Execution Copy
BEAR STEARNS ASSET BACKED SECURITIES I LLC,
Depositor
EMC MORTGAGE CORPORATION,
Sponsor
WELLS FARGO BANK, N.A.,
Master Servicer and Securities Administrator
and
CITIBANK, N.A.,
Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2007
--------------------------------------
BEAR STEARNS ASSET BACKED SECURITIES TRUST 2007-SD2
ASSET-BACKED CERTIFICATES, SERIES 2007-SD2
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TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
Section 1.01. Defined
Terms...............................................2
ARTICLE II.
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance
of Trust Fund...................................47
Section 2.02. Acceptance
of the Mortgage Loans...........................49
Section 2.03.
Representations, Warranties and Covenants of the Master
Servicer and the Sponsor...................................51
Section 2.04.
Representations and Warranties of the Depositor............59
Section 2.05. Delivery
of Opinion of Counsel in Connection with
Substitutions and Repurchases..............................60
Section 2.06.
Authentication and Delivery of Certificates................60
Section 2.07. Covenants of the Master
Servicer...........................61
Section 2.08. Lost
Mortgage Notes Indemnity..............................61
Section 2.09. Purposes
and Powers of the Trust...........................61
ARTICLE
III.
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS
Section 3.01. The Master
Servicer........................................63
Section 3.02.
REMIC-Related Covenants....................................63
Section 3.03. Monitoring
of Servicers....................................64
Section 3.04.
[Reserved].................................................65
Section 3.05. Power to
Act; Procedures...................................65
Section 3.06.
Due-on-Sale Clauses; Assumption Agreements.................66
Section 3.07. Release of
Mortgage Files..................................66
Section 3.08. Documents,
Records and Funds in Possession of the
Master Servicer To Be Held for Trustee.....................67
Section 3.09.
Maintenance of Hazard Insurance............................67
Section 3.10.
Presentment of Claims and Collection of Proceeds...........68
Section 3.11.
Maintenance of the Primary Mortgage Insurance Policies.....68
Section 3.12. Custodian
to Retain Possession of Certain Insurance
Policies and Documents.....................................68
Section 3.13.
Realization Upon Defaulted Mortgage Loans..................69
Section 3.14.
Compensation for the Servicers and the Master Servicer.....69
Section 3.15. REO
Property...............................................69
Section 3.16. Annual
Statement as to Compliance..........................70
Section 3.17.
Assessments of Compliance and Attestation Reports..........70
Section 3.18. Reports
Filed with Securities and Exchange Commission......72
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Section 3.19.
[Reserved].................................................81
Section 3.20. Optional
Purchase of Defaulted Mortgage Loans..............81
Section 3.21.
[Reserved].................................................81
Section 3.22. Intention
of the Parties and Interpretation................81
ARTICLE IV.
ACCOUNTS
Section 4.01. Protected
Accounts.........................................82
Section 4.02.
[Reserved].................................................82
Section 4.03.
[Reserved].................................................82
Section 4.04.
Distribution Account.......................................82
Section 4.05. Permitted
Withdrawals and Transfers from the
Distribution Account.......................................84
Section 4.06. The Yield
Maintenance Account and the Yield Maintenance
Agreements.................................................86
Section 4.07. The Final
Maturity Reserve Account.........................87
Section 4.08. Class P
Reserve Account....................................88
ARTICLE V.
DISTRIBUTIONS AND ADVANCES
BY THE MASTER SERVICER
Section 5.01.
Advances...................................................90
Section 5.02.
Compensating Interest Payments.............................90
Section 5.03. REMIC
Distributions........................................91
Section 5.04.
Distributions..............................................91
Section 5.04A. Allocation of
Realized Losses..............................98
Section 5.05. Monthly
Statements to Certificateholders..................100
Section 5.06. REMIC
Designations and Allocations........................103
Section 5.07. Basis Risk
Reserve Fund...................................108
ARTICLE VI.
THE CERTIFICATES
Section 6.01. The
Certificates..........................................109
Section 6.02.
Certificate Register; Registration of Transfer and
Exchange of Certificates..................................111
Section 6.03. Mutilated,
Destroyed, Lost or Stolen Certificates.........115
Section 6.04. Persons
Deemed Owners.....................................115
Section 6.05. Access to
List of Certificateholders' Names and
Addresses.................................................115
Section 6.06. Book-Entry
Certificates...................................115
Section 6.07. Notices to
Depository.....................................116
Section 6.08. Definitive
Certificates...................................116
Section 6.09.
Maintenance of Office or Agency...........................117
Section 6.10.
Appointment of Paying Agent and Certificate Registrar.....117
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ARTICLE VII.
THE DEPOSITOR, THE MASTER SERVICER AND THE SPONSOR
Section 7.01. Respective
Liabilities of the Depositor, the Master
Servicer and the Sponsor..................................118
Section 7.02. Merger or
Consolidation of the Depositor, the Master
Servicer or the Sponsor...................................118
Section 7.03.
Indemnification of the Trustee, the Master Servicer,
the Securities Administrator and Others...................118
Section 7.04. Limitation
on Liability of the Depositor, the Sponsor,
the Master Servicer, the Securities Administrator and
Others....................................................119
Section 7.05. Limitation
on Resignation of Master Servicer and Sponsor..120
Section 7.06. Errors and
Omissions Insurance; Fidelity Bonds............120
ARTICLE VIII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 8.01. Events of
Default.........................................121
Section 8.02. Trustee to
Act; Appointment of Successor..................122
Section 8.03.
Notification to Certificateholders........................123
ARTICLE IX.
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 9.01. Duties of
Trustee and Securities Administrator............124
Section 9.02. Certain
Matters Affecting the Trustee and the
Securities Administrator..................................125
Section 9.03. Trustee
and Securities Administrator Not Liable for
Certificates or Mortgage Loans............................127
Section 9.04. Trustee
and Securities Administrator May Own
Certificates..............................................128
Section 9.05. Trustee's
and Securities Administrator's Fees and
Expenses..................................................128
Section 9.06.
Eligibility Requirements for Trustee, Securities
Administrator and Paying Agent............................128
Section 9.07.
Insurance.................................................129
Section 9.08.
Resignation and Removal of Trustee, Securities
Administrator and Paying Agent............................129
Section 9.09. Successor
Trustee, Securities Administrator or Successor
Paying Agent..............................................130
Section 9.10. Merger or
Consolidation of Trustee, Securities
Administrator or Paying Agent.............................131
Section 9.11.
Appointment of Co-Trustee or Separate Trustee.............131
Section 9.12. Tax
Matters...............................................132
ARTICLE X.
TERMINATION
Section 10.01. Termination upon
Liquidation or Repurchase of the
Mortgage Loans............................................135
Section 10.02. Final
Distribution on the Certificates....................135
Section 10.03. Additional
Termination Requirements.......................136
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01.
Amendment.................................................138
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Section 11.02. Recordation of
Agreement; Counterparts....................139
Section 11.03. Governing
Law.............................................139
Section 11.04. Intention of
Parties......................................139
Section 11.05.
Notices...................................................140
Section 11.06. Severability of
Provisions................................141
Section 11.07.
Assignment................................................141
Section 11.08. Limitation on
Rights of Certificateholders................141
Section 11.09. Inspection and
Audit Rights...............................142
Section 11.10. Certificates
Nonassessable and Fully Paid.................142
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Exhibits
--------
Exhibit A-1 Form
of Class A Certificates
Exhibit A-2 Form
of Class I-B and Class II-M Certificates
Exhibit A-3 Form
of Class I-PO Certificates
Exhibit A-4 Form
of Class P Certificates
Exhibit A-5 Form
of Class X Certificates
Exhibit A-6 Form
of Class B-IO Certificates
Exhibit A-7 Form
of Class R Certificates
Exhibit B
Mortgage Loan Schedule
Exhibit C
[Reserved]
Exhibit D
Form of Transfer Affidavit
Exhibit E
Form of Transferor Certificate
Exhibit F
Form of Investment Letter (Non-Rule 144A)
Exhibit G
Form of Rule 144A Investment Letter
Exhibit H
Form of Request for Release
Exhibit I
DTC Letter of Representations
Exhibit J
Schedule of Mortgage Loans with Lost Notes
Exhibit K
Form of Custodial Agreements
Exhibit L
Servicing Criteria to be Addressed in Assessment of Compliance
Exhibit M-1 Form
of Back-Up Certification
Exhibit M-2 Form of Certification for
the Securities
Administrator
Exhibit N
Form of Yield Maintenance Agreements
Exhibit O
Form 10-D, Form 8-K and Form 10-K Reporting Responsibilities
Exhibit P
Form of Additional Disclosure Notice
Schedules
Schedule I
Servicing Agreements
Schedule II
Assignment, Assumptions and Recognition Agreements
Schedule III
Yield Maintenance Agreements Projected Principal Balances
Schedule IV
Coupon Strip Reserve Account Schedule
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<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of February 1, 2007,
among BEAR STEARNS ASSET BACKED SECURITIES I LLC, a Delaware
limited liability
company, as depositor (the "Depositor"), EMC MORTGAGE CORPORATION,
a Delaware
corporation, as sponsor (the "Sponsor"), WELLS FARGO BANK, N.A., a
national
banking association, as master servicer (in such capacity, the
"Master
Servicer") and as securities administrator (in such capacity, the
"Securities
Administrator") and CITIBANK, N.A., a national banking association,
as trustee
(the "Trustee").
PRELIMINARY STATEMENT
The parties to this Agreement hereby create a common law trust
pursuant to the laws of the State of New York. The Depositor is the
owner of the
Trust Fund that is hereby conveyed to the Trustee in return for
the
Certificates. As provided herein, the Securities Administrator on
behalf of the
Trustee shall make four separate real estate mortgage investment
conduit (each a
"REMIC") elections with respect to the Trust Fund for Federal
income tax
purposes.
The Trust Fund shall be named, and may be referred to as, the
"Bear Stearns Asset Backed Securities Trust 2007-SD2." The
Certificates issued
hereunder may be referred to as "Asset-Backed Certificates Series
2007-SD2"
(including for purposes of any endorsement or assignment of a
Mortgage Note or
Mortgage).
In consideration of the mutual agreements herein contained,
the Depositor, the Master Servicer, the Securities Administrator,
the Sponsor
and the Trustee agree as follows:
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ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms.
In addition to those terms defined in Section 1.02, whenever
used in this Agreement, the following words and phrases, unless the
context
otherwise requires, shall have the following meanings:
Accepted Master Servicing Practices: With respect to any
Mortgage Loan those customary mortgage servicing practices of
prudent mortgage
servicing institutions that master service mortgage loans of the
same type and
quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged
Property is located, to the extent applicable to the Master
Servicer (except in
its capacity as successor to a Servicer) or to the Trustee (in its
capacity, if
at all, as Successor Master Servicer).
Account: Each Protected Account, the Distribution Account, the
Final Maturity Reserve Account, the Basis Risk Reserve Fund, the
Yield
Maintenance Account and the Class P Reserve Account.
Accrual Period: With respect to the Certificates (other than
the Class I-PO Certificates, the Adjustable Rate Certificates, the
Class P
Certificates and the Residual Certificates) will be the calendar
month
immediately preceding the calendar month in which a Distribution
Date occurs.
All calculations of interest on such Certificates will be made on
the basis of a
360-day year that consists of twelve 30-day months.
With respect to the Adjustable Rate Certificates and any
Distribution Date, the period from and including the preceding
Distribution Date
(or, in the case of the first Distribution Date, from the Closing
Date) to and
including the day prior to the current Distribution Date. All
calculations of
interest on the Adjustable Rate Certificates (including the
Interest Rate Cap)
will be made on the basis of the actual number of days elapsed in
the related
Accrual Period and in a 360-day year.
Accrued Certificate Interest: With respect to the Group I
Certificates of any Class (other than the Class I-PO Certificates)
on any
Distribution Date, is equal to the amount of interest accrued
during the related
Accrual Period at the applicable Pass-Through Rate on the
Certificate Principal
Balance or Notional Amount, as applicable, of such Certificate
immediately prior
to such Distribution Date, less (1) in the case of a Group I Senior
Certificate,
such Certificate's share of (a) Prepayment Interest Shortfalls on
the related
Mortgage Loans, to the extent not covered by Compensating Interest
paid by the
Servicer or the Master Servicer, (b) interest shortfalls on the
related Mortgage
Loans resulting from the application of the Relief Act or similar
state law and
(c) after the Cross-Over Date, the interest portion of any Realized
Losses on
the related Mortgage Loans, and (2) in the case of a Group I
Subordinate
Certificate, such Certificate's share of (a) Prepayment Interest
Shortfalls on
the related Mortgage Loans, to the extent not covered by
Compensating Interest
paid by the Servicer or the Master Servicer, (b) interest
shortfalls on the
related Mortgage Loans resulting from the application of the Relief
Act or
similar state law and (c) the interest portion of any Realized
Losses on the
related Mortgage Loans. The Senior Percentage of Prepayment
Interest Shortfalls
and interest shortfalls resulting from the application of the
Relief Act will be
allocated among the Group I Senior Certificates in the related
Certificate Group
in proportion to the amount of Accrued Certificate Interest that
would have been
allocated thereto in the absence of such shortfalls. The applicable
Subordinate
Percentage of Prepayment Interest Shortfalls and interest
shortfalls resulting
from the application of the Relief Act will be allocated among the
Group I
Subordinate Certificates in proportion to the amount of Accrued
Certificate
Interest that would have been allocated thereto in the absence of
such
shortfalls. Accrued Certificate Interest with respect to the Group
I
Certificates (other than the Class I-PO Certificates) is calculated
on the basis
of a 360-day year consisting
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of twelve 30-day months. No Accrued Certificate Interest will be
payable with
respect to any Class of Certificates after the Distribution Date on
which the
outstanding Certificate Principal Balance or Notional Amount, as
applicable, of
such Certificate has been reduced to zero.
Actual Monthly Payments: For any Mortgage Loan in Loan Group
II and each Due Period, means the actual monthly payments of
principal and
interest received during such month on such Mortgage Loan.
Additional Disclosure:
As defined in Section 3.18 (a).
Additional Form 10-D Disclosure: As defined in Section
3.18 (a).
Additional Form 10-K Disclosure: As defined in Section
3.18 (a).
Adjustable Rate Certificates: The Class II-A Certificates
and
the Class II-M Certificates.
Adjusted Rate Cap: With respect to each Class of Class II-A
Certificates and Class II-M Certificates, each Distribution Date
and the related
Due Period, (A) the sum of (i) the scheduled Monthly Payments owed
on the
related Mortgage Loans for such Due Period less the related
Servicing Fees and
the related Master Servicing Fee and (ii) the Actual Monthly
Payments received
in excess of such scheduled Monthly Payments, minus (B) the Coupon
Strip, if
any, payable to the Final Maturity Reserve Account with respect to
such
Distribution Date, expressed as a per annum rate calculated on the
basis of the
aggregate Stated Principal Balance of the related Mortgage Loans
for such Due
Period and further reflecting the accrual of interest on an
actual/360 basis.
Advance: An advance of delinquent payments of principal (other
than in respect of delinquent payments of principal on any Simple
Interest
Loans) or interest in respect of a Mortgage Loan required to be
made by the
applicable Servicer pursuant to the related Servicing Agreement, or
by the
Master Servicer pursuant to Section 5.01.
Agreement: This Pooling and Servicing Agreement and any and
all amendments or supplements hereto made in accordance with the
terms herein.
Aggregate Subordinate Optimal Principal Amount: With respect
to Loan Group I, is the sum of each of the components of the
definition of
Subordinate Optimal Principal Amount for all Sub-Loan Groups in
such Loan Group.
Allocable Share: With respect to any class of Class I-B
Certificates on any Distribution Date, will equal such Class's pro
rata share
(based on the Certificate Principal Balance of each Class entitled
thereto) of
the Aggregate Subordinate Optimal Principal Amount; provided,
however, that no
class of Class I-B Certificates (other than the class of Class I-B
Certificates
with the lowest numerical designation) shall be entitled on any
Distribution
Date to receive distributions pursuant to clauses (2), (3) and (5)
of the
definition of Subordinate Optimal Principal Amount unless the Class
Prepayment
Distribution Trigger for the related Class is satisfied for such
Distribution
Date. Notwithstanding the foregoing, if on any Distribution Date
the Certificate
Principal Balance of any class of Class I-B Certificates for which
the related
Class Prepayment Distribution Trigger was satisfied on such
Distribution Date is
reduced to zero, any amounts distributable to such Class pursuant
to clauses
(2), (3) and (5) of the definition of Subordinate Optimal Principal
Amount to
the extent of such Class's remaining Allocable Share, shall be
distributed to
the remaining Classes of Class I-B Certificates in reduction of
their respective
Certificate Principal Balances, sequentially, to the Class I-B
Certificates, in
the order of their numerical class designations.
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Amount Held for Future Distribution: As to any Distribution
Date, the aggregate amount held in the Distribution Account at the
close of
business on the immediately preceding Determination Date on account
of (i) all
Scheduled Payments or portions thereof received in respect of the
Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments,
Liquidation
Proceeds, Insurance Proceeds and Subsequent Recoveries received in
respect of
such Mortgage Loans after the last day of the related Prepayment
Period or
Liquidation Period, as applicable.
Annual Statement of Compliance: As defined in Section 3.16.
Applicable Written Notice: For purposes of Section 8.01,
written notice to the Master Servicer by the Trustee, the
Securities
Administrator or the Depositor, or to the Trustee and the Master
Servicer by the
Holders of Certificates evidencing not less than 25% of the Voting
Rights
evidenced by the Certificates.
Applied Realized Loss Amount: With respect to any Distribution
Date and each Class of Group II Offered Certificates, the sum of
the Realized
Losses with respect to the Mortgage Loans in Loan Group II, which
have been
allocated in reduction of the Certificate Principal Balance of such
Class of
Certificates pursuant to this Agreement. Realized Losses in respect
of Loan
Group II in the aggregate shall equal the amount, if any, by which
(i) the
aggregate Certificate Principal Balance of all of the Group II
Certificates
(after all distributions of principal on such Distribution Date)
exceeds (ii)
the aggregate Stated Principal Balance of all of the Mortgage Loans
in Loan
Group II for such Distribution Date. Realized Losses in respect of
Loan Group I
shall be allocated, first, the Class II-M-5 Certificates, the Class
II-M-4
Certificates, the Class II-M-3 Certificates, the Class II-M-2
Certificates and
the Class II-M-1 Certificates, in that order, in each case until
the respective
Certificate Principal Balance thereof has been reduced to zero, and
then, to the
Class II-A-2 Certificates and the Class II-A-1 Certificates, in
that order, in
each case until the Certificate Principal Balance of each such
class has been
reduced to zero.
Appraised Value: With respect to any Mortgage Loan originated
in connection with a refinancing, the appraised value of the
Mortgaged Property
based upon the appraisal made at the time of such refinancing or,
with respect
to any other Mortgage Loan, the appraised value of the Mortgaged
Property based
upon the appraisal made by a fee appraiser at the time of the
origination of the
related Mortgage Loan.
Assessment of Compliance: As defined in Section 3.17.
Assumption Agreement: Any Assignment, Assumption and
Recognition Agreement or comparable document transferring or
acknowledging the
transfer of a Servicing Agreement to the Trust set forth on
Schedule II hereto.
Attesting Party: As
defined in Section 3.17.
Attestation Report: As
defined in Section 3.17.
Available Funds: With respect to any Distribution Date and
each Sub-Loan Group in Loan Group I, an amount equal to the
aggregate of the
following amounts with respect to the Mortgage Loans in the related
Sub-Loan
Group: (a) all previously undistributed payments on account of
principal
(including the principal portion of Scheduled Payments, Principal
Prepayments
and the principal portion of Net Liquidation Proceeds) and all
previously
undistributed payments on account of interest received after the
Cut-off Date
and on or prior to the related Determination Date, (b) any Advances
and
Compensating Interest paid by the paid by the Servicer or the
Master Servicer
with respect to such Distribution Date, (c) any reimbursed amount
in connection
with losses on investments of deposits in
4
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certain eligible investments in respect of the Mortgage Loans in
the related
Sub-Loan Group, and (d) any amount allocated from the Available
Funds of another
Sub-Loan Group in accordance with Section 5.04(a)(I)(i)(F),
except:
(i) all payments that were due on or before the Cut-off Date;
(ii) all
Principal Prepayments and Liquidation Proceeds
received after the applicable Prepayment Period and the Liquidation
Period,
respectively;
(iii) all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or
dates subsequent
to the related Due Date;
(iv) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which, and to the
extent that,
there are any unreimbursed Advances;
(v) amounts of Advances determined to be Nonrecoverable
Advances;
(vi) any investment earnings on amounts on deposit in the
Distribution Account and amounts permitted to be withdrawn from the
Distribution
Account pursuant to this Agreement;
(vii) amounts needed to pay the Servicing Fees, the Master
Servicing Fee or to reimburse the Servicer or the Master Servicer
for amounts
due under the Servicing Agreement and this Agreement (allocated as
provided in
Section 4.05(b)) to the extent such amounts have not been retained
by, or paid
previously to, the Servicer or the Master Servicer;
(viii) amounts applied to pay any fees with respect to any
lender-paid primary mortgage insurance policy (allocated as
provided in Section
4.05(b)); and
(ix) any expenses or other amounts (allocated as provided in
Section 4.05(b)) reimbursable to the Trustee, the Securities
Administrator and
the Custodian pursuant to Section 4.05(a), Section 7.04 or Section
9.05.
Back-Up Certification:
As defined in Section 3.18(a)(iii).
Balloon Loan: A Mortgage Loan, identified as such on the
Mortgage Loan Schedule, where the related Mortgage Note provides
for lowered
payments of principal over the life of such Mortgage Loan and a
larger payment
of principal than is usual at its stated maturity.
Bankruptcy Code: Title
11 of the United States Code.
Basis Risk Reserve Fund: The fund maintained as described
in
Section 5.07.
Basis Risk Shortfall: As of any Distribution Date and for any
Class of Adjustable Rate Certificates, the excess of (i) the amount
of Current
Interest that such Class would have been entitled to receive on
such
Distribution Date had the applicable Pass-Through Rate been
calculated without
regard to the Interest Rate Cap; over (ii) the sum of interest for
such Class,
calculated at the applicable Interest Rate Cap for such
Distribution Date, and
any amount paid to such Class in respect of interest under the
Yield Maintenance
Agreement.
Basis Risk Shortfall Carry Forward Amount: As of any
Distribution Date and for any Class of Adjustable Rate
Certificates, the sum of:
(i) if on such Distribution Date the applicable Pass-
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Through Rate for such Class is based upon the applicable Interest
Rate Cap, the
applicable Basis Risk Shortfall; and (ii) the Basis Risk Shortfall
for all
previous Distribution Dates not previously paid (including interest
accrued
thereon at the applicable Pass-Through Rate for the Accrual Period
with respect
to each such prior Distribution Date), together with interest
thereon at a rate
equal to the applicable Pass-Through Rate for such Distribution
Date.
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the
ownership of which
is reflected on the books of the Depository or on the books of a
person
maintaining an account with the Depository (directly, as a
"Depository
Participant", or indirectly, as an indirect participant in
accordance with the
rules of the Depository and as described in Section 6.06). As of
the Closing
Date, each Class of Regular Certificates constitutes a Class of
Book-Entry
Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday,
or (ii) a day on which banking institutions in The City of New
York, New York,
or the States of Maryland, Minnesota or Texas, or, if different,
the city in
which the Corporate Trust Office of the Trustee or the principal
office of the
Securities Administrator, the Master Servicer or of a Servicer is
located are
authorized or obligated by law or executive order to be closed.
Cede: Cede & Co.,
or its successors in interest.
Certificate: Any one
of the certificates of any Class
executed and
authenticated by the
Certificate Registrar in substantially the
forms attached hereto as Exhibits A-1 through A-6.
Certificate Group: With respect to the Certificates, either
Sub-Loan Group I-1, Sub-Loan Group I-2 or Sub-Loan
Group I-3, as applicable.
Certificate Margin: Reference to any of the Class II-A-1
Margin, the Class II-A-2 Margin, the Class II-A-3 Margin, the Class
II-M-1
Margin, the Class II-M-2 Margin, the Class II-M-3 Margin, the Class
II-M-4
Margin or the Class II-M-5 Margin.
Certificate Owner: With respect to a Book-Entry Certificate,
the Person that is the beneficial owner of such Book-Entry
Certificate.
Certificate Principal Balance: As to any Certificate (other
than any Class I-X Certificates, Class B-IO Certificates or
Residual
Certificates) and as of any Distribution Date, the Initial
Certificate Principal
Balance of such Certificate, increased by (i) (in the case of the
Group II
Certificates) the amount of any Net Deferred Interest allocated
thereto on such
Distribution Date and on any previous Distribution Dates, and (ii)
any
Subsequent Recoveries allocated to such Class (other than an
Interest-Only
Certificate) on previous Distribution Dates pursuant to Section
5.04A, reduced
by the sum of (i) all amounts distributed with respect to such
Certificate in
reduction of the Certificate Principal Balance thereof on previous
Distribution
Dates pursuant to Section 5.04, (ii) the principal portion of the
Realized
Losses (other than Realized Losses resulting from Debt Service
Reductions)
allocated to such Certificate on previous Distribution Dates, and
(iii) solely
in the case of the Group I Subordinate Certificates, such
Certificate's pro rata
share, if any, of the applicable Subordinate Certificate Writedown
Amount for
previous Distribution Dates. References herein to the Certificate
Principal
Balance of a Class of Certificates shall mean the Certificate
Principal Balances
of all Certificates in such Class.
Certificate Register:
The register maintained pursuant to
Section 6.02 hereof.
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Certificate Registrar:
The Securities Administrator or any
successor certificate registrar appointed hereunder.
Certificate Registrar
Office: The office of the Certificate
Registrar located at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota
55479, Attention:
BSABS 2007-SD2.
Certificateholder or
Holder: The person in
whose name a
Certificate is
registered
in the Certificate Register (initially, Cede
&
Co., as nominee for the Depository, in the case of any Book-Entry
Certificates).
Certification Parties:
As defined in Section 3.18(a)(iii)(D).
Certifying Person: As
defined in Section 3.18(a)(iii)(D).
Class: All
Certificates bearing the same Class designation as
set forth in Section
6.01 hereof.
Class A Certificates:
The Class I-A Certificates and the
Class II-A Certificates, in the form of Exhibit A-1 hereto.
Class B-IO Distribution Amount: With respect to any
Distribution Date, the amount allocable to the Class B-IO
Certificates as
provided in Section 5.04 and Section 5.06(d), for such Distribution
Date and all
prior Distribution Dates, less the aggregate of all amounts
distributed (or
deemed distributed) in accordance with Section 5.04 and Section
5.06(d) with
respect to the Class B-IO Certificates on prior Distribution
Dates.
Class P Certificate: The Class I-P Certificates and the Class
II-P Certificates, in the form of Exhibit A-4 hereto.
Class Prepayment Distribution Trigger: A test, which shall be
satisfied for a class of Group I Subordinate Certificates for a
Distribution
Date if the fraction (expressed as a percentage), the numerator of
which is the
aggregate Certificate Principal Balance of such Class and each
Class of Group I
Subordinate Certificates subordinate thereto, if any, and the
denominator of
which is the Stated Principal Balances of all of the Mortgage Loans
in Loan
Group I as of the related Due Date, equals or exceeds such
percentage calculated
as of the Closing Date.
Class P Reserve Account: The reserve account established and
maintained by the Securities Administrator pursuant to Section
4.08.
Class R-I Certificate: Any Certificate designated as a "Class
R-I Certificate" on the face thereof, in substantially the form set
forth in
Exhibit A-6 hereto, and evidencing ownership of the residual
interest in REMIC I
and representing the right to the Percentage Interest of
distributions provided
for the Class R-1 Certificate as set forth herein.
Class R-II Certificate: Any Certificate designated as a "Class
R-II Certificate" on the face thereof, in substantially the form
set forth in
Exhibit A-6 hereto, and evidencing ownership of the residual
interest in REMIC
II and representing the right to the Percentage Interest of
distributions
provided for the Class R-2 Certificate as set forth herein.
Class R-III Certificate: Any Certificate designated as a
"Class R-III Certificate" on the face thereof, in substantially the
form set
forth in Exhibit A-6 hereto, and evidencing ownership of the
7
<PAGE>
residual interest in REMIC III and representing the right to the
Percentage
Interest of distributions provided for the Class R-III Certificate
as set forth
herein.
Class R-X Certificate: Any Certificate designated as a "Class
R-X Certificate" on the face thereof, in substantially the form set
forth in
Exhibit A-6 hereto, and evidencing ownership of the residual
interest in REMIC
IV and representing the right to the Percentage Interest of
distributions
provided for the Class R-X Certificate as set forth herein.
Class I-A Certificates: The Class I-A-1 Certificates, Class
I-A-2 Certificates and Class I-A-3 Certificates.
Class I-A-1 Certificates: The Class I-A-1A Certificates
and
Class I-A-1B Certificates.
Class I-A-2 Certificates: The Class I-A-2A Certificates
and
Class I-A-2B Certificates.
Class I-A-3 Certificates: The Class I-A-3A Certificates
and
Class I-A-3B Certificates.
Class I-B Certificates: The I-B-1 Certificates, Class I-B-2
Certificates, Class I-B-3 Certificates, Class I-B-4 Certificates,
Class I-B-5
Certificates and Class I-B-6 Certificates.
Class I-P Certificate: Any Certificate designated as a "Class
I-P Certificate" on the face thereof, in the form of Exhibit A-4
hereto,
representing the right to its Percentage Interest of distributions
provided for
the Class I-P Certificates as set forth herein.
Class I-PO
Certificate: Any Certificate designated as a "Class
I-PO Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to its Percentage Interest of distributions
provided for
the Class I-PO Certificates as set forth herein.
Class I-PO Certificate Cash Shortfall: For any Distribution
Date, the difference between (i) principal distributable to the
Class I-PO
Certificates in accordance with priority third of clause (i)(A)
under subsection
5.04(a)(I), and (ii) principal actually distributed to the Class
I-PO
Certificates after giving effect to clause (iii) under subsection
5.04(a)(I).
Class I-PO Certificate Deferred Amount: As to each
Distribution Date through the Cross-Over Date, the aggregate of all
amounts
allocable on such dates to the Class I-PO Certificates in respect
of the
principal portion of Realized Losses in respect of Discount
Mortgage Loans in
Sub-Loan Group I-1 and the Class I-PO Certificate Cash Shortfall
and all amounts
previously allocated in respect of such losses and such shortfalls
to the Class
I-PO Certificates, and not distributed on prior Distribution
Dates.
Class I-PO Certificate
Principal Distribution
Amount: With
respect to each Distribution Date, an amount equal to
the sum of:
(i) the PO Percentage of all scheduled payments of principal
due on each Discount Mortgage Loan in Sub-Loan Group I-1 on the
related
Due Date as specified in the amortization schedule at the time
applicable thereto (after adjustment for previous principal
prepayments
but before any adjustment to such amortization schedule by reason
of
any bankruptcy or similar proceeding or any moratorium or
similar
waiver or grace period);
8
<PAGE>
(ii) the PO Percentage of the stated principal balance of each
Discount Mortgage Loan in Sub-Loan Group I-1 which was the subject
of a
prepayment
in full received by a Servicer during the applicable
Prepayment Period;
(iii) the PO Percentage of all partial prepayments of
principal of each Discount Mortgage Loan in Sub-Loan Group I-1
received
during the applicable Prepayment Period;
(iv) the lesser of (a) the PO Percentage of the sum of (A) all
net Liquidation Proceeds allocable to principal on each
Discount
Mortgage Loan in Sub-Loan Group I-1 which became a Liquidated
Mortgage
Loan during the related Liquidation Period (other than a
Discount
Mortgage Loan described in clause (B)) and (B) the stated
principal
balance of each such Discount Mortgage Loan in Sub-Loan Group
I-1
purchased
by an insurer from the Trust during the related Prepayment
Period pursuant to the related primary mortgage insurance policy,
if
any, or otherwise; and (b) the PO Percentage of the sum of (A)
the
stated principal balance of each Discount Mortgage Loan in
Sub-Loan
Group I-1 which became a Liquidated Mortgage Loan during the
related
Prepayment Period (other than a Discount Mortgage Loan described
in
clause (B)) and (B) the stated principal balance of each such
Mortgage
Loan in Sub-Loan Group I-1 that was purchased by an insurer from
the
Trust during the related Prepayment Period pursuant to the
related
primary mortgage insurance policy, if any, or otherwise; and
(v) the PO Percentage of the sum of (a) the Stated Principal
Balance of each Discount Mortgage Loan in Sub-Loan Group I-1 which
was
repurchased by the seller in connection with such Distribution Date
and
(b) the difference, if any, between the Stated Principal Balance of
a
Discount Mortgage Loan in Sub-Loan Group I-1 that has been replaced
by
the seller with a substitute Discount Mortgage Loan pursuant to
the
pooling and servicing agreement in connection with such
Distribution
Date and the Stated Principal Balance of such substitute
Discount
Mortgage Loan.
The Class I-PO Certificates shall be entitled to distributions from
Sub-Loan
Group I-1 only.
Class II-A Certificates: The Class II-A-1 Certificates
and
Class II-A-2 Certificates.
Class II-A Principal
Distribution Amount:
With respect to
any applicable
Distribution Date, an amount equal to the excess, if any, of:
1.
the
aggregate Certificate Principal Balance of the
Class II-A Certificates immediately prior to such
Distribution Date over
2. the
lesser of
I.
the
excess of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related
9
<PAGE>
Realized Loss Period and Principal
Prepayments received during the
related Prepayment Period)
multiplied by (i) on each
Distribution Date prior to the
Distribution Date in February 2013,
38.250% and (ii) on each
Distribution Date on and after the
Distribution Date in February 2013,
30.600%, and
II. the excess
of
(a) the aggregate Stated
Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
0.50% of the aggregate Stated
Principal Balance of the Mortgage
Loans in Loan Group II as of the
Cut-off Date.
Class II-A-1 Certificate: Any Certificate designated as a
"Class II-A-1 Certificate" on the face thereof, in the form of
Exhibit A-1
hereto, representing the right to its Percentage Interest of
distributions
provided for the Class II-A-1 Certificates as set forth herein.
Class II-A-1 Margin: For any Distribution Date (i) on or prior
to the Optional Termination Date, 0.400% per annum and (ii)
thereafter, 0.800%
per annum.
Class II-A-1 Pass-Through Rate: On any Distribution Date, the
least of (i) One-Month LIBOR for the related Accrual Period plus
the Class
II-A-1 Margin for such Distribution Date, (ii) 11.50% per annum,
and (iii) the
applicable Interest Rate Cap for such Distribution Date.
Class II-A-2 Certificate: Any Certificate designated as a
"Class II-A-2 Certificate" on the face thereof, in the form of
Exhibit A-1
hereto, representing the right to its Percentage Interest of
distributions
provided for the Class II-A-2 Certificates as set forth herein.
Class II-A-2 Margin: For any Distribution Date (i) on or prior
to the Optional Termination Date, 0.500% per annum and (ii)
thereafter, 1.000%
per annum.
Class II-A-2 Pass-Through Rate: On any Distribution Date, the
lesser of (i) One-Month LIBOR for the related Accrual Period plus
the Class
II-A-2 Margin for such Distribution Date, (ii) 11.50% per annum,
and (iii) the
applicable Interest Rate Cap for such Distribution Date.
Class B-IO Certificate: Any Certificate designated as a "Class
B-IO Certificate" on the face thereof, in the form of Exhibit A-6
hereto,
representing the right to its Percentage Interest of distributions
provided for
the Class B-IO Certificates herein.
Class II-M Certificates: The M-1 Certificates, Class II-M-2
Certificates, Class II-M-3 Certificates, Class II-M-4 Certificates
and Class
II-M-5 Certificates.
Class II-M-1 Certificate: Any Certificate designated as a
"Class II-M-1 Certificate" on the face thereof, in the form of
Exhibit A-2
hereto, representing the right to its Percentage Interest of
distributions
provided for the Class II-M-1 Certificates as set forth herein.
10
<PAGE>
Class II-M-1 Margin: For any Distribution Date (i) on or prior
to the Optional Termination Date, 0.420% per annum and (ii)
thereafter, 0.630%
per annum.
Class II-M-1 Pass-Through Rate: For any Distribution Date, the
lesser of (i) One-Month LIBOR for the related Accrual Period plus
the Class
II-M-1 Margin for such Distribution Date, (ii) 11.50% per annum,
and (iii) the
applicable Interest Rate Cap for such Distribution Date.
Class II-M-1 Principal Distribution Amount: With respect to
any applicable Distribution Date, an amount equal to the excess, if
any, of:
1. the
Certificate Principal Balance of the Class II-M-1
Certificates immediately prior to such Distribution
Date over
2. the
lesser of
I. the
excess of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
the
sum of
(1) the
aggregate Certificate
Principal Balance of the
Class II-A Certificates
(after taking into account
the payment of the Class
II-A Principal Distribution
Amount on such Distribution
Date), and
(2) the
aggregate Stated
Principal
Balance of the
Mortgage Loans in Loan
Group II as of the last day
of the related Due Period
(after reduction for
Realized Losses incurred
during the related Realized
Loss Period and Principal
Prepayments received during
the related Prepayment
Period) multiplied by (i)
on each Distribution Date
prior to the Distribution
Date in February 2013,
32.375% and (ii) on each
Distribution Date on and
after the Distribution Date
in February 2013, 25.900%,
and
II. the excess
of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
0.50% of the aggregate Stated
Principal Balance of the Mortgage
Loans in Loan Group II as of the
Cut-off Date.
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<PAGE>
Class II-M-2 Certificate: Any Certificate designated as a
"Class II-M-2 Certificate" on the face thereof, in the form of
Exhibit A-2
hereto, representing the right to its Percentage Interest of
distributions
provided for the Class II-M-2 Certificates as set forth herein.
Class II-M-2 Margin: For any Distribution Date (i) on or prior
to the Optional Termination Date, 0.500% per annum and (ii)
thereafter, 0.750%
per annum.
Class II-M-2 Pass-Through Rate: For any Distribution Date, the
lesser of (i) One-Month LIBOR for the related Accrual Period plus
the Class
II-M-2 Margin for such Distribution Date, (ii) 11.50% per annum,
and (iii) the
applicable Interest Rate Cap for such Distribution Date.
Class II-M-2 Principal Distribution Amount: With respect to
any applicable Distribution Date, an amount equal to the excess, if
any, of:
1. the
Certificate Principal Balance of the Class II-M-2
Certificates immediately prior to such Distribution
Date over
2. the
lesser of
I. the
excess of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
the sum of
(1) the
aggregate Certificate
Principal Balance of the
Class II-A Certificates
(after taking into account
the payment of the Class
II-A Principal Distribution
Amount on such Distribution
Date),
(2) the
Certificate Principal
Balance of the Class II-M-1
Certificates (after taking
into account the payment of
the Class II-M-1 Principal
Distribution Amount on such
Distribution Date), and
(3) the
aggregate Stated
Principal Balance of the
Mortgage Loans in Loan
Group II as of the last day
of the related Due Period
(after reduction for
Realized Losses incurred
during the related Realized
Loss Period and Principal
Prepayments received during
the related Prepayment
Period) multiplied by (i)
on each Distribution Date
prior to the Distribution
Date in February 2013,
26.875% and (ii) on each
Distribution Date on and
after the Distribution Date
in February 2013, 21.500%,
and
II. the excess
of
12
<PAGE>
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
0.50% of the aggregate Stated
Principal Balance of the Mortgage
Loans in Loan Group II as of the
Cut-off Date.
Class II-M-3 Certificate: Any Certificate designated as a
"Class II-M-3 Certificate" on the face thereof, in the form of
Exhibit A-2
hereto, representing the right to its Percentage Interest of
distributions
provided for the Class II-M-3 Certificates as set forth herein.
Class II-M-3 Margin: For any Distribution Date (i) on or prior
to the Optional Termination Date, 0.800% per annum and (ii)
thereafter, 1.200%
per annum.
Class II-M-3 Pass-Through Rate: For any Distribution Date, the
lesser of (i) One-Month LIBOR for the related Accrual Period plus
the Class
II-M-3 Margin for such Distribution Date, (ii) 11.50% per annum,
and (iii) the
applicable Interest Rate Cap for such Distribution Date.
Class II-M-3 Principal Distribution Amount: With respect to
any applicable Distribution Date, an amount equal to the excess, if
any, of:
1. the
Certificate Principal Balance of the Class II-M-3
Certificates immediately prior to such Distribution
Date over
2. the
lesser of
I. the
excess of
(a)
the
aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
the sum of
(1) the
aggregate Certificate
Principal Balance of the
Class II-A Certificates
(after taking into account
the payment of the Class
II-A Principal Distribution
Amount on such Distribution
Date),
(2) the
Certificate Principal
Balance of the Class II-M-1
Certificates
(after taking
into account the payment of
the Class II-M-1 Principal
Distribution Amount on such
Distribution Date),
(3) the
Certificate Principal
Balance of the Class II-M-2
Certificates (after taking
into account the payment of
the
13
<PAGE>
Class II-M-2 Principal
Distribution Amount on such
Distribution Date), and
(4) the
aggregate Stated
Principal Balance of the
Mortgage Loans in Loan
Group II as of the last day
of the related Due Period
(after reduction for
Realized Losses incurred
during the related Realized
Loss Period and Principal
Prepayments received during
the related Prepayment
Period) multiplied by (i)
on each Distribution Date
prior to the Distribution
Date in February 2013,
17.750% and (ii) on each
Distribution Date on and
after the Distribution Date
in February 2013, 14.200%,
and
II. the excess
of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
0.50% of the aggregate Stated
Principal Balance of the Mortgage
Loans in Loan Group II as of the
Cut-off Date.
Class II-M-4 Certificate: Any Certificate designated as a
"Class II-M-4 Certificate" on the face thereof, in the form of
Exhibit A-2
hereto, representing the right to its Percentage Interest of
distributions
provided for the Class II-M-4 Certificates as set forth herein.
Class II-M-4 Margin: For any Distribution Date (i) on or prior
to the Optional Termination Date, 1.000% per annum and (ii)
thereafter, 1.500%
per annum.
Class II-M-4 Pass-Through Rate: For any Distribution Date, the
lesser of (i) One-Month LIBOR for the related Accrual Period plus
the Class
II-M-4 Margin for such Distribution Date, (ii) 11.50% per annum,
and (iii) the
applicable Interest Rate Cap for such Distribution Date.
Class II-M-4
Principal Distribution Amount: With respect to
any applicable Distribution Date, an amount equal to the excess, if
any, of:
1. the
Certificate Principal Balance of the Class II-M-4
Certificates immediately prior to such Distribution
Date over
2. the
lesser of
I. the
excess of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
14
<PAGE>
(b)
the sum of
(1) the
aggregate Certificate
Principal Balance of the
Class II-A Certificates
(after taking into account
the payment of the Class
II-A Principal Distribution
Amount on such Distribution
Date),
(2) the
Certificate Principal
Balance of the Class II-M-1
Certificates (after taking
into account the payment of
the Class II-M-1 Principal
Distribution Amount on such
Distribution Date),
(3) the
Certificate Principal
Balance of the Class II-M-2
Certificates (after taking
into account the payment of
the Class II-M-2 Principal
Distribution Amount on such
Distribution Date),
(4) the
Certificate Principal
Balance of the Class II-M-3
Certificates (after taking
into account the payment of
the Class II-M-3 Principal
Distribution Amount on such
Distribution Date), and
(5) the
aggregate Stated
Principal Balance of the
Mortgage Loans in Loan
Group II as of the last day
of the related Due Period
(after reduction for
Realized Losses incurred
during the related Realized
Loss Period and Principal
Prepayments received during
the related Prepayment
Period) multiplied by (i)
on each Distribution Date
prior to the Distribution
Date in February 2013,
11.250% and (ii) on each
Distribution Date on and
after the Distribution Date
in February 2013, 9.000%,
and
II. the excess
of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the
related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
0.50% of the aggregate Stated
Principal Balance of the Mortgage
Loans in Loan Group II as of the
Cut-off Date.
Class II-M-5 Certificate: Any Certificate designated as a
"Class II-M-5 Certificate" on the face thereof, in the form of
Exhibit A-2
hereto, representing the right to its Percentage Interest of
distributions
provided for the Class II-M-5 Certificates as set forth herein.
Class II-M-5 Margin: For any Distribution Date (i) on or prior
to the Optional Termination Date, 1.000% per annum and (ii)
thereafter, 1.500%
per annum.
15
<PAGE>
Class II-M-5 Pass-Through Rate: For any Distribution Date, the
lesser of (i) One-Month LIBOR for the related Accrual Period plus
the Class
II-M-5 Margin for such Distribution Date, (ii) 11.50% per annum,
and (iii) the
applicable Interest Rate Cap for such Distribution Date.
Class II-M-5 Principal Distribution Amount: With respect to
any applicable Distribution Date, an amount equal to the excess, if
any, of:
1. the
Certificate Principal Balance of the Class II-M-5
Certificates immediately prior to such Distribution
Date over
2. the
lesser of
I. the
excess of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
the sum of
(1) the
aggregate Certificate
Principal Balance of the
Class II-A Certificates
(after taking into account
the payment of the Class
II-A Principal Distribution
Amount on such Distribution
Date),
(2) the
Certificate Principal
Balance of the Class II-M-1
Certificates (after taking
into account the payment of
the Class II-M-1 Principal
Distribution Amount on such
Distribution Date),
(3) the
Certificate Principal
Balance of the Class II-M-2
Certificates (after taking
into account the payment of
the Class II-M-2 Principal
Distribution Amount on such
Distribution Date),
(4) the
Certificate Principal
Balance of the Class II-M-3
Certificates (after taking
into account the payment of
the Class II-M-3 Principal
Distribution Amount on such
Distribution Date),
(5) the
Certificate Principal
Balance of the Class II-M-4
Certificates (after taking
into account the payment of
the Class II-M-4 Principal
Distribution Amount on such
Distribution Date), and
(6) the
aggregate Stated
Principal Balance of the
Mortgage Loans in Loan
Group II as of the last day
of the related Due Period
(after reduction for
Realized Losses incurred
during the related Realized
Loss Period and Principal
16
<PAGE>
Prepayments received during
the related Prepayment
Period) multiplied by (i)
on each Distribution Date
prior to the Distribution
Date in February 2013,
8.750% and (ii) on each
Distribution Date on and
after the Distribution Date
in February 2013, 7.000%,
and
II. the excess of
(a)
the aggregate Stated Principal
Balance of the Mortgage Loans in
Loan Group II as of the last day of
the related Due Period (after
reduction for Realized Losses
incurred during the related Realized
Loss Period and Principal
Prepayments received during the
related Prepayment Period), over
(b)
0.50% of the aggregate Stated
Principal Balance of the Mortgage
Loans in Loan Group II as of the
Cut-off Date.
Class II-P Certificate: Any Certificate designated as a "Class
II-P Certificate" on the face thereof, in the form of Exhibit A-4
hereto,
representing the right to its Percentage Interest of distributions
provided for
the Class II-P Certificates as set forth herein.
Closing Date: March
15, 2007.
Code: The Internal
Revenue Code of 1986, as amended,
including any successor or amendatory provisions.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the sum of (x) the original
principal
balance of the related Mortgage Loan and (y) the outstanding
principal balance
at the date of origination of the Mortgage Loan of any senior
mortgage loan, and
the denominator of which is the Appraised Value of the related
Mortgaged
Property.
Compensating Interest: With respect to any Mortgage Loan and
any Distribution Date, an amount, not to exceed the related
Servicing Fee, to be
applied by the related Servicer pursuant to the related Servicing
Agreement to
the payment of a Prepayment Interest Shortfall on such Mortgage
Loan or by the
Master Servicer pursuant to Section 5.02 hereof.
Corporate Trust Office: The designated office of the Trustee
where at any particular time its corporate trust business with
respect to this
Agreement shall be administered, which office at the date of the
execution of
this Agreement is located at 388 Greenwich Street, 14th Floor, New
York, New
York 10013, Attention: Structured Finance Agency & Trust BSABS
2007-SD2, or at
such other address as the Trustee may designate from time to time.
With respect
to the Certificate Registrar and the presentment of Certificates
for
registration of transfer, exchange or final payment, Wells Fargo
Bank, N.A.,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479,
Attention:
Corporate Trust, BSABS 2007-SD2, and for all other purposes, P.O.
Box 98,
Columbia, Maryland 21046 (or for overnight deliveries, 9062 Old
Annapolis Road,
Columbia, Maryland 21045), Attention: Corporate Trust, BSABS
2007-SD2.
Coupon Strip: With respect to Loan Group II and any
Distribution Date occurring in or after March 2017, in which an
amount is
payable to the Final Maturity Reserve Account pursuant to Section
4.07, an
amount, if any, equal to the lesser of (a) the product of (i)
one-twelfth of
0.90%, and (ii) the Stated Principal Balance of the Mortgage Loans
in Loan Group
II with original terms to maturity in
17
<PAGE>
excess of 30 years at the beginning of the related Due Period, and
(b) the
amount, if any, which when added to amounts on deposit on the Final
Maturity
Reserve Account on such Distribution Date would equal the Final
Maturity Reserve
Account Target.
Credit Enhancement Percentage: With respect to Loan Group II
and any Distribution Date, the percentage obtained by dividing (x)
the sum of
(i) the aggregate Certificate Principal Balance of the Group II
Subordinate
Certificates, plus (ii) any Overcollateralization Amount (in each
case after
taking into account distribution of the Principal Distribution
Amount on such
Distribution Date), by (y) the aggregate Stated Principal Balances
of the
Mortgage Loans in Loan Group II as of the last day of the related
Due Period
(after reduction for Realized Losses incurred during the related
Realized Loss
Period and prepayments received during the related Prepayment
Period).
Cross-Over Date: The Distribution Date on which the
Certificate Principal Balances of the Group I Subordinate
Certificates are
reduced to zero.
Cumulative Loss Test: With respect to Loan Group II and any
Distribution Date on or after the Stepdown Date, a Cumulative Loss
Test will be
deemed to have been violated if the aggregate of related Realized
Losses
(reduced by the aggregate amount of Subsequent Recoveries) from the
Closing Date
through the last day of the related Realized Loss Period with
respect to the
Mortgage Loans in Loan Group II, as a percentage of the aggregate
Stated
Principal Balance of the Mortgage Loans in Loan Group II as of the
Cut-off Date,
exceed for Distribution Dates occurring:
<TABLE>
<CAPTION>
DISTRIBUTION DATE
LOSS PERCENTAGE
-----------------
---------------
March 2009 through February 2010................................
1.25%
<S>
<C>
March 2010 through February 2011................................
1.25% for the first month,
plus an additional 1/12th of
0.50% for each month
thereafter
March 2011 through February 2012................................
1.75% for the first month,
plus an additional 1/12th of
0.25% for each month
thereafter
March 2012 through February 2013................................
2.00% for the first month,
plus an additional 1/12th of
0.25% for each month
thereafter
March 2013 and each month thereafter............................
2.25%
</TABLE>
Current Interest: As of any Distribution Date, with respect to
each Class of Group II Offered Certificates, (i) the interest
accrued on the
Certificate Principal Balance, during the related Accrual Period at
the
applicable Pass-Through Rate plus any amount previously distributed
with respect
to interest for such Certificate that has been recovered as a
voidable
preference by a trustee in bankruptcy, minus, to the extent
allocated to such
Class, (ii) the sum of (a) any Prepayment Interest Shortfall for
such
Distribution Date, to the extent not covered by Compensating
Interest, (b) any
shortfalls resulting from application of the Relief Act or similar
state laws
during the related Due Period, and (c) any Net Deferred Interest
for such
Distribution Date. For purposes of calculating Current Interest for
any such
Class,
18
<PAGE>
amounts specified in clause (ii) hereof for any such Distribution
Date shall be
allocated first to the Class B-IO Certificates and the Residual
Certificates in
reduction of amounts otherwise distributable to such Certificates
on such
Distribution Date and then any excess shall be allocated to each
Class of Group
II Certificates, pro rata, based on the respective amounts of
interest accrued
pursuant to clause (i) hereof for each such Class on such
Distribution Date.
Custodial Agreement: The Custodial Agreement, dated as of
March 15, 2007, among the Trustee, the Depositor, the Sponsor, the
Master
Servicer, the Securities Administrator and the Custodian
thereunder, as amended
or supplemented from time to time, in substantially the form of
Exhibit K
hereto.
Custodian: Wells Fargo
Bank, N.A., as
custodian on behalf of
the Trustee with
respect to the Mortgage Loans and related Mortgage Files
held
by Wells Fargo Bank, N.A. pursuant to the Custodial Agreement
Cut-off Date: The
close of business on February 1, 2007.
Cut-off Date
Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on the
Cut-off Date
after application of all Principal Prepayments received prior to
the Cut-off
Date and, except with respect to any Simple Interest Loans,
scheduled payments
of principal due on or before the Cut-off Date, whether or not
received but
without giving effect to any installments of principal received in
respect of
Due Dates after the Cut-off Date. The aggregate Cut-off Date
Principal Balance
of the Mortgage Loans is $350,840,007.38.
Deferred Interest: With respect to any negatively amortizing
Mortgage Loan, the excess of the amount of interest due on such
negatively
amortizing Mortgage Loan over the interest portion of the scheduled
payment due
thereon, which is permitted under the terms of the related Mortgage
Note to be
added to the principal of the Mortgage Note.
Definitive Certificates: As defined in Section 6.06.
Deleted Mortgage
Loan: A Mortgage Loan replaced or to be
replaced by a Replacement Mortgage Loan.
Delinquency Test: With respect to Loan Group II and any
Distribution Date on or after the Stepdown Date, a Delinquency Test
shall have
been violated if at any time, (x) the three-month rolling average
of the percent
equivalent of a fraction, the numerator of which is the aggregate
Stated
Principal Balance of the Mortgage Loans in Loan Group II that are
60 days or
more Delinquent or are in bankruptcy or foreclosure or are REO
Properties, and
the denominator of which is the aggregate Stated Principal Balance
of all of the
Mortgage Loans in Loan Group II as of the last day of the related
Due Period
(after reduction for Realized Losses incurred during the related
Realized Loss
Period and prepayments received during the related Prepayment
period) equals or
exceeds (y) 34.00% of the Credit Enhancement Percentage.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is not made pursuant to the terms of such Mortgage Loan by
the close of
business on the day such payment is scheduled to be due. A Mortgage
Loan is "30
days delinquent" if such payment has not been received by the close
of business
on the corresponding day of the month immediately succeeding the
month in which
such payment was due, or, if there is no such corresponding day
(e.g., as when a
30-day month follows a 31-day month in which a payment was due on
the 31st day
of such month), then on the last day of such immediately succeeding
month.
Similarly for "60 days delinquent," "90 days delinquent" and so
on.
19
<PAGE>
Denomination: With respect to the Certificates, the amount set
forth on the face thereof as, in the case of a Certificate having a
Certificate
Principal Balance, the "Initial Principal Balance of this
Certificate," and, in
the case of a Class I-X Certificate, as the "Initial Principal
Balance
(Notional) of this Certificate."
Depositor: Bear Stearns Asset Backed Securities I LLC, a
Delaware limited liability company, or its successor in
interest.
Depositor Information:
As defined in Section 3.18(b).
Depository: The initial Depository shall be DTC, the nominee
of which is Cede, or any other organization registered as a
"clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The
Depository shall initially be the registered Holder of the
Book-Entry
Certificates. The Depository shall at all times be a "clearing
corporation" as
defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of
New York.
Depository Agreement: With respect to the Class of Book-Entry
Certificates, the agreement between the Trust and the initial
Depository, dated
March 14, 2007, substantially in the form of Exhibit I.
Depository Participant: A broker, dealer, bank or other
financial institution or other Person for whom from time to time a
Depository
effects book-entry transfers and pledges of securities deposited
with the
Depository.
Determination Date: With respect to any Distribution Date and
Servicer, the date specified in the related Servicing
Agreement.
Discount Mortgage Loan: A Sub-Loan Group I-1 Mortgage Loan
with a Net Mortgage Rate less than 5.500%.
Distribution Account: The separate Eligible Account created
and maintained by the Paying Agent pursuant to Section 4.04 in the
name of the
Trustee for the benefit of the Certificateholders and designated
"Citibank,
N.A., in trust for registered holders of Bear Stearns Asset Backed
Securities
Trust 2007-SD2, Asset-Backed Certificates, Series 2007-SD2". Funds
in the
Distribution Account shall be held in trust for the
Certificateholders for the
uses and purposes set forth in this Agreement.
Distribution Date: The 25th day of each calendar month after
the initial issuance of the Certificates, or if such 25th day is
not a Business
Day, the next succeeding Business Day, commencing in March
2007.
DTC: The Depository Trust Company, or its successors in
interest.
Due Date: As to any Mortgage Loan (other than a Simple
Interest Loan), the date in each month on which the related
Scheduled Payment is
due, as set forth in the related Mortgage Note, and with respect to
any Simple
Interest Loans, the last day of the immediately preceding
Prepayment Period, if
its Scheduled Payment is due during such Prepayment Period.
Due Period: With respect to any Distribution Date and any
Mortgage Loan (other than any Simple Interest Loan), the period
from the second
day of the calendar month preceding the calendar month in which
such
Distribution Date occurs through close of business on the first day
of the
calendar
20
<PAGE>
month in which such Distribution Date occurs, and with respect to
any Simple
Interest Loans, the calendar month immediately preceding the month
in which such
Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust
company, the
long-term unsecured debt obligations and short-term unsecured debt
obligations
of which (or, in the case of a depository institution or trust
company that is
the principal subsidiary of a holding company, the debt obligations
of such
holding company, but only if Moody's is not a Rating Agency) are
rated by each
Rating Agency in one of its two highest long-term and its highest
short-term
rating, respectively (or, if S&P is a Rating Agency, in its
highest long-term
and one of its two highest short-term ratings, respectively,) at
the time any
amounts are held on deposit therein, or (ii) an account or accounts
in a
depository institution or trust company in which such accounts are
insured by
the FDIC (to the limits established by the FDIC) and the uninsured
deposits in
which accounts are otherwise secured such that, as evidenced by an
Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such
account or a
perfected first priority security interest against any collateral
(which shall
be limited to Permitted Investments) securing such funds that is
superior to
claims of any other depositors or creditors of the depository
institution or
trust company in which such account is maintained, or (iii) a trust
account or
accounts maintained with the corporate trust department of a
federal or state
chartered depository institution or trust company having capital
and surplus of
not less than $50,000,000, acting in its fiduciary capacity or (iv)
any other
account acceptable to the Rating Agencies. Eligible Accounts may
bear interest,
and may include, if otherwise qualified under this definition,
accounts
maintained with the Trustee, the Securities Administrator or the
Master
Servicer.
EMC: EMC Mortgage
Corporation, a Delaware corporation.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Restricted Certificate: Each Class of Certificates other
than the Class A Certificates.
Event of Default: As
defined in Section 8.01 hereof.
Excess Cashflow: With respect to Loan Group II and any
Distribution Date, an amount, if any, equal to the sum of (a) the
Excess
Overcollateralization Amount and (b) the Remaining Excess Spread,
in each case
for such Distribution Date.
Excess Liquidation Proceeds: To the extent not required by law
to be paid to the related Mortgagor, the excess, if any, of any
Liquidation
Proceeds with respect to a Mortgage Loan over the Stated Principal
Balance of
such Mortgage Loan and accrued and unpaid interest at the related
Mortgage Rate
through the last day of the month in which the Mortgage Loan has
been
liquidated.
Excess Overcollateralization Amount: With respect to Loan
Group II and any Distribution Date, the lesser of (i) Principal
Funds and (ii)
the excess, if any, of the Overcollateralization Amount over the
Specified
Overcollateralization Amount for such Distribution Date.
Excess Spread:
With respect to Loan Group II and any
Distribution Date, the excess, if any, of (i) Interest Funds for
such
Distribution Date over (ii) the sum of (a) Current Interest on the
Group II
Certificates and (b) Interest Carry Forward Amounts on the Class
II-A
Certificates for such Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
21
<PAGE>
Extra Principal Distribution Amount: With respect to Loan
Group II and any Distribution Date, the lesser of (i) the excess,
if any, of the
Specified Overcollateralization Amount for such Distribution Date
over the
Overcollateralization Amount for such Distribution Date and (ii)
the Excess
Spread for such Distribution Date.
Fannie Mae: Fannie Mae (also known as Federal National
Mortgage Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Final Maturity
Reserve Account: The separate trust account
established and maintained by the Securities Administrator pursuant
to Section
4.07 hereof.
Final Maturity Reserve Account Target: On any Distribution
Date occurring in or after March 2017, an amount equal to the
lesser of (a) the
product of (i) the aggregate Stated Principal Balance of the
Mortgage Loans in
Loan Group II with original terms to maturity in excess of 30 years
as of the
related Due Date, and (ii) a fraction, the numerator of which is
1.00 and the
denominator of which is 0.85, and (b) $866,836.13.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
Fiscal Quarter: December 1 through the last day of February,
March 1 through May 31, June 1 through August 31, or September 1
through
November 30, as applicable.
Fitch: Fitch
Ratings.
Freddie Mac: Freddie Mac (also known as Federal Home Loan
Mortgage Corporation), or any successor thereto.
Gross Margin: With respect to each Mortgage Loan that bears an
adjustable rate of interest, the fixed percentage set forth in the
related
Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is
added to the related Index on each Interest Adjustment Date to
determine
(subject to rounding, the Minimum Lifetime Mortgage Rate, the
Maximum Lifetime
Mortgage Rate and the Periodic Rate Cap, each as applicable) the
Mortgage Rate
until the next succeeding Interest Adjustment Date.
Group I Non-Offered Certificates: The Class I-B-4
Certificates, the Class I-B-5 Certificates, the Class I-B-6
Certificates and the
Class I-P Certificates.
Group I Senior Certificates: The Class I-A Certificates, the
Class I-PO Certificates and the Class I-X Certificates.
Group I Subordinate Certificates: The Class I-B Certificates.
Group II Non-Offered Certificates: The Class B-IO Certificates
and the Class II-P Certificates.
Group II Senior Certificates: The Class II-A Certificates.
Group II Subordinate Certificates: The Class II-M
Certificates.
22
<PAGE>
Indemnified Persons:
The Trustee, the Master Servicer, the
Sponsor, the Depositor, the Custodian and the Securities
Administrator and their
officers, directors, agents and employees and, with respect to the
Trustee, any
separate co-trustee and its officers, directors, agents and
employees.
Index: With respect to each Mortgage Loan that bears an
adjustable rate of interest, the index set forth in the related
Mortgage Note
and indicated on the Mortgage Loan Schedule, by reference to which
the related
Mortgage Rate will be adjusted from time to time.
Initial Certificate Principal Balance: With respect to any
Certificate, the Certificate Principal Balance of such Certificate
or any
predecessor Certificate on the Closing Date.
Initial Overcollateralization Amount: $7,120,624.32.
Insurance Policy: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy, including all riders and
endorsements
thereto in effect with respect to such Mortgage Loan, including any
replacement
policy or policies for any such insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage
Loans pursuant to any Insurance Policy, to the extent such proceeds
are not
applied to the restoration of the related Mortgaged Property or
released to the
Mortgagor in accordance with the procedures that such Servicer
would follow in
servicing mortgage loans held for its own account, in each case
other than any
amount included in such Insurance Proceeds in respect of Insured
Expenses and
exclusive of Subsequent Recoveries.
Insured Expenses: Expenses covered by an Insurance Policy or
any other insurance policy with respect to the Mortgage Loans.
Interest Carry Forward Amount: As of any Distribution Date and
with respect to each Class of Group II Offered Certificates, the
sum of (i) the
excess of (a) the Current Interest for such Class with respect to
prior
Distribution Dates over (b) the amount actually distributed to such
Class with
respect to interest on such prior Distribution Dates and (ii)
interest thereon
(to the extent permitted by applicable law) at the applicable
Pass-Through Rate
for such Class for the related Accrual Period including the Accrual
Period
relating to such Distribution Date.
Interest Determination Date: With respect to each Adjustable
Rate Certificate, for the first Accrual Period, March 13, 2007, and
with respect
to any Accrual Period thereafter, the second LIBOR Business Day
preceding the
commencement of such Accrual Period.
Interest Funds: With respect to Loan Group II and any
Distribution Date (i) the sum, without duplication, of the
following amounts:
(a) all interest received during the related Due Period with
respect to the
related Mortgage Loans less the related Servicing Fee, and Master
Servicing Fee
referred to in clause (ii) of the definition thereof, (b) all
Advances relating
to interest with respect to the related Mortgage Loans made on or
prior to the
related Master Servicer Advance Date, (c) all Compensating Interest
with respect
to the related Mortgage Loans and required to be remitted pursuant
to the
related Servicing Agreement or this Agreement with respect to such
Distribution
Date, (d) Liquidation Proceeds with respect to the related Mortgage
Loans
collected during the related Liquidation Period (to the extent such
Liquidation
Proceeds relate to interest), (e) all amounts relating to interest
with respect
to each related Mortgage Loan repurchased by the Sponsor pursuant
to Sections
2.02, 2.03 and 3.20, and (f) all amounts in respect of interest
paid by EMC
pursuant to Section 10.01, in each case to the extent remitted by
the Master
Servicer to the Distribution Account pursuant to this Agreement,
minus (ii) all
amounts relating to interest reimbursed pursuant to Sections
4.05.
23
<PAGE>
Interest-Only Certificates: The Class I-X Certificates.
Interest Rate Adjustment Date: With respect to each Mortgage
Loan that bears an adjustable rate of interest, the date set forth
in the
related Mortgage Note and indicated on the Mortgage Loan Schedule,
on which the
related Mortgage Rate is subject to adjustment.
Interest Rate Cap: For any Distribution Date and the Group II
Offered Certificates, the excess of (A) the weighted average of the
Net Mortgage
Rates of the Mortgage Loans in Loan Group II as of the first day of
the related
Due Period, adjusted to reflect the accrual of interest based on
the actual
number of days elapsed in the related Accrual Period divided by
360, over (B)
the Coupon Strip, if any, payable to the Final Maturity Reserve
Account, divided
by the outstanding Stated Principal Balance of the related Mortgage
Loans as of
the related Due Date prior to giving effect to any reduction in the
Stated
Principal Balances of the related Mortgage Loans on such Due Date,
multiplied by
12.
Latest Possible Maturity Date: For the Group I Certificates
and the Group II Certificates, the Distribution Date in February
2037. For
purposes of the Treasury Regulations under Code section 860A
through 860G, the
latest possible maturity date of each regular interest issued by
REMIC I, REMIC
II, REMIC III and REMIC IV shall be the Latest Possible Maturity
Date.
LIBOR Business Day: Any day on which banks in the London,
England and New York City, U.S.A. are open and conducting
transactions in
foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan that has been liquidated through
deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization
as provided
by applicable law governing the real property subject to the
related Mortgage
and any security agreements and as to which the related Servicer
has certified
to the Master Servicer during the prior calendar month that it has
received all
amounts it expects to receive in connection with such
liquidation.
Liquidation Period: With respect to any Distribution Date, the
related monthly or other period described in the related Servicing
Agreement
pursuant to which any Liquidation Proceeds are collected and
remitted on the
related Servicer Remittance Date.
Liquidation Proceeds: Amounts, other than Insurance Proceeds
and Subsequent Recoveries, received in connection with the partial
or complete
liquidation of a Mortgage Loan, whether through trustee's sale,
foreclosure sale
or otherwise, or in connection with any condemnation or partial
release of a
Mortgaged Property and any other proceeds received with respect to
an REO
Property, less the sum of related unreimbursed Advances, Servicing
Fees and
Servicing Advances and all expenses of liquidation, including
property
protection expenses and foreclosure and sale costs, including court
and
reasonable attorney's fees.
Loan Group: Any of
Loan Group I or Loan Group II.
Loan Group I: The pool of the Mortgage Loans consisting of the
Mortgage Loans included in Sub-Loan Group I-1, Sub-Loan Group I-2
and Sub-Loan
Group I-3.
Loan Group II: The pool of the Mortgage Loans consisting of
the Mortgage Loans included in Loan Group II.
Master Servicer: Wells Fargo Bank, N.A., a national banking
association, in its capacity as master servicer hereunder, and its
successors
and assigns.
24
<PAGE>
Master Servicer Advance Date: As to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
Master Servicer Information: As defined in Section
3.18(b).
Master Servicing Fee: For any Distribution Date, the sum of
(i) all income and gain, net of losses, realized from any
investment of funds in
the Distribution Account since the prior Distribution Date and (ii)
with respect
to each Mortgage Loan, an amount equal to 1/12th of the Master
Servicing Fee
Rate multiplied by the Stated Principal Balance of such Mortgage
Loan as of the
close of business on the first day of the month immediately
preceding the month
in which such Distribution Date occurs.
Master Servicing Fee Rate: For each Distribution Date, 0.015%
per annum of the aggregate Stated Principal Balance of the Mortgage
Loans as of
the first day of the month immediately preceding such Distribution
Date.
Maximum Lifetime Mortgage Rate: As to each Mortgage Loan that
bears an adjustable rate of interest, the rate, if any, set forth
in the related
Mortgage Note and indicated on the Mortgage Loan Schedule, that is
the maximum
level to which a Mortgage Rate can adjust in accordance with its
terms,
regardless of the change in the applicable Index.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of
Delaware, or
any successor thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
Minimum Lifetime Mortgage Rate: As to each Mortgage Loan that
bears an adjustable rate of interest, the rate, if any, set forth
in the related
Mortgage Note and indicated on the Mortgage Loan Schedule, that is
the minimum
level to which a Mortgage Rate can adjust in accordance with its
terms,
regardless of the change in the applicable Index.
MOM Loan: Any Mortgage Loan as to which, at origination
thereof, MERS acts as the mortgagee, solely as nominee for the
originator of
such Mortgage Loan and its successors and assigns.
Monthly Statement: The statement delivered to the
Certificateholders pursuant to Section 5.05.
Moody's: Moody's
Investors Service, Inc.
Mortgage: The mortgage, deed of trust or other instrument
creating a first lien on or first priority ownership interest, or
creating a
second lien on or second priority ownership interest, as
applicable, in an
estate in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof pertaining to a particular Mortgage Loan and any additional
documents
delivered to the Custodian on behalf of the Trustee to be added to
the Mortgage
File pursuant to this Agreement.
25
<PAGE>
Mortgage Loans: Such of the mortgage loans transferred and
assigned to the Trustee pursuant to the provisions hereof, as from
time to time
are held as a part of the Trust Fund (including any REO Property),
the mortgage
loans so held being identified in the Mortgage Loan Schedule,
notwithstanding
foreclosure or other acquisition of title of the related Mortgaged
Property. Any
mortgage loan that was intended by the parties hereto to be
transferred to the
Trust Fund as indicated by such Mortgage Loan Schedule which is in
fact not so
transferred for any reason including, without limitation, a breach
of the
representation contained in Section 2.03(b)(v) hereof, shall
continue to be a
Mortgage Loan hereunder until the Purchase Price with respect
thereto has been
paid to the Trust Fund. The term Mortgage Loan shall not include
any Liquidated
Loan.
Mortgage Loan Purchase Price: The price, calculated as set
forth in Section 10.01, to be paid in connection with the
repurchase of the
Mortgage Loans pursuant to Section 10.01.
Mortgage Loan Schedule: The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the deletion
of Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans
pursuant to the
provisions of this Agreement) transferred to the Trustee as part of
the Trust
Fund and from time to time subject to this Agreement. The initial
Mortgage Loan
Schedule is attached hereto as Exhibit B and sets forth the
following
information with respect to each Mortgage Loan:
(i) the loan
number;
(ii)
the Servicer thereof;
(iii) the
Mortgage Rate in effect as of the Cut-off Date;
(iv)
the Master Servicing Fee Rate;
(v) the
related Servicing Fee Rate;
(vi)
the Net Mortgage Rate in effect as of the Cut-off
Date;
(vii) the
stated maturity date;
(viii) the
original principal balance;
(ix)
the stated original term;
(x) the next
payment date as of the Cut-off Date;
(xi)
the monthly payment as of the Cut-off Date;
(xii) the
remaining term as of the Cut-off Date;
(xiii) the
property type;
(xiv) if
it is a first or second lien on the related
Mortgaged Property;
(xv) if applicable,
that such Mortgage Loan is a Balloon
Loan;
(xvi)
whether interest accrues at a fixed rate, and
otherwise, the applicable Index (with respect to adjustable
rate
Mortgage Loans);
26
<PAGE>
(xvii) the Gross
Margin, if applicable;
(xviii) the intervals
between Interest Adjustment Dates, if
applicable;
(xix) the
next succeeding Interest Adjustment Date, if
applicable, as of the Cut-off Date;
(xx)
the Periodic Rate Cap, if applicable;
(xxi) the
Minimum Lifetime Mortgage Rate, if applicable;
(xxii) the
Maximum Lifetime Mortgage Rate, if applicable;
(xxiii) the Combined Loan-to-Value Ratio as of the Cut-off
Date;
(xxiv)
[Reserved];
(xxv) the
Cut-off Date Principal Balance;
(xxvi)
if applicable,
that such Mortgage Loan is a Simple
Interest Loan;
(xxvii) if applicable,
that such Mortgage Loan provides for
negative amortization; and
(xxviii) the MIN with respect to each Mortgage Loan registered
on the MERS(R) System.
Such schedule shall also set forth the total of the amounts
described under
(xxv) above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage
Note.
Mortgaged Property: The underlying property securing a
Mortgage Loan.
Mortgagor: The obligor
on a Mortgage Note.
Net Deferred Interest: With respect to the Mortgage Loans in
Loan Group II, on any Distribution Date, means the amount of
Deferred Interest
on the related Mortgage Loans during the related Due Period net of
Principal
Prepayments in full, partial Principal Prepayments, Net Liquidation
Proceeds,
Repurchase Proceeds and scheduled principal payments, in that
order, in each
case with respect to Loan Group II, included in the related
available funds for
such Distribution Date and available to be distributed on the
related
Certificates on that Distribution Date.
With respect to any Class of Group II Senior Certificates and
Group II Subordinate Certificates as of any Distribution Date,
means an amount
equal to the product of (1) the excess, if any, of (a) the
Pass-Through Rate for
such Class of Certificates, over (b) the Adjusted Rate Cap for such
Class of
Certificates for such Distribution Date, (2) the Certificate
Principal Balance
of such Class of Certificates immediately prior to such
Distribution Date, and
(3) the actual number of days in such Accrual Period divided by
360.
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Net Interest Shortfalls: With respect to Loan Group I and any
Distribution Date, the sum of Prepayment Interest Shortfalls on the
related
Mortgage Loans, to the extent not covered by Compensating Interest,
and interest
shortfalls on the related Mortgage Loans resulting from the
application of the
Relief Act or similar state law, in each case with respect to such
Distribution
Date.
Net Mortgage Rate: As to each Mortgage Loan, and at any time,
the per annum rate equal to the Mortgage Rate less the sum of the
related
Servicing Fee Rate and the Master Servicing Fee Rate.
NIM Issuer: Any entity established as the issuer of NIM
Securities.
NIM Securities: Any debt securities secured or otherwise
backed by some or all of the Non-Offered Certificates.
NIM Trustee: The
trustee for any NIM Securities.
Non-Book-Entry Certificate: Any Certificate other than a
Book-Entry Certificate.
Non-Offered Certificates: The Group I Non-Offered
Certificates, the Group II Non-Offered Certificates, or the
Residual
Certificates.
Non-PO Percentage: (a) With respect to each Mortgage Loan in
Loan Group I that is a Discount Mortgage Loan, the related Net
Mortgage Rate
divided by 5.500%, and (b) with respect to each Mortgage Loan in
Loan Group I
that is not a Discount Mortgage Loan, 100%.
Nonrecoverable Advance: Any portion of an Advance previously
made or proposed to be made by the Master Servicer that, in the
good faith
judgment of the Master Servicer, will not or, in the case of a
proposed advance,
would not, be ultimately recoverable by it from the related
Mortgagor, related
Liquidation Proceeds or otherwise.
Notional Amount: The Notional Amount of the Class I-X
Certificates immediately prior to any Distribution Date, is equal
to the
aggregate State Principal Balance of the Sub-Loan Group I-3
Mortgage Loans with
a Net Mortgage Rate greater than or equal to 6.500% per annum.
Offered Certificates: The Senior Certificates, the Group I
Subordinate Certificates (other than Group I Non-Offered
Certificates) and the
Group II Subordinate Certificates (other than Group II
Non-Offered
Certificates).
Officer's Certificate: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the
President, a Vice
President (however denominated), an Assistant Vice President, the
Treasurer, the
Secretary, or one of the assistant treasurers or assistant
secretaries of the
Depositor, EMC or the Master Servicer (or any other officer
customarily
performing functions similar to those performed by any of the above
designated
officers and also to whom, with respect to a particular matter,
such matter is
referred because of such officer's knowledge of and familiarity
with a
particular subject) or (ii), if provided for in this Agreement,
signed by a
Servicing Officer, as the case may be, and delivered to the
Depositor, the
Sponsor, the Securities Administrator, the Master Servicer and/or
the Trustee,
as the case may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Securities Administrator on the related Interest
Determination
Date on the basis of the rate for U.S. dollar deposits for one
month that
appears on Telerate Screen Page 3750 as of 11:00 a.m. (London time)
on such
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Interest Determination Date. If such rate does not appear on such
page (or such
other page as may replace that page on that service, or if such
service is no
longer offered, such other service for displaying One-Month LIBOR
or comparable
rates as may be reasonably selected by the Securities
Administrator), One-Month
LIBOR for the applicable Accrual Period will be the Reference Bank
Rate. If no
such quotations can be obtained by the Securities Administrator and
no Reference
Bank Rate is available, One-Month LIBOR will be One-Month LIBOR
applicable to
the preceding Accrual Period. The establishment of One-Month LIBOR
on each
Determination Date by the Securities Administrator and the
Securities
Administrator's calculation of the rate of interest applicable to
the
Certificates bearing interest based on One-Month LIBOR shall, in
the absence of
manifest error, be conclusive and binding.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, reasonably
acceptable to each
addressee of such opinion; provided that with respect to Section
7.05 or 11.01,
or the interpretation or application of the REMIC Provisions, such
counsel must
(i) in fact be independent of the Depositor and the Master
Servicer, (ii) not
have any direct financial interest in the Depositor or the Master
Servicer or in
any affiliate of either, and (iii) not be connected with the
Depositor or the
Master Servicer as an officer, employee, promoter, underwriter,
trustee,
partner, director or person performing similar functions.
Optional Termination: The termination of either Loan Group I
or Loan Group II as a result of the purchase of all of the Mortgage
Loans in the
related Loan Group and any related REO Property pursuant to the
last sentence of
Section 10.01 hereof.
Optional Termination Date: With respect to each Loan Group,
the Distribution Date on which the Stated Principal Balance of all
of the
Mortgage Loans in the related Loan Group, and the Appraised Value
of all related
REO Properties, at the time of repurchase is equal to or less than
10% of the
aggregate Cut-off Date Principal Balance of all of the Mortgage
Loans in the
related Loan Group.
Original Group I Subordinate Principal Balance: The aggregate
Certificate Principal Balance of the Group I Subordinate
Certificates as of the
Closing Date.
Original Value: The value of the property underlying a
Mortgage Loan based on an appraisal.
Originator: Any of the entities which either originated or
acquired a Mortgage Loan and transferred such Mortgage Loan to the
Sponsor.
OTS: The Office of
Thrift Supervision.
Outstanding: With respect to the Certificates as of any date
of determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
(a)
Certificates theretofore canceled by the Certificate
Registrar or delivered to the Certificate Registrar
for cancellation; and
(b)
Certificates in exchange for which or in lieu of
which other Certificates have been executed and
delivered by the Certificate Registrar pursuant to
this Agreement.
Outstanding Mortgage Loan: As of any date of determination, a
Mortgage Loan with a Stated Principal Balance greater than zero
that was not the
subject of a Principal Prepayment in full, and that did not become
a Liquidated
Loan, prior to the end of the related Prepayment Period.
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Overcollateralization Amount: With respect to Loan Group II
and any Distribution Date, the excess, if any, of (i) the aggregate
Stated
Principal Balance of the Mortgage Loans in Loan Group II as of the
last day of
the related Due Period (after reduction for Realized Losses
incurred during the
related Realized Loss Period and prepayments received during the
related
Prepayment Period), over (ii) the sum of the Certificate Principal
Balances of
the Group II Offered Certificates (after taking into account the
payment of
principal other than any Extra Principal Distribution Amount on
such
Certificates) on such Distribution Date.
Overcollateralization Floor: With respect to Loan Group II and
any date of determination, 0.50% of the aggregate Cut-off Date
Principal Balance
of the Mortgage Loans in Loan Group II.
Ownership Interest: As to any Certificate, any ownership
interest in such Certificate including any interest in such
Certificate as the
Holder thereof and any other interest therein, whether direct or
indirect, legal
or beneficial.
Pass-Through Rate: With respect to each Class of Certificates,
other than the Class I-PO Certificates, the Class P Certificates,
the Class B-IO
Certificates and the Residual Certificates, the applicable interest
rate for
each such Class as set forth in Section 6.01. The Class I-PO
Certificates, the
Class P Certificates, the Class B-IO Certificates and the Residual
Certificates
do not accrue interest and do not have a Pass-Through Rate.
Paying Agent: The Securities Administrator and any successor
paying agent appointed hereunder.
Percentage Interest: With respect to any Certificate of a
specified Class, the Percentage Interest set forth on the face
thereof or the
percentage obtained by dividing the Denomination of such
Certificate by the
aggregate of the Denominations of all Certificates of such
Class.
Periodic Rate Cap: As to each Mortgage Loan that bears an
adjustable rate of interest, the rate, if any, set forth in the
related Mortgage
Note and indicated on the Mortgage Loan Schedule, that is the
maximum adjustment
that can be made to a Mortgage Rate on each Interest Adjustment
Date in
accordance with its terms, regardless of the change in the
applicable Index.
Permitted Investments: At any time, any one or more of the
following obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit
of
the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving
the
highest long-term debt rating of each Rating Agency, or such
lower
rating as will not result in the downgrading or withdrawal of
the
ratings then assigned to the Certificates by each Rating Agency,
as
evidenced in writing;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating
of
each Rating Agency, or such lower rating as will not result in
the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency, as evidenced in writing;
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(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or
trust
company incorporated under the laws of the United States or of
any
state thereof and subject to supervision and examination by
federal
and/or state banking authorities (including the Trustee, the
Securities
Administrator and the Master Servicer in their commercial
banking
capacity), provided that the commercial paper and/or long term
unsecured debt obligations of such depository institution or
trust
company are then rated one of the two highest long-term and the
highest
short-term ratings of each such Rating Agency for such securities,
or
such lower ratings as will not result in the downgrading or
withdrawal
of the rating then assigned to the Certificates by any Rating
Agency,
as evidenced in writing;
(v) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of
the
issuance of such agreements, such terms and conditions as will
not
result in the downgrading or withdrawal of the rating then assigned
to
the Certificates by each Rating Agency, as evidenced in
writing;
(vi) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered
into
with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(vii) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the
face
amount thereof) bearing interest or sold at a discount issued by
any
corporation incorporated under the laws of the United States or
any
state thereof which, at the time of such investment, have one of
the
two highest
short term ratings of each Rating Agency (except if the
Rating Agency is Moody's, such rating will be the highest
commercial
paper rating of Moody's for any such securities), or such lower
rating
as will not result in the downgrading or withdrawal of the rating
then
assigned to the Certificates by each Rating Agency, as evidenced by
a
signed writing delivered by each Rating Agency;
(viii) interests in any money market fund (including any such
fund managed or advised by the Trustee, the Master Servicer,
the
Securities Administrator or any affiliate thereof) which at the
date of
acquisition of the interests in such fund and throughout the time
such
interests are held in
such fund has the highest applicable short term
rating by each Rating Agency rating such fund (and, so long as
S&P is a
Rating Agency, the long term ratings must be either AAAm or
AAAm-G), or
such lower rating as will not result in the downgrading or
withdrawal
of the ratings then assigned to the Certificates by each Rating
Agency,
as evidenced in writing;
(ix) short term investment funds sponsored by any trust
company or banking association incorporated under the laws of
the
United States or any state thereof (including any such fund managed
or
advised by the Trustee, the Securities Administrator or the
Master
Servicer or any affiliate thereof) which on the date of acquisition
has
been rated by each Rating Agency in their respective highest
applicable
rating category or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency, as evidenced in writing;
and
(x) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to each
Rating
Agency and as will not result in the downgrading or withdrawal of
the
rating then assigned to the Certificates by any Rating Agency,
as
evidenced by a signed writing delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted
Investment if such instrument (i) evidences the right to receive
interest only
payments with respect to the obligations underlying such
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instrument, (ii) is purchased at a premium or (iii) is purchased at
a deep
discount; provided further that no such instrument shall be a
Permitted
Investment (A) if such instrument evidences principal and interest
payments
derived from obligations underlying such instrument and the
interest payments
with respect to such instrument provide a yield to maturity of
greater than 120%
of the yield to maturity at par of such underlying obligations, or
(B) if it may
be redeemed at a price below the purchase price (the foregoing
clause (B) not to
apply to investments in units of money market funds pursuant to
clause (vii)
above); provided further that no amount beneficially owned by any
REMIC
(including, without limitation, any amounts collected by the Master
Servicer but
not yet deposited in the Distribution Account) may be invested in
investments
(other than money market funds) treated as equity interests for
Federal income
tax purposes, unless the Master Servicer shall receive an Opinion
of Counsel, at
the expense of the Master Servicer, to the effect that such
investment will not
adversely affect the status of any such REMIC as a REMIC under the
Code or
result in imposition of a tax on any such REMIC. Permitted
Investments that are
subject to prepayment or call may not be purchased at a price in
excess of par.
Permitted Transferee: Any person other than (i) the United
States, any State or political subdivision thereof, or any agency
or
instrumentality of any of the foregoing, (ii) a foreign
government,
International Organization or any agency or instrumentality of
either of the
foregoing, (iii) an organization (except certain farmers'
cooperatives described
in section 521 of the Code) that is exempt from tax imposed by
Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on
unrelated business
taxable income) on any excess inclusions (as defined in section
860E(c)(1) of
the Code) with respect to any Residual Certificate, (iv) rural
electric and
telephone cooperatives described in section 1381(a)(2)(C) of the
Code, (v) a
Person that is not a citizen or resident of the United States, a
corporation,
partnership (other than a partnership that has any direct or
indirect foreign
partners) or other entity (treated as a corporation or a
partnership for federal
income tax purposes), created or organized in or under the laws of
the United
States, any state thereof or the District of Columbia, an estate
whose income
from sources without the United States is includible in gross
income for United
States federal income tax purposes regardless of its connection
with the conduct
of a trade or business within the United States, or a trust if a
court within
the United States is able to exercise primary supervision over
the
administration of the trust and one or more United States persons
have authority
to control all substantial decisions of the trust or and (vi) any
other Person
so designated by the Trustee based upon an Opinion of Counsel
(which shall not
be an expense of the Trustee) that states that the Transfer of an
Ownership
Interest in a Residual Certificate to such Person may cause the
Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are
Outstanding.
The terms "United States," "State" and "International Organization"
shall have
the meanings set forth in section 7701 of the Code or successor
provisions. A
corporation will not be treated as an instrumentality of the United
States or of
any State or political subdivision thereof for these purposes if
all of its
activities are subject to tax and, with the exception of the
Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not
selected by
such government unit.
Person: Any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability
company, trust,
unincorporated organization or government, or any agency or
political
subdivision thereof.
PO Percentage: (a) With respect to each Mortgage Loan in Loan
Group I that is a Discount Mortgage Loan, 5.500% minus the related
Net Mortgage
Rate, divided by 5.500%, and (b) with respect to each Mortgage Loan
in Loan
Group I that is not a Discount Mortgage Loan, 0%.
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to each Class of
Offered
Certificates.
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Prepayment Charge: Any prepayment premium, penalty or charge
payable by a Mortgagor in connection with any Principal Prepayment
on a Mortgage
Loan pursuant to the terms of the related Mortgage Note.
Prepayment Charge Loan: Any Mortgage Loan for which a
Prepayment Charge may be assessed and to which such Prepayment
Charge the Class
P Certificates are entitled, as indicated on the Mortgage Loan
Schedule.
Prepayment Interest Shortfall: With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a
partial
Principal Prepayment or a Principal Prepayment in full during the
related
Prepayment Period, or that became a Liquidated Loan during the
prior calendar
month (other than a Principal Prepayment in full resulting from the
purchase of
a Mortgage Loan pursuant to Section 2.02, 2.03, 3.20 or 10.01
hereof), the
amount, if any, by which (i) one month's interest at the applicable
Net Mortgage
Rate on the Stated Principal Balance of such Mortgage Loan
immediately prior to
such prepayment (or liquidation) or in the case of a partial
Principal
Prepayment on the amount of such prepayment (or Liquidation
Proceeds) exceeds
(ii) the amount of interest paid or collected in connection with
such Principal
Prepayment or such Liquidation Proceeds.
Prepayment Period: With respect to any Distribution Date and
the Mortgage Loans serviced by a related Servicer, the monthly or
other related
period preceding such Distribution Date described in the related
Servicing
Agreement pursuant to which any prepayments on such Mortgage Loans
are
determined with respect to such Distribution Date.
Primary Mortgage Insurance Policy: Any primary mortgage
guaranty insurance policy issued in connection with a Mortgage Loan
which
provides compensation to a Mortgage Note holder in the event of
default by the
obligor under such Mortgage Note or the related security
instrument, if any or
any replacement policy therefor through the related Accrual Period
for such
Class relating to a Distribution Date.
Principal Distribution Amount: With respect to Loan Group II
and any Distribution Date, an amount equal to (x) the Principal
Funds for such
Distribution Date plus (y) any Extra Principal Distribution Amount
for such
Distribution Date minus (z) any Excess Overcollateralization Amount
for such
Distribution Date.
Principal Funds: With respect to Loan Group II and any
Distribution Date, (i) the sum, without duplication of (a) all
scheduled
principal (or with respect to any Simple Interest Loans, actual
principal)
collected during the related Due Period, (b) all Advances (except
with respect
to any Simple Interest Loans) relating to principal made on or
before the Master
Servicer Advance Date, (c) Principal Prepayments exclusive of
Prepayment Charges
collected during the related Prepayment Period, (d) the Stated
Principal Balance
of each related Mortgage Loan that was repurchased by the Sponsor
pursuant to
Sections 2.02, 2.03 or 3.20, (e) the aggregate of all Substitution
Adjustment
Amounts for the related Determination Date in connection with the
substitution
of related Mortgage Loans pursuant to Section 2.03(c), (f) amounts
in respect of
principal paid by the Depositor pursuant to Section 10.01 and (g)
all
Liquidation Proceeds collected during the related Liquidation
Period (to the
extent such Liquidation Proceeds relate to principal), less all
non-recoverable
Advances relating to principal reimbursed during the related
Liquidation Period
and all Subsequent Recoveries received during the related
Liquidation Period and
minus (ii) the sum of (a) all amounts relating to principal or not
allocable to
either interest or principal reimbursed pursuant to Section 4.05,
and (b) the
amount of any Principal Prepayments in full, partial Principal
Prepayments, Net
Liquidation Proceeds, Repurchase Proceeds and scheduled principal
payments, in
that order, included in collections for the related Due Period that
are applied
as Interest Funds in connection with any Deferred Interest with
respect to such
Due Period.
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Principal Prepayment: Any Mortgagor payment or other recovery
of (or proceeds with respect to) principal on a Mortgage Loan
(including loans
purchased or repurchased under Sections 2.02, 2.03, 3.20 and 10.01
hereof) that
is received in advance of its scheduled Due Date and is not
accompanied by an
amount as to interest representing scheduled interest due on any
date or dates
in any month or months subsequent to the month of prepayment.
Partial Principal
Prepayments shall be applied by the Master Servicer or the
applicable Servicer,
as appropriate, in accordance with the terms of the related
Mortgage Note.
Projected Principal Balance: With respect to each Yield
Maintenance Agreement for each applicable Distribution Date, the
respective
amount set forth on Schedule III hereto.
Prospectus Supplement: The Prospectus Supplement dated March
14, 2007 relating to the public offering of the Offered
Certificates, as amended
and supplemented.
Protected Account: An account established and maintained by
each Servicer with respect to receipts on the Mortgage Loans and
REO Property
serviced by such Servicer in accordance with the related Servicing
Agreement.
Protected Party: As
defined in Section 7.04 hereof.
PUD: A Planned Unit
Development.
Purchase Price: With respect to any Mortgage Loan (x) required
to be repurchased by the Sponsor pursuant to Section 2.02 or 2.03
hereof or (y)
that the Sponsor has a right to purchase pursuant to Section 3.20
hereof, an
amount equal to the sum of (i) 100% of the outstanding principal
balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued
interest thereon
at the applicable Mortgage Rate through the first day of the month
in which the
Purchase Price is to be distributed to Certificateholders plus
(iii) in the case
of a repurchase of such Mortgage Loan resulting from breach of
the
representation or warranty contained in Section 2.03(b)(vii)(Q)
or
2.03(b)(vii)(S), any costs or damages incurred by the Trust in
connection with
the violation by such Mortgage Loan of any predatory or abusive
lending law,
reduced by (iv) any portion of the Servicing Fee, Servicing
Advances and
Advances payable to the purchaser of the Mortgage Loan.
Rating Agency: Each of S&P and Fitch, in the case of Group
I
Certificates; and each of S&P and Moody's, in the case of Group
II Certificates.
If any such organization or its successor is no longer in
existence, "Rating
Agency" shall be a nationally recognized statistical rating
organization, or
other comparable Person, designated by the Depositor, notice of
which
designation shall be given to the Trustee. References herein to a
given rating
category of a Rating Agency shall mean such rating category without
giving
effect to any modifiers.
Realized Loss: With respect to each Liquidated Loan, an amount
(not less than zero or more than the Stated Principal Balance of
the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated
Principal
Balance of such Liquidated Loan as of the date of such liquidation,
minus (ii)
the Liquidation Proceeds, if any, received in connection with such
liquidation
during the month in which such liquidation occurs, to the extent
applied as
recoveries of principal of the Liquidated Loan.
Realized Loss Period: With respect to a Distribution Date, the
monthly or other related period preceding such Distribution Date
described in
the related Servicing Agreement pursuant to which any Realized
Losses are
determined with respect to such Distribution Date.
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Record Date: With respect to the Adjustable Rate Certificates
and any Distribution Date, so long as such Certificates are
Book-Entry
Certificates, the Business Day preceding such Distribution Date,
and otherwise,
the close of business on the last Business Day of the month
preceding the month
in which such Distribution Date occurs. With respect to each Class
of
Certificates (other than the Adjustable Rate Certificates) and (a)
the first
Distribution Date, the Closing Date, and (b) with respect to any
other
Distribution Date, the close of business on the last Business Day
of the month
immediately preceding the month in which such Distribution Date
occurs.
Reference Bank Rate: With respect to the Adjustable Rate
Certificates and any Accrual Period, the arithmetic mean (rounded
upwards, if
necessary, to the nearest whole multiple of 0.03125%) of the
offered rates for
United States dollar deposits for one month that are quoted by the
Reference
Banks as of 11:00 a.m., New York City time, on the related
Interest
Determination Date to prime banks in the London interbank market
for a period of
one month in amounts approximately equal to the aggregate
Certificate Principal
Balance of all Adjustable Rate Certificates on such Interest
Determination Date,
provided that at least two such Reference Banks provide such rate.
If fewer than
two offered rates appear, the Reference Bank Rate will be the
arithmetic mean
(rounded upwards, if necessary, to the nearest whole multiple of
0.03125%) of
the rates quoted by one or more major banks in New York City,
selected by the
Securities Administrator, as of 11:00 a.m., New York City time, on
such date for
loans in U.S. dollars to leading European banks for a period of one
month in
amounts approximately equal to the aggregate Certificate Principal
Balance of
the Certificates which bear an adjustable rate of interest on such
Interest
Determination Date.
Reference Banks: Barclays Bank PLC, Citibank, N.A. and
Deutsche Bank AG, provided that if any of the foregoing banks are
not suitable
to serve as a Reference Bank, then any leading banks selected by
the Securities
Administrator which are engaged in transactions in Eurodollar
deposits in the
international Eurocurrency market (i) with an established place of
business in
London, England, (ii) not controlling, under the control of or
under common
control with the Depositor, the Sponsor, the Master Servicer or any
affiliate
thereof and (iii) which have been designated as such by the
Securities
Administrator.
Regular Certificate: Any Certificate other than a Residual
Certificate.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be
amended from
time to time, and subject to such clarification and interpretation
as have been
provided by the Commission in the adopting release (Asset-Backed
Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005)) or
by the staff of the Commission, or as may be provided by the
Commission or its
staff from time to time.
Relief Act: The Servicemembers Civil Relief Act, as amended,
or any similar state or local law.
Remaining Excess Spread: With respect to Loan Group II and any
Distribution Date, the Excess Spread less any Extra Principal
Distribution
Amount, in each case for such Distribution Date.
REMIC: A "real estate mortgage investment conduit" within the
meaning of section 860D of the Code.
REMIC I: The segregated pool of assets described in Section
5.06(a).
REMIC I Certificates: The REMIC I Regular Interests and the
Class R-I Certificate.
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REMIC I Regular Interests: As defined in Section 5.06(b)(i).
REMIC II: The segregated pool of assets consisting of the
REMIC I regular interests and constituting a REMIC hereunder.
REMIC II Certificates: The REMIC II Regular Interests and the
Class R-II Certificate.
REMIC II Regular Interests: As defined in Section 5.06(b)(ii).
REMIC III: The segregated pool of assets consisting of the
REMIC II regular interests and constituting a REMIC hereunder.
REMIC III Certificates: The REMIC III Regular Interests and
the Class R-III Certificate.
REMIC III Regular Interests: As defined in Section
5.06(b)(iii).
REMIC IV: The segregated pool of assets consisting of the
REMIC III Class P Certificates and constituting a REMIC
hereunder.
REMIC IV Certificates: The REMIC IV Class P Regular Interest
and the Class R-X Certificate.
REMIC IV Regular Interest: As defined in Section 5.06(b)(iv).
REMIC Opinion: An Opinion of Counsel, to the effect that the
proposed action described therein would not, under the REMIC
Provisions, (i)
cause either REMIC I, REMIC II, REMIC III or REMIC IV to fail to
qualify as a
REMIC while any regular interest in any such REMIC is outstanding,
(ii) result
in a tax on prohibited transactions or (iii) constitute a taxable
contribution
after the Startup Day.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear
at sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and
related
provisions, and proposed, temporary and final regulations and
published rulings,
notices and announcements promulgated thereunder, as the foregoing
may be in
effect from time to time as well as provisions of applicable state
laws.
Remittance Report: As
defined in Section 4.05(c).
REO Property: A Mortgaged Property acquired by a Servicer
through foreclosure or deed-in-lieu of foreclosure in connection
with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan or Mortgage Loans
in the aggregate substituted by the Sponsor for a Deleted Mortgage
Loan, which
must, on the date of such substitution, as confirmed in a Request
for Release,
(i) have a Stated Principal Balance, after deduction of the
principal portion of
the Scheduled Payment due in the month of substitution, not in
excess of, and
not less than 90% of the Stated Principal Balance of the Deleted
Mortgage Loan;
(ii) have a Mortgage Rate not less than or more than 1% per annum
higher than
the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same
or higher
credit quality characteristics than that of the Deleted Mortgage
Loan; (iv) have
a Combined Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan;
(v) have a remaining term to maturity no greater than (and not more
than one
year less than) that of the Deleted Mortgage Loan; (vi) not permit
conversion of
the Mortgage Rate from a fixed rate to a variable rate; (vii)
provide
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for a Prepayment Charge on terms substantially similar to those of
the
Prepayment Charge, if any, of the Deleted Mortgage Loan; (viii)
have the same
lien priority as the Deleted Mortgage Loan; (ix) constitute the
same occupancy
type as the Deleted Mortgage Loan or be owner occupied; (x) be
current in
payment of principal and interest as of the date of substitution;
(xi) have
payment terms that do not vary in any material respect from the
payment terms of
the Mortgage Loan for which it is to be substituted; (xii) if the
Deleted
Mortgage Loan bears an adjustable rate of interest, have a Gross
Margin,
Periodic Rate Cap and Maximum Lifetime Mortgage Rate no less than
those of the
Deleted Mortgage Loan, have the same Index and interval between
Interest
Adjustment Dates, and a Minimum Lifetime Mortgage Rate no lower
than that of
such Deleted Mortgage Loan; and (xiii) comply with each
representation and
warranty set forth in Section 2.03 hereof.
Reportable Event: As
defined in Section 3.18(a)(ii).
Request for Release: The Request for Release to be submitted
by the Sponsor, a Servicer or the Master Servicer to the
Custodian,
substantially in the form of Exhibit H. Each Request for Release
furnished to
the Custodian by the Sponsor, a Servicer or the Master Servicer
shall be in
duplicate and shall be executed by a Servicing Officer (or, if
furnished
electronically to the Custodian, shall be deemed to have been sent
and executed
by a Servicing Officer) of the Sponsor, the Servicer or the Master
Servicer, as
applicable.
Required Insurance Policy: With respect to any Mortgage Loan,
any insurance policy that is required to be maintained from time to
time under
this Agreement or the related Servicing Agreement.
Residual Certificates: The Class R-I Certificate, Class R-II
Certificate, Class R-III Certificate and Class R-X Certificate.
Responsible Officer: With respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any
Assistant Secretary,
any Trust Officer with specific responsibility for the transaction
contemplated
hereby or other officers of the Trustee specified by the Trustee,
as to whom,
with respect to a particular matter, such matter is referred
because of such
officer's knowledge of and familiarity with the particular
subject.
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.
Sarbanes-Oxley Act: The Sarbanes-Oxley Act of 2002 and the
rules and regulations of the Commission promulgated thereunder
(including any
interpretation thereof by the Commission's staff).
Sarbanes-Oxley Certification: As defined in Section
3.18(a)(iii)(D).
Scheduled Payment: The scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on
such Mortgage
Loan.
Securities Act: The
Securities Act of 1933, as amended.
Securities Administrator: Wells Fargo Bank, N.A., in its
capacity as securities administrator hereunder, and its successors
and assigns.
Securities Administrator Fee: For any Distribution Date, a fee
payable to the Securities Administrator by the Master Servicer out
of its own
funds in such capacity as they may separately agree.
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Securities
Administrator Information: As defined in Section
3.18(b).
Senior Certificates: The Group I Senior Certificates and the
Group II Senior Certificates.
Senior Optimal Principal Amount: With respect to each Sub-Loan
Group included in Loan Group I and each Distribution Date, will be
an amount
equal to the sum of the following (but in no event greater than the
aggregate
Certificate Principal Balance of the related Certificate Group
immediately prior
to such Distribution Date):
(1) the Senior Percentage of the Non-PO Percentage of the
principal portion of all monthly payments due on the Mortgage Loans
in
the related Sub-Loan Group on the related Due Date, as specified in
the
amortization schedule at the time applicable thereto (after
adjustment
for previous principal prepayments but before any adjustment to
such
amortization schedule by reason of any bankruptcy or similar
proceeding
or any moratorium or similar waiver or grace period if the
Distribution
Date occurs prior to a Cross-Over Date);
(2) the Senior Prepayment Percentage of the Non-PO Percentage
of the Stated Principal Balance of each Mortgage Loan in the
related
Sub-Loan Group which was the subject of a prepayment in full
received
by a Servicer during the applicable Prepayment Period;
(3) the Senior Prepayment Percentage of the Non-PO Percentage
of the amount of all partial prepayments allocated to principal
received during the applicable Prepayment Period in respect of
Mortgage
Loans in the related Sub-Loan Group;
(4) the lesser of (a) the Senior Prepayment Percentage of the
Non-PO Percentage of the sum of (i) all Net Liquidation
Proceeds
allocable to principal received in respect of each Mortgage Loan in
the
related Sub-Loan Group that became a Liquidated Mortgage Loan
during
the related Liquidation Period (other than Mortgage Loans described
in
the immediately following clause (ii)) and all Subsequent
Recoveries
received in respect of each Liquidated Mortgage Loan in the
related
Sub-Loan Group during the related Due Period and (ii) the
Stated
Principal Balance of each such Mortgage Loan in the related
Sub-Loan
Group purchased by an insurer from the Trust during the related
Prepayment Period pursuant to the related primary mortgage
insurance
policy, if any, or otherwise; and (b) the Senior Percentage of
the
Non-PO Percentage of the sum of (i) the Stated Principal Balance
of
each Mortgage Loan in the related Sub-Loan Group which became a
Liquidated Mortgage Loan during the related Prepayment Period
(other
than the Mortgage Loans described in the immediately following
clause
(ii)) and all Subsequent Recoveries received in respect of each
Liquidated Mortgage Loan in the related Sub-Loan Group during
the
related Due Period and (ii) the Stated Principal Balance of each
such
Mortgage Loan in the related Sub-Loan Group that was purchased by
an
insurer from the Trust during the related Prepayment Period
pursuant to
the related primary mortgage insurance policy, if any or
otherwise;
(5) any amount allocated to the Available Funds of the related
Sub-Loan Group in accordance with clauses (E) and (F) under
subsection
5.04(a)(I)(i); and
(6) the Senior Prepayment Percentage of the Non-PO Percentage
of the sum of (a) the Stated Principal Balance of each Mortgage
Loan in
the related Sub-Loan Group which was repurchased by the Sponsor
in
connection with such Distribution Date and (b) the excess, if any,
of
the Stated Principal Balance of a Mortgage Loan in the related
Sub-Loan
Group that has been replaced by the Sponsor with a substitute
Mortgage
Loan pursuant to this Agreement in
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connection with such Distribution Date over the Stated
Principal
Balance of such substitute Mortgage Loan.
Senior Percentage: With respect to each Certificate Group
related to a Sub-Loan Group in Loan Group I and any Distribution
Date, is the
lesser of (a) 100% and (b) the percentage obtained by dividing the
Certificate
Principal Balance of the Group I Senior Certificates (other than
the Class I-X
and Class I-PO certificates) in the related Certificate Group by
the aggregate
Stated Principal Balance of the Mortgage Loans in the related
Sub-Loan Group in
Loan Group I (other than the PO Percentage thereof with respect to
the related
Discount Mortgage Loans) as of the beginning of the related Due
Period. The
initial Group I Senior Percentage for each Certificate Group
related to a
Sub-Loan Group in Loan Group I will be equal to approximately
83.95%.
Senior Prepayment Percentage: The Senior Prepayment Percentage
for the Group I Senior Certificates (other than the Class I-X and
Class I-PO
Certificates) of each Certificate Group related to a Sub-Loan Group
in Loan
Group I, on any Distribution Date occurring during the periods set
forth below
will be as follows:
Period (dates inclusive)
Senior Prepayment Percentage
---------------------------
--------------------------------------------
March 2007 - February 2012
100%
March 2012 - February 2013
Senior Percentage for
the related Senior
Certificates plus 70% of the Subordinate
Percentage for the related Sub-Loan Group.
March 2013 - February 2014
Senior Percentage for the related Senior
Certificates plus 60% of the Subordinate
Percentage for the related Sub-Loan Group.
March 2014 - February 2015
Senior Percentage for the related Senior
Certificates plus 40% of the Subordinate
Percentage for the related Sub-Loan Group.
March 2015 - February 2016
Senior Percentage for the related Senior
Certificates plus 20% of the Subordinate
Percentage for the related Sub-Loan Group.
March 2016 and thereafter
Senior Percentage for the related senior
certificates.
No scheduled reduction to the Senior Prepayment Percentage for
the related Certificate Group shall be made as of any Distribution
Date unless,
as of the last day of the month preceding such Distribution Date
(1) the
aggregate Stated Principal Balance of the Mortgage Loans in all
Sub-Loan Groups
in Loan Group I delinquent 60 days or more (including for this
purpose any such
Mortgage Loans in foreclosure and such Mortgage Loans with respect
to which the
related Mortgaged Property has been acquired by the Trust) averaged
over the
last six months, as a percentage of the aggregate Certificate
Principal Balance
of the Group I Subordinate Certificates does not exceed 50% and (2)
cumulative
Realized Losses on the Mortgage Loans in all Sub-Loan Groups in
Loan Group I do
not exceed (a) 30% of the aggregate Certificate Principal Balance
of the
Original Group I Subordinate Principal Balance if such Distribution
Date occurs
between and including March 2012 and February 2013, (b) 35% of the
Original
Group I Subordinate Principal Balance if such Distribution Date
occurs between
and including March 2013 and February 2014, (c) 40% of the Original
Group I
Subordinate Principal Balance if such Distribution Date occurs
between and
including March 2014 and February 2015, (d) 45% of the Original
Group I
Subordinate Principal Balance if such Distribution Date occurs
between and
including March
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2015 and February 2016, and (e) 50% of the Original Group I
Subordinate
Principal Balance if such Distribution Date occurs during or after
March 2016.
Notwithstanding the foregoing, if on any Distribution Date,
the percentage, the numerator of which is the aggregate Certificate
Principal
Balance of the Group I Senior Certificates (other than the Class
I-X
Certificates) immediately preceding such Distribution Date, and the
denominator
of which is the Stated Principal Balance of the Mortgage Loans in
Loan Group I
as of the beginning of the related Due Period, exceeds such
percentage as of the
Cut-off Date, then the Senior Prepayment Percentage with respect to
all the
Group I Senior Certificates for such Distribution Date will equal
100%.
Servicer: Each of EMC Mortgage Corporation, Wells Fargo Bank,
N.A. and GMAC Mortgage LLC, in each case pursuant to the applicable
Servicing
Agreement, and their respective permitted successors and
assigns.
Servicer Remittance Date: With respect to each Mortgage Loan
and related Servicer, the date set forth in the related Servicing
Agreement,
when the related Servicer is required to remit funds in the related
Protected
Account to the Master Servicer.
Servicing Agreement: Any servicing agreement set forth on
Schedule I hereto, including the related Assumption Agreement.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable legal
fees) incurred in
the performance by a Servicer of its servicing obligations under
the related
Servicing Agreement, including, but not limited to, the cost of (i)
the
preservation, restoration and protection of a Mortgaged Property,
(ii) any
enforcement or judicial proceedings, including foreclosures, and
including any
expenses incurred in relation to any such proceedings that result
from a
Mortgage Loan being registered in the MERS(R) System, (iii) the
management and
liquidation of any REO Property (including, without limitation,
realtor's
commissions) and (iv) compliance with any obligations under a
Servicing
Agreement or Section 3.09 hereof to cause insurance to be
maintained.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to time,
or those
Servicing Criteria otherwise mutually agreed to by EMC, the Master
Servicer, the
Securities Administrator and the applicable Servicer in response to
evolving
interpretations of Regulation AB and incorporated into a revised
Exhibit L.
Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to 1/12th of the Servicing Fee Rate
multiplied by the
Stated Principal Balance of such Mortgage Loan as of the close of
business on
the first day of the month immediately preceding the month in which
such
Distribution Date occurs or, in the event of any payment of
interest that
accompanies a Principal Prepayment in full during the related Due
Period made by
the Mortgagor immediately prior to such prepayment, interest at the
Servicing
Fee Rate on the Stated Principal Balance of such Mortgage Loan for
the period
covered by such payment of interest.
Servicing Fee Rate: With respect to each Mortgage Loan, the
per annum rate set forth in the Mortgage Loan Schedule under the
heading
"Servicing Fee."
Servicing Officer: Any officer of a Servicer or the Master
Servicer involved in, or responsible for, the administration and
servicing or
master servicing of the Mortgage Loans, as to which evidence
reasonably
acceptable to the Custodian or the Trustee, as applicable, of due
authorization,
by such party has been furnished from time to time to the Custodian
or the
Trustee, as applicable.
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Significance Estimate: With respect to any Distribution Date,
and in accordance with Item 1115 of Regulation AB, shall be an
amount determined
based on the reasonable good-faith estimate by the Depositor of the
aggregate
maximum probable exposure of the outstanding Group II Offered
Certificates to
the Yield Maintenance Agreements.
Significance Percentage: With respect to any Distribution
Date, and in accordance with Item 1115 of Regulation AB, shall be
an percentage
equal to the Significance Estimate divided by the aggregate
outstanding
Certificate Principal Balance of the Group II Offered Certificates,
prior to the
distribution of the related Principal Distribution Amount on such
Distribution
Date.
Simple Interest Loan: A Mortgage Loan that provides for daily
accrual of interest and is identified as such on the Mortgage Loan
Schedule.
None of the Mortgage Loans is a Simple Interest Loan.
Specified Overcollateralization Amount: With respect to Loan
Group II and any Distribution Date:
(i) prior to
the Stepdown Date, 3.50% of the aggregate
Stated Principal Balance of the Mortgage Loans in
Loan Group II as of the Cut-off Date,
(ii)
on or after the Stepdown Date, provided a Trigger
Event is not in effect, the greater of:
(x) the
product of (a) on each Distribution Date
prior to the Distribution Date in February
2013, 8.75%, and on each Distribution Date
on or after the Distribution Date in
February 2013, 7.00%, and (b) the aggregate
Stated Principal Balance of the Mortgage
Loans in Loan Group II as of the last day of
the related Due Period (after reduction for
Realized Losses incurred during the related
Realized Loss Period and prepayments
received during the related Prepayment
Period), and
(y) the
Overcollateralization Floor; or
(iii) on
and after the Stepdown Date, and if a Trigger
Event is in effect, the Specified
Overcollateralization Amount for the immediately
preceding Distribution Date.
Sponsor: EMC, in its capacity as seller of the Mortgage Loans
to the Depositor.
Startup Day: The startup day, within the meaning of Section
860G(a)(9), for each REMIC formed hereunder shall be the Closing
Date.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO Property and any Distribution Date, the Cut-off Date
Principal
Balance thereof, plus with respect to any negatively amortizing
Mortgage Loan,
the amount of any Net Deferred Interest added to the principal
balance thereof,
minus the sum of (i) the principal portion of the Scheduled
Payments due (or,
with respect to any Simple Interest Loans, the principal portion of
payments
actually received) with respect to such Mortgage Loan during each
related Due
Period ending prior to such Distribution Date (and other than with
respect to
any Simple Interest Loans irrespective of any delinquency in their
payment),
(ii) all Principal Prepayments with respect to such Mortgage Loan
received prior
to or during the related Prepayment Period, and all Liquidation
Proceeds to the
extent applied by the related Servicer as recoveries of principal
in accordance
with Section 3.13 with respect to such Mortgage Loan, that were
received by the
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<PAGE>
related Servicer prior to or during the related Liquidation Period,
and (iii)
any Realized Losses on such Mortgage Loan incurred during the
related Realized
Loss Period. The Stated Principal Balance of a Liquidated Loan
equals zero.
Stepdown Date: With respect to Loan Group II and any
Distribution Date, the earlier to occur of:
(i) the
Distribution Date on which the aggregate
Certificate Principal Balance of the Class II-A
Certificates has been reduced to zero; and
(ii)
the later to occur of
(x) the
Distribution Date occurring in March
2010, and
(y) the first
Distribution Date for which the
aggregate Certificate Principal Balance of
the Group II Subordinate Certificates plus
the Overcollateralization Amount for such
Distribution Date divided by the sum of the
Stated Principal Balances of the Mortgage
Loans in Loan Group II as of the end of the
related Due Period (after reduction for
Realized Losses incurred during the related
Realized Loss Period and prepayments
received during the related Prepayment
Period) is greater than or equal to (A) on
each Distribution Date prior to the
Distribution Date in February 2013, 38.250%,
and (B) on each distribution date on and
after the distribution date in February
2013, 30.600%.
Strike Rate: With respect to the Yield Maintenance Agreements,
as set forth in Schedule III hereto.
Subcontractor: Any vendor, subcontractor or other Person that
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 any
Servicer (or a
Subservicer of any Servicer), the Master Servicer, the Custodian or
the
Securities Administrator.
Sub-Loan Group: Either Sub-Loan Group I-1, Sub-Loan Group I-2,
Sub-Loan Group I-3, Sub-Loan Group II-1, Sub-Loan Group II-2 or
Sub-Loan Group
II-3, as applicable.
Sub-Loan Group I-1: With respect to the Mortgage Loans, the
pool of Mortgage Loans identified in the Mortgage Loan Schedule as
composing
Sub-Loan Group I-1. With respect to the Certificates, the Class
I-A-1A
Certificates, the Class I-A-1B Certificates and the Class I-PO
Certificates.
Sub-Loan Group I-2: With respect to the Mortgage Loans, the
pool of Mortgage Loans identified in the Mortgage Loan Schedule as
composing
Sub-Loan Group I-2. With respect to the Certificates, the Class
I-A-2A
Certificates and the Class I-A-2B Certificates.
Sub-Loan Group I-3: With respect to the Mortgage Loans, the
pool of Mortgage Loans identified in the Mortgage Loan Schedule as
composing
Sub-Loan Group I-3. With respect to the Certificates, the Class
I-A-3A
Certificates, the Class I-A-3B Certificates and the Class I-X
Certificates.
Sub-Loan Group I-1 Fraction: With respect to any Mortgage Loan
in Loan Group I with a Net Mortgage Rate of greater than or equal
to 5.500% per
annum and less than 6.000% per annum, a
42
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fraction, (x) the numerator of which is equal to 6.000% minus the
Net Mortgage
Rate of such Mortgage Loan, and (y) the denominator of which is
equal to 0.500%.
Sub-Loan Group I-2A Fraction: With respect to any Mortgage
Loan in Loan Group I with a Net Mortgage Rate of greater than or
equal to 5.500%
per annum and less than 6.000% per annum, a fraction, (x) the
numerator of which
is equal to Net Mortgage Rate minus 5.500% of such Mortgage Loan,
and (y) the
denominator of which is equal to 0.500%.
Sub-Loan Group I-2B Fraction: With respect to any Mortgage
Loan in Loan Group I with a Net Mortgage Rate of greater than or
equal to 6.000%
per annum and less than 6.500% per annum, a fraction, (x) the
numerator of which
is equal to 6.500% minus the Net Mortgage Rate of such Mortgage
Loan, and (y)
the denominator of which is equal to 0.500%.
Sub-Loan Group I-3 Fraction: With respect to any Mortgage Loan
in Loan Group I with a Net Mortgage Rate of greater than or equal
to 6.000% per
annum and less than 6.500% per annum, a fraction, (x) the numerator
of which is
equal to the Net Mortgage Rate of such Mortgage Loans minus 6.000%,
and (y) the
denominator of which is equal to 0.500%.
Subordinate Certificates: The Group I Subordinate Certificates
and the Group II Subordinate Certificates.
Subordinate Certificate Writedown Amount: With respect to the
Group I Subordinate Certificates, the amount by which (x) the sum
of the
Certificate Principal Balances of the Group I Certificates (after
giving effect
to the distribution of principal and the allocation of Realized
Losses in
reduction of the Certificate Principal Balances of the Group I
Certificates on
such Distribution Date) exceeds (y) the Stated Principal Balances
of the
Mortgage Loans in Loan Group I on the Due Date related to such
Distribution
Date.
Subordinate Optimal Principal Amount: With respect to any
Sub-Loan Group of Loan Group I and each Distribution Date will be
an amount
equal to the sum of the following (but in no event greater than the
aggregate
Certificate Principal Balance of the Group I Subordinate
Certificates
immediately prior to such Distribution Date):
(1) the related Subordinate Percentage of the Non-PO
Percentage of the principal portion of all Monthly Payments due on
each
Mortgage Loan in the related Sub-Loan Group on the related Due
Date, as
specified in the amortization schedule at the time applicable
thereto
(after adjustment for previous principal prepayments but before
any
adjustment to such amortization schedule by reason of any
bankruptcy or
similar proceeding or any moratorium or similar waiver or grace
period);
(2) the related Subordinate Prepayment Percentage of the
Non-PO Percentage of the Stated Principal Balance of each Mortgage
Loan
in the related Sub-Loan Group which was the subject of a prepayment
in
full received by a Servicer during the applicable Prepayment
Period;
(3) the related Subordinate Prepayment Percentage of the
Non-PO Percentage of the amount all partial prepayments of
principal
received in respect of Mortgage Loans in the related Sub-Loan
Group
during the applicable Prepayment Period;
(4) the excess, if any, of (a) the Net Liquidation Proceeds
allocable to principal received in respect of each Mortgage Loan in
the
related Sub-Loan Group that became a Liquidated Mortgage Loan
during
the related Liquidation Period and all Subsequent Recoveries
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received in respect of each Liquidated Mortgage Loan during the
related Due Period over (b) the sum of the amounts distributable
to
the holders of the Group I Senior Certificates in the related
Certificate Group pursuant to clause (4) of the definition of
"Senior
Optimal Principal Amount" and "Class I-PO Certificate Principal
Distribution Amount" on such Distribution Date;
(5) the related Subordinate Prepayment Percentage of the
Non-PO Percentage of the sum of (a) the Stated Principal Balance
of
each
Mortgage Loan in the related Sub-Loan Group which was
repurchased
by the sponsor in connection with such Distribution Date and (b)
the
difference, if any, between the Stated Principal Balance of a
Mortgage
Loan in the related Sub-Loan Group that has been replaced by
the
sponsor with a substitute Mortgage Loan pursuant to the Mortgage
Loan
purchase agreement in connection with such Distribution Date and
the
Stated Principal Balance of such substitute Mortgage Loan; and
(6) on the Distribution Date on which the aggregate
Certificate Principal Balance of the Group I Senior Certificates
(other
than the Class I-X and Class I-PO certificates) in the related
Certificate Group have all been reduced to zero, 100% of the
Senior
Optimal Principal Amount for such Group I Senior Certificates.
Subordinate Percentage: As of any Distribution Date and with
respect to any Sub-Loan Group included in Loan Group I, equals 100%
minus the
related Senior Percentage for the related Certificate Group.
Subordinate Prepayment Percentage: As of any Distribution Date
and with respect to any Sub-Loan Group included in Loan Group I,
will equal 100%
minus the Senior Prepayment Percentage for the Senior Certificates
in the
related Certificate Group.
Subsequent Recovery: The recovery of any amount (including the
release of surplus funds held to cover expenses) in respect of a
Liquidated Loan
after a Realized Loss has been allocated with respect thereto to
one or more
Classes of Certificates.
Subservicer: Any Person that (i) services Mortgage Loans on
behalf of any Servicer or that is engaged by the Master Servicer or
Securities
Administrator, and (ii) is responsible for the performance (whether
directly or
through subservicers or Subcontractors) of a substantial portion of
the material
servicing functions required to be performed under this Agreement,
any related
Servicing Agreement or any subservicing agreement that are
identified in Item
1122(d) of Regulation AB.
Sub-Servicing Letter Agreement: The letter agreement, dated
March 15, 2007, among EMC, as servicer, Wells Fargo Bank, N.A., as
subservicer
and the Master Servicer, providing for the allocation of certain
fees and
reimbursements identified therein.
Substitution Adjustment Amount: The meaning ascribed to such
term pursuant to Section 2.03(c).
Successor Master
Servicer: The meaning ascribed to such term
pursuant to Section 8.01.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss.
1.860F-4(d) and
temporary Treasury regulation ss. 301.6231(a)(7)-1T. The holder of
the greatest
Percentage Interest in a Class of Residual Certificates shall be
the Tax Matters
Person for the related REMIC. The Securities Administrator, or any
successor
thereto or assignee thereof shall serve as tax administrator
hereunder and as
agent for the related Tax Matters Person.
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Termination Costs: The costs and expenses related to the
termination of any Servicer, the appointment of a successor
servicer or the
transfer and assumption of servicing with respect to the related
Servicing
Agreement, including, without limitation, the items set forth in
Section
3.03(c).
Transfer Affidavit: As
defined in Section 6.02(c).
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
Trigger Event: With respect to Loan Group II and any
Distribution Date, a violation of either the Cumulative Loss Test
or the
Delinquency Test.
Trust or Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest accruing and
principal due
(or in the case of any Simple Interest Loan, received) with respect
thereto
after the Cut-off Date to the extent not applied in computing the
Cut-off Date
Principal Balance thereof; (ii) the Distribution Account, the Yield
Maintenance
Account, the Final Maturity Reserve Account and the Basis Risk
Reserve Fund and
all amounts deposited therein pursuant to the applicable provisions
of this
Agreement; (iii) property that secured a Mortgage Loan and has been
acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the
mortgagee's
rights under the Insurance Policies with respect to the Mortgage
Loans; (v) the
Servicing Agreements and Assumption Agreements; (vi) rights under
the Yield
Maintenance Agreements; and (vii) all proceeds of the foregoing,
including
proceeds of conversion, voluntary or involuntary, of any of the
foregoing into
cash or other liquid property.
Trustee: Citibank, N.A., 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, and any
successor
thereto, and any corporation or national banking association
resulting from or
surviving any consolidation or merger to which it or its successors
may be a
party and any successor trustee as may from time to time be serving
as successor
trustee hereunder.
Trustee Fee: As to any Distribution Date, a fee payable to the
Trustee by the Master Servicer out of its own funds in such amount
as they may
separately agree.
Unpaid Applied Realized Loss Amount: As of any Distribution
Date, and each Class of Group II Offered Certificates, the excess
of (i) the
Applied Realized Loss Amount for such Class over (ii) the sum of
all
distributions on such Class in reduction of the Applied Realized
Loss Amount and
any Subsequent Recoveries allocated to such Class, in each case, on
all previous
Distribution Dates.
Voting Rights: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of
the voting
provisions hereunder. Voting Rights shall be allocated (i) 96% to
the
Certificates (other than the Class I-X Certificates, Class P
Certificates, Class
B-IO Certificates and the Residual Certificates), (ii) 1% to the
Class I-X
Certificates, (iii) 1% to the Class P Certificates, (iv) 1% to the
Class B-IO
Certificates, and (v) 1% to the Residual Certificates, with the
allocation among
the Certificates to be in proportion to the Certificate Principal
Balance of
each Class relative to the Certificate Principal Balance of all
other such
Classes. Voting Rights will be allocated among the Certificates of
each Class of
Certificates, in accordance with their respective Percentage
Interests.
WFB: Wells Fargo Bank, N.A., in its capacity as a Servicer of
the Mortgage Loans and its successor and assigns in such
capacity.
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Yield Maintenance Account: The separate Eligible Account
created and maintained by the Paying Agent pursuant to Section 4.06
in the name
of the Trustee primarily for the benefit of the Holders of the
Adjustable Rate
Certificates and designated "Citibank, N.A., in trust for
registered holders of
the Bear Stearns Asset Backed Securities Trust 2007-SD2,
Asset-Backed
Certificates, Series 2007-SD2." The Yield Maintenance Account shall
not
constitute an asset of any REMIC hereunder.
Yield Maintenance Agreements: With respect to the Adjustable
Rate Certificates, the respective yield maintenance agreements with
reference
numbers FXNCC9305, FXNCC9306, FXNCC9307, FXNCC9308, FXNCC9309 and
FXNCC93012,
each dated as of March 15, 2007, between the Yield Maintenance
Provider and the
Trustee on behalf of the Trust, together with any scheduling,
confirmations or
other agreements related thereto, attached hereto as Exhibit N.
Yield Maintenance Payment: (i) With respect to the Yield
Maintenance Agreement related to the Class II-A Certificates and
any
Distribution Date through the Distribution Date in January 2012, an
amount equal
to the product of (A) the actual number of days in the applicable
Accrual Period
divided by 360, and (B) the product of (a) the per annum rate equal
to the
excess, if any, of (x) the lesser of (i) One-Month LIBOR and (ii)
11.50% per
annum, over (y) the applicable Strike Rate and (b) the lesser of
(x) the
aggregate Certificate Principal Balance of the Class II-A
Certificates and (y)
the Projected Principal Balance for such Certificates, in each case
for such
Distribution Date.
(ii) With respect to the Yield Maintenance Agreements related
to each Class of Class II-M Certificates and any Distribution Date
through the
Distribution Date in January 2012, the amount equal to the product
of (A) the
actual number of days in the applicable Accrual Period divided by
360, and (B)
the product of (a) the per annum rate equal to the excess, if any,
of (x) the
lesser of (i) One-Month LIBOR and (ii) 11.50% per annum, over (y)
the applicable
Strike Rate and (b) the lesser of (x) the Certificate Principal
Balance of the
related Class of Class II-M Certificates and (y) the Projected
Principal Balance
for such Class of Certificates, in each case for such Distribution
Date.
Yield Maintenance Provider: Bear Stearns Financial Products
Inc. or any successor in interest.
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ARTICLE II.
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of
Trust Fund.
The Sponsor hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the
right, title and
interest of the Sponsor in and to the assets in the Trust Fund.
The Sponsor has entered into this Agreement in consideration
for the purchase of the Mortgage Loans by the Depositor and has
agreed to take
the actions specified herein.
The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise
conveys to the
Trustee for the use and benefit of the Certificateholders, without
recourse, all
the right, title and interest of the Depositor in and to the Trust
Fund.
In connection with any such transfer and assignment, the
Depositor has delivered to or caused to be delivered to, and
deposited with, the
Custodian the following documents or instruments with respect to
each Mortgage
Loan so assigned:
(i) the original Mortgage Note, including any riders thereto,
endorsed without recourse (A) to the order of "Citibank, N.A.,
as
Trustee for certificateholders, of Bear Stearns Asset Backed
Securities
Trust 2007-SD2, Asset Backed Certificates, Series 2007-SD2,
without
recourse", or in blank, or (B) in the case of a Mortgage Loan
registered on the MERS(R) System, in blank and, in each case,
showing
to the extent available to the Sponsor an unbroken chain of
endorsements from the original payee thereof to the Person
endorsing it
to the Trustee,
(ii) the original Mortgage and, if the related Mortgage Loan
is a MOM Loan, noting the presence of the MIN and language
indicating
that such Mortgage Loan is a MOM Loan, which shall have been
recorded
(or if the original is not available, a copy), with evidence of
such
recording indicated thereon (or if clause (x) in the proviso
below
applies, shall be in recordable form),
(iii) unless the Mortgage Loan is registered on the MERS(R)
System, the assignment (either an original or a copy, which may be
in
the form of a blanket assignment if permitted in the jurisdiction
in
which the Mortgaged Property is located) to the Trustee of the
Mortgage, in recordable form, with respect to each Mortgage Loan in
the
name of "Citibank, N.A., as Trustee for certificateholders of
Bear
Stearns Asset Backed Securities Trust 2007-SD2, Asset Backed
Certificates, Series 2007-SD2" or in blank,
(iv) an original or a copy of all intervening assignments of
the Mortgage, if any, to the extent available to the Sponsor ,
with
evidence of recording thereon,
(v) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for
title
insurance, if available, or a copy thereof, or, in the event that
such
original title insurance policy is unavailable, a photocopy
thereof, or
in lieu thereof, a current lien search on the related Mortgaged
Property and
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(vi) originals or copies of all available assumption,
modification or substitution agreements, if any;
provided, however, that the assignment of the Mortgage to the
Trustee will not be required to be submitted for recording with
respect to any
Mortgage Loan: (a) if the Trustee and the Custodian shall have
received an
Opinion of Counsel addressed to the Trustee to the effect that the
recordation
of the assignment to the Trustee of the Mortgage securing a
particular Mortgage
Note is not necessary to perfect the security interest of the
Trustee in such
Mortgage, (b) such recordation is not required by the Rating
Agencies or (c) if
MERS is identified on the Mortgage or on a properly recorded
assignment of the
Mortgage as the mortgagee of record solely as nominee for the
Sponsor and its
successors and assigns;
and provided, further, however, that in lieu of the foregoing,
the Depositor may deliver, or cause to be delivered, the following
documents,
under the circumstances set forth below: (x) if any Mortgage,
assignment thereof
to the Trustee or intervening assignments thereof have been
delivered or are
being delivered to recording offices for recording and have not
been returned in
time to permit their delivery as specified above, the Depositor may
deliver, or
cause to be delivered, a true copy thereof with a certification by
the
applicable Servicer or the title company issuing the commitment for
title
insurance, on the face of such copy, substantially as follows:
"Certified to be
a true and correct copy of the original, which has been transmitted
for
recording"; and (y) in lieu of the Mortgage Notes relating to the
Mortgage Loans
identified in the list set forth in Exhibit J, the Depositor may
deliver, or
cause to be delivered, a lost note affidavit (or a blanket lost
note affidavit
covering some or all of the Mortgage Loans in Exhibit J) and a copy
of the
original note, if available; and provided, further, however, that
in the case of
Mortgage Loans which have been prepaid in full after the Cut-off
Date and prior
to the Closing Date, the Depositor, in lieu of delivering the above
documents,
may cause the Sponsor to, and the Sponsor shall, (i) deposit or
cause to be
deposited on the Closing Date all amounts paid in respect of such
Mortgage Loans
(to the extent required to be remitted by the related Servicers
pursuant to
their Servicing Agreements) into the Distribution Account or (ii)
deliver to the
Custodian on the Closing Date a certification of an authorized
officer of the
Sponsor stating that the Sponsor will deposit or cause to be
deposited all such
amounts on or before Business Day immediately preceding the first
Distribution
Date, in which case the Sponsor shall so deposit or cause to be
deposited such
amounts into the Distribution Account on or before such Business
Day immediately
preceding the first Distribution Date.
In the case of the documents referred to in clause (x) above,
the Depositor shall deliver, or cause to be delivered, such
documents to the
Custodian promptly after they are received. The Sponsor shall
cause, at its
expense, the Mortgage and intervening assignments, if any, and to
the extent
required in accordance with the foregoing, the assignment of the
Mortgage to the
Trustee to be submitted for recording promptly after the Closing
Date. In the
event that the Sponsor, the Depositor or the Master Servicer gives
written
notice to the Trustee (a) that recording of the assignment of the
Mortgage to
the Trustee is required to protect the right, title and interest of
the Trustee
on behalf of the Certificateholders in and to any Mortgage Loan,
(b) a court
recharacterizes the sale of the Mortgage Loans as a financing, or
(c) as a
result of any change in or amendment to the laws of a State in
which recording
was not effected or any applicable political subdivision thereof,
or any change
in official position regarding application or interpretation of
such laws,
including a holding by a court of competent jurisdiction, such
recording is so
required, the Sponsor shall submit or cause to be submitted for
recording as
specified above or, should the Sponsor fail to perform such
obligations, the
Trustee (or the Custodian on its behalf) shall cause each such
previously
unrecorded assignment to be submitted for recording as specified
above at the
expense of the Trust pursuant to Section 9.05. In the event a
Mortgage File is
released to the Master Servicer or a Servicer as a result of the
Master
Servicer's or a Servicer's having completed a Request for Release,
the Trustee
shall, if not so completed, complete, or cause the Custodian to
complete, the
assignment of the related Mortgage in the manner specified in
clause (iii)
above.
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In connection with the assignment of any Mortgage Loans
registered on the MERS(R) System, the Sponsor further agrees that
it will cause,
at the Sponsor's own expense, within 30 days after the Closing
Date, the MERS(R)
System to indicate that such Mortgage Loans have been assigned by
the Sponsor to
the Depositor and by the Depositor to the Trustee in accordance
with this
Agreement for the benefit of the Certificateholders by including
(or deleting,
in the case of Mortgage Loans which are repurchased in accordance
with this
Agreement) in such computer files (a) the code in the field which
identifies the
specific Trustee, (b) the code in the field "Pool Field" which
identifies the
series of the Certificates issued in connection with such Mortgage
Loans and (c)
a code that provides the Custodian with access to such Mortgage
Loans. The
Sponsor further agrees that it will not, and will not permit any
Servicer or the
Master Servicer to, and the Master Servicer agrees that it will
not, alter the
codes referenced in this paragraph with respect to any Mortgage
Loan during the
term of this Agreement unless and until such Mortgage Loan is
repurchased in
accordance with the terms of this Agreement.
Since the mortgage loans permitted to be purchased pursuant to
this Agreement are limited to (i) the Mortgage Loans purchased
hereunder on the
Closing Date and (ii) any Replacement Mortgage Loans purchased
hereafter
pursuant to the provisions of this Agreement, and the Sponsor has
made the
representations and warranties contained herein with respect to all
such
Mortgage Loans, including the representations and warranties
contained in
Section 2.03(b)(vii)(Q) and (S) of this Agreement, that, as of the
Closing Date
or date of substitution, as applicable, no Mortgage Loan is a "high
cost home",
"covered", "high risk home" or "predatory" loan under any
applicable federal,
state or local law,, it is agreed and understood by the Depositor,
the Sponsor
and the Trustee that it is not intended that any mortgage loan be
purchased
hereunder that is a "High-Cost Home Loan" as defined in the New
Jersey Home
Ownership Security Act of 2002, a "High-Cost Home Loan" as defined
in the New
Mexico Home Loan Protection Act, a "High Cost Home Mortgage Loan"
as defined in
the Massachusetts Predatory Home Loan Practices Act of 2004 or a
"High-Cost Home
Loan" as defined in the Indiana High Cost Home Loan Law of
2005.
Section 2.02. Acceptance of
the Mortgage Loans.
(a) The Trustee
acknowledges receipt based on receipt by the
Custodian of, subject to the further review and the exceptions the
Custodian
notes pursuant to the procedures described below, the documents (or
certified
copies thereof) delivered to the Custodian pursuant to Section 2.01
and declares
that it holds and will continue to hold directly or through the
Custodian those
documents and any amendments, replacements or supplements thereto
and all other
assets of the Trust Fund delivered to the Custodian on its behalf
in trust for
the use and benefit of all present and future Holders of the
Certificates. On
the Closing Date, the Custodian will deliver to the Sponsor, the
Depositor and
the Trustee an initial certification in the form annexed as Exhibit
One to the
Custodial Agreement confirming whether or not it has received the
Mortgage File
for each Mortgage Loan, but without review of such Mortgage File,
except to the
extent necessary to confirm whether such Mortgage File contains the
original
Mortgage Note or a lost note affidavit in lieu thereof. No later
than 90 days
after the Closing Date, the Custodian agrees pursuant to the
Custodial
Agreement, for the benefit of the Certificateholders, to review
each Mortgage
File delivered to it and to execute and deliver, or cause to be
executed and
delivered, to the Sponsor, the Depositor and to the Trustee an
interim
certification substantially in the form annexed as Exhibit Two to
the Custodial
Agreement. In conducting such review, the Custodian on behalf of
the Trustee
will ascertain whether all required documents have been executed
and received
and whether those documents relate, determined on the basis of the
Mortgagor
name, original principal balance and loan number, to the Mortgage
Loans
identified in Exhibit B to this Agreement, as supplemented
(provided, however,
that with respect to those documents described in clauses (iv) and
(vi) of the
fourth paragraph of Section 2.01, such obligations shall extend
only to
documents actually delivered pursuant to such clauses). In
performing any such
review, the Custodian on behalf of the Trustee and in accordance
with the
Custodial Agreement may conclusively rely on the purported due
execution and
genuineness of any
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such document and on the purported genuineness of any signature
thereon. If the
Custodian finds any document constituting part of the Mortgage File
not to have
been executed or received, or to be unrelated to the Mortgage Loans
identified
in Exhibit B or to appear to be defective on its face, the
Custodian shall
include such information in the exception report attached to such
interim
certification. The Sponsor shall correct or cure any such defect
or, if prior to
the end of the second anniversary of the Closing Date, the Sponsor
may
substitute for the related Mortgage Loan a Replacement Mortgage
Loan, which
substitution shall be accomplished in the manner and subject to the
conditions
set forth in Section 2.03 or shall deliver to the Trustee and the
Custodian an
Opinion of Counsel, addressed to the Trustee and the Custodian, at
the Sponsor's
expense, to the effect that such defect does not materially or
adversely affect
the interests of Certificateholders in such Mortgage Loan within 90
days from
the date of notice from the Custodian of the defect and if the
Sponsor fails to
correct or cure the defect or deliver such opinion within such
period, the
Sponsor will, subject to Section 2.03, within 90 days from the
notification of
the Custodian purchase such Mortgage Loan at the Purchase Price;
provided,
however, that if such defect relates solely to the inability of the
Sponsor to
deliver the Mortgage, assignment thereof to the Trustee, or
intervening
assignments thereof with evidence of recording thereon because such
documents
have been submitted for recording and have not been returned by the
applicable
jurisdiction, the Sponsor shall not be required to purchase such
Mortgage Loan
if the Sponsor delivers such documents promptly upon receipt, but
in no event
later than 360 days after the Closing Date.
(b) No later than 180 days after the Closing Date, the
Custodian on behalf of the Trustee and in accordance with the
Custodial
Agreement will review, for the benefit of the Certificateholders,
the Mortgage
Files and will execute and deliver or cause to be executed and
delivered to the
Sponsor, the Depositor and to the Trustee, a final certification
substantially
in the form annexed as Exhibit Three to the Custodial Agreement. In
conducting
such review, the Custodian will ascertain whether each document
required to be
recorded has been returned from the recording office with evidence
of recording
thereon and the Custodian has received either an original or a copy
thereof, as
required in Section 2.01 (provided, however, that with respect to
those
documents described in clauses (iv) and (vi) of the fourth
paragraph of Section
2.01, such obligations shall extend only to documents actually
delivered
pursuant to such clauses). If the Custodian finds any document with
respect to a
Mortgage Loan has not been received, or to be unrelated, determined
on the basis
of the Mortgagor name, original principal balance and loan number,
to the
Mortgage Loans identified in Exhibit B or to appear defective on
its face, the
Custodian shall note such defect in the exception report attached
to the final
certification and shall promptly notify the Sponsor. The Sponsor
shall correct
or cure any such defect or, if prior to the end of the second
anniversary of the
Closing Date, the Sponsor may substitute for the related Mortgage
Loan a
Replacement Mortgage Loan, which substitution shall be accomplished
in the
manner and subject to the conditions set forth in Section 2.03 or
shall deliver
to the Trustee and the Custodian an Opinion of Counsel, addressed
to the Trustee
and the Custodian, at the Sponsor's expense, to the effect that
such defect does
not materially or adversely affect the interests of
Certificateholders in such
Mortgage Loan within 90 days from the date of notice from the
Custodian of the
defect and if the Sponsor is unable within such period to correct
or cure such
defect, or to substitute the related Mortgage Loan with a
Replacement Mortgage
Loan or to deliver such opinion, the Sponsor shall, subject to
Section 2.03,
within 90 days from the notification of the Custodian, purchase
such Mortgage
Loan at the Purchase Price; provided, however, that if such defect
relates
solely to the inability of the Sponsor to deliver the Mortgage,
assignment
thereof to the Trustee or intervening assignments thereof with
evidence of
recording thereon, because such documents have not been returned by
the
applicable jurisdiction, the Sponsor shall not be required to
purchase such
Mortgage Loan, if the Sponsor delivers such documents promptly upon
receipt, but
in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by the
Sponsor in accordance with subsections 2.02(a) or (b) above or
Section 2.03, the
Sponsor shall remit the applicable Purchase Price to the Paying
Agent for
deposit in the Distribution Account and shall provide written
notice to the
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Paying Agent and Trustee detailing the components of the Purchase
Price, signed
by a Servicing Officer. Upon deposit of the Purchase Price in the
Distribution
Account and receipt of a Request for Release, the Trustee will
release or notify
the Custodian which, upon receipt of such notice from the Trustee,
shall release
to the Sponsor the related Mortgage File and the Trustee shall
execute and
deliver all instruments of transfer or assignment, without
recourse,
representation or warranty, furnished to it by the Sponsor, as are
necessary to
vest in the Sponsor title to and rights under the Mortgage Loan.
Such purchase
shall be deemed to have occurred on the date on which the deposit
into the
Distribution Account was made or if the Custodian is then acting,
the date on
which notice of the deposit of the Purchase Price into the
Distribution Account
was received by the Custodian from the Securities Administrator or
Paying Agent.
The Trustee shall promptly notify the Rating Agencies of such
repurchase. The
obligation of the Sponsor to cure, repurchase or substitute for any
Mortgage
Loan as to which a defect in a constituent document exists shall be
the sole
remedy respecting such defect available to the Certificateholders
or to the
Trustee on their behalf.
(d) The Sponsor shall deliver to the Custodian, and the
Trustee agrees to accept or to cause the Custodian to accept, the
Mortgage Note
and other documents constituting the Mortgage File with respect to
any
Replacement Mortgage Loan, which the Custodian will review as
provided in
subsections 2.02(a) and 2.02(b), provided, that the Closing Date
referred to
therein shall instead be the date of delivery of the Mortgage File
with respect
to each Replacement Mortgage Loan.
(e) Until all amounts distributable in respect of the
Certificates have been distributed in full and the Master Servicer
has otherwise
fulfilled its respective obligations under this Agreement, the
Trustee, or the
Custodian acting on its behalf, shall retain possession and custody
of each
Mortgage File in accordance with and subject to the terms and
conditions of this
Agreement.
Section 2.03. Representations,
Warranties and Covenants of the
Master Servicer and the Sponsor.
(a) The Master Servicer hereby represents and warrants to the
Depositor, the Securities Administrator and the Trustee as follows,
as of the
Closing Date:
(i) It is duly
organized and is validly existing and in
good standing as a national banking association organized under
the
laws
of the United States, and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to
be
conducted by it in any state in which a Mortgaged Property is
located
or is otherwise not required under applicable law to effect
such
qualification and, in any event, is in compliance with the
doing
business laws of any such state, to the extent necessary to ensure
its
ability to enforce each Mortgage Loan, to service the Mortgage
Loans in
accordance with the terms of this Agreement and to perform any of
its
other obligations under this Agreement in accordance with the
terms
hereof.
(ii)
It has the full corporate power and authority to
service each Mortgage Loan, and to execute, deliver and perform,
and to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action
on
its part
the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and
delivery
hereof by the other parties hereto, constitutes its legal, valid
and
binding obligation, enforceable against it in accordance with
its
terms, except that (a) the enforceability hereof may be limited
by
bankruptcy, insolvency, moratorium, receivership and other similar
laws
relating to creditors' rights generally and (b) the remedy of
specific
performance and injunctive and other forms of equitable relief may
be
subject to equitable defenses and to the discretion of the court
before
which any proceeding therefor may be brought.
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(iii) The
execution and delivery of this Agreement by it,
the servicing of the Mortgage Loans by it under this Agreement,
the
consummation of any other of the transactions contemplated by
this
Agreement, and the fulfillment of or compliance with the terms
hereof
are in its ordinary course of business and will not (A) result in
a
material breach of any term or provision of its charter or by-laws
or
(B) materially conflict with, result in a material breach,
violation or
acceleration of, or result in a material default under, the terms
of
any other material agreement or instrument to which it is a party
or by
which it may be bound, or (C) constitute a material violation of
any
statute, order or regulation applicable to it of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over it; and it is not in breach or violation of any material
indenture
or other material agreement or instrument, or in violation of
any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it
which breach or violation may materially impair its ability to
perform
or meet any of its obligations under this Agreement.
(iv)
It or one or more of its affiliates is an approved
servicer of conventional mortgage loans for Fannie Mae or Freddie
Mac
and is a mortgagee approved by the Secretary of Housing and
Urban
Development pursuant to sections 203 and 211 of the National
Housing
Act.
(v) No
litigation is pending or, to the best of its
knowledge, threatened, against it that would materially and
adversely
affect the execution, delivery or enforceability of this Agreement
or
its ability to service the Mortgage Loans or to perform any of
its
other obligations under this Agreement in accordance with the
terms
hereof.
(vi)
No consent, approval, authorization or order of any
court or governmental agency or body is required for its
execution,
delivery and performance of, or compliance with, this Agreement or
the
consummation of the transactions contemplated hereby, or if any
such
consent, approval, authorization or order is required, it has
obtained
the same.
(b) The Sponsor hereby represents and warrants to the
Depositor, the Securities Administrator, the Master Servicer and
the Trustee as
follows, as of the Closing Date:
(i) The
Sponsor is duly organized as a Delaware
corporation and is validly existing and in good standing under the
laws
of the State of Delaware and is duly authorized and qualified
to
transact any and all business contemplated by this Agreement to
be
conducted by the Sponsor in any state in which a Mortgaged Property
is
located or is otherwise not required under applicable law to
effect
such qualification and, in any event, is in compliance with the
doing
business laws of any such state, to the extent necessary to ensure
its
ability to enforce each Mortgage Loan, to sell the Mortgage Loans
in
accordance with the terms of this Agreement and to perform any of
its
other obligations under this Agreement in accordance with the
terms
hereof.
(ii)
The Sponsor has the full corporate power and
authority to sell each Mortgage Loan, and to execute, deliver
and
perform, and to enter into and consummate the transactions
contemplated
by this Agreement and has duly authorized by all necessary
corporate
action on the part of the Sponsor the execution, delivery and
performance of this Agreement; and this Agreement, assuming the
due
authorization, execution and delivery hereof by the other
parties
hereto, constitutes a legal, valid and binding obligation of
the
Sponsor, enforceable against the Sponsor in accordance with its
terms,
except that (a) the enforceability hereof may be limited by
bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to
creditors' rights generally and (b) the remedy of specific
performance
and injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before which
any
proceeding therefor may be brought.
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(iii) The
execution and delivery of this Agreement by the
Sponsor, the sale of the Mortgage Loans by the Sponsor under
this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or
compliance
with the terms hereof are in the ordinary course of business of
the
Sponsor and will not (A) result in a material breach of any term
or
provision of the charter or by-laws of the Sponsor or (B)
materially
conflict with, result in a material breach, violation or
acceleration
of, or result in a material default under, the terms of any
other
material agreement or instrument to which the Sponsor is a party or
by
which it may be bound, or (C) constitute a material violation of
any
statute, order or regulation applicable to the Sponsor of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over the Sponsor; and the Sponsor is not in breach
or
violation of any material indenture or other material agreement
or
instrument, or in violation of any statute, order or regulation of
any
court, regulatory body, administrative agency or governmental
body
having jurisdiction
over it which breach or violation may materially
impair the Sponsor's ability to perform or meet any of its
obligations
under this Agreement.
(iv)
The Sponsor is an approved seller of conventional
mortgage loans for Fannie Mae or Freddie Mac and is a mortgagee
approved by the Secretary of Housing and Urban Development pursuant
to
sections 203 and 211 of the National Housing Act.
(v) No
litigation is pending or, to the best of the
Sponsor's knowledge, threatened, against the Sponsor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Sponsor to
sell
the Mortgage Loans or to perform any of its other obligations
under
this Agreement in accordance with the terms hereof.
(vi)
No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution,
delivery and performance by the Sponsor of, or compliance by
the
Sponsor with, this Agreement or the consummation of the
transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is required, the Sponsor has obtained the same.
(vii) With
respect to each Mortgage Loan as of the Closing
Date (unless otherwise expressly provided):
A. the
information set forth in the Mortgage Loan
Schedule hereto is true and correct in all material respects;
B. immediately
prior to the transfer to the
Depositor, the Sponsor was the sole owner of beneficial title
and
holder of each Mortgage and Mortgage Note relating to the
Mortgage
Loans and is conveying the same free and clear of any and all
liens, claims, encumbrances, participation interests, equities,
pledges, charges or security interests of any nature and the
Sponsor has full right and authority to sell or assign the same
pursuant to this Agreement;
C. each Mortgage
Loan at the time it was made
complied in all material respects with all applicable laws and
regulations, including, without limitation, usury, equal credit
opportunity, disclosure and recording laws and all applicable
predatory, abusive and fair lending laws; and each Mortgage
Loan
has been serviced in all material respects in accordance with
all
applicable laws and regulations, including, without limitation,
usury, equal credit opportunity, disclosure and recording laws
and
all applicable anti-predatory lending laws and the terms of the
related Mortgage Note, the Mortgage and other loan documents;
53
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D. there is no
monetary default existing under any
Mortgage or the related Mortgage Note and there is no material
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a
default, breach or event of acceleration; and neither the
Sponsor,
any of its affiliates nor any servicer of any related Mortgage
Loan has taken any action to waive any default, breach or event
of
acceleration; and no foreclosure action is threatened or has
been
commenced with respect to the Mortgage Loan;
E. the terms of
the Mortgage Note and the Mortgage
have not been impaired, waived, altered or modified in any
respect, except by written instruments which have been recorded
or
will be recorded, if necessary, (i) if required by law in the
jurisdiction where the Mortgaged Property is located, or (ii)
to
protect the interests of the Trustee on behalf of the
Certificateholders;
F. no selection
procedure reasonably believed by
the Sponsor to be adverse to the interests of the
Certificateholders was utilized in selecting the Mortgage
Loans;
G. each Mortgage
is a valid and enforceable first
on the property securing the related Mortgage Note and each
Mortgaged Property is owned by the Mortgagor in fee simple
(except
with respect to common areas in the case of condominiums, PUDs
and
de minimis PUDs) or by leasehold for a term longer than the
term
of the related Mortgage, subject only to (i) the lien of
current
real property taxes and assessments, (ii) covenants, conditions
and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage,
such
exceptions being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal obtained
in
connection with the origination of the related Mortgage Loan or
referred to in the lender's title insurance policy delivered to
the originator of the related Mortgage Loan and (iii) other
matters to which like properties are commonly subject which do
not
materially interfere with the benefits of the security intended
to
be provided by such Mortgage;
H. there is no
mechanics' lien or claim for work,
&nbs
