<PAGE>
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-AB3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
ARTICLE I
DEFINITIONS.................................................
14
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES..............................................
67
SECTION 2.01.
Conveyance of Mortgage
Loans........................... 67
SECTION 2.02.
Acceptance by Trustee
of the Mortgage Loans............ 69
SECTION 2.03.
Representations,
Warranties and Covenants of
the Depositor..........................................
71
SECTION 2.04.
Representations and
Warranties of the Servicer......... 74
SECTION 2.05.
Substitutions and
Repurchases of Mortgage Loans Which
Are Not "Qualified Mortgages"..........................
75
SECTION 2.06.
Authentication and
Delivery of Certificates............ 75
SECTION 2.07.
REMIC
Elections........................................ 76
SECTION 2.08.
Covenants of the
Servicer.............................. 82
SECTION 2.09.
[RESERVED].............................................
82
SECTION 2.10.
Conveyance of
Subsequent Mortgage Loans................ 82
SECTION 2.11.
Permitted Activities
of the Issuing Entity............. 85
SECTION 2.12.
Qualification of
Special Purpose Entity................ 85
SECTION 2.13.
Depositor Notification
of NIM Notes.................... 85
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS............... 85
SECTION 3.01.
Servicer to Service
Mortgage Loans..................... 85
SECTION 3.02.
Servicing and
Subservicing; Enforcement of the
Obligations of Servicer................................
87
SECTION 3.03.
Rights of the
Depositor and the Trustee in Respect
of the Servicer........................................
88
SECTION 3.04.
Trustee to Act as
Servicer............................. 88
SECTION 3.05.
Collection of Mortgage
Loan Payments; Collection
Account; Certificate Account...........................
89
SECTION 3.06.
Collection of Taxes,
Assessments and Similar Items;
Escrow Accounts........................................
92
SECTION 3.07.
Access to Certain
Documentation and Information
Regarding the Mortgage Loans...........................
92
SECTION 3.08.
Permitted Withdrawals
from the Collection Account and
Certificate Account....................................
93
SECTION 3.09.
[RESERVED].............................................
95
SECTION 3.10.
Maintenance of Hazard
Insurance........................ 95
SECTION 3.11.
Enforcement of
Due-On-Sale Clauses; Assumption
Agreements.............................................
96
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 3.12.
Realization Upon
Defaulted Mortgage Loans;
Determination of Excess Proceeds.......................
97
SECTION 3.13.
Trustee to Cooperate;
Release of Mortgage Files........ 101
SECTION 3.14.
Documents Records and
Funds in Possession of Servicer
to be Held for the Trustee.............................
102
SECTION 3.15.
Servicing
Compensation................................. 102
SECTION 3.16.
Access to Certain
Documentation........................ 103
SECTION 3.17.
Annual Statement as to
Compliance...................... 103
SECTION 3.18.
Assessment of
Compliance; Accountant's Attestation..... 103
SECTION 3.19.
Subordination
Liens.................................... 106
SECTION 3.20.
Periodic
Filings....................................... 106
SECTION 3.21.
Indemnification by
Trustee............................. 110
SECTION 3.22.
Indemnification by
Servicer............................ 110
SECTION 3.23.
Prepayment Charge
Reporting Requirements............... 111
SECTION 3.24.
Statements to
Trustee.................................. 111
SECTION 3.25.
Further
Indemnification by the Servicer................ 111
SECTION 3.26.
Nonsolicitation........................................
112
SECTION 3.27.
Existing Servicing
Agreement........................... 112
SECTION 3.28.
High Cost Mortgage
Loans............................... 112
SECTION 3.29.
[RESERVED].............................................
113
ARTICLE IV
DISTRIBUTIONS...............................................
113
SECTION 4.01.
Advances...............................................
113
SECTION 4.02.
Reduction of Servicing
Compensation in Connection with
Prepayment Interest Shortfalls.........................
113
SECTION 4.03.
Distributions on the
REMIC Interests................... 114
SECTION 4.04.
Distributions..........................................
114
SECTION 4.05.
Monthly Statements to
Certificateholders............... 122
ARTICLE V
THE CERTIFICATES............................................
126
SECTION 5.01.
The
Certificates....................................... 126
SECTION 5.02.
Certificate Register;
Registration of Transfer and
Exchange of Certificates...............................
127
SECTION 5.03.
Mutilated, Destroyed,
Lost or Stolen Certificates...... 131
SECTION 5.04.
Persons Deemed
Owners.................................. 131
SECTION 5.05.
Access to List of
Certificateholders' Names
and Addresses..........................................
132
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 5.06.
Book-Entry
Certificates................................ 132
SECTION 5.07.
Notices to
Depository.................................. 133
SECTION 5.08.
Definitive
Certificates................................ 133
SECTION 5.09.
Maintenance of Office
or Agency........................ 133
SECTION 5.10.
Pre-Funding
Account.................................... 133
SECTION 5.11.
Capitalized Interest
Account........................... 134
ARTICLE VI THE
DEPOSITOR AND THE SERVICER..............................
135
SECTION 6.01.
Respective Liabilities
of the Depositor and
the Servicer...........................................
135
SECTION 6.02.
Merger or
Consolidation of the Depositor or
the Servicer...........................................
135
SECTION 6.03.
Limitation on
Liability of the Depositor, the Servicer
and Others.............................................
136
SECTION 6.04.
Limitation on
Resignation of Servicer.................. 136
SECTION 6.05.
Errors and Omissions
Insurance; Fidelity Bonds......... 137
ARTICLE VII DEFAULT;
TERMINATION OF SERVICER............................ 137
SECTION 7.01.
Events of
Default...................................... 137
SECTION 7.02.
[RESERVED].............................................
139
SECTION 7.03.
Trustee to Act;
Appointment of Successor............... 139
SECTION 7.04.
Notification to
Certificateholders..................... 140
ARTICLE VIII CONCERNING THE
TRUSTEE...................................... 140
SECTION 8.01.
Duties of
Trustee...................................... 140
SECTION 8.02.
Certain Matters
Affecting the Trustee.................. 141
SECTION 8.03.
Trustee Not Liable for
Mortgage Loans.................. 143
SECTION 8.04.
Trustee May Own
Certificates........................... 143
SECTION 8.05.
Trustee's
Fees......................................... 143
SECTION 8.06.
Indemnification of
Trustee; Expenses................... 143
SECTION 8.07.
Eligibility
Requirements for Trustee................... 144
SECTION 8.08.
Resignation and
Removal of Trustee..................... 144
SECTION 8.09.
Successor
Trustee...................................... 145
SECTION 8.10.
Merger or
Consolidation of Trustee..................... 145
SECTION 8.11.
Appointment of
Co-Trustee or Separate Trustee.......... 146
SECTION 8.12.
Tax
Matters............................................ 147
ARTICLE IX
TERMINATION.................................................
149
SECTION 9.01.
Termination upon
Liquidation or Repurchase of all
Mortgage Loans.........................................
149
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 9.02.
Final Distribution on
the Certificates................. 151
SECTION 9.03.
Additional Termination
Requirements.................... 152
ARTICLE X
MISCELLANEOUS PROVISIONS....................................
153
SECTION 10.01.
Amendment..............................................
153
SECTION 10.02.
Counterparts...........................................
154
SECTION 10.03.
Governing Law..........................................
155
SECTION 10.04.
Intention of Parties...................................
155
SECTION 10.05.
Notices................................................
155
SECTION 10.06.
Severability of Provisions.............................
156
SECTION 10.07.
Assignment.............................................
156
SECTION 10.08.
Limitation on Rights of Certificateholders.............
156
SECTION 10.09.
Inspection and Audit Rights............................
157
SECTION 10.10.
Certificates Nonassessable and Fully Paid..............
157
SECTION 10.11.
[RESERVED].............................................
157
SECTION 10.12.
[RESERVED].............................................
157
SECTION 10.13.
Third Party Rights.....................................
157
SECTION 10.14.
Assignment; Sales; Advance Facilities..................
158
</TABLE>
-iv-
<PAGE>
EXHIBIT A
FORMS OF LIBOR 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-1
[RESERVED]
EXHIBIT C-2
[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
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
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 ADDITION NOTICE
EXHIBIT V
FORM OF SWAP AGREEMENT
SCHEDULE W ITEMS
FOR FORM 8-K
SCHEDULE X ITEMS
FOR FORM 10-D
SCHEDULE Y 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) four 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, (v) the Supplemental Interest Trust, which in
turn will
hold the Swap Agreement, and (vi) the Pre-Funding Account and the
Capitalized
Interest Account. The Pre-Funding REMIC will consist of all of the
assets
constituting the Trust Fund (other than assets described in clauses
(ii), (iii),
(iv), (v) and (vi) above, the Pre-Funding REMIC Regular Interests,
the SWAP
REMIC Regular Interests and the Lower Tier REMIC Regular Interests)
and will be
evidenced by the Pre-Funding REMIC Regular Interests (which will
be
uncertificated and will represent the "regular interests" in the
Pre-Funding
REMIC) and the Class PFR Interest as the single "residual interest"
in the
Pre-Funding REMIC. The Trustee will hold the Pre-Funding REMIC
Regular
Interests. The SWAP REMIC will consist of the Pre-Funding 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 Trustee will hold the SWAP REMIC Regular Interests. The Lower
Tier REMIC
will consist of the 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 PFR Interest, 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 PRE-FUNDING REMIC
The following table sets forth the designations, initial principal
balances and
interest rates for each interest in the Pre-Funding REMIC:
<TABLE>
<CAPTION>
Class
Initial Principal Balance Interest Rate
-----
------------------------- -------------
<S> <C>
<C>
PF-I
(1)
(1)
PF-IX
(2)
(2)
PF-II
(3)
(3)
PF-IIX
(4)
(4)
PFR
(5)
(5)
</TABLE>
1
<PAGE>
(1) The initial
principal balance of the Class PF-I Interest shall equal the
aggregate Stated Principal Balance of the Initial Mortgage Loans in
Group
One
as of the Initial Cut-off Date ($164,024,769.71). The interest rate
for
the
Class PF-I Interest shall be (i) for each Distribution Date (and
the
related Accrual Period) through and including the Distribution Date
that
immediately follows the Funding Period, the weighted average of the
Net
Mortgage Rates of the Initial Mortgage Loans in Group One
calculated based
on
the Net Mortgage Rates and the Stated Principal Balances of the
Initial
Mortgage Loans in Group One as of the immediately preceding
Distribution
Date (or in the case of the
first Distribution Date, as of the Initial
Cut-off Date) and (ii) for each Distribution Date (and the related
Accrual
Period) after the Distribution Date that immediately follows the
Funding
Period, the weighted average of the Net Mortgage Rates of the
Mortgage
Loans in Group One calculated based on the Net Mortgage Rates and
the
Stated Principal Balances of the Mortgage Loans in Group One as of
the
immediately preceding Distribution Date.
(2) The initial
principal balance of the Class PF-IX Interest shall equal the
portion of the Original Pre-Funded Amount that relates to Group
One
($53,820,036.01). The interest rate for the Class PF-IX Interest
shall be
(i)
for each Distribution Date (and the related Accrual Period) through
and
including the Distribution Date that immediately follows the
Funding
Period, a per annum rate equal to 3.75% and (ii) for each
Distribution Date
(and
the related Accrual Period) after the Distribution Date that
immediately follows the Funding Period, the weighted average of the
Net
Mortgage Rates of the Mortgage Loans in Group One calculated based
on the
Net
Mortgage Rates and the Stated Principal Balances of the Mortgage
Loans
in Group One as of the
immediately preceding Distribution Date.
(3) The initial
principal balance of the Class PF-II Interest shall equal the
aggregate Stated Principal Balance of the Initial Mortgage Loans in
Group
Two
as of the Initial Cut-off Date ($155,976,099.24). The interest rate
for
the
Class PF-II Interest shall be (i) for each Distribution Date (and
the
related Accrual Period) through and including the Distribution Date
that
immediately follows the Funding Period, the weighted average of the
Net
Mortgage Rates of the Initial Mortgage Loans in Group Two
calculated based
on
the Net Mortgage Rates and the Stated Principal Balances of the
Initial
Mortgage Loans in Group Two as of the immediately preceding
Distribution
Date
(or in the case of the first Distribution Date, as of the
Initial
Cut-off Date) and (ii) for each Distribution Date (and the related
Accrual
Period) after the Distribution Date that immediately follows the
Funding
Period, the weighted average of the Net Mortgage Rates of the
Mortgage
Loans in Group Two calculated based on the Net Mortgage Rates and
the
Stated Principal Balances of the Mortgage Loans in Group Two as of
the
immediately preceding Distribution Date.
(4) The initial
principal balance of the Class PF-IIX Interest shall equal the
portion of the Original Pre-Funded Amount that relates to Group
Two
($51,179,095.04). The interest rate for the Class PF-IIX Interest
shall be
(i)
for each Distribution Date (and the related Accrual Period) through
and
including the Distribution Date that immediately follows the
Prefunding
Period, a per annum rate equal to 3.75% and (ii) for each
Distribution Date
(and
the related Accrual Period) after the Distribution Date that
immediately follows the Funding Period, the weighted average of the
Net
Mortgage Rates of the Mortgage Loans in Group Two calculated based
on the
Net
Mortgage Rates and the Stated Principal Balances of the Mortgage
Loans
in
Group Two as of the immediately preceding Distribution Date.
(5) The Class PFR
Interest shall have no principal amount and shall bear no
interest.
THE SWAP REMIC
The following table sets forth the designations, initial principal
balances and
interest rates for each interest in the SWAP REMIC:
2
<PAGE>
<TABLE>
<CAPTION>
Class Initial
Principal Balance Interest Rate
-----
------------------------- -------------
<S> <C>
<C>
1-SW1
$20,957,561.680
(1)
1-SW1A
$ 2,680,984.757
(2)
1-SW1B
$ 2,680,984.757
(3)
1-SW2A
$ 2,984,724.488
(2)
1-SW2B
$ 2,984,724.488
(3)
1-SW3A
$ 3,281,079.537
(2)
1-SW3B
$ 3,281,079.537
(3)
1-SW4A
$ 3,689,789.197
(2)
1-SW4B
$ 3,689,789.197
(3)
1-SW5A
$ 3,899,107.044
(2)
1-SW5B
$ 3,899,107.044
(3)
1-SW6A
$ 3,913,515.300
(2)
1-SW6B
$ 3,913,515.300
(3)
1-SW7A
$ 3,771,483.306
(2)
1-SW7B
$ 3,771,483.306
(3)
1-SW8A
$ 3,602,272.225
(2)
1-SW8B
$ 3,602,272.225
(3)
1-SW9A
$ 3,403,621.597
(2)
1-SW9B
$ 3,403,621.597
(3)
1-SW10A
$ 3,184,361.825
(2)
1-SW10B
$ 3,184,361.825
(3)
1-SW11A
$ 2,985,118.146
(2)
1-SW11B
$ 2,985,118.146
(3)
1-SW12A
$ 2,806,928.271
(2)
1-SW12B
$ 2,806,928.271
(3)
1-SW13A
$ 2,667,164.939
(2)
1-SW13B
$ 2,667,164.939
(3)
1-SW14A
$ 2,628,061.540
(2)
1-SW14B
$ 2,628,061.540
(3)
1-SW15A
$ 2,771,128.681
(2)
1-SW15B
$ 2,771,128.681
(3)
1-SW16A
$ 3,062,059.394
(2)
1-SW16B
$ 3,062,059.394
(3)
1-SW17A
$ 3,304,479.144
(2)
1-SW17B
$ 3,304,479.144
(3)
1-SW18A
$ 3,274,962.454
(2)
1-SW18B
$ 3,274,962.454
(3)
1-SW19A
$ 3,011,958.164
(2)
1-SW19B
$ 3,011,958.164
(3)
1-SW20A
$ 2,690,932.063
(2)
1-SW20B
$ 2,690,932.063
(3)
1-SW21A
$ 2,317,791.078
(2)
1-SW21B
$ 2,317,791.078
(3)
1-SW22A
$ 2,001,571.658
(2)
1-SW22B
$ 2,001,571.658
(3)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Class Initial
Principal Balance Interest Rate
-----
------------------------- -------------
<S>
<C>
<C>
1-SW23A
$ 1,765,417.894
(2)
1-SW23B
$ 1,765,417.894
(3)
1-SW24A
$ 1,596,761.932
(2)
1-SW24B
$ 1,596,761.932
(3)
1-SW25A
$ 1,474,657.100
(2)
1-SW25B
$ 1,474,657.100
(3)
1-SW26A
$ 1,413,126.962
(2)
1-SW26B
$ 1,413,126.962
(3)
1-SW27A
$ 1,385,670.059
(2)
1-SW27B
$ 1,385,670.059
(3)
1-SW28A
$ 1,676,084.352
(2)
1-SW28B
$ 1,676,084.352
(3)
1-SW29A
$ 1,652,891.056
(2)
1-SW29B
$ 1,652,891.056
(3)
1-SW30A
$ 1,559,125.526
(2)
1-SW30B
$ 1,559,125.526
(3)
1-SW31A
$ 337,992.111
(2)
1-SW31B
$ 337,992.111
(3)
1-SW32A
$ 1,107,354.098
(2)
1-SW32B
$ 1,107,354.098
(3)
1-SW33A
$ 979,243.925
(2)
1-SW33B
$ 979,243.925
(3)
1-SW34A
$ 887,607.892
(2)
1-SW34B
$ 887,607.892
(3)
1-SW35A
$ 809,944.168
(2)
1-SW35B
$ 809,944.168
(3)
1-SW36A
$ 744,540.238
(2)
1-SW36B
$ 744,540.238
(3)
1-SW37A
$ 686,600.440
(2)
1-SW37B
$ 686,600.440
(3)
1-SW38A
$ 636,411.559
(2)
1-SW38B $
636,411.559
(3)
1-SW39A
$ 584,996.853
(2)
1-SW39B
$ 584,996.853
(3)
1-SW40A
$ 542,149.599
(2)
1-SW40B
$ 542,149.599
(3)
1-SW41A
$ 509,513.884
(2)
1-SW41B
$ 509,513.884
(3)
1-SW42A
$ 468,320.969
(2)
1-SW42B
$ 468,320.969
(3)
1-SW43A
$ 437,789.379
(2)
1-SW43B
$ 437,789.379
(3)
1-SW44A
$ 415,587.662
(2)
1-SW44B
$ 415,587.662
(3)
1-SW45A
$ 385,300.570
(2)
1-SW45B
$ 385,300.570
(3)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Class Initial
Principal Balance Interest Rate
-----
------------------------- -------------
<S>
<C>
<C>
1-SW46A
$ 373,333.714
(2)
1-SW46B
$ 373,333.714
(3)
1-SW47A $
352,526.204
(2)
1-SW47B
$ 352,526.204
(3)
1-SW48A
$ 334,276.191
(2)
1-SW48B
$ 334,276.191
(3)
1-SW49A
$ 316,067.953
(2)
1-SW49B
$ 316,067.953
(3)
1-SW50A
$ 299,243.927
(2)
1-SW50B
$ 299,243.927
(3)
1-SW51A
$ 305,925.355
(2)
1-SW51B
$ 305,925.355
(3)
1-SW52A
$ 285,694.749
(2)
1-SW52B
$ 285,694.749
(3)
1-SW53A
$ 272,940.833
(2)
1-SW53B
$ 272,940.833
(3)
1-SW54A
$ 5,913,430.056
(2)
1-SW54B
$ 5,913,430.056
(3)
2-SW2
$19,929,177.320
(4)
2-SW1A
$ 2,549,429.243
(5)
2-SW1B
$ 2,549,429.243
(6)
2-SW2A
$ 2,838,264.512
(5)
2-SW2B
$ 2,838,264.512
(6)
2-SW3A
$ 3,120,077.463
(5)
2-SW3B
$ 3,120,077.463
(6)
2-SW4A
$ 3,508,731.803
(5)
2-SW4B
$ 3,508,731.803
(6)
2-SW5A
$ 3,707,778.456
(5)
2-SW5B
$ 3,707,778.456
(6)
2-SW6A
$ 3,721,479.700
(5)
2-SW6B
$ 3,721,479.700
(6)
2-SW7A
$ 3,586,417.194
(5)
2-SW7B
$ 3,586,417.194
(6)
2-SW8A
$ 3,425,509.275
(5)
2-SW8B
$ 3,425,509.275
(6)
2-SW9A
$ 3,236,606.403
(5)
2-SW9B
$ 3,236,606.403
(6)
2-SW10A
$ 3,028,105.675
(5)
2-SW10B
$ 3,028,105.675
(6)
2-SW11A
$ 2,838,638.854
(5)
2-SW11B
$ 2,838,638.854
(6)
2-SW12A
$ 2,669,192.729
(5)
2-SW12B
$ 2,669,192.729
(6)
2-SW13A
$ 2,536,287.561
(5)
2-SW13B
$ 2,536,287.561
(6)
2-SW14A
$ 2,499,102.960
(5)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Class Initial
Principal Balance Interest Rate
-----
------------------------- -------------
<S>
<C>
<C>
2-SW14B
$ 2,499,102.960
(6)
2-SW15A
$ 2,635,149.819
(5)
2-SW15B
$ 2,635,149.819
(6)
2-SW16A
$ 2,911,804.606
(5)
2-SW16B
$ 2,911,804.606
(6)
2-SW17A
$ 3,142,328.856
(5)
2-SW17B
$ 3,142,328.856
(6)
2-SW18A
$ 3,114,260.546
(5)
2-SW18B
$ 3,114,260.546
(6)
2-SW19A
$ 2,864,161.836
(5)
2-SW19B
$ 2,864,161.836
(6)
2-SW20A
$ 2,558,888.437
(5)
2-SW20B
$ 2,558,888.437
(6)
2-SW21A
$ 2,204,057.422
(5)
2-SW21B
$ 2,204,057.422
(6)
2-SW22A
$ 1,903,354.842
(5)
2-SW22B
$ 1,903,354.842
(6)
2-SW23A
$ 1,678,789.106
(5)
2-SW23B
$ 1,678,789.106
(6)
2-SW24A
$ 1,518,409.068
(5)
2-SW24B
$ 1,518,409.068
(6)
2-SW25A
$ 1,402,295.900
(5)
2-SW25B
$
1,402,295.900
(6)
2-SW26A
$ 1,343,785.038
(5)
2-SW26B
$ 1,343,785.038
(6)
2-SW27A
$ 1,317,675.441
(5)
2-SW27B
$ 1,317,675.441
(6)
2-SW28A
$ 1,593,839.148
(5)
2-SW28B
$ 1,593,839.148
(6)
2-SW29A
$ 1,571,783.944
(5)
2-SW29B
$ 1,571,783.944
(6)
2-SW30A
$ 1,482,619.474
(5)
2-SW30B
$ 1,482,619.474
(6)
2-SW31A
$ 321,406.889
(5)
2-SW31B
$ 321,406.889
(6)
2-SW32A
$ 1,053,016.402
(5)
2-SW32B
$ 1,053,016.402
(6)
2-SW33A
$ 931,192.575
(5)
2-SW33B
$ 931,192.575
(6)
2-SW34A
$ 844,053.108
(5)
2-SW34B
$ 844,053.108
(6)
2-SW35A
$ 770,200.332
(5)
2-SW35B
$ 770,200.332
(6)
2-SW36A
$ 708,005.762
(5)
2-SW36B
$ 708,005.762
(6)
2-SW37A
$ 652,909.060
(5)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Class Initial
Principal Balance Interest Rate
-----
------------------------- -------------
<S>
<C>
<C>
2-SW37B
$ 652,909.060
(6)
2-SW38A
$ 605,182.941
(5)
2-SW38B
$ 605,182.941
(6)
2-SW39A
$ 556,291.147
(5)
2-SW39B
$ 556,291.147
(6)
2-SW40A
$ 515,546.401
(5)
2-SW40B
$ 515,546.401
(6)
2-SW41A
$ 484,512.116
(5)
2-SW41B
$ 484,512.116
(6)
2-SW42A
$ 445,340.531
(5)
2-SW42B
$ 445,340.531
(6)
2-SW43A
$ 416,307.121
(5)
2-SW43B
$ 416,307.121
(6)
2-SW44A
$ 395,194.838
(5)
2-SW44B
$ 395,194.838
(6)
2-SW45A
$ 366,393.930
(5)
2-SW45B
$ 366,393.930
(6)
2-SW46A
$ 355,014.286
(5)
2-SW46B
$ 355,014.286
(6)
2-SW47A
$ 335,227.796
(5)
2-SW47B
$ 335,227.796
(6)
2-SW48A
$ 317,873.309
(5)
2-SW48B
$ 317,873.309
(6)
2-SW49A
$ 300,558.547
(5)
2-SW49B
$ 300,558.547
(6)
2-SW50A
$ 284,560.073
(5)
2-SW50B
$ 284,560.073
(6)
2-SW51A
$ 290,913.645
(5)
2-SW51B
$ 290,913.645
(6)
2-SW52A
$ 271,675.751
(5)
2-SW52B
$ 271,675.751
(6)
2-SW53A
$ 259,547.667
(5)
2-SW53B
$ 259,547.667
(6)
2-SW54A
$ 5,623,258.944
(5)
2-SW54B
$ 5,623,258.944
(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
7
<PAGE>
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
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
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>
8
<PAGE>
(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 sum of (A) the aggregate Cut-off Date
Principal
Balance of the Initial Mortgage Loans and (B) the Original
Pre-Funded
Amount 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 sum of (A) the aggregate Cut-off
Date
Principal Balance of the Initial Mortgage Loans in Group One and
(B) the
portion of the Original Pre-Funded Amount relating to Group One
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 sum of (A) the aggregate Cut-off Date Principal
Balance of the
Initial Mortgage Loans in
Group One and (B) the portion of the Original
Pre-Funded Amount relating to Group One.
(5) The initial
principal balance of the Class LTII2A Interest shall equal
0.05% of the excess of (i) the sum of (A) the aggregate Cut-off
Date
Principal Balance of the Initial Mortgage Loans in Group Two and
(B) the
portion of the Original Pre-Funded Amount relating to Group Two
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 sum of (A) the aggregate Cut-off Date Principal
Balance of the
Initial Mortgage Loans in Group Two and (B) the portion of the
Original
Pre-Funded Amount relating to Group Two.
(7) The initial
principal balance of the Class LTIIX Interest shall equal the
excess of (i) 50% of the sum of (A) the aggregate Cut-off Date
Principal
Balance of the Initial Mortgage Loans and (B) the Original
Pre-Funded
Amount 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.
9
<PAGE>
(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>
DISTRIBUTION
SWAP REMIC
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
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
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION
SWAP REMIC
DATE
REGULAR INTEREST
------------
----------------
<S>
<C>
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
7-29
CLASS 1-SW23A
CLASS 2-SW23A
7-30
CLASS 1-SW24A
CLASS 2-SW24A
7-31
CLASS 1-SW25A
CLASS 2-SW25A
7-32
CLASS 1-SW26A
CLASS 2-SW26A
7-33
CLASS 1-SW27A
CLASS 2-SW27A
7-34
CLASS 1-SW28A
CLASS 2-SW28A
7-35
CLASS 1-SW29A
CLASS 2-SW29A
7-36
CLASS 1-SW30A
CLASS 2-SW30A
7-37
CLASS 1-SW31A
CLASS 2-SW31A
7-38
CLASS 1-SW32A
CLASS 2-SW32A
7-39
CLASS 1-SW33A
CLASS 2-SW33A
7-40
CLASS 1-SW34A
CLASS 2-SW34A
7-41
CLASS 1-SW35A
CLASS 2-SW35A
7-42
CLASS 1-SW36A
CLASS 2-SW36A
7-43
CLASS 1-SW37A
CLASS 2-SW37A
7-44
CLASS 1-SW38A
CLASS 2-SW38A
7-45
CLASS 1-SW39A
CLASS 2-SW39A
7-46
CLASS 1-SW40A
CLASS 2-SW40A
7-47
CLASS 1-SW41A
CLASS 2-SW41A
7-48
CLASS 1-SW42A
CLASS
2-SW42A
7-49
CLASS 1-SW43A
CLASS 2-SW43A
7-50
CLASS 1-SW44A
CLASS 2-SW44A
7-51
CLASS 1-SW45A
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION
SWAP REMIC
DATE
REGULAR INTEREST
------------
----------------
<S>
<C>
CLASS 2-SW45A
7-52
CLASS 1-SW46A
CLASS 2-SW46A
7-53
CLASS 1-SW47A
CLASS 2-SW47A
7-54
CLASS 1-SW48A
CLASS 2-SW48A
7-55
CLASS 1-SW49A
CLASS 2-SW49A
7-56
CLASS 1-SW50A
CLASS 2-SW50A
7-57
CLASS 1-SW51A
CLASS 2-SW51A
7-58
CLASS 1-SW52A
CLASS
2-SW52A
7-59
CLASS 1-SW53A
CLASS 2-SW53A
7-60
CLASS 1-SW54A
CLASS 2-SW54A
</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
Class of
Principal
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
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.
12
<PAGE>
(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.
(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 Interest
Class Principal
Amount Rate
-----
----------------
--------
<S>
<C>
<C>
A-1
(1)
(2)
A-2A (1)
(2)
A-2B (1)
(2)
A-2C (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.
13
<PAGE>
(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 PFR Interest, the
Class SWR Interest, the Class LTR Interest and the Residual
Interest.
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 Pre-Funding REMIC Regular Interests and 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 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 Pre-Funding REMIC Regular
Interests and
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.
Addition Notice: With respect to the transfer of Subsequent
Mortgage Loans
to the Trust Fund pursuant to Section 2.10, a notice of the
Sponsor's
designation of the Subsequent Mortgage Loans to be sold to the
Trust Fund, the
proposed Mortgage Group to which such Mortgage Loans are to be
added, the
proposed Subsequent Cut-off Date, the proposed Subsequent Transfer
Date and the
aggregate Stated Principal Balance of such Subsequent Mortgage
Loans as of the
Subsequent Cut-off Date. Unless otherwise agreed by the Servicer
and the
Trustee, the Addition Notice shall be given to the Servicer and the
Trustee not
later than three Business Days prior to the related Subsequent
Transfer Date and
shall be substantially in the form of Exhibit U.
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.
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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.
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 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 sum of the (x)
aggregate
Stated Principal Balance of the Mortgage Loans as of such
Distribution Date and
(y) the amount on deposit in the Pre-Funding Account as of such
Distribution
Date (disregarding income or loss on investments of amount on
deposit in the
Pre-Funding Account).
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
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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.
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 sum of (i) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the Initial Cut-off Date and (ii) the Original
Pre-Funded
Amount.
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, 40, 45 or 50-year
amortization schedule,
with a balloon payment of the remaining outstanding principal
balance due on
such Mortgage Loan at its stated maturity.
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<PAGE>
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-AB3." Funds in the 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: The Bank of New York, 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.
Capitalized Interest Account: The account described in Section 5.11
herein.
Capitalized Interest Amount: The amount paid by the Sponsor to the
Trustee
for deposit into the Capitalized Interest Account on the Closing
Date pursuant
to Section 5.11, which amount is $814,569.53.
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-AB3." 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-2A, Class A-2B and Class
A-2C
Certificates. For purposes of Section 2.07 hereof, Certificate
Group Two shall
be related to Group Two.
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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 Initial Cut-off Date and the Original
Pre-Funded
Amount)) 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 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,
and the Class
A-2C Certificate Principal Balance.
Class A Certificates: Any of the Class A-1, Class A-2A, Class A-2B
and
Class A-2C 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
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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) 75.10% 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) any Distribution
Date
from the Closing Date up to and including the Distribution Date
immediately
following the Funding Period, a per annum rate equal to the product
of (i) 12,
(ii) the quotient of (x) the sum of (1) the total scheduled
interest on the
Initial Mortgage Loans in Group One based on the Net Mortgage Rates
in effect on
the related Due Date and (2) the Required Withdrawal for Group One
for such
Distribution 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 sum of (1) the aggregate Stated
Principal Balance
of the Initial 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
Initial Cut-off Date) and (2) the excess of (a) the portion of the
Original
Pre-Funded Amount relating to Group One over (b) the aggregate of
principal
payments received with respect to the Subsequent Mortgage Loans in
Group One
that were distributed on prior Distribution Dates and losses with
respect to
principal incurred with respect to the Subsequent Mortgage Loans in
Group One
that were allocated on prior Distribution Dates 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 and (B) any Distribution Date
after the
Distribution Date immediately following the Funding Period, the per
annum rate
equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled
interest on the Included 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 Included Mortgage Loans in Group One 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-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.
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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, 0.1600% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.3200% per
annum.
Class A-1 Maximum Rate Cap: With respect to (A) any Distribution
Date from
the Closing Date up to and including the Distribution Date
immediately following
the Funding Period, a per annum rate equal to the product of (i)
12, (ii) the
quotient of (x) the sum of (1) the total scheduled interest that
would have been
due on the Initial Mortgage Loans in Group One 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 and
(2) the Required Withdrawal for Group One for such Distribution
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,
(y) the sum of (1) the aggregate Stated Principal Balance of the
Initial
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 Initial
Cut-off Date)
and (2) the excess of (a) the portion of the Original Pre-Funded
Amount relating
to Group One over (b) the aggregate of principal payments received
with respect
to the Subsequent Mortgage Loans in Group One that were distributed
on prior
Distribution Dates and losses with respect to principal incurred
with respect to
the Subsequent Mortgage Loans in Group One that were allocated on
prior
Distribution Dates 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
and (B) any Distribution Date after the Distribution Date
immediately following
the Funding Period, 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,
5.48625% 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.
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 10.840% per annum.
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Class A-2 Available Funds Cap: With respect to (A) any Distribution
Date
from the Closing Date up to and including the Distribution Date
immediately
following the Funding Period, a per annum rate equal to the product
of (i) 12,
(ii) the quotient of (x) the sum of (1) the total scheduled
interest on the
Initial Mortgage Loans in Group Two based on the Net Mortgage Rates
in effect on
the related Due Date and (2) the Required Withdrawal for Group Two
for such
Distribution 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 sum of (1) the aggregate Stated
Principal Balance
of the Initial 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
Initial Cut-off Date) and (2) the excess of (a) the portion of the
Original
Pre-Funded Amount relating to Group Two over (b) the aggregate of
principal
payments received with respect to the Subsequent Mortgage Loans in
Group Two
that were distributed on prior Distribution Dates and losses with
respect to
principal incurred with respect to the Subsequent Mortgage Loans in
Group Two
that were allocated on prior Distribution Dates 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 and (B) any Distribution Date
after the
Distribution Date immediately following the Funding Period, the per
annum rate
equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled
interest on the Included 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 Included Mortgage Loans in Group Two 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 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 and Class
A-2C
Certificates.
Class A-2 Maximum Rate Cap: With respect to (A) any Distribution
Date from
the Closing Date up to and including the Distribution Date
immediately following
the Funding Period, a per annum rate equal to the product of (i)
12, (ii) the
quotient of (x) the sum of (1) the total scheduled interest that
would have been
due on the Initial Mortgage Loans in Group Two 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 and
(2) the Required Withdrawal for Group Two for such Distribution
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 sum of (1) the aggregate Stated Principal Balance of
the Initial
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 Initial
Cut-off Date)
and (2) the excess of (a) the portion of the Original Pre-Funded
Amount relating
to Group Two over (b) the aggregate of principal payments received
with respect
to the Subsequent Mortgage Loans in Group Two that were distributed
on prior
Distribution Dates and losses with respect to principal incurred
with respect to
the Subsequent Mortgage Loans in Group Two that were allocated on
prior
Distribution Dates 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
and (B) any Distribution
21
<PAGE>
Date after the Distribution Date immediately following the Funding
Period, 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 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 Stated Principal Balance of the total pool of 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 9.340% 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.
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,
5.37625% 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.
22
<PAGE>
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, 0.1500% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.3000% per
annum.
Class A-2B Pass-Through Rate: For the first Distribution Date,
5.47625% 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.
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, 0.2400% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.4800% per
annum.
Class A-2C Pass-Through Rate: For the first Distribution Date,
5.56625% 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 B Certificates: The Class B-1 Certificates, Class B-2
Certificates,
and the Class B-3 Certificates.
23
<PAGE>
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,
6.12625% 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 sum of 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), and (H)
the Class B-1
Certificate Principal Balance immediately prior to such
Distribution Date over
(2) the lesser of (A) 94.00% of the Stated Principal Balances of
the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated
Principal
24
<PAGE>
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, 0.9500% per annum
and, as of any
Distribution Date after the Auction Termination Date, 1.4250% per
annum.
Class B-2 Pass-Through Rate: For the first Distribution Date,
6.27625% 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 the Class B-1 Certificates have been reduced
to
25
<PAGE>
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) 95.20% 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.
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.
26
<PAGE>
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, 1.8500% per annum
and, as of any
Distribution Date after the Auction Termination Date, 2.7750% per
annum.
Class B-3 Pass-Through Rate: For the first Distribution Date,
7.17625% 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) 97.20% 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
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."
27
<PAGE>
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.
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.
28
<PAGE>
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 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
sum of (x) the Cut-off Date Principal Balance of the Initial
Mortgage Loans in
Group One and (y) the portion of the Original Pre-Funded Amount
relating to
Group One 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 sum
of (x) the
Cut-off Date Principal Balance of the Initial Mortgage Loans in
Group One and
(y) the portion of the Original Pre-Funded Amount relating to Group
One, 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
sum of (x) the Cut-off Date Principal Balance of the Initial
Mortgage Loans in
Group Two and (y) the portion of the Original Pre-Funded Amount
relating to
Group Two over (ii) the aggregate of the initial Certificate
Principal Balances
of Certificate Group Two, and with an interest rate equal to the
Net Rate.
Class LTII2B Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% of the sum
of (x) the
Cut-off Date Principal Balance of the Initial Mortgage Loans in
Group Two and
(y) the portion of the Original Pre-Funded Amount relating to Group
Two, 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
sum of (x) the aggregate Cut-off Date Principal Balance of the
Initial Mortgage
Loans and (y) the Original Pre-Funded Amount over (ii) the
initial
29
<PAGE>
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
sum of (x) the aggregate Cut-off Date Principal Balance of the
Initial Mortgage
Loans and (y) the Original Pre-Funded Amount 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.
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
30
<PAGE>
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, 0.3000% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.45000% per
annum.
Class M-1 Pass-Through Rate: For the first Distribution Date,
5.62625% 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) of 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) 79.80% 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 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."
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.
31
<PAGE>
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,
5.63625% 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) of 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) 84.20% 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.
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."
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<PAGE>
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, 0.3200% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.4800% per
annum.
Class M-3 Pass-Through Rate: For the first Distribution Date,
5.64625% 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) 86.90% 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 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
33
<PAGE>
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, 0.3800% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.5700% per
annum.
Class M-4 Pass-Through Rate: For the first Distribution Date,
5.70625% 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 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) of 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
34
<PAGE>
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) 89.20% 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.
Class M-5 Margin: As of any Distribution Date up to and including
the
Auction Termination Date for the Certificates, 0.4100% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.6150% per
annum.
Class M-5 Pass-Through Rate: For the first Distribution Date,
5.73625% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-5 Margin, (2) the
35
<PAGE>
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) 91.20% 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.
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
36
<PAGE>
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, 0.4600% per annum
and, as of any
Distribution Date after the Auction Termination Date, 0.6900% per
annum.
Class M-6 Pass-Through Rate: For the first Distribution Date,
5.78625% 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) 92.80% 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 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 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."
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<PAGE>
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 PF-I Interest: An uncertificated regular interest in the
Pre-Funding
REMIC having the terms described in the Preliminary Statement
hereto.
Class PF-IX Interest: An uncertificated regular interest in the
Pre-Funding
REMIC having the terms described in the Preliminary Statement
hereto.
Class PF-II Interest:
An uncertificated regular interest in the Pre-Funding
REMIC having the terms described in the Preliminary Statement
hereto.
Class PF-IIX Interest: An uncertificated regular interest in
the
Pre-Funding REMIC having the terms described in the Preliminary
Statement
hereto.
Class PFR Interest: The sole class of "residual interest" in
the
Pre-Funding REMIC.
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, 0.1600% per annum and, as of
any
Distribution Date after the Auction Termination Date, 0.3200% per
annum.
Class R Pass-Through Rate: For the first Distribution Date,
5.48625% 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).
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<PAGE>
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 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 26, 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-AB3". 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.
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<PAGE>
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 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.
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 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: With respect to the Initial Mortgage Loans, the
Initial
Cut-off Date, and with respect to the Subsequent Mortgage Loans,
the related
Subsequent Cut-off Date.
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 applicable Cut-off Date after application
of all
payments of principal due on or prior to the applicable Cut-off
Date, whether or
not received, and all Principal Prepayments received prior to the
applicable
Cut-off Date, but without giving effect to any installments of
principal
received in respect of Due Dates after the applicable 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.
40
<PAGE>
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.
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.
41
<PAGE>
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 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.
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<PAGE>
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 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) $5,950,000 over (B) the
sum of (x)
the aggregate Stated Principal Balance of the Mortgage Loans and
(y) the amount
on deposit in the Pre-Funding Amount as of such Distribution Date
(disregarding
income and loss on investments of amounts on deposit in the
Pre-Funding Account)
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) 2.80% 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 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 (x) the related Maximum Rate Cap or (y) the sum of (i)
the
43
<PAGE>
related Available Funds Cap and (ii) the product of (A) 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 (B) the sum of (x) the
quotient obtained
by dividing (I) an amount equal to the proceeds, if any, payable
under the
related Cap Contract by (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, together with (i) 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 or the applicable Maximum Rate Cap) and (ii) any amount
previously
distributed with respect to 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.
Funding Period: The period beginning on the Closing Date and ending
on the
earlier of (a) the date on which the amount on deposit in the
Pre-Funding
Account is reduced to zero or (b) 2:00 p.m., New York City time, on
November 24,
2006.
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, including Initial Mortgage Loans
included in such
Mortgage Group as of the Initial Cut-off Date and Subsequent Loans
added
thereto.
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: For each Distribution Date from the Closing Date
up to
and including the Distribution Date immediately following the
Funding Period,
the weighted average of the interest rates on the Class PF-I
Interest and the
Class PF-IX Interest weighted on the basis of their respective
principal amounts
immediately prior to such Distribution Date; for each Distribution
Date
thereafter, 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 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 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
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to Mortgage Loans in Group One and with respect to the Distribution
Date
immediately following the end of the Funding Period, the portion,
if any, of the
Original Pre-Funded Amount relating to Group One remaining in the
Pre-Funding
Account (disregarding income or loss on investments of amounts on
deposit in the
Pre-Funding Account), and the denominator of which is the amount of
Principal
Funds received from all of the Mortgage Loans in the mortgage pool
and with
respect to the Distribution Date immediately following the end of
the Funding
Period, the portion, if any, of the Original Pre-Funded Amount
relating to
either Mortgage Group remaining in the Pre-Funding Account
(disregarding income
or loss on investments of amounts on deposit in the Pre-Funding
Account).
Group Two: The portion of the Mortgage Pool identified as "Group
Two" in
the Prospectus Supplement, including Initial Mortgage Loans
included in such
Mortgage Group as of the Initial Cut-off Date and Subsequent Loans
added
thereto.
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: For each Distribution Date from the Closing Date
up to
and including the Distribution Date immediately following the
Funding Period,
the weighted average of the interest rates on the Class PF-II
Interest and the
Class PF-IIX Interest weighted on the basis of their respective
principal
amounts immediately prior to such Distribution Date; for each
Distribution Date
thereafter, 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 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 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 with respect to the Distribution Date immediately
following the
end of the Funding Period, the portion, if any, of the Original
Pre-Funded
Amount relating to Group Two remaining in the Pre-Funding Account
(disregarding
income or loss on investments of amounts on deposit in the
Pre-Funding Account),
and the denominator of which is the amount of Principal Funds
received from all
of the Mortgage Loans in the mortgage pool and with respect to the
Distribution
Date immediately following the end of the Funding Period, the
portion, if any,
of the Original Pre-Funded Amount relating to either Mortgage Group
remaining in
the Pre-Funding Account (disregarding income or loss on investments
of amounts
on deposit in the Pre-Funding Account).
Included Mortgage Loan: With respect to any Distribution Date, any
Mortgage
Loan with a Stated Principal Balance greater than zero as of the
preceding
Distribution Date (or, in the case of the first Distribution Date,
the Initial
Mortgage Loans); provided, however, that no Subsequent Mortgage
Loan as to which
the Subsequent Cut-Off Date is on or after the Due Date in the
related Due
Period shall be treated as an Included Mortgage Loan for such
Distribution Date.
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.
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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 Cut-off Date: September 1, 2006.
Initial Mortgage Loans: The Mortgage Loans included in the Trust
Fund as of
the Closing Date.
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 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 on an Included
Mortgage Loan
during the related Due Period and received before the related
Servicer
Remittance 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), (6)
prepayment charges received with respect to the Mortgage Loans
during the
related Prepayment Period and (7) any Required Withdrawal from the
Capitalized
Interest Account for such Distribution Date, 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 ; provided,
however, that notwithstanding the foregoing, Subsequent Mortgage
Loan Interest
shall
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<PAGE>
not be included in Interest Funds for any Distribution Date up to
and including
the Distribution Date immediately following the Funding Period.
Issuing Entity: Specialty Underwriting and Residential Finance
Trust,
Series 2006-AB3.
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
Initial 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-1, Class A-2, 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.
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.
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<PAGE>
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
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 sum of
(x) the aggregate Stated Principal Balance of the Included Mortgage
Loans in
Group One and (y) amounts on deposit in the Pre-Funding Account for
Group One
(disregarding any income or loss on investments therein) as of the
close of the
preceding calendar month (or, if such date would be prior to the
Closing Date,
the portion of the Original Pre-Funded Amount relating to 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 sum of (x) the aggregate
Stated
Principal Balance of the Included Mortgage Loans in Group Two and
(y) amounts on
deposit in the Pre-Funding Account for Group Two (disregarding any
income or
loss on investments therein) as of the close of the preceding
calendar month
(or, if such date would be prior to the Closing Date, the portion
of the
Original Pre-Funded Amount relating to 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 sum of (i) the Stated Principal
Balance of the
Mortgage Loans as of the Initial Cut-off Date and (ii) the Original
Pre-Funded
Amount.
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<PAGE>
MOM
Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely
as nominee for the originator of such Mortgage Loan and its
successors and
assigns.
Monthly 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 and as supplemented by each schedule of Subsequent
Mortgage Loans
attached to a Subsequent Transfer Instrument) 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 or Subsequent Cut-off Date
Principal Balance with respect to a Subsequent Mortgage Loan;
(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;
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<PAGE>
(c) the Maximum
Mortgage Rate;
(d) the Minimum
Mortgage Rate;
(e) the Mortgage Rate
as of the Initial 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 and, following
the related
Subsequent Transfer Date, any Subsequent Mortgage Loan delivered
pursuant to a
Subsequent Transfer Instrument), 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.
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<PAGE>
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).
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 Mortgager 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-2 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
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<PAGE>
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 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.
Original Pre-Funded Amount: The amount deposited by the Depositor
in the
Pre-Funding Account on the Closing Date from the proceeds of the
issuance of the
Certificates, which amount is $104,999,131.05, of which
$53,820,036.01 will
relate to Group One and $51,179,095.04 will relate to Group
Two.
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 sum of the Stated Principal Balance of the Mortgage
Loans and the
amount on deposit in the Pre-Funding Account (disregarding income
or loss on
investments of amounts on deposit in the Pre-Funding Account) 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.
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<PAGE>
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:
(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.
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<PAGE>
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 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;
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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) 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 sum of
(i)
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 and (ii)
the Pre-Funded Amount as of such Distribution Date.
Pre-Funded Amount: As of any date of determination, the amount on
deposit
in the Pre-Funding Account (not including any income, gain or loss
on such
amount).
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Pre-Funding Account: The account established and maintained
pursuant to
Section 5.10.
Pre-Funding REMIC: As described in the Preliminary Statement and
Section
2.07.
Pre-Funding REMIC Regular Interests: Each of the Class PF-I
Interest, the
Class PF-II Interest, the Class PF-IX Interest and the Class PF-IIX
Interest.
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 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
Initial 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, (7)
with respect
to the Distribution Date immediately following the end of the
Funding Period,
any amounts remaining in the Pre-Funding Account (as determined
without regard
to income or losses arising from the investment of amounts on
deposit in the
Pre-Funding
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Account) after giving effect to the purchase of any Subsequent
Mortgage Loans
and (8) 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
22, 2006,
relating to the public offering of the Class A Certificates, Class
R
Certificates, Class M Certificates and Class B-2 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)
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).
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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 Pre-Funding
REMIC, 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 R,
Class M and Class B Certificates, the Upper Tier REMIC Net WAC Cap
for the
Corresponding REMIC Regular Interest.
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
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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
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.
Required Withdrawal: With respect to each Mortgage Group, any
Distribution
Date up to and including the Distribution Date immediately
following the Funding
Period, an amount equal to one-twelfth of the product of (i) the
excess of (a)
the portion of the Original Pre-Funded Amount relating to such
Mortgage Group
over (b) the aggregate of principal payments received with respect
to the
Subsequent Mortgage Loans in such Mortgage Group that were
distributed on prior
Distribution Dates and losses with respect to principal incurred
with respect to
the Subsequent Mortgage Loans in such Mortgage Group that were
allocated on
prior Distribution Dates and (ii) 3.75%.
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.
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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 PFR Interest, 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.
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
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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.
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.
Special Subservicer: The Subservicer for the Special Subservicer
Loans.
Special Subservicer Loans: The Mortgage Loans identified as the
Special
Subservicer Loans in a mortgage loan schedule provided to the
Trustee by the
Servicer.
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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 applicable Cut-off Date, the applicable
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 75.10% 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 0.80% with respect to
October 2008, plus an additional 1/12th of
0.95% for each month thereafter
October 2009 - September 2010 1.75% with respect to
October 2009, plus an additional 1/12th of
1.00% for each month thereafter
October 2010 - September 2011 2.75% with respect to
October 2010, plus an additional 1/12th of
0.85% for each month thereafter
October 2011 - September 2012 3.60% with respect to
October 2011, plus an additional 1/12th of
0.45% for each month thereafter
October 2012 and thereafter 4.05%
</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) 37.35%
and (ii)
Required Percentage or (2) the quotient (expressed as a percentage)
of (A) the
aggregate
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Realized Losses incurred from the Initial Cut-off Date through the
last day of
the calendar month preceding such Distribution Date and (B) the sum
of (1) the
aggregate principal balance of the Mortgage Loans as of the Initial
Cut-off Date
and (2) the Original Pre-Funded Amount 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 sum of (x) the aggregate
Stated Principal
Balance of the Included Mortgage Loans in each Mortgage Group as of
the
immediately preceding Distribution Date (or, in the case of the
first
Distribution Date, as of the Initial Cut-off Date) and (y) the
amount on deposit
in the Pre-Funding Account related to such Mortgage Group
(disregarding income
or loss on investments of amounts on deposit in the Pre-Funding
Account) as of
the close of the preceding calendar month (or, if such date would
be prior to
the Closing Date, the portion of the Original Pre-Funded Amount
relating to such
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
and Class A-2C 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
O-3 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 sum of (x) the aggregate
Stated Principal
Balance of the Included Mortgage Loans in each Mortgage Group as of
the
immediately preceding Distribution Date (or, in the case of the
first
Distribution Date, as of the Initial Cut-off Date) and (y) the
amount on deposit
in the Pre-Funding Account related to such Mortgage Group
(disregarding income
or loss on investments of amounts on deposit in the Pre-Funding
Account) as of
the close of the preceding calendar month (or, if such date would
be prior to
the Closing Date, the portion of the Original Pre-Funded Amount
relating to such
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
and Class A-2C Certificates, in the case of Group Two) of the Class
A-1 Maximum
Rate Cap and the Class A-2 Maximum Rate Cap.
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.
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<PAGE>
Subordinate Certificates: The Class M and Class B Certificates.
Subsequent Cut-off Date: With respect to those Subsequent Mortgage
Loans
sold to the Trust Fund pursuant to a Subsequent Transfer
Instrument, the first
day of the month in which the related Subsequent Transfer Date
occurs.
Subsequent Mortgage Loan: A Mortgage Loan sold by the Depositor to
the
Trust Fund pursuant to Section 2.10, such Mortgage Loan being
identified on the
Mortgage Loan Schedule attached to a Subsequent Transfer
Instrument, all of
which shall be "qualified mortgages" within the meaning of Section
860G(a)(3)(A)
of the Code (as determined without regard to Treasury Regulations
Section
1.860G-2(a)(3)(iii) or any similar rule that treats a defective
obligation as a
"qualified mortgage" for a temporary period).
Subsequent Mortgage Loan Interest: Interest accrued at the
applicable Net
Mortgage Rate on any Subsequent Mortgage Loan through the Due
Period relating to
the Distribution Date that immediately follows the Funding
Period.
Subsequent Mortgage Loan Purchase Agreement: The agreement between
the
Depositor and the Mortgage Loan Sponsor regarding the transfer of
the Subsequent
Mortgage Loans by the Sponsor to the Depositor.
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.
Subsequent Transfer Date: With respect to each Subsequent
Transfer
Instrument, the date on which the related Subsequent Mortgage Loans
are sold to
the Issuing Entity.
Subsequent Transfer Instrument: Each Subsequent Transfer
Instrument, dated
as of a Subsequent Transfer Date, executed by the Depositor and
acknowledged by
the Trustee substantially in the form of Exhibit M, by which
Subsequent Mortgage
Loans are sold to the Trust Fund and which will specify, on
Attachment B
thereto, among other things, the Mortgage Group to which each
Subsequent
Mortgage Loan is to be added.
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.
Subservicer Custodial Files: The Mortgage Files related to the
Special
Subservicer Loans, which shall be held by the Trustee or its
custodian apart
from all other Mortgage Files.
Subservicing Agreement: As defined in Section 3.02(a).
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<PAGE>
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-AB3." 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: The Bank of New York 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.
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, 1.40% of the sum of (i) the Stated
Principal Balance
of the Mortgage Loans as of the Initial Cut-off Date and (ii) the
Original
Pre-Funded Amount and (b) on or after the Stepdown Date, 2.80% 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.
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<PAGE>
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 related Cut-off Date to the extent
not applied
in computing the related Cut-off Date Principal Balance thereof,
exclusive of
interest not required to be deposited in the Collection Account;
(ii) the
Collection Account, the Certificate Account, the Pre-Funding
Account and the
Capitalized Interest 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.
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 and Class UTA-2C 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 LIBOR Certificates, 2% to the Class C
and Class P
Certificates, with the allocation among the LIBOR 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
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<PAGE>
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 Initial Mortgage Loans on or after the
Initial Cut-off
Date (other than Scheduled Payments due on the Mortgage Loans on or
before the
Initial 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 and the Depositor shall,
in accordance
with Section 2.10, deliver to, and deposit with, the Trustee the
following
documents or instruments with respect to each Subsequent Mortgage
Loan:
(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 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 Sponsor;
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<PAGE>
(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 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
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<PAGE>
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,
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
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<PAGE>
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 (or the
Subsequent Transfer Date with respect to Subsequent Mortgage
Loans).
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 (or the
Subsequent Transfer Date with respect to Subsequent Mortgage
Loans), 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 (or the Subsequent Transfer Date with respect to
Subsequent
Mortgage Loans); 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
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
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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 (or the Subsequent
Transfer
Date with respect to Subsequent Mortgage Loans), 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 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
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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 (or the Subsequent Transfer Date with
respect
to
Subsequent Mortgage Loans), 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 Initial Cut-off Date that complies with the loan limitations
of
Fannie Mae and Freddie Mac as in effect on the Initial 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 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
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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.
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
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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 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
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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
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 p
