EXHIBIT 99.1
The Pooling and Servicing Agreement
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INDYMAC MBS, INC.
Depositor
INDYMAC BANK, F.S.B.
Seller and Servicer
DEUTSCHE BANK NATIONAL TRUST COMPANY
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2006
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INDYMAC INDX MORTGAGE LOAN TRUST
2006-AR31
MORTGAGE PASS-THROUGH CERTIFICATES
Series 2006-AR31
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TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS...........................................................................................4
Section 1.01
Definitions............................................................................4
Section 1.02 Rules of
Construction.................................................................33
ARTICLE TWO CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES.........................................35
Section 2.01 Conveyance
of Mortgage
Loans..........................................................35
Section 2.02 Acceptance
by the Trustee of the Mortgage
Loans.......................................38
Section 2.03
Representations, Warranties, and Covenants of the Seller and the
Servicer.............40
Section 2.04
Representations and Warranties of the Depositor as to the Mortgage
Loans..............41
Section 2.05 Delivery
of Opinion of Counsel in Connection with
Substitutions.......................42
Section 2.06 Execution
and Delivery of
Certificates................................................42
Section 2.07 REMIC
Matters.........................................................................42
ARTICLE THREE ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS.....................................................43
Section 3.01 Servicer
to Service Mortgage
Loans....................................................43
Section 3.02
[Reserved]............................................................................44
Section 3.03 Rights of
the Depositor and the Trustee in Respect of the
Servicer....................44
Section 3.04
[Reserved]............................................................................44
Section 3.05 Trustee to
Act as
Servicer............................................................44
Section 3.06 Collection
of Mortgage Loan Payments; Certificate Account; Distribution
Account.......44
Section 3.07 Collection
of Taxes, Assessments and Similar Items; Escrow
Accounts...................47
Section 3.08 Access to
Certain Documentation and Information Regarding the Mortgage
Loans..........47
Section 3.09 Permitted
Withdrawals from the Certificate Account and the Distribution
Account.......48
Section 3.10
Maintenance of Hazard Insurance; Maintenance of Primary Insurance
Policies............49
Section 3.11
Enforcement of Due-On-Sale Clauses; Assumption
Agreements.............................50
Section 3.12
Realization Upon Defaulted Mortgage
Loans.............................................51
Section
3.13 Trustee to
Cooperate; Release of Mortgage
Files.......................................53
Section 3.14 Documents,
Records and Funds in Possession of the Servicer to be Held for the
Trustee.54
Section 3.15 Servicing
Compensation................................................................54
Section 3.16 Access to
Certain
Documentation.......................................................55
Section 3.17 Annual
Statement as to
Compliance.....................................................55
Section 3.18 Errors and
Omissions Insurance; Fidelity
Bonds........................................55
Section 3.19
Notification of
Adjustments...........................................................55
Section 3.20 Prepayment
Charges....................................................................56
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ARTICLE FOUR DISTRIBUTIONS AND ADVANCES BY THE
SERVICER..........................................................57
Section 4.01
Advances..............................................................................57
Section 4.02 Priorities
of
Distribution............................................................58
Section 4.03
[Reserved]............................................................................61
Section 4.04
[Reserved]............................................................................61
Section 4.05 Allocation
of Realized
Losses.........................................................61
Section 4.06 Monthly
Statements to
Certificateholders..............................................61
Section
4.07
[Reserved]............................................................................64
Section 4.08
[Reserved]............................................................................64
Section 4.09
Determination of Pass-Through Rates for LIBOR
Certificates............................64
ARTICLE FIVE THE
CERTIFICATES....................................................................................67
Section 5.01 The
Certificates......................................................................67
Section 5.02
Certificate Register; Registration of Transfer and Exchange of
Certificates...........67
Section 5.03 Mutilated,
Destroyed, Lost or Stolen
Certificates.....................................71
Section 5.04 Persons
Deemed
Owners.................................................................71
Section 5.05 Access to
List of Certificateholders' Names and
Addresses.............................72
Section 5.06
Maintenance of Office or
Agency.......................................................72
ARTICLE SIX THE DEPOSITOR AND THE
SERVICER.......................................................................73
Section
6.01 Respective
Liabilities of the Depositor and the
Servicer..............................73
Section 6.02 Merger or
Consolidation of the Depositor or the
Servicer..............................73
Section 6.03 Limitation
on Liability of the Depositor, the Seller, the Servicer, and
Others........73
Section 6.04 Limitation
on Resignation of the
Servicer.............................................74
ARTICLE SEVEN
DEFAULT............................................................................................75
Section 7.01 Events of
Default.....................................................................75
Section 7.02 Trustee to
Act; Appointment of
Successor..............................................76
Section 7.03
Notification to
Certificateholders....................................................77
ARTICLE EIGHT CONCERNING THE
TRUSTEE.............................................................................79
Section 8.01 Duties of
the
Trustee.................................................................79
Section 8.02 Certain
Matters Affecting the
Trustee.................................................79
Section
8.03 Trustee
Not Liable for Certificates or Mortgage
Loans.................................81
Section 8.04 Trustee
May Own
Certificates..........................................................81
Section 8.05 Trustee's
Fees and
Expenses...........................................................81
Section 8.06
Eligibility Requirements for the
Trustee..............................................82
Section 8.07
Resignation and Removal of the
Trustee................................................82
Section 8.08 Successor
Trustee.....................................................................83
Section 8.09 Merger or
Consolidation of the
Trustee................................................84
Section 8.10
Appointment of Co-Trustee or Separate
Trustee.........................................84
Section 8.11 Tax
Matters...........................................................................85
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ARTICLE NINE
TERMINATION.........................................................................................88
Section 9.01
Termination upon Liquidation or Purchase of the Mortgage
Loans........................88
Section 9.02 Final
Distribution on the
Certificates................................................89
Section 9.03 Additional
Termination
Requirements...................................................90
ARTICLE TEN MISCELLANEOUS
PROVISIONS.............................................................................91
Section 10.01
Amendment.............................................................................91
Section
10.02 Recordation of
Agreement;
Counterparts................................................92
Section 10.03 Governing
Law.........................................................................93
Section 10.04 Intention of
Parties..................................................................93
Section 10.05
Notices...............................................................................93
Section 10.06 Severability of
Provisions............................................................94
Section 10.07
Assignment............................................................................94
Section 10.08 Limitation on
Rights of
Certificateholders............................................94
Section 10.09 Inspection and
Audit
Rights...........................................................95
Section 10.10 Certificates
Nonassessable and Fully
Paid.............................................95
Section 10.11 Official
Record.......................................................................95
Section 10.12 Protection of
Assets..................................................................96
Section 10.13
Qualifying Special Purpose
Entity.....................................................96
ARTICLE ELEVEN EXCHANGE ACT
REPORTING............................................................................97
Section 11.01 Filing
Obligations....................................................................97
Section 11.02 Form 10-D
Filings.....................................................................97
Section 11.03 Form 8-K
Filings......................................................................98
Section 11.04 Form 10-K
Filings.....................................................................98
Section 11.05 Sarbanes-Oxley
Certification..........................................................99
Section 11.06 Form 15
Filing........................................................................99
Section 11.07 Report on
Assessment of Compliance and
Attestation....................................99
Section 11.08 Use of
Subcontractors................................................................101
Section 11.09
Amendments...........................................................................101
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SCHEDULES
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Schedule I:
Mortgage Loan
Schedule...................................................................S-I-1
Schedule II:
Representations and Warranties of the
Seller/Servicer...................................S-II-1
Schedule III:
Representations and Warranties as to the Mortgage
Loans................................S-III-1
Schedule IV:
Reserved................................................................................S-IV-1
Schedule V:
Form of Monthly
Report...................................................................S-V-1
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EXHIBITS
Exhibit A:
Form of Senior
Certificate.................................................................A-1
Exhibit B:
Form of Subordinated
Certificate...........................................................B-1
Exhibit C:
Form of Class A-R
Certificate..............................................................C-1
Exhibit D:
[Reserved].................................................................................D-1
Exhibit E
Form of Reverse of
Certificates............................................................E-1
Exhibit F:
Form of Class P
Certificates...............................................................F-1
Exhibit G-1:
Form of Initial Certification of Trustee
................................................G-1-1
Exhibit G-2:
Form of Delay Delivery
Certification.....................................................G-2-1
Exhibit H:
Form of Final Certification of
Trustee.....................................................H-1
Exhibit I:
Form of Transfer
Affidavit.................................................................I-1
Exhibit J:
Form of Transferor
Certificate.............................................................J-1
Exhibit K:
Form of Investment Letter (Non-Rule
144A)..................................................K-1
Exhibit L:
Form of Rule 144A
Letter...................................................................L-1
Exhibit M:
Form of Request for Release (for
Trustee)..................................................M-1
Exhibit N:
Request for Release of
Documents...........................................................N-1
Exhibit O:
[Reserved].................................................................................O-1
Exhibit P-1:
[Reserved].................................................................................P-1
Exhibit P-2:
[Reserved].................................................................................P-1
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Exhibit Q:
[Reserved].................................................................................Q-1
Exhibit R:
Form of Performance Certification
(Trustee)................................................R-1
Exhibit S:
Form of Servicing Criteria To Be Addressed in Assessment
of Compliance
Statement................................................................S-1
Exhibit T:
List of Item 1119
Parties..................................................................T-1
Exhibit U:
Form of Sarbanes-Oxley Certification (Replacement of
Servicer).............................U-1
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THIS
POOLING AND SERVICING AGREEMENT, dated as of September 1, 2006,
among INDYMAC MBS, INC., a Delaware corporation, as depositor
(the
"Depositor"), IndyMac Bank, F.S.B. ("IndyMac"), a federal savings
bank, as
seller (in that capacity, the "Seller") and as servicer (in that
capacity, the
"Servicer"), and Deutsche Bank National Trust Company, a national
banking
association, as trustee (the "Trustee"),
W I T N E S S E T H T H A T
In
consideration of the mutual agreements set forth in this
Agreement,
the parties agree as follows:
P R E L I M I N A R Y S T A T E M E N T
The
Depositor is the owner of the Trust Fund that is hereby conveyed
to
the Trustee in return for the Certificates. As provided in this
Agreement, the
Trustee shall elect that the Trust Fund (exclusive of any amounts
in respect
of waived Prepayment Charges paid by the Servicer to the Class P
Certificates
pursuant to the second paragraph of Section 3.20) be treated for
federal
income tax purposes as comprising one real estate mortgage
investment conduit
(the "Master REMIC"). Each Certificate, other than the Class A-R
Certificate,
will represent ownership of one or more regular interests in the
Master REMIC
for purposes of the REMIC Provisions. The Class A-R represents
ownership of
the sole class of residual interest in each REMIC created under
this
Agreement. The Master REMIC will hold as assets all property of the
Trust
Fund. The latest possible maturity date of all REMIC regular
interests created
in this Agreement shall be the Latest Possible Maturity Date. All
amounts in
respect of waived Prepayment Charges paid by the Servicer to the
Class P
Certificates pursuant to the second paragraph of Section 3.20 will
be treated
as paid directly by the Servicer to the Class P Certificates and
not as paid
by or through any REMIC created hereunder.
The Master REMIC
The
following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in
excess
thereof in which such Classes shall be issuable (except that one
Certificate
of each Class of Certificates may be issued in a different
amount):
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Initial Class
Pass-Through
Minimum
Integral Multiples in
Class Designation
Certificate Balance
Rate
Denomination
Excess of Minimum
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Class A-1
$100,000,000.00
Variable(1)
$
100,000
$1,000
Class A-2
$28,142,100.00
Variable(1)
$
100,000
$1,000
Class A-3
$98,574,000.00
Variable(1)
$
100,000
$1,000
Class A-4
$10,927,000.00
Variable(1)
$
100,000
$1,000
Class A-5
$43,777,900.00
Variable(1)
$
100,000
$1,000
Class A-R
$100.00
(1)
$
100
N/A
Class B-1
$7,247,000.00
Variable(1)
$
100,000
$1,000
Class B-2
$4,680,000.00
Variable(1)
$
100,000
$1,000
Class B-3
$2,869,000.00
Variable(1)
$
100,000
$1,000
Class B-4
$3,623,000.00
Variable(1)
$
100,000
$1,000
Class B-5
$1,208,000.00
Variable(1)
$
100,000
$1,000
Class B-6
$906,264.00
Variable(1)
$
100,000
$1,000
Class P
$100.00
0%(2)
$
100
N/A
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(1) The Pass-Through Rate for this Class of Certificates for the
Interest
Accrual Period related to each Distribution Date will equal the
Weighted
Average Net Mortgage Rate of the Mortgage Loans. The Pass-Through
Rate for
this Class of Certificates during the initial Interest Accrual
Period is
6.126105% per annum.
(2) The Class P Certificates will not be entitled to any interest,
but will be
entitled to 100% of any Prepayment Charges collected on the
Mortgage Loans.
The
foregoing REMIC structure is intended to cause all of the cash
from
the Mortgage Loans to flow through to the Master REMIC as cash flow
on a REMIC
regular interest, without creating any shortfall--actual or
potential (other
than for credit losses) to any REMIC regular interest.
For any purpose for which the Pass-Through Rates is calculated,
the
interest rate on the Mortgage Loans shall be appropriately adjusted
to account
for the difference between the monthly day count convention of the
Mortgage
Loans and the monthly day count convention of the regular interests
issued by
the REMIC. For purposes of calculating the Pass-Through Rates for
each of the
interests issued by the Master REMIC such rates shall be adjusted
to equal a
monthly day count convention based on a 30 day month for each Due
Period and a
360-day year so that the Mortgage Loans and all regular interests
will be
using the same monthly day count convention.
Set forth below are designations of Classes of Certificates to the
categories
used in this Agreement:
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Accretion Directed Certificates..........................
None.
Accrual Certificates.....................................
None.
Book-Entry Certificates..................................
All
Classes of Certificates other than the Physical
Certificates.
COFI Certificates........................................
None.
Components...............................................
None.
Component Certificates...................................
None.
Delay Certificates.......................................
All
interest-bearing Classes of Certificates other
than any Non-Delay Certificates.
ERISA-Restricted Certificates,...........................
The
Residual Certificates and the Private
Certificates; the Retained Certificates until they
have been the subject of ERISA-Qualifying
Underwriting; and Certificates of any Class that
also does not have or no longer has a rating of BBB-
or its equivalent, or better, from at least one
Rating Agency.
LIBOR Certificates.......................................
None.
Non-Delay Certificates...................................
LIBOR Certificates.
Notional Amount Certificates.............................
None.
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Notional Amount Components...............................
None.
Offered Certificates.....................................
All
Classes of Certificates other than the Private
Certificates.
Physical Certificates....................................
Class A-R Certificates and the Private Certificates.
Planned Principal Classes................................
None.
Principal Only Certificates..............................
None.
Private Certificates.....................................
Class P, Class B-4, Class B-5 and Class B-6
Certificates.
Rating Agencies..........................................
Moody's and S&P.
Regular Certificates.....................................
All
Classes of Certificates other than the Class A-R
Certificates.
Residual Certificate.....................................
Class A-R Certificates.
Retained Certificates....................................
None.
Senior Certificates......................................
Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-R Certificates.
Subordinated Certificates................................
Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates.
Super Senior Certificates................................
Class A-1, Class A-3, Class A-4 and Class A-5
Certificates
Support Certificates.....................................
Class A-2 Certificates
Targeted Principal Classes...............................
None.
Targeted Principal Component.............................
None.
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With
respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions
in this
Agreement relating solely to such designations shall be of no force
or effect,
and any calculations in this Agreement incorporating references to
such
designations shall be interpreted without reference to such
designations and
amounts. Defined terms and provisions in this Agreement relating
to
statistical rating agencies not designated above as Rating Agencies
shall be
of no force or effect.
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ARTICLE ONE
DEFINITIONS
Section
1.01 Definitions.
Unless the
context requires a different meaning, capitalized terms are
used in this Agreement as defined below.
Accretion
Directed Certificates: As specified in the Preliminary
Statement.
Accretion
Direction Rule: Not applicable.
Accrual
Amount: Not applicable.
Accrual
Certificates: As specified in the Preliminary Statement.
Accrual
Termination Date: Not applicable.
Additional
Designated Information: As defined in Section 11.02.
Adjusted
Mortgage Rate: As to each Mortgage Loan and at any time, the
per annum rate equal to the Mortgage Rate less the Servicing Fee
Rate.
Adjusted
Net Mortgage Rate: As to each Mortgage Loan and any
Distribution Date, the per annum rate equal to the Mortgage Rate of
that
Mortgage Loan (as of the Due Date in the month preceding the month
in which
such Distribution Date occurs) less the Expense Fee Rate for that
Mortgage
Loan.
Adjustment
Date: A date specified in each Mortgage Note as a date on
which the Mortgage Rate on the related Mortgage Loan is subject to
adjustment.
Advance:
The payment required to be made by the Servicer with respect to
any Distribution Date pursuant to Section 4.01, the amount of any
such payment
being equal to the aggregate of payments of principal and interest
(net of the
Servicing Fee) on the Mortgage Loans that were due during the
related Due
Period and not received as of the close of business on the
related
Determination Date, together with an amount equivalent to interest
on each REO
Property, net of any net income from such REO Property, less the
aggregate
amount of any such delinquent payments that the Servicer has
determined would
constitute a Nonrecoverable Advance if advanced.
Advance
Notice: As defined in Section 4.01(b).
Advance
Deficiency: As defined in Section 4.01(b).
Affiliate:
With respect to any Person, any other Person controlling,
controlled or under common control with such Person. For 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 "controlling" and
"controlled" shall
have meanings correlative to the foregoing. Affiliates also include
any
entities consolidated with the requirements of generally accepted
accounting
principles.
Agreement:
This Pooling and Servicing Agreement and all amendments and
supplements.
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Allocable
Share: As to any Distribution Date and Class of Certificates,
the ratio that the amount calculated with respect to such
Distribution Date
pursuant to clause (i) of the definition of Class Optimal
Interest
Distribution Amount (without giving effect to any reduction of such
amount
pursuant to Section 4.02(d)) bears to the amount calculated with
respect to
such Distribution Date for each Class of Certificates pursuant to
clause (i)
of the definition of Class Optimal Interest Distribution Amount
(without
giving effect to any reduction of such amount pursuant to Section
4.02(d)).
Amount
Available for Senior Principal: As to any Distribution Date,
the
Available Funds for such Distribution Date, reduced by the
aggregate amount
distributable (or allocable to the Accrual Amount, if applicable)
on such
Distribution Date in respect of interest on the Senior Certificates
pursuant
to Section 4.02(a)(i).
Amount
Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Certificate Account at the close of
business on
the related Determination Date on account of (i) Principal
Prepayments
received after the last day of the related Prepayment Period and
Liquidation
Proceeds and Subsequent Recoveries received in the month of such
Distribution
Date and (ii) all Scheduled Payments due after the related Due
Date.
Applicable
Credit Support Percentage: As defined in Section 4.02(e).
Appraised
Value: With respect to any Mortgage Loan, the Appraised Value
of the related Mortgaged Property shall be: (i) with respect to a
Mortgage
Loan other than a Refinance Loan, the lesser of (a) the value of
the Mortgaged
Property based upon the appraisal made at the time of the
origination of such
Mortgage Loan and (b) the sales price of the Mortgaged Property at
the time of
the origination of such Mortgage Loan; and (ii) with respect to a
Refinance
Loan, the value of the Mortgaged Property based upon the appraisal
made at the
time of the origination of such Refinance Loan.
Assumed
Balance: Not applicable.
Assumed
Interest Amount: Not applicable.
Available
Funds: As to any Distribution Date, the sum of (a) the
aggregate amount held in the Certificate Account at the close of
business on
the related Determination Date, including any Subsequent
Recoveries, net of
the Amount Held for Future Distribution, net of Prepayment Charges
and net of
amounts permitted to be withdrawn from the Certificate Account
pursuant to
clauses (i) - (viii), inclusive, of Section 3.09(a) and amounts
permitted to
be withdrawn from the Distribution Account pursuant to clauses (i)
- (iv),
inclusive, of Section 3.09(b), (b) the amount of the related
Advance, (c) in
connection with Defective Mortgage Loans, the aggregate of the
Purchase Prices
and Substitution Adjustment Amounts deposited on the related
Distribution
Account Deposit Date, and (d) any amount deposited on the related
Distribution
Account Deposit Date pursuant to Section 3.10. The Holders of the
Class P
Certificates will be entitled to all Prepayment Charges received on
the
Mortgage Loans and such amounts will not be available for
distribution to the
Holders of any other Class of Certificates.
Bankruptcy
Code: The United States Bankruptcy Reform Act of 1978, as
amended.
Bankruptcy
Coverage Termination Date: The point in time at which the
Bankruptcy Loss Coverage Amount is reduced to zero.
Bankruptcy
Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that a
Bankruptcy Loss
shall not be deemed a Bankruptcy Loss under this Agreement so long
as the
Servicer has notified the Trustee in writing that the Servicer is
diligently
5
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pursuing any remedies that may exist in connection with the related
Mortgage
Loan and either (A) the related Mortgage Loan is not in default
with regard to
payments due under the Mortgage Loan or (B) delinquent payments of
principal
and interest under the related Mortgage Loan and any related escrow
payments
in respect of such Mortgage Loan are being advanced on a current
basis by the
Servicer, in either case without giving effect to any Debt Service
Reduction
or Deficient Valuation.
Bankruptcy
Loss Coverage Amount: As of any date of determination, the
Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy
Loss
Coverage Amount as reduced by (i) the aggregate amount of
Bankruptcy Losses
allocated to the Certificates since the Cut-off Date and (ii) any
permissible
reductions in the Bankruptcy Loss Coverage Amount as evidenced by a
letter of
each Rating Agency to the Trustee to the effect that any such
reduction will
not result in a downgrading, qualification or withdrawal of the
then current
ratings assigned to the Classes of Certificates rated by it.
Blanket
Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry
Certificates: As specified in the Preliminary Statement.
Business
Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in the City of New York, New
York, the State
of California or the city in which the Corporate Trust Office of
the Trustee
is located are authorized or obligated by law or executive order to
be closed.
Certificate: Any one of the certificates issued by the Trust Fund
and
executed by the Trustee in substantially the forms attached as
exhibits.
Certificate Account: The separate Eligible Account or Accounts
created
and maintained by the Servicer pursuant to Section 3.06(b) with a
depository
institution in the name of the Servicer for the benefit of the
Trustee on
behalf of Certificateholders and designated "IndyMac Bank, F.S.B.,
in trust
for the registered holders of IndyMac INDX Mortgage Loan Trust
2006-AR31,
Mortgage Pass-Through Certificates, Series 2006-AR31."
Certificate Balance: With respect to any Certificate at any date
of
determination, the maximum dollar amount of principal to which the
Holder
thereof is then entitled under this Agreement, such amount being
equal to the
Denomination thereof (A) plus any increase in the Certificate
Balance of such
Certificate pursuant to Section 4.02 due to the receipt of
Subsequent
Recoveries, (B) minus the sum of (i) all distributions of principal
previously
made with respect thereto and (ii) all Realized Losses allocated to
that
Certificate and, in the case of any Subordinated Certificates, all
other
reductions in Certificate Balance previously allocated to that
Certificate
pursuant to Section 4.05 and (C) in the case of any Class of
Accrual
Certificates, plus the Accrual Amount added to the Class
Certificate Balance
of such Class prior to such date.
Certificateholder or Holder: The person in whose name a Certificate
is
registered in the Certificate Register, except that, solely for the
purpose of
giving any consent pursuant to this Agreement, any Certificate
registered in
the name of the Depositor or any affiliate of the Depositor is not
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 a consent has been obtained, except that if the Depositor
or its
affiliates own 100% of the Percentage Interests evidenced by a
Class of
Certificates, the Certificates shall be Outstanding for purposes of
any
provision of this Agreement requiring the consent of the Holders
of
Certificates of a particular Class as a condition to the taking of
any action.
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.
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Certificate Owner: With respect to a Book-Entry Certificate, the
Person
who is the beneficial owner of the Book-Entry Certificate. For the
purposes of
this Agreement, in order for a Certificate Owner to enforce any of
its rights
under this Agreement, it shall first have to provide evidence of
its
beneficial ownership interest in a Certificate that is reasonably
satisfactory
to the Trustee, the Depositor and/or the Servicer, as
applicable.
Certificate Register: The register maintained pursuant to Section
5.02.
Certificate Registrar: Deutsche Bank National Trust Company and
its
successors and, if a successor trustee is appointed under this
Agreement, the
successor.
Certification Party: As defined in Section 11.05.
Certifying
Person: As defined in Section 11.05.
Class: All
Certificates bearing the same class designation as set forth
in the Preliminary Statement.
Class
Certificate Balance: For any Class as of any date of
determination, the aggregate of the Certificate Balances of all
Certificates
of the Class as of that date.
Class
Interest Shortfall: As to any Distribution Date and Class, the
amount by which the amount described in clause (i) of the
definition of Class
Optimal Interest Distribution Amount for such Class exceeds the
amount of
interest actually distributed on such Class on such Distribution
Date pursuant
to such clause (i).
Class
Optimal Interest Distribution Amount: With respect to any
Distribution Date and interest-bearing Class, the sum of (i) one
month's
interest accrued during the related Interest Accrual Period at
the
Pass-Through Rate for such Class on the related Class Certificate
Balance
immediately prior to such Distribution Date, subject to reduction
pursuant to
Section 4.02(d), and (ii) any Class Unpaid Interest Amounts for
such Class.
Class
Subordination Percentage: With respect to any Distribution Date
and each Class of Subordinated Certificates, the fraction
(expressed as a
percentage) the numerator of which is the Class Certificate Balance
of such
Class of Subordinated Certificates immediately prior to such
Distribution Date
and the denominator of which is the aggregate Class Certificate
Balance of all
Classes of Certificates immediately prior to such Distribution
Date.
Class
Unpaid Interest Amounts: As to any Distribution Date and Class
of
interest-bearing Certificates, the amount by which the aggregate
Class
Interest Shortfalls for such Class on prior Distribution Dates
exceeds the
amount distributed on such Class on prior Distribution Dates
pursuant to
clause (ii) of the definition of Class Optimal Interest
Distribution Amount.
Closing
Date: September 27, 2006.
CMT Index:
Not applicable.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COFI: Not
applicable.
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<PAGE>
COFI
Certificates: Not applicable.
Commission: The United States Securities and Exchange
Commission.
Compensating Interest: For any Distribution Date, 0.125% multiplied
by
one-twelfth multiplied by the aggregate Stated Principal Balance of
the
Mortgage Loans as of the first day of the prior month.
Components: Not applicable.
Co-op
Shares: Shares issued by a Cooperative Corporation.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and
improvements
constituting the Cooperative Property and that governs the
Cooperative
Property, which Cooperative Corporation must qualify as a
Cooperative Housing
Corporation under section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Co-op Shares and
a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by
the
Cooperative Corporation, including the allocation of individual
dwelling units
to the holders of the Co-op Shares of the Cooperative
Corporation.
Cooperative Unit: A single family dwelling located in a
Cooperative
Property.
Corporate
Trust Office: The designated office of the Trustee in the
State of California at which at any particular time its corporate
trust
business with respect to this Agreement is administered, which
office at the
date of the execution of this Agreement is located at 1761 East St.
Andrew
Place, Santa Ana, California 92705, Attn: Trust
Administration-IN06AV (IndyMac
MBS, Inc., IndyMac INDX Mortgage Loan Trust 2006-AR31, Mortgage
Pass-Through
Certificates, Series 2006-AR31), and which is the address to which
notices to
and correspondence with the Trustee should be directed. With
respect to the
Certificate Registrar and presentment of Certificates for
registration of
transfer, exchange or final payment is located at DB Services
Tennessee, 648
Grassmere Park Road, Nashville, Tennessee 37211-3658, Attention:
Transfer
Unit.
Current
Interest: For each Class of Certificates and any Distribution
Date, the amount of interest accrued during the related Interest
Accrual
Period on the related Class Certificate Balance immediately prior
to that
Distribution Date at such Class's Pass-Through Rate.
Cut-off
Date: September 1, 2006.
Cut-off
Date Pool Principal Balance: $301,954,364.84.
Cut-off
Date Principal Balance: As to any Mortgage Loan, its Stated
Principal Balance as of the close of business on the Cut-off
Date.
Debt
Service Reduction: For any Mortgage Loan, a reduction by a court
of
competent jurisdiction in a proceeding under the Bankruptcy Code in
the
Scheduled Payment for the Mortgage Loan that became final and
non-appealable,
except a reduction resulting from a Deficient Valuation or a
reduction that
results in a permanent forgiveness of principal.
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<PAGE>
Defective
Mortgage Loan: Any Mortgage Loan that is required to be
repurchased pursuant to Section 2.02 or 2.03.
Deficient
Valuation: For any Mortgage Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less
than the
then outstanding indebtedness under the Mortgage Loan, or any
reduction in the
amount of principal to be paid in connection with any Scheduled
Payment that
results in a permanent forgiveness of principal, which valuation or
reduction
results from an order of the court that is final and non-appealable
in a
proceeding under the Bankruptcy Code.
Definitive
Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry
Certificate
pursuant to Section 5.02(e).
Delay
Certificates: As specified in the Preliminary Statement.
Delay
Delivery Certification: A certification substantially in the
form
of Exhibit G-2.
Delay
Delivery Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule for which none of a related Mortgage File,
or neither
the Mortgage Note, nor a lost note affidavit for a lost Mortgage
Note, has
been delivered to the Trustee by the Closing Date. The Depositor
shall deliver
the Mortgage Files to the Trustee:
(A) for at
least 70% of the Mortgage Loans, not later than the Closing
Date, and
(B) for
the remaining 30% of the Mortgage Loans, not later than five
Business Days following the Closing Date.
To the
extent that the Seller is in possession of any Mortgage File
for
any Delay Delivery Mortgage Loan, until delivery of the Mortgage
File to the
Trustee as provided in Section 2.01, the Seller shall hold the
files as
Servicer, as agent and in trust for the Trustee.
Deleted
Mortgage Loan: As defined in Section 2.03(c).
Delinquent: A Mortgage Loan is "Delinquent" if any monthly payment
due
on a Due Date is not made by the close of business on the next
scheduled Due
Date for such Mortgage Loan. A Mortgage Loan is "30 days
Delinquent" if such
monthly payment has not been received by the close of business on
the
corresponding day of the month immediately succeeding the month in
which such
monthly payment was due. The determination of whether a Mortgage
Loan is "60
days Delinquent", "90 days Delinquent", etc. shall be made in a
like manner.
Denomination: For each Certificate, the amount on the face of
the
Certificate as the "Initial Certificate Balance of this
Certificate" or the
Percentage Interest appearing on the face of the Certificate.
Depositor:
IndyMac MBS, Inc., a Delaware corporation, or its successor
in interest.
Depository: The initial Depository shall be The Depository
Trust
Company, the nominee of which is CEDE & Co., as the registered
Holder of the
Book-Entry Certificates. The Depository shall at all times be a
"clearing
corporation" as defined in Section 8-102(a)(5) of the UCC.
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.
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<PAGE>
Determination Date: As to any Distribution Date, the 18th day of
each
month or if that day is not a Business Day the next Business Day,
except that
if the next Business Day is less than two Business Days before the
related
Distribution Date, then the Determination Date shall be the
Business Day
preceding the 18th day of the month.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.06(c) in the name
of the
Trustee for the benefit of the Certificateholders and designated
"Deutsche
Bank National Trust Company in trust for registered holders of
IndyMac INDX
Mortgage Loan Trust 2006-AR31, Mortgage Pass-Through Certificates,
Series
2006-AR31." Funds in the Distribution Account shall be held in
trust for the
Certificateholders for the uses and purposes set forth in this
Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:30
P.M. Pacific time on the Business Day preceding the Distribution
Date.
Distribution Date: The 25th day of each calendar month after the
initial
issuance of the Certificates, or if that day is not a Business Day,
the next
Business Day, commencing in October 2006.
Due Date:
For any Mortgage Loan and Distribution Date, the first day of
the month in which such Distribution Date occurs.
Due
Period: For any Distribution Date, the period commencing on the
second day of the month preceding the month in which the
Distribution Date
occurs and ending on the first day of the month in which the
Distribution Date
occurs.
EDGAR: The
Commission's Electronic Data Gathering, Analysis and
Retrieval system.
Eligible
Account: Any of
(i) an
account or accounts maintained with a federal or state
chartered
depository institution or trust company the short-term unsecured
debt
obligations of which (or, in the case of a depository institution
or trust
company that is the principal subsidiary of a holding company, the
debt
obligations of such holding company) have the highest short-term
ratings of
Moody's or Fitch and one of the two highest short-term ratings of
S&P, if S&P
is a Rating Agency at the time any amounts are held on deposit
therein, or
(ii) an
account or accounts in a depository institution or trust
company
in which such accounts are insured by the FDIC (to the limits
established by
the FDIC) and the uninsured deposits in which accounts are
otherwise secured
such that, as evidenced by an Opinion of Counsel delivered to the
Trustee and
to each Rating Agency, the Certificateholders have a claim with
respect to the
funds in such account or a perfected first priority 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 or trust company in which such account is
maintained,
or
(iii) a
trust account or accounts maintained with (a) the trust
department of a federal or state chartered depository institution
or (b) a
trust company, acting in its fiduciary capacity or
(iv) any
other account acceptable to each Rating Agency.
Eligible Accounts may bear interest, and may include, if otherwise
qualified
under this definition, accounts maintained with the Trustee.
10
<PAGE>
ERISA: The
Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying
Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of
the
Underwriter's Exemption.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow
Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.07(a).
Event of
Default: As defined in Section 7.01.
Excess
Loss: The amount of any (i) Fraud Loss on the Mortgage Loans
realized after the Fraud Loss Coverage Termination Date, (ii)
Special Hazard
Loss on the Mortgage Loans realized after the Special Hazard
Coverage
Termination Date or (iii) Bankruptcy Loss on the Mortgage Loans
realized after
the Bankruptcy Coverage Termination Date.
Excess
Proceeds: For any Liquidated Mortgage Loan, the excess of
(a) all
Liquidation Proceeds from the Mortgage Loan received in the
calendar month in which the Mortgage Loan became a Liquidated
Mortgage Loan,
net of any amounts previously reimbursed to the Servicer as
Nonrecoverable
Advances with respect to the Mortgage Loan pursuant to Section
3.09(a)(iii),
over
(b) the
sum of (i) the unpaid principal balance of the Liquidated
Mortgage Loan as of the Due Date in the month in which the Mortgage
Loan
became a Liquidated Mortgage Loan plus (ii) accrued interest at the
Mortgage
Rate from the Due Date for which interest was last paid or advanced
(and not
reimbursed) to Certificateholders up to the Due Date applicable to
the
Distribution Date following the calendar month during which the
liquidation
occurred.
Exchange
Act: The Securities Exchange Act of 1934, as amended and the
rules and regulations promulgated thereunder.
Exchange
Act Reports: Any reports on Form 10-D, Form 8-K and Form 10-K
required to be filed by the Depositor with respect to the Trust
Fund under the
Exchange Act.
Expense
Fee Rate: As to each Mortgage Loan, the sum of (a) the related
Servicing Fee Rate and (b) the Trustee Fee Rate.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The
Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under
Title III of
the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Fitch:
Fitch, Inc., or any successor thereto. If Fitch is designated
as
a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b)
the address for notices to Fitch shall be Fitch, Inc., One State
Street Plaza,
New York, NY 10004, Attention: MBS Monitoring - IndyMac 2006-AR31,
or any
other address Fitch furnishes to the Depositor and the
Servicer.
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<PAGE>
FNMA: The
Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the
Federal
National Mortgage Association Charter Act, or any successor
thereto.
Form 10-D
Disclosure Item: With respect to any Person, any material
litigation or governmental proceedings pending against such Person,
or against
any of the Trust Fund, the Depositor, the Trustee or the Servicer,
if such
Person has actual knowledge thereof.
Form 10-K
Disclosure Item: With respect to any Person, (a) Form 20-D
Disclosure Item, and (b) any affiliations or relationships between
such Person
and any Item 1119 Party.
Fraud
Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has
occurred.
Fraud Loss
Coverage Amount: As of the Closing Date, $6,039,087, subject
to reduction from time to time, by the amount of Fraud Losses
allocated to the
Certificates. In addition, on each anniversary of the Cut-off Date,
the Fraud
Loss Coverage Amount will be reduced as follows: (a) on the first,
second,
third and fourth anniversaries of the Cut-off Date, to an amount
equal to the
lesser of (i) 1.00% of the then current Stated Principal Balance of
the
Mortgage Loans in the case of the first anniversary and 0.50% of
the
then-current Stated Principal Balance of the Mortgage Loans in the
case of the
second, third and fourth such anniversaries and (ii) the excess of
the Fraud
Loss Coverage Amount as of the preceding anniversary of the Cut-off
Date over
the cumulative amount of Fraud Losses allocated to the Certificates
since such
preceding anniversary; and (b) on the fifth anniversary of the
Cut-off Date,
to zero.
Fraud Loss
Coverage Termination Date: The point in time at which the
Fraud Loss Coverage Amount is reduced to zero.
Fraud
Losses: Realized Losses on Mortgage Loans as to which a loss is
sustained by reason of a default arising from fraud, dishonesty
or
misrepresentation in connection with the related Mortgage Loan,
including a
loss by reason of the denial of coverage under any related Primary
Insurance
Policy because of such fraud, dishonesty or misrepresentation.
Gross
Margin: With respect to each Mortgage Loan, the fixed
percentage
set forth in the related Mortgage Note that is added to the
Mortgage Index on
each Adjustment Date in accordance with the terms of the related
Mortgage Note
used to determine the Mortgage Rate for such Mortgage Loan.
Hedged
Certificates: Not applicable.
Index: Not
applicable.
Indirect
Participant: A broker, dealer, bank, or other financial
institution or other Person that clears through or maintains a
custodial
relationship with a Depository Participant.
Initial
Bankruptcy Loss Coverage Amount: $100,000.
Initial
LIBOR Rate: Not applicable.
Insurance
Policy: For any Mortgage Loan included in the Trust Fund, any
insurance policy, including all riders and endorsements thereto in
effect,
including any replacement policy or policies for any Insurance
Policies.
12
<PAGE>
Insurance
Proceeds: Proceeds paid by an insurer pursuant to any
Insurance Policy, 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
Accrual Period: With respect to each Class of Delay
Certificates and any Distribution Date, the calendar month prior to
the month
of such Distribution Date. With respect to each Class of
Non-Delay
Certificates and any Distribution Date, the one-month period
commencing on the
25th day of the month preceding the month in which such
Distribution Date
occurs and ending on the 24th day of the month in which such
Distribution Date
occurs. All Classes of Certificates will accrue interest on the
basis of a
360-day year consisting of twelve 30-day months.
Interest
Determination Date: With respect to (a) any Interest Accrual
Period for any LIBOR Certificates and (b) any Interest Accrual
Period for the
COFI Certificates for which the applicable Index is LIBOR, the
second Business
Day prior to the first day of such Interest Accrual Period.
Interest
Rate: With respect to each REMIC 1 Interest, the applicable
rate set forth or calculated in the manner described in the
Preliminary
Statement.
Interest
Settlement Rate: As defined in Section 4.08.
Item 1119
Party: The Depositor, the Seller, the Servicer, the Trustee,
the Cap Counterparty and any other material transaction party, as
identified
in Exhibit T hereto, as updated pursuant to Section 11.04.
Last
Scheduled Distribution Date: The Distribution Date in the month
immediately following the month of the latest scheduled maturity
date for any
of the Mortgage Loans.
Latest
Possible Maturity Date: The Distribution Date following the
third
anniversary of the scheduled maturity date of the Mortgage Loan
having the
latest scheduled maturity date as of the Cut-off Date.
Lender PMI
Loans: Mortgage Loans with respect to which the lender rather
than the borrower acquired the primary mortgage guaranty insurance
and charged
the related borrower an interest premium.
LIBOR: The
London interbank offered rate for one month United States
dollar deposits calculated in the manner described in Section
4.08.
LIBOR
Determination Date: For any Interest Accrual Period, the second
London Business Day prior to the commencement of such Interest
Accrual Period.
Limited
Exchange Act Reporting Obligations: The obligations of the
Servicer under Section 3.17(b), Section 6.02 and Section 6.04 with
respect to
notice and information to be provided to the Depositor and Article
11 (except
Section 11.07(a)(i) and (ii)).
Liquidated
Mortgage Loan: For any Distribution Date, a defaulted
Mortgage Loan (including any REO Property) that was liquidated in
the calendar
month preceding the month of the Distribution Date and as to which
the
Servicer has certified (in accordance with this Agreement) that it
has
received all amounts it expects to receive in connection with the
liquidation
of the Mortgage Loan, including the final disposition of an REO
Property.
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<PAGE>
Liquidation Proceeds: Amounts, including Insurance Proceeds
regardless of when received, received in connection with the
partial or
complete liquidation of defaulted Mortgage Loans, whether through
trustee's
sale, foreclosure sale, 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 Servicing Fees, Servicing Advances, and Advances.
Loan-to-Value Ratio: For any Mortgage Loan and as of any date
of
determination, is the fraction whose numerator is the original
principal
balance of the related Mortgage Loan at that date of determination
and whose
denominator is the Appraised Value of the related Mortgaged
Property.
London Business Day: Any day on which dealings in deposits of
United
States dollars are transacted in the London interbank market.
Lost Mortgage Note: Any Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Maintenance: For any Cooperative Unit, the rent paid by the
Mortgagor
to the Cooperative Corporation pursuant to the Proprietary
Lease.
Maximum Mortgage Rate: For each Mortgage Loan, the percentage
set
forth in the related Mortgage Note as the lifetime maximum Mortgage
Rate to
which such Mortgage Rate may be adjusted.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or
any
successor thereto.
MERS
Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS(R) System.
MERS(R)
System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The
mortgage identification number for any MERS Mortgage Loan.
Minimum
Mortgage Rate: For each Mortgage Loan, the percentage set forth
in the related Mortgage Note as the lifetime minimum Mortgage Rate
to which
such Mortgage Rate may be adjusted.
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.
Moneyline
Telerate Page 3750: The display page currently so designated
on the Moneyline Telerate Information Services, Inc. (or any page
replacing
that page on that service for the purpose of displaying London
inter-bank
offered rates of major banks).
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.06.
Moody's:
Moody's Investors Service, Inc., or any successor thereto. If
Moody's is designated as a Rating Agency in the Preliminary
Statement, for
purposes of Section 10.05(b) the address for notices to Moody's
shall be
Moody's Investors Service, Inc., 99 Church Street, New York, New
York 10007,
Attention: Residential Loan Monitoring Group, or any other address
that
Moody's furnishes to the Depositor and the Servicer.
14
<PAGE>
Mortgage:
The mortgage, deed of trust, or other instrument creating a
first lien on an estate in fee simple or leasehold interest in real
property
securing a Mortgage Note.
Mortgage
File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents
delivered to the
Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage
Index: Six-Month LIBOR Index or One-Year LIBOR Index.
Mortgage
Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to this Agreement, as from time to time are
held as a
part of the Trust Fund (including any REO Property), the Mortgage
Loans so
held being identified on the Mortgage Loan Schedule,
notwithstanding
foreclosure or other acquisition of title of the related Mortgaged
Property.
Mortgage
Loan Schedule: As of any date, the list set forth in Schedule I
of Mortgage Loans included in the Trust Fund on that date. The
Mortgage Loan
Schedule shall be prepared by the Seller and shall set forth the
following
information with respect to each Mortgage Loan:
(i) the loan
number;
(ii) the street
address of the Mortgaged Property, including the
zip code;
(iii) the maturity date;
(iv) the original
principal balance;
(v) the Cut-off
Date Principal Balance;
(vi) the first payment
date of the Mortgage Loan;
(vii) the Scheduled Payment in effect as of the Cut-off Date;
(viii) the Gross Margin in effect as of the Cut-off Date;
(ix) the Maximum
Mortgage Rate in effect as of the Cut-off Date;
(x) the
Adjustment Date in effect as of the Cut-off Date;
(xi) a code indicating
the Mortgage Index and when it is
determined;
(xii) the Loan-to-Value Ratio at origination;
(xiii) a code indicating whether the residential dwelling at
the
time of origination was represented to be owner-occupied;
(xiv) a code indicating whether the residential dwelling is
either
(a) a
detached single family dwelling, (b) a dwelling in a
PUD, (c) a condominium unit, (d) a two- to four-unit
residential property, or (e) a Cooperative Unit;
(xv) the Mortgage Rate
in effect as of the Cut-off Date;
(xvi) the purpose for the Mortgage Loan;
15
<PAGE>
(xvii) the type of documentation program pursuant to which the
Mortgage Loan was originated;
(xviii) a code indicating whether the Mortgage Loan is a
borrower-paid mortgage insurance loan;
(xix) the Servicing Fee Rate;
(xx) a code indicating
whether the Mortgage Loan is a Lender PMI
Loan;
(xxi) the coverage amount of any mortgage insurance;
(xxii) with respect to the Lender PMI Loans, the interest
premium
charged by the lender;
(xxiii) a code indicating whether the Mortgage Loan is a Delay
Delivery Mortgage Loan;
(xxiv) the Minimum Mortgage Rate in effect as of the Cut-off
Date;
and
(xxv) a code indicating whether the Mortgage Loan is a MERS
Mortgage Loan.
The schedule shall also set forth the total of the amounts
described under (v)
above for all of the Mortgage Loans.
Mortgage
Note: The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note from
time to time (net of the interest premium for any Lender PMI
Loan).
Mortgaged
Property: The underlying property securing a Mortgage Loan,
which, with respect to a Cooperative Loan, is the related Co-op
Shares and
Proprietary Lease.
Mortgagor:
The obligors on a Mortgage Note.
National
Cost of Funds Index: The National Monthly Median Cost of Funds
Ratio to SAIF-Insured Institutions published by the OTS.
Net
Prepayment Interest Shortfall: As to any Distribution Date, the
amount by which the aggregate of the Prepayment Interest Shortfalls
for such
Distribution Date exceeds the Compensating Interest for such
Distribution
Date.
Net WAC
Cap: Not applicable.
Net WAC
Carryover Amounts: Not applicable.
Non-Delay
Certificates: As specified in the Preliminary Statement.
Nonrecoverable 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 be ultimately recoverable by the Servicer from
the related
Mortgagor, related Liquidation Proceeds or otherwise.
16
<PAGE>
Notice of
Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the
Certificates
shall be made only upon presentation and surrender thereof.
Notional
Amount: Not applicable.
Notional
Amount Certificates: As specified in the Preliminary Statement.
Notional
Amount Components: As specified in the Preliminary Statement.
Offered
Certificates: As specified in the Preliminary Statement.
Officer's
Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing
Director, 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 or the Servicer, (ii) if provided for
in this
Agreement, signed by a Servicing Officer, as the case may be, and
delivered to
the Depositor and the Trustee as required by this Agreement or
(iii) in the
case of any other Person, signed by an authorized officer of such
Person.
One-Year
CMT Index: The weekly average yield on United States Treasury
securities adjusted to a constant maturity of one year as published
by the
Federal Reserve Board in Statistical Release H.15(591) and most
recently
available as of a day specified in the related Mortgage Note.
One-Year
LIBOR Index: The average of the London interbank offered rates
for one-year U.S. dollar deposits in the London market, generally
as set forth
in either The Wall Street Journal or some other source generally
accepted in
the residential mortgage loan origination business and specified in
the
related Mortgage Note, or, if such rate ceases to be published in
The Wall
Street Journal or becomes unavailable for any reason, then based
upon a new
index selected by the servicer, based on comparable information, in
each case,
as most recently announced as of either 45 days prior to, or the
first
Business Day of the month immediately preceding the month of, such
Adjustment
Date.
Opinion of
Counsel: For the interpretation or application of the REMIC
Provisions, a written opinion of counsel who (i) is in fact
independent of the
Depositor and the Servicer, (ii) does not have any direct financial
interest
in the Depositor or the Servicer or in any affiliate of either, and
(iii) is
not connected with the Depositor or the Servicer as an officer,
employee,
promoter, underwriter, trustee, partner, director, or person
performing
similar functions. Otherwise, a written opinion of counsel who may
be counsel
for the Depositor or the Servicer, including in-house counsel,
reasonably
acceptable to the Trustee.
Optional
Termination Date: As defined in Section 9.01.
Original
Applicable Credit Support Percentage: With respect to each of
the following Classes of Subordinated Certificates, the
corresponding
percentage described below, as of the Closing Date:
Class B-1.................................... 6.80%
Class B-2.................................... 4.40%
Class B-3.................................... 2.85%
Class B-4.................................... 1.90%
Class B-5.................................... 0.70%
Class B-6.................................... 0.30%
17
<PAGE>
Original
Mortgage Loan: The Mortgage Loan refinanced in connection with
the origination of a Refinance Loan.
Original
Subordinated Principal Balance: The aggregate Class Certificate
Balance of the Subordinated Certificates as of the Closing
Date.
OTS: The
Office of Thrift Supervision.
Outside
Reference Date: Not applicable.
Outstanding: For the Certificates as of any date of determination,
all
Certificates theretofore executed and authenticated under this
Agreement
except:
(i) Certificates
theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in
exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a
Stated Principal Balance greater than zero that was not the subject
of a
Principal Prepayment in Full before the Due Date or during the
related
Prepayment Period and that did not become a Liquidated Mortgage
Loan before
the Due Date.
Ownership
Interest: As to any Residual Certificate, any ownership
interest in the Certificate including any interest in the
Certificate as its
Holder and any other interest therein, whether direct or indirect,
legal or
beneficial.
Pass-Through Margin: Not applicable.
Pass-Through Rate: For each Class of Certificates, the per annum
rate
set forth or calculated in the manner described in the Preliminary
Statement.
Percentage
Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the
related Class,
the percentage interest being set forth on its face or equal to the
percentage
obtained by dividing the Denomination of the Certificate by the
aggregate of
the Denominations of all Certificates of the same Class.
Performance Certification: As defined in Section 11.05.
Permitted
Investments: At any time, any of the following:
(i)
obligations of the United States or any agency thereof 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, or any lower rating that will
not result in
the downgrading, qualification or withdrawal of the ratings then
assigned to
the Certificates by the Rating Agencies, as evidenced by a signed
writing
delivered by each Rating Agency;
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<PAGE>
(iii)
commercial or finance company paper that is then receiving the
highest commercial or finance company paper rating of each Rating
Agency, or
any lower rating that will not result in the downgrading,
qualification or
withdrawal of the ratings then assigned to the Certificates by the
Rating
Agencies , as evidenced by a signed writing delivered by each
Rating Agency;
(iv)
certificates of deposit, demand or time deposits, or bankers'
acceptances 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 or state banking
authorities, provided
that the commercial paper or long-term unsecured debt obligations
of the
depository institution or trust company (or in the case of the
principal
depository institution in a holding company system, the commercial
paper or
long-term unsecured debt obligations of the holding company, but
only if
Moody's is not a Rating Agency) are then rated one of the two
highest
long-term and the highest short-term ratings of each Rating Agency
for the
securities, or any lower rating that will not result in the
downgrading,
qualification or withdrawal of the ratings then assigned to the
Certificates
by the Rating Agencies, as evidenced by a signed writing delivered
by each
Rating Agency;
(v) demand
or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that the
deposits
are fully insured by the FDIC;
(vi)
guaranteed reinvestment agreements issued by any bank,
insurance
company, or other corporation acceptable to the Rating Agencies at
the time of
the issuance of the agreements, as evidenced by a signed writing
delivered by
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 (iv)
above; provided that such repurchase obligation would be accounted
for as a
financing arrangement under generally accepted accounting
principles;
(viii)
securities (other than stripped bonds, stripped coupons, or
instruments sold at a purchase price in excess of 115% of their
face amount)
bearing interest or sold at a discount issued by any corporation
incorporated
under the laws of the United States or any state thereof that, at
the time of
the investment, have one of the two highest ratings of each Rating
Agency
(except if the Rating Agency is Moody's the rating shall be the
highest
commercial paper rating of Moody's for the securities), or any
lower rating
that will not result in the downgrading, qualification or
withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies,
as evidenced
by a signed writing delivered by each Rating Agency and that have a
maturity
date occurring no more than 365 days from their date of
issuance;
(ix) units
of a taxable money-market portfolio having the highest rating
assigned by each Rating Agency (except (i) if Fitch is a Rating
Agency and has
not rated the portfolio, the highest rating assigned by Moody's and
(ii) if
S&P is a Rating Agency, "AAAm" or "AAAM-G" by S&P) and
restricted to
obligations issued or guaranteed by the United States of America or
entities
whose obligations are backed by the full faith and credit of the
United States
of America and repurchase agreements collateralized by such
obligations; and
(x) any
other investments bearing interest or sold at a discount
acceptable to each Rating Agency that will not result in the
downgrading,
qualification or withdrawal of the ratings then assigned to the
Certificates
by the Rating Agencies, as evidenced by a signed writing delivered
by each
Rating Agency.
No
Permitted Investment may (i) evidence the right to receive
interest
only payments with respect to the obligations underlying the
instrument, (ii)
be sold or disposed of before its maturity or (iii) be any
19
<PAGE>
obligation of the Seller or any of its Affiliates. Any Permitted
Investment
shall be relatively risk free and no options or voting rights shall
be
exercised with respect to any Permitted Investment. Any Permitted
Investment
shall be sold or disposed of in accordance with Financial
Accounting Standard
140, paragraph 35c(6) in effect as of the Closing Date.
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 any Residual
Certificate,
(iv) a
rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code,
(v) an
"electing large partnership" as defined in section 775 of the
Code,
(vi) a
Person that is not a U.S. Person, and
(vii) any
other Person so designated by the Depositor based on an
Opinion of Counsel that the Transfer of an Ownership Interest in a
Residual
Certificate to the Person may cause any REMIC to fail to qualify as
a REMIC at
any time that the Certificates are outstanding.
Person:
Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company,
trust,
unincorporated organization, or government, or any agency or
political
subdivision thereof.
Physical
Certificates: As specified in the Preliminary Statement.
Planned
Balance: Not applicable.
Planned
Principal Classes: As specified in the Preliminary Statement.
Pool
Stated Principal Balance: The aggregate Stated Principal Balance
of
the Mortgage Loans.
Prepayment
Charge: As to a Mortgage Loan, any charge payable by a
Mortgagor in connection with certain partial prepayments and all
prepayments
in full made within the related Prepayment Charge Period, the
Prepayment
Charges with respect to each applicable Mortgage Loan so held by
the Trust
Fund being identified in the Mortgage Loan Schedule.
Prepayment
Charge Period: As to any Mortgage Loan, the period of time
during which a Prepayment Charge may be imposed.
Prepayment
Interest Excess: As to any Principal Prepayment received by
the Servicer on a Mortgage Loan from the first day through the
fifteenth day
of any calendar month other than the month of the Cut-off Date, all
amounts
paid by the related Mortgagor in respect of interest on such
Principal
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<PAGE>
Prepayment. All Prepayment Interest Excess shall be retained by the
Servicer
as additional servicing compensation.
Prepayment
Interest Shortfall: As to any Distribution Date, Mortgage
Loan and Principal Prepayment received on or after the sixteenth
day of the
month preceding the month of such Distribution Date (or, in the
case of the
first Distribution Date, on or after the Cut-off Date) and on or
before the
last day of the month preceding the month of such Distribution
Date, the
amount, if any, by which one month's interest at the related
Mortgage Rate,
net of the Servicing Fee Rate, on such Principal Prepayment exceeds
the amount
of interest paid in connection with such Principal Prepayment.
Prepayment
Period: As to any Distribution Date and related Due Date, the
period from and including the 16th day of the month immediately
prior to the
month of such Distribution Date (or, in the case of the first
Distribution
Date, from the Cut-off Date) and to and including the 15th day of
the month of
such Distribution Date.
Prepayment
Shift Percentage: Not applicable.
Primary
Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any
Mortgage
Loan.
Principal
Amount: As to any Distribution Date, the sum of (a) all
monthly payments of principal due on each Mortgage Loan on the
related Due
Date, (b) the principal portion of the Purchase Price of each
Mortgage Loan
that was repurchased by the Seller pursuant to this Agreement as of
such
Distribution Date, excluding any Mortgage Loan that was repurchased
due to a
modification of the Mortgage Rate, (c) the Substitution Adjustment
Amount in
connection with any Deleted Mortgage Loan received with respect to
such
Distribution Date, (d) any Insurance Proceeds or Liquidation
Proceeds
allocable to recoveries of principal of Mortgage Loans that are not
yet
Liquidated Mortgage Loans received during the calendar month
preceding the
month of such Distribution Date, (e) with respect to each Mortgage
Loan that
became a Liquidated Mortgage Loan during the calendar month
preceding the
month of such Distribution Date, the amount of Liquidation Proceeds
allocable
to principal received with respect to such Mortgage Loan, (f) all
partial and
full Principal Prepayments on the Mortgage Loans received during
the related
Prepayment Period and the principal portion of the Purchase Price
of any
Mortgage Loan purchased by the Seller pursuant to Section 3.12, and
(g) any
Subsequent Recoveries with respect to the Mortgage Loans received
during the
calendar month preceding the month of such Distribution Date.
Principal
Only Certificates: As specified in the Preliminary Statement.
Principal
Prepayment: Any payment of principal by a Mortgagor on a
Mortgage Loan (including the principal portion of the Purchase
Price of any
Mortgage Loan purchased pursuant to Section 3.12) that is received
in advance
of its scheduled Due Date and is not accompanied by an amount
representing
scheduled interest due on any date in any month after the month of
prepayment.
The Servicer shall apply partial Principal Prepayments in
accordance with the
related Mortgage Note.
Principal
Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Priority
Amount: Not applicable.
Priority
Percentage: Not applicable.
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<PAGE>
Private
Certificates: As specified in the Preliminary Statement.
Pro Rata
Share: As to any Distribution Date and any Class of
Subordinated Certificates, the portion of the Subordinated
Principal
Distribution Amount allocable to such Class, equal to the product
of the
Subordinated Principal Distribution Amount on such Distribution
Date and a
fraction, the numerator of which is the related Class Certificate
Balance
thereof and the denominator of which is the aggregate Class
Certificate
Balance of the Subordinated Certificates, in each case immediately
prior to
such Distribution Date.
Proprietary Lease: For any Cooperative Unit, a lease or
occupancy
agreement between a Cooperative Corporation and a holder of related
Co-op
Shares.
Prospectus
Supplement: The Prospectus Supplement dated September 27,
2006, relating to the Offered Certificates, and any supplement to
the
Prospectus Supplement.
PUD:
Planned Unit Development.
Purchase
Price: For any Mortgage Loan required to be purchased by the
Seller pursuant to Section 2.02 or 2.03 or purchased by the
Servicer pursuant
to Section 3.12, the sum of
(i) 100%
of the unpaid principal balance of the Mortgage Loan on the
date of the purchase,
(ii)
accrued and unpaid interest on the Mortgage Loan at the
applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x)
the
purchaser is the Servicer or (y) if the purchaser is the Seller and
the Seller
is the Servicer) from the date through which interest was last paid
by the
Mortgagor to the Due Date in the month in which the Purchase Price
is to be
distributed to Certificateholders, net of any unreimbursed Advances
made by
the Servicer on the Mortgage Loan, and
(iii) any
costs and damages incurred by the Trust Fund in connection
with any violation by the Mortgage Loan of any predatory or abusive
lending
law.
If the
Mortgage Loan is purchased pursuant to Section 3.12, the
interest
component of the Purchase Price shall be computed (i) on the basis
of the
applicable Adjusted Mortgage Rate before giving effect to the
related
modification and (ii) from the date to which interest was last paid
to the
date on which the Mortgage Loan is assigned to the Servicer
pursuant to
Section 3.12.
Qualified
Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of
business and
each state having jurisdiction over the insurer in connection with
the
insurance policy issued by the insurer, duly authorized and
licensed in such
states to transact a mortgage guaranty insurance business in such
states and
to write the insurance provided by the insurance policy issued by
it, approved
as a FNMA- or FHLMC-approved mortgage insurer or having a claims
paying
ability rating of at least "AA" or equivalent rating by a
nationally
recognized statistical rating organization. Any replacement insurer
with
respect to a Mortgage Loan must have at least as high a claims
paying ability
rating as the insurer it replaces had on the Closing Date.
Rating
Agency: Each of the Rating Agencies specified in the
Preliminary
Statement. If any of them or a successor is no longer in existence,
"Rating
Agency" shall be the nationally recognized statistical rating
organization, or
other comparable Person, named in the Underwriters' Exemption and
designated
by the Depositor, notice of which designation shall be given to the
Trustee.
References to a given rating or rating category of a Rating Agency
means the
rating category without giving effect to any modifiers.
22
<PAGE>
Realized
Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of
the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated
Principal
Balance of the Liquidated Mortgage Loan as of the date of such
liquidation,
plus (ii) interest at the Adjusted Net Mortgage Rate from the Due
Date as to
which interest was last paid or advanced (and not reimbursed)
to
Certificateholders up to the Due Date in the month in which
Liquidation
Proceeds are required to be distributed on the Stated Principal
Balance of
such Liquidated Mortgage Loan from time to time, minus (iii) the
Liquidation
Proceeds, if any, received during the month in which such
liquidation
occurred, to the extent applied as recoveries of interest at the
Adjusted Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan.
With respect
to each Mortgage Loan which has become the subject of a Deficient
Valuation,
if the principal amount due under the related Mortgage Note has
been reduced,
the difference between the principal balance of the Mortgage Loan
outstanding
immediately prior to such Deficient Valuation and the principal
balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect
to each
Mortgage Loan that has become the subject of a Debt Service
Reduction and any
Distribution Date, the amount, if any, by which the principal
portion of the
related Scheduled Payment has been reduced.
To the
extent the Servicer receives Subsequent Recoveries with respect
to any Mortgage Loan, the amount of the Realized Loss with respect
to that
Mortgage Loan will be reduced by such Subsequent Recoveries.
Recognition Agreement: For any Cooperative Loan, an agreement
between
the Cooperative Corporation and the originator of the Mortgage Loan
that
establishes the rights of the originator in the Cooperative
Property.
Record
Date: With respect to any Distribution Date, (x) for the LIBOR
Certificates, so long as such Certificates are Book-Entry
Certificates, the
Business Day immediately prior to such Distribution Date and (y)
for any other
Class of Certificates the close of business on the last Business
Day of the
month preceding the month of that Distribution Date.
Reference
Bank: As defined in Section 4.08.
Refinance
Loan: Any Mortgage Loan the proceeds of which are used to
refinance an Original Mortgage Loan.
Regular
Certificates: As specified in the Preliminary Statement.
Regulation
AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to
time, and subject to such clarification and interpretation as have
been
provided by the Commission in the adopting release (Asset-Backed
Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005))
or by the staff of the Commission, or as may be provided by the
Commission or
its staff from time to time.
Relief
Act: The Servicemembers Civil Relief Act.
Relief Act
Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount
of interest
collectible thereon for the most recently ended calendar month as a
result of
the application of the Relief Act or any similar state or local
laws, the
amount, if any, by which (i) interest collectible on such Mortgage
Loan for
the most recently ended calendar month is less than (ii) interest
accrued
thereon for such month pursuant to the Mortgage Note.
23
<PAGE>
REMIC: A
"real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
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 regulations promulgated thereunder, as the foregoing may be in
effect from
time to time as well as provisions of applicable state laws.
REO
Property: A Mortgaged Property acquired by the Trust Fund
through
foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted
Mortgage Loan.
Reportable
Event: Any event required to be reported on Form 8-K, and in
any event, the following:
(a) entry
into a definitive agreement related to the Trust Fund, the
Certificates or the Mortgage Loans, or an amendment to a
Transaction Document,
even if the Depositor is not a party to such agreement (e.g., a
servicing
agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
(b)
termination of a Transaction Document (other than by expiration
of
the agreement on its stated termination date or as a result of all
parties
completing their obligations under such agreement), even if the
Depositor is
not a party to such agreement (e.g., a servicing agreement with a
servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(c) with
respect to the Servicer only, if the Servicer becomes aware of
any bankruptcy or receivership with respect to the Seller, the
Depositor, the
Servicer, the Trustee, the Cap Counterparty, any enhancement or
support
provider contemplated by Items 1114(b) or 1115 of Regulation AB, or
any other
material party contemplated by Item 1101(d)(1) of Regulation
AB;
(d) with
respect to the Trustee, the Servicer and the Depositor only,
the occurrence of an early amortization, performance trigger or
other event,
including an Event of Default under this Agreement;
(e) any
amendment to this Agreement;
(f) the
resignation, removal, replacement, substitution of the Servicer
or the Trustee;
(g) with
respect to the Servicer only, if the Servicer becomes aware
that (i) any material enhancement or support specified in Item
1114(a)(1)
through (3) of Regulation AB or Item 1115 of Regulation AB that was
previously
applicable regarding one or more Classes of the Certificates has
terminated
other than by expiration of the contract on its stated termination
date or as
a result of all parties completing their obligations under such
agreement;
(ii) any material enhancement specified in Item 1114(a)(1) through
(3) of
Regulation AB or Item 1115 of Regulation AB has been added with
respect to one
or more Classes of the Certificates; or (iii) any existing
material
enhancement or support specified in Item 1114(a)(1) through (3) of
Regulation
AB or Item 1115 of Regulation AB with respect to one or more
Classes of the
Certificates has been materially amended or modified; and
(h) with
respect to the Trustee, the Servicer and the Depositor only, a
required distribution to Holders of the Certificates is not made as
of the
required Distribution Date under this Agreement.
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<PAGE>
Reporting
Subcontractor: With respect to the Servicer or the Trustee,
any Subcontractor determined by such Person pursuant to Section
11.08(b) to be
"participating in the servicing function" within the meaning of
Item 1122 of
Regulation AB. References to a Reporting Subcontractor shall refer
only to the
Subcontractor of such Person and shall not refer to Subcontractors
generally.
Request
for Release: The Request for Release submitted by the Servicer
to the Trustee, substantially in the form of Exhibits M and N, as
appropriate.
Required
Insurance Policy: For any Mortgage Loan, any insurance policy
that is required to be maintained from time to time under this
Agreement.
Required
Reserve Fund Deposit: Not applicable.
Residual
Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any
Managing
Director, any Director, Vice President, any Assistant Vice
President, any
Associate, any Assistant Secretary, any Trust Officer, or any other
officer of
the Trustee customarily performing functions similar to those
performed by any
of the above designated officers who at such time shall be officers
to whom,
with respect to a particular matter, the matter is referred because
of the
officer's knowledge of and familiarity with the particular subject
and who has
direct responsibility for the administration of this Agreement.
Restricted
Classes: As defined in Section 4.02(e).
SAIF: The
Savings Association Insurance Fund, or any successor thereto.
Sarbanes-Oxley Certification: As defined in Section 11.05.
S&P:
Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. If
S&P is designated as a Rating Agency in the Preliminary
Statement, for
purposes of Section 10.05(b) the address for notices to S&P
shall be Standard
& Poor's, a division of The McGraw-Hill Companies, Inc., 55
Water Street, New
York, New York 10041, Attention: Mortgage Surveillance Monitoring,
or any
other address that S&P furnishes to the Depositor and the
Servicer.
Scheduled
Balance: Not applicable.
Scheduled
Classes: As specified in the Preliminary Statement.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such
Mortgage Loan
which, unless otherwise specified herein, shall give effect to any
related
Debt Service Reduction and any Deficient Valuation that affects the
amount of
the monthly payment due on such Mortgage Loan.
Securities
Act: The Securities Act of 1933, as amended.
Security
Agreement: For any Cooperative Loan, the agreement between the
owner of the related Co-op Shares and the originator of the related
Mortgage
Note that defines the security interest in the Co-op Shares and the
related
Proprietary Lease.
Seller:
IndyMac Bank, F.S.B., a federal savings bank, and its
successors
and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
25
<PAGE>
Senior
Certificate Group: As specified in the Preliminary Statement.
Senior
Certificates: As specified in the Preliminary Statement.
Senior
Credit Support Depletion Date: The date on which the Class
Certificate Balance of each Class of Subordinated Certificates has
been
reduced to zero.
Senior
Percentage: As to any Distribution Date, the percentage
equivalent of a fraction the numerator of which is the aggregate
Class
Certificate Balance of the Senior Certificates immediately before
the
Distribution Date and the denominator of which is the aggregate
Class
Certificate Balance of all Classes of Certificates immediately
prior to that
Distribution Date.
Senior
Prepayment Percentage: As to any Distribution Date during the
seven years beginning on the first Distribution Date, 100%. The
Senior
Prepayment Percentage for any Distribution Date occurring on or
after the
seventh anniversary of the first Distribution Date will, except as
provided in
this Agreement, be as follows: for any Distribution Date in the
first year
thereafter, the Senior Percentage plus 70% of the Subordinated
Percentage for
such Distribution Date; for any Distribution Date in the second
year
thereafter, the Senior Percentage plus 60% of the Subordinated
Percentage for
such Distribution Date; for any Distribution Date in the third
year
thereafter, the Senior Percentage plus 40% of the Subordinated
Percentage for
such Distribution Date; for any Distribution Date in the fourth
year
thereafter, the Senior Percentage plus 20% of the Subordinated
Percentage for
such Distribution Date; and for any Distribution Date thereafter,
the Senior
Percentage for such Distribution Date (unless on any Distribution
Date the
Senior Percentage exceeds the initial Senior Percentage in which
case the
Senior Prepayment Percentage for such Distribution Date will once
again equal
100%). Notwithstanding the foregoing, no decrease in the Senior
Prepayment
Percentage will occur unless both Senior Step Down Conditions are
satisfied
with respect to all of the Mortgage Loans.
Notwithstanding the preceding paragraphs, if (x) on or before
the
Distribution Date in September 2009, the Subordinated Percentage is
at least
200% of the Subordinated Percentage as of the Closing Date, the
delinquency
test set forth in the definition of Senior Step Down Conditions is
satisfied
and cumulative Realized Losses do not exceed 20% of the aggregate
Class
Certificate Balance of the Subordinated Certificates as of the
Closing Date,
the Senior Prepayment Percentage will equal the Senior Percentage
for that
Distribution Date plus 50% of an amount equal to 100% minus the
Senior
Percentage for that Distribution Date and (y) after the
Distribution Date in
September 2009, the Subordinated Percentage is at least 200% of
the
Subordinated Percentage as of the Closing Date, the delinquency
test set forth
in the definition of Senior Step Down Conditions is satisfied and
cumulative
Realized Losses do not exceed 30% of the aggregate Class
Certificate Balance
of the Subordinated Certificates as of the Closing Date, the Senior
Prepayment
Percentage will equal the Senior Percentage.
Senior
Principal Distribution Amount: As to any Distribution Date, the
sum of (i) the related Senior Percentage of all amounts described
in clauses
(a) through (d) of the definition of Principal Amount for such
Distribution
Date, (ii) with respect to any Mortgage Loan that became a
Liquidated Mortgage
Loan during the calendar month preceding the month of such
Distribution Date,
the lesser of (x) the Senior Percentage of the Stated Principal
Balance of
such Mortgage Loan and (y) either (A) if no Excess Losses were
sustained on
the Liquidated Mortgage Loan during the preceding calendar month,
the related
Senior Prepayment Percentage of the amount of the Liquidation
Proceeds
allocable to principal received on the Mortgage Loan or (B) if an
Excess Loss
was sustained with respect to such Liquidated Mortgage Loan during
such
preceding calendar month, the Senior Percentage of the amount of
the
Liquidation Proceeds allocable to principal received with respect
to such
Mortgage Loan, and (iii) the sum of (x) the Senior Prepayment
Percentage of
the amounts described in clause (f) of the definition of Principal
Amount and
such Distribution Date, and (y) the Senior Prepayment Percentage of
any
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<PAGE>
Subsequent Recoveries described in clause (g) of the definition of
Principal
Amount for such Distribution Date; provided, however, that if a
Bankruptcy
Loss that is an Excess Loss is sustained with respect to a Mortgage
Loan that
is not a Liquidated Mortgage Loan, the Senior Principal
Distribution Amount
will be reduced on the related Distribution Date by the Senior
Percentage of
the applicable principal portion of such Bankruptcy Loss.
Senior
Step Down Conditions: As to any Distribution Date: (i) the
aggregate Stated Principal Balance of all the Mortgage Loans 60
days or more
Delinquent (averaged over the preceding six month period)
(including any
Mortgage Loans subject to foreclosure proceedings, REO Property
(regardless of
whether that Mortgage Loan is 60 days or more Delinquent) and
Mortgage Loans
the Mortgagors of which are in bankruptcy), as a percentage of the
aggregate
Class Certificate Balance of the Subordinated Certificates
immediately prior
to such Distribution Date, does not equal or exceed 50%, and (ii)
cumulative
Realized Losses do not exceed: (a) commencing with the Distribution
Date on
the seventh anniversary of the first Distribution Date, 30% of the
Original
Subordinated Principal Balance, (b) commencing with the
Distribution Date on
the eighth anniversary of the first Distribution Date, 35% of the
Original
Subordinated Principal Balance, (c) commencing with the
Distribution Date on
the ninth anniversary of the first Distribution Date, 40% of the
Original
Subordinated Principal Balance, (d) commencing with the
Distribution Date on
the tenth anniversary of the first Distribution Date, 45% of the
Original
Subordinated Principal Balance, and (e) commencing with the
Distribution Date
on the eleventh anniversary of the first Distribution Date and
thereafter, 50%
of the Original Subordinated Principal Balance.
Servicer:
IndyMac Bank, F.S.B., a federal savings bank, and its
successors and assigns, in its capacity as servicer under this
Agreement.
Servicer
Advance Date: As to any Distribution Date, 12:30 P.M. Pacific
time on the Business Day preceding the Distribution Date.
Servicing
Advances: All customary, reasonable, and necessary "out of
pocket" costs and expenses incurred in the performance by the
Servicer of its
servicing obligations, including the cost of
(a) the preservation, restoration, and protection of a
Mortgaged
Property,
(b) expenses reimbursable to the Servicer pursuant to Section
3.12
and any
enforcement or judicial proceedings, including foreclosures,
(c) the maintenance and liquidation of any REO Property,
(d) compliance with the obligations under Section 3.10, and
(e) reasonable compensation to the Servicer or its affiliates
for
acting as
broker in connection with the sale of foreclosed Mortgaged
Properties
and for performing certain default management and other
similar
services (including appraisal services) in connection with the
servicing
of defaulted Mortgage Loans. For purposes of this clause (e),
only costs
and expenses incurred in connection with the performance of
activities
generally considered to be outside the scope of customary
servicing
or master servicing duties shall be treated as Servicing
Advances.
Servicing
Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB.
Servicing
Fee: As to each Mortgage Loan and any Distribution Date, one
month's interest at the applicable Servicing Fee Rate on the Stated
Principal
Balance of the Mortgage Loan, or, whenever a
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<PAGE>
payment of interest accompanies a Principal Prepayment in Full made
by the
Mortgagor, interest at the Servicing Fee Rate on the Stated
Principal Balance
of the Mortgage Loan for the period covered by the payment of
interest,
subject to reduction as provided in Section 3.15.
Servicing
Fee Rate: For each Mortgage Loan, the per annum rate specified
on the Mortgage Loan Schedule.
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 the list may from time to time be amended.
Servicing
Standard: That degree of skill and care exercised by the
Servicer with respect to mortgage loans comparable to the Mortgage
Loans
serviced by the Servicer for itself or others.
Shift
Percentage: Not applicable.
Six-Month
LIBOR Index: The average of the London interbank offered rates
for six month U.S. dollar deposits in the London market, generally
as set
forth in either The Wall Street Journal or some other source
generally
accepted in the residential mortgage loan origination business and
specified
in the related Mortgage Note or, if such rate ceases to be
published in The
Wall Street Journal or becomes unavailable for any reason, then
based upon a
new index selected by the Servicer, based on comparable
information, in each
case, as most recently announced as of either 45 days prior to, or
the first
Business Day of the month immediately preceding the month of, such
Adjustment
Date.
Special
Hazard Coverage Termination Date: The point in time at which
the
Special Hazard Loss Coverage Amount is reduced to zero.
Special
Hazard Loss: Any Realized Loss suffered by a Mortgaged Property
on account of direct physical loss, but not including (i) any loss
of a type
covered by a hazard insurance policy or a flood insurance policy
required to
be maintained with respect to such Mortgaged Property pursuant to
Section 3.10
to the extent of the amount of such loss covered thereby, or (ii)
any loss
caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the
Trustee,
the Servicer or any of their agents or employees (without
regard to
any portion of the loss not covered by any errors and
omissions
policy);
(c) errors in design, faulty workmanship or faulty materials,
unless the
collapse of the property or a part thereof ensues and then
only for
the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled
or
uncontrolled, and whether such loss be direct or indirect,
proximate or
remote or
be in whole or in part caused by, contributed to or aggravated
by a peril
covered by the definition of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war,
including
action in
hindering, combating or defending against an actual, impending
or
expected attack:
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<PAGE>
1. by any government or sovereign power, de jure or de
facto, or by any authority maintaining or using military, naval
or
air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(f) any weapon of war employing nuclear fission, fusion or
other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped
power
or action
taken by governmental authority in hindering, combating or
defending
against such an occurrence, seizure or destruction under
quarantine
or customs regulations, confiscation by order of any
government
or public authority, or risks of contraband or illegal
transportation or trade.
Special Hazard Loss
Coverage Amount: With respect to the first
Distribution Date, $5,700,000. With respect to any Distribution
Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1%
of the
aggregate of the principal balances of the Mortgage Loans, (ii)
twice the
principal balance of the largest Mortgage Loan and (iii) the
aggregate of the
principal balances of all Mortgage Loans secured by Mortgaged
Properties
located in the single California postal zip code area having the
highest
aggregate principal balance of any such zip code area and (b) the
Special
Hazard Loss Coverage Amount as of the Closing Date less the amount,
if any, of
Special Hazard Losses allocated to the Certificates since the
Closing Date.
All principal balances for the purpose of this definition will be
calculated
as of the first day of the calendar month preceding the month of
such
Distribution Date after giving effect to Scheduled Payments on the
Mortgage
Loans then due, whether or not paid.
Special
Hazard Mortgage Loan: A Liquidated Mortgage Loan as to which a
Special Hazard Loss has occurred.
Startup
Day: The Closing Date.
Stated
Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date,
as
specified in the amortization schedule at the time relating thereto
(before
any adjustment to such amortization schedule by reason of any
moratorium or
similar waiver or grace period) after giving effect to the sum of:
(i) the
payment of principal due on such Due Date and irrespective of any
delinquency
in payment by the related Mortgagor and (ii) any Liquidation
Proceeds
allocable to principal received in the prior calendar month and
Principal
Prepayments received through the last day of the Prepayment Period
in which
the Due Date occurs, in each case with respect to such Mortgage
Loan.
Subcontractor: Any vendor, subcontractor or other Person that is
not
responsible for the overall servicing (as "servicing" is commonly
understood
by participants in the mortgage-backed securities market) of
Mortgage Loans
but performs one or more discrete functions identified in Item
1122(d) of
Regulation AB with respect to the Mortgage Loans under the
direction or
authority of the Servicer or the Trustee, as the case may be.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated Percentage: As to any Distribution Date, 100% minus
the
Senior Percentage for such Distribution Date.
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<PAGE>
Subordinated Prepayment Percentage: As to any Distribution Date,
100%
minus the Senior Prepayment Percentage for such Distribution
Date.
Subordinated Principal Distribution Amount: As to any Distribution
Date,
the sum of the following: (i) the Subordinated Percentage of all
amounts
described in clauses (a) through (d) of the definition of Principal
Amount
with respect to such Distribution Date, (ii) with respect to any
Mortgage Loan
that became a Liquidated Mortgage Loan during the calendar month
preceding the
month of such Distribution Date, the amount of Liquidation Proceeds
allocable
to principal received with respect thereto remaining after
application thereof
pursuant to clause (ii) of the definition of Senior Principal
Distribution
Amount, up to the Subordinated Percentage of the Stated Principal
Balance of
such Mortgage Loan, and (iii) the sum of the Subordinated
Prepayment
Percentage of the amounts described in clauses (f) and (g) of the
definition
of Principal Amount with respect to such Distribution Date.
Subsequent
Recoveries: As to any Distribution Date, with respect to a
Liquidated Mortgage Loan that resulted in a Realized Loss in a
prior calendar
month, unexpected amounts received by the Servicer (net of any
related
expenses permitted to be reimbursed pursuant to Section 3.09)
specifically
related to such Liquidated Mortgage Loan.
Substitute
Mortgage Loan: A Mortgage Loan substituted by the Seller for
a Deleted Mortgage Loan that must, on the date of substitution, as
confirmed
in a Request for Release, substantially in the form of Exhibit
M,
(i) have a
Stated Principal Balance, after deduction of the principal
portion of the Scheduled Payment due in the month of substitution,
not in
excess of, and not more than 10% less than, the Stated Principal
Balance of
the Deleted Mortgage Loan (unless the amount of any shortfall is
deposited by
the Seller in the Certificate Account and held for distribution to
the
Certificateholders on the related Distribution Date);
(ii) have
a Mortgage Rate no lower than and not more than 1% per annum
higher than the Deleted Mortgage Loan;
(iii) have
a Maximum Mortgage Rate not more than 1% per annum higher
than and not lower than the Maximum Mortgage Rate of the deleted
Mortgage
Loan;
(iv) have
the same Mortgage Index and interval between Adjustment Dates
as the deleted Mortgage Loan and a Gross Margin not more than 1%
per annum
higher than, and not lower than that of the deleted Mortgage
Loan;
(v) have a
Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan;
(vi) have
a remaining term to maturity not more than one year greater
than and not more than one year less than that of the Deleted
Mortgage Loan;
(vii) not
be a Cooperative Loan unless the Deleted Mortgage Loan was a
Cooperative Loan; and
(viii)
comply with each representation and warranty in Section 2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
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<PAGE>
Suspension
Notification: Notification to the Commission of the
suspension of the Trust Fund's obligation to file reports pursuant
to Section
15(d) of the Exchange Act.
Targeted
Balance: Not applicable.
Targeted
Principal Classes: As specified in the Preliminary Statement.
Transaction Documents: This Agreement and any other document or
agreement entered into in connection with the Trust Fund, the
Certificates or
the Mortgage Loans.
Transfer:
Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Transfer
Payment Made: As defined in Section 4.03.
Transfer
Payment Received: As defined in Section 4.03.
Trust
Fund: The corpus of the trust created under this Agreement
consisting of
(i) the
Mortgage Loans and all interest and principal received on them
after the Cut-off Date, other than amounts due on the Mortgage
Loans by the
Cut-off Date;
(ii) the
Certificate Account, the Distribution Account and all amounts
deposited therein pursuant to this Agreement (including amounts
received from
the Seller on the Closing Date that will be deposited by the
Trustee in the
Certificate Account pursuant to Section 2.01);
(iii)
property that secured a Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure, or otherwise;
(iv) the
right to collect any amounts under any mortgage insurance
policies covering any Mortgage Loan and any collections received
under any
mortgage insurance policies covering any Mortgage Loan; and
(v) all
proceeds of the conversion, voluntary or involuntary, of any of
the foregoing.
Trustee:
Deutsche Bank National Trust Company and its successors and, if
a successor trustee is appointed under this Agreement, the
successor.
Trustee
Fee: The fee payable to the Trustee on each Distribution Date
for its services as Trustee hereunder, in an amount equal to
one-twelfth of
the Trustee Fee Rate multiplied by the aggregate Stated Principal
Balance of
the Mortgage Loans as of the Due Date in the month preceding the
month of such
Distribution Date (after giving effect to Principal Prepayments in
the
Prepayment Period related to that prior Due Date).
Trustee
Fee Rate: 0.0085% per annum.
The terms
"United States," "State," and "International Organization"
have the meanings in section 7701 of the Code or successor
provisions. A
corporation will not be treated as an instrumentality of the United
States or
of any State or political subdivision thereof for these purposes if
all of its
activities are subject to tax and, with the exception of the
Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not
selected by
such government unit.
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<PAGE>
UCC: The
Uniform Commercial Code for the State of New York.
Underwriter's Exemption: Prohibited Transaction Exemption 2002-41,
67
Fed. Reg. 54487 (2002) (or any successor thereto), or any
substantially
similar administrative exemption granted by the U.S. Department of
Labor
United
States Person or U.S. Person:
(i) A
citizen or resident of the United States;
(ii) a
corporation (or entity treated as a corporation for tax
purposes)
created or organized in the United States or under the laws of the
United
States or of any state thereof, including, for this purpose, the
District of
Columbia;
(iii) a
partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the
United
States or of any state thereof, including, for this purpose, the
District of
Columbia (unless provided otherwise by future Treasury
regulations);
(iv) an
estate whose income is includible in gross income for United
States income tax purposes regardless of its source; or
(v) a
trust, if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S.
Persons have authority to control all substantial decisions of the
trust.
Notwithstanding the last clause of the preceding sentence, to the
extent
provided in Treasury regulations, certain trusts in existence on
August 20,
1996, and treated as U.S. Persons before that date, may elect to
continue to
be U.S. Persons.
U.S.A.
Patriot Act: The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001.
Voting
Rights: The portion of the voting rights of all of the
Certificates that is allocated to any Certificate. As of any date
of
determination, (a) 1% of all Voting Rights shall be allocated to
the Holder of
the Class A-R Certificates and (b) the remaining Voting Rights
shall be
allocated among Holders of the remaining Classes of Offered
Certificates in
proportion to the Certificate Balances of the respective
Certificates on the
date.
Weighted
Average Adjusted Net Mortgage Rate: For any Distribution Date,
the average of the Adjusted Net Mortgage Rate of each Mortgage
Loan, weighted
on the basis of its Stated Principal Balance as of the Due Date in
the prior
month (after giving effect to Principal Prepayments in the
Prepayment Period
related to such prior Due Date).
Weighted
Average Initial Adjustment Date: Not applicable.
Withdrawal Date:
The 18th day of each month, or if such day is not a
Business Day, the next preceding Business Day.
Yield
Supplement Amount: Not applicable.
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<PAGE>
Section
1.02 Rules of Construction.
Except as
otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise
(a)
References to designated articles, sections, subsections,
exhibits,
and other subdivisions of this Agreement, such as "Section 6.12
(a)," refer to
the designated article, section, subsection, exhibit, or other
subdivision of
this Agreement as a whole and to all subdivisions of the designated
article,
section, subsection, exhibit, or other subdivision. The words
"herein,"
"hereof," "hereto," "hereunder," and other words of similar import
refer to
this Agreement as a whole and not to any particular article,
section, exhibit,
or other subdivision of this Agreement.
(b) Any
term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or
any other
changes that may have occurred since the document, statute, rule,
or
regulation came into being, including changes that occur after the
date of
this Agreement.
(c) Any
party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something
to be done
rather than doing it directly shall be implicit in every
requirement under
this Agreement. Unless a provision is restricted as to time or
limited as to
frequency, all provisions under this Agreement are implicitly
available and
things may happen from time to time.
(d) The
term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word
"either," the word
"or" is always used inclusively (for example, the phrase "A or B"
means "A or
B or both," not "either A or B but not both").
(e) A
reference to "a [thing]" or "any [of a thing]" does not imply
the
existence or occurrence of the thing referred to even though not
followed by
"if any," and "any [of a thing]" is any of it. A reference to the
plural of
anything as to which there could be either one or more than one
does not imply
the existence of more than one (for instance, the phrase "the
obligors on a
note" means "the obligor or obligors on a note"). "Until [something
occurs]"
does not imply that it must occur, and will not be modified by the
word
"unless." The word "due" and the word "payable" are each used in
the sense
that the stated time for payment has passed. The word "accrued" is
used in its
accounting sense, i.e., an amount paid is no longer accrued. In
the
calculation of amounts of things, differences and sums may
generally result in
negative numbers, but when the calculation of the excess of one
thing over
another results in zero or a negative number, the calculation is
disregarded
and an "excess" does not exist. Portions of things may be expressed
as
fractions or percentages interchangeably.
(f) All
accounting terms used in an accounting context and not
otherwise
defined, and accounting terms partly defined in this Agreement, to
the extent
not completely defined, shall be construed in accordance with
generally
accepted accounting principles. To the extent that the definitions
of
accounting terms in this Agreement are inconsistent with their
meanings under
generally accepted accounting principles, the definitions contained
in this
Agreement shall control. Capitalized terms used in this Agreement
without
definition that are defined in the Uniform Commercial Code are used
in this
Agreement as defined in the Uniform Commercial Code.
(g) In the
computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and
"beginning"
mean "from and including," the word "after" means "from but
excluding," the
words "to" and "until" mean "to but excluding," and the word
"through" means
"to and including." Likewise, in setting deadlines or other
periods, "by"
means "by." The words
33
<PAGE>
"preceding," "following," and words of similar import, mean
immediately
preceding or following. References to a month or a year refer to
calendar
months and calendar years.
(h) Any
reference to the enforceability of any agreement against a
party
means that it is enforceable, subject as to enforcement against the
party, to
applicable bankruptcy, insolvency, reorganization, and other
similar laws of
general applicability relating to or affecting creditors' rights
and to
general equity principles.
34
<PAGE>
ARTICLE TWO
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01
Conveyance of Mortgage Loans.
(a) The
Seller, concurrently with the execution and delivery of this
Agreement, hereby transfers to the Depositor, without recourse, all
the
interest of the Seller in each Mortgage Loan, including all
interest and
principal received or receivable by the Seller on each Mortgage
Loan after the
Cut-off Date and all interest and principal payments on each
Mortgage Loan
received before the Cut-off Date for installments of interest and
principal
due after the Cut-off Date but not including payments of principal
and
interest due by the Cut-off Date. By the Closing Date, the Seller
shall
deliver to the Depositor or, at the Depositor's direction, to the
Trustee or
other designee of the Depositor, the Mortgage File for each
Mortgage Loan
listed in the Mortgage Loan Schedule (except that, in the case of
Mortgage
Loans that are Delay Delivery Mortgage Loans, such delivery may
take place
within five Business Days of the Closing Date) as of the Closing
Date. The
delivery of the Mortgage Files shall be made against payment by the
Depositor
of the purchase price, previously agreed to by the Seller and
Depositor, for
the Mortgage Loans. With respect to any Mortgage Loan that does not
have a
first payment date on or before the Due Date in the month of the
first
Distribution Date, the Seller shall deposit into the Distribution
Account on
the first Distribution Account Deposit Date an amount equal to one
month's
interest at the related Adjusted Mortgage Rate on the Cut-off Date
Principal
Balance of such Mortgage Loan. Also on the Closing Date the
Depositor shall
deposit $100 into the Certificate Account for the benefit of the
Class P
Certificates.
(b) The
Depositor, concurrently with the execution and delivery of this
Agreement, hereby transfers to the Trustee for the benefit of
the
Certificateholders, without recourse, all the interest of the
Depositor in the
Trust Fund, together with the Depositor's right to require the
Seller to cure
any breach of a representation or warranty made in this Agreement
by the
Seller or to repurchase or substitute for any affected Mortgage
Loan in
accordance with this Agreement.
(c) In
connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered (or, in the case of the Delay
Delivery
Mortgage Loans, will deliver to the Trustee within the time periods
specified
in the definition of Delay Delivery Mortgage Loans), for the
benefit of the
Certificateholders the following documents or instruments with
respect to each
Mortgage Loan so assigned:
(i) The original Mortgage Note, endorsed by manual or facsimile
signature
in blank in the following form: "Pay to the order of
_______________ ______________without recourse," with all
intervening
endorsements showing a complete chain of endorsement from the
originator
to the
Person endorsing the Mortgage Note (each endorsement being
sufficient
to transfer all interest of the party so endorsing, as
noteholder
or assignee thereof, in that Mortgage Note) or a lost note
affidavit
for any Lost Mortgage Note from the Seller stating that the
original
Mortgage Note was lost or destroyed, together with a copy of
the
Mortgage Note.
(ii) Except as provided below and for each Mortgage Loan that
is
not a MERS
Mortgage Loan, the original recorded Mortgage or a copy of
such
Mortgage certified by the Seller as being a true and complete
copy
of the
Mortgage (or, in the case of a Mortgage for which the related
Mortgaged
Property is located in the Commonwealth of Puerto Rico, a true
copy of
the Mortgage certified as such by the applicable notary) and in
the case
of each MERS Mortgage Loan, the original Mortgage, noting the
presence
of the MIN of the Mortgage Loans and either language indicating
that the
Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM
35
<PAGE>
Loan or if
the Mortgage Loan was not a MOM Loan at origination, the
original
Mortgage and the assignment thereof to MERS, with evidence of
recording
indicated thereon, or a copy of the Mortgage certified by the
public
recording office in which such Mortgage has been recorded;
(iii) In the case of a Mortgage Loan that is not a MERS
Mortgage
Loan, a
duly executed assignment of the Mortgage (which may be included
in a
blanket assignment or assignments), together with, except as
provided
below, all interim recorded assignments of the mortgage (each
assignment, when duly and validly completed, to be in recordable
form
and
sufficient to effect the assignment of and transfer to its
assignee
of the
Mortgage to which the assignment relates). If the related
Mortgage
has not been returned from the applicable public recording
office,
the assignment of the Mortgage may exclude the information to
be
provided
by the recording office. The assignment of Mortgage need not be
delivered
in the case of a Mortgage for which the related Mortgage
Property
is located in the Commonwealth of Puerto Rico.
(iv) The original or copies of each assumption, modification,
written
assurance, or substitution agreement.
(v) Except as provided below, the original or duplicate
original
lender's
title policy and all its riders.
(vi) The originals of the following documents for each
Cooperative
Loan:
(A) the Co-op
Shares, together with a stock power in
blank;
(B) the executed
Security Agreement;
(C) the executed
Proprietary Lease;
(D) the executed
Recognition Agreement;
(E) the executed
UCC-1 financing statement that has been
filed in all places required to perfect the Seller's
interest in the Co-op Shares and the Proprietary Lease
with evidence of recording on it; and
(F) executed
UCC-3 financing statements or other
appropriate UCC financing statements required by state
law, evidencing a complete and unbroken line from the
mortgagee to the Trustee with evidence of recording
thereon (or in a form suitable for recordation). If in
connection with any Mortgage Loan the Depositor cannot
deliver
(a) the original
recorded Mortgage,
(b) all interim
recorded assignments, or
(c) the lender's
title policy (together with all its
riders).
In
addition, in connection with the assignment of any MERS
Mortgage
Loan, the Seller agrees that it will cause, at the Seller's
expense, the
MERS(R) System to indicate that the Mortgage Loans sold by the
Seller to the
Depositor have been assigned by the Seller to the Trustee in
accordance with
this Agreement for the benefit of the Certificateholders by
including (or
deleting, in the case of Mortgage
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Loans that are repurchased in accordance with this Agreement) in
such computer
files the information required by the MERS(R) System to identify
the series of
the Certificates issued in connection with such Mortgage Loans. The
Seller
further agrees that it will not, and will not permit the Servicer
to, and the
Servicer agrees that it will not, alter the information referenced
in this
paragraph with respect to any Mortgage Loan sold by the Seller to
the
Depositor during the term of this Agreement unless and until such
Mortgage
Loan is repurchased in accordance with the terms of this
Agreement.
In the
event that in connection with any Mortgage Loan that is not a
MERS Mortgage Loan the Depositor cannot deliver (a) the original
recorded
Mortgage, (b) all interim recorded assignments or (c) the lender's
title
policy (together with all riders thereto) satisfying the
requirements of
clause (ii), (iii) or (v) above, respectively, concurrently with
the execution
and delivery of this Agreement because such document or documents
have not
been returned from the applicable public recording office in the
case of
clause (ii) or (iii) above, or because the title policy has not
been delivered
to either the Servicer or the Depositor by the applicable title
insurer in the
case of clause (v) above, then the Depositor shall promptly deliver
to the
Trustee, in the case of clause (ii) or (iii) above, the original
Mortgage or
the interim assignment, as the case may be, with evidence of
recording
indicated on when it is received from the public recording office,
or a copy
of it, certified, if appropriate, by the relevant recording office
and in the
case of clause (v) above, the original or a copy of a written
commitment or
interim binder or preliminary report of title issued by the title
insurance or
escrow company, with the original or duplicate copy thereof to be
delivered to
the Trustee upon receipt thereof. The delivery of the original
Mortgage Loan
and each interim assignment or a copy of them, certified, if
appropriate, by
the relevant recording office, shall not be made later than one
year following
the Closing Date, or, in the case of clause (v) above, later than
120 days
following the Closing Date. If the Depositor is unable to deliver
each
Mortgage by that date and each interim assignment because any
documents have
not been returned by the appropriate recording office, or, in the
case of each
interim assignment, because the related Mortgage has not been
returned by the
appropriate recording office, the Depositor shall deliver the
documents to the
Trustee as promptly as possible upon their receipt and, in any
event, within
720 days following the Closing Date.
The
Depositor shall forward to the Trustee (a) from time to time
additional original documents evidencing an assumption or
modification of a
Mortgage Loan and (b) any other documents required to be delivered
by the
Depositor or the Servicer to the Trustee. If the original Mortgage
is not
delivered and in connection with the payment in full of the related
Mortgage
Loan the public recording office requires the presentation of a
"lost
instruments affidavit and indemnity" or any equivalent document,
because only
a copy of the Mortgage can be delivered with the instrument of
satisfaction or
reconveyance, the Servicer shall execute and deliver the required
document to
the public recording office. If a public recording office retains
the original
recorded Mortgage or if a Mortgage is lost after recordation in a
public
recording office, the Seller shall deliver to the Trustee a copy of
the
Mortgage certified by the public recording office to be a true and
complete
copy of the original recorded Mortgage.
As
promptly as practicable after any transfer of a Mortgage Loan
under
this Agreement, and in any event within thirty days after the
transfer, the
Trustee shall (i) affix the Trustee's name to each assignment of
Mortgage, as
its assignee, and (ii) cause to be delivered for recording in the
appropriate
public office for real property records the assignments of the
Mortgages to
the Trustee, except that, if the Trustee has not received the
information
required to deliver any assignment of a Mortgage for recording, the
Trustee
shall deliver it as soon as practicable after receipt of the
needed
information and in any event within thirty days.
The
Trustee need not record any assignment that relates to a
Mortgage
Loan (a) the Mortgaged Property and Mortgage File relating to which
are
located in California or (b) in any other jurisdiction (including
Puerto Rico)
under the laws of which, as evidenced by an Opinion of Counsel
delivered by
the Seller (at the Seller's expense) to the Trustee, recording the
assignment
is not necessary to protect the
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Trustee's and the Certificateholders' interest in the related
Mortgage Loan.
The Seller shall deliver such Opinion of Counsel within 90 days of
the Closing
Date.
If any
Mortgage Loans have been prepaid in full as of the Closing
Date,
the Depositor, in lieu of delivering the above documents to the
Trustee, will
deposit in the Certificate Account the portion of the prepayment
that is
required to be deposited in the Certificate Account pursuant to
Section 3.06.
Notwithstanding anything to the contrary in this Agreement, within
five
Business Days after the Closing Date, the Seller shall either
(x) deliver to the Trustee the Mortgage File as required
pursuant
to this Section 2.01 for each Delay Delivery Mortgage Loan or
(y) (A) repurchase the Delay Delivery Mortgage Loan or (B)
substitute the Substitute Mortgage Loan for a Delay Delivery
Mortgage Loan, which repurchase or substitution shall be
accomplished in the manner and subject to the conditions in
Section 2.03 (treating each such Delay Delivery Mortgage Loan as
a
Deleted Mortgage Loan for purposes of such Section 2.03);
provided, however, that if the Seller fails to deliver a Mortgage
File for any
Delay Delivery Mortgage Loan within the period specified herein,
the Seller
shall use its best reasonable efforts to effect a substitution,
rather than a
repurchase of, such Deleted Mortgage Loan and provided further that
the cure
period provided for in Section 2.02 or in Section 2.03 shall not
apply to the
initial delivery of the Mortgage File for such Delay Delivery
Mortgage Loan,
but rather the Seller shall have five (5) Business Days to cure
such failure
to deliver. At the end of such period, the Trustee shall send a
Delay Delivery
Certification for the Delay Delivery Mortgage Loans delivered
during such
period in accordance with the provisions of Section 2.02.
(d) The
Seller agrees to treat the transfer of the Mortgage Loans to
the
Depositor as a sale for all tax, accounting, and regulatory
purposes.
Section
2.02 Acceptance by the Trustee of the Mortgage Loans.
The
Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form of Exhibit G-1, and declares that
it holds
and will hold such documents and the other documents delivered to
it
constituting the Mortgage Files for the Mortgage Loans, and that it
holds or
will hold such other assets as are included in the Trust Fund, in
trust for
the exclusive use and benefit of all present and future
Certificateholders.
The
Trustee acknowledges that it will maintain possession of the
related
Mortgage Notes in the State of California, unless otherwise
permitted by the
Rating Agencies. The Trustee agrees to execute and deliver on the
Closing Date
to the Depositor, the Servicer and the Seller an Initial
Certification in the
form of Exhibit G-1. Based on its review and examination, and only
as to the
documents identified in such Initial Certification, the Trustee
acknowledges
that such documents appear regular on their face and relate to such
Mortgage
Loans. The Trustee shall be under no duty or obligation to inspect,
review or
examine said documents, instruments, certificates or other papers
to determine
that the same are genuine, enforceable or appropriate for the
represented
purpose or that they have actually been recorded in the real estate
records or
that they are other than what they purport to be on their face.
By the
thirtieth day after the Closing Date (or if that day is not a
Business Day, the succeeding Business Day), the Trustee shall
deliver to the
Depositor, the Servicer, and the Seller a Delay Delivery
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Certification with respect to the Mortgage Loans substantially in
the form of
Exhibit G-2, with any applicable exceptions noted thereon.
By the
ninetieth day after the Closing Date (or if that day is not a
Business Day, the succeeding Business Day), the Trustee shall
deliver to the
Depositor, the Servicer and the Seller a Final Certification with
respect to
the Mortgage Loans in the form of Exhibit H, with any applicable
exceptions
noted thereon.
If, in the
course of its review, the Trustee finds any document
constituting a part of a Mortgage File that does not meet the
requirements of
Section 2.01, the Trustee shall list such as an exception in the
Final
Certification. The Trustee shall not make any determination as to
whether (i)
any endorsement is sufficient to transfer all interest of the party
so
endorsing, as noteholder or assignee thereof, in that Mortgage Note
or (ii)
any assignment is in recordable form or is sufficient to effect the
assignment
of and transfer to the assignee thereof under the mortgage to which
the
assignment relates. The Seller shall promptly correct any defect
that
materially and adversely affects the interests of the
Certificateholders
within 90 days from the date it was so notified of the defect and,
if the
Seller does not correct the defect within that period, the Seller
shall either
(a) substitute for the related Mortgage Loan a Substitute Mortgage
Loan, which
substitution shall be accomplished in the pursuant Section 2.03, or
(b)
purchase the Mortgage Loan at its Purchase Price from the Trustee
within 90
days from the date the Seller was notified of the defect in
writing.
If a
substitution or purchase of a Mortgage Loan pursuant to this
provision is required because of a delay in delivery of any
documents by the
appropriate recording office, or there is a dispute between either
the
Servicer or the Seller and the Trustee over the location or status
of the
recorded document, then the substitution or purchase shall occur
within 720
days from the Closing Date. In no other case may a substitution or
purchase
occur more than 540 days from the Closing Date.
The
Trustee shall deliver written notice to each Rating Agency
within
270 days from the Closing Date indicating each Mortgage Loan (a)
that has not
been returned by the appropriate recording office or (b) as to
which there is
a dispute as to location or status of the Mortgage Loan. The notice
shall be
delivered every 90 days thereafter until the related Mortgage Loan
is returned
to the Trustee. Any substitution pursuant to (a) above or purchase
pursuant to
(b) above shall not be effected before the delivery to the Trustee
of the
Opinion of Counsel, if required by Section 2.05, and any
substitution pursuant
to (a) above shall not be effected before the additional delivery
to the
Trustee of a Request for Release substantially in the form of
Exhibit N. No
substitution is permitted to be made in any calendar month after
the
Determination Date for the month.
The
Purchase Price for any Mortgage Loan shall be deposited by the
Seller in the Certificate Account by the Distribution Account
Deposit Date for
the Distribution Date in the month following the month of
repurchase and, upon
receipt of the deposit and certification with respect thereto in
the form of
Exhibit N, the Trustee shall release the related Mortgage File to
the Seller
and shall execute and deliver at the Seller's request any
instruments of
transfer or assignment prepared by the Seller, in each case without
recourse,
necessary to vest in the Seller, or a designee, the Trustee's
interest in any
Mortgage Loan released pursuant hereto.
If
pursuant to the foregoing provisions the Seller repurchases a
Mortgage Loan that is a MERS Mortgage Loan, the Servicer shall
either (i)
cause MERS to execute and deliver an assignment of the Mortgage in
recordable
form to transfer the Mortgage from MERS to the Seller and shall
cause such
Mortgage to be removed from registration on the MERS(R) System in
accordance
with MERS' rules and regulations or (ii) cause MERS to designate on
the
MERS(R) System the Seller as the beneficial holder of such Mortgage
Loan.
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<PAGE>
The
Trustee shall retain possession and custody of each Mortgage File
in
accordance with and subject to the terms and conditions set forth
herein. The
Servicer shall promptly deliver to the Trustee, upon the execution
or receipt
thereof, the originals of any other documents or instruments
constituting the
Mortgage File that come into the possession of the Servicer from
time to time.
The
obligation of the Seller to substitute for or to purchase any
Mortgage Loan that does not meet the requirements of Section 2.01
shall
constitute the sole remedy respecting the defect available to the
Trustee, the
Depositor, and any Certificateholder against the Seller.
Section
2.03 Representations, Warranties, and Covenants of the Seller
and the Servicer.
(a)
IndyMac, in its capacities as Seller and Servicer, makes the
representations and warranties in Schedule II, and by this
reference
incorporated in this Agreement, to the Depositor and the Trustee,
as of the
Closing Date.
(b) The Seller, in its
capacity as Seller, makes the representations and
warranties in Schedule III, and by this reference incorporated in
this
Agreement, to the Depositor and the Trustee, as of the Closing
Date, or if so
specified in Schedule III, as of the Cut-off Date.
(c) Upon
discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(b) that
materially
and adversely affects the interests of the Certificateholders in
any Mortgage
Loan, the party discovering such breach shall give prompt notice
thereof to
the other parties. The Seller covenants that within 90 days of the
earlier of
its discovery or its receipt of written notice from any party of a
breach of
any representation or warranty made pursuant to Section 2.03(b)
which
materially and adversely affects the interests of the
Certificateholders in
any Mortgage Loan, it shall cure such breach in all material
respects, and if
such breach is not so cured, shall, (i) if the 90-day period
expires before
the second anniversary of the Closing Date, remove the Mortgage
Loan (a
"Deleted Mortgage Loan") from the Trust Fund and substitute in its
place a
Substitute Mortgage Loan, in accordance with this Section 2.03; or
(ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the
Trustee at
the Purchase Price in the manner set forth below. Any substitution
pursuant to
(i) above shall not be effected before the delivery to the Trustee
of the
Opinion of Counsel, if required by Section 2.05, and a Request for
Release
substantially in the form of Exhibit N, and the Mortgage File for
any
Substitute Mortgage Loan. The Seller shall promptly reimburse the
Servicer and
the Trustee for any expenses reasonably incurred by the Servicer or
the
Trustee in respect of enforcing the remedies for the breach.
With
respect to any Substitute Mortgage Loan or Loans, the Seller
shall
deliver to the Trustee for the benefit of the Certificateholders
the Mortgage
Note, the Mortgage, the related assignment of the Mortgage, and
such other
documents and agreements as are required by Section 2.01, with the
Mortgage
Note endorsed and the Mortgage assigned as required by Section
2.01. No
substitution is permitted to be made in any calendar month after
the
Determination Date for such month. Scheduled Payments due with
respect to
Substitute Mortgage Loans in the month of substitution shall not be
part of
the Trust Fund and will be retained by the Seller on the next
succeeding
Distribution Date. For the month of substitution, distributions
to
Certificateholders will include the monthly payment due on any
Deleted
Mortgage Loan for such month and thereafter the Seller shall be
entitled to
retain all amounts received in respect of such Deleted Mortgage
Loan.
The
Servicer shall amend the Mortgage Loan Schedule for the benefit
of
the Certificateholders to reflect the removal of the Deleted
Mortgage Loan and
the substitution of the Substitute Mortgage Loans and the Servicer
shall
deliver the amended Mortgage Loan Schedule to the Trustee. Upon
the
substitution, the Substitute Mortgage Loans shall be subject to
this Agreement
in all respects, and the
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Seller shall be deemed to have made with respect to the Substitute
Mortgage
Loans, as of the date of substitution, the representations and
warranties made
pursuant to Section 2.03(b) with respect to the Mortgage Loan. Upon
any
substitution and the deposit to the Certificate Account of the
amount required
to be deposited therein in connection with the substitution as
described in
the following paragraph, the Trustee shall release the Mortgage
File held for
the benefit of the Certificateholders relating to the Deleted
Mortgage Loan to
the Seller and shall execute and deliver at the Seller's direction
such
instruments of transfer or assignment prepared by the Seller, in
each case
without recourse, as shall be necessary to vest title in the
Seller, or its
designee, the Trustee's interest in any Deleted Mortgage Loan
substituted for
pursuant to this Section 2.03.
For any
month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will
determine the amount (if any) by which the aggregate principal
balance of all
such Substitute Mortgage Loans as of the date of substitution is
less than the
aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after
application of the scheduled principal portion of the monthly
payments due in
the month of substitution). The amount of such shortage (the
"Substitution
Adjustment Amount") plus, if the Seller is not the Servicer, an
amount equal
to the aggregate of any unreimbursed Advances and Servicer Advances
with
respect to such Deleted Mortgage Loans shall be deposited into the
Certificate
Account by the Seller by the Distribution Account Deposit Date for
the
Distribution Date in the month succeeding the calendar month during
which the
related Mortgage Loan became required to be purchased or replaced
hereunder.
If the Seller repurchases a Mortgage Loan, the Purchase Price
therefor shall
be deposited in the Certificate Account pursuant to Section 3.06 by
the
Distribution Account Deposit Date for the Distribution Date in the
month
following the month during which the Seller became obligated
hereunder to
repurchase or replace the Mortgage Loan and upon such deposit of
the Purchase
Price and receipt of a Request for Release in the form of Exhibit
N, the
Trustee shall release the related Mortgage File held for the
benefit of the
Certificateholders to such Person, and the Trustee shall execute
and deliver
at such Person's direction such instruments of transfer or
assignment prepared
by such Person, in each case without recourse, as shall be
necessary to
transfer title from the Trustee. The obligation under this
Agreement of any
Person to cure, repurchase, or replace any Mortgage Loan as to
which a breach
has occurred and is continuing shall constitute the sole remedy
against the
Person respecting the breach available to Certificateholders, the
Depositor,
or the Trustee on their behalf.
The
representations and warranties made pursuant to this Section
2.03
shall survive delivery of the respective Mortgage Files to the
Trustee for the
benefit of the Certificateholders.
Section
2.04 Representations and Warranties of the Depositor as to the
Mortgage Loans.
The
Depositor represents and warrants to the Trustee with respect
to
each Mortgage Loan as of the date of this Agreement or such other
date set
forth in this Agreement that as of the Closing Date, and following
the
transfer of the Mortgage Loans to it by the Seller, the Depositor
had good
title to the Mortgage Loans and the Mortgage Notes were subject to
no offsets,
defenses, or counterclaims.
The
representations and warranties in this Section 2.04 shall
survive
delivery of the Mortgage Files to the Trustee. Upon discovery by
the Depositor
or the Trustee of any breach of any of the representations and
warranties in
this Section that materially and adversely affects the interest of
the
Certificateholders, the party discovering the breach shall give
prompt written
notice to the others and to each Rating Agency.
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<PAGE>
Section
2.05 Delivery of Opinion of Counsel in Connection with
Substitutions.
(a)
Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or 2.03 shall be made more
than 90 days
after the Closing Date unless the Seller delivers to the Trustee an
Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of
either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect
that such
substitution will not (i) result in the imposition of the tax on
"prohibited
transactions" on the Trust Fund or contributions after the Startup
Date, as
defined in sections 860F(a)(2) and 860G(d) of the Code,
respectively or (ii)
cause any REMIC created under this Agreement to fail to qualify as
a REMIC at
any time that any Certificates are outstanding.
(b) Upon
discovery by the Depositor, the Seller, 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 Business
Days of
discovery) give written notice thereof to the other parties. In
connection
therewith, the Trustee shall require the Seller, at the Seller's
option, to
either (i) substitute, if the conditions in Section 2.03(c) with
respect to
substitutions are satisfied, a Substitute Mortgage Loan for the
affected
Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within
90 days of
such discovery in the same manner as it would a Mortgage Loan for a
breach of
representation or warranty made pursuant to Section 2.03. The
Trustee shall
reconvey to the Seller 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 Execution and Delivery of Certificates.
The
Trustee acknowledges the transfer and assignment to it of the
Trust
Fund and, concurrently with such transfer and assignment, has
executed and
delivered to or upon the order of the Depositor, the Certificates
in
authorized denominations evidencing directly or indirectly the
entire
ownership of the Trust Fund. The Trustee agrees to hold the Trust
Fund and
exercise the rights referred to above for the benefit of all
present and
future Holders of the Certificates.
Section
2.07 REMIC Matters.
The
Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all
interests
created under this Agreement. The "Startup Day" for purposes of the
REMIC
Provisions shall be the Closing Date.
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<PAGE>
ARTICLE THREE
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section
3.01 Servicer to Service Mortgage Loans.
For and on
behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with this Agreement
and the
Servicing Standard.
The
Servicer shall not make or permit any modification, waiver, or
amendment of any term of any Mortgage Loan that would cause any
REMIC created
under this Agreement to fail to qualify as a REMIC or result in the
imposition
of any tax under section 860F(a) or section 860G(d) of the
Code.
Without
limiting the generality of the foregoing, the Servicer, in its
own name or in the name of the Depositor and the Trustee, is hereby
authorized
and empowered by the Depositor and the Trustee, when the Servicer
believes it
appropriate in its reasonable judgment, to execute and deliver, on
behalf of
the Trustee, the Depositor, the Certificateholders, or any of them,
any
instruments of satisfaction or cancellation, or of partial or full
release or
discharge, and all other comparable instruments, with respect to
the Mortgage
Loans, and with respect to the Mortgaged Properties held for the
benefit of
the Certificateholders. The Servicer shall prepare and deliver to
the
Depositor or the Trustee any documents requiring execution and
delivery by
either or both of them appropriate to enable the Servicer to
service and
administer the Mortgage Loans to the extent that the Servicer is
not permitted
to execute and deliver such documents pursuant to the preceding
sentence. Upon
receipt of the documents, the Depositor or the Trustee shall
execute the
documents and deliver them to the Servicer.
The
Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, in its own name,
when the
Servicer believes it appropriate in its best judgment to register
any Mortgage
Loan on the MERS(R) System, or cause the removal from the
registration of any
Mortgage Loan on the MERS(R) System, to execute and deliver, on
behalf of the
Trustee and the Certificateholders or any of them, any and all
instruments of
assignment and other comparable instruments with respect to such
assignment or
re-recording of a Mortgage in the name of MERS, solely as nominee
for the
Trustee and its successors and assigns.
In
accordance with and to the extent of the Servicing Standard,
the
Servicer shall advance funds necessary to effect the payment of
taxes and
assessments on the Mortgaged Properties, which advances shall be
reimbursable
in the first instance from related collections from the Mortgagors
pursuant to
Section 3.07, and further as provided in Section 3.09. The costs
incurred by
the Servicer in effecting the timely payments of taxes and
assessments on the
Mortgaged Properties and related insurance premiums shall not, for
the purpose
of calculating monthly distributions to the Certificateholders, be
added to
the Stated Principal Balances of the related Mortgage Loans,
notwithstanding
that the Mortgage Loans so permit.
Nothing in
this Agreement to the contrary shall limit the Servicer from
undertaking any legal action that it may deem appropriate with
respect to the
Mortgage Loans including, without limitation, any rights or causes
of action
arising out of the origination of the Mortgage Loans.
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<PAGE>
Section
3.02 [Reserved].
Section
3.03 Rights of the Depositor and the Trustee in Respect of the
Servicer.
The
Depositor may, but is not obligated to, enforce the obligations
of
the Servicer under this Agreement and may, but is not obligated to,
perform,
or cause a designee to perform, any defaulted obligation of the
Servicer under
this Agreement and in connection with any such defaulted obligation
to
exercise the related rights of the Servicer under this Agreement;
provided
that the Servicer shall not be relieved of any of its obligations
under this
Agreement by virtue of such performance by the Depositor or its
designee.
Neither the Trustee nor the Depositor shall have any responsibility
or
liability for any action or failure to act by the Servicer nor
shall the
Trustee or the Depositor be obligated to supervise the performance
of the
Servicer under this Agreement or otherwise.
Section
3.04 [Reserved].
Section
3.05 Trustee to Act as Servicer.
If the
Servicer for any reason is no longer the Servicer under this
Agreement (including because of the occurrence or existence of an
Event of
Default or termination by the Depositor), the Trustee or its
successor shall
assume all of the rights and obligations of the Servicer under this
Agreement
arising thereafter (except that the Trustee shall not be
(i) liable for losses of the Servicer pursuant to Section 3.10
or
any acts
or omissions of the predecessor Servicer hereunder,
(ii) obligated to make Advances if it is prohibited from doing
so
by
applicable law,
(iii) obligated to effectuate repurchases or substitutions of
Mortgage
Loans hereunder, including repurchases or substitutions
pursuant
to Section 2.02 or 2.03,
(iv) responsible for expenses of the Servicer pursuant to
Section
2.03,
or
(v) deemed to have made any representations and warranties of
the
Servicer
hereunder). Any assumption shall be subject to Section 7.02.
Notwithstanding anything else in this Agreement to the contrary, in
no
event shall the Trustee be liable for any servicing fee or for
any
differential in the amount of the Servicing Fee paid under this
Agreement and
the amount necessary to induce any successor Servicer to act as
successor
Servicer under this Agreement and the transactions provided for in
this
Agreement.
Section
3.06 Collection of Mortgage Loan Payments; Certificate Account;
Distribution Account.
(a) In
accordance with and to the extent of the Servicing Standard,
the
Servicer shall make reasonable efforts in accordance with the
customary and
usual standards of practice of prudent mortgage servicers to
collect all
payments called for under the Mortgage Loans to the extent the
procedures are
consistent with this Agreement and any related Required Insurance
Policy.
Consistent with the foregoing, the Servicer may in its discretion
(i) waive
any late payment charge or, subject to Section 3.20, any Prepayment
Charge in
connection with the prepayment of a Mortgage Loan and (ii) extend
the due
dates for payments due on a Delinquent Mortgage Loan for a period
not greater
than 125 days. In connection with a seriously delinquent or
defaulted Mortgage
Loan, the Servicer may, consistent with the Servicing
44
<PAGE>
Standard, waive, modify or vary any term of that Mortgage Loan
(including
modifications that change the Mortgage Rate, forgive the payment of
principal
or interest or extend the final maturity date of that Mortgage Loan
), accept
payment from the related Mortgagor of an amount less than the
Stated Principal
Balance in final satisfaction of that Mortgage Loan, or consent to
the
postponement of strict compliance with any such term or otherwise
grant
indulgence to any Mortgagor if in the Servicer's determination such
waiver,
modification, postponement or indulgence is not materially adverse
to the
interests of the Certificateholders (taking into account any
estimated loss
that might result absent such action) and is expected to minimize
the loss on
such Mortgage Loan; provided, however, the Servicer shall not
initiate new
lending to such Mortgagor through the Trust and cannot, except as
provided in
the immediately succeeding sentence, extend the maturity of any
Mortgage Loan
past the date on which the final payment is due on the latest
maturing
Mortgage Loan as of the Cut-off Date. With respect to no more than
5% of the
Mortgage Loans (measured by aggregate Cut-off Date Principal
Balance of the
Mortgage Loans), the Servicer may extend the maturity of a Mortgage
Loan past
the date on which the final payment is due on the latest maturing
Mortgage
Loan as of the Cut-off Date, but in no event more than one year
past such
date. In the event of any such arrangement, the Servicer shall make
Advances
on the related Mortgage Loan in accordance with Section 4.01 during
the
scheduled period in accordance with the amortization schedule of
the Mortgage
Loan without modification thereof because of the arrangements. The
Servicer
shall not be required to institute or join in litigation with
respect to
collection of any payment (whether under a Mortgage, Mortgage Note,
or
otherwise or against any public or governmental authority with
respect to a
taking or condemnation) if it reasonably believes that enforcing
the provision
of the Mortgage or other instrument pursuant to which the payment
is required
is prohibited by applicable law. The Servicer shall not have the
discretion to
sell any Delinquent or defaulted Mortgage Loan.
(b) The
Servicer shall establish and maintain a Certificate Account
into
which the Servicer shall deposit on a daily basis (i) within two
Business Days
of receipt (in the case of items (i) through (iii) below) and (2)
within one
Business Day of receipt (in the case of all other items), except as
otherwise
specified herein, the following payments and collections received
by it in
respect of Mortgage Loans after the Cut-off Date (other than in
respect of
principal and interest due on the Mortgage Loans by the Cut-off
Date) and the
following amounts required to be deposited hereunder:
(i) all payments on account of principal on the Mortgage Loans,
including
Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans,
net of the
Servicing Fee;
(iii) all Insurance Proceeds, Subsequent Recoveries and
Liquidation Proceeds, other than proceeds to be applied to the
restoration or repair of the Mortgaged Property or released to
the
Mortgagor
in accordance with the Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Servicer
pursuant
to Section
3.06(f) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Servicer
pursuant
to
Sections 3.10 and 3.12;
(vi) all Purchase Prices from the Servicer or Seller and all
Substitution Adjustment Amounts;
(vii) all Advances made by the Servicer pursuant to Section
4.01;
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(viii) any other amounts required to be deposited under this
Agreement;
and
(ix) all
Prepayment Charges collected.
In
addition, with respect to any Mortgage Loan that is subject to
a
buydown agreement, on each Due Date for the Mortgage Loan, in
addition to the
monthly payment remitted by the Mortgagor, the Servicer shall cause
funds to
be deposited into the Certificate Account in an amount required to
cause an
amount of interest to be paid with respect to the Mortgage Loan
equal to the
amount of interest that has accrued on the Mortgage Loan from the
preceding
Due Date at the Mortgage Rate net of the Servicing Fee Rate on that
date.
The
foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting
the
generality of the foregoing, payments in the nature of late payment
charges or
assumption fees, if collected, need not be remitted by the
Servicer. If the
Servicer remits any amount not required to be remitted, it may at
any time
withdraw that amount from the Certificate Account, any provision in
this
Agreement to the contrary notwithstanding. The withdrawal or
direction may be
accomplished by delivering written notice of it to the Trustee or
any other
institution maintaining the Certificate Account that describes the
amounts
deposited in error in the Certificate Account. The Servicer shall
maintain
adequate records with respect to all withdrawals made pursuant to
this Section
3.06. All funds deposited in the Certificate Account shall be held
in trust
for the Certificateholders until withdrawn in accordance with
Section 3.09.
(c) The
Trustee shall establish and maintain the Distribution Account
on
behalf of the Certificateholders. The Trustee shall, promptly upon
receipt,
deposit in the Distribution Account and retain in the Distribution
Account the
following:
(i) the aggregate amount remitted by the Servicer to the
Trustee
pursuant
to Section 3.09(a);
(ii) any amount deposited by the Servicer pursuant to Section
3.06(f) in
connection with any losses on Permitted Investments; and
(iii) any other amounts deposited under this Agreement that are
required
to be deposited in the Distribution Account.
If the
Servicer remits any amount not required to be remitted, it may
at
any time direct the Trustee in writing to withdraw that amount from
the
Distribution Account, any provision in this Agreement to the
contrary
notwithstanding. The direction may be accomplished by delivering an
Officer's
Certificate to the Trustee that describes the amounts deposited in
error in
the Distribution Account. All funds deposited in the Distribution
Account
shall be held by the Trustee in trust for the Certificateholders
until
disbursed in accordance with this Agreement or withdrawn in
accordance with
Section 3.09. In no event shall the Trustee incur liability for
withdrawals
from the Distribution Account at the direction of the Servicer.
(d) Each
institution at which the Certificate Account is maintained
shall invest the funds in such account as directed in writing by
the Servicer
in Permitted Investments, which shall mature not later than the
second
Business Day preceding the related Distribution Account Deposit
Date (except
that if the Permitted Investment is an obligation of the
institution that
maintains the account, then the Permitted Investment shall mature
not later
than the Business Day preceding the Distribution Account Deposit
Date) and
which shall not be sold or disposed of before its maturity. The
funds in the
Distribution Account shall remain uninvested. All such Permitted
Investments
shall be made in the name of the Trustee, for the
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benefit of the Certificateholders. All income realized from any
such
investment of funds on deposit in the Certificate Account shall be
for the
benefit of the Servicer as servicing compensation and shall be
remitted to it
monthly as provided in this Agreement. The amount of any realized
losses on
Permitted Investments in the Certificate Account shall promptly be
deposited
by the Servicer in the Certificate Account. The Trustee shall not
be liable
for the amount of any loss incurred in respect of any investment or
lack of
investment of funds held in the Certificate Account and made in
accordance
with this Section 3.06.
(e)
[Reserved].
(f)
[Reserved].
(g) The
Servicer shall give notice to the Trustee, the Seller, each
Rating Agency and the Depositor of any proposed change of the
location of the
Certificate Account not later than 30 days and not more than 45
days prior to
any change of this Agreement. The Trustee shall give notice to the
Servicer,
the Seller, each Rating Agency and the Depositor of any proposed
change of the
location of the Distribution Account not later than 30 days and not
more than
45 days prior to any change of this Agreement.
Section
3.07 Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
(a) To the
extent required by the related Mortgage Note and not
violative of current law, the Servicer shall establish and maintain
one or
more accounts (each, an "Escrow Account") and deposit and retain
therein all
collections from the Mortgagors (or advances) for the payment of
taxes,
assessments, hazard insurance premiums or comparable items for the
account of
the Mortgagors. Nothing herein shall require the Servicer to compel
a
Mortgagor to establish an Escrow Account in violation of applicable
law.
(b)
Withdrawals of amounts so collected from the Escrow Accounts may
be
made only to effect timely payment of taxes, assessments, hazard
insurance
premiums, condominium or PUD association dues, or comparable items,
to
reimburse (without duplication) the Servicer out of related
collections for
any payments made pursuant to Section 3.01 (with respect to taxes
and
assessments and insurance premiums) and Section 3.10 (with respect
to hazard
insurance), to refund to any Mortgagors any sums determined to be
overages, to
pay interest, if required by law or the related Mortgage or
Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and
terminate the
Escrow Account at the termination of this Agreement in accordance
with Section
9.01. The Escrow Accounts shall not be a part of the Trust
Fund.
(c) The
Servicer shall advance any payments referred to in Section
3.07(a) that are not timely paid by the Mortgagors or advanced by
the Servicer
on the date when the tax, premium or other cost for which such
payment is
intended is due, but the Servicer shall be required so to advance
only to the
extent that such advances, in the good faith judgment of the
Servicer, will be
recoverable by the Servicer out of Insurance Proceeds, Liquidation
Proceeds or
otherwise.
Section
3.08 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The
Servicer shall afford the Depositor and the Trustee reasonable
access to all records and documentation regarding the Mortgage
Loans and all
accounts, insurance information and other matters relating to this
Agreement,
such access being afforded without charge, but only upon reasonable
request
and during normal business hours at the office designated by the
Servicer.
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<PAGE>
Upon
reasonable advance notice in writing, the Servicer will provide
to
each Certificateholder or Certificate Owner that is a savings and
loan
association, bank, or insurance company certain reports and
reasonable access
to information and documentation regarding the Mortgage Loans
sufficient to
permit the Certificateholder or Certificate Owner to comply with
applicable
regulations of the OTS or other regulatory authorities with respect
to
investment in the Certificates. The Servicer shall be entitled to
be
reimbursed by each such Certificateholder or Certificate Owner for
actual
expenses incurred by the Servicer in providing the reports and
access.
Section
3.09 Permitted Withdrawals from the Certificate Account and the
Distribution Account.
(a) The
Servicer may (and, in the case of clause (ix) below, shall)
from
time to time make withdrawals from the Certificate Account for the
following
purposes:
(i) to pay to the Servicer (to the extent not previously
retained)
the
servicing compensation to which it is entitled pursuant to
Section
3.15, and
to pay to the Servicer, as additional servicing compensation,
earnings
on or investment income with respect to funds in or credited to
the
Certificate Account;
(ii) to reimburse the Servicer or successor Servicer for the
unreimbursed Advances made by it, such right of reimbursement
pursuant
to this
subclause (ii) being limited to amounts received on the
Mortgage
Loans in
respect of which the Advance was made;
(iii) to reimburse the Servicer or successor Servicer for any
Nonrecoverable Advance previously made by it;
(iv) to reimburse the Servicer for Insured Expenses from the
related
Insurance Proceeds;
(v) to reimburse the Servicer for (a) unreimbursed Servicing
Advances,
the Servicer's right to reimbursement pursuant to this clause
(a) with
respect to any Mortgage Loan being limited to amounts received
on the
Mortgage Loans that represent late recoveries of the payments
for
which the
advances were made pursuant to Section 3.01 or Section 3.07,
(b)
unreimbursed Servicing Advances made in respect of a Mortgage
Loan
for which
such Servicing Advances are not recoverable from the Mortgagor
and (c)
for unpaid Servicing Fees as provided in Section 3.12;
(vi) to pay to the purchaser, with respect to each Mortgage
Loan
or
property acquired in respect of such Mortgage Loan that has
been
purchased
pursuant to Section 2.02, 2.03, or 3.12, all amounts received
thereon
after the date of such purchase;
(vii) to reimburse the Seller, the Servicer, or the Depositor
for
expenses
incurred by any of them and reimbursable pursuant to Section
6.03;
(viii) to withdraw any amount deposited in the Certificate
Account
and not
required to be deposited in the Certificate Account;
(ix) by the Distribution Account Deposit Date, to withdraw (1)
the
Available
Funds and the Trustee Fee for the Distribution Date, to the
extent on
deposit, and (2) the Prepayment Charge amount, and remit such
amount to
the Trustee for deposit in the Distribution Account; and
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<PAGE>
(x) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01.
The
Servicer shall keep and maintain separate accounting, on a
Mortgage
Loan by Mortgage Loan basis, to justify any withdrawal from the
Certificate
Account pursuant to subclauses (i), (ii), (iv), (v), and (vi).
Before making
any withdrawal from the Certificate Account pursuant to subclause
(iii), the
Servicer shall deliver to the Trustee an Officer's Certificate of a
Servicing
Officer indicating the amount of any previous Advance determined by
the
Servicer to be a Nonrecoverable Advance and identifying the related
Mortgage
Loans and their respective portions of the Nonrecoverable
Advance.
(b) The
Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this
Agreement
(and to withhold from the amounts so withdrawn the amount of any
taxes that it
is authorized to withhold pursuant to the last paragraph of Section
8.11). In
addition, the Trustee may from time to time make withdrawals from
the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related
Distribution
Date;
(ii) to withdraw and return to the Servicer any amount
deposited
in the Distribution
Account and not required to be deposited therein;
and
(iii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01.
(c)
[Reserved].
Section
3.10 Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies.
(a) The
Servicer shall maintain, for each Mortgage Loan, hazard
insurance with extended coverage in an amount that is at least
equal to the
lesser of
(i) the
maximum insurable value of the improvements securing the
Mortgage Loan and
(ii) the
greater of (y) the outstanding principal balance of the
Mortgage Loan and (z) an amount such that the proceeds of the
policy are
sufficient to prevent the Mortgagor or the mortgagee from becoming
a
co-insurer.
Each
policy of standard hazard insurance shall contain, or have an
accompanying endorsement that contains, a standard mortgagee
clause. Any
amounts collected under the policies (other than the amounts to be
applied to
the restoration or repair of the related Mortgaged Property or
amounts
released to the Mortgagor in accordance with the Servicer's normal
servicing
procedures) shall be deposited in the Certificate Account. Any cost
incurred
in maintaining any insurance shall not, for the purpose of
calculating monthly
distributions to the Certificateholders or remittances to the
Trustee for
their benefit, be added to the principal balance of the Mortgage
Loan,
notwithstanding that the Mortgage Loan so permits. Such costs shall
be
recoverable by the Servicer out of late payments by the related
Mortgagor or
out of Liquidation Proceeds to the extent permitted by Section
3.09. No
earthquake or other additional insurance is to be required of any
Mortgagor or
maintained on property acquired in respect of a Mortgage other than
pursuant
to any applicable laws and regulations in force that require
additional
insurance. If the Mortgaged Property is located at the time of
origination of
the Mortgage Loan in a federally designated special flood hazard
area and the
area is participating in the national flood insurance program,
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<PAGE>
the Servicer shall maintain flood insurance for the Mortgage Loan.
The flood
insurance shall be in an amount equal to the least of (i) the
original
principal balance of the related Mortgage Loan, (ii) the
replacement value of
the improvements that are part of the Mortgaged Property, and (iii)
the
maximum amount of flood insurance available for the related
Mortgaged Property
under the national flood insurance program.
If the
Servicer obtains and maintains a blanket policy insuring
against
hazard losses on all of the Mortgage Loans, it shall have satisfied
its
obligations in the first sentence of this Section 3.10. The policy
may contain
a deductible clause on terms substantially equivalent to those
commercially
available and maintained by comparable servicers. If the policy
contains a
deductible clause and a policy complying with the first sentence of
this
Section 3.10 has not been maintained on the related Mortgaged
Property, and if
a loss that would have been covered by the required policy occurs,
the
Servicer shall deposit in the Certificate Account, without any
right of
reimbursement, the amount not otherwise payable under the blanket
policy
because of the deductible clause. In connection with its activities
as
Servicer of the Mortgage Loans, the Servicer agrees to present, on
behalf of
itself, the Depositor, and the Trustee for the benefit of the
Certificateholders, claims under any blanket policy.
(b) The
Servicer shall not take any action that would result in
non-coverage under any applicable Primary Insurance Policy of any
loss that,
but for the actions of the Servicer, would have been covered
thereunder. The
Servicer shall not cancel or refuse to renew any Primary Insurance
Policy that
is in effect at the date of the initial issuance of the
Certificates and is
required to be kept in force hereunder unless the replacement
Primary
Insurance Policy for the canceled or non-renewed policy is
maintained with a
Qualified Insurer. The Servicer need not maintain any Primary
Insurance Policy
if maintaining the Primary Insurance Policy is prohibited by
applicable law.
The Servicer agrees, to the extent permitted by applicable law, to
effect the
timely payment of the premiums on each Primary Insurance Policy,
and any costs
not otherwise recoverable shall be recoverable by the Servicer from
the
related liquidation proceeds.
In
connection with its activities as Servicer of the Mortgage Loans,
the
Servicer agrees to present, on behalf of itself, the Trustee and
the
Certificateholders, claims to the insurer under any Primary
Insurance Policies
and, in this regard, to take any reasonable action in accordance
with the
Servicing Standard necessary to permit recovery under any Primary
Insurance
Policies respecting defaulted Mortgage Loans. Any amounts collected
by the
Servicer under any Primary Insurance Policies shall be deposited in
the
Certificate Account.
Section
3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements.
(a) Except
as otherwise provided in this Section 3.11, when any property
subject to a Mortgage has been conveyed by the Mortgagor, the
Servicer shall
to the extent that it has knowledge of the conveyance and in
accordance with
the Servicing Standard, enforce any due-on-sale clause contained in
any
Mortgage Note or Mortgage, to the extent permitted under applicable
law and
governmental regulations, but only to the extent that enforcement
will not
adversely affect or jeopardize coverage under any Required
Insurance Policy.
Notwithstanding the foregoing, the Servicer is not required to
exercise these
rights with respect to a Mortgage Loan if the Person to whom the
related
Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies
the conditions contained in the Mortgage Note and Mortgage related
thereto and
the consent of the mortgagee under the Mortgage Note or Mortgage is
not
otherwise so required under the Mortgage Note or Mortgage as a
condition to
the transfer.
If (i) the
Servicer is prohibited by law from enforcing any due-on-sale
clause, (ii) coverage under any Required Insurance Policy would be
adversely
affected, (iii) the Mortgage Note does not include a due-on-sale
clause, or
(iv) nonenforcement is otherwise permitted hereunder, the Servicer
is
authorized, subject to Section 3.11(b), to take or enter into an
assumption
and modification agreement from or with
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<PAGE>
the person to whom the property has been or is about to be
conveyed, pursuant
to which the person becomes liable under the Mortgage Note and,
unless
prohibited by applicable state law, the Mortgagor remains liable
thereon. The
Mortgage Loan must continue to be covered (if so covered before the
Servicer
enters into the agreement) by the applicable Required Insurance
Policies.
The
Servicer, subject to Section 3.11(b), is also authorized with
the
prior approval of the insurers under any Required Insurance
Policies to enter
into a substitution of liability agreement with the Person,
pursuant to which
the original Mortgagor is released from liability and the Person
is
substituted as Mortgagor and becomes liable under the Mortgage
Note.
Notwithstanding the foregoing, the Servicer shall not be deemed to
be in
default under this Section 3.11 because of any transfer or
assumption that the
Servicer reasonably believes it is restricted by law from
preventing, for any
reason whatsoever.
(b)
Subject to the Servicer's duty to enforce any due-on-sale clause
to
the extent set forth in Section 3.11(a), in any case in which a
Mortgaged
Property has been conveyed to a Person by a Mortgagor, and the
Person is to
enter into an assumption agreement or modification agreement or
supplement to
the Mortgage Note or Mortgage that requires the signature of the
Trustee, or
if an instrument of release signed by the Trustee is required
releasing the
Mortgagor from liability on the Mortgage Loan, the Servicer shall
prepare and
deliver to the Trustee for signature and shall direct the Trustee,
in writing,
to execute the assumption agreement with the Person to whom the
Mortgaged
Property is to be conveyed, and the modification agreement or
supplement to
the Mortgage Note or Mortgage or other instruments appropriate to
carry out
the terms of the Mortgage Note or Mortgage or otherwise to comply
with any
applicable laws regarding assumptions or the transfer of the
Mortgaged
Property to the Person. In connection with any such assumption, no
material
term of the Mortgage Note may be changed.
In
addition, the substitute Mortgagor and the Mortgaged Property must
be
acceptable to the Servicer in accordance with its underwriting
standards as
then in effect. Together with each substitution, assumption, or
other
agreement or instrument delivered to the Trustee for execution by
it, the
Servicer shall deliver an Officer's Certificate signed by a
Servicing Officer
stating that the requirements of this subsection have been met in
connection
with such Officer's Certificate. The Servicer shall notify the
Trustee that
any substitution or assumption agreement has been completed by
forwarding to
the Trustee the original of the substitution or assumption
agreement, which in
the case of the original shall be added to the related Mortgage
File and
shall, for all purposes, be considered a part of the Mortgage File
to the same
extent as all other documents and instruments constituting a part
of the
Mortgage File. The Servicer will retain any fee collected by it for
entering
into an assumption or substitution of liability agreement as
additional
servicing compensation.
Section
3.12 Realization Upon Defaulted Mortgage Loans.
The
Servicer shall use reasonable efforts in accordance with the
Servicing Standard to foreclose on or otherwise comparably convert
the
ownership of assets securing such of the Mortgage Loans as come
into and
continue in default and as to which no satisfactory arrangements
can be made
for collection of delinquent payments. In connection with the
foreclosure or
other conversion, the Servicer shall follow the Servicing Standard
and shall
follow the requirements of the insurer under any Required Insurance
Policy.
The Servicer shall not be required to expend its own funds in
connection with
any foreclosure or towards the restoration of any property unless
it
determines (i) that the restoration or foreclosure will increase
the proceeds
of liquidation of the Mortgage Loan after reimbursement to itself
of
restoration expenses and (ii) that restoration expenses will be
recoverable to
it through Liquidation Proceeds (respecting which it shall have
priority for
purposes of withdrawals from the Certificate Account). The Servicer
shall be
responsible for all other costs and expenses incurred by it in any
foreclosure
proceedings. The Servicer is entitled to reimbursement of such
costs and
expenses from the liquidation
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<PAGE>
proceeds with respect to the related Mortgaged Property, as
provided in the
definition of Liquidation Proceeds. If the Servicer has knowledge
that a
Mortgaged Property that the Servicer is contemplating acquiring in
foreclosure
or by deed in lieu of foreclosure is located within a one mile
radius of any
site listed in the Expenditure Plan for the Hazardous Substance
Clean Up Bond
Act of 1984 or other site with environmental or hazardous waste
risks known to
the Servicer, the Servicer will, before acquiring the Mortgaged
Property,
consider the risks and only take action in accordance with its
established
environmental review procedures.
With
respect to any REO Property, the deed or certificate of sale
shall
be taken in the name of the Trustee for the benefit of the
Certificateholders,
or its nominee, on behalf of the Certificateholders. The Trustee's
name shall
be placed on the title to the REO Property solely as the Trustee
hereunder and
not in its individual capacity. The Servicer shall ensure that the
title to
the REO Property references the Pooling and Servicing Agreement and
the
Trustee's capacity hereunder. Pursuant to its efforts to sell the
REO
Property, the Servicer shall either itself or through an agent
selected by the
Servicer protect and conserve the REO Property in accordance with
the
Servicing Standard.
The
Servicer shall perform the tax reporting and withholding required
by
sections 1445 and 6050J of the Code with respect to foreclosures
and
abandonments, the tax reporting required by section 6050H of the
Code with
respect to the receipt of mortgage interest from individuals and,
if required
by section 6050P of the Code with respect to the cancellation of
indebtedness
by certain financial entities, by preparing any required tax and
information
returns, in the form required.
If the
Trust Fund acquires any Mortgaged Property as aforesaid or
otherwise in connection with a default or imminent default on a
Mortgage Loan,
the REO Property shall only be held temporarily, shall be actively
marketed
for sale, and the Servicer shall dispose of the Mortgaged Property
as soon as
practicable, and in any case before the end of the third calendar
year
following the calendar year in which the Trust Fund acquires the
property.
Notwithstanding any other provision of this Agreement, no Mortgaged
Property
acquired by the Trust Fund shall be rented (or allowed to continue
to be
rented) or otherwise used for the production of income by or on
behalf of the
Trust Fund.
The
decision of the Servicer to foreclose on a defaulted Mortgage
Loan
shall be subject to a determination by the Servicer that the
proceeds of the
foreclosure would exceed the costs and expenses of bringing a
foreclosure
proceeding. The proceeds received from the maintenance of any REO
Properties,
net of reimbursement to the Servicer for costs incurred (including
any
property or other taxes) in connection with maintenance of the REO
Properties
and net of unreimbursed Servicing Fees, Advances, and Servicing
Advances,
shall be applied to the payment of principal of and interest on the
related
defaulted Mortgage Loans (with interest accruing as though the
Mortgage Loans
were still current and adjustments, if applicable, to the Mortgage
Rate were
being made in accordance with the Mortgage Note) and all such
proceeds shall
be deemed, for all purposes in this Agreement, to be payments on
account of
principal and interest on the related Mortgage Notes and shall be
deposited
into the Certificate Account. To the extent the net proceeds
received during
any calendar month exceeds the amount attributable to amortizing
principal and
accrued interest at the related Mortgage Rate on the related
Mortgage Loan for
the calendar month, the excess shall be considered to be a partial
prepayment
of principal of the related Mortgage Loan.
The
proceeds from any liquidation of a Mortgage Loan, as well as
any
proceeds from an REO Property, will be applied in the following
order of
priority: first, to reimburse the Servicer for any related
unreimbursed
Servicing Advances or Servicing Fees or for any related
unreimbursed Advances,
as applicable; second, to reimburse the Servicer, as applicable,
and to
reimburse the Certificate Account for any Nonrecoverable Advances
(or portions
thereof) that were previously withdrawn by the Servicer pursuant to
Section
3.09(a)(iii) that related to the Mortgage Loan; third, to accrued
and unpaid
interest (to
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<PAGE>
the extent no Advance has been made for such amount or any such
Advance has
been reimbursed) on the Mortgage Loan or related REO Property, at
the Adjusted
Net Mortgage Rate to the Due Date occurring in the month in which
such amounts
are required to be distributed; and fourth, as a recovery of
principal of the
Mortgage Loan. The Servicer will retain any Excess Proceeds from
the
liquidation of a Liquidated Mortgage Loan as additional servicing
compensation
pursuant to Section 3.15.
The
Servicer may agree to a modification of any Mortgage Loan at
the
request of the related Mortgagor if (i) the modification is in lieu
of a
refinancing and (ii) the Servicer purchases that Mortgage Loan from
the Trust
Fund as described below. Upon the agreement of the Servicer to
modify a
Mortgage Loan in accordance with the preceding sentence, the
Servicer shall
purchase that Mortgage Loan and all interest of the Trustee in that
Mortgage
Loan shall automatically be deemed transferred and assigned to the
Servicer
and all benefits and burdens of ownership thereof, including the
right to
accrued interest thereon from the date of purchase and the risk of
default
thereon, shall pass to the Servicer. The Servicer shall promptly
deliver to
the Trustee a certification of a Servicing Officer to the effect
that all
requirements of this paragraph have been satisfied with respect to
a Mortgage
Loan to be repurchased pursuant to this paragraph.
The
Servicer shall deposit the Purchase Price for any Mortgage Loan
repurchased pursuant to Section 3.12 in the Certificate Account
pursuant to
Section 3.06 within one Business Day after the purchase of the
Mortgage Loan.
Upon receipt by the Trustee of written notification of any such
deposit signed
by a Servicing Officer, the Trustee shall release to the Servicer
the related
Mortgage File and shall execute and deliver such instruments of
transfer or
assignment, in each case without recourse, as shall be necessary to
vest in
the Servicer any Mortgage Loan previously transferred and assigned
pursuant
hereto. The Servicer covenants and agrees to indemnify the Trust
Fund against
any liability for any "prohibited transaction" taxes and any
related interest,
additions, and penalties imposed on the Trust Fund established
hereunder as a
result of any modification of a Mortgage Loan effected pursuant to
this
Section, or any purchase of a Mortgage Loan by the Servicer in
connection with
a modification (but such obligation shall not prevent the Servicer
or any
other appropriate Person from contesting any such tax in
appropriate
proceedings and shall not prevent the Servicer from withholding
payment of
such tax, if permitted by law, pending the outcome of such
proceedings). The
Servicer shall have no right of reimbursement for any amount paid
pursuant to
the foregoing indemnification, except to the extent that the amount
of any
tax, interest, and penalties, together with interest thereon, is
refunded to
the Trust Fund.
Section
3.13 Trustee to Cooperate; Release of Mortgage Files.
Upon the
payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in
a manner
customary for such purposes, the Servicer will immediately notify
the Trustee
by delivering a Request for Release substantially in the form of
Exhibit N.
Upon receipt of the request, the Trustee shall promptly release the
related
Mortgage File to the Servicer, and the Trustee shall at the
Servicer's
direction execute and deliver to the Servicer the request for
reconveyance,
deed of reconveyance, or release or satisfaction of mortgage or
such
instrument releasing the lien of the Mortgage in each case provided
by the
Servicer, together with the Mortgage Note with written evidence
of
cancellation thereon. The Servicer is authorized to cause the
removal from the
registration on the MERS System of such Mortgage and to execute and
deliver,
on behalf of the Trustee and the Certificateholders or any of them,
any and
all instruments of satisfaction or cancellation or of partial or
full release.
Expenses incurred in connection with any instrument of satisfaction
or deed of
reconveyance shall be chargeable to the related Mortgagor.
From time
to time and as shall be appropriate for the servicing or
foreclosure of any Mortgage Loan, including for such purpose
collection under
any policy of flood insurance, any fidelity bond or errors or
omissions
policy, or for the purposes of effecting a partial release of any
Mortgaged
Property
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from the lien of the Mortgage or the making of any corrections to
the Mortgage
Note or the Mortgage or any of the other documents included in the
Mortgage
File, the Trustee shall, upon delivery to the Trustee of a Request
for Release
in the form of Exhibit M signed by a Servicing Officer, release the
Mortgage
File to the Servicer or its designee. Subject to the further
limitations set
forth below, the Servicer shall cause the Mortgage File or
documents so
released to be returned to the Trustee when the need therefor by
the Servicer
no longer exists, unless the Mortgage Loan is liquidated and the
proceeds
thereof are deposited in the Certificate Account, in which case the
Servicer
shall deliver to the Trustee a Request for Release in the form of
Exhibit N,
signed by a Servicing Officer.
If the
Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property as authorized by this
Agreement, the
Servicer shall deliver to the Trustee, for signature, as
appropriate, any
court pleadings, requests for trustee's sale, or other documents
necessary to
effectuate such foreclosure or any legal action brought to obtain
judgment
against the Mortgagor on the Mortgage Note or the Mortgage or to
obtain a
deficiency judgment or to enforce any other remedies or rights
provided by the
Mortgage Note or the Mortgage or otherwise available at law or in
equity.
Section 3.14
Documents, Records and Funds in Possession of the Servicer
to be Held for the Trustee.
The
Servicer shall account fully to the Trustee for any funds it
receives or otherwise collects as Liquidation Proceeds or Insurance
Proceeds
in respect of any Mortgage Loan. All Mortgage Files and funds
collected or
held by, or under the control of, the Servicer in respect of any
Mortgage
Loans, whether from the collection of principal and interest
payments or from
Liquidation Proceeds, including any funds on deposit in the
Certificate
Account, shall be held by the Servicer for and on behalf of the
Trustee and
shall be and remain the sole and exclusive property of the Trustee,
subject to
the applicable provisions of this Agreement. The Servicer also
agrees that it
shall not create, incur or subject any Mortgage File or any funds
that are
deposited in the Certificate Account, Distribution Account, or any
Escrow
Account, or any funds that otherwise are or may become due or
payable to the
Trustee for the benefit of the Certificateholders, to any claim,
lien,
security interest, judgment, levy, writ of attachment, or other
encumbrance,
or assert by legal action or otherwise any claim or right of setoff
against
any Mortgage File or any funds collected on, or in connection with,
a Mortgage
Loan, except, however, that the Servicer shall be entitled to set
off against
and deduct from any such funds any amounts that are properly due
and payable
to the Servicer under this Agreement.
Section
3.15 Servicing Compensation.
As
compensation for its activities hereunder, the Servicer may retain
or
withdraw from the Certificate Account the Servicing Fee for each
Mortgage Loan
for the related Distribution Date. Notwithstanding the foregoing,
the
Servicing Fee payable to the Servicer shall be reduced by the
lesser of the
aggregate of the Prepayment Interest Shortfalls with respect to
the
Distribution Date and the aggregate Compensating Interest for the
Distribution
Date.
The
Servicer may retain or withdraw from the Certificate Account
the
Servicing Fee for each Mortgage Loan for the related Distribution
Date. If the
Servicer directly services a Mortgage Loan, the Servicer may retain
the
Servicing Fee for its own account as compensation for performing
services.
Additional
servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, assumption fees, late payment charges
and all
income net of any losses realized from Permitted Investments shall
be retained
by the Servicer to the extent not required to be deposited in the
Certificate
Account pursuant to Section 3.06. The Servicer shall be required to
pay all
expenses incurred by it in connection with its servicing activities
hereunder
(including payment of any premiums for hazard
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insurance, and any Primary Insurance Policy and maintenance of the
other forms
of insurance coverage required by this Agreement) and shall not be
entitled to
reimbursement therefor except as specifically provided in this
Agreement.
Section
3.16 Access to Certain Documentation.
The
Servicer shall provide to the OTS and the FDIC and to
comparable
regulatory authorities supervising Holders of Certificates and
Certificate
Owners and the examiners and supervisory agents of the OTS, the
FDIC, and such
other authorities, access to the documentation regarding the
Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Access
shall be
afforded without charge, but only upon reasonable prior written
request and
during normal business hours at the offices designated by the
Servicer.
Nothing in this Section 3.16 shall limit the obligation of the
Servicer to
observe any applicable law prohibiting disclosure of information
regarding the
Mortgagors and the failure of the Servicer to provide access as
provided in
this Section 3.16 as a result of such obligation shall not
constitute a breach
of this Section 3.16.
Section
3.17 Annual Statement as to Compliance.
(a) By
March 1 of each year, commencing with 2007, the Servicer shall
deliver to the Trustee via electronic mail
(DBSEC.Notifications@db.com) and
the Depositor an Officer's Certificate signed by two Servicing
Officers
stating, as to each signer thereof, that (i) a review of the
activities of the
Servicer during the preceding calendar year (or applicable portion
thereof)
and of the performance of the Servicer under this Agreement has
been made
under such officer's supervision, and (ii) to the best of such
officer's
knowledge, based on the review, the Servicer has fulfilled all its
obligations
under this Agreement, in all material respects throughout the year
(or
applicable portion thereof), or, if there has been a failure to
fulfill any
obligation in any material respect, specifying each failure known
to the
officer and the nature and status thereof.
(b)
[Reserved].
(c) Copies
of such statement shall be provided by the Trustee to any
Certificateholder or Certificate Owner upon request at the
Servicer's expense,
provided such statement is delivered by the Servicer to the
Trustee.
Section
3.18 Errors and Omissions Insurance; Fidelity Bonds.
The
Servicer shall obtain and maintain in force (a) policies of
insurance covering errors and omissions in the performance of its
obligations
as Servicer hereunder and (b) a fidelity bond covering its
officers,
employees, and agents. Each policy and bond shall, together, comply
with the
requirements from time to time of FNMA or FHLMC for persons
performing
servicing for mortgage loans purchased by FNMA or FHLMC. If any
policy or bond
ceases to be in effect, the Servicer shall obtain a comparable
replacement
policy or bond from an insurer or issuer meeting the above
requirements as of
the date of the replacement.
Section
3.19 Notification of Adjustments.
On each
Adjustment Date, the Servicer shall make interest rate
adjustments for each Mortgage Loan in compliance with the
requirements of the
related Mortgage and Mortgage Note and applicable regulations. The
Servicer
shall execute and deliver the notices required by each Mortgage and
Mortgage
Note and applicable regulations regarding interest rate
adjustments. The
Servicer also shall provide timely notification to the Trustee of
all
applicable data and information regarding such interest rate
adjustments and
the Servicer's methods of implementing such interest rate
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adjustments. Upon the discovery by the Servicer or the Trustee that
the
Servicer has failed to adjust or has incorrectly adjusted a
Mortgage Rate or a
monthly payment pursuant to the terms of the related Mortgage Note
and
Mortgage, the Servicer shall immediately deposit in the Certificate
Account
from its own funds the amount of any loss caused thereby without
reimbursement
therefor; provided, however, the Servicer shall not be liable with
respect to
any interest rate adjustments made by any servicer prior to the
Servicer.
Section
3.20 Prepayment Charges.
The
Servicer will not waive any part of any Prepayment Charge unless
the
waiver relates to a default or a reasonably foreseeable default,
the
Prepayment Charge would cause an undue hardship to the related
borrower, the
Mortgaged Property is sold by the Mortgagor, the collection of any
Prepayment
Charge would violate any relevant law or regulation or the waiving
of the
Prepayment Charge would otherwise benefit the Trust Fund and it is
expected
that the waiver would maximize recovery of total proceeds taking
into account
the value of the Prepayment Charge and related Mortgage Loan and
doing so is
standard and customary in servicing similar Mortgage Loans
(including any
waiver of a Prepayment Charge in connection with a refinancing of a
Mortgage
Loan that is related to a default or a reasonably foreseeable
default). The
Servicer will not waive a Prepayment Charge in connection with a
refinancing
of a Mortgage Loan that is not related to a default or a
reasonably
foreseeable default.
If a
Prepayment Charge is waived other than as permitted by the
prior
sentence, then the Servicer is required to pay the amount of such
waived
Prepayment Charge, for the benefit of the Holders of the related
Class of
Class P Certificates, by depositing such amount into the
Distribution Account
from its own funds, without any right of reimbursement therefor,
together with
and at the time that the amount prepaid on the related Mortgage
Loan is
required to be deposited into the Distribution Account.
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ARTICLE FOUR
DISTRIBUTIONS AND ADVANCES BY THE SERVICER
Section
4.01 Advances.
(a) The
Servicer shall determine on or before each Servicer Advance
Date
whether it is required to make an Advance pursuant to the
definition thereof.
If the Servicer determines it is required to make an Advance, it
shall, on or
before the Servicer Advance Date, either (i) deposit into the
Certificate
Account an amount equal to the Advance or (ii) make an appropriate
entry in
its records relating to the Certificate Account that any Amount
Held for
Future Distribution has been used by the Servicer in discharge of
its
obligation to make any such Advance. Any funds so applied shall be
replaced by
the Servicer by deposit in the Certificate Account no later than
the close of
business on the next Servicer Advance Date. The Servicer shall be
entitled to
be reimbursed from the Certificate Account for all Advances of its
own funds
made pursuant to this Section 4.01 as provided in Section 3.09. The
obligation
to make Advances with respect to any Mortgage Loan shall continue
if such
Mortgage Loan has been foreclosed or otherwise terminated and the
Mortgaged
Property has not been liquidated. The Servicer shall inform the
Trustee of the
amount of the Advance to be made on each Servicer Advance Date no
later than
the second Business Day before the related Distribution Date.
(b) If the
Servicer determines that it will be unable to comply with its
obligation to make the Advances as and when described in the second
sentence
of Section 4.01(a), it shall use its best efforts to give written
notice
thereof to the Trustee (each such notice an "Advance Notice"; and
such notice
may be given by telecopy), not later than 3:00 P.M., New York time,
on the
Business Day immediately preceding the related Servic
