<PAGE>
Exhibit 4.1
EXECUTION COPY
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
----------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2006
----------
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-BC4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
ARTICLE I
DEFINITIONS....................................................
11
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES.. 60
SECTION 2.01.
Conveyance of Mortgage
Loans........................... 60
SECTION 2.02.
Acceptance by Trustee
of the Mortgage Loans............ 63
SECTION 2.03.
Representations,
Warranties and Covenants of the
Depositor..............................................
64
SECTION 2.04.
Representations and
Warranties of the Servicer......... 67
SECTION 2.05.
Substitutions and
Repurchases of Mortgage Loans Which
Are Not "Qualified Mortgages"..........................
68
SECTION 2.06.
Authentication and
Delivery of Certificates............ 69
SECTION 2.07.
REMIC
Elections........................................ 69
SECTION 2.08.
Covenants of the
Servicer.............................. 74
SECTION 2.09.
[RESERVED].............................................
74
SECTION 2.10.
[RESERVED].............................................
74
SECTION 2.11.
Permitted Activities
of the Issuing Entity............. 74
SECTION 2.12.
Qualification of
Special Purpose Entity................ 74
SECTION 2.13.
Depositor Notification
of NIM Notes.................... 74
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS............... 75
SECTION 3.01.
Servicer to Service
Mortgage Loans..................... 75
SECTION 3.02.
Servicing and
Subservicing; Enforcement of the
Obligations of Servicer................................
76
SECTION 3.03.
Rights of the
Depositor and the Trustee in Respect of
the Servicer...........................................
77
SECTION 3.04.
Trustee to Act as
Servicer............................. 77
SECTION 3.05.
Collection of Mortgage
Loan Payments; Collection
Account; Certificate Account...........................
78
SECTION 3.06.
Collection of Taxes,
Assessments and Similar Items;
Escrow Accounts........................................
81
SECTION 3.07.
Access to Certain
Documentation and Information
Regarding the Mortgage Loans...........................
82
SECTION 3.08.
Permitted Withdrawals
from the Collection Account and
Certificate Account....................................
82
SECTION 3.09.
[RESERVED].............................................
84
SECTION 3.10.
Maintenance of Hazard
Insurance........................ 84
SECTION 3.11.
Enforcement of
Due-On-Sale Clauses; Assumption
Agreements.............................................
85
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 3.12.
Realization Upon
Defaulted Mortgage Loans;
Determination of Excess Proceeds.......................
86
SECTION 3.13.
Trustee to Cooperate;
Release of Mortgage Files........ 90
SECTION 3.14.
Documents Records and
Funds in Possession of Servicer
to be Held for the Trustee.............................
91
SECTION 3.15.
Servicing
Compensation................................. 92
SECTION 3.16.
Access to Certain
Documentation........................ 92
SECTION 3.17.
Annual Statement as to
Compliance...................... 92
SECTION 3.18.
Assessment of
Compliance; Accountant's Attestation..... 93
SECTION 3.19.
Subordination
Liens.................................... 95
SECTION 3.20.
Periodic
Filings....................................... 95
SECTION 3.21.
Indemnification by
Trustee............................. 99
SECTION 3.22.
Indemnification by
Servicer............................ 100
SECTION 3.23.
Prepayment Charge
Reporting Requirements............... 100
SECTION 3.24.
Statements to
Trustee.................................. 100
SECTION 3.25.
Further
Indemnification by the Servicer................ 101
SECTION 3.26.
Nonsolicitation........................................
101
SECTION 3.27.
Existing Servicing
Agreement........................... 101
SECTION 3.28.
High Cost Mortgage
Loans............................... 101
SECTION 3.29.
[RESERVED].............................................
101
ARTICLE IV
DISTRIBUTIONS.................................................
102
SECTION 4.01.
Advances...............................................
102
SECTION 4.02.
Reduction of Servicing
Compensation in Connection with
Prepayment Interest Shortfalls.........................
102
SECTION 4.03.
Distributions on the
REMIC Interests................... 102
SECTION 4.04.
Distributions..........................................
102
SECTION 4.05.
Monthly Statements to
Certificateholders............... 111
ARTICLE V THE
CERTIFICATES...............................................
115
SECTION 5.01.
The
Certificates....................................... 115
SECTION 5.02.
Certificate Register;
Registration of Transfer and
Exchange of Certificates...............................
116
SECTION 5.03.
Mutilated, Destroyed,
Lost or Stolen Certificates...... 120
SECTION 5.04.
Persons Deemed
Owners.................................. 120
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 5.05.
Access to List of
Certificateholders' Names and
Addresses..............................................
120
SECTION 5.06.
Book-Entry
Certificates................................ 121
SECTION 5.07.
Notices to
Depository.................................. 122
SECTION 5.08.
Definitive
Certificates................................ 122
SECTION 5.09.
Maintenance of Office
or Agency........................ 122
ARTICLE VI THE DEPOSITOR AND THE
SERVICER................................ 122
SECTION 6.01.
Respective Liabilities
of the Depositor and the
Servicer...............................................
122
SECTION 6.02.
Merger or
Consolidation of the Depositor or the
Servicer...............................................
123
SECTION 6.03.
Limitation on
Liability of the Depositor, the Servicer
and Others.............................................
123
SECTION 6.04.
Limitation on
Resignation of Servicer.................. 123
SECTION 6.05.
Errors and Omissions
Insurance; Fidelity Bonds......... 124
ARTICLE VII DEFAULT; TERMINATION OF
SERVICER............................. 124
SECTION 7.01.
Events of
Default...................................... 124
SECTION 7.02.
[RESERVED].............................................
126
SECTION 7.03.
Trustee to Act;
Appointment of Successor............... 126
SECTION 7.04.
Notification to
Certificateholders..................... 127
ARTICLE VIII CONCERNING THE
TRUSTEE...................................... 127
SECTION 8.01.
Duties of
Trustee...................................... 127
SECTION 8.02.
Certain Matters
Affecting the Trustee.................. 128
SECTION 8.03.
Trustee Not Liable for
Mortgage Loans.................. 130
SECTION 8.04.
Trustee May Own
Certificates........................... 130
SECTION 8.05.
Trustee's
Fees......................................... 130
SECTION 8.06.
Indemnification of
Trustee; Expenses................... 130
SECTION 8.07.
Eligibility
Requirements for Trustee................... 131
SECTION 8.08.
Resignation and
Removal of Trustee..................... 132
SECTION 8.09.
Successor
Trustee...................................... 132
SECTION 8.10.
Merger or
Consolidation of Trustee..................... 133
SECTION 8.11.
Appointment of
Co-Trustee or Separate Trustee.......... 133
SECTION 8.12.
Tax
Matters............................................ 134
ARTICLE IX
TERMINATION...................................................
136
SECTION 9.01.
Termination upon
Liquidation or Repurchase of all
Mortgage Loans.........................................
136
SECTION 9.02.
Final Distribution on
the Certificates................. 138
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 9.03.
Additional Termination
Requirements.................... 139
ARTICLE X MISCELLANEOUS
PROVISIONS....................................... 140
SECTION 10.01.
Amendment..............................................
140
SECTION 10.02.
Counterparts...........................................
142
SECTION 10.03.
Governing Law..........................................
142
SECTION 10.04.
Intention of Parties...................................
142
SECTION 10.05.
Notices................................................
142
SECTION 10.06.
Severability of Provisions.............................
143
SECTION 10.07.
Assignment.............................................
143
SECTION 10.08.
Limitation on Rights of Certificateholders.............
144
SECTION 10.09.
Inspection and Audit Rights............................
144
SECTION 10.10.
Certificates Nonassessable and Fully Paid..............
144
SECTION 10.11.
[RESERVED].............................................
145
SECTION 10.12.
[RESERVED].............................................
145
SECTION 10.13.
Third Party Rights.....................................
145
SECTION 10.14.
Assignment; Sales; Advance Facilities..................
145
</TABLE>
iv
<PAGE>
EXHIBIT A FORMS
OF OFFERED CERTIFICATES
EXHIBIT B-1 MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
EXHIBIT B-2 MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
EXHIBIT B-3 MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
EXHIBIT C
[RESERVED]
EXHIBIT D FORM
OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM
OF TRANSFEROR CERTIFICATE FOR CLASS P AND CLASS C CERTIFICATES
EXHIBIT G FORM
OF INVESTMENT LETTER
EXHIBIT H FORM
OF RULE 144A INVESTMENT LETTER
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
EXHIBIT J FORM
OF POWER OF ATTORNEY
EXHIBIT K FORM
OF BACK-UP CERTIFICATION OF TRUSTEE
EXHIBIT L FORM
OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M
[RESERVED]
EXHIBIT N FORM
OF AUCTION PROCEDURES
EXHIBIT O-1 FORM OF CLASS A-1 CAP CONTRACT
EXHIBIT O-2 FORM OF CLASS A-2 CAP CONTRACT
EXHIBIT O-3 FORM OF SUBORDINATE CERTIFICATE CONTRACT
EXHIBIT P-1 ONE MONTH LIBOR CAP TABLE - A-1 CAP CONTRACT
EXHIBIT P-2 ONE MONTH LIBOR CAP TABLE - A-2 CAP CONTRACT
EXHIBIT P-3 ONE MONTH LIBOR CAP TABLE - SUBORDINATE CERTIFICATE CAP
CONTRACT
EXHIBIT Q FORM
OF ASSESSMENT OF COMPLIANCE
EXHIBIT R
SERVICING CRITERIA TO BE ADDRESSED
EXHIBIT S FORM
OF SARBANES-OXLEY CERTIFICATION
EXHIBIT T FORM
OF ITEM 1123 CERTIFICATION OF SERVICER
EXHIBIT U FORM
OF SWAP AGREEMENT
SCHEDULE V ITEMS FOR
FORM 8-K
SCHEDULE W ITEMS FOR
FORM 10-D
SCHEDULE X ITEMS FOR
FORM 10-K
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of September 1, 2006
(the
"Agreement"), among MERRILL LYNCH MORTGAGE INVESTORS, INC., a
Delaware
corporation, as depositor (the "Depositor"), WILSHIRE CREDIT
CORPORATION, a
Nevada corporation, as servicer (the "Servicer"), and U.S. BANK
NATIONAL
ASSOCIATION, a national banking association, as trustee (the
"Trustee").
The
Depositor is the owner of the Trust Fund that is hereby conveyed to
the
Trustee in return for the Certificates. The Trust Fund for federal
income tax
purposes will consist of (i) three real estate mortgage investment
conduits in a
tiered structure, (ii) the right to receive the payments
distributable to the
Class P Certificates pursuant to Section 4.04(b)(i) hereof, (iii)
each Cap
Contract and the Cap Contract Account, (iv) the grantor trusts
described in
Section 2.07 hereof and (v) the Supplemental Interest Trust, which
in turn will
hold the Swap Agreement. The SWAP REMIC will consist of all of the
assets
constituting the Trust Fund (other than the assets described in
clauses (ii),
(iii), (iv) and (v) above, other than the SWAP REMIC Regular
Interests and other
than the Lower Tier REMIC Regular Interests) and will be evidenced
by the SWAP
REMIC Regular Interests (which will be uncertificated and will
represent the
"regular interests" in the SWAP REMIC) and the Class SWR Interest
as the single
"residual interest" in the SWAP REMIC. The Lower Tier REMIC will
consist of SWAP
REMIC Regular Interests and will be evidenced by the Lower Tier
REMIC Regular
Interests (which will be uncertificated and will represent the
"regular
interests" in the Lower Tier REMIC) and the Class LTR Interest as
the single
"residual interest" in the Lower Tier REMIC. The Trustee will hold
the Lower
Tier REMIC Regular Interests. The Upper Tier REMIC will consist of
the Lower
Tier REMIC Regular Interests and will be evidenced by the REMIC
Regular
Interests (which will represent the "regular interests" in the
Upper Tier REMIC)
and the Residual Interest as the single "residual interest" in the
Upper Tier
REMIC. The Class R Certificate will represent beneficial ownership
of the Class
SWR Interest, the Class LTR Interest and the Residual Interest. The
"latest
possible maturity date" for federal income tax purposes of all
interests created
hereby will be the Latest Possible Maturity Date.
All
covenants and agreements made by the Sponsor in the Sale Agreement
and
by the Depositor and the Trustee herein with respect to the
Mortgage Loans and
the other property constituting the Trust Fund are for the benefit
of the
Holders from time to time of the Certificates.
THE SWAP REMIC
The following table sets forth the designations, initial principal
balances and
interest rates for each interest in the SWAP REMIC:
<TABLE>
<CAPTION>
Initial
Principal
Interest
Class
Balance
Rate
----- ---------------
--------
<S>
<C>
<C>
1-SW1 $86,497,363.547
(1)
1-SW1A $
9,138,567.494 (2)
1-SW1B $
9,138,567.494 (3)
1-SW2A $
9,952,405.630 (2)
1-SW2B $
9,952,405.630 (3)
1-SW3A
$10,653,301.220 (2)
1-SW3B
$10,653,301.220 (3)
1-SW4A
$11,158,936.983 (2)
1-SW4B
$11,158,936.983 (3)
1-SW5A
$11,361,862.267 (2)
1-SW5B
$11,361,862.267 (3)
1-SW6A
$11,148,663.353 (2)
</TABLE>
1
<PAGE>
<TABLE>
<S>
<C>
<C>
1-SW6B
$11,148,663.353 (3)
1-SW7A
$10,718,138.050 (2)
1-SW7B
$10,718,138.050 (3)
1-SW8A
$10,081,358.688 (2)
1-SW8B
$10,081,358.688 (3)
1-SW9A $
9,451,830.285 (2)
1-SW9B $
9,451,830.285 (3)
1-SW10A $
8,742,067.013 (2)
1-SW10B $
8,742,067.013 (3)
1-SW11A $
8,069,933.408 (2)
1-SW11B $
8,069,933.408 (3)
1-SW12A $
7,500,574.498 (2)
1-SW12B $
7,500,574.498 (3)
1-SW13A $
7,066,550.651 (2)
1-SW13B $
7,066,550.651 (3)
1-SW14A $
6,981,383.080 (2)
1-SW14B $
6,981,383.080 (3)
1-SW15A $
7,543,289.397 (2)
1-SW15B $
7,543,289.397 (3)
1-SW16A $
8,918,756.995 (2)
1-SW16B $
8,918,756.995 (3)
1-SW17A
$10,465,919.975 (2)
1-SW17B
$10,465,919.975 (3)
1-SW18A
$10,291,956.481 (2)
1-SW18B
$10,291,956.481 (3)
1-SW19A $
8,337,690.561 (2)
1-SW19B $
8,337,690.561 (3)
1-SW20A $
6,639,792.912 (2)
1-SW20B $
6,639,792.912 (3)
1-SW21A $
5,435,214.685 (2)
1-SW21B $
5,435,214.685 (3)
1-SW22A $
2,105,538.887 (2)
1-SW22B $
2,105,538.887 (3)
1-SW23A $
2,911,240.391 (2)
1-SW23B $
2,911,240.391 (3)
1-SW24A $
3,092,567.154 (2)
1-SW24B $
3,092,567.154 (3)
1-SW25A $
2,902,816.459 (2)
1-SW25B $
2,902,816.459 (3)
1-SW26A $
2,776,346.728 (2)
1-SW26B $
2,776,346.728 (3)
1-SW27A $
2,741,480.636 (2)
1-SW27B $
2,741,480.636 (3)
1-SW28A $
2,693,257.128 (2)
1-SW28B $ 2,693,257.128 (3)
1-SW29A $
2,521,655.773 (2)
1-SW29B $
2,521,655.773 (3)
1-SW30A $
2,230,501.071 (2)
</TABLE>
2
<PAGE>
<TABLE>
<S>
<C>
<C>
1-SW30B $
2,230,501.071 (3)
1-SW31A $
1,947,920.481 (2)
1-SW31B $
1,947,920.481 (3)
1-SW32A $
1,728,087.260 (2)
1-SW32B $
1,728,087.260 (3)
1-SW33A $
1,571,969.872 (2)
1-SW33B $
1,571,969.872 (3)
1-SW34A $
1,440,372.859 (2)
1-SW34B $
1,440,372.859 (3)
1-SW35A $
1,319,328.420 (2)
1-SW35B $
1,319,328.420 (3)
1-SW36A $
1,210,869.340 (2)
1-SW36B $
1,210,869.340 (3)
1-SW37A $
1,114,940.250 (2)
1-SW37B $
1,114,940.250 (3)
1-SW38A $
1,031,220.416 (2)
1-SW38B $
1,031,220.416 (3)
1-SW39A $
957,049.169
(2)
1-SW39B $
957,049.169
(3)
1-SW40A $
890,955.787
(2)
1-SW40B $
890,955.787
(3)
1-SW41A $
834,990.556
(2)
1-SW41B $
834,990.556
(3)
1-SW42A $
774,560.926
(2)
1-SW42B $
774,560.926
(3)
1-SW43A $
738,327.542
(2)
1-SW43B $
738,327.542
(3)
1-SW44A
$14,858,361.862 (2)
1-SW44B
$14,858,361.862 (3)
2-SW2 $79,090,348.653
(4)
2-SW1A $
8,356,006.006 (5)
2-SW1B $
8,356,006.006 (6)
2-SW2A $
9,100,152.870 (5)
2-SW2B $
9,100,152.870 (6)
2-SW3A $
9,741,028.780 (5)
2-SW3B $
9,741,028.780 (6)
2-SW4A
$10,203,365.517 (5)
2-SW4B $10,203,365.517 (6)
2-SW5A
$10,388,913.733 (5)
2-SW5B
$10,388,913.733 (6)
2-SW6A
$10,193,971.647 (5)
2-SW6B
$10,193,971.647 (6)
2-SW7A $
9,800,313.450 (5)
2-SW7B $
9,800,313.450 (6)
2-SW8A $
9,218,063.312 (5)
2-SW8B $
9,218,063.312 (6)
2-SW9A $
8,642,443.215 (5)
2-SW9B $
8,642,443.215 (6)
</TABLE>
3
<PAGE>
<TABLE>
<S>
<C>
<C>
2-SW10A $
7,993,458.987 (5)
2-SW10B $
7,993,458.987 (6)
2-SW11A $
7,378,882.092 (5)
2-SW11B $
7,378,882.092 (6)
2-SW12A $
6,858,279.002 (5)
2-SW12B $
6,858,279.002 (6)
2-SW13A $
6,461,421.849 (5)
2-SW13B $
6,461,421.849 (6)
2-SW14A $ 6,383,547.420 (5)
2-SW14B $
6,383,547.420 (6)
2-SW15A $
6,897,336.103 (5)
2-SW15B $
6,897,336.103 (6)
2-SW16A $
8,155,018.505 (5)
2-SW16B $
8,155,018.505 (6)
2-SW17A $
9,569,693.525 (5)
2-SW17B $
9,569,693.525 (6)
2-SW18A $
9,410,627.019 (5)
2-SW18B $
9,410,627.019 (6)
2-SW19A $
7,623,710.439 (5)
2-SW19B $
7,623,710.439 (6)
2-SW20A $
6,071,208.588 (5)
2-SW20B $
6,071,208.588 (6)
2-SW21A $
4,969,781.815 (5)
2-SW21B $
4,969,781.815 (6)
2-SW22A $
1,925,235.613 (5)
2-SW22B $
1,925,235.613 (6)
2-SW23A $
2,661,942.609 (5)
2-SW23B $
2,661,942.609 (6)
2-SW24A $
2,827,741.846 (5)
2-SW24B $
2,827,741.846 (6)
2-SW25A $
2,654,240.041 (5)
2-SW25B $
2,654,240.041 (6)
2-SW26A $
2,538,600.272 (5)
2-SW26B $
2,538,600.272 (6)
2-SW27A $
2,506,719.864 (5)
2-SW27B $
2,506,719.864 (6)
2-SW28A $
2,462,625.872 (5)
2-SW28B $
2,462,625.872 (6)
2-SW29A $
2,305,719.227 (5)
2-SW29B $
2,305,719.227 (6)
2-SW30A $
2,039,496.929 (5)
2-SW30B $
2,039,496.929 (6)
2-SW31A $
1,781,114.519 (5)
2-SW31B $
1,781,114.519 (6)
2-SW32A $
1,580,106.240 (5)
2-SW32B $
1,580,106.240 (6)
2-SW33A $
1,437,357.628 (5)
2-SW33B $
1,437,357.628 (6)
</TABLE>
4
<PAGE>
<TABLE>
<S>
<C>
<C>
2-SW34A $
1,317,029.641 (5)
2-SW34B $
1,317,029.641 (6)
2-SW35A $
1,206,350.580 (5)
2-SW35B $
1,206,350.580 (6)
2-SW36A $
1,107,179.160 (5)
2-SW36B $
1,107,179.160 (6)
2-SW37A $
1,019,464.750 (5)
2-SW37B $
1,019,464.750 (6)
2-SW38A $
942,914.084
(5)
2-SW38B $
942,914.084
(6)
2-SW39A $
875,094.331
(5)
2-SW39B $
875,094.331
(6)
2-SW40A $
814,660.713
(5)
2-SW40B $
814,660.713
(6)
2-SW41A $
763,487.944
(5)
2-SW41B $
763,487.944
(6)
2-SW42A $
708,233.074
(5)
2-SW42B $
708,233.074
(6)
2-SW43A $
675,102.458
(5)
2-SW43B $
675,102.458
(6)
2-SW44A
$13,585,998.138 (5)
2-SW44B
$13,585,998.138 (6)
SWR
(7)
(7)
</TABLE>
(1) The interest rate
on the Class 1-SW1 Interest shall be a per annum rate
equal to the Group One Net WAC.
(2) For any
Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the
designation
"A"
shall be a per annum rate equal to 2 times the Group One Net
WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for
such
Distribution Date.
(3) For any
Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the
designation
"B"
shall be a per annum rate equal to the greater of (x) the excess,
if
any,
of (i) 2 times the Group One Net WAC over (ii) 2 times the REMIC
Swap
Rate for such
Distribution Date and (y) 0.00%.
(4) The interest rate
on the Class 2-SW2 Interest shall be a per annum rate
equal to the Group Two Net WAC.
(5) For any
Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the
designation
"A"
shall be a per annum rate equal to 2 times the Group Two Net
WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for
such
Distribution Date.
(6) For any
Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the
designation
"B"
shall be a per annum rate equal to the greater of (x) the excess,
if
any,
of (i) 2 times the Group Two Net WAC over (ii) 2 times the REMIC
Swap
Rate
for such Distribution Date and (y) 0.00%.
(7) The Class SWR
Interest shall have no principal amount and shall bear no
interest.
THE LOWER TIER REMIC
5
<PAGE>
The
following table sets forth the designations, initial principal
balances, interest rates, Corresponding Classes of Certificates and
related
Mortgage Group for each interest in the Lower Tier REMIC:
<TABLE>
<CAPTION>
Class(es) of
Corresponding
Initial
Certificates
Principal
Interest or Related
Class Balance
Rate
Mortgage Group
-----
---------
--------
--------------
<S> <C>
<C>
<C>
LTA-1
(1)
(8)
A-1, R
LTA-2A (1)
(8)
A-2A
LTA-2B (1)
(8)
A-2B
LTA-2C (1)
(8)
A-2C
LTA-2D (1)
(8)
A-2D
LTM-1
(1)
(8)
M-1
LTM-2
(1)
(8)
M-2
LTM-3
(1)
(8)
M-3
LTM-4
(1)
(8)
M-4
LTM-5
(1)
(8)
M-5
LTM-6
(1)
(8)
M-6
LTB-1
(1)
(8)
B-1
LTB-2
(1)
(8)
B-2
LTB-3
(1)
(8)
B-3
LTIX
(2)
(8)
N/A
LTII1A (3)
(8)
Group One
LTII1B (4)
(9)
Group One
LTII2A (5)
(8)
Group Two
LTII2B (6)
(10)
Group Two
LTIIX
(7)
(8)
N/A
LT-IO (11)
(11)
N/A
LTR
(12) (12)
N/A
</TABLE>
(1) The initial
principal balance of each of these Lower Tier REMIC Regular
Interests shall equal 1/4 of the initial Certificate Principal
Balance of
its
Corresponding Certificates.
(2) The initial
principal balance of the Class LTIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance
of the
Mortgage Loans over (ii) the initial principal balance of the Lower
Tier
REMIC I Marker Interests.
(3) The initial
principal balance of the Class LTII1A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal
Balance of
the
Group One Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group One.
(4) The initial
principal balance of the Class LTII1B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group
One
Mortgage Loans.
(5) The initial
principal balance of the Class LTII2A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal
Balance of
the
Group Two Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group Two.
(6) The initial
principal balance of the Class LTII2B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group
Two
Mortgage Loans.
6
<PAGE>
(7) The initial
principal balance of the Class LTIIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance
of the
Mortgage Loans over (ii) the initial principal balance of the Lower
Tier
REMIC II Marker Interests.
(8) For each
Distribution Date, the interest rate for each of the Lower Tier
REMIC Regular Interests (other than the Class LTII1B, the Class
LTII2B and
the
Class LT-IO Interests) shall be a per annum rate (but not less
than
zero) equal to the product of (i) the weighted average of the
interest
rates on the SWAP REMIC Regular Interests for such Distribution
Date and
(ii)
a fraction the numerator of which is 30 and the denominator of
which
is
the actual number of days in the Accrual Period for the LIBOR
Certificates, provided however, that for any Distribution Date on
which the
Class LT-IO Interest is entitled to a portion of interest accruals
on a
SWAP
REMIC Regular Interest ending with a designation "A" as described
in
footnote 11 below, such weighted average shall be computed by
first
subjecting the rate on such SWAP REMIC Regular Interest to a cap
equal to
Swap
LIBOR for such Distribution Date.
(9) For each
Distribution Date, the interest rate for the Class LTII1B
Interest
shall be a per annum rate equal to the product of (i) the weighted
average
of
the interest rates on the SWAP REMIC Regular Interests beginning
with
the
designation "1" for such Distribution Date and (ii) a fraction
the
numerator of which is 30 and the denominator of which is the actual
number
of
days in the Accrual Period for the LIBOR Certificates,
provided,
however, that for any Distribution Date on which the Class LT-IO
Interest
is
entitled to a portion of interest accruals on a SWAP REMIC
Regular
Interest ending with a designation "A" as described in footnote 11
below,
such
weighted average shall be computed by first subjecting the rate
on
such
SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for
such
Distribution Date.
(10) For each Distribution Date, the interest rate for the Class
LTII2B Interest
shall be a per annum rate equal to the product of (i) the weighted
average
of
the interest rates on the SWAP REMIC Regular Interests beginning
with
the
designation "2" for such Distribution Date and (ii) a fraction
the
numerator of which is 30 and the denominator of which is the actual
number
of
days in the Accrual Period for the LIBOR Certificates,
provided,
however, that for any Distribution Date on which the Class LT-IO
Interest
is
entitled to a portion of interest accruals on a SWAP REMIC
Regular
Interest ending with a designation "A" as described in footnote 11
below,
such
weighted average shall be computed by first subjecting the rate
on
such
SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for
such
Distribution Date.
(11) The Class LT-IO Interest is an interest-only class that does
not have a
principal balance. For only those Distribution Dates listed in the
first
column of the table below, the Class LT-IO Interest shall be
entitled to
interest accrued on the SWAP REMIC Regular Interest listed in the
second
column below at a per annum rate equal to the excess, if any, of
(i) the
interest rate for such SWAP REMIC Regular Interest for such
Distribution
Date
over (ii) Swap LIBOR for such Distribution Date.
<TABLE>
<CAPTION>
SWAP REMIC
Distribution Date Regular Interest
----------------- ----------------
<S>
<C>
7
Class 1-SW1A
Class 2-SW1A
7-8
Class 1-SW2A
Class 2-SW2A
7-9
Class 1-SW3A
Class 2-SW3A
7-10
Class 1-SW4A
Class 2-SW4A
7-11
Class 1-SW5A
Class 2-SW5A
7-12
Class 1-SW6A
Class 2-SW6A
7-13
Class 1-SW7A
Class 2-SW7A
7-14
Class 1-SW8A
</TABLE>
7
<PAGE>
<TABLE>
<S>
<C>
Class 2-SW8A
7-15
Class 1-SW9A
Class 2-SW9A
7-16
Class 1-SW10A
Class 2-SW10A
7-17
Class 1-SW11A
Class 2-SW11A
7-18
Class 1-SW12A
Class 2-SW12A
7-19
Class 1-SW13A
Class 2-SW13A
7-20
Class 1-SW14A
Class 2-SW14A
7-21
Class 1-SW15A
Class 2-SW15A
7-22
Class 1-SW16A
Class 2-SW16A
7-23
Class 1-SW17A
Class 2-SW17A
7-24
Class 1-SW18A
Class 2-SW18A
7-25
Class 1-SW19A
Class 2-SW19A
7-26
Class 1-SW20A
Class 2-SW20A
7-27
Class 1-SW21A
Class 2-SW21A
7-28
Class 1-SW22A
Class 2-SW22A
7-30
Class 1-SW23A
Class 2-SW23A
7-31
Class 1-SW24A
Class 2-SW24A
7-32
Class 1-SW25A
Class 2-SW25A
7-33
Class 1-SW26A
Class 2-SW26A
7-34
Class 1-SW27A
Class 2-SW27A
7-35
Class 1-SW28A
Class 2-SW28A
7-36
Class 1-SW29A
Class 2-SW29A
7-37
Class 1-SW30A
Class 2-SW30A
7-38
Class 1-SW31A
Class 2-SW31A
7-39
Class 1-SW32A
Class 2-SW32A
7-40
Class 1-SW33A
Class 2-SW33A
7-41
Class 1-SW34A
Class 2-SW34A
7-42
Class 1-SW35A
Class 2-SW35A
7-43
Class 1-SW36A
</TABLE>
8
<PAGE>
<TABLE>
<S>
<C>
Class 2-SW36A
7-44
Class 1-SW37A
Class 2-SW37A
7-45
Class 1-SW38A
Class 2-SW38A
7-46
Class 1-SW39A
Class 2-SW39A
7-47
Class 1-SW40A
Class 2-SW40A
7-48
Class 1-SW41A
Class 2-SW41A
7-49
Class 1-SW42A
Class 2-SW42A
7-50
Class 1-SW43A
Class 2-SW43A
7-51
Class 1-SW44A
Class 2-SW44A
</TABLE>
(12) The Class LTR Interest shall have no principal amount and
shall bear no
interest.
UPPER TIER REMIC
The following table sets forth the designation, the initial
principal balances,
the interest rates and Classes of Related Certificates for each of
the interests
in the Upper Tier REMIC.
<TABLE>
<CAPTION>
Initial
Principal
Class of Related
Class
Balance
Rate
Certificates
-----
--------- ----
----------------
<S>
<C>
<C>
<C>
UTA-1
(1) (2)
A-1
UTA-2A
(1) (2)
A-2A
UTA-2B
(1) (2)
A-2B
UTA-2C
(1) (2)
A-2C
UTA-2D
(1) (2)
A-2D
UTM-1
(1) (2)
M-1
UTM-2
(1)
(2)
M-2
UTM-3
(1) (2)
M-3
UTM-4
(1) (2)
M-4
UTM-5
(1) (2)
M-5
UTM-6
(1) (2)
M-6
UTB-1
(1) (2)
B-1
UTB-2
(1) (2)
B-2
UTB-3
(1) (2)
B-3
Uncertificated Class C Interest (3)
(3)
N/A
UT-IO
(4) (4)
N/A
Residual Interest
(1) (2)
R
</TABLE>
(1) The initial
principal balance of each of these REMIC Regular Interests
shall equal the initial principal balance of its Class of
Related
Certificates.
(2) The interest rates
on each of these REMIC Regular Interests shall be an
annual rate equal to the Pass-Through Rate for the Class of
Related
Certificates, provided that in lieu of the applicable Available
Funds Caps
set
forth in the definition of an applicable Pass-Through Rate, the
applicable Upper Tier REMIC Net WAC Cap shall be used.
9
<PAGE>
(3) The Uncertificated
Class C Interest shall have an initial principal balance
equal to the initial Overcollateralization Amount. The
Uncertificated Class
C
Interest shall accrue interest on a notional balance set forth in
the
definition of Class C Current Interest at a rate equal to the Class
C
Distributable Interest Rate. The Uncertificated Class C Interest
shall be
represented by the Class C Certificates.
(4) The Class UT-IO
Interest shall have no principal amount and will not have
an
interest rate, but will be entitled to 100% of the interest accrued
with
respect to the Class LT-IO Interest. The Class UT-IO Interest shall
be
represented by the Class C Certificates.
THE CERTIFICATES
The following table sets forth the Class designation, interest rate
and initial
Class principal amount for each Class of Certificates comprising
interests in
the Trust Fund.
<TABLE>
<CAPTION>
Initial Class
Class Principal
Amount Interest
Rate
-----
----------------
-------------
<S> <C>
<C>
A-1
(1)
(2)
A-2A
(1)
(2)
A-2B
(1)
(2)
A-2C
(1)
(2)
A-2D
(1)
(2)
M-1
(1)
(2)
M-2
(1)
(2)
M-3
(1)
(2)
M-4
(1)
(2)
M-5
(1)
(2)
M-6
(1)
(2)
B-1
(1)
(2)
B-2
(1)
(2)
B-3
(1)
(2)
C
(3)
(3)
P
(4)
(4)
R
(1)
(2)(5)
</TABLE>
(1) Each of these
Classes of Certificates shall have initial principal balances
as
set forth in Section 5.01 hereof.
(2) Each of these
Classes of Certificates shall bear interest at a per annum
rate
equal to the Pass-Through Rate for such Certificates set forth in
the
definitions herein.
(3) For federal income
tax purposes, the Class C Certificate shall represent
(i)
the right to receive all distributions with respect to the
REMIC
Regular Interests represented by the Uncertificated Class C
Interest and
the
Class UT-IO Interest and (ii) certain rights and obligations
with
respect to notional principal contracts as described in Section
2.07.
(4) The Class P
Certificates shall be entitled to the amounts distributable
pursuant to Section 4.04(b) hereof and shall not represent a REMIC
regular
interest.
(5) The Class R
Interest represents ownership of the Class SWR Interest, the
Class LTR Interest and the Residual Interest.
10
<PAGE>
In
consideration of the mutual agreements herein contained, the
Depositor,
the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless
the context otherwise requires, shall have the following
meanings:
Accepted Servicing Practices: The Servicer's normal servicing
practices,
which will conform to the mortgage servicing practices of prudent
mortgage
lending institutions that service for their own account mortgage
loans of the
same type as the Mortgage Loans in the jurisdictions in which the
related
Mortgaged Properties are located.
Accountant's Attestation: As defined in Section 3.18 hereof.
Accrual Period: With respect to each Class of the LIBOR
Certificates, their
Corresponding REMIC Regular Interests and the Lower Tier REMIC
Interests and any
Distribution Date, the period commencing on the immediately
preceding
Distribution Date (or, in the case of the first Distribution Date,
the Closing
Date) and ending on the day immediately preceding such Distribution
Date, and
with respect to the SWAP REMIC Regular Interests and any
Distribution Date, the
calendar month immediately preceding the month in which such
Distribution Date
occurs. All calculations of interest on each Class of the LIBOR
Certificates,
their Corresponding REMIC Regular Interests and the Lower Tier
REMIC Interests
will be made on the basis of the actual number of days elapsed in
the related
Accrual Period and a 360 day year, and all calculations of interest
on the SWAP
REMIC Regular Interests will be made on the basis of a 360-day year
consisting
of twelve 30-day months.
Additional Form 10-D Disclosure: As defined in Section 3.20
hereof.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage
Loan Schedule as having a Mortgage Rate that is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each
date on
which the related Mortgage Rate is subject to adjustment, as
provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the
Servicer
with respect to any Distribution Date pursuant to Section 4.01, the
amount of
any such advances being equal to the sum of the aggregate amount of
all payments
of principal and interest (or, with respect to interest-only
Mortgage Loans,
payments of scheduled interest) (net of the Servicing Fee) on the
Mortgage Loans
that were due during the applicable Due Period and not received as
of the close
of business on the related Determination Date, except as provided
in Section
4.01 hereof, less the aggregate amount of any such Delinquent
payments that the
Servicer has determined would constitute a Non-Recoverable Advance
were an
advance to be made with respect thereto; provided, however, that
with respect to
(i) any Mortgage Loan which is not a first lien Mortgage Loan that
is 150 days
delinquent or more (whether or not the Mortgage Loan has been
converted to an
REO Property), (ii) shortfalls due to bankruptcy proceedings or the
application
of the Relief Act or similar law and (iii) the principal portion of
any amount
paid on a Balloon Loan, there will be no obligation to make
advances and,
provided further, however, that with respect to any Mortgage Loan
that has been
converted to an REO Property which is less than 150 days
delinquent, the
obligation to make Advances shall only be to payments of interest
(subject to
the exceptions described above and net of the related Servicing
Fees), to be
calculated after taking into account rental income.
11
<PAGE>
Advance Facility: A financing or other facility as described in
Section
10.14(a).
Advance Facility Notice: As defined in Section 10.14(b).
Advance Financing Person: As defined in Section 10.14(a).
Advance Reimbursement Amounts: As defined in Section 10.14(a).
Affiliate: With respect to any specified Person, any other
Person
controlling, controlled by or under common control with such
Person. For the
purposes of this definition, "control" means the power to direct
the management
and policies of a Person, directly or indirectly, whether through
ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of
determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A
Certificate
Principal Balance, the Class A-2B Certificate Principal Balance,
the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal
Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate
Principal
Balance, the Class M-2 Certificate Principal Balance, the Class M-3
Certificate
Principal Balance, the Class M-4 Certificate Principal Balance, the
Class M-5
Certificate Principal Balance, the Class M-6 Certificate Principal
Balance, the
Class B-1 Certificate Principal Balance, the Class B-2 Certificate
Principal
Balance, and the Class B-3 Certificate Principal Balance, in each
case as of
such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all
amendments
or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution
Date, the
amount, if any, by which, the sum of (i) the Aggregate Certificate
Principal
Balance and (ii) the Class C Certificate Principal Balance after
distributions
of principal on such Distribution Date exceeds the aggregate Stated
Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of
which were
used to purchase the related Mortgaged Property, the "Appraised
Value" of a
Mortgaged Property is the lesser of (1) the appraised value based
on an
appraisal made for the Sponsor by an independent fee appraiser at
the time of
the origination of the related Mortgage Loan, and (2) the sales
price of such
Mortgaged Property at such time of origination. With respect to a
Mortgage Loan
the proceeds of which were used to refinance an existing mortgage
loan, the
"Appraised Value" is the appraised value of the Mortgaged Property
based upon
the appraisal obtained at the time of refinancing.
Assessment of Compliance: As defined in Section 3.18 hereof.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer
or equivalent instrument, in recordable form, sufficient under the
laws of the
jurisdiction where the related Mortgaged Property is located to
reflect of
record the sale and assignment of the Mortgage Loan to the Trustee,
which
assignment, notice of transfer or equivalent instrument may, if
permitted by
law, be in the form of one or more blanket assignments covering
Mortgages
secured by Mortgaged Properties located in the same county.
Auction Termination: The termination of the Trust Fund hereunder
pursuant
to Section 9.01(a)(i) hereof.
12
<PAGE>
Auction Termination Amount: The purchase price received by the
Trustee in
connection with any purchase of all of the Mortgage Loans pursuant
to Section
9.01(a) (i).
Auction Termination Date: The first Distribution Date on which
the
aggregate Stated Principal Balance of the Mortgage Loans (or if
such Mortgage
Loan is an REO Property, the fair market value of such REO
Property) is equal to
or less than 10% of the aggregate Stated Principal Balance of the
Mortgage Loans
as of the Cut-off Date.
Auction Termination Price: In the case of an Auction Termination,
as of the
initial Distribution Date on or after the Auction Termination Date,
an amount
equal to the sum of (a) the aggregate Stated Principal Balance of
each Mortgage
Loan (other than any Mortgage Loan that has become an REO
Property), plus
accrued interest thereon at the applicable Mortgage Rate through
the Due Date
preceding distribution of the proceeds, (b) the fair market value
of any REO
Property, plus accrued interest thereon at the applicable Mortgage
Rate, (c) any
unreimbursed fees, indemnification amounts, out-of-pocket costs and
expenses
owed to the Trustee or the Servicer (including any costs and
expenses incurred
in connection with the Auction Termination) and any unreimbursed
Servicing Fees,
Advances and Servicing Advances, (d) all interest accrued on, as
well as amounts
necessary to retire, the principal balance of any NIM Notes, (e)
any costs and
damages incurred by the Issuing Entity (or the Trustee on behalf of
the Issuing
Entity) in connection with any violation of any anti-predatory or
anti-abusive
lending laws and (f) any Swap Termination Payment, other than a
Defaulted Swap
Termination Payment, owed to the Swap Counterparty; such Swap
Termination
Payment shall include any payment resulting from the termination of
the Swap
Agreement after the Auction Termination Date but prior to the final
distribution
to the Certificates.
Available Funds Cap: Any of the Class A-1 Available Funds Cap, the
Class
A-2 Available Funds Cap, and the Subordinate Certificate Available
Funds Cap.
Balloon Loan: A Mortgage Loan having an original term to stated
maturity of
approximately 15 or 30 years which provides for level monthly
payments of
principal and interest based on a 30- or 40-year amortization
schedule, with a
balloon payment of the remaining outstanding principal balance due
on such
Mortgage Loan at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be
registered
in the name of the Depository or its nominee, the ownership of
which is
reflected on the books of the Depository or on the books of a
Person maintaining
an account with the Depository (directly, as a "Depository
Participant", or
indirectly, as an indirect participant in accordance with the rules
of the
Depository and as described in Section 5.06). As of the Closing
Date, each of
the Class A, Class M and Class B Certificates constitute a Class of
Book-Entry
Certificates.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2)
a day
on which banking institutions in the State of Oregon or Minnesota
or in the City
of New York, New York are authorized or obligated by law or
executive order to
be closed.
Cap
Contract: Any of the Class A-1 Cap Contract, the Class A-2 Cap
Contract
or the Subordinate Certificate Cap Contract.
Cap
Contract Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 4.04(j) in the name of the
Trustee for the
benefit of the Issuing Entity and designated "U.S. Bank National
Association, as
trustee, in trust for registered holders of Specialty Underwriting
and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates,
Series
2006-BC4." Funds in the
13
<PAGE>
Cap Contract Account shall be held in trust for the Issuing Entity
for the uses
and purposes set forth in this Agreement.
Cap
Contract Counterparty: Bear Stearns Financial Products, and any
successor thereto.
Cap
Contract Notional Balance: Any of the Class A-1 Cap Contract
Notional
Balance, the Class A-2 Cap Contract Notional Balance or the
Subordinate
Certificate Cap Contract Notional Balance.
Cap
Contract Termination Date: Any of the Class A-1 Cap Contract
Termination Date, the Class A-2 Cap Contract Termination Date or
the Subordinate
Certificate Cap Contract Termination Date.
Certificate: Any one of the certificates of any Class executed by
the
Trustee and authenticated by the Trustee in substantially the forms
attached
hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 3.05(f) in the name of the
Trustee for the
benefit of the Certificateholders and designated "U.S. Bank
National
Association, as trustee, in trust for registered holders of
Specialty
Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed
Certificates, Series 2006-BC4." Funds in the Certificate Account
shall be held
in trust for the Certificateholders for the uses and purposes set
forth in this
Agreement.
Certificate Group: Either of Certificate Group One or Certificate
Group
Two.
Certificate Group One: The Class A-1 and Class R Certificates. For
purposes
of Section 2.07 hereof, Certificate Group One shall be related to
Group One.
Certificate Group Two: The Class A-2 Certificates. For purposes of
Section
2.07 hereof, Certificate Group Two shall be related to Group
Two.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of
any
Distribution Date, the Initial Certificate Principal Balance of
such Certificate
less the sum of (1) all amounts distributed with respect to such
Certificate in
reduction of the Certificate Principal Balance thereof on previous
Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss
Amounts
allocated to such Certificate on previous Distribution Dates
pursuant to Section
4.04(h). On each Distribution Date, after all distributions of
principal on such
Distribution Date, a portion of the Class C Interest Carry Forward
Amount in an
amount equal to the excess of the Overcollateralization Amount on
such
Distribution Date over the Overcollateralization Amount as of the
preceding
Distribution Date (or, in the case of the first Distribution Date,
the initial
Overcollateralization Amount (based on the Stated Principal Balance
of the
Mortgage Loans as of the Cut-off Date)) will be added to the
aggregate
Certificate Principal Balance of the Class C Certificates (on a pro
rata basis).
Notwithstanding the immediately preceding sentence, however, to the
extent any
excess referred to in the immediately preceding sentence is
attributable to
distributions of proceeds of the Swap Agreement, such sentence
shall be applied
by substituting the "Class C Unpaid Realized Loss Amount" for the
"Class C
Interest Carry Forward Amount". Notwithstanding the foregoing on
any
Distribution Date relating to a Due Period in which a Subsequent
Recovery has
been received by the Servicer, the Certificate Principal Balance of
any Class of
Certificates then outstanding for which any Applied Realized Loss
Amount has
been allocated will be increased, in order of seniority, by an
amount equal to
the lesser of (i) the Unpaid Realized Loss Amount for such Class of
Certificates
and (ii) the total of any Subsequent Recovery distributed on such
date to the
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Certificateholders (reduced by the amount of the increase in the
Certificate
Principal Balance of any more senior Class of Certificates pursuant
to this
sentence on such Distribution Date).
Certificate Register: The register maintained pursuant to Section
5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate
is
registered in the Certificate Register (initially, Cede & Co.,
as nominee for
the Depository) in the case of any Class of Regular Certificates or
the Class R
Certificate, except that solely for the purpose of giving any
consent pursuant
to this Agreement, any Certificate registered in the name of the
Depositor or
any Affiliate of the Depositor shall be deemed not to be
Outstanding and the
Percentage Interest evidenced thereby shall not be taken into
account in
determining whether the requisite amount of Percentage Interests
necessary to
effect such consent has been obtained; provided, however, that if
any such
Person (including the Depositor) owns 100% of the Percentage
Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be
Outstanding
for purposes of any provision hereof that requires the consent of
the Holders of
Certificates of a particular Class as a condition to the taking of
any action
hereunder. The Trustee is entitled to rely conclusively on a
certification of
the Depositor or any Affiliate of the Depositor in determining
which
Certificates are registered in the name of an Affiliate of the
Depositor.
Class: All Certificates bearing the same Class designation as set
forth in
Section 5.01 hereof.
Class A Certificate Principal Balance: For any date of
determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A
Certificate
Principal Balance, the Class A-2B Certificate Principal Balance,
the Class A-2C
Certificate Principal Balance and the Class A-2D Certificate
Principal Balance.
Class A Certificates: Any of the Class A-1, Class A-2A, Class A-2B,
Class
A-2C and Class A-2D Certificates.
Class A Principal Distribution Amount: With respect to any
Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on
which a Stepdown
Trigger Event exists, 100% of the Principal Distribution Amount for
such
Distribution Date and (2) on or after the Stepdown Date where a
Stepdown Trigger
Event does not exist, the excess of (A) the Certificate Principal
Balance of the
Class A and Class R Certificates immediately prior to such
Distribution Date
over (B) the lesser of (1) 53.10% of the Stated Principal Balances
of the
Mortgage Loans as of such Distribution Date, and (2) the excess of
the Stated
Principal Balances of the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount; provided, however,
that in no
event will the Class A Principal Distribution Amount with respect
to any
Distribution Date exceed the aggregate Certificate Principal
Balance of the
Class A and Class R Certificates.
Class A-1 Available Funds Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x)
the total
scheduled interest on the Mortgage Loans in Group One based on the
Net Mortgage
Rates in effect on the related Due Date, less the pro rata portion
(calculated
based on the ratio of the Stated Principal Balance of the Mortgage
Loans in
Group One to the Stated Principal Balance of the total pool of
Mortgage Loans)
allocable to the Mortgage Loans in Group One of any Net Swap
Payments or Swap
Termination Payments (other than Defaulted Swap Termination
Payments) owed to
the Swap Counterparty for such Distribution Date, and (y) the
aggregate Stated
Principal Balance of the Mortgage Loans in Group One as of the
first day of the
related Accrual Period (or, in the case of the first Distribution
Date, as of
the Cut-off Date) and (iii) a fraction, the numerator of which is
30, and the
denominator of which is the actual number of days in the related
Accrual Period.
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<PAGE>
Class A-1 Cap Contract: The confirmation and agreement and any
related
confirmation thereto, between the Trustee, on behalf of the Issuing
Entity, and
the Cap Contract Counterparty (in the form of Exhibit O-1 hereto),
with respect
to the Class A-1 Certificates.
Class A-1 Cap Contract Notional Balance: With respect to any
Distribution
Date, the Class A-1 Cap Contract Notional Balance set forth for
such
Distribution Date in the Class A-1 One Month LIBOR Cap Table
attached hereto as
Exhibit P-1.
Class A-1 Cap Contract Termination Date: The Distribution Date
after the
Distribution Date in March 2007.
Class A-1 Certificate: Any Certificate designated as a "Class
A-1
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class A-1 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-1
Certificates.
Class A-1 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-1
Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class A-1
Current Interest or a Class A-1 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
A-1
Certificates.
Class A-1 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-1 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class A-1 Pass-Through
Rate for the
related Accrual Period.
Class A-1 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.1400% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.2800% per
annum.
Class A-1 Maximum Rate Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x)
the total
scheduled interest that would have been due on the Group One
Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their
maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans
provided for
interest at their Net Mortgage Rates less the pro rata portion
(calculated based
on the ratio of the Stated Principal Balance of the Group One
Mortgage Loans to
the Stated Principal Balance of the total pool of Mortgage Loans)
allocable to
the Group One Mortgage Loans of any Net Swap Payments or Swap
Termination
Payments owed to the Swap Counterparty for such Distribution Date
(other than
Defaulted Swap Termination Payments), and (y) the aggregate Stated
Principal
Balance of the Group One Mortgage Loans as of the first day of the
related
Accrual Period and (iii) a fraction, the numerator of which is 30
and the
denominator of which is the actual number of days in the related
Accrual Period.
The Class A-1 Maximum Rate Cap shall relate to the Class A-1
Certificates and
Class R Certificates.
Class A-1 Pass-Through Rate: For the first Distribution Date,
5.466% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-1 Margin, (2) the Class A-1 Available Funds Cap,
and (3) the
Class A-1 Maximum Rate Cap for such Distribution Date.
16
<PAGE>
Class A-1 Upper Collar: With respect to each Distribution Date with
respect
to which payments are received on the Class A-1 Cap Contract, a
rate equal to
the lesser of One-Month LIBOR and 10.860% per annum.
Class A-2 Available Funds Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x)
the total
scheduled interest on the Mortgage Loans in Group Two based on the
Net Mortgage
Rates in effect on the related Due Date, less the pro rata portion
(calculated
based on the ratio of the Stated Principal Balance of the Mortgage
Loans in
Group Two to the Stated Principal Balance of the total pool of
Mortgage Loans)
allocable to the Mortgage Loans in Group Two of any Net Swap
Payments or Swap
Termination Payments (other than Defaulted Swap Termination
Payments) owed to
the Swap Counterparty for such Distribution Date, and (y) the
aggregate Stated
Principal Balance of the Mortgage Loans in Group Two as of the
first day of the
related Accrual Period (or, in the case of the first Distribution
Date, as of
the Cut-off Date) and, (iii) a fraction, the numerator of which is
30, and the
denominator of which is the actual number of days in the related
Accrual Period.
Class A-2 Cap Contract: The confirmation and agreement and any
related
confirmation thereto, between the Trustee, on behalf of the Issuing
Entity, and
the Cap Contract Counterparty (in the form of Exhibit O-2 hereto),
with respect
to the Class A-2 Certificates.
Class A-2 Cap Contract Notional Balance: With respect to any
Distribution
Date, the Class A-2 Cap Contract Notional Balance set forth for
such
Distribution Date in the Class A-2 One Month LIBOR Cap Table
attached hereto as
Exhibit P-2.
Class A-2 Cap Contract Termination Date: The Distribution Date
after the
Distribution Date in March 2007.
Class A-2 Certificates: The Class A-2A, Class A-2B, Class A-2C and
Class
A-2D Certificates.
Class A-2 Maximum Rate Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12 and (ii) the quotient of
(x) the total
scheduled interest that would have been due on the Group Two
Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their
maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans
provided for
interest at their Net Mortgage Rates less the pro rata portion
(calculated based
on the ratio of the Stated Principal Balance of the Group Two
Mortgage Loans to
the total pool of Stated Principal Balance of the Mortgage Loans)
allocable to
the Group Two Mortgage Loans of any Net Swap Payments or Swap
Termination
Payments owed to the Swap Counterparty for such Distribution Date
(other than
Defaulted Swap Termination Payments), and (y) the aggregate Stated
Principal
Balance of the Group Two Mortgage Loans as of the first day of the
related
Accrual Period and (iii) a fraction, the numerator of which is 30
and the
denominator of which is the actual number of days in the related
Accrual Period.
Class A-2 Upper Collar: With respect to each Distribution Date with
respect
to which payments are received on the Class A-2 Cap Contract, a
rate equal to
the lesser of One-Month LIBOR and 9.370% per annum.
Class A-2A Certificate: Any Certificate designated as a "Class
A-2A
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class A-2A Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2A
Certificates.
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<PAGE>
Class A-2A Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2A
Pass-Through Rate on
the Class A-2A Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Class A-2A
Current Interest or a Class A-2A Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
A-2A
Certificates.
Class A-2A Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-2A Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2A Certificates with respect to Current Interest or Interest
Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class A-2A Pass-Through
Rate for the
related Accrual Period.
Class A-2A Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.0500% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.1000% per
annum.
Class A-2A Pass-Through Rate: For the first Distribution Date,
5.376% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2A Margin, (2) the Class A-2 Available Funds Cap
and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2B Certificate: Any Certificate designated as a "Class
A-2B
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class A-2B Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2B
Certificates.
Class A-2B Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2B
Pass-Through Rate on
the Class A-2B Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Class A-2B
Current Interest or a Class A-2B Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
A-2B
Certificates.
Class A-2B Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-2B Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2B Certificates with respect to Current Interest or Interest
Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class A-2B Pass-Through
Rate for the
related Accrual Period.
Class A-2B Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.1100% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.2200% per
annum.
Class A-2B Pass-Through Rate: For the first Distribution Date,
5.436% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2B Margin, (2) the Class A-2 Available Funds Cap
and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
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<PAGE>
Class A-2C Certificate: Any Certificate designated as a "Class
A-2C
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class A-2C Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2C
Certificates.
Class A-2C Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2C
Pass-Through Rate on
the Class A-2C Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Class A-2C
Current Interest or a Class A-2C Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
A-2C
Certificates.
Class A-2C Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-2C Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2C Certificates with respect to Current Interest or Interest
Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class A-2C Pass-Through
Rate for the
related Accrual Period.
Class A-2C Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.1500% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.3000% per
annum.
Class A-2C Pass-Through Rate: For the first Distribution Date,
5.476% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2C Margin, (2) the Class A-2 Available Funds Cap
and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2D Certificate: Any Certificate designated as a "Class
A-2D
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class A-2D Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2D
Certificates.
Class A-2D Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2D
Pass-Through Rate on
the Class A-2D Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Class A-2D
Current Interest or a Class A-2D Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
A-2D
Certificates.
Class A-2D Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-2D Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2D Certificates with respect to Current Interest or Interest
Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class A-2D Pass-Through
Rate for the
related Accrual Period.
Class A-2D Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.2400% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.4800% per
annum.
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<PAGE>
Class A-2D Pass-Through Rate: For the first Distribution Date,
5.566% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2D Margin, (2) the Class A-2 Available Funds Cap
and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class B Certificates: The Class B-1 Certificates, Class B-2
Certificates,
and the Class B-3 Certificates.
Class B-1 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class B-1 Certificates.
Class B-1 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class B-1
Certificates.
Class B-1 Certificates: Any Certificate designated as a "Class
B-1
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class B-1 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class B-1
Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class B-1
Current Interest or a Class B-1 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
B-1
Certificates.
Class B-1 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
B-1 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class B-1 Pass-Through
Rate for the
related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.8000% per annum
and, as of any
Distribution Date after the Auction Termination Date, 1.2000% per
annum.
Class B-1 Pass-Through Rate: For the first Distribution Date,
6.126% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class B-1 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A,
Class R and Class M Certificates have been reduced to zero and a
Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the
excess of (1) the sum of (A) the Certificate Principal Balances of
the Class A
and Class R Certificates (after taking into account distributions
of the Class A
Principal Distribution Amount on such Distribution Date), (B) the
Class M-1
Certificate Principal Balance (after taking into account
distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date),
(C) the
Class M-2 Certificate Principal Balance (after taking into account
distributions
of the Class M-2 Principal Distribution Amount on such Distribution
Date), (D)
the Class M-3 Certificate Principal Balance (after taking into
account
distributions of the Class M-3 Principal Distribution Amount on
such
Distribution Date), (E) the Class M-4 Certificate Principal
20
<PAGE>
Balance (after taking into account distributions of the Class M-4
Principal
Distribution Amount on such Distribution Date), (F) the Class M-5
Certificate
Principal Balance (after taking into account distributions of the
Class M-5
Principal Distribution Amount on such Distribution Date), (G) the
Class M-6
Certificate Principal Balance (after taking into account
distributions of the
Class M-6 Principal Distribution Amount on such Distribution Date),
and (H) the
Class B-1 Certificate Principal Balance immediately prior to such
Distribution
Date over (2) the lesser of (A) 87.40% of the Stated Principal
Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated
Principal Balances of the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which
the Certificate
Principal Balance of each Class of the Class A Certificates, Class
R Certificate
and Class M Certificates has been reduced to zero, the Class B-1
Principal
Distribution Amount will equal the lesser of (x) the outstanding
Certificate
Principal Balance of the Class B-1 Certificates and (y) 100% of the
Principal
Distribution Amount remaining after any distributions on such Class
A, Class R
and Class M Certificates and (II) in no event will the Class B-1
Principal
Distribution Amount with respect to any Distribution Date exceed
the Class B-1
Certificate Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class B-1 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class B-2 Certificates.
Class B-2 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class B-2
Certificates.
Class B-2 Certificates: Any Certificate designated as a "Class
B-2
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class B-2 Current
Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2
Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class B-2
Current Interest or a Class B-2 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
B-2
Certificates.
Class B-2 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
B-2 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class B-2 Pass-Through
Rate for the
related Accrual Period.
Class B-2 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 1.0500% per annum
and, as of any
Distribution Date after the Auction Termination Date, 1.5750% per
annum.
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<PAGE>
Class B-2 Pass-Through Rate: For the first Distribution Date,
6.376% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class B-2 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A,
Class R, Class M and Class B-1 Certificates have been reduced to
zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger
Event does not
exist, the excess of (1) the sum of (A) the Certificate Principal
Balances of
the Class A and Class R Certificates (after taking into account
distributions of
the Class A Principal Distribution Amount on such Distribution
Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account
distributions
of the Class M-1 Principal Distribution Amount on such Distribution
Date), (C)
the Class M-2 Certificate Principal Balance (after taking into
account
distributions of the Class M-2 Principal Distribution Amount on
such
Distribution Date), (D) the Class M-3 Certificate Principal Balance
(after
taking into account distributions of the Class M-3 Principal
Distribution Amount
on such Distribution Date), (E) the Class M-4 Certificate Principal
Balance
(after taking into account distributions of the Class M-4 Principal
Distribution
Amount on such Distribution Date), (F) the Class M-5 Certificate
Principal
Balance (after taking into account distributions of the Class M-5
Principal
Distribution Amount on such Distribution Date), (G) the Class M-6
Certificate
Principal Balance (after taking into account distributions of the
Class M-6
Principal Distribution Amount on such Distribution Date), (H) the
Class B-1
Certificate Principal Balance (after taking into account
distributions of the
Class B-1 Principal Distribution Amount on such Distribution Date,
and (I) the
Class B-2 Certificate Principal Balance immediately prior to such
Distribution
Date over (2) the lesser of (A) 90.30% of the Stated Principal
Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated
Principal Balances of the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which
the Certificate
Principal Balance of each Class of the Class A Certificates, Class
R
Certificate, Class M Certificates and Class B-1 Certificates has
been reduced to
zero, the Class B-2 Principal Distribution Amount will equal the
lesser of (x)
the outstanding Certificate Principal Balance of the Class B-2
Certificates and
(y) 100% of the Principal Distribution Amount remaining after any
distributions
on such Class A, Class R, Class M and Class B-1 Certificates and
(II) in no
event will the Class B-2 Principal Distribution Amount with respect
to any
Distribution Date exceed the Class B-2 Certificate Principal
Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class B-2 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class B-3 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class B-3 Certificates.
Class B-3 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class B-3
Certificates.
Class B-3 Certificates: Any Certificate designated as a "Class
B-3
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
22
<PAGE>
Class B-3 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class B-3
Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class B-3
Current Interest or a Class B-3 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
B-3
Certificates.
Class B-3 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
B-3 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class B-3 Pass-Through
Rate for the
related Accrual Period.
Class B-3 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 2.0500% per annum
and, as of any
Distribution Date after the Auction Termination Date, 3.0750% per
annum.
Class B-3 Pass-Through Rate: For the first Distribution Date,
7.376% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class B-3 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class B-3 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A,
Class R, Class M, Class B-1 and Class B-2 Certificates have been
reduced to zero
and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event does
not exist, the excess of (1) the sum of (A) the Certificate
Principal Balances
of the Class A and Class R Certificates (after taking into account
distributions
of the Class A Principal Distribution Amount on such Distribution
Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account
distributions
of the Class M-1 Principal Distribution Amount on such Distribution
Date), (C)
the Class M-2 Certificate Principal Balance (after taking into
account
distributions of the Class M-2 Principal Distribution Amount on
such
Distribution Date), (D) the Class M-3 Certificate Principal Balance
(after
taking into account distributions of the Class M-3 Principal
Distribution Amount
on such Distribution Date), (E) the Class M-4 Certificate Principal
Balance
(after taking into account distributions of the Class M-4 Principal
Distribution
Amount on such Distribution Date), (F) the Class M-5 Certificate
Principal
Balance (after taking into account distributions of the Class M-5
Principal
Distribution Amount on such Distribution Date), (G) the Class M-6
Certificate
Principal Balance (after taking into account distributions of the
Class M-6
Principal Distribution Amount on such Distribution Date), (H) the
Class B-1
Certificate Principal Balance (after taking into account
distributions of the
Class B-1 Principal Distribution Amount on such Distribution Date,
(I) the Class
B-2 Certificate Principal Balance (after taking into account
distributions of
the Class B-2 Principal Distribution Amount on such Distribution
Date, and (J)
the Class B-3 Certificate Principal Balance immediately prior to
such
Distribution Date over (2) the lesser of (A) 92.60% of the Stated
Principal
Balances of the Mortgage Loans as of such Distribution Date and (B)
the excess
of the Stated Principal Balances of the Mortgage Loans as of such
Distribution
Date over the Minimum Required Overcollateralization Amount.
Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date
on which the
Certificate Principal Balance of each Class of the Class A
Certificates, Class R
Certificate, Class M Certificates, Class B-1 and Class B-2
Certificates has been
reduced to zero, the Class B-3 Principal Distribution Amount will
equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class B-3
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A, Class R, Class M, Class B-1
and
23
<PAGE>
Class B-2 Certificates and (II) in no event will the Class B-3
Principal
Distribution Amount with respect to any Distribution Date exceed
the Class B-3
Certificate Principal Balance.
Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class B-3 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class C Applied Realized Loss Amount: As of any Distribution Date,
the sum
of all Applied Realized Loss Amounts with respect to the Mortgage
Loans which
have been applied to the reduction of the Certificate Principal
Balance of the
Class C Certificates.
Class C Certificate: Any Certificate designated as a "Class C
Certificate"
on the face thereof, executed by the Trustee and authenticated by
the Trustee in
substantially the form set forth in Exhibit A, representing the
right to
distributions as set forth herein.
Class C Certificate Principal Balance: As of any date of
determination, the
aggregate Certificate Principal Balance of the Class C
Certificates.
Class C Current Interest: As of any Distribution Date, the interest
accrued
during the related Accrual Period at the Class C Distributable
Interest Rate on
a notional amount equal to the aggregate principal balance of the
Lower Tier
REMIC Regular Interests immediately prior to such Distribution Date
plus the
interest portion of any previous distributions on such Class that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
C
Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a)
the
weighted average of the interest rates on the Lower Tier REMIC
Regular Interests
(other than the Class LT-IO Interest) over (b) two times the
weighted average of
the interest rates on the Lower Tier REMIC I Marker Interests and
the Class LTIX
Interest (treating for purposes of this clause (b) the interest
rate on each of
the Lower Tier REMIC I Marker Interests as being subject to a cap
and a floor
equal to the interest rate of the Corresponding REMIC Regular
Interest of the
Corresponding Certificates (as adjusted, if necessary, for the
length of the
Accrual Period for the LIBOR Certificates) and treating the Class
LTIX Interest
as being capped at zero). The averages described in the preceding
sentence shall
be weighted on the basis of the respective principal balances of
the Lower Tier
REMIC Regular Interests immediately prior to any date of
determination.
Class C Interest Carry Forward Amount: As of any Distribution Date,
the
excess of (A) the Class C Current Interest with respect to prior
Distribution
Dates over (B) the amount actually distributed to the Class C
Certificates with
respect to interest on such prior Distribution Dates or added to
the aggregate
Certificate Principal Balance of the Class C Certificates (other
than amounts so
added attributable to Subsequent Recoveries or proceeds of the Swap
Agreement).
Class C Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class C Applied Realized Loss Amount over (2) the
sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss
Amount on all
previous Distribution Dates and (y) all increases in the
Certificate Principal
Balance of such Class C Certificates (A) pursuant to the last
sentence of the
definition of "Certificate Principal Balance" or (B) attributable
to
distributions of proceeds of the Swap Agreement.
24
<PAGE>
Class LTA-1 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificates and an interest rate
equal to the Net
Rate.
Class LTA-2A Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTA-2B Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTA-2C Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTA-2D Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTB-1 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTB-2 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTB-3 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LT-IO Interest: An uncertificated regular interest in the
Lower Tier
REMIC with the characteristics set forth in the description of the
Lower Tier
REMIC in the Preliminary Statement.
Class LTII1A Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% of the
excess of (i) the
aggregate Cut-off Date Principal Balance of the Group One Mortgage
Loans over
(ii) the aggregate of the initial Certificate Principal Balances of
Certificate
Group One, and with an interest rate equal to the Net Rate.
Class LTII1B Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% of the
aggregate Cut-off
Date Principal Balance of the Group One Mortgage Loans, and with an
interest
rate equal to the rate set forth in footnote 9 to the description
of the Lower
Tier REMIC in the Preliminary Statement.
Class LTII2A Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% of the
excess of (i) the
aggregate Cut-off Date Principal Balance of the Group Two Mortgage
Loans over
(ii) the aggregate of the initial Certificate Principal Balances of
Certificate
Group Two, and with an interest rate equal to the Net Rate.
25
<PAGE>
Class LTII2B Interest:
An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the
aggregate Cut-off
Date Principal Balance of the Group Two Mortgage Loans, and with an
interest
rate equal to the rate set forth in footnote 10 to the description
of the Lower
Tier REMIC in the Preliminary Statement.
Class LTIX Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to the excess of (i)
50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over
(ii) the
initial principal balance of the Lower Tier REMIC I Marker
Interests, and with
an interest rate equal to the Net Rate.
Class LTIIX Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to the excess of (i)
50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over
(ii) the
initial principal balance of the Lower Tier REMIC II Marker
Interests, and with
an interest rate equal to the Net Rate.
Class LTM-1 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-2 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-3 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-4 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-5 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-6 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTR Interest: The sole class of "residual interest" in the
Lower Tier
REMIC.
Class M Certificates: Any of the Class M-1, Class M-2, Class M-3,
Class
M-4, Class M-5 and Class M-6 Certificates.
Class M-1 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class
M-1
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
26
<PAGE>
Class M-1 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-1
Certificates.
Class M-1 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-1
Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class M-1
Current Interest or a Class M-1 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
M-1
Certificates.
Class M-1 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-1 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class M-1 Pass-Through
Rate for the
related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.2900% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.4350% per
annum.
Class M-1 Pass-Through Rate: For the first Distribution Date,
5.616% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-1 Margin and (2) the Subordinate Certificate
Available Funds
Cap and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution
Date.
Class M-1 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A
and Class R Certificates have been reduced to zero and a Stepdown
Trigger Event
exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1)
the sum of (A) the Certificate Principal Balances of the Class A
and Class R
Certificates (after taking into account distributions of the Class
A Principal
Distribution Amount on such Distribution Date) and (B) the Class
M-1 Certificate
Principal Balance immediately prior to such Distribution Date over
(2) the
lesser of (A) 62.50% of the Stated Principal Balances of the
Mortgage Loans as
of such Distribution Date and (B) the excess of the Stated
Principal Balances
for the Mortgage Loans as of such Distribution Date over the
Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on
any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of the Class A Certificates and Class R
Certificate has
been reduced to zero, the Class M-1 Principal Distribution Amount
will equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class M-1
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A Certificates and Class R
Certificate and (II)
in no event will the Class M-1 Principal Distribution Amount with
respect to any
Distribution Date exceed the Class M-1 Certificate Principal
Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-1 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
27
<PAGE>
Class M-2 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class
M-2
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-2
Certificates.
Class M-2 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-2
Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class M-2
Current Interest or a Class M-2 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
M-2
Certificates.
Class M-2 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-2 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class M-2 Pass-Through
Rate for the
related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.3100% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.4650% per
annum.
Class M-2 Pass-Through Rate: For the first Distribution Date,
5.636% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-2 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A,
Class R and Class M-1 Certificates have been reduced to zero and a
Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the
excess of (1) the sum of (A) the Certificate Principal Balances of
the Class A
and Class R Certificates (after taking into account distributions
of the Class A
Principal Distribution Amount on such Distribution Date), (B) the
Class M-1
Certificate Principal Balance (after taking into account
distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date)
and (C) the
Class M-2 Certificate Principal Balance immediately prior to such
Distribution
Date over (2) the lesser of (A) 69.80% of the Stated Principal
Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated
Principal Balances of the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which
the Certificate
Principal Balance of each Class of Class A Certificates, Class R
Certificate and
the Class M-1 Certificates has been reduced to zero, the Class M-2
Principal
Distribution Amount will equal the lesser of (x) the outstanding
Certificate
Principal Balance of the Class M-2 Certificates and (y) 100% of the
Principal
Distribution Amount remaining after any distributions on such Class
A, Class R
and Class M-1 Certificates and (II) in no event will the Class M-2
Principal
Distribution Amount with respect to any Distribution Date exceed
the Class M-2
Certificate Principal Balance.
28
<PAGE>
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-2 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-3 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-3 Certificates.
Class M-3 Certificate: Any Certificate designated as a "Class
M-3
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class M-3 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-3
Certificates.
Class M-3 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-3
Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class M-3
Current Interest or a Class M-3 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
M-3
Certificates.
Class M-3 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-3 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class M-3 Pass-Through
Rate for the
related Accrual Period.
Class M-3 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.3400% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.5100% per
annum.
Class M-3 Pass-Through Rate: For the first Distribution Date,
5.666% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-3 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class M-3 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A,
Class R, Class M-1 and Class M-2 Certificates have been reduced to
zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger
Event does not
exist, the excess of (1) the sum of (A) the Certificate Principal
Balances of
the Class A and Class R Certificates (after taking into account
distributions of
the Class A Principal Distribution Amount on such Distribution
Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account
distributions
of the Class M-1 Principal Distribution Amount on such Distribution
Date), (C)
the Class M-2 Certificate Principal Balance (after taking into
account
distributions of the Class M-2 Principal Distribution Amount on
such
Distribution Date) and (D) the Class M-3 Certificate Principal
Balance
immediately prior to such Distribution Date over (2) the lesser of
(A) 73.80% of
the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date
and (B) the excess of the Stated Principal Balances for the
Mortgage
29
<PAGE>
Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on
any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of the Class A Certificates, the Class R
Certificate, the
Class M-1 Certificates and the Class M-2 Certificates has been
reduced to zero,
the Class M-3 Principal Distribution Amount will equal the lesser
of (x) the
outstanding Certificate Principal Balance of the Class M-3
Certificates and (y)
100% of the Principal Distribution Amount remaining after any
distributions on
such Class A, Class R, Class M-1 and Class M-2 Certificates and
(II) in no event
will the Class M-3 Principal Distribution Amount with respect to
any
Distribution Date exceed the Class M-3 Certificate Principal
Balance.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-3 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-3 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-4 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-4 Certificates.
Class M-4 Certificate: Any Certificate designated as a "Class
M-4
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class M-4 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-4
Certificates.
Class M-4 Current
Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-4
Pass-Through Rate on
the Class M-4 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class M-4
Current Interest or a Class M-4 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
M-4
Certificates.
Class M-4 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-4 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class M-4 Pass-Through
Rate for the
related Accrual Period.
Class M-4 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.3900% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.5850% per
annum.
Class M-4 Pass-Through
Rate: For the first Distribution Date, 5.716% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-4 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class M-4 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate
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<PAGE>
Principal Balances of the Class A, Class R, Class M-1, Class M-2
and Class M-3
Certificates have been reduced to zero and a Stepdown Trigger Event
exists, or
as long as a Stepdown Trigger Event does not exist, the excess of
(1) the sum of
(A) the Certificate Principal Balances of the Class A and Class R
Certificates
(after taking into account distributions of the Class A Principal
Distribution
Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal
Balance (after taking into account distributions of the Class M-1
Principal
Distribution Amount on such Distribution Date), (C) the Class M-2
Certificate
Principal Balance (after taking into account distributions of the
Class M-2
Principal Distribution Amount on such Distribution Date), (D) the
Class M-3
Certificate Principal Balance (after taking into account
distributions of the
Class M-3 Principal Distribution Amount on such Distribution Date)
and (E) the
Class M-4 Certificate Principal Balance immediately prior to such
Distribution
Date over (2) the lesser of (A) 77.50% of the Stated Principal
Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated
Principal Balances for the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which
the Certificate
Principal Balance of each Class of the Class A Certificates, the
Class R
Certificate, the Class M-1 Certificates, the Class M-2 and the
Class M-3
Certificates has been reduced to zero, the Class M-4 Principal
Distribution
Amount will equal the lesser of (x) the outstanding Certificate
Principal
Balance of the Class M-3 Certificates and (y) 100% of the Principal
Distribution
Amount remaining after any distributions on such Class A, Class R,
Class M-1,
Class M-2 and Class M-3 Certificates and (II) in no event will the
Class M-4
Principal Distribution Amount with respect to any Distribution Date
exceed the
Class M-4 Certificate Principal Balance.
Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-4 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-4 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-4 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-5 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-5 Certificates.
Class M-5 Certificate: Any Certificate designated as a "Class
M-5
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class M-5 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-5
Certificates.
Class M-5 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-5
Pass-Through Rate on
the Class M-5 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class M-5
Current Interest or a Class M-5 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
M-5
Certificates.
Class M-5 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-5 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-5 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class M-5 Pass-Through
Rate for the
related Accrual Period.
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<PAGE>
Class M-5 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.4000% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.6000% per
annum.
Class M-5 Pass-Through Rate: For the first Distribution Date,
5.726% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-5 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class M-5 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A,
Class R, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates
have been
reduced to zero and a Stepdown Trigger Event exists, or as long as
a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the
Certificate
Principal Balances of the Class A and Class R Certificates (after
taking into
account distributions of the Class A Principal Distribution Amount
on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after
taking into account distributions of the Class M-1 Principal
Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance
(after taking into account distributions of the Class M-2 Principal
Distribution
Amount on such Distribution Date), (D) the Class M-3 Certificate
Principal
Balance (after taking into account distributions of the Class M-3
Principal
Distribution Amount on such Distribution Date), (E) the Class M-4
Certificate
Principal Balance (after taking into account distributions of the
Class M-4
Principal Distribution Amount on such Distribution Date) and (F)
the Class M-5
Certificate Principal Balance immediately prior to such
Distribution Date over
(2) the lesser of (A) 81.00% of the Stated Principal Balances of
the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated
Principal
Balances for the Mortgage Loans as of such Distribution Date over
the Minimum
Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of the Class A Certificates, the Class R
Certificate, the
Class M-1 Certificates, the Class M-2, the Class M-3 and the Class
M-4
Certificates has been reduced to zero, the Class M-5 Principal
Distribution
Amount will equal the lesser of (x) the outstanding Certificate
Principal
Balance of the Class M-5 Certificates and (y) 100% of the Principal
Distribution
Amount remaining after any distributions on such Class A, Class R,
Class M-1,
Class M-2, Class M-3 and Class M-4 Certificates and (II) in no
event will the
Class M-5 Principal Distribution Amount with respect to any
Distribution Date
exceed the Class M-5 Certificate Principal Balance.
Class M-5 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-5 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-5 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-5 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-6 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-6 Certificates.
Class M-6 Certificate: Any Certificate designated as a "Class
M-6
Certificate" on the face thereof, executed by the Trustee and
authenticated by
the Trustee in substantially the form set forth in Exhibit A,
representing the
right to distributions as set forth herein.
Class M-6 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-6
Certificates.
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<PAGE>
Class M-6 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-6
Pass-Through Rate on
the Class M-6 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Class M-6
Current Interest or a Class M-6 Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
M-6
Certificates.
Class M-6 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-6 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-6 Certificates with respect to Current Interest or Interest Carry
Forward
Amounts on such prior Distribution Dates and (2) interest on such
excess (to the
extent permitted by applicable law) at the Class M-6 Pass-Through
Rate for the
related Accrual Period.
Class M-6 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.4700% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.7050% per
annum.
Class M-6 Pass-Through Rate: For the first Distribution Date,
5.796% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-6 Margin, (2) the Subordinate Certificate
Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such
Distribution Date.
Class M-6 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Certificate Principal Balances of
the Class A,
Class R, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5
Certificates
have been reduced to zero and a Stepdown Trigger Event exists, or
as long as a
Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the
Certificate Principal Balances of the Class A and Class R
Certificates (after
taking into account distributions of the Class A Principal
Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance
(after taking into account distributions of the Class M-1 Principal
Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate
Principal
Balance (after taking into account distributions of the Class M-2
Principal
Distribution Amount on such Distribution Date), (D) the Class M-3
Certificate
Principal Balance (after taking into account distributions of the
Class M-3
Principal Distribution Amount on such Distribution Date), (E) the
Class M-4
Certificate Principal Balance (after taking into account
distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date),
(F) the
Class M-5 Certificate Principal Balance (after taking into account
distributions
of the Class M-5 Principal Distribution Amount on such Distribution
Date) and
(G) the Class M-6 Certificate Principal Balance immediately prior
to such
Distribution Date over (2) the lesser of (A) 84.30% of the Stated
Principal
Balances of the Mortgage Loans as of such Distribution Date and (B)
the excess
of the Stated Principal Balances for the Mortgage Loans as of such
Distribution
Date over the Minimum Required Overcollateralization Amount.
Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date
on which the
Certificate Principal Balance of each Class of the Class A
Certificates, the
Class R Certificate, the Class M-1 Certificates, the Class M-2, the
Class M-3,
the Class M-4 and the Class M-5 Certificates has been reduced to
zero, the Class
M-6 Principal Distribution Amount will equal the lesser of (x) the
outstanding
Certificate Principal Balance of the Class M-6 Certificates and (y)
100% of the
Principal Distribution Amount remaining after any distributions on
such Class A,
Class R, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5
Certificates
and (II) in no event will the Class M-6 Principal Distribution
Amount with
respect to any Distribution Date exceed the Class M-6 Certificate
Principal
Balance.
Class M-6 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-6 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the
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<PAGE>
Class M-6 Unpaid Realized Loss Amounts on all previous Distribution
Dates and
(y) all increases in the Certificate Principal Balance of such
Class M-6
Certificates pursuant to the last sentence of the definition of
"Certificate
Principal Balance."
Class P Certificate: Any Certificate designated as a "Class P
Certificate"
on the face thereof, executed by the Trustee and authenticated by
the Trustee in
substantially the form set forth in Exhibit A, representing the
right to
distributions as set forth herein.
Class R Certificate: Any Certificate designated as a "Class R
Certificate"
on the face thereof, executed by the Trustee and authenticated by
the Trustee in
substantially the form set forth in Exhibit A, representing the
right to
distributions as set forth herein.
Class R Certificate Principal Balance: As of any date of
determination, the
aggregate Certificate Principal Balance of the Class R
Certificate.
Class R Current Interest: As of any Distribution Date, the interest
accrued
during the related Accrual Period at the Class R Pass-Through Rate
on the Class
R Certificate Principal Balance as of such Distribution Date plus
the portion of
any previous distributions on such Class in respect of Class R
Current Interest
or a Class R Interest Carry Forward Amount that is recovered as a
voidable
preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall
allocated on such Distribution Date to the Class R Certificate.
Class R Interest Carry Forward Amount: As of any Distribution Date,
the sum
of (1) the excess of (A) the Class R Current Interest with respect
to prior
Distribution Dates over (B) the amount actually distributed to the
Class R
Certificate with respect to Current Interest or Interest Carry
Forward Amounts
on such prior Distribution Dates and (2) interest on such excess
(to the extent
permitted by applicable law) at the Class R Pass-Through Rate for
the related
Accrual Period.
Class R Margin: As of any Distribution Date up to and including the
Auction
Termination Date for the Certificates, 0.1400% per annum and, as of
any
Distribution Date after the Auction Termination Date, 0.2800% per
annum.
Class R Pass-Through Rate: For the first Distribution Date, 5.466%
per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class R Margin, (2) the Class A-1 Available Funds Cap for
such
Distribution Date and (3) the Class A-1 Maximum Rate Cap.
Class SWR Interest: The sole class of "residual interest" in the
SWAP
REMIC.
Clean Up Call: The termination of the Trust Fund hereunder pursuant
to
Section 9.01(a)(ii).
Clean Up Call Date: The second Distribution Date immediately
following the
Auction Termination Date.
Clean Up Call Price: An amount equal to the sum of (a) the
aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage
Loan that is an
REO Property), plus accrued interest thereon at the applicable
Mortgage Rate
through the Due Date preceding distribution of the proceeds, (b)
the fair market
value of any REO Property, plus accrued interest thereon, (c) any
unreimbursed
fees, out-of-pocket expenses owed to the Trustee or the Servicer
(including the
costs and expenses of conducting the auction described in Section
9.01(a)) and
any unreimbursed Servicing Fees, Advances or Servicing Advances,
(d) all
interest accrued on, as well as amounts necessary to retire, the
principal
balance of the NIM Notes, (e) any costs and damages incurred by the
Issuing
Entity (or the Trustee on behalf of the
34
<PAGE>
Issuing Entity) in connection with any violation by the affected
Mortgage Loan
of any anti-predatory or anti-abusive lending laws and (f) any Swap
Termination
Payment, other than a Defaulted Swap Termination Payment, owed to
the Swap
Counterparty; such Swap Termination Payment shall include any
payment resulting
from the termination of the Swap Agreement after the Clean Up Call
Date but
prior to the final distribution to the Certificates.
Closing Date: September 27, 2006.
Code: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
Collection Account: The separate Eligible Account created and
initially
maintained by the Servicer pursuant to Section 3.05(d) in the name
of the
Trustee for the benefit of the Certificateholders and designated
"Wilshire
Credit Corporation, in trust for registered holders of Specialty
Underwriting
and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series
2006-BC4". Funds in the Collection Account shall be held in trust
for the
Certificateholders for the uses and purposes set forth in this
Agreement.
Combined Loan-to-Value Ratio: For any Mortgage Loan in a second
lien
position, the fraction, expressed as a percentage, the numerator of
which is the
sum of (1) the original principal balance of the related Mortgage
Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on
which are
senior to the lien on such related Mortgage Loan (such sum
calculated at the
date of origination of such related Mortgage Loan) and the
denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged
Property and
(B) the sales price of the related Mortgaged Property at time of
origination.
Commission: The Securities and Exchange Commission.
Compensating Interest: For any Distribution Date and all
Principal
Prepayments in full in respect of a Mortgage Loan that are received
during the
period from the first day of the related Prepayment Period through
the last day
of the calendar month preceding such Distribution Date, a payment
made by the
Servicer in an amount not to exceed the product of (a) one-twelfth
of 0.25% and
(b) the aggregate Stated Principal Balance of the Mortgage Loans
for such
Distribution Date, equal to the amount of interest at the Net
Mortgage Rate for
that Mortgage Loan from the date of prepayment through the last day
of such
preceding calendar month.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged
Property, whether permanent or temporary, partial or entire, by
exercise of the
power of eminent domain or condemnation, to the extent not required
to be
released either to a Mortgagor in accordance with the terms of the
related
mortgage loan documents or to the holder of a senior lien on the
Mortgaged
Property.
Corresponding Certificates: With respect to the Class LTA-1
Interest, the
Class A-1 and Class R Certificates. With respect to the Class
LTA-2A Interest,
the Class A-2A Certificates. With respect to the Class LTA-2B
Interest, the
Class A-2B Certificates. With respect to the Class LTA-2C Interest,
the Class
A-2C Certificates. With respect to the Class LTA-2D Interest, the
Class A-2D
Certificates. With respect to the Class LTM-1 Interest, the Class
M-1
Certificates. With respect to the Class LTM-2 Interest, the Class
M-2
Certificates. With respect to the Class LTM-3 Interest, the Class
M-3
Certificates. With respect to the Class LTM-4 Interest, the Class
M-4
Certificates. With respect to the Class LTM-5 Interest, the Class
M-5
Certificates. With respect to the Class LTM-6 Interest, the Class
M-6
Certificates. With respect to the Class LTB-1 Interest, the Class
B-1
Certificates. With respect to the Class LTB-2 Interest, the Class
B-2
Certificates. With respect to the Class LTB-3 Interest, the Class
B-3
Certificates.
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<PAGE>
Corresponding REMIC Regular Interest: For each Class of
Certificates, the
interest in the Upper Tier REMIC listed on the same row in the
table entitled
"Upper Tier REMIC" in the Preliminary Statement.
Current Interest: Any of the Class A-1 Current Interest, the Class
A-2A
Current Interest, the Class A-2B Current Interest, the Class A-2C
Current
Interest, the Class A-2D Current Interest, the Class R Current
Interest, the
Class M-1 Current Interest, the Class M-2 Current Interest, the
Class M-3
Current Interest, the Class M-4 Current Interest, the Class M-5
Current
Interest, the Class M-6 Current Interest, the Class B-1 Current
Interest, the
Class B-2 Current Interest, the Class B-3 Current Interest and the
Class C
Current Interest.
Cut-off Date: September 1, 2006.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid
principal balance thereof as of the close of business on the
calendar day
immediately preceding the Cut-off Date after application of all
payments of
principal due on or prior to the Cut-off Date, whether or not
received, and all
Principal Prepayments received prior to the Cut-off Date, but
without giving
effect to any installments of principal received in respect of Due
Dates after
the Cut-off Date.
Defaulted Swap Termination Payment: Any payment required to be made
by the
Supplemental Interest Trust to the Swap Counterparty pursuant to
the Swap
Agreement as a result of an event of default under the Swap
Agreement with
respect to which the Swap Counterparty is the defaulting party or a
termination
event (including a Downgrade Termination Event) under that
agreement (other than
illegality or a tax event) with respect to which the Swap
Counterparty is the
sole Affected Party (as defined in the Swap Agreement).
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is
not made pursuant to the terms of such Mortgage Loan by the close
of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30
days
delinquent" if such payment has not been received by the close of
business on
the corresponding day of the month immediately succeeding the month
in which
such payment was due, or, if there is no such corresponding day
(e.g., as when a
30-day month follows a 31-day month in which a payment was due on
the 31st day
of such month), then on the last day of such immediately succeeding
month.
Similarly for "60 days delinquent," "90 days delinquent" and so
on.
Denomination: With respect to each Certificate, the amount set
forth on the
face thereof as the "Initial Principal Balance of this
Certificate."
Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware
corporation,
or any successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company
("DTC"), the nominee of which is Cede & Co., or any other
organization
registered as a "clearing agency" pursuant to Section 17A of the
Securities
Exchange Act of 1934, as amended. The Depository shall initially be
the
registered Holder of the Book-Entry Certificates. The Depository
shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of
the Uniform
Commercial Code of the State of New York.
36
<PAGE>
Depository Agreement: With respect to Classes of Book-Entry
Certificates,
the agreement between the Trustee and the initial Depository.
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.
Designated Transaction: A transaction in which the assets
underlying the
Certificates consist of single-family residential, multi-family
residential,
home equity, manufactured housing and/or commercial mortgage
obligations that
are secured by single family residential, multi-family residential,
commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th
day of
the month of such Distribution Date or, if such 15th day is not a
Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or
political
subdivision thereof, any foreign government, any international
organization, or
any agency or instrumentality of any of the foregoing, (2) any
organization
(other than a cooperative described in Section 521 of the Code)
which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such
organization is
subject to the tax imposed by Section 511 of the Code and (3) any
organization
described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the
initial
issuance of the Certificates, or if such 25th day is not a Business
Day, the
next succeeding Business Day, commencing in October 2006.
Downgrade Termination Event: An event whereby (x) the Swap
Counterparty (or
its guarantor) ceases to have short term unsecured and/or long term
debt ratings
at least equal to the levels specified in the Swap Agreement, and
(y) at least
one of the following events has not occurred (except to the extent
otherwise
approved by the Rating Agencies): (i) within the time period
specified in the
Swap Agreement with respect to such downgrade, the Swap
Counterparty shall
transfer the Swap Agreement, in whole, but not in part, to a
substitute swap
counterparty that satisfies the requirements set forth in the Swap
Agreement,
subject to the satisfaction of the Rating Agency Condition or (ii)
within the
time period specified in the Swap Agreement with respect to such
downgrade, the
Swap Counterparty shall collateralize its exposure to the Trust
Fund pursuant to
an ISDA Credit Support Annex, subject to the satisfaction of the
Rating Agency
Condition; provided that such ISDA Credit Support Annex shall be
made a credit
support document for the Swap Counterparty pursuant to an amendment
to the Swap
Agreement.
Due
Date: With respect to any Distribution Date and any Mortgage Loan,
the
day during the related Due Period on which a Scheduled Payment is
due.
Due
Period: With respect to any Distribution Date, the period beginning
on
the second day of the calendar month preceding the calendar month
in which such
Distribution Date occurs and ending on the first day of the month
in which such
Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a
depository
institution the long-term unsecured debt obligations of which are
rated by each
Rating Agency in one of its two highest rating categories, or (ii)
maintained
with the corporate trust department of a bank which (A) has a
rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the
corporate trust
department of a national banking association or banking corporation
which has a
rating of at least A-1 by S&P or F1 by
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Fitch, or (iii) an account or accounts the deposits in which are
fully insured
by the FDIC, or (iv) an account or accounts, acceptable to each
Rating Agency
without reduction or withdrawal of the rating of any Class of
Certificates, as
evidenced in writing, by a depository institution in which such
accounts are
insured by the FDIC (to the limit established by the FDIC), the
uninsured
deposits in which accounts are otherwise secured such that, as
evidenced by an
Opinion of Counsel delivered to and acceptable to the Trustee and
each Rating
Agency, the Certificateholders have a claim with respect to the
funds in such
account and a perfected first security interest against any
collateral (which
shall be limited to Permitted Investments) securing such funds that
is superior
to claims of any other depositors or creditors of the depository
institution
with which such account is maintained, or (v) maintained at an
eligible
institution whose commercial paper, short-term debt or other
short-term deposits
are rated at least A-1+ by S&P and F-1+ by Fitch, or (vi)
maintained with a
federal or state chartered depository institution the deposits in
which are
insured by the FDIC to the applicable limits and the short-term
unsecured debt
obligations of which (or, in the case of a depository institution
that is a
subsidiary of a holding company, the short-term unsecured debt
obligations of
such holding company) are rated A-1 by S&P or Prime-1 by
Moody's at the time any
deposits are held on deposit therein, or (vii) a segregated trust
account or
accounts maintained with a federal or state chartered depository
institution or
trust company acting in its fiduciary capacity, or (viii) otherwise
acceptable
to each Rating Agency, as evidenced by a letter from each Rating
Agency to the
Trustee.
ERISA: The Employee Retirement Income Security Act of 1974,
including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that would satisfy the
requirements of
Prohibited Transaction Exemption 90-29, Exemption Application No.
D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted to the Underwriter by
the United
States Department of Labor (or any other applicable underwriter's
exemption
granted by the United States Department of Labor), except, in
relevant part, for
the requirement that the certificates have received a rating at the
time of
acquisition that is in one of the three (or four, in the case of a
"designated
transaction") highest generic rating categories by at least one of
the Rating
Agencies.
ERISA Restricted Certificates: The Class C and Class P Certificates
and any
other Certificate, as long as the acquisition and holding of such
other
Certificate is not covered by and exempt under any applicable
underwriter's
exemption granted by the United States Department of Labor.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
Exception Report: As defined in Section 2.02 hereof.
Excess Interest: On any Distribution Date, for any Class of the
Class A
Certificates, Class R Certificates, Class M Certificates and Class
B
Certificates, the excess, if any, of (1) the amount of interest
such Class of
Certificates is entitled to receive on such Distribution Date over
(2) the
amount of interest such Class of Certificates would have been
entitled to
receive on such Distribution Date at an interest rate equal to the
REMIC
Pass-Through Rate.
Excess Proceeds: With respect to any Liquidated Loan, any
Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal
balance of
such Liquidated Loan as of the date of such liquidation plus (2)
interest at the
Mortgage Rate from the Due Date as to which interest was last paid
or advanced
to Certificateholders (and not reimbursed to the Servicer) up to
the Due Date in
the month in
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which such Liquidation Proceeds are required to be distributed on
the unpaid
principal balance of such Liquidated Loan outstanding during each
Due Period as
to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Existing Servicing Agreement: The Servicing Agreement between
Merrill Lynch
Mortgage Lending, Inc., as Owner, and Wilshire Credit Corporation,
as Servicer,
dated as of January 1, 2005, as at any time amended and in
effect.
Extra Principal Distribution Amount: (1) Prior to the Stepdown
Date, the
excess of (A) the sum of (i) the Aggregate Certificate Principal
Balance
immediately preceding such Distribution Date reduced by the
Principal Funds with
respect to such Distribution Date and (ii) $40,700,004 over (B) the
Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution
Date and (2) on
and after the Stepdown Date, the excess, if any, of (A) the sum of
(i) the
Aggregate Certificate Principal Balance immediately preceding such
Distribution
Date, reduced by the Principal Funds with respect to such
Distribution Date and
(ii) the greater of (a) 7.40% of the Pool Stated Principal Balance
of the
Mortgage Loans and (b) the Minimum Required Overcollateralization
Amount less
(B) the Pool Stated Principal Balance of the Mortgage Loans as of
such
Distribution Date; provided, however, that if on any Distribution
Date a
Stepdown Trigger Event is in effect, the Extra Principal
Distribution Amount
will not be reduced to the applicable percentage of the
then-current Stated
Principal Balance of the Mortgage Loans as of the Due Date
immediately prior to
the Stepdown Trigger Event until the next Distribution Date on
which the
Stepdown Trigger Event is not in effect.
Fannie Mae: A federally chartered and privately owned corporation
organized
and existing under the Federal National Mortgage Association
Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution
Date,
in the event that the Pass-Through Rate for a Class of Class A,
Class R, Class M
or Class B Certificates is based upon the related Available Funds
Cap or the
related Maximum Rate Cap, the sum of (A) the excess of (1) the
amount of
interest that such Class would have been entitled to receive on
such
Distribution Date had the Pass-Through Rate for that Class not been
calculated
based on the related Available Funds Cap or the related Maximum
Rate Cap, up to
but not exceeding the greater of (a) the related Maximum Rate Cap
or (b) the sum
of (i) the related Available Funds Cap and (ii) the product of (AA)
a fraction,
the numerator of which is 360 and the denominator of which is the
actual number
of days in the related Accrual Period and (BB) the sum of (x) the
quotient of
(I) an amount equal to the proceeds, if any, payable under the
related Cap
Contract and (II) the aggregate Certificate Principal Balance of
each Class of
Certificates to which such Cap Contract relates for such
Distribution Date and
(y) the quotient obtained by dividing (I) an amount equal to any
Net Swap
Payments owed by the Swap Counterparty for such Distribution Date
by (II) the
aggregate Stated Principal Balance of the Mortgage Loans as of the
immediately
preceding Distribution Date over (2) the amount of interest such
Class was
entitled to receive on such Distribution Date based on the
applicable Available
Funds Cap; (B) the unpaid portion of any such excess from prior
Distribution
Dates (and interest accrued thereon at the then applicable
Pass-Through Rate,
without giving effect to the applicable Available Funds Cap) and
(C) any amount
previously distributed with respect to
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<PAGE>
Floating Rate Certificate Carryover for such Class that is
recovered as a
voidable preference by a trustee in bankruptcy.
Freddie Mac: A corporate instrumentality of the United States
created and
existing under Title III of the Emergency Home Finance Act of 1970,
as amended,
or any successor thereto.
Grantor Trusts: The grantor trusts described in Section 2.07
hereof.
Gross Margin: The percentage set forth in the related Mortgage Note
for
each of the Adjustable Rate Mortgage Loans which is to be added to
the
applicable index for use in determining the Mortgage Rate on each
Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each
Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group
One" in
the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan at any time identified
in the
Group One Mortgage Loan Schedule attached hereto as Exhibit
B-2.
Group One Net WAC: The Net WAC of Group One.
Group One Principal Distribution Amount: As of any Distribution
Date, the
amount equal to the lesser of (i) the aggregate Certificate
Principal Balance of
the Class A-1 and Class R Certificates and (ii) the product of (x)
the Group One
Principal Distribution Percentage and (y) the Class A Principal
Distribution
Amount; provided, however, that (A) with respect to any
Distribution Date on
which the Class A-1 and Class R Certificates are outstanding and
the Certificate
Principal Balance of the Class A-2 Certificates has been reduced to
zero, the
Group Two Principal Distribution Amount in excess of the amount
necessary to
reduce the Certificate Principal Balance of the Class A-2
Certificates to zero
will be applied to increase the Group One Principal Distribution
Amount and (B)
with respect to any Distribution Date thereafter, the Group One
Principal
Distribution Amount will equal the Class A Principal Distribution
Amount.
Group One Principal Distribution Percentage: With respect to
any
Distribution Date, a fraction expressed as a percentage, the
numerator of which
is the amount of Principal Funds received with respect to Mortgage
Loans in
Group One and the denominator of which is the amount of Principal
Funds received
from all of the Mortgage Loans in the mortgage pool.
Group Two: The portion of the Mortgage Pool identified as "Group
Two" in
the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan at any time identified
in the
Group Two Mortgage Loan Schedule attached hereto as Exhibit
B-3.
Group Two Net WAC: The Net WAC of Group Two.
Group Two Principal Distribution Amount: As of any Distribution
Date, the
amount equal to the lesser of (i) the aggregate Certificate
Principal Balance of
the Class A-2 Certificates and (ii) the product of (x) the Group
Two Principal
Distribution Percentage and (y) the Class A Principal Distribution
Amount;
provided, however, that (A) with respect to any Distribution Date
on which the
Class A-2 Certificates are outstanding and the Certificate
Principal Balances of
the Class A-1 and Class R Certificates have been reduced to zero,
the Group One
Principal Distribution Amount in excess of the
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<PAGE>
amount necessary to reduce the Certificate Principal Balance of the
Class A-1
Certificates and Class R Certificates to zero will be applied to
increase the
Group Two Principal Distribution Amount and (B) with respect to any
Distribution
Date thereafter, the Group Two Principal Distribution Amount will
equal the
Class A Principal Distribution Amount.
Group Two Principal Distribution Percentage: With respect to
any
Distribution Date, a fraction expressed as a percentage, the
numerator of which
is the amount of Principal Funds received with respect to Mortgage
Loans in
Group Two and the denominator of which is the amount of Principal
Funds received
from all of the Mortgage Loans in the mortgage pool.
Indenture: An indenture relating to the issuance of NIM Notes.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan,
the first
Adjustment Date following the origination of such Mortgage
Loan.
Initial Certificate Principal Balance: With respect to any
Certificate
(other than the Class P Certificates), the Certificate Principal
Balance of such
Certificate or any predecessor Certificate on the Closing Date as
set forth in
Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate
in
effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust
Fund, any insurance policy, including all riders and endorsements
thereto in
effect with respect to such Mortgage Loan, including any
replacement policy or
policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant
to any Insurance Policy or any other insurance policy covering a
Mortgage Loan,
to the extent such proceeds are payable to the mortgagee under the
Mortgage, the
Servicer or the trustee under the deed of trust and are not applied
to the
restoration of the related Mortgaged Property or released to either
the
Mortgagor or to the holder of a senior lien on the related Mortgage
Property in
accordance with the procedures that the Servicer would follow in
servicing
mortgage loans held for its own account, in each case other than
any amount
included in such Insurance Proceeds in respect of Insured
Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any
other
insurance policy with respect to the Mortgage Loans.
Interest Carry Forward Amount: Any of the Class A-1 Interest Carry
Forward
Amount, the Class A-2A Interest Carry Forward Amount, the Class
A-2B Interest
Carry Forward Amount, the Class A-2C Interest Carry Forward Amount,
the Class
A-2D Interest Carry Forward Amount, the Class R Interest Carry
Forward Amount,
the Class M-1 Interest Carry Forward Amount, the Class M-2 Interest
Carry
Forward Amount, the Class M-3 Interest Carry Forward Amount, the
Class M-4
Interest Carry Forward Amount, the Class M-5 Interest Carry Forward
Amount, the
Class M-6 Interest Carry Forward Amount, the Class B-1 Interest
Carry Forward
Amount, the Class B-2 Interest Carry Forward Amount, the Class B-3
Interest
Carry Forward Amount or the Class C Interest Carry Forward Amount,
as the case
may be.
Interest Determination Date: With respect to the LIBOR
Certificates, for
any Accrual Period, the second LIBOR Business Day preceding the
commencement of
such Accrual Period.
Interest Funds: With respect to any Distribution Date, the sum,
without
duplication, of (1) all scheduled interest due during the related
Due Period and
received before the related Servicer Remittance
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<PAGE>
Date or advanced on or before the related Servicer Remittance Date
less the
Servicing Fee, (2) all Advances relating to interest with respect
to the
Mortgage Loans, (3) all Compensating Interest with respect to the
Mortgage
Loans, (4) Liquidation Proceeds with respect to the Mortgage Loans
(to the
extent such Liquidation Proceeds relate to interest) collected
during the
related Prepayment Period, (5) proceeds of any purchase pursuant to
Sections
2.02, 2.03 or 9.01 (to the extent such proceeds relate to interest)
and (6)
prepayment charges received with respect to the Mortgage Loans
during the
related Prepayment Period less (A) all Non-Recoverable Advances
relating to
interest and (B) other amounts reimbursable to the Servicer and the
Trustee
pursuant to this Agreement and allocable to interest.
Issuing Entity: Specialty Underwriting and Residential Finance
Trust,
Series 2006-BC4.
Last
Scheduled Distribution Date: With respect to any Class of
Certificates, the Distribution Date in September 2037.
Latest Possible Maturity Date: The first Distribution Date
following the
third anniversary of the scheduled maturity date of the Mortgage
Loan in the
Trust Fund having the latest scheduled maturity date as of the
Cut-off Date.
Lender: As defined in Section 10.14(a).
LIBOR Business Day: Any day on which banks in the City of London,
England
and New York City, U.S.A. are open and conducting transactions in
foreign
currency and exchange.
LIBOR Certificates: The Class A, Class M, Class B and Class R
Certificates.
Liquidated Loan: With respect to any Distribution Date, a
defaulted
Mortgage Loan that either (a) pursuant to Section 3.12 has been
realized upon or
liquidated through deed-in-lieu of foreclosure, foreclosure sale,
trustee's sale
or other realization as provided by applicable law governing the
real property
subject to the related Mortgage and any security agreements and as
to which the
Servicer has certified (in accordance with Section 3.12) in the
related
Prepayment Period that it has received all amounts it expects to
receive in
connection with such liquidation or (b) as to which is not a first
lien Mortgage
Loan and is delinquent 180 days or longer, the Servicer has
certified in a
certificate of an officer of the Servicer delivered to the
Depositor and the
Trustee that it does not believe that there is a reasonable
likelihood that any
further net proceeds will be received or recovered with respect to
such Mortgage
Loan.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in
connection with the partial or complete liquidation of Mortgage
Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer
pursuant to this
Agreement or otherwise or amounts received in connection with any
condemnation
or partial release of a Mortgaged Property and any other proceeds
received in
connection with an REO Property, less the sum of related
unreimbursed Advances,
Servicing Fees, Servicing Advances and any other expenses related
to such
Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the
fraction,
expressed as a percentage, the numerator of which is the original
principal
balance of the related Mortgage Loan and the denominator of which
is the lesser
of (x) the Appraised Value of the related Mortgaged Property and
(y) the sales
price of the related Mortgaged Property at the time of
origination.
Losses: Any losses, claims, damages, liabilities or expenses
collectively.
Lower Tier REMIC: As described in the Preliminary Statement and
Section
2.07.
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Lower Tier REMIC I Marker Interests: Each of the classes of Lower
Tier
REMIC Regular Interests other than the Class LTIX Interest, the
Class LTIIX
Interest, the Class LTII1A Interest, the Class LTII1B Interest, the
Class LTII2A
Interest, the Class LTII2B Interest and the Class LT-IO
Interest.
Lower Tier REMIC II Marker Interests: Each of the Class LTII1A
Interest,
the Class LTII1B Interest, the Class LTII2A Interest and the Class
LTII2B
Interest.
Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the
Class
LTA-2A Interest, the Class LTA-2B Interest, the Class LTA-2C
Interest, the Class
LTA-2D Interest, the Class LTM-1 Interest, the Class LTM-2
Interest, the Class
LTM-3 Interest, the Class LTM-4 Interest, the Class LTM-5 Interest,
the Class
LTM-6 Interest, the Class LTB-1 Interest, the Class LTB-2 Interest,
the Class
LTB-3 Interest, the Class LTII1A Interest, the Class LTII1B
Interest, the Class
LTII2A Interest, the Class LTII2B Interest, the Class LTIX
Interest, the Class
LTIIX Interest, the Class LT-IO Interest and the Class LTR
Interest.
Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC
Interests
other than the Class LTR Interest.
Lower Tier REMIC Subordinate Balance Ratio: The ratio of (i) the
principal
balance of the Class LTII1A Interest to (ii) the principal balance
of the Class
LTII2A Interest that is equal to the ratio of (i) the excess of (A)
the
aggregate Stated Principal Balance of Group One over (B) the
current Certificate
Principal Balance of the Class A-1 and Class R Certificates to (ii)
the excess
of (A) the aggregate Stated Principal Balance of Group Two over (B)
the current
Certificate Principal Balance of the Class A-2 Certificates.
Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan,
the maximum rate of interest set forth as such in the related
Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest
set forth in
the related Mortgage Note.
Maximum Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class
A-2
Maximum Rate Cap, or the Subordinate Certificate Maximum Rate
Cap.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of the State of Delaware, or
any successor
thereto.
MERS
Loan: Any Mortgage Loan registered with MERS on the MERS
System.
MERS
System: The system of recording transfers of mortgage
electronically
maintained by MERS.
MIN:
The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan,
the minimum rate of interest set forth as such in the related
Mortgage Note.
Minimum Required Overcollateralization Amount: An amount equal to
the
product of (x) 0.50% and (y) the Stated Principal Balance of the
Mortgage Loans
as of the Cut-off Date.
MOM
Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely
as nominee for the originator of such Mortgage Loan and its
successors and
assigns.
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Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 4.05.
Moody's: Moody's Investors Service, Inc. or any successor in
interest.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of
trust or
other instrument creating a first or second lien or a first or
second priority
ownership interest in an estate in fee simple in real property
securing a
Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof
pertaining to a particular Mortgage Loan and any additional
documents delivered
to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Group: Either of Group One or Group Two.
Mortgage Loan Schedule: The lists of Mortgage Loans (as from time
to time
amended by the Sponsor to reflect the deletion of Deleted Mortgage
Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions
of this
Agreement) transferred to the Trustee as part of the Trust Fund and
from time to
time subject to this Agreement, attached hereto as Exhibits B-1,
B-2 and B-3,
setting forth the following information with respect to each
Mortgage Loan:
(i)
the loan number;
(ii)
the unpaid principal balance of the Mortgage Loans;
(iii) the Initial Mortgage Rate;
(iv)
the maturity date and the months remaining before maturity
date;
(v) the original principal
balance;
(vi)
the Cut-off Date Principal Balance;
(vii) the first payment date of the Mortgage Loan;
(viii) the Loan-to-Value Ratio at origination with respect to a
first lien
Mortgage Loan or the Combined Loan-to-Value Ratio with respect to
a
second lien Mortgage Loan;
(ix)
a code indicating whether the residential dwelling at the time
of
origination was represented to be owner-occupied;
(x)
a code indicating the
property type;
(xi)
with respect to each Adjustable Rate Mortgage Loan:
(a) the frequency of
each Adjustment Date;
(b) the next
Adjustment Date;
(c) the Maximum
Mortgage Rate;
(d) the Minimum
Mortgage Rate;
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<PAGE>
(e) the Mortgage Rate
as of the Cut-off Date;
(f) the related
Periodic Rate Cap;
(g) the Gross Margin;
and
(h) the lifetime rate
cap;
(xii) the location of the related Mortgaged Property;
(xiii) a code indicating whether a prepayment charge is
applicable;
(a) the period during
which such prepayment charge is in effect;
(b) the amount of such
prepayment charge;
(c) any limitations or
other conditions on the enforceability of such
prepayment charge; and
(d) any other
information pertaining to the prepayment charge
specified in the related Mortgage Note;
(xiv) the Credit Score and date obtained; and
(xv)
the MIN.
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the
Trustee pursuant to the provisions hereof as from time to time are
held as a
part of the Trust Fund (including any REO Property), the mortgage
loans so held
being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or
other acquisition of title of the related Mortgaged Property. Any
mortgage loan
that was intended by the parties hereto to be transferred to the
Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so
transferred for
any reason shall continue to be a Mortgage Loan hereunder until the
Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence of
indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all
amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in
the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from
time to time.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Net
Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum
rate equal to the then current Mortgage Rate less the Servicing Fee
Rate.
Net
Rate: The per annum rate set forth in footnote 8 to the description
of
the Lower Tier REMIC in the Preliminary Statement hereto (such rate
being based
on the weighted average of the interest rates on the SWAP REMIC
Regular
Interests as adjusted and as set forth in such footnote).
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<PAGE>
Net
Swap Payment: With respect to any Distribution Date, any net
payment
(other than a Swap Termination Payment or Defaulted Swap
Termination Payment)
made by the Supplemental Interest Trust to the Swap Counterparty on
the related
Fixed Rate Payer Payment Date (as defined in the Swap Agreement) or
made by the
Swap Counterparty to the Supplemental Interest Trust on the related
Floating
Rate Payer Payment Date (as defined in the Swap Agreement). In each
case, the
Net Swap Payment shall not be less than zero.
Net
WAC: With respect to any Distribution Date and for any Mortgage
Group,
the weighted average Net Mortgage Rate for the Mortgage Loans in
such Mortgage
Group calculated based on the respective Net Mortgage Rates and the
Stated
Principal Balances of such Mortgage Loans as of the preceding
Distribution Date
(or, in the case of the first Distribution Date, as of the Cut-off
Date).
NIM
Notes: Any net interest margin or excess cashflow securities to
be
issued pursuant to an Indenture.
Non-Recoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Servicer that, in the good faith
judgment of the
Servicer, will not or, in the case of a current delinquency, would
not, be
ultimately recoverable by the Servicer from the related Mortgagor,
related
Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.
Non-Recoverable Servicing Advance: Any portion of a Servicing
Advance
previously made or proposed to be made by the Servicer that, in the
good faith
judgment of the Servicer, will not or, in the case of a current
Servicing
Advance, would not, be ultimately recoverable by the Servicer from
the related
Mortgagor, related Liquidation Proceeds or otherwise with respect
to the related
Mortgage Loan.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A Certificates, Class M
Certificates, Class
B Certificates and Class R Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President, a vice
president (however
denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor, the
Servicer or the Trustee (or any other officer customarily
performing functions
similar to those performed by any of the above designated officers
and also to
whom, with respect to a particular matter, such matter is referred
because of
such officer's knowledge of and familiarity with a particular
subject) or (2),
if provided for in this Agreement, signed by a Servicing Officer,
as the case
may be, and delivered to the Depositor, the Servicer or the
Trustee, as the case
may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by
the Trustee on the related Interest Determination Date on the basis
of (a) the
offered rates for one-month United States dollar deposits, as such
rates appear
on Telerate page 3750, as of 11:00 a.m. (London time) on such
Interest
Determination Date or (b) if such rate does not appear on Telerate
Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference
Banks for
one-month United States dollar deposits, as such rates appear on
the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest
Determination
Date. If One-Month LIBOR is determined pursuant to clause (b)
above, on each
Interest Determination Date, One-Month LIBOR for the related
Accrual Period will
be established by the Trustee as follows:
(i) If on such
Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related
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Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole
multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the higher of (i) One-Month
LIBOR
as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for
the Depositor or the Servicer, reasonably acceptable to each
addressee of such
opinion; provided, however, that with respect to Section 6.04 or
10.01, or the
interpretation or application of the REMIC Provisions, such counsel
must (1) in
fact be independent of the Depositor and the Servicer, (2) not have
any direct
financial interest in the Depositor or the Servicer or in any
Affiliate of
either, and (3) not be connected with the Depositor or the Servicer
as an
officer, employee, promoter, underwriter, trustee, partner,
director or person
performing similar functions.
OTS:
The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except: (1) Certificates theretofore canceled by the
Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in
exchange for
which or in lieu of which other Certificates have been executed by
the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage
Loan
with a Stated Principal Balance greater than zero that was not the
subject of a
Principal Prepayment in full, and that did not become a Liquidated
Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the
excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2)
the
Certificate Principal Balance of the Certificates (other than the
Class P
Certificates and the Class C Certificates).
Overcollateralization Deficiency Amount: As of any date of
determination,
if the Overcollateralization Amount is less than the Targeted
Overcollateralization Amount, then the amount equal to the
Targeted
Overcollateralization Amount over the Overcollateralization Amount;
otherwise,
zero.
Overcollateralization Release Amount: As of any date of
determination, if
the Overcollateralization Amount is greater than the Targeted
Overcollateralization Amount, then the amount equal to the
Overcollateralization
Amount over the Targeted Overcollateralization Amount; otherwise,
zero.
Ownership Interest: As to any Certificate, any ownership interest
in such
Certificate including any interest in such Certificate as the
Holder thereof and
any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to any Class of Certificates,
the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage Interest: With respect to:
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(i) any Class, the percentage interest in the undivided
beneficial
ownership interest evidenced by such Class which shall be equal
to the Certificate Principal Balance of such Class divided by
the
aggregate Certificate Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby of
the
related Class shall equal the percentage obtained by dividing
the
Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of such Class; except that in
the case of any Class P Certificates, the Percentage Interest
with respect to such Certificate shown on the face of such
Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related
Mortgage Note, the provision therein that limits permissible
increases and
decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the Issuing Entity
created
pursuant to this Agreement which shall be:
(i) holding Mortgage
Loans transferred from the Depositor and other
assets of the Issuing Entity, including the Cap Contracts and
the
Supplemental Interest Trust subtrust, which in turn holds the
Swap Agreement, and any credit enhancement and passive
derivative
financial instruments that pertain to beneficial interests
issued
or sold to parties other than the Depositor, its Affiliates, or
its agents;
(ii) issuing Certificates and other interests in the assets of
the
Issuing Entity;
(iii) through the appropriate subtrust, as applicable,
receiving
collections on the Mortgage Loans and the Swap Agreement and
making payments on such Certificates and interests in
accordance
with the terms of this Agreement; and
(iv) engaging in other activities that are necessary or incidental
to
accomplish these limited purposes, which activities cannot be
contrary to the status of the Issuing Entity as a qualified
special purpose entity under existing accounting literature.
Permitted Investments: At any time, any one or more of the
following
obligations and securities:
(i) obligations of the
United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the
United States;
(ii) general obligations of or obligations guaranteed by any state
of
the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates;
(iii) commercial or finance company paper, other than commercial
or
finance company paper issued by the Depositor, the Trustee or
any
of their Affiliates, which is then receiving the highest
commercial or finance company paper rating of each such Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to
supervision
and examination by
48
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federal and/or state banking authorities, provided that the
commercial paper and/or long term unsecured debt obligations of
such depository institution or trust company are then rated one
of the two highest long-term and the highest short-term ratings
of each such Rating Agency for such securities;
(v) demand or time
deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance
company or other corporation rated in the two highest long-term
or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such agreements,
such
terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by
any
such Rating Agency as evidenced by a letter from each Rating
Agency;
(vii) repurchase
obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons
or
instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount
issued by
any corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United States or
any state thereof which, at the time of such investment, have
one
of the two highest long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed
or
advised by the Trustee or its Affiliates) which at the date of
acquisition of the interests in such fund and throughout the
time
such interests are held in such fund has the highest applicable
long term rating by each such Rating Agency; and
(x) short term
investment funds sponsored by any trust company or
national banking association incorporated under the laws of the
United States or any state thereof, including the Trustee or
any
of its Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective highest
applicable rating category;
provided, that no such instrument shall be a Permitted Investment
if such
instrument (i) evidences the right to receive interest only
payments with
respect to the obligations underlying such instrument, (ii) is
purchased at a
premium or above par or (iii) is purchased at a deep discount;
provided,
further, that no such instrument shall be a Permitted Investment
(A) if such
instrument evidences principal and interest payments derived from
obligations
underlying such instrument and the interest payments with respect
to such
instrument provide a yield to maturity of greater than 120% of the
yield to
maturity at par of such underlying obligations, or (B) if it may be
redeemed at
a price below the purchase price (the foregoing clause (B) not to
apply to
investments in units of money market funds pursuant to clause (ix)
above); and
provided, further, (I) that no amount beneficially owned by any
REMIC
(including, without limitation, any amounts collected by the
Servicer but not
yet deposited in the Collection Account) may be invested in
investments (other
than money market funds) treated as equity interests for Federal
income tax
purposes, unless the Servicer and/or the Trustee, shall receive an
Opinion of
Counsel acceptable to the Servicer and/or the Trustee, at the
expense of the
party requesting that such investment be made, to the effect that
such
investment will not adversely affect the status of the any REMIC
provided for
herein as a REMIC under the Code or result in imposition of a tax
on the Issuing
Entity or any REMIC provided for herein and (II) any such
investment must be a
"permitted investment" within the meaning of Section 860G(a)(5)
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of the Code. Permitted Investments that are subject to prepayment
or call may
not be purchased at a price in excess of par. Any Permitted
Investment may be
held by or through the Trustee or any of its Affiliates.
Permitted Transferee: Any Person other than (i) the United States,
any
State or political subdivision thereof, or any agency or
instrumentality of any
of the foregoing, (ii) a foreign government, International
Organization or any
agency or instrumentality of either of the foregoing, (iii) an
organization
(except certain farmers' cooperatives described in Section 521 of
the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the
tax imposed
by Section 511 of the Code on unrelated business taxable income) on
any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with
respect to the
Class R Certificate, (iv) rural electric and telephone cooperatives
described in
Section 1381(a)(2)(C) of the Code, and (v) a Person that is not a
citizen or
resident of the United States, a corporation or partnership (or
other entity
treated as a corporation or partnership for United States federal
income tax
purposes) created or organized in or under the laws of the United
States or any
State thereof or the District of Columbia or an estate whose income
from sources
without the United States is includable in gross income for United
States
federal income tax purposes regardless of its connection with the
conduct of a
trade or business within the United States, or a trust if a court
within the
United States is able to exercise primary supervision over the
administration of
the trust and one or more United States persons have authority to
control all
substantial decisions of the trust, unless, in the case of this
clause (v), such
Person has furnished the transferor and the Trustee with a duly
completed
Internal Revenue Service Form W-8ECI or applicable successor form.
The terms
"United States," "State" and "International Organization" shall
have the
meanings set forth in Section 7701 of the Code. A corporation will
not be
treated as an instrumentality of the United States or of any State
thereof for
these purposes if all of its activities are subject to tax and,
with the
exception of the Federal Home Loan Mortgage Corporation, a majority
of its board
of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, limited
liability
company, joint venture, association, joint-stock company, trust,
unincorporated
organization or government, or any agency or political subdivision
thereof.
Pool
Stated Principal Balance: As to any Distribution Date, the
aggregate
of the Stated Principal Balances, as of such Distribution Date, of
the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Prepayment Assumption: A rate of prepayment, as described in the
Prospectus
Supplement in the definition of "Modeling Assumptions," relating to
the
Certificates.
Prepayment Interest Excess: With respect to any Servicer Remittance
Date,
for each Mortgage Loan that was the subject of a Principal
Prepayment in full
during the portion of the related Prepayment Period occurring
between the first
day of the calendar month in which such Servicer Remittance Date
occurs and the
last day of the related Prepayment Period, an amount equal to
interest (to the
extent received) at the applicable Net Mortgage Rate on the amount
of such
Principal Prepayment for the number of days commencing on the first
day of the
calendar month in which such Servicer Remittance Date occurs and
ending on the
date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution
Date, for
each Mortgage Loan that was the subject of a Principal Prepayment
in full (other
than a Principal Prepayment in full resulting from the purchase of
a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a
Principal
Prepayment in full on a Mortgage Loan received during the period
from and
including the first day to and including the 14th day of the month
of such
Distribution Date), the amount, if any, by which (i) one month's
interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of
such
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Mortgage Loan as of the preceding Distribution Date exceeds (ii)
the amount of
interest paid or collected in connection with such Principal
Prepayment.
Prepayment Period: As to any Distribution Date, the period
beginning with
the opening of business on the 15th day of the calendar month
preceding the
month in which such Distribution Date occurs (or in the case of the
first
Distribution Date, beginning with the opening of business on the
Cut-off Date)
and ending on the close of business on the 14th day of the month in
which such
Distribution Date occurs.
Principal Distribution Amount: With respect to each Distribution
Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii)
any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any
Distribution
Date, the sum, without duplication, of (1) the scheduled principal
due during
the related Due Period and received before the related Servicer
Remittance Date
or advanced on or before the related Servicer Remittance Date, (2)
prepayments
in full collected in the related Prepayment Period, (3) the Stated
Principal
Balance of each Mortgage Loan that was purchased by the Depositor
or the
Servicer during the related Prepayment Period or, in the case of a
purchase
pursuant to Section 9.01, on the Business Day prior to such
Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal
balance of any
Replacement Mortgage Loan is less than the aggregate unpaid
principal of the
related Deleted Mortgage Loans delivered by the Sponsor in
connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5)
all Liquidation
Proceeds collected during the related Prepayment Period (to the
extent such
Liquidation Proceeds relate to principal and represent payment in
full), (6)
Subsequent Recoveries received during the related Due Period and
(7) all other
collections and recoveries in respect of principal during the
related Due
Period, less (A) all Non-Recoverable Advances relating to principal
with respect
to the Mortgage Loans and (B) other amounts reimbursable to the
Servicer and the
Trustee pursuant to this Agreement and allocable to principal.
Principal Prepayment: Any Mortgagor payment or other recovery of
(or
proceeds with respect to) principal on a Mortgage Loan (including
Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof)
that is
received in advance of its scheduled Due Date and is not
accompanied by an
amount as to interest representing scheduled interest due on any
date or dates
in any month or months subsequent to the month of prepayment.
Partial Principal
Prepayments shall be applied by the Servicer in accordance with the
terms of the
related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement, dated September
25, 2006,
relating to the public offering of the Offered Certificates.
PUD:
A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to
be
repurchased by the Sponsor pursuant to Section 2.02 or 2.03 hereof,
or purchased
by the Servicer pursuant to Section 3.12(c) hereof, an amount equal
to the sum
of (i) 100% of the unpaid principal balance of the Mortgage Loan as
of the date
of such purchase together with any unreimbursed Servicing Advances,
(ii) accrued
interest thereon at the applicable Mortgage Rate from (a) the date
through which
interest was last paid by the Mortgagor to (b) the Due Date in the
month in
which the Purchase Price is to be distributed to Certificateholders
and (iii)
any costs and damages incurred by the Issuing Entity (or the
Trustee on behalf
of the Issuing Entity) in connection with any violation by the
affected Mortgage
Loan of any anti-predatory or anti-abusive lending laws. With
respect to any REO
Property purchased by the Servicer pursuant to Section 3.12(c)
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hereof, an amount equal to the fair market value of such REO
Property, as
determined in good faith by the Servicer.
Rating Agency: Either of Moody's or S&P. If any such
organization or its
successor is no longer in existence, "Rating Agency" shall be a
nationally
recognized statistical rating organization, or other comparable
Person,
designated by the Depositor, notice of which designation shall be
given to the
Trustee. References herein to a given rating category of a Rating
Agency shall
mean such rating category without giving effect to any
modifiers.
Rating Agency Condition: As defined in the Swap Agreement.
Realized Loss: With respect to (1) a Liquidated Loan, the amount,
if any,
by which the Stated Principal Balance and accrued interest thereon
at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer
with respect
thereto (net of reimbursement of Advances and Servicing Advances)
at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to
a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that
the Mortgagor
is no longer legally required to pay (except for the extinguishment
of debt that
results from the exercise of remedies due to default by the
Mortgagor).
Record Date: With respect to any Distribution Date, the close of
business
on the last Business Day of the month preceding the month in which
the
applicable Distribution Date occurs (or with respect to the first
Distribution
Date, the Closing Date).
Reference Banks: Barclays Bank PLC, U.S. Bank National
Association,
Citibank, N.A., and NatWest, N.A.; provided that if any of the
foregoing banks
are not suitable to serve as a Reference Bank, then any leading
banks selected
by the Trustee which are engaged in transactions in Eurodollar
deposits in the
international Eurocurrency market (i) with an established place of
business in
London, England and (ii) whose quotations appear on the Reuters
Screen LIBO Page
on the relevant Interest Determination Date.
Regular Certificate: Any one of the Class A, Class R, Class M and
Class B
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from
time to time,
and subject to such clarification and interpretation as have been
provided by
the Commission in the adopting release (Asset-Backed Securities,
Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005)) or by
the staff of
the Commission, or as may be provided by the Commission or its
staff from time
to time.
Related Certificates: For each interest in the Upper Tier REMIC,
the Class
of Certificates listed on the same row in the table entitled "Upper
Tier REMIC"
in the Preliminary Statement.
Relief Act: The Servicemembers Civil Relief Act or any similar
state laws
or regulations.
REMIC: A "real estate mortgage investment conduit" within the
meaning of
section 860D of the Code. References herein to "the REMICs" or "a
REMIC" shall
mean any (or, as the context requires, all) of the SWAP REMIC, the
Lower Tier
REMIC and the Upper Tier REMIC.
REMIC Pass-Through
Rate: In the case of a Class of the Class A, Class M and
Class B Certificates, the Upper Tier REMIC Net WAC Cap for the
Corresponding
REMIC Regular Interest.
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REMIC Provisions: Provisions of the federal income tax law relating
to real
estate mortgage investment conduits, which appear at sections 860A
through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions,
and proposed,
temporary and final regulations and published rulings, notices and
announcements
promulgated thereunder, as the foregoing may be in effect from time
to time as
well as provisions of applicable state laws.
REMIC Regular Interests: Each of the interests in the Upper Tier
REMIC as
set forth in the Preliminary Statement other than the Residual
Interest.
REMIC SWAP Rate: For each Distribution Date (and the related
Accrual
Period), a per annum rate equal to the Fixed Rate under the Swap
Agreement for
such Distribution Date, as set forth in the Prospectus
Supplement.
Remittance Report: As defined in Section 4.04(k) hereof.
REO
Property: A Mortgaged Property acquired by the Servicer, on behalf
of
the Trustee for the benefit of the Certificateholders, through
foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage
Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the
Depositor for
a Deleted Mortgage Loan, which must, on the date of such
substitution, as
confirmed in a Request for Release, substantially in the form of
Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal
portion of the
Scheduled Payment due in the month of substitution, not in excess
of, and not
less than 90% of the Stated Principal Balance of the Deleted
Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate
not less than
or no more than 1% per annum higher than the Mortgage Rate of the
Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage
Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower
than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum
Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage
Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate
Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per
annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit
conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F)
currently be accruing
interest at a rate not more than 1% per annum higher or lower than
that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or
credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value
Ratio (or a
Combined Loan-to-Value Ratio, in the case of Mortgage Loans in a
second lien
position) no higher than that of the Deleted Mortgage Loan; (5)
have a remaining
term to maturity no greater than (and not more than one year less
than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on
terms
substantially similar to those of the prepayment charge, if any, of
the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted
Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan;
and (9) comply
with each representation and warranty set forth in Section 2.03
hereof.
Request for Release: The Request for Release of Documents submitted
by the
Servicer to the Trustee, substantially in the form of Exhibit I
hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance
policy that is required to be maintained from time to time under
this Agreement.
Required Percentage: With respect to any Distribution Date
following a
Stepdown Date, the quotient of (1) the excess of (A) the aggregate
Stated
Principal Balance of the Mortgage Loans as of such Distribution
Date, over (B)
the Certificate Principal Balance of the most senior Class of
Certificates
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outstanding as of such Distribution Date, prior to giving effect
to
distributions to be made on such Distribution Date and (2) the
aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution
Date.
Requirements: Any rules or regulations promulgated pursuant to
the
Sarbanes-Oxley Act of 2002 (as such may be amended from time to
time).
Reserve Interest Rate: With respect to any Interest Determination
Date, the
rate per annum that the Trustee determines to be (1) the arithmetic
mean
(rounded upwards if necessary to the nearest whole multiple of
0.03125%) of the
one-month United States dollar lending rates which New York City
banks selected
by the Trustee are quoting on the relevant Interest Determination
Date to the
principal London offices of leading banks in the London interbank
market or (2)
in the event that the Trustee can determine no such arithmetic
mean, the lowest
one-month United States dollar lending rate which New York City
banks selected
by the Trustee are quoting on such Interest Determination Date to
leading
European banks.
Residual Certificate: The Class R Certificate.
Residual Interest: An interest in the Upper Tier REMIC that is
entitled to
all distributions of principal and interest on the Class R
Certificate other
than (i) distributions in respect of the Class SWR Interest and the
Class LTR
Interest, and (ii) distributions on the Class R Certificate in
respect of Excess
Interest.
Responsible Officer: When used with respect to the Trustee or
Servicer, any
officer of the Trustee or Servicer with direct responsibility for
the
administration of this Agreement and also means any other officer
to whom, with
respect to a particular matter, such matter is referred because of
such
officer's knowledge of and familiarity with the particular
subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on
the
Reuters Monitor Money Rates Service (or such other page as may
replace such LIBO
page on that service for the purpose of displaying London interbank
offered
rates of major banks).
S&P: Standard & Poor's Ratings Services, a division of The
McGraw-Hill
Companies, Inc., or its successor in interest.
Sale
Agreement: The Mortgage Loan Sale and Assignment Agreement, dated
as
of September 1, 2006, between the Depositor and the Sponsor.
Sarbanes-Oxley Certification: As defined in Section 3.20
hereof.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
due on
any Due Date allocable to principal and/or interest on such
Mortgage Loan.
Section 302 Requirements: Any rules or regulations promulgated
pursuant to
the Sarbanes-Oxley Act of 2002 (as such may be amended from time to
time).
Securities Act: The Securities Act of 1933, as amended.
Servicer: Wilshire Credit Corporation, a Nevada corporation, or
its
successor in interest.
Servicer Advance Date: As to any Distribution Date, the related
Servicer
Remittance Date.
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Servicer Remittance Date: With respect to any Distribution Date,
the later
of (x) the date that is two Business Days after the 15th day of the
month in
which the related Distribution Date occurs and (y) the 18th day
(or, if such day
is not a Business Day, the next succeeding Business Day) of the
month in which
the related Distribution Date occurs.
Servicer's Assignee: As defined in Section 10.14(a).
Servicing Advances: All customary, reasonable and necessary "out of
pocket"
costs and expenses incurred in the performance by the Servicer of
its servicing
obligations hereunder, including, but not limited to, the cost of
(1) the
preservation, restoration and protection of a Mortgaged Property,
including
without limitation advances in respect of prior liens, real estate
taxes and
assessments, (2) any collection, enforcement or judicial
proceedings, including
without limitation foreclosures, collections and liquidations, (3)
the
conservation, management, sale and liquidation of any REO Property
(4) executing
and recording instruments of satisfaction, deeds of reconveyance,
substitutions
of trustees on deeds of trust or assignments of mortgage to the
extent not
otherwise recovered from the related Mortgagor or payable under
this Agreement,
(5) correcting errors of prior servicers; tax tracking; title
research; flood
certification; and lender paid mortgage insurance, (6) obtaining or
correcting
any legal documentation required to be included in the Mortgage
Files and
reasonably necessary for the Servicer to perform its obligations
under this
Agreement and (7) compliance with the obligations under Sections
3.01 and 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of
Regulation AB, as such may be amended from time to time, and in
Exhibit R of
this Agreement.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an
amount equal to one month's interest at the Servicing Fee Rate on
the Stated
Principal Balance of such Mortgage Loan as of the preceding
Distribution Date
or, in the event of any payment of interest that accompanies a
Principal
Prepayment in full made by the Mortgagor, interest at the Servicing
Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the
preceding
Distribution Date for the period covered by such payment of
interest.
Servicing Fee Rate: 0.500% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible
for, the administration and servicing of the Mortgage Loans whose
name and
facsimile signature appear on a list of servicing officers
furnished to the
Trustee by the Servicer on the Closing Date pursuant to this
Agreement, as such
lists may from time to time be amended.
Servicing Rights Pledgee: One or more lenders, selected by the
Servicer, to
which the Servicer may pledge and assign all of its right, title
and interest
in, to and under this Agreement.
Servicing Transfer Costs: In the event that the Servicer does not
reimburse
the Trustee under the this Agreement, all costs associated with the
transfer of
servicing from the predecessor Servicer, including, without
limitation, any
costs or expenses associated with the termination of the
predecessor Servicer,
the appointment of a successor servicer, the complete transfer of
all servicing
data and the completion, correction or manipulation of such
servicing data as
may be required by the Trustee or any successor servicer to correct
any errors
or insufficiencies in the servicing data or otherwise to enable the
Trustee or
successor servicer to service the Mortgage Loans properly and
effectively.
SFAS
140: Statement of Financial Accounting Standard No. 140,
Accounting
for Transfers and Servicing of Financial Assets and Extinguishments
of
Liabilities dated September 2000, published by the Financial
Accounting
Standards Board of the Financial Accounting Foundation.
55
<PAGE>
Significance Estimate: With respect to any Distribution Date, and
in
accordance with Item 1115 of Regulation AB, shall be an amount
determined based
on the reasonable good-faith estimate by the Depositor or its
affiliate of the
aggregate maximum probable exposure of the outstanding Certificates
to the Swap
Agreement.
Significance Percentage: With respect to any Distribution Date, and
in
accordance with Item 1115 of Regulation AB, shall be a percentage
equal to the
Significance Estimate divided by the aggregate outstanding
Certificate Principal
Balance of the Certificates, prior to the distribution of the
Principal
Distribution Amount on such Distribution Date.
Sponsor: Merrill Lynch Mortgage Lending, Inc., a Delaware
corporation, or
its successor in interest.
SPV:
As defined in Section 10.14(a).
Startup Day: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal
Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x)
due with
respect to such Mortgage Loan during each Due Period ending prior
to such
Distribution Date and (y) that were received by the Servicer as of
the close of
business on the Determination Date related to such Distribution
Date or with
respect to which Advances were made on the Servicer Advance Date
prior to such
Distribution Date and (B) all Principal Prepayments with respect to
such
Mortgage Loan received on or prior to the last day of the related
Prepayment
Period, and all Liquidation Proceeds to the extent applied by the
Servicer as
recoveries of principal in accordance with Section 3.12 with
respect to such
Mortgage Loan, that were received by the Servicer as of the close
of business on
the last day of the related Due Period. Notwithstanding the
foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be
zero.
Stepdown Date: The earlier to occur of (1) the first Distribution
Date on
which the Class A Certificate Principal Balance and the Class R
Certificate
Principal Balance have been reduced to zero and (2) the later to
occur of (A)
the Distribution Date in October 2009 or (B) the first Distribution
Date on
which the Class A Certificate Principal Balance (after giving
effect to
distributions of the Principal Funds amount for such Distribution
Date) is less
than or equal to 53.10% of the aggregate Stated Principal Balance
of the
Mortgage Loans as of the end of the immediately preceding Due
Period.
Stepdown Required Loss Percentage: For any Distribution Date,
the
applicable percentage for such Distribution Date set forth in the
following
table:
<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS
PERCENTAGE
------------------------------
---------------------------------
<S>
<C>
October 2008 - September 2009 1.55% with respect to
October 2008, plus an additional 1/12th of
1.95% for each month thereafter
October 2009 - September 2010 3.50% with respect to
October 2009, plus an additional 1/12th of
2.05% for each month thereafter
October 2010 - September 2011 5.55% with respect to
October 2010, plus an additional 1/12th of
1.60% for each month thereafter
</TABLE>
56
<PAGE>
<TABLE>
<S>
<C>
October 2011 - September 2012 7.15% with respect to
October 2011, plus an additional 1/12th of
0.85% for each month thereafter
October 2012 and thereafter 8.00%
</TABLE>
Stepdown Trigger Event: With respect to the Certificates on or
after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A)
the
aggregate Stated Principal Balance of all Mortgage Loans which are
sixty (60) or
more days Delinquent measured on a rolling three month basis
(including, for the
purposes of this calculation, Mortgage Loans in foreclosure, REO
Properties and
Mortgage Loans with respect to which the applicable Mortgagor is in
bankruptcy)
and (B) the Stated Principal Balance of the Mortgage Loans as of
the preceding
Servicer Advance Date, equals or exceeds the product of (i) 34.55%
and (ii)
Required Percentage or (2) the quotient (expressed as a percentage)
of (A) the
aggregate Realized Losses incurred from the Cut-off Date through
the last day of
the calendar month preceding such Distribution Date and (B) the
aggregate
principal balance of the Mortgage Loans as of the Cut-off Date
exceeds the
Stepdown Required Loss Percentage.
Subcontractor: Any outsourcer that performs one or more discrete
functions
identified in Item 1122(d) of Regulation AB with respect to 5% or
more of the
Mortgage Loans under the direction or authority of a Servicer
(measured by
aggregate Stated Principal Balance of the Mortgage Loans, annually
at the
commencement of the calendar year prior to the year in which an
Assessment of
Compliance is required to be delivered, multiplied by a fraction,
the numerator
of which is the number of months during which such Subcontractor
performs such
discrete functions and the denominator of which is 12, or, in the
case of the
year in which the Closing Date occurs, the number of months elapsed
in such
calendar year).
Subordinate Certificate Available Funds Cap: With respect to a
Distribution
Date, the per annum rate equal to the weighted average (weighted in
proportion
to the results of subtracting from the aggregate Stated Principal
Balance of
each Mortgage Group, the current Certificate Principal Balance of
the Class A-1
and Class R Certificates, in the case of Group One, or the Class
A-2A, Class
A-2B, Class A-2C and Class A-2D Certificates, in the case of Group
Two) of the
Class A-1 Available Funds Cap and the Class A-2 Available Funds
Cap.
Subordinate Certificate Cap Contract: The confirmation and
agreement and
any related confirmation thereto, between the Trustee, on behalf of
the Issuing
Entity, and the Cap Contract Counterparty (in the form of Exhibit
O3 hereto),
with respect to the Subordinate Certificates.
Subordinate Certificate Cap Contract Notional Balance: With respect
to any
Distribution Date, the Subordinate Certificate Cap Contract
Notional Balance set
forth for such Distribution Date in the Subordinate Certificate One
Month LIBOR
Cap Table attached hereto as Exhibit P-3.
Subordinate Certificate Cap Contract Termination Date: The day
after the
Distribution Date in March 2007.
Subordinate Certificate Maximum Rate Cap: With respect to a
Distribution
Date, the per annum rate equal to the weighted average (weighted in
proportion
to the results of subtracting from the aggregate Stated Principal
Balance of
each Mortgage Group, the current Certificate Principal Balance of
the Class A-1
and Class R Certificates, in the case of Group One, or the Class
A-2A, Class
A-2B, Class A-2C and Class A-2D Certificates, in the case of Group
Two) of the
Class A-1 Maximum Rate Cap and the Class A-2 Maximum Rate Cap.
57
<PAGE>
Subordinate Certificate Upper Collar: With respect to each
Distribution
Date with respect to which payments are received on the Subordinate
Certificate
Cap Contract, a rate equal to the lesser of One-Month LIBOR and
8.970% per
annum.
Subordinate Certificates: The Class M and Class B Certificates.
Subsequent Recovery: The amount, if any, recovered by the Servicer
with
respect to a Liquidated Loan with respect to which a Realized Loss
has been
incurred after liquidation and disposition of such Mortgage
Loan.
Subservicer: Any Person that services Mortgage Loans on behalf of
the
Servicer pursuant to a subservicing agreement and is responsible
for the
performance of the material servicing functions required to be
performed by the
Servicer under this Agreement that are identified in Item 1122(d)
of Regulation
AB with respect to 10% or more of the Mortgage Loans under the
direction or
authority of the Servicer (measured by aggregate Stated Principal
Balance of the
Mortgage Loans, annually at the commencement of the calendar year
prior to the
year in which an Assessment of Compliance is required to be
delivered,
multiplied by a fraction, the numerator of which is the number of
months during
which such Subservicer services the related Mortgage Loans and the
denominator
of which is 12, or, in the case of the year in which the Closing
Date occurs,
the number of months elapsed in such calendar year). Any
subservicer shall meet
the qualifications set forth in Section 3.02.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant
to Section 2.03(c).
Supplemental Interest Trust: The separate trust, established
pursuant to
Section 4.04(l) of this Agreement and held by the Trustee for the
benefit of the
holders of the Certificates as a segregated subtrust of the Trust
Fund, in which
the Swap Agreement will be held, out of which any Swap Termination
Payments or
Net Swap Payments owed to the Swap Counterparty will be paid,
certain
distributions to Certificateholders will be made, and into which
any Swap
Termination Payments or Net Swap Payments received from the Swap
Counterparty
will be deposited as set forth in Section 4.04 hereof.
Swap
Account: The separate Eligible Account created and maintained by
the
Trustee pursuant to Section 4.04(l)(i) in the name of the Trustee
for the
benefit of the Trust Fund and designated "U.S. Bank National
Association, as
trustee, in trust for registered holders of Specialty Underwriting
and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates,
Series
2006-BC4." Funds in the Swap Account shall be held in trust for the
Issuing
Entity for the uses and purposes set forth in this Agreement.
Swap
Agreement: The confirmation and agreement and any related
confirmation
thereto, between the Swap Counterparty and the trustee of the
Supplemental
Interest Trust for the benefit of the Issuing Entity.
Swap
Counterparty: Bear Stearns Financial Products or any successor
counterparty who meets the requirements set forth in the Swap
Agreement.
Swap
LIBOR: With respect to any Distribution Date (and the related
Accrual
Period) the product of (i) the Floating Rate Option (as defined in
the Swap
Agreement for the related Swap Payment Date), (ii) two and (iii)
the quotient of
(a) the actual number of days in the Accrual Period for the Lower
Tier REMIC
Interests divided by (b) 30.
58
<PAGE>
Swap
Payment Date: For so long as the Swap Agreement is in effect or
amounts remain unpaid thereunder, the Business Day immediately
preceding each
Distribution Date.
SWAP
REMIC: As described in the Preliminary Statement and Section
2.07.
SWAP REMIC Interests:
Each of the interests in the SWAP REMIC as set forth
in the Preliminary Statement.
SWAP
REMIC Regular Interests: Each of the SWAP REMIC Interests other
than
the Class SWR Interest.
Swap
Termination Payment: Any payment payable by the Supplemental
Interest
Trust or the Swap Counterparty upon termination of the Swap
Agreement as a
result of termination of the Swap Agreement.
Targeted Overcollateralization Amount: As of any Determination
Date, (a)
prior to the Stepdown Date, 3.70% of the Cut-Off Date Principal
Balance of the
Mortgage Loans and (b) on or after the Stepdown Date, 7.40% of the
Stated
Principal Balance of the Mortgage Loans.
Tax
Matters Person: The Person designated as "tax matters person" in
the
manner provided under Treasury regulation Section 1.860F-4(d) and
Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest
in a Certificate.
Trust Fund: The corpus of the Issuing Entity created hereunder
consisting
of (i) the Mortgage Loans and all interest and principal received
on or with
respect thereto on and after the Cut-off Date to the extent not
applied in
computing the Cut-off Date Principal Balance thereof, exclusive of
interest not
required to be deposited in the Collection Account; (ii) the
Collection Account
and the Certificate Account and all amounts deposited therein
pursuant to the
applicable provisions of this Agreement; (iii) property that
secured a Mortgage
Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or
otherwise; (iv) the mortgagee's rights under the Insurance Policies
with respect
to the Mortgage Loans and/or the related Mortgaged Properties; (v)
all proceeds
of the conversion, voluntary or involuntary, of any of the
foregoing into cash
or other liquid property; (vi) the Cap Contracts and the Cap
Contract Account;
and (vii) the Supplemental Interest Trust that in turn holds the
Swap Agreement.
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, and any
successor
thereto, and any corporation or national banking association
resulting from or
surviving any consolidation or merger to which it or its successors
may be a
party and any successor trustee as may from time to time be serving
as successor
trustee hereunder.
Uncertificated Class C Interest: An uncertificated REMIC Regular
Interest
having the characteristics described in the Preliminary
Statement.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss
Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized
Loss Amount,
Class M-4 Unpaid Realized Loss Amount, Class M-5 Unpaid Realized
Loss Amount,
Class M-6 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized
Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized
Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
59
<PAGE>
Upper Collar: Any of the Class A-1 Upper Collar, the Class A-2
Upper Collar
or the Subordinate Certificate Upper Collar.
Upper Tier REMIC: As described in the Preliminary Statement and
Section
2.07.
Upper Tier REMIC Net WAC Cap: In the case of the Class UTA-1
Interest and
the Residual Interest, a per annum rate equal to the weighted
average of the
interest rate of the Class LTII1B Interest for such Distribution
Date. In the
case of the Class UTA-2A, Class UTA-2B, Class UTA-2C and Class
UTA-2D Interests,
a per annum rate equal to the weighted average of the interest rate
for the
Class LTII2B for such Distribution Date. In the case of the Class
UTM-1, Class
UTM-2, Class UTM-3, Class UTM-4, Class UTM-5, Class UTM-6, Class
UTB-1, Class
UTB-2 and Class UTB-3 Interests, a per annum rate equal to the
weighted average
of the interest rates of Class LTII1B and Class LTII2B Interests
for such
Distribution weighted, respectively, on the basis of the
uncertificated
principal balances of the Class LTII1A and the Class LTII2A
Interests. In the
case of any interest in the Upper Tier REMIC that accrues interest
on a "30/360"
basis, the per annum rates described in this definition shall be
adjusted to
reflect accruals on such basis.
Voting Rights: The portion of the voting rights of all the
Certificates
that is allocated to any of the Certificates for purposes of the
voting
provisions hereunder. Voting Rights allocated to each Class of
Certificates
shall be allocated 98% to the Offered Certificates, 2% to the Class
C and Class
P Certificates, with the allocation among the Offered Certificates
to be in
proportion to the Class Certificate Principal Balance of each Class
relative to
the Class Certificate Principal Balance of all other Classes.
Voting Rights will
be allocated among the Certificates of each such Class in
accordance with their
respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The
Depositor, concurrently with the execution and delivery hereof,
does
hereby sell, transfer, assign, set over and convey to the Trustee
without
recourse all the right, title and interest of the Depositor in and
to the assets
of the Trust Fund. Such assignment includes all interest and
principal received
on or with respect to the Mortgage Loans on or after the Cut-off
Date (other
than Scheduled Payments due on the Mortgage Loans on or before the
Cut-off
Date).
In
connection with such assignment, the Depositor does hereby deliver
to,
and deposit with, the Trustee the following documents or
instruments with
respect to each Mortgage Loan so assigned:
(a)
all pages of the original Mortgage Note, signed by the borrower(s)
and
endorsed, "Pay to the order of blank, without recourse" and signed
in the name
of the prior holder by an authorized officer. Such signature on the
endorsement
shall be an original signature of such authorized officer and have
printed the
endorser's name, title and company name. To the extent that there
is no room on
the face of the Mortgage Note for endorsements, the endorsement may
be contained
on an allonge, if the law by which such Mortgage Note is governed
so permits.
The Mortgage Note shall include all intervening endorsements
showing a complete
chain of title from the originator to the Sponsor;
(b)
all original pages of any riders referred to in the Mortgage
Note;
(c)
for each Mortgage Loan that is not a MOM Mortgage Loan, the
original
recorded Mortgage, together with all riders referred to in the
Mortgage, and
legal description, with evidence of
60
<PAGE>
recording thereon or if the original is not available, a copy
certified by the
applicable public recording office. If the original Mortgage has
not yet been
returned from the recording office, a copy of the original
Mortgage, together
with all riders thereto, that has been delivered for recording in
the
appropriate recording office of the jurisdiction in which the
Mortgaged Property
is located;
(d)
for each Mortgage Loan that is not a MERS Mortgage Loan, the
original
Mortgage Assignment, executed in blank, in form and substance
acceptable for
recording and signed in the name of the last endorsee by an
authorized officer;
(e)
the policy of title insurance (or a preliminary title report if
the
original title insurance policy has not been received from the
title insurance
company);
(f)
for each Mortgage Loan that is not a MERS Mortgage Loan, originals
of
any intervening Mortgage Assignments, with evidence of recording
thereon, or if
the original is not available, a copy certified by the applicable
public
recording office. If the original intervening assignment has not
yet been
returned from the recording office, a copy of such assignment which
has been
sent for recording in the appropriate jurisdiction in which the
Mortgaged
Property is located, showing a complete chain of title from the
originator to
the Seller;
(g)
in the case of each MOM Loan, the original Mortgage, together with
all
riders thereto, with evidence of recording thereon, noting the
presence of the
MIN of the Mortgage Loan and language indicating that the Mortgage
Loan is a MOM
Loan or if the original Mortgage is not available, a copy certified
by the
applicable public recording office. If the original Mortgage has
not yet been
returned from the recording office, a copy of such Mortgage which
has been sent
for recording in the appropriate jurisdiction in which the
Mortgaged Property is
located;
(h)
in the case of each MERS Mortgage Loan that is not a MOM Loan,
the
original Mortgage Assignment or if the original Mortgage is not
available, a
copy certified by the applicable public recording office, with
evidence of
recording thereon, and all intervening Mortgage Assignments, with
evidence of
recording thereon, showing a complete chain of title from the
originator to
MERS;
(i)
all original pages of assumption, modification, consolidation
or
extension agreements, if any, with evidence of recording
thereon;
(j)
with respect to a Mortgage Loan that, according to the Mortgage
Loan
Schedule is covered by a primary mortgage insurance policy, the
original or a
copy of the policy of primary mortgage insurance; and
(k)
if the Mortgage Note or the Mortgage has been signed by any Person
on
behalf of the Mortgagor, the original power of attorney or other
instrument that
authorized and empowered such Person to sign, or a copy of such
power of
attorney that has been delivered for recording in the appropriate
recording
office of the jurisdiction in which the Mortgaged Property is
located.
If
in connection with any Mortgage Loan, the Depositor cannot deliver
the
Mortgage, Assignments of Mortgage or assumption, consolidation or
modification,
as the case may be, with evidence of recording thereon, if
applicable,
concurrently with the execution and delivery of this Agreement
solely because of
a delay caused by the public recording office where such Mortgage,
Assignments
of Mortgage or assumption, consolidation or modification, as the
case may be,
has been delivered for recordation, the Depositor shall deliver or
cause to be
delivered to the Trustee written notice stating that such Mortgage
or
assumption, consolidation or modification, as the case may be, has
been
delivered to the appropriate public recording office for
recordation.
Thereafter, the Depositor shall
61
<PAGE>
deliver or cause to be delivered to the Trustee such Mortgage,
Assignments of
Mortgage or assumption, consolidation or modification, as the case
may be, with
evidence of recording indicated thereon, if applicable, upon
receipt thereof
from the public recording office. To the extent any required
endorsement is not
contained on a Mortgage Note or an Assignment of Mortgage, the
Depositor shall
make or cause such endorsement to be made.
With
respect to any Mortgage Loan, none of the Depositor, the Servicer
or
the Trustee shall be obligated to cause to be recorded the
Assignment of
Mortgage referred to in this Section 2.01. In the event that any
Assignment of
Mortgage is not recorded or is improperly recorded, the Servicer
shall have no
liability for its failure to receive or act on notices related to
such
Assignment of Mortgage.
The
ownership of each Mortgage Note, the Mortgage and the contents of
the
related Mortgage File is vested in the Trustee. Neither the
Depositor nor the
Servicer shall take any action inconsistent with such ownership and
shall not
claim any ownership interest therein. The Depositor and the
Servicer shall
respond to any third party inquiries with respect to ownership of
the Mortgage
Loans by stating that such ownership is held by the Trustee on
behalf of the
Certificateholders. Mortgage documents relating to the Mortgage
Loans not
delivered to the Trustee are and shall be held in trust by the
Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's
possession of
the contents of each Mortgage File so retained is for the sole
purpose of
servicing the related Mortgage Loan, and such retention and
possession by the
Servicer is in a custodial capacity only. The Depositor agrees to
take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to
promptly
indicate to all inquiring parties that the Mortgage Loans have been
sold and to
claim no ownership interest in the Mortgage Loans.
It
is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund
pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a
conveyance
of Mortgage Loans from the Sponsor to the Depositor is
characterized as a pledge
and not a sale, then the Depositor shall be deemed to have
transferred to the
Trustee all of the Depositor's right, title and interest in, to and
under the
obligations of the Sponsor deemed to be secured by said pledge; and
it is the
intention of this Agreement that the Depositor shall also be deemed
to have
granted to the Trustee a first priority security interest in all of
the
Depositor's right, title, and interest in, to and under the
obligations of the
Sponsor to the Depositor deemed to be secured by said pledge and
that the
Trustee shall be deemed to be an independent custodian for purposes
of
perfection of the security interest granted to the Depositor. If
the conveyance
of the Mortgage Loans from the Depositor to the Trustee is
characterized as a
pledge, it is the intention of this Agreement that this Agreement
shall
constitute a security agreement under applicable law, and that the
Depositor
shall be deemed to have granted to the Trustee a first priority
security
interest in all of the Depositor's right, title and interest in, to
and under
the Mortgage Loans, all payments of principal of or interest on
such Mortgage
Loans, all other rights relating to and payments made in respect of
the Trust
Fund, and all proceeds of any thereof. If the trust created by this
Agreement
terminates prior to the satisfaction of the claims of any Person in
any
Certificates, the security interest created hereby shall continue
in full force
and effect and the Trustee shall be deemed to be the collateral
agent for the
benefit of such Person.
In
addition to the conveyance made in the first paragraph of this
Section
2.01, the Depositor does hereby convey, assign and set over to the
Trustee for
the benefit of the Certificateholders its rights and interests
under the Sale
Agreement, including the Depositor's right, title and interest in
the
representations and warranties contained in the Sale Agreement and
the benefit
of the repurchase obligations and the obligation of the Sponsor
contained in the
Sale Agreement to take, at the request of the Depositor or the
Trustee, all
action on its part which is reasonably necessary to ensure the
enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and
shall be
entitled to exercise all rights of the Depositor under the Sale
Agreement as if,
for such purpose, it were the Depositor. The foregoing sale,
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<PAGE>
transfer, assignment, set-over, deposit and conveyance does not and
is not
intended to result in creation or assumption by the Trustee of any
obligation of
the Depositor, the Sponsor, or any other Person in connection with
the Mortgage
Loans or any other agreement or instrument relating thereto.
The
parties hereto agree and understand that it is not intended that
any
Mortgage Loan be included in the Trust that is, without limitation,
a "High-Cost
Home Loan" as defined by the Home Ownership and Equity Protection
Act of 1994 or
any other applicable anti-predatory lending laws, including but not
limited to
(i) a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act
effective November 27, 2003; (ii) a "High-Cost Home Loan" as
defined in the New
Mexico Home Loan Protection Act effective January 1, 2004; (iii) a
"High-Cost
Home Loan" as defined in the Massachusetts Predatory Home Loan
Practices Act
effective November 7, 2004; (iv) a "High-Cost Home Loan" as defined
by the
Indiana High Cost Home Loan Law effective January 1, 2005 or (v) a
"High-Cost
Home Loan" as defined by the Illinois High Risk Home Loan Act
effective January
1, 2004.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered
contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt
of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage
File (but does
not acknowledge receipt of all documents required to be included in
such
Mortgage File) with respect to each Mortgage Loan and declares that
it holds and
will hold such documents and any other documents constituting a
part of the
Mortgage Files delivered to it in trust for the use and benefit of
all present
and future Certificateholders. The Depositor will cause the Sponsor
to
repurchase any Mortgage Loan to which a material exception was
taken in the
Exception Report unless such exception is cured to the satisfaction
of the
Depositor and the Trustee within 45 Business Days of the Closing
Date.
The
Trustee acknowledges receipt of the three Cap Contracts (forms of
which
are attached hereto as Exhibits O-1, O-2 and O-3) and the Sale
Agreement.
The
Trustee acknowledges receipt of the Swap Agreement that will be
held in
the Supplemental Interest Trust and is hereby instructed to enter
into the Swap
Agreement, not in its individual capacity, but solely as Trustee
for the Issuing
Entity and for the Supplemental Interest Trust.
The
Trustee agrees, for the benefit of Certificateholders, to review
each
Mortgage File delivered to it within sixty (60) days after the
Closing Date to
ascertain and to certify, within seventy (70) days of the Closing
Date, to the
Depositor and the Servicer that all documents required by Section
2.01, except
those listed on the exception report attached thereto, have been
executed and
received, and that such documents relate to the Mortgage Loans
identified in
Exhibit B that have been conveyed to it. If the Trustee finds any
document or
documents constituting a part of a Mortgage File to be missing or
defective
(that is, mutilated, damaged, defaced or unexecuted) in any
material respect,
the Trustee shall promptly (and in any event within no more than
five Business
Days) after such finding so notify the Servicer, the Sponsor and
the Depositor.
In addition, the Trustee shall also notify the Servicer, the
Sponsor and the
Depositor if the original Mortgage with evidence of recording
thereon with
respect to a Mortgage Loan is not received within seventy (70) days
of the
Closing Date; if it has not been received because of a delay caused
by the
public recording office where such Mortgage has been delivered for
recordation,
the Depositor shall deliver or cause to be delivered to the Trustee
written
notice stating that such Mortgage has been delivered to the
appropriate public
recording officer for recordation and thereafter the Depositor
shall deliver or
cause to be delivered such Mortgage with evidence of recording
thereon upon
receipt thereof from the public recording office. The Trustee shall
request that
the Sponsor correct or cure such omission, defect or other
irregularity, or
substitute a Mortgage Loan pursuant to the provisions of Section
2.03(c), within
ninety (90) days from the date the Sponsor was notified of such
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omission or defect and, if the Sponsor does not correct or cure
such omission or
defect within such period, that the Sponsor purchase such Mortgage
Loan from the
Issuing Entity within ninety (90) days from the date the Trustee
notified the
Sponsor of such omission, defect or other irregularity at the
Purchase Price of
such Mortgage Loan. The Purchase Price for any Mortgage Loan
purchased pursuant
to this Section 2.02 shall be paid to the Servicer and deposited by
the Servicer
in the Collection Account promptly upon receipt, and, upon receipt
by the
Trustee of written notification of such deposit signed by a
Servicing Officer,
the Trustee, upon receipt of a Request for Release, shall promptly
release to
the Sponsor the related Mortgage File and the Trustee shall execute
and deliver
such instruments of transfer or assignment, without recourse,
representation or
warranty, as shall be necessary to vest in the Sponsor or its
designee, as the
case may be, any Mortgage Loan released pursuant hereto, and the
Trustee shall
have no further responsibility with regard to such Mortgage Loan.
It is
understood and agreed that the obligation of the Sponsor to
purchase, cure or
substitute any Mortgage Loan as to which a material defect in or
omission of a
constituent document exists shall constitute the sole remedy
respecting such
defect or omission available to the Trustee on behalf of
Certificateholders. The
preceding sentence shall not, however, limit any remedies available
to the
Certificateholders, the Depositor or the Trustee pursuant to the
Sale Agreement.
The Trustee shall be under no duty or obligation to inspect, review
and examine
such documents, instruments, certificates or other papers to
determine that they
are genuine, enforceable, recordable or appropriate to the
represented purpose,
or that they have actually been recorded, or that they are other
than what they
purport to be on their face. The Trustee shall keep confidential
the name of
each Mortgagor and the Trustee shall not solicit any such Mortgagor
for the
purpose of refinancing the related Mortgage Loan. It is understood
and agreed
that all rights and benefits relating to the solicitation of any
Mortgagors and
the attendant rights, title and interest in and to the list of
Mortgagors and
data relating to their Mortgages shall be retained by the
Servicer.
Within seventy (70) days of the Closing Date, the Trustee shall
deliver to
the Depositor and the Servicer the Trustee's Certification,
substantially in the
form of Exhibit D attached hereto, evidencing the completeness of
the Mortgage
Files, with any exceptions noted thereto.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a)
The Depositor hereby represents and warrants to the Servicer and
the
Trustee as follows, as of the date hereof
(i) The Depositor is duly organized and is validly existing as
a
corporation in good standing under the laws of the State of
Delaware and
has
full power and authority (corporate and other) necessary to own or
hold
its
properties and to conduct its business as now conducted by it and
to
enter into and perform its obligations under this Agreement and the
Sale
Agreement.
(ii) The Depositor has the full corporate power and authority
to
execute, deliver and perform, and to enter into and consummate
the
transactions contemplated by, this Agreement and the Sale Agreement
and has
duly
authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the
Sale
Agreement; and this Agreement and the Sale Agreement, assuming the
due
authorization, execution and delivery hereof by the other parties
hereto,
constitutes a legal, valid and binding obligation of the
Depositor,
enforceable against the Depositor in accordance with its terms,
subject, as
to
enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and
(ii)
general principles of equity, regardless of whether enforcement
is
sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the Depositor, the consummation of the
transactions
contemplated by this Agreement and the Sale
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Agreement, and the fulfillment of or compliance with the terms
hereof are
in
the ordinary course of business of the Depositor and will not (A)
result
in a
material breach of any term or provision of the charter or by-laws
of
the
Depositor or (B) materially conflict with, result in a violation
or
acceleration of, or result in a material default under, the terms
of any
other material agreement or instrument to which the Depositor is a
party or
by
which it may be bound or (C) constitute a material violation of
any
statute, order or regulation applicable to the Depositor of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over the
Depositor; and the Depositor is not in breach or
violation of any material indenture or other material agreement
or
instrument, or in violation of any statute, order or regulation of
any
court, regulatory body, administrative agency or governmental body
having
jurisdiction over it which breach or violation may materially
impair the
Depositor's ability to perform or meet any of its obligations under
this
Agreement.
(iv) No litigation is pending or, to the best of the
Depositor's
knowledge, threatened, against the Depositor that would materially
and
adversely affect the execution, delivery or enforceability of
this
Agreement and the Sale Agreement or the ability of the Depositor to
perform
its
obligations under this Agreement and the Sale Agreement in
accordance
with
the terms hereof.
(v) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Depositor of, or compliance by the Depositor
with, this
Agreement and the Sale Agreement or the consummation of the
transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is required, the Depositor has obtained the same. The
Depositor
hereby represents and warrants to the Trustee with respect to each
Mortgage
Loan
as of the Closing Date, and following the transfer of the
Mortgage
Loans to it by the Sponsor, the Depositor had good title to the
Mortgage
Loans and the Mortgage Notes were subject to no offsets, claims,
liens,
mortgage, pledge, charge, security interest, defenses or
counterclaims.
(vi) Each Mortgage Loan in Group One has a Stated Principal Balance
as
of
the Cut-off Date that complies with the loan limitations of Fannie
Mae
and
Freddie Mac as in effect on the Cut-off Date.
(b)
To the extent that any fact, condition or event with respect to
a
Mortgage Loan constitutes a breach of a representation or warranty
of the
Sponsor under the Sale Agreement, the only right or remedy of the
Trustee or of
any Certificateholder shall be the Trustee's right to enforce the
obligations of
the Sponsor under any applicable representation or warranty made by
it. The
Trustee acknowledges that the Depositor shall have no obligation or
liability
with respect to any breach of any representation or warranty with
respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(v)) under
any
circumstances.
(c)
Upon discovery by any of the Depositor, the Servicer, or the
Trustee of
a breach of any of representations and warranties set forth in the
Sale
Agreement that adversely and materially affects the value of the
related
Mortgage Loan, prepayment charges or the interests of the
Certificateholders,
the party discovering such breach shall give prompt written notice
to the other
parties. Within ninety (90) days of the discovery of a breach of
any
representation or warranty given to the Trustee by the Depositor,
the Sponsor
and assigned by the Depositor to the Trustee, the Depositor, or the
Sponsor
shall either (a) cure such breach in all material respects, (b)
repurchase such
Mortgage Loan or any property acquired in respect thereof from the
Trustee at
the Purchase Price or (c) within the two year period following the
Closing Date,
substitute a Replacement Mortgage Loan for the affected Mortgage
Loan. In the
event of discovery of a breach of any representation and warranty
of the Sponsor
or the Depositor, the Trustee
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shall enforce its rights under the Sale Agreement or thereunder for
the benefit
of Certificateholders. In the event of a breach of the
representations and
warranties with respect to the Mortgage Loans set forth in a Sale
Agreement, the
Trustee shall enforce the right of the Issuing Entity to be
indemnified for such
breach of representation and warranty. In the event that such
breach relates
solely to the unenforceability of a prepayment charge, amounts
received in
respect of such indemnity up to the amount of such prepayment
charge shall be
distributed pursuant to Section 4.04(b)(i)(B). As provided in the
Sale
Agreement, if the Sponsor substitutes for a Mortgage Loan for which
there is a
breach of any representations and warranties which adversely and
materially
affects the value of such Mortgage Loan and such substitute
mortgage loan is not
a Replacement Mortgage Loan, under the terms of the Sale Agreement,
the Sponsor
will, in exchange for such substitute Mortgage Loan, (i) provide
the applicable
Purchase Price for the affected Mortgage Loan or (ii) within two
years of the
Closing Date, substitute such affected Mortgage Loan with a
Replacement Mortgage
Loan. Any such substitution shall not be effected prior to the
additional
delivery to the Trustee of a Request for Release substantially in
the form of
Exhibit I and shall not be effected unless it is within two years
of the Startup
Day. As provided in the Sale Agreement, the Sponsor indemnifies and
holds the
Issuing Entity, the Trustee, the Depositor, the Servicer and
each
Certificateholder harmless against any and all taxes, claims,
losses, penalties,
fines, forfeitures, reasonable legal fees and related costs,
judgments, and any
other costs, fees and expenses that the Issuing Entity, the
Trustee, the
Depositor, the Servicer and any Certificateholder may sustain in
connection with
any actions of the Sponsor relating to a repurchase of a Mortgage
Loan other
than in compliance with the terms of this Section 2.03 and the Sale
Agreement,
to the extent that any such action causes (i) any federal or state
tax to be
imposed on the Issuing Entity or any REMIC provided for herein,
including
without limitation, any federal tax imposed on "prohibited
transactions" under
Section 860F(a)(1) of the Code or on "contributions after the
startup day" under
Section 860G(d)(1) of the Code, or (ii) any REMIC created hereunder
to fail to
qualify as a REMIC at any time that any Certificate is
outstanding.
With
respect to any Mortgage Loan repurchased by the Depositor pursuant
to
this Agreement or by the Sponsor pursuant to the Sale Agreement,
the principal
portion of the funds received by the Servicer in respect of such
repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall
be deposited
by the Servicer in the Certificate Account pursuant to Section
3.05. The
Trustee, upon receipt of the full amount of the Purchase Price for
a Deleted
Mortgage Loan, or upon receipt of the Mortgage File for a
Replacement Mortgage
Loan substituted for a Deleted Mortgage Loan, shall release or
cause to be
released and reassign to the Depositor or the Sponsor, as
applicable, the
related Mortgage File for the Deleted Mortgage Loan and shall
execute and
deliver such instruments of transfer or assignment, in each case
without
recourse, representation or warranty, as shall be necessary to vest
in such
party or its designee or assignee title to any Deleted Mortgage
Loan released
pursuant hereto, free and clear of all security interests, liens
and other
encumbrances created by this Agreement, which instruments shall be
prepared by
the Trustee, and the Trustee shall not have any further
responsibility with
respect to the Mortgage File relating to such Deleted Mortgage
Loan.
With
respect to each Replacement Mortgage Loan to be delivered to
the
Trustee pursuant to the terms of this Article II in exchange for a
Deleted
Mortgage Loan: (i) the Depositor or the Sponsor, as applicable,
must deliver to
the Trustee the Mortgage File for the Replacement Mortgage Loan
containing the
documents set forth in Section 2.01 along with a written
certification
certifying as to the delivery of such Mortgage File and containing
the granting
language set forth in the first sentence of Section 2.01; and (ii)
the Depositor
will be deemed to have made, with respect to such Replacement
Mortgage Loan,
each of the representations and warranties made by it with respect
to the
related Deleted Mortgage Loan. The Trustee shall review the
Mortgage File with
respect to each Replacement Mortgage Loan and certify to the
Depositor that all
documents required by Section 2.01 have been executed and
received.
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For
any month in which the Sponsor substitutes one or more
Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Sponsor
will
determine the amount (if any) by which the aggregate principal
balance of all
such Replacement Mortgage Loans as of the date of substitution and
the aggregate
prepayment charges with respect to such Replacement Mortgage Loans
is less than
the aggregate Stated Principal Balance (after application of the
principal
portion of the Scheduled Payment due in the month of substitution)
and aggregate
prepayment charges of all such Deleted Mortgage Loans. An amount
equal to the
aggregate of the deficiencies described in the preceding sentence
(such amount,
the "Substitution Adjustment Amount") shall be delivered by the
Sponsor to the
Servicer for deposit into the Collection Account on the
Determination Date for
the Distribution Date relating to the Prepayment Period during
which the related
Mortgage Loan became required to be purchased or replaced
hereunder.
The
Sponsor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, 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 Replacement
Mortgage
Loan or Replacement Mortgage Loans and shall deliver a copy of such
amended
Mortgage Loan Schedule to the Trustee. Upon such substitution by
the Sponsor,
such Replacement Mortgage Loan or Replacement Mortgage Loans shall
constitute
part of the Mortgage Pool and shall be subject in all respects to
the terms of
this Agreement and the Sale Agreement, including all applicable
representations
and warranties thereof included in the Sale Agreement as of the
date of
substitution.
In
addition, the Sponsor shall obtain at its own expense and deliver
to the
Trustee an Opinion of Counsel addressed to the Trustee to the
effect that such
substitution will not (a) cause any federal tax to be imposed on
the Issuing
Entity or any REMIC provided for herein, including without
limitation, any
federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the
Code or on "contributions after the startup day" under Section
860G(d)(1) of the
Code or (b) adversely affect the status of any REMIC provided for
herein as a
REMIC. If any such Opinion of Counsel can not be delivered, then
such
substitution may only be effected at such time as the required
Opinion of
Counsel can be given.
(d)
It is understood and agreed that the representations, warranties
and
indemnification (i) set forth in this Section 2.03 and (ii) of the
Sponsor and
the Depositor set forth in the Sale Agreement and assigned to the
Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage
Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and
shall continue
throughout the term of this Agreement.
SECTION 2.04. Representations and Warranties of the Servicer.
The
Servicer hereby represents and warrants to the Depositor and
the
Trustee as follows, as of the date hereof
(i) The Servicer is a duly formed corporation and is validly
existing
and
in good standing under the laws of the state of its formation 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 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, to service the
Mortgage
Loans in accordance with the terms of this Agreement and to perform
any of
its
other obligations under this Agreement in accordance with the
terms
hereof.
(ii) The Servicer has the power and authority to service each
Mortgage
Loan, and to execute, deliver and perform, and to enter into and
consummate
the
transactions contemplated by
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this
Agreement and has duly authorized by all necessary corporate action
on
the
part of the Servicer the execution, delivery and performance of
this
Agreement; and this Agreement, assuming the due authorization,
execution
and
delivery hereof by the other parties hereto, constitutes a legal,
valid
and
binding obligation of the Servicer, enforceable against the
Servicer in
accordance with its terms, except that (a) the enforceability
hereof may be
limited by bankruptcy, insolvency, moratorium, receivership and
other
similar laws relating to creditors' rights generally and (b) the
remedy of
specific performance and injunctive and other forms of equitable
relief may
be
subject to equitable defenses and to the discretion of the court
before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Servicer,
the
servicing of the Mortgage Loans under this Agreement, the
consummation
of
any other of the transactions contemplated by this Agreement, 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
material
breach of any term or provision of the charter or by-laws of the
Servicer
or
(B) materially conflict with, result in a material breach,
violation or
acceleration of, or result in a material default under, the terms
of any
other material agreement or instrument to which the Servicer is a
party or
by
which it may be bound, or (C) constitute a material violation of
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 in breach
or
violation of any material indenture or other material agreement
or
instrument, or in violation of any statute, order or regulation of
any
court, regulatory body, administrative agency or governmental body
having
jurisdiction over it which breach or violation may materially
impair the
Servicer's ability to perform or meet any of its obligations under
this
Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for
Fannie
Mae
and is an approved servicer of mortgage loans for Freddie Mac.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, 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 under this Agreement 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 of the transactions contemplated
hereby, or
if
any such consent, approval, authorization or order is required,
the
Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully furnish (for
the
period it serviced the Mortgage Loans), in accordance with the Fair
Credit
Reporting Act and its implementing regulations, accurate and
complete
information (e.g., favorable and unfavorable) on its borrower
credit files
to
Equifax, Experian and Trans Union Credit Information Company on
a
monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which
Are Not
"Qualified Mortgages".
Upon
discovery by the Depositor, the Servicer 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 promptly
(and in any event within five (5) Business Days of discovery)
give
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written notice thereof to the other parties. In connection
therewith, the
Depositor shall, at the Depositor's option, either (i) substitute,
if the
conditions in Section 2.03(c) with respect to substitutions are
satisfied, a
Replacement Mortgage Loan for the affected Mortgage Loan, or (ii)
repurchase the
affected Mortgage Loan within ninety (90) days of such discovery in
the same
manner as it would a Mortgage Loan for a breach of representation
or warranty
contained in Section 2.03. The Trustee shall reconvey to the
Depositor 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 contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The
Trustee acknowledges the transfer and assignment to it of the
Trust
Fund and, concurrently with such transfer and assignment, the
Trustee has caused
to be authenticated and delivered to or upon the order of the
Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by
the Trustee
in authorized denominations evidencing ownership of the entire
Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights
referred to above
for the benefit of all present and future Holders of the
Certificates and to
perform its duties set forth in this Agreement in accordance with
the provisions
hereof.
SECTION 2.07. REMIC Elections.
(a)
The Depositor hereby instructs and authorizes the Trustee to make
an
appropriate election to treat each of the SWAP REMIC, the Lower
Tier REMIC and
the Upper Tier REMIC as a REMIC. The Trustee shall sign the returns
providing
for such elections and such other tax or information returns which
are required
to be signed by the Trustee under applicable law. This Agreement
shall be
construed so as to carry out the intention of the parties that each
of the SWAP
REMIC, the Lower Tier REMIC and the Upper Tier REMIC be treated as
a REMIC at
all times prior to the date on which the Trust Fund is
terminated.
(b)
The Preliminary Statement sets forth the designations and
"latest
possible maturity date" for federal income tax purposes of all
interests created
hereby. The "Startup Day," as defined in Section 860G(a)(9) of the
Code, for
purposes of the REMIC Provisions shall be the Closing Date. Each
REMIC's fiscal
year shall be the calendar year.
The
SWAP REMIC shall consist of all of the assets of the Trust Fund,
other
than (i) amounts distributable to the Class P Certificates pursuant
to Section
4.04(b)(i) hereof, (ii) the interests issued by the SWAP REMIC and
the interests
issued by the Lower Tier REMIC, (iii) the grantor trusts described
in Section
2.07 hereof, (iv) each Cap Contract and the Cap Contract Account
and (v) the
Swap Agreement and the Supplemental Interest Trust. The SWAP REMIC
shall issue
the SWAP REMIC Regular Interests, which shall be designated as
regular interests
of such REMIC, and shall issue the Class SWR Interest, which shall
be designated
as the sole class of residual interest in the SWAP REMIC. Each of
the SWAP REMIC
Regular Interests shall have the characteristics set forth in the
Preliminary
Statement and this Section 2.07.
The
Lower Tier REMIC shall consist of the SWAP REMIC Regular Interests.
The
Lower Tier REMIC shall issue the Lower Tier REMIC Regular
Interests, which shall
be designated as regular interests of such REMIC and shall issue
the Class LTR
Interest, which shall be designated as the sole class of residual
interest in
the Lower Tier REMIC. Each of the Lower Tier REMIC Regular
Interests shall have
the characteristics set forth in its definition and the Preliminary
Statement.
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The
assets of the Upper Tier REMIC shall be the Lower Tier REMIC
Regular
Interests. The REMIC Regular Interests shall be designated as the
regular
interests in the Upper Tier REMIC and the Residual Interest shall
be designated
as the sole class of residual interest in the Upper Tier REMIC. For
federal
income tax purposes, the pass-through rate on each REMIC Regular
Interest (other
than the Uncertificated Class C Interest and the Class UT-IO
Interest) and on
the sole class of residual interest in the Upper Tier REMIC shall
be subject to
a cap equal to the Upper Tier REMIC Net WAC Cap.
The
beneficial ownership of the Class SWR Interest, the Class LTR
Interest
and the Residual Interest shall be represented by the Class R
Certificate. The
Class SWR Interest and the Class LTR Interest shall not have a
principal balance
or bear interest.
(c)
The "tax matters person" with respect to each REMIC for purposes of
the
REMIC Provisions shall be the beneficial owner of the Class R
Certificate;
provided, however, that the Holder of the Class R Certificate, by
its acceptance
thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to
act as "tax matters person" with respect to each such REMIC for
purposes of the
REMIC Provisions. If there is more than one beneficial owner of the
Class R
Certificate, the "tax matters person" shall be the Person with the
greatest
percentage interest in the Class R Certificate and, if there is
more than one
such Person, shall be determined under Treasury regulation Section
1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1.
(d)
(i) It is intended that the rights of the Class A Certificates,
Class R
Certificate, Class M Certificates and Class B Certificates to
receive payments
in respect of Excess Interest shall be treated as a right in
interest rate cap
contracts written by the Class C Certificateholders in favor of the
holders of
the Class A Certificates, Class R Certificate, Class M Certificates
and Class B
Certificates, and such shall be accounted for as property held
separate and
apart from the regular interests in the Upper Tier REMIC held by
the holders of
the Class A Certificates, Class M Certificates and Class B
Certificates and the
residual interest in the Upper Tier REMIC held by the holder of the
Class R
Certificate. This provision is intended to satisfy the requirements
of Treasury
Regulations Section 1.860G-2(i) for the treatment of property
rights coupled
with REMIC interests to be separately respected and shall be
interpreted
consistently with such regulation. On each Distribution Date, to
the extent that
any of the Class A Certificates, Class R Certificate, Class M
Certificates and
Class B Certificates receive payments in respect of Excess
Interest, such
amounts, to the extent not derived from payments on the Cap
Contracts or the
Swap Agreement, will be treated as distributed by the Upper Tier
REMIC to the
Class C Certificates pro rata in payment of the amounts specified
in Section
4.04(f) and then paid to the relevant Class of Certificates
pursuant to the
related interest rate cap agreement.
(ii) It is intended that the beneficial owners of the
Certificates
(other than the Class P and Class C Certificates) shall be treated
as having
entered into a notional principal contract with respect to the
beneficial owners
of the Class C Certificates. Pursuant to each such notional
principal contract,
all beneficial owners of each Class of Certificates (other than the
Class P and
Class C Certificates) shall be treated as having agreed to pay, on
each
Distribution Date, to the beneficial owners of the Class C
Certificates an
aggregate amount equal to the excess, if any, of (i) the amount
payable on such
Distribution Date on the Corresponding REMIC Regular Interest of
such Class of
Certificates over (ii) the amount payable on such Class of
Certificates on such
Distribution Date (such excess, a "Class Payment Shortfall"). A
Class Payment
Shortfall shall be allocated to each Class of Certificates to the
extent that
interest accrued on such Class for the related Accrual Period at
the
Pass-Through Rate for a Class, computed by substituting "Upper Tier
REMIC Net
WAC Cap" for the Available Funds Cap set forth in the definition
thereof,
exceeds the amount of interest accrued on such Certificate at the
Pass-Through
Rate (without such substitution) for the related Accrual Period,
and a Class
Payment Shortfall payable from principal collections shall be
allocated to the
most subordinate Class of Certificates with an outstanding
principal balance to
the extent of such balance.
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(e)
The parties intend that the portion of the Trust Fund consisting of
the
Uncertificated Class C Interest, the uncertificated Class UT-IO
Interest, the
rights to receive payments deemed made by the Class A, Class R,
Class M and
Class B Certificates in respect of notional principal contracts
described in
Section 2.07(d)(ii), the Cap Contract Account, the Cap Contracts,
the
Supplemental Interest Trust that holds the Swap Agreement and the
obligation of
the holders of the Class C Certificates to pay amounts in respect
of Excess
Interest to the holders of the Class A Certificates, Class R
Certificate, Class
M Certificates and Class B Certificates shall be treated as a
"grantor trust"
under the Code, for the benefit of the holders of the Class C
Certificates, and
the provisions hereof shall be interpreted consistently with this
intention. In
furtherance of such intention, the Trustee shall (i) furnish or
cause to be
furnished to the holders of the Class C Certificates information
regarding their
allocable share, if any, of the income with respect to such grantor
trust, (ii)
file or cause to be filed with the Internal Revenue Service Form
1041 (together
with any necessary attachments) and such other forms as may be
applicable and
(iii) comply with such information reporting obligations with
respect to
payments from such grantor trust to the holders of Class A
Certificates, Class R
Certificate, Class M Certificates, Class B Certificates and Class C
Certificates
as may be applicable under the Code.
(f)
The parties intend that the portion of the Trust Fund consisting of
the
right to receive the payments distributable to the Class P
Certificates pursuant
to Section 4.04(b)(i) hereof shall be treated as a "grantor trust"
under the
Code, for the benefit of the holders of the Class P Certificates,
and the
provisions hereof shall be interpreted consistently with this
intention. In
furtherance of such intention, the Trustee shall (i) furnish or
cause to be
furnished to the holders of the Class P Certificates information
regarding their
allocable share of the income with respect to such grantor trust
and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041
(together with
any necessary attachments) and such other forms as may be
applicable.
(g)
The parties intend that amounts paid to the Swap Counterparty under
the
Swap Agreement shall be deemed for federal income tax purposes to
be paid by the
Class C Certificates first, out of funds deemed received in respect
of the Class
UT-IO Interest, second, out of funds deemed received in respect of
the
Uncertificated Class C Interest and third, out of funds deemed
received in
respect of notional principal contracts described in Section
2.07(d)(ii), and
the provisions hereof shall be interpreted consistently with this
intention. On
each Distribution Date, to the extent that amounts paid to the Swap
Counterparty
are deemed paid out of funds received in respect of the
Uncertificated Class C
Interest, such amounts will be treated as distributed by the Upper
Tier REMIC to
the Class C Certificates pro rata in payment of the amounts
specified in Section
4.04(f) and then paid to the Swap Counterparty pursuant to the Swap
Agreement.
The Supplemental Interest Trust shall be an "outside reserve fund"
for
federal income tax purposes and not an asset of any REMIC.
Furthermore, the
Holders of the Class C Certificates shall be the beneficial owners
of the
Supplemental Interest Trust for all federal income tax purposes,
and shall be
taxable on all income earned thereon.
(h)
All payments of principal and interest at the Net Mortgage Rate on
each
of the Mortgage Loans (other than amounts distributable to the
Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received by the
SWAP REMIC
with respect to the Mortgage Loans shall be paid to the SWAP REMIC
Regular
Interests until the principal balance of all such interests have
been reduced to
zero and any losses allocated to such interests have been
reimbursed. Any
available funds remaining in the SWAP REMIC on a Distribution Date
after
distributions to the SWAP REMIC Regular Interests shall be
distributed to the
Class R Certificates on account of the Class SWR Interest. On each
Distribution
Date, the Trustee shall distribute the aggregate Interest Funds
(net of expenses
and payments to the Class P Certificates) with respect to each of
the SWAP REMIC
Regular Interests based on the interest rates for each such
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SWAP REMIC Regular Interest. On each Distribution Date, the Trustee
shall
distribute the aggregate Principal Funds with respect to the Group
One Mortgage
Loans first to the Class 1-SW1 Interest until its principal balance
is reduced
to zero and then sequentially to each of the other SWAP REMIC
Regular Interests
beginning with designation "1" in ascending order of their
numerical class
designation, in equal amounts to each such class in such numerical
designation,
until the principal balance of each such class is reduced to zero.
All losses
with respect to the Group One Mortgage Loans shall be allocated
among the SWAP
REMIC Regular Interests beginning with the designation "1" in the
same manner
that principal distributions are allocated. On each Distribution
Date, the
Trustee shall distribute the aggregate Principal Funds with respect
to the Group
Two Mortgage Loans first to the Class 2-SW2 Interest until its
principal balance
is reduced to zero and then sequentially to each of the other SWAP
REMIC Regular
Interests beginning with designation "2" in ascending order of
their numerical
class designation, in equal amounts to each such class in such
numerical
designation, until the principal balance of each such class is
reduced to zero.
All losses with respect to the Group Two Mortgage Loans shall be
allocated among
the SWAP REMIC Regular Interests beginning with the designation "2"
in the same
manner that principal distributions are allocated. Subsequent
Recoveries with
respect to the Group One and Group Two Mortgage Loans shall be
allocated in the
reverse fashion from the manner in which losses are allocated.
All payments received by the Lower Tier REMIC with respect to the
SWAP
REMIC Regular Interests shall be paid to the Lower Tier REMIC
Regular Interests
until the principal balance of all such interests have been reduced
to zero and
any losses allocated to such interests have been reimbursed. Any
excess amounts
shall be distributed to the Class LTR Interest. On each
Distribution Date,
payments and losses shall be allocated among the Lower Tier REMIC
Regular
Interests so that (i) each of the Lower Tier REMIC I Marker
Interests shall have
a principal balance equal to 25% of the principal balance of the
Corresponding
Certificates, (ii) the Class LTIX Interest has a principal balance
equal to the
excess of (x) 50% of the remaining principal balance of the
Mortgage Loans over
(y) the aggregate principal balance of the Lower Tier REMIC I
Marker Interests
(if necessary to reflect an increase in overcollateralization,
accrued and
unpaid interest on the Class LTIX interest may be added to its
principal amount
to achieve this result) and (iii) the aggregate principal amount of
the Class
LTII1A Interest, Class LTII1B Interest, Class LTII2A Interest,
Class LTII2B
Interest and Class LTIIX Interest shall equal 50% of the remaining
principal
balance of the Mortgage Loans. Distributions and losses allocated
to the Lower
Tier REMIC Regular Interests described in clause (iii) of the
preceding sentence
will be allocated among such Lower Tier REMIC Regular Interests in
the following
manner: (x) such distributions shall be deemed made to such Lower
Tier REMIC
Regular Interests first, so as to keep the principal balance of the
each such
Lower Tier REMIC Regular Interest with "B" at the end of its
designation equal
to 0.05% of the aggregate scheduled principal balance of the
Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC
Regular Interests
with "A" at the end of its designation so that the uncertificated
principal
balance of each such Lower Tier REMIC Regular Interest is equal to
0.05% of the
excess of (I) the aggregate scheduled principal balance of the
Mortgage Loans in
the related Mortgage Group over (II) the aggregate principal
balance of
Certificate Group One, in the case of the Class LTII1A Interest, or
Certificate
Group Two, in the case of the Class LTII2A Interest (except that if
0.05% of any
such excess is greater than the principal amount of the related
Lower Tier REMIC
II Marker Interest with "A" at the end of its designation, the
least amount of
principal shall be distributed to each Lower Tier REMIC II Marker
Interest with
"A" at the end of its designation such that the Lower Tier REMIC
Subordinate
Balance Ratio is maintained) and finally, any remaining
distributions of
principal to the Class LTIIX Interest and (y) such losses shall be
allocated
among the Lower Tier REMIC Regular Interests described in clause
(iii) of the
preceding sentence first, so as to keep the principal balance of
the each such
Lower Tier REMIC Regular Interest with "B" at the end of its
designation equal
to 0.05% of the aggregate scheduled principal balance of the
Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC
Regular Interests
with "A" at the end of its designation so that the uncertificated
principal
balance of each such Lower Tier REMIC Regular Interest is equal to
0.05% of the
excess of (I) the aggregate scheduled principal balance of the
Mortgage Loans in
the related Mortgage
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Group over (II) the aggregate principal balance of Certificate
Group One, in the
case of the Class LTII1A Interest, or Certificate Group Two, in the
case of the
Class LTII2A Interest (except that if 0.05% of any such excess is
greater than
the principal amount of the related Lower Tier REMIC II Marker
Interest with "A"
at the end of its designation, the least amount of losses shall be
allocated to
each Lower REMIC II Marker Interest with "A" at the end of its
designation such
that the Lower Tier REMIC Subordinate Balance Ratio is maintained)
and finally,
any remaining losses to the Class LTIIX Interest. Notwithstanding
the preceding
two sentences, however, losses not allocated to any Class of
Certificates will
not be allocated to any Lower Tier REMIC Regular Interests. All
computations
with respect to the Lower Tier REMIC Regular Interests shall be
taken out to ten
decimal places.
Any available funds remaining in the Lower Tier REMIC on a
Distribution Date after distributions to the Lower Tier REMIC
Regular Interests
shall be distributed to the Class R Certificates in respect of the
Class LTR
Interest.
If on any Distribution Date the Certificate Principal Balance of
any
Class of Certificates is increased pursuant to the last sentence of
the
definition of "Certificate Principal Balance", then there shall be
an equivalent
increase in the principal amounts of the Lower Tier REMIC Regular
Interests,
with such increase allocated (before the making of distributions
and the
allocation of losses on the Lower Tier REMIC Regular Interests on
such
Distribution Date) among the Lower Tier REMIC Regular Interests so
that, to the
greatest extent possible, (i) each of the Lower Tier REMIC I Marker
Interests
has a principal balance equal to 25% of the principal balance of
the
Corresponding Certificates, (ii) the Class LTIX Interest has a
principal balance
equal to the excess of (x) 50% of the remaining principal balance
of the
Mortgage Loans over (y) the aggregate principal balance of the
Lower Tier REMIC
I Marker Interests and (iii) the aggregate principal amount of the
Lower Tier
REMIC II Marker Interests and the Class LTIIX Interest shall equal
50% of the
remaining principal balance of the Mortgage Loans. Allocations in
connection
with clause (iii) shall be made so that, to the greatest extent
possible, (a)
the principal balance of each Lower Tier REMIC II Marker Interest
with "B" at
the end of its designation equals 0.05% of the aggregate scheduled
principal
balance of the Mortgage Loans in related Mortgage Group, (b) the
principal
balance of each Lower Tier REMIC II Marker Interest with "A" at the
end of its
designation equals 0.05% of the excess of (x) the aggregate
scheduled principal
balance of the Mortgage Loans in related Mortgage Group over (y)
the aggregate
principal balance of Certificate Group One in the case of the Class
LTII1A
Interest, or Certificate Group Two in the case of the Class LTII2A
Interest and
(c) any remaining allocations are made to the Class LTIIX
Interest.
For purposes of this Section 2.07, (i) the Class LTII1A Interest
and
Class LTII1B Interest shall be related to Group One, and (ii) the
Class LTII2A
Interest and Class LTII2B Interest shall be related to Group
Two.
(i)
In the event that any REMIC provided for herein fails to qualify as
a
REMIC, loses its status as a REMIC, or incurs federal, state or
local taxes as a
result of a prohibited transaction or prohibited contribution under
the REMIC
Provisions due to the negligent performance by the Servicer of its
duties and
obligations set forth herein, the Servicer shall indemnify the
Trustee and the
Issuing Entity against any and all Losses resulting from such
negligence;
provided, however, that the Servicer shall not be liable for any
such Losses
attributable to the action or inaction of the Trustee, the
Depositor or the
Holder of the Class R Certificate, as applicable, nor for any such
Losses
resulting from misinformation provided by the Holder of the Class R
Certificate
on which the Servicer has relied. The foregoing shall not be deemed
to limit or
restrict the rights and remedies of the Holder of the Class R
Certificate now or
hereafter existing at law or in equity. Notwithstanding the
foregoing, however,
in no event shall the Servicer have any liability (1) for any
action or omission
that is taken in accordance with and in compliance with the express
terms of, or
which is expressly permitted by the terms of, this Agreement, (2)
for any Losses
other than those arising out of a negligent performance by the
Servicer of its
duties and
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obligations set forth herein, and (3) for any special or
consequential damages
to Certificateholders (in addition to payment of principal and
interest on the
Certificates).
(j)
In the event that any REMIC provided for herein fails to qualify as
a
REMIC, loses its status as a REMIC, or incurs federal, state or
local taxes as a
result of a prohibited transaction or prohibited contribution under
the REMIC
Provisions due to the negligent performance by the Trustee of its
duties and
obligations set forth herein, the Trustee shall indemnify the
Issuing Entity
against any and all Losses resulting from such negligence;
provided, however,
that the Trustee shall not be liable for any such Losses
attributable to the
action or inaction of the Servicer, the Depositor or the Holder of
the Class R
Certificate, as applicable, nor for any such Losses resulting
from
misinformation provided by the Holder of the Class R Certificate on
which the
Trustee has relied. The foregoing shall not be deemed to limit or
restrict the
rights and remedies of the Holder of the Class R Certificate now or
hereafter
existing at law or in equity. Notwithstanding the foregoing,
however, in no
event shall the Trustee have any liability (1) for any action or
omission that
is taken in accordance with and in compliance with the express
terms of, or
which is expressly permitted by the terms of, this Agreement, (2)
for any Losses
other than those arising out of a negligent performance by the
Trustee of its
duties and obligations set forth herein, and (3) for any special
or
consequential damages to Certificateholders (in addition to payment
of principal
and interest on the Certificates).
SECTION 2.08. Covenants of the Servicer.
The
Servicer hereby covenants to each of the other parties to this
Agreement that the Servicer shall comply in the performance of its
obligations
under this Agreement with all reasonable rules and requirements of
the insurer
under each Required Insurance Policy.
SECTION 2.09. [RESERVED]
SECTION 2.10. [RESERVED]
SECTION 2.11. Permitted Activities of the Issuing Entity. The
Issuing
Entity is created for the object and purpose of engaging in the
Permitted
Activities. In furtherance of the foregoing, the Trustee is hereby
authorized
and directed to execute and deliver, on behalf of the Issuing
Entity, the Cap
Contracts and the Swap Agreement, and to execute and deliver on
behalf of the
Issuing Entity, and to perform the duties and obligations of the
Issuing Entity
under any agreement or instrument related to the Cap Contracts and
the Swap
Agreement, in each case in such form as the Depositor shall direct
or shall
approve in writing, the execution and delivery of any such
agreement by the
Depositor to be conclusive evidence of its approval thereof.
SECTION 2.12. Qualification of Special Purpose Entity. For purposes
of SFAS
140, the parties hereto intend that the Issuing Entity shall be
treated as a
"qualifying special purpose entity" as such term is used in SFAS
140 and any
successor rule thereto and its power and authority as stated in
Section 2.11 of
this Agreement shall be limited in accordance with paragraph 35 of
SFAS 140.
SECTION 2.13. Depositor Notification of NIM Notes. The Depositor
shall
notify the Servicer and the Trustee if and when any NIM Notes are
issued and
when such NIM Notes are no longer outstanding.
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ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For
and on behalf of the Certificateholders, the Servicer shall service
and
administer the Mortgage Loans in accordance with Accepted Servicing
Practices.
In connection with such servicing and administration, the Servicer
shall have
full power and authority, acting alone and/or through subservicers
as provided
in Section 3.02 hereof, to do or cause to be done any and all
things that it may
deem necessary or desirable in connection with such servicing
and
administration, including but not limited to, the power and
authority, subject
to the terms hereof (i) to execute and deliver, on behalf of
the
Certificateholders and the Trustee, customary consents or waivers
and other
instruments and documents, (ii) to consent to transfers of any
Mortgaged
Property and assumptions of the Mortgage Notes and related
Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any
Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section
3.12(a), to
effectuate foreclosure or other conversion of the ownership of the
Mortgaged
Property securing any Mortgage Loan; provided that, subject to
Section 6.03, the
Servicer shall not take any action that is inconsistent with or
prejudices the
interests of the Issuing Entity or the Certificateholders in any
Mortgage Loan
serviced by it under this Agreement or the rights and interests of
the other
parties to this Agreement except as otherwise required by this
Agreement or by
law. The Servicer shall represent and protect the interest of the
Issuing Entity
in the same manner as it currently protects its own interest in
mortgage loans
in its own portfolio in any claim, proceeding or litigation
regarding a Mortgage
Loan, but in any case not in any manner that is a lesser standard
than that
provided in the first sentence of this Section 3.01.
Notwithstanding anything in
this Agreement to the contrary, the Servicer shall not make or
permit any
modification, waiver or amendment of any term of any Mortgage Loan
which would
cause any of the REMICs provided for herein to fail to qualify as a
REMIC or
result in the imposition of any tax under Section 860G(a) or
860G(d) of the
Code. Without limiting the generality of the foregoing, the
Servicer, in its own
name or in the name of the Depositor and the Trustee, is hereby
authorized and
empowered by the Depositor and the Trustee, when the Servicer
believes it
appropriate in its reasonable judgment, to execute and deliver, on
behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any
and all
instruments of satisfaction or cancellation, of partial or full
release or
discharge, or of subordination and all other comparable
instruments, with
respect to the Mortgage Loans, and with respect to the Mortgaged
Properties held
for the benefit of the Certificateholders. The Servicer shall
prepare and
deliver to the Depositor and/or the Trustee such documents
requiring execution
and delivery by any or all of them as are necessary or appropriate
to enable the
Servicer to service and administer the Mortgage Loans. If
reasonably required by
the Servicer, the Trustee shall furnish the Servicer with a
reasonable number of
powers of attorney in the form attached hereto as Exhibit J and
execute such
other documents delivered to it by the Servicer that are necessary
or
appropriate to enable the Servicer to carry out its servicing and
administrative
duties under this Agreement. Upon receipt of such documents, the
Depositor
and/or the Trustee shall execute such documents and deliver them to
the
Servicer. The Trustee shall have no liability with respect to any
misuse of such
power of attorney and shall be indemnified by the Servicer for any
costs,
liabilities or expenses incurred by the Trustee in connection
therewith.
In
accordance with the standards of the preceding paragraph, the
Servicer
shall advance or cause to be advanced funds as necessary for the
purpose of
effecting the payment of taxes and assessments on any first lien
Mortgaged
Properties, which advances shall be reimbursable in the first
instance from
related collections from the Mortgagors pursuant to Section 3.06,
and further as
provided in Section 3.08. To the extent that a Mortgage does not
provide for
escrow payments, (i) the Servicer shall determine whether any such
payments are
made by a first lien Mortgagor in a manner and at a time that is
necessary to
avoid the loss of the Mortgaged Property due to a tax sale or the
foreclosure as
a result of a tax lien and (ii) the Servicer shall ensure that all
insurance
required to be maintained on a first lien Mortgaged
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Property pursuant to this Agreement is maintained. If any such
payment has not
been made and the Servicer receives notice of a tax lien with
respect to the
Mortgage Loan being imposed, the Servicer will, to the extent
required to avoid
loss of the Mortgaged Property, advance or cause to be advanced
funds necessary
to discharge such lien on the Mortgaged Property subject to the
Servicer's
determination that such advances will be recoverable. All costs
incurred by the
Servicer, if any, in effecting the timely payment of taxes and
assessments on
the Mortgaged Properties and related insurance premiums shall not,
for the
purpose of calculating monthly distributions to the
Certificateholders, be added
to the Stated Principal Balance under the related Mortgage
Loans,
notwithstanding that the terms of such Mortgage Loans so
permit.
The
Servicer shall deliver a list of Servicing Officers and
specimen
signatures to the Trustee by the Closing Date.
The
Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and
for each
Mortgage Loan, the Servicer agrees that it shall report one of the
following
statuses each month as follows: current, delinquent (30-, 60-,
90-days, etc.),
foreclosed or charged-off.
The
Servicer further is authorized and empowered by the Trustee, on
behalf
of the Certificateholders and the Trustee, in its own name or in
the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case
may be,
believes it is appropriate in its best judgment to register any
Mortgage Loan on
the MERS System, or cause the removal from the registration of any
Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the
Trustee and the
Certificateholders or any of them, any and all instruments of
assignment and
other comparable instruments with respect to such assignment or
re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee
and its
successors and assigns. Any reasonable expenses incurred in
connection with the
actions described in the preceding sentence or as a result of MERS
discontinuing
or becoming unable to continue operations in connection with the
MERS System,
shall be subject to withdrawal by the Servicer from the Collection
Account
(provided that such expenses constitute "unanticipated expenses"
within the
meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
With
respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage
Loan, provided
that the following requirements are met:
(a)
the resulting Combined Loan-to-Value Ratio of such Mortgage Loan is
no
higher than the Combined Loan-to-Value Ratio prior to such
refinancing; and
(b)
the interest rate for the loan evidencing the refinanced senior
lien is
no more than 2.0% higher than the interest rate on the loan
evidencing the
existing senior lien immediately prior to the date of such
refinancing; and
(c)
the loan evidencing the refinanced senior lien is not subject
to
negative amortization.
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of
Servicer.
(a)
The Servicer may arrange for the subservicing of any Mortgage Loan
by a
subservicer, which may be an Affiliate (each, a "subservicer"),
pursuant to a
subservicing agreement (each, a "Subservicing Agreement");
provided, however,
that (i) such subservicing arrangement and the terms of the related
subservicing
agreement must provide for the servicing of such Mortgage Loans in
a manner
consistent with the servicing arrangements contemplated hereunder
and (ii) that
such agreement would not result in a withdrawal or downgrading by
any Rating
Agency of the ratings of any Certificates
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evidenced by a letter to that effect delivered by each Rating
Agency to the
Depositor. Notwithstanding the provisions of any subservicing
agreement, any of
the provisions of this Agreement relating to agreements or
arrangements between
the Servicer and a subservicer or reference to actions taken
through a
subservicer or otherwise, the Servicer shall remain obligated and
liable to the
Depositor, the Trustee and the Certificateholders for the servicing
and
administration of the Mortgage Loans in accordance with the
provisions of this
Agreement without diminution of such obligation or liability by
virtue of such
subservicing agreements or arrangements or by virtue of
indemnification from the
subservicer and to the same extent and under the same terms and
conditions as if
the Servicer alone were servicing and administering the Mortgage
Loans. Every
subservicing agreement entered into by the Servicer shall contain a
provision
giving any successor servicer the option to terminate such
agreement in the
event a successor servicer is appointed. All actions of the each
subservicer
performed pursuant to the related subservicing agreement shall be
performed as
an agent of the Servicer with the same force and effect as if
performed directly
by the Servicer. The Servicer shall deliver to the Trustee copies
of all
subservicing agreements.
(b)
The Servicer may enter into a special servicing advisory agreement
with
a holder of the Class R Certificate and/or one or more other class
of
Subordinate Certificates issued by the Issuing Entity or of a net
interest
margin trust holding certificates issued by the Issuing Entity
and/or an advisor
designated by such holder. Pursuant to such agreement, the Servicer
may provide
such holder or advisor, in its capacity as special servicing
advisor, with
loan-level information with respect to the Mortgage Loans, and such
holder or
the special servicing advisor designated by such holder may advise
the Servicer
with regards to efforts to maximize recoveries with respect to such
Mortgage
Loans, including without limitation the commencement of foreclosure
proceedings
or other actions.
(c)
For purposes of this Agreement, the Servicer shall be deemed to
have
received any collections, recoveries or payments with respect to
the Mortgage
Loans that are received by a subservicer regardless of whether such
payments are
remitted by the subservicer to the Servicer.
(d)
The Servicer shall not permit a Subservicer to perform any
servicing
responsibilities hereunder with respect to the Mortgage Loans
unless that
Subservicer first agrees in writing with the Servicer to deliver an
Assessment
of Compliance and an Accountant's Attestation in such manner and at
such times
that permits that Servicer to comply with Section 3.17 of this
Agreement.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility
or
liability for any action or failure to act by the Servicer, and
neither of them
is obligated to supervise the performance of the Servicer hereunder
or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In
the event that the Servicer shall for any reason no longer be
the
Servicer hereunder (including by reason of an Event of Default),
the Trustee or
its designee shall, within a period of time not to exceed ninety
(90) days from
the date of notice of termination or resignation, thereupon assume
all of the
rights and obligations of the Servicer hereunder arising thereafter
except that
the Trustee shall not be (i) liable for losses of the Servicer
pursuant to
Section 3.10 hereof or any acts or omissions of such predecessor
Servicer
hereunder, (ii) obligated to make Advances or Servicing Advances if
it is
prohibited from doing so by applicable law, (iii) obligated to
effectuate
repurchases or substitutions of Mortgage Loans hereunder, including
pursuant to
Section 2.02, 2.03 or 2.05 hereof, (iv) responsible for any
expenses of the
Servicer pursuant to Section 2.03 or (v) deemed to have made any
representations
and warranties hereunder, including pursuant to Section 2.04 or the
first
paragraph of Section 6.02 hereof; provided,
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however that the Trustee (subject to clause (ii) above) or its
designee, in its
capacity as the successor servicer, shall immediately assume the
terminated or
resigning Servicer's obligation to make Advances and Servicing
Advances. No such
termination shall affect any obligation of the Servicer to pay
amounts owed
under this Agreement and to perform its duties under this Agreement
until its
successor assumes all of its rights and obligations hereunder. If
the Servicer
shall for any reason no longer be the Servicer (including by reason
of any Event
of Default), the Trustee (or any other successor servicer) may, at
its option,
succeed to any rights and obligations of the Servicer under any
subservicing
agreement in accordance with the terms thereof; provided, however,
that the
Trustee (or any other successor servicer) shall not incur any
liability or have
any obligations in its capacity as servicer under a subservicing
agreement
arising prior to the date of such succession unless it expressly
elects to
assume such obligations of the Servicer thereunder; and the
Servicer shall not
thereby be relieved of any liability or obligations under the
subservicing
agreement arising prior to the date of such succession. To the
extent any costs
or expenses, including without limitation Servicing Transfer Costs
incurred by
the Trustee in connection with this Section 3.04 are not paid by
the Servicer
pursuant to this Agreement within thirty (30) days of the date of
the Trustee's
invoice therefor, such amounts shall be payable out of the
Certificate Account;
provided that the terminated Servicer shall reimburse the Issuing
Entity for any
such expense incurred by the Issuing Entity upon receipt of a
reasonably
detailed invoice evidencing such expenses. If the Trustee is
unwilling or unable
to act as servicer, the Trustee shall seek to appoint a successor
servicer that
is eligible in accordance with the criteria specified in Section
7.03 of this
Agreement.
The
Servicer shall, upon request of the Trustee, but at the expense of
the
Servicer, deliver to the assuming party all documents and records
relating to
each subservicing agreement and the Mortgage Loans then being
serviced and
otherwise use its best efforts to effect the orderly and efficient
transfer of
the subservicing agreement to the assuming party.
In
the event that the Servicer shall for any reason no longer be
the
Servicer hereunder (including by reason of any Event of
Default),
notwithstanding anything to the contrary above, the Trustee and the
Depositor
hereby agree that within ten (10) Business Days or delivery to the
Trustee by
the Servicing Rights Pledgee of a letter signed by the Servicer
whereby the
Servicer shall resign as Servicer under this Agreement, the
Servicing Rights
Pledgee or its designee shall be appointed as successor servicer
(provided that
at the time of such appointment the Servicing Rights Pledgee or
such designee
meets the requirements of a successor servicer set forth above) and
the
Servicing Rights Pledgee agrees to be subject to the terms of this
Agreement.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection
Account;
Certificate Account.
(a)
The Servicer shall make reasonable efforts in accordance with
Accepted
Servicing Practices to collect all payments called for under the
terms and
provisions of the Mortgage Loans to the extent such procedures
shall be
consistent with this Agreement and the terms and provisions of any
related
Required Insurance Policy. Consistent with the foregoing and
subject to Section
3.01 hereof, the Servicer may in its discretion (i) waive any late
payment
charge or, if applicable, any default interest, or (ii) extend the
due dates for
payments due on a Mortgage Note for a period not greater than 180
days;
provided, however, that any extension pursuant to clause (ii) above
shall not
affect the amortization schedule of any Mortgage Loan for purposes
of any
computation hereunder, except as provided below. In the event of
any such
arrangement pursuant to clause (ii) above, subject to Section 4.01,
the Servicer
shall make any Advances on the related Mortgage Loan during the
scheduled period
in accordance with the amortization schedule of such Mortgage Loan
without
modification thereof by reason of such arrangements.
Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in
the judgment
of the Servicer, such default is reasonably foreseeable, the
Servicer,
consistent with the standards set forth in Section 3.01, may also
waive, modify
or vary any term of such Mortgage Loan
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(including modifications that would change the Mortgage Rate,
forgive the
payment of principal or interest or extend the final maturity date
of such
Mortgage Loan), accept payment from the related Mortgagor of an
amount less than
the Stated Principal Balance in final satisfaction of such Mortgage
Loan, or
consent to the postponement of strict compliance with any such term
or otherwise
grant indulgence to any Mortgagor (any and all such waivers,
modifications,
variances, forgiveness of principal or interest, postponements, or
indulgences
collectively referred to herein as "forbearance"), provided,
however, that in no
event shall the Servicer grant any such forbearance (other than as
permitted by
the second sentence of this Section) with respect to any one
Mortgage Loan more
than once in any 12 month period or more than three times over the
life of such
Mortgage Loan, and provided, further, that in determining which
course of action
permitted by this sentence it shall pursue, the Servicer shall
adhere to the
standards of Section 3.01. The Servicer's analysis supporting any
forbearance
and the conclusion that any forbearance meets the standards of
Section 3.01
shall be reflected in writing in the Mortgage File.
(b)
The Servicer will not waive any prepayment charge or portion
thereof
unless, (i) the enforceability thereof shall have been limited by
bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to
creditors' rights generally or is otherwise prohibited by law, or
(ii) the
collectability thereof shall have been limited due to acceleration
in connection
with a foreclosure or other involuntary payment, or (iii) the
prepayment of the
Mortgage Loan is made in connection with the involuntary sale of
the related
Mortgaged Property, or (iv) in the Servicer's reasonable judgment
as described
in Section 3.01 hereof, (x) such waiver relates to a default or a
reasonably
foreseeable default and (y) such waiver would maximize recovery of
total
proceeds taking into account the value of such prepayment charge
and related
Mortgage Loan, or (v) the collection of such prepayment charge or
portion
thereof, or of a similar type of prepayment charge, would be
considered
"predatory" or "illegal" pursuant to written guidance published by
any
applicable federal, state or local regulatory authority having
jurisdiction over
such matters or has been challenged by any such authority, or, only
to the
extent that there are no NIM Notes outstanding or to the extent
that the
Depositor has notified the Servicer in writing that all previously
issued NIM
Notes are no longer outstanding, there is a certificated class
action in which a
similar type of prepayment charge is being challenged, or (vi) if
sufficient
information is not made available to enable it to collect the
prepayment charge.
Except as provided in the preceding sentence, in no event will the
Servicer
waive a prepayment charge in connection with a refinancing of a
Mortgage Loan
that is not related to a default or a reasonably foreseeable
default. If the
Servicer waives or does not collect all or a portion of a
prepayment charge
relating to a Principal Prepayment in full or in part due to any
action or
omission of the Servicer, other than as provided above, the
Servicer shall
deposit the amount of such prepayment charge (or such portion
thereof as had
been waived for deposit) into the Collection Account for
distribution in
accordance with the terms of this Agreement.
(c)
The Servicer shall not be required to institute or join in
litigation
with respect to collection of any payment (whether under a
Mortgage, Mortgage
Note or otherwise or against any public or governmental authority
with respect
to a taking or condemnation) if it reasonably believes that
enforcing the
provision of the Mortgage or other instrument pursuant to which
such payment is
required is prohibited by applicable law.
(d)
The Servicer shall establish and initially maintain, on behalf of
the
Trustee for the benefit of the Certificateholders, the Collection
Account. The
Servicer shall deposit into the Collection Account daily, within
two (2)
Business Days of receipt thereof, in immediately available funds,
the following
payments and collections received or made by it on and after the
Cut-off Date
with respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on
the
Mortgage Loans on or prior to the Cut-off Date;
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(ii) all payments on account of interest on the Mortgage Loans net
of
the
related Servicing Fee permitted under Section 3.15, other than
interest
due
on the Mortgage Loans on or prior to the Cut-off Date;
(iii) all Liquidation Proceeds, other than proceeds to be applied
to
the
restoration or repair of the Mortgaged Property or released to
either
the
Mortgagor or the holder of a senior lien on the Mortgaged Property
in
accordance with the
Servicer's normal servicing procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer pursuant
to
Section 3.05(g) in connection with any losses on Permitted
Investments;
(vii) any amounts required to be deposited by the Servicer pursuant
to
Section 3.10 hereof;
(viii) the Purchase Price and any Substitution Adjustment
Amount;
(ix) all Advances made by the Servicer pursuant to Section
4.01;
