Exhibit 99.5
11
<PAGE>
CWHEQ, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
PARK GRANADA LLC,
Seller
PARK MONACO INC.,
Seller
PARK SIENNA LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2006
HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 2006-S5
<PAGE>
Table of Contents
<TABLE>
<S>
<C>
<C>
Page
ARTICLE I. DEFINITIONS
5
Section 1.01 Defined
Terms...................................................................................5
Section 1.02 Certain
Interpretive
Provisions................................................................41
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES
42
Section 2.01 Conveyance
of Mortgage
Loans...................................................................42
Section 2.02 Acceptance
by Trustee of the Mortgage
Loans....................................................49
Section 2.03
Representations, Warranties and Covenants of the Master Servicer
and the Sellers...............55
Section 2.04
Representations and Warranties of the
Depositor................................................73
Section 2.05 Delivery
of Opinion of Counsel in Connection with Substitutions and
Repurchases................75
Section 2.06
Authentication and Delivery of
Certificates....................................................75
Section 2.07 Covenants
of the Master
Servicer...............................................................76
Section 2.08 Sponsor
Loss Coverage
Obligation...............................................................76
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
76
Section 3.01 Master
Servicer to Service Mortgage
Loans......................................................76
Section 3.02
Subservicing; Enforcement of the Obligations of Master
Servicer................................78
Section 3.03 Rights of
the Depositor, the Sellers, the Certificateholders, the NIM
Insurer,
the Certificate Insurer and the Trustee in Respect of the Master
Servicer......................79
Section 3.04 Trustee to
Act as Master
Servicer..............................................................80
Section 3.05 Collection
of Mortgage Loan Payments; Certificate Account; Distribution
Account;
Pre-Funding Account; Seller Shortfall Interest Requirement; Premium
Account....................80
Section 3.06 Collection
of Taxes, Assessments and Similar Items; Escrow
Accounts............................84
Section 3.07 Access to
Certain Documentation and Information Regarding the Mortgage
Loans...................85
Section 3.08 Permitted
Withdrawals from the Certificate Account, Distribution Account,
Carryover Reserve Fund and the Principal Reserve
Fund..........................................85
Section 3.09
[Reserved].....................................................................................88
Section 3.10
Maintenance of Hazard
Insurance................................................................88
Section 3.11
Enforcement of Due-On-Sale Clauses; Assumption
Agreements......................................89
Section 3.12
Realization Upon Defaulted Mortgage Loans; Determination of Excess
Proceeds and
Realized Losses; Repurchase of Certain Mortgage
Loans..........................................90
Section 3.13 Trustee to
Cooperate; Release of Mortgage
Files................................................94
Section 3.14 Documents,
Records and Funds in Possession of Master Servicer to be Held for
the Trustee.......95
i
<PAGE>
Section 3.15 Servicing
Compensation.........................................................................95
Section 3.16 Access to
Certain
Documentation................................................................96
Section 3.17 Annual
Statement as to
Compliance..............................................................96
Section 3.18 The
Corridor
Contract..........................................................................97
Section 3.19
[Reserved].....................................................................................97
Section 3.20 Prepayment
Charges.............................................................................97
ARTICLE IV. DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
98
Section 4.01 Advances;
Remittance
Reports...................................................................98
Section 4.02 Reduction
of Servicing Compensation in Connection with Prepayment Interest
Shortfalls.........100
Section 4.03
[Reserved]....................................................................................100
Section 4.04
Distributions.................................................................................100
Section 4.05 Monthly
Statements to
Certificateholders......................................................104
Section 4.06
Certificate Insurance Policy; Rights of the Certificate
Insurer...............................106
Section 4.07
Termination of the Credit Insurance
Policy....................................................109
Section 4.08 Carryover
Reserve
Fund........................................................................110
ARTICLE V. THE CERTIFICATES
112
Section 5.01 The
Certificates..............................................................................112
Section 5.02
Certificate Register; Registration of Transfer and Exchange of
Certificates...................113
Section 5.03 Mutilated,
Destroyed, Lost or Stolen
Certificates.............................................117
Section 5.04 Persons
Deemed
Owners.........................................................................117
Section 5.05 Access to
List of Certificateholders' Names and
Addresses.....................................117
Section 5.06 Book-Entry
Certificates.......................................................................118
Section 5.07 Notices to
Depository.........................................................................119
Section 5.08 Definitive
Certificates.......................................................................119
Section 5.09
Maintenance of Office or
Agency...............................................................119
ARTICLE VI. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
120
Section 6.01 Respective
Liabilities of the Depositor, the Master Servicer and the
Sellers..................120
Section 6.02 Merger or
Consolidation of the Depositor, the Master Servicer or the
Sellers..................120
Section 6.03 Limitation
on Liability of the Depositor, the Sellers, the Master
Servicer,
the Certificate Insurer, the NIM Insurer and
Others...........................................120
Section 6.04 Limitation
on Resignation of Master
Servicer..................................................121
Section 6.05 Errors and
Omissions Insurance; Fidelity
Bonds................................................122
ARTICLE VII. DEFAULT; TERMINATION OF MASTER SERVICER
122
Section 7.01 Events of
Default.............................................................................122
Section 7.02 Trustee to
Act; Appointment of
Successor......................................................124
Section 7.03
Notification to
Certificateholders............................................................126
ii
<PAGE>
ARTICLE VIII. CONCERNING THE TRUSTEE
126
Section 8.01 Duties of
Trustee.............................................................................126
Section 8.02 Certain
Matters Affecting the
Trustee.........................................................128
Section 8.03 Trustee
Not Liable for Mortgage
Loans.........................................................129
Section 8.04 Trustee
May Own
Certificates..................................................................129
Section 8.05 Master
Servicer to Pay Trustee's Fees and
Expenses............................................129
Section 8.06
Eligibility Requirements for
Trustee..........................................................130
Section 8.07
Resignation and Removal of
Trustee............................................................130
Section 8.08 Successor
Trustee.............................................................................131
Section 8.09 Merger or
Consolidation of
Trustee............................................................132
Section 8.10
Appointment of Co-Trustee or Separate
Trustee.................................................132
Section 8.11 Tax
Matters...................................................................................134
Section 8.12 Access to
Records of the
Trustee..............................................................136
Section 8.13 Suits for
Enforcement.........................................................................136
Section 8.14 Monitoring
of Significance
Percentage.........................................................137
ARTICLE IX. TERMINATION
137
Section 9.01
Termination upon Liquidation or Repurchase of all Mortgage
Loans..............................137
Section 9.02 Final
Distribution on the
Certificates........................................................138
Section 9.03 Additional
Termination
Requirements...........................................................140
Section 9.04 Auction of
the Mortgage Loans and REO
Properties..............................................141
ARTICLE X. MISCELLANEOUS PROVISIONS
144
Section 10.01
Amendment.....................................................................................144
Section 10.02 Recordation of
Agreement;
Counterparts........................................................146
Section 10.03 Governing
Law.................................................................................146
Section 10.04 Intention of
Parties..........................................................................146
Section 10.05
Notices.......................................................................................148
Section 10.06 Severability of
Provisions....................................................................149
Section 10.07
Assignment....................................................................................149
Section 10.08 Limitation on
Rights of
Certificateholders....................................................149
Section 10.09 Inspection and
Audit
Rights...................................................................150
Section 10.10 Certificates
Nonassessable and Fully
Paid.....................................................150
Section 10.11 Rights of NIM
Insurer.........................................................................151
Section 10.12 Rights of
Certificate
Insurer.................................................................152
ARTICLE XI. EXCHANGE ACT REPORTING
153
Section 11.01 Filing
Obligations............................................................................153
Section 11.02 Form 10-D
Filings.............................................................................153
Section 11.03 Form 8-K
Filings..............................................................................154
Section 11.04 Form 10-K
Filings.............................................................................154
Section 11.05 Sarbanes-Oxley
Certification..................................................................155
Section 11.06 Form 15
Filing................................................................................156
iii
<PAGE>
Section 11.07 Report on
Assessment of Compliance and
Attestation............................................156
Section 11.08 Use of
Subservicers and
Subcontractors........................................................157
Section 11.09
Amendments....................................................................................158
Section 11.10 Reconciliation
of
Accounts....................................................................158
Exhibits
EXHIBIT A
Forms of Certificates
EXHIBIT A-1
Form
of Class A-1 Certificate
EXHIBIT A-2
Form
of Class A-2 Certificate
EXHIBIT A-3
Form
of Class A-3 Certificate
EXHIBIT A-4
Form
of Class A-4 Certificate
EXHIBIT A-5
Form
of Class A-5 Certificate
EXHIBIT A-6
Form
of Class A-6 Certificate
EXHIBIT B
Form of Class P Certificate
EXHIBIT C
Form of Class C Certificate
EXHIBIT D
Form of Class A-R Certificate
EXHIBIT E
Form of Tax Matters
Person Certificate
EXHIBIT F
Mortgage Loan Schedule
EXHIBIT F-1
List
of Mortgage Loans
EXHIBIT F-2
Mortgage Loans for which All or a Portion of a Related
Mortgage File is not Delivered to the Trustee on or prior to
the Closing Date
EXHIBIT G
Forms of Certification of Trustee
EXHIBIT G-1
Form
of Initial Certification of Trustee (Initial Mortgage Loans)
EXHIBIT G-2
Form
of Interim Certification of Trustee
EXHIBIT G-3
Form
of Delay Delivery Certification
EXHIBIT G-4
Form
of Initial Certification of Trustee (Subsequent Mortgage Loans)
EXHIBIT H
Form of Final Certification of Trustee
EXHIBIT I
Transfer Affidavit for Class A-R Certificates
EXHIBIT J-1 Form
of Transferor Certificate for Class A-R Certificates
EXHIBIT J-2 Form
of Transferor Certificate for Private Certificates
EXHIBIT K
Form of Investment Letter (Non-Rule 144A)
EXHIBIT L
Form of Rule 144A Letter
EXHIBIT M
Form of Request for Document Release
EXHIBIT N
Form of Request for File Release
EXHIBIT O
Copy of Depository Agreement
EXHIBIT P
Form of Subsequent Transfer Agreement
EXHIBIT Q
Form of Class A-1 Corridor Contract
EXHIBIT R
Form of Certificate Insurance Policy
EXHIBIT S-1 Form
of Corridor Contract Assignment Agreement
EXHIBIT S-2 Form
of Corridor Contract Administration Agreement
EXHIBIT T
Officer's Certificate with respect to Prepayments
EXHIBIT U
[Reserved]
EXHIBIT V-1
[Reserved]
iv
<PAGE>
EXHIBIT V-2
[Reserved]
EXHIBIT V-3
[Reserved]
EXHIBIT W
Form of Monthly Statement
EXHIBIT X-1 Form
of Performance Certification (Subservicer)
EXHIBIT X-2 Form
of Performance Certification (Trustee)
EXHIBIT Y
Form of Servicing Criteria to be Addressed in Assessment of
Compliance Statement
EXHIBIT Z
List of Item 1119 Parties
EXHIBIT AA
Form of Sarbanes-Oxley Certification (Replacement Master
Servicer)
SCHEDULE I
Prepayment Charge Schedule and Prepayment Charge Summary
SCHEDULE II
Collateral Schedule
</TABLE>
v
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of September 1,
2006, by and among CWHEQ, INC., a Delaware corporation, as
depositor (the
"Depositor"), COUNTRYWIDE HOME LOANS, INC., a New York corporation,
as seller
("CHL" or a "Seller"), PARK GRANADA LLC, a Delaware corporation, as
a seller
("Park Granada" or a "Seller"), PARK MONACO INC., a Delaware
corporation, as a
seller ("Park Monaco" or a "Seller"), PARK SIENNA LLC, a Delaware
limited
liability company, as a seller ("Park Sienna" or a "Seller", and
together with
CHL, Park Granada and Park Monaco, the "Sellers"), COUNTRYWIDE HOME
LOANS
SERVICING LP, a Texas limited partnership, as master servicer (the
"Master
Servicer"), and THE BANK OF NEW YORK, a New York banking
corporation, as
trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed
to the Trustee in return for the Certificates. As provided herein,
the Trustee
will elect that the Trust Fund (excluding the Carryover Reserve
Fund, the
assets held in the Pre-Funding Account and the Trust Fund's rights
with
respect to payments received under the Corridor Contract) be
treated for
federal income tax purposes as two real estate mortgage investment
conduits
(each a "REMIC" or, in the alternative, the "Subsidiary REMIC" and
the "Master
REMIC"). The Subsidiary REMIC will hold as assets all property of
the Trust,
other than the Carryover Reserve Fund, the Pre-Funding Account and
the Trust
Fund's rights with respect to payments received under the Corridor
Contract,
and will be evidenced by (i) the Subsidiary REMIC Regular
Interests, which
will be uncertificated and will represent the "REMIC regular
interests" in the
Subsidiary REMIC, and (ii) the Class S-A-R Interest, which will
represent the
"REMIC residual interest" in the Subsidiary REMIC. The Master REMIC
will hold
as assets the Subsidiary REMIC Regular Interests and will be
evidenced by the
Certificates, each of which (other than the Class A-R Certificate)
will
represent ownership of one or more REMIC regular interests in the
Master
REMIC. The Class A-R Certificate will represent ownership of the
sole Class of
the REMIC residual interest in each REMIC created hereunder. The
latest
possible maturity date, for federal income tax purposes, of all
REMIC regular
interests created herein shall be the Latest Possible Maturity
Date.
The Subsidiary REMIC
The Subsidiary REMIC Regular Interests will have the principal
balances, pass-through rates and corresponding Classes of
Certificates as set
forth in the following table:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Subsidiary REMIC Regular
Pass-Through
Corresponding
Interests
Initial Principal Balance
Rate
Class of Certificates
---------------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
SR-A-1..........................
(1)
(2)
A-1
---------------------------------------------------------------------------------------------------------------------
SR-A-2..........................
(1)
(2)
A-2
---------------------------------------------------------------------------------------------------------------------
SR-A-3..........................
(1)
(2)
A-3
---------------------------------------------------------------------------------------------------------------------
SR-A-4..........................
(1)
(2)
A-4
---------------------------------------------------------------------------------------------------------------------
SR-A-5..........................
(1)
(2)
A-5
---------------------------------------------------------------------------------------------------------------------
SR-A-6..........................
(1)
(2)
A-6
---------------------------------------------------------------------------------------------------------------------
SR-C............................
(3)
(2)
N/A
---------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<S>
<C>
<C>
<C>
SR-$100.........................
(1)
(4)
A-R
---------------------------------------------------------------------------------------------------------------------
SR-P............................
$100.00
(4)
P
---------------------------------------------------------------------------------------------------------------------
SR-A-R..........................
(5)
(5)
N/A
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Class
SR-A-1 Interest, Class SR-A-2 Interest, Class SR-A-3
Interest, Class SR-A-4 Interest, Class SR-A-5 Interest, Class
SR-A-6 Interest and Class SR-$100 Interest (the "Accretion
Directed
Classes") will each have a principal balance that is equal to 50%
of
its Corresponding Class of Certificates and on each Distribution
Date,
interest, principal payments and Realized Losses shall be
allocated
so as to cause each of the Accretion Directed Classes to continue
to
equal 50% of its Corresponding Class of Certificates.
(2) The
interest rate with respect to any Distribution Date (and the
related Interest
Accrual Period) for this Subsidiary REMIC Interest
is the Net Rate Cap.
(3) The SR-C
Interest shall have a principal balance equal to the sum of
(a) 50% of the Cut-off Date Principal Balance of the Mortgage
Loans
and (b) 50% of the initial Mortgage Loan overcollateralization.
The
initial Mortgage Loan overcollateralization is the excess of
Cut-off
Date Principal Balance of the Mortgage Loans over the aggregate
Certificate Principal Balance of the Accretion Directed Classes.
On
each Distribution Date, interest, principal and Realized Losses
shall
be allocated so as to cause the SR-C Interest to equal the excess
of
the Stated Principal Balance of the Mortgage Loans as of the end
of
the related Due Period over the aggregate Certificate Principal
Balance of the Accretion Directed Classes (after taking into
account
distributions for such Distribution Date).
(4) The
SR-$100 Interest and
the Class SR-P Interest do not pay any
interest. All
Prepayment Charges are
allocated to the Class SR-P
Interest.
(5) The Class
SR-A-R Interest is the
sole class of residual interest in
the Subsidiary REMIC.
It has no principal balance and pays no
principal or interest.
On each
Distribution Date, the Interest Funds, the Principal
Distribution
Amount and the Prepayment Charges payable with respect to the
Mortgage Loans
will be payable with respect to the Subsidiary REMIC Regular
Interests in the
following manner:
(1) Interest. Interest is to be distributed with respect to
each
Subsidiary REMIC Interest at the rate or according to the formulas
described
above.
(2) Prepayment Charges. All Prepayment Charges are allocated to
the
Class SR-P Interest.
(3) Principal. Principal shall be allocated among the
Subsidiary
REMIC Interests according to the formulas described above.
The Master REMIC
The following table specifies the class designation, pass
through
rate, and principal amount for each class of Master REMIC
Interest:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Class
Original Certificate
Pass-Through
Principal Balance
Rate
---------------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
A-1..................................
$374,864,000
(1)
---------------------------------------------------------------------------------------------------------------------
A-2..................................
$106,200,000
(2)
---------------------------------------------------------------------------------------------------------------------
A-3..................................
$181,818,000
(2)
---------------------------------------------------------------------------------------------------------------------
A-4..................................
$69,023,000
(2)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<S>
<C>
<C>
---------------------------------------------------------------------------------------------------------------------
A-5..................................
$78,095,000
(2)
---------------------------------------------------------------------------------------------------------------------
A-6..................................
$90,000,000
(2)
---------------------------------------------------------------------------------------------------------------------
C....................................
(3)
(4)
---------------------------------------------------------------------------------------------------------------------
A-R..................................
$100
(5)
---------------------------------------------------------------------------------------------------------------------
P....................................
$100
(6)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Pass-Through Rate for the Class A-1 Certificates for
the
Accrual Period for any Distribution Date will be equal to the
lesser of (a)
One-Month LIBOR plus the applicable Pass-Through Margin, and (b)
the Net Rate
Cap.
(2) The Pass-Through Rates for the Class A-2, Class A-3, Class
A-4,
Class A-5 and Class A-6 Certificates for the Accrual Period for
any
Distribution Date will be equal to the lesser of (a) the per annum
fixed rate
for the Class set forth in the table below and (b) the Net Rate
Cap.
Class of Certificates
Pass-Through Rate
---------------------
-----------------
Class A-2............................................
5.681%
Class A-3............................................
5.762%
Class A-4............................................
5.842%
Class A-5............................................
6.155%
Class A-6............................................
5.750%
(3) For federal income tax purposes, the Class C Certificates
shall
have a Certificate Principal Balance equal to the
Overcollateralized Amount.
(4) For each Accrual Period the Class C Certificates are entitled
to
an amount (the "Class C Distributable Amount") equal to the sum of
a (i)
specified portion of the interest on the Subsidiary REMIC
Interests, (other
than the SR-P Interest equal to the excess of the Net Rate Cap over
the
product of two and the weighted average of the rates on the
Accretion Directed
Classes (capped at the rates on their Corresponding Class of
Certificates) and
the SR-C Interest (subject to a cap of 0.00%) and (ii) all accruals
of
interest and collections of scheduled principal and principal
payments
allocated to the SR-C Interest. The Pass-Through Rate of the Class
C
Certificates shall be a rate sufficient to entitle it to an amount
equal to
all interest accrued on the Mortgage Loans less the interest
accrued on the
other interests issued by the Master REMIC. The Class C
Distributable Amount
for any Distribution Date is payable from current interest on the
Mortgage
Loans to the extent not used to increase overcollateralization and
any related
amount of overcollateralization released for that Distribution
Date.
(5) The Class A-R Certificates represent the sole class of
residual
interest in each REMIC created hereunder. The Class A-R
Certificates are not
entitled to distributions of interest. On the first Distribution
Date, the
Class A-R Certificates are entitled to receive $100.00 from the
Principal
Reserve Fund.
(6) For any Distribution Date, the Class P Certificates are
entitled
to all Prepayment Charges collected during the related Prepayment
Period and
the Master Servicer Prepayment Charge Amount. On the Class P
Principal
Distribution Date, the Class P Certificates are entitled to receive
$100.00
from the Principal Reserve Fund.
3
<PAGE>
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 interest rate in respect of
any Subsidiary REMIC regular interest created hereunder 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
each of the REMICs. For purposes of calculating the interest rates
for each of
the interests issued by REMIC, such rates shall be adjusted to
equal a monthly
day count convention based on a 30 day month for each Interest
Period and a
360-day year so that the Mortgage Loans and all regular interests
will be
using the same monthly day count convention.
No monies will be remitted by CHL to the Trustee for deposit
in the Pre-Funding Account. Consequently, all references to or
provisions
herein regarding the Funding Period, Pre-Funding Amount,
Pre-Funding Account,
Seller Shortfall Interest Requirement, Subsequent Certificate
Account Deposit,
Subsequent Cut-off Date, Subsequent Mortgage Loan, Subsequent
Transfer
Agreement, Subsequent Transfer Date, Subsequent Transfer Date
Purchase Amount
and Subsequent Transfer Date Transfer Amount are inapplicable.
4
<PAGE>
ARTICLE I.
DEFINITIONS
Section 1.01 Defined
Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following
meanings:
Acceptable Bid Amount: Either (i) a bid equal to or greater
than the Minimum Auction Amount or (ii) the highest bid submitted
by a
Qualified Bidder in an auction if the Directing Certificateholder
agrees to
pay the related Auction Supplement Amount.
Account: Any Escrow Account, the Certificate Account, the
Distribution Account or any other account related to the Trust Fund
or the
Mortgage Loans.
Accrual Period: With respect to any Distribution Date and
each Class of Adjustable Rate Certificates, the period commencing
on the
immediately preceding Distribution Date (or, in the case of the
first
Distribution Date, the Closing Date) and ending on the day
immediately
preceding such Distribution Date. With respect to any Distribution
Date and
each Class of Fixed Rate Certificates and the Class C Certificates,
the
calendar month preceding the month in which such Distribution Date
occurs. All
calculations of interest on the Adjustable Rate Certificates will
be made on
the basis of the actual number of days elapsed in the related
Accrual Period
and on a 360-day year. All calculations of interest on each Class
of Fixed
Rate Certificates and the Class C Certificates will be made on the
basis of a
360-day year consisting of twelve 30-day months.
Adjustable Rate Certificates: The Class A-1 Certificates.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, the
Mortgage Rate less the related Expense Fee Rate.
Advance: The aggregate of the advances required to be made
by the Master Servicer with respect to any Distribution Date
pursuant to
Section 4.01, the amount of any such advances being equal to the
aggregate of
payments of principal of, and interest on the Stated Principal
Balance of, the
Mortgage Loans (net of the Servicing Fees) that were due on the
related Due
Date and not received by the Master Servicer as of the close of
business on
the related Determination Date including an amount equivalent to
interest on
the Stated Principal Balance of each Mortgage Loan as to which the
related
Mortgaged Property is an REO Property or as to which the related
Mortgaged
Property has been liquidated but such Mortgage Loan has not yet
become a
Liquidated Mortgage Loan; provided, however, that the net monthly
rental
income (if any) from such REO Property deposited in the Certificate
Account
for such Distribution Date pursuant to Section 3.12 may be used to
offset such
Advance for the related REO Property; provided, further, that for
the
avoidance of doubt, no Advances shall be required to be made in
respect of any
Liquidated Mortgage Loan.
Agreement: This Pooling and Servicing Agreement and any and
all amendments or supplements hereto made in accordance with the
terms herein.
5
<PAGE>
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 immediately preceding Determination Date on account
of (i) all
Scheduled Payments or portions thereof received in respect of the
Mortgage
Loans due after the related Due Date, (ii) Principal Prepayments
received in
respect of such Mortgage Loans after the last day of the related
Prepayment
Period and (iii) Liquidation Proceeds and Subsequent Recoveries
received in
respect of such Mortgage Loans after the last day of the related
Due Period.
Applied Realized Loss Amount: With respect to any
Distribution Date, the amount, if any, by which, the aggregate
Certificate
Principal Balance of the Certificates (after all distributions of
principal on
such Distribution Date) exceeds the sum of (x) the Stated Principal
Balance of
the Mortgage Loans for such Distribution Date and (y) the amount on
deposit in
the Pre-Funding Account.
Appraised Value: The appraised value of the Mortgaged
Property based upon the appraisal made for the originator of the
related
Mortgage Loan by an independent fee appraiser at the time of the
origination
of the related Mortgage Loan, or the sales price of the Mortgaged
Property at
the time of such origination, whichever is less, or with respect to
any
Mortgage Loan originated in connection with a refinancing, the
appraised value
of the Mortgaged Property based upon the appraisal made at the time
of such
refinancing.
Auction Supplement Amount: As defined in Section 9.04(c).
Bankruptcy Code: Title
11 of the United States Code.
Bid Date: As defined
in Section 9.04(b).
Book-Entry Certificates: Any of the Certificates that shall
be registered in the name of the Depository or its nominee, the
ownership of
which is reflected on the books of the Depository or on the books
of a person
maintaining an account with the Depository (directly, as a
"Depository
Participant", or indirectly, as an indirect participant in
accordance with the
rules of the Depository and as described in Section 5.06). As of
the Closing
Date, each Class of Interest-Bearing Certificates constitutes a
Class of
Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which the Certificate Insurer or banking
institutions in the
State of New York or 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.
Carryover Reserve Fund: The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section
4.07 in
the name of the Trustee for the benefit of the Certificateholders
and
designated "The Bank of New York in trust for registered Holders of
CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S5".
Funds in
the Carryover Reserve Fund shall be held in trust for the
Certificateholders
for the uses and purposes set forth in this Agreement.
6
<PAGE>
Certificate: Any one of the certificates of any Class
executed and authenticated by the Trustee in substantially the
forms attached
hereto as Exhibits A-1 through A-6, Exhibit B, Exhibit C and
Exhibit D.
Certificate Account: The separate Eligible Account created
and initially maintained by the Master Servicer pursuant to Section
3.05(b)
with a depository institution in the name of the Master Servicer
for the
benefit of the Trustee on behalf of the Certificateholders and the
Certificate
Insurer and designated "Countrywide Home Loans Servicing LP in
trust for
registered Holders of CWHEQ, Inc., Home Equity Loan Asset Backed
Certificates,
Series 2006-S5". Funds in the Certificate Account shall be held in
trust for
the Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Insurance Policy: The irrevocable Certificate
Insurance Policy, No. 06030111, including any endorsements thereto,
issued by
the Certificate Insurer with respect to the Class A Certificates,
in the form
attached hereto as Exhibit R.
Certificate Insurance Policy Payments Account: The separate
Eligible Account created and maintained by the Trustee pursuant to
Section
4.06(c) in the name of the Trustee for the benefit of the Class
A
Certificateholders and designated "The Bank of New York in trust
for
registered holders of CWHEQ, Inc., Home Equity Loan Asset Backed
Certificates,
Series 2006-S5, Class A Certificates". Funds in the Certificate
Insurance
Policy Payments Account shall be held in trust for the Class A
Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Insurance Policy Premium Rate: 0.120% per annum.
Certificate Insurance Premium: For any Distribution Date, an
amount equal to the product of (x) the Certificate Insurance Policy
Premium
Rate and (y) the aggregate Certificate Principal Balance of the
Class A
Certificates immediately prior to such Distribution Date. In
addition, to the
extent the Credit Insurance Policy is terminated and pursuant to
the
provisions of this Agreement a replacement credit insurance policy
issued by a
credit insurer that fulfills the requirements set forth in Section
4.07 and is
acceptable to the Certificate Insurer has not been obtained by the
Depositor,
then the Certificate Insurer shall be entitled to an additional
premium
payable on each Distribution Date in an amount equal to 27.777778%
of the
amount that would have been paid as premium on the Credit Insurance
Policy on
such Distribution Date had the Credit Insurance Policy not been
terminated.
The Certificate Insurance Premium shall be computed on the basis of
a 360-day
year consisting of twelve 30-day months.
Certificate Insurance Reimbursement Amount: As to any
Distribution Date, (i) all Insured Amounts paid by the Certificate
Insurer for
which the Certificate Insurer has not been reimbursed prior to
such
Distribution Date pursuant to Section 4.04 hereof, plus (ii)
interest accrued
on such Insured Amounts paid by the Certificate Insurer and not
previously
repaid, calculated at the Late Payment Rate from the date the
payments of the
Insured Amounts were made, plus (iii) any other amounts then due
and owing to
the Certificate Insurer pursuant to the Insurance and Indemnity
Agreement plus
interest accrued on such amount not previously reimbursed
calculated at the
Late Payment Rate.
7
<PAGE>
Certificate Insurer: FGIC in its capacity as insurer under
the Certificate Insurance Policy, and any permitted successor or
assign.
Certificate Insurer Contact Person: The officer designated
by the Master Servicer to provide information to the Certificate
Insurer
pursuant to Section 4.06(i).
Certificate Insurer Default: As defined in Section 4.06(l).
Certificate Owner: With respect to a Book-Entry Certificate,
the person that is the beneficial owner of such Book-Entry
Certificate.
Certificate Principal Balance: As to any Certificate (other
than the Class C Certificates) and as of any Distribution Date, the
Initial
Certificate Principal Balance of such Certificate (A) less the sum
of (i) all
amounts distributed with respect to such Certificate in reduction
of the
Certificate Principal Balance thereof on previous Distribution
Dates pursuant
to Section 4.04(b), (ii) with respect to the Class A Certificates
only,
payments under the Certificate Insurance Policy relating to
principal (except
that any payment under the Certificate Insurance Policy with
respect to an
Applied Realized Loss Amount allocated to the Class A Certificates
shall not
result in a further reduction of the Certificate Principal Balance
of the
Class A Certificates) and (iii) any Applied Realized Loss Amounts
allocated to
such Certificate on previous Distribution Dates pursuant to Section
4.04(g),
and (B) increased by any Subsequent Recoveries allocated to such
Certificate
pursuant to Section 4.04(h) on such Distribution Date. References
herein to
the Certificate Principal Balance of a Class of Certificates shall
mean the
Certificate Principal Balances of all Certificates in such Class.
The Class C
Certificates do not have a Certificate Principal Balance. With
respect to any
Certificate (other than the Class C Certificates) of a Class and
any
Distribution Date, the portion of the Certificate Principal Balance
of such
Class represented by such Certificate equal to the product of the
Percentage
Interest evidenced by such Certificate and the Certificate
Principal Balance
of such Class. Exclusively for the purpose of determining any
subrogation
rights of the Certificate Insurer arising under Section 4.06
hereof, the
"Certificate Principal Balance" of the Class A Certificates shall
not be
reduced by the amount of any payments made by the Certificate
Insurer in
respect of principal on such Certificates under the Certificate
Insurance
Policy, except to the extent such payment shall have been
reimbursed to the
Certificate Insurer pursuant to the provisions of this
Agreement.
Certificate Register: The register maintained pursuant to
Section 5.02 hereof.
Certificateholder or Holder: The person in whose name a
Certificate is registered in the Certificate Register (initially,
Cede & Co.,
as nominee for the Depository, in the case of any Class of
Book-Entry
Certificates), except that solely for the purpose of giving any
consent
pursuant to this Agreement, any Certificate registered in the name
of the
Depositor or any affiliate of the Depositor shall be deemed not to
be
Outstanding and the Voting Interest evidenced thereby shall not be
taken into
account in determining whether the requisite amount of Voting
Interests
necessary to effect such consent has been obtained; provided that
if any such
Person (including the Depositor) owns 100% of the Voting Interests
evidenced
by a Class of Certificates, such Certificates shall be deemed to
be
Outstanding for purposes of any provision hereof (other than the
second
sentence of Section 10.01 hereof) that requires the consent of the
Holders of
Certificates of a particular Class as a condition to the taking of
any action
hereunder.
8
<PAGE>
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.
Certification Party:
As defined in Section 11.05.
Certifying Person: As
defined in Section 11.05.
CHL: Countrywide Home Loans, Inc., a New York corporation,
and its successors and assigns.
CHL Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which CHL is the applicable
Seller.
Class: All Certificates bearing the same Class designation as
set forth in Section 5.01 hereof.
Class A
Certificates: Collectively, the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates.
Class A Available Funds: With respect to any Class of Class
A Certificates and any Distribution Date, funds allocated from
amounts
available pursuant to this Agreement to make distributions on that
Class of
Class A Certificates on such Distribution Date, other than any
Insured
Amounts.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (x) the aggregate Certificate
Principal
Balance of the Class A Certificates immediately prior to that
Distribution
Date, over (y) the aggregate Stated Principal Balance of the
Mortgage Loans
for that Distribution Date minus the Overcollateralization Target
Amount for
such Distribution Date.
Class A-1 Certificate: Any Certificate designated as a
"Class A-1 Certificate" on the face thereof, in the form of Exhibit
A-1
hereto, representing the right to distributions as set forth
herein.
Class A-2 Certificate: Any Certificate designated as a
"Class A-2 Certificate" on the face thereof, in the form of Exhibit
A-2
hereto, representing the right to distributions as set forth
herein.
Class A-3
Certificate: Any Certificate designated as a
"Class A-3 Certificate" on the face thereof, in the form of Exhibit
A-3
hereto, representing the right to distributions as set forth
herein.
Class A-4 Certificate: Any Certificate designated as a
"Class A-4 Certificate" on the face thereof, in the form of Exhibit
A-4
hereto, representing the right to distributions as set forth
herein.
9
<PAGE>
Class A-5 Certificate: Any Certificate designated as a
"Class A-5 Certificate" on the face thereof, in the form of Exhibit
A-5
hereto, representing the right to distributions as set forth
herein.
Class A-6 Certificate: Any Certificate designated as a
"Class A-6 Certificate" on the face thereof, in the form of Exhibit
A-6
hereto, representing the right to distributions as set forth
herein.
Class A-6 Portion: With respect to any Distribution Date, a
percentage, expressed as a fraction, the numerator of which is the
Certificate
Principal Balance of the Class A-6 Certificates immediately prior
to such
Distribution Date and the denominator of which is the aggregate
Certificate
Principal Balance of all Classes of Class A Certificates
immediately prior to
such Distribution Date.
Class A-R Certificate: Any Certificate designated as a
"Class A-R Certificate" on the face thereof, in the form of Exhibit
D hereto
or, in the case of the Tax Matters Person Certificate, Exhibit E
hereto, in
either case representing the right to distributions as set forth
herein.
Class C Certificate: Any Certificate designated as a "Class
C Certificate" on the face thereof, in the form of Exhibit C
hereto,
representing the right to distributions as set forth herein.
Class C Distributable Amount: As defined in the Preliminary
Statement.
Class P Certificate: Any Certificate designated as a "Class
P Certificate" on the face thereof, in the form of Exhibit B
hereto,
representing the right to distributions as set forth herein.
Class P Principal Distribution Date: The first Distribution
Date that occurs after the end of the latest Prepayment Charge
Period for all
Mortgage Loans that have a Prepayment Charge Period.
Closing Date:
September 28, 2006.
Code: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
Collateral Schedule:
Schedule II hereto.
Combined
Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the sum of (x) original
principal
balance of the related Mortgage Loan and (y) the outstanding
principal balance
of any senior mortgage loans at the date of origination of the
related
Mortgage Loan and the denominator of which is the Appraised Value
of the
related Mortgaged Property.
Commission: The U.S.
Securities and Exchange Commission.
10
<PAGE>
Compensating Interest: With respect to the Mortgage Loans
and any Distribution Date, an amount equal to the lesser of (x)
one-half of
the Servicing Fee for the related Due Period and (y) the aggregate
Prepayment
Interest Shortfalls for such Distribution Date.
Confirmation: The confirmation, reference number FXNEC8682,
with a trade date of September 14, 2006 evidencing a transaction
between the
Corridor Contract Counterparty and CHL relating to the Corridor
Contract.
Corporate Trust Office: The designated office of the Trustee
in the State of New York where at any particular time its corporate
trust
business with respect to this Agreement shall be administered,
which office at
the date of the execution of this Agreement is located at 101
Barclay Street,
New York, New York 10286 (Attention: Corporate Trust MBS
Administration),
telephone: (212) 815-3236, facsimile: (212) 815-3986.
Corridor Contract: With respect to the Class A-1
Certificates, the transaction evidenced by the Confirmation (as
assigned to
the Corridor Contract Administrator pursuant to the Corridor
Contract
Assignment Agreement), a form of which is attached hereto as
Exhibit Q.
Corridor Contract Administration Agreement: The corridor
contract administration agreement dated as of the Closing Date
among CHL, the
Trustee and the Corridor Contract Administrator, a form of which is
attached
hereto as Exhibit S-2.
Corridor Contract Administrator: The Bank of New York, in
its capacity as corridor contract administrator under the Corridor
Contract
Administration Agreement.
Corridor Contract Assignment Agreement: The Assignment
Agreement dated as of the Closing Date among CHL, the Corridor
Contract
Administrator and the Corridor Contract Counterparty, a form of
which is
attached hereto as Exhibit S-1.
Corridor Contract Counterparty: Bear Stearns Financial
Products Inc. and its successors.
Corridor Contract Termination Date: The Distribution Date in
August 2008.
Covered Certificates:
The Class A-1 Certificates.
Covered Loan: A Mortgage Loan listed on the Mortgage Loan
Schedule as being covered by the Credit Insurance Policy.
Credit Bureau Risk Score: A statistical credit score obtained
by CHL in connection with the origination of a Mortgage Loan.
Credit Insurance Policy: The Credit Insurance Policy issued by
the Credit Insurer with respect to certain Mortgage Loans
identified in the
Mortgage Loan Schedule.
Credit Insurance Premium: For any Distribution Date, the fee
payable to the Credit Insurer equal to the product of (x) the
Credit Insurance
Premium Rate and (y) the
11
<PAGE>
aggregate Stated Principal Balance of the Covered Loans for the
Distribution
Date, computed on the basis of a 360-day year consisting of twelve
30-day
months.
Credit Insurance Premium Rate: With respect to a Covered Loan
and any Distribution Date, 1.152% per annum.
Credit Insurer: Old Republic Insurance Company, or any
replacement Credit Insurer, as applicable.
Current Interest: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the
interest accrued
at the applicable Pass-Through Rate for the applicable Accrual
Period on the
Certificate Principal Balance or Notional Amount of such Class
immediately
prior to such Distribution Date.
Cut-off Date: When used with respect to any Mortgage Loan
the "Cut-off Date" shall mean the Initial Cut-off Date or the
related
Subsequent Cut-off Date, as the case may be.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on the
Cut-off
Date after application of all payments of principal due on or prior
to the
Cut-off Date, whether or not received, and all Principal
Prepayments received
on or prior to the Cut-off Date, but without giving effect to any
installments
of principal received in respect of Due Dates after the Cut-off
Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding
under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan
that became
final and non-appealable, except such a reduction resulting from a
Deficient
Valuation or any other reduction that results in a permanent
forgiveness of
principal.
Deficiency Amount: With respect to the Class A Certificates,
an amount, if any equal to the sum of:
(a) with respect to any Distribution Date, the excess, if
any, of (i) the aggregate amount of Current Interest on the Class
A
Certificates net of any interest shortfalls resulting from
Prepayment Interest
Shortfalls and any interest shortfalls resulting from the
application of the
Relief Act, or similar state or local laws, over (ii) the Interest
Funds
available after making the distributions required pursuant to
Section
4.04(a)(i) on such Distribution Date; and
(b) (i) with respect to any Distribution Date other than the
Final Insured Distribution Date for the Class A Certificates, the
excess, if
any, of (a) the aggregate Certificate Principal Balance of the
Class A
Certificates over (b) the sum of the Stated Principal Balance of
the Mortgage
Loans for such Distribution Date and the amount on deposit in the
Pre-Funding
Account, in the case of (a) and (b) after taking into account
all
distributions to be made on such Distribution Date; and (ii) with
respect to
the Final Insured Distribution Date, the aggregate Certificate
Principal
Balance of the Class A Certificates on such Distribution Date after
taking
into account any reduction of the Certificate Principal Balance of
the Class A
Certificates from all sources other than the Certificate Insurance
Policy.
12
<PAGE>
Deficient Valuation: With respect to 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 such
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 such court that is
final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
Delay Delivery Mortgage Loans: (i) The Initial Mortgage
Loans identified on the schedule of Mortgage Loans hereto set forth
on Exhibit
F-2 hereof for which all or a portion of a related Mortgage File is
not
delivered to the Trustee on or prior to the Closing Date, and (ii)
the
Subsequent Mortgage Loans identified on the schedule of Subsequent
Mortgage
Loans set forth in Annex A to each related Subsequent Transfer
Agreement for
which all or a portion of the related Mortgage File is not
delivered to the
Trustee on or prior to the related Subsequent Transfer Date. The
Depositor
shall deliver (or cause delivery of) the Mortgage Files to the
Trustee: (A)
with respect to at least 50% of the Initial Mortgage Loans, not
later than the
Closing Date and with respect to at least 10% of the Subsequent
Mortgage Loans
conveyed on a Subsequent Transfer Date, not later than such
Subsequent
Transfer Date, (B) with respect to at least an additional 40% of
the Initial
Mortgage Loans, not later than 20 days after the Closing Date, and
not later
than 20 days after the relevant Subsequent Transfer Date with
respect to the
remaining Subsequent Mortgage Loans conveyed on such Subsequent
Transfer Date,
and (C) with respect to the remaining Initial Mortgage Loans, not
later than
thirty days after the Closing Date. To the extent that Countrywide
Home Loans,
Inc. shall be in possession of any Mortgage Files with respect to
any Delay
Delivery Mortgage Loan, until delivery of such Mortgage File to the
Trustee as
provided in Section 2.01, Countrywide Home Loans, Inc. shall hold
such files
as agent and in trust for the Trustee.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be
replaced by a Replacement Mortgage Loan.
Delinquency Trigger Event: Exists with respect to any
Distribution Date if the Rolling Sixty-Day Delinquency Rate for
the
outstanding Mortgage Loans equals or exceeds 4.50%.
Denomination: With respect to each Certificate, the amount
set forth on the face thereof as the "Initial Certificate Balance
of this
Certificate" or, if not the foregoing, the Percentage Interest
appearing on
the face thereof, as applicable.
Depositor: CWHEQ, 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., or any other
organization
registered as a "clearing agency" pursuant to Section 17A of the
Securities
Exchange Act of 1934, as amended. The Depository shall initially be
the
registered Holder of the Book-Entry Certificates. The Depository
shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5)
of the
Uniform Commercial Code of the State of New York.
13
<PAGE>
Depository Agreement: With respect to the Book-Entry
Certificates, the agreement among the Depositor and the initial
Depository,
dated as of the Closing Date, substantially in the form of Exhibit
O.
Depository Participant: A broker, dealer, bank or other
financial institution or other person for whom from time to time a
Depository
effects book-entry transfers and pledges of securities deposited
with the
Depository.
Determination Date: With respect to any Distribution Date,
the 22nd day of the month of such Distribution Date or, if such
22nd day is
not a Business Day, the immediately preceding Business Day;
provided that the
Determination Date in each month will be at least two Business Days
before the
Distribution Date.
Directing Certificateholder: As defined in Section 9.04(a).
Distribution Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.05(c) in the
name of the
Trustee for the benefit of the Certificateholders and the
Certificate Insurer
and designated "The Bank of New York, in trust for registered
Holders of
CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series
2006-S5".
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, 1:00 p.m. Pacific time on the Business Day immediately
preceding such
Distribution Date.
Distribution Date: The 25th day of each month, or if such
day is not a Business Day, on the first Business Day thereafter,
commencing in
October 2006.
Due Date: With respect to any Mortgage Loan and Due Period,
the due date for Scheduled Payments of interest and/or principal on
that
Mortgage Loan occurring in such Due Period as provided in the
related Mortgage
Note.
Due for Payment: With respect to an Insured Amount, the
Distribution Date on which Insured Amounts are due and payable
pursuant to the
terms of this Agreement.
Due Period: With respect to any Distribution Date, the
period beginning on the second day of the calendar month preceding
the
calendar month in which such Distribution Date occurs and ending on
the first
day of the month in which such Distribution Date occurs.
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 long-term unsecured debt obligations and 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, if Moody's is not a Rating
Agency) are
rated by each Rating Agency in one of its two highest long-term and
its
highest short-term rating categories respectively, at the time
any
14
<PAGE>
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 the corporate trust department of a
federal or state
chartered depository institution or trust company having capital
and surplus
of not less than $50,000,000, acting in its fiduciary capacity or
(iv) any
other account acceptable to the Rating Agencies without reduction
or
withdrawal of their then-current ratings of the Certificates
(without regard
to the Certificate Insurance Policy, in the case of the Class A
Certificates)
as evidenced by a letter from each Rating Agency to the Trustee.
Eligible
Accounts may bear interest, and may include, if otherwise qualified
under this
definition, accounts maintained with the Trustee.
Eligible Repurchase Month: As defined in Section 3.12(d)
hereof.
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
applicable
requirements of the Underwriter's Exemption.
ERISA-Restricted Certificates: The Class A-R Certificates,
Class P Certificates, Class C Certificates and Certificates of any
Class that
does not have or no longer has a rating of at least BBB- or its
equivalent
from at least one Rating Agency.
Escrow Account: As
defined in Section 3.06 hereof.
Event of Default: As
defined in Section 7.01 hereof.
Excess Cashflow: With respect to any Distribution Date the
sum of (i) the amount remaining after the distribution of interest
to
Certificateholders for such Distribution Date, pursuant to Section
4.04(a)(v),
(ii) the amount remaining after the distribution of principal
to
Certificateholders for such Distribution Date, pursuant to Section
4.04(b)(iv)
and (iii) the Overcollateralization Reduction Amount for such
Distribution
Date.
Excess Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of the Overcollateralized
Amount for
such Distribution Date over the Overcollateralization Target Amount
for such
Distribution Date.
Excess Proceeds: With respect to any Liquidated Mortgage
Loan, the amount, if any, by which the sum of any Liquidation
Proceeds and
Subsequent Recoveries are in excess of the sum of (i) the unpaid
principal
balance of such Liquidated Mortgage Loan as of the date of
liquidation of such
Liquidated Mortgage Loan plus (ii) interest at the Mortgage Rate
from the Due
Date as to which interest was last paid or advanced to
Certificateholders (and
not reimbursed to the Master Servicer) up to the Due Date in the
month in
which Liquidation
15
<PAGE>
Proceeds are required to be distributed on the Stated Principal
Balance of
such Liquidated Mortgage Loan outstanding during each Due Period as
to which
such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as
amended, 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: With respect to any Mortgage Loan, the sum
of (i) the Servicing Fee Rate, (ii) the Trustee Fee Rate and (iii)
with
respect to any Covered Loan, the Credit Insurance Premium Rate.
Extra Principal Distribution Amount: With respect to any
Distribution Date, the lesser of (1) the Overcollateralization
Deficiency
Amount for such Distribution Date and (2) the Excess Cashflow
available for
payment thereof for such Distribution Date.
Fannie Mae: 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.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FGIC: Financial
Guaranty Insurance Company, a New York stock
insurance corporation, or any successor thereto.
Final Insured Distribution Date: With respect to the Class A
Certificates and the Certificate Insurance Policy, the earlier of
(i) the
Distribution Date in June 2035 and (ii) the final Distribution Date
that
occurs in connection with an Optional Termination.
Fixed Rate Certificates: The Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates.
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, any
co-trustee,
the Master Servicer or any Subservicer, if such Person has actual
knowledge
thereof.
Form 10-K Disclosure Item: With respect to any Person, (a)
Form 10-D Disclosure Item, and (b) any affiliations or
relationships between
such Person and any Item 1119 Party.
Freddie Mac: 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.
16
<PAGE>
Funding Period:
The period from the Closing Date to and
including the earlier to occur of (x) the date the amount in the
Pre-Funding
Account is less than $40,000 and (y) October 15, 2006.
Initial Certificate Account Deposit: An amount equal to the
aggregate of all amounts in respect of (i) principal of the Initial
Mortgage
Loans due after the Initial Cut-off Date and received by the Master
Servicer
before the Closing Date and not applied in computing the Cut-off
Date
Principal Balance thereof and (ii) interest on the Initial Mortgage
Loans due
after the Initial Cut-off Date and received by the Master Servicer
before the
Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate (other than the Class C Certificates) the Certificate
Principal
Balance of such Certificate or any predecessor Certificate on the
Closing
Date.
Initial Cut-off Date: In the case of any Initial Mortgage
Loan, the later of (x) September 1, 2006 and (y) the date of
origination of
such Mortgage Loan.
Initial Mortgage Loan: A Mortgage Loan conveyed to the
Trustee on the Closing Date pursuant to this Agreement as
identified on the
Mortgage Loan Schedule delivered to the Trustee on the Closing
Date.
Insolvency Proceeding:
As defined in Section 4.06(h).
Insurance and Indemnity Agreement: The Insurance and
Indemnity Agreement, dated as of the Closing Date, by and among
the
Certificate Insurer, as insurer, the Depositor, as depositor,
Countrywide, as
sponsor and a seller, the Master Servicer, as master servicer, and
the
Trustee, as trustee.
Insurance Policy: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy, including the Credit
Insurance
Policy, including all riders and endorsements thereto in effect
with respect
to such Mortgage Loan, including any replacement policy or policies
for any
Insurance Policy.
Insurance Proceeds: Proceeds paid in respect of the Mortgage
Loans (other than by the Certificate Insurer under the Certificate
Insurance
Policy) pursuant to any Insurance Policy or any other insurance
policy
covering a Mortgage Loan, to the extent such proceeds are payable
to the
mortgagee under the Mortgage, the Master Servicer or the trustee
under the
deed of trust and are not applied to the restoration of the related
Mortgaged
Property or released to the Mortgagor in accordance with the
procedures that
the Master Servicer would follow in servicing mortgage loans held
for its own
account, in each case other than any amount included in such
Insurance
Proceeds in respect of Insured Expenses and received either prior
to or in
connection with such Mortgage Loan becoming a Liquidated Mortgage
Loan.
Insured Amounts: With respect to any Class of Class A
Certificates and any Distribution Date, the (i) Deficiency Amount
for such
Class and Distribution Date and (ii) any Preference Amount.
17
<PAGE>
Insured Expenses: Expenses covered by an Insurance Policy or
any other insurance policy with respect to the Mortgage Loans.
Interest-Bearing Certificates: The Class A Certificates.
Interest Carry Forward Amount: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the
excess of (i)
the Current Interest for such Class with respect to prior
Distribution Dates
over (ii) the amount actually distributed to such Class with
respect to
interest on such prior Distribution Dates.
Interest Determination Date: With respect to the Adjustable
Rate Certificates, the second LIBOR Business Day preceding the
commencement of
each Accrual Period.
Interest Funds: With respect to any Distribution Date, an
amount equal to (x) the Interest Remittance Amount for such
Distribution Date,
plus, solely for the purpose of calculating the Deficiency Amount,
the amounts
on deposit in the Premium Account after taking into account any
deposit to the
Premium Account on such Distribution Date pursuant to Section
3.08(b)(vi),
less (y) the sum of (i) the Trustee Fee for such Distribution Date
and (ii)
the Credit Insurance Premium for such Distribution Date.
Interest Remittance Amount: With respect to any Distribution
Date, (x) the sum, without duplication, of (i) all scheduled
interest
collected during the related Due Period with respect to the
Mortgage Loans
less the Servicing Fee, (ii) all interest on Principal Prepayments
received
during the related Prepayment Period with respect to the Mortgage
Loans, other
than Prepayment Interest Excess, (iii) all Advances relating to
interest with
respect to the Mortgage Loans, (iv) all Compensating Interest with
respect to
the Mortgage Loans, (v) Liquidation Proceeds with respect to the
Mortgage
Loans collected during the related Due Period (to the extent such
Liquidation
Proceeds relate to interest), (vi) any payments received under the
Credit
Insurance Policy attributable to interest for the related Due
Period, (vii)
any Loss Coverage Payment attributable to interest for the related
Due Period
and (viii) the Seller Shortfall Interest Requirement, if any, less
(y) all
reimbursements to the Master Servicer during the related Due Period
for
Advances of interest previously made.
Investment Letter: As
defined in Section 5.02(b).
Item 1119 Party: The Depositor, any Seller, the Master
Servicer, the Trustee, any Subservicer, any originator identified
in the
Prospectus Supplement, the Credit Insurer and the Corridor
Contract
Counterparty, and any other material transaction party, as
identified in
Exhibit Z hereto, as updated pursuant to Section 11.04.
Late Payment Rate: With respect to any Distribution Date,
the lesser of (a) the greater of (i) the per annum rate of interest
publicly
announced from time to time by Citibank, N.A. as its prime or base
lending
rate (any change in such rate of interest to be effective on the
date such
change is announced by Citibank, N.A.), and (ii) the then
applicable highest
rate of interest on the Class A Certificates and (b) the maximum
rate
permissible under applicable usury or similar laws limiting
interest rates as
determined by the Certificate Insurer. The Late Payment Rate shall
be computed
on the basis of the actual number of days elapsed over a year of
360 days.
18
<PAGE>
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.
LIBOR Business Day: Any day on which banks in the City of
London, England and New York City, U.S.A. are open and conducting
transactions
in foreign currency and exchange.
Limited Exchange Act Reporting Obligations: The obligations
of the Master 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 XI (except Section 11.07(a)(1) and (2)).
Liquidated Mortgage Loan: With respect to any Distribution
Date, a defaulted Mortgage Loan that has been liquidated through
deed-in-lieu
of foreclosure, foreclosure sale, trustee's sale or other
realization as
provided by applicable law governing the real property subject to
the related
Mortgage and any security agreements and as to which the Master
Servicer has
certified in the related Prepayment Period that it has received all
amounts it
expects to receive in connection with such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of
Mortgage
Loans, whether through trustee's sale, foreclosure sale 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 received in connection with or prior to such Mortgage Loan
becoming a
Liquidated Mortgage Loan (other than the amount of such net
proceeds
representing any profit realized by the Master Servicer in
connection with the
disposition of any such properties), less the sum of related
unreimbursed
Advances, Servicing Fees and Servicing Advances.
Loan Number and Borrower Identification Mortgage Loan
Schedule: With respect to any Subsequent Transfer Date, the Loan
Number and
Borrower Identification Mortgage Loan Schedule delivered in
connection with
such Subsequent Transfer Date pursuant to Section 2.01(f). Each
Loan Number
and Borrower Identification Mortgage Loan Schedule shall contain
the
information specified in the definition of "Mortgage Loan Schedule"
with
respect to the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer
Date, and each Loan Number and Borrower Identification Mortgage
Loan Schedule
shall be deemed to be included in the Mortgage Loan Schedule.
Loss Coverage
Payment: With respect to any Distribution Date
on or prior to the Distribution Date on which the Sponsor Loss
Coverage Amount
is reduced to zero, the amount of Realized Losses on the Covered
Loans with
respect to which a claim for payment was denied by the Credit
Insurer due to
an exclusion in the Credit Insurance Policy but for which there are
no
breaches of the representations and warranties set forth in Section
2.03 with
respect to such Covered Loans. Notwithstanding the preceding
sentence, with
respect to the Distribution Date on which the amount described in
the
preceding sentence exceeds the Sponsor Loss Coverage Amount, the
Loss Coverage
Payment for such Distribution Date shall be the Sponsor Loss
Coverage Amount.
19
<PAGE>
Majority Holder: As to any Class of Certificates, the
Holders of Certificates evidencing at least 51% of the Voting
Rights allocated
to such Class of Certificates.
Master Servicer: Countrywide Home Loans Servicing LP, a
Texas limited partnership, and its successors and assigns, in its
capacity as
master servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
Master Servicer Prepayment Charge Payment Amount: The
amounts (i) payable by the Master Servicer in respect of any
Prepayment
Charges waived other than in accordance with the standard set forth
in the
first sentence of Section 3.20(a), or (ii) collected from the
Master Servicer
in respect of a remedy for the breach of the representation made by
CHL set
forth in Section 3.20(c).
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 Auction Amount: With respect to any auction of the
Mortgage Loans and any REO Properties pursuant to Section 9.04, the
sum of (i)
the Termination Price that would be payable by the NIM Insurer if
the Optional
Termination were exercised in the following calendar month pursuant
to Section
9.01 and (ii) all reasonable fees and expenses incurred by the
Trustee in
connection with any auction conducted pursuant to Section 9.04. For
the
avoidance of doubt, unless the Certificate Insurer otherwise
consents, the
Minimum Auction Amount shall result in a final distribution on the
Class A
Certificates and to the Certificate Insurer that is sufficient (x)
to pay such
Class A Certificates in full (without the need of any payment by
the
Certificate Insurer of any Insured Amount) and (y) to pay any
amounts due and
payable to the Certificate Insurer pursuant to the terms hereof and
pursuant
to the Insurance and Indemnity Agreement.
Modified Mortgage Loan: As defined in Section 3.12(a).
MOM Loan: Any Mortgage Loan, as to which MERS is acting as
mortgagee, solely as nominee for the originator of such Mortgage
Loan and its
successors and assigns.
Monthly Statement: The statement delivered to the
Certificateholders pursuant to Section 4.05.
Moody's: Moody's
Investors Service, Inc. and its successors.
20
<PAGE>
Mortgage: The mortgage, deed of trust or other instrument
creating a second lien on or second priority ownership interest in
an estate
in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof pertaining to a particular Mortgage Loan and any additional
documents
delivered to the Trustee to be added to the Mortgage File pursuant
to this
Agreement.
Mortgage Loan Schedule: The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the deletion
of
Liquidated Mortgage Loans and Deleted Mortgage Loans and the
addition of (x)
Replacement Mortgage Loans pursuant to the provisions of this
Agreement and
(y) Subsequent Mortgage Loans pursuant to the provisions of this
Agreement and
any Subsequent Transfer Agreement) transferred to the Trustee as
part of the
Trust Fund and from time to time subject to this Agreement,
attached hereto as
Exhibit F-1, setting forth in the following information with
respect to each
Mortgage Loan:
(i) the loan number;
(ii) [Reserved];
(iii) the Appraised Value;
(iv) the Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the
Cut-off Date;
(x) the Combined Loan-to-Value Ratio at
origination;
(xi) a code indicating whether the residential
dwelling at the time of origination was represented to be
owner-occupied;
(xii) a code indicating whether the residential
dwelling is either (a) a detached single-family dwelling,
(b) a two-family residential property, (c) a three-family
residential property, (d) a four-family residential
property, (e) planned unit development, (f) a low-rise
condominium unit, (g) a high-rise condominium unit or (h)
manufactured housing;
(xiii) the purpose of the Mortgage Loan;
(xiv) a code indicating if such Mortgage Loan is a
Covered Loan, if applicable; and
21
<PAGE>
(xv) a code indicating whether the Mortgage Loan is
a CHL Mortgage Loan, a Park Granada Mortgage Loan, a Park
Monaco Mortgage Loan or a Park Sienna Mortgage Loan.
Such schedule shall also set forth the total of the amounts
described under
(vii) above for all of the Mortgage Loans. The Mortgage Loan
Schedule shall be
deemed to include each Loan Number and Borrower Identification
Mortgage Loan
Schedule delivered pursuant to Section 2.01(f) and all the related
Subsequent
Mortgage Loans and Subsequent Mortgage Loan information included
therein.
Mortgage Loans: Such of the mortgage loans transferred and
assigned to the Trustee pursuant to the provisions hereof and any
Subsequent
Transfer Agreement as from time to time are held as part of the
Trust Fund
(including any REO Property), the mortgage loans so held being
identified in
the Mortgage Loan Schedule, notwithstanding foreclosure or other
acquisition
of title of the related Mortgaged Property. Any mortgage loan that
was
intended by the parties hereto to be transferred to the Trust Fund
as
indicated by such Mortgage Loan Schedule which is in fact not so
transferred
for any reason, including a breach of the representation contained
in Section
2.02 hereof, shall continue to be a Mortgage Loan hereunder until
the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage
Loan.
Mortgage Pool: The aggregate of the Mortgage Loans identified
in the Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage
Note as set forth in the Mortgage Loan Schedule.
Mortgaged Property:
The underlying property securing a
Mortgage Loan.
Mortgagor: The
obligors on a Mortgage Note.
NAS Factor: For any Distribution Date set forth below, the
percentage set forth in the following table:
<TABLE>
<S>
<C>
Distribution Date
Percentage
-----------------------------------------------------------------------------------------
October 2006 -- September 2009
0%
October 2009 -- September 2011
45%
October 2011 -- September 2012
80%
October 2012 -- September 2013
100%
October 2013 and thereafter
300%
</TABLE>
NAS Principal Distribution Amount: For any Distribution
Date, an amount equal to the product of (i) the Class A-6 Portion
for such
Distribution Date, (ii) any amounts
22
<PAGE>
distributed to the Class A Certificates pursuant to Section
4.04(b)(ii) for
such Distribution Date and (iii) the NAS Factor for such
Distribution Date.
Net 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.
Net Rate Cap: For each Distribution Date, (1) the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans as of the
first day
of the related Due Period (after giving effect to Principal
Prepayments
received during the Prepayment Period that ends during such Due
Period), less
(2) the Certificate Insurance Policy Premium Rate, multiplied by a
fraction,
the numerator of which is (a) the aggregate Certificate Principal
Balance of
the Class A Certificates and the denominator of which is (b) the
aggregate
Stated Principal Balance of the Mortgage Loans as of the first day
of the
related Due Period (after giving effect to Principal Prepayments
received
during the Prepayment Period that ends during such Due Period) plus
any
amounts on deposit in the Pre-Funding Account as of the first day
of that Due
Period. The Net Rate Cap shall be adjusted in the case of the Class
A-1
Certificates only, to an effective rate reflecting the calculation
of interest
on the basis of the actual number of days elapsed during the
related Accrual
Period and a 360-day year.
Net Rate Carryover: With respect to any Class of Class A
Certificates and any Distribution Date, the sum of (A) the excess
of (i) the
amount of interest that such Class would otherwise have accrued for
such
Distribution Date had the Pass-Through Rate for such Class and the
related
Accrual Period not been determined based on the Net Rate Cap, over
(ii) the
amount of interest accrued on such Class at the applicable Net Rate
Cap for
such Distribution Date and (B) the Net Rate Carryover for such
Class for all
previous Distribution Dates not previously paid pursuant to Section
4.04,
together with interest thereon at the then-applicable Pass-Through
Rate for
such Class, without giving effect to the applicable Net Rate
Cap.
NIM Insurer: Any insurer guarantying at the request of CHL
certain payments under notes backed or secured by the Class C
and/or Class P
Certificates.
Nonrecoverable Advance: Any portion of an Advance previously
made or proposed to be made by the Master Servicer that, in the
good faith
judgment of the Master Servicer, will not or, in the case of a
current
delinquency, would not, be ultimately recoverable by the Master
Servicer from
the related Mortgagor, related Liquidation Proceeds or
otherwise.
Non-United States Person: A Person that is not a citizen or
resident of the United States, a corporation, partnership, or other
entity
(treated as a corporation or a partnership for federal income tax
purposes)
created or organized in or under the laws of the United States, any
state
thereof or the District of Columbia, an estate whose income from
sources
without the United States is includible in gross income for United
States
federal income tax purposes regardless of its connection with the
conduct of a
trade or business within the United States, or a trust if a court
within the
United States is able to exercise primary supervision over the
administration
of the trust and one or more United States persons have authority
to control
all substantial decisions of the trustor.
Notional Amount: Not applicable.
23
<PAGE>
Officer's Certificate: A certificate (i) in the case of the
Depositor, 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,
(ii) in the case of the Master Servicer, signed by the President,
an Executive
Vice President, a Vice President, an Assistant Vice President, the
Treasurer,
or one of the Assistant Treasurers or Assistant Secretaries of
Countrywide GP,
Inc., its general partner, (iii) 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 the case may be, as required by this Agreement, or
(iv) in the
case of any other Person, signed by an authorized officer of such
Person.
One-Month LIBOR: With respect to any Accrual Period for the
Adjustable Rate Certificates, the rate determined by the Trustee on
the
related Interest Determination Date on the basis of the rate for
U.S. dollar
deposits for one month as quoted on the Bloomberg Terminal on such
Interest
Determination Date. If such rate is not quoted on the Bloomberg
Terminal (or
if such service is no longer offered, such other service for
displaying
One-Month LIBOR or comparable rates as may be reasonably selected
by the
Trustee), One-Month LIBOR for the applicable Accrual Period for the
Adjustable
Rate Certificates will be the Reference Bank Rate. If no such
quotations can
be obtained by the Trustee and no Reference Bank Rate is available,
One-Month
LIBOR will be One-Month LIBOR applicable to the preceding Accrual
Period for
the Adjustable Rate Certificates.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, reasonably
acceptable to
each addressee of such opinion; provided that with respect to
Section 6.04 or
10.01, or the interpretation or application of the REMIC
Provisions, such
counsel must (i) in fact be independent of the Depositor and the
Master
Servicer, (ii) not have any direct financial interest in the
Depositor or the
Master Servicer or in any affiliate of either and (iii) not be
connected with
the Depositor or the Master Servicer as an officer, employee,
promoter,
underwriter, trustee, partner, director or person performing
similar
functions.
Optional Termination: The termination of the Trust Fund
provided hereunder pursuant to clause (a) of the first sentence of
Section
9.01 hereof.
Optional Termination Date: The first Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans
is less
than or equal to 10% of the sum of the aggregate Cut-off Date
Principal
Balance of the Initial Mortgage Loans and the Pre-Funded
Amount.
Original Value: The value of the property underlying a
Mortgage Loan based, in the case of the purchase of the underlying
Mortgaged
Property, on the lower of an appraisal satisfactory to the Master
Servicer or
the sales price of such property or, in the case of a refinancing,
on an
appraisal satisfactory to the Master Servicer.
OTS: The Office of
Thrift Supervision.
24
<PAGE>
Outstanding: With respect to 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 Distribution Date, a
Mortgage Loan with a Stated Principal Balance greater than zero
that was not
the subject of a Principal Prepayment in full, and that did not
become a
Liquidated Mortgage Loan, prior to the end of the related
Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, the amount, if any, by which the
Overcollateralization
Target Amount exceeds the Overcollateralized Amount on such
Distribution Date
(after giving effect to the distribution of the Principal
Distribution Amount
(other than the portion thereof consisting of the Extra Principal
Distribution
Amount) on such Distribution Date).
Overcollateralization Reduction Amount: With respect to any
Distribution Date, an amount equal to the lesser of (i) the
Excess
Overcollateralization Amount for such Distribution Date and (ii)
the Principal
Remittance Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution Date (a) through the Distribution Date in March 2007,
$0, (b)
after the Distribution Date in March 2007, an amount equal to 0.50%
of the sum
of the aggregate Cut-off Date Principal Balance of the Initial
Mortgage Loans
and the Pre-Funded Amount; provided, however, that if a Delinquency
Trigger
Event is in effect on any Distribution Date, the
Overcollateralization Target
Amount will equal 0.75% of the sum of the aggregate Cut-off Date
Principal
Balance of the Initial Mortgage Loans and the Pre-Funded
Amount.
Overcollateralized Amount: With respect to any Distribution
Date, the amount, if any, by which (x) the sum of the aggregate
Stated
Principal Balance of the Mortgage Loans for such Distribution Date
and any
amount on deposit in the Pre-Funding Account exceeds (y) the
aggregate
Certificate Principal Balance of the Class A Certificates as of
such
Distribution Date (after giving effect to distribution of the
Principal
Remittance Amount to be made on such Distribution Date and, in the
case of the
Distribution Date immediately following the end of the Funding
Period, any
amounts to be released from the Pre-Funding Account).
Ownership Interest: As to any Certificate, any ownership
interest in such Certificate including any interest in such
Certificate as the
Holder thereof and any other interest therein, whether direct or
indirect,
legal or beneficial.
Park Granada: Park Granada LLC, a Delaware limited liability
company, and its successors and assigns.
25
<PAGE>
Park Granada Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule for which Park Granada is the
applicable
Seller.
Park Monaco: Park Monaco Inc., a Delaware corporation, and its
successors and assigns.
Park Monaco Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule for which Park Monaco is the
applicable
Seller.
Park Sienna: Park Sienna LLC, a Delaware limited liability
company, and its successors and assigns.
Park
Sienna Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule for which Park Sienna is the
applicable
Seller.
Pass-Through Margin: With respect to any Distribution Date
and the Class A-1 Certificates, 0.110% per annum.
Pass-Through Rate: With respect to any Accrual Period and
each Class of Interest-Bearing Certificates, the per annum rate set
forth or
calculated in the manner described in the Preliminary
Statement.
Percentage
Interest: With respect to any Interest-Bearing
Certificate, a fraction, expressed as a percentage, the numerator
of which is
the Certificate Principal Balance represented by such Certificate
and the
denominator of which is the aggregate Certificate Principal Balance
of the
related Class. With respect to the Class C, Class P and Class
A-R
Certificates, the portion of the Class evidenced thereby, expressed
as a
percentage, as stated on the face of such Certificate or equal to
the
percentage obtained by dividing the Denomination of such
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 one or more of the
following obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations
guaranteed by any state of the United States or the District
of Columbia receiving the highest long-term debt rating of
each Rating Agency, or such lower rating as each Rating
Agency has confirmed in writing is sufficient for the
ratings originally assigned to the Certificates by such
Rating Agency (without regard to the Certificate Insurance
Policy, in the case of the Class A Certificates);
(iii) commercial or finance company paper which is
then receiving the highest commercial or finance company
paper rating of each Rating Agency, or such lower rating as
each Rating Agency has confirmed in writing is sufficient
for
26
<PAGE>
the ratings originally assigned to the Certificates by such
Rating Agency (without regard to the Certificate Insurance
Policy, in the case of the Class A Certificates);
(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 and/or state banking
authorities, provided that the commercial paper and/or long
term unsecured debt obligations of such 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 such 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 such
Rating Agency for such securities, or such lower ratings as
each Rating Agency has confirmed in writing is sufficient
for the ratings originally assigned to the Certificates by
such Rating Agency (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates);
(v) 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;
(vi) securities (other than stripped bonds,
stripped coupons or instruments sold at a purchase price in
excess of 115% of the face amount thereof) bearing interest
or sold at a discount issued by any corporation incorporated
under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two
highest long term ratings of each Rating Agency (except (x)
if the Rating Agency is Moody's, such rating shall be the
highest commercial paper rating of S&P for any such
securities) and (y), or such lower rating as each Rating
Agency has confirmed in writing is sufficient for the
ratings originally assigned to the Certificates by such
Rating Agency (without regard to the Certificate Insurance
Policy, in the case of the Class A Certificates);
(vii) interests in any money market fund which at
the date of acquisition of the interests in such fund and
throughout the time such interests are held in such fund has
the highest applicable long term rating by each Rating
Agency or such lower rating as each Rating Agency has
confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating
Agency (without regard to the Certificate Insurance Policy,
in the case of the Class A Certificates);
(viii) short term investment funds sponsored by any
trust company or national banking association incorporated
under the laws of the United States or any state thereof
which on the date of acquisition has been rated by each
Rating Agency in their respective highest applicable rating
category or such lower rating as each Rating Agency has
confirmed in writing is sufficient for the ratings
originally assigned to the Certificates by such Rating
Agency (without regard to the Certificate Insurance Policy,
in the case of the Class A Certificates); and
27
<PAGE>
(ix) such other relatively risk free investments
having a specified stated maturity and bearing interest or
sold at a discount acceptable to each Rating Agency as will
not result in the downgrading or withdrawal of the rating
then assigned to the Certificates by any Rating Agency
(without regard to the Certificate Insurance Policy, in the
case of the Class A Certificates), as evidenced by a signed
writing delivered by each Rating Agency, and reasonably
acceptable to the NIM Insurer, as evidenced by a signed
writing delivered by the NIM Insurer, and the Certificate
Insurer, as evidenced by a signed writing delivered by the
Certificate Insurer;
provided, that no such instrument shall be a Permitted Investment
if such
instrument (i) evidences the right to receive interest only
payments with
respect to the obligations underlying such instrument, (ii) is
purchased at a
premium or (iii) is purchased at a deep discount; provided further
that no
such instrument shall be a Permitted Investment (A) if such
instrument
evidences principal and interest payments derived from obligations
underlying
such instrument and the interest payments with respect to such
instrument
provide a yield to maturity of greater than 120% of the yield to
maturity at
par of such underlying obligations, or (B) if it may be redeemed at
a price
below the purchase price (the foregoing clause (B) not to apply to
investments
in units of money market funds pursuant to clause (vii) above);
provided
further that no amount beneficially owned by any REMIC (including,
without
limitation, any amounts collected by the Master Servicer but not
yet deposited
in the Certificate Account) may be invested in investments (other
than money
market funds) treated as equity interests for Federal income tax
purposes,
unless the Master Servicer shall receive an Opinion of Counsel, at
the expense
of Master Servicer, to the effect that such investment will not
adversely
affect the status of any such REMIC as a REMIC under the Code or
result in
imposition of a tax on any such REMIC. Permitted Investments that
are subject
to prepayment or call may not be purchased at a price in excess of
par.
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 Class A-R
Certificate,
(iv) 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 citizen or
resident of
the United States, a corporation, partnership, or other entity
(treated as a
corporation or a partnership for federal income tax purposes)
created or
organized in or under the laws of the United States, any state
thereof or the
District of Columbia, or an estate whose income from sources
without the
United States is includible in gross income for United States
federal income
tax purposes regardless of its connection with the conduct of a
trade or
business within the United States, or a trust if a court within the
United
States is able to exercise primary supervision over the
administration of the
trust and one or more United States Persons have authority to
control all
substantial decisions of the trustor unless such Person has
furnished the
transferor and the Trustee with a duly completed Internal Revenue
Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee
based upon an
Opinion of Counsel that the
28
<PAGE>
Transfer of an Ownership Interest in a Class A-R Certificate to
such Person
may cause any REMIC formed hereunder to fail to qualify as a REMIC
at any time
that any Certificates are Outstanding. The terms "United States,"
"State" and
"International Organization" shall have the meanings set forth 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.
Person: Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company,
trust,
unincorporated organization or government, or any agency or
political
subdivision thereof.
Plan: An "employee benefit plan" as defined in section 3(3)
of ERISA that is subject to Title I of ERISA, a "plan" as defined
in section
4975 of the Code that is subject to section 4975 of the Code, or
any Person
investing on behalf of or with plan assets (as defined in 29 CFR
ss.2510.3-101
or otherwise under ERISA) of such an employee benefit plan or
plan.
Pool Stated Principal Balance: The aggregate of the Stated
Principal Balances of the Mortgage Loans which were Outstanding
Mortgage
Loans.
Pre-Funded Amount:
$0.
Pre-Funding Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.05 in the name
of the
Trustee for the benefit of the Certificateholders and the
Certificate Insurer
and designated "The Bank of New York, in trust for registered
holders of
CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series
2006-S5."
Funds in the Pre-Funding Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this
Agreement and
shall not be a part of any REMIC created hereunder, provided,
however that any
investment income earned from Permitted Investments made with funds
in the
Pre-Funding Account will be for the account of CHL.
Preference Amount: Any payment of principal or interest on a
Class A Certificate which has become Due for Payment and which was
made to a
Holder by or on behalf of the Trust, which has been deemed a
preferential
transfer and was previously recovered from the Holder pursuant to
the United
States Bankruptcy Code in accordance with a final, non-appealable
order of a
court of competent jurisdiction.
Preference Claim: As
defined in Section 4.06(h).
Premium Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of
the Trustee
for the benefit of the Certificateholders and the Certificate
Insurer and
designated "The Bank of New York, in trust for registered holders
of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S5."
Funds in
the Premium Account shall be held in trust for the
Certificateholders and the
Certificate Insurer for the uses and purposes set forth in this
Agreement.
29
<PAGE>
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to the
Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the
charges or premiums, if any, due in connection with a full or
partial
prepayment of such Mortgage Loan within the related Prepayment
Charge Period
in accordance with the terms thereof (other than any Master
Servicer
Prepayment Charge Payment Amount).
Prepayment Charge Period: With respect to any Mortgage Loan,
the period of time during which a Prepayment Charge may be
imposed.
Prepayment Charge Schedule: As of the Initial Cut-off Date
with respect to each Initial Mortgage Loan and as of the Subsequent
Cut-off
Date with respect to each Subsequent Mortgage Loan, a list attached
hereto as
Schedule I (including the Prepayment Charge Summary attached
thereto), setting
forth the following information with respect to each Prepayment
Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment
Charge;
(iii) the state of origination of the related
Mortgage Loan;
(iv) the date on which the first monthly payment
was due on the related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage
Loan as of the Cut-off Date.
As of the Closing Date, the Prepayment Charge Schedule shall
contain the necessary information for each Initial Mortgage Loan.
The
Prepayment Charge Schedule shall be amended by the Master Servicer
upon the
sale of any Subsequent Mortgage Loans to the Trust Fund. In
addition, the
Prepayment Charge Schedule shall be amended from time to time by
the Master
Servicer in accordance with the provisions of this Agreement and a
copy of
each related amendment shall be furnished by the Master Servicer to
the Class
P and Class C Certificateholders and the NIM Insurer.
Prepayment Interest Excess: With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Principal
Prepayment
during the period from the related Due Date to the end of the
related
Prepayment Period, any payment of interest received in connection
therewith
(net of any applicable Servicing Fee) representing interest accrued
for any
portion of such month of receipt.
Prepayment Interest Shortfall: With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a
partial
Principal Prepayment or a Principal Prepayment in full during the
period from
the beginning of the related Prepayment Period to the Due Date
in
30
<PAGE>
such Prepayment Period (other than a Principal Prepayment in full
resulting
from the purchase of a Mortgage Loan pursuant to Section 2.02,
2.03, 2.04,
3.12 or 9.01 hereof) and for each Mortgage Loan that became a
Liquidated
Mortgage Loan during the related Due Period, the amount, if any, by
which (i)
one month's interest at the applicable Net Mortgage Rate on the
Stated
Principal Balance of such Mortgage Loan immediately prior to such
prepayment
(or liquidation) or in the case of a partial Principal Prepayment
on the
amount of such prepayment (or Liquidation Proceeds) exceeds (ii)
the amount of
interest paid or collected in connection with such Principal
Prepayment or
such Liquidation Proceeds.
Prepayment Period: As to any Distribution Date and related
Due Date, the period beginning with the opening of business on the
sixteenth
day of the calendar month preceding the month in which such
Distribution Date
occurs (or, with respect to the first Distribution Date, the period
beginning
with the opening of business on the day immediately following the
Initial
Cut-off Date) and ending on the close of business on the fifteenth
day of the
month in which such Distribution Date occurs.
Prime Rate: The prime commercial lending rate of The Bank of
New York, as publicly announced to be in effect from time to time.
The Prime
Rate shall be adjusted automatically, without notice, on the
effective date of
any change in such prime commercial lending rate. The Prime Rate is
not
necessarily The Bank of New York's lowest rate of interest.
Principal Distribution Amount: With respect to each
Distribution Date, the sum of (i) the Principal Remittance Amount
for such
Distribution Date, (ii) the Extra Principal Distribution Amount for
such
Distribution Date, and (iii) with respect to the Distribution Date
immediately
following the end of the Funding Period, the amount, if any,
remaining in the
Pre-Funding Account at the end of the Funding Period (net of any
investment
income therefrom), minus (iv) the Overcollateralization Reduction
Amount for
such Distribution Date.
Principal Prepayment: Any Mortgagor payment or other
recovery of (or proceeds with respect to) principal on a Mortgage
Loan
(including loans purchased or repurchased under Sections 2.02,
2.03, 2.04,
3.12 and 9.01 hereof) that is received in advance of its scheduled
Due Date to
the extent it is not accompanied by an amount as to interest
representing
scheduled interest due on any date or dates in any month or months
subsequent
to the month of prepayment. Partial Principal Prepayments shall be
applied by
the Master Servicer in accordance with the terms of the related
Mortgage Note.
Principal Remittance Amount: With respect to any
Distribution Date, (a) the sum, without duplication, of: (i) the
scheduled
principal collected with respect to the Mortgage Loans during the
related Due
Period or advanced with respect to such Distribution Date, (ii)
Principal
Prepayments collected in the related Prepayment Period with respect
to the
Mortgage Loans, (iii) the Stated Principal Balance of each Mortgage
Loan that
was repurchased by a Seller or purchased by the Master Servicer
with respect
to such Distribution Date, (iv) the amount, if any, by which the
aggregate
unpaid principal balance of any Replacement Mortgage Loans
delivered by the
Sellers in connection with a substitution of a Mortgage Loan is
less than the
aggregate unpaid principal balance of any Deleted Mortgage Loans,
(v) any
payments received under the Credit Insurance Policy attributable to
principal
for the related Due Period, (vi) any Loss Coverage Payment
attributable to
principal for the related Due Period, and (vii) all Liquidation
31
<PAGE>
Proceeds (to the extent such Liquidation Proceeds related to
principal) and
Subsequent Recoveries collected during the related Due Period; less
(b) all
Advances relating to principal and certain expenses reimbursable
pursuant to
Section 6.03 and reimbursed during the related Due Period.
Principal Reserve Fund: The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section
3.08 in
the name of the Trustee for the benefit of the Certificateholders
and
designated "The Bank of New York in trust for registered Holders of
CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S5".
Funds in
the Principal Reserve Fund shall be held in trust for the
Certificateholders
for the uses and purposes set forth in this Agreement.
Private Certificates:
The Class C and Class P Certificates.
Prospectus: The prospectus dated September 20, 2006, relating
to asset backed securities to be sold by the Depositor.
Prospectus Supplement: The prospectus supplement dated
September 26, 2006, relating to the public offering of the certain
Classes of
Certificates offered thereby.
PTCE 95-60: As defined
in Section 5.02(b).
PUD: A Planned Unit
Development.
Purchase Price: With respect to any Mortgage Loan (x)
required to be (1) repurchased by a Seller or purchased by the
Master
Servicer, as applicable, pursuant to Section 2.02, 2.03 or 3.12
hereof or (2)
repurchased by the Depositor pursuant to Section 2.04 hereof, or
(y) that the
Master Servicer has a right to purchase pursuant to Section 3.12
hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance
(or, if
such purchase or repurchase, as the case may be, is effected by the
Master
Servicer, the Stated Principal Balance) of the Mortgage Loan as of
the date of
such purchase, (ii) accrued interest thereon at the applicable
Mortgage Rate
(or, if such purchase or repurchase, as the case may be, is
effected by the
Master Servicer, at the Net Mortgage Rate) from (a) the date
through which
interest was last paid by the Mortgagor (or, if such purchase or
repurchase,
as the case may be, is effected by the Master Servicer, the date
through which
interest was last advanced and not reimbursed by the Master
Servicer) to (b)
the Due Date in the month in which the Purchase Price is to be
distributed to
Certificateholders and (iii) any costs, expenses and damages
incurred by the
Trust Fund resulting from any violation of any predatory or abusive
lending
law in connection with such Mortgage Loan.
Qualified Bidder: With respect to any auction pursuant to
Section 9.04, any institution that is a regular purchaser and/or
seller in the
secondary market of residential mortgage loans as determined by the
Trustee
(or any advisor on its behalf), in its sole discretion, any holder
of an
interest in the Class C Certificates and the Certificate Insurer;
provided,
however, that neither Countrywide nor any of its affiliates shall
constitute a
Qualified Bidder.
Rating Agency: Each of Moody's and S&P. If any such
organization or its successor is no longer in existence, "Rating
Agency" shall
be a nationally recognized statistical
32
<PAGE>
rating organization, or other comparable Person identified as a
"Rating
Agency" in the Underwriter's Exemption, designated by the
Depositor, notice of
which designation shall be given to the Trustee. References herein
to a given
rating category of a Rating Agency shall mean such rating category
without
giving effect to any modifiers.
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 such Liquidated Mortgage Loan as of the
date of
such liquidation, minus (ii) the Liquidation Proceeds, if any,
received in
connection with such liquidation during the month in which such
liquidation
occurs, to the extent applied as recoveries of principal of the
Liquidated
Mortgage Loan. With respect to each Mortgage Loan that has become
the subject
of a Deficient Valuation, (i) if the value of the related Mortgaged
Property
was reduced below the principal balance of the related Mortgage
Note, the
amount by which the value of the Mortgaged Property was reduced
below the
principal balance of the related Mortgage Note, and (ii) 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.
Record Date: With respect to any Distribution Date and the
Adjustable-Rate Certificates, the Business Day immediately
preceding such
Distribution Date, or if such Certificates are no longer
Book-Entry
Certificates, the last Business Day of the month preceding the
month of such
Distribution Date. With respect to the Fixed-Rate Certificates and
the Class
A-R, Class C and Class P Certificates, the last Business Day of the
month
preceding the month of a Distribution Date.
Reference Bank Rate: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest
whole multiple
of 0.03125%) of the offered rates for United States dollar deposits
for one
month that are quoted by the Reference Banks as of 11:00 a.m., New
York City
time, on the related Interest Determination Date to prime banks in
the London
interbank market for a period of one month in amounts approximately
equal to
the outstanding aggregate Certificate Principal Balance of the
Adjustable-Rate
Certificates on such Interest Determination Date, provided that at
least two
such Reference Banks provide such rate. If fewer than two offered
rates
appear, the Reference Bank Rate will be the arithmetic mean
(rounded upwards,
if necessary, to the nearest whole multiple of 0.03125%) of the
rates quoted
by one or more major banks in New York City, selected by the
Trustee, as of
11:00 a.m., New York City time, on such date for loans in U.S.
dollars to
leading European banks for a period of one month in amounts
approximately
equal to the aggregate Certificate Principal Balance of the
Adjustable-Rate
Certificates on such Interest Determination Date.
Reference Banks: Barclays Bank PLC, Deutsche Bank and
NatWest, N.A., provided that if any of the foregoing banks are not
suitable to
serve as a Reference Bank, then any leading banks selected by the
Trustee
which are engaged in transactions in Eurodollar deposits in the
international
Eurocurrency market (i) with an established place of business in
London,
England, (ii) not controlling, under the control of or under common
control
with the Depositor, CHL or the Master Servicer and (iii) which have
been
designated as such by the Trustee.
33
<PAGE>
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
Regular Certificate:
Any Certificate other than the Class A-R
Certificates.
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 and publicly available.
Relief Act: The
Servicemembers Civil Relief Act.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear
at section
860A through 860G of Subchapter M of Chapter 1 of the Code, and
related
provisions, and regulations and rulings promulgated thereunder, as
the
foregoing may be in effect from time to time.
Remittance Report: A report prepared by the Master Servicer
and delivered to the Trustee, the Certificate Insurer and the NIM
Insurer in
accordance with Section 4.04.
REO Property: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed-in-lieu of foreclosure in
connection with
a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of
such
substitution, as confirmed in a Request for File Release, (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
less than
90% of the Stated Principal Balance of the Deleted Mortgage Loan;
(ii) have
the same or higher credit quality characteristics than that of the
Deleted
Mortgage Loan; (iii) be accruing interest at a rate not more than
1% per annum
higher or lower than that of the Deleted Mortgage Loan; (iv) have a
Combined
Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (v) have
a remaining term to maturity not greater than (and not more than
one year less
than) that of the Deleted Mortgage Loan; (vi) not permit conversion
of the
Mortgage Rate from a fixed rate to a variable rate; (vii) provide
for a
Prepayment Charge on terms substantially similar to those of the
Prepayment
Charge, if any, of the Deleted Mortgage Loan; (viii) have the same
occupancy
type and lien priority as the Deleted Mortgage Loan; and (ix)
comply with each
representation and warranty set forth in Section 2.03 as of the
date of
substitution; provided, however, that notwithstanding the
foregoing, to the
extent that compliance with clause (ix) of this definition would
cause a
proposed Replacement Mortgage Loan to fail to comply with one or
more of
clauses (i), (iii), (vii) and/or (viii) of this definition, then
such proposed
Replacement Mortgage Loan must comply with clause (ix) and, with
the consent
of the Certificate Insurer, need not comply with one or more of
clauses (i),
(iii), (vii) and/or (viii), to the extent, and only to the extent,
necessary
to assure that the Replacement Mortgage Loan otherwise complies
with clause
(ix).
34
<PAGE>
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 Master Servicer only, if the
Master Servicer becomes aware of any bankruptcy or receivership
with respect
to CHL, the Depositor, the Master Servicer, any Subservicer, the
Trustee, the
Corridor Contract 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 Master 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 Master Servicer, any Subservicer, the Trustee or any
co-trustee;
(g)
with respect to the Master Servicer only, if the
Master 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 Master 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.
Reporting
Subcontractor: With respect to the Master 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.
35
<PAGE>
Representing Party: As
defined in Section 2.03(f).
Request for Document Release: A Request for Document Release
submitted by the Master Servicer to the Trustee, substantially in
the form of
Exhibit M.
Request for File Release: A Request for File Release submitted
by the Master Servicer to the Trustee, substantially in the form of
Exhibit N.
Required Carryover Reserve Fund Deposit: With respect to any
Distribution Date, an amount equal to the excess of (i) $1,000 over
(ii) the
amount of funds on deposit in the Carryover Reserve Fund.
Required Insurance Policy: With respect to any Mortgage
Loan, any insurance policy that is required to be maintained from
time to time
under this Agreement, including with respect to the Covered Loans,
the Credit
Insurance Policy.
Responsible Officer: When used with respect to the Trustee,
any Vice President, any Assistant Vice President, the Secretary,
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 and also to whom, with respect to a particular matter,
such matter is
referred because of such officer's knowledge of and familiarity
with the
particular subject.
Rolling Sixty-Day Delinquency Rate: With respect to any
Distribution Date, the average of the Sixty-Day Delinquency Rates
for such
Distribution Date and the two immediately preceding Distribution
Dates.
Rule 144A: Rule 144A
under the Securities Act.
Rule 144A Letter: As
defined in Section 5.02(b).
S&P: Standard & Poor's Ratings Services, a division of
The
McGraw-Hill Companies, Inc. and its successors.
Sarbanes-Oxley Certification: As defined in Section 11.05.
Scheduled Payment: With respect to any Mortgage Loan, the
scheduled monthly payment of principal and/or interest due on any
Due Date on
such Mortgage Loan which is payable by the related Mortgagor from
time to time
under the related Mortgage Note, determined: (a) after giving
effect to (i)
any Deficient Valuation and/or Debt Service Reduction with respect
to such
Mortgage Loan and (ii) any reduction in the amount of interest
collectible
from the related Mortgagor pursuant to the Relief Act or any
similar state or
local law; (b) without giving effect to any extension granted or
agreed to by
the Master Servicer pursuant to Section 3.05(a); and (c) on the
assumption
that all other amounts, if any, due under such Mortgage Loan are
paid when
due.
Securities Act: The
Securities Act of 1933, as amended.
36
<PAGE>
Seller Shortfall Interest Requirement: $0.
Sellers: CHL, in its capacity as seller of the CHL Mortgage
Loans to the Depositor, Park Granada, in its capacity as seller of
the Park
Granada Mortgage Loans to the Depositor, Park Monaco, in its
capacity as
seller of the Park Monaco Mortgage Loans to the Depositor and Park
Sienna, in
its capacity as seller of the Park Sienna Mortgage Loans to the
Depositor.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in the performance by
the Master
Servicer of its servicing obligations hereunder, including, but not
limited
to, the cost of (i) the preservation, restoration and protection of
a
Mortgaged Property, (ii) any enforcement or judicial proceedings,
including
foreclosures, (iii) the management and liquidation of any REO
Property and
(iv) compliance with the obligations under Section 3.10.
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, an amount equal to one month's interest at the Servicing Fee
Rate on the
Stated Principal Balance of such Mortgage Loan for the preceding
Distribution
Date or, in the event of any payment of interest that accompanies a
Principal
Prepayment in full made by the Mortgagor, interest at the Servicing
Fee Rate
on the Stated Principal Balance of such Mortgage Loan for the
period covered
by such payment of interest.
Servicing Fee Rate:
With respect to each Mortgage Loan, 0.50%
per annum.
Servicing Officer: Any officer of the Master 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 Master Servicer
on the
Closing Date pursuant to this Agreement, as such list may from time
to time be
amended.
Sixty-Day Delinquency Rate: With respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which
is the
aggregate Stated Principal Balance for such Distribution Date of
all Mortgage
Loans 60 or more days delinquent as of the close of business on the
last day
of the calendar month preceding such Distribution Date (including
Mortgage
Loans in foreclosure, bankruptcy and REO Properties) and the
denominator of
which is the aggregate Stated Principal Balance for such
Distribution Date of
all Mortgage Loans.
Sponsor Loss Coverage Amount: With respect to any
Distribution Date, the amount by which 1.00% of the sum of the
aggregate
Cut-off Date Principal Balance of the Initial Mortgage Loans and
the
Pre-Funded Amount exceeds the aggregate amount of Loss Coverage
Payments, if
any, made prior to such Distribution Date.
Sponsor Loss Coverage Obligation: The obligation of CHL
described in Section 2.08 with respect to Loss Coverage
Payments.
37
<PAGE>
Stated Principal Balance: With respect to any Mortgage Loan
or related REO Property (i) as of the Cut-off Date, the unpaid
principal
balance of the Mortgage Loan as of such date (before any adjustment
to the
amortization schedule for any moratorium or similar waiver or grace
period),
after giving effect to any partial prepayments or Liquidation
Proceeds
received prior to such date and to the payment of principal due on
or prior to
such date and irrespective any delinquency in payment by the
related
Mortgagor, and (ii) as of any other Distribution Date, the Stated
Principal
Balance of the Mortgage Loan as of its Cut-off Date, minus the sum
of (a) the
principal portion of the Scheduled Payments (x) due with respect to
such
Mortgage Loan during each Due Period ending prior to such
Distribution Date
and (y) that were received by the Master Servicer as of the close
of business
on the Determination Date related to such Distribution Date or with
respect to
which Advances were made as of the Master Servicer Advance Date
related to
such Distribution Date, (b) all Principal Prepayments with respect
to such
Mortgage Loan received by the Master Servicer during each
Prepayment Period
ending prior to such Distribution Date, (c) all Liquidation
Proceeds collected
with respect to such Mortgage Loan during each Due Period ending
prior to such
Distribution Date, to the extent applied by the Master Servicer as
recoveries
of principal in accordance with Section 3.12 and (d) any Realized
Loss
previously incurred in connection with a Deficient Valuation. The
Stated
Principal Balance of any Mortgage Loan that becomes a Liquidated
Mortgage Loan
will be zero on each date following the Due Period in which such
Mortgage Loan
becomes a Liquidated Mortgage Loan. References herein to the Stated
Principal
Balance of the Mortgage Loans at any time shall mean the aggregate
Stated
Principal Balance of all Mortgage Loans in the Trust Fund as of
such time.
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 Master Servicer or a Subservicer or
the Trustee,
as the case may be.
Subsequent Certificate Account Deposit: With respect to any
Subsequent Transfer Date, an amount equal to the aggregate of all
amounts in
respect of (i) principal of the related Subsequent Mortgage Loans
due after
the related Subsequent Cut-off Date and received by the Master
Servicer on or
before such Subsequent Transfer Date and not applied in computing
the Cut-off
Date Principal Balance thereof and (ii) interest on the such
Subsequent
Mortgage Loans due after such Subsequent Cut-off Date and received
by the
Master Servicer on or before the Subsequent Transfer Date.
Subsequent Cut-off Date: In the case of any Subsequent
Mortgage Loan, the later of (x) the first day of the month of the
related
Subsequent Transfer Date and (y) the date of origination of such
Subsequent
Mortgage Loan.
Subsequent Mortgage Loan: Any Mortgage Loan conveyed to the
Trustee on a Subsequent Transfer Date, and listed on the related
Loan Number
and Borrower Identification Mortgage Loan Schedule delivered
pursuant to
Section 2.01(f). When used with respect to a single Subsequent
Transfer Date,
"Subsequent Mortgage Loan" shall mean a Subsequent Mortgage Loan
conveyed to
the Trustee on such Subsequent Transfer Date.
38
<PAGE>
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 Master
Servicer (net
of any related expenses permitted to be reimbursed pursuant to
Section 3.08
and 3.12) specifically related to such Liquidated Mortgage Loan
after the
classification of such Mortgage Loan as a Liquidated Mortgage
Loan.
Subsequent Transfer Agreement: A Subsequent Transfer
Agreement substantially in the form of Exhibit P hereto, executed
and
delivered by the Sellers, the Depositor and the Trustee as provided
in Section
2.01(d).
Subsequent Transfer Date: For any Subsequent Transfer
Agreement, the "Subsequent Transfer Date" identified in such
Subsequent
Transfer Agreement; provided, however, the Subsequent Transfer Date
for any
Subsequent Transfer Agreement must be a Business Day and may not be
a date
earlier than the date on which the Subsequent Transfer Agreement is
executed
and delivered by the parties thereto pursuant to Section
2.01(d).
Subsequent Transfer Date Purchase Amount: With respect to
any Subsequent Transfer Date, the "Subsequent Transfer Date
Purchase Amount"
identified in the related Subsequent Transfer Agreement which shall
be an
estimate of the aggregate Stated Principal Balances of the
Subsequent Mortgage
Loans identified in such Subsequent Transfer Agreement.
Subsequent Transfer Date Transfer Amount: With respect to
any Subsequent Transfer Date, an amount equal to the lesser of (i)
the
aggregate Stated Principal Balances as of the related Subsequent
Cut-off Dates
of the Subsequent Mortgage Loans conveyed on such Subsequent
Transfer Date, as
listed on the related Loan Number and Borrower Identification
Mortgage Loan
Schedule delivered pursuant to Section 2.01(f) and (ii) the amount
on deposit
in the Pre-Funding Account.
Subservicer: As
defined in Section 3.02(a).
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such
term pursuant to Section 2.03(f).
Substitution Amount: With respect to any Mortgage Loan
substituted pursuant to Section 2.03(f), the excess of (x) the
principal
balance of the Mortgage Loan that is substituted for, over (y) the
principal
balance of the related substitute Mortgage Loan, each balance being
determined
as of the date of substitution.
Successful Auction: An auction held pursuant to Section 9.04
at which at least three Qualified Bidders submitted bids and at
least one of
those bids was an Acceptable Bid Amount.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss.
1.860F-4(d) and
Treasury regulation ss. 301.6231(a)(7)-1. Initially, this person
shall be the
Trustee.
39
<PAGE>
Tax Matters Person Certificate: The Class A-R Certificate with
a Denomination of $0.05 and in the form of Exhibit E hereto.
Terminator: As defined
in Section 9.01.
Termination Price: As
defined in Section 9.01.
Transaction Documents: This Agreement, the Corridor
Contract, the Corridor Contract Administration Agreement, the
Credit Insurance
Policy, the Certificate Insurance Policy, the Insurance and
Indemnity
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 Certificate.
Transfer Affidavit: As
defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and principal
received
on or with respect thereto after the Cut-off Date to the extent not
applied in
computing the Cut-off Date Principal Balance thereof, exclusive of
interest
not required to be deposited in the Certificate Account pursuant to
Section
3.05(b)(2); (ii) the Certificate Account, the Distribution Account,
the
Principal Reserve Fund, the Carryover Reserve Fund, the Pre-Funding
Account,
the Premium Account and all amounts deposited therein pursuant to
the
applicable provisions of this Agreement; (iii) the rights to
receive certain
proceeds of the Corridor Contract as provided in the Corridor
Contract
Administration Agreement; (iv) property that secured a Mortgage
Loan and has
been acquired by foreclosure, deed in lieu of foreclosure or
otherwise; (v)
the mortgagee's rights under the Insurance Policies with respect to
the
Mortgage Loan; (vi) rights under the Credit Insurance Policy; (vii)
the rights
of the Trustee for the benefit of the Class A Certificateholders
under the
Certificate Insurance Policy; and (vi) all proceeds of the
conversion,
voluntary or involuntary, of any of the foregoing into cash or
other liquid
property.
Trustee: The Bank of New York, a New York banking
corporation, not in its individual capacity, but solely in its
capacity as
trustee for the benefit of the Certificateholders under this
Agreement, and
any successor thereto, and any corporation or national banking
association
resulting from or surviving any consolidation or merger to which it
or its
successors may be a party and any successor trustee as may from
time to time
be serving as successor trustee hereunder.
Trustee Advance Notice: As defined in Section 4.01(d).
Trustee Advance Rate: With respect to any Advance made by
the Trustee pursuant to Section 4.01(d), a per annum rate of
interest
determined as of the date of such Advance equal to the Prime Rate
in effect on
such date plus 5.00%.
40
<PAGE>
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the sum of (i)
the Pool
Stated Principal Balance and (ii) any amounts remaining in the
Pre-Funding
Account (excluding any investment earnings thereon) with respect to
such
Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the
per annum rate agreed upon in writing on or prior to the Closing
Date by the
Trustee and the Depositor, which is 0.009% per annum.
Underwriter's Exemption: Prohibited Transaction Exemption
2002-41, 67 Fed. Reg. 54487 (2002), as amended (or any successor
thereto), or
any substantially similar administrative exemption granted by the
U.S.
Department of Labor.
Underwriters: Countrywide Securities Corporation, Bear,
Stearns & Co. Inc. and BNP Paribas Securities Corp.
Unpaid Realized Loss Amount: For any Class of Certificates
and any Distribution Date, (x) the portion of the aggregate Applied
Realized
Loss Amount allocated to that Class and remaining unpaid (in the
case of any
Class of Class A Certificates, without regard to any payment made
by the
Certificate Insurer in respect of that Class under the Certificate
Insurance
Policy) minus (y) (1) any increase in the Certificate Principal
Balance of
that Class due to the allocation of Subsequent Recoveries to the
Certificate
Principal Balance of that Class pursuant to Section 4.04(h) or (2)
in the case
of any Class of Class A Certificates, the amount of any Subsequent
Recovery
paid to the Certificate Insurer in respect of that Class.
Voting Rights: The voting rights of all the Certificates
that are allocated to any Certificates for purposes of the voting
provisions
hereunder. Voting Rights allocated to each Class of Certificates
shall be
allocated 97% to the Certificates other than the Class A-R, Class C
and Class
P Certificates (with the allocation among the Certificates to be in
proportion
to the Certificate Principal Balance of each Class relative to the
Certificate
Principal Balance of all other such Classes), and 1% to each of the
Class A-R,
Class C and Class P Certificates. Voting Rights will be allocated
among the
Certificates of each such Class in accordance with their respective
Percentage
Interests. Notwithstanding any of the foregoing, on any date on
which any
Class A Certificates are outstanding or any amounts are owed the
Certificate
Insurer under this Agreement, unless a Certificate Insurer Default
shall have
occurred and be continuing, the Certificate Insurer will be
entitled to
exercise the Voting Rights of the Class A Certificateholders,
without the
consent of the Class A Certificateholders, and the Class A
Certificateholders
may exercise such rights only with the prior written consent of
the
Certificate Insurer.
Winning Bidder: With respect to a Successful Auction, the
Qualified Bidder that bids the highest price.
Section 1.02 Certain
Interpretive Provisions.
All terms defined in this Agreement shall have the defined
meanings when used in any certificate, agreement or other document
delivered
pursuant hereto unless otherwise defined therein. For purposes of
this
Agreement and all such certificates and other documents,
41
<PAGE>
unless the context otherwise requires: (a) accounting terms not
otherwise
defined in this Agreement, and accounting terms partly defined in
this
Agreement to the extent not defined, shall have the respective
meanings given
to them under generally accepted accounting principles; (b) the
words
"hereof," "herein" and "hereunder" and words of similar import
refer to this
Agreement (or the certificate, agreement or other document in which
they are
used) as a whole and not to any particular provision of this
Agreement (or
such certificate, agreement or document); (c) references to any
Section,
Schedule or Exhibit are references to Sections, Schedules and
Exhibits in or
to this Agreement, and references to any paragraph, subsection,
clause or
other subdivision within any Section or definition refer to such
paragraph,
subsection, clause or other subdivision of such Section or
definition; (d) the
term "including" means "including without limitation"; (e)
references to any
law or regulation refer to that law or regulation as amended from
time to time
and include any successor law or regulation; (f) references to any
agreement
refer to that agreement as amended from time to time; (g)
references to any
Person include that Person's permitted successors and assigns, and
(h) a
Mortgage Loan is "30 days delinquent" if a Scheduled Payment has
not been
received by the close of business on the Due Date on which the next
Scheduled
Payment is due. Similarly for "60 days delinquent," "90 days
delinquent" and
so on.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND
WARRANTIES
Section 2.01
Conveyance of Mortgage Loans.
(a) Each Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the
right, title and
interest of such Seller in and to the applicable Initial Mortgage
Loans,
including all interest and principal received and receivable by
such Seller on
or with respect to applicable Initial Mortgage Loans after the
Initial Cut-of
Date (to the extent not applied in computing the Cut-off Date
Principal Balance
thereof) or deposited into the Certificate Account by the Master
Servicer on
behalf of such Seller as part of the Initial Certificate Account
Deposit as
provided in this Agreement, other than principal due on the
applicable Initial
Mortgage Loans on or prior to the Initial Cut-off Date and interest
accruing
prior to the Initial Cut-off Date. The Master Servicer confirms
that, on
behalf of the Sellers, concurrently with the transfer and
assignment, it has
deposited into the Certificate Account the Initial Certificate
Account
Deposit. On the Closing Date, CHL, as a Seller, shall deposit
$71.07 into the
Distribution Account for distribution as part of the Principal
Remittance
Amount on the first Distribution Date.
Immediately upon the conveyance of the Initial Mortgage
Loans referred to in the preceding paragraph, the Depositor (i)
sells,
transfers, assigns, sets over and otherwise conveys to the Trustee
for benefit
of the Certificateholders and the Certificate Insurer, without
recourse, all
right title and interest in the Initial Mortgage Loans and (ii)
causes the
Certificate Insurer to deliver the Certificate Insurance Policy to
the
Trustee.
CHL further agrees (x) to cause The Bank of New York to
enter into the Corridor Contract Administration Agreement as
Corridor Contract
Administrator and (y) to assign all of its right, title and
interest in and to
the interest rate corridor transaction evidenced by each
42
<PAGE>
Confirmation, and to cause all of its obligations in respect of
such
transaction to be assumed by, the Corridor Contract Administrator,
on the
terms and conditions set forth in the Corridor Contract Assignment
Agreement.
(b) Subject to the
execution and delivery of the related Subsequent
Transfer Agreement as provided by Section 2.01(d) and the terms and
conditions
of this Agreement, each Seller sells, transfers, assigns, sets over
and
otherwise conveys to the Depositor, without recourse, on each
Subsequent
Transfer Date, all the right, title and interest of such Seller in
and to the
related Subsequent Mortgage Loans, including all interest and
principal received
and receivable by such Seller on or with respect to such Subsequent
Mortgage
Loans after the related Subsequent Cut-off Date (to the extent not
applied in
computing the Cut-off Date Principal Balance thereof) or deposited
into the
Certificate Account by the Master Servicer on behalf of such Seller
as part of
any related Subsequent Certificate Account Deposit as provided in
this
Agreement, other than principal due on such Subsequent Mortgage
Loans on or
prior to the related Subsequent Cut-off Date and interest accruing
prior to
the related Subsequent Cut-off Date.
Immediately upon the conveyance of the Subsequent Mortgage
Loans referred to in the preceding paragraph, the Depositor sells,
transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit
of the
Certificateholders and the Certificate Insurer, without recourse,
all right
title and interest in the Subsequent Mortgage Loans.
(c) Each Seller has entered into this Agreement in consideration
for
the purchase of the Mortgage Loans by the Depositor and has agreed
to take the
actions specified herein. The Depositor, concurrently with the
execution and
delivery of this Agreement, hereby sells, transfers, assigns and
otherwise
conveys to the Trustee for the use and benefit of the
Certificateholders,
without recourse, all right title and interest in the portion of
the Trust
Fund not otherwise conveyed to the Trustee pursuant to Section
2.01(a) or (b).
(d) On any Business Day during the Funding Period designated by CHL
to
the Trustee, the Sellers, the Depositor and the Trustee shall
complete,
execute and deliver a Subsequent Transfer Agreement. After the
execution and
delivery of such Subsequent Transfer Agreement, on the Subsequent
Transfer
Date, the Trustee shall set aside in the Pre-Funding Account an
amount equal
to the related Subsequent Transfer Date Purchase Amount.
(e) The transfer of Subsequent Mortgage Loans on the Subsequent
Transfer Date is subject to the satisfaction of each of the
following
conditions:
(1) the Trustee, the Underwriters and the Certificate Insurer
will be provided Opinions of Counsel addressed to the Rating
Agencies as with
respect to the sale of the Subsequent Mortgage Loans conveyed on
such
Subsequent Transfer Date (such opinions being substantially similar
to the
opinions delivered on the Closing Date to the Rating Agencies and
the
Certificate Insurer with respect to the sale of the Initial
Mortgage Loans on
the Closing Date), to be delivered as provided in Section
2.01(f);
(2) the execution and delivery of such Subsequent Transfer
Agreement or conveyance of the related Subsequent Mortgage Loans
does not
result in a reduction or
43
<PAGE>
withdrawal of any ratings assigned to the Certificates by the
Rating Agencies
(without regard to the Certificate Insurance Policy, in the case of
the Class
A Certificates);
(3) the Depositor shall deliver to the Trustee and the
Certificate Insurer an Officer's Certificate confirming the
satisfaction of
each of the conditions set forth in this Section 2.01(e) required
to be
satisfied by such Subsequent Transfer Date;
(4) each Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date satisfies the representations and warranties
applicable to it
under this Agreement, provided, however, that with respect to a
breach of a
representation and warranty with respect to a Subsequent Mortgage
Loan set
forth in this clause (4), the obligation under Section 2.03(f) of
this
Agreement of the applicable Seller, to cure, repurchase or replace
such
Subsequent Mortgage Loan shall constitute the sole remedy against
such Seller
respecting such breach available to Certificateholders, the
Depositor, the
Certificate Insurer or the Trustee;
(5) the Subsequent Mortgage Loans conveyed on such Subsequent
Transfer Date were selected in a manner reasonably believed not to
be adverse
to the interests of the Certificateholders or the Certificate
Insurer;
(6) no Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date was 30 or more days delinquent as of the related
Cut-off Date;
(7) following the conveyance of the Subsequent Mortgage Loans
on such Subsequent Transfer Date, the characteristics of the
Mortgage Loans
will not vary by more than the amount specified below from the
characteristics
listed below; provided that for the purpose of making such
calculations, the
characteristics for any Initial Mortgage Loan made will be taken as
of the
Initial Cut-off Date and the characteristics for any Subsequent
Mortgage Loans
will be taken as of the Subsequent Cut-off Date;
<TABLE>
<S>
<C>
<C>
Permitted Variance
Characteristic
Value
or Range
--------------
-------
------------------
Average Stated Principal Balance................................
N/A
5%
Weighted Average Mortgage Rate..................................
N/A
0.10%
Weighted Average Original Combined Loan-to-Value Ratio..........
N/A
1.00%
Weighted Average Remaining Term to Maturity.....................
N/A
3 months
Weighted Average FICO Score.....................................
N/A
5 points
Occupancy Type - Investment Properties..........................
N/A
1.00%
Purpose - Cash Out..............................................
N/A
1.00% higher
2.00% lower
</TABLE>
(8) none of the Sellers or the Depositor is insolvent and
neither of the Sellers nor the Depositor will be rendered insolvent
by the
conveyance of Subsequent Mortgage Loans on such Subsequent Transfer
Date; and
44
<PAGE>
(9) the Trustee, the Underwriters and the Certificate Insurer
will be provided with 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 purchase of Subsequent
Mortgage Loans
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 formed hereunder to fail to qualify as a REMIC, such opinion
to be
delivered as provided in Section 2.01(f).
The Trustee shall not be required to investigate or
otherwise verify compliance with these conditions, except for its
own receipt
of documents specified above, and shall be entitled to rely on the
required
Officer's Certificate.
(f) Within six Business Days after each Subsequent Transfer Date,
upon
(1) delivery to the Trustee and the Certificate Insurer by the
Depositor of
the Opinions of Counsel referred to in Section 2.01(e)(1) and
(e)(9), (2)
delivery to the Trustee by CHL (on behalf of each Seller) of a Loan
Number and
Borrower Identification Mortgage Loan Schedule reflecting the
Subsequent
Mortgage Loans conveyed on such Subsequent Transfer Date, (3)
deposit in the
Certificate Account by the Master Servicer on behalf of the Sellers
of the
applicable Subsequent Certificate Account Deposit, and (4) delivery
to the
Trustee and the Certificate Insurer by the Depositor of an
Officer's
Certificate confirming the satisfaction of each of the conditions
precedent
set forth in this Section 2.01(f), the Trustee shall pay the
applicable Seller
the Subsequent Transfer Date Transfer Amount from such funds that
were set
aside in the Pre-Funding Account pursuant to Section 2.01(d). The
positive
difference, if any, between the Subsequent Transfer Date Transfer
Amount and
the Subsequent Transfer Date Purchase Amount shall be re-invested
by the
Trustee in the Pre-Funding Account.
The Trustee shall not be required to investigate or
otherwise verify compliance with the conditions set forth in the
preceding
paragraph, except for its own receipt of documents specified above,
and shall
be entitled to rely on the required Officer's Certificate.
Within thirty days after each Subsequent Transfer Date, the
Depositor shall deliver to the Trustee and the Certificate Insurer
a letter of
a nationally recognized firm of independent public accountants
stating whether
or not the Subsequent Mortgage Loans conveyed on such Subsequent
Transfer Date
conform to the characteristics described in Section 2.01(e)(6) and
(7).
(g) In connection with the transfer and assignment of each
Mortgage
Loan, the Depositor has delivered to, and deposited with, the
Trustee (or, in
the case of the Delay Delivery Mortgage Loans, will deliver to, and
deposit
with, the Trustee within the time periods specified in the
definition of Delay
Delivery Mortgage Loans) (except as provided in clause (vi) below)
for the
benefit of the Certificateholders, the following documents or
instruments with
respect to each such Mortgage Loan so assigned (with respect to
each Mortgage
Loan, clause (i) through (vi) below, together, the "Mortgage File"
for each
such Mortgage Loan):
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the
order
of ________________
45
<PAGE>
without recourse", with all intervening endorsements that show
a
complete chain of endorsement from the originator to the Person
endorsing the Mortgage Note (each such endorsement being sufficient
to
transfer all right, title and interest of the party so endorsing,
as
noteholder or assignee thereof, in and to that Mortgage Note), or,
if
the original Mortgage Note has been lost or destroyed and not
replaced,
an original lost note affidavit, stating that the original Mortgage
Note
was lost or destroyed, together with a copy of the related Mortgage
Note
and all such intervening endorsements;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage or a copy of such
Mortgage, with recording information, and in the case of each
MERS
Mortgage Loan, the original Mortgage or a copy of such Mortgage,
with
recording information, noting the presence of the MIN of the
Mortgage
Loan and language indicating that the Mortgage Loan is a MOM Loan
if
the Mortgage Loan is a MOM Loan, 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 each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to
"Home
Equity Loan Asset Backed Certificates, Series 2006-S5, CWHEQ, Inc.,
by
The Bank of New York, a New York banking corporation, as trustee
under
the Pooling and Servicing Agreement dated as of September 1,
2006,
without recourse" or a copy of such assignment, with recording
information, (each such assignment, when duly and validly
completed,
to be in recordable form and sufficient to effect the assignment
of
and transfer to the assignee thereof, under the Mortgage to which
such
assignment relates);
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording
information,
together with all interim recorded assignments of such Mortgage or
a
copy of such assignments, with recording information (in each
case
noting the presence of a MIN in the case of each MERS Mortgage
Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy
or a copy of lender's title policy or a printout of the
electronic
equivalent and all riders thereto or, in the event such original
title
policy has not been received from the insurer, such original or
duplicate original lender's title policy and all riders thereto
shall
be delivered within one year of the Closing Date.
In addition, in connection with the assignment of any MERS
Mortgage Loan, each Seller agrees that it will cause, at such
Seller's own
expense, the MERS(R) System to indicate (and provide evidence to
the Trustee
that it has done so) that such Mortgage Loans have been assigned by
such
Seller to the Trustee in accordance with this Agreement for the
benefit of
46
<PAGE>
the Certificateholders by including (or deleting, in the case of
Mortgage
Loans which are repurchased in accordance with this Agreement) in
such
computer files (a) the code "[IDENTIFY TRUSTEE SPECIFIC CODE]" in
the field
"[IDENTIFY THE FIELD NAME FOR TRUSTEE]" which identifies the
Trustee and (b)
the code "[IDENTIFY SERIES SPECIFIC CODE NUMBER]" in the field
"Pool Field"
which identifies the series of the Certificates issued in
connection with such
Mortgage Loans. The Sellers further agree that they will not, and
will not
permit the Master Servicer to, and the Master Servicer agrees that
it will
not, alter the codes referenced in this paragraph with respect to
any Mortgage
Loan 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 a Seller cannot deliver the original
recorded
Mortgage or all interim recorded assignments of the Mortgage
satisfying the
requirements of clause (ii), (iii) or (iv) concurrently with the
execution and
delivery hereof, such Seller shall deliver or cause to be delivered
to the
Trustee a true copy of such Mortgage and of each such undelivered
interim
assignment of the Mortgage each certified by such Seller, the
applicable title
company, escrow agent or attorney, or the originator of such
Mortgage, as the
case may be, to be a true and complete copy of the original
Mortgage or
assignment of Mortgage submitted for recording. For any such
Mortgage Loan
that is not a MERS Mortgage Loan each Seller shall promptly deliver
or cause
to be delivered to the Trustee such original Mortgage and such
assignment or
assignments with evidence of recording indicated thereon upon
receipt thereof
from the public recording official, or a copy thereof, certified,
if
appropriate, by the relevant recording office, but in no event
shall any such
delivery be made later than 270 days following the Closing Date;
provided that
in the event that by such date such Seller is unable to deliver or
cause to be
delivered each such Mortgage and each interim assignment by reason
of the fact
that any such 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,
such
Seller shall deliver or cause to be delivered such documents to the
Trustee as
promptly as possible upon receipt thereof. If the public recording
office in
which a Mortgage or interim assignment thereof is recorded retains
the
original of such Mortgage or assignment, a copy of the original
Mortgage or
assignment so retained, with evidence of recording thereon,
certified to be
true and complete by such recording office, shall satisfy a
Seller's
obligations in Section 2.01. If any document submitted for
recording pursuant
to this Agreement is (x) lost prior to recording or rejected by the
applicable
recording office, the applicable Seller shall immediately prepare
or cause to
be prepared a substitute and submit it for recording, and shall
deliver copies
and originals thereof in accordance with the foregoing or (y) lost
after
recording, the applicable Seller shall deliver to the Trustee a
copy of such
document certified by the applicable public recording office to be
a true and
complete copy of the original recorded document. Each Seller shall
promptly
forward or cause to be forwarded to the Trustee (x) from time to
time
additional original documents evidencing an assumption or
modification of a
Mortgage Loan and (y) any other documents required to be delivered
by the
Depositor or the Master Servicer to the Trustee within the time
periods
specified in this Section 2.01.
With respect to each Mortgage Loan other than a MERS
Mortgage Loan as to which the related Mortgaged Property and
Mortgage File are
located in (a) the State of California or (b) any other
jurisdiction under the
laws of which the recordation of the assignment specified
47
<PAGE>
in clause (iii) above is not necessary to protect the Trustee's and
the
Certificateholders' interest in the related Mortgage Loan, as
evidenced by an
Opinion of Counsel delivered by CHL to the Trustee and a copy to
the Rating
Agencies, in lieu of recording the assignment specified in clause
(iii) above,
the applicable Seller may deliver an unrecorded assignment in
blank, in form
otherwise suitable for recording to the Trustee; provided that if
the related
Mortgage has not been returned from the applicable public recording
office,
such assignment, or any copy thereof, of the Mortgage may exclude
the
information to be provided by the recording office. As to any
Mortgage Loan
other than a MERS Mortgage Loan, the procedures of the preceding
sentence
shall be applicable only so long as the related Mortgage File is
maintained in
the possession of the Trustee in the State or jurisdiction
described in such
sentence. In the event that with respect to Mortgage Loans other
than MERS
Mortgage Loans (I) any Seller, the Depositor, the Master Servicer,
the
Certificate Insurer or the NIM Insurer gives written notice to the
Trustee
that recording is required to protect the right, title and interest
of the
Trustee on behalf of the Certificateholders in and to any Mortgage
Loan, (II)
a court recharacterizes any sale of the Mortgage Loans as a
financing, or
(III) as a result of any change in or amendment to the laws of the
State or
jurisdiction described in the first sentence of this paragraph or
any
applicable political subdivision thereof, or any change in official
position
regarding application or interpretation of such laws, including a
holding by a
court of competent jurisdiction, such recording is so required, the
Trustee
shall complete the assignment in the manner specified in clause
(iii) above
and CHL shall submit or cause to be submitted for recording as
specified above
or, should CHL fail to perform such obligations, the Trustee shall
cause the
Master Servicer, at the Master Servicer's expense, to cause each
such
previously unrecorded assignment to be submitted for recording as
specified
above. In the event a Mortgage File is released to the Master
Servicer as a
result of the Master Servicer's having completed a Request for
Document
Release, the Trustee shall complete the assignment of the related
Mortgage in
the manner specified in clause (iii) above.
The Trustee or its agent shall maintain possession of the
Mortgage Files in the State of California and shall not remove the
Mortgage
Files from the State of California without the written consent of
the
Certificate Insurer. In the event that a Seller fails to record an
assignment
of a Mortgage Loan as herein provided within 90 days of notice of
an event set
forth in clause (I), (II) or (III) of the preceding paragraph, the
Master
Servicer shall prepare and, if required hereunder, file such
assignments for
recordation in the appropriate real property or other records
office. Each
Seller hereby appoints the Master Servicer (and any successor
servicer
hereunder) as its attorney-in-fact with full power and authority
acting in its
stead for the purpose of such preparation, execution and
filing.
In the case of Mortgage Loans that become the subject of a
Principal Prepayment between the Closing Date (in the case of
Initial Mortgage
Loans) or related Subsequent Transfer Date (in the case of
Subsequent Mortgage
Loans) and the Cut-off Date, CHL shall deposit or cause to be
deposited in the
Certificate Account the amount required to be deposited therein
with respect
to such payment pursuant to Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement,
within thirty days after the Closing Date (in the case of Initial
Mortgage
Loans) or within twenty days after the related Subsequent Transfer
Date (in
the case of Subsequent Mortgage Loans), CHL (on behalf of each
Seller) shall
either (i) deliver to the Trustee the Mortgage File as required
pursuant to
this
48
<PAGE>
Section 2.01 for each Delay Delivery Mortgage Loan or (ii) (A)
repurchase the
Delay Delivery Mortgage Loan or (B) substitute the Delay Delivery
Mortgage
Loan for a Replacement Mortgage Loan, which repurchase or
substitution shall
be accomplished in the manner and subject to the conditions set
forth in
Section 2.03, provided that if CHL fails to deliver a Mortgage File
for any
Delay Delivery Mortgage Loan within the period provided in the
prior sentence,
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 CHL shall have five (5) Business Days to
cure such
failure to deliver. CHL shall promptly provide each Rating Agency
with written
notice of any cure, repurchase or substitution made pursuant to the
proviso of
the preceding sentence. On or before the thirtieth (30th) day (or
if such
thirtieth day is not a Business Day, the succeeding Business Day)
after the
Closing Date (in the case of Initial Mortgage Loans) or within
twenty days
after the related Subsequent Transfer Date (in the case of
Subsequent Mortgage
Loans), the Trustee shall, in accordance with the provisions of
Section 2.02,
send a Delay Delivery Certification substantially in the form
annexed hereto
as Exhibit G-3 (with any applicable exceptions noted thereon) for
all Delay
Delivery Mortgage Loans delivered within thirty (30) days after
such date. The
Trustee will promptly send a copy of such Delay Delivery
Certification to each
Rating Agency.
Each Seller has entered into this Agreement in consideration
for the purchase of the Mortgage Loans sold by such Seller to the
Depositor
and has agreed to take the actions specified herein. The
Depositor,
concurrently with the execution and delivery of this Agreement,
hereby sells,
transfers, assigns and otherwise conveys to the Trustee for the use
and
benefit of the Certificateholders, without recourse, all right
title and
interest in the portion of the Trust Fund not otherwise conveyed to
the Trust
Fund pursuant to Sections 2.01(a) or (b).
Section 2.02
Acceptance by Trustee of the Mortgage Loans.
(a) The Trustee acknowledges receipt, subject to the
limitations
contained in and any exceptions noted in the Initial Certification
in the form
annexed hereto as Exhibit G-1 and in the list of exceptions
attached thereto,
of the documents referred to in clauses (i) and (iii) of Section
2.01(g) above
with respect to the Initial Mortgage Loans and all other assets
included in
the Trust Fund and declares that it holds and will hold such
documents and the
other documents delivered to it constituting the Mortgage Files,
and that it
holds or will hold such other assets included in the Trust Fund, in
trust for
the exclusive use and benefit of all present and future
Certificateholders.
The Trustee agrees to execute and deliver on the Closing
Date to the Depositor, the Master Servicer, CHL (on behalf of each
Seller) and
the Certificate Insurer, an Initial Certification substantially in
the form
annexed hereto as Exhibit G-1 to the effect that, as to each
Initial Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Initial
Mortgage
Loan paid in full or any Initial Mortgage Loan specifically
identified in such
certification as not covered by such certification), the documents
described
in Section 2.01(g)(i) and, in the case of each Initial Mortgage
Loan that is
not a MERS Mortgage Loan, the documents described in Section
2.01(g)(iii) with
respect to such Initial Mortgage Loans as are in the Trustee's
possession and
based on its review and examination and only as to the foregoing
documents,
such documents appear regular on their face and relate to such
Initial
Mortgage Loan. The Trustee agrees to execute and deliver within 30
days after
the Closing Date to the Depositor, the Master
49
<PAGE>
Servicer, CHL (on behalf of each Seller) and the Certificate
Insurer, an
Interim Certification substantially in the form annexed hereto as
Exhibit G-2
to the effect that, as to each Initial Mortgage Loan listed in the
Mortgage
Loan Schedule (other than any Initial Mortgage Loan paid in full or
any
Initial Mortgage Loan specifically identified in such certification
as not
covered by such certification) all documents required to be
delivered to the
Trustee pursuant to the Agreement with respect to such Initial
Mortgage Loans
are in its possession (except those documents described in
Section
2.01(g)(vi)) and based on its review and examination and only as to
the
foregoing documents, (i) such documents appear regular on their
face and
relate to such Initial Mortgage Loan, and (ii) the information set
forth in
items (i), (iv), (v), (vi), (viii) and (ix) of the definition of
the "Mortgage
Loan Schedule" accurately reflects information set forth in the
Mortgage File.
On or before the thirtieth (30th) day after the Closing Date (or if
such
thirtieth day is not a Business Day, the succeeding Business Day),
the Trustee
shall deliver to the Depositor, the Master Servicer, CHL (on behalf
of each
Seller) and the Certificate Insurer a Delay Delivery Certification
with
respect to the Initial Mortgage Loans substantially in the form
annexed hereto
as Exhibit G-3, with any applicable exceptions noted thereon. The
Trustee
shall be under no duty or obligation to inspect, review or examine
such
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.
Not later than 180 days after the Closing Date, the Trustee
shall deliver to the Depositor, the Master Servicer, CHL (on behalf
of each
Seller), the Certificate Insurer and any Certificateholder that so
requests, a
Final Certification with respect to the Initial Mortgage Loans
substantially
in the form annexed hereto as Exhibit H, with any applicable
exceptions noted
thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Trustee shall review each Mortgage
File with
respect to the Initial Mortgage Loans to determine that such
Mortgage File
contains the following documents:
(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 that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest
of the party so endorsing, as noteholder or assignee thereof, in
and
to that Mortgage Note), or, if the original Mortgage Note has
been
lost or destroyed and not replaced, an original lost note
affidavit,
stating that the original Mortgage Note was lost or destroyed,
together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each Initial Mortgage Loan that is not a
MERS Mortgage Loan, the original recorded Mortgage or a copy of
such
Mortgage, with recording information, and in the case of each
Initial
Mortgage Loan that is a MERS Mortgage Loan, the original Mortgage
or a
copy of such Mortgage, with recording information, noting the
presence
of the MIN of the Initial Mortgage Loan and language indicating
that
the Mortgage Loan is a MOM Loan if the
50
<PAGE>
Initial Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon, or a copy of the Mortgage certified by the
public
recording office in which Mortgage has been recorded;
(iii) in the case of each Initial Mortgage Loan that is not a
MERS Mortgage Loan, a duly executed assignment of the Mortgage or
a
copy thereof with recording information, in either case in the
form
permitted by Section 2.01;
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording
information,
together with all interim recorded assignments of such Mortgage or
a
copy of such assignments, with recording information (in each
case
noting the presence of a MIN in the case of each MERS Mortgage
Loan);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy
or a copy of lender's title policy or a printout of the
electronic
equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any
document or documents constituting a part of such Mortgage File
that do not
meet the requirements of clauses (i)-(iv) and (vi) above, the
Trustee shall
include such exceptions in such Final Certification (and the
Trustee shall
state in such Final Certification whether any Mortgage File does
not then
include the original or duplicate original lender's title policy or
a printout
of the electronic equivalent and all riders thereto). If the public
recording
office in which a Mortgage or assignment thereof is recorded
retains the
original of such Mortgage or assignment, a copy of the original
Mortgage or
assignment so retained, with evidence of recording thereon,
certified to be
true and complete by such recording office, shall be deemed to
satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable.
CHL shall
promptly correct or cure such defect referred to above within 90
days from the
date it was so notified of such defect and, if CHL does not correct
or cure
such defect within such period, CHL shall either (A) if the time to
cure such
defect expires prior to the end of the second anniversary of the
Closing Date,
substitute for the related Initial Mortgage Loan a Replacement
Mortgage Loan,
which substitution shall be accomplished in the manner and subject
to the
conditions set forth in Section 2.03, or (B) purchase such Initial
Mortgage
Loan from the Trust Fund within 90 days from the date CHL was
notified of such
defect in writing at the Purchase Price of such Initial Mortgage
Loan;
provided that any such substitution pursuant to (A) above or
repurchase
pursuant to (B) above shall not be effected prior to the delivery
to the
Trustee of the Opinion of Counsel required by Section 2.05 hereof
and any
substitution pursuant to (A) above shall not be effected prior to
the
additional delivery to the Trustee of a Request for File Release.
No
substitution will be made in any calendar month after the
Determination Date
for such month. The Purchase Price for any such Initial Mortgage
Loan shall be
deposited by CHL in the Certificate Account and, upon receipt of
such deposit
and Request for File Release with respect thereto, the Trustee
shall release
the related Mortgage File to CHL and shall execute and deliver at
CHL's
request such instruments of transfer or assignment as CHL has
prepared, in
each case without recourse, as shall be necessary to vest in CHL,
or a
designee, the Trustee's interest in any Initial Mortgage Loan
released
pursuant hereto.
51
<PAGE>
If pursuant to the foregoing provisions CHL repurchases an Initial
Mortgage
Loan that is a MERS Mortgage Loan, the Master Servicer shall cause
MERS to
execute and deliver an assignment of the Mortgage in recordable
form to
transfer the Mortgage from MERS to CHL and shall cause such
Mortgage to be
removed from registration on the MERS(R) System in accordance with
MERS' rules
and regulations.
The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and
conditions set
forth herein. Each Seller shall promptly deliver to the Trustee,
upon the
execution or receipt thereof, the originals of such other documents
or
instruments constituting the Mortgage File that come into the
possession of
such Seller from time to time.
It is understood and agreed that the obligation of CHL to
substitute for or to purchase any Mortgage Loan that does not meet
the
requirements of Section 2.02(a) above shall constitute the sole
remedy
respecting such defect available to the Trustee, the Depositor and
any
Certificateholder against any Seller.
It is understood and agreed that the obligation of CHL to
substitute for or to purchase, pursuant to Section 2.02(a), any
Initial
Mortgage Loan whose Mortgage File contains any document or
documents that does
not meet the requirements of clauses (i)-(iv) and (vi) above and
which defect
is not corrected or cured by CHL within 90 days from the date it
was notified
of such defect, shall constitute the sole remedy respecting such
defect
available to the Trustee, the Depositor and any Certificateholder
against any
Seller.
(b) The Trustee agrees to execute and deliver on the Subsequent
Transfer Date to the Depositor, the Master Servicer, CHL (on behalf
of each
Seller) and the Certificate Insurer an Initial Certification
substantially in
the form annexed hereto as Exhibit G-4 to the effect that, as to
each
Subsequent Mortgage Loan listed in the Mortgage Loan Schedule
(other than any
Subsequent Mortgage Loan paid in full or any Subsequent Mortgage
Loan
specifically identified in such certification as not covered by
such
certification), the documents described in Section 2.01(g)(i) and,
in the case
of each Subsequent Mortgage Loan that is not a MERS Mortgage Loan,
the
documents described in Section 2.01(g)(iii), with respect to such
Subsequent
Mortgage Loan are in its possession, and based on its review and
examination
and only as to the foregoing documents, such documents appear
regular on their
face and relate to such Subsequent Mortgage Loan.
The Trustee agrees to execute and deliver within 30 days
after the Subsequent Transfer Date to the Depositor, the Master
Servicer, CHL
(on behalf of each Seller) and the Certificate Insurer an
Interim
Certification substantially in the form annexed hereto as Exhibit
G-2 to the
effect that, as to each Subsequent Mortgage Loan listed in the
Mortgage Loan
Schedule (other than any Subsequent Mortgage Loan paid in full or
any
Subsequent Mortgage Loan specifically identified in such
certification as not
covered by such certification), all documents required to be
delivered to it
pursuant to this Agreement with respect to such Subsequent Mortgage
Loan are
in its possession (except those described in Section 2.01(g)(vi))
and based on
its review and examination and only as to the foregoing documents,
(i) such
documents appear regular on their face and relate to such
Subsequent Mortgage
Loan, and (ii) the information set forth in items (i), (iv), (v),
(vi), (viii)
and (ix) of the definition of the "Mortgage Loan Schedule"
52
<PAGE>
accurately reflects information set forth in the Mortgage File. On
or before
the thirtieth (30th) day after the Subsequent Transfer Date (or if
such
thirtieth day is not a Business Day, the succeeding Business Day),
the Trustee
shall deliver to the Depositor, the Master Servicer, CHL (on behalf
of each
Seller) and the Certificate Insurer a Delay Delivery Certification
with
respect to the Subsequent Mortgage Loans substantially in the form
annexed
hereto as Exhibit G-3, with any applicable exceptions noted
thereon, together
with a Subsequent Certification substantially in the form annexed
hereto as
Exhibit G-4. The Trustee shall be under no duty or obligation to
inspect,
review or examine such 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.
Not later than 180 days after the Subsequent Transfer Date,
the Trustee shall deliver to the Depositor, the Master Servicer,
CHL (on
behalf of each Seller), the Certificate Insurer and to any
Certificateholder
that so requests a Final Certification with respect to the
Subsequent Mortgage
Loans substantially in the form annexed hereto as Exhibit H, with
any
applicable exceptions noted thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Trustee shall review each Mortgage
File with
respect to the Subsequent Mortgage Loans to determine that such
Mortgage File
contains the following documents:
(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 that show a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each such
endorsement being sufficient to transfer all right, title and
interest
of the party so endorsing, as noteholder or assignee thereof, in
and
to that Mortgage Note), or, if the original Mortgage Note has
been
lost or destroyed and not replaced, an original lost note
affidavit,
stating that the original Mortgage Note was lost or destroyed,
together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each Subsequent Mortgage Loan that is not
a MERS Mortgage Loan, the original recorded Mortgage or a copy of
such
Mortgage, with recording information, and in the case of each
Subsequent Mortgage Loan that is a MERS Mortgage Loan, the
original
Mortgage or a copy of such Mortgage, with recording
information,
noting the presence of the MIN of the Subsequent Mortgage Loan
and
language indicating that the Subsequent Mortgage Loan is a MOM Loan
if
the Subsequent Mortgage Loan is a MOM Loan, with evidence of
recording
indicated thereon, or a copy of the Mortgage certified by the
public
recording office
in which Mortgage has been recorded;
(iii) in the case of each Subsequent Mortgage Loan that is not
a MERS Mortgage Loan, a duly executed assignment of the Mortgage or
a
copy thereof with recording information, in either case in the
form
permitted by Section 2.01;
53
<PAGE>
(iv) the original recorded assignment or assignments of the
Mortgage or a copy of such assignments, with recording
information,
together with all interim recorded assignments of such Mortgage or
a
copy of such assignments, with recording information (in each
case
noting the presence of a MIN in the case of each MERS Mortgage
Loan);
(v)
the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy
or a copy of lender's title policy or a printout of the
electronic
equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any
document or documents constituting a part of such Mortgage File
that do not
meet the requirements of clauses (i)-(iv) and (vi) above, the
Trustee shall
include such exceptions in such Final Certification (and the
Trustee shall
state in such Final Certification whether any Mortgage File does
not then
include the original or duplicate original lender's title policy or
a printout
of the electronic equivalent and all riders thereto). If the public
recording
office in which a Mortgage or assignment thereof is recorded
retains the
original of such Mortgage or assignment, a copy of the original
Mortgage or
assignment so retained, with evidence of recording thereon,
certified to be
true and complete by such recording office, shall be deemed to
satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable.
CHL shall
promptly correct or cure such defect referred to above within 90
days from the
date it was so notified of such defect and, if CHL does not correct
or cure
such defect within such period, CHL shall either (A) if the time to
cure such
defect expires prior to the end of the second anniversary of the
Closing Date,
substitute for the related Subsequent Mortgage Loan a Replacement
Mortgage
Loan, which substitution shall be accomplished in the manner and
subject to
the conditions set forth in Section 2.03, or (B) purchase such
Subsequent
Mortgage Loan from the Trust Fund within 90 days from the date CHL
was
notified of such defect in writing at the Purchase Price of such
Subsequent
Mortgage Loan; provided that any such substitution pursuant to (A)
above or
repurchase pursuant to (B) above shall not be effected prior to the
delivery
to the Trustee of the Opinion of Counsel required by Section 2.05
hereof and
any substitution pursuant to (A) above shall not be effected prior
to the
additional delivery to the Trustee of a Request for File Release.
No
substitution will be made in any calendar month after the
Determination Date
for such month. The Purchase Price for any such Subsequent Mortgage
Loan shall
be deposited by CHL in the Certificate Account and, upon receipt of
such
deposit and Request for File Release with respect thereto, the
Trustee shall
release the related Mortgage File to CHL and shall execute and
deliver at
CHL's request such instruments of transfer or assignment as CHL has
prepared,
in each case without recourse, as shall be necessary to vest in
CHL, or a
designee, the Trustee's interest in any Subsequent Mortgage Loan
released
pursuant hereto. If pursuant to the foregoing provisions CHL
repurchases a
Subsequent Mortgage Loan that is a MERS Mortgage Loan, the Master
Servicer
shall cause MERS to execute and deliver an assignment of the
Mortgage in
recordable form to transfer the Mortgage from MERS to CHL and shall
cause such
Mortgage to be removed from registration on the MERS(R) System in
accordance
with MERS' rules and regulations.
The
Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and
conditions set
forth herein. Each Seller shall
54
<PAGE>
promptly deliver to the Trustee, upon the execution or receipt
thereof, the
originals of such other documents or instruments constituting the
Mortgage
File that come into the possession of such Seller from time to
time.
It is understood and agreed that the obligation of the
Sellers to substitute for or to purchase, pursuant to Section
2.02(b), any
Subsequent Mortgage Loan whose Mortgage File contains any document
or
documents that does not meet the requirements of clauses (i)-(iv)
and (vi)
above and which defect is not corrected or cured by such Seller
within 90 days
from the date it was notified of such defect, shall constitute the
sole remedy
respecting such defect available to the Trustee, the Depositor and
any
Certificateholder against the Sellers.
Section 2.03
Representations, Warranties and Covenants of
the Master Servicer and the Sellers.
(a) The Master Servicer hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as
of the date
hereof with respect to the Initial Mortgage Loans, and the related
Subsequent
Transfer Date with respect to the Subsequent Mortgage Loans:
(1) The Master Servicer is duly organized as a Texas limited
partnership and is validly existing and in good standing under
the
laws of the State of Texas and is duly authorized and qualified
to
transact any and all business contemplated by this Agreement to
be
conducted by the Master Servicer in any state in which a
Mortgaged
Property is located or is otherwise not required under applicable
law
to effect such qualification and, in any event, is in compliance
with
the doing business laws of any such state, to the extent necessary
to
ensure its ability to enforce each Mortgage Loan, to service
the
Mortgage Loans in accordance with the terms of this Agreement and
to
perform any of its other obligations under this Agreement in
accordance with the terms hereof.
(2) The Master Servicer has the full partnership power and
authority to sell and service each Mortgage Loan, and to
execute,
deliver and perform, and to enter into and consummate the
transactions
contemplated by this Agreement and has duly authorized by all
necessary partnership action on the part of the Master Servicer
the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and
delivery
hereof by the other parties hereto, constitutes a legal, valid
and
binding obligation of the Master Servicer, enforceable against
the
Master Servicer in accordance with its terms, except that (a)
the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to
creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before which
any
proceeding therefor may be brought.
(3) The execution and delivery of this Agreement by the Master
Servicer, the servicing of the Mortgage Loans by the Master
Servicer
under this Agreement, the consummation of any other of the
transactions contemplated by this
55
<PAGE>
Agreement, and the fulfillment of or compliance with the terms
hereof
are in the ordinary course of business of the Master Servicer and
will
not (A) result in a material breach of any term or provision of
the
certificate of limited partnership, partnership agreement or
other
organizational document of the Master Servicer or (B)
materially
conflict with, result in a material breach, violation or
acceleration
of, or result in a material default under, the terms of any
other
material agreement or instrument to which the Master Servicer is
a
party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to the
Master
Servicer of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over the Master Servicer;
and
the Master Servicer is not in breach or violation of any
material
indenture or other material agreement or instrument, or in
violation
of any statute, order or regulation of any court, regulatory
body,
administrative agency or governmental body having jurisdiction over
it
which breach or violation may materially impair the Master
Servicer's
ability to perform or meet any of its obligations under this
Agreement.
(4) The Master Servicer is an approved servicer of
conventional mortgage loans for Fannie Mae and Freddie Mac and is
a
mortgagee approved by the Secretary of Housing and Urban
Development
pursuant to sections 203 and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer
that
would materially and adversely affect the execution, delivery
or
enforceability of this Agreement or the ability of the Master
Servicer
to service the Mortgage Loans or to perform any of its other
obligations under this Agreement or any Subsequent Transfer
Agreement
in accordance with the terms hereof or thereof.
(6) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by the Master Servicer of, or compliance by the
Master
Servicer with, this Agreement or the consummation of the
transactions
contemplated hereby, or if any such consent, approval,
authorization
or order is required, the Master Servicer has obtained the
same.
(7) The Master Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and
procedures
of MERS in connection with the servicing of the Mortgage Loans for
as
long as such Mortgage Loans are registered with MERS.
(b) CHL hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Initial
Cut-off Date
in the case of the Initial Mortgage Loans and as of the related
Subsequent
Cut-off Date in the case of the Subsequent Mortgage Loans (unless
otherwise
indicated or the context otherwise requires, percentages with
respect to the
Initial Mortgage Loans in the Trust Fund are measured by the
Cut-off Date
Principal Balance of the Initial Mortgage Loans in the Trust
Fund):
(1) CHL is duly organized as a New York corporation and is
validly existing and in good standing under the laws of the State
of
New York and is duly
56
<PAGE>
authorized and qualified to transact any and all business
contemplated
by this Agreement and each Subsequent Transfer Agreement to be
conducted by CHL in any state in which a Mortgaged Property is
located
or is otherwise not required under applicable law to effect
such
qualification and, in any event, is in compliance with the
doing
business laws of any such state, to the extent necessary to ensure
its
ability to enforce each Mortgage Loan, to sell the CHL Mortgage
Loans
in accordance with the terms of this Agreement and each
Subsequent
Transfer Agreement and to perform any of its other obligations
under
this Agreement and each Subsequent Transfer Agreement in
accordance
with the terms hereof and thereof.
(2) CHL has the full corporate power and authority to sell
each CHL Mortgage Loan, and to execute, deliver and perform, and
to
enter into and consummate the transactions contemplated by this
Agreement and each Subsequent Transfer Agreement and has duly
authorized by all necessary corporate action on the part of CHL
the
execution, delivery and performance of this Agreement and each
Subsequent Transfer Agreement; and this Agreement and each
Subsequent
Transfer Agreement, assuming the due authorization, execution
and
delivery hereof by the other parties hereto, constitutes a
legal,
valid and binding obligation of CHL, enforceable against CHL in
accordance with its terms, except that (a) the enforceability
hereof
may be limited by bankruptcy, insolvency, moratorium, receivership
and
other similar laws relating to creditors' rights generally and (b)
the
remedy of specific performance and injunctive and other forms
of
equitable relief may be subject to equitable defenses and to
the
discretion of the court before which any proceeding therefor may
be
brought.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by CHL, the sale of the CHL
Mortgage
Loans by CHL under this Agreement and each Subsequent Transfer
Agreement, the consummation of any other of the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement,
and the fulfillment of or compliance with the terms hereof and
thereof
are in the ordinary course of business of CHL and will not (A)
result
in a material breach of any term or provision of the charter or
by-laws of CHL or (B) materially conflict with, result in a
material
breach, violation or acceleration of, or result in a material
default
under, the terms of any other material agreement or instrument
to
which CHL is a party or by which it may be bound, or (C) constitute
a
material violation of any statute, order or regulation applicable
to
CHL of any court, regulatory body, administrative agency or
governmental body having jurisdiction over CHL; and CHL is not
in
breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order
or
regulation of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over it which breach or
violation may materially impair CHL's ability to perform or meet
any
of its obligations under this Agreement and each Subsequent
Transfer
Agreement.
(4) CHL is an approved seller of conventional mortgage loans
for Fannie Mae and Freddie Mac and is a mortgagee approved by
the
Secretary of Housing and Urban Development pursuant to sections
203
and 211 of the National Housing Act.
57
<PAGE>
(5) No litigation is pending or, to the best of CHL's
knowledge, threatened, against CHL that would materially and
adversely
affect the execution, delivery or enforceability of this Agreement
or
any Subsequent Transfer Agreement or the ability of CHL to sell
the
CHL Mortgage Loans or to perform any of its other obligations
under
this Agreement or any Subsequent Transfer Agreement in accordance
with
the terms hereof or thereof.
(6) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by CHL of, or compliance by CHL with, this
Agreement
or any Subsequent Transfer Agreement or the consummation of the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, CHL has obtained the same.
(7) The information set forth on Exhibit F-1 hereto with
respect to each Initial Mortgage Loan is true and correct in
all
material respects as of the Closing Date.
(8) CHL will treat the transfer of the CHL Mortgage Loans to
the Depositor as a sale of the CHL Mortgage Loans for all tax,
accounting and regulatory purposes.
(9) None of the Mortgage Loans is 30 days or more delinquent
as of the applicable Cut-off Date.
(10) No Mortgage Loan had a Combined Loan-to-Value Ratio at
origination in excess of 100.00%.
(11) Each Mortgage Loan is secured by a valid and enforceable
second lien on the related Mortgaged Property subject only to (1)
the
lien of non-delinquent current real property taxes and
assessments,
(2) covenants, conditions and restrictions, rights of way,
easements
and other matters of public record as of the date of recording of
such
Mortgage, such exceptions appearing of record being acceptable
to
mortgage lending institutions generally or specifically reflected
in
the appraisal made in connection with the origination of the
related
Mortgage Loan, (3) other matters to which like properties are
commonly
subject that do not materially interfere with the benefits of
the
security intended to be provided by such Mortgage (4) any
senior
mortgage loan secured by such Mortgaged Property and identified in
the
Mortgage File related to such Mortgage Loan.
(12) Immediately prior to the assignment of each CHL Mortgage
Loan to the Depositor, CHL had good title to, and was the sole
owner
of, such CHL Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and had full right and
authority,
subject to no interest or participation of, or agreement with,
any
other party, to sell and assign the same pursuant to this
Agreement.
(13) There is no delinquent tax or assessment lien against any
Mortgaged Property.
58
<PAGE>
(14) There is no valid offset, claim, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of
the
Mortgagor to pay the unpaid principal of or interest on such
Mortgage
Note.
(15) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property that are or may be a
lien
prior to, or equal with, the lien of such Mortgage, except those
that
are insured against by the title insurance policy referred to in
item
(18) below.
(16) As of the Closing Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Transfer Date in
the
case of the Subsequent Mortgage Loans, to the best of CHL's
knowledge,
each Mortgaged Property is free of material damage and is in
good
repair.
(17) As of the Closing Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Transfer Date in
the
case of the Subsequent Mortgage Loans, neither CHL nor any
prior
holder of any Mortgage has modified the Mortgage in any
material
respect (except that a Mortgage Loan may have been modified by
a
written instrument that has been recorded or submitted for
recordation, if necessary, to protect the interests of the
Certificateholders and the original or a copy of which has been
delivered to the Trustee); satisfied, cancelled or subordinated
such
Mortgage in whole or in part; released the related Mortgaged
Property
in whole or in part from the lien of such Mortgage; or executed
any
instrument of release, cancellation, modification (except as
expressly
permitted above) or satisfaction with respect thereto.
(18) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date
Principal
Balance of each such Mortgage Loan or a commitment (binder) to
issue
the same was effective on the date of the origination of each
Mortgage
Loan, each such policy is valid and remains in full force and
effect,
and each such policy was issued by a title insurer qualified to
do
business in the jurisdiction where the Mortgaged Property is
located
and acceptable to Fannie Mae and Freddie Mac and is in a form
acceptable to Fannie Mae and Freddie Mac, which policy insures
the
Sellers and successor owners of indebtedness secured by the
insured
Mortgage, as to the second priority lien, of the Mortgage subject
to
the exceptions set forth in paragraph (11) above; to the best of
CHL's
knowledge, no claims
have been made under such mortgage title
insurance policy and no prior holder of the related Mortgage,
including any Seller, has done, by act or omission, anything
that
would impair the coverage of such mortgage title insurance
policy.
(19) No Initial Mortgage Loan was the subject of a Principal
Prepayment in full between the Initial Cut-off Date and the
Closing
Date. No Subsequent Mortgage Loan was the subject of a
Principal
Prepayment
in full between the Subsequent Cut-off Date and the
Subsequent Transfer Date.
(20) To the best of CHL's knowledge, all of the improvements
that were included for the purpose of determining the Appraised
Value
of the Mortgaged
59
<PAGE>
Property lie wholly within the boundaries and building
restriction
lines of such property, and no improvements on adjoining
properties
encroach upon the Mortgaged Property.
(21) To the best of CHL's knowledge, no improvement located on
or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of CHL's
knowledge,
all inspections, licenses and certificates required to be made
or
issued with respect to all occupied portions of the Mortgaged
Property
and, with respect to the use and occupancy of the same, including
but
not limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material
adverse
effect on the value of such Mortgaged Property, and the
Mortgaged
Property is lawfully occupied under applicable law.
(22) The Mortgage Note and the related Mortgage are genuine,
and each is the legal, valid and binding obligation of the
maker
thereof, enforceable in accordance with its terms and under
applicable
law, except that (a) the enforceability thereof may be limited
by
bankruptcy, insolvency, moratorium, receivership and other
similar
laws relating to creditors' rights generally and (b) the remedy
of
specific performance and injunctive and other forms of
equitable
relief may be subject to equitable defenses and to the discretion
of
the court before which any proceeding therefor may be brought. To
the
best of CHL's knowledge, all parties to the Mortgage Note and
the
Mortgage had legal capacity to execute the Mortgage Note and
the
Mortgage and each Mortgage Note and Mortgage have been duly and
properly executed by such parties.
(23) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder,
and
any and all requirements as to completion of any on-site or
off-site
improvements and as to disbursements of any escrow funds therefor
have
been complied with. All costs, fees and expenses incurred in
making,
or closing or recording the Mortgage Loan were paid.
(24) The related Mortgage contains customary and enforceable
provisions that
render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of
the
benefits of the security, including, (i) in the case of a
Mortgage
designated as a deed of trust, by trustee's sale, and (ii)
otherwise
by judicial foreclosure.
(25) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve
as
such, has been properly designated and currently so serves and
is
named in such Mortgage, and no fees or expenses are or will
become
payable by the Certificateholders to the trustee under the deed
of
trust, except in connection with a trustee's sale after default by
the
Mortgagor.
(26) [Reserved].
(27) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which
customary
arrangements for repayment thereof
60
<PAGE>
have not been made, and no escrow deposits or payments of other
charges or payments due the Sellers have been capitalized under
the
Mortgage or the related Mortgage Note.
(28) The origination, underwriting, servicing and collection
practices with respect to each Mortgage Loan have been in all
respects
legal, proper, prudent and customary in the mortgage lending
and
servicing business, as conducted by prudent lending institutions
which
service mortgage loans of the same type in the jurisdiction in
which
the Mortgaged Property is located.
(29) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations.
(30) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature.
(31) Each Mortgage Loan contains a customary "due on sale"
clause.
(32) No less than approximately the percentage specified in
the Collateral Schedule of the Initial Mortgage Loans are secured
by
single family detached dwellings. No more than approximately
the
percentage specified in the Collateral Schedule of the Initial
Mortgage Loans are secured by two- to four-family dwellings. No
more
than approximately the percentage specified in the Collateral
Schedule
of the Initial Mortgage Loans are secured by low-rise
condominium
units. No more than approximately the percentage specified in
the
Collateral Schedule of the Initial Mortgage Loans are secured
by
high-rise condominium units. No more than approximately the
percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
are
secured by manufactured housing. No more than approximately the
percentage specified in the Collateral Schedule of the Initial
Mortgage Loans are secured by PUDs.
(33) Each Initial Mortgage Loan was originated on or after the
date specified in the Collateral Schedule.
(34) [Reserved];
(35) Approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans provide for a Prepayment
Charge.
(36) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately the
percentage
specified in the Collateral Schedule of the Initial Mortgage
Loans,
respectively, are secured by investor properties, and no less
than
approximately the percentage specified in the Collateral Schedule
of
the Initial Mortgage Loans respectively, are secured by
owner-occupied
Mortgaged Properties that are primary residences.
(37) At the Cut-off Date, the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance
policy
with a generally acceptable carrier that provides for fire and
extended coverage and coverage for such other hazards as are
customary
in the area where the Mortgaged Property is located in an
61
<PAGE>
amount that is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan
or
(ii) the greater of (a) the outstanding principal balance of
the
Mortgage Loan and (b) an amount such that the proceeds of such
policy
shall be sufficient to prevent the Mortgagor and/or the mortgagee
from
becoming a co-insurer. If the Mortgaged Property is a
condominium
unit, it is included under the coverage afforded by a blanket
policy
for the condominium unit. All such individual insurance policies
and
all flood policies referred to in item (38) below contain a
standard
mortgagee clause naming the applicable Seller or the original
mortgagee, and its successors in interest, as mortgagee, and
the
applicable Seller has received no notice that any premiums due
and
payable thereon have not been paid; the Mortgage obligates the
Mortgagor thereunder to maintain all such insurance, including
flood
insurance, at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage
to
obtain and maintain such insurance at the Mortgagor's cost and
expense
and to seek reimbursement therefor from the Mortgagor.
(38) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as
having
special flood hazards, a flood insurance policy in a form meeting
the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged
Property
with a generally acceptable carrier in an amount representing
coverage
not less
than the least of (A) the original outstanding principal
balance of the Mortgage Loan, (B) the minimum amount required
to
compensate for damage or loss on a replacement cost basis, or (C)
the
maximum amount of insurance that is available under the Flood
Disaster
Protection Act of 1973, as amended.
(39) To the best of CHL's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial
condemnation
of the Mortgaged Property.
(40) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of CHL's
knowledge, there is no material event that, with the passage of
time
or
with notice and the expiration of any grace or cure period,
would
constitute a default, breach, violation or event of acceleration
under
the Mortgage or the related Mortgage Note; and no Seller has
waived
any default, breach, violation or event of acceleration.
(41) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units
and
dwelling units in PUDs. To the best of CHL's knowledge, no
improvement
to a Mortgaged Property includes a cooperative or a mobile home
or
constitutes other than real property under state law.
(42) Each Mortgage Loan is being serviced by the Master
Servicer.
(43) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by
the
Mortgage, and the secured principal amount, as consolidated, bears
a
single interest rate and single repayment term reflected on the
Mortgage Loan Schedule. The consolidated principal amount does
not
exceed the original principal amount of the Mortgage Loan. The
62
<PAGE>
Mortgage Note does not permit or obligate the Master Servicer to
make
future advances to the Mortgagor at the option of the
Mortgagor.
(44) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground
rents
that previously became due and owing have been paid, or an escrow
of
funds has been established in an amount sufficient to pay for
every
such item that remains unpaid and that has been assessed, but is
not
yet due and payable.
Except for (A) payments in the nature of escrow
payments, and (B) interest accruing from the date of the Mortgage
Note
or date of disbursement of the Mortgage proceeds, whichever is
later,
to the day that precedes by one month the Due Date of the first
installment of principal and interest, including without
limitation,
taxes and insurance payments, the Master Servicer has not
advanced
funds, or induced, solicited or knowingly received any advance
of
funds by a party other than the Mortgagor, directly or indirectly,
for
the payment of any amount required by the Mortgage.
(45) The Mortgage Loans originated by CHL were underwritten in
all material respects in accordance with CHL's underwriting
guidelines
for closed-end second lien mortgage loans or, with respect to
Mortgage
Loans purchased by CHL were underwritten in all material respects
in
accordance with customary and prudent underwriting guidelines
generally used by originators of closed-end second lien
mortgage
loans.
(46) Prior to the approval of the Mortgage Loan application,
an appraisal of the related Mortgaged Property was obtained from
a
qualified appraiser, duly appointed by the originator, who had
no
interest, direct or indirect, in the Mortgaged Property or in any
loan
made on the security thereof, and whose compensation is not
affected
by the approval or disapproval of the Mortgage Loan; such appraisal
is
in a form acceptable to Fannie Mae and Freddie Mac.
(47) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan, and no Mortgage
Loan
is subject to a buydown or similar arrangement.
(48) The Mortgage Rates borne by the Initial Mortgage Loans as
of the Cut-off Date ranged between the approximate per annum
percentages specified on the Collateral Schedule and the
weighted
average Mortgage Rate of the Initial Mortgage Loans as of the
Cut-off
Date was approximately the per annum rate specified on the
Collateral
Schedule.
(49) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the
applicable
Seller's portfolio at the Closing Date as to which the
representations
and warranties made as to the Mortgage Loans set forth in this
Section
2.03(b) and Sections 2.03(c), 2.03(d) and 2.03(e) can be made.
No
selection was made in a manner that would adversely affect the
interests of Certificateholders or the Certificate Insurer.
63
<PAGE>
(50) [Reserved].
(51) Each of the Initial Mortgage Loans in the Mortgage Pool
has a Due Date on or before the date specified in the
Collateral
Schedule.
(52) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in
the
Prospectus Supplement.
(53) There is no obligation on the part of any Seller under
the terms of the Mortgage or related Mortgage Note to make payments
in
addition to those made by the Mortgagor.
(54) Any leasehold estate securing a Mortgage Loan has a term
of not less than five years in excess of the term of the
related
Mortgage Loan.
(55) Each Mortgage Loan represents a "qualified mortgage"
within the meaning of Section 860(a)(3) of the Code (but
without
regard to the rule in Treasury Regulation ss. 1.860G-2(f)(2)
that
treats a defective obligation as a qualified mortgage, or any
substantially similar successor provision) and applicable
Treasury
regulations promulgated thereunder.
(56) No Mortgage Loan was either a "consumer credit contract"
or a "purchase money loan" as such terms are defined in 16 C.F.R.
ss.
433 nor is any Mortgage Loan a "mortgage" as defined in 15 U.S.C.
ss.
1602(aa).
(57) To the extent required under applicable law, each
originator and subsequent mortgagee or servicer of the Mortgage
Loan
complied with all licensing requirements and was authorized to
transact and do business in the jurisdiction in which the
related
Mortgaged Property is located at all times when it held or
serviced
the Mortgage Loan. Any and all requirements of any federal, state
or
local laws or regulations, including, without limitation,
usury,
truth-in-lending, real estate settlement procedures, consumer
credit
protection, anti-predatory lending, fair credit reporting,
unfair
collection practice, equal credit opportunity, fair housing and
disclosure laws and regulations, applicable to the
solicitation,
origination, collection and servicing of such Mortgage Loan have
been
complied with in all material respects; and any obligations of
the
holder of the Mortgage Note, Mortgage and other loan documents
have
been complied with in all material respects; servicing of each
Mortgage Loan has been in accordance with prudent mortgage
servicing
standards, any applicable laws, rules and regulations and in
accordance with the terms of the Mortgage Notes, Mortgage and
other
loan documents, whether such origination and servicing was done by
the
applicable Seller, its affiliates, or any third party which
originated
the Mortgage Loan on behalf of, or sold the Mortgage Loan to, any
of
them, or any servicing agent of any of the foregoing.
(58) The Mortgaged Property complies with all applicable laws,
rules and regulations relating to environmental matters, including
but
not limited to those relating to radon, asbestos and lead paint and
no
Seller nor, to the best of CHL's
64
<PAGE>
knowledge, the Mortgagor, has received any notice of any violation
or
potential violation of such law.
(59) There is no action, suit or proceeding pending, or to the
best of CHL's knowledge, threatened or likely to be asserted
with
respect to the Mortgage Loan against or affecting any Seller before
or
by any court, administrative agency, arbitrator or governmental
body.
(60) No action, inaction, or event has occurred and no state
of fact exists or has existed that has resulted or will result in
the
exclusion from, denial of, or defense to coverage under any
applicable
hazard insurance policy, irrespective of the cause of such failure
of
coverage. In connection with the placement of any such insurance,
no
commission, fee, or other compensation has been or will be received
by
CHL or any designee of CHL or any corporation in which CHL or
any
officer, director, or employee had a financial interest at the time
of
placement of such insurance.
(61) Each Mortgage Loan has a fully assignable life of loan
tax service contract which may be assigned without the payment of
any
fee.
(62) No Mortgagor has notified CHL or the Master Servicer on
CHL's behalf, and CHL has no knowledge, of any relief requested
or
allowed to a Mortgagor under the Relief Act or any similar state
or
local law.
(63) Each Mortgage Loan was (A) originated no earlier than six
months prior to the time the applicable Seller purchased such
Mortgage
Loan pursuant to a mortgage loan purchase agreement or other
similar
agreement and (B) underwritten or reunderwritten by CHL in
accordance
with CHL's underwriting guidelines in effect at the time the loan
was
underwritten or reunderwritten, as applicable.
(64) Each Mortgage Loan, at the time it was originated and as
of the Closing Date or the related Subsequent Transfer Date, as
applicable, complied in all material respects with applicable
local,
state and federal laws, including, but not limited to, all
predatory
and abusive lending laws.
(65) None of the Mortgage Loans is a "high cost" mortgage loan
as defined by applicable federal, state and local predatory and
abusive lending laws.
(66) Each Prepayment Charge is enforceable and was originated
in compliance with all applicable federal, state and local
laws.
(67) None of the Mortgage Loans that are secured by property
located in the State of Illinois are in violation of the provisions
of
the Illinois Interest Act; 815 Ill. Comp. Stat. 205/0.01
(2004).
(68) There is no Mortgage Loan in the Trust Fund that was
originated on or after March 7, 2003, which is a "high cost home
loan"
as defined under the Georgia Fair Lending Act.
65
<PAGE>
(69) No Mortgage Loan in the Trust Fund is a High Cost Loan or
Covered Loan, as applicable (as such terms are defined in the
then-current Standard & Poor's LEVELS(R) Glossary which is now
Version
5.7, Appendix E) and no Mortgage Loan originated on or after
October
1, 2002 through March 6, 2003 is governed by the Georgia Fair
Lending
Act.
(70) Each Mortgage Loan is secured by a "single family
residence" within the meaning of Section 25(e)(10) of the
Internal
Revenue Code of 1986 (as amended) (the "Code"). The fair market
value
of the manufactured home securing each Mortgage Loan was at
least
equal to 80% of the adjusted issue price of the contract at either
(i)
the time the contract was originated (determined pursuant to the
REMIC
Provisions) or (ii) the time the contract is transferred to the
purchaser. Each Mortgage Loan is a "qualified mortgage" under
Section
860G(a)(3) of the Code.
(71) No Mortgage Loan in the Trust Fund is a "high cost home,"
"covered" (excluding home loans defined as "covered home loans" in
the
New Jersey Home Ownership Security Act of 2002 that were
originated
between November 26, 2003 and July 7, 2004), "high risk home"
or
"predatory" loan under any applicable state, federal or local law
(or
a similarly classified loan using different terminology under a
law
imposing heightened regulatory scrutiny or additional legal
liability
for residential mortgage loans having high interest rates,
points
and/or fees).
(72) There is no Mortgage Loan in the Trust Fund that was
originated on or after October 1, 2002 and before March 7, 2003,
which
is secured by property located in the State of Georgia.
(73) The representations in Section 2.03(c)(1)-(6),
2.03(d)(1)-(6) and 2.03(e)(1)-(6) are true and correct.
(74) The Mortgage Loans listed on the Mortgage Loan Schedule
as being covered by the Credit Insurance Policy are eligible for
such
coverage.
(c) Park Granada hereby represents and warrants to the Depositor,
the
Certificate Insurer and the Trustee as follows, as of the Cut-off
Date:
(1) Park Granada is duly organized as a Delaware corporation
and is validly existing and in good standing under the laws of
the
State of Delaware and is duly authorized and qualified to transact
any
and all business contemplated by this Agreement and each
Subsequent
Transfer Agreement to be conducted by Park Granada in any state
in
which a Mortgaged Property securing a Park Granada Mortgage Loan
is
located or is otherwise not required under applicable law to
effect
such qualification and, in any event, is in compliance with the
doing
business laws of any such state, to the extent necessary to ensure
its
ability to enforce each Park Granada Mortgage Loan, to sell the
Park
Granada Mortgage Loans in accordance with the terms of this
Agreement
and each Subsequent Transfer Agreement and to perform any of its
other
obligations under this Agreement in accordance with the terms
hereof.
66
<PAGE>
(2) Park Granada has the full company power and authority to
sell each Park Granada Mortgage Loan, and to execute, deliver
and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement
and has duly authorized by all necessary corporate action on the
part
of Park Granada the execution, delivery and performance of this
Agreement and each Subsequent Transfer Agreement; and this
Agreement
and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other
parties
hereto, constitutes a legal, valid and binding obligation of
Park
Granada, enforceable against Park Granada in accordance with
its
terms, except that (a) the enforceability hereof may be limited
by
bankruptcy, insolvency, moratorium, receivership and other
similar
laws relating to creditors' rights generally and (b) the remedy
of
specific performance and injunctive and other forms of
equitable
relief may be subject to equitable defenses and to the discretion
of
the court before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Granada, the sale of the
Park
Granada Mortgage Loans by Park Granada under this Agreement and
each
Subsequent Transfer Agreement, the consummation of any other of
the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement, and the fulfillment of or compliance with
the
terms hereof are in the ordinary course of business of Park
Granada
and will not (A) result in a material breach of any term or
provision
of the certificate of incorporation or by-laws of Park Granada or
(B)
materially conflict with, result in a material breach, violation
or
acceleration of, or result in a material default under, the terms
of
any other material agreement or instrument to which Park Granada is
a
party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to
Park
Granada of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Park Granada; and
Park
Granada is not in breach or violation of any material indenture
or
other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it
which breach or violation may materially impair Park Granada's
ability
to perform or meet any of its obligations under this Agreement.
(4) No litigation is pending or, to the best of Park Granada's
knowledge, threatened, against Park Granada that would materially
and
adversely affect the execution, delivery or enforceability of
this
Agreement or any Subsequent Transfer Agreement or the ability of
Park
Granada to sell the Park Granada Mortgage Loans or to perform any
of
its other obligations under this Agreement or any Subsequent
Transfer
Agreement in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by Park Granada of, or compliance by Park
Granada
with, this Agreement or any Subsequent Transfer Agreement or
the
consummation of the transactions contemplated hereby, or if any
such
consent, approval, authorization or order is required, Park
Granada
has obtained the same.
67
<PAGE>
(6) Park Granada will treat the transfer of the Park Granada
Mortgage Loans to the Depositor as a sale of the Park Granada
Mortgage
Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Granada
Mortgage Loan to the Depositor, Park Granada had good title to,
and
was the sole owner of, such Park Granada Mortgage Loan free and
clear
of any pledge, lien, encumbrance or security interest and had
full
right and authority, subject to no interest or participation of,
or
agreement with, any other party, to sell and assign the same
pursuant
to this Agreement.
(d) Park Monaco hereby represents and warrants to the Depositor,
the
Certificate Insurer and the Trustee as follows, as of the Cut-off
Date:
(1) Park Monaco is duly organized as a Delaware corporation
and is validly existing and in good standing under the laws of
the
State of Delaware and is duly authorized and qualified to transact
any
and all business contemplated by this Agreement and each
Subsequent
Transfer Agreement to be conducted by Park Monaco in any state
in
which a Mortgaged Property securing a Park Monaco Mortgage Loan
is
located or is otherwise not required under applicable law to
effect
such qualification and, in any event, is in compliance with the
doing
business laws of any such state, to the extent necessary to ensure
its
ability to enforce each Park Monaco Mortgage Loan, to sell the
Park
Monaco Mortgage Loans in accordance with the terms of this
Agreement
and each Subsequent Transfer Agreement and to perform any of its
other
obligations under this Agreement in accordance with the terms
hereof.
(2) Park Monaco has the full company power and authority to
sell each Park Monaco Mortgage Loan, and to execute, deliver
and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement
and has duly authorized by all necessary corporate action on the
part
of Park
Monaco the execution, delivery and performance of this
Agreement and each Subsequent Transfer Agreement; and this
Agreement
and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other
parties
hereto, constitutes a legal, valid and binding obligation of
Park
Monaco, enforceable against Park Monaco in accordance with its
terms,
except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other
similar
laws relating to creditors' rights generally and (b) the remedy
of
specific performance and injunctive and other forms of
equitable
relief may be subject to equitable defenses and to the discretion
of
the court before which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Monaco, the sale of the
Park
Monaco Mortgage Loans by Park Monaco under this Agreement and
each
Subsequent Transfer Agreement, the consummation of any other of
the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement, and the fulfillment of or compliance with
the
terms hereof are in the ordinary course of business of Park Monaco
and
will not (A) result in
68
<PAGE>
a material breach of any term or provision of the certificate
of
incorporation or by-laws of Park Monaco or (B) materially
conflict
with, result in a material breach, violation or acceleration of,
or
result in a material default under, the terms of any other
material
agreement or instrument to which Park Monaco is a party or by which
it
may be bound, or (C) constitute a material violation of any
statute,
order or regulation applicable to Park Monaco of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over Park Monaco; and Park Monaco is not in breach or violation of
any
material indenture or other material agreement or instrument, or
in
violation of any statute, order or regulation of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over it which breach or violation may materially impair Park
Monaco's
ability to perform or meet any of its obligations under this
Agreement.
(4) No litigation is pending or, to the best of Park Monaco's
knowledge, threatened, against Park Monaco that would materially
and
adversely affect the execution, delivery or enforceability of
this
Agreement or any Subsequent Transfer Agreement or the ability of
Park
Monaco to sell the Park Monaco Mortgage Loans or to perform any of
its
other obligations under this Agreement or any Subsequent
Transfer
Agreement in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by Park Monaco of, or compliance by Park Monaco
with,
this Agreement or any Subsequent Transfer Agreement or the
consummation of the transactions contemplated hereby, or if any
such
consent, approval, authorization or order is required, Park Monaco
has
obtained the same.
(6) Park Monaco will treat the transfer of the Park Monaco
Mortgage Loans to the Depositor as a sale of the Park Monaco
Mortgage
Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Monaco
Mortgage Loan to the Depositor, Park Monaco had good title to, and
was
the sole owner of, such Park Monaco Mortgage Loan free and clear
of
any pledge, lien, encumbrance or security interest and had full
right
and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign the same
pursuant
to this Agreement.
(e) Park Sienna hereby represents and warrants to the Depositor,
the
Certificate Insurer and the Trustee as follows, as of the Cut-off
Date:
(1) Park Sienna is duly organized as a Delaware limited
liability company and is validly existing and in good standing
under
the laws of the State of Delaware and is duly authorized and
qualified
to transact any and all business contemplated by this Agreement
and
each Subsequent Transfer Agreement to be conducted by Park Sienna
in
any state in which a Mortgaged Property securing a Park Sienna
Mortgage Loan is located or is otherwise not required under
applicable
law to
69
<PAGE>
effect such qualification and, in any event, is in compliance with
the
doing business laws of
any such state, to the extent necessary to
ensure its ability to enforce each Park Sienna Mortgage Loan, to
sell
the Park Sienna Mortgage Loans in accordance with the terms of
this
Agreement and each Subsequent Transfer Agreement and to perform any
of
its other obligations under this Agreement in accordance with
the
terms hereof.
(2) Park Sienna has the full company power and authority to
sell each Park Sienna Mortgage Loan, and to execute, deliver
and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement
and has duly authorized by all necessary company action on the part
of
Park Sienna the execution, delivery and performance of this
Agreement
and each Subsequent Transfer Agreement; and this Agreement and
each
Subsequent Transfer Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto,
constitutes
a legal, valid and binding obligation of Park Sienna,
enforceable
against Park Sienna in accordance with its terms, except that (a)
the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to
creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before which
any
proceeding therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Sienna, the sale of the
Park
Sienna Mortgage Loans by Park Sienna under this Agreement and
each
Subsequent Transfer Agreement, the consummation of any other of
the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement and the fulfillment of or compliance with the
terms
hereof are in the ordinary course of business of Park Sienna and
will
not (A) result in a material breach of any term or provision of
the
certificate of formation or limited liability company agreement
of
Park Sienna or (B) materially conflict with, result in a
material
breach, violation or acceleration of, or result in a material
default
under, the terms of any other material agreement or instrument
to
which Park Sienna is a party or by which it may be bound, or
(C)
constitute a material violation of any statute, order or
regulation
applicable to Park Sienna of any court, regulatory body,
administrative agency or governmental body having jurisdiction
over
Park Sienna; and Park Sienna is not in breach or violation of
any
material indenture or other material agreement or instrument, or
in
violation of any statute, order or regulation of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over it which breach or violation may materially impair Park
Sienna's
ability to perform or meet any of its obligations under this
Agreement.
(4) No
litigation is pending or, to the best of Park Sienna's
knowledge, threatened, against Park Sienna that would materially
and
adversely affect the execution, delivery or enforceability of
this
Agreement or any Subsequent Transfer Agreement or the ability of
Park
Sienna to sell the Park Sienna Mortgage Loans or to perform any of
its
other obligations under this Agreement or any Subsequent
Transfer
Agreement in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by
70
<PAGE>
Park Sienna of, or compliance by Park Sienna with, this Agreement
or
any Subsequent Transfer Agreement or the consummation of the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, Park Sienna has obtained the
same.
(6) Park Sienna will treat the transfer of the Park Sienna
Mortgage Loans to the Depositor as a sale of the Park Sienna
Mortgage
Loans for all tax, accounting and regulatory purposes.
(7)
Immediately prior to the assignment of each Park Sienna
Mortgage Loan to the Depositor, Park Sienna had good title to, and
was
the sole owner of, such the Park Sienna Mortgage Loan free and
clear
of any pledge, lien, encumbrance or security interest and had
full
right and authority, subject to no interest or participation of,
or
agreement with, any other party, to sell and assign the same
pursuant
to this Agreement.
(f) Upon discovery by any of the parties hereto of a breach of
a
representation or warranty set forth in Section 2.03(a) through (e)
that
materially and adversely affects the interests of the
Certificateholders or
the Certificate Insurer in any Mortgage Loan, the party discovering
such
breach shall give prompt notice thereof to the other parties, the
NIM Insurer
and the Certificate Insurer. Each of the Master Servicer and the
Sellers
(each, a "Representing Party") hereby covenants with respect to
the
representations and warranties set forth in Sections 2.03(a)
through (e) that
within 90 days of the earlier of the discovery by such Representing
Party or
receipt of written notice by such Representing Party from any party
of a
breach of any representation or warranty set forth herein made that
materially
and adversely affects the interests of the Certificateholders in
any Mortgage
Loan or the Certificate Insurer, it shall cure such breach in all
material
respects and, if such breach is not so cured, shall, (i) if such
90-day period
expires prior to the second anniversary of the Closing Date, remove
such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and
substitute
in its place a Replacement Mortgage Loan, in the manner and subject
to the
conditions set forth in this Section; or (ii) repurchase the
affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in
the manner
set forth below; provided that (a) any such substitution pursuant
to (i) above
or repurchase pursuant to (ii) above shall not be effected prior to
the
delivery to the Trustee of the Opinion of Counsel required by
Section 2.05
hereof, (b) any such substitution pursuant to (i) above shall not
be effected
prior to the additional delivery to the Trustee of a Request for
File Release
and (c) any such substitution pursuant to (i) above shall include a
payment by
the applicable Representing Party of any amount as calculated under
item (iii)
of the definition of "Purchase Price". Any Representing Party
liable for a
breach under this Section 2.03 shall promptly reimburse the Master
Servicer or
the Trustee for any expenses reasonably incurred by the Master
Servicer or the
Trustee in respect of enforcing the remedies for such breach. To
enable the
Master Servicer to amend the Mortgage Loan Schedule, any
Representing Party
liable for a breach under this Section 2.03 shall, unless it cures
such breach
in a timely fashion pursuant to this Section 2.03, promptly notify
the Master
Servicer whether such Representing Party intends either to
repurchase, or to
substitute for, the Mortgage Loan affected by such breach. With
respect to the
representations and warranties described in this Section that are
made to the
best of the Representing Party's knowledge, if it is discovered by
any of the
Depositor, the Master Servicer, the Sellers, the Certificate
Insurer or the
Trustee that the substance of such representation and warranty is
inaccurate
and such inaccuracy materially and adversely affects the value of
the related
Mortgage Loan, notwithstanding the Representing Party's lack of
71
<PAGE>
knowledge with respect to the substance of such representation or
warranty,
such inaccuracy shall be deemed a breach of the applicable
representation or
warranty.
With respect to any Replacement Mortgage Loan or Loans, the
applicable Seller delivering such Replacement Mortgage Loan shall
deliver to
the Trustee for the benefit of the Certificateholders and the
Certificate
Insurer the related Mortgage Note, Mortgage and 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 will be made in any calendar month after
the
Determination Date for such month. Scheduled Payments due with
respect to
Replacement Mortgage Loans in the Due Period related to the
Distribution Date
on which such proceeds are to be distributed shall not be part of
the Trust
Fund and will be retained by the applicable Seller delivering such
Replacement
Mortgage Loan on such Distribution Date. For the month of
substitution,
distributions to Certificateholders will include the Scheduled
Payment due on
any Deleted Mortgage Loan for the related Due Period and thereafter
the
applicable Seller shall be entitled to retain all amounts received
in respect
of such Deleted Mortgage Loan. The Master Servicer shall amend the
Mortgage
Loan Schedule for the benefit of the Certificateholders to reflect
the removal
of such Deleted Mortgage Loan and the substitution of the
Replacement Mortgage
Loan or Loans and the Master Servicer shall deliver the amended
Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Replacement
Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all
respects, and
the applicable Seller delivering such Replacement Mortgage Loan
shall be
deemed to have made with respect to such Replacement Mortgage Loan
or Loans,
as of the date of substitution, the representations and warranties
set forth
in Section 2.03(b), (c), (d) or (e) with respect to such Mortgage
Loan. Upon
any such substitution and the deposit to the Certificate Account of
the amount
required to be deposited therein in connection with such
substitution as
described in the following paragraph, the Trustee shall release to
the
Representing Party the Mortgage File relating to such Deleted
Mortgage Loan
and held for the benefit of the Certificateholders and shall
execute and
deliver at the Master Servicer's direction such instruments of
transfer or
assignment as have been prepared by the Master Servicer, in each
case without
recourse, as shall be necessary to vest in the applicable Seller,
or its
respective designee, title to the Trustee's interest in any Deleted
Mortgage
Loan substituted for pursuant to this Section 2.03.
For any month in which any Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans,
the Master
Servicer will determine the amount (if any) by which the aggregate
principal
balance of all such Replacement Mortgage Loans as of the date of
substitution
is less than the Stated Principal Balance (after application of the
principal
portion of the Scheduled Payment due in the month of substitution)
of all such
Deleted Mortgage Loans. An amount equal to the aggregate of the
deficiencies
described in the preceding sentence (such amount, the "Substitution
Adjustment
Amount") shall be forwarded by the applicable Seller to the Master
Servicer
and deposited by the Master Servicer into the Certificate Account
not later
than the Determination Date for the Distribution Date relating to
the
Prepayment Period during which the related Mortgage Loan became
required to be
purchased or replaced hereunder.
In the event that a Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited in the
Certificate
Account pursuant to Section 3.05 on the
72
<PAGE>
Determination Date for the Distribution Date in the month following
the month
during which such Seller became obligated to repurchase or replace
such
Mortgage Loan and upon such deposit of the Purchase Price, the
delivery of the
Opinion of Counsel required by Section 2.05, if any, and the
receipt of a
Request for File Release, the Trustee shall release the related
Mortgage File
held for the benefit of the Certificateholders to such Seller, and
the Trustee
shall execute and deliver at such Person's direction the related
instruments
of transfer or assignment prepared by such Seller, in each case
without
recourse, as shall be necessary to transfer title from the Trustee
for the
benefit of the Certificateholders and transfer the Trustee's
interest to such
Seller to any Mortgage Loan purchased pursuant to this Section
2.03. It is
understood and agreed that the obligation under this Agreement of
the Sellers
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
Sellers respecting such breach available to Certificateholders, the
Depositor
or the Trustee.
(g) The representations and warranties set forth in this Section
2.03
shall survive delivery of the respective Mortgage Files to the
Trustee for the
benefit of the Certificateholders and the Certificate Insurer with
respect to
each Mortgage Loan.
Section 2.04
Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master
Servicer, the Certificate Insurer and the Trustee as follows, as of
the date
hereof and as of each Subsequent Transfer Date:
(1) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of
Delaware
and has full power and authority (corporate and other) necessary
to
own or hold its properties and to conduct its business as now
conducted by it and to enter into and perform its obligations
under
this
Agreement and each Subsequent Transfer Agreement.
(2) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate
the
transactions contemplated by, this Agreement and each
Subsequent
Transfer Agreement and has duly authorized, by all necessary
corporate
action on its part, the execution, delivery and performance of
this
Agreement and each Subsequent Transfer Agreement; and this
Agreement
and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other
parties
hereto, constitutes a legal, valid and binding obligation of
the
Depositor, enforceable against the Depositor in accordance with
its
terms, subject, as to enforceability, to (i) bankruptcy,
insolvency,
reorganization, moratorium and other similar laws affecting
creditors'
rights generally and (ii) general principles of equity, regardless
of
whether enforcement is sought in a proceeding in equity or at
law.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by the Depositor, the consummation
of
the transactions contemplated by this Agreement, and the
fulfillment
of or compliance with the terms hereof are in the ordinary course
of
business of the Depositor and will not (A) result in a material
breach
of any term or provision of the charter or by-laws of the Depositor
or
(B)
73
<PAGE>
materially conflict with, result in a material breach, violation
or
acceleration of, or result in a material default under, the terms
of
any other material agreement or instrument to which the Depositor
is a
party or by which it may be bound or (C) constitute a material
violation of any statute, order or regulation applicable to the
Depositor of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over the Depositor; and
the
Depositor is not in breach or violation of any material indenture
or
other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it
which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this
Agreement.
(4) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that
would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or any Subsequent Transfer
Agreement
or the ability of the Depositor to perform its obligations under
this
Agreement or any Subsequent Transfer Agreement in accordance with
the
terms
hereof or thereof.
