ASSET BACKED SECURITIES
CORPORATION
Depositor
DLJ MORTGAGE CAPITAL, INC.
Seller
SELECT PORTFOLIO SERVICING, INC.
Servicer
OFFICETIGER GLOBAL REAL ESTATE SERVICES
INC.,
Loan Performance Advisor
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
_________________________________________
POOLING AND SERVICING
AGREEMENT
Dated as of January 1, 2007
_________________________________________
Asset Backed Securities Corporation Home
Equity Loan Trust, Series RFC 2007-HE1
Asset Backed Pass-Through Certificates,
Series RFC 2007-HE1
Table of Contents
Page
ARTICLE I DEFINITIONS
3
SECTION 1.01.
Defined Terms.
3
SECTION 1.02.
Allocation of Certain Interest
Shortfalls.
48
SECTION 1.03.
Designation of Interests in
REMIC
48
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF
CERTIFICATES
57
SECTION 2.01.
Conveyance of Mortgage Loans.
57
SECTION 2.02.
Acceptance of REMIC I by the
Trustee.
60
SECTION 2.03.
Repurchase or Substitution of Mortgage
Loans by the Seller or the
Depositor; Payment of Prepayment Premiums
in the Event of Breach.
61
SECTION 2.04.
Representations and Warranties of the
Depositor.
63
SECTION 2.05.
Representations, Warranties and Covenants
of the Servicer and the
Seller.
65
SECTION 2.06.
Issuance of the R-I Residual
Interest.
69
SECTION 2.07.
Conveyance of REMIC I Regular Interests;
Acceptance of REMIC II
by the Trustee.
69
SECTION 2.08.
Conveyance of REMIC II Regular
Interests; Acceptance of REMIC III
by the Trustee.
69
ARTICLE III ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
69
SECTION 3.01.
Servicer to Act as Servicer.
69
SECTION 3.02.
Sub-Servicing Agreements Between the
Servicer and Sub-Servicers.
72
SECTION 3.03.
Successor Sub-Servicers.
73
SECTION 3.04.
Liability of the Servicer.
74
SECTION 3.05.
No Contractual Relationship Between
Sub-Servicers and Trustee or
Certificateholders.
74
SECTION 3.06.
Assumption or Termination of
Sub-Servicing Agreements by the
Trustee.
74
SECTION 3.07.
Collection of Certain Mortgage Loan
Payments.
75
SECTION 3.08.
Sub-Servicing Accounts.
76
SECTION 3.09.
Collection of Taxes, Assessments and
Similar Items; Servicing
Accounts.
76
SECTION 3.10.
Collection Account and Distribution
Account.
77
SECTION 3.11.
Withdrawals from the Collection Account
and Distribution Account.
79
SECTION 3.12.
Investment of Funds in the Collection
Account, the REO Account and
the Distribution Account.
81
SECTION 3.13.
Superior Liens.
83
SECTION 3.14.
Maintenance of Hazard Insurance and
Errors and Omissions and
Fidelity Coverage.
83
SECTION 3.15.
Enforcement of Due-On-Sale Clauses;
Assumption Agreements.
85
SECTION 3.16.
Realization Upon Defaulted Mortgage
Loans.
86
SECTION 3.17.
Trustee to Cooperate; Release of Mortgage
Files.
88
SECTION 3.18.
Servicing Compensation.
90
SECTION 3.19.
[Reserved].
90
SECTION 3.20.
Annual Statements as to
Compliance.
90
SECTION 3.21.
Report on Assessment of Compliance and
Attestation.
91
SECTION 3.22.
Access to Certain
Documentation.
94
SECTION 3.23.
Title, Management and Disposition of REO
Property.
95
SECTION 3.24.
Obligations of the Servicer in Respect of
Prepayment Interest
Shortfalls and Relief Act Interest
Shortfalls.
98
SECTION 3.25.
Obligations of the Servicer in Respect of
Mortgage Rates and Monthly
Payments.
98
SECTION 3.26.
Net WAC Reserve Fund.
99
SECTION 3.27.
Swap Agreement.
100
SECTION 3.28.
Advance Facility.
100
SECTION 3.29.
Trustee to Act as Servicer.
102
ARTICLE IV PAYMENTS TO
CERTIFICATEHOLDERS
103
SECTION 4.01.
Distributions.
103
SECTION 4.02.
Statements to
Certificateholders.
114
SECTION 4.03.
Remittance Reports; P&I
Advances.
118
SECTION 4.04.
Allocation of Realized Losses.
120
SECTION 4.05.
Compliance with Withholding
Requirements.
121
SECTION 4.06.
Commission Reporting.
121
SECTION 4.07.
Supplemental Interest Trust.
125
SECTION 4.08.
Rights of Swap Counterparty.
126
SECTION 4.09.
Replacement of Swap
Counterparty
126
SECTION 4.10.
Distribution of Net Counterparty
Payments
127
ARTICLE V THE CERTIFICATES
128
SECTION 5.01.
The Certificates.
128
SECTION 5.02.
Registration of Transfer and Exchange of
Certificates.
130
SECTION 5.03.
Mutilated, Destroyed, Lost or Stolen
Certificates.
135
SECTION 5.04.
Persons Deemed Owners.
136
SECTION 5.05.
Certain Available Information.
136
SECTION 5.06.
Access to List of
Certificateholders’ Names and Addresses.
136
ARTICLE VI THE DEPOSITOR, THE SERVICER
AND THE LOAN PERFORMANCE
ADVISOR
137
SECTION 6.01.
Liability of the Depositor, the Seller
and the Servicer.
137
SECTION 6.02.
Merger or Consolidation of the Depositor,
the Seller or the Servicer.
137
SECTION 6.03.
Limitation on Liability of the Depositor,
the Seller, the Servicer and
Others.
137
SECTION 6.04.
Limitation on Resignation of the
Servicer.
139
SECTION 6.05.
Rights of the Depositor and the Trustee
in Respect of the Servicer.
139
SECTION 6.06.
Duties of the Loan Performance
Advisor.
140
ARTICLE VII DEFAULT
140
SECTION 7.01.
Event of Default.
140
SECTION 7.02.
Trustee to Act; Appointment of
Successor.
142
SECTION 7.03.
Notification to
Certificateholders.
144
SECTION 7.04.
Waiver of Event of Default.
145
ARTICLE VIII CONCERNING THE
TRUSTEE
145
SECTION 8.01.
Duties of Trustee.
145
SECTION 8.02.
Certain Matters Affecting the
Trustee.
146
SECTION 8.03.
Trustee Not Liable for Certificates or
Mortgage Loans.
147
SECTION 8.04.
Trustee May Own Certificates.
148
SECTION 8.05.
Fees and Expenses of the
Trustee.
148
SECTION 8.06.
Eligibility Requirements for
Trustee.
149
SECTION 8.07.
Resignation and Removal of the
Trustee.
149
SECTION 8.08.
Successor Trustee.
150
SECTION 8.09.
Merger or Consolidation of
Trustee.
150
SECTION 8.10.
Appointment of Co-Trustee or Separate
Trustee.
151
SECTION 8.11.
Appointment of Custodians.
152
SECTION 8.12.
Appointment of Office or
Agency.
152
SECTION 8.13.
Representations and Warranties of the
Trustee.
152
ARTICLE IX TERMINATION
153
SECTION 9.01.
Termination Upon Repurchase or
Liquidation of All Mortgage Loans.
153
SECTION 9.02.
Additional Termination
Requirements.
155
ARTICLE X REMIC PROVISIONS
156
SECTION 10.01.
REMIC Administration.
156
SECTION 10.02.
Prohibited Transactions and
Activities.
160
SECTION 10.03.
Servicer and Trustee
Indemnification.
160
ARTICLE XI MISCELLANEOUS
PROVISIONS
160
SECTION 11.01.
Amendment.
160
SECTION 11.02.
Recordation of Agreement;
Counterparts.
162
SECTION 11.03.
Limitation on Rights of
Certificateholders.
162
SECTION 11.04.
Governing Law.
163
SECTION 11.05.
Notices.
163
SECTION 11.06.
Severability of Provisions.
164
SECTION 11.07.
Notice to Rating Agencies and the Swap
Counterparty.
164
SECTION 11.08.
Article and Section
References.
165
SECTION 11.09.
[Reserved].
165
SECTION 11.10.
Grant of Security Interest.
165
SECTION 11.11.
Protection of Assets.
166
SECTION 11.12.
Non-Solicitation.
166
Exhibits
Exhibit A-1
Form of Class A
Certificate
Exhibit A-2
Form of Mezzanine Certificate
Exhibit A-3
Form of Class X
Certificate
Exhibit A-4
Form of Class P
Certificate
Exhibit A-5
Form of Class R Certificate
Exhibit B
[Reserved]
Exhibit C-1
Form of Trust Receipt and Initial
Certification
Exhibit C-2
Form of Trustee Receipt and Final
Certification
Exhibit D
[Reserved]
Exhibit E-1
Form of Request for Release
Exhibit E-2
[Reserved]
Exhibit F-1
Forms of Transferor/Transferee
Representation Letter
Exhibit F-2
Form of Transfer Affidavit and
Agreement
Exhibit G
Form of ERISA Certification
Exhibit H
Form of Depositor
Certification
Exhibit I
Form Of Trustee Certification For Monthly
Statements
Exhibit J
Form of Servicer Certification
Exhibit K
Form of Assessment of
Compliance
Exhibit L
Servicing Criteria to be Addressed in
Assessment of Compliance
Exhibit M
Form 10-D, Form 8-K and Form 10-K
Reporting Responsibility
Schedules
Schedule 1
Mortgage Loan Schedule
Schedule 2
Prepayment Premium Schedule
Schedule 3
Seller Representations related to the
Mortgage Loans
This Pooling and Servicing Agreement, is
dated and effective as of January 1, 2007, among ASSET BACKED
SECURITIES CORPORATION, as Depositor, DLJ MORTGAGE CAPITAL, INC.,
as Seller, SELECT PORTFOLIO SERVICING, INC., as Servicer,
OFFICETIGER GLOBAL REAL ESTATE SERVICES INC., as Loan Performance
Advisor, and U.S. BANK NATIONAL ASSOCIATION, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell
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 multiple REMICs (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool
of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement.
As of the Cut-off Date, the Mortgage
Loans had an aggregate Stated Principal Balance equal to
$706,532,307.
Set forth below are designations of
Classes of Certificates to the categories used herein.
|
Book-Entry Certificates
|
All Classes of Certificates other than the Physical
Certificates.
|
|
Class A Certificates
|
Class A1A, Class A1B, Class A2, Class A3, Class A4 and Class A5
Certificates
|
|
Class P Certificates
|
Class P Certificates.
|
|
ERISA-Restricted Certificates
|
Non-Offered Certificates and any Certificates that do not satisfy
the applicable ratings requirement under the Underwriter’s
Exemption.
|
|
ERISA-Restricted Swap Certificate
|
Any Certificate other than an ERISA-Restricted Certificate.
|
|
LIBOR Certificates
|
Class A and Mezzanine Certificates.
|
|
Mezzanine Certificates
|
Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class
M7, Class M8, Class M9, Class M10 and Class M11 Certificates.
|
|
Non-Offered Certificates
|
Class M11, Class X, Class P and Residual Certificates.
|
|
Offered Certificates
|
Class A and Offered Subordinate Certificates.
|
|
Offered Subordinate Certificates
|
Mezzanine Certificates (other than the Class M11 Certificates).
|
|
Physical Certificates
|
Class X, Class P and Residual Certificates.
|
|
Regular Certificates
|
All Classes of Certificates other than the Residual
Certificates.
|
|
Residual Certificates
|
Class R Certificates.
|
|
Senior Certificates
|
Class A Certificates.
|
|
Subordinate Certificates
|
Mezzanine Certificates, Class X Certificates and Residual
Certificates.
|
In consideration of the mutual agreements
herein contained, the Depositor, the Seller, the Servicer, the
Trustee and the Loan Performance Advisor agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.
Defined Terms.
Whenever used in this Agreement,
including, without limitation, in the Preliminary Statement hereto,
the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this
Article.
“1933 Act”: As defined in
Section 5.02(b) herein.
“Accepted Servicing
Practices”: With respect to any Mortgage Loan, those mortgage
servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in
the jurisdiction where the related Mortgaged Property is
located.
“Accountant’s
Attestation”: As defined in Section
3.21(i)(b).
“Additional Servicer”: Means
each affiliate of the Depositor that Services any of the Mortgage
Loans and each Person who is not an affiliate of the Depositor, who
Services 10% or more of the Mortgage Loans (measured by aggregate
Stated Principal Balance of the Mortgage Loans, annually at the
commencement of the calendar year prior to the year in which an
Statement of Compliance pursuant to Section 3.20 hereof is required
to be delivered). For clarification purposes, the Trustee is
not an Additional Servicer.
“Adjustable Rate Mortgage
Loan”: Each of the Mortgage Loans identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is subject to
adjustment.
“Adjustable-Rate PPC”: 100%
Adjustable-Rate PPC means a CPR of 4.00% per annum of the then
unpaid principal balance of the Adjustable Rate Mortgage Loans in
the first month of the life of such Mortgage Loans and an
additional approximately 2.1818% (precisely 24%/11 expressed as a
percentage) per annum in each month thereafter until the 12
th month, remaining at 28% per annum in each month
thereafter until the 24 th month, then beginning in the
25 th month, remaining at 55% per annum in each month
thereafter until the 28 th month and in each month
thereafter during the life of such Mortgage Loans, a CPR of 35% per
annum.
“Adjustment Date”: With
respect to each Adjustable Rate Mortgage Loan, the day of the month
on which the Mortgage Rate of such Mortgage Loan changes pursuant
to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Adjustable Rate Mortgage Loan
is set forth in the Mortgage Loan Schedule.
“Administrative Fee Rate”:
The sum of the Servicing Fee Rate and the LPA Fee Rate.
“Advance Facility”: As
defined in Section 3.28(a) herein.
“Advance Facility Notice”: As
defined in Section 3.28(b) herein.
“Advance Facility Trustee”:
As defined in Section 3.28(b) herein.
“Advance Reimbursement
Amounts”: As defined in Section 3.28(a) herein.
“Advancing Person”: As
defined in Section 3.28(a) herein.
“Affiliate”: With respect to
any specified Person, any other Person controlling or controlled by
or under common control with such specified Person. For the
purposes of this definition, “control” when used with
respect to any specified Person 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.
“Aggregate Principal
Balance”: As of any date of determination will be equal to
the aggregate Stated Principal Balance of the Mortgage Loans and
any REO Properties owned by the Trust.
“Agreement”: This Pooling and
Servicing Agreement and all amendments hereof and supplements
hereto.
“Allocated Realized Loss
Amount”: With respect to any Class of Mezzanine Certificates
and any Distribution Date, is an amount equal to the sum of (i) any
Realized Loss allocated to that class of certificates on that
Distribution Date and (ii) any Allocated Realized Loss Amount for
that Class of Certificates from the previous Distribution Date that
has not been reimbursed less any increases to the Certificate
Principal Balance of that Class as a result of
Recoveries.
“Applicable Regulations”: As
to any Mortgage Loan, all federal, state and local laws, statutes,
rules and regulations applicable thereto.
“Assessment of Compliance”:
As defined in Section 3.21(i)(a).
“Assignment”: An assignment
of Mortgage, notice of transfer or equivalent instrument, in
recordable form (excepting therefrom, if applicable, the mortgage
recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder’s
office and/or the assignee’s name), which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property
is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in
the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county, if
permitted by law.
“Assignment and Assumption
Agreement”: That certain assignment and assumption agreement
dated as of the Cut-off Date, by and between the Seller, as
assignor and the Depositor, as assignee, relating to the Mortgage
Loans.
“Available Distribution
Amount”: With respect to any Distribution Date, an amount
equal to (1) the sum of (a) the aggregate of the amounts on deposit
in the Collection Account and Distribution Account as of the close
of business on the related Determination Date, (b) the aggregate of
any amounts received in respect of an REO Property withdrawn from
any REO Account and deposited in the Distribution Account for such
Distribution Date pursuant to Section 3.23, (c) the amount
deposited in the Distribution Account by the Servicer in respect of
Compensating Interest for such Distribution Date pursuant to
Section 3.24 and (d) the aggregate of any P&I Advances made by
the Servicer for such Distribution Date pursuant to Section 4.04
reduced (to not less than zero) by (2) the portion of the amount
described in clause (1)(a) above that represents (i) Monthly
Payments on the Mortgage Loans received from a Mortgagor on or
prior to the Determination Date but due during any Due Period
subsequent to the related Due Period, (ii) Principal Prepayments on
the Mortgage Loans received after the related Prepayment Period
(together with any interest payments received with such Principal
Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the
related Prepayment Period), Prepayment Interest Excess, (iii)
Liquidation Proceeds, Insurance Proceeds and proceeds from
repurchases of and substitutions for Mortgage Loans, if any,
received in respect of such Mortgage Loans after the calendar month
preceding the month of such Distribution Date, (iv) amounts
reimbursable or payable to the Depositor, the Originator, the
Servicer, the Loan Performance Advisor, the Trustee, the Custodian
or any Sub-Servicer pursuant to Section 3.11, Section 3.17, Section
3.12 or Section 8.11, as applicable, or otherwise payable in
respect of Extraordinary Trust Fund Expenses, (v) amounts deposited
in the Collection Account or the Distribution Account in error, and
(vi) the amount of any Prepayment Premiums collected by the
Servicer in connection with the voluntary Principal Prepayment in
full of any of the Mortgage Loans or the Servicer Prepayment
Premium Payment Amount.
“Bankruptcy Code”: The
Bankruptcy Reform Act of 1978 (Title 11 of the United States Code),
as amended.
“Bankruptcy Loss”: With
respect to any Mortgage Loan, a Realized Loss resulting from a
Deficient Valuation (i.e. “principal cramdown”) or Debt
Service Reduction (i.e., “interest
cramdown”).
“Basic Principal Distribution
Amount”: With respect to any Distribution Date the amounts in
clauses (b)(i) – (iv) of the definition of Principal
Distribution Amount.
“Book-Entry Certificate”: As
specified in the Preliminary Statement.
“Book-Entry Custodian”: The
custodian appointed pursuant to Section 5.01 herein.
“Business Day”: Any day other
than a Saturday, a Sunday or a day on which banking or savings and
loan institutions in the State of California, the State of Utah,
the State of New York, the State of Delaware, the State of
Minnesota, the State of Texas or the cities in which the Corporate
Trust Office of the Trustee is located, are authorized or obligated
by law or executive order to be closed.
“Calculation Period”: As such
term is defined in the Swap Agreement.
“Certificate”: Any one of the
certificates issued under this Agreement in substantially the forms
attached hereto as Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit
A-4 and Exhibit A-5.
“Certificate Factor”: With
respect to any Class of LIBOR Certificates as of any Distribution
Date, a fraction, expressed as a decimal carried to six places, the
numerator of which is the aggregate Certificate Principal Balance
of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal and allocations of
Realized Losses in reduction of the Certificate Principal Balance
of such Class of Certificates to be made on such Distribution
Date), and the denominator of which is the Original Certificate
Principal Balance of such Class of Certificates as of the Closing
Date.
“Certificate Margin”: As to
any Class of LIBOR Certificates, the respective amount set forth
below:
|
|
Certificate Margin
|
|
Class
|
(1)
|
(2)
|
|
Class A1A
|
0.150%
|
0.300%
|
|
Class A1B
|
0.150%
|
0.300%
|
|
Class A2
|
0.050%
|
0.100%
|
|
Class A3
|
0.090%
|
0.180%
|
|
Class A4
|
0.140%
|
0.280%
|
|
Class A5
|
0.220%
|
0.440%
|
|
Class M1
|
0.220%
|
0.330%
|
|
Class M2
|
0.270%
|
0.405%
|
|
Class M3
|
0.310%
|
0.465%
|
|
Class M4
|
0.370%
|
0.555%
|
|
Class M5
|
0.380%
|
0.570%
|
|
Class M6
|
0.450%
|
0.675%
|
|
Class M7
|
0.850%
|
1.275%
|
|
Class M8
|
1.500%
|
2.250%
|
|
Class M9
|
2.500%
|
3.750%
|
|
Class M10
|
2.500%
|
3.750%
|
|
Class M11
|
2.500%
|
3.750%
|
|
|
|
|
(1)
To and including the first possible
Optional Termination Date.
(2)
After the first possible Optional
Termination Date.
“Certificate Owner”: With
respect to a Book-Entry Certificate, the Person who is the
beneficial owner of such Certificate as reflected on the books of
the Depository or on the books of a Depository Participant or on
the books of an indirect participating brokerage firm for which a
Depository Participant acts as agent.
“Certificate Principal
Balance”: With respect to any Class of Certificates, other
than the Class R and Class X Certificates, as of any Distribution
Date, the Original Certificate Principal Balance thereof reduced by
the sum of (a) all amounts actually distributed in respect of
principal of such Class and (b) with respect to the Mezzanine
Certificates, any reductions in their respective Certificate
Principal Balances deemed to have occurred in connection with
allocations of Realized Losses on all prior Distribution Dates
pursuant to Section 4.04(b) plus any increase to a Certificate
Principal Balance pursuant to Section 4.04(d).
“Certificate Register” and
“Certificate Registrar”: The register maintained and
the registrar appointed pursuant to Section 5.02 herein.
“Certificateholder” or
“Holder”: The Person in whose name a Certificate is
registered in the Certificate Register, except that a Disqualified
Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the
purposes of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor or the Servicer
or any Affiliate thereof shall be deemed not to be outstanding and
the Voting Rights to which it is entitled shall not be taken into
account in determining whether the requisite percentage of Voting
Rights necessary to effect any such consent has been obtained,
except as otherwise provided in Section 12.01. The Trustee
may conclusively rely upon a certificate of the Depositor or the
Servicer in determining whether a Certificate is held by an
Affiliate thereof. All references herein to
“Holders” or “Certificateholders” shall
reflect the rights of Certificate Owners as they may indirectly
exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided,
however , that the Trustee shall be required to recognize as a
“Holder” or “Certificateholder” only the
Person in whose name a Certificate is registered in the Certificate
Register.
“Charged-off Mortgage Loan”:
As defined in Section 3.01 herein.
“Class”: All of the
Certificates bearing the same class designation as set forth in the
Preliminary Statement.
“Class A Principal
Distribution Amount”: With respect to any Distribution
Date (a) prior to the Stepdown Date, (b) that is the Stepdown
Date, if the Stepdown Date occurs as a result of clause (1) of the
definition thereof or (c) on which a Trigger Event is in effect, an
amount equal to the Principal Distribution Amount for such
Distribution Date. For any Distribution Date (a) on or
after the Stepdown Date (except as provided in the previous
sentence) and (b) on which a Trigger Event is not in effect,
an amount equal to the excess, if any, of (x) the aggregate
Certificate Principal Balance of the Class A Certificates
immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (1) 55.60% and (2) the
Aggregate Principal Balance as of the last day of the related Due
Period and (B) the excess, if any, of the Aggregate Principal
Balance as of the last day of the related Due Period over the
Overcollateralization Floor.
“Class Exemption”: A
class exemption granted by the U.S. Department of Labor, which
provides relief from certain of the prohibited transaction
provisions of ERISA and the related excise tax provisions of the
Code.
“Class M1/M2/M3 Principal
Distribution Amount” is an amount equal to, with respect to
any Distribution Date, the excess, if any, of (x) the sum of (1)
the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (2) the
aggregate Certificate Principal Balance of the Class M1, Class M2
and Class M3 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (1) 74.70% and (2)
the aggregate Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (B) the excess, if any, of
the aggregate Principal Balance of the Mortgage Loans as of the
last day of the related Due Period over the Overcollateralization
Floor.
“Class M4 Principal
Distribution Amount”: With respect to any Distribution Date,
the excess, if any, of (x) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (2) the
Certificate Principal Balance of the Class M1/M2/M3 Certificates
(after taking into account the payment of the Class M/1/M2/M3
Principal Distribution Amount on such Distribution Date) and
(2) the Certificate Principal Balance of the Class M4
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 78.40% and
(2) the Aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance of the Mortgage Loans as of the last
day of the related Due Period over the Overcollateralization
Floor.
“Class M5 Principal Distribution
Amount”: With respect to any Distribution Date, the excess,
if any, of (x) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (2) the Certificate Principal Balance
of the Class M1/M2/M3 Certificates (after taking into account the
payment of the Class M/1/M2/M3 Principal Distribution Amount on
such Distribution Date), (3) the Certificate Principal Balance
of the Class M4 Certificates (after taking into account the payment
of the Class M4 Principal Distribution Amount on such Distribution
Date) and (4) the Certificate Principal Balances of the Class
M5 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 81.90% and
(2) the Aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance as of the last day of the related Due
Period over the Overcollateralization Floor.
“Class M6 Principal Distribution
Amount”: With respect to any Distribution Date, the excess,
if any, of (x) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (2) the Certificate Principal Balance
of the Class M1/M2/M3 Certificates (after taking into account the
payment of the Class M/1/M2/M3 Principal Distribution Amount on
such Distribution Date), (3) the Certificate Principal Balance
of the Class M4 Certificates (after taking into account the payment
of the Class M4 Principal Distribution Amount on such Distribution
Date), (4) the Certificate Principal Balances of the Class M5
Certificates (after taking into account the payment of the Class M5
Principal Distribution Amount on such Distribution Date) and
(5) the Certificate Principal Balance of the Class M6
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 85.10% and
(2) the Aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance as of the last day of the related Due
Period over the Overcollateralization Floor.
“Class M7 Principal Distribution
Amount”: With respect to any Distribution Date, the excess,
if any, of (x) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (2) the Certificate Principal Balance
of the Class M1/M2/M3 Certificates (after taking into account the
payment of the Class M/1/M2/M3 Principal Distribution Amount on
such Distribution Date), (2) the Certificate Principal Balance
of the Class M4 Certificates (after taking into account the payment
of the Class M4 Principal Distribution Amount on such Distribution
Date), (3) the Certificate Principal Balance of the Class M5
Certificates (after taking into account the payment of the Class M5
Principal Distribution Amount on such Distribution Date),
(4) the Certificate Principal Balance of the Class M6
Certificates (after taking into account the payment of the Class M6
Principal Distribution Amount on such Distribution Date) and
(5) the Certificate Principal Balance of the Class M7
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 88.20% and
(2) the Aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance as of the last day of the related Due
Period over the Overcollateralization Floor.
“Class M8 Principal Distribution
Amount”: With respect to any Distribution Date, the excess,
if any, of (x) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (2) the Certificate Principal Balance
of the Class M1/M2/M3 Certificates (after taking into account the
payment of the Class M/1/M2/M3 Principal Distribution Amount on
such Distribution Date), (2) the Certificate Principal Balance
of the Class M4 Certificates (after taking into account the payment
of the Class M4 Principal Distribution Amount on such Distribution
Date), (3) the Certificate Principal Balance of the Class M5
Certificates (after taking into account the payment of the Class M5
Principal Distribution Amount on such Distribution Date),
(4) the Certificate Principal Balance of the Class M6
Certificates (after taking into account the payment of the Class M6
Principal Distribution Amount on such Distribution Date),
(5) the Certificate Principal Balance of the Class M7
Certificates (after taking into account the payment of the Class M7
Principal Distribution Amount on such Distribution Date) and
(6) the Certificate Principal Balance of the Class M8
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 90.70% and
(2) the Aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance as of the last day of the related Due
Period over the Overcollateralization Floor.
“Class M9 Principal Distribution
Amount”: With respect to any Distribution Date, the excess,
if any, of (x) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (2) the Certificate Principal Balance
of the Class M1/M2/M3 Certificates (after taking into account the
payment of the Class M/1/M2/M3 Principal Distribution Amount on
such Distribution Date), (3) the Certificate Principal Balance
of the Class M4 Certificates (after taking into account the payment
of the Class M4 Principal Distribution Amount on such Distribution
Date), (4) the Certificate Principal Balance of the Class M5
Certificates (after taking into account the payment of the Class M5
Principal Distribution Amount on such Distribution Date),
(5) the Certificate Principal Balance of the Class M6
Certificates (after taking into account the payment of the Class M6
Principal Distribution Amount on such Distribution Date),
(6) the Certificate Principal Balance of the Class M7
Certificates (after taking into account the payment of the Class M7
Principal Distribution Amount on such Distribution Date),
(7) the Certificate Principal Balance of the Class M8
Certificates (after taking into account the payment of the Class M8
Principal Distribution Amount on such Distribution Date) and
(8) the Certificate Principal Balance of the Class M9
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 92.10% and
(2) the Aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance as of the last day of the related Due
Period over the Overcollateralization Floor.
“Class M10 Principal Distribution
Amount”: With respect to any Distribution Date, the
excess, if any, of (x) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (2) the
Certificate Principal Balance of the Class M1/M2/M3 Certificates
(after taking into account the payment of the Class M/1/M2/M3
Principal Distribution Amount on such Distribution Date),
(3) the Certificate Principal Balance of the Class M4
Certificates (after taking into account the payment of the Class M4
Principal Distribution Amount on such Distribution Date),
(4) the Certificate Principal Balance of the Class M5
Certificates (after taking into account the payment of the Class M5
Principal Distribution Amount on such Distribution Date),
(5) the Certificate Principal Balance of the Class M6
Certificates (after taking into account the payment of the Class M6
Principal Distribution Amount on such Distribution Date),
(6) the Certificate Principal Balance of the Class M7
Certificates (after taking into account the payment of the Class M7
Principal Distribution Amount on such Distribution Date),
(7) the Certificate Principal Balance of the Class M8
Certificates (after taking into account the payment of the Class M8
Principal Distribution Amount on such Distribution Date),
(8) the Certificate Principal Balance of the Class M9
Certificates (after taking into account the payment of the Class M9
Principal Distribution Amount on such Distribution Date) and
(9) the Certificate Principal Balance of the Class M10
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 93.50% and
(2) the Aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance as of the last day of the related Due
Period over the Overcollateralization Floor.
“Class M11 Principal Distribution
Amount”: With respect to any Distribution Date, the
excess, if any, of (x) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal
Distribution Amount on such Distribution Date), (2) the
Certificate Principal Balance of the Class M1/M2/M3 Certificates
(after taking into account the payment of the Class M/1/M2/M3
Principal Distribution Amount on such Distribution Date),
(3) the Certificate Principal Balance of the Class M4
Certificates (after taking into account the payment of the Class M4
Principal Distribution Amount on such Distribution Date),
(4) the Certificate Principal Balance of the Class M5
Certificates (after taking into account the payment of the Class M5
Principal Distribution Amount on such Distribution Date),
(5) the Certificate Principal Balance of the Class M6
Certificates (after taking into account the payment of the Class M6
Principal Distribution Amount on such Distribution Date),
(6) the Certificate Principal Balance of the Class M7
Certificates (after taking into account the payment of the Class M7
Principal Distribution Amount on such Distribution Date),
(7) the Certificate Principal Balance of the Class M8
Certificates (after taking into account the payment of the Class M8
Principal Distribution Amount on such Distribution Date),
(8) the Certificate Principal Balance of the Class M9
Certificates (after taking into account the payment of the Class M9
Principal Distribution Amount on such Distribution Date),
(9) the Certificate Principal Balance of the Class M10
Certificates (after taking into account the payment of the Class
M10 Principal Distribution Amount on such Distribution Date) and
(10) the Certificate Principal Balance of the Class M11
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 95.60% and
(2) the aggregate Principal Balance as of the last day of the
related Due Period and (B) the excess, if any, of the
Aggregate Principal Balance as of the last day of the related Due
Period over the Overcollateralization Floor.
“Class X Distribution
Amount”: With respect to any Distribution Date the sum of
(i) the Overcollateralization Release Amount for that
Distribution Date, if any, and (ii) the product of (x) a
notional amount, equal to the aggregate Stated Principal Balance of
the Mortgage Loans as of the first day of the month preceding the
month of such Distribution Date (after giving effect to Monthly
Payments of principal due on such date and reduced by Principal
Prepayments received and distributed in the month prior that
Distribution Date), and (y) the Pass-Through Rate for such
Class for such Distribution Date as set forth in footnote
(2) to the Certificates table under Section 1.03 herein, less
(iii) distributions made pursuant to Section 4.01(a)(3)(a)(i)
through (xxxviii) on such Distribution Date.
“Closing Date”: February 6,
2007.
“Code”: The Internal Revenue
Code of 1986, including any successor or amendatory
provisions.
“Collection Account”: The
account or accounts created and maintained by the Servicer pursuant
to Section 3.10(a), which shall be entitled “Select Portfolio
Servicing, Inc. as Servicer for U.S. Bank National Association, as
Trustee, in trust for the registered holders of Asset Backed
Securities Corporation Home Equity Loan Trust 2006-HE7, Series RFC
2007-HE1”. The Collection Account must be an Eligible
Account.
“Commission”: The Securities
and Exchange Commission.
“Compensating Interest”: As
defined in Section 3.24 herein.
“Controlling Person”: With
respect to any Person, any other Person who “controls”
such Person within the meaning of the Securities Act.
“Corporate Trust Office”: The
principal corporate trust office of the Trustee at which at any
particular time its corporate trust business in connection with
this Agreement shall be administered, which offices at the date of
the execution of this Agreement is located at 60 Livingston Avenue,
St. Paul, Minnesota, 55107-2292, Attn: Structured Finance,
ABSC RFC 2007-HE1, or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders,
the Depositor and the Servicer.
“Corresponding Classes of
Certificates”: With respect to each REMIC Regular Interest,
any Class of Certificates appearing opposite such REMIC Regular
Interest in Section 1.03 hereof.
“CPR”: A prepayment
assumption that represents an annualized constant assumed rate of
prepayment each month of a pool of mortgage loans relative to its
outstanding principal balance for the life of such pool.
“Credit Enhancement
Percentage”: For any Distribution Date the percentage
obtained by dividing (x) the sum of (i) the aggregate
Certificate Principal Balance of the Mezzanine Certificates (after
giving effect to the distribution of the Principal Distribution
Amount on such Distribution Date) and (ii) the
Overcollateralization Amount which for the purposes of this
definition shall not be less than zero (after giving effect to the
distribution of the Principal Distribution Amount on such
Distribution Date) by (y) the Aggregate Principal Balance as
of the last day of the related Due Period.
“Credit Repositories”: Each
of Equifax, Transunion, and Experian, or their respective
successors in interest.
“Custodial Agreement”: The
Custodial Agreement dated January 1, 2007 between the Trustee and
Wells Fargo Bank, N.A. and any other custodial agreement between
the Trustee and the Custodian providing for the safekeeping of any
documents or instruments referred to in Section 2.01 on behalf
of the Certificateholders.
“Custodial File”: A Mortgage
File held by a Custodian on behalf of the Trustee.
“Custodian”: Wells Fargo
Bank, N.A. and any other custodian that is appointed pursuant
to a Custodial Agreement. Any Custodian so appointed shall
act as agent on behalf of the Trustee, and shall be compensated by
the Trustee. The Trustee shall remain at all times
responsible under the terms of this Agreement, notwithstanding the
fact that certain duties have been assigned to a
Custodian.
“Cut-off Date”: With respect
to each Mortgage Loan (other than a Qualified Substitute Mortgage
Loan), January 1, 2007. With respect to all Qualified
Substitute Mortgage Loans, their respective dates of substitution.
References herein to the “Cut-off Date,” when
used with respect to more than one Mortgage Loan, shall be to the
respective Cut-off Dates for such Mortgage Loans.
“Debt Service Reduction”:
With respect to any Mortgage Loan, a reduction in the scheduled
Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such
a reduction resulting from a Deficient Valuation.
“Defaulting Party”: As
defined in the ISDA Master Agreement.
“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 the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the
Bankruptcy Code.
“Definitive Certificates”: As
defined in Section 5.01(b) herein.
“Deleted Mortgage Loan”: A
Mortgage Loan replaced or to be replaced by a Qualified Substitute
Mortgage Loan.
“Delinquency Percentage”:
With respect to the last day of a Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate
Stated Principal Balance of all Mortgage Loans that, as of the last
day of the previous calendar month, are 60 or more days Delinquent,
are in foreclosure, have been converted to REO Properties or have
been discharged by reason of bankruptcy, and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage
Loans and REO Properties as of the last day of the previous
calendar month.
“Delinquent”: A Mortgage Loan
is “Delinquent” if any Monthly Payment due on a Due
Date is not made by the close of business on the next scheduled Due
Date for such Mortgage Loan (including all foreclosures,
bankruptcies and REO Properties). A Mortgage Loan is
“30 days Delinquent” if such Monthly Payment has not
been received by the close of business on the corresponding day of
the month immediately succeeding the month in which such Monthly
Payment was due or, if there was no such corresponding date (e.g
., as when a 30-day month follows a 31-day month in which
the payment was due on the 31st day of such month), then on the
last day of such immediately succeeding month; and similarly for
“60 days Delinquent” and “90 days
Delinquent,” etc.
“Depositor”: Asset Backed
Securities Corporation, a Delaware corporation, or its successor in
interest.
“Depositor Certification”: As
defined in Section 4.06(b) herein, a form of which is attached
hereto as Exhibit H.
“Depository”: The Depository
Trust Company, or any successor Depository hereafter named.
The nominee of the initial Depository, for purposes of
registering those Certificates that are to be Book-Entry
Certificates, is CEDE & Co. 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
and a “clearing agency” registered pursuant to the
provisions of Section 17A of the Exchange Act.
“Depository Institution”: Any
depository institution or trust company, including the Trustee,
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 “F-1” by
Fitch (if rated by Fitch), “A-1” by S&P and
“P-1” by Moody’s (or comparable ratings if Fitch,
S&P and Moody’s are not the Rating Agencies).
“Depository Participant”: A
broker, dealer, bank or other financial institution or other Person
for whom from time to time a Depository effects book-entry
transfers and pledges of securities deposited with the
Depository.
“Determination Date”: With
respect to each Distribution Date, the 15th day of the calendar
month in which such Distribution Date occurs or, if such 15th day
is not a Business Day, the Business Day immediately preceding such
15th day.
“Directly Operate”: With
respect to any REO Property, the furnishing or rendering of
services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon
or any use of such REO Property in a trade or business conducted by
the Trust Fund other than through an Independent Contractor;
provided, however , that the Trustee (or the Servicer on
behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants,
enters into or renews leases, deals with taxes and insurance, or
makes decisions as to repairs or capital expenditures with respect
to such REO Property.
“Disqualified Organization”:
Any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are
subject to tax and, except for Freddie Mac, a majority of its board
of directors is not selected by such governmental unit), (ii) any
foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers’ cooperatives described in
Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric
and telephone cooperatives described in Section 1381(a)(2)(C) of
the Code, (v) an “electing large partnership” within
the meaning of Section 775 of the Code and (vi) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Certificate by such
Person may cause any REMIC created hereunder, or any Person having
an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed under the
Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a Residual Certificate to such Person.
The terms “United States,” “State”
and “international organization” shall have the
meanings set forth in Section 7701 of the Code or successor
provisions.
“Distribution Account”: The
trust account or accounts created and maintained by the Trustee
pursuant to Section 3.10(b) which shall be entitled
“Distribution Account, U.S. Bank National Association, as
Trustee, in trust for the registered holders of Asset Backed
Securities Corporation Home Equity Loan Trust, Series RFC
2007-HE1”. The Distribution Account must be an Eligible
Account.
“Distribution Date”:
The 25th day of any month, or if such 25th day is not a Business
Day, the Business Day immediately following such 25th day,
commencing in February 2007.
“Due Date”: With respect to
each Distribution Date and each Mortgage Loan (a) that has a
Monthly Payment due on the first day of the month, the first day of
the month and (b) that has a Monthly Payment due on a day other
than the first day of the month, such Mortgage Loan will be treated
as if the Monthly Payment is due on the first day of the
immediately succeeding month, in each case, exclusive of any days
of grace in the related Due Period.
“Due Period”: With respect to
any Distribution Date, the period commencing on the second day of
the month immediately preceding the month in which such
Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
“Early Termination Date”: As
defined in the ISDA Master Agreement.
“EDGAR”: The
Commission’s Electronic Data Gathering and Retrieval
System.
“Eligible Account”: Either
(1) an account or accounts maintained with a federal or
state-chartered Depository Institution or trust company acceptable
to the Rating Agencies and shall be: (a) commercial paper,
short-term debt obligation, or other short-term deposits rated at
least “A-1+” by S&P and “F-1+” by Fitch
(if rated by Fitch) if the deposits are to be held in the account
for less than 30 days; or (b) long term unsecured debt obligations
rated at least “AA-” by S&P if the deposits are to
be held in the account more than 30 days; following a downgrade,
withdrawal, or suspension of such institution’s rating, each
account should promptly (and in any case within not more than 10
calendar days) be moved to a qualifying institution or to one or
more segregated trust accounts in the trust department of such
institution, if permitted; or (2) a segregated trust account or
accounts 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 Code of Federal Regulation
Section 9.10(b), which, in either case, has corporate trust powers,
acting in its fiduciary capacity. Eligible Accounts may bear
interest.
“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 (without regard to
the ratings requirements) of an Underwriter’s
Exemption.
“Estate in Real Property”: A
fee simple estate in a parcel of land.
“Event of Default”: One or
more of the events described in Section 7.01(a) herein.
“Excess Overcollateralization
Amount”: With respect to any Distribution Date, the excess,
if any, of (i) the Overcollateralization Amount for such
Distribution Date (assuming that 100% of the Basic Principal
Distribution Amount is applied as a principal payment on such
Distribution Date) over (ii) the Overcollateralization Target
Amount for such Distribution Date.
“Exchange Act”: The
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Extraordinary Trust Fund
Expense”: Any amounts reimbursable to the Trustee or any
director, officer, employee or agent of the Trustee, from the Trust
Fund pursuant to Section 2.02, 2.03, 7.02 or 8.05(a) and any
amounts payable from the Distribution Account in respect of taxes
pursuant to Section 10.01(g)(iii), any amounts payable from the
Distribution Account in respect of any REMIC administration
pursuant to Section 10.01(c).
“Fannie Mae”: Fannie Mae,
formerly known as Federal National Mortgage Association, or any
successor thereto.
“Fannie Mae Representations”:
As defined in Schedule 3 hereto.
“FDIC”: Federal Deposit
Insurance Corporation or any successor thereto.
“Federal Funds Rate”: The
interest rate at which depository institutions lend balances at the
Federal Reserve to other depository institutions
overnight.
“Final Certification”: As
defined in Section 2.02.
“Final Distribution Date”:
The Distribution Date in December 2036.
“Final Recovery
Determination”: With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller, the Depositor or the Servicer, as the case
may be, pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, as applicable), a determination made by
the Servicer that all Insurance 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. The Servicer shall maintain
records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
“First Lien”: With respect to
any second lien Mortgage Loan, the mortgage loan relating to the
corresponding Mortgaged Property having a first priority
lien.
“Fitch”: Fitch Ratings, Inc.,
or its successor in interest thereto.
“Fixed Rate Mortgage Loan”:
Each of the Mortgage Loans identified in the Mortgage Loan Schedule
as having a Mortgage Rate that is fixed.
“Fixed-Rate PPC”: 100%
Fixed-Rate PPC means a CPR of 4.00% per annum of the then unpaid
principal balance of the Fixed Rate Mortgage Loans in the first
month of the life of such Mortgage Loans and an additional
approximately 1.4545% (precisely 16%/11 expressed as a percentage)
per annum in each month thereafter until the 12th month, and then
beginning in the 12th month and in each month thereafter during the
life of such Mortgage Loans, a CPR of 20% per annum.
“Formula Rate”: As to any
Class of LIBOR Certificates and any Distribution Date, the lesser
of (i) One-Month LIBOR plus the applicable Certificate Margin and
(ii) the applicable Maximum Rate.
“Freddie Mac”: Freddie Mac,
formerly known as Federal Home Loan Mortgage Corporation, or any
successor thereto.
“Freddie Mac
Representations”: As defined in Schedule 3 hereto.
“Gross Margin”: With respect
to each Adjustable Rate Mortgage Loan, the fixed percentage set
forth in the related Mortgage Note that is added to the Index on
each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage
Loan.
“Independent”: When used with
respect to any specified Person, any such Person who (a) is in fact
independent of the Depositor, the Servicer and their respective
Affiliates, (b) does not have any direct financial interest in or
any material indirect financial interest in the Depositor, the
Servicer or any Affiliate thereof, and (c) is not connected with
the Depositor, the Servicer or any Affiliate thereof as an officer,
employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions; provided, however ,
that a Person shall not fail to be Independent of the Depositor,
the Servicer or any Affiliate thereof merely because such Person is
the beneficial owner of 1% or less of any Class of securities
issued by the Depositor or the Servicer or any Affiliate thereof,
as the case may be.
“Independent Contractor”:
Either (i) any Person (other than the Servicer) that would be an
“independent contractor” with respect to the Trust Fund
within the meaning of Section 856(d)(3) of the Code if the Trust
Fund were a real estate investment trust (except that the ownership
tests set forth in that section shall be considered to be met by
any Person that owns, directly or indirectly, 35% or more of any
Class of Certificates), so long as the Trust Fund does not receive
or derive any income from such Person and provided that the
relationship between such Person and the Trust Fund is at
arm’s length, all within the meaning of Treasury Regulation
Section 1.856-4(b)(5), or (ii) any other Person (including the
Servicer) if the Trustee has received an Opinion of Counsel to the
effect that the taking of any action in respect of any REO Property
by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as
“foreclosure property” within the meaning of Section
860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause
any income realized in respect of such REO Property to fail to
qualify as Rents from Real Property.
“Index”: With respect to each
Adjustable Rate Mortgage Loan and each related Adjustment Date, the
index as specified in the related Mortgage Note.
“Initial Certification”: As
defined in Section 2.02.
“Insurance Proceeds”:
Proceeds of any title policy, hazard policy or other insurance
policy covering a Mortgage Loan, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing Mortgage
Loans held for its own account, subject to the terms and conditions
of the related Mortgage Note and Mortgage.
“Interest Accrual Period”:
With respect to any Distribution Date and the LIBOR Certificates,
will be the actual number of days (based on a 360-day year)
included in the period commencing on the immediately preceding
Distribution Date (or, in the case of the first such Interest
Accrual Period, commencing on the Closing Date) and ending on the
day immediately preceding such Distribution Date.
“Interest Determination
Date”: With respect to the LIBOR Certificates and any
Interest Accrual Period therefor, the second London Business Day
preceding the commencement of such Interest Accrual
Period.
“Interest Remittance Amount”:
With respect to any Distribution Date, the sum of the Subgroup 1
Interest Remittance Amount and the Subgroup 2 Interest Remittance
Amount.
“ISDA”: International
Swaps and Derivatives Association, Inc.
“ISDA Master Agreement”:
An ISDA Master Agreement (Multicurrency-Cross Border) in the
form published by ISDA in 1992 including the schedule
thereto.
“Late Collections”: With
respect to any Mortgage Loan and any Due Period, all amounts
received subsequent to the Determination Date immediately following
such Due Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds 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.
“Legal Fees”: As defined in
Section 8.05(b).
“LIBOR Certificates”: As
specified in the Preliminary Statement.
“Liquidation Event”: With
respect to any Mortgage Loan, any of the following events: (i) such
Mortgage Loan is paid in full; (ii) a Final Recovery Determination
is made as to such Mortgage Loan; (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold
or replaced pursuant to or as contemplated by Section 2.03, Section
3.16(c), Section 3.23 or Section 9.01; or (iv) such Mortgage Loan
becomes a Charged-off Mortgage Loan. With respect to any REO
Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO
Property is removed from the Trust Fund by reason of its being
purchased pursuant to Section 9.01.
“Liquidation Proceeds”: The
amount (other than Insurance Proceeds, Recoveries or amounts
received in respect of the rental of any REO Property prior to REO
Disposition) received by the Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the
power of eminent domain or condemnation, (ii) the liquidation of a
defaulted Mortgage Loan through a trustee’s sale, foreclosure
sale or otherwise, or (iii) the repurchase, substitution or sale of
a Mortgage Loan or an REO Property pursuant to or as contemplated
by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.
“Loan Performance Advisor”:
OfficeTiger Global Real Estate Services Inc., a Delaware
corporation, and its successors in interest.
“Loan Performance Advisor
Agreement”: The Loan Performance Advisor Agreement, dated as
of February 28, 2005, by and between the Depositor and the Loan
Performance Advisor.
“LPA Fee”: As to any
Distribution Date, an amount equal to the product of (a)
one-twelfth of the LPA Fee Rate and (b) the aggregate Stated
Principal Balance of the Mortgage Loans as of the first day of the
related Due Period or, in the case of the first Distribution Date,
the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date; provided however that the Loan Performance
Advisor Fee for any Distribution Date shall not be lower than
$1,500.
“LPA Fee Rate”: With respect
to each Mortgage Loan, either (a) 0.014% per annum or (b) if the
Loan Performance Advisor Fee is the amount calculated pursuant to
the proviso in the definition of “LPA Fee”, a per annum
rate determined by dividing such fee by the average of the
aggregate Stated Principal Balance of the Mortgage Loans as of the
first day of the related Due Period.
“Loan-to-Value Ratio” or
“LTV”: With respect to any first lien Mortgage Loan and
as of any date of determination, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the
related Mortgage Loan at such date and the denominator of which is
the Value of the related Mortgaged Property. With respect to
any second lien Mortgage Loan and as of any date of determination,
the fraction, expressed as a percentage, the numerator of which is
the sum of (a) the principal balance of the related Mortgage Loan
at the date of origination plus (b) the principal balance of the
related First Lien at the date of origination of such mortgage loan
and the denominator of which is the Value of the related Mortgaged
Property.
“London Business Day”: Any
day on which banks in the City of London and The City of New York
are open and conducting transactions in United States
dollars.
“Master REMIC”: As defined in
Section 1.03 of this Agreement.
“Maximum Rate”: The Subgroup
1 Maximum Rate, Subgroup 2 Maximum Rate or the Subordinate Maximum
Rate, as applicable.
“Maximum Mortgage Rate”: With
respect to each Adjustable Rate Mortgage Loan, the percentage set
forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.
“Minimum Mortgage Rate”: With
respect to each Adjustable Rate Mortgage Loan, the greater of (a)
the Gross Margin set forth in the related Mortgage Note and (b) the
percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
“Monthly Interest Distributable
Amount”: With respect to any Distribution Date and each Class
of Certificates, other than the Class P, Class R and Class X
Certificates, an amount equal to the amount of interest accrued
during the related Interest Accrual Period at the related
Pass-Through Rate on the Certificate Principal Balance of such
Class of Certificates immediately prior to such Distribution Date,
in each case, reduced by any Net Prepayment Interest Shortfalls
allocated to such Class of Certificates and any Relief Act Interest
Shortfalls allocated to such Class of Certificates, in each such
case, as such shortfalls are allocated pursuant to Section 1.02
herein.
“Monthly Payment”: With
respect to any Mortgage Loan, the scheduled monthly payment of
principal and interest on such Mortgage Loan which is payable by
the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient
Valuation and/or Debt Service Reduction with respect to such
Mortgage Loan and (ii) any reduction in the amount of interest
collectible from the related Mortgagor pursuant to the Relief Act;
(b) without giving effect to any extension granted or agreed to by
the Servicer pursuant to Section 3.07(a); and (c) on the assumption
that all other amounts, if any, due under such Mortgage Loan are
paid when due.
“Moody’s”:
Moody’s Investors Service, Inc. or its successor in
interest.
“Mortgage”: The mortgage,
deed of trust or other instrument creating a first or second lien
on, or first or second priority security interest in, a Mortgaged
Property securing a Mortgage Note.
“Mortgage File”: The mortgage
documents listed in Section 2.01 pertaining to a particular
Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to this Agreement.
“Mortgage Loan”: Each
mortgage loan transferred and assigned to the Trustee pursuant to
Section 2.01 or Section 2.03(c) of this Agreement, as held from
time to time as a part of the Trust Fund, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule, including each
REO Property unless the context otherwise requires.
“Mortgage Loan Schedule”: As
of any date, the list of Mortgage Loans included in the Trust Fund
on such date, attached hereto as Schedule 1. The Mortgage
Loan Schedule shall set forth by Subgroup the following information
with respect to each Mortgage Loan in such Subgroup:
(i)
the Mortgagor’s name and the
Originator’s Mortgage Loan identifying number;
(ii)
the street address of the Mortgaged
Property including the state and zip code;
(iii)
a code indicating whether the Mortgaged
Property is owner-occupied;
(iv)
the type of Residential Dwelling
constituting the Mortgaged Property;
(v)
the original months to
maturity;
(vi)
the Loan-to-Value Ratio, at
origination;
(vii)
the Mortgage Rate in effect immediately
following the Cut-off Date;
(viii)
the date on which the first Monthly
Payment was due on the Mortgage Loan;
(ix)
the stated maturity date of such Mortgage
Loan and of the related First Lien, if applicable;
(x)
the amount of the Monthly Payment (a) at
origination and (b) due on the first Due Date after the Cut-off
Date;
(xi)
the last Due Date on which a Monthly
Payment was actually applied to the unpaid Stated Principal
Balance;
(xii)
the original principal amount of the
Mortgage Loan and the original principal balance of the related
First Lien, if applicable, as of the date of
origination;
(xiii)
the Stated Principal Balance of the
Mortgage Loan and the Stated Principal Balance of the related First
Lien, if applicable, as of the close of business on the Cut-off
Date;
(xiv)
with respect to each Adjustable Rate
Mortgage Loan, the applicable Index and Gross Margin;
(xv)
a code indicating the purpose of the
Mortgage Loan (i.e., purchase financing, rate/term refinancing,
cash-out refinancing);
(xvi)
with respect to each Adjustable Rate
Mortgage Loan, the Maximum Mortgage Rate;
(xvii)
with respect to each Adjustable Rate
Mortgage Loan, the Minimum Mortgage Rate;
(xviii)
the Mortgage Rate at
origination;
(xix)
with respect to each Adjustable Rate
Mortgage Loan, the Periodic Rate Cap and the maximum first
Adjustment Date Mortgage Rate adjustment;
(xx)
a code indicating the documentation
program;
(xxi)
with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date immediately following the
Cut-off Date and the Adjustment Date frequency;
(xxii)
the Value of the Mortgaged
Property;
(xxiii)
the sale price of the Mortgaged Property,
if applicable;
(xxiv)
the Originator’s risk grade and the
FICO or other credit score;
(xxv)
the actual interest “paid to
date” of the Mortgage Loan as of the Cut-off Date;
(xxvi)
the number of years any Prepayment
Premium is in effect;
(xxvii)
the loan type (e.g., fixed, adjustable;
2/28, 2/28 IO, 3/27, 3/27 IO etc.);
(xxviii)
the actual unpaid principal balance
of the Mortgage Loan as of the Cut-off Date;
(xxix)
a code indicating whether such Mortgage
Loan is a Subgroup 1 Mortgage Loan or a Subgroup 2
Mortgage Loan;
(xxx)
a code indicating whether the Mortgage
Loan is a second lien Mortgage Loan; and
(xxxi)
a code indicating whether the Mortgage
Loan is subject to a Prepayment Premium, if any.
The Mortgage Loan Schedule shall set
forth the following information with respect to the Mortgage Loans
in the aggregate as of the Cut-off Date: (1) the number of Mortgage
Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage
Loans; and (4) the weighted average maturity of the Mortgage Loans.
The Mortgage Loan Schedule shall set forth the aggregate
Stated Principal Balance of the Mortgage Loans. The Mortgage
Loan Schedule shall be amended from time to time by the Depositor
in accordance with the provisions of this Agreement. With
respect to any Qualified Substitute Mortgage Loan, the Cut-off Date
shall refer to the related Cut-off Date for such Mortgage Loan,
determined in accordance with the definition of Cut-off Date
herein.
“Mortgage Note”: The original
executed note or other evidence of the indebtedness of a Mortgagor
under a Mortgage Loan.
“Mortgage Pool”: The pool of
Mortgage Loans, identified on Schedule 1 from time to time, and any
REO Properties acquired in respect thereof.
“Mortgage Rate”: With respect
to each Mortgage Loan, the annual rate at which interest accrues on
such Mortgage Loan from time to time in accordance with the
provisions of the related Mortgage Note. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the
immediately preceding sentence as of the date such Mortgage Loan
became an REO Property.
“Mortgaged Property”: The
underlying property securing a Mortgage Loan, including any REO
Property, consisting of an Estate in Real Property or a leasehold
interest improved by a Residential Dwelling.
“Mortgagor”: The obligor on a
Mortgage Note.
“Net Counterparty Payment”:
For each Swap Payment Date, the excess, if any, of the Swap
Counterparty Payment over the Trust Swap Payment for such
date.
“Net Liquidation Proceeds”:
With respect to any liquidation of a Mortgage Loan or any other
disposition of related Mortgaged Property (including REO Property),
the related Liquidation Proceeds, net of P&I Advances,
Servicing Advances, Servicing Fees and any other fees, received and
retained in connection with the liquidation of such Mortgage Loan
or Mortgaged Property in accordance with the terms of this
Agreement.
“Net Monthly Excess
Cashflow”: With respect to any Distribution Date, an amount
equal to the sum of (i) any Overcollateralization Release Amount
for such Distribution Date and (ii) the positive excess of (x) the
Available Distribution Amount for such Distribution Date over (y)
the sum for such Distribution Date of (A) the Monthly Interest
Distributable Amounts for the LIBOR Certificates pursuant to
Section 4.01(a)(1), (B) any Unpaid Interest Shortfall Amounts for
the Class A Certificates, (C) the Principal Remittance Amount, (D)
the Net Trust Swap Payment (unless an Early Termination Date has
occurred) and (E) any Swap Termination Payment required to be paid
by the Supplemental Interest Trust (unless the Swap Counterparty is
the Defaulting Party or the Sole Affected Party).
“Net Mortgage Rate”: With
respect to any Mortgage Loan (or the related REO Property) as of
any date of determination, a per annum rate of interest equal to
the then applicable Mortgage Rate for such Mortgage Loan minus the
Administration Fee Rate.
“Net Prepayment Interest
Shortfall”: With respect to any Distribution Date, the
excess, if any, of any Prepayment Interest Shortfalls for such date
over the related Compensating Interest.
“Net Trust Swap Payment”:
For each Swap Payment Date, the excess, if any, of the Trust
Swap Payment over the Swap Counterparty Payment for such
date.
“Net WAC Rate”: The
Subgroup 1 Net WAC Rate, the Subgroup 2 Net WAC Rate or
the Subordinate Net WAC Rate, as applicable.
“Net WAC Rate Carryover
Amount”: For any Distribution Date on which the Pass-Through
Rate for any Class of LIBOR Certificates is equal to the related
Net WAC Rate, an amount equal to the sum of (i) the excess of (x)
the amount of interest such Class accrued for such Distribution
Date at the related Formula Rate, over (y) the amount of interest
such Class accrued for such Distribution Date at the related Net
WAC Rate and (ii) the unpaid portion of any related Net WAC Rate
Carryover Amount from the prior Distribution Date together with
interest accrued on such unpaid portion for the most recently ended
Interest Accrual Period at the Formula Rate applicable for such
Class for such Interest Accrual Period.
“Net WAC Reserve Fund”: The
Eligible Account established pursuant to Section 3.26.
“New Lease”: Any lease of REO
Property entered into on behalf of the Trust Fund, including any
lease renewed or extended on behalf of the Trust Fund, if the Trust
Fund has the right to renegotiate the terms of such
lease.
“NIM Note”: Any debt
instrument secured by distributions on any of the Certificates
issued by the Trust.
“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 of the Servicer using Accepted
Servicing Practices, will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
“Nonrecoverable Servicing
Advance”: Any Servicing Advance previously made or proposed
to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Servicer using Accepted
Servicing Practices, will not or, in the case of a proposed
Servicing Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.
“Non-United States Person”:
Any Person other than a United States Person.
“Offered Certificates”: As
defined in the Preliminary Statement.
“Offered Subordinate
Certificates”: As specified in the Preliminary
Statement.
“Officers’
Certificate”: With respect to the Depositor and the Seller, a
certificate signed by the Chairman of the Board, the Vice Chairman
of the Board, the President, a vice president (however denominated)
or an authorized agent, and by the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor or Seller, as applicable. With respect to the
Servicer, any officer who is authorized to act for the Servicer in
matters relating to this Agreement, and whose action is binding
upon the Servicer, initially including those individuals whose
names appear on the list of authorized officers delivered at the
closing.
“One-Month LIBOR”: With
respect to the LIBOR Certificates and any Interest Accrual
Period therefor, the rate determined by the Trustee on the related
Interest Determination Date (or with respect to the initial
Interest Accrual Period, on the Closing Date based on information
available on the related Interest Determination Date) on the basis
of the offered rate for one-month U.S. dollar deposits, as such
rate appears on Telerate Page 3750 as of 11:00 a.m. (London time)
on such Interest Determination Date; provided that if such rate
does not appear on Telerate Page 3750, the rate for such date will
be determined on the basis of the offered rates of the Reference
Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London
time) on such Interest Determination Date. In such event, the
Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If on
such Interest Determination Date, two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If on such Interest Determination
Date, fewer than two Reference Banks provide such offered
quotations, One-Month LIBOR for the related Interest Accrual Period
shall be the higher of (i) One-Month LIBOR as determined on
the previous Interest Determination Date and (ii) the Reserve
Interest Rate. Notwithstanding the foregoing, if, under the
priorities described above, One-Month LIBOR for an Interest
Determination Date would be based on One-Month LIBOR for the
previous Interest Determination Date for the third consecutive
Interest Determination Date, the Trustee shall select an
alternative comparable index (over which the Trustee has no
control), used for determining one-month Eurodollar lending rates
that is calculated and published (or otherwise made available) by
an independent party.
“Operative Documents”: This
Agreement, the Assignment and Assumption Agreement and any other
documents related hereto or thereto.
“Opinion of Counsel”: A
written opinion of counsel, who may, without limitation, be
salaried counsel for the Depositor or the Servicer and which shall
be acceptable to the Trustee (which acceptance shall not be
unreasonably withheld), except that any opinion of counsel relating
to (a) the qualification of any REMIC created hereunder or (b)
compliance with the REMIC Provisions must be an opinion of
Independent counsel.
“Optional Termination”:
With respect to the majority Class X Certificateholder (so
long as (a) it is not an affiliate of the Depositor or the Seller
or (b) the Class X Certificates are not securing a NIM Note), the
purchase by the Servicer at the direction and on behalf of the
majority Class X Certificateholder of the Mortgage Loans and each
REO Property remaining in the Trust Fund. With respect to the
Servicer, the purchase by the Servicer (so long as the Class X
Certificates are not securing a NIM Note) of the Mortgage Loans and
each REO Property remaining in the Trust Fund.
“Optional Termination Date”:
Each Distribution Date that any Terminating Entity shall be
permitted to purchase the Mortgage Loans and REO Properties
pursuant to Section 9.01(b).
“Original Certificate Principal
Balance”: With respect to any Class of Certificates, other
than the Class R and Class X Certificates, the Certificate
Principal Balance thereof on the Closing Date and as specified in
Section 1.03 hereof.
“Outsourcer”: As defined in
Section 3.02(c) herein.
“Overcollateralization
Amount”: As of any Distribution Date, the excess, if any, of
(a) the aggregate Stated Principal Balances of the Mortgage Loans
and REO Properties as of the last day of the related Due Period
(giving effect to scheduled payments received or advanced on or
before the related Determination Date and principal payments
received during the related Prepayment Period) for such
Distribution Date over (b) the sum of the aggregate Certificate
Principal Balances of the LIBOR and Class P Certificates as of such
Distribution Date (after taking into account the payment of the
Basic Principal Distribution Amount on such Distribution
Date).
“Overcollateralization Deficiency
Amount”: With respect to any Distribution Date, the excess,
if any, of (a) the Overcollateralization Target Amount applicable
to such Distribution Date over (b) the Overcollateralization Amount
applicable to such Distribution Date (assuming that 100% of the
Basic Principal Distribution Amount is applied as a payment of
principal) on such Distribution Date.
“Overcollateralization
Floor”: $3,532,662.
“Overcollateralization Increase
Amount”: With respect to any Distribution Date, the lesser of
(a) the Overcollateralization Deficiency Amount for such
Distribution Date and (b) Net Monthly Excess Cash Flow available
for distribution on that Distribution Date pursuant to Section
4.01(a)(3)(a).
“Overcollateralization Release
Amount”: With respect to any Distribution Date, an amount
equal to the lesser of (a) the Excess Overcollateralization Amount
and (b) the Basic Principal Distribution Amount for such
Distribution Date.
“Overcollateralization Target
Amount”: With respect to any Distribution Date (1) prior to
the Stepdown Date, 2.20% of the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date, (2) on or after the
Stepdown Date provided a Trigger Event is not in effect, the
greater of (x) 4.40% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period
(giving effect to scheduled payments received or advanced on or
before the related Determination Date and principal payments
received during the related Prepayment Period) and (y) the
Overcollateralization Floor and (3) on or after the Stepdown Date
if a Trigger Event is in effect, the Overcollateralization Target
Amount for the immediately preceding Distribution Date.
“Ownership Interest”: As to
any Certificate, any ownership or security 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, as owner or as pledgee.
“Party B”: U.S. Bank National
Association, a national banking association, not in its individual
capacity, but solely as trustee on behalf of the Supplemental
Interest Trust as Party B to the Swap Agreement.
“Pass-Through Rate”:
For any Distribution Date with respect to any class of LIBOR
Certificates will equal the lesser of (a) the related Formula Rate
and (b) the related Net WAC Rate for such Distribution Date.
For any Distribution Date and the Class X Certificates, the
rate set forth for the Class X Certificates in footnote (2) to the
“Master REMIC–Certificates” table in Section
1.03.
“PCAOB”: The Public Company
Accounting Oversight Board.
“Percentage Interest”: As to
any certificate, either the percentage set forth on the face
thereof or the percentage obtained by dividing the initial
Certificate Principal Balance represented by such certificate by
the aggregate initial Certificate Principal Balance of all of the
Certificates of such Class.
“Periodic Rate Cap”: With
respect to each Adjustable Rate Mortgage Loan and any Adjustment
Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without
regard to the Maximum Mortgage Rate or the Minimum Mortgage Rate)
on such Adjustment Date from the Mortgage Rate in effect
immediately prior to such Adjustment Date.
“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 Depositor, the Servicer, the Trustee or any of their
respective Affiliates:
(a)
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;
(b)
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 that are rated in the
highest rating category by each Rating Agency and issued by any
Depository Institution;
(c)
repurchase obligations with respect to
any security described in clause (a) above entered into with a
Depository Institution (acting as principal);
(d)
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 each Rating Agency that rates such securities in its
highest long-term unsecured rating category at the time of such
investment or contractual commitment providing for such
investment;
(e)
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
each Rating Agency that rates such securities in its highest
short-term unsecured debt rating available at the time of such
investment;
(f)
units of money market funds, including
money market funds managed or advised by the Trustee or an
Affiliate thereof, that have been rated “AAA” by Fitch
(if rated by Fitch), “Aaa” by Moody’s (if rated
by Moody’s) and “AAA” by S&P (if rated by
S&P); and
(g)
if previously confirmed in writing to the
Trustee, any other demand, money market or time deposit, or any
other obligation, security or investment, as may be acceptable to
the Rating Agencies as a permitted investment of funds backing
securities having ratings equivalent to its highest initial rating
of the Class A Certificates; provided, however , that
any Permitted Investment pursuant to this clause (g) which solely
contains a short-term rating shall be a Permitted Investment rated
in the highest category for such short-term rating;
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% of the yield to maturity at par of the underlying
obligations.
“Permitted Transferee”: Any
Transferee of a Residual Certificate other than a Disqualified
Organization or Non-United States Person.
“Person”: Any individual,
corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
“P&I Advance”: As to any
Mortgage Loan or REO Property, any advance made by the Servicer in
respect of any Distribution Date representing the aggregate of all
payments of principal and interest, net of the Servicing Fee, that
were due during the related Due Period on the related 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 Section 4.03. The Servicer will not be required to make
any Nonrecoverable P&I Advances as described in Section
4.03.
“Plan”: Any employee benefit
plan (as defined in Section 3(3) of ERISA) or other plan as defined
in Section 4975(e)(1) of the Code that is subject to Title I of
ERISA or Section 4975 of the Code, or any entity deemed to hold the
plan assets of the foregoing.
“Pool Principal Balance”: As
of any Distribution Date, the aggregate Stated Principal Balance of
the Mortgage Loans.
“Prepayment Assumption”: With
respect to the (i) Adjustable Rate Mortgage Loans, 100%
Adjustable-Rate PPC and (ii) Fixed Rate Mortgage Loans, 115%
Fixed-Rate PPC. The Prepayment Assumption is used solely for
determining the accrual of original issue discount on the
Certificates for federal income tax purposes.
“Prepayment Interest Excess”:
With respect to any Distribution Date, an amount equal to interest
payments with Principal Prepayments in full received during the
first day through the fifteenth day of a calendar month in a
Prepayment Period representing interest accruals for the portion of
the Prepayment Period from such first day to the date such
prepayment is applied by the Servicer.
“Prepayment Interest
Shortfall”: With respect to any Determination Date, for each
Mortgage Loan that was during the related Prepayment Period subject
to a Principal Prepayment (other than a Principal Prepayment
received on or prior to the Closing Date or during that portion of
the related Prepayment Period occurring during the first day of the
calendar month in which the such Determination Date occurs and the
last day of the Prepayment Period) that was applied by the Servicer
to reduce the outstanding principal balance of such Mortgage Loan
on a date preceding the Due Date in the succeeding Prepayment
Period, an amount equal to the product of (a) the Net Mortgage Rate
for such Mortgage Loan, (b) the amount of the Principal Prepayment
for such Mortgage Loan, (c) 1/360 and (d) the number of days
commencing on the date on which the prepayment is applied and
ending on the last day of the calendar month preceding the month of
such Determination Date. The obligations of the Servicer in
respect of any Prepayment Interest Shortfall are set forth in
Section 3.24.
“Prepayment Period”:
For any Distribution Date and (i) Principal Prepayments in
full, the period beginning on the sixteenth day of the calendar
month preceding the month of such Distribution Date and ending on
the fifteenth day of the month of such Distribution Date and (ii)
Principal Prepayments in part, the calendar month preceding the
month of such Distribution Date, except, in each case, with respect
to the first Distribution Date, when the Prepayment Period for all
prepayments will commence on January 24, 2007.
“Prepayment Premium”: With
respect to any Mortgage Loan and Prepayment Period, any prepayment
premium, penalty or charge collected by the Servicer from a
Mortgagor in connection with any voluntary Principal Prepayment and
held from time to time as a part of the Trust Fund. The
Servicer shall calculate, in good faith using Accepted Servicing
Practices, the amount of any Prepayment Premium solely pursuant to
the terms of the related Mortgage Note.
“Prepayment Premium
Schedule”: As of the Cut-off Date, a list attached hereto as
Schedule 2 (including the Prepayment Premium Summary attached
thereto) in an electronic format, setting forth the following
information with respect to each Prepayment Premium:
(i)
the Mortgage Loan identifying
number;
(ii)
a code indicating the type of Prepayment
Premium;
(iii)
the state of origination of the related
Mortgage Loan;
(iv)
the date on which the first monthly
payment was due on the related Mortgage Loan;
(v)
the term of the related Prepayment
Premium;
(vi)
the principal balance of the related
Mortgage Loan as of the Cut-off Date; and
(vii)
such other information as is reasonably
requested by the Trustee.
Upon notice to the Trustee, the Servicer
shall amend the Prepayment Premium Schedule (i) if the Servicer has
waived a Prepayment Premium or (ii) upon the substitution of any
Mortgage Loan. The Servicer shall furnish a copy of the
amended Prepayment Premium Schedule to the Trustee. With
respect to a waived Prepayment Premium, the Servicer may deliver to
the Trustee an Officer’s Certificate as described in Section
3.07(b) in lieu of an amended Prepayment Premium
Schedule.
“Prime Rate”: The rate of
interest equal to the prime rate as reported in The Wall Street
Journal .
“
Principal Distribution Amount”: With respect to any
Distribution Date, the lesser of:
(a)
the excess of the Available Distribution
Amount over the amount payable on the Certificates from the
Available Distribution Account pursuant to Section 4.01(a)(1)(i)
– (xiv); and
(b)
the sum of
(i)
the principal portion of each Monthly
Payment on the Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination
Date;
(ii)
the Stated Principal Balance of any
Mortgage Loan that was purchased during the calendar month
preceding the month of such Distribution Date pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01 and
the amount of any shortfall deposited in the Collection Account in
connection with the substitution of a Deleted Mortgage Loan
pursuant to Section 2.03 during the calendar month preceding the
month of such Distribution Date;
(iii)
the principal portion of all other
unscheduled collections in respect of Insurance Proceeds,
Liquidation Proceeds and REO Principal Amortization received during
the calendar month preceding the month of such Distribution Date,
net of any portion thereof that represents a recovery of principal
for which an advance was made by the Servicer pursuant to Section
4.03 in respect of a preceding Distribution Date and any Recoveries
received during the calendar month preceding the month of such
Distribution Date;
(iv)
the principal portion of all unscheduled
collections in respect of Principal Prepayments received during the
related Prepayment Period; and
(v)
the amount of any Overcollateralization
Increase Amount for such Distribution Date to the extent covered by
Net Monthly Excess Cashflow for such Distribution Date;
minus:
(c)
the amount of any Overcollateralization
Release Amount for such Distribution Date.
“Principal Prepayment”: Any
payment of principal made by the Mortgagor on a Mortgage Loan which
is received in advance of its scheduled Due Date and which is not
accompanied by an amount of interest (without regard to any
Prepayment Premium that may have been collected by the Servicer in
connection with such payment of principal) representing the full
amount of scheduled interest due on any Due Date in any month or
months subsequent to the month of prepayment.
“Principal Remittance
Amount”: With respect to any Distribution Date, that portion
of the Available Distribution Amount equal to the sum of (i) all
scheduled payments of principal collected or advanced on the
Mortgage Loans by the Servicer that were due during the related Due
Period, (ii) the principal portion of all Principal Prepayments of
the Mortgage Loans, if any, applied by the Servicer during the
related Prepayment Period, (iii) the principal portion of all
related Net Liquidation Proceeds, Insurance Proceeds and Recoveries
received during the calendar month preceding the month of such
Distribution Date, (iv) that portion of the Purchase Price
representing principal of any purchased or repurchased Mortgage
Loan, deposited to the Collection Account during the calendar month
preceding the month of such Distribution Date, (v) the principal
portion of the amount of any shortfall deposited in the Collection
Account in connection with the substitution of a Deleted Mortgage
Loan pursuant to Section 2.03 during the calendar month preceding
the month of such Distribution Date and (vi) on the Distribution
Date on which the Trust is to be terminated in accordance with this
Agreement, that portion of the Termination Price in respect of
principal.
“PTCE”: A Prohibited
Transaction Class Exemption.
“Purchase Price”: With
respect to any Mortgage Loan or REO Property to be purchased
pursuant to or as contemplated by Section 2.03 or Section 3.16(c),
and as calculated and confirmed in writing by the Servicer to the
Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other
price as provided in Section 9.01), (ii) in the case of
(x) a Mortgage Loan, accrued interest on such Stated Principal
Balance at the applicable Mortgage Rate in effect from time to time
from the Due Date as to which interest was last covered by a
payment by the Mortgagor or an advance by the Servicer through the
end of the calendar month in which the purchase is to be effected
and (y) an REO Property, the sum of (1) accrued interest
on such Stated Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was
last covered by a payment by the Mortgagor or an advance by the
Servicer through the end of the calendar month immediately
preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property
for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month
in which such purchase is to be effected, net of the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and
P&I Advances that as of the date of purchase had been
distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I
Advances and any unpaid Servicing Fees allocable to such Mortgage
Loan or REO Property and any P&I Advances previously reimbursed
to the Servicer pursuant to Section 3.11(a)(vi) (except in the case
of a purchase by the Servicer), (iv) any amounts previously
withdrawn from the Collection Account in respect of such Mortgage
Loan or REO Property pursuant to Section 3.11(a)(ix) and Section
3.16(b), (v) in the case of a Mortgage Loan required to be
purchased pursuant to Section 2.03, expenses reasonably incurred or
to be incurred by the Servicer or the Trustee in respect of the
breach or defect giving rise to the purchase obligation and
(vi) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, any costs, indemnities and damages
actually incurred and paid by or on behalf of the Trust in
connection with any violation with respect to such Mortgage Loan of
(i) the representation and warranties set forth in Section
2.05(b)(vii) or (viii) of this Agreement or (ii) the
representations and warranties made in Schedule 3 hereto in
connection with “high-cost” home loans or a mortgage
loan’s compliance with applicable law, including any
predatory or abusive lending laws.
“Qualified Substitute Mortgage
Loan”: A Mortgage Loan substituted for a Deleted Mortgage
Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal
and interest due during or prior to the month of substitution, not
in excess of and not more than 5% less than the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have
a Mortgage Rate not less than (and not more than one percentage
point in excess of) the Mortgage Rate of the Deleted Mortgage Loan,
(iii) with respect to each Adjustable Rate Mortgage Loan have
a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on
the Deleted Mortgage Loan, (iv) with respect to each
Adjustable Rate Mortgage Loan have a Minimum Mortgage Rate not less
than the Minimum Mortgage Rate of the Deleted Mortgage Loan,
(v) with respect to each Adjustable Rate Mortgage Loan have a
Gross Margin equal to or greater than the Gross Margin of the
Deleted Mortgage Loan, (vi) with respect to each Adjustable
Rate Mortgage Loan, adjust in accordance with the Index and have a
next Adjustment Date not less than six months and not more than
eight months later than the next Adjustment Date on the Deleted
Mortgage Loan, and have the same intervals between Adjustment Dates
as the Deleted Mortgage Loan, (vii) have a remaining term to
maturity not greater than (and not more than one year less than)
that of the Deleted Mortgage Loan, (viii) have the same Due
Date as the Due Date on the Deleted Mortgage Loan, (ix) have a
Loan-to-Value Ratio as of the date of substitution equal to or
lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (x) have a risk grading certified by the Seller
at least equal to the risk grading assigned on the Deleted Mortgage
Loan, (xi) have been underwritten or reunderwritten by the
Originator in accordance with the same underwriting criteria and
guidelines as the Mortgage Loans being replaced, (xii) be of
the same or better credit quality as the Mortgage Loan being
replaced, (xiii) have a lien priority equal to or superior to
that of the Deleted Mortgage Loan, (xiv) be secured by the
same property type as the Deleted Mortgage Loan and
(xv) conform to each representation and warranty in this
Agreement. In the event that one or more Mortgage Loans are
substituted for one or more Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be determined on the basis of
aggregate Stated Principal Balances, the Mortgage Rates described
in clause (ii) hereof shall be determined on the basis of weighted
average Mortgage Rates, the terms described in clause (vii) hereof
shall be determined on the basis of weighted average remaining term
to maturity, the Loan-to-Value Ratios described in clause (ix)
hereof shall be satisfied as to each such Mortgage Loan, the risk
gradings described in clause (x) hereof shall be satisfied as to
each such Mortgage Loan and, except to the extent otherwise
provided in this sentence, the representations and warranties
described in clause (xv) hereof must be satisfied as to each
Qualified Substitute Mortgage Loan or in the aggregate, as the case
may be.
“Qualifying SPE”: As
set forth in SFAS 140.
“Rating Agency or Rating
Agencies”: S&P, Moody’s and Fitch or their
successors. If such agencies or their successors are no
longer in existence, “Rating Agencies” shall be such
nationally recognized statistical rating agencies, or other
comparable Persons, designated by the Depositor, notice of which
designation shall be given to the Trustee and the
Servicer.
“Realized Loss”: With respect
to each Mortgage Loan as to which a Final Recovery Determination
has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery
Determination was made, plus (ii) accrued interest from the
Due Date as to which interest was last paid by the Mortgagor
through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar
month during such period (A) at an annual rate equal to the
annual rate at which interest was then accruing on such Mortgage
Loan and (B) on a principal amount equal to the Stated
Principal Balance of such Mortgage Loan as of the close of business
on the Distribution Date during such calendar month, plus
(iii) any amounts previously withdrawn from the Collection
Account in respect of such Mortgage Loan pursuant to Section
3.11(a)(ix) and Section 3.16(b), minus (iv) the proceeds, if
any, received in respect of such Mortgage Loan during the calendar
month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the Servicer with respect to
such Mortgage Loan pursuant to Section 3.11(a)(iii).
With respect to any REO Property as to
which a Final Recovery Determination has been made, an amount (not
less than zero) equal to (i) the unpaid principal balance of
the related Mortgage Loan as of the date of acquisition of such REO
Property on behalf of the Trust Fund, plus (ii) accrued
interest from the Due Date as to which interest was last paid by
the Mortgagor in respect of the related Mortgage Loan through the
end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, calculated in the case of
each calendar month during such period (A) at an annual rate
equal to the annual rate at which interest was then accruing on the
related Mortgage Loan and (B) on a principal amount equal to
the Stated Principal Balance of the related Mortgage Loan as of the
close of business on the Distribution Date during such calendar
month, plus (iii) REO Imputed Interest for such REO Property
for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month
in which such Final Recovery Determination was made, plus
(iv) any amounts previously withdrawn from the Collection
Account in respect of the related Mortgage Loan pursuant to Section
3.11(a)(ix) and Section 3.16(b), minus (v) the aggregate of
all P&I Advances made by the Servicer in respect of such REO
Property or the related Mortgage Loan for which the Servicer has
been or, in connection with such Final Recovery Determination, will
be reimbursed pursuant to Section 3.23 out of rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of
such REO Property, minus (vi) the total of all net rental
income, Insurance Proceeds and Liquidation Proceeds received in
respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the
Distribution Account pursuant to Section 3.23.
With respect to each Mortgage Loan that
has become the subject of a Deficient Valuation, the difference
between the principal balance of such Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal
balance of such Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan that
has become the subject of a Debt Service Reduction, the portion, if
any, of the reduction in each affected Monthly Payment attributable
to a reduction in the Mortgage Rate imposed by a court of competent
jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly
Payment.
“Record Date”: With respect
to any Distribution Date and any Definitive Certificates, the close
of business on the last Business Day of the month immediately
preceding the month in which such applicable Distribution Date
occurs. With respect to any Distribution Date and the LIBOR
Certificates (other than any Definitive Certificates), the Business
Day prior to such Distribution Date.
“Recovery”: With respect to
any Distribution Date and any Mortgage Loan that was determined to
be a Liquidated Mortgage Loan in any month prior to the month
preceding that Distribution Date, an amount received in respect of
such Liquidated Mortgage Loan during the calendar month prior to
that Distribution Date, net of reimbursable expenses.
“Reference Banks”: Deutsche
Bank, Barclays Bank PLC, The Tokyo Mitsubishi Bank and National
Westminster Bank PLC and their successors in interest; provided,
however , that if any of the foregoing banks are not able to
serve as a Reference Bank, then any leading banks selected by the
Trustee which are engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established
place of business in London, (ii) not controlling, under the
control of or under common control with the Depositor or any
Affiliate thereof and (iii) which have been designated as such
by the Trustee.
“Refinanced Mortgage Loan”: A
Mortgage Loan the proceeds of which were not used to purchase the
related Mortgaged Property.
“Regular Certificate”: As
specified in the Preliminary Statement.
“Regular Interest”: A
“regular interest” in a REMIC within the meaning of
Section 860G(a)(1) of the Code.
“Regulation AB”: Means
Subpart 229.1100 – Asset Backed Securities (Regulation AB),
17 C.F.R. §§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 Red. 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.
“Reg AB Sub-Servicer”: Any
Person that (i) is a Servicing Function Participant, (ii) services
Mortgage Loans on behalf of the Servicer, and (iii) is responsible
for the performance (whether directly or through sub-servicers or
Subcontractors) of a substantial portion of the material Servicing
functions required to be performed under this Agreement, or any
sub-servicing agreement that are identified in Item 1122(d) of
Regulation AB.
“Relief Act”: The
Servicemembers Civil Relief Act or any similar state or local
law.
“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 calendar month as
a result of the application of the Relief Act.
“REMIC”: A “real estate
mortgage investment conduit” within the meaning of Section
860D of the Code.
“REMIC I”: The segregated
pool of assets subject hereto, constituting the primary trust
created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made, consisting of (i) such
Mortgage Loans as from time to time are subject to this Agreement,
together with the Mortgage Files relating thereto, and together
with all collections thereon and proceeds thereof, (ii) any
REO Property, together with all collections thereon and proceeds
thereof, (iii) the Trustee’s rights with respect to the
Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof,
(iv) and (iv) the Collection Account (other than any
amounts representing any Servicer Prepayment Premium Payment
Amount), the Distribution Account (other than any amounts
representing any Servicer Prepayment Premium Payment
Amount) and any REO Account and such assets that are deposited
therein from time to time and any investments thereof, together
with any and all income, proceeds and payments with respect
thereto. Notwithstanding the foregoing, however, REMIC I
specifically excludes all payments and other collections of
principal and interest due on the Mortgage Loans on or before the
Cut-off Date (except Principal Prepayments received after January
23, 2007) and all Prepayment Premiums payable in connection with
Principal Prepayments made on or before the Cut-off Date, the Net
WAC Reserve Fund, the Supplemental Interest Account and the Swap
Agreement.
“REMIC I Regular Interest”:
Any of the separate non-certificated beneficial ownership interests
in REMIC I issued hereunder and designated as a “regular
interest” in REMIC I.
“REMIC II”: The segregated
pool of assets consisting of all of the REMIC I Regular Interests
conveyed in trust to the Trustee for the benefit of the
Certificateholders pursuant to Section 2.08 and all amounts
deposited therein, with respect to which a separate REMIC election
is to be made.
“REMIC II Accretion Directed
Class”: As set forth in the Section 1.03 under the heading
entitled “REMIC II.”
“REMIC II Regular Interest”:
Any of the separate non-certificated beneficial ownership interests
in REMIC II issued hereunder and designated as a “regular
interest” in REMIC II.
“REMIC III”: The segregated
pool of assets consisting of all of the REMIC II Regular Interests
conveyed in trust to the Trustee for the benefit of the
Certificateholders pursuant to Section 2.08 and all amounts
deposited therein, with respect to which a separate REMIC election
is to be made.
“REMIC Provisions”:
Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at Section 860A through
860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
“Remittance Report”: A report
in form mutually agreed to between the Trustee and the Servicer on
a magnetic disk or tape or in electronic format prepared by the
Servicer pursuant to Section 4.03 with such additions, deletions
and modifications as agreed to by the Trustee and the
Servicer.
“Rents from Real Property”:
With respect to any REO Property, gross income of the character
described in Section 856(d) of the Code as being included in the
term “rents from real property.”
“REO Account”: Each of the
accounts maintained, or caused to be maintained, by the Servicer in
respect of an REO Property pursuant to Section 3.23.
“REO Disposition”: The sale
or other disposition of an REO Property on behalf of the Trust
Fund.
“REO Imputed Interest”: As to
any REO Property, for any calendar month during which such REO
Property was at any time part of the Trust Fund, one month’s
interest at the applicable Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such
calendar month, of the related Mortgage Loan, if appropriate) as of
the close of business on the Distribution Date in such calendar
month.
“REO Principal Amortization”:
With respect to any REO Property, for any calendar month, the
excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether
in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in
connection with a purchase of all of the Mortgage Loans and REO
Properties pursuant to Section 9.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts
(i) payable pursuant to Section 3.23(c) in respect of the
proper operation, management and maintenance of such REO Property
or (ii) payable or reimbursable to the Servicer pursuant to
Section 3.23(d) for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and P&I
Advances in respect of such REO Property or the related Mortgage
Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.
“REO Property”: A Mortgaged
Property acquired by the Servicer on behalf of the Trust Fund
through foreclosure or deed-in-lieu of foreclosure, as described in
Section 3.23.
“Request for Release”: A
release signed by a Servicing Officer, or in a mutually agreeable
electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer, in the form of Exhibit E-1
attached hereto.
“Required Net WAC Reserve Fund
Deposit”: With respect to any Distribution Date the excess,
if any, of (i) $1,000 over (ii) the amount of funds on deposit in
the Net WAC Reserve Fund prior to deposits thereto on such
Distribution Date.
“Reserve Interest Rate”: With
respect to any Interest Determination Date, the rate per annum that
the Trustee determines to be either (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of
1/16%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee are quoting on the relevant
Interest Determination Date to the principal London offices of
leading banks in the London interbank market or (ii) in the
event that the Trustee can determine no such arithmetic mean, the
lowest one-month U.S. dollar lending rate which New York City banks
selected by the Trustee are quoting on such Interest Determination
Date to leading European banks.
“Residential Dwelling”: Any
one of the following: (i) an attached or detached one-family
dwelling, (ii) an attached or detached two- to four-family
dwelling, (iii) an attached or detached one-family dwelling
unit in a condominium project, (iv) an attached or detached
one-family dwelling in a planned unit development, none of which is
a cooperative or mobile home (as defined in 42 United States Code,
Section 5402(6)), or (v) a manufactured home.
“Residual Certificates”: As
specified in the Preliminary Statement.
“Residual Interest”: The sole
class of “residual interests” in a REMIC within the
meaning of Section 860G(a)(2) of the Code.
“Responsible Officer”: When
used with respect to the Trustee, the President, any vice
president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, any
trust officer or assistant trust officer, the Controller and any
assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any
of the above designated officers and, with respect to a particular
matter, to whom such matter is referred because of such
officer’s knowledge of and familiarity with the particular
subject.
“S&P”: Standard and
Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.
“Securities Act”: means the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.
“Seller”: DLJ Mortgage
Capital, Inc., or its successor in interest, in its capacity as
seller.
“Servicer”: Select Portfolio
Servicing, Inc., or any successor servicer appointed as herein
provided, in its capacity as servicer hereunder.
“Servicer Certification”: As
defined in Section 4.07(d) herein, a form of which is attached
hereto as Exhibit J.
“Servicer Prepayment Premium
Payment Amount”: The amounts payable by the Servicer in
respect of any waived Prepayment Premiums pursuant to Section
2.03(b)(ii).
“Servicer Remittance Date”:
With respect to any Distribution Date, 3:00 p.m. New York time on
the 21 st day of each month or, if such 21 st
day is not a Business Day, the Business Day immediately following
such 21 st day.
“Service(s)(ing)”: In
accordance with Regulation AB, the act of servicing and
administering the Mortgage Loans or any other assets of the Trust
by an entity that meets the definition of “servicer”
set forth in Item 1101 of Regulation AB and is subject to the
disclosure requirements set forth in 1108 of Regulation AB.
For clarification purposes, any uncapitalized occurrence of
this term shall have the meaning commonly understood by
participants in the residential mortgage-backed securitization
market.
“Servicing Account”: The
account or accounts created and maintained pursuant to Section
3.09.
“Servicing Advances”: The
reasonable “out-of-pocket” costs and expenses incurred
prior to, on or after the Cut-off Date by the Servicer in the
performance of its servicing obligations (including the reasonable
fees of counsel) in connection with a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (i)
the inspection, preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings,
including foreclosures, in respect of a particular Mortgage Loan,
(iii) the reasonable fees in connection with the management and
liquidation of any REO Property (including default management and
similar services, appraisal services and real estate broker
services), (iv) the performance of its obligations under Section
3.01, Section 3.09, Section 3.13, Section 3.14, Section 3.16 and
Section 3.23, (v) locating documents missing from the Mortgage File
or Servicing File and (vi) obtaining any broker price opinion.
Servicing Advances also include any reasonable
“out-of-pocket” cost and expenses (including legal
fees) incurred by the Servicer in connection with executing and
recording instruments of satisfaction, deeds of reconveyance or
Assignments of Mortgage to the extent not recovered from the
Mortgagor or otherwise payable under this Agreement. The
Servicer shall not be required to make any Nonrecoverable Servicing
Advances.
“Servicing Criteria”:
The “servicing criteria” set forth in Item
1122(d) of Regulation AB, as such may be amended from time to
time.
“Servicing Fee”: With respect
to each Mortgage Loan and for any calendar month, an amount equal
to one month’s interest at the Servicing Fee Rate on the same
principal amount on which interest on such Mortgage Loan accrues
for such calendar month, subject to reduction as provided in
Section 3.24. A portion of such Servicing Fee may be retained
by any Sub-Servicer as its servicing compensation.
“Servicing Fee Rate”: 0.50%
per annum.
“Servicing File”: With
respect to each Mortgage Loan, the Servicing File for such Mortgage
Loan shall consist of copies of each item required to be in the
Mortgage File (for the avoidance of doubt, the original of each
such document shall be maintained in the Mortgage File for such
Mortgage Loan unless otherwise permitted to be released in
accordance with this Agreement) and the following documents listed
below.
(i)
Residential loan application.
(ii)
Mortgage Loan closing
statement.
(iii)
Verification of employment and income, if
applicable.
(iv)
Verification of acceptable evidence of
source and amount of downpayment, if applicable.
(v)
Credit report on Mortgagor.
(vi)
Residential appraisal report.
(vii)
Photograph of the Mortgaged
Property.
(viii)
Survey of the Mortgaged
Property.
(ix)
Copy of each instrument necessary to
complete identification of any exception set forth in the exception
schedule in the title policy, i.e., map or plat, restrictions,
easements, sewer agreements, home association declarations,
etc.
(x)
All required disclosure
statements.
(xi)
If required in an appraisal, termite
report, structural engineer’s report, water potability and
septic certification.
(xii)
Sales Contract, if applicable.
“Servicing Function
Participant”: Any Sub-Servicer, Subcontractor or any other
Person, other than the Servicer and the Trustee, that is determined
to be “participating in a servicing function” within
the meaning of Item 1122 of Regulation AB, unless such
Person’s activities relate only to 5% or less of the Mortgage
Loans (measured as the weighted average of the monthly percentages
of the aggregate Stated Principal Balance of the Mortgage Loans
serviced by such participant during the commencement of the
calendar year prior to the year in which an Assessment of
Compliance is required to be delivered, multiplied by a fraction,
the numerator of which is the number of months in such year during
which such Servicing Function Participant Services the related
Mortgage Loans and the denominator of which is 12, or, in the case
of the year in which the Closing Date occurs, the number of months
elapsed from the Cut-Off Date to the end of such calendar
year).
“Servicing Officer”: Any
employee of the Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loans, whose name and
specimen signature appear on a list of Servicing Officers furnished
by the Servicer to the Trustee and the Depositor on the Closing
Date, as such list may from time to time be amended.
“SFAS 140”: Statement
of Accounting Standards No. 140 of the Financial Accounting
Standards Board, as in effect as the date hereof.
“Single Certificate”: With
respect to any Class of Certificates (other than the Class P
Certificates and the Residual Certificates), a hypothetical
Certificate of such Class evidencing a Percentage Interest for such
Class corresponding to an initial Certificate Principal Balance or
Notional Amount of $1,000. With respect to the Class P
Certificates and the Residual Certificates, a hypothetical
Certificate of such Class evidencing a 20% Percentage Interest in
such Class.
“Sole Affected Party”: As
defined in the ISDA Master Agreement.
“Special Servicer”: As
defined in Section 3.16(e) herein.
“Startup Day”: With respect
to each REMIC formed hereby, the day designated as such pursuant to
Section 10.01(b) hereof.
“Stated Principal Balance”:
With respect to any Mortgage Loan: (a) as of any date of
determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to
such Mortgage Loan would be distributed, the principal balance of
such Mortgage Loan as of the Cut-off Date, as shown in the Mortgage
Loan Schedule, minus the sum of (i) the principal portion of each
Monthly Payment due on a Due Date subsequent to the Cut-off Date,
to the extent received from the Mortgagor or advanced by the
Servicer and distributed pursuant to Section 4.01 on or before such
date of determination, (ii) all Principal Prepayments received
after the Cut-off Date, to the extent distributed pursuant to
Section 4.01 on or before such date of determination, (iii) all
Liquidation Proceeds and Insurance Proceeds applied by the Servicer
as recoveries of principal in accordance with the provisions of
Section 3.16, to the extent distributed pursuant to Section 4.01 on
or before such date of determination and (iv) any Realized Loss
incurred with respect thereto as a result of a Deficient Valuation
or Debt Service Reduction made during or prior to the Prepayment
Period for the most recent Distribution Date coinciding with or
preceding such date of determination; and (b) as of any date of
determination coinciding with or subsequent to the Distribution
Date on which the proceeds, if any, of a Liquidation Event with
respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of
determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to
such REO Property would be distributed, an amount (not less than
zero) equal to the Stated Principal Balance of the related Mortgage
Loan as of the date on which such REO Property was acquired on
behalf of the Trust Fund, minus the sum of (i) if such REO Property
was acquired before the Distribution Date in any calendar month,
the principal portion of the Monthly Payment due on the Due Date in
the calendar month of acquisition, to the extent advanced by the
Servicer and distributed pursuant to Section 4.01 on or before such
date of determination, and (ii) the aggregate amount of REO
Principal Amortization in respect of such REO Property for all
previously ended calendar months, to the extent distributed
pursuant to Section 4.01 on or before such date of determination;
and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any,
of a Liquidation Event with respect to such REO Property would be
distributed, zero.
“Stepdown Date”: The earlier
to occur of (1) the Distribution Date on which the aggregate
Certificate Principal Balance of the Class A Certificates has been
reduced to zero (assuming that 100% of the Basic Principal
Distribution Amount and any Net Monthly Excess Cashflow required to
maintain the Overcollateralization Target Amount is applied as
principal on such Distribution Date (assuming for this purpose
prior to the Stepdown Date)) and (2) the later to occur of (x) the
Distribution Date occurring in February 2010 and (y) the first
Distribution Date on which the Credit Enhancement Percentage
(calculated for this purpose after giving effect to payments or
other recoveries in respect of the Mortgage Loans during the
related Due Period but before giving effect to the distribution of
the Principal Distribution Amount on such Distribution Date) is
greater than or equal to 44.40%.
“Subcontractor”: Any vendor,
subcontractor or other Person that (i) is a Servicing Function
Participant and (ii) is not responsible for the overall servicing
of Mortgage Loans but performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to
Mortgage Loans under the direction or authority of the Servicer (or
a Sub-Servicer of the Servicer), or the Trustee.
“Subgroup”: Any of
Subgroup 1 or Subgroup 2 as applicable.
“Subgroup 1”: Those
certain Mortgage Loans identified as belonging to Subgroup 1
on the Mortgage Loan Schedule.
“Subgroup 1
Certificates”: The Class A1A and Class A1B
Certificates.
“Subgroup 1 Interest Remittance
Amount”: With respect to any Distribution Date, that portion
of the Available Distribution Amount for such Distribution Date
attributable to interest received or advanced with respect to the
Subgroup 1 Mortgage Loans and to Compensating Interest paid by the
Servicer with respect to the Subgroup 1 Mortgage Loans.
“Subgroup 1 Mortgage
Loans”: The Mortgage Loans relating to Subgroup 1.
“Subgroup 1 Maximum Rate”:
With respect to the Subgroup 1 Certificates and any
Distribution Date and the related Interest Accrual Period a per
annum rate (subject to adjustment based on the actual number of
days elapsed in the related Accrual Period) equal to the sum of (i)
the difference between (A) the weighted average of the Maximum Loan
Rates (in the case of the Adjustable Rate Mortgage Loans) and the
Loan Rates (in the case of the fixed-rate Mortgage Loans), in each
case, of the Subgroup 1 Mortgage Loans as of the first day of the
month preceding the month of such Distribution Date, weighted on
the basis of the related Stated Principal Balances as of such date
(subject to adjustment for prepayments received and distributed in
the month prior to that Distribution Date) and (B) the sum of (1)
the Servicing Fee Rate for the Subgroup 1 Mortgage Loans and (2)
the LPA Fee Rate for the Subgroup 1 Mortgage Loans and (ii) the
Subgroup 1 Net Counterparty Payment for such Distribution Date
multiplied by a fraction, the numerator of which is 12, and the
denominator of which is equal to the aggregate Stated Principal
Balance of the Subgroup 1 Mortgage Loans as of the first day of the
month preceding the month of such Distribution Date (subject to the
adjustment for prepayments received and distributed in the month
prior to that Distribution Date and expressed as a
percentage).
“Subgroup 1 Net Counterparty
Payment”: With respect to any Distribution Date, an amount
equal to the sum of (i) the Net Counterparty Payment and (ii) the
Swap Termination Payment required to be paid by the Swap
Counterparty, if any, multiplied by a fraction the numerator of
which is the aggregate Stated Principal Balance of the Subgroup 1
Mortgage Loans, and the denominator of which is the aggregate
Stated Principal Balance of the Mortgage Loans, in each case as of
the first day of the month preceding the month of such Distribution
Date (subject to adjustment for prepayments received and
distributed in the month prior to that Distribution
Date).
“Subgroup 1 Net Trust Swap
Payment”: With respect to any Distribution Date, is an amount
equal to, with respect to any Distribution Date, the sum of the (i)
Net Trust Swap Payment and (ii) Swap Termination Payment required
to be paid by the Supplemental Interest Trust, if any, unless the
Swap Counterparty is the Defaulting Party or Sole Affected Party
(as defined in the ISDA Master Agreement), multiplied by a fraction
the numerator of which is the aggregate Stated Principal Balance of
the Subgroup 1 Mortgage Loans, and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans, in each
case as of the first day of the month preceding the month of such
Distribution Date (subject to adjustment for prepayments received
and distributed in the month prior to that Distribution
Date).
“Subgroup 1 Net WAC
Rate”: With respect to the Subgroup 1 Certificates and any
Distribution Date and the related Interest Accrual Period, a per
annum rate (subject to adjustment based on the actual number of
days elapsed in the related Interest Accrual Period) equal to the
difference between (A) the weighted average of the Loan Rates of
the Subgroup 1 Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date, weighted on the
basis of the related Stated Principal Balances as of such date
(subject to adjustment for prepayments received and distributed in
the month prior to that Distribution Date) and (B) the sum of (1)
the Servicing Fee Rate for the Subgroup 1 Mortgage Loans and (2)
the LPA Fee Rate for the Subgroup 1 Mortgage Loans and (3) the
Subgroup 1 Net Trust Swap Payment for such Distribution Date
multiplied by a fraction, the numerator of which is 12, and the
denominator of which is equal to the aggregate Stated Principal
Balance of the Subgroup 1 Mortgage Loans as of the first day of the
month preceding the month of such Distribution Date (subject to the
adjustment for prepayments received and distributed in the month
prior to that Distribution Date and expressed as a
percentage).
“Subgroup 1 Percentage”:
With respect to any Distribution Date will equal the percentage
equivalent of a fraction, the numerator of which is the Subgroup 1
Principal Remittance Amount for such Distribution Date and the
denominator of which is the Principal Remittance Amount for such
Distribution Date.
“Subgroup 1 Principal
Distribution Amount”: With respect to any Distribution Date,
the product of (i) the Subgroup 1 Percentage for such Distribution
Date and (ii) the Class A Principal Distribution Amount for such
Distribution Date.
“Subgroup 1 Principal
Remittance Amount”: With respect to any Distribution Date,
means the portion of the Principal Remittance Amount for such
Distribution Date derived from the Subgroup 1 Mortgage
Loans.
“Subgroup 2”:
Those certain Mortgage Loans identified as belonging to
Subgroup 2 on the Mortgage Loan Schedule.
“Subgroup 2
Certificates”: The Class A2, Class A3, Class A4 and
Class A5 Certificates.
“Subgroup 2 Interest
Remittance Amount”: With respect to any Distribution Date is
that portion of the Available Distribution Amount for such
Distribution Date attributable to interest received or advanced
with respect to the Subgroup 2 Mortgage Loans and Compensating
Interest paid by the Servicer with respect to the Subgroup 2
Mortgage Loans.
“Subgroup 2 Mortgage
Loans”: The Mortgage Loans relating to
Subgroup 2.
“Subgroup 2 Maximum Rate”:
With respect to the Subgroup 2 Certificates and any
Distribution Date and the related Interest Accrual Period a per
annum rate (subject to adjustment based on the actual number of
days elapsed in the related Accrual Period) equal to the sum of (i)
the difference between (A) the weighted average of the Maximum Loan
Rates (in the case of the Adjustable Rate Mortgage Loans) and the
Loan Rates (in the case of the fixed-rate Mortgage Loans), in each
case, of the Subgroup 2 Mortgage Loans as of the first day of the
month preceding the month of such Distribution Date, weighted on
the basis of the related Stated Principal Balances as of such date
(subject to adjustment for prepayments received and distributed in
the month prior to that Distribution Date) and (B) the sum of (1)
the Servicing Fee Rate for the Subgroup 2 Mortgage Loans and (2)
the LPA Fee Rate for the Subgroup 2 Mortgage Loans and (ii) the
Subgroup 2 Net Counterparty Payment for such Distribution Date
multiplied by a fraction, the numerator of which is 12, and the
denominator of which is equal to the aggregate Stated Principal
Balance of the Subgroup 2 Mortgage Loans as of the first day of the
month preceding the month of such Distribution Date (subject to the
adjustment for prepayments received and distributed in the month
prior to that Distribution Date and expressed as a
percentage).
“Subgroup 2 Net Counterparty
Payment”: With respect to any Distribution Date, an amount
equal to the sum of (i) the Net Counterparty Payment and (ii) the
Swap Termination Payment required to be paid by the Swap
Counterparty, if any, multiplied by a fraction the numerator of
which is the aggregate Stated Principal Balance of the Subgroup 2
Mortgage Loans, and the denominator of which is the aggregate
Stated Principal Balance of the Mortgage Loans, in each case as of
the first day of the month preceding the month of such Distribution
Date (subject to adjustment for prepayments received and
distributed in the month prior to that Distribution
Date).
“Subgroup 2 Net Trust Swap
Payment”: With respect to any Distribution Date, an amount
equal to, with respect to any Distribution Date, the sum of the (i)
Net Trust Swap Payment and (ii) Swap Termination Payment required
to be paid by the Supplemental Interest Trust, if any, unless the
Swap Counterparty if the Defaulting Party or Sole Affected Party
(as defined in the ISDA Master Agreement), multiplied by a fraction
the numerator of which is the aggregate Stated Principal Balance of
the Subgroup 2 Mortgage Loans, and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans, in each
case as of the first day of the month preceding the month of such
Distribution Date (subject to adjustment for prepayments received
and distributed in the month prior to that Distribution
Date).
“Subgroup 2 Net WAC
Rate”: With respect to the Subgroup 2 Certificates and any
Distribution Date and the related Interest Accrual Period, a per
annum rate (subject to adjustment based on the actual number of
days elapsed in the related Interest Accrual Period) equal to the
difference between (A) the weighted average of the Loan Rates of
the Subgroup 2 Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date, weighted on the
basis of the related Stated Principal Balances as of such date
(subject to adjustment for prepayments received and distributed in
the month prior to that Distribution Date) and (B) the sum of (1)
the Servicing Fee Rate for the Subgroup 2 Mortgage Loans, (2) the
LPA Fee Rate for the Subgroup 2 Mortgage Loans and (3) the Subgroup
2 Net Trust Swap Payment for such Distribution Date multiplied by a
fraction, the numerator of which is 12, and the denominator of
which is equal to the aggregate Stated Principal Balance of the
Subgroup 2 Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date (subject to the
adjustment for prepayments received and distributed in the month
prior to that Distribution Date and expressed as a
percentage).
“Subgroup 2 Percentage”:
With respect to any Distribution Date is the percentage equivalent
of a fraction, the numerator of which is the Subgroup 2 Principal
Remittance Amount for such Distribution Date and the denominator of
which is the Principal Remittance Amount for such Distribution
Date.
“Subgroup 2 Principal
Distribution Amount”: With respect to any Distribution Date,
the product of (i) the Subgroup 2 Percentage for such Distribution
Date and (ii) the Class A Principal Distribution Amount for such
Distribution Date.
“Subgroup 2 Principal
Remittance Amount”: With respect to any Distribution Date,
means the portion of the Principal Remittance Amount for such
Distribution Date derived from the Subgroup 2 Mortgage
Loans.
“Subgroup Subordinate Amount”
With respect to any Subgroup and any Distribution Date is the
aggregate Stated Principal Balance of such Subgroup as of the first
day of the month preceding the month of such Distribution Date
(after giving effect to Monthly Payments of principal due on such
date and subject to adjustment for prepayments received and
distributed in the month prior to that Distribution Date) minus the
aggregate Certificate Principal Balance of the related Class or
Classes of Class A Certificates.
“Subordinate Certificates”:
As set forth in the Preliminary Statement.
“Subordinate Maximum Rate”:
With respect to the Mezzanine Certificates and any Distribution
Date, a per annum rate equal to the weighted average of the
Subgroup 1 Maximum Rate and the Subgroup 2 Maximum Rate
weighted in proportion to the related Subgroup Subordinate
Amounts.
“Subordinate Net WAC Rate”:
With respect to the Mezzanine Certificates and any Distribution
Date, a per annum rate equal to the weighted average of the
Subgroup 1 Net WAC Rate and the Subgroup 2 Net WAC Rate
weighted in proportion to the related Subgroup Subordinate
Amounts.
“Sub-Servicer”: Any Person
with which the Servicer has entered into a Sub-Servicing Agreement
and which meets the qualifications of a Sub-Servicer pursuant to
Section 3.02.
“Sub-Servicing Account”: An
account established by a Sub-Servicer which meets the requirements
set forth in Section 3.08 and is otherwise acceptable to the
Servicer.
“Sub-Servicing Agreement”:
The written contract between the Servicer and a Sub-Servicer
relating to servicing and administration of certain Mortgage Loans
as provided in Section 3.02.
“Substitution Shortfall
Amount”: As defined in Section 2.03(c) herein.
“Supplemental Interest
Account”: As defined in Section 4.07 hereof.
“Supplemental Interest
Trust”: The trust created pursuant to Section 4.07 herein and
designated as the “Supplemental Interest Trust,”
consisting of the Swap Agreement, the Supplemental Interest Account
and the right to receive amounts as provided in Section
4.01.
“Swap Agreement”: The swap
agreement relating to the Certificates consisting of a 1992 ISDA
Master Agreement (Multicurrency Cross-Border), the schedule and the
1994 ISDA Credit Support Annex (Bilateral Form New York Law), each
dated as of the Closing Date, and the related confirmation thereto,
between the Trustee and the Swap Counterparty, as such agreement
may be amended and supplemented in accordance with its
terms.
“Swap Business Day”: A
“Business Day” as such term is defined in the Swap
Agreement.
“Swap Counterparty”: Credit
Suisse International, or any successor in interest thereto in
accordance with the Swap Agreement.
“Swap Counterparty Payment”:
With respect to a Swap Payment Date, the payment, if any, made by
the Swap Counterparty to the Trust, on behalf of the Supplemental
Interest Trust, for the benefit of the holders of the Certificates
as determined in accordance with the Swap Agreement.
“Swap Event of Default”: An
“Event of Default” as such term is defined in the Swap
Agreement.
“Swap Notional Amount”: With
respect to the Swap Agreement, the notional amount as determined in
accordance with the terms of the Confirmation of the Swap
Agreement.
“Swap Payment Date”: The day
that falls one Swap Business Day prior to the 25th day of each
month beginning in February 2007 through and including January
2012.
“Swap Termination Date”:
The Swap Payment Date in January 2012, after any required
payment is made.
“Swap Termination Payment”:
Upon the designation of an “Early Termination Date” as
defined in the Swap Agreement, the payment to be made by the Trust
to the Supplemental Interest Account for payment to the Swap
Counterparty, or by the Swap Counterparty to the Supplemental
Interest Account for payment to the Trust, as applicable, pursuant
to the terms of the Swap Agreement.
“Tax Returns”: Each federal
income tax return on Internal Revenue Service Form 1066, U.S. Real
Estate Mortgage Investment Conduit Income Tax Return, including
Schedule Q thereto, Quarterly Notice to Residual Interest Holders
of REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of the Trust Fund due to its
classification as multiple REMICs under the REMIC Provisions,
together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed
with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or
local tax laws.
“Telerate Page 3750”: The
display designated as page “3750” on the Dow Jones
Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London
interbank offered rates of major banks).
“Terminating Entity”: With respect
to any Optional Termination Date, the majority Class X
Certificateholder (as long as (a) it is not an affiliate of the
Depositor or the Seller or (b) the Class X Certificates are not
securing a NIM Note), so long as it provides notice to the Servicer
of its intent to act as the Terminating Entity by the first day of
the month next preceding such Distribution Date. If the
majority Class X Certificateholder does not provide such notice
then the Servicer, so long as (a) the Class X Certificates are not
securing a NIM Note and (b) the Servicer provides notice to the
Trustee of its intent to act as the Terminating Entity by the fifth
day of the month next preceding such Distribution Date.
“Termination Price”: As
defined in Section 9.01 herein.
“Third Party Claims”: As
defined in Section 8.05(b)
“Transfer”: Any direct or
indirect transfer, sale, pledge, hypothecation, or other form of
assignment of any Ownership Interest in a Certificate.
“Transferee”: Any Person who
is acquiring by Transfer any Ownership Interest in a
Certificate.
“Transferor”: Any Person who
is disposing by Transfer of any Ownership Interest in a
Certificate.
“Trigger Event”: A
Trigger Event has occurred with respect to any Distribution Date on
or after the Stepdown Date if (i) the Delinquency Percentage
exceeds 37.65% of the Credit Enhancement Percentage for such
Distribution Date or (ii) the cumulative Realized Losses as of the
last day of the prior calendar month (reduced by the aggregate
amount of Recoveries) as a percentage of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date is
greater than the percentage set forth in the following
table:
|
Range of Distribution Dates
|
Percentage
|
|
February
2009-January 2010
|
1.45%*
|
|
February 2010-
January 2011
|
3.20%*
|
|
February 2011-
January 2012
|
5.05%*
|
|
February 2012-
January 2013
|
6.50%*
|
|
February 2013-
January 2014
|
7.30%*
|
|
February 2014
and thereafter
|
7.35%
|
_______________________
*
The percentages set forth in the table
above are the percentages applicable for the first Distribution
Date in the corresponding range of Distribution Dates. The
percentage for each succeeding Distribution Date in a range
increases incrementally by 1/12 of the positive difference between
the percentage applicable to the first Distribution Date in that
range and the percentage applicable to the first Distribution Date
in the succeeding range.
“Trust”: Asset Backed
Securities Corporation Home Equity Loan Trust, Series RFC 2007-HE1,
the trust created under this Agreement.
“Trust Fund”: The corpus of
the trust created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto
after the related Cut-off Date, other than such amounts which were
due on the Mortgage Loans on or before the related Cut-off Date,
(ii) the Collection Account, the Distribution Account and the Net
WAC Reserve Fund and all amounts deposited therein pursuant to the
applicable provisions of this Agreement (including, without
limitation, amounts received from the Seller on the Closing Date
which shall be deposited by the Trustee in the Collection Account
pursuant to Section 2.01), (iii) the Depositor’s rights under
the Assignment and Assumption Agreement, (iv) the Trust’s
rights under the Swap Agreement, (v) property that secured a
Mortgage Loan and has been acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise and (vi) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing.
“Trust Swap Payment”: With
respect to any Swap Payment Date, the payment, if any, made by the
Trust, on behalf of the Supplemental Interest Trust to the Swap
Counterparty, as determined in accordance with the Swap
Agreement.
“Trustee”: U.S. Bank National
Association, a national banking association, not in its individual
capacity, but solely in its capacity as Trustee for the benefit of
the Certificateholders under this Agreement, or its successor in
interest, or any successor trustee appointed as herein
provided.
“Underwriter”: Credit Suisse
Securities (USA) LLC.
“Underwriter’s
Exemption”: Prohibited Transaction Exemption 2002-41, 67 Fed.
Reg. 54487 (2002), as amended (or any successor thereto), or any
substantially similar administrative exemption granted by the U.S.
Department of Labor.
“Uninsured Cause”: Any cause
of damage to a Mortgaged Property such that the complete
restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to
Section 3.14.
“United States Person”: A
“United States person” within the meaning set forth in
Section 7701 of the Code.
“Unpaid Interest Shortfall
Amount”: For (i) the first Distribution Date and with respect
to each Class of Senior Certificates and the Mezzanine
Certificates, zero, and for such Class of Certificates and any
Distribution Date after the first Distribution Date, the amount, if
any, by which (a) the sum of (1) the Monthly Interest Distributable
Amount for such Class of Certificates for the immediately preceding
Distribution Date and (2) the outstanding Unpaid Interest Shortfall
Amount, if any, for such Class of Certificates for such preceding
Distribution Date exceeds (b) the aggregate amount distributed on
such Class of Certificates in respect of interest on such preceding
Distribution Date, plus interest on the amount of interest due but
not paid on the Class of Certificates on such preceding
Distribution Date, to the extent permitted by law, at the
Pass-Through Rate on such Distribution Date for such Class of
Certificates for the related Interest Accrual Period.
“Value”: With respect to any
Mortgaged Property related to a Mortgage Loan, the lesser of (i)
the lesser of (a) the value thereof as determined by an appraisal
made for the originator of the Mortgage Loan at the time of
origination of the Mortgage Loan by an appraiser who met the
minimum requirements of the Uniform Standards of Professional
Appraisal Practice, and (b) the value thereof as determined by a
review appraisal conducted by the originator in the event any such
review appraisal determines an appraised value more than ten
percent (10%) lower than the value thereof as determined by the
appraisal referred to in clause (i)(a) above, or (c) an automated
valuation model (“AVM”) and (ii) the purchase price
paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, (1) in the case
of a Refinanced Mortgage Loan, such value of the Mortgaged Property
is based solely upon the lesser of (i) the value of such Mortgage
Property at the time of origination of such Refinanced Mortgage
Loan as determined under (a), (b) or (c) above and (2) in the case
of a Mortgage Loan originated in connection with a
“lease-option purchase,” such value of the Mortgaged
Property is based on the lower of the value determined by an
appraisal made for the originator of such Mortgage Loan at the time
of origination or the sale price of such Mortgaged Property if the
“lease option purchase price” was set less than 12
months prior to origination, and is based on the value determined
by an appraisal made for the originator of such Mortgage Loan at
the time of origination if the “lease option purchase
price” was set 12 months or more prior to
origination.
“Voting Rights”: The portion
of the voting rights of all of the Certificates that is allocated
to any Certificate. With respect to any date of
determination, 97% of all voting rights will be allocated among all
Holders of the LIBOR Certificates in proportion to their then
outstanding Certificate Principal Balances (provided, however, that
98% of all voting rights shall be allocated to the LIBOR
Certificates at any time that a NIM Note is outstanding and is
secured by the Class X Certificates), 1% of all voting rights will
be allocated among the Holders of the Class X Certificates
(provided, however, that if such Certificates are securing any NIM
Note, the Class X Certificates shall have no voting rights while
such NIM Notes remain outstanding); 1% of all voting rights will be
allocated among the Holders of the Class P Certificates, and
1% of all voting rights will be allocated among Holders of the
Residual Certificates. Voting Rights allocated to a Class
shall be allocated among the Certificates of such Class in
proportion to the outstanding Percentage Interests evidenced by
their respective Certificates.
SECTION 1.02.
Allocation of Certain Interest
Shortfalls.
For purposes of calculating the amount of
the Monthly Interest Distributable Amount for the Senior and
Subordinate Certificates for any Distribution Date, the aggregate
amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfall incurred in respect of the Mortgage Loans for
any Distribution Date shall be allocated to the Class X
Certificates in reduction of the Class X Distribution Amount and
thereafter, among the Class A Certificates and the other Classes of
Subordinate Certificates on a pro rata basis based on such Monthly
Interest Distributable Amount prior to giving effect to any such
reduction.
SECTION 1.03.
Designation of Interests in
REMIC
(a)
Designation of Interests in
REMIC
The Trustee shall elect that each of
REMIC I, REMIC II and REMIC III be treated as a REMIC under Section
860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of this Agreement shall be
resolved in a manner that preserves the validity of such REMIC
elections. The assets of REMIC I shall include the Mortgage
Loans, the accounts (other than the Net WAC Reserve Fund, the Swap
Agreement and the Supplemental Interest Account), any REO Property,
and any proceeds of the foregoing. The REMIC I Regular
Interests shall constitute the assets of REMIC II. The REMIC
II Regular Interests shall constitute the assets of REMIC III (the
“Master REMIC”).
REMIC I:
The following table sets forth the
designations, principal balances, and interest rates for each
interest in REMIC I, each of which (other than the R-I interest) is
hereby designated as a regular interest in REMIC I (the
“REMIC I Regular Interests”):
|
|
Initial Principal Balance of REMIC Interest
|
|
|
T1-A
|
$ 50,032,307.38
|
(1)
|
|
T1-F1
|
$ 3,305,322.00
|
(2)
|
|
T1-V1
|
$ 3,305,322.00
|
(3)
|
|
T1-F2
|
$ 3,703,997.50
|
(2)
|
|
T1-V2
|
$ 3,703,997.50
|
(3)
|
|
T1-F3
|
$ 4,095,193.00
|
(2)
|
|
T1-V3
|
$ 4,095,193.00
|
(3)
|
|
T1-F4
|
$ 4,477,200.50
|
(2)
|
|
T1-V4
|
$ 4,477,200.50
|
(3)
|
|
T1-F5
|
$ 4,847,006.50
|
(2)
|
|
T1-V5
|
$ 4,847,006.50
|
(3)
|
|
T1-F6
|
$ 5,206,421.00
|
(2)
|
|
T1-V6
|
$ 5,206,421.00
|
(3)
|
|
T1-F7
|
$ 5,552,481.00
|
(2)
|
|
T1-V7
|
$ 5,552,481.00
|
(3)
|
|
T1-F8
|
$ 5,883,654.50
|
(2)
|
|
T1-V8
|
$ 5,883,654.50
|
(3)
|
|
T1-F9
|
$ 6,201,124.50
|
(2)
|
|
T1-V9
|
$ 6,201,124.50
|
(3)
|
|
T1-F10
|
$ 6,496,614.00
|
(2)
|
|
T1-V10
|
$ 6,496,614.00
|
(3)
|
|
T1-F11
|
$ 6,774,989.50
|
(2)
|
|
T1-V11
|
$ 6,774,989.50
|
(3)
|
|
T1-F12
|
$ 7,033,602.50
|
(2)
|
|
T1-V12
|
$ 7,033,602.50
|
(3)
|
|
T1-F13
|
$ 7,271,276.00
|
(2)
|
|
T1-V13
|
$ 7,271,276.00
|
(3)
|
|
T1-F14
|
$ 7,485,924.50
|
(2)
|
|
T1-V14
|
$ 7,485,924.50
|
(3)
|
|
T1-F15
|
$ 7,655,532.50
|
(2)
|
|
T1-V15
|
$ 7,655,532.50
|
(3)
|
|
T1-F16
|
$ 7,464,999.50
|
(2)
|
|
T1-V16
|
$ 7,464,999.50
|
(3)
|
|
T1-F17
|
$ 7,235,351.50
|
(2)
|
|
T1-V17
|
$ 7,235,351.50
|
(3)
|
|
T1-F18
|
$ 7,012,420.00
|
(2)
|
|
T1-V18
|
$ 7,012,420.00
|
(3)
|
|
T1-F19
|
$ 6,811,046.00
|
(2)
|
|
T1-V19
|
$ 6,811,046.00
|
(3)
|
|
T1-F20
|
$ 6,671,969.00
|
(2)
|
|
T1-V20
|
$ 6,671,969.00
|
(3)
|
|
T1-F21
|
$ 9,842,729.00
|
(2)
|
|
T1-V21
|
$ 9,842,729.00
|
(3)
|
|
T1-F22
|
$ 9,541,628.50
|
(2)
|
|
T1-V22
|
$ 9,541,628.50
|
(3)
|
|
T1-F23
|
$ 9,031,264.50
|
(2)
|
|
T1-V23
|
$ 9,031,264.50
|
(3)
|
|
T1-F24
|
$ 8,550,000.50
|
(2)
|
|
T1-V24
|
$ 8,550,000.50
|
(3)
|
|
T1-F25
|
$ 8,086,832.50
|
(2)
|
|
T1-V25
|
$ 8,086,832.50
|
(3)
|
|
T1-F26
|
$ 7,643,869.00
|
(2)
|
|
T1-V26
|
$ 7,643,869.00
|
(3)
|
|
T1-F27
|
$ 5,063,381.00
|
(2)
|
|
T1-V27
|
$ 5,063,381.00
|
(3)
|
|
T1-F28
|
$ 4,753,777.00
|
(2)
|
|
T1-V28
|
$ 4,753,777.00
|
(3)
|
|
T1-F29
|
$ 4,601,786.50
|
(2)
|
|
T1-V29
|
$ 4,601,786.50
|
(3)
|
|
T1-F30
|
$ 4,531,302.00
|
(2)
|
|
T1-V30
|
$ 4,531,302.00
|
(3)
|
|
T1-F31
|
$ 4,777,768.50
|
(2)
|
|
T1-V31
|
$ 4,777,768.50
|
(3)
|
|
T1-F32
|
$ 68,923,997.50
|
(2)
|
|
T1-V32
|
$ 68,923,997.50
|
(3)
|
|
T1-F33
|
$ 6,458,468.00
|
(2)
|
|
T1-V33
|
$ 6,458,468.00
|
(3)
|
|
T1-F34
|
$ 2,190,727.50
|
(2)
|
|
T1-V34
|
$ 2,190,727.50
|
(3)
|
|
T1-F35
|
$ 2,092,109.00
|
(2)
|
|
T1-V35
|
$ 2,092,109.00
|
(3)
|
|
T1-F36
|
$ 1,996,228.50
|
(2)
|
|
T1-V36
|
$ 1,996,228.50
|
(3)
|
|
T1-F37
|
$ 1,905,330.50
|
(2)
|
|
T1-V37
|
$ 1,905,330.50
|
(3)
|
|
T1-F38
|
$ 1,717,241.00
|
(2)
|
|
T1-V38
|
$ 1,717,241.00
|
(3)
|
|
T1-F39
|
$ 1,407,070.00
|
(2)
|
|
T1-V39
|
$ 1,407,070.00
|
(3)
|
|
T1-F40
|
$ 1,307,553.00
|
(2)
|
|
T1-V40
|
$ 1,307,553.00
|
(3)
|
|
T1-F41
|
$ 1,266,961.00
|
(2)
|
|
T1-V41
|
$ 1,266,961.00
|
(3)
|
|
T1-F42
|
$ 1,229,166.50
|
(2)
|
|
T1-V42
|
$ 1,229,166.50
|
(3)
|
|
T1-F43
|
$ 4,155,703.00
|
(2)
|
|
T1-V43
|
$ 4,155,703.00
|
(3)
|
|
T1-F44
|
$ 8,117,817.50
|
(2)
|
|
T1-V44
|
$ 8,117,817.50
|
(3)
|
|
T1-F45
|
$ 1,155,750.00
|
(2)
|
|
T1-V45
|
$ 1,155,750.00
|
(3)
|
|
T1-F46
|
$
794,239.50
|
(2)
|
|
T1-V46
|
$
794,239.50
|
(3)
|
|
T1-F47
|
$
728,093.50
|
(2)
|
|
T1-V47
|
$
728,093.50
|
(3)
|
|
T1-F48
|
$
707,758.50
|
(2)
|
|
T1-V48
|
$
707,758.50
|
(3)
|
|
T1-F49
|
$
687,990.00
|
(2)
|
|
T1-V49
|
$
687,990.00
|
(3)
|
|
T1-F50
|
$
668,772.50
|
(2)
|
|
T1-V50
|
$
668,772.50
|
(3)
|
|
T1-F51
|
$
650,090.00
|
(2)
|
|
T1-V51
|
$
650,090.00
|
(3)
|
|
T1-F52
|
$
631,928.50
|
(2)
|
|
T1-V52
|
$
631,928.50
|
(3)
|
|
T1-F53
|
$
614,272.50
|
(2)
|
|
T1-V53
|
$
614,272.50
|
(3)
|
|
T1-F54
|
$
597,109.00
|
(2)
|
|
T1-V54
|
$
597,109.00
|
(3)
|
|
T1-F55
|
$
580,423.50
|
(2)
|
|
T1-V55
|
$
580,423.50
|
(3)
|
|
T1-F56
|
$
564,371.00
|
(2)
|
|
T1-V56
|
$
564,371.00
|
(3)
|
|
T1-F57
|
$
548,669.00
|
(2)
|
|
T1-V57
|
$
548,669.00
|
(3)
|
|
T1-F58
|
$
533,387.00
|
(2)
|
|
T1-V58
|
$
533,387.00
|
(3)
|
|
T1-F59
|
$
518,533.00
|
(2)
|
|
T1-V59
|
$
518,533.00
|
(3)
|
|
T1-F60
|
$ 17,889,775.00
|
(2)
|
|
T1-V60 (5)
|
$ 17,889,775.00
|
(3)
|
|
R-I
|
(4)
|
(4)
|
(1)
The interest rate with
respect to any Distribution Date (and the related Interest Accrual
Period) for the T1-A Interest is a per annum rate equal to the
weighted average of the Net Mortgage Rate of all the Mortgage Loans
as of the first day of the related Due Period, weighted on their
outstanding principal balances of such day and adjusted to take
into account any prepayments of principal occurring after such day
that were distributed in the prior calendar month (the “REMIC
Net WAC Rate”).
(2)
The interest rate with
respect to any Distribution Date (and the related Interest Accrual
Period) for each of these interests is a per annum rate equal to
the lesser of (i) 10.297%, and (ii) the product of (a) the REMIC
Net WAC Rate and (b) 2.
(3)
For any Distribution
Date (and the related Interest Accrual Period) the interest rate
for each of these Lower Tier Interests shall be the excess, if any,
of (i) the product of (a) the REMIC Net WAC Rate and (b) 2, over
(ii) 10.297%.
(4)
The R-I interest shall
not have a principal balance and shall not bear interest. The
R-I interest is hereby designated as the sole class of residual
interest in REMIC I.
(5)
This interest shall also
be entitled to all Prepayment Premiums received in respect of the
Mortgage Loans.
On the Business Day prior to each
Distribution Date, all Realized Losses and all payments of
principal shall be allocated in the following order of
priority:
(i)
First, to the T1-A interest until the
outstanding principal balance of such interest is reduced to zero,
and
(ii)
Second, to the outstanding T1 interest
with the lowest numerical denomination until such interest is
reduced to zero; provided that in the case of T1 interests with the
same numerical denomination, principal shall be allocated equally
between such interests.
REMIC II:
The following table sets forth the
designations, principal balances, and interest rates for each
interest in REMIC II, each of which (other than the R-II interest)
is hereby designated as a regular interest in REMIC II (the
“REMIC II Regular Interests”):
|
|
Initial Principal Balance of REMIC Interest
|
|
Corresponding Class
of REMIC III Interest
|
|
T2-A1A (5)
|
(6)
|
(1)
|
A1A
|
|
T2-A1B (5)
|
(6)
|
(1)
|
A1B
|
|
T2-A2 (5)
|
(6)
|
(1)
|
A2
|
|
T2-A3 (5)
|
(6)
|
(1)
|
A3
|
|
T2-A4 (5)
|
(6)
|
(1)
|
A4
|
|
T2-A5 (5)
|
(6)
|
(1)
|
A5
|
|
T2-M1 (5)
|
(6)
|
(1)
|
M1
|
|
T2-M2 (5)
|
(6)
|
(1)
|
M2
|
|
T2-M3 (5)
|
(6)
|
(1)
|
M3
|
|
T2-M4 (5)
|
(6)
|
(1)
|
M4
|
|
T2-M5 (5)
|
(6)
|
(1)
|
M5
|
|
T2-M6 (5)
|
(6)
|
(1)
|
M6
|
|
T2-M7 (5)
|
(6)
|
(1)
|
M7
|
|
T2-M8 (5)
|
(6)
|
(1)
|
M8
|
|
T2-M9 (5)
|
(6)
|
(1)
|
M9
|
|
T2-M10 (5)
|
(6)
|
(1)
|
M10
|
|
T2-M11 (5)
|
(6)
|
(1)
|
M11
|
|
T2-P (4) (5)
|
(6)
|
(1)
|
P
|
|
T2-Accrual Interest
|
(7)
|
(1)
|
N/A
|
|
T2-IO
|
(2)
|
(2)
|
N/A
|
|
R-II
|
(3)
|
(3)
|
N/A
|
(1)
The interest rate for
each of these interests (the “REMIC Maximum Rate”) with
respect to any Distribution Date (and the related Interest Accrual
Period) is a per annum rate equal to the weighted average of the
interest rates on the REMIC I Regular Interests, provided ,
however , that for any Distribution Date on which the Class
T2-IO Interest is entitled to a portion of the interest accruals on
a REMIC I interest having an “F” in its class
designation, as described in footnote two below, such weighted
average shall be computed by first subjecting the rate on such
REMIC I interest to a cap equal to the product of the interest rate
used to compute the Swap Counterparty Payment adjusted to reflect
the day count convention used for such interest rate (“Swap
LIBOR”) for such Distribution Date and 2.
(2)
The Class T2-IO is an
interest only class that does not have a principal balance.
For only those Distribution Dates listed in the first column
in the table below, the Class T2-IO shall be entitled to interest
accrued on the REMIC I interest listed in the second column in the
table below at a per annum rate equal to the excess, if any, of (i)
the interest rate for such REMIC I interest for such Distribution
Date over (ii) the product of Swap LIBOR for such Distribution Date
and 2.
|
Distribution Dates
|
|
|
1
|
Class
T1-F1
|
|
1-2
|
Class
T1-F2
|
|
1-3
|
Class
T1-F3
|
|
1-4
|
Class
T1-F4
|
|
1-5
|
Class
T1-F5
|
|
1-6
|
Class
T1-F6
|
|
1-7
|
Class
T1-F7
|
|
1-8
|
Class
T1-F8
|
|
1-9
|
Class
T1-F9
|
|
1-10
|
Class
T1-F10
|
|
1-11
|
Class
T1-F11
|
|
1-12
|
Class
T1-F12
|
|
1-13
|
Class
T1-F13
|
|
1-14
|
Class
T1-F14
|
|
1-15
|
Class
T1-F15
|
|
1-16
|
Class
T1-F16
|
|
1-17
|
Class
T1-F17
|
|
1-18
|
Class
T1-F18
|
|
1-19
|
Class
T1-F19
|
|
1-20
|
Class
T1-F20
|
|
1-21
|
Class
T1-F21
|
|
1-22
|
Class
T1-F22
|
|
1-23
|
Class
T1-F23
|
|
1-24
|
Class
T1-F24
|
|
1-25
|
Class
T1-F25
|
|
1-26
|
Class
T1-F26
|
|
1-27
|
Class
T1-F27
|
|
1-28
|
Class
T1-F28
|
|
1-29
|
Class
T1-F29
|
|
1-30
|
Class
T1-F30
|
|
1-31
|
Class
T1-F31
|
|
1-32
|
Class
T1-F32
|
|
1-33
|
Class
T1-F33
|
|
1-34
|
Class
T1-F34
|
|
1-35
|
Class
T1-F35
|
|
1-36
|
Class
T1-F36
|
|
1-37
|
Class
T1-F37
|
|
1-38
|
Class
T1-F38
|
|
1-39
|
Class
T1-F39
|
|
1-40
|
Class
T1-F40
|
|
1-41
|
Class
T1-F41
|
|
1-42
|
Class
T1-F42
|
|
1-43
|
Class
T1-F43
|
|
1-44
|
Class
T1-F44
|
|
1-45
|
Class
T1-F45
|
|
1-46
|
Class
T1-F46
|
|
1-47
|
Class
T1-F47
|
|
1-48
|
Class
T1-F48
|
|
1-49
|
Class
T1-F49
|
|
1-50
|
Class
T1-F50
|
|
1-51
|
Class
T1-F51
|
|
1-52
|
Class
T1-F52
|
|
1-53
|
Class
T1-F53
|
|
1-54
|
Class
T1-F54
|
|
1-55
|
Class
T1-F55
|
|
1-56
|
Class
T1-F56
|
|
1-57
|
Class
T1-F57
|
|
1-58
|
Class
T1-F58
|
|
1-59
|
Class
T1-F59
|
|
1-60
|
Class
T1-F60
|
(3)
The R-II interest shall
not have a principal amount and shall not bear interest. The
R-II interest is hereby designated as the sole class of residual
interest in REMIC II.
(4)
This interest shall also
be entitled to all Prepayment Premiums received in respect of the
Mortgage Loans.
(5)
This interest is a REMIC
II Accretion Directed Class.
(6)
This interest shall have
an Initial Principal Balance equal to one-half of the initial Class
Principal Balance of its Corresponding Class of REMIC III
Interests.
(7)
This interest shall have
an Initial Principal Balance equal to the excess of (i) the
aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date over (ii) the aggregate Initial Class Principal
Balance of the REMIC II Accretion Directed Classes.
On the Business Day prior to each
Distribution Date, interest shall be allocated with respect to the
interests in REMIC II based on the above-described interest rates,
provided however , that interest that accrues on the
T2-Accrual Interest shall be deferred to the extent necessary to
make the distributions of principal described below. Any
interest so deferred shall itself bear interest at the interest
rate for the T2-Accrual Interest.
On the Business Day prior to each
Distribution Date the principal distributed on the REMIC interests
(together with an amount equal to the interest deferred on the
T2-Accrual Interest for such Distribution Date) shall be
distributed, and Realized Losses shall be allocated, among the
interests in REMIC II in the following order of
priority:
(a)
First, to each interest in REMIC II
having a Corresponding Class in REMIC III until the outstanding
principal amount of each such interest equals one-half of the
outstanding principal amount of such Corresponding Class for such
interest immediately after such Distribution Date; and
(b)
Second, to the T2-Accrual Interest, any
remaining amounts.
Master REMIC Certificates:
The following table sets forth
characteristics of the Certificates:
|
|
Original Certificate Principal Balance
|
|
|
Class A1A
|
$71,333,000
|
(1)
|
|
Class A1B
|
$71,333,000
|
(1)
|
|
Class A2
|
$223,892,000
|
(1)
|
|
Class A3
|
$50,340,000
|
(1)
|
|
Class A4
|
$101,353,000
|
(1)
|
|
Class A5
|
$31,431,000
|
(1)
|
|
Class M1
|
$27,556,000
|
(1)
|
|
Class M2
|
$25,438,000
|
(1)
|
|
Class M3
|
$14,480,000
|
(1)
|
|
Class M4
|
$13,071,000
|
(1)
|
|
Class M5
|
$12,364,000
|
(1)
|
|
Class M6
|
$11,305,000
|
(1)
|
|
Class M7
|
$10,951,000
|
(1)
|
|
Class M8
|
$8,832,000
|
(1)
|
|
Class M9
|
$4,946,000
|
(1)
|
|
Class M10
|
$4,946,000
|
(1)
|
|
Class M11
|
$7,419,000
|
(1)
|
|
Class X
|
(2)
|
(2)
|
|
Class P
|
$100
|
(3)
|
|
Swap Amount
|
(4)
|
(4)
|
|
Class R (5)
|
N/A
|
N/A
|
(1)
The lesser of the
related Formula Rate and the applicable Net WAC Rate. For
purposes of the REMIC Provisions, the reference to “Net WAC
Rate” in the preceding sentence shall be deemed to be a
reference to the REMIC Maximum Rate; therefore, on any Distribution
Date on which the Pass-Through Rate for this Class of Certificates
exceeds the REMIC Maximum Rate, interest accruals based on such
excess shall be treated as having been paid from the Net WAC
Reserve Fund or the Supplemental Interest Trust, as applicable; on
any Distribution Date on which the Pass-Through Rate on this Class
of Certificates is based on the Net WAC Rate, the amount of
interest that would have accrued on this Class of Certificates if
the REMIC Maximum Rate were substituted for the Net WAC Rate shall
be treated as having been paid by the holders of such Certificates
to the Supplemental Interest Trust, all pursuant to and as further
provided in Section 10.01(l) hereof.
(2)
The Class X Certificate
has a notional balance equal to the aggregate Stated Principal
Balance of the Mortgage Loans. The initial interest rate of
the Class X Certificate shall be a rate sufficient to cause all net
interest from the Mortgage Loans to accrue on the Class X
Certificate that is in excess of the amount of interest that
accrues on the Class A Certificates, Class M Certificates and the
Net Trust Swap Payment. For any Distribution Date, the
interest rate in respect of the Class X Certificate shall be the
excess of: (i) the weighted average interest rate of all interests
in REMIC II (other than any interest-only regular interest) over
(ii) the product of: (A) two and (B) the weighted average
Pass-Through Rate of the T2-Accrual Interest and the REMIC II
Accretion Directed Class, where the T2-Accrual Interest is subject
to a cap equal to zero and each REMIC II Accretion Directed Class
is subject to a cap, equal to the Pass-Through Rate on its
Corresponding Class, determined by substituting the REMIC Maximum
Rate for the Net WAC Rate. The Class X Certificate shall also
be entitled to principal equal to the excess of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date (less $100.00) over the aggregate Certificate Principal
Balance of the Class A Certificates and Class M Certificates as of
the Closing Date. Such principal balance shall not bear
interest.
(3)
The Class P
Certificates shall not be entitled to payments of interest, but
shall be entitled to receive all Prepayment Premiums in respect of
the Mortgage Loans.
(4)
The Swap Amount shall be
a REMIC regular interest of REMIC III. The Swap Amount shall
not have a principal balance, but shall receive 100% of the amount
received from the T2-IO interest.
(5)
The Class R Certificates
shall represent the beneficial ownership of the R-I, R-II and R-III
interests.
The foregoing REMIC structure is intended
to cause all of the cash from the Mortgage Loans to flow through to
REMIC III as cash flow on a REMIC regular interest, without
creating any shortfall, actual or potential (other than for credit
losses), to any REMIC regular interest. To the extent that
the structure is believed to diverge from such intention, the party
identifying any ambiguity or drafting error shall notify the other
parties hereto, and the parties hereto shall attempt to resolve
such ambiguity or correct such drafting error in accordance with
Section 12.01 to accomplish such intention.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01.
Conveyance of Mortgage Loans.
(a)
The Depositor, as of the date of this
Agreement, does hereby establish the Trust, and, concurrently with
the delivery of this Agreement, does hereby transfer, assign, set
over and otherwise convey to the Trustee without recourse for the
benefit of the Certificateholders all the right, title and interest
of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to the Mortgage Loans identified
on the Mortgage Loan Schedule, the rights of the Depositor under
the Assignment and Assumption Agreement, and all other assets
included or to be included in the Trust Fund. Such assignment
includes all interest and principal received by the Seller, the
Depositor, the Servicer or the Trustee on or with respect to the
Mortgage Loans (other than payments of principal and interest due
on such Mortgage Loans on or before the Cut-off Date), including
Principal Prepayments, and interest thereon, received on and after
January 24, 2007 by the Seller, the Depositor or the Servicer on or
with respect to the Mortgage Loans. On or prior to the
Closing Date, the Trustee shall execute the Swap Agreement in
accordance with Section 4.07(f) and the Depositor hereby directs
the Trustee to do so. With respect to any Mortgage Loan that
does not have a first payment date during the Due Period related to
the first Distribution Date, the Depositor shall deposit into the
Distribution Account on or before the Servicer Remittance Date
relating to the first Distribution Date, an amount equal to one
month’s interest at the related Net Mortgage Rate on the
Cut-off Date Principal Balance of such Mortgage Loan.
If the assignment and transfer of the
Mortgage Loans and the other property specified in this Section
2.01 from the Depositor to the Trustee pursuant to this Agreement
is held or deemed not to be a sale or is held or deemed to be a
pledge of security for a loan, the Depositor intends that the
rights and obligations of the parties shall be established pursuant
to the terms of this Agreement and that, in such event, (i) the
Depositor shall be deemed to have granted and does hereby grant to
the Trustee, for the benefit of the Certificateholders, as of the
Closing Date a perfected, first priority security interest in the
entire right, title and interest of the Depositor in and to the
Mortgage Loans and all other property conveyed to the Trust Fund
pursuant to this Section 2.01 and all proceeds thereof, and (ii)
this Agreement shall constitute a security agreement under
applicable law.
In connection with such transfer and
assignment, the Depositor does hereby deliver to, and deposit with
the Trustee or the Custodian, as applicable, a copy of the related
Mortgage Loan Schedule in an electronic, machine-readable medium,
and the following documents or instruments with respect to each
Mortgage Loan so transferred and assigned (each, a “Mortgage
File”):
(i)
the original Mortgage Note, endorsed in
blank or in the following form: “Pay to the order of U.S.
Bank National Association, as Trustee under the applicable
agreement, without recourse,” with all prior and intervening
endorsements showing a complete chain of endorsement from the
Originator to the Person so endorsing to the Trustee or a copy of
such original Mortgage Note with an accompanying lost note
affidavit executed by the Seller;
(ii)
the original Mortgage with evidence of
recording thereon, and a copy, certified by the appropriate
recording office, of the recorded power of attorney, if the
Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;
(iii)
an original Assignment of the Mortgage in
blank;
(iv)
the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment
from the Originator to the Person assigning the Mortgage to the
Trustee or in blank;
(v)
the original or copies of each
assumption, modification, written assurance or substitution
agreement, if any; and
(vi)
with respect to any first lien Mortgage
Loan, the original lender’s title insurance policy, if
available, together with all endorsements or riders which were
issued with or subsequent to the issuance of such policy, insuring
the priority of the Mortgage as a first lien on the Mortgaged
Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is
unavailable, a written commitment or uniform binder or preliminary
report of title issued by the title insurance or escrow company, if
available.
Notwithstanding the foregoing, the
Trustee, if applicable, acknowledges receipt of items listed under
clause (v) above only to the extent that it has received a written
schedule of the items to be delivered to the Trustee or the
Custodian pursuant to such clause (v).
The Depositor hereby represents that, on
the Closing Date (i) no more than 1% of the Mortgage Loans by
Stated Principal Balance as of the Cut-off Date may have lost note
affidavits in lieu of the original Mortgage Notes and (ii) the
Depositor shall cause the Seller to deliver to the Trustee or the
Custodian, as applicable, a copy of the original Mortgage Note for
each Mortgage Loan with respect to which a lost note affidavit is
delivered.
If any of the documents referred to in
clauses (ii), (iii), (iv) or (v) above in this Section 2.01(a) has
as of the Closing Date been submitted for recording but either (x)
has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained
the original of such document, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon (1)
delivery to the Trustee or the Custodian, as applicable, of a copy
of each such document certified by the Seller, in the case of (x)
above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was
submitted for recording and (2) if such copy is certified by the
Seller or delivery to the Trustee or the Custodian, as applicable,
promptly upon receipt thereof of either the original or a copy of
such document certified by the applicable public recording office
to be a true and complete copy of the original. If the
original lender’s title insurance policy was not delivered
pursuant to clause (vii) above in this Section 2.01(a), the
Depositor shall deliver or cause to be delivered to the Trustee or
the Custodian, as applicable, promptly after receipt thereof, the
original lender’s title insurance policy, if available.
The Depositor shall deliver or cause to be delivered to the
Trustee or the Custodian, as applicable, promptly upon receipt
thereof any other original documents constituting a part of a
Mortgage File received with respect to any Mortgage Loan,
including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
All original documents relating to the
Mortgage Loans that are not delivered to the Trustee or the
Custodian, as applicable, are and shall be held by or on behalf of
the Depositor or the Servicer, as the case may be, in trust for the
benefit of the Trustee on behalf of the Certificateholders.
In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage
File, such document shall be delivered promptly to the Trustee or
the Custodian, as applicable. Any such original document
delivered to or held by the Depositor that is not required pursuant
to the terms of this Section to be a part of a Mortgage File, shall
be delivered promptly to the Servicer.
The Depositor shall deliver or cause the
Seller, the Trustee or the Custodian to deliver to the Servicer
copies of all trailing documents required to be included in the
Servicing File at the same time the originals or certified copies
thereof are delivered to the Trustee or Custodian, as applicable,
which documents shall include, but are not limited to, the
mortgagee policy of title insurance and any Mortgage Loan documents
upon return from the recording office. The Servicer shall not
be responsible for any custodial fees other than costs incurred in
obtaining such documents, and the Servicer shall be entitled to
reimbursement from the Seller for any reasonable costs incurred in
obtaining such documents.
(b)
It is agreed and understood by the
Depositor, the Seller, the Servicer and the Trustee that it is not
intended that any Mortgage Loan be included in the Trust Fund that
is a “High-Cost Home Loan” as defined by the Home
Ownership and Equity Protection Act of 1994 or any other applicable
predatory lending laws, including, but not limited to (i) a
“High-Cost Home Loan” as defined in the New Jersey Home
Ownership Act effective November 27, 2003, (ii) a “High-Cost
Home Loan” as defined in the New Mexico Home Loan Protection
Act effective January 1, 2004, (iii) a “High Cost Home
Mortgage Loan” as defined in the Massachusetts Predatory Home
Loan Practices Act effective November 7, 2004 or (iv) a
“High-Cost Home Loan” as defined by the Indiana High
Cost Home Loan Law effective January 1, 2005.
SECTION 2.02.
Acceptance of REMIC I by the
Trustee.
Subject to the provisions of Section 2.01
and subject to any exceptions noted on the exception report
described in the next paragraph below, the Trustee or the Custodian
acknowledges receipt of the documents referred to in Section 2.01
(other than such documents described in Section 2.01(a)(iv)) above
and all other assets included under clauses (i), (iii), (iv) and
(v) of the definition of “REMIC I” (to the extent of
amounts deposited into the Distribution Account) and declares that
the Trustee or the Custodian, as applicable, holds and will hold
such documents and the other documents delivered to it constituting
the Mortgage File on behalf of the Trust, and that it holds or will
hold all such assets and such other assets included in the
definition of “REMIC I” in trust for the exclusive use
and benefit of all present and future Certificateholders. The
Trustee also acknowledges receipt of the amounts on deposit in the
Net WAC Reserve Fund in trust for the exclusive use and benefit of
all present and future Certificateholders.
The Trustee agrees on or before the
Closing Date, for the benefit of the Certificateholders, to review,
or cause the Custodian to review, each Mortgage File and to certify
and deliver, or cause the Custodian to certify and deliver an
initial certification, to the Depositor, the Seller, the Servicer
and the Trustee in substantially the form attached hereto as
Exhibit C-1 (the “Initial Certification”). It is
herein acknowledged that, in conducting such review, neither the
Trustee nor the Custodian was under any duty or obligation (i) to
inspect, review or examine any such documents, instruments,
certificates or other papers to determine whether they are genuine,
enforceable, or appropriate for the represented purpose (including
with respect to Section 2.01(a)(vi), whether such title insurance
policy insures the priority of the Mortgage as a first lien) or
whether they have actually been recorded or that they are other
than what they purport to be on their face or (ii) to determine
whether any Mortgage File should include any of the documents
specified in Section 2.01(a)(iv).
Prior to the first anniversary date of
this Agreement, the Trustee shall cause the Custodian to deliver to
the Depositor, the Trustee, the Seller and the Servicer a final
certification in substantially the form annexed hereto as Exhibit
C-2 (the “Final Certification”) evidencing the
completeness of the Mortgage Files, with any applicable exceptions
noted thereon.
If in the process of reviewing the
Mortgage Files and making or preparing, as the case may be, the
certifications referred to above, the Trustee or the Custodian
finds any document or documents constituting a part of a Mortgage
File to be missing or defective in any material respect, at the
conclusion of its review the Trustee shall so notify the Depositor,
the Seller and the Servicer. In addition, upon the discovery
by the Depositor, the Servicer, the Custodian or the Trustee of a
breach of any of the representations and warranties made by the
Seller in this Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of
the related Certificateholders in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the
other parties.
Enforcement of this Agreement against the
Seller shall be effected by the Trustee. The Trustee shall
pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery exceeds
all amounts due in respect of the Mortgage Loans or (ii) from a
specific recovery of costs, expenses or attorneys’ fees
against the Person against which such enforcement is directed;
provided, however , if the sources of reimbursement
described in clauses (i) and (ii) are insufficient, the Trustee may
seek reimbursement for any remaining unreimbursed costs of such
enforcement from the Trust Fund as an Extraordinary Trust Fund
Expense.
SECTION 2.03.
Repurchase or Substitution of Mortgage
Loans by the Seller or the Depositor; Payment of Prepayment
Premiums in the Event of Breach.
(a)
Upon discovery by any of the parties
hereto or receipt of notice by a Responsible Officer in the
Corporate Trust Office of the Trustee of any materially defective
document in, or that a document is missing from, the Mortgage File
or of the breach by the Seller of any representation, warranty or
covenant in respect of any Mortgage Loan made pursuant to Section
2.05(b)(ix) that materially adversely affects the value of such
Mortgage Loan or the Certificateholders (in the case of any such
representation or warranty made, to the knowledge or the best of
knowledge of the Seller as to which the Seller has no knowledge,
without regard to the Seller’s lack of knowledge with respect
to the substance of such representation or warranty being
inaccurate at the time it was made), the party discovering such
breach shall notify a Responsible Officer in the Corporate Trust
Office of the Trustee and the Trustee shall promptly notify the
Seller and the Servicer of such defect, missing document or breach
and cause the Seller to deliver such missing document or cure such
defect or breach within 90 days from the date the Seller was
notified of such missing document, defect or breach; provided that
in the case of a missing document, such missing document was not
previously delivered to the Custodian by the Seller.
Notwithstanding the foregoing, any breach by the Seller of
the Fannie Mae Representations or the Freddie Mac Representations
shall be deemed to materially and adversely affect the interests of
the Certificateholders in that Mortgage Loan. If the Seller
does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Seller
shall repurchase such Mortgage Loan from the Trust Fund at the
Purchase Price. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Distribution Account, and
the Trustee, upon receipt of such deposit, shall release or cause
the Custodian to release to the Seller the related Mortgage File
and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, (
provided, however , that in the instruments of transfer or
assignment, the Trustee shall represent and warrant to the Seller
that the repurchased Mortgage Loan is free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security
interest created by the Trustee and its successors, assigns and
transferees), as the Seller shall furnish to it and as shall be
necessary to vest in the Seller any Mortgage Loan released pursuant
hereto, and the Trustee shall have no further responsibility with
regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, the Seller may cause such
Mortgage Loan to be removed from the Trust Fund (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to
the limitations set forth in Section 2.03(c). It is
understood and agreed that the obligation of the Seller to cure, to
repurchase or to substitute for any Mortgage Loan as to which a
document is missing, a material defect in a constituent document
exists or as to which such a breach has occurred and is continuing
shall constitute the sole remedies respecting such omission, defect
or breach available to the Trustee on behalf of the
Certificateholders.
(b)
(i)
As promptly as practicable (and no later
than 90 days) after the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any
representation, warranty or covenant of the Servicer set forth in
Section 2.05(a) which materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the
Servicer shall cure such breach in all material
respects.
(ii)
If the covenant made by the Servicer in
Section 2.05(a)(vii) is breached and remains uncured, the Servicer
shall pay into the Collection Account the amount of the waived
Prepayment Premium. If the Servicer shall fail to make any
payment required pursuant to this Section 2.03(b)(ii) either the
Trustee or the Seller may enforce such obligation.
(c)
Any substitution of Qualified Substitute
Mortgage Loans for Deleted Mortgage Loans made pursuant to Section
2.03(a) must be effected prior to the date that is two years after
the Closing Date for the Trust Fund.
As to any Deleted Mortgage Loan for which
the Seller substitutes a Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected by the Seller delivering
to the Trustee, or the Custodian on behalf of the Trustee, as
applicable, for such Qualified Substitute Mortgage Loan or Loans,
the Mortgage Note, the Mortgage, the Assignment to the Trustee, and
such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2.01, together
with an Officers’ Certificate providing that each such
Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described
below), if any, in connection with such substitution. The
Trustee or the Custodian, as applicable, shall acknowledge receipt
for such Qualified Substitute Mortgage Loan or Loans and, within
ten Business Days thereafter, review such documents as specified in
Section 2.02 and deliver to the Trustee (if delivered by the
Custodian), the Depositor, the Seller and the Servicer, with
respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit
C-1, with any applicable exceptions noted thereon. Within one
year of the date of substitution, the Trustee or the Custodian
shall deliver to the Trustee (if delivered by the Custodian), the
Depositor, the Seller and the Servicer a certification
substantially in the form of Exhibit C-2 hereto with respect to
such Qualified Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon. Monthly Payments due
with respect to Qualified Substitute Mortgage Loans in the month of
substitution are not part of the Trust Fund and will be retained by
the Seller. For the month of substitution, distributions to
Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of
substitution, and the Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Trustee shall give or cause to be given
written notice to the Certificateholders that such substitution has
taken place, and the Servicer shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan or Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the Trustee in an electronic
format. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool
and part of the related Subgroup and shall be subject in all
respects to the terms of this Agreement, including, all applicable
representations and warranties thereof included in this
Agreement.
For any month in which the Seller
substitutes one or more Qualified Substitute Mortgage Loans for one
or more Deleted Mortgage Loans, the Servicer will determine the
amount (the “Substitution Shortfall Amount”), if any,
by which the aggregate Purchase Price of all such Deleted Mortgage
Loans exceeds the aggregate of, as to each such Qualified
Substitute Mortgage Loan, the Stated Principal Balance thereof as
of the date of substitution, together with one month’s
interest on such Stated Principal Balance at the applicable Net
Mortgage Rate, plus all outstanding P&I Advances and Servicing
Advances and any costs and damages actually incurred and paid by or
on behalf of the Trust in connection with any violation by such
Mortgage Loan of (i) the representations and warranties set forth
in Section 2.05(b)(vii) or (viii) of this Agreement or (ii) the
representations and warranties made in connection with
“high-cost” home loans or any predatory or abusive
lending laws in Schedule 3 hereto. On the date of such
substitution, which shall be on or prior to the next succeeding
Determination Date, the Seller will deliver or cause to be
delivered to the Servicer for deposit in the Collection Account an
amount equal to the Substitution Shortfall Amount, if any, and the
Trustee, upon receipt of the related Qualified Substitute Mortgage
Loan or Loans and certification by the Servicer of such deposit,
shall release or cause the Custodian to release to the Seller the
related Mortgage File or Files and the Trustee shall execute and
deliver such instruments of transfer or assignment, in each case
without recourse, as the Seller shall deliver to it and as shall be
reasonably necessary to vest therein any Deleted Mortgage Loan
released pursuant hereto.
In addition, the Seller shall obtain at
its own expense and deliver to the Trustee an Opinion of Counsel to
the effect that such substitution will not cause (a) any federal
tax to be imposed on any of the REMICs, created hereunder,
including without limitation, any federal tax imposed on
“prohibited transactions” under Section 860F(a)(1) of
the Code or on “contributions after the startup date”
under Section 860G(d)(1) of the Code, or (b) any REMIC hereunder to
fail to qualify as a REMIC at any time that any Certificate is
outstanding.
(d)
Upon discovery by the Seller, the
Depositor, the Servicer or the Trustee that any Mortgage Loan does
not constitute a “qualified mortgage” within the
meaning of Section 860G(a)(3) of the Code, the party discovering
such fact shall within two Business Days give written notice
thereof to the other parties. In connection therewith, the
Seller shall repurchase or, subject to the limitations set forth in
Section 2.03(c), substitute one or more Qualified Substitute
Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such
affected Mortgage Loan. Any such repurchase or substitution
shall be made in the same manner as set forth in Section 2.03(a).
The Trustee shall reconvey to the Seller the Mortgage Loan to
be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for
breach of a representation or warranty.
SECTION 2.04.
Representations and Warranties of the
Depositor.
The Depositor hereby represents, warrants
and covenants to the Trustee and the Servicer that as of the
Closing Date:
(i)
