J.P. MORGAN ACCEPTANCE CORPORATION
I
Depositor
J.P. MORGAN MORTGAGE ACQUISITION
CORP.
Seller
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION
Securities Administrator and
Servicer
U.S. BANK NATIONAL ASSOCIATION
Trustee
and
PENTALPHA SURVEILLANCE LLC
Trust Oversight Manager
_________________________________________
POOLING AND SERVICING
AGREEMENT
Dated as of August 1, 2006
_________________________________________
J.P. MORGAN MORTGAGE ACQUISITION TRUST
2006-WMC3
ASSET BACKED PASS-THROUGH CERTIFICATES,
SERIES 2006-WMC3
Table of Contents
Page
ARTICLE I DEFINITIONS
SECTION 1.01.
Defined Terms.
3
SECTION 1.02.
Allocation of Certain Interest
Shortfalls.
44
SECTION 1.03.
Designation of Interests in
REMIC.
44
SECTION 1.04.
Rights of the NIMS Insurer.
52
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01.
Conveyance of Mortgage Loans.
52
SECTION 2.02.
Acceptance of REMIC I by the
Trustee.
55
SECTION 2.03.
Repurchase or Substitution of Mortgage
Loans by the Originator, the
Seller or the Depositor; Payment of
Prepayment Premiums in the
Event of Breach.
57
SECTION 2.04.
Representations and Warranties of the
Depositor.
61
SECTION 2.05.
Representations, Warranties and Covenants
of the Servicer.
63
SECTION 2.06.
Representations and Warranties as to the
Mortgage Loans.
66
SECTION 2.07.
Issuance of the R-I Residual
Interest.
67
SECTION 2.08.
Conveyance of Uncertificated REMIC
Regular Interests; Acceptance
by the Trustee.
67
ARTICLE III ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01.
Servicer to Act as Servicer.
67
SECTION 3.02.
Sub-Servicing Agreements Between the
Servicer and Sub-Servicers.
70
SECTION 3.03.
Successor Sub-Servicers.
72
SECTION 3.04.
Liability of the Servicer.
72
SECTION 3.05.
No Contractual Relationship Between
Sub-Servicers and NIMS
Insurer, Trustee, Securities
Administrator or Certificateholders.
72
SECTION 3.06.
Assumption or Termination of
Sub-Servicing Agreements by Trustee.
73
SECTION 3.07.
Collection of Certain Mortgage Loan
Payments.
73
SECTION 3.08.
Sub-Servicing Accounts.
74
SECTION 3.09.
Collection of Taxes, Assessments and
Similar Items; Servicing
Accounts.
74
SECTION 3.10.
Collection Account and Distribution
Account.
75
SECTION 3.11.
Withdrawals from the Collection Account
and Distribution Account.
77
SECTION 3.12.
Investment of Funds in the Collection
Account, the REO Account and
the Distribution Account.
80
SECTION 3.13.
Superior Liens.
81
SECTION 3.14.
Maintenance of Hazard Insurance and
Errors and Omissions and
Fidelity Coverage.
81
SECTION 3.15.
Enforcement of Due-On-Sale Clauses;
Assumption Agreements.
83
SECTION 3.16.
Realization Upon Defaulted Mortgage
Loans.
84
SECTION 3.17.
Trustee and the Custodian to Cooperate;
Release of Mortgage Files.
86
SECTION 3.18.
Servicing Compensation.
87
SECTION 3.19.
[RESERVED].
88
SECTION 3.20.
Statement as to Compliance.
88
SECTION 3.21.
Report on Assessment of Compliance and
Attestation.
88
SECTION 3.22.
Access to Certain
Documentation.
92
SECTION 3.23.
Title, Management and Disposition of REO
Property.
92
SECTION 3.24.
Obligations of the Servicer in Respect of
Prepayment Interest
Shortfalls.
96
SECTION 3.25.
Obligations of the Servicer in Respect of
Mortgage Rates and Monthly
Payments.
96
SECTION 3.26.
Net WAC Reserve Fund.
96
SECTION 3.27.
Swap Agreement.
97
SECTION 3.28.
Advance Facility.
98
ARTICLE IV PAYMENTS TO
CERTIFICATEHOLDERS
SECTION 4.01.
Distributions.
101
SECTION 4.02.
Statements to
Certificateholders.
111
SECTION 4.03.
Remittance Reports; P&I
Advances.
115
SECTION 4.04.
Allocation of Realized Losses.
116
SECTION 4.05.
Compliance with Withholding
Requirements.
117
SECTION 4.06.
Tax Returns; Commission
Reporting.
117
SECTION 4.07.
Supplemental Interest Trust.
121
SECTION 4.08.
Rights of Swap Provider.
122
SECTION 4.09.
Replacement of Swap Provider.
122
SECTION 4.10.
Distribution of Net Swap
Payments.
123
ARTICLE V THE CERTIFICATES
SECTION 5.01.
The Certificates.
126
SECTION 5.02.
Registration of Transfer and Exchange of
Certificates.
128
SECTION 5.03.
Mutilated, Destroyed, Lost or Stolen
Certificates.
134
SECTION 5.04.
Persons Deemed Owners.
135
SECTION 5.05.
Certain Available Information.
135
ARTICLE VI THE DEPOSITOR, THE SELLER AND
THE SERVICER
SECTION 6.01.
Liability of the Depositor, the Seller
and the Servicer.
135
SECTION 6.02.
Merger or Consolidation of the Depositor,
the Seller or the Servicer.
136
SECTION 6.03.
Limitation on Liability of the Depositor,
the Seller, the Servicer and
Others.
136
SECTION 6.04.
Limitation on Resignation of the
Servicer.
138
SECTION 6.05.
Rights of the Depositor, the Seller, the
Securities Administrator and
the Trustee in Respect of the
Servicer.
138
ARTICLE VII DEFAULT
SECTION 7.01.
Servicer Events of Default.
139
SECTION 7.02.
Trustee to Act; Appointment of
Successor.
142
SECTION 7.03.
Notification to
Certificateholders.
143
SECTION 7.04.
Waiver of Servicer Events of
Default.
144
ARTICLE VIII CONCERNING THE TRUSTEE, THE
SECURITIES ADMINISTRATOR AND THE TRUST OVERSIGHT MANAGER
SECTION 8.01.
Duties of Trustee.
144
SECTION 8.02.
Certain Matters Affecting the
Trustee.
146
SECTION 8.03.
Trustee not Liable for Certificates or
Mortgage Loans.
148
SECTION 8.04.
Trustee May Own Certificates.
148
SECTION 8.05.
Fees and Expenses of Trustee.
148
SECTION 8.06.
Eligibility Requirements for
Trustee.
149
SECTION 8.07.
Resignation and Removal of
Trustee.
149
SECTION 8.08.
Successor Trustee.
150
SECTION 8.09.
Merger or Consolidation of
Trustee.
150
SECTION 8.10.
Appointment of Co-Trustee or Separate
Trustee.
150
SECTION 8.11.
Duties of Securities
Administrator.
152
SECTION 8.12.
Certain Matters Affecting the Securities
Administrator.
153
SECTION 8.13.
Securities Administrator not Liable for
Certificates or Mortgage
Loans.
156
SECTION 8.14.
Securities Administrator May Own
Certificates.
156
SECTION 8.15.
Fees and Expenses of Securities
Administrator.
156
SECTION 8.16.
Eligibility Requirements for Securities
Administrator.
157
SECTION 8.17.
Resignation and Removal of Securities
Administrator.
157
SECTION 8.18.
Successor Securities
Administrator.
158
SECTION 8.19.
Merger or Consolidation of Securities
Administrator.
158
SECTION 8.20.
Duties of the Trust Oversight
Manager.
159
SECTION 8.21.
Limitation Upon Liability of the Trust
Oversight Manager.
159
SECTION 8.22.
Removal of Trust Oversight
Manager.
159
ARTICLE IX TERMINATION
SECTION 9.01.
Termination Upon Repurchase or
Liquidation of All Mortgage Loans.
160
SECTION 9.02.
Additional Termination
Requirements.
162
ARTICLE X REMIC PROVISIONS
SECTION 10.01.
REMIC Administration.
163
SECTION 10.02.
Prohibited Transactions and
Activities.
167
SECTION 10.03.
Servicer and Securities Administrator
Indemnification.
167
ARTICLE XI MISCELLANEOUS
PROVISIONS
SECTION 11.01.
Amendment.
167
SECTION 11.02.
Recordation of Agreement;
Counterparts.
169
SECTION 11.03.
Limitation on Rights of
Certificateholders.
170
SECTION 11.04.
Governing Law.
170
SECTION 11.05.
Notices.
171
SECTION 11.06.
Severability of Provisions.
171
SECTION 11.07.
Notice to Rating Agencies and the Swap
Provider.
171
SECTION 11.08.
Article and Section
References.
172
SECTION 11.09.
Third Party Rights.
172
SECTION 11.10.
Grant of Security Interest.
173
SECTION 11.11.
Protection of Assets.
173
SECTION 11.12.
Non-Solicitation
174
SECTION 11.13.
Compliance With Regulation AB.
174
SECTION 11.14.
Accounting Treatment.
174
Exhibits
Exhibit A-1
Form of Class A Certificate
Exhibit A-2
Form of Mezzanine Certificate
Exhibit A-3
Form of Class C
Certificate
Exhibit A-4
Form of Class P Certificate
Exhibit A-5
Form of Class R Certificate
Exhibit B
[Reserved]
Exhibit C-1
Form of Trustee Receipt and Initial
Certification
Exhibit C-2
Form of Trustee Receipt and Final
Certification
Exhibit D
Form of Mortgage Loan Purchase
Agreement
Exhibit E-1
Form of Request for Release
Exhibit E-2
[Reserved]
Exhibit F-1
Forms of Transferor/Transferee
Representation Letter
Exhibit F-2
Form of Transfer Affidavit and
Agreement
Exhibit G
Form of ERISA Certification
Exhibit H
Form of Depositor
Certification
Exhibit I
Form of Securities Administrator
Certification
Exhibit J
Form of Servicer Certification
Exhibit K-1
Form of Assessment of
Compliance
Exhibit K-2
Form of Custodian’s Assessment of
Compliance
Exhibit L
Form of Realized Loss Report
Schedules
Schedule 1
Mortgage Loan Schedule
Schedule 2
[Reserved]
Schedule 3
Swap Agreement Schedule
Schedule 4
Mortgage Loan Representations and
Warranties
Schedule 5
Servicing Transfer Dates
This Pooling and Servicing Agreement, is
dated as of August 1, 2006 (the “Agreement”), by and
among J.P. MORGAN ACCEPTANCE CORPORATION I, a Delaware corporation,
as Depositor (the “Depositor”), J.P. MORGAN MORTGAGE
ACQUISITION CORP., a Delaware corporation, as Seller (the
“Seller”) for purposes of Section 2.03 and 2.05,
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Securities
Administrator (the “Securities Administrator”) and as
Servicer (the “Servicer”), PENTALPHA SURVEILLANCE LLC
as Trust Oversight Manager (the “Trust Oversight
Manager”) and U.S. BANK NATIONAL ASSOCIATION, as Trustee (the
“Trustee”).
PRELIMINARY STATEMENT:
The Depositor intends to sell
pass-through certificates (collectively, the
“Certificates”), to be issued hereunder in multiple
classes, which in the aggregate will evidence the entire beneficial
ownership interest in multiple REMICs (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool
of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement.
As of the Cut-off Date, the Mortgage
Loans had an aggregate Stated Principal Balance equal to
$959,177,770.27.
Set forth below are designations of
Classes of Certificates to the categories used herein.
|
Book-Entry Certificates
|
All Classes of Certificates other than the Physical
Certificates.
|
|
Class A Certificates
|
Class A-1SS, A-1MZ, Class A-2, Class A-3, Class A-4 and Class A-5
Certificates.
|
|
Class P Certificates
|
Class P Certificates.
|
|
ERISA-Restricted Certificates
|
Non-Offered Certificates and any Certificates that do not satisfy
the applicable ratings requirement under the Underwriter’s
Exemption upon acquisition.
|
|
ERISA-Restricted Swap Certificates
|
Offered Certificates.
|
|
LIBOR Certificates
|
Class A and Mezzanine Certificates.
|
|
Mezzanine Certificates
|
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7, Class M-8, Class M-9 and Class M-10 Certificates.
|
|
Non-Offered Certificates
|
Class M-10, Class C, Class P and Residual Certificates.
|
|
Offered Certificates
|
Class A and Offered Subordinate Certificates.
|
|
Offered Subordinate Certificates
|
Mezzanine Certificates (other than the Class M-10
Certificates).
|
|
Physical Certificates
|
Class C, Class P and Residual Certificates.
|
|
Regular Certificates
|
All Classes of Certificates other than the Residual
Certificates.
|
|
Residual Certificates
|
Class R Certificates.
|
|
Residual Interests
|
Class R Certificates and the Uncertificated Interest.
|
|
Senior Certificates
|
Class A Certificates.
|
|
Subordinate Certificates
|
Class C and Mezzanine Certificates.
|
|
Uncertificated Interest
|
The R-I Interest.
|
In consideration of the mutual agreements
herein contained, the Depositor, the Seller, the Servicer, the
Securities Administrator, the Trust Oversight Manager and the
Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.
Defined Terms.
The following words and phrases, unless
the context otherwise requires, shall have the following
meanings:
“Accepted Servicing
Practices”: With respect to any Mortgage Loan, those mortgage
servicing practices employed by the Servicer in servicing similar
mortgage loans for its own portfolio giving due consideration to
customary and usual standards of practice of prudent mortgage
lending institutions which service mortgage loans of the same type
as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located.
“Accountant’s
Attestation”: As defined in Section 3.21.
“Additional Termination
Events” As defined in the Swap Agreement.
“Adjustable Rate Mortgage
Loan”: Each of the Mortgage Loans identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is subject to
adjustment.
“Adjustable Rate Prepayment
Vector”: A CPR of 2.00% per annum of the then unpaid
principal balance of such Mortgage Loans in the first month of the
life of such Mortgage Loans and an additional approximately 2.545%
(precisely 28%/11) per annum in each month thereafter until the
12th month. Beginning in the 12th month and in each month
thereafter until the 22nd month, a CPR of 30%. Beginning in
the 23rd month and in each month thereafter until the 27th month, a
CPR of 50%. Beginning in the 28th month and in each month
thereafter during the life of such Mortgage Loans, a CPR of 35%;
provided, however, that the prepayment rate will not exceed 85% CPR
in any period for any given percentage of the Adjustable Rate
Prepayment Vector.
“Adjustment Date”: With
respect to each Adjustable Rate Mortgage Loan, the day of the month
on which the Mortgage Rate of such Mortgage Loan changes pursuant
to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Adjustable Rate Mortgage Loan
is set forth in the Mortgage Loan Schedule.
“Administrative Fee”: As to
any Distribution Date, the sum of the Servicing Fee, the Securities
Administrator Fee, the Custodian Fee and the Trust Oversight
Manager Fee, each for such Distribution Date.
“Administrative Fee Rate”: As
to any Distribution Date, the sum of the Servicing Fee Rate, the
Securities Administrator Fee Rate, the Custodian Fee Rate and the
Trust Oversight Manager Fee Rate, each for such Distribution
Date.
“Advance Facility”: As
defined in Section 3.28(a) herein.
“Advance Facility Notice”: As
defined in Section 3.28(b) herein.
“Advance Facility Trustee”:
As defined in Section 3.28(b) herein.
“Advance Reimbursement
Amounts”: As defined in Section 3.28(a) herein.
“Advancing Person”: As
defined in Section 3.28(a) herein.
“Affiliate”: With respect to
any specified Person, any other Person controlling or controlled by
or under common control with such specified Person. For the
purposes of this definition, “control” when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the
foregoing.
“Aggregate Collateral
Balance”: As of any date of determination will be equal to
the aggregate Stated Principal Balance of the Mortgage Loans and
any REO Properties owned by the Trust.
“Agreement”: This Pooling and
Servicing Agreement and all amendments hereof and supplements
hereto.
“Applicable Regulations”: As
to any Mortgage Loan, all federal, state and local laws, statutes,
rules and regulations applicable thereto.
“Allocated Realized Loss
Amount”: With respect to any Distribution Date and any Class
of Mezzanine Certificates, the amount by which (A) any Realized
Losses allocated to such Class of Certificates on any Distribution
Date pursuant to Section 4.04 exceeds the sum of (B) (i) any
additions to the Class Principal Amount pursuant to Section 4.04(d)
on such Distribution Date or any previous Distribution Date and
(ii) the aggregate of the amounts paid in respect of
reimbursement of Allocated Realized Loss Amounts pursuant to
Section 4.01(a)(3) on previous Distribution Dates.
“Assessment of Compliance”:
As defined in Section 3.21.
“Assignment”: An assignment
of Mortgage, notice of transfer or equivalent instrument, in
recordable form (excepting therefrom, if applicable, the mortgage
recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder’s
office and/or the assignee’s name), which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property
is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in
the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county, if
permitted by law.
“Assignment and Assumption
Agreement”: That certain assignment, assumption and
recognition agreement dated as of the Closing Date, by and among
the Seller, the Depositor and WMC, and related to the Mortgage Loan
Purchase Agreement.
“Available Funds”: With
respect to any Distribution Date, an amount equal to (1) the sum of
(a) the aggregate of the amounts on deposit in the Collection
Account and Distribution Account in respect of the Mortgage Loans
as of the close of business on the related Determination Date, (b)
the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO Account and deposited in the Distribution
Account for such Distribution Date pursuant to Section 3.23, (c)
the aggregate of any amounts deposited in the Distribution Account
by the Servicer in respect of Compensating Interest for such
Distribution Date pursuant to Section 3.24 and (d) the aggregate of
any P&I Advances made by the Servicer for such Distribution
Date pursuant to Section 4.03 reduced (to not less than zero)
reduced by (2) the portion of the amount described in clause (1)(a)
above that represents (i) Monthly Payments on the Mortgage Loans
received from a Mortgagor on or prior to the Determination Date but
due during any Due Period subsequent to the related Due Period,
(ii) Principal Prepayments on the Mortgage Loans received after the
related Prepayment Period (together with any interest payments
received with such Principal Prepayments to the extent they
represent the payment of interest accrued on the Mortgage Loans
during a period subsequent to the related Prepayment Period), (iii)
Liquidation Proceeds, Insurance Proceeds and proceeds from
repurchases of and substitutions for Mortgage Loans, if any,
received in respect of such Mortgage Loans after the calendar month
preceding the month of such Distribution Date, (iv) amounts
reimbursable or payable to the Depositor, the Originator, the
Servicer, the Securities Administrator, the Trustee, the Trust
Oversight Manager, the Custodian or any Sub-Servicer pursuant to
Section 3.11 or Section 3.12 or otherwise payable in respect of
Extraordinary Trust Fund Expenses, (v) amounts deposited in the
Collection Account or the Distribution Account in error, (vi) the
amount of any Prepayment Premiums collected by the Servicer in
connection with the voluntary Principal Prepayment in full of any
of the Mortgage Loans or the Servicer Prepayment Premium Payment
Amount and (vii) any Net Swap Payment or Swap Termination Payment
owed to the Swap Provider (other than any Swap Termination Payment
owed to the Swap Provider resulting from a Swap Provider Trigger
Event).
“Balloon Loan”: Any Mortgage
Loan which, by its terms, does not fully amortize the principal
balance thereof by its stated maturity and thus requires a payment
at the stated maturity larger than the monthly payments due
thereunder.
“Bankruptcy Code”: The
Bankruptcy Reform Act of 1978 (Title 11 of the United States Code),
as amended.
“Bankruptcy Loss”: With
respect to any Mortgage Loan, a Realized Loss resulting from a
Deficient Valuation (i.e. “principal cramdown”) or Debt
Service Reduction (i.e. “interest
cramdown”).
“Book-Entry Certificate”: As
specified in the Preliminary Statement.
“Book-Entry Custodian”: The
custodian appointed pursuant to Section 5.01(b) herein.
“Business Day”: Any day other
than (i) a Saturday or Sunday, or (ii) a day on which banking
institutions in the City of New York, New York, the Commonwealth of
Pennsylvania, the States of California, Texas, Arizona, New Jersey
and Minnesota or the city in which the Corporate Trust Office of
the Trustee or Securities Administrator is located are authorized
or obligated by law or executive order to be closed.
“Certificate”: Any one of the
certificates issued under this Agreement in substantially the forms
attached hereto as Exhibit A-1 through Exhibit A-5.
“Certificate Factor”: With
respect to any Class of LIBOR Certificates as of any Distribution
Date, a fraction, expressed as a decimal carried to six places, the
numerator of which is the aggregate Class Principal Amount of such
Class of Certificates on such Distribution Date (after giving
effect to any distributions of principal and allocations of
Realized Losses in reduction of the Class Principal Amount of such
Class of Certificates to be made on such Distribution Date), and
the denominator of which is the initial aggregate Class Principal
Amount of such Class of Certificates as of the Closing
Date.
“Certificate Margin”: As to
any Class of LIBOR Certificates, the respective amount set forth
below:
|
|
Certificate Margin
|
|
|
|
|
|
|
|
|
A-1SS
|
0.130%
|
0.260%
|
|
A-1MZ
|
0.180%
|
0.360%
|
|
A-2
|
0.050%
|
0.100%
|
|
A-3
|
0.110%
|
0.220%
|
|
A-4
|
0.150%
|
0.300%
|
|
A-5
|
0.240%
|
0.480%
|
|
M-1
|
0.250%
|
0.375%
|
|
M-2
|
0.300%
|
0.450%
|
|
M-3
|
0.320%
|
0.480%
|
|
M-4
|
0.370%
|
0.555%
|
|
M-5
|
0.400%
|
0.600%
|
|
M-6
|
0.460%
|
0.690%
|
|
M-7
|
0.800%
|
1.200%
|
|
M-8
|
0.920%
|
1.380%
|
|
M-9
|
1.800%
|
2.700%
|
|
M-10
|
2.000%
|
3.000%
|
(1)
To and including the Optional Termination
Date.
(2)
After the Optional Termination
Date.
“Certificate Owner”: With
respect to a Book-Entry Certificate, the Person who is the
beneficial owner of such Certificate as reflected on the books of
the Depository or on the books of a Depository Participant or on
the books of an indirect participating brokerage firm for which a
Depository Participant acts as agent.
“Certificate Register” and
“Certificate Registrar”: The register maintained and
the registrar appointed pursuant to Section 5.02 herein.
“Certificateholder” or
“Holder”: The Person in whose name a Certificate or
Uncertificated Interest is registered in the Certificate Register,
except that a Disqualified Organization or a Non-United States
Person shall not be a Holder of a Residual Interest for any
purposes hereof and, solely for the purposes of giving any consent
pursuant to this Agreement, any Certificate registered in the name
of the Depositor or the Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is
entitled shall not be taken into account in determining whether the
requisite percentage of Voting Rights necessary to effect any such
consent has been obtained, except as otherwise provided in Section
11.01. The Securities Administrator may conclusively rely
upon a certificate of the Depositor or the Servicer in determining
whether a Certificate is held by an Affiliate thereof. All
references herein to “Holders” or
“Certificateholders” shall reflect the rights of
Certificate Owners as they may indirectly exercise such rights
through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Securities
Administrator shall be required to recognize as a
“Holder” or “Certificateholder” only the
Person in whose name a Certificate is registered in the Certificate
Register.
“Charged-off Mortgage Loan”:
As defined in Section 3.01 herein.
“Class”: All of the
Certificates bearing the same class designation as set forth in the
Preliminary Statement.
“Class A Principal Distribution
Amount”: For any Distribution Date, is an amount equal to the
excess of (x) the aggregate Class Principal Amount of the Senior
Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (1) 59.20% and (2) the Pool
Principal Balance as of the last day of the related Due Period and
(B) the Pool Principal Balance as of the last day of the related
Due Period minus the Overcollateralization Floor.
“Class C Distribution
Amount”: With respect to any Distribution Date the sum of
(i) the Overcollateralization Release Amount for that
Distribution Date, if any, and (ii) the product of (x) a
notional amount, equal to the aggregate Stated Principal Balance of
the Mortgage Loans as of the first day of the month of such
Distribution Date (after giving effect to Monthly Payments of
principal due on such date), and (y) the Pass-Through Rate for
the Class C Interest for such Distribution Date as set forth
in footnote (2) to the Master REMIC under Section 1.03 herein, less
(iii) distributions made pursuant to Section
4.01(a)(3)(i)-(xiii) on such Distribution Date.
“Class Exemption”: A class
exemption granted by the U.S. Department of Labor, which provides
relief from certain of the prohibited transaction provisions of
ERISA and the related excise tax provisions of the Code.
“Class M-4 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Class Principal Amount of the Class M-1, M-2
and M-3 Certificates (after taking into account the payment of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount on
such Distribution Date), and (iii) the Class Principal Amount
of the Class M-4 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product
of (i) 78.80% and (ii) the Pool Principal Balance as of
the last day of the related Due Period and (B) the Pool
Principal Balance as of the last day of the related Due Period
minus the Overcollateralization Floor.
“Class M-5 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Class Principal Amount of the Class M-1, M-2
and M-3 Certificates (after taking into account the payment of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount on
such Distribution Date), (iii) the Class Principal Amount of
the Class M-4 Certificates (after taking into account the payment
of the Class M-4 Principal Distribution Amount on such Distribution
Date) and (iv) the Class Principal Amount of the Class M-5
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 82.00% and
(ii) the Pool Principal Balance as of the last day of the
related Due Period and (B) the Pool Principal Balance as of
the last day of the related Due Period minus the
Overcollateralization Floor.
“Class M-6 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Class Principal Amount of the Class M-1, M-2
and M-3 Certificates (after taking into account the payment of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount on
such Distribution Date), (iii) the Class Principal Amount of
the Class M-4 Certificates (after taking into account the payment
of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Class Principal Amount of the Class M-5
Certificates (after taking into account the payment of the Class
M-5 Principal Distribution Amount on such Distribution Date) and
(v) the Class Principal Amount of the Class M-6 Certificates
immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 84.90% and (ii) the
Pool Principal Balance as of the last day of the related Due Period
and (B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class M-7 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Class Principal Amount of the Class M-1, M-2
and M-3 Certificates (after taking into account the payment of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount on
such Distribution Date), (iii) the Class Principal Amount of
the Class M-4 Certificates (after taking into account the payment
of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Class Principal Amount of the Class M-5
Certificates (after taking into account the payment of the Class
M-5 Principal Distribution Amount on such Distribution Date),
(v) the Class Principal Amount of the Class M-6 Certificates
(after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date) and (vi) the
Class Principal Amount of the Class M-7 Certificates immediately
prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 87.70% and (ii) the Pool
Principal Balance as of the last day of the related Due Period and
(B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class M-8 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Class Principal Amount of the Class M-1, M-2
and M-3 Certificates (after taking into account the payment of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount on
such Distribution Date), (iii) the Class Principal Amount of
the Class M-4 Certificates (after taking into account the payment
of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Class Principal Amount of the Class M-5
Certificates (after taking into account the payment of the Class
M-5 Principal Distribution Amount on such Distribution Date),
(v) the Class Principal Amount of the Class M-6 Certificates
(after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), (vi) the Class
Principal Amount of the Class M-7 Certificates (after taking into
account the payment of the Class M-7 Principal Distribution Amount
on such Distribution Date) and (vii) the Class Principal
Amount of the Class M-8 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product
of (i) 90.10% and (ii) the Pool Principal Balance as of
the last day of the related Due Period and (B) the Pool
Principal Balance as of the last day of the related Due Period
minus the Overcollateralization Floor.
“Class M-9 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Class Principal Amount of the Class M-1, M-2
and M-3 Certificates (after taking into account the payment of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount on
such Distribution Date), (iii) the Class Principal Amount of
the Class M-4 Certificates (after taking into account the payment
of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Class Principal Amount of the Class M-5
Certificates (after taking into account the payment of the Class
M-5 Principal Distribution Amount on such Distribution Date),
(v) the Class Principal Amount of the Class M-6 Certificates
(after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), (vi) the Class
Principal Amount of the Class M-7 Certificates (after taking into
account the payment of the Class M-7 Principal Distribution Amount
on such Distribution Date), (vii) the Class Principal Amount of the
Class M-8 Certificates (after taking into account the payment of
the Class M-8 Principal Distribution Amount on such Distribution
Date) and (viii) the Class Principal Amount of the Class M-9
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 91.90% and
(ii) the Pool Principal Balance as of the last day of the
related Due Period and (B) the Pool Principal Balance as of
the last day of the related Due Period minus the
Overcollateralization Floor.
“Class M-10 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Class Principal Amount of the Class M-1, M-2
and M-3 Certificates (after taking into account the payment of the
Combined Class M-1, M-2 and M-3 Principal Distribution Amount on
such Distribution Date), (iii) the Class Principal Amount of
the Class M-4 Certificates (after taking into account the payment
of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Class Principal Amount of the Class M-5
Certificates (after taking into account the payment of the Class
M-5 Principal Distribution Amount on such Distribution Date),
(v) the Class Principal Amount of the Class M-6 Certificates
(after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), (vi) the Class
Principal Amount of the Class M-7 Certificates (after taking into
account the payment of the Class M-7 Principal Distribution Amount
on such Distribution Date), (vii) the Class Principal Amount of the
Class M-8 Certificates (after taking into account the payment of
the Class M-8 Principal Distribution Amount on such Distribution
Date), (viii) the Class Principal Amount of the Class M-9
Certificates (after taking into account the payment of the Class
M-9 Principal Distribution Amount on such Distribution Date) and
(iv) the Class Principal Amount of the Class M-10 Certificates
immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 93.90% and (ii) the
Pool Principal Balance as of the last day of the related Due Period
and (B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class Principal Amount”:
With respect to any Class of Certificates, other than the Residual
and Class C Certificates, as of any Distribution Date, the
Class Principal Amount thereof on the Closing Date (the
“Original Class Principal Amount”) reduced by the sum
of (a) all amounts actually distributed in respect of principal of
such Class and (b) with respect to the Mezzanine Certificates, any
reductions in their respective Class Principal Amounts deemed to
have occurred in connection with allocations of Realized Losses on
all prior Distribution Dates pursuant to Section 4.04(b) plus any
increase to a Class Principal Amount pursuant to Section 4.04(d).
“Closing Date”: September 14,
2006.
“Code”: The Internal Revenue
Code of 1986, including any successor or amendatory
provisions.
“Collection Account”: The
account or accounts created and maintained by the Servicer pursuant
to Section 3.10(a), which shall be entitled “Chase Home
Finance, LLC as subservicer for JPMorgan Chase Bank, National
Association, as servicer for U.S. Bank National Association, as
Trustee, in trust for the registered holders of J.P. Morgan
Mortgage Acquisition Trust 2006-WMC3. The Collection Account
must be an Eligible Account.
“Combined Class M-1, M-2 and M-3
Principal Distribution Amount”: With respect to any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Class Principal Amount of the Senior Certificates (after
taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date) and (2) the Class
Principal Amount of the Class M-1, M-2 and M-3 Certificates
immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (1) 75.60 % and (2) the Pool Principal Balance
as of the last day of the related Due Period and (B) the Pool
Principal Balance as of the last day of the related Due Period
minus the Overcollateralization Floor.
“Commission”: The Securities
and Exchange Commission.
“Compensating Interest”: As
defined in Section 3.24 herein.
“Controlling Person”: The
Holders of the majority Percentage Interest of the Class C
Certificates.
“Corporate Trust Office”: The
corporate trust office of the Trustee at which at any particular
time its corporate trust business in connection with this Agreement
shall be administered, which offices at the date of the execution
of this instrument is located 209 S. LaSalle Street, Suite 300,
Chicago, IL 60604, Attention: JPMAC 2006-WMC3, or at such
other address as the Trustee may designate from time to time by
notice to the Certificateholders, the Securities Administrator, the
Depositor and the Servicer. With respect to the Securities
Administrator, 4 New York Plaza, 6th Floor, New York, New York
10004, Attention: Worldwide Securities Services/Structured
Finance Services – JPMAC 2006-WMC3 or at such other address
as the Securities Administrator may designate from time to time by
notice to the Certificateholders, the Trustee, the Depositor and
the Servicer. For purposes of presenting Certificates for
final payment at 2001 Bryan Street, 9th Floor, Dallas, Texas 75201,
Attention: Worldwide Securities Services/Structured Finance
Payment Area – JPMAC 2006-WMC3.
“Corresponding Classes of
Certificates”: With respect to each REMIC Regular Interest,
any Class of Certificates appearing opposite such REMIC Regular
Interest in Section 1.03 hereof.
“CPR”: A prepayment
assumption that represents an annualized constant assumed rate of
prepayment each month of a pool of mortgage loans relative to its
outstanding principal balance for the life of such pool.
“Credit Repositories”: Each
of Equifax, Transunion, and Experian, or their respective
successors in interest.
“Custodial Agreement”: Any
custodial agreement between the Trustee, on behalf of the Trust,
and the Custodian providing for the safekeeping of any documents or
instruments referred to in Section 2.01 on behalf of the
Certificateholders.
“Custodial File”: A Mortgage
File held by a Custodian on behalf of the Trustee.
“Custodian”: A custodian that
is appointed pursuant to a Custodial Agreement. The initial
Custodian shall be J.P. Morgan Trust Company, National
Association.
“Custodian Fee”: As to
any Distribution Date and each Mortgage Loan, an amount equal to
the product of the Custodian Fee Rate and the outstanding Stated
Principal Balance of such Mortgage Loan as of the first day of the
related Due Period.
“Custodian Fee Rate”:
0.002% per annum.
“Cut-off Date”: With respect
to each Mortgage Loan (other than a Qualified Substitute Mortgage
Loan), the close of business on August 1, 2006. With respect
to all Qualified Substitute Mortgage Loans, their respective dates
of substitution. References herein to the “Cut-off
Date,” when used with respect to more than one Mortgage Loan,
shall be to the respective Cut-off Dates for such Mortgage
Loans.
“Debt Service Reduction”:
With respect to any Mortgage Loan, a reduction in the scheduled
Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such
a reduction resulting from a Deficient Valuation.
“Deficient Valuation”:
With respect to any Mortgage Loan, a valuation of the related
Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the
Mortgage Loan, which valuation results from a proceeding initiated
under the Bankruptcy Code.
“Definitive Certificates”: As
defined in Section 5.01(b) herein.
“Deleted Mortgage Loan”: A
Mortgage Loan replaced or to be replaced by a Qualified Substitute
Mortgage Loan.
“Delinquency Percentage”:
With respect to the last day of a Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate
Stated Principal Balance of all Mortgage Loans that, as of the last
day of the previous calendar month, are 60 or more days Delinquent,
are in foreclosure, have been converted to REO Properties or have
been discharged by reason of bankruptcy, and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage
Loans and REO Properties as of the last day of the previous
calendar month.
“Delinquent”: A Mortgage Loan
is “Delinquent” if any Monthly Payment due on a Due
Date is not made by the close of business on the next scheduled Due
Date for that Mortgage Loan (including all foreclosures,
bankruptcies and REO Properties). A Mortgage Loan is
“30 days Delinquent” if such Monthly Payment has not
been received by the close of business on the corresponding day of
the month immediately succeeding the month in which such Monthly
Payment was due or, if there was no corresponding date (e.g., as
when a 30-day month follows a 31-day month in which such payment
was due on the 31st day of that month), then on the last day of
such immediately succeeding month; and similarly for “60 days
Delinquent” and “90 days Delinquent,” etc.
“Depositor”: J.P. Morgan
Acceptance Corporation I, a Delaware corporation, having its
principal place of business in New York, or its successors in
interest.
“Depositor Certification”: As
defined in Section 4.06(b) herein, a form of which is attached
hereto as Exhibit H.
“Depository”: The Depository
Trust Company, or any successor Depository hereafter named.
The nominee of the initial Depository, for purposes of
registering those Certificates that are to be Book-Entry
Certificates, is CEDE & Co. The Depository shall at all
times be a “clearing corporation” as defined in Section
8-102(a)(5) of the Uniform Commercial Code of the State of New York
and a “clearing agency” registered pursuant to the
provisions of Section 17A of the Exchange Act.
“Depository Institution”: Any
depository institution or trust company, including the Trustee,
that (a) is incorporated under the laws of the United States of
America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term
unsecured debt obligations that are rated F-1 by Fitch, A-1 by
S&P and P-1 by Moody’s (or comparable ratings if Fitch,
S&P and Moody’s are not the Rating Agencies).
“Depository Participant”: A
broker, dealer, bank or other financial institution or other Person
for whom from time to time a Depository effects book-entry
transfers and pledges of securities deposited with the
Depository.
“Determination Date”: With
respect to each Distribution Date, the 15th day of the calendar
month in which such Distribution Date occurs or, if such 15th day
is not a Business Day, the Business Day immediately preceding such
15th day.
“Directly Operate”: With
respect to any REO Property, the furnishing or rendering of
services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon
or any use of such REO Property in a trade or business conducted by
the Trust Fund other than through an Independent Contractor;
provided, however, that the Trustee (or the Servicer on behalf of
the Trustee) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicer on behalf of
the Trustee) establishes rental terms, chooses tenants, enters into
or renews leases, deals with taxes and insurance, or makes
decisions as to repairs or capital expenditures with respect to
such REO Property.
“Disqualified Organization”:
Any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are
subject to tax and, except for Freddie Mac, a majority of its board
of directors is not selected by such governmental unit), (ii) any
foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers’ cooperatives described in
Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric
and telephone cooperatives described in Section 1381(a)(2)(C) of
the Code, (v) an “electing large partnership” within
the meaning of Section 775 of the Code and (vi) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Interest by such
Person may cause any REMIC created hereunder, or any Person having
an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed under the
Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a Residual Interest to such Person. The
terms “United States,” “State” and
“international organization” shall have the meanings
set forth in Section 7701 of the Code or successor
provisions.
“Distribution Account”: The
trust account or accounts created and maintained by the Securities
Administrator pursuant to Section 3.10(b) which shall be entitled
“Distribution Account, U.S. Bank National Association, as
Trustee, in trust for the registered holders of J.P. Morgan
Mortgage Acquisition Trust 2006-WMC3. The Distribution
Account must be an Eligible Account.
“Distribution Date”: The 25th
day of any month, or if such 25th day is not a Business Day, the
Business Day immediately following such 25th day, commencing in
September 2006.
“Downgrade Provisions”:
The provisions of the Swap Agreement which are triggered if
the short-term or long-term credit ratings of the Swap Provider
fall below certain levels specified in the Swap
Agreement.
“Due Date”: With respect to
each Distribution Date and each Mortgage Loan (a) that has a
Monthly Payment due on the first day of the month, the first day of
the month and (b) that has a Monthly Payment due on a day other
than the first day of the month, such Mortgage Loan will be treated
as if the Monthly Payment is due on the first day of the
immediately succeeding month, in each case, exclusive of any days
of grace in the related Due Period.
“Due Period”: With respect to
any Distribution Date, the period commencing on the second day of
the month immediately preceding the month in which such
Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
“EDGAR”: The
Commission’s Electronic Data Gathering and Retrieval
System.
“Eligible
Account”: Either (1) an account or accounts maintained with a
federal or state-chartered Depository Institution or trust company
acceptable to the Rating Agencies and shall be: (a) commercial
paper, short-term debt obligation, or other short-term deposits
rated at least “A-1+” by S&P and “F-1+”
by Fitch if the deposits are to be held in the account for less
than 30 days; or (b) long term unsecured debt obligations rated at
least “AA-” by S&P and “A+” by Fitch if
the deposits are to be held in the account more than 30 days;
following a downgrade, withdrawal, or suspension of such
institution’s rating, each account should promptly (and in
any case within not more than 10 calendar days) be moved to a
qualifying institution or to one or more segregated trust accounts
in the trust department of such institution, if permitted; or (2) a
segregated trust account or accounts maintained with the corporate
trust department of a federal depository institution or
state-chartered depository institution subject to regulations
regarding fiduciary funds on deposit similar to Title 12 of the
Code of Federal Regulation Section 9.10(b), which, in either case,
has corporate trust powers, acting in its fiduciary capacity.
Eligible Accounts may bear interest.
“ERISA”: The Employee
Retirement Income Security Act of 1974, as amended.
“ERISA-Qualifying
Underwriting”: A best efforts or firm commitment underwriting
or private placement that meets the requirements (without regard to
the ratings requirements) of an Underwriter’s
Exemption.
“ERISA-Restricted
Certificate”: As defined in the Preliminary
Statement.
“ERISA-Restricted Swap
Certificate”: As defined in the Preliminary
Statement.
“Estate in Real Property”: A
fee simple estate in a parcel of land.
“Events of Default”: Under
the Swap Agreement (each a Swap Default), among others, the
following standard events of default under the ISDA Master
Agreement:
·
Failure to Pay or Deliver,
·
“Bankruptcy” (as defined in
the Swap Agreement) and
·
“Merger without Assumption”
(but only with respect to the Swap Provider), as described in
Sections 5(a)(vii), 5(a)(viii) and 5(b)(iv) of the ISDA Master
Agreement.
“Exception Report”: The list
of exceptions attached to the initial certification and the final
certification.
“Excess Overcollateralized
Amount”: With respect to any Distribution Date, 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.
“Exchange Act”: The
Securities Exchange Act of 1934, as amended.
“Extraordinary Trust Fund
Expense”: Any amounts payable (other than fees) or
reimbursable to the Securities Administrator, the Trustee, the
Custodian or any director, officer, employee or agent of the
Securities Administrator, the Trustee or the Custodian, from the
Trust Fund pursuant to Sections 2.02, 2.03, 7.01(c), 8.05 or 8.15
herein, or Section 25 of the Custodial Agreement and any amounts
payable from the Distribution Account in respect of taxes pursuant
to Section 10.01(g)(iii), any amounts payable from the Distribution
Account in respect of any REMIC administration pursuant to Section
10.01(c).
“Fair Market Value”: An
amount equal to the fair market value of all of the property of the
Trust Fund, as agreed upon between the Servicer and a majority of
the holders of the Uncertificated Interests; provided, however,
that if the Servicer and a majority of the holders of the
Uncertificated Interests do not agree upon the fair market value of
all of such property of the Trust Fund, the Servicer, or an agent
appointed by the Servicer, shall solicit bids for all of such
property of the Trust Fund, until it has received three bids, and
the Fair Market Value shall be equal to the highest of such three
bids.
“Fannie Mae”: Fannie Mae,
formerly known as Federal National Mortgage Association, or any
successor thereto.
“FDIC”: Federal Deposit
Insurance Corporation or any successor thereto.
“Federal Funds Rate”: The
interest rate at which depository institutions lend balances at the
Federal Reserve to other depository institutions
overnight.
“Final Distribution Date”:
The Distribution Date in August 2036.
“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, the Depositor or the Servicer, as the case
may be, pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, as applicable), a determination made by
the Servicer that all Insurance Proceeds, Liquidation Proceeds and
other payments or recoveries which the Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered.
“First Lien”: With respect to
any second lien Mortgage Loan, the mortgage loan relating to the
corresponding Mortgaged Property having a first priority
lien.
“Fitch”: Fitch Ratings, or
its successor in interest thereto.
“Fixed Rate Mortgage Loan”:
Each of the Mortgage Loans identified in the Mortgage Loan Schedule
as having a Mortgage Rate that is fixed.
“Fixed Rate Prepayment
Vector”: A CPR of 2.00% per annum of the then unpaid
principal balance of such Mortgage Loans in the first month of the
life of such Mortgage Loans and an additional approximately 2.000%
(precisely 18%/9) per annum in each month thereafter until the 10th
month. Beginning in the 10th month and in each month
thereafter during the life of such Mortgage Loans, a CPR of
20%.
“Fixed Swap Payment”: With
respect to any Distribution Date, a fixed amount equal to the fixed
swap payment for such Distribution Date as set forth on
Schedule 3 attached hereto.
“Floating Swap Payment”: With
respect to any Distribution Date, a floating amount equal to the
product of (i) LIBOR (as determined pursuant to the Swap Agreement
for such Distribution Date), (ii) the related swap balance (as set
forth on Schedule 3 attached hereto) and (iii) a fraction, the
numerator of which is the actual number of days elapsed from and
including the previous Distribution Date to but excluding the
current Distribution Date (or, for the first Distribution Date, the
actual number of days elapsed from and including the Closing Date
to but excluding the first Distribution Date), and the denominator
of which is 360.
“Formula Rate”: As to any
Class of LIBOR Certificates and any Distribution Date, the sum of
One-Month LIBOR and the applicable Certificate Margin.
“Freddie Mac”: Freddie Mac,
formerly known as Federal Home Loan Mortgage Corporation, or any
successor thereto.
“Group”: Either Group 1
or Group 2, as applicable.
“Group 1”: Those certain
Mortgage Loans identified as belonging to Group 1 on the
Mortgage Loan Schedule.
“Group 1 Basic Principal
Distribution Amount”: With respect to any Distribution Date,
the excess of (i) the Group 1 Principal Remittance Amount for
such Distribution Date over (ii) the product of (a) the
Overcollateralization Release Amount, if any, for such Distribution
Date and (b) the Group 1 Percentage.
“Group 1 Certificates”:
The Class A-1SS and Class A-1MZ Certificates.
“Group 1 Interest Remittance
Amount”: With respect to any Distribution Date is that
portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the
Group 1 Mortgage Loans and Compensating Interest paid by the
Servicer with respect to the Group 1 Mortgage
Loans.
“Group 1 Mortgage
Loans”: The Mortgage Loans relating to
Group 1.
“Group 1 Percentage”:
With respect to any Distribution Date, the percentage equivalent of
a fraction, the numerator of which is the Group 1 Principal
Remittance Amount for such Distribution Date and the denominator of
which is the Principal Remittance Amount for such Distribution
Date.
“Group 1 Principal
Distribution Amount”: With respect to any Distribution Date
is the sum of (i) the Group 1 Basic Principal Distribution
Amount for such Distribution Date and (ii) the product of (a) the
Overcollateralization Increase Amount for such Distribution Date
and (b) the Group 1 Percentage.
“Group 1 Principal Remittance
Amount”: Means, with respect to any Distribution Date, the
portion of the Principal Remittance Amount for such Distribution
Date derived from the Group 1 Mortgage Loans.
“Group 1 Senior Principal
Distribution Amount”: with respect to any Distribution Date,
is an amount equal to the Class A Principal Distribution Amount
multiplied by the Group 1 Percentage.
“Group 2”: Those certain
Mortgage Loans identified as belonging to Group 2 on the
Mortgage Loan Schedule.
“Group 2 Basic Principal
Distribution Amount”: With respect to any Distribution Date
is the excess of (i) the Group 2 Principal Remittance Amount
for such Distribution Date over (ii) the product of (a) the
Overcollateralization Release Amount, if any, for such Distribution
Date and (b) the Group 2 Percentage.
“Group 2 Certificates”:
The Class A-2, Class A-3, Class A-4 and Class A-5
Certificates.
“Group 2 Interest Remittance
Amount”: With respect to any Distribution Date is that
portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the
Group 2 Mortgage Loans and Compensating Interest paid by the
Servicer with respect to the Group 2 Mortgage
Loans.
“Group 2 Mortgage
Loans”: The Mortgage Loans relating to
Group 2.
“Group 2 Percentage”:
With respect to any Distribution Date, the percentage equivalent of
a fraction, the numerator of which is the Group 2 Principal
Remittance Amount for such Distribution Date and the denominator of
which is the Principal Remittance Amount for such Distribution
Date.
“Group 2 Principal
Distribution Amount”: With respect to any Distribution Date
is the sum of (i) the Group 2 Basic Principal
Distribution Amount for such Distribution Date and (ii) the
product of (a) the Overcollateralization Increase Amount for
such Distribution Date and (b) the Group 2
Percentage.
“Group 2 Principal Remittance
Amount”: Means, with respect to any Distribution Date,
the portion of the Principal Remittance Amount for such
Distribution Date derived from the Group 2 Mortgage
Loans.
“Group 2 Senior Principal
Distribution Amount”: with respect to any Distribution
Date, is an amount equal to the Class A Principal Distribution
Amount multiplied by the Group 2 Percentage.
“Gross Margin”: With respect
to each Adjustable Rate Mortgage Loan, the fixed percentage set
forth in the related Mortgage Note that is added to the Index on
each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage
Loan.
“Independent”: When used with
respect to any specified Person, any such Person who (a) is in fact
independent of the Depositor, the Servicer and their respective
Affiliates, (b) does not have any direct financial interest in or
any material indirect financial interest in the Depositor, the
Servicer or any Affiliate thereof, and (c) is not connected with
the Depositor, the Servicer or any Affiliate thereof as an officer,
employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions; provided, however, that a
Person shall not fail to be Independent of the Depositor, the
Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any Class of securities issued by
the Depositor or the Servicer or any Affiliate thereof, as the case
may be.
“Independent Contractor”:
Either (i) any Person (other than the Servicer) that would be an
“independent contractor” with respect to the Trust Fund
within the meaning of Section 856(d)(3) of the Code if the Trust
Fund were a real estate investment trust (except that the ownership
tests set forth in that section shall be considered to be met by
any Person that owns, directly or indirectly, 35% or less of any
Class of Certificates), so long as the Trust Fund does not receive
or derive any income from such Person and provided that the
relationship between such Person and the Trust Fund is at
arm’s length, all within the meaning of Treasury Regulation
Section 1.856-4(b)(5), or (ii) any other Person (including the
Servicer) if the Securities Administrator has received an Opinion
of Counsel to the effect that the taking of any action in respect
of any REO Property by such Person, subject to any conditions
therein specified, that is otherwise herein contemplated to be
taken by an Independent Contractor will not cause such REO Property
to cease to qualify as “foreclosure property” within
the meaning of Section 860G(a)(8) of the Code (determined without
regard to the exception applicable for purposes of Section 860D(a)
of the Code), or cause any income realized in respect of such REO
Property to fail to qualify as Rents from Real Property.
“Index”: With respect to each
Adjustable Rate Mortgage Loan and each related Adjustment Date, the
index as specified in the related Mortgage Note.
“Insurance Proceeds”:
Proceeds of any title policy, hazard policy or other insurance
policy covering a Mortgage Loan or related Mortgaged Property, to
the extent such proceeds are not to be applied to the restoration
of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Servicer would follow in
servicing Mortgage Loans held for its own account, subject to the
terms and conditions of the related Mortgage Note and
Mortgage.
“Interest Accrual Period”:
For any Distribution Date and the LIBOR Certificates, will be the
actual number of days (based on a 360-day year) included in the
period commencing on the immediately preceding Distribution Date
(or, in the case of the first such Interest Accrual Period,
commencing on the Closing Date) and ending on the day immediately
preceding such Distribution Date.
“Interest Determination
Date”: With respect to the LIBOR Certificates and any
Interest Accrual Period therefor, the second London Business Day
preceding the commencement of such Interest Accrual
Period.
“Interest Remittance Amount”:
With respect to any Distribution Date, the sum of the Group 1
Interest Remittance Amount and the Group 2 Interest Remittance
Amount.
“ISDA”: International
Swaps and Derivatives Association, Inc.
“ISDA Master Agreement”:
An ISDA Master Agreement (Multicurrency-Cross Border) in the
form published by ISDA in 1992 including the schedule
thereto.
“JPMorgan Trust”: J.P.
Morgan Trust Company, N.A.
“Late Collections”: With
respect to any Mortgage Loan and any Due Period, all amounts
received subsequent to the Determination Date immediately following
such Due Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest
due (without regard to any acceleration of payments under the
related Mortgage and Mortgage Note) but Delinquent for such Due
Period and not previously recovered.
“Latest Possible Maturity
Date”: The Distribution Date occurring five years after the
Final Distribution Date.
“LIBOR Certificates”: As
specified in the Preliminary Statement.
“Liquidated Mortgage Loan”: A
Mortgage Loan as to which a Final Recovery Determination has been
made.
“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; (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold
or replaced pursuant to or as contemplated by Section 2.03, Section
3.16(c), Section 3.23 or Section 9.01; or (iv) such Mortgage Loan
becomes a Charged-off Mortgage Loan. 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
purchased pursuant to Section 9.01.
“Liquidation Proceeds”: The
amount (other than Insurance Proceeds, Recoveries or amounts
received in respect of the rental of any REO Property prior to REO
Disposition) received by the Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the
power of eminent domain or condemnation (but only to the extent not
required to be released to a Mortgagor pursuant to the related
Mortgage Loan Documents or to the holder of a first lien pursuant
to the mortgage loan documents relating to the first lien), (ii)
the liquidation of a defaulted Mortgage Loan through a
trustee’s sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO
Property pursuant to or as contemplated by Section 2.03, Section
3.16(c), Section 3.23 or Section 9.01.
“Loan-to-Value Ratio” or
“LTV”: With respect to any first lien Mortgage Loan and
as of any date of determination, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the
related Mortgage Loan at such date and the denominator of which is
the Value of the related Mortgaged Property. With respect to
any second lien Mortgage Loan and as of any date of determination,
the fraction, expressed as a percentage, the numerator of which is
the sum of (a) the principal balance of the related Mortgage Loan
at the date of origination plus (b) the principal balance of the
related First Lien at the date of origination of such mortgage loan
and the denominator of which is the Value of the related Mortgaged
Property.
“London Business Day”: Any
day on which banks in the City of London are open and conducting
transactions in United States dollars.
“Master REMIC”: As defined in
Section 1.03 of this Agreement.
“Maximum Mortgage Rate”: With
respect to each Adjustable Rate Mortgage Loan, the percentage set
forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.
“Maximum Rate Cap”: With
respect to each Interest Accrual Period, a per annum rate (subject
to adjustment based on the actual number of days elapsed in the
Interest Accrual Period) equal to (1) the sum of
(i) (A) the weighted average of the Maximum Mortgage
Rates as of the first day of the related Due Period weighted on the
basis of the related Stated Principal Balances as of such date
(subject to adjustment for prepayments received and distributed in
the month prior to that Distribution Date) minus (B) the
Administrative Fee Rate and (ii) the Net Swap Payment, if any,
made by the Swap Provider for such month multiplied by 12, divided
by the aggregate principal balance of the Mortgage Loans over
(2) the Net Swap Payment, if any, made to the Swap Provider
for such month, multiplied by 12, divided by the aggregate
principal balance of the Mortgage Loans.
“Mezzanine Certificates”: As
defined in the Preliminary Statement.
“Minimum Mortgage Rate”: With
respect to each Adjustable Rate Mortgage Loan, the greater of (a)
the Gross Margin set forth in the related Mortgage Note and (b) the
percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
“Monthly Interest Distributable
Amount”: With respect to any Distribution Date and each Class
of Certificates, other than the Class P, Class R and Class C
Certificates, an amount equal to the amount of interest accrued
during the related Interest Accrual Period at the related
Pass-Through Rate on the Class Principal Amount of such Class of
Certificates immediately prior to such Distribution Date, in each
case, reduced by any Net Prepayment Interest Shortfalls allocated
to such Class of Certificates and any Relief Act Interest
Shortfalls allocated to such Class of Certificates, in each such
case, as such shortfalls are allocated pursuant to Section 1.02
herein.
“Monthly Payment”: With
respect to any Mortgage Loan, the scheduled monthly payment of
principal and interest on such Mortgage Loan which is payable by
the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient
Valuation and/or Debt Service Reduction with respect to such
Mortgage Loan and (ii) 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 Section 3.07(a); 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. or its successor in
interest.
“Mortgage”: The mortgage,
deed of trust or other instrument creating a first or second lien
on, or first or second priority security interest in, a Mortgaged
Property securing a Mortgage Note.
“Mortgage File”: The mortgage
documents listed in Section 2.01 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 transferred and assigned to the Trustee pursuant to
Section 2.01 or Section 2.03(c) of this Agreement, as held from
time to time as a part of the Trust Fund, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule, including each
REO Property unless the context otherwise requires.
“Mortgage Loan Purchase
Agreement”: The mortgage loan sale and interim servicing
agreement dated as of July 1, 2005, between WMC Mortgage Corp. and
J.P. Morgan Mortgage Acquisition Corp., regarding the sale of the
Mortgage Loans to the Seller.
“Mortgage Loan Schedule”: As
of any date, the list of Mortgage Loans included in the Trust Fund
on such date, attached hereto as Schedule 1. The Mortgage
Loan Schedule shall set forth the following information with
respect to each Mortgage Loan:
(i)
the Mortgagor’s name and the
Originator’s Mortgage Loan identifying number;
(ii)
the street address of the Mortgaged
Property including the state and zip code;
(iii)
a code indicating whether the Mortgaged
Property is owner-occupied;
(iv)
the type of Residential Dwelling
constituting the Mortgaged Property;
(v)
the original months to
maturity;
(vi)
the Loan-to-Value Ratio, at
origination;
(vii)
the Mortgage Rate in effect immediately
following the Cut-off Date;
(viii)
the date on which the first Monthly
Payment was due on the Mortgage Loan;
(ix)
the stated maturity date of such Mortgage
Loan and of the related First Lien, if applicable;
(x)
the amount of the Monthly Payment (a) at
origination and (b) due on the first Due Date after the Cut-off
Date;
(xi)
the last Due Date on which a Monthly
Payment was actually applied to the unpaid Stated Principal
Balance;
(xii)
the original principal amount of the
Mortgage Loan and the original principal balance of the related
First Lien, if applicable, as of the date of
origination;
(xiii)
the Stated Principal Balance of the
Mortgage Loan and the Stated Principal Balance of the related First
Lien, if applicable, as of the close of business on the Cut-off
Date;
(xiv)
with respect to each Adjustable Rate
Mortgage Loan, the Applicable Index and Gross Margin;
(xv)
a code indicating the purpose of the
Mortgage Loan (i.e., purchase financing, rate/term refinancing,
cash-out refinancing);
(xvi)
with respect to each Adjustable Rate
Mortgage Loan, the Maximum Mortgage Rate;
(xvii)
with respect to each Adjustable Rate
Mortgage Loan, the Minimum Mortgage Rate;
(xviii)
the Mortgage Rate at
origination;
(xix)
with respect to each Adjustable Rate
Mortgage Loan, the Periodic Rate Cap and the maximum first
Adjustment Date Mortgage Rate adjustment;
(xx)
a code indicating the documentation
program;
(xxi)
with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date immediately following the
Cut-off Date and the Adjustment Date frequency;
(xxii)
the Value of the Mortgaged
Property;
(xxiii)
the sale price of the Mortgaged Property,
if applicable;
(xxiv)
the Originator’s risk grade and the
FICO or other credit score of the Mortgagor;
(xxv)
the actual interest “paid to
date” of the Mortgage Loan as of the Cut-off Date;
(xxvi)
the number of years any Prepayment
Premium is in effect;
(xxvii)
the loan type (i.e., fixed, adjustable;
2/28, 3/27, 15/15, etc.);
(xxviii)
the actual unpaid principal balance
of the Mortgage Loan as of the Cut-off Date;
(xxix)
a code indicating whether such Mortgage
Loan is a Group 1 Mortgage Loan or a Group 2 Mortgage
Loan;
(xxx)
a code indicating whether the Mortgage
Loan is a second lien Mortgage Loan; and
(xxxi)
a code indicating whether the Mortgage
Loan is subject to a Prepayment Premium, if any.
The Mortgage Loan Schedule shall set
forth the following information with respect to the Mortgage Loans
in the aggregate 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 Mortgage Rate of the Mortgage Loans; and (4)
the weighted average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall set forth the aggregate Stated
Principal Balance of the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With
respect to any Qualified Substitute Mortgage Loan, the Cut-off Date
shall refer to the related Cut-off Date for such Mortgage Loan,
determined in accordance with the definition of Cut-off Date
herein.
“Mortgage Note”: The original
executed note with all applicable riders or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
“Mortgage Pool”: The pool of
Mortgage Loans, identified on Schedule 1 from time to time, and any
REO Properties acquired in respect thereof.
“Mortgage 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. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the
immediately preceding sentence as of the date such Mortgage Loan
became an REO Property.
“Mortgaged Property”: The
underlying property securing a Mortgage Loan, including any REO
Property, consisting of an Estate in Real Property or a leasehold
interest improved by a Residential Dwelling.
“Mortgagor”: The obligor on a
Mortgage Note.
“Net Liquidation Proceeds”:
With respect to any liquidation of a Mortgage Loan or any other
disposition of related Mortgaged Property (including REO Property),
the related Liquidation Proceeds, net of P&I Advances,
Servicing Advances, Servicing Fees and any other fees, received and
retained in connection with the liquidation of such Mortgage Loan
or Mortgaged Property in accordance with the terms of this
Agreement.
“Net Monthly Excess
Cashflow”: With respect to any Distribution Date, an amount
equal to the sum of (i) any Overcollateralization Release Amount
for such Distribution Date and (ii) the positive 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 Senior Certificates and Mezzanine Certificates,
each pursuant to Section 4.01(a)(1), (B) the Unpaid Interest
Shortfall Amounts for the Class A Certificates and (C) the
Principal Remittance Amount.
“Net Mortgage 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 Mortgage Rate for such Mortgage Loan minus the
Administrative Fee Rate.
“Net Prepayment Interest
Shortfall”: With respect to any Distribution Date, the amount
by which the sum of any Prepayment Interest Shortfalls for such
date exceeds the sum of (x) all Prepayment Interest Excess for such
date over (y) Compensating Interest payments made with respect to
such date.
“Net Swap Payment”: In the
case of payments made by the Supplemental Interest Trust, the
excess, if any, of (x) the Fixed Swap Payment over (y) the Floating
Swap Payment. In the case of payments made by the Swap
Provider, the excess, if any, of (x) the Floating Swap Payment over
(y) the Fixed Swap Payment. In each case, the Net Swap
Payment shall not be less than zero.
“Net WAC Rate”: As to any
Interest Accrual Period, a per annum rate (subject to adjustment
based on the actual number of days elapsed in the Interest Accrual
Period) equal to 12 times the quotient of (x) the total scheduled
interest on the Mortgage Loans for the related Due Period, net of
the sum of (1) the Administrative Fee, (2) any Net Swap Payment
owed to the Swap Provider and (3) any Swap Termination Payment
(other than any Swap Termination Payment resulting from a Swap
Provider Trigger Event), payable by the Supplemental Interest Trust
and (y) the aggregate Stated Principal Balance of the Mortgage
Loans as of the first day of the applicable Due Period.
“Net WAC Rate Carryover
Amount”: For any Distribution Date on which the Pass-Through
Rate for any Class of LIBOR Certificates is equal to the related
Net WAC Rate, an amount equal to the sum of (i) the excess of (x)
the amount of interest such Class accrued for such Distribution
Date at the related Formula Rate, over (y) the amount of interest
such Class accrued for such Distribution Date at the related Net
WAC Rate and (ii) the unpaid portion of any Net WAC Rate Carryover
Amount from the prior Distribution Date together with interest
accrued on such unpaid portion for the most recently ended Interest
Accrual Period at the Formula Rate applicable for such Class for
such Interest Accrual Period.
“Net WAC Reserve Fund”: The
Eligible Account established pursuant to Section 3.26.
“New Lease”: Any lease of REO
Property entered into on behalf of the Trust Fund, including any
lease renewed or extended on behalf of the Trust Fund, if the Trust
Fund has the right to renegotiate the terms of such
lease.
“NIMS Insurer”: Any
insurer that is guaranteeing certain payments under notes secured
by collateral which includes all or a portion of the Class C
Certificates, the Class P Certificates and/or the Residual
Certificates.
“Nonrecoverable P&I
Advance”: Any P&I Advance previously made or proposed to
be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer using Accepted
Servicing Practices, will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
“Nonrecoverable Servicing
Advance”: Any Servicing Advance previously made or proposed
to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Servicer using Accepted
Servicing Practices, will not or, in the case of a proposed
Servicing Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.
“Non-United States Person”:
Any Person other than a United States Person.
“Offered Certificates”: As
defined in the Preliminary Statement.
“Offered Subordinate
Certificates”: As specified in the Preliminary
Statement.
“Officers’
Certificate”: With respect to the Depositor and the Seller, a
certificate signed by the Chairman of the Board, the Vice Chairman
of the Board, the President, a vice president (however denominated)
or an authorized agent, and by the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor or Seller, as applicable. With respect to the
Servicer, any officer who is authorized to act for the Servicer in
matters relating to this Agreement, and whose action is binding
upon the Servicer, initially including those individuals whose
names appear on the list of authorized officers delivered at the
closing.
“One-Month LIBOR”: With
respect to the LIBOR Certificates and any Interest Accrual Period
therefor, the rate determined by the Securities Administrator on
the related Interest Determination Date (or with respect to the
initial Interest Accrual Period, on the Closing Date based on
information available on the related Interest Determination Date)
on the basis of the offered rate for one-month U.S. dollar
deposits, as such rate appears on Telerate Page 3750 as of 11:00
a.m. (London time) on such Interest Determination Date; provided
that if such rate does not appear on Telerate Page 3750, the rate
for such date will be determined on the basis of the offered rates
of the Reference Banks for one-month U.S. dollar deposits, as of
11:00 a.m. (London time) on such Interest Determination Date.
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 on such Interest Determination
Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Accrual Period shall be
the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If on such
Interest Determination Date, fewer than two Reference Banks provide
such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the higher of (i) LIBOR as determined on
the previous Interest Determination Date and (ii) the Reserve
Interest Rate. Notwithstanding the foregoing, if, under the
priorities described above, LIBOR for an Interest Determination
Date would be based on LIBOR for the previous Interest
Determination Date for the third consecutive Interest Determination
Date, the Depositor shall select an alternative comparable index
(over which the Depositor has no control), used for determining
one-month Eurodollar lending rates that is calculated and published
(or otherwise made available) by an independent party.
“Operative Documents”: This
Agreement, the Mortgage Loan Purchase Agreement, the Custodial
Agreement, the Assignment and Assumption Agreement and any other
documents related hereto or thereto.
“Opinion of Counsel”: A
written opinion of counsel, who may, without limitation, be
salaried counsel for the Depositor or the Servicer and which shall
be acceptable to the Securities Administrator and the Trustee
(which acceptance shall not be unreasonably withheld), except that
any opinion of counsel relating to (a) the qualification of any
REMIC created hereunder or (b) compliance with the REMIC Provisions
must be an opinion of Independent counsel.
“Optional Termination Date”:
The first Distribution Date that the Servicer shall be permitted to
purchase the Mortgage Loans and REO Properties pursuant to Section
9.01(b).
“Originator”: WMC or its
successor in interest.
“Overcollateralization Deficiency
Amount”: With respect to any Distribution Date, the excess,
if any, of (a) the Overcollateralization Target Amount applicable
to such Distribution Date over (b) the Overcollateralized Amount
applicable to such Distribution Date (assuming that 100% of the
Principal Remittance Amount is applied as a payment of principal on
such Distribution Date).
“Overcollateralization
Floor”: With respect to any Distribution Date, 0.50% of
the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.
“Overcollateralization Increase
Amount”: With respect to any Distribution Date, the lesser of
(a) the Overcollateralization Deficiency Amount as of such
Distribution Date and (b) Net Monthly Excess Cash Flow available
for distribution on that Distribution Date pursuant to Section
4.01(a)(3)(i).
“Overcollateralization Release
Amount”: With respect to any Distribution Date, an amount
equal to the lesser of (a) the Excess Overcollateralized Amount and
(b) the Principal Remittance Amount for such Distribution
Date.
“Overcollateralization Target
Amount”: With respect to any Distribution Date (1) prior
to the Stepdown Date, 3.05% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, (2) on
or after the Stepdown Date provided a Trigger Event is not in
effect, the greater of (x) 6.10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the
related Due Period and (y) the Overcollateralization Floor,
and (3) on or after the Stepdown Date if a Trigger Event is in
effect, the Overcollateralization Target Amount for the immediately
preceding Distribution Date.
“Overcollateralized Amount”:
As of any Distribution Date, the excess, if any, of (a) the
aggregate Stated Principal Balances of the Mortgage Loans and REO
Properties as of the last day of the related Due Period for such
Distribution Date over (b) the sum of the aggregate Class Principal
Amounts of the Class A, Mezzanine and Class P Certificates as of
such Distribution Date (assuming 100% of the Principal Remittance
Amount is applied as a principal payment on such Distribution
Date).
“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.
“P&I Advance”: As to any
Mortgage Loan or REO Property, any advance made by the Servicer in
respect of any Distribution Date representing the aggregate of all
payments of principal and interest, net of the Servicing Fee, that
were due during the related Due Period on the related Mortgage
Loans and that were Delinquent on the related Determination Date,
plus certain amounts representing assumed payments not covered by
any current net income on the Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure as determined pursuant
to Section 4.03. The Servicer will not be required to make
any Nonrecoverable P&I Advances as described in Section
4.03.
“Pass-Through Rate”: For any
Distribution Date and any Class of LIBOR Certificates, the least of
(i) the related Formula Rate, (ii) the Net WAC Rate and (iii) the
Maximum Rate Cap for such Distribution Date. For any
Distribution Date and the Class C Certificates, the rate set
forth for the Class C Interest in footnote (2) to
“Master REMIC” under Section 1.03 herein.
“Percentage Interest”: As to
any Certificate, either the percentage set forth on the face
thereof or the percentage obtained by dividing the initial Class
Principal Amount represented by such Certificate by the aggregate
initial Class Principal Amount of all of the Certificates of such
Class.
“Periodic Rate Cap”: With
respect to each Adjustable Rate Mortgage Loan and any Adjustment
Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without
regard to the Maximum Mortgage Rate or the Minimum Mortgage Rate)
on such Adjustment Date from the Mortgage Rate in effect
immediately prior to such Adjustment Date.
“Permitted Investments”: Any
one or more of the following obligations or securities acquired at
a purchase price of not greater than par, regardless of whether
issued by the Depositor, the Servicer, the Securities
Administrator, the Trustee or any of their respective
Affiliates:
(a)
direct obligations of, or obligations
fully guaranteed as to timely payment of principal and interest by,
the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit
of the United States;
(b)
demand and time deposits in, certificates
of deposit of, or bankers’ acceptances (which shall each have
an original maturity of not more than 90 days and, in the case of
bankers’ acceptances, shall in no event have an original
maturity of more than 365 days or a remaining maturity of more than
30 days) denominated in United States dollars that are rated at
least “F1+” by Fitch and “A-1” by S&P
(if rated by Fitch and/or S&P), and issued by any Depository
Institution;
(c)
repurchase obligations with respect to
any security described in clause (a) above entered into with a
Depository Institution (acting as principal);
(d)
securities bearing interest or sold at a
discount that are issued by any corporation incorporated under the
laws of the United States of America or any state thereof and that
are rated by each Rating Agency that rates such securities in its
highest long-term unsecured rating at the time of such investment
or contractual commitment providing for such investment;
(e)
commercial paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than
30 days after the date of acquisition thereof) that is rated by
each Rating Agency that rates such securities in its highest
short-term unsecured debt rating available at the time of such
investment;
(f)
units of money market funds, including
money market funds sponsored, managed or advised by the Trustee,
the Securities Administrator or an Affiliate of either of them and
from which the Trustee, the Securities Administrator or the
Affiliate of either of them may receive compensation, that have
been rated “AAA” by Fitch (if rated by Fitch),
“Aaa” by Moody’s (if rated by Moody’s) and
“AAA” by S&P (if rated by S&P); and
(g)
if previously confirmed in writing to the
Trustee and the Securities Administrator, any other demand, money
market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies as a
permitted investment of funds backing securities having ratings
equivalent to its highest initial rating of the Class A
Certificates; provided, however, that any Permitted Investment
pursuant to this clause (g) which solely contains a short-term
rating shall be a Permitted Investment rated in the highest
category for such short-term rating;
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 Interest other than a Disqualified
Organization or Non-United States 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.
“Plan”: Any employee benefit
plan (as defined in Section 3(3) of ERISA) or other plan as defined
in Section 4975(e)(1) of the Code that is subject to Title I of
ERISA or Section 4975 of the Code, or any entity deemed to hold the
plan assets of the foregoing.
“Pool Principal Balance”: As
of any Distribution Date, the aggregate Stated Principal Balance of
the Mortgage Loans.
“PPC”: Either of the Fixed
Rate Prepayment Vector or the Adjustable Rate Prepayment Vector.
“Prepayment Assumption”: With
respect to the Adjustable Rate Mortgage Loans, the Fixed Rate
Prepayment Vector. With respect to the Fixed Rate Mortgage
Loans, the Adjustable Rate Prepayment Vector. The Prepayment
Assumption is used solely for determining the accrual of original
issue discount on the Certificates for federal income tax purposes.
“Prepayment Interest Excess”:
With respect to any Distribution Date, the interest received in
connection with any Principal Prepayment in full received on a
Mortgage Loan by the Servicer between the 1st and 15th calendar day
of the month for the related Distribution Date.
“Prepayment Interest
Shortfall”: With respect to any Principal Prepayment received
after the Servicing Transfer Date and any Distribution Date, for
each Mortgage Loan that was during the related Prepayment Period
(other than prepayments received in the month of such Distribution
Date) subject to a Principal Prepayment in full or in part, an
amount equal to interest at the applicable Net Mortgage Rate on the
amount of such Principal Prepayment for the number of days
commencing on the date on which the prepayment is applied and
ending on the last day of the calendar month preceding the month of
such Distribution Date. The obligations of the Servicer in
respect of any Prepayment Interest Shortfall are set forth in
Section 3.24.
“Prepayment Period”: With
respect to any Distribution Date, and any Principal Prepayment in
full received on a Mortgage Loan, is the period that
(a) commences on the 16th calendar day of the month preceding
the month in which such Distribution Date occurs and (b) ends
on the 15th calendar day in the month in which such Distribution
Date occurs. With respect to any Distribution Date and any
Principal Prepayment in part received on a Mortgage Loan, is the
calendar month preceding such Distribution Date.
“Prepayment Premium”: With
respect to any Mortgage Loan and the related Prepayment Period, any
prepayment premium, penalty or charge collected by the Servicer
from a Mortgagor in connection with any voluntary Principal
Prepayment and held from time to time as a part of the Trust Fund.
The Servicer shall calculate, in good faith using Accepted
Servicing Practices, the amount of any Prepayment Premium solely
pursuant to the terms of the related Mortgage Note.
“Prime Rate”: The rate of
interest equal to the prime rate as reported in The Wall Street
Journal .
“Principal Prepayment”: Any
payment of principal made by the Mortgagor on a Mortgage Loan which
is received in advance of its scheduled Due Date and which is not
accompanied by an amount of interest (without regard to any
Prepayment Premium that may have been collected by the Servicer in
connection with such payment of principal) representing the full
amount of scheduled interest due on any Due Date in any month or
months subsequent to the month of prepayment.
“Principal Remittance
Amount”: With respect to any Distribution Date, that portion
of the Available Funds equal to the sum of (i) all scheduled
payments of principal collected or advanced on the Mortgage Loans
by the Servicer that were due during the related Due Period, (ii)
the principal portion of all Principal Prepayments of the Mortgage
Loans, if any, applied by the Servicer during the related
Prepayment Period, (iii) the principal portion of all related Net
Liquidation Proceeds, Insurance Proceeds and Recoveries received
during the calendar month preceding the month of such Distribution
Date, (iv) that portion of the Purchase Price representing
principal of any purchased or repurchased Mortgage Loan, deposited
to the Collection Account during the calendar month preceding the
month of such Distribution Date, (v) the principal portion of the
amount of any shortfall deposited in the Collection Account in
connection with the substitution of a Deleted Mortgage Loan
pursuant to Section 2.03 during the calendar month preceding the
month of such Distribution Date and (vi) on the Distribution Date
on which the Trust is to be terminated in accordance with this
Agreement, that portion of the Termination Price in respect of
principal.
“PTCE”: A Prohibited
Transaction Class Exemption.
“Purchase Price”: With
respect to any Mortgage Loan or REO Property to be purchased
pursuant to or as contemplated by Section 2.03 or Section 3.16(c),
and as calculated and confirmed in an Officers’ Certificate
from the Servicer to the Securities Administrator, an amount equal
to the sum of (i) 100% of the Stated Principal Balance thereof as
of the date of purchase (or such other price as provided in Section
9.01), (ii) in the case of (x) a Mortgage Loan, accrued interest on
such Stated Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was
last covered by a payment by the Mortgagor or a P&I Advance by
the Servicer 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 Stated Principal Balance at the applicable
Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an
advance by the Servicer through the end of the calendar month
immediately preceding the calendar month in which such REO Property
was acquired, 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, Liquidation Proceeds and
P&I Advances that as of the date of purchase had been
distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) except in the case of a purchase by the Servicer, any
unreimbursed Servicing Advances and P&I Advances and any unpaid
Servicing Fees allocable to such Mortgage Loan or REO Property and
any P&I Advances previously reimbursed to the Servicer pursuant
to Section 3.11(a)(vi), (iv) any amounts previously withdrawn from
the Collection Account in respect of such Mortgage Loan or REO
Property pursuant to Section 3.11(a)(ix) and Section 3.16(b), (v)
in the case of a Mortgage Loan required to be purchased pursuant to
Section 2.03, expenses reasonably incurred or to be incurred by the
Servicer, the Trustee, the Custodian, the Trust Oversight Manager
or the Securities Administrator in respect of the breach or defect
giving rise to the purchase obligation and (vi) in the case of a
Mortgage Loan required to be purchased pursuant to Section 2.03,
any costs and damages actually incurred and paid by the Trust, the
Depositor, the Seller, the Servicer, the Trustee or the Securities
Administrator in connection with any violation by such Mortgage
Loan of (x) the representation and warranties set forth in Section
2.06 of this Agreement or (y) the representations and warranties
made in paragraphs (f), (qq), (xx), (yy), (ggg), (hhh), (nnn) or
(qqq) of Sechedule 4 attached hereto.
“Qualified Appraiser”: An
appraiser of a Mortgaged Property duly appointed by the originator
of the related Mortgage Loan, who had no interest, direct or
indirect, in such Mortgaged Property or in any loan made on the
security thereof, whose compensation is not affected by the
approval or disapproval of the related Mortgage Loan and who met
the qualifications of Fannie Mae or Freddie Mac and satisfied the
requirements of Title XI of FIRREA.
“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 Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have
a Mortgage Rate not less than (and not more than one percentage
point in excess of) the Mortgage Rate of the Deleted Mortgage Loan,
(iii) with respect to each Adjustable Rate Mortgage Loan have
a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on
the Deleted Mortgage Loan, (iv) with respect to each
Adjustable Rate Mortgage Loan have a Minimum Mortgage Rate not less
than the Minimum Mortgage Rate of the Deleted Mortgage Loan,
(v) with respect to each Adjustable Rate Mortgage Loan have a
Gross Margin equal to or greater than the Gross Margin of the
Deleted Mortgage Loan, (vi) with respect to each Adjustable
Rate Mortgage Loan, adjust in accordance with the Index and have a
next Adjustment Date not more than two months later than the next
Adjustment Date on the Deleted Mortgage Loan, and have the same
intervals between Adjustment Dates as the Deleted Mortgage Loan,
(vii) have a remaining term to maturity not greater than (and
not more than one year less than) that of the Deleted Mortgage
Loan, (viii) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of
the date of substitution equal to or lower than the Loan-to-Value
Ratio of the Deleted Mortgage Loan as of such date, (x) have a
risk grading certified by the Seller at least equal to the risk
grading assigned on the Deleted Mortgage Loan, (xi) have been
underwritten or reunderwritten by the Originator in accordance with
the same underwriting criteria and guidelines as the Mortgage Loans
being replaced, (xii) be of the same or better credit quality
as the Mortgage Loan being replaced, (xiii) have a lien
priority equal to or superior to that of the Deleted Mortgage Loan,
(xiv) be secured by the same property type as the Deleted
Mortgage Loan and (xv) conform to each representation and
warranty in the applicable Mortgage Loan Purchase Agreement.
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 Mortgage Rates described in clause (ii)
hereof shall be determined on the basis of weighted average
Mortgage Rates, the Loan-to-Value Ratios described in clause (ix)
hereof shall be satisfied as to each such Mortgage Loan, the risk
gradings described in clause (x) 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 (xv) hereof must be satisfied as to each
Qualified Substitute Mortgage Loan or in the aggregate, as the case
may be.
“Rating Agency or Rating
Agencies”: S&P, Moody’s and Fitch or their
successors. If such agencies or their successors are no
longer in existence, “Rating Agencies” shall be such
nationally recognized statistical rating agencies, or other
comparable Persons, designated by the Depositor, notice of which
designation shall be given to the Trustee, the Securities
Administrator and the Servicer.
“Realized Loss”: With respect
to each Mortgage Loan as to which a Final Recovery Determination
has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery
Determination was made, plus (ii) accrued interest from the Due
Date as to which interest was last paid by the Mortgagor through
the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar
month during such period (A) at an annual rate equal to the annual
rate at which interest was then accruing on such Mortgage Loan and
(B) on a principal amount equal to the Stated Principal Balance of
such Mortgage Loan immediately prior to such Final Recovery
Determination, plus (iii) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan pursuant to
Section 3.11(a)(ix) and Section 3.16(b), minus (iv) the proceeds,
if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made,
net of amounts that are payable therefrom to the Servicer with
respect to such Mortgage Loan pursuant to Section 3.11(a)(ii) and
(iii).
With respect to any REO Property as to
which a Final Recovery Determination has been made, an amount (not
less than zero) equal to (i) the unpaid principal balance of the
related Mortgage Loan as of the date of acquisition of such REO
Property on behalf of the Trust Fund, plus (ii) accrued interest
from the Due Date as to which interest was last paid by the
Mortgagor in respect of the related Mortgage Loan through the end
of the calendar month immediately preceding the calendar month in
which such REO Property was acquired, calculated in the case of
each calendar month during such period (A) at an annual rate equal
to the annual rate at which interest was then accruing on the
related Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of the related Mortgage Loan as of the
close of business on the Distribution Date during such calendar
month, plus (iii) 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 Final Recovery Determination was made, plus (iv) any
amounts previously withdrawn from the Collection Account in respect
of the related Mortgage Loan pursuant to Section 3.11(a)(ix) and
Section 3.16(b), minus (v) the aggregate of all P&I Advances
made by the Servicer in respect of such REO Property or the related
Mortgage Loan for which the Servicer has been or, in connection
with such Final Recovery Determination, will be reimbursed pursuant
to Section 3.23 out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property,
minus (vi) the total of all net rental income, Insurance Proceeds
and Liquidation Proceeds received in respect of such REO Property
that has been, or in connection with such Final Recovery
Determination, will be transferred to the Distribution Account
pursuant to Section 3.23.
With respect to each Mortgage Loan that
has become the subject of a Deficient Valuation, the difference
between the principal balance of such Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal
balance of such Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan that
(i) is not a Liquidated Mortgage Loan and (ii) has become the
subject of a Debt Service Reduction, the portion, if any, of the
reduction in each affected Monthly Payment attributable to a
reduction in the Mortgage Rate imposed by a court of competent
jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly
Payment.
“Record Date”: With respect
to any Distribution Date and any Definitive Certificates, other
than the Class C Certificates, and the first Distribution
Date, the close of business on the last Business Day of the month
immediately preceding the month in which such applicable
Distribution Date occurs. With respect to any Distribution
Date and the Offered Certificates (other than any Definitive
Certificates), the Business Day prior to such Distribution
Date.
“Recovery”: With respect to
any Liquidated Mortgage Loan, an amount received in respect of
principal on such Mortgage Loan which has previously been allocated
as a Realized Loss to a Class or Classes of Certificates net of
reimbursable expenses.
“Reference Banks”: Deutsche
Bank, Barclays Bank PLC, The Tokyo Mitsubishi Bank and National
Westminster Bank PLC and their successors in interest; provided,
however, that if any of the foregoing banks are not able to serve
as a Reference Bank, then any leading banks selected by the
Depositor which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling,
under the control of or under common control with the Depositor or
any Affiliate thereof, and (iii) which have been designated as
such by the Depositor.
“Refinanced Mortgage Loan”: A
Mortgage Loan the proceeds of which were not used to purchase the
related Mortgaged Property.
“Regular Certificate”: As
specified in the Preliminary Statement.
“Regular Interest”: A
“regular interest” in a REMIC within the meaning of
Section 860G(a)(1) of the Code.
“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 clarification and
interpretation as have been provided by the Commission in the
adopting release (Asset-Backed Securities, Securities Act Release
No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or
its staff from time to time.
“Relief Act”: The
Servicemembers Civil Relief Act, as amended, or any similar state
or local law.
“Relief Act Interest
Shortfall”: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest collectible
on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
“REMIC”: A “real estate
mortgage investment conduit” within the meaning of Section
860D of the Code.
“REMIC I”: 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, 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 each of the Mortgage Loan
Purchase Agreement and the Assignment and Assumption Agreement
(including any security interest created thereby) and (v) the
Collection Account (other than any amounts representing any
Servicer Prepayment Premium Payment Amount), the Distribution
Account (other than any amounts representing any Servicer
Prepayment Premium Payment Amount) and 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. Notwithstanding the foregoing,
however, REMIC I specifically excludes all payments and other
collections of principal and interest due on the Mortgage Loans on
or before the Cut-off Date and all Prepayment Premiums payable in
connection with Principal Prepayments made on or before the Cut-off
Date, the Net WAC Reserve Fund, the Supplemental Interest Trust,
the Supplemental Interest Account and the Swap
Agreement.
“REMIC I Regular
Interest”: Any of the separate non-certificated beneficial
ownership interests in REMIC I issued hereunder and designated
as a “regular interest” in REMIC I.
“REMIC II”: The
segregated pool of assets consisting of all of the REMIC I
Regular Interests conveyed in trust to the Trustee for the benefit
of the Certificateholders pursuant to Section 2.08 and all amounts
deposited therein, with respect to which a separate REMIC election
is to be made.
“REMIC II Regular
Interest”: Any of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and
designated as a “regular interest” in
REMIC II.
“REMIC III”: The
segregated pool of assets consisting of all of the REMIC II
Regular Interests conveyed in trust to the Trustee for the benefit
of the Certificateholders pursuant to Section 2.08 and all amounts
deposited therein, with respect to which a separate REMIC election
is to be made.
“REMIC Provisions”:
Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at Section 860A through
860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
“REMIC Swap Rate”: For
each Distribution Date (and the related Interest Accrual Period), a
per annum rate equal to the product of: (i) 5.394% and
(ii) 2.
“Remittance Report”: A report
in form mutually agreed to between the Securities Administrator and
the Servicer on a magnetic disk or tape or in electronic format
prepared by the Servicer pursuant to Section 4.03 with such
additions, deletions and modifications as agreed to by the
Securities Administrator and the Servicer.
“Rents from Real Property”:
With respect to any REO Property, gross income of the character
described in Section 856(d) of the Code as being included in the
term “rents from real property.”
“REO Account”: Each of the
accounts maintained, or caused to be maintained, by the Servicer in
respect of an REO Property pursuant to Section 3.23.
“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 Mortgage Rate on the Stated 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 Distribution 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 9.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.23(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii)
payable or reimbursable to the Servicer pursuant to Section 3.23(d)
for unpaid Servicing Fees in respect of the related Mortgage Loan
and unreimbursed Servicing Advances and P&I 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, as described in
Section 3.23.
“Request for Release”: A
release signed by a Servicing Officer, or in a mutually agreeable
electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer, in the form of Exhibit E-1
attached hereto.
“Required Net WAC Reserve Fund
Deposit”: With respect to any Distribution Date, the excess,
if any, of (i) $1,000 over (ii) the amount of funds on deposit in
the Net WAC Reserve Fund prior to deposits thereto on such
Distribution Date. The Depositor shall cause the deposit of
$1,000 to the Net WAC Reserve Fund on the Closing Date.
“Reserve Interest Rate”: With
respect to any Interest Determination Date, the rate per annum that
the Securities Administrator determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which
New York City banks selected by the Depositor are quoting on the
relevant Interest Determination Date to the principal London
offices of leading banks in the London interbank market or (ii) in
the event that the Securities Administrator can determine no such
arithmetic mean, the lowest one-month U.S. dollar lending rate
which New York City banks selected by the Depositor are quoting on
such Interest Determination Date to leading European
banks.
“Residential Dwelling”: Any
one of the following: (i) an attached or detached one-family
dwelling, (ii) an attached or detached two- to four-family
dwelling, (iii) an attached or detached one-family dwelling unit in
a condominium project or (iv) an attached or detached one-family
dwelling in a planned unit development, none of which is a
cooperative or mobile home.
“Residual Certificates”: As
specified in the Preliminary Statement.
“Residual Interest”: As
specified in the Preliminary Statement.
“Responsible Officer”: When
used with respect to the Securities Administrator, any vice
president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, any
trust officer or assistant trust officer, the Controller and any
assistant controller or any other officer of 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 Trustee,
any vice president, any assistant vice president, any trust officer
or any assistant trust officer charged with direct responsibility
for the administration of this Agreement.
“S&P”: Standard and
Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.
“Securities Administrator
Certification”: As defined in Section 4.06(c)
herein.
“Securities Administrator
Fee”: As to any Distribution Date and each Mortgage
Loan, an amount equal to the product of the Securities
Administrator Fee Rate and the outstanding Stated Principal Balance
of such Mortgage Loan as of the first day of the related Due
Period, provided, however, such amount shall not be less than
$500.00 per month.
“Securities Administrator Fee
Rate”: 0.004% per annum, and as adjusted to reflect the
minimum monthly payment of $500.
“Seller”: J.P. Morgan
Mortgage Acquisition Corp. or its successor in interest, in its
capacity as seller.
“Senior Enhancement
Percentage”: For any Distribution Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Class
Principal Amount of the Mezzanine Certificates (after giving effect to the distribution of the
Group 1 Principal Distribution Amount and the Group 2
Principal Distribution Amount on such Distribution Date) and (ii)
the Overcollateralized Amount (after giving effect to the
distribution of the Principal Distribution Amount on such
Distribution Date) by (y) the Pool Principal Balance as of the last
day of the related Due Period.
“Sequential Trigger Event”: A
Sequential Trigger Event is in effect if any of the following
occurs (a) the Overcollateralization Amount is zero and none of the
Subordinate Certificates are outstanding, (b) with respect to any
Distribution Date prior to the Distribution Date in September 2008,
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 subsequent recoveries recovered since the
Cut-Off Date through the last day of the related Due Period)
divided by the aggregate principal balance of the Mortgage Loans on
the Cut-Off Date exceeds 1.40% or (c) with respect to any
Distribution Date on or after the Distribution Date in September
2008, a Trigger Event is in effect.
“Servicer”: JPMorgan Chase
Bank, National Association, or any successor servicer appointed as
herein provided, in its capacity as servicer hereunder.
“Servicer Certification”: As
defined in Section 4.06(d) herein, a form of which is attached
hereto as Exhibit J.
“Servicer Event of Default”:
One or more of the events described in Section 7.01(a).
“Servicer Prepayment Premium
Payment Amount”: The amounts payable by the Servicer in
respect of any waived Prepayment Premiums pursuant to Section
2.03(b)(ii).
“Servicer Remittance Date”:
With respect to any Distribution Date, 4:00 p.m. New York time on
the Business Day preceding such Distribution Date.
“Servicing Account”: The
account or accounts created and maintained pursuant to Section
3.09.
“Servicing Advances”: The
reasonable “out-of-pocket” costs and expenses incurred
by the Servicer in the performance of its servicing obligations
(including the reasonable fees of counsel) in connection with a
default, delinquency or other unanticipated event, including, but
not limited to, the cost of (i) the inspection, preservation,
restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, in
respect of a particular Mortgage Loan, (iii) the reasonable fees in
connection with the management and liquidation of any REO Property
(including default management and similar services, appraisal
services and real estate broker services), (iv) the performance of
its obligations under Section 3.01, Section 3.09, Section 3.13,
Section 3.14, Section 3.16 and Section 3.23, and (v) locating
documents missing from the Mortgage File or Servicing File.
Servicing Advances also include any reasonable
“out-of-pocket” cost and expenses (including legal
fees) incurred by the Servicer in connection with executing and
recording instruments of satisfaction, deeds of reconveyance or
Assignments of Mortgage to the extent not recovered from the
Mortgagor or otherwise payable under this Agreement. The
Servicer shall not be required to make any Nonrecoverable Servicing
Advances.
“Servicing Criteria”:
The “servicing criteria” set forth in Item
1122(d) of Regulation AB, as such may be amended from time to
time.
“Servicing Fee”: With respect
to each Mortgage Loan and for any calendar month, an amount equal
to one month’s interest at the Servicing Fee Rate on the same
principal amount on which interest on such Mortgage Loan accrues
for such calendar month, subject to reduction as provided in
Section 3.24. A portion of such Servicing Fee may be retained
by any Sub-Servicer as its servicing compensation.
“Servicing Fee Rate”: 0.50%
per annum on the Stated Principal Balance of each Mortgage
Loan.
“Servicing File”: With
respect to each Mortgage Loan, the Servicing File for such Mortgage
Loan shall consist of, but not be limited to, copies of each item
required to be in the Mortgage File and all additional documents
generated as a result of or utilized in originating and/or
servicing each Mortgage Loan (for the avoidance of doubt, the
original of each such document shall be maintained in the Mortgage
File for such Mortgage Loan unless otherwise permitted to be
released in accordance with this Agreement) including the following
documents listed below.
(i)
Residential loan application.
(ii)
Mortgage Loan closing
statement.
(iii)
Verification of employment and income, if
applicable.
(iv)
Verification of acceptable evidence of
source and amount of downpayment.
(v)
Credit report on Mortgagor.
(vi)
Residential appraisal report.
(vii)
Photograph of the Mortgaged
Property.
(viii)
Survey of the Mortgaged
Property.
(ix)
Copy of each instrument necessary to
complete identification of any exception set forth in the exception
schedule in the title policy, i.e., map or plat, restrictions,
easements, sewer agreements, home association declarations,
etc.
(x)
All required disclosure
statements.
(xi)
If required in an appraisal, termite
report, structural engineer’s report, water potability and
septic certification.
(xii)
Sales Contract, if applicable.
“Servicing Officer”: Any
employee of the Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loans, whose name and
specimen signature appear on a list of Servicing Officers furnished
by the Servicer to the Trustee, the Securities Administrator and
the Depositor on the Closing Date, as such list may from time to
time be amended.
“Servicing Transfer Date”:
With respect to those loans in Section A of Schedule 5, May
1, 2006 and with respect to those loans in Section B of Schedule 5,
June 1, 2006.
“Single Certificate”: With
respect to any Class of Certificates (other than the Class P
Certificates and the Residual Certificates), a hypothetical
Certificate of such Class evidencing a Percentage Interest for such
Class corresponding to an initial Class Principal Amount of $1,000.
With respect to the Class P Certificates and the Residual
Certificates, a hypothetical Certificate of such Class evidencing a
20% Percentage Interest in such Class.
“Startup Day”: With respect
to each REMIC formed hereby, the day designated as such pursuant to
Section 10.01(b) hereof.
“Stated Principal Balance”:
With respect to any Mortgage Loan and as to any date of
determination, the principal balance of such Mortgage Loan as of
the Cut-off Date, as shown in the Mortgage Loan Schedule, minus all
amounts previously distributed pursuant to Section 4.01
representing payments or recoveries of principal, or advances in
lieu thereof; provided, however, that the State Principal Balance
for any Mortgage Loan that has become a Liquidated Mortgage Loan
shall be zero as of the first day of the Due Period following the
Due Period in which such Mortgage Loan becomes a Liquidated
Mortgage Loan, and at all times thereafter.
“Stepdown Date”: The earlier
to occur of (1) the Distribution Date on which the aggregate Class
Principal Amount of the Class A Certificates has been reduced to
zero and (2) the later to occur of (x) the Distribution Date
occurring in September 2009 and (y) the first Distribution Date on
which the Senior Enhancement Percentage is greater than or equal to
40.80% (for the purpose of this definition only, Senior Enhancement
Percentage shall be calculated prior to the distribution of
Principal Distribution Amounts on the Mezzanine
Certificates).
“Subcontractor”: Any
vendor, subcontractor or other Person that, in the reasonable
determination of the Servicer, is not responsible for the overall
servicing (as “servicing” is commonly understood by
participants in the mortgage-backed securities market) of Mortgage
Loans but performs one or more discrete functions identified in
Item 1122(d) of Regulation AB with respect to Mortgage Loans as
reasonably determined by and under the direction or authority of
the Servicer or a Sub-servicer.
“Subordinate Certificates”:
As defined in the Preliminary Statement.
“Sub-Servicer”: Any Person in
the reasonable determination of the Servicer, that services
Mortgage Loans on behalf of the Servicer pursuant to a
Sub-Servicing Agreement and is responsible for the performance of a
material servicing function required to be performed by the related
Servicer under this Agreement that are identified in Item 1122(d)
of Regulation AB. Any subservicer shall meet the
qualifications set forth in Section 3.02.
“Sub-Servicing Account”: An
Eligible Account established by a Sub-Servicer which meets the
requirements set forth in Section 3.08 and is otherwise acceptable
to the Servicer.
“Sub-Servicing Agreement”:
The written contract between the Servicer and a Sub-Servicer
relating to servicing and administration of certain Mortgage Loans
as provided in Section 3.02.
“Substitution Shortfall
Amount”: As defined in Section 2.03(c) herein.
“Supplemental Interest
Account”: As defined in Section 4.07 hereof.
“Supplemental Interest
Trust”: The trust created pursuant to Section 4.07
herein and designated as the “Supplemental Interest
Trust,” consisting of the Swap Agreement, the Supplemental
Interest Account and the right to receive amounts as provided in
Section 4.01.
“Swap Agreement”: The 1992
ISDA Master Agreement (Multicurrency-Cross Border) dated as of
September 14, 2006 (together with the schedule thereto, the Master
Agreement) between the Swap Provider and the Securities
Administrator on behalf of the Supplemental Interest Trust, an ISDA
Credit Support Annex (Bilateral Form-New York Law) as of the same
date, which supplements, forms part of, and is subject to the
Master Agreement, and a confirmation of the same date, which
supplements and forms part of the Master Agreement.
“Swap Business Days”:
Any day other than a Saturday, a Sunday or a day on which
banking or savings and loan institutions in the City of New York
are authorized or obligated by law or executive order to be
closed.
“Swap Default”: An Event of
Default under the Interest Rate Swap Agreement.
“Swap Early Termination”: The
occurrence of an Early Termination Date under the Swap
Agreement.
“Swap LIBOR”: A per annum
rate equal to the floating rate payable by the Swap Provider under
the Swap Agreement determined by taking into account the day count
convention used to determine the amount of the payment required by
the Swap Provider and expressing such rate as so determined on a
30/360 basis.
“Swap Payment Date”: Two Swap
Business Days prior to the Distribution Date.
“Swap Provider”: JPMorgan
Chase Bank, National Association.
“Swap Provider Trigger
Event”: A Swap Termination Payment that is triggered upon:
(i) an Event of Default under the Swap Agreement with respect to
which the Swap Provider is a Defaulting Party (as defined in the
Swap Agreement), (ii) a Termination Event under the Swap Agreement
with respect to which the Swap Provider is the sole Affected Party
(as defined in the Swap Agreement) or (iii) an Additional
Termination Event under the Swap Agreement with respect to which
the Swap Provider is the sole Affected Party.
“Swap Termination Payment”:
The amount, if any, owed by the Supplemental Interest Trust or the
Swap Provider upon a Swap Early Termination.
“Tax Returns”: Each 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 REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of the Trust Fund due to its
classification as multiple REMICs 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 designated as page “3750” on the Moneyline
Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London
interbank offered rates of major banks).
“Termination Event”: Under
the Swap Agreement, the following standard events under the ISDA
Master Agreement:
·
“Illegality” (which generally
relates to changes in law causing it to become unlawful for either
party to perform its obligations under the Swap
Agreement),
·
“Tax Event” (which generally
relates to either party to the Swap Agreement receiving a payment
under the Swap Agreement from which an amount has been deducted or
withheld for or on account of taxes) and
·
“Tax Event Upon Merger”
(solely with respect to the Swap Provider as merging party) (which
generally relates to the Swap Provider’s receiving a payment
under the Swap Agreement from which an amount has been deducted or
withheld for or on account of taxes resulting from a
merger),
as described in Sections 5(b)(i),
5(b)(ii) and 5(b)(iii) of the ISDA Master Agreement.
“Termination Price”: As
defined in Section 9.01 herein.
“Transfer”: Any direct or
indirect transfer, sale, pledge, hypothecation, or other form of
assignment of any Ownership Interest in a Certificate.
“Transferee”: Any Person who
is acquiring by Transfer any Ownership Interest in a
Certificate.
“Transferor”: Any Person who
is disposing by Transfer of any Ownership Interest in a
Certificate.
“Trigger Event”: A Trigger
Event has occurred with respect to any Distribution Date on or
after the Stepdown Date if (i) the Delinquency Percentage exceeds
37.15% of the Senior Enhancement Percentage for such Distribution
Date or (ii) the cumulative Realized Losses (after reduction for
all Subsequent Recoveries received through the end of the related
Due Period) as a percentage of the original aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date is
greater than the percentage set forth in the following
table:
|
Range of Distribution Date s
|
Percentage
|
|
September 2008 – August 2009
|
1.40%
|
|
September 2009 – August 2010
|
3.15%
|
|
September 2010 – August 2011
|
4.90%
|
|
September 2011 – August 2012
|
6.30%
|
|
September 2012 and thereafter
|
7.05%
|
The percentages set forth in the table
above are the percentages applicable for the first Distribution
Date in the corresponding range of Distribution Dates. The
percentage for each succeeding Distribution Date in a range
increases incrementally by 1/12 of the positive difference between
the percentage applicable to the first Distribution Date in that
range and the percentage applicable to the first Distribution Date
in the succeeding range.
“Trust”: J.P. Morgan Mortgage
Acquisition Trust 2006-WMC3, the trust created under this
Agreement.
“Trust Fund”: The corpus of
the trust created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto
after the related Cut-off Date, other than such amounts which were
due on the Mortgage Loans on or before the related Cut-off Date,
(ii) the Collection Account, the Distribution Account and the Net
WAC Reserve Fund and all amounts deposited therein pursuant to the
applicable provisions of this Agreement (including, without
limitation, amounts received from the Seller on the Closing Date
which shall be deposited by the Securities Administrator in the
Distribution Account pursuant to Section 2.01), (iii) the
Depositor’s rights under each Mortgage Loan Purchase
Agreement and the Assignment and Assumption Agreement, (iv) the
Trust’s rights under the Swap Agreement, (v) property that
secured a Mortgage Loan and has been acquired by foreclosure,
deed-in-lieu of foreclosure or otherwise and (vi) all present and
future claims, demands, causes and choses in action in respect of
the foregoing, (vii) all other property of the Trust from time to
time, and (viii) all additions to, distributions on and proceeds of
the foregoing of every kind and nature whatsoever, including all
proceeds of the conversion, voluntary or involuntary, of any of the
foregoing.
“Trustee”: U.S. Bank National
Association, a national banking association, not in its individual
capacity, but solely in its capacity as Trustee for the benefit of
the Certificateholders under this Agreement, or its successor in
interest, or any successor trustee appointed as herein
provided.
“Trust Oversight Management
Agreement”: The trust oversight management agreement
dated September 14, 2006 among the Servicer, the Depositor and the
Trust Oversight Manager.
“Trust Oversight Manager”:
Pentalpha Surveillance LLC, A Delaware limited liability
company, and its successors and assigns.
“Trust Oversight Manager
Certification”: As defined in Section 8.20.
“Trust Oversight Manager
Fee”: With respect to any Distribution Date and each
Mortgage Loan, an amount equal to the product of (a) one twelfth,
(b) the Trust Oversight Manager Fee Rate and (c) the Stated
Principal Balance of such Mortgage Loan as of the first day of the
related Due Period, provided, however, such amount shall not be
less than $1,250.00 per month.
“Trust Oversight Manager Fee
Rate”: 0.015% per annum.
“Uncertificated Interest”: As
defined in the Preliminary Statement.
“Underwriter”: J.P. Morgan
Securities Inc.
“Underwriter’s
Exemption”: Prohibited Transaction Exemption 2002-19, 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 pursuant to
Section 3.14.
“United States Person”: A
“United States person” within the meaning set forth in
Section 7701(a)(30) of the Code.
“Unpaid Interest Shortfall
Amount”: For (i) the first Distribution Date and with respect
to the Senior Certificates and the Mezzanine Certificates, zero,
and for such Class of Certificates and any Distribution Date after
the first Distribution Date, the amount, if any, by which (a) the
sum of (1) the Monthly Interest Distributable Amount for such Class
of Certificates for the immediately preceding Distribution Date and
(2) the outstanding Unpaid Interest Shortfall Amount, if any, for
such Class of Certificates for such preceding Distribution Date
exceeds (b) the aggregate amount distributed on such Class of
Certificates in respect of interest on such preceding Distribution
Date, plus interest on the amount of interest due but not paid on
the Class of Certificates on such preceding Distribution Date, to
the extent permitted by law, at the Pass-Through Rate on such
Distribution Date for such Class of Certificates for the related
Interest Accrual Period.
“Value”: With respect to any
Mortgaged Property, the lesser of (i) the value thereof as
determined by a Qualified Appraiser at the time of origination of
the Mortgage Loan, and (ii) the purchase price paid for the
related Mortgage Property by the Mortgagor with the proceeds of the
Mortgage Loan; provided, however, that in the case of a Refinanced
Mortgage Loan made more than twelve months after the related
Mortgage Property was purchased by the related Mortgagor, such
value of the Mortgaged Property is based solely upon the value
determined by an appraisal made for the originator of such
Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by a Qualified Appraiser.
“Voting Rights”: The portion
of the voting rights of all of the Certificates that is allocated
to any Certificate. With respect to any date of
determination, 97% of all voting rights will be allocated among all
Holders of the Offered Certificates in proportion to their then
outstanding Class Principal Amounts, 1% of all voting rights will
be allocated among the Holders of the Class C Certificates; 1%
of all voting rights will be allocated among the Holders of the
Class P Certificates, and 1% of all voting rights will be allocated
among Holders of the Residual Certificates. Voting Rights
allocated to a Class shall be allocated among the Certificates of
such Class in proportion to the outstanding Percentage Interests
evidenced by their respective Certificates.
“Whole Loan Sale Date”: With
respect to those loans in Section A of Schedule 5, March 21, 2006
and with respect to those loans in Section B of Schedule 5, April
27, 2006
“WMC”: WMC Mortgage Corp.,
a California Corporation, or its successor in
interest.
SECTION 1.02.
Allocation of Certain Interest
Shortfalls.
For purposes of calculating the amount of
the Monthly Interest Distributable Amount for the Senior and
Mezzanine Certificates for any Distribution Date, the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicer pursuant to Section 3.24) and
any Relief Act Interest Shortfall incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated to the
Class C Certificates in reduction of the Class C
Distribution Amount and thereafter, among the Class A Certificates
and the other Classes of Mezzanine Certificates on a pro
rata basis based on such Monthly Interest Distributable Amount
prior to giving effect to any such reduction.
SECTION 1.03.
Designation of Interests in
REMIC.
The Securities Administrator shall elect
that each of REMIC I, REMIC II, and REMIC III be
treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that
preserves the validity of such REMIC elections. The assets of
REMIC I shall include the Mortgage Loans, the accounts (other
than the Net WAC Reserve Fund and the Supplemental Interest
Account), any REO Property, and any proceeds of the foregoing.
The Supplemental Interest Trust and any assets thereof shall
not be an asset of any REMIC formed hereby. The REMIC I
Regular Interests shall constitute the assets of REMIC II.
The REMIC II Regular Interests shall constitute
the assets of REMIC III (the “Master REMIC”).
The Class R Certificate represents ownership of the sole
class of residual interest in each of the REMIC II and the
Master REMIC.
REMIC I:
The following table sets forth the
designations, principal balances, and interest rates for each
interest in REMIC I, each of which (other than the R-I
interest) is hereby designated as a regular interest in
REMIC I (the “REMIC I Regular
Interests”):
|
Class Designation
|
Initial Principal Balance
|
Interest Rate
|
|
T1-A
|
(5)
|
(1)
|
|
T1-F1
|
$
4,563,500.00
|
(2)
|
|
T1-V1
|
$
4,563,500.00
|
(3)
|
|
T1-F2
|
$
6,154,000.00
|
(2)
|
|
T1-V2
|
$
6,154,000.00
|
(3)
|
|
T1-F3
|
$
7,746,000.00
|
(2)
|
|
T1-V3
|
$
7,746,000.00
|
(3)
|
|
T1-F4
|
$
9,336,000.00
|
(2)
|
|
T1-V4
|
$
9,336,000.00
|
(3)
|
|
T1-F5
|
$ 10,897,500.00
|
(2)
|
|
T1-V5
|
$ 10,897,500.00
|
(3)
|
|
T1-F6
|
$
7,632,500.00
|
(2)
|
|
T1-V6
|
$
7,632,500.00
|
(3)
|
|
T1-F7
|
$ 13,897,500.00
|
(2)
|
|
T1-V7
|
$ 13,897,500.00
|
(3)
|
|
T1-F8
|
$ 15,248,000.00
|
(2)
|
|
T1-V8
|
$ 15,248,000.00
|
(3)
|
|
T1-F9
|
$ 16,265,000.00
|
(2)
|
|
T1-V9
|
$ 16,265,000.00
|
(3)
|
|
T1-F10
|
$ 17,185,500.00
|
(2)
|
|
T1-V10
|
$ 17,185,500.00
|
(3)
|
|
T1-F11
|
$ 16,392,000.00
|
(2)
|
|
T1-V11
|
$ 16,392,000.00
|
(3)
|
|
T1-F12
|
$ 15,636,000.00
|
(2)
|
|
T1-V12
|
$ 15,636,000.00
|
(3)
|
|
T1-F13
|
$ 14,915,500.00
|
(2)
|
|
T1-V13
|
$ 14,915,500.00
|
(3)
|
|
T1-F14
|
$ 14,228,500.00
|
(2)
|
|
T1-V14
|
$ 14,228,500.00
|
(3)
|
|
T1-F15
|
$ 13,574,000.00
|
(2)
|
|
T1-V15
|
$ 13,574,000.00
|
(3)
|
|
T1-F16
|
$ 12,951,000.00
|
(2)
|
|
T1-V16
|
$ 12,951,000.00
|
(3)
|
|
T1-F17
|
$ 12,356,000.00
|
(2)
|
|
T1-V17
|
$ 12,356,000.00
|
(3)
|
|
T1-F18
|
$ 11,790,000.00
|
(2)
|
|
T1-V18
|
$ 11,790,000.00
|
(3)
|
|
T1-F19
|
$ 11,249,500.00
|
(2)
|
|
T1-V19
|
$ 11,249,500.00
|
(3)
|
|
T1-F20
|
$ 10,853,500.00
|
(2)
|
|
T1-V20
|
$ 10,853,500.00
|
(3)
|
|
T1-F21
|
$ 21,348,000.00
|
(2)
|
|
T1-V21
|
$ 21,348,000.00
|
(3)
|
|
T1-F22
|
$ 138,865,000.00
|
(2)
|
|
T1-V22
|
$ 138,865,000.00
|
(3)
|
|
T1-F23
|
$
3,473,000.00
|
(2)
|
|
T1-V23
|
$
3,473,000.00
|
(3)
|
|
T1-F24
|
$
3,223,500.00
|
(2)
|
|
T1-V24
|
$
3,223,500.00
|
(3)
|
|
T1-F25
|
$
2,966,000.00
|
(2)
|
|
T1-V25
|
$
2,966,000.00
|
(3)
|
|
T1-F26
|
$
2,215,500.00
|
(2)
|
|
T1-V26
|
$
2,215,500.00
|
(3)
|
|
T1-F27
|
$
2,128,000.00
|
(2)
|
|
T1-V27
|
$
2,128,000.00
|
(3)
|
|
T1-F28
|
$
2,044,000.00
|
(2)
|
|
T1-V28
|
$
2,044,000.00
|
(3)
|
|
T1-F29
|
$
1,964,000.00
|
(2)
|
|
T1-V29
|
$
1,964,000.00
|
(3)
|
|
T1-F30
|
$
1,887,000.00
|
(2)
|
|
T1-V30
|
$
1,887,000.00
|
(3)
|
|
T1-F31
|
$
1,814,000.00
|
(2)
|
|
T1-V31
|
$
1,814,000.00
|
(3)
|
|
T1-F32
|
$
84,500.00
|
(2)
|
|
T1-V32
|
$
84,500.00
|
(3)
|
|
T1-F33
|
$
615,500.00
|
(2)
|
|
T1-V33
|
$
615,500.00
|
(3)
|
|
T1-F34
|
$
1,044,000.00
|
(2)
|
|
T1-V34
|
$
1,044,000.00
|
(3)
|
|
T1-F35
|
$
66,000.00
|
(2)
|
|
T1-V35
|
$
66,000.00
|
(3)
|
|
T1-F36
|
$
1,073,000.00
|
(2)
|
|
T1-V36
|
$
1,073,000.00
|
(3)
|
|
T1-F37
|
$
16,500.00
|
(2)
|
|
T1-V37
|
$
16,500.00
|
(3)
|
|
T1-F38
|
$
764,500.00
|
(2)
|
|
T1-V38
|
$
764,500.00
|
(3)
|
|
T1-F39
|
$
256,000.00
|
(2)
|
|
T1-V39
|
$
256,000.00
|
(3)
|
|
T1-F40
|
$
1,003,000.00
|
(2)
|
|
T1-V40
|
$
1,003,000.00
|
(3)
|
|
T1-F41
|
$
969,500.00
|
(2)
|
|
T1-V41
|
$
969,500.00
|
(3)
|
|
T1-F42
|
$
3,000.00
|
(2)
|
|
T1-V42
|
$
3,000.00
|
(3)
|
|
T1-F43
|
$
935,000.00
|
(2)
|
|
T1-V43
|
$
935,000.00
|
(3)
|
|
T1-F44
|
$
907,000.00
|
(2)
|
|
T1-V44
|
$
907,000.00
|
(3)
|
|
T1-F45
|
$
877,000.00
|
(2)
|
|
T1-V45
|
$
877,000.00
|
(3)
|
|
T1-F46
|
$
849,000.00
|
(2)
|
|
T1-V46
|
$
849,000.00
|
(3)
|
|
T1-F47
|
$
820,500.00
|
(2)
|
|
T1-V47
|
$
820,500.00
|
(3)
|
|
T1-F48
|
$
794,500.00
|
(2)
|
|
T1-V48
|
$
794,500.00
|
(3)
|
|
T1-F49
|
$ 24,527,500.00
|
(2)
|
|
T1-V49
|
$ 24,527,500.00
|
(3)
|
|
R-I
|
(4)
|
(4)
|
___________________________
(1)
For any Distribution
Date (and the related Interest Accrual Period), the interest rate
for the Class T1-A Interest shall be the Net WAC Rate, determined
without regard to the Swap Agreement (the “REMIC Net WAC
Rate”).
(2)
For any Distribution
Date (and the related Interest Accrual Period), the interest rate
for each of these interests shall be the lesser of (i) the REMIC
Swap Rate for such Distribution Date, and (ii) the product of (a)
the REMIC Net WAC Rate and (b) 2.
(3)
For any Distribution
Date (and the related Interest Accrual Period), the interest rate
for each of these interests shall be the excess, if any, of (i) the
product of (a) the REMIC Net WAC Rate and (b) 2, over (ii) the
REMIC Swap Rate for such Distribution Date.
(4)
The Class R-I interest
shall not have a principal amount and shall not bear interest.
The Class R-I interest is hereby designated as the sole class
of residual interest in REMIC I.
(5)
This interest shall have
an initial principal balance equal to the excess of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date over the aggregate initial principal balance of each other
interest in REMIC I.
On each Distribution Date, the Securities
Administrator shall first pay or charge as an expense of
REMIC I all expenses of the Trust Fund for such
Distribution Date, other than any Net Swap Payment or Swap
Termination Payment required to be made from the Trust
Fund.
On each Distribution Date, the Securities
Administrator shall distribute the aggregate Interest Remittance
Amount for each Group (net of expenses described in the preceding
paragraph) with respect to each of the REMIC I Regular
Interests based on the above-described interest rates.
On each Distribution Date, the Securities
Administrator shall distribute the aggregate Principal Remittance
Amount with respect to each Group with respect to the REMIC I
Regular Interests, first to the Class T1-A Interest until its
principal balance is reduced to zero, and then sequentially, to the
other REMIC I Regular Interests in ascending order of their
numerical class designation, and, with respect to each pair of
classes having the same numerical designation, in equal amounts to
each such class, until the principal balance of each such class is
reduced to zero. All losses on the Mortgage Loans shall be
allocated among the REMIC I Regular Interests in the same
manner that principal distributions are allocated.
On each Distribution Date, the Securities
Administrator shall distribute an amount equal to the amount then
on deposit in the Distribution Account that represents Prepayment
Premiums to the Class T1-F49 Interest.
REMIC II:
The following table sets forth the
designations, principal balances, and interest rates for each
interest in REMIC II, each of which (other than the R-II
interest) is hereby designated as a regular interest in
REMIC II (the “REMIC II Regular
Interests”):
REMIC II
Class Designation
|
|
Initial Class
Principal Amount
|
Corresponding Class of Certificate(s)
|
|
T2-A1SS
|
(1)
|
½
Corresponding Class balance
|
A-1SS
|
|
T2-A1MZ
|
(1)
|
½
Corresponding Class balance
|
A-1MZ
|
|
T2-A2
|
(1)
|
½
Corresponding Class balance
|
A-2
|
|
T2-A3
|
(1)
|
½
Corresponding Class balance
|
A-3
|
|
T2-A4
|
(1)
|
½
Corresponding Class balance
|
A-4
|
|
T2-A5
|
(1)
|
½
Corresponding Class balance
|
A-5
|
|
T2-M1
|
(1)
|
½
Corresponding Class balance
|
M-1
|
|
T2-M2
|
(1)
|
½
Corresponding Class balance
|
M-2
|
|
T2-M3
|
(1)
|
½
Corresponding Class balance
|
M-3
|
|
T2-M4
|
(1)
|
½
Corresponding Class balance
|
M-4
|
|
T2-M5
|
(1)
|
½
Corresponding Class balance
|
M-5
|
|
T2-M6
|
(1)
|
½
Corresponding Class balance
|
M-6
|
|
T2-M7
|
(1)
|
½
Corresponding Class balance
|
M-7
|
|
T2-M8
|
(1)
|
½
Corresponding Class balance
|
M-8
|
|
T2-M9
|
(1)
|
½
Corresponding Class balance
|
M-9
|
|
T2-M10
|
(1)
|
½
Corresponding Class balance
|
M-10
|
|
T2-Accrual
|
(1)
|
(4)
|
N/A
|
|
T2-IO
|
(2)
|
(2)
|
N/A
|
|
R-II
|
(3)
|
(3)
|
R
|
|
|
|
|
|
___________________________
(1)
For any Distribution
Date (and the related Interest Accrual Period), the interest rate
for each of these interests is a per annum rate equal to the
weighted average of the interest rates on the REMIC I Regular
Interests for such Distribution Date, provided, however,
that for any Distribution Date on which the T2-IO Interest is
entitled to a portion of the interest accruals on a REMIC I
Regular Interest having an “F” in its class
designation, as described in footnote two below, such weighted
average shall be computed by first subjecting the rate on such
REMIC I Regular Interest to a cap equal to the product of (i)
two, and (ii) Swap LIBOR for such Distribution Date (the
“REMIC II Net WAC Rate”).
(2)
The Class T2-IO is an
interest only class that does not have a principal balance.
For the applicable Distribution Date listed in the first
column in the table below, the Class T2-IO shall be entitled to
interest accrued on each REMIC I Regular Interest listed in
the second column in the table below at a per annum rate equal to
the excess, if any, of (i) the interest rate for each such
REMIC I Regular Interest for such Distribution Date over (ii)
the product of (a) two, and (b) Swap LIBOR for such Distribution
Date.
|
Distribution Dates
|
REMIC
I Class
Designation
|
|
1
|
Class T1-F1
through T1-F49
|
|
2
|
Class T1-F2
through T1-F49
|
|
3
|
Class T1-F3
through T1-F49
|
|
4
|
Class T1-F4
through T1-F49
|
|
5
|
Class T1-F5
through T1-F49
|
|
6
|
Class T1-F6
through T1-F49
|
|
7
|
Class T1-F7
through T1-F49
|
|
8
|
Class T1-F8
through T1-F49
|
|
9
|
Class T1-F9
through T1-F49
|
|
10
|
Class T1-F10
through T1-F49
|
|
11
|
Class T1-F11
through T1-F49
|
|
12
|
Class T1-F12
through T1-F49
|
|
13
|
Class T1-F13
through T1-F49
|
|
14
|
Class T1-F14
through T1-F49
|
|
15
|
Class T1-F15
through T1-F49
|
|
16
|
Class T1-F16
through T1-F49
|
|
17
|
Class T1-F17
through T1-F49
|
|
18
|
Class T1-F18
through T1-F49
|
|
19
|
Class T1-F19
through T1-F49
|
|
20
|
Class T1-F20
through T1-F49
|
|
21
|
Class T1-F21
through T1-F49
|
|
22
|
Class T1-F22
through T1-F49
|
|
23
|
Class T1-F23
through T1-F49
|
|
24
|
Class T1-F24
through T1-F49
|
|
25
|
Class T1-F25
through T1-F49
|
|
26
|
Class T1-F26
through T1-F49
|
|
27
|
Class T1-F27
through T1-F49
|
|
28
|
Class T1-F28
through T1-F49
|
|
29
|
Class T1-F29
through T1-F49
|
|
30
|
Class T1-F30
through T1-F49
|
|
31
|
Class T1-F31
through T1-F49
|
|
32
|
Class T1-F32
through T1-F49
|
|
33
|
Class T1-F35
through T1-F49
|
|
34
|
Class T1-F39
through T1-F49
|
|
35
|
Class T1-F43
through T1-F49
|
|
36
|
Class T1-F38
through T1-F49
|
|
37
|
Class T1-F33
through T1-F49
|
|
38
|
Class T1-F34
through T1-F49
|
|
39
|
Class T1-F36
through T1-F49
|
|
40
|
Class T1-F37
through T1-F49
|
|
41
|
Class T1-F40
through T1-F49
|
|
42
|
Class T1-F41
through T1-F49
|
|
43
|
Class T1-F42
through T1-F49
|
|
44
|
Class T1-F44
through T1-F49
|
|
45
|
Class T1-F45
through T1-F49
|
|
46
|
Class T1-F46
through T1-F49
|
|
47
|
Class T1-F47
through T1-F49
|
|
48
|
Class T1-F48
through T1-F49
|
|
49
|
Class
T1-F49
|
(3)
The Class R-II interest
is the sole class of residual interest in REMIC II. It
does not have an interest rate or a principal balance.
(4)
This interest shall have
an initial principal balance equal to the aggregate principal
balance of all the Mortgage Loans as of the Cut-off Date minus the
aggregate initial principal balance of each other regular interest
in REMIC II.
On each Distribution Date, interest shall
be distributed on the REMIC II Regular Interests based on the
above-described interest rates , provided, however , that
interest that accrues on the Class T2-Accrual Interest shall be
deferred in an amount equal to one-half of the increase, if any, in
the Overcollateralized Amount for such Distribution Date. Any
interest so deferred shall itself bear interest at the interest
rate for the Class T2-Accrual Interest. An amount equal to
the interest so deferred shall be distributed as additional
principal on the other REMIC II Regular Interests having a
principal balance in the manner described under priority
First below.
On each Distribution Date principal shall
be distributed, and Realized Losses shall be allocated, among the
REMIC II Regular Interests in the following order of
priority:
First , to the Class T2-A1SS, Class T2-A1MZ, Class T2-A2,
Class T2-A3, Class T2-A4, Class T2-A5, Class T2-M1, Class T2-M2,
Class T2-M3, Class T2-M4, Class T2-M5, Class T2-M6, Class T2-M7,
Class T2-M8, Class T2-M9 and Class T2-M10 Interests until the
principal balance of each such REMIC II Regular Interest
equals one-half of the Class Principal Amount of the Corresponding
Class of Certificates immediately after such Distribution Date;
and
Second , to the Class T2-Accrual Interest, any remaining
amounts.
On each Distribution Date, the Securities
Administrator shall be deemed to have distributed the Prepayment
Premiums passed through with respect to the Class T1-F49
REMIC I Regular Interests on such Distribution Date to the
Class T2-Accrual Interest.
Master REMIC:
The following table sets forth
characteristics of the Certificates, each of which, except for the
Class R Certificates, is hereby designated as a “regular
interest” in the REMIC III:
|
|
Original Class
Principal Amount
|
|
|
Class A-1SS
|
$175,270,000
|
(1)
|
|
Class A-1MZ
|
$43,817,000
|
(1)
|
|
Class A-2
|
$279,200,000
|
(1)
|
|
Class A-3
|
$90,900,000
|
(1)
|
|
Class A-4
|
$95,700,000
|
(1)
|
|
Class A-5
|
$78,618,000
|
(1)
|
|
Class M-1
|
$32,612,000
|
(1)
|
|
Class M-2
|
$28,775,000
|
(1)
|
|
Class M-3
|
$17,265,000
|
(1)
|
|
Class M-4
|
$15,346,000
|
(1)
|
|
Class M-5
|
$15,346,000
|
(1)
|
|
Class M-6
|
$13,908,000
|
(1)
|
|
Class M-7
|
$13,428,000
|
(1)
|
|
Class M-8
|
$11,510,000
|
(1)
|
|
Class M-9
|
$8,632,000
|
(1)
|
|
Class M-10
|
$9,591,000
|
(1)
|
|
Class C
|
(2)
|
(2)
|
|
Class P
|
$100
|
(3)
|
|
Class R (4)
|
N/A
|
N/A
|
(1)
The lesser of the
related Formula Rate and the Net WAC Rate. For purposes of
the REMIC Provisions, the reference to “Net WAC Rate”
in the preceding sentence shall be deemed to be a reference to the
REMIC II Net WAC Rate; therefore, on any Distribution Date on
which the Pass-Through Rate for any Certificate exceeds the
REMIC II Net WAC Rate, interest accruals based on such excess
shall be treated as having been paid from the Net WAC Rate Reserve
Fund or the Supplemental Interest Trust, as applicable; on any
Distribution Date on which the Pass-Through Rate on a Class of
Certificates is based on the Net WAC Rate, the amount of interest
that would have accrued on such Class of Certificates if the
REMIC II Net WAC Rate were substituted for the Net WAC Rate
shall be treated as having been paid by the holder of such
Certificate to the Supplemental Interest Trust, all pursuant to and
as further provided in Section 10.01(k) hereof. Any
entitlement to Net WAC Rate Carryover Amounts shall not be an
obligation of any REMIC created hereunder.
(2)
The Class C
Certificates shall represent ownership of a regular interest (the
“Class C Interest”), which shall comprise two
notional components, the first of which has a notional balance
equal to the aggregate Stated Principal Balance of the Mortgage
Loans. The interest rate of the Class C Interest shall
be a rate sufficient to cause all net interest from the Mortgage
Loans to accrue on the Class C Interest that is in excess of
the amount of interest that accrues on the Class A Certificates and
the Class M Certificates. For any Distribution Date, the
Pass-Through Rate in respect of the Class C Interest shall be
the excess of: (i) the REMIC II Net WAC Rate over (ii) the
product of: (A) two and (B) the weighted average interest rate of
the REMIC II Regular Interests (other than any interest-only
regular interest) and the Class T2-Accrual Interest, where the
Class T2-Accrual Interest is subject to a cap equal to zero and
each remaining REMIC II Regular Interest is subject to a
cap equal to the Pass-Through Rate on its Corresponding Class.
The second notional component represents the right to receive
all distributions in respect of the Class T2-IO Interest in
REMIC II (the “T-I Interest”). The Class C
Interest shall also be entitled to principal equal to the excess of
the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date (less $100.00) over the aggregate Class Principal
Amount of the Class A Certificates and Class M Certificates as of
the Closing Date. Such principal balance shall not bear
interest. Also, the Class C Certificates shall represent
beneficial ownership of (i) the Net WAC Reserve Fund, (ii) the
Supplemental Interest Trust, and (iii) an interest in the interest
rate cap contracts described in Section 10.01(k) hereof.
(3)
The Class P Certificates
shall not be entitled to payments of interest, but shall be
entitled to receive all Prepayment Premiums in respect of the
Mortgage Loans.
(4)
REMIC III shall
also issue the R-III interest, which shall not have a principal
amount and shall not bear interest. The R-III interest is
hereby designated as the sole class of residual interest in
REMIC III. The Class R Certificates shall represent the
beneficial ownership of the R-II and R-III interests.
The foregoing REMIC structure is intended
to cause all of the cash from the Mortgage Loans to flow through to
the Master REMIC as cash flow on a REMIC regular interest, without
creating any shortfall, actual or potential (other than for credit
losses), to any REMIC regular interest. To the extent that
the structure is believed to diverge from such intention, the party
identifying any ambiguity or drafting error shall notify the other
parties hereto, and the parties hereto shall attempt to resolve
such ambiguity or correct such drafting error in accordance with
Section 11.01 to accomplish such intention.
SECTION 1.04.
Rights of the NIMS Insurer.
Each of the rights of the NIMS Insurer
set forth in this Agreement shall exist so long as (i) the NIMS
Insurer has undertaken to guarantee certain payments of notes
issued pursuant to an indenture and (ii) any series of such notes
issued pursuant to one or more indentures remain outstanding or the
NIMS Insurer is owed amounts in respect of its guarantee of payment
on such notes; provided, however, that the NIMS Insurer shall not
have any rights hereunder so long as (i) the NIMS Insurer has not
undertaken to guarantee certain payments of notes issued pursuant
to the indenture or (ii) any default has occurred and is continuing
under the insurance policy issued by the NIMS Insurer with respect
to such notes.
The Seller shall notify the Servicer, the
Securities Administrator and the Trustee in writing of the
appointment of a NIMS Insurer immediately following such
appointment. The Servicer, the Securities Administrator and
the Trustee shall not be under any obligation to provide notice or
to deliver any document hereunder to the NIMS Insurer unless it has
received notice of the appointment of a NIMS Insurer
hereunder.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01.
Conveyance of Mortgage Loans.
(a)
The Depositor, concurrently with the
execution and delivery hereof, does hereby establish the Trust and
transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security
interest therein for the benefit of the Depositor, in and to the
Mortgage Loans identified on the Mortgage Loan Schedule, the rights
of the Depositor under the Assignment and Assumption Agreement and
the Mortgage Loan Purchase Agreement and all other assets included
or to be included in the Trust Fund. Such assignment includes
all interest and principal received by the Seller, the Depositor or
the Servicer on or with respect to the Mortgage Loans (other than
payments of principal and interest due on such Mortgage Loans on or
before the Cut-off Date). The Depositor herewith delivers to
the Trustee and the Securities Administrator an executed copy of
the Assignment and Assumption Agreement. In addition, on or
prior to the Closing Date, the Securities Administrator shall
execute the Swap Agreement and the Depositor hereby directs the
Securities Administrator to do so. With respect to any
Mortgage Loan that does not have a first payment date during the
Due Period related to the first Distribution Date, the Depositor
shall deposit into the Distribution Account on or before the
Servicer Remittance Date relating to the first Distribution Date,
an amount equal to one month’s interest at the related Net
Mortgage Rate on the Cut-off Date Stated Principal Balance of such
Mortgage Loan.
If the assignment and transfer of the
Mortgage Loans and the other property specified in this Section
2.01 from the Depositor to the Trustee pursuant to this Agreement
is held or deemed not to be a sale or is held or deemed to be a
pledge of security for a loan, the Depositor intends that the
rights and obligations of the parties shall be established pursuant
to the terms of this Agreement and that, in such event, (i) the
Depositor shall be deemed to have granted and does hereby grant to
the Trustee, for the benefit of the Certificateholders, as of the
Closing Date a perfected, first priority security interest in the
entire right, title and interest of the Depositor in and to the
Mortgage Loans and all other property conveyed to the Trust Fund
pursuant to this Section 2.01 and all proceeds thereof,
substitutions therefor and accessions thereto, and (ii) this
Agreement shall constitute a security agreement under applicable
law.
In connection with such transfer and
assignment, the Depositor does hereby deliver to, and deposit with
the Custodian a copy of the related Mortgage Loan Schedule in an
electronic, machine readable medium, and the following documents or
instruments with respect to each Mortgage Loan so transferred and
assigned (each, a “Mortgage File”):
(i)
the original Mortgage Note, endorsed in
blank or in the following form: “Pay to the order of U.S.
Bank National Association, as Trustee under the applicable
agreement, without recourse,” with all prior and intervening
endorsements showing a complete chain of endorsement from the
originator to the Person so endorsing to the Trustee or a copy of
such original Mortgage Note with an accompanying lost note
affidavit executed by the Seller;
(ii)
the original Mortgage with evidence of
recording thereon, and a copy, certified by the appropriate
recording office, of the recorded power of attorney, if the
Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;
(iii)
an original Assignment of the Mortgage in
blank;
(iv)
the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment
from the originator to the Person assigning the Mortgage to the
Trustee or in blank;
(v)
the original or copies of each
assumption, modification, written assurance or substitution
agreement, if any; and
(vi)
with respect to any first lien Mortgage
Loan, the original lender’s title insurance policy, if
available, together with all endorsements or riders which were
issued with or subsequent to the issuance of such policy, insuring
the priority of the Mortgage as a first lien on the Mortgaged
Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is
unavailable, a written commitment or uniform binder or preliminary
report of title issued by the title insurance or escrow company, if
available.
Notwithstanding the foregoing, the
Trustee, if applicable, acknowledges receipt of items listed under
clause (v) above only to the extent that it has received a written
schedule of the items to be delivered to the Custodian pursuant to
such clause (v).
The Depositor hereby represents that, on
the Closing Date (i) no more than 1% of the Mortgage Loans by
Stated Principal Balance as of the Cut-off Date may have lost note
affidavits in lieu of the original Mortgage Notes and (ii) the
Depositor shall cause the Originator to deliver to the Custodian,
on behalf of the Trustee, a copy of the original Mortgage Note for
each Mortgage Loan with respect to which a lost note affidavit is
delivered.
The Depositor shall cause the Originator,
at its expense, to promptly (and in no event later than thirty (30)
Business Days, subject to extension upon a mutual agreement among
the Depositor, the Servicer and the Trustee, following the later of
the Closing Date and the date of receipt by the Servicer or the
Trustee, as the case may be, of the recording information for a
Mortgage) submit or cause to be submitted to the Custodian, as
applicable, for recording, at no expense to the Trust Fund, the
Servicer, the Trustee or the Custodian, as applicable, in the
appropriate public office for real property records, each
Assignment referred to in clauses (iii) and (iv) above in this
Section 2.01(a) and shall execute each original Assignment in the
following form: “U.S. Bank National Association, as Trustee
under the applicable agreement, without recourse.” In the
event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Depositor shall or shall cause the
Originator to promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case
may be, and thereafter cause each such Assignment to be duly
recorded. Notwithstanding the foregoing, in lieu of recording
such Assignments, the Depositor may provide to the Trustee and the
Securities Administrator an Opinion of Counsel to the effect that
such recording is not required to evidence the Trust’s
interest in the related Mortgage Loan.
If any of the documents referred to in
clauses (ii), (iii), (iv) or (v) above in this Section 2.01(a) has
as of the Closing Date been submitted for recording but either (x)
has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained
the original of such document, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon (1)
delivery to the Custodian of a copy of each such document certified
by the Originator, in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and
(2) if such copy is certified by the Originator or delivery to the
Custodian promptly upon receipt thereof of either the original or a
copy of such document certified by the applicable public recording
office to be a true and complete copy of the original. If the
original lender’s title insurance policy was not delivered
pursuant to clause (vi) above in this Section 2.01(a), the
Depositor shall deliver or cause to be delivered to the Custodian
promptly after receipt thereof, the original lender’s title
insurance policy, if available. The Depositor shall deliver
or cause to be delivered to the Custodian promptly upon receipt
thereof any other original documents constituting a part of a
Mortgage File received with respect to any Mortgage Loan,
including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
All original documents relating to the
Mortgage Loans that are not delivered to the Custodian are and
shall be held by or on behalf of the Depositor or the Servicer, as
the case may be, in trust for the benefit of the Trustee on behalf
of the Certificateholders. In the event that any such
original document is required pursuant to the terms of this Section
to be a part of a Mortgage File, such document shall be delivered
promptly to the Custodian. Any such original document
delivered to or held by the Depositor that is not required pursuant
to the terms of this Section to be a part of a Mortgage File, shall
be delivered promptly to the Servicer.
The Depositor shall deliver or cause the
Originator or the Custodian to deliver to the Servicer copies of
all trailing documents required to be included in the Servicing
File at the same time the originals or certified copies thereof are
delivered to the Custodian which documents shall include, but are
not limited to, the mortgagee policy of title insurance and any
Mortgage Loan documents upon return from the recording office.
The Servicer shall not be responsible for any custodial fees
other than costs incurred in obtaining such documents, and the
Servicer shall be entitled to reimbursement from the Seller for any
reasonable costs incurred in obtaining such documents.
(b)
It is agreed and understood by the
Depositor, the Seller, the Servicer and the Trustee that it is not
intended that any Mortgage Loan be included in the Trust Fund that
is a high-cost home loan as defined by the HOEPA or any other
applicable predatory or abusive lending laws.
SECTION 2.02.
Acceptance of REMIC I by the
Trustee.
Subject to the provisions of Section 2.01
and subject to any exceptions noted on the Exception Report, and
pursuant to the Custodial Agreement, in an initial certification to
the Trustee, the Custodian has acknowledged receipt of the
documents referred to in Section 2.01 (other than such documents
described in Section 2.01(a)(v) above), the Securities
Administrator acknowledges receipt of amounts, if any, on deposit
in each of the Net WAC Reserve Fund and the Distribution Account
and the Trustee acknowledges receipt of all other assets included
under clauses (i) (other than clause (v) of the definition of
Mortgage File, to which the Trustee acknowledges receipt of items
listed under such clause (v) only to the extent that it has
received a written schedule of the items to be delivered to the
Custodian pursuant to such clause (v)), (iii), (iv) and (v) (other
than the Collection Account) of the definition of
“REMIC I” (to the extent of amounts deposited into
the Distribution Account) and declares that the Trustee or the
Custodian, as applicable, holds and will hold such documents and
the other documents delivered to it constituting the Mortgage File
on behalf of the Trust, and that it holds or will hold all such
assets and such other assets included in the definition of
“REMIC I” in trust for the exclusive use and
benefit of all present and future Certificateholders. The
Securities Administrator also acknowledges receipt of the amounts
on deposit in the Distribution Account and the Net WAC Reserve Fund
in trust for the exclusive use and benefit of all present and
future Certificateholders.
The Trustee agrees on or before the
Closing Date, for the benefit of the Certificateholders, to cause
the Custodian to review, each Mortgage File and to cause the
Custodian to deliver a certification to the Depositor, the Seller,
the Servicer, the Securities Administrator and the Trustee in
substantially the form attached hereto as Exhibit C-1. It is
herein acknowledged that, in conducting such review, neither the
Trustee nor the Custodian was under any duty or obligation (i) to
inspect, review or examine any such documents, instruments,
certificates or other papers to determine whether they are genuine,
enforceable, or appropriate for the represented purpose (including
with respect to Section 2.01(a)(vi), whether such title insurance
policy insures the priority of the Mortgage as a first lien) or
whether they have actually been recorded or that they are other
than what they purport to be on their face or (ii) to determine
whether any Mortgage File should include any of the documents
specified in Section 2.01(a)(v).
Not later than ninety (90) days following
the Closing Date, the Trustee shall cause the Custodian to deliver
to the Depositor, the Trustee, the Seller, the Securities
Administrator and the Servicer a final certification in the form
annexed hereto as Exhibit C-2 evidencing the completeness of the
Mortgage Files, with any applicable exceptions noted on the
Exception Report attached thereto.
If in the process of reviewing the
Mortgage Files and making or preparing, as the case may be, the
certifications referred to above, the Custodian finds any document
or documents constituting a part of a Mortgage File to be missing
or defective in any material respect, at the conclusion of its
review the Custodian shall so notify the Depositor, the Seller, the
Securities Administrator, the Trustee and the Servicer. In
addition, upon the discovery by the Depositor, the Servicer, the
Custodian or the Trustee of a breach of any of the representations
and warranties made by the Originator or the Seller in the Mortgage
Loan Purchase Agreement or this Agreement, respectively, in respect
of any Mortgage Loan which materially adversely affects such
Mortgage Loan or the interests of the related Certificateholders in
such Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties.
Enforcement of each Mortgage Loan
Purchase Agreement or this Agreement against the Originator or the
Seller, respectively, shall be effected by the Securities
Administrator on behalf of the Trustee. The Securities
Administrator on behalf of the Trustee shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor
only (i) from a general recovery resulting from such enforcement,
to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys’ fees against the
Person against which such enforcement is directed; provided,
however, if the sources of reimbursement described in clauses (i)
and (ii) are insufficient, the Securities Administrator on behalf
of the Trustee may seek reimbursement for any remaining
unreimbursed costs of such enforcement from the Trust Fund as an
Extraordinary Trust Fund Expense.
SECTION 2.03.
Repurchase or Substitution of Mortgage
Loans by the Originator, the Seller or the Depositor; Payment of
Prepayment Premiums in the Event of Breach.
(a)
(i) Upon discovery by any of the parties
hereto or receipt of notice by a Responsible Officer in the
Corporate Trust Office of the Trustee or the Securities
Administrator of any materially defective document in, or that a
document is missing from, the Mortgage File or of the breach by the
Originator of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or the Assignment and Assumption
Agreement in respect of any Mortgage Loan that materially adversely
affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, such party or the Trustee shall promptly
notify the Seller, the Servicer and the Securities Administrator
(if such discovering party is not the Securities Administrator) of
such defect, missing document or breach and such party or the
Securities Administrator on behalf of the Trustee shall cause the
Originator to deliver such missing document or cure such defect or
breach within 90 days from the date the Originator was notified of
such missing document, defect or breach; provided that such missing
document was not previously delivered by the Originator under the
Mortgage Loan Purchase Agreement and the Assignment and Assumption
Agreement. Notwithstanding the foregoing, if applicable, any
breach by the Originator of a representation made pursuant to
Fannie Mae guidelines in effect on the applicable Whole Loan Sale
Date shall be deemed to materially and adversely affect the
interests of the Certificateholders in that Mortgage Loan. If
the Originator does not deliver such missing document or cure such
defect or breach in all material respects during such period, the
Securities Administrator on behalf of the Trustee shall enforce the
obligations of the Originator under the Mortgage Loan Purchase
Agreement and the Assignment and Assumption Agreement to repurchase
such Mortgage Loan from the Trust Fund at the Purchase Price, to
the extent that the Originator is obligated to do so under the
Mortgage Loan Purchase Agreement and the Assignment and Assumption
Agreement. In the event that the Originator shall fail to
cure the applicable breach or repurchase a Mortgage Loan in
accordance with the preceding sentence, the Seller shall do so.
Notwithstanding the foregoing, the Depsitor or its
designee, on behalf of the Trust, shall use its best efforts to
enforce obligations of the Originator with respect to a breach of
the representations and warranties made by the Originator under the
Assignment and Assumption Agreement. The Purchase Price for
the repurchased Mortgage Loan shall be deposited in the
Distribution Account, and the Securities Administrator on behalf of
the Trustee, upon receipt of such deposit, shall (i) release or
cause the Custodian to release to the Originator or the Seller, as
the case may be, the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment, in
each case without recourse, (provided, however, that in the
instruments of transfer or assignment, the Trustee shall represent
and warrant to the Originator or the Seller, as applicable, that
the repurchased Mortgage Loan is free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest created by
the Trustee and its successors, assigns and transferees), as the
Originator or the Seller, as applicable, shall furnish to it and as
shall be necessary to vest in the Originator or the Seller, as the
case may be, any Mortgage Loan released pursuant hereto, and the
Securities Administrator and the Trustee shall have no further
responsibility with regard to such Mortgage File and (ii) reimburse
pursuant to Section 3.11(b)(viii) herein the Trust, the Depositor,
the Seller, the Servicer, the Trustee or the Securities
Administrator for any costs and damages incurred and paid by such
party in connection with any violation by a Mortgage Loan of (x)
the representation and warranties set forth in Section 2.06 of this
Agreement or (y) the representations and warranties made in
paragraphs (f), (qq), (xx), (yy), (ggg), (hhh), (nnn) or (qqq) of
Sechedule 4 attached hereto to the extent such amount to be
reimbursed is included in the Purchase Price. In lieu of
repurchasing any such Mortgage Loan as provided above, if so
provided in the Mortgage Loan Purchase Agreement, the Assignment
and Assumption Agreement or this Agreement, the Originator or the
Seller, as applicable, may cause such Mortgage Loan to be removed
from the Trust Fund (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to the limitations set
forth in Section 2.03(c). It is understood and agreed that
the obligation of the Originator or the Seller, as applicable, to
cure or to repurchase (or to substitute for) any Mortgage Loan as
to which a document is missing, a material defect in a constituent
document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Securities
Administrator and the Trustee on behalf of the
Certificateholders.
(ii)
Upon discovery by any of the parties
hereto or receipt of notice by a Responsible Officer in the
Corporate Trust Office of the Trustee of any breach by the Seller
of any representation, warranty or covenant made by the Seller in
Section 2.06 in respect of any Mortgage Loan that materially
adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders (in the case of any such
representation or warranty made to the knowledge or the best of
knowledge of the Seller as to which the Seller has no knowledge,
without regard to the Seller’s lack of knowledge with respect
to the substance of such representation or warranty being
inaccurate at the time it was made), such party or the Trustee
shall promptly notify the Seller and the Servicer of such breach
and cause the Seller to cure such breach within 90 days from the
date the Seller was notified of such breach.
Notwithstanding the foregoing, if applicable, any
breach by the Seller of a representation made pursuant to Fannie
Mae guidelines in effect on the applicable Whole Loan Sale Date
shall be deemed to materially and adversely affect the interest of
the Certificateholders in such Mortgage Loan. If the Seller
fails to cure such breach in all material respects during such
period, the Seller shall repurchase such Mortgage Loan from the
Trust Fund at the Purchase Price. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Distribution
Account, and the Securities Administrator, upon receipt of such
deposit, shall (i) release or cause the Custodian to release to the
Seller the related Mortgage File and the Trustee shall execute and
deliver such instruments of transfer or assignment, in each case
without recourse, (provided, however, that in the instruments of
transfer or assignment, the Trustee shall represent and warrant to
the Seller that the repurchased Mortgage Loan is free and clear of
any encumbrance, equity, lien, pledge, charge, claim or security
interest created by the Trustee and its successors, assigns and
transferees), as the Seller shall furnish to it and as shall be
necessary to vest in the Seller, any Mortgage Loan released
pursuant hereto, and the Trustee shall have no further
responsibility with regard to such Mortgage File and (ii) reimburse
pursuant to Section 3.11(b)(viii) herein the Trust, the Depositor,
the Seller, the Servicer, the Trustee or the Securities
Administrator for any costs and damages incurred and paid by such
party in connection with any violation by a Mortgage Loan of (x)
the representation and warranties set forth in Section 2.06 of this
Agreement or (y) the representations and warranties made in
paragraphs (f), (qq), (xx), (yy), (ggg), (hhh), (nnn) or (qqq) of
Sechedule 4 attached hereto to the extent such amount to be
reimbursed is included in the Purchase Price. In lieu of
repurchasing any such Mortgage Loan as provided above, if so
provided in this Agreement, the Seller may cause such Mortgage Loan
to be removed from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(c). It is understood
and agreed that the obligation of the Seller to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which
such a breach has occurred and is continuing shall constitute the
sole remedy respecting such breach available to the Trustee on
behalf of the Certificateholders. To the extent that a
representation, warranty or covenant relating to a Mortgage Loan
has been breached by both the Originator under the Mortgage Loan
Purchase Agreement and/or Assignment and Assumption Agreement and
the Seller under this Agreement, the Trustee or the Securities
Administrator, as applicable, shall first enforce the repurchase
and/or substitution obligation of the Originator under the related
agreement and then the Seller under this Agreement.
(b)
(i)
As promptly as practicable (and no later
than 90 days) after the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any
representation, warranty or covenant of the Servicer set forth in
Section 2.05(a) which materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the
Servicer shall cure such breach in all material
respects.
(ii)
If the covenant made by the Servicer in
Section 2.05(a)(vii) is breached and remains uncured, the Servicer
shall pay into the Collection Account the amount of the waived
Prepayment Premium. If the Servicer shall fail to make any
payment required pursuant to this Section 2.03(b)(ii), either the
Trustee or the Seller may enforce such obligation.
(c)
Any substitution of Qualified Substitute
Mortgage Loans for Deleted Mortgage Loans made pursuant to Section
2.03(a) must be effected prior to the date that is two years after
the Closing Date for the Trust Fund.
As to any Deleted Mortgage Loan for which
the Originator or the Seller substitutes a Qualified Substitute
Mortgage Loan or Loans, such substitution shall be effected by the
Originator or the Seller, as the case may be, delivering to the
Custodian on behalf of the Trustee, for such Qualified Substitute
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the
Assignment to the Trustee, and such other documents and agreements,
with all necessary endorsements thereon, as are required by Section
2.01, together with an Officers’ Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Shortfall Amount
(as described below), if any, in connection with such substitution.
The Custodian shall acknowledge receipt for such Qualified
Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, review such documents as specified in Section 2.02 and
deliver to the Trustee, the Depositor, the Seller, the Securities
Administrator and the Servicer, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially in
the form attached hereto as Exhibit C-1, with any applicable
exceptions noted thereon. Within one year of the date of
substitution, the Custodian shall deliver to the Trustee, the
Securities Administrator, the Depositor, the Seller and the
Servicer a certification substantially in the form of Exhibit C-2
hereto with respect to such Qualified Substitute Mortgage Loan or
Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in
the month of substitution are not part of the Trust Fund and will
be retained by the Originator or the Seller, as the case may be.
For the month of substitution, distributions to
Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of
substitution, and the Originator or the Seller, as the case may be,
shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The
Servicer shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage
Loan or Loans and shall deliver a copy of such amended Mortgage
Loan Schedule to the Securities Administrator and the Trustee in an
electronic format. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and part of the related Group and shall be subject in
all respects to the terms of this Agreement, including, in the case
of a substitution effected by the Originator or the Seller, all
applicable representations and warranties thereof included in the
Mortgage Loan Purchase Agreement, the Assignment and Assumption
Agreement or this Agreement, as applicable, and in the case of a
substitution effected by the Seller, all applicable representations
and warranties thereof set forth in Section 2.04.
For any month in which the Originator or
the Seller substitutes one or more Qualified Substitute Mortgage
Loans for one or more Deleted Mortgage Loans, the Seller will
determine the amount (the “Substitution Shortfall
Amount”), if any, by which the aggregate Purchase Price of
all such Deleted Mortgage Loans exceeds the aggregate of, as to
each such Qualified Substitute Mortgage Loan, the Stated Principal
Balance thereof as of the date of substitution, together with one
month’s interest on such Substitution Shortfall Amount at the
applicable Net Mortgage Rate. On the date of such
substitution, which shall be on or prior to the next succeeding
Determination Date, the Originator or the Seller, as the case may
be, will deliver or cause to be delivered to the Servicer for
deposit in the Collection Account an amount equal to the
Substitution Shortfall Amount, if any, and the Custodian, upon
receipt of the related Qualified Substitute Mortgage Loan or Loans,
shall release to the Originator or the Seller, as the case may be,
the related Mortgage File or Files and the Trustee shall execute
and deliver such instruments of transfer or assignment, in each
case without recourse, as the Originator or the Seller, as the case
may be, shall deliver to it and as shall be reasonably necessary to
vest therein any Deleted Mortgage Loan released pursuant
hereto.
In addition, the Originator or the
Seller, as the case may be, shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed
on any of the REMICs, created hereunder, including without
limitation, any federal tax imposed on “prohibited
transactions” under Section 860F(a)(1) of the Code or on
“contributions after the startup date” under Section
860G(d)(1) of the Code, or (b) any REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificate is
outstanding.
(d)
Upon discovery by the Depositor, the
Servicer, the Securities Administrator or the Trustee that any
Mortgage Loan does not constitute a “qualified
mortgage” within the meaning of Section 860G(a)(3) of the
Code, the party discovering such fact shall within two Business
Days give written notice thereof to the other parties. In
connection therewith, the Originator or the Seller, as the case may
be, shall repurchase or, subject to the limitations set forth in
Section 2.03(c), substitute one or more Qualified Substitute
Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such
affected Mortgage Loan. The Securities Administrator on
behalf of the Trustee shall cause such repurchase or substitution
to be made by (i) the Originator, if the affected Mortgage
Loan’s status as a non-qualified mortgage is or results from
a breach of any representation, warranty or covenant made by the
Originator under the applicable Mortgage Loan Purchase Agreement or
the Assignment and Assumption Agreement, as applicable or
(ii) the Seller, if the affected Mortgage Loan’s status
as a non-qualified mortgage is a breach of any representation or
warranty of the Seller set forth in Section 2.04 or 2.06, or if its
status as a non-qualified mortgage is a breach of any
representation or warranty (other than a representation and
warranty of the Originator). Any such repurchase or
substitution shall be made in the same manner as set forth in
Section 2.03(a). The Trustee shall reconvey to the Originator
or the Seller, as the case may be, the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
SECTION 2.04.
Representations and Warranties of the
Depositor.
The Depositor hereby represents and
warrants to the Trustee, the Swap Provider and the Securities
Administrator that as of the Closing Date:
(i)
the Depositor is a corporation duly
organized, validly existing and in good standing under the laws
governing its creation and existence and has full corporate power
and authority to own its property, to carry on its business as
presently conducted, to enter into and perform its obligations
under this Agreement, and to create the trust pursuant
hereto;
(ii)
the execution and delivery by the
Depositor of this Agreement have been duly authorized by all
necessary corporate action on the part of the Depositor; neither
the execution and delivery of this Agreement, nor the consummation
of the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on
the Depositor or its properties or the certificate of incorporation
or bylaws of the Depositor;
(iii)
the execution, delivery and performance
by the Depositor of this Agreement and the consummation of the
transactions contemplated hereby do not require the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any state, federal or
other governmental authority or agency, except such as has been
obtained, given, effected or taken prior to the date
hereof;
(iv)
this Agreement has been duly executed and
delivered by the Depositor and, assuming due authorization,
execution and delivery by the Trustee, the Servicer, the Seller and
the Securities Administrator, constitutes a valid and binding
obligation of the Depositor enforceable against it in accordance
with its terms except as such enforceability may be subject to (A)
applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally and
(B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at
law;
(v)
there are no actions, suits or
proceedings pending or, to the knowledge of the Depositor,
threatened or likely to be asserted against or affecting the
Depositor, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to
any other matter which in the judgment of the Depositor will be
determined adversely to the Depositor and will if determined
adversely to the Depositor materially and adversely affect it or
its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its
obligations under this Agreement;
(vi)
immediately prior to the transfer and
assignment of the Mortgage Loans to the Trustee, the Depositor was
the sole owner and had good title to each Mortgage Loan, and had
full right to transfer and sell each Mortgage Loan to the Trustee
free and clear, subject only to (1) liens of current real property
taxes and assessments not yet due and payable and, if the related
Mortgaged Property is a condominium unit, any lien for common
charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage acceptable to
mortgage lending institutions in the area in which the related
Mortgaged Property is located and specifically referred to in the
lender’s title insurance policy or attorney’s opinion
of title and abstract of title delivered to the originator of such
Mortgage Loan, and (3) such other matters to which like properties
are commonly subject which do not, individually or in the
aggregate, materially interfere with the benefits of the security
intended to be provided by the Mortgage, of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or
security interest, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party,
to sell and assign each Mortgage Loan pursuant to this
Agreement;
(vii)
this Agreement creates a valid and
continuing security interest (as defined in the applicable Uniform
Commercial Code (the “UCC”)), in the Mortgage Loans in
favor of the Trustee, which security interest is prior to all other
liens, and is enforceable as such against creditors of and
purchasers from the Depositor;
(viii)
the Mortgage Loans constitute
“instruments” within the meaning of the applicable
UCC;
(ix)
other than the security interest granted
to the Trustee pursuant to this Agreement, the Depositor has not
pledged, assigned, sold, granted a security interest in, or
otherwise conveyed any of the Mortgage Loans. The Depositor
has not authorized the filing of and is not aware of any financing
statement against the Depositor that includes a description of the
collateral covering the Mortgage Loans other than a financing
statement relating to the security interest granted to the Trustee
hereunder or that has been terminated. The Depositor is not
aware of any judgment or tax lien filings against the
Depositor;
(x)
none of the Mortgage Loans have any marks
or notations indicating that such Mortgage Loans have been pledged,
assigned or otherwise conveyed to any Person other than the
Trustee;
(xi)
the Depositor has received all consents
and approvals required by the terms of the Mortgage Loans to convey
the Mortgage Loans hereunder to the Trustee; and
(xii)
the Trust is a common law trust duly
organized and validly existing under the laws of the state of New
York.
SECTION 2.05.
Representations, Warranties and Covenants
of the Servicer.
(a)
The Servicer hereby represents, warrants
and covenants to the Trustee, the Seller, the Securities
Administrator and to the Depositor that as of the Closing Date or
as of such date specifically provided herein:
(i)
The Servicer is a national banking
association duly organized, validly existing and in good standing
under the laws of the United States of America and is duly
authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Servicer in
any state in which a Mortgaged Property related to a Mortgage Loan
is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with
the doing business laws of any such State, to the extent necessary
to ensure its ability to enforce each Mortgage Loan serviced and to
service the Mortgage Loans in accordance with the terms of this
Agreement;
(ii)
The Servicer has the full power and
authority to service each Mortgage Loan which the Servicer is
required to service hereunder, and to execute, deliver and perform,
and to enter into and consummate the transactions contemplated by
this Agreement and has duly authorized by all necessary action on
the part of the Servicer the execution, delivery and performance of
this Agreement; and this Agreement has been duly executed and
delivered by the Servicer and, assuming the due authorization,
execution and delivery thereof by the Depositor, the Seller, the
Securities Administrator and the Trustee, constitutes a legal,
valid and binding obligation of the Servicer, enforceable against
the Servicer in accordance with its terms, except to the extent
that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to creditors’ rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought;
(iii)
The execution and delivery of this
Agreement by the Servicer, the servicing of the Mortgage Loans by
the Servicer hereunder, the consummation by the Servicer of any
other of the transactions herein contemplated, and the fulfillment
of or compliance with the terms hereof are in the ordinary course
of business of the Servicer and will not (A) result in a breach of
any term or provision of the organizational documents of the
Servicer or (B) conflict with, result in a breach, violation or
acceleration of, or result in a default under, the terms of any
other material agreement or instrument to which the Servicer is a
party or by which it may be bound, or any statute, order or
regulation applicable to the Servicer of any court, regulatory
body, administrative agency or governmental body having
jurisdiction over the Servicer; and the Servicer is not a party to,
bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it, which materially and adversely affects or, to the
Servicer’s knowledge, would in the future materially and
adversely affect, (x) the ability of the Servicer to perform its
obligations under this Agreement or (y) the business, operations,
financial condition, properties or assets of the Servicer taken as
a whole;
(iv)
The Servicer is an approved
seller/servicer for Fannie Mae and an approved servicer for Freddie
Mac in good standing and is a HUD-approved non-supervised mortgagee
pursuant to Section 203 and Section 211 of the National Housing
Act, and no event has occurred, including but not limited to a
change in insurance coverage, that would make the Servicer unable
to comply with HUD, Fannie Mae or Freddie Mac eligibility
requirements;
(v)
No litigation is pending or, to the best
knowledge of the Servicer, threatened against the Servicer that
would materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Servicer to
service the Mortgage Loans or to perform any of its other
obligations hereunder in accordance with the terms
hereof;
(vi)
No consent, approval, authorization or
order of any court or governmental agency or body is required for
the execution, delivery and performance by the Servicer of, or
compliance by the Servicer with, this Agreement or the consummation
by the Servicer of the transactions contemplated by this Agreement,
except for such consents, approvals, authorizations or orders, if
any, that have been obtained prior to the Closing Date;
(vii)
The Servicer will not waive any
Prepayment Premium or part of a Prepayment Premium unless such
Prepayment Premium (a) is a Prepayment Premium in connection with a
Mortgage Loan that is related to a default or an imminent default,
(b) is a Prepayment Premium, the collection of which would be
considered “predatory” pursuant to written guidance
published or issued by any applicable federal, state or local
regulatory authority acting in its official capacity and having
jurisdiction over such matters or (c) is a Prepayment Premium, the
collection of which would violate applicable federal, state or
local law. Notwithstanding the previous sentence, if the
Servicer determines that any Prepayment Premium is not legally
enforceable under the circumstances in which the related Principal
Prepayment occurs, then the Servicer shall not be required to
attempt to collect the applicable Prepayment Premium, and shall
have no liability or obligation with respect to such Prepayment
Premium pursuant to Section 2.03(b)(ii) hereof;
(viii)
For each Mortgage Loan, the Servicer will
accurately, fully and in a timely manner report its borrower credit
files to each of the Credit Repositories; and
(ix)
The Servicer shall review the Mortgage
Loan documents in accordance with its customary servicing
procedures to verify the existence of all documents necessary to
enforce any Prepayment Premiums. If the Servicer cannot
verify the existence of such documents it shall immediately notify
the Originator, the Seller, the Trustee, the Securities
Administrator and the Depositor. Upon receipt of such notice,
the Originator shall provide the Servicer with any outstanding
documents required to verify the existence of the Prepayment
Premium. In the event the Servicer is unable to verify the
existence of Prepayment Premium, the Servicer shall not be
obligated to collect such Prepayment Premium or to pay such
Prepayment Premiums into the Collection Account.
(b)
It is understood and agreed that the
representations, warranties and covenants set forth in this Section
2.05 shall survive delivery of the Mortgage Files to the Trustee,
and shall inure to the benefit of the Seller, the Trustee, the
Securities Administrator and the Depositor. Upon discovery by
any of the Depositor, the Seller, the Servicer, the Securities
Administrator or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan, Prepayment
Premium or the interests therein of the Certificateholders, the
party discovering such breach shall give prompt written notice (but
in no event later than two Business Days following such discovery)
to the other such parties. The obligation of the Servicer set
forth in Section 2.03(b) to cure breaches (or, in the case of
Section 2.05(a)(vii), to pay the amount of the waived Prepayment
Premium) shall constitute the sole remedy against the Servicer
available to the Certificateholders, the Depositor, the Seller, the
Securities Administrator or the Trustee on behalf of the
Certificateholders respecting a breach of the representations,
warranties and covenants contained in this Section 2.05.
SECTION 2.06.
Representations and Warranties as to the
Mortgage Loans.
The Seller hereby represents, warrants
and covenants to the Trustee, the Servicer, the Securities
Administrator and the Depositor that:
(i) Pursuant to the Assignment and
Assumption Agreement, the representations and warranties in
Schedule 4 attached hereto, (other than those representations and
warranties set forth in paragraphs (a), (b), (c), (e), (g), (k),
(l), (m), (p), (x), (bb), (kk), (mm), (pp), (tt), (vv) and (zz) of
such Schedule 4) of the originator with respect to the Mortgage
Loans, which have been assigned to the Trustee hereunder, were made
as of the Closing Date.
(ii) Pursuant to the Assignment and
Assumption Agreement, the representations and warranties of the
Originator set forth in paragraphs (a), (bb) and (vv) of Schedule 4
attached hereto were made as of the Whole Loan Sale Date under the
Mortgage Loan Purchase Agreement.
(iii) With respect to the period from
such Whole Loan Sale Date to and including the Closing Date, the
Seller hereby makes the representations and warranties contained in
paragraph (a), (bb) and (vv) of Schedule 4 attached hereto to and
for the benefit of the Depositor, the Trustee, the Securities
Administrator and the Trust Fund.
(iv) Pursuant to the Assignment and
Assumption Agreement, the representations and warranties of the
Originator set forth in paragraphs (b), (c), (e), (g), (k), (l),
(m), (p), (x), (kk), (mm), (nn), (pp), (tt) and (zz) of Schedule 4
attached hereto were made as of the Servicing Transfer Date under
the Mortgage Loan Purchase Agreement.
(v) With respect to the period from such
Servicing Transfer Date to and including the Closing Date, the
Seller hereby makes the representations and warranties contained in
paragraphs (b), (c), (e), (g), (k), (l), (m), (p), (x), (kk), (mm),
(nn), (pp), (tt) and (zz) of Schedule 4 attached hereto to and for
the benefit of the Depositor, the Trustee, the Securities
Administrator and the Trust Fund.
(vi) In addition, the Seller hereby
represents and warrants that, as of the Closing Date, (i) no
Mortgage Loan is subject to the Home Ownership and Equity
Protection Act of 1994 or any applicable, similar federal, state or
local statutes or regulations related to “high cost”
mortgage loans or “predatory,” “high cost,”
“threshold” or “covered” lending (as such
terms are defined in the applicable statute or regulation), (ii) no
Mortgage Loan is (w) a “High-Cost Home Loan” as defined
in the New Jersey Home Ownership Act effective November 27, 2003,
(x) a “High-Cost Home Loan” as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004, (y) a
“High Cost Loan” or “Covered Loan” (as such
terms are defined in the then-current S&P’s LEVELS®
Glossary), or (z) governed by the Georgia Fair Lending Act, if such
Mortgage Loan was originated on or after October 1, 2002 through
March 6, 2003, (iii) each Mortgage Loan at origination complied in
all material respects with applicable local, state and federal
laws, including, but not limited to, applicable anti-predatory and
abusive lending laws, and (iv) each Mortgage Loan is a
“qualified mortgage” within the meaning of 860G(a)(3)
of the Code.
If the substance of the representations
and warranties referred to in clause (i) through (vi) above are
determined to have been breached, then the Seller will perform the
remedy specified in Section 2.03 herein.
SECTION 2.07.
Issuance of the R-I Residual
Interest.
The Trustee acknowledges the assignment
to it of the Mortgage Loans and the delivery to it or to the
Custodian on its behalf, as applicable, of the Mortgage Files,
subject to the provisions of Section 2.01 and Section 2.02,
together with the assignment to the Trustee of all other assets
included in REMIC I, receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in
exchange therefor, the Securities Administrator, pursuant to the
written request of the Depositor executed by an officer of the
Depositor, has executed, authenticated and delivered to or upon the
order of the Depositor, the R-I residual interests in an authorized
denomination. The R-I residual interest, together with the
REMIC I Regular Interests, constitute the entire beneficial
ownership interest in REMIC I.
SECTION 2.08.
Conveyance of Uncertificated REMIC
Regular Interests; Acceptance by the Trustee.
The Depositor, concurrently with the
execution and delivery hereof, does hereby transfer, assign, set
over and otherwise convey to the Trustee without recourse all the
right, title and interest of the Deposit
