Exhibit 99.1
==============================================================================
INDYMAC MBS, INC.
Depositor
INDYMAC BANK, F.S.B.
Seller and Servicer
DEUTSCHE BANK NATIONAL TRUST COMPANY
Trustee
----------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2006
----------------------------------------
INDYMAC INDX MORTGAGE LOAN TRUST
2006-FLX1
MORTGAGE PASS-THROUGH CERTIFICATES
Series 2006-FLX1
==============================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE ONE DEFINITIONS
6
<S>
<C>
Section 1.01.
Definitions............................................................................6
Section 1.02. Rules of
Construction.................................................................36
ARTICLE TWO CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES
38
Section 2.01. Conveyance of
Mortgage
Loans..........................................................38
Section 2.02. Acceptance by
the Trustee of the Mortgage
Loans.......................................41
Section 2.03. Representations,
Warranties, and Covenants of the Seller and the
Servicer.............43
Section 2.04. Representations
and Warranties of the Depositor as to the Mortgage
Loans..............44
Section 2.05. Delivery of
Opinion of Counsel in Connection with
Substitutions.......................45
Section 2.06. Execution and
Delivery of
Certificates................................................45
Section 2.07. REMIC
Matters.........................................................................45
ARTICLE THREE ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
46
Section 3.01. Servicer to
Service Mortgage
Loans....................................................46
Section 3.02.
[Reserved]............................................................................47
Section 3.03. Rights of the
Depositor and the Trustee in Respect of the
Servicer....................47
Section 3.04.
[Reserved]............................................................................47
Section 3.05. Trustee to Act
as
Servicer............................................................47
Section 3.06. Collection of
Mortgage Loan Payments; Certificate Account; Distribution
Account; Cap Contract Reserve
Fund....................................................47
Section 3.07. Collection of
Taxes, Assessments and Similar Items; Escrow
Accounts...................50
Section 3.08. Access to
Certain Documentation and Information Regarding the Mortgage
Loans..........51
Section 3.09. Permitted
Withdrawals from the Certificate Account, the Distribution
Account
and the Cap Contract Reserve
Fund.....................................................51
Section 3.10. Maintenance of
Hazard Insurance; Maintenance of Primary Insurance
Policies............53
Section 3.11. Enforcement of
Due-On-Sale Clauses; Assumption
Agreements.............................54
Section 3.12. Realization Upon
Defaulted Mortgage
Loans.............................................55
Section 3.13. Trustee to
Cooperate; Release of Mortgage
Files.......................................57
Section 3.14. Documents,
Records and Funds in Possession of the Servicer to be Held for
the
Trustee...............................................................................58
Section 3.15. Servicing
Compensation................................................................58
Section 3.16. Access to
Certain
Documentation.......................................................58
Section 3.17. Annual Statement
as to
Compliance.....................................................59
Section 3.18. Errors and
Omissions Insurance; Fidelity
Bonds........................................59
Section 3.19. The Cap
Contract......................................................................59
Section 3.20. Notification of
Adjustments...........................................................60
Section 3.21. Prepayment
Charges....................................................................60
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TABLE OF CONTENTS
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(Continued)
Page
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ARTICLE FOUR DISTRIBUTIONS AND ADVANCES BY THE SERVICER
61
Section 4.01.
Advances..............................................................................61
Section 4.02. Priorities of
Distribution............................................................62
Section 4.03.
[Reserved]............................................................................65
Section 4.04. Allocation of
Net Deferred
Interest...................................................65
Section 4.05. Monthly
Statements to
Certificateholders..............................................65
Section 4.06. Carryover
Reserve
Fund................................................................67
Section 4.07. Determination of
Pass-Through Rates for LIBOR
Certificates............................68
ARTICLE FIVE THE CERTIFICATES
70
Section 5.01. The
Certificates......................................................................70
Section 5.02. Certificate
Register; Registration of Transfer and Exchange of
Certificates...........70
Section 5.03. Mutilated,
Destroyed, Lost or Stolen
Certificates.....................................74
Section 5.04. Persons Deemed
Owners.................................................................74
Section 5.05. Access to List
of Certificateholders' Names and
Addresses.............................75
Section 5.06. Maintenance of
Office or
Agency.......................................................75
ARTICLE SIX THE DEPOSITOR AND THE SERVICER
76
Section 6.01. Respective
Liabilities of the Depositor and the
Servicer..............................76
Section 6.02. Merger or
Consolidation of the Depositor or the
Servicer..............................76
Section 6.03. Limitation on
Liability of the Depositor, the Seller, the Servicer, and
Others........76
Section 6.04. Limitation on
Resignation of the
Servicer.............................................77
ARTICLE SEVEN DEFAULT
78
Section 7.01. Events of
Default.....................................................................78
Section 7.02. Trustee to Act;
Appointment of
Successor..............................................79
Section 7.03. Notification to
Certificateholders....................................................80
ARTICLE EIGHT CONCERNING THE TRUSTEE
82
Section 8.01. Duties of the
Trustee.................................................................82
Section 8.02. Certain Matters
Affecting the
Trustee.................................................82
Section 8.03. Trustee Not
Liable for Certificates or Mortgage
Loans.................................84
Section 8.04. Trustee May Own
Certificates..........................................................84
Section 8.05. Trustee's Fees
and
Expenses...........................................................84
Section 8.06. Eligibility
Requirements for the
Trustee..............................................85
Section 8.07. Resignation and
Removal of the
Trustee................................................85
Section 8.08. Successor
Trustee.....................................................................86
Section 8.09. Merger or
Consolidation of the
Trustee................................................87
Section 8.10. Appointment of
Co-Trustee or Separate
Trustee.........................................87
Section 8.11. Tax
Matters...........................................................................88
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TABLE OF CONTENTS
-----------------
(Continued)
Page
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ARTICLE NINE TERMINATION
91
Section 9.01. Termination upon
Liquidation or Purchase of the Mortgage
Loans........................91
Section 9.02. Final
Distribution on the
Certificates................................................92
Section 9.03. Additional
Termination
Requirements...................................................93
ARTICLE TEN MISCELLANEOUS PROVISIONS
94
Section 10.01.
Amendment.............................................................................94
Section 10.02. Recordation of
Agreement;
Counterparts................................................95
Section 10.03. Governing
Law.........................................................................96
Section 10.04. Intention of
Parties..................................................................96
Section 10.05.
Notices...............................................................................96
Section 10.06. Severability of
Provisions............................................................97
Section 10.07.
Assignment............................................................................97
Section 10.08. Limitation on Rights
of
Certificateholders............................................97
Section 10.09. Inspection and Audit
Rights...........................................................98
Section 10.10. Certificates
Nonassessable and Fully
Paid.............................................98
Section 10.11. Official
Record.......................................................................98
Section 10.12. Protection of
Assets..................................................................99
Section 10.13. Qualifying Special
Purpose
Entity.....................................................99
ARTICLE ELEVEN EXCHANGE ACT REPORTING
100
Section 11.01. Filing
Obligations...................................................................100
Section 11.02. Form 10-D
Filings....................................................................100
Section 11.03. Form 8-K
Filings.....................................................................101
Section 11.04. Form 10-K
Filings....................................................................101
Section 11.05. Sarbanes-Oxley
Certification.........................................................102
Section 11.06. Form 15
Filing.......................................................................102
Section 11.07. Report on Assessment
of Compliance and
Attestation...................................102
Section 11.08. Use of
Subcontractors................................................................104
Section 11.09.
Amendments...........................................................................104
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<PAGE>
TABLE OF CONTENTS
-----------------
(Continued)
SCHEDULES
Schedule I: Mortgage
Loan
Schedule...................................................................S-I-1
Schedule II: Representations
and Warranties of the
Seller/Servicer...................................S-II-1
Schedule III: Representations and
Warranties as to the Mortgage
Loans................................S-III-1
Schedule IV: Form of Monthly
Report..................................................................S-IV-1
EXHIBITS
Exhibit A: Form
of Senior
Certificate.................................................................A-1
Exhibit B: Form
of Subordinated
Certificate...........................................................B-1
Exhibit C: Form
of Class A-R
Certificate..............................................................C-1
Exhibit D:
[Reserved].................................................................................D-1
Exhibit E
Form of Reverse of
Certificates............................................................E-1
Exhibit F: Form
of Class P
Certificates...............................................................F-1
Exhibit G-1: Form of Initial
Certification of
Trustee.................................................G-1-1
Exhibit G-2:
[Reserved]...............................................................................G-2-1
Exhibit G-3: Form of Delay
Delivery
Certification.....................................................G-3-1
Exhibit G-4:
[Reserved]...............................................................................G-4-1
Exhibit H-1: Form of Final
Certification of
Trustee...................................................H-1-1
Exhibit H-2:
[Reserved]...............................................................................H-2-1
Exhibit I: Form
of Transfer
Affidavit.................................................................I-1
Exhibit J: Form
of Transferor
Certificate.............................................................J-1
Exhibit K: Form
of Investment Letter (Non-Rule
144A)..................................................K-1
Exhibit L: Form
of Rule 144A
Letter...................................................................L-1
Exhibit M: Form
of Request for Release (for
Trustee)..................................................M-1
Exhibit N:
Request for Release of
Documents...........................................................N-1
Exhibit O:
[Reserved].................................................................................O-1
Exhibit P: Form
of Cap
Contract.......................................................................P-1
Exhibit Q
[Reserved].................................................................................Q-1
Exhibit R-1 Form of
Performance Certification
(Trustee)................................................R-1
Exhibit S
Form of Servicing Criteria to be Addressed in Assessment
of Compliance
Statement....................................................................S-1
Exhibit T
Form of List of Item 1119
Parties..........................................................T-1
Exhibit U
Form of Sarbanes-Oxley
Certification.......................................................U-1
</TABLE>
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<PAGE>
THIS
POOLING AND SERVICING AGREEMENT, dated as of September 1, 2006,
among INDYMAC MBS, INC., a Delaware corporation, as depositor
(the
"Depositor"), IndyMac Bank, F.S.B. ("IndyMac"), a federal savings
bank, as
seller (in that capacity, the "Seller") and as servicer (in that
capacity, the
"Servicer"), and Deutsche Bank National Trust Company, a national
banking
association, as trustee (the "Trustee"),
W i t n e s s e t h T h a t
In
consideration of the mutual agreements set forth in this
Agreement,
the parties agree as follows:
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 in this
Agreement, the
Trustee shall elect that the Trust Fund (exclusive of the Cap
Contract, the
Carryover Reserve Fund and any amounts in respect of waived
Prepayment Charges
paid by the Servicer to the Class P Certificates pursuant to the
second
paragraph of Section 3.20) be treated for federal income tax
purposes as
comprising two real estate mortgage investment conduits (each, a
"REMIC" or,
in the alternative, "REMIC 1" and the "Master REMIC"). Each
Certificate, other
than the Class A-R Certificate, will represent ownership of one or
more
regular interests in the Master REMIC for purposes of the REMIC
Provisions.
The Class A-R represents ownership of the sole class of residual
interest in
each REMIC created under this Agreement. The Master REMIC will hold
as assets
the several classes of uncertificated REMIC 1 Interests (other than
the Class
R-1 Interest). REMIC 1 will hold as assets all property of the
Trust Fund
other than the Cap Contract, the Cap Contract Reserve Fund and the
Carryover
Reserve Fund. Each REMIC 1 Interest (other than the Class R-1
Interest) is
hereby designated as a regular interest in REMIC 1. The latest
possible
maturity date of all REMIC regular interests created in this
Agreement shall
be the Latest Possible Maturity Date. All amounts in respect of
waived
Prepayment Charges paid by the Servicer to the Class P Certificates
pursuant
to the second paragraph of Section 3.20 will be treated as paid
directly by
the Servicer to the Class P Certificates and not as paid by or
through any
REMIC created under this Agreement.
<PAGE>
REMIC 1
The REMIC
1 Interests will have the Initial Principal Balances and
Pass-Through Rates as set forth in the following table:
<TABLE>
<CAPTION>
Pass-
Principal
Through
REMIC 1 Interests
Balances
Rate
Corresponding Certificates Classes
-----------------
--------
----
----------------------------------
<S>
<C>
<C>
<C>
Class 1-A-1
(1)
(2)
Class A-1
Class 1-A-2
(1)
(2)
Class A-2
Class 1-M-1
(1)
(2)
Class M-1
Class 1-M-2
(1)
(2)
Class M-2
Class 1-M-3
(1)
(2)
Class M-3
Class 1-M-4
(1)
(2)
Class M-4
Class 1-M-5
(1)
(2)
Class M-5
Class 1-M-6
(1)
(2)
Class M-6
Class 1-M-7
(1)
(2)
Class M-7
Class 1-M-8
(1)
(2)
Class M-8
Class 1-M-9
(1)
(2)
Class M-9
Class 1-M-10
(1) (2)
Class M-10
Class 1-M-11
(1)
(2)
Class M-11
Class 1-Accrual
(1)
(2)
N/A
Class R-1
(3)
(3)
N/A
</TABLE>
---------------------------
(1) On each
Distribution Date, Principal Amounts and Realized Losses will
be
allocated
to the REMIC 1 Interests in such a manner that, following such
allocations: (i) the principal balances of the REMIC 1 Interests
(other
than the
Class 1-Accrual and Class R-1 Interests) will equal 50% of the
Certificate Balance of their Corresponding Certificates for
such
Distribution Date, (ii) the Class 1-Accrual Interest will have
a
principal
balance equal to 50% of the aggregate principal balance of the
Mortgage
Loans plus 50% of the Overcollateralized Amount.
(2) The pass
through rate will equal the Weighted Average Adjusted Net
Mortgage
Rate.
(3) The Class
R-1 Interest is the sole class of residual interest in REMIC
1. It has
no principal balance and pays no principal or interest.
The Master REMIC
The following table sets forth the Class Designation, Initial
Class
Certificate Balance, Pass-Through Rate, Minimum Denominations and
Integral
Multiples in excess thereof in respect of the Certificates, each of
which
(other than the Class A-R Certificates) is hereby designated a
regular
interest in the Master REMIC, in which such Classes shall be
issuable (except
that one Certificate of each Class of Certificates may be issued in
a
different amount):
<TABLE>
<CAPTION>
Initial Class
Class
Certificate
Pass-Through
Minimum
Integral Multiples in
Designation
Balance
Rate
Denomination
Excess of Minimum
-----------
-------
----
------------
-----------------
<S>
<C>
<C>
<C>
<C>
Class A-1
$198,592,000
Variable(1)
$25,000
$1,000
Class A-2
$82,746,000
Variable(1)
$25,000
$1,000
Class A-3
$49,647,000
Variable(1)
$25,000
$1,000
2
<PAGE>
Initial Class
Class
Certificate
Pass-Through
Minimum
Integral Multiples in
Designation
Balance
Rate
Denomination
Excess of Minimum
-----------
-------
----
------------
-----------------
Class A-R
$100
Variable(2)
$100
N/A
Class M-1
$10,620,000
Variable(1)
$25,000
$1,000
Class M-2
$2,832,000
Variable(1)
$25,000
$1,000
Class M-3
$1,770,000
Variable(1)
$25,000
$1,000
Class M-4
$1,770,000
Variable(1)
$25,000
$1,000
Class M-5
$2,478,000
Variable(1)
$25,000
$1,000
Class M-6
$1,770,000
Variable(1)
$25,000
$1,000
Class C
(3)
(4)
N/A
N/A
Class P
$100.00
(5)
N/A
N/A
</TABLE>
(1) The Pass-Through Rate for this Class of Certificates for any
Interest
Accrual Period for any Distribution Date will be a per annum rate
equal to the
least of (i) LIBOR for that Distribution Date plus the Pass-Through
Margin for
that Class and that Interest Accrual Period, (ii) the Net Rate Cap
for that
Distribution Date and (iii) the Maximum Rate.
(2) The Pass-Through Rate for the Class A-R Certificates for the
Interest
Accrual Period related to each Distribution Date will be a per
annum rate
equal to the Weighted Average Adjusted Net Mortgage Rate of the
Mortgage
Loans. The Pass-Through Rate for the Class A-R Certificates for the
Interest
Accrual Period related to the first Distribution Date is 6.8532%
per annum.
The Class A-R Certificates will receive interest and principal
pursuant to its
ownership of the Class R-1 Interests.
(3) For federal income tax purposes, the Class C Certificates will
represent
two classes of regular interests issued by the Master REMIC, (i) a
class that
does not accrue interest and has a principal balance equal to
the
Overcollateralized Amount as of the Closing Date and (ii) a class
that is not
entitled to principal and has a notional balance equal to the sum
of the
principal balances of the REMIC 1 Regular Interests (excluding the
Class R-1
Interest).
(4) For each Interest Accrual Period the Class C Certificates are
entitled to
the "Class C Distributable Amount," which shall consist of (i) a
specified
portion of the interest on each of the REMIC 1 Regular Interests
(excluding
the Class R-1 Interest) in an amount equal to the excess of: (a)
the weighted
average pass-through rate in respect of such REMIC 1 Regular
Interests over
(b) the product of two and the weighted average pass-through rate
in respect
of such REMIC 1 Regular Interests treating each of the REMIC 1
Accretion
Directed Classes as subject to a cap equal to the pass-through rate
in respect
of the Corresponding Class Certificate of each such REMIC 1 Regular
Interest
and the Class 1-Accrual Interest as subject to a cap equal to 0.00%
and (ii)
collections of scheduled principal and principal prepayments
allocated to the
class of regular interests referenced in clause (i) of footnote (3)
above.
(5) The Class P Certificates will not be entitled to any interest,
but will be
entitled to 100% of any Prepayment Charges collected on the
Mortgage Loans.
The
foregoing REMIC structure is intended to cause all of the cash
from
the Mortgage Loans to flow through to the Master REMIC as cash flow
on a REMIC
regular interest, without creating any shortfall--actual or
potential (other
than for credit losses) to any REMIC regular interest.
For any
purpose for which the Pass-Through Rates (other than in the
Master REMIC) are calculated, the interest rate on the Mortgage
Loans shall be
appropriately adjusted to account for the difference between the
monthly day
count
3
<PAGE>
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 Pass-Through Rates for each of the interests issued by each
REMIC (other
than the Master REMIC) created hereunder such rates shall be
adjusted to equal
a monthly day count convention based on a 30 day month for each Due
Period and
a 360-day year so that the Mortgage Loans and all regular interests
will be
using the same monthly day count convention.
Set forth below are designations of Classes of Certificates to the
categories
used in this Agreement:
<TABLE>
<CAPTION>
<S>
<C>
Accretion Directed Certificates..........................
None.
Accrual Certificates.....................................
None.
Book-Entry Certificates..................................
All
Classes of Certificates other than the Physical
Certificates.
Class P Certificates.....................................
Class P Certificates.
COFI Certificates........................................
None.
Components...............................................
None.
Component Certificates...................................
None.
Delay Certificates.......................................
Class A-R Certificates.
ERISA-Restricted Certificates............................
The
Private Certificates and Residual Certificates;
and Certificates of any Class that does not or no
longer has a rating of BBB- or its equivalent, or
better, from at least one Rating Agency.
LIBOR Certificates.......................................
The
Senior Certificates (other than the Class A-R
Certificates) and Subordinated Certificates.
Non-Delay Certificates...................................
All
LIBOR Certificates.
Notional Amount Certificates.............................
None.
Notional Amount Components...............................
None.
Offered Certificates.....................................
All
Classes of Certificates other than the Private
Certificates.
Physical Certificates....................................
Class A-R Certificates and Private Certificates.
Planned Principal Classes................................
None.
Principal Only Certificates..............................
None.
Principal Only Components................................
None.
Private Certificates.....................................
Class C and Class P Certificates.
Rating Agencies..........................................
Moody's and S&P.
Regular Certificates.....................................
All
Classes of Certificates other than the Class A-R
Certificates.
Residual Certificate.....................................
Class A-R Certificates.
Retained Certificates....................................
None.
Senior Certificates......................................
Class A-1, Class A-2, Class A-3 and Class A-R
Certificates.
Subordinated Certificates................................
Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5 and Class M-6Certificates.
4
<PAGE>
Targeted Principal Classes...............................
None.
Targeted Principal Component.............................
None.
</TABLE>
With
respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions
in this
Agreement relating solely to such designations shall be of no force
or effect,
and any calculations in this Agreement incorporating references to
such
designations shall be interpreted without reference to such
designations and
amounts. Defined terms and provisions in this Agreement relating
to
statistical rating agencies not designated above as Rating Agencies
shall be
of no force or effect.
5
<PAGE>
Article One
DEFINITIONS
Section
1.01. Definitions.
Unless the
context requires a different meaning, capitalized terms are
used in this Agreement as defined below.
Accretion
Directed Certificates: As specified in the Preliminary
Statement.
Accretion
Direction Rule: Not applicable.
Accrual
Amount: Not applicable.
Accrual
Certificates: As specified in the Preliminary Statement.
Accrual
Termination Date: Not applicable.
Additional
Designated Information: As defined in Section 11.02.
Adjusted
Mortgage Rate: As to each Mortgage Loan and at any time, the
per annum rate equal to the Mortgage Rate less the Servicing Fee
Rate.
Adjusted
Net Mortgage Rate: As to each Mortgage Loan and any
Distribution Date, the per annum rate equal to the Mortgage Rate of
that
Mortgage Loan (as of the Due Date in the month preceding the month
in which
such Distribution Date occurs) less the Expense Fee Rate for that
Mortgage
Loan.
Adjustment
Date: A date specified in each Mortgage Note as a date on
which the Mortgage Rate on the related Mortgage Loan is subject to
adjustment.
Advance:
The payment required to be made by the Servicer with respect to
any Distribution Date pursuant to Section 4.01, the amount of any
such payment
being equal to the aggregate of payments of principal and interest
(net of the
Servicing Fee) on the Mortgage Loans that were due during the
related Due
Period and not received as of the close of business on the
related
Determination Date, together with an amount equivalent to interest
on each REO
Property, net of any net income from such REO Property, less the
aggregate
amount of any such delinquent payments that the Servicer has
determined would
constitute a Nonrecoverable Advance if advanced.
Advance
Notice: As defined in Section 4.01(b).
Advance
Deficiency: As defined in Section 4.01(b).
Affiliate:
With respect to any Person, any other Person controlling,
controlled or under common control with such Person. For purposes
of this
definition, "control" means the power to direct the management and
policies of
a Person, directly or indirectly, whether through ownership of
voting
securities, by contract, or otherwise and "controlling" and
"controlled" shall
have meanings correlative to the foregoing. Affiliates also include
any
entities consolidated with the requirements of generally accepted
accounting
principles.
Agreement:
This Pooling and Servicing Agreement and all amendments and
supplements.
6
<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 related Determination Date on account of (i) Principal
Prepayments
received after the last day of the related Prepayment Period and
Liquidation
Proceeds and Subsequent Recoveries received in the month of such
Distribution
Date and (ii) all Scheduled Payments due after the related Due
Date.
Applied
Realized Loss Amount: For any Distribution Date, the amount by
which the aggregate Class Certificate Balance of all LIBOR
Certificates (other
than the Class A-1 Certificates) (after all distributions of
principal on such
Distribution Date) exceeds the Pool Principal Balance (after giving
effect to
Principal Prepayments and Liquidation Proceeds allocated to
principal and
Subsequent Recoveries received in the related Prepayment
Period).
Appraised
Value: With respect to any Mortgage Loan, the Appraised Value
of the related Mortgaged Property shall be: (i) with respect to a
Mortgage
Loan other than a Refinance Loan, the lesser of (a) the value of
the Mortgaged
Property based upon the appraisal made at the time of the
origination of such
Mortgage Loan and (b) the sales price of the Mortgaged Property at
the time of
the origination of such Mortgage Loan; and (ii) with respect to a
Refinance
Loan, the value of the Mortgaged Property based upon the appraisal
made at the
time of the origination of such Refinance Loan.
Available
Funds: As to any Distribution Date, the sum of (a) the
aggregate amount held in the Certificate Account at the close of
business on
the related Determination Date, including any Subsequent Recoveries
net of the
Amount Held for Future Distribution, net of Prepayment Charges and
net of
amounts permitted to be withdrawn from the Certificate Account
pursuant to
clauses (i) - (viii), inclusive, of Section 3.09(a) and amounts
permitted to
be withdrawn from the Distribution Account pursuant to clauses (i)
- (ii),
inclusive, of Section 3.09(b), (b) the amount of the Advance, (c)
in
connection with Defective Mortgage Loans, the aggregate of the
Purchase Prices
and Substitution Adjustment Amounts deposited on the related
Distribution
Account Deposit Date, and (d) any amount deposited on the related
Distribution
Account Deposit Date pursuant to Section 3.10. The Holders of the
Class P
Certificates will be entitled to all Prepayment Charges received on
the
Mortgage Loans and such amounts will not be available for
distribution to the
Holders of any other Class of Certificates.
Bankruptcy
Code: The United States Bankruptcy Reform Act of 1978, as
amended.
Bankruptcy
Coverage Termination Date: Not applicable.
Bankruptcy
Loss: Not applicable.
Bankruptcy
Loss Coverage Amount: Not applicable.
Blanket
Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry
Certificates: As specified in the Preliminary Statement.
Business
Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the banking institutions in the City of New York, New
York, the
State of California or the city in which the Corporate Trust Office
of the
Trustee is located are authorized or obligated by law or executive
order to be
closed.
Cap
Contract Reserve Fund: The separate Eligible Account created
and
initially maintained by the Trustee pursuant to Section
3.06(g).
7
<PAGE>
Cap
Contract: With respect to the LIBOR Certificates, the
transaction
evidenced by the related Confirmation, a form of which is attached
hereto as
Exhibit P.
Cap
Contract Termination Date: The Distribution Date in July 2013.
Cap
Counterparty: Swiss Re Financial Products Corporation.
Cap
Counterparty Trigger Event: A Cap Termination Payment that is
triggered upon (i) an "Event of Default" under the Cap Contract
with respect
to which the Cap Counterparty is the sole "Defaulting Party" (as
defined in
the Cap Contract) or (ii) a "Termination Event" or "Additional
Termination
Event" under the Cap Contract with respect to which the Cap
Counterparty is
the sole "Affected Party" (as defined in the Cap Contract).
Cap
Termination Payment : The payment payable to the Trust Fund
under
the Cap Contract due to an early termination of the Cap
Contract.
Carryover
Reserve Fund: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.06 with a
depository
institution in the name of the Trustee for the benefit of the
Certificateholders and designated "Deutsche Bank National Trust
Company, in
trust for the registered holders of IndyMac INDX Mortgage Loan
Trust
2006-FLX1, Mortgage Pass-Through Certificates, Series
2006-FLX1."
Certificate: Any one of the certificates issued by the Trust Fund
and
executed by the Trustee in substantially the forms attached as
exhibits.
Certificate Account: The separate Eligible Account or Accounts
created
and maintained by the Servicer pursuant to Section 3.06(d) with a
depository
institution in the name of the Servicer for the benefit of the
Trustee on
behalf of Certificateholders and designated "IndyMac Bank, F.S.B.,
in trust
for the registered holders of IndyMac INDX Mortgage Loan Trust
2006-FLX1,
Mortgage Pass-Through Certificates, Series 2006-FLX1."
Certificate Balance: With respect to any Certificate (other than
the
Class C Certificates) at any date, the maximum dollar amount of
principal to
which the Holder thereof is then entitled under this Agreement,
such amount
being equal to the Denomination thereof (A) minus the sum of (i)
all
distributions of principal previously made with respect thereto and
(ii) all
Applied Realized Loss Amounts allocated to that Certificate and, in
the case
of any Subordinated Certificates, all other reductions in
Certificate Balance
previously allocated to that Certificate pursuant to Section 4.05,
(B) plus
the amount of Net Deferred Interest allocated to that Certificate
pursuant to
Section 4.04 prior to the date of determination and (C) in the case
of any
Class of Accrual Certificates, plus the Accrual Amount added to the
Class
Certificate Balance of such Class prior to such date.
Certificate Group: Not applicable.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person
who is the beneficial owner of the Book-Entry Certificate. For the
purposes of
this Agreement, in order for a Certificate Owner to enforce any of
its rights
under this Agreement, it shall first have to provide evidence of
its
beneficial ownership interest in a Certificate that is reasonably
satisfactory
to the Trustee, the Depositor and/or the Servicer, as
applicable.
Certificate Register: The register maintained pursuant to Section
5.02.
8
<PAGE>
Certificateholder or Holder: The person in whose name a Certificate
is
registered in the Certificate Register, except that, solely for the
purpose of
giving any consent pursuant to this Agreement, any Certificate
registered in
the name of the Depositor or any affiliate of the Depositor is not
Outstanding
and the Percentage Interest evidenced thereby shall not be taken
into account
in determining whether the requisite amount of Percentage Interests
necessary
to effect a consent has been obtained, except that if the Depositor
or its
affiliates own 100% of the Percentage Interests evidenced by a
Class of
Certificates, the Certificates shall be Outstanding for purposes of
any
provision of this Agreement requiring the consent of the Holders
of
Certificates of a particular Class as a condition to the taking of
any action.
The Trustee is entitled to rely conclusively on a certification of
the
Depositor or any affiliate of the Depositor in determining which
Certificates
are registered in the name of an affiliate of the Depositor.
Certificate Registrar: Deutsche Bank National Trust Company and
its
successors and, if a successor trustee is appointed under this
Agreement, the
successor.
Certification Party: As defined in Section 11.05.
Certifying
Person: As defined in Section 11.05.
Class: All
Certificates bearing the same class designation as set forth
in the Preliminary Statement.
Class
Certificate Balance: For any Class (other than the Notional
Amount
Certificates) as of any date of determination, the aggregate of
the
Certificate Balances of all Certificates of the Class as of that
date.
Class C
Distributable Amount: As defined in the Preliminary Statement.
Closing
Date: September 28, 2006.
CMT Index:
Not applicable.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COFI: Not
applicable.
COFI
Certificates: Not applicable.
Commission: The United States Securities and Exchange
Commission.
Compensating Interest: For any Distribution Date, 0.125% multiplied
by
one-twelfth multiplied by the aggregate Stated Principal Balance of
the
Mortgage Loans as of the first day of the prior month.
Co-op
Shares: Shares issued by a Cooperative Corporation.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and
improvements
constituting the Cooperative Property and that governs the
Cooperative
Property, which Cooperative Corporation must qualify as a
Cooperative Housing
Corporation under section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Co-op Shares and
a
Proprietary Lease.
9
<PAGE>
Cooperative Property: The real property and improvements owned by
the
Cooperative Corporation, including the allocation of individual
dwelling units
to the holders of the Co-op Shares of the Cooperative
Corporation.
Cooperative Unit: A single family dwelling located in a
Cooperative
Property.
Corporate
Trust Office: The designated office of the Trustee in the
State of California at which at any particular time its corporate
trust
business with respect to this Agreement is administered, which
office at the
date of the execution of this Agreement is located at 1761 East St.
Andrew
Place, Santa Ana, California 92705, Attn: Mortgage
Administration-IN06F1
(IndyMac MBS, Inc., IndyMac INDX Mortgage Loan Trust 2006-FLX1,
Mortgage
Pass-Through Certificates, Series 2006-FLX1), and which is the
address to
which notices to and correspondence with the Trustee should be
directed or,
with respect to the Certificate Registrar, the designated office
for
presentment and surrender of Certificates for registration
transfer, exchange
or final payment thereof is located at DB Services Tennessee, 646
Grassmere
Park Road, Nashville, Tennessee, 37211-3658, Attention: Transfer
Unit.
Cross-over
Situation: Not applicable.
Cumulative
Loss Trigger Event: With respect to a Distribution Date on or
after the Stepdown Date occurs if the aggregate amount of Realized
Losses on
the Mortgage Loans from (and including) the Cut-off Date to (and
including)
the related Due Date (reduced by the aggregate amount of Subsequent
Recoveries
received from the Cut-off Date through the Prepayment Period
related to that
Due Date) exceeds the applicable percentage, for such Distribution
Date, of
the Cut-off Date Pool Principal Balance, as set forth below:
<TABLE>
<CAPTION>
Distribution Date
Percentage
-----------------
----------
<S>
<C>
October 2009 - September 2010.................. 0.40% with respect to
October 2009, plus an additional 1/12th of
0.30% for each month thereafter through September 2010
October 2010 - September 2011.................. 0.70% with respect to
October 2010, plus an additional 1/12th of
0.30% for each month thereafter through September 2011
October 2011 - September 2012.................. 1.00% with respect to
October 2011, plus an additional 1/12th of
0.35% for each month thereafter through September 2012
October 2012 - September 2013.................. 1.35% with respect to
October 2012, plus an additional 1/12th of
0.15% for each month thereafter through September 2013
October 2013- September 2014................... 1.50% with respect to
October 2013, plus an additional 1/12th of
0.30% for each month thereafter through September 2016
October 2014 and thereafter.................... 1.80%
</TABLE>
Current
Interest: With respect to each Class of LIBOR Certificates and
each Distribution Date, (x) the interest accrued at the
applicable
Pass-Through Rate for the applicable Interest Accrual Period on
10
<PAGE>
the Class Certificate Balance of that Class immediately prior to
that
Distribution Date minus (y) the Net Interest Shortfalls allocated
to that
Class for that Distribution Date and minus (z) the Net Deferred
Interest, if
any, allocated to that Class for that Distribution Date.
Cut-off
Date: September 1, 2006.
Cut-off
Date Pool Principal Balance: $353,994,216.96.
Cut-off
Date Principal Balance: As to any Mortgage Loan, its Stated
Principal Balance as of the close of business on the Cut-off
Date.
Debt
Service Reduction: For any Mortgage Loan, a reduction by a court
of
competent jurisdiction in a proceeding under the Bankruptcy Code in
the
Scheduled Payment for the Mortgage Loan that became final and
non-appealable,
except a reduction resulting from a Deficient Valuation or a
reduction that
results in a permanent forgiveness of principal.
Defective
Mortgage Loan: Any Mortgage Loan that is required to be
repurchased pursuant to Section 2.02 or 2.03.
Deferred
Interest: With respect to each Mortgage Loan and each related
Due Date, the excess, if any, of the amount of interest accrued on
such
Mortgage Loan from the preceding Due Date to such Due Date over the
monthly
payment due or received for such Due Date.
Deficient
Valuation: For any Mortgage Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less
than the
then outstanding indebtedness under the Mortgage Loan, or any
reduction in the
amount of principal to be paid in connection with any Scheduled
Payment that
results in a permanent forgiveness of principal, which valuation or
reduction
results from an order of the court that is final and non-appealable
in a
proceeding under the Bankruptcy Code.
Definitive
Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry
Certificate
pursuant to Section 5.02(e).
Delay
Certificates: As specified in the Preliminary Statement.
Delay
Delivery Certification: A certification substantially in the
form
of Exhibit G-3.
Delay
Delivery Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule for which all or a portion of a related
Mortgage File
is not delivered to the Trustee by the Closing Date. The Depositor
shall
deliver the Mortgage Files to the Trustee:
(A) for at
least 70% of the Mortgage Loans, not later than the Closing
Date and
(B) for
the remaining 30% of the Mortgage Loans, not later than five
Business Days following the Closing Date.
To the
extent that the Seller is in possession of any Mortgage File
for
any Delay Delivery Mortgage Loan, until delivery of the Mortgage
File to the
Trustee as provided in Section 2.01, the Seller shall hold the
files as
Servicer, as agent and in trust for the Trustee.
Deleted
Mortgage Loan: As defined in Section 2.03(c).
11
<PAGE>
Delinquency Trigger Event: With respect to any Distribution Date on
or
after the Stepdown Date, if the Rolling Three Month Delinquency
Rate as of the
last day of the immediately preceding month equals or exceeds 40%
of the
Senior Enhancement Percentage for that Distribution Date.
Delinquent: A Mortgage Loan is "Delinquent" if any monthly payment
due
on a Due Date is not made by the close of business on the next
scheduled Due
Date for such Mortgage Loan. A Mortgage Loan is "30 days
Delinquent" if such
monthly payment has not been received by the close of business on
the
corresponding day of the month immediately succeeding the month in
which such
monthly payment was due. The determination of whether a Mortgage
Loan is "60
days Delinquent", "90 days Delinquent", etc. shall be made in a
like manner.
Denomination: For each Certificate, the amount on the face of
the
Certificate as the "Initial Certificate Balance of this
Certificate" or the
"Initial Notional Amount of this Certificate" or, if neither of the
foregoing,
the Percentage Interest appearing on the face of the
Certificate.
Depositor:
IndyMac MBS, Inc., a Delaware corporation, or its successor
in interest.
Depository: The initial Depository shall be The Depository
Trust
Company, the nominee of which is CEDE & Co., as the registered
Holder of the
Book-Entry Certificates. The Depository shall at all times be a
"clearing
corporation" as defined in Section 8-102(a)(5) of the UCC.
Depository
Participant: A broker, dealer, bank, or other financial
institution or other Person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: As to any Distribution Date, the 18th day of
each
month or if that day is not a Business Day the next Business Day,
except that
if the next Business Day is less than two Business Days before the
related
Distribution Date, then the Determination Date shall be the
Business Day
preceding the 18th day of the month.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.06(e) in the name
of the
Trustee for the benefit of the Certificateholders and designated
"Deutsche
Bank National Trust Company in trust for registered holders of
IndyMac INDX
Mortgage Loan Trust 2006-FLX1, Mortgage Pass-Through Certificates,
Series
2006-FLX1." Funds in the Distribution Account shall be held in
trust for the
Certificateholders for the uses and purposes set forth in this
Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:30
P.M. Pacific time on the Business Day preceding the Distribution
Date.
Distribution Date: The 25th day of each calendar month after the
initial
issuance of the Certificates, or if that day is not a Business Day,
the next
Business Day, commencing in October 2006.
Due Date:
For any Mortgage Loan and Distribution Date, the first day of
the month in which such Distribution Date occurs.
Due
Period: For any Distribution Date, the period commencing on the
second day of the month preceding the month in which the
Distribution Date
occurs and ending on the first day of the month in which the
Distribution Date
occurs.
EDGAR: The
Commission's Electronic Data Gathering, Analysis and
Retrieval system.
12
<PAGE>
Eligible
Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company
the
short-term unsecured debt obligations of which (or, in the case of
a
depository institution or trust company that is the principal
subsidiary of a
holding company, the debt obligations of such holding company) have
the
highest short-term ratings of Moody's or Fitch and one of the two
highest
short-term ratings of S&P, if S&P is a Rating Agency at the
time any amounts
are held on deposit therein, or (ii) an account or accounts in a
depository
institution or trust company in which such accounts are insured by
the FDIC
(to the limits established by the FDIC) and the uninsured deposits
in which
accounts are otherwise secured such that, as evidenced by an
Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such
account or a
perfected first priority security interest against any collateral
(which shall
be limited to Permitted Investments) securing such funds that is
superior to
claims of any other depositors or creditors of the depository
institution or
trust company in which such account is maintained, or (iii) a trust
account or
accounts maintained with (a) the trust department of a federal or
state
chartered depository institution or (b) a trust company, acting in
its
fiduciary capacity or (iv) any other account acceptable to each
Rating Agency.
Eligible Accounts may bear interest, and may include, if otherwise
qualified
under this definition, accounts maintained with the Trustee.
ERISA: The
Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that meets the requirements of
the
Underwriter's Exemption.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow
Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.07(a).
Event of
Default: As defined in Section 7.01.
Excess
Cashflow: With respect to any Distribution Date (i) the
Interest
Remittance Amount remaining after the distribution of interest to
the Holders
of the Certificates for that Distribution Date, (ii) the
Overcollateralization
Release Amount and (iii) any Principal Distribution Amount for
that
Distribution Date remaining after distributions of principal to the
Offered
Certificates.
Excess
Loss: Not applicable.
Excess
Proceeds: For any Liquidated Mortgage Loan, the excess of
(a) all
Liquidation Proceeds from the Mortgage Loan received in the
calendar month in which the Mortgage Loan became a Liquidated
Mortgage Loan,
net of any amounts previously reimbursed to the Servicer as
Nonrecoverable
Advances with respect to the Mortgage Loan pursuant to Section
3.09(a)(iii),
over
(b) the
sum of (i) the unpaid principal balance of the Liquidated
Mortgage Loan as of the Due Date in the month in which the Mortgage
Loan
became a Liquidated Mortgage Loan plus (ii) accrued interest at the
Mortgage
Rate from the Due Date for which interest was last paid or advanced
(and not
reimbursed) to Certificateholders up to the Due Date applicable to
the
Distribution Date following the calendar month during which the
liquidation
occurred.
Exchange
Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
13
<PAGE>
Exchange
Act Reports: Any reports on Form 10-D, Form 8-K and Form 10-K
required to be filed by the Depositor with respect to the Trust
Fund under the
Exchange Act.
Expense
Fee Rate: As to each Mortgage Loan, the sum of (a) the related
Servicing Fee Rate and (b) the Trustee Fee Rate.
Extra
Principal Distribution Amount: For any Distribution Date, the
product of (a) the lesser of (x) the Overcollateralization
Deficiency Amount
for that Distribution Date and (y) the Excess Cashflow for that
Distribution
Date and (b) the Principal Remitance Amount.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The
Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under
Title III of
the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Fitch:
Fitch, Inc., or any successor thereto. If Fitch is designated
as
a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b)
the address for notices to Fitch shall be Fitch, Inc., One State
Street Plaza,
New York, NY 10004, Attention: MBS Monitoring - IndyMac 2006-FLX1,
or any
other address Fitch furnishes to the Depositor and the
Servicer.
FNMA: The
Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the
Federal
National Mortgage Association Charter Act, or any successor
thereto.
Form 10-D
Disclosure Item: With respect to any Person, any material
litigation or governmental proceedings pending against such Person,
or against
any of the Trust Fund, the Depositor, the Trustee or the Servicer,
if such
Person has actual knowledge thereof.
Form 10-K
Disclosure Item: With respect to any Person, (a) Form 10-D
Disclosure Item, and (b) any affiliations or relationships between
such Person
and any Item 1119 Party.
Fraud
Loan: Not applicable.
Fraud
Losses: Not applicable.
Fraud Loss
Coverage Amount: Not applicable.
Fraud Loss
Coverage Termination Date: Not applicable.
Gross
Margin: With respect to each Mortgage Loan, the fixed
percentage
set forth in the related Mortgage Note that is added to the
Mortgage Index on
each Adjustment Date in accordance with the terms of the related
Mortgage Note
used to determine the Mortgage Rate for such Mortgage Loan.
Hard
Prepayment Charges: As to a Mortgage Loan, any charge payable by
a
Mortgagor in connection with certain partial prepayments and all
prepayments
in full made within the related Prepayment Charge Period, the Hard
Prepayment
Charges with respect to each applicable Mortgage Loan so held by
the Trust
Fund being identified in the Mortgage Loan Schedule.
Indirect
Participant: A broker, dealer, bank, or other financial
institution or other Person that clears through or maintains a
custodial
relationship with a Depository Participant.
14
<PAGE>
Initial
Bankruptcy Loss Coverage Amount: Not applicable.
Initial
LIBOR Rate: 5.326% per annum.
Insurance
Policy: For any Mortgage Loan included in the Trust Fund, any
insurance policy, including all riders and endorsements thereto in
effect,
including any replacement policy or policies for any Insurance
Policies.
Insurance
Proceeds: Proceeds paid by an insurer pursuant to any
Insurance Policy, in each case other than any amount included in
such
Insurance Proceeds in respect of Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest
Accrual Period: With respect to each Class of Delay
Certificates and any Distribution Date, the calendar month prior to
the month
of such Distribution Date. The Delay Certificates will accrue
interest on the
basis of a 360-day year consisting of twelve 30-day months. With
respect to
each Class of Non-Delay Certificates and any Distribution Date, the
period
commencing on the immediately preceding Distribution Date (or, in
the case of
the first Distribution Date, the Closing Date) and ending on the
day
immediately preceding that Distribution Date. Each Class of
Non-Delay
Certificates will accrue interest on the basis of a 360-day year
and the
actual number of days elapsed during the related Interest Accrual
Period.
Interest
Carry Forward Amount: With respect to each Class of LIBOR
Certificates and each Distribution Date, is the sum of (i) the
excess of (a)
Current Interest for that Class with respect to prior Distribution
Dates, over
(b) the amount actually distributed to that Class with respect to
interest on
prior Distribution Dates and (ii) interest for the applicable
Interest Accrual
Period on the amount described in clause (i) based on the
Pass-Through Rate
for the applicable Class of LIBOR Certificates.
Interest
Determination Date: With respect to (a) any Interest Accrual
Period for a Class of LIBOR Certificates and (b) any Interest
Accrual Period
for the COFI Certificates for which the applicable Index is LIBOR,
the second
Business Day prior to the first day of such Interest Accrual
Period.
Interest
Funds: For any Distribution Date, the Interest Remittance
Amount minus the Trustee Fee for that Distribution Date.
Interest
Rate: With respect to each REMIC 1 Interest, REMIC 2 Interest
or Master REMIC Interest, the applicable rate set forth or
calculated in the
manner described in the Preliminary Statement.
Interest
Remittance Amount: For any Distribution Date is :
(a) the sum, without duplication, of:
(1) all interest on the Mortgage Loans due on the related
Due Date and received on or prior to the related Determination
Date, less the Expense Fees,
(2) all interest on Principal Prepayments on the Mortgage
Loans, other than Prepayment Interest Excess,
(3) all Advances relating to interest,
15
<PAGE>
(4) amounts paid by the Servicer in respect of Compensating
Interest, and
(5) Liquidation Proceeds on the Mortgage Loans received
during the related Prepayment Period (to the extent such
Liquidation Proceeds relate to interest)
minus
(b) all Advances relating to interest and certain expenses
reimbursed
since the prior Due Date,
plus
(c) the lesser of (i) the Principal Payment Amount and
Distribution Date and (ii) the Deferred Interest for that
Distribution
Date.
Interest
Settlement Rate: As defined in Section 4.07.
Item 1119
Party: The Depositor, the Seller, the Servicer, the Trustee,
the Cap Counterparty and any other material transaction party, as
identified
in Exhibit T, as updated pursuant to Section 11.04.
Latest Possible
Maturity Date: The Distribution Date following the third
anniversary of the scheduled maturity date of the Mortgage Loan
having the
latest scheduled maturity date as of the Cut-off Date.
Lender PMI
Loans: Mortgage Loans with respect to which the lender rather
than the borrower acquired the primary mortgage guaranty insurance
and charged
the related borrower an interest premium.
LIBOR: The
London interbank offered rate for one month United States
dollar deposits calculated in the manner described in Section
4.07.
LIBOR
Certificates: As specified in the Preliminary Statement.
LIBOR
Determination Date: For any Interest Accrual Period, the second
London Business Day prior to the commencement of such Interest
Accrual Period.
Limited
Exchange Act Reporting Obligations: The obligations of the
Servicer under Section 3.17(b), Section 6.02 and Section 6.04 with
respect to
notice and information to be provided to the Depositor and Article
11 (except
Section 11.07(a)(i) and (ii)).
Liquidated
Mortgage Loan: For any Distribution Date, a defaulted
Mortgage Loan (including any REO Property) that was liquidated in
the calendar
month preceding the month of the Distribution Date and as to which
the
Servicer has certified (in accordance with this Agreement) that it
has
received all amounts it expects to receive in connection with the
liquidation
of the Mortgage Loan, including the final disposition of an REO
Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds
regardless
of when received, received in connection with the partial or
complete
liquidation of defaulted Mortgage Loans, whether through trustee's
sale,
foreclosure sale, or otherwise or amounts received in connection
with any
condemnation or partial release of a Mortgaged Property, and any
other
proceeds received in connection with an REO Property, less the sum
of related
unreimbursed Servicing Fees, Servicing Advances, and Advances.
16
<PAGE>
Loan-to-Value Ratio: For any Mortgage Loan and as of any date
of
determination, is the fraction whose numerator is the original
principal
balance of the related Mortgage Loan at that date of determination
and whose
denominator is the Appraised Value of the related Mortgaged
Property.
London
Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
Lost
Mortgage Note: Any Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Maintenance: For any Cooperative Unit, the rent paid by the
Mortgagor to
the Cooperative Corporation pursuant to the Proprietary Lease.
Maximum
Mortgage Rate: For each Mortgage Loan, the percentage set forth
in the related Mortgage Note as the lifetime maximum Mortgage Rate
to which
such Mortgage Rate may be adjusted.
Maximum
Rate: 10.10% per annum.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or
any
successor thereto.
MERS
Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS(R) System.
MERS(R)
System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The
mortgage identification number for any MERS Mortgage Loan.
Minimum
Mortgage Rate: For each Mortgage Loan, the percentage set forth
in the related Mortgage Note as the lifetime minimum Mortgage Rate
to which
such Mortgage Rate may be adjusted.
MOM Loan:
Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its
successors
and assigns.
Moneyline
Telerate Page 3750: The display page currently so designated
on the Moneyline Telerate Information Services, Inc. (or any page
replacing
that page on that service for the purpose of displaying London
inter-bank
offered rates of major banks).
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.06.
Moody's:
Moody's Investors Service, Inc., or any successor thereto. If
Moody's is designated as a Rating Agency in the Preliminary
Statement, for
purposes of Section 10.05(b) the address for notices to Moody's
shall be
Moody's Investors Service, Inc., 99 Church Street, New York, New
York 10007,
Attention: Residential Loan Monitoring Group, or any other address
that
Moody's furnishes to the Depositor and the Servicer.
Mortgage:
The mortgage, deed of trust, or other instrument creating a
first lien on an estate in fee simple or leasehold interest in real
property
securing a Mortgage Note.
Mortgage
File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents
delivered to the
Trustee to be added to the Mortgage File pursuant to this
Agreement.
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Mortgage
Index: One-Year LIBOR Index.
Mortgage
Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to this Agreement, as from time to time are
held as a
part of the Trust Fund (including any REO Property), the Mortgage
Loans so
held being identified on the Mortgage Loan Schedule,
notwithstanding
foreclosure or other acquisition of title of the related Mortgaged
Property.
Mortgage
Loan Schedule: As of any date, the list set forth in Schedule I
of Mortgage Loans included in the Trust Fund on that date. The
Mortgage Loan
Schedule shall be prepared by the Seller and shall set forth the
following
information with respect to each Mortgage Loan:
(i) the loan
number;
(ii)
the street address of the Mortgaged Property, including
the zip code;
(iii) the
maturity date;
(iv)
the original principal balance;
(v) the
Cut-off Date Principal Balance;
(vi)
the first payment date of the Mortgage Loan;
(vii) the
Scheduled Payment in effect as of the Cut-off Date;
(viii) the Gross
Margin in effect as of the Cut-off Date;
(ix)
the Maximum Mortgage Rate in effect as of the Cut-off Date;
(x) the
Payment Adjustment Date in effect as of the Cut-off
Date;
(xi)
a code indicating the Mortgage Index and when it is
determined;
(xii) the
Loan-to-Value Ratio at origination;
(xiii) a code
indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(xiv) a
code indicating whether the residential dwelling is
either (a) a detached single family dwelling, (b) a
dwelling in a
PUD, (c) a condominium unit, (d) a two- to
four-unit residential property, or (e) a Cooperative Unit;
(xv)
the Mortgage Rate in effect as of the Cut-off Date;
(xvi) the
purpose for the Mortgage Loan;
(xvii) the type
of documentation program pursuant to which the
Mortgage Loan was originated;
(xviii) a code
indicating whether the Mortgage Loan is a
borrower-paid mortgage insurance loan;
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<PAGE>
(xix) the
Servicing Fee Rate;
(xx)
a code indicating whether the Mortgage Loan is a Lender
PMI Loan;
(xxi) the
coverage amount of any mortgage insurance;
(xxii) with
respect to the Lender PMI Loans, the interest premium
charged by the lender;
(xxiii) a code
indicating whether the Mortgage Loan is a Delay
Delivery Mortgage Loan;
(xxiv) the
Minimum Mortgage Rate in effect as of the Cut-off Date;
(xxv) a
code indicating whether the Mortgage Loan is a MERS
Mortgage Loan; and
(xxvi) the type
of Prepayment Charges and the length of time
during which Prepayment Charges will be imposed on a
Mortgage Loan.
The
schedule shall also set forth the total of the amounts
described
under (v) above for all of the Mortgage Loans.
Mortgage
Note: The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note from
time to time (net of the interest premium for any Lender PMI
Loan).
Mortgaged
Property: The underlying property securing a Mortgage Loan,
which, with respect to a Cooperative Loan, is the related Co-op
Shares and
Proprietary Lease.
Mortgagor:
The obligors on a Mortgage Note.
National
Cost of Funds Index: The National Monthly Median Cost of Funds
Ratio to SAIF-Insured Institutions published by the OTS.
Net
Deferred Interest: With respect to each Distribution Date, the
excess, if any, of the amount of Deferred Interest that accrued on
the
Mortgage Loans from the preceding Due Date to the Due Date in the
month of
such Distribution Date, over the Principal Payment Amount for
that
Distribution Date.
Net
Interest Shortfall: With respect to any Distribution Date, an
amount
equal to any Net Prepayment Interest Shortfalls for that
Distribution Date and
the amount of interest that would otherwise have been received with
respect to
any Mortgage Loan that was the subject of a Relief Act
Reduction.
Net
Prepayment Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of Prepayment Interest
Shortfalls
exceeds the Compensating Interest for such Distribution Date.
Net Rate
Cap: For each Distribution Date and the LIBOR Certificates, the
product of (A) the Weighted Average Adjusted Net Mortgage Rate and
(B) a
fraction, the numerator of which is 30, and the denominator of
which is the
actual number of days in the related Interest Accrual Period.
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<PAGE>
Net Rate
Carryover: For a Class of LIBOR Certificates on any
Distribution Date, the excess of:
(1) the amount of interest that Class would have accrued for
that
Distribution Date had the Pass-Through Rate for that Class and
the
related
Interest Accrual Period not been calculated based on the Net
Rate Cap,
over
(2) the amount of interest that Class accrued on that
Distribution
Date based
on the Net Rate Cap,
plus the unpaid portion of any excess from prior Distribution Dates
(and
interest accrued thereon at the then applicable Pass-Through Rate,
without
giving effect to the Net Rate Cap or the Maximum Rate).
NIM
Insurer: Any insurer guarantying at the request of the Holder of
the
Class C or Class P Certificates certain payments under notes backed
or secured
by the Class C or Class P Certificates.
Non-Delay
Certificates: As specified in the Preliminary Statement.
Nonrecoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Servicer, that, in the good faith
judgment of the
Servicer, will not be ultimately recoverable by the Servicer from
the related
Mortgagor, related Liquidation Proceeds or otherwise.
Notice of
Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the
Certificates
shall be made only upon presentation and surrender thereof.
Notional
Amount: Not applicable.
Notional
Amount Certificates: As specified in the Preliminary Statement.
Notional
Amount Components: As specified in the Preliminary Statement.
OC Floor:
An amount equal to 0.50% of the Cut-off Date Pool Principal
Balance of the Mortgage Loans.
Offered
Certificates: As specified in the Preliminary Statement.
Officer's
Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing
Director, a
Vice President (however denominated), an Assistant Vice President,
the
Treasurer, the Secretary, or one of the Assistant Treasurers or
Assistant
Secretaries of the Depositor or the Servicer, or (ii) if provided
for in this
Agreement, signed by a Servicing Officer, as the case may be, and
delivered to
the Depositor and the Trustee as required by this Agreement or
(iii) in the
case of any other Person, signed by an authorized officer of such
Person.
One-Year
CMT Index: The weekly average yield on United States Treasury
securities adjusted to a constant maturity of one year as published
by the
Federal Reserve Board in Statistical Release H.15(519) and most
recently
available as of a day specified in the related Mortgage Note.
One-Year
LIBOR Index: The average of the London interbank offered rates
for one-year U.S. dollar deposits in the London market, generally
as set forth
in either The Wall Street Journal or some other source generally
accepted in
the residential mortgage loan origination business and specified in
the
related Mortgage Note, or, if such rate ceases to be published in
The Wall
Street Journal or becomes
20
<PAGE>
unavailable for any reason, then based upon a new index selected by
the
servicer, based on comparable information, in each case, as most
recently
announced as of either 45 days prior to, or the first Business Day
of the
month immediately preceding the month of, such Adjustment Date.
Opinion of
Counsel: For the interpretation or application of the REMIC
Provisions, a written opinion of counsel who (i) is in fact
independent of the
Depositor and the Servicer, (ii) does not have any direct financial
interest
in the Depositor or the Servicer or in any affiliate of either, and
(iii) is
not connected with the Depositor or the Servicer as an officer,
employee,
promoter, underwriter, trustee, partner, director, or person
performing
similar functions. Otherwise, a written opinion of counsel who may
be counsel
for the Depositor or the Servicer, including in-house counsel,
reasonably
acceptable to the Trustee.
Optional
Termination Date: As defined in Section 9.01.
Original
Mortgage Loan: The Mortgage Loan refinanced in connection with
the origination of a Refinance Loan.
OTS: The
Office of Thrift Supervision.
Outside Reference
Date: Not applicable.
Outstanding: For the Certificates as of any date of determination,
all
Certificates theretofore executed and authenticated under this
Agreement
except:
(i) Certificates
theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in
exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee
pursuant to this
Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a
Stated Principal Balance greater than zero that was not the subject
of a
Principal Prepayment in Full before the Due Date or during the
related
Prepayment Period and that did not become a Liquidated Mortgage
Loan before
the Due Date.
Overcollateralization Deficiency Amount: For any Distribution
Date
equals the amount, if any, by which the Overcollateralization
Target Amount
exceeds the Overcollateralized Amount on that Distribution Date
(after giving
effect to distributions of the Principal Remittance Amount on
that
Distribution Date).
Overcollateralization Release Amount: With respect to any
Distribution
Date, an amount equal to the lesser of (x) the Principal Remittance
Amount for
that Distribution Date and (y) the amount, if any, by which the
Overcollateralized Amount for that date (calculated for this
purpose on the
basis of the assumption that 100% of the Principal Remittance
Amount for that
date is applied in reduction of the Class Certificate Balances of
the Offered
Certificates) exceeds the Overcollateralization Target Amount for
that date.
Overcollateralization Target Amount: With respect to any
Distribution
Date (a) prior to the Stepdown Date, an amount equal to 0.50% of
the Cut-off
Date Pool Principal Balance and (b) on or after the Stepdown Date,
the greater
of (i) (x) for any Distribution Date prior to the Distribution Date
in October
2012, an amount equal to 1.25% of the aggregate Stated Principal
Balance of
the Mortgage
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<PAGE>
Loans as of the Due Date in the month of that Distribution Date
(after giving
effect to Principal Prepayments received in the related Prepayment
Period) and
(y) for any Distribution Date on or after the Distribution Date in
October
2012, an amount equal to 1.00% of the aggregate Stated Principal
Balance of
the Mortgage Loans as of the Due Date in the month of that
Distribution Date
(after giving effect to Principal Prepayments received in the
related
Prepayment Period) and (ii) the OC Floor; provided, however, that
if a Trigger
Event is in effect on any Distribution Date, the
Overcollateralization Target
Amount will be the Overcollateralization Target Amount as in effect
for the
prior Distribution Date.
Overcollateralized Amount: For any Distribution Date is the amount,
if
any, by which (x) the Pool Principal Balance as of the Due Date in
the month
of that Distribution Date (after giving effect to Principal
Prepayments
received in the related Prepayment Period) exceeds (y) the
aggregate Class
Certificate Balance of the Offered Certificates (after giving
effect to
distributions of the Principal Distribution Amount (excluding the
Extra
Principal Distribution Amount) on that Distribution Date).
Ownership
Interest: As to any Residual Certificate, any ownership
interest in the Certificate including any interest in the
Certificate as its
Holder and any other interest therein, whether direct or indirect,
legal or
beneficial.
Pass-Through Margin: With respect to the Interest Accrual Period
for any
Distribution Date and Class of LIBOR Certificates, the per annum
rate
indicated in the following table:
Class of LIBOR Certificates
Pass-Through Margin
---------------------------
-------------------
(1)
(2)
Class A-1
0.210%
0.420%
Class A-2
0.290%
0.580%
Class A-3
0.370%
0.740%
Class M-1
0.430%
0.645%
Class M-2
0.450%
0.675%
Class M-3
0.500%
0.750%
Class M-4
0.700%
1.050%
Class M-5
1.200%
1.800%
Class M-6
2.350%
3.525%
---------------------------
(1) For the
Interest Accrual Period related to any Distribution Date
occurring
on or prior to the first possible Optional Termination Date.
(2) For the
Interest Accrual Period related to any Distribution Date
occurring
after the first possible Optional Termination Date.
Pass-Through Rate: For each Class of Certificates, the per annum
rate
set forth or calculated in the manner described in the Preliminary
Statement.
Payment
Adjustment Date: A date specified in each Mortgage Note as a
date on which the Scheduled Payment for the related Mortgage Loan
is subject
to adjustment.
Payment
Cap: For each Mortgage Loan, the percentage limit set forth in
the related Mortgage Note concerning the maximum permitted increase
in a
Scheduled Payment on any Payment Adjustment Date other than in
connection with
a recast of the Scheduled Payment.
Percentage
Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the
related Class,
the percentage interest being set forth on its face or
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<PAGE>
equal to the percentage obtained by dividing the Denomination of
the
Certificate by the aggregate of the Denominations of all
Certificates of the
same Class. 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.
Performance Certification: As defined in Section 11.05.
Permitted
Investments: At any time, any of the following:
(i)
obligations of the United States or any agency thereof backed by
the
full faith and credit of the United States;
(ii)
general obligations of or obligations guaranteed by any state
of
the United States or the District of Columbia receiving the highest
long-term
debt rating of each Rating Agency, or any lower rating that will
not result in
the downgrading, qualification or withdrawal of the ratings then
assigned to
the Certificates by the Rating Agencies, as evidenced by a signed
writing
delivered by each Rating Agency;
(iii)
commercial or finance company paper that is then receiving the
highest commercial or finance company paper rating of each Rating
Agency, or
any lower rating that will not result in the downgrading,
qualification or
withdrawal of the ratings then assigned to the Certificates by the
Rating
Agencies , as evidenced by a signed writing delivered by each
Rating Agency;
(iv)
certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated
under the laws of the United States or of any state thereof and
subject to
supervision and examination by federal or state banking
authorities, provided
that the commercial paper or long-term unsecured debt obligations
of the
depository institution or trust company (or in the case of the
principal
depository institution in a holding company system, the commercial
paper or
long-term unsecured debt obligations of the holding company, but
only if
Moody's is not a Rating Agency) are then rated one of the two
highest
long-term and the highest short-term ratings of each Rating Agency
for the
securities, or any lower rating that will not result in the
downgrading,
qualification or withdrawal of the ratings then assigned to the
Certificates
by the Rating Agencies, as evidenced by a signed writing delivered
by each
Rating Agency;
(v) demand
or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that the
deposits
are fully insured by the FDIC;
(vi)
guaranteed reinvestment agreements issued by any bank,
insurance
company, or other corporation acceptable to the Rating Agencies at
the time of
the issuance of the agreements, as evidenced by a signed writing
delivered by
each Rating Agency;
(vii)
repurchase obligations with respect to any security described
in
clauses (i) and (ii) above, in either case entered into with a
depository
institution or trust company (acting as principal) described in
clause (iv)
above; provided that such repurchase obligation would be accounted
for as a
financing arrangement under generally accepted accounting
principles;
(viii)
securities (other than stripped bonds, stripped coupons, or
instruments sold at a purchase price in excess of 115% of their
face amount)
bearing interest or sold at a discount issued by any corporation
incorporated
under the laws of the United States or any state thereof that, at
the time of
the investment, have one of the two highest ratings of each Rating
Agency
(except if the Rating Agency is Moody's the rating shall be the
highest
commercial paper rating of Moody's for the securities), or any
23
<PAGE>
lower rating that will not result in the downgrading, qualification
or
withdrawal of the ratings then assigned to the Certificates by the
Rating
Agencies, as evidenced by a signed writing delivered by each Rating
Agency and
that have a maturity date occurring no more than 365 days from
their date of
issuance;
(ix) units
of a taxable money-market portfolio having the highest rating
assigned by each Rating Agency (except (i) if Fitch is a Rating
Agency and has
not rated the portfolio, the highest rating assigned by Moody's and
(ii) if
S&P is a Rating Agency, "AAAm" or "AAAM-G" by S&P) and
restricted to
obligations issued or guaranteed by the United States of America or
entities
whose obligations are backed by the full faith and credit of the
United States
of America and repurchase agreements collateralized by such
obligations; and
(x) any
other investments bearing interest or sold at a discount
acceptable to each Rating Agency that will not result in the
downgrading,
qualification or withdrawal of the ratings then assigned to the
Certificates
by the Rating Agencies, as evidenced by a signed writing delivered
by each
Rating Agency, and reasonably acceptable to the NIM Insurer, as
evidence by a
signed writing delivered by the NIM Insurer.
No
Permitted Investment may (i) evidence the right to receive
interest-only payments with respect to the obligations underlying
the
instrument, (ii) be sold or disposed of before its maturity or
(iii) be any
obligation of the Seller or any of its Affiliates. Any Permitted
Investment
shall be relatively risk free and no options or voting rights shall
be
exercised with respect to any Permitted Investment. Any Permitted
Investment
shall be sold or disposed in accordance with Financial Accounting
Standard
140, paragraph 35c(6) in effect as of the Closing Date.
Permitted
Transferee: Any person other than
(i) the
United States, any State or political subdivision thereof, or
any agency or instrumentality of any of the foregoing,
(ii) a
foreign government, International Organization, or any agency
or
instrumentality of either of the foregoing,
(iii) an
organization (except certain farmers' cooperatives described in
section 521 of the Code) that is exempt from tax imposed by Chapter
1 of the
Code (including the tax imposed by section 511 of the Code on
unrelated
business taxable income) on any excess inclusions (as defined in
section
860E(c)(1) of the Code) with respect to any Residual
Certificate,
(iv) a
rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code,
(v) an
"electing large partnership" as defined in section 775 of the
Code,
(vi) a
Person that is not a U.S. Person, and
(vii) any
other Person so designated by the Depositor based on an
Opinion of Counsel that the Transfer of an Ownership Interest in a
Residual
Certificate to the Person may cause any REMIC to fail to qualify as
a REMIC at
any time that the Certificates are outstanding.
Person:
Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company,
trust,
unincorporated organization, or government, or any agency or
political
subdivision thereof.
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<PAGE>
Physical
Certificates: As specified in the Preliminary Statement.
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.
Planned
Balance: With respect to the Planned Principal Classes in the
aggregate and any Distribution Date appearing in the aggregate
Principal
Balance Schedule, the amount appearing opposite such Distribution
Date for
such Planned Principal Classes.
Planned
Principal Classes: As specified in the Preliminary Statement.
Pool
Principal Balance: The aggregate Stated Principal Balances of
the
Mortgage Loans.
Prepayment
Charge: A Hard Prepayment Charge or Soft Prepayment Charge,
as the context may require.
Prepayment
Charge Period: As to any Mortgage Loan, the period of time
during which a Prepayment Charge may be imposed.
Prepayment
Interest Excess: As to any Principal Prepayment received by
the Servicer on a Mortgage Loan from the first day through the
fifteenth day
of any calendar month other than the month of the Cut-off Date, all
amounts
paid by the related Mortgagor in respect of interest on such
Principal
Prepayment. All Prepayment Interest Excess shall be retained by the
Servicer
as additional servicing compensation.
Prepayment
Interest Shortfall: As to any Distribution Date, Mortgage
Loan and Principal Prepayment received on or after the sixteenth
day of the
month preceding the month of such Distribution Date (or, in the
case of the
first Distribution Date, on or after the Cut-off Date) and on or
before the
last day of the month preceding the month of such Distribution
Date, the
amount, if any, by which one month's interest at the related
Mortgage Rate,
net of the Servicing Fee Rate, on such Principal Prepayment exceeds
the amount
of interest paid in connection with such Principal Prepayment.
Prepayment
Period: As to any Distribution Date and related Due Date, the
period from and including the 16th day of the month immediately
prior to the
month of such Distribution Date (or, in the case of the first
Distribution
Date, from the Cut-off Date) and to and including the 15th day of
the month of
such Distribution Date.
Prepayment
Shift Percentage: Not applicable.
Primary
Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any
Mortgage
Loan.
Principal
Balance Schedules: Not applicable.
Principal
Distribution Amount: With respect to each Distribution Date,
an amount equal to the sum of (1) the Principal Remitance Amount
for that
Distribution Date minus the Overcollateralization Release Amount
for that
Distribution Date and (2) the Extra Principal Distribution Amount
for that
Distribution Date.
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<PAGE>
Principal
Only Certificates: As specified in the Preliminary Statement.
Principal
Payment Amount: For any Distribution Date, the Principal
Remittance Amount for that Distribution Date before application to
offset the
Deferred Interest for that Distribution Date.
Principal
Prepayment: Any payment of principal by a Mortgagor on a
Mortgage Loan (including the principal portion of the Purchase
Price of any
Mortgage Loan purchased pursuant to Section 3.12) that is received
in advance
of its scheduled Due Date and is not accompanied by an amount
representing
scheduled interest due on any date in any month after the month of
prepayment.
The Servicer shall apply partial Principal Prepayments in
accordance with the
related Mortgage Note.
Principal
Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Principal Remittance
Amount: For any Distribution Date, an amount, not
less than zero, equal to:
(a) the sum, without duplication, of:
(1) all principal collected or advanced on the Mortgage
Loans with respect to the related Due Date,
(2) Principal Prepayments on the Mortgage Loans collected
during the related Prepayment Period,
(3) the Stated Principal Balance of each Mortgage Loan that
was repurchased by the Seller or purchased by the Servicer with
respect to that Distribution Date,
(4) any Substitution Adjustment Amounts, and
(5) all liquidation proceeds (to the extent such liquidation
proceeds related to principal) and all Subsequent Recoveries
received during the related Prepayment Period
minus
(b) all non-recoverable Advances relating to principal on the
Mortgage
Loans and certain expenses reimbursed since the prior Due Date,
and
minus
(c) the Deferred Interest for that Distribution Date.
Private
Certificates: As specified in the Preliminary Statement.
Proprietary Lease: For any Cooperative Unit, a lease or
occupancy
agreement between a Cooperative Corporation and a holder of related
Co-op
Shares.
Prospectus
Supplement: The Prospectus Supplement dated September 27,
2006, relating to the Offered Certificates, and any supplement
thereto.
PUD: Planned Unit
Development.
26
<PAGE>
Purchase
Price: For any Mortgage Loan required to be purchased by the
Seller pursuant to Section 2.02 or 2.03 or purchased by the
Servicer pursuant
to Section 3.12, the sum of
(i) 100%
of the unpaid principal balance of the Mortgage Loan on the
date of the purchase,
(ii)
accrued and unpaid interest on the Mortgage Loan at the
applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x)
the
purchaser is the Servicer or (y) if the purchaser is the Seller and
the Seller
is the Servicer) from the date through which interest was last paid
by the
Mortgagor to the Due Date in the month in which the Purchase Price
is to be
distributed to Certificateholders, net of any unreimbursed Advances
made by
the Servicer on the Mortgage Loan, and
(iii) any
costs and damages incurred by the Trust Fund in connection
with any violation by the Mortgage Loan of any predatory or abusive
lending
law.
If the
Mortgage Loan is purchased pursuant to Section 3.12, the
interest
component of the Purchase Price shall be computed (i) on the basis
of the
applicable Adjusted Mortgage Rate before giving effect to the
related
modification and (ii) from the date to which interest was last paid
to the
date on which the Mortgage Loan is assigned to the Servicer
pursuant to
Section 3.12.
Qualified
Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of
business and
each state having jurisdiction over the insurer in connection with
the
insurance policy issued by the insurer, duly authorized and
licensed in such
states to transact a mortgage guaranty insurance business in such
states and
to write the insurance provided by the insurance policy issued by
it, approved
as a FNMA- or FHLMC-approved mortgage insurer or having a claims
paying
ability rating of at least "AA" or equivalent rating by a
nationally
recognized statistical rating organization. Any replacement insurer
with
respect to a Mortgage Loan must have at least as high a claims
paying ability
rating as the insurer it replaces had on the Closing Date.
Rating
Agency: Each of the Rating Agencies specified in the
Preliminary
Statement. If any of them or a successor is no longer in existence,
"Rating
Agency" shall be the nationally recognized statistical rating
organization, or
other comparable Person, identified as a "Rating Agency" in the
Underwriter's
Exemption and designated by the Depositor, notice of which
designation shall
be given to the Trustee. References to a given rating or rating
category of a
Rating Agency means the rating category without giving effect to
any
modifiers.
Realized
Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of
the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated
Principal
Balance of the Liquidated Mortgage Loan as of the date of such
liquidation,
plus (ii) interest at the Adjusted Net Mortgage Rate from the Due
Date as to
which interest was last paid or advanced (and not reimbursed)
to
Certificateholders up to the Due Date in the month in which
Liquidation
Proceeds are required to be distributed on the Stated Principal
Balance of
such Liquidated Mortgage Loan from time to time, minus (iii) the
Liquidation
Proceeds, if any, received during the month in which such
liquidation
occurred, to the extent applied as recoveries of interest at the
Adjusted Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan.
With respect
to each Mortgage Loan that has become the subject of a Deficient
Valuation, if
the principal amount due under the related Mortgage Note has been
reduced, the
difference between the principal balance of the Mortgage Loan
outstanding
immediately prior to such Deficient Valuation and the principal
balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect
to each
Mortgage Loan which has become the subject of a Debt Service
Reduction and any
Distribution Date, the amount, if any, by which the principal
portion of the
related Scheduled Payment has been reduced.
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<PAGE>
To the
extent the Servicer receives Subsequent Recoveries with respect
to any Mortgage Loan, the amount of the Realized Loss with respect
to that
Mortgage Loan will be reduced by such Subsequent Recoveries.
Recognition Agreement: For any Cooperative Loan, an agreement
between
the Cooperative Corporation and the originator of the Mortgage Loan
that
establishes the rights of the originator in the Cooperative
Property.
Record
Date: With respect to any Distribution Date and any Definitive
Certificate and the Delay Certificates, the close of business on
the last
Business Day of the month preceding the month of that Distribution
Date. With
respect to any Distribution Date and the LIBOR Certificates as long
as they
are Book-Entry Certificates, the Business Day immediately prior to
such
Distribution Date.
Reference
Bank: As defined in Section 4.07.
Refinance
Loan: Any Mortgage Loan the proceeds of which are used to
refinance an Original Mortgage Loan.
Regular
Certificates: As specified in the Preliminary Statement.
Regulation
AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to
time, and subject to such clarification and interpretation as have
been
provided by the Commission in the adopting release (Asset-Backed
Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005))
or by the staff of the Commission, or as may be provided by the
Commission or
its staff from time to time.
Relief
Act: The Servicemembers Civil Relief Act.
Relief Act
Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount
of interest
collectible thereon for the most recently ended calendar month as a
result of
the application of the Relief Act or any similar state or local
laws, the
amount, if any, by which (i) interest collectible on such Mortgage
Loan for
the most recently ended calendar month is less than (ii) interest
accrued
thereon for such month pursuant to the Mortgage Note.
REMIC: A
"real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC
Provisions: Provisions of the federal income tax law relating
to
real estate mortgage investment conduits, which appear at sections
860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions,
and regulations promulgated thereunder, as the foregoing may be in
effect from
time to time as well as provisions of applicable state laws.
REO
Property: A Mortgaged Property acquired by the Trust Fund
through
foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted
Mortgage Loan.
Reportable
Event: Any event required to be reported on Form 8-K, and in
any event, the following:
(a) entry
into a definitive agreement related to the Trust Fund, the
Certificates or the Mortgage Loans, or an amendment to a
Transaction Document,
even if the Depositor is not a party to
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<PAGE>
such agreement (e.g., a servicing agreement with a servicer
contemplated by
Item 1108(a)(3) of Regulation AB);
(b)
termination of a Transaction Document (other than by expiration
of
the agreement on its stated termination date or as a result of all
parties
completing their obligations under such agreement), even if the
Depositor is
not a party to such agreement (e.g., a servicing agreement with a
servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(c) with
respect to the Servicer only, if the Servicer becomes aware of
any bankruptcy or receivership with respect to the Seller, the
Depositor, the
Servicer, the Trustee, the Cap Counterparty, any enhancement or
support
provider contemplated by Items 1114(b) or 1115 of Regulation AB, or
any other
material party contemplated by Item 1101(d)(1) of Regulation
AB;
(d) with
respect to the Trustee, the Servicer and the Depositor only,
the occurrence of an early amortization, performance trigger or
other event,
including an Event of Default under this Agreement;
(e) any
amendment to this Agreement;
(f) the
resignation, removal, replacement, substitution of the Servicer
or the Trustee;
(g) with
respect to the Servicer only, if the Servicer becomes aware
that (i) any material enhancement or support specified in Item
1114(a)(1)
through (3) of Regulation AB or Item 1115 of Regulation AB that was
previously
applicable regarding one or more Classes of the Certificates has
terminated
other than by expiration of the contract on its stated termination
date or as
a result of all parties completing their obligations under such
agreement;
(ii) any material enhancement specified in Item 1114(a)(1) through
(3) of
Regulation AB or Item 1115 of Regulation AB has been added with
respect to one
or more Classes of the Certificates; or (iii) any existing
material
enhancement or support specified in Item 1114(a)(1) through (3) of
Regulation
AB or Item 1115 of Regulation AB with respect to one or more
Classes of the
Certificates has been materially amended or modified; and
(h) with
respect to the Trustee, the Servicer and the Depositor only, a
required distribution to Holders of the Certificates is not made as
of the
required Distribution Date under this Agreement.
Reporting
Subcontractor: With respect to the Servicer or the Trustee,
any Subcontractor determined by such Person pursuant to Section
11.08(b) to be
"participating in the servicing function" within the meaning of
Item 1122 of
Regulation AB. References to a Reporting Subcontractor shall refer
only to the
Subcontractor of such Person and shall not refer to Subcontractors
generally.
Request
for Release: The Request for Release submitted by the Servicer
to the Trustee, substantially in the form of Exhibits M and N, as
appropriate.
Required
Insurance Policy: For any Mortgage Loan, any insurance policy
that is required to be maintained from time to time under this
Agreement.
Residual
Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any
Managing
Director, any Director, Vice President, any Assistant Vice
President, any
Associate, any Assistant Secretary, any Trust Officer, or any other
officer of
the Trustee customarily performing functions similar to those
performed by any
of the above designated officers who at such time shall be officers
to whom,
with respect to a
29
<PAGE>
particular matter, the matter is referred because of the officer's
knowledge
of and familiarity with the particular subject and who has
direct
responsibility for the administration of this Agreement.
Restricted
Classes: As defined in Section 4.02(e).
Rolling
Three Month Delinquency Rate: With respect to any Distribution
Date, an amount equal to the average of the Delinquency Rates for
each of the
three (or one and two, in the case of the first and second
Distribution Dates,
respectively) immediately preceding months.
SAIF: The
Savings Association Insurance Fund, or any successor thereto.
Sarbanes-Oxley Certification: As defined in Section 11.05.
S&P:
Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. If
S&P is designated as a Rating Agency in the Preliminary
Statement, for
purposes of Section 10.05(b) the address for notices to S&P
shall be Standard
& Poor's, a division of The McGraw-Hill Companies, Inc., 55
Water Street, New
York, New York 10041, Attention: Mortgage Surveillance Monitoring,
or any
other address that S&P furnishes to the Depositor and the
Servicer.
Scheduled
Balance: Not applicable.
Scheduled
Classes: As specified in the Preliminary Statement.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such
Mortgage Loan
which, unless otherwise specified herein, shall give effect to any
related
Debt Service Reduction and any Deficient Valuation that affects the
amount of
the monthly payment due on such Mortgage Loan.
Securities
Act: The Securities Act of 1933, as amended.
Security
Agreement: For any Cooperative Loan, the agreement between the
owner of the related Co-op Shares and the originator of the related
Mortgage
Note that defines the security interest in the Co-op Shares and the
related
Proprietary Lease.
Seller:
IndyMac Bank, F.S.B., a federal savings bank, and its
successors
and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
Senior
Certificate Group: As specified in the Preliminary Statement.
Senior
Certificates: As specified in the Preliminary Statement.
Senior
Credit Support Depletion Date: Not applicable.
Senior
Enhancement Percentage: With respect to a Distribution Date on
or
after the Stepdown Date a fraction (expressed as a percentage):
(1) the numerator of which is sum of the aggregate Class
Certificate Balance of the Subordinated Certificates and the
Overcollateralized Amount (which, for purposes of this definition
only,
shall not
be less than zero) and
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<PAGE>
(2) the denominator of which is the Pool Principal Balance as
of
the Due
Date in the prior month (after giving effect to Principal
Prepayments in the Prepayment Period related to that prior Due
Date).
Senior
Principal Distribution Amount: For any Distribution Date an
amount equal to the amount, if any, by which (x) the aggregate
Class
Certificate Balance of the Classes of Senior Certificates after
allocation of
any Net Deferred Interest for that Distribution Date but prior to
any
distributions on that Distribution Date exceeds (y) the Senior
Target Amount
for that Distribution Date.
Senior
Target Amount: For any Distribution Date, (x) after the
Stepdown
Date if a Trigger Event is not in effect, an amount equal to the
lesser of (a)
the product of (1) 83.75% on any Distribution Date on or after the
Stepdown
Date and prior to the Distribution Date in October 2012 or (y)
87.00% on any
Distribution Date on or after the Stepdown Date and on or after
the
Distribution Date in October 2012 and (2) the Pool Principal
Balance as of the
Due Date in the month of that Distribution Date (after giving
effect to
Principal Prepayments received in the related Prepayment Period)
and (b) the
amount, if any, by which (1) the Pool Principal Balance as of the
Due Date in
the month of that Distribution Date (after giving effect to
Principal
Prepayments received in the related Prepayment Period) exceeds (2)
the OC
Floor, and (y) for any Distribution Date after the Stepdown Date on
which a
Trigger Event is in effect, the Senior Target Amount for the
immediately
preceding Distribution Date.
Servicer:
IndyMac Bank, F.S.B., a federal savings bank, and its
successors and assigns, in its capacity as servicer under this
Agreement.
Servicer
Advance Date: As to any Distribution Date, 12:30 P.M. Pacific
time on the Business Day preceding the Distribution Date.
Servicing
Advances: All customary, reasonable, and necessary "out of
pocket" costs and expenses incurred in the performance by the
Servicer of its
servicing obligations, including the cost of
(a) the preservation, restoration, and protection of a
Mortgaged
Property,
(b) expenses reimbursable to the Servicer pursuant to Section
3.12
and any
enforcement or judicial proceedings, including foreclosures,
(c) the maintenance and liquidation of any REO Property,
(d) compliance with the obligations under Section 3.10, and
(e) reasonable compensation to the Servicer or its affiliates
for
acting as
broker in connection with the sale of foreclosed Mortgaged
Properties
and for performing certain default management and other
similar
services (including appraisal services) in connection with the
servicing
of defaulted Mortgage Loans. For purposes of this clause (e),
only costs
and expenses incurred in connection with the performance of
activities
generally considered to be outside the scope of customary
servicing
or master servicing duties shall be treated as Servicing
Advances.
Servicing
Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB.
Servicing
Fee: As to each Mortgage Loan and any Distribution Date, one
month's interest at the applicable Servicing Fee Rate on the Stated
Principal
Balance of the Mortgage Loan, or, whenever a payment of interest
accompanies a
Principal Prepayment in Full made by the Mortgagor, interest at
the
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<PAGE>
Servicing Fee Rate on the Stated Principal Balance of the Mortgage
Loan for
the period covered by the payment of interest, subject to reduction
as
provided in Section 3.15.
Servicing
Fee Rate: For each Mortgage Loan, 0.375% per annum.
Servicing
Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage
Loans whose
name and facsimile signature appear on a list of servicing officers
furnished
to the Trustee by the Servicer on the Closing Date pursuant to this
Agreement,
as the list may from time to time be amended.
Servicing
Standard: That degree of skill and care exercised by the
Servicer with respect to mortgage loans comparable to the Mortgage
Loans
serviced by the Servicer for itself or others.
Shift
Percentage: Not applicable.
Six-Month
LIBOR Index: The average of the London interbank offered rates
for six month U.S. dollar deposits in the London market, generally
as set
forth in either The Wall Street Journal or some other source
generally
accepted in the residential mortgage loan origination business and
specified
in the related Mortgage Note or, if such rate ceases to be
published in The
Wall Street Journal or becomes unavailable for any reason, then
based upon a
new index selected by the Servicer, based on comparable
information, in each
case, as most recently announced as of either 45 days prior to, or
the first
Business Day of the month immediately preceding the month of, such
Adjustment
Date.
Soft
Prepayment Charge: As to a Mortgage Loan, any charge payable by
a
Mortgagor in connection with certain partial prepayments and all
prepayments
in full made within the related Prepayment Charge Period other than
as a
result of selling the Mortgaged Property, the Soft Prepayment
Charges with
respect to each applicable Mortgage Loan so held by the Trust Fund
being
identified in the Mortgage Loan Schedule.
Special
Hazard Coverage Termination Date: Not applicable.
Special
Hazard Loss: Not applicable.
Special
Hazard Loss Coverage Amount: Not applicable.
Special
Hazard Mortgage Loan: Not applicable.
Startup
Day: The Closing Date.
Stated
Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date,
as
specified in the amortization schedule at the time relating thereto
(before
any adjustment to such amortization schedule by reason of any
moratorium or
similar waiver or grace period) after giving effect to the sum of:
(i) the
payment of principal due on such Due Date and irrespective of any
delinquency
in payment by the related Mortgagor and (ii) any Liquidation
Proceeds
allocable to principal received in the prior calendar month and any
Principal
Prepayments received through the last day of the related Prepayment
Period, in
each case, with respect to such Mortgage Loan and increased by any
Deferred
Interest added to the principal balance of that Mortgage Loan on or
prior to
such Due Date.
Stepdown
Date: The later to occur of (x) the Distribution Date in
October 2009 and(y) the first Distribution Date on which the
aggregate Class
Certificate Balance of the Senior Certificates (after
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<PAGE>
calculating anticipated distributions on such Distribution Date) is
less than
or equal to (a) prior to the Distribution Date in October 2012,
16.25% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the
Due Date in
the month of that Distribution Date (after giving effect to
Principal
Prepayments in the related Prepayment Period) and (b) on or after
the
Distribution Date in October 2012, 13.00% of the aggregate Stated
Principal
Balance of the Mortgage Loans as of the Due Date in the month of
that
Distribution Date (after giving effect to Principal Prepayments in
the related
Prepayment Period).
Stepdown
Target Subordinated Percentage: For any Class of Subordinated
Certificates, the respective percentages indicated in the following
table:
Stepdown Target
Stepdown Target
Subordination
Subordination
Percentage (1)
Percentage (2)
Class M-1................ 8.75%
7.00%
Class M-2................ 6.75%
5.40%
Class M-3................ 5.50%
4.40%
Class M-4................ 4.25%
3.40%
Class M-5................ 2.50%
2.00%
Class M-6................ 1.25%
1.00%
--------
(1) For any
Distribution Date occurring on or after the Distribution Date
occurring in October 2009 and prior to the Distribution Date
occurring in
October 2012.
(2) For any
Distribution Date occurring on or after the Distribution Date
occurring in October 2012.
Subcontractor: Any vendor, subcontractor or other Person that is
not
responsible for the overall servicing (as "servicing" is commonly
understood
by participants in the mortgage-backed securities market) of
Mortgage Loans
but performs one or more discrete functions identified in Item
1122(d) of
Regulation AB with respect to the Mortgage Loans under the
direction or
authority of the Servicer or the Trustee, as the case may be.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated Class Principal Distribution Target Amount: For any
Class
of Subordinated Certificates and Distribution Date will equal the
excess of:
(1) the
sum of: (a) the aggregate Class Certificate Balance of the
Senior Certificates (after taking into account the distribution of
the Senior
Principal Distribution Amount for that Distribution Date), (b) the
aggregate
Class Certificate Balance of any Class(es) of Subordinated
Certificates that
are senior to the subject Class (in each case, after taking into
account
distribution of the Subordinated Class Principal Distribution
Target Amount(s)
for such more senior Class(es) of Certificates for such
Distribution Date),
and (c) the Class Certificate Balance of the subject Class of
Subordinated
Certificates immediately prior to such Distribution Date over
(2) the
lesser of (a) the product of (x) 100% minus the Stepdown Target
Subordination Percentage for the subject Class of Certificates and
(y) the
aggregate Stated Principal Balance of the Mortgage Loans for that
Distribution
Date and (b) the aggregate Stated Principal Balance of the Mortgage
Loans for
that Distribution Date minus the OC Floor;
33
<PAGE>
provided, however, that if such Class of Subordinated Certificates
is the only
class of Subordinated Certificates outstanding on such Distribution
Date, that
Class will be entitled to receive the entire remaining Principal
Distribution
Amount until its Class Certificate Balance is reduced to zero.
Subsequent
Recoveries: As to any Distribution Date, with respect to a
Liquidated Mortgage Loan that resulted in a Realized Loss in a
prior calendar
month, unexpected amounts received by the Servicer (net of any
related
expenses permitted to be reimbursed pursuant to Section 3.09)
specifically
related to such Liquidated Mortgage Loan.
Substitute
Mortgage Loan: A Mortgage Loan substituted by the Seller for
a Deleted Mortgage Loan that must, on the date of substitution, as
confirmed
in a Request for Release, substantially in the form of Exhibit
M,
(i) have a
Stated Principal Balance, after deduction of the principal
portion of the Scheduled Payment due in the month of substitution,
not in
excess of, and not more than 10% less than, the Stated Principal
Balance of
the Deleted Mortgage Loan (unless the amount of any shortfall is
deposited by
the Seller in the Certificate Account and held for distribution to
the
Certificateholders on the related Distribution Date);
(ii) have
a Mortgage Rate no lower than and not more than 1% per annum
higher than the Deleted Mortgage Loan;
(iii) have
a Maximum Mortgage Rate not more than 1% per annum higher
than and not lower than the Maximum Mortgage Rate of the Deleted
Mortgage
Loan,
(iv) have
the same Mortgage Index and interval between Adjustment Dates
as the Deleted Mortgage Loan and a Gross Margin not more than 1%
per annum
higher than, and not lower than that of the Deleted Mortgage
Loan;
(v) have
the same negative amortization limit, payment adjustment
intervals and recast provisions as that of the Deleted Mortgage
Loan;
(vi) have
a Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan;
(vii) have
a remaining term to maturity no greater than (and not more
than one year less than) that of the Deleted Mortgage Loan;
(viii) not
be a Cooperative Loan unless the Deleted Mortgage Loan was a
Cooperative Loan; and
(ix)
comply with each representation and warranty in Section 2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
Suspension
Notification: Notification to the Commission of the
suspension of the Trust Fund's obligation to file reports pursuant
to Section
15(d) of the Exchange Act.
Targeted
Balance: Not applicable.
Targeted
Principal Classes: As specified in the Preliminary Statement.
34
<PAGE>
Transaction Documents: This Agreement, the Cap Contract and any
other
document or agreement entered into in connection with the Trust
Fund, the
Certificates or the Mortgage Loans.
Transfer: Any
direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Trigger
Event: With respect to a Distribution Date on or after the
Stepdown Date either a Delinquency Trigger Event is in effect with
respect to
that Distribution Date or a Cumulative Loss Trigger Event is in
effect with
respect to that Distribution Date.
Trust
Fund: The corpus of the trust created under this Agreement
consisting of
(i) the
Mortgage Loans and all interest and principal received on them
after the Cut-off Date, other than amounts due on the Mortgage
Loans by the
Cut-off Date;
(ii) the
Certificate Account, the Distribution Account, the Carryover
Reserve Fund and all amounts deposited therein pursuant to this
Agreement
(including amounts received from the Seller on the Closing Date
that will be
deposited by the Trustee in the Certificate Account pursuant to
Section 2.01);
(iii)
property that secured a Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure, or otherwise;
(iv) the
right to collect any amounts under any mortgage insurance
policies covering any Mortgage Loan and any collections received
under any
mortgage insurance policies covering any Mortgage Loan; and
(v) all
proceeds of the conversion, voluntary or involuntary, of any of
the foregoing.
Trustee:
Deutsche Bank National Trust Company and its successors and, if
a successor trustee is appointed under this Agreement, the
successor.
Trustee
Fee: The fee payable to the Trustee on each Distribution Date
for its services as Trustee hereunder, in an amount equal to
one-twelfth of
the Trustee Fee Rate multiplied by the aggregate Stated Principal
Balance of
the Mortgage Loans as of the Due Date in the month preceding the
month of such
Distribution Date (after giving effect to Principal Prepayments in
the
Prepayment Period related to that prior Due Date).
Trustee
Fee Rate: 0.0085% per annum.
The terms
"United States," "State," and "International Organization"
have the meanings in section 7701 of the Code or successor
provisions. A
corporation will not be treated as an instrumentality of the United
States or
of any State or political subdivision thereof for these purposes if
all of its
activities are subject to tax and, with the exception of the
Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not
selected by
such government unit.
UCC: The
Uniform Commercial Code for the State of New York.
Underwriter's Exemption: Prohibited Transaction Exemption 2002-41,
67
Fed. Reg. 54487 (2002) (or any successor thereto), or any
substantially
similar administrative exemption granted by the U.S. Department of
Labor.
35
<PAGE>
United
States Person or U.S. Person:
(i) A
citizen or resident of the United States;
(ii) a
corporation (or entity treated as a corporation for tax
purposes)
created or organized in the United States or under the laws of the
United
States or of any state thereof, including, for this purpose, the
District of
Columbia;
(iii) a
partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the
United
States or of any state thereof, including, for this purpose, the
District of
Columbia (unless provided otherwise by future Treasury
regulations);
(iv) an
estate whose income is includible in gross income for United
States income tax purposes regardless of its source; or
(v) a trust, if
a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S.
Persons have authority to control all substantial decisions of the
trust.
Notwithstanding the last clause of the preceding sentence, to the
extent
provided in Treasury regulations, certain trusts in existence on
August 20,
1996, and treated as U.S. Persons before that date, may elect to
continue to
be U.S. Persons.
Unpaid
Realized Loss Amount: For any Class of Certificates (other than
the Class A-1 Certificates), (x) the portion of the aggregate
Applied Realized
Loss Amount previously allocated to that Class remaining unpaid
from prior
Distribution Dates minus (y) any increase in the Class Certificate
Balance of
that Class due to the allocation of Subsequent Recoveries to the
Class
Certificate Balance of that Class.
U.S.A.
Patriot Act: The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001.
Voting
Rights: The portion of the voting rights of all of the
Certificates that is allocated to any Certificate. As of any date
of
determination, (a) 1% of all Voting Rights shall be allocated to
the Holders
of the Class P, Class C and Class A-R Certificates and (b) the
remaining
Voting Rights shall be allocated among Holders of the remaining
Classes of
Certificates in proportion to the Certificate Balances of the
respective
Certificates on that date.
Weighted
Average Adjusted Net Mortgage Rate: For any Distribution Date,
the average of the Adjusted Net Mortgage Rate of each Mortgage
Loan, weighted
on the basis of its Stated Principal Balance as of the Due Date in
the prior
month (after giving effect to Principal Prepayments in the
Prepayment Period
related to such prior Due Date).
Withdrawal
Date: The 18th day of each month, or if such day is not a
Business Day, the next preceding Business Day.
Section
1.02. Rules of Construction.
Except as
otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise
(a)
References to designated articles, sections, subsections,
exhibits,
and other subdivisions of this Agreement, such as "Section 6.12
(a)," refer to
the designated article, section, subsection, exhibit,
36
<PAGE>
or other subdivision of this Agreement as a whole and to all
subdivisions of
the designated article, section, subsection, exhibit, or other
subdivision.
The words "herein," "hereof," "hereto," "hereunder," and other
words of
similar import refer to this Agreement as a whole and not to any
particular
article, section, exhibit, or other subdivision of this
Agreement.
(b) Any
term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or
any other
changes that may have occurred since the document, statute, rule,
or
regulation came into being, including changes that occur after the
date of
this Agreement.
(c) Any
party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something
to be done
rather than doing it directly shall be implicit in every
requirement under
this Agreement. Unless a provision is restricted as to time or
limited as to
frequency, all provisions under this Agreement are implicitly
available and
things may happen from time to time.
(d) The
term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word
"either," the word
"or" is always used inclusively (for example, the phrase "A or B"
means "A or
B or both," not "either A or B but not both").
(e) A
reference to "a [thing]" or "any [of a thing]" does not imply
the
existence or occurrence of the thing referred to even though not
followed by
"if any," and "any [of a thing]" is any of it. A reference to the
plural of
anything as to which there could be either one or more than one
does not imply
the existence of more than one (for instance, the phrase "the
obligors on a
note" means "the obligor or obligors on a note"). "Until [something
occurs]"
does not imply that it must occur, and will not be modified by the
word
"unless." The word "due" and the word "payable" are each used in
the sense
that the stated time for payment has passed. The word "accrued" is
used in its
accounting sense, i.e., an amount paid is no longer accrued. In
the
calculation of amounts of things, differences and sums may
generally result in
negative numbers, but when the calculation of the excess of one
thing over
another results in zero or a negative number, the calculation is
disregarded
and an "excess" does not exist. Portions of things may be expressed
as
fractions or percentages interchangeably.
(f) All
accounting terms used in an accounting context and not
otherwise
defined, and accounting terms partly defined in this Agreement, to
the extent
not completely defined, shall be construed in accordance with
generally
accepted accounting principles. To the extent that the definitions
of
accounting terms in this Agreement are inconsistent with their
meanings under
generally accepted accounting principles, the definitions contained
in this
Agreement shall control. Capitalized terms used in this Agreement
without
definition that are defined in the Uniform Commercial Code are used
in this
Agreement as defined in the Uniform Commercial Code.
(g) In the
computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and
"beginning"
mean "from and including," the word "after" means "from but
excluding," the
words "to" and "until" mean "to but excluding," and the word
"through" means
"to and including." Likewise, in setting deadlines or other
periods, "by"
means "by." The words "preceding," "following," and words of
similar import,
mean immediately preceding or following. References to a month or a
year refer
to calendar months and calendar years.
(h) Any
reference to the enforceability of any agreement against a
party
means that it is enforceable, subject as to enforcement against the
party, to
applicable bankruptcy, insolvency, reorganization, and other
similar laws of
general applicability relating to or affecting creditors' rights
and to
general equity principles.
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Article Two
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section
2.01. Conveyance of Mortgage Loans.
(a) The
Seller, concurrently with the execution and delivery of this
Agreement, hereby transfers to the Depositor, without recourse, all
the
interest of the Seller in each Mortgage Loan, including all
interest and
principal received or receivable by the Seller on each Mortgage
Loan after the
Cut-off Date and all interest and principal payments on each
Mortgage Loan
received before the Cut-off Date for installments of interest and
principal
due after the Cut-off Date but not including payments of principal
and
interest due by the Cut-off Date. By the Closing Date, the Seller
shall
deliver to the Depositor or, at the Depositor's direction, to the
Trustee or
other designee of the Depositor, the Mortgage File for each
Mortgage Loan
listed in the Mortgage Loan Schedule (except that, in the case of
Mortgage
Loans that are Delay Delivery Mortgage Loans, such delivery may
take place
within five Business Days of the Closing Date) as of the Closing
Date. The
delivery of the Mortgage Files shall be made against payment by the
Depositor
of the purchase price, previously agreed to by the Seller and
Depositor, for
the Mortgage Loans. With respect to any Mortgage Loan that does not
have a
first payment date on or before the Due Date in the month of the
first
Distribution Date, the Seller shall deposit into the Distribution
Account on
the first Distribution Account Deposit Date an amount equal to one
month's
interest at the related Adjusted Mortgage Rate on the Cut-off Date
Principal
Balance of such Mortgage Loan. On the Closing Date the Depositor
shall also
deposit or shall cause to be deposited $1,000 into the Carryover
Reserve Fund
and $100 into the Certificate Account.
(b) The
Depositor, concurrently with the execution and delivery of this
Agreement, hereby (i) transfers to the Trustee for the benefit of
the
Certificateholders, without recourse, all the interest of the
Depositor in the
Trust Fund, together with the Depositor's right to require the
Seller to cure
any breach of a representation or warranty made in this Agreement
by the
Seller or to repurchase or substitute for any affected Mortgage
Loan in
accordance with this Agreement. The Depositor hereby directs the
Trustee to
execute the Cap Contract.
(c) In
connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered (or, in the case of the Delay
Delivery
Mortgage Loans, will deliver to the Trustee within the time periods
specified
in the definition of Delay Delivery Mortgage Loans), for the
benefit of the
Certificateholders the following documents or instruments with
respect to each
Mortgage Loan so assigned:
(i) The original Mortgage Note, endorsed by manual or facsimile
signature
in blank in the following form: "Pay to the order of
_______________ ______________without recourse," with all
intervening
endorsements showing a complete chain of endorsement from the
originator
to the
Person endorsing the Mortgage Note (each endorsement being
sufficient
to transfer all interest of the party so endorsing, as
noteholder
or assignee thereof, in that Mortgage Note) or a lost note
affidavit
for any Lost Mortgage Note from the Seller stating that the
original
Mortgage Note was lost or destroyed, together with a copy of
the Mortgage
Note.
(ii) Except as provided below and for each Mortgage Loan that
is
not a MERS
Mortgage Loan, the original recorded Mortgage or a copy of
such
Mortgage certified by the Seller as being a true and complete
copy
of the
Mortgage (or, in the case of a Mortgage for which the related
Mortgaged
Property is located in the Commonwealth of Puerto Rico, a true
copy of
the Mortgage certified as such by the applicable notary) and in
the case
of each MERS Mortgage Loan, the original Mortgage, noting the
presence
of the MIN of the Mortgage Loans and either
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language
indicating that the Mortgage Loan is a MOM Loan if the Mortgage
Loan is a
MOM Loan or if the Mortgage Loan was not a MOM Loan at
origination, the original Mortgage and the assignment thereof to
MERS,
with
evidence of recording indicated thereon, or a copy of the
Mortgage
certified
by the public recording office in which such Mortgage has been
recorded.
(iii) In the case of a Mortgage Loan that is not a MERS
Mortgage
Loan, a
duly executed assignment of the Mortgage (which may be included
in a
blanket assignment or assignments), together with, except as
provided
below, all interim recorded assignments of the mortgage (each
assignment, when duly and validly completed, to be in recordable
form
and
sufficient to effect the assignment of and transfer to its
assignee
of the Mortgage
to which the assignment relates). If the related
Mortgage
has not been returned from the applicable public recording
office,
the assignment of the Mortgage may exclude the information to
be
provided
by the recording office. The assignment of Mortgage need not be
delivered
in the case of a Mortgage for which the related Mortgage
Property
is located in the Commonwealth of Puerto Rico.
(iv) The original or copies of each assumption, modification,
written
assurance, or substitution agreement.
(v) Except as provided below, the original or duplicate
original
lender's
title policy and all its riders.
(vi) The originals of the following documents for each
Cooperative
Loan:
(A) the Co-op Shares, together with a stock power in blank;
(B) the executed Security Agreement;
(C) the executed Proprietary Lease;
(D) the executed Recognition Agreement;
(E) the executed UCC-1 financing statement that has been
filed in all places required to perfect the Seller's interest
in
the Co-op Shares and the Proprietary Lease with evidence of
recording on it; and
(F) executed UCC-3 financing statements or other appropriate
UCC financing statements required by state law, evidencing a
complete and unbroken line from the mortgagee to the Trustee
with
evidence of recording thereon (or in a form suitable for
recordation). If in connection with any Mortgage Loan the
Depositor cannot deliver
(a) the original recorded Mortgage,
(b) all interim recorded assignments, or
(c) the lender's title policy (together with all its
riders).
In
addition, in connection with the assignment of any MERS
Mortgage
Loan, the Seller agrees that it will cause, at the Seller's
expense, the
MERS(R) System to indicate that the Mortgage Loans sold by the
Seller to the
Depositor have been assigned by the Seller to the Trustee in
accordance with
this
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Agreement for the benefit of the Certificateholders by including
(or deleting,
in the case of Mortgage Loans that are repurchased in accordance
with this
Agreement) in such computer files the information required by the
MERS(R)
System to identify the series of the Certificates issued in
connection with
such Mortgage Loans. The Seller further agrees that it will not,
and will not
permit the Servicer to, and the Servicer agrees that it will not,
alter the
information referenced in this paragraph with respect to any
Mortgage Loan
sold by the Seller to the Depositor during the term of this
Agreement unless
and until such Mortgage Loan is repurchased in accordance with the
terms of
this Agreement.
In the
event that in connection with any Mortgage Loan that is not a
MERS Mortgage Loan the Depositor cannot deliver (a) the original
recorded
Mortgage, (b) all interim recorded assignments or (c) the lender's
title
policy (together with all riders thereto) satisfying the
requirements of
clause (ii), (iii) or (v) above, respectively, concurrently with
the execution
and delivery of this Agreement because such document or documents
have not
been returned from the applicable public recording office in the
case of
clause (ii) or (iii) above, or because the title policy has not
been delivered
to either the Servicer or the Depositor by the applicable title
insurer in the
case of clause (v) above, then the Depositor shall promptly deliver
to the
Trustee, in the case of clause (ii) or (iii) above, the original
Mortgage or
the interim assignment, as the case may be, with evidence of
recording
indicated on when it is received from the public recording office,
or a copy
of it, certified, if appropriate, by the relevant recording office
and in the
case of clause (v) above, the original or a copy of a written
commitment or
interim binder or preliminary report of title issued by the title
insurance or
escrow company, with the original or duplicate copy thereof to be
delivered to
the Trustee upon receipt thereof. The delivery of the original
Mortgage Loan
and each interim assignment or a copy of them, certified, if
appropriate, by
the relevant recording office, shall not be made later than one
year following
the Closing Date, or, in the case of clause (v) above, later than
120 days
following the Closing Date. If the Depositor is unable to deliver
each
Mortgage by that date and each interim assignment because any
documents have
not been returned by the appropriate recording office, or, in the
case of each
interim assignment, because the related Mortgage has not been
returned by the
appropriate recording office, the Depositor shall deliver the
documents to the
Trustee as promptly as possible upon their receipt and, in any
event, within
720 days following the Closing Date.
The
Depositor shall forward to the Trustee (a) from time to time
additional original documents evidencing an assumption or
modification of a
Mortgage Loan and (b) any other documents required to be delivered
by the
Depositor or the Servicer to the Trustee. If the original Mortgage
is not
delivered and in connection with the payment in full of the related
Mortgage
Loan the public recording office requires the presentation of a
"lost
instruments affidavit and indemnity" or any equivalent document,
because only
a copy of the Mortgage can be delivered with the instrument of
satisfaction or
reconveyance, the Servicer shall execute and deliver the required
document to
the public recording office. If a public recording office retains
the original
recorded Mortgage or if a Mortgage is lost after recordation in a
public
recording office, the Seller shall deliver to the Trustee a copy of
the
Mortgage certified by the public recording office to be a true and
complete
copy of the original recorded Mortgage.
As
promptly as practicable after any transfer of a Mortgage Loan
under
this Agreement, and in any event within thirty days after the
transfer, the
Trustee shall (i) affix the Trustee's name to each assignment of
Mortgage, as
its assignee, and (ii) cause to be delivered for recording in the
appropriate
public office for real property records the assignments of the
Mortgages to
the Trustee, except that, if the Trustee has not received the
information
required to deliver any assignment of a Mortgage for recording, the
Trustee
shall deliver it as soon as practicable after receipt of the
needed
information and in any event within thirty days.
The
Trustee need not record any assignment that relates to a
Mortgage
Loan (a) the Mortgaged Property and Mortgage File relating to which
are
located in California or (b) in any other jurisdiction (including
Puerto Rico)
under the laws of which, as evidenced by an Opinion of Counsel
delivered by
the
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<PAGE>
Seller (at the Seller's expense) to the Trustee, recording the
assignment is
not necessary to protect the Trustee's and the Certificateholders'
interest in
the related Mortgage Loan. The Seller shall deliver such Opinion of
Counsel
within 90 days of the Closing Date.
If any
Mortgage Loans have been prepaid in full as of the Closing
Date,
the Depositor, in lieu of delivering the above documents to the
Trustee, will
deposit in the Certificate Account the portion of the prepayment
that is
required to be deposited in the Certificate Account pursuant to
Section 3.06.
Notwithstanding anything to the contrary in this Agreement, within
five
Business Days after the Closing Date, the Seller shall either
(x)
deliver to the Trustee the Mortgage File as required pursuant
to
this
Section 2.01 for each Delay Delivery Mortgage Loan or
(y) (A)
repurchase the Delay Delivery Mortgage Loan or (B) substitute
the
Substitute Mortgage Loan for a Delay Delivery Mortgage Loan,
which
repurchase
or substitution shall be accomplished in the manner and
subject to
the conditions in Section 2.03 (treating each such Delay
Delivery
Mortgage Loan as a Deleted Mortgage Loan for purposes of such
Section
2.03);
provided, however, that if the Seller fails to deliver a Mortgage
File for any
Delay Delivery Mortgage Loan within the period specified herein,
the Seller
shall use its best reasonable efforts to effect a substitution,
rather than a
repurchase of, such Deleted Mortgage Loan and provided further that
the cure
period provided for in Section 2.02 or in Section 2.03 shall not
apply to the
initial delivery of the Mortgage File for such Delay Delivery
Mortgage Loan,
but rather the Seller shall have five (5) Business Days to cure
such failure
to deliver. At the end of such period, the Trustee shall send a
Delay Delivery
Certification for the Delay Delivery Mortgage Loans delivered
during such
period in accordance with the provisions of Section 2.02.
(d) The
Seller agrees to treat the transfer of the Mortgage Loans to
the
Depositor as a sale for all tax, accounting, and regulatory
purposes.
Section
2.02. Acceptance by the Trustee of the Mortgage Loans.
The
Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form of Exhibit G-1, and declares that
it holds
and will hold such documents and the other documents delivered to
it
constituting the Mortgage Files for the Mortgage Loans, and that it
holds or
will hold such other assets as are included in the Trust Fund, in
trust for
the exclusive use and benefit of all present and future
Certificateholders.
The
Trustee acknowledges that it will maintain possession of the
related
Mortgage Notes in the State of California, unless otherwise
permitted by the
Rating Agencies. The Trustee agrees to execute and deliver on the
Closing Date
to the Depositor, the Servicer and the Seller an Initial
Certification in the
form of Exhibit G-1. Based on its review and examination, and only
as to the
documents identified in such Initial Certification, the Trustee
acknowledges
that such documents appear regular on their face and relate to such
Mortgage
Loans. The Trustee shall be under no duty or obligation to inspect,
review or
examine said documents, instruments, certificates or other papers
to determine
that the same are genuine, enforceable or appropriate for the
represented
purpose or that they have actually been recorded in the real estate
records or
that they are other than what they purport to be on their face.
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<PAGE>
By the
thirtieth day after the Closing Date (or if that day is not a
Business Day, the succeeding Business Day), the Trustee shall
deliver to the
Depositor, the Servicer, and the Seller a Delay Delivery
Certification with
respect to the Mortgage Loans substantially in the form of Exhibit
G-3, with
any applicable exceptions noted thereon.
By the
ninetieth day after the Closing Date (or if that day is not a
Business Day, the succeeding Business Day), the Trustee shall
deliver to the
Depositor, the Servicer and the Seller a Final Certification with
respect to
the Mortgage Loans in the form of Exhibit H-1, with any applicable
exceptions
noted thereon.
If, in the
course of its review, the Trustee finds any document
constituting a part of a Mortgage File that does not meet the
requirements of
Section 2.01, the Trustee shall list such as an exception in the
Final
Certification. The Trustee shall not make any determination as to
whether (i)
any endorsement is sufficient to transfer all interest of the party
so
endorsing, as noteholder or assignee thereof, in that Mortgage Note
or (ii)
any assignment is in recordable form or is sufficient to effect the
assignment
of and transfer to the assignee thereof under the mortgage to which
the
assignment relates. The Seller shall promptly correct any defect
that
materially and adversely affects the interests of the
Certificateholders
within 90 days from the date it was so notified of the defect and,
if the
Seller does not correct the defect within that period, the Seller
shall either
(a) substitute for the related Mortgage Loan a Substitute Mortgage
Loan, which
substitution shall be accomplished in the pursuant Section 2.03, or
(b)
purchase the Mortgage Loan at its Purchase Price from the Trustee
within 90
days from the date the Seller was notified of the defect in
writing.
If a
substitution or purchase of a Mortgage Loan pursuant to this
provision is required because of a delay in delivery of any
documents by the
appropriate recording office, or there is a dispute between either
the
Servicer or the Seller and the Trustee over the location or status
of the
recorded document, then the substitution or purchase shall occur
within 720
days from the Closing Date. In no other case may a substitution or
purchase
occur more than 540 days from the Closing Date.
The
Trustee shall deliver written notice to each Rating Agency
within
270 days from the Closing Date indicating each Mortgage Loan (a)
that has not
been returned by the appropriate recording office or (b) as to
which there is
a dispute as to location or status of the Mortgage Loan. The notice
shall be
delivered every 90 days thereafter until the related Mortgage Loan
is returned
to the Trustee. Any substitution pursuant to (a) above or purchase
pursuant to
(b) above shall not be effected before the delivery to the Trustee
of the
Opinion of Counsel, if required by Section 2.05, and any
substitution pursuant
to (a) above shall not be effected before the additional delivery
to the
Trustee of a Request for Release substantially in the form of
Exhibit N. No
substitution is permitted to be made in any calendar month after
the
Determination Date for the month.
The
Purchase Price for any Mortgage Loan shall be deposited by the
Seller in the Certificate Account by the Distribution Account
Deposit Date for
the Distribution Date in the month following the month of
repurchase and, upon
receipt of the deposit and certification with respect thereto in
the form of
Exhibit N, the Trustee shall release the related Mortgage File to
the Seller
and shall execute and deliver at the Seller's request any
instruments of
transfer or assignment prepared by the Seller, in each case without
recourse,
necessary to vest in the Seller, or a designee, the Trustee's
interest in any
Mortgage Loan released pursuant hereto.
If
pursuant to the foregoing provisions the Seller repurchases a
Mortgage Loan that is a MERS Mortgage Loan, the Servicer shall
either (i)
cause MERS to execute and deliver an assignment of the Mortgage in
recordable
form to transfer the Mortgage from MERS to the Seller and shall
cause such
Mortgage to be removed from registration on the MERS(R) System in
accordance
with MERS' rules and
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regulations or (ii) cause MERS to designate on the MERS(R) System
the Seller
as the beneficial holder of such Mortgage Loan.
The
Trustee shall retain possession and custody of each Mortgage File
in
accordance with and subject to the terms and conditions set forth
herein. The
Servicer shall promptly deliver to the Trustee, upon the execution
or receipt
thereof, the originals of any other documents or instruments
constituting the
Mortgage File that come into the possession of the Servicer from
time to time.
The
obligation of the Seller to substitute for or to purchase any
Mortgage Loan that does not meet the requirements of Section 2.01
shall
constitute the sole remedy respecting the defect available to the
Trustee, the
Depositor, and any Certificateholder against the Seller.
Section
2.03. Representations, Warranties, and Covenants of the Seller
and the Servicer.
(a)
IndyMac, in its capacities as Seller and Servicer, makes the
representations and warranties in Schedule II, and by this
reference
incorporated in this Agreement, to the Depositor and the Trustee,
as of the
Closing Date.
(b) The
Seller, in its capacity as Seller, makes the representations
and
warranties in Schedule III, and by this reference incorporated in
this
Agreement, to the Depositor and the Trustee, as of the Closing
Date, or if so
specified in Schedule III, as of the Cut-off Date.
(c) Upon
discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(b) that
materially
and adversely affects the interests of the Certificateholders in
any Mortgage
Loan, the party discovering such breach shall give prompt notice
thereof to
the other parties. The Seller covenants that within 90 days of the
earlier of
its discovery or its receipt of written notice from any party of a
breach of
any representation or warranty made pursuant to Section 2.03(b)
which
materially and adversely affects the interests of the
Certificateholders in
any Mortgage Loan, it shall cure such breach in all material
respects, and if
such breach is not so cured, shall, (i) if the 90-day period
expires before
the second anniversary of the Closing Date, remove the Mortgage
Loan (a
"Deleted Mortgage Loan") from the Trust Fund and substitute in its
place a
Substitute Mortgage Loan, in accordance with this Section 2.03; or
(ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the
Trustee at
the Purchase Price in the manner set forth below. Any substitution
pursuant to
(i) above shall not be effected before the delivery to the Trustee
of the
Opinion of Counsel, if required by Section 2.05 and a Request for
Release
substantially in the form of Exhibit N, and the Mortgage File for
any
Substitute Mortgage Loan. The Seller shall promptly reimburse the
Servicer and
the Trustee for any expenses reasonably incurred by the Servicer or
the
Trustee in respect of enforcing the remedies for the breach.
With
respect to any Substitute Mortgage Loan or Loans, the Seller
shall
deliver to the Trustee for the benefit of the Certificateholders
the Mortgage
Note, the Mortgage, the related assignment of the Mortgage, and
such other
documents and agreements as are required by Section 2.01, with the
Mortgage
Note endorsed and the Mortgage assigned as required by Section
2.01. No
substitution is permitted to be made in any calendar month after
the
Determination Date for such month. Scheduled Payments due with
respect to
Substitute Mortgage Loans in the month of substitution shall not be
part of
the Trust Fund and will be retained by the Seller on the next
succeeding
Distribution Date. For the month of substitution, distributions
to
Certificateholders will include the monthly payment due on any
Deleted
Mortgage Loan for such month and thereafter the Seller shall be
entitled to
retain all amounts received in respect of such Deleted Mortgage
Loan.
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The
Servicer shall amend the Mortgage Loan Schedule for the benefit
of
the Certificateholders to reflect the removal of the Deleted
Mortgage Loan and
the substitution of the Substitute Mortgage Loans and the Servicer
shall
deliver the amended Mortgage Loan Schedule to the Trustee. Upon
the
substitution, the Substitute Mortgage Loans shall be subject to
this Agreement
in all respects, and the Seller shall be deemed to have made with
respect to
the Substitute Mortgage Loans, as of the date of substitution,
the
representations and warranties made pursuant to Section 2.03(b)
with respect
to the Mortgage Loan. Upon any substitution and the deposit to the
Certificate
Account of the amount required to be deposited therein in
connection with the
substitution as described in the following paragraph, the Trustee
shall
release the Mortgage File held for the benefit of the
Certificateholders
relating to the Deleted Mortgage Loan to the Seller and shall
execute and
deliver at the Seller's direction such instruments of transfer or
assignment
prepared by the Seller, in each case without recourse, as shall be
necessary
to vest title in the Seller, or its designee, the Trustee's
interest in any
Deleted Mortgage Loan substituted for pursuant to this Section
2.03.
For any
month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will
determine the amount (if any) by which the aggregate principal
balance of all
such Substitute Mortgage Loans as of the date of substitution is
less than the
aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after
application of the scheduled principal portion of the monthly
payments due in
the month of substitution). The amount of such shortage (the
"Substitution
Adjustment Amount") plus, if the Seller is not the Servicer, an
amount equal
to the aggregate of any unreimbursed Advances and Servicer Advances
with
respect to such Deleted Mortgage Loans shall be deposited into the
Certificate
Account by the Seller by the Distribution Account Deposit Date for
the
Distribution Date in the month succeeding the calendar month during
which the
related Mortgage Loan became required to be purchased or replaced
hereunder.
If the Seller repurchases a Mortgage Loan, the Purchase Price
therefor shall
be deposited in the Certificate Account pursuant to Section 3.06 by
the
Distribution Account Deposit Date for the Distribution Date in the
month
following the month during which the Seller became obligated
hereunder to
repurchase or replace the Mortgage Loan and upon such deposit of
the Purchase
Price and receipt of a Request for Release in the form of Exhibit
N, the
Trustee shall release the related Mortgage File held for the
benefit of the
Certificateholders to such Person, and the Trustee shall execute
and deliver
at such Person's direction such instruments of transfer or
assignment prepared
by such Person, in each case without recourse, as shall be
necessary to
transfer title from the Trustee. The obligation under this
Agreement of any
Person to cure, repurchase, or replace any Mortgage Loan as to
which a breach
has occurred and is continuing shall constitute the sole remedy
against the
Person respecting the breach available to Certificateholders, the
Depositor,
or the Trustee on their behalf.
The
representations and warranties made pursuant to this Section
2.03
shall survive delivery of the respective Mortgage Files to the
Trustee for the
benefit of the Certificateholders.
Section
2.04. Representations and Warranties of the Depositor as to the
Mortgage Loans.
The
Depositor represents and warrants to the Trustee with respect
to
each Mortgage Loan as of the date of this Agreement or such other
date set
forth in this Agreement that as of the Closing Date, and following
the
transfer of the Mortgage Loans to it by the Seller, the Depositor
had good
title to the Mortgage Loans and the Mortgage Notes were subject to
no offsets,
defenses, or counterclaims.
The
representations and warranties in this Section 2.04 shall
survive
delivery of the Mortgage Files to the Trustee. Upon discovery by
the Depositor
or the Trustee of any breach of any of the representations and
warranties in
this Section that materially and adversely affects the interest of
the
Certificateholders, the party discovering the breach shall give
prompt written
notice to the others and to each Rating Agency.
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Section
2.05. Delivery of Opinion of Counsel in Connection with
Substitutions.
(a)
Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or 2.03 shall be made more
than 90 days
after the Closing Date unless the Seller delivers to the Trustee an
Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of
either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect
that such
substitution will not (i) result in the imposition of the tax on
"prohibited
transactions" on the Trust Fund or contributions after the Startup
Date, as
defined in sections 860F(a)(2) and 860G(d) of the Code,
respectively or (ii)
cause any REMIC created under this Agreement to fail to qualify as
a REMIC at
any time that any Certificates are outstanding.
(b) Upon
discovery by the Depositor, the Seller, the Servicer or the
Trustee that any Mortgage Loan does not constitute a "qualified
mortgage"
within the meaning of section 860G(a)(3) of the Code, the party
discovering
such fact shall promptly (and in any event within five Business
Days of
discovery) give written notice thereof to the other parties. In
connection
therewith, the Trustee shall require the Seller, at the Seller's
option, to
either (i) substitute, if the conditions in Section 2.03(c) with
respect to
substitutions are satisfied, a Substitute Mortgage Loan for the
affected
Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within
90 days of
such discovery in the same manner as it would a Mortgage Loan for a
breach of
representation or warranty made pursuant to Section 2.03. The
Trustee shall
reconvey to the Seller the Mortgage Loan to be released pursuant
hereto in the
same manner, and on the same terms and conditions, as it would a
Mortgage Loan
repurchased for breach of a representation or warranty contained in
Section
2.03.
Section
2.06. Execution and Delivery of Certificates.
The
Trustee acknowledges the transfer and assignment to it of the
Trust
Fund and, concurrently with such transfer and assignment, has
executed and
delivered to or upon the order of the Depositor, the Certificates
in
authorized denominations evidencing directly or indirectly the
entire
ownership of the Trust Fund. The Trustee agrees to hold the Trust
Fund and
exercise the rights referred to above for the benefit of all
present and
future Holders of the Certificates.
Section
2.07. REMIC Matters.
The
Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all
interests
created under this Agreement. The "Startup Day" for purposes of the
REMIC
Provisions shall be the Closing Date. Each REMIC's fiscal year
shall be the
calendar year.
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Article Three
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section
3.01. Servicer to Service Mortgage Loans.
For and on
behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with this Agreement
and the
Servicing Standard.
The
Servicer shall not make or permit any modification, waiver, or
amendment of any term of any Mortgage Loan that would cause any
REMIC created
under this Agreement to fail to qualify as a REMIC or result in the
imposition
of any tax under section 860F(a) or section 860G(d) of the
Code.
Without
limiting the generality of the foregoing, the Servicer, in its
own name or in the name of the Depositor and the Trustee, is hereby
authorized
and empowered by the Depositor and the Trustee, when the Servicer
believes it
appropriate in its reasonable judgment, to execute and deliver, on
behalf of
the Trustee, the Depositor, the Certificateholders, or any of them,
any
instruments of satisfaction or cancellation, or of partial or full
release or
discharge, and all other comparable instruments, with respect to
the Mortgage
Loans, and with respect to the Mortgaged Properties held for the
benefit of
the Certificateholders. The Servicer shall prepare and deliver to
the
Depositor or the Trustee any documents requiring execution and
delivery by
either or both of them appropriate to enable the Servicer to
service and
administer the Mortgage Loans to the extent that the Servicer is
not permitted
to execute and deliver such documents pursuant to the preceding
sentence. Upon
receipt of the documents, the Depositor or the Trustee shall
execute the
documents and deliver them to the Servicer.
The
Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, in its own name,
when the
Servicer believes it appropriate in its best judgment to register
any Mortgage
Loan on the MERS(R) System, or cause the removal from the
registration of any
Mortgage Loan on the MERS(R) System, to execute and deliver, on
behalf of the
Trustee and the Certificateholders or any of them, any and all
instruments of
assignment and other comparable instruments with respect to such
assignment or
re-recording of a Mortgage in the name of MERS, solely as nominee
for the
Trustee and its successors and assigns.
In
accordance with and to the extent of the Servicing Standard,
the
Servicer shall advance funds necessary to effect the payment of
taxes and
assessments on the Mortgaged Properties, which advances shall be
reimbursable
in the first instance from related collections from the Mortgagors
pursuant to
Section 3.07, and further as provided in Section 3.09. The costs
incurred by
the Servicer in effecting the timely payments of taxes and
assessments on the
Mortgaged Properties and related insurance premiums shall not, for
the purpose
of calculating monthly distributions to the Certificateholders, be
added to
the Stated Principal Balances of the related Mortgage Loans,
notwithstanding
that the Mortgage Loans so permit.
Nothing in
this Agreement to the contrary shall limit the Servicer from
undertaking any legal action that it may deem appropriate with
respect to the
Mortgage Loans including, without limitation, any rights or causes
of action
arising out of the origination of the Mortgage Loans.
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<PAGE>
Section
3.02. [Reserved].
Section
3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
The
Depositor may, but is not obligated to, enforce the obligations
of
the Servicer under this Agreement and may, but is not obligated to,
perform,
or cause a designee to perform, any defaulted obligation of the
Servicer under
this Agreement and in connection with any such defaulted obligation
to
exercise the related rights of the Servicer under this Agreement;
provided
that the Servicer shall not be relieved of any of its obligations
under this
Agreement by virtue of such performance by the Depositor or its
designee.
Neither the Trustee nor the Depositor shall have any responsibility
or
liability for any action or failure to act by the Servicer nor
shall the
Trustee or the Depositor be obligated to supervise the performance
of the
Servicer under this Agreement or otherwise.
Section
3.04. [Reserved].
Section
3.05. Trustee to Act as Servicer.
If the
Servicer for any reason is no longer the Servicer under this
Agreement (including because of the occurrence or existence of an
Event of
Default), the Trustee or its successor shall assume all of the
rights and
obligations of the Servicer under this Agreement arising thereafter
(except
that the Trustee shall not be
(i) liable for losses of the Servicer pursuant to Section 3.10
or
any acts
or omissions of the predecessor Servicer hereunder,
(ii) obligated to make Advances if it is prohibited from doing
so
by
applicable law,
(iii)
obligated to effectuate repurchases or substitutions of
Mortgage
Loans hereunder, including repurchases or substitutions
pursuant
to Section 2.02 or 2.03,
(iv) responsible for expenses of the Servicer pursuant to
Section
2.03,
or
(v) deemed to have made any representations and warranties of
the
Servicer
hereunder). Any assumption shall be subject to Section 7.02.
Notwithstanding anything else in this Agreement to the contrary,
in
no event shall the Trustee be liable for any servicing fee or for
any
differential in the amount of the Servicing Fee paid under this
Agreement and
the amount necessary to induce any successor Servicer to act as
successor
Servicer under this Agreement and the transactions provided for in
this
Agreement.
Section
3.06. Collection of Mortgage Loan Payments; Certificate
Account;
Distribution Account; Cap Contract Reserve Fund.
(a) In
accordance with and to the extent of the Servicing Standard,
the
Servicer shall make reasonable efforts in accordance with the
customary and
usual standards of practice of prudent mortgage servicers to
collect all
payments called for under the Mortgage Loans to the extent the
procedures are
consistent with this Agreement and any related Required Insurance
Policy.
Consistent with the foregoing, the Servicer may in its discretion
(i) waive
any late payment charge or, subject to Section 3.21, any Prepayment
Charge in
connection with the prepayment of a Mortgage Loan and (ii) extend
the due
dates for payments due on a Delinquent Mortgage Loan for a period
not greater
than 125 days. In connection with a seriously delinquent or
defaulted Mortgage
Loan, the Servicer may, consistent with the Servicing
47
<PAGE>
Standard, waive, modify or vary any term of that Mortgage Loan
(including
modifications that change the Mortgage Rate, forgive the payment of
principal
or interest or extend the final maturity date of that Mortgage Loan
), accept
payment from the related Mortgagor of an amount less than the
Stated Principal
Balance in final satisfaction of that Mortgage Loan, or consent to
the
postponement of strict compliance with any such term or otherwise
grant
indulgence to any Mortgagor if in the Servicer's determination such
waiver,
modification, postponement or indulgence is not materially adverse
to the
interests of the Certificateholders (taking into account any
estimated loss
that might result absent such action) and is expected to minimize
the loss on
such Mortgage Loan; provided, however, the Servicer shall not
initiate new
lending to such Mortgagor through the Trust and cannot, except as
provided in
the immediately succeeding sentence, extend the maturity of any
Mortgage Loan
past the date on which the final payment is due on the latest
maturing
Mortgage Loan as of the Cut-off Date. With respect to no more than
5% of the
Mortgage Loans (measured by aggregate Cut-off Date Principal
Balance of the
Mortgage Loans), the Servicer may extend the maturity of a Mortgage
Loan past
the date on which the final payment is due on the latest maturing
Mortgage
Loan as of the Cut-off Date, but in no event more than one year
past such
date. In the event of any such arrangement, the Servicer shall make
Advances
on the related Mortgage Loan in accordance with Section 4.01 during
the
scheduled period in accordance with the amortization schedule of
the Mortgage
Loan without modification thereof because of the arrangements. The
Servicer
shall not be required to institute or join in litigation with
respect to
collection of any payment (whether under a Mortgage, Mortgage Note,
or
otherwise or against any public or governmental authority with
respect to a
taking or condemnation) if it reasonably believes that enforcing
the provision
of the Mortgage or other instrument pursuant to which the payment
is required
is prohibited by applicable law. The Servicer shall not have the
discretion to
sell any Delinquent or defaulted Mortgage Loan.
(b)
[reserved].
(c)
[reserved].
(d) The
Servicer shall establish and maintain a Certificate Account
into
which the Servicer shall deposit on a daily basis (i) within two
Business Days
of receipt (in the case of items (i) through (iii) below) and (2)
within one
Business Day of receipt (in the case of all other items), except as
otherwise
specified herein, the following payments and collections received
by it in
respect of Mortgage Loans after the Cut-off Date (other than in
respect of
principal and interest due on the Mortgage Loans by the Cut-off
Date) and the
following amounts required to be deposited hereunder:
(i) all payments on account of principal on the Mortgage Loans,
including
Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans,
net of the
Servicing Fee;
(iii) all Insurance Proceeds, Subsequent Recoveries and
Liquidation Proceeds, other than proceeds to be applied to the
restoration or repair of the Mortgaged Property or released to
the
Mortgagor
in accordance with the Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Servicer
pursuant
to Section
3.06(f) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Servicer
pursuant
to
Sections 3.10 and 3.12;
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<PAGE>
(vi) all Purchase Prices from the Servicer or Seller and all
Substitution Adjustment Amounts;
(vii) all Advances made by the Servicer pursuant to Section
4.01;
(viii) any other amounts required to be deposited under this
Agreement;
and
(ix) all Prepayment Charges collected.
In
addition, with respect to any Mortgage Loan that is subject to
a
buydown agreement, on each Due Date for the Mortgage Loan, in
addition to the
monthly payment remitted by the Mortgagor, the Servicer shall cause
funds to
be deposited into the Certificate Account in an amount required to
cause an
amount of interest to be paid with respect to the Mortgage Loan
equal to the
amount of interest that has accrued on the Mortgage Loan from the
preceding
Due Date at the Mortgage Rate net of the Servicing Fee Rate on that
date.
The
foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting
the
generality of the foregoing, payments in the nature of late payment
charges or
assumption fees, if collected, need not be remitted by the
Servicer. If the
Servicer remits any amount not required to be remitted, it may at
any time
withdraw that amount from the Certificate Account, any provision in
this
Agreement to the contrary notwithstanding. The withdrawal or
direction may be
accomplished by delivering written notice of it to the Trustee or
any other
institution maintaining the Certificate Account that describes the
amounts
deposited in error in the Certificate Account. The Servicer shall
maintain
adequate records with respect to all withdrawals made pursuant to
this Section
3.06. All funds deposited in the Certificate Account shall be held
in trust
for the Certificateholders until withdrawn in accordance with
Section 3.09.
(e) The
Trustee shall establish and maintain the Distribution Account
on
behalf of the Certificateholders. The Trustee shall, promptly upon
receipt,
deposit in the Distribution Account and retain in the Distribution
Account the
following:
(i) the aggregate amount remitted by the Servicer to the
Trustee
pursuant
to Section 3.09(a);
(ii) any amount deposited by the Servicer pursuant to Section
3.06(f) in
connection with any losses on Permitted Investments; and
(iii) any other amounts deposited under this Agreement that are
required
to be deposited in the Distribution Account.
If the
Servicer remits any amount not required to be remitted, it may
at
any time direct the Trustee in writing to withdraw that amount from
the
Distribution Account, any provision in this Agreement to the
contrary
notwithstanding. The direction may be accomplished by delivering an
Officer's
Certificate to the Trustee that describes the amounts deposited in
error in
the Distribution Account. All funds deposited in the Distribution
Account
shall be held by the Trustee in trust for the Certificateholders
until
disbursed in accordance with this Agreement or withdrawn in
accordance with
Section 3.09. In no event shall the Trustee incur liability for
withdrawals
from the Distribution Account at the direction of the Servicer.
(f) Each
institution at which the Certificate Account is maintained
shall invest the funds in such account as directed in writing by
the Servicer
in Permitted Investments, which shall mature not later
49
<PAGE>
than the second Business Day preceding the related Distribution
Account
Deposit Date (except that if the Permitted Investment is an
obligation of the
institution that maintains the account, then the Permitted
Investment shall
mature not later than the Business Day preceding the Distribution
Account
Deposit Date) and which shall not be sold or disposed of before its
maturity.
The funds in the Distribution Account shall remain uninvested. All
such
Permitted Investments shall be made in the name of the Trustee, for
the
benefit of the Certificateholders. All income realized from any
such
investment of funds on deposit in the Certificate Account shall be
for the
benefit of the Servicer as servicing compensation and shall be
remitted to it
monthly as provided in this Agreement. The amount of any realized
losses on
Permitted Investments in the Certificate Account shall promptly be
deposited
by the Servicer in the Certificate Account. The Trustee shall not
be liable
for the amount of any loss incurred in respect of any investment or
lack of
investment of funds held in the Certificate Account and made in
accordance
with this Section 3.06.
(g) (i) On
the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the LIBOR
Certificates,
the Cap Contract Reserve Fund. The Cap Contract Reserve Fund shall
be an
Eligible Account, and funds on deposit in the account shall be held
separate
and apart from, and shall not be commingled with, any other moneys,
including
without limitation, other moneys held by the Trustee pursuant to
this
Agreement.
(ii) The Trustee shall deposit in the Cap Contract Reserve Fund
all amounts received from the Cap Counterparty on any applicable
Distribution
Date pursuant to the Cap Contract. If the Trustee shall also
deposit into the
Cap Contract Reserve Fund any amount not required to be deposited
in that
account, it may at any time withdraw such amount from the Cap
Contract Reserve
Fund, any provision in this Agreement to the contrary
notwithstanding. Funds
in the Cap Contract Reserve Fund shall be held uninvested. The
Trustee shall
account for the Cap Contract Reserve Fund as an outside reserve
fund within
the meaning of Treasury regulation 1.860G-2(h) and not an asset of
any REMIC
created pursuant to this Agreement.
(h)
Amounts on deposit in the Cap Contract Reserve Fund shall be
withdrawn by the Trustee to make distributions pursuant to Section
4.08
exclusively (other than as expressly provided in Section 3.09).
`The Servicer
shall give notice to the Trustee, the Seller, each Rating Agency
and the
Depositor of any proposed change of the location of the Certificate
Account
not later than 30 days and not more than 45 days prior to any
change of this
Agreement. The Trustee shall give notice to the Servicer, the
Seller, each
Rating Agency and the Depositor of any proposed change of the
location of the
Distribution Account not later than 30 days and not more than 45
days prior to
any change of this Agreement.
Section
3.07. Collection of Taxes, Assessments and Similar Items;
Escrow
Accounts.
(a) To the
extent required by the related Mortgage Note and not
violative of current law, the Servicer shall establish and maintain
one or
more accounts (each, an "Escrow Account") and deposit and retain
therein all
collections from the Mortgagors (or advances) for the payment of
taxes,
assessments, hazard insurance premiums or comparable items for the
account of
the Mortgagors. Nothing herein shall require the Servicer to compel
a
Mortgagor to establish an Escrow Account in violation of applicable
law.
(b)
Withdrawals of amounts so collected from the Escrow Accounts may
be
made only to effect timely payment of taxes, assessments, hazard
insurance
premiums, condominium or PUD association dues, or comparable items,
to
reimburse (without duplication) the Servicer out of related
collections for
any payments made pursuant to Section 3.01 (with respect to taxes
and
assessments and insurance premiums) and Section 3.10 (with respect
to hazard
insurance), to refund to any Mortgagors any sums determined to be
overages, to
pay interest, if required by law or the related Mortgage or
Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and
terminate the
Escrow
50
<PAGE>
Account at the termination of this Agreement in accordance with
Section 9.01.
The Escrow Accounts shall not be a part of the Trust Fund.
(c) The
Servicer shall advance any payments referred to in Section
3.07(a) that are not timely paid by the Mortgagors or advanced by
the Servicer
on the date when the tax, premium or other cost for which such
payment is
intended is due, but the Servicer shall be required so to advance
only to the
extent that such advances, in the good faith judgment of the
Servicer, will be
recoverable by the Servicer out of Insurance Proceeds, Liquidation
Proceeds or
otherwise.
Section
3.08. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The
Servicer shall afford the Depositor and the Trustee reasonable
access to all records and documentation regarding the Mortgage
Loans and all
accounts, insurance information and other matters relating to this
Agreement,
such access being afforded without charge, but only upon reasonable
request
and during normal business hours at the office designated by the
Servicer.
Upon
reasonable advance notice in writing, the Servicer will provide
to
each Certificateholder or Certificate Owner that is a savings and
loan
association, bank, or insurance company certain reports and
reasonable access
to information and documentation regarding the Mortgage Loans
sufficient to
permit the Certificateholder or Certificate Owner to comply with
applicable
regulations of the OTS or other regulatory authorities with respect
to
investment in the Certificates. The Servicer shall be entitled to
be
reimbursed by each such Certificateholder or Certificate Owner for
actual
expenses incurred by the Servicer in providing the reports and
access.
Section
3.09. Permitted Withdrawals from the Certificate Account, the
Distribution Account and the Cap Contract Reserve Fund.
(a) The
Servicer may (and, in the case of clause (ix) below, shall)
from
time to time make withdrawals from the Certificate Account for the
following
purposes:
(i) to pay to the Servicer (to the extent not previously
retained)
the
servicing compensation to which it is entitled pursuant to
Section
3.15, and
to pay to the Servicer, as additional servicing compensation,
earnings
on or investment income with respect to funds in or credited to
the
Certificate Account;
(ii) to reimburse the Servicer or successor Servicer for the
unreimbursed Advances made by it, such right of reimbursement
pursuant
to this
subclause (ii) being limited to amounts received on the
Mortgage
Loans in
respect of which the Advance was made;
(iii) to
reimburse the Servicer or successor Servicer for any
Nonrecoverable Advance previously made by it;
(iv) to reimburse the Servicer for Insured Expenses from the
related
Insurance Proceeds;
(v) to reimburse the Servicer for (a) unreimbursed Servicing
Advances,
the Servicer's right to reimbursement pursuant to this clause
(a) with
respect to any Mortgage Loan being limited to amounts received
on the
Mortgage Loans that represent late recoveries of the payments
for
which the
advances were made pursuant to Section 3.01 or Section 3.07,
(b)
unreimbursed Servicing Advances made in respect of a Mortgage
Loan
for which
such Servicing
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<PAGE>
Advances
are no recoverable from the Mortgagor and (c) for unpaid
Servicing
Fees as provided in Section 3.12;
(vi) to pay to the purchaser, with respect to each Mortgage
Loan
or
property acquired in respect of such Mortgage Loan that has
been
purchased
pursuant to Section 2.02, 2.03, or 3.12, all amounts received
thereon
after the date of such purchase;
(vii) to reimburse the Seller, the Servicer, or the Depositor
for
expenses
incurred by any of them and reimbursable pursuant to Section
6.03;
(viii) to withdraw any amount deposited in the Certificate
Account
and not
required to be deposited in the Certificate Account;
(ix) by the Distribution Account Deposit Date, to withdraw (1)
the
Available
Funds and the Trustee Fee for the Distribution Date, to the
extent on
deposit, and (2) the Prepayment Charges on deposit, and remit
such
amount to the Trustee for deposit in the Distribution Account;
and
(x) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01.
The
Servicer shall keep and maintain separate accounting, on a
Mortgage
Loan by Mortgage Loan basis, to justify any withdrawal from the
Certificate
Account pursuant to subclauses (i), (ii), (iv), (v) and (vi).
Before making
any withdrawal from the Certificate Account pursuant to subclause
(iii), the
Servicer shall deliver to the Trustee an Officer's Certificate of a
Servicing
Officer indicating the amount of any previous Advance determined by
the
Servicer to be a Nonrecoverable Advance and identifying the related
Mortgage
Loans and their respective portions of the Nonrecoverable
Advance.
(b) The
Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this
Agreement
(and to withhold from the amounts so withdrawn the amount of any
taxes that it
is authorized to withhold pursuant to the third paragraph of
Section 8.11). In
addition, the Trustee may from time to time make withdrawals from
the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related
Distribution
Date;
(ii) to withdraw and return to the Servicer any amount
deposited
in the
Distribution Account and not required to be deposited therein;
and
(iii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01.
(c) On
each Distribution Date, the Trustee shall make withdrawals from
the Cap Contract Reserve Fund in the manner specified in Section
4.07 (and to
withhold from the amounts so withdrawn the amount of any taxes that
it is
authorized to retain pursuant to the last paragraph of Section
8.11). In
addition, the Trustee may from time to time make withdrawals from
the Cap
Contract Reserve Fund for the following purposes:
(i) to withdraw any amount deposited in the Cap Contract
Reserve
Fund and
not required to be deposited therein; and
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(i) to clear and terminate the Cap Contract Reserve Fund upon
the
earliest
of (x) the reduction of the aggregate Class Certificate Balance
of the
LIBOR Certificates to zero, (y) the Cap Contract Termination
Date
and (z)
the termination of this Agreement pursuant to Section 9.01.
Section
3.10. Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies.
(a) The
Servicer shall maintain, for each Mortgage Loan, hazard
insurance with extended coverage in an amount that is at least
equal to the
lesser of
(i) the maximum insurable value of the improvements securing
the
Mortgage Loan
and
(ii) the greater of (y) the outstanding principal balance of
the
Mortgage
Loan and (z) an amount such that the proceeds of the policy are
sufficient
to prevent the Mortgagor or the mortgagee from becoming a
co-insurer.
Each
policy of standard hazard insurance shall contain, or have an
accompanying endorsement that contains, a standard mortgagee
clause. Any
amounts collected under the policies (other than the amounts to be
applied to
the restoration or repair of the related Mortgaged Property or
amounts
released to the Mortgagor in accordance with the Servicer's normal
servicing
procedures) shall be deposited in the Certificate Account. Any cost
incurred
in maintaining any insurance shall not, for the purpose of
calculating monthly
distributions to the Certificateholders or remittances to the
Trustee for
their benefit, be added to the principal balance of the Mortgage
Loan,
notwithstanding that the Mortgage Loan so permits. Such costs shall
be
recoverable by the Servicer out of late payments by the related
Mortgagor or
out of Liquidation Proceeds to the extent permitted by Section
3.09. No
earthquake or other additional insurance is to be required of any
Mortgagor or
maintained on property acquired in respect of a Mortgage other than
pursuant
to any applicable laws and regulations in force that require
additional
insurance. If the Mortgaged Property is located at the time of
origination of
the Mortgage Loan in a federally designated special flood hazard
area and the
area is participating in the national flood insurance program, the
Servicer
shall maintain flood insurance for the Mortgage Loan. The flood
insurance
shall be in an amount equal to the least of (i) the original
principal balance
of the related Mortgage Loan, (ii) the replacement value of the
improvements
that are part of the Mortgaged Property, and (iii) the maximum
amount of flood
insurance available for the related Mortgaged Property under the
national
flood insurance program.
If the
Servicer obtains and maintains a blanket policy insuring
against
hazard losses on all of the Mortgage Loans, it shall have satisfied
its
obligations in the first sentence of this Section 3.10. The policy
may contain
a deductible clause on terms substantially equivalent to those
commercially
available and maintained by comparable servicers. If the policy
contains a
deductible clause and a policy complying with the first sentence of
this
Section 3.10 has not been maintained on the related Mortgaged
Property, and if
a loss that would have been covered by the required policy occurs,
the
Servicer shall deposit in the Certificate Account, without any
right of
reimbursement, the amount not otherwise payable under the blanket
policy
because of the deductible clause. In connection with its activities
as
Servicer of the Mortgage Loans, the Servicer agrees to present, on
behalf of
itself, the Depositor, and the Trustee for the benefit of the
Certificateholders, claims under any blanket policy.
(b) The
Servicer shall not take any action that would result in
non-coverage under any applicable Primary Insurance Policy of any
loss that,
but for the actions of the Servicer, would have been covered
thereunder. The
Servicer shall not cancel or refuse to renew any Primary Insurance
Policy that
is
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in effect at the date of the initial issuance of the Certificates
and is
required to be kept in force hereunder unless the replacement
Primary
Insurance Policy for the canceled or non-renewed policy is
maintained with a
Qualified Insurer. The Servicer need not maintain any Primary
Insurance Policy
if maintaining the Primary Insurance Policy is prohibited by
applicable law.
The Servicer agrees, to the extent permitted by applicable law, to
effect the
timely payment of the premiums on each Primary Insurance Policy,
and any costs
not otherwise recoverable shall be recoverable by the Servicer from
the
related liquidation proceeds.
In
connection with its activities as Servicer of the Mortgage Loans,
the
Servicer agrees to present, on behalf of itself, the Trustee and
the
Certificateholders, claims to the insurer under any Primary
Insurance Policies
and, in this regard, to take any reasonable action in accordance
with the
Servicing Standard necessary to permit recovery under any Primary
Insurance
Policies respecting defaulted Mortgage Loans. Any amounts collected
by the
Servicer under any Primary Insurance Policies shall be deposited in
the
Certificate Account.
Section
3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except
as otherwise provided in this Section 3.11, when any property
subject to a Mortgage has been conveyed by the Mortgagor, the
Servicer shall
to the extent that it has knowledge of the conveyance and in
accordance with
the Servicing Standard, enforce any due-on-sale clause contained in
any
Mortgage Note or Mortgage, to the extent permitted under applicable
law and
governmental regulations, but only to the extent that enforcement
will not
adversely affect or jeopardize coverage under any Required
Insurance Policy.
Notwithstanding the foregoing, the Servicer is not required to
exercise these
rights with respect to a Mortgage Loan if the Person to whom the
related
Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies
the conditions contained in the Mortgage Note and Mortgage related
thereto and
the consent of the mortgagee under the Mortgage Note or Mortgage is
not
otherwise so required under the Mortgage Note or Mortgage as a
condition to
the transfer.
If (i) the
Servicer is prohibited by law from enforcing any due-on-sale
clause, (ii) coverage under any Required Insurance Policy would be
adversely
affected, (iii) the Mortgage Note does not include a due-on-sale
clause, or
(iv) nonenforcement is otherwise permitted hereunder, the Servicer
is
authorized, subject to Section 3.11(b), to take or enter into an
assumption
and modification agreement from or with the person to whom the
property has
been or is about to be conveyed, pursuant to which the person
becomes liable
under the Mortgage Note and, unless prohibited by applicable state
law, the
Mortgagor remains liable thereon. The Mortgage Loan must continue
to be
covered (if so covered before the Servicer enters into the
agreement) by the
applicable Required Insurance Policies.
The
Servicer, subject to Section 3.11(b), is also authorized with
the
prior approval of the insurers under any Required Insurance
Policies to enter
into a substitution of liability agreement with the Person,
pursuant to which
the original Mortgagor is released from liability and the Person
is
substituted as Mortgagor and becomes liable under the Mortgage
Note.
Notwithstanding the foregoing, the Servicer shall not be deemed to
be in
default under this Section 3.11 because of any transfer or
assumption that the
Servicer reasonably believes it is restricted by law from
preventing, for any
reason whatsoever.
(b)
Subject to the Servicer's duty to enforce any due-on-sale clause
to
the extent set forth in Section 3.11(a), in any case in which a
Mortgaged
Property has been conveyed to a Person by a Mortgagor, and the
Person is to
enter into an assumption agreement or modification agreement or
supplement to
the Mortgage Note or Mortgage that requires the signature of the
Trustee, or
if an instrument of release signed by the Trustee is required
releasing the
Mortgagor from liability on the Mortgage Loan, the Servicer shall
prepare and
deliver to the Trustee for signature and shall direct the Trustee,
in writing,
to execute the assumption agreement with the Person to whom the
Mortgaged
Property is to be conveyed, and the modification agreement or
supplement to
the Mortgage Note or
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Mortgage or other instruments appropriate to carry out the terms of
the
Mortgage Note or Mortgage or otherwise to comply with any
applicable laws
regarding assumptions or the transfer of the Mortgaged Property to
the Person.
In connection with any such assumption, no material term of the
Mortgage Note
may be changed.
In
addition, the substitute Mortgagor and the Mortgaged Property must
be
acceptable to the Servicer in accordance with its underwriting
standards as
then in effect. Together with each substitution, assumption, or
other
agreement or instrument delivered to the Trustee for execution by
it, the
Servicer shall deliver an Officer's Certificate signed by a
Servicing Officer
stating that the requirements of this subsection have been met in
connection
with such Officer's Certificate. The Servicer shall notify the
Trustee that
any substitution or assumption agreement has been completed by
forwarding to
the Trustee the original of the substitution or assumption
agreement, which in
the case of the original shall be added to the related Mortgage
File and
shall, for all purposes, be considered a part of the Mortgage File
to the same
extent as all other documents and instruments constituting a part
of the
Mortgage File. The Servicer will retain any fee collected by it for
entering
into an assumption or substitution of liability agreement as
additional
servicing compensation.
Section
3.12. Realization Upon Defaulted Mortgage Loans.
The
Servicer shall use reasonable efforts in accordance with the
Servicing Standard to foreclose on or otherwise comparably convert
the
ownership of assets securing such of the Mortgage Loans as come
into and
continue in default and as to which no satisfactory arrangements
can be made
for collection of delinquent payments. In connection with the
foreclosure or
other conversion, the Servicer shall follow the Servicing Standard
and shall
follow the requirements of the insurer under any Required Insurance
Policy.
The Servicer shall not be required to expend its own funds in
connection with
any foreclosure or towards the restoration of any property unless
it
determines (i) that the restoration or foreclosure will increase
the proceeds
of liquidation of the Mortgage Loan after reimbursement to itself
of
restoration expenses and (ii) that restoration expenses will be
recoverable to
it through Liquidation Proceeds (respecting which it shall have
priority for
purposes of withdrawals from the Certificate Account). The Servicer
shall be
responsible for all other costs and expenses incurred by it in any
foreclosure
proceedings. The Servicer is entitled to reimbursement of such
costs and
expenses from the liquidation proceeds with respect to the related
Mortgaged
Property, as provided in the definition of Liquidation Proceeds. If
the
Servicer has knowledge that a Mortgaged Property that the Servicer
is
contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is
located within a one mile radius of any site listed in the
Expenditure Plan
for the Hazardous Substance Clean Up Bond Act of 1984 or other site
with
environmental or hazardous waste risks known to the Servicer, the
Servicer
will, before acquiring the Mortgaged Property, consider the risks
and only
take action in accordance with its established environmental
review
procedures.
With
respect to any REO Property, the deed or certificate of sale
shall
be taken in the name of the Trustee for the benefit of the
Certificateholders,
or its nominee, on behalf of the Certificateholders. The Trustee's
name shall
be placed on the title to the REO Property solely as the Trustee
hereunder and
not in its individual capacity. The Servicer shall ensure that the
title to
the REO Property references the Pooling and Servicing Agreement and
the
Trustee's capacity hereunder. Pursuant to its efforts to sell the
REO
Property, the Servicer shall either itself or through an agent
selected by the
Servicer protect and conserve the REO Property in accordance with
the
Servicing Standard.
The
Servicer shall perform the tax reporting and withholding required
by
sections 1445 and 6050J of the Code with respect to foreclosures
and
abandonments, the tax reporting required by section 6050H of the
Code with
respect to the receipt of mortgage interest from individuals and,
if required
by section
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6050P of the Code with respect to the cancellation of indebtedness
by certain
financial entities, by preparing any required tax and information
returns, in
the form required.
If the
Trust Fund acquires any Mortgaged Property as aforesaid or
otherwise in connection with a default or imminent default on a
Mortgage Loan,
the REO Property shall only be held temporarily, shall be actively
marketed
for sale, and the Servicer shall dispose of the Mortgaged Property
as soon as
practicable, and in any case before the end of the third calendar
year
following the calendar year in which the Trust Fund acquires the
property.
Notwithstanding any other provision of this Agreement, no Mortgaged
Property
acquired by the Trust Fund shall be rented (or allowed to continue
to be
rented) or otherwise used for the production of income by or on
behalf of the
Trust Fund.
The
decision of the Servicer to foreclose on a defaulted Mortgage
Loan
shall be subject to a determination by the Servicer that the
proceeds of the
foreclosure would exceed the costs and expenses of bringing a
foreclosure
proceeding. The proceeds received from the maintenance of any REO
Properties,
net of reimbursement to the Servicer for costs incurred (including
any
property or other taxes) in connection with maintenance of the REO
Properties
and net of unreimbursed Servicing Fees, Advances, and Servicing
Advances,
shall be applied to the payment of principal of and interest on the
related
defaulted Mortgage Loans (with interest accruing as though the
Mortgage Loans
were still current and adjustments, if applicable, to the Mortgage
Rate were
being made in accordance with the Mortgage Note) and all such
proceeds shall
be deemed, for all purposes in this Agreement, to be payments on
account of
principal and interest on the related Mortgage Notes and shall be
deposited
into the Certificate Account. To the extent the net proceeds
received during
any calendar month exceeds the amount attributable to amortizing
principal and
accrued interest at the related Mortgage Rate on the related
Mortgage Loan for
the calendar month, the excess shall be considered to be a partial
prepayment
of principal of the related Mortgage Loan.
The
proceeds from any liquidation of a Mortgage Loan, as well as
any
proceeds from an REO Property, will be applied in the following
order of
priority: first, to reimburse the Servicer for any related
unreimbursed
Servicing Advances or Servicing Fees or for any related
unreimbursed Advances,
as applicable; second, to reimburse the Servicer, as applicable,
and to
reimburse the Certificate Account for any Nonrecoverable Advances
(or portions
thereof) that were previously withdrawn by the Servicer pursuant to
Section
3.09(a)(iii) that related to the Mortgage Loan; third, to accrued
and unpaid
interest (to the extent no Advance has been made for such amount or
any such
Advance has been reimbursed) on the Mortgage Loan or related REO
Property, at
the Adjusted Net Mortgage Rate to the Due Date occurring in the
month in which
such amounts are required to be distributed; and fourth, as a
recovery of
principal of the Mortgage Loan. The Servicer will retain any Excess
Proceeds
from the liquidation of a Liquidated Mortgage Loan as additional
servicing
compensation pursuant to Section 3.15.
The
Servicer may agree to a modification of any Mortgage Loan at
the
request of the related Mortgagor if (i) the modification is in lieu
of a
refinancing and the Mortgage Rate on the Mortgage Loan, as
modified, is
approximately a prevailing market rate for newly-originated
Mortgage Loans
having similar terms and (ii) the Servicer purchases that Mortgage
Loan from
the Trust Fund as described below. Upon the agreement of the
Servicer to
modify a Mortgage Loan in accordance with the preceding sentence,
the Servicer
shall purchase that Mortgage Loan and all interest of the Trustee
in that
Mortgage Loan shall automatically be deemed transferred and
assigned to the
Servicer and all benefits and burdens of ownership thereof,
including the
right to accrued interest thereon from the date of purchase and the
risk of
default thereon, shall pass to the Servicer. The Servicer shall
promptly
deliver to the Trustee a certification of a Servicing Officer to
the effect
that all requirements of this paragraph have been satisfied with
respect to a
Mortgage Loan to be repurchased pursuant to this paragraph.
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The
Servicer shall deposit the Purchase Price for any Mortgage Loan
repurchased pursuant to Section 3.12 in the Certificate Account
pursuant to
Section 3.06 within one Business Day after the purchase of the
Mortgage Loan.
Upon receipt by the Trustee of written notification of any such
deposit signed
by a Servicing Officer, the Trustee shall release to the Servicer
the related
Mortgage File and shall execute and deliver such instruments of
transfer or
assignment, in each case without recourse, as shall be necessary to
vest in
the Servicer any Mortgage Loan previously transferred and assigned
pursuant
hereto. The Servicer covenants and agrees to indemnify the Trust
Fund against
any liability for any "prohibited transaction" taxes and any
related interest,
additions, and penalties imposed on the Trust Fund established
hereunder as a
result of any modification of a Mortgage Loan effected pursuant to
this
Section, or any purchase of a Mortgage Loan by the Servicer in
connection with
a modification (but such obligation shall not prevent the Servicer
or any
other appropriate Person from contesting any such tax in
appropriate
proceedings and shall not prevent the Servicer from withholding
payment of
such tax, if permitted by law, pending the outcome of such
proceedings). The
Servicer shall have no right of reimbursement for any amount paid
pursuant to
the foregoing indemnification, except to the extent that the amount
of any
tax, interest, and penalties, together with interest thereon, is
refunded to
the Trust Fund.
Section
3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the
payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in
a manner
customary for such purposes, the Servicer will immediately notify
the Trustee
by delivering a Request for Release substantially in the form of
Exhibit N.
Upon receipt of the request, the Trustee shall promptly release the
related
Mortgage File to the Servicer, and the Trustee shall at the
Servicer's
direction execute and deliver to the Servicer the request for
reconveyance,
deed of reconveyance, or release or satisfaction of mortgage or
such
instrument releasing the lien of the Mortgage in each case provided
by the
Servicer, together with the Mortgage Note with written evidence
of
cancellation thereon. The Servicer is authorized to cause the
removal from the
registration on the MERS System of such Mortgage and to execute and
deliver,
on behalf of the Trustee and the Certificateholders or any of them,
any and
all instruments of satisfaction or cancellation or of partial or
full release.
Expenses incurred in connection with any instrument of satisfaction
or deed of
reconveyance shall be chargeable to the related Mortgagor.
From time
to time and as shall be appropriate for the servicing or
foreclosure of any Mortgage Loan, including for such purpose
collection under
any policy of flood insurance, any fidelity bond or errors or
omissions
policy, or for the purposes of effecting a partial release of any
Mortgaged
Property from the lien of the Mortgage or the making of any
corrections to the
Mortgage Note or the Mortgage or any of the other documents
included in the
Mortgage File, the Trustee shall, upon delivery to the Trustee of a
Request
for Release in the form of Exhibit M signed by a Servicing Officer,
release
the Mortgage File to the Servicer or its designee. Subject to the
further
limitations set forth below, the Servicer shall cause the Mortgage
File or
documents so released to be returned to the Trustee when the need
therefor by
the Servicer no longer exists, unless the Mortgage Loan is
liquidated and the
proceeds thereof are deposited in the Certificate Account, in which
case the
Servicer shall deliver to the Trustee a Request for Release in the
form of
Exhibit N, signed by a Servicing Officer.
If the
Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property as authorized by this
Agreement, the
Servicer shall deliver to the Trustee, for signature, as
appropriate, any
court pleadings, requests for trustee's sale, or other documents
necessary to
effectuate such foreclosure or any legal action brought to obtain
judgment
against the Mortgagor on the Mortgage Note or the Mortgage or to
obtain a
deficiency judgment or to enforce any other remedies or rights
provided by the
Mortgage Note or the Mortgage or otherwise available at law or in
equity.
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Section
3.14. Documents, Records and Funds in Possession of the
Servicer
to be Held for the Trustee.
The
Servicer shall account fully to the Trustee for any funds it
receives or otherwise collects as Liquidation Proceeds or Insurance
Proceeds
in respect of any Mortgage Loan. All Mortgage Files and funds
collected or
held by, or under the control of, the Servicer in respect of any
Mortgage
Loans, whether from the collection of principal and interest
payments or from
Liquidation Proceeds, including any funds on deposit in the
Certificate
Account, shall be held by the Servicer for and on behalf of the
Trustee and
shall be and remain the sole and exclusive property of the Trustee,
subject to
the applicable provisions of this Agreement. The Servicer also
agrees that it
shall not create, incur or subject any Mortgage File or any funds
that are
deposited in the Certificate Account, the Distribution Account, or
any Escrow
Account, or any funds that otherwise are or may become due or
payable to the
Trustee for the benefit of the Certificateholders, to any claim,
lien,
security interest, judgment, levy, writ of attachment, or other
encumbrance,
or assert by legal action or otherwise any claim or right of setoff
against
any Mortgage File or any funds collected on, or in connection with,
a Mortgage
Loan, except, however, that the Servicer shall be entitled to set
off against
and deduct from any such funds any amounts that are properly due
and payable
to the Servicer under this Agreement.
Section
3.15. Servicing Compensation.
As
compensation for its activities hereunder, the Servicer may retain
or
withdraw from the Certificate Account the Servicing Fee for each
Mortgage Loan
for the related Distribution Date. Notwithstanding the foregoing,
the
Servicing Fee payable to the Servicer shall be reduced by the
lesser of the
aggregate of the Prepayment Interest Shortfalls with respect to
the
Distribution Date and the aggregate Compensating Interest for the
Distribution
Date.
The
Servicer may retain or withdraw from the Certificate Account
the
Servicing Fee for each Mortgage Loan for the related Distribution
Date. If the
Servicer directly services a Mortgage Loan, the Servicer may retain
the
Servicing Fee for its own account as compensation for performing
services.
Additional servicing compensation in the form of Excess Proceeds,
Prepayment
Interest Excess, assumption fees, late payment charges and all
income net of
any losses realized from Permitted Investments shall be retained by
the
Servicer to the extent not required to be deposited in the
Certificate Account
pursuant to Section 3.06. The Servicer shall be required to pay all
expenses
incurred by it in connection with its servicing activit
