EXHIBIT 4.2
BEAR STEARNS ASSET BACKED SECURITIES I LLC,
Depositor
[_______________________],
Seller and Company
[_______________________],
Master Servicer and Securities Administrator
and
[_______________________],
Trustee
--------------------
POOLING AND SERVICING AGREEMENT
Dated as of ____ 1, 200__
----------------------------------------
BEAR STEARNS ASSET BACKED SECURITIES TRUST 200__-___
ASSET-BACKED CERTIFICATES, SERIES 200__-___
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
2
Section 1.01
Defined Terms
..............................................................................
2
Section 1.02
Allocation of Certain Interest Shortfalls
.................................................. 26
ARTICLE II CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
26
Section 2.01
Conveyance of Trust Fund
...................................................................
26
Section 2.02
Acceptance of the Mortgage Loans
...........................................................
28
Section 2.03
Representations, Warranties and Covenants of the Company and the
Seller .................... 30
Section 2.04
Representations and Warranties of the Depositor
............................................ 40
Section 2.05
Delivery of Opinion of Counsel in Connection with Substitutions and
Repurchases ............ 41
Section 2.06
Countersignature and Delivery of Certificates
.............................................. 42
Section 2.07
Purposes and Powers of the Trust
...........................................................
42
ARTICLE III ADMINISTRATION AND SERVICING OF COMPANY MORTGAGE LOANS
BY COMPANY
43
Section 3.01 The
Company
................................................................................
43
Section 3.02
Due-on-Sale Clauses; Assumption Agreements
................................................. 44
Section 3.03
Subservicers
...............................................................................
45
Section 3.04
Documents, Records and Funds in Possession of Company to Be Held
for Trustee ............... 45
Section 3.05
Maintenance of Hazard Insurance
............................................................
46
Section 3.06
Presentment of Claims and Collection of Proceeds
........................................... 47
Section 3.07
Maintenance of the Primary Mortgage Insurance Policies
..................................... 47
Section 3.08
Fidelity Bond, Errors and Omissions Insurance
.............................................. 48
Section 3.09
Realization upon Defaulted Mortgage Loans; Determination of Excess
Liquidation Proceeds
and
Realized Losses; Repurchases of Certain Mortgage Loans
................................. 48
Section 3.10
Servicing Compensation
.....................................................................
51
Section 3.11 REO
Property
...............................................................................
51
Section 3.12
Liquidation Reports
........................................................................
51
Section 3.13
Annual Statement as to Compliance
..........................................................
52
Section 3.14
Assessments of Compliance and Attestation Reports
.......................................... 52
Section 3.15
Books and Records
..........................................................................
54
ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY
MASTER SERVICER
54
Section 4.01
Master Servicer
............................................................................
54
Section 4.02
REMIC-Related Covenants
....................................................................
55
Section 4.03
Monitoring of Company and Servicer
.........................................................
56
Section 4.04
Fidelity Bond
..............................................................................
57
Section 4.05
Power to Act; Procedures
...................................................................
57
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Section 4.06
Due-on-Sale Clauses; Assumption Agreements
................................................. 58
Section 4.07
Release of Mortgage Files
..................................................................
58
Section 4.08
Documents, Records and Funds in Possession of Master Servicer,
Company and Servicer to Be
Held for Trustee.
..........................................................................
59
Section 4.09
Standard Hazard Insurance and Flood Insurance Policies
..................................... 60
Section 4.10
Presentment of Claims and Collection of Proceeds
........................................... 60
Section 4.11
Maintenance of the Primary Mortgage Insurance Policies
..................................... 61
Section 4.12
Trustee to Retain Possession of Certain Insurance Policies and
Documents ................... 61
Section 4.13
Realization upon Defaulted Mortgage Loans
.................................................. 62
Section 4.14
Compensation for the Master Servicer
.......................................................
62
Section 4.15 REO
Property
...............................................................................
62
Section 4.16
Annual Statement as to Compliance
..........................................................
63
Section 4.17
Assessments of Compliance and Attestation Reports
.......................................... 63
Section 4.18
[Reserved.]
................................................................................
65
Section 4.19
Company
....................................................................................
65
Section 4.20 UCC
........................................................................................
65
Section 4.21
Optional Purchase of Certain Mortgage Loans
................................................ 65
Section 4.22
Books and Records
..........................................................................
66
ARTICLE V ACCOUNTS
66
Section 5.01
Collection of Mortgage Loan Payments; Protected Account
.................................... 66
Section 5.02
Permitted Withdrawals From the Protected Account
........................................... 68
Section 5.03
Collection of Taxes; Assessments and Similar Items; Escrow Accounts
........................ 70
Section 5.04
Servicer Protected Accounts
................................................................
71
Section 5.05
Master Servicer Collection Account
.........................................................
72
Section 5.06
Permitted Withdrawals and Transfers from the Master Servicer
Collection Account ............ 73
Section 5.07
Distribution Account
.......................................................................
74
Section 5.08
Permitted Withdrawals and Transfers from the Distribution Account
.......................... 74
ARTICLE VI DISTRIBUTIONS AND ADVANCES
76
Section 6.01
Advances
...................................................................................
76
Section 6.02
Compensating Interest Payments
.............................................................
77
Section 6.03
[Reserved.]
................................................................................
78
Section 6.04
Distributions
..............................................................................
78
Section 6.05
Monthly Statements to Certificateholders
................................................... 80
Section 6.06
REMIC Designation
..........................................................................
84
ARTICLE VII THE CERTIFICATES
84
Section 7.01 The
Certificates
...........................................................................
84
Section 7.02
Certificate Register; Registration of Transfer and Exchange of
Certificates ................ 85
Section 7.03
Mutilated, Destroyed, Lost or Stolen Certificates
.......................................... 88
Section 7.04
Persons Deemed Owners
......................................................................
89
Section 7.05
Access to List of Certificateholders' Names and Addresses
.................................. 89
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Section 7.06
Book-Entry Certificates
....................................................................
89
Section 7.07
Notices to Depository
......................................................................
90
Section 7.08
Definitive Certificates
....................................................................
90
Section 7.09
Maintenance of Office or Agency
............................................................
91
ARTICLE VIII THE COMPANY AND THE MASTER SERVICER
91
Section 8.01
Liabilities of the Depositor, the Company and the Master Servicer
.......................... 91
Section 8.02
Merger or Consolidation of the Depositor, the Company or the Master
Servicer ............... 91
Section 8.03
Indemnification of the Trustee, the Master Servicer and the
Securities Administrator ....... 92
Section 8.04
Limitations on Liability of the Depositor, the Company, the Master
Servicer and Others ..... 93
Section 8.05
Master Servicer and Company Not to Resign
.................................................. 94
Section 8.06
Successor Master Servicer
..................................................................
95
Section 8.07
Sale and Assignment of Master Servicing
.................................................... 95
ARTICLE IX DEFAULT; TERMINATION OF MASTER SERVICER; TERMINATION OF
COMPANY
96
Section 9.01
Events of Default
..........................................................................
96
Section 9.02
Trustee to Act; Appointment of Successor
................................................... 97
Section 9.03
Notification to Certificateholders
.........................................................
99
Section 9.04
Waiver of Defaults
.........................................................................
99
Section 9.05
Company Default
............................................................................
99
Section 9.06
Waiver of Company Defaults
.................................................................
101
ARTICLE X CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
101
Section 10.01
Duties of Trustee and Securities Administrator
............................................ 101
Section 10.02
Certain Matters
Affecting the Trustee and the Securities Administrator
.................... 103
Section 10.03
Trustee and Securities Administrator Not Liable for Certificates or
Mortgage Loans ........ 105
Section 10.04
Trustee and Securities Administrator May Own Certificates
................................. 105
Section 10.05
Trustee's and Securities Administrator's Fees and Expenses
................................ 105
Section 10.06
Eligibility Requirements for Trustee and Securities Administrator
......................... 106
Section 10.07
Insurance
.................................................................................
106
Section 10.08
Resignation and Removal of Trustee and Securities Administrator
........................... 106
Section 10.09
Successor Trustee or Securities Administrator
............................................. 107
Section 10.10
Merger or Consolidation of Trustee or Securities Administrator
............................ 108
Section 10.11
Appointment of Co-Trustee or Separate Trustee
............................................. 108
Section 10.12
Tax Matters
...............................................................................
109
Section 10.13
Reports Filed with Securities and Exchange Commission
..................................... 112
Section 10.14
Intention of the Parties and Interpretation
............................................... 114
ARTICLE XI TERMINATION
115
Section 11.01
Termination upon Liquidation or Repurchase of all Mortgage Loans
.......................... 115
Section 11.02
Final Distribution on the Certificates
.................................................... 116
Section 11.03
Additional Termination Requirements
.......................................................
117
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ARTICLE XII MISCELLANEOUS PROVISIONS
118
Section 12.01
Amendment
.................................................................................
118
Section 12.02
Recordation of Agreement; Counterparts
.................................................... 119
Section 12.03
Governing Law
.............................................................................
119
Section 12.04
Intention of Parties
......................................................................
120
Section 12.05
Notices
...................................................................................
120
Section 12.06
Severability of Provisions
................................................................
121
Section 12.07
Assignment
................................................................................
121
Section 12.08
Limitation on Rights of Certificateholders
................................................ 121
Section 12.09
Inspection and Audit Rights
...............................................................
122
Section 12.10
Certificates Nonassessable and Fully Paid
................................................. 122
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Exhibits
Exhibit A-1 Form
of Class A Certificates
Exhibit A-2 Form
of Class M Certificates
Exhibit A-3 Form
of Class B Certificates
Exhibit A-4 Form
of Class R Certificate
Exhibit B Mortgage Loan
Schedule
Exhibit C-1 Form
of Initial Certification of Trustee
Exhibit C-2 Form
of Interim Certification of Trustee
Exhibit C-3 Form
of Final Certification of Trustee
Exhibit D Form of Transfer
Affidavit
Exhibit E Form of
Transferor Certificate
Exhibit F Form of
Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule
144A Investment Letter
Exhibit H Form of Request
for Release
Exhibit I DTC Letter of
Representations
Exhibit J Schedule of
Mortgage Loans with Lost Notes
Exhibit K Form of
Custodial Agreement
Exhibit L Form of Back-Up
Certification
Exhibit M Form of Mortgage
Loan Purchase Agreement
Exhibit N Servicing
Criteria to Be Addressed in Assessment of Compliance
Exhibit O Form 10-D, Form
8-K and Form 10-K Reporting Responsibility
iv
<PAGE>
POOLING
AND SERVICING AGREEMENT, dated as of _____ 1, 200__, among BEAR
STEARNS ASSET BACKED SECURITIES I LLC, a Delaware limited liability
company, as
depositor (the "Depositor"),
_________________________________________, a
_______________________, as seller (in such capacity, the "Seller")
and as
company (in such capacity, the "Company"),
______________________________________________________, a
_____________________________, as master servicer (in such
capacity, the "Master
Servicer") and as securities administrator (in such capacity, the
"Securities
Administrator") and ________________________________________, a
___________________________________, not in its individual
capacity, but solely
as trustee (the "Trustee").
PRELIMINARY STATEMENT
The
Depositor is the owner of the Trust Fund that is hereby conveyed
to
the Trustee in return for the Certificates.
As
provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and
certain other
related assets subject to this Agreement as a real estate mortgage
investment
conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of
assets will be designated as the "REMIC Trust." The Class R
Certificate will
represent the sole class of "residual interests" in the REMIC Trust
for purposes
of the REMIC Provisions (as defined herein) under federal income
tax law.
The
following table irrevocably sets forth the Class designation,
Pass-Through Rate and Initial Certificate Principal Balance for
each Class of
Certificates that represents one or more of the "regular interests"
in the REMIC
Trust created hereunder:
Initial Certificate
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Assumed Final Class
Designation Maturity Date (1) Principal
Balance
Pass-Through Rate
-----------------------------
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[Class A-1]
$
Class A-1 Pass-Through Rate
[Class M-1]
$
Class M-1 Pass Through Rate
[Class M-2]
$
Class M-2 Pass-Through Rate
[Class B-1]
$
Class B-1 Pass Through Rate
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----------
(1) Solely for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the
maturity
date for
the Mortgage Loan with the latest maturity date has been
designated
as the "latest possible maturity date" for each Class of
Certificates that represents one or more of the "regular interests"
in the
REMIC
Trust.
The Trust
Fund shall be named, and may be referred to as, the "Bear
Stearns Asset Backed Securities Trust 200__-___." The Certificates
issued
hereunder may be referred to as "Asset-Backed Certificates Series
200__-___"
(including for purposes of any endorsement or assignment of a
Mortgage Note or
Mortgage).
In
consideration of the mutual agreements herein contained, the
Depositor,
the Master Servicer, the Securities Administrator, the Seller, the
Company and
the Trustee agree as follows:
1
<PAGE>
ARTICLE I
DEFINITIONS
Section
1.01 Defined Terms.
In
addition to those terms defined in Section 1.02, whenever used in
this
Agreement, the following words and phrases, unless the context
otherwise
requires, shall have the following meanings:
Accepted
Master Servicing Practices: With respect to any Mortgage Loan,
as
applicable, either (a) those customary mortgage servicing practices
of prudent
mortgage servicing institutions that master service mortgage loans
of the same
type and quality as such Mortgage Loan in the jurisdiction where
the related
Mortgaged Property is located, to the extent applicable to the
Trustee or the
Master Servicer (except in its capacity as successor to the Company
or the
related Servicer), or (b) as provided in Section 3.01 hereof or as
provided in
the related Servicing Agreement, but, in each case, in no event
below the
standard set forth in clause (a).
Accepted
Servicing Practices: With respect to each Company Mortgage
Loan,
those mortgage servicing practices (including collection
procedures) that are in
accordance with all applicable statutes, regulations and prudent
mortgage
banking practices for similar mortgage loans.
Account:
The Distribution Account, the Master Servicer Collection
Account,
the Net WAC Reserve Fund and any Protected Account.
Accrual
Period: With respect to the Certificates (other than the Class
[M-2], Class [B-1] and Class R Certificates) and any Distribution
Date, the
calendar month immediately preceding such Distribution Date. With
respect to the
Class [M-2] Certificates and Class [B-1] Certificates and any
Distribution Date,
the period from and including the 25th day of the calendar month
preceding the
calendar month in which the Distribution Date occurs (or with
respect to the
first Accrual Period, the Closing Date) to and including the 24th
day of the
calendar month in which such Distribution Date occurs. All
calculations of
interest on the Certificates (other than the Class [M-2], Class
[B-1] and Class
R Certificates) will be made on the basis of a 360-day year
consisting of twelve
30-day months. All calculations of interest on the Class [M-2]
Certificates and
Class [B-1] Certificates will be made on the basis of the actual
number of days
elapsed in the related Accrual Period.
Advance:
An advance of delinquent payments of principal or interest in
respect of a Mortgage Loan required to be made by the Company as
provided in
Section 6.01(a) hereof, by the related Servicer in accordance with
the related
Servicing Agreement or by the Master Servicer as provided in
Section 6.01(b)
hereof.
Agreement:
This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
Amount Held for
Future Distribution: As to any Distribution Date, the aggregate
amount held in
the Company's or the related Servicer's Protected Account at the
close of
business on the immediately preceding Determination Date on account
of (i) all
Scheduled Payments or portions thereof received in respect of the
Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments,
Liquidation
Proceeds and Insurance Proceeds received in respect of such
Mortgage Loans after
the last day of the related Prepayment Period.
2
<PAGE>
Applied
Realized Loss Amount: With respect to any Distribution Date and
a
Class of Subordinated Certificates the sum of the Realized Losses
with respect
to the Mortgage Loans which are to be applied in reduction of the
Certificate
Principal Balance of that Class of Certificates pursuant to this
Agreement,
which shall, on any such Distribution Date equal with respect to
the Class
[B-1], Class [M-2] and Class [M-1] Certificates, so long as their
respective
Certificate Principal Balances have not been reduced to zero, the
amount, if
any, by which, (i) the aggregate Certificate Principal Balance of
all of the
Certificates (after all distributions of principal on such
Distribution Date and
the allocation of Realized Losses on such Distribution Date)
exceeds (ii) the
aggregate Stated Principal Balance of all of the Mortgage Loans as
of the last
day of the related Due Period.
Appraised
Value: With respect to any Mortgage Loan originated in
connection with a refinancing, the appraised value of the Mortgaged
Property
based upon the appraisal made at the time of such refinancing or,
with respect
to any other Mortgage Loan, the lesser of (x) the appraised value
of the
Mortgaged Property based upon the appraisal made by a fee appraiser
at the time
of the origination of the related Mortgage Loan, and (y) the sales
price of the
Mortgaged Property at the time of such origination.
Assessment
of Compliance: As defined in Section 4.17.
Assignment
Agreement: Collectively, the _______________ Assignment
Agreement, the _______________ Assignment Agreement and the
_______________
Assignment Agreement.
Attestation Report: As defined in Section 4.17.
Available
Funds: The sum of Interest Funds and Principal Funds with
respect to the Mortgage Loans.
Bankruptcy
Code: Title 11 of the United States Code.
Basic
Principal Distribution Amount: Shall mean, with respect to any
Distribution Date, the lesser of (a) the excess of (i) the
Available Funds for
such Distribution Date over (ii) the aggregate Monthly Interest
Distributable
Amount for the Certificates (other than the Class R Certificate)
for such
Distribution Date and (b) the excess of (i) the Principal
Remittance Amount for
such Distribution Date over (ii) the Overcollateralization Release
Amount, if
any, for such Distribution Date.
Book-Entry
Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of
which is
reflected on the books of the Depository or on the books of a
person maintaining
an account with the Depository (directly, as a "Depository
Participant", or
indirectly, as an indirect participant in accordance with the rules
of the
Depository and as described in Section 7.06). As of the Closing
Date, each Class
of Regular Certificates constitutes a Class of Book-Entry
Certificates.
3
<PAGE>
Business
Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day
on which banking institutions in The City of New York, New
York,
_______________, or the city in which the Corporate Trust Office of
the Trustee
or the principal office of the Company or the Master Servicer is
located are
authorized or obligated by law or executive order to be closed.
Certificate: Any one of the certificates of any Class executed
and
authenticated by the Trustee in substantially the forms attached
hereto as
Exhibits A-1 through A-7.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than
the Class
R Certificate) and as of any Distribution Date, the Initial
Certificate
Principal Balance of such Certificate less the sum of (i) all
amounts
distributed with respect to such Certificate in reduction of the
Certificate
Principal Balance thereof on previous Distribution Dates pursuant
to Section
6.04, and (ii) in the case of any Subordinated Certificate, any
Applied Realized
Loss Amounts allocated to such Certificate on previous Distribution
Dates.
Certificate Register: The register maintained pursuant to Section
7.02
hereof.
Certificateholder or Holder: The person in whose name a Certificate
is
registered in the Certificate Register (initially, Cede & Co.,
as nominee for
the Depository, in the case of any Book-Entry Certificates).
Class: All
Certificates bearing the same Class designation as set forth in
Section 7.01 hereof.
Class A-1
Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-1
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class A-1 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
Class A-1
Pass-Through Rate: Shall mean (i) on any Distribution Date
which
occurs on or prior to the Optional Termination Date, _____% per
annum and (ii)
for each Distribution Date thereafter, _____% per annum[, in each
case subject
to a cap equal to the Net WAC Rate Cap for such Distribution
Date].
Class B-1
Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class B-1 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
Class B-1
Pass-Through Rate: Shall mean (i) on any Distribution Date
which
occurs on or prior to the Optional Termination Date, the related
LIBOR Rate and
(ii) for each Distribution Date thereafter, the related LIBOR Rate
plus _____%
per annum, [in each case subject to a cap equal to the Net WAC Rate
Cap for such
Distribution Date].
Class M-1
Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class M-1 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
4
<PAGE>
Class M-1
Pass-Through Rate: Shall mean (i) on any Distribution Date
which
occurs on or prior to the Optional Termination Date, _____% per
annum and (ii)
for each Distribution Date thereafter, _____% per annum[, in each
case subject
to a cap equal to the Net WAC Rate Cap for such Distribution
Date].
Class M-2
Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of distributions
provided for
the Class M-2 Certificates as set forth herein and evidencing a
Regular Interest
in the REMIC Trust.
Class M-2
Pass-Through Rate: Shall mean (i) on any Distribution Date
which
occurs on or prior to the Optional Termination Date, the related
LIBOR Rate and
(ii) for each Distribution Date thereafter, the related LIBOR Rate
plus _____%
per annum[, in each case subject to a cap equal to the Net WAC Rate
Cap for such
Distribution Date].
Class R
Certificate: The Certificate designated the "Class R
Certificate"
on the face thereof, in substantially the form set forth in Exhibit
A-4 hereto,
evidencing the sole class of "residual interests" (within the
meaning of Section
860G(a)(2) in the REMIC Trust.
Closing
Date: _____ __, 200__.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Company
Assessment of Compliance: As defined in Section 3.14.
Company
Attestation Report: As defined in Section 3.14.
Compensating Interest: An amount, not to exceed the Servicing Fee,
to be
deposited in the Master Servicer Collection Account by the Company
or the
related Servicer to the payment of a Prepayment Interest Shortfall
on a Mortgage
Loan subject to this Agreement; provided that in the event the
Company or the
related Servicer fails to make such payment, the Master Servicer
shall be
obligated to do so pursuant to Section 6.02(c) hereof.
Corporate
Trust Office: The designated office of the Trustee where at any
particular time its corporate trust business with respect to this
Agreement
shall be administered, which office at the date of the execution of
this
Agreement is located at ______________________________, or at such
other address
as the Trustee may designate from time to time.
Cross-Over
Date: The first Distribution Date on which the aggregate
Certificate Principal Balance of the Subordinated Certificates has
been reduced
to zero (giving effect to all distributions on such Distribution
Date).
Custodial
Agreement: An agreement dated as of the Closing Date among the
Depositor, the Seller, the Trustee and the Custodian in
substantially the form
of Exhibit K hereto.
5
<PAGE>
Custodian:
________________________________________________, or any
successor custodian appointed pursuant to the provisions hereof and
the
Custodial Agreement.
Cut-off
Date: The close of business on _____ 1, 200__.
Cut-off
Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the
Cut-off Date after
application of all Principal Prepayments received prior to the
Cut-off Date and
scheduled payments of principal due on or before the Cut-off Date,
whether or
not received, but without giving effect to any installments of
principal
received in respect of Due Dates after the Cut-off Date.
Debt
Service Reduction: With respect to any Mortgage Loan, a reduction
by
a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in
the Scheduled Payment for such Mortgage Loan that became final
and
non-appealable, except such a reduction resulting from a Deficient
Valuation or
any other reduction that results in a permanent forgiveness of
principal.
Deficient
Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an
amount less than
the then outstanding indebtedness under such Mortgage Loan, or any
reduction in
the amount of principal to be paid in connection with any Scheduled
Payment that
results in a permanent forgiveness of principal, which valuation or
reduction
results from an order of such court that is final and
non-appealable in a
proceeding under the Bankruptcy Code.
Definitive
Certificates: As defined in Section 7.06.
Deleted
Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is
not made pursuant to the terms of such Mortgage Loan by the close
of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30
days
delinquent" if such payment has not been received by the close of
business on
the corresponding day of the month immediately succeeding the month
in which
such payment was due, or, if there is no such corresponding day
(e.g., as when a
30-day month follows a 31-day month in which a payment was due on
the 31st day
of such month), then on the last day of such immediately succeeding
month.
Similarly for "60 days delinquent," "90 days delinquent" and so
on.
Denomination: With respect to each Certificate, the amount set
forth on
the face thereof as the "Initial Principal Balance of this
Certificate".
Depositor:
Bear Stearns Asset Backed Securities I LLC, a Delaware limited
liability company, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company
("DTC"), the nominee of which is Cede & Co., or any other
organization
registered as a "clearing agency" pursuant to Section 17A of the
Securities
Exchange Act of 1934, as amended. The Depository shall initially be
the
registered Holder of the Book-Entry Certificates. The Depository
shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5)
of the
Uniform Commercial Code of the State of New York.
6
<PAGE>
Depository
Agreement: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and
the initial
Depository, dated as of the Closing Date, substantially in the form
of Exhibit
I.
Depository
Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to any Distribution Date, the
_____th day
of the month of such Distribution Date or, if such _____th day is
not a Business
Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 5.07 in the name of the Trustee
for the
benefit of the Certificateholders and designated "[Name of
Trustee], in trust
for registered holders of Bear Stearns Asset Backed Securities
Trust 200__-___,
Asset-Backed Certificates, Series 200__-___". 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, on
or
before 3:00 p.m. Eastern time on the Business Day immediately
preceding such
Distribution Date.
Distribution
Date: The _____th day of each calendar month after the
initial issuance of the Certificates, or if such _____th day is not
a Business
Day, the next succeeding Business Day, commencing in _____
200__.
Due Date:
As to any Mortgage Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related
Mortgage Note.
Due
Period: With respect to any Distribution Date, the period from
the
second day of the calendar month preceding the calendar month in
which such
Distribution Date occurs through close of business on the first day
of the
calendar month in which such Distribution Date occurs.
Eligible
Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company,
the
long-term unsecured debt obligations and short-term unsecured debt
obligations
of which (or, in the case of a depository institution or trust
company that is
the principal subsidiary of a holding company, the debt obligations
of such
holding company, so long as Moody's is not a Rating Agency) are
rated by each
Rating Agency in one of its two highest long-term and its highest
short-term
rating categories respectively, at the time any amounts are held on
deposit
therein, or (ii) an account or accounts in a depository institution
or trust
company in which such accounts are insured by the FDIC (to the
limits
established by the FDIC) and the uninsured deposits in which
accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to
the Trustee and to each Rating Agency, the Certificateholders have
a claim with
respect to the funds in such account or a perfected first priority
security
interest against any collateral (which shall be limited to
Permitted
Investments) securing such funds that is superior to claims of any
other
depositors or creditors of the depository institution or trust
company in which
such account is maintained, or (iii) a trust account or accounts
maintained with
the corporate trust department of a federal or state chartered
depository
institution or trust company having capital and surplus of not less
than
$50,000,000, acting in its fiduciary capacity or (iv) any other
account
acceptable to the Rating Agencies. Eligible Accounts may bear
interest, and may
include, if otherwise qualified under this definition, accounts
maintained with
the Trustee.
7
<PAGE>
Company
Mortgage Loans: Shall mean those Mortgage Loans serviced by the
Company pursuant to the terms of this Agreement.
ERISA: The
Employee Retirement Income Security Act of 1974, as amended.
ERISA
Restricted Certificate: The Class R Certificate.
Event of
Default: As defined in Section 9.01 hereof.
Exemption:
Prohibited Transaction Exemption 90-30, as amended from time to
time.
Excess
Liquidation Proceeds: To the extent not required by law to be
paid
to the related Mortgagor, the excess, if any, of any Liquidation
Proceeds with
respect to a Mortgage Loan over the Stated Principal Balance of
such Mortgage
Loan and accrued and unpaid interest at the related Mortgage Rate
through the
last day of the month in which the Mortgage Loan has been
liquidated.
Extra
Principal Distribution Amount: With respect to any Distribution
Date
(a) on or prior to the earlier of (1) the [10]% Clean-Up Call Date
and (2) the
Distribution Date in _____ 20_____, the lesser of (x) the Net
Monthly Excess
Cashflow for such Distribution Date and (y) the
Overcollateralization Increase
Amount for such Distribution Date; and (b) thereafter, the Net
Monthly Excess
Cashflow for such Distribution Date.
Fannie
Mae: Fannie Mae (formerly, Federal National Mortgage
Association),
or any successor thereto.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
Final
Recovery Determination: With respect to any defaulted Mortgage
Loan
or any REO Property (other than a Mortgage Loan or REO Property
purchased by the
Seller or the [Master Servicer] pursuant to or as contemplated by
Section
2.03(c) or Section 11.01), a determination made by the Company
pursuant to this
Agreement or the applicable Servicer pursuant to the related
Servicing Agreement
that all Insurance Proceeds, Liquidation Proceeds and other
payments or
recoveries which the Company or such Servicer, in its reasonable
good faith
judgment, expects to be finally recoverable in respect thereof have
been so
recovered. The Master Servicer shall maintain records, based solely
on
information provided by each Servicer, of each Final Recovery
Determination made
thereby.
FIRREA:
The Financial Institutions Reform, Recovery, and Enforcement
Act
of 1989.
8
<PAGE>
Freddie
Mac: Freddie Mac (formerly The Federal Home Loan Mortgage
Corporation), or any successor thereto.
Indemnified Persons: The Trustee, the Master Servicer, the Company,
the
Trust Fund and the Securities Administrator and their officers,
directors,
agents and employees and, with respect to the Trustee, any separate
co-trustee
and its officers, directors, agents and employees.
Initial
Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any
predecessor
Certificate on the Closing Date.
Insurance
Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy or LPMI Policy, including all riders and
endorsements
thereto in effect with respect to such Mortgage Loan, including any
replacement
policy or policies for any Insurance Policies.
Insurance
Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy
covering a
Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under
the Mortgage, the Company, the related Servicer or the trustee
under the deed of
trust and are not applied to the restoration of the related
Mortgaged Property
or released to the Mortgagor in accordance with the procedures that
the Company
or the related Servicer would follow in servicing mortgage loans
held for its
own account, in each case other than any amount included in such
Insurance
Proceeds in respect of Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest
Determination Date: Shall mean the second LIBOR Business Day
preceding the commencement of each Accrual Period.
Interest
Funds: For any Distribution Date, (i) the sum, without
duplication, of (a) all scheduled interest during the related Due
Period with
respect to the related Mortgage Loans less the Servicing Fee, the
Master
Servicing Fee and the LPMI Fee, if any, (b) all Advances relating
to interest
with respect to the related Mortgage Loans made on or prior to the
related
Distribution Account Deposit Date, (c) all Compensating Interest
with respect to
the related Mortgage Loans and required to be remitted by the
Company or the
Master Servicer pursuant to this Agreement or the related Servicer
pursuant to
the related Servicing Agreement with respect to such Distribution
Date, (d)
Liquidation Proceeds with respect to the related Mortgage Loans
collected during
the related Prepayment Period (to the extent such Liquidation
Proceeds relate to
interest), (e) all amounts relating to interest with respect to
each Mortgage
Loan repurchased by the Seller pursuant to Sections 2.02 and 2.03
and by Company
pursuant to Section 4.21 and (f) all amounts in respect of interest
paid by the
Master Servicer pursuant to Section 11.01, in each case to the
extent remitted
by the Company or the related Servicer, as applicable, to the
Distribution
Account pursuant to this Agreement or the related Servicing
Agreement minus (ii)
all amounts relating to interest required to be reimbursed pursuant
to Sections
5.02, 5.04, 5.06 and 5.08 or as otherwise set forth in this
Agreement.
Interest
Shortfall: With respect to any Distribution Date, means the
aggregate shortfall, if any, in collections of interest (adjusted
to the related
Net Mortgage Rates) on Mortgage Loans resulting from (a) Principal
Prepayments
in full received during the related Prepayment Period, (b) the
partial Principal
Prepayments received during the related Prepayment Period to the
extent applied
prior to the Due Date in the month of the Distribution Date and (c)
interest
payments on certain of the Mortgage Loans being limited pursuant to
the
provisions of the Relief Act or similar state laws.
9
<PAGE>
Last
Scheduled Distribution Date: _____ __, 20___.
Latest
Possible Maturity Date: The Distribution Date following the
final
scheduled maturity date of the Mortgage Loan in the Trust Fund
having the latest
scheduled maturity date as of the Cut-off Date.
LIBOR
Business Day: Shall mean a day on which banks are open for
dealing
in foreign currency and exchange in London and New York City.
LIBOR
Rate: Shall mean (i) with respect to the Class [M-2]
Certificates,
[One-Month] LIBOR plus _____% per annum and (ii) with respect to
the Class [B-1]
Certificates, [One-Month] LIBOR plus _____% per annum.
Liquidated
Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure,
foreclosure sale, trustee's sale or other realization as provided
by applicable
law governing the real property subject to the related Mortgage and
any security
agreements and as to which the Company or the related Servicer has
made a Final
Recovery Determination with respect thereto.
Liquidation Proceeds: Amounts, other than Insurance Proceeds,
received in
connection with the partial or complete liquidation of a Mortgage
Loan, whether
through trustee's sale, foreclosure sale or otherwise, or in
connection with any
condemnation or partial release of a Mortgaged Property and any
other proceeds
received with respect to an REO Property, less the sum of related
unreimbursed
Advances, Servicing Fees, Master Servicing Fees and Servicing
Advances and all
expenses of liquidation, including property protection expenses and
foreclosure
and sale costs, including court and reasonable attorneys' fees.
Loan-to-Value Ratio: The fraction, expressed as a percentage,
the
numerator of which is the original principal balance of the related
Mortgage
Loan and the denominator of which is the Appraised Value of the
related
Mortgaged Property.
Loss
Allocation Limitation: The meaning specified in Section
6.04A(c)
hereof.
LPMI Fee:
Shall mean the fee payable to the insurer for each Mortgage
Loan
subject to an LPMI Policy as set forth in such LPMI Policy.
LPMI
Policy: A policy of mortgage guaranty insurance issued by an
insurer
meeting the requirements of Fannie Mae and Freddie Mac in which the
Company or
the related Servicer of the related Mortgage Loan is responsible
for the payment
of the LPMI Fee thereunder from collections on the related Mortgage
Loan.
Master
Servicer: ________________________________________________, in
its
capacity as master servicer, and its successors and assigns.
10
<PAGE>
Master
Servicer Collection Account: The trust accounts or accounts
created
and maintained pursuant to Section 5.05 hereof, which shall be
entitled "[Name
of Servicer], as Trustee f/b/o holders of Bear Stearns Asset Backed
Securities
Trust 200__-___, Asset Backed Certificates, Series 200__-___,
Master Servicer
Collection Account".
Master
Servicing Fee: As to each Mortgage Loan and any Distribution
Date,
an amount equal to 1/12th of the Master Servicing Fee Rate
multiplied by the
Stated Principal Balance of such Mortgage Loan as of the last day
of the related
Due Period or, in the event of any payment of interest that
accompanies a
Principal Prepayment in full during the related Due Period made by
the Mortgagor
immediately prior to such prepayment, interest at the Master
Servicing Fee Rate
on the Stated Principal Balance of such Mortgage Loan for the
period covered by
such payment of interest.
Master
Servicing Fee Rate: ___% 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(R)
System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The
Mortgage Identification Number for Mortgage Loans registered
with
MERS on the MERS(R) System.
MOM Loan:
With respect to any Mortgage Loan, MERS acting as the mortgagee
of such Mortgage Loan, solely as nominee for the originator of such
Mortgage
Loan and its successors and assigns, at the origination
thereof.
Monthly
Interest Distributable Amount: With respect to the Certificates
(other than the Class R Certificate) for any Distribution Date,
means an amount
equal to the interest accrued during the related Accrual Period at
the
applicable Pass-Through Rate on the Certificate Principal Balance
of such
Certificate immediately prior to such Distribution Date less such
Certificate's
share of any Unpaid Interest Shortfall and the interest portion of
any Realized
Losses on the Mortgage Loans allocated to such Certificate pursuant
to Section
1.02. Accrued Certificate Interest is calculated on the basis of a
360-day year
consisting of twelve 30-day months. No Accrued Certificate Interest
will be
payable with respect to any Class of Certificates after the
Distribution Date on
which the outstanding Certificate Principal Balance of such
Certificate has been
reduced to zero.
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 6.05.
Moody's:
Moody's Investors Service, Inc.
Mortgage:
The mortgage, deed of trust or other instrument creating a
first
lien on or first priority ownership interest in an estate in fee
simple in real
property securing a Mortgage Note.
11
<PAGE>
Mortgage
File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional
documents delivered
to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage
Loans: Such of the Mortgage Loans transferred and assigned to
the
Trustee pursuant to the provisions hereof, as from time to time are
held as a
part of the Trust Fund (including any REO Property), the mortgage
loans so held
being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or
other acquisition of title of the related Mortgaged Property. Any
mortgage loan
that was intended by the parties hereto to be transferred to the
Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so
transferred for
any reason including, without limitation, a breach of the
representation
contained in Section 2.03(b)(v) hereof, shall continue to be a
Mortgage Loan
hereunder until the Purchase Price with respect thereto has been
paid to the
Trust Fund.
Mortgage
Loan Purchase Agreement: The Mortgage Loan Purchase Agreement
dated as of ____ __, 200__, between the Seller, as seller and the
Depositor, as
purchaser.
Mortgage
Loan Purchase Price: The price, calculated as set forth in
Section 11.01, to be paid in connection with the repurchase of the
Mortgage
Loans pursuant to Section 11.01.
Mortgage
Loan Schedule: The list of Mortgage Loans (as from time to time
amended by the Company or the Master Servicer to reflect the
deletion of Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans
pursuant to the
provisions of this Agreement) transferred to the Trustee as part of
the Trust
Fund and from time to time subject to this Agreement, the initial
Mortgage Loan
Schedule being attached hereto as Exhibit B, setting forth the
following
information with respect to each Mortgage Loan:
(i)
the loan number;
(ii)
the Mortgage Rate in effect as of the Cut-off Date;
(iii) the
Servicer (or the Company, if it services the Mortgage Loan),the
Servicing Fee Rate and the Master Servicing Fee Rate;
(iv)
the Net Mortgage Rate in effect as of the Cut-off Date;
(v)
the maturity date;
(vi)
the original principal balance;
(vii) the
Cut-off Date Principal Balance;
(viii) the
original term;
(ix)
the remaining term;
(x)
the property type; and
12
<PAGE>
(xi)
the MIN with respect to each Mortgage Loan. Such schedule shall
also
set forth the aggregate Cut-off Date Principal Balance for all
of
the
Mortgage Loans.
Mortgage
Note: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note.
Mortgaged
Property: The underlying property securing a Mortgage Loan.
Mortgagor:
The obligors on a Mortgage Note.
Net
Interest Shortfalls: Shall mean Interest Shortfalls net of payments
by
the Company, the Servicer or the Master Servicer in respect of
Compensating
Interest.
Net
Monthly Excess Cashflow: With respect to any Distribution Date,
the
sum of (a) any Overcollateralization Release Amount and (b) the
excess of (x)
the Available Funds for such Distribution Date over (y) the sum for
such
Distribution Date of (A) the aggregate amount of the Monthly
Interest
Distributable Amount for the Offered Certificates and (B) the
Principal
Remittance Amount.
Net
Mortgage Rate: As to each Mortgage Loan, and at any time, the
per
annum rate equal to the related Mortgage Rate less the sum of (i)
the Servicing
Fee Rate, (ii) the Master Servicing Fee Rate and (iii) the rate at
which the
LPMI Fee is calculated, if any.
Net WAC
Rate Cap: With respect to each Class of Offered Certificates
and
each Distribution Date shall mean the weighted average of the Net
Mortgage Rates
of the Mortgage Loans, weighted based on their Stated Principal
Balances as of
the first day of the calendar month preceding the month in which
the
Distribution Date occurs.
Non-Book-Entry Certificate: Any Certificate other than a
Book-Entry
Certificate.
Nonrecoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Company or the Master Servicer pursuant
to this
Agreement or the related Servicer pursuant to the related Servicing
Agreement,
that, in the good faith judgment of the Company, the Master
Servicer or the
related Servicer, will not or, in the case of a proposed advance,
would not, be
ultimately recoverable by it from the related Mortgagor, related
Liquidation
Proceeds, Insurance Proceeds or otherwise.
Offered
Certificates: The Class [A-1], Class [M-1], Class [M-2] and
Class
[B-1] Certificates.
Officer's
Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice
President (however
denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor or the
Master Servicer (or any other officer customarily performing
functions similar
to those performed by any of the above designated officers and also
to whom,
with respect to a particular matter, such matter is referred
because of such
officer's knowledge of and familiarity with a particular subject)
or (ii), if
provided for in this Agreement, signed by a Servicing Officer, as
the case may
be, and delivered to the Depositor, the Seller, the Securities
Administrator,
the Master Servicer and/or the Trustee, as the case may be, as
required by this
Agreement.
13
<PAGE>
One-Month
LIBOR: With respect to any Accrual Period, the rate determined
by the Securities Administrator on the related Interest
Determination Date on
the basis of the rate for U.S. dollar deposits for one month that
appears on
Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such
Interest
Determination Date; provided that the parties hereto acknowledge
that One-Month
LIBOR for the first Accrual Period shall equal _____% per annum. If
such rate
does not appear on such page (or such other page as may replace
that page on
that service, or if such service is no longer offered, such other
service for
displaying One-Month LIBOR or comparable rates as may be reasonably
selected by
the Securities Administrator), One-Month LIBOR for the applicable
Accrual Period
will be the Reference Bank Rate. If no such quotations can be
obtained by the
Securities Administrator and no Reference Bank Rate is available,
One-Month
LIBOR will be One-Month LIBOR applicable to the preceding Accrual
Period. The
establishment of One-Month LIBOR on each Interest Determination
Date by the
Securities Administrator and the Securities Administrator's
calculation of the
rate of interest applicable to the Class [M-2] Certificates and
Class [B-1]
Certificates for the related Accrual Period shall, in the absence
of manifest
error, be final and binding.
Opinion of
Counsel: A written opinion of counsel, who may be counsel for
the Seller, the Depositor, the Company or the Master Servicer,
reasonably
acceptable to each addressee of such opinion; provided that with
respect to
Section 2.05, 8.05, 8.07 or 12.01, or the interpretation or
application of the
REMIC Provisions, such counsel must (i) in fact be independent of
the Seller,
Depositor, the Company and the Master Servicer, (ii) not have any
direct
financial interest in the Seller, Depositor, the Company or the
Master Servicer
or in any affiliate of either, and (iii) not be connected with the
Seller,
Depositor, the Company or the Master Servicer as an officer,
employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.
Optional
Termination: The termination of the Trust Fund created
hereunder
as a result of the purchase of all of the Mortgage Loans and any
REO Property
pursuant to the last sentence of Section 11.01 hereof.
Optional
Termination Date: The first Distribution Date on which the
Trust
Fund may be terminated at the option of the [Master Servicer] as
described under
Section 11.01.
Original
Value: The value of the property underlying a Mortgage Loan
based, in the case of the purchase of the underlying Mortgaged
Property, on the
lower of an appraisal or the sales price of such property or, in
the case of a
refinancing, on an appraisal.
Originator: With respect to each Mortgage Loan, shall mean the
originator
set forth in the Mortgage Loan Schedule for such Mortgage Loan.
OTS: The
Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
14
<PAGE>
(a)
Certificates theretofore canceled by the Trustee or delivered to
the
Trustee for cancellation; and
(b)
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 date of determination, a
Mortgage
Loan with a Stated Principal Balance greater than zero that was not
the subject
of a Principal Prepayment in full, and that did not become a
Liquidated Loan,
prior to the end of the related Prepayment Period.
Overcollateralized Amount: With respect to any Distribution Date,
is the
excess, if any, of (a) the aggregate Stated Principal Balances of
the Mortgage
Loans as of the last day of the related Due Period over (b) the
Certificate
Principal Balances of the Offered Certificates on such Distribution
Date (after
taking into account the payment of principal other than any Extra
Principal
Distribution Amount on such Certificates).
Overcollateralization Increase Amount: As of any Distribution Date
after
the Distribution Date in ______ 200__ the excess, if any, of (a)
the
Overcollateralization Target Amount over (b) the Overcollateralized
Amount on
such Distribution Date (after taking into account payments to the
Offered
Certificates of the Basic Principal Distribution Amount on such
Distribution
Date).
Overcollateralization Release Amount: With respect to any
Distribution
Date, the lesser of (x) the Principal Remittance Amount for such
Distribution
Date and (y) the excess, if any, of (i) the Overcollateralized
Amount for such
Distribution Date (assuming that 100% of the Principal Remittance
Amount is
applied as a principal payment on such Distribution Date) over (ii)
the
Overcollateralization Target Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution
Date, $________.
Ownership
Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the
Holder thereof and
any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to each Class of Certificates,
the
applicable Pass-Through Rate for each such Class as set forth in
the Preliminary
Statement.
Percentage
Interest: With respect to any Certificate of a specified Class,
the Percentage Interest set forth on the face thereof or the
percentage obtained
by dividing the Denomination of such Certificate by the aggregate
of the
Denominations of all Certificates of the such Class.
Permitted
Investments: At any time, any one or more of the following
obligations and securities:
(i)
obligations of
the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the
United States;
(ii)
general obligations of
or obligations guaranteed by any state of the
United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency, or such lower rating
as
will
not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by each Rating Agency;
15
<PAGE>
(iii)
[Reserved];
(iv)
commercial or finance
company paper which is then receiving the
highest commercial or finance company paper rating of each
Rating
Agency, or such lower rating as will not result in the
downgrading
or withdrawal of the ratings then assigned to the Certificates
by
each Rating Agency;
(v)
certificates of
deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust
company
incorporated under the laws of the United States or of any
state
thereof and subject to supervision and examination by federal
and/or
state banking authorities (including the Trustee in its
commercial
banking capacity), provided that the commercial paper and/or
long
term unsecured debt obligations of such depository institution
or
trust company are then rated one of the two highest long-term
and
the highest short-term ratings of each such Rating Agency for
such
securities, or such lower ratings as will not result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency;
(vi)
demand or time
deposits or certificates of deposit issued by any
bank
or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vii)
guaranteed reinvestment agreements issued by any bank,
insurance
company or other corporation containing, at the time of the
issuance
of such agreements, such terms and conditions as will not result
in
the downgrading or withdrawal of the rating then assigned to
the
Certificates by any such Rating Agency;
(viii) repurchase obligations with respect to any security
described in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(ix)
securities (other than
stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of [115]% of the
face
amount thereof) bearing interest or sold at a discount issued by
any
corporation incorporated under the laws of the United States or
any
state thereof which, at the time of such investment, have one of
the
two highest long term ratings of each Rating Agency (except if
the
Rating Agency is Moody's, such rating shall be the highest
commercial paper rating of Moody's for any such securities), or
such
lower rating as will not result in the downgrading or withdrawal
of
the rating then assigned to the Certificates by any Rating
Agency,
as evidenced by a signed writing delivered by each Rating
Agency;
(x)
interests in any
money market fund (including any such fund managed
or advised by the Trustee or Master Servicer or any affiliate
thereof)
which at the date of acquisition of the interests in such
fund and throughout the time such interests are held in such
fund
has the highest applicable long term rating by each Rating Agency
or
such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by
each
Rating Agency;
16
<PAGE>
(xi)
short term investment
funds sponsored by any trust company or
banking association incorporated under the laws of the United
States
or any state thereof (including any such fund managed or advised
by
the Trustee or any affiliate thereof) which on the date of
acquisition has been rated by each Rating Agency in their
respective
highest applicable rating category or such lower rating as will
not
result in the downgrading or withdrawal of the ratings then
assigned
to the Certificates by each Rating Agency; and
(xii) such
other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to each
Rating
Agency as will not result in the downgrading or withdrawal of
the
rating then assigned to the Certificates by any Rating Agency,
as
evidenced by a signed writing delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment
if
such
instrument (i) evidences the right to receive interest only
payments with respect to the obligations underlying such
instrument,
(ii) is purchased at a premium or (iii) is purchased at a deep
discount; provided further that no such instrument shall be a
Permitted Investment (A) if such instrument evidences principal
and
interest payments derived from obligations underlying such
instrument and the interest payments with respect to such
instrument
provide a yield to maturity of greater than 120% of the yield
to
maturity at par of such underlying obligations, or (B) if it may
be
redeemed at a price below the purchase price (the foregoing
clause
(B) not to apply to investments in units of money market funds
pursuant to clause (vii) above); provided further that no
amount
beneficially owned by the REMIC Trust may be invested in
investments
(other than money market funds) treated as equity interests for
federal income tax purposes, unless the Master Servicer shall
receive an Opinion of Counsel, at the expense of the Master
Servicer, to the effect that such investment will not adversely
affect the status of the REMIC Trust as a REMIC under the Code
or
result in imposition of a tax on the REMIC Trust. Permitted
Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
Permitted
Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, any possession of the
United States or
any agency or instrumentality of any of the foregoing, (ii) a
foreign
government, International Organization or any agency or
instrumentality of
either of the foregoing, (iii) an organization (except certain
farmers'
cooperatives described in section 521 of the Code) that is exempt
from tax
imposed by Chapter 1 of the Code (including the tax imposed by
section 511 of
the Code on unrelated business taxable income) on any excess
inclusions (as
defined in section 860E(c)(1) of the Code) with respect to the
Class R
Certificate, (iv) rural electric and telephone cooperatives
described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or
resident of the
United States, a corporation, partnership (other than a partnership
that has any
direct or indirect foreign partners) or other entity (treated as a
corporation
or a partnership for federal income tax purposes), created or
organized in or
under the laws of the United States, any state thereof or the
District of
Columbia, an estate whose income from sources without the United
States is
includible in gross income for United States federal income tax
purposes
regardless of its connection with the conduct of a trade or
business within the
United States, or a trust if a court within the United States is
able to
exercise primary supervision over the administration of the trust
and one or
more United States persons have authority to control all
substantial decisions
of the trustor and (vi) any other Person so designated by the
Trustee based upon
an Opinion of Counsel addressed to the Trustee (which shall not be
an expense of
the Trustee) that states that the Transfer of an Ownership Interest
in the Class
R Certificate to such Person may cause the REMIC Trust created
hereunder to fail
to qualify as a REMIC at any time that any Certificates are
Outstanding. The
terms "United States," "State" and "International Organization"
shall have the
meanings set forth in section 7701 of the Code or successor
provisions. A
corporation will not be treated as an instrumentality of the United
States or of
any State or political subdivision thereof for these purposes if
all of its
activities are subject to tax and, with the exception of Freddie
Mac, a majority
of its board of directors is not selected by such government
unit.
17
<PAGE>
Person: Any
individual, corporation, partnership, joint venture,
association, joint- stock company, limited liability company,
trust,
unincorporated organization or government, or any agency or
political
subdivision thereof.
Prepayment
Assumption: The applicable rate of prepayment, as described in
the Prospectus Supplement relating to each Class of Offered
Certificates.
Prepayment
Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a partial Principal
Prepayment, a
Principal Prepayment in full, or that became a Liquidated Loan
during the
related Prepayment Period, (other than a Principal Prepayment in
full resulting
from the purchase of a Mortgage Loan pursuant to Section 2.02,
2.03, 4.21 or
11.01 hereof), the amount, if any, by which (i) one month's
interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of
such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in
the case of a
partial Principal Prepayment on the amount of such prepayment (or
liquidation
proceeds) exceeds (ii) the amount of interest paid or collected in
connection
with such Principal Prepayment or such liquidation proceeds less
the sum of (a)
the related Servicing Fee and (b) the LPMI Fee, if any.
Prepayment
Period: As to any Distribution Date and (i) each Company
Mortgage Loan, the calendar month immediately preceding the month
in which such
Distribution Date occurs and (ii) any other Mortgage Loan, the
period set forth
in the related Servicing Agreement.
Primary
Mortgage Insurance Policy: Any primary mortgage guaranty
insurance
policy issued in connection with a Mortgage Loan which provides
compensation to
a Mortgage Note holder in the event of default by the obligor under
such
Mortgage Note or the related security instrument, if any or any
replacement
policy therefor through the related Accrual Period for such Class
relating to a
Distribution Date.
Principal
Distribution Amount: With respect to each Distribution Date, is
equal to the sum of the Basic Principal Distribution Amount for
such
Distribution Date, plus any Extra Principal Distribution Amount for
such
Distribution Date.
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<PAGE>
Principal
Funds: With respect to any Distribution Date, (i) the sum,
without duplication, of (a) all scheduled principal collected
during the related
Due Period, (b) all Advances relating to principal made on or prior
to the
Distribution Account Deposit Date, (c) Principal Prepayments
exclusive of
prepayment charges or penalties collected during the related
Prepayment Period,
(d) the Stated Principal Balance of each Mortgage Loan that was
repurchased by
the Seller pursuant to Sections 2.02 or 2.03 or by the Company
pursuant to
Section 4.21, (e) the aggregate of all Substitution Adjustment
Amounts for the
related Determination Date in connection with the substitution of
Mortgage Loans
pursuant to Section 2.03(c), (e) all Liquidation Proceeds collected
during the
related Prepayment Period (to the extent such Liquidation Proceeds
relate to
principal) and remitted by the Company or the related Servicer to
the
Distribution Account pursuant to this Agreement or the related
Servicing
Agreement and (f) amounts in respect of principal paid by the
[Master Servicer]
pursuant to Section 11.01 minus (ii) all amounts required to be
reimbursed
pursuant to Sections 5.02, 5.04, 5.06 and 5.08 or as otherwise set
forth in this
Agreement.
Principal
Remittance Amount: With respect to each Distribution Date, the
sum of the amounts listed in clauses (a) through (e) of the
definition of
Principal Funds.
Principal
Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including
loans
purchased or repurchased under Sections 2.02, 2.03, 4.21 and 11.01
hereof) that
is received in advance of its scheduled Due Date and is not
accompanied by an
amount as to interest representing scheduled interest due on any
date or dates
in any month or months subsequent to the month of prepayment.
Partial Principal
Prepayments shall be applied by the Company or the related
Servicer, as
appropriate, in accordance with the terms of the related Mortgage
Note.
Private
Certificate: The Class R Certificate.
Prospectus Supplement:
The Prospectus Supplement dated ___________ __,
20__ relating to the public offering of the Offered
Certificates.
Protected
Account: Each account established and maintained by the Company
with respect to receipts on the Mortgage Loans and REO Property in
accordance
with Section 5.01 hereof or by the related Servicer in accordance
with the
related Servicing Agreement.
PUD: A
Planned Unit Development.
Purchase
Price: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof,
an amount
equal to the sum of (i) 100% of the outstanding principal balance
of the
Mortgage Loan as of the date of such purchase plus (ii) accrued
interest thereon
at the applicable Mortgage Rate through the first day of the month
in which the
Purchase Price is to be distributed to Certificateholders, reduced
by any
portion of the Servicing Fee, Master Servicing Fee, Servicing
Advances and
Advances payable to the purchaser of the Mortgage Loan plus and
(iii) any costs
and damages (if any) incurred by the Trust in connection with any
violation of
such Mortgage Loan of any predatory or abusive lending laws.
Rating
Agency: Each of [Moody's] and [S&P]. If any such organization
or
its successor is no longer in existence, "Rating Agency" shall be a
nationally
recognized statistical rating organization, or other comparable
Person,
designated by the Depositor, notice of which designation shall be
given to the
Trustee. References herein to a given rating category of a Rating
Agency shall
mean such rating category without giving effect to any
modifiers.
19
<PAGE>
Realized
Loss: With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than
zero) equal to
(i) the unpaid principal balance of such Mortgage Loan as of the
commencement of
the calendar month in which the Final Recovery Determination was
made, plus (ii)
accrued interest from the Due Date as to which interest was last
paid by the
Mortgagor through the end of the calendar month in which such Final
Recovery
Determination was made, calculated in the case of each calendar
month during
such period (A) at an annual rate equal to the annual rate at which
interest was
then accruing on such Mortgage Loan and (B) on a principal amount
equal to the
Stated Principal Balance of such Mortgage Loan as of the close of
business on
the Distribution Date during such calendar month, minus (v) the
proceeds, if
any, received in respect of such Mortgage Loan during the calendar
month in
which such Final Recovery Determination was made, net of amounts
that are
payable therefrom to the Company pursuant to this Agreement or the
applicable
Servicer pursuant to the related Servicing Agreement.
With
respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal
to (i) the
unpaid principal balance of the related Mortgage Loan as of the
date of
acquisition of such REO Property on behalf of the REMIC Trust, plus
(ii) accrued
interest from the Due Date as to which interest was last paid by
the Mortgagor
in respect of the related Mortgage Loan through the end of the
calendar month
immediately preceding the calendar month in which such REO Property
was
acquired, calculated in the case of each calendar month during such
period (A)
at an annual rate equal to the annual rate at which interest was
then accruing
on the related Mortgage Loan and (B) on a principal amount equal to
the Stated
Principal Balance of the related Mortgage Loan as of the close of
business on
the Distribution Date during such calendar month, plus (iii) REO
Imputed
Interest for such REO Property for each calendar month commencing
with the
calendar month in which such REO Property was acquired and ending
with the
calendar month in which such Final Recovery Determination was made,
minus (iv)
the aggregate of all unreimbursed Advances and Servicing
Advances.
With
respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, 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, the portion, if any, of the reduction in each
affected
Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a
court of competent jurisdiction. Each such Realized Loss shall be
deemed to have
been incurred on the Due Date for each affected Monthly
Payment.
Record
Date: With respect to the Certificates (other than the Class
[M-2]
Certificates and Class [B-1] Certificates) and any Distribution
Date, the close
of business on the last Business Day of the month preceding the
month in which
such Distribution Date occurs. With respect to any Distribution
Date and the
Class [M-2] Certificates and Class [B-1] Certificates, so long as
the Class
[M-2] Certificates and Class [B-1] Certificates are Book-Entry
Certificates, the
Business Day preceding such Distribution Date, and otherwise, the
close of
business on the last Business Day of the month preceding the month
in which such
Distribution Date occurs.
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<PAGE>
Reference
Banks: Shall mean leading banks selected by the Securities
Administrator and engaged in transactions in Eurodollar deposits in
the
international Eurocurrency market (i) with an established place of
business in
London, (ii) which have been designated as such by the Securities
Administrator
and (iii) which are not controlling, controlled by, or under common
control
with, the Depositor, the Seller or the Master Servicer.
Reference
Bank Rate: With respect to any Accrual Period shall mean the
arithmetic mean, rounded upwards, if necessary, to the nearest
whole multiple of
[0.03125%], of the offered rates for United States dollar deposits
for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York
City time, on
the related Interest Determination Date to prime banks in the
London interbank
market for a period of one month in an amount approximately equal
to the
aggregate Certificate Principal Balance of the Class [M-2]
Certificates and
Class [B-1] Certificates for such Accrual Period, provided that at
least two
such Reference Banks provide such rate. If fewer than two offered
rates appear,
the Reference Bank Rate will be the arithmetic mean, rounded
upwards, if
necessary, to the nearest whole multiple of [0.03125]%, of the
rates quoted by
one or more major banks in New York City, selected by the
Securities
Administrator, as of 11:00 a.m., New York City time, on such date
for loans in
United States dollars to leading European banks for a period of one
month in
amounts approximately equal to the aggregate Certificate Principal
Balance of
the Class [M-2] Certificates and Class [B-1] Certificates for such
Accrual
Period.
Regular
Certificate: Any Certificate other than the Class R
Certificate.
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 Soldiers' and Sailors' Civil Relief Act of 1940, as
amended or any similar state law.
REMIC: A
"real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC
Trust: The segregated pool of assets described in Section
6.06(a).
REMIC
Certificates: The REMIC Regular Certificates and the Class R
Certificate.
REMIC
Opinion: Shall mean an Opinion of Counsel to the effect that
the
proposed action will not have an adverse affect on the REMIC
Trust.
21
<PAGE>
REMIC
Provisions: Provisions of the federal income tax law relating
to
real estate mortgage investment conduits, which appear at sections
860A through
860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and
proposed, temporary and final regulations and published rulings,
notices and
announcements promulgated thereunder, as the foregoing may be in
effect from
time to time as well as provisions of applicable state laws.
REMIC
Regular Certificate: A Class A-1, Class M-[1], Class M-[2] or
Class
[B-1] Certificate.
Remittance
Date: Shall mean (i) with respect to the Company, the Business
Day immediately preceding the Distribution Account Deposit Date and
(ii) with
respect to the related Servicer, the date specified in the related
Servicing
Agreement.
Remittance
Report: As defined in Section 6.04(d).
REO
Imputed Interest: As to any REO Property, for any calendar
month
during which such REO Property was at any time part of the REMIC
Trust, one
month's interest at the applicable Net Mortgage Rate on the Stated
Principal
Balance of such REO Property (or, in the case of the first such
calendar month,
of the related Mortgage Loan, if appropriate) as of the close of
business on the
Distribution Date in such calendar month.
REO
Property: A Mortgaged Property acquired by the Company or the
related
Servicer through foreclosure or deed-in-lieu of foreclosure in
connection with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan or Mortgage Loans in
the
aggregate substituted by the Seller for a Deleted Mortgage Loan,
which must, on
the date of such substitution, as confirmed in a Request for
Release, (i) have a
Stated Principal Balance, after deduction of the principal portion
of the
Scheduled Payment due in the month of substitution, not in excess
of, and not
less than [90]% of, the Stated Principal Balance of the Deleted
Mortgage Loan;
(ii) have a fixed Mortgage Rate not less than or more than 1% per
annum higher
than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the
same or
higher credit quality characteristics than that of the Deleted
Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the Deleted
Mortgage
Loan; (v) have a remaining term to maturity no greater than (and
not more than
one year less than) that of the Deleted Mortgage Loan; (vi) not
permit
conversion of the Mortgage Rate from a fixed rate to a variable
rate; (vii) have
the same lien priority as the Deleted Mortgage Loan; (viii)
constitute the same
occupancy type as the Deleted Mortgage Loan or be owner occupied;
and (ix)
comply with each representation and warranty set forth in Section
2.03 hereof.
Repurchase
Price: With respect to each Mortgage Loan, a price equal to (i)
the outstanding principal balance of such Mortgage Loan, plus (ii)
interest on
such outstanding principal balance at the Mortgage Rate (net of the
Servicing
Fee Rate) from the last date through which interest has been paid
to the end of
the month of repurchase, less (iii) amounts advanced by the Company
or the
related Servicer in respect of such repurchased Mortgage Loan which
are being
held in the Master Servicer Collection Account for remittance to
the Trustee
plus (iv) any costs and damages (if any) incurred by the Trust in
connection
with any violation of such Mortgage Loan of any predatory or
abusive lending
laws.
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<PAGE>
Request
for Release: The Request for Release to be submitted by the
Seller, the Company, the related Servicer or the Master Servicer to
the
Custodian substantially in the form of Exhibit H. Each Request for
Release
furnished to the Custodian by the Seller, the Company, the related
Servicer or
the Master Servicer shall be in duplicate and shall be executed by
an officer of
such Person or a Servicing Officer (or, if furnished electronically
to the
Custodian, shall be deemed to have been sent and executed by an
officer of such
Person or a Servicing Officer) of the Company or the related
Servicer, as
applicable.
Required
Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to
time under this
Agreement or the related Servicing Agreement.
Responsible Officer: With respect to the Trustee, any Vice
President, any
Assistant Vice President, the Secretary, any Assistant Secretary,
or any Trust
Officer with specific responsibility for the transactions
contemplated hereby,
any other officer customarily performing functions similar to those
performed by
any of the above designated officers or other officers of the
Trustee specified
by the Trustee, as to whom, with respect to a particular matter,
such matter is
referred because of such officer's knowledge of and familiarity
with the
particular subject.
S&P:
Standard & Poor's, a division of The McGraw-Hill Companies,
Inc.
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.
Securities
Act: The Securities Act of 1933, as amended.
Securities
Administrator:
________________________________________________, in its capacity
as securities
administrator hereunder, and its successors and assigns.
Seller:
________________________, a ____________________, and its
successors and assigns, in its capacity as seller of the Mortgage
Loans to the
Depositor.
Senior
Certificates: The Class [A-1] Certificates.
Servicer:
Either ___________________ or _____________.
Servicing
Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees)
incurred in the
performance by the Company or the related Servicer of its servicing
obligations
hereunder or under the related Servicing Agreement, including, but
not limited
to, the cost of (i) the preservation, restoration and protection of
a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including
foreclosures,
and including any expenses incurred in relation to any such
proceedings that
result from the Mortgage Loan being registered in the MERS(R)
System, (iii) the
management and liquidation of any REO Property (including, without
limitation,
realtor's commissions) and (iv) compliance with any obligations
under Section
3.07 hereof to cause insurance to be maintained.
Servicing
Agreement: Shall mean ______________________.
23
<PAGE>
Servicing
Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing
Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the
Stated
Principal Balance of such Mortgage Loan as of the last day of the
related Due
Period or, in the event of any payment of interest that accompanies
a Principal
Prepayment in full during the related Due Period made by the
Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee
Rate on the
Stated Principal Balance of such Mortgage Loan for the period
covered by such
payment of interest.
Servicing
Fee Rate: ___% per annum.
Servicing
Modification: With respect to any Mortgage Loan that is in
default or, in the reasonable judgment of the Company or the
related Servicer,
as to which default is reasonably foreseeable, any modification
which is
effected by the Company or the related Servicer in accordance with
the terms of
this Agreement or the related Servicing Agreement which results in
any change in
the outstanding Stated Principal Balance, any change in the
Mortgage Rate or any
extension of the term of such Mortgage Loan.
Servicing
Officer: Any officer of the Company or the related Servicer
involved in, or responsible for, the administration and servicing
of the
Mortgage Loans (i) in the case of the Company, whose name and
facsimile
signature appear on a list of servicing officers furnished to the
Trustee by the
Company on the Closing Date pursuant to this Agreement, as such
list may from
time to time be amended and (ii) in the case of the related
Servicer, as to
which evidence reasonably acceptable to the Trustee, as applicable,
of due
authorization, by such party has been furnished from time to time
to the
Trustee.
Startup
Day: The Startup Day for the REMIC Trust formed hereunder shall
be
the Closing Date.
Stated
Principal Balance: With respect to any Mortgage Loan or related
REO
Property and any Distribution Date, the Cut-off Date Principal
Balance thereof
minus the sum of (i) the principal portion of the Scheduled
Payments due with
respect to such Mortgage Loan during each Due Period ending prior
to such
Distribution Date (and irrespective of any delinquency in their
payment), (ii)
all Principal Prepayments with respect to such Mortgage Loan
received prior to
or during the related Prepayment Period, and all Liquidation
Proceeds to the
extent applied by the Company or the related Servicer as recoveries
of principal
in accordance with Section 3.09 or the related Servicing Agreement
with respect
to such Mortgage Loan, that were received by the Company or the
Servicer as of
the close of business on the last day of the Prepayment Period
related to such
Distribution Date and (iii) any Realized Losses on such Mortgage
Loan incurred
during the related Prepayment Period. The Stated Principal Balance
of a
Liquidated Loan equals zero.
Subordinated Certificates: The Class [M-1], Class [M-2] and Class
[B-1]
Certificates.
24
<PAGE>
Subservicer Assignment Agreement: The Assignment, Assumption
and
Recognition Agreement, dated as of _____ ___, 200___, by and among
the Seller,
Subservicer and the Trustee evidencing the assignment of the
Subservicer
Servicing Agreement to the Trust.
Subservicer Loans: Those Mortgage Loans subject to this Agreement
which
were purchased by the Seller from Subservicer pursuant to the
Subservicer
Servicing Agreement.
Subservicer Servicing Agreement: The Servicing Agreement, dated as
of
_____ 1, 200__, by and between the Seller and Subservicer.
Subservicing Agreement: Any agreement entered into between the
Company and
a subservicer with respect to the subservicing of any Mortgage Loan
hereunder by
such subservicer.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant
to Section 2.03(c).
Successor
Master Servicer: The meaning ascribed to such term pursuant to
Section 9.01.
Tax
Matters Person: The person designated as "tax matters person" in
the
manner provided under Treasury regulation ss. 1.860F-4(d) and
temporary Treasury
regulation ss. 301.6231(a)(7)-1T. The holder of the Class R
Certificate shall be
the Tax Matters Person for the REMIC Trust. The Securities
Administrator, or any
successor thereto or assignee thereof shall serve as tax
administrator hereunder
and as agent for the related Tax Matters Person.
[10%]
Clean-up Call Date: Shall mean the first Distribution Date in
or
after __________ 200__ upon which the Stated Principal Balance of
the Mortgage
Loans as of the end of the related Due Period is less than or equal
to [10%] of
the aggregate Cut-off Date Principal Balance of the Mortgage
Loans.
Transfer Affidavit: As
defined in Section 7.02(c).
Transfer:
Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Trust
Fund: The corpus of the trust created hereunder consisting of
(i)
the Mortgage Loans and all interest accruing and principal due with
respect
thereto after the Cut-off Date to the extent not applied in
computing the
Cut-off Date Principal Balance thereof; (ii) the Distribution
Account, the
Master Servicer Collection Account maintained by the Master
Servicer and the
Protected Accounts maintained by the Company and the Servicers and
all amounts
deposited therein pursuant to the applicable provisions of this
Agreement and
the Servicing Agreements; (iii) property that secured a Mortgage
Loan and has
been acquired by foreclosure, deed in lieu of foreclosure or
otherwise; (iv) the
mortgagee's rights under the Insurance Policies with respect to the
Mortgage
Loans; (v) the Servicing Agreement and the Assignment Agreements;
(vi) the
rights under the Mortgage Loan Purchase Agreement, and (vii) all
proceeds of the
foregoing, including proceeds of conversion, voluntary or
involuntary, of any of
the foregoing into cash or other liquid property.
Trustee:
____________________, a ____________________________, not in
its
individual capacity, but solely in its capacity as trustee for the
benefit of
the Certificateholders under this Agreement, and any successor
thereto, and any
corporation or national banking association resulting from or
surviving any
consolidation or merger to which it or its successors may be a
party and any
successor trustee as may from time to time be serving as successor
trustee
hereunder.
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Unpaid
Interest Shortfalls: Shall mean Interest Shortfalls net of
payments
by the Company, the related Servicer or the Master Servicer in
respect of
Compensating Interest.
Voting
Rights: The portion of the voting rights of all the
Certificates
that is allocated to any Certificate for purposes of the voting
provisions
hereunder. All of the Voting Rights shall be allocated to the
Certificates other
than the Class R Certificate, with the allocation among the
Certificates other
than the Class R Certificate to be in proportion to the Certificate
Principal
Balance of each such Class relative to the Certificate Principal
Balance of all
other such Classes. Voting Rights will be allocated among the
Certificates of
each such Class in accordance with their respective Percentage
Interests.
Section
1.02 Allocation of Certain Interest Shortfalls.
For
purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class [A-1], Class [M-1], Class [M-2]
and the Class
[B-1] Certificates for any Distribution Date, (1) the aggregate
amount of any
Unpaid Interest Shortfalls in respect of the Mortgage Loans for any
Distribution
Date shall be allocated among the Certificates in proportion to the
amount of
the Monthly Interest Distributable Amount that would have been
allocated to such
Certificates in the absence of such Unpaid Interest Shortfalls and
(2) the
interest portion of Realized Losses for the Mortgage Loans will be
allocated
first to the Class [B-1] Certificates, second to the Class [M-2]
Certificates,
and third to the Class [M-1] Certificates, and following the
Cross-Over Date to
the Class [A-1] Certificates.
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section
2.01 Conveyance of Trust Fund.
The Seller
hereby sells, transfers, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title
and interest of
the Seller in and to the assets in the Trust Fund.
The Seller
has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to
take the
actions specified herein.
The
Depositor, concurrently with the execution and delivery hereof,
hereby
sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for
the use and benefit of the Certificateholders, without recourse,
all the right,
title and interest of the Depositor in and to the Trust Fund.
26
<PAGE>
In
connection with such sale, the Depositor has delivered to, and
deposited with, the Trustee or the Custodian, as its agent, the
following
documents or instruments with respect to each Mortgage Loan so
assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed
without recourse
to the order of "[Name of Trustee], as Trustee for
certificateholders of Bear
Stearns Asset Backed Securities Trust 200__-___, Asset Backed
Certificates,
Series 200__-___," and showing to the extent available to the
Seller an unbroken
chain of endorsements from the original payee thereof to the Person
endorsing it
to the Trustee, (ii) the original Mortgage and, if the related
Mortgage Loan is
a MOM Loan, noting the presence of the MIN and language indicating
that such
Mortgage Loan is a MOM Loan, which shall have been recorded (or if
the original
is not available, a copy), with evidence of such recording
indicated thereon (or
if clause (x) in the proviso below applies, shall be in recordable
form), (iii)
unless the Mortgage Loan is a MOM Loan, the assignment (either an
original or a
copy, which may be in the form of a blanket assignment if permitted
in the
jurisdiction in which the Mortgaged Property is located) to the
Trustee of the
Mortgage with respect to each Mortgage Loan in the name of "[Name
of Trustee],
as Trustee for certificateholders of Bear Stearns Asset Backed
Securities Trust
200__-___, Asset Backed Certificates, Series 200__-___," which
shall have been
recorded (or if clause (x) in the proviso below applies, shall be
in recordable
form) (iv) an original or a copy of all intervening assignments of
the Mortgage,
if any, to the extent available to the Seller, with evidence of
recording
thereon, (v) the original policy of title insurance or mortgagee's
certificate
of title insurance or commitment or binder for title insurance, if
available, or
a copy thereof, or, in the event that such original title insurance
policy is
unavailable, a photocopy thereof, or in lieu thereof, a current
lien search on
the related Mortgaged Property and (vi) originals or copies of all
available
assumption, modification or substitution agreements, if any;
provided, however,
that in lieu of the foregoing, the Seller may deliver the following
documents,
under the circumstances set forth below: (x) if any Mortgage,
assignment thereof
to the Trustee or intervening assignments thereof have been
delivered or are
being delivered to recording offices for recording and have not
been returned in
time to permit their delivery as specified above, the Depositor may
deliver a
true copy thereof with a certification by the Seller or the title
company
issuing the commitment for title insurance, on the face of such
copy,
substantially as follows: "Certified to be a true and correct copy
of the
original, which has been transmitted for recording"; and (y) in
lieu of the
Mortgage Notes relating to the Mortgage Loans identified in the
list set forth
in Exhibit J, the Depositor may deliver a lost note affidavit and
indemnity and
a copy of the original note, if available; and provided, further,
however, that
in the case of Mortgage Loans which have been prepaid in full after
the Cut-Off
Date and prior to the Closing Date, the Depositor, in lieu of
delivering the
above documents, may deliver to the Trustee and its Custodian a
certification of
a Servicing Officer to such effect and in such case shall deposit
all amounts
paid in respect of such Mortgage Loans, in the Master Servicer
Collection
Account or in the Distribution Account on the Closing Date. In the
case of the
documents referred to in clause (x) above, the Depositor shall
deliver such
documents to the Trustee or its Custodian promptly after they are
received. The
Seller shall cause, at its expense, the Mortgage and intervening
assignments, if
any, and to the extent required in accordance with the foregoing,
the assignment
of the Mortgage to the Trustee to be submitted for recording
promptly after the
Closing Date; provided that the Seller need not cause to be
recorded any
assignment (a) in any jurisdiction under the laws of which, as
evidenced by an
Opinion of Counsel addressed to the Trustee delivered by the Seller
to the
Trustee and the Rating Agencies, the recordation of such assignment
is not
necessary to protect the Trustee's interest in the related Mortgage
Loan or (b)
if MERS is identified on the Mortgage or on a properly recorded
assignment of
the Mortgage as mortgagee of record solely as nominee for Seller
and its
successors and assigns. In the event that the Seller, the Depositor
or the
Master Servicer gives written notice to the Trustee that a court
has
recharacterized the sale of the Mortgage Loans as a financing, the
Seller shall
submit or cause to be submitted for recording as specified above
or, should the
Seller fail to perform such obligations, the Master Servicer shall
cause each
such previously unrecorded assignment to be submitted for recording
as specified
above at the expense of the Trust. In the event a Mortgage File is
released to
the Company or the Servicer as a result of such Person having
completed a
Request for Release, the Custodian shall, if not so completed,
complete the
assignment of the related Mortgage in the manner specified in
clause (iii)
above.
27
<PAGE>
In
connection with the assignment of any Mortgage Loan registered on
the
MERS(R) System, the Seller further agrees that it will cause, at
the Seller's
own expense, within 30 days after the Closing Date, the MERS(R)
System to
indicate that such Mortgage Loans have been assigned by the Seller
to the
Depositor and by the Depositor to the Trustee in accordance with
this Agreement
for the benefit of the Certificateholders by including (or
deleting, in the case
of Mortgage Loans which are repurchased in accordance with this
Agreement) in
such computer files (a) the code in the field which identifies the
specific
Trustee and (b) the code in the field "Pool Field" which identifies
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 Company,
the Servicer
or the Master Servicer to, and the Master Servicer agrees that it
will not,
alter the codes referenced in this paragraph with respect to any
Mortgage Loan
during the term of this Agreement unless and until such Mortgage
Loan is
repurchased in accordance with the terms of this Agreement or the
Mortgage Loan
Purchase Agreement.
Section
2.02 Acceptance of the Mortgage Loans.
(a) Based
on the Initial Certification received by it from the Custodian,
the Trustee acknowledges receipt of, subject to the further review
and
exceptions reported by the Custodian pursuant to the procedures
described below,
the documents (or certified copies thereof) delivered to the
Trustee or the
Custodian on its behalf pursuant to Section 2.01 and declares that
it holds and
will continue to hold directly or through a custodian those
documents and any
amendments, replacements or supplements thereto and all other
assets of the
Trust Fund delivered to it in trust for the use and benefit of all
present and
future Holders of the Certificates. On the Closing Date, the
Trustee or the
Custodian on its behalf will deliver an Initial Certification in
the form
annexed hereto as Exhibit C-1 confirming whether or not it has
received the
Mortgage File for each Mortgage Loan, but without review of such
Mortgage File,
except to the extent necessary to confirm whether such Mortgage
File contains
the original Mortgage Note or a lost note affidavit and indemnity
in lieu
thereof. No later than [90] days after the Closing Date, the
Trustee or the
Custodian on its behalf shall, for the benefit of the
Certificateholders, review
each Mortgage File delivered to it and execute and deliver to the
Seller and, if
reviewed by the Custodian, the Trustee, an Interim Certification
substantially
in the form annexed hereto as Exhibit C-2. In conducting such
review, the
Trustee or the Custodian on its behalf will ascertain whether all
required
documents have been executed and received and whether those
documents relate,
determined on the basis of the Mortgagor name, original principal
balance and
loan number, to the Mortgage Loans identified in Exhibit B to this
Agreement, as
supplemented (provided, however, that with respect to those
documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations shall
extend only
to documents actually delivered pursuant to such subclauses). In
performing any
such review, the Trustee and the Custodian may conclusively rely on
the
purported due execution and genuineness of any such document and on
the
purported genuineness of any signature thereon. If the Trustee or
the Custodian
on its behalf finds any document constituting part of the Mortgage
File not to
have been executed or received, or to be unrelated to the Mortgage
Loans
identified in Exhibit B or to appear to be defective on its face,
the Trustee or
the Custodian on its behalf shall include such information in the
exception
report attached to Exhibit C-2. The Seller shall correct or cure
any such defect
or, if prior to the end of the second anniversary of the Closing
Date, the
Seller may substitute for the related Mortgage Loan a Replacement
Mortgage Loan,
which substitution shall be accomplished in the manner and subject
to the
conditions set forth in Section 2.03 or shall deliver to the
Trustee an Opinion
of Counsel addressed to the Trustee to the effect that such defect
does not
materially or adversely affect the interests of the
Certificateholders in such
Mortgage Loan within [60] days from the date of notice from the
Trustee of the
defect and if the Seller fails to correct or cure the defect or
deliver such
opinion within such period, the Seller will, subject to Section
2.03, within 90
days from the notification of the Trustee purchase such Mortgage
Loan at the
Purchase Price; provided, however, that if such defect relates
solely to the
inability of the Seller to deliver the Mortgage, assignment thereof
to the
Trustee, or intervening assignments thereof with evidence of
recording thereon
because such documents have been submitted for recording and have
not been
returned by the applicable jurisdiction, the Seller shall not be
required to
purchase such Mortgage Loan if the Seller delivers such documents
promptly upon
receipt, but in no event later than [360] days after the Closing
Date.
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<PAGE>
(b) No
later than [180] days after the Closing Date, the Trustee or
the
Custodian on its behalf will review, for the benefit of the
Certificateholders,
the Mortgage Files and will execute and deliver or cause to be
executed and
delivered to the Seller and, if reviewed by the Custodian, the
Trustee, a Final
Certification substantially in the form annexed hereto as Exhibit
C-3. In
conducting such review, the Trustee or the Custodian on its behalf
will
ascertain whether each document required to be recorded has been
returned from
the recording office with evidence of recording thereon and the
Trustee or the
Custodian on its behalf has received either an original or a copy
thereof, as
required in Section 2.01 (provided, however, that with respect to
those
documents described in subclauses (iv) and (vi) of Section 2.01,
such
obligations shall extend only to documents actually delivered
pursuant to such
subclauses). If the Trustee or the Custodian on its behalf finds
any document
with respect to a Mortgage Loan has not been received, or to be
unrelated,
determined on the basis of the Mortgagor name, original principal
balance and
loan number, to the Mortgage Loans identified in Exhibit B or to
appear
defective on its face, the Trustee or the Custodian on its behalf
shall note
such defect in the exception report attached to the Final
Certification and
shall promptly notify the Seller. The Seller shall correct or cure
any such
defect or, if prior to the end of the second anniversary of the
Closing Date,
the Seller may substitute for the related Mortgage Loan a
Replacement Mortgage
Loan, which substitution shall be accomplished in the manner and
subject to the
conditions set forth in Section 2.03 or shall deliver to the
Trustee an Opinion
of Counsel addressed to the Trustee to the effect that such defect
does not
materially or adversely affect the interests of Certificateholders
in such
Mortgage Loan within [60] days from the date of notice from the
Trustee of the
defect and if the Seller is unable within such period to correct or
cure such
defect, or to substitute the related Mortgage Loan with a
Replacement Mortgage
Loan or to deliver such opinion, the Seller shall, subject to
Section 2.03,
within [90] days from the notification of the Trustee, purchase
such Mortgage
Loan at the Purchase Price; provided, however, that if such defect
relates
solely to the inability of the Seller to deliver the Mortgage,
assignment
thereof to the Trustee or intervening assignments thereof with
evidence of
recording thereon, because such documents have not been returned by
the
applicable jurisdiction, the Seller shall not be required to
purchase such
Mortgage Loan, if the Seller delivers such documents promptly upon
receipt, but
in no event later than [360] days after the Closing Date.
29
<PAGE>
(c) In the
event that a Mortgage Loan is purchased by the Seller in
accordance with subsections 2.02(a) or (b) above or Section 2.03,
the Seller
shall remit the applicable Purchase Price to the Master Servicer
for deposit in
the Master Servicer Collection Account and shall provide written
notice to the
Trustee detailing the components of the Purchase Price, signed by a
Servicing
Officer. Upon deposit of the Purchase Price in the Master Servicer
Collection
Account and upon receipt of a Request for Release with respect to
such Mortgage
Loan, the Trustee or the Custodian will release to the Seller the
related
Mortgage File and the Trustee shall execute and deliver all
instruments of
transfer or assignment, without recourse, representation or
warranty furnished
to it by the Seller, as are necessary to vest in the Seller title
to and rights
under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the
date on which the deposit into the Master Servicer Collection
Account was made.
The Trustee shall promptly notify the Rating Agencies of such
repurchase. The
obligation of the Seller to cure, repurchase or substitute for any
Mortgage Loan
as to which a defect in a constituent document exists shall be the
sole remedies
respecting such defect available to the Certificateholders or to
the Trustee on
their behalf.
(d) The
Seller shall deliver to the Trustee, and Trustee agrees to
accept
the Mortgage Note and other documents constituting the Mortgage
File with
respect to any Replacement Mortgage Loan, which the Trustee or the
Custodian
will review as provided in subsections 2.02(a) and 2.02(b),
provided, that the
Closing Date referred to therein shall instead be the date of
delivery of the
Mortgage File with respect to each Replacement Mortgage Loan.
Section
2.03 Representations, Warranties and Covenants of the Company
and
the Seller.
(a) The
Company hereby represents and warrants to the Master Servicer,
the
Depositor, the Securities Administrator and the Trustee as follows,
as of the
Closing Date:
(i) It is duly organized and is validly existing and in good
standing under the
laws of _______________________ and is duly authorized
and
qualified to transact any and all business contemplated by this
Agreement
to be conducted by it in any state in which a Mortgaged
Property
is located
or is otherwise not required under applicable law to effect
such
qualification and, in any event, is in compliance with the
doing
business
laws of any such state, to the extent necessary to ensure its
ability to
enforce each Mortgage Loan, to service the Mortgage Loans in
accordance
with the terms of this Agreement and to perform any of its
other
obligations under this Agreement in accordance with the terms
hereof.
(ii) It has the full corporate power and authority to service
each
Mortgage
Loan, and to execute, deliver and perform, and to enter into
and
consummate
the transactions contemplated by this Agreement and has duly
authorized
by all necessary corporate action on its part the execution,
delivery
and performance of this Agreement; and this Agreement, assuming
the due
authorization, execution and delivery hereof by the other
parties
hereto,
constitutes its legal, valid and binding obligation,
enforceable
against it
in accordance with its terms, except that (a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to
creditors'
rights
generally and (b) the remedy of specific performance and
injunctive
and other
forms of equitable relief may be subject to equitable defenses
and to the
discretion of the court before which any proceeding therefor
may be
brought.
30
<PAGE>
(iii) The
execution and delivery of this Agreement by it, the
servicing
of the Company Mortgage Loans by it under this Agreement, the
consummation of any other of the transactions contemplated by
this
Agreement,
and the fulfillment of or compliance with the terms hereof are
in its
ordinary course of business and will not (A) result in a
material
breach of
any term or provision of its charter or by-laws or (B)
materially
conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms
of any
other
material agreement or instrument to which it is a party or by
which
it may be
bound, or (C) constitute a material violation of any statute,
order or
regulation applicable to it of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it;
and it is
not in breach or violation of any material indenture or other
material
agreement or instrument, or in violation of any statute, order
or
regulation
of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
violation
may
materially impair its ability to perform or meet any of its
obligations under this Agreement.
(iv) It is an approved servicer of conventional mortgage loans
for
Fannie Mae
or Freddie Mac and is a mortgagee approved by the Secretary of
Housing
and Urban Development pursuant to sections 203 and 211 of the
National
Housing Act.
(v) No litigation is pending or, to the best of its knowledge,
threatened, against it that would materially and adversely affect
the
execution,
delivery or enforceability of this Agreement or its ability to
service
the Company Mortgage Loans or to perform any of its other
obligations under this Agreement in accordance with the terms
hereof.
(vi) No consent, approval, authorization or order of any court
or
governmental agency or body is required for its execution, delivery
and
performance of, or compliance with, this Agreement or the
consummation of
the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, it has obtained the same.
(b) The
Seller hereby represents and warrants to the Depositor, the
Securities Administrator, the Master Servicer and the Trustee as
follows, as of
the Closing Date:
(i) The Seller is duly organized as a ____________________ and
is
validly
existing and in good standing under the laws of
_____________________ and is duly authorized and qualified to
transact any
and all
business contemplated by this Agreement to be conducted by the
Seller in
any state in which a Mortgaged Property is located or is
otherwise
not required under applicable law to effect such qualification
and, in
any event, is in compliance with the doing business laws of any
such
state, to the extent necessary to ensure its ability to enforce
each
Mortgage
Loan, to sell the Mortgage Loans in accordance with the terms
of
this
Agreement and to perform any of its other obligations under
this
Agreement
in accordance with the terms hereof.
31
<PAGE>
(ii) The Seller has the full corporate power and authority to
sell
each
Mortgage Loan, and to execute, deliver and perform, and to enter
into
and
consummate the transactions contemplated by this Agreement and
has
duly
authorized by all necessary corporate action on the part of the
Seller the
execution, delivery and performance of this Agreement; and this
Agreement,
assuming the due authorization, execution and delivery hereof
by the
other parties hereto, constitutes a legal, valid and binding
obligation
of the Seller, enforceable against the Seller in accordance
with its
terms, except that (a) the enforceability hereof may be limited
by
bankruptcy, insolvency, moratorium, receivership and other similar
laws
relating
to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may
be
subject to
equitable defenses and to the discretion of the court before
which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Seller,
the sale
of the Mortgage Loans by the Seller under this Agreement, the
consummation of any other of the transactions contemplated by
this
Agreement,
and the fulfillment of or compliance with the terms hereof are
in the
ordinary course of business of the Seller and will not (A)
result
in a
material breach of any term or provision of the charter or by-laws
of
the Seller
or (B) materially conflict with, result in a material breach,
violation
or acceleration of, or result in a material default under, the
terms of
any other material agreement or instrument to which the Seller
is
a party or
by which it may be bound, or (C) constitute a material
violation
of any statute, order or regulation applicable to the Seller of
any court,
regulatory body, administrative agency or governmental body
having
jurisdiction over the Seller; and the Seller is not in breach
or
violation
of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of
any
court, regulatory
body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially
impair the
Seller's
ability to perform or meet any of its obligations under this
Agreement.
(iv)
The Seller is an approved seller of conventional mortgage loans
for Fannie
Mae or Freddie Mac and is a mortgagee approved by the Secretary
of Housing
and Urban Development pursuant to sections 203 and 211 of the
National
Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge,
threatened, against the Seller that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement
or the ability of the Seller to sell the Mortgage Loans or to
perform
any of its other obligations under this Agreement in accordance
with the
terms hereof.
(vi) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Seller of, or compliance by the Seller with,
this
Agreement
or the consummation of the transactions contemplated hereby, or
if any
such consent, approval, authorization or order is required, the
Seller has
obtained the same.
32
<PAGE>
(vii) With respect to each Mortgage Loan as of the Cut-off Date
(unless
otherwise expressly provided):
(A)
The information set forth in the Mortgage Loan Schedule on
the Closing Date is complete, true and correct.
(B) All payments required to be made prior to the Cut-off Date
with respect to each Mortgage Loan have been made and no
Mortgage
Loan is delinquent ____ or more days; and the Seller has not
advanced funds, or induced, solicited or knowingly received any
advance of funds from a party other than the owner of the
Mortgaged
Property subject to the Mortgage, directly or indirectly, for
the
payment of any amount required under any Mortgage Loan.
(C) Except with respect to taxes, insurance and other amounts
previously advanced by a prior servicer with respect to any
Mortgage
Loan, to the best of Seller's knowledge, there are no
delinquent
taxes, water charges, sewer rents, assessments, insurance
premiums,
leasehold payments, including assessments payable in future
installments, or other outstanding charges affecting the
related
Mortgaged Property.
(D) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except
by
written instruments which in the case of the Mortgage Loans are
in
the Mortgage File and have been or will be recorded, if necessary
to
protect the interests of the Trustee, and which have been or will
be
delivered to the Trustee, all in accordance with this Agreement.
The
substance of any such waiver, alteration or modification has
been
approved by the title insurer, to the extent required by the
related
policy. No Mortgagor has been released, in whole or in part,
except
in connection with an assumption agreement approved by the
title
insurer, to the extent required by the policy, and which
assumption
agreement in the case of the Mortgage Loans is part of the
Mortgage
File.
(E) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including
the
defense of usury, nor will the operation of any of the terms of
the
Mortgage Note and the Mortgage, or the exercise of any right
thereunder, render the Mortgage unenforceable, in whole or in
part,
or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted
with
respect thereto.
(F) All buildings upon, or comprising part of, the Mortgaged
Property are insured by an insurer acceptable to Fannie Mae and
Freddie Mac against loss by fire, hazards of extended coverage
and
such other hazards as are customary in the area where the
Mortgaged
Property is located, and such insurer is licensed to do business
in
the state where the Mortgaged Property is located. All such
insurance policies contain a standard mortgagee clause naming
the
originator, its successors and assigns as mortgagee and Seller
has
received no notice that all premiums thereon have not been paid.
If
upon origination of the Mortgage Loan, the Mortgaged Property
was,
or was
subsequently deemed to be, in an area identified in the
Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been
made
available), which require under applicable law that a flood
insurance policy meeting the requirements of the current
guidelines
of the Federal Insurance Administration (or any successor
thereto)
be obtained, such flood insurance policy is in effect which
policy
is with a generally acceptable carrier in an amount
representing
coverage not less than the least of (A) the Stated Principal
Balance
of the related Mortgage Loan, (B) the minimum amount required
to
compensate for damage or loss on a replacement cost basis, or
(C)
the maximum amount of insurance that is available under the
Flood
Disaster Protection Act of 1973. The Mortgage obligates the
Mortgagor thereunder to maintain all such insurance at
Mortgagor's
cost and expense and, on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance
at
Mortgagor's cost and expense and to obtain reimbursement
therefor
from the Mortgagor.
33
<PAGE>
(G) Any and all requirements of any federal, state or local
law including, usury, truth in lending, real estate settlement
procedures including, the Real Estate Settlement Procedures Act
of
1974, as amended, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan
have
been complied with in all material respects.
(H) The Mortgage has not been satisfied, canceled,
subordinated, or rescinded, in whole or in part, and the
Mortgaged
Property has not been released from the lien of the Mortgage,
in
whole or in part, nor has any instrument been executed that
would
effect any such release, cancellation, subordination or
rescission.
(I) The Mortgage is a valid, existing and enforceable [first]
[junior] lien on
the Mortgaged Property, including all improvements
on the Mortgaged Property, if any, subject only to (1) the lien
of
current real property taxes and assessments not yet due and
payable,
(2) covenants, conditions and restrictions, rights of way,
easements
and other matters of the public record as of the date of
recording
being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do
not
adversely affect the Appraised Value of the Mortgaged Property,
(3)
other matters to which like properties are commonly subject which
do
not materially interfere with the benefits of the security
intended
to be provided by the Mortgage [and if a junior lien, the
related
Senior Liens]. The Seller has full right to sell and assign the
Mortgage
to the Depositor.
(J) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as
the
enforceability thereof may be limited by bankruptcy, insolvency
or
reorganization or general principles of equity.
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<PAGE>
(K) All parties to the Mortgage Note and the Mortgage had the
legal capacity to enter into the Mortgage Loan transaction and
to
execute and deliver the Mortgage Note and the Mortgage, and the
Mortgage Note and the Mortgage have been duly and properly
executed
by such parties.
(L) The proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances
thereunder
and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow
funds
therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording
of
the Mortgage were paid, and the Mortgagor is not entitled to
any
refund of any amounts paid or due under the Mortgage Note or
Mortgage.
(M) Immediately prior to the conveyance of the Mortgage Loans
by the Seller to the Depositor hereunder, the Seller was the
sole
owner and holder of the Mortgage Loan; the related Originator or
the
Seller or the Servicer was the custodian of the related escrow
account, if applicable; the Mortgage Loan had neither been
assigned
nor pledged, and the Seller had good and marketable title
thereto,
and had full right to transfer and sell the Mortgage Loan and
the
related servicing rights to the Depositor free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security
interest subject to the related Servicing Agreement, if
applicable,
and had full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell
and
assign the Mortgage Loan and the related servicing rights to
the
Depositor pursuant to the terms of this Agreement.
(N) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such
interest,
were) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged
Property
is located, and (2) organized under the laws of such state,
qualified to do business in such state, a federal savings and
loan
association or national bank having principal offices in such
state
or not deemed to be doing business in such state under
applicable
law.
(O) The Mortgage Loan is covered by an ALTA lender's title
insurance policy or equivalent form acceptable to the Department
of
Housing and Urban Development, or any successor thereto, and
qualified to do business in the jurisdiction where the
Mortgaged
Property is located, insuring (subject to the exceptions
contained
in clause (I) above) the Seller (as assignee), its successors
and
assigns as to the [first] priority lien of the Mortgage in the
original principal amount of the Mortgage Loan and against any
loss
by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage Note and/or
Mortgage
providing for adjustment in the Mortgage Rate and monthly
payment.
Additionally, such lender's title insurance policy
affirmatively
insures ingress and egress, and against encroachments by or upon
the
Mortgaged Property or any interest therein. With respect to
each
Mortgage Loan, the Seller (as assignee) is the sole insured of
such
lender's title insurance policy, and such lender's title
insurance
policy is in full force and effect. No claims have been made
under
such lender's title insurance policy, and no prior holder of
the
related Mortgage, including the Seller in the case of a
Mortgage
Loan, has done, by act or omission, anything which would impair
the
coverage of such lender's title insurance policy. Except as
provided
in clause
(B), immediately prior to the Cut-off Date, there was no
default, breach, violation or event of acceleration existing
under
the Mortgage or the Mortgage Note and there was no event which,
with
the passage of time or with notice and the expiration of any
grace
or cure period, would constitute a default, breach, violation
or
event of acceleration, and the Seller has not waived any
default,
breach, violation or event of acceleration.
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<PAGE>
(P) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien)
affecting
the related Mortgaged Property which are or may be liens prior to
or
equal with, the lien of the related Mortgage.
(Q) All improvements which were considered in any appraisal
which was used in determining the Appraised Value of the
related
Mortgaged Property lay wholly within the boundaries and
building
restriction lines of the Mortgaged Property, and no improvements
on
adjoining properties encroach upon the Mortgaged Property.
(R) [Reserved]
(S) The origination, servicing and collection practices with
respect to each Mortgage Note and Mortgage including, the
establishment, maintenance and servicing of the escrow accounts
and
escrow payments, if any, since origination, have been conducted
in
all respects in accordance with the terms of Mortgage Note and
in
compliance with all applicable laws and regulations and, unless
otherwise required by law or Fannie Mae/Freddie Mac standard,
in
accordance with the proper, prudent and customary practices in
the
mortgage origination and servicing business. With respect to
the
escrow accounts and escrow payments, if any, and any Company
Mortgage Loan all such payments are in the possession or under
the
control of the Seller and there exists no deficiencies in
connection
therewith for which customary arrangements for repayment
thereof
have not been made. Any interest required to be paid pursuant
to
state and local law has been properly paid and credited.
(T) The Mortgaged Property is free of material damage and
waste and there is no proceeding pending for the total or
partial
condemnation thereof.
(U) The Mortgage contains customary and enforceable provisions
to render the rights and remedies of the holder thereof adequate
for
the realization against the Mortgaged Property of the benefits
of
the security intended to be provided thereby, including, (1) in
the
case of a Mortgage designated as a deed of trust, by trustee's
sale,
and (2) otherwise by judicial foreclosure. There is no other
exemption available to the Mortgagor which would interfere with
the
right to sell the Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage. The Mortgagor has not notified
the
Seller and the Seller has no knowledge of any relief requested
or
allowed to the Mortgagor under the Relief Act.
36
<PAGE>
(V) The Mortgage Note is not and has not been secured by any
collateral except the lien of the applicable Mortgage.
(W) [Reserved]
(X) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such,
has
been properly designated and currently so serves and is named in
the
Mortgage, and no fees or expenses are or will become payable by
the
Certificateholders to the trustee under the deed of trust, except
in
connection with a trustee's sale after default by the
Mortgagor.
(Y) No Mortgage Loan contains a permanent or temporary
"buydown" provision. The Mortgage Loan is not a graduated
payment
mortgage loan.
(Z) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of the
Mortgage Loan.
(AA) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property.
(BB) To the best of Seller's knowledge, the Mortgaged Property
is lawfully occupied under applicable law and all inspections,
licenses and certificates required to be made or issued with
respect
to all occupied portions of the Mortgaged Property and, with
respect
to the use and occupancy of the same, including but not limited
to
certificates of occupancy, have been made or obtained from the
appropriate authorities.
(CC) The assignment of Mortgage with respect to a Mortgage
Loan is in recordable form and is acceptable for recording under
the
laws of the jurisdiction in which the Mortgaged Property is
located.
(DD) [Reserved].
(EE) [Reserved].
(FF) The Mortgaged Property consists of a single parcel of
real property with or without a detached single family
residence
erected thereon, or an individual condominium unit, or a 2-4
family
dwelling, or an individual unit in a planned unit development
as
defined by Fannie Mae or a manufactured dwelling which conforms
with
Fannie Mae and Freddie Mac requirements regarding such dwellings,
or
a townhouse, each structure of which is permanently affixed to
the
Mortgaged Property, and is legally classified as real estate.
(GG) [Reserved]
(HH) [Reserved]
37
<PAGE>
(II) Each Mortgage Loan at the time of origination was
underwritten in general in accordance with guidelines not
inconsistent with the guidelines set forth in the Prospectus
Supplement and generally accepted prime credit underwriting
guidelines.
(JJ) No error,
omission, misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on
the
part of the Seller or the related Originator.
(KK) [None of the Mortgage Loans is (i) a loan subject to 12
CFR Part 226.31, 12 CFR Part 226.32 or 12 CFR Part 226.34 of
Regulation Z, the regulation implementing the Truth-in-Lending
Act,
which implements the Home Ownership and Equity Protection Act
of
1994, as amended or (ii) classified and /or defined as a "high
cost", "covered", or "predatory" loan under any other state,
federal
or local law or regulation or ordinance, including, but not
limited
to, the States of Georgia or North Carolina, or the City of New
York.]
(c) Upon
discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(b)(vii) that
materially and
adversely affects the interests of the Certificateholders in any
Mortgage Loan,
the party discovering such breach shall give prompt written notice
thereof to
the other parties. Any breach of a representation or warranty
contained in
clause (KK) above, shall be automatically deemed to affect
materially and
adversely the interests of the Certificateholders. The Seller
hereby covenants
with respect to the representations and warranties set forth in
Section
2.03(b)(vii), that within 90 days of the discovery of a breach of
any
representation or warranty set forth therein that 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,
(i) if such 90-day period expires prior to the second anniversary
of the Closing
Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from
the Trust Fund
and substitute in its place a Replacement Mortgage Loan, in the
manner and
subject to the conditions set forth in this Section; or (ii)
repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at the
Purchase Price
in the manner set forth below; provided that any such substitution
pursuant to
(i) above or repurchase pursuant to (ii) above shall not be
effected prior to
the delivery to the Trustee of an Opinion of Counsel if required by
Section 2.05
hereof and any such substitution pursuant to (i) above shall not be
effected
prior to the additional delivery to the Trustee of a Request for
Release. The
Seller shall promptly reimburse the Master Servicer and the Trustee
for any
expenses reasonably incurred by the Master Servicer or the Trustee
in respect of
enforcing the remedies for such breach. To enable the Securities
Administrator
to amend the Mortgage Loan Schedule, the Seller shall, unless it
cures such
breach in a timely fashion pursuant to this Section 2.03, promptly
notify the
Securities Administrator whether it intends either to repurchase,
or to
substitute for, the Mortgage Loan affected by such breach. With
respect to the
representations and warranties in Section 2.03(b)(vii) that are
made to the best
of the Seller's knowledge, if it is discovered by any of the
Depositor, the
Master Servicer, the Seller, the Securities Administrator or the
Trustee that
the substance of such representation and warranty is inaccurate and
such
inaccuracy materially and adversely affects the value of the
related Mortgage
Loan, notwithstanding the Seller's lack of knowledge with respect
to the
substance of such representation or warranty, the Seller shall
nevertheless be
required to cure, substitute for or repurchase the affected
Mortgage Loan in
accordance with the foregoing.
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<PAGE>
With
respect to any Replacement Mortgage Loan or Loans, the Seller
shall
deliver to the Trustee for the benefit of the Certificateholders
such documents
and agreements as are required by Section 2.01. No substitution
will be made in
any calendar month after the Determination Date for such month.
Scheduled
Payments due with respect to Replacement Mortgage Loans in the Due
Period
related to the Distribution Date on which such proceeds are to be
distributed
shall not be part of the Trust Fund and will be retained by the
Seller. For the
month of substitution, distributions to Certificateholders will
include the
Scheduled Payment due on any Deleted Mortgage Loan for the related
Due Period
and thereafter the Seller shall be entitled to retain all amounts
received in
respect of such Deleted Mortgage Loan. The Securities Administrator
shall amend
the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect
the removal of such Deleted Mortgage Loan and the substitution of
the
Replacement Mortgage Loan or Loans and the Securities Administrator
shall
deliver the amended Mortgage Loan Schedule to the Trustee and the
Custodian.
Upon such substitution, the Replacement Mortgage Loan or Loans
shall be subject
to the terms of this Agreement in all respects, and the Seller
shall be deemed
to have made with respect to such Replacement Mortgage Loan or
Loans, as of the
date of substitution, the representations and warranties set forth
in Section
2.03(b)(vii) with respect to such Mortgage Loan. Upon any such
substitution and
the deposit into the Master Servicer Collection Account of the
amount required
to be deposited therein in connection with such substitution as
described in the
following paragraph and receipt by the Trustee of a Request for
Release for such
Mortgage Loan, the Trustee or the Custodian shall release to the
Seller the
Mortgage File relating to such Deleted Mortgage Loan and held for
the benefit of
the Certificateholders and the Trustee shall execute and deliver at
the Seller's
direction such instruments of transfer or assignment as have been
prepared by
the Seller, in each case without recourse, representation or
warranty as shall
be necessary to vest in the Seller, or its respective designee,
title to the
Trustee's interest in any Deleted Mortgage Loan substituted for
pursuant to this
Section 2.03.
For any month in
which the Seller substitutes one or more Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer
will determine
the amount (if any) by which the aggregate principal balance of all
the
Replacement Mortgage Loans as of the date of substitution is less
than the
Stated Principal Balance (after application of the principal
portion of the
Scheduled Payment due in the month of substitution) of such Deleted
Mortgage
Loan. An amount equal to the aggregate of such deficiencies,
described in the
preceding sentence for any Distribution Date (such amount, the
"Substitution
Adjustment Amount") shall be deposited into the Master Servicer
Collection
Account, by the Seller delivering such Replacement Mortgage Loan on
the
Determination Date for the Distribution Date relating to the
Prepayment Period
during which the related Mortgage Loan became required to be
purchased or
replaced hereunder.
In the
event that the Seller shall have repurchased a Mortgage Loan,
the
Purchase Price therefor shall be deposited into the Master Servicer
Collection
Account maintained by the Master Servicer, on the Determination
Date for the
Distribution Date in the month following the month during which the
Seller
became obligated to repurchase or replace such Mortgage Loan and
upon such
deposit of the Purchase Price, the delivery of an Opinion of
Counsel if required
by Section 2.05 and the receipt of a Request for Release, the
Trustee or the
Custodian shall release the related Mortgage File held for the
benefit of the
Certificateholders to the Seller, and the Trustee shall execute and
deliver at
such Person's direction the related instruments of transfer or
assignment
prepared by the Seller, in each case without recourse,
representation or
warranty as shall be necessary to transfer title from the Trustee
for the
benefit of the Certificateholders and transfer the Trustee's
interest to the
Seller to any Mortgage Loan purchased pursuant to this Section
2.03. It is
understood and agreed that the obligation under this Agreement of
the Seller to
cure, repurchase or replace any Mortgage Loan as to which a breach
has occurred
and is continuing shall constitute the sole remedies against the
Seller
respecting such breach available to Certificateholders, the
Depositor or the
Trustee.
39
<PAGE>
(d) The
representations and warranties set forth in Section 2.03 hereof
shall survive delivery of the respective Mortgage Loans and
Mortgage Files to
the Trustee or the Custodian for the benefit of the
Certificateholders.
Section
2.04 Representations and Warranties of the Depositor.
The
Depositor hereby represents and warrants to the Master Servicer,
the
Securities Administrator and the Trustee as follows, as of the date
hereof and
as of the Closing Date:
(i) The Depositor is duly organized and is validly existing as
a
limited
liability company in good standing under the laws of the State
of
Delaware
and has full power and authority (corporate and other)
necessary
to own or
hold its properties and to conduct its business as now
conducted
by it and
to enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full power and authority to execute,
deliver
and perform, and to enter into and consummate the transactions
contemplated by, this Agreement and has duly authorized, by all
necessary
corporate
action on its part, the execution, delivery and performance of
this
Agreement; and this Agreement, assuming the due authorization,
execution
and delivery hereof by the other parties hereto, constitutes a
legal,
valid and binding obligation of the Depositor, enforceable
against
the
Depositor in accordance with its terms, subject, as to
enforceability,
to (i)
bankruptcy, insolvency, reorganization, moratorium and other
similar
laws affecting creditors' rights generally and (ii) general
principles
of equity, regardless of whether enforcement is sought in a
proceeding
in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor,
the
consummation of the transactions contemplated by this Agreement,
and
the
fulfillment of or compliance with the terms hereof are in the
ordinary
course of
business of the Depositor and will not (A) result in a material
breach of
any term or provision of the charter or by-laws of the
Depositor
or (B)
materially conflict with, result in a material breach, violation
or
acceleration of, or result in a material default under, the terms
of any
other
material agreement or instrument to which the Depositor is a
party
or by
which it may be bound or (C) constitute a material violation of
any
statute, order
or regulation applicable to the Depositor of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction over the Depositor; and the Depositor is not in breach
or
violation
of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of
any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over it which breach or violation may materially
impair the
Depositor's ability to perform or meet any of its obligations under
this
Agreement.
40
<PAGE>
(iv) No litigation is pending, or, to the best of the
Depositor's
knowledge,
threatened, against the Depositor that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement
or the ability of the Depositor to perform its obligations
under
this
Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Depositor of, or compliance by the Depositor
with, this
Agreement
or the consummation of the transactions contemplated hereby, or
if any
such consent, approval, authorization or order is required, the
Depositor
has obtained the same.
The
Depositor hereby represents and warrants to the Trustee as of
the
Closing Date, following the transfer of the Mortgage Loans to it by
the Seller,
the Depositor had good title to the Mortgage Loans and the related
Mortgage
Notes were subject to no offsets, claims, defenses or
counterclaims.
It is
understood and agreed that the representations and warranties
set
forth in the immediately preceding paragraph shall survive delivery
of the
Mortgage Files to the Trustee or the Custodian for the benefit of
the
Certificateholders. Upon discovery by the Depositor or the Trustee
of a breach
of such representations and warranties, the party discovering such
breach shall
give prompt written notice to the others and to each Rating
Agency.
Section
2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a)
Notwithstanding any contrary provision of this Agreement, with
respect
to any Mortgage Loan that is not in default or as to which default
is not
imminent, no repurchase or substitution pursuant to Sections 2.02
or 2.03 shall
be made unless the Seller delivers to the Trustee an Opinion of
Counsel,
addressed to the Trustee, to the effect that such repurchase or
substitution
would not (i) result in the imposition of the tax on "prohibited
transactions"
of the REMIC Trust contributions after the Closing Date, as defined
in sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the
REMIC Trust
to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to
this paragraph shall be repurchased or the substitution therefor
shall occur
(subject to compliance with Sections 2.02 or 2.03) upon the earlier
of (a) the
occurrence of a default or imminent default with respect to such
Mortgage Loan
and (b) receipt by the Trustee of an Opinion of Counsel addressed
to the Trustee
to the effect that such repurchase or substitution, as applicable,
will not
result in the events described in clause (i) or clause (ii) of the
preceding
sentence.
(b) Upon
discovery by the Depositor, the Seller or the Master Servicer
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 5 Business Days of discovery)
give written
notice thereof to the other parties and the Trustee. 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 Replacement 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 contained in Section 2.03. The Trustee shall reconvey to
the Seller the
Mortgage Loan to be released pursuant hereto (and the Custodian
shall deliver
the related Mortgage File) 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.
41
<PAGE>
Section
2.06 Countersignature and Delivery of Certificates.
The
Trustee acknowledges the sale, transfer and assignment to it of
the
Trust Fund and, concurrently with such transfer and assignment, has
executed,
countersigned and delivered, to or upon the order of the Depositor,
the
Certificates in authorized denominations evidencing 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 and to perform the duties set forth in this Agreement
in accordance
with its terms.
Section 2.07 Purposes and Powers of the Trust.
The
purpose of the common law trust, as created hereunder, is to engage
in
the following activities:
(a)
acquire and hold the Mortgage Loans and the other assets of the
Trust
Fund and the proceeds therefrom;
(b) to
issue the Certificates sold to the Depositor in exchange for
the
Mortgage Loans;
(c) to
make payments on the Certificates;
(d) to
engage in those activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or
connected
therewith; and
(e)
subject to compliance with this Agreement, to engage in such
other
activities as may be required in connection with conservation of
the Trust Fund
and the making of distributions to the Certificateholders.
The trust is hereby authorized to engage in the foregoing
activities. The Trustee shall not cause the trust to engage in any
activity
other than in connection with the foregoing or other than as
required or
authorized by the terms of this Agreement while any Certificate is
outstanding,
and this Section 2.07 may not be amended, without the consent of
the
Certificateholders evidencing 51% or more of the aggregate Voting
Rights of the
Certificates.
42
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING OF COMPANY MORTGAGE LOANS BY
COMPANY
Section
3.01 The Company.
The
Company shall service and administer the Company Mortgage Loans
in
accordance with customary and usual standards of practice of
prudent mortgage
loan servicers in the respective states in which the related
Mortgaged
Properties are located. In connection with such servicing and
administration,
the Company shall have full power and authority, acting alone
and/or through
subservicers as provided in Section 3.03, to do or cause to be done
any and all
things that it may deem necessary or desirable in connection with
such servicing
and administration, including but not limited to, the power and
authority,
subject to the terms hereof (i) to execute and deliver, on behalf
of the
Certificateholders and the Trustee, customary consents or waivers
and other
instruments and documents, (ii) to consent to transfers of any
related Mortgaged
Property and assumptions of the Mortgage Notes and related
Mortgages (but only
in the manner provided herein), (iii) to collect any Insurance
Proceeds and
other Liquidation Proceeds, and (iv) subject to Section 3.09, to
effectuate
foreclosure or other conversion of the ownership of the Mortgaged
Property
securing any Company Mortgage Loan; provided that the Company shall
take no
action that is inconsistent with or prejudices the interests of the
Trust Fund
or the Certificateholders in any Company Mortgage Loan or the
rights and
interests of the Depositor and the Trustee under this
Agreement.
Without
limiting the generality of the foregoing, the Company, in its
own
name or in the name of the Trust, the Depositor or the Trustee, is
hereby
authorized and empowered by the Trust, the Depositor and the
Trustee, when the
Company believes it appropriate in its reasonable judgment, to
execute and
deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any
of them, any and all instruments of satisfaction or cancellation,
or of partial
or full release or discharge and all other comparable instruments,
with respect
to the Company Mortgage Loans, and with respect to the related
Mortgaged
Properties held for the benefit of the Certificateholders. The
Company shall
prepare and deliver to the Depositor and/or the Trustee such
documents requiring
execution and delivery by any or all of them as are necessary or
appropriate to
enable the Company to service and administer the Company Mortgage
Loans. Upon
receipt of such documents, the Depositor and/or the Trustee shall
execute such
documents and deliver them to the Company.
In
accordance with the standards of the first paragraph of this
Section
3.01, the Company shall advance or cause to be advanced funds as
necessary for
the purpose of effecting the payment of taxes and assessments on
the Mortgaged
Properties relating to the Company Mortgage Loans, which advances
shall be
reimbursable in the first instance from related collections from
the Mortgagors
pursuant to Section 5.03, and further as provided in Section 5.02.
All costs
incurred by the Company, if any, in effecting the timely payments
of taxes and
assessments on the Mortgaged Properties relating to the Company
Mortgage Loans
and related insurance premiums shall not, for the purpose of
calculating monthly
distributions to the Certificateholders, be added to the Stated
Principal
Balance under the related Company Mortgage Loans, notwithstanding
that the terms
of such Mortgage Loans so permit.
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Section
3.02 Due-on-Sale Clauses; Assumption Agreements.
(a) Except
as otherwise provided in this Section 3.02, when any property
subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the
Company shall to the extent that it has knowledge of such
conveyance, 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 such enforcement will not adversely affect or
jeopardize coverage
under any Required Insurance Policy. Notwithstanding the foregoing,
the Company
is not required to exercise such rights with respect to an Company
Mortgage Loan
if the Person to whom the related Mortgaged Property has been
conveyed or is
proposed to be conveyed satisfies the terms and conditions
contained in the
Mortgage Note and Mortgage related thereto and the consent of the
mortgagee
under such Mortgage Note or Mortgage is not otherwise so required
under such
Mortgage Note or Mortgage as a condition to such transfer. In the
event that the
Company is prohibited by law from enforcing any such due-on-sale
clause, or if
coverage under any Required Insurance Policy would be adversely
affected, or if
nonenforcement is otherwise permitted hereunder, the Company is
authorized,
subject to Section 3.02(b), to take or enter into an assumption and
modification
agreement from or with the person to whom such property has been or
is about to
be conveyed, pursuant to which such person becomes liable under the
Mortgage
Note and, unless prohibited by applicable state law, the Mortgagor
remains
liable thereon, provided that the Mortgage Loan shall continue to
be covered (if
so covered before the Company enters such agreement) by the
applicable Required
Insurance Policies. The Company, subject to Section 3.02(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 such Person,
pursuant to
which the original Mortgagor is released from liability and such
Person is
substituted as Mortgagor and becomes liable under the Mortgage
Note.
Notwithstanding the foregoing, the Company shall not be deemed to
be in default
under this Section 3.02(a) by reason of any transfer or assumption
that the
Company reasonably believes it is restricted by law from
preventing.
(b)
Subject to the Company's duty to enforce any due-on-sale clause to
the
extent set forth in Section 3.02(a), in any case in which a
Mortgaged Property
has been conveyed to a Person by a Mortgagor, and such 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 related Company Mortgage Loan, the Company shall
prepare and
deliver or cause to be prepared and delivered to the Trustee for
signature and
shall direct, in writing, the Trustee to execute the assumption
agreement with
the Person to whom the Mortgaged Property is to be conveyed and
such
modification agreement or supplement to the Mortgage Note or
Mortgage or other
instruments as are reasonable or necessary 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
such Person.
In connection with any such assumption, no material term of the
Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of
the Scheduled
Payment and any other term affecting the amount or timing of
payment on the
Mortgage Loan) may be changed. In addition, the substitute
Mortgagor and the
Mortgaged Property must be acceptable to the Company in accordance
with its
servicing standards as then in effect. The Company shall notify the
Trustee that
any such substitution or assumption agreement has been completed by
forwarding
to the Trustee the original of such 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 such Mortgage File
to the same
extent as all other documents and instruments constituting a part
thereof. Any
fee collected by the Company for entering into an assumption or
substitution of
liability agreement will be retained by the Company as additional
servicing
compensation.
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<PAGE>
Section
3.03 Subservicers.
The
Company shall perform all of its servicing responsibilities
hereunder
or may cause a subservicer to perform any such servicing
responsibilities on its
behalf, but the use by the Company of a subservicer shall not
release the
Company from any of its obligations hereunder and the Company shall
remain
responsible hereunder for all acts and omissions of each
subservicer as fully as
if such acts and omissions were those of the Company. The Company
shall pay all
fees of each subservicer from its own funds, and a subservicer's
fee shall not
exceed the Servicing Fee payable to the Company hereunder.
At the
cost and expense of the Company, without any right of
reimbursement
from its Protected Account, the Company shall be entitled to
terminate the
rights and responsibilities of a subservicer and arrange for any
servicing
responsibilities to be performed by a successor subservicer;
provided, however,
that nothing contained herein shall be deemed to prevent or
prohibit the
Company, at the Company's option, from electing to service the
related Company
Mortgage Loans itself. In the event that the Company's
responsibilities and
duties under this Agreement are terminated pursuant to Section
9.03, the Company
shall at its own cost and expense terminate the rights and
responsibilities of
each subservicer effective as of the date of termination of the
Company. The
Company shall pay all fees, expenses or penalties necessary in
order to
terminate the rights and responsibilities of each subservicer from
the Company's
own funds without reimbursement from the Trust Fund.
Notwithstanding the foregoing, the Company shall not be relieved of
its
obligations hereunder and shall be obligated to the same extent and
under the
same terms and conditions as if it alone were servicing and
administering the
Company Mortgage Loans. The Company shall be entitled to enter into
an agreement
with a subservicer for indemnification of the Company by the
subservicer and
nothing contained in this Agreement shall be deemed to limit or
modify such
indemnification.
Any
subservicing agreement and any other transactions or services
relating
to the Company Mortgage Loans involving a subservicer shall be
deemed to be
between such subservicer and the Company alone, and neither the
Master Servicer
nor the Trustee shall have any obligations, duties or liabilities
with respect
to such subservicer including any obligation, duty or liability of
either the
Master Servicer or the Trustee to pay such subservicer's fees and
expenses. For
purposes of remittances to the Master Servicer pursuant to this
Agreement, the
Company shall be deemed to have received a payment on an Company
Mortgage Loan
when a subservicer has received such payment.
Section
3.04 Documents, Records and Funds in Possession of Company to
Be
Held for Trustee.
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<PAGE>
Notwithstanding any other provisions of this Agreement, the Company
shall
transmit to the Trustee as required by this Agreement all documents
and
instruments in respect of an Company Mortgage Loan coming into the
possession of
the Company from time to time and shall account fully to the
Trustee for any
funds received by the Company or that otherwise are collected by
the Company as
Liquidation Proceeds or Insurance Proceeds in respect of any such
Mortgage Loan.
All Mortgage Files and funds collected or held by, or under the
control of, the
Company in respect of any Company Mortgage Loans, whether from the
collection of
principal and interest payments or from Liquidation Proceeds,
including but not
limited to, any funds on deposit in the Protected Account
maintained by the
Company, shall be held by the Company 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 Company also agrees
that it shall
not create, incur or subject any Mortgage File or any funds that
are deposited
in the Protected Account maintained by the Company or the Master
Servicer
Collection Account or in 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 set off against any Mortgage File or any funds
collected on,
or in connection with, an Company Mortgage Loan, except, however,
that the
Company shall be entitled to set off against and deduct from any
such funds any
amounts that are properly due and payable to the Company under this
Agreement.
Section
3.05 Maintenance of Hazard Insurance.
The Company shall
cause to be maintained, for each Company Mortgage Loan,
hazard insurance on buildings upon, or comprising part of, the
Mortgaged
Property against loss by fire, hazards of extended coverage and
such other
hazards as are customary in the area where the related Mortgaged
Property is
located with an insurer which is licensed to do business in the
state where the
related Mortgaged Property is located. Each such policy of standard
hazard
insurance shall contain, or have an accompanying endorsement that
contains, a
standard mortgagee clause. The Company shall also cause flood
insurance to be
maintained on property acquired upon foreclosure or deed in lieu of
foreclosure
of any Company Mortgage Loan, to the extent described below.
Pursuant to Section
5.01, any amounts collected by the Company under any such policies
(other than
the amounts to be applied to the restoration or repair of the
related Mortgaged
Property or property thus acquired or amounts released to the
Mortgagor in
accordance with the Company's normal servicing procedures) shall be
deposited in
the Protected Account maintained by the Company. Any cost incurred
by the
Company in maintaining any such 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 terms of the Company Mortgage Loan
so permit.
Such costs shall be recoverable by the Company out of late payments
by the
related Mortgagor or out of Liquidation Proceeds to the extent
permitted by
Section 5.02. It is understood and agreed that 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 such applicable
laws and
regulations as shall at any time be in force and as shall require
such
additional insurance. If the Mortgaged Property is located at the
time of
origination of the Company Mortgage Loan in a federally designated
special flood
hazard area and such area is participating in the national flood
insurance
program, the Company shall cause flood insurance to be maintained
with respect
to such Mortgage Loan. Such flood insurance shall be in an amount
equal to the
least of (i) the Stated Principal Balance of the related Mortgage
Loan, (ii)
minimum amount required to compensate for damage or loss on a
replacement cost
basis or (iii) the maximum amount of such insurance available for
the related
Mortgaged Property under the Flood Disaster Protection Act of 1973,
as amended.
46
<PAGE>
In the
event that the Company shall obtain and maintain a blanket
policy
insuring against hazard losses on all of the Mortgage Loans, it
shall
conclusively be deemed to have satisfied its obligations as set
forth in the
first sentence of this Section 3.05, it being understood and agreed
that such
policy may contain a deductible clause on terms substantially
equivalent to
those commercially available and maintained by comparable
servicers. If such
policy contains a deductible clause, the Company shall, in the
event that there
shall not have been maintained on the related Mortgaged Property a
policy
complying with the first sentence of this Section 3.05, and there
shall have
been a loss that would have been covered by such policy, deposit in
the
Protected Account maintained by the Company the amount not
otherwise payable
under the blanket policy because of such deductible clause. Such
deposit shall
be from the Company's own funds without reimbursement therefor. In
connection
with its activities as administrator and servicer of the Company
Mortgage Loans,
the Company agrees to present, on behalf of itself, the Depositor
and the
Trustee for the benefit of the Certificateholders, claims under any
such blanket
policy.
Section
3.06 Presentment of Claims and Collection of Proceeds.
The
Company shall prepare and present on behalf of the Trustee and
the
Certificateholders all claims under the Insurance Policies and take
such actions
(including the negotiation, settlement, compromise or enforcement
of the
insured's claim) as shall be necessary to realize recovery under
such Insurance
Policies. Any proceeds disbursed to the Company in respect of such
Insurance
Policies shall be promptly deposited in the Protected Account
maintained by the
Company upon receipt, except that any amounts realized that are to
be applied to
the repair or restoration of the related Mortgaged Property as a
condition
precedent to the presentation of claims on the related Mortgage
Loan to the
insurer under any applicable Insurance Policy need not be so
deposited (or
remitted).
Section
3.07 Maintenance of the Primary Mortgage Insurance Policies.
(a) The
Company shall not take any action that would result in
noncoverage
under any applicable Primary Mortgage Insurance Policy of any loss
which, but
for the actions of the Company would have been covered thereunder.
The Company
shall use its best efforts to keep in force and effect (to the
extent that the
Mortgage Loan requires the Mortgagor to maintain such insurance),
Primary
Mortgage Insurance applicable to each Company Mortgage Loan. The
Company shall
not cancel or refuse to renew any such Primary Mortgage Insurance
Policy that is
in effect at the date of the initial issuance of the Mortgage Note
and is
required to be kept in force hereunder.
(b) The
Company agrees to present on behalf of the Trustee and the
Certificateholders, claims to the insurer under any Primary
Mortgage Insurance
Policies and, in this regard, to take such reasonable action as
shall be
necessary to permit recovery under any Primary Mortgage Insurance
Policies
respecting defaulted Mortgage Loans. Pursuant to Section 5.01, any
amounts
collected by the Company under any Primary Mortgage Insurance
Policies shall be
deposited in the Protected Account maintained by the Company,
subject to
withdrawal pursuant to Section 5.02 hereof.
47
<PAGE>
Section 3.08
Fidelity Bond, Errors and Omissions Insurance.
The
Company shall maintain, at its own expense, a blanket fidelity
bond
and an errors and omissions insurance policy, with broad coverage
with
responsible companies on all officers, employees or other persons
acting in any
capacity with regard to the Company Mortgage Loans and who handle
funds, money,
documents and papers relating to the Company Mortgage Loans. The
fidelity bond
and errors and omissions insurance shall be in the form of the
Mortgage Banker's
Blanket Bond and shall protect and insure the Company against
losses, including
forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of
such persons. Such fidelity bond shall also protect and insure the
Company
against losses in connection with the failure to maintain any
insurance policies
required pursuant to this Agreement and the release or satisfaction
of an
Company Mortgage Loan which is not in accordance with Accepted
Servicing
Practices. No provision of this Section 3.08 requiring the fidelity
bond and
errors and omissions insurance shall diminish or relieve the
Company from its
duties and obligations as set forth in this Agreement. The minimum
coverage
under any such bond and insurance policy shall be at least equal to
the
corresponding amounts required by Accepted Servicing Practices. The
Company
shall deliver to the Master Servicer a certificate from the surety
and the
insurer as to the existence of the fidelity bond and errors and
omissions
insurance policy and shall obtain a statement from the surety and
the insurer
that such fidelity bond or insurance policy shall in no event be
terminated or
materially modified without thirty days prior written notice to the
Master
Servicer and the Trustee. The Company shall notify the Master
Servicer and the
Trustee within five business days of receipt of notice that such
fidelity bond
or insurance policy will be, or has been, materially modified or
terminated. The
Trustee for the benefit of the Certificateholders must be named as
loss payees
on the fidelity bond and as additional insured on the errors and
omissions
policy.
Section
3.09 Realization upon Defaulted Mortgage Loans; Determination
of
Excess Liquidation Proceeds and Realized Losses; Repurchases of
Certain Mortgage
Loans.
(a) The
Company shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing
such of the
Company 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 such foreclosure or other conversion, the Company
shall follow
such practices and procedures as it shall deem necessary or
advisable and as
shall be normal and usual in its general mortgage servicing
activities and the
requirements of the insurer under any Required Insurance Policy;
provided that
the Company shall not be required to expend its own funds in
connection with any
foreclosure or towards the restoration of any property unless it
shall determine
(i) that such restoration and/or foreclosure will increase the
proceeds of
liquidation of the Company Mortgage Loan after reimbursement to
itself of such
expenses and (ii) that such expenses will be recoverable to it
through Insurance
Proceeds or Liquidation Proceeds (respecting which it shall have
priority for
purposes of withdrawals from the Protected Account maintained by
the Company
pursuant to Section 5.02). If the Company reasonably believes that
Liquidation
Proceeds with respect to any such Mortgage Loan would not be
increased as a
result of such foreclosure or other action, such Mortgage Loan will
be
charged-off and will become a Liquidated Loan. The Company will
give notice of
any such charge-off to the Trustee and the Securities
Administrator. The Company
shall be responsible for all other costs and expenses incurred by
it in any such
proceedings; provided that such costs and expenses shall be
Servicing Advances
and that it shall be entitled to reimbursement thereof from the
proceeds of
liquidation of the related Mortgaged Property, as contemplated in
Section 5.02.
If the Company has knowledge that a Mortgaged Property that the
Company is
contemplating acquiring in foreclosure or by deed- in-lieu of
foreclosure is
located within a one-mile radius of any site with environmental or
hazardous
waste risks known to the Company, the Company will, prior to
acquiring the
Mortgaged Property, consider such risks and only take action in
accordance with
its established environmental review procedures.
48
<PAGE>
With
respect to any REO Property, the
