EXHIBIT 99.1
The Pooling and Servicing Agreement
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EXECUTION COPY
----------------------
CWALT, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
PARK GRANADA LLC,
Seller
PARK MONACO INC.,
Seller
PARK SIENNA LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
-----------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2006
-----------------------------------
ALTERNATIVE LOAN TRUST 2006-40T1
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-40T1
----------------------
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Table of Contents
Page
ARTICLE I DEFINITIONS
SECTION 1.01. Defined
Terms.........................................................................................I-1
SECTION 1.02. Certain
Interpretive
Provisions......................................................................I-33
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES
SECTION 2.01. Conveyance of
Mortgage
Loans.........................................................................II-1
SECTION 2.02. Acceptance by
Trustee of the Mortgage
Loans..........................................................II-4
SECTION 2.03. Representations,
Warranties and Covenants of the Sellers and Master
Servicer........................II-6
SECTION 2.04. Representations
and Warranties of the Depositor as to the Mortgage
Loans.............................II-8
SECTION 2.05. Delivery of
Opinion of Counsel in Connection with
Substitutions......................................II-9
SECTION 2.06. Execution and
Delivery of
Certificates...............................................................II-9
SECTION 2.07. REMIC
Matters........................................................................................II-9
SECTION 2.08. Covenants of the
Master
Servicer....................................................................II-10
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. Master Servicer
to Service Mortgage
Loans...........................................................III-1
SECTION 3.02. Subservicing;
Enforcement of the Obligations of
Subservicers........................................III-2
SECTION 3.03. Rights of the
Depositor and the Trustee in Respect of the Master
Servicer...........................III-2
SECTION 3.04. Trustee to Act
as Master
Servicer...................................................................III-2
SECTION 3.05. Collection of
Mortgage Loan Payments; Certificate Account; Distribution Account;
the
Supplemental Interest Trust and the Corridor Contract Reserve Fund
and the ES Grantor Trust.........III-3
SECTION 3.06. Collection of
Taxes, Assessments and Similar Items; Escrow
Accounts.................................III-6
SECTION 3.07. Access to
Certain Documentation and Information Regarding the Mortgage
Loans........................III-7
SECTION 3.08. Permitted
Withdrawals from the Certificate Account, the Distribution Account,
the Corridor
Contract Reserve Fund and the ES Grantor
Trust......................................................III-7
SECTION 3.09. Maintenance of
Hazard Insurance; Maintenance of Primary Insurance
Policies..........................III-9
SECTION 3.10. Enforcement of
Due-on-Sale Clauses; Assumption
Agreements..........................................III-10
SECTION 3.11. Realization Upon
Defaulted Mortgage Loans; Repurchase of Certain Mortgage
Loans....................III-11
SECTION 3.12. Trustee to
Cooperate; Release of Mortgage
Files....................................................III-14
SECTION 3.13. Documents,
Records and Funds in Possession of Master Servicer to be Held for
the Trustee...........III-15
SECTION 3.14. Servicing
Compensation.............................................................................III-15
SECTION 3.15. Access to
Certain
Documentation....................................................................III-16
SECTION 3.16. Annual Statement
as to
Compliance..................................................................III-16
SECTION 3.17. Errors and
Omissions Insurance; Fidelity
Bonds.....................................................III-16
SECTION 3.18. The Corridor
Contracts.............................................................................III-17
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ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
SECTION 4.01.
Advances.............................................................................................IV-1
SECTION 4.02. Priorities of
Distribution...........................................................................IV-2
SECTION 4.03.
[Reserved]...........................................................................................IV-8
SECTION 4.04. Allocation of
Realized
Losses........................................................................IV-8
SECTION 4.05.
Cross-Collateralization; Adjustments to Available
Funds..............................................IV-9
SECTION 4.06. Monthly
Statements to
Certificateholders.............................................................IV-9
SECTION 4.07. Determination of
Pass-Through Rates for COFI
Certificates...........................................IV-10
SECTION 4.08. Determination of
Pass-Through Rates for LIBOR
Certificates..........................................IV-11
SECTION 4.09. Distributions
from the Corridor Contract Reserve
Fund...............................................IV-12
ARTICLE V THE CERTIFICATES
SECTION 5.01. The
Certificates......................................................................................V-1
SECTION 5.02. Certificate
Register; Registration of Transfer and Exchange of
Certificates...........................V-1
SECTION 5.03. Mutilated,
Destroyed, Lost or Stolen
Certificates.....................................................V-6
SECTION 5.04. Persons Deemed
Owners.................................................................................V-6
SECTION 5.05. Access to List
of Certificateholders' Names and
Addresses.............................................V-6
SECTION 5.06. Maintenance of
Office or
Agency.......................................................................V-7
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Respective
Liabilities of the Depositor and the Master
Servicer......................................VI-1
SECTION 6.02. Merger or
Consolidation of the Depositor or the Master
Servicer......................................VI-1
SECTION 6.03. Limitation on
Liability of the Depositor, the Sellers, the Master Servicer and
Others................VI-1
SECTION 6.04. Limitation on
Resignation of Master
Servicer.........................................................VI-2
ARTICLE VII DEFAULT
SECTION 7.01. Events of
Default...................................................................................VII-1
SECTION 7.02. Trustee to Act;
Appointment of
Successor............................................................VII-3
SECTION 7.03. Notification to
Certificateholders..................................................................VII-4
ARTICLE VIII CONCERNING THE TRUSTEE
SECTION 8.01. Duties of
Trustee..................................................................................VIII-1
SECTION 8.02. Certain Matters
Affecting the
Trustee..............................................................VIII-2
SECTION 8.03. Trustee Not
Liable for Certificates or Mortgage
Loans..............................................VIII-3
SECTION 8.04. Trustee May Own
Certificates.......................................................................VIII-3
SECTION 8.05. Trustee's Fees
and
Expenses........................................................................VIII-3
SECTION 8.06. Eligibility
Requirements for
Trustee...............................................................VIII-3
SECTION 8.07. Resignation and
Removal of
Trustee.................................................................VIII-4
SECTION 8.08. Successor
Trustee..................................................................................VIII-5
SECTION 8.09. Merger or
Consolidation of
Trustee.................................................................VIII-5
SECTION 8.10. Appointment of
Co-Trustee or Separate
Trustee......................................................VIII-5
SECTION 8.11. Tax
Matters........................................................................................VIII-7
SECTION 8.12. Monitoring of
Significance
Percentage..............................................................VIII-9
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ARTICLE IX TERMINATION
SECTION 9.01. Termination upon
Liquidation or Purchase of all Mortgage
Loans.......................................IX-1
SECTION 9.02. Final
Distribution on the
Certificates...............................................................IX-1
SECTION 9.03. Additional
Termination
Requirements..................................................................IX-2
ARTICLE X MISCELLANEOUS PROVISIONS
SECTION 10.01.
Amendment.............................................................................................X-1
SECTION 10.02. Recordation of
Agreement;
Counterparts................................................................X-2
SECTION 10.03. Governing
Law.........................................................................................X-2
SECTION 10.04. Intention of
Parties..................................................................................X-2
SECTION 10.05.
Notices...............................................................................................X-4
SECTION 10.06. Severability of
Provisions............................................................................X-5
SECTION 10.07.
Assignment............................................................................................X-5
SECTION 10.08. Limitation on Rights
of
Certificateholders............................................................X-5
SECTION 10.09. Inspection and Audit
Rights...........................................................................X-6
SECTION 10.10. Certificates
Nonassessable and Fully
Paid.............................................................X-6
SECTION 10.11.
[Reserved]............................................................................................X-6
SECTION 10.12. Protection of
Assets..................................................................................X-6
ARTICLE XI EXCHANGE ACT REPORTING
SECTION 11.01. Filing
Obligations...................................................................................XI-1
SECTION 11.02. Form 10-D
Filings....................................................................................XI-1
SECTION 11.03. Form 8-K
Filings.....................................................................................XI-2
SECTION 11.04. Form 10-K
Filings....................................................................................XI-2
SECTION 11.05. Sarbanes-Oxley
Certification.........................................................................XI-2
SECTION 11.06. Form 15
Filing.......................................................................................XI-3
SECTION 11.07. Report on Assessment
of Compliance and
Attestation...................................................XI-3
SECTION 11.08. Use of Subservicers
and
Subcontractors...............................................................XI-4
SECTION 11.09.
Amendments...........................................................................................XI-5
SECTION 11.10. Reconciliation of
Accounts...........................................................................XI-5
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SCHEDULES
Schedule I:
Mortgage Loan
Schedule..................................................................................S-I-1
Schedule II-A: Representations and
Warranties of
Countrywide........................................................S-II-A-1
Schedule II-B: Representations and
Warranties of Park
Granada.......................................................S-II-B-1
Schedule II-C Representations
and Warranties of Park Monaco
Inc....................................................S-II-C-1
Schedule II-D Representations
and Warranties of Park Sienna
LLC....................................................S-II-D-1
Schedule III-A:
Representations and Warranties of Countrywide as to the Mortgage
Loans..............................S-III-A-1
Schedule III-B:
Representations and Warranties of Countrywide as to the
Countrywide
Mortgage
Loans......................................................................................S-III-B-1
Schedule III-C:
Representations and Warranties of Park Granada as to the Park
Granada
Mortgage
Loans......................................................................................S-III-C-1
Schedule III-D Representations and
Warranties of Park Monaco Inc.
as to the Park Monaco Inc. Mortgage
Loans...........................................................S-III-D-1
Schedule III-E Representations and
Warranties of Park Sienna LLC
as to the Park Sienna LLC Mortgage
Loans............................................................S-III-E-1
Schedule IV:
Representations and Warranties of the Master
Servicer..................................................S-IV-1
Schedule V:
Principal Balance Schedules (if
applicable).............................................................S-V-1
Schedule VI: Form of
Monthly Master Servicer
Report.................................................................S-VI-I
Schedule VII: Schedule of
Available Exchanges of Depositable Certificates for Exchangeable
Certificates.............S-VII-I
EXHIBITS
Exhibit A:
Form of Senior Certificate (excluding Notional Amount
Certificates).....................................A-1
Exhibit B:
Form of Subordinated
Certificate........................................................................B-1
Exhibit C-1: Form of
Class A-R
Certificate.........................................................................C-1-1
Exhibit C-2:
[Reserved]............................................................................................C-2-1
Exhibit C-3
[Reserved]............................................................................................C-3-1
Exhibit C-4: Form of
Exchangeable
Certificate......................................................................C-4-1
Exhibit D:
Form of Notional Amount
Certificate.....................................................................D-1
Exhibit E:
Form of Reverse of
Certificates.........................................................................E-1
Exhibit F-1: Form of
Initial Certification of
Trustee..............................................................F-1-1
Exhibit F-2:
[Reserved]............................................................................................F-2-1
Exhibit G-1: Form of
Delay Delivery Certification of Trustee
......................................................G-1-1
Exhibit G-2:
[Reserved]............................................................................................G-2-1
Exhibit H-1: Form of
Final Certification of Trustee
...............................................................H-1-1
Exhibit H-2:
[Reserved]............................................................................................H-2-1
Exhibit I:
Form of Transfer
Affidavit..............................................................................I-1
Exhibit J-1: Form of
Transferor Certificate
(Residual).............................................................J-1-1
Exhibit J-2: Form of
Transferor Certificate
(Private)..............................................................J-2-1
Exhibit K:
Form of Investment Letter [Non-Rule
144A]...............................................................K-1
Exhibit L-1: Form of
Rule 144A
Letter..............................................................................L-1-1
Exhibit L-2: Form of
ERISA Letter (Covered
Certificates)...........................................................L-2-1
Exhibit M:
Form of Request for Release (for
Trustee)...............................................................M-1
Exhibit N:
Form of Request for Release of Documents (Mortgage Loan - Paid
in Full, Repurchased and
Replaced)......................................................................N-1
Exhibit O:
[Reserved]..............................................................................................O-1
Exhibit P:
[Reserved]..............................................................................................P-1
Exhibit Q:
Standard & Poor's LEVELS(R) Version 5.7 Glossary Revised,
Appendix
E..............................................................................................Q-1
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Exhibit R:
Form of Corridor Contract
..............................................................................R-1
Exhibit S-1:
[Reserved]............................................................................................S-1-1
Exhibit S-2:
[Reserved]............................................................................................S-2-1
Exhibit T:
[Reserved]..............................................................................................T-1
Exhibit U:
Monthly
Statement.......................................................................................U-1
Exhibit V-1: Form of
Performance Certification
(Subservicer).......................................................V-1-1
Exhibit V-2: Form of
Performance Certification
(Trustee)...........................................................V-2-1
Exhibit W:
Form of Servicing Criteria to be Addressed in Assessment of
Compliance
Statement...............................................................................................W-1
Exhibit X:
List of Item 1119
Parties...............................................................................X-1
Exhibit Y:
Form of Sarbanes-Oxley Certification (Replacement of Master
Servicer)...................................Y-1
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THIS POOLING AND SERVICING AGREEMENT, dated as of November 1,
2006, among CWALT, INC., a Delaware corporation, as depositor
(the
"Depositor"), COUNTRYWIDE HOME LOANS, INC. ("Countrywide"), a New
York
corporation, as a seller (a "Seller"), PARK GRANADA LLC ("Park
Granada"), a
Delaware limited liability company, as a seller (a "Seller"), PARK
MONACO INC.
("Park Monaco"), a Delaware corporation, as a seller (a "Seller"),
PARK SIENNA
LLC ("Park Sienna"), a Delaware limited liability company, as a
seller (a
"Seller") COUNTRYWIDE HOME LOANS SERVICING LP, a Texas limited
partnership, as
master servicer (the "Master Servicer"), and THE BANK OF NEW YORK,
a banking
corporation organized under the laws of the State of New York, as
trustee (the
"Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. For federal
income tax
purposes, the Trust Fund will consist of three real estate mortgage
investment
conduits (each a "REMIC" or, in the alternative, the "Lower Tier
REMIC," the
"Middle Tier REMIC" and the "Master REMIC," respectively). Each
Certificate,
other than the Class A-R Certificate, will represent ownership of
one or more
regular interests in the Master REMIC for purposes of the REMIC
Provisions.
The Class A-R Certificate will represent ownership of the sole
class of
residual interest in the Lower Tier REMIC, the Middle Tier REMIC
and the
Master REMIC. The Master REMIC will hold as assets the several
classes of
uncertificated Middle Tier REMIC Interests (other than the Class
MTR-A-R
Interest). The Middle Tier REMIC will hold as assets the several
classes of
uncertificated Lower Tier REMIC Interests (other than the Class
LTR-A-R
Interest). The Lower Tier REMIC will hold as assets all property of
the Trust
Fund. Each Middle Tier REMIC Interest (other than the Class MTR-A-R
Interest)
is hereby designated as a regular interest in the Middle Tier REMIC
and each
Lower Tier REMIC Interest (other than the Class LTR-A-R Interest)
is hereby
designated as a regular interest in the Lower Tier REMIC . The
latest possible
maturity date of all REMIC regular interests created herein shall
be the
Latest Possible Maturity Date.
The Corridor Contracts, the Supplemental Interest Trust and the
Corridor Contract Reserve Fund will not form part of any REMIC.
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The following table sets forth characteristics of the Master
REMIC
Certificates, together with the minimum denominations and integral
multiples
in excess thereof in which such Classes shall be issuable (except
that one
Certificate of each Class of Certificates may be issued in a
different amount
and, in addition, one Residual Certificate representing the Tax
Matters Person
Certificate may be issued in a different amount):
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Integral
Pass-Through
Multiples in
Initial Class
Rate
Minimum
Excess of
Class Designation
Certificate Balance
(per annum)
Denomination
Minimum
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-1
$14,817,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-2
$49,254,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-3
$100,000,000.00
(1)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-4
$100,000,000.00(2)
(3)
$25,000.00(4)
$1.00(4)
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-5
$81,400,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-6
$4,704,374.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-7
$4,925,374.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-8
$416,666.00(2)
6.00%
$25,000.00(4)
$1.00(4)
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-9
$10,000,000.00
(5)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-10
$10,000,000.00(2)
(6)
$25,000.00(4)
$1.00(4)
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-11
$50,000,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-12
$994,862.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-A-13
$13,102,900.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-A-1
$100,000,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-A-2
$5,750,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-A-3
$275,001.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-A-4
$11,140,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-A-5
$117,806,000.00
(7)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-A-6
$117,806,000.00(2)
(8)
$25,000.00(4)
$1.00(4)
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-A-7
$641,000.00
6.00%
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 1-X
$331,920,212.00(2)
(9)
$25,000.00(4)
$1.00(4)
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class 2-X
$249,986,208.00(2)
(10)
$25,000.00(4)
$1.00(4)
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class PO-1
$668,988.00
(11)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class A-R(12)
$100.00
6.00%
(13)
(13)
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class M-1
$15,299,400.00
(14)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class M-2
$1,799,900.00
(14)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class M-3
$4,799,900.00
(14)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class M-4
$899,900.00
(14)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class B-1
$3,299,900.00
(14)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class B-2
$900,000.00
(14)
$25,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class B-3
$3,299,900.00
(14)
$100,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class B-4
$2,099,900.00
(14)
$100,000.00
$1.00
------------------------ ----------------------------
------------------------- --------------------------
----------------------
Class B-5
$2,099,954.00
(14)
$100,000.00
$1.00
</TABLE>
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(1)
The Class 1-A-3 Certificates will bear interest during each
Interest
Accrual Period at a per annum rate of LIBOR plus 0.55%, subject to
a
maximum and minimum Pass-Through Rate of 6.00% and 0.55% per
annum,
respectively. The Pass-Through Rate for the Class 1-A-3
Certificates
for the Interest Accrual Period for the first Distribution Date
is
5.87% per annum.
2
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(2)
This Class will be a Class of Notional Amount Certificates,
will
have no Class Certificate Balance and will bear interest on its
Notional Amount.
(3)
The Class 1-A-4 Certificates will bear interest during each
Interest
Accrual Period at a per annum rate of 5.45% minus LIBOR, subject to
a
maximum and minimum Pass-Through Rate of 5.45% and 0.00% per
annum,
respectively. The Pass-Through Rate for the Class 1-A-4
Certificates
for the Interest Accrual Period for the first Distribution Date
is
0.13% per annum.
(4)
Minimum denomination is based on the Notional Amount of such
Class.
(5)
The Class 1-A-9 Certificates will bear interest during each
Interest
Accrual Period at a per annum rate of LIBOR plus 0.40%, subject to
a
maximum and minimum Pass-Through Rate of 5.75% and 0.40% per
annum,
respectively. The Pass-Through Rate for the Class 1-A-9
Certificates
for the Interest Accrual Period for the first Distribution Date
is
5.72% per annum.
(6)
The Class 1-A-10 Certificates will bear interest during each
Interest
Accrual Period at a per annum rate equal to 5.35% minus LIBOR,
subject
to a maximum and minimum Pass-Through Rate of 5.35% and 0.00%
per
annum, respectively. The Pass-Through Rate for the Class 1-A-10
Certificates for the Interest Accrual Period for the first
Distribution Date is 0.03% per annum.
(7)
The Class 2-A-5 Certificates will bear interest during each
Interest
Accrual Period at a per annum rate of LIBOR plus 0.40%, subject to
a
maximum and minimum Pass-Through Rate of 7.00% and 0.40% per
annum,
respectively. The Pass-Through Rate for the Class 2-A-5
Certificates
for the Interest Accrual Period for the first Distribution Date
is
5.72% per annum.
(8)
The Class 2-A-6 Certificates will bear interest during each
Interest
Accrual Period at a per annum rate equal to 6.60% minus LIBOR,
subject
to a maximum and minimum Pass-Through Rate of 6.60% and 0.00%
per
annum, respectively. The Pass-Through Rate for the Class 1-A-10
Certificates for the Interest Accrual Period for the first
Distribution Date is 1.28% per annum.
(9)
The Pass-Through Rate for the Class 1-X Certificates for the
Interest
Accrual Period for any Distribution Date will be equal to the
excess
of (a) the weighted average of the Adjusted Net Mortgage Rates of
the
Non-Discount Mortgage Loans in Loan Group 1, weighted on the basis
of
the Stated Principal Balance thereof as of the Due Date in the
preceding calendar month (after giving effect to Principal
Prepayments
received in the Prepayment Period related to such prior Due
Date),
over (b) 6.00%. The Pass-Through Rate for the Class 1-X
Certificates
for the Interest Accrual Period for the first Distribution Date
is
0.351051% per annum.
(10) The
Pass-Through Rate for the Class 2-X Certificates for the
Interest
Accrual Period for any Distribution Date will be equal to the
excess
of (a) the weighted average of the Adjusted Net Mortgage Rates of
the
Non-Discount Mortgage Loans in Loan Group 2, weighted on the basis
of
the Stated Principal Balance thereof as of the Due Date in the
preceding calendar month (after giving effect to Principal
Prepayments
received in the Prepayment Period related to such prior Due
Date),
over (b) 6.50%. The Pass-Through Rate for the Class 2-X
Certificates
for the Interest Accrual Period for the first Distribution Date
is
0.426816% per annum.
(11) The
Class PO-1 Certificates are Principal Only Certificates and
will not receive any distributions of interest.
(12) The
Class A-R Certificates represent the sole Class of residual
interest in the Master REMIC.
3
<PAGE>
(13) The
Class A-R Certificate shall be issued as two separate
certificates, one with an initial Certificate Balance of $99.99
and
the Tax Matters Person Certificate with an initial Certificate
Balance
of $0.01.
(14) The
Pass-Through Rate for each Class of Subordinated Certificates
for
the Interest Accrual Period for any Distribution Date will be a
per
annum rate equal to the Subordinate Pass-Through Rate. The
Pass-Through Rate for each Class of Subordinated Certificates for
the
initial Interest Accrual Period is 6.208329% per annum.
4
<PAGE>
The following table specifies the class designation, interest
rate, and principal amount for each class of Lower Tier REMIC
Interests:
Lower Tier
Initial
Corresponding
REMIC Interest Principal
Balance Interest
Rate
Loan Group
Designation
------------------ ------------
----------
------------
-----------------
------------------ --------------------- -----------------
LTR-A-1
(1)
6.00%
1
------------------ ------------------- ---------------------
-----------------
LTR-B-1
(1)
6.00%
1
------------------ ------------------- ---------------------
-----------------
LTR-C-1
(1)
6.00%
1
------------------ ------------------- ---------------------
-----------------
LTR-PO-1
$668,988.00
(2)
1
------------------ ------------------- ---------------------
-----------------
LTR-X-1
(3)
(4)
1
------------------ ------------------- ---------------------
-----------------
LTR-A-2
(1)
6.50%
2
------------------ ------------------- ---------------------
-----------------
LTR-B-2
(1)
6.50%
2
------------------ ------------------- ---------------------
-----------------
LTR-C-2
(1)
6.50%
2
------------------ ------------------- ---------------------
-----------------
LTR-X-2
(3)
(5)
2
------------------ ------------------- ---------------------
-----------------
LTR-A-R
(6)
(6)
N/A
------------------ ------------------- ---------------------
-----------------
(1) Each Class A
Lower Tier REMIC Interest will have an Initial Principal
Balance
equal to 0.90% of the Subordinated Portion of its Corresponding
Loan
Group. Each Class B Lower Tier REMIC Interest will have an
Initial
Principal
Balance equal to 0.10% of the Subordinated Portion of its
Corresponding Loan Group. Each Class C Lower Tier REMIC Interest
will
have an
Initial Principal Balance equal to the excess of its
Corresponding Loan Group (in the case of Loan Group 1, as reduced
by the
Loan
Group's corresponding PO Balance) over the initial aggregate
principal
balances of the Class A and Class B Lower Tier REMIC Interests
corresponding to that Loan Group. Hereafter, the Class A, Class B
and
Class C
Lower Tier REMIC Interests are referred to as "Tracking
Interests."
(2) This Class
of Lower Tier REMIC Interest does not pay any interest.
(3) This Class
of Lower Tier REMIC Interest does not pay any principal.
(4) This Class
of Lower Tier REMIC Interest is entitled to receive on each
Distribution Date a specified portion of the interest payable on
the
Non-Discount Mortgage Loans in the corresponding Loan Group.
Specifically, for each related Distribution Date, this Class of
Lower
Tier REMIC
Interest is entitled to interest accruals on each
Non-Discount Mortgage Loan in excess of an Adjusted Net Mortgage
Rate of
6.00% per
annum.
(5) This Class
of Lower Tier REMIC Interest is entitled to receive on each
Distribution Date a specified portion of the interest payable on
the
Non-Discount Mortgage Loans in the corresponding Loan Group.
Specifically, for each related Distribution Date, this Class of
Lower
Tier REMIC
Interest is entitled to interest accruals on each
Non-Discount Mortgage Loan in excess of an Adjusted Net Mortgage
Rate of
6.50% per
annum.
(6) The Class
LTR-A-R Lower Tier REMIC Interest is the sole class of
residual
interest in the Lower Tier REMIC. It does not pay any
interest
or principal.
On each Distribution Date, the Available Funds shall be
distributed with respect to the the Lower Tier REMIC Interests in
the
following manner:
(1) Interest.
Interest is to be distributed with respect to each Lower
Tier REMIC
Interest at the rates, or according to the formulas,
described
above.
5
<PAGE>
(2) Initial
Allocations of Realized Losses and Principal.
(a)
The Trustee
shall first allocate the Realized Losses on the Group
1 Mortgage Loans (including any reductions in previously
allocated
Realized Losses on the Group 1 Mortgage Loans attributable to
any
related Subsequent Recoveries), and distribute the principal on
the Group 1 Mortgage Loans between the LTR-PO-1 Interests and
the
LTR-1 Tracking Interests in the same manner that such amounts
are
allocated to or distributed between (a) the Class PO-1
Certificates and (b) the remaining Group 1 Certificates and the
Assumed Balance of the Class Certificate Balance of each Class
of
Subordinated Certificates related to the Group 1 Mortgage
Loans.
(b)
The Trustee
shall first allocate the Realized Losses on the Group
2 Mortgage Loans (including any reductions in previously
allocated
Realized Losses on the Group 2 Mortgage Loans attributable to
any
related Subsequent Recoveries), and distribute the principal on
the Group 2 Mortgage Loans to the LTR-2 Tracking Interests.
(3) Subsequent
Allocations. Amounts allocated to the Tracking Interests of
each Group
in accordance with Paragraph 2, above, shall be further
allocated
as described below.
(4) Principal,
if no Cross-Over Situation Exists. If no Cross-Over Situation
exists
with respect to any Class of Tracking Interests, Principal
Amounts
allocated with respect to each Loan Group's Tracking Interests
in
accordance with Paragraph 2, shall be further allocated: first
to
cause the
Loan Group's corresponding Class A and Class B Tracking
Interests
to equal, respectively, 0.90% of the Subordinated Portion and
0.10% of
the Subordinated Portion; and second to the Loan Group's
corresponding Class C Tracking Interest;
(5) Principal,
if a Cross-Over Situation Exists. If a Cross-Over Situation
exists
with respect to the Class A and Class B Tracking Interests:
(a)
If the
Calculation Rate in respect of the outstanding Class A and
Class B Tracking Interests is less than the Subordinate
Pass-Through Rate,
Principal Relocation Payments will be made
proportionately to the outstanding Class A Tracking Interests
prior to any other principal distributions from each such Loan
Group.
(b)
If the
Calculation Rate in respect of the outstanding Class A and
Class B Tracking Interests is greater than the Subordinate
Pass-Through Rate, Principal Relocation Payments will be made
proportionately to the outstanding Class B Tracking Interests
prior to any other principal distributions from each such Loan
Group.
In each
case, Principal Relocation Payments will be made so as to cause
the Calculation Rate in respect of the outstanding Class A and
Class B
Tracking Interests to equal the Subordinate Pass-Through Rate. With
respect to
each Loan Group, if (and to the extent that) the sum of (a) the
principal
payments received during the Due Period (as adjusted for amounts
allocated to
the Class PO-1 Certificates in the case of Loan Group 1) and (b)
the Realized
Losses (as adjusted for amounts allocated to the Class PO-1
Certificates in
the case of Loan Group 1), are insufficient to make the necessary
reductions
of principal on the Class A and Class B Tracking Interests, then
interest will
be added to the Loan Group's Class C Tracking Interest.
6
<PAGE>
(c)
Unless required
to achieve the Calculation Rate, the outstanding
aggregate Class A and Class B Tracking Interests for all Loan
Groups will not be reduced below 1 percent of the excess of (i)
the aggregate outstanding Principal Balances of all Loan Groups
(as adjusted for amounts allocated to the Class PO-1
Certificates
in the case of Loan Group 1) as of the end of any Due Period
(reduced by principal prepayments received after the Due Period
that are to to be distributed on the Disribution Date related
to
the Due Period) over (ii) the aggregate Class Certificate
Balance
of the Senior Certificates for all Loan Groups as of the
related
Distribution Date (after taking into account distributions of
principal on such Distribution Date).
If (and to
the extent that) the limitation in paragraph (c) prevents the
distribution of principal to the Class A and Class B Tracking
Interests of a
Loan Group, and if the Loan Group's Class C Tracking Interest has
already been
reduced to zero, then the excess principal from that Loan Group (as
adjusted
for amounts allocated to the Class PO-1 Certificates in the case of
Loan Group
1) will be paid to the Class C Tracking Interests of the other Loan
Groups the
aggregate Class A and Class B Tracking Interests of which are less
than one
percent of the Subordinated Portion. If the Loan Group
corresponding to the
Class C Tracking Interest that receives such payment has a weighted
average
Adjusted Net Mortgage Rate below the weighted average Adjusted Net
Mortgage
Rate of the Loan Group making the payment, then the payment will be
treated by
the Lower Tier REMIC as a Realized Loss. Conversely, if the Loan
Group
corresponding to the Class C Tracking Interest that receives such
payment has
a weighted average Adjusted Net Mortgage Rate above the weighted
average
Adjusted Net Mortgage Rate of the Loan Group making the payment,
then the
payment will be treated by the Lower Tier REMIC as a reimbursement
for prior
Realized Losses.
7
<PAGE>
The
following table specifies the class designation, interest rate,
and
principal amount for each class of Middle Tier REMIC Interests:
<TABLE>
<CAPTION>
<S>
<C>
<C>
<C>
---------------------------- -------------------------------
---------------------------------
---------------------------------
Middle
Tier REMIC
Initial Principal
Interest Rate
Corresponding
Interest
Balance
Master REMIC
Certificate
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-1
$14,817,000.00
6.00%
1-A-1
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR 1-A-2
$49,254,000.00
6.00%
1-A-2
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-3
$100,000,000.00
6.00%
1-A-3 and 1-A-4(1)
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-5
$81,400,000.00
6.00%
1-A-5
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-6
$4,704,374.00
6.00%
1-A-6
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-7
$4,925,374.00
6.00%
1-A-7
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-9
$10,000,000.00
6.00%
1-A-9, Class 1-A-8, Class
1-A-10(2)
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-11
$50,000,000.00
6.00%
1-A-11
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-12
$994,862.00.00
6.00%
1-A-12
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-A-13
$13,102,900.00
6.00%
1-A-13
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-X
(3)
(4)
1-X
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-2-A-1
$100,000,000.00
6.00%
2-A-1
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-2-A-2
$5,750,000.00
6.00%
2-A-2
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-2-A-3
$275,001.00
6.00%
2-A-3
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-2-A-4
$11,140,000.00
6.00%
2-A-4
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-2-A-5
$117,806,000.00
7.00%
2-A-5, 2-A-6(5)
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR 2-A-7
$641,000.00
6.00%
2-A-7
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-2-X
(3)
(6)
2-X
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-1-$100
$100
6.00%
A-R
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-PO-1
(7)
(8)
PO
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-M-1
$15,299,400.00
(9)
M-1
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR M-2
$1,799,900.00
(9)
M-2
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR M-3
$4,799,900.00
(9)
M-3
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR M-4
$899,900.00
(9)
M-4
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-B-1
$3,299,900.00
(9)
B-1
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-B-2
$900,000.00
(9)
B-2
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-B-3
$3,299,900.00
(9)
B-3
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-B-4
$2,099,900.00
(9)
B-4
8
<PAGE>
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-B-5
$2,099,954.00
(9)
B-5
---------------------------- -------------------------------
---------------------------------
---------------------------------
MTR-A-R
(10)
(10)
N/A
---------------------------- -------------------------------
---------------------------------
---------------------------------
</TABLE>
(1) For each
Distribution Date, the Class 1-A-4 Certificates are entitled to
a
specified portion of the interest payable on each of the Class
MTR-1-A-3
Middle Tier REMIC Interest. Specifically, for each
Distribution Date, the Class 1-A-4 Certificates are entitled to
interest
payable on
the Class MTR-1-A-3 Middle Tier REMIC Interest at a per annum
rate equal
to 5.45% minus LIBOR, but not less than 0.00%.
(2) For each
Distribution Date, the Class 1-A-8 Certificates are entitled to
a
specified portion of the interest payable on the Class
MTR-1-A-9
Middle
Tier REMIC Interest. Specifically, for each Distribution Date,
the Class
1-A-8 Certificates are entitled to interest payable on the
Class
MTR-1-A-9 Middle Tier REMIC Interest at a per annum rate equal
to
0.25%. For
each Distribution Date, the Class 1-A-10 Certificates are
entitled
to a specified portion of the interest payable on the Class
MTR-1-A-9
Middle Tier REMIC Interest. Specifically, for each
Distribution Date, the Class 1-A-10 Certificates are entitled
to
interest
payable on the Class MTR-1-A-9 Middle Tier REMIC Interest at a
per annum
rate equal to 5.35% minus LIBOR, but not less than 0.00%.
(3) This Class
of Middle Tier REMIC Interest pays no principal.
(4) For each
Distribution Date, the Class MTR-1-X Middle Tier REMIC Interest
is
entitled to all the interest payable with respect to the Class
LTR-X-1
Lower Tier REMIC Interest.
(5) For each
Distribution Date, the Class 2-A-6 Certificates are entitled to
a
specified portion of the interest payable on each of the Class
MTR-2-A-5
Middle Tier REMIC Interest. Specifically, for each
Distribution Date, the Class 2-A-6 Certificates are entitled to
interest
payable on
the Class MTR-2-A-5 Middle Tier REMIC Interest at a per annum
rate equal
to 6.60% minus LIBOR, but not less than 0.00%.
(6) For each
Distribution Date, the Class MTR-2-X Middle Tier REMIC Interest
is
entitled to all the interest payable with respect to the Class
LTR-X-2
Lower Tier REMIC Interest.
(7) For each
Distribution Date, the Class MTR-PO-1 Middle Tier REMIC
Interest
is entitled to all the principal payable with respect to the
Class
LTR-PO-1 Lower Tier REMIC Interest.
(8) This Class
of Middle Tier REMIC Interest pays no interest.
(9) The
Subordinate Pass-Through Rate.
(10) The MT-A-R is the
sole class of residual interest in the Middle Tier
REMIC. It
pays no interest or principal.
On each
Distribution Date, interest shall be payable on the Middle Tier
REMIC Interests according the formulas described above, and
principal,
Realized Losses and Subsequent Recoveries shall be allocated among
the Middle
Tier REMIC Interests in the same manner that such items are
allocated among
their corresponding Certificate Classes.
The
foregoing REMIC structure is intended to cause all of the cash
from
the Mortgage Loans to flow through to the Master REMIC as cash flow
on a REMIC
regular interest, without creating any shortfall-actual or
potential (other
than for credit losses) to any REMIC regular interest.
9
<PAGE>
Set forth
below are designations of Classes or Components of
Certificates and other defined terms to the categories used
herein:
Accretion Directed Certificates...... None.
Accretion Directed Components........ None.
Accrual Certificates................. None.
Accrual Components................... None.
Book-Entry Certificates.............. All Classes of Certificates
other than
the Physical Certificates.
COFI
Certificates................... None.
Combined Certificates................ None.
Component Certificates............... None.
Components........................... None.
Delay Certificates................... All interest-bearing Classes
of
Certificates other than the Non-Delay
Certificates, if any.
Depositable Certificates............. Class 1-A-1, Class 1-A-5,
Class 1-A-12
and Class 1-A-13 Certificates.
ERISA-Restricted Certificates........ The Residual Certificates and
Private
Certificates; until an ERISA-Qualifying
Underwriting has occurred with respect to
such Class, the Class PO-1, the Class 1-X
and the Class 2-X Certificates; and any
Certificate of a Class that does not have
or no longer has a rating of at least
BBB- or its equivalent from at least one
Rating Agency.
Exchangeable Certificates............ Class 1-A-14
Certificates.
Floating Rate Certificates........... Class 1-A-3, Class 1-A-9 and
Class 2-A-5
Certificates.
Group 1 Certificates................. Group 1 Senior Certificates
and the
portions of the Subordinated Certificates
related to
Loan Group 1.
Group 1 Senior Certificates.......... Class 1-A-1, Class 1-A-2,
Class 1-A-3,
Class 1-A-4, Class 1-A-5, Class 1-A-6,
Class 1-A-7, Class 1-A-8, Class 1-A-9,
Class 1-A-10, Class 1-A-11, Class 1-A-12,
Class 1-A-13, Class 1-A-14, Class 1-X,
Class PO-1 and Class A-R Certificates.
Group 2 Certificates................. Group 2 Senior Certificates
and the
portions of the Subordinated Certificates
related to Loan Group 2.
Group 2 Senior Certificates.......... Class 2-A-1, Class 2-A-2,
Class 2-A-3,
Class 2-A-4, Class 2-A-5, Class 2-A-6,
Class 2-A-7 and Class 2-X Certificates
10
<PAGE>
Inverse Floating Rate Certificates... Class 1-A-4, Class 1-A-10 and
Class 2-A-6
Certificates.
LIBOR Certificates................... The Floating Rate
Certificates and the
Inverse Floating Rate Certificates.
Non-Delay Certificates............... LIBOR Certificates.
Notional Amount Certificates......... Class 1-A-4, Class 1-A-8,
Class 1-A-10,
Class 2-A-6, Class 1-X and Class 2-X
Certificates.
Notional Amount Components........... None.
Offered Certificates................. All Classes of Certificates
other than
the Private Certificates.
Physical Certificates................ Private Certificates and the
Residual
Certificates.
Planned Principal Classes............ None.
Principal Only Certificates.......... Class PO-1 Certificates.
Private Certificates................. Class B-3, Class B-4 and
Class B-5
Certificates.
Rating Agencies...................... Fitch, S&P and
Moody's.
Regular Certificates................. All Classes of Certificates,
other than
the Residual Certificates.
Residual Certificates................ Class A-R Certificates.
Scheduled Principal Classes.......... None.
Senior Certificate Group............. The Group 1 Senior
Certificates and the
Group 2 Senior Certificates, as
applicable.
Senior Certificates.................. The Group 1 Senior
Certificates and
Group 2 Senior Certificates.
Subordinated Certificates............ Class M-1, Class M-2, Class
M-3, Class
M-4, Class B-1, Class B-2, Class B-3,
Class B-4 and Class B-5 Certificates.
Targeted Principal Classes........... None.
Underwriter.......................... Each of HSBC Securities (USA)
Inc.
(Senior) and Countrywide Securities
Corporation.
With
respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions
herein
relating solely to such designations shall be of no force or
effect, and any
calculations herein incorporating references to such designations
shall be
interpreted without reference to such designations and amounts.
Defined terms
and provisions herein relating to statistical rating agencies not
designated
above as Rating Agencies shall be of no force or effect.
11
<PAGE>
ARTICLE I
DEFINITIONS
SECTION
1.01. Defined Terms.
Whenever
used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following
meanings:
Account:
Any Escrow Account, the Certificate Account, the Distribution
Account, the Corridor Contract Reserve Fund or any other account
related to
the Trust Fund or the Mortgage Loans.
Accretion
Directed Certificates: As specified in the Preliminary
Statement.
Accretion
Direction Rule: Not applicable.
Accrual
Amount: With respect to any Class of Accrual Certificates or
any
Accrual Component and any Distribution Date prior to the related
Accrual
Termination Date, the amount allocable to interest on such Class of
Accrual
Certificates or Accrual Component with respect to such Distribution
Date
pursuant to Section 4.02(a).
Accrual
Certificates: As specified in the Preliminary Statement.
Accrual
Components: As specified in the Preliminary Statement.
Accrual
Termination Date: Not applicable.
Additional
Designated Information: As defined in Section 11.02.
Adjusted
Mortgage Rate: As to each Mortgage Loan, and at any time, the
per annum rate equal to the Mortgage Rate less the Master Servicing
Fee Rate.
Adjusted
Net Mortgage Rate: As to each Mortgage Loan, and at any time,
the per annum rate equal to the Mortgage Rate less the sum of the
Trustee Fee
Rate and the Master Servicing Fee Rate. For purposes of determining
whether
any Substitute Mortgage Loan is a Discount Mortgage Loan or a
Non-Discount
Mortgage Loan and for purposes of calculating the applicable PO
Percentage and
the applicable Non-PO Percentage, each Substitute Mortgage Loan
shall be
deemed to have an Adjusted Net Mortgage Rate equal to the Adjusted
Net
Mortgage Rate of the Deleted Mortgage Loan for which it is
substituted.
Advance:
As to a Loan Group, the payment required to be made by the
Master Servicer with respect to any Distribution Date pursuant to
Section
4.01, the amount of any such payment being equal to the aggregate
of payments
of principal and interest (net of the Master Servicing Fee) on the
Mortgage
Loans in such Loan Group that were due on the related Due Date and
not
received by the Master Servicer as of the close of business on the
related
Determination Date, together with an amount equivalent to interest
on each
Mortgage Loan as to which the related Mortgaged Property is an REO
Property
(net of any net income from such REO Property), less the aggregate
amount of
any such delinquent payments that the Master Servicer has
determined would
constitute a Nonrecoverable Advance, if advanced.
I-1
<PAGE>
Aggregate
Planned Balance: With respect to any group of Planned
Principal Classes or Components and any Distribution Date, the
amount set
forth for such group for such Distribution Date in Schedule V
hereto.
Aggregate
Scheduled Balance: With respect to any group of Scheduled
Principal Classes or Components and an Distribution Date, the
amount set forth
for such group for such Distribution Date in Schedule V hereto.
Aggregate
Targeted Balance: With respect to any group of Targeted
Principal Classes or Components and any Distribution Date, the
amount set
forth for such group for such Distribution Date in Schedule V
hereto.
Agreement:
This Pooling and Servicing Agreement and all amendments or
supplements hereto.
Allocable
Share: As to any Distribution Date and any Mortgage Loan (i)
with respect to the Class PO Certificates, zero, (ii) with respect
to the
Class 1-X and Class 2-X Certificates, (a) the ratio that the
excess, if any,
of the Adjusted Net Mortgage Rate with respect to such Mortgage
Loan, over the
related Required Coupon bears to such Adjusted Net Mortgage Rate or
(b) if the
Adjusted Net Mortgage Rate with respect to such Mortgage Loan does
not exceed
the related Required Coupon, zero and (iii) with respect to each
other Class
of Certificates the product of (a) the lesser of (I) the ratio that
the
related Required Coupon bears to the Adjusted Net Mortgage Rate of
such
Mortgage Loan and (II) one, multiplied by (b) the ratio that the
amount
calculated with respect to such Distribution Date (A) with respect
to the
Senior Certificates of the related Senior Certificate Group (other
than the
related Class PO Certificates (if any)), pursuant to clause (i) of
the
definition of Class Optimal Interest Distribution Amount (without
giving
effect to any reduction of such amount pursuant to Section 4.02(d))
and (B)
with respect to the Subordinated Certificates, pursuant to the
definition of
Assumed Interest Amount or after a Senior Termination Date pursuant
to clause
(i) of the definition of Class Optimal Interest Distribution Amount
(without
giving effect to any reduction of such amount pursuant to Section
4.02(d))
bears to the amount calculated with respect to such Distribution
Date for each
Class of Certificates pursuant to clause (i) of the definition of
Class
Optimal Interest Distribution Amount (without giving effect to any
reduction
of such amount pursuant to Section 4.02(d)) or the definition of
Assumed
Interest Amount, as applicable.
Amount
Available for Senior Principal: As to any Distribution Date and
(a) Loan Group 1, the Available Funds for such Distribution Date
and Loan
Group, reduced by the aggregate amount distributable (or allocable
to the
Accrual Amount, if applicable) on such Distribution Date in respect
of
interest on the related Senior Certificates pursuant to Section
4.02(a)(1)(ii)
and (b) Loan Group 2, the Available Funds for such Distribution
Date and Loan
Group, reduced by the aggregate amount distributable (or allocable
to the
Accrual Amount, if applicable) on such Distribution Date in respect
of
interest on the related Senior Certificates pursuant to Section
4.02(a)(2)(ii).
Amount
Held for Future Distribution: As to any Distribution Date and
Mortgage Loans in a Loan Group, the aggregate amount held in the
Certificate
Account at the close of business on the related Determination Date
on account
of (i) Principal Prepayments received after the related Prepayment
Period and
Liquidation Proceeds and Subsequent Recoveries received in the
month of such
Distribution Date relating to such Loan Group and (ii) all
Scheduled Payments
due after the related Due Date relating to such Loan Group.
Applicable
Credit Support Percentage: As defined in Section 4.02(e).
I-2
<PAGE>
Appraised
Value: With respect to any Mortgage Loan, the Appraised Value
of the related Mortgaged Property shall be: (i) with respect to a
Mortgage
Loan other than a Refinancing Mortgage Loan, the lesser of (a) the
value of
the Mortgaged Property based upon the appraisal made at the time of
the
origination of such Mortgage Loan and (b) the sale price of the
Mortgaged
Property at the time of the origination of such Mortgage Loan; (ii)
with
respect to a Refinancing Mortgage Loan other than a Streamlined
Documentation
Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal
made-at the time of the origination of such Refinancing Mortgage
Loan; and
(iii) with respect to a Streamlined Documentation Mortgage Loan,
(a) if the
loan-to-value ratio with respect to the Original Mortgage Loan at
the time of
the origination thereof was 80% or less and the loan amount of the
new
mortgage loan is $650,000 or less, the value of the Mortgaged
Property based
upon the appraisal made at the time of the origination of the
Original
Mortgage Loan and (b) if the loan-to-value ratio with respect to
the Original
Mortgage Loan at the time of the origination thereof was greater
than 80% or
the loan amount of the new loan being originated is greater than
$650,000, the
value of the Mortgaged Property based upon the appraisal (which may
be a
drive-by appraisal) made at the time of the origination of such
Streamlined
Documentation Mortgage Loan.
Assumed
Balance: For a Distribution Date and Loan Group, an amount
equal
to the Subordinated Percentage for that Distribution Date relating
to that
Loan Group of the aggregate of the applicable Non-PO Percentage of
the Stated
Principal Balance of each Mortgage Loan in such Loan Group as of
the Due Date
occurring in the month prior to the month of that Distribution Date
(after
giving effect to Principal Prepayments received in the Prepayment
Period
related to such Due Date).
Assumed
Interest Amount: With respect to any Distribution Date and
Class
of Subordinated Certificates, one month's interest accrued during
the related
Interest Accrual Period at the Pass-Through Rate for such Class on
the
applicable Assumed Balance immediately prior to that Distribution
Date.
Available
Funds: As to any Distribution Date and the Mortgage Loans in a
Loan Group, the sum of (a) the aggregate amount held in the
Certificate
Account at the close of business on the related Determination Date,
including
any Subsequent Recoveries, in respect of such Mortgage Loans, net
of the
related Amount Held for Future Distribution and net of amounts
permitted to be
withdrawn from the Certificate Account pursuant to clauses (i) -
(viii),
inclusive, of Section 3.08(a) in respect of such Mortgage Loans and
amounts
permitted to be withdrawn from the Distribution Account pursuant to
clauses
(i) - (v), inclusive, of Section 3.08(b) in respect of such
Mortgage Loans,
(b) the amount of the related Advance and (c) in connection with
Defective
Mortgage Loans in such Loan Group, as applicable, the aggregate of
the
Purchase Prices and Substitution Adjustment Amounts deposited on
the related
Distribution Account Deposit Date; provided, however, that on a
Senior
Termination Date, Available Funds with respect to the Loan Group
relating to
the remaining Senior Certificate Group shall include the Available
Funds from
the other Loan Groups after all distributions are made on the
Senior
Certificates of the other Senior Certificate Group or Groups and on
any
Distribution Date thereafter, Available Funds shall be calculated
based upon
all the Mortgage Loans in the Mortgage Pool, as opposed to the
Mortgage Loans
in the related Loan Group.
Bankruptcy
Code: The United States Bankruptcy Reform Act of 1978, as
amended.
Book-Entry
Certificates: As specified in the Preliminary Statement.
Business
Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in the City of New York, New
York, or the
States of California or Texas or the city in which the Corporate
Trust Office
of the Trustee is located are authorized or obligated by law or
executive
order to be closed.
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<PAGE>
Calculation Rate: For each Distribution Date, the product of (i) 10
and
(ii) the weighted average rate of the outstanding Class A and Class
B
Interests, treating each Class A Interest as having an interest
rate of 0.00%
per annum.
Ceiling
Rate: With respect to each Class of Covered Certificates, the
percentages set forth below.
Class of Certificates
Ceiling Rate
-----------------------
--------------
-------------------------------------------
---------------------
Class
1-A-3 Certificates
8.95%
-------------------------------------------
---------------------
Class
1-A-9 Certificates
9.10%
-------------------------------------------
---------------------
Certificate: Any one of the Certificates executed by the Trustee
in
substantially the forms attached hereto as exhibits.
Certificate Account: The separate Eligible Account or Accounts
created
and maintained by the Master Servicer pursuant to Section 3.05 with
a
depository institution, initially Countrywide Bank, N.A., in the
name of the
Master Servicer for the benefit of the Trustee on behalf of
Certificateholders
and designated "Countrywide Home Loans Servicing LP, in trust for
the
registered holders of Alternative Loan Trust 2006-40T1, Mortgage
Pass-Through
Certificates, Series 2006-40T1."
Certificate Balance:
With respect to any Certificate at any date (other
than the Notional Amount Certificates), the maximum dollar amount
of principal
to which the Holder thereof is then entitled hereunder, such amount
being
equal to the Denomination thereof (A) plus any increase in the
Certificate
Balance of each Certificate pursuant to Section 4.02 due to the
receipt of
Subsequent Recoveries, (B) minus the sum of (i) all distributions
of principal
previously made with respect thereto and (ii) all Realized Losses
allocated
thereto and, in the case of the Subordinated Certificates, all
other
reductions in Certificate Balance previously allocated thereto
pursuant to
Section 4.04 and (C) in the case of any Class of Accrual
Certificates,
increased by the Accrual Amount added to the Class Certificate
Balance of such
Class prior to such date. The Notional Amount Certificates have no
Certificate
Balances.
Certificate Group: The Group 1 Certificates or the Group 2
Certificates,
as the context requires.
Certificate
Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate. For the
purposes
of this Agreement, in order for a Certificate Owner to enforce any
of its
rights hereunder, it shall first have to provide evidence of its
beneficial
ownership interest in a Certificate that is reasonably satisfactory
to the
Trustee, the Depositor, and/or the Master Servicer, as
applicable.
Certificate Register: The register maintained pursuant to Section
5.02
hereof.
Certificateholder or Holder: The person in whose name a Certificate
is
registered in the Certificate Register, except that, solely for the
purpose of
giving any consent pursuant to this Agreement, any Certificate
registered in
the name of the Depositor or any affiliate of the Depositor shall
be deemed
not to be Outstanding and the Percentage Interest evidenced thereby
shall not
be taken into account in determining whether the requisite amount
of
Percentage Interests necessary to effect such consent has been
obtained;
provided, however, that if any such Person (including the
Depositor) owns 100%
of the
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<PAGE>
Percentage Interests evidenced by a Class of Certificates, such
Certificates
shall be deemed to be Outstanding for purposes of any provision
hereof (other
than the second sentence of Section 10.01 hereof) that requires the
consent of
the Holders of Certificates of a particular Class as a condition to
the taking
of any action hereunder. The Trustee is entitled to rely
conclusively on a
certification of the Depositor or any affiliate of the Depositor
in
determining which Certificates are registered in the name of an
affiliate of
the Depositor.
Certification Party: As defined in Section 11.05.
Certifying
Person: As defined in Section 11.05.
Class: All
Certificates bearing the same class designation as set forth
in the Preliminary Statement.
Class
Certificate Balance: With respect to any Class and as to any
date
of determination, the aggregate of the Certificate Balances of
all
Certificates of such Class as of such date.
Class
Interest Shortfall: As to any Distribution Date and Class, the
amount by which the amount described in clause (i) of the
definition of Class
Optimal Interest Distribution Amount for such Class exceeds the
amount of
interest actually distributed on such Class on such Distribution
Date pursuant
to such clause (i).
Class
Optimal Interest Distribution Amount: With respect to any
Distribution Date and interest bearing Class or, with respect to
any
interest-bearing Component, the sum of (i) one month's interest
accrued during
the related Interest Accrual Period at the Pass-Through Rate for
such Class on
the related Class Certificate Balance, Component Balance, Notional
Amount or
Component Notional Amount, as applicable, immediately prior to
such
Distribution Date, subject to reduction as provided in Section
4.02(d) and
(ii) any Class Unpaid Interest Amounts for such Class or
Component.
Class PO
Certificates: Class PO-1 Certificates
Class PO
Component: None.
Class PO
Deferred Amount: As to any Distribution Date and Loan Group,
the aggregate of the applicable PO Percentage of each Realized Loss
on a
Discount Mortgage Loan in that Loan Group to be allocated to the
related Class
PO Certificates (if any) on such Distribution Date on or prior to
the Senior
Credit Support Depletion Date or previously allocated to such Class
PO
Certificates (if any) and not yet paid to the Holders of the Class
PO
Certificates (if any).
Class
Subordination Percentage: With respect to any Distribution Date
and each Class of Subordinated Certificates, the quotient
(expressed as a
percentage) of (a) the Class Certificate Balance of such Class of
Subordinated
Certificates immediately prior to such Distribution Date divided by
(b) the
aggregate of the Class Certificate Balances immediately prior to
such
Distribution Date of all Classes of Certificates.
Class
Unpaid Interest Amounts: As to any Distribution Date and Class
of
interest bearing Certificates, the amount by which the aggregate
Class
Interest Shortfalls for such Class on prior Distribution Dates
exceeds the
amount distributed on such Class on prior Distribution Dates
pursuant to
clause (ii) of the definition of Class Optimal Interest
Distribution Amount.
Closing
Date: November 29, 2006.
I-5
<PAGE>
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions
COFI: The
Monthly Weighted Average Cost of Funds Index for the Eleventh
District Savings Institutions published by the Federal Home Loan
Bank of San
Francisco.
COFI
Certificates: As specified in the Preliminary Statement.
Commission: The U.S. Securities and Exchange Commission.
Combined
Certificates: As specified in the Preliminary Statement.
Combined
Certificates Payment Rule: Not applicable.
Compensating Interest: As to any Distribution Date and Loan Group
an
amount equal to the product of one-twelfth of 0.125% and the
aggregate Stated
Principal Balance of the Mortgage Loans in such Loan Group as of
the Due Date
in the prior calendar month.
Component:
As specified in the Preliminary Statement.
Component Balance:
With respect to any Component and any Distribution
Date, the Initial Component Balance thereof on the Closing Date,
(A) plus any
increase in the Component Balance of such Component pursuant to
Section 4.02
due to the receipt of Subsequent Recoveries, (B) minus the sum of
all amounts
applied in reduction of the principal balance of such Component and
Realized
Losses allocated thereto on previous Distribution Dates.
Component
Certificates: As specified in the Preliminary Statement.
Component
Notional Amount: Not applicable.
Confirmation: With respect to the Class 1-A-3 Certificates, the
confirmation (reference number: FXNEC8895), dated November 29,
2006,
evidencing a transaction between the Corridor Contract Counterparty
and the
Supplemental Interest Trustee. With respect to the Class 1-A-9
Certificates,
the confirmation (reference number: FXNEC8916), dated November 29,
2006,
evidencing a transaction between the Corridor Contract Counterparty
and the
Supplemental Interest Trustee.
Coop
Shares: Shares issued by a Cooperative Corporation.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and
improvements
constituting the Cooperative Property and which governs the
Cooperative
Property, which Cooperative Corporation must qualify as a
Cooperative Housing
Corporation under Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Coop Shares and
a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by
the
Cooperative Corporation, including the allocation of individual
dwelling units
to the holders of the Coop Shares of the Cooperative
Corporation.
Cooperative Unit: A single family dwelling located in a
Cooperative
Property.
I-6
<PAGE>
Corporate
Trust Office: The designated office of the Trustee in the
State of New York at which at any particular time its corporate
trust business
with respect to this Agreement shall be administered, which office
at the date
of the execution of this Agreement is located at 101 Barclay
Street, 4W, New
York, New York 10286 (Attn: Mortgage-Backed Securities Group,
CWALT, Inc.
Series 2006-40T1), facsimile no. (212) 815-3986, and which is the
address to
which notices to and correspondence with the Trustee should be
directed.
Corridor
Contract: With respect to each Class of Covered Certificates,
the transaction evidenced by the related Confirmation, a form of
which is
attached hereto as Exhibit R.
Corridor
Contract Counterparty: Bear Stearns Financial Products Inc.
Corridor
Contract Reserve Fund: The separate fund created and initially
maintained by the Supplemental Interest Trustee pursuant to Section
3.05(g) in
the name of the Supplemental Interest Trustee for the benefit of
the Holders
of the Covered Certificates and designated "The Bank of New York in
trust for
registered holders of CWALT, Inc., Alternative Loan Trust
2006-40T1, Mortgage
Pass-Through Certificates, Series 2006-40T1." Funds in the Corridor
Contract
Reserve Fund shall be held in trust for the Holders of the
Covered
Certificates for the uses and purposes set forth in this Agreement.
For all
federal income tax purposes, the Corridor Contract Reserve Fund
will be
beneficially owned by the Underwriter (Senior).
Corridor
Contract Scheduled Termination Date: For the Class 1-A-3
Certificates, the Distribution Date in July 2014. For the Class
1-A-9
Certificates, the Distribution Date in October 2013.
Countrywide: Countrywide Home Loans, Inc., a New York corporation,
and
its successors and assigns in its capacity as the seller of the
Countrywide
Mortgage Loans to the Depositor.
Countrywide Mortgage Loans: The Mortgage Loans identified as such
on the
Mortgage Loan Schedule for which Countrywide is the applicable
Seller.
Covered
Certificates: The Class 1-A-3 and Class 1-A-9 Certificates.
Cross-Over
Situation: For any Distribution Date and for each Loan Group
(after taking into account principal distributions on such
Distribution Date)
with respect to the Class A and Class B Lower Tier REMIC Interests,
a
situation in which the Class A and Class B Interests corresponding
to any Loan
Group are in the aggregate less than 1% of the Subordinated Portion
of the
Loan Group to which they correspond.
Cut-off
Date: In the case of any Mortgage Loan, the later of (i) the
date of origination of such Mortgage Loan and (ii) November 1,
2006.
Cut-off
Date Pool Principal Balance: $599,978,354.12.
Cut-off
Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on 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 which became final
and
non-appealable, except such a reduction resulting from a Deficient
Valuation
or any reduction that results in a permanent forgiveness of
principal.
I-7
<PAGE>
Defective
Mortgage Loan: Any Mortgage Loan which is required to be
repurchased pursuant to Section 2.02 or 2.03.
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 the Mortgage Loan, or
any
reduction in the amount of principal to be paid in connection with
any
Scheduled Payment that results in a permanent forgiveness of
principal, which
valuation or reduction results from an order of such court which is
final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive
Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry
Certificate
pursuant to Section 5.02(e).
Delay
Certificates: As specified in the Preliminary Statement.
Delay
Delivery Certification: As defined in Section 2.02(a) hereof.
Delay
Delivery Mortgage Loans: The Mortgage Loans for which all or a
portion of a related Mortgage File is not delivered to the Trustee
on the
Closing Date. The number of Delay Delivery Mortgage Loans shall not
exceed 50%
of the aggregate number of Mortgage Loans in each Loan Group as of
the Closing
Date. To the extent that Countrywide Home Loans Servicing LP shall
be in
possession of any Mortgage Files with respect to any Delay Delivery
Mortgage
Loan, until delivery of such Mortgage File to the Trustee as
provided in
Section 2.01, Countrywide Home Loans Servicing LP shall hold such
files as
Master Servicer hereunder, as agent and in trust for the
Trustee.
Deleted
Mortgage Loan: As defined in Section 2.03(c) hereof
Denomination: With respect to each Certificate, the amount set
forth on
the face thereof as the "Initial Certificate Balance of this
Certificate" or
the "Initial Notional Amount of this Certificate" or, if neither of
the
foregoing, the Percentage Interest appearing on the face
thereof.
Depositable Certificate: As specified in the Preliminary
Statement.
Depositor:
CWALT, Inc., a Delaware corporation, or its successor in
interest.
Depository: The initial Depository shall be The Depository
Trust
Company, the nominee of which is CEDE & Co., as the registered
Holder of the
Book-Entry Certificates. The Depository shall at all times be a
"clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform
Commercial Code
of the State of New York.
Depository
Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: As to any Distribution Date, the 22nd day of
each
month or if such 22nd day is not a Business Day the next preceding
Business
Day; provided, however, that if such 22nd day or such Business Day,
whichever
is applicable, is less than two Business Days prior to the
related
Distribution Date, the Determination Date shall be the first
Business Day
which is two Business Days preceding such Distribution Date.
I-8
<PAGE>
Discount
Mortgage Loan: Any Mortgage Loan in a Loan Group with an
Adjusted Net Mortgage Rate that is less than the Required Coupon
for that Loan
Group.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of
the Trustee
for the benefit of the Certificateholders and designated "The Bank
of New York
in trust for registered holders of Alternative Loan Trust
2006-40T1, Mortgage
Pass-Through Certificates, Series 2006-40T1." Funds in the
Distribution
Account shall be held in trust for the Certificateholders for the
uses and
purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:30
p.m. Pacific time on the Business Day immediately preceding such
Distribution
Date.
Distribution Date: The 25th day of each calendar month after the
initial
issuance of the Certificates, or if such 25th day is not a Business
Day, the
next succeeding Business Day, commencing in December 2006.
Due Date:
With respect to any Distribution Date, the related Due Date is
the first day of the month in which that Distribution Date
occurs.
EDGAR: The
Commission's Electronic Data Gathering, Analysis and
Retrieval system.
Eligible
Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company,
the
short-term unsecured debt obligations of which (or, in the case of
a
depository institution or trust company that is the principal
subsidiary of a
holding company, the debt obligations of such holding company) have
the
highest short-term ratings of Moody's or Fitch and one of the two
highest
short-term ratings of S&P, if S&P is a Rating Agency, at
the time any amounts
are held on deposit therein, or (ii) an account or accounts in a
depository
institution or trust company in which such accounts are insured by
the FDIC
(to the limits established by the FDIC) and the uninsured deposits
in which
accounts are otherwise secured such that, as evidenced by an
Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such
account or a
perfected first priority security interest against any collateral
(which shall
be limited to Permitted Investments) securing such funds that is
superior to
claims of any other depositors or creditors of the depository
institution or
trust company in which such account is maintained, or (iii) a trust
account or
accounts maintained with (a) the trust department of a federal or
state
chartered depository institution or (b) a trust company, acting in
its
fiduciary capacity or (iv) any other account acceptable to each
Rating Agency.
Eligible Accounts may bear interest, and may include, if otherwise
qualified
under this definition, accounts maintained with the Trustee.
Eligible
Repurchase Month: As defined in Section 3.11 hereof.
ERISA: The
Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that meets the requirements of
the
Underwriter's Exemption.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
ES Grantor
Trust: The separate trust created under this Agreement
pursuant to Section 3.05(h).
I-9
<PAGE>
Escrow
Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.06(a) hereof.
Event of
Default: As defined in Section 7.01 hereof.
Excess
Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds
received with
respect to such Mortgage Loan during the calendar month in which
such Mortgage
Loan became a Liquidated Mortgage Loan plus any Subsequent
Recoveries received
with respect to such Mortgage Loan, net of any amounts previously
reimbursed
to the Master Servicer as Nonrecoverable Advance(s) with respect to
such
Mortgage Loan pursuant to Section 3.08(a)(iii), exceeds (i) the
unpaid
principal balance of such Liquidated Mortgage Loan as of the Due
Date in the
month in which such Mortgage Loan became a Liquidated Mortgage Loan
plus (ii)
accrued interest at the Mortgage Rate from the Due Date as to which
interest
was last paid or advanced (and not reimbursed) to
Certificateholders up to the
Due Date applicable to the Distribution Date immediately following
the
calendar month during which such liquidation occurred.
Exchange
Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Exchange
Act Reports: Any reports on Form 10-D, Form 8-K and Form 10-K
required to be filed by the Depositor with respect to the Trust
Fund under the
Exchange Act.
Exchange
Fee: As defined in Section 5.02(e).
Exchangeable Certificate: As specified in the Preliminary
Statement.
Expense
Rate: As to each Mortgage Loan, the sum of the Master Servicing
Fee Rate and the Trustee Fee Rate.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The
Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under
Title III of
the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Final
Certification: As defined in Section 2.02(a) hereof.
FIRREA:
The Financial Institutions Reform, Recovery, and Enforcement
Act
of 1989.
Fitch:
Fitch, Inc., or any successor thereto. If Fitch is designated
as
a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b)
the address for notices to Fitch shall be Fitch, Inc., One State
Street Plaza,
New York, New York 10004, Attention: Residential Mortgage
Surveillance Group,
or such other address as Fitch may hereafter furnish to the
Depositor and the
Master Servicer.
FNMA: The
Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the
Federal
National Mortgage Association Charter Act, or any successor
thereto.
Form 10-D
Disclosure Item: With respect to any Person, any material
litigation or governmental proceedings pending against such Person,
or against
any of the Trust Fund, the Depositor,
I-10
<PAGE>
the Trustee, the co-trustee, the Master Servicer or any Subservicer
if such
Person has actual knowledge thereof.
Form 10-K
Disclosure Item: With respect to any Person, (a) any Form 10-D
Disclosure Item and (b) any affiliations or relationships between
such Person
and any Item 1119 Party.
Grantor
Trust: A trust described in Section 671 of the Code, the items
of income, deductions and credits of which must be included in
computing the
taxable income and credits of the person treated as the owner of
such trust
(either the grantor or other person designated under the Code).
Group 1
Mortgage Loans: The Mortgage Loans in Loan Group 1.
Group 1
Priority Amount: For any Distribution Date, an amount equal to
the sum of (i) the product of (A) the Scheduled Principal
Distribution Amount
for Loan Group 1, (B) the Shift Percentage and (C) the Group 1
Priority
Percentage and (ii) the product of (A) the Unscheduled Principal
Distribution
Amount for Loan Group 1, (B) the Prepayment Shift Percentage and
(C) the Group
1 Priority Percentage.
Group 1
Priority Percentage: As to any Distribution Date, the
percentage
equivalent of a fraction, the numerator of which is the aggregate
Class
Certificate Balance of the Class 1-A-1 and Class 1-A-13
Certificates
immediately prior to such Distribution Date, and the denominator of
which is
the Non-PO Pool Balance for Loan Group 1 as of the Due Date in the
month
preceding the month of such Distribution Date (after giving effect
to
Principal Prepayments on the Mortgage Loans in Loan Group 1
received in the
Prepayment Period related to the prior Due Date).
Group 1
Senior Certificates: As specified in the Preliminary Statement.
Group 2
Mortgage Loans: The Mortgage Loans in Loan Group 2.
Group 2
Priority Amount: For any Distribution Date, an amount equal to
the sum of (i) the product of (A) the Scheduled Principal
Distribution Amount
for Loan Group 2, (B) the Shift Percentage and (C) the Group 2
Priority
Percentage and (ii) the product of (A) the Unscheduled Principal
Distribution
Amount for Loan Group 2, (B) the Prepayment Shift Percentage and
(C) the Group
2 Priority Percentage.
Group 2
Priority Percentage: As to any Distribution Date, the
percentage
equivalent of a fraction, the numerator of which is the aggregate
Class
Certificate Balance of the Class 2-A-4 and Class 2-A-7
Certificates
immediately prior to such Distribution Date, and the denominator of
which is
the Non-PO Pool Balance for Loan Group 2 as of the Due Date in the
month
preceding the month of such Distribution Date (after giving effect
to
Principal Prepayments on the Mortgage Loans in Loan Group 2
received in the
Prepayment Period related to the prior Due Date).
Group 2
Senior Certificates: As specified in the Preliminary Statement.
Index:
With respect to any Interest Accrual Period for the COFI
Certificates, if any, the then-applicable index used by the Trustee
pursuant
to Section 4.07 to determine the applicable Pass-Through Rate for
such
Interest Accrual Period for the COFI Certificates.
Indirect
Participant: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a
custodial
relationship with a Depository Participant.
I-11
<PAGE>
Initial
Certification: As defined in Section 2.02(a) hereof.
Initial
Component Balance: As specified in the Preliminary Statement.
Insurance
Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and
endorsements
thereto in effect, including any replacement policy or policies for
any
Insurance Policies.
Insurance
Proceeds: Proceeds paid by an insurer pursuant to any
Insurance Policy, in each case other than any amount included in
such
Insurance Proceeds in respect of Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest
Accrual Period: With respect to each Class of Delay
Certificates, its corresponding Lower Tier REMIC Regular Interest
and any
Distribution Date, the calendar month prior to the month of such
Distribution
Date. With respect to any Class of Non-Delay Certificates, its
corresponding
Lower Tier REMIC Regular Interest and any Distribution Date, the
one month
period commencing on the 25th day of the month preceding the month
in which
such Distribution Date occurs and ending on the 24th day of the
month in which
such Distribution Date occurs.
Interest
Determination Date: With respect to (a) any Interest Accrual
Period for any LIBOR Certificates and (b) any Interest Accrual
Period for the
COFI Certificates for which the applicable Index is LIBOR, the
second Business
Day prior to the first day of such Interest Accrual Period.
Item 1119
Party: The Depositor, any Seller, the Master Servicer, the
Trustee, any Subservicer, any originator identified in the
Prospectus
Supplement, the Corridor Contract Counterparty and any other
material
transaction party, as identified in Exhibit X hereto, as updated
pursuant to
Section 11.04.
Latest
Possible Maturity Date: The Distribution Date following the
third
anniversary of the scheduled maturity date of the Mortgage Loan
having the
latest scheduled maturity date as of the Cut-off Date.
Lender PMI
Mortgage Loan: Certain Mortgage Loans as to which the lender
(rather than the borrower) acquires the Primary Insurance Policy
and charges
the related borrower an interest premium.
LIBOR: The
London interbank offered rate for one-month United States
dollar deposits calculated in the manner described in Section
4.08.
Limited
Exchange Act Reporting Obligations: The obligations of the
Master Servicer under Section 3.16(b), Section 6.02 and Section
6.04 with
respect to notice and information to be provided to the Depositor
and Article
XI (except Section 11.07(a)(1) and (2)).
LIBOR
Certificates: As specified in the Preliminary Statement.
Liquidated
Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was
liquidated in
the calendar month preceding the month of such Distribution Date
and as to
which the Master Servicer has determined (in accordance with
this
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<PAGE>
Agreement) that it has received all amounts it expects to receive
in
connection with the liquidation of such Mortgage Loan, including
the final
disposition of an REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in
connection with the partial or complete liquidation of defaulted
Mortgage
Loans, whether through trustee's sale, foreclosure sale or
otherwise or
amounts received in connection with any condemnation or partial
release of a
Mortgaged Property and any other proceeds received in connection
with an REO
Property, less the sum of related unreimbursed Master Servicing
Fees,
Servicing Advances and Advances.
Loan
Group: Any of Loan Group 1 or Loan Group 2, as applicable.
Loan Group
1: All Mortgage Loans identified as Group 1 Mortgage Loans on
the Mortgage Loan Schedule.
Loan Group
2: All Mortgage Loans identified as Group 2 Mortgage Loans on
the Mortgage Loan Schedule
Loan Group
Principal Balance: As to any Distribution Date and Loan
Group, the aggregate Stated Principal Balance of the Mortgage Loans
in that
Loan Group as of the Due Date in the month preceding the month of
the
Distribution Date (after giving effect to Principal Prepayments
received in
the Prepayment Period related to such Due Date).
Loan-to-Value Ratio: With respect to any Mortgage Loan and as to
any
date of determination, the fraction (expressed as a percentage) the
numerator
of which is the principal balance of the related Mortgage Loan at
such date of
determination and the denominator of which is the Appraised Value
of the
related Mortgaged Property.
Lost
Mortgage Note: Any Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Lower Tier
REMIC: As specified in the Preliminary Statement.
Lower Tier
REMIC Interest: As specified in the Preliminary Statement.
Lower Tier
REMIC Regular Interest: As specified in the Preliminary
Statement.
LTR-A-R
Interest: As specified in the Preliminary Statement.
Maintenance: With respect to any Cooperative Unit, the rent paid by
the
Mortgagor to the Cooperative Corporation pursuant to the
Proprietary Lease.
Majority
in Interest: As to any Class of Regular Certificates, the
Holders of Certificates of such Class evidencing, in the aggregate,
at least
51% of the Percentage Interests evidenced by all Certificates of
such Class.
Master
REMIC: As described in the Preliminary Statement
Master Servicer:
Countrywide Home Loans Servicing LP, a Texas limited
partnership, and its successors and assigns, in its capacity as
master
servicer hereunder.
Master
Servicer Advance Date: As to any Distribution Date, 12:30 p.m.
Pacific time on the Business Day immediately preceding such
Distribution Date.
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<PAGE>
Master
Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount payable out of each full payment of interest
received on such
Mortgage Loan and equal to one-twelfth of the Master Servicing Fee
Rate
multiplied by the Stated Principal Balance of such Mortgage Loan as
of the Due
Date in the month preceding the month of such Distribution Date,
subject to
reduction as provided in Section 3.14.
Master
Servicing Fee Rate: With respect to each Mortgage Loan, 0.200%
per annum.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or
any
successor thereto.
MERS
Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS
System
MERS (R)
System: The system of recording transfers of mortgages
electronically maintained by MERS.
Middle
Tier REMIC: As specified in the Preliminary Statement.
Middle
Tier REMIC Interest: As specified in the Preliminary Statement.
MIN: The
Mortgage Identification Number for any MERS Mortgage Loan.
MOM Loan:
Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its
successors
and assigns.
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.06.
Moody's:
Moody's Investors Service, Inc., or any successor thereto. If
Moody's is designated as a Rating Agency in the Preliminary
Statement, for
purposes of Section 10.05(b) the address for notices to Moody's
shall be
Moody's Investors Service, Inc., 99 Church Street, New York, New
York 10007,
Attention: Residential Pass-Through Monitoring, or such other
address as
Moody's may hereafter furnish to the Depositor or the Master
Servicer.
Mortgage:
The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple or leasehold interest in real
property
securing a Mortgage Note.
Mortgage
File: The mortgage documents listed in Section 2.01 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 as from time to time are
transferred and assigned to the Trustee pursuant to the provisions
hereof and
that 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.
Mortgage
Loan Schedule: The list of Mortgage Loans (as from time to time
amended by the Master Servicer to reflect the addition of
Substitute Mortgage
Loans and the deletion of Deleted Mortgage Loans pursuant to the
provisions of
this Agreement) transferred to the Trustee as part of the
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<PAGE>
Trust Fund and from time to time subject to this Agreement,
attached hereto as
Schedule I, setting forth the following information with respect to
each
Mortgage Loan by Loan Group:
(i) the
loan number;
(ii) the
Mortgagor's name and the street address of the
Mortgaged Property, including the zip code;
(iii) the maturity
date;
(iv) the
original principal balance;
(v) the
Cut-off Date Principal Balance;
(vi) the first
payment date of the Mortgage Loan;
(vii) the Scheduled
Payment in effect as of the Cut-off
Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code
indicating whether the residential dwelling at
the time of origination was represented to be
owner-occupied;
(x) a code
indicating whether the residential dwelling is
either (a) a detached single family dwelling (b) a
dwelling in a de minimis PUD, (c) a condominium unit
or PUD (other than a de minimis PUD), (d) a two- to
four-unit residential property or (e) a Cooperative
Unit;
(xi) the
Mortgage Rate;
(xii) a code
indicating whether the Mortgage Loan is a
Countrywide Mortgage Loan, a Park Granada Mortgage
Loan, a Park Monaco Mortgage Loan or a Park Sienna
Mortgage Loan;
(xiii) a code indicating whether the Mortgage Loan is a
Lender PMI Mortgage Loan and, in the case of any
Lender PMI Mortgage Loan, a percentage representing
the amount of the related interest premium charged to
the borrower;
(xiv) the purpose for
the Mortgage Loan;
(xv) the type of
documentation program pursuant to which
the Mortgage Loan was originated;
(xvi) [Reserved];
and
(xvii) a code indicating whether the Mortgage Loan is a MERS
Mortgage Loan.
Such
schedule shall also set forth the total of the amounts
described
under (iv) and (v) above for all of the Mortgage Loans and for each
Loan Group
and in the aggregate.
Mortgage
Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
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<PAGE>
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note from
time to time, net of any interest premium charged by the mortgagee
to obtain
or maintain any Primary Insurance Policy.
Mortgaged
Property: The underlying property securing a Mortgage Loan,
which, with respect to a Cooperative Loan, is the related Coop
Shares and
Proprietary Lease.
Mortgagor:
The obligor(s) on a Mortgage Note.
MTR-A-R
Interest: As specified in the Preliminary Statement.
National
Cost of Funds Index: The National Monthly Median Cost of Funds
Ratio to SAIF-Insured Institutions published by the Office of
Thrift
Supervision.
Net
Prepayment Interest Shortfalls: As to any Distribution Date and
Loan
Group, the amount by which the aggregate of the Prepayment Interest
Shortfalls
for such Loan Group exceeds the sum of (a) the Compensating
Interest for such
Loan Group and Distribution Date and (b) the excess, if any, of
the
Compensating Interest for the other Loan Group for such
Distribution Date over
the Prepayment Interest Shortfalls experienced by the Mortgage
Loans in such
other Loan Group.
Non-Delay
Certificates: As specified in the Preliminary Statement.
Non-Discount Mortgage Loan: Any Mortgage Loan in a Loan Group with
an
Adjusted Net Mortgage Rate that is greater than or equal to the
Required
Coupon for such Loan Group.
Non-PO
Formula Principal Amount: As to any Distribution Date and Loan
Group, the sum of (i) the sum of the applicable Non-PO Percentage
of (a) the
principal portion of each Scheduled Payment (without giving effect
to any
reductions thereof caused by any Debt Service Reductions or
Deficient
Valuations) due on each Mortgage Loan in the related Loan Group on
the related
Due Date, (b) the Stated Principal Balance of each Mortgage Loan in
the
related Loan Group that was repurchased by a Seller or purchased by
the Master
Servicer pursuant to this Agreement as of such Distribution Date,
(c) the
Substitution Adjustment Amount in connection with any Deleted
Mortgage Loan in
such Loan Group received with respect to such Distribution Date,
(d) any
Insurance Proceeds or Liquidation Proceeds allocable to recoveries
of
principal of Mortgage Loans in the related Loan Group that are not
yet
Liquidated Mortgage Loans received during the calendar month
preceding the
month of such Distribution Date, (e) with respect to each Mortgage
Loan in a
Loan Group that became a Liquidated Mortgage Loan during the
calendar month
preceding the month of such Distribution Date, the amount of the
Liquidation
Proceeds allocable to principal received during the calendar month
preceding
the month of such Distribution Date with respect to such Mortgage
Loan and (f)
all Principal Prepayments for such Loan Group received during the
related
Prepayment Period and (ii) (A) any Subsequent Recoveries received
on the
Mortgage Loans in that Loan Group during the calendar month
preceding the
month of such Distribution Date, or (B) with respect to Subsequent
Recoveries
attributable to a Discount Mortgage Loan in such Loan Group which
incurred a
Realized Loss after the Senior Credit Support Depletion Date, the
Non-PO
Percentage of any such Subsequent Recoveries received during the
calendar
month preceding the month of such Distribution Date.
Non-PO
Percentage: As to any Discount Mortgage Loan in a Loan Group, a
fraction (expressed as a percentage) the numerator of which is the
Adjusted
Net Mortgage Rate of such Discount Mortgage Loan and the
denominator of which
is the Required Coupon for such Loan Group. As to any Non-Discount
Mortgage
Loan, 100%.
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<PAGE>
Non-PO
Pool Balance: As to any Loan Group and any Due Date, the
excess,
if any, of (i) the aggregate Stated Principal Balance of all
Mortgage Loans in
the related Loan Group over (ii) the sum of the PO Percentage of
the Stated
Principal Balance of each Discount Mortgage Loan in that Loan
Group.
Nonrecoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Master Servicer that, in the good faith
judgment of
the Master Servicer, will not be ultimately recoverable by the
Master Servicer
from the related Mortgagor, related Liquidation Proceeds,
Subsequent
Recoveries or otherwise.
Notice of
Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the
Certificates
shall be made only upon presentation and surrender thereof.
Notional
Amount: With respect to any Distribution Date and the Class
1-A-4 Certificates, an amount equal to the Class Certificate
Balance of the
Class 1-A-3 Certificates immediately prior to such Distribution
Date.
With
respect to any Distribution Date and the Class 1-A-8
Certificates,
an amount equal to the product of (i) 0.25/6.00 and (ii) the Class
Certificate
Balance of the Class 1-A-9 Certificates immediately prior to such
Distribution
Date.
With
respect to any Distribution Date and the Class 1-A-10
Certificates,
an amount equal to the Class Certificate Balance of the Class
1-A-9
Certificates immediately prior to such Distribution Date.
With
respect to any Distribution Date and the Class 2-A-6
Certificates,
an amount equal to the Class Certificate Balance of the Class
2-A-5
Certificates immediately prior to such Distribution Date.
With respect to
any Distribution Date and the Class 1-X Certificates, an
amount equal to the aggregate of the Stated Principal Balances of
the
Non-Discount Mortgage Loans in Loan Group 1 as of the Due Date in
the
preceding calendar month (after giving effect to Principal
Prepayments
received in the Prepayment Period related to such Due Date).
With
respect to any Distribution Date and the Class 2-X Certificates,
an
amount equal to the aggregate of the Stated Principal Balances of
the
Non-Discount Mortgage Loans in Loan Group 2 as of the Due Date in
the
preceding calendar month (after giving effect to Principal
Prepayments
received in the Prepayment Period related to such Due Date).
Notional
Amount Certificates: As specified in the Preliminary Statement.
Offered
Certificates: As specified in the Preliminary Statement.
Officer's
Certificate: A certificate (i) in the case of the Depositor,
signed by the Chairman of the Board, the Vice Chairman of the
Board, the
President, a Managing Director, a Vice President (however
denominated), an
Assistant Vice President, the Treasurer, the Secretary, or one of
the
Assistant Treasurers or Assistant Secretaries of the Depositor,
(ii) in the
case of the Master Servicer, signed by the President, an Executive
Vice
President, a Vice President, an Assistant Vice President, the
Treasurer, or
one of the Assistant Treasurers or Assistant Secretaries of
Countrywide GP,
Inc., its general partner or (iii) if provided for in this
Agreement, signed
by a Servicing Officer, as the case may be, and
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<PAGE>
delivered to the Depositor and the Trustee, as the case may be, as
required by
this Agreement or (iv) in the case of any other Person, signed by
an
authorized officer of such Person.
Opinion of
Counsel: A written opinion of counsel, who may be counsel for
a Seller, the Depositor or the Master Servicer, including, in-house
counsel,
reasonably acceptable to the Trustee; provided, however, that with
respect to
the interpretation or application of the REMIC Provisions, such
counsel must
(i) in fact be independent of a Seller, the Depositor and the
Master Servicer,
(ii) not have any direct financial interest in a Seller, the
Depositor or the
Master Servicer or in any affiliate thereof, and (iii) not be
connected with a
Seller, the Depositor or the Master Servicer as an officer,
employee,
promoter, underwriter, trustee, partner, director or person
performing similar
functions.
Optional
Termination: The termination of the trust created hereunder in
connection with the purchase of the Mortgage Loans pursuant to
Section 9.01(a)
hereof.
Original
Applicable Credit Support Percentage: With respect to each of
the following Classes of Certificates, the corresponding percentage
described
below, as of the Closing Date:
Class
M-1................... 5.75%
Class
M-2................... 3.20%
Class
M-3................... 2.90%
Class
M-4................... 2.10%
Class
B-1................... 1.95%
Class
B-2................... 1.40%
Class
B-3................... 1.25%
Class
B-4................... 0.70%
Class
B-5................... 0.35%
Original
Mortgage Loan: The mortgage loan refinanced in connection with
the origination of a Refinancing Mortgage Loan.
Original
Subordinate Principal Balance: On or prior to a Senior
Termination Date, the Subordinated Percentage for a Loan Group of
the
aggregate of the applicable Non-PO Percentage of the Stated
Principal Balances
of the Mortgage Loans in such Loan Group, in each case as of the
Cut-off Date;
or if such date is after a Senior Termination Date, the aggregate
of the Class
Certificate Balances of the Subordinated Certificates as of the
Closing Date.
OTS: The
Office of Thrift Supervision.
Outside
Reference Date: As to any Interest Accrual Period for the COFI
Certificates, the close of business on the tenth day thereof.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
(i)
Certificates
theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; and
(ii)
Certificates in
exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee
pursuant to this Agreement;
I-18
<PAGE>
START HERE
provided,
however, that upon the exchange of any Depositable or
Exchangeable Certificate pursuant to Section 5.02 hereof, the
Depositable or
Exchangeable Certificate so exchanged shall be deemed no longer to
be
Outstanding, and the Certificates issued in exchange therefor shall
be deemed
to be Outstanding.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a
Stated Principal Balance greater than zero, which was not the
subject of a
Principal Prepayment in Full prior to such Due Date or during the
Prepayment
Period related to such Due Date and which did not become a
Liquidated Mortgage
Loan prior to such Due Date.
Overcollateralized Group: As defined in Section 4.05.
Ownership
Interest: As to any Residual Certificate, any ownership
interest in such Certificate including any interest in such
Certificate as the
Holder thereof and any other interest therein, whether direct or
indirect,
legal or beneficial.
Park
Granada: Park Granada LLC, a Delaware limited liability
company,
and its successors and assigns, in its capacity as the seller of
the Park
Granada Mortgage Loans to the Depositor.
Park
Granada Mortgage Loans: The Mortgage Loans identified as such
on
the Mortgage Loan Schedule for which Park Granada is the applicable
Seller.
Park
Monaco: Park Monaco Inc., a Delaware corporation, and its
successors and assigns, in its capacity as the seller of the Park
Monaco
Mortgage Loans to the Depositor.
Park
Monaco Mortgage Loans: The Mortgage Loans identified as such on
the
Mortgage Loan Schedule for which Park Monaco is the applicable
Seller.
Park
Sienna: Park Sienna LLC, a Delaware limited liability company,
and
its successors and assigns, in its capacity as the seller of the
Park Sienna
Mortgage Loans to the Depositor.
Park
Sienna Mortgage Loans: The Mortgage Loans identified as such on
the
Mortgage Loan Schedule for which Park Sienna is the applicable
Seller.
Pass-Through Rate: For any interest bearing Class of Certificates
or
Component, the per annum rate set forth or calculated in the manner
described
in the Preliminary Statement.
Percentage
Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the
related Class,
such percentage interest being set forth on the face thereof or
equal to the
percentage obtained by dividing the Denomination of such
Certificate by the
aggregate of the Denominations of all Certificates of the same
Class.
Performance Certification: As defined in Section 11.05.
Permitted
Investments: At any time, any one or more of the following
obligations and securities:
(i)
obligations of
the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the
United States;
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<PAGE>
(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;
(iii)
commercial or finance company paper which is then receiving the
highest commercial or finance company paper rating of each
Rating
Agency, or such lower rating as will not result in the
downgrading
or withdrawal of the ratings then assigned to the Certificates
by
each Rating Agency;
(iv)
certificates of
deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust
company
incorporated under the laws of the United States or of any
state
thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial
paper and/or long term unsecured debt obligations of such
depository
institution or trust company (or in the case of the
principal depository institution in a holding company system,
the
commercial paper or long-term unsecured debt obligations of
such
holding company, but only if Moody's is not a Rating Agency)
are
then rated one of the two highest long-term and the highest
short-term ratings of each 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
either Rating Agency;
(v)
repurchase
obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (iv) above;
(vi)
units of a taxable
money-market portfolio having the highest
rating assigned by each Rating Agency (except if Fitch is a
Rating
Agency and has not rated the portfolio, the highest rating
assigned by Moody's) and restricted to obligations issued or
guaranteed by the United States of America or entities whose
obligations are
backed by the full faith and credit of the United
States of America and repurchase agreements collateralized by
such
obligations; and
(vii) such
other relatively risk free investments 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 either 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 evidences the right to receive interest only payments
with respect
to the obligations underlying such instrument.
Permitted
Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or
instrumentality of
any of the foregoing, (ii) a foreign government, International
Organization or
any agency or instrumentality of either of the foregoing, (iii)
an
organization (except certain farmers' cooperatives described in
section 521 of
the Code) which 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)(l)
of the
Code) with respect to any Residual Certificate, (iv) rural electric
and
telephone cooperatives described in section 1381(a)(2)(C) of the
Code, (v) an
"electing large partnership" as defined in Section 775 of the
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<PAGE>
Code, (vi) a Person that is not a citizen or resident of the United
States, a
corporation, partnership, or other entity created or organized in
or under the
laws of the United States, any State thereof or the District of
Columbia, or
an estate or trust 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 the authority to control all
substantial
decisions of the trust unless such Person has furnished the
transferor and the
Trustee with a duly completed Internal Revenue Service Form W-8ECI
or any
applicable successor form, and (vii) any other Person so designated
by the
Depositor based upon an Opinion of Counsel that the Transfer of an
Ownership
Interest in a Residual Certificate to such Person may cause any
REMIC
hereunder to fail to qualify as a REMIC at any time that the
Certificates are
outstanding. The terms "United States," "State" and
"International
Organization" shall have the meanings set forth in section 7701 of
the Code or
successor provisions. A corporation will not be treated as an
instrumentality
of the United States or of any State or political subdivision
thereof for
these purposes if all of its activities are subject to tax and,
with the
exception of the Federal Home Loan Mortgage Corporation, a majority
of its
board of directors is not selected by such government unit.
Person:
Any individual, corporation, partnership, joint venture,
limited
liability company, association, joint-stock company, trust,
unincorporated
organization or government, or any agency or political subdivision
thereof.
Physical
Certificate: As specified in the Preliminary Statement.
Plan: An
"employee benefit plan" as defined in section 3(3) of ERISA
that is subject to Title I of ERISA, a "plan" as defined in section
4975 of
the Code that is subject to section 4975 of the Code, or any Person
investing
on behalf of or with plan assets (as defined in 29 CFR
ss.2510.3-101 or
otherwise under ERISA) of such an employee benefit plan or
plan.
Planned
Balance: With respect to any group of Planned Principal Classes
or Components in the aggregate and any Distribution Date appearing
in Schedule
V hereto, the Aggregate Planned Balance for such group and
Distribution Date.
With respect to any other Planned Principal Class or Component and
any
Distribution Date appearing in Schedule V hereto, the applicable
amount
appearing opposite such Distribution Date for such Class or
Component.
Planned
Principal Classes: As specified in the Preliminary Statement.
PO Formula
Principal Amount: As to any Distribution Date and related
Class PO Certificates (if any), the sum of (i) the sum of the
applicable PO
Percentage of (a) the principal portion of each Scheduled Payment
(without
giving effect to any reductions thereof caused by any Debt Service
Reductions
or Deficient Valuations) due on each Mortgage Loan in the related
Loan Group
on the related Due Date, (b) the Stated Principal Balance of each
Mortgage
Loan in the related Loan Group that was repurchased by a Seller or
purchased
by the Master Servicer pursuant to this Agreement as of such
Distribution
Date, (c) the Substitution Adjustment Amount in connection with any
Deleted
Mortgage Loan in the related Loan Group received with respect to
such
Distribution Date, (d) any Insurance Proceeds or Liquidation
Proceeds
allocable to recoveries of principal of Mortgage Loans in the
related Loan
Group that are not yet Liquidated Mortgage Loans received during
the calendar
month preceding the month of such Distribution Date, (e) with
respect to each
Mortgage Loan in the related Loan Group that became a Liquidated
Mortgage Loan
during the calendar month preceding the month of such Distribution
Date, the
amount of Liquidation Proceeds allocable to principal received with
respect to
such Mortgage Loan during the calendar month preceding the month of
such
Distribution Date with respect to such Mortgage Loan, and (f) all
Principal
Prepayments with respect to the Mortgage Loans in the related Loan
Group
received during the related Prepayment Period and (ii) with respect
to
Subsequent Recoveries attributable to a Discount Mortgage Loan in
the related
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<PAGE>
Loan Group which incurred a Realized Loss after the Senior Credit
Support
Depletion Date, the PO Percentage of any such Subsequent Recoveries
on the
Mortgage Loans in such Loan Group received during the calendar
month preceding
the month of such Distribution Date.
PO
Percentage: As to any Discount Mortgage Loan in a Loan Group, a
fraction (expressed as a percentage) the numerator of which is the
excess of
the Required Coupon for such Loan Group over the Adjusted Net
Mortgage Rate of
such Discount Mortgage Loan and the denominator of which is such
Required
Coupon. As to any Non-Discount Mortgage Loan, 0%.
Pool
Stated Principal Balance: As of any date of determination, the
aggregate of the Stated Principal Balances of the Outstanding
Mortgage Loans.
Prepayment
Charge: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial
Principal
Prepayment of such Mortgage Loan within the related Prepayment
Charge Period
in accordance with the terms thereof.
Prepayment
Charge Amount: Not Applicable.
Prepayment
Charge Period: With respect to any Mortgage Loan, the period
of time during which a Prepayment Charge may be imposed.
Prepayment
Interest Excess: As to any Principal Prepayment received by
Countrywide Home Loans Servicing LP from the first day through the
fifteenth
day of any calendar month (other than the calendar month in which
the Initial
Cut-off Date occurs), all amounts paid by the related Mortgagor in
respect of
interest on such Principal Prepayment. All Prepayment Interest
Excess shall be
paid to the Master Servicer as additional master servicing
compensation.
Prepayment
Interest Shortfall: As to any Distribution Date, Mortgage
Loan and Principal Prepayment received on or after the sixteenth
day of the
month preceding the month of such Distribution Date (or, in the
case of the
first Distribution Date, on or after November 1, 2006) and on or
before the
last day of the month preceding the month of such Distribution
Date, the
amount, if any, by which one month's interest at the related
Mortgage Rate,
net of the Master Servicing Fee Rate, on such Principal Prepayment
exceeds the
amount of interest paid in connection with such Principal
Prepayment.
Prepayment
Period: As to any Distribution Date and the related Due Date,
the period from the 16th day of the calendar month immediately
preceding the
month of such Distribution Date (or, in the case of the first
Distribution
Date, from November 1, 2006) through the 15th day of the calendar
month of
such Distribution Date.
Prepayment
Shift Percentage: As to any Distribution Date occurring
during the five years beginning on the first Distribution Date, 0%.
For any
Distribution Date occurring on or after fifth anniversary of the
first
Distribution Date, as follows: for any Distribution Date in the
first year
thereafter, 30%; for any Distribution Date in the second year
thereafter, 40%;
for any Distribution Date in the third year thereafter, 60%; for
any
Distribution Date in the fourth year thereafter, 80%; and for any
Distribution
Date thereafter, 100%.
Primary
Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any
Mortgage
Loan.
I-22
<PAGE>
Prime
Rate: The prime commercial lending rate of The Bank of New
York,
as publicly announced to be in effect from time to time. The Prime
Rate shall
be adjusted automatically, without notice, on the effective date of
any change
in such prime commercial lending rate. The Prime Rate is not
necessarily The
Bank of New York's lowest rate of interest.
Principal
Only Certificates: As specified in the Preliminary Statement.
Principal
Prepayment: Any payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date
and is not
accompanied by an amount representing scheduled interest due on any
date or
dates in any month or months subsequent to the month of prepayment.
Partial
Principal Prepayments shall be applied by the Master Servicer in
accordance
with the terms of the related Mortgage Note.
Principal
Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Principal
Relocation Payment: A payment from any Loan Group to an Lower
Tier REMIC Regular Interest other than a Regular Interest
corresponding to
that Loan Group as provided in the Preliminary Statement. Principal
Relocation
Payments from a Loan Group shall be made of the amounts in respect
of
principal from the Mortgage Loans of the Loan Group and shall
include a
proportionate allocation of the Realized Losses from the Mortgage
Loans of the
Loan Group.
Private
Certificate: As specified in the Preliminary Statement.
Pro Rata
Share: As to any Distribution Date, the Subordinated Principal
Distribution Amount and any Class of Subordinated Certificates, the
portion of
the Subordinated Principal Distribution Amount allocable to such
Class, equal
to the product of the Subordinated Principal Distribution Amount on
such
Distribution Date and a fraction, the numerator of which is the
related Class
Certificate Balance thereof and the denominator of which is the
aggregate of
the Class Certificate Balances of the Subordinated
Certificates.
Proprietary Lease: With respect to any Cooperative Unit, a lease
or
occupancy agreement between a Cooperative Corporation and a holder
of related
Coop Shares.
Prospectus: The Prospectus dated November 14, 2006 generally
relating to
mortgage pass-through certificates to be sold by the Depositor.
Prospectus
Supplement: The Prospectus Supplement dated November 28, 2006
relating to the Offered Certificates.
PUD:
Planned Unit Development.
Purchase
Price: With respect to any Mortgage Loan required to be
purchased by a Seller pursuant to Section 2.02 or 2.03 hereof or
purchased at
the option of the Master Servicer pursuant to Section 3.11, an
amount equal to
the sum of (i) 100% of the unpaid principal balance of the Mortgage
Loan on
the date of such purchase, (ii) accrued interest thereon at the
applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x)
the
purchaser is the Master Servicer or (y) if the purchaser is
Countrywide and
Countrywide is an affiliate of the Master Servicer) from the date
through
which interest was last paid by the Mortgagor to the Due Date in
the month in
which the Purchase Price is to be distributed to Certificateholders
and (iii)
costs and damages incurred by the Trust Fund in connection with
I-23
<PAGE>
a repurchase pursuant to Section 2.03 hereof that arises out of a
violation of
any predatory or abusive lending law with respect to the related
Mortgage
Loan.
Qualified
Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of
business and
each state having jurisdiction over such insurer in connection with
the
insurance policy issued by such insurer, duly authorized and
licensed in such
states to transact a mortgage guaranty insurance business in such
states and
to write the insurance provided by the insurance policy issued by
it, approved
as a FNMA-approved mortgage insurer and having a claims paying
ability rating
of at least "AA" or equivalent rating by a nationally recognized
statistical
rating organization. Any replacement insurer with respect to a
Mortgage Loan
must have at least as high a claims paying ability rating as the
insurer it
replaces had on the Closing Date.
Rating
Agency: Each of the Rating Agencies specified in the
Preliminary
Statement. If any such organization or a successor is no longer in
existence,
"Rating Agency" shall be such nationally recognized statistical
rating
organization, or other comparable Person, identified as a rating
agency under
the Underwriter's Exemption, as is designated by the Depositor,
notice of
which designation shall be given to the Trustee. References herein
to a given
rating category of a Rating Agency shall mean such rating category
without
giving effect to any modifiers.
Realized
Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of
the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated
Principal
Balance of the Liquidated Mortgage Loan as of the date of such
liquidation,
plus (ii) interest at the Adjusted Net Mortgage Rate from the Due
Date as to
which interest was last paid or advanced (and not reimbursed)
to
Certificateholders up to the Due Date in the month in which
Liquidation
Proceeds are required to be distributed on the Stated Principal
Balance of
such Liquidated Mortgage Loan from time to time, minus (iii) the
Liquidation
Proceeds, if any, received during the month in which such
liquidation
occurred, to the extent applied as recoveries of interest at the
Adjusted Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan.
With respect
to each Mortgage Loan which has become the subject of a Deficient
Valuation,
if the principal amount due under the related Mortgage Note has
been reduced,
the difference between the principal balance of the Mortgage Loan
outstanding
immediately prior to such Deficient Valuation and the principal
balance of the
Mortgage Loan as reduced by the Deficient Valuation.
To the
extent the Master Servicer receives Subsequent Recoveries with
respect to any Liquidated Mortgage Loan, the amount of the Realized
Loss with
respect to that Mortgage Loan will be reduced by such Subsequent
Recoveries.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of
such
Mortgage Loan which establishes the rights of such originator in
the
Cooperative Property.
Recombination Group: Each Class of Depositable Certificates and
the
Class of Exchangeable Certificates included within any
particular
"Recombination" specified in Schedule VII.
Record
Date: As to any Distribution Date, the close of business on the
last Business Day of the month preceding the month of such
Distribution Date.
Reference
Bank: As defined in Section 4.08(b).
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection
with the refinancing of an existing mortgage loan.
I-24
<PAGE>
Regular
Certificates: As specified in the Preliminary Statement.
Regulation
AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to
time, and subject to such clarification and interpretation as have
been
provided by the Commission in the adopting release (Asset-Backed
Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005))
or by the staff of the Commission, or as may be provided by the
Commission or
its staff from time to time.
Relief
Act: The Servicemembers Civil Relief Act.
Relief Act
Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount
of interest
collectible thereon for the most recently ended calendar month as a
result of
the application of the Relief Act or any similar state laws, the
amount, if
any, by which (i) interest collectible on such Mortgage Loan for
the most
recently ended calendar month is less than (ii) interest accrued
thereon for
such month pursuant to the Mortgage Note.
REMIC: A
"real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC
Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement
or
interpretation relating to REMICs and the REMIC Provisions issued
after the
Closing Date.
REMIC
Provisions: Provisions of the federal income tax law relating
to
real estate mortgage investment conduits, which appear at sections
860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions,
and regulations promulgated thereunder, as the foregoing may be in
effect from
time to time as well as provisions of applicable state laws.
REO
Property: A Mortgaged Property acquired by the Trust Fund
through
foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted
Mortgage Loan.
Reportable
Event: Any event required to be reported on Form 8-K and, in
any event, the following:
(a) entry
into a definitive agreement related to the Trust Fund, the
Certificates or the Mortgage Loans, or an amendment to a
Transaction
Document,
even if the Depositor is not a party to such agreement (e.g.,
a
servicing agreement with a servicer contemplated by Item 1108(a)(3)
of
Regulation
AB);
(b)
termination of a Transaction Document (other than by expiration
of
the
agreement on its stated termination date or as a result of all
parties
completing their obligations under such agreement), even if the
Depositor
is not a party to such agreement (e.g., a servicing agreement
with a
servicer contemplated by Item 1108(a)(3) of Regulation AB);
(c) with
respect to the Master Servicer only, if the Master Servicer
becomes
aware of any bankruptcy or receivership with respect to
Countrywide, the
Depositor, the Master Servicer, any Subservicer, the
Trustee,
any enhancement or support provider contemplated by Items
1114(b) or
1115 of Regulation AB, or any other material party
contemplated by Item 1101(d)(1) of Regulation AB;
I-25
<PAGE>
(d) with
respect to the Trustee, the Master Servicer and the Depositor
only, the
occurrence of an early amortization, performance trigger or
other
event, including an Event of Default under this Agreement;
(e) the
resignation, removal, replacement, substitution of the Master
Servicer,
any Subservicer or the Trustee;
(f) with
respect to the Master Servicer only, if the Master Servicer
becomes
aware that (i) any material enhancement or support specified in
Item
1114(a)(1) through (3) of Regulation AB or Item 1115 of
Regulation
AB that
was previously applicable regarding one or more Classes of the
Certificates has terminated other than by expiration of the
contract on
its stated
termination date or as a result of all parties completing
their
obligations under such agreement; (ii) any material enhancement
specified
in Item 1114(a)(1) through (3) of Regulation AB or Item 1115
of
Regulation AB has been added with respect to one or more Classes
of
the
Certificates; or (iii) any existing material enhancement or
support
specified
in Item 1114(a)(1) through (3) of Regulation AB or Item 1115
of
Regulation AB with respect to one or more Classes of the
Certificates
has been
materially amended or modified; and
(g) with
respect to the Trustee, the Master Servicer and the Depositor
only, a
required distribution to Holders of the Certificates is not
made
as of the
required Distribution Date under this Agreement.
Reporting
Subcontractor: With respect to the Master Servicer or the
Trustee, any Subcontractor determined by such Person pursuant to
Section
11.08(b) to be "participating in the servicing function" within the
meaning of
Item 1122 of Regulation AB. References to a Reporting Subcontractor
shall
refer only to the Subcontractor of such Person and shall not refer
to
Subcontractors generally.
Request
for Release: The Request for Release submitted by the Master
Servicer to the Trustee, substantially in the form of Exhibits M
and N, as
appropriate.
Required
Coupon: With respect to the Mortgage Loans in Loan Group 1,
6.00% per annum and with respect to the Mortgage Loans in Loan
Group 2, 6.50%
per annum.
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.
Residual
Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any
Vice
President, any Assistant Vice President, the Secretary, any
Assistant
Secretary, any Trust Officer or any other officer of the Trustee
customarily
performing functions similar to those performed by any of the above
designated
officers and also to whom, with respect to a particular matter,
such matter is
referred because of such officer's knowledge of and familiarity
with the
particular subject.
Restricted
Classes: As defined in Section 4.02(e).
S&P:
Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. If
S&P is designated as a Rating Agency in the Preliminary
Statement, for
purposes of Section 10.05(b) the address for notices to S&P
shall be Standard
& Poor's, 55 Water Street, New York, New York 10041,
Attention:
I-26
<PAGE>
Mortgage Surveillance Monitoring, or such other address as S&P
may hereafter
furnish to the Depositor and the Master Servicer.
Sarbanes-Oxley Certification: As defined in Section 11.05.
Scheduled
Balances: With respect to any group of Scheduled Principal
Classes or Components in the aggregate and any Distribution Date
appearing in
Schedule V hereto, the Aggregate Scheduled Balance for such group
and
Distribution Date. With respect to any other Scheduled Principal
Class or
Component and any Distribution Date appearing in Schedule V hereto,
the
applicable amount appearing opposite such Distribution Date for
such Class or
Component.
Scheduled
Principal Classes: As specified in the Preliminary Statement.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such
Mortgage Loan
which, unless otherwise specified herein, shall give effect to any
related
Debt Service Reduction and any Deficient Valuation that affects the
amount of
the monthly payment due on such Mortgage Loan.
Scheduled
Principal Distribution Amount: As to any Distribution Date and
Loan Group, an amount equal to the Non-PO Percentage of all amounts
described
in subclauses (a) through (d) of clause (i) of the definition of
Non-PO
Formula Principal Amount for such Loan Group and Distribution
Date.
Securities
Act: The Securities Act of 1933, as amended.
Seller:
Countrywide, Park Granada, Park Monaco or Park Sienna, as
applicable.
Senior
Certificate Group: As specified in the Preliminary Statement.
Senior
Certificates: As specified in the Preliminary Statement.
Senior
Credit Support Depletion Date: The date on which the Class
Certificate Balance of each Class of Subordinated Certificates has
been
reduced to zero.
Senior
Percentage: As to any Senior Certificate Group and Distribution
Date, the percentage equivalent of a fraction the numerator of
which is the
aggregate of the Class Certificate Balances of each Class of
Senior
Certificates of such Senior Certificate Group (other than the
related Class PO
Certificates (if any) and Notional Amount Certificates) immediately
prior to
such Distribution Date and the denominator of which is the
aggregate of the
applicable Non-PO Percentage of the Stated Principal Balance of
each Mortgage
Loan in the related Loan Group as of the Due Date occurring in the
month prior
to the month of such Distribution Date (after giving effect to
Principal
Prepayments received in the Prepayment Period related to such prior
Due Date);
provided, however, that on any Distribution Date after a Senior
Termination
Date, the Senior Percentage for the Senior Certificates of the
remaining
Senior Certificate Group is the percentage equivalent of a
fraction, the
numerator of which is the aggregate of the Class Certificate
Balances of each
such Class of Senior Certificates (other than the related Class
PO
Certificates (if any) and Notional Amount Certificates) of such
remaining
Senior Certificate Group immediately prior to such Distribution
Date and the
denominator is the aggregate of the Class Certificate Balances of
all Classes
of Certificates (other than the Class PO Certificates (if any) and
the
Notional Amount Certificates), immediately prior to such
Distribution Date.
I-27
<PAGE>
Senior
Prepayment Percentage: As to a Senior Certificate Group and any
Distribution Date during the five years beginning on the first
Distribution
Date, 100%. The Senior Prepayment Percentage for any Distribution
Date
occurring on or after the fifth anniversary of the first
Distribution Date
will, except as provided herein, be as follows: for any
Distribution Date in
the first year thereafter, the related Senior Percentage plus 70%
of the
related Subordinated Percentage for such Distribution Date; for
any
Distribution Date in the second year thereafter, the related Senior
Percentage
plus 60% of the related Subordinated Percentage for such
Distribution Date;
for any Distribution Date in the third year thereafter, the related
Senior
Percentage plus 40% of the related Subordinated Percentage for
such
Distribution Date; for any Distribution Date in the fourth year
thereafter,
the related Senior Percentage plus 20% of the related Subordinated
Percentage
for such Distribution Date; and for any Distribution Date
thereafter, the
related Senior Percentage for such Distribution Date (unless on
any
Distribution Date the Senior Percentage exceeds the initial Senior
Percentage
of such Senior Certificate Group, in which case the Senior
Prepayment
Percentage for each Senior Certificate Group for such Distribution
Date will
once again equal 100%). Notwithstanding the foregoing, no decrease
in any
Senior Prepayment Percentage will occur unless both of the Senior
Step Down
Conditions are satisfied with respect to all of the Loan
Groups.
Senior
Principal Distribution Amount: As to any Distribution Date and
Senior Certificate Group, the sum of (i) the sum of the related
Senior
Percentage of the applicable Non-PO Percentage of all amounts
described in
subclauses (a) through (d) of clause (i) of the definition of
"Non-PO Formula
Principal Amount" with respect to the related Loan Group for such
Distribution
Date, (ii) with respect to any Mortgage Loan in the related Loan
Group that
became a Liquidated Mortgage Loan during the calendar month
preceding the
month of such Distribution Date, the lesser of (x) the related
Senior
Percentage of the applicable Non-PO Percentage of the Stated
Principal Balance
of such Mortgage Loan and (y) the related Senior Prepayment
Percentage of the
applicable Non-PO Percentage of the amount of the Liquidation
Proceeds
allocable to principal received with respect to the Mortgage Loan
and (iii)
the sum of (x) the related Senior Prepayment Percentage of the
applicable
Non-PO Percentage of the amounts described in subclause (f) of
clause (i) of
the definition of "Non-PO Formula Principal Amount" with respect to
the
related Loan Group for such Distribution Date plus (y) the related
Senior
Prepayment Percentage of any Subsequent Recoveries described in
clause (ii) of
the definition of "Non-PO Formula Principal Amount" for such
Distribution Date
; provided, however, on any Distribution Date after a Senior
Termination Date,
the Senior Principal Distribution Amount for the remaining Senior
Certificate
Group will be calculated pursuant to the above formula based on all
the
Mortgage Loans in the Mortgage Pool, as opposed to the Mortgage
Loans in the
related Loan Group and, if such Distribution Date is a Senior
Termination
Date, shall be reduced by the amount of the principal distribution
made
pursuant to (a) if the Group 1 Senior Certificates are reduced to
zero on such
date, Section 4.02(a)(1)(iv)(y) and (b) if the Group 2 Senior
Certificates are
reduced to zero on such date, Section 4.02(a)(2)(iv)(y).
Senior
Step Down Conditions: With respect to the Mortgage Loans in a
Loan Group: (i) the outstanding principal balance of all Mortgage
Loans
delinquent 60 days or more (including Mortgage Loans in
foreclosure, REO
Property and Mortgage Loans the mortgagors of which are in
bankruptcy)
(averaged over the preceding six month period), as a percentage of
(a) if such
date is on or prior to a Senior Termination Date, the Subordinated
Percentage
for such Loan Group of the aggregate of the applicable Non-PO
Percentage of
the aggregate Stated Principal Balance of the Mortgage Loans in
that Loan
Group, or (b) if such date is after a Senior Termination Date, the
aggregate
Class Certificate Balance of the Subordinated Certificates, does
not equal or
exceed 50%, and (ii) cumulative Realized Losses on the Mortgage
Loans in each
Loan Group do not exceed: (a) commencing with the Distribution Date
on the
fifth anniversary of the first Distribution Date, 30% of the
Original
Subordinate Principal Balance, (b) commencing with the Distribution
Date on
the sixth anniversary of the first Distribution Date, 35% of the
Original
Subordinate Principal Balance, (c) commencing with the Distribution
Date on
the seventh anniversary of the first Distribution Date, 40% of the
Original
Subordinate Principal Balance,
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<PAGE>
(d) commencing with the Distribution Date on the eighth anniversary
of the
first Distribution Date, 45% of the Original Subordinate Principal
Balance,
and (e) commencing with the Distribution Date on the ninth
anniversary of the
first Distribution Date, 50% of the Original Subordinate Principal
Balance.
Senior
Termination Date: For any Senior Certificate Group, the
Distribution Date on which the aggregate Class Certificate Balance
of the
Senior Certificates in such Senior Certificate Group (other than
the related
Class PO Certificates (if any)) has been reduced to zero.
Servicing
Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the
Master Servicer
of its servicing obligations, including, but not limited to, the
cost of (i)
the preservation, restoration and protection of a Mortgaged
Property, (ii) any
expenses reimbursable to the Master Servicer pursuant to Section
3.11 and any
enforcement or judicial proceedings, including foreclosures, (iii)
the
management and liquidation of any REO Property and (iv) compliance
with the
obligations under Section 3.09.
Servicing
Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB.
Servicing
Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage
Loans whose
name and facsimile signature appear on a list of servicing officers
furnished
to the Trustee by the Master Servicer on the Closing Date pursuant
to this
Agreement, as such list may from time to time be amended.
Shift
Percentage: As to any Distribution Date occurring during the
five
years beginning on the first Distribution Date, 0%. For any
Distribution Date
occurring on or after the fifth anniversary of the first
Distribution Date,
100%.
Startup
Day: The Closing Date.
Stated
Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date,
as
specified in the amortization schedule at the time relating thereto
(before
any adjustment to such amortization schedule by reason of any
moratorium or
similar waiver or grace period) minus the sum of: (i) any previous
partial
Principal Prepayments and the payment of principal due on such Due
Date,
irrespective of any delinquency in payment by the related
Mortgagor, (ii)
Liquidation Proceeds allocable to principal (other than with
respect to any
Liquidated Mortgage Loan) received in the prior calendar month and
Principal
Prepayments received through the last day of the related Prepayment
Period, in
each case, with respect to that Mortgage Loan and (iii) any
Realized Loss
previously incurred in connection with a Deficient Valuation. The
Stated
Principal Balance of any Mortgage Loan that becomes a Liquidated
Mortgage Loan
will be zero on each date following the Due Period in which such
Mortgage Loan
becomes a Liquidated Mortgage Loan.
Streamlined Documentation Mortgage Loan: Any Mortgage Loan
originated
pursuant to Countrywide's Streamlined Loan Documentation Program
then in
effect. For the purposes of this Agreement, a Mortgagor is eligible
for a
mortgage pursuant to Countrywide's Streamlined Loan Documentation
Program if
that Mortgagor is refinancing an existing mortgage loan that was
originated or
acquired by Countrywide where, among other things, the mortgage
loan has not
been more than 30 days delinquent in payment during the previous
twelve-month
period.
Strike
Rate: With respect to each Class of Covered Certificates, the
applicable rate set forth below:
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<PAGE>
---------------------------------------------------
--------------------
Class of Certificates
Strike Rate
---------------------------------------------------
--------------------
Class
1-A-3 Certificates
5.45%
---------------------------------------------------
--------------------
Class
1-A-9 Certificates
5.35%
---------------------------------------------------
--------------------
Subcontractor: Any vendor, subcontractor or other Person that is
not
responsible for the overall servicing (as "servicing" is commonly
understood
by participants in the mortgage-backed securities market) of
Mortgage Loans
but performs one or more discrete functions identified in Item
1122(d) of
Regulation AB with respect to Mortgage Loans under the direction or
authority
of the Master Servicer or a Subservicer or the Trustee, as the case
may be.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated Percentage: As to any Loan Group and Distribution Date
on
or prior to a Senior Termination Date, 100% minus the Senior
Percentage for
the Senior Certificate Group relating to such Loan Group for such
Distribution
Date. As to any Distribution Date after a Senior Termination Date,
100% minus
the Senior Percentage for such Distribution Date.
Subordinated Portion: For any Distribution Date, an amount equal to
the
aggregate Stated Principal Balance of the Mortgage Loans in the
related Loan
Group as of the end of the Prepayment Period related to the
immediately
preceding Distribution Date, minus the aggregate Class Certificate
Balance of
the related Senior Certificates immediately prior to such
Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution Date and
Loan
Group, 100% minus the related Senior Prepayment Percentage for
such
Distribution Date.
Subordinated Principal Distribution Amount: With respect to any
Distribution Date and Loan Group, an amount equal to the excess of
(A) the
sum, not less than zero, of (i) the Subordinated Percentage of the
applicable
Non-PO Percentage for such Loan Group of all amounts described in
subclauses
(a) through (d) of clause (i) of the definition of "Non-PO Formula
Principal
Amount" for such Distribution Date, (ii) with respect to each
Mortgage Loan
that became a Liquidated Mortgage Loan during the calendar month
preceding the
month of such Distribution Date, the applicable Non-PO Percentage
of the
amount of the Liquidation Proceeds allocated to principal received
with
respect thereto remaining after application thereof pursuant to
clause (ii) of
the definition of Senior Principal Distribution Amount, up to the
Subordinated
Percentage for such Loan Group of the applicable Non-PO Percentage
of the
Stated Principal Balance of such Mortgage Loan, (iii) the
Subordinated
Prepayment Percentage of the applicable Non-PO Percentage of all
amounts
described in subclause (f) of clause (i) of the definition of
"Non-PO Formula
Principal Amount" for such Loan Group and Distribution Date, and
(iv) the
related Subordinated Prepayment Percentage of any Subsequent
Recoveries
described in clause (ii) of the definition of "Non-PO Formula
Principal
Amount" for such Distribution Date, over (B) the amount of any
payments in
respect of Class PO Deferred Amounts for the related Class PO
Certificates (if
any) on the related Distribution Date, provided, however, that on
any
Distribution Date after a Senior Termination Date, the Subordinated
Principal
Distribution Amount will not be calculated by Loan Group but will
equal the
amount calculated pursuant to the formula set forth above based on
the
applicable Subordinated Percentage or Subordinated Prepayment
Percentage, as
applicable, for the Subordinated Certificates for such Distribution
Date with
respect to all of the Mortgage Loans as opposed to the Mortgage
Loans in the
related Loan Group.
Subordinate Pass-Through Rate: For the Interest Accrual Period
related
to each Distribution Date, a per annum rate equal to (1) the sum of
the
following for each Loan Group: the product of (x) the Required
Coupon of the
Loan Group and (y) the related Subordinated Portion
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<PAGE>
immediately prior to that Distribution Date, divided by (2) the
aggregate
Class Certificate Balance of the Subordinated Certificates
immediately prior
to that Distribution Date.
Subsequent
Recoveries: As to any Distribution Date, with respect to a
Liquidated Mortgage Loan that resulted in a Realized Loss in a
prior calendar
month, unexpected amounts received by the Master Servicer (net of
any related
expenses permitted to be reimbursed pursuant to Section 3.08)
specifically
related to such Liquidated Mortgage Loan.
Subservicer: Any person to whom the Master Servicer has contracted
for
the servicing of all or a portion of the Mortgage Loans pursuant to
Section
3.02 hereof.
Substitute
Mortgage Loan: A Mortgage Loan substituted by a Seller for a
Deleted Mortgage Loan which must, on the date of such substitution,
as
confirmed in a Request for Release, substantially in the form of
Exhibit M,
(i) have a Stated Principal Balance, after deduction of the
principal portion
of the Scheduled Payment due in the month of substitution, not in
excess of,
and not more than 10% less than the Stated Principal Balance of the
Deleted
Mortgage Loan; (ii) be accruing interest at a rate no lower than
and not more
than 1% per annum higher than, that of the Deleted Mortgage Loan;
(iii) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (iv)
have a remaining term to maturity no greater than (and not more
than one year
less than that of) the Deleted Mortgage Loan; (v) not be a
Cooperative Loan
unless the Deleted Mortgage Loan was a Cooperative Loan and (vi)
comply with
each representation and warranty set forth in Section 2.03
hereof.
Substitution Adjustment Amount: The meaning ascribed to such
term
pursuant to Section 2.03.
Supplemental Interest Trust: The separate trust created under
this
Agreement pursuant to Section 3.05(g).
Supplemental Interest Trustee: The Bank of New York, a New York
banking
corporation, not in its individual capacity, but solely in its
capacity as
trustee of the Supplemental Interest Trust for the benefit of the
Holders of
the Covered Certificates 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.
Targeted
Balance: With respect to any group of Targeted Principal
Classes or Components in the aggregate and any Distribution Date
appearing in
Schedule V hereto, the Aggregate Targeted Balance for such group
and
Distribution Date. With respect to any other Targeted Principal
Class or
Component and any Distribution Date appearing in Schedule V hereto,
the
applicable amount appearing opposite such Distribution Date for
such Class or
Component.
Targeted
Principal Classes: As specified in the Preliminary Statement.
Tax
Matters Person: The person designated as "tax matters person" in
the
manner provided under Treasury regulation ss. 1.860F-4(d) and
Treasury
regulation ss. 301.6231(a)(7)-1. Initially, the Tax Matters Person
shall be
the Trustee.
Tax
Matters Person Certificate: The Class A-R Certificate with a
Denomination of $0.01.
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<PAGE>
Transaction Documents: This Agreement, the Corridor Contracts and
any
other document or agreement entered into in connection with the
Trust Fund,
the Certificates or the Mortgage Loans.
Transfer:
Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Trust
Fund: The corpus of the trust created hereunder consisting of
(i)
the Mortgage Loans and all interest and principal received on or
with respect
thereto after the Cut-off Date to the extent not applied in
computing the
Cut-off Date Principal Balance thereof; (ii) the Certificate
Account, the
Distribution Account and all amounts deposited therein pursuant to
the
applicable provisions of this Agreement; (iii) property that
secured a
Mortgage Loan and has been acquired by foreclosure, deed-in-lieu
of
foreclosure or otherwise; and (iv) all proceeds of the conversion,
voluntary
or involuntary, of any of the foregoing.
Trustee:
The Bank of New York and its successors and, if a successor
trustee is appointed hereunder, such successor.
Trustee
Advance Rate: With respect to any Advance made by the Trustee
pursuant to Section 4.01(b), a per annum rate of interest
determined as of the
date of such Advance equal to the Prime Rate in effect on such date
plus
5.00%.
Trustee
Fee: As to any Distribution Date, an amount equal to
one-twelfth
of the Trustee Fee Rate multiplied by the Pool Stated Principal
Balance with
respect to such Distribution Date.
Trustee
Fee Rate: With respect to each Mortgage Loan, 0.009% per annum.
Undercollateralized Group: As defined in Section 4.05.
Underwriter's Exemption: Prohibited Transaction Exemption 2002-41,
67
Fed. Reg. 54487 (2002), as amended (or any successor thereto), or
any
substantially similar administrative exemption granted by the U.S.
Department
of Labor.
Underwriter: As specified in the Preliminary Statement.
Unscheduled Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to the sum of (i) with respect
to each
Mortgage Loan that became a Liquidated Mortgage Loan during the
calendar month
preceding the month of such Distribution Date, the applicable
Non-PO
Percentage of the Liquidation Proceeds allocable to principal
received with
respect to such Mortgage Loan and (ii) the applicable Non-PO
Percentage of the
amount described in subclause (f) of clause (i) of the definition
of Non-PO
Formula Principal Amount for such Distribution Date and (iii) any
Subsequent
Recoveries described in clause (ii) of the definition of Non-PO
Formula
Principal Amount for such Distribution Date.
Voting Rights: The
portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date
of
determination, (a) 1% of all Voting Rights shall be allocated to
each Class of
Notional Amount Certificates, if any (such Voting Rights to be
allocated among
the holders of Certificates of each such Class in accordance with
their
respective Percentage Interests), and (b) the remaining Voting
Rights (or 100%
of the Voting Rights if there is no Class of Notional Amount
Certificates)
shall be allocated among Holders of the remaining Classes of
Certificates in
proportion to the Certificate Balances of their respective
Certificates on
such date. The Class of
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<PAGE>
Exchangeable Certificates, when Outstanding, will be allocated a
proportionate
share of the Voting Rights allocated to the Classes of
Depositable
Certificates.
Yield
Supplement Amount: For any Distribution Date and Class of
Covered
Certificates on or prior to the applicable Corridor Contract
Termination Date,
interest for the related Interest Accrual Period on the Class
Certificate
Balance of the applicable Class of Covered Certificates immediately
prior to
such Distribution Date at a rate equal to the excess, if any, of
(i) the
lesser of LIBOR and the applicable Ceiling Rate over (ii) the
applicable
Strike Rate.
SECTION
1.02. Certain Interpretive Provisions.
All terms
defined in this Agreement shall have the defined meanings when
used in any certificate, agreement or other document delivered
pursuant hereto
unless otherwise defined therein. For purposes of this Agreement
and all such
certificates and other documents, unless the context otherwise
requires: (a)
accounting terms not otherwise defined in this Agreement, and
accounting terms
partly defined in this Agreement to the extent not defined, shall
have the
respective meanings given to them under generally accepted
accounting
principles; (b) the words "hereof," "herein" and "hereunder" and
words of
similar import refer to this Agreement (or the certificate,
agreement or other
document in which they are used) as a whole and not to any
particular
provision of this Agreement (or such certificate, agreement or
document); (c)
references to any Section, Schedule or Exhibit are references to
Sections,
Schedules and Exhibits in or to this Agreement, and references to
any
paragraph, subsection, clause or other subdivision within any
Section or
definition refer to such paragraph, subsection, clause or other
subdivision of
such Section or definition; (d) the term "including" means
"including without
limitation"; (e) references to any law or regulation refer to that
law or
regulation as amended from time to time and include any successor
law or
regulation; (f) references to any agreement refer to that agreement
as amended
from time to time; (g) references to any Person include that
Person's
permitted successors and assigns; and (h) a Mortgage Loan is "30
days
delinquent" if any Scheduled Payment has not been received by the
close of
business on the day immediately preceding the Due Date on which the
next
Scheduled Payment is due. Similarly for "60 days delinquent," "90
days
delinquent" and so on
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<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION
2.01. Conveyance of Mortgage Loans.
(a) Each
Seller, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys
to the
Depositor, without recourse, all its respective right, title and
interest in
and to the related Mortgage Loans, including all interest and
principal
received or receivable by such Seller, on or with respect to the
Mortgage
Loans after the Cut-off Date and all interest and principal
payments on the
related Mortgage Loans received prior to the Cut-off Date in
respect of
installments of interest and principal due thereafter, but not
including
payments of principal and interest due and payable on such Mortgage
Loans, on
or before the Cut-off Date. On or prior to the Closing Date,
Countrywide shall
deliver to the Depositor or, at the Depositor's direction, to the
Trustee or
other designee of the Depositor, the Mortgage File for each
Mortgage Loan
listed in the Mortgage Loan Schedule (except that, in the case of
the Delay
Delivery Mortgage Loans (which may include Countrywide Mortgage
Loans, Park
Granada Mortgage Loans, Park Monaco Mortgage Loans and Park Sienna
Mortgage
Loans), such delivery may take place within thirty (30) days
following the
Closing Date). Such delivery of the Mortgage Files shall be made
against
payment by the Depositor of the purchase price, previously agreed
to by the
Sellers and Depositor, for the Mortgage Loans. With respect to any
Mortgage
Loan that does not have a first payment date on or before the Due
Date in the
month of the first Distribution Date, Countrywide shall deposit
into the
Distribution Account on or before the Distribution Account Deposit
Date
relating to the first applicable Distribution Date, an amount equal
to one
month's interest at the related Adjusted Mortgage Rate on the
Cut-off Date
Principal Balance of such Mortgage Loan.
(b)
Immediately upon the conveyance of the Mortgage Loans referred to
in
clause (a), the Depositor sells, transfers, assigns, sets over and
otherwise
conveys to the Trustee for the benefit of the Certificateholders,
without
recourse, all the right, title and interest of the Depositor in and
to the
Trust Fund together with the Depositor's right to require each
Seller to cure
any breach of a representation or warranty made herein by such
Seller, or to
repurchase or substitute for any affected Mortgage Loan in
accordance
herewith.
(c) In
connection with the transfer and assignment set forth in clause
(b) above, the Depositor has delivered or caused to be delivered to
the
Trustee (or, in the case of the Delay Delivery Mortgage Loans, will
deliver or
cause to be delivered to the Trustee within thirty (30) days
following the
Closing Date) for the benefit of the Certificateholders the
following
documents or instruments with respect to each Mortgage Loan so
assigned:
(i) (A) the original Mortgage Note endorsed by manual or
facsimile
signature
in blank in the following form: "Pay to the order of
____________ without recourse," with all intervening
endorsements
showing a
complete chain of endorsement from the originator to the
Person
endorsing the Mortgage Note (each such endorsement being
sufficient
to transfer all right, title and interest of the party so
endorsing,
as noteholder or assignee thereof, in and to that Mortgage
Note);
or
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<PAGE>
(B) with respect to any Lost Mortgage Note, a lost note
affidavit
from
Countrywide stating that the original Mortgage Note was lost or
destroyed,
together with a copy of such Mortgage Note;
(ii)
except as provided below and for each Mortgage Loan that is not
a
MERS Mortgage Loan, the original recorded Mortgage or a copy of
such Mortgage,
with recording information, certified by Countrywide as being a
true and
complete copy of the Mortgage (or, in the case of a Mortgage for
which the
related Mortgaged Property is located in the Commonwealth of Puerto
Rico, a
true copy of the Mortgage certified as such by the applicable
notary) and in
the case of each MERS Mortgage Loan, the original Mortgage, or a
copy of such
mortgage, with recording information, noting the presence of the
MIN of the
Mortgage Loans and either language indicating that the Mortgage
Loan is a MOM
Loan if the Mortgage Loan is a MOM Loan or if the Mortgage Loan was
not a MOM
Loan at origination, the original Mortgage and the assignment
thereof to MERS,
with evidence of recording indicated thereon, or a copy of the
Mortgage
certified by the public recording office in which such Mortgage has
been
recorded;
(iii) in
the case of each Mortgage Loan that is not a MERS Mortgage
Loan, a duly executed assignment of the Mortgage, or a copy of
such
assignment, with recording information, (which may be included in a
blanket
assignment or assignments), together with, except as provided
below, all
interim recorded assignments of such mortgage or a copy of such
assignment,
with recording information, (each such assignment, when duly and
validly
completed, to be in recordable form and sufficient to effect the
assignment of
and transfer to the assignee thereof, under the Mortgage to which
the
assignment relates); provided that, if the related Mortgage has not
been
returned from the applicable public recording office, such
assignment of the
Mortgage may exclude the information to be provided by the
recording office;
provided, further, that such assignment of Mortgage need not be
delivered in
the case of a Mortgage for which the related Mortgaged Property is
located in
the Commonwealth of Puerto Rico;
(iv) the
original or copies of each assumption, modification, written
assurance or substitution agreement, if any;
(v) except
as provided below, the original or duplicate original
lender's title policy or a printout of the electronic equivalent
and all
riders thereto; and
(vi) in
the case of a Cooperative Loan, the originals of the following
documents or instruments:
(A) The Coop Shares, together with a stock power in blank;
(B) The executed Security Agreement;
(C) The executed Proprietary Lease;
(D) The executed Recognition Agreement;
(E) The executed UCC-1 financing statement with evidence of
recording
thereon which have been filed in all places required to
perfect
the Seller's interest in the Coop Shares and the Proprietary
Lease; and
(F) The executed UCC-3 financing statements or other
appropriate
UCC
financing statements required by state law, evidencing a
complete
and
unbroken line
II-2
<PAGE>
from the
mortgagee to the Trustee with evidence of recording thereon (or
in a form
suitable for recordation).
In
addition, in connection with the assignment of any MERS
Mortgage
Loan, each Seller agrees that it will cause, at the Trustee's
expense, the
MERS(R) System to indicate that the Mortgage Loans sold by such
Seller to the
Depositor have been assigned by that Seller 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 the information
required by the
MERS(R) System to identify the series of the Certificates issued in
connection
with such Mortgage Loans. Each Seller further agrees that it will
not, and
will not permit the Master Servicer to, and the Master Servicer
agrees that it
will not, alter the information referenced in this paragraph with
respect to
any Mortgage Loan sold by such Seller to the Depositor during the
term of this
Agreement unless and until such Mortgage Loan is repurchased in
accordance
with the terms of this Agreement.
In the
event that in connection with any Mortgage Loan that is not a
MERS Mortgage Loan the Depositor cannot deliver (a) the original
recorded
Mortgage, or a copy of such Mortgage, with recording information,
(b) all
interim recorded assignments, or a copy of such assignments, with
recording
information or (c) the lender's title policy or a copy of the
lender's title
policy (together with all riders thereto) satisfying the
requirements of
clause (ii), (iii) or (v) above, respectively, concurrently with
the execution
and delivery of this Agreement because such document or documents
have not
been returned from the applicable public recording office in the
case of
clause (ii) or (iii) above, or because the title policy has not
been delivered
to either the Master Servicer or the Depositor by the applicable
title insurer
in the case of clause (v) above, the Depositor shall promptly
deliver to the
Trustee, in the case of clause (ii) or (iii) above, such original
Mortgage or
a copy of such Mortgage, with recording information, or such
interim
assignment or a copy of such assignment, with recording
information, as the
case may be, with evidence of recording indicated thereon upon
receipt thereof
from the public recording office, or a copy thereof, certified,
if
appropriate, by the relevant recording office, but in no event
shall any such
delivery of the original Mortgage and each such interim assignment
or a copy
thereof, certified, if appropriate, by the relevant recording
office, be made
later than one year following the Closing Date, or, in the case of
clause (v)
above, no later than 120 days following the Closing Date; provided,
however,
in the event the Depositor is unable to deliver by such date each
Mortgage and
each such interim assignment by reason of the fact that any such
documents
have not been returned by the appropriate recording office, or, in
the case of
each such interim assignment, because the related Mortgage has not
been
returned by the appropriate recording office, the Depositor shall
deliver such
documents to the Trustee as promptly as possible upon receipt
thereof and, in
any event, within 720 days following the Closing Date. The
Depositor shall
forward or cause to be forwarded to the Trustee (a) from time to
time
additional original documents evidencing an assumption or
modification of a
Mortgage Loan and (b) any other documents required to be delivered
by the
Depositor or the Master Servicer to the Trustee. In the event that
the
original Mortgage is not delivered and in connection with the
payment in full
of the related Mortgage Loan and the public recording office
requires the
presentation of a "lost instruments affidavit and indemnity" or any
equivalent
document, because only a copy of the Mortgage can be delivered with
the
instrument of satisfaction or reconveyance, the Master Servicer
shall execute
and deliver or cause to be executed and delivered such a document
to the
public recording office. In the case where a public recording
office retains
the original recorded Mortgage or in the case where a Mortgage is
lost after
recordation in a public recording office, Countrywide shall deliver
to the
Trustee a copy of such Mortgage certified by such public recording
office to
be a true and complete copy of the original recorded Mortgage.
As
promptly as practicable subsequent to such transfer and
assignment,
and in any event, within one-hundred and twenty (120) days after
such transfer
and assignment, the Trustee shall (A) as the
II-3
<PAGE>
assignee thereof, affix the following language to each assignment
of
Mortgage: "CWALT Series 2006-40T1, The Bank of New York, as
trustee", (B)
cause such assignment to be in proper form for recording in the
appropriate
public office for real property records and (C) cause to be
delivered for
recording in the appropriate public office for real property
records the
assignments of the Mortgages to the Trustee, except that, (i) with
respect to
any assignments of Mortgage as to which the Trustee has not
received the
information required to prepare such assignment in recordable form,
the
Trustee's obligation to do so and to deliver the same for such
recording shall
be as soon as practicable after receipt of such information and in
any event
within thirty (30) days after receipt thereof and (ii) the Trustee
need not
cause to be recorded any assignment which relates to a Mortgage
Loan, the
Mortgaged Property and Mortgage File relating to which are located
in any
jurisdiction (including Puerto Rico) under the laws of which the
recordation
of such assignment is not necessary to protect the Trustee's and
the
Certificateholders' interest in the related Mortgage Loan as
evidenced by an
opinion of counsel delivered by Countrywide to the Trustee within
90 days of
the Closing Date (which opinion may be in the form of a "survey"
opinion and
is not required to be delivered by counsel admitted to practice law
in the
jurisdiction as to which such legal opinion applies).
In the
case of Mortgage Loans that have been prepaid in full as of the
Closing Date, the Depositor, in lieu of delivering the above
documents to the
Trustee, will deposit in the Certificate Account the portion of
such payment
that is required to be deposited in the Certificate Account
pursuant to
Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement,
within
thirty (30) days after the Closing Date, Countrywide (on its own
behalf and on
behalf of Park Granada, Park Monaco and Park Sienna) shall either
(i) deliver
to the Depositor, or at the Depositor's direction, to the Trustee
or other
designee of the Depositor the Mortgage File as required pursuant to
this
Section 2.01 for each Delay Delivery Mortgage Loan or (ii) either
(A)
substitute a Substitute Mortgage Loan for the Delay Delivery
Mortgage Loan or
(B) repurchase the Delay Delivery Mortgage Loan, which substitution
or
repurchase shall be accomplished in the manner and subject to the
conditions
set forth in Section 2.03 (treating each Delay Delivery Mortgage
Loan as a
Deleted Mortgage Loan for purposes of such Section 2.03); provided,
however,
that if Countrywide fails to deliver a Mortgage File for any Delay
Delivery
Mortgage Loan within the thirty (30) day period provided in the
prior
sentence, Countrywide (on its own behalf and on behalf of Park
Granada, Park
Monaco and Park Sienna) shall use its best reasonable efforts to
effect a
substitution, rather than a repurchase of, such Deleted Mortgage
Loan and
provided further that the cure period provided for in Section 2.02
or in
Section 2.03 shall not apply to the initial delivery of the
Mortgage File for
such Delay Delivery Mortgage Loan, but rather Countrywide (on its
own behalf
and on behalf of Park Granada, Park Monaco and Park Sienna) shall
have five
(5) Business Days to cure such failure to deliver. At the end of
such thirty
(30) day period the Trustee shall send a Delay Delivery
Certification for the
Delay Delivery Mortgage Loans delivered during such thirty (30) day
period in
accordance with the provisions of Section 2.02.
(d)
Neither the Depositor nor the Trust will acquire or hold any
Mortgage Loan that would violate the representations made by
Countrywide set
forth in clause (46) of Schedule III-A hereto.
SECTION
2.02. Acceptance by Trustee of the Mortgage Loans.
(a) The
Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form annexed hereto as Exhibit F-1 and
declares
that it holds and will hold such documents and the other documents
delivered
to it constituting the Mortgage Files, and that it holds or will
hold such
other assets as are included in the Trust Fund, in trust for the
exclusive use
and benefit of all present and future Certificateholders. The
Trustee
acknowledges that it will maintain possession of the Mortgage Notes
in the
State of California, unless otherwise permitted by the Rating
Agencies.
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<PAGE>
The
Trustee agrees to execute and deliver on the Closing Date to
the
Depositor, the Master Servicer and Countrywide (on its own behalf
and on
behalf of Park Granada, Park Monaco and Park Sienna) an Initial
Certification
in the form annexed hereto as Exhibit F-1. Based on its review
and
examination, and only as to the documents identified in such
Initial
Certification, the Trustee acknowledges that such documents appear
regular on
their face and relate to such Mortgage Loan. The Trustee shall be
under no
duty or obligation to inspect, review or examine said documents,
instruments,
certificates or other papers to determine that the same are
genuine,
enforceable or appropriate for the represented purpose or that they
have
actually been recorded in the real estate records or that they are
other than
what they purport to be on their face.
On or
about the thirtieth (30th) day after the Closing Date, the
Trustee
shall deliver to the Depositor, the Master Servicer and Countrywide
(on its
own behalf and on behalf of Park Granada, Park Monaco and Park
Sienna) a Delay
Delivery Certification with respect to the Mortgage Loans in the
form annexed
hereto as Exhibit G-1, with any applicable exceptions noted
thereon.
Not later
than 90 days after the Closing Date, the Trustee shall deliver
to the Depositor, the Master Servicer and Countrywide (on its own
behalf and
on behalf of Park Granada, Park Monaco and Park Sienna) a Final
Certification
with respect to the Mortgage Loans in the form annexed hereto as
Exhibit H-1,
with any applicable exceptions noted thereon. If, in the course of
such
review, the Trustee finds any document constituting a part of a
Mortgage File
which does not meet the requirements of Section 2.01, the Trustee
shall list
such as an exception in the Final Certification; provided, however
that the
Trustee shall not make any determination as to whether (i) any
endorsement is
sufficient to transfer all right, title and interest of the party
so
endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note or
(ii) any assignment is in recordable form or is sufficient to
effect the
assignment of and transfer to the assignee thereof under the
mortgage to which
the assignment relates. Countrywide (on its own behalf and on
behalf of Park
Granada, Park Monaco and Park Sienna) shall promptly correct or
cure such
defect within 90 days from the date it was so notified of such
defect and, if
Countrywide does not correct or cure such defect within such
period,
Countrywide (on its own behalf and on behalf of Park Granada, Park
Monaco and
Park Sienna) shall either (a) substitute for the related Mortgage
Loan a
Substitute Mortgage Loan, which substitution shall be accomplished
in the
manner and subject to the conditions set forth in Section 2.03, or
(b)
purchase such Mortgage Loan from the Trustee within 90 days from
the date
Countrywide (on its own behalf and on behalf of Park Granada, Park
Monaco and
Park Sienna) was notified of such defect in writing at the Purchase
Price of
such Mortgage Loan; provided, however, that in no event shall
such
substitution or purchase occur more than 540 days from the Closing
Date,
except that if the substitution or purchase of a Mortgage Loan
pursuant to
this provision is required by reason of a delay in delivery of any
documents
by the appropriate recording office, and there is a dispute between
either the
Master Servicer or Countrywide (on its own behalf and on behalf of
Park
Granada, Park Monaco and Park Sienna) and the Trustee over the
location or
status of the recorded document, then such substitution or purchase
shall
occur within 720 days from the Closing Date. The Trustee shall
deliver written
notice to each Rating Agency within 270 days from the Closing Date
indicating
each Mortgage Loan (a) which has not been returned by the
appropriate
recording office or (b) as to which there is a dispute as to
location or
status of such Mortgage Loan. Such notice shall be delivered every
90 days
thereafter until the related Mortgage Loan is returned to the
Trustee. Any
such substitution pursuant to (a) above or purchase pursuant to (b)
above
shall not be effected prior to the delivery to the Trustee of the
Opinion of
Counsel required by Section 2.05 hereof, if any, and any
substitution pursuant
to (a) above shall not be effected prior to the additional delivery
to the
Trustee of a Request for Release substantially in the form of
Exhibit N. No
substitution is permitted to be made in any calendar month after
the
Determination Date for such month. The Purchase Price for any such
Mortgage
Loan shall be deposited by Countrywide (on its own behalf and on
behalf of
Park Granada, Park Monaco and Park Sienna) in the Certificate
Account on or
prior to the Distribution Account Deposit Date for the Distribution
Date in
the month following the month of repurchase and, upon receipt of
such deposit
and
II-5
<PAGE>
certification with respect thereto in the form of Exhibit N hereto,
the
Trustee shall release the related Mortgage File to Countrywide (on
its own
behalf and on behalf of Park Granada, Park Monaco and Park Sienna)
and shall
execute and deliver at Countrywide's (on its own behalf and on
behalf of Park
Granada, Park Monaco and Park Sienna) request such instruments of
transfer or
assignment prepared by Countrywide, in each case without recourse,
as shall be
necessary to vest in Countrywide (on its own behalf and on behalf
of Park
Granada, Park Monaco and Park Sienna), or its designee, the
Trustee's interest
in any Mortgage Loan released pursuant hereto. If pursuant to the
foregoing
provisions Countrywide (on its own behalf and on behalf of Park
Granada, Park
Monaco and Park Sienna) repurchases an Mortgage Loan that is a MERS
Mortgage
Loan, the Master Servicer shall either (i) cause MERS to execute
and deliver
an assignment of the Mortgage in recordable form to transfer the
Mortgage from
MERS to Countrywide (on its own behalf and on behalf of Park
Granada, Park
Monaco and Park Sienna) or its designee and shall cause such
Mortgage to be
removed from registration on the MERS(R) System in accordance with
MERS' rules
and regulations or (ii) cause MERS to designate on the MERS(R)
System
Countrywide (on its own behalf and on behalf of Park Granada, Park
Monaco and
Park Sienna) or its designee as the beneficial holder of such
Mortgage Loan.
(b)
[Reserved].
(c) The
Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set
forth
herein. The Master Servicer shall promptly deliver to the Trustee,
upon the
execution or receipt thereof, the originals of such other documents
or
instruments constituting the Mortgage File as come into the
possession of the
Master Servicer from time to time.
(d) It is
understood and agreed that the respective obligations of each
Seller to substitute for or to purchase any Mortgage Loan sold to
the
Depositor by it which does not meet the requirements of Section
2.01 above
shall constitute the sole remedy respecting such defect available
to the
Trustee, the Depositor and any Certificateholder against that
Seller.
(e)
[Reserved].
(f)
[Reserved].
SECTION
2.03. Representations, Warranties and Covenants of the Sellers
and Master Servicer.
(a)
Countrywide hereby makes the representations and warranties set
forth in (i) Schedule II-A, Schedule II-B, Schedule II-C and
Schedule II-D
hereto, and by this reference incorporated herein, to the
Depositor, the
Master Servicer and the Trustee, as of the Closing Date, (ii)
Schedule III-A
hereto, and by this reference incorporated herein, to the
Depositor, the
Master Servicer and the Trustee, as of the Closing Date, or if so
specified
therein, as of the Cut-off Date with respect to all of the Mortgage
Loans, and
(iii) Schedule III-B hereto, and by this reference incorporated
herein, to the
Depositor, the Master Servicer and the Trustee, as of the Closing
Date, or if
so specified therein, as of the Cut-off Date with respect to the
Mortgage
Loans that are Countrywide Mortgage Loans. Park Granada hereby
makes the
representations and warranties set forth in (i) Schedule II-B
hereto, and by
this reference incorporated herein, to the Depositor, the Master
Servicer and
the Trustee, as of the Closing Date and (ii) Schedule III-C hereto,
and by
this reference incorporated herein, to the Depositor, the Master
Servicer and
the Trustee, as of the Closing Date, or if so specified therein, as
of the
Cut-off Date with respect to the Mortgage Loans that are Park
Granada Mortgage
Loans. Park Monaco hereby makes the representations and warranties
set forth
in (i) Schedule II-C hereto, and by this reference incorporated
herein, to the
Depositor, the Master Servicer and the Trustee, as of the Closing
Date and
(ii) Schedule III-
II-6
<PAGE>
D hereto, and by this reference incorporated herein, to the
Depositor, the
Master Servicer and the Trustee, as of the Closing Date, or if so
specified
therein, as of the Cut-off Date with respect to the Mortgage Loans
that are
Park Monaco Mortgage Loans. Park Sienna hereby makes the
representations and
warranties set forth in (i) Schedule II-D hereto, and by this
reference
incorporated herein, to the Depositor, the Master Servicer and the
Trustee, as
of the Closing Date and (ii) Schedule III-E hereto, and by this
reference
incorporated herein, to the Depositor, the Master Servicer and the
Trustee, as
of the Closing Date, or if so specified therein, as of the Cut-off
Date with
respect to the Mortgage Loans that are Park Sienna Mortgage
Loans.
(b) The
Master Servicer hereby makes the representations and warranties
set forth in Schedule IV hereto, and by this reference incorporated
herein, to
the Depositor and the Trustee, as of the Closing Date.
(c) Upon
discovery by any of the parties hereto of a breach of a
representation or warranty with respect to a Mortgage Loan made
pursuant to
Section 2.03(a) that materially and adversely affects the interests
of the
Certificateholders in that Mortgage Loan, the party discovering
such breach
shall give prompt notice thereof to the other parties. Each Seller
hereby
covenants that within 90 days of the earlier of its discovery or
its receipt
of written notice from any party of a breach of any representation
or warranty
with respect to a Mortgage Loan sold by it pursuant to Section
2.03(a) which
materially and adversely affects the interests of the
Certificateholders in
that Mortgage Loan, it shall cure such breach in all material
respects, and if
such breach is not so cured, shall, (i) if such 90-day period
expires prior to
the second anniversary of the Closing Date, remove such Mortgage
Loan (a
"Deleted Mortgage Loan") from the Trust Fund and substitute in its
place a
Substitute 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, however, that any such substitution pursuant to
(i) above
shall not be effected prior to the delivery to the Trustee of the
Opinion of
Counsel required by Section 2.05 hereof, if any, 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 substantially in the form
of Exhibit N
and the Mortgage File for any such Substitute Mortgage Loan. The
Seller
repurchasing a Mortgage Loan pursuant to this Section 2.03(c) 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. With respect to the representations and
warranties
described in this Section which are made to the best of a Seller's
knowledge,
if it is discovered by either the Depositor, a Seller 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 or the interests of the Certificateholders therein,
notwithstanding that
Seller's lack of knowledge with respect to the substance of
such
representation or warranty, such inaccuracy shall be deemed a
breach of the
applicable representation or warranty.
With
respect to any Substitute Mortgage Loan or Loans, sold to the
Depositor by a Seller, Countrywide (on its own behalf and on behalf
of Park
Granada, Park Monaco and Park Sienna) shall deliver to the Trustee
for the
benefit of the Certificateholders the Mortgage Note, the Mortgage,
the related
assignment of the Mortgage, and such other documents and agreements
as are
required by Section 2.01, with the Mortgage Note endorsed and the
Mortgage
assigned as required by Section 2.01. No substitution is permitted
to be made
in any calendar month after the Determination Date for such month.
Scheduled
Payments due with respect to Substitute Mortgage Loans in the month
of
substitution shall not be part of the Trust Fund and will be
retained by the
related Seller on the next succeeding Distribution Date. For the
month of
substitution, distributions to Certificateholders will include the
monthly
payment due on any Deleted Mortgage Loan for such month and
thereafter that
Seller shall be entitled to retain all amounts received in respect
of such
Deleted Mortgage Loan. The Master Servicer shall amend the Mortgage
Loan
Schedule for the benefit of the Certificateholders to reflect the
removal of
such Deleted
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<PAGE>
Mortgage Loan and the substitution of the Substitute Mortgage Loan
or Loans
and the Master Servicer shall deliver the amended Mortgage Loan
Schedule to
the Trustee. Upon such substitution, the Substitute Mortgage Loan
or Loans
shall be subject to the terms of this Agreement in all respects,
and the
related Seller shall be deemed to have made with respect to such
Substitute
Mortgage Loan or Loans, as of the date of substitution, the
representations
and warranties made pursuant to Section 2.03(a) with respect to
such Mortgage
Loan. Upon any such substitution and the deposit to the Certificate
Account of
the amount required to be deposited therein in connection with
such
substitution as described in the following paragraph, the Trustee
shall
release the Mortgage File held for the benefit of the
Certificateholders
relating to such Deleted Mortgage Loan to the related Seller and
shall execute
and deliver at such Seller's direction such instruments of transfer
or
assignment prepared by Countrywide (on its own behalf and on behalf
of Park
Granada, Park Monaco and Park Sienna), in each case without
recourse, as shall
be necessary to vest title in that Seller, or its designee, the
Trustee's
interest in any Deleted Mortgage Loan substituted for pursuant to
this Section
2.03.
For any
month in which a Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer
will determine the amount (if any) by which the aggregate principal
balance of
all Substitute Mortgage Loans sold to the Depositor by that Seller
as of the
date of substitution is less than the aggregate Stated Principal
Balance of
all Deleted Mortgage Loans repurchased by that Seller (after
application of
the scheduled principal portion of the monthly payments due in the
month of
substitution). The amount of such shortage (the "Substitution
Adjustment
Amount") plus an amount equal to the aggregate of any unreimbursed
Advances
with respect to such Deleted Mortgage Loans shall be deposited in
the
Certificate Account by Countrywide (on its own behalf and on behalf
of Park
Granada, Park Monaco and Park Sienna) on or before the Distribution
Account
Deposit Date for the Distribution Date in the month succeeding the
calendar
month during which the related Mortgage Loan became required to be
purchased
or replaced hereunder.
In the
event that a Seller shall have repurchased a Mortgage Loan, the
Purchase Price therefor shall be deposited in the Certificate
Account pursuant
to Section 3.05 on or before the Distribution Account Deposit Date
for the
Distribution Date in the month following the month during which
that Seller
became obligated hereunder to repurchase or replace such Mortgage
Loan and
upon such deposit of the Purchase Price, the delivery of the
Opinion of
Counsel required by Section 2.05 and receipt of a Request for
Release in the
form of Exhibit N hereto, the Trustee shall release the related
Mortgage File
held for the benefit of the Certificateholders to such Person, and
the Trustee
shall execute and deliver at such Person's direction such
instruments of
transfer or assignment prepared by such Person, in each case
without recourse,
as shall be necessary to transfer title from the Trustee. It is
understood and
agreed that the obligation under this Agreement of any Person to
cure,
repurchase or replace any Mortgage Loan as to which a breach has
occurred and
is continuing shall constitute the sole remedy against such Persons
respecting
such breach available to Certificateholders, the Depositor or the
Trustee on
their behalf.
The
representations and warranties made pursuant to this Section
2.03
shall survive delivery of the respective Mortgage Files to the
Trustee for the
benefit of the Certificateholders.
SECTION
2.04. Representations and Warranties of the Depositor as to the
Mortgage Loans.
The
Depositor hereby represents and warrants to the Trustee with
respect
to each Mortgage Loan as of the date hereof or such other date set
forth
herein that as of the Closing Date, and following the transfer of
the Mortgage
Loans to it by each Seller, the Depositor had good title to the
Mortgage Loans
and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.
II-8
<PAGE>
The
Depositor hereby assigns, transfers and conveys to the Trustee
all
of its rights with respect to the Mortgage Loans including,
without
limitation, the representations and warranties of each Seller made
pursuant to
Section 2.03(a)(ii) hereof, together with all rights of the
Depositor to
require each Seller to cure any breach thereof or to repurchase or
substitute
for any affected Mortgage Loan in accordance with this
Agreement.
It is
understood and agreed that the representations and warranties
set
forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the
Trustee. Upon discovery by the Depositor or the Trustee of a breach
of any of
the foregoing representations and warranties set forth in this
Section 2.04
(referred to herein as a "breach"), which breach materially and
adversely
affects the interest of the Certificateholders, 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.
(a)
Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 2.03 shall be made
more than
90 days after the Closing Date unless Countrywide delivers to the
Trustee an
Opinion of Counsel, which Opinion of Counsel shall not be at the
expense of
either the Trustee or the Trust Fund, addressed to the Trustee, to
the effect
that such substitution will not (i) result in the imposition of the
tax on
"prohibited transactions" on the Trust Fund or contributions after
the Startup
Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code,
respectively,
or (ii) cause any REMIC created hereunder to fail to qualify as a
REMIC at any
time that any Certificates are outstanding.
(b) Upon
discovery by the Depositor, a Seller, the Master Servicer, or
the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party
discovering
such fact shall promptly (and in any event within five (5) Business
Days of
discovery) give written notice thereof to the other parties. In
connection
therewith, the Trustee shall require Countrywide (on its own behalf
and on
behalf of Park Granada, Park Monaco and Park Sienna), at its
option, to either
(i) substitute, if the conditions in Section 2.03(c) with respect
to
substitutions are satisfied, a Substitute Mortgage Loan for the
affected
Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within
90 days of
such discovery in the same manner as it would a Mortgage Loan for a
breach of
representation or warranty made pursuant to Section 2.03. The
Trustee shall
reconvey to Countrywide the Mortgage Loan to be released pursuant
hereto in
the same manner, and on the same terms and conditions, as it would
a Mortgage
Loan repurchased for breach of a representation or warranty
contained in
Section 2.03.
SECTION
2.06. Execution and Delivery of Certificates.
The
Trustee acknowledges the transfer and assignment to it of the
Trust
Fund and, concurrently with such transfer and assignment, has
executed and
delivered to or upon the order of the Depositor, the Certificates
in
authorized denominations evidencing directly or indirectly the
entire
ownership of the Trust Fund. The Trustee agrees to hold the Trust
Fund and
exercise the rights referred to above for the benefit of all
present and
future Holders of the Certificates and to perform the duties set
forth in this
Agreement, to the end that the interests of the Holders of the
Certificates
may be adequately and effectively protected.
SECTION
2.07. REMIC Matters.
The
Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all
interests
created hereby. The "Startup Day" for purposes of the
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<PAGE>
REMIC Provisions shall be the Closing Date. The "tax matters
person" with
respect to each REMIC hereunder shall be the Trustee and the
Trustee shall
hold the Tax Matters Person Certificate. Each REMIC's fiscal year
shall be the
calendar year.
SECTION 2.08.
Covenants of the Master Servicer.
The Master
Servicer hereby covenants to the Depositor and the Trustee as
follows:
(a) the
Master Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and
requirements of
the insurer under each Required Insurance Policy; and
(b) no
written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor,
any
affiliate of the Depositor or the Trustee and prepared by the
Master Servicer
pursuant to this Agreement will contain any untrue statement of a
material
fact or omit to state a material fact necessary to make such
information,
certificate, statement or report not misleading.
II-10
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION
3.01. Master Servicer to Service Mortgage Loans.
For and on
behalf of the Certificateholders, the Master Servicer shall
service and administer the Mortgage Loans in accordance with the
terms of this
Agreement and customary and usual standards of practice of prudent
mortgage
loan servicers. In connection with such servicing and
administration, the
Master Servicer shall have full power and authority, acting alone
and/or
through Subservicers as provided in Section 3.02 hereof, 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 Mortgaged Property and
assumptions of the
Mortgage Notes and related Mortgages (but only in the manner
provided in this
Agreement), (iii) to collect any Insurance Proceeds and other
Liquidation
Proceeds (which, for the purpose of this Section, includes any
Subsequent
Recoveries), and (iv) to effectuate foreclosure or other conversion
of the
ownership of the Mortgaged Property securing any Mortgage Loan;
provided that
the Master Servicer shall not take any action that is inconsistent
with or
prejudices the interests of the Trust Fund or the
Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor, the
Trustee and
the Certificateholders under this Agreement. The Master Servicer
shall
represent and protect the interests of the Trust Fund in the same
manner as it
protects its own interests in mortgage loans in its own portfolio
in any
claim, proceeding or litigation regarding a Mortgage Loan, and
shall not make
or permit any modification, waiver or amendment of any Mortgage
Loan which
would cause any REMIC created hereunder to fail to qualify as a
REMIC or
result in the imposition of any tax under Section 860F(a) or
Section 860G(d)
of the Code. Without limiting the generality of the foregoing, the
Master
Servicer, in its own name or in the name of the Depositor and the
Trustee, is
hereby authorized and empowered by the Depositor and the Trustee,
when the
Master Servicer believes it appropriate in its reasonable judgment,
to execute
and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders
or any of them, any and all instruments of satisfaction or
cancellation, or of
partial or full release or discharge and all other comparable
instruments,
with respect to the Mortgage Loans, and with respect to the
Mortgaged
Properties held for the benefit of the Certificateholders. The
Master Servicer
shall prepare and deliver to the Depositor and/or the Trustee such
documents
requiring execution and delivery by either or both of them as are
necessary or
appropriate to enable the Master Servicer to service and administer
the
Mortgage Loans to the extent that the Master Servicer is not
permitted to
execute and deliver such documents pursuant to the preceding
sentence. Upon
receipt of such documents, the Depositor and/or the Trustee shall
execute such
documents and deliver them to the Master Servicer. The Master
Servicer further
is authorized and empowered by the Trustee, on behalf of the
Certificateholders and the Trustee, in its own name or in the name
of the
Subservicer, when the Master Servicer or the Subservicer, as the
case may be,
believes it appropriate in its best judgment to register any
Mortgage Loan on
the MERS(R) System, or cause the removal from the registration of
any Mortgage
Loan on the MERS(R) System, to execute and deliver, on behalf of
the Trustee
and the Certificateholders or any of them, any and all instruments
of
assignment and other comparable instruments with respect to such
assignment or
re-recording of a Mortgage in the name of MERS, solely as nominee
for the
Trustee and its successors and assigns.
In
accordance with the standards of the preceding paragraph, the
Master
Servicer 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, which advances shall be reimbursable in the first
instance from
related collections from the Mortgagors pursuant to Section 3.06,
and further
as provided in Section 3.08. The costs incurred by the Master
Servicer, if
any, in effecting the timely payments of taxes and assessments on
the
Mortgaged Properties and related insurance premiums shall not, for
the purpose
of
III-1
<PAGE>
calculating monthly distributions to the Certificateholders, be
added to the
Stated Principal Balances of the related Mortgage Loans,
notwithstanding that
the terms of such Mortgage Loans so permit.
SECTION
3.02. Subservicing; Enforcement of the Obligations of
Subservicers.
(a) The
Master Servicer may arrange for the subservicing of any
Mortgage
Loan by a Subservicer pursuant to a subservicing agreement;
provided, however,
that such subservicing arrangement and the terms of the related
subservicing
agreement must provide for the servicing of such Mortgage Loans in
a manner
consistent with the servicing arrangements contemplated hereunder.
Unless the
context otherwise requires, references in this Agreement to actions
taken or
to be taken by the Master Servicer in servicing the Mortgage Loans
include
actions taken or to be taken by a Subservicer on behalf of the
Master
Servicer. Notwithstanding the provisions of any subservicing
agreement, any of
the provisions of this Agreement relating to agreements or
arrangements
between the Master Servicer and a Subservicer or reference to
actions taken
through a Subservicer or otherwise, the Master Servicer shall
remain obligated
and liable to the Depositor, the Trustee and the Certificateholders
for the
servicing and administration of the Mortgage Loans in accordance
with the
provisions of this Agreement without diminution of such obligation
or
liability by virtue of such subservicing agreements or arrangements
or by
virtue of indemnification from the Subservicer and to the same
extent and
under the same terms and conditions as if the Master Servicer alone
were
servicing and administering the Mortgage Loans. All actions of
each
Subservicer performed pursuant to the related subservicing
agreement shall be
performed as an agent of the Master Servicer with the same force
and effect as
if performed directly by the Master Servicer.
(b) For
purposes of this Agreement, the Master Servicer shall be deemed
to have received any collections, recoveries or payments with
respect to the
Mortgage Loans that are received by a Subservicer regardless of
whether such
payments are remitted by the Subservicer to the Master
Servicer.
SECTION
3.03. Rights of the Depositor and the Trustee in Respect of the
Master Servicer.
The
Depositor may, but is not obligated to, enforce the obligations
of
the Master Servicer hereunder and may, but is not obligated to,
perform, or
cause a designee to perform, any defaulted obligation of the Master
Servicer
hereunder and in connection with any such defaulted obligation to
exercise the
related rights of the Master Servicer hereunder; provided that the
Master
Servicer shall not be relieved of any of its obligations hereunder
by virtue
of such performance by the Depositor or its designee. Neither the
Trustee nor
the Depositor shall have any responsibility or liability for any
action or
failure to act by the Master Servicer nor shall the Trustee or the
Depositor
be obligated to supervise the performance of the Master Servicer
hereunder or
otherwise.
SECTION
3.04. Trustee to Act as Master Servicer.
In the
event that the Master Servicer shall for any reason no longer
be
the Master Servicer hereunder (including by reason of an Event of
Default or
termination by the Depositor), the Trustee or its successor shall
thereupon
assume all of the rights and obligations of the Master Servicer
hereunder
arising thereafter (except that the Trustee shall not be (i) liable
for losses
of the Master Servicer pursuant to Section 3.09 hereof or any acts
or
omissions of the predecessor Master Servicer hereunder), (ii)
obligated to
make Advances if it is prohibited from doing so by applicable law,
(iii)
obligated to effectuate repurchases or substitutions of Mortgage
Loans
hereunder including, but not limited to, repurchases or
substitutions of
Mortgage Loans pursuant to Section 2.02 or 2.03 hereof, (iv)
responsible for
expenses of the Master Servicer pursuant to Section 2.03 or (v)
deemed to have
made any representations and warranties of the Master Servicer
hereunder). Any
such assumption shall be subject to Section 7.02
III-2
<PAGE>
hereof. If the Master Servicer shall for any reason no longer be
the Master
Servicer (including by reason of any Event of Default or
termination by the
Depositor), the Trustee or its successor shall succeed to any
rights and
obligations of the Master Servicer under each subservicing
agreement.
The Master
Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all
documents
and records relating to each subservicing agreement or substitute
subservicing
agreement and the Mortgage Loans then being serviced thereunder and
an
accounting of amounts collected or held by it and otherwise use its
best
efforts to effect the orderly and efficient transfer of the
substitute
subservicing agreement to the assuming party.
SECTION
3.05. Collection of Mortgage Loan Payments; Certificate
Account;
Distribution Account; the Supplemental Interest Trust and the
Corridor
Contract Reserve Fund and the ES Grantor Trust.
(a) The
Master Servicer shall make reasonable efforts in accordance
with
the customary and usual standards of practice of prudent mortgage
servicers to
collect all payments called for under the terms and provisions of
the Mortgage
Loans to the extent such procedures shall be consistent with this
Agreement
and the terms and provisions of any related Required Insurance
Policy.
Consistent with the foregoing, the Master Servicer may in its
discretion (i)
waive any late payment charge or any Prepayment Charge or penalty
interest in
connection with the prepayment of a Mortgage Loan and (ii) extend
the due
dates for payments due on a Mortgage Note for a period not greater
than 180
days; provided, however, that the Master Servicer cannot extend the
maturity
of any such Mortgage Loan past the date on which the final payment
is due on
the latest maturing Mortgage Loan as of the Cut-off Date. In the
event of any
such arrangement, the Master Servicer shall make Advances on the
related
Mortgage Loan in accordance with the provisions of Section 4.01
during the
scheduled period in accordance with the amortization schedule of
such Mortgage
Loan without modification thereof by reason of such arrangements.
The Master
Servicer shall not be required to institute or join in litigation
with respect
to collection of any payment (whether under a Mortgage, Mortgage
Note or
otherwise or against any public or governmental authority with
respect to a
taking or condemnation) if it reasonably believes that enforcing
the provision
of the Mortgage or other instrument pursuant to which such payment
is required
is prohibited by applicable law.
(b) The
Master Servicer shall establish and maintain a Certificate
Account into which the Master Servicer shall deposit or cause to be
deposited
no later than two Business Days after receipt (or, if the current
long-term
credit rating of Countrywide is reduced below "A-" by S&P or
Fitch, or "A3" by
Moody's, the Master Servicer shall deposit or cause to be deposited
on a daily
basis within one Business Day of receipt), except as otherwise
specifically
provided herein, the following payments and collections remitted
by
Subservicers or received by it in respect of Mortgage Loans
subsequent to the
Cut-off Date (other than in respect of principal and interest due
on the
Mortgage Loans on or before the Cut-off Date) and the following
amounts
required to be deposited hereunder:
(i) all payments on account of principal on the Mortgage Loans,
including
Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans,
net of the
Master Servicing Fee, Prepayment Interest Excess and any
lender-paid mortgage insurance premiums;
(iii) [Reserved];
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<PAGE>
(iv) all Insurance Proceeds, Subsequent Recoveries and
Liquidation
Proceeds, other
than proceeds to be applied to the restoration or repair
of the
Mortgaged Property or released to the Mortgagor in accordance
with the
Master Servicer's normal servicing procedures;
(v) any amount required to be deposited by the Master Servicer
or
the
Depositor pursuant to Section 3.05(e) in connection with any
losses
on
Permitted Investments for which it is responsible;
(vi) any amounts required to be deposited by the Master
Servicer
pursuant to Section
3.09(c) and in respect of net monthly rental income
from REO
Property pursuant to Section 3.11 hereof;
(vii) all Substitution Adjustment Amounts;
(viii) all Advances made by the Master Servicer pursuant to
Section
4.01;
and
(ix) any other amounts required to be deposited hereunder.
In
addition, with respect to any Mortgage Loan that is subject to
a
buydown agreement, on each Due Date for such Mortgage Loan, in
addition to the
monthly payment remitted by the Mortgagor, the Master Servicer
shall cause
funds to be deposited into the Certificate Account in an amount
required to
cause an amount of interest to be paid with respect to such
Mortgage Loan
equal to the amount of interest that has accrued on such Mortgage
Loan from
the preceding Due Date at the Mortgage Rate net of the Master
Servicing Fee.
The
foregoing requirements for remittance by the Master Servicer
shall
be exclusive, it being understood and agreed that, without limiting
the
generality of the foregoing, payments in the nature of Prepayment
Charges,
late payment charges or assumption fees, if collected, need not be
remitted by
the Master Servicer. In the event that the Master Servicer shall
remit any
amount not required to be remitted, it may at any time withdraw or
direct the
institution maintaining the Certificate Account to withdraw such
amount from
the Certificate Account, any provision herein to the contrary
notwithstanding.
Such withdrawal or direction may be accomplished by delivering
written notice
thereof to the Trustee or such other institution maintaining the
Certificate
Account which describes the amounts deposited in error in the
Certificate
Account. The Master Servicer shall maintain adequate records with
respect to
all withdrawals made pursuant to this Section. All funds deposited
in the
Certificate Account shall be held in trust for the
Certificateholders until
withdrawn in accordance with Section 3.08.
(c)
[Reserved].
(d) The
Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall,
promptly upon
receipt, deposit in the Distribution Account and retain therein the
following:
(i) the aggregate amount remitted by the Master Servicer to the
Trustee
pursuant to Section 3.08(a)(ix);
(ii) any amount deposited by the Master Servicer or the
Depositor
pursuant
to Section 3.05(e) in connection with any losses on Permitted
Investments for which it is responsible; and
III-4
<PAGE>
(iii) any other amounts deposited hereunder which are required
to
be
deposited in the Distribution Account.
In the
event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to
withdraw
such amount from the Distribution Account, any provision herein to
the
contrary notwithstanding. Such direction may be accomplished by
delivering an
Officer's Certificate to the Trustee which describes the amounts
deposited in
error in the Distribution Account. All funds deposited in the
Distribution
Account shall be held by the Trustee in trust for the
Certificateholders until
disbursed in accordance with this Agreement or withdrawn in
accordance with
Section 3.08. In no event shall the Trustee incur liability for
withdrawals
from the Distribution Account at the direction of the Master
Servicer.
(e) Each
institution at which the Certificate Account or the
Distribution Account is maintained shall invest the funds therein
as directed
in writing by the Master Servicer in Permitted Investments, which
shall mature
not later than (i) in the case of the Certificate Account, the
second Business
Day next preceding the related Distribution Account Deposit Date
(except that
if such Permitted Investment is an obligation of the institution
that
maintains such account, then such Permitted Investment shall mature
not later
than the Business Day next preceding such Distribution Account
Deposit Date)
and (ii) in the case of the Distribution Account, the Business Day
next
preceding the Distribution Date (except that if such Permitted
Investment is
an obligation of the institution that maintains such fund or
account, then
such Permitted Investment shall mature not later than such
Distribution Date)
and, in each case, shall not be sold or disposed of prior to its
maturity. All
such Permitted Investments shall be made in the name of the
Trustee, for the
benefit of the Certificateholders. All income and gain net of any
losses
realized from any such investment of funds on deposit in the
Certificate
Account, or the Distribution Account shall be for the benefit of
the Master
Servicer as servicing compensation and shall be remitted to it
monthly as
provided herein. The amount of any realized losses in the
Certificate Account
or the Distribution Account incurred in any such account in respect
of any
such investments shall promptly be deposited by the Master Servicer
in the
Certificate Account or paid to the Trustee for deposit into the
Distribution
Account, as applicable. The Trustee in its fiduciary capacity shall
not be
liable for the amount of any loss incurred in respect of any
investment or
lack of investment of funds held in the Certificate Account or
the
Distribution Account and made in accordance with this Section
3.05.
(f) The
Master Servicer shall give notice to the Trustee, each Seller,
each Rating Agency and the Depositor of any proposed change of the
location of
the Certificate Account prior to any change thereof. The Trustee
shall give
notice to the Master Servicer, each Seller, each Rating Agency and
the
Depositor of any proposed change of the location of the
Distribution Account
or the ES Grantor Trust prior to any change thereof. The
Supplemental Interest
Trustee shall give notice to the Master Servicer, each Seller, each
Rating
Agency and the Depositor of any proposed change of the location of
the
Corridor Contract Reserve Fund prior to any change thereof.
(g) On the
Closing Date, there is hereby established a separate trust
(the "Supplemental Interest Trust"), the assets of which shall
consist of the
Corridor Contract Reserve Fund and the Supplemental Interest
Trustee's rights
and obligations under the Corridor Contracts The Supplemental
Interest Trust
shall be maintained by the Supplemental Interest Trustee, who
initially, shall
be the Trustee.
On the
Closing Date, the Supplemental Interest Trustee shall establish
and maintain in its name, in trust for the benefit of the Holders
of the
Covered Certificates, the Corridor Contract Reserve Fund, and shall
deposit
$1,000 therein upon receipt from or on behalf of the Depositor of
such amount.
All funds on deposit in the Corridor Contract Reserve Fund shall be
held
separate and apart from, and
III-5
<PAGE>
shall not be commingled with, any other moneys, including without
limitation,
other moneys held by the Trustee pursuant to this Agreement.
On each
Distribution Date, the Supplemental Interest Trustee shall
deposit into the Corridor Contract Reserve Fund all amounts
received in
respect of the Corridor Contracts for the related Interest Accrual
Period. The
Supplemental Interest Trustee shall make withdrawals from the
Corridor
Contract Reserve Fund to make distributions pursuant to Section
4.09
exclusively (other than as expressly provided for in Section
3.08).
Funds in
the Corridor Contract Reserve Fund shall remain univested.
(h) At the
request of the Holder of the Classes of Depositable
Certificates, and upon the surrender of such Depositable
Certificates, (i)
there will be established a separate trust (the "ES Grantor
Trust"), which
shall be a Grantor Trust for federal income tax purposes and (ii)
the Trustee
shall issue the Exchangeable Certificates, as set forth in Schedule
VII. The
ES Grantor Trust shall be maintained by the Trustee in its name,
for the
benefit of the Holders of the Depositable Certificates. Any and all
funds on
deposit in the ES Grantor Trust shall be held by the Trustee
separate and
apart from, and shall not be commingled with, any other moneys or
properties,
including without limitation, other moneys or properties held by
the Trustee
pursuant to this Agreement. In addition, at the request of the
Holder of the
Class of Exchangeable Certificates, and upon the surrender of
such
Exchangeable Certificates, the Trustee shall exchange such
Exchangeable
Certificates for the deposited Depositable Certificates, as set
forth in
Schedule VII.
SECTION 3.06.
Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
(a) To the
extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall establish and
maintain one
or more accounts (each, an "Escrow Account") and deposit and retain
therein
all collections from the Mortgagors (or advances by the Master
Servicer) for
the payment of taxes, assessments, hazard insurance premiums or
comparable
items for the account of the Mortgagors. Nothing herein shall
require the
Master Servicer to compel a Mortgagor to establish an Escrow
Account in
violation of applicable law.
(b)
Withdrawals of amounts so collected from the Escrow Accounts may
be
made only to effect timely payment of taxes, assessments, hazard
insurance
premiums, condominium or PUD association dues, or comparable items,
to
reimburse the Master Servicer out of related collections for any
payments made
pursuant to Sections 3.01 hereof (with respect to taxes and
assessments and
insurance premiums) and 3.09 hereof (with respect to hazard
insurance), to
refund to any Mortgagors any sums determined to be overages, to pay
interest,
if required by law or the terms of the related Mortgage or Mortgage
Note, to
Mortgagors on balances in the Escrow Account or to clear and
terminate the
Escrow Account at the termination of this Agreement in accordance
with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust
Fund.
(c) The
Master Servicer shall advance any payments referred to in
Section 3.06(a) that are not timely paid by the Mortgagors on the
date when
the tax, premium or other cost for which such payment is intended
is due, but
the Master Servicer shall be required so to advance only to the
extent that
such advances, in the good faith judgment of the Master Servicer,
will be
recoverable by the Master Servicer out of Insurance Proceeds,
Liquidation
Proceeds or otherwise.
III-6
<PAGE>
SECTION
3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Master
Servicer shall afford each Seller, the Depositor and the
Trustee reasonable access to all records and documentation
regarding the
Mortgage Loans and all accounts, insurance information and other
matters
relating to this Agreement, such access being afforded without
charge, but
only upon reasonable request and during normal business hours at
the office
designated by the Master Servicer.
Upon
reasonable advance notice in writing, the Master Servicer will
provide to each Certificateholder and/or Certificate Owner which is
a savings
and loan association, bank or insurance company certain reports and
reasonable
access to information and documentation regarding the Mortgage
Loans
sufficient to permit such Certificateholder and/or Certificate
Owner to comply
with applicable regulations of the OTS or other regulatory
authorities with
respect to investment in the Certificates; provided that the Master
Servicer
shall be entitled to be reimbursed by each such Certificateholder
and/or
Certificate Owner for actual expenses incurred by the Master
Servicer in
providing such reports and access.
SECTION
3.08. Permitted Withdrawals from the Certificate Account, the
Distribution Account, the Corridor Contract Reserve Fund and the ES
Grantor
Trust.
(a) The
Master Servicer may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not previously
retained
by the Master Servicer) the servicing compensation to which it
is
entitled pursuant to Section 3.14, and to pay to the Master
Servicer,
as
additional servicing compensation, earnings on or investment
income
with
respect to funds in or credited to the Certificate Account;
(ii) to reimburse each of the Master Servicer and the Trustee
for
unreimbursed Advances made by it, such right of reimbursement
pursuant
to this
subclause (ii) being limited to amounts received on the
Mortgage
Loan(s) in
respect of which any such Advance was made;
(iii) to reimburse each of the Master Servicer and the Trustee
for
any
Nonrecoverable Advance previously made by it;
(iv) to reimburse the Master Servicer for Insured Expenses from
the
related Insurance Proceeds;
(v) to reimburse the Master Servicer for (a) unreimbursed
Servicing
Advances, the Master Servicer's right to reimbursement
pursuant
to this clause (a) with respect to any Mortgage Loan being
limited to
amounts received on such Mortgage Loan(s) which represent
late
recoveries of the payments for which such advances were made
pursuant
to Section 3.01 or Section 3.06 and (b) for unpaid Master
Servicing
Fees as provided in Section 3.11 hereof;
(vi) to pay to the purchaser, with respect to each Mortgage
Loan
or
property acquired in respect thereof that has been purchased
pursuant
to Section
2.02, 2.03 or 3.11, all amounts received thereon after the
date of
such purchase;
III-7
<PAGE>
(vii) to reimburse the Sellers, the Master Servicer or the
Depositor
for expenses incurred by any of them and reimbursable pursuant
to Section
6.03 hereof;
(viii) to withdraw any amount deposited in the Certificate
Account
and not
required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an
amount equal to the sum of (a) the related Available Funds
and (b)
the Trustee Fee for such Distribution Date and remit such
amount
to the
Trustee for deposit in the Distribution Account; and
(x) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
The Master
Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any
withdrawal from the Certificate Account pursuant to such subclauses
(i), (ii),
(iv), (v) and (vi). Prior to making any withdrawal from the
Certificate
Account pursuant to subclause (iii), the Master Servicer shall
deliver to the
Trustee an Officer's Certificate of a Servicing Officer indicating
the amount
of any previous Advance determined by the Master Servicer to be
a
Nonrecoverable Advance and identifying the related Mortgage
Loans(s), and
their respective portions of such Nonrecoverable Advance.
(b) The
Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this
Agreement
(and to withhold from the amounts so withdrawn, the amount of any
taxes that
it is authorized to withhold pursuant to the third paragraph of
Section 8.11).
In addition, the Trustee may from time to time make withdrawals
from the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related
Distribution
Date;
(ii) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds
in
the
Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited
in the Distribution Account and not required to be deposited
therein;
(iv) to reimburse the Trustee for any unreimbursed Advances
made
by it
pursuant to Section 4.01(b) hereof, such right of reimbursement
pursuant
to this subclause (iv) being limited to (x) amounts received on
the
related Mortgage Loan(s) in respect of which any such Advance
was
made and
(y) amounts not otherwise reimbursed to the Trustee pursuant to
Section
3.08(a)(ii) hereof;
(v) to reimburse the Trustee for any Nonrecoverable Advance
previously
made by the Trustee pursuant to Section 4.01(b) hereof, such
right of
reimbursement pursuant to this subclause (v) being limited to
amounts
not otherwise reimbursed to the Trustee pursuant to Section
3.08(a)(iii) hereof; and
(vi) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
(c) The
Supplemental Interest Trustee shall withdraw funds from the
Corridor Contract Reserve Fund for distribution to the Covered
Certificates in
the manner specified in Section 4.09
III-8
<PAGE>
(and to withhold from the amounts so withdrawn the amount of any
taxes that it
is authorized to retain pursuant to the third paragraph of Section
8.11). In
addition, the Supplemental Interest Trustee may from time to time
make
withdrawals from the Corridor Contract Reserve Fund for the
following
purposes:
(i) to withdraw any amount deposited in the Corridor Contract
Reserve
Fund and not required to be deposited therein; and
(ii) to clear and terminate the Corridor Contract Reserve Fund
upon the
earlier of (i) the reduction of the aggregate Class Certificate
Balance of
the Covered Certificates to zero, and (ii) the latest
Corridor
Contract Scheduled Termination Date.
(d) On
each Distribution Date starting with the Distribution Date
occurring in the first month after the month in which the ES
Grantor Trust is
established as described in Section 3.05(h), the Trustee, as
trustee of the ES
Grantor Trust, shall withdrawal from the ES Grantor Trust the
amount on
deposit therein from distributions to the deposited Depositable
Certificates
for such Distribution Date and distribute such amount to the
Holders of the
Class of Exchangeable Certificates. All distributions to the
Exchangeable
Certificates shall be made in accordance with the priorities of
distribution
for such deposited Depositable Certificates set forth in Section
4.02.
SECTION
3.09. Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies.
(a) The
Master Servicer shall cause to be maintained, for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is
at least
equal to the lesser of (i) the maximum insurable value of the
improvements
securing such Mortgage Loan or (ii) the greater of (y) the
outstanding
principal balance of the Mortgage Loan and (z) an amount such that
the
proceeds of such policy shall be sufficient to prevent the
Mortgagor and/or
the mortgagee from becoming a co-insurer. Each such policy of
standard hazard
insurance shall contain, or have an accompanying endorsement that
contains, a
standard mortgagee clause. Any amounts collected by the Master
Servicer under
any such policies (other than the amounts to be applied to the
restoration or
repair of the related Mortgaged Property or amounts released to the
Mortgagor
in accordance with the Master Servicer's normal servicing
procedures) shall be
deposited in the Certificate Account. Any cost incurred by the
Master Servicer
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 Mortgage Loan so permit. Such
costs
shall be recoverable by the Master Servicer out of late payments by
the
related Mortgagor or out of the proceeds of liquidation of the
Mortgage Loan
or Subsequent Recoveries to the extent permitted by Section 3.08
hereof. 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
Mortgage Loan in a federally designated special flood hazard area
and such
area is participating in the national flood insurance program, the
Master
Servicer 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 outstanding principal balance of the related Mortgage
Loan, (ii)
the replacement value of the improvements which are part of such
Mortgaged
Property, and (iii) the maximum amount of such insurance available
for the
related Mortgaged Property under the national flood insurance
program.
(b) The
Master Servicer shall not take any action which would result in
non-coverage under any applicable Primary Insurance Policy of any
loss which,
but for the actions of the Master Servicer, would have been
covered
thereunder. The Master Servicer shall not cancel or refuse to
III-9
<PAGE>
renew any such Primary Insurance Policy that is in effect at the
date of the
initial issuance of the Certificates and is required to be kept in
force
hereunder unless the replacement Primary Insurance Policy for such
canceled or
non-renewed policy is maintained with a Qualified Insurer.
Except
with respect to any Lender PMI Mortgage Loans, the Master
Servicer shall not be required to maintain any Primary Insurance
Policy (i)
with respect to any Mortgage Loan with a Loan-to-Value Ratio less
than or
equal to 80% as of any date of determination or, based on a new
appraisal, the
principal balance of such Mortgage Loan represents 80% or less of
the new
appraised value or (ii) if maintaining such Primary Insurance
Policy is
prohibited by applicable law. With respect to the Lender PMI
Mortgage Loans,
the Master Servicer shall maintain the Primary Insurance Policy for
the life
of such Mortgage Loans, unless otherwise provided for in the
related Mortgage
Note or prohibited by law.
The Master
Servicer agrees to effect the timely payment of the premiums
on each Primary Insurance Policy, and such costs not otherwise
recoverable
shall be recoverable by the Master Servicer from the related
proceeds of
liquidation and Subsequent Recoveries.
(c) In
connection with its activities as Master Servicer of the
Mortgage
Loans, the Master Servicer agrees to present on behalf of itself,
the Trustee
and Certificateholders, claims to the insurer under any Primary
Insurance
Policies and, in this regard, to take such reasonable action as
shall be
necessary to permit recovery under any Primary Insurance Policies
respecting
defaulted Mortgage Loans. Any amounts collected by the Master
Servicer under
any Primary Insurance Policies shall be deposited in the
Certificate Account.
SECTION
3.10. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
(a) Except
as otherwise provided in this Section, when any property
subject to a Mortgage has been conveyed by the Mortgagor, the
Master Servicer
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 Master
Servicer is not required to exercise such rights with respect to a
Mortgage
Loan if the Person to whom the related Mortgaged Property has been
conveyed or
is proposed to be conveyed satisfies the 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 Master Servicer 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 Master
Servicer is authorized, subject to Section 3.10(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 Master
Servicer
enters such agreement) by the applicable Required Insurance
Policies. The
Master Servicer, subject to Section 3.10(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 Master Servicer shall not be deemed to be in default
under this
Section by reason of any transfer or assumption which the Master
Servicer
reasonably believes it is restricted by law from preventing, for
any reason
whatsoever.
III-10
<PAGE>
(b)
Subject to the Master Servicer's duty to enforce any
due-on-sale
clause to the extent set forth in Section 3.10(a) hereof, 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 Mortgage Loan, the
Master
Servicer 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 may be changed. In addition, the
substitute
Mortgagor and the Mortgaged Property must be acceptable to the
Master Servicer
in accordance with its underwriting standards as then in effect.
Together with
each such substitution, assumption or other agreement or instrument
delivered
to the Trustee for execution by it, the Master Servicer shall
deliver an
Officer's Certificate signed by a Servicing Officer stating that
the
requirements of this subsection have been met in connection
therewith. The
Master Servicer 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 Master Servicer for entering into an assumption or
substitution of
liability agreement will be retained by the Master Servicer as
additional
servicing compensation.
SECTION
3.11. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
(a) The
Master Servicer shall use reasonable efforts to foreclose upon
or otherwise comparably convert the ownership of properties
securing such of
the Mortgage Loans as come into and continue in default and as to
which no
satisfactory arrangements can be made for collection of delinquent
payments.
In connection with such foreclosure or other conversion, the Master
Servicer
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 meet the requirements of the insurer under any
Required
Insurance Policy; provided, however, that the Master Servicer 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 Mortgage Loan after reimbursement to itself of such expenses
and (ii) that
such expenses will be recoverable to it through the proceeds of
liquidation of
the Mortgage Loan and Subsequent Recoveries (respecting which it
shall have
priority for purposes of withdrawals from the Certificate Account).
The Master
Servicer shall be responsible for all other costs and expenses
incurred by it
in any such proceedings; provided, however, that it shall be
entitled to
reimbursement thereof from the proceeds of liquidation of the
Mortgage Loan
and Subsequent Recoveries with respect to the related Mortgaged
Property, as
provided in the definition of Liquidation Proceeds. If the Master
Servicer has
knowledge that a Mortgaged Property which the Master Servicer is
contemplating
acquiring in foreclosure or by deed in lieu of foreclosure is
located within a
1 mile radius of any site listed in the Expenditure Plan for the
Hazardous
Substance Clean Up Bond Act of 1984 or other site with
environmental or
hazardous waste risks known to the Master Servicer, the Master
Servicer will,
prior to acquiring the Mortgaged Property, consider such risks and
only take
action in accordance with its established environmental review
procedures.
III-11
<PAGE>
With
respect to any REO Property, the deed or certificate of sale
shall
be taken in the name of the Trustee for the benefit of the
Certificateholders,
or its nominee, on behalf of the Certificateholders. The Trustee's
name shall
be placed on the title to such REO Property solely as the Trustee
hereunder
and not in its individual capacity. The Master Servicer shall
ensure that the
title to such REO Property references the Pooling and Servicing
Agreement and
the Trustee's capacity thereunder. Pursuant to its efforts to sell
such REO
Property, the Master Servicer shall either itself or through an
agent selected
by the Master Servicer protect and conserve such REO Property in
the same
manner and to such extent as is customary in the locality where
such REO
Property is located and may, incident to its conservation and
protection of
the interests of the Certificateholders, rent the same, or any part
thereof,
as the Master Servicer deems to be in the best interest of the
Certificateholders for the period prior to the sale of such REO
Property. The
Master Servicer shall prepare for and deliver to the Trustee a
statement with
respect to each REO Property that has been rented showing the
aggregate rental
income received and all expenses incurred in connection with the
maintenance
of such REO Property at such times as is necessary to enable the
Trustee to
comply with the reporting requirements of the REMIC Provisions. The
net
monthly rental income, if any, from such REO Property shall be
deposited in
the Certificate Account no later than the close of business on
each
Determination Date. The Master Servicer shall perform the tax
reporting and
withholding required by Sections 1445 and 6050J of the Code with
respect to
foreclosures and abandonments, the tax reporting required by
Section 6050H of
the Code with respect to the receipt of mortgage interest from
individuals and
any tax reporting required by Section 6050P of the Code with
respect to the
cancellation of indebtedness by certain financial entities, by
preparing such
tax and information returns as may be required, in the form
required, and
delivering the same to the Trustee for filing.
In the
event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent
default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged
Property as
soon as practicable in a manner that maximizes the Liquidation
Proceeds
thereof, but in no event later than three years after its
acquisition by the
Trust Fund. In that event, the Trustee shall have been supplied
with an
Opinion of Counsel to the effect that the holding by the Trust Fund
of such
Mortgaged Property subsequent to a three-year period, if
applicable, will not
result in the imposition of taxes on "prohibited transactions" of
any REMIC
hereunder as defined in section 860F of the Code or cause any REMIC
hereunder
to fail to qualify as a REMIC at any time that any Certificates
are
outstanding, the Trust Fund may continue to hold such Mortgaged
Property
(subject to any conditions contained in such Opinion of Counsel)
after the
expiration of such three-year period. Notwithstanding any other
provision of
this Agreement, no Mortgaged Property acquired by the Trust Fund
shall be
rented (or allowed to continue to be rented) or otherwise used for
the
production of income by or on behalf of the Trust Fund in such a
manner or
pursuant to any terms that would (i) cause such Mortgaged Property
to fail to
qualify as "foreclosure property" within the meaning of section
860G(a)(8) of
the Code or (ii) subject any REMIC hereunder to the imposition of
any federal,
state or local income taxes on the income earned from such
Mortgaged Property
under Section 860G(c) of the Code or otherwise, unless the Master
Servicer has
agreed to indemnify and hold harmless the Trust Fund with respect
to the
imposition of any such taxes.
In the
event of a default on a Mortgage Loan one or more of whose
obligor is not a United States Person, as that term is defined in
Section
7701(a)(30) of the Code, in connection with any foreclosure or
acquisition of
a deed in lieu of foreclosure (together, "foreclosure") in respect
of such
Mortgage Loan, the Master Servicer will cause compliance with the
provisions
of Treasury Regulation Section 1.1445-2(d)(3) (or any successor
thereto)
necessary to assure that no withholding tax obligation arises with
respect to
the proceeds of such foreclosure except to the extent, if any, that
proceeds
of such foreclosure are required to be remitted to the obligors on
such
Mortgage Loan.
III-12
<PAGE>
The
decision of the Master Servicer to foreclose on a defaulted
Mortgage
Loan shall be subject to a determination by the Master Servicer
that the
proceeds of such foreclosure would exceed the costs and expenses of
bringing
such a proceeding. The income earned from the management of any
REO
Properties, net of reimbursement to the Master Servicer for
expenses incurred
(including any property or other taxes) in connection with such
management and
net of unreimbursed Master Servicing Fees, Advances and Servicing
Advances,
shall be applied to the payment of principal of and interest on the
related
defaulted Mortgage Loans (with interest accruing as though such
Mortgage Loans
were still current) and all such income shall be deemed, for all
purposes in
this Agreement, to be payments on account of principal and interest
on the
related Mortgage Notes and shall be deposited into the Certificate
Account. To
the extent the net income received during any calendar month is in
excess of
the amount attributable to amortizing principal and accrued
interest at the
related Mortgage Rate on the related Mortgage Loan for such
calendar month,
such excess shall be considered to be a partial prepayment of
principal of the
related Mortgage Loan.
The
proceeds from any liquidation of a Mortgage Loan, as well as
any
income from an REO Property, will be applied in the following order
of
priority: first, to reimburse the Master Servicer for any related
unreimbursed
Servicing Advances and Master Servicing Fees; second, to reimburse
the Master
Servicer or the Trustee for any unreimbursed Advances; third, to
reimburse the
Certificate Account for any Nonrecoverable Advances (or portions
thereof) that
were previously withdrawn by the Master Servicer or the Trustee
pursuant to
Section 3.08(a)(iii) that related to such Mortgage Loan; fourth, to
accrued
and unpaid interest (to the extent no Advance has been made for
such amount or
any such Advance has been reimbursed) on the Mortgage Loan or
related REO
Property, at the Adjusted Net Mortgage Rate to the Due Date
occurring in the
month in which such amounts are required to be distributed; and
fifth, as a
recovery of principal of the Mortgage Loan. Excess Proceeds, if
any, from the
liquidation of a Liquidated Mortgage Loan will be retained by the
Master
Servicer as additional servicing compensation pursuant to Section
3.14.
The Master
Servicer, in its sole discretion, shall have the right to
purchase for its own account from the Trust Fund any Mortgage Loan
which is
151 days or more delinquent at a price equal to the Purchase Price;
provided,
however, that the Master Servicer may only exercise this right on
or before
the next to the last day of the calendar month in which such
Mortgage Loan
became 151 days delinquent (such month, the "Eligible Repurchase
Month");
provided further, that any such Mortgage Loan which becomes current
but
thereafter becomes delinquent may be purchased by the Master
Servicer pursuant
to this Section in any ensuing Eligible Repurchase Month. The
Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in
the
Certificate Account and the Trustee, upon receipt of a certificate
from the
Master Servicer in the form of Exhibit N hereto, shall release or
cause to be
released to the purchaser of such Mortgage Loan the related
Mortgage File and
shall execute and deliver such instruments of transfer or
assignment prepared
by the purchaser of such Mortgage Loan, in each case without
recourse, as
shall be necessary to vest in the purchaser of such Mortgage Loan
any Mortgage
Loan released pursuant hereto and the purchaser of such Mortgage
Loan shall
succeed to all the Trustee's right, title and interest in and to
such Mortgage
Loan and all security and documents related thereto. Such
assignment shall be
an assignment outright and not for security. The purchaser of such
Mortgage
Loan shall thereupon own such Mortgage Loan, and all security and
documents,
free of any further obligation to the Trustee or the
Certificateholders with
respect thereto.
(b)
Countrywide may agree to a modification of any Mortgage Loan
(the
"Modified Mortgage Loan") if (i) the modification is in lieu of a
refinancing
and (ii) the Mortgage Rate on the Modified Mortgage Loan is
approximately a
prevailing market rate for newly-originated mortgage loans having
similar
terms and (iii) Countrywide purchases the Modified Mortgage Loan
from the
Trust Fund as described below. Effective immediately after the
modification,
and, in any event, on the same Business Day on which the
modification occurs,
all interest of the Trustee in the Modified Mortgage Loan shall
III-13
<PAGE>
automatically be deemed transferred and assigned to Countrywide and
all
benefits and burdens of ownership thereof, including the right to
accrued
interest thereon from the date of modification and the risk of
default
thereon, shall pass to Countrywide. The Master Servicer shall
promptly deliver
to the Trustee a certification of a Servicing Officer to the effect
that all
requirements of this paragraph have been satisfied with respect to
the
Modified Mortgage Loan. For federal income tax purposes, the
Trustee shall
account for such purchase as a prepayment in full of the Modified
Mortgage
Loan.
Countrywide shall remit the Purchase Price for any Modified
Mortgage
Loan to the Master Servicer for deposit into the Certificate
Account pursuant
to Section 3.05 within one Business Day after the purchase of the
Modified
Mortgage Loan. Upon receipt by the Trustee of written notification
of any such
deposit signed by a Servicing Officer, the Trustee shall release
to
Countrywide the related Mortgage File and shall execute and deliver
such
instruments of transfer or assignment, in each case without
recourse, as shall
be necessary to vest in Countrywide any Modified Mortgage Loan
previously
transferred and assigned pursuant hereto. Countrywide covenants and
agrees to
indemnify the Trust Fund against any liability for any
"prohibited
transaction" taxes and any related interest, additions, and
penalties imposed
on the Trust Fund established hereunder as a result of any
modification of a
Mortgage Loan effected pursuant to this subsection (b), any holding
of a
Modified Mortgage Loan by the Trust Fund or any purchase of a
Modified
Mortgage Loan by Countrywide (but such obligation shall not
prevent
Countrywide or any other appropriate Person from in good faith
contesting any
such tax in appropriate proceedings and shall not prevent
Countrywide from
withholding payment of such tax, if permitted by law, pending the
outcome of
such proceedings). Countrywide shall have no right of reimbursement
for any
amount paid pursuant to the foregoing indemnification, except to
the extent
that the amount of any tax, interest, and penalties, together with
interest
thereon, is refunded to the Trust Fund or Countrywide.
SECTION
3.12. Trustee to Cooperate; Release of Mortgage Files.
Upon the
payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be
escrowed in a
manner customary for such purposes, the Master Servicer will
immediately
notify the Trustee by delivering, or causing to be delivered a
"Request for
Release" substantially in the form of Exhibit N. Upon receipt of
such request,
the Trustee shall promptly release the related Mortgage File to the
Master
Servicer, and the Trustee shall at the Master Servicer's direction
execute and
deliver to the Master Servicer the request for reconveyance, deed
of
reconveyance or release or satisfaction of mortgage or such
instrument
releasing the lien of the Mortgage in each case provided by the
Master
Servicer, together with the Mortgage Note with written evidence
of
cancellation thereon. The Master Servicer is authorized to cause
the removal
from the registration on the MERS System of such Mortgage and to
execute and
deliver, on behalf of the Trustee and the Certificateholders or any
of them,
any and all instruments of satisfaction or cancellation or of
partial or full
release. Expenses incurred in connection with any instrument of
satisfaction
or deed of reconveyance shall be chargeable to the related
Mortgagor. From
time to time and as shall be appropriate for the servicing or
foreclosure of
any Mortgage Loan, including for such purpose, collection under any
policy of
flood insurance, any fidelity bond or errors or omissions policy,
or for the
purposes of effecting a partial release of any Mortgaged Property
from the
lien of the Mortgage or the making of any corrections to the
Mortgage Note or
the Mortgage or any of the other documents included in the Mortgage
File, the
Trustee shall, upon delivery to the Trustee of a Request for
Release in the
form of Exhibit M signed by a Servicing Officer, release the
Mortgage File to
the Master Servicer. Subject to the further limitations set forth
below, the
Master Servicer shall cause the Mortgage File or documents so
released to be
returned to the Trustee when the need therefor by the Master
Servicer no
longer exists, unless the Mortgage Loan is liquidated and the
proceeds thereof
are deposited in the Certificate Account, in which case the Master
Servicer
shall deliver to the Trustee a Request for Release in the form of
Exhibit N,
signed by a Servicing Officer.
III-14
<PAGE>
If the
Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by
this
Agreement, the Master Servicer shall deliver or cause to be
delivered to the
Trustee, for signature, as appropriate, any court pleadings,
requests for
trustee's sale or other documents necessary to effectuate such
foreclosure or
any legal action brought to obtain judgment against the Mortgagor
on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or
to enforce
any other remedies or rights provided by the Mortgage Note or the
Mortgage or
otherwise available at law or in equity.
SECTION
3.13. Documents, Records and Funds in Possession of Master
Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the
Master
Servicer shall transmit to the Trustee as required by this
Agreement all
documents and instruments in respect of a Mortgage Loan coming into
the
possession of the Master Servicer from time to time and shall
account fully to
the Trustee for any funds received by the Master Servicer or which
otherwise
are collected by the Master Servicer as Liquidation Proceeds,
Insurance
Proceeds or Subsequent Recoveries in respect of any Mortgage Loan.
All
Mortgage Files and funds collected or held by, or under the control
of, the
Master Servicer in respect of any Mortgage Loans, whether from the
collection
of principal and interest payments or from Liquidation Proceeds and
any
Subsequent Recoveries, including but not limited to, any funds on
deposit in
the Certificate Account, shall be held by the Master Servicer for
and on
behalf of the Trustee and shall be and remain the sole and
exclusive property
of the Trustee, subject to the applicable provisions of this
Agreement. The
Master Servicer also agrees that it shall not create, incur or
subject any
Mortgage File or any funds that are deposited in the Certificate
Account,
Distribution Account or any Escrow Account, or any funds that
otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest,
judgment, levy,
writ of attachment or other encumbrance, or assert by legal action
or
otherwise any claim or right of setoff against any Mortgage File or
any funds
collected on, or in connection with, a Mortgage Loan, except,
however, that
the Master Servicer shall be entitled to set off against and deduct
from any
such funds any amounts that are properly due and payable to the
Master
Servicer under this Agreement.
SECTION
3.14. Servicing Compensation.
As
compensation for its activities hereunder, the Master Servicer
shall
be entitled to retain or withdraw from the Certificate Account an
amount equal
to the Master Servicing Fee; provided, that the aggregate Master
Servicing Fee
with respect to any Distribution Date shall be reduced (i) by an
amount equal
to the aggregate of the Prepayment Interest Shortfalls on all of
the Mortgage
Loans, if any, with respect to such Distribution Date, but not
to
