Exhibit 99.5
===============================================================================
CWHEQ, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
PARK GRANADA LLC,
Seller
PARK MONACO INC.,
Seller
PARK SIENNA LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
-----------------------
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2006
-------------------------
HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 2006-S7
<PAGE>
Table of Contents
<TABLE>
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Page
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ARTICLE I. DEFINITIONS
5
Section 1.01 Defined
Terms...................................................................................5
Section 1.02 Certain
Interpretive
Provisions................................................................43
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES
43
Section 2.01 Conveyance
of Mortgage
Loans...................................................................43
Section 2.02 Acceptance
by Trustee of the Mortgage
Loans....................................................50
Section 2.03
Representations, Warranties and Covenants of the Master Servicer
and the Sellers...............56
Section 2.04
Representations and Warranties of the
Depositor................................................73
Section 2.05 Delivery
of Opinion of Counsel in Connection with Substitutions and
Repurchases................75
Section 2.06
Authentication and Delivery of
Certificates....................................................75
Section 2.07 Covenants
of the Master
Servicer...............................................................76
Section 2.08 Sponsor
Loss Coverage
Obligation...............................................................76
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
76
Section 3.01 Master
Servicer to Service Mortgage
Loans......................................................76
Section 3.02
Subservicing; Enforcement of the Obligations of Master
Servicer................................78
Section 3.03 Rights of
the Depositor, the Sellers, the Certificateholders, the NIM
Insurer, the
Certificate Insurer and the Trustee in Respect of the Master
Servicer..........................79
Section 3.04 Trustee to
Act as Master
Servicer..............................................................80
Section 3.05 Collection
of Mortgage Loan Payments; Certificate Account; Distribution
Account;
Pre-Funding Account; Seller Shortfall Interest Requirement; Premium
Account....................81
Section 3.06 Collection
of Taxes, Assessments and Similar Items; Escrow
Accounts............................84
Section 3.07 Access to
Certain Documentation and Information Regarding the Mortgage
Loans...................85
Section 3.08 Permitted
Withdrawals from the Certificate Account, Distribution Account,
Carryover
Reserve Fund and the Principal Reserve
Fund....................................................85
Section 3.09
[Reserved].....................................................................................88
Section 3.10
Maintenance of Hazard
Insurance................................................................88
Section 3.11
Enforcement of Due-On-Sale Clauses; Assumption
Agreements......................................89
Section 3.12
Realization Upon Defaulted Mortgage Loans; Determination of Excess
Proceeds and
Realized Losses; Repurchase of Certain Mortgage
Loans..........................................90
Section 3.13 Trustee to
Cooperate; Release of Mortgage
Files................................................94
Section 3.14 Documents,
Records and Funds in Possession of Master Servicer to be Held for
the
Trustee........................................................................................95
i
<PAGE>
Section 3.15 Servicing
Compensation.........................................................................95
Section 3.16 Access to
Certain
Documentation................................................................96
Section 3.17 Annual
Statement as to
Compliance..............................................................96
Section 3.18 The
Corridor
Contract..........................................................................97
Section 3.19
[Reserved].....................................................................................98
Section 3.20 Prepayment
Charges.............................................................................98
ARTICLE IV. DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
99
Section 4.01 Advances;
Remittance
Reports...................................................................99
Section 4.02 Reduction
of Servicing Compensation in Connection with Prepayment Interest
Shortfalls.........100
Section 4.03
[Reserved]....................................................................................100
Section 4.04
Distributions.................................................................................101
Section 4.05 Monthly
Statements to
Certificateholders......................................................105
Section 4.06
Certificate Insurance Policy; Rights of the Certificate
Insurer...............................106
Section 4.07
Termination of the Credit Insurance
Policy....................................................109
Section 4.08 Carryover
Reserve
Fund........................................................................110
ARTICLE V. THE CERTIFICATES
112
Section 5.01 The
Certificates..............................................................................112
Section 5.02
Certificate Register; Registration of Transfer and Exchange of
Certificates...................113
Section 5.03 Mutilated,
Destroyed, Lost or Stolen
Certificates.............................................117
Section 5.04 Persons
Deemed
Owners.........................................................................117
Section 5.05 Access to
List of Certificateholders' Names and
Addresses.....................................117
Section 5.06 Book-Entry
Certificates.......................................................................118
Section 5.07 Notices to
Depository.........................................................................119
Section 5.08 Definitive
Certificates.......................................................................119
Section 5.09
Maintenance of Office or
Agency...............................................................119
ARTICLE VI. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
120
Section 6.01 Respective
Liabilities of the Depositor, the Master Servicer and the
Sellers..................120
Section 6.02 Merger or
Consolidation of the Depositor, the Master Servicer or the
Sellers..................120
Section 6.03 Limitation
on Liability of the Depositor, the Sellers, the Master Servicer,
the NIM
Insurer and
Others............................................................................120
Section 6.04 Limitation
on Resignation of Master
Servicer..................................................121
Section 6.05 Errors and
Omissions Insurance; Fidelity
Bonds................................................122
ARTICLE VII. DEFAULT; TERMINATION OF MASTER SERVICER
122
Section 7.01 Events of
Default.............................................................................122
Section 7.02 Trustee to
Act; Appointment of
Successor......................................................124
Section 7.03
Notification to
Certificateholders............................................................126
ii
<PAGE>
ARTICLE VIII. CONCERNING THE TRUSTEE
126
Section 8.01 Duties of
Trustee.............................................................................126
Section 8.02 Certain
Matters Affecting the
Trustee.........................................................128
Section 8.03 Trustee
Not Liable for Mortgage
Loans.........................................................129
Section 8.04 Trustee
May Own
Certificates..................................................................129
Section 8.05 Master
Servicer to Pay Trustee's Fees and
Expenses............................................129
Section 8.06
Eligibility Requirements for
Trustee..........................................................130
Section 8.07
Resignation and Removal of
Trustee............................................................130
Section 8.08 Successor
Trustee.............................................................................131
Section 8.09 Merger or
Consolidation of
Trustee............................................................132
Section 8.10
Appointment of Co-Trustee or Separate
Trustee.................................................132
Section 8.11 Tax
Matters...................................................................................134
Section 8.12 Access to
Records of the
Trustee..............................................................136
Section 8.13 Suits for
Enforcement.........................................................................136
Section 8.14 Monitoring
of Significance
Percentage.........................................................137
ARTICLE IX. TERMINATION
137
Section 9.01
Termination upon Liquidation or Repurchase of all Mortgage
Loans..............................137
Section 9.02 Final
Distribution on the
Certificates........................................................138
Section 9.03 Additional
Termination
Requirements...........................................................140
Section 9.04 Auction of
the Mortgage Loans and REO
Properties..............................................141
ARTICLE X. MISCELLANEOUS PROVISIONS
144
Section 10.01
Amendment.....................................................................................144
Section 10.02 Recordation of
Agreement;
Counterparts........................................................146
Section 10.03 Governing
Law.................................................................................146
Section 10.04 Intention of
Parties..........................................................................146
Section 10.05
Notices.......................................................................................148
Section 10.06 Severability of
Provisions....................................................................149
Section 10.07
Assignment....................................................................................149
Section 10.08 Limitation on
Rights of
Certificateholders....................................................149
Section 10.09 Inspection and
Audit
Rights...................................................................150
Section 10.10 Certificates
Nonassessable and Fully
Paid.....................................................150
Section 10.11 Rights of NIM
Insurer.........................................................................150
ARTICLE XI. EXCHANGE ACT REPORTING
152
Section 11.01 Filing
Obligations............................................................................152
Section 11.02 Form 10-D
Filings.............................................................................152
Section 11.03 Form 8-K
Filings..............................................................................153
Section 11.04 Form 10-K
Filings.............................................................................153
Section 11.05 Sarbanes-Oxley
Certification..................................................................154
Section 11.06
Form 15
Filing................................................................................155
Section 11.07 Report on
Assessment of Compliance and
Attestation............................................155
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<PAGE>
Section 11.08 Use of
Subservicers and
Subcontractors........................................................156
Section 11.09
Amendments....................................................................................157
Section 11.10 Reconciliation
of
Accounts....................................................................157
</TABLE>
Exhibits
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EXHIBIT A
Forms of Certificates
EXHIBIT A-1
Form of Class A-1 Certificate
EXHIBIT A-2
Form of Class A-2 Certificate
EXHIBIT A-3
Form of Class A-3 Certificate
EXHIBIT A-4
Form of Class A-4 Certificate
EXHIBIT A-5
Form of Class A-5 Certificate
EXHIBIT A-6
Form of Class A-6 Certificate
EXHIBIT B
Form of Class P Certificate
EXHIBIT C
Form of Class C Certificate
EXHIBIT D
Form of Class A-R Certificate
EXHIBIT E
Form of Tax Matters Person Certificate
EXHIBIT F
Mortgage Loan Schedule
EXHIBIT F-1
List of Mortgage Loans
EXHIBIT F-2
Mortgage Loans for which All or a
Portion of a Related Mortgage File is
not Delivered to the Trustee on or prior
to the Closing Date
EXHIBIT G
Forms of Certification of Trustee
EXHIBIT G-1
Form of Initial Certification of Trustee (Initial Mortgage
Loans)
EXHIBIT G-2
Form of Interim Certification of Trustee
EXHIBIT G-3
Form of Delay Delivery Certification
EXHIBIT G-4
Form of Initial Certification of Trustee (Subsequent Mortgage
Loans)
EXHIBIT H
Form of Final Certification of Trustee
EXHIBIT I
Transfer Affidavit for Class A-R Certificates
EXHIBIT J-1
Form of Transferor Certificate for Class A-R Certificates
EXHIBIT J-2
Form of Transferor Certificate for Private Certificates
EXHIBIT K
Form of Investment Letter (Non-Rule 144A)
EXHIBIT L
Form of Rule 144A Letter
EXHIBIT M
Form of Request for Document Release
EXHIBIT N
Form of Request for File Release
EXHIBIT O
Copy of Depository Agreement
EXHIBIT P
Form of Subsequent Transfer Agreement
EXHIBIT Q
Form of Class A-1 Corridor Contract
EXHIBIT R
Form of Certificate Insurance Policy
EXHIBIT S-1
Form of Corridor Contract Assignment Agreement
EXHIBIT S-2
Form of Corridor Contract Administration Agreement
EXHIBIT T
Officer's Certificate with respect to Prepayments
EXHIBIT U
[Reserved]
EXHIBIT V-1
[Reserved]
EXHIBIT V-2
[Reserved]
iv
<PAGE>
EXHIBIT V-3
[Reserved]
EXHIBIT W
Form of Monthly Statement
EXHIBIT X-1
Form of Performance Certification (Subservicer)
EXHIBIT X-2
Form of Performance Certification (Trustee)
EXHIBIT Y
Form of Servicing Criteria to be Addressed in Assessment of
Compliance
Statement
EXHIBIT Z
List of Item 1119 Parties
EXHIBIT AA
Form of Sarbanes-Oxley Certification (Replacement Master
Servicer)
SCHEDULE I
Prepayment Charge Schedule and Prepayment Charge Summary
SCHEDULE II
Collateral Schedule
</TABLE>
v
<PAGE>
POOLING
AND SERVICING AGREEMENT, dated as of November 1, 2006, by and
among CWHEQ, INC., a Delaware corporation, as depositor (the
"Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller
("CHL" or a
"Seller"), PARK GRANADA LLC, a Delaware corporation, as a seller
("Park
Granada" or a "Seller"), PARK MONACO INC., a Delaware corporation,
as a seller
("Park Monaco" or a "Seller"), PARK SIENNA LLC, a Delaware limited
liability
company, as a seller ("Park Sienna" or a "Seller", and together
with CHL, Park
Granada and Park Monaco, the "Sellers"), COUNTRYWIDE HOME LOANS
SERVICING LP,
a Texas limited partnership, as master servicer (the "Master
Servicer"), and
THE BANK OF NEW YORK, a New York banking corporation, as trustee
(the
"Trustee").
PRELIMINARY STATEMENT
The
Depositor is the owner of the Trust Fund that is hereby conveyed
to
the Trustee in return for the Certificates. As provided herein, the
Trustee
will elect that the Trust Fund (excluding the Carryover Reserve
Fund, the
assets held in the Pre-Funding Account and the Trust Fund's rights
with
respect to payments received under the Corridor Contract) be
treated for
federal income tax purposes as two real estate mortgage investment
conduits
(each a "REMIC" or, in the alternative, the "Subsidiary REMIC" and
the "Master
REMIC"). The Subsidiary REMIC will hold as assets all property of
the Trust,
other than the Carryover Reserve Fund, the Pre-Funding Account and
the Trust
Fund's rights with respect to payments received under the Corridor
Contract,
and will be evidenced by (i) the Subsidiary REMIC Regular
Interests, which
will be uncertificated and will represent the "REMIC regular
interests" in the
Subsidiary REMIC, and (ii) the Class S-A-R Interest, which will
represent the
"REMIC residual interest" in the Subsidiary REMIC. The Master REMIC
will hold
as assets the Subsidiary REMIC Regular Interests and will be
evidenced by the
Certificates, each of which (other than the Class A-R Certificate)
will
represent ownership of one or more REMIC regular interests in the
Master
REMIC. The Class A-R Certificate will represent ownership of the
sole Class of
the REMIC residual interest in each REMIC created hereunder. The
latest
possible maturity date, for federal income tax purposes, of all
REMIC regular
interests created herein shall be the Latest Possible Maturity
Date.
The Subsidiary REMIC
The
Subsidiary REMIC Regular Interests will have the principal
balances,
pass-through rates and corresponding Classes of Certificates as set
forth in
the following table:
<TABLE>
<CAPTION>
<S>
<C>
<C>
<C>
Subsidiary REMIC
Regular
Pass-Through
Corresponding
Interests
Initial Principal Balance
Rate
Class of Certificates
---------------------------------------------------------------------------------------------------------------------
SR-A-1..........................
(1)
(2)
A-1
---------------------------------------------------------------------------------------------------------------------
SR-A-2..........................
(1)
(2)
A-2
---------------------------------------------------------------------------------------------------------------------
SR-A-3..........................
(1)
(2)
A-3
---------------------------------------------------------------------------------------------------------------------
SR-A-4..........................
(1)
(2)
A-4
---------------------------------------------------------------------------------------------------------------------
SR-A-5..........................
(1)
(2)
A-5
---------------------------------------------------------------------------------------------------------------------
SR-A-6..........................
(1)
(2)
A-6
---------------------------------------------------------------------------------------------------------------------
SR-Accrual......................
(3)
(2)
N/A
---------------------------------------------------------------------------------------------------------------------
<PAGE>
SR-$100.........................
$100.00
(4)
N/A
---------------------------------------------------------------------------------------------------------------------
SR-P............................
$100.00
(4)
P
---------------------------------------------------------------------------------------------------------------------
SR-A-R..........................
(5)
(5)
N/A
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Class
SR-A-1 Interest, Class SR-A-2 Interest, Class SR-A-3 Interest,
Class
SR-A-4 Interest, Class SR-A-5 Interest and Class SR-A-6 (the
"Accretion
Directed Classes") will each have a principal balance that is
equal to
50% of its Corresponding Class of Certificates and on each
Distribution Date, interest, principal payments and Realized
Losses
shall be
allocated so as to cause each of the Accretion Directed Classes
to
continue to equal 50% of its Corresponding Class of
Certificates.
(2) The interest
rate with respect to any Distribution Date (and the related
Interest
Accrual Period) for this Subsidiary REMIC Interest is a per
annum rate
equal to the weighted average Adjusted Net Mortgage Rate of
the
Mortgage Loans.
(3) The
SR-Accrual Interest shall have an initial principal balance equal
to
the sum of
(a) 50% of the Cut-off Date Principal Balance of the Mortgage
Loans and
(b) 50% of the Overcollateralized Amount. On each Distribution
Date,
interest, principal and Realized Losses shall be allocated so
as
to cause
the SR-C Interest to equal the excess of the Stated Principal
Balance of
the Mortgage Loans as of the end of the related Due Period
(appropriately adjusted for prepayments) over the aggregate
Certificate
Principal
Balance of the Accretion Directed Classes (after taking into
account
distributions for such Distribution Date).
(4) The SR-$100
Interest and the Class SR-P Interest do not pay any
interest.
All Prepayment Charges are allocated to the Class SR-P
Interest.
(5) The Class
SR-A-R Interest is the sole class of residual interest in the
Subsidiary
REMIC. It has no principal balance and pays no principal or
interest.
On each
Distribution Date, the Interest Funds, the Principal
Distribution Amount and the Prepayment Charges payable with respect
to the
Mortgage Loans will be payable with respect to the Subsidiary REMIC
Regular
Interests in the following manner:
(1)
Interest. Interest is to be distributed with respect to each
Subsidiary
REMIC Interest at the rate or according to the formulas
described
above.
(2)
Prepayment Charges. All Prepayment Charges are allocated to the
Class SR-P
Interest.
(3)
Principal. Principal shall be allocated among the Subsidiary
REMIC
Interests
according to the formulas described above.
The Master REMIC
The
following table specifies the class designation, pass through
rate,
and principal amount for each class of Master REMIC Interest:
2
<PAGE>
<TABLE>
<CAPTION>
<S>
<C>
<C>
<C>
Class
Original Certificate
Pass-Through
Principal Balance
Rate
---------------------------------------------------------------------------------------------------------------------
A-1..................................
$ 438,104,000
(1)
---------------------------------------------------------------------------------------------------------------------
A-2..................................
$ 102,297,000
(2)
---------------------------------------------------------------------------------------------------------------------
A-3..................................
$ 193,012,000
(2)
---------------------------------------------------------------------------------------------------------------------
A-4..................................
$ 74,011,000
(2)
---------------------------------------------------------------------------------------------------------------------
A-5..................................
$
87,076,000
(2)
---------------------------------------------------------------------------------------------------------------------
A-6..................................
$ 100,000,00
(2)
---------------------------------------------------------------------------------------------------------------------
C....................................
(3)
(4)
---------------------------------------------------------------------------------------------------------------------
A-R..................................
$ 100
(5)
---------------------------------------------------------------------------------------------------------------------
P....................................
$ 100
(6)
</TABLE>
(1) The
Pass-Through Rate for the Class A-1 Certificates for the
Accrual
Period for any Distribution Date will be equal to the lesser of (a)
One-Month
LIBOR plus the applicable Pass-Through Margin, and (b) the Net Rate
Cap.
(2) The
Pass-Through Rates for the Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates for the Accrual Period for
any
Distribution Date will be equal to the lesser of (a) the per annum
fixed rate
for the Class set forth in the table below and (b) the Net Rate
Cap.
Class of Certificates
Pass-Through Rate
---------------------
-----------------
Class A-2....................................
5.571%
Class A-3....................................
5.712%
Class A-4....................................
5.731%
Class A-5....................................
5.945%
Class A-6....................................
5.693%
(3) For
federal income tax purposes, the Class C Certificates shall
have
a Certificate Principal Balance equal to the Overcollateralized
Amount.
(4) For
each Accrual Period the Class C Certificates are entitled to an
amount (the "Class C Distributable Amount") equal to the sum of a
specified
portion of the interest on the Subsidiary REMIC Regular Interests
(other than
the SR-P Interest) equal to the excess of the Net Rate Cap over the
product of
two and the weighted average of the rates on the Accretion Directed
Classes
(capped at the rates on their Corresponding Class of Certificates)
and the
SR-Accrual Interest (subject to a cap of 0.00%). The Pass-Through
Rate of the
Class C Certificates shall be a rate sufficient to entitle it to an
amount
equal to all interest accrued on the Mortgage Loans less the
interest accrued
on the other interests issued by the Master REMIC. The Class C
Distributable
Amount for any Distribution Date is payable from current interest
on the
Mortgage Loans to the extent not used to increase
overcollateralization and
any related amount of overcollateralization released for that
Distribution
Date.
(5) The
Class A-R Certificates represent the sole class of residual
interest in each REMIC created hereunder. The Class A-R
Certificates are not
entitled to distributions of interest. On the first Distribution
Date, the
Class A-R Certificates are entitled to receive $100.00 from the
Principal
Reserve Fund.
3
<PAGE>
(6) For
any Distribution Date, the Class P Certificates are entitled to
all Prepayment Charges collected during the related Prepayment
Period and the
Master Servicer Prepayment Charge Amount. On the Class P
Principal
Distribution Date, the Class P Certificates are entitled to receive
$100.00
from the Principal Reserve Fund.
The
foregoing REMIC structure is intended to cause all of the cash
from
the Mortgage Loans to flow through to the Master REMIC as cash flow
on a REMIC
regular interest, without creating any shortfall--actual or
potential (other
than for credit losses) to any REMIC regular interest.
For any
purpose for which the interest rate in respect of any
Subsidiary
REMIC regular interest created hereunder is calculated, the
interest rate on
the Mortgage Loans shall be appropriately adjusted to account for
the
difference between the monthly day count convention of the Mortgage
Loans and
the monthly day count convention of the regular interests issued by
each of
the REMICs. For purposes of calculating the interest rates for each
of the
interests issued by REMIC, such rates shall be adjusted to equal a
monthly day
count convention based on a 30 day month for each Interest Period
and a
360-day year so that the Mortgage Loans and all regular interests
will be
using the same monthly day count convention.
No monies
will be remitted by CHL to the Trustee for deposit in the
Pre-Funding Account. Consequently, all references to or provisions
herein
regarding the Funding Period, Pre-Funding Amount, Pre-Funding
Account, Seller
Shortfall Interest Requirement, Subsequent Certificate Account
Deposit,
Subsequent Cut-off Date, Subsequent Mortgage Loan, Subsequent
Transfer
Agreement, Subsequent Transfer Date, Subsequent Transfer Date
Purchase Amount
and Subsequent Transfer Date Transfer Amount are inapplicable.
4
<PAGE>
ARTICLE I.
DEFINITIONS
Section
1.01 Defined Terms.
Whenever
used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following
meanings:
Acceptable
Bid Amount: Either (i) a bid equal to or greater than the
Minimum Auction Amount or (ii) the highest bid submitted by a
Qualified Bidder
in an auction if the Directing Certificateholder agrees to pay the
related
Auction Supplement Amount.
Account:
Any Escrow Account, the Certificate Account, the Distribution
Account or any other account related to the Trust Fund or the
Mortgage Loans.
Accrual
Period: With respect to any Distribution Date and each Class of
Adjustable Rate Certificates, the period commencing on the
immediately
preceding Distribution Date (or, in the case of the first
Distribution Date,
the Closing Date) and ending on the day immediately preceding
such
Distribution Date. With respect to any Distribution Date and each
Class of
Fixed Rate Certificates and the Class C Certificates, the calendar
month
preceding the month in which such Distribution Date occurs. All
calculations
of interest on the Adjustable Rate Certificates will be made on the
basis of
the actual number of days elapsed in the related Accrual Period and
on a
360-day year. All calculations of interest on each Class of Fixed
Rate
Certificates and the Class C Certificates will be made on the basis
of a
360-day year consisting of twelve 30-day months.
Adjustable
Rate Certificates: The Class A-1 Certificates.
Adjusted
Net Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate
less the related Expense Fee Rate.
Advance:
The aggregate of the advances required to be made by the Master
Servicer with respect to any Distribution Date pursuant to Section
4.01, the
amount of any such advances being equal to the aggregate of
payments of
principal of, and interest on the Stated Principal Balance of, the
Mortgage
Loans (net of the Servicing Fees) that were due on the related Due
Date and
not received by the Master Servicer as of the close of business on
the related
Determination Date including an amount equivalent to interest on
the Stated
Principal Balance of each Mortgage Loan as to which the related
Mortgaged
Property is an REO Property or as to which the related Mortgaged
Property has
been liquidated but such Mortgage Loan has not yet become a
Liquidated
Mortgage Loan; provided, however, that the net monthly rental
income (if any)
from such REO Property deposited in the Certificate Account for
such
Distribution Date pursuant to Section 3.12 may be used to offset
such Advance
for the related REO Property; provided, further, that for the
avoidance of
doubt, no Advances shall be required to be made in respect of any
Liquidated
Mortgage Loan.
Agreement:
This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms
herein.
5
<PAGE>
Amount
Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Certificate Account at the close of
business on
the immediately preceding Determination Date on account of (i) all
Scheduled
Payments or portions thereof received in respect of the Mortgage
Loans due
after the related Due Date, (ii) Principal Prepayments received in
respect of
such Mortgage Loans after the last day of the related Prepayment
Period and
(iii) Liquidation Proceeds and Subsequent Recoveries received in
respect of
such Mortgage Loans after the last day of the related Due
Period.
Applied
Realized Loss Amount: With respect to any Distribution Date,
the
amount, if any, by which, the aggregate Certificate Principal
Balance of the
Certificates (after all distributions of principal on such
Distribution Date)
exceeds the sum of (x) the Stated Principal Balance of the Mortgage
Loans for
such Distribution Date and (y) the amount on deposit in the
Pre-Funding
Account.
Appraised
Value: The appraised value of the Mortgaged Property based
upon the appraisal made for the originator of the related Mortgage
Loan by an
independent fee appraiser at the time of the origination of the
related
Mortgage Loan, or the sales price of the Mortgaged Property at the
time of
such origination, whichever is less, or with respect to any
Mortgage Loan
originated in connection with a refinancing, the appraised value of
the
Mortgaged Property based upon the appraisal made at the time of
such
refinancing.
Auction
Supplement Amount: As defined in Section 9.04(c).
Avoided
Payment: As defined in the Certificate Insurance Policy.
Bankruptcy
Code: Title 11 of the United States Code.
Bid Date:
As defined in Section 9.04(b).
Book-Entry
Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the
ownership of
which is reflected on the books of the Depository or on the books
of a person
maintaining an account with the Depository (directly, as a
"Depository
Participant", or indirectly, as an indirect participant in
accordance with the
rules of the Depository and as described in Section 5.06). As of
the Closing
Date, each Class of Interest-Bearing Certificates constitutes a
Class of
Book-Entry Certificates.
Business
Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which either the Certificate Insurer or banking institutions
in the
State of New York or California or the city in which the Corporate
Trust
Office of the Trustee is located are authorized or obligated by law
or
executive order to be closed.
Carryover
Reserve Fund: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.07 in the
name of
the Trustee for the benefit of the Certificateholders and
designated "The Bank
of New York in trust for registered Holders of CWHEQ, Inc., Home
Equity Loan
Asset Backed Certificates, Series 2006-S7". Funds in the Carryover
Reserve
Fund shall be held in trust for the Certificateholders for the uses
and
purposes set forth in this Agreement.
6
<PAGE>
Certificate: Any one of the certificates of any Class executed
and
authenticated by the Trustee in substantially the forms attached
hereto as
Exhibits A-1 through A-6, Exhibit B, Exhibit C and Exhibit D.
Certificate Account: The separate Eligible Account created and
initially
maintained by the Master Servicer pursuant to Section 3.05(b) with
a
depository institution in the name of the Master Servicer for the
benefit of
the Trustee on behalf of the Certificateholders and the Certificate
Insurer
and designated "Countrywide Home Loans Servicing LP in trust for
registered
Holders of CWHEQ, Inc., Home Equity Loan Asset Backed Certificates,
Series
2006-S7". Funds in the Certificate Account shall be held in trust
for the
Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Insurance Policy: The irrevocable Financial
Guaranty
Insurance Policy, No. CA03420A, including any endorsements thereto,
issued by
XLCA with respect to the Class A Certificates, in the form attached
hereto as
Exhibit R.
Certificate Insurance Policy Premium Rate: 0.090% per annum.
Certificate Insurance Premium: For any Distribution Date, an
amount
equal to the product of (x) the Certificate Insurance Policy
Premium Rate and
(y) the aggregate Certificate Principal Balance of the Class A
Certificates on
the prior Distribution Date (after giving effect to any
distributions of
principal to be made on such Distribution Date). The Certificate
Insurance
Premium shall be computed on the basis of a 360-day year consisting
of twelve
30-day months.
Certificate Insurance Reimbursement Amount: As to any Distribution
Date,
(i) all Insured Payments paid by the Certificate Insurer for which
the
Certificate Insurer has not been reimbursed prior to such
Distribution Date
pursuant to Section 4.04 hereof, plus (ii) interest accrued on such
Insured
Payments not previously repaid, calculated at the Late Payment Rate
from the
date the Insured Payments were made, plus (iii) any other amounts
then due and
owing to the Certificate Insurer pursuant to the Insurance and
Indemnity
Agreement plus interest accrued on such amount not previously paid
calculated
at the Late Payment Rate.
Certificate Insurer: XLCA in its capacity as insurer under the
Certificate Insurance Policy, and any permitted successor or
assign.
Certificate Insurer Contact Person: The officer designated by the
Master
Servicer to provide information to the Certificate Insurer pursuant
to Section
4.06(i).
Certificate Insurer Default: As defined in Section 4.06(l).
Certificate Owner: With respect to a Book-Entry Certificate, the
person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than
the
Class C Certificates) and as of any Distribution Date, the Initial
Certificate
Principal Balance of such Certificate (A) less the sum of (i) all
amounts
distributed with respect to such Certificate in reduction of the
Certificate
Principal Balance thereof on previous Distribution Dates pursuant
to Section
4.04(b), (ii) with respect to the Class A Certificates only,
payments under
the Certificate
7
<PAGE>
Insurance Policy relating to principal (except that any payment
under the
Certificate Insurance Policy with respect to an Applied Realized
Loss Amount
allocated to the Class A Certificates shall not result in a further
reduction
of the Certificate Principal Balance of the Class A Certificates)
and (iii)
any Applied Realized Loss Amounts allocated to such Certificate on
previous
Distribution Dates pursuant to Section 4.04(g), and (B) increased
by any
Subsequent Recoveries allocated to such Certificate pursuant to
Section
4.04(h) on such Distribution Date. References herein to the
Certificate
Principal Balance of a Class of Certificates shall mean the
Certificate
Principal Balances of all Certificates in such Class. The Class C
Certificates
do not have a Certificate Principal Balance. With respect to any
Certificate
(other than the Class C Certificates) of a Class and any
Distribution Date,
the portion of the Certificate Principal Balance of such Class
represented by
such Certificate equal to the product of the Percentage Interest
evidenced by
such Certificate and the Certificate Principal Balance of such
Class.
Exclusively for the purpose of determining any subrogation rights
of the
Certificate Insurer arising under Section 4.06 hereof, the
"Certificate
Principal Balance" of the Class A Certificates shall not be reduced
by the
amount of any payments made by the Certificate Insurer in respect
of principal
on such Certificates under the Certificate Insurance Policy, except
to the
extent such payment shall have been reimbursed to the Certificate
Insurer
pursuant to the provisions of this Agreement.
Certificate Register: The register maintained pursuant to Section
5.02
hereof.
Certificateholder or Holder: The person in whose name a Certificate
is
registered in the Certificate Register (initially, Cede & Co.,
as nominee for
the Depository, in the case of any Class of Book-Entry
Certificates), except
that solely for the purpose of giving any consent pursuant to this
Agreement,
any Certificate registered in the name of the Depositor or any
affiliate of
the Depositor shall be deemed not to be Outstanding and the Voting
Interest
evidenced thereby shall not be taken into account in determining
whether the
requisite amount of Voting Interests necessary to effect such
consent has been
obtained; provided that if any such Person (including the
Depositor) owns 100%
of the Voting Interests evidenced by a Class of Certificates,
such
Certificates shall be deemed to be Outstanding for purposes of any
provision
hereof (other than the second sentence of Section 10.01 hereof)
that requires
the consent of the Holders of Certificates of a particular Class as
a
condition to the taking of any action hereunder. The Trustee is
entitled to
rely conclusively on a certification of the Depositor or any
affiliate of the
Depositor in determining which Certificates are registered in the
name of an
affiliate of the Depositor.
Certification Party: As defined in Section 11.05.
Certifying
Person: As defined in Section 11.05.
CHL:
Countrywide Home Loans, Inc., a New York corporation, and its
successors and assigns.
CHL
Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule for which CHL is the applicable Seller.
Class: All
Certificates bearing the same Class designation as set forth
in Section 5.01 hereof.
8
<PAGE>
Class A
Certificates: Collectively, the Class A-1, Class A-2, Class
A-3,
Class A-4, Class A-5 and Class A-6 Certificates.
Class A
Available Funds: With respect to any Distribution Date, funds
allocated from amounts available pursuant to this Agreement
(including any
funds in the Premium Account) to make distributions on the Class
A
Certificates on such Distribution Date, other than any Insured
Payments.
Class A
Insurance Payments Account: The separate Eligible Account
created and maintained by the Trustee pursuant to Section 4.06(c)
in the name
of the Trustee for the benefit of the Class A Certificateholders
and
designated "The Bank of New York in trust for registered holders of
CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S7,
Class A
Certificates." Funds in the Class A Insurance Payments Account
shall be held
in trust for the Class A Certificateholders for the uses and
purposes set
forth in this Agreement.
Class A
Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the aggregate Certificate Principal Balance
of the
Class A Certificates immediately prior to that Distribution Date,
over (y) the
aggregate Stated Principal Balance of the Mortgage Loans for that
Distribution
Date minus the Overcollateralization Target Amount for such
Distribution Date.
Class A-1
Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-1
hereto,
representing the right to distributions as set forth herein.
Class A-2
Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to distributions as set forth herein.
Class A-3
Certificate: Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to distributions as set forth herein.
Class A-4
Certificate: Any Certificate designated as a "Class A-4
Certificate" on the face thereof, in the form of Exhibit A-4
hereto,
representing the right to distributions as set forth herein.
Class A-5
Certificate: Any Certificate designated as a "Class A-5
Certificate" on the face thereof, in the form of Exhibit A-5
hereto,
representing the right to distributions as set forth herein.
Class A-6
Certificate: Any Certificate designated as a "Class A-6
Certificate" on the face thereof, in the form of Exhibit A-6
hereto,
representing the right to distributions as set forth herein.
Class A-6
Portion: With respect to any Distribution Date, a percentage,
expressed as a fraction, the numerator of which is the Certificate
Principal
Balance of the Class A-6 Certificates immediately prior to such
Distribution
Date and the denominator of which is the
9
<PAGE>
aggregate Certificate Principal Balance of all Classes of the Class
A
Certificates immediately prior to such Distribution Date.
Class A-R
Certificate: Any Certificate designated as a "Class A-R
Certificate" on the face thereof, in the form of Exhibit D hereto
or, in the
case of the Tax Matters Person Certificate, Exhibit E hereto, in
either case
representing the right to distributions as set forth herein.
Class C
Certificate: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit C
hereto,
representing the right to distributions as set forth herein.
Class C
Distributable Amount: As defined in the Preliminary Statement.
Class P
Certificate: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit B
hereto,
representing the right to distributions as set forth herein.
Class P
Principal Distribution Date: The first Distribution Date that
occurs after the end of the latest Prepayment Charge Period for all
Mortgage
Loans that have a Prepayment Charge Period.
Closing
Date: November 30, 2006.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collateral
Schedule: Schedule II hereto.
Combined
Loan-to-Value Ratio: The fraction, expressed as a percentage,
the numerator of which is the sum of (x) original principal balance
of the
related Mortgage Loan and (y) the outstanding principal balance of
any senior
mortgage loans at the date of origination of the related Mortgage
Loan and the
denominator of which is the Appraised Value of the related
Mortgaged Property.
Commission: The U.S. Securities and Exchange Commission.
Compensating Interest:
With respect to the Mortgage Loans and any
Distribution Date, an amount equal to the lesser of (x) one-half of
the
Servicing Fee for the related Due Period and (y) the aggregate
Prepayment
Interest Shortfall for such Distribution Date.
Confirmation: The confirmation, reference number 1143052, with a
trade
date of November 16, 2006 evidencing a transaction between the
Corridor
Contract Counterparty and CHL relating to the Corridor
Contract.
Corporate
Trust Office: The designated office of the Trustee in the
State of New York where at any particular time its corporate trust
business
with respect to this Agreement shall be administered, which office
at the date
of the execution of this Agreement is located at
10
<PAGE>
101 Barclay Street, New York, New York 10286 (Attention: Corporate
Trust MBS
Administration), telephone: (212) 815-3236, facsimile: (212)
815-3986.
Corridor
Contract: With respect to the Class A-1 Certificates, the
transaction evidenced by the Confirmation (as assigned to the
Corridor
Contract Administrator pursuant to the Corridor Contract
Assignment
Agreement), a form of which is attached hereto as Exhibit Q.
Corridor
Contract Administration Agreement: The corridor contract
administration agreement dated as of the Closing Date among CHL,
the Trustee
and the Corridor Contract Administrator, a form of which is
attached hereto as
Exhibit S-2.
Corridor
Contract Administrator: The Bank of New York, in its capacity
as corridor contract administrator under the Corridor Contract
Administration
Agreement.
Corridor
Contract Assignment Agreement: The Assignment Agreement dated
as of the Closing Date among CHL, the Corridor Contract
Administrator and the
Corridor Contract Counterparty, a form of which is attached hereto
as Exhibit
S-1.
Corridor
Contract Counterparty: Swiss Re Financial Products Corporation.
Corridor
Contract Termination Date: The Distribution Date in November
2008.
Covered
Certificates: The Class A-1 Certificates.
Covered
Loan: A Mortgage Loan listed on the Mortgage Loan Schedule as
being covered by the Credit Insurance Policy.
Credit
Bureau Risk Score: A statistical credit score obtained by CHL
in
connection with the origination of a Mortgage Loan.
Credit
Insurance Policy: The Credit Insurance Policy issued by the
Credit Insurer with respect to certain Mortgage Loans identified in
the
Mortgage Loan Schedule.
Credit
Insurance Premium: For any Distribution Date, the aggregate fee
payable to the Credit Insurer equal to the product of (x) the
Credit Insurance
Premium Rate and (y) the Stated Principal Balance of each Covered
Loan for the
Distribution Date, computed on the basis of a 360-day year
consisting of
twelve 30-day months.
Credit
Insurance Premium Rate: is the rate at which the Credit
Insurance
Premium accrues on each Mortgage Loan and ranges from 0.51% to
3.99% per
annum.
Credit
Insurer: Old Republic Insurance Company, or any replacement
Credit Insurer, as applicable.
Cumulative
Loss Trigger Event: With respect to any Distribution Date on
or after the Stepdown Date, (x) the aggregate amount of Realized
Losses on the
Mortgage Loans from the Cut-off Date for each Mortgage Loan to (and
including)
the last day of the related Due Period (reduced by the aggregate
amount of any
Subsequent Recoveries received through the last
11
<PAGE>
day of that Due Period) exceeds (y) the applicable percentage, for
that
Distribution Date, of the sum of the Initial Cut-off Date Pool
Principal
Balance and the Pre-Funded Amount, as set forth below:
<TABLE>
<CAPTION>
<S> <C>
<C>
Distribution Date
Percentage
May 2009 -- October 2009......... 2.50% with respect to May 2009,
plus an
additional 1/6th of 0.50% for each month
thereafter through October 2009
November 2009 -- October 2010.... 3.00% with respect to November
2009, plus
an additional 1/12th of 0.50% for each
month thereafter through October 2010
November 2010 -- October 2011.... 3.50% with respect to November
2010, plus
an additional 1/12th of 0.50% for each
month thereafter through October 2011
November 2011 and thereafter..... 4.00%
</TABLE>
Current
Interest: With respect to each Class of Interest-Bearing
Certificates and each Distribution Date, interest accrued at the
applicable
Pass-Through Rate for the applicable Accrual Period on the
Certificate
Principal Balance or Notional Amount of such Class immediately
prior to such
Distribution Date.
Cut-off
Date: With respect to any Mortgage Loan, the Initial Cut-off
Date or the related Subsequent Cut-off Date, as the case may
be.
Cut-off
Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the
Cut-off Date
after application of all payments of principal due on or prior to
the Cut-off
Date, whether or not received, and all Principal Prepayments
received on or
prior to the Cut-off Date, but without giving effect to any
installments of
principal received in respect of Due Dates after the Cut-off
Date.
Debt
Service Reduction: With respect to any Mortgage Loan, a
reduction
by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan that became final
and
non-appealable, except such a reduction resulting from a Deficient
Valuation
or any other reduction that results in a permanent forgiveness of
principal.
Deficiency
Amount: With respect to:
(a) each
Distribution Date prior to the Final Scheduled Distribution
Date for the Class A Certificates, an amount equal to the sum of
(i) the
excess, if any, of (a) the aggregate amount of Current Interest on
the Class A
Certificates net of any interest shortfalls resulting from
12
<PAGE>
Prepayment Interest Shortfalls and any interest shortfalls
resulting from the
application of the Relief Act, or similar state or local laws,
regulations or
ordinances, over (b) the Class A Available Funds for such
Distribution Date
allocable to pay such Current Interest pursuant to this Agreement,
and (ii)
the excess, if any, of (A) the aggregate Certificate Principal
Balance of the
Class A Certificates over (B) the sum of the aggregate Stated
Principal
Balance of the Mortgage Loans and any amount on deposit in the
Pre-Funding
Account, in each case taking into account all distributions to be
made on such
Distribution Date;
(b) the
Final Scheduled Distribution Date for the Class A Certificates,
an amount equal to the sum of (i) the excess, if any, of (a) the
aggregate
amount of Current Interest on the Class A Certificates net of any
interest
shortfalls resulting from Prepayment Interest Shortfalls and any
interest
shortfalls resulting from the application of the Relief Act, or
similar state
or local laws, regulations or ordinances, over (b) the Class A
Available Funds
for such Distribution Date allocable to pay such Current Interest
pursuant to
this Agreement and (ii) the aggregate Certificate Principal Balance
of the
Class A Certificates on the Final Scheduled Distribution Date
(after taking
into account all distributions of Class A Available Funds to be
made to the
Class A Certificates on such Distribution Date); and
(c) any
date on which the acceleration of the Class A Certificates has
been directed or consented to by the Certificate Insurer, the
excess of (i)
the amount required to pay the aggregate Certificate Principal
Balance of the
Class A Certificates in full, together with accrued and unpaid
interest
thereon through the date of payment of the Class A Certificates
(net of any
interest shortfalls resulting from Prepayment Interest Shortfalls
and any
interest shortfalls resulting from the application of the Relief
Act, or
similar state or local laws, regulations or ordinances), over (ii)
the Class A
Available Funds for that Distribution Date allocable to pay such
principal and
interest pursuant to this Agreement.
Deficient
Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an
amount less
than the then outstanding indebtedness under such Mortgage Loan, or
any
reduction in the amount of principal to be paid in connection with
any
Scheduled Payment that results in a permanent forgiveness of
principal, which
valuation or reduction results from an order of such court that is
final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive
Certificates: As defined in Section 5.06.
Delay
Delivery Mortgage Loans: (i) The Initial Mortgage Loans
identified
on the schedule of Mortgage Loans hereto set forth on Exhibit F-2
hereof for
which all or a portion of a related Mortgage File is not delivered
to the
Trustee on or prior to the Closing Date, and (ii) the Subsequent
Mortgage
Loans identified on the schedule of Subsequent Mortgage Loans set
forth in
Annex A to each related Subsequent Transfer Agreement for which all
or a
portion of the related Mortgage File is not delivered to the
Trustee on or
prior to the related Subsequent Transfer Date. The Depositor shall
deliver (or
cause delivery of) the Mortgage Files to the Trustee: (A) with
respect to at
least 50% of the Initial Mortgage Loans, not later than the Closing
Date and
with respect to at least 10% of the Subsequent Mortgage Loans
conveyed on a
Subsequent Transfer Date, not later than such Subsequent Transfer
Date, (B)
with respect to at least an additional 40% of the Initial Mortgage
Loans, not
later than 20 days after the Closing
13
<PAGE>
Date, and not later than 20 days after the relevant Subsequent
Transfer Date
with respect to the remaining Subsequent Mortgage Loans conveyed on
such
Subsequent Transfer Date, and (C) with respect to the remaining
Initial
Mortgage Loans, not later than thirty days after the Closing Date.
To the
extent that Countrywide Home Loans, Inc. shall be in possession of
any
Mortgage Files with respect to any Delay Delivery Mortgage Loan,
until
delivery of such Mortgage File to the Trustee as provided in
Section 2.01,
Countrywide Home Loans, Inc. shall hold such files as agent and in
trust for
the Trustee.
Deleted
Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquency Trigger Event: With respect to any Distribution Date on
or
after the Stepdown Date, the Rolling Sixty-Day Delinquency Rate for
the
outstanding Mortgage Loans equals or exceeds the applicable
percentage for
that Distribution Date, as set forth below:
Distribution Date
Percentage
-----------------
----------
May 2009 - October 2009.........................
3.00%
November 2009 - October 2010....................
4.00%
November 2010 - October 2011....................
4.50%
November 2011 and thereafter....................
5.00%
Denomination: With respect to each Certificate, the amount set
forth on
the face thereof as the "Initial Certificate Balance of this
Certificate" or,
if not the foregoing, the Percentage Interest appearing on the face
thereof,
as applicable.
Depositor:
CWHEQ, Inc., a Delaware corporation, or its successor in
interest.
Depository: The initial Depository shall be The Depository
Trust
Company, the nominee of which is Cede & Co., or any other
organization
registered as a "clearing agency" pursuant to Section 17A of the
Securities
Exchange Act of 1934, as amended. The Depository shall initially be
the
registered Holder of the Book-Entry Certificates. The Depository
shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5)
of the
Uniform Commercial Code of the State of New York.
Depository
Agreement: With respect to the Book-Entry Certificates, the
agreement among the Depositor and the initial Depository, dated as
of the
Closing Date, substantially in the form of Exhibit O.
Depository
Participant: A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to any Distribution Date, the 22nd
day
of the month of such Distribution Date or, if such 22nd day is not
a Business
Day, the immediately preceding Business Day; provided that the
Determination
Date in each month will be at least two Business Days before the
Distribution
Date.
14
<PAGE>
Directing
Certificateholder: As defined in Section 9.04(a).
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(c) in the name
of the
Trustee for the benefit of the Certificateholders and the
Certificate Insurer
and designated "The Bank of New York, in trust for registered
Holders of
CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series
2006-S7".
Funds in the Distribution Account shall be held in trust for
the
Certificateholders for the uses and purposes set forth in this
Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
1:00
p.m. Pacific time on the Business Day immediately preceding such
Distribution
Date.
Distribution Date: The 25th day of each month, or if such day is
not a
Business Day, on the first Business Day thereafter, commencing in
December
2006.
Due Date:
With respect to any Mortgage Loan and Due Period, the due date
for Scheduled Payments of interest and/or principal on that
Mortgage Loan
occurring in such Due Period as provided in the related Mortgage
Note.
Due for
Payment: With respect to an Insured Amount, the Distribution
Date on which Insured Amounts are due and payable pursuant to the
terms of
this Agreement.
Due
Period: With respect to any Distribution Date, the period
beginning
on the second day of the calendar month preceding the calendar
month in which
such Distribution Date occurs and ending on the first day of the
month in
which such Distribution Date occurs.
EDGAR: The
Commission's Electronic Data Gathering, Analysis, and
Retrieval system.
Eligible
Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company,
the
long-term unsecured debt obligations and short-term unsecured debt
obligations
of which (or, in the case of a depository institution or trust
company that is
the principal subsidiary of a holding company, the debt obligations
of such
holding company, if Moody's is not a Rating Agency) are rated by
each Rating
Agency in one of its two highest long-term and its highest
short-term rating
categories respectively, at the time any amounts are held on
deposit therein,
or (ii) an account or accounts in a depository institution or trust
company in
which such accounts are insured by the FDIC (to the limits
established by the
FDIC) and the uninsured deposits in which accounts are otherwise
secured such
that, as evidenced by an Opinion of Counsel delivered to the
Trustee and to
each Rating Agency, the Certificateholders have a claim with
respect to the
funds in such account or a perfected first priority security
interest against
any collateral (which shall be limited to Permitted Investments)
securing such
funds that is superior to claims of any other depositors or
creditors of the
depository institution or trust company in which such account is
maintained,
or (iii) a trust account or accounts maintained with the corporate
trust
department of a federal or state chartered depository institution
or trust
company having capital and surplus of not less than $50,000,000,
acting in its
fiduciary capacity or (iv) any other account acceptable to the
Rating Agencies
without reduction or withdrawal of their then-current ratings of
the
Certificates (without regard to the Certificate Insurance Policy,
in the case
of the Class A Certificates) as evidenced by a
15
<PAGE>
letter from each Rating Agency to the Trustee. Eligible Accounts
may bear
interest, and may include, if otherwise qualified under this
definition,
accounts maintained with the Trustee.
Eligible
Repurchase Month: As defined in Section 3.12(d) hereof.
ERISA: The
Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that meets the applicable
requirements of
the Underwriter's Exemption.
ERISA-Restricted Certificates: The Class A-R Certificates, Class
P
Certificates, Class C Certificates and Certificates of any Class
that does not
have or no longer has a rating of at least BBB- or its equivalent
from at
least one Rating Agency.
Escrow
Account: As defined in Section 3.06 hereof.
Event of
Default: As defined in Section 7.01 hereof.
Excess
Cashflow: With respect to any Distribution Date the sum of (i)
the amount remaining after the distribution of interest to
Certificateholders
for such Distribution Date, pursuant to Section 4.04(a)(v), (ii)
the amount
remaining after the distribution of principal to Certificateholders
for such
Distribution Date, pursuant to Section 4.04(b)(iv) and (iii)
the
Overcollateralization Reduction Amount for such Distribution
Date.
Excess
Overcollateralization Amount: With respect to any Distribution
Date, the excess, if any, of the Overcollateralized Amount for
such
Distribution Date over the Overcollateralization Target Amount for
such
Distribution Date.
Excess
Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds and
Subsequent
Recoveries are in excess of the sum of (i) the unpaid principal
balance of
such Liquidated Mortgage Loan as of the date of liquidation of such
Liquidated
Mortgage Loan plus (ii) interest at the Mortgage Rate from the Due
Date as to
which interest was last paid or advanced to Certificateholders (and
not
reimbursed to the Master Servicer) up to the Due Date in the month
in which
Liquidation Proceeds are required to be distributed on the Stated
Principal
Balance of such Liquidated Mortgage Loan outstanding during each
Due Period as
to which such interest was not paid or advanced.
Exchange
Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Exchange
Act Reports: Any reports on Form 10-D, Form 8-K and Form 10-K
required to be filed by the Depositor with respect to the Trust
Fund under the
Exchange Act.
Expense
Fee Rate: With respect to any Mortgage Loan, the sum of (i) the
Servicing Fee Rate, (ii) the Trustee Fee Rate and (iii) with
respect to any
Covered Loan, the Credit Insurance Premium Rate.
16
<PAGE>
Extra
Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (1) the Overcollateralization Deficiency Amount
for such
Distribution Date and (2) the Excess Cashflow available for payment
thereof
for such Distribution Date.
Fannie
Mae: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing
under the
Federal National Mortgage Association Charter Act, or any successor
thereto.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
Final
Scheduled Distribution Date: With respect to the Class A
Certificates and the Certificate Insurance Policy, the Distribution
Date
occurring in the month following the month of the scheduled
maturity date of
the Mortgage Loan having the latest scheduled maturity date
including any
Subsequent Mortgage Loan, if any.
Fixed Rate
Certificates: The Class A-2, Class A-3, Class A-4, Class A-5
and Class A-6 Certificates.
Form 10-D
Disclosure Item: With respect to any Person, any material
litigation or governmental proceedings pending against such Person,
or against
any of the Trust Fund, the Depositor, the Trustee, any co-trustee,
the Master
Servicer or any Subservicer, if such Person has actual knowledge
thereof.
Form 10-K
Disclosure Item: With respect to any Person, (a) Form 10-D
Disclosure Item, and (b) any affiliations or relationships between
such Person
and any Item 1119 Party.
Freddie
Mac: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under
Title III of
the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Funding
Period: The period from the Closing Date to and including the
earlier to occur of (x) the date the amount in the Pre-Funding
Account is less
than $40,000 and (y) December 29, 2006.
Initial
Certificate Account Deposit: An amount equal to the aggregate
of
all amounts in respect of (i) principal of the Initial Mortgage
Loans due
after the Initial Cut-off Date and received by the Master Servicer
before the
Closing Date and not applied in computing the Cut-off Date
Principal Balance
thereof and (ii) interest on the Initial Mortgage Loans due after
the Initial
Cut-off Date and received by the Master Servicer before the Closing
Date.
Initial
Certificate Principal Balance: With respect to any Certificate
(other than the Class C Certificates) the Certificate Principal
Balance of
such Certificate or any predecessor Certificate on the Closing
Date.
Initial
Cut-off Date: In the case of any Initial Mortgage Loan, the
later of (x) November 1, 2006 and (y) the date of origination of
such Mortgage
Loan.
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Initial
Cut-off Date Pool Principal Balance: The aggregate Cut-off
Prinicipal Balance of the Initial Mortgage Loans.
Initial
Mortgage Loan: A Mortgage Loan conveyed to the Trustee on the
Closing Date pursuant to this Agreement as identified on the
Mortgage Loan
Schedule delivered to the Trustee on the Closing Date.
Insolvency
Proceeding: As defined in Section 4.06(h).
Insurance
and Indemnity Agreement: The Insurance and Indemnity
Agreement, dated as of the Closing Date, by and among the
Certificate Insurer,
as insurer, the Depositor, as depositor, Countrywide, as sponsor
and a seller,
the Master Servicer, as master servicer, and the Trustee, as
trustee.
Insurance
Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including the Credit Insurance
Policy,
including all riders and endorsements thereto in effect with
respect to such
Mortgage Loan, including any replacement policy or policies for any
Insurance
Policy.
Insurance
Proceeds: Proceeds paid in respect of the Mortgage Loans
(other than by the Certificate Insurer under the Certificate
Insurance Policy)
pursuant to any Insurance Policy or any other insurance policy
covering a
Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under
the Mortgage, the Master Servicer or the trustee under the deed of
trust and
are not applied to the restoration of the related Mortgaged
Property or
released to the Mortgagor in accordance with the procedures that
the Master
Servicer would follow in servicing mortgage loans held for its own
account, in
each case other than any amount included in such Insurance Proceeds
in respect
of Insured Expenses and received either prior to or in connection
with such
Mortgage Loan becoming a Liquidated Mortgage Loan.
Insured
Amounts: As defined in the Certificate Insurance Policy.
Insured
Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Insured
Payments: Either or both of (i) with respect to any
Distribution
Date, the aggregate amount actually paid by the Certificate Insurer
to the
Trustee in respect of Insured Amounts for such Distribution Date
and (ii)
amounts actually paid by the Certificate Insurer in respect of
Avoided
Payments for any given Business Day.
Interest-Bearing Certificates: The Class A Certificates.
Interest Carry Forward
Amount: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the
excess of (i)
the Current Interest for such Class with respect to prior
Distribution Dates
over (ii) the amount actually distributed to such Class with
respect to
interest on such prior Distribution Dates.
Interest
Determination Date: With respect to the Adjustable Rate
Certificates, the second LIBOR Business Day preceding the
commencement of each
Accrual Period.
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Interest
Funds: With respect to any Distribution Date, (x) an amount
equal to (i) the Interest Remittance Amount for such Distribution
Date, plus
(ii) solely for the purpose of calculating the Deficiency Amount,
the amount
on deposit in the Premium Account after taking into account any
deposits to
the Premium Account on such Distribution Date, less (y) the sum of
(i) the
Trustee Fee for such Distribution Date and (ii) the Credit
Insurance Premium
for such Distribution Date.
Interest
Remittance Amount: With respect to any Distribution Date, (x)
the sum, without duplication, of (i) all scheduled interest
collected during
the related Due Period with respect to the Mortgage Loans less the
Servicing
Fee, (ii) all interest on Principal Prepayments received during the
related
Prepayment Period with respect to the Mortgage Loans, other than
Prepayment
Interest Excess, (iii) all Advances relating to interest with
respect to the
Mortgage Loans, (iv) all Compensating Interest with respect to the
Mortgage
Loans, (v) Liquidation Proceeds with respect to the Mortgage Loans
collected
during the related Due Period (to the extent such Liquidation
Proceeds relate
to interest), (vi) any payments received under the Credit Insurance
Policy
attributable to interest for the related Due Period, (vii) any Loss
Coverage
Payment attributable to interest for the related Due Period and
(viii) the
Seller Shortfall Interest Requirement, if any, less (y) all
reimbursements to
the Master Servicer during the related Due Period for Advances of
interest
previously made.
Investment
Letter: As defined in Section 5.02(b).
Item 1119
Party: The Depositor, any Seller, the Master Servicer, the
Trustee, any Subservicer, any originator identified in the
Prospectus
Supplement, the Credit Insurer and the Corridor Contract
Counterparty, and any
other material transaction party, as identified in Exhibit Z
hereto, as
updated pursuant to Section 11.04.
Late
Payment Rate: With respect to any Distribution Date, the lesser
of
(i) the greater of (a) the rate of interest, as it is publicly
announced by
Citibank, N.A. at its principal office in New York, New York as its
prime rate
(any change in the prime rate of interest to be effective on the
date the
change is announced by Citibank, N.A.) plus 2% and (b) the then
applicable
highest rate of interest on any of the Class A Certificates and
(ii) the
maximum rate permissible under applicable usury or similar laws
limiting
interest rates. The Late Payment Rate shall be computed on the
basis of the
actual number of days elapsed over a year of 360 days.
Latest
Possible Maturity Date: The Distribution Date following the
third
anniversary of the scheduled maturity date of the Mortgage Loan
having the
latest scheduled maturity date as of the Cut-off Date.
LIBOR
Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting
transactions in
foreign currency and exchange.
Limited
Exchange Act Reporting Obligations: The obligations of the
Master Servicer under Section 3.17(b), Section 6.02 and Section
6.04 with
respect to notice and information to be provided to the Depositor
and Article
XI (except Section 11.07(a)(1) and (2)).
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Liquidated
Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan that has been liquidated through
deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization
as provided
by applicable law governing the real property subject to the
related Mortgage
and any security agreements and as to which the Master Servicer has
certified
in the related Prepayment Period that it has received all amounts
it expects
to receive in connection with such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in
connection with the partial or complete liquidation of Mortgage
Loans, whether
through trustee's sale, foreclosure sale or otherwise or amounts
received in
connection with any condemnation or partial release of a Mortgaged
Property
and any other proceeds received in connection with an REO Property
received in
connection with or prior to such Mortgage Loan becoming a
Liquidated Mortgage
Loan (other than the amount of such net proceeds representing any
profit
realized by the Master Servicer in connection with the disposition
of any such
properties), less the sum of related unreimbursed Advances,
Servicing Fees and
Servicing Advances.
Loan
Number and Borrower Identification Mortgage Loan Schedule: With
respect to any Subsequent Transfer Date, the Loan Number and
Borrower
Identification Mortgage Loan Schedule delivered in connection with
such
Subsequent Transfer Date pursuant to Section 2.01(f). Each Loan
Number and
Borrower Identification Mortgage Loan Schedule shall contain the
information
specified in the definition of "Mortgage Loan Schedule" with
respect to the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer
Date, and each
Loan Number and Borrower Identification Mortgage Loan Schedule
shall be deemed
to be included in the Mortgage Loan Schedule.
Loss
Coverage Payment: With respect to any Distribution Date on or
prior
to the Distribution Date on which the Sponsor Loss Coverage Amount
is reduced
to zero, the amount of Realized Losses on the Covered Loans with
respect to
which a claim for payment was denied by the Credit Insurer due to
an exclusion
in the Credit Insurance Policy but for which there are no breaches
of the
representations and warranties set forth in Section 2.03 with
respect to such
Covered Loans. Notwithstanding the preceding sentence, with respect
to the
Distribution Date on which the amount described in the preceding
sentence
exceeds the Sponsor Loss Coverage Amount, the Loss Coverage Payment
for such
Distribution Date shall be the Sponsor Loss Coverage Amount.
Majority
Holder: The Holders of Certificates evidencing at least 51% of
the Voting Rights allocated to such Class of Certificates.
Master
Servicer: Countrywide Home Loans Servicing LP, a Texas limited
partnership, and its successors and assigns, in its capacity as
master
servicer hereunder.
Master
Servicer Advance Date: As to any Distribution Date, the
Business
Day immediately preceding such Distribution Date.
Master
Servicer Prepayment Charge Payment Amount: The amounts (i)
payable by the Master Servicer in respect of any Prepayment Charges
waived
other than in accordance with the standard set forth in the first
sentence of
Section 3.20(a), or (ii) collected from the
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<PAGE>
Master Servicer in respect of a remedy for the breach of the
representation
made by CHL set forth in Section 3.20(c).
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or
any
successor thereto.
MERS
Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS(R) System.
MERS(R)
System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The
Mortgage Identification Number for any MERS Mortgage Loan.
Minimum
Auction Amount: With respect to any auction of the Mortgage
Loans and any REO Properties pursuant to Section 9.04, the sum of
(i) the
Termination Price that would be payable by the NIM Insurer if the
Optional
Termination were exercised in the following calendar month pursuant
to Section
9.01 and (ii) all reasonable fees and expenses incurred by the
Trustee in
connection with any auction conducted pursuant to Section 9.04. For
the
avoidance of doubt, the Minimum Auction Amount shall result in a
final
distribution on the Class A Certificates and to the Certificate
Insurer that
is sufficient (x) to pay such Class A Certificates in full (without
the need
of any payment by the Certificate Insurer of any Insured Amount)
and (y) to
pay any amounts due and payable to the Certificate Insurer pursuant
to the
terms hereof and pursuant to the Insurance and Indemnity
Agreement.
Modified
Mortgage Loan: As defined in Section 3.12(a).
MOM Loan:
Any Mortgage Loan, as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its
successors
and assigns.
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's:
Moody's Investors Service, Inc. and its successors.
Mortgage:
The mortgage, deed of trust or other instrument creating a
second lien on or second priority ownership interest in an estate
in fee
simple in real property securing a Mortgage Note.
Mortgage
File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional
documents
delivered to the Trustee to be added to the Mortgage File pursuant
to this
Agreement.
Mortgage
Loan Schedule: The list of Mortgage Loans (as from time to time
amended by the Master Servicer to reflect the deletion of
Liquidated Mortgage
Loans and Deleted Mortgage Loans and the addition of (x)
Replacement Mortgage
Loans pursuant to the provisions of this Agreement and (y)
Subsequent Mortgage
Loans pursuant to the provisions of this Agreement and any
Subsequent Transfer
Agreement) transferred to the Trustee as part of the
21
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Trust Fund and from time to time subject to this Agreement,
attached hereto as
Exhibit F-1, setting forth in the following information with
respect to each
Mortgage Loan:
(i) the loan number;
(ii) [Reserved];
(iii) the Appraised Value;
(iv) the Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off Date;
(x) the Combined Loan-to-Value Ratio at origination;
(xi) a code indicating whether the residential dwelling at
the time of origination was represented to be owner-occupied;
(xii) a code indicating whether the residential dwelling is
either (a) a detached single-family dwelling, (b) a two-family
residential property, (c) a three-family residential property,
(d)
a four-family residential property, (e) planned unit
development,
(f) a low-rise condominium unit, (g) a high-rise condominium
unit
or (h) manufactured housing;
(xiii) the purpose of the Mortgage Loan;
(xiv) a code indicating if such Mortgage Loan is a Covered
Loan, if applicable; and
(xv) a code indicating whether the Mortgage Loan is a CHL
Mortgage Loan, a Park Granada Mortgage Loan, a Park Monaco
Mortgage Loan or a Park Sienna Mortgage Loan.
Such schedule shall also set forth the total of the amounts
described under
(vii) above for all of the Mortgage Loans. The Mortgage Loan
Schedule shall be
deemed to include each Loan Number and Borrower Identification
Mortgage Loan
Schedule delivered pursuant to Section 2.01(f) and all the related
Subsequent
Mortgage Loans and Subsequent Mortgage Loan information included
therein.
Mortgage
Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions hereof and any Subsequent
Transfer
Agreement as from time
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<PAGE>
to time are held as part of the Trust Fund (including any REO
Property), the
mortgage loans so held being identified in the Mortgage Loan
Schedule,
notwithstanding foreclosure or other acquisition of title of the
related
Mortgaged Property. Any mortgage loan that was intended by the
parties hereto
to be transferred to the Trust Fund as indicated by such Mortgage
Loan
Schedule which is in fact not so transferred for any reason,
including a
breach of the representation contained in Section 2.02 hereof,
shall continue
to be a Mortgage Loan hereunder until the Purchase Price with
respect thereto
has been paid to the Trust Fund.
Mortgage
Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
Mortgage
Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note as
set forth in the Mortgage Loan Schedule.
Mortgaged
Property: The underlying property securing a Mortgage Loan.
Mortgagor:
The obligors on a Mortgage Note.
NAS
Factor: For any Distribution Date set forth below, the
percentage
set forth in the following table:
Distribution Date
Percentage
------------------------------------------------- ----------
December 2006 -- November 2009
0%
December 2009 -- November 2011
45%
December 2011 -- November 2012
80%
December 2012 -- November 2013
100%
December 2013 and thereafter
300%
NAS
Principal Distribution Amount: For any Distribution Date, an
amount
equal to the product of (i) the Class A-6 Portion for such
Distribution Date,
(ii) any amounts distributed to the Class A Certificates pursuant
to Section
4.04(b)(ii) for such Distribution Date and (iii) the NAS Factor for
such
Distribution Date.
Net
Mortgage Rate: As to each Mortgage Loan, and at any time, the
per
annum rate equal to the Mortgage Rate less the Servicing Fee
Rate.
Net Rate
Cap: For each Distribution Date, (1) the weighted average
Adjusted Net Mortgage Rate of the Mortgage Loans as of the first
day of the
related Due Period (after giving effect to Principal Prepayments
received
during the Prepayment Period that ends during such Due Period),
less (2) the
Certificate Insurance Policy Premium Rate, multiplied by a
fraction, the
numerator of which is (a) the aggregate Certificate Principal
Balance of the
Class A Certificates and the denominator of which is (b) the
aggregate Stated
Principal Balance of the Mortgage Loans as of the first day of the
related Due
Period (after giving effect to Principal Prepayments received
during the
Prepayment Period that ends during such Due Period) plus any
amounts on
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<PAGE>
deposit in the Pre-Funding Account as of the first day of that Due
Period. The
Net Rate Cap shall be adjusted in the case of the Class A-1
Certificates only,
to an effective rate reflecting the calculation of interest on the
basis of
the actual number of days elapsed during the related Accrual Period
and a
360-day year.
Net Rate
Carryover: With respect to any Class of Class A Certificates
and any Distribution Date, the sum of (A) the excess of (i) the
amount of
interest that such Class would otherwise have accrued for such
Distribution
Date had the Pass-Through Rate for such Class and the related
Accrual Period
not been determined based on the Net Rate Cap, over (ii) the amount
of
interest accrued on such Class at the applicable Net Rate Cap for
such
Distribution Date and (B) the Net Rate Carryover for such Class for
all
previous Distribution Dates not previously paid pursuant to Section
4.04,
together with interest thereon at the then-applicable Pass-Through
Rate for
such Class, without giving effect to the applicable Net Rate
Cap.
NIM
Insurer: Any insurer guarantying at the request of CHL certain
payments under notes backed or secured by the Class C and/or Class
P
Certificates.
Nonrecoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Master Servicer that, in the good faith
judgment of
the Master Servicer, will not or, in the case of a current
delinquency, would
not, be ultimately recoverable by the Master Servicer from the
related
Mortgagor, related Liquidation Proceeds or otherwise.
Non-United States
Person: A Person that is not a citizen or resident of
the United States, a corporation, partnership, or other entity
(treated as a
corporation or a partnership for federal income tax purposes)
created or
organized in or under the laws of the United States, any state
thereof or the
District of Columbia, an estate whose income from sources without
the United
States is includible in gross income for United States federal
income tax
purposes regardless of its connection with the conduct of a trade
or business
within the United States, or a trust if a court within the United
States is
able to exercise primary supervision over the administration of the
trust and
one or more United States persons have authority to control all
substantial
decisions of the trustor.
Notional
Amount: Not applicable.
OC Floor:
An amount equal to 0.50% of the sum of the Initial Cut-off
Date Pool Principal Balance and the Pre-Funded Amount.
Officer's
Certificate: A certificate (i) in the case of the Depositor,
signed by the Chairman of the Board, the Vice Chairman of the
Board, the
President, a Managing Director, a Vice President (however
denominated), an
Assistant Vice President, the Treasurer, the Secretary, or one of
the
Assistant Treasurers or Assistant Secretaries of the Depositor,
(ii) in the
case of the Master Servicer, signed by the President, an Executive
Vice
President, a Vice President, an Assistant Vice President, the
Treasurer, or
one of the Assistant Treasurers or Assistant Secretaries of
Countrywide GP,
Inc., its general partner, (iii) if provided for in this Agreement,
signed by
a Servicing Officer, as the case may be, and delivered to the
Depositor and
the Trustee, as the case may be, as required by this Agreement, or
(iv) in the
case of any other Person, signed by an authorized officer of such
Person.
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<PAGE>
One-Month
LIBOR: With respect to any Accrual Period for the Adjustable
Rate Certificates, the rate determined by the Trustee on the
related Interest
Determination Date on the basis of the rate for U.S. dollar
deposits for one
month as quoted on the Bloomberg Terminal on such Interest
Determination Date.
If such rate is not quoted on the Bloomberg Terminal (or if such
service is no
longer offered, such other service for displaying One-Month LIBOR
or
comparable rates as may be reasonably selected by the Trustee),
One-Month
LIBOR for the applicable Accrual Period for the Adjustable Rate
Certificates
will be the Reference Bank Rate. If no such quotations can be
obtained by the
Trustee and no Reference Bank Rate is available, One-Month LIBOR
will be
One-Month LIBOR applicable to the preceding Accrual Period for the
Adjustable
Rate Certificates.
Opinion of
Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Master Servicer, reasonably acceptable to each
addressee
of such opinion; provided that with respect to Section 6.04 or
10.01, or the
interpretation or application of the REMIC Provisions, such counsel
must (i)
in fact be independent of the Depositor and the Master Servicer,
(ii) not have
any direct financial interest in the Depositor or the Master
Servicer or in
any affiliate of either and (iii) not be connected with the
Depositor or the
Master Servicer as an officer, employee, promoter, underwriter,
trustee,
partner, director or person performing similar functions.
Optional
Termination: The termination of the Trust Fund provided
hereunder pursuant to the purchase of the Mortgage Loans pursuant
to clause
(a) of the first sentence of Section 9.01 hereof.
Optional
Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less
than or equal
to 10% of the sum of the Initial Cut-off Date Pool Principal
Balance and the
Pre-Funded Amount.
Original
Value: The value of the property underlying a Mortgage Loan
based, in the case of the purchase of the underlying Mortgaged
Property, on
the lower of an appraisal satisfactory to the Master Servicer or
the sales
price of such property or, in the case of a refinancing, on an
appraisal
satisfactory to the Master Servicer.
OTS: The
Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered
to the
Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other
Certificates have been executed and delivered by the Trustee
pursuant to
this
Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage
Loan
with a Stated Principal Balance greater than zero that was not the
subject of
a Principal Prepayment in
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<PAGE>
full, and that did not become a Liquidated Mortgage Loan, prior to
the end of
the related Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, the amount, if any, by which the
Overcollateralization
Target Amount exceeds the Overcollateralized Amount on such
Distribution Date
(after giving effect to the distribution of the Principal
Distribution Amount
(other than the portion thereof consisting of the Extra Principal
Distribution
Amount) on such Distribution Date).
Overcollateralization Reduction Amount: With respect to any
Distribution
Date, an amount equal to the lesser of (i) the Excess
Overcollateralization
Amount for such Distribution Date and (ii) the Principal Remittance
Amount for
such Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution
Date (a) prior to the Stepdown Date, an amount equal to 1.75% of
the sum of
the Initial Cut-off Date Pool Principal Balance and the Pre-Funded
Amount and
(b) on or after the Stepdown Date, the greater of (i) an amount
equal to 3.50%
of the aggregate Stated Principal Balance of the Mortgage Loans for
that
Distribution Date and (ii) the OC Floor; provided, however, that if
a Trigger
Event is in effect on any Distribution Date, the
Overcollateralization Target
Amount will be the Overcollateralization Target Amount as in effect
for the
prior Distribution Date.
Overcollateralized Amount: With respect to any Distribution Date,
the
amount, if any, by which (x) the sum of the aggregate Stated
Principal Balance
of the Mortgage Loans for such Distribution Date and any amount on
deposit in
the Pre-Funding Account exceeds (y) the aggregate Certificate
Principal
Balance of the Class A Certificates as of such Distribution Date
(after giving
effect to distribution of the Principal Remittance Amount to be
made on such
Distribution Date and, in the case of the Distribution Date
immediately
following the end of the Funding Period, any amounts to be released
from the
Pre-Funding Account).
Ownership
Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the
Holder
thereof and any other interest therein, whether direct or indirect,
legal or
beneficial.
Park
Granada: Park Granada LLC, a Delaware limited liability
company,
and its successors and assigns.
Park
Granada Mortgage Loans: The Mortgage Loans identified as such
on
the Mortgage Loan Schedule for which Park Granada is the applicable
Seller.
Park
Monaco: Park Monaco Inc., a Delaware corporation, and its
successors and assigns.
Park
Monaco Mortgage Loans: The Mortgage Loans identified as such on
the
Mortgage Loan Schedule for which Park Monaco is the applicable
Seller.
Park
Sienna: Park Sienna LLC, a Delaware limited liability company,
and
its successors and assigns.
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<PAGE>
Park
Sienna Mortgage Loans: The Mortgage Loans identified as such on
the
Mortgage Loan Schedule for which Park Sienna is the applicable
Seller.
Pass-Through Margin: With respect to any Distribution Date and the
Class
A-1 Certificates, 0.090% per annum.
Pass-Through Rate: With respect to any Accrual Period and each
Class of
Interest-Bearing Certificates, the per annum rate set forth or
calculated in
the manner described in the Preliminary Statement.
Percentage
Interest: With respect to any Interest-Bearing Certificate, a
fraction, expressed as a percentage, the numerator of which is the
Certificate
Principal Balance represented by such Certificate and the
denominator of which
is the aggregate Certificate Principal Balance of the related
Class. With
respect to the Class C, Class P and Class A-R Certificates, the
portion of the
Class evidenced thereby, expressed as a percentage, as stated on
the face of
such Certificate or equal to the percentage obtained by dividing
the
Denomination of such Certificate by the aggregate of the
Denominations of all
Certificates of the same Class.
Performance Certification: As defined in Section 11.05.
Permitted
Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and
credit
of the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia
receiving
the highest long-term debt rating of each Rating Agency, or
such
lower rating as each Rating Agency has confirmed in writing is
sufficient for the ratings originally assigned to the
Certificates
by such Rating Agency (without regard to the Certificate
Insurance
Policy, in the case of the Class A Certificates);
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper
rating
of each Rating Agency, or such lower rating as each Rating
Agency
has confirmed in writing is sufficient for the ratings
originally
assigned to the Certificates by such Rating Agency (without
regard
to the Certificate Insurance Policy, in the case of the Class A
Certificates);
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or
trust
company incorporated under the laws of the United States or of
any
state thereof and subject to supervision and examination by
federal and/or state banking authorities, provided that the
commercial paper and/or long term unsecured debt obligations of
such depository institution or trust company (or in the case of
the principal depository institution in a holding company
system,
the commercial paper or long-term unsecured debt obligations of
such holding company, but only if Moody's is not a Rating
Agency)
are then rated one of the two highest long-term and the highest
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short-term ratings of each such Rating Agency for such
securities,
or such lower ratings as each Rating Agency has confirmed in
writing is sufficient for the ratings originally assigned to
the
Certificates by such Rating Agency (without regard to the
Certificate Insurance Policy, in the case of the Class A
Certificates);
(v) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered
into with a depository institution or trust company (acting as
principal) described in clause (iv) above;
(vi) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of
the
face amount thereof) bearing interest or sold at a discount
issued
by any corporation incorporated under the laws of the United
States or any state thereof which, at the time of such
investment,
have one of the two highest long term ratings of each Rating
Agency (except (x) if the Rating Agency is Moody's, such rating
shall be the highest commercial paper rating of S&P for any
such
securities) and (y), or such lower rating as each Rating Agency
has confirmed in writing is sufficient for the ratings
originally
assigned to the Certificates by such Rating Agency (without
regard
to the Certificate Insurance Policy, in the case of the Class A
Certificates);
(vii) interests in any money market fund which at the date
of acquisition of the interests in such fund and throughout the
time such interests are held in such fund has the highest
applicable long term rating by each Rating Agency or such lower
rating as each Rating Agency has confirmed in writing is
sufficient for the ratings originally assigned to the
Certificates
by such Rating Agency (without regard to the Certificate
Insurance
Policy, in the case of the Class A Certificates);
(viii) short term investment funds sponsored by any trust
company or national banking association incorporated under the
laws of the United States or any state thereof which on the
date
of acquisition has been rated by each Rating Agency in their
respective highest applicable rating category or such lower
rating
as each Rating Agency has confirmed in writing is sufficient
for
the ratings originally assigned to the Certificates by such
Rating
Agency (without regard to the Certificate Insurance Policy, in
the
case of the Class A Certificates); and
(ix) such other relatively risk free investments having a
specified stated maturity and bearing interest or sold at a
discount acceptable to each Rating Agency as will not result in
the downgrading or withdrawal of the rating then assigned to
the
Certificates by any Rating Agency (without regard to the
Certificate Insurance Policy, in the case of the Class A
Certificates), as evidenced by a signed writing delivered by
each
Rating Agency, and reasonably acceptable to the NIM Insurer and
the Certificate Insurer, as evidenced by a signed writing
delivered by the NIM Insurer and the Certificate Insurer;
provided, that no such instrument shall be a Permitted Investment
if such
instrument (i) evidences the right to receive interest only
payments with
respect to the obligations underlying such instrument, (ii) is
purchased at a
premium or (iii) is purchased at a deep discount; provided
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<PAGE>
further that no such instrument shall be a Permitted Investment (A)
if such
instrument evidences principal and interest payments derived from
obligations
underlying such instrument and the interest payments with respect
to such
instrument provide a yield to maturity of greater than 120% of the
yield to
maturity at par of such underlying obligations, or (B) if it may be
redeemed
at a price below the purchase price (the foregoing clause (B) not
to apply to
investments in units of money market funds pursuant to clause (vii)
above);
provided further that no amount beneficially owned by any REMIC
(including,
without limitation, any amounts collected by the Master Servicer
but not yet
deposited in the Certificate Account) may be invested in
investments (other
than money market funds) treated as equity interests for Federal
income tax
purposes, unless the Master Servicer shall receive an Opinion of
Counsel, at
the expense of Master Servicer, to the effect that such investment
will not
adversely affect the status of any such REMIC as a REMIC under the
Code or
result in imposition of a tax on any such REMIC. Permitted
Investments that
are subject to prepayment or call may not be purchased at a price
in excess of
par.
Permitted
Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or
instrumentality of
any of the foregoing, (ii) a foreign government, International
Organization or
any agency or instrumentality of either of the foregoing, (iii)
an
organization (except certain farmers' cooperatives described in
section 521 of
the Code) that is exempt from tax imposed by Chapter 1 of the Code
(including
the tax imposed by section 511 of the Code on unrelated business
taxable
income) on any excess inclusions (as defined in section 860E(c)(1)
of the
Code) with respect to any Class A-R Certificate, (iv) rural
electric and
telephone cooperatives described in section 1381(a)(2)(C) of the
Code, (v) an
"electing large partnership" as defined in section 775 of the Code,
(vi) a
Person that is not a citizen or resident of the United States, a
corporation,
partnership, or other entity (treated as a corporation or a
partnership for
federal income tax purposes) created or organized in or under the
laws of the
United States, any state thereof or the District of Columbia, or an
estate
whose income from sources without the United States is includible
in gross
income for United States federal income tax purposes regardless of
its
connection with the conduct of a trade or business within the
United States,
or a trust if a court within the United States is able to exercise
primary
supervision over the administration of the trust and one or more
United States
Persons have authority to control all substantial decisions of the
trustor
unless such Person has furnished the transferor and the Trustee
with a duly
completed Internal Revenue Service Form W-8ECI, and (vii) any other
Person so
designated by the Trustee based upon an Opinion of Counsel that the
Transfer
of an Ownership Interest in a Class A-R Certificate to such Person
may cause
any REMIC formed hereunder to fail to qualify as a REMIC at any
time that any
Certificates are Outstanding. The terms "United States," "State"
and
"International Organization" shall have the meanings set forth in
section 7701
of the Code or successor provisions. A corporation will not be
treated as an
instrumentality of the United States or of any State or political
subdivision
thereof for these purposes if all of its activities are subject to
tax and,
with the exception of the Federal Home Loan Mortgage Corporation, a
majority
of its board of directors is not selected by such government
unit.
Person:
Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company,
trust,
unincorporated organization or government, or any agency or
political
subdivision thereof.
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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 Section
2510.3-101 or
otherwise under ERISA) of such an employee benefit plan or
plan.
Pool
Stated Principal Balance: The aggregate of the Stated Principal
Balances of the Mortgage Loans which were Outstanding Mortgage
Loans.
Pre-Funded
Amount: The amount deposited in the Pre-Funding Account on
the Closing Date, which shall equal $0.
Pre-Funding Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of
the Trustee
for the benefit of the Certificateholders and the Certificate
Insurer and
designated "The Bank of New York, in trust for registered holders
of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S7."
Funds in
the Pre-Funding Account shall be held in trust for the
Certificateholders for
the uses and purposes set forth in this Agreement and shall not be
a part of
any REMIC created hereunder, provided, however that any investment
income
earned from Permitted Investments made with funds in the
Pre-Funding Account
will be for the account of CHL.
Preference
Claim: As defined in Section 4.06(h).
Premium
Account: The separate Eligible Account created and maintained
by
the Trustee pursuant to Section 3.05 in the name of the Trustee for
the
benefit of the Certificateholders and the Certificate Insurer and
designated
"The Bank of New York, in trust for registered holders of CWHEQ,
Inc., Home
Equity Loan Asset Backed Certificates, Series 2006-S7." Funds in
the Premium
Account shall be held in trust for the Certificateholders and the
Certificate
Insurer for the uses and purposes set forth in this Agreement.
Prepayment
Assumption: The applicable rate of prepayment, as described
in the Prospectus Supplement relating to the Certificates.
Prepayment
Charge: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial
prepayment of such
Mortgage Loan within the related Prepayment Charge Period in
accordance with
the terms thereof (other than any Master Servicer Prepayment Charge
Payment
Amount).
Prepayment
Charge Period: With respect to any Mortgage Loan, the period
of time during which a Prepayment Charge may be imposed.
Prepayment
Charge Schedule: As of the Initial Cut-off Date with respect
to each Initial Mortgage Loan and as of the Subsequent Cut-off Date
with
respect to each Subsequent Mortgage Loan, a list attached hereto as
Schedule I
(including the Prepayment Charge Summary attached thereto), setting
forth the
following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
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(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on
the related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as
of the Cut-off Date.
As of the
Closing Date, the Prepayment Charge Schedule shall contain the
necessary information for each Initial Mortgage Loan. The
Prepayment Charge
Schedule shall be amended by the Master Servicer upon the sale of
any
Subsequent Mortgage Loans to the Trust Fund. In addition, the
Prepayment
Charge Schedule shall be amended from time to time by the Master
Servicer in
accordance with the provisions of this Agreement and a copy of each
related
amendment shall be furnished by the Master Servicer to the Class P
and Class C
Certificateholders and the NIM Insurer.
Prepayment
Interest Excess: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment
during the
period from the related Due Date to the end of the related
Prepayment Period,
any payment of interest received in connection therewith (net of
any
applicable Servicing Fee) representing interest accrued for any
portion of
such month of receipt.
Prepayment
Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal
Prepayment
or a Principal Prepayment in full during the period from the
beginning of the
related Prepayment Period to the Due Date in such Prepayment Period
(other
than a Principal Prepayment in full resulting from the purchase of
a Mortgage
Loan pursuant to Section 2.02, 2.03, 2.04, 3.12 or 9.01 hereof) and
for each
Mortgage Loan that became a Liquidated Mortgage Loan during the
related Due
Period, the amount, if any, by which (i) one month's interest at
the
applicable Net Mortgage Rate on the Stated Principal Balance of
such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in
the case of a
partial Principal Prepayment on the amount of such prepayment (or
Liquidation
Proceeds) exceeds (ii) the amount of interest paid or collected in
connection
with such Principal Prepayment or such Liquidation Proceeds.
Prepayment
Period: As to any Distribution Date and related Due Date, the
period beginning with the opening of business on the sixteenth day
of the
calendar month preceding the month in which such Distribution Date
occurs (or,
with respect to the first Distribution Date, the period beginning
with the
opening of business on November 2, 2006) and ending on the close of
business
on the fifteenth day of the month in which such Distribution Date
occurs.
Prime
Rate: The prime commercial lending rate of The Bank of New
York,
as publicly announced to be in effect from time to time. The Prime
Rate shall
be adjusted automatically, without notice, on the effective date of
any change
in such prime commercial lending rate. The Prime Rate is not
necessarily The
Bank of New York's lowest rate of interest.
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<PAGE>
Principal
Distribution Amount: With respect to each Distribution Date,
the sum of (i) the Principal Remittance Amount for such
Distribution Date,
(ii) the Extra Principal Distribution Amount for such Distribution
Date, and
(iii) with respect to the Distribution Date immediately following
the end of
the Funding Period, the amount, if any, remaining in the
Pre-Funding Account
at the end of the Funding Period (net of any investment income
therefrom),
minus (iv) the Overcollateralization Reduction Amount for such
Distribution
Date.
Principal
Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including
loans
purchased or repurchased under Sections 2.02, 2.03, 2.04, 3.12 and
9.01
hereof) that is received in advance of its scheduled Due Date to
the extent it
is not accompanied by an amount as to interest representing
scheduled interest
due on any date or dates in any month or months subsequent to the
month of
prepayment. Partial Principal Prepayments shall be applied by the
Master
Servicer in accordance with the terms of the related Mortgage
Note.
Principal
Remittance Amount: With respect to any Distribution Date, (a)
the sum, without duplication, of: (i) the scheduled principal
collected with
respect to the Mortgage Loans during the related Due Period or
advanced with
respect to such Distribution Date, (ii) Principal Prepayments
collected in the
related Prepayment Period with respect to the Mortgage Loans, (iii)
the Stated
Principal Balance of each Mortgage Loan that was repurchased by a
Seller or
purchased by the Master Servicer with respect to such Distribution
Date, (iv)
the amount, if any, by which the aggregate unpaid principal balance
of any
Replacement Mortgage Loans delivered by the Sellers in connection
with a
substitution of a Mortgage Loan is less than the aggregate unpaid
principal
balance of any Deleted Mortgage Loans, (v) any payments received
under the
Credit Insurance Policy attributable to principal for the related
Due Period,
(vi) any Loss Coverage Payment attributable to principal for the
related Due
Period, and (vii) all Liquidation Proceeds (to the extent such
Liquidation
Proceeds related to principal) and Subsequent Recoveries collected
during the
related Due Period; less (b) all Advances relating to principal and
certain
expenses reimbursable pursuant to Section 6.03 and reimbursed
during the
related Due Period.
Principal
Reserve Fund: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 3.08 in the
name of
the Trustee for the benefit of the Certificateholders and
designated "The Bank
of New York in trust for registered Holders of CWHEQ, Inc., Home
Equity Loan
Asset Backed Certificates, Series 2006-S7". Funds in the Principal
Reserve
Fund shall be held in trust for the Certificateholders for the uses
and
purposes set forth in this Agreement.
Private
Certificates: The Class C and Class P Certificates.
Prospectus: The prospectus dated November 15, 2006, relating to
asset
backed securities to be sold by the Depositor.
Prospectus
Supplement: The prospectus supplement dated November 29,
2006, relating to the public offering of the certain Classes of
Certificates
offered thereby.
PTCE
95-60: As defined in Section 5.02(b).
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<PAGE>
PUD: A
Planned Unit Development.
Purchase
Price: With respect to any Mortgage Loan (x) required to be (1)
repurchased by a Seller or purchased by the Master Servicer, as
applicable,
pursuant to Section 2.02, 2.03 or 3.12 hereof or (2) repurchased by
the
Depositor pursuant to Section 2.04 hereof, or (y) that the Master
Servicer has
a right to purchase pursuant to Section 3.12 hereof, an amount
equal to the
sum of (i) 100% of the unpaid principal balance (or, if such
purchase or
repurchase, as the case may be, is effected by the Master Servicer,
the Stated
Principal Balance) of the Mortgage Loan as of the date of such
purchase, (ii)
accrued interest thereon at the applicable Mortgage Rate (or, if
such purchase
or repurchase, as the case may be, is effected by the Master
Servicer, at the
Net Mortgage Rate) from (a) the date through which interest was
last paid by
the Mortgagor (or, if such purchase or repurchase, as the case may
be, is
effected by the Master Servicer, the date through which interest
was last
advanced by and not reimbursed to the Master Servicer) to (b) the
Due Date in
the month in which the Purchase Price is to be distributed to
Certificateholders and (iii) any costs, expenses and damages
incurred by the
Trust Fund resulting from any violation of any predatory or abusive
lending
law in connection with such Mortgage Loan.
Qualified
Bidder: With respect to any auction pursuant to Section 9.04,
any institution that is a regular purchaser and/or seller in the
secondary
market of residential mortgage loans as determined by the Trustee
(or any
advisor on its behalf), in its sole discretion, and any holder of
an interest
in the Class C Certificates; provided, however, that neither
Countrywide nor
any of its affiliates shall constitute a Qualified Bidder.
Rating
Agency: Each of Moody's and S&P. If any such organization or
its
successor is no longer in existence, "Rating Agency" shall be a
nationally
recognized statistical rating organization, or other comparable
Person
identified as a "Rating Agency" in the Underwriter's Exemption,
designated by
the Depositor, notice of which designation shall be given to the
Trustee.
References herein to a given rating category of a Rating Agency
shall mean
such rating category without giving effect to any modifiers.
Realized
Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of
the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated
Principal
Balance of such Liquidated Mortgage Loan as of the date of such
liquidation,
minus (ii) the Liquidation Proceeds, if any, received in connection
with such
liquidation during the month in which such liquidation occurs, to
the extent
applied as recoveries of principal of the Liquidated Mortgage Loan.
With
respect to each Mortgage Loan that has become the subject of a
Deficient
Valuation, (i) if the value of the related Mortgaged Property was
reduced
below the principal balance of the related Mortgage Note, the
amount by which
the value of the Mortgaged Property was reduced below the principal
balance of
the related Mortgage Note, and (ii) if the principal amount due
under the
related Mortgage Note has been reduced, the difference between the
principal
balance of the Mortgage Loan outstanding immediately prior to such
Deficient
Valuation and the principal balance of the Mortgage Loan as reduced
by the
Deficient Valuation.
Record
Date: With respect to any Distribution Date and the
Adjustable-Rate Certificates, the Business Day immediately
preceding such
Distribution Date, or if such
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Certificates are no longer Book-Entry Certificates, the last
Business Day of
the month preceding the month of such Distribution Date. With
respect to the
Fixed-Rate Certificates and the Class A-R, Class C and Class P
Certificates,
the last Business Day of the month preceding the month of a
Distribution Date.
Reference
Bank Rate: With respect to any Accrual Period, the arithmetic
mean (rounded upwards, if necessary, to the nearest whole multiple
of
0.03125%) of the offered rates for United States dollar deposits
for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York
City time,
on the related Interest Determination Date to prime banks in the
London
interbank market for a period of one month in amounts approximately
equal to
the outstanding aggregate Certificate Principal Balance of the
Adjustable-Rate
Certificates on such Interest Determination Date, provided that at
least two
such Reference Banks provide such rate. If fewer than two offered
rates
appear, the Reference Bank Rate will be the arithmetic mean
(rounded upwards,
if necessary, to the nearest whole multiple of 0.03125%) of the
rates quoted
by one or more major banks in New York City, selected by the
Trustee, as of
11:00 a.m., New York City time, on such date for loans in U.S.
dollars to
leading European banks for a period of one month in amounts
approximately
equal to the aggregate Certificate Principal Balance of the
Adjustable-Rate
Certificates on such Interest Determination Date.
Reference
Banks: Barclays Bank PLC, Deutsche Bank and NatWest, N.A.,
provided that if any of the foregoing banks are not suitable to
serve as a
Reference Bank, then any leading banks selected by the Trustee
which are
engaged in transactions in Eurodollar deposits in the
international
Eurocurrency market (i) with an established place of business in
London,
England, (ii) not controlling, under the control of or under common
control
with the Depositor, CHL or the Master Servicer and (iii) which have
been
designated as such by the Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection
with the refinancing of an existing mortgage loan.
Regular
Certificate: Any Certificate other than the Class A-R
Certificates.
Regulation
AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended
from time to
time, and subject to such clarification and interpretation as have
been
provided by the Commission in the adopting release (Asset Backed
Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005))
or by the staff of the Commission, or as may be provided by the
Commission or
its staff from time to time and publicly available.
Relief
Act: The Servicemembers Civil Relief Act.
REMIC
Provisions: Provisions of the federal income tax law relating
to
real estate mortgage investment conduits which appear at section
860A through
860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and
regulations and rulings promulgated thereunder, as the foregoing
may be in
effect from time to time.
Remittance
Report: A report prepared by the Master Servicer and
delivered to the Trustee and the NIM Insurer in accordance with
Section 4.04.
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REO
Property: A Mortgaged Property acquired by the Master Servicer
through foreclosure or deed-in-lieu of foreclosure in connection
with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a Seller
for a
Deleted Mortgage Loan which must, on the date of such substitution,
as
confirmed in a Request for File Release, (i) have a Stated
Principal Balance,
after deduction of the principal portion of the Scheduled Payment
due in the
month of substitution, not in excess of, and not less than 90% of
the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) have the same
or higher
credit quality characteristics than that of the Deleted Mortgage
Loan; (iii)
be accruing interest at a rate not more than 1% per annum higher or
lower than
that of the Deleted Mortgage Loan; (iv) have a Combined
Loan-to-Value Ratio no
higher than that of the Deleted Mortgage Loan; (v) have a remaining
term to
maturity not greater than (and not more than one year less than)
that of the
Deleted Mortgage Loan; (vi) not permit conversion of the Mortgage
Rate from a
fixed rate to a variable rate; (vii) provide for a Prepayment
Charge on terms
substantially similar to those of the Prepayment Charge, if any, of
the
Deleted Mortgage Loan; (viii) have the same occupancy type and lien
priority
as the Deleted Mortgage Loan; (ix) comply with each representation
and
warranty set forth in Section 2.03 as of the date of substitution
and (x) if
the Deleted Mortgage Loan was a Covered Loan, be covered by the
Credit
Insurance Policy; provided, however, that notwithstanding the
foregoing, to
the extent that compliance with clause (ix) of this definition
would cause a
proposed Replacement Mortgage Loan to fail to comply with one or
more of
clauses (i), (iii), (vii) and/or (viii) of this definition, then
such proposed
Replacement Mortgage Loan must comply with clause (ix) and need not
comply
with one or more of clauses (i), (iii), (vii) and/or (viii), to the
extent,
and only to the extent, necessary to assure that the Replacement
Mortgage Loan
otherwise complies with clause (ix); provided, further, that to the
extent
that the Certificate Insurer has provided its consent, the
Replacement
Mortgage Loan need not comply with clause (x).
Reportable
Event: Any event required to be reported on Form 8-K, and in
any event, the following:
(a) entry
into a definitive agreement related to the Trust Fund, the
Certificates or the Mortgage Loans, or an amendment to a
Transaction Document,
even if the Depositor is not a party to such agreement (e.g., a
servicing
agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
(b)
termination of a Transaction Document (other than by expiration
of
the agreement on its stated termination date or as a result of all
parties
completing their obligations under such agreement), even if the
Depositor is
not a party to such agreement (e.g., a servicing agreement with a
servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(c) with
respect to the Master Servicer only, if the Master Servicer
becomes aware of any bankruptcy or receivership with respect to
CHL, the
Depositor, the Master Servicer, any Subservicer, the Trustee, the
Corridor
Contract Counterparty, any enhancement or support provider
contemplated by
Items 1114(b) or 1115 of Regulation AB, or any other material
party
contemplated by Item 1101(d)(1) of Regulation AB;
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(d) with
respect to the Trustee, the Master Servicer and the Depositor
only, the occurrence of an early amortization, performance trigger
or other
event, including an Event of Default under this Agreement;
(e) any
amendment to this Agreement;
(f) the
resignation, removal, replacement, substitution of the Master
Servicer, any Subservicer, the Trustee or any co-trustee;
(g) with
respect to the Master Servicer only, if the Master Servicer
becomes aware that (i) any material enhancement or support
specified in Item
1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation
AB that was
previously applicable regarding one or more classes of the
Certificates has
terminated other than by expiration of the contract on its stated
termination
date or as a result of all parties completing their obligations
under such
agreement; (ii) any material enhancement specified in Item
1114(a)(1) through
(3) of Regulation AB or Item 1115 of Regulation AB has been added
with respect
to one or more classes of the Certificates; or (iii) any existing
material
enhancement or support specified in Item 1114(a)(1) through (3) of
Regulation
AB or Item 1115 of Regulation AB with respect to one or more
classes of the
Certificates has been materially amended or modified; and
(h) with
respect to the Trustee, the Master Servicer and the Depositor
only, a required distribution to Holders of the Certificates is not
made as of
the required Distribution Date under this Agreement.
Reporting
Subcontractor: With respect to the Master Servicer or the
Trustee, any Subcontractor determined by such Person pursuant to
Section
11.08(b) to be "participating in the servicing function" within the
meaning of
Item 1122 of Regulation AB. References to a Reporting Subcontractor
shall
refer only to the Subcontractor of such Person and shall not refer
to
Subcontractors generally.
Representing Party: As defined in Section 2.03(f).
Request
for Document Release: A Request for Document Release submitted
by the Master Servicer to the Trustee, substantially in the form of
Exhibit M.
Request
for File Release: A Request for File Release submitted by the
Master Servicer to the Trustee, substantially in the form of
Exhibit N.
Required
Carryover Reserve Fund Deposit: With respect to any
Distribution Date, an amount equal to the excess of (i) $1,000 over
(ii) the
amount of funds on deposit in the Carryover Reserve Fund.
Required
Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to
time under
this Agreement, including with respect to the Covered Loans, the
Credit
Insurance Policy.
Responsible Officer: When used with respect to the Trustee, any
Vice
President, any Assistant Vice President, the Secretary, any
Assistant
Secretary, any Trust Officer or any
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other officer of the Trustee customarily performing functions
similar to those
performed by any of the above designated officers and also to whom,
with
respect to a particular matter, such matter is referred because of
such
officer's knowledge of and familiarity with the particular
subject.
Rolling
Sixty-Day Delinquency Rate: With respect to any Distribution
Date on or after the Stepdown Date, the average of the Sixty-Day
Delinquency
Rates for that Distribution Date and the two immediately
preceding
Distribution Dates.
Rule 144A:
Rule 144A under the Securities Act.
Rule 144A
Letter: As defined in Section 5.02(b).
S&P:
Standard & Poor's Ratings Services, a division of The
McGraw-Hill
Companies, Inc. and its successors.
Sarbanes-Oxley Certification: As defined in Section 11.05.
Scheduled
Payment: With respect to any Mortgage Loan, the scheduled
monthly payment of principal and/or interest due on any Due Date on
such
Mortgage Loan which is payable by the related Mortgagor from time
to time
under the related Mortgage Note, determined: (a) after giving
effect to (i)
any Deficient Valuation and/or Debt Service Reduction with respect
to such
Mortgage Loan and (ii) any reduction in the amount of interest
collectible
from the related Mortgagor pursuant to the Relief Act or any
similar state or
local law; (b) without giving effect to any extension granted or
agreed to by
the Master Servicer pursuant to Section 3.05(a); and (c) on the
assumption
that all other amounts, if any, due under such Mortgage Loan are
paid when
due.
Securities
Act: The Securities Act of 1933, as amended.
Seller
Shortfall Interest Requirement: With respect to the Master
Servicer Advance Date in each of December 2006 and January 2007,
the sum of:
(a) the product of:
(1) the excess of the aggregate Stated Principal
Balance for such Distribution Date of all the Mortgage Loans in the
Mortgage
Pool (including the Subsequent Mortgage Loans, if any) owned by the
Trust Fund
at the beginning of the related Due Period, over the aggregate
Stated
Principal Balance for such Distribution Date of such Mortgage Loans
(including
such Subsequent Mortgage Loans, if any) that have a scheduled
payment of
interest due in the related Due Period, and (2) a fraction, the
numerator of
which is the weighted average Net Mortgage Rate of all the Mortgage
Loans in
the Mortgage Pool (including such Subsequent Mortgage Loans, if
any) (weighted
on the basis of the Stated Principal Balances thereof for such
Distribution
Date) and the denominator of which is 12; and
(b) the
product of: (1) the amount on deposit in the Pre-Funding
Account
at the beginning of the related Due Period, and (2) a fraction, the
numerator
of which is the weighted average Net Mortgage Rate of the Mortgage
Loans
(including Subsequent Mortgage Loans, if any) owned by the Trust
Fund at the
beginning of the related Due Period (weighted on
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<PAGE>
the basis of the Stated Principal Balances thereof for such
Distribution Date)
and the denominator of which is 12.
Sellers:
CHL, in its capacity as seller of the CHL Mortgage Loans to the
Depositor, Park Granada, in its capacity as seller of the Park
Granada
Mortgage Loans to the Depositor, Park Monaco, in its capacity as
seller of the
Park Monaco Mortgage Loans to the Depositor and Park Sienna, in its
capacity
as seller of the Park Sienna Mortgage Loans to the Depositor.
Servicing
Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the
Master Servicer
of its servicing obligations hereunder, including, but not limited
to, the
cost of (i) the preservation, restoration and protection of a
Mortgaged
Property, (ii) any enforcement or judicial proceedings,
including
foreclosures, (iii) the management and liquidation of any REO
Property and
(iv) compliance with the obligations under Section 3.10.
Servicing
Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB.
Servicing
Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on
the Stated
Principal Balance of such Mortgage Loan for the preceding
Distribution Date
or, in the event of any payment of interest that accompanies a
Principal
Prepayment in full made by the Mortgagor, interest at the Servicing
Fee Rate
on the Stated Principal Balance of such Mortgage Loan for the
period covered
by such payment of interest.
Servicing
Fee Rate: With respect to each Mortgage Loan, 0.50% per annum.
Servicing
Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage
Loans whose
name and facsimile signature appear on a list of servicing officers
furnished
to the Trustee by the Master Servicer on the Closing Date pursuant
to this
Agreement, as such list may from time to time be amended.
Sixty-Day
Delinquency Rate: With respect to any Distribution Date on or
after the Stepdown Date, a fraction, expressed as a percentage, the
numerator
of which is the aggregate Stated Principal Balance for such
Distribution Date
of all Mortgage Loans 60 or more days delinquent as of the close of
business
on the last day of the calendar month preceding such Distribution
Date
(including Mortgage Loans in foreclosure, bankruptcy and REO
Properties) and
the denominator of which is the aggregate Stated Principal Balance
for such
Distribution Date of all Mortgage Loans.
Sponsor
Loss Coverage Amount: With respect to any Distribution Date,
the
amount by which 1.00% of the sum of the aggregate Cut-off Date
Principal
Balance of the Initial Mortgage Loans and the Pre-Funded Amount
exceeds the
aggregate amount of Loss Coverage Payments, if any, made prior to
such
Distribution Date.
Sponsor
Loss Coverage Obligation: The obligation of CHL described in
Section 2.08 with respect to Loss Coverage Payments.
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<PAGE>
Stated
Principal Balance: With respect to any Mortgage Loan or related
REO Property (i) as of the Cut-off Date, the unpaid principal
balance of the
Mortgage Loan as of such date (before any adjustment to the
amortization
schedule for any moratorium or similar waiver or grace period),
after giving
effect to any partial prepayments or Liquidation Proceeds received
prior to
such date and to the payment of principal due on or prior to such
date and
irrespective any delinquency in payment by the related Mortgagor,
and (ii) as
of any other Distribution Date, the Stated Principal Balance of the
Mortgage
Loan as of its Cut-off Date, minus the sum of (a) the principal
portion of the
Scheduled Payments (x) due with respect to such Mortgage Loan
during each Due
Period ending prior to such Distribution Date and (y) that were
received by
the Master Servicer as of the close of business on the
Determination Date
related to such Distribution Date or with respect to which Advances
were made
as of the Master Servicer Advance Date related to such Distribution
Date, (b)
all Principal Prepayments with respect to such Mortgage Loan
received by the
Master Servicer during each Prepayment Period ending prior to
such
Distribution Date, (c) all Liquidation Proceeds collected with
respect to such
Mortgage Loan during each Due Period ending prior to such
Distribution Date,
to the extent applied by the Master Servicer as recoveries of
principal in
accordance with Section 3.12 and (d) any Realized Loss previously
incurred in
connection with a Deficient Valuation. The Stated Principal Balance
of any
Mortgage Loan that becomes a Liquidated Mortgage Loan will be zero
on each
date following the Due Period in which such Mortgage Loan becomes a
Liquidated
Mortgage Loan. References herein to the Stated Principal Balance of
the
Mortgage Loans at any time shall mean the aggregate Stated
Principal Balance
of all Mortgage Loans in the Trust Fund as of such time.
Stepdown
Date: The later to occur of (i) the Distribution Date in May
2009 and (ii) the first Distribution Date on which the aggregate
Stated
Principal Balance of the Mortgage Loans for that Distribution Date
is less
than or equal to 50.00% of the sum of the Initial Cut-off Date Pool
Principal
Balance and the Pre-Funded Amount.
Subcontractor: Any vendor, subcontractor or other Person that is
not
responsible for the overall servicing (as "servicing" is commonly
understood
by participants in the mortgage-backed securities market) of
Mortgage Loans
but performs one or more discrete functions identified in Item
1122(d) of
Regulation AB with respect to the Mortgage Loans under the
direction or
authority of the Master Servicer or a Subservicer or the Trustee,
as the case
may be.
Subsequent
Certificate Account Deposit: With respect to any Subsequent
Transfer Date, an amount equal to the aggregate of all amounts in
respect of
(i) principal of the related Subsequent Mortgage Loans due after
the related
Subsequent Cut-off Date and received by the Master Servicer on or
before such
Subsequent Transfer Date and not applied in computing the Cut-off
Date
Principal Balance thereof and (ii) interest on the such Subsequent
Mortgage
Loans due after such Subsequent Cut-off Date and received by the
Master
Servicer on or before the Subsequent Transfer Date.
Subsequent
Cut-off Date: In the case of any Subsequent Mortgage Loan,
the later of (x) the first day of the month of the related
Subsequent Transfer
Date and (y) the date of origination of such Subsequent Mortgage
Loan.
39
<PAGE>
Subsequent
Mortgage Loan: Any Mortgage Loan conveyed to the Trustee on a
Subsequent Transfer Date, and listed on the related Loan Number and
Borrower
Identification Mortgage Loan Schedule delivered pursuant to Section
2.01(f).
When used with respect to a single Subsequent Transfer Date,
"Subsequent
Mortgage Loan" shall mean a Subsequent Mortgage Loan conveyed to
the Trustee
on such Subsequent Transfer Date.
Subsequent
Recoveries: As to any Distribution Date, with respect to a
Liquidated Mortgage Loan that resulted in a Realized Loss in a
prior calendar
month, unexpected amounts received by the Master Servicer (net of
any related
expenses permitted to be reimbursed pursuant to Section 3.08 and
3.12)
specifically related to such Liquidated Mortgage Loan after the
classification
of such Mortgage Loan as a Liquidated Mortgage Loan.
Subsequent
Transfer Agreement: A Subsequent Transfer Agreement
substantially in the form of Exhibit P hereto, executed and
delivered by the
Sellers, the Depositor and the Trustee as provided in Section
2.01(d).
Subsequent
Transfer Date: For any Subsequent Transfer Agreement, the
"Subsequent Transfer Date" identified in such Subsequent Transfer
Agreement;
provided, however, the Subsequent Transfer Date for any Subsequent
Transfer
Agreement must be a Business Day and may not be a date earlier than
the date
on which the Subsequent Transfer Agreement is executed and
delivered by the
parties thereto pursuant to Section 2.01(d).
Subsequent
Transfer Date Purchase Amount: With respect to any Subsequent
Transfer Date, the "Subsequent Transfer Date Purchase Amount"
identified in
the related Subsequent Transfer Agreement which shall be an
estimate of the
aggregate Stated Principal Balances of the Subsequent Mortgage
Loans
identified in such Subsequent Transfer Agreement.
Subsequent
Transfer Date Transfer Amount: With respect to any Subsequent
Transfer Date, an amount equal to the lesser of (i) the aggregate
Stated
Principal Balances as of the related Subsequent Cut-off Dates of
the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer
Date, as listed
on the related Loan Number and Borrower Identification Mortgage
Loan Schedule
delivered pursuant to Section 2.01(f) and (ii) the amount on
deposit in the
Pre-Funding Account.
Subservicer: As defined in Section 3.02(a).
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such
term
pursuant to Section 2.03(f).
Substitution Amount: With respect to any Mortgage Loan
substituted
pursuant to Section 2.03(f), the excess of (x) the principal
balance of the
Mortgage Loan that is substituted for, over (y) the principal
balance of the
related substitute Mortgage Loan, each balance being determined as
of the date
of substitution.
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<PAGE>
Successful
Auction: An auction held pursuant to Section 9.04 at which at
least three Qualified Bidders submitted bids and at least one of
those bids
was an Acceptable Bid Amount.
Tax
Matters Person: The person designated as "tax matters person" in
the
manner provided under Treasury regulation Section 1.860F-4(d) and
Treasury
regulation Section 301.6231(a)(7)-1. Initially, this person shall
be the
Trustee.
Tax
Matters Person Certificate: The Class A-R Certificate with a
Denomination of $0.05 and in the form of Exhibit E hereto.
Terminator: As defined in Section 9.01.
Termination Price: As defined in Section 9.01.
Transaction Documents: This Agreement, the Corridor Contract,
the
Corridor Contract Administration Agreement, the Credit Insurance
Policy, the
Certificate Insurance Policy, the Insurance and Indemnity Agreement
and any
other document or agreement entered into in connection with the
Trust Fund,
the Certificates or the Mortgage Loans.
Transfer:
Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Transfer
Affidavit: As defined in Section 5.02(c).
Transferor
Certificate: As defined in Section 5.02(b).
Trigger
Event: With respect to any Distribution Date on or after the
Stepdown Date, either a Delinquency Trigger Event or a Cumulative
Loss Trigger
Event is in effect with respect to that Distribution Date.
Trust
Fund: The corpus of the trust created hereunder consisting of
(i)
the Mortgage Loans and all interest and principal received on or
with respect
thereto after the Cut-off Date to the extent not applied in
computing the
Cut-off Date Principal Balance thereof, exclusive of interest not
required to
be deposited in the Certificate Account pursuant to Section
3.05(b)(2); (ii)
the Certificate Account, the Distribution Account, the Principal
Reserve Fund,
the Carryover Reserve Fund, the Pre-Funding Account, the Premium
Account and
all amounts deposited therein pursuant to the applicable provisions
of this
Agreement; (iii) the rights to receive certain proceeds of the
Corridor
Contract as provided in the Corridor Contract Administration
Agreement; (iv)
property that secured a Mortgage Loan and has been acquired by
foreclosure,
deed in lieu of foreclosure or otherwise; (v) the mortgagee's
rights under the
Insurance Policies with respect to the Mortgage Loan; (vi) rights
under the
Credit Insurance Policy; (vii) the rights of the Trustee for the
benefit of
the Class A Certificateholders under the Certificate Insurance
Policy; and
(vi) all proceeds of the conversion, voluntary or involuntary, of
any of the
foregoing into cash or other liquid property.
Trustee:
The Bank of New York, a New York banking corporation, not in
its individual capacity, but solely in its capacity as trustee for
the benefit
of the Certificateholders
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<PAGE>
under this Agreement, and any successor thereto, and any
corporation or
national banking association resulting from or surviving any
consolidation or
merger to which it or its successors may be a party and any
successor trustee
as may from time to time be serving as successor trustee
hereunder.
Trustee
Advance Notice: As defined in Section 4.01(d).
Trustee
Advance Rate: With respect to any Advance made by the Trustee
pursuant to Section 4.01(d), a per annum rate of interest
determined as of the
date of such Advance equal to the Prime Rate in effect on such date
plus
5.00%.
Trustee
Fee: As to any Distribution Date, an amount equal to
one-twelfth
of the Trustee Fee Rate multiplied by the sum of (i) the Pool
Stated Principal
Balance and (ii) any amounts remaining in the Pre-Funding Account
(excluding
any investment earnings thereon) with respect to such Distribution
Date.
Trustee
Fee Rate: With respect to each Mortgage Loan, the per annum
rate
agreed upon in writing on or prior to the Closing Date by the
Trustee and the
Depositor, which is 0.009% per annum.
Underwriter's Exemption: Prohibited Transaction Exemption 2002-41,
67
Fed. Reg. 54487 (2002), as amended (or any successor thereto), or
any
substantially similar administrative exemption granted by the U.S.
Department
of Labor.
Underwriters: Countrywide Securities Corporation, Merrill Lynch,
Pierce,
Fenner & Smith Incorporated and Greenwich Capital Markets
Inc.
Unpaid
Realized Loss Amount: For any Class of Certificates and any
Distribution Date, (x) the portion of the aggregate Applied
Realized Loss
Amount allocated to that Class and remaining unpaid (in the case of
any Class
of Class A Certificates, without regard to any payment made by the
Certificate
Insurer in respect of that Class under the Certificate Insurance
Policy) minus
(y) (1) any increase in the Certificate Principal Balance of that
Class due to
the allocation of Subsequent Recoveries to the Certificate
Principal Balance
of that Class pursuant to Section 4.04(h) or (2) in the case of any
Class of
Class A Certificates, the amount of any Subsequent Recovery paid to
the
Certificate Insurer in respect of that Class.
Voting
Rights: The voting rights of all the Certificates that are
allocated to any Certificates for purposes of the voting provisions
hereunder.
Voting Rights allocated to each Class of Certificates shall be
allocated 97%
to the Certificates other than the Class A-R, Class C and Class P
Certificates
(with the allocation among the Certificates to be in proportion to
the
Certificate Principal Balance of each Class relative to the
Certificate
Principal Balance of all other such Classes), and 1% to each of the
Class A-R,
Class C and Class P Certificates. Voting Rights will be allocated
among the
Certificates of each such Class in accordance with their respective
Percentage
Interests. Notwithstanding any of the foregoing, on any date on
which any
Class A Certificates are outstanding or any amounts are owed the
Certificate
Insurer under this Agreement, unless a Certificate Insurer Default
shall have
occurred and be continuing, the Certificate Insurer will be
entitled to
exercise the Voting Rights of the Class A Certificateholders,
without the
consent of the Class A Certificateholders, and the Class A
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<PAGE>
Certificateholders may exercise such rights only with the prior
written
consent of the Certificate Insurer.
Winning
Bidder: With respect to a Successful Auction, the Qualified
Bidder that bids the highest price.
XLCA: XL
Capital Assurance Inc., organized and created under the laws of
the State of New York, or any successor thereto.
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 a Scheduled Payment has not been received by the
close of
business on the Due Date on which the next Scheduled Payment is
due. Similarly
for "60 days delinquent," "90 days delinquent" and so on.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section
2.01 Conveyance of Mortgage Loans.
(a) Each
Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the
right, title and
interest of such Seller in and to the applicable Initial Mortgage
Loans,
including all interest and principal received and receivable by
such Seller on
or with respect to applicable Initial Mortgage Loans after the
Initial Cut-off
Date (to the extent not applied in computing the Cut-off Date
Principal
Balance thereof) or deposited into the Certificate Account by the
Master
Servicer on behalf of such Seller as part of the Initial
Certificate Account
Deposit as provided in this Agreement, other than principal due on
the
applicable Initial Mortgage Loans on or prior to the Initial
Cut-off Date and
interest accruing
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<PAGE>
prior to the Initial Cut-off Date. The Master Servicer confirms
that, on
behalf of the Sellers, concurrently with the transfer and
assignment, it has
deposited into the Certificate Account the Initial Certificate
Account
Deposit. On the Closing Date, CHL, as a Seller, shall deposit
$24.09 into the
Distribution Account for distribution as part of the Principal
Remittance
Amount on the first Distribution Date.
Immediately upon the conveyance of the Initial Mortgage Loans
referred
to in the preceding paragraph, the Depositor (i) sells, transfers,
assigns,
sets over and otherwise conveys to the Trustee for benefit of
the
Certificateholders and the Certificate Insurer, without recourse,
all right
title and interest in the Initial Mortgage Loans and (ii) causes
the
Certificate Insurer to deliver the Certificate Insurance Policy to
the
Trustee.
CHL
further agrees (x) to cause The Bank of New York to enter into
the
Corridor Contract Administration Agreement as Corridor Contract
Administrator
and (y) to assign all of its right, title and interest in and to
the interest
rate corridor transaction evidenced by each Confirmation, and to
cause all of
its obligations in respect of such transaction to be assumed by,
the Corridor
Contract Administrator, on the terms and conditions set forth in
the Corridor
Contract Assignment Agreement.
(b)
Subject to the execution and delivery of the related Subsequent
Transfer Agreement as provided by Section 2.01(d) and the terms and
conditions
of this Agreement, each Seller sells, transfers, assigns, sets over
and
otherwise conveys to the Depositor, without recourse, on each
Subsequent
Transfer Date, all the right, title and interest of such Seller in
and to the
related Subsequent Mortgage Loans, including all interest and
principal
received and receivable by such Seller on or with respect to such
Subsequent
Mortgage Loans after the related Subsequent Cut-off Date (to the
extent not
applied in computing the Cut-off Date Principal Balance thereof) or
deposited
into the Certificate Account by the Master Servicer on behalf of
such Seller
as part of any related Subsequent Certificate Account Deposit as
provided in
this Agreement, other than principal due on such Subsequent
Mortgage Loans on
or prior to the related Subsequent Cut-off Date and interest
accruing prior to
the related Subsequent Cut-off Date.
Immediately upon the conveyance of the Subsequent Mortgage
Loans
referred to in the preceding paragraph, the Depositor sells,
transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit
of the
Certificateholders and the Certificate Insurer, without recourse,
all right
title and interest in the Subsequent Mortgage Loans.
(c) Each
Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to
take the
actions specified herein. The Depositor, concurrently with the
execution and
delivery of this Agreement, hereby sells, transfers, assigns and
otherwise
conveys to the Trustee for the use and benefit of the
Certificateholders,
without recourse, all right title and interest in the portion of
the Trust
Fund not otherwise conveyed to the Trustee pursuant to Section
2.01(a) or (b).
(d) On any
Business Day during the Funding Period designated by CHL to
the Trustee, the Sellers, the Depositor and the Trustee shall
complete,
execute and deliver a Subsequent Transfer Agreement. After the
execution and
delivery of such Subsequent Transfer
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<PAGE>
Agreement, on the Subsequent Transfer Date, the Trustee shall set
aside in the
Pre-Funding Account an amount equal to the related Subsequent
Transfer Date
Purchase Amount.
(e) The
transfer of Subsequent Mortgage Loans on the Subsequent
Transfer
Date is subject to the satisfaction of each of the following
conditions:
(1) the Trustee, the Underwriters and the Certificate Insurer
will
be
provided Opinions of Counsel addressed to the Rating Agencies as
with
respect to
the sale of the Subsequent Mortgage Loans conveyed on such
Subsequent
Transfer Date (such opinions being substantially similar to
the
opinions delivered on the Closing Date to the Rating Agencies
and
the
Certificate Insurer with respect to the sale of the Initial
Mortgage
Loans on
the Closing Date), to be delivered as provided in Section
2.01(f);
(2) the execution and delivery of such Subsequent Transfer
Agreement
or conveyance of the related Subsequent Mortgage Loans does
not result
in a reduction or withdrawal of any ratings assigned to the
Certificates by the Rating Agencies (without regard to the
Certificate
Insurance
Policy, in the case of the Class A Certificates);
(3) the Depositor shall deliver to the Trustee an Officer's
Certificate confirming the satisfaction of each of the conditions
set
forth in
this Section 2.01(e) required to be satisfied by such
Subsequent
Transfer Date;
(4) each Subsequent Mortgage Loan conveyed on such Subsequent
Transfer
Date satisfies the representations and warranties applicable to
it under
this Agreement, provided, however, that with respect to a
breach of
a representation and warranty with respect to a Subsequent
Mortgage
Loan set forth in this clause (4), the obligation under Section
2.03(f) of
this Agreement of the applicable Seller, to cure, repurchase
or replace
such Subsequent Mortgage Loan shall constitute the sole
remedy
against such Seller respecting such breach available to
Certificateholders, the Depositor, the Certificate Insurer or
the
Trustee;
(5) the Subsequent Mortgage Loans conveyed on such Subsequent
Transfer
Date were selected in a manner reasonably believed not to be
adverse to
the interests of the Certificateholders or the Certificate
Insurer;
(6) no Subsequent Mortgage Loan conveyed on such Subsequent
Transfer
Date was 30 or more days delinquent as of the related Cut-off
Date;
(7) following the conveyance of the Subsequent Mortgage Loans
on
such
Subsequent Transfer Date, the characteristics of the Mortgage
Loans
will not
vary by more than the amount specified below from the
characteristics listed below; provided that for the purpose of
making
such
calculations, the characteristics for any Initial Mortgage Loan
made will
be taken as of the Initial Cut-off Date and the
characteristics for any Subsequent Mortgage Loans will be taken as
of
the
Subsequent Cut-off Date;
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Permitted Variance
Characteristic
Value or Range
----------------------------
--------- ------------------
Average Stated Principal Balance................... N/A
5%
Weighted Average Mortgage Rate..................... N/A 0.10%
Weighted Average Original Combined Loan-to-Value
N/A 3.00%
Ratio..............................................
Weighted Average Remaining Term to Maturity........ N/A 3 months
Weighted Average FICO Score........................ N/A 5 points
(8) none of the Sellers or the Depositor is insolvent and
neither
of the
Sellers nor the Depositor will be rendered insolvent by the
conveyance
of Subsequent Mortgage Loans on such Subsequent Transfer
Date;
and
(9) the Trustee, the Underwriters and the Certificate Insurer
will
be
provided with an Opinion of Counsel, which Opinion of Counsel
shall
not be at
the expense of either the Trustee or the Trust Fund, addressed
to the
Trustee, to the effect that such purchase of Subsequent
Mortgage
Loans will
not (i) result in the imposition of the tax on "prohibited
transactions" on the Trust Fund or contributions after the Startup
Date,
as defined
in Sections 860F(a)(2) and 860G(d) of the Code, respectively
or (ii)
cause any REMIC formed hereunder to fail to qualify as a REMIC,
such
opinion to be delivered as provided in Section 2.01(f).
The
Trustee shall not be required to investigate or otherwise
verify
compliance with these conditions, except for its own receipt of
documents
specified above, and shall be entitled to rely on the required
Officer's
Certificate.
(f) Within
six Business Days after each Subsequent Transfer Date, upon
(1) delivery to the Trustee and the Certificate Insurer by the
Depositor of
the Opinions of Counsel referred to in Section 2.01(e)(1) and
(e)(9), (2)
delivery to the Trustee by CHL (on behalf of each Seller) of a Loan
Number and
Borrower Identification Mortgage Loan Schedule reflecting the
Subsequent
Mortgage Loans conveyed on such Subsequent Transfer Date, (3)
deposit in the
Certificate Account by the Master Servicer on behalf of the Sellers
of the
applicable Subsequent Certificate Account Deposit, and (4) delivery
to the
Trustee by the Depositor of an Officer's Certificate confirming
the
satisfaction of each of the conditions precedent set forth in this
Section
2.01(f), the Trustee shall pay the applicable Seller the Subsequent
Transfer
Date Transfer Amount from such funds that were set aside in the
Pre-Funding
Account pursuant to Section 2.01(d). The positive difference, if
any, between
the Subsequent Transfer Date Transfer Amount and the Subsequent
Transfer Date
Purchase Amount shall be re-invested by the Trustee in the
Pre-Funding
Account.
The
Trustee shall not be required to investigate or otherwise
verify
compliance with the conditions set forth in the preceding
paragraph, except
for its own receipt of documents specified above, and shall be
entitled to
rely on the required Officer's Certificate.
Within
thirty days after each Subsequent Transfer Date, the Depositor
shall deliver to the Trustee and the Certificate Insurer a letter
of a
nationally recognized firm of independent public accountants
stating whether
or not the Subsequent Mortgage Loans conveyed
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on such Subsequent Transfer Date conform to the characteristics
described in
Section 2.01(e)(6) and (7).
(g) In
connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered to, and deposited with, the
Trustee (or, in
the case of the Delay Delivery Mortgage Loans, will deliver to, and
deposit
with, the Trustee within the time periods specified in the
definition of Delay
Delivery Mortgage Loans) (except as provided in clause (vi) below)
for the
benefit of the Certificateholders, the following documents or
instruments with
respect to each such Mortgage Loan so assigned (with respect to
each Mortgage
Loan, clause (i) through (vi) below, together, the "Mortgage File"
for each
such Mortgage Loan):
(i) the original Mortgage Note, endorsed by manual or facsimile
signature
in blank in the following form: "Pay to the order of
________________ without recourse", with all intervening
endorsements
that show
a complete chain of endorsement from the originator to the
Person
endorsing the Mortgage Note (each such endorsement being
sufficient
to transfer all right, title and interest of the party so
endorsing,
as noteholder or assignee thereof, in and to that Mortgage
Note), or,
if the original Mortgage Note has been lost or destroyed and
not
replaced, an original lost note affidavit, stating that the
original
Mortgage
Note was lost or destroyed, together with a copy of the related
Mortgage
Note and all such intervening endorsements;
(ii)
in the case of each Mortgage Loan that is not a MERS Mortgage
Loan, the
original recorded Mortgage or a copy of such Mortgage, with
recording
information, and in the case of each MERS Mortgage Loan, the
original
Mortgage or a copy of such Mortgage, with recording
information, noting the presence of the MIN of the Mortgage Loan
and
language
indicating that the Mortgage Loan is a MOM Loan if the Mortgage
Loan is a
MOM Loan, with evidence of recording indicated thereon, or a
copy of
the Mortgage certified by the public recording office in which
such
Mortgage has been recorded;
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage
Loan, a duly executed assignment of the Mortgage to "The Bank
of New
York, a New York banking corporation, as trustee under the
Pooling
and Servicing Agreement dated as of November 1, 2006, without
recourse,
for Home Equity Loan Asset Backed Certificates, Series
2006-S7,
CWHEQ, Inc.," or a copy of such assignment, with recording
information, (each such assignment, when duly and validly
completed, to
be in
recordable form and sufficient to effect the assignment of and
transfer
to the assignee thereof, under the Mortgage to which such
assignment
relates);
(iv) the original recorded assignment or assignments of the
Mortgage
or a copy of such assignments, with recording information,
together
with all interim recorded assignments of such Mortgage or a
copy of
such assignments, with recording information (in each case
noting the
presence of a MIN in the case of each MERS Mortgage Loan);
47
<PAGE>
(v) the original or copies of each assumption, modification,
written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or
a
copy of
lender's title policy or a printout of the electronic
equivalent
and all
riders thereto or, in the event such original title policy has
not been
received from the insurer, such original or duplicate original
lender's
title policy and all riders thereto shall be delivered within
one year
of the Closing Date.
In
addition, in connection with the assignment of any MERS
Mortgage
Loan, each Seller agrees that it will cause, at such Seller's own
expense, the
MERS(R) System to indicate (and provide evidence to the Trustee
that it has
done so) that such Mortgage Loans have been assigned by such Seller
to the
Trustee in accordance with this Agreement for the benefit of
the
Certificateholders by including (or deleting, in the case of
Mortgage Loans
which are repurchased in accordance with this Agreement) in such
computer
files (a) the code "[IDENTIFY TRUSTEE SPECIFIC CODE]" in the field
"[IDENTIFY
THE FIELD NAME FOR TRUSTEE]" which identifies the Trustee and (b)
the code
"[IDENTIFY SERIES SPECIFIC CODE NUMBER]" in the field "Pool Field"
which
identifies the series of the Certificates issued in connection with
such
Mortgage Loans. The Sellers further agree that they will not, and
will not
permit the Master Servicer to, and the Master Servicer agrees that
it will
not, alter the codes referenced in this paragraph with respect to
any Mortgage
Loan during the term of this Agreement unless and until such
Mortgage Loan is
repurchased in accordance with the terms of this Agreement.
In the
event that in connection with any Mortgage Loan that is not a
MERS Mortgage Loan a Seller cannot deliver the original recorded
Mortgage or
all interim recorded assignments of the Mortgage satisfying the
requirements
of clause (ii), (iii) or (iv) concurrently with the execution and
delivery
hereof, such Seller shall deliver or cause to be delivered to the
Trustee a
true copy of such Mortgage and of each such undelivered interim
assignment of
the Mortgage each certified by such Seller, the applicable title
company,
escrow agent or attorney, or the originator of such Mortgage, as
the case may
be, to be a true and complete copy of the original Mortgage or
assignment of
Mortgage submitted for recording. For any such Mortgage Loan that
is not a
MERS Mortgage Loan each Seller shall promptly deliver or cause to
be delivered
to the Trustee such original Mortgage and such assignment or
assignments with
evidence of recording indicated thereon upon receipt thereof from
the public
recording official, or a copy thereof, certified, if appropriate,
by the
relevant recording office, but in no event shall any such delivery
be made
later than 270 days following the Closing Date; provided that in
the event
that by such date such Seller is unable to deliver or cause to be
delivered
each such Mortgage and each interim assignment by reason of the
fact that any
such documents have not been returned by the appropriate recording
office, or,
in the case of each interim assignment, because the related
Mortgage has not
been returned by the appropriate recording office, such Seller
shall deliver
or cause to be delivered such documents to the Trustee as promptly
as possible
upon receipt thereof. If the public recording office in which a
Mortgage or
interim assignment thereof is recorded retains the original of such
Mortgage
or assignment, a copy of the original Mortgage or assignment so
retained, with
evidence of recording thereon, certified to be true and complete by
such
recording office, shall satisfy a Seller's obligations in Section
2.01. If any
document submitted for recording pursuant to this Agreement is (x)
lost prior
to recording or
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<PAGE>
rejected by the applicable recording office, the applicable Seller
shall
immediately prepare or cause to be prepared a substitute and submit
it for
recording, and shall deliver copies and originals thereof in
accordance with
the foregoing or (y) lost after recording, the applicable Seller
shall deliver
to the Trustee a copy of such document certified by the applicable
public
recording office to be a true and complete copy of the original
recorded
document. Each Seller shall promptly forward or cause to be
forwarded to the
Trustee (x) from time to time additional original documents
evidencing an
assumption or modification of a Mortgage Loan and (y) any other
documents
required to be delivered by the Depositor or the Master Servicer to
the
Trustee within the time periods specified in this Section 2.01.
With
respect to each Mortgage Loan other than a MERS Mortgage Loan as
to
which the related Mortgaged Property and Mortgage File are located
in any
jurisdiction under the laws of which the recordation of the
assignment
specified in clause (iii) above is not necessary to protect the
Trustee's and
the Certificateholders' interest in the related Mortgage Loan, as
evidenced by
an Opinion of Counsel delivered by CHL to the Trustee 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 opinion applies), in lieu of
recording the
assignment specified in clause (iii) above, the applicable Seller
may deliver
an unrecorded assignment in blank, in form otherwise suitable for
recording to
the Trustee; provided that if the related Mortgage has not been
returned from
the applicable public recording office, such assignment, or any
copy thereof,
of the Mortgage may exclude the information to be provided by the
recording
office. As to any Mortgage Loan other than a MERS Mortgage Loan,
the
procedures of the preceding sentence shall be applicable only so
long as the
related Mortgage File is maintained in the possession of the
Trustee in the
State or jurisdiction described in such sentence. In the event that
with
respect to Mortgage Loans other than MERS Mortgage Loans (I) any
Seller, the
Depositor, the Master Servicer, the Certificate Insurer or the NIM
Insurer
gives written notice to the Trustee that recording is required to
protect the
right, title and interest of the Trustee on behalf of the
Certificateholders
in and to any Mortgage Loan, (II) a court recharacterizes any sale
of the
Mortgage Loans as a financing, or (III) as a result of any change
in or
amendment to the laws of the State or jurisdiction described in the
first
sentence of this paragraph or any applicable political subdivision
thereof, or
any change in official position regarding application or
interpretation of
such laws, including a holding by a court of competent
jurisdiction, such
recording is so required, the Trustee shall complete the assignment
in the
manner specified in clause (iii) above and CHL shall submit or
cause to be
submitted for recording as specified above or, should CHL fail to
perform such
obligations, the Trustee shall cause the Master Servicer, at the
Master
Servicer's expense, to cause each such previously unrecorded
assignment to be
submitted for recording as specified above. In the event a Mortgage
File is
released to the Master Servicer as a result of the Master
Servicer's having
completed a Request for Document Release, the Trustee shall
complete the
assignment of the related Mortgage in the manner specified in
clause (iii)
above.
The
Trustee or its agent shall maintain possession of the Mortgage
Files
in the State of California and shall not remove the Mortgage Files
from the
State of California. In the event that a Seller fails to record an
assignment
of a Mortgage Loan as herein provided within 90 days of notice of
an event set
forth in clause (I), (II) or (III) of the preceding paragraph, the
Master
Servicer shall prepare and, if required hereunder, file such
assignments for
recordation in the appropriate real property or other records
office. Each
Seller hereby appoints the Master
49
<PAGE>
Servicer (and any successor servicer hereunder) as its
attorney-in-fact with
full power and authority acting in its stead for the purpose of
such
preparation, execution and filing.
In the
case of Mortgage Loans that become the subject of a Principal
Prepayment between the Closing Date (in the case of Initial
Mortgage Loans) or
related Subsequent Transfer Date (in the case of Subsequent
Mortgage Loans)
and the Cut-off Date, CHL shall deposit or cause to be deposited in
the
Certificate Account the amount required to be deposited therein
with respect
to such payment pursuant to Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement,
within
thirty days after the Closing Date (in the case of Initial Mortgage
Loans) or
within twenty days after the related Subsequent Transfer Date (in
the case of
Subsequent Mortgage Loans), CHL (on behalf of each Seller) shall
either (i)
deliver to the Trustee the Mortgage File as required pursuant to
this Section
2.01 for each Delay Delivery Mortgage Loan or (ii) (A) repurchase
the Delay
Delivery Mortgage Loan or (B) substitute the Delay Delivery
Mortgage Loan for
a Replacement Mortgage Loan, which repurchase or substitution shall
be
accomplished in the manner and subject to the conditions set forth
in Section
2.03, provided that if CHL fails to deliver a Mortgage File for any
Delay
Delivery Mortgage Loan within the period provided in the prior
sentence, the
cure period provided for in Section 2.02 or in Section 2.03 shall
not apply to
the initial delivery of the Mortgage File for such Delay Delivery
Mortgage
Loan, but rather CHL shall have five (5) Business Days to cure such
failure to
deliver. CHL shall promptly provide each Rating Agency with written
notice of
any cure, repurchase or substitution made pursuant to the proviso
of the
preceding sentence. On or before the thirtieth (30th) day (or if
such
thirtieth day is not a Business Day, the succeeding Business Day)
after the
Closing Date (in the case of Initial Mortgage Loans) or within
twenty days
after the related Subsequent Transfer Date (in the case of
Subsequent Mortgage
Loans), the Trustee shall, in accordance with the provisions of
Section 2.02,
send a Delay Delivery Certification substantially in the form
annexed hereto
as Exhibit G-3 (with any applicable exceptions noted thereon) for
all Delay
Delivery Mortgage Loans delivered within thirty (30) days after
such date. The
Trustee will promptly send a copy of such Delay Delivery
Certification to each
Rating Agency.
Each
Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans sold by such Seller to the Depositor
and has
agreed to take the actions specified herein. The Depositor,
concurrently with
the execution and delivery of this Agreement, hereby sells,
transfers, assigns
and otherwise conveys to the Trustee for the use and benefit of
the
Certificateholders and the Certificate Insurer, without recourse,
all right
title and interest in the portion of the Trust Fund not otherwise
conveyed to
the Trust Fund pursuant to Sections 2.01(a) or (b).
Section
2.02 Acceptance by Trustee of the Mortgage Loans.
(a) The
Trustee acknowledges receipt, subject to the limitations
contained in and any exceptions noted in the Initial Certification
in the form
annexed hereto as Exhibit G-1 and in the list of exceptions
attached thereto,
of the documents referred to in clauses (i) and (iii) of Section
2.01(g) above
with respect to the Initial Mortgage Loans and all other assets
included in
the Trust Fund and declares that it holds and will hold such
documents and the
other documents delivered to it constituting the Mortgage Files,
and that it
holds or will hold such
50
<PAGE>
other assets included in the Trust Fund, in trust for the exclusive
use and
benefit of all present and future Certificateholders.
The
Trustee agrees to execute and deliver on the Closing Date to
the
Depositor, the Master Servicer, CHL (on behalf of each Seller) and
the
Certificate Insurer, an Initial Certification substantially in the
form
annexed hereto as Exhibit G-1 to the effect that, as to each
Initial Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Initial
Mortgage
Loan paid in full or any Initial Mortgage Loan specifically
identified in such
certification as not covered by such certification), the documents
described
in Section 2.01(g)(i) and, in the case of each Initial Mortgage
Loan that is
not a MERS Mortgage Loan, the documents described in Section
2.01(g)(iii) with
respect to such Initial Mortgage Loans as are in the Trustee's
possession and
based on its review and examination and only as to the foregoing
documents,
such documents appear regular on their face and relate to such
Initial
Mortgage Loan. The Trustee agrees to execute and deliver within 30
days after
the Closing Date to the Depositor, the Master Servicer, CHL (on
behalf of each
Seller) and the Certificate Insurer, an Interim Certification
substantially in
the form annexed hereto as Exhibit G-2 to the effect that, as to
each Initial
Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Initial
Mortgage Loan paid in full or any Initial Mortgage Loan
specifically
identified in such certification as not covered by such
certification) all
documents required to be delivered to the Trustee pursuant to the
Agreement
with respect to such Initial Mortgage Loans are in its possession
(except
those documents described in Section 2.01(g)(vi)) and based on its
review and
examination and only as to the foregoing documents, (i) such
documents appear
regular on their face and relate to such Initial Mortgage Loan, and
(ii) the
information set forth in items (i), (iv), (v), (vi), (viii) and
(ix) of the
definition of the "Mortgage Loan Schedule" accurately reflects
information set
forth in the Mortgage File. On or before the thirtieth (30th) day
after the
Closing Date (or if such thirtieth day is not a Business Day, the
succeeding
Business Day), the Trustee shall deliver to the Depositor, the
Master
Servicer, CHL (on behalf of each Seller) and the Certificate
Insurer a Delay
Delivery Certification with respect to the Initial Mortgage
Loans
substantially in the form annexed hereto as Exhibit G-3, with any
applicable
exceptions noted thereon. The Trustee shall be under no duty or
obligation to
inspect, review or examine such documents, instruments,
certificates or other
papers to determine that the same are genuine, enforceable or
appropriate for
the represented purpose or that they have actually been recorded in
the real
estate records or that they are other than what they purport to be
on their
face.
Not later
than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer, CHL (on behalf of
each Seller),
the Certificate Insurer and any Certificateholder that so requests,
a Final
Certification with respect to the Initial Mortgage Loans
substantially in the
form annexed hereto as Exhibit H, with any applicable exceptions
noted
thereon.
In
connection with the Trustee's completion and delivery of such
Final
Certification, the Trustee shall review each Mortgage File with
respect to the
Initial Mortgage Loans to determine that such Mortgage File
contains the
following documents:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature
in blank in the following form: "Pay to the order of
________________ without recourse", with all intervening
endorsements
that show
a complete chain
51
<PAGE>
of
endorsement from the originator to the Person endorsing the
Mortgage
Note (each
such endorsement being sufficient to transfer all right,
title and
interest of the party so endorsing, as noteholder or assignee
thereof,
in and to that Mortgage Note), or, if the original Mortgage
Note has
been lost or destroyed and not replaced, an original lost note
affidavit,
stating that the original Mortgage Note was lost or
destroyed,
together with a copy of the related Mortgage Note and all
such
intervening endorsements;
(ii) in the case of each Initial Mortgage Loan that is not a
MERS
Mortgage
Loan, the original recorded Mortgage or a copy of such
Mortgage,
with recording information, and in the case of each Initial
Mortgage
Loan that is a MERS Mortgage Loan, the original Mortgage or a
copy of
such Mortgage, with recording information, noting the presence
of the MIN
of the Initial Mortgage Loan and language indicating that the
Mortgage
Loan is a MOM Loan if the Initial Mortgage Loan is a MOM Loan,
with
evidence of recording indicated thereon, or a copy of the
Mortgage
certified
by the public recording office in which Mortgage has been
recorded;
(iii) in the case of each Initial Mortgage Loan that is not a
MERS
Mortgage
Loan, a duly executed assignment of the Mortgage or a copy
thereof
with recording information, in either case in the form
permitted
by Section
2.01;
(iv) the original recorded assignment or assignments of the
Mortgage
or a copy of such assignments, with recording information,
together
with all interim recorded assignments of such Mortgage or a
copy of
such assignments, with recording information (in each case
noting the
presence of a MIN in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification,
written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or
a
copy of
lender's title policy or a printout of the electronic
equivalent
and all
riders thereto.
If, in the
course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not
meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall
include
such exceptions in such Final Certification (and the Trustee shall
state in
such Final Certification whether any Mortgage File does not then
include the
original or duplicate original lender's title policy or a printout
of the
electronic equivalent and all riders thereto). If the public
recording office
in which a Mortgage or assignment thereof is recorded retains the
original of
such Mortgage or assignment, a copy of the original Mortgage or
assignment so
retained, with evidence of recording thereon, certified to be true
and
complete by such recording office, shall be deemed to satisfy the
requirements
of clause (ii), (iii) or (iv) above, as applicable. CHL shall
promptly correct
or cure such defect referred to above within 90 days from the date
it was so
notified of such defect and, if CHL does not correct or cure such
defect
within such period, CHL shall either (A) if the time to cure such
defect
expires prior to the end of the second anniversary of the Closing
Date,
substitute for the related Initial Mortgage
52
<PAGE>
Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in
the manner and subject to the conditions set forth in Section 2.03,
or (B)
purchase such Initial Mortgage Loan from the Trust Fund within 90
days from
the date CHL was notified of such defect in writing at the Purchase
Price of
such Initial Mortgage Loan; provided that any such substitution
pursuant to
(A) above or repurchase pursuant to (B) above shall not be effected
prior to
the delivery to the Trustee of the Opinion of Counsel required by
Section 2.05
hereof and any substitution pursuant to (A) above shall not be
effected prior
to the additional delivery to the Trustee of a Request for File
Release. No
substitution will be made in any calendar month after the
Determination Date
for such month. The Purchase Price for any such Initial Mortgage
Loan shall be
deposited by CHL in the Certificate Account and, upon receipt of
such deposit
and Request for File Release with respect thereto, the Trustee
shall release
the related Mortgage File to CHL and shall execute and deliver at
CHL's
request such instruments of transfer or assignment as CHL has
prepared, in
each case without recourse, as shall be necessary to vest in CHL,
or a
designee, the Trustee's interest in any Initial Mortgage Loan
released
pursuant hereto. If pursuant to the foregoing provisions CHL
repurchases an
Initial Mortgage Loan that is a MERS Mortgage Loan, the Master
Servicer shall
cause MERS to execute and deliver an assignment of the Mortgage in
recordable
form to transfer the Mortgage from MERS to CHL and shall cause such
Mortgage
to be removed from registration on the MERS(R) System in accordance
with MERS'
rules and regulations.
The
Trustee shall retain possession and custody of each Mortgage File
in
accordance with and subject to the terms and conditions set forth
herein. Each
Seller shall promptly deliver to the Trustee, upon the execution or
receipt
thereof, the originals of such other documents or instruments
constituting the
Mortgage File that come into the possession of such Seller from
time to time.
It is
understood and agreed that the obligation of CHL to substitute
for
or to purchase any Mortgage Loan that does not meet the
requirements of
Section 2.02(a) above shall constitute the sole remedy respecting
such defect
available to the Trustee, the Depositor and any Certificateholder
against any
Seller.
It is
understood and agreed that the obligation of CHL to substitute
for
or to purchase, pursuant to Section 2.02(a), any Initial Mortgage
Loan whose
Mortgage File contains any document or documents that does not meet
the
requirements of clauses (i)-(iv) and (vi) above and which defect is
not
corrected or cured by CHL within 90 days from the date it was
notified of such
defect, shall constitute the sole remedy respecting such defect
available to
the Trustee, the Depositor and any Certificateholder against any
Seller.
(b) The
Trustee agrees to execute and deliver on the Subsequent
Transfer
Date to the Depositor, the Master Servicer, CHL (on behalf of each
Seller) and
the Certificate Insurer an Initial Certification substantially in
the form
annexed hereto as Exhibit G-4 to the effect that, as to each
Subsequent
Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Subsequent
Mortgage Loan paid in full or any Subsequent Mortgage Loan
specifically
identified in such certification as not covered by such
certification), the
documents described in Section 2.01(g)(i) and, in the case of each
Subsequent
Mortgage Loan that is not a MERS Mortgage Loan, the documents
described in
Section 2.01(g)(iii), with respect to such Subsequent Mortgage Loan
are in its
possession, and based on its review and examination and only as to
the
53
<PAGE>
foregoing documents, such documents appear regular on their face
and relate to
such Subsequent Mortgage Loan.
The
Trustee agrees to execute and deliver within 30 days after the
Subsequent Transfer Date to the Depositor, the Master Servicer, CHL
(on behalf
of each Seller) and the Certificate Insurer an Interim
Certification
substantially in the form annexed hereto as Exhibit G-2 to the
effect that, as
to each Subsequent Mortgage Loan listed in the Mortgage Loan
Schedule (other
than any Subsequent Mortgage Loan paid in full or any Subsequent
Mortgage Loan
specifically identified in such certification as not covered by
such
certification), all documents required to be delivered to it
pursuant to this
Agreement with respect to such Subsequent Mortgage Loan are in its
possession
(except those described in Section 2.01(g)(vi)) and based on its
review and
examination and only as to the foregoing documents, (i) such
documents appear
regular on their face and relate to such Subsequent Mortgage Loan,
and (ii)
the information set forth in items (i), (iv), (v), (vi), (viii) and
(ix) of
the definition of the "Mortgage Loan Schedule" accurately reflects
information
set forth in the Mortgage File. On or before the thirtieth (30th)
day after
the Subsequent Transfer Date (or if such thirtieth day is not a
Business Day,
the succeeding Business Day), the Trustee shall deliver to the
Depositor, the
Master Servicer, CHL (on behalf of each Seller) and the Certificate
Insurer a
Delay Delivery Certification with respect to the Subsequent
Mortgage Loans
substantially in the form annexed hereto as Exhibit G-3, with any
applicable
exceptions noted thereon, together with a Subsequent
Certification
substantially in the form annexed hereto as Exhibit G-4. The
Trustee shall be
under no duty or obligation to inspect, review or examine such
documents,
instruments, certificates or other papers to determine that the
same are
genuine, enforceable or appropriate for the represented purpose or
that they
have actually been recorded in the real estate records or that they
are other
than what they purport to be on their face.
Not later
than 180 days after the Subsequent Transfer Date, the Trustee
shall deliver to the Depositor, the Master Servicer, CHL (on behalf
of each
Seller), the Certificate Insurer and to any Certificateholder that
so requests
a Final Certification with respect to the Subsequent Mortgage
Loans
substantially in the form annexed hereto as Exhibit H, with any
applicable
exceptions noted thereon.
In
connection with the Trustee's completion and delivery of such
Final
Certification, the Trustee shall review each Mortgage File with
respect to the
Subsequent Mortgage Loans to determine that such Mortgage File
contains the
following documents:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature
in blank in the following form: "Pay to the order of
________________ without recourse", with all intervening
endorsements
that show
a complete chain of endorsement from the originator to the
Person
endorsing the Mortgage Note (each such endorsement being
sufficient
to transfer all right, title and interest of the party so
endorsing,
as noteholder or assignee thereof, in and to that Mortgage
Note), or,
if the original Mortgage Note has been lost or destroyed and
not
replaced, an original lost note affidavit, stating that the
original
Mortgage
Note was lost or destroyed, together with a copy of the related
Mortgage
Note and all such intervening endorsements;
54
<PAGE>
(ii) in the case of each Subsequent Mortgage Loan that is not a
MERS
Mortgage Loan, the original recorded Mortgage or a copy of such
Mortgage,
with recording information, and in the case of each Subsequent
Mortgage
Loan that is a MERS Mortgage Loan, the original Mortgage or a
copy of
such Mortgage, with recording information, noting the presence
of the MIN
of the Subsequent Mortgage Loan and language indicating that
the
Subsequent Mortgage Loan is a MOM Loan if the Subsequent
Mortgage
Loan is a
MOM Loan, with evidence of recording indicated thereon, or a
copy of
the Mortgage certified by the public recording office in which
Mortgage
has been recorded;
(iii) in the case of each Subsequent Mortgage Loan that is not
a
MERS
Mortgage Loan, a duly executed assignment of the Mortgage or a
copy
thereof
with recording information, in either case in the form
permitted
by Section
2.01;
(iv) the original recorded assignment or assignments of the
Mortgage
or a copy of such assignments, with recording information,
together
with all interim recorded assignments of such Mortgage or a
copy of
such assignments, with recording information (in each case
noting the
presence of a MIN in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification,
written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or
a
copy of
lender's title policy or a printout of the electronic
equivalent
and all
riders thereto.
If, in the
course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not
meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall
include
such exceptions in such Final Certification (and the Trustee shall
state in
such Final Certification whether any Mortgage File does not then
include the
original or duplicate original lender's title policy or a printout
of the
electronic equivalent and all riders thereto). If the public
recording office
in which a Mortgage or assignment thereof is recorded retains the
original of
such Mortgage or assignment, a copy of the original Mortgage or
assignment so
retained, with evidence of recording thereon, certified to be true
and
complete by such recording office, shall be deemed to satisfy the
requirements
of clause (ii), (iii) or (iv) above, as applicable. CHL shall
promptly correct
or cure such defect referred to above within 90 days from the date
it was so
notified of such defect and, if CHL does not correct or cure such
defect
within such period, CHL shall either (A) if the time to cure such
defect
expires prior to the end of the second anniversary of the Closing
Date,
substitute for the related Subsequent Mortgage Loan a Replacement
Mortgage
Loan, which substitution shall be accomplished in the manner and
subject to
the conditions set forth in Section 2.03, or (B) purchase such
Subsequent
Mortgage Loan from the Trust Fund within 90 days from the date CHL
was
notified of such defect in writing at the Purchase Price of such
Subsequent
Mortgage Loan; provided that any such substitution pursuant to (A)
above or
repurchase pursuant to (B) above shall not be effected prior to the
delivery
to the Trustee of the Opinion of Counsel required by Section 2.05
hereof and
any substitution pursuant to (A) above shall not be effected prior
to the
additional delivery to the Trustee of a Request for File Release.
No
substitution will be made in any calendar month after
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the Determination Date for such month. The Purchase Price for any
such
Subsequent Mortgage Loan shall be deposited by CHL in the
Certificate Account
and, upon receipt of such deposit and Request for File Release with
respect
thereto, the Trustee shall release the related Mortgage File to CHL
and shall
execute and deliver at CHL's request such instruments of transfer
or
assignment as CHL has prepared, in each case without recourse, as
shall be
necessary to vest in CHL, or a designee, the Trustee's interest in
any
Subsequent Mortgage Loan released pursuant hereto. If pursuant to
the
foregoing provisions CHL repurchases a Subsequent Mortgage Loan
that is a MERS
Mortgage Loan, the Master Servicer shall cause MERS to execute and
deliver an
assignment of the Mortgage in recordable form to transfer the
Mortgage from
MERS to CHL and shall cause such Mortgage to be removed from
registration on
the MERS(R) System in accordance with MERS' rules and
regulations.
The
Trustee shall retain possession and custody of each Mortgage File
in
accordance with and subject to the terms and conditions set forth
herein. Each
Seller shall promptly deliver to the Trustee, upon the execution or
receipt
thereof, the originals of such other documents or instruments
constituting the
Mortgage File that come into the possession of such Seller from
time to time.
It is
understood and agreed that the obligation of the Sellers to
substitute for or to purchase, pursuant to Section 2.02(b), any
Subsequent
Mortgage Loan whose Mortgage File contains any document or
documents that does
not meet the requirements of clauses (i)-(iv) and (vi) above and
which defect
is not corrected or cured by such Seller within 90 days from the
date it was
notified of such defect, shall constitute the sole remedy
respecting such
defect available to the Trustee, the Depositor and any
Certificateholder
against the Sellers.
Section
2.03 Representations, Warranties and Covenants of the Master
Servicer and the Sellers.
(a) The
Master Servicer hereby represents and warrants to the
Depositor,
the Certificate Insurer and the Trustee as follows, as of the date
hereof with
respect to the Initial Mortgage Loans, and the related Subsequent
Transfer
Date with respect to the Subsequent Mortgage Loans:
(1) The Master Servicer is duly organized as a Texas limited
partnership and is validly existing and in good standing under the
laws
of the
State of Texas and is duly authorized and qualified to transact
any and
all business contemplated by this Agreement to be conducted by
the Master
Servicer in any state in which a Mortgaged Property is
located or
is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the
doing
business
laws of any such state, to the extent necessary to ensure its
ability to
enforce each Mortgage Loan, to service the Mortgage Loans in
accordance
with the terms of this Agreement and to perform any of its
other
obligations under this Agreement in accordance with the terms
hereof.
(2) The Master Servicer has the full partnership power and
authority
to sell and service each Mortgage Loan, and to execute,
deliver
and perform, and to enter into and consummate the transactions
contemplated by this Agreement and has duly
56
<PAGE>
authorized
by all necessary partnership action on the part of the Master
Servicer
the execution, delivery and performance of this Agreement; and
this
Agreement, assuming the due authorization, execution and
delivery
hereof by
the other parties hereto, constitutes a legal, valid and
binding
obligation of the Master Servicer, enforceable against the
Master
Servicer in accordance with its terms, except that (a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to
creditors'
rights
generally and (b) the remedy of specific performance and
injunctive
and other forms of equitable relief may be subject to
equitable
defenses and to the discretion of the court before which any
proceeding
therefor may be brought.
(3) The execution and delivery of this Agreement by the Master
Servicer,
the servicing of the Mortgage Loans by the Master Servicer
under this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or
compliance
with the
terms hereof are in the ordinary course of business of the
Master
Servicer and will not (A) result in a material breach of any
term
or
provision of the certificate of limited partnership,
partnership
agreement
or other organizational document of the Master Servicer or (B)
materially
conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms
of any
other
material agreement or instrument to which the Master Servicer is
a
party or
by which it may be bound, or (C) constitute a material
violation
of any statute, order or regulation applicable to the Master
Servicer
of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Master Servicer; and
the
Master
Servicer is not in breach or violation of any material
indenture
or other
material agreement or instrument, or in violation of any
statute,
order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it
which
breach or violation may materially impair the Master Servicer's
ability to
perform or meet any of its obligations under this Agreement.
(4) The Master Servicer is an approved servicer of conventional
mortgage
loans for Fannie Mae and Freddie Mac and is a mortgagee
approved
by the Secretary of Housing and Urban Development pursuant to
sections
203 and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of the Master
Servicer's
knowledge, threatened, against the Master Servicer that would
materially
and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master
Servicer
to service
the Mortgage Loans or to perform any of its other obligations
under this
Agreement or any Subsequent Transfer Agreement in accordance
with the
terms hereof or thereof.
(6) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Master Servicer of, or compliance by the
Master
Servicer
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is
required, the Master Servicer has obtained the same.
57
<PAGE>
(7) The Master Servicer is a member of MERS in good standing,
and
will
comply in all material respects with the rules and procedures
of
MERS in
connection with the servicing of the Mortgage Loans for as long
as such
Mortgage Loans are registered with MERS.
(b) CHL
hereby represents and warrants to the Depositor, the
Certificate
Insurer and the Trustee as follows, as of the Initial Cut-off Date
in the case
of the Initial Mortgage Loans and as of the related Subsequent
Cut-off Date in
the case of the Subsequent Mortgage Loans (unless otherwise
indicated or the
context otherwise requires, percentages with respect to the Initial
Mortgage
Loans in the Trust Fund are measured by the Cut-off Date Principal
Balance of
the Initial Mortgage Loans in the Trust Fund):
(1) CHL is duly organized as a New York corporation and is
validly
existing
and in good standing under the laws of the State of New York
and is
duly authorized and qualified to transact any and all business
contemplated by this Agreement and each Subsequent Transfer
Agreement to
be
conducted by CHL in any state in which a Mortgaged Property is
located or
is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the
doing
business
laws of any such state, to the extent necessary to ensure its
ability to
enforce each Mortgage Loan, to sell the CHL Mortgage Loans in
accordance
with the terms of this Agreement and each Subsequent Transfer
Agreement
and to perform any of its other obligations under this
Agreement
and each Subsequent Transfer Agreement in accordance with the
terms
hereof and thereof.
(2) CHL has the full corporate power and authority to sell each
CHL
Mortgage Loan, and to execute, deliver and perform, and to
enter
into and
consummate the transactions contemplated by this Agreement and
each
Subsequent Transfer Agreement and has duly authorized by all
necessary
corporate action on the part of CHL the execution, delivery
and
performance of this Agreement and each Subsequent Transfer
Agreement;
and this Agreement and each Subsequent Transfer Agreement,
assuming
the due authorization, execution and delivery hereof by the
other
parties hereto, constitutes a legal, valid and binding
obligation
of CHL,
enforceable against CHL in accordance with its terms, except
that (a)
the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to
creditors'
rights generally and (b) the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject
to
equitable
defenses and to the discretion of the court before which any
proceeding
therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent
Transfer Agreement by CHL, the sale of the CHL Mortgage Loans
by CHL
under this Agreement and each Subsequent Transfer Agreement,
the
consummation of any other of the transactions contemplated by
this
Agreement
and each Subsequent Transfer Agreement, and the fulfillment of
or
compliance with the terms hereof and thereof are in the
ordinary
course of
business of CHL and will not (A) result in a material breach
of any
term or provision of the charter or by-laws of CHL or (B)
materially
conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms
of any
other
material agreement or instrument to which
58
<PAGE>
CHL is a
party or by which it may be bound, or (C) constitute a material
violation
of any statute, order or regulation applicable to CHL of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over CHL; and CHL is not in breach or violation of
any
material indenture or other material agreement or instrument, or
in
violation of any
statute, order or regulation of any court, regulatory
body,
administrative agency or governmental body having jurisdiction
over it
which breach or violation may materially impair CHL's ability
to
perform or
meet any of its obligations under this Agreement and each
Subsequent
Transfer Agreement.
(4) CHL is an approved seller of conventional mortgage loans
for
Fannie Mae
and Freddie Mac and is a mortgagee approved by the Secretary
of Housing
and Urban Development pursuant to sections 203 and 211 of the
National
Housing Act.
(5) No litigation is pending or, to the best of CHL's
knowledge,
threatened, against CHL that would materially and adversely affect
the
execution,
delivery or enforceability of this Agreement or any
Subsequent
Transfer Agreement or the ability of CHL to sell the CHL
Mortgage
Loans or to perform any of its other obligations under this
Agreement
or any Subsequent Transfer Agreement in accordance with the
terms
hereof or thereof.
(6) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by CHL of, or compliance by CHL with, this Agreement or
any
Subsequent
Transfer Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is
required, CHL has obtained the same.
(7) The information set forth on the Mortgage Loan Schedule
with
respect to
each Initial Mortgage Loan is true and correct in all
material
respects as of the Closing Date.
(8) CHL will treat the transfer of the CHL Mortgage Loans to
the
Depositor
as a sale of the CHL Mortgage Loans for all tax, accounting
and
regulatory purposes.
(9) None of the Mortgage Loans is 30 days or more delinquent.
(10) No Mortgage Loan had a Combined Loan-to-Value Ratio at
origination in excess of 100.00%.
(11) Each Mortgage Loan is secured by a valid and enforceable
second
lien on the related Mortgaged Property subject only to (1) the
lien of
non-delinquent current real property taxes and assessments, (2)
covenants,
conditions and restrictions, rights of way, easements and
other
matters of public record as of the date of recording of such
Mortgage,
such exceptions appearing of record being acceptable to
mortgage
lending institutions generally or specifically reflected in the
appraisal
made in connection with the origination of the related
Mortgage
Loan, (3) other matters to which like properties are commonly
subject
that do not materially interfere with the benefits of the
security
intended to be provided by such Mortgage (4) any senior
mortgage
loan secured
59
<PAGE>
by such
Mortgaged Property and identified in the Mortgage File related
to such Mortgage
Loan.
(12) Immediately prior to the assignment of each CHL Mortgage
Loan
to the
Depositor, CHL had good title to, and was the sole owner of,
such
CHL
Mortgage Loan free and clear of any pledge, lien, encumbrance
or
security
interest and had full right and authority, subject to no
interest
or participation of, or agreement with, any other party, to
sell and
assign the same pursuant to this Agreement.
(13) There is no delinquent tax or assessment lien against any
Mortgaged
Property.
(14) There is no valid offset, claim, defense or counterclaim
to
any
Mortgage Note or Mortgage, including the obligation of the
Mortgagor
to pay the
unpaid principal of or interest on such Mortgage Note.
(15) There are no mechanics' liens or claims for work, labor or
material
affecting any Mortgaged Property that are or may be a lien
prior to,
or equal with, the lien of such Mortgage, except those that
are insured
against by the title insurance policy referred to in item
(18)
below.
(16) As of the Closing Date in the case of the Initial Mortgage
Loans and
as of the related Subsequent Transfer Date in the case of the
Subsequent
Mortgage Loans, to the best of CHL's knowledge, each
Mortgaged
Property is free of material damage and is in good repair.
(17) As of the Closing Date in the case of the Initial Mortgage
Loans and
as of the related Subsequent Transfer Date in the case of the
Subsequent
Mortgage Loans, neither CHL nor any prior holder of any
Mortgage
has modified the Mortgage in any material respect (except that
a Mortgage
Loan may have been modified by a written instrument that has
been
recorded or submitted for recordation, if necessary, to protect
the
interests
of the Certificateholders and the original or a copy of which
has been
delivered to the Trustee); satisfied, cancelled or subordinated
such
Mortgage in whole or in part; released the related Mortgaged
Property
in whole or in part from the lien of such Mortgage; or executed
any
instrument of release, cancellation, modification (except as
expressly
permitted above) or satisfaction with respect thereto.
(18) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date
Principal
Balance of
each such Mortgage Loan or a commitment (binder) to issue the
same was
effective on the date of the origination of each Mortgage Loan,
each such
policy is valid and remains in full force and effect, and each
such
policy was issued by a title insurer qualified to do business
in
the
jurisdiction where the Mortgaged Property is located and
acceptable
to Fannie
Mae and Freddie Mac and is in a form acceptable to Fannie Mae
and
Freddie Mac, which policy insures the Sellers and successor
owners
of
indebtedness secured by the insured Mortgage, as to the second
priority
lien, of the Mortgage subject to the exceptions set forth in
paragraph
(11)
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<PAGE>
above; to
the best of CHL's knowledge, no claims have been made under
such
mortgage title insurance policy and no prior holder of the
related
Mortgage,
including any Seller, has done, by act or omission, anything
that would
impair the coverage of such mortgage title insurance policy.
(19) No Initial Mortgage Loan was the subject of a Principal
Prepayment
in full between the Initial Cut-off Date and the Closing
Date. No
Subsequent Mortgage Loan was the subject of a Principal
Prepayment in
full between the Subsequent Cut-off Date and the
Subsequent
Transfer Date.
(20) To the best of CHL's knowledge, all of the improvements
that
were
included for the purpose of determining the Appraised Value of
the
Mortgaged
Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on
adjoining
properties
encroach upon the Mortgaged Property.
(21) To the best of CHL's knowledge, no improvement located on
or
being part
of the Mortgaged Property is in violation of any applicable
zoning law
or regulation. To the best of CHL's knowledge, all
inspections, licenses and certificates required to be made or
issued
with
respect to all occupied portions of the Mortgaged Property and,
with
respect to the use and occupancy of the same, including but not
limited to
certificates of occupancy and fire underwriting certificates,
have been
made or obtained from the appropriate authorities, unless the
lack
thereof would not have a material adverse effect on the value
of
such
Mortgaged Property, and the Mortgaged Property is lawfully
occupied
under
applicable law.
(22) The Mortgage Note and the related Mortgage are genuine,
and
each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable
law,
except
that (a) the enforceability thereof may be limited by
bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to
creditors'
rights generally and (b) the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject
to
equitable
defenses and to the discretion of the court before which any
proceeding
therefor may be brought. To the best of CHL's knowledge, all
parties to
the Mortgage Note and the Mortgage had legal capacity to
execute
the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage
have been duly and properly executed by such parties.
(23) The proceeds of the Mortgage Loan have been fully
disbursed,
there is
no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site
improvements
and as to
disbursements of any escrow funds therefor have been complied
with. All
costs, fees and expenses incurred in making, or closing or
recording
the Mortgage Loan were paid.
(24) The related Mortgage contains customary and enforceable
provisions
that render the rights and remedies of the holder thereof
adequate
for the realization against the Mortgaged Property of the
benefits
of the security, including, (i) in the case of a Mortgage
designated
as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial
foreclosure.
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<PAGE>
(25) With respect to each Mortgage constituting a deed of trust,
a
trustee,
duly qualified under applicable law to serve as such, has been
properly
designated and currently so serves and is named in such
Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except
in
connection
with a trustee's sale after default by the Mortgagor.
(26) [Reserved].
(27) There exist no deficiencies with respect to escrow
deposits
and
payments, if such are required, for which customary arrangements
for
repayment
thereof have not been made, and no escrow deposits or payments
of other
charges or payments due the Sellers have been capitalized under
the
Mortgage or the related Mortgage Note.
(28) The origination, underwriting, servicing and collection
practices
with respect to each Mortgage Loan have been in all respects
legal,
proper, prudent and customary in the mortgage lending and
servicing
business, as conducted by prudent lending institutions which
service
mortgage loans of the same type in the jurisdiction in which
the
Mortgaged
Property is located.
(29) There is no pledged account or other security other than
real
estate
securing the Mortgagor's obligations.
(30) No Mortgage Loan has a shared appreciation feature, or
other
contingent
interest feature.
(31) Each Mortgage Loan contains a customary "due on sale"
clause.
(32) No less than approximately the percentage specified in the
Collateral
Schedule of the Initial Mortgage Loans are secured by single
family
detached dwellings. No more than approximately the percentage
specified
in the Collateral Schedule of the Initial Mortgage Loans are
secured by
two- to four-family dwellings. No more than approximately the
percentage
specified in the Collateral Schedule of the Initial Mortgage
Loans are
secured by low-rise condominium units. No more than
approximately the percentage specified in the Collateral Schedule
of the
Initial
Mortgage Loans are secured by high-rise condominium units. No
more than
approximately the percentage specified in the Collateral
Schedule
of the Initial Mortgage Loans are secured by manufactured
housing.
No more than approximately the percentage specified in the
Collateral
Schedule of the Initial Mortgage Loans are secured by PUDs.
(33) Each Initial Mortgage Loan was originated on or after the
date
specified in the Collateral Schedule.
(34) [Reserved];
(35) Approximately the percentage specified in the Collateral
Schedule
of the Initial Mortgage Loans provide for a Prepayment Charge.
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<PAGE>
(36) On the basis of representations made by the Mortgagors in
their loan
applications, no more than approximately the percentage
specified
in the Collateral Schedule of the Initial Mortgage Loans,
respectively, are secured by investor properties, and no less
than
approximately the percentage specified in the Collateral Schedule
of the
Initial
Mortgage Loans respectively, are secured by owner-occupied
Mortgaged
Properties that are primary residences.
(37) At the Cut-off Date, the improvements upon each Mortgaged
Property
are covered by a valid and existing hazard insurance policy
with a
generally acceptable carrier that provides for fire and
extended
coverage
and coverage for such other hazards as are customary in the
area where
the Mortgaged Property is located in an amount that is at
least
equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan or (ii) the greater of (a)
the
outstanding principal balance of the Mortgage Loan and (b) an
amount
such that
the proceeds of such policy shall be sufficient to prevent the
Mortgagor
and/or the mortgagee from becoming a co-insurer. If the
Mortgaged
Property is a condominium unit, it is included under the
coverage
afforded by a blanket policy for the condominium unit. All such
individual
insurance policies and all flood policies referred to in item
(38) below
contain a standard mortgagee clause naming the applicable
Seller or
the original mortgagee, and its successors in interest, as
mortgagee,
and the applicable Seller has received no notice that any
premiums
due and payable thereon have not been paid; the Mortgage
obligates
the Mortgagor thereunder to maintain all such insurance,
including
flood insurance, at the Mortgagor's cost and expense, and upon
the
Mortgagor's failure to do so, authorizes the holder of the
Mortgage
to obtain
and maintain such insurance at the Mortgagor's cost and
expense
and to seek reimbursement therefor from the Mortgagor.
(38) If the Mortgaged Property is in an area identified in the
Federal
Register by the Federal Emergency Management Agency as having
special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property
with
a
generally acceptable carrier in an amount representing coverage
not
less than
the least of (A) the original outstanding principal balance of
the
Mortgage Loan, (B) the minimum amount required to compensate
for
damage or
loss on a replacement cost basis, or (C) the maximum amount of
insurance
that is available under the Flood Disaster Protection Act of
1973, as
amended.
(39) To the best of CHL's knowledge, there is no proceeding
occurring,
pending or threatened for the total or partial condemnation
of the
Mortgaged Property.
(40) There is no material monetary default existing under any
Mortgage
or the related Mortgage Note and, to the best of CHL's
knowledge,
there is no material event that, with the passage of time or
with
notice and the expiration of any grace or cure period, would
constitute
a default, breach, violation or event of acceleration under
the
Mortgage or the related Mortgage Note; and no Seller has waived
any
default,
breach, violation or event of acceleration.
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<PAGE>
(41) Each Mortgaged Property is improved by a one- to
four-family
residential dwelling, including condominium units and dwelling
units in
PUDs. To
the best of CHL's knowledge, no improvement to a Mortgaged
Property
includes a cooperative or a mobile home or constitutes other
than real
property under state law.
(42) Each Mortgage Loan is being serviced by the Master
Servicer.
(43) Any future advances made prior to the Cut-off Date have
been
consolidated with the outstanding principal amount secured by
the
Mortgage,
and the secured principal amount, as consolidated, bears a
single
interest rate and single repayment term reflected on the
Mortgage
Loan
Schedule. The consolidated principal amount does not exceed the
original
principal amount of the Mortgage Loan. The Mortgage Note does
not permit
or obligate the Master Servicer to make future advances to
the
Mortgagor at the option of the Mortgagor.
(44) All taxes, governmental assessments, insurance premiums,
water,
sewer and municipal charges, leasehold payments or ground rents
that
previously became due and owing have been paid, or an escrow of
funds has
been established in an amount sufficient to pay for every such
item that
remains unpaid and that has been assessed, but is not yet due
and
payable. Except for (A) payments in the nature of escrow
payments,
and (B)
interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is later, to the
day
that
precedes by one month the Due Date of the first installment of
principal
and interest, including without limitation, taxes and
insurance
payments, the Master Servicer has not advanced funds, or
induced,
solicited or knowingly received any advance of funds by a party
other than
the Mortgagor, directly or indirectly, for the payment of any
amount
required by the Mortgage.
(45) The Mortgage Loans originated by CHL were underwritten in
all
material
respects in accordance with CHL's underwriting guidelines for
closed-end
second lien mortgage loans or, with respect to Mortgage Loans
purchased
by CHL were underwritten in all material respects in
accordance
with customary and prudent underwriting guidelines generally
used by
originators of closed-end second lien mortgage loans.
(46) Prior to the approval of the Mortgage Loan application, an
appraisal
of the related Mortgaged Property was obtained from a
qualified
appraiser, duly appointed by the originator, who had no
interest,
direct or indirect, in the Mortgaged Property or in any loan
made on
the security thereof, and whose compensation is not affected by
the
approval or disapproval of the Mortgage Loan; such appraisal is in
a
form
acceptable to Fannie Mae and Freddie Mac.
(47) None of the Mortgage Loans is a graduated payment mortgage
loan or a
growing equity mortgage loan, and no Mortgage Loan is subject
to a
buydown or similar arrangement.
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<PAGE>
(48) The Mortgage Rates borne by the Initial Mortgage Loans as
of
the
Cut-off Date ranged between the approximate per annum
percentages
specified
on the Collateral Schedule and the weighted average Mortgage
Rate of
the Initial Mortgage Loans as of the Cut-off Date was
approximately the per annum rate specified on the Collateral
Schedule.
(49) The Mortgage Loans were selected from among the
outstanding
one- to
four-family mortgage loans in the applicable Seller's portfolio
at the
Closing Date as to which the representations and warranties
made
as to the
Mortgage Loans set forth in this Section 2.03(b) and Sections
2.03(c),
2.03(d) and 2.03(e) can be made. No selection was made in a
manner
that would adversely affect the interests of Certificateholders
or the
Certificate Insurer.
(50) [Reserved].
(51) Each of the Initial Mortgage Loans in the Mortgage Pool has
a
Due Date
on or before the date specified in the Collateral Schedule.
(52) The Mortgage Loans, individually and in the aggregate,
conform in
all material respects to the descriptions thereof in the
Prospectus
Supplement.
(53) There is no obligation on the part of any Seller under the
terms of
the Mortgage or related Mortgage Note to make payments in
addition
to those made by the Mortgagor.
(54) Any leasehold estate securing a Mortgage Loan has a term
of
not less
than five years in excess of the term of the related Mortgage
Loan.
(55) Each Mortgage Loan represents a "qualified mortgage"
within
the
meaning of Section 860(a)(3) of the Code (but without regard to
the
rule in
Treasury Regulation Section 1.860G-2(f)(2) that treats a
defective
obligation as a qualified mortgage, or any substantially
similar
successor provision) and applicable Treasury regulations
promulgated thereunder.
(56) No Mortgage Loan was either a "consumer credit contract" or
a
"purchase
money loan" as such terms are defined in 16 C.F.R. Section 433
nor is any
Mortgage Loan a "mortgage" as defined in 15 U.S.C. Section
1602(aa).
(57) Each Mortgage Loan, at the time it was originated and as
of
the
Closing Date or the related Subsequent Transfer Date, as
applicable,
complied
in all material respects with applicable local, state and
federal
laws, including, but not limited to, all predatory and abusive
lending
laws.
(58) None of the Mortgage Loans is a "high cost" mortgage loan
as
defined by
applicable federal, state and local predatory and abusive
lending
laws.
(59) Each Prepayment Charge is enforceable and was originated
in
compliance
with all applicable federal, state and local laws.
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<PAGE>
(60) None of the Mortgage Loans that are secured by property
located in
the State of Illinois are in violation of the provisions of
the
Illinois Interest Act; 815 Ill. Comp. Stat. 205/0.01 (2004).
(61) There is no Mortgage Loan in the Trust Fund that was
originated
on or after March 7, 2003, which is a "high cost home loan"
as defined
under the Georgia Fair Lending Act.
(62) No Mortgage Loan in the Trust Fund is a High Cost Loan or
Covered
Loan, as applicable (as such terms are defined in the
then-current Standard & Poor's LEVELS(R) Glossary which is now
Version
5.7,
Appendix E) and no Mortgage Loan originated on or after October
1,
2002
through March 6, 2003 is governed by the Georgia Fair Lending
Act.
(63) Each Mortgage Loan is secured by a "single family
residence"
within the
meaning of Section 25(e)(10) of the Internal Revenue Code of
1986 (as
amended) (the "Code"). The fair market value of the
manufactured home securing each Mortgage Loan was at least equal to
80%
of the
adjusted issue price of the contract at either (i) the time the
contract
was originated (determined pursuant to the REMIC Provisions) or
(ii) the
time the contract is transferred to the purchaser. Each
Mortgage
Loan is a "qualified mortgage" under Section 860G(a)(3) of the
Code.
(64) No Mortgage Loan in the Trust Fund is a "high cost home,"
"covered"
(excluding home loans defined as "covered home loans" in the
New Jersey
Home Ownership Security Act of 2002 that were originated
between
November 26, 2003 and July 7, 2004), "high risk home" or
"predatory" loan under any applicable state, federal or local law
(or a
similarly
classified loan using different terminology under a law
imposing
heightened regulatory scrutiny or additional legal liability
for
residential mortgage loans having high interest rates, points
and/or
fees).
(65) There is no Mortgage Loan in the Trust Fund that was
originated
on or after October 1, 2002 and before March 7, 2003, which
is secured
by property located in the State of Georgia.
(66) The representations in Section 2.03(c)(1)-(6),
2.03(d)(1)-(6)
and
2.03(e)(1)-(6) are true and correct.
(67) Each Park Granada Mortgage Loan, Park Monaco Mortgage Loan
and Park
Sienna Mortgage Loan were acquired by Park Granada, Park Monaco
and Park
Sienna, respectively, from CHL. Immediately prior to the
assignment
of each Park Granada Mortgage Loan, Park Monaco Mortgage Loan
and Park
Sienna Mortgage Loan to Park Granada, Park Monaco and Park
Sienna,
respectively, by CHL, CHL had good title to, and was the sole
owner of,
each such Park Granada Mortgage Loan, Park Monaco Mortgage
Loan and
Park Sienna Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest.
(c) Park
Granada hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Cut-off
Date:
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<PAGE>
(1) Park Granada is duly organized as a Delaware corporation
and
is validly
existing and in good standing under the laws of the State of
Delaware
and is duly authorized and qualified to transact any and all
business
contemplated by this Agreement and each Subsequent Transfer
Agreement
to be conducted by Park Granada in any state in which a
Mortgaged
Property securing a Park Granada Mortgage Loan is located or
is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the
doing
business
laws of any such state, to the extent necessary to ensure its
ability to
enforce each Park Granada Mortgage Loan, to sell the Park
Granada
Mortgage Loans in accordance with the terms of this Agreement
and each
Subsequent Transfer Agreement and to perform any of its other
obligations under this Agreement in accordance with the terms
hereof.
(2) Park Granada has the full company power and authority to
sell
each Park
Granada Mortgage Loan, and to execute, deliver and perform,
and to
enter into and consummate the transactions contemplated by this
Agreement
and each Subsequent Transfer Agreement and has duly authorized
by all
necessary corporate action on the part of Park Granada the
execution,
delivery and performance of this Agreement and each
Subsequent
Transfer Agreement; and this Agreement and each Subsequent
Transfer
Agreement, assuming the due authorization, execution and
delivery
hereof by the other parties hereto, constitutes a legal, valid
and
binding obligation of Park Granada, enforceable against Park
Granada
in
accordance with its terms, except that (a) the enforceability
hereof
may be
limited by bankruptcy, insolvency, moratorium, receivership and
other
similar laws relating to creditors' rights generally and (b)
the
remedy of
specific performance and injunctive and other forms of
equitable
relief may be subject to equitable defenses and to the
discretion
of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of this Agreement and each
Subsequent
Transfer Agreement by Park Granada, the sale of the Park
Granada
Mortgage Loans by Park Granada under this Agreement and each
Subsequent
Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer
Agreement,
and the fulfillment of or compliance with the terms hereof
are in the
ordinary course of business of Park Granada and will not (A)
result in
a material breach of any term or provision of the certificate
of
incorporation or by-laws of Park Granada or (B) materially
conflict
with,
result in a material breach, violation or acceleration of, or
result in
a material default under, the terms of any other material
agreement
or instrument to which Park Granada is a party or by which it
may be
bound, or (C) constitute a material violation of any statute,
order or
regulation applicable to Park Granada of any court, regulatory
body,
administrative agency or governmental body having jurisdiction
over Park
Granada; and Park Granada is not in breach or violation of any
material
indenture or other material agreement or instrument, or in
violation
of any statute, order or regulation of any court, regulatory
body,
administrative agency or governmental body having jurisdiction
over it
which breach or violation may materially impair Park Granada's
ability to
perform or meet any of its obligations under this Agreement.
67
<PAGE>
(4) No litigation is pending or, to the best of Park Granada's
knowledge,
threatened, against Park Granada that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement
or any Subsequent Transfer Agreement or the ability of Park
Granada to
sell the Park Granada Mortgage Loans or to perform any of its
other
obligations under this Agreement or any Subsequent Transfer
Agreement
in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by Park Granada of, or compliance by Park Granada with,
this
Agreement
or any Subsequent Transfer Agreement or the consummation of
the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, Park Granada has obtained the
same.
(6) Park Granada will treat the transfer of the Park Granada
Mortgage
Loans to the Depositor as a sale of the Park Granada Mortgage
Loans for
all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Granada
Mortgage
Loan to the Depositor, Park Granada had good title to, and was
the sole
owner of, such Park Granada Mortgage Loan free and clear of any
pledge,
lien, encumbrance or security interest and had full right and
authority,
subject to no interest or participation of, or agreement
with, any
other party, to sell and assign the same pursuant to this
Agreement.
(d) Park
Monaco hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Cut-off
Date:
(1) Park Monaco is duly organized as a Delaware corporation and
is
validly
existing and in good standing under the laws of the State of
Delaware
and is duly authorized and qualified to transact any and all
business
contemplated by this Agreement and each Subsequent Transfer
Agreement
to be conducted by Park Monaco in any state in which a
Mortgaged
Property securing a Park Monaco Mortgage Loan is located or is
otherwise
not required under applicable law to effect such qualification
and, in
any event, is in compliance with the doing business laws of any
such
state, to the extent necessary to ensure its ability to enforce
each Park
Monaco Mortgage Loan, to sell the Park Monaco Mortgage Loans
in
accordance with the terms of this Agreement and each Subsequent
Transfer
Agreement and to perform any of its other obligations under
this
Agreement in accordance with the terms hereof.
(2) Park Monaco has the full company power and authority to
sell
each Park
Monaco Mortgage Loan, and to execute, deliver and perform, and
to enter
into and consummate the transactions contemplated by this
Agreement
and each Subsequent Transfer Agreement and has duly authorized
by all
necessary corporate action on the part of Park Monaco the
execution,
delivery and performance of this Agreement and each
Subsequent
Transfer Agreement; and this Agreement and each Subsequent
Transfer
Agreement, assuming the due authorization, execution and
delivery
hereof by the other
68
<PAGE>
parties
hereto, constitutes a legal, valid and binding obligation of
Park
Monaco, enforceable against Park Monaco in accordance with its
terms,
except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar
laws
relating
to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may
be
subject to
equitable defenses and to the discretion of the court before
which any
proceeding therefor may be brought.
(3) The execution and delivery of this Agreement and each
Subsequent
Transfer Agreement by Park Monaco, the sale of the Park
Monaco
Mortgage Loans by Park Monaco under this Agreement and each
Subsequent
Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer
Agreement,
and the fulfillment of or compliance with the terms hereof
are in the
ordinary course of business of Park Monaco and will not (A)
result in
a material breach of any term or provision of the certificate
of
incorporation or by-laws of Park Monaco or (B) materially
conflict
with, result in
a material breach, violation or acceleration of, or
result in
a material default under, the terms of any other material
agreement
or instrument to which Park Monaco is a party or by which it
may be
bound, or (C) constitute a material violation of any statute,
order or
regulation applicable to Park Monaco of any court, regulatory
body,
administrative agency or governmental body having jurisdiction
over Park
Monaco; and Park Monaco is not in breach or violation of any
material
indenture or other material agreement or instrument, or in
violation
of any statute, order or regulation of any court, regulatory
body,
administrative agency or governmental body having jurisdiction
over it
which breach or violation may materially impair Park Monaco's
ability to
perform or meet any of its obligations under this Agreement.
(4) No litigation is pending or, to the best of Park Monaco's
knowledge,
threatened, against Park Monaco that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement
or any Subsequent Transfer Agreement or the ability of Park
Monaco to
sell the Park Monaco Mortgage Loans or to perform any of its
other
obligations under this Agreement or any Subsequent Transfer
Agreement
in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by Park Monaco of, or compliance by Park Monaco with,
this
Agreement
or any Subsequent Transfer Agreement or the consummation of
the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, Park Monaco has obtained the
same.
(6) Park Monaco will treat the transfer of the Park Monaco
Mortgage
Loans to the Depositor as a sale of the Park Monaco Mortgage
Loans for
all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Monaco
Mortgage
Loan to the Depositor, Park Monaco had good title to, and was
the sole
owner
69
<PAGE>
of, such
Park Monaco Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and had full right and
authority,
subject to
no interest or participation of, or agreement with, any other
party, to
sell and assign the same pursuant to this Agreement.
(e) Park
Sienna hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Cut-off
Date:
(1) Park Sienna is duly organized as a Delaware limited
liability
company
and is validly existing and in good standing under the laws of
the State
of Delaware and is duly authorized and qualified to transact
any and
all business contemplated by this Agreement and each Subsequent
Transfer
Agreement to be conducted by Park Sienna in any state in which
a
Mortgaged Property securing a Park Sienna Mortgage Loan is located
or
is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the
doing
business
laws of any such state, to the extent necessary to ensure its
ability to
enforce each Park Sienna Mortgage Loan, to sell the Park
Sienna
Mortgage Loans in accordance with the terms of this Agreement
and
each
Subsequent Transfer Agreement and to perform any of its other
obligations under this Agreement in accordance with the terms
hereof.
(2) Park Sienna has the full company power and authority to
sell
each Park
Sienna Mortgage Loan, and to execute, deliver and perform, and
to enter
into and consummate the transactions contemplated by this
Agreement
and each Subsequent Transfer Agreement and has duly authorized
by all
necessary company action on the part of Park Sienna the
execution,
delivery and performance of this Agreement and each
Subsequent
Transfer Agreement; and this Agreement and each Subsequent
Transfer
Agreement, assuming the due authorization, execution and
delivery
hereof by the other parties hereto, constitutes a legal, valid
and
binding obligation of Park Sienna, enforceable against Park
Sienna
in
accordance with its terms, except that (a) the enforceability
hereof
may be
limited by bankruptcy, insolvency, moratorium, receivership and
other
similar laws relating to creditors' rights generally and (b)
the
remedy of
specific performance and injunctive and other forms of
equitable
relief may be subject to equitable defenses and to the
discretion
of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of this Agreement and each
Subsequent
Transfer Agreement by Park Sienna, the sale of the Park
Sienna
Mortgage Loans by Park Sienna under this Agreement and each
Subsequent
Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer
Agreement
and the fulfillment of or compliance with the terms hereof are
in the
ordinary course of business of Park Sienna and will not (A)
result in
a material breach of any term or provision of the certificate
of
formation or limited liability company agreement of Park Sienna
or
(B)
materially conflict with, result in a material breach, violation
or
acceleration of, or result in a material default under, the terms
of any
other
material agreement or instrument to which Park Sienna is a
party
or by
which it may be bound, or (C) constitute a material violation
of
any
statute, order or regulation applicable to Park Sienna of any
court,
regulatory
body, administrative agency or governmental body having
jurisdiction over Park Sienna; and Park Sienna is not in
70
<PAGE>
breach or
violation of any material indenture or other material
agreement
or instrument, or in violation of any statute, order or
regulation
of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
violation
may
materially impair Park Sienna's ability to perform or meet any
of
its
obligations under this Agreement.
(4) No litigation is pending or, to the best of Park Sienna's
knowledge,
threatened, against Park Sienna that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement
or any Subsequent Transfer Agreement or the ability of Park
Sienna to
sell the Park Sienna Mortgage Loans or to perform any of its
other
obligations under this Agreement or any Subsequent Transfer
Agreement
in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by Park Sienna of, or compliance by Park Sienna with,
this
Agreement
or any Subsequent Transfer Agreement or the consummation of
the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, Park Sienna has obtained the
same.
(6) Park Sienna will treat the transfer of the Park Sienna
Mortgage
Loans to the Depositor as a sale of the Park Sienna Mortgage
Loans for
all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Sienna
Mortgage
Loan to the Depositor, Park Sienna had good title to, and was
the sole
owner of, such the Park Sienna Mortgage Loan free and clear of
any
pledge, lien, encumbrance or security interest and had full
right
and
authority, subject to no interest or participation of, or
agreement
with, any
other party, to sell and assign the same pursuant to this
Agreement.
(f) Upon
discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(a) through (e)
that
materially and adversely affects the interests of the
Certificateholders or
the Certificate Insurer in any Mortgage Loan, the party discovering
such
breach shall give prompt notice thereof to the other parties, the
NIM Insurer
and the Certificate Insurer. Each of the Master Servicer and the
Sellers
(each, a "Representing Party") hereby covenants with respect to
the
representations and warranties set forth in Sections 2.03(a)
through (e) that
within 90 days of the earlier of the discovery by such Representing
Party or
receipt of written notice by such Representing Party from any party
of a
breach of any representation or warranty set forth herein made that
materially
and adversely affects the interests of the Certificateholders in
any Mortgage
Loan or the Certificate Insurer, it shall cure such breach in all
material
respects and, if such breach is not so cured, shall, (i) if such
90-day period
expires prior to the second anniversary of the Closing Date, remove
such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and
substitute
in its place a Replacement Mortgage Loan, in the manner and subject
to the
conditions set forth in this Section; or (ii) repurchase the
affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in
the manner
set forth below; provided that (a) any such substitution pursuant
to (i) above
or repurchase pursuant to (ii) above shall not be effected prior to
the
delivery to the Trustee of the Opinion of Counsel required by
Section 2.05
hereof, (b) any such substitution pursuant to (i) above shall not
be effected
prior to the additional delivery to the Trustee of a Request for
File
71
<PAGE>
Release and (c) any such substitution pursuant to (i) above shall
include a
payment by the applicable Representing Party of any amount as
calculated under
item (iii) of the definition of "Purchase Price". Any Representing
Party
liable for a breach under this Section 2.03 shall promptly
reimburse the
Master Servicer or the Trustee for any expenses reasonably incurred
by the
Master Servicer or the Trustee in respect of enforcing the remedies
for such
breach. To enable the Master Servicer to amend the Mortgage Loan
Schedule, any
Representing Party liable for a breach under this Section 2.03
shall, unless
it cures such breach in a timely fashion pursuant to this Section
2.03,
promptly notify the Master Servicer whether such Representing Party
intends
either to repurchase, or to substitute for, the Mortgage Loan
affected by such
breach. With respect to the representations and warranties
described in this
Section that are made to the best of the Representing Party's
knowledge, if it
is discovered by any of the Depositor, the Master Servicer, the
Sellers, the
Certificate Insurer or the Trustee that the substance of such
representation
and warranty is inaccurate and such inaccuracy materially and
adversely
affects the value of the related Mortgage Loan, notwithstanding
the
Representing Party's lack of knowledge with respect to the
substance of such
representation or warranty, such inaccuracy shall be deemed a
breach of the
applicable representation or warranty.
With
respect to any Replacement Mortgage Loan or Loans, the
applicable
Seller delivering such Replacement Mortgage Loan shall deliver to
the Trustee
for the benefit of the Certificateholders and the Certificate
Insurer the
related Mortgage Note, Mortgage and assignment of the Mortgage, and
such other
documents and agreements as are required by Section 2.01, with the
Mortgage
Note endorsed and the Mortgage assigned as required by Section
2.01. No
substitution will be made in any calendar month after the
Determination Date
for such month. Scheduled Payments due with respect to Replacement
Mortgage
Loans in the Due Period related to the Distribution Date on which
such
proceeds are to be distributed shall not be part of the Trust Fund
and will be
retained by the applicable Seller delivering such Replacement
Mortgage Loan on
such Distribution Date. For the month of substitution,
distributions to
Certificateholders will include the Scheduled Payment due on any
Deleted
Mortgage Loan for the related Due Period and thereafter the
applicable Seller
shall be entitled to retain all amounts received in respect of such
Deleted
Mortgage Loan. The Master Servicer shall amend the Mortgage Loan
Schedule for
the benefit of the Certificateholders to reflect the removal of
such Deleted
Mortgage Loan and the substitution of the Replacement Mortgage Loan
or Loans
and the Master Servicer shall deliver the amended Mortgage Loan
Schedule to
the Trustee. Upon such substitution, the Replacement Mortgage Loan
or Loans
shall be subject to the terms of this Agreement in all respects,
and the
applicable Seller delivering such Replacement Mortgage Loan shall
be deemed to
have made with respect to such Replacement Mortgage Loan or Loans,
as of the
date of substitution, the representations and warranties set forth
in Section
2.03(b), (c), (d) or (e) with respect to such Mortgage Loan. Upon
any such
substitution and the deposit to the Certificate Account of the
amount required
to be deposited therein in connection with such substitution as
described in
the following paragraph, the Trustee shall release to the
Representing Party
the Mortgage File relating to such Deleted Mortgage Loan and held
for the
benefit of the Certificateholders and shall execute and deliver at
the Master
Servicer's direction such instruments of transfer or assignment as
have been
prepared by the Master Servicer, in each case without recourse, as
shall be
necessary to vest in the applicable Seller, or its respective
designee, title
to the Trustee's interest in any Deleted Mortgage Loan substituted
for
pursuant to this Section 2.03.
72
<PAGE>
For any
month in which any Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer
will determine the amount (if any) by which the aggregate principal
balance of
all such Replacement Mortgage Loans as of the date of substitution
is less
than the Stated Principal Balance (after application of the
principal portion
of the Scheduled Payment due in the month of substitution) of all
such Deleted
Mortgage Loans. An amount equal to the aggregate of the
deficiencies described
in the preceding sentence (such amount, the "Substitution
Adjustment Amount")
shall be forwarded by the applicable Seller to the Master Servicer
and
deposited by the Master Servicer into the Certificate Account not
later than
the Determination Date for the Distribution Date relating to the
Prepayment
Period during which the related Mortgage Loan became required to be
purchased
or replaced hereunder.
In the
event that a Seller shall have repurchased a Mortgage Loan, the
Purchase Price therefor shall be deposited in the Certificate
Account pursuant
to Section 3.05 on the Determination Date for the Distribution Date
in the
month following the month during which such Seller became obligated
to
repurchase or replace such Mortgage Loan and upon such deposit of
the Purchase
Price, the delivery of the Opinion of Counsel required by Section
2.05, if
any, and the receipt of a Request for File Release, the Trustee
shall release
the related Mortgage File held for the benefit of the
Certificateholders to
such Seller, and the Trustee shall execute and deliver at such
Person's
direction the related instruments of transfer or assignment
prepared by such
Seller, in each case without recourse, as shall be necessary to
transfer title
from the Trustee for the benefit of the Certificateholders and
transfer the
Trustee's interest to such Seller to any Mortgage Loan purchased
pursuant to
this Section 2.03. It is understood and agreed that the obligation
under this
Agreement of the Sellers to cure, repurchase or replace any
Mortgage Loan as
to which a breach has occurred and is continuing shall constitute
the sole
remedy against the Sellers respecting such breach available to
Certificateholders, the Depositor or the Trustee.
(g) The
representations and warranties set forth in this Section 2.03
shall survive delivery of the respective Mortgage Files to the
Trustee for the
benefit of the Certificateholders and the Certificate Insurer with
respect to
each Mortgage Loan.
Section
2.04 Representations and Warranties of the Depositor.
The
Depositor hereby represents and warrants to the Master Servicer
and
the Trustee as follows, as of the date hereof and as of each
Subsequent
Transfer Date:
(1) The Depositor is duly organized and is validly existing as
a
corporation in good standing under the laws of the State of
Delaware and
has full
power and authority (corporate and other) necessary to own or
hold its
properties and to conduct its business as now conducted by it
and to
enter into and perform its obligations under this Agreement and
each
Subsequent Transfer Agreement.
(2) The Depositor has the full corporate power and authority to
execute,
deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and each
Subsequent
Transfer
Agreement and has duly authorized, by all necessary corporate
action on
its part, the execution, delivery and performance of this
Agreement
and each Subsequent Transfer Agreement; and this
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Agreement
and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other
parties
hereto,
constitutes a legal, valid and binding obligation of the
Depositor,
enforceable against the Depositor in accordance with its
terms,
subject, as to enforceability, to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
creditors'
rights
generally and (ii) general principles of equity, regardless of
whether
enforcement is sought in a proceeding in equity or at law.
(3) The execution and delivery of this Agreement and each
Subsequent
Transfer Agreement by the Depositor, the consummation of the
transactions contemplated by this Agreement, and the fulfillment of
or
compliance
with the terms hereof are in the ordinary course of business
of the
Depositor and will not (A) result in a material breach of any
term or
provision of the charter or by-laws of the Depositor or (B)
materially
conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms
of any
other
material agreement or instrument to which the Depositor is a
party
or by
which it may be bound or (C) constitute a material violation of
any
statute, order or regulation applicable to the Depositor of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over the Depositor; and the Depositor is not in
breach or
violation of any material indenture or other material
agreement
or instrument, or in violation of any statute, order or
regulation
of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
violation
may
materially impair the Depositor's ability to perform or meet any
of
its
obligations under this Agreement.
(4) No litigation is pending, or, to the best of the
Depositor's
knowledge,
threatened, against the Depositor that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement
or any Subsequent Transfer Agreement or the ability of the
Depositor
to perform its obligations under this Agreement or any
Subsequent
Transfer Agreement in accordance with the terms hereof or
thereof.
(5) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Depositor of, or compliance by the Depositor
with,
this
Agreement or any Subsequent Transfer Agreement or the
consummation
of the
transactions contemplated hereby, or if any such consent,
approval,
authorization or order is required, the Depositor has obtained
the
same.
The
Depositor hereby represents and warrants to the Trustee with
respect
to each Mortgage Loan, as of the Closing Date or the related
Subsequent
Transfer Date, as applicable, following the transfer of such
Mortgage Loan to
it by the Sellers, the Depositor had good title to the Initial
Mortgage Loans
or related Subsequent Mortgage Loans, as applicable, and the
related Mortgage
Notes were subject to no offsets, claims, defenses or
counterclaims.
It is
understood and agreed that the representations and warranties
set
forth in the two immediately preceding paragraphs 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 the immediately preceding paragraph (referred to
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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
and the NIM
Insurer. The Depositor hereby covenants with respect to the
representations
and warranties made by it in this Section 2.04 that within 90 days
of the
earlier of the discovery by it or receipt of written notice by it
from any
party of a breach of any representation or warranty set forth
herein made that
materially and adversely affects the interests of the
Certificateholders in
any Mortgage Loan, it shall cure such breach in all material
respects and, if
such breach is not so cured, shall repurchase or replace the
affected Mortgage
Loan or Loans in accordance with the procedure set forth in Section
2.03(f).
Section
2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a)
Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which
default is
not imminent, no repurchase or substitution pursuant to Sections
2.02, 2.03 or
2.04 shall be made unless the Representing Party making such
repurchase or
substitution delivers to the Trustee an Opinion of Counsel (which
such
Representing Party shall use reasonable efforts to obtain),
addressed to the
Trustee to the effect that such repurchase or substitution would
not (i)
result in the imposition of the tax on "prohibited transactions" of
the Trust
Fund or contributions after the Closing Date, as defined in
sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the
any REMIC
formed hereunder to fail to qualify as a REMIC at any time that
any
Certificates are outstanding. Any Mortgage Loan as to which
repurchase or
substitution was delayed pursuant to this paragraph shall be
repurchased or
the substitution therefor shall occur (subject to compliance with
Sections
2.02, 2.03 or 2.04) upon the earlier of (a) the occurrence of a
default or
imminent default with respect to such loan and (b) receipt by the
Trustee of
an Opinion of Counsel to the effect that such repurchase or
substitution, as
applicable, will not result in the events described in clause (i)
or clause
(ii) of the preceding sentence.
(b) Upon
discovery by the Depositor, any 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 Business
Days of
discovery) give written notice thereof to the other parties and the
NIM
Insurer. In connection therewith, the Trustee shall require CHL, at
CHL's
option, to either (i) substitute, if the conditions in Section
2.03(f) with
respect to substitutions are satisfied, a Replacement Mortgage Loan
for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage
Loan within
90 days of such discovery in the same manner as i
