HSI ASSET SECURITIZATION CORPORATION,
Depositor,
CITIMORTGAGE, INC.,
Master Servicer,
CITIBANK, N.A.,
Securities Administrator
WELLS FARGO BANK, N.A.,
Custodian,
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 2006
HSI ASSET LOAN OBLIGATION TRUST 2006-2
MORTGAGE PASS THROUGH CERTIFICATES,
SERIES 2006-2
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage
Loans..................................50
Section 2.02 Acceptance by the
Custodian of the Mortgage Loans.............53
Section 2.03 Remedies for Breaches
of Representations and Warranties
with Respect to the Mortgage
Loans............................54
Section 2.04 Execution and Delivery
of Certificates........................55
Section 2.05
[Reserved]....................................................55
Section 2.06
[Reserved]....................................................55
Section 2.07 Representations and
Warranties of the Depositor...............55
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Establishment of
Certain Accounts.............................57
Section 3.02 Investment of Funds in
the Distribution Account and
the Master Servicing
Account..................................58
Section 3.03 Report on Assessment
of Compliance with Relevant
Servicing
Criteria............................................59
Section 3.04 Report on Attestation
of Compliance with Relevant
Servicing
Criteria............................................60
Section 3.05 Annual Officer's
Certificates.................................61
Section 3.06
Indemnification...............................................62
Section 3.07
Advances......................................................62
ARTICLE IV
DISTRIBUTIONS
Section 4.01 The Distribution
Account......................................64
Section 4.02 Priorities of
Distribution....................................64
Section 4.03 Monthly Statements to
Certificateholders......................72
Section 4.04 Allocation of Realized
Losses.................................74
Section 4.05 The Yield Maintenance
Agreement...............................76
Section 4.06 Certain Matters
Relating to the Determination of LIBOR........77
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates..............................................78
Section 5.02 Certificate Register;
Registration of Transfer and
Exchange of
Certificates......................................78
Section 5.03 Mutilated, Destroyed,
Lost or Stolen Certificates.............84
Section 5.04 Persons Deemed
Owners.........................................84
Section 5.05 Access to List of
Certificateholders' Names and Addresses.....84
Section 5.06 Maintenance of Office
or Agency...............................84
ARTICLE VI
THE DEPOSITOR
Section 6.01 Liabilities of the
Depositor..................................85
Section 6.02 Merger or
Consolidation of the Depositor......................85
Section 6.03 Limitation on
Liability of the Depositor and Others...........85
ARTICLE VII
DEFAULT
Section 7.01 Master Servicer to
Act; Appointment of Successor..............86
Section 7.02 Notification to
Certificateholders............................88
-i-
<PAGE>
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the
Trustee.........................................88
Section 8.02 Certain Matters
Affecting the Trustee.........................89
Section 8.03 Trustee Not Liable for
Certificates or Mortgage Loans.........91
Section 8.04 Trustee May Own
Certificates..................................91
Section 8.05 Trustee's Fees
Indemnification and Expenses...................91
Section 8.06 Eligibility
Requirements for the Trustee......................92
Section 8.07 Resignation and
Removal of the Trustee........................93
Section 8.08 Successor
Trustee.............................................93
Section 8.09 Merger or
Consolidation of the Trustee........................94
Section 8.10 Appointment of
Co-Trustee or Separate Trustee.................94
Section 8.11
[Reserved]....................................................95
Section 8.12 Commission
Reporting..........................................95
ARTICLE IX
ADMINISTRATION OF THE MORTGAGE LOANS BY THE MASTER SERVICER
Section 9.01 Duties of the Master
Servicer; Enforcement of each
Servicer's
Obligations.......................................102
Section 9.02 Provision to the
Securities Administrator of
Loan-Level
Information.......................................104
Section 9.03
[Reserved]...................................................104
Section 9.04 Maintenance of
Fidelity Bond and Errors and
Omissions
Insurance..........................................104
Section 9.05 Representations and
Warranties of the Master Servicer........104
Section 9.06 Master Servicer Events
of Default............................106
Section 9.07 Waiver of
Default............................................107
Section 9.08 Successor to the
Master Servicer.............................107
Section 9.09
[Reserved]...................................................109
Section 9.10 Merger or
Consolidation......................................109
Section 9.11 Resignation of the
Master Servicer...........................109
Section 9.12 Assignment or
Delegation of Duties by the Master Servicer....109
Section 9.13 Limitation on
Liability of the Master Servicer...............110
Section 9.14 Indemnification; Third
Party Claims..........................110
ARTICLE X
CONCERNING THE SECURITIES ADMINISTRATOR
Section 10.01
Duties of Securities
Administrator...........................111
Section 10.02
Certain Matters Affecting the Securities
Administrator.......112
Section 10.03
Securities Administrator Not Liable for Certificates
or Mortgage
Loans............................................114
Section 10.04
Securities Administrator May Own
Certificates................115
Section 10.05
Securities Administrator's Fees and
Expenses.................115
Section 10.06
Eligibility Requirements for Securities
Administrator........115
Section 10.07
Resignation and Removal of Securities
Administrator..........116
Section 10.08
Successor Securities
Administrator...........................117
Section 10.09
Merger or Consolidation of Securities
Administrator..........118
Section 10.10
Assignment or Delegation of Duties by the Securities
Administrator................................................118
ARTICLE XI
REMIC provisions
Section 11.01
REMIC
Administration.........................................118
Section 11.02
[Reserved]...................................................121
Section 11.03
Designation of
REMIC(s)......................................122
Section 11.04
Distributions on Uncertificated REMIC 1 Regular Interests,
REMIC 2 Regular Interests, and REMIC 3 Regular
Interests.....122
-ii-
<PAGE>
ARTICLE XII
TERMINATION
Section 12.01
Termination upon Liquidation or Purchase of the
Mortgage
Loans...............................................125
Section 12.02
Final Distribution on the
Certificates.......................125
Section 12.03
Additional Termination
Requirements..........................126
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01
Amendment....................................................127
Section 13.02
Recordation of Agreement;
Counterparts.......................129
Section 13.03
Governing
Law................................................129
Section 13.04
Intention of
Parties.........................................129
Section 13.05
Notices......................................................130
Section 13.06
Severability of
Provisions...................................131
Section 13.07
[Reserved.]..................................................131
Section 13.08
Limitation on Rights of
Certificateholders...................131
Section 13.09
Certificates Nonassessable and Fully
Paid....................132
Section 13.10
Rule of
Construction.........................................132
Section 13.11
Waiver of Jury
Trial.........................................132
-iii-
<PAGE>
EXHIBITS
Exhibit A Form
of Senior Certificates and Senior Subordinate Certificate
Exhibit B Form
of Junior Subordinate Certificate
Exhibit C Form
of Class R Certificate
Exhibit D Form
of Class P Certificate
Exhibit E Form
of Initial Certification of Custodian
Exhibit F Form
of Document Certification and Exception Report of Custodian
Exhibit G Form
of Residual Transfer Affidavit
Exhibit H Form
of Transferor Certificate
Exhibit I Form
of Rule 144A Investment Letter
Exhibit J Form
of Request for Release
Exhibit K
Contents for Each Mortgage File
Exhibit L Form
of Sarbanes-Oxley Certification to be provided with
Form 10 K
Exhibit M List
of Servicing Agreements
Exhibit N Form
of Servicing Function Participant Back-up Sarbanes Oxely
Certification
Exhibit O Form
of Yield Maintenance Agreement
Exhibit P
[Reserved]
Exhibit Q
Transfer Agreements
Exhibit R
[Reserved]
Exhibit S
Servicing Criteria Matrix
Exhibit T
Transaction Parties
Exhibit U Form
of Annual Compliance Certificate
Exhibit V
Additional Form 10-D Disclosure
Exhibit W
Additional Form 10-K Disclosure
Exhibit X Form
8-K Disclosure Information
Exhibit Y
Additional Disclosure Notification
-iv-
<PAGE>
THIS
POOLING AND SERVICING
AGREEMENT, dated as of
December 1, 2006, among
HSI ASSET SECURITIZATION CORPORATION, as depositor (the "Depositor"),
CITIMORTGAGE, INC., a
New York corporation (the "Master Servicer"), CITIBANK,
N.A., a national banking association ( the "Securities
Administrator"),
WELLS
FARGO BANK, N.A., a national banking association (the "Custodian") and
DEUTSCHE
BANK NATIONAL TRUST COMPANY, a national banking association, as trustee (the
"Trustee").
W I T N E S S E T H:
In
consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
PRELIMINARY STATEMENT:
The
Depositor
intends
to sell Mortgage Pass-Through Certificates
(collectively, the "Certificates"), to be issued hereunder in multiple
classes,
which in the aggregate will evidence the entire beneficial
ownership interest in
the Trust Fund (as defined herein). As provided herein, the Securities
Administrator will
make an election
to treat the
entire segregated pool of
assets relating to the Mortgage Loans, as described in the
definition of REMIC 1
below, as a real
estate mortgage
investment
conduit (a "REMIC")
for federal
income tax purposes,
and such segregated
pool of assets will be
designated as
"REMIC 1." The Class R-I Certificates will represent the sole class
of "residual
interests" in REMIC 1 for purposes of the REMIC Provisions (as defined
herein)
under federal income
tax law. The following
table irrevocably
sets forth the
designation, the REMIC
1 Remittance Rate, the initial Uncertificated Principal
Balance, and solely
for purposes of
satisfying
Treasury Regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each
of the REMIC 1
Regular Interests. None of the REMIC 1 Regular Interests will be
certificated.
<PAGE>
<TABLE>
<CAPTION>
---------------------------- --------------------- --------------------- ----------------------
----------------------
REMIC 1
REMIC 1
Initial
Latest Possible
Related
Regular Interests and
Remittance Rate
Uncertificated
Maturity Date(1)
Subgroup/Class of
Residual
Interests
Principal Balance
Certificates
---------------------------- --------------------- --------------------- ----------------------
----------------------
<S>
<C>
<C>
<C>
<C>
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 1-A
6.00%
$564.72
December 26, 2036
Subgroup I-1
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 2-A
7.00%
$659.06
December 26, 2036
Subgroup I-2
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 3-A
7.50%
$188.75
December 26, 2036
Subgroup I-3
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 4-A
8.00%
$137.66
December 26, 2036
Subgroup I-4
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 5-A
5.50%
$300.10
December 26, 2021
Subgroup II-1
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class P
0.00%
$100
December 26, 2026
All
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class I-PO
0.00%
$251,132
December 26, 2036
Class I-PO
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class I-IO
6.00%
(2)
December 26, 2036
Class I-IO
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class II-PO
0.00%
$18,382
December 26, 2026
Class II-PO
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class II-IO
5.50%
(2)
December 26, 2026
Class II-IO
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 1-ZZZ
6.00%
$5,647,155
December 26, 2036
Subgroup I-1
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 2-ZZZ
7.00%
$6,590,564
December 26, 2036
Subgroup I-2
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 3-ZZZ
7.50%
$1,887,545
December 26, 2036
Subgroup I-3
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 4-ZZZ
8.00%
$1,376,647
December 26, 2036
Subgroup I-4
---------------------------- --------------------- --------------------- ----------------------
----------------------
Class 5-ZZZ
5.50%
$3,001,797
December 26, 2036
Subgroup II-1
---------------------------- --------------------- --------------------- ----------------------
----------------------
</TABLE>
----------------------------------
(1) Solely
for purposes of Section 1.860G-1(a)(4)(iii)
of the Treasury
regulations, the
Distribution Date immediately following the maturity date
for
the Mortgage Loan with the latest maturity date has been designated
as
the
"latest possible maturity date" for each REMIC 1 Regular
Interest.
(2) Neither the Class
I-IO nor the Class II-IO has an Uncertificated Principal
Balance and
each is entitled to receive on each Distribution Date a
specified portion of the interest payable on certain Subgroup I-4
Loans and
Subgroup II-1 Loans, respectively, equal to the Class I-IO Notional
Amount
or
the Class I-IO Notional Amount, as the case may be.
-2-
<PAGE>
As
provided herein, the
Securities
Administrator will
elect to treat the
segregated pool of
assets consisting of the Uncertificated REMIC 1 Regular
Interests as a REMIC for federal income tax purposes, and such segregated pool
of assets will be
designated
as "REMIC 2." The
Class R-II
Certificates will
represent the sole class of "residual interests" in REMIC 2 for purposes
of the
REMIC Provisions under
federal income tax law. The following table irrevocably
sets forth the
designation, the REMIC
2 Remittance Through
Rate, the initial
Uncertificated
Balance, and
solely for purposes of satisfying Treasury
Regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" for
each of the REMIC 2 Regular Interests and the general
description of the
Class
R-II Certificates. None of the REMIC 2 Regular Interests will be
certificated.
<TABLE>
<CAPTION>
REMIC
2
Regular Interests
REMIC 2
Initial
Latest
Related
and Residual
Remittance Uncertificated
Possible
Class of
Interests
Rate
Balance
Maturity Date(1)
Certificates
---------
-----
-------
----------------
------------
<S>
<C>
<C> <C>
<C>
Class
I-A-1
6.00%
$
December 26, 2036 Class I-A-1
Class
I-A-2
6.00%
December 26, 2036 Class I-A-2
Class
I-A-3
6.00%
December 26, 2036 Class I-A-3,
Class I-A-4
Class
I-A-5
6.00%
December 26, 2036 Class I-A-5
Class
I-A-6
6.00%
December 26, 2036 Class I-A-6
Class
I-A-7
7.00%
December 26, 2036 Class I-A-7,
Class I-A-8
Class
I-A-9
7.50%
December 26, 2036 Class I-A-9,
Class I-A-10
Class I-A-11
8.00%
December 26, 2036 Class I-A-11
Class I-A-12
Class P
0.00%
$100
___________
Class P
Class I-IO
6.00%
December 26, 2036 Class I-IO
Class I-PO
0.00%
December 26, 2036 Class I-PO
Class II-A-1
5.50%
December 26, 2026 Class II-A-1
Class
II-IO
5.50%
December 26, 2026 Class II-IO
Class
II-PO
0.00%
December 26, 2026 Class II-PO
Class B-1
Variable Rate(2)
December 26, 2036 Class B-1
Class B-2
Variable Rate(2)
December 26, 2036 Class B-2
Class B-3
Variable Rate(2)
December 26, 2036 Class B-3
Class B-4
Variable Rate(2)
December 26, 2036 Class B-4
</TABLE>
----------------------------------
(1) Solely
for purposes of Section 1.860G-1(a)(4)(iii)
of the Treasury
regulations, the
Distribution Date immediately following the maturity date
for
the Mortgage Loan with the latest maturity date has been designated
as
the
"latest possible maturity date" for each REMIC 2 Regular
Interest.
(2) The REMIC 2
Remittance
Rate for the REMIC 2
Regular Interest
Class B-1,
B-2,
B-3, B-4, B-5 and B-6 will be a variable rate of interest equal to
the
weighted average of
the designated
rates of each
subgroup. For federal
income tax
purposes, however, such REMIC 2 Remittance Rate on any
Distribution Date shall be expressed as the weighted average of the
REMIC 1
Remittance Rates of
the REMIC 1 Regular
Interests Class 1-A,
Class 2-A,
Class 3-A, Class 4-A
and Class 5-A,
weighted on the basis
of the related
Uncertificated Principal Balances of such REMIC 1 Regular
Interests.
<PAGE>
<TABLE>
<CAPTION>
REMIC
2
Regular Interests
REMIC 2
Initial
Latest
Related
and Residual
Remittance Uncertificated
Possible
Class of
Interests
Rate
Balance
Maturity Date(1)
Certificates
---------
-----
-------
----------------
------------
<S>
<C>
<C>
<C>
<C>
Class B-5
Variable Rate(2)
December 26, 2036 Class B-5
Class B-6
Variable Rate(2)
December 26, 2036 Class B-6
</TABLE>
As
provided herein, the
Securities
Administrator will
elect to treat the
segregated pool of assets consisting of the REMIC 2 Regular
Interests as a REMIC
for federal income tax
purposes, and such segregated pool of assets will be
designated as REMIC 3.
The Class R-III
Certificates will
represent the sole
class of "residual
interests" in REMIC 3
for purposes of the REMIC Provisions
under federal income
tax law. The following
table irrevocably
sets forth the
designation,
remittance rate (the "REMIC 3 Remittance Rate") and Initial Class
Certificate Balance for each of the "regular interests" in REMIC 3
(the "REMIC 3
Regular Interests").
None of the Class R-I, Class R-II and Class R-III
Certificates have a principal balance nor an interest rate. The
"latest possible
maturity date" (determined solely for purposes of satisfying
Treasury regulation
Section
1.860G-1(a)(4)(iii))
for each REMIC 3
Regular Interest
shall be the
first Distribution
Date that follows the
stated maturity date for the Mortgage
Loan included
in the Trust Fund as of the Closing Date with the longest
remaining term to stated maturity.
-3-
<PAGE>
THE SERIES 2006-2 CERTIFICATES
<TABLE>
<CAPTION>
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Initial Principal Related
Initial
Balance or
Loan
Related Interest
Summary Interest
Moody's S&P
Class
Notional Amount (1) Group Subgroup
Rate
Designation Rate Formula(7)
Rating
Rating
================ ==================== ========== ===========
============ =================== ================== ===========
=======
<S>
<C>
<C>
<C> <C>
<C>
<C>
<C>
<C>
Offered
Certificates:
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-1
$17,337,000
1
I-1
6.00000% Super
Fixed
Aaa
AAA
Senior/
Non-Accelerating(6)
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-2
$40,672,000
1
I-1
6.00000%
Senior/Sequential Fixed
Aaa
AAA
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-3
$40,672,000 1
I-1
Adjustable Super
LIBOR + 0.60%(7)
Aaa
AAA
Rate
Senior/Sequential/
Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-4
$40,672,000(2) 1
I-1
Adjustable
Senior/Notional/ 5.40% - LIBOR(7)
Aaa
AAA
Rate
Inverse Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-5
$189,699
1
I-1
6.00000%
Senior/Sequential Fixed
Aaa
AAA
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-6
$3,047,000
1
I-1
6.00000% Senior
Fixed
Aaa
AAA
Support/
Non-Accelerating(6)
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-7
$118,943,983
1
I-2
Adjustable
Senior/Pass-Through LIBOR + 0.37%(7) Aaa
AAA
Rate
Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-8
$118,943,983(2) 1
I-2
Adjustable
Senior/Notional 6.63% - LIBOR(7)
Aaa
AAA
Rate
Inverse Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-9
$34,065,691
1
I-3
Adjustable
Senior/Pass-Through LIBOR + 0.30%(7) Aaa
AAA
Rate
Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-10
$34,065,691(2) 1
I-3
Adjustable
Senior/Notional 7.20% - LIBOR(7)
Aaa
AAA
Rate
Inverse Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-11
$24,845,192
1
I-4
Adjustable
Senior/Pass-Through LIBOR + 0.20%(7) Aaa
AAA
Rate
Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-A-12
$24,845,192(2) 1
I-4
Adjustable
Senior/Notional 7.80% - LIBOR(7)
Aaa
AAA
Rate
Inverse Floater
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-IO
$590,041(2)
1
I-4
6.00000% Senior/Notional
Fixed
Aaa
AAA
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class I-PO
$251,132(3) 1
I-1
(3)
Senior/Principal N/A
Aaa
AAA
Only
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class II-A-1
$54,156,905
2
II-1
5.50000%
Senior/Pass-Through Fixed
Aaa
AAA
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class II-IO
2
II-1
5.50000% Senior/Notional
Fixed
Aaa
AAA
$6,991,827(2)
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class II-PO
$18,382(3)
2
II-1
(3)
Senior/Principal N/A
Aaa
AAA
Only
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class B-1
$8,275,332
1, 2
(5)
Variable Subordinate
weighted average
Aa3
AA
Rate
rate -
0.57687234%
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class B-2
$3,527,027
1, 2
(5)
Variable Subordinate
weighted average
A3
A
Rate
rate - 0.32687234%
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class B-3
$2,116,216
1, 2
(5)
Variable Subordinate
weighted average
Baa3
BBB
Rate
rate
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Total Offered:
$348,117,559
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Non-Offered
Certificates(4):
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class B-4
$2,116,216
1, 2
(5)
Variable Subordinate
weighted average
NR
BB
Rate
rate
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class B-5
$1,763,513
1, 2
(5)
Variable Subordinate
weighted average
NR
B
Rate
rate
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class B-6
$705,404
1, 2
(5)
Variable Subordinate
(8)
NR
NR
Rate
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Class P
$100
1, 2
(5)
0.00%
Prepayment Charges N.A
NR
NR
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
</TABLE>
-4-
<PAGE>
<TABLE>
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Total
$4,585,133
Non-Offered:
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
Total:
$352,702,692
---------------- -------------------- ---------- -----------
------------ ------------------- ------------------ -----------
-------
</TABLE>
(1) Approximate.
Subject to variance of plus or minus 5%.
(2) Interest-only
certificates that will
accrue interest on a notional amount.
These certificates
will not receive distributions of principal.
(3) The Class I-PO and
Class II-PO certificates are principal-only certificates
and
are not entitled to payment of interest.
(4) The issuing entity
will also issue the Class R certificates and the Class P
Certificates, which are entitled to receive any prepayment
penalties on the
mortgage loans.
(5) The Class B-1,
Class B-2,
Class B-3,
Class B-4,
Class B-5 and Class
B-6
certificates will be
related to subgroups
I-1, I-2, I-3, I-4 and II-1 and
will
receive a variable rate of interest based on the weighted average of
the
designated rates of each subgroup.
(6) The Class I-A-1
and Class I-A-6
certificates
will not receive
principal
payments at
the same rate as the other Senior Certificates because
principal payments
generally will not be
distributable to the Class I-A-1
and
Class I-A-6 certificates until the Distribution Date in January
2012.
(7) Subject to minimum
and maximum rates as described in this Agreement.
(8) The Class B-6
Certificates
will accrue interest
at a per annum rate equal
to
(i) the weighted average of the designated rates applicable to
subgroups
I-1,
I-2, I-3, I-4 and II-1 on the basis of the group subordinate amounts
thereof plus ((0.57687234% multiplied by the Class
Certificate Balance
of
the
Class B-1 Certificates) plus (0.32687234% multiplied by the Class
Certificate Balance
of the Class B-2
Certificates)
divided by the
Class
Certificate Balance of the Class B-6 Certificates.
-5-
<PAGE>
<TABLE>
<CAPTION>
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Final Scheduled
Record
Delay/Acrual
Distribution
Minimum
Incremental
Class
Date(1)
Period(2)
Date(3)
Denomination(4)
Denomination
CUSIP Number ISIN
Number
=============
=========
================
=================
================
================
==================
=============
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Offered
Certificates:
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-1 DD
24 day
December 2036
$25,000
$1
40431H AA 5
US40431HAA59
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-2 DD
24 day
December 2036
$25,000
$1
40431H AB 3
US40431HAB33
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-3 DD
0 day
December 2036
$25,000
$1
40431H AC 1
US40431HAC16
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-4 DD
0 day
December 2036
$25,000
$1
40431H AD 9
US40431HAD98
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-5 DD
24 day
December 2036
$25,000
$1
40431H AE 7
US40431HAE71
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-6 DD
24 day
December 2036
$25,000
$1
40431H AF 4
US40431HAF47
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-7 DD
0 day
December 2036
$25,000
$1
40431H AG 2
US40431HAG20
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-8 DD
0 day
December 2036
$25,000
$1
40431H AH 0
US40431HAH03
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-9 DD
0 day
December 2036
$25,000
$1
40431H AJ 6
US40431HAJ68
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-10 DD
0 day
December 2036
$25,000
$1
40431H AK 3
US40431HAK32
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-11 DD
0 day
December 2036
$25,000
$1
40431H AL 1
US40431HAL15
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-A-12 DD
0 day
December 2036
$25,000
$1
40431H AM 9
US40431HAM97
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-IO
DD
24 day
December 2036
$25,000
$1
40431H AN 7
US40431HAN70
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class I-PO
DD
N/A
December 2036
$25,000
$1
40431H AP 2
US40431HAP29
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class II-A-1 DD
24 day
December 2021
$25,000
$1
40431H AQ 0
US40431HAQ02
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class II-IO DD
24 day
December 2021
$25,000
$1
40431H AR 8
US40431HAR84
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class II-PO DD
N/A
December 2021
$25,000
$1
40431H AS 6
US40431HAS67
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class B-1
DD
24 day
December 2036
$25,000
$1
40431H AT 4
US40431HAT41
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class B-2
DD
24 day
December 2036
$25,000
$1
40431H AU 1
US40431HAU14
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class B-3
DD
24 day
December 2036
$25,000
$1
40431H AV 9
US40431HAV96
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Non-Offered
Certificates:
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class B-4
CM
24 day
December 2036
$25,000
$1
40431H AZ 0
US40431HAZ01
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class B-5
CM
24 day
December 2036
$25,000
$1
40431H BA 4
US40431HBA41
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
Class B-6
CM
24 day
December 2036
$25,000
$1
40431H BB 2
US40431HBB24
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
-------------
---------
----------------
-----------------
----------------
----------------
------------------
-------------
</TABLE>
-6-
<PAGE>
(1) CM = For any
distribution date, the last business day of the calendar month
immediately preceding
the distribution
date. DD = For any distribution
date, the close of business on the business day immediately preceding the
distribution date.
(2) 24 Day = For any
distribution date, the interest accrual period will be the
calendar month immediately preceding the month in which the related
distribution date
occurs. 0 Day = For any distribution date, the interest
accrual period will be the period beginning on the immediately preceding
distribution date
(or the closing date, in the case of the first
distribution date) and
ending on the calendar day immediately before the
related distribution date.
(3) Calculated
as the distribution date in the month following the month in
which the latest maturity date of any mortgage loan included in the
related
subgroup occurs.
(4) With respect to
the initial European investors, the underwriters will only
sell
offered certificates in minimum total investment amounts of
$100,000.
-7-
<PAGE>
The
Mortgage Loans have an
aggregate Stated
Principal Balance as of the
Cut-off Date of $352,702,693.
Set
forth below are designations of Classes of Certificates to the
categories used herein:
Adjustable Rate Certificates........... Floater Certificates and
Inverse Floater
Certificates.
Book-Entry Certificates................ All Classes of Certificates other than
the Junior Subordinate Certificates, the
Class R Certificates and Class P
Certificates.
Class A Certificates................... Class I-A-1, Class I-A-2, Class I-A-3,
Class I-A-4, Class
I-A-5, Class
I-A-6,
Class I-A-7, Class
I-A-8, Class
I-A-9,
Class I-A-10, Class I-A-11, Class I-A-12
and Class II-A-1 Certificates.
Class I-A Certificates................. The Class I-A-1,
Certificates, the Class
I-A-2
Certificates, Class I-A-3
Certificates, the Class I-A-4
Certificates, Class
I-A-5 Certificates,
Class I-A-6
Certificates,
Class I-A-7
Certificates, Class
I-A-8 Certificates,
Class I-A-9
Certificates, Class
I-A-10
Certificates, Class
I-A-11 Certificates
and Class I-A-12 Certificates.
Class II-A Certificates................ The Class II-A-1
Certificates.
Class IO Certificates.................. Class I-IO and Class II-IO
Certificates
Class P Certificates................... The Class P
Certificates.
Class PO Certificates.................. Class I-PO and Class II-PO
Certificates
-8-
<PAGE>
Class R Certificates................... Class R-I, Class R-II and Class R-III
Certificates
ERISA-Restricted Certificates.......... The Junior Subordinate Certificates,
Class R
Certificates, Class P
Certificates and any
Certificate with a
rating which
falls below the lowest
applicable permitted
rating under the
Underwriters' Exemption.
Floater Certificates:.................. Class I-A-3, Class I-A-7, Class I-A-9,
and Class I-A-11 Certificates
Group 1 Certificates................... Any one of the Class I-A-1,
Class I-A-2,
Class I-A-3, Class
I-A-4, Class
I-A-5,
Class I-A-6, Class
I-A-7, Class
I-A-8,
Class I-A-9, Class I-A-10, Class I-A-11,
Class I-A-12,
Class I-IO and the
Class
I-PO.
Group 2 Certificates................... Any one of the Class
II-A-1, Class II-IO
and the Class II-PO.
Interest Only Certificates:............ Class IO Certificates, Class I-A-4
Certificates, Class
I-A-8 Certificates,
Class I-A-10
Certificates
and Class
I-A-12 Certificates.
Inverse Floater Certificates:.......... Class I-A-4, Class I-A-8, Class I-A-10
and Class I-A-12 Certificates
Junior Subordinate Certificates........ Class B-4, Class B-5 and Class B-6
Certificates.
NAS Certificates....................... Any one of the Class
I-A-1 or the Class
I-A-6 Certificates.
-9-
<PAGE>
Offered Certificates................... All Classes of Certificates other than
the Private Certificates.
Physical Certificates:................. Any one of the Class P or Class R
Certificates.
Private Certificate.................... Any Junior Subordinate Certificate,
Class R
Certificate
or Class P
Certificate.
Rating Agencies........................ Moody's and Standard &
Poor's.
Regular Certificates................... All Classes of Certificates other than
the Class R Certificates.
Residual Certificates.................. Class R Certificates.
Senior Certificate..................... Any one of the Group 1
Certificates
or
the Group 2 Certificates.
Senior Subordinate Certificates........ Class B-1, Class B-2 and Class B-3
Certificates.
Senior Support Certificates............ The Class I-A-6
Certificates.
Subgroup I-1 Certificates.............. Any one of the Class I-A-1
Certificates,
Class I-A-2
Certificates,
Class I-A-3
Certificates, Class
I-A-4 Certificates,
Class I-A-5
Certificates,
Class I-A-6
Certificates or the Class I-PO
Certificates.
-10-
<PAGE>
Subgroup I-2 Certificates.............. Any one of the Class I-A-7
Certificates
or the Class I-A-8 Certificates.
Subgroup I-3 Certificates.............. Any one of the Class I-A-9
Certificates
or the Class I-A-10 Certificates.
Subgroup I-4 Certificates.............. Any one of the Class I-A-11
Certificates, the Class I-A-12,
Certificates or the Class I-IO
Certificates.
Subgroup II-1 Certificates............. Any one of the Class II-A-1
Certificates, the Class II-IO
Certificates or the Class II-PO
Certificates.
Subordinate Certificate................ Any one of the Senior Subordinate
Certificates or
Junior
Subordinate
Certificates.
Super Senior Certificates.............. The Class I-A-1 Certificates or the
Class I-A-3 Certificates.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following
meanings:
10-K
Filing Deadline: As defined in Section 8.12(a)(ii).
Accepted Servicing
Practices:
With respect to any
Mortgage Loan and
the
related Servicer, the
servicing and administration of such Mortgage Loan (i) in
the same manner in which, and with the same care, skill,
prudence and
diligence
with which such Servicer generally services and administers
similar mortgage
loans with
similar mortgagors (A) for other third parties, giving due
consideration to
customary and usual standards of practice of prudent
institutional residential mortgage lenders servicing their own
mortgage loans or
(B) held in such
Servicer's own portfolio, whichever standard is higher, and
(ii) in accordance
with applicable
local, state and federal laws,
rules and
regulations.
-11-
<PAGE>
Account: Any of the Collection Accounts, the Master Servicing Account,
the
Reserve Fund, the Class P Reserve Fund, the Distribution
Account and any
Escrow
Account. Each Account shall be an Eligible Account.
Accrued Certificate
Interest: With respect
to each Distribution Date, (a)
in the case of each class of Offered Certificates (other than the
Interest Only
Certificates and Class
PO Certificates)
interest accrued during the related
Interest Accrual Period on the Class Certificate Balance thereof, immediately
prior to that Distribution Date at the related Pass-Through Rate and (b) in
the
case of the Interest
Only Certificates,
interest accrued during the related
Interest Accrual Period on the related Notional Amount immediately
prior to that
Distribution Date at the then-applicable Pass-Through Rate that Class for
that
Distribution Date.
In each case Accrued
Certificate
Interest on any Class
of
Certificates will be reduced by the amount of:
(i) Prepayment
Interest Shortfalls on the Mortgage Loans in the
related Loan Group (to the extent not offset by the related
Servicer with a
payment of
Compensating Interest
as provided
in the related Servicing
Agreement);
(ii) the interest
portions of Realized Losses, including Excess
Special Hazard Losses,
Excess Fraud Losses,
Excess Bankruptcy
Losses and
Extraordinary Losses
on the Mortgage
Loans included in the related Loan
Group not allocated
solely to one or more specific Classes of Certificates
pursuant to Section 4.04;
(iii) the interest
portion of any P&I
Advances that were made with
respect to delinquencies on the Mortgage Loans included in the
related Loan
Group that were ultimately determined under the terms of this
Agreement to
be,
and reported to the Master Servicer and the Securities Administrator
under the terms of this Agreement as, Excess Special Hazard Losses,
Excess
Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses;
and
(iv) any other interest shortfalls not allocated solely to one or
more
Specific Classes
of Certificates pursuant to Section 4.04, including
interest that is not collectible from the Mortgagor pursuant to the Relief
Act.
The
related Loan Group Senior Percentage of these reductions with respect
to the related Loan Group, will be allocated among the Holders of the
related
Senior Certificates,
in proportion to the amounts of Accrued Certificate
Interest that would have been payable to those Certificates on that
Distribution
Date absent such reductions. The remainder of these reductions will
be allocated
among the Holders of the Subordinate Certificates, in proportion to the
respective amounts of Accrued Certificate Interest that would have been
payable
to those Certificates
on that Distribution Date absent such reductions. In
addition to that portion of the reductions described in the preceding
sentences
that are allocated to any Class of Subordinate Certificates,
Accrued Certificate
Interest on such
Class of Subordinate Certificates will be reduced by the
interest portion of
Realized Losses that are allocated solely to such Class of
Subordinate Certificates pursuant to Section 4.04.
Additional Disclosure Notification: The form of notice set forth on
Exhibit
Y.
Additional Form 10-D Disclosure: As defined in Section
8.12(a)(i).
-12-
<PAGE>
Additional Form 10-K Disclosure: As defined in Section
8.12(a)(ii).
Advance: Any P&I Advance or Servicing Advance.
Affiliate: With
respect to any Person, any other Person controlling,
controlled by or under common control with such first Person.
For the purposes
of this definition,
"control" means the power to direct
the management and
policies of such Person, directly or indirectly,
whether through the
ownership
of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This
Pooling and Servicing
Agreement and all amendments or
supplements hereto.
Amounts Held
for Future Distribution: As to the Certificates on any
Distribution Date, the
aggregate amount held in the Collection Accounts of the
Servicers at the close of business on the related Determination Date on account
of (i) Principal Prepayments, Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds
and Subsequent
Recoveries on the
Mortgage Loans received
after the end of the related Prepayment Period and (ii) all
Scheduled Payments
on the Mortgage Loans due after the end of the related Due
Period.
Assignment of Mortgage: An assignment of the Mortgage,
notice of transfer
or equivalent
instrument in recordable form (other than the assignee's name
and
recording information
not yet returned from the recording office), reflecting
the sale of the Mortgage to the Trustee.
Available Funds: With respect to any Distribution Date and each
Loan Group,
to the extent received
by the Securities
Administrator (x) the
sum of (i) all
scheduled installments
of interest
(net of the related
Expense Fees and any
Lender paid Primary Mortgage Insurance Policy premiums) and
principal due on the
Due Date on the related Mortgage Loans in the related Due Period
and received by
the Servicers on or prior to the related Determination Date, together with any
P&I Advances in
respect thereof;
(ii) all Condemnation Proceeds, Insurance
Proceeds, Liquidation
Proceeds and Subsequent Recoveries received by the
Servicers during
the related Prepayment Period (in each case, net of
unreimbursed expenses
incurred in connection
with a liquidation or foreclosure
and unreimbursed
Advances, if any); (iii) all curtailments or Principal
Prepayments in Full on
the related Mortgage
Loans received by the Servicers
during the related
Prepayment Period
together with all
Compensating
Interest
paid by the Servicers in connection therewith (excluding any Prepayment
Charges); (iv)
all Substitution Adjustment Amounts with respect to the
substitutions of Mortgage Loans in such Loan Group that occur on or
prior to the
related Determination
Date; (v) all amounts received with respect to such
Distribution Date
as the Repurchase Price in respect of a Mortgage Loan
repurchased by a
Mortgage Loan Seller or the Sponsor on or prior to the related
Determination Date; and (vi) the proceeds with respect to the
termination of the
Trust Fund pursuant to
clause (a) of Section
12.01; reduced by (y)
amounts in
reimbursement for Advances previously made with respect to the
Mortgage Loans in
such Loan Group and other amounts as to which the Servicers,
the Depositor, the
Master Servicer, the Securities Administrator or the Trustee are
entitled to be
paid or reimbursed pursuant to the Servicing Agreements or this
Agreement.
-13-
<PAGE>
Available Funds Cap: with respect to any Distribution Date on or
before the
Distribution Date in
August 2010 and the
Class I-A-3
Certificates, 6.00%
per
annum plus amounts, if
any, paid pursuant to
the Yield Maintenance
Agreement
(which shall not be part of any REMIC hereunder) and on deposit in the Reserve
Fund (which shall not be part of any REMIC hereunder) up to an amount equal to
the Yield Supplement Amount for that Distribution Date, expressed
as a per annum
rate. With respect to
any Distribution
Dates after the
Distribution
Date in
August 2010, 6.00% per annum.
Bankruptcy Amount:
As of any date of
determination,
an amount equal to
$100,000 as reduced by (i) the aggregate amount of Bankruptcy Losses allocated
solely to one or more
specific Classes
of Certificates in accordance with
Section 4.04 and (ii) any permissible reductions in the Bankruptcy Amount as
evidenced by a letter of each Rating Agency to the Securities
Administrator and
the Master Servicer to
the effect that any such reduction will not result in a
downgrading, qualification or withdrawal of the then current
ratings assigned to
the Classes of Certificates rated by it.
Bankruptcy Losses:
Any Realized
Losses attributable to certain actions
which may be taken by a bankruptcy court in connection with a Mortgage Loan,
including a reduction by a bankruptcy court of the Stated
Principal Balance of
or the Mortgage Rate on a Mortgage Loan or an extension of
maturity.
Back-up Certification: As defined in Section 3.05.
Book-Entry Certificates: As specified in the Preliminary
Statement.
Business Day: Any day
other than (i) Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions, in (a) the States of New York,
California, Maryland
or Minnesota, (b) the
Commonwealth of Pennsylvania or any
other State in which any Servicer's servicing operations are
located, or (c) any
State in which the
Corporate Trust Office is located, are authorized or
obligated by law or executive order to be closed.
Cash
Liquidation: As to any
defaulted Mortgage
Loan other than a Mortgage
Loan as to which an REO Acquisition occurred, a determination by the
applicable
Servicer that it has received all Insurance Proceeds, Liquidation Proceeds and
other payments or cash
recoveries
which such Servicer
reasonably and in
good
faith expects to be finally recoverable with respect to such
Mortgage Loan.
Certificate: Any
one of the Certificates executed by the Securities
Administrator in substantially the forms attached hereto as
exhibits.
Certificate Group: As
applicable, each of
the Subgroup I-1
Certificates,
the Subgroup I-2 Certificates, the Subgroup I-3 Certificates,
the Subgroup I-4
Certificates or the Subgroup II-1 Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who
is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
5.02.
-14-
<PAGE>
Certificateholder or
Holder: The person in
whose name a
Certificate
is
registered in the Certificate Register, except that, solely for the
purpose of
giving any consent pursuant to this Agreement, any Certificate
registered in the
name of the Depositor or any Affiliate of the Depositor
shall be deemed not
to
be Outstanding and the Percentage Interest evidenced thereby shall
not be taken
into account in determining whether the requisite amount of
Percentage Interests
necessary to effect such consent has been obtained; provided, however, that if
any such Person
(including
the Depositor) owns 100.00% of the Percentage
Interests evidenced
by a Class of
Certificates,
such Certificates shall be
deemed to be Outstanding for purposes of any provision 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 Securities Administrator 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 Parties: As defined in Section 3.05.
Certifying Person: As defined in Section 3.05.
Citibank: Citibank, N.A. or its successor in interest.
CitiMortgage: CitiMortgage, Inc. or its successor in interest.
Class: All Certificates bearing the same class designation
as set forth in
the Preliminary Statement.
Class I-A Certificates: As specified in the Preliminary
Statement.
Class I-A-1 Certificates: All Certificates bearing the Class
designation of
"Class I-A-1".
Class I-A-2 Certificates: All Certificates bearing the Class
designation of
"Class I-A-2".
Class I-A-3 Certificates: All Certificates bearing the Class
designation of
"Class I-A-3".
Class I-A-4 Certificates: All Certificates bearing the Class
designation of
"Class I-A-4".
Class I-A-5 Certificates: All Certificates bearing the Class
designation of
"Class I-A-5".
Class I-A-6 Certificates: All Certificates bearing the Class
designation of
"Class I-A-6".
Class I-A-7 Certificates: All Certificates bearing the Class
designation of
"Class I-A-7".
-15-
<PAGE>
Class I-A-8 Certificates: All Certificates bearing the Class
designation of
"Class I-A-8".
Class I-A-9 Certificates: All Certificates bearing the Class
designation of
"Class I-A-9".
Class I-A-10
Certificates: All
Certificates bearing the Class designation
of "Class I-A-10".
Class I-A-11
Certificates: All
Certificates bearing the Class designation
of "Class I-A-11".
Class I-A-12
Certificates: All
Certificates bearing the Class designation
of "Class I-A-12".
Class I-IO Notional Amount: Class I-IO Notional Amount on each
Distribution
Date will be equal to the aggregate Stated Principal Balance of the Mortgage
Loans in Loan Group I having Net Mortgage Rates greater than or equal to 8.00%
per annum (the "Loan Group I Premium Loans") multiplied by the following
fraction:
weighted average Net Mortgage Rate of all
Loan Group I Premium Loans minus 8.00%
-------------------------
6.00%.
Class II-A Certificates: The Class II-A-1 Certificates.
Class II-A-1
Certificates: All
Certificates bearing the Class designation
of "Class II-A-1".
Class II-IO
Notional Amount: Class II-IO Notional Amount on each
Distribution Date will be equal to the aggregate Stated Principal
Balance of the
Mortgage Loans in Loan
Group II having Net Mortgage Rates greater than or equal
to 5.50% per annum
(the "Loan Group II Premium Loans") multiplied by the
following fraction:
weighted average Net Mortgage Rate of all
Loan Group II Premium Loans minus 5.50%
-------------------------
5.50%.
Class A Certificates: As specified in the Preliminary
Statement.
Class B-1 Certificates: All Certificates bearing the Class designation
of
"Class B-1".
Class B-2 Certificates: All Certificates bearing the Class designation
of
"Class B-2".
-16-
<PAGE>
Class B-3 Certificates: All Certificates bearing the Class designation
of
"Class B-3".
Class B-4 Certificates: All Certificates bearing the Class designation
of
"Class B-4".
Class B-5
Certificates: All
Certificates bearing
the Class designation of
"Class B-5".
Class B-6 Certificates: All Certificates bearing the Class designation
of
"Class B-6".
Class Certificate Balance: With respect to any Offered
Certificate, other
than the Interest Only Certificates, as of any date of
determination, an
amount
equal to the initial Class Certificate Balance of that Certificate
reduced by
the aggregate of (a) all amounts allocable to principal
previously
distributed
with respect to that Certificate and (b) any reductions in the
Class Certificate
Balance of
that Certificate deemed to have occurred in connection with
allocations of
Realized Losses in the manner described in this Agreement,
provided that,
the Class Certificate Balance of any Class of Certificates
outstanding with the
Highest Priority to
which Realized
Losses related to a
Mortgage Loan, other than Excess Bankruptcy Losses, Excess Fraud Losses, Excess
Special Hazard Losses and Extraordinary Losses, have been allocated shall be
increased by any
Subsequent
Recoveries
related to that Mortgage Loan not
previously allocated
as set forth in Section 4.02(h), and the Class Certificate
Balance of the Class of Certificates with a Class Certificate Balance greater
than zero with the Lowest Priority shall be further
reduced by an amount
equal
to the percentage
interest evidenced
thereby multiplied by the excess, if any,
of (i) the then-aggregate Class Certificate Balance of all Classes of
Certificates then
outstanding
over (ii) the
then-aggregate
Stated Principal
Balance of all of the Mortgage Loans.
Class P Certificates:
All certificates
bearing the
designation of "Class
P".
Class P Reserve Fund: The Eligible Account established pursuant to Section
3.01(e).
Class PO Collection
Shortfall:
With respect to each Loan Group and
each
Cash Liquidation or
REO Disposition
of a Discount
Mortgage Loan in such
Loan
Group in connection with each Distribution Date or any prior
Distribution Date,
the extent that (1) the amount included under clause (iii) of the
definition of
Class PO Principal
Distribution Amount
for that Distribution Date is less than
(2) the amount described in (a) under clause (iii) of the
definition of Class PO
Principal Distribution Amount.
Class PO Principal
Distribution Amount:
With respect to any
Distribution
Date and each Loan Group, an amount equal to the aggregate of:
(i) the related
Discount Fraction of the principal portion of the
Scheduled Payment on
each Discount Mortgage Loan in the related Loan Group
due
during the related Due Period, whether or not received on or prior to
the
related Determination
Date, less the related
Discount Fraction of the
principal portion of any related Debt Service
-17-
<PAGE>
Reductions which together with other Bankruptcy Losses are in
excess of the
Bankruptcy Amount;
(ii) the related
Discount Fraction of
the principal
portion of all
unscheduled
collections on each Discount Mortgage Loan in the related Loan
Group received
during the preceding
calendar month or, in the case of a
Principal Prepayment,
during the related
Prepayment
Period (other than
amounts received in
connection with a Cash
Liquidation or REO Disposition
of a
Discount Mortgage Loan
in the related Loan Group described in clause
(iii) below) including
Principal Prepayments and repurchases of
Discount
Mortgage Loans (or, in
the case of a
substitution of a
Deleted Mortgage
Loan
that is a Discount
Mortgage Loan, the Discount Fraction of the amount
of
any Substitution
Adjustment Amount deposited in the Collection Account
in
connection with such substitution);
(iii) in connection with the Cash Liquidation or REO Disposition of
a
Discount Mortgage Loan in the related Loan Group that did not
result in any
Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses
or
Extraordinary
Losses, an amount equal to the lesser of (a) the
applicable Discount
Fraction of the Stated Principal Balance of that
Discount Mortgage Loan
immediately prior to that Distribution Date and (b)
the
aggregate amount of
collections on that Discount Mortgage Loan to the
extent applied as recoveries of principal;
(iv) any amounts allocable to principal for the related Loan Group
for
any
previous Distribution
Date calculated
pursuant to clauses (i) through
(iii) above that remain undistributed; and
(v) an amount equal to the aggregate of the related Class PO
Collection Shortfalls
for all Distribution Dates on or prior to such
Distribution Date,
less any amounts paid under this clause on a prior
Distribution Date, until paid in full; provided, that distributions under
this
clause (v) shall only be made to the extent of Eligible
Funds for the
related Loan Group on any Distribution Date.
Notwithstanding the
foregoing, on or after
the Credit Support
Depletion
Date, the Class PO Principal Distribution Amount with respect to any
Distribution Date and
Loan Group
will equal the Discount Fraction of the
principal portion of Scheduled Payments and all collections other
than Scheduled
Payments received or
advanced in respect of the Discount Mortgage Loans in the
related Loan Group.
Class R Certificates: As set forth in the Preliminary
Statement.
Closing Date: December 28, 2006.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account:
With respect to each Servicer, the account defined as
"Custodial Account" in the related Servicing Agreement.
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<PAGE>
Commission: The United States Securities and Exchange
Commission.
Compensating Interest:
For any Distribution Date, the lesser of (a) the
amount, if any, by
which the Prepayment
Interest Shortfall
related to a Loan
Group, if any,
for such Distribution Date, with respect to all voluntary
Principal Prepayments
for such Loan Group
(excluding
any payments
made upon
liquidation of any Mortgage Loan) exceeds all Prepayment
Interest Excesses for
such Distribution Date
and for such Loan Group, and (b) the aggregate amount of
the Servicing Fees actually retained by or paid to the
applicable Servicer
for
such Distribution Date and for such Loan Group.
Condemnation Proceeds:
All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of
the
power of eminent domain or condemnation.
Corporate Trust Office: With respect to the Securities Administrator, (i)
for transfer,
presentation or surrender of Certificates, the office at 111
Wall
Street, 15th Floor Window, New York, New York 10005, Attention:
Corporate Trust
Services - HALO 2006-2, and (ii) for all other purposes,
388 Greenwich
Street,
14th Floor, New York, New York 10013, Attention: Structured Finance Agency and
Trust - HALO 2006-2 or at such other address as the Securities
Administrator may
designate from time to time by notice to the Certificateholders,
the Depositor,
the Master Servicer and the Trustee. With respect to the Trustee,
the designated
office of the Trustee in the State of California at which any
particular
time
its corporate trust
business with respect
to this Agreement is
administered,
which office at the date of the execution of this Agreement is located at 1761
East St. Andrew
Place, Santa Ana, California 92705 4934, Attention: Trust
Administration -
HB06L2, facsimile
number (714)
247-6329, and its telephone
number is (714)
247-6000 and which is also the address to which notices to and
correspondence with the Trustee under this Agreement should be
directed.
Countrywide Servicing: Countrywide Home Loans Servicing LP.
Credit Support
Depletion Date: The
first Distribution
Date on which the
aggregate Class Certificate Balances of the Subordinate
Certificates have
been
reduced to zero.
Curtailment: Any
Principal Prepayment
made by a Mortgagor
which is not a
Principal Prepayment in Full.
Custodial File: The meaning assigned to such term in Section
2.01(b).
Custodian: Initially,
Wells Fargo, or any
successor custodian
appointed
hereunder.
Cut-off Date: December 1, 2006.
Cut-off Date
Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the Cut-off Date.
Cut-off Date
Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the
Cut-off Date.
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<PAGE>
Data
Tape Information: With respect to each Mortgage Loan, the same
information (provided
as of the Cut-off Date) included in the data fields
specified under the
definition of
"Mortgage Loan
Schedule" in the
applicable
Transfer Agreement,
with such additions and modifications as agreed upon by the
applicable Mortgage Loan Seller and the Depositor.
Debt
Service Reduction: With respect to any Mortgage Loan, a reduction
by a
court of competent jurisdiction in a proceeding under the United States
Bankruptcy Code in the
Scheduled Payment for such Mortgage Loan which became
final and
non-appealable, except
such a reduction
resulting from a
Deficient
Valuation or any reduction that results in a permanent forgiveness
of principal.
Deficient Valuation:
With respect to any Mortgage Loan, a valuation of the
related Mortgaged
Property by a court of
competent jurisdiction
in an amount
less than then
outstanding
principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the United
States Bankruptcy
Code.
Definitive
Certificates:
Any Certificate
evidenced
by a Physical
Certificate and any
Certificate
issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Deleted Mortgage
Loan: A Mortgage
Loan repurchased by a Mortgage Loan
Seller or the Sponsor and removed from the Trust Fund.
Denomination: With respect to each Certificate, the amount set
forth on the
face thereof
as the "Initial Certificate Balance of this Certificate" (or
initial notional balance, in the case of the Interest Only
Certificates) or the
Percentage Interest appearing on the face thereof.
Depositor: HSI Asset
Securitization
Corporation, a
Delaware corporation,
and its successors in interest.
Depository: The
initial Depository
shall be The Depository Trust Company,
the nominee of which is CEDE & Co., as the registered Holder of the Book-Entry
Certificates. The
Depository shall at all times be a "clearing corporation" as
defined in Section
8-102(a)(5) of the Uniform Commercial Code of the State of
New York.
Depository
Institution: Any
depository
institution
or trust company,
including the Trustee and the Securities Administrator, that (a) is
incorporated
under the laws of the
United States of
America or any State
thereof, (b) is
subject to supervision and examination by federal or state
banking
authorities
and (c) has outstanding unsecured commercial paper or other
short-term unsecured
debt obligations that are rated P-1 by Moody's, F1+ by Fitch and
A-1 by Standard
& Poor's.
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.
Designated Rates:
For Subgroup I-1,
6.0%, for Subgroup I-2, 7.0%, for
Subgroup I-3, 7.5%, for Subgroup I-4, 8.0% and for Subgroup II-1,
5.5%.
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<PAGE>
Determination Date:
For each Remittance Date (i) with respect to Wells
Fargo Bank, as Servicer, and Countrywide Servicing, the Business
Day immediately
preceding such Remittance Date, (ii) with respect to
Wachovia, the 15th day
of
the calendar month in which such Remittance Date occurs, or if that
day is not a
Business Day, the immediately succeeding business day and (iii)
with respect to
HSBC Mortgage, the
16th day of the calendar month in which such Remittance Date
occurs, or if
that day is not a Business Day, the immediately succeeding
Business Day.
Discount Fraction:
With respect to each Discount Mortgage Loan (a) in Loan
Group I, a fraction,
expressed as a percentage, the numerator of which is 6.00%
minus the Net Mortgage Rate for such Discount Mortgage Loan in Loan Group I
and
the denominator
of which is 6.00% and (b) in Loan Group II, a fraction,
expressed as a
percentage,
the numerator of which is 5.50% minus the Net
Mortgage Rate
for such Discount Mortgage Loan in Loan Group II and the
denominator of which is 5.50%.
Discount Mortgage
Loan: With respect to Loan Group I, any Mortgage Loan in
Loan Group I with a
Net Mortgage
Rate less than
6.00% per annum, and with
respect to Loan Group II, any Mortgage Loan in Loan Group II with a
Net Mortgage
Rate less than 5.50% per annum.
Disqualified Non-U.S.
Person: With respect
to a Class R Certificate, any
Non-U.S. Person or agent thereof other than (i) a Non-U.S. Person
that holds the
Class R Certificate in connection with the conduct of a trade or
business within
the United
States and has furnished the transferor and the Securities
Administrator with an
effective IRS Form W-8ECI or (ii) a Non-U.S. Person that
has delivered to both the transferor and the Securities
Administrator an opinion
of a nationally
recognized
tax counsel to the
effect that the
transfer of a
Class R Certificate to it is in accordance with the requirements of
the Code and
the regulations
promulgated
thereunder
and that such
transfer of a Class R
Certificate will not be disregarded for federal income tax
purposes.
Distribution Account:
The separate Eligible Account created and maintained
by the Securities
Administrator pursuant
to Section 3.01(c) in the name of the
Securities
Administrator as paying agent for the benefit of the Trustee and
the
Certificateholders and
designated "Citibank,
N.A. as paying agent in trust for
registered
holders of
HSI Asset Loan Obligation Trust 2006-2 Mortgage
Pass-Through
Certificates, Series
2006-2". Funds in the
Distribution
Account
shall be held in trust for the Certificateholders for the uses
and purposes set
forth in this Agreement.
Distribution Date: The
25th day of each calendar month, or if such day is
not a Business Day, the next succeeding Business Day, commencing in January,
2007.
Document Certification and Exception Report: The form of report
attached to
Exhibit F hereto.
Due
Date: For a Mortgage
Loan, the date specified in the related Mortgage
Note on which the
monthly scheduled
payment of
interest and principal (or
interest only during the applicable interest-only period, if any, following
origination) is due.
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<PAGE>
Due
Period: With respect to any Distribution Date, the period
commencing on
the second
day of the
calendar month preceding the month in which such
Distribution Date
occurs and ending on the first day of the calendar month in
which such Distribution Date occurs.
EDGAR: The Commission's Electronic Data Gathering and Retrieval
System.
Eligible Account:
Either (i) an account maintained with a federal or
state-chartered
depository institution
or trust company that complies with the
definition of
Eligible Institution, (ii) an account maintained with the
corporate trust
department
of a federal depository institution or
state-chartered
depository
institution subject
to regulations regarding
fiduciary funds on
deposit similar to Title 12 of the U.S.
Code of Federal
Regulation Section
9.10(b), which, in either case, has
corporate trust powers
and is acting in its fiduciary capacity or (iii) any other account
acceptable to
each Rating Agency.
Eligible Accounts may
bear interest, and may
include, if
otherwise qualified
under this definition, accounts maintained with the
Securities Administrator.
Eligible Funds: With
respect to any Distribution Date and each Loan Group,
the portion, if any,
of the Available Funds for such Loan Group remaining after
reduction by the sum of the related Senior Principal Distribution Amount (in
each case determined
without regard to Section 4.02(a)(iii)(E)), the Class PO
Principal Distribution
Amount (determined
without regard to
clause (v) of its
definition), the
Senior Interest
Distribution Amount, and the aggregate amount
of Accrued Certificate
Interest on the Senior Subordinate Certificates, Class
B-4 and Class B-5 Certificates.
Eligible Institution:
A federal or state-chartered depository institution
or trust company the commercial paper, short-term debt obligations, or other
short-term deposits of
which are rated at least "A-1+" by Standard & Poor's
if
the amounts on deposit
are to be held in the
account for no more than 365 days
(or at least "A-2" if
the amounts on deposit
are to be held in the account for
no more than 30 days),
"P-1" by Moody's and "F1+" by Fitch (or a
comparable
rating if another
Rating Agency is specified by the Depositor by written notice
to each of the Servicers and the Securities Administrator) or long-term
unsecured debt
obligations are rated at least "AA-" by Standard & Poor's if
the
amounts on deposit are to be held in the account for no more than
365 days.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying
Underwriting: A
best efforts or firm commitment
underwriting or
private placement
that meets the
requirements
of Prohibited
Transaction Exemption
("PTE") 96-84, 61 Fed.
Reg. 58234 (1996), as
amended by
PTE 97-34, 62 Fed. Reg. 39021 (1997), PTE 2000-58, 65 Fed. Reg.
67765 (2000) and
PTE 2002-41, 67 Fed.
Reg. 54487 (2002) (or any successor thereto), or any
substantially similar administrative exemption granted by the U.S.
Department of
Labor.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: With respect to each Servicer, the meaning assigned
to such
term in the related Servicing Agreement.
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<PAGE>
Event of Default: With
respect to each Servicer, the meaning assigned to
such term in the related Servicing Agreement.
Excess Bankruptcy Losses: Bankruptcy Losses on the Mortgage Loans
in excess
of the Bankruptcy Amount.
Excess Fraud
Losses: Fraud Losses on the Mortgage
Loans in excess of
the
Fraud Loss Amount.
Excess Special Hazard
Losses: Special Hazard
Losses on the Mortgage Loans
in excess of the Special Hazard Amount.
Excess Subordinate
Principal Amount: With respect to any Distribution Date
on which the Class Certificate Balance of Class or Classes of
Certificates then
outstanding with the
Lowest Priority is to be reduced to zero and on which
Realized Losses on the Mortgage Loans are to be allocated to that
Class or those
Classes, the amount,
if any, by which (i)
the amount of
principal that
would
otherwise be
distributable on that
Class or those Classes of Certificates on
that Distribution Date is greater than (ii) the excess, if any, of
the aggregate
Class Certificate
Balance of that Class or those Classes of Certificates
immediately prior to
that Distribution
Date over the aggregate amount of
Realized Losses to be
allocated to that Class or those Classes of Certificates
on that Distribution
Date, as reduced by any amount
calculated
pursuant to
clause (v) of the definition of "Class PO Distribution Amount."
Exchange Act: The
Securities
Exchange Act of 1934,
as amended,
and the
rules and regulations thereunder.
Expense Fees:
As to each Mortgage
Loan and any
Distribution
Date, the
Servicing Fees.
Extraordinary Loss: A
Realized Loss
resulting from damage
to a Mortgaged
Property that was occasioned by war, civil insurrection, certain governmental
actions, nuclear reaction and certain other risks.
Fannie Mae: The Federal National Mortgage Association, or any successor
thereto.
Final Recovery
Determination: With
respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property
purchased by the
Mortgage Loan
Seller or the Sponsor
as contemplated
by this Agreement, any
Transfer Agreement or the Purchase Agreement, as applicable), a determination
made by any
Servicer that all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries which the
Servicer, in its
reasonable good faith
judgment, expects to be finally recoverable in respect
thereof have been so recovered.
Fitch: Fitch, Inc., or
any successor thereto.
If Fitch is designated as a
Rating Agency in the
Preliminary Statement,
for purposes of
Section 12.05 the
address for notices to Fitch shall be Fitch, Inc., One State Street Plaza,
New
York, New York 10004, Attention:
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<PAGE>
MBS Monitoring - HALO (HSI Asset Loan Obligation Trust 2006-2), or such other
address as Fitch may
hereafter furnish
to the Depositor and the Securities
Administrator.
Form
8-K Disclosure Information: As defined in Section 8.12(a)(iii).
Fraud Loss Amount: As
of the Closing Date, an amount equal to 2.00% of the
Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, subject
to reduction from time
to time, by the amount of Fraud Losses allocated to the
Certificates in accordance with Section 4.04. In addition,
on each anniversary
of the Cut-off Date,
the Fraud Loss Amount
will be reduced as follows: (a) on
the first, second,
third and fourth
anniversaries
of the Cut-off Date,
to an
amount equal
to the lesser of (i) 2% of the then-current Stated Principal
Balance of the Mortgage Loans in the case of the first such
anniversary
and 1%
of the then-current
Stated Principal
Balance of the Mortgage Loans in the case
of the second, third
and fourth such
anniversaries and (ii)
the excess of the
Fraud Loss Amount as of the preceding anniversary of the Cut-off Date over the
cumulative amount of
Fraud Losses allocated
to the Certificates in
accordance
with Section
4.04 since such preceding anniversary; and (b) on the fifth
anniversary of the Cut-off Date, to zero.
Fraud Losses: A
Realized Loss incurred on defaulted Mortgage Loans as to
which there was a fraud in the origination of such Mortgage
Loan.
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.
Group 1 Certificates: As specified in the Preliminary
Statement.
Group I Mortgage Loans: The Mortgage Loans identified on
the Mortgage Loan
Schedule as Group I Mortgage Loans.
Group 2 Certificates: As specified in the Preliminary
Statement.
Group II Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan
Schedule as Group II Mortgage Loans.
Group
Subordinate
Amount: With
respect to each Subgroup and any
Distribution Date, the
excess of the sum of the Subgroup Fraction of the Stated
Principal Balance for
all Mortgage Loans included in such Subgroup (other than
the Discount Fraction
of any Discount
Mortgage Loan) immediately prior to such
Distribution Date
over the total Class Certificate Balance of the Senior
Certificates (other
than any Class PO Certificates) of the related Certificate
Group immediately prior to that Distribution Date.
Highest Priority:
As of any date of determination, the Class of
Certificates then outstanding with a Certificate Balance greater
than zero, with
the earliest priority for payments pursuant to Section 4.02(a), in
the following
order: Senior
Certificates,
Class B-1, Class B-2,
Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates.
HSBC
Mortgage: HSBC Mortgage Corporation (USA).
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<PAGE>
Independent: When used
with respect to any
accountants,
a Person who is
"independent" within the meaning of Rule 2-01(B) of the
Commission's
Regulation
S-X. Independent means, when used with respect to any other Person,
a Person who
(A) is in fact independent of another specified Person and any
Affiliate of such
other Person,
(B) does not have any
material direct or indirect financial
interest in such other Person or any Affiliate of such other
Person, (C) is not
connected with such
other Person or any
Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or
Person
performing similar
functions and (D) is not a member of the immediate family of
a Person defined in clause (B) or (C) above.
Initial Certificate
Balance: With respect to each Class of
Certificates,
the Certificate Balance of such Class of Certificates as of the
Cut-off Date, in
the amount set forth in the Preliminary Statement.
Initial Certification: As defined in Section 2.02.
Initial Subordinate
Class Percentage: With respect to each Class of
Subordinate
Certificates, an
amount which is equal
to the initial
aggregate
Certificate Balance of
such Class of
Subordinate
Certificates divided
by the
aggregate Stated
Principal Balance of
all the Mortgage Loans as of the Cut-off
Date as follows:
<TABLE>
<S>
<C>
<C>
--------------------------- --------------- ---------------------
Class B-1:
2.35%
Class B-4: 0.60%
--------------------------- --------------- ---------------------
Class B-2:
1.00%
Class B-5: 0.50%
--------------------------- --------------- ---------------------
Class B-3:
0.60%
Class B-6: 0.20%
--------------------------- --------------- ---------------------
</TABLE>
Insurance Policy:
With respect to any
Mortgage Loan included in the Trust
Fund, any insurance policy, including, but not limited to, any standard
hazard
insurance policy,
flood insurance policy, earthquake insurance policy, title
insurance policy or
Primary Mortgage
Insurance Policy (if any), including all
riders and endorsements thereto in effect, including any replacement policy
or
policies.
Insurance Proceeds:
With respect to each Mortgage Loan, proceeds of
Insurance Policies insuring the Mortgage Loan or the related
Mortgaged Property.
Interest Accrual
Period: For each Class
of Certificates
(other than the
Adjustable Rate
Certificates)
and any Distribution Date, the calendar month
immediately preceding
the month in which the related Distribution Date occurs,
assuming a 360-day year consisting of twelve 30-day months. The
Interest Accrual
Period for the Adjustable Rate Certificates will be the actual number of
days
elapsed during the period commencing on the immediately
preceding Distribution
Date (or, for the initial Distribution Date, the Closing Date) and
ending on the
day immediately
preceding the current Distribution Date assuming a 360-day year
consisting of twelve 30-day months.
Interest Only Certificates: As specified in the Preliminary
Statement.
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<PAGE>
Interest Transfer Amount: With respect to any Undercollateralized
Group and
any Distribution Date, one month's interest on the applicable
Principal Transfer
Amount at the Designated Rate for the related Subgroup, plus any shortfall of
interest on the Senior Certificates of the applicable Undercollateralized Group
from prior Distribution Dates.
IRS:
The Internal Revenue Service.
Junior Subordinate Certificates: As specified in the Preliminary
Statement.
Late
Collections: With respect to any Mortgage Loan and any Due Period,
all
amounts received after the Determination Date immediately following such Due
Period, whether as late payments of Scheduled Payments or as
Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds, Subsequent Recoveries
or otherwise,
which represent late
payments or collections of principal and/or interest due
(without regard to any
acceleration of payments under the related Mortgage and
Mortgage Note) but delinquent for such Due Period and not
previously recovered.
LIBOR: With respect to
any Interest Accrual Period for the Adjustable Rate
Certificates, the per
annum rate determined on the LIBOR Determination Date in
the following
manner by the Securities Administrator on the basis of the
"Interest Settlement
Rate" set by the British Bankers' Association (the "BBA")
for one-month
United States dollar deposits, as such rates appear on the
Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination
Date.
If
on such a LIBOR
Determination Date,
the BBA's Interest Settlement Rate
does not appear on the Telerate Page 3750 as of 11:00 a.m.
(London time), or
if
the Telerate
Page 3750 is not available on such date, the Securities
Administrator will
obtain such rate from
Reuters' "page LIBOR
01" or, if such
rate does not appear therein, the Securities Administrator will
obtain such rate
from Bloomberg's
page "BBAM." If such rate is not published for such LIBOR
Determination Date,
LIBOR for such date
will be the most
recently published
Interest Settlement
Rate. In the event
that the BBA no longer sets an Interest
Settlement Rate,
the Securities Administrator will designate an alternative
index that has
performed,
or that the
Securities
Administrator
expects to
perform, in a manner
substantially
similar to the BBA's
Interest Settlement
Rate. The Securities Administrator will select a particular index as the
alternative index only if it receives an Opinion of Counsel, which
opinion shall
be an expense reimbursed from the Distribution Account pursuant to
Section 4.01,
that the selection of
such index will not cause any of the REMICs to lose their
classification as REMICs for federal income tax purposes.
LIBOR Determination
Date: With respect to
any Interest Accrual Period for
the Adjustable Rate
Certificates, the
second London Business Day preceding the
commencement of such Interest Accrual Period.
Liquidated Mortgage
Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was
liquidated in the
calendar month preceding the month of such Distribution Date and as
to which the
applicable Servicer
has certified to the Securities Administrator that it has
received all amounts it expects to receive in
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<PAGE>
connection with the
liquidation
of such Mortgage Loan including the final
disposition of an REO Property.
Liquidation Proceeds: Cash received in connection with the
liquidation of a
Liquidated Mortgage Loan, whether through a trustee's sale,
foreclosure sale
or
otherwise.
Loan
Group: The Group I
Mortgage Loans or the Group II Mortgage Loans, as
applicable.
Loan
Group I: The group of Mortgage Loans comprised of the Group I
Mortgage
Loans.
Loan
Group II: The group of Mortgage Loans comprised of the Group II
Mortgage Loans.
London Business Day: Any day on which dealings in deposits of
United States
dollars are transacted in the London interbank market.
Lower Priority:
As of any date of determination and any Class of
Certificates,
any other Class of Certificates then outstanding with a
Certificate Balance greater than zero, with later priority for
payments pursuant
to Section 4.02(a).
Lowest Priority: As of any date of determination, the Class of
Certificates
then outstanding
with the latest
priority for payments pursuant to Section
4.02(a), in the
following order:
Senior Certificates, Class B-6, Class B-5,
Class B-4, Class B-3, Class B-2 and Class B-1 Certificates.
Master Servicer:
CitiMortgage, Inc., and any successor in interest, and if
a successor master servicer is appointed hereunder, such
successor.
Master Servicer Event of Default: As defined in Section 9.06.
Master Servicer Float Period: With respect to each Distribution Date and
the related amounts in the Master Servicing Account, the period commencing on
the applicable Remittance Date immediately preceding the related
Master Servicer
Remittance Date and ending on such Master Servicer Remittance
Date.
Master Servicer
Remittance Date: As to any Distribution Date, 12:00 noon
New York City time on the first Business Day immediately preceding such
Distribution Date.
Master Servicing
Account: The separate Eligible Account created and
maintained by the Master Servicer pursuant to Section 3.01(c) in
the name of the
Master Servicer for
the benefit of the Trustee and the Certificateholders and
designated
"CitiMortgage, Inc.,
in trust for
registered holders of
HSI Asset
Loan Obligation Trust 2006-2 Mortgage Pass-Through Certificates,
Series 2006-2".
Funds in the Master Servicing Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this
Agreement.
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Master Servicing
Officer: Any officer
of the Master Servicer involved in,
or responsible
for, the administration and master servicing of the Mortgage
Loans.
MERS: Mortgage
Electronic
Registration
Systems,
Inc.,
a Delaware
corporation, and its successors in interest.
MERS
Designated
Mortgage Loan: Any Mortgage Loan as to
which the related
Mortgage, or an Assignment of Mortgage, has been or will be
recorded in the name
of MERS, as nominee for the holder from time to time of the
Mortgage Note.
MERS
Procedure Manual:
The MERS Procedures
Manual, as it may be
amended,
supplemented or otherwise modified from time to time.
MERS(R) System:
MERS
mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
MIN:
The Mortgage
Identification Number
of Mortgage Loans registered with
MERS on the MERS(R) System.
Monthly Statement: The
statement made available to the Certificateholders
by the Securities Administrator through its website pursuant to
Section 4.03.
Moody's: Moody's
Investors Service, Inc. If Moody's is designated as a
Rating Agency in the Preliminary Statement, for purposes of Section
13.05(c) the
address for notices to Moody's shall be Moody's Investors Service, Inc., 99
Church Street,
New York, New York 10007, Attention: Residential Mortgage
Pass-Through Group,
HALO (HSI Asset Loan
Obligation Trust
Series 2006-2), or
such other address as
Moody's may hereafter
furnish to the
Depositor and the
Securities Administrator.
Mortgage: The mortgage, deed of trust or other instrument
identified on the
Mortgage Loan Schedule as securing a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
contained
in either the Servicing File or Custodial File.
Mortgage Loan:
An individual Mortgage Loan that is the subject of
this
Agreement, each
Mortgage Loan
originally
sold and subject to
this Agreement
being identified on
the Mortgage Loan
Schedule, which
Mortgage Loan includes,
without limitation,
the Mortgage File, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Subsequent Recoveries,
Condemnation Proceeds,
Insurance Proceeds,
REO Disposition,
Prepayment Charges, and all other rights,
benefits, proceeds
and obligations arising from or in connection with such
Mortgage Loan, excluding replaced or repurchased Mortgage
Loans.
Mortgage Loan
Schedule: A schedule of Mortgage Loans prepared by the
Depositor, delivered
to the Trustee on the Closing Date and referred to on
Schedule I, such schedule setting forth the Data Tape
Information with
respect
to each Mortgage Loan.
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Mortgage Loan Sellers:
The entities which
sold the Mortgage
Loans to the
Sponsor pursuant to the Transfer Agreements.
Mortgage Note:
The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
Mortgage Rate:
With respect to any Mortgage Loan, the annual rate of
interest borne by the related Mortgage Note from time to time, as
of the related
Due Date.
Mortgaged Property:
With respect to each
Mortgage Loan, the real property
(or leasehold estate, if applicable) identified on the Mortgage
Loan Schedule as
securing repayment of the debt evidenced by the related Mortgage
Note.
Mortgagor: The obligor(s) on a Mortgage Note.
NAS
Prepayment Percentage:
With respect to any Distribution Date occurring
prior to the Distribution Date in January 2012, 0%. For any
Distribution
Date
occurring on or after January 2012, a percentage determined as
follows:
(i)
for any Distribution Date on or after January 2012 and prior to
January 2013, 30%;
(ii)
for any Distribution
Date on or
after January 2013 and prior to
January 2014, 40%;
(iii) for any
Distribution Date on
or after January
2014 and prior to
January 2015, 60%;
(iv)
for any Distribution
Date on or
after January 2015 and prior to
January 2016, 80%;
and
(v)
for any Distribution
Date after January 2016, 100%.
Net
Mortgage Rate: As to any Mortgage Loan and any Distribution Date, the
excess of the Mortgage
Rate over the sum of the applicable Servicing Fee Rate
and the rate at which any lender paid Primary Mortgage Insurance
Policy premiums
are paid, if applicable.
Non-Discount Mortgage
Loan means the Mortgage Loans in each Loan Group
other than the Discount Mortgage Loans included in that Loan
Group.
Non-Permitted Transferee: A Person other than a Permitted
Transferee.
Non-U.S. Person: A person that is not a U.S. Person.
Nonrecoverable P&I Advance: Any P&I Advance previously
made or proposed to
be made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment
(taking into account
Accepted Servicing Practices) of the
applicable Servicer, the
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Master Servicer,
as successor servicer, or any successor master servicer
including the Trustee, as applicable, will not or, in the case of a
proposed P&I
Advance, would not be
ultimately recoverable
from related Late
Collections on
such Mortgage Loan or REO Property as provided herein.
Nonrecoverable Servicing Advance: Any Servicing Advances previously
made or
proposed to be made in respect of a Mortgage Loan or REO Property, which, in
accordance with
Accepted Servicing Practices, will not or, in the case of a
proposed Servicing
Advance, would not be ultimately
recoverable from
related
Late Collections.
Notice of Final
Distribution: The
notice to be provided by the Securities
Administrator pursuant to Section 12.02 to the effect that final
distribution on
any of the
Certificates shall be
made only upon
presentation
and surrender
thereof.
Notional Amount:
As of any date of determination for the Class I-A-4
Certificates, the
Notional Amount is equal to the Class Certificate Balance of
the Class I-A-3 Certificates. For Class I-A-8 Certificates, the
Notional Amount
is equal to the Class Certificate Balance of the Class I-A-7
Certificates.
For
the Class I-A-10 Certificates, the Notional Amount is equal to the Class
Certificate Balance
of the Class
I-A-9 Certificates. For the Class I-A-12
Certificates, the
Notional Amount is equal to the Class Certificate Balance of
the Class I-A-11 Certificates. The Notional Amount for the Class I-IO
Certificates and Class
II-IO Certificates
will equal the Class
I-IO Notional
Amount and the Class II-IO Notional Amount, respectively.
Offered Certificates: As specified in the Preliminary
Statement.
Offering Documents: Collectively, the Prospectus, Prospectus
Supplement and
the Private Placement Memorandum.
Officer's Certificate: As defined in the applicable Servicing
Agreement.
Opinion of Counsel: A written opinion of counsel, which may be in-house or
outside counsel to the
Depositor,
the Sponsor, the Master Servicer or the
Trustee, acceptable
to the Trustee or the Securities Administrator, as
applicable, except that any opinion of counsel relating to (a) the
qualification
of any REMIC
created hereunder as a REMIC or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
Option to Purchase: On
the initial or any subsequent Optional Termination
Date, the Master Servicer, at its own option may purchase,
or upon
instruction
by the Depositor,
shall purchase the Mortgage Loans. In the event that the
Depositor wishes to
instruct the Master Servicer to purchase the Mortgage Loans
on any Optional
Termination Date, the
Depositor shall provide instructions to
the Master Servicer to exercise such option no later than 5 p.m. on
the Business
Day immediately
preceding the Optional Termination Date, in which event the
exercise by the Master
Servicer of its option to purchase the Mortgage Loans
shall be deemed to have been at the Depositor's instruction.
Optional Termination
Date: Any Distribution Date on which the aggregate
Stated Principal
Balance of the Mortgage Loans, as of the last day of the
related Due Period,
is less than or equal
to 10.00% of the
Cut-off Date Pool
Principal Balance.
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OTS:
Office of Thrift Supervision, and any successor thereto.
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 Securities Administrator
or
delivered to the Securities Administrator for cancellation; and
(ii) Certificates
in exchange for which or in lieu of which
other
Certificates
have been executed and delivered by the Securities
Administrator pursuant to this Agreement.
Outstanding Mortgage
Loan: As of any Due Date, a Mortgage Loan with a
Stated Principal
Balance greater than zero which was not the subject of a
Principal Prepayment
in Full prior to such
Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
Overcollateralized
Group: On any
Distribution
Date, when there is an
Undercollateralized
Group, any Certificate Group on such Distribution Date that
is not itself an Undercollateralized Group.
Ownership Interest: As to any Residual Certificate, any ownership interest
in such Certificate
including any interest
in such Certificate
as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
P&I Advance: As to any Mortgage Loan or REO Property, any
advance made by a
Servicer in respect of any Remittance Date representing the aggregate of all
payments of principal and interest, net of the applicable Servicing
Fee and any
lender paid Primary Mortgage Insurance Policy premiums, that were
due during the
related Due Period on the Mortgage Loans and that were delinquent
on the related
Determination Date,
plus certain
amounts representing assumed payments not
covered by any
current net income on the Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure as determined pursuant
to the related
Servicing Agreement.
Pass-Through Rate: means:
With
respect to the Certificates (other than the Adjustable Rate
Certificates, the Subordinate Certificates, the Class PO
Certificates, the Class
P Certificates and the Class R Certificates), and any Distribution
Date, the per
annum rates set forth in the Preliminary Statement hereto. For the Adjustable
Rate Certificates and the Subordinate Certificates and any
Distribution Date:
(i)
With respect to the Class I-A-3 Certificates with respect to the
initial Interest
Accrual Period is 5.95% per annum, and as to any
Interest Accrual
Period thereafter,
will be a per annum rate equal to
LIBOR plus 0.60%,
with a maximum
rate of the
applicable
Available
Funds Cap and a minimum rate of 0.60% per annum;
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(ii)
With respect
to the Class
I-A-4 Certificates with respect to the
initial Interest
Accrual Period is 0.05% per annum, and as to any
Interest Accrual Period thereafter, will be a per annum rate equal
to
5.40% minus
LIBOR, with a maximum rate of 5.40% per annum and a
minimum rate of 0.00% per annum;
(iii) With
respect to the
Class I-A-7 Certificates with respect to the
initial Interest
Accrual Period is 5.72% per annum, and as to any
Interest Accrual Period thereafter, will be a per annum rate equal
to
LIBOR plus 0.37%, with
a maximum rate of the 7.00% and a minimum rate
of 0.37% per annum;
(iv)
With respect
to the Class
I-A-8 Certificates with respect to the
initial Interest
Accrual Period is 1.28% per annum, and as to any
Interest Accrual Period thereafter, will be a per annum rate equal
to
6.63% minus
LIBOR, with a maximum rate of 6.63% per annum and a
minimum rate of 0.00% per annum;
(v)
With respect to the Class I-A-9 Certificates with respect to the
initial Interest
Accrual Period is 5.65% per annum, and as to any
Interest Accrual Period thereafter, will be a per annum rate equal
to
LIBOR plus 0.30%, with
a maximum rate of
7.50% and a minimum rate of
0.30% per annum;
(vi)
With respect to the
Class I-A-10
Certificates
with respect to the
initial Interest
Accrual Period is 1.85% per annum, and as to any
Interest Accrual Period thereafter, will be a per annum rate equal
to
7.20% minus
LIBOR, with a maximum rate of 7.20% per annum and a
minimum rate of 0.00% per annum;
(vii) With
respect to the Class
I-A-11 Certificates with respect to the
initial Interest
Accrual Period is 5.55% per annum, and as to any
Interest Accrual Period thereafter, will be a per annum rate equal
to
LIBOR plus 0.20%, with
a maximum rate of
8.00% and a minimum rate of
0.20% per annum;
(viii) With
respect to the Class
I-A-12 Certificates
with respect to the
initial Interest
Accrual Period is 2.45% per annum, and as to any
Interest Accrual Period thereafter, will be a per annum rate equal
to
7.80% minus
LIBOR, with a maximum rate of 7.80% per annum and a
minimum rate of 0.00% per annum;
(ix)
With respect
to the Class
B-1 Certificate and as to any Interest
Accrual Period,
will be a per annum
rate equal to the
Subgroup WAC
Rate for such Distribution Date minus 0.57687234%;
(x)
With respect to the Class B-2 Certificate and as to any Interest
Accrual Period,
will be a per annum
rate equal to the
Subgroup WAC
Rate for such Distribution Date minus 0.32687234%;
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(xi)
With respect
to the Class
B-3 Certificate and as to any Interest
Accrual Period,
will be a per annum
rate equal to the
Subgroup WAC
Rate for such Distribution Date;
(xii) With
respect to the Class B-4 Certificate and as to any Interest
Accrual Period,
will be a per annum
rate equal to the
Subgroup WAC
Rate for such Distribution Date;
(xiii) With
respect to the Class
B-5 Certificate
and as to any Interest
Accrual Period,
will be a per annum
rate equal to the
Subgroup WAC
Rate for such Distribution Date; and
(xiv) With
respect to the Class B-6 Certificate and as to any Interest
Accrual Period,
will be a per annum
rate equal to the
Subgroup WAC
Rate for such Distribution Date plus (((0.57687234% multiplied by the
Class Certificate
Balance of the Class
B-1 Certificates
immediately
prior to such Distribution Date) plus (0.32687234%
multiplied by the
Class Certificate
Balance of the Class
B-2 Certificates
immediately
prior to such
Distribution Date))
divided by the Class
Certificate
Balance of the
Class B-6 Certificates immediately prior to such
Distribution Date);
The Class PO Certificates, the Class P Certificates and the Class R
Certificates
have no Pass-Through Rates and are not entitled to Accrued
Certificate Interest.
Percentage Interest:
As to any Certificate, the percentage interest
evidenced thereby in
distributions
required to be made on
the related Class,
such percentage
interest being set forth on the face
thereof or equal to
the
percentage obtained by
dividing the
Denomination of such
Certificate
by the
aggregate of the Denominations of all Certificates of the same
Class.
Permitted Investments:
Any one or more of the
following obligations or
securities acquired at
a purchase price of not greater than par, regardless of
whether issued by the
Securities
Administrator,
the Trustee or any of their
respective Affiliates:
(i) direct obligations
of, or obligations fully guaranteed as to
timely payment of
principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are
backed by
the
full faith and credit of the United States;
(ii) demand and time
deposits in, certificates of deposit of, or
bankers' acceptances
(which shall each have an original
maturity of not
more than 90 days and,
in the case of
bankers' acceptances, shall in no
event have an
original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States dollars and
issued by,
any Depository Institution and rated F1+ by Fitch,
A-1+ by
Standard & Poor's and P-1 by Moody's;
(iii) repurchase obligations with respect to any security described
in
clause (i) above
entered into with a
Depository
Institution
(acting as
principal);
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(iv) securities bearing interest or sold at a discount that are
issued
by
any corporation
incorporated
under the laws of the
United States of
America or any state
thereof and that are rated by Fitch, Moody's and
Standard & Poor's
(in each case, to the
extent they are designated as
Rating Agencies in the
Preliminary
Statement),
and by each other
Rating
Agency that rates such
securities,
in its highest long-term unsecured
rating categories at the time of such investment or contractual
commitment
providing for such investment;
(v) commercial paper
(including both
non-interest-bearing
discount
obligations and
interest-bearing
obligations
payable on demand or on a
specified date not more than 30 days after the date of acquisition
thereof)
that
is rated by Fitch, Moody's and Standard & Poor's (in each case,
to the
extent they
are designated as Rating Agencies in the Preliminary
Statement), and by
each other Rating Agency that rates such securities, in
its
highest short-term
unsecured debt rating available at the time of such
investment;
(vi) units of money market funds, including money market funds
managed
by
the Trustee, the Securities Administrator or an Affiliate
thereof, that
have
been rated "Aaa" by Moody's, "AAA" by Standard & Poor's
and, if rated
by
Fitch, "AAA" by Fitch; and
(vii) if previously confirmed in writing to the Securities
Administrator, any other demand, money market or time deposit, or
any other
obligation, security
or investment,
as may be acceptable to each of the
Rating Agencies as a
permitted investment
of funds backing "Aaa" or "AAA"
rated securities; provided, however, that no instrument described
hereunder
shall evidence
either the right to
receive (a) only interest with respect
to
the obligations
underlying
such instrument or (b) both principal
and
interest payments
derived from obligations underlying such instrument and
the
interest and principal payments with respect to such instrument
provide
a
yield to maturity at par greater than 120.00% of the yield to
maturity at
par
of the underlying obligations.
Permitted Transferee:
Any Person
other than (i) the
United States,
any
State or political
subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, international organization or any
agency or
instrumentality of
either of the
foregoing, (iii) an
organization
(except certain
farmers' cooperatives described in Section 521 of the Code)
which is exempt from
tax imposed by Chapter
1 of the Code
(including the tax
imposed by Section 511 of the Code on unrelated business taxable income) on
any
excess inclusions (as defined in Section 860E(c)(1) of the Code)
with respect to
any Residual
Certificate,
(iv) rural electric and telephone cooperatives
described in
Section 1381(a)(2)(C) of the Code, (v) a Person that is a
Disqualified Non-U.S. Person or a U.S. Person with respect to whom
income from a
Residual Certificate
is attributable to a foreign permanent establishment or
fixed base, within the
meaning of an
applicable
income tax
treaty, of such
Person or any other U.S. Person, (vi) an "electing large
partnership" within the
meaning of Section 775 of the Code and (vii) any other Person so
designated
by
the Depositor based upon an Opinion of Counsel that the Transfer of
an Ownership
Interest in a Residual
Certificate to such
Person may cause any
REMIC formed
hereby to fail to
qualify as a REMIC at any time
that the Certificates are
outstanding. The terms "United States", "State" and "international
organization"
shall have the
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meanings set
forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United
States or of
any State or political
subdivision
thereof for these purposes if all of its
activities are subject to tax and, with the exception of Freddie
Mac, a majority
of its board of directors is not selected by such government
unit.
Person: Any
individual,
corporation,
partnership,
joint
venture,
association, limited liability company, joint-stock company, trust,
unincorporated
organization or
government,
or any agency or political
subdivision thereof.
Prepayment Assumption:
With respect to the
Mortgage Loans,
a prepayment
assumption of 24% CPR,
used for determining the accrual of original issue
discount and market discount and premium on the Certificates for federal
income
tax purposes.
Prepayment Charge: Any prepayment premium, penalty or charge
collected by a
Servicer with respect to a Mortgage Loan from a Mortgagor in
connection with any
Principal Prepayment pursuant to the terms of the related Mortgage
Note.
Prepayment Distribution Percentage: With respect to any Distribution
Date
and each Class of
Subordinate
Certificates
for each Loan Group, under the
applicable
circumstances set forth below, the respective percentages set forth
below:
(i) For any
Distribution
Date prior to the Distribution Date in
January 2012
(unless the Certificate Balances of the related Senior
Certificates other
than the Class PO
Certificates
have been reduced to
zero), 0%.
(ii) For any
Distribution Date for
which clause
(i) above does not
apply, and on which
any Class of Subordinate Certificates is outstanding
with
a Certificate Balance greater than zero:
(a) in the case of the
Class of Subordinate
Certificates
then
outstanding with
the Highest Priority and each other Class of
Subordinate Certificates for which the related Prepayment
Distribution
Trigger has been
satisfied, a fraction, expressed as a percentage, the
numerator of
which is the Certificate Balance of such Class of
Subordinate
Certificates then
outstanding with the
Highest Priority
immediately prior to such date and the denominator of which is the
sum
of the Certificate
Balances immediately prior to such date of (1) the
Class of Subordinate
Certificates then
outstanding with the
Highest
Priority and (2) all other Classes of Subordinate Certificates for
which the respective Prepayment Distribution Triggers have been
satisfied; and
(b) in the case of each other Class of Subordinate Certificates
for which the Prepayment Distribution Triggers have not been
satisfied, 0%.
(iii) Notwithstanding
the foregoing, if the application of the
foregoing percentages
on any Distribution Date (determined without regard
to
the proviso to the
definition of
"Subordinate Principal
Distribution
Amount") would
result in a
distribution
as provided in Section
4.02 in
respect of principal of any Class or Classes of Subordinate
Certificates in
an
amount greater than the remaining Certificate Balance thereof (any
such
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class, a "Maturing Class"), then: (a) the Prepayment Distribution
Percentage of each
Maturing Class shall
be reduced to a level that, when
applied as described above, would exactly reduce the Certificate
Balance of
such
Class to zero; (b) the
Prepayment
Distribution
Percentage
of each
other Class of Subordinate Certificates (any such Class, a "Non-Maturing
Class") shall
be recalculated in accordance with the provisions in
paragraph (ii) above, as if the Certificate Balance of each Maturing Class
had
been reduced to zero (such percentage as recalculated, the
"Recalculated
Percentage"); (c) the
total amount of the reductions in the
Prepayment
Distribution
Percentages of the
Maturing Class or Classes
pursuant to
clause (a) of this sentence, expressed as an aggregate
percentage, shall be allocated among the Non-Maturing Classes in
proportion
to
their respective Recalculated Percentages (the portion of such
aggregate
reduction so
allocated to any Non-Maturing Class, the "Adjustment
Percentage");
and (d) for purposes of such Distribution Date, the
Prepayment
Distribution
Percentage of each
Non-Maturing
Class shall be
equal to the sum of (1) the Prepayment Distribution Percentage thereof,
calculated in accordance with the provisions in paragraph
(ii) above as if
the
Certificate
Balance of each
Maturing Class had not been reduced to
zero, plus (2) the related Adjustment Percentage.
Prepayment
Distribution Trigger: With respect to any Distribution Date and
any Class of Subordinate Certificates (other than the Class B-1
Certificates), a
test that shall be satisfied if the fraction (expressed as a percentage)
equal
to the sum of the
Certificate
Balances of such Class and each Class of
Subordinate Certificates with a Lower Priority than such Class
immediately prior
to such Distribution
Date divided by the
aggregate Stated Principal Balance of
all of the Mortgage Loans (or related REO Properties) immediately prior to such
Distribution Date is
greater than or equal
to the sum of the
related Initial
Subordinate Class Percentages of such Classes of Subordinate
Certificates.
Prepayment Interest
Excess: With respect to any Distribution Date, any
interest collected by
Wells Fargo with respect to any related Mortgage Loan as
to which a Principal
Payment in Full occurs from the 1st day of the month
through the 13th day of the month in which the Distribution Date
occurs and that
represents interest
that accrues from the
1st day of such month to the date of
such Principal Prepayment in Full.
Prepayment Interest Shortfall: With respect to each Servicer,
the meaning
assigned to such term in the related Servicing Agreement for each
Loan Group.
Prepayment Period:
With respect to each Servicer, the meaning assigned to
such term (or to the term "Principal Prepayment Period" with respect to Wells
Fargo) in the related Servicing Agreement.
Primary Mortgage Insurance Policy: Any mortgage guaranty insurance,
if any,
on an individual Mortgage Loan as evidenced by a policy or
certificate,
whether
such policy is obtained by the related Mortgage Loan Seller, the lender or the
borrower.
Principal Prepayment:
Any full or partial
payment or other
recovery of
principal on a Mortgage Loan (including upon liquidation of a Mortgage Loan)
that is received in advance of its scheduled Due Date, excluding any Prepayment
Charge thereon, and that is not
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accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of
prepayment.
Principal Prepayment
in Full: Any Principal Prepayment made by a Mortgagor
of the entire principal balance of a Mortgage Loan.
Principal Transfer
Amount: With respect
to any Distribution
Date and any
Undercollateralized Group, the excess of the aggregate Class
Principal Amount of
the Senior Certificates (other than the Class PO
Certificates) related
to that
Subgroup over the Subgroup Fraction of the aggregate Stated
Principal Balance of
the Mortgage
Loans related to that Undercollateralized Group (less the
applicable Discount Fraction of any Discount Mortgage Loan in that
Subgroup).
Private Certificate: As specified in the Preliminary Statement.
Private Placement
Memorandum:
The Private
Placement Memorandum, dated
December 28,
2006 relating to the offering of the Junior Subordinate
Certificates.
Prospectus: The Prospectus, dated December 27, 2006, as
supplemented by the
Prospectus Supplement.
Prospectus Supplement:
The Prospectus Supplement, dated December 27, 2006
relating to the Offered Certificates.
PTCE: As defined in Section 5.02(b).
Purchase Agreement:
The Mortgage
Loan Purchase Agreement, dated as of
December 1, 2006, between the Depositor and the Sponsor.
Rating Agency: Each of
the Rating Agencies
specified in the
Preliminary
Statement. If such
organization
or a successor is no longer in existence,
"Rating Agency"
shall be such nationally recognized statistical rating
organization, or other
comparable
Person, as is designated by the
Depositor,
notice of which
designation shall be
given to the Trustee
and the Securities
Administrator.
References herein to a
given rating or
rating category of a
Rating Agency
shall mean such rating
category without giving effect to any
modifiers. For
purposes of Section
13.05, the
addresses for notices to each
Rating Agency
shall be the address specified therefor in the definition
corresponding to the name of such Rating Agency, or such other
address as either
such Rating Agency may
hereafter furnish to
the Depositor and the
Securities
Administrator.
Realized Losses:
With respect to any date of determination and any
Liquidated Mortgage
Loan, the amount, if any, by which (a) the unpaid principal
balance of such
Liquidated Mortgage
Loan together with accrued and unpaid
interest thereon
exceeds (b) the Liquidation Proceeds with respect thereto
net
of the expenses
incurred by the
applicable
Servicer in
connection
with the
liquidation of
such Liquidated Mortgage Loan and net of the amount of
unreimbursed Servicing Advances with respect to such Liquidated
Mortgage Loan.
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Record Date: means, with respect to the Offered Certificates,
the Business
Day immediately
preceding the related
Distribution
Date, unless the Offered
Certificates are
issued in definitive
form, in which case the Record Date will
be the last
Business Day of the month immediately preceding the related
Distribution Date.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB),
17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time
to time, and
subject to such
clarification and
interpretation as have
been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518,
70 Fed. Reg. 1,506,
1,531 (Jan. 7, 2005)) or by the staff
of the Commission,
or as may be provided
by the Commission
or its staff from
time to time.
Regular Certificates: As specified in the Preliminary
Statement.
Relevant Servicing
Criteria: The Servicing Criteria applicable to the
parties having
reporting obligations hereunder, as set forth on Exhibit S
attached hereto.
For clarification purposes, multiple parties can have
responsibility for the
same Relevant
Servicing Criteria.
With respect to
any
Servicing Function
Participant engaged by
the Master Servicer,
the Securities
Administrator, the
Custodian or any
Servicer, the term "Relevant Servicing
Criteria" may refer to a portion of the Relevant Servicing
Criteria applicable
to such parties.
Relief Act: The
Servicemembers Civil
Relief Act, as
amended, or
similar
legislation or regulations as in effect from time to time.
Relief Act Interest
Shortfall: With
respect to any Distribution Date and
any Mortgage Loan, any
reduction in the amount of interest collectible on such
Mortgage Loan
for the most
recently ended Due Period as a result of the
application of the
Servicemembers Civil
Relief Act or any
applicable similar
state statutes.
REMIC: A "real estate
mortgage investment
conduit" within the
meaning of
Section 860D of the Code. As used herein, the term "the REMIC" or "the
REMICs"
shall mean one or more of the REMICs created under this
Agreement.
REMIC 1: The
segregated pool of
assets, with respect to which a REMIC
election is made pursuant to this Agreement, consisting of:
(a)
the Mortgage Loans and the related Mortgage Files and collateral
securing such Mortgage Loans,
(b)
all payments on and
collections
in respect of the
Mortgage Loans due
after the Cut off
Date as shall be on deposit in any Collection
Account or in the Distribution Account and identified as
belonging to
the Trust Fund,
(c)
property that secured a Mortgage
Loan and that has been
acquired for
the benefit of the
Certificateholders by
foreclosure or deed in lieu
of foreclosure,
(d)
the hazard insurance
policies and Primary Insurance Policies, if any,
and
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(e)
all funds on deposit
in the Class P Reserve Fund;
(f)
all proceeds of
clauses (a) through (e) above.
REMIC 1 Interest:
The REMIC 1 Regular Interests and the Class R-I
Certificates.
REMIC 1 Subordinated
Balance Ratio: The ratio among the Uncertificated
Balances of each of the REMIC 1 Regular Interests ending with the designation
"A," equal to the
ratio among, with respect to each such REMIC 1 Regular
Interest, the
excess of (x) the
aggregate Stated Principal Balance of the
Mortgage Loans in the related Subgroup (other than the Discount
Fraction of the
Stated Principal
Balance of any such Mortgage Loan) over (y) the Class
Certificate Balance
of the Senior Certificates (other than the Class PO
Certificates) in the related Subgroup.
REMIC 2: The
segregated pool of
assets consisting
of all of the REMIC
1
Regular Interests,
with respect to which a separate
REMIC election is to be
made.
REMIC 2 Certificate: Any Certificate, other than a Class R-I
Certificate.
REMIC 2 Regular
Certificate: Any REMIC
2 Certificate, other
than a Class
R-2 Certificate.
REMIC 3: The
segregated pool of
assets consisting
of all of the REMIC
2
Regular Interests,
with respect to which a separate
REMIC election is to be
made.
REMIC 3 Certificate: Any Certificate, other than a Class R-2
Certificate.
REMIC 3 Regular
Certificate: Any REMIC
3 Certificate, other
than a Class
R-3 Certificate.
REMIC 1 Regular
Interest: Any of the
fifteen separate non-certificated
beneficial ownership
interests in REMIC 1
issued hereunder and designated as a
"regular interest"
in REMIC 1. Each
REMIC 1 Regular Interest shall accrue
interest at the related REMIC 1 Remittance Rate in effect from time
to time, and
shall be entitled
to distributions of principal, subject to the terms and
conditions hereof,
in an aggregate amount
equal to its initial
Uncertificated
Balance as set forth in the Preliminary Statement hereto. The designations for
the respective
REMIC 1 Regular Interests are set forth in the Preliminary
Statement hereto.
REMIC 1 Remittance Rate: As set forth in the Preliminary
Statement.
REMIC 2 Remittance Rate: As set forth in the Preliminary
Statement.
REMIC 2 Regular Interest: Any of the twenty certificated beneficial
ownership interests in
REMIC 2 issued hereunder, and, hereby, designated as a
"regular interest"
in REMIC 2, as
follows: Class I-A-1,
Class I-A-2, Class
I-A-3, Class I-A-5,
Class I-A-6, Class I-A-7, Class I-A-9, Class I-A-11, Class
I-IO, Class I-PO, Class II-A-1, Class P, Class II-IO, Class II-PO, Class B-1,
Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates.
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REMIC 3 Regular Interest: Any of the twenty-four
certificated
beneficial
ownership interests in
REMIC 3 issued hereunder, and, hereby, designated as a
"regular interest"
in REMIC 3, as
follows: Class I-A-1,
Class I-A-2, Class
I-A-3, Class I-A-4,
Class I-A-5,
Class I-A-6, Class
I-A-7, Class I-A-8, Class
I-A-9, Class I-A-10,
Class I-A-11, Class
I-A-12, Class I-IO, Class I-PO, Class
II-A-1, Class II-IO,
Class II-PO,
Class P, Class B-1,
Class B-2,
Class B-3,
Class B-4, Class B-5 and Class B-6 Certificates.
REMIC Provisions: Provisions of the federal income tax law relating
to real
estate mortgage investment conduits, which appear at Sections 860A
through 860G
of Subchapter
M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect
from time
to time as well as provisions of applicable state laws.
Remittance Date: With respect to each Servicer, the 18th day of
each month.
REO
Acquisition:
The acquisition by the
applicable Servicer on
behalf of
the Trustee for the benefit of the Certificateholders of any REO
Property.
REO
Disposition:
The final sale by the applicable Servicer of any REO
Property.
REO
Proceeds: Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental
of the related
Mortgaged Property)
which proceeds are required to be deposited into the
applicable Collection Account upon the related REO Disposition.
REO
Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or
deed-in-lieu
of foreclosure in connection with a defaulted
Mortgage Loan.
Reportable Event: As defined in Section 8.12(a)(iii).
Reporting Servicer: As defined in Section 8.12(a)(ii).
Repurchase Price: With respect to any Mortgage Loan, an amount
equal to the
sum of (i) the unpaid principal balance of such Mortgage Loan as
of the date of
repurchase, (ii) interest on such unpaid principal balance of such
Mortgage Loan
at the Mortgage Rate from the last date through which interest has been paid to
the date of repurchase, (iii) all unreimbursed Servicing Advances, (iv) the
amount of any costs and damages incurred by the Trust Fund as a result of
any
violation of
any applicable federal, state or local predatory- or
abusive-lending law
arising from or in connection with the origination of such
Mortgage Loan
and (v) all expenses incurred by the Master Servicer, the
Securities
Administrator, the
related Servicer or
Trustee arising out of
the
Master Servicer's,
the related
Servicer's
or Trustee's enforcement of the
applicable Mortgage Loan Seller's or Sponsor's repurchase
obligation hereunder.
Request for Release: The Request for Release submitted by a
Servicer to the
Trustee, substantially in the form of Exhibit J.
Residual Certificates: As specified in the Preliminary
Statement.
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Reserve Fund: The fund
established
by the Securities Administrator on
behalf of the Holders
of the Class
I-A-3 Certificates pursuant to Section
3.01(a).
Responsible Officer:
When used with respect to the Trustee, the Securities
Administrator or the
Master Servicer,
any vice president,
any assistant vice
president, any
assistant secretary,
any assistant treasurer, any associate, or
any other officer of the Trustee, the Securities Administrator or the Master
Servicer customarily
performing functions
similar to those performed by any of
the above designated
officers who at such
time shall be officers to whom, with
respect to a
particular
matter, such matter is referred because of such
officer's knowledge of
and familiarity with the particular subject and who, in
each case, shall have
direct responsibility for the administration of this
Agreement.
Rule
144A Investment Letter: As defined in Section 5.02(b).
Sarbanes-Oxley Act:
The Sarbanes-Oxley Act of 2002 and the rules and
regulations of
the Commission promulgated thereunder (including any
interpretations thereof by the Commission's staff).
Sarbanes-Oxley Certification: A written certification signed by
an officer
of the Master Servicer that complies with (i) the Sarbanes-Oxley Act, and (ii)
Exchange Act Rules
13a-14(d) and 15d-14(d), as in effect from time to
time;
provided that if, after the Closing Date (a) the Sarbanes-Oxley Act is amended,
(b) the Rules referred
to in clause (ii) are
modified or superseded by any
subsequent statement, rule or regulation of the Commission or any
statement of a
division thereof,
or (c) any future releases, rules and regulations are
published by the
Commission from time
to time pursuant to
the Sarbanes-Oxley
Act, which in any such
case affects the form or substance of the required
certification and results in the required certification being, in
the reasonable
judgment of the Master
Servicer, materially
more onerous that then form of the
required certification as of the Closing Date, the Sarbanes-Oxley
Certification
shall be as agreed to by the Master Servicer, and the Depositor following a
negotiation in good faith to determine how to comply with any such
requirements.
Scheduled Payment: The
scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such
Mortgage Loan which,
unless otherwise specified herein, shall give effect to any related
Debt Service
Reduction and any
Deficient Valuation that affects the amount of the
monthly
payment due on such Mortgage Loan.
Securities Act: The
Securities
Act of 1933, as
amended and the rules and
regulations thereunder.
Securities
Administrator:
Citibank, N.A. and any
successors in interest,
and if a successor securities administrator is appointed hereunder, such
successor.
Securities
Administrator Float
Period: With respect
to the
Distribution
Date and the related amounts in the Distribution Account, the period commencing
on the Remittance Date immediately preceding such Distribution Date and ending
on such Distribution Date.
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Senior Accelerated
Distribution Percentage means for each Subgroup and any
Distribution Date
occurring prior to the 60th Distribution Date 100%. The
related Senior
Accelerated
Distribution
Percentage for any Distribution Date
thereafter will be as follows:
(i) for any Distribution Date after the 60th Distribution
Date but on
or
prior to the 72nd
Distribution Date, the
related Senior Percentage for
such
Subgroup for such Distribution Date plus 70% of the related
Subordinate Percentage for that Subgroup for such Distribution
Date;
(ii) for any Distribution Date after the 72nd Distribution Date but
on
or
prior to the 84th
Distribution Date, the
related Senior Percentage for
such
Subgroup for such Distribution Date plus 60% of the related
Subordinate Percentage for that Subgroup for such Distribution
Date;
(iii) for any Distribution Date after the 84th Distribution Date but
on
or prior to the 96th
Distribution Date, the
related Senior
Percentage
for
such Subgroup for such Distribution Date plus 40% of the related
Subordinate Percentage for that Subgroup for such Distribution
Date;
(iv) for any Distribution Date after the 96th Distribution Date but
on
or
prior to the 108th
Distribution Date, the related Senior Percentage for
such
Subgroup for such Distribution Date plus 20% of the related
Subordinate Percentage for that Subgroup for such Distribution
Date; and
(v) for any Distribution Date thereafter, the Senior Percentage for
such
Subgroup for such Distribution Date.
If
on any Distribution Date the Senior Percentages for any Subgroup
exceeds
the initial Senior
Percentage for that
Subgroup, then the
Senior Accelerated
Distribution
Percentages for each Subgroup for that Distribution Date will
once
again equal 100%.
Any
scheduled reduction to such Senior Accelerated Distribution Percentage
shall not be made as of any Distribution Date unless:
(a)
the Stated Principal
Balance of the
Mortgage Loans delinquent 60 days
or more as set forth in the Monthly Statements (including Mortgage Loans in
bankruptcy,
foreclosure and REO)
averaged over the last six months, as a
percentage of the aggregate Group Subordinate Amounts, is less than
50% and
(b)
Realized Losses on the Mortgage
Loans to date for that
Distribution
Date as set forth in the Monthly Statements, if occurring during the sixth,
seventh, eighth, ninth or tenth year, or any year thereafter,
after the closing
date, are less than 30%, 35%, 40%, 45% or 50%, respectively, of the sum of the
initial aggregate Group Subordinate Amounts;
Notwithstanding the
foregoing,
upon reduction of the Class
Certificate
Balances of the
Senior Certificates related to a Subgroup, other than the
related Class PO
Certificates, to zero,
the Senior
Accelerated
Distribution
Percentage, as the case may be, will equal 0%.
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Senior Certificates:
As specified in the
Preliminary
Statement,
as the
context requires.
Senior Interest
Distribution Amount: With respect to any Distribution Date
and each Loan Group, the aggregate amount of Accrued Certificate
Interest to be
distributed to
the holders of the related Senior Certificates for that
Distribution Date pursuant to Section 4.02(a)(i).
Senior Percentage: means, as the context requires:
(i) for each
Distribution
Date and each
Subgroup, the percentage
equivalent of a fraction, the numerator of which is the
aggregate Class
Certificate Balance of
the Senior
Certificates of the related Certificate
Group (other
than the Class PO
Certificates)
immediately
prior to such
Distribution Date, and the denominator of which is the Subgroup
Fraction of
