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EXHIBIT 4.1
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WELLS FARGO ASSET SECURITIES CORPORATION,
Depositor
WELLS FARGO BANK, N.A.,
Servicer
WELLS FARGO BANK, N.A.,
Securities Administrator
and
HSBC Bank USA, National Association,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of December 21, 2006
Home Equity Asset-Backed Certificates, Series 2006-3
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<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Defined
Terms.....................................................
Section 1.02
Accounting........................................................
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage
Loans......................................
Section 2.02 Acceptance by
Custodian...........................................
Section 2.03 Repurchase or Substitution of Mortgage Loans by
the
Depositor........................................................
Section 2.04 Representations and Warranties of the Depositor
with respect to the Mortgage
Loans...............................
Section 2.05 Representations, Warranties and Covenants of the
Servicer.........................................................
Section 2.06 Representations and Warranties of the
Depositor...................
Section 2.07 Issuance of Certificates and the REMIC Regular
Interests........................................................
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as
Servicer.......................................
Section 3.02 Collection of Mortgage Loan
Payments..............................
Section 3.03 Realization Upon Defaulted Mortgage
Loans.........................
Section 3.04 Collection Account, Distribution Account, Excess
Reserve Fund Account and Supplemental Interest
Trust
Account....................................................
Section 3.05 Permitted Withdrawals from the Collection
Account.................
Section 3.06 Establishment of Escrow Accounts; Deposits in
Escrow
Accounts..................................................
Section 3.07 Permitted Withdrawals From Escrow
Account.........................
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder; Primary Mortgage
Insurance...............
Section 3.09 Transfer of
Accounts..............................................
Section 3.10 Maintenance of Hazard
Insurance...................................
Section 3.11 Maintenance of Mortgage Impairment Insurance
Policy...............
Section 3.12 Fidelity Bond, Errors and Omissions
Insurance.....................
Section 3.13 Title, Management and Disposition of REO
Property.................
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements.......................................................
Section 3.15
Reserved..........................................................
Section 3.16 Optional Purchases of 60+ Day Delinquent
Loans....................
Section 3.17 Custodian to Cooperate; Release of
Files..........................
Section 3.18 Servicing
Compensation............................................
Section 3.19 Annual Statement as to
Compliance.................................
Section 3.20 Assessment of Servicing Compliance; Registered
Public Accounting Firm Attestation
Reports.......................
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage
Loans.....................................
Section 3.22 Obligations of the Servicer in Respect of
Compensating
Interest............................................
Section 3.23 Investment of Funds in the Collection Account and
the Distribution
Account.........................................
Section 3.24 Liability of Servicer;
Indemnification............................
Section 3.25 Reports of Foreclosure and Abandonment of
Mortgaged
Properties.......................................................
Section 3.26
Reserved..........................................................
Section 3.27 No Personal
Solicitation..........................................
Section 3.28 Exchange Act
Reports..............................................
Section 3.29 PMI Policy; Claims Under the PMI
Policy...........................
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest
Distributions............................................
Section 4.02 Distributions of Principal and Monthly Excess
Cashflow
Amounts.................................................
Section 4.03 Allocation of
Losses..............................................
Section 4.04 Method of
Distribution............................................
Section 4.05 Distributions on Book-Entry
Certificates..........................
Section 4.06
Statements........................................................
Section 4.07 Remittance Reports;
Advances......................................
Section 4.08 Tax Treatment of Cap Carryover Amounts, the
Supplemental Interest Trust and the Interest Rate
Swap
Agreement...................................................
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates..................................................
Section 5.02 Registration of Transfer and Exchange of
Certificates.....................................................
Section 5.03 Mutilated, Destroyed, Lost or Stolen
Certificates.................
Section 5.04 Persons Deemed
Owners.............................................
Section 5.05 Appointment of Paying
Agent.......................................
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Servicer and the
Depositor.......................
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the
Depositor....................
Section 6.03 Limitation on Liability of the Servicer and
Others................
Section 6.04 Servicer Not to
Resign............................................
Section 6.05 Delegation of
Duties..............................................
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of
Termination....................................
Section 7.02 Trustee to Act; Appointment of
Successor..........................
Section 7.03 Waiver of
Defaults................................................
Section 7.04 Notification to
Certificateholders................................
Section 7.05 Survival of Servicer
Liabilities..................................
ARTICLE VIII
THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 8.01 Duties of Trustee and Securities
Administrator....................
Section 8.02 Certain Matters Affecting the Trustee and the
Securities
Administrator.........................................
Section 8.03 Trustee and Securities Administrator Not Liable
for
Certificates or Mortgage
Loans...................................
Section 8.04 Trustee and Securities Administrator May Own
Certificates.....................................................
Section 8.05 Trustee and Securities Administrator Fees and
Expenses.........................................................
Section 8.06 Eligibility Requirements for Trustee and
Securities
Administrator....................................................
Section 8.07 Resignation or Removal of Trustee and Securities
Administrator....................................................
Section 8.08 Successor Trustee and Successor Securities
Administrator....................................................
Section 8.09 Merger or Consolidation of Trustee or Securities
Administrator....................................................
Section 8.10 Appointment of Co-Trustee or Separate
Trustee.....................
Section 8.11 Limitation of
Liability...........................................
Section 8.12 Trustee or Securities Administrator May Enforce
Claims Without Possession of
Certificates........................
Section 8.13 Suits for
Enforcement.............................................
Section 8.14 Waiver of Bond
Requirement........................................
Section 8.15 Waiver of Inventory, Accounting and Appraisal
Requirement......................................................
Section 8.16 Appointment of
Custodian..........................................
Section 8.17 Indemnification of the Securities Administrator
and
Depositor by the
Trustee.........................................
Section 8.18 Trustee Errors and Omissions
Policy...............................
Section 8.19 Securities Administrator Errors and Omissions
Policy...........................................................
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01 REMIC
Administration..............................................
Section 9.02 Prohibited Transactions and
Activities............................
Section 9.03 Indemnification with Respect to Certain Taxes and
Loss of REMIC
Status.............................................
Section 9.04
[Reserved]........................................................
Section 9.05 Grantor Trust
Administration......................................
ARTICLE X
TERMINATION
Section 10.01
Termination.......................................................
Section 10.02 Additional Termination
Requirements...............................
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01
Amendment.........................................................
Section 11.02 Recordation of Agreement;
Counterparts............................
Section 11.03 Limitation on Rights of
Certificateholders........................
Section 11.04 Governing Law;
Jurisdiction.......................................
Section 11.05
Notices...........................................................
Section 11.06 Severability of
Provisions........................................
Section 11.07 Article and Section
References....................................
Section 11.08 Notice to the Rating
Agencies.....................................
Section 11.09 Further
Assurances................................................
Section 11.10 Benefits of
Agreement.............................................
Section 11.11 Acts of
Certificateholders........................................
Section 11.12
Recharacterization................................................
Section 11.13 Regulation AB Compliance; Intent of Parties;
Reasonableness...................................................
<PAGE>
EXHIBITS:
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit A-3 Form of Class A-3 Certificates
Exhibit B-1 Form of Class M-1 Certificates
Exhibit B-2 Form of Class M-2 Certificates
Exhibit B-3 Form of Class M-3 Certificates
Exhibit B-4 Form of Class M-4 Certificates
Exhibit B-5 Form of Class M-5 Certificates
Exhibit B-6 Form of Class M-6 Certificates
Exhibit B-7 Form of Class B-1 Certificates
Exhibit B-8 Form of Class B-2 Certificates
Exhibit B-9 Form of Class B-3 Certificates
Exhibit B-10 Form of Class B-4 Certificates
Exhibit C-1 Form of Class CE Certificates
Exhibit C-2 Form of Class P Certificates
Exhibit C-3 Form of Class R Certificate
Exhibit D Addresses for Requesting Mortgage Loan Schedule
Exhibit E Form of Request for Release
Exhibit F-1 Form of Custodian's Initial Certification
Exhibit F-2 Form of Custodian's Final Certification
Exhibit G Form of Mortgage Loan Purchase Agreement
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation Letter
Exhibit J Form of Rule 144A Investment Letter
Exhibit K Form of Residual Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate for the B-4, Class CE,
Class P and Class R Certificates
Exhibit M PMI Policy
Exhibit N-1 Form of Interest Rate Swap Agreement
Exhibit N-2 Form of Interest Rate Cap Agreement
Exhibit O Form of Sarbanes-Oxley Certification
Exhibit P Form of Certification of the Securities Administrator
to be Provided to Servicer
Exhibit Q List of Recordation States
Exhibit R Form of Custodial Agreement
Exhibit S Servicing Criteria to be Addressed in Assessment of
Compliance
Exhibit T Additional Form 10-D Disclosure
Exhibit U Additional Form 10-K Disclosure
Exhibit V Form 8-K Disclosure Information
Exhibit W Additional Disclosure Notification
Exhibit W Additional Disclosure Notification
<PAGE>
This Pooling and Servicing Agreement is dated as of December
21,
2006 (the "Agreement"), among WELLS FARGO ASSET SECURITIES
CORPORATION, as
depositor (the "Depositor"), WELLS FARGO BANK, N.A., as servicer
(the
"Servicer"), WELLS FARGO BANK, N.A., as securities administrator
(the
"Securities Administrator"), and HSBC BANK USA, NATIONAL
ASSOCIATION, as trustee
(the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in
multiple Classes,
which in the aggregate will evidence the entire beneficial
ownership interest in
the Trust Fund created hereunder. The Certificates will consist of
sixteen
Classes of Certificates, designated as (i) the Class A-1, Class A-2
and Class
A-3 Certificates, (ii) the Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5
and Class M-6, (iii) the Class B-1, Class B-2, Class B-3 and Class
B-4
Certificates, (iv) the Class CE Certificates, (v) the Class P
Certificates and
(vi) the Class R Certificate.
The Trustee shall elect that five segregated asset pools within
the
Trust Fund (exclusive of (i) the Prepayment Penalties, the Servicer
Prepayment
Penalty Payment Amounts and the Originator Prepayment Penalty
Payment Amounts,
(ii) the Interest Rate Swap Agreement, (iii) the Interest Rate Cap
Agreement,
(iv) the Supplemental Interest Trust, (v) the Excess Reserve Fund
Account and
(vi) the right of the LIBOR Certificates to receive Cap Carryover
Amounts and
the obligation of the LIBOR Certificates to pay Class IO
Shortfalls) be treated
for federal income tax purposes as comprising five REMICs (each, a
"Trust REMIC"
or, in the alternative, "Pooling-Tier REMIC-1," "Pooling-Tier
REMIC-2,"
"Lower-Tier REMIC," "Upper-Tier REMIC" and "Class CE REMIC,"
respectively). The
Class CE Interest, Class IO Interest and each Class of LIBOR
Certificates (other
than (i) the right of each Class of LIBOR Certificates to receive
Cap Carryover
Amounts and the obligation to pay Class IO Shortfalls and (ii) the
right of the
Class CE Certificates to receive Net Swap Payments from the Swap
Provider and
Cap Payments from the Cap Provider, the obligation to pay Cap
Carryover Amounts
to Holders of the LIBOR Certificates and to pay Net Swap Payments
and Swap
Termination Payments to the Swap Provider, and the right to receive
Class IO
Shortfalls) represent ownership of one or more regular interests in
a REMIC for
purposes of the REMIC Provisions.
The Class R Certificate represents ownership of the sole class
of
residual interest in each of Pooling-Tier REMIC-1, Pooling-Tier
REMIC-2, the
Lower-Tier REMIC, the Upper-Tier REMIC and the Class CE REMIC for
purposes of
the REMIC Provisions.
The Start-up Day for each Trust REMIC is the Closing Date. The
latest possible maturity date for each regular interest is the
latest date
referenced in Section 9.01.
The Class CE REMIC shall hold as assets the Class UT-X Interest
and
the Class UT-IO Interest as set out below. The Upper-Tier REMIC
shall hold as
assets the several classes of uncertificated Lower-Tier Regular
Interests, set
out below. The Lower-Tier REMIC shall hold as assets the several
classes of
uncertificated Pooling-Tier REMIC-2 Regular Interests. Pooling-Tier
REMIC-2
shall hold as assets the several classes of uncertificated
Pooling-Tier REMIC-1
Regular Interests. Pooling-Tier REMIC-1 shall hold as assets the
assets of the
Trust Fund (exclusive of (i) the Prepayment Penalties, the Servicer
Prepayment
Penalty Payment Amounts and the Originator Prepayment Penalty
Payment Amounts,
(ii) the Interest Rate Swap Agreement, (iii) the Interest Rate Cap
Agreement,
(iv) the Supplemental Interest Trust, (v) the Excess Reserve Fund
Account, and
(vi) the right of the LIBOR Certificates to receive Cap Carryover
Amounts and
the obligation of the LIBOR Certificates to pay Class IO
Shortfalls).
For federal income tax purposes, each Class of LIBOR
Certificates,
the Class CE Certificates and the Class P Certificates represent
beneficial
ownership of portions of the Trust Fund which shall be treated as a
grantor
trust in accordance with Section 9.05.
Pooling-Tier REMIC-1
Pooling-Tier REMIC-1 shall issue the following interests in
Pooling-Tier REMIC-1, and each such interest is hereby designated
as a regular
interest in the Pooling-Tier REMIC-1. The Class PT1-R Interest is
hereby
designated as the sole class of residual interest in Pooling-Tier
REMIC-1. The
Class PT1-R Interest shall have no principal balance and no
interest rate.
Pooling-Tier REMIC-1 Pooling-Tier REMIC-1 Initial Pooling-Tier
Regular Interest Interest Rate REMIC-1 Principal Amount
Class PT1-1 (1) $56,550,677.00
Class PT1-2A (2) $4,009,769.75
Class PT1-2B (3) $4,009,769.75
Class PT1-3A (2) $11,605,231.54
Class PT1-3B (3) $11,605,231.54
Class PT1-4A (2) $11,975,124.84
Class PT1-4B (3) $11,975,124.84
Class PT1-5A (2) $12,306,905.76
Class PT1-5B (3) $12,306,905.76
Class PT1-6A (2) $12,599,223.48
Class PT1-6B (3) $12,599,223.48
Class PT1-7A (2) $12,850,865.45
Class PT1-7B (3) $12,850,865.45
Class PT1-8A (2) $13,060,998.13
Class PT1-8B (3) $13,060,998.13
Class PT1-9A (2) $13,228,936.29
Class PT1-9B (3) $13,228,936.29
Class PT1-10A (2) $13,353,993.15
Class PT1-10B (3) $13,353,993.15
Class PT1-11A (2) $13,436,169.57
Class PT1-11B (3) $13,436,169.57
Class PT1-12A (2) $13,474,527.18
Class PT1-12B (3) $13,474,527.18
Class PT1-13A (2) $13,470,317.13
Class PT1-13B (3) $13,470,317.13
Class PT1-14A (2) $13,419,103.29
Class PT1-14B (3) $13,419,103.29
Class PT1-15A (2) $13,217,040.62
Class PT1-15B (3) $13,217,040.62
Class PT1-16A (2) $12,972,765.30
Class PT1-16B (3) $12,972,765.30
Class PT1-17A (2) $12,705,710.51
Class PT1-17B (3) $12,705,710.51
Class PT1-18A (2) $12,417,267.88
Class PT1-18B (3) $12,417,267.88
Class PT1-19A (2) $12,112,722.64
Class PT1-19B (3) $12,112,722.64
Class PT1-20A (2) $11,451,242.14
Class PT1-20B (3) $11,451,242.14
Class PT1-21A (2) $10,787,794.84
Class PT1-21B (3) $10,787,794.84
Class PT1-22A (2) $10,148,448.18
Class PT1-22B (3) $10,148,448.18
Class PT1-23A (2) $9,547,812.35
Class PT1-23B (3) $9,547,812.35
Class PT1-24A (2) $8,964,273.04
Class PT1-24B (3) $8,964,273.04
Class PT1-25A (2) $8,436,190.39
Class PT1-25B (3) $8,436,190.39
Class PT1-26A (2) $7,939,825.35
Class PT1-26B (3) $7,939,825.35
Class PT1-27A (2) $7,473,221.43
Class PT1-27B (3) $7,473,221.43
Class PT1-28A (2) $7,082,733.16
Class PT1-28B (3) $7,082,733.16
Class PT1-29A (2) $15,226,250.07
Class PT1-29B (3) $15,226,250.07
Class PT1-30A (2) $14,118,528.26
Class PT1-30B (3) $14,118,528.26
Class PT1-31A (2) $11,804,552.10
Class PT1-31B (3) $11,804,552.10
Class PT1-32A (2) $9,887,963.80
Class PT1-32B (3) $9,887,963.80
Class PT1-33A (2) $8,299,552.31
Class PT1-33B (3) $8,299,552.31
Class PT1-34A (2) $6,982,245.66
Class PT1-34B (3) $6,982,245.66
Class PT1-35A (2) $5,889,084.49
Class PT1-35B (3) $5,889,084.49
Class PT1-36A (2) $4,984,049.50
Class PT1-36B (3) $4,984,049.50
Class PT1-37A (2) $4,232,528.74
Class PT1-37B (3) $4,232,528.74
Class PT1-38A (2) $3,605,708.36
Class PT1-38B (3) $3,605,708.36
Class PT1-39A (2) $2,841,489.27
Class PT1-39B (3) $2,841,489.27
Class PT1-40A (2) $2,289,499.03
Class PT1-40B (3) $2,289,499.03
Class PT1-41A (2) $1,906,815.31
Class PT1-41B (3) $1,906,815.31
Class PT1-42A (2) $1,626,847.83
Class PT1-42B (3) $1,626,847.83
Class PT1-43A (2) $1,413,758.15
Class PT1-43B (3) $1,413,758.15
Class PT1-44A (2) $1,246,331.40
Class PT1-44B (3) $1,246,331.40
Class PT1-45A (2) $1,111,323.18
Class PT1-45B (3) $1,111,323.18
Class PT1-46A (2) $1,000,221.26
Class PT1-46B (3) $1,000,221.26
Class PT1-47A (2) $937,202.20
Class PT1-47B (3) $937,202.20
Class PT1-48A (2) $884,052.37
Class PT1-48B (3) $884,052.37
Class PT1-49A (2) $15,663,783.39
Class PT1-49B (3) $15,663,783.39
----------
(1) For any Distribution Date (and the related Interest Accrual
Period), this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per
annum
rate (such rate, the "Pooling-Tier REMIC-1 Interest Rate" for such
Class)
equal to the Pooling-Tier REMIC-1 WAC Rate.
(2) For any Distribution Date (and the related Interest Accrual
Period) this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per
annum
rate (such rate, the "Pooling-Tier REMIC-1 Interest Rate" for such
Class)
equal to the product of (i) 2 and (ii) the Pooling-Tier REMIC-1 WAC
Rate,
subject to a maximum rate equal to the PT1 Cap.
(3) For any Distribution Date (and the related Interest Accrual
Period) this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per
annum
rate (such rate, the "Pooling-Tier REMIC-1 Interest Rate" for such
Class)
equal to the excess, if any, of (A) the product of (i) 2 and (ii)
the
Pooling-Tier REMIC-1 WAC Rate over (B) the PT1 Cap.
On each Distribution Date, the Securities Administrator shall
first
pay from the Trust Fund and charge as an expense of Pooling-Tier
REMIC-1 all
expenses of the Trust for such Distribution Date. Such expenses,
other than any
Servicing Fee and Insurer Fee, shall be allocated in the same
manner as Realized
Losses.
On each Distribution Date, the interest distributable in respect
of
the Mortgage Loans for such Distribution Date shall be deemed to be
distributed
to the Pooling-Tier REMIC-1 Regular Interests at the rates shown
above.
On each Distribution Date, Realized Losses, Subsequent
Recoveries
and payments of principal in respect of the Mortgage Loans shall be
allocated to
the outstanding Pooling-Tier REMIC-1 Regular Interest with the
lowest numerical
denomination until the Pooling-Tier REMIC-1 Principal Amount of
such interest or
interests, as the case may be, is reduced to zero, provided that,
with respect
to Pooling-Tier REMIC-1 Regular Interests with the same numerical
denomination,
such Realized Losses, Subsequent Recoveries and payments of
principal shall be
allocated pro rata between such Pooling-Tier REMIC-1 Regular
Interests.
Pooling-Tier REMIC-2
Pooling-Tier REMIC-2 shall issue the following interests in
Pooling-Tier REMIC-2, and each such interest, other than the Class
PT2-R
Interest, is hereby designated as a regular interest in
Pooling-Tier REMIC-2.
The Class PT2-R Interest is hereby designated as the sole class of
residual
interest in Pooling-Tier REMIC-2 and shall be represented by the
Class R
Certificate. The Class PT2-R Interest shall have no principal
balance and no
interest rate.
<TABLE>
<CAPTION>
Corresponding
Pooling-Tier Initial Pooling-Tier Corresponding Pooling-Tier
Corresponding
Pooling-Tier REMIC-2 REMIC-2 REMIC-2 Principal Pooling-Tier REMIC-2
REMIC-1 Regular Scheduled Crossover
Regular Interest Interest Rate Amount IO Interest Interest
Distribution Date
----------------------- ------------- --------------------
-------------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Class PT2-1 (1) $56,550,677.00 N/A N/A N/A
Class PT2-2A (2) $4,009,769.75 Class PT2-IO-2 N/A N/A
Class PT2-2B (3) $4,009,769.75 N/A N/A N/A
Class PT2-3A (2) $11,605,231.54 Class PT2-IO-3 N/A N/A
Class PT2-3B (3) $11,605,231.54 N/A N/A N/A
Class PT2-4A (2) $11,975,124.84 Class PT2-IO-4 N/A N/A
Class PT2-4B (3) $11,975,124.84 N/A N/A N/A
Class PT2-5A (2) $12,306,905.76 Class PT2-IO-5 N/A N/A
Class PT2-5B (3) $12,306,905.76 N/A N/A N/A
Class PT2-6A (2) $12,599,223.48 Class PT2-IO-6 N/A N/A
Class PT2-6B (3) $12,599,223.48 N/A N/A N/A
Class PT2-7A (2) $12,850,865.45 Class PT2-IO-7 N/A N/A
Class PT2-7B (3) $12,850,865.45 N/A N/A N/A
Class PT2-8A (2) $13,060,998.13 Class PT2-IO-8 N/A N/A
Class PT2-8B (3) $13,060,998.13 N/A N/A N/A
Class PT2-9A (2) $13,228,936.29 Class PT2-IO-9 N/A N/A
Class PT2-9B (3) $13,228,936.29 N/A N/A N/A
Class PT2-10A (2) $13,353,993.15 Class PT2-IO-10 N/A N/A
Class PT2-10B (3) $13,353,993.15 N/A N/A N/A
Class PT2-11A (2) $13,436,169.57 Class PT2-IO-11 N/A N/A
Class PT2-11B (3) $13,436,169.57 N/A N/A N/A
Class PT2-12A (2) $13,474,527.18 Class PT2-IO-12 N/A N/A
Class PT2-12B (3) $13,474,527.18 N/A N/A N/A
Class PT2-13A (2) $13,470,317.13 Class PT2-IO-13 N/A N/A
Class PT2-13B (3) $13,470,317.13 N/A N/A N/A
Class PT2-14A (2) $13,419,103.29 Class PT2-IO-14 N/A N/A
Class PT2-14B (3) $13,419,103.29 N/A N/A N/A
Class PT2-15A (2) $13,217,040.62 Class PT2-IO-15 N/A N/A
Class PT2-15B (3) $13,217,040.62 N/A N/A N/A
Class PT2-16A (2) $12,972,765.30 Class PT2-IO-16 N/A N/A
Class PT2-16B (3) $12,972,765.30 N/A N/A N/A
Class PT2-17A (2) $12,705,710.51 Class PT2-IO-17 N/A N/A
Class PT2-17B (3) $12,705,710.51 N/A N/A N/A
Class PT2-18A (2) $12,417,267.88 Class PT2-IO-18 N/A N/A
Class PT2-18B (3) $12,417,267.88 N/A N/A N/A
Class PT2-19A (2) $12,112,722.64 Class PT2-IO-19 N/A N/A
Class PT2-19B (3) $12,112,722.64 N/A N/A N/A
Class PT2-20A (2) $11,451,242.14 Class PT2-IO-20 N/A N/A
Class PT2-20B (3) $11,451,242.14 N/A N/A N/A
Class PT2-21A (2) $10,787,794.84 Class PT2-IO-21 N/A N/A
Class PT2-21B (3) $10,787,794.84 N/A N/A N/A
Class PT2-22A (2) $10,148,448.18 Class PT2-IO-22 N/A N/A
Class PT2-22B (3) $10,148,448.18 N/A N/A N/A
Class PT2-23A (2) $9,547,812.35 Class PT2-IO-23 N/A N/A
Class PT2-23B (3) $9,547,812.35 N/A N/A N/A
Class PT2-24A (2) $8,964,273.04 Class PT2-IO-24 N/A N/A
Class PT2-24B (3) $8,964,273.04 N/A N/A N/A
Class PT2-25A (2) $8,436,190.39 Class PT2-IO-25 N/A N/A
Class PT2-25B (3) $8,436,190.39 N/A N/A N/A
Class PT2-26A (2) $7,939,825.35 Class PT2-IO-26 N/A N/A
Class PT2-26B (3) $7,939,825.35 N/A N/A N/A
Class PT2-27A (2) $7,473,221.43 Class PT2-IO-27 N/A N/A
Class PT2-27B (3) $7,473,221.43 N/A N/A N/A
Class PT2-28A (2) $7,082,733.16 Class PT2-IO-28 N/A N/A
Class PT2-28B (3) $7,082,733.16 N/A N/A N/A
Class PT2-29A (2) $15,226,250.07 Class PT2-IO-29 N/A N/A
Class PT2-29B (3) $15,226,250.07 N/A N/A N/A
Class PT2-30A (2) $14,118,528.26 Class PT2-IO-30 N/A N/A
Class PT2-30B (3) $14,118,528.26 N/A N/A N/A
Class PT2-31A (2) $11,804,552.10 Class PT2-IO-31 N/A N/A
Class PT2-31B (3) $11,804,552.10 N/A N/A N/A
Class PT2-32A (2) $9,887,963.80 Class PT2-IO-32 N/A N/A
Class PT2-32B (3) $9,887,963.80 N/A N/A N/A
Class PT2-33A (2) $8,299,552.31 Class PT2-IO-33 N/A N/A
Class PT2-33B (3) $8,299,552.31 N/A N/A N/A
Class PT2-34A (2) $6,982,245.66 Class PT2-IO-34 N/A N/A
Class PT2-34B (3) $6,982,245.66 N/A N/A N/A
Class PT2-35A (2) $5,889,084.49 Class PT2-IO-35 N/A N/A
Class PT2-35B (3) $5,889,084.49 N/A N/A N/A
Class PT2-36A (2) $4,984,049.50 Class PT2-IO-36 N/A N/A
Class PT2-36B (3) $4,984,049.50 N/A N/A N/A
Class PT2-37A (2) $4,232,528.74 Class PT2-IO-37 N/A N/A
Class PT2-37B (3) $4,232,528.74 N/A N/A N/A
Class PT2-38A (2) $3,605,708.36 Class PT2-IO-38 N/A N/A
Class PT2-38B (3) $3,605,708.36 N/A N/A N/A
Class PT2-39A (2) $2,841,489.27 Class PT2-IO-39 N/A N/A
Class PT2-39B (3) $2,841,489.27 N/A N/A N/A
Class PT2-40A (2) $2,289,499.03 Class PT2-IO-40 N/A N/A
Class PT2-40B (3) $2,289,499.03 N/A N/A N/A
Class PT2-41A (2) $1,906,815.31 Class PT2-IO-41 N/A N/A
Class PT2-41B (3) $1,906,815.31 N/A N/A N/A
Class PT2-42A (2) $1,626,847.83 Class PT2-IO-42 N/A N/A
Class PT2-42B (3) $1,626,847.83 N/A N/A N/A
Class PT2-43A (2) $1,413,758.15 Class PT2-IO-43 N/A N/A
Class PT2-43B (3) $1,413,758.15 N/A N/A N/A
Class PT2-44A (2) $1,246,331.40 Class PT2-IO-44 N/A N/A
Class PT2-44B (3) $1,246,331.40 N/A N/A N/A
Class PT2-45A (2) $1,111,323.18 Class PT2-IO-45 N/A N/A
Class PT2-45B (3) $1,111,323.18 N/A N/A N/A
Class PT2-46A (2) $1,000,221.26 Class PT2-IO-46 N/A N/A
Class PT2-46B (3) $1,000,221.26 N/A N/A N/A
Class PT2-47A (2) $937,202.20 Class PT2-IO-47 N/A N/A
Class PT2-47B (3) $937,202.20 N/A N/A N/A
Class PT2-48A (2) $884,052.37 Class PT2-IO-48 N/A N/A
Class PT2-48B (3) $884,052.37 N/A N/A N/A
Class PT2-49A (2) $15,663,783.39 Class PT2-IO-49 N/A N/A
Class PT2-49B (3) $15,663,783.39 N/A N/A N/A
Class PT2-IO-2 (4) (4) N/A Class PT1-2A January 2007
Class PT2-IO-3 (4) (4) N/A Class PT1-3A February 2007
Class PT2-IO-4 (4) (4) N/A Class PT1-4A March 2007
Class PT2-IO-5 (4) (4) N/A Class PT1-5A April 2007
Class PT2-IO-6 (4) (4) N/A Class PT1-6A May 2007
Class PT2-IO-7 (4) (4) N/A Class PT1-7A June 2007
Class PT2-IO-8 (4) (4) N/A Class PT1-8A July 2007
Class PT2-IO-9 (4) (4) N/A Class PT1-9A August 2007
Class PT2-IO-10 (4) (4) N/A Class PT1-10A September 2007
Class PT2-IO-11 (4) (4) N/A Class PT1-11A October 2007
Class PT2-IO-12 (4) (4) N/A Class PT1-12A November 2007
Class PT2-IO-13 (4) (4) N/A Class PT1-13A December 2007
Class PT2-IO-14 (4) (4) N/A Class PT1-14A January 2008
Class PT2-IO-15 (4) (4) N/A Class PT1-15A February 2008
Class PT2-IO-16 (4) (4) N/A Class PT1-16A March 2008
Class PT2-IO-17 (4) (4) N/A Class PT1-17A April 2008
Class PT2-IO-18 (4) (4) N/A Class PT1-18A May 2008
Class PT2-IO-19 (4) (4) N/A Class PT1-19A June 2008
Class PT2-IO-20 (4) (4) N/A Class PT1-20A July 2008
Class PT2-IO-21 (4) (4) N/A Class PT1-21A August 2008
Class PT2-IO-22 (4) (4) N/A Class PT1-22A September 2008
Class PT2-IO-23 (4) (4) N/A Class PT1-23A October 2008
Class PT2-IO-24 (4) (4) N/A Class PT1-24A November 2008
Class PT2-IO-25 (4) (4) N/A Class PT1-25A December 2008
Class PT2-IO-26 (4) (4) N/A Class PT1-26A January 2009
Class PT2-IO-27 (4) (4) N/A Class PT1-27A February 2009
Class PT2-IO-28 (4) (4) N/A Class PT1-28A March 2009
Class PT2-IO-29 (4) (4) N/A Class PT1-29A April 2009
Class PT2-IO-30 (4) (4) N/A Class PT1-30A May 2009
Class PT2-IO-31 (4) (4) N/A Class PT1-31A June 2009
Class PT2-IO-32 (4) (4) N/A Class PT1-32A July 2009
Class PT2-IO-33 (4) (4) N/A Class PT1-33A August 2009
Class PT2-IO-34 (4) (4) N/A Class PT1-34A September 2009
Class PT2-IO-35 (4) (4) N/A Class PT1-35A October 2009
Class PT2-IO-36 (4) (4) N/A Class PT1-36A November 2009
Class PT2-IO-37 (4) (4) N/A Class PT1-37A December 2009
Class PT2-IO-38 (4) (4) N/A Class PT1-38A January 2010
Class PT2-IO-39 (4) (4) N/A Class PT1-39A February 2010
Class PT2-IO-40 (4) (4) N/A Class PT1-40A March 2010
Class PT2-IO-41 (4) (4) N/A Class PT1-41A April 2010
Class PT2-IO-42 (4) (4) N/A Class PT1-42A May 2010
Class PT2-IO-43 (4) (4) N/A Class PT1-43A June 2010
Class PT2-IO-44 (4) (4) N/A Class PT1-44A July 2010
Class PT2-IO-45 (4) (4) N/A Class PT1-45A August 2010
Class PT2-IO-46 (4) (4) N/A Class PT1-46A September 2010
Class PT2-IO-47 (4) (4) N/A Class PT1-47A October 2010
Class PT2-IO-48 (4) (4) N/A Class PT1-48A November 2010
Class PT2-IO-49 (4) (4) N/A Class PT1-49A December 2010
</TABLE>
---------
(1) For any Distribution Date (and the related Interest Accrual
Period), this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate (such rate, the "Pooling-Tier REMIC-2 Interest Rate" for such
Class)
equal to the Pooling-Tier REMIC-1 WAC Rate.
(2) For any Distribution Date (and the related Interest Accrual
Period) this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate (such rate, the "Pooling-Tier REMIC-2 Interest Rate" for such
Class)
equal to the weighted average of the Pooling-Tier REMIC-1 Interest
Rates
on the Pooling-Tier REMIC-1 Regular Interests having an "A" in
their class
designation, provided that, on each Distribution Date on which
interest is
distributable on the Corresponding Pooling-Tier REMIC-2 IO
Interest, this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate equal to Swap LIBOR subject to a maximum rate equal to the
weighted
average of the Pooling-Tier REMIC-1 Interest Rates on the
Pooling-Tier
REMIC-1 Regular Interests having an "A" in their class
designation.
(3) For any Distribution Date (and the related Interest Accrual
Period) this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per
annum
rate (such rate, the "Pooling-Tier REMIC-2 Interest Rate" for such
Class)
equal to the weighted average of the Pooling-Tier REMIC-1 Interest
Rates
on the Pooling-Tier REMIC-1 Regular Interests having a "B" in their
class
designation.
(4) Each Pooling-Tier REMIC-2 IO Interest is an interest-only
interest and
does not have a principal balance. From the Closing Date through
and
including the Corresponding Scheduled Crossover Distribution Date,
each
Pooling-Tier REMIC-2 IO Interest shall be entitled to receive
interest
that accrues on the Corresponding Pooling-Tier REMIC-1 Regular
Interest at
a rate equal to the excess, if any, of (i) the Pooling-Tier
REMIC-1
Interest Rate for the Corresponding Pooling-Tier REMIC-1 Regular
Interest
over (ii) Swap LIBOR. After the Corresponding Scheduled
Crossover
Distribution Date, the Pooling-Tier REMIC-2 IO Interest shall not
accrue
interest.
On each Distribution Date, the interest distributable in respect
of
the Mortgage Loans for such Distribution Date shall be distributed
to the
Pooling-Tier REMIC-2 Regular Interests at the Pooling-Tier REMIC-2
Interest
Rates shown above.
On each Distribution Date, Realized Losses, Subsequent
Recoveries
and payments of principal in respect of the Mortgage Loans shall be
allocated to
the outstanding Pooling-Tier REMIC-2 Regular Interests (other than
the
Pooling-Tier REMIC-2 IO Interests) with the lowest numerical
denomination until
the Pooling-Tier REMIC-2 Principal Amount of such interest or
interests, as the
case may be, is reduced to zero, provided however that, for
Pooling-Tier REMIC-2
Regular Interests with the same numerical denomination, such
Realized Losses,
Subsequent Recoveries and payments of principal shall be allocated
pro rata
between such Pooling-Tier REMIC-2 Regular Interests.
Lower-Tier REMIC
The Lower-Tier REMIC shall issue the following interests, and
each
such interest, other than the Class LT-R Interest, is hereby
designated as a
regular interest in the Lower-Tier REMIC. The Class LT-R Interest
is hereby
designated as the sole class of residual interest in the Lower-Tier
REMIC and
shall be represented by the Class R Certificate. The Class LT-R
Interest shall
have no principal balance and no interest rate.
<TABLE>
<CAPTION>
Corresponding
Upper-Tier REMIC
Lower-Tier Regular Interest Lower-Tier Interest Rate Initial
Lower-Tier Principal Amount Regular Interest
--------------------------- ------------------------
----------------------------------- ----------------
<S> <C> <C> <C>
Class LT-A-1 (1) 1/2 Principal Balance of Corresponding A-1
Upper-Tier REMIC Regular Interest
Class LT-A-2 (1) 1/2 Principal Balance of Corresponding A-2
Upper-Tier REMIC Regular Interest
Class LT-A-3 (1) 1/2 Principal Balance of Corresponding A-3
Upper-Tier REMIC Regular Interest
Class LT-M-1 (1) 1/2 Principal Balance of Corresponding M-1
Upper-Tier REMIC Regular Interest
Class LT-M-2 (1) 1/2 Principal Balance of Corresponding M-2
Upper-Tier REMIC Regular Interest
Class LT-M-3 (1) 1/2 Principal Balance of Corresponding M-3
Upper-Tier REMIC Regular Interest
Class LT-M-4 (1) 1/2 Principal Balance of Corresponding M-4
Upper-Tier REMIC Regular Interest
Class LT-M-5 (1) 1/2 Principal Balance of Corresponding M-5
Upper-Tier REMIC Regular Interest
Class LT-M-6 (1) 1/2 Principal Balance of Corresponding M-6
Upper-Tier REMIC Regular Interest
Class LT-B-1 (1) 1/2 Principal Balance of Corresponding B-1
Upper-Tier REMIC Regular Interest
Class LT-B-2 (1) 1/2 Principal Balance of Corresponding B-2
Upper-Tier REMIC Regular Interest
Class LT-B-3 (1) 1/2 Principal Balance of Corresponding B-3
Upper-Tier REMIC Regular Interest
Class LT-B-4 (1) 1/2 Principal Balance of Corresponding B-4
Upper-Tier REMIC Regular Interest
Class LT-Accrual (1) 1/2 Pool Balance plus 1/2 N/A
Overcollateralization Amount
Class LT-IO (2) (2) N/A
</TABLE>
----------
(1) The interest rate with respect to any Distribution Date for
these
interests is a per annum variable rate equal to the weighted
average of
the Pooling-Tier REMIC-2 Interest Rates of the Pooling-Tier
REMIC-2
Regular Interests (other than the Pooling-Tier REMIC-2 IO
Interests).
(2) This Lower-Tier Regular Interest is an interest-only interest
and does not
have a Lower-Tier Principal Amount. On each Distribution Date,
this
Lower-Tier Regular Interest shall be entitled to receive all
interest
distributable on the Pooling-Tier REMIC-2 IO Interests.
Each Lower-Tier Regular Interest is hereby designated as a
regular
interest in the Lower-Tier REMIC. The Class LT-A-1, Class LT-A-2,
Class LT-A-3,
Class LT-M-1, Class LT-M-2, Class LT-M-3, Class LT-M-4, Class
LT-M-5, Class
LT-M-6, Class LT-B-1, Class LT-B-2, Class LT-B-3 and Class LT-B-4
Interests are
hereby designated the LT-Accretion Directed Classes (the
"LT-Accretion Directed
Classes").
On each Distribution Date, 50% of the increase in the
Overcollateralization Amount shall be payable as a reduction of the
Lower-Tier
Principal Amount of the LT-Accretion Directed Classes (each such
Class will be
reduced by an amount equal to 50% of any increase in the
Overcollateralization
Amount that is attributable to a reduction in the Principal Balance
of its
Corresponding Class) and shall be accrued and added to the
Lower-Tier Principal
Amount of the Class LT-Accrual Interest. On each Distribution Date,
the increase
in the Lower-Tier Principal Amount of the Class LT-Accrual Interest
shall not
exceed interest accruals for such Distribution Date for the Class
LT-Accrual
Interest. In the event that: (i) 50% of the increase in the
Overcollateralization Amount exceeds (ii) interest accruals on the
Class
LT-Accrual Interest for such Distribution Date, the excess for such
Distribution
Date (accumulated with all such excesses for all prior Distribution
Dates) will
be added to any increase in the Overcollateralization Amount for
purposes of
determining the amount of interest accrual on the Class LT-Accrual
Interest
payable as principal on the LT-Accretion Directed Classes on the
next
Distribution Date pursuant to the first sentence of this paragraph.
All payments
of scheduled principal and prepayments of principal generated by
the Mortgage
Loans and all Subsequent Recoveries allocable to principal shall be
allocated
(i) 50% to the Class LT-Accrual Interest and (ii) 50% to the
LT-Accretion
Directed Classes (such principal payments and Subsequent Recoveries
shall be
allocated among such LT-Accretion Directed Classes in an amount
equal to 50% of
the principal amounts and Subsequent Recoveries allocated to their
respective
Corresponding Classes), until paid in full. Notwithstanding the
above, principal
payments allocated to the Class UT-X Interest that result in the
reduction in
the Overcollateralization Amount shall be allocated to the Class
LT-Accrual
Interest (until paid in full). Realized Losses shall be applied so
that after
all distributions have been made on each Distribution Date (i) the
Lower-Tier
Principal Amount of each of the LT-Accretion Directed Classes is
equal to 50% of
the Principal Balance of their Corresponding Class, and (ii) the
Class
LT-Accrual Interest is equal to 50% of the Pool Balance plus 50% of
the
Overcollateralization Amount. Any increase in the Principal Balance
of a Class
of LIBOR Certificates as a result of a Subsequent Recovery shall
increase the
Lower-Tier Principal Amount of the Corresponding Lower-Tier Regular
Interest by
50% of such increase, and the remaining 50% of such increase shall
increase the
Lower-Tier Principal Amount of the Class LT-Accrual Interest.
Upper-Tier REMIC
The Upper-Tier REMIC shall issue the following interests, and
each
such interest, other than the Class UT-R Interest, is hereby
designated as a
regular interest in the Upper-Tier REMIC. The Class UT-R Interest
is hereby
designated as the sole class of residual interests in the
Upper-Tier REMIC and
shall be represented by the Class R Certificate. The Class UT-R
Interest shall
have no principal balance and no interest rate.
<TABLE>
<CAPTION>
Upper-Tier REMIC Initial Principal Corresponding Class
Regular Interest Upper-Tier Interest Rate Upper-Tier Amount of
Certificates
---------------- ------------------------ -----------------
-------------------
<S> <C> <C> <C>
Class A-1 (1) $338,723,000.00 Class A-1
Class A-2 (1) $309,822,000.00 Class A-2
Class A-3 (1) $20,730,000.00 Class A-3
Class M-1 (1) $51,550,000.00 Class M-1
Class M-2 (1) $43,478,000.00 Class M-2
Class M-3 (1) $14,351,000.00 Class M-3
Class M-4 (1) $17,034,000.00 Class M-4
Class M-5 (1) $15,690,000.00 Class M-5
Class M-6 (1) $10,759,000.00 Class M-6
Class B-1 (1) $9,862,000.00 Class B-1
Class B-2 (1) $8,517,000.00 Class B-2
Class B-3 (1) $12,552,000.00 Class B-3
Class B-4 (1) $13,897,000.00 Class B-4
Class UT-IO (2) (2) N/A
Class UT-X (3) (3) N/A
</TABLE>
----------
(1) For any Distribution Date (and the related Interest Accrual
Period), this
interest shall bear interest at the lesser of (i) the Pass-Through
Rate
(determined without regard to the Pool Cap) for the Corresponding
Class of
Certificates, and (ii) the Upper-Tier REMIC WAC Rate.
(2) This interest is an interest-only interest and does not have a
principal
balance. On each Distribution Date, the Class UT-IO Interest shall
be
entitled to receive all interest distributable on the Class
LT-IO
Interest.
(3) The Class UT-X Interest has an initial principal balance of
$29,585,677.00
but will not accrue interest on such balance but will accrue
interest on a
notional amount. As of any Distribution Date, the Class UT-X
Interest
shall have a notional amount equal to the aggregate of the
Lower-Tier
Principal Amounts of the Lower-Tier Regular Interests (other than
the
Class LT-IO Interest) as of the first day of the related Interest
Accrual
Period. With respect to any Interest Accrual Period, the Class
UT-X
Interest shall bear interest at a rate equal to the excess, if any,
of the
Upper-Tier REMIC WAC Rate over the product of (i) 2 and (ii) the
weighted
average of the Lower-Tier Interest Rates of the Lower-Tier REMIC
Interests
(other than the Class LT-IO Interest), where the Lower-Tier
Interest Rate
on the Class LT-Accrual Interest is subject to a cap equal to zero
and
each LT-Accretion Directed Class is subject to a cap equal to
the
Upper-Tier Interest Rate on its Corresponding Class of Upper-Tier
Regular
Interest. With respect to any Distribution Date, interest that so
accrues
on the notional amount of the Class UT-X Interest shall be deferred
in an
amount equal to any increase in the Overcollateralization Amount on
such
Distribution Date. Such deferred interest shall not itself bear
interest.
On each Distribution Date, interest distributable in respect of
the
Lower-Tier Interests for such Distribution Date shall be deemed to
be
distributed on the interests in the Upper-Tier REMIC at the rates
shown above,
provided that the Class UT-IO Interest shall be entitled to receive
interest
before any other interest in the Upper-Tier REMIC.
On each Distribution Date, all Realized Losses, Subsequent
Recoveries and all payments of principal shall be allocated to the
Upper-Tier
Interests until the outstanding principal balance of each such
interest equals
the outstanding Principal Balance of the Corresponding Class of
Certificates as
of such Distribution Date.
Class CE REMIC
The Class CE REMIC shall issue the following classes of
interests.
The Class CE Interest and the Class IO Interest shall each
represent a regular
interest in the Class CE REMIC and the Class R Certificate shall
represent the
sole class of residual interest in the Class CE REMIC.
Class CE Interest Class CE REMIC
REMIC Designation Rate Principal Amount
------------------- -------- ----------------
Class CE Interest (1) (1)
Class IO Interest (2) (2)
Class R-CE Interest (3) (3)
----------
(1) The Class CE Interest has an initial principal balance equal to
the
initial principal balance of the Class UT-X Interest and is
entitled to
100% of the interest and principal on the Class UT-X Interest on
each
Distribution Date.
(2) This interest is an interest-only interest and does not have a
principal
balance. On each Distribution Date the Class IO Interest shall be
entitled
to receive 100% of the interest distributable on the Class UT-IO
Interest.
(3) The Class R-CE Interest does not have a principal balance or an
interest
rate.
<PAGE>
Certificates
The following table sets forth (or describes) the Class
designation,
Original Principal Balance, the Pass-Through Rate and the Final
Scheduled
Distribution Date for each Class of Certificates comprising the
interests in the
Trust Fund created hereunder:
<TABLE>
<CAPTION>
============================ ==========================
=========================== =============================
Original Principal Pass-Through Final Scheduled
Class Balance Rate Distribution Date*
---------------------------- --------------------------
--------------------------- -----------------------------
<S> <C> <C> <C>
A-1 $338,723,000.00 (1) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
A-2 $309,822,000.00 (2) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
A-3 $20,730,000.00 (3) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
M-1 $51,550,000.00 (4) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
M-2 $43,478,000.00 (5) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
M-3 $14,351,000.00 (6) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
M-4 $17,034,000.00 (7) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
M-5 $15,690,000.00 (8) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
M-6 $10,759,000.00 (9) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
B-1 $9,862,000.00 (10) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
B-2 $8,517,000.00 (11) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
B-3 $12,552,000.00 (12) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
B-4 $13,897,000.00 (13) January 25, 2037
---------------------------- --------------------------
--------------------------- -----------------------------
CE (14) (14) N/A
---------------------------- --------------------------
--------------------------- -----------------------------
P N/A N/A N/A
---------------------------- --------------------------
--------------------------- -----------------------------
R N/A N/A N/A
---------------------------- --------------------------
--------------------------- -----------------------------
Total $866,965,000.00 N/A N/A
============================ ==========================
=========================== =============================
</TABLE>
* Solely for purposes of Treasury Regulations Section
1.860G-1(a)(4)(iii),
the Distribution Date following the maturity date for the Mortgage
Loan
with the latest maturity date has been designated as the "latest
possible
maturity date" for each Class of LIBOR Certificates, the Class CE
Interest
and the Class IO Interest that represents one or more of the
"regular
interests" in the Upper-Tier REMIC.
(1) The Pass-Through Rate for the Class A-1 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class A-1 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(2) The Pass-Through Rate for the Class A-2 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class A-2 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(3) The Pass-Through Rate for the Class A-3 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class A-3 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(4) The Pass-Through Rate for the Class M-1 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class M-1 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(5) The Pass-Through Rate for the Class M-2 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class M-2 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(6) The Pass-Through Rate for the Class M-3 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class M-3 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(7) The Pass-Through Rate for the Class M-4 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class M-4 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(8) The Pass-Through Rate for the Class M-5 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class M-5 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(9) The Pass-Through Rate for the Class M-6 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class M-6 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(10) The Pass-Through Rate for the Class B-1 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class B-1 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(11) The Pass-Through Rate for the Class B-2 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class B-2 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(12) The Pass-Through Rate for the Class B-3 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class B-3 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(13) The Pass-Through Rate for the Class B-4 Certificates during
each Interest
Accrual Period is equal to the lesser of: (i) the Class B-4 Formula
Rate
and (ii) the Pool Cap for such Distribution Date.
(14) The Class CE Certificates will represent beneficial ownership
of (i) the
Class CE Interest, (ii) the Class IO Interest, (iii) the right to
receive
Class IO Shortfalls, (iv) amounts in the Supplemental Interest
Trust,
including the Interest Rate Cap Agreement and the Interest Rate
Swap
Agreement subject to the obligation to pay Net Swap Payments and
Swap
Termination Payments to the Swap Provider and Cap Carryover Amounts
to the
LIBOR Certificates and (v) amounts in the Excess Reserve Fund
Account,
subject to the obligation to make payments from the Excess Reserve
Fund
Account in respect of Cap Carryover Amounts to the LIBOR
Certificates. For
federal income tax purposes, the Class CE Certificateholder's
obligation
to make payments of Cap Carryover Amounts to the LIBOR Certificates
from
the Excess Reserve Fund Account and the Supplemental Interest Trust
shall
be treated as payments made pursuant to a notional principal
contract
between the Class CE Certificateholders and each Class of LIBOR
Certificates. Such rights and obligations of the Class CE
Certificateholders and LIBOR Certificateholders shall be treated as
held
in a portion of the Trust Fund that is treated as a grantor trust
under
subpart E, Part I of subchapter J of the Code.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Agreement or
in
the Preliminary Statement, the following words and phrases, unless
the context
otherwise requires, shall have the meanings specified in this
Article. Interest
on all LIBOR Certificates will be calculated on the basis of the
actual number
of days in the related Interest Accrual Period and a 360-day
year.
"1933 Act" The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan" Each Mortgage Loan (including each
Mortgage Loan in foreclosure and each Mortgage Loan for which the
Mortgagor has
filed for bankruptcy after the Closing Date) with respect to which
any portion
of a Monthly Payment is, as of the last day of the prior Collection
Period, two
months or more past due and each Mortgage Loan relating to an REO
Property.
"Account" Any of the Collection Account, the Distribution
Account,
the Supplemental Interest Trust Account, the Excess Reserve Fund
Account or the
Escrow Account.
"Accrued Certificate Interest" With respect to each
Distribution
Date and Class of LIBOR Certificates, an amount equal to the
interest accrued at
the Pass-Through Rate set forth or described for such Class in the
table in the
Preliminary Statement under the caption "Certificates" during the
related
Interest Accrual Period on the Principal Balance of such Class of
Certificates,
reduced by such Class' Interest Percentage of any Current Interest
Shortfall for
such Distribution Date.
"Additional Form 10-D Disclosure" As defined in Section
3.28(a).
"Additional Form 10-K Disclosure" As defined in Section
3.28(b).
"Additional Servicer" As defined in Section 6.05.
"Adjustable Rate Mortgage Loan" A Mortgage Loan which has a rate
at
which interest accrues that adjusts based on the Index plus a
related Gross
Margin, as set forth and subject to the limitations in the related
Mortgage
Note.
"Adjustment Date" With respect to each Adjustable Rate Mortgage
Loan, each adjustment date on which the Mortgage Interest Rate
changes pursuant
to the related Mortgage Note. The first Adjustment Date following
the applicable
Cut-off Date as to each Adjustable Rate Mortgage Loan is set forth
in the
Mortgage Loan Schedule.
"Advance" As to any Mortgage Loan, any advance made by the
Servicer
in respect of any Distribution Date pursuant to Section 4.07 or if
the Servicer
fails to make any advance, by the Trustee pursuant to Section
7.01.
"Adverse REMIC Event" As defined in Section 9.01(f) hereof.
"Affiliate" With respect to any Person, any other Person
controlling, controlled by or under common control with such
Person. For
purposes of this definition, "control" means the power to direct
the management
and policies of a Person, directly or indirectly, whether through
ownership of
voting securities, by contract or otherwise and "controlling" and
"controlled"
shall have meanings correlative to the foregoing.
"Agreement" This Pooling and Servicing Agreement and all
amendments
and supplements hereto.
"Applicable Regulations" As to any Mortgage Loan, all federal,
state
and local laws, statutes, rules and regulations applicable
thereto.
"Applied Realized Loss Amount" With respect to each
Distribution
Date, the excess, if any, of (a) the aggregate of the Principal
Balances of the
Certificates (other than the Class CE, Class P and Residual
Certificates and
after giving effect to all distributions on such Distribution Date
and the
increase of any Principal Balances as a result of Subsequent
Recoveries) over
(b) the Pool Balance as of the end of the related Collection
Period.
"Assignment" An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient
under the laws of
the jurisdiction wherein the related Mortgaged Property is located
to reflect or
record the sale of the Mortgage.
"Available Funds" As to any Distribution Date, an amount equal
to
the excess of (i) the sum of: (a) the aggregate of the Monthly
Payments due
during the related Collection Period and received on or prior to
the related
Determination Date by the Servicer, (b) Liquidation Proceeds,
Insurance
Proceeds, Condemnation Proceeds, Principal Prepayments,
Substitution Adjustment
Amounts, the Purchase Price for any repurchased Mortgage Loan, the
Termination
Price with respect to the termination of the Trust pursuant to
Section 10.01
hereof and other unscheduled recoveries of principal and interest
(excluding
Prepayment Penalties, Originator Prepayment Penalty Payment Amounts
and Servicer
Prepayment Penalty Payment Amounts) in respect of the Mortgage
Loans during the
related Prepayment Period, (c) the aggregate of any amounts
received in respect
of an REO Property deposited in the Collection Account for such
Distribution
Date, (d) any Compensating Interest for such Distribution Date, (e)
the
aggregate of any Advances made by the Servicer or the Trustee for
such
Distribution Date and (f) any Reimbursement Amount or Subsequent
Recovery
deposited into the Collection Account during the related Prepayment
Period over
(ii) the sum of (a) amounts reimbursable or payable to the Servicer
pursuant to
Sections 3.05 or 6.03, (b) amounts reimbursable or payable to the
Trustee
pursuant to Section 7.01 or Section 8.05 and amounts reimbursable
or payable to
the Securities Administrator pursuant to Section 8.05 or Section
9.01(c), (c)
Stayed Funds, (d) the Servicing Fees and the Insurer Premium and
(e) amounts
deposited in the Collection Account or the Distribution Account, as
the case may
be, in error.
"Balloon Loan" A Mortgage Loan that provides for the payment of
the
unamortized principal balance of such Mortgage Loan in a single
payment at the
maturity of such Mortgage Loan that is substantially greater than
the preceding
monthly payment.
"Balloon Payment" A payment of the unamortized principal balance
of
a Mortgage Loan in a single payment at the maturity of such
Mortgage Loan that
is substantially greater than the preceding Monthly Payment.
"Bankruptcy Code" Title 11 of the United States Code, as
amended.
"Book-Entry Certificates" Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the
ownership of which
is reflected on the books of the Depository or on the books of a
Person
maintaining an account with the Depository directly, as a
Depository
Participant, or indirectly, as an indirect participant in
accordance with the
rules of the Depository and as described in Section 5.02 hereof. On
the Closing
Date, the Class A-1, Class A-2, Class A-3, Class M-1, Class M-2,
Class M-3,
Class M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3
and Class B-4
Certificates shall be Book-Entry Certificates.
"Business Day" Any day other than (i) a Saturday or a Sunday or
(ii)
a legal holiday in the State of New York.
"Cap Carryover Amount" For any Distribution Date, the sum of (a)
if
the Accrued Certificate Interest for any Certificate is based upon
the Pool Cap,
the excess of (i) the amount of interest such Certificate would
have been
entitled to receive on such Distribution Date based on the related
Formula Rate,
over (ii) the amount of interest such Certificate received on such
Distribution
Date based on the Pool Cap, and (b) if the Pool Cap exceeds the
Upper-Tier REMIC
WAC Rate, the excess of (i) the lesser of the amount in clause
(a)(i) or clause
(a)(ii) over (ii) the amount of interest such Certificate would
have received on
such Distribution Date based on the Upper-Tier REMIC WAC Rate, in
each case
together with the unpaid portion of any such excess from prior
Distribution
Dates (and interest accrued thereon at the then applicable Formula
Rate on such
Certificate).
"Cap Early Termination" The occurrence of an early termination
under
the Interest Rate Cap Agreement.
"Cap Payment" With respect to any Distribution Date (other than
the
initial Distribution Date) up to and including the Distribution
Date in December
2010, the amount payable by the Cap Provider to the Supplemental
Interest Trust
pursuant to the Interest Rate Cap Agreement.
"Cap Provider" Barclays Bank PLC.
"Cap Termination Payment" The amount, if any, owed by the Cap
Provider to the Supplemental Interest Trust upon a Cap Early
Termination.
"Certificate" Any LIBOR Certificate, Class CE Certificate, Class
P
Certificate or Residual Certificate.
"Certificate Custodian" Initially, Wells Fargo Bank; thereafter
any
other Certificate Custodian acceptable to the Depository and
selected by the
Securities Administrator.
"Certificate Owner" With respect to each Book-Entry Certificate,
any
beneficial owner thereof.
"Certificate Register" and "Certificate Registrar" The register
maintained and registrar appointed pursuant to Section 5.02
hereof.
"Certificateholder" or "Holder" The Person in whose name a
Certificate is registered in the Certificate Register, except that
a
Disqualified Organization or non-U.S. Person shall not be a Holder
of a Residual
Certificate for any purpose hereof.
"Class" Collectively, Certificates or REMIC Regular Interests
which
have the same priority of payment and bear the same class
designation and the
form of which is identical except for variation in the Percentage
Interest
evidenced thereby.
"Class A Certificate" Any one of the Certificates with an "A"
designated on the face thereof substantially in the form annexed
hereto as
Exhibit A-1, Exhibit A-2 and Exhibit A-3, executed by the
Securities
Administrator on behalf of the Trust and authenticated and
delivered by the
Certificate Registrar, representing the right to distributions as
set forth
herein and therein.
"Class A Certificateholders" Collectively, the Holders of the
Class
A Certificates.
"Class A-1 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.050% per annum, and (ii)
following the
Optional Termination Date, 0.100% per annum.
"Class A-1 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class A-1 Certificate Margin.
"Class A-2 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.150% per annum, and (ii)
following the
Optional Termination Date, 0.300% per annum.
"Class A-2 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class A-2 Certificate Margin.
"Class A-3 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.210% per annum, and (ii)
following the
Optional Termination Date, 0.420% per annum.
"Class A-3 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class A-3 Certificate Margin.
"Class B-1 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.750% per annum, and (ii)
following the
Optional Termination Date, 1.125% per annum.
"Class B-1 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class B-1 Certificate Margin.
"Class B-1 Principal Distribution Amount" As of any
Distribution
Date on or after the Stepdown Date and as long as a Trigger Event
is not in
effect, the excess of (x) the sum of (i) the sum of the Principal
Balances of
the Senior Certificates (after taking into account the payment of
the Senior
Principal Distribution Amount on such Distribution Date), (ii) the
sum of the
Principal Balances of the Sequential Class M Certificates (after
taking into
account the payment of the Sequential Class M Principal
Distribution Amount on
such Distribution Date), (iii) the Principal Balance of the Class
M-4
Certificates (after taking into account the payment of the Class
M-4 Principal
Distribution Amount on such Distribution Date), (iv) the Principal
Balance of
the Class M-5 Certificates (after taking into account the payment
of the Class
M-5 Principal Distribution Amount on such Distribution Date), (v)
the Principal
Balance of the Class M-6 Certificates (after taking into account
the payment of
the Class M-6 Principal Distribution Amount on such Distribution
Date) and (vi)
the Principal Balance of the Class B-1 Certificates immediately
prior to such
Distribution Date over (y) the lesser of (a) the product of (i)
85.60% and (ii)
the Pool Balance as of the last day of the related Collection
Period and (b) the
Overcollateralization Floor.
"Class B-1 Realized Loss Amortization Amount" As to the Class
B-1
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class B-1 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (xx) hereof,
in each case
for such Distribution Date.
"Class B-2 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.900% per annum, and (ii)
following the
Optional Termination Date, 1.350% per annum.
"Class B-2 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class B-2 Certificate Margin.
"Class B-2 Principal Distribution Amount" As of any
Distribution
Date on or after the Stepdown Date and as long as a Trigger Event
is not in
effect, the excess of (x) the sum of (i) the sum of the Principal
Balances of
the Senior Certificates (after taking into account the payment of
the Senior
Principal Distribution Amount on such Distribution Date), (ii) the
sum of the
Principal Balances of the Sequential Class M Certificates (after
taking into
account the payment of the Sequential Class M Principal
Distribution Amount on
such Distribution Date), (iii) the Principal Balance of the Class
M-4
Certificates (after taking into account the payment of the Class
M-4 Principal
Distribution Amount on such Distribution Date), (iv) the Principal
Balance of
the Class M-5 Certificates (after taking into account the payment
of the Class
M-5 Principal Distribution Amount on such Distribution Date), (v)
the Principal
Balance of the Class M-6 Certificates (after taking payments into
account the
payments of the Class M-6 Principal Distribution Amount on such
Distribution
Date), (vi) the Principal Balance of the Class B-1 Certificates
(after taking
payments into account the payments of the Class B-1 Principal
Distribution
Amount on such Distribution Date) and (vii) the Principal Balance
of the Class
B-2 Certificates immediately prior to such Distribution Date over
(y) the lesser
of (a) the product of (i) 87.50% and (ii) the Pool Balance as of
the last day of
the related Collection Period and (b) the Overcollateralization
Floor.
"Class B-2 Realized Loss Amortization Amount" As to the Class
B-2
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class B-2 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (xxiii)
hereof, in each
case for such Distribution Date.
"Class B-3 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 1.730% per annum, and (ii)
following the
Optional Termination Date, 2.595% per annum.
"Class B-3 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class B-3 Certificate Margin.
"Class B-3 Principal Distribution Amount" As of any
Distribution
Date on or after the Stepdown Date and as long as a Trigger Event
is not in
effect, the excess of (x) the sum of (i) the sum of the Principal
Balances of
the Senior Certificates (after taking into account the payment of
the Senior
Principal Distribution Amount on such Distribution Date), (ii) the
sum of the
Principal Balances of the Sequential Class M Certificates (after
taking into
account the payment of the Sequential Class M Principal
Distribution Amount on
such Distribution Date), (iii) the Principal Balance of the Class
M-4
Certificates (after taking into account the payment of the Class
M-4 Principal
Distribution Amount on such Distribution Date), (iv) the Principal
Balance of
the Class M-5 Certificates (after taking into account the payment
of the Class
M-5 Principal Distribution Amount on such Distribution Date), (v)
the Principal
Balance of the Class M-6 Certificates (after taking into account
the payment of
the Class M-6 Principal Distribution Amount on such Distribution
Date), (vi) the
Principal Balance of the Class B-1 Certificates (after taking into
account the
payment of the Class B-1 Principal Distribution Amount on such
Distribution
Date), (vii) the Principal Balance of the Class B-2 Certificates
(after taking
into account the payment of the Class B-2 Principal Distribution
Amount on such
Distribution Date) and (viii) the Principal Balance of the Class
B-3
Certificates immediately prior to such Distribution Date over (y)
the lesser of
(a) the product of (i) 90.30% and (ii) the Pool Balance as of the
last day of
the related Collection Period and (b) the Overcollateralization
Floor.
"Class B-3 Realized Loss Amortization Amount" As to the Class
B-3
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class B-3 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (xxvi)
hereof, in each
case for such Distribution Date.
"Class B-4 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 2.250% per annum, and (ii)
following the
Optional Termination Date, 3.375% per annum.
"Class B-4 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class B-4 Certificate Margin.
"Class B-4 Principal Distribution Amount" As of any
Distribution
Date on or after the Stepdown Date and as long as a Trigger Event
is not in
effect, the excess of (x) the sum of (i) the sum of the Principal
Balances of
the Senior Certificates (after taking into account the payment of
the Senior
Principal Distribution Amount on such Distribution Date), (ii) the
sum of the
Principal Balances of the Sequential Class M Certificates (after
taking into
account the payment of the Sequential Class M Principal
Distribution Amount on
such Distribution Date), (iii) the Principal Balance of the Class
M-4
Certificates (after taking into account the payment of the Class
M-4 Principal
Distribution Amount on such Distribution Date), (iv) the Principal
Balance of
the Class M-5 Certificates (after taking into account the payment
of the Class
M-5 Principal Distribution Amount on such Distribution Date), (v)
the Principal
Balance of the Class M-6 Certificates (after taking into account
the payment of
the Class M-6 Principal Distribution Amount on such Distribution
Date), (vi) the
Principal Balance of the Class B-1 Certificates (after taking into
account the
payment of the Class B-1 Principal Distribution Amount on such
Distribution
Date), (vii) the Principal Balance of the Class B-2 Certificates
(after taking
into account the payment of the Class B-2 Principal Distribution
Amount on such
Distribution Date), (viii) the Principal Balance of the Class B-3
Certificates
(after taking into account the payment of the Class B-3 Principal
Distribution
Amount on such Distribution Date) and (ix) the Principal Balance of
the Class
B-4 Certificates immediately prior to such Distribution Date over
(y) the lesser
of (a) the product of (i) 93.40% and (ii) the Pool Balance as of
the last day of
the related Collection Period and (b) the Overcollateralization
Floor.
"Class B-4 Realized Loss Amortization Amount" As to the Class
B-4
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class B-4 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (xxix)
hereof, in each
case for such Distribution Date.
"Class CE Certificates" Any one of the Class CE Certificates as
designated on the face thereof substantially in the form annexed
hereto as
Exhibit C-1, executed by the Securities Administrator on behalf of
the Trust and
authenticated and delivered by the Certificate Registrar,
representing the right
to distributions as set forth herein and therein.
"Class CE Distributable Amount" With respect to any
Distribution
Date, the sum of (i) the interest accrued on the Class CE Interest
at its
Pass-Through Rate calculated on its Notional Amount less the amount
of Cap
Carryover Amounts paid pursuant to Section 4.02(b)(xxxi), any Net
Swap Payments
paid to the Swap Provider and any Swap Termination Payments paid to
the Swap
Provider pursuant to Section 4.02(b)(xxxii), and (ii) any
remaining
Overcollateralization Release Amounts.
"Class CE Interest" As defined in the Preliminary Statement.
"Class CE REMIC" As defined in the Preliminary Statement.
"Class IO Interest" As defined in the Preliminary Statement.
"Class IO Shortfalls" As defined in Section 4.08. For the
avoidance
of doubt, the Class IO Shortfall for any Distribution Date shall
equal the
amount payable by the Class CE Certificates in respect of amounts
due to the
Swap Provider on such Distribution Date (other than any Swap
Termination Payment
resulting from a Swap Provider Trigger Event) in excess of the
amount payable on
the Class CE Interest (prior to any reduction for Cap Carryover
Amounts or Swap
Termination Payments) and the Class IO Interest on such
Distribution Date, all
as further provided in Section 4.08.
"Class LT-A-1 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-A-1 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-A-2 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-A-2 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-A-3 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-A-3 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-Accrual Interest" One of the separate
non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-Accrual
Interest shall accrue interest at the related Pass-Through Rate in
effect from
time to time, and shall be entitled to distributions of principal,
subject to
the terms and conditions hereof, in an aggregate amount equal to
1/2 of the Pool
Balance plus 1/2 of the Overcollateralization Amount, as set forth
in the
Preliminary Statement hereto.
"Class LT-B-1 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-B-1 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-B-2 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-B-2 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-B-3 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-B-3 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-B-4 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-B-4 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-M-1 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-M-1 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-M-2 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-M-2 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-M-3 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-M-3 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-M-4 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-M-4 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-M-5 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-M-5 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-M-6 Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. Class
LT-M-6 Interest
shall accrue interest at the related Pass-Through Rate in effect
from time to
time, and shall be entitled to distributions of principal, subject
to the terms
and conditions hereof, in an aggregate amount equal to 1/2 of the
initial
Principal Balance of the Corresponding Upper-Tier REMIC Regular
Interest as set
forth in the Preliminary Statement hereto.
"Class LT-IO Interest" One of the separate non-certificated
beneficial ownership interests in the Lower-Tier REMIC issued
hereunder and
designated as a Regular Interest in the Lower-Tier REMIC. The Class
LT-IO
Interest is an interest-only interest and does not have a
Lower-Tier Principal
Amount. On each Distribution Date, the Class LT-IO Interest shall
be entitled to
receive all interest distributable on the Pooling-Tier REMIC-2 IO
Interest.
"Class LT-R Interest" The residual interest in the Lower-Tier
REMIC
as described in the Preliminary Statement.
"Class M Certificate" Any one of the Certificates with an "M"
designated on the face thereof substantially in the form annexed
hereto as
Exhibit B-1, Exhibit B-2, Exhibit B-3, Exhibit B-4, Exhibit B-5 and
Exhibit B-6,
executed by the Securities Administrator on behalf of the Trust
and
authenticated and delivered by the Certificate Registrar,
representing the right
to distributions as set forth herein and therein.
"Class M Certificateholders" Collectively, the Holders of the
Class
M Certificates.
"Class M-1 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.230% per annum, and (ii)
following the
Optional Termination Date, 0.345% per annum.
"Class M-1 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class M-1 Certificate Margin.
"Class M-1 Realized Loss Amortization Amount" As to the Class
M-1
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class M-1 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) and (ii) hereof, in
each case for
such Distribution Date.
"Class M-2 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.270% per annum, and (ii)
following the
Optional Termination Date, 0.405% per annum.
"Class M-2 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class M-2 Certificate Margin.
"Class M-2 Realized Loss Amortization Amount" As to the Class
M-2
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class M-2 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (v) hereof,
in each case
for such Distribution Date.
"Class M-3 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.300% per annum, and (ii)
following the
Optional Termination Date, 0.450% per annum.
"Class M-3 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class M-3 Certificate Margin.
"Class M-3 Realized Loss Amortization Amount" As to the Class
M-3
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class M-3 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (viii)
hereof, in each
case for such Distribution Date.
"Class M-4 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.360% per annum, and (ii)
following the
Optional Termination Date, 0.540% per annum.
"Class M-4 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class M-4 Certificate Margin.
"Class M-4 Principal Distribution Amount" As of any
Distribution
Date on or after the Stepdown Date and as long as a Trigger Event
is not in
effect, the excess of (x) the sum of (i) the sum of the Principal
Balances of
the Senior Certificates (after taking into account the payment of
the Senior
Principal Distribution Amount on such Distribution Date), (ii) the
sum of the
Principal Balances of the Sequential Class M Certificates (after
taking into
account the payment of the Sequential Class M Principal
Distribution Amount on
such Distribution Date) and (iii) the Principal Balance of the
Class M-4
Certificates immediately prior to such Distribution Date over (y)
the lesser of
(a) the product of (i) 77.50% and (ii) the Pool Balance as of the
last day of
the related Collection Period and (b) the Overcollateralization
Floor.
"Class M-4 Realized Loss Amortization Amount" As to the Class
M-4
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class M-4 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (xi) hereof,
in each case
for such Distribution Date.
"Class M-5 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.380% per annum, and (ii)
following the
Optional Termination Date, 0.570% per annum.
"Class M-5 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class M-5 Certificate Margin.
"Class M-5 Principal Distribution Amount" As of any
Distribution
Date on or after the Stepdown Date and as long as a Trigger Event
is not in
effect, the excess of (x) the sum of (i) the sum of the Principal
Balances of
the Senior Certificates (after taking into account the payment of
the Senior
Principal Distribution Amount on such Distribution Date), (ii) the
sum of the
Principal Balances of the Sequential Class M Certificates (after
taking into
account the payment of the Sequential Class M Principal
Distribution Amount on
such Distribution Date), (iii) the Principal Balance of the Class
M-4
Certificates (after taking into account the payment of the Class
M-4 Principal
Distribution Amount on such Distribution Date) and (iv) the
Principal Balance of
the Class M-5 Certificates immediately prior to such Distribution
Date over (y)
the lesser of (a) the product of (i) 81.00% and (ii) the Pool
Balance as of the
last day of the related Collection Period and (b) the
Overcollateralization
Floor.
"Class M-5 Realized Loss Amortization Amount" As to the Class
M-5
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class M-5 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (xiv)
hereof, in each
case for such Distribution Date.
"Class M-6 Certificate Margin" For each Distribution Date (i) on
or
prior to the Optional Termination Date, 0.420% per annum, and (ii)
following the
Optional Termination Date, 0.630% per annum.
"Class M-6 Formula Rate" For each Distribution Date, a rate per
annum equal to One-Month LIBOR applicable to the related Interest
Accrual
Period, plus the Class M-6 Certificate Margin.
"Class M-6 Principal Distribution Amount" As of any
Distribution
Date on or after the Stepdown Date and as long as a Trigger Event
is not in
effect, the excess of (x) the sum of (i) the sum of the Principal
Balances of
the Senior Certificates (after taking into account the payment of
the Senior
Principal Distribution Amount on such Distribution Date), (ii) the
sum of the
Principal Balances of the Sequential Class M Certificates (after
taking into
account the payment of the Sequential Class M Principal
Distribution Amount on
such Distribution Date), (iii) the Principal Balance of the Class
M-4
Certificates (after taking into account the payment of the Class
M-4 Principal
Distribution Amount on such Distribution Date), (iv) the Principal
Balance of
the Class M-5 Certificates (after taking into account the payment
of the Class
M-5 Principal Distribution Amount on such Distribution Date) and
(v) the
Principal Balance of the Class M-6 Certificates immediately prior
to such
Distribution Date over (y) the lesser of (a) the product of (i)
83.40% and (ii)
the Pool Balance as of the last day of the related Collection
Period and (b) the
Overcollateralization Floor.
"Class M-6 Realized Loss Amortization Amount" As to the Class
M-6
Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid
Realized Loss Amount for the Class M-6 Certificates as of such
Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over
(ii) the sum
of the amounts described in Section 4.02(b)(i) through (xvii)
hereof, in each
case for such Distribution Date.
"Class P Certificate" Any one of the Certificates with a "P"
designated on the face thereof substantially in the form annexed
hereto as
Exhibit C-2, executed by the Securities Administrator on behalf of
the Trust and
authenticated and delivered by the Certificate Registrar,
representing the right
to distributions as set forth herein and therein.
"Class PT1-R Interest" The residual interest in Pooling-Tier
REMIC-1
as described in the Preliminary Statement.
"Class PT2-R Interest" The residual interest in Pooling-Tier
REMIC-2
as described in the Preliminary Statement.
"Class P Certificateholders" The holders of the Class P
Certificates.
"Class R Certificate" The Class R Certificate executed by the
Securities Administrator on behalf of the Trust, and authenticated
and delivered
by the Certificate Registrar, substantially in the form annexed
hereto as
Exhibit C-3 and evidencing the ownership of the Class R-CE
Interest, the Class
PT1-R Interest, the Class PT2-R Interest, the Class LT-R Interest
and the Class
UT-R Interest.
"Class R-CE Interest" The residual interest in the Class CE REMIC
as
described in the Preliminary Statement and the related footnote
thereto.
"Class UT-IO Interest" A regular interest in the Upper-Tier REMIC
as
described in the Preliminary Statement and the related footnote
thereto.
"Class UT-R Interest" The residual interest in the Upper-Tier
REMIC
as described in the Preliminary Statement.
"Class UT-X Interest" A regular interest in the Upper-Tier REMIC
as
described in the Preliminary Statement and the related footnote
thereto.
"Closing Date" December 21, 2006.
"Code" The Internal Revenue Code of 1986, as it may be amended
from
time to time.
"Collection Account" The segregated account or accounts created
and
maintained by the Servicer pursuant to Section 3.04(a), which shall
be entitled
"Collection Account, Wells Fargo Bank, N.A., as Servicer for HSBC
Bank USA,
National Association, as Trustee, in trust for registered Holders
of Wells Fargo
Home Equity Asset-Backed Securities 2006-3 Trust, Home Equity
Asset-Backed
Certificates, Series 2006-3," and which must be an Eligible
Account.
"Collection Period" With respect to any Distribution Date, the
period from the second day of the calendar month preceding the
month in which
such Distribution Date occurs through the first day of the month in
which such
Distribution Date occurs.
"Commission" The United States Securities and Exchange
Commission.
"Compensating Interest" As defined in Section 3.22 hereof.
"Condemnation Proceeds" All awards or settlements in respect of
a
taking of a Mortgaged Property by exercise of the power of eminent
domain or
condemnation.
"Corporate Trust Office" With respect to the Trustee, the
principal
corporate trust office of the Trustee at which at any particular
time its
corporate trust business in connection with this Agreement shall
be
administered, which office at the date of the execution of this
instrument is
located at 452 Fifth Avenue, New York, New York 10018, Attention:
WFHET 2006-3
or at such other address as the Trustee may designate from time to
time by
notice to the Certificateholders, the Depositor, the Securities
Administrator
and the Servicer. With respect to the Securities Administrator, the
corporate
trust office of the Securities Administrator at which at any
particular time its
corporate trust business in connection with this Agreement shall
be
administered, which office at the date of the execution of this
instrument is
located at (i) for certificate transfer purposes, Wells Fargo
Center, Sixth
Street and Marquette Avenue, Minneapolis, Minnesota, 55479-0113,
Attention:
Client Manager-WFHET, Series 2006-3 and (ii) for all other
purposes, 9062 Old
Annapolis Road, Columbia, Maryland 21045, Attention: Client
Manager-WFHET,
Series 2006-3 or at such other address as the Securities
Administrator may
designate from time to time by notice to the Certificateholders,
the Depositor,
the Trustee and the Servicer.
"Corresponding Class" The Class of interests in one Trust REMIC
created under this Agreement that corresponds to the Class of
interests in the
other Trust REMIC or to a Class of Certificates in the manner set
out below:
Corresponding
Upper-Tier Corresponding
Lower-Tier Class REMIC Regular Class of
Designation Interest Certificates
---------------- ------------- -------------
Class LT-A-1 Class A-1 Class A-1
Class LT-A-2 Class A-2 Class A-2
Class LT-A-3 Class A-3 Class A-3
Class LT-M-1 Class M-1 Class M-1
Class LT-M-2 Class M-2 Class M-2
Class LT-M-3 Class M-3 Class M-3
Class LT-M-4 Class M-4 Class M-4
Class LT-M-5 Class M-5 Class M-5
Class LT-M-6 Class M-6 Class M-6
Class LT-B-1 Class B-1 Class B-1
Class LT-B-2 Class B-2 Class B-2
Class LT-B-3 Class B-3 Class B-3
Class LT-B-4 Class B-4 Class B-4
"Corresponding Pooling-Tier REMIC-2 IO Interest" As defined in
the
Preliminary Statement.
"Corresponding Scheduled Crossover Distribution Date" The
Distribution Date, if any, in the month and year specified in the
Preliminary
Statement corresponding to a Pooling-Tier REMIC-2 IO Interest.
"Coverage Percentage" As defined in the PMI Policy.
"Covered Mortgage Loan" Each of the Mortgage Loans insured by
the
Insurer, as set forth on the Mortgage Loan Schedule.
"Current Interest Shortfall" With respect to any Distribution
Date,
the sum of (i) the aggregate amount of Relief Act Interest
Shortfalls, (ii) the
aggregate amount of Prepayment Interest Shortfalls attributable to
partial
Principal Prepayments and (iii) the amount, if any, by which (x)
the aggregate
amount of Prepayment Interest Shortfalls attributable to Principal
Prepayments
in full exceeds (y) the Compensating Interest for such Distribution
Date.
"Custodial Agreement" That certain Custodial Agreement, dated as
of
December 21, 2006, among the Custodian, the Depositor, the Servicer
and the
Trustee, in the form of Exhibit R attached hereto.
"Custodian" Wells Fargo Bank, as custodian pursuant to the
Custodial
Agreement, and any successor custodian, if any, hereafter appointed
by the
Trustee pursuant to Section 8.16. The Custodian may (but need not)
be the
Trustee, the Securities Administrator or the Servicer or any Person
directly or
indirectly controlling or controlled by or under common control of
any of them.
"Cut-off Date" With respect to each Mortgage Loan, the Due Date
occurring in December 2006.
"Cut-off Date Principal Balance" With respect to any Mortgage
Loan,
the unpaid principal balance thereof as of the applicable Cut-off
Date after
giving effect to any Monthly Payment due on such date and to the
application of
funds received or advanced on or before such date (or as of the
applicable date
of substitution with respect to an Eligible Substitute Mortgage
Loan).
"DBRS" Dominion Bond Rating Service, Inc. and its successors, and
if
such company shall for any reason no longer perform the functions
of a
securities rating agency, "DBRS" shall be deemed to refer to any
other
"nationally recognized statistical rating organization" as set
forth on the most
current list of such organizations released by the Commission.
"Debt Service Reduction" With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan
by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code,
except such a
reduction resulting from a Deficient Valuation.
"Defective Mortgage Loan" A Mortgage Loan replaced or to be
replaced
by one or more Eligible Substitute Mortgage Loans.
"Deficient Valuation" With respect to any Mortgage Loan, a
valuation
of the related Mortgaged Property by a court of competent
jurisdiction in an
amount less than the then outstanding principal balance of the
Mortgage Loan, or
any reduction in the amount of principal to be paid in connection
with any
scheduled Monthly Payment that results in a permanent forgiveness
of principal,
which valuation results from a proceeding initiated under the
Bankruptcy Code.
"Definitive Certificates" As defined in Section 5.02(c) hereof.
"Delinquent" Any Mortgage Loan with respect to which the
Monthly
Payment due on a Due Date is not made by the close of business on
the next
scheduled Due Date for such Mortgage Loan.
"Depositor" Wells Fargo Asset Securities Corporation, a
Delaware
corporation, or any successor in interest.
"Depository" The initial depository shall be The Depository
Trust
Company, whose nominee is Cede & Co., or any other organization
registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act. 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 Participant" A broker, dealer, bank or other
financial
institution or other person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date" With respect to any Distribution Date, the
17th
day of the calendar month in which such Distribution Date occurs
or, if such
17th day is not a Business Day, the Business Day immediately
preceding such 17th
day.
"Disqualified Organization" A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of:
(i) the United
States, any state or political subdivision thereof, any possession
of the United
States, any foreign government, any international organization, or
any agency or
instrumentality of any of the foregoing, (ii) any organization
(other than a
cooperative described in Section 521 of the Code) which is exempt
from the tax
imposed by Chapter 1 of the Code unless such organization is
subject to the tax
imposed by Section 511 of the Code, (iii) any organization
described in Section
1381(a)(2)(C) of the Code, or (iv) any other Person so designated
by the
Securities Administrator based upon an Opinion of Counsel provided
by nationally
recognized counsel to the Securities Administrator that the holding
of an
ownership interest in the Class R Certificate by such Person may
cause the Trust
Fund or any Person having an ownership interest in any Class of
Certificates
(other than such Person) to incur liability for any federal tax
imposed under
the Code that would not otherwise be imposed but for the transfer
of an
ownership interest in a Class R Certificate to such Person. A
corporation will
not be treated as an instrumentality of the United States or of any
state or
political subdivision thereof if all of its activities are subject
to tax and a
majority of its board of directors is not selected by a
governmental unit. The
term "United States," "state" and "international organization"
shall have the
meanings set forth in Section 7701 of the Code.
"Distribution Account" The segregated trust account or accounts
created and maintained by the Securities Administrator pursuant to
Section
3.04(b), which shall be entitled "Distribution Account, Wells Fargo
Bank, N.A.,
as Securities Administrator, in trust for the registered Holders of
Wells Fargo
Home Equity Asset-Backed Securities 2006-3 Trust, Home Equity
Asset-Backed
Certificates, Series 2006-3," and which must be an Eligible
Account.
"Distribution Date" The 25th day of any calendar month, or if
such
25th day is not a Business Day, the Business Day immediately
following such 25th
day, commencing in January 2007.
"Distribution Date Statement" As defined in Section 4.06(a)
hereof.
"Document Transfer Date" The 60th day following the occurrence of
a
Document Transfer Event.
"Document Transfer Event" The occurrence of either of the
following:
(i) Wells Fargo Bank is no longer the Servicer of any of the
Mortgage Loans or
(ii) the senior, unsecured long-term debt rating of Wells Fargo
& Company is
less than "BBB-" by Fitch.
"Due Date" With respect to each Mortgage Loan, the day of the
calendar month on which the Monthly Payment for such Mortgage Loan
was due in
accordance with the terms of the related Mortgage Note, exclusive
of any grace
period.
"Eligible Account" Any of (i) an account or accounts maintained
with
a federal or state chartered depository institution or trust
company the
short-term unsecured debt obligations of which (or, in the case of
a depository
institution or trust company that is the principal subsidiary of a
holding
company, the short-term unsecured debt obligations of such holding
company) are
rated "A-1+" by S&P, "F-1" by Fitch, "R-1" by DBRS and "P-1" by
Moody's (or
comparable ratings if S&P, Fitch, DBRS and Moody's are not the
Rating Agencies)
by each of the Rating Agencies at the time any amounts are held on
deposit
therein, (ii) an account or accounts the deposits in which are
fully insured by
the FDIC, (iii) a trust account or accounts maintained with the
trust department
of a federal or state chartered depository institution, national
banking
association or trust company acting in its fiduciary capacity or
(iv) an account
otherwise acceptable to each Rating Agency without reduction or
withdrawal of
their then current ratings of the Certificates as evidenced by a
letter from
each Rating Agency to the Securities Administrator and the Trustee.
Eligible
Accounts may bear interest.
"Eligible Investments" Any one or more of the following
obligations
or securities acquired at a purchase price of not greater than par,
regardless
of whether issued or managed by the Depositor, the Servicer, the
Securities
Administrator, the Trustee or any of their respective Affiliates or
for which an
Affiliate of the Trustee or the Securities Administrator serves as
an advisor:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States
or
any agency or instrumentality thereof, provided such obligations
are
backed by the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit
of, bankers' acceptances issued by or federal funds sold by any
depository institution or trust company (including the Trustee,
the
Securities Administrator or their respective agents acting in
their
respective commercial capacities) incorporated under the laws of
the
United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities,
so
long as, at the time of such investment or contractual
commitment
providing for such investment, such depository institution or
trust
company or its ultimate parent has a short term uninsured debt
rating in one of the two highest available rating categories of
S&P,
DBRS and Moody's and the highest available rating category of
Fitch
and provided that each such investment has an original maturity
of
no more than 365 days and (B) any other demand or time deposit
or
deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and
entered into with a depository institution or trust company
(acting
as principal) rated A or higher by S&P, DBRS and Fitch and A2
or
higher by Moody's, provided, however, that collateral
transferred
pursuant to such repurchase obligation must be of the type
described
in clause (i) above and must (A) be valued daily at current
market
prices plus accrued interest or (B) pursuant to such valuation,
be
equal, at all times, to 105% of the cash transferred by the
Trustee
or the Securities Administrator in exchange for such collateral
and
(C) be delivered to the Trustee, the Securities Administrator or,
if
the Trustee or the Securities Administrator is supplying the
collateral, an agent for the Trustee or the Securities
Administrator, as the case may be, in such a manner as to
accomplish
perfection of a security interest in the collateral by possession
of
certificated securities;
(iv) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of
the
United States of America or any State thereof and that are rated
by
each Rating Agency in its highest long-term unsecured rating
categories at the time of such investment or contractual
commitment
providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable
on
demand or on a specified date not more than 30 days after the
date
of acquisition thereof) that is rated by each Rating Agency in
its
highest short-term unsecured debt rating available at the time
of
such investment;
(vi) units of money market funds registered under the
Investment Company Act of 1940 (including funds managed or
advised
by the Trustee or the Securities Administrator or affiliates
thereof) that, if rated by each Rating Agency, are rated in its
highest rating category (if so rated by such Rating Agency);
and
(vii) if previously confirmed in writing to the Trustee and
the Securities Administrator, any other demand, money market or
time
deposit, or any other obligation, security or investment, as may
be
acceptable to the Rating Agencies in writing as an eligible
investment of funds backing securities having ratings equivalent
to
its highest initial rating of the Senior Certificates;
provided, that no instrument described hereunder shall evidence
either the right to receive (a) only interest with respect to the
obligations
underlying such instrument or (b) both principal and interest
payments derived
from obligations underlying such instrument and the interest and
principal
payments with respect to such instrument provide a yield to
maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations.
"Eligible Substitute Mortgage Loan" A mortgage loan substituted
for
a Defective Mortgage Loan pursuant to the terms of this Agreement
which must, on
the date of such substitution, (i) have an outstanding principal
balance, after
application of all scheduled payments of principal and interest due
during or
prior to the month of substitution, not in excess of, the
outstanding principal
balance of the Defective Mortgage Loan as of the Due Date in the
calendar month
during which the substitution occurs, (ii) have a Mortgage Interest
Rate, with
respect to a Fixed Rate Mortgage Loan, not less than the Mortgage
Interest Rate
of the Defective Mortgage Loan and not more than 1% in excess of
the Mortgage
Interest Rate of such Defective Mortgage Loan, (iii) if an
Adjustable Rate
Mortgage Loan, have a Rate Ceiling not less than the Rate Ceiling
for the
Defective Mortgage Loan, (iv) if an Adjustable Rate Mortgage Loan,
have a
Minimum Mortgage Interest Rate not less than the Minimum Mortgage
Interest Rate
of the Defective Mortgage Loan, (v) if an Adjustable Rate Mortgage
Loan, have a
Gross Margin equal to or greater than the Gross Margin of the
Defective Mortgage
Loan, (vi) if an Adjustable Rate Mortgage Loan, have the same Index
and
frequency of adjustment as the Defective Mortgage Loan, (vii) if an
Adjustable
Rate Mortgage Loan, have a next Adjustment Date not more than three
months later
than the next Adjustment Date on the Defective Mortgage Loan,
(viii) have an
original term to maturity not greater than (and not more than one
year less
than) that of the Defective Mortgage Loan, (ix) be current as of
the date of
substitution, (x) have a Loan-to-Value Ratio equal to or lower than
the
Loan-to-Value Ratio of the Defective Mortgage Loan, (xi) have a
risk grading at
least equal to the risk grading assigned on the Defective Mortgage
Loan, (xii)
have the same lien priority as the Defective Mortgage Loan, (xiii)
have a
Prepayment Penalty at least equal in amount and duration of that of
the
Defective Mortgage Loan and (xiv) conform to each representation
and warranty
set forth in Section 2.04 hereof applicable to the Defective
Mortgage Loan. In
the event that one or more mortgage loans are substituted for one
or more
Defective Mortgage Loans, the amounts described in clause (i)
hereof shall be
determined on the basis of aggregate principal balance, the
Mortgage Interest
Rates described in clause (ii) hereof shall be determined on the
basis of
weighted average Mortgage Interest Rates, the risk gradings
described in clause
(xi) hereof shall be satisfied as to each such mortgage loan, the
terms
described in clause (viii) hereof shall be determined on the basis
of weighted
average remaining term to maturity, the Loan-to-Value Ratios
described in clause
(x) hereof shall be satisfied as to each such mortgage loan and,
except to the
extent otherwise provided in this sentence, the representations and
warranties
described in clause (xiv) hereof must be satisfied as to each
Eligible
Substitute Mortgage Loan or in the aggregate, as the case may
be.
"ERISA" The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Restricted Certificates" Any of the Class CE, Class P
and
Class R Certificates.
"Escrow Account" The account or accounts created and maintained
pursuant to Section 3.06.
"Escrow Agreement" An agreement between a Mortgagor and the
Servicer
relating to accounts constituting taxes and/or fire and hazard
insurance
premiums required to be escrowed.
"Escrow Payments" The amounts constituting taxes and/or fire
and
hazard insurance premiums required to be escrowed to an Escrow
Agreement.
"Estate in Real Property" A fee simple estate in a parcel of
real
property.
"Excess Reserve Fund Account" The segregated trust account
created
and maintained by the Securities Administrator pursuant to Section
3.04(g) which
shall be entitled "Excess Reserve Fund Account, Wells Fargo Bank,
N.A., as
Securities Administrator for HSBC Bank USA, National Association,
as Trustee, in
trust for registered Holders of the Class A, Class M and Class B
Certificates of
Wells Fargo Home Equity Asset-Backed Securities 2006-3 Trust, Home
Equity
Asset-Backed Certificates, Series 2006-3," and which must be an
Eligible
Account. Amounts on deposit in the Excess Reserve Fund Account
shall not be
invested. The Excess Reserve Fund Account shall not be an asset of
any REMIC
formed under this Agreement.
"Exchange Act" The Securities Exchange Act of 1934, as amended.
"Extra Principal Distribution Amount" With respect to any
Distribution Date, the lesser of (x) the Monthly Excess Interest
Amount for such
Distribution Date, after reduction (but not below zero) by any
Current Interest
Shortfall and (y) the Overcollateralization Deficiency for such
Distribution
Date.
"FDIC" Federal Deposit Insurance Corporation or any successor
thereto.
"Fidelity Bond" An insurance policy naming the Trustee, its
successors and assigns as loss payees relative to losses caused by
improper or
unlawful acts of the Servicer's personnel.
"Final Scheduled Distribution Date" As to each Class of
Certificates, the date set forth as such in the Preliminary
Statement.
"Fitch" Fitch Ratings and its successors, and if such company
shall
for any reason no longer perform the functions of a securities
rating agency,
"Fitch" shall be deemed to refer to any other "nationally
recognized statistical
rating organization" as set forth on the most current list of such
organizations
released by the Commission.
"Fixed Rate Mortgage Loan" A Mortgage Loan which has a constant
annual rate at which interest accrues in accordance with the
provisions of the
related Mortgage Note.
"Fixed Swap Payment" With respect to any Distribution Date up to
and
including the Distribution Date in December 2010, an amount equal
to the product
of (x) 5.155% per annum, (y) the Swap Notional Amount for such
Distribution Date
and (z) a fraction, the numerator of which is 30 (or, for the first
Distribution
Date, the number of days elapsed from the Closing Date to but
excluding the
first Distribution Date on a 30/360 basis), and the denominator of
which is 360.
"Floating Swap Payment" With respect to any Distribution Date up
to
and including the Distribution Date in December 2010, an amount
equal to the
product of (i) Swap LIBOR, (ii) the Swap Notional Amount for such
Distribution
Date and (iii) a fraction, the numerator of which is the actual
number of days
elapsed from and including the previous Distribution Date to but
excluding the
current Distribution Date (or, for the first Distribution Date, the
actual
number of days elapsed from the Closing Date to but excluding the
first
Distribution Date), and the denominator of which is 360.
"Foreclosure Price" The amount reasonably expected to be
received
from the sale of the related Mortgaged Property net of any expenses
associated
with foreclosure proceedings.
"Form 8-K" A Current Report on Form 8-K under the Exchange Act.
"Form 8-K Disclosure Information" As defined in Section
3.28(c).
"Form 10-D" An Asset-Backed Issuer Distribution Report on Form
10-D
under the Exchange Act.
"Form 10-K" An Annual Report on Form 10-K under the Exchange
Act.
"Form 10-K Filing Deadline" As defined in Section 3.28(b).
"Form 15" A Form 15 Suspension Notification under the Exchange
Act.
"Formula Rate" Any of the Class A-1 Formula Rate, the Class A-2
Formula Rate, the Class A-3 Formula Rate, the Class M-1 Formula
Rate, the Class
M-2 Formula Rate, the Class M-3 Formula Rate, the Class M-4 Formula
Rate, the
Class M-5 Formula Rate, the Class M-6 Formula Rate, the Class B-1
Formula Rate,
the Class B-2 Formula Rate, the Class B-3 Formula Rate and the
Class B-4 Formula
Rate.
"Grantor Trust" That portion of the Trust exclusive of
Pooling-Tier
REMIC-1, Pooling-Tier REMIC-2, Lower-Tier REMIC, Upper-Tier REMIC
and Class CE
REMIC consisting of (a) the Prepayment Penalties, any Originator
Prepayment
Penalty Payment Amounts, any Servicer Prepayment Penalty Payment
Amounts,
proceeds thereof in the Custodial Account or Distribution Account
and the right
of the Class P Certificateholders to receive such Prepayment
Penalties,
Originator Prepayment Penalty Payment Amounts and Servicer
Prepayment Penalty
Payment Amounts, (b) the right of the LIBOR Certificates to receive
Cap
Carryover Amounts and the obligation to pay Class IO Shortfalls,
(c) the
Interest Rate Swap Agreement, the Interest Rate Cap Agreement, the
Excess
Reserve Fund Account and the beneficial interest of the Class CE
Certificates
with respect thereto and (d) the obligation of the Class CE
Certificates to pay
Cap Carryover Amounts and the right to receive Class IO
Shortfalls.
"Gross Margin" With respect to each Adjustable Rate Mortgage
Loan,
the fixed percentage set forth in the related Mortgage Note that is
added to the
Index on each Adjustment Date in accordance with the terms of the
related
Mortgage Note used to determine the Mortgage Interest Rate for such
Mortgage
Loan.
"Independent" When used with respect to any specified Person,
any
such Person who (i) is in fact independent of the Depositor, the
Securities
Administrator, the Trustee, the Servicer and their respective
Affiliates, (ii)
does not have any direct financial interest in or any material
indirect
financial interest in the Depositor, the Securities Administrator,
the Trustee
or the Servicer, or any Affiliate thereof, and (iii) is not
connected with the
Depositor, the Securities Administrator, the Trustee or the
Servicer, or any
Affiliate thereof, as an officer, employee, promoter, underwriter,
trustee,
partner, director or Person performing similar functions; provided,
however,
that a Person shall not fail to be Independent of the Depositor,
the Securities
Administrator, the Trustee or the Servicer, or any Affiliate
thereof, merely
because such Person is the beneficial owner of 1% or less of any
class of
securities issued by the Depositor, the Securities Administrator,
the Trustee or
the Servicer, or any Affiliate thereof, as the case may be.
"Index" With respect to each Adjustable Rate Mortgage Loan and
with
respect to each related Adjustment Date, the index as specified in
the related
Mortgage Note.
"Initial Overcollateralization Amount" $29,585,676.69.
"Initial Principal Balance" With respect to any Certificate of
a
Class other than a Class CE, Class P or Residual Certificate, the
amount
designated "Initial Principal Balance" on the face thereof.
"Initial Pooling-Tier REMIC-1 Principal Amount" As described in
the
Preliminary Statement.
"Initial Pooling-Tier REMIC-2 Principal Amount" As described in
the
Preliminary Statement.
"Insurance Proceeds" Proceeds of any title policy, hazard policy
or
other insurance policy (including the PMI Policy) covering a
Mortgage Loan, to
the extent such proceeds are not to be applied to the restoration
of the related
Mortgaged Property or released to the Mortgagor in accordance with
the
procedures that the Servicer would follow in servicing mortgage
loans held for
its own account, subject to the terms and conditions of the related
Mortgage
Note and Mortgage.
"Insurer" Mortgage Guaranty Insurance Corporation, a Wisconsin
corporation, and its successors in interest.
"Insurer Fee" With respect to each Covered Mortgage Loan, an
amount
payable monthly and equal to the product of (a) 1/12th of the
Insurer Fee Rate
and (b) the scheduled principal balance of such Covered Mortgage
Loan as of the
first day of each month.
"Insurer Fee Rate" With respect to each Covered Mortgage Loan,
1.46%
per annum.
"Insurer Premium" With respect to each Covered Mortgage Loan,
an
amount equal to the aggregate of the Insurer Fees applicable to the
related
Covered Mortgage Loans.
"Interest Accrual Period" With respect to any Distribution Date,
the
period from and including the preceding Distribution Date to the
day prior to
the current Distribution Date (or, in the case of the first
Distribution Date,
the period from December 21, 2006 through January 25, 2007).
"Interest Carry Forward Amount" For any Class of LIBOR
Certificates
and any Distribution Date, the sum of (a) the excess, if any, of
(i) the Accrued
Certificate Interest for the prior Distribution Date and any
Interest Carry
Forward Amount for the prior Distribution Date, over (ii) the
amount in respect
of interest actually distributed on such Class on such prior
Distribution Date
and (b) interest on such excess at the applicable Pass-Through Rate
on the basis
of the actual number of days elapsed since the prior Distribution
Date.
"Interest Percentage" With respect to any Class of LIBOR
Certificates and any Distribution Date, the ratio (expressed as a
decimal
carried to at least six places) of the Accrued Certificate Interest
for such
Class to the sum of the Accrued Certificate Interest for all
Classes, in each
case with respect to such Distribution Date, without regard to
Current Interest
Shortfalls.
"Interest Rate Cap Agreement" The long-form confirmation (which
incorporates by reference a 1992 ISDA Master Agreement
(Multicurrency-Cross
Border)) dated as of December 21, 2006 between Barclays Bank PLC
and the
Securities Administrator acting on behalf of the Supplemental
Interest Trust,
substantially in the form attached hereto as Exhibit N-2. The
Interest Rate Cap
Agreement shall not be an asset of any REMIC formed under this
Agreement.
"Interest Rate Swap Agreement" The long-form confirmation
(which
incorporates by reference a 1992 ISDA Master Agreement
(Multicurrency-Cross
Border)) dated as of December 21, 2006 between Barclays Bank PLC
and the
Securities Administrator acting on behalf of the Supplemental
Interest Trust,
substantially in the form attached hereto as Exhibit N-1. The
Interest Rate Swap
Agreement shall not be an asset of any REMIC formed under this
Agreement.
"Interest Remittance Amount" As of any Distribution Date, an
amount
equal to (A) the sum, without duplication, of (i) all interest due
and collected
with respect to the related Collection Period on the Mortgage Loans
received by
the Servicer on or prior to the Determination Date for such
Distribution Date
and any interest advanced by the Servicer or the Trustee on the
Mortgage Loans
with respect to the related Collection Period (less the Servicing
Fee for the
Mortgage Loans and the Insurer Fee for the Covered Mortgage Loans,
amounts
available for reimbursement of Advances and Servicing Advances
pursuant to
Section 3.05 and expenses reimbursable pursuant to Section 6.03,
amounts
reimbursable or payable to the Trustee pursuant to this Agreement,
including,
without limitation, Sections 7.01 and 8.05 and amounts reimbursable
or payable
to the Securities Administrator pursuant to this Agreement,
including, without
limitation, Sections 8.05 and 9.01(c)), (ii) all Compensating
Interest paid by
the Servicer on such Distribution Date with respect to such
Mortgage Loans,
(iii) the portion of any payment in connection with any Principal
Prepayment,
substitution, Purchase Price, Termination Price, Insurance
Proceeds, Subsequent
Recoveries or Net Liquidation Proceeds relating to interest with
respect to such
Mortgage Loans received during the related Prepayment Period and
(iv) the
portion of any Reimbursement Amount relating to interest on such
Mortgage Loans
received during the related Prepayment Period less (B) any amounts
payable to
the Swap Provider (including any Net Swap Payment and any Swap
Termination
Payment owed to the Swap Provider other than any Swap Termination
Payment owed
to the Swap Provider resulting from a Swap Provider Trigger Event
and without
duplication of any previously paid Replacement Swap Provider
Payment).
"Investor-Based Exemption" Any of Prohibited Transaction Class
Exemption ("PTCE") 84-14 (for transactions by independent
"qualified
professional asset managers"), PTCE 91-38 (for transactions by bank
collective
investment funds), PTCE 90-1 (for transactions by insurance company
pooled
separate accounts), PTCE 95-60 (for transactions by insurance
company general
accounts) or PTCE 96-23 (for transactions effected by "in-house
asset
managers"), or any comparable exemption available under Similar
Law.
"Late Collections" With respect to any Mortgage Loan, all
amounts
received subsequent to the Determination Date immediately following
any related
Collection Period, whether as late payments of Monthly Payments or
as Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds or otherwise,
which
represent late payments or collections of principal and/or interest
due (without
regard to any acceleration of payments under the related Mortgage
and Mortgage
Note) but delinquent on a contractual basis for such Collection
Period and not
previously recovered.
"LIBOR Business Day" Any day on which banks in London, England
and
the City of New York are open and conducting transactions in
foreign currency
and exchange.
"LIBOR Certificates" The Class A, Class M and Class B
Certificates.
"LIBOR Determination Date" With respect to any Class of LIBOR
Certificates, (i) for the initial Distribution Date, the second
LIBOR Business
Day preceding the Closing Date and (ii) for each subsequent
Distribution Date,
the second LIBOR Business Day prior to the immediately preceding
Distribution
Date.
"Liquidated Mortgage Loan" As to any Distribution Date, any
Mortgage
Loan in respect of which the Servicer has determined, in accordance
with the
servicing procedures specified herein, as of the end of the related
Prepayment
Period, that all Liquidation Proceeds, Condemnation Proceeds and
Insurance
Proceeds which it expects to recover with respect to the
liquidation of the
Mortgage Loan or disposition of the related REO Property have been
recovered.
"Liquidation Proceeds" The amount (other than amounts received
in
respect of the rental of any REO Property prior to REO Disposition)
received by
the Servicer in connection with (i) the taking of all or a part of
a Mortgaged
Property by exercise of the power of eminent domain or condemnation
or (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's
sale,
foreclosure sale or otherwise.
"Liquidation Report" The report with respect to a Liquidated
Mortgage Loan in such form as is agreed to by the Servicer, the
Trustee and the
Securities Administrator listing (i) the sale price of the related
Mortgaged
Property or amount of the REO Disposition, (ii) the amount of any
Realized Loss
(or gain) with respect to such Liquidated Mortgage Loan, (iii) the
expenses
relating to the liquidation of such Liquidated Mortgage Loan and
(iv) such other
information as is agreed to by the Servicer, the Trustee and the
Securities
Administrator.
"Loan-to-Value Ratio" For any Mortgage Loan, the ratio, expressed
as
a percentage, the numerator of which is the original loan amount
(unless
otherwise indicated) of a particular Mortgage Loan at origination
and the
denominator of which is the lesser of (x) the appraised value of
the related
Mortgaged Property determined in the appraisal used by the
originator at the
time of origination of such Mortgage Loan, and (y) if the Mortgage
is originated
in connection with a sale of the Mortgaged Property, the sale price
for such
Mortgaged Property.
"Losses" As defined in Section 9.03.
"Lost Note Affidavit" With respect to any Mortgage Loan as to
which
the original Mortgage Note has been permanently lost or destroyed
and has not
been replaced, an affidavit from the Seller certifying that the
original
Mortgage Note has been lost, misplaced or destroyed (together with
a copy of the
related Mortgage Note and indemnifying the Trust against any loss,
cost or
liability resulting from the failure to deliver the original
Mortgage Note) in
the form of Exhibit H hereto.
"Lower-Tier Interest Rate" With respect to each Lower-Tier
Regular
Interest, the Lower-Tier Interest Rate described in the Preliminary
Statement.
"Lower-Tier Principal Amount" With respect to each Lower-Tier
Regular Interest, the amount described in the Preliminary Statement
under the
caption "Lower-Tier REMIC."
"Lower-Tier Regular Interest" Each of the Class LT-A-1, Class
LT-A-2, Class LT-A-3, Class LT-M-1, Class LT-M-2, Class LT-M-3,
Class LT-M-4,
Class LT-M-5, Class LT-M-6, Class LT-B-1, Class LT-B-2, Class
LT-B-3, Class
LT-B-4, Class LT-IO and Class LT-Accrual Interests as described in
the
Preliminary Statement.
"Lower-Tier REMIC" As defined in the Preliminary Statement.
"LT-Accretion Directed Classes" As defined in the Preliminary
Statement.
"Majority Certificateholders" The Holders of Certificates
evidencing
at least 51% of the Voting Interests.
"Majority Class CE Certificateholder" The Holder of Class CE
Certificates evidencing at least a 51% Percentage Interest in the
Class CE
Certificates.
"MERS" The Mortgage Electronic Registration Systems, Inc.
"MERS Mortgage Loan" Any MOM Mortgage Loan or any other
Mortgage
Loan as to which MERS is (or is intended to be) the mortgagee of
record and as
to which a MIN has been assigned.
"MIN" A MERS Mortgage Identification Number assigned to a
Mortgage
Loan in accordance with the MERS Procedure Manual.
"Minimum Mortgage Interest Rate" With respect to each
Adjustable
Rate Mortgage Loan, the percentage set forth in the related
Mortgage Note as the
minimum Mortgage Interest Rate thereunder.
"MOM" A Mortgage Loan where the related Mortgage names MERS as
the
original mortgagee thereof, as to which a MIN has been assigned,
and which
Mortgage has not been assigned to any other person.
"Monthly Excess Cashflow Amount" The sum of (a) the Monthly
Excess
Interest Amount remaining after reduction (but not below zero) by
any Current
Interest Shortfall and any amounts used to fund any Extra Principal
Distribution
Amount, (b) the Overcollateralization Release Amount and (c) any
portion of the
Principal Distribution Amount (without duplication) remaining after
principal
distributions on the Certificates (other than the Class CE, Class P
and Residual
Certificates).
"Monthly Excess Interest Amount" With respect to each
Distribution
Date, the amount, if any, by which the Interest Remittance Amount
for such
Distribution Date exceeds the aggregate amount distributed on such
Distribution
Date pursuant to paragraphs (i) through (xii) of Section 4.01.
"Monthly Payment" With respect to any Mortgage Loan, the
scheduled
monthly payment of principal and interest on such Mortgage Loan
which is payable
by the related Mortgagor from time to time under the related
Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation
and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any
reduction in
the amount of interest collectible from the related Mortgagor
pursuant to the
Relief Act or similar state laws; (b) without giving effect to any
extension
granted or agreed to by the Servicer pursuant to Section 3.01; and
(c) on the
assumption that all other amounts, if any, due under such Mortgage
Loan are paid
when due.
"Moody's" Moody's Investors Service, Inc., and its successors,
and
if such company shall for any reason no longer perform the
functions of a
securities rating agency, "Moody's" shall be deemed to refer to any
other
"nationally recognized statistical rating organization" as set
forth on the most
current list of such organizations released by the Commission.
"Mortgage" The mortgage, deed of trust or other instrument
creating
a first or second lien on, or first or second priority security
interest in, a
Mortgaged Property securing a Mortgage Note.
"Mortgage File" Either of the Owner Mortgage File or Retained
Mortgage File.
"Mortgage Interest Rate" With respect to each Mortgage Loan,
the
annual rate at which interest accrues on such Mortgage Loan from
time to time in
accordance with the provisions of the related Mortgage Note, which
rate (i) in
the case of each Fixed Rate Mortgage Loan shall remain constant at
the rate set
forth in the Mortgage Loan Schedule as the Mortgage Interest Rate
in effect
immediately following the applicable Cut-off Date and (ii) in the
case of each
Adjustable Rate Mortgage Loan (A) as of any date of determination
until the
first Adjustment Date following the applicable Cut-off Date shall
be the rate
set forth in the Mortgage Loan Schedule as the Mortgage Interest
Rate in effect
immediately following the applicable Cut-off Date and (B) as of any
date of
determination thereafter shall be the rate as adjusted on the most
recent
Adjustment Date, to equal the sum, rounded as provided in the
Mortgage Note, of
the Index, determined as set forth in the related Mortgage Note,
plus the
related Gross Margin subject to the limitations set forth in the
related
Mortgage Note. With respect to each Mortgage Loan that becomes an
REO Property,
as of any date of determination, the annual rate determined in
accordance with
the immediately preceding sentence as of the date such Mortgage
Loan became an
REO Property.
"Mortgage Loan" Each mortgage loan transferred and assigned to
the
Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to
time held as
a part of the Trust Fund, the Mortgage Loans so held being
identified in the
Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement" The agreement between the
Seller
and the Depositor, dated as of December 21, 2006, regarding the
transfer of the
Mortgage Loans by the Seller to or at the direction of the
Depositor, in the
form of Exhibit G attached hereto.
"Mortgage Loan Schedule" As of any date with respect to the
Mortgage
Loans, the lists of such Mortgage Loans included in the Trust Fund
on such date,
separately identifying the Fixed Rate Mortgage Loans and the
Adjustable Rate
Mortgage Loans delivered by the Depositor to the Trustee, the
Servicer, the
Securities Administrator and the Custodian. The Mortgage Loan
Schedule shall set
forth the following information with respect to each Mortgage
Loan:
(1) the Mortgage Loan identifying number;
(2) the city, state and zip code of the Mortgaged Property;
(3) the type of property;
(4) the Mortgage Interest Rate;
(5) the Net Mortgage Interest Rate;
(6) the Monthly Payment;
(7) the original number of months to maturity;
(8) the scheduled maturity date;
(9) the Cut-off Date Principal Balance;
(10) the Loan-to-Value Ratio at origination;
(11) whether such Mortgage Loan is covered by primary mortgage
insurance;
(12) whether such Mortgage Loan is a Covered Mortgage Loan;
(13) the applicable Servicing Fee Rate;
(14) with respect to each Covered Mortgage Loan, the Coverage
Percentage;
(15) the Index;
(16) the Gross Margin;
(17) the Periodic Cap;
(18) the first Adjustment Date;
(19) the Rate Ceiling; and
(20) a code indicating whether the Mortgage Loan has a
Prepayment
Penalty and the Prepayment Penalty term.
The Mortgage Loan Schedule shall set forth the following
information, as of the applicable Cut-off Date, with respect to the
Mortgage
Loans in the aggregate: (1) the number of Mortgage Loans; (2) the
current unpaid
principal balance of the Mortgage Loans; (3) the weighted average
Mortgage
Interest Rate of the Mortgage Loans; and (4) the weighted average
maturity of
the Mortgage Loans. The Mortgage Loan Schedule shall be amended
from time to
time in accordance with the provisions of this Agreement. With
respect to any
Eligible Substitute Mortgage Loan, Cut-off Date shall refer to the
applicable
date of substitution.
"Mortgage Note" The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
"Mortgage Pool" The pool of Mortgage Loans, identified on the
Mortgage Loan Schedule from time to time, and any REO Properties
acquired in
respect thereof.
"Mortgaged Property" The underlying property securing a
Mortgage
Loan, including any REO Property, consisting of an Estate in Real
Property
improved by a Residential Dwelling.
"Mortgagor" The obligor on a Mortgage Note.
"Net Liquidation Proceeds" With respect to any Liquidated
Mortgage
Loan or any other disposition of related Mortgaged Property
(including REO
Property) the related Liquidation Proceeds net of unreimbursed
Advances,
unreimbursed Servicing Advances, unpaid Servicing Fees and any
other accrued and
unpaid servicing fees received and retained in connection with the
liquidation
of such Mortgage Loan or Mortgaged Property.
"Net Mortgage Interest Rate" With respect to any Mortgage Loan,
the
Mortgage Interest Rate borne by such Mortgage Loan minus the
Servicing Fee Rate
and with respect to any Covered Mortgage Loan, the Insurer Fee Rate
(including
any state and local tax on the Insurer Fee Rate).
"Net Swap Payment" In the case of (i) payments made by the
Supplemental Interest Trust to the Swap Provider on any
Distribution Date up to
and including the Distribution Date in December 2010, the excess,
if any, of (x)
the Fixed Swap Payment for such Distribution Date over (y) the
Floating Swap
Payment for such Distribution Date and (ii) payments made by the
Swap Provider
to the Supplemental Interest Trust on any Distribution Date up to
and including
the Distribution Date in December 2010, the excess, if any, of (x)
the Floating
Swap Payment for such Distribution Date over (y) the Fixed Swap
Payment for such
Distribution Date.
"Nonrecoverable Advance" Any Advance or Servicing Advance
previously
made or proposed to be made in respect of a Mortgage Loan that, in
the good
faith business judgment of the Servicer (or the Trustee, in the
case of any
Advance made by the Trustee pursuant to Section 7.01), will not or,
in the case
of a proposed Advance or Servicing Advance, would not be ultimately
recoverable
from Late Collections on such Mortgage Loan as provided herein.
"Notional Amount" With respect to Class CE Interest, an amount
equal
to the aggregate of the Lower-Tier Principal Amounts of the
Lower-Tier Regular
Interests (other than the Class LT-IO Interest) as of the first day
of the
related Interest Accrual Period.
"NYCEMA" A New York Consolidation, Extension and Modification
Agreement.
"Officer's Certificate" A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President, a vice
president (however
denominated), and by the Treasurer, the Secretary, or one of the
assistant
treasurers or assistant secretaries or any other duly authorized
officer of the
Servicer, the Securities Administrator, the Trustee, the Insurer or
the
Depositor, as applicable.
"One-Month LIBOR" With respect to the initial Interest Accrual
Period, 5.35% per annum. With respect to each Interest Accrual
Period (other
than the initial Interest Accrual Period), the rate determined by
the Securities
Administrator on the related LIBOR Determination Date on the basis
of the
British Bankers' Association ("BBA") "Interest Settlement Rate" for
one-month
deposits in U.S. Dollars as found on Telerate Page 3750 as of 11:00
A.M. London
time on such LIBOR Determination Date. If no such quotations are
available on a
LIBOR Determination Date, One-Month LIBOR for the related Interest
Accrual
Period will be established by the Securities Administrator as the
higher of:
(i) One-Month LIBOR as determined on the previous LIBOR
Determination Date; and
(ii) the rate per annum which the Securities Administrator
determines to be either (A) the arithmetic mean (rounding such
arithmetic
mean upwards if necessary to the nearest whole multiple of 1/16%)
of the
one-month U.S. Dollar lending rates that New York City banks
selected by
the Securities Administrator are quoting, on the relevant LIBOR
Determination Date, to the principal London offices of at least
two
leading banks in the London interbank market or (B) in the event
that the
Securities Administrator can determine no such arithmetic mean, the
lowest
one-month U.S. Dollar lending rate that the New York City banks
selected
by the Securities Administrator are quoting on such LIBOR
Determination
Date to leading European banks.
"Opinion of Counsel" A written opinion of counsel, who may,
without
limitation, be a salaried counsel for the Depositor, the
Securities
Administrator, the Trustee or the Servicer except that any opinion
of counsel
relating to (a) the qualification of any REMIC as a REMIC or (b)
compliance with
the REMIC Provisions must be an opinion of Independent counsel.
"Optional Termination Date" The first Distribution Date on which
the
Majority Class CE Certificateholder or, if there is no Majority
Class CE
Certificateholder, the Depositor, may opt to terminate the Mortgage
Pool
pursuant to Section 10.01.
"Original Principal Balance" With respect to each Class of
Certificates, the Principal Balance thereof on the Closing Date, as
set forth
opposite such Class in the table in the Preliminary Statement under
the caption
"Certificates," except with respect to (i) the Class P and
Residual
Certificates, which have an Original Principal Balance of zero and
(ii) the
Class CE Certificates, which, solely for REMIC purposes, have an
Original
Principal Balance equal to the Initial Overcollateralization
Amount.
"Originator" Wells Fargo Bank and its successors.
"Originator Prepayment Penalty Payment Amount" The amount payable
by
the Originator pursuant to Section 5(b) of the Mortgage Loan
Purchase Agreement.
"Overcollateralization Amount" As of any Distribution Date, the
excess, if any, of (x) the Pool Balance as of the last day of the
related
Collection Period over (y) the aggregate Principal Balance of all
Classes of
Certificates (other than the Class CE, Class P and Residual
Certificates) after
taking into account all distributions of principal on such
Distribution Date and
the increase of any Principal Balance as a result of Subsequent
Recoveries.
"Overcollateralization Deficiency" As of any Distribution Date,
the
excess, if any, of (x) the Targeted Overcollateralization Amount
for such
Distribution Date over (y) the Overcollateralization Amount for
such
Distribution Date, calculated for this purpose after taking into
account the
reduction on such Distribution Date of the Principal Balances of
all Classes of
Certificates (other than the Class CE, Class P and Residual
Certificates)
resulting from the distribution of the Principal Distribution
Amount (but not
the Extra Principal Distribution Amount) on such Distribution Date,
but prior to
taking into account any Applied Realized Loss Amount on such
Distribution Date.
"Overcollateralization Floor" As of any Distribution Date, the
amount by which the Pool Balance as of the last day of the related
Collection
Period exceeds the product of (i) 0.50% and (ii) the Pool Balance
as of the
Cut-off Date.
"Overcollateralization Release Amount" With respect to any
Distribution Date on or after the Stepdown Date on which a Trigger
Event is not
in effect, the lesser of (x) the Principal Remittance Amount and
(y) the excess,
if any, of (i) the Overcollateralization Amount for such
Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied as
a principal
payment on the Certificates (other than the Class CE, Class P and
Residual
Certificates) on such Distribution Date, over (ii) the Targeted
Overcollateralization Amount for such Distribution Date. With
respect to any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Release Amount will be zero.
"Owner Mortgage File" A file maintained by the Custodian for
each
Mortgage Loan that contains the documents specified in Section
2.01(a) and any
additional documents required to be added to the Owner Mortgage
File pursuant to
this Agreement.
"Ownership Interest" As to any Certificate, any ownership or
security interest in such Certificate, including any interest in
such
Certificate as the Holder thereof and any other interest therein,
whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate" For each Class of LIBOR Certificates, each
Pooling-Tier REMIC-1 Regular Interest, each Pooling-Tier REMIC-2
Regular
Interest, each Lower-Tier Regular Interest, each Upper-Tier Regular
Interest,
and each Class CE REMIC Regular Interest, the per annum rate set
forth or
calculated in the manner described in the Preliminary
Statement.
"Paying Agent" Any paying agent appointed pursuant to Section
5.05.
"Paying Agent Agreement" As defined in Section 5.05.
"Percentage Interest" With respect to any Certificate (other than
a
Class CE, Class P and Residual Certificate), a fraction, expressed
as a
percentage, the numerator of which is the initial Principal
Balance, as the case
may be, represented by such Certificate and the denominator of
which is the
Original Principal Balance of the related Class. With respect to a
Class CE or
Class P Certificate, the portion of the Class evidenced thereby,
expressed as a
percentage, as stated on the face of such Certificate; provided,
however, that
the sum of all such percentages for each such Class totals 100%.
With respect to
the Class R Certificate, 100%.
"Periodic Cap" With respect to each Adjustable Rate Mortgage
Loan,
the applicable limit on adjustment of the Mortgage Interest Rate
for each
Adjustment Date specified in the applicable Mortgage Note and
designated as such
in the Mortgage Loan Schedule.
"Permitted Transferee" Any transferee of a Residual Certificate
other than a Disqualified Organization, a non-U.S. Person or a U.S.
Person with
respect to whom income on the Residual Certificate is attributable
to a foreign
permanent establishment or fixed base, within the meaning of an
applicable
income tax treaty, of such Person or any other U.S. Person.
"Person" Any individual, corporation, partnership, joint
venture,
association, joint stock company, trust, limited liability
company,
unincorporated organization or government or any agency or
political subdivision
thereof.
"PMI Policy" The Primary Mortgage Insurer Policy No.
22-400-4-3707,
with respect to the Covered Mortgage Loans, issued by the Insurer,
and all
endorsements thereto, as supplemented by the commitment letter,
dated December
13, 2006, between the Insurer and the Securities Administrator, a
copy of which
is attached hereto as Exhibit M.
"Pool Balance" As of any date of determination, the aggregate
unpaid
principal balance of the Mortgage Loans.
"Pool Cap" With respect to any Distribution Date and the LIBOR
Certificates (a) a per annum rate (subject to adjustment based on
the actual
number of days elapsed in the related Interest Accrual Period)
equal to the
weighted average of the Net Mortgage Interest Rates for the
Mortgage Loans,
weighted on the basis of the unpaid principal balance of the
Mortgage Loans as
of the first day of the related Collection Period minus (b) a
percentage,
expressed as a per annum rate (subject to an adjustment based on
the actual
number of days elapsed in the related Interest Accrual Period),
calculated as a
fraction, the numerator of which is the sum of (i) any Net Swap
Payment owed by
the Supplemental Interest Trust to the Swap Provider and (ii) any
Swap
Termination Payment (other than any Swap Termination Payment
resulting from a
Swap Provider Trigger Event) payable by the Supplemental Interest
Trust solely
from Available Funds and the denominator of which is the Pool
Balance as of the
first day of the related Collection Period.
"Pooling-Tier REMIC-1" As described in the Preliminary
Statement.
"Pooling-Tier REMIC-1 Interest Rate" As described in the
Preliminary
Statement.
"Pooling-Tier REMIC-1 Regular Interest" As described in the
Preliminary Statement.
"Pooling-Tier REMIC-1 WAC Rate" As of any Distribution Date, a
per
annum rate equal to (a) the weighted average of the Net Mortgage
Interest Rates
then in effect on the beginning of the related Collection Period
multiplied by
(b) 30 divided by the actual number of days in the related Interest
Accrual
Period.
"Pooling-Tier REMIC-2" As described in the Preliminary
Statement.
"Pooling-Tier REMIC-2 Interest Rate" As described in the
Preliminary
Statement.
"Pooling-Tier REMIC-2 IO Interest" Any of the Pooling-Tier
REMIC-2
Regular Interests with the designation "IO" in its name.
"Pooling-Tier REMIC-2 Regular Interest" As described in the
Preliminary Statement.
"Prepayment Interest Shortfall" With respect to any
Distribution
Date, for each Mortgage Loan that was the subject of a Principal
Prepayment
during the related Prepayment Period that was applied by the
Servicer to reduce
the outstanding Principal Balance of such Mortgage Loan on a date
preceding the
related Due Date, an amount equal to interest at the applicable Net
Mortgage
Interest Rate on the amount of such Principal Prepayment for the
number of days
commencing on the date on which the Principal Prepayment is applied
and ending
on the last day of the calendar month in which applied.
"Prepayment Penalty" With respect to any Prepayment Period, any
Prepayment Penalty, penalty or charge collected by the Servicer
from a Mortgagor
in connection with any voluntary Principal Prepayment in full
pursuant to the
terms of the related Mortgage Note as from time to time held as a
part of the
Trust Fund, the Prepayment Penalties so held being determined in
accordance with
the guidelines for Prepayment Penalty provisions set forth in the
Seller
underwriting standards. The defined term "Prepayment Penalty" shall
not include
any Servicer Prepayment Penalty Payment Amount or Originator
Prepayment Penalty
Payment Amount.
"Prepayment Period" With respect to any Distribution Date, the
one
month period ending on the last day of the calendar month preceding
the month in
which such Distribution Date occurs.
"Prime Rate" The prime rate announced to be in effect from time
to
time, as published as the average rate in The Wall Street Journal
(Northeast
edition).
"Principal Balance" With respect to any Class of Certificates
(other
than the Class CE, Class P and Residual Certificates) and any
Distribution Date,
the Original Principal Balance (a) reduced by the sum of (i) all
amounts
actually distributed in respect of principal of such Class on all
prior
Distribution Dates and (ii) Applied Realized Loss Amounts allocated
thereto for
previous Distribution Dates and (b) increased by any Subsequent
Recoveries
allocated to such Class for previous Distribution Dates. The Class
CE, Class P
and Residual Certificates do not have a Principal Balance. With
respect to any
Certificate (other than a Class CE, Class P or Residual
Certificate) of a Class
and any Distribution Date, the portion of the Principal Balance of
such Class
represented by such Certificate equal to the product of the
Percentage Interest
evidenced by such Certificate and the Principal Balance of such
Class.
"Principal Distribution Amount" With respect to any
Distribution
Date, (a) the sum of (i) the Principal Remittance Amount and (ii)
the Extra
Principal Distribution Amount, if any, minus (b) the
Overcollateralization
Release Amount.
"Principal Prepayment" Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its
scheduled Due
Date and which is not accompanied by an amount of interest
representing the full
amount of scheduled interest due on any Due Date in any month or
months
subsequent to the month of prepayment.
"Principal Remittance Amount" With respect to any Distribution
Date,
to the extent of funds available therefor, an amount equal to (A)
the sum (less
amounts available for reimbursement of Advances and Servicing
Advances pursuant
to Section 3.05 and expenses reimbursable pursuant to Section 6.03
and amounts
reimbursable or payable to the Securities Administrator or Trustee
pursuant to
this Agreement, including, without limitation, Sections 8.05 and
Section
9.01(c)) of (i) each payment of principal on a Mortgage Loan due
during the
related Collection Period and received by the Servicer on or prior
to the
related Determination Date, and any Advances with respect thereto
(other than
any payment received on an Eligible Substitute Mortgage Loan
substituted during
the related Collection Period), (ii) all full and partial Principal
Prepayments
received by the Servicer during the related Prepayment Period,
(iii) Subsequent
Recoveries, Insurance Proceeds and Net Liquidation Proceeds
allocable to
principal actually collected by the Servicer during the related
Prepayment
Period, (iv) with respect to Defective Mortgage Loans repurchased
with respect
to such Prepayment Period, the portion of the Purchase Price
allocable to
principal, (v) any Substitution Adjustment Amounts received during
the related
Prepayment Period and (vi) on the Distribution Date on which the
Trust is to be
terminated in accordance with Section 10.01 hereof, that portion of
the
Termination Price in respect of principal; less (B) to the extent
any amounts
payable to the Swap Provider (including any Net Swap Payment and
any Swap
Termination Payment owed to the Swap Provider but excluding any
Swap Termination
Payment owed to the Swap Provider resulting from a Swap Provider
Trigger Event
and without duplication of any previously paid Replacement Swap
Provider
Payment) exceed the Interest Remittance Amount for such
Distribution Date
(without giving effect to clause (B) of the definition of "Interest
Remittance
Amount"), the amount of such excess.
"Private Certificates" Any of the Class B-4, Class CE, Class P
and
Class R Certificates.
"Private Placement Memorandum" That certain private placement
memorandum dated December 18, 2006 relating to the private
placement of the
Class B-4, Class CE and Class P Certificates.
"Prospectus" That certain Prospectus, dated December 18, 2006,
as
supplemented by the Prospectus Supplement.
"Prospectus Supplement" That certain Prospectus Supplement,
dated
December 18, 2006 relating to the public offering of the LIBOR
Certificates
(other than the Class B-4 Certificates).
"PT1 Cap" With respect to any Distribution Date, 10.310%.
"Purchase Price" With respect to any Mortgage Loan or REO
Property
to be purchased pursuant to or as contemplated by Section 2.01,
2.03 or 3.16, an
amount equal to the sum of (i) 100% of the unpaid principal balance
thereof as
of the date of purchase, (ii) in the case of a Mortgage Loan,
accrued interest
on such unpaid principal balance at the applicable Mortgage
Interest Rate in
effect from time to time from the Due Date as to which interest was
last covered
by a payment by the Mortgagor or an Advance by the Servicer, which
payment or
Advance had as of the date of purchase been distributed pursuant to
Section
4.01, through the end of the calendar month in which the purchase
is to be
effected, (iii) any unreimbursed Servicing Advances and Advances
and any unpaid
Servicing Fees allocable to such Mortgage Loan or REO Property,
(iv) any amounts
previously withdrawn from the Collection Account in respect of such
Mortgage
Loan or REO Property pursuant to Section 3.13 and (v) in the case
of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses
reasonably
incurred or to be incurred by the Servicer, the Securities
Administrator or the
Trustee in respect of the breach or defect giving rise to the
purchase
obligation.
"Rate Ceiling" With respect to each Adjustable Rate Mortgage
Loan,
the maximum per annum Mortgage Interest Rate permitted under the
related
Mortgage Note.
"Rating Agency or Rating Agencies" Moody's, Fitch, S&P and
DBRS, or
their respective successors. If such agencies or their successors
are no longer
in existence, "Rating Agencies" shall be such nationally recognized
statistical
rating organizations as set forth on the most current list of such
organizations
released by the Commission and designated by the Depositor, notice
of which
designation shall be given to the Trustee, the Securities
Administrator and the
Servicer.
"Realized Loss" With respect to a Liquidated Mortgage Loan, the
amount by which the remaining unpaid principal balance of the
Mortgage Loan
exceeds the amount of Net Liquidation Proceeds applied to the
principal balance
of the related Mortgage Loan. With respect to any Mortgage Loan, a
Deficient
Valuation or a reduction in the Principal Balance thereof resulting
from a
Servicer Modification.
"Realized Loss Amortization Amount" Any of the Class M-1
Realized
Loss Amortization Amount, the Class M-2 Realized Loss Amortization
Amount, the
Class M-3 Realized Loss Amortization Amount, the Class M-4 Realized
Loss
Amortization Amount, the Class M-5 Realized Loss Amortization
Amount, the Class
M-6 Realized Loss Amortization Amount, the Class B-1 Realized Loss
Amortization
Amount, the Class B-2 Realized Loss Amortization Amount, the Class
B-3 Realized
Loss Amortization Amount and the Class B-4 Realized Loss
Amortization Amount.
"Record Date" With respect to any Distribution Date and (i) the
Class CE, Class P and Residual Certificates, the last Business Day
of the
preceding month and (ii) any Class of Book-Entry Certificates, the
Business Day
immediately preceding such Distribution Date; provided, however,
that if any
Book-Entry Certificate becomes a Definitive Certificate, the Record
Date for
such Class shall be the last Business Day of the immediately
preceding month.
"Reference Banks" Initially, the Reference Banks shall be
Deutsche
Bank International, Bank of America, N.A., Citibank, N.A., and The
Fuji Bank,
Limited. If any of these banks are not available, the Securities
Administrator
shall select from one of the following banks a substitute Reference
Bank:
Westdeutsche Landesbank Girozentrale, The J.P. Morgan Chase Bank or
National
Westminster Bank Plc. If any of these banks are not available, the
Securities
Administrator shall in its discretion select another Reference
Bank.
"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
publicly 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.
"Regulation FD" Regulation FD, 17 C.F.R. ss.ss.243.100-243.103,
as
such may be amended from time to time.
"Reimbursement Amount" With respect to any Mortgage Loan, any
costs
or damages incurred by the Trust in connection with a breach of the
Depositor's
representations set forth in Section 2.04(i) and (dd) hereof.
"Related Documents" With respect to any Mortgage Loan, the
related
Mortgage Notes, Mortgages and other related documents.
"Relevant Servicing Criteria" The Servicing Criteria applicable
to
the Securities Administrator, the Trustee, the Custodian or the
Servicer, as set
forth on Exhibit S attached hereto. For clarification purposes,
multiple parties
can have responsibility for the same Relevant Servicing Criteria.
With respect
to a Servicing Function Participant engaged by the Securities
Administrator, the
Trustee, the Custodian or the Servicer, the term "Relevant
Servicing Criteria"
refers to the portion of the Relevant Servicing Criteria applicable
to the party
engaging such Servicing Function Participant insofar as the
functions required
to be performed by such party are to be performed by the Servicing
Function
Participant.
"Relief Act" The Servicemembers Civil Relief Act, as it may be
amended from time to time.
"Relief Act Interest Shortfall" With respect to any
Distribution
Date, for any Mortgage Loan with respect to which there has been a
reduction in
the amount of interest collectible thereon for the most recently
ended
Collection Period as a result of the application of the Relief Act
or similar
state laws, the amount by which (i) interest collectible on such
Mortgage Loan
during such Collection Period is less than (ii) one month's
interest on the
principal balance of such Mortgage Loan at the Mortgage Interest
Rate for such
Mortgage Loan before giving effect to the application of the Relief
Act or
similar state laws.
"REMIC" A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Provisions" Provisions of the federal income tax law
relating
to real estate mortgage investment conduits which appear at Section
860A through
860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and
regulations and rulings promulgated thereunder, as the foregoing
may be in
effect from time to time.
"REMIC Regular Interest" Any Pooling-Tier REMIC-1 Regular
Interest,
Pooling-Tier REMIC-2 Regular Interest, Lower-Tier REMIC Regular
Interest or
Upper-Tier REMIC Regular Interest, the Class CE Interest or the
Class IO
Interest.
"Remittance Report" A report prepared by the Servicer and
delivered
to the Securities Administrator pursuant to Section 4.07,
containing the
information agreed to between the Servicer and the Securities
Administrator
necessary for the Securities Administrator to prepare each
Distribution Date
Statement.
"Rents from Real Property" With respect to any REO Property,
gross
income of the character described in Section 856(d) of the
Code.
"REO Disposition" The sale or other disposition of an REO
Property
on behalf of the Trust.
"REO Disposition Fee" The REO Disposition Fee shall be the
greater
of one percent (1%) of the gross sales price of the REO Property or
$1,500.00 up
to a maximum fee of $10,000 per REO Property.
"REO Imputed Interest" As to any REO Property, for any
Collection
Period, an amount equivalent to interest (at the Net Mortgage
Interest Rate that
would have been applicable to the related Mortgage Loan had it been
outstanding)
for such Collection Period on the unpaid principal balance of the
Mortgage Loan
as of the date of acquisition.
"REO Mortgage Loan" Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage
Note is discharged and the related Mortgaged Property is held as
part of the
Trust Fund.
"REO Principal Amortization" With respect to any REO Property,
for
any calendar month, the aggregate of all amounts received in
respect of such REO
Property during such calendar month, whether in the form of rental
income, sale
proceeds (including, without limitation, that portion of the
Termination Price
paid in connection with a purchase of all of the Mortgage Loans and
REO
Properties pursuant to Section 10.01 that is allocable to such REO
Property) or
otherwise, net of any portion of such amounts (i) payable pursuant
to Section
3.13 in respect of the proper operation, management and maintenance
of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant
to Section
3.13 for unpaid Servicing Fees in respect of the related Mortgage
Loan and
payable and reimbursable to the Servicer or the Trustee for
unreimbursed
Servicing Advances and Advances in respect of such REO Property or
the related
Mortgage Loan.
"REO Property" A Mortgaged Property acquired by the Servicer on
behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure, as
described in Section 3.13.
"Replacement Swap Provider Payment" As defined in Section
3.04(m).
"Reportable Event" As defined in Section 3.28(c).
"Request for Release" A release signed by a Servicing Officer,
in
the form of Exhibit E attached hereto.
"Residential Dwelling" Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a
one-family dwelling unit in a condominium project, (iv) a
manufactured home, or
(v) a detached one-family dwelling in a planned unit development,
none of which
is a co-operative or mobile home.
"Residual Certificate" The Class R Certificate.
"Residual Interest" The sole Class of "residual interests" in
each
REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer" When used with respect to the Trustee,
the
Securities Administrator, the Custodian or the Paying Agent, any
officer of the
Corporate Trust Department of the Trustee, the Securities
Administrator, the
Custodian or the Paying Agent having direct responsibility for
the
administration of this Agreement, including any Senior Vice
President, any Vice
President, any Assistant Vice President, any Assistant Secretary,
any Trust
Officer or Assistant Trust Officer, or any other employee of the
Trustee, the
Securities Administrator, the Custodian or the Paying Agent
customarily
performing functions similar to those performed by any of the
above-designated
officers and in each case having direct responsibility for the
administration of
this Agreement. When used with respect to a Servicer, a Servicing
Officer.
"Retained Mortgage File" A file maintained by Wells Fargo Bank
prior
to any Document Transfer Date for each Mortgage Loan that contains
the documents
specified in Section 2.01(b) and any additional documents required
to be added
to the Retained Mortgage File pursuant to this Agreement.
"S&P" Standard & Poor's, a division of The McGraw-Hill
Companies,
Inc., and its successors, and if such company shall for any reason
no longer
perform the functions of a securities rating agency, "S&P"
shall be deemed to
refer to any other "nationally recognized statistical rating
organization" as
set forth on the most current list of such organizations released
by the
Commission.
"Sarbanes Oxley Certification" As defined in Section 3.28(b)
hereof.
"Securities Administrator" Wells Fargo Bank, or any successor
Securities Administrator appointed as herein provided.
"Securities Administrator Errors and Omissions Policy" An
insurance
policy covering losses caused by errors or omissions of the
Securities
Administrator and its personnel.
"Seller" Wells Fargo Bank, or its successor in interest, in its
capacity as seller under the Mortgage Loan Purchase Agreement.
"Senior Certificates" The Class A Certificates.
"Senior Enhancement Percentage" For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate
Principal
Balance of the Class M and Class B Certificates after taking into
account the
distribution of the Principal Distribution Amount on such
Distribution Date and
(ii) the Overcollateralization Amount as of such Distribution Date
by (y) the
Pool Balance as of the last day of the related Collection
Period.
"Senior Principal Distribution Amount" With respect to any
Distribution Date, the excess of (a) the aggregate Principal
Balance of the
Senior Certificates immediately prior to such Distribution Date
over (b) the
lesser of (x) the product of (1) 49.30% and (2) the aggregate
unpaid principal
balance of the Mortgage Loans as of the last day of the related
Collection
Period and (y) the Overcollateralization Floor.
"Senior Specified Enhancement Percentage" On any date of
determination thereof, 50.70%.
"Sequential Class M Principal Distribution Amount" As of any
Distribution Date on or after the Stepdown Date and as long as a
Trigger Event
is not in effect, the excess of (x) the sum of (i) the sum of the
Principal
Balances of the Senior Certificates (after taking into account the
payment of
the Senior Principal Distribution Amount on such Distribution Date)
and (ii) the
sum of the Principal Balances of the Sequential Class M
Certificates immediately
prior to such Distribution Date over (y) the lesser of (a) the
product of (i)
73.70% and (ii) the Pool Balance as of the last day of the related
Collection
Period and (b) the Overcollateralization Floor.
"Servicer" Wells Fargo Bank, or any successor servicer appointed
as
herein provided, in its capacity as Servicer hereunder. Initially
the servicing
functions performed by Wells Fargo Bank shall be performed by the
Wells Fargo
Home Mortgage division of Wells Fargo Bank.
"Servicer Errors and Omissions Policy" An insurance policy
covering
losses caused by errors or omissions of the Servicer and its
personnel,
including, but not limited to losses caused by the failure to pay
insurance
premiums or taxes, to record or perfect liens, to effect valid
transfers of
Mortgage Notes, or to properly service Mortgage Loans.
"Servicer Event of Termination" One or more of the events
described
in Section 7.01.
"Servicer Modification" A modification to the terms of a
Mortgage
Loan, in accordance with the terms of Section 3.01, as to which the
Mortgagor is
in default or as to which, in the judgment of the Servicer, default
is
reasonably foreseeable.
"Servicer Prepayment Penalty Payment Amount" The amount payable
by
the Servicer in respect of any waived Prepayment Penalties pursuant
to Section
3.01, which amount shall be equal to the difference between the
amount of
Prepayment Penalty due by a Mortgagor before any waiver and the
actual amount of
the Prepayment Penalty that was paid by the Mortgagor.
"Servicer Remittance Date" With respect to any Distribution
Date,
three Business Days prior to such Distribution Date.
"Servicing Advances" All customary, reasonable and necessary "out
of
pocket" costs and expenses incurred by the Servicer (including
reasonable
attorneys' fees and disbursements) in the performance of its
servicing
obligations, including, but not limited to, the cost of (i) the
preservation,
restoration, inspection and protection of the Mortgaged Property,
(ii) any
enforcement or judicial proceedings, including foreclosures, (iii)
the
management and liquidation of the REO Property and (iv) compliance
with the
obligations under Section 3.08.
"Servicing Criteria" The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to
time.
"Servicing Fee" With respect to each Mortgage Loan (including
each
REO Property) and for any calendar month, an amount equal to one
month's
interest (or in the event of any payment of interest which
accompanies a
Principal Prepayment in full made by the Mortgagor during such
calendar month,
interest for the number of days covered by such payment of
interest) at the
Servicing Fee Rate on the same principal amount on which interest
on such
Mortgage Loan accrues for such calendar month.
"Servicing Fee Rate" With respect to each Mortgage Loan, 0.50%
per
annum.
"Servicing Function Participant" Any Subservicer, Subcontractor
or
any other Person, other than the Securities Administrator, the
Trustee, the
Custodian and the Servicer, that is performing activities addressed
by the
Servicing Criteria.
"Servicing Officer" Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage
Loans, whose name
and specimen signature appear on a list of servicing officers
furnished by the
Servicer to the Trustee, the Securities Administrator and the
Depositor, as such
list may from time to time be amended.
"Servicing Standards" The standards set forth in Section 3.01.
"Similar Law" As defined in Section 5.02(d) hereof.
"Startup Day" As defined in Section 9.01(b) hereof.
"Stayed Funds" Any payment required to be made under the terms
of
the Certificates and this Agreement but which is not remitted by
the Servicer
because the Servicer is the subject of a proceeding under the
Bankruptcy Code
and the making of such remittance is prohibited by Section 362 of
the Bankruptcy
Code.
"Stepdown Date" The earlier to occur of (i) the Distribution
Date
following the Distribution Date on which the aggregate Principal
Balance of the
Senior Certificates is reduced to zero and (ii) the later to occur
of (x) the
Distribution Date in January 2010 and (y) the Distribution Date on
which the
Senior Enhancement Percentage for the prior Distribution Date is
greater than or
equal to the Senior Specified Enhancement Percentage.
"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 the Servicer
(or a
Subservicer of the Servicer), the Securities Administrator, the
Trustee or the
Custodian.
"Subordination Depletion Date" The Distribution Date on which
the
aggregate Principal Balance of the Class M and Class B Certificates
is reduced
to zero and the Overcollateralization Amount is reduced to
zero.
"Subsequent Recovery" Any amount (net of reimbursable expenses)
received on a Mortgage Loan subsequent to such Mortgage Loan being
determined to
be a Liquidated Mortgage Loan that resulted in a Realized Loss in a
prior month.
"Subservicer" Any Person that (i) services Mortgage Loans on
behalf
of the Servicer, 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 or
any sub-servicing agreement that are identified in Item 1122(d) of
Regulation
AB.
"Substitution Adjustment Amount" As defined in Section 2.03(d)
hereof.
"Supplemental Interest Trust" The corpus of a trust created
pursuant
to this Agreement, consisting of the Supplemental Interest Trust
Account created
pursuant to Section 3.04(h) of this Agreement, the Interest Rate
Swap Agreement,
the Interest Rate Cap Agreement and the right to receive Class IO
Shortfalls,
subject to the obligation to pay amounts specified in Section
3.04(h).
"Supplemental Interest Trust Account" The segregated trust
account
created and maintained by the Securities Administrator pursuant to
Section
3.04(h) which shall be entitled "Supplemental Interest Trust
Account, Wells
Fargo Bank, N.A., as Securities Administrator for HSBC Bank USA,
National
Association, as Trustee, in trust for registered Holders of the
LIBOR
Certificates of Wells Fargo Home Equity Asset-Backed Securities
2006-3 Trust,
Home Equity Asset-Backed Certificates, Series 2006-3," and which
must be an
Eligible Account. Amounts on deposit in the Supplemental Interest
Trust Account
shall not be invested. The Supplemental Interest Trust Account
shall not be an
asset of any REMIC formed under this Agreement.
"Swap Early Termination" The occurrence of an early termination
under the Interest Rate Swap Agreement.
"Swap LIBOR" As to any Distribution Date, LIBOR as determined
pursuant to the Interest Rate Swap Agreement with respect to such
Distribution
Date.
"Swap Notional Amount" The swap notional amount set forth on
Schedule I of the Interest Rate Swap Agreement.
"Swap Provider" Barclays Bank PLC.
"Swap Provider Trigger Event" The occurrence of any of the
following: (i) an "Event of Default" under the Interest Rate Swap
Agreement with
respect to the Swap Provider, (ii) a "Termination Event" under the
Interest Rate
Swap Agreement (other than illegality or a tax event) with respect
to which the
Swap Provider is the sole Affected Party (as defined in the
Interest Rate Swap
Agreement) or (iii) an "Additional Termination Event" under the
Interest Rate
Swap Agreement with respect to which the Swap Provider is the sole
"Affected
Party."
"Swap Termination Payment" The amount, if any, owed by the
Supplemental Interest Trust to the Swap Provider or by the Swap
Provider to the
Supplemental Interest Trust upon a Swap Early Termination.
"Targeted Overcollateralization Amount" As of any Distribution
Date,
(x) prior to the Stepdown Date, 3.30% of the Pool Balance as of the
Cut-off Date
and (y) on and after the Stepdown Date, (i) if a Trigger Event has
not occurred
for such Distribution Date, the greater of (A) 6.60% of the Pool
Balance as of
the last day of the related Collection Period and (B) 0.50% of the
Pool Balance
as of the Cut-off Date and (ii) if a Trigger Event has occurred for
such
Distribution Date, the Targeted Overcollateralization Amount for
the immediately
preceding Distribution Date.
"Tax Matters Person" With respect to each Trust REMIC, the
Person
designated as the "tax matters person" for each such Trust REMIC in
Section
9.01(e) hereof, in each case in the manner provided under Treasury
Regulations
Section 1.860F-4(d) and Treasury Regulations Section
301.6231(a)(7)-1.
"Tax Returns" The federal income tax returns on Internal
Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit
Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual
Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or any
successor
forms, to be filed on behalf of the Trust for each of the five
REMICs created
pursuant to this Agreement under the REMIC Provisions, together
with any and all
other information reports or returns that may be required to be
furnished to the
Certificateholders or filed with the Internal Revenue Service or
any other
governmental taxing authority under any applicable provisions of
federal, state
or local tax laws.
"Telerate Page 3750" The display page currently so designated on
the
Moneyline Telerate Service (or such other page as may replace the
Telerate Page
3750 page on the Moneyline Telerate Service for the purpose of
displaying London
interbank offered rates of major banks).
"Termination Price" As defined in Section 10.01(a) hereof.
"Trigger Event" With respect to any Distribution Date, if (i)
the
three-month rolling average of 60+ Day Delinquent Loans (as a
percentage of the
Pool Balance as of the last day of the related Collection Period)
equals or
exceeds 31.56% of the Senior Enhancement Percentage for the prior
Distribution
Date or (ii) the aggregate amount of Realized Losses incurred since
the
applicable Cut-off Date through the last day of the related
Collection Period
(reduced by the aggregate amount of Subsequent Recoveries received
since the
applicable Cut-off Date through the end of the last day of the
related
Collection Period) divided by the Pool Balance on the Cut-off Date
exceeds the
applicable percentages set forth below with respect to such
Distribution Date:
<TABLE>
<CAPTION>
Distribution Date Occurring In Percentage
---------------------------------------------
----------------------------------------------------------
<S> <C>
January 2009 through December 2009 1.400% for the first month, plus
an additional 1/12th of
1.650% for each month thereafter
January 2010 through December 2010 3.050% for the first month, plus
an additional 1/12th of
1.750% for each month thereafter
January 2011 through December 2011 4.800% for the first month, plus
an additional 1/12th of
1.400% for each month thereafter
January 2012 through December 2012 6.200% for the first month, plus
an additional 1/12th of
0.750% for each month thereafter
January 2013 and thereafter 6.950%
</TABLE>
"Trust" Wells Fargo Home Equity Asset-Backed Securities 2006-3
Trust, the New York common law trust created hereunder.
"Trustee Errors and Omissions Policy" An insurance policy
covering
losses caused by errors or omissions of the Trustee and its
personnel.
"Trust Fund" The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be
administered hereunder,
with respect to a portion of which five REMIC elections are to be
made, such
entire Trust Fund consisting of: (i) such Mortgage Loans as from
time to time
are subject to this Agreement, together with the Mortgage Files
relating
thereto, and together with all collections thereon and proceeds
thereof, (ii)
any REO Property, together with all collections thereon and
proceeds thereof,
(iii) the Trustee's rights with respect to the Mortgage Loans under
all
insurance policies required to be maintained pursuant to this
Agreement and any
proceeds thereof, (iv) the Depositor's rights under the Mortgage
Loan Purchase
Agreement (including any security interest created thereby), (v)
the Securities
Administrator's rights under the Interest Rate Swap Agreement, (vi)
the Interest
Rate Swap Agreement, (vii) the Securities Administrator's rights
under the
Interest Rate Cap Agreement, (viii) the Interest Rate Cap Agreement
and (ix) the
Collection Account, the Distribution Account, the Excess Reserve
Fund Account,
the Supplemental Interest Trust Account and such assets that are
deposited
therein from time to time and any investments thereof, together
with any and all
income, proceeds and payments with respect thereto.
"Trust REMIC" As defined in the Preliminary Statement.
"Trustee" HSBC Bank USA, National Association, a national
banking
association, in its capacity as trustee hereunder, or any successor
Trustee
appointed as herein provided.
"United States Person" or "U.S. Person" (i) A citizen or resident
of
the United States, (ii) a corporation, partnership or other entity
treated as a
corporation or partnership for United States federal income tax
purposes
organized in or under the laws of the United States or any state
thereof or the
District of Columbia (unless, in the case of a partnership,
Treasury Regulations
provide otherwise), (iii) an estate the income of which is
includible in gross
income for United States tax purposes, regardless of its source, or
(iv) 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.
Notwithstanding the
preceding sentence, to the extent provided in Treasury Regulations,
certain
Trusts in existence on August 20, 1996, and treated as United
States persons
prior to such date, that elect to continue to be treated as United
States
persons will also be a U.S. Person; provided, that for purposes of
the
definition of a "Permitted Transferee," a U.S. Person shall not
include any
person whose income is attributable to a foreign permanent
establishment or
fixed base, within the meaning of an applicable income tax treaty,
of such
Person or any other Person.
"Unpaid Realized Loss Amount" For any Class of Class M and Class
B
Certificates and as to any Distribution Date, the excess of (x) the
aggregate
Applied Realized Loss Amounts applied with respect to such Class
for all prior
Distribution Dates over (y) the sum of (a) the cumulative amount of
any
Subsequent Recoveries allocated to such Class, (b) the cumulative
amount of
related Realized Loss Amortization Amounts with respect to such
Class for all
prior Distribution Dates and (c) the cumulative amount of Unpaid
Realized Loss
Amounts reimbursed to such Class for all prior Distribution Dates
pursuant to
Section 3.04(h)(i) clause seventh.
"Upper-Tier Interest Rate" As described in the Preliminary
Statement.
"Upper-Tier REMIC" As described in the Preliminary Statement.
"Upper-Tier REMIC Regular Interest" As described in the
Preliminary
Statement.
"Upper-Tier REMIC WAC Rate" For any Distribution Date, the
weighted
average of the Lower-Tier Interest Rates on the Lower-Tier Regular
Interests
(other than the Class LT-IO Interest), as of the first day of the
related
Interest Accrual Period, weighted on the basis of the Lower-Tier
Principal
Amounts of such Lower-Tier Regular Interests as of the first day of
the related
Interest Accrual Period.
"Value" With respect to any Mortgaged Property, the value thereof
as
determined by an independent appraisal made at the time of the
origination of
the related Mortgage Loan or the sale price, if the appraisal is
not available.
"Voting Interests" The portion of the voting rights of all of
the
Certificates which is allocated to any Certificate. The Voting
Interests
allocated among Holders of the LIBOR Certificates shall be 98%, and
shall be
allocated among each such Class according to the fraction,
expressed as a
percentage, the numerator of which is the aggregate Principal
Balance of all the
Certificates of such Class then outstanding and the denominator of
which is the
aggregate Principal Balance of all the LIBOR Certificates then
outstanding. The
Voting Interests allocated to each such Class of Certificates shall
be allocated
among all holders of each such Class in proportion to the
outstanding Principal
Balance of such Certificates; provided, however, that any
Certificate registered
in the name of the Servicer, the Depositor, the Securities
Administrator or the
Trustee or any of their respective affiliates shall not be included
in the
calculation of Voting Interests; provided that only such
Certificates as are
known by a Responsible Officer of the Securities Administrator to
be so
registered will be so excluded. One percent of all the Voting
Interests will be
allocated to the Holders of each of the Class CE and Class P
Certificates. The
Class R Certificate shall have no Voting Interest.
"Wells Fargo Bank" Wells Fargo Bank, N.A., a national banking
association, or its successor in interest.
"Wells Fargo Bank Correspondents" The entities identified on a
list
provided by Wells Fargo Bank to the Servicer, from which Wells
Fargo Bank
purchased the Mortgage Loans.
"Written Order to Authenticate" A written order of the
Depositor
directing the Securities Administrator to execute, authenticate and
deliver the
Certificates.
Section 1.02 Accounting. Unless otherwise specified herein, for
the
purpose of any definition or calculation, whenever amounts are
required to be
netted, subtracted or added or any distributions are taken into
account such
definition or calculation and any related definitions or
calculations shall be
determined without duplication of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,
concurrently with the execution and delivery hereof, does hereby
transfer,
assign, set over and otherwise convey to the Trustee, on behalf of
the Trust,
without recourse for the benefit of the Certificateholders all the
right, title
and interest of the Depositor, including any security interest
therein for the
benefit of the Depositor, in and to (i) each Mortgage Loan
identified on the
Mortgage Loan Schedule, including the related Cut-off Date
Principal Balance,
all interest accruing thereon after the applicable Cut-off Date and
all
collections in respect of interest and principal due after the
applicable
Cut-off Date; (ii) property which secured each such Mortgage Loan
and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iii)
its interest
in any insurance policies in respect of the Mortgage Loans; (iv)
all other
assets included or to be included in the Trust Fund; (v) all
proceeds of any of
the foregoing; and (vi) the rights of the Depositor under the
Mortgage Loan
Purchase Agreement. Such assignment includes all interest and
principal due to
the Depositor or the Servicer after the applicable Cut-off Date
with respect to
the Mortgage Loans. It is agreed and understood by the Depositor
and the Trustee
that it is not intended that any mortgage loan be included in the
Trust Fund
that is a "High-Cost Home Loan" as defined in (i) the New Jersey
Home Ownership
Act effective November 27, 2003, (ii) the New Mexico Home Loan
Protection Act
effective January 1, 2004, (iii) the Massachusetts Predatory Home
Loan Practices
Act, effective November 7, 2004 or (iv) the Indiana Home Loan
Practices Act,
effective January 1, 2005.
In connection with such assignment, the Depositor shall, with
respect to each Mortgage Loan, deliver, or cause to be delivered,
to the
Custodian, on or before the Closing Date the following documents or
instruments
with respect to each Mortgage Loan:
(i) The original Mortgage Note either (A) endorsed in blank or
(B)
endorsed as provided in Section 2.01(d), with all prior and
intervening
endorsements as may be necessary to show a complete chain of
endorsements
or with respect to any Mortgage Loan as to which the original
Mortgage
Note has been permanently lost or destroyed and has not been
replaced, a
lost note affidavit with a copy of the Mortgage Note and, in the
case of
any Mortgage Loan originated in the State of New York documented by
a
NYCEMA, the NYCEMA, the new Mortgage Note, if applicable, the
consolidated
Mortgage Note and the consolidated Mortgage;
(ii) A recorded original assignment of the related Mortgage
from
Wells Fargo Bank assigning the related Mortgage to the Trustee,
certified
by the recording office, or, if such assignment is in the process
of being
recorded, a copy of the related Mortgage transmitted for
recordation
certified by an officer of Wells Fargo Bank or applicable Wells
Fargo Bank
Correspondent to be a true and correct copy of such assignment
submitted
for recordation; provided, however, if recordation is not required
as
described below, an assignment in recordable form (which may be
assigned
in blank) with respect to the related Mortgage;
(iii) The original of each assumption agreement, modification,
written assurance or substitution agreement pertaining to such
Mortgage
Note, if any; and
(iv) For each Mortgage Loan secured by Co-op Shares, the
originals
of the following documents or instruments:
(A) The loan security agreement;
(B) The stock certificate;
(C) The stock power, executed in blank;
(D) The executed proprietary lease;
(E) The executed recognition agreement;
(F) The executed UCC-1 financing statement with evidence of
recording thereon; and
(G) The executed UCC-3 financing statements or other
appropriate UCC financing statements required by state law,
evidencing a complete and unbroken chain from the mortgagee to
the
Trustee with evidence of recording thereon (or in a form
suitable
for recordation).
(b) The Securities Administrator shall promptly notify the
Depositor, the Trustee and the Custodian of the occurrence of any
Document
Transfer Event of which the Securities Administrator had knowledge.
Following
the receipt of such notice, the Depositor shall, with respect to
each Mortgage
Loan, deliver, or cause to be delivered, to the Custodian, no later
than the
Document Transfer Date, copies (which may be in electronic form
mutually agreed
upon by the Depositor and the Custodian) of the following
additional documents
or instruments with respect to each Mortgage Loan; provided,
however, that
originals of such documents or instruments shall be delivered to
the Custodian
if originals are required under the law in which the related
Mortgaged Property
is located in order to exercise all remedies available to the Trust
under
applicable law following default by the related Mortgagor:
(i) The original recorded Mortgage with evidence of recordation
noted thereon or attached thereto, together with any addenda or
riders
thereto, or a copy of such recorded Mortgage with such evidence
of
recordation certified to be true and correct by the appropriate
governmental recording office; or a copy of such recorded Mortgage
with
such evidence of recordation, or if the original Mortgage has
been
submitted for recordation but has not been returned from the
applicable
public recording office, a copy of the Mortgage certified by an
officer of
Wells Fargo Bank or the applicable Wells Fargo Bank Correspondent
to be a
true and correct copy of the original Mortgage submitted for
recordation;
(ii) The original of each assumption agreement, modification,
written assurance or substitution agreement pertaining to such
Mortgage,
if any, or, if such document is in the process of being recorded, a
copy
of such document, certified by an officer of Wells Fargo Bank or
the
applicable Wells Fargo Bank Correspondent of such Mortgage Loan or
by the
applicable title insurance company, closing agent, settlement
agent,
escrow agent or closing attorney to be a true and correct copy of
such
document transmitted for recordation, if any;
(iii) For each MERS Mortgage Loan that is not a MOM Mortgage
Loan,
the original assignment showing MERS as the assignee of the
Mortgage, with
evidence of recording thereon or copies thereof certified by an
officer of
Wells Fargo Bank or the applicable Wells Fargo Bank Correspondent
to have
been submitted for recordation;
(iv) Each original recorded intervening assignment of the
Mortgage
as may be necessary to show a complete chain of title from the
Mortgage
Loan originator to Wells Fargo Bank or Wells Fargo Home Mortgage,
Inc.,
with evidence of recordation noted thereon or attached thereto, or
a copy
of such assignment with such evidence of recordation to be true
and
correct by the appropriate governmental recording office, or, if
any such
assignment has been submitted for recordation but has not been
returned
from the applicable public recording office or is not otherwise
available,
a copy of such assignment certified by an officer of Wells Fargo
Bank or
the applicable Wells Fargo Bank Correspondent to be a true and
correct
copy of the recorded assignment submitted for recordation; and
(v) The original policy of the title insurance or certificate
of
title insurance or a written commitment to issue such a title
insurance
policy or certificate of title insurance, or a copy of such
title
insurance certified as true and correct by the applicable insurer
or any
attorney's certificate of title with an Officer's Certificate of
Wells
Fargo Bank or the applicable Wells Fargo Bank Correspondent that
such
attorney's certificate of title is customarily used in lieu of a
title
insurance policy in the jurisdiction in which the related
mortgage
property is located.
(c) If any assignment of a Mortgage to the Trustee is in the
process
of being recorded on the Closing Date, the Depositor shall use its
best efforts
to cause each such original recorded document or certified copy
thereof to be
delivered to the Custodian promptly following its recordation, but
in no event
later than one (1) year following the Closing Date. If any Mortgage
has been
recorded in the name of MERS or its designee, no assignment of
Mortgage in favor
of the Trustee will be required to be prepared or delivered and
instead, the
Servicer shall take all actions as are necessary to cause the Trust
Fund to be
shown as the owner of the related Mortgage Loan on the records of
MERS for the
purpose of the system of recording transfers of beneficial
ownership of
mortgages maintained by MERS. The Depositor shall also cause to be
delivered to
the Custodian any other original mortgage loan document included in
the Owner
Mortgage File (and, if applicable, the Retained Mortgage File) if a
copy thereof
has been delivered. The Depositor shall pay from its own funds,
without any
right of reimbursement therefor, the amount of any costs,
liabilities and
expenses incurred by the Trust by reason of the failure of the
Depositor to
cause to be delivered to the Custodian within one (1) year
following the Closing
Date any assignment of a Mortgage (except with respect to any
Mortgage recorded
in the name of MERS) not delivered to the Custodian on the Closing
Date.
In lieu of recording an assignment of any Mortgage the
Depositor
may, deliver or cause to be delivered to the Custodian the
assignment of the
Mortgage Loan to the Trustee in a form suitable for recordation, if
(i) with
respect to a particular state the Trustee and the Custodian have
received an
Opinion of Counsel acceptable to it that such recording is not
required to make
the assignment effective against the parties to the Mortgage or
subsequent
purchasers or encumbrancers of the Mortgaged Property or (ii) the
Depositor has
been advised by each Rating Agency that non recordation in a state
will not
result in a reduction of the rating assigned by that Rating Agency
at the time
of initial issuance of the Certificates. Set forth on Exhibit Q
attached hereto
is a list of all states where recordation is required by any Rating
Agency to
obtain the initial ratings of the Certificates. The Custodian may
rely and shall
be protected in relying upon the information contained in such
Exhibit Q. In the
event that the Custodian receives notice that recording is required
to protect
the right, title and interest of the Trustee in and to any such
Mortgage Loan
for which recordation of an assignment has not previously been
required, the
Custodian shall promptly notify the Trustee and the Custodian shall
within five
Business Days (or such other reasonable period of time mutually
agreed upon by
the Custodian and the Trustee) of its receipt of such notice
deliver each
previously unrecorded assignment to the related Servicer for
recordation.
(d) Except for Mortgage Notes endorsed in blank, endorsements
shall
comply with the following format:
WITHOUT RECOURSE
PAY TO THE ORDER OF:
HSBC BANK USA, NATIONAL ASSOCIATION, AS
TRUSTEE under the pooling and servicing
agreement dated as of December 21, 2006.
and its successors and assigns,
[Wells Fargo Bank, N.A.][Wells Fargo Home Mortgage, Inc.]
[Signature of Officer]
[Officer's Name and Title]
Except where assignments in blank are authorized or in the case
of
any Mortgage registered in the name of MERS, assignments of any
Mortgage shall
comply with the following:
HSBC BANK USA, NATIONAL ASSOCIATION, AS
TRUSTEE
and its successors and assigns
(e) Concurrently with the execution and delivery of this
Agreement,
the Depositor shall deliver the Mortgage Loan Schedule to the
Trustee, the
Securities Administrator, the Servicer and the Custodian. The
Depositor and the
Securities Administrator shall provide a copy of the Mortgage Loan
Schedule to
any Certificateholders upon written request made to it at the
addresses set
forth on Exhibit D, as the same may be amended from time to time by
written
notice from such party to the other parties hereto.
(f) The Securities Administrator shall monitor the rating of
Wells
Fargo & Company and upon the occurrence of a Document Transfer
Event relating to
such rating, shall promptly notify the Servicer, Depositor, Trustee
and
Custodian of the occurrence of such Document Transfer Event.
Section 2.02 Acceptance by Custodian. The Custodian, on behalf
of
the Trustee, acknowledges the receipt of, subject to the provisions
of Section
2.01 and subject to the review described below and any exceptions
noted on the
exception report described in the next paragraph below, the
documents referred
to in Section 2.01 above and all other assets included in the
definition of
"Trust Fund" and declares that it holds and will hold such
documents and the
other documents delivered to it constituting the Owner Mortgage
File (and in the
case of a Document Transfer Event, the Retained Mortgage File), and
that it
holds or will hold all such assets and such other assets included
in the
definition of "Trust Fund" in trust for the exclusive use and
benefit of all
present and future Certificateholders.
The Custodian, for the benefit of the Certificateholders, shall
execute and deliver to the Servicer, the Securities Administrator,
the Trustee
and the Depositor on or prior to the Closing Date an initial
certification in
the form attached hereto as Exhibit F-1 hereto, to the effect that,
except as
may be specified in a list of exceptions attached thereto, it has
received the
original Mortgage Notes (described in Section 2.01(a)(i)) relating
to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan
that has been paid in full, liquidated or otherwise released as of
the date of
such certification, and subject to any exceptions specifically
identified in the
exception report annexed to such certification).
The Custodian will review each Owner Mortgage File within 45
days
after execution of this Agreement. The Custodian will deliver no
later than 30
days after completion of such review to the Servicer, the
Securities
Administrator, the Trustee and the Depositor a final certification
in the form
of Exhibit F-2 hereto to the effect that, except as may be
specified in a list
of exceptions attached thereto, all required documents set forth in
Section
2.01(a) have been executed and received and appear regular on their
face, and
that such documents relate to the Mortgage Loans identified in the
Mortgage Loan
Schedule based on a comparison of the Mortgage Loan identifying
number,
Mortgagor name and street address, and in so doing the Custodian
may rely on the
purported due execution and genuineness of any such document and on
the
purported genuineness of any signature thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to
above, the
Custodian finds any document or documents constituting a part of a
Mortgage File
to be missing or defective in any material respect, at the
conclusion of its
review the Custodian shall so notify the Depositor, the Trustee,
the Securities
Administrator and the Servicer.
The Securities Administrator is hereby directed to execute and
deliver, on behalf of the Supplemental Interest Trust, the Interest
Rate Swap
Agreement and the Interest Rate Cap Agreement.
If the Interest Rate Swap Agreement or Interest Rate Cap
Agreement
is terminated, the Securities Administrator shall enter into a
replacement
interest rate swap agreement or interest rate cap agreement, as
applicable, upon
written direction of the Depositor.
Section 2.03 Repurchase or Substitution of Mortgage Loans by
the
Depositor. (a) Upon discovery or receipt of written notice of any
materially
defective document in, or that a document is missing from, an Owner
Mortgage
File (or, if applicable, a Retained Mortgage File) or of a breach
of a
representation of warranty of the Depositor in Section 2.04 hereof,
in respect
of any Mortgage Loan and such breach materially adversely affects
the value of
such Mortgage Loan, Prepayment Penalty or the interest therein of
the
Certificateholders, the Trustee (or the Custodian) shall promptly
(and in no
event more than 30 days after completion of the review) notify the
Depositor and
the Servicer of such defect, missing document or breach and request
that the
Depositor cure such defect or breach or deliver such missing
document within 60
days from the date the Depositor was notified of such missing
document, breach
or defect. If the Depositor does not deliver such missing document
or cure such
defect or cure such breach in all material respects during such
period, the
Depositor shall repurchase such Mortgage Loan from the Trust Fund
at the
Purchase Price on or prior to the Determination Date following the
expiration of
such period (subject to Section 2.03(d) and the last paragraph of
this Section
2.03(a)). The Purchase Price for the repurchased Mortgage Loan
shall be
deposited in the Collection Account, and the Custodian, upon
receipt of written
notice from the Servicer of such deposit, shall release to the
Depositor the
Owner Mortgage File (and, if applicable, Retained Mortgage File) of
the Mortgage
Loan being repurchased. The Trustee shall execute and deliver such
instruments
of transfer or assignment (or, in the case of a Mortgage Loan
registered in the
name of MERS or its designee, the Servicer shall reflect such
assignment on the
records of MERS), in each case without recourse, as the Depositor
shall furnish
to it and as shall be necessary to vest in the Depositor any
Mortgage Loan
released pursuant hereto and the Custodian and the Trustee shall
have no further
responsibility with regard to such Owner Mortgage File (and, if
applicable,
Retained Mortgage File). In lieu of repurchasing any such Mortgage
Loan as
provided above, the Depositor may cause such Mortgage Loan to be
removed from
the Trust Fund (in which case it shall become a Defective Mortgage
Loan) and
substitute one or more Eligible Substitute Mortgage Loans in the
manner and
subject to the limitations set forth in Section 2.03(d).
It is understood and agreed that the representations and
warranties
set forth in Section 2.04 hereof shall survive delivery of the
Owner Mortgage
Files (and, if applicable, Retained Mortgage Files) to the
Custodian and shall
inure to the benefit of the Certificateholders notwithstanding any
restrictive
or qualified endorsement or assignment. It is understood and agreed
that the
obligations of the Depositor set forth in this Section 2.03(a) to
cure,
substitute for or repurchase a Mortgage Loan and to pay the
Reimbursement Amount
constitute the sole remedies available to the Certificateholders
and to the
Trustee on their behalf respecting a breach of the representations
and
warranties in Section 2.04 hereof.
(b) In addition to the foregoing, in the case of a breach of
the
Depositor's representation set forth in Section 2.04(i) and (dd)
hereof, the
Depositor shall pay to the Trust the Reimbursement Amount. The
Reimbursement
Amount shall be delivered to the Servicer for deposit into the
Collection
Account within 10 days from the date the Depositor was notified by
the Trustee
of the amount of such costs and damages.
(c) Within 90 days of the earlier of discovery by the Servicer
or
receipt of notice by the Servicer of the breach of any
representation, warranty
or covenant of the Servicer set forth in Section 2.05 which
materially and
adversely affects the interests of the Certificateholders in any
Mortgage Loan,
the Servicer shall cure such breach in all material respects.
(d) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 2.03(a) must be
effected prior
to the last Business Day that is within two years after the Closing
Date. As to
any Defective Mortgage Loan for which the Depositor substitutes an
Eligible
Substitute Mortgage Loan or Loans, such substitution shall be
effected by the
Depositor delivering to the Custodian, on the Trustee's behalf for
such Eligible
Substitute Mortgage Loan or Loans, the documents required by
Section 2.01,
together with an Officer's Certificate providing that each such
Eligible
Substitute Mortgage Loan satisfies the definition thereof and
specifying the
Substitution Adjustment Amount, if any, in connection with such
substitution.
The Custodian shall acknowledge receipt for such Eligible
Substitute Mortgage
Loan or Loans and, within ten Business Days thereafter, the
Custodian shall
review such documents as specified in Section 2.02 and deliver to
the Servicer
and the Trustee, with respect to such Eligible Substitute Mortgage
Loan or
Loans, a certification substantially in the form attached hereto as
Exhibit F-1,
with any applicable exceptions noted thereon. Within one year of
the date of
substitution, the Custodian shall deliver to the Servicer and the
Trustee a
certification substantially in the form of Exhibit F-2 hereto with
respect to
such Eligible Substitute Mortgage Loan or Loans, with any
applicable exceptions
noted thereon. Monthly Payments due with respect to Eligible
Substitute Mortgage
Loans in the month of substitution are not part of the Trust Fund
and will be
retained by the Depositor. For the month of substitution,
distributions to
Certificateholders will reflect the collections and recoveries in
respect of
such Defective Mortgage Loan in the Collection Period or Prepayment
Period, as
applicable, preceding the date of substitution and the Depositor
shall
thereafter be entitled to retain all amounts subsequently received
in respect of
such Defective Mortgage Loan. The Depositor shall give or cause to
be given
written notice to the Certificateholders that such substitution has
taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of
such Defective
Mortgage Loan from the terms of this Agreement and the substitution
of the
Eligible Substitute Mortgage Loan or Loans and shall deliver a copy
of such
amended Mortgage Loan Schedule to the Trustee, the Servicer, the
Securities
Administrator and the Custodian. Upon such substitution, such
Eligible
Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and
shall be subject in all respects to the terms of this Agreement,
including all
applicable representations and warranties as of the date of
substitution.
For any month in which the Depositor substitutes one or more
Eligible Substitute Mortgage Loans for one or more Defective
Mortgage Loans, the
Servicer will determine the amount (the "Substitution Adjustment
Amount"), if
any, by which the aggregate Purchase Price of all such Defective
Mortgage Loans
exceeds the aggregate, as to each such Eligible Substitute Mortgage
Loan, of the
principal balance thereof as of the date of substitution, together
with one
month's interest on such principal balance at the applicable Net
Mortgage
Interest Rate. On the date of such substitution, the Depositor will
deliver or
cause to be delivered to the Servicer for deposit in the Collection
Account an
amount equal to the Substitution Adjustment Amount, if any, and the
Custodian,
on behalf of the Trustee, upon receipt of the related Eligible
Substitute
Mortgage Loan or Loans and notice by the Servicer of such deposit,
shall release
to the Depositor the related Owner Mortgage File (and, if
applicable, Retained
Mortgage File) and the Trustee shall execute and deliver such
instruments of
transfer or assignment, in each case without recourse, as the
Depositor shall
deliver to it and as shall be necessary to vest therein any
Defective Mortgage
Loan released pursuant hereto.
The Depositor shall determine the Purchase Price or the
eligibility
of any Eligible Substitute Mortgage Loan and the Trustee shall be
protected in
relying on such determination.
(e) Upon discovery by the Depositor, the Seller, the Servicer,
the
Securities Administrator, the Custodian or the Trustee that any
Mortgage Loan
does not constitute a "qualified mortgage" within the meaning of
Section
860G(a)(3) of the Code, the party discovering such fact shall
within two
Business Days give written notice thereof to the other parties. In
connection
therewith, the Depositor shall repurchase or, subject to the
limitations set
forth in Section 2.03(d), substitute one or more Eligible
Substitute Mortgage
Loans for the affected Mortgage Loan within 60 days of the earlier
of discovery
or receipt of such notice with respect to such affected Mortgage
Loan. In
addition, upon discovery that a Mortgage Loan is defective in a
manner that
would cause it to be a "defective obligation" within the meaning of
Treasury
Regulations relating to REMICs, the Depositor shall cure the defect
or make the
required purchase or substitution no later than 60 days after the
discovery of
the defect. Any such repurchase or substitution shall be made in
the same manner
as set forth in Section 2.03(a). The Trustee shall reconvey to the
Depositor the
Mortgage Loan to be released pursuant hereto in the same manner,
and on the same
terms and conditions, as it would a Mortgage Loan repurchased for
breach of a
representation or warranty.
(f) The Trustee shall be responsible for enforcing the
Depositor's
obligations under this Section 2.03. If the Trustee receives
written notice from
the Custodian or the Securities Administrator that the defect is
not cured by
the Depositor within 60 days after the Trustee's notice, the
Trustee shall
enforce the Depositor's obligation to repurchase such Mortgage Loan
or
substitute for such Mortgage Loan in accordance with the provisions
of this
Section 2.03. In connection with any substitution permitted by this
Section
2.03, the Trustee shall verify that the unpaid principal balance
and the
Loan-to-Value Ratio of the Eligible Substitute Mortgage Loan
satisfy the
requirements of this Section 2.03.
Section 2.04 Representations and Warranties of the Depositor
with
respect to the Mortgage Loans. The Depositor hereby represents and
warrants to
the Trustee for the benefit of the Certificateholders that as of
the Closing
Date or as of such other date specifically provided herein:
(a) The information set forth in the Mortgage Loan Schedule was
true
and correct in all material respects, including, without
limitation, the
information regarding any Prepayment Penalty, at the date or dates
respecting
which such information was furnished as specified in the Mortgage
Loan Schedule;
(b) Immediately prior to the transfer and assignment
contemplated
herein, the Depositor was the sole owner and holder of the Mortgage
Loan free
and clear of any and all liens, pledges, charges or security
interests of any
nature and has full right and authority to sell and assign the
same;
(c) All payments required to be made up to the Due Date for
such
Mortgage Loan immediately preceding the Closing Date under the
terms of the
related Mortgage Note have been made and no Mortgage Loan had more
than one
delinquency in the 12 months preceding the applicable Cut-off
Date;
(d) The Mortgage Note, the related Mortgage and other
agreements
executed in connection therewith are genuine, and each is the
legal, valid and
binding obligation of the maker thereof, enforceable in accordance
with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency,
reorganization or other similar laws affecting the enforcement of
creditors'
rights generally and by general equity principles (regardless of
whether such
enforcement is considered in a proceeding in equity or at law);
and, to the best
of the Depositor's knowledge, all parties to the Mortgage Note and
the Mortgage
had legal capacity to execute the Mortgage Note and the Mortgage
and each
Mortgage Note and Mortgage has been duly and properly executed by
the Mortgagor;
(e) All taxes, governmental assessments, insurance premiums,
and
water, sewer and municipal charges, which previously became due and
owing have
been paid, or an escrow of funds has been established, to the
extent permitted
by law, in an amount sufficient to pay for every such item which
remains unpaid;
and neither the Servicer nor the Depositor has advanced funds, or
received any
advance of funds by a party other than the Mortgagor, directly or
indirectly for
the payment of any amount required by the Mortgage, except for
interest accruing
from the date of the Mortgage Note or date of disbursement of the
Mortgage Loan
proceeds, whichever is later, to the day which precedes by thirty
days the first
Due Date under the related Mortgage Note;
(f) Neither the Depositor nor any prior holder of the Mortgage
or
the related Mortgage Note has modified the Mortgage or the related
Mortgage Note
in any material respect, satisfied, canceled or subordinated the
Mortgage in
whole or in part, released the Mortgaged Property in whole or in
part from the
lien of the Mortgage, or executed any instrument of release,
cancellation,
modification or satisfaction, except in each case as is reflected
in an
agreement delivered to the Trustee or the Custodian pursuant to
Section 2.01;
(g) No Mortgage Note or Mortgage is subject to any right of
rescission, set-off, counterclaim or defense, including the defense
of usury,
nor will the operation of any of the terms of the Mortgage Note or
Mortgage, or
the exercise of any right thereunder, render the Mortgage Note or
Mortgage
unenforceable, in whole or in part, or subject it to any right of
rescission,
set-off, counterclaim or defense, including the defense of usury,
and no such
right of rescission, set-off, counterclaim or defense has been
asserted with
respect thereto;
(h) The Mortgage is a valid, subsisting and enforceable first
lien
with respect to 95.89% of the Mortgage Loans (by aggregate unpaid
principal
balance as of the Cut-off Date) or second lien with respect to
4.11% of the
Mortgage Loans (by aggregate unpaid principal balance as of the
Cut-off Date) on
the property therein described, and the Mortgaged Property related
to each first
lien is free and clear of all encumbrances and liens having
priority over the
first lien of the Mortgage except for liens for real estate taxes
and special
assessments not yet due and payable and liens or interests arising
under or as a
result of any federal, state or local law, regulation or ordinance
relating to
hazardous wastes or hazardous substances, and, if the related
Mortgaged Property
is a condominium unit, any lien for common charges permitted by
statute or
homeowners association fees; and any security agreement, chattel
mortgage or
equivalent document related to, and delivered to the Trustee or to
the Custodian
with, any Mortgage establishes in the Depositor a valid and
subsisting first
lien with respect to 95.89% of the Mortgage Loans (by aggregate
unpaid principal
balance as of the Cut-off Date) or second lien with respect to
4.11% of the
Mortgage Loans (by aggregate unpaid principal balance as of the
Cut-off Date) on
the property described therein and the Depositor has full right to
sell and
assign the same to the Trustee;
(i) Each Mortgage Loan at the time it was originated complied in
all
material respects with applicable federal, state and local laws
including,
without limitation, truth-in-lending, real estate settlement
procedures,
consumer credit protection, equal credit opportunity, predatory and
abusive
lending laws and disclosure laws;
(j) Each Mortgaged Property is located in the United States and
consists of a one- to four-unit residential property, which may
include a
detached home, townhouse, condominium unit, a unit in a planned
unit development
or a manufacturing housing unit which constitutes real property for
purposes of
the applicable state law;
(k) Except for Mortgage Loans secured by residential long-term
leases, the Mortgaged Property consists of a fee simple estate in
real property;
all of the improvements which are included for the purpose of
determining the
appraised value of the Mortgaged Property lie wholly within the
boundaries and
building restriction lines of such property and no improvements on
adjoining
properties encroach upon the Mortgaged Property (unless insured
against under
the related title insurance policy); and to the best of the
Depositor's
knowledge, the Mortgaged Property and all improvements thereon
comply with all
requirements of any applicable zoning and subdivision laws and
ordinances;
(l) With respect to each Mortgage where a lost note affidavit
has
been delivered to the Custodian on the Trustee's behalf in place of
the related
Mortgage Note, the related Mortgage Note is no longer in
existence;
(m) The proceeds of the Mortgage Loans have been fully
disbursed,
there is no requirement for future advances thereunder and any and
all
requirements as to completion of any on-site or off-site
improvements and as to
disbursements of any escrow funds therefor have been complied with
(except for
escrow funds for exterior items which could not be completed due to
weather and
escrow funds for the completion of swimming pools); and all costs,
fees and
expenses incurred in making, closing or recording the Mortgage Loan
have been
paid, except recording fees with respect to Mortgages not recorded
as of the
Closing Date;
(n) The Mortgage Loan (except any Mortgage Loan secured by a
Mortgaged Property located in any jurisdiction, as to which an
opinion of
counsel of the type customarily rendered in such jurisdiction in
lieu of title
insurance is instead received) is covered by an American Land Title
Association
mortgagee title insurance policy or other generally acceptable form
of policy or
insurance acceptable to Fannie Mae or Freddie Mac, issued by a
title insurer
acceptable to Fannie Mae or Freddie Mac insuring the originator,
its successors
and assigns, as to the first priority lien of the Mortgage in the
original
principal amount of the Mortgage Loan and subject only to (A) the
lien of
current real property taxes and assessments not yet due and
payable, (B)
covenants, conditions and restrictions, rights of way, easements
and other
matters of public record as of the date of recording of such
Mortgage acceptable
to mortgage lending institutions in the area in which the Mortgaged
Property is
located or specifically referred to in the appraisal performed in
connection
with the origination of the related Mortgage Loan, (C) liens
created pursuant to
any federal, state or local law, regulation or ordinance affording
liens for the
costs of clean-up of hazardous substances or hazardous wastes or
for other
environmental protection purposes and (D) such other matters to
which like
properties are commonly subject which do not individually, or in
the aggregate,
materially interfere with the benefits of the security intended to
be provided
by the Mortgage; the Depositor is the sole insured of such
mortgagee title
insurance policy, the assignment to the Trustee of the Depositor's
interest in
such mortgagee title insurance policy does not require any consent
of or
notification to the insurer which has not been obtained or made,
such mortgagee
title insurance policy is in full force and effect and will be in
full force and
effect and inure to the benefit of the Trustee, no claims have been
made under
such mortgagee title insurance policy, and no prior holder of the
related
Mortgage, including the Depositor, has done, by act or omission,
anything which
would impair the coverage of such mortgagee title insurance
policy;
(o) To the best of the Depositor's knowledge, there is no
default,
breach, violation or event of acceleration existing under the
Mortgage or the
related Mortgage Note and no event which, with the passage of time
or with
notice and the expiration of any grace or cure period, would
constitute a
default, breach, violation or event of acceleration; the Depositor
has not
waived any default, breach, violation or event of acceleration; and
no
foreclosure action is currently threatened or has been commenced
with respect to
the Mortgage Loan;
(p) The Mortgaged Property is free and clear of all mechanics'
and
materialmen's liens or liens in the nature thereof; provided,
however, that this
warranty shall be deemed not to have been made at the time of the
initial
issuance of the Certificates if a title policy affording, in
substance, the same
protection afforded by this warranty is furnished to the Trustee by
the
Depositor;
(q) The Mortgage Loan meets, or is exempt from, applicable state
or
federal laws, regulations and other requirements, pertaining to
usury, and the
Mortgage Loan is not usurious;
(r) To the best of the Depositor's knowledge, all inspections,
licenses and certificates required to be made or issued with
respect to all
portions of the Mortgaged Property and, with respect to the use and
occupancy of
the same, including, but not limited to, certificates of occupancy
and fire
underwriting certificates, have been made or obtained from the
appropriate
authorities;
(s) Each Mortgage Note (other than with respect to any Balloon
Loans) is payable in monthly payments, resulting in complete
amortization of the
Mortgage Loan over a term of not more than 360 months;
(t) Each Mortgage contains customary and enforceable provisions
such
as to render the rights and remedies of the holder thereof adequate
for the
realization against the Mortgaged Property of the benefits of the
security,
including realization by judicial foreclosure (subject to any
limitation arising
from any bankruptcy, insolvency or other law for the relief of
debtors), and
there is no homestead or other exemption available to the Mortgagor
which would
interfere with such right of foreclosure;
(u) The Mortgaged Property is undamaged by water, fire,
earthquake,
earth movement other than earthquake, windstorm, flood, tornado or
similar
casualty (excluding casualty from the presence of hazardous wastes
or hazardous
substances, as to which the Depositor makes no representations), in
a matter
which would adversely affect the value of the Mortgaged Property as
security for
the Mortgage Loan or the use for which the premises were intended
and to the
best of the Depositor's knowledge, there is no proceeding pending
or threatened
for the total or partial condemnation of the Mortgaged
Property;
(v) The Mortgaged Property securing each Mortgage Loan is insured
by
an insurer acceptable to Fannie Mae or Freddie Mac against loss by
fire and such
hazards as are covered under a standard extended coverage
endorsement, in an
amount which is not less than the lesser of 100% of the insurable
value of the
Mortgaged Property and the outstanding principal balance of the
Mortgage Loan,
but in no event less than the minimum amount necessary to fully
compensate for
any damage or loss on a replacement cost basis; if the Mortgaged
Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy
for the project; if upon origination of the Mortgage Loan, the
improvements on
the Mortgaged Property were in an area identified in the Federal
Register by the
Federal Emergency Management Agency as having special flood
hazards, a flood
insurance policy meeting the requirements of the current guidelines
of the
Federal Insurance Administration is in effect with a generally
acceptable
insurance carrier, in an amount representing coverage not less than
the least of
(A) the outstanding principal balance of the Mortgage Loan, (B) the
full
insurable value of the Mortgaged Property and (C) the maximum
amount of
insurance which was available under the National Flood Insurance
Act of 1968, as
amended; and each Mortgage obligates the Mortgagor thereunder to
maintain all
such insurance at the Mortgagor's cost and expense;
(w) To the best of the Depositor's knowledge, no Mortgagor is a
debtor in any state or federal bankruptcy or insolvency
proceeding;
(x) If the Mortgage Loan is secured by a long-term residential
lease, (1) the lessor under the lease holds a fee simple interest
in the land;
(2) the terms of such lease expressly permit the mortgaging of the
leasehold
estate, the assignment of the lease without the lessor's consent
and the
acquisition by the holder of the Mortgage of the rights of the
lessee upon
foreclosure or assignment in lieu of foreclosure or provide the
holder of the
Mortgage with substantially similar protections; (3) the terms of
such lease do
not (a) allow the termination thereof upon the lessee's default
without the
holder of the Mortgage being entitled to receive written notice of,
and
opportunity to cure, such default, (b) allow the termination of the
lease in the
event of damage or destruction as long as the Mortgage is in
existence, (c)
prohibit the holder of the Mortgage from being insured (or
receiving proceeds of
insurance) under the hazard insurance policy or policies relating
to the
Mortgaged Property or (d) permit any increase in rent other than
pre-established
increases set forth in the lease; (4) the original term of such
lease is not
less than 15 years; (5) the term of such lease does not terminate
earlier than
five years after the maturity date of the Mortgage Note; and (6)
the Mortgaged
Property is located in a jurisdiction in which the use of leasehold
estates in
transferring ownership in residential properties is a widely
accepted practice;
(y) None of the Mortgage Loans are classified as "high cost"
Mortgage Loans under Section 32 of the Home Ownership and Equity
Protection Act
of 1994 as amended or any comparable state law;
(z) With respect to each Mortgage Loan that has a Prepayment
Penalty, each such Prepayment Penalty shall be enforceable, and
each Prepayment
Penalty shall be permitted pursuant to federal, state and local
law. Each such
Prepayment Penalty is in an amount less than or equal to the
maximum amount
permitted under applicable law;
(aa) Each Mortgage Loan is a "qualified mortgage" within the
meaning
of Section 860G of the Code and Treas. Reg. ss.1.860G-2;
(bb) No Mortgage Loan is a "high cost" loan as defined under
any
federal, state or local law applicable to such Mortgage Loan at the
time of its
origination;
(cc) No Mortgage Loan is serviced by the Trustee or an affiliate
of
the Trustee; and
(dd) No Mortgage Loan (other than a Mortgage Loan that is a New
Jersey covered purchase loan) is a High Cost Loan or Covered Loan,
as applicable
(as such terms are defined in the then current S&P's LEVELS(R)
Glossary which is
now Version 5.7, Appendix E) and no Mortgage Loan originated on or
after October
1, 2002 through March 6, 2003 is governed by the Georgia Fair
Lending Act.
Notwithstanding the foregoing, no representations or warranties
are
made by the Depositor as to the environmental condition of any
Mortgaged
Property; the absence, presence or effect of hazardous wastes or
hazardous
substances on any Mortgaged Property; any casualty resulting from
the presence
or effect of hazardous wastes or hazardous substances on, near or
emanating from
any Mortgaged Property; the impact on Certificateholders of any
environmental
condition or presence of any hazardous substance on or near any
Mortgaged
Property; or the compliance of any Mortgaged Property with any
environmental
laws, nor is any agent, person or entity otherwise affiliated with
the Depositor
authorized or able to make any such representation, warranty or
assumption of
liability relative to any Mortgaged Property. In addition, no
representations or
warranties are made by the Depositor with respect to the absence or
effect of
fraud in the origination of any Mortgage Loan.
It is understood and agreed that the representations and
warranties
set forth in this Section 2.04 shall survive delivery of the
respective Owner
Mortgage Files (and, if applicable, Retained Mortgage Files) to the
Custodian
and shall inure to the benefit of the Trustee notwithstanding any
restrictive or
qualified endorsement or assignment.
Section 2.05 Representations, Warranties and Covenants of the
Servicer. The Servicer hereby represents, warrants and covenants to
the Trustee,
for the benefit of each of the Trustee and the Certificateholders
and to the
Depositor and the Securities Administrator that as of the Closing
Date or as of
such date specifically provided herein:
(i) The Servicer is a national banking association duly
chartered
and validly existing in good standing under the laws of the United
States
and has all licenses necessary to carry on its business as now
being
conducted, except for such licenses, certificates and permits the
absence
of which, individually or in the aggregate, would not have a
material
adverse effect on the ability of the Servicer to conduct its
business as
it is presently conducted, and is licensed, qualified and in good
standing
in the states where the Mortgaged Property is located if the laws
of such
state require licensing or qualification in order to conduct
business of
the type conducted by the Servicer or to ensure the enforceability
or
validity of each Mortgage Loan; the Servicer has the power and
authority
to execute and deliver this Agreement and to perform in
accordance
herewith; the execution, delivery and performance of this
Agreement
(including all instruments of transfer to be delivered pursuant to
this
Agreement) by the Servicer and the consummation of the
transactions
contemplated hereby have been duly and validly authorized; and
all
requisite corporate action has been taken by the Servicer to make
this
Agreement valid and binding upon the Servicer in accordance with
its
terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer
and will
not result in the breach of any term or provision of the articles
of
incorporation or by-laws of the Servicer or result in the breach of
any
term or provision of, or conflict with or constitute a default
under or
result in the acceleration of any obligation under, any
agreement,
indenture or loan or credit agreement or other instrument to which
the
Servicer or its property is subject, or result in the violation of
any
law, rule, regulation, order, judgment or decree to which the
Servicer or
its property is subject;
(iii) The Servicer is an approved seller/servicer of
conventional
residential mortgage loans for Fannie Mae or Freddie Mac, with
the
facilities, procedures, and experienced personnel necessary for the
sound
servicing of mortgage loans of the same type as the Mortgage Loans.
The
Servicer is a HUD approved mortgagee pursuant to Section 203 of
the
National Housing Act and is in good standing to sell mortgage loans
to and
service mortgage loans for Fannie Mae or Freddie Mac, and no event
has
occurred, including but not limited to a change in insurance
coverage,
which would make the Servicer unable to comply with Fannie Mae or
Freddie
Mac eligibility requirements or which would require notification to
either
Fannie Mae or Freddie Mac;
(iv) This Agreement, and all documents and instruments
contemplated
hereby which are executed and delivered by the Servicer, constitute
and
will constitute valid, legal and binding obligations of the
Servicer,
enforceable in accordance with their respective terms, except as
the
enforcement thereof may be limited by applicable bankruptcy,
insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement
of creditors' rights generally (whether considered in a proceeding
at law
or in equity);
(v) The Servicer does not believe, nor does it have any reason
or
cause to believe, that it cannot perform each and every covenant
contained
in this Agreement;
(vi) There is no action, suit, proceeding or investigation
pending
or, to its knowledge, threatened against the Servicer that,
either
individually or in the aggregate, may result in any material
adverse
change in the business, operations, financial condition, properties
or
assets of the Servicer, or in any material impairment of the right
or
ability of the Servicer to carry on its business substantially as
now
conducted, or in any material liability on the part of the
Servicer, or
that would draw into question the validity or enforceability of
this
Agreement or of any action taken or to be taken in connection with
the
obligations of the Servicer contemplated herein, or that would be
likely
to impair materially the ability of the Servicer to perform under
the
terms of this Agreement;
(vii) No consent, approval or order of any court or
governmental
agency or body is required for the execution, delivery and
performance by
the Servicer of or compliance by the Servicer with this Agreement
or the
consummation of the transactions contemplated by this Agreement,
except
for such consents, approvals, authorizations and orders, if any,
that have
been obtained;
(viii) No information in this Agreement provided by the Servicer
nor
any information, certificate of an officer, statement furnished in
writing
or report delivered to the Trustee or the Securities Administrator
by the
Servicer in connection with the transactions contemplated hereby
contains
or will contain any untrue statement of a material fact or omits or
will
omit to state a material fact necessary in order to make the
statements
contained therein, in light of the circumstances under which they
were
made, not misleading;
(ix) The Servicer has fully furnished, and shall continue to
fully
furnish for so long as it is servicing the Mortgage Loans
hereunder, in
accordance with the Fair Credit Reporting Act and its
implementing
regulations, accurate and complete information on the Mortgagor
credit
files to Equifax, Experian and Trans Union Credit Information
Company on a
monthly basis;
(x) Except as otherwise disclosed in the Prospectus, no legal
or
governmental proceedings are pending (or known to be contemplated)
against
the Servicer that would be material to Certificateholders;
(xi) Except as otherwise disclosed in the Prospectus, the
Servicer
is not aware and has not received notice that any default,
early
amortization or other performance triggering event has occurred as
to any
other securitization due to any act or failure to act of the
Servicer
under such securitization;
(xii) Except as otherwise disclosed in the Prospectus, the
Servicer
has not been terminated as servicer in a residential mortgage
loan
securitization, either due to a servicing default or to application
of a
servicing performance test or trigger;
(xiii) Except as otherwise disclosed in the Prospectus, no
material
noncompliance with the applicable servicing criteria with respect
to other
securitizations of residential mortgage loans involving the
Servicer as a
servicer has been disclosed or reported by the Servicer within the
past
three (3) years;
(xiv) Except as otherwise disclosed in the Prospectus, no
material
changes to the Servicer's policies or procedures with respect to
the
servicing function it will perform under this Agreement for
mortgage loans
of a type similar to the Mortgage Loans have occurred during
the
three-year period immediately preceding the date of this
Agreement;
(xv) Except as otherwise disclosed in the Prospectus, there is
no
material risk that the Servicer's financial condition could affect
one or
more aspects of the performance by the Servicer of its
servicing
obligations under this Agreement in a manner that could have a
material
impact on the performance of the Mortgage Loans or the
Certificates; and
(xvi) Except as disclosed in the Prospectus, there are no
affiliations, relationships or transactions relating to the
Servicer and
any party identified in Item 1119 of Regulation AB of the type
described
therein.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.05 shall survive delivery of
the Mortgage
Files to the Custodian and shall inure to the benefit of the
Trustee, the
Depositor, the Securities Administrator and the Certificateholders.
Upon
discovery by any of the Depositor, the Servicer, the Securities
Administrator or
the Trustee of a breach of any of the foregoing representations,
warranties and
covenants which materially and adversely affects the value of any
Mortgage Loan,
Prepayment Penalty or the interests therein of the
Certificateholders, the party
discovering such breach shall give prompt written notice (but in no
event later
than two Business Days following such discovery) to the other
parties hereto.
Upon discovery by any of the Depositor, the Servicer, the
Securities
Administrator or the Trustee of a breach of any of the
representations and
warranties set forth in this Section 2.05, the party discovering
such breach
shall give prompt written notice, which shall not exceed two days,
to the other
parties. The Securities Administrator shall consult with the
Depositor to
determine if any such breach is material and any breach determined
by the
Depositor to be material shall be included by the Securities
Administrator on
the next Distribution Date Statement prepared pursuant to Section
4.06.
Section 2.06 Representations and Warranties of the Depositor.
The
Depositor represents and warrants to the Trust and the Trustee on
behalf of the
Certificateholders and to the Servicer and Securities Administrator
as follows:
(i) This agreement constitutes a legal, valid and binding
obligation
of the Depositor, enforceable against the Depositor in accordance
with its
terms, except as enforceability may be limited by applicable
bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or
hereafter in effect affecting the enforcement of creditors' rights
in
general and except as such enforceability may be limited by
general
principles of equity (whether considered in a proceeding at law or
in
equity);
(ii) Immediately prior to the sale and assignment by the
Depositor
to the Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor
had good and marketable title to each Mortgage Loan (insofar as
such title
was conveyed to it by the Seller) subject to no prior lien (other
than
4.11% of the Mortgage Loans (by aggregate unpaid principal balance
as of
the Cut-off Date) which are second liens), claim, participation
interest,
mortgage, security interest, pledge, charge or other encumbrance or
other
interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title interest in the Mortgage Loans to the Trustee on
behalf of
the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to
the
Trustee on behalf of the Trust with any intent to hinder, delay or
defraud
any of its creditors;
(v) The Depositor has been duly incorporated and is validly
existing
as a corporation in good standing under the laws of the State of
Delaware,
with full corporate power and authority to own its assets and
conduct its
business as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of
any material obligation, agreement, covenant or condition contained
in any
contract, indenture, mortgage, loan agreement, note, lease or
other
instrument to which the Depositor is a party or by which it or
its
properties may be bound, which default might result in any
material
adverse changes in the financial condition, earnings, affairs or
business
of the Depositor or which might materially and adversely affect
the
properties or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement
by
the Depositor, and the consummation of the transactions
contemplated
thereby, do not and will not result in a material breach or
violation of
any of the terms or provisions of, or, to the knowledge of the
Depositor,
constitute a default under, any indenture, mortgage, deed of trust,
loan
agreement or other agreement or instrument to which the Depositor
is a
party or by which the Depositor is bound or to which any of the
property
or assets of the Depositor is subject, nor will such actions result
in any
violation of the provisions of the certificate of incorporation or
by-laws
of the Depositor or, to the best of the Depositor's knowledge
without
independent investigation, any statute or any order, rule or
regulation of
any court or governmental agency or body having jurisdiction over
the
Depositor or any of its properties or assets (except for such
conflicts,
breaches, violations and defaults as would not have a material
adverse
effect on the ability of the Depositor to perform its obligations
under
this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order,
registration or qualification of or with any court or governmental
agency
or body of the United States or any other jurisdiction is required
for the
issuance of the Certificates, or the consummation by the Depositor
of the
other transactions contemplated by this Agreement, except such
consents,
approvals, authorizations, registrations or qualifications as (a)
may be
required under State securities or blue sky laws, (b) have been
previously
obtained or (c) the failure of which to obtain would not have a
material
adverse effect on the performance by the Depositor of its
obligations
under, or the validity or enforceability of, this Agreement;
and
(ix) There are no actions, proceedings or investigations
pending
before or, to the Depositor's knowledge, threatened by any
court,
administrative agency or other tribunal to which the Depositor is a
party
or of which any of its properties is the subject: (a) which if
determined
adversely to the Depositor would have a material adverse effect on
the
business, results of operations or financial condition of the
Depositor;
(b) asserting the invalidity of this Agreement or the Certificates;
(c)
seeking to prevent the issuance of the Certificates or the
consummation by
the Depositor of any of the transactions contemplated by this
Agreement,
as the case may be; or (d) which might materially and adversely
affect the
performance by the Depositor of its obligations under, or the
validity or
enforceability of, this Agreement.
Section 2.07 Issuance of Certificates and the REMIC Regular
Interests. The Trustee acknowledges the assignment to it of the
Mortgage Loans
and the delivery to the Custodian on its behalf of the Mortgage
Files, subject
to the provisions of Sections 2.01 and 2.02, and the Trustee
acknowledges the
assignment to it of all other assets included in the Trust Fund,
receipt of
which is hereby acknowledged. Concurrently with such assignment and
delivery and
in exchange therefor, the Securities Administrator, pursuant to the
Written
Order to Authenticate executed by an officer of the Depositor, has
executed, and
the Certificate Registrar has authenticated and delivered to or
upon the order
of the Depositor, each Class of Certificates in the minimum dollar
denominations
and integral dollar multiples in excess thereof or minimum
Percentage Interests
set forth in Section 5.01 hereof. The Trustee acknowledges the
issuance of the
Pooling-Tier REMIC-1 Regular Interests and declares that it holds
such regular
interests as assets of Pooling-Tier REMIC-2. The Trustee
acknowledges the
issuance of the Pooling-Tier REMIC-2 Regular Interests and declares
that it
holds such regular interests as assets of the Lower-Tier REMIC. The
Trustee
acknowledges the issuance of the Lower-Tier REMIC Regular Interests
and declares
that it hold such regular interests as assets of the Upper-Tier
REMIC. The
Trustee acknowledges the issuance of the Class UT-IO Interest and
Class UT-X
Interest and declares that it holds such regular interests as
assets of the
Class CE REMIC. The Trustee acknowledges the issuance of the Class
R-CE
Interest, Class PT1-R Interest, the Class PT2-R Interest, Class
LT-R Interest
and Class UT-R Interest, represented by the Class R Certificate.
The Trustee
acknowledges that the obligation of the Class CE Certificates to
pay Cap
Carryover Amounts, and declares that it hold the same as assets of
the Grantor
Trust on behalf of the Holders of the Class A-1, Class A-2, Class
A-3, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class
B-1, Class
B-2, Class B-3 and Class B-4 Certificates, respectively. In
addition to the
assets described in the preceding sentence, the assets of the
Grantor Trust
shall also include (i) Prepayment Penalties, any Servicer
Prepayment Penalty
Payment Amounts, any Originator Prepayment Penalty Payment Amounts
and the
beneficial interest of the Class P Certificates with respect
thereto and (ii)
the Interest Rate Swap Agreement, the Interest Rate Cap Agreement,
the
Supplemental Interest Trust Account, the Excess Reserve Fund
Account and the
beneficial interest of the Class CE Certificates with respect
thereto, subject
to the obligation to pay Cap Carryover Amounts, Net Swap Payments
to the Swap
Provider and Swap Termination Payments (without duplication of any
previously
paid Replacement Swap Provider Payment) to the Swap Provider and
the right to
receive Class IO Shortfalls from the LIBOR Certificates. The
interests evidenced
by the Certificates constitute the entire beneficial ownership
interest in the
Trust Fund.
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer. The Servicer, as
independent contract servicer, shall service and administer the
Mortgage Loans
in accordance with this Agreement and the normal and usual
standards of practice
of sub-prime mortgage servicers servicing similar mortgage loans in
the same
respective jurisdictions as the Mortgaged Properties, and shall
have full power
and authority, acting alone, to do or cause to be done any and all
things in
connection with such servicing and administration which the
Servicer may deem
necessary or desirable and consistent with the terms of this
Agreement (the
"Servicing Standards").
Consistent with the terms of this Agreement, the Servicer may
waive,
modify or vary any term of any Mortgage Loan or consent to the
postponement of
strict compliance with any such term or in any manner grant
indulgence to any
Mortgagor if in the Servicer's reasonable determination such
waiver,
modification, postponement or indulgence is not materially adverse
to the
Certificateholders; provided, however, that the Servicer shall not
make future
advances (other than Servicing Advances) and (unless the Mortgagor
is in default
with respect to the Mortgage Loan or such default is, in the
judgment of the
Servicer, reasonably foreseeable) the Servicer shall not permit any
modification
with respect to any Mortgage Loan that would (i) change the
Mortgage Interest
Rate, defer or forgive the payment thereof of any principal or
interest
payments, reduce or increase the outstanding principal amount
(except for actual
payments of principal) or extend the final maturity date with
respect to such
Mortgage Loan, (ii) affect adversely the status of any Trust REMIC
as a REMIC or
(iii) cause any REMIC created hereunder to be subject to a tax on
"prohibited
transactions" or "contributions" pursuant to the REMIC
Provisions.
Notwithstanding the foregoing, the Servicer shall not permit any
modification
with respect to any Mortgage Loan that would both (x) effect an
exchange or
reissuance of such Mortgage Loan under Section 1.860G-2(b) of the
Treasury
Regulations and (y) cause any Trust REMIC to fail to qualify as a
REMIC under
the Code or the imposition of any tax on "prohibited transactions"
or
"contributions" after the Startup Day under the REMIC Provisions.
Without
limiting the generality of the foregoing, the Servicer shall
continue, and is
hereby authorized and empowered to execute and deliver on behalf of
itself and
the Trustee, all instruments of satisfaction or cancellation, or of
partial or
full release, discharge and all other comparable instruments, with
respect to
the Mortgage Loans and with respect to the Mortgaged Properties.
The Servicer
shall make all required Servicing Advances and shall service and
administer the
Mortgage Loans in accordance with Applicable Regulations, and shall
provide to
the Mortgagor any reports required to be provided to them thereby.
By the
execution of this Agreement, the Trustee hereby grants to the
Servicer, a power
of attorney to enable the Servicer to carry out its servicing and
administrative
duties hereunder; provided, however, that the Trustee shall not be
held liable
for any misuse of any such power of attorney by the Servicer.
Notwithstanding
anything contained herein to the contrary, the Servicer shall not,
without the
Trustee's written consent: (i) initiate any action, suit or
proceeding solely
under the Trustee's name without indicating the Servicer's
representative
capacity; or (ii) take any action with the intent to cause, and
that actually
causes, the Trustee to be registered to do business in any
state.
In servicing and administering the Mortgage Loans, the Servicer
shall employ procedures including collection procedures and
exercise the same
care that it customarily employs and exercises in servicing and
administering
mortgage loans for its own account giving due consideration to
accepted mortgage
servicing practices of prudent lending institutions and the
Certificateholders'
reliance on the Servicer.
Notwithstanding anything in this Agreement to the contrary, in
the
event of a voluntary Principal Prepayment in full of a Mortgage
Loan, the
Servicer may not waive any Prepayment Penalty or portion thereof
required by the
terms of the related Mortgage Note unless (i)(a) the Servicer
determines that
such waiver is standard and customary in servicing similar mortgage
loans, (b)
such waiver relates to a default or a reasonably foreseeable
default and (c)
would, in the reasonable judgment of the Servicer, maximize
recovery of
Liquidation Proceeds for such Mortgage Loan, taking into account
the value of
such Prepayment Penalty, or (ii) the enforceability thereof is
limited (1) by
bankruptcy, insolvency, moratorium, receivership, or other similar
law relating
to creditors' rights generally or (2) due to acceleration in
connection with a
foreclosure or other involuntary payment. If the Servicer has
waived or does not
collect all or a portion of a Prepayment Penalty relating to a
voluntary
Principal Prepayment in full due to any action or omission of the
Servicer,
other than as provided above, the Servicer shall, on the date on
which the
Principal Prepayment in full is remitted to the Securities
Administrator,
deliver to the Securities Administrator the Servicer Prepayment
Penalty Amount
with respect to such Mortgage Loan for distribution in accordance
with the terms
of this Agreement. If the Servicer waives a Prepayment Penalty, the
Servicer
shall notify the Securities Administrator of such waiver.
In the event that a Prepayment Penalty due with respect to any
Mortgage Loan is not timely received by the Servicer, the Servicer
shall use
commercially reasonable efforts to determine whether the Originator
is obligated
to pay a related Originator Prepayment Penalty Payment Amount, and
if the
Servicer determines that a Originator Prepayment Penalty Payment
Amount is due,
the Servicer shall promptly notify the Originator, and the Servicer
shall
enforce the Originator's obligations as set forth in the Mortgage
Loan Purchase
Agreement to pay any such Originator Prepayment Penalty Payment
Amounts and, to
the extent that such amounts are received by the Servicer, shall
cause such
amounts to be deposited into the Collection Account within one
Business Day of
receipt.
Section 3.02 Collection of Mortgage Loan Payments. Continuously
from
the date hereof until the principal and interest on all Mortgage
Loans are paid
in full or as long as the Mortgage Loan remains subject to this
Agreement, the
Servicer will diligently collect all payments due under each
Mortgage Loan when
the same shall become due and payable and shall, to the extent such
procedures
shall be consistent with the Servicing Standards and Applicable
Regulations,
follow such collection procedures as it follows with respect to
mortgage loans
comparable to the Mortgage Loans and held for its own account.
Further, where
applicable, the Servicer will take special care in ascertaining and
estimating
annual Escrow Payments that, as provided in the Escrow Agreement,
will become
due and payable to that end that the installments payable by the
Mortgagors will
be sufficient to pay such charges as and when they become due and
payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans. In the
event
that any payment due under any Mortgage Loan is not paid when the
same becomes
due and payable, or in the event the Mortgagor fails to perform any
other
covenant or obligation under the Mortgage Loan and such failure
continues beyond
any applicable grace period, the Servicer shall take such action as
it shall
deem to be in the best interest of the Certificateholders (except
as provided in
Section 3.29).
In connection with a foreclosure or other conversion, the
Servicer
shall exercise such rights and powers vested in it hereunder and
use the same
degree of care and skill in its exercise as it would exercise or
use under the
circumstances in the conduct of its own affairs and consistent with
Applicable
Regulations and the Servicing Standards, including, without
limitation,
advancing funds for the payment of taxes and insurance premiums
with respect to
first and second lien Mortgage Loans.
Notwithstanding the foregoing provisions of this Section 3.03,
with
respect to any Mortgage Loan as to which the Servicer has received
actual notice
of, or has actual knowledge of, the presence of any toxic or
hazardous substance
on the related Mortgaged Property, the Servicer shall not either
(i) obtain
title to such Mortgaged Property as a result of or in lieu of
foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any
other action
with respect to, such Mortgaged Property if, as a result of any
such action, the
Trust would be considered to hold title to, to be a
mortgagee-in-possession of,
or to be an owner or operator of such Mortgaged Property within the
meaning of
the Comprehensive Environmental Response, Compensation and
Liability Act of
1980, as amended from time to time, or any comparable law, unless
the Servicer
has also previously determined, based on its reasonable judgment
and a report
prepared by a Person who regularly conducts environmental audits
using customary
industry standards, stating that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best
economic interest of
the Certificateholders to take such actions as are necessary to
bring the
Mortgaged Property into compliance therewith; and
B. there are no circumstances present at such Mortgaged
Property
relating to the use, management or disposal of any hazardous
substances,
hazardous materials, hazardous wastes, or petroleum-based materials
for which
investigation, testing, monitoring, containment, clean-up or
remediation could
be required under any federal, state or local law or regulation, or
that if any
such materials are present for which such action could be required,
that it
would be in the best economic interest of the Certificateholders to
take such
actions with respect to the affected Mortgaged Property.
Notwithstanding the foregoing, if such environmental audit
reveals,
or if the Servicer has actual knowledge or notice, that such
Mortgaged Property
contains such wastes or substances, the Servicer shall not
foreclose or accept a
deed in lieu of foreclosure.
The cost of the environmental audit report contemplated by this
Section 3.03 shall be advanced by the Servicer, subject to the
Servicer's right
to be reimbursed therefor from the Collection Account as provided
in Section
3.05(ii).
If the Servicer determines, as described above, that it is in
the
best economic interest of the Certificateholders to take such
actions as are
necessary to bring any such Mortgaged Property into compliance with
applicable
environmental laws, or to take such action with respect to the
containment,
clean-up or remediation of hazardous substances, hazardous
materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged
Property, then
the Servicer shall take such action as it deems to be in the best
economic
interest of the Certificateholders. The cost of any such
compliance,
containment, cleanup or remediation shall be advanced by the
Servicer, subject
to the Servicer's right to be reimbursed therefor from the
Collection Account as
provided in Section 3.05(ii).
Section 3.04 Collection Account, Distribution Account, Excess
Reserve Fund Account and Supplemental Interest Trust Account. (a)
The Servicer
shall segregate and hold all funds collected and received pursuant
to each
Mortgage Loan separate and apart from any of its own funds and
general assets
and shall establish and maintain one or more accounts (such account
or accounts,
the "Collection Account"). Each Collection Account shall be an
Eligible Account.
The Servicer shall deposit in the Collection Account within two
Business Days of receipt, and retain therein, the following
payments and
collections received or made by it after the applicable Cut-off
Date with
respect to the Mortgage Loans, without duplication:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Interest Rate less the Servicing Fee Rate
and the
Insurer Fee Rate;
(iii) all Net Liquidation Proceeds and Subsequent Recoveries;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held
in the
Escrow Account and applied to the restoration or repair of the
Mortgaged
Property or released to the Mortgagor in accordance with the
Servicer's
normal servicing procedures, the loan documents or applicable
law;
(v) all Condemnation Proceeds affecting any Mortgaged Property
which
are not released to the Mortgagor in accordance with the Servicer's
normal
servicing procedures, the loan documents or applicable law;
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13;
(vii) all Prepayment Penalties collected by the Servicer in
connection with the voluntary Principal Prepayment in full of any
of the
Mortgage Loans, all Originator Prepayment Penalty Payment Amounts
paid by
the Originator and all Servicer Prepayment Penalty Payment
Amounts
required to be paid by the Servicer pursuant to Section 3.01 in
connection
with any such Principal Prepayment; and
(viii) all amounts required to be deposited by the Servicer
pursuant
to Section 2.03.
Any interest paid on funds deposited in the Collection Account,
subject to Section 3.23, shall accrue to the benefit of the
Servicer and the
Servicer shall be entitled to retain and withdraw such interest
from the
Collection Account pursuant to Section 3.05(v). In addition, the
Servicer shall
deposit in the Collection Account any amounts required to be
deposited pursuant
to Section 3.23(b) in connection with losses realized on Permitted
Investments
with respect to funds held in the Collection Account. The foregoing
requirements
for deposit from the Collection Account shall be exclusive, it
being understood
and agreed that, without limiting the generality of the foregoing,
payments in
the nature of late payment charges, bad check fees, prepayment
penalties that
are not Prepayment Penalties, Originator Prepayment Penalty Payment
Amounts or
Servicer Prepayment Penalty Payment Amounts, assumption fees and
other similar
fees need not be deposited by the Servicer in the Collection
Account. Amounts
deposited into the Collection Account in error may be withdrawn at
any time.
(b) On behalf of the Trust Fund, the Securities Administrator
shall
establish and maintain one or more accounts (such account or
accounts, the
"Distribution Account"), on behalf of the Trustee, held in trust
for the benefit
of the Certificateholders. On behalf of the Trust Fund, the
Servicer shall
deliver (or cause the Originator to deliver in the case of clause
(iii) below)
to the Securities Administrator in immediately available funds for
deposit in
the Distribution Account on the Servicer Remittance Date (i) that
portion of the
Available Funds (calculated without regard to the references in the
definition
thereof to amounts that may be deposited to the Distribution
Account from a
different source as provided herein) then on deposit in the
Collection Account,
(ii) the amount of all Prepayment Penalties collected by the
Servicer in
connection with the voluntary Principal Prepayment in full of any
of the
Mortgage Loans then on deposit in the Collection Account (other
than any such
Prepayment Penalties received after the related Prepayment Period),
(iii) any
Originator Prepayment Penalty Payment Amount or Servicer Prepayment
Penalty
Payment Amount that became due during the related Prepayment Period
and (iv)
amounts reimbursable or payable to the Trustee pursuant to Section
7.01 and
Section 8.05 and amounts reimbursable or payable to the Securities
Administrator
pursuant to Section 8.05 or Section 9.01(c). Except as otherwise
provided in
Section 3.04(f), amounts in the Distribution Account shall be
deemed to be held
on behalf of the related REMICs in accordance with the REMIC
distributions set
forth in the Preliminary Statement. The Securities Administrator or
the Paying
Agent, as applicable, may, from time to time, withdraw from the
Distribution
Account for the following purposes:
(i) to pay to the Securities Administrator and to the Trustee
any
amounts owed to the Securities Administrator and the Trustee
pursuant to
Section 8.05, any amounts owed to the Securities Administrator
pursuant to
Section 9.01(c) and any amounts owed to the Trustee pursuant to
Section
7.01;
(ii) to pay to the Securities Administrator as compensation any
interest earned on funds in the Distribution Account (all such
interest to
be withdrawn monthly on each Distribution Date);
(iii) to remit Net Swap Payments and Swap Termination Payments
(without duplication of any previously paid Replacement Swap
Provider
Payment) to the Supplemental Interest Trust Account;
(iv) to remit funds to Certificateholders in the amounts and
the
manner provided for herein; and
(v) to clear and terminate the Distribution Account upon the
termination of this Agreement.
The Securities Administrator shall notify the Depositor and the
Trustee of the amount, purpose and party paid pursuant to Section
3.04(b)(i).
(c) Funds in the Collection Account and the Distribution Account
may
be invested in Permitted Investments in accordance with the
provisions set forth
in Section 3.23. The Servicer shall give notice to the Securities
Administrator
(and the Securities Administrator shall give such notice to the
Trustee) of the
location of the Collection Account maintained by it when
established upon
request and prior to any change thereof. The Securities
Administrator shall give
notice to the Servicer, the Trustee and the Depositor of the
location of the
Distribution Account when established and prior to any change
thereof.
(d) In the event the Servicer delivers to the Securities
Administrator for deposit in the Distribution Account any amount
not required to
be deposited therein, it may at any time request that the
Securities
Administrator withdraw such amount from the Distribution Account
and remit to
the Servicer any such amount, any provision herein to the
contrary
notwithstanding. In addition, the Servicer shall deliver to the
Securities
Administrator from time to time for deposit, and the Securities
Administrator
shall so deposit, in the Distribution Account in respect of
Pooling-Tier REMIC-1
(other than amounts described in clause (iii), which shall be held
in the
Grantor Trust):
(i) any Advances, as required pursuant to Section 4.07;
(ii) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters;
(iii) any Prepayment Penalties, Servicer Prepayment Penalty
Payment
Amounts or amounts in connection with the waiver of such
Prepayment
Penalties, in each case required to be deposited pursuant to
Section 3.01;
(iv) any amounts required to be deposited in the Distribution
Account pursuant to Sections 2.03, 3.04, 3.16, 3.23 or 4.07;
and
(v) any amounts required to be deposited by the Servicer pursuant
to
Section 3.11 in connection with the deductible clause in any
blanket
hazard insurance policy, such deposit being made from the
Servicer's own
funds, without reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from the
Servicer, a trustee in bankruptcy, or federal bankruptcy court or
other source,
the Securities Administrator shall, unless such funds have been
received from
the Servicer, notify the Servicer of such receipt and deposit such
funds in the
Distribution Account, subject to withdrawal thereof as permitted
hereunder. In
addition, the Securities Administrator shall deposit in the
Distribution Account
any amounts required to be deposited pursuant to Section 3.23(b) in
connection
with losses realized on Permitted Investments with respect to funds
held in the
Distribution Account.
(f) Any Prepayment Penalties, Originator Prepayment Penalty
Payment
Amounts and Servicer Prepayment Penalty Payment Amounts deposited
pursuant to
Section 3.04(a)(vii) shall not be assets of any REMIC created
hereunder, but
shall be considered assets of the Grantor Trust held by the
Securities
Administrator, on behalf of the Trustee, for the benefit of the
Class P
Certificateholders. In addition, (i) any Cap Carryover Amounts that
are paid
with respect to the LIBOR Certificates will be treated as first
having been
distributed with respect to the Class CE Certificates and then
having been paid
outside of the Trust REMICs to the Holders of the LIBOR
Certificates and (ii)
any Class IO Shortfalls will be treated as first having been
distributed with
respect to the related Classes of LIBOR Certificates and then as
having been
paid outside of the Trust REMICs to the Holders of the Class CE
Certificates.
(g) The Securities Administrator shall establish and maintain
the
Excess Reserve Fund Account, held in trust for the benefit of the
Holders of the
LIBOR Certificates. On each Distribution Date, Cap Carryover
Amounts available
pursuant the Section 4.02(b)(xxxi) will be deposited into the
Excess Reserve
Fund Account. On such Distribution Date, the Securities
Administrator shall
withdraw such Cap Carryover Amounts on deposit and apply them,
sequentially, as
follows:
(i) concurrently, to the Class A Certificates, pro rata (based
on
the outstanding Principal Balance of each such Class) any Cap
Carryover
Amount for such Class;
(ii) concurrently, to the Class A Certificates, pro rata (based
on
the remaining unpaid Cap Carryover Amount for each such Class
after
distributions pursuant to clause (i) above) any remaining Cap
Carryover
Amount for such Class after giving effect to any distributions
pursuant to
clause (i) above; and
(iii) sequentially, to the Class M-1, Class M-2, Class M-3,
Class
M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3 and
Class B-4
Certificates, any Cap Carryover Amount for such Class.
(h) (i) The Securities Administrator shall establish and
maintain
the Supplemental Interest Trust Account, held in trust for the
benefit of the
Swap Provider and the Holders of the LIBOR Certificates and Class
CE
Certificates. On the Business Day prior to each Distribution Date,
the
Securities Administrator shall (A) deposit into the Supplemental
Interest Trust
Account any Net Swap Payment and Swap Termination Payment received
from the Swap
Provider, any Replacement Swap Provider Payment received from a
replacement swap
provider and any Cap Payment and Cap Termination Payment received
from the Cap
Provider for such Distribution Date and (B) deposit into the
Supplemental
Interest Trust Account from Available Funds, any Net Swap Payment
and Swap
Termination Payment owed to the Swap Provider for such Distribution
Date, in
each case prior to distributions to Certificateholders. On the
Business Day
prior to each Distribution Date, in the case of clauses first,
second and
eighth, and on each Distribution Date, in the case of clauses
third, fourth,
fifth, sixth, seventh and ninth, the Securities Administrator shall
withdraw
from the Supplemental Interest Trust Account any amounts on deposit
and apply
them, sequentially, as follows:
first, to the Swap Provider, any Net Swap Payment owed to the
Swap
Provider pursuant to the Interest Rate Swap Agreement for such
Distribution
Date;
second, to the Swap Provider, any Replacement Swap Provider
Payment
owed to the replaced Swap Provider and, without duplication, any
Swap
Termination Payment (other than any Swap Termination Payment
resulting from a
Swap Provider Trigger Event) owed to the Swap Provider pursuant to
the Interest
Rate Swap Agreement for such Distribution Date;
third, concurrently, to the Class A-1, Class A-2 and Class A-3
Certificates, pro rata (based on the Accrued Certificate Interest
and Interest
Carry Forward Amount remaining for each such Class), the Accrued
Certificate
Interest and Interest Carry Forward Amount, to the extent
remaining
undistributed after distributions pursuant to Sections 4.01 and
4.02(b);
fourth, to the Class M and Class B Certificates to pay Accrued
Certificate Interest and Interest Carry Forward Amount (in each
case, to the
extent remaining undistributed after distributions pursuant to
Sections 4.01 and
4.02(b)) in the following order of priority:
(i) to the Class M-1 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
(ii) to the Class M-2 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
(iii) to the Class M-3 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
(iv) to the Class M-4 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
(v) to the Class M-5 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
(vi) to the Class M-6 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
(vii) to the Class B-1 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
(viii) to the Class B-2 Certificates, to pay Accrued
Certificate
Interest and then Interest Carry Forward Amount;
(ix) to the Class B-3 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount; and
(x) to the Class B-4 Certificates, to pay Accrued Certificate
Interest and then Interest Carry Forward Amount;
fifth, to the LIBOR Certificates to pay remaining Cap Carryover
Amounts in the following order of priority (after giving effect to
payments made
pursuant to Section 3.04(g)):
(i) concurrently, to the Class A Certificates, pro rata (based
on
the outstanding Principal Balance of each such Class) any Cap
Carryover
Amount for such Class;
(ii) concurrently, to the Class A Certificates, pro rata (based
on
the remaining unpaid Cap Carryover Amount for each such Class
after
distributions pursuant to clause (i) above) any remaining Cap
Carryover
Amount for such Class after giving effect to any distributions
pursuant to
clause (i) above; and
(iii) sequentially, to the Class M-1, Class M-2, Class M-3,
Class
M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3 and
Class B-4
Certificates, any Cap Carryover Amount for such Class;
sixth, to the LIBOR Certificates to pay principal as described
in
Sections 4.02(a)(i) and (ii), but only to the extent necessary to
restore the
Overcollateralization Amount to the Targeted Overcollateralization
Amount as a
result of current or prior Realized Losses not previously
reimbursed, after
giving effect to distributions pursuant to Sections 4.01 and
4.02(a);
seventh, sequentially, to the Class M-1, Class M-2, Class M-3,
Class
M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3 and
Class B-4
Certificates, in that order, any remaining Unpaid Realized Loss
Amounts for each
such Class, after payment of the applicable Realized Loss
Amortization Amounts
pursuant to Section 4.02(b);
eighth, to the Swap Provider, any Swap Termination Payment
resulting
from a Swap Provider Trigger Event (without duplication of any
previously paid
Replacement Swap Provider Payment) owed to the Swap Provider
pursuant to the
Interest Rate Swap Agreement for such Distribution Date; and
ninth, any remaining amount to the Class CE Certificates.
(ii) As described in Section 3.04(h)(i) above, Net Swap
Payments
owed to the Swap Provider and Swap Termination Payments (other than
Swap
Termination Payments resulting from a Swap Provider Trigger Event
and without
duplication of any Replacement Swap Provider Payment) owed to the
Swap Provider
shall be payable from the Supplemental Interest Trust to the Swap
Provider from
Available Funds prior to any distributions to Certificateholders.
Prior to each
Distribution Date, such amounts will be remitted from the
Distribution Account
to the Supplemental Interest Trust Account, first to make any Net
Swap Payment
owed to the Swap Provider on the Business Day prior to each
Distribution Date
pursuant to the Interest Rate Swap Agreement, and second to make
any Swap
Termination Payment (other than any Swap Termination Payment
resulting from a
Swap Provider Trigger Event and without duplication of any
previously paid
Replacement Swap Provider Payment pursuant to Section 3.04(h)(i)
priority
second) owed to the Swap Provider on the Business Day prior to each
Distribution
Date pursuant to the Interest Rate Swap Agreement. Any Swap
Termination Payment
triggered by a Swap Provider Trigger Event owed to the Swap
Provider pursuant to
the Interest Rate Swap Agreement will be subordinated to
distributions to the
holders of the LIBOR Certificates and shall be paid pursuant to
Section
3.04(h)(i) priority eighth.
(i) The Securities Administrator shall account for the Excess
Reserve Fund Account and Supplemental Interest Trust Account as
assets of a
grantor trust under subpart E, part I of subchapter J of the Code
and not as
assets of any REMIC created pursuant to this Agreement. The
beneficial owner of
the Excess Reserve Fund Account and the Supplemental Interest Trust
Account is
the Class CE Certificateholder. For federal income tax purposes,
Net Swap
Payments and Swap Termination Payments payable to the Swap Provider
shall be
deemed to be paid to the Supplemental Interest Trust first, from
the Class CE
REMIC, by the Holder of the Class CE Certificates (in respect of
the Class IO
Interest and, if applicable, Class CE Interest) and second, other
than any Swap
Termination Payment resulting from a Swap Provider Trigger Event,
from the
Upper-Tier REMIC by the Holders of the applicable Class or Classes
of LIBOR
Certificates (in respect of Class IO Shortfalls).
(j) Any Cap Carryover Amounts paid by the Securities
Administrator
pursuant to Sections 3.04(g) and (h) to the LIBOR Certificates
shall be
accounted for by the Securities Administrator as amounts paid first
to the Class
CE Certificates in respect of the Class CE Interest or from Net
Swap Payments
received from the Swap Provider and then to the respective Class or
Classes of
LIBOR Certificates. In addition, the Securities Administrator shall
account for
each Class of LIBOR Certificates' rights to receive payments of Cap
Carryover
Amounts and the obligation to pay Class IO Shortfalls as rights and
obligations
in a separate limited recourse notional principal contract between
the Class CE
Certificateholders and the holders of the LIBOR Certificates of
each such Class.
(k) [Reserved].
(l) With respect to the failure of the Swap Provider or Cap
Provider
to perform any of its obligations under the Interest Rate Swap
Agreement or the
Interest Rate Cap Agreement, as applicable, the breach by the Swap
Provider or
Cap Provider of any of its representations and warranties made
pursuant to the
Interest Rate Swap Agreement or Interest Rate Cap Agreement, as
applicable, or
the termination of the Interest Rate Swap Agreement or Interest
Rate Cap
Agreement, as applicable, the Securities Administrator shall send
any notices
and make any demands, on behalf of the Supplemental Interest Trust,
as are
required under the Interest Rate Swap Agreement or Interest Rate
Cap Agreement,
as applicable. The Securities Administrator shall cause any
replacement swap
provider or cap provider to provide a copy of the related
replacement interest
rate swap agreement or interest rate cap agreement to the
Securities
Administrator and the Depositor.
(m) (i) Upon the occurrence of a Swap Early Termination and in
the
event that the Supplemental Interest Trust receives a Swap
Termination Payment,
and (A) the Depositor obtains a successor swap provider, the
Securities
Administrator shall use the Swap Termination Payment received by
the
Supplemental Interest Trust to pay the replacement swap provider
any amount owed
to such replacement swap provider upon entering into a replacement
interest rate
swap agreement or (B) the Depositor cannot obtain a successor swap
provider, the
Securities Administrator shall deposit the Swap Termination Payment
into a
reserve account which is a sub-account of the Supplemental Interest
Trust
Account. On each subsequent Distribution Date (so long as funds are
available in
the reserve account), the Securities Administrator shall withdraw
from the
reserve account and deposit into the Supplemental Interest Trust
Account an
amount equal to the amount of any Net Swap Payment due the
Supplemental Interest
Trust (calculated in accordance with the terms of the Interest Rate
Swap
Agreement) and treat such amount as a Net Swap Payment for purposes
of
determining the distributions from the Supplemental Interest Trust
Account. The
remaining amount in the reserve account will remain in that account
and will not
be treated as a Swap Termination Payment for purposes of
determining the
distributions from the Supplemental Interest Trust Account until
the final
Distribution Date.
(ii) Notwithstanding all other provisions in this Agreement, in
the
event that the Supplemental Interest Trust, at the direction of the
Depositor,
enters into a replacement interest rate swap agreement and the
Supplemental
Interest Trust is entitled to receive a payment from a replacement
swap provider
(such payment, a "Replacement Swap Provider Payment"), the
Securities
Administrator shall deposit such Replacement Swap Provider Payment
into the
Supplemental Interest Trust Account and pay to the Swap Provider
the lesser of
(x) the amount so received and (y) any Swap Termination Payment
owed to the Swap
Provider (to the extent not already paid by the Trust) that is
being replaced
immediately upon receipt of the Replacement Swap Provider Payment,
regardless of
whether the date of receipt thereof is a Distribution Date;
provided that to the
extent that the Replacement Swap Provider Payment is less than the
Swap
Termination Payment owed to the Swap Provider that is being
replaced, any
remaining amounts will be paid to the Swap Provider on the
subsequent
Distribution Date (unless the Replacement Swap Provider Payment is
paid to the
Swap Provider on a Distribution Date, in which case such remaining
amounts will
be paid on such Distribution Date) in accordance with Section
3.04(h)(i) of this
Agreement. For the avoidance of doubt, the parties agree that the
Swap Provider
shall have first priority to any Replacement Swap Provider Payment
(to the
extent that the Swap Provider is owed a Swap Termination Payment
from the
Supplemental Interest Trust) over the payment by the Trust to
Certificateholders, the Servicer, the Securities Administrator or
any other
Person.
Section 3.05 Permitted Withdrawals from the Collection Account.
The
Servicer may, from time to time, withdraw from the Collection
Account for the
following purposes:
(i) to remit to the Securities Administrator for deposit in the
Distribution Account the amounts required to be so remitted
pursuant to
Section 3.04(b) or permitted to be so remitted pursuant to the
first
sentence of Section 3.04(d);
(ii) first, to the extent the Servicer has not previously
reimbursed
the Trustee pursuant to Section 4.07(e), to reimburse the Trustee
for any
unreimbursed Advances made by the Trustee and second, to reimburse
itself
for any unreimbursed Advances and Servicing Advances; the
Servicer's right
to reimburse itself and the Trustee pursuant to this subclause (ii)
being
limited to amounts received on the related Mortgage Loan which
represent
payments of (a) principal and/or interest respecting which any
such
Advance was made or (b) Condemnation Proceeds, Insurance Proceeds
or
Liquidation Proceeds respecting which any such Servicing Advance
was made;
(iii) first, to the extent the Servicer has not previously
reimbursed the Trustee pursuant to Section 4.07(e), to reimburse
the
Trustee for any unreimbursed Advances made by the Trustee and
second to
reimburse itself for any unreimbursed Servicing Advances, any
unpaid
Servicing Fees and for unreimbursed Advances, in each case, to the
extent
that such amounts are deemed to be Nonrecoverable Advances, and
to
reimburse itself and the Trustee for such amounts to the extent
that such
amounts are nonrecoverable from the disposition of REO Property
pursuant
to Section 3.03 or Section 3.13 hereof;
(iv) to reimburse itself for any amounts paid or expenses
incurred
pursuant to Section 3.03 (and not otherwise previously
reimbursed);
(v) to pay to itself as servicing compensation (a) any interest
earned on funds in the Collection Account (all such interest to
be
withdrawn monthly not later than each Servicer Remittance Date) and
(b)
the Servicing Fee from that portion of any payment or recovery as
to
interest to a particular Mortgage Loan to the extent not retained
pursuant
to Section 3.04(a)(ii);
(vi) to reimburse itself for any amounts paid pursuant to
Section
6.03 (and not otherwise previously reimbursed);
(vii) to reimburse the Servicer (if the Servicer is not an
Affiliate
of the repurchasing party), the Securities Administrator or the
Trustee,
as the case may be, for enforcement expenses reasonably incurred
in
respect of the breach or defect giving rise to the purchase
obligation
under Section 2.03 of this Agreement that were included in the
Purchase
Price of the Mortgage Loan, including any expenses arising out of
the
enforcement of the purchase obligation;
(viii) to reimburse the Depositor or the Servicer for expenses
and
costs reimbursable to them pursuant to Section 3.24(b);
(ix) to reimburse the Insurer for the amount of any claim (net
of
the aggregate amount of Insurer Fee paid to the Insurer with
respect to
the related Covered Mortgage Loan) paid by the Insurer prior to
rescission
of coverage of the related Covered Mortgage Loan as set forth in
Section
3.29; and
(x) to clear and terminate the Collection Account upon the
termination of this Agreement.
The foregoing requirements for withdrawal from the Collection
Account shall be exclusive. In the event the Servicer shall deposit
in the
Collection Account any amount not required to be deposited therein,
it may at
any time withdraw such amount from the Collection Account, any
provision herein
to the contrary notwithstanding. The Servicer shall notify the
Securities
Administrator of the amount, purpose and party of any payment or
reimbursement
of expenses made pursuant to Sections 3.05(iv), (vi), (vii) and
(viii).
Section 3.06 Establishment of Escrow Accounts; Deposits in
Escrow
Accounts. The Servicer shall segregate and hold all funds collected
and received
pursuant to each Mortgage Loan which constitute Escrow Payments
separate and
apart from any of its own funds and general assets and shall
establish and
maintain one or more Escrow Accounts, in the form of time deposit
or demand
accounts. A copy of such account certification agreement shall be
furnished to
the Trustee upon request. The Escrow Account shall be an Eligible
Account.
The Servicer shall deposit in the Escrow Account or Accounts
within
two Business Days of receipt, and retain therein, (i) all Escrow
Payments
collected on account of the Mortgage Loans, for the purpose of
effecting timely
payment of any such items as required under the terms of this
Agreement, and
(ii) all Insurance Proceeds which are to be applied to the
restoration or repair
of any Mortgaged Property. The Servicer shall make withdrawals
therefrom only to
effect such payments as are required under this Agreement, and for
such other
purposes as shall be set forth in, or in accordance with, Section
3.07. The
Servicer shall be entitled to retain any interest paid on funds
deposited in the
Escrow Account by the depository institution other than interest on
escrowed
funds required by law to be paid to the Mortgagor and, to the
extent required by
the related Mortgage Loan or Applicable Regulations, the Servicer
shall pay
interest on escrowed funds to the Mortgagor notwithstanding that
the Escrow
Account is non-interest bearing or that interest paid thereon is
insufficient
for such purposes.
Section 3.07 Permitted Withdrawals From Escrow Account.
Withdrawals
from the Escrow Account may be made by the Servicer (i) to effect
timely
payments of Escrow Payments, (ii) to reimburse the Servicer for any
Servicing
Advance made by the Servicer with respect to a related Mortgage
Loan but only
from amounts received on the related Mortgage Loan which represent
late payments
or Late Collections of Escrow Payments thereunder, (iii) to refund
to the
Mortgagor any funds as may be determined to be overages, (iv) for
transfer to
the Collection Account in accordance with the terms of this
Agreement, (v) for
application to restoration or repair of the Mortgaged Property,
(vi) to pay to
the Servicer, or to the Mortgagor to the extent required by the
related Mortgage
Loan or Applicable Regulations, any interest paid on the funds
deposited in the
Escrow Account, (vii) to clear and terminate the Escrow Account on
the
termination of this Agreement or (viii) to transfer to the
Collection Account
any Insurance Proceeds. As part of its servicing duties, the
Servicer shall pay
to the Mortgagor interest on funds in the Escrow Account, to the
extent required
by the related Mortgage Loan or Applicable Regulations, and to the
extent that
interest earned on funds in the Escrow Account is insufficient,
shall pay such
interest from its own funds, without any reimbursement
therefor.
In the event the Servicer shall deposit in the Escrow Account
any
amount not required to be deposited therein, it may at any time
withdraw such
amount from the Escrow Account, any provision herein to the
contrary
notwithstanding.
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder; Primary Mortgage Insurance. (a) With
respect to each
Mortgage Loan subject to an Escrow Agreement, the Servicer shall
maintain
accurate records reflecting the status of taxes, which are or may
become a lien
upon the Mortgaged Property and the status of fire, flood (if
applicable) and
hazard insurance coverage and shall obtain, from time to time, all
bills for the
payment of such charges (including renewal premiums) and shall
effect payment
thereof prior to the applicable penalty or termination date and at
a time
appropriate for securing maximum discounts allowable, employing for
such purpose
deposits of the Mortgagor in the Escrow Account which shall have
been estimated
and accumulated by the Servicer in amounts sufficient for such
purposes, as
allowed under the terms of the Escrow Agreement or Applicable
Regulations. To
the extent that a Mortgage Loan is not subject to an Escrow
Agreement, the
Servicer shall determine that any such payments are made by the
Mortgagor. The
Servicer assumes full responsibility for the payment of all such
bills and shall
effect payments of all such bills irrespective of the Mortgagor's
faithful
performance in the payment of same or the making of the Escrow
Payments and
shall make Servicing Advances from its own funds to effect such
payments.
(a) For any Mortgage Loan with a Loan-to-Value Ratio at
origination
of greater than 80%, if the Mortgage Loan Schedule indicates that
such Mortgage
Loan has primary mortgage insurance, the Servicer shall maintain
coverage under
a primary mortgage insurance policy until the Loan-to-Value Ratio
on any such
Mortgage Loan is reduced to 78% or lower as a result of principal
payments on
such Mortgage Loan or based upon an appraisal of the related
Mortgaged Property
after the Closing Date. Notwithstanding anything to the contrary
herein, the
Servicer shall be responsible for the payment of all primary
mortgage insurance
premiums out of the Servicer's own funds, without any right to
reimbursement
therefor. The Servicer shall not assign its obligation under any
primary
mortgage insurance policy without the consent of each Rating Agency
and the
related primary insurance policy provider. In the event that Wells
Fargo Bank is
no longer Servicer hereunder, Wells Fargo Bank agrees to continue
to pay all
primary mortgage insurance premiums for the Mortgage Loans.
For purposes of this Section 3.08(b), primary mortgage
insurance
does not include the PMI Policy.
Section 3.09 Transfer of Accounts. The Servicer may transfer
the
Collection Account or the Escrow Account to a different depository
institution
from time to time. Upon such transfer, the Servicer shall deliver
to the
Securities Administrator (and the Securities Administrator shall
provide to the
Depositor and the Trustee), a certification or letter agreement, as
the case may
be, as required pursuant to Sections 3.04 and 3.06.
Section 3.10 Maintenance of Hazard Insurance. The Servicer
shall
cause to be maintained for each Mortgage Loan fire and hazard
insurance with
extended coverage as is customary in the area where the Mortgaged
Property is
located in an amount which is at least equal to the lesser of (i)
the amount
necessary to fully compensate for any damage or loss to the
improvements which
are a part of such property on a replacement cost basis or (ii) the
Principal
Balance of the Mortgage Loan, in each case in an amount not less
than such
amount as is necessary to prevent the Mortgagor and/or the
Mortgagee from
becoming a co-insurer. If the Mortgaged Property is in an area
identified in the
Federal Register by the Flood Emergency Management Agency as having
special
flood hazards and flood insurance has been made available, the
Servicer will
cause to be maintained a flood insurance policy meeting the
requirements of the
current guidelines of the Federal Insurance Administration with a
generally
acceptable insurance carrier, in an amount representing coverage
not less than
the least of (i) the Principal Balance of the Mortgage Loan, (ii)
the maximum
insurable value of the improvements securing such Mortgage Loan or
(iii) the
maximum amount of insurance which is available under the National
Flood
Insurance Act of 1968, as amended. The Servicer shall also maintain
on the REO
Property for the benefit of the Certificateholders, (x) fire and
hazard
insurance with extended coverage in an amount which is at least
equal to the
replacement cost of the improvements which are a part of such
property and (y)
to the extent required and available under the Flood Disaster
Protection Act of
1973, as amended, flood insurance in an amount as provided above.
Any amounts
collected by the Servicer under any such policies other than
amounts to be
deposited in the Escrow Account and applied to the restoration or
repair of the
Mortgaged Property or REO Property, or released to the Mortgagor in
accordance
with the Servicer's normal servicing procedures, shall be deposited
in the
Collection Account, subject to withdrawal pursuant to Section 3.05.
It is
understood and agreed that no earthquake or other additional
insurance is
required to be maintained by the Servicer or the Mortgagor or
maintained on
property acquired in respect of the Mortgage Loan, other than
pursuant to such
Applicable Regulations as shall at any time be in force and as
shall require
such additional insurance. All such policies shall be endorsed with
standard
mortgagee clauses with loss payable to the Servicer and shall
provide for at
least thirty days prior written notice of any cancellation,
reduction in the
amount of or material change in coverage to the Servicer. The
Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting
either his
insurance carrier or agent, provided, however, that the Servicer
shall not
accept any such insurance policies from insurance companies unless
such
companies currently reflect a general policy rating of B:VI or
better in Best's
Key Rating Guide and are licensed to do business in the state
wherein the
property subject to the policy is located.
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy.
In
the event that the Servicer shall obtain and maintain a blanket
policy issued by
an insurer that has a general policy rating of B:VI or better in
Best's Key
Rating Guide insuring against hazard losses on all of the Mortgage
Loans, then,
to the extent such policy provides coverage in an amount equal to
the amount
required pursuant to Section 3.10 and otherwise complies with all
other
requirements of Section 3.10, it shall conclusively be deemed to
have satisfied
its obligations as set forth in Section 3.10, it being understood
and agreed
that such policy may contain a deductible clause, in which case the
Servicer
shall, in the event that there shall not have been maintained on
the related
Mortgaged Property or REO Property a policy complying with Section
3.10, and
there shall have been a loss which would have been covered by such
policy,
deliver to the Securities Administrator for deposit in the
Distribution Account
the amount not otherwise payable under the blanket policy because
of such
deductible clause, which amount shall not be reimbursable to the
Servicer from
the Trust Fund. In connection with its activities as servicer of
the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of the
Trustee,
claims under any such blanket policy in a timely fashion in
accordance with the
terms of such policy. Upon request of the Securities Administrator,
the Servicer
shall cause to be delivered to the Custodian, the Trustee and the
Securities
Administrator a certified true copy of such policy and a statement
from the
insurer thereunder that such policy shall in no event be terminated
or
materially modified without thirty days prior written notice to the
Trustee.
Section 3.12 Fidelity Bond, Errors and Omissions Insurance. (a)
The
Servicer shall maintain, at all times and at its own expense, a
Servicer Errors
and Omissions Policy in an amount and with an insurer acceptable to
Fannie Mae
or Freddie Mac. The Servicer Errors and Omissions Policy shall
insure the
Servicer, its successors and assigns, against any losses resulting
from
negligence, errors or omissions on the part of officers, employees
or other
persons acting on behalf of the Servicer in the performance of its
duties as a
Servicer pursuant to this Agreement. The Servicer shall maintain in
effect the
Servicer Errors and Omissions Policy at all times and the Servicer
Errors and
Omissions Policy may not be canceled, permitted to lapse or
otherwise terminated
without the acquisition of comparable coverage by the Servicer. The
terms of the
Servicer Errors and Omissions Policy shall provide for a deductible
amount that
is acceptable to Fannie Mae or Freddie Mac with respect to its
approved mortgage
loan servicers. The Servicer Errors and Omissions Policy shall be
obtained by
the Servicer from an insurer which satisfies Fannie Mae or Freddie
Mac standards
in this regard.
(b) The Servicer must maintain, at all times, at its own expense,
a
Fidelity Bond in an amount and with an insurer acceptable to Fannie
Mae or
Freddie Mac and having terms that are acceptable to Fannie Mae or
Freddie Mac.
The amount of Fidelity Bond coverage shall be an amount acceptable
to Fannie Mae
or Freddie Mac. The coverage of the Fidelity Bond must explicitly
insure the
Servicer, its successors and assigns, against any losses resulting
from
dishonest, fraudulent or criminal acts on the part of officers,
employees or
other persons acting on behalf of the Servicer. The Servicer must
maintain in
effect the Fidelity Bond at all times and the Fidelity Bond may not
be canceled,
permitted to lapse or otherwise terminated without thirty Business
Days' prior
written notice by registered mail to the Securities Administrator
and the
Depositor. Further, the Fidelity Bond must provide that, or the
insurer must
state in writing to the Securities Administrator and the Depositor
that, the
Fidelity Bond shall not be cancelable without the giving of notice
as provided
for in the prior sentence. The terms of the Fidelity Bond must
provide for a
deductible amount that does not exceed Fannie Mae or Freddie Mac
requirements.
The Fidelity Bond must be obtained from a company which satisfies
Fannie Mae or
Freddie Mac standards in this regard.
Section 3.13 Title, Management and Disposition of REO Property.
(a)
In the event that title to a Mortgaged Property is acquired in
foreclosure or by
deed in lieu of foreclosure, the deed or certificate of sale shall
be taken in
the name of the Trustee, on behalf of the Certificateholders, or in
the event
the Trustee is not authorized or permitted to hold title to real
property in the
state where the REO Property is located, or would be adversely
affected under
the "doing business" or tax laws of such state by so holding title,
the deed or
certificate of sale shall be taken in the name of such Person or
Persons as
shall be consistent with an Opinion of Counsel obtained by the
Servicer from an
attorney duly licensed to practice law in the state where the REO
Property is
located. Any Person or Persons holding such title other than the
Trustee shall
acknowledge in writing that such title is being held as nominee for
the benefit
of the Trustee. Pursuant to the power of attorney granted in
Section 3.01, the
Servicer is hereby authorized to acquire, transfer and dispose of
any REO
Property taken in the name of the Trustee pursuant to this Section
3.13 without
further documentation of its authority as attorney in fact for the
Trustee on
behalf of the Trust.
(b) In the event that the Trust Fund acquires any REO Property
as
aforesaid or otherwise in connection with a default or imminent
default on a
Mortgage Loan, the Servicer shall dispose of such REO Property
before the end of
the third calendar year beginning after the year of its acquisition
by the Trust
Fund for purposes of Section 860G(a)(8) of the Code or, at the
expense of the
Trust Fund, request from the Internal Revenue Service, more than 60
days before
the day on which the above-mentioned grace period would otherwise
expire, an
extension of the above-mentioned grace period, unless the Servicer
obtains an
Opinion of Counsel, addressed and delivered to the Servicer and the
Trustee, to
the effect that the holding by the Trust Fund of such REO Property
subsequent to
such period will not: (i) result in the imposition of any tax on
"prohibited
transactions" as defined in Section 860F of the Code; or (ii) cause
any Trust
REMIC to fail to qualify as a REMIC at any time that any
Certificates are
outstanding, in which case the Trust Fund may continue to hold such
REO Property
(subject to any conditions contained in such Opinion of Counsel).
The Servicer
shall be entitled to be reimbursed from the Collection Account for
any costs
incurred in obtaining such Opinion of Counsel, as provided in
Section 3.05.
Subject to compliance with applicable laws and regulations as
shall
at any time be in force, and notwithstanding any other provisions
of this
Agreement, no REO Property acquired by the Trust Fund shall be
rented (or
allowed to continue to be rented) or otherwise used by or on behalf
of the Trust
Fund in such a manner or pursuant to any terms that would: (i)
cause such REO
Property to fail to qualify as "foreclosure property" within the
meaning of
Section 860G(a)(8) of the Code; or (ii) subject any Trust REMIC to
the
imposition of any federal income taxes on the income earned from
such REO
Property, including any taxes imposed by reason of Sections 860F or
860G(c) of
the Code, unless the Servicer has agreed to indemnify and hold
harmless the
Trust Fund with respect to the imposition of any such taxes.
The Servicer shall manage, conserve, protect and operate each
REO
Property for the Certificateholders and the Trust Fund solely for
the purpose of
its prompt disposition and sale in a manner which does not cause
such REO
Property to fail to qualify as "foreclosure property" within the
meaning of
Section 860G(a)(8) of the Code or result in the receipt by the
related Trust
REMIC of any "income from non-permitted assets" within the meaning
of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which
is subject to taxation under the REMIC Provisions. The Servicer
shall cause each
REO Property to be inspected promptly upon the acquisition of title
thereto and
possession thereof and shall cause each REO Property to be
inspected at least
annually thereafter. The Servicer shall make or cause to be made a
written or
electronic report of each such inspection. Such reports shall be
retained in the
Mortgage File and copies thereof shall be forwarded by the Servicer
to the
Trustee upon request. The Servicer shall attempt to sell the same
(and may
temporarily rent the same) on such terms and conditions as the
Servicer deems to
be in the best interest of the Certificateholders and the Trust
Fund.
With respect to each REO Property, the Servicer shall segregate
and
hold all funds collected and received in connection with the
operation of the
REO Property separate and apart from its own funds or general
assets and shall
deposit or cause to be deposited, on a daily basis, within three
Business Days
of receipt, into the Collection Account, all revenues received with
respect to
the related REO Property and shall withdraw therefrom funds
necessary for the
proper operation, management and maintenance of the REO Property,
including the
cost of maintaining any hazard insurance pursuant to Section 3.10
hereof and the
fees of any managing agent acting on behalf of the Servicer.
The Servicer shall furnish to the Securities Administrator and
the
Trustee, on each Servicer Remittance Date, an operating statement
for each REO
Property covering the operation of each REO Property for the
previous month, if
applicable. Such operation statement shall be accompanied by such
other
information as the Securities Administrator or the Trustee shall
reasonably
request.
The Servicer shall use its best efforts to dispose of the REO
Property as promptly as is practically consistent with protecting
the
Certificateholders' interests.
Each REO Disposition shall be carried out by the Servicer at
such
price and upon such terms and conditions as the Servicer deems to
be in the best
interest of the Certificateholders. If as of the date title to any
REO Property
was acquired by the Servicer there were outstanding unreimbursed
Servicing
Advances with respect to the REO Property, the Servicer, upon an
REO Disposition
of such REO Property, shall be entitled to reimbursement for any
related
unreimbursed Servicing Advances from proceeds received in
connection with such
REO Disposition. The Servicer shall be entitled to an REO
Disposition Fee upon
each REO Disposition, and may withhold and retain the REO
Disposition Fee from
Liquidation Proceeds. The proceeds from the REO Disposition, net of
any payments
to the Servicer as provided above, shall be deposited in the
Collection Account
and shall be distributed to the Trust in the month following
receipt thereof in
accordance with Section 4.01.
Any REO Disposition shall be for cash only (unless changes in
the
REMIC Provisions made subsequent to the Startup Day allow a sale
for other
consideration and an Opinion of Counsel is obtained by the Servicer
to the
effect that such sale shall not cause any REMIC constituting part
of the Trust
Fund to fail to qualify as a REMIC).
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Mortgaged Property has been or is about to be
conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of
such conveyance
or prospective conveyance, exercise its rights to accelerate the
maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in
the related
Mortgage or Mortgage Note; provided, however, that the Servicer
shall not
exercise any such right if the "due-on-sale" clause, in the
reasonable belief of
the Servicer, is not enforceable under applicable law. In such
event, the
Servicer shall make reasonable efforts to enter into an assumption
and
modification agreement with the Person to whom such property has
been or is
about to be conveyed, pursuant to which such Person becomes liable
under the
Mortgage Note and, unless prohibited by applicable law or the
Mortgage, the
Mortgagor remains liable thereon. If the foregoing is not permitted
under
applicable law, the Servicer is authorized to enter into a
substitution of
liability agreement with such Person, pursuant to which the
original Mortgagor
is released from liability and such Person is substituted as
Mortgagor and
becomes liable under the Note. The Mortgage Loan, as assumed, shall
conform in
all respects to the requirements, representations and warranties of
this
Agreement. The Servicer shall notify the Trustee that any such
assumption or
substitution agreement has been completed by forwarding to the
Trustee (or the
Custodian, as the case may be) the original copy of such assumption
or
substitution agreement (indicating the Mortgage File to which it
relates) which
copy shall be added by the Trustee (or the Custodian, as the case
may be) to the
related Mortgage File and which shall, for all purposes, be
considered a part of
such Mortgage File to the same extent as all other documents and
instruments
constituting a part thereof. The Servicer shall be responsible for
recording any
such assumption or substitution agreements. Except as otherwise
provided in
Section 3.01, in connection with any such assumption or
substitution agreement,
the Monthly Payment on the related Mortgage Loan shall not be
changed but shall
remain as in effect immediately prior to the assumption or
substitution, the
stated maturity or outstanding principal amount of such Mortgage
Loan shall not
be changed nor shall any required monthly payments of principal or
interest be
deferred or forgiven. Any fee collected by the Servicer for
consenting to any
such conveyance or entering into an assumption or substitution
agreement shall
be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision
of
this Agreement, the Servicer shall not be deemed to be in default,
breach or any
other violation of its obligations hereunder by reason of any
assumption of a
Mortgage Loan by operation of law or any assumption which the
Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.15 Reserved.
Section 3.16 Optional Purchases of 60+ Day Delinquent Loans. (a)
The
Depositor may, at its option, purchase any 60+ Day Delinquent Loan
or any
Mortgage Loan or REO Property for which the Servicer has accepted a
deed in lieu
of foreclosure during the following time periods: (i) beginning on
the first day
of the second month following the month in which the Servicer has
reported that
it has initiated foreclosure proceedings with respect to such 60+
Day Delinquent
Loan, with such repurchase option expiring on the last day of such
second
following month; (ii) beginning on the first day of the second
month following
the month in which the Servicer has reported that such defaulted
Mortgage Loan
has become an REO Property, with such repurchase option expiring on
the last day
of such second following month; and (iii) beginning on the day on
which the
Servicer accepts a contractual commitment by a third party to
purchase the
Mortgaged Property related to the 60+ Day Delinquent Loan or REO
Property, with
such repurchase option expiring on the earlier of the last day of
the month in
which such contractual commitment was accepted by the Servicer or
the day
immediately prior to the day on which the closing occurs with
respect to such
third party purchase of the Mortgaged Property related to the 60+
Day Delinquent
Loan or REO Property.
Prior to purchase pursuant to this Section 3.16, the Servicer
shall
be required to continue to make monthly Advances pursuant to
Section 4.07. The
Depositor shall not use any procedure in selecting Mortgage Loans
to be
purchased which is materially adverse to the interests of the
Certificateholders. The Depositor shall purchase any such 60+ Day
Delinquent
Loan or REO Property that it elects to purchase at a price equal to
the Purchase
Price. The Purchase Price for the repurchased Mortgage Loan or REO
Property
shall be deposited in the Collection Account, and the Custodian, on
behalf of
the Trustee, upon receipt of written certification from the
Depositor of such
deposit, shall release to, or at the direction of, the Depositor,
the related
Mortgage File and shall execute and deliver such instruments of
transfer or
assignment, in each case without recourse, as the Depositor shall
furnish to it
and as shall be necessary to vest in the Depositor any Mortgage
Loan or REO
Property released pursuant hereto and neither the Trustee nor the
Custodian
shall have further responsibility with regard to such Mortgage
File.
Section 3.17 Custodian to Cooperate; Release of Files. (a) Upon
the
payment in full of any Mortgage Loan (including any liquidation of
any Mortgage
Loan through foreclosure or otherwise, or the receipt by the
Servicer of a
notification that payment in full will be escrowed in a manner
customary for
such purposes), the Servicer shall confirm to the Trustee and the
Securities
Administrator that all amounts required to be remitted to the
Distribution
Account in connection with such Mortgage Loan have been so
deposited, and the
Servicer shall deliver two copies of such Request for Release to
the Custodian.
The Custodian shall, within five Business Days of its receipt of
such a Request
for Release, release the related Owner Mortgage File (and Retained
Mortgage
File, if applicable) to the Servicer, as requested by the Servicer.
No expenses
incurred in connection with any instrument of satisfaction or deed
of
reconveyance shall be chargeable to the Distribution Account.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including but not limited to,
collection under
any insurance policies, or to effect a partial release of any
Mortgaged Property
from the lien of the Mortgage, the Servicer shall deliver to the
Custodian two
copies of a Request for Release. The Custodian shall, within five
Business Days,
release the related Owner Mortgage File (and Retained Mortgage
File, if
applicable) to the Servicer. Any such Request for Release shall
obligate the
Servicer to return the Owner Mortgage File (and Retained Mortgage
File, if
applicable) to the Custodian by the sixtieth day following the
release thereof,
unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the
Distribution Account or
(ii) the Owner Mortgage File (or Retained Mortgage File, if
applicable) or any
documents contained therein have been delivered to an attorney, or
to a public
trustee or other public official as required by law, for purposes
of initiating
or pursuing legal action or other proceedings for the foreclosure
of the
Mortgaged Property either judicially or non-judicially. Upon
receipt of two
copies of a Request for Release stating that such Mortgage Loan was
liquidated
and that all amounts received or to be received in connection with
such
liquidation which are required to be deposited into the
Distribution Account
have been so deposited, or that such Mortgage Loan has become an
REO Property,
the Custodian shall amend its records.
Upon the occurrence of the event specified in clause (ii) of
the
preceding paragraph, the Trustee shall execute and deliver to the
Servicer, as
directed by the Servicer, court pleadings, requests for trustee's
sale or other
documents necessary to the foreclosure or trustee's sale in respect
of a
Mortgaged Property or to any legal action brought to obtain
judgment against any
Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage
Note or
Mortgage or otherwise available at law or in equity. Each such
direction shall
include a request that such pleadings or documents be executed by
the Trustee
and a statement as to the reason such documents or pleadings are
required and a
certification that the execution and delivery thereof by the
Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for
the
termination of such a lien upon completion of the foreclosure
proceeding or
trustee's sale.
(b) Subject to Section 3.01, the Servicer shall have the right
to
accept applications of Mortgagors for consent to (i) partial
releases of
Mortgages, (ii) alterations, and (iii) removal, demolition or
division of
properties subject to Mortgages. No application for approval shall
be considered
by the Servicer unless: (w) either (A) it has received an Opinion
of Counsel,
addressed to the Trustee (which opinion shall not be an expense of
the Trustee
or the Trust Fund) that such sale, disposition, substitution,
acquisition or
contribution will not affect adversely the status of any Trust
REMIC as a REMIC
or cause any Trust REMIC to be subject to a tax on "prohibited
transactions" or
"contributions" pursuant to the REMIC Provisions or (B) other
evidence
satisfactory to the Servicer; (x) the provisions of the related
Mortgage Note
and Mortgage have been complied with; (y) the Loan-to-Value Ratio
and
debt-to-income ratio after any release does not exceed the maximum
Loan-to-Value
Ratio and debt-to-income ratio established in accordance with the
underwriting
standards of the Mortgage Loans; and (z) the lien priority of the
related
Mortgage is not affected. Upon receipt by the Trustee of a
Servicing Officer's
certificate setting forth the action proposed to be taken in
respect of a
particular Mortgage Loan and certifying that the criteria set forth
in the
immediately preceding sentence have been satisfied, the Trustee
shall execute
and deliver to the Servicer the consent or partial release so
requested by, and
furnished to it by, the Servicer. A proposed form of consent or
partial release,
as the case may be, shall accompany any Servicing Officer's
certificate
delivered by the Servicer pursuant to this paragraph.
Section 3.18 Servicing Compensation. As compensation for its
activities hereunder, the Servicer shall be entitled to retain the
amount of the
Servicing Fee with respect to each Mortgage Loan (including REO
Properties). The
Servicer shall be entitled to retain additional servicing
compensation in the
form of release fees, bad check charges, assumption fees,
modification or
extension fees, late payment charges, prepayment penalties that are
not
Prepayment Penalties, Servicer Prepayment Penalty Payment Amounts,
Originator
Prepayment Penalty Payment Amounts or REO Disposition Fees, or any
other
service-related fees, Insurance Proceeds and Liquidation Proceeds
not required
to be deposited in the Collection Account and similar items, to the
extent
collected from Mortgagors. In addition, the Servicer shall be
entitled to the
investment income on funds on deposit in the Collection
Account.
Section 3.19 Annual Statement as to Compliance. (a) The
Securities
Administrator shall deliver in electronic format or otherwise make
available to
the Depositor, and the Trustee and the Servicer shall deliver and
the Securities
Administrator, the Trustee and the Servicer shall cause each
Additional Servicer
engaged by it to deliver in electronic form, or otherwise make
available to the
Securities Administrator (and the Securities Administrator shall
forward to the
Trustee and each Rating Agency) on or before March 5 of each year
or if such day
is not a Business Day, the next Business Day (with a 10 calendar
day cure
period, but in no event later than March 15), commencing in March
2007, a copy
of a certificate in the form required by Item 1123 of Regulation
AB, to the
effect that (i) an authorized officer of the Securities
Administrator, the
Servicer or the Additional Servicer, as the case may be, has
reviewed (or a
review has been made under his or her supervision of) such party's
activities
under this Agreement or such other applicable agreement in the case
of an
Additional Servicer, during the prior calendar year or portion
thereof and (ii)
to the best of such officer's knowledge, based on such review, such
party has
fulfilled all of its obligations under this Agreement or such other
applicable
agreement in the case of an Additional Servicer, in all material
respects
throughout the prior calendar year or portion thereof or, if there
has been a
failure to fulfill any such obligation in any material respect,
specifying each
such failure known to such officer and the nature and status
thereof. If any of
the certificates delivered pursuant to this Section 3.19 disclose
that there has
been a failure to fulfill any obligation in any material respect
then the
Securities Administrator shall promptly notify the Depositor and
forward a copy
of such certificate to the Depositor, and the Depositor shall
review such
certificate and, if applicable, consult with the Servicer as to the
nature of
any failure to fulfill any obligation under this Agreement or such
other
applicable agreement in the case of an Additional Servicer, in any
material
respect.
(b) Delivery of such reports, information and documents to the
Securities Administrator is for informational purposes only and the
Trustee's,
Securities Administrator's and Depositor's receipt of such shall
not constitute
constructive notice of any information contained therein or
determinable, from
information contained therein, including the Servicer's compliance
with any of
its covenants hereunder (as to which the Trustee, the Securities
Administrator
and the Depositor are entitled to rely exclusively on Officer's
Certificates).
Section 3.20 Assessment of Servicing Compliance; Registered
Public
Accounting Firm Attestation Reports.(a)
(a) The Securities Administrator, at its own expense, shall
furnish
to the Depositor and the Trustee, and the Servicer, the Trustee and
the
Custodian, at their own expense, shall furnish, or otherwise make
available, and
the Securities Administrator and each such party shall cause any
Servicing
Function Participant engaged by any such party to furnish, to the
Securities
Administrator, not later than March 5 of each year, or if such day
is not a
Business Day, the next Business Day (with a 10 day cure period, but
in no event
later than March 15), commencing in March 2007, a copy of a report,
signed by an
authorized officer of the Securities Administrator, the Trustee,
the Custodian,
the Servicing Function Participant or the Servicer, as applicable,
on assessment
of compliance with, at a minimum, the Relevant Servicing Criteria
that contains:
(i) a statement by such party of its responsibility for
assessing
compliance with the Servicing Criteria applicable to it;
(ii) a statement that such party used the Servicing Criteria
applicable to it to assess compliance with the Servicing
Criteria;
(iii) such party's assessment of compliance with the Servicing
Criteria applicable to it as of and for the preceding fiscal
year,
including, if there had been any material instance of noncompliance
with
the Servicing Criteria applicable to it, identifying each such
failure and
the nature and status thereof; and
(iv) a statement that a registered public accounting firm has
issued
an attestation report on such party's assessment of compliance with
the
Servicing Criteria applicable to it as of and for the preceding
fiscal
year.
No later than 30 days following the end of each fiscal year,
the
Securities Administrator shall forward to the Depositor the name of
each
Servicing Function Participant engaged by it and what Relevant
Servicing
Criteria will be addressed in the report on assessment of
compliance prepared by
such Servicing Function Participant. When the Securities
Administrator submits
its assessments to the Depositor, it will also at such time include
the
assessment (and attestation pursuant to Section 3.20(b)) of each
Servicing
Function Participant engaged by it.
No later than 30 days following the end of each fiscal year, each
of
the Servicer, the Trustee and the Custodian (so long as the
Custodian is not the
Securities Administrator) shall forward to the Securities
Administrator the name
of each Servicing Function Participant engaged by it and what
Relevant Servicing
Criteria will be addressed in the report on assessment of
compliance prepared by
such Servicing Function Participant. When the Servicer, the Trustee
and the
Custodian (so long as the Custodian is not the Securities
Administrator) submit
their assessments to the Securities Administrator, each such party
will also at
such time include the assessment (and attestation pursuant to
Section 3.20(b))
of each Servicing Function Participant engaged by it.
The Securities Administrator shall confirm that the assessments
address the Relevant Servicing Criteria for each party as set forth
on Exhibit S
and shall notify the Depositor of any exceptions and deliver the
assessment of
compliance containing such exceptions. Promptly after receipt of
each such
report on assessment of compliance, the Depositor shall review each
such report
and, if applicable, consult with the Securities Administrator, the
Trustee, the
Custodian, the Servicer and any Servicing Function Participant as
to the nature
of any material instance of noncompliance with the Relevant
Servicing Criteria
by the Securities Administrator, the Trustee, the Custodian, the
Servicer or any
Servicing Function Participant engaged by such parties.
(b) The Securities Administrator, at its own expense, shall cause
a
registered public accounting firm which is a member of the
Institute of
Certified Public Accountants to furnish to the Depositor, and each
of the
Trustee, the Servicer and the Custodian at their own expense, shall
cause, and
the Securities Administrator and each such party shall cause any
Servicing
Function Participant engaged by any such party, at such party's
expense, to
cause a registered public accounting firm which is a member of the
Institute of
Certified Public Accountants to furnish to the Securities
Administrator, not
later than March 5 of each year, or if such day is not a Business
Day, the next
Business Day (with a 10 calendar day cure period, but in no event
later than
March 15), commencing in March 2007, an electronic report to the
effect that (i)
it has obtained a representation regarding certain matters from the
management
of such party, which includes an assertion that such party has
complied with the
Relevant Servicing Criteria, and (ii) on the basis of an
examination conducted
by such firm in accordance with standards for attestation
engagements issued or
adopted by the Public Company Accounting Oversight Board, it is
expressing an
opinion as to whether such party's assessment of compliance with
the Relevant
Servicing Criteria was fairly stated in all material respects, or
it cannot
express an overall opinion regarding such party's assessment of
compliance with
the Relevant Servicing Criteria. In the event that an overall
opinion cannot be
expressed, such registered public accounting firm shall state in
such report why
it was unable to express such an opinion. Such report must be
available for
general use and not contain restricted use language. If requested
by the
Securities Administrator or the Depositor, such report shall
contain or be
accompanied by a consent of such accounting firm to inclusion or
incorporation
of such report in the Depositor's Registration Statement on Form
S-3 relating to
the Certificates and the Trust's Form 10-K.
Promptly after receipt of such report from the Securities
Administrator or any Servicing Function Participant engaged by the
Securities
Administrator, the Depositor shall review the report and, if
applicable, consult
with the Securities Administrator if any such report (i) states
that the party's
assessment of compliance was not fairly stated in a material
respect or (ii) is
unable to state an overall opinion.
Promptly after receipt of such report from the Trustee, the
Custodian, the Servicer or any Servicing Function Participant
engaged by such
parties, the Securities Administrator shall review the report and
shall promptly
notify the Depositor if any such report (i) states that the party's
assessment
of compliance was not fairly stated in a material respect or (ii)
is unable to
state an overall opinion and the Depositor shall promptly review
each such
report and the Depositor and the Securities Administrator shall
consult with the
parties to which such report relates.
(c) The Securities Administrator shall make available any
report
from the Securities Administrator, the Trustee, the Custodian, the
Servicer, or
any Servicing Function Participant furnished pursuant to Section
3.19 and this
Section 3.20, as well as any documents incorporated by reference
into the
Prospectus (to the extent such documents are either in its
possession or have
been filed with the Commission), to any Certificateholder
requesting such
information.
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Servicer shall provide to the
Trustee, the
Securities Administrator, Certificateholders that are federally
insured savings
and loan associations, the Office of Thrift Supervision, the FDIC
and the
supervisory agents and examiners of each of the foregoing (which,
in the case of
supervisory agents and examiners, may be required by applicable
state and
federal regulations) access to the available documentation
regarding the
Mortgage Loans, such access being afforded without charge but only
upon
reasonable advance request and during normal business hours at the
offices of
the Servicer designated by it.
Upon request, the Servicer shall furnish to the Securities
Administrator its most recent financial statements and such other
information
relating to the Servicer's capacity to perform its obligations
under this
Agreement as it possesses. The Securities Administrator shall
deliver such
financial statements to the Depositor and the Trustee immediately
upon receipt.
To the extent such information is not otherwise available to the
public, the
Depositor, the Securities Administrator and the Trustee shall not
disseminate
any information obtained pursuant to the preceding sentence without
the
Servicer's written consent, except as required pursuant to this
Agreement or to
the extent that it is appropriate to do so (i) in working with
legal counsel,
auditors, taxing authorities or other governmental agencies or (ii)
pursuant to
any law, rule, regulation, order, judgment, writ, injunction or
decree of any
court or governmental authority having jurisdiction over the
Depositor and the
Trustee or the Trust Fund, and in any case, each of the Depositor,
the
Securities Administrator or the Trustee, as the case may be, shall
use its best
efforts to assure the confidentiality of any such disseminated
non-public
information.
Section 3.22 Obligations of the Servicer in Respect of
Compensating
Interest. With respect to each Distribution Date, not later than
the close of
business on the related Servicer Remittance Date, the Servicer
shall deliver to
the Securities Administrator for deposit in the Distribution
Account an amount
("Compensating Interest") equal to the lesser of (A) the aggregate
of the
Prepayment Interest Shortfalls on the Mortgage Loans for such
Distribution Date
resulting from Principal Prepayments on the Mortgage Loans during
the related
Prepayment Period and (B) its aggregate Servicing Fee received in
the related
Collection Period. The Servicer shall apply Compensating Interest
to offset any
Prepayment Interest Shortfalls attributable to Principal
Prepayments in full on
the Mortgage Loans. The Servicer shall not have the right to
reimbursement for
any amounts remitted to the Securities Administrator in respect of
Compensating
Interest. Such amounts so remitted shall be included in the
Available Funds and
distributed therewith on the next Distribution Date.
Section 3.23 Investment of Funds in the Collection Account and
the
Distribution Account. (a) The Servicer may direct in writing any
depository
institution maintaining the Collection Account and the Securities
Administrator
may direct in writing any depository institution maintaining the
Distribution
Account (for purposes of this Section 3.23, each an "Investment
Account"), to
invest the funds in such Investment Account in one or more
Permitted Investments
bearing interest or sold at a discount, and maturing, unless
payable on demand,
(i) no later than the Business Day immediately preceding the date
on which such
funds are required to be withdrawn from such account pursuant to
this Agreement,
if a Person other than the Securities Administrator is the obligor
thereon, and
(ii) no later than the date on which such funds are required to be
withdrawn
from such account pursuant to this Agreement, if the Securities
Administrator is
the obligor thereon. All such Permitted Investments shall be held
to maturity,
unless payable on demand. Any investment of funds in an Investment
Account shall
be made in the name of the Securities Administrator or the
Servicer, as
applicable (in its capacity as such) or in the name of a nominee of
the same.
The Servicer or the Securities Administrator, as applicable, shall
be entitled
to sole possession over each such investment and the income
thereon, and any
certificate or other instrument evidencing any such investment
shall be
delivered directly to the Securities Administrator or its agent,
together with
any document of transfer necessary to transfer title to such
investment to the
Securities Administrator or its nominee. In the event amounts on
deposit in an
Investment Account are at any time invested in a Permitted
Investment payable on
demand, the Servicer or the Securities Administrator:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the
last day such Permitted Investment may otherwise mature
hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the
Securities Administrator that such Permitted Investment
would not constitute a Permitted Investment in respect
of funds thereafter on deposit in the Investment
Account.
(b) All income and gain realized from the investment of funds in
the
Collection Account shall be for the benefit of the Servicer. The
Servicer shall
deposit in the Collection Account the amount of any loss incurred
in respect of
any such Permitted Investment made with funds in such account
immediately upon
realization of such loss. All income and gain realized from the
investment of
funds in the Distribution Account shall be for the benefit of the
Securities
Administrator. The Securities Administrator shall deposit in the
Distribution
Account the amount of any loss incurred on Permitted Investments in
the
Distribution Account.
(c) Except as otherwise expressly provided in this Agreement, if
any
default occurs in the making of a payment due under any Permitted
Investment, or
if a default occurs in any other performance required under any
Permitted
Investment, the Securities Administrator may and, subject to
Section 8.01 and
Section 8.02(a)(v), upon the request of the Holders of Certificates
representing
more than 50% of the Voting Rights allocated to any Class of
Certificates, shall
take such action as may be appropriate to enforce such payment or
performance,
including the institution and prosecution of appropriate
proceedings.
Section 3.24 Liability of Servicer; Indemnification. (a) Subject
to
clause (b) below and Section 6.03, the Servicer (except the
Securities
Administrator if it is required to succeed the Servicer hereunder)
indemnifies
and holds the Trustee, the Securities Administrator and the
Depositor (and their
respective officers, directors and Affiliates) and each
Certificateholder
harmless against any and all claims, losses, penalties, fines,
forfeitures,
reasonable legal fees and related costs, judgments, and any other
costs, fees
and expenses that the Trustee, the Securities Administrator, the
Depositor and
any Certificateholder may sustain in any way related to the failure
of the
Servicer to perform its duties hereunder and service the Mortgage
Loans in
compliance with the Servicing Standards, including, but not limited
to the
Servicer's obligation to deliver any information, report,
certification,
accountants' letter or other material required to comply with
Regulation AB or
(b) any material breach by the Servicer of any of the
representations and
warranties contained in Section 2.05. The Servicer shall
immediately notify the
Trustee, the Securities Administrator, the Depositor and each
Certificateholder
if a claim is made that may result in such claims, losses,
penalties, fines,
forfeitures, legal fees or related costs, judgments, or any other
costs, fees
and expenses, and the Servicer shall assume (with the consent of
such party or
parties who are the subject of any such claim) the defense of any
such claim and
pay all expenses in connection therewith, including reasonable
counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which
may be entered
against the Servicer, the Trustee, the Securities Administrator,
the Depositor
and/or Certificateholder in respect of such claim. The provisions
of this
Section 3.24 shall survive the termination of this Agreement and
the payment of
the outstanding Certificates.
(b) None of the Depositor, the Servicer, or any of the
directors,
officers, employees or agents of the Depositor or the Servicer
shall be under
any liability to the Trust Fund or the Certificateholders for any
action taken,
or for refraining from the taking of any action, in good faith
pursuant to this
Agreement, or for errors in judgment; provided, however, that this
provision
shall not protect the Depositor or the Servicer or any such Person
against any
breach of warranties or representations made herein, or against any
specific
liability imposed on the Servicer for a breach of the Servicing
Standard, or
against any liability which would otherwise be imposed by reason of
its
respective willful misfeasance, bad faith, fraud or negligence in
the
performance of its duties or by reasons of negligent disregard of
its respective
obligations or duties hereunder.
The Depositor, the Servicer and any director, officer, employee
or
agent of the Depositor or the Servicer, may rely in good faith on
any document
of any kind which, prima facie, is properly executed and submitted
by any
appropriate Person with respect to any matters arising hereunder.
The Depositor,
the Servicer and any director, officer, employee or agent of the
Depositor or
the Servicer shall be indemnified and held harmless by the Trust
Fund against
any loss, liability or expense incurred in connection with any
legal action
relating to this Agreement or the Certificates, other than any
loss, liability
or expense incurred in connection with any legal action incurred by
reason of
its respective misfeasance, bad faith, fraud or negligence, a
breach of a
representation or warranty hereunder or (in the case of the
Servicer) a breach
of the Servicing Standard in the performance of its respective
duties or by
reason of negligent disregard of its respective obligations or
duties hereunder.
Neither the Depositor nor the Servicer shall be under any
obligation to appear
in, prosecute or defend any legal action unless such action is
related to its
respective duties under this Agreement and in its opinion does not
expose it to
any expense or liability; provided, however, that each of the
Depositor and the
Servicer may in its discretion undertake any action related to its
obligations
hereunder which it may deem necessary or desirable with respect to
this
Agreement and the rights and duties of the parties hereto and the
interests of
the Certificateholders hereunder. The Servicer's right to indemnity
or
reimbursement pursuant to this Section shall survive any
resignation or
termination of the Servicer pursuant to Section 6.04 or 7.01 with
respect to any
losses, expenses, costs or liabilities arising prior to such
resignation or
termination (or arising from events that occurred prior to such
resignation or
termination). In such event, unless the Depositor or the Servicer
acts without
the consent of Holders of Certificates entitled to at least 51% of
the Voting
Rights, the legal expenses and costs of such action and any
liability resulting
therefrom (except any loss, liability or expense incurred by reason
of willful
misfeasance, bad faith or gross negligence in the performance of
duties
hereunder or by reason of reckless disregard of obligations and
duties
hereunder) shall be expenses, costs and liabilities of the Trust
Fund, and the
Depositor and the Servicer shall be entitled to be reimbursed
therefor from the
Collection Account as and to the extent provided in Section 3.05,
any such right
of reimbursement being prior to the rights of the
Certificateholders to receive
any amount in the Collection Account.
Section 3.25 Reports of Foreclosure and Abandonment of
Mortgaged
Properties. On or before April 30 of each year beginning in 2007,
the Servicer
shall file the reports of foreclosure and abandonment of any
Mortgaged Property
required by Section 6050J of the Code with the Internal Revenue
Service and
provide an Officer's Certificate certifying its compliance with
this Section
3.25 to the Trustee. The reports from the Servicer shall be in form
and
substance sufficient to meet the reporting requirements imposed by
such Section
6050J.
Section 3.26 Reserved.
Section 3.27 No Personal Solicitation. From and after the
Closing
Date, the Servicer agrees that it will not take any action or
permit or cause
any action to be taken by any of its agents and Affiliates, or by
any
independent contractors or independent mortgage brokerage companies
on the
Servicer's behalf, to personally, by telephone, mail or electronic
mail, solicit
the Mortgagor under any Mortgage Loan for the purpose of
refinancing such
Mortgage Loan; provided, that the Servicer may solicit any
Mortgagor for whom
the Servicer has received a request for verification of mortgage, a
request for
demand for payoff, a mortgagor initiated written or verbal
communication
indicating a desire to prepay the related Mortgage Loan, or the
mortgagor
initiates a title search; provided, further, it is understood and
agreed that
promotions undertaken by the Servicer or any of its Affiliates
which (i) concern
optional insurance products or other additional products or (ii)
are directed to
the general public at large, including, without limitation, mass
mailings based
on commercially acquired mailing lists, newspaper, radio and
television
advertisements shall not constitute solicitation under this
Section, nor is the
Servicer prohibited from responding to unsolicited requests or
inquiries made by
a Mortgagor or an agent of a Mortgagor. Furthermore, the Servicer
shall be
permitted to include in its monthly statements to borrowers or
otherwise,
statements regarding the availability of the Servicer's counseling
services with
respect to refinancing mortgage loans.
Section 3.28 Exchange Act Reports.
(a) Within 15 days after each Distribution Date, the Securities
Administrator shall prepare, an authorized officer of the Servicer
shall sign
(and return an electronic copy of such signed Form 10-D (with an
original
executed hard copy to follow by overnight mail) to the Securities
Administrator
no later than the 13th calendar day after the related Distribution
Date provided
that the Securities Administrator provides such Form 10-D for
signature to the
Servicer no later than the 11th calendar day after the related
Distribution
Date), and the Securities Administrator shall file with the
Commission, on
behalf of the Trust, any Form 10-D required by the Exchange Act, in
form and
substance as required by the Exchange Act. The Securities
Administrator shall
file each Form 10-D with a copy of the related Distribution Date
Statement
attached thereto. Any disclosure in addition to the Distribution
Date Statement
that is required to be included on Form 10-D ("Additional Form 10-D
Disclosure")
shall be reported by the parties set forth on Exhibit T and
directed and
approved by the Depositor, and the Securities Administrator will
have no duty or
liability for any failure hereunder to determine or prepare any
Additional Form
10-D Disclosure (other than with respect to itself) absent such
reporting,
direction and approval. If a Form 10-D cannot be filed on time or
if a
previously filed Form 10-D needs to be amended, the Securities
Administrator
will follow the procedures set forth in Section 3.28(d). Promptly
(but no later
than 1 Business Day) after filing with the Commission, the
Securities
Administrator will make available on its internet website a final
executed copy
of each Form 10-D.
For so long as the Trust is subject to the Exchange Act
reporting
requirements, within five (5) calendar days (or, solely in the case
of Item 7
listed on Exhibit T, the greater of five (5) calendar days or three
(3) Business
Days) after the related Distribution Date, the parties identified
on Exhibit T
shall (i) provide to the Securities Administrator and the
Depositor, to the
extent known by a Responsible Officer, in EDGAR-compatible format,
or in such
other format as otherwise agreed upon by the Securities
Administrator and such
party, the form and substance of any Additional Form 10-D
Disclosure, if
applicable and (ii) include with such Additional Form 10-D
Disclosure, an
Additional Disclosure Notification in the form attached hereto as
Exhibit W, and
the Depositor will approve, as to form and substance, or
disapprove, as the case
may be, the inclusion of the Additional Form 10-D Disclosure on
Form 10-D. The
Securities Administrator has no duty under this Agreement to
monitor or enforce
the performance by the parties listed on Exhibit T of their duties
under this
paragraph or proactively solicit or procure from such parties any
Additional
Form 10-D Disclosure. After preparing the Form 10-D, if the Form
10-D contains
any Additional Form 10-D Disclosure, the Securities Administrator
shall forward
electronically a draft copy of the Form 10-D to the Depositor for
review. Each
party to this Agreement acknowledges that the performance by the
Securities
Administrator of its duties under this Section 3.28(a) relating to
the timely
preparation and filing of Form 10-D is contingent upon such parties
strictly
observing all applicable deadlines in the performance of their
duties under this
Section 3.28(a). The Securities Administrator shall have no
liability for any
loss, expense, damage, claim arising out of or with respect to any
failure to
properly prepare and/or timely file such Form 10-D, where such
failure results
from the Securities Administrator's inability or failure to
receive, on a timely
basis, any information from any other party hereto or the
Custodian, needed to
prepare, arrange for execution or file such Form 10-D, not
resulting from its
own negligence, bad faith or willful misconduct. The Depositor will
be
responsible for any reasonable fees assessed and expenses incurred
by the
Securities Administrator in connection with including any
Additional Form 10-D
Disclosure on Form 10-D pursuant to this paragraph.
(b) Within 90 days after the end of each fiscal year of the Trust
or
such earlier date as may be required by the Exchange Act (it being
understood
that the fiscal year for the Trust ends on December 31st of each
year),
commencing in March 2007 (the "Form 10-K Filing Deadline"), the
Securities
Administrator shall prepare and the Securities Administrator shall
file with the
Commission, on behalf of the Trust, a Form 10-K, in form and
substance as
required by the Exchange Act. Each such Form 10-K shall include the
following
items, in each case to the extent they have been delivered to the
Securities
Administrator within the applicable timeframes set forth in this
Agreement or
the Custodial Agreement:
(i) an annual compliance statement for the Securities
Administrator,
the Servicer and any Additional Servicer, as described under
Section 3.19;
(ii) (A) the annual reports on assessment of compliance with
Servicing Criteria for the Securities Administrator, the Trustee,
the
Servicer, the Custodian, and each Servicing Function Participant,
as
described under Section 3.20(a), and (B) if any party's report
on
assessment of compliance with Servicing Criteria described under
Section
3.20(a) identifies any material instance of noncompliance,
disclosure
identifying such instance of noncompliance, or if any party's
report on
assessment of compliance with servicing criteria described under
Section
3.20(a) is not included as an exhibit to such Form 10-K, disclosure
that
such report is not included and an explanation of why such report
is not
included;
(iii) (A) the registered public accounting firm attestation
report
for each of the Securities Administrator, the Trustee, the
Servicer, the
Custodian, and each Servicing Function Participant, as described
under
Section 3.20(b), and (B) if any registered public accounting
firm
attestation report described under Section 3.20(b) identifies any
material
instance of noncompliance, disclosure identifying such instance
of
noncompliance, or if any such registered public accounting firm
attestation report is not included as an exhibit to such Form
10-K,
disclosure that such report is not included and an explanation of
why such
report is not included; and
(iv) the Sarbanes-Oxley Certification.
Any disclosure or information in addition to (i) through (iv)
above
that is required to be included on Form 10-K ("Additional Form 10-K
Disclosure")
shall, pursuant to the paragraph immediately below, be reported by
the parties
set forth on Exhibit U and directed and approved by the Depositor,
and the
Securities Administrator will have no duty or liability for any
failure
hereunder to determine or prepare any Additional Form 10-K
Disclosure (other
than with respect to itself) absent such reporting, direction and
approval. If a
Form 10-K cannot be filed on time or if a previously filed Form
10-K needs to be
amended, the Securities Administrator will follow the procedures
set forth in
Section 3.28(d). Promptly (but no later than 1 Business Day) after
filing with
the Commission, the Securities Administrator will make available on
its internet
website a final executed copy of each Form 10-K.
No later than March 5 (with a 10 calendar day cure period, but in
no
event later than March 15) of each year that the Trust is subject
to the
Exchange Act reporting requirements, commencing in March 2007, (i)
the parties
identified on Exhibit U shall provide to the Securities
Administrator and the
Depositor, to the extent known by a Responsible Officer, in
EDGAR-compatible
format, or in such other format as otherwise agreed upon by the
Securities
Administrator and such party, the form and substance of any
Additional Form 10-K
Disclosure, if applicable, and (ii) the parties identified on
Exhibit U shall
include with such Additional Form 10-K Disclosure, an Additional
Disclosure
Notification in the form attached hereto as Exhibit W, and the
Depositor will
approve, as to form and substance, or disapprove, as the case may
be, the
inclusion of the Additional Form 10-K Disclosure on Form 10-K. The
Securities
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