.07(d) in the
name of the Securities Administrator for the benefit of the
Certificateholders
and designated "JPMorgan Chase Bank, National Association, in trust
for
registered holders of IXIS Real Estate Capital Trust 2006-HE2,
Mortgage
Pass-Through Certificates, Series 2006-HE2". Funds in the
Distribution Account
shall be held in trust for the Certificateholders for the uses and
purposes set
forth in this Agreement.
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 June
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 each 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.
37
Eligible Account: Any of (i) an account or accounts maintained with
a
federal or state chartered depository institution or trust company
the
commercial paper, short-term debt obligations, demand deposits or
other
short-term deposits of which are rated in one of the two highest
rating
categories by each of the Rating Agencies at the time any amounts
are held on
deposit therein, (ii) an account or accounts the deposits in which
are fully
insured by the FDIC (to the limits established by such
corporation), the
uninsured deposits in which account are otherwise secured such
that, as
evidenced by an Opinion of Counsel delivered to each Rating Agency,
the
Certificateholders will have a claim with respect to the funds in
such account
or a perfected first priority security interest against such
collateral (which
shall be limited to Permitted Investments) securing such funds that
is superior
to claims of any other depositors or creditors of the depository
institution
with which such account is maintained, (iii) a trust account or
accounts
maintained with the trust department of a federal or state
chartered depository
institution, national banking association or trust company acting
in its
fiduciary capacity, (iv) an account otherwise acceptable to each
Rating Agency
or (v) an account maintained with a "qualified depository" (as such
term is
defined in the related Servicing Agreement). Eligible Accounts may
bear
interest.
Eligible Institution: A federal or state chartered depository
institution or trust company, which (x) with respect to any
Eligible Account,
the amounts on deposit in which will be held for less than 30 days,
the
commercial paper, short-term debt obligations, or other short-term
deposits of
which are rated at least "F1" by Fitch, "P-1" by Moody's, and
either "A-1+" or
"A-1", if the amounts on deposit represent less than 20% of the
initial par
value of the securities, are not intended to be used as credit
enhancement and
are to be held for less than 30 days, by Standard & Poor's (or
a comparable
rating if another Rating Agency is specified by the Depositor by
written notice
to the Servicers and the Securities Administrator) or (y) with
respect to any
Eligible Account, the amounts on deposit in which will be held for
no more than
365 days, the long-term unsecured debt obligations of which are
rated at least
"A" by Fitch, "A" by Standard & Poor's and "A2" by Moody's (or
a comparable
rating if another Rating Agency is specified by the Depositor by
written notice
to the Servicers and the Securities Administrator).
Encore: Encore Credit Corp., a California corporation, and its
successors in interest.
Encore Assignment Agreement: The Assignment and Recognition
Agreement,
dated as of May 25, 2006, by and among the Unaffiliated Seller, the
Depositor
and Encore, and each other Assignment and Recognition Agreement by
and among the
Unaffiliated Seller, the Depositor and Encore in connection with
any Subsequent
Transfer of Encore Mortgage Loans.
Encore Mortgage Loan: A Mortgage Loan which was acquired from
Encore
by the Unaffiliated Seller pursuant to the Encore Purchase
Agreement, and which
has been acquired by the Trust Fund.
Encore Purchase Agreement: The Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of December 1, 2005, as
amended to
date, by and between the Unaffiliated Seller and Encore.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
38
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b).
Event of Default: As defined in Section 7.01.
Excess Reserve Fund Account: The separate Eligible Account created
and
maintained by the Securities Administrator pursuant to Sections
3.07(b) and
3.07(c) in the name of the Securities Administrator, on behalf of
the
Supplemental Interest Trust, for the benefit of the Holders of the
Regular
Certificates and designated "JPMorgan Chase Bank, National
Association, in trust
for registered holders of IXIS Real Estate Capital Trust 2006-HE2,
Mortgage
Pass-Through Certificates, Series 2006-HE2". Funds in the Excess
Reserve Fund
Account shall be held in trust for the Holders of the Regular
Certificates 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 Custodial Fee Rate and the
Securities
Administrator, Backup Servicer and Master Servicer Fee Rate.
Expense Fees: As to each Mortgage Loan, the sum of the Servicing
Fees,
the Custodial Fee and the Securities Administrator, Backup Servicer
and Master
Servicer Fee.
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 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.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under
Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor
thereto.
39
Final Certification: A certification submitted by the Custodian in
substantially the form of Exhibit G hereto.
Final Recovery Determination: With respect to any defaulted
Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO
Property purchased
by an Originator as contemplated by the Assignment and Recognition
Agreements),
a determination made by the applicable Servicer that all Insurance
Proceeds,
Condemnation Proceeds, Liquidation Proceeds and other payments or
recoveries
which such Servicer, in its reasonable good faith judgment, expects
to be
finally recoverable in respect thereof have been so recovered. The
applicable
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
each of the
following months:
FINAL SCHEDULED
DISTRIBUTION DATE
-----------------
Class A-1 Certificates...............
August 2036
Class A-2 Certificates...............
August 2036
Class A-3 Certificates...............
August 2036
Class A-4 Certificates...............
August 2036
Class M-1 Certificates...............
August 2036
Class M-2 Certificates...............
August 2036
Class M-3 Certificates...............
August 2036
Class M-4 Certificates...............
August 2036
Class M-5 Certificates...............
August 2036
Class M-6 Certificates...............
August 2036
Class B-1 Certificates...............
August 2036
Class B-2 Certificates...............
August 2036
Class B-3 Certificates...............
August 2036
Class B-4 Certificates...............
August 2036
Class X Certificates.................
August 2036
Class P Certificates.................
August 2036
Class R Certificates.................
August 2036
First Bank: First Bank Mortgage, a Missouri corporation, and its
successors in interest.
First Bank Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and First Bank, and each other Assignment and Recognition
Agreement by
and among the Unaffiliated Seller, the Depositor and First Bank in
connection
with any Subsequent Transfer of First Bank Mortgage Loans.
40
First Bank Mortgage Loan: A Mortgage Loan which was acquired from
First Bank by the Unaffiliated Seller pursuant to the First Bank
Purchase
Agreement, and which has been acquired by the Trust Fund.
First Bank Purchase Agreement: The First Amended and Restated
Mortgage
Loan Purchase and Warranties Agreement, dated as of January 1,
2006, as amended
to date, by and between the Unaffiliated Seller and First Bank.
First Horizon: First Horizon Home Loan Corp., a Kansas corporation.
First Horizon Capital Assignment Agreement: The Assignment and
Recognition Agreement, dated as of May 25, 2006, by and among the
Unaffiliated
Seller, the Depositor and First Horizon, and each other Assignment
and
Recognition Agreement by and among the Unaffiliated Seller, the
Depositor and
First Horizon in connection with any Subsequent Transfer of First
Horizon
Mortgage Loans.
First Horizon Mortgage Loan: A Mortgage Loan which was acquired
from
First Horizon by the Unaffiliated Seller pursuant to the First
Horizon Purchase
Agreement, and which has been acquired by the Trust Fund.
First Horizon Purchase Agreement: The Amended and Restated Mortgage
Loan Purchase and Warranties Agreement, dated as of December 1,
2005, as amended
to date, by and between the Unaffiliated Seller and First Horizon.
First Lien Mortgage Loan: A Mortgage Loan secured by a first lien
Mortgage on the related Mortgaged Property.
First NLC: First NLC Financial Services., a Florida limited
liability
company.
First NLC Capital Assignment Agreement: The Assignment and
Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and First NLC, and each other Assignment and Recognition
Agreement by
and among the Unaffiliated Seller, the Depositor and First NLC in
connection
with any Subsequent Transfer of First Bank Mortgage Loans.
First NLC Mortgage Loan: A Mortgage Loan which was acquired from
First
NLC by the Unaffiliated Seller pursuant to the First NLC Purchase
Agreement, and
which has been acquired by the Trust Fund.
First NLC Purchase Agreement: The Second Mortgage Loan Purchase and
Warranties Agreement, dated as of December 1, 2005, as amended to
date, by and
between the Unaffiliated Seller and First NLC.
Fitch: Fitch, Inc., and its successors in interest. If Fitch is
designated as a Rating Agency in the Preliminary Statement, for
purposes of
Section 10.06 the address for notices to Fitch shall be Fitch,
Inc., One State
Street Plaza, New York, New York 10004, Attention: Residential
Mortgage
Surveillance Group - IXIS Real Estate Capital Trust 2006-HE2, or
such
41
other address as Fitch may hereafter furnish to the Depositor, the
Securities
Administrator, the Trustee and the Servicers.
Fixed Rate Mortgage Loan: A Mortgage Loan bearing interest at a
fixed
rate.
FlexPoint: FlexPoint Funding Corp., a California corporation.
FlexPoint Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and FlexPoint, and each other Assignment and Recognition
Agreement by
and among the Unaffiliated Seller, the Depositor and FlexPoint in
connection
with any Subsequent Transfer of FlexPoint Mortgage Loans.
FlexPoint Mortgage Loan: A Mortgage Loan which was acquired from
FlexPoint by the Unaffiliated Seller pursuant to the FlexPoint
Purchase
Agreement, and which has been acquired by the Trust Fund.
FlexPoint Purchase Agreement: The Amended and Restated Mortgage
Loan
Purchase and Warranties Agreement, dated as of December 1, 2005, as
amended to
date, by and between the Unaffiliated Seller and FlexPoint.
Floor Amount: An amount equal to the product of (x) 0.50% and (y)
the
Maximum Pool Principal Balance.
Fremont: Fremont Investment & Loan, a California State
chartered
industrial bank.
Fremont Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Fremont, and each other Assignment and Recognition
Agreement by
and among the Unaffiliated Seller, the Depositor and Fremont in
connection with
any Subsequent Transfer of Fremont Mortgage Loans.
Fremont Mortgage Loan: A Mortgage Loan which was acquired from
Fremont
by the Unaffiliated Seller pursuant to the Fremont Purchase
Agreement, and which
has been acquired by the Trust Fund.
Fremont Purchase Agreement: The Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of December 1, 2005, as
amended to
date, by and between the Unaffiliated Seller and Fremont.
Form 8-K Disclosure Information: As defined in Section 8.12.
Funding America: Funding America Warehouse Trust, a Delaware
statutory
trust and a wholly owned subsidiary of Funding America, LLC.
Funding America Assignment Agreement: The Assignment and
Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Funding America, and each other Assignment and
Recognition
Agreement by and among the
42
Unaffiliated Seller, the Depositor and Funding America in
connection with any
Subsequent Transfer of Funding America Mortgage Loans.
Funding America Mortgage Loan: A Mortgage Loan which was acquired
from
Funding America by the Unaffiliated Seller pursuant to the Funding
America
Purchase Agreement, and which has been acquired by the Trust Fund.
Funding America Purchase Agreement: The Flow Mortgage Loan Purchase
and Warranties Agreement, dated as of May 1, 2006, by and between
the
Unaffiliated Seller and Funding America.
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.
High Cost Loan: A Mortgage Loan classified as (a) a "high cost"
loan
under the Home Ownership and Equity Protection Act of 1994, (b) a
"high cost
home," "threshold," "covered," (excluding New Jersey "Covered Home
Loans" as
that term is defined in clause (1) of the definition of that term
in the New
Jersey Home Ownership Security Act of 2002), "high risk home,"
"predatory" or
similar loan under any other applicable state, federal or local law
(or a
similarly classified loan using different terminology under a law
imposing
heightened regulatory scrutiny or additional legal liability for
residential
mortgage loans having high interest rates, points and/or fees) or
(c) a Mortgage
Loan categorized as High Cost pursuant to Appendix E of Standard
& Poor's
Glossary.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
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.
Initial Cut-off Date: May 1, 2006.
Initial Mortgage Loans: The Mortgage Loans delivered by the
Depositor
on the Startup Date.
Initial Pre-Funded Amount: $174,850,973.21.
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 any Distribution Date, the
period beginning with the preceding 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) and
43
ending on the day immediately preceding the current Distribution
Date (on an
actual/360 day count basis).
Interest Rate Swap Agreement: The Interest Rate Swap Agreement
dated
as of May 25, 2006, between the Supplemental Interest Trust and
IXIS Financial
Products Inc.
Interest Remittance Amount: With respect to any Distribution Date,
the
sum of (a) the sum, without duplication, of the following amounts
received by
the Master Servicer from the Servicers on the related Remittance
Date:
(i) all installments of interest due on the Mortgage Loans during
the
related Prepayment Period and received or advanced by each Servicer
on or prior
to the related Remittance Date;
(ii) Compensating Interest paid by each Servicer on such Remittance
Date;
(iii) the interest component of all Substitution Adjustment Amounts
and Repurchase Prices received by each Servicer during the related
Prepayment
Period;
(iv) the interest component of all Condemnation Proceeds, Insurance
Proceeds and Liquidation Proceeds received by each Servicer during
the related
Prepayment Period (in each case, net (but not to be reduced below
zero) of
unreimbursed expenses incurred in connection with a liquidation or
foreclosure
and unreimbursed Advances, if any); and
(v) the interest component of the proceeds of any termination of
the
Trust Fund;
reduced by the Securities Administrator, Backup Servicer and Master
Servicer Fee and the Servicing Fees for the related Prepayment
Period for the
related Distribution Date, together with amounts in reimbursement
for Advances
previously made with respect to the Mortgage Loans and other
amounts as to which
each Servicer, or the Trustee, Securities Administrator, Backup
Servicer, Master
Servicer and Custodian is entitled to be reimbursed pursuant to the
Agreement;
and
(b) the Capitalized Interest Requirement, if any, deposited into
the
Distribution Account on such Distribution Date.
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: Prohibited Transaction Class Exemption
84-14, Prohibited Transaction Class Exemption 90-1, Prohibited
Transaction Class
Exemption 91-38, PTCE 95-60 or Prohibited Transaction Class
Exemption 96-23, as
each may be amended from time to time, or any similar prohibited
transaction
class exemption granted by the U.S. Department of Labor or, with
respect to any
governmental plan (as defined in Section 3(32) of
44
ERISA), granted pursuant to any federal, state or local law
materially similar
to Title I of ERISA or Section 4975 of the Code.
Late Collections: With respect to any Mortgage Loan and any Due
Period, all amounts received subsequent to 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.
Lenders Direct: Lenders Direct Capital Corp., a California
corporation, and its successors in interest.
Lenders Direct Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Lenders Direct, and each other Assignment and
Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and
Lenders Direct
in connection with any Subsequent Transfer of Lenders Mortgage
Loans.
Lenders Direct Mortgage Loan: A Mortgage Loan which was acquired
from
Lenders Direct by the Unaffiliated Seller pursuant to the Lenders
Direct
Purchase Agreement, and which has been acquired by the Trust Fund.
Lenders Direct Purchase Agreement: The Second Amended and Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of
December 1, 2005,
as amended to date, by and between the Unaffiliated Seller and
Lenders Direct.
LIBOR: With respect to any Interest Accrual Period for the LIBOR
Certificates, the rate determined by the Securities Administrator
on the related
LIBOR Determination Date on the basis of the offered rate for
one-month U.S.
dollar deposits as such rate appears on Telerate Page 3750 as of
11:00 a.m.
(London time) on such date; provided that if such rate does not
appear on
Telerate Page 3750, the rate for such date will be determined on
the basis of
the rates at which one-month U.S. dollar deposits are offered by
the Reference
Banks at approximately 11:00 a.m. (London time) on such date to
prime banks in
the London interbank market. In such event, the Securities
Administrator shall
request that the principal London office of each of the Reference
Banks to
provide a quotation of its rate. If at least two such quotations
are provided,
the rate for that date will be the arithmetic mean of the
quotations (rounded
upwards if necessary to the nearest whole multiple of 1/16%). If
fewer than two
quotations are provided as requested, the rate for that date will
be the
arithmetic mean of the rates quoted by major banks in New York
City, selected by
the Securities Administrator, after consultation with the
Depositor, at
approximately 11:00 a.m. (New York City time) on such date for
one-month U.S.
dollar loans to leading European banks.
LIBOR Certificates: As specified in the Preliminary Statement.
LIBOR Determination Date: With respect to any Interest Accrual
Period
(other than the initial Interest Accrual Period) for the LIBOR
Certificates, the
second London Business Day preceding the commencement of such
Interest Accrual
Period.
45
Lime Financial: Lime Financial Services, Ltd., an Oregon
corporation,
and its successors in interest.
Lime Financial Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Lime Financial, and each other Assignment and
Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and
Lime Financial
in connection with any Subsequent Transfer of Lime Financial
Mortgage Loans.
Lime Financial Mortgage Loan: A Mortgage Loan which was acquired
from
Lime Financial by the Unaffiliated Seller pursuant to the Lime
Financial
Purchase Agreement, and which has been acquired by the Trust Fund.
Lime Financial Purchase Agreement: The Amended and Restated
Mortgage
Loan Purchase and Warranties Agreement, dated as of December 1,
2005, as amended
to date, by and between the Unaffiliated Seller and Lime Financial.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was
liquidated in the
calendar month preceding the month of such Distribution Date and as
to which the
applicable Servicer has certified to the Securities Administrator
and the Master
Servicer that it has received all amounts it expects to receive in
connection
with the liquidation of such Mortgage Loan including the final
disposition of an
REO Property.
Liquidation Event: With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a
Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is
removed from coverage under this Agreement by reason of its being
purchased,
sold or replaced pursuant to or as contemplated by this Agreement.
With respect
to any REO Property, either of the following events: (i) a Final
Recovery
Determination is made as to such REO Property; or (ii) such REO
Property is
removed from coverage under this Agreement by reason of its being
purchased
pursuant to this Agreement.
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 Mortgage Loan, the
ratio (expressed as a percentage) of the original outstanding
principal amount
of the 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 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.
Mandalay: Mandalay Mortgage, LLC, a Delaware limited liability
company, and its successors in interest.
46
Mandalay Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Mandalay, and each other Assignment and Recognition
Agreement by
and among the Unaffiliated Seller, the Depositor and Mandalay in
connection with
any Subsequent Transfer of Mandalay Mortgage Loans.
Mandalay Mortgage Loan: A Mortgage Loan which was acquired from
Mandalay by the Unaffiliated Seller pursuant to the Mandalay
Purchase Agreement,
and which has been acquired by the Trust Fund.
Mandalay Purchase Agreement: The Mortgage Loan Purchase and
Warranties
Agreement, dated as of May 1, 2006, as amended to date, by and
between the
Unaffiliated Seller and Mandalay.
Master Financial: Master Financial, Inc., a California corporation,
and its successors in interest.
Master Financial Assignment Agreement: The Assignment and
Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Master Financial, and each other Assignment and
Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and
Master
Financial in connection with any Subsequent Transfer of Master
Financial
Mortgage Loans.
Master Financial Mortgage Loan: A Mortgage Loan which was acquired
from Master Financial by the Unaffiliated Seller pursuant to the
Master
Financial Purchase Agreement, and which has been acquired by the
Trust Fund.
Master Financial Purchase Agreement: The Amended and Restated
Mortgage
Loan Purchase and Warranties Agreement, dated as of November 1,
2005, as amended
to date, by and between the Unaffiliated Seller and Master
Financial.
Master Servicer: JPMorgan Chase Bank, National Association, a
banking
association organized under the laws of the United States, and its
successors in
interest and, if a successor master servicer is appointed
hereunder, such
successor master servicer.
Master Servicer Events of Default: As defined in Section 9.04.
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.
Maximum Pool Principal Balance: The aggregate Stated Principal
Balances of all Initial Mortgage Loans as of the Initial Cut-off
Date plus the
Initial Pre-Funded Amount.
MERS: Mortgage Electronic Registration System, Inc.
47
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 the 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
and other parties as specified in and pursuant to Section 4.03(a).
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 10.06 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.
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. As applicable,
"Mortgage Loan"
shall be deemed to refer to REO Property.
Mortgage Loan Purchase Agreement: The Accredited Purchase
Agreement,
the Chapel Mortgage Purchase Agreement, the Encore Purchase
Agreement, the First
Bank Purchase Agreement, the First Horizon Purchase Agreement, the
First NLC
Purchase Agreement, the FlexPoint Purchase Agreement, the Fremont
Purchase
Agreement, the Funding America Purchase Agreement, the Lenders
Direct Purchase
Agreement, the Lime Financial Purchase Agreement, the Mandalay
Purchase
Agreement, the Master Financial Purchase Agreement, the
48
NC Capital Purchase Agreement, the Platinum Purchase Agreement, the
Town &
Country Purchase Agreement or the Rose Purchase Agreement, as
applicable.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto
as
Schedule I, such schedule setting forth the following information
with respect
to each Mortgage Loan: (1) the Originator's Mortgage Loan number;
(2) the city,
state and zip code of the Mortgaged Property; (3) a code indicating
whether the
Mortgaged Property is a single family residence, two-family
residence,
three-family residence, four-family residence, PUD or condominium;
(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) the Loan-to-Value Ratio; (12) the
next Interest
Rate Adjustment Date; (13) with respect to each Adjustable Rate
Mortgage Loan,
the lifetime mortgage interest rate cap; (14) whether the Mortgage
Loan is
convertible or not; (15) a code indicating the mortgage guaranty
insurance
company; (16) the Servicing Fee; (17) the identity of the related
Originator of
such Mortgage Loan; (18) the Mortgagor's name; (19) the
"paid-through" date
(based on payments received from the related Mortgagor) as of the
Cut-off Date;
(20) the Servicing Transfer Date; (21) whether such Mortgage Loan
has been 30
days Delinquent since the applicable Servicing Transfer Date; and
(22) whether
such Mortgage Loan provides for a Prepayment Charge as well as the
term and
amount of such Prepayment Charge, if any.
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 with respect to
Adjustable Rate
Mortgage Loans.
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.
NC Capital: NC Capital Corporation, a California corporation.
NC Capital Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and NC Capital, and each other Assignment and Recognition
Agreement by
and among the Unaffiliated Seller, the Depositor and NC Capital in
connection
with any Subsequent Transfer of NC Capital Mortgage Loans.
49
NC Capital Mortgage Loan: A Mortgage Loan which was acquired from
NC
Capital by the Unaffiliated Seller pursuant to the NC Capital
Purchase
Agreement, and which has been acquired by the Trust Fund.
NC Capital Purchase Agreement: The Amended and Restated Mortgage
Loan
Purchase and Warranties Agreement, dated as of December 1, 2005, as
amended to
date, by and between the Unaffiliated Seller and NC Capital.
Net Monthly Excess Cash Flow: For any Distribution Date the amount
remaining for distribution pursuant to subsection 4.02(a)(iii)
(before giving
effect to distributions pursuant to such subsection).
Net Prepayment Interest Shortfall: For any Distribution Date, the
amount by which the sum of the Prepayment Interest Shortfalls for
such
Distribution Date exceeds the sum of (i) the Compensating Interest
payments made
with respect to such Distribution Date and (ii) all Prepayment
Interest Excesses
for such Distribution Date.
Net Swap Payment: For any Distribution Date, each payment required
to
be made to the Swap Provider pursuant to the Interest Rate Swap
Agreement.
Net Swap Receipt: For any Distribution Date, the net payment that
the
Swap Provider will owe the Supplemental Interest Trust pursuant to
the Interest
Rate Swap Agreement.
NIM Issuer: Any entity established as the issuer of a series of NIM
Securities.
NIM Indenture: The Indenture, dated as of May 25, 2006, between
IXIS
Real Estate Capital Inc. NIM Trust 2006-HE2N, as co-issuer, and
JPMorgan Chase
Bank, National Association, as indenture trustee.
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 Standard &
Poor's.
NIM Trustee: The trustee for any series of 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 or the
Master Servicer
or any successor Master 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, Liquidation Proceeds or
otherwise on
such Mortgage Loan or REO Property as provided herein.
Nonrecoverable Servicing Advance: Any Servicing Advances previously
made or proposed to be made in respect of a Mortgage Loan or REO
Property,
which, in the good faith business judgment of the applicable
Servicer, or the
Master Servicer or any successor Master
50
Servicer, will not or, in the case of a proposed Servicing Advance,
would not,
be ultimately recoverable from related late payments, Insurance
Proceeds,
Condemnation Proceeds, Liquidation Proceeds or otherwise on such
Mortgage Loan
or REO Property. The determination by the applicable Servicer or
the Master
Servicer or any successor Master Servicer that it has made a
Nonrecoverable
Servicing Advance or that any proposed Servicing Advances, if made,
would
constitute a Nonrecoverable Servicing Advance, shall be evidenced
by an
Officers' Certificate delivered to the Securities Administrator and
the Master
Servicer.
Notice of Final Distribution: The notice to be provided pursuant to
Section 11.02 to the effect that final distribution on any of the
Certificates
shall be made only upon presentation and surrender thereof.
Offered Certificates: As specified in the Preliminary Statement.
Officer's Certificate: A certificate signed by an officer of each
Servicer or Subservicer 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 Securities Administrator pursuant to this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
in-house
counsel for a Servicer or the Subservicer, reasonably acceptable to
the Trustee
and the Securities Administrator; provided that any Opinion of
Counsel relating
to (a) qualification of the Mortgage Loans in a REMIC or (b)
compliance with the
REMIC Provisions, must be (unless otherwise stated in such Opinion
of Counsel)
an opinion of counsel who (i) is in fact independent of the related
Servicer of
the Mortgage Loans, (ii) does not have any material direct or
indirect financial
interest in the related Servicer of the Mortgage Loans or in an
Affiliate of
either and (iii) is not connected with the related Servicer of the
Mortgage
Loans as an officer, employee, director or person performing
similar functions.
Optional Termination Date: means:
(i) For so long as the Class X Certificates are 100% owned, either
directly or indirectly, by the Unaffiliated Seller or any Affiliate
thereof,
then one or more of the Servicers may cause the Optional
Termination Date to
occur on any Distribution Date when the aggregate Stated Principal
Balance of
the Mortgage Loans is 10.00% or less of the Maximum Pool Principal
Balance; and
(ii) If the Class X Certificates are not 100% owned, either
directly
or indirectly, by the Unaffiliated Seller or any Affiliate thereof,
then the
Holders of a majority in Class Certificate Balance of the Class X
Certificates
may cause the Optional Termination Date to occur on any
Distribution Date when
the aggregate Stated Principal Balance of the Mortgage Loans is
10.00% or less
of the Maximum Pool Principal Balance, and, if such Class X
Certificateholders
do not do so, then the Servicers shall also have such right;
provided, however,
that the Unaffiliated Seller or any of its affiliates, may only
participate in
the exercise of the clean-up call by the majority owners of the
Class X
Certificates if the Unaffiliated Seller or any of its affiliates,
is not the
majority owner of the Class X Certificates, either directly or
indirectly.
51
Originator: The party that originated or acquired a Mortgage Loan
and,
more specifically, (i) with respect to any Accredited Mortgage
Loan, Accredited,
(ii) with respect to any Chapel Mortgage Loan, Chapel, (iii) with
respect to any
Encore Mortgage Loan, Encore, (iv) with respect to any First Bank
Mortgage Loan,
First Bank, (v) with respect to any First Horizon Mortgage Loan,
First Horizon,
(vi) with respect to any First NLC Mortgage Loan, First NLC, (vii)
with respect
to any FlexPoint Mortgage Loan, FlexPoint, (viii) with respect to
any Fremont
Investment & Loan, Fremont, (ix) with respect to any Funding
America Mortgage
Loan, Funding America, (x) with respect to any Lenders Direct
Mortgage Loan,
Lenders Direct, (xi) with respect to any Lime Financial Mortgage
Loan, Lime
Financial, (xii) with respect to Mandalay Mortgage, LLC, Mandalay,
(xiii) with
respect to any Master Financial Mortgage Loan, Master Financial,
(xiv) with
respect to any NC Capital Mortgage Loan, NC Capital, (xv) with
respect to any
Platinum Mortgage Loan, Platinum, (xvi) with respect to any Rose
Mortgage Loan,
Rose, and (xvii) with respect to Town & Country Credit
Corporation, Town &
Country.
OTS: Office of Thrift Supervision, and any successor thereto.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Securities
Administrator
or delivered to the Securities Administrator for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Securities
Administrator
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a
Stated Principal Balance greater than zero which was not the
subject of a
Principal Prepayment in Full prior to such Due Date and which did
not become a
Liquidated Mortgage Loan prior to such Due Date.
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 (including the Backup Servicer as
successor Servicer
or any other successor Servicer) or the Master Servicer (including
the Trustee
as successor Master Servicer and any other successor Master
Servicer, as
applicable) in respect of any Remittance Date with respect to any
Mortgage Loan
representing the aggregate of all payments of principal and/or
interest on such
Mortgage Loan, net of the related Servicing Fee, that were due
during the
related Due Period on the Mortgage Loan, and that were delinquent
or unpaid 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.
Pass-Through Margin: With respect to each Class of Regular
Certificates, on or prior to the Optional Termination Date the
following
percentages: Class A-1, 0.0600%; Class A-2, 0.1200%; Class A-3,
0.1600%; Class
A-4, 0.2600%; Class M-1, 0.2900%; Class M-2,
52
0.3200%; Class M-3, 0.3300%; Class M-4, 0.4000%; Class M-5,
0.4400%; Class M-6,
0.5100%; Class B-1, 1.0000%; Class B-2, 1.1000%; Class B-3,
1.9500%; and Class
B-4, 2.4000%. On the first Distribution Date after the Optional
Termination
Date, the Pass-Through Margins shall increase to the following
percentages:
Class A-1, 0.1200%; Class A-2, 0.2400%; Class A-3, 0.3200%; Class
A-4, 0.5200%;
Class M-1, 0.4350%; Class M-2, 0.4800%; Class M-3, 0.4950%; Class
M-4, 0.6000%;
Class M-5, 0.6600%; Class M-6, 0.7650%; Class B-1, 1.5000%; Class
B-2, 1.6500%;
Class B-3, 2.9250%; and Class B-4, 3.6000%.
Pass-Through Rate: For any Distribution Date, the "Pass-Through
Rate"
for each class of LIBOR Certificates will be a per annum rate equal
to the
lesser of (1) One-Month LIBOR plus the related Pass-Through Margin
for such
classes and that Distribution Date and (2) the WAC Cap.
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 the Servicers, 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 Eligible Institution;
(iii) repurchase obligations with respect to any security described
in
clause (i) above entered into with an Eligible 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
53
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) any demand, money market fund, common trust fund or time
deposit
or obligation, or interest-bearing or other security or investment,
(A)
rated in the highest rating category by each Rating Agency (if
rated by
such Rating Agency) or (B) that would not adversely affect the then
current
rating by either Rating Agency of any of the Certificates. Such
investments
in this subsection (vi) may include money market mutual funds or
common
trust funds, including, without limitation, the J.P. Morgan Prime
Money
Market Fund or any other fund for which JPMorgan Chase Bank,
National
Association, the Trustee or an affiliate thereof serves as an
investment
advisor, administrator, shareholder servicing agent, and/or
custodian or
subcustodian, notwithstanding that (i) JPMorgan Chase Bank,
National
Association, or an affiliate thereof charges and collects fees and
expenses
from such funds for services rendered, (ii) JPMorgan Chase Bank,
National
Association, or an affiliate thereof charges and collects fees and
expenses
for services rendered pursuant to this Agreement, and (iii)
services
performed for such funds and pursuant to this Agreement may
converge at any
time. The Trustee specifically authorizes JPMorgan Chase Bank,
National
Association, or an affiliate thereof to charge and collect from the
Trust
Fund such fees as are collected from all investors in such funds
for
services rendered to such funds (but not to exceed investment
earnings
thereon); and
(vii) if previously confirmed in writing to the Securities
Administrator, any other demand, money market or time deposit, or
any other
obligation, security or investment, as may be acceptable to 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, (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 REMIC created hereunder to
fail to
qualify as a REMIC at any time that the Certificates are
outstanding. The terms
"United States," "State" and
54
"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 the Federal Home Loan Mortgage Corporation, a
majority of its
board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, 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.
Plan: As defined in Section 5.02(b).
Platinum: Platinum Capital Group, a California corporation.
Platinum Assignment Agreement: The Assignment and Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Platinum, and each other Assignment and Recognition
Agreement by
and among the Unaffiliated Seller, the Depositor and Platinum in
connection with
any Subsequent Transfer of Platinum Mortgage Loans.
Platinum Mortgage Loan: A Mortgage Loan which was acquired from
Platinum by the Unaffiliated Seller pursuant to the Platinum
Purchase Agreement,
and which has been acquired by the Trust Fund.
Platinum Purchase Agreement: The Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of December 1, 2005, as
amended to
date, by and between the Unaffiliated Seller and Platinum.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans
for such
Distribution Date which were Outstanding Mortgage Loans as of the
last day of
the related Due Period.
Pre-Funding Account: The separate Eligible Account created and
maintained by the Securities Administrator pursuant to Section
3.07(f) in the
name of Securities Administrator for the benefit of the
Certificateholders, and
designated in trust for registered holders of IXIS Real Estate
Capital Trust
2006-HE2, Mortgage Pass Through Certificates, Series 2006-HE2, the
funds of
which, during the Pre-Funding Period, shall be applied solely to
the purchase of
Subsequent Mortgage Loans.
Pre-Funding Amount: With respect to any date, the amount on deposit
in
the Pre-Funding Account, which amount the Securities Administrator
shall
evidence to the Custodian upon request.
Pre-Funding Earnings: The actual investment earnings realized on
amounts deposited in the Pre-Funding Account.
55
Pre-Funding Period: The period commencing on the Startup Date and
ending on the earliest to occur of (i) the date on which the amount
on deposit
in the Pre-Funding Account (exclusive of any investment earnings)
is less than
$100,000, (ii) the date on which any Event of Default occurs and
(iii) August
24, 2006.
Pre-Funding Reserve Account: The separate Eligible Account created
and
maintained by the Securities Administrator pursuant to Section
3.07(j) in the
name of the Securities Administrator, for the benefit of the Class
X
Certificateholders and designated "JPMorgan Chase Bank, National
Association, in
trust for holders of IXIS Real Estate Capital Trust 2006-HE2,
Mortgage
Pass-Through Certificates, Series 2006-HE2, Class X".
Prepayment Charge: Any prepayment premium, penalty or charge
collected
by a 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 a Servicer with respect to any Mortgage Loan
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 Remittance Date,
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 in Full, that was applied by a
Servicer to
reduce the outstanding principal balance of such Mortgage Loan on a
date
preceding the Due Date in the succeeding Prepayment Period, an
amount equal to
interest at the applicable Adjusted Net Mortgage Rate on the amount
of such
Principal Prepayment for the number of days commencing on the date
on which the
prepayment is applied and ending on the last day of the calendar
month preceding
such Distribution date.
Prepayment Period: With respect to any Distribution Date, the
period
from and including the 16th day of the month preceding the month in
which such
Distribution Date occurs (or, in the case of the first Distribution
Date, from
and including the Cut-off Date) to and including the 15th day of
the month in
which such Distribution Date occurs.
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 in advance of its scheduled Due Date, excluding
any Prepayment
Charge thereon and which is not accompanied by an amount of
interest
representing scheduled interest due on any date or dates in any
month or months
subsequent to the month of prepayment.
56
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, of: (i) each Scheduled Payment
of principal
on a Mortgage Loan during the related Due Period and received by
the Servicers
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) the principal component
of all
Condemnation Proceeds, Insurance Proceeds and Liquidation Proceeds
during the
related Due Period (in each case, net of remaining (i.e., not
deducted from the
Interest Remittance Amount) 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 during the
related Prepayment
Period; (iv) the principal component of all Substitution Adjustment
Amounts
allocable to principal and Repurchase Prices received by the
Servicers with
respect to such Distribution Date; and (v) the proceeds of any
termination of
the Trust Fund pursuant to Section 11.01 (to the extent such
proceeds relate to
principal); reduced by remaining amounts (i.e., not deducted from
the Interest
Remittance Amount) in reimbursement for Advances previously made
with respect to
the Mortgage Loans and other amounts as to which any Servicer is
entitled to be
reimbursed pursuant to this Agreement.
Private Certificates: As specified in the Preliminary Statement.
Prospectus Supplement: The Prospectus Supplement, dated May 22,
2006,
relating to the Offered Certificates.
PTCE 95-60: As defined in Section 5.02(b).
PUD: Planned Unit Development.
Qualified Insurer: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal
place of business
and each state having jurisdiction over such insurer in connection
with the
insurance policy issued by such insurer, duly authorized and
licensed in such
states to transact a mortgage guaranty insurance business in such
states and to
write the insurance provided by the insurance policy issued by it,
approved as a
FNMA- or FHLMC-approved mortgage insurer or having a claims paying
ability
rating of at least "AA" or equivalent rating by a nationally
recognized
statistical rating organization. Any replacement insurer with
respect to a
Mortgage Loan must have at least as high a claims paying ability
rating as the
insurer it replaces had on the Closing Date.
Rating Agency: Each of Standard & Poor's, Fitch and Moody's. If
such
organization or a successor is no longer in existence, "Rating
Agency" shall be
such nationally recognized statistical rating organization, or
other comparable
Person, as is designated by the Depositor, notice of which
designation shall be
given to the Trustee and the Securities Administrator. References
herein to a
given rating or rating category of a Rating Agency shall mean such
rating
category without giving effect to any modifiers. For purposes of
Section 10.06,
the addresses for notices to each Rating Agency shall be the
address specified
therefor in the
57
definition corresponding to the name of such Rating Agency, or such
other
address as such Rating Agency may hereafter furnish to the
Depositor, the
Trustee, the Securities Administrator, and the Servicers.
Realized Loss: With respect to each Liquidated Mortgage Loan the
excess (not less than zero or more than the Stated Principal
Balance of the
Mortgage Loan) of the unpaid principal balance of a Liquidated
Mortgage Loan
together with accrued and unpaid interest thereon over the
Liquidation Proceeds,
net of customary out-of-pocket expenses incurred by the applicable
Servicer in
connection with the liquidation of such Liquidated Mortgage Loan
and net of the
amount of any 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
immediately 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. Sections 229.1100-229.1123, as such may be amended
from time to
time, and subject to such clarification and interpretation as have
been provided
by the Commission in the adopting release (Asset-Backed Securities,
Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005))
or by the
staff of the Commission, or as may be provided by the Commission or
its staff
from time to time.
Relief Act Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest or principal
collectible
on such Mortgage Loan for the most recently ended Due Period as a
result of the
application of the Servicemembers Civil Relief Act and similar
state laws.
Remainder Amount: As defined in Section 11.01.
REMIC: A "real estate mortgage investment conduit" within the
meaning
of section 860D of the Code.
REMIC Adjusted WAC Cap: The weighted average of the interest rates
on
the REMIC IV Accretion Directed Classes and the Class IV-Accrual
Interest.
REMIC Provisions: Provisions of the federal income tax law relating
to
REMICs, 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.
58
REMIC Trust: The segregated pool of assets consisting of the Trust
Fund, exclusive of Prepayment Charges, the Supplemental Interest
Trust, the
Excess Reserve Fund Account, the Pre-Funding Account, the Swap
Account, the
Pre-Funding Reserve Account, the Capitalized Interest Account and
the Interest
Rate Swap Agreement.
REMIC I: As described in the Preliminary Statement.
REMIC I Regular Interest: As described in the Preliminary
Statement.
REMIC II: As described in the Preliminary Statement.
REMIC II Regular Interest: As described in the Preliminary
Statement.
REMIC III: As described in the Preliminary Statement.
REMIC III Net WAC: The weighted average of the interest rates on
the
Class II C1 through Class II C53 Interests and the Class II J1
Interests.
REMIC III Regular Interest: As described in the Preliminary
Statement.
REMIC IV: As described in the Preliminary Statement.
REMIC IV Accretion Directed Class: As described in the Preliminary
Statement.
REMIC IV Net WAC: The weighted average of the interest rates on the
Class III-C1a through Class III-C52a, Class III-C1b through Class
III-C52b
Interests and the Class III-J1 Interests.
REMIC IV Regular Interest: As described in the Preliminary
Statement.
REMIC V: As described in the Preliminary Statement.
REMIC V Regular Interest: As described in the Preliminary
Statement.
Remittance Date: With respect to any Distribution Date, 21st day
(or
if such day is a Saturday, then it shall be the first business day
immediately
preceding that day, or if such day is a Sunday or otherwise not a
Business Day,
then it shall be the immediately following Business Day) of the
month of the
related 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).
59
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.
Reportable Event: As defined in Section 8.12(g).
Representative: Morgan Stanley & Co. Incorporated, as
representative
on behalf of itself, Bank of America Securities LLC, Countrywide
Securities
Corporation and IXIS Securities LLC.
Repurchase Price: With respect to any Mortgage Loan, an amount
equal
to the sum (without duplication) of (i) the unpaid principal
balance of such
Mortgage Loan as of the date of repurchase and (ii) (x) if such
Mortgage Loan is
being repurchased by the Unaffiliated Seller, the sum of (A)
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 last day of the month in which such repurchase occurs, (B) all
unreimbursed
P&I Advances and Servicing Advances, (C) all unpaid Servicing
Fees, (D) all
expenses reasonably incurred by the Servicers, the Trustee, the
Custodian, the
Securities Administrator, the Master Servicer, the Backup Servicer
or the
Unaffiliated Seller, as the case may be, in respect of a breach or
defect,
including, without limitation, expenses arising out of any such
party's
enforcement of the Originator's repurchase obligation, to the
extent not
included in (B), and (E) all costs and expenses incurred by, or on
behalf of,
the Trust Fund in connection with any violation by such Mortgage
Loan of a
predatory or abusive-lending law or (y) if such Mortgage Loan is
being
repurchased by the related Originator, all other amounts payable by
such
Originator in accordance with the terms of the related Mortgage
Loan Purchase
Agreement.
Request for Release: The Request for Release submitted by a
Servicer
to the Trustee, the Securities Administrator and Custodian,
substantially in the
form of Exhibit K.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, the
Master
Servicer or the Securities Administrator, as applicable, any vice
president, any
assistant vice president, any assistant secretary, any assistant
treasurer or
any other officer of the Trustee, the Master Servicer or the
Securities
Administrator, as applicable, 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, in each case, shall have direct responsibility for
the
administration of this Agreement.
Rose: Rose Mortgage, Inc., a New Jersey corporation, and its
successors in interest.
Rose Assignment Agreement: The Assignment and Recognition
Agreement,
dated as of May 25, 2006, by and among the Unaffiliated Seller, the
Depositor
and Rose, and each other Assignment and Recognition Agreement by
and among the
Unaffiliated Seller, the Depositor and Rose in connection with any
Subsequent
Transfer of Rose Mortgage Loans.
60
Rose Mortgage Loan: A Mortgage Loan which was acquired from Rose by
the Unaffiliated Seller pursuant to the Rose Purchase Agreement,
and which has
been acquired by the Trust Fund.
Rose Purchase Agreement: The Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of November 1, 2005, as
amended to
date, by and between the Unaffiliated Seller and Rose.
Rule 144A Letter: As defined in Section 5.02(b).
Sarbanes Certification: As defined in Section 8.12.
Saxon: Saxon Mortgage Services, Inc., a Texas corporation.
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
scheduled payment due on such Mortgage Loan.
Scheduled Principal Balance: With respect to any Mortgage Loan: (a)
as
of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as
of such date, net of the principal portion of all unpaid Scheduled
Payments, if
any, due on or before such date; (b) as of any Due Date subsequent
to the
Cut-off Date up to and including the Due Date in the calendar month
in which a
Liquidation Event occurs with respect to such Mortgage Loan, the
Scheduled
Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of
(i) the principal portion of each Scheduled Payment due on or
before such Due
Date but subsequent to the Cut-off Date, whether or not received,
(ii) all
Principal Prepayments received before such Due Date but after the
Cut-off Date,
(iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds
received before such Due Date but after the Cut-off Date, net of
any portion
thereof that represents principal due (without regard to any
acceleration of
payments under the related Mortgage and Mortgage Note) on a Due
Date occurring
on or before the date on which such proceeds were received and (iv)
any
reduction in the principal balance of such Mortgage Loan incurred
with respect
thereto as a result of a Deficient Valuation occurring before such
Due Date, but
only to the extent such reduction in principal balance represents a
reduction in
the portion of principal of such Mortgage Loan not yet due (without
regard to
any acceleration of payments under the related Mortgage and
Mortgage Note) as of
the date of such Deficient Valuation; and (c) as of any Due Date
subsequent to
the occurrence of a Liquidation Event with respect to such Mortgage
Loan, zero.
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.
Securities Administrator: JPMorgan Chase Bank, National
Association, a
banking association organized under the laws of the United States,
and its
successors and assigns, in its capacity as Securities Administrator
hereunder.
61
Securities Administrator, Backup Servicer and Master Servicer Fee:
With respect to any Distribution Date, an amount equal to the
product of (a)
one-twelfth of the Securities Administrator, Backup Servicer and
Master Servicer
Fee Rate and (b) the sum of (i) the Stated Principal Balance of the
Mortgage
Loans as of the prior Distribution Date (or as of the Cut-off Date
in the case
of the first Distribution Date) and (ii) the Pre-Funding Amount.
Securities Administrator, Backup Servicer and Master Servicer Fee
Rate: With respect to each Mortgage Loan, 0.0035% per annum.
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 for such Distribution Date) by (y) the Current
Maximum
Amount for that Distribution Date.
Senior Specified Enhancement Percentage: As of any date of
determination, 39.40%.
Servicer: Each of Master Financial and Saxon, each in its capacity
as
a Servicer hereunder.
Servicer Remittance Report: As defined in Section 4.03(c).
Servicing Advances: The reasonable "out-of-pocket" costs and
expenses
(including legal fees) incurred by the applicable 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 Section
3.01, Section 3.09, Section 3.13 and Section 3.15. Servicing
Advances also
include any reasonable "out-of-pocket" costs and expenses
(including legal fees)
incurred by the applicable 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. No
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 Q hereto.
Servicing Fee: With respect to each 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 at the
end of the
related Due Period. 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
62
Agreement. The Servicing Fee for each servicer 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 consisting of originals or copies of all
documents in
the Mortgage File which are not delivered to the Custodian in the
Custodial File
and copies of each of the other Mortgage Loan documents required to
be delivered
by the related Originator pursuant to the terms of the related
Mortgage Loan
Purchase Agreement.
Servicing Function Participant: As defined in Section 3.23(a).
Servicing Officer: Any officer of either 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, the Securities Administrator, the Master Servicer and
the Custodian
by such Servicer on the Closing Date pursuant to this Agreement, as
such list
may from time to time be amended.
Servicing Transfer Date: With respect to each Mortgage Loan, the
date
on which Master Financial or Saxon commenced servicing such
Mortgage Loan, as
set forth on the Mortgage Loan Schedule.
Servicing Trigger Event: With respect to each Determination Date, a
Servicing Trigger Event exists if total Cumulative Loss Percentage
exceeds: (i)
8.50% on any Determination Date up to, and including, the fifth
anniversary of
the Cut-off Date; or (ii) 10.82% on any Determination Date from the
fifth to,
and including, the tenth anniversary of the Cut-off Date. Following
the tenth
anniversary of the Cut-off Date, no Servicing Trigger Event shall
exist.
Specified Subordinated Amount: With respect to any Distribution
Date
prior to the Stepdown Date, an amount equal to 1.90% of the Maximum
Pool
Principal Balance; and with respect to any Distribution Date on and
after the
Stepdown Date, an amount equal to 3.80% of the Current Maximum
Amount for that
Distribution Date subject to a minimum amount equal to 0.50% of the
Maximum 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 Current Maximum Amount, but
instead will remain
the same as the prior period's Specified Subordinated Amount until
the
Distribution Date on which a Trigger Event no longer exists. When
the Class
Certificate Balance of each Class of LIBOR Certificates has been
reduced to
zero, the Specified Subordinated Amount shall thereafter equal
zero.
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 10.06 the address for notices to Standard &
Poor's shall be
Standard & Poor's, 55 Water Street, New York, New York
63
10041, Attention: Residential Mortgage Surveillance Group - IXIS
Real Estate
Capital Trust 2006-HE2, or such other address as Standard &
Poor's may hereafter
furnish to the Depositor, the Trustee, the Securities Administrator
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: For each REMIC created hereunder, 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, to
the extent actually received, minus (ii) all amounts previously
remitted to the
Securities Administrator with respect to the related Mortgage Loan
representing
payments or recoveries of principal, including Advances in respect
of Scheduled
Payments of principal. For purposes of any Distribution Date, the
Stated
Principal Balance of any Mortgage Loan will give effect to any
Scheduled
Payments of principal received by the related Servicer on or prior
to the
related Determination Date or advanced by the related Servicer
prior to 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 June 2009 and (b) the Distribution Date on
which the
aggregate Class Certificate Balance 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 scheduled and unscheduled payments of principal on the
Mortgage Loans on
the last day of the related Due Period but prior to any allocation
of the
Principal Distribution Amount together with any principal payments
from the Swap
Account to the LIBOR Certificates on the applicable 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, a Subservicer, or the Master
Servicer or
the Securities Administrator, as applicable, 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 Current Maximum Amount for that
Distribution Date on
such Distribution Date over (b) the aggregate of the Class
Certificate Balances
of the LIBOR Certificates as of such Distribution Date plus, except
for federal
income tax purposes, the Class Certificate Balances of the Class P
Certificates
(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.
64
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.
Subsequent Cut-off Date: As to any Subsequent Mortgage Loans, the
date
specified in the Addition Notice delivered in connection therewith,
which date
shall be the close of business on the first day of the month in
which such
Subsequent Mortgage Loans will be conveyed to the Trust Fund.
Subsequent Mortgage Loans: The Mortgage Loans hereafter transferred
and assigned to the Trust Fund pursuant to Section 2.01(c), each of
which shall
have been purchased by the Unaffiliated Seller under a Mortgage
Loan Purchase
Agreement.
Subsequent Transfer: The transfer and assignment by the Depositor
to
the Trust of the Subsequent Mortgage Loans pursuant to the terms
hereof.
Subsequent Transfer Agreement: A subsequent transfer agreement in
substantially the form of Exhibit L.
Subsequent Transfer Date: The Business Day on which a Subsequent
Transfer occurs.
Subservicer: Any Person that services Mortgage Loans on behalf of a
Servicer 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, 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 Agreement: As defined in Section 3.02(a).
Substitute Mortgage Loan: A Mortgage Loan substituted by the
Unaffiliated Seller or an Originator for a Deleted Mortgage Loan in
accordance
with the terms of this Agreement or the related Mortgage Loan
Purchase
Agreement, as applicable, which must, on the date of such
substitution, as
confirmed in a Request for Release, substantially in the form of
65
Exhibit K, (i) have a Stated Principal Balance, after deduction of
the principal
portion of the Scheduled Payment due in the month of substitution,
not in excess
of, and not more than 10% less than, the Stated Principal Balance
of the Deleted
Mortgage Loan; (ii) be accruing interest at a rate no lower than
and not more
than 1% per annum higher than, that of the Deleted Mortgage Loan;
(iii) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (iv) have
a remaining term to maturity no greater than (and not more than one
year less
than that of) the Deleted Mortgage Loan; and (v) comply with each
representation
and warranty set forth in Sections 3.01(f), 3.01(h), 3.01(n),
3.01(o), 3.01(p)
and 3.03 of the Unaffiliated Seller's Agreement, each
representation and
warranty set forth in the applicable Mortgage Loan Purchase
Agreement and each
of the requirements set forth in Sections 2.01(c) hereof.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03.
Supplemental Interest Trust: IXIS Real Estate Capital Supplemental
Interest Trust 2006-HE2 established pursuant to Section 2.01(d).
Swap Account: The separate Eligible Account created and maintained
by
the Securities Administrator pursuant to Section 3.07(m) in the
name of the
Securities Administrator, on behalf of the Supplemental Interest
Trust, for the
benefit of the Certificateholders and the Swap Provider, and
designated
"JPMorgan Chase Bank, National Association, in trust for registered
holders of
IXIS Real Estate Capital Trust 2006-HE2, Mortgage Pass-Through
Certificates,
Series 2006-HE2 and IXIS Financial Products, Inc.".
Swap Payment Rate: For any Distribution Date the Swap Payment Rate
is
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 Stated
Principal Balance of the mortgage loans at the beginning of the
related Due
Period plus amounts in the Pre-Funding Account, multiplied by 12.
Swap Provider: IXIS Financial Products Inc., a Delaware
corporation,
and any successor thereto.
Swap Termination Payment: A termination payment required to be made
by
either the Supplemental Interest Trust or the Swap Provider
pursuant to the
Interest Rate Swap Agreement as a result of termination of the
Interest Rate
Swap Agreement.
Tax Matters Person: The Holder of the Class R Certificates
designated
as "tax matters person" of REMIC I, REMIC II, REMIC III, REMIC IV
and REMIC V,
respectively, in the manner provided under Treasury regulations
section
1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1.
Tax Service Contract: As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on the
Bridge Telerate Service (or such other page as may replace that
page on that
service for displaying comparable rates or prices).
66
Termination Price: As defined in Section 11.01.
Test Date File: As defined in Section 3.01.
Total Monthly Excess Spread: As to any Distribution Date, an amount
equal to the excess if any, of (i) the interest on the Mortgage
Loans received
by the Servicers on or prior to the related Determination Date
(other than
Prepayment Interest Excesses) or advanced by the Servicers for the
related
Remittance Date (net of Expense Fees) over (ii) the sum of the
amounts payable
to the LIBOR Certificates pursuant to Section 4.02(a)(i) and Net
Swap Payments
to the Swap Provider on such Distribution Date.
Town & Country: Town & Country Credit Corporation, a
Delaware
corporation.
Town & Country Assignment Agreement: The Assignment and
Recognition
Agreement, dated as of May 25, 2006, by and among the Unaffiliated
Seller, the
Depositor and Town & Country, and each other Assignment and
Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and
Town & Country
in connection with any Subsequent Transfer of Town & Country
Mortgage Loans.
Town & Country Mortgage Loan: A Mortgage Loan which was
acquired from
Town & Country by the Unaffiliated Seller pursuant to the Town
& Country
Purchase Agreement, and which has been acquired by the Trust Fund.
Town & Country Purchase Agreement: The Mortgage Loan Purchase
and
Warranties Agreement, dated as of November 1, 2005, as amended to
date, by and
between the Unaffiliated Seller and Town & Country.
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: The occurrence of either a Delinquency Trigger Event
or
a Cumulative Loss Trigger Event.
Trust: The express trust created hereunder in Section 2.01(d).
Trust Fund: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans and all interest and principal received on
or with
respect thereto after the related Cut-off Date, other than such
amounts which
were due on the Mortgage Loans on or before the related Cut-off
Date; (ii) each
Account, other than the Swap Account and the Excess Reserve Fund
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) all
rights of the
Depositor against the Unaffiliated Seller under the Unaffiliated
Seller's
Agreement; (v) all rights of the Depositor against each Originator
under the
related Assignment and Recognition Agreement and the related
Mortgage
67
Loan Purchase Agreement; and (vi) all proceeds of the conversion,
voluntary or
involuntary, of any of the foregoing.
Trustee: Deutsche Bank National Trust Company, a national banking
association, and its successors in interest and, if a successor
trustee is
appointed hereunder, such successor.
Unaffiliated Seller's Agreement: The Unaffiliated Seller's
Agreement,
dated as of the date hereof, among the Unaffiliated Seller and the
Depositor
relating to the sale of the Mortgage Loans from the Unaffiliated
Seller to the
Depositor.
Underwriters' Exemption: Prohibited Transaction Exemption 90-24, as
amended.
Unpaid Interest Amount: As of any Distribution Date and any Class
of
Certificates, the sum of (a) the excess of (i) the sum of the
Accrued
Certificate Interest for such Distribution Date and any portion of
such Accrued
Certificate Interest from prior Distribution Dates remaining unpaid
over (ii)
the amount in respect of interest on such Class of Certificates
actually
distributed on that Distribution Date and (b) 30 days' 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 Amount 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.
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
68
(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 product of (i) the weighted average of the Adjusted Net
Mortgage Rates
then in effect on the beginning of the related Due Period on the
Mortgage Loans,
less the Swap Payment Rate, and (ii) a fraction, the numerator of
which is 30
and the denominator of which is the actual number of days in the
Interest
Accrual Period related to such Distribution Date.
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,
other than any
Subsequent Mortgage Loans, which will be so sold, transferred,
assigned,
set-over and conveyed on the related Subsequent Transfer Date. The
Mortgage
Loans permitted by the terms of this Agreement to be included in
the Trust Fund
are limited to (i) the Initial Mortgage Loans (which the Depositor
is required
hereunder to have acquired pursuant to Subsequent Transfer
Agreements) and (iii)
Substitute Mortgage Loans. It is agreed and understood by the
parties hereto
that it is not intended that any Mortgage Loan be included in the
Trust Fund
that is a High Cost Loan.
(b) In connection with the transfer and assignment of each Mortgage
Loan, the Unaffiliated Seller has delivered or caused to be
delivered to the
Custodian for the benefit of the Certificateholders the following
documents or
instruments with respect to each Mortgage Loan so assigned (to the
extent such
documents or instruments are required to be delivered by the
related Originator
under each Mortgage Loan Purchase Agreement):
(i) the original Mortgage Note bearing all intervening endorsements
evidencing a complete chain of assignment from the originator to
the
related Originator, endorsed "Pay to the order of _________,
without
recourse" and signed in the name of the related Originator by an
authorized
officer. To the extent that there is no room on the face of the
Mortgage
Notes for endorsements, the endorsement may be contained on an
allonge,
unless the Trustee and the Custodian are advised by the related
Originator
that state law does not so allow. If the Mortgage Loan was acquired
by an
Originator in a merger, the endorsement must be by "[related
Originator],
successor by merger to [name of predecessor]". If the Mortgage Loan
was
acquired or originated by the related Originator while doing
business under
another name, the endorsement must be by "[related Originator],
formerly
known as [previous name]";
69
(ii) the original of any guarantee executed in connection with the
Mortgage Note;
(iii) the original Mortgage with evidence of recording thereon. If
in
connection with any Mortgage Loan, the original Mortgage with
evidence of
recording thereon cannot be delivered on or prior to the related
Delivery
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, then the related Originator, as required by the
terms of
the related Mortgage Loan Purchase Agreement, will be required to
deliver
to the Custodian, on behalf of the Trustee, a photocopy of such
Mortgage
and (i) the original recorded Mortgage or a copy of such Mortgage
certified
by such public recording office to be a true and complete copy of
the
original recorded Mortgage promptly upon receipt thereof by the
related
Originator (but in any event within 360 days from the related
Delivery
Date); or (ii) 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, if any, with evidence of recording thereon;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed in blank, in form and substance acceptable for recording
(except
with respect to MERS Designated Mortgage Loans);
(vi) the originals of all intervening assignments of mortgage,
evidencing a complete chain of assignment from the originator (or
MERS with
respect to each MERS Designated Mortgage Loan) to the related
Originator,
with evidence of recording thereon 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;
(vii) the original or duplicate lender's title policy and all
riders
thereto or, if such original is unavailable, either an original
title
binder or an original or copy of the title commitment, and if
copies then
certified to be true and complete by the title company; and
(viii) the security agreement, chattel mortgage or equivalent
document
executed in connection with the Mortgage, if any.
70
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 Trustee to be shown as Investor 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. Within 90
days after the
Closing Date, the Trustee shall, 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 the Trustee by
the
Unaffiliated Seller (such to be provided to the Trustee no later
than 45 days
from the Closing Date), the Trustee 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, the Trustee shall promptly notify the Unaffiliated
Seller of such
fact and the Unaffiliated Seller shall then either cure such defect
or
repurchase such Mortgage Loan in accordance with Section 2.03.
From time to time, each Servicer shall forward to the Custodian
additional original documents, additional documents evidencing an
assumption,
modification, consolidation or extension of a Mortgage Loan
approved by the
applicable Servicer, in accordance with the terms of this
Agreement. All such
mortgage documents held by the Custodian as to each Mortgage Loan
shall
constitute the "Custodial File".
On or prior to the related Delivery Date, the Unaffiliated Seller
shall deliver, or cause the related Originator to deliver, to the
Custodian
Assignments of Mortgage, in blank, for each Mortgage Loan. If an
Assignment of
Mortgage is required to be recorded pursuant to the terms hereof,
the applicable
Servicer, or the applicable Servicer's designee shall direct the
Custodian to
promptly forward such Assignment of Mortgage to such Servicer for
recording. No
later than thirty (30) Business Days following the date of receipt
by a Servicer
of all necessary recording information for a Mortgage, such
Servicer shall
promptly submit or cause to be submitted for recording, at the
expense of the
Unaffiliated Seller (the Unaffiliated Seller to seek reimbursement
from the
related Originator under the applicable Mortgage Loan Purchase
Agreement) 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 Assignment of Mortgage shall not be required to be
completed and
submitted for recording with respect to any MERS Designated
Mortgage Loan or any
Mortgage Loan (other than any Mortgage Loan where the Mortgaged
Property is
located in any state where recordation is required by any Rating
Agency to
obtain the initial ratings on the Certificates, which states as of
the date
hereof, are Florida and Maryland) upon a determination by the
applicable
Servicer that recordation is necessary for the enforcement of
rights under, or
satisfaction or assignment of, the related Mortgage, at which time,
such
Servicer shall record any such Assignment of Mortgage in accordance
with the
terms hereof. If any Assignment of Mortgage is required to be
recorded pursuant
to the terms hereof, the Mortgage shall be assigned from the
related Originator,
to "Deutsche Bank National Trust Company, as trustee under the
Pooling and
Servicing Agreement dated as of May 1, 2006, IXIS Real Estate
Capital Trust
2006-HE2." In the event that any such
71
assignment is lost or returned unrecorded because of a defect
therein, the
Unaffiliated Seller shall cause the related Originator to promptly
prepare a
substitute assignment to cure such defect and thereafter cause each
such
assignment to be duly recorded. In the event the Unaffiliated
Seller does not
pay or otherwise reimburse the applicable Servicer for any of the
foregoing
costs of recording any such Assignment of Mortgage, such Servicer
shall be
entitled to be reimbursed from the Trust Fund from amounts on
deposit in its
Collection Account. In the event the related Originator fails to
reimburse the
Unaffiliated Seller for the recording costs described above, upon
receipt of
written direction from the Unaffiliated Seller, the Trustee shall
assign its
rights under the applicable Mortgage Loan Purchase Agreement solely
with respect
to payment of such expenses to the Unaffiliated Seller.
The Unaffiliated Seller shall use commercially reasonable efforts
to
assist each Servicer in causing the related Originator to deliver
(at the
expense of such Originator pursuant to the related Mortgage Loan
Purchase
Agreement) to each Servicer copies of all trailing documents
required to be
included in the Custodial File at the same time the originals or
certified
copies thereof are delivered to the Custodian, such documents,
including, but
not limited to, the mortgagee policy of title insurance and any
mortgage loan
documents upon return from the recording office. The Unaffiliated
Seller shall
use commercially reasonable efforts to assist each Servicer in
seeking
reimbursement from the related Originator pursuant to the related
Mortgage Loan
Purchase Agreement for any fees or costs incurred by such Servicer
in obtaining
such documents.
On or prior to the Closing Date, the Unaffiliated Seller shall
deliver
to the Trustee, the Custodian, the Securities Administrator, the
Master
Servicer, the Backup Servicer and the Servicers a copy of the Data
Tape
Information in electronic, machine readable medium in a form
mutually acceptable
to the Custodian, the Trustee, the Securities Administrator, the
Master
Servicer, the Backup Servicer and the Servicers. Within ten days of
the Closing
Date, the Unaffiliated Seller shall deliver a copy of the complete
Mortgage Loan
Schedule to the Custodian, the Trustee, the Securities
Administrator, the Master
Servicer, the Backup Servicer and the Servicers.
In the event that such original or copy of any document submitted
for
recordation to the appropriate public recording office is not so
delivered to
the Custodian within 90 days following the related Delivery Date,
as evidenced
by the Custodian's Final Certification, and in the event that the
Originator
does not cure such failure within 30 days of discovery or receipt
of written
notification of such failure from the Depositor, the Trustee, the
Securities
Administrator, the Master Servicer, the Backup Servicer or the
Securities
Administrator shall notify the related Originator to repurchase the
Mortgage
Loan pursuant to the related Mortgage Loan Purchase Agreement, upon
the request
of the Depositor, the Trustee or the Securities Administrator, at
the Repurchase
Price and in the manner specified in Section 2.03. The foregoing
repurchase
provision shall not apply in the event that the related Originator
cannot
deliver such original or copy of any document submitted for
recordation to the
appropriate public recording office within the specified period due
to a delay
caused by the recording office in the applicable jurisdiction;
provided that the
related Originator shall instead be required to deliver a recording
receipt of
such recording office or, if such recording receipt is not
available, an
officer's certificate of a servicing officer of the Originator
confirming that
such document has been accepted for recording.
72
(c) Purchase and Sale of Subsequent Mortgage Loans.
(i) Subject to the satisfaction of the conditions set forth in
paragraph (ii) below, and upon the Securities Administrator's
receipt of a
Subsequent Transfer Agreement executed by all other parties
thereto, in
consideration of the Securities Administrator's delivery on the
related
Subsequent Transfer Dates to or upon the order of the Depositor of
all or a
portion of the balance of funds in the Pre-Funding Account, the
Depositor
shall on any Subsequent Transfer Date sell, transfer, assign, set
over and
convey to the Trustee without recourse but subject to terms and
provisions
of this Agreement, all of the right, title and interest of the
Depositor in
and to the Subsequent Mortgage Loans, including the outstanding
principal
of and interest due on such Subsequent Mortgage Loans, and all
other
related assets included or to be included in the Trust Fund with
respect
thereto.
The amount released from the Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans shall be one-hundred percent
(100%)
of the aggregate Stated Principal Balances as of the related
Subsequent
Cut-off Date of the Subsequent Mortgage Loans so transferred.
(ii) The Subsequent Mortgage Loans and the other property and
rights
related thereto described in paragraph (a) above shall be
transferred by
the Depositor to the Trust Fund only upon the satisfaction of each
of the
following conditions on or prior to the related Subsequent Transfer
Date:
(a)
the Unaffiliated Seller shall have provided the Depositor, the
Trustee, the Securities Administrator and the Rating Agencies
with a timely Addition Notice, which shall include a Mortgage
Loan Schedule, listing the Subsequent Mortgage Loans and shall
have provided any other information reasonably requested by any
of the foregoing with respect to the Subsequent Mortgage Loans;
(b)
the applicable Servicer shall have deposited in the related
Collection Account all collections of (x) principal in respect of
the Subsequent Mortgage Loans received and due after the related
Subsequent Cut-off Date and (y) interest due on the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date;
(c)
as of each Subsequent Transfer Date, the Unaffiliated Seller was
not insolvent nor will be made insolvent by such transfer nor is
the Unaffiliated Seller aware of any pending insolvency;
(d)
such addition will not result in a "prohibited transaction" (as
defined in the REMIC Provisions) for any REMIC created hereunder,
and will not cause any REMIC created hereunder to cease to
qualify as a REMIC, as evidenced by an Opinion of Counsel with
respect to such matters (which may be a blanket opinion dated the
Closing Date);
73
(e)
the Pre-Funding Period shall not have terminated;
(f)
the Unaffiliated Seller shall have delivered to the Securities
Administrator an executed Assignment and Recognition Agreement
with respect to each related Originator of Subsequent Mortgage
Loans to be added to the Trust Fund on such Subsequent Transfer
Date (which Assignment and Recognition Agreement shall include a
representation and warranty from the related Originator that none
of the Subsequent Mortgage Loans is a High Cost Loan, none of the
Subsequent Mortgage Loans is covered by the Home Ownership and
Equity Protection Act of 1994 and none of the Subsequent Mortgage
Loans is in violation of any comparable state law);
(g)
the Unaffiliated Seller shall have delivered to the Securities
Administrator an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this
paragraph (ii), and the Opinion of Counsel referenced in clause
(d);
(h)
the Unaffiliated Seller and the Depositor shall have delivered to
the Securities Administrator an executed copy of a Subsequent
Transfer Agreement, substantially in the form of Exhibit L
hereto;
(i)
each of the Rating Agencies shall have provided a notice in
either written or electronic format acknowledging their
respective consents to the transfer of the Subsequent Mortgage
Loans to the Trust Fund.
(iii) The obligation of the Trust Fund to purchase the Subsequent
Mortgage Loans on a Subsequent Transfer Date is subject to the
requirements
that, following the purchase of such Subsequent Mortgage Loans,
with
respect to the entire mortgage loan pool:
(A)
no more than 4.00% may be second lien mortgage loans;
(B)
no more than 44.50% may be first lien mortgage loans which are
secured by Mortgaged Properties which also secure second lien
mortgage loans;
(C)
no less than 6.00% and no more than 9.00% may be Fixed Rate
Mortgage Loans;
(D)
the weighted average original term to maturity may not exceed 360
months;
(E)
the weighted average gross Mortgage Rate must not be less than
8.10%, or more than 8.40%;
(F)
the weighted average original LTV must not exceed 81.00%, and no
more than 28.00% of the Mortgage Loans may have LTVs in excess of
80.00%;
74
(G)
at least 70.00% of the Mortgage Loans must have Prepayment
Charges;
(H)
the weighted average Gross Margin for the Adjustable Rate
Mortgage Loans must be at least 6.000%;
(I)
the weighted average credit score (FICO Score) must be at least
620, and none of the Mortgage Loans may have credit scores below
500;
(J)
the weighted average credit score for the second-lien mortgage
loans must be at least 650;
(K)
no more than 30.00% may have an interest-only period;
(L)
no more than 5.00% of the Mortgage Loans will be 10 year/40 year
dual amortization Mortgage Loans;
(M)
the weighted average initial periodic rate cap for the Adjustable
Rate Mortgage Loans may not exceed 2.500%
(N)
no mortgage loan is classified as a "high cost" loan under the
Home Ownership and Equity Protection Act of 1994 ("HOEPA") and no
mortgage loan is in violation of, or classified as a "high cost,"
"threshold," "predatory" or similar loan under, any other
applicable state, federal or local law;
Any of the requirements set forth in clauses (ii) and (iii) above
may
be waived or modified in any respect with the consent of the Rating
Agencies.
(iv) In connection with the transfer and assignment of the
Subsequent
Mortgage Loans, the Unaffiliated Seller shall satisfy the document
delivery
requirements set forth in Section 2.01(b).
(d) The Depositor does hereby establish, pursuant to the further
provisions of the Agreement and the laws of the State of New York,
an express
trust (the "Trust") to be known, for convenience, as "IXIS REAL
ESTATE CAPITAL
TRUST 2006-HE2" 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. In addition Depositor does hereby establish, pursuant to
the further
provisions of the Agreement and the laws of the State of New York,
an express
trust (the "Supplemental Interest Trust") to be known, for
convenience, as "IXIS
REAL ESTATE CAPITAL SUPPLEMENTAL INTEREST TRUST 2006-HE2", which,
as a subtrust
of the Trust Fund, will hold the Interest Rate Swap Agreement, the
Swap Account
and the Excess Reserve Fund Account.
(e) The Trust shall have the capacity, power and authority, and the
Trustee on behalf of the Trust is hereby authorized, to accept the
sale,
transfer, assignment, set over and conveyance by the Depositor to
the Trust of
all the right, title and interest of the Depositor in and to the
Trust Fund
(including, without limitation, the Mortgage Loans) pursuant to
Section
75
2.01(a). The Securities Administrator is hereby authorized and
directed to
execute the Interest Rate Swap Agreement on behalf of the
Supplemental Interest
Trust.
Section 2.02 Acceptance by the Custodian of the Mortgage Loans.
The Custodian shall acknowledge, on each Delivery Date, receipt of
the
documents identified in the Initial Certification in the form
annexed hereto as
Exhibit F, 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, on behalf
of the
Trustee, in trust for the exclusive use and benefit of all present
and future
Certificateholders. The Custodian acknowledges that it will
maintain possession
of the related Mortgage Notes in the State of California, unless
otherwise
permitted under this Agreement or by the Rating Agencies.
In connection with each Delivery, the Custodian shall deliver via
facsimile (with original to follow the next Business Day) to the
Depositor, the
Trustee, the Securities Administrator, the Backup Servicer, the
Unaffiliated
Seller and the Servicers an Initial Certification on or prior to
the related
Delivery Date, certifying receipt of the related Mortgage Notes and
Assignments
of Mortgage for each related Mortgage Loan. The Custodian shall not
be
responsible for verifying the validity, sufficiency or genuineness
of any
document in any Custodial File.
Within 120 days after the related Delivery Date, the Custodian
shall
ascertain that all documents required to be reviewed by it are in
its
possession, and shall deliver to the Depositor, the Unaffiliated
Seller, the
Servicers, the Trustee, the Backup Servicer and the Securities
Administrator a
Final Certification to the effect that, as to each Mortgage Loan
listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any
Mortgage Loan specifically identified in such certification as an
exception and
not covered by such certification): (i) all documents 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 (18) of the Mortgage Loan Schedule and
items (1),
(9) and (17) of the Data Tape Information respecting such Mortgage
Loan is
correct; (iv) each Mortgage Note has been endorsed as provided in
Section 2.01
of this Agreement; and (v) upon receipt of the screen printouts
specified in
Section 2.01, with respect to each MERS Designated Loan, the
Trustee, on behalf
of the Trust Fund, is listed as the Investor of such MERS
Designated Loan on the
MERS System. The Custodian shall not be responsible to verify the
validity,
sufficiency or genuineness of any document in any Custodial File.
Upon receipt
of such Final Certification, if the Depositor or the Unaffiliated
Seller
determines that any noncompliance identified by the Custodian is a
breach of a
representation or warranty relating to such Mortgage Loan, such
party shall give
written notice to the Trustee and the Securities Administrator
thereof.
The Custodian shall retain possession and custody of each Custodial
File in accordance with and subject to the terms and conditions set
forth
herein. Each Servicer shall promptly deliver to the Custodian, 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.
76
Section 2.03 Representations, Warranties and Covenants of the
Unaffiliated Seller and the Servicers.
(a) Master Financial hereby makes the representations and
warranties
set forth in (i) Schedule II hereto to the Depositor, the
Unaffiliated Seller,
the Custodian, the Securities Administrator and the Trustee and
(ii) Schedule
IIA hereto to the Unaffiliated Seller, in each case, as of the
Closing Date, and
with respect to Subsequent Mortgage Loans, as of the related
Subsequent Transfer
Date; provided, however, that in the case of clause (ii), Master
Financial only
makes representations and warranties with respect to those Mortgage
Loans on
Schedule IA hereto for which the Servicing Transfer Date has
occurred prior to
the Closing Date or the related Subsequent Transfer Date, as
applicable.
(b) Saxon hereby makes the representations and warranties set forth
in
(i) Schedule III hereto to the Depositor, the Unaffiliated Seller,
the
Custodian, the Securities Administrator and the Trustee and (ii)
Schedule IIIA
hereto to the Unaffiliated Seller, in each case, as of the Closing
Date, and
with respect to Subsequent Mortgage Loans, as of the related
Subsequent Transfer
Date; provided, however, that in the case of clause (ii), Saxon
only makes
representations and warranties with respect to those Mortgage Loans
on Schedule
IB hereto for which the Servicing Transfer Date has occurred prior
to the
Closing Date or the related Subsequent Transfer Date, as
applicable.
(c) IXIS Real Estate Capital Inc., in its capacity as the
Unaffiliated
Seller, hereby makes the representations and warranties set forth
in Schedule IV
hereto to the Depositor, the Trustee, the Securities Administrator
and the
Custodian as of the Closing Date.
(d) It is understood and agreed by each Servicer and the
Unaffiliated
Seller that the representations and warranties set forth in Section
2.03 shall
survive the transfer of the Mortgage Loans to the Trust Fund, and
shall inure to
the benefit of the Trust Fund notwithstanding any restrictive or
qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or
failure to examine any Mortgage File. Upon discovery by any of the
Depositor,
the Unaffiliated Seller, the Trustee, the Securities Administrator
or either
Servicer of a breach by the Unaffiliated Seller of any of the
foregoing
representations or any of the representations and warranties made
pursuant to
Sections 3.01(f), 3.01(h), 3.01(n), 3.01(o), 3.01(p) or 3.03 of the
Unaffiliated
Seller's Agreement or by any Originator of the representations and
warranties
made pursuant to the related Assignment and Recognition Agreement,
the party
discovering such breach shall give prompt written notice to the
others.
Within 90 days of the earlier of either discovery by or notice to
the
Unaffiliated Seller of any breach of a representation or warranty
set forth in
Section 3.01(f), 3.01(h), 3.01(n), 3.01(o), 3.01(p) or 3.03 of the
Unaffiliated
Seller's Agreement that materially and adversely affects the value
of the
Mortgage Loans or the interest of the Trustee or the
Certificateholders therein,
the Unaffiliated Seller shall use its best efforts to cure such
breach in all
material respects and, if such breach cannot be remedied, the
Unaffiliated
Seller shall, (i) if such 90-day period expires prior to the second
anniversary
of the related Delivery Date, remove such Mortgage Loan from the
Trust Fund and
substitute in its place a Substitute Mortgage Loan, in the manner
and subject to
the conditions set forth in this Section 2.03; or (ii) repurchase
such Mortgage
Loan at the Repurchase Price; provided, however, that any such
substitution
pursuant
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to (i) above shall not be effected prior to the delivery to the
Trustee of the
Opinion of Counsel required by Section 2.05, if any, and a Request
for Release
substantially in the form of Exhibit K, and the Mortgage File for
any such
Substitute Mortgage Loan. The Trustee shall forward such Request
for Release to
the Custodian and the Custodian shall release the related Mortgage
File.
In the event there is a breach of a representation or warranty by
Accredited with respect to an Accredited Home Loan that materially
and adversely
affects the value of such Mortgage Loan or the interest of the
Trustee and the
Certificateholders therein, and, upon discovery or receipt of
notice, Accredited
fails to cure, substitute or repurchase such Mortgage Loan within
the period
specified in either the Accredited Assignment Agreement or the
Accredited
Purchase Agreement, the Unaffiliated Seller shall cure, substitute
or repurchase
such Mortgage Loan subject to the conditions set forth in this
Section 2.03. In
the event there is a breach of a representation or warranty by
Chapel Mortgage
with respect to a Chapel Mortgage Loan that materially and
adversely affects the
value of such Mortgage Loan or the interest of the Trustee and the
Certificateholders therein, and, upon discovery or receipt of
notice, Chapel
Mortgage fails to cure, substitute or repurchase such Mortgage Loan
within the
period specified in either the Chapel Mortgage Assignment Agreement
or the
Chapel Mortgage Purchase Agreement, the Unaffiliated Seller shall
cure,
substitute or repurchase such Mortgage Loan subject to the
conditions set forth
in this Section 2.03. In the event there is a breach of a
representation or
warranty by First Bank with respect to a First Bank Mortgage Loan
that
materially and adversely affects the value of such Mortgage Loan or
the interest
of the Trustee and the Certificateholders therein, and, upon
discovery or
receipt of notice, First Bank fails to cure, substitute or
repurchase such
Mortgage Loan within the period specified in either the First Bank
Assignment
Agreement or the First Bank Purchase Agreement, the Unaffiliated
Seller shall
cure, substitute or repurchase such Mortgage Loan subject to the
conditions set
forth in this Section 2.03. In the event there is a breach of a
representation
or warranty by Funding America with respect to a Funding America
Mortgage Loan
that materially and adversely affects the value of such Mortgage
Loan or the
interest of the Trustee and the Certificateholders therein, and,
upon discovery
or receipt of notice, Funding America fails to cure, substitute or
repurchase
such Mortgage Loan within the period specified in either the
Funding America
Assignment Agreement or the Funding America Purchase Agreement, the
Unaffiliated
Seller shall cure, substitute or repurchase such Mortgage Loan
subject to the
conditions set forth in this Section 2.03. In the event there is a
breach of a
representation or warranty by Lenders Direct with respect to a
Lenders Direct
Mortgage Loan that materially and adversely affects the value of
such Mortgage
Loan or the interest of the Trustee and the Certificateholders
therein, and,
upon discovery or receipt of notice, Lenders Direct fails to cure,
substitute or
repurchase such Mortgage Loan within the period specified in either
the Lenders
Direct Assignment Agreement or the Lenders Direct Purchase
Agreement, the
Unaffiliated Seller shall cure, substitute or repurchase such
Mortgage Loan
subject to the conditions set forth in this Section 2.03. In the
event there is
a breach of a representation or warranty by Lime Financial with
respect to a
Lime Financial Mortgage Loan that materially and adversely affects
the value of
such Mortgage Loan or the interest of the Trustee and the
Certificateholders
therein, and, upon discovery or receipt of notice, Lime Financial
fails to cure,
substitute or repurchase such Mortgage Loan within the period
specified in
either the Lime Financial Assignment Agreement or the Lime
Financial Purchase
Agreement, the Unaffiliated Seller shall cure, substitute or
repurchase such
Mortgage Loan subject to the conditions set forth in this Section
2.03. In the
event there is a breach of a
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representation or warranty by Mandalay with respect to a Mandalay
Mortgage Loan
that materially and adversely affects the value of such Mortgage
Loan or the
interest of the Trustee and the Certificateholders therein, and,
upon discovery
or receipt of notice, Mandalay fails to cure, substitute or
repurchase such
Mortgage Loan within the period specified in either the Mandalay
Assignment
Agreement or the Mandalay Purchase Agreement, the Unaffiliated
Seller shall
cure, substitute or repurchase such Mortgage Loan subject to the
conditions set
forth in this Section 2.03. In the event there is a breach of a
representation
or warranty by Master Financial with respect to a Master Financial
Mortgage Loan
that materially and adversely affects the value of such Mortgage
Loan or the
interest of the Trustee and the Certificateholders therein, and,
upon discovery
or receipt of notice, Master Financial fails to cure, substitute or
repurchase
such Mortgage Loan within the period specified in either the Master
Financial
Assignment Agreement or the Master Financial Purchase Agreement,
the
Unaffiliated Seller shall cure, substitute or repurchase such
Mortgage Loan
subject to the conditions set forth in this Section 2.03. In the
event there is
a breach of a representation or warranty by Platinum with respect
to a Platinum
Mortgage Loan that materially and adversely affects the value of
such Mortgage
Loan or the interest of the Trustee and the Certificateholders
therein, and,
upon discovery or receipt of notice, Platinum fails to cure,
substitute or
repurchase such Mortgage Loan within the period specified in either
the Platinum
Assignment Agreement or the Platinum Purchase Agreement, the
Unaffiliated Seller
shall cure, substitute or repurchase such Mortgage Loan subject to
the
conditions set forth in this Section 2.03. In the event there is a
breach of a
representation or warranty by Town & Country with respect to a
Town & Country
Mortgage Loan that materially and adversely affects the value of
such Mortgage
Loan or the interest of the Trustee and the Certificateholders
therein, and,
upon discovery or receipt of notice, Town & Country fails to
cure, substitute or
repurchase such Mortgage Loan within the period specified in either
the Town &
Country Assignment Agreement or the Town & Country Purchase
Agreement, the
Unaffiliated Seller shall cure, substitute or repurchase such
Mortgage Loan
subject to the conditions set forth in this Section 2.03.
Notwithstanding the
Unaffiliated Seller's lack of knowledge, in the event it is
discovered by the
Unaffiliated Seller, the Depositor or the Trust (including the
Trustee and the
Servicers acting on the Trust's behalf), that the substance of a
representation
or warranty was inaccurate as of the applicable date of such
representation or
warranty and such inaccuracy materially and adversely affects the
value of the
related Mortgage Loan, the Unaffiliated Seller shall use its best
efforts to
cure such breach or substitute or repurchase such Mortgage Loan in
accordance
with this Section 2.03(d).
With respect to any Substitute Mortgage Loan or Loans, the
Unaffiliated Seller shall deliver to the Custodian, on behalf of
the Trustee,
for the benefit of the Certificateholders the Mortgage Note, the
Mortgage, the
related Assignment of the Mortgage, and such other documents and
agreements as
are required by Section 2.01, with the Mortgage Note endorsed and
the Mortgage
assigned as required by Section 2.01. No substitution is permitted
to be made in
any calendar month after the Determination Date for such month.
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
related Originator 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
related Originator shall be entitled to retain all amounts received
in respect
of such Deleted Mortgage Loan.
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For any month in which the Unaffiliated Seller 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
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 Unaffiliated Seller shall deposit the amount of such
shortage plus an
amount equal to the aggregate of any unreimbursed Advances and
accrued and
unpaid Servicing Fees with respect to such Deleted Mortgage Loans
(the
"Substitution Adjustment Amount") into the related Collection
Account on or
before the Remittance Date for the Distribution Date in the month
succeeding the
calendar month during which the related Mortgage Loan became
required to be
purchased or replaced hereunder.
Upon receipt of written notice (x) from the Custodian that any
document does not comply with the requirements set forth in clauses
(i) through
(iv) of the Custodian's review of the Custodial Files pursuant to
Section 2.02
or (y) of a breach of a representation and warranty, the Securities
Administrator shall in turn promptly notify the applicable
Originator (with a
copy to the applicable Servicer, the Custodian and the Unaffiliated
Seller) in
writing of such non-compliance or breach and request that the
related Originator
cure such non-compliance or breach within the time period set forth
in the
applicable Mortgage Loan Purchase Agreement (but in any event,
within 60 days
from the date the related Originator is notified of such
non-compliance or
breach) and if the related Originator does not cure such
non-compliance or
breach in all material respects during such period, the Securities
Administrator
shall notify such Originator to repurchase such Mortgage Loan from
the Trust
Fund at the Repurchase Price. In the event the Securities
Administrator receives
written notice (x) of a breach by any Originator of a
representation and
warranty that is subject to an automatic sixty-day repurchase
obligation
pursuant to Section 9.03 of the related Mortgage Loan Purchase
Agreement, which
representations and warranties relate to Prepayment Fees, Predatory
Lending
Regulations, Single Premium Credit Insurance, the Georgia Fair
Lending Act, the
Fair Credit Reporting Act, New York State Banking Law or (y) that a
Mortgage
Loan does not constitute a "qualified mortgage" within the meaning
of Section
860G(a)(3) of the Code, the Securities Administrator shall notify
such
Originator to repurchase the Mortgage Loan at the Repurchase Price
within sixty
(60) days of such Originator's receipt of such notice.
(e) Upon receipt of the Final Certification with respect to each
Mortgage Loan, the Securities Administrator will notify the related
Originator
within 5 Business Days of such delivery of any missing documents
from the
Custodial File and if the related Originator does not deliver such
missing
documents within 60 days from the date the related Originator is
notified of
such noncompliance or breach, the Securities Administrator shall
notify such
Originator to repurchase such Mortgage Loan from the Trust Fund at
the
Repurchase Price.
(f) Based solely on information received with respect to any
Substitute Mortgage Loan from the Unaffiliated Seller or the
related Originator,
as applicable, the related Servicer shall amend the Mortgage Loan
Schedule to
reflect the removal of such Deleted Mortgage Loan and the
substitution of the
Substitute Mortgage Loan or Loans and the related Servicer shall
deliver the
amended Mortgage Loan Schedule to the Securities Administrator.
Upon such
substitution, the Substitute Mortgage Loan or Loans shall be
subject to the
terms of this Agreement in all respects, and the Unaffiliated
Seller shall be
deemed to have made with respect to such Substitute Mortgage Loan
or Loans, as
of the date of substitution, the
80
representations and warranties made pursuant to Sections 3.01(f),
3.01(h),
3.01(n), 3.01(o), 3.01(p) and 3.03 of the Unaffiliated Seller's
Agreement with
respect to such Mortgage Loan. Upon any such substitution and the
deposit to the
related Collection Account of the amount required to be deposited
therein in
connection with such substitution as described in this Section
2.03, the
Securities Administrator shall forward the Request for Release from
the related
Servicer to the Custodian and the Custodian shall release the
Mortgage File
relating to such Deleted Mortgage Loan to the Unaffiliated Seller
or the related
Originator, as applicable, and shall execute and deliver at the
Unaffiliated
Seller's or related Originator's direction, as applicable, such
instruments of
transfer or assignment prepared by such party, in each case without
recourse, as
shall be necessary to vest title in the Unaffiliated Seller or the
related
Originator, or its designee, as applicable, the Trustee's interest
in any
Deleted Mortgage Loan substituted for pursuant to this Section
2.03.
(g) In the event that the Unaffiliated Seller or the related
Originator, as applicable, shall have repurchased a Mortgage Loan,
the
Repurchase Price therefor shall be deposited in the related
Collection Account
pursuant to Section 3.10 on or before the Remittance Date for the
Distribution
Date in the month following the month during which the Unaffiliated
Seller or
the related Originator, as applicable, became obligated hereunder
to repurchase
or replace such Mortgage Loan and upon such deposit of the
Repurchase Price, the
delivery of the Opinion of Counsel required by Section 2.05 and
receipt of a
Request for Release in the form of Exhibit K hereto, the Securities
Administrator shall forward the Request for Release from the
applicable Servicer
to the Custodian, and the Custodian shall release the related
Custodial File to
such Person as directed by such 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. It is understood and agreed that
the obligation
under this Agreement of any Person to cure, repurchase or replace
any Mortgage
Loan as to which a breach has occurred and is continuing shall
constitute the
sole remedy against such Persons respecting such breach available
to
Certificateholders, the Depositor, the Unaffiliated Seller, the
Custodian, the
Securities Administrator or the Trustee on their behalf. In the
event such
required repurchase or replacement does not occur, the Securities
Administrator
shall take such actions as directed upon written direction from the
Depositor
and the provision of reasonable indemnity satisfactory to the
Securities
Administrator in accordance with Sections 6.03 and 10.02.
(h) If the Unaffiliated Seller is required to repurchase or replace
a
Mortgage Loan pursuant to the terms hereof, upon receipt by the
Trustee of
written direction from the Unaffiliated Seller and either written
certification
from the Unaffiliated Seller that it has deposited the related
Repurchase Price
with the Securities Administrator or receipt by the Trustee of a
Substitute
Mortgage Loan, as applicable, the Trustee shall assign to the
Unaffiliated
Seller its rights under the related Mortgage Loan Purchase
Agreement solely with
respect to such Mortgage Loan by an assignment in form and
substance mutually
satisfactory to the Unaffiliated Seller, the Trustee and the
Securities
Administrator.
(i) The representations and warranties made pursuant to this
Section
2.03 shall survive delivery of the respective Custodial Files to
the Custodian.
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Section 2.04 The Depositor and the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee and the
Securities Administrator with respect to each Mortgage Loan as of
the date
hereof or such other date set forth herein that as of the related
Delivery Date,
and following the transfer of the Mortgage Loans to it by the
Unaffiliated
Seller, the Depositor had good title to the Mortgage Loans and the
Mortgage
Notes were subject to no offsets, defenses or counterclaims.
The Depositor hereby assigns, transfers and conveys to the Trustee
all
of its rights with respect to the Initial Mortgage Loans and shall,
on each
subsequent Transfer Date, convey all of its right, title and
interest with
respect to the related subsequent Mortgage Loans.
Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Non-Qualified Mortgages.
Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.03 shall be made more than 30
days after the
related Delivery Date unless the Unaffiliated Seller delivers, or
causes the
related Originator to deliver, as applicable, to the Securities
Administrator an
Opinion of Counsel, at the expense of the Unaffiliated Seller or
the related
Originator, as applicable, addressed to the Trustee and the
Securities
Administrator, to the effect that such substitution will not (i)
result in the
imposition of the tax on "prohibited transactions" on the Trust
Fund or
contributions after the Startup Day, as defined in Sections
860F(a)(2) and
860G(d) of the Code, respectively, or (ii) cause any REMIC created
hereunder to
fail to qualify as one or more REMICs at any time that any
Certificates are
outstanding.
Section 2.06 Execution and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, the
Securities
Administrator has executed and delivered to or upon the order of
the Depositor,
the Certificates in authorized denominations evidencing directly or
indirectly
the entire ownership of the Trust Fund. The Trustee agrees to hold
the Trust
Fund and exercise the rights referred to above for the benefit of
all present
and future Holders of the Certificates.
Section 2.07 REMIC Matters.
The Preliminary Statement sets forth the designations for federal
income tax purposes of all interests created hereby. The "Startup
Day" for
purposes of the REMIC Provisions shall be the Closing Date. Unless
otherwise
stated, the "latest possible maturity date" is August 25, 2037,
which is the
Distribution Date in the thirteenth month following the month in
which the
latest maturity date of any Mortgage Loan occurs.
Section 2.08 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
Trustee, the Custodian, the Securities Administrator, the
Unaffiliated Seller
and each Servicer that as of the date of this Agreement or as of
such date
specifically provided herein:
82
(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 by-laws 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
83
(h) Immediately prior to the transfer and assignment by the
Depositor
to the Trustee, the Depositor had, or, with respect to the
Subsequent Mortgage
Loans, will have, good title to, and was, or will be, the sole
owner of each
Mortgage Loan, free of any interest of any other Person, and the
Depositor has
transferred, or shall transfer, all right, title and interest in
each Mortgage
Loan to the Trustee. The transfer of the Mortgage Note and the
Mortgage to the
Custodian, on behalf of the Trustee, 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 and 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 2.08 shall survive delivery of
the
respective Custodial Files to the Custodian and shall inure to the
benefit of
the Trustee.
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
prudent
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 non-ownership of any Certificate by such
Servicer or any Affiliate of such Servicer;
(iii) such Servicer's obligation to make P&I Advances or
Servicing
Advances; or
(iv) such Servicer's or any Subservicer's right to receive
compensation for its services hereunder or with respect to any
particular
transaction.
To the extent consistent with the foregoing, each Servicer shall
seek
to maximize the timely and complete recovery of principal and
interest on the
Mortgage Notes. Subject only to the above-described servicing
standards and the
terms of this Agreement and of the respective
84
Mortgage Loans, each Servicer shall have full power and authority,
acting alone
or through Subservicers as provided in Section 3.02, to do or cause
to be done
any and all things in connection with such servicing and
administration which it
may deem necessary or desirable. Without limiting the generality of
the
foregoing, each Servicer in its own name or in the name of a
Subservicer is
hereby authorized and empowered by the Trustee when such Servicer
believes it
appropriate in its best judgment in accordance with the servicing
standards set
forth above, to execute and deliver any and all instruments of
satisfaction or
cancellation, or of partial or full release or discharge, and all
other
comparable instruments, with respect to the Mortgage Loans and the
Mortgaged
Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and
to hold or
cause to be held title to such properties, on behalf of the
Trustee. Each
Servicer shall service and administer the Mortgage Loans in
accordance with
applicable state and federal law and shall provide to the
Mortgagors any reports
required to be provided to them thereby. Each Servicer covenants
that its
computer and other systems used in servicing the Mortgage Loans
operate in a
manner such that such Servicer can service the Mortgage Loans in
accordance with
the terms of this Agreement. Each Servicer shall also comply in the
performance
of this Agreement with all reasonable rules and requirements of
each insurer
under any standard hazard insurance policy. Subject to Section
3.15, the Trustee
shall execute, at the written request of the applicable Servicer,
and furnish,
or cause to be furnished, to such Servicer and any Subservicer such
documents as
are necessary or appropriate to enable such Servicer or any
Subservicer to carry
out their servicing and administrative duties hereunder, and the
Trustee hereby
grants to each Servicer, and this Agreement shall constitute, a
power of
attorney to carry out such duties including a power of attorney to
take title to
Mortgaged Properties after foreclosure on behalf of the Trustee.
The Trustee
shall execute a separate power of attorney in favor of each
Servicer for the
purposes described herein to the extent necessary or desirable to
enable the
Servicers to perform its duties hereunder. The Trustee shall not be
liable for
the actions of the Servicers or any Subservicers under such powers
of attorney.
(b) Subject to Section 3.09(b), in accordance with the standards of
the preceding paragraph, each Servicer shall advance or cause to be
advanced
funds as necessary for the purpose of effecting the timely payment
of taxes and
assessments on the Mortgaged Properties, which advances shall be
Servicing
Advances reimbursable in the first instance from related
collections from the
Mortgagors pursuant to Section 3.09(b), and further as provided in
Section 3.11.
Any cost incurred by a Servicer or by Subservicers in effecting the
timely
payment of taxes and assessments on a Mortgaged Property shall not
be added to
the unpaid principal balance of the related Mortgage Loan,
notwithstanding that
the terms of such Mortgage Loan so permit.
(c) Notwithstanding anything in this Agreement to the contrary,
each
Servicer may not make any future advances with respect to a
Mortgage Loan
(except as provided in Section 4.01) and no Servicer shall (i)
permit any
modification with respect to any Mortgage Loan (except in the case
of a
defaulted Mortgage Loan) that would change the Mortgage Rate,
reduce or increase
the principal balance (except for reductions resulting from actual
payments of
principal) or change the final maturity date on such Mortgage Loan
(except for a
reduction of interest payments resulting from the application of
the
Servicemembers Civil Relief Act or any similar state statutes) or
(ii) permit
any modification, waiver or amendment of any term of any Mortgage
Loan that
would both (A) effect an exchange or reissuance of such Mortgage
Loan
85
under Section 1001 of the Code (or final, temporary or proposed
Department of
the Treasury regulations promulgated thereunder) and (B) cause any
REMIC created
hereunder to fail to qualify as a REMIC under the Code or the
imposition of any
tax on "prohibited transactions" or "contributions after the
startup day" under
the REMIC Provisions, or (iii) except as provided in Section
3.07(a), waive any
Prepayment Charges.
(d) Each Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release
such
Servicer from the responsibilities or liabilities arising under
this Agreement.
(e) In the event that the Mortgage Loan Documents relating to any
Mortgage Loan contain provisions requiring the related Mortgagor to
submit to
binding arbitration of any disputes arising in connection with such
Mortgage
Loan, the applicable Servicer shall be entitled at its sole
discretion to waive
any such provisions on behalf of the Trust and to send written
notice of such
waiver to the related Mortgagor, although the Mortgagor may still
require
arbitration of such disputes at its option.
(f) Master Financial, with assistance from the Backup Servicer,
hereby
agrees to provide the Backup Servicer with (i) the systems and data
information
from the servicing systems in use by each Servicer (the "Data File
Layouts and
Definitions") and (ii) a test data file, which shall include the
loan master
file, the transaction history file and all other files necessary to
carryout the
servicing-related activities (the "Test Data File"), both in a
format acceptable
to the Backup Servicer within 5 days of the Closing Date. Using
this
information, the Backup Servicer will map the data from Master
Financial's
system to its own data structure ("Data Mapping Matrix"). The
Backup Servicer
shall confirm in writing to the Master Servicer, Master Financial,
the
Securities Administrator and the Trustee that it has completed the
Data Mapping
Matrix, and received and verified the completeness of the Test Data
File within
7 business days of receipt of the Data File Layouts and Definitions
and the Test
Data File.
(g) Notwithstanding the foregoing, with respect to any Mortgage
Loan
serviced by Master Financial, upon becoming 60 days Delinquent,
Master Financial
will promptly notify Saxon, the Master Servicer, the Securities
Administrator
and the Depositor, of the delinquent status of such Mortgage Loan.
In the event
that the Scheduled Payment on such Mortgage Loan has not been
received by the
74th day following the related Due Date, Master Financial will
notify the
related Mortgagor that servicing of such Mortgage Loan will be
transferred to
Saxon and Saxon hereby agrees to accept any such servicing
transfer. Any such
servicing transfer from Master Financial to Saxon shall occur on
the first day
of the immediately succeeding calendar month and Saxon, as
successor Servicer,
shall be subject to all the obligations and entitled to all the
benefits of a
successor Servicer set forth in this Agreement.
Section 3.02 Subservicing Agreements Between the Servicers and
Subservicers.
(a) Each Servicer may enter into subservicing agreements with
Subservicers for the servicing and administration of the Mortgage
Loans
("Subservicing Agreements"). Each Servicer represents and warrants
to the other
parties hereto that, except as otherwise set forth herein, no
Subservicing
Agreement is in effect as of the Closing Date with respect to any
Mortgage Loans
required to be serviced by it hereunder. Each Servicer shall give
notice to the
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Depositor, the Securities Administrator, the Master Servicer, the
Backup
Servicer and the Trustee of any such Subservicer and Subservicing
Agreement,
which notice shall contain all information (including without
limitation a copy
of the Subservicing Agreement) reasonably necessary to enable the
Securities
Administrator, pursuant to Section 8.12(g), to accurately and
timely report the
event under Item 6.02 of Form 8-K pursuant to the Exchange Act (if
such reports
under the Exchange Act are required to be filed under the Exchange
Act). No
Subservicing Agreement shall be effective until 30 days after such
written
notice is received by both the Depositor, the Securities
Administrator, the
Master Servicer, the Backup Servicer and the Trustee. The
Securities
Administrator shall not be required to review or consent to such
Subservicing
Agreements and shall have no liability in connection therewith.
Each Subservicer shall be (i) authorized to transact business in
the
state or states in which the related Mortgaged Properties it is to
service are
situated, if and to the extent required by applicable law to enable
the
Subservicer to perform its obligations hereunder and under the
Subservicing
Agreement, (ii) an institution approved as a mortgage loan
originator by the
Federal Housing Administration or an institution that has deposit
accounts
insured by the FDIC and (iii) a Freddie Mac or Fannie Mae approved
mortgage
servicer. Each Subservicing Agreement must impose on the
Subservicer
requirements conforming to the provisions set forth in Section 3.08
and provide
for servicing of the Mortgage Loans consistent with the terms of
this Agreement.
Each Servicer will examine each Subservicing Agreement to which it
is a party
and will be familiar with the terms thereof. The terms of any
Subservicing
Agreement will not be inconsistent with any of the provisions of
this Agreement.
Each Servicer and the Subservicers may enter into and make
amendments to the
Subservicing Agreements or enter into different forms of
Subservicing
Agreements; provided, however, that any such amendments or
different forms shall
be consistent with and not violate the provisions of this
Agreement, and that no
such amendment or different form shall be made or entered into
which could be
reasonably expected to be materially adverse to the interests of
the Trustee.
Any variation from the provisions set forth in Section 3.08
relating to
insurance or priority requirements of Subservicing Accounts, or
credits and
charges to the Subservicing Accounts or the timing and amount of
remittances by
the Subservicers to the applicable Servicer, are conclusively
deemed to be
inconsistent with this Agreement and therefore prohibited. Each
Servicer shall
deliver to the Securities Administrator, the Trustee, the Master
Servicer, the
Backup Servicer, the Unaffiliated Seller and the Depositor copies
of all
Subservicing Agreements, and any amendments or modifications
thereof, promptly
upon such Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, each Servicer
(except as otherwise provided in the last sentence of this
paragraph), for the
benefit of the Trustee, shall enforce the obligations of each
Subservicer under
the related Subservicing Agreement, including, without limitation,
any
obligation to make advances in respect of delinquent payments as
required by a
Subservicing Agreement. Such enforcement, including, without
limitation, the
legal prosecution of claims, termination of Subservicing
Agreements, and the
pursuit of other appropriate remedies, shall be in such form and
carried out to
such an extent and at such time as the applicable Servicer, in its
good faith
business judgment, would require were it the owner of the related
Mortgage
Loans. Each Servicer shall pay the costs of such enforcement at its
own expense,
and shall be reimbursed therefor only (i) from a general recovery
resulting from
such enforcement, to the extent, if any, that such recovery exceeds
all amounts
due in respect of the
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related Mortgage Loans or (ii) from a specific recovery of costs,
expenses or
attorneys' fees against the party against whom such enforcement is
directed.
(c) Each Servicer shall cause any Subservicer engaged by such
Servicer
(or by any Subservicer) for the benefit of the Depositor, the
Securities
Administrator, the Master Servicer, the Backup Servicer and the
Trustee to
comply with the provisions of this Section 3.02 and with Sections
3.22, 3.23,
6.02 and 6.05 of this Agreement to the same extent as if such
Subservicer were a
Servicer, and to provide the information required with respect to
such
Subservicer under Section 8.12 of this Agreement. Each Servicer
shall be
responsible for obtaining from each such Subservicer and delivering
to
applicable Persons any servicer compliance statement required to be
delivered by
such Subservicer under Section 3.22 and any assessment of
compliance report and
related accountant's attestation required to be delivered by such
Subservicer
under Section 3.23, in each case as and when required to be
delivered.
(d) Subject to the conditions set forth in this Section 3.02(d),
each
Servicer and any Subservicer engaged by such Servicer is permitted
to utilize
one or more Subcontractors to perform certain of its obligations
hereunder. Each
Servicer shall promptly upon request provide to the Depositor a
written
description (in form and substance satisfactory to the Depositor)
of the role
and function of each Subcontractor utilized by each Servicer or any
such
Subservicer, specifying, not later than the date specified for
delivery of the
annual report on assessment of compliance set forth in Section
3.23(b) (i) the
identity of each such Subcontractor, if any, that is materially
"participating
in the servicing function" (with respect to more than 5% of the
pool assets)
within the meaning of Item 1122 of Regulation AB, and (ii) which
elements of the
Servicing Criteria will be addressed in assessments of compliance
provided by
each Subcontractor identified pursuant to clause (i) of this
paragraph. As a
condition to the utilization by a Servicer or any such Subservicer
of any
Subcontractor determined to be materially "participating in the
servicing
function" (with respect to more than 5% of the pool assets)within
the meaning of
Item 1122 of Regulation AB, each Servicer shall cause any such
Subcontractor
used by such Servicer (or by any such Subservicer) for the benefit
of the
Depositor, the Securities Administrator, the Master Servicer, the
Backup
Servicer and the Trustee to comply with the provisions of Section
3.23 of this
Agreement to the same extent as if such Subcontractor were a
Servicer. Each
Servicer shall be responsible for obtaining from each such
Subcontractor and
delivering to the applicable Persons any assessment of compliance
report and
related accountant's attestation required to be delivered by such
Subcontractor
under Section 3.23, in each case as and when required to be
delivered.
(e) Notwithstanding the foregoing, if a Servicer engages a
Subcontractor in connection with the performance of any of its
duties under this
Agreement, such Servicer shall be responsible for determining
whether such
Subcontractor is a "servicer" within the meaning of Item 1101 of
Regulation AB
and whether any such affiliate or third-party vendor meets the
criteria in Item
1108(a)(2)(i) through (iii) of Regulation AB. If a Servicer
determines, pursuant
to the preceding sentence, that such Subcontractor is a "servicer"
within the
meaning of Item 1101 of Regulation AB and meets the criteria in
Item
1108(a)(2)(i) through (iii) of Regulation AB, then such
Subcontractor shall be
deemed to be a Subservicer for purposes of this Agreement, the
engagement of
such Subservicer shall not be effective unless and until notice is
given
pursuant to Section 3.02(a) and such Servicer shall comply with
Section 3.02(c)
with respect thereto.
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Section 3.03 Successor Subservicers.
Each Servicer shall be entitled to terminate any Subservicing
Agreement to which it is a party and the rights and obligations of
any
Subservicer pursuant to any Subservicing Agreement in accordance
with the terms
and conditions of such Subservicing Agreement provided, however,
that the
termination, resignation or removal of a Subservicer shall be not
be effective
until 30 days after written notice is received by the Depositor and
the
Securities Administrator that contains all information reasonably
necessary to
enable the Securities Administrator, pursuant to Section 8.12(g),
to accurately
and timely report the event under Item 6.02 of Form 8-K pursuant to
the Exchange
Act (if such reports under the Exchange Act are required to be
filed under the
Exchange Act). In the event of termination of any Subservicer, all
servicing
obligations of such Subservicer shall be assumed simultaneously by
the
applicable Servicer without any act or deed on the part of such
Subservicer or
such Servicer, and such Servicer either shall service directly the
related
Mortgage Loans or shall enter into a Subservicing Agreement with a
successor
Subservicer which qualifies under Section 3.02.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Depositor, the
Master Servicer,
Backup Servicer or the Securities Administrator without fee, in
accordance with
the terms of this Agreement, in the event that the applicable
Servicer shall,
for any reason, no longer be one of the Servicers (including
termination due to
an Event of Default).
Section 3.04 Liability of the Servicers.
Notwithstanding any Subservicing Agreement, any of the provisions
of
this Agreement relating to agreements or arrangements between a
Servicer and a
Subservicer or reference to actions taken through a Subservicer or
otherwise,
such Servicer shall remain obligated and primarily liable to the
Trustee for the
servicing and administering of the Mortgage Loans in accordance
with the
provisions of Section 3.01 without diminution of such obligation or
liability by
virtue of such Subservicing Agreements or arrangements or by virtue
of
indemnification from the Subservicer and to the same extent and
under the same
terms and conditions as if such Servicer alone were servicing and
administering
the Mortgage Loans. Each Servicer shall be entitled to enter into
any agreement
with a Subservicer for indemnification of the applicable Servicer
by such
Subservicer and nothing contained in this Agreement shall be deemed
to limit or
modify such indemnification.
Section 3.05 No Contractual Relationship Between Subservicers and
the
Trustee.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Subservicer
in its capacity as such shall be deemed to be between the
Subservicer and the
applicable Servicer alone, and neither the Trustee nor the
Securities
Administrator (or any successor Servicer) shall not be deemed a
party thereto
and shall have no claims, rights, obligations, duties or
liabilities with
respect to the Subservicer except as set forth in Section 3.06.
Each Servicer
shall be solely liable for all fees owed by it to any Subservicer,
irrespective
of whether such Servicer's compensation pursuant to this Agreement
is sufficient
to pay such fees.
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Section 3.06 Assumption or Termination of Subservicing Agreements
by
Backup Servicer or Master Servicer.
In the event that Master Financial or Saxon at any time shall for
any
reason no longer be a Servicer (including by reason of the
occurrence of an
Event of Default), the Backup Servicer (in the event that Master
Financial
ceases to be as Servicer) or the Master Servicer (in the event that
Saxon ceases
to be as Servicer) or its designee shall thereupon assume all of
the rights and
obligations of the applicable Servicer under each Subservicing
Agreement that
such Servicer may have entered into, with copies thereof provided
to the Backup
Servicer or the Master Servicer, as applicable, prior to the Backup
Servicer or
the Master Servicer, as applicable, assuming such rights and
obligations, unless
the Backup Servicer or the Master Servicer, as applicable, elects
to terminate
any Subservicing Agreement in accordance with its terms as provided
in Section
3.03.
Upon such assumption, the Backup Servicer or the Master Servicer,
as
the case may be, its designee or the successor Servicer shall be
deemed, subject
to Section 3.03, to have assumed all of the applicable Servicer's
interest
therein and to have replaced such Servicer as a party to each
Subservicing
Agreement to which the predecessor Servicer was a party to the same
extent as if
each Subservicing Agreement had been assigned to the assuming
party, except that
(i) the applicable Servicer shall not thereby be relieved of any
liability or
obligations under any Subservicing Agreement that arose before it
ceased to be a
Servicer and (ii) none of the Depositor, the Trustee, the Master
Servicer, the
Backup Servicer, their designees or any successor Servicer shall be
deemed to
have assumed any liability or obligation of such Servicer
(including, but
without limitation, any and all Advances made by the predecessor
Servicer) that
arose before such predecessor Servicer ceased to be a Servicer.
The applicable Servicer at its expense shall, upon request of the
Backup Servicer or the Master Servicer, as applicable, deliver to
the assuming
party all documents and records relating to each Subservicing
Agreement to which
it is a party and the Mortgage Loans then being serviced by it and
an accounting
of amounts collected and held by or on behalf of it, and otherwise
use its best
efforts to effect the orderly and efficient transfer of the
Subservicing
Agreements to the assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments;
Establishment of Certain Accounts.
(a) Each Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage
Loans, and
shall, to the extent such procedures shall be consistent with this
Agreement and
the terms and provisions of any applicable Insurance Policies,
follow such
collection procedures as it would follow with respect to mortgage
loans
comparable to the Mortgage Loans and held for its own account.
Consistent with
the foregoing and Accepted Servicing Practices, a Servicer may (i)
waive any
late payment charge or, if applicable, any penalty interest, or
(ii) extend the
due dates for the Scheduled Payments due on a Mortgage Note for a
period of not
greater than 180 days; provided that any extension pursuant to
clause (ii) above
shall not affect the amortization schedule of any Mortgage Loan for
purposes of
any computation hereunder, except as provided below. In the event
of any such
arrangement pursuant to clause (ii) above, such Servicer shall make
timely
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advances on such Mortgage Loan during such extension pursuant to
Section 4.01
and in accordance with the amortization schedule of such Mortgage
Loan without
modification thereof by reason of such arrangements, subject to
Section 4.01(d)
pursuant to which such Servicer shall not be required to make any
such advances
that are Nonrecoverable P&I Advances. Notwithstanding the
foregoing, a Servicer
may not waive, in whole or in part, a Prepayment Charge, except
under the
following circumstances: (i) such waiver relates to a default or a
reasonably
foreseeable default and would, in the reasonable judgment of such
Servicer,
maximize recovery of total proceeds taking into account the value
of such
Prepayment Charge and the related Mortgage Loan, and doing so is
standard and
customary in servicing mortgage loans similar to the Mortgage Loans
(including
any waiver of a Prepayment Charge in connection with a refinancing
of a Mortgage
Loan that is related to a default or a reasonably foreseeable
default), and in
no event will such Servicer waive a Prepayment Charge in connection
with a
refinancing of a Mortgage Loan that is not related to a default or
a reasonably
foreseeable default or (ii) such Prepayment Charge is not permitted
to be
collected by applicable law. If a Prepayment Charge is waived other
than as
permitted by the prior sentence, then such Servicer is required to
pay the
amount of such waived Prepayment Charge, for the benefit of the
Holders of the
Class P Certificates, by depositing such amount into the related
Collection
Account together with and at the time that the amount prepaid on
the related
Mortgage Loan is required to be deposited into the related
Collection Account.
Notwithstanding any provision in this Agreement to the contrary, in
the event
the Prepayment Charge payable under the terms of the Mortgage Note
is less than
the amount of the Prepayment Charge set forth in the Mortgage Loan
Schedule or
other information provided to the applicable Servicer, such
Servicer shall not
have any liability or obligation with respect to such difference,
and in
addition shall not have any liability or obligation to pay the
amount of any
uncollected Prepayment Charge if the failure to collect such amount
is the
direct result of inaccurate or incomplete information on the
Mortgage Loan
Schedule.
(b) (i) The Securities Administrator shall establish and maintain
the
Excess Reserve Fund Account, on behalf of the Class X
Certificateholders to
receive any Basis Risk Payment and to secure their limited recourse
obligation
to pay to the LIBOR Certificateholders Basis Risk Carry Forward
Amounts.
(ii) On each Distribution Date, the Securities Administrator
shall deposit the amount of any Basis Risk Payment made for the
benefit of the
Certificateholders made for the benefit of the LIBOR Certificates
for such date
into the Excess Reserve Fund Account.
(c) (i) On each Distribution Date on which there exists a Basis
Risk
Carry Forward Amount on any Class of Certificates, the Securities
Administrator
shall (1) withdraw from the Distribution Account and deposit in the
Excess
Reserve Fund Account, as set forth in Section 4.02(a)(iii)(U), the
lesser of (a)
the Class X Distributable Amount (without regard to the reduction
in the
definition thereof with respect to the Basis Risk Payment) (to the
extent
remaining after the distributions specified in Sections
4.02(a)(iii)(A)-(T), and
(b) the Basis Risk Payment and (2) withdraw from the Excess Reserve
Fund Account
amounts necessary to pay to such Class or Classes of Certificates
the Basis Risk
Carry Forward Amount. Such payments shall be allocated to those
Classes on a pro
rata basis based upon the amount of Basis Risk Carry
