POOLING AND SERVICING AGREEMENT

EXECUTION

 

 

GREENWICH CAPITAL ACCEPTANCE, INC.,

Depositor

 

GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,

Seller

 

WELLS FARGO BANK, N.A.,

Master Servicer and Securities Administrator

 

CLAYTON FIXED INCOME SERVICES INC.,

Credit Risk Manager

 

and

 

DEUTSCHE BANK NATIONAL TRUST COMPANY,

Trustee and Custodian

POOLING AND SERVICING AGREEMENT

Dated as of August 1, 2006

 

DSLA Mortgage Loan Trust

Mortgage Loan Pass-Through Certificates, Series 2006-AR2

 

 

Table of Contents

 

 

EXHIBITS AND SCHEDULES:
Exhibit A	Form of Senior Certificate
Exhibit B	Form of Subordinate Certificate
Exhibit C-1	Form of Class C Certificate
Exhibit C-2	Form of Class P Certificate
Exhibit C-3	Form of Class R Certificate
Exhibit D	Form of Reverse Certificate
Exhibit E	[Reserved]
Exhibit F	Request for Release
Exhibit G-1	Form of Receipt of Mortgage Note
Exhibit G-2	Form of Interim Certification of Trustee
Exhibit G-3	Form of Final Certification of Trustee
Exhibit H	Form of Lost Note Affidavit
Exhibit I-1	Form of ERISA Representation for Residual Certificate
Exhibit I-2	Form of ERISA Representation for ERISA Restricted Trust Certificates
Exhibit J-1	Form of Investment Letter [Non-Rule 144A]
Exhibit J-2	Form of Rule 144A Investment Letter
Exhibit K	Form of Transferor Certificate
Exhibit L	Transfer Affidavit for Residual Certificate Pursuant to Section 6.02(e)
Exhibit M	Certificate Insurance Policy
Exhibit N	List of Servicers and Servicing Agreements
Exhibit O	Transaction Parties
Exhibit P	Form of Subsequent Transfer Agreement
Exhibit Q	Servicing Criteria
Exhibit R	Additional Form 10-D Disclosure
Exhibit S	Additional Form 10-K Disclosure
Exhibit T	Additional Form 8-K Disclosure
Exhibit U	Additional Disclosure Notification
Schedule I	Mortgage Loan Schedule

 

 

This Pooling and Servicing Agreement is dated as of August 1, 2006 (the “ Agreement ”), among GREENWICH CAPITAL ACCEPTANCE, INC., a Delaware corporation, as depositor (the “ Depositor ”), GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a New York corporation, as seller (the “ Seller ”), WELLS FARGO BANK, N.A., a national banking association, as master servicer (in such capacity, the “ Master Servicer ”) and as securities administrator (in such capacity, the “ Securities Administrator ”), CLAYTON FIXED INCOME SERVICES INC., as credit risk manager (the “Credit Risk Manager”) and DEUTSCHE BANK NATIONAL TRUST COMPANY, a national banking association, as trustee and custodian (the “ Trustee ”).

PRELIMINARY STATEMENT:

Through this Agreement, the Depositor intends to cause the issuance and sale of the DSLA Mortgage Loan Trust Mortgage Loan Pass-Through Certificates, Series 2006-AR2 (the “ Certificates ”) representing in the aggregate the entire beneficial ownership of the Trust Fund, the primary assets of which are the Mortgage Loans (as defined below).

The Depositor intends to sell the Certificates, to be issued hereunder in multiple classes, which in the aggregate will evidence the entire beneficial ownership interest in the Trust Fund. The Certificates will consist of seventeen classes of certificates, designated as (i) the Class 1A-1A Certificates, (ii) the Class 1A-1B Certificates, (iii) the Class 2A-1A Certificates, (iv) the Class 2A-1B1 Certificates, (v) the Class 2A-1B2, (vi) the Class 2A-1B3, (vii) the Class 2A-1C, (viii) the Class M-1 Certificates, (ix) the Class M-2 Certificates, (x) Class M-3 Certificates, (xi) the Class M-4 Certificates, (xii) the Class M-5 Certificates, (xiii) the Class M-6 Certificates, (xiv) the Class M-7 Certificates, (xv) the Class C Certificates, (xvi) the Class P Certificates and (xvii) the Class R Certificates.

For federal income tax purposes, the Trust Fund (exclusive of the Prefunding Account, the assets held in the Basis Risk Reserve Fund, the Final Maturity Reserve Trust and the Final Maturity Reserve Account (the “ Excluded Trust Property ”)) comprises three REMICs in a tiered REMIC structure: the “Pooling REMIC,” the “ Lower-Tier REMIC ” and the “ Upper-Tier REMIC .” Each Certificate, other than the Class R Certificate, shall represent ownership of a regular interest in the Upper-Tier REMIC, as described herein. The LIBOR Certificates   also represent the right to receive (i) payments in respect of the Final Maturity Reserve Account and (ii) payments in respect of Basis Risk Shortfalls from the Basis Risk Reserve Fund as provided in Section 5.07. The owners of the Class C Certificates beneficially own the Basis Risk Reserve Fund, the Final Maturity Reserve Account and the Final Maturity Reserve Trust. The Class R Certificate represents the sole class of residual interest in the Upper-Tier REMIC.

The Pooling REMIC will hold as its assets all of the assets constituting the Trust Fund (exclusive of the Excluded Trust Property) and will issue interests (the “ Pooling REMIC Regular Interests ”) (which will be uncertificated and will represent the regular interests in the Pooling REMIC) and a residual interest (the “Class PT-R Interest”) which will also be uncertificated and which will represent the sole class of residual interest in the Pooling REMIC. The Trustee will hold the Pooling REMIC Regular Interests as assets of the Lower-Tier REMIC.

 

The Lower-Tier REMIC will hold as its assets the Pooling REMIC Regular Interests and will issue interests (the “ Lower-Tier Regular Interests ”) (which will be uncertificated and will represent the regular interests in the Lower-Tier REMIC) and a residual interest (the “Class LT-R Interest”) which will also be uncertificated and which will represent the sole class of residual interest in the Lower-Tier REMIC. The Trustee will hold the Lower-Tier Regular Interests as assets of the Upper-Tier REMIC.

For purposes of the REMIC Provisions, the startup day for each REMIC created hereby is the Closing Date. All REMIC regular and residual interests created hereby will be retired on or before the Latest Possible Maturity Date.

Pooling REMIC Interests

Designation		Interest Rate			Initial Principal Balance			Related group
PT-1			(1)		$	434,287,068.08			Group 1
PT-1-PF			(2)		$	91,827,627.00			Group 1
PT-1-X			(3)			(3)			Group 1
PT-2			(1)		$	580,236,361.30			Group 2
PT-2-PF			(2)		$	103,648,944.00			Group 2
PT-2-X			(3)			(3)			Group 2
PT-R			(4)			(4)			N/A

 

 

On each Distribution Date, Available Funds for all Loan Groups shall be allocated among the Pooling REMIC Interests in the following order of priority:

 

 

 

On any Distribution Date, after all distributions of Available Funds on such date, Realized Losses shall be allocated among the Pooling REMIC Interests in the same order of priority in which principal is distributed among such Pooling REMIC Interests pursuant to priorities (i) and (ii) above.

 

On each Distribution Date, Prepayment Penalty Amounts with respect to Loan Group 1 and Loan Group 2 shall be distributed to the PT-1 Interest and the PT-2 Interest, respectively.

Lower-Tier REMIC

The following table sets forth (or describes) the designation, interest rate, and initial principal balance of each Lower-Tier Interest in the Lower-Tier REMIC, each of which, other than the LT-R Lower-Tier Interest) is hereby designated as a regular interest in the Lower-Tier REMIC (the “Lower-Tier Regular Interests):

Designation		Interest Rate			Initial Principal Balance			Corresponding Class of Certificate
LT-1A-1A			(1)		$	170,974,000.00			1A-1A
LT-1A-1B			(1)		$	73,274,500.00			1A-1B
LT-2A-1A			(1)		$	190,496,500.00			2A-1A
LT-2A-1B1			(1)		$	36,301,500.00			2A-1B1
LT-2A-1B2			(1)		$	18,012,500.00			2A-1B2

Designation			Interest Rate			Initial Principal Balance			Corresponding Class of Certificate
LT-2A-1B3			(1)		$	25,059,500.00			2A-1B3
LT-2A-1C			(1)		$	47,624,000.00			2A-1C
LT-M-1			(1)		$	16,335,000.00			M-1
LT-M-2			(1)		$	6,957,500.00			M-2
LT-M-3			(1)		$	3,630,000.00			M-3
LT-M-4			(1)		$	3,327,500.00			M-4
LT-M-5			(1)		$	3,630,000.00			M-5
LT-M-6			(1)		$	3,025,000.00			M-6
LT-M-7			(1)		$	3,327,500.00			M-7
LT-Q			(1)		$	608,025,000.38			N/A
LT-I			(2)			(2)			N/A
LT-R			(3)			(3)			N/A

 

On each Distribution Date, Available Funds shall be distributed in payment of principal on the Lower-Tier Regular Interests as follows:

 

 

On each Distribution Date, after taking into account principal distributions under priorities (i) and (ii) above, Realized Losses attributable to principal and any Net Deferred Interest shall each be allocated among the Lower-Tier Regular Interests in the same manner that principal is distributed among such Lower-Tier Regular Interests.

On each Distribution Date, Prepayment Penalty Amounts shall be distributed to the LT-Q Interest.

 

DEFINITIONS; DECLARATION OF TRUST

“ Final Distribution Date ”: The Distribution Date occurring in October 2036 (other than the Insured Certificates, which is November 2037).

“ Final Maturity Reserve Account ”: The account created pursuant to Section 5.09 of this Agreement.

“ Final Maturity Reserve Amount ”: For each Distribution Date prior to the Distribution Date in October 2016, zero. For each Distribution Date on and after the Distribution Date in October 2016 to and including the earlier of (i) the Distribution Date in September 2026 or (ii) the termination of the Trust, the product of (x) the quotient of the Final Maturity Reserve Rate divided by 12 and (y) the aggregate Stated Principal Balance of the Mortgage Loans on the first day of the related Due Period (not including for this purpose Mortgage Loans for which prepayments in full have been received and distributed in the month prior to the Distribution Date).

“ Final Maturity Reserve Rate ”: A per annum rate equal to the product of (i) 1.00% and (ii) a fraction, the numerator of which is the aggregate Stated Principal Balance as of the Cut-off Date of the Mortgage Loans having 40-year original terms to maturity and the denominator of which is aggregate Stated Principal Balance as of the Cut-off Date of all of the Mortgage Loans.

“ Final Maturity Reserve Trust ”: The corpus of a trust created pursuant to Section 5.09 of this Agreement and designated as the “Final Maturity Reserve Trust,” consisting of the Final Maturity Reserve Account, but which is not an asset of any REMIC.

“ Final Recovery Determination ”: With respect to any defaulted Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property purchased by the Seller pursuant to or contemplated by Section 2.03, 3.25 and 10.01), a determination made by the Servicer that all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which it expects to be finally recoverable in respect thereof have been so recovered.

“ Form 8-K Disclosure Information ”: As defined in Section 3.19(c).

“ Freddie Mac ”: The Federal Home Loan Mortgage Corporation or any successor thereto.

“ GCFP ”: Greenwich Capital Financial Products, Inc., and its successors or assigns.

“ Gross Margin ”: With respect to each Mortgage Loan, the fixed percentage set forth in the related Mortgage Note that is added to the applicable Index on each Adjustment Date in accordance with the terms of the related Mortgage Note used to determine the Loan Rate for such Mortgage Loan.

“ Group 1 Adjusted Cap Rate ”: For any Distribution Date and for the Group 1 Certificates, the Net WAC Cap for such Distribution Date, determined by first reducing the Net WAC by a per annum rate equal to the product of (i) the Net Deferred Interest for Loan Group 1 for that Distribution Date multiplied by (ii) 12, divided by the Pool Collateral Balance for Loan Group 1 as of the first day of the month before such Distribution Date (or in the case of the first Distribution Date, as of the Initial Cut-off Date).

“ Group 1 Certificates ”: The Class 1A-1A and Class 1A-1B Certificates.

“ Group 1 Mortgage Loan ”: A Mortgage Loan that is identified as such on the Mortgage Loan Schedule.

“ Group 1 Prefunded Amount ”: The amount deposited in the Prefunding Account on the Closing Date to purchase additional Group 1 Mortgage Loans, which shall equal $91,827,627.00.

“ Group 1 Principal Distribution Amount ”: For any Distribution Date on or after the Stepdown Date and as long as a Trigger Event has not occurred or is not continuing with respect to such Distribution Date, will be the lesser of (a) the greater of (x) the Senior Principal Distribution Amount multiplied by the Group 1 Principal Distribution Percentage and (y) the amount by which the aggregate Class Principal Balances of the Group 1 Certificates exceed the Stated Principal Balances of the Group 1 Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (b) the aggregate Class Principal Balance of the Group 1 Certificates; provided, however , that with respect to any such Distribution Date on which the aggregate Class Principal Balance of the Group 2 Certificates is reduced to zero, the Group 2 Principal Distribution Percentage of the Senior Principal Distribution Amount available for distribution to the Senior Certificates in excess of the amount necessary to reduce the aggregate Class Principal Balance of the Group 2 Certificates to zero will be applied to increase the Group 1 Principal Distribution Amount (so long as any Class of Group 1 Certificates is outstanding).

“ Group 1 Principal Distribution Percentage ”: For any Distribution Date, a fraction, the numerator of which is (a) the sum of (i) the Stated Principal Balances of the Group 1 Mortgage Loans as of the first day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in respect of Loan Group 1 in the Prefunding Account as of the first day of the related Prepayment Period minus (b) the sum of (i) the Stated Principal Balances of the Group 1 Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in respect of Loan Group 1 in the Prefunding Account as of the last day of the related Prepayment Period, and the denominator of which is (a) the sum of (i) the Stated Principal Balances of the Mortgage Loans as of the first day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in the Prefunding Account as of the first day of the related Prepayment Period minus (b) the sum of (i) the Stated Principal Balances of the Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in the Prefunding Account as of the last day of the related Prepayment Period.

“ Group 2 Adjusted Cap Rate ”: For any Distribution Date and for the Group 2 Certificates, the Net WAC Cap for such Distribution Date, determined by first reducing the Net WAC by a per annum rate equal to the product of (i) the Net Deferred Interest for Loan Group 2 for that Distribution Date multiplied by (ii) 12, divided by the Pool Collateral Balance for Loan Group 2 as of the first day of the month before such Distribution Date (or in the case of the first Distribution Date, as of the Initial Cut-off Date).

“ Group 2 Certificates ”: The Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3 and Class 2A-1C Certificates.

“ Group 2 Mortgage Loan ”: A Mortgage Loan that is identified as such on the Mortgage Loan Schedule.

“ Group 2 Prefunded Amount ”: The amount deposited in the Prefunding Account on the Closing Date to purchase additional Group 2 Mortgage Loans, which shall equal $103,648,944.00.

“ Group 2 Principal Distribution Amount ”: For any Distribution Date on or after the Stepdown Date and as long as a Trigger Event has not occurred or is not continuing with respect to such Distribution Date, will be the lesser of (a) the greater of (x) the Senior Principal Distribution Amount multiplied by the Group 2 Principal Distribution Percentage and (y) the amount by which the aggregate Class Principal Balances of the Group 2 Certificates exceed the Stated Principal Balances of the Group 2 Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (b) the aggregate Class Principal Balance of the Group 2 Certificates; provided, however , that with respect to any such Distribution Date on which the aggregate Class Principal Balance of the Group 1 Certificates is reduced to zero, the Group 1 Principal Distribution Percentage of the Senior Principal Distribution Amount available for distribution to the Senior Certificates in excess of the amount necessary to reduce the aggregate Class Principal Balance of the Group 1 Certificates to zero will be applied to increase the Group 2 Principal Distribution Amount (so long as any Class of Group 2 Certificates is outstanding).

“ Group 2 Principal Distribution Percentage ”: For any Distribution Date, a fraction, the numerator of which is (a) the sum of (i) the Stated Principal Balances of the Group 2 Mortgage Loans as of the first day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in respect of Loan Group 2 in the Prefunding Account as of the first day of the related Prepayment Period minus (b) the sum of (i) the Stated Principal Balances of the Group 2 Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in respect of Loan Group 2 in the Prefunding Account as of the last day of the related Prepayment Period, and the denominator of which is (a) the sum of (i) the Stated Principal Balances of the Mortgage Loans as of the first day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in the Prefunding Account as of the first day of the related Prepayment Period minus (b) the sum of (i) the Stated Principal Balances of the Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii) the amount on deposit in the Prefunding Account as of the last day of the related Prepayment Period.

“ Indemnification Agreement ”: The Indemnification Agreement dated as of the Closing Date among the Depositor, the Seller, Greenwich Capital Markets, Inc. and the Certificate Insurer, including any amendments and supplements thereto.

“ Indemnified Persons ”: The Trustee (individually in its corporate capacity and in all capacities hereunder), the Master Servicer, the Depositor, the Custodian, the Securities Administrator (in all capacities hereunder), the NIMS Insurer and the Certificate Insurer and their officers, directors, agents and employees and, with respect to the Trustee, any separate co-trustee and its officers, directors, agents and employees.

“ Independent ”: When used with respect to any accountants, a Person who is “independent” within the meaning of Rule 2-01(B) of the Securities and Exchange Commission’s Regulation S-X. Independent means, when used with respect to any other Person, a Person who (A) is in fact independent of another specified Person and any affiliate of such other Person, (B) does not have any material direct or indirect financial interest in such other Person or any affiliate of such other Person, (C) is not connected with such other Person or any affiliate of such other Person as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions and (D) is not a member of the immediate family of a Person defined in clause (B) or (C) above.

“ Indenture ”: An indenture relating to the issuance of notes secured by the Class C Certificates, the Class P Certificates and/or the Residual Certificates (or any portion thereof) which may or may not be guaranteed by the NIMS Insurer.

“ Index ”: With respect to each Mortgage Loan and each Adjustment Date, the index specified in the related Mortgage Note.

“ Initial Certificate Principal Balance ”: With respect to any Certificate other than the Class C and Class R Certificates, the amount designated “Initial Certificate Principal Balance” on the face thereof.

“ Initial Cut-off Date ”: With respect to any Initial Mortgage Loan, the Close of Business in New York City on August 1, 2006.

“Initial LIBOR Rate” : 5.330%.

 

“ Initial Loan Group 1 Balance ”: $434,287,068.08.

“ Initial Loan Group 2 Balance ”: $580,236,361.30.

“ Initial Mortgage Loan ”: Any Mortgage Loan conveyed to the Trust Fund on the Closing Date pursuant to Section 2.01 hereof, which Mortgage Loan shall be listed on the Mortgage Loan Schedule delivered pursuant to this Agreement.

“ Insurance Proceeds ”: With respect to any Mortgage Loan, proceeds of any title policy, hazard policy or other insurance policy covering a Mortgage Loan, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the related Mortgagor in accordance with the Servicing Agreement.

“ Insured Amount ”: As defined in the Certificate Insurance Policy.

“ Insured Certificates ”: The Class 1A-1B and Class 2A-1C Certificates.

“ Insurer Premium Rate ”: 0.08% per annum.

“ Interest Distributable Amount ”: With respect to any Distribution Date and each Class of Certificates (other than the Class C, Class P and Class R Certificates), the sum of (i) the Monthly Interest Distributable Amount for that Class and (ii) the Unpaid Interest Shortfall Amount for that Class.

“ Interest Remittance Amount ”: For any Distribution Date and Loan Group, the sum of (i) the portion of the Available Funds for such Distribution Date attributable to interest received or advanced with respect to the Mortgage Loans in such Loan Group and (ii) Principal Prepayments for such Loan Group received during the related Prepayment Period up to the amount of related Deferred Interest for such Distribution Date.

“ Interest Shortfall ”: With respect to any Distribution Date and each Mortgage Loan that during the related Prepayment Period was the subject of a Principal Prepayment or a reduction of its Monthly Payment under the Relief Act, constitutes an amount determined as follows:

(a)   Principal Prepayments in part received during the relevant Prepayment Period: the difference between (i) one month’s interest at the applicable Net Loan Rate for such Mortgage Loan on the amount of such prepayment and (ii) the amount of interest for the calendar month of such prepayment (adjusted to the applicable Net Loan Rate) received at the time of such prepayment; and

(b)   Principal Prepayments in full received during the relevant Prepayment Period: the difference between (i) one month’s interest at the applicable Net Loan Rate on the Stated Principal Balance of such Mortgage Loan immediately prior to such prepayment and (ii) the amount of interest for the calendar month of such prepayment (adjusted to the applicable Net Loan Rate) received at the time of such prepayment; and

(c)   any Relief Act Reductions for such Distribution Date.

 

“ Late Payment Rate ”: The meaning given to such term in the Certificate Insurance Policy.

“ Latest Possible Maturity Date ”: As determined as of the Cut-off Date, the Distribution Date following the fifth anniversary of the scheduled maturity date of the Mortgage Loan having the latest scheduled maturity date as of the Cut-off Date.

“ Lender-Paid Mortgage Insurance Loan ”: Each Mortgage Loan identified as such in the Mortgage Loan Schedule.

“ Lender-Paid Mortgage Insurance Fee ”: As to any Distribution Date and each Lender Paid Mortgage Insurance Mortgage Loan, an amount equal to the product of the Lender-Paid Mortgage Insurance Fee Rate and the outstanding Principal Balance of such Mortgage Loan as of the first day of the related Due Period.

“ Lender-Paid Mortgage Insurance Fee Rate ”: For each Lender-Paid Mortgage Insurance Loan and any Distribution Date, the per annum rate required to be paid in connection with the related lender-paid mortgage insurance policy for such Mortgage Loan on such Distribution Date.

“LIBOR” : With respect to the first Accrual Period, the Initial LIBOR Rate. With respect to each subsequent Accrual Period, a per annum rate determined on the LIBOR Determination Date in the following manner by the Securities Administrator on the basis of the “Interest Settlement Rate” set by the BBA for one-month United States dollar deposits, as such rates appear on the Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.

(a)   If on such a LIBOR Determination Date, the BBA’s Interest Settlement Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time), or if the Telerate Page 3750 is not available on such date, the Securities Administrator will obtain such rate from Reuters’ “page LIBOR 01” or Bloomberg’s page “BBAM.” If such rate is not published for such LIBOR Determination Date, LIBOR for such date will be the most recently published Interest Settlement Rate. In the event that the BBA no longer sets an Interest Settlement Rate, the 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 am (London time) on such date to prime banks in the London interbank market. In such event, the Securities Administrator will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of the quotations (rounded upwards if necessary to the nearest whole multiple of 1/16%). If fewer than two quotations are provided as requested, the rate for that date will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the 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 loan to leading European banks.

(b)   The establishment of LIBOR by the Securities Administrator and the Securities Administrator’s subsequent calculation of the Pass-Through Rate applicable to the LIBOR Certificates for the relevant Accrual Period, in the absence of manifest error, will be final and binding.

 

“ LIBOR Business Day ”: Any day on which banks in London, England and the City of New York are open and conducting transactions in foreign currency and exchange.

“ LIBOR Certificates ”: The Class 1A-1A, Class 1A-1B, Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3, Class 2A-1C Certificates and the Subordinate Certificates.

“ LIBOR Determination Date ”: The second LIBOR Business Day immediately preceding the commencement of each Accrual Period for the LIBOR Certificates.

“ Liquidated Mortgage Loan ”: As to any Distribution Date, any Mortgage Loan in respect of which the Servicer has determined, as of the end of the related Prepayment Period, that all Liquidation Proceeds that it expects to recover with respect to the liquidation of such Mortgage Loan or disposition of the related REO Property have been recovered.

“ 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 the Trust Fund by reason of its being purchased, sold or replaced pursuant to or as contemplated hereunder. 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 the Trust Fund by reason of its being sold or purchased pursuant to Section 10.01 hereof or the applicable provisions of the Servicing Agreement.

“ Liquidation Expenses ”: With respect to a Mortgage Loan in liquidation, unreimbursed expenses paid or incurred by or for the account of the Master Servicer or the Servicer, such expenses including (a) property protection expenses, (b) property sales expenses, (c) foreclosure and sale costs, including court costs and reasonable attorneys’ fees, and (d) similar expenses reasonably paid or incurred in connection with liquidation.

“ Liquidation Proceeds ”: With respect to any Mortgage Loan, the amount (other than amounts received in respect of the rental of any REO Property prior to REO Disposition) received by the Servicer as proceeds from the liquidation of such Mortgage Loan, as determined in accordance with the applicable provisions of the Servicing Agreement, other than Recoveries; provided that with respect to any Mortgage Loan or REO Property repurchased, substituted or sold pursuant to or as contemplated hereunder, or pursuant to the applicable provisions of the Servicing Agreement, “Liquidation Proceeds” shall also include amounts realized in connection with such repurchase, substitution or sale.

“ Loan Group ”: Either of Loan Group 1 or Loan Group 2, as the context requires.

“ Loan Group Balance ”: As to each Loan Group and any Distribution Date, the aggregate of the Stated Principal Balances, as of the Close of Business on the first day of the month preceding the month in which such Distribution Date occurs, of the Mortgage Loans in such Loan Group that were Outstanding Mortgage Loans on that day.

“ Loan Group 1 ”: At any time, the Group 1 Mortgage Loans in the aggregate and any REO Properties acquired in respect thereof.

“ Loan Group 2 ”: At any time, the Group 2 Mortgage Loans in the aggregate and any REO Properties acquired in respect thereof.

“ Loan Group Collateral Balance ”: With respect to each Loan Group and any date of determination, the applicable Loan Group Balance plus the amount, if any, then on deposit in the Prefunding Account, with respect to the related Loan Group; provided that the Loan Group Collateral Balance as of the Initial Cut-off Date will include the Group 1 Prefunded Amount or Group 2 Prefunded Amount, as applicable.

“ Loan Rate ”: With respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note.

“ Loan-to-Value Ratio ”: With respect to each Mortgage Loan and any date of determination, a fraction, expressed as a percentage, the numerator of which is the Principal Balance of the Mortgage Loan at such date of determination and the denominator of which is the Value of the related Mortgaged Property.

“ Lost Note Affidavit ”: With respect to any Mortgage Loan as to which the original Mortgage Note has been lost or destroyed and has not been replaced, an affidavit from the Seller certifying that the original Mortgage Note has been lost, misplaced or destroyed (together with a copy of the related Mortgage Note and indemnifying the Trust Fund against any loss, cost or liability resulting from the failure to deliver the original Mortgage Note) in the form of Exhibit H hereto.

“ Lower-Tier Regular Interest ”: As described in the Preliminary Statement.

“ Lower-Tier REMIC ”: As described in the Preliminary Statement.

“ Majority Certificateholders ”: The Holders of Certificates evidencing at least 51% of the Voting Rights.

“ Master Servicer ”: Wells Fargo Bank, N.A., or any successor Master Servicer appointed as herein provided.

“ Master Servicing Fee” : As to any Distribution Date and each related Mortgage Loan, an amount equal to the product of the applicable Master Servicing Fee Rate and the outstanding Principal Balance of such Mortgage Loan as of the first day of the related Due Period.

“ Master Servicing Fee Rate ”: 0.0075% per annum.

“ Maximum Loan Rate ”: With respect to each Mortgage Loan, the percentage set forth in the related Mortgage Note as the maximum Loan Rate thereunder.

 

“ MERS ”: Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

“ MERS Mortgage Loan ”: Any Mortgage Loan registered with MERS on the MERS System.

“ MERS ^®   System ”: The system of recording transfers of mortgages electronically maintained by MERS.

“ MIN ”: The Mortgage Identification Number for any MERS Mortgage Loan.

“ MOM Loan ”: Any Mortgage Loan as to which MERS is acting as mortgagee, solely as nominee for the originator of such Mortgage Loan and its successors and assigns.

“ Monthly Interest Distributable Amount ”: With respect to each Class of Certificates (other than the Class C, Class P and Class R Certificates) and any Distribution Date, the amount of interest accrued during the related Accrual Period at the lesser of the related Pass-Through Rate and the related Adjusted Cap Rate on the Class Principal Balance of that Class immediately prior to that Distribution Date, in each case, reduced by any Prepayment Interest Shortfalls allocated to such Class and Relief Act Reductions (allocated to each Certificate based on its respective entitlements to interest irrespective of any Prepayment Interest Shortfalls or Relief Act Reductions for such Distribution Date) pursuant to Section 5.01; provided, however , that for purposes of compliance with the REMIC Provisions, (A) the Monthly Interest Distributable Amount for each Class of Subordinate Certificates shall be calculated by reducing the related Pass-Through Rate by a per annum rate equal to (i) 12 times the Subordinate Class Expense Share for such Class divided by (ii) the Class Principal Balance of such Class as of the beginning of the related Accrual Period and (B) such Class shall be deemed to bear interest at such Pass-Through Rate as so reduced for federal income tax purposes.

“ Monthly Payment ”: With respect to any Mortgage Loan, the scheduled monthly payment of principal and/or interest on such Mortgage Loan that is payable by the related Mortgagor from time to time under the related Mortgage Note, determined, for the purposes of this Agreement: (a) after giving effect to any reduction in the amount of interest collectible from the related Mortgagor pursuant to the Relief Act; (b) without giving effect to any extension granted or agreed to by the Servicer pursuant to the applicable provisions of the Servicing Agreement; and (c) on the assumption that all other amounts, if any, due under such Mortgage Loan are paid when due.

“ Moody’s ”: Moody’s Investors Service, Inc. and its successors.

“ Mortgage ”: The mortgage, deed of trust or other instrument creating a first lien on, or first priority security interest in, a Mortgaged Property securing a Mortgage Note.

“ Mortgage File ”: The mortgage documents listed in Section 2.01 hereof pertaining to a particular Mortgage Loan and any additional documents required to be added to the Mortgage File pursuant to this Agreement.

 

“ Mortgage Loan ”: Each mortgage loan (including Cooperative Loans) transferred and assigned to the Trustee pursuant to Section 2.01 or Section 2.03(d) hereof as from time to time held as a part of the Trust Fund, the Mortgage Loans so held being identified in the Mortgage Loan Schedule.

“ Mortgage Loan Purchase Agreement ”: The Mortgage Loan Purchase Agreement between the Seller and the Depositor, dated as of August 1, 2006, regarding the transfer of the Mortgage Loans by the Seller to or at the direction of the Depositor.

“ Mortgage Loan Schedule ”: As of any date, the list of Mortgage Loans included in the Trust Fund on such date, attached hereto as Schedule I. The Mortgage Loan Schedule shall be prepared by the Seller and shall set forth the following information with respect to each Mortgage Loan:

Information set forth in clauses (ii) and (iii) above regarding each Mortgagor and the related Mortgaged Property shall be confidential and the Trustee (or Master Servicer) shall not disclose such information except to the extent disclosure may be required by any law or regulatory or administrative authority; provided , however , that the Trustee may disclose on a confidential basis any such information to its agents, attorneys and any auditors in connection with the performance of its responsibilities hereunder.

The Mortgage Loan Schedule, as in effect from time to time, shall also set forth the following information with respect to the Mortgage Loans in the aggregate and by Loan Group as of the Cut-off Date: (1) the number of Mortgage Loans; (2) the current Principal Balance of the Mortgage Loans; (3) the weighted average Loan Rate of the Mortgage Loans; and (4) the weighted average remaining months to maturity of the Mortgage Loans. The Mortgage Loan Schedule shall be amended from time to time by the Seller in accordance with the provisions of this Agreement.

“ Mortgage Note ”: The original executed note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

 

“ Mortgaged Property ”: Either of (x) the fee simple or leasehold interest in real property, together with improvements thereto including any exterior improvements to be completed within 120 days of disbursement of the related Mortgage Loan proceeds, or (y) in the case of a Cooperative Loan, the related Cooperative Shares and Proprietary Lease, securing the indebtedness of the Mortgagor under the related Mortgage Loan.

“ Mortgagor ”: The obligor on a Mortgage Note.

“ MTA ”: The twelve-month average yields on United States Treasury securities adjusted to a constant maturity of one year as published by the Federal Reserve Board in Statistical Release H.15(519).

“ MTA Indexed ”: Indicates a Mortgage Loan that has an adjustable Loan Rate calculated on the basis of the MTA index.

“ Net Deferred Interest ”: With respect to each Loan Group and any Distribution Date, the greater of (i) the excess, if any, of the Deferred Interest for the related Due Date over the aggregate amount of any principal prepayments in part or in full received during the related Prepayment Period and (ii) zero.

“ Net Interest Shortfall ”: With respect to any Distribution Date, the excess of the Interest Shortfall, if any, for such Distribution Date over the sum of (i) Interest Shortfalls paid by the Servicer under the Servicing Agreement with respect to such Distribution Date and (ii) Compensating Interest Payments made with respect to such Distribution Date.

“ Net Liquidation Proceeds ”: With respect to any Liquidated Mortgage Loan or any other disposition of related Mortgaged Property (including REO Property) the related Liquidation Proceeds net of Advances, related Servicing Advances, related Servicing Fees, related Master Servicing Fees and any other accrued and unpaid fees received and retained in connection with the liquidation of such Mortgage Loan or Mortgaged Property.

“ Net Loan Rate ”: With respect to any Mortgage Loan (or the related REO Property), as of any date of determination, a per annum rate of interest equal to the then applicable Loan Rate for such Mortgage Loan minus the Expense Fee Rate and on and after the Distribution Date in October 2016, until the earlier of (i) the Distribution Date in September 2026 and (ii) the termination of the Trust, the Final Maturity Reserve Rate.

“ Net Maximum Rate ”: For any Mortgage Loan and any Distribution Date, the maximum rate at which interest could accrue on such Mortgage Loan net of the sum of (a) the Expense Fee Rate and (b) on and after the Distribution Date in October 2016 until the earlier of (i) the Distribution Date in September 2026 and (ii) the termination of the Trust, the Final Maturity Reserve Rate.

“ Net Maximum Rate Cap ”: For any Distribution Date will equal the applicable Net WAC Cap, computed for this purposes on the basis of the assumption that each Mortgage Loan accrued interest for the related Accrual Period at its Net Maximum Rate.

 

“ Net Monthly Excess Cashflow ”: For any Distribution Date is equal to the sum of (a) any Overcollateralization Release Amount and (b) the excess of (x) the Available Funds for such Distribution Date over (y) the sum for such Distribution Date of (A) the Monthly Interest Distributable Amounts for the LIBOR Certificates, (B) the Unpaid Interest Shortfall Amounts for the Class 1A-1A, Class 1A-1B, Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3 and Class 2A-1C Certificates and (C) the Principal Remittance Amount.

“ Net Realized Losses ”: For any Class of Certificates and any Distribution Date, the excess of (i) the amount of Realized Losses previously allocated to that Class over (ii) the amount of any increases to the Class Principal Balance of that Class pursuant to Section 5.08 due to Recoveries.

“ Net WAC ”: With respect to any Distribution Date, the weighted average of the Net Loan Rates of the Mortgage Loans as of the first day of the related Due Period (or, in the case of the first Distribution Date, as of the Cut-off Date), weighted on the basis of the related Stated Principal Balances at the beginning of the related Due Period, provided, however , that for the first two Distribution Dates only, such weighted average of the Net Loan Rates of the Mortgage Loans will be multiplied by the quotient of (i) the aggregate of the Stated Principal Balances as of the first day of the related Due Period of the Mortgage Loans having scheduled payments that are included in determining Available Funds for such Distribution Date divided by (ii) the sum of (a) the aggregate of the Stated Principal Balances of all of the Mortgage Loans as of the first day of the related Due Period and (b) the amount on deposit in the Prefunding Account immediately prior to such Distribution Date.

“ Net WAC Cap ”: For the LIBOR Certificates (other than the Class 1A-1B and Class 2A-1C Certificates) and any Distribution Date is equal to the product of (x) the Net WAC and (y) a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related Accrual Period. For the Class 1A-1B and Class 2A-1C Certificates and any Distribution Date is equal to the excess, if any, of (x) the Net WAC Cap for the Class 1A-1A, Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3 Certificates and the Subordinate Certificates for such Distribution Date over (y) the related Insurer Premium Rate for such Distribution Date.

“ NIM Redemption Amount ”: As defined in Section 10.01(a).

“ NIM Securities ”: Any net interest margin securities issued by a trust or other special purpose entity pursuant to an Indenture, the principal assets of such issuing entity include the Class P and Class C Certificates and the payments received thereon, which principal assets back such securities.

“ NIMS Agreement ”: Any agreement pursuant to which the NIM Securities are issued.

“ NIMS Insurer ”: One or more insurance issuing financial guaranty insurance policies in connection with the issuance of NIM Securities.

“ Nonrecoverable ”: The determination by the Master Servicer or the Servicer in respect of a delinquent Mortgage Loan that if it were to make an Advance in respect of thereof, such amount would not be recoverable from any collections or other recoveries (including Liquidation Proceeds) on such Mortgage Loan.

 

“ Notice ”: As defined in the Certificate Insurance Policy.

“ Offered Certificates ”: The Class 1A-1A, Class 1A-1B, Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3, Class 2A-1C, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates.

“ Officers’ Certificate ”: A certificate signed by the Chairman of the Board, the Vice Chairman of the Board, the President or a vice president (however denominated), or by the Treasurer, the Secretary, or one of the assistant treasurers or assistant secretaries of the Seller, the Master Servicer or the Depositor, as applicable.

“ One-Month LIBOR ”: The average of interbank offered rates for one month U.S. dollar deposits in the London market based on quotations of major banks.

“ Opinion of Counsel ”: A written opinion of counsel, who may, without limitation, be a salaried counsel for the Depositor, the Seller or the Servicer, acceptable to the Trustee or the Securities Administrator, as applicable, except that any opinion of counsel relating to (a) the qualification of any REMIC created hereunder as a REMIC or (b) compliance with the REMIC Provisions must be an opinion of Independent counsel.

“ Original Class Principal Balance ”: With respect to each Class of Certificates other than the Class C, Class P and Class R Certificates, the corresponding aggregate amount set forth opposite the Class designation of such Class in the Preliminary Statement.

“ Originator ”: Downey Savings and Loan Association, F.A.

“ OTS ”: The Office of Thrift Supervision.

“ Outstanding Mortgage Loan ”: As of any Due Date, a Mortgage Loan with a Stated Principal Balance greater than zero, that was not the subject of a prepayment in full prior to such Due Date and that did not become a Liquidated Mortgage Loan prior to such Due Date.

“ Overcollateralization Deficiency Amount ”: With respect to any Distribution Date, the amount, if any, by which the Overcollateralization Target Amount exceeds the Overcollateralized Amount on such Distribution Date (assuming that 100% of the Principal Remittance Amount is applied as a principal payment on such Distribution Date).

“ Overcollateralization Release Amount ”: With respect to any Distribution Date, the lesser of (x) the Principal Remittance Amount for such Distribution Date and (y) the excess, if any, of (i) the Overcollateralized Amount for such Distribution Date (assuming that 100% of the Principal Remittance Amount is applied as a principal payment on such Distribution Date) over (ii) the Overcollateralization Target Amount for such Distribution Date.

“ Overcollateralization Target Amount ”: With respect to any Distribution Date, an amount equal to (i) prior to the Stepdown Date, 0.50% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date, (ii) on or after the Stepdown Date so long as a Trigger Event is not in effect, the greater of (x) (I) 1.25% of the aggregate Stated Principal Balance of the Mortgage Loans prior to the Distribution Date in September 2012 or (II) 1.00% of the aggregate Stated Principal Balance of the Mortgage Loans on or after the Distribution Date in September 2012 and (y) 0.50% of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date; or (iii) on or after the Stepdown Date and if a Trigger Event is in effect, the Overcollateralization Target Amount for the immediately preceding Distribution Date.

 

“ Overcollateralized Amount ”: For any Distribution Date, an amount equal to (i) the sum of the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus (ii) the sum of the aggregate Certificate Principal Balance of the LIBOR Certificates and the Class P Certificates as of such Distribution Date (after giving effect to distributions to be made on such Distribution Date) from the Principal Remittance Amount.

“ Ownership Interest ”: As to any Certificate, any ownership or security 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, as owner or as pledgee.

“ Pass-Through Rate ”: With respect to each Class of Offered Certificates and any Distribution Date, the rate set forth below:

 

(ii)	The Pass-Through Rate for the Class 1A-1B Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.190% per annum (0.380% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(iii)

The Pass-Through Rate for the Class 2A-1A Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.200% per annum (0.400% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(iv)	The Pass-Through Rate for the Class 2A-1B1 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.090% per annum (0.180% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(vi)	The Pass-Through Rate for the Class 2A-1B3 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.310% per annum (0.620% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(vii)

The Pass-Through Rate for the Class 2A-1C Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.200% per annum (0.400% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(viii)

The Pass-Through Rate for the Class M-1 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.390% per annum (0.585% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(ix)	The Pass-Through Rate for the Class M-2 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.410% per annum (0.615% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(x)	The Pass-Through Rate for the Class M-3 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.450% per annum (0.675% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(xi)	The Pass-Through Rate for the Class M-4 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.600% per annum (0.900% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(xii)

The Pass-Through Rate for the Class M-5 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 0.700% per annum (1.050% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

 

(xiv)

The Pass-Through Rate for the Class M-7 Certificates with respect to any Distribution Date shall equal the least of (i) One-Month LIBOR plus 1.750% per annum (2.625% per annum after the Call Option Date), (ii) the Net WAC Cap for that Distribution Date and (iii) the Net Maximum Rate Cap.

“ Paying Agent ”: Any paying agent appointed pursuant to Section 6.05 hereof, initially, the Securities Administrator.

“ PCAOB ”: The Public Company Accounting Oversight Board.

“ Percentage Interest ”: With respect to any Certificate (other than a Class C, Class P and Class R Certificate), a fraction, expressed as a percentage, the numerator of which is the Initial Certificate Principal Balance represented by such Certificate and the denominator of which is the Original Class Principal Balance or Original Class Notional Balance, as applicable, of the related Class. With respect to the Class C, Class P and Class R Certificates, 100%.

“ 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 or managed by the Depositor, the Master Servicer, the Trustee or any of their respective Affiliates or for which an Affiliate of the Trustee serves as an advisor:

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 Transferee of a Residual Certificate other than a Disqualified Organization or a non-U.S. Person.

“ Person ”: Any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“ Physical Certificates ”: The Class C, Class P and Class R Certificates.

 

“ Policy Account ”: The trust account or accounts created and maintained by the Securities Administrator, on behalf of the Trustee pursuant to Section 4.05 hereof in the name of the Trustee for the benefit of the Class 1A-1B and Class 2A-1C Certificateholders and designated “Policy Account, Wells Fargo Bank, N.A., as Securities Administrator, on behalf of Deutsche Bank National Trust Company, as Trustee, in trust for the registered Certificateholders of DSLA Mortgage Loan Trust, DSLA Mortgage Loan Pass-Through Certificates, Series 2006-AR2, Class 1A-1B and Class 2A-1C Certificates.”

“ Pool Balance ”: As to any Distribution Date, the aggregate of the Stated Principal Balances, as of the Close of Business on the first day of the related Due Period, of the Mortgage Loans in all Loan Groups that were Outstanding Mortgage Loans on that day.

“ Pool Collateral Balance ”: As of any date of determination, the Pool Balance plus the amount, if any, then on deposit in the Prefunding Account.

“ Preference Amounts ”: As defined in the Certificate Insurance Policy.

“ Prefunded Amount ”: The amount deposited in the Prefunding Account on the Closing Date, which shall equal $195,476,571.

“ Prefunding Account ”: The separate Eligible Account created and maintained by the Securities Administrator pursuant to Section 4.06 in the name of the Trustee for the benefit of the Certificateholders and designated “Prefunding Account, Wells Fargo Bank, N.A., as Securities Administrator, on behalf of Deutsche Bank National Trust Company, as Trustee, in trust for the registered Holders of DSLA Mortgage Loan Trust, Mortgage Loan Pass-Through Certificates, Series 2006-AR2.” Funds in the Prefunding Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement and shall not be a part of any REMIC created hereunder; provided , however , that any investment income earned from Permitted Investments made with funds in the Prefunding Account shall be for the account of the Depositor.

“ Prefunding Period ”: The period from the Closing Date until the earliest of (i) the date on which the amount on deposit in the Prefunding Account is reduced to less than $100,000, (ii) an Event of Default occurs or (iii) October 12, 2006.

“ Premium Amount ”: The Class 1A-1B Premium Amount or the Class 2A-1C Premium Amount, as applicable.

“ Premium Proceeds ”: The amount by which the Termination Price paid in connection with the termination pursuant to Section 10.01 hereof exceeds the sum of (i) accrued and unpaid interest and unpaid principal on the Certificates, (ii) any unreimbursed Servicing Advances and Advances and any unpaid Master Servicing Fees and Servicing Fees and (iii) all amounts, if any, then due and owing to the Trustee, the Master Servicer, the Securities Administrator, the Credit Risk Manager and the Certificate Insurer under this Agreement.

“ Prepayment Penalty Amount ”: With respect to any Mortgage Loan and each Distribution Date, all premiums or charges, if any, paid by Mortgagors under the related Mortgage Notes as a result of full or partial Principal Prepayments collected by the Servicer during the immediately preceding Prepayment Period.

 

“ Prepayment Period ”: With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date occurs.

“ Primary Insurance Policy ”: Mortgage guaranty insurance, if any, on an individual Mortgage Loan, as evidenced by a policy or certificate.

“ Principal Balance ”: As to any Mortgage Loan, other than a Liquidated Mortgage Loan, and any day, the related Cut-off Date Principal Balance, minus all collections credited against the Principal Balance of such Mortgage Loan after the Cut-off Date, as increased by the amount of any Deferred Interest added to the outstanding Principal Balance of such Mortgage Loan pursuant to the terms of the related Mortgage Note. For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to have a Principal Balance equal to the Principal Balance of the related Mortgage Loan as of the final recovery of related Liquidation Proceeds and a Principal Balance of zero thereafter. As to any REO Property and any day, the Principal Balance of the related Mortgage Loan immediately prior to such Mortgage Loan becoming REO Property.

“ Principal Deficiency   Amount ”: For any Distribution Date and for any Undercollateralized Group, the excess, if any, of the aggregate Class Principal Balance of such Undercollateralized Group immediately prior to such Distribution Date over the sum of the Principal Balances of the Mortgage Loans in the related Loan Group immediately prior to such Distribution Date.

“ Principal Distribution Amount ”: For any Distribution Date and Loan Group, the excess of (x) the related Principal Remittance Amount reduced by the lesser of (a) Principal Prepayments received for the related Loan Group during the related Prepayment Period and (b) the amount of Deferred Interest added to the Principal Balance of the Mortgage Loans in the related Loan Group on the Due Date in the month of such Distribution Date over (y) such Loan Group’s pro rata share, based on the aggregate outstanding Principal Balance of the Mortgage Loans, of the Overcollateralization Release Amount for such Distribution Date.

“ Principal Remittance Amount ”: With respect to each Loan Group and any Distribution Date, the sum of (a) each scheduled payment of principal collected or advanced on the related Mortgage Loans (before taking into account any Deficient Valuations or Debt Service Reductions) by the Servicer or the Master Servicer in respect of the related Due Period, (b) that portion of the Purchase Price or Repurchase Price, as applicable, representing principal of any repurchased Mortgage Loan in that Loan Group, deposited to the Distribution Account during the related Prepayment Period, (c) the principal portion of any related Substitution Adjustments with respect to that Loan Group deposited in the Distribution Account during the related Prepayment Period, (d) the principal portion of all Insurance Proceeds received during the related Prepayment Period with respect to Mortgage Loans in that Loan Group that are not yet Liquidated Mortgage Loans, (e) the principal portion of all Net Liquidation Proceeds received during the related Prepayment Period with respect to Liquidated Mortgage Loans in that Loan Group other than Recoveries, (f) all Principal Prepayments in part or in full on Mortgage Loans received by the Servicer during the related Prepayment Period, net of Deferred Interest, (g) all Recoveries related to that Loan Group received during the related Prepayment Period, (h) the outstanding principal balance of each Mortgage Loan purchased from the Trust Fund by the NIMS Insurer (in the case of certain Mortgage Loans 90 days or more delinquent) and (i) on the Distribution Date on which the Trust Fund is to be terminated pursuant to Section 10.01 hereof, that portion of the Termination Price in respect of principal for that Loan Group.

 

“ Principal Prepayment ”: Any payment of principal made by the Mortgagor on a Mortgage Loan that is received in advance of its scheduled Due Date and that is not accompanied by an amount of interest representing the full amount of scheduled interest due on any Due Date in any month or months subsequent to the month of prepayment.

“ Private Certificates ”: The Class C, Class P and Class R Certificates.

“ Pro Rata Share ”: As to any Distribution Date and any Class of Subordinate Certificates, the portion of the Subordinate Principal Distribution Amount allocable to such Class, equal to the product of the (a) Subordinate Principal Distribution Amount on such date and (b) a fraction, the numerator of which is the related Class Principal Balance of that Class and the denominator of which is the aggregate of the Class Principal Balances of all the Classes of Subordinate Certificates.

“ Proprietary Lease ”: With respect to any Cooperative Unit, a lease or occupancy agreement between a Cooperative Corporation and a holder of related Cooperative Shares.

“ Prospectus ”: The Prospectus Supplement, together with the accompanying prospectus, dated August 10, 2006, relating to the Offered Certificates.

“ Prospectus Supplement ”: That certain prospectus supplement dated September 11, 2006, relating to the initial offering of the Offered Certificates.

“ Purchase Agreement ”: Each of (i) the Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of September 1, 2004, as amended by that certain Amendment Number One dated as of October 28, 2004 and that certain Amendment Number Two dated as of September 23, 2005, between GCFP and Downey and (ii) Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of December 31, 2005, between GCFP and Downey, as each may be amended from time to time, and any assignments and conveyances related to the Mortgage Loans.

“ Purchase Price ”: With respect to any Mortgage Loan or REO Property to be purchased pursuant to or as contemplated by Section 2.03 hereof, and as confirmed by an Officers’ Certificate from the Seller to the Trustee and the Securities Administrator, an amount equal to the sum of (i) 100% of the Principal Balance thereof as of the date of purchase (or such other price as is provided in Section 10.01), plus (ii) in the case of (x) a Mortgage Loan, accrued interest on such Principal Balance at the applicable Loan Rate (or if the Servicer is repurchasing such Mortgage Loan, the Loan Rate minus the Servicing Fee Rate) from the Due Date as to which interest was last covered by a payment by the Mortgagor through the end of the calendar month in which the purchase is to be effected, and (y) an REO Property, the sum of (1) accrued interest on such Principal Balance at the applicable Loan Rate (or if the Servicer is repurchasing such Mortgage Loan, the Loan Rate minus the Servicing Fee Rate) from the Due Date as to which interest was last covered by a payment by the Mortgagor plus (2) REO Imputed Interest for such REO Property for each calendar month commencing with the calendar month in which such REO Property was acquired and ending with the calendar month in which such purchase is to be effected, net of the total of all net rental income, Insurance Proceeds and Liquidation Proceeds that as of the date of purchase had been distributed as or to cover REO Imputed Interest, plus (iii) any unreimbursed Servicing Advances and any unpaid Expense Fees allocable to such Mortgage Loan or REO Property, plus (iv) in the case of a Mortgage Loan required to be purchased pursuant to Section 2.03 hereof, expenses reasonably incurred or to be incurred by the Trustee in respect of the breach or defect giving rise to the purchase obligation and plus (v) any costs and damages incurred by the Trust in connection with any violation by such Mortgage Loan of any predatory- or abusive-lending laws.

 

“ 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, and having a claims paying ability which is acceptable to each Rating Agency for pass-through certificates without a certificate insurance policy having the same ratings on the Certificates rated by each Rating Agency as of the Closing Date. 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.

“ Qualified Substitute Mortgage Loan ”: A mortgage loan substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the date of such substitution, (i) have an outstanding principal balance, after application of all scheduled payments of principal and interest due during or prior to the month of substitution, not in excess of, and not more than 5% less than, the Principal Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month during which the substitution occurs, (ii) have a maximum loan rate not less than the Maximum Loan Rate of the Deleted Mortgage Loan, (iii)  have a gross margin equal to or greater than the Gross Margin of the Deleted Mortgage Loan, (iv) have the same Index as the Deleted Mortgage Loan, (v) have its next adjustment date not more than two months after the next Adjustment Date of the Deleted Mortgage Loan, (vi) have a remaining term to maturity not greater than (and not more than one year less than) that of the Deleted Mortgage Loan, (vii) be current as of the date of substitution, (viii) have a Loan-to-Value Ratio and a Loan-to-Collateral Value Ratio as of the date of substitution equal to or lower than the Loan-to-Value Ratio and the Loan-to-Collateral Value Ratio, respectively, of the Deleted Mortgage Loan as of such date, (ix) have been underwritten or re-underwritten in accordance with the same or substantially similar underwriting criteria and guidelines as the Deleted Mortgage Loan, (x) is of the same or better credit quality as the Deleted Mortgage Loan and (xi) conform to each representation and warranty set forth in Section 2.04 hereof applicable to the Deleted Mortgage Loan. In the event that one or more mortgage loans are substituted for one or more Deleted Mortgage Loans, the amounts described in clause (i) hereof shall be determined on the basis of aggregate principal balances, the terms described in clause (vi) hereof shall be determined on the basis of weighted average remaining term to maturity, the Loan-to-Value Ratio and Loan-to-Collateral Value Ratio described in clause (viii) hereof shall be satisfied as to each such mortgage loan and, except to the extent otherwise provided in this sentence, the representations and warranties described in clause (x) hereof must be satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case may be.

 

“ Rating Agency ”: Each of DBRS, S&P and Moody’s and any respective successors thereto. If DBRS, Moody’s, S&P or their respective successors shall no longer be in existence, “Rating Agency” shall include such nationally recognized statistical rating agency or agencies, or other comparable Person or Persons, as shall have been designated by the Depositor, notice of which designation shall be given to the Trustee and the Master Servicer.

“ Realized Loss ”: With respect to any Liquidated Mortgage Loan, the amount of loss realized equal to the portion of the Principal Balance remaining unpaid after application of all Net Liquidation Proceeds in respect of such Liquidated Mortgage Loan.

“ Recognition Agreement ”: With respect to any Cooperative Loan, an agreement between the related Cooperative Corporation and the originator of such Mortgage Loan to establish the rights of such originator in the related Cooperative Property.

“ Reconstitution Agreement ”: Each of the reconstitution agreements dated as of August 1, 2006 among the Seller, the Depositor and the Servicer and acknowledged by the Master Servicer and the Trustee, reconstituting the Servicing Agreements.

“ Record Date ”: With respect to each Distribution Date and the LIBOR Certificates, the Business Day preceding the applicable Distribution Date so long as such Certificates remain Book-Entry Certificates and otherwise the Record Date shall be same as the other Classes of Certificates. For each other Class of Certificates, the last Business Day of the calendar month preceding the month in which such Distribution Date occurs.

“ Recovery ”: With respect to any Distribution Date and a Mortgage Loan that became a Liquidated Mortgage Loan in the month preceding the month prior to that Distribution Date and with respect to which the related Realized Loss was allocated to one or more Classes of Certificates, an amount received in respect of such Liquidated Mortgage Loan during the prior calendar month, net of any reimbursable expenses.

“ Reference Bank: ” A leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market, which shall not control, be controlled by, or be under common control with, the Securities Administrator and shall have an established place of business in London. Until all of the LIBOR Certificates are paid in full, the Securities Administrator will at all times retain at least four Reference Banks for the purpose of determining LIBOR with respect to each LIBOR Determination Date. The Securities Administrator initially shall designate the Reference Banks (after consultation with the Depositor). If any such Reference Bank should be unwilling or unable to act as such or if the Securities Administrator should terminate its appointment as Reference Bank, the Securities Administrator shall promptly appoint or cause to be appointed another Reference Bank (after consultation with the Depositor). The Securities Administrator shall have no liability or responsibility to any Person for (i) the selection of any Reference Bank for purposes of determining LIBOR or (ii) any inability to retain at least four Reference Banks which is caused by circumstances beyond its reasonable control.

 

“ Refinancing Mortgage Loan ”: Any Mortgage Loan originated in connection with the refinancing of an existing mortgage loan.

“ Regular Certificate ”: Any Certificate other than the Class C, Class P and Class R Certificates.

“ Regulation AB ”: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such clarifications and interpretations 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.

“ Regulation S ”: Regulation S promulgated under the Securities Act or any successor provision thereto, in each case as the same may be amended from time to time; and all references to any rule, section or subsection of, or definition or term contained in, Regulation S means such rule, section, subsection, definition or term, as the case may be, or any successor thereto, in each case as the same may be amended from time to time.

“ Regulation S Global Security ”: The meaning specified in Section 6.01.

“ Relevant Servicing Criteria ”: The Servicing Criteria applicable to each party, as set forth on Exhibit Q attached hereto. Multiple parties can have responsibility for the same Relevant Servicing Criteria. With respect to a Servicing Function Participant engaged by the Master Servicer, the Securities Administrator, the Trustee, in its capacity as Custodian, or the Servicer, the term “Relevant Servicing Criteria” may refer to a portion of the Relevant Servicing Criteria applicable to such parties.

“ Relief Act ”: The Servicemembers Civil Relief Act, as amended, or any similar state or local law.

“ Relief Act Reductions ”: With respect to any Distribution Date and any Mortgage Loan as to which there has been a reduction in the amount of interest collectible thereon for the most recently ended Due Period as a result of the application of the Relief Act, the amount, if any, by which (i) interest collectible on that Mortgage Loan during such Due Period is less than (ii) one month’s interest on the Stated Principal Balance of such Mortgage Loan at the Loan Rate for such Mortgage Loan before giving effect to the application of the Relief Act.

“ REMIC ”: A “real estate mortgage investment conduit” within the meaning of Section 860D of the Code.

“ REMIC Opinion ”: An Independent Opinion of Counsel, to the effect that the proposed action described therein would not cause an Adverse REMIC Event.

 

“ REMIC Provisions ”: Provisions of the federal income tax law relating to real estate mortgage investment conduits which appear at Section 860A through 860G of Subchapter M of Chapter 1 of the Code, and related provisions, and regulations and rulings promulgated thereunder, as the foregoing may be in effect from time to time.

“ Remittance Report ”: The Master Servicer’s Remittance Report to the Securities Administrator providing information with respect to each Mortgage Loan which is provided no later than the second Business Day following each Determination Date and which shall contain such information as may be agreed upon by the Master Servicer and the Securities Administrator and which shall be sufficient to enable the Securities Administrator to prepare the related Distribution Date Statement.

“ Rents from Real Property ”: With respect to any REO Property, gross income of the character described in Section 856(d) of the Code.

“ REO Account ”: The account or accounts maintained by the Servicer in respect of an REO Property pursuant to the Servicing Agreement.

“ REO Disposition ”: The sale or other disposition of an REO Property on behalf of the Trust Fund.

“ REO Imputed Interest ”: As to any REO Property, for any calendar month during which such REO Property was at any time part of the Trust Fund, one month’s interest at the applicable Net Loan Rate for such REO Property on the Principal Balance of such REO Property (or, in the case of the first such calendar month, of the related Mortgage Loan if appropriate) as of the Close of Business on the Due Date in such calendar month.

“ REO Principal Amortization ”: With respect to any REO Property, for any calendar month, the excess, if any, of (a) the aggregate of all amounts received in respect of such REO Property during such calendar month, whether in the form of rental income, sale proceeds (including, without limitation, that portion of the Termination Price paid in connection with a purchase of all of the Mortgage Loans and REO Properties pursuant to Section 10.01 hereof that is allocable to such REO Property) or otherwise, net of any portion of such amounts (i) payable pursuant to the applicable provisions of the Servicing Agreement in respect of the proper operation, management and maintenance of such REO Property or (ii) payable or reimbursable to the Servicer pursuant to the applicable provisions of the Servicing Agreement for unpaid Master Servicing Fees and Servicing Fees in respect of the related Mortgage Loan and unreimbursed Servicing Advances and Advances in respect of such REO Property or the related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO Property for such calendar month.

“ REO Property ”: A Mortgaged Property acquired by the Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure in accordance with the applicable provisions of the Servicing Agreement.

“Reportable Event ”: As defined in Section 3.19(c).

 

“Request for Release” : A release signed by a Servicing Officer, in the form of Exhibit F attached hereto.

“ Required Reserve Fund Deposit ”: With respect to the Class C Certificates and any Distribution Date, an amount equal to the lesser of (i) the Net Monthly Excess Cashflow otherwise distributable to the Class C Certificates for such Distribution Date and (ii) the amount required to bring the balance on deposit in the Basis Risk Reserve Fund to an amount equal to the greater of (a) the unpaid Basis Risk Shortfalls for such Distribution Date with respect to the LIBOR certificates and (b) $1,000.

“ Residential Dwelling ”: Any one of the following: (i) a detached one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family dwelling unit in a condominium project, (iv) a manufactured home, (v) a cooperative unit or (vi) a detached one-family dwelling in a planned unit development, none of which is a mobile home.

“ Residual Certificate ”: The Class R Certificates.

“ Responsible Officer ”: When used with respect to the Trustee or the Securities Administrator, any director, any vice president, any assistant vice president, any associate assigned to the Corporate Trust Office of the Trustee or the Securities Administrator, as applicable, (or similar group) or any other officer of the Trustee or the Securities Administrator customarily performing functions similar to those performed by any of the above designated officers and, with respect to a particular matter, to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject. When used with respect to the Master Servicer, any director, any vice president, any assistant vice president, any associate assigned to the office specified in Section 12.05 of the Master Servicer (or similar group) or any other officer of the Master Servicer customarily performing functions similar to those performed by any of the above designated officers and, with respect to a particular matter, to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“ Restricted Global Security ”: As defined in Section 6.01.

“ S&P ”: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or any successor thereto.

“ Sarbanes Oxley Act ”: The Sarbanes-Oxley Act of 2002 and the rules and regulations of the Commission promulgated thereunder (including any interpretations thereof by the Commission’s staff).

“ Sarbanes-Oxley Certification ”: A written certification signed by an officer of the Master Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as amended from time to time, and (ii) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect from time to time; provided that if, after the Closing Date (a) the Sarbanes-Oxley Act of 2002 is amended, (b) the Rules referred to in clause (ii) are modified or superseded by any subsequent statement, rule or regulation of the Commission or any statement of a division thereof, or (c) any future releases, rules and regulations are published by the Securities and Exchange Commission from time to time pursuant to the Sarbanes-Oxley Act of 2002, which in any such case affects the form or substance of the required certification and results in the required certification being, in the reasonable judgment of the Master Servicer, materially more onerous than the form of the required certification as of the Closing Date, the Sarbanes-Oxley Certification shall be as agreed to by the Master Servicer, the Depositor and the Seller following a negotiation in good faith to determine how to comply with any such new requirements.

 

“ Securities Act ”: The Securities Act of 1933, as amended, and the rules and regulations thereunder.

“ Securities Administrator ”: Wells Fargo Bank, N.A., or its successor in interest, or any successor securities administrator appointed as herein provided.

“ Security Agreement ”: With respect to any Cooperative Loan, the agreement between the owner of the related Cooperative Shares and the originator of the related Mortgage Note that defines the terms of the security interest in such Cooperative Shares and the related Proprietary Lease.

“ Seller ”: GCFP, in its capacity as seller under this Agreement.

“ Senior Certificate ”: Any one of the Class 1A-1A, Class 1A-1B, Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3 and Class 2A-1C Certificates.

“ Senior Certificate Group ”: Either (a) the Class 1A-1A and Class 1A-1B Certificates with respect to Loan Group 1 or (b) the Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3 and Class 2A-1C Certificates with respect to Loan Group 2.

“ Senior Certificateholder ”: Any Holder of a Senior Certificate.

“ Senior Credit Support Depletion Date ”: The date on which the Class Principal Balance of each Class of Subordinate Certificates has been reduced to zero.

“ Senior Principal Distribution Amount ”: For any Distribution Date, an amount equal to the excess of (x) the aggregate class principal balance of the Senior Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) for each Distribution Date prior to September 2012, 82.125% and thereafter 85.700% and (ii) the sum of (x) the Stated Principal Balances of the Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (y) the amount on deposit in the Prefunding Account as of the last day of the related Prepayment Period and (B) the sum of (x) the Stated Principal Balances of the Mortgage Loans as of the last day of the related Prepayment Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (y) the amount on deposit in the Prefunding Account as of the last day of the related Prepayment Period minus approximately $6,050,000.

 

“ Senior Termination Date ”: For each Senior Certificate Group, the Distribution Date on which the aggregate of the Class Principal Balances of the related Senior Certificates is reduced to zero.

“ Servicer ”: Downey Savings and Loan Association, F.A., and any successors thereto.

“ Servicer Remittance Date ”: With respect to each Mortgage Loan, the 18 ^th day of each month, or if such 18 ^th day is not a Business Day, the preceding Business Day.

“ Servicing Account ”: Any account established and maintained for the benefit of the Trust Fund by the Servicer or with respect to the related Mortgage Loans and any REO Property, pursuant to the terms of the Servicing Agreement.

“ Servicing Advances ”: With respect to the Servicer and the Master Servicer (including the Trustee in its capacity as successor Master Servicer), all customary, reasonable and necessary “out of pocket” costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Servicer in the performance of its servicing obligations under the Servicing Agreement or by the Master Servicer (including the Trustee in its capacity as successor Master Servicer) in the performance of its obligations hereunder, including, but not limited to, the cost of (i) the preservation, restoration, inspection and protection of the Mortgaged Property, (ii) any enforcement or judicial proceedings, including foreclosures, (iii) the management and liquidation of the REO Property and (iv) any other expenses permitted to be reimbursed as Servicing Advances under the Servicing Agreement, as applicable.

“ Servicing Agreement ”: The Purchase Agreement, as reconstituted by the Reconstitution Agreement, as the same may be amended from time to time.

“ Servicing Criteria ”: The criteria set forth in paragraph (d) of Item 1122 of Regulation AB, as such may be amended from time to time.

“ Servicing Fee ”: With respect to each Mortgage Loan and for any calendar month, the fee payable to the Servicer as set forth on the Mortgager Loan Schedule.

“ Servicing Fee Rate ”: With respect to each Mortgage Loan, the per annum rate of 0.3750%.

“ Servicing Function Participant ”: The Servicer, any Subservicer, Subcontractor of the Servicer, the Master Servicer, a Custodian and the Securities Administrator, respectively.

“ Servicing Officer”: Any officer of a Master Servicer or Servicer involved in, or responsible for, the administration and servicing (or master servicing) of Mortgage Loans, whose name and specimen signature appear on a list of servicing officers furnished by the Master Servicer, Servicer or Subservicer, as applicable, to the Trustee, the Custodian and the Depositor on the Closing Date, as such list may from time to time be amended.

“ Sponsor ”: Greenwich Capital Financial Products, Inc., in its capacity as sponsor under this Agreement.

 

“ Startup Day ”: As defined in Section 9.01(b) hereof.

“ Stated Principal Balance ”: With respect to any Mortgage Loan: (a) as of the Distribution Date in September 2006, the Cut-off Date Principal Balance of such Mortgage Loan,  (b) thereafter as of any date of determination up to and including the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan would be distributed, the Cut-off Date Principal Balance of such Mortgage Loan, minus , in the case of each Mortgage Loan, the sum of (i) the principal portion of each Monthly Payment due on a Due Date subsequent to the Cut-off Date, whether or not received, (ii) all Principal Prepayments received after the Cut-off Date, to the extent distributed pursuant to Section 5.01 before such date of determination and (iii) all Liquidation Proceeds and Insurance Proceeds applied by the Servicer as recoveries of principal in accordance with the applicable provisions of the Servicing Agreement, to the extent distributed pursuant to Section 5.01 before such date of determination; and (c) as of any date of determination subsequent to the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan would be distributed, zero. With respect to any REO Property: (x) as of any date of determination up to and including the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such REO Property would be distributed, an amount (not less than zero) equal to the Stated Principal Balance of the related Mortgage Loan as of the date on which such REO Property was acquired on behalf of the Trust Fund, minus the aggregate amount of REO Principal Amortization in respect of such REO Property for all previously ended calendar months, to the extent distributed pursuant to Section 5.01 before such date of determination; and (y) as of any date of determination subsequent to the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such REO Property would be distributed, zero.

“ Stepdown Date ”: The earlier to occur of (i) the first Distribution Date on which the aggregate Certificate Principal Balance of the Class 1A-1A, Class 1A-1B, Class 2A-1A, Class 2A-1B1, Class 2A-1B2, Class 2A-1B3 and Class 2A-1C Certificates has been reduced to zero and (ii) the later to occur of (x) the Distribution Date occurring in September 2009 and (y) the first Distribution Date on which the Credit Enhancement Percentage (calculated for this purpose only after taking into account distributions of principal on the Mortgage Loans and before distribution of the Principal Distribution Amount to the holders of the Certificates then entitled to distributions of principal on such Distribution Date) is greater than or equal to (a) prior to the Distribution Date in September 2012, 17.875% and (b) on or after the Distribution Date in September 2012, 14.300%.

“ Strike Rate ”: Not applicable.

“ Subcontractor ”: Any vendor, subcontractor or other Person that is not responsible for the overall servicing of Mortgage Loans but performs one or more discrete functions identified in Item 1122(d) of Regulation AB with respect to Mortgage Loans under the direction or authority of the Servicer (or a Subservicer of the Servicer), the Master Servicer, the Trustee, the Custodian or the Securities Administrator.

“ Subordinate Adjusted Cap Rate ”: For any Distribution Date and the Subordinate Certificates, the weighted average of the Group 1 Adjusted Cap Rate and the Group 2 Adjusted Cap Rate for such Distribution Date, weighted in either case based upon the applicable Subordinate Component for such Loan Group.

 

“ Subordinate Certificate ”: Any of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 or Class M-7 Certificates.

 

“ Subordinate Class Expense Share ”: For each Class of Subordinate Certificates and each Accrual Period, the Subordinate Class Expense Share shall be allocated in reverse order of their respective numerical Class designations (beginning with the Class of Subordinate Certificates with the highest numerical Class designation) and will be an amount equal to (i) the sum of, without duplication, (a) the amounts paid to the Trustee from the Trust Fund during such Accrual Period pursuant to Section 8.05 hereof to the extent such amounts were paid for ordinary or routine expenses and were not taken into account in computing the Net Loan Rate of any Mortgage Loan and (b) amounts described in clause (y) of the definition of Available Funds herein to the extent such amounts were paid for ordinary or routine expenses and were not taken into account in computing the Net Loan Rate of any Mortgage Loan minus (ii) amounts taken into account under clause (i) of this definition in determining the Subordinate Class Expense Share of any Class of Subordinate Certificates having a higher numeric designation. In no event, however, shall the Subordinate Class Expense Share for any Class of Subordinate Certificates and any Accrual Period exceed the product of (i) (a) the lesser of the Pass-Through Rate for such Class or the Subordinate Adjusted Cap Rate, divided by (b) 12 and (ii) the Class Principal Amount of such Class of Subordinate Certificates as of the beginning of the related Accrual Period.

“ Subordinate Component ”: With respect to each Loan Group and any Distribution Date, the excess of the sum of the related Pool Collateral Balance for such Distribution Date over the aggregate Class Principal Balance of the related Senior Certificate Group immediately preceding such Distribution Date. The designation “1” and “2” appearing after the corresponding Loan Group designation is used to indicate a Subordinate Component allocable to Loan Group 1 and Loan Group 2, respectively.

“ Subsequent Cut-off Date ”: With respect to any Subsequent Mortgage Loan, the later of (a) the first day of the month of the conveyance of such Mortgage Loan to the Trust after giving effect to the monthly payment on that date or (b) the date such Mortgage Loan was originated.

“ Subsequent Mortgage Loan ”: Any Mortgage Loan, other than an Initial Mortgage Loan, conveyed to the Trust Fund pursuant to Section 2.01 hereof and a Subsequent Transfer Agreement, which Mortgage Loan shall be listed on the revised Mortgage Loan Schedule delivered pursuant to this Agreement and on Schedule A to such Subsequent Transfer Agreement. When used with respect to a single Subsequent Transfer Date, Subsequent Mortgage Loan shall mean a Subsequent Mortgage Loan conveyed to the Trust on that Subsequent Transfer Date.

“ Subsequent Transfer Agreement ”: A Subsequent Transfer Agreement substantially in the form of Exhibit P hereto, executed and delivered by and among the Depositor, the Seller and the Trustee and acknowledged by the Servicer, as provided in Section 2.01(b) hereof.

 

 

“ Subsequent Transfer Date ”: With respect to any Subsequent Transfer Agreement, the date the related Subsequent Mortgage Loans are transferred to the Trust pursuant to the related Subsequent Transfer Agreement.

“ Subservicer ”: Any Person that services Mortgage Loans on behalf of the Servicer, the Master Servicer, the Securities Administrator or the Custodian, and is responsible for the performance (whether directly or through subservicers or Subcontractors) of servicing functions required to be performed under this Agreement, any related Servicing Agreement or any subservicing agreement that are identified in Item 1122(d) of Regulation AB.

“ Substitution Adjustment ”: As defined in Section 2.03(d) hereof.

“ Tax Returns ”: The federal income tax return on Internal Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed on behalf of each of the REMICs created hereunder under the REMIC Provisions, together with any and all other information reports or returns that may be required to be furnished to the Certificateholders or filed with the Internal Revenue Service or any other governmental taxing authority under any applicable provisions of federal, state or local tax laws.

“ Telerate Page 3750 ”: The display currently so designated as “Page 3750” on the Bridge Telerate Service (or such other page selected by the Securities Administrator as may replace Page 3750 on that service for the purpose of displaying daily comparable rates on prices).

“ Termination Price ”: As defined in Section 10.01(a) hereof.

“ Transfer ”: Any direct or indirect transfer or sale of any Ownership Interest in a Residual Certificate.

“ Transfer Affidavit ”: As defined in Section 6.02(e)(ii) hereof.

“ Transferee ”: Any Person who is acquiring by Transfer any Ownership Interest in a Certificate.

“ Trigger Event ”: With respect to any Distribution Date on or after the Stepdown Date, occurs when:

(a)   the sum of the percentages obtained by dividing (x) the aggregate Stated Principal Balance of Mortgage Loans delinquent 60 days or more, that are in foreclosure or that are REO Properties by (y) the aggregate Stated Principal Balance of the Mortgage Loans, in each case, as of the last day of the previous calendar month, exceeds (i) prior to the Distribution Date in September 2012, 35.04% of the current Credit Enhancement Percentage or (ii) on or after the Distribution Date in September 2012, 40.00% of the current Credit Enhancement Percentage; or

(b)   the aggregate amount of Realized Losses incurred since the Cut-off Date through the last day of the related Due Period (reduced by the aggregate amount of Recoveries received since the Cut-off Date through the last day of the related Due Period) divided by the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date exceeds the applicable percentages set forth below with respect to such Distribution Date:

 

“ Trust Fund ”: The segregated pool of assets subject hereto, constituting the primary trust created hereby and to be administered hereunder, with respect to which a REMIC election is to be made, such Trust Fund consisting of: (i) such Mortgage Loans as from time to time are subject to this Agreement, together with the Mortgage Files relating thereto, and together with all collections thereon and proceeds thereof, (ii) any REO Property, together with all collections thereon and proceeds thereof, (iii) the Trustee’s rights with respect to the Mortgage Loans under all insurance policies required to be maintained pursuant to this Agreement and any proceeds thereof, (iv) the Depositor’s rights under the Mortgage Loan Purchase Agreement (including any security interest created thereby); (v) the Distribution Account (subject to the last sentence of this definition), any REO Account and such assets that are deposited therein from time to time and any investments thereof, together with any and all income, proceeds and payments with respect thereto, (vi) all right, title and interest of the Seller in and to the Servicing Agreement, (vii) the Basis Risk Reserve Fund, the Prefunding Account and the Final Maturity Reserve Fund, (viii) the Certificate Insurance Policy and (ix) all proceeds of the foregoing. Notwithstanding the foregoing, however, the Trust Fund specifically excludes (1) all payments and other collections of interest and principal due on the Mortgage Loans on or before the Cut-off Date and principal received before the Cut-off Date (except any principal collected as part of a payment due after the Cut-off Date) and (2) all income and gain realized from Permitted Investments of funds on deposit in the Distribution Account.

“ Trustee ”: Deutsche Bank National Trust Company, not in its individual capacity but solely as trustee, a national banking association, its successors or assigns, or any successor trustee appointed as herein provided.

“ Trustee Fee ”: The annual on-going fee as agreed to by the Trustee and the Master Servicer and payable by the Master Servicer on behalf of the Trust Fund to the Trustee from the Master Servicer’s own funds pursuant to the terms of the separate fee letter agreement between the Trustee and the Master Servicer.

“ Undercollateralized Group ”: With respect to any Distribution Date and any Loan Group as to which the aggregate Class Principal Balance of the related Classes of Senior Certificates, after giving effect to distributions pursuant to Section 5.01(a) on such date, is greater than the Loan Group Balance of the related Loan Group for such Distribution Date, such Classes of Senior Certificates shall constitute an Undercollateralized Group.

 

“ Underwriter’s Exemption ”: Prohibited Transaction Exemption 90-59 (Exemption Application No. D-8374), as amended by PTE 97-34 (Exemption Application No. D-10245 and D-10246) and by PTE 2000-58 (Exemption Application No. D-10829) and PTE 2002-41 (Exemption Application No. D-11077), as amended (or any successor thereto), or any substantially similar administrative exemption granted by the U.S. Department of Labor.

“ Uninsured Cause ”: Any cause of damage to a Mortgaged Property such that the complete restoration of such property is not fully reimbursable by the hazard insurance policies required to be maintained on such Mortgaged Property.

“ United States Person ” or “ U.S. Person ”: A citizen or resident of the United States, a corporation, partnership or other entity treated as a corporation or partnership for federal income tax purposes (other than a partnership that is not treated as a U.S. Person pursuant to any applicable Treasury regulations) created or organized in, or under the laws of, the United States, any state thereof or the District of Columbia, or an estate the income of which from sources without the United States is includible in gross income for United States federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States, or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have authority to control all substantial decisions of the trust. The term “United States” shall have the meaning set forth in Section 7701 of the Code or successor provisions.

“ Unpaid Basis Risk Shortfall ”: For each Class of Offered Certificates and any Distribution Date, the aggregate of all Basis Risk Shortfalls for such Class remaining unpaid from all previous Distribution Dates, together with interest thereon at the applicable Pass-Through Rate, computed without regard to the applicable Net WAC Cap, but limited to a rate no greater than the Net Maximum Rate Cap.

“ Unpaid Interest Shortfall Amount ”: For each class of Offered Certificates (other than the Class C and Class P Certificates) and any Distribution Date, the amount, if any, by which (a) the sum of (1) the Monthly Interest Distributable Amount for such Class for the immediately preceding Distribution Date and (2) the outstanding Unpaid Interest Shortfall Amount, if any, for such Class for such preceding Distribution Date exceeds (b) the aggregate amount distributed on such Class in respect of interest pursuant to clause (a) of this definition on such preceding Distribution Date, plus interest on the amount of interest due but not paid on the Certificates of such Class on such preceding Distribution Date, to the extent permitted by law, at the applicable Pass-Through Rate for such Class for the related Accrual Period.

“ Upper-Tier REMIC ”: As described in the Preliminary Statement.

“ Value ”: With respect to any Mortgage Loan and the related Mortgaged Property, the lesser of:

provided, however , that in the case of a Refinancing Mortgage Loan, such value of the Mortgaged Property is based solely upon the value determined by an appraisal made for the originator of such Refinancing Mortgage Loan at the time of origination by an appraiser who met the minimum requirements of Fannie Mae and Freddie Mac.

“ Voting Rights ”: The portion of the voting rights of all of the Certificates which is allocated to any Certificate. 99% of the voting rights shall be allocated among the Classes of Regular Certificates, pro rata , based on a fraction, expressed as a percentage, the numerator of which is the Class Principal Balance of such Class and the denominator of which is the aggregate of the Class Principal Balances then outstanding and 1% of the voting rights shall be allocated to the Class R Certificate; provided , however , that when none of the Regular Certificates is outstanding, 100% of the voting rights shall be allocated to the Holder of the Class R Certificate. The voting rights allocated to a Class of Certificates shall be allocated among all Holders of such Class, pro rata , based on a fraction the numerator of which is the Certificate Principal Balance of each Certificate of such Class and the denominator of which is the Class Principal Balance of such Class; provided , further , however , that any Certificate registered in the name of the Master Servicer, the Securities Administrator or the Trustee or any of its affiliates shall not be included in the calculation of Voting Rights; and provided , further , however , that all Voting Rights in respect of the Insured Certificates shall be allocated to the Certificate Insurer. The Class C and Class P Certificates will have no voting rights.

“ Writedown Amount ”: The reduction described in Section 5.03(c).

“ Yield Maintenance Account ”: Not applicable.

“ Yield Maintenance Agreement ”: Not applicable.

“ Yield Maintenance Allocation Agreement ”: Not applicable.

“ Yield Maintenance Distributable Amount ”: Not applicable.

“ Yield Maintenance Notional Balance ”: Not applicable.

“ Yield Maintenance Payment Amount ”: Not applicable.

“ Yield Maintenance Provider ”: Not applicable.

“ Yield Maintenance Trust ”: Not applicable.

“ Yield Maintenance Trust Account ”: Not applicable.

Unless otherwise specified herein, for the purpose of any definition or calculation, whenever amounts are required to be netted, subtracted or added or any distributions are taken into account such definition or calculation and any related definitions or calculations shall be determined without duplication of such functions.

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS;

ORIGINAL ISSUANCE OF CERTIFICATES