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EXHIBIT 4
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ASSET BACKED FUNDING CORPORATION,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
LITTON LOAN SERVICING LP,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2004
2004-CB1 Trust
C-BASS Mortgage Loan Asset-Backed Certificates, Series
2004-CB1
================================================================================
<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 Trustee
Section 2.03 Repurchase or Substitution of Mortgage Loans by the
Seller
Section 2.04 Representations and Warranties of the Seller 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 Uncertificated
Regular Interests
Section 2.08 Representations and Warranties of the Seller
Section 2.09 Covenants of the Seller
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 and
Reserve Account
Section 3.05 Permitted Withdrawals From the Collection
Account
Section 3.06 Establishment of Escrow Account; Deposits in Escrow
Account
Section 3.07 Permitted Withdrawals From Escrow Account
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections
Thereunder
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
and Certain
Delinquent Mortgage Loans
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements
Section 3.15 Notification of Adjustments
Section 3.16 Optional Purchases and Sales of Mortgage Loans by
Servicer
Section 3.17 Trustee to Cooperate; Release of Files
Section 3.18 Servicing Compensation
Section 3.19 Annual Statement as to Compliance
Section 3.20 Annual Independent Certified Public Accountants'
Reports
Section 3.21 Access to Certain Documentation and Information
Regarding the
Mortgage Loans
Section 3.22 Reserved
Section 3.23 Obligations of the Servicer in Respect of
Compensating Interest
Section 3.24 Obligations of the Servicer in Respect of Mortgage
Interest Rates
and Monthly Payments
Section 3.25 Investment of Funds in the Collection Account and
the Distribution
Account
Section 3.26 Liability of Servicer; Indemnification
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties
Section 3.28 Protection of Assets
Section 3.29 Periodic Filings
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 REMIC Distributions
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 SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the
Depositor
Section 602 Merger or Consolidation of, or Assumption of the
Obligations of,
the Seller, 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 Survivability of Servicer Liabilities
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee
Section 8.02 Certain Matters Affecting the Trustee
Section 8.03 Trustee Not Liable for Certificates or Mortgage
Loans
Section 8.04 Trustee May Own Certificates
Section 8.05 Seller to Pay Trustee Fees and Expenses
Section 8.06 Eligibility Requirements for Trustee
Section 8.07 Resignation or Removal of Trustee
Section 8.08 Successor Trustee
Section 8.09 Merger or Consolidation of Trustee
Section 8.10 Appointment of Co-Trustee or Separate Trustee
Section 8.11 Limitation of Liability
Section 8.12 Trustee 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 Compliance with National Housing Act of 1934
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 REO Property
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
<PAGE>
EXHIBITS:
Exhibit A-1 Form of Class AF-1 Certificates
Exhibit A-2 Form of Class AV-1 Certificates
Exhibit A-3 Form of Class AV-2 Certificates
Exhibit A-4 Form of Class AV-3 Certificates
Exhibit B-1 Form of Class B-1 Certificates
Exhibit B-2 Form of Class B-2 Certificates
Exhibit B-3 Form of Class B-3 Certificates
Exhibit B-4 Form of Class B-4 Certificates
Exhibit C-1-1 Form of Class R Certificate
Exhibit C-1-2 Form of Class R-A Certificate
Exhibit C-2 Form of Class M-1 Certificates
Exhibit C-3 Form of Class M-2 Certificates
Exhibit C-4 Form of Class M-3 Certificates
Exhibit C-5 Form of Class X Certificates
Exhibit C-6 Form of Class N Certificates
Exhibit D-1 Mortgage Loan Schedule for Group I Mortgage
Loans
Exhibit D-2 Mortgage Loan Schedule for Group II Mortgage
Loans
Exhibit E Form of Request for Release of Documents
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit F-3 Form of Receipt of Mortgage Note
Exhibit G Mortgage Loan Purchase Agreement
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letter
Exhibit K Form of Residual Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M [Reserved]
Exhibit N DTC Letter of Representations
Exhibit O [Reserved]
Exhibit P Monthly Information Provided by Servicer
Exhibit Q Form of Officer's Certificate with Respect to
Prepayments
Exhibit R Form of Notice of Prepayment Penalty Inconsistency
Exhibit S Form of Yield Maintenance Agreement
Exhibit T Form of Certification
Exhibit U Form of Certification to be Provided by Trustee
Exhibit V Schedule of Mortgage Loan without Title Policies
Exhibit W Form of Power of Attorney
<PAGE>
This Pooling and Servicing Agreement is dated as of January 1,
2004
(the "Agreement"), among ASSET BACKED FUNDING CORPORATION, as
depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING AND SECURITIZATION
LLC, as seller
(the "Seller"), LITTON LOAN SERVICING LP, as servicer (the
"Servicer"), and U.S.
BANK 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 fifteen
Classes of Certificates, designated as (i) the Class AF-1, Class
AV-1, Class
AV-2 and Class AV-3 Certificates, (ii) the Class M-1, Class M-2
and Class M-3
Certificates, (iii) the Class B-1, Class B-2, Class B-3 and
Class B-4
Certificates, (iv) the Class N Certificates, (v) the Class X
Certificates and
(vi) the Class R and Class R-A Certificates.
REMIC 1
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of the Mortgage Loans and
certain other
related assets subject to this Agreement (but exclusive of the
Yield Maintenance
Agreement, the Reserve Fund, any LIBOR Carryover Amount and the
prepayment
charges) as a real estate investment conduit (a "REMIC") for
federal income tax
purposes, and such segregated pool of assets will be designated
as "REMIC 1."
The Class R-1 Interest will represent the sole class of
"residual interests" in
REMIC 1 for purposes of the REMIC Provisions under federal
income tax law. The
following table irrevocably sets forth the designation, the
Uncertificated REMIC
1 Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely
for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC 1 Regular
Interests. None
of the REMIC 1 Regular Interests will be certificated.
<TABLE>
<CAPTION>
==================================================================================================================
Initial
Uncertificated REMIC Uncertificated Principal Latest
Possible
Designation Pass-Through Rate(1) Balance Maturity Date(1)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LT1AA (2) $207,876,867.17 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AF1 (2) $522,280.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AV1 (2) $400,000.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AV2 (2) $660,930.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AV3 (2) $134,955.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1M1 (2) $121,970.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1M2 (2) $106,060.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1M3 (2) $31,820.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B1 (2) $26,515.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B2 (2) $26,515.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B3 (2) $26,515.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B4 (2) $42,425.00 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1ZZ (2) $2,142,400.04 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1SUB (2) $2,450.23 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1GRP (2) $12,895.83 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT2SUB (2) $5,610.32 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT2GRP (2) $29,528.02 February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1XX (2) $212,068,767.81 February 25, 2034
==================================================================================================================
</TABLE>
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury
regulations, the Distribution Date immediately following the
maturity date
for the Mortgage Loan with the latest maturity date has been
designated as
the "latest possible maturity date" for each REMIC 1 Regular
Interest.
(2) Calculated in accordance with the definition of
"Uncertificated REMIC 1
Pass-Through Rate" herein.
REMIC 2
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of the REMIC 1 Regular
Interests as a REMIC
for federal income tax purposes, and such segregated pool of
assets will be
designated as "REMIC 2." REMIC 2 will issue as regular interests
(i) the Classes
of Certificates (exclusive of the rights of such Classes of
Certificates other
than the Class AF-1 Certificates to receive LIBOR Carryover
Amounts) indicated
as issued by REMIC 2 in the table at the end of the Preliminary
Statement, (ii)
the REMIC 2 Class B-4 Interest (as described in footnote 11 to
the table at the
end of the Preliminary Statement) and (iii) the REMIC 2 Class
X/N Interest(as
described in footnote 13 at the end of the Preliminary
Statement). The Class R-2
Interest represents the sole class of "residual interests" in
REMIC 2 for
purposes of the REMIC Provisions.
REMIC A
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of REMIC 2 Regular Interest
X/N as a REMIC
for federal income tax purposes, and such segregated pool of
assets will be
designated as "REMIC A." The REMIC A Class X/N Regular Interest
represents the
sole class of regular interests and the Class R-A Interest
represents the sole
class of "residual interests" in REMIC A for purposes of the
REMIC Provisions.
The REMIC A Class X/N Interest shall have a principal balance
equal to the REMIC
2 Class X/N Interest and shall bear interest at the same rate as
the REMIC 2
Class X/N Interest.
REMIC B
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of the REMIC 2 Regular
Interest B-4 as a
REMIC for federal income tax purposes, and such segregated pool
of assets will
be designated as "REMIC B." The Class B-4 Certificates
(exclusive of the right
to LIBOR Carryover Amounts) represent the sole class of "regular
interests" and
the Class R-B Interest represents the sole class of "residual
interests" in
REMIC B for purposes of the REMIC Provisions. The Class B-4
Certificates shall
have a principal balance equal to the REMIC 2 Class B-4 Interest
and shall bear
interest at the same rate as the REMIC 2 Class B-4 Interest.
Solely for purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury
regulations, 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 Certificates that represents
one or more of the
"regular interests" in REMIC 2, REMIC A or REMIC B.
The following table sets forth (or describes) the Class
designation,
Pass-Through Rate and the Original Class Certificate Principal
Balance or the
Original Class N Notional Amount, for each Class of Certificates
comprising the
interests in the Trust Fund created hereunder:
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================
Original Class
Certificate
Issuing Principal Balance or Pass-Through Assumed Final
Class REMIC Notional Amount Rate Maturity Dates
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AF-1 2 $104,456,000.00 (1) October 25, 2032
------------------------------------------------------------------------------------------------------------------
AV-1 2 $80,000,000.00 (2) September 25, 2033
------------------------------------------------------------------------------------------------------------------
AV-2 2 $132,186,000.00 (3) September 25, 2030
------------------------------------------------------------------------------------------------------------------
AV-3 2 $26,991,000.00 (4) September 25, 2033
------------------------------------------------------------------------------------------------------------------
M-1 2 $24,394,000.00 (5) August 25, 2033
------------------------------------------------------------------------------------------------------------------
M-2 2 $21,212,000.00 (6) June 25, 2033
------------------------------------------------------------------------------------------------------------------
M-3 2 $6,364,000.00 (7) April 25, 2033
------------------------------------------------------------------------------------------------------------------
B-1 2 $5,303,000.00 (8) March 25, 2033
------------------------------------------------------------------------------------------------------------------
B-2 2 $5,303,000.00 (9) January 25, 2033
------------------------------------------------------------------------------------------------------------------
B-3 2 $5,303,000.00 (10) October 25, 2032
------------------------------------------------------------------------------------------------------------------
B-4(11) B $8,485,000.00 (12) May 25, 2032
------------------------------------------------------------------------------------------------------------------
N(13) (13) $25,837,220.00(13)(14) 3.50% N/A
------------------------------------------------------------------------------------------------------------------
X(13) (13) N/A(13) N/A N/A
------------------------------------------------------------------------------------------------------------------
R 1, 2(15) N/A N/A N/A
------------------------------------------------------------------------------------------------------------------
R-A 1, 2(16) N/A N/A N/A
------------------------------------------------------------------------------------------------------------------
Total $419,997,000.00(17)
==================================================================================================================
</TABLE>
(1) Interest will accrue on the Class AF-1 Certificates during
each Interest
Accrual Period at a rate equal to the Class AF-1 Pass-Through
Rate.
(2) Interest will accrue on the Class AV-1 Certificates at a
rate equal to the
lesser of: (i) the Class AV-1 Pass-Through Rate and (ii) the
Group II Cap
for such Distribution Date.
(3) Interest will accrue on the Class AV-2 Certificates at a
rate equal to the
lesser of: (i) the Class AV-2 Pass-Through Rate and (ii) the
Group II Cap
for such Distribution Date.
(4) Interest will accrue on the Class AV-3 Certificates at a
rate equal to the
lesser of: (i) the Class AV-3 Pass-Through Rate and (ii) the
Group II Cap
for such Distribution Date.
(5) Interest will accrue on the Class M-1 Certificates at a rate
equal to the
lesser of: (i) the Class M-1 Pass-Through Rate and (ii) the Pool
Cap for
such Distribution Date.
(6) Interest will accrue on the Class M-2 Certificates at a rate
equal to the
lesser of: (i) the Class M-2 Pass-Through Rate and (ii) the Pool
Cap for
such Distribution Date.
(7) Interest will accrue on the Class M-3 Certificates at a rate
equal to the
lesser of: (i) the Class M-3 Pass-Through Rate and (ii) the Pool
Cap for
such Distribution Date.
(8) Interest will accrue on the Class B-1 Certificates at a rate
equal to the
lesser of: (i) the Class B-1 Pass-Through Rate and (ii) the Pool
Cap for
such Distribution Date.
(9) Interest will accrue on the Class B-2 Certificates at a rate
equal to the
lesser of: (i) the Class B-2 Pass-Through Rate and (ii) the Pool
Cap for
such Distribution Date.
(10) Interest will accrue on the Class B-3 Certificates at a
rate equal to the
lesser of: (i) the Class B-3 Pass-Through Rate and (ii) the Pool
Cap for
such Distribution Date.
(11) REMIC 2 will issue an Uncertificated Regular Interest
economically
equivalent to the Class B-4 Certificates. That Regular Interest
will be an
asset of REMIC B which will issue the Class B-4 Certificates as
described
under "REMIC B" in this Preliminary Statement.
(12) Interest will accrue on the Class B-4 Certificates at a
rate equal to the
lesser of: (i) the Class B-4 Pass-Through Rate and (ii) the Pool
Cap for
such Distribution Date.
(13) The Class N and Class X Certificates, collectively,
represent the
beneficial ownership of the Class X/N Interest. REMIC 2 will
issue the
REMIC 2 Class X/N Interest, which will be an asset of REMIC A.
REMIC A
will issue the REMIC A Class X/N Interest. The REMIC 2 Class X/N
Interest
and the REMIC A Class X/N Interest will have a principal balance
equal to
the Class X/N Uncertificated Principal Balance but will not bear
interest
on that balance. The REMIC 2 Class X/N Interest and the REMIC A
Class X/N
Interest will bear interest on the Notional Balance therefor at
the Pass
Through Rate therefor. The X Certificates and Class N
Certificates will
represent the beneficial ownership of the REMIC A Class X/N
Interest and
beneficial rights with respect to the Yield Maintenance
Agreement and the
Reserve Account, subject to the obligation to pay LIBOR
Carryover Amounts.
(14) Initial Class N Notional Amount.
(15) The Class R Certificate will represent beneficial ownership
of the Class
R-1 Interest and the Class R-2 Interest.
(16) The Class R-A Certificate will represent beneficial
ownership of the Class
R-A Interest and the Class R-B Interest.
(17) Exclusive of the Class N Notional Amount.
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. Unless otherwise
specified, interest on
the Class AV-1, Class AV-2, Class AV-3, Class M-1, Class M-2,
Class M-3, Class
B-1, Class B-2, Class B-3 and Class B-4 Certificates will be
calculated on the
basis of the actual number of days in the related Interest
Accrual Period and a
360-day year. Interest on the Class AF-1, Class N and Class X
Certificates and
the REMIC Regular Interests will be calculated on the basis of a
360-day year
consisting of twelve 30-day months.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan 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, each Mortgage Loan in
foreclosure, all REO
Property and each Mortgage Loan for which the Mortgagor has
filed for bankruptcy
after the Closing Date.
"Account": Any of the Collection Account, the Distribution
Account,
the Escrow Account and the Reserve Account.
"Accrued Certificate Interest": With respect to each
Distribution
Date and Class of Certificates, an amount equal to the interest
accrued at the
applicable rate set forth or described opposite such Class in
the table in the
Preliminary Statement during the related Interest Accrual Period
on the
Certificate Principal Balance of such Class of Certificates,
reduced by such
Class's Interest Percentage of Relief Act Interest Shortfalls
for such
Distribution Date.
"Actuarial Mortgage Loan": Any Mortgage Loan other than a
Simple
Interest Mortgage Loan.
"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.
"Adjusted Pool Balance": As of any Distribution Date, the
Pool
Balance minus the Remaining Initial Overcollateralization
Amount.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage
Loan, each adjustment date, on which the Mortgage Interest Rate
of an
Adjustable-Rate Mortgage Loan changes pursuant to the related
Mortgage Note. The
first Adjustment Date following the Cut-off Date as to each
Adjustable-Rate
Mortgage Loan is set forth in the Mortgage Loan Schedules.
"Advance": As to any Actuarial Mortgage Loan (other than a
Third
Lien Mortgage Loan) or REO Property, any advance made by the
Servicer in respect
of any Distribution Date pursuant to Section 4.07.
"Advance Facility": As defined in Section 6.05(b) hereof.
"Advance Facility Notice": As defined in Section 6.05(c)
hereof.
"Advance Financing Person": As defined in Section 6.05(b)
hereof.
"Advance Reimbursement Amounts": As defined in Section
6.05(c)
hereof.
"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.
"Agency Insurance Agreements": The FHA Insurance Contracts.
"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,
including with respect to each FHA Loan, the FHA Regulations and
the related FHA
Insurance Contract.
"Applied Realized Loss Amount": With respect to each
Distribution
Date, the excess, if any, of (a) the aggregate of the
Certificate Principal
Balances of the Certificates (after giving effect to all
distributions on such
Distribution Date) 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.
"Assumed Final Maturity Date": As to each Class of Certificates,
the
date set forth as such in the Preliminary Statement.
"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 by the
Servicer on or prior to
the related Determination Date, (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, any
Reimbursement Amount or Recovery deposited to the Collection
Account and other
unscheduled recoveries of principal and interest (excluding
prepayment
penalties) in respect of the Mortgage Loans during the related
Prepayment
Period, (c) the aggregate of any amounts received in respect of
an REO Property
withdrawn from any REO Account and deposited in the Collection
Account for such
Distribution Date, (d) any Compensating Interest for such
Distribution Date, and
(e) the aggregate of any Advances made by the Servicer for such
Distribution
Date over (ii) the sum of (a) amounts reimbursable or payable to
the Servicer
pursuant to Section 3.05, (b) Stayed Funds, (c) the Servicing
Fee and (d)
amounts deposited in the Collection Account or the Distribution
Account, as the
case may be, in error.
"Balloon Mortgage 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 AF-1, Class AV-1, Class AV-2, Class AV-3, Class
M-1, Class M-2,
Class M-3, Class B-1, Class B-2 and Class B-3 Certificates shall
be Book-Entry
Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day
on
which banking institutions in the State of Delaware, the State
of New York, the
State of Texas or in the city in which the Corporate Trust
Office of the Trustee
is located are authorized or obligated by law or executive order
to be closed.
"Cap": Any of the Group II Cap or the Pool Cap.
"Certificate": Any Regular Certificate or Residual
Certificate.
"Certificate Custodian": Initially, U.S. Bank National
Association;
thereafter any other Certificate Custodian acceptable to the
Depository and
selected by the Trustee.
"Certificate Owner": With respect to each Book-Entry
Certificate,
any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class
of
Certificates (other than the Class N, Class X and Residual
Certificates) and any
Distribution Date, the Original Class Certificate Principal
Balance 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. The Class N, Class X and Residual
Certificates do not have a
Certificate Principal Balance. With respect to any Certificate
(other than a
Class N, Class X or a Residual Certificate) of a Class and any
Distribution
Date, the portion of the Certificate Principal Balance of such
Class represented
by such Certificate equal to the product of the Percentage
Interest evidenced by
such Certificate and the Certificate Principal Balance of such
Class.
"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 Disqualified 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 AF-1 Pass-Through Rate": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 4.020% per annum and
(ii) following the
Optional Termination Date, 4.520% per annum.
"Class AV-1 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date, 0.310% per annum, and
(ii) following
the Optional Termination Date, 0.620% per annum.
"Class AV-1 Pass-Through Rate": For each Distribution Date,
LIBOR as
of the related LIBOR Determination Date, plus the Class AV-1
Certificate Margin.
"Class AV-2 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date, 0.180% per annum, and
(ii) following
the Optional Termination Date, 0.360% per annum.
"Class AV-2 Pass-Through Rate": For each Distribution Date,
LIBOR as
of the related LIBOR Determination Date, plus the Class AV-2
Certificate Margin.
"Class AV-3 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date, 0.430% per annum, and
(ii) following
the Optional Termination Date, 0.860% per annum.
"Class AV-3 Pass-Through Rate": For each Distribution Date,
LIBOR as
of the related LIBOR Determination Date, plus the Class AV-3
Certificate Margin.
"Class A Certificate": Any one of the Certificates with an
"A"
designated on the face thereof substantially in the form annexed
hereto as
Exhibits A-1, A-2, A-3 and A-4, executed by the Trustee 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 Interest Carry Forward Amount": For any Distribution
Date,
the sum of the Interest Carry Forward Amounts for the Class A
Certificates for
such Distribution Date.
"Class A Principal Distribution Amount": As of any Distribution
Date
(a) prior to the Stepdown Date or with respect to which a
Trigger Event is in
effect, the Principal Distribution Amount and (b) on or after
the Stepdown Date
and as long as a Trigger Event is not in effect, the excess of
(x) the sum of
the Certificate Principal Balances of the Class A Certificates
immediately prior
to such Distribution Date over (y) the lesser of (A) the product
of (i) 62.00%
and (ii) the Pool Balance as of the last day of the related
Collection Period
and (B) the Pool Balance as of the last day of the related
Collection Period
minus the product of (i) 0.50% and (ii) the Pool Balance on the
Cut-off Date.
"Class B Certificate": Any one of the Certificates with a
"B"
designated on the face thereof substantially in the form annexed
hereto as
Exhibit B-1, Exhibit B-2, Exhibit B-3 and Exhibit B-4, executed
by the Trustee
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 B Certificateholders": Collectively, the Holders of the
Class
B Certificates.
"Class B-1 Applied Realized Loss Amount": As to the Class
B-1
Certificates and as of any Distribution Date, the lesser of (x)
the Certificate
Principal Balance thereof (after taking into account the
distribution of the
Principal Distribution Amount on such Distribution Date, but
prior to the
application of the Class B-1 Applied Realized Loss Amount, if
any, on such
Distribution Date) and (y) the excess of (i) the Applied
Realized Loss Amount as
of such Distribution Date over (ii) the sum of the Class B-2
Applied Realized
Loss Amount, the Class B-3 Applied Realized Loss Amount and the
Class B-4
Applied Realized Loss Amount as of such Distribution Date.
"Class B-1 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 1.700% per annum, and
(ii) following the
Optional Termination Date, 2.550% per annum.
"Class B-1 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date, 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
Certificate Principal
Balances of the Class A Certificates (after taking into account
the payment of
the Class A Principal Distribution Amount on such Distribution
Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates
(after taking into
account the payment of the Class M-1 Principal Distribution
Amount on such
Distribution Date), (iii) the Certificate Principal Balance of
the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal
Distribution Amount on such Distribution Date), (iv) the
Certificate Principal
Balance of the Class M-3 Certificates (after taking into account
the payment of
the Class M-3 Principal Distribution Amount on such Distribution
Date) and (v)
the Certificate Principal Balance of the Class B-1 Certificates
immediately
prior to such Distribution Date over (y) the lesser of (A) the
product of (i)
89.00% and (ii) the Pool Balance as of the last day of the
related Collection
Period and (B) the Pool Balance as of the last day of the
related Collection
Period minus the product of 0.50% and the Pool Balance on the
Cut-off Date.
"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 (xiv)
hereof, in each
case for such Distribution Date.
"Class B-2 Applied Realized Loss Amount": As to the Class
B-2
Certificates and as of any Distribution Date, the lesser of (x)
the Certificate
Principal Balance thereof (after taking into account the
distribution of the
Principal Distribution Amount on such Distribution Date, but
prior to the
application of the Class B-2 Applied Realized Loss Amount, if
any, on such
Distribution Date) and (y) the excess of (i) the Applied
Realized Loss Amount as
of such Distribution Date over (ii) the sum of the Class B-3
Applied Realized
Loss Amount and the Class B-4 Applied Realized Loss Amount as of
such
Distribution Date.
"Class B-2 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 1.800% per annum, and
(ii) following the
Optional Termination Date, 2.700% per annum.
"Class B-2 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date, 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
Certificate Principal
Balances of the Class A Certificates (after taking into account
the payment of
the Class A Principal Distribution Amount on such Distribution
Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates
(after taking into
account the payment of the Class M-1 Principal Distribution
Amount on such
Distribution Date), (iii) the Certificate Principal Balance of
the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal
Distribution Amount on such Distribution Date), (iv) the
Certificate Principal
Balance of the Class M-3 Certificates (after taking into account
the payment of
the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the
Certificate 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) and (vi) the Certificate Principal Balance of
the Class B-2
Certificates immediately prior to such Distribution Date over
(y) the lesser of
(A) the product of (i) 91.50% and (ii) the Pool Balance as of
the last day of
the related Collection Period and (B) the Pool Balance as of the
last day of the
related Collection Period minus the product of 0.50% and the
Pool Balance on the
Cut-off Date.
"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 (xvii)
hereof, in each
case for such Distribution Date.
"Class B-3 Applied Realized Loss Amount": As to the Class
B-3
Certificates and as of any Distribution Date, the lesser of (x)
the Certificate
Principal Balance thereof (after taking into account the
distribution of the
Principal Distribution Amount on such Distribution Date, but
prior to the
application of the Class B-3 Applied Realized Loss Amount, if
any, on such
Distribution Date) and (y) the excess of (i) the Applied
Realized Loss Amount as
of such Distribution Date over (ii) the Class B-4 Applied
Realized Loss Amount
as of such Distribution Date.
"Class B-3 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 2.950% per annum, and
(ii) following the
Optional Termination Date, 4.425% per annum.
"Class B-3 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date, 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
Certificate Principal
Balances of the Class A Certificates (after taking into account
the payment of
the Class A Principal Distribution Amount on such Distribution
Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates
(after taking into
account the payment of the Class M-1 Principal Distribution
Amount on such
Distribution Date), (iii) the Certificate Principal Balance of
the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal
Distribution Amount on such Distribution Date), (iv) the
Certificate Principal
Balance of the Class M-3 Certificates (after taking into account
the payment of
the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the
Certificate 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), (vi) the Certificate 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 (vii) the
Certificate
Principal Balance of the Class B-3 Certificates immediately
prior to such
Distribution Date over (y) the lesser of (A) the product of (i)
94.00% and (ii)
the Pool Balance as of the last day of the related Collection
Period and (B) the
Pool Balance as of the last day of the related Collection Period
minus the
product of 0.50% and the Pool Balance on the Cut-off Date.
"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 (xx)
hereof, in each case
for such Distribution Date.
"Class B-4 Applied Realized Loss Amount": As to the Class
B-4
Certificates and as of any Distribution Date, the lesser of (x)
the Certificate
Principal Balance thereof (after taking into account the
distribution of the
Principal Distribution Amount on such Distribution Date, but
prior to the
application of the Class B-4 Applied Realized Loss Amount, if
any, on such
Distribution Date) and (y) the Applied Realized Loss Amount as
of such
Distribution Date.
"Class B-4 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 4.000% per annum, and
(ii) following the
Optional Termination Date, 6.000% per annum.
"Class B-4 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date, 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
Certificate Principal
Balances of the Class A Certificates (after taking into account
the payment of
the Class A Principal Distribution Amount on such Distribution
Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates
(after taking into
account the payment of the Class M-1 Principal Distribution
Amount on such
Distribution Date), (iii) the Certificate Principal Balance of
the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal
Distribution Amount on such Distribution Date), (iv) the
Certificate Principal
Balance of the Class M-3 Certificates (after taking into account
the payment of
the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the
Certificate 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), (vi) the Certificate 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), (vii) the
Certificate 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
(viii) the Certificate Principal Balance of the Class B-4
Certificates
immediately prior to such Distribution Date over (y) the lesser
of (A) the
product of (i) 98.00% and (ii) the Pool Balance as of the last
day of the
related Collection Period and (B) the Pool Balance as of the
last day of the
related Collection Period minus the product of 0.50% and the
Pool Balance on the
Cut-off Date.
"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 (xxiii)
hereof, in each
case for such Distribution Date.
"Class M Certificate": Any one of the Certificates with an
"M"
designated on the face thereof substantially in the form annexed
hereto as
Exhibit C-2, Exhibit C-3 and Exhibit C-4, executed by the
Trustee 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 Applied Realized Loss Amount": As to the Class
M-1
Certificates and as of any Distribution Date, the lesser of (x)
the Certificate
Principal Balance thereof (after taking into account the
distribution of the
Principal Distribution Amount on such Distribution Date, but
prior to the
application of the Class M-1 Applied Realized Loss Amount, if
any, on such
Distribution Date) and (y) the excess of (i) the Applied
Realized Loss Amount as
of such Distribution Date over (ii) the sum of the Class M-2
Applied Realized
Loss Amount, the Class M-3 Applied Realized Loss Amount, the
Class B-1 Applied
Realized Loss Amount, the Class B-2 Applied Realized Loss
Amount, the Class B-3
Applied Realized Loss Amount and the Class B-4 Applied Realized
Loss Amount, in
each case as of such Distribution Date.
"Class M-1 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 0.600% per annum, and
(ii) following the
Optional Termination Date, 0.900% per annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date, plus the Class M-1
Certificate Margin.
"Class M-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 Certificate
Principal Balances of
the Class A Certificates (after taking into account the payment
of the Class A
Principal Distribution Amount on such Distribution Date) and
(ii) the
Certificate Principal Balance of the Class M-1 Certificates
immediately prior to
such Distribution Date over (y) the lesser of (A) the product of
(i) 73.50% and
(ii) the Pool Balance as of the last day of the related
Collection Period and
(B) the Pool Balance as of the last day of the related
Collection Period minus
the product of 0.50% and the Pool Balance on the Cut-off
Date.
"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) through (v)
hereof, in each case
for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to the Class
M-2
Certificates and as of any Distribution Date, the lesser of (x)
the Certificate
Principal Balance thereof (after taking into account the
distribution of the
Principal Distribution Amount on such Distribution Date, but
prior to the
application of the Class M-2 Applied Realized Loss Amount, if
any, on such
Distribution Date) and (y) the excess of (i) the related Applied
Realized Loss
Amount as of such Distribution Date over (ii) the sum of the
Class M-3 Applied
Realized Loss Amount, the Class B-1 Applied Realized Loss
Amount, the Class B-2
Applied Realized Loss Amount, the Class B-3 Applied Realized
Loss Amount and the
Class B-4 Applied Realized Loss Amount, in each case as of such
Distribution
Date.
"Class M-2 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 1.180% per annum, and
(ii) following the
Optional Termination Date, 1.770% per annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date, plus the Class M-2
Certificate Margin.
"Class M-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 Certificate
Principal Balances of
the Class A Certificates (after taking into account the payment
of the Class A
Principal Distribution Amount on such Distribution Date), (ii)
the Certificate
Principal Balance of the Class M-1 Certificates (after taking
into account the
payment of the Class M-1 Principal Distribution Amount on such
Distribution
Date) and (iii) the Certificate Principal Balance of the Class
M-2 Certificates
immediately prior to such Distribution Date over (y) the lesser
of (A) the
product of (i) 83.50% and (ii) the Pool Balance as of the last
day of the
related Collection Period and (B) the Pool Balance as of the
last day of the
related Collection Period minus the product of 0.50% and the
Pool Balance on the
Cut-off Date.
"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 (viii)
hereof, in each
case for such Distribution Date.
"Class M-3 Applied Realized Loss Amount": As to the Class
M-3
Certificates and as of any Distribution Date, the lesser of (x)
the Certificate
Principal Balance thereof (after taking into account the
distribution of the
Principal Distribution Amount on such Distribution Date, but
prior to the
application of the Class M-3 Applied Realized Loss Amount, if
any, on such
Distribution Date) and (y) the excess of (i) the related Applied
Realized Loss
Amount as of such Distribution Date over (ii) the sum of the
Class B-1 Applied
Realized Loss Amount, the Class B-2 Applied Realized Loss
Amount, the Class B-3
Applied Realized Loss Amount and the Class B-4 Applied Realized
Loss Amount, in
each case as of such Distribution Date.
"Class M-3 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 1.400% per annum, and
(ii) following the
Optional Termination Date, 2.100% per annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date, plus the Class M-3
Certificate Margin.
"Class M-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 Certificate
Principal Balances of
the Class A Certificates (after taking into account the payment
of the Class A
Principal Distribution Amount on such Distribution Date), (ii)
the Certificate
Principal Balance of the Class M-1 Certificates (after taking
into account the
payment of the Class M-1 Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-2
Certificates
(after taking into account the payment of the Class M-2
Principal Distribution
Amount on such Distribution Date) and (iv) the Certificate
Principal Balance of
the Class M-3 Certificates immediately prior to such
Distribution Date over (y)
the lesser of (A) the product of (i) 86.50% and (ii) the Pool
Balance as of the
last day of the related Collection Period and (B) the Pool
Balance as of the
last day of the related Collection Period minus the product of
0.50% and the
Pool Balance on the Cut-off Date.
"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 (xi)
hereof, in each case
for such Distribution Date.
"Class N Certificate": Any one of the Certificates with an
"N"
designated on the face thereof substantially in the form annexed
hereto as
Exhibit C-6, executed by the Trustee 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 N Notional Amount": As of any date, the Notional Amount
of
the Class N Certificates.
"Class R Certificate": The Class R Certificate executed by
the
Trustee on behalf of the Trust, and authenticated and delivered
by the
Certificate Registrar, substantially in the form annexed hereto
as Exhibit C-1
and evidencing the ownership of the Residual Interest in each of
REMIC 1 and
REMIC 2. The Class R Certificate represents the ownership of the
Class R-1
Interest and Class R-2 Interest.
"Class R-A Interest": The uncertificated residual interest in
REMIC
A.
"Class R-B Interest": The uncertificated residual interest in
REMIC
B.
"Class R-1 Interest": The uncertificated residual interest in
REMIC
1.
"Class R-2 Interest": The uncertificated residual interest in
REMIC
2.
"Class R-A Certificate": The Class R-A Certificate executed by
the
Trustee on behalf of the Trust, and authenticated and delivered
by the
Certificate Registrar, substantially in the form annexed hereto
as Exhibit C-1-2
and evidencing the ownership of the Residual Interest in each of
REMIC A and
REMIC B. The Class R-A Certificate represents the ownership of
the Class R-A
Interest and Class R-B Interest.
"Class X": Any one of the Class X Certificates as designated on
the
face thereof substantially in the form annexed hereto as Exhibit
C-5, executed
by the Trustee 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 X/N Interest": An uncertificated interest in the Trust
held
by the Trustee on behalf of the holders of the Class X and Class
N Certificates,
representing ownership of the REMIC A Class X/N Regular Interest
and beneficial
rights with respect to the Yield Maintenance Agreement and the
Reserve Account,
less the amount (without duplication) of any LIBOR Carryover
Amounts paid
pursuant to Section 4.02(b)(xxv) and (xxvi).
"Class X/N Uncertificated Principal Balance": The Initial
Overcollateralization Amount minus the sum of (i) any Realized
Losses allocated
thereto and (ii) any amounts distributed (or deemed distributed)
to the REMIC 2
Class X/N Interest with respect thereto.
"Class X Distributable Amount": With respect to any
Distribution
Date, the excess of (i) the aggregate of amounts distributable
on the Class X/N
Interest for such Distribution Date, over (ii) the aggregate of
amounts
distributable to the Class N Certificates pursuant to Section
4.02(b).
"Closing Date": February 12, 2004.
"Code": The Internal Revenue Code of 1986, as it may be amended
from
time to time.
"Collection Account": The account or accounts created and
maintained
by the Servicer pursuant to Section 3.04, which shall be
entitled "Collection
Account, Litton Loan Servicing LP, as Servicer for the Trust
under the Pooling
and Servicing Agreement dated as of January 1, 2004 among Asset
Backed Funding
Corporation, as Depositor, Credit-Based Asset Servicing and
Securitization LLC,
as Seller, Litton Loan Servicing LP, as Servicer, and U.S. Bank
National
Association, as Trustee, in trust for registered Holders of
2004-CB1 Trust,
C-BASS Mortgage Loan Asset-Backed Certificates, Series
2004-CB1," 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.
"Combined Loan-to-Value Ratio": As of any date and Mortgage
Loan,
the fraction, expressed as a percentage, the numerator of which
is the Principal
Balance of the Mortgage Loan as of such date of determination
plus the principal
balance of any related senior mortgage loan or mortgage loans,
if any, at
origination of the Mortgage Loan and the denominator of which is
the Value of
the related Mortgaged Property.
"Compensating Interest": As defined in Section 3.23 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.
"Conventional Mortgage Loan": Any Mortgage Loan that is not an
FHA
Loan.
"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 60 Livingston Avenue, EP-MN-WS3D, St. Paul, Minnesota
55107-2292,
Attention: Institutional Trust Services, C-BASS Series 2004-CB1,
or at such
other address as the Trustee may designate from time to time by
notice to the
Certificateholders, the Depositor, the Servicer and the
Seller.
"Corresponding Classes": With respect to REMIC 1 and REMIC 2,
the
following Classes shall be Corresponding Classes:
--------------------------------------------------------------------------------
Corresponding REMIC 1 Classes Corresponding REMIC 2 Classes
--------------------------------------------------------------------------------
LT1AF1 Class AF-1 Certificates
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LT1AV1 Class AV-1 Certificates
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LT1AV2 Class AV-2 Certificates
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LT1AV3 Class AV-3 Certificates
--------------------------------------------------------------------------------
LT1M1 Class M-1 Certificates
--------------------------------------------------------------------------------
LT1M2 Class M-2 Certificates
--------------------------------------------------------------------------------
LT1M3 Class M-3 Certificates
--------------------------------------------------------------------------------
LT1B1 Class B-1 Certificates
--------------------------------------------------------------------------------
LT1B2 Class B-2 Certificates
--------------------------------------------------------------------------------
LT1B3 Class B-3 Certificates
--------------------------------------------------------------------------------
LT1B4 REMIC 2 Class B-4 Regular Interest
--------------------------------------------------------------------------------
"Custodial Agreement": The Custodial Agreement, dated as of
January
1, 2004, among the Trustee, the Servicer and the Custodian, as
the same may be
amended or supplemented pursuant to the terms thereof.
"Custodian": The Bank of New York, a New York banking
corporation,
or any successor custodian appointed pursuant to the terms of
the Custodial
Agreement.
"Cut-off Date": January 1, 2004.
"Cut-off Date Principal Balance": With respect to any Mortgage
Loan,
the unpaid principal balance thereof as of the Cut-off Date
after 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).
"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, 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 and/or any Escrow Payment due on a Due Date is not made
by the close of
business on the next scheduled Due Date for such Mortgage Loan
or any Mortgage
Loan with respect to which any Servicing Advances made on or
before the Cut-off
Date has not been reimbursed by the related Mortgagor.
"Depositor": Asset Backed Funding 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(3) 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
10th day of the calendar month in which such Distribution Date
occurs or, if
such 10th day is not a Business Day, the Business Day
immediately preceding such
10th day.
"Directly Operate": With respect to any REO Property, the
furnishing
or rendering of services to the tenants thereof, the management
or operation of
such REO Property, the holding of such REO Property primarily
for sale to
customers, the performance of any construction work thereon or
any use of such
REO Property in a trade or business conducted by the Trust other
than through an
Independent Contractor; provided, however, that the Trustee (or
the Servicer
under this Agreement) shall not be considered to Directly
Operate an REO
Property solely because the Trustee (or the Servicer under this
Agreement)
establishes rental terms, chooses tenants, enters into or renews
leases, deals
with taxes and insurance, or makes decisions as to repairs or
capital
expenditures with respect to such REO Property.
"Disqualified Non-U.S. Person": With respect to a Residual
Certificate, any (A) non-U.S. Person or agent thereof or (B)
U.S. Person with
respect to whom income from a Residual Certificate is
attributable to a foreign
permanent establishment or fixed base, within the meaning of an
applicable
income tax treaty, of such Person or any other U.S. Person.
"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 Trustee
based upon an Opinion of Counsel provided by nationally
recognized counsel to
the Trustee that the holding of an ownership interest in a
Residual 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
Residual 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 trust account or accounts created
and
maintained by the Trustee pursuant to Section 3.04(b) which
shall be entitled
"Distribution Account, U.S. Bank National Association, as
Trustee, in trust for
the registered Holders of 2004-CB1 Trust, C-BASS Mortgage Loan
Asset-Backed
Certificates, Series 2004-CB1" 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 February 2004.
"Distribution Information": The items calculated and reported by
the
Trustee pursuant to Section 4.06(a)(i), (ii), (iii) and (xiv)
through (xxiv) and
any other information included in the monthly statement to
certificateholders
set forth in Section 4.06 of the Pooling Agreement aggregated
and/or calculated
by the Trustee from (a) information contained in the Remittance
Report or (b)
other information furnished to the Trustee by the Servicer
pursuant to Section
4.07.
"Due Date": With respect to each Mortgage Loan and any
Distribution
Date, the day of the calendar month in which such Distribution
Date occurs on
which the Monthly Payment for such Mortgage Loan was due,
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" (or the equivalent) 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 (to the limits established
by such
corporation), the uninsured deposits in which account are
otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the
Trustee and to each
Rating Agency, the Certificateholders will have a claim with
respect to the
funds in such account or a perfected first priority security
interest against
such collateral (which shall be limited to Permitted
Investments) securing such
funds that is superior to claims of any other depositors or
creditors of the
depository institution with which such account is maintained,
(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
Trustee. Eligible Accounts may bear interest.
"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, and not
more than 5% less
than, 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 Maximum Loan
Rate not less
than the Maximum Loan Rate for the Defective Mortgage Loan, (iv)
if an
Adjustable-Rate Mortgage Loan, have a Minimum Loan Rate not less
than the
Minimum Loan Rate of the Defective Mortgage Loan, (v) if an
Adjustable-Rate
Mortgage Loan, have the same Index as the Defective Mortgage
Loan, (vi) if an
Adjustable-Rate Mortgage Loan, have a Gross Margin equal to or
greater than the
Gross Margin of the Defective Mortgage Loan, (vii) if an
Adjustable-Rate
Mortgage Loan, have the same Index as the Defective Mortgage
Loan, (viii) if an
Adjustable-Rate Mortgage Loan, have a next Adjustment Date not
more than two
months later than the next Adjustment Date on the Defective
Mortgage Loan, (ix)
have a remaining term to maturity not greater than (and not more
than one year
less than) that of the Defective Mortgage Loan, (x) be current
as of the date of
substitution, (xi) have a Combined Loan-to-Value Ratio as of the
date of
substitution equal to or lower than the Combined Loan-to-Value
Ratio of the
Defective Mortgage Loan as of such date, (xii) have a risk
grading determined by
the Seller at least equal to the risk grading assigned on the
Defective Mortgage
Loan, (xiii) have been reunderwritten by the Seller in
accordance with the same
underwriting criteria and guidelines as the Defective Mortgage
Loan, (xiv) have
the same Due Date as the Defective Mortgage Loan and (xv)
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
balances, 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 (xii) hereof shall be satisfied as
to each such
mortgage loan, the terms described in clause (ix) hereof shall
be determined on
the basis of weighted average remaining term to maturity, the
Combined
Loan-to-Value Ratios described in clause (xi) hereof shall be
satisfied as to
each such mortgage loan and, except to the extent otherwise
provided in this
sentence, the representations and warranties described in clause
(xv) hereof
must be satisfied as to each 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 M-1, Class
M-2,
Class M-3, Class B-1, Class B-2, Class B-3, Class B-4, Class N,
Class X, Class R
and Class R-A Certificates.
"Escrow Account": The account or accounts created and
maintained
pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents,
taxes,
assessments, water rates, mortgage insurance premiums, fire and
hazard insurance
premiums and other payments required to be escrowed by the
Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of
real
property.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Expense Fee Rate": The sum of (i) the Trustee Fee Rate and (ii)
the
Servicing Fee Rate.
"Extended Period": As defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any Distribution
Date,
the lesser of (x) the Monthly Excess Interest Amount for such
Distribution Date
and (y) the Overcollateralization Deficiency for such
Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any
successor
thereto.
"FHA": The Federal Housing Administration, an agency within
HUD.
"FHA Approved Mortgagee": Those institutions which are approved
by
FHA to act as servicer and mortgagee of record pursuant to FHA
Regulations.
"FHA Insurance Contract" or "FHA Insurance": The contractual
obligation of FHA respecting the insurance of an FHA Loan
pursuant to the
National Housing Act, as amended.
"FHA Loan": A Mortgage Loan which is the subject of an FHA
Insurance
Contract as evidenced by a Mortgage Insurance Certificate.
"FHA Regulations": Regulations promulgated by HUD under the
National
Housing Act, codified in 24 Code of Federal Regulations, and
other HUD issuances
relating to FHA Loans, including the related handbooks,
circulars, notices and
mortgagee letters.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section
3.12.
"Final Recovery Determination": With respect to any
defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or
REO Property
purchased by the Seller or the Servicer pursuant to or as
contemplated by
Section 2.03 or 10.01), a determination made by the Servicer
that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries
which the
Servicer, in its reasonable good faith judgment, expects to be
finally
recoverable in respect thereof have been so recovered. The
Servicer shall
maintain records, prepared by a Servicing Officer, of each Final
Recovery
Determination made thereby.
"First Lien Mortgage Loan": Any of the of the Mortgage Loans
which
are secured by a first mortgage lien that is senior to a Second
Lien Mortgage
Loan and Third Lien Mortgage Loan, if any, on the related
Mortgaged Property.
"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 Securities and Exchange 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.
"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.
"Grantor Trust": That portion of the Trust exclusive of REMIC
1,
REMIC 2, REMIC A and REMIC B consisting of (a) the right of the
Offered
Certificates (other than the Class AF-1 Certificates) and the
Class B-4
Certificates to receive LIBOR Carryover Amounts, (b) the Yield
Maintenance
Agreement, the Reserve Account and the beneficial interest of
the Class X/N
Interest with respect thereto and (c) the obligation of the
Class X/N Interest
to pay LIBOR Carryover Amounts.
"Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan,
the fixed percentage, if any, 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.
"Group Subordinate Amount": With respect to any Distribution
Date
and (i) Loan Group I, the excess of the aggregate Principal
Balance of the Group
I Mortgage Loans as of the first day of the related Collection
Period over the
Certificate Principal Balance of the Class AF-1 Certificates
immediately prior
to such Distribution Date and (ii) Loan Group II, the excess of
the aggregate
Principal Balance of the Group II Mortgage Loans as of the first
day of the
related Collection Period over the aggregate Certificate
Principal Balance of
the Class AV-1, Class AV-2 and Class AV-3 Certificates
immediately prior to such
Distribution Date.
"Group I Interest Remittance Amount": As of any Distribution
Date,
the sum, without duplication, of (i) all interest received by
the Servicer on or
prior to the related Determination Date for such Distribution
Date or advanced
with respect to Monthly Payments due during the related
Collection Period on the
Group I Mortgage Loans (less the Servicing Fee, amounts
available for
reimbursement of Advances and Servicing Advances pursuant to
Section 3.05 and
expenses reimbursable pursuant to Section 6.03), (ii) the
portion of any full or
partial Principal Prepayment related to interest with respect to
a Group I
Mortgage Loan received during the related Prepayment Period,
(iii) all
Compensating Interest paid by the Servicer on the related
Determination Date
with respect to the Group I Mortgage Loans, (iv) the portion of
any payment in
connection with any Purchase Price, Net Liquidation Proceeds,
Insurance Proceeds
or Condemnation Proceeds relating to interest with respect to
the Group I
Mortgage Loans received during the related Prepayment Period,
(v) the portion of
any Substitution Adjustment Amount relating to interest with
respect to the
Group I Mortgage Loans received during the related Prepayment
Period, (vi) with
respect to the related Distribution Date on which the Trust is
to be terminated
in accordance with the Section 10.01 hereof, that portion of the
Termination
Price with respect to the Group I Mortgage Loans in respect of
interest and
(vii) the portion of any Reimbursement Amount or Recovery
related to the Group I
Mortgage Loans received during the related Prepayment
Period.
"Group I Mortgage Loan": A Mortgage Loan in Loan Group I.
"Group I Principal Allocation Percentage": As of any
Distribution
Date, a fraction expressed as a percentage, the numerator of
which is the
Principal Remittance Amount allocable to the Group I Mortgage
Loans for such
Distribution Date and the denominator of which is equal to the
Principal
Remittance Amount for such Distribution Date.
"Group I Principal Distribution Amount": As of any
Distribution
Date, the product of the Group I Principal Allocation Percentage
and the Class A
Principal Distribution Amount.
"Group II Cap": With respect to any Distribution Date, a per
annum
rate (adjusted by multiplying such rate by a fraction equal to
30 over the
actual number of days in the related Interest Accrual Period)
equal to the
Weighted Average Net Mortgage Rate for the Group II Mortgage
Loans for such
Distribution Date as of the first day of the related Collection
Period.
"Group II Interest Remittance Amount": As of any Distribution
Date,
the sum, without duplication, of (i) all interest received by
the Servicer on or
prior to the related Determination Date for such Distribution
Date or advanced
with respect to Monthly Payments due during the related
Collection Period on the
Group II Mortgage Loans (less the Servicing Fee, amounts
available for
reimbursement of Advances and Servicing Advances pursuant to
Section 3.05 and
expenses reimbursable pursuant to Section 6.03), (ii) the
portion of any full or
partial Principal Prepayment related to interest with respect to
a Group II
Mortgage Loan received during the related Prepayment Period,
(iii) all
Compensating Interest paid by the Servicer on the related
Determination Date
with respect to the Group II Mortgage Loans, (iv) the portion of
any payment in
connection with any Purchase Price, Net Liquidation Proceeds,
Insurance Proceeds
or Condemnation Proceeds relating to interest with respect to
the Group II
Mortgage Loans received during the related Prepayment Period,
(v) the portion of
any Substitution Adjustment Amount relating to interest with
respect to the
Group II Mortgage Loans received during the related Prepayment
Period, (vi) with
respect to the related Distribution Date on which the Trust is
to be terminated
in accordance with the Section 10.01 hereof, that portion of the
Termination
Price with respect to the Group II Mortgage Loans in respect of
interest and
(vii) the portion of any Reimbursement Amount or Recovery
related to the Group
II Mortgage Loans received during the related Prepayment
Period.
"Group II Mortgage Loan": A Mortgage Loan in Loan Group II.
"Group II Principal Allocation Percentage": As of any
Distribution
Date, a fraction expressed as a percentage, the numerator of
which is the
Principal Remittance Amount allocable to the Group II Mortgage
Loans for such
Distribution Date and the denominator of which is equal to the
Principal
Remittance Amount for such Distribution Date.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto, including the Federal
Housing
Commissioner and the Secretary of Housing and Urban Development
where
appropriate under the FHA Regulations.
"Independent": When used with respect to any specified Person,
any
such Person who (i) is in fact independent of the Depositor, the
Servicer and
their respective Affiliates, (ii) does not have any direct
financial interest in
or any material indirect financial interest in the Depositor or
the Servicer or
any Affiliate thereof, and (iii) is not connected with the
Depositor 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 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 or the Servicer or any Affiliate thereof, as the case
may be.
"Independent Contractor": Either (i) any Person (other than
the
Servicer) that would be an "independent contractor" with respect
to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the
Trust Fund were
a real estate investment trust (except that the ownership tests
set forth in
that section shall be considered to be met by any Person that
owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so
long as the
Trust Fund does not receive or derive any income from such
Person and provided
that the relationship between such Person and the Trust Fund is
at arm's length,
all within the meaning of Treasury Regulations Section
1.856-4(b)(5), or (ii)
any other Person (including the Servicer) if the Trustee has
received an Opinion
of Counsel, which Opinion of Counsel shall be an expense of the
Trust Fund, to
the effect that the taking of any action in respect of any REO
Property by such
Person, subject to any conditions therein specified, that is
otherwise herein
contemplated to be taken by an Independent Contractor will not
cause such REO
Property to cease to qualify as "foreclosure property" within
the meaning of
Section 860G(a)(8) of the Code (determined without regard to the
exception
applicable for purposes of Section 860D(a) of the Code), or
cause any income
realized in respect of such REO Property to fail to qualify as
Rents from Real
Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and
with
respect to each related Adjustment Date, the index as specified
in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any
Certificate of a Class other than a Class N, Class X or Residual
Certificate,
the amount designated "Initial Certificate Principal Balance" on
the face
thereof.
"Initial Overcollateralization Amount": $4,241,504.43.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or
other insurance policy covering a Mortgage Loan, to the extent
such proceeds are
not to be applied to the restoration of the related Mortgaged
Property or
released to the Mortgagor in accordance with the procedures that
the Servicer
would follow in servicing mortgage loans held for its own
account, subject to
the terms and conditions of the related Mortgage Note and
Mortgage.
"Interest Accrual Period": With respect to any Distribution Date
and
(i) with respect to the Class AV-1, Class AV-2, Class AV-3,
Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates, the
period from the preceding Distribution Date through the day
prior to the current
Distribution Date (or, in the case of the first Distribution
Date, the period
from the Closing Date through February 24, 2004), and (ii) with
respect to (a)
the Class AF-1, Class N and Class X Certificates, the REMIC 2
Class X/N Interest
and the REMIC A Class X/N Interest and (b) the REMIC 1 Regular
Interests, the
calendar month immediately preceding the month in which such
Distribution Date
occurs.
"Interest Carry Forward Amount": For any Class of
Certificates
(other than the Class X and Residual Certificates) and any
Distribution Date,
the sum of (a) the excess, if any, of the Accrued Certificate
Interest and any
Interest Carry Forward Amount for each Class for the prior
Distribution Date,
over 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 (x) with respect to the Certificates (other
than the Class
AF-1 and Class N Certificates), on the basis of the actual
number of days
elapsed on the basis of a 360-day year since the prior
Distribution Date, and
(y) with respect to the Class AF-1 and Class N Certificates, on
the basis of a
360-day year consisting of twelve 30-day months.
"Interest Percentage": With respect to any Class of Certificates
and
any Distribution Date, the ratio (expressed as a decimal carried
to six places)
of the Accrued Certificate Interest for such Class to the sum of
the Accrued
Certificate Interest for all Classes of Certificates, in each
case with respect
to such Distribution Date and without regard to shortfalls
caused by the Relief
Act or similar state laws.
"Interest Remittance Amount": As of any Determination Date, the
sum
of the Group I Interest Remittance Amount and the Group II
Interest Remittance
Amount.
"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, 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.
"Lender": As defined in Section 6.05(b).
"LIBOR": With respect to each Interest Accrual Period, the
rate
determined by the Trustee on the related LIBOR Determination
Date on the basis
of the offered rate for one-month United States dollar deposits,
as such rate
appears on the Telerate Page 3750, as of 11:00 a.m. (London
time) on such LIBOR
Determination Date. If no such quotations are available on an
LIBOR
Determination Date, LIBOR for the related Interest Accrual
Period will be
established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more Reference
Banks
provide quotations as to the rate at which deposits in U.S.
Dollars are
offered as of 11:00 a.m. (London time) to prime banks in the
London
interbank market for a period of one month in amounts
approximately equal
to the aggregate Certificate Principal Balance of the Class
AV-1, Class
AV-2, Class AV-3, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2,
Class B-3 and Class B-4 Certificates, LIBOR for the related
Interest
Accrual Period shall be the arithmetic mean of such offered
quotations
(rounded upwards if necessary to the nearest whole multiple of
0.001%);
(ii) If on such LIBOR Determination Date fewer than two
Reference
Banks provide such offered quotations, LIBOR for the related
Interest
Accrual Period shall be the arithmetic mean of the rates quoted
by one or
more major banks in New York City, selected by the Trustee
after
consultation with the Depositor, as of 11:00 a.m., New York City
time, on
such date for loans in U.S. Dollars to leading European banks
for a period
of one month in amounts approximately equal to the aggregate
Certificate
Principal Balance of the Class AV-1, Class AV-2, Class AV-3,
Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class
B-4
Certificates; and
(iii) If no such quotations can be obtained, LIBOR for the
related
Interest Accrual Period shall be LIBOR for the prior
Distribution Date.
"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 Carryover Amount": If on any Distribution Date, the
Accrued
Certificate Interest for (a) the Class AV-1, Class AV-2 or Class
AV-3
Certificates is based upon the Group II Cap or (b) the Class
M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 or Class B-4
Certificates is based on
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
Pass-Through Rate, over (ii) the amount of interest such
Certificate received on
such Distribution Date based on the applicable Cap, together
with the unpaid
portion of any such excess from prior Distribution Dates (and
interest accrued
thereon at the then applicable Pass-Through Rate on such
Certificate).
"LIBOR Determination Date": With respect to the Offered
Certificates
(other than the Class AF-1 Certificates) and the Class B-4
Certificates, (i) for
the first 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 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 Event": With respect to any Mortgage Loan, any of
the
following events: (i) such Mortgage Loan is paid in full; (ii) a
Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is
removed from the Trust Fund by reason of its being purchased,
sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01.
With respect to
any REO Property, either of the following events: (i) a Final
Recovery
Determination is made as to such REO Property; or (ii) such REO
Property is
removed from the Trust Fund by reason of its being sold or
purchased pursuant to
Section 3.13 or Section 10.01.
"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 and containing such information as is
agreed to by
the Servicer and the Trustee.
"Loan Group": Either of Loan Group I or Loan Group II, as
the
context requires.
"Loan Group Balance": Either of the Group I Loan Balance or
the
Group II Loan Balance, as applicable.
"Loan Group I": The pool of Mortgage Loans identified in Exhibit
D-1
of the Mortgage Loan Schedule as having been assigned to Loan
Group I.
"Loan Group II": The pool of Mortgage Loans identified in
Exhibit
D-2 of the Mortgage Loan Schedule as having been assigned to
Loan Group II.
"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.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class
R
Certificates evidencing at least a 51% Percentage Interest in
the Class R
Certificates.
"Marker Rate": With respect to the Class CE Certificates and
any
Distribution Date, a per annum rate equal to two (2) times the
weighted average
of the Uncertificated REMIC Pass-Through Rates for REMIC 1
Regular Interest
LT1AF1, REMIC 1 Regular Interest LT1AV1, REMIC 1 Regular
Interest LT1AV2, REMIC
1 Regular Interest LT1AV3, REMIC 1 Regular Interest LT1M1, REMIC
1 Regular
Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1 Regular
Interest LT1B1,
REMIC 1 Regular Interest LT1B2, REMIC 1 Regular Interest LT1B3,
REMIC 1 Regular
Interest LTB4 and REMIC 1 Regular Interest LT1ZZ, (i) with the
rate on each such
REMIC Regular Interest (other than REMIC 1 Regular Interest
LT1ZZ) subject to a
cap equal to the Pass-Through Rate of its Corresponding Class
(taking into
account in determining any such Pass-Through Rate the imposition
of the Group II
Cap or Pool Cap, as applicable, as described in footnotes 2
through 12 to the
table at the end of the Preliminary Statement) for the purposes
of this
calculation and (ii) with the rate on REMIC 1 Regular Interest
LT1ZZ subject to
a cap of zero for the purpose of this calculation; provided,
however, that for
this purpose, calculations of the Uncertificated REMIC 1
Pass-Through Rate and
the related caps with respect to each such REMIC Regular
Interest (other than
REMIC 1 Regular Interest LT1ZZ) shall be multiplied by a
fraction, the numerator
of which is the actual number of days in the Interest Accrual
Period and the
denominator of which is 30.
"Maximum Loan Rate": With respect to each Adjustable-Rate
Mortgage
Loan, the percentage set forth in the related Mortgage Note as
the maximum
Mortgage Interest Rate thereunder.
"Maximum LT1ZZ Uncertificated Accrued Interest Deferral
Amount":
With respect to any Distribution Date, the excess of (a) accrued
interest at the
Uncertificated REMIC 1 Pass-Through Rate applicable to REMIC 1
Regular Interest
LT1ZZ for such Distribution Date on a balance equal to the
Uncertificated
Principal Balance of REMIC 1 Regular Interest LT1ZZ minus the
REMIC 1
Overcollateralized Amount, in each case for such Distribution
Date, over (b)
Uncertificated Accrued Interest on REMIC 1 Regular Interest
LT1AF1, REMIC 1
Regular Interest LT1AV1, REMIC 1 Regular Interest LT1AV2, REMIC
1 Regular
Interest LT1AV3, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest LT1B1,
REMIC 1 Regular
Interest LT1B2, REMIC 1 Regular Interest LT1B3 and REMIC 1
Regular Interest
LT1B4, each subject to a cap equal to the Pass-Through Rate of
the related
Corresponding Class (taking into account in determining any such
Pass-Through
Rate the imposition of the Group II Cap or Pool Cap, as
applicable, as described
in footnotes 2 through 12 to the table at the end of the
Preliminary Statement)
for the purpose of this calculation; provided, however, that for
this purpose,
calculations of the Uncertificated REMIC 1 Pass-Through Rate and
the related
caps with respect to Uncertificated Accrued Interest on REMIC 1
Regular Interest
LT1AV1, REMIC 1 Regular Interest LT1AV2, REMIC 1 Regular
Interest LT1AV3, REMIC
1 Regular Interest LT1M1, REMIC 1 Regular Interest LT1M2, REMIC
1 Regular
Interest LT1M3, REMIC 1 Regular Interest LT1B1, REMIC 1 Regular
Interest LT1B2,
REMIC 1 Regular Interest LT1B3 and REMIC 1 Regular Interest
LT1B4 shall be
multiplied by a fraction, the numerator of which is the actual
number of days in
the Interest Accrual Period and the denominator of which is
30.
"Minimum Loan Rate": With respect to each Adjustable-Rate
Mortgage
Loan, either the percentage set forth in the related Mortgage
Note as the
minimum Mortgage Interest Rate thereunder or if no such
percentage is set forth
in the related Mortgage Note, the Gross Margin set forth in the
related Mortgage
Note.
"Monthly Excess Cashflow Amount": The sum of the Monthly
Excess
Interest Amount, the Overcollateralization Release Amount and
(without
duplication) any portion of the Principal Distribution Amount
remaining after
principal distributions on the Offered Certificates and the
Class B-4
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 (xi) under 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 Securities
and Exchange
Commission.
"Mortgage": The mortgage, deed of trust or other instrument
creating
a first, second or third lien on, or first or second priority
security interest
in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section
2.01
pertaining to a particular Mortgage Loan and any additional
documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Insurance Certificate": The certificate evidencing an
FHA
Insurance Contract.
"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 Schedules as the Mortgage Interest
Rate in effect
immediately following the 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 Cut-off Date shall be the
rate set forth in
the Mortgage Loan Schedules as the Mortgage Interest Rate in
effect immediately
following the 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 to the nearest 0.125% 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 and set forth in Exhibits D-1 or D-2
attached hereto.
"Mortgage Loan Purchase Agreement": The agreement between the
Seller
and the Depositor, dated as of January 1, 2004, regarding the
transfer of the
Mortgage Loans by the Seller to or at the direction of the
Depositor.
"Mortgage Loan Schedule": As of any date (i) with respect to
the
Mortgage Loans, the list of such Mortgage Loans included in the
Trust Fund on
such date, separately identifying the Group I Mortgage Loans and
the Group II
Mortgage Loans, attached hereto as Exhibits D-1 and D-2. The
Mortgage Loan
Schedule shall be prepared by the Seller and shall set forth the
following
information with respect to each Mortgage Loan:
(1) the Seller's Mortgage Loan identifying number;
(2) the city, state, and zip code of the Mortgaged Property;
(3) the type of Residential Dwelling constituting the Mortgaged
Property
or a designation that the Mortgaged Property is a multi-family
property;
(4) the occupancy status of the Mortgaged Property at
origination;
(5) the original months to maturity;
(6) the date of origination;
(7) the first payment date;
(8) the stated maturity date;
(9) the stated remaining months to maturity;
(10) the original principal amount of the Mortgage Loan;
(11) the Principal Balance of each Mortgage Loan as of the
Cut-off Date;
(12) the Mortgage Interest Rate of the Mortgage Loan as of the
Cut-off
Date;
(13) the current principal and interest payment of the Mortgage
Loan as of
the Cut-off Date;
(14) the contractual interest paid to date of the Mortgage
Loan;
(15) if the Mortgage Loan is not owner-financed, the
Combined
Loan-to-Value Ratio at origination;
(16) a code indicating the loan performance status of the
Mortgage Loan as
of the Cut-off Date;
(17) a code indicating whether the Mortgage Loan is a Simple
Interest
Mortgage Loan or an Actuarial Mortgage Loan;
(18) a code indicating whether the Mortgaged Property is in
bankruptcy or
in its forbearance period as of the Cut-off Date;
(19) a code indicating whether the Mortgage Loan is conventional
or
insured by the FHA
(20) a code indicating the Index that is associated with such
Mortgage
Loan;
(21) the Gross Margin;
(22) the Periodic Rate Cap;
(23) the Minimum Loan Rate;
(24) the Maximum Loan Rate;
(25) a code indicating whether the Mortgage Loan has a
prepayment penalty
and the type of prepayment penalty;
(26) the first Adjustment Date immediately following the Cut-off
Date;
(27) the rate adjustment frequency;
(28) the payment adjustment frequency;
(29) a code indicating whether the Mortgage Loan is
owner-financed; and
(30) a code indicating whether the Mortgage Loan is a Second
Lien Mortgage
Loan or Third Lien Mortgage Loan.
The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date, with respect to the
Mortgage Loans in the
aggregate, for each Loan Group: (1) the number of Mortgage
Loans; (2) the
current 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 by the Seller in accordance with the provisions of
this Agreement.
With respect to any Eligible Substitute Mortgage Loan, Cut-off
Date shall refer
to the related Cut-off Date for such Mortgage Loan, determined
in accordance
with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of
indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibits
D-1 and D-2 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 or multi-family 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 Advances,
Servicing Advances,
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
Expense Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf of
the
Trust, including any lease renewed or extended on behalf of the
Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage
Loan or REO
Property that, in the good faith business judgment of the
Servicer, 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 or REO
Property as
provided herein.
"Notional Amount": With respect to the Class N Certificates,
an
amount equal to the Original Class N Notional Amount reduced by
the aggregate
distributions made to the Class N Certificates pursuant to
Section
4.02(b)(xxvii). With respect to the REMIC 2 Class X/N Interest
and the REMIC A
Class X/N Interest, an amount equal to the aggregate principal
balance of the
REMIC 1 Regular Interests.
"Offered Certificates": The Class AF-1, Class AV-1, Class
AV-2,
Class AV-3, Class M-1, Class M-2, Class M-3, Class B-1, Class
B-2 and Class B-3
Certificates.
"Officers' Certificate": A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President or a vice
president
(however denominated), and by the Treasurer, the Secretary, or
one of the
assistant treasurers or assistant secretaries of the Servicer,
the Seller or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without
limitation, be a salaried counsel for the Depositor 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 Servicer may opt to terminate the Mortgage Pool pursuant to
Section 10.01.
"Original Class N Notional Amount": The Notional Amount of the
Class
N Certificates on the Closing Date, as set forth opposite such
Class in the
Preliminary Statement.
"Original Class Certificate Principal Balance": With respect to
each
Class of Certificates, the Certificate Principal Balance thereof
on the Closing
Date, as set forth opposite such Class in the Preliminary
Statement, except with
respect to the Class N, Class X and Residual Certificates, which
have an
Original Class Certificate Principal Balance of zero.
"Overcollateralization Amount": As of any Distribution Date,
the
excess, if any, of (x) the Pool Balance as of the last day of
the immediately
preceding Collection Period over (y) the aggregate Certificate
Principal
Balances of all Classes of Offered Certificates and the Class
B-4 Certificates
(after taking into account all distributions of principal on
such Distribution
Date).
"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 Certificate Principal
Balances of all
Classes of Offered Certificates and the Class B-4 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 Amounts on such
Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date on which a Trigger
Event is not in
effect, the lesser of (x) the Principal Remittance Amount for
such Distribution
Date 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 Offered Certificates and
the Class B-4
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.
"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": Any of the Class AF-1 Pass-Through Rate,
the
Class AV-1 Pass-Through Rate, the Class AV-2 Pass-Through Rate,
the Class AV-3
Pass-Through Rate, the Class M-1 Pass-Through Rate, the Class
M-2 Pass-Through
Rate, the Class M-3 Pass-Through Rate, the Class B-1
Pass-Through Rate, the
Class B-2 Pass-Through Rate, the Class B-3 Pass-Through Rate and
the Class B-4
Pass-Through Rate. With respect to the Class N Certificates, the
Pass-Through
Rate is 5.43% per annum.
With respect to the REMIC 2 Class X/N Interest and the REMIC A
Class
X/N Interest and any Distribution Date, a per annum rate equal
to the percentage
equivalent of a fraction, the numerator of which is the sum of
the amounts
calculated pursuant to clauses (A) through (M) below, and the
denominator of
which is the aggregate of the Uncertificated Principal Balances
of REMIC 1
Regular Interest LT1AA, REMIC 1 Regular Interest LT1AF1, REMIC 1
Regular
Interest LT1AV1, REMIC 1 Regular Interest LT1AV2, REMIC 1
Regular Interest
LT1AV3, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular Interest LT1B1, REMIC 1
Regular Interest
LT1B2, REMIC 1 Regular Interest LT1B3, REMIC 1 Regular Interest
LT1B4 and REMIC
1 Regular Interest LT1ZZ. For purposes of calculating the
Pass-Through Rate for
the REMIC 2 Class X/N Interest and the REMIC A Class X/N
Interest, the numerator
is equal to the sum of the following components:
(A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AA minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AA;
(B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AF1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AF1;
(C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AV1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AV1;
(D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AV2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AV2;
(E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AV3 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AV3;
(F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1M1;
(G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1M2;
(H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M3 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1M3;
(I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B1;
(J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B2;
(K) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B3 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B3;
(L) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B4 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B4; and
(M) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1ZZ minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1ZZ.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other
than a
Class N, Class X or Residual Certificate), a fraction, expressed
as a
percentage, the numerator of which is the Initial Certificate
Principal Balance
represented by such Certificate and the denominator of which is
the Original
Class Certificate Principal Balance of the related Class. With
respect to a
Class N Certificate, the undivided percentage interest obtained
by dividing the
Initial Class N Notional Amount by the Original Class N Notional
Amount of such
Class. With respect to a Class X or Residual 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%.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set
forth in the
related Mortgage Note, which is the maximum amount by which the
Mortgage
Interest Rate for such Mortgage Loan may increase or decrease
(without regard to
the Maximum Loan Rate or the Minimum Loan Rate) on such
Adjustment Date from the
Mortgage Interest Rate in effect immediately prior to such
Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not
greater than par,
regardless of whether issued or managed by the Depositor, the
Servicer, the
Trustee or any of their respective Affiliates or for which an
Affiliate of the
Trustee 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 or its
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 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 and Fitch and rated 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 in exchange for such collateral and
(C) be
delivered to the Trustee or, if the Trustee is supplying the
collateral,
an agent for the Trustee, 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
affiliates thereof having the highest rating category by the
applicable
Rating Agency; and
(vii) if previously confirmed in writing to the Trustee, any
other
demand, money market or time deposit, or any other obligation,
security or
investment, as may be acceptable to the Rating Agencies in
writing as a
permitted investment of funds backing securities having ratings
equivalent
to its highest initial rating of the Class A 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.
"Permitted Transferee": Any transferee of a Residual
Certificate
other than a Disqualified Organization or a Disqualified
Non-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.
"Pool Balance": As of any date of determination, the
aggregate
Principal Balance of the Mortgage Loans.
"Pool Cap": With respect to any Distribution Date, a per annum
rate
(adjusted by multiplying such rate by a fraction equal to 30
over the actual
number of days in the related Interest Accrual Period) equal to
(i) the Net
Mortgage Interest Rates for the Group I Mortgage Loans (weighted
on the basis of
the Principal Balances of the Group I Mortgage Loans as of the
first day of the
related Collection Period) and (ii) the Net Mortgage Interest
Rates for the
Group II Mortgage Loans (weighted on the basis of the Principal
Balances of the
Group II Mortgage Loans as of the first day of the related
Collection Period),
in each case weighted on the basis of the related Group
Subordinate Amount. For
federal income tax purposes, the economic equivalent of such
rate shall be
expressed as the weighted average of the Uncertificated REMIC 1
Pass-Through
Rate on (a) REMIC 1 Regular Interest LT1SUB, subject to a cap
and floor equal to
the Weighted Average Net Mortgage Interest Rates of the Group 1
Mortgage Loans
and (b) REMIC 1 Regular Interest LT2SUB, subject to a cap and
floor equal to the
Weighted Average Net Mortgage Interest Rates of the Group 2
Mortgage Loans,
weighted on the basis of the Uncertificated Balances of such
REMIC 1 Regular
Interests.
"Prepayment Interest Shortfall": With respect to any
Distribution
Date, for each Mortgage Loan that was during the related
Prepayment Period the
subject of a Principal Prepayment in full that was applied by
the Servicer to
reduce the outstanding principal balance of such loan on a date
preceding the
related Due Date, an amount equal to interest at the applicable
Mortgage
Interest Rate (net of the Servicing Fee Rate) on the amount of
such Principal
Prepayment for the number of days commencing on the date on
which the prepayment
is applied and ending on the last day of the related Prepayment
Period.
"Prepayment Period": With respect to any Distribution Date,
the
calendar month preceding the month in which such Distribution
Date occurs.
"Primary Insurance Policy": Each policy of primary guaranty
mortgage
insurance issued by a Qualified Insurer in effect with respect
to any Mortgage
Loan, or any replacement policy therefor obtained by the
Servicer pursuant to
Section 3.08.
"Principal Balance": As to any Mortgage Loan and any day, other
than
a Liquidated Mortgage Loan, the related Cut-off Date Principal
Balance, minus
the sum of (i) all collections and other amounts credited
against the principal
balance of any such Mortgage Loan, (ii) the principal portion of
Advances, (iii)
any Deficient Valuation and (iv) any principal reduction
resulting from a
Servicer Modification. For purposes of this definition, a
Liquidated Mortgage
Loan shall be deemed to have a Principal Balance equal to the
Principal Balance
of the related Mortgage Loan as of the final recovery of related
Liquidation
Proceeds and a Principal Balance of zero thereafter. As to any
REO Property and
any day, the Principal Balance of the related Mortgage Loan
immediately prior to
such Mortgage Loan becoming REO Property minus any REO Principal
Amortization
received with respect thereto on or prior to such day.
"Principal Distribution Amount": As to any Distribution Date,
the
sum of (i) the Principal Remittance Amount minus, for
Distribution Dates
occurring on and after the Stepdown Date and for which a Trigger
Event is not in
effect, the Overcollateralization Release Amount, if any, and
(ii) the Extra
Principal Distribution Amount, if any.
"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, 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) 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, (ii) the portion of all full and
partial
Principal Prepayments or Insurance Proceeds and Recoveries
allocable to
principal received by the Servicer during the related Prepayment
Period, (iii)
the 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 allocable to principal 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.
"Private Certificates": Any of the Class B-4, Class N, Class X
and
Residual Certificates.
"Property Insurance Proceeds": Proceeds of any title policy,
hazard
policy or other insurance policy covering a Mortgage Loan, to
the extent such
proceeds are received by the Servicer and are not to be applied
to the
restoration of the related Mortgaged Property or released to the
Mortgagor in
accordance with the Servicer's servicing procedures, subject to
the terms and
conditions of the related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement
dated
February 9, 2004 relating to the public offering of the Offered
Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property
to be purchased pursuant to or as contemplated by Section 2.03
or 10.01, and as
confirmed by an Officers' Certificate from the Servicer to the
Trustee, an
amount equal to the sum of (i) 100% of the Principal Balance
thereof as of the
date of purchase (or such other price as provided in Section
10.01), (ii) in the
case of (x) a Mortgage Loan, accrued interest on such 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, and (y) an REO
Property, its fair
market value, determined in good faith by the Servicer, (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 or the Trustee in respect of the breach or defect
giving rise to the
purchase obligation.
"Qualified Insurer": Any insurance company acceptable to Fannie
Mae
or Freddie Mac.
"Rating Agency or Rating Agencies": Fitch, Moody's and S&P,
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 Securities and Exchange Commission and
designated by the
Depositor, notice of which designation shall be given to the
Trustee 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 plus
accrued and unpaid interest thereon at the Mortgage Interest
Rate through the
last day of the month of liquidation, 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 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 all of the Certificates (except
for
the Class AF-1, Class B-4, Class N, Class X, Class R and Class
R-A
Certificates), the Business Day immediately preceding such
Distribution Date;
provided, however, that if any such Certificate becomes a
Definitive
Certificate, the Record Date for such Certificate shall be the
last Business Day
of the month immediately preceding the month in which the
related Distribution
Date occurs. With respect to the Class AF-1, Class B-4, Class N,
Class X, Class
R and Class R-A Certificates, the last Business Day of the month
immediately
preceding the month in which the related Distribution Date
occurs or the Closing
Date, in the case of the first Distribution Date.
"Recovery": Any amount received on a Mortgage Loan subsequent
to
such Mortgage Loan being determined to be a Liquidated Mortgage
Loan.
"Reference Banks": Those banks (i) with an established place
of
business in London, England, (ii) not controlling, under the
control of or under
common control with the Depositor or the Trustee, (iii) that
have been
designated as such by the Trustee, after consultation with the
Servicer and (iv)
that are engaged in transactions in the London interbank
market.
"Regular Certificate": Any of the Offered Certificates, the
Class
B-4 Certificates the Class N Certificates and the Class X
Certificates.
"Reimbursement Amount": As defined in Section 2.03.
"Related Documents": With respect to any Mortgage Loan, the
related
Mortgage Notes, Mortgages and other related documents.
"Relief Act": The Servicemembers Civil Relief Act.
"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 1 Interest Loss Allocation Amount": With respect to
any
Distribution Date, an amount equal to (a) the product of (i) 50%
of the sum of
the aggregate Principal Balance of the Mortgage Loans and
related REO Properties
then outstanding and (ii) the Uncertificated REMIC 1
Pass-Through Rate for REMIC
1 Regular Interest LT1AA minus the Marker Rate, divided by (b)
12.
"REMIC 1 Marker Allocation Percentage": 50% of any amount
payable
from or loss attributable to the Mortgage Loans, which shall be
allocated to
REMIC 1 Regular Interest LT1AA, REMIC 1 Regular Interest LT1AF1,
REMIC 1 Regular
Interest LT1AV1, REMIC 1 Regular Interest LT1AV2, REMIC 1
Regular Interest
LT1AV3, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular Interest LT1B1, REMIC 1
Regular Interest
LT1B2, REMIC 1 Regular Interest LT1B3, REMIC 1 Regular Interest
LT1B4 and REMIC
1 Regular Interest LT1ZZ.
"REMIC 1 Overcollateralization Target Amount": 0.50% of the
Targeted
Overcollateralization Amount.
"REMIC 1 Overcollateralized Amount": With respect to any date
of
determination, (i) 0.50% of the aggregate Uncertificated
Principal Balances of
the REMIC 1 Regular Interests minus (ii) the aggregate of the
Uncertificated
Principal Balances of REMIC 1 Regular Interest LT1AF1, REMIC 1
Regular Interest
LT1AV1, REMIC 1 Regular Interest LT1AV2, REMIC 1 Regular
Interest LT1AV3, REMIC
1 Regular Interest LT1M1, REMIC 1 Regular Interest LT1M2, REMIC
1 Regular
Interest LT1M3, REMIC 1 Regular Interest LT1B1, REMIC 1 Regular
Interest LT1B2,
REMIC 1 Regular Interest LT1B3 and REMIC 1 Regular Interest
LT1B4, in each case
as of such date of determination.
"REMIC 1 Principal Loss Allocation Amount": With respect to
any
Distribution Date, an amount equal to (a) the product of (i) 50%
of the
aggregate Principal Balance of the Mortgage Loans and related
REO Properties
then outstanding and (ii) 1 minus a fraction, the numerator of
which is two
times the aggregate of the Uncertificated Principal Balances of
REMIC 1 Regular
Interest LT1AF1, REMIC 1 Regular Interest LT1AV1, REMIC 1
Regular Interest
LT1AV2, REMIC 1 Regular Interest LT1AV3, REMIC 1 Regular
Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest
LT1B1, REMIC 1 Regular Interest LT1B2, REMIC 1 Regular Interest
LT1B3 and REMIC
1 Regular Interest LT1B4 and the denominator of which is the
aggregate of the
Uncertificated Principal Balances of REMIC 1 Regular Interest
LT1AF1, REMIC 1
Regular Interest LT1AV1, REMIC 1 Regular Interest LT1AV2, REMIC
1 Regular
Interest LT1AV3, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1 Regular Interest LT1B1,
REMIC 1 Regular
Interest LT1B2, REMIC 1 Regular Interest LT1B3, REMIC 1 Regular
Interest LT1B4
and REMIC 1 Regular Interest LT1ZZ.
"REMIC 1 Regular Interest LT1AA": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1AA
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1AF1": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1AF1
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1AV1": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1AV1
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1AV2": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1AV2
shall accrue interest at the related Uncertificated REMIC 1
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 its initial Uncertificated Principal Balance as set
forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1AV3": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1AV3
shall accrue interest at the related Uncertificated REMIC 1
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 its initial Uncertificated Principal Balance as set
forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1M1": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1M1
shall accrue interest at the related Uncertificated REMIC 1
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 its initial Uncertificated Principal Balance as set
forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1M2": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1M2
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M3": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1M3
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B1": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1B1
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B2": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1B2
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B3": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1B3
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B4": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1B4
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1SUB": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1SUB
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1GRP": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1GRP
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2SUB": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT2SUB
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2GRP": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT2GRP
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1XX": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1XX
shall accrue interest at the related Uncertificated REMIC 1
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 its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1ZZ": One of the separate
non-certificated beneficial ownership interests in REMIC 1
issued hereunder and
designated as a Regular Interest in REMIC 1. REMIC 1 Regular
Interest LT1ZZ
shall accrue interest at the related Uncertificated REMIC 1
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 its initial Uncertificated Principal Balance as set
forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interests": REMIC 1 Regular Interest LT1AA,
REMIC 1
Regular Interest LT1AF1, REMIC 1 Regular Interest LT1AV1, REMIC
1 Regular
Interest LT1AV2, REMIC 1 Regular Interest LT1AV3, REMIC 1
Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2, REMIC 1 Regular Interest
LT1M3, REMIC 1
Regular Interest LT1B1, REMIC 1 Regular Interest LT1B2, REMIC 1
Regular Interest
LT1B3, REMIC 1 Regular Interest LT1B4, REMIC 1 Regular Interest
LT1SUB, REMIC 1
Regular Interest LT1GRP, REMIC 1 Regular Interest LT2SUB, REMIC
1 Regular
Interest LT2GRP, REMIC 1 Regular Interest LT1XX and REMIC 1
Regular Interest
LT1ZZ.
"REMIC 1 Sub WAC Allocation Percentage": 50% of any amount
payable
or loss attributable from the Mortgage Loans, which shall be
allocated to REMIC
1 Regular Interest LT1SUB, REMIC 1 Regular Interest LT1GRP,
REMIC 1 Regular
Interest LT2SUB, REMIC 1 Regular Interest LT2GRP and REMIC 1
Regular Interest
LT1XX.
"REMIC 1 Subordinated Balance Ratio": The ratio among the
Uncertificated Principal Balances of each REMIC 1 Regular
Interest ending with
the designation "SUB," equal to the ratio among, with respect to
each such REMIC
1 Regular Interest, the excess of (x) the aggregate Principal
Balance of the
Mortgage Loans in the related Loan Group over (y) the current
Certificate
Principal Amount of the Class A Certificates in the related Loan
Group.
"REMIC 2 Regular Interests": The Class AV-1, Class AV-2, Class
AV-3,
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class
B-3 Certificates
(exclusive of the right of such Certificates to LIBOR Carryover
Amounts), the
Class AF-1 Certificates, the REMIC 2 Class X/N Interest and the
REMIC 2 Class B
Interest.
"REMIC 2 Class B Interest": One of the separate
non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and
designated as a
Regular Interest in REMIC 2, and which is held as an asset of
REMIC B. The REMIC
2 Class B Interest shall have a principal balance and
Pass-Through Rate equal to
the principal balance and Pass-Through Rate of the Class B
Certificates.
"REMIC 2 Class X/N Interest": One of the separate
non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and
designated as a
Regular Interest in REMIC 2, and which is held as an asset of
REMIC A. The REMIC
2 Class X/N Interest shall accrue interest at its 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 the Class
X/N Uncertificated Principal Balance, as set forth in the
Preliminary Statement
hereto.
"REMIC A Class X/N Interest": The separate non-certificated
beneficial ownership interests in REMIC A issued hereunder and
designated as a
Regular Interest in REMIC A, which is represented by the Class
X/N Interest in
the Grantor Trust and is beneficially owned by the Class N and
Class X
Certificates. The REMIC A Class X/N Interest shall accrue
interest at its
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 the Class X/N Uncertificated Principal
Balance, as set
forth in the Preliminary Statement hereto (in all cases, subject
to the
obligation of the REMIC A Class X/N Interest to pay LIBOR
Carryover Amounts).
"REMIC Regular Interest": Any regular interest in REMIC 1, REMIC
2,
REMIC A or REMIC B.
"Remittance Report": A report prepared by the Servicer and
delivered
to the Trustee pursuant to Section 4.07, containing the
information attached
hereto as Exhibit P.
"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 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
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 Fund through foreclosure or deed-in-lieu of
foreclosure, as
described in Section 3.13.
"Request for Release": A release signed by a Servicing Officer,
in
the form of Exhibit E attached hereto.
"Reserve Account": The trust account created and maintained by
the
Trustee pursuant to Section 3.04(g) which shall be entitled
"Reserve Account,
U.S. Bank National Association, as Trustee, in trust for
registered Holders of
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB1"
and which must
be an Eligible Account. Amounts on deposit in the Reserve
Account shall not be
invested. The Reserve Account shall not be an asset of any REMIC
formed under
this Agreement.
"Residential Dwelling": Any one of the following: (i) a
one-family
dwelling, (ii) a two- to four-family dwelling, (iii) a
one-family dwelling unit
in a Fannie Mae eligible condominium project, (iv) a one-family
dwelling in a
planned unit development, which is not a co-operative, or (v) a
mobile or
manufactured home (as defined in 42 United States Code, Section
5402(6)).
"Residual Certificates": The Class R and Class R-A
Certificates.
"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,
any
officer assigned to the Corporate Trust Division (or any
successor thereto),
including any Vice President, Assistant Vice President, Trust
Officer, any
Assistant Secretary, any trust officer or any other officer of
the Trustee
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.
"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
Securities and Exchange Commission.
"Second Lien Mortgage Loan": Any of the of the Mortgage Loans
which
are secured by a second mortgage lien that is junior to a First
Lien Mortgage
Loan on the related Mortgaged Property and that is senior to a
Third Lien
Mortgage Loan, if any, on the related Mortgaged Property.
"Seller": Credit-Based Asset Servicing and Securitization LLC,
or
its successor in interest, in its capacity as seller under the
Mortgage Loan
Purchase Agreement.
"Senior Certificates": The Class AF-1, Class AV-1, Class AV-2
and
Class AV-3 Certificates.
"Senior Enhancement Percentage": For any Distribution Date,
the
percentage obtained by dividing (x) the sum of (i) the aggregate
Certificate
Principal Balances of the Subordinated Certificates and (ii)
the
Overcollateralization Amount, in each case after taking into
account the
distribution of the Principal Distribution Amount on such
Distribution Date by
(y) the Pool Balance as of the last day of the related
Collection Period.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 38%.
"Servicer": Litton Loan Servicing LP, a Delaware limited
partnership, or any successor servicer appointed as herein
provided, in its
capacity as Servicer hereunder.
"Servicer Affiliate": A Person (i) controlling, controlled by
or
under common control with the Servicer or which is 50% or more
owned by the
Servicer and (ii) which is qualified to service residential
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 Remittance Date": With respect to any Distribution
Date,
one Business Day prior to such Distribution Date.
"Servicer's Assignee": As defined in Section 6.05(c) hereof.
"Servicing Advances": All customary, reasonable and necessary
"out
of pocket" costs and expenses incurred by the Servicer in the
performance of its
servicing obligations, including, but not limited to, the cost
of (i) the
preservation, restoration 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 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 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 and the Depositor on the Closing Date,
as such list may
from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by
the
Servicer, to which the Servicer will pledge and assign all of
its right, title
and interest in, to and under this Agreement, including Wachovia
Bank, National
Association, as the representative of certain lenders.
"Servicing Standard": Shall mean the standards set forth in
Section
3.01.
"Simple Interest Method": The method of allocating a payment
to
principal and interest, pursuant to which the portion of such
payment that is
allocated to interest is equal to the product of the fixed rate
of interest
multiplied by the unpaid principal balance multiplied by the
period of time
elapsed since the preceding payment of interest was made and
divided by either
360 or 365, as specified in the related Mortgage Note, and the
remainder of such
payment is allocated to principal.
"Simple Interest Mortgage Loan": Any Mortgage Loan under which
the
portion of a payment allocable to interest and the portion of
such payment
allocable to principal is determined in accordance with the
Simple Interest
Method.
"Special Hazard Loss": Any Realized Losses that result from
direct
physical damage to Mortgaged Properties caused by natural
disasters and other
hazards (i) which are not covered by hazard insurance policies
(such as
earthquakes) and (ii) for which claims have been submitted and
rejected by the
related hazard insurer and any shortfall in insurance proceeds
for partial
damage due to the application of the co-insurance clauses
contained in hazard
insurance policies.
"SPV": As defined in Section 6.05(c).
"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 later to occur of (x) the earlier to occur
of
(A) the Distribution Date in February 2007 and (B) the
Distribution Date on
which the aggregate Certificate Principal Balance of the Class A
Certificates is
reduced to zero, and (y) the first Distribution Date on which
the Senior
Enhancement Percentage (after taking into account distributions
of principal on
such Distribution Date) is greater than or equal to the Senior
Specified
Enhancement Percentage.
"Subordinated Certificates": The Class M-1, Class M-2, Class
M-3,
Class B-1, Class B-2, Class B-3, Class B-4, Class N, Class X,
Class R and Class
R-A Certificates.
"Substitution Adjustment Amount": As defined in Section
2.03(d)
hereof.
"Targeted Overcollateralization Amount": As of any
Distribution
Date, (x) prior to the Stepdown Date, 1.00% of the Pool Balance
on the Cut-off
Date and (y) on and after the Stepdown Date, (i) if a Trigger
Event has not
occurred, the lesser of (a) 1.00% of the Pool Balance on the
Cut-off Date and
(b) the greater of (A) 2.00% of the Pool Balance as of the last
day of the
related Collection Period and (B) 0.50% of the Pool Balance on
the Cut-off Date
and (ii) if a Trigger Event has occurred, the Targeted
Overcollateralization
Amount for the immediately preceding Distribution Date.
"Tax Matters Person": The tax matters person appointed pursuant
to
Section 9.01(e) hereof.
"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 four
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 that service for the purpose of displaying
London interbank
offered rates of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Third Lien Mortgage Loan": Any of the of the Mortgage Loans
which
are secured by a third mortgage lien a that is junior to a First
Lien Mortgage
Loan and Second Lien Mortgage Loan on the related Mortgaged
Property.
"Trigger Event": With respect to any Distribution Date, if (i)
the
six-month rolling average of 60+ Day Delinquent Loans equals or
exceeds 40% of
the Senior Enhancement Percentage or (ii) the aggregate amount
of Realized
Losses incurred since the Cut-off Date through the last day of
the related
Collection Period divided by the Pool Balance as of the Cut-off
Date exceeds the
applicable percentages set forth below with respect to such
Distribution Date:
Distribution Date Occurring In Percentage
------------------------------ ----------
February 2007 through January 2008 2.50%
February 2008 through January 2009 4.00%
February 2009 through January 2010 5.20%
February 2010 and thereafter 5.50%
"Trust": 2004-CB1 Trust, the trust created hereunder.
"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 four 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 Trustee's
rights under the Yield Maintenance Agreement and (vi) the
Collection Account,
the Distribution Account, the Reserve Account and any REO
Account and such
assets that are deposited therein from time to time and any
investments thereof,
together with any and all income, proceeds and payments with
respect thereto.
"Trustee": U.S. Bank National Association, a national
banking
association, or any successor Trustee appointed as herein
provided.
"Trustee Fee": With respect to any Distribution Date, the
product of
(x) one-twelfth of the Trustee Fee Rate and (y) the aggregate of
the Principal
Balances of all Mortgage Loans as of the opening of business on
the first day of
the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date,
0.0060%
per annum.
"Uncertificated Accrued Interest": With respect to each REMIC
1
Regular Interest on each Distribution Date, an amount equal to
one month's
interest at the related Uncertificated REMIC 1 Pass-Through Rate
on the
Uncertificated Principal Balance of such REMIC Regular Interest.
In each case,
Uncertificated Accrued Interest will be reduced by any
Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (allocated to such
REMIC Regular
Interests based on their respective entitlements to interest
irrespective of any
Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls for such
Distribution Date).
"Uncertificated Principal Balance": The amount of any REMIC
1
Regular Interest outstanding as of any date of determination. As
of the Closing
Date, the Uncertificated Balance of each REMIC 1 Regular
Interest shall equal
the amount set forth in the Preliminary Statement hereto as its
initial
uncertificated balance. On each Distribution Date, the
Uncertificated Principal
Balance of each REMIC 1 Regular Interest shall be reduced by all
distributions
of principal made on such REMIC 1 Regular Interest on such
Distribution Date
pursuant to Section 4.08 and, if and to the extent necessary and
appropriate,
shall be further reduced on such Distribution Date by Realized
Losses as
provided in Section 4.08(b). The Uncertificated Balance of REMIC
1 Regular
Interest LT1ZZ shall be increased by interest deferrals as
provided in Section
4.08(a)(i). The Uncertificated Balance of each REMIC 1 Regular
Interest shall
never be less than zero.
"Uncertificated REMIC 1 Pass-Through Rate": With respect to
REMIC 1
Regular Interest LT1AA, REMIC 1 Regular Interest LT1AF1, REMIC 1
Regular
Interest LT1AV1, REMIC 1 Regular Interest LT1AV2, REMIC 1
Regular Interest
LT1AV3, REMIC 1 Regular Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular Interest LT1B1, REMIC 1
Regular Interest
LT1B2, REMIC 1 Regular Interest LT1B3, REMIC 1 Regular Interest
LT1B4, REMIC 1
Regular Interest LT1ZZ, REMIC 1 Regular Interest LT1SUB, REMIC 1
Regular
Interest LT2SUB and REMIC 1 Regular Interest LT1XX, the Weighted
Average Net
Mortgage Rate of the Mortgage Loans. With respect to REMIC 1
Regular Interest
LT1GRP, the Weighted Average Net Mortgage Rate of the Group 1
Mortgage Loans.
With respect REMIC 1 Regular Interest LT2GRP, the Weighted
Average Net Mortgage
Interest Rate of the Group 2 Mortgage Loans.
"Underwriters": Banc of America Securities LLC and J.P.
Morgan
Securities Inc., as underwriters with respect to the Offered
Certificates.
"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) or (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 M-1, Class M-2,
Class
M-3, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates
and as to any
Distribution Date, the excess of (x) the cumulative amount of
related Applied
Realized Loss Amounts with respect to such Class for all prior
Distribution
Dates over (y) the cumulative amount of related Realized Loss
Amortization
Amounts with respect to such Class for all prior Distribution
Dates.
"Value": With respect to any Mortgaged Property, the lower of
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; except that, with respect to any Mortgage Loan
that is a purchase
money mortgage loan, the lesser of (i) the value thereof as
determined by an
independent appraisal made at the time of the origination of
such Mortgage Loan,
if any, and (ii) the sales price of the related Mortgaged
Property.
"Voting Rights": The portion of the voting rights of all of
the
Certificates which is allocated to any Certificate. The Voting
Rights allocated
among Holders of the Offered Certificates and the Class B-4
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 Certificate
Principal Balance of all the Certificates of such Class then
outstanding and the
denominator of which is the aggregate Certificate Principal
Balance of all the
Offered Certificates and the Class B-4 Certificates then
outstanding. The Voting
Rights allocated to each such Class of Certificates shall be
allocated among all
holders of each such Class in proportion to the outstanding
Certificate
Principal Balance of such Certificates; provided, however, that
any Certificate
registered in the name of the Servicer, the Depositor or the
Trustee or any of
their respective affiliates shall not be included in the
calculation of Voting
Rights; provided that only such Certificates as are known by a
Responsible
Officer of the Trustee to be so registered will be so excluded.
On each
Distribution Date (a) prior to the date on which the Notional
Amount of the
Class N Certificates is reduced to zero, the percentage of all
the Voting Rights
allocated among the Holders of the Class N and Class X
Certificates,
respectively, shall be 1% and (b) on and after the date on which
the Notional
Amount of the Class N Certificates is reduced to zero, the
percentage of all the
Voting Rights allocated among the Holders of the Class N
Certificates shall be
0% and the percentage of all the Voting Rights allocated among
the Holder of the
Class X Certificates shall be 2%. The Residual Certificates
shall have no Voting
Rights.
"Weighted Average Net Mortgage Rate": With respect to any of
Loan
Group I or Loan Group II, the weighted average (based on
Principal Balance as of
the first day of the related Collection Period or, in the case
of the first
Distribution Date, the Cut-Off Date) of the Net Mortgage
Interest Rates of the
Mortgage Loans of such Loan Group or Groups, expressed as an
annual rate and
calculated on the basis of twelve months consisting of 30 days
each and a
360-day year.
"Written Order to Authenticate": A written order by which
the
Depositor directs the Trustee to execute, authenticate and
deliver the
Certificates.
"Yield Maintenance Agreement": The interest rate cap
agreement
between the Trustee, on behalf of the Trust, and the Yield
Maintenance Agreement
Provider substantially in the form attached hereto as Exhibit S.
The Yield
Maintenance Agreement shall not be an asset of any REMIC formed
under this
Agreement.
"Yield Maintenance Agreement Payment": On each Distribution
Date
through the Distribution Date in October 2006, the amount equal
to the product
of (a) the excess of the lesser of (i) LIBOR and (ii) 7.71% over
the strike rate
for such Distribution Date set forth on the schedule attached to
the
confirmation to the Yield Maintenance Agreement for such
Distribution Date, (b)
the product of the cap notional amount and the scale factor,
both as set forth
on the schedule attached to the confirmation to the Yield
Maintenance Agreement
for such Distribution Date and (c) a fraction, the numerator of
which is the
actual number of days elapsed since the previous Distribution
Date to but
excluding the current Distribution Date and the denominator of
which is 360.
"Yield Maintenance Agreement Provider": Bank of America, N.A.,
and
any successor thereto.
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.
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
Cut-off Date and
all collections in respect of interest and principal due after
the 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
proceeds of any of
the foregoing; (v) the rights of the Depositor under the
Mortgage Loan Purchase
Agreement, and (vi) all other assets included or to be included
in the Trust
Fund; provided, however, so long as the Servicer is an FHA
Approved Mortgagee,
the Commissioner of HUD shall have no obligation to recognize or
deal with any
person other than the Servicer with respect to FHA Insurance.
Such assignment
includes all interest and principal due to the Depositor or the
Servicer after
the Cut-off Date with respect to the Mortgage Loans.
It is agreed and understood by the parties hereto that it is
not
intended that any mortgage loan be included in the Trust that is
a "High-Cost
Home Loan" as defined in the New Jersey Home Ownership Act
effective November
27, 2003.
In connection with such transfer and assignment, the Seller,
on
behalf of the Depositor, does hereby deliver to, and deposit
with the Trustee,
or its designated agent (the "Custodian"), the following
documents or
instruments with respect to each Mortgage Loan (a "Mortgage
File") so
transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank or
(B) in
the following form: "Pay to the order of U.S. Bank National
Association, as Trustee under the Pooling and Servicing
Agreement,
dated as of January 1, 2004, among Credit-Based Asset Servicing
and
Securitization LLC, Asset Backed Funding Corporation, Litton
Loan
Servicing LP and U.S. Bank National Association, C-BASS
Mortgage
Loan Asset-Backed Certificates, Series 2004-CB1, without
recourse,"
or with respect to any lost Mortgage Note, an original Lost
Note
Affidavit, together with a copy of the related Mortgage
Note;
(ii) the original Mortgage with evidence of recording thereon,
and the
original recorded power of attorney, if the Mortgage was
executed
pursuant to a power of attorney, with evidence of recording
thereon
or, if such Mortgage or power of attorney has been submitted
for
recording but has not been returned from the applicable
public
recording office, has been lost or is not otherwise available,
a
copy of such Mortgage or power of attorney, as the case may
be,
certified to be a true and complete copy of the original
submitted
for recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable
for recording. The Mortgage shall be assigned either (A) in
blank or
(B) to "U.S. Bank National Association, as Trustee under the
Pooling
and Servicing Agreement, dated as of January 1, 2004, among
Credit-Based Asset Servicing and Securitization LLC, Asset
Backed
Funding Corporation, Litton Loan Servicing LP and U.S. Bank
National
Association, C-BASS Mortgage Loan Asset-Backed Certificates,
Series
2004-CB1, without recourse";
(iv) an original or copy of any intervening assignment of
Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy
except with respect to those Mortgage Loans identified on
Exhibit V
hereto;
(vi) the original or copies of each assumption, modification,
written
assurance or substitution agreement, if any; and
(vii) for each FHA Loan, the original Mortgage Insurance
Certificate.
The Trustee agrees to execute and deliver (or cause the
Custodian to
execute and deliver) to the Depositor on or prior to the Closing
Date an
acknowledgment of receipt of the original Mortgage Note (with
any exceptions
noted), substantially in the form attached as Exhibit F-3
hereto.
If any of the documents referred to in Section 2.01(ii), (iii)
or
(iv) above has as of the Closing Date been submitted for
recording but either
(x) has not been returned from the applicable public recording
office or (y) has
been lost or such public recording office has retained the
original of such
document, the obligations of the Seller to deliver such
documents shall be
deemed to be satisfied upon (1) delivery to the Trustee or the
Custodian no
later than the Closing Date, of a copy of each such document
certified by the
Seller in the case of (x) above or the applicable public
recording office in the
case of (y) above to be a true and complete copy of the original
that was
submitted for recording and (2) if such copy is certified by the
Seller,
delivery to the Trustee or the Custodian, promptly upon receipt
thereof of
either the original or a copy of such document certified by the
applicable
public recording office to be a true and complete copy of the
original. The
Seller shall deliver or cause to be delivered to the Trustee or
the Custodian
promptly upon receipt thereof any other documents constituting a
part of a
Mortgage File received with respect to any Mortgage Loan,
including, but not
limited to, any original documents evidencing an assumption or
modification of
any Mortgage Loan.
Upon discovery or receipt of notice of any materially
defective
document in, or that a document is missing from, a Mortgage
File, the Seller
shall have 120 days to cure such defect or 150 days following
the Closing Date,
in the case of missing Mortgages or Assignments or deliver such
missing document
to the Trustee or the Custodian. If the Seller does not cure
such defect or
deliver such missing document within such time period, the
Seller shall either
repurchase or substitute for such Mortgage Loan in accordance
with Section 2.03.
The Servicer shall cause the Assignments of Mortgage which
were
delivered in blank to be completed and shall cause all
Assignments referred to
in Section 2.01(iii) hereof and, to the extent necessary, in
Section 2.01(iv)
hereof to be recorded; provided, however, the Servicer need not
cause to be
recorded any Assignment which relates to a Mortgage Loan in any
jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel
delivered by the
Servicer to the Trustee and the Rating Agencies, the recordation
of such
assignment is not necessary to protect the Trustee's interest,
on behalf of the
Trust, in the related Mortgage Loan. The Servicer shall be
required to deliver
such assignments for recording within 30 days of the Closing
Date. The Servicer
shall furnish the Trustee, or its designated agent, with a copy
of each
assignment of Mortgage submitted for recording. In the event
that any such
Assignment is lost or returned unrecorded because of a defect
therein, the
Servicer shall promptly have a substitute Assignment prepared or
have such
defect cured, as the case may be, and thereafter cause each such
Assignment to
be duly recorded. In the event that any Mortgage Note is
endorsed in blank as of
the Closing Date, promptly following the Closing Date the
Servicer shall cause
to be completed such endorsements "Pay to the order of U.S. Bank
National
Association, as Trustee under the Pooling and Servicing
Agreement, dated as of
January 1, 2004, among Credit-Based Asset Servicing and
Securitization LLC,
Asset Backed Funding Corporation, Litton Loan Servicing LP and
U.S. Bank
National Association, C-BASS Mortgage Loan Asset-Backed
Certificates, Series
2004-CB1, without recourse."
The Depositor herewith delivers to the Trustee executed copies
of
the Mortgage Loan Purchase Agreement.
Section 2.02 Acceptance by Trustee.
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 a
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 Trustee agrees, for the benefit of the Certificateholders,
to
review (or cause the Custodian to review) each Mortgage File
within 60 days
after the Closing Date (or, with respect to any document
delivered after the
Startup Day, within 60 days of receipt and with respect to any
Qualified
Substitute Mortgage, within 60 days after the assignment
thereof) and to certify
in substantially the form attached hereto as Exhibit F-1 that,
as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in the
exception
report annexed thereto as not being covered by such
certification), (i) all
documents required to be delivered to it pursuant to Section
2.01 of this
Agreement are in its possession, (ii) such documents have been
reviewed by it
and have not been mutilated, damaged or torn and relate to such
Mortgage Loan
and (iii) based on its examination and only as to the foregoing,
the information
set forth in the Mortgage Loan Schedules that corresponds to
items (1), (2),
(3), (5), (13) and (25) (in the case of (25), only as to whether
there is a
prepayment penalty) of the Mortgage Loan Schedule accurately
reflects
information set forth in the Mortgage File. It is herein
acknowledged that, in
conducting such review, the Trustee (or the Custodian, as
applicable) is under
no duty or obligation to inspect, review or examine any such
documents,
instruments, certificates or other papers to determine that they
are genuine,
enforceable, or appropriate for the represented purpose or that
they have
actually been recorded or that they are other than what they
purport to be on
their face.
Prior to the first anniversary date of this Agreement the
Trustee
shall deliver (or cause the Custodian to deliver) to the
Depositor and the
Servicer a final certification in the form annexed hereto as
Exhibit F-2
evidencing the completeness of the Mortgage Files, with any
applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making
or
preparing, as the case may be, the certifications referred to
above, the Trustee
(or the Custodian, as applicable) finds any document or
documents constituting a
part of a Mortgage File to be missing or defective in any
material respect, at
the conclusion of its review the Trustee shall so notify the
Seller, the
Depositor and the Servicer. In addition, upon the discovery by
the Seller,
Depositor, the Trustee or the Servicer (or upon receipt by the
Trustee of
written notification of such breach) of a breach of any of the
representations
and warranties made by the Seller in the related Mortgage Loan
Purchase
Agreement in respect of any Mortgage Loan which materially
adversely affects
such Mortgage Loan or the interests of the related
Certificateholders in such
Mortgage Loan, the party discovering such breach shall give
prompt written
notice to the other parties.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage
Loans and the
Related Documents, conveying good title thereto free and clear
of any liens and
encumbrances, from the Depositor to the Trustee and that such
property not be
part of the Depositor's estate or property of the Depositor in
the event of any
insolvency by the Depositor. In the event that such conveyance
is deemed to be,
or to be made as security for, a loan, the parties intend that
the Depositor
shall be deemed to have granted and does hereby grant to the
Trustee, on behalf
of the Trust, a first priority perfected security interest in
all of the
Depositor's right, title and interest in and to the Mortgage
Loans and the
Related Documents, and that this Agreement shall constitute a
security agreement
under applicable law.
The Trustee is hereby directed to execute and deliver, on behalf
of
the Trust, the Yield Maintenance Agreement.
Section 2.03 Repurchase or Substitution of Mortgage Loans by
the
Seller.
(a) Upon discovery or receipt of written notice of any
materially
defective document in, or that a document is missing from, a
Mortgage File or of
the breach by the Seller of any representation, warranty or
covenant under the
Mortgage Loan Purchase Agreement or in Section 2.04 in respect
of any Mortgage
Loan which materially adversely affects the value of such
Mortgage Loan or the
interest therein of the Certificateholders, the Trustee (or the
Custodian, as
applicable) shall promptly notify the Seller, the Servicer and
the Trustee of
such defect, missing document or breach and request that the
Seller deliver such
missing document or cure such defect or breach within 120 days
or 150 days
following the Closing Date, in the case of missing Mortgages or
Assignments from
the date the Seller was notified of such missing document,
defect or breach, and
if the Seller does not deliver such missing document or cure
such defect or
breach in all material respects during such period, the Trustee
shall enforce
the Seller's obligation under the Mortgage Loan Purchase
Agreement and cause the
Seller to repurchase such Mortgage Loan from the Trust Fund at
the Purchase
Price on or prior to the Determination Date following the
expiration of such 120
day period (subject to Section 2.03(e)); provided that, in
connection with any
such breach that could not reasonably have been cured within
such 120 day or 150
day period, if the Seller shall have commenced to cure such
breach within such
120 day or 150 day period, the Seller shall be permitted to
proceed thereafter
diligently and expeditiously to cure the same within the
additional period
provided under the Mortgage Loan Purchase Agreement. The
Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Collection
Account, and the
Trustee, upon receipt of written certification from the Servicer
of such
deposit, shall release to the Seller the related Mortgage File
and shall execute
and deliver such instruments of transfer or assignment, in each
case without
recourse, as the Seller shall furnish to it and as shall be
necessary to vest in
the Seller any Mortgage Loan released pursuant hereto and the
Trustee shall have
no further responsibility with regard to such Mortgage File. In
lieu of
repurchasing any such Mortgage Loan as provided above, the
Seller may cause such
Mortgage Loan to be removed from the Trust Fund (in which case
it shall become a
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).
In addition to the foregoing, in the case of a breach of the
Seller's
representation set forth in Section 3.01(f) of the Mortgage Loan
Purchase
Agreement, the Seller shall reimburse the Trust for all costs or
damages
incurred by the Trust as a result of the violation of such law
(such amount, 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 Seller was notified by the Trustee of the amount of such
costs and damages.
It is understood and agreed that the obligation of the Seller to
pay the
Reimbursement Amount and to either cure or repurchase (or
substitute for) any
Mortgage Loan as to which a document is missing, a material
defect in a
constituent document exists or as to which such a breach has
occurred and is
continuing shall constitute the sole remedy against the Seller
respecting such
omission, defect or breach available to the Trustee and the
Trustee on behalf of
the Certificateholders.
(b) [Reserved].
(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 Seller substitutes a
Eligible
Substitute Mortgage Loan or Loans, such substitution shall be
effected by the
Seller delivering to the Trustee for such Eligible Substitute
Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such
other documents and agreements, with all necessary endorsements
thereon, as are
required by Section 2.01, together with an Officers' Certificate
providing that
each such Eligible Substitute Mortgage Loan satisfies the
definition thereof and
specifying the Substitution Adjustment Amount (as described
below), if any, in
connection with such substitution. The Trustee shall acknowledge
receipt for
such Eligible Substitute Mortgage Loan or Loans and, within ten
Business Days
thereafter, shall review such documents as specified in Section
2.02 and deliver
(or cause the Custodian to deliver) to the Servicer, 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
Trustee shall deliver
(or cause the Custodian to deliver) to the Servicer 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
Seller. 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 preceding the month of
substitution and the
Depositor or the Seller, as the case may be, shall thereafter be
entitled to
retain all amounts subsequently received in respect of such
Defective Mortgage
Loan. The Seller 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. 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 and, in
the case of a
substitution effected by the Seller, the Mortgage Loan Purchase
Agreement,
including, in the case of a substitution effected by the Seller
all applicable
representations and warranties thereof included in the Mortgage
Loan Purchase
Agreement and all applicable representations and warranties
thereof set forth in
Section 2.04, in each case as of the date of substitution.
For any month in which the Seller 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 Seller 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 Trustee,
upon receipt of the related Eligible Substitute Mortgage Loan or
Loans and
certification by the Servicer of such deposit, shall release to
the Seller the
related Mortgage File or Files and shall execute and deliver
such instruments of
transfer or assignment, in each case without recourse, as the
Seller shall
deliver to it and as shall be necessary to vest therein any
Defective Mortgage
Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and
deliver
to the Trustee an Opinion of Counsel to the effect that such
substitution will
not cause (a) any federal tax to be imposed on the Trust Fund,
including without
limitation, any federal tax imposed on "prohibited transactions"
under Section
860F(a)(l) of the Code or on "contributions after the startup
date" under
Section 860G(d)(l) of the Code, or (b) any REMIC formed under
this Agreement to
fail to qualify as a REMIC at any time that any Certificate is
outstanding. If
such Opinion of Counsel can not be delivered, then such
substitution may only be
effected at such time as the required Opinion of Counsel can be
given.
(e) Upon discovery by the Seller, the Servicer or the Trustee
that
any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning
of Section 860G(a)(3) of the Code, the party discovering such
fact shall within
two Business Days give written notice thereof to the other
parties. In
connection therewith, the Seller shall repurchase or, subject to
the limitations
set forth in Section 2.03(d), substitute one or more Eligible
Substitute
Mortgage Loans for the affected Mortgage Loan within 90 days of
the earlier of
discovery or receipt of such notice with respect to such
affected Mortgage Loan.
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 Seller shall cure the defect
or make the
required purchase or substitution no later than 90 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), if made by the Seller. The
Trustee shall
reconvey to the Seller the Mortgage Loan to be released pursuant
hereto in the
same manner, and on the same terms and conditions, as it would a
Mortgage Loan
repurchased for breach of a representation or warranty.
Notwithstanding anything to the contrary contained herein,
the
parties hereto acknowledge that the functions of the Trustee
with respect to the
custody, acceptance, inspection and release of the Mortgage
Files pursuant to
Sections 2.01, 2.02 and 2.03 and preparation and delivery of the
certifications
in the form of Exhibit F-1 and Exhibit F-2 shall be performed by
the Custodian
pursuant to the terms and conditions of the Custodial Agreement.
The fees and
expenses of the Custodian shall be paid by the Servicer.
Section 2.04 Representations and Warranties of the Seller
with
Respect to the Mortgage Loans.
The Seller 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 representations and warranties made by the Seller
pursuant
to Section 3.01 of the Mortgage Loan Purchase Agreement are
hereby being made to
the Trustee and are true and correct as of the Closing Date.
(b) Any written agreement between the Mortgagor in respect of
a
Mortgage Loan and the Servicer modifying such Mortgagor's
obligation to make
payments under the Mortgage Loan (such modified Mortgage Loan, a
"Modified
Mortgage Loan") involved the application of the Seller's
underwriting standards
or some assessment of the Mortgagor's ability to repay the
Modified Mortgage
Loan.
With respect to the representations and warranties set forth in
this
Section 2.04 that are made to the best of the Seller's knowledge
or as to which
the Seller has no knowledge, if it is discovered by the
Depositor, the Seller,
the Servicer or the Trustee that the substance of such
representation and
warranty is inaccurate and such inaccuracy materially and
adversely affects the
value of the related Mortgage Loan or the interest therein of
the
Certificateholders then, notwithstanding the Seller's lack of
knowledge with
respect to the substance of such representation and warranty
being inaccurate at
the time the representation or warranty was made, such
inaccuracy shall be
deemed a breach of the applicable representation or
warranty.
Upon discovery by the Depositor, the Seller, the Servicer or
the
Trustee of a breach of any of the representations and warranties
contained in
this Section that materially and adversely affects the value of
any Mortgage
Loan or the interest therein of the Certificateholders, the
party discovering
the breach shall give prompt written notice to the others and in
no event later
than two Business Days from the date of such discovery. Within
ninety days of
its discovery or its receipt of notice of any such missing or
materially
defective documentation or any such breach of a representation
or warranty, the
Seller shall promptly deliver such missing document or cure such
defect or
breach in all material respects, or in the event such defect or
breach cannot be
cured, the Seller shall repurchase the affected Mortgage Loan or
cause the
removal of such Mortgage Loan from the Trust Fund and substitute
for it one or
more Eligible Substitute Mortgage Loans, in either case, in
accordance with
Section 2.03.
It is understood and agreed that the representations and
warranties
set forth in this Section 2.04 shall survive delivery of the
Mortgage Files to
the Trustee 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 Seller set
forth in Section
2.03(a) to cure, substitute for or repurchase a Mortgage Loan
pursuant to the
Mortgage Loan Purchase Agreement and to reimburse the Trust the
Reimbursement
Amount, constitute the sole remedies available to the
Certificateholders or to
the Trustee on their behalf respecting a breach of the
representations and
warranties contained in this Section 2.04.
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 that as of the Closing Date or as of such date
specifically
provided herein:
(i) The Servicer is duly organized, validly existing, and in
good
standing under the laws of the jurisdiction of its formation 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; this Agreement evidences the
valid,
binding and enforceable obligation of the Servicer, subject to
applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws
affecting the enforcement of creditors' rights generally; 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
certificate of
formation or the partnership agreement 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
mortgage loans for Fannie Mae and is an FHA Approved Mortgagee
in good
standing to service mortgages and has not been suspended as a
mortgagee or
servicer by the FHA and has 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, and shall remain
for as long
as it is servicing the Mortgage Loans hereunder, in good
standing as a FHA
Approved Mortgagee and servicer of mortgage loans for HUD,
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 HUD, Fannie Mae or Freddie Mac or FHA eligibility
requirements
or which would require notification to any of HUD, Fannie Mae,
Freddie Mac
or FHA;
(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 laws
and
general principles of 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) Neither this Agreement nor any information, certificate
of an
officer, statement furnished in writing or report delivered to
the Trustee
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; and
(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.
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 Trustee and shall inure to the benefit of the
Trustee, the
Depositor and the Certificateholders. Upon discovery by any of
the Depositor,
the Servicer, the Seller 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 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.
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 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,
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; (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 Uncertificated
Regular
Interests.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the
delivery to it (or the Custodian, as bailee and Custodian of the
Trustee) 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 Trustee,
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, the Certificates (other than
the Class X and
Residual Certificates) in minimum dollar denominations or
$25,000 and integral
dollar multiples of $1 in excess. The Class X, Class R and Class
R-A
Certificates are issuable only in minimum Percentage Interests
of 10%. The
Trustee acknowledges the issuance of the uncertificated REMIC 1
Regular
Interests and declares that it hold such regular interests as
assets of REMIC 2.
The Trustee acknowledges the issuance of the uncertificated
REMIC 2 Class X/N
Regular Interest and declares that it hold such regular interest
as the asset of
REMIC A. The Trustee acknowledges the issuance of the
uncertificated REMIC 2
Class B-4 Regular Interest and declares that it hold such
regular interest as
the asset of REMIC B. The Trustee acknowledges that it holds the
REMIC A Class
X/N Interest as an asset of the Grantor Trust, which Grantor
Trust will issue
the Class X/N Interest, subject to the obligation thereof to pay
LIBOR Carryover
Amounts on behalf of the Holders of the Class AV-1, Class AV-2,
Class AV-3,
Class M-1, Class M-2, Class M-3, 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 the
Yield
Maintenance Agreement, the Reserve Account and the beneficial
interest of the
Class X/N Interest with respect thereto, subject to the
obligation to pay LIBOR
Carryover Amounts. The interests evidenced by the Certificates
constitute the
entire beneficial ownership interest in the Trust Fund.
Section 2.08 Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and
the
Trustee on behalf of the Certificateholders that as of the
Closing Date or as of
such date specifically provided herein:
(i) The Seller is duly organized, validly existing and in
good
standing as a limited liability company under the laws of the
State of
Delaware and has the power and authority to own its assets and
to transact
the business in which it is currently engaged. The Seller is
duly
qualified to do business and is in good standing in each
jurisdiction in
which the character of the business transacted by it or
properties owned
or leased by it requires such qualification and in which the
failure to so
qualify would have a material adverse effect on (a) its
business,
properties, assets or condition (financial or other), (b) the
performance
of its obligations under this Agreement, (c) the value or
marketability of
the Mortgage Loans, or (d) its ability to foreclose on the
related
Mortgaged Properties.
(ii) The Seller has the power and authority to make,
execute,
deliver and perform this Agreement and to consummate all of
the
transactions contemplated hereunder and has taken all necessary
action to
authorize the execution, delivery and performance of this
Agreement. When
executed and delivered, this Agreement will constitute the
Seller's legal,
valid and binding obligations enforceable in accordance with its
terms,
except as enforcement of such terms may be limited by (1)
bankruptcy,
insolvency, reorganization, receivership, moratorium or similar
laws
affecting the enforcement of creditors' rights generally and by
the
availability of equitable remedies, (2) general equity
principles
(regardless of whether such enforcement is considered in a
proceeding in
equity or at law) or (3) public policy considerations underlying
the
securities laws, to the extent that such policy considerations
limit the
enforceability of the provisions of this Agreement which purport
to
provide indemnification from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates
and
permits from all governmental authorities necessary for
conducting its
business as it is presently 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
Seller to conduct its business as it is presently conducted. It
is not
required to obtain the consent of any other party or any
consent, license,
approval or authorization from, or registration or declaration
with, any
governmental authority, bureau or agency in connection with the
execution,
delivery, performance, validity or enforceability of this
Agreement,
except for such consents, licenses, approvals or authorizations,
or
registrations or declarations as shall have been obtained or
filed, as the
case may be, prior to the Closing Date.
(iv) The execution, delivery and performance of this Agreement
by
the Seller will not conflict with or result in a breach of, or
constitute
a default under, any provision of any existing law or regulation
or any
order or decree of any court applicable to the Seller or any of
its
properties or any provision of its Limited Liability Company
Agreement, or
constitute a material breach of, or result in the creation or
imposition
of any lien, charge or encumbrance upon any of its properties
pursuant to
any mortgage, indenture, contract or other agreement to which it
is a
party or by which it may be bound.
(v) No certificate of an officer, written statement or
report
delivered pursuant to the terms hereof by the Seller contains
any untrue
statement of a material fact or omits to state any material fact
necessary
to make the certificate, statement or report not misleading.
(vi) The transactions contemplated by this Agreement are in
the
ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be
made
insolvent by the transfer of the Mortgage Loans to the
Depositor, nor is
the Seller aware of any pending insolvency.
(viii) The Seller is not in violation of, and the execution
and
delivery of this Agreement by it and its performance and
compliance with
the terms of this Agreement will not constitute a violation with
respect
to any order or decree of any court, or any order or regulation
of any
federal, state, municipal or governmental agency having
jurisdiction,
which violation would materially and adversely affect the
Seller's
condition (financial or otherwise) or operations or any of the
Seller's
properties, or materially and adversely affect the performance
of any of
its duties hereunder.
(ix) There are no actions or proceedings against, or
investigations
of, the Seller pending or, to its knowledge, threatened, before
any court,
administrative agency or other tribunal (i) that, if determined
adversely,
would prohibit the Seller from entering into this Agreement,
(ii) seeking
to prevent the consummation of any of the transactions
contemplated by
this Agreement or (iii) that, if determined adversely, would
prohibit or
materially and adversely affect the Seller's performance of any
of its
respective obligations under, or the validity or enforceability
of, this
Agreement.
(x) The Seller did not transfer the Mortgage Loans to the
Depositor
with any intent to hinder, delay or defraud any of its
creditors.
(xi) The Seller acquired title to the Mortgage Loans in good
faith,
without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the Mortgage
Notes
and the Mortgages by the Seller to the Depositor are not subject
to the
bulk transfer laws or any similar statutory provisions in effect
in any
applicable jurisdiction.
Section 2.09 Covenants of the Seller.
(a) The Seller hereby covenants that except for the transfer
hereunder, the Seller will not sell, pledge, assign or transfer
to any other
Person, or grant, create, incur, assume or suffer to exist any
lien on any
Mortgage Loan, or any interest therein; the Seller will notify
the Trustee, as
assignee of the Depositor, of the existence of any lien on any
Mortgage Loan
immediately upon discovery thereof, and the Seller will defend
the right, title
and interest of the Trust, as assignee of the Depositor, in, to
and under the
Mortgage Loans, against all claims of third parties claiming
through or under
the Seller; provided, however, that nothing in this Section 2.09
shall prevent
or be deemed to prohibit the Seller from suffering to exist upon
any of the
Mortgage Loans any liens for municipal or other local taxes and
other
governmental charges if such taxes or governmental charges shall
not at the time
be due and payable or if the Seller shall currently be
contesting the validity
thereof in good faith by appropriate proceedings and shall have
set aside on its
books adequate reserves with respect thereto.
(b) The Seller hereby covenants that neither it nor any
Affiliate of
the Seller will directly solicit any Mortgagor hereunder to
refinance the
related Mortgage Loan. For the purposes of the foregoing,
neither the Seller nor
any Affiliate of the Seller shall be deemed to directly solicit
any Mortgagor if
the Seller responds to a request from a Mortgagor regarding a
refinancing or if
the Mortgagor receives marketing materials which are generally
disseminated.
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 prudent mortgage servicers,
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
including, in the case of FHA Loans, taking all actions that a
mortgagee is
permitted or required to take by the FHA (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 and prudent
determination such waiver,
modification, postponement or indulgence is not materially
adverse to the
Certificateholders; provided, however, that the Servicer shall
not make future
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 the
outstanding principal amount (except for actual payments of
principal) or extend
the final maturity date with respect to such Mortgage Loan, (ii)
in the case of
FHA Loans, affect the FHA Insurance Contract with respect to
such Mortgage Loan,
(iii) affect adversely the status of any REMIC constituting part
of the Trust
Fund as a REMIC or (iv) cause any REMIC 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 REMIC constituting part of the
Trust Fund 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 Property. 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 Mortgagors any reports
required to be
provided to them thereby. If reasonably required by the
Servicer, the Trustee
shall furnish the Servicer with a power of attorney
(substantially in the form
annexed hereto as Exhibit W) and other documents necessary or
appropriate to
enable the Servicer to carry out its servicing and
administrative duties under
this Agreement.
In servicing and administering FHA Loans, the Servicer shall
comply
strictly with the National Housing Act, the FHA Regulations and
the Servicemen's
Readjustment Act and administrative guidelines issued thereunder
or pursuant
thereto (insofar as the same apply to any Mortgage Loan) and, to
the extent
permitted hereunder, promptly discharge all of the obligations
of the mortgagee
thereunder and under each Mortgage including the timely giving
of notices, the
essence hereof being that the full benefits of each FHA
Insurance Contract inure
to the Trustee, on behalf of the Certificateholders.
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 FHA
Insurance
Contracts and the Certificateholders' reliance on the
Servicer.
The Servicer shall give prompt notice to the Trustee of any
action,
of which the Servicer has actual knowledge, which action
purports to (i) assert
a claim against the Trust Fund or (ii) assert jurisdiction over
the Trust Fund.
Notwithstanding anything in this Agreement to the contrary, in
the
event of a 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) the Servicer determines that
such waiver would
maximize recovery of Liquidation Proceeds for such Mortgage
Loan, taking into
account the value of such prepayment penalty, or (ii) (A) 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, or
(B) the enforceability is otherwise limited or prohibited by
applicable law. In
the event of a Principal Prepayment in full with respect to any
Mortgage Loan,
the Servicer shall deliver to the Trustee an Officer's
Certificate substantially
in the form of Exhibit Q no later than the third Business Day
following the
immediately succeeding Determination Date with a copy to the
Class X
Certificateholder. If the Servicer has waived or does not
collect all or a
portion of a prepayment penalty relating to a Principal
Prepayment in full due
to any action or omission of the Servicer, other than as
provided above, the
Servicer shall, within 90 days of the date on which the
Principal Prepayment in
full is remitted to the Trustee, deliver to the Trustee the
amount of such
prepayment penalty (or such portion thereof as had been waived
for deposit) into
the Distribution Account for distribution in accordance with the
terms of this
Agreement.
The Trustee shall prepare and deliver to the Depositor and the
owner
of the Class N and Class X Certificates, on a monthly basis, a
statement setting
forth the amounts received with respect to prepayment
penalties.
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, 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 this Agreement
and the terms and provisions of any related Primary Insurance
Policy 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, the Servicer will take special care in
ascertaining and
estimating annual ground rents, taxes, assessments, water rates,
fire and hazard
insurance premiums, mortgage insurance premiums, and all other
charges that, as
provided in the Mortgage, 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 Conventional
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. In the event that any payment due under any
FHA Loan becomes
delinquent, the Servicer shall take all such actions as are in
the best
interests of the Certificateholders and permitted under any
applicable FHA loss
mitigation proceedings, including, but not limited to,
requesting the FHA to
accept an assignment of such FHA Loan, and, upon the Servicer's
determination
that foreclosure is in the best interest of the
Certificateholders, commencing
foreclosure proceedings. With respect to any defaulted Mortgage
Loan, the
Servicer shall have the right to review the status of the
related forbearance
plan and, subject to the second paragraph of Section 3.01, may
modify such
forbearance plan; including, extending the Mortgage Loan
repayment date for a
period of one year or reducing the Mortgage Interest Rate up to
50 basis points.
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 prudent mortgage
servicers would
exercise or use under the circumstances in the conduct of their
own affairs and
consistent with Applicable Regulations and the servicing
standards set forth in
the Fannie Mae Guide, including, without limitation, advancing
funds for the
payment of taxes and insurance premiums with respect to first
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 Fund 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 prudent
report prepared by a Person who regularly conducts environmental
audits using
customary industry standards, 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.
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 and
Reserve
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 Collection
Accounts. Each Collection Account shall be an Eligible
Account.
The Servicer shall deposit in the Collection Account on a
daily
basis within two Business Days of receipt, and retain therein,
the following
payments and collections received or made by it after the
Cut-off Date with
respect to the Mortgage Loans:
(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;
(iii) all proceeds from a Cash Liquidation;
(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;
and
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13.
Any interest paid on funds deposited in the Collection
Account,
subject to Section 3.25, 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). 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, prepayment charges that are not
prepayment
penalties, and assumption fees need not be deposited by the
Servicer in the
Collection Account.
(b) On behalf of the Trust Fund, the Trustee shall establish
and
maintain one or more accounts (such account or accounts, the
"Distribution
Account"), held in trust for the benefit of the
Certificateholders. On behalf of
the Trust Fund, the Servicer shall deliver to the Trustee in
immediately
available funds for deposit in the Distribution Account by the
close of business
New York time on the Servicer Remittance Date, 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. Amounts in
the Distribution Account shall be deemed to be held on behalf of
the related
REMICs and the Grantor Trust in accordance with the REMIC
distributions set
forth in Section 4.08.
(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 3.25. The Servicer shall give notice to the Trustee
certifying the
location of the Collection Account maintained by it when
established and prior
to any change thereof. The Trustee shall give notice to the
Servicer and the
Depositor of the location of the Distribution Account when
established and prior
to any change thereof.
(d) In the event the Servicer shall deliver to the Trustee
for
deposit in the Distribution Account any amount not required to
be deposited
therein, it may at any time request that the Trustee 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 Trustee from time to time for deposit, and
the Trustee
shall so deposit, in the Distribution Account in respect of
REMIC 1:
(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 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, 3.15, 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 Trustee shall notify the Servicer of such receipt and
deposit such funds in
the Distribution Account, subject to withdrawal thereof as
permitted hereunder.
In addition, the Trustee shall deposit in the Distribution
Account any amounts
required to be deposited pursuant to Section 3.25(b) in
connection with losses
realized on Permitted Investments with respect to funds held in
the Distribution
Account.
(f) (i) The Trustee shall establish and maintain the Reserve
Account, held in trust for the benefit of the Holders of the
Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2, Class B-3 Certificates.
The Trustee shall
deposit in the Reserve Account on the date received by it, any
Yield Maintenance
Agreement Payment received from the Yield Maintenance Agreement
Provider for the
related Distribution Date. On each Distribution Date, the
Trustee shall withdraw
from the Reserve Account any Yield Maintenance Agreement Payment
and apply it in
the following order of priority:
(A) concurrently, to the Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3, any remaining unpaid LIBOR
Carryover Amounts for such Classes for such Distribution Date
(after
distributions pursuant to Section 4.02(b)(xxvi) hereof), pro
rata;
and
(B) to the Trustee as additional compensation, any remaining
amount on deposit in the Reserve Account.
(ii) The Trustee shall account for the Reserve Account as an
asset
of a grantor trust under subpart E, part I of subchapter J of
the Code and
not an asset of any REMIC created pursuant to this Agreement.
The
beneficial owner of the Reserve Account is the Holder of the
Class X/N
Interest. For all federal tax purposes, amounts transferred or
reimbursed
by REMIC 2 to the Reserve Account shall be treated as
distributions by the
Trustee to the Holders of the Class X/N Interest.
(iii) Any LIBOR Carryover Amounts paid by the Trustee pursuant
to
this Section 3.04(f) to the Offered Certificates shall be
accounted for by
the Trustee as amounts paid first to the Holder of the Class X/N
Interest
and then to the respective Class or Classes of Offered
Certificates. In
addition, the Trustee shall account for the Class M-1, Class
M-2, Class
M-3, Class B-1, Class B-2, Class B-3 Certificates' rights to
receive
payments of LIBOR Carryover Amounts as rights in a limited
recourse
interest rate cap contract written by the Holders of the Class
X/N
Interest in favor of the Class M-1, Class M-2, Class M-3, Class
B-1, Class
B-2, Class B-3 Certificates.
(iv) For federal tax return and information reporting, the right
of
the Holders of the Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2,
Class B-3 Certificates to receive payments under the Yield
Maintenance
Agreement in respect of any Yield Maintenance Agreement Payments
shall be
assigned a value of zero.
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 Trustee 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 clause (ii) of first
sentence of
the second paragraph of Section 4.07(b);
(ii) to reimburse itself for (a) Advances and Servicing Advances
to
the extent of amounts received on the related Mortgage Loan
which
represent payments of (x) principal and/or interest respecting
which any
such Advance was made or (y) Condemnation Proceeds, Insurance
Proceeds or
Liquidation Proceeds respecting which any such Servicing Advance
was made;
or (b) any unreimbursed Advances to the extent of funds held in
the
Collection Account for future distribution that were not
included in
Available Funds for the preceding Distribution Date; provided,
however,
any funds so applied will be replaced by the Servicer by deposit
in the
Collection Account no later than one Business Day prior to
the
Distribution Date on which such funds are required to be
distributed;
(iii) to reimburse itself for unreimbursed Servicing Advances,
any
unpaid Servicing Fees and for unreimbursed Advances to the
extent that
such amounts are deemed to be Nonrecoverable Advances and to
reimburse
itself for such amounts to the extent that such amounts are
nonrecoverable
from the disposition of REO Property or have been written-off
pursuant to
Section 3.13;
(iv) to reimburse itself for any amounts paid 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(ii);
(vi) to pay or reimburse itself for any amounts payable or
paid
pursuant to Section 6.03 (and not otherwise previously
reimbursed) and to
reimburse itself as set forth in Section 9.01(c); and
(vii) 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.
Section 3.06 Establishment of Escrow Account; Deposits in
Escrow
Account.
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 letter 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 on a daily
basis
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 ground rents, taxes, assessments,
water rates,
fire, flood and hazard insurance premiums, Primary Insurance
Policy premiums, if
applicable, and comparable items, (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, (viii) to transfer to the
Collection
Account any insurance proceeds, or (ix) in the case of FHA
Loans, for transfer
to the Collection Account, fire and hazard insurance proceeds
and Escrow
Payments with respect to any Mortgage Loan where the FHA has
directed
application of such funds as a credit against the proceeds of
the FHA Insurance
Contract. 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.
With respect to each first lien Mortgage Loan, the Servicer
shall
maintain accurate records reflecting the status of ground rents,
taxes,
assessments, water rates and other charges which are or may
become a lien upon
the Mortgaged Property and the status of Primary Insurance
Policy premiums and
fire, flood 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 Mortgage or
Applicable Regulations.
To the extent that a Mortgage does not provide for Escrow
Payments, the Servicer
shall (i) determine whether any such payments are made by the
Mortgagor in a
manner and at a time that is necessary to avoid the loss of the
Mortgaged
Property due to a tax sale or the foreclosure as a result of a
tax lien and (ii)
ensure that all insurance required to be maintained on the
Mortgaged Property
pursuant to this Agreement is maintained. If any such payment
has not been made
and the Servicer receives notice of a tax lien with respect to
the Mortgage Loan
being imposed, the Servicer will, promptly and to the extent
required to avoid
loss of the Mortgaged Property, advance or cause to be advanced
funds necessary
to discharge such lien on the Mortgaged Property. 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.
The Servicer, on behalf of the Trustee, as mortgagee, will
maintain
in full force and effect (to the extent a Mortgage Loan has a
Primary Insurance
Policy) a Primary Insurance Policy issued by a Qualified Insurer
with respect to
each Mortgage Loan for which such coverage is required. Such
coverage will be
maintained until the Combined Loan-to-Value Ratio of the related
Mortgage Loan
is reduced to 80% or less. The Servicer will not cancel or
refuse to renew any
Primary Insurance Policy in effect on the Closing Date that is
required to be
kept in force under this Agreement unless a replacement Primary
Insurance Policy
for such cancelled or non-renewed policy is obtained from and
maintained with a
Qualified Insurer. The Servicer shall not take any action which
would result in
non-coverage under any applicable Primary Insurance Policy of
any loss which,
but for the actions of the Servicer, would have been covered
thereunder. In
connection with any assumption or substitution agreement entered
into or to be
entered into pursuant to Section 3.14, the Servicer shall
promptly notify the
insurer under the related Primary Insurance Policy, if any, of
such assumption
or substitution of liability in accordance with the terms of
such policy and
shall take all actions which may be required by such insurer as
a condition to
the continuation of coverage under the Primary Insurance Policy.
If such Primary
Insurance Policy is terminated as a result of such assumption or
substitution of
liability, the Servicer shall obtain a replacement Primary
Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer
agrees
to prepare and present, on behalf of itself and the Trustee,
claims to the
insurer under any Primary Insurance Policy in a timely fashion
in accordance
with the terms of such policies and, in this regard, to take
such action as
shall be necessary to permit recovery under any Primary
Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 3.04,
any amounts
collected by the Servicer under any Primary Insurance Policy
shall be deposited
in the Collection Account, subject to withdrawal pursuant to
Section 3.05.
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 Trustee and the
Depositor, 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 first
lien
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, (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 or
(iii) the amount
required under applicable HUD/FHA regulations. 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 Flood Disaster Protection Act of 1973, 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, (y) public liability insurance and, (z) 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 Trustee 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 Trustee, the Servicer shall cause to be
delivered to the
Trustee 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.
The Servicer shall maintain, at its own expense, a blanket
fidelity
bond (the "Fidelity Bond") and an errors and omissions insurance
policy, with
broad coverage with financially responsible companies on all
officers, employees
or other persons acting in any capacity with regard to the
Mortgage Loans to
handle funds, money, documents and papers relating to the
Mortgage Loans. The
Fidelity Bond and errors and omissions insurance shall be in the
form of the
Mortgage Banker's Blanket Bond and shall protect and insure the
Servicer against
losses, including forgery, theft, embezzlement, fraud, errors
and omissions and
negligent acts of such persons. Such Fidelity Bond shall also
protect and insure
the Servicer against losses in connection with the failure to
maintain any
insurance policies required pursuant to this Agreement and the
release or
satisfaction of a Mortgage Loan without having obtained payment
in full of the
indebtedness secured thereby. No provision of this Section 3.12
requiring the
Fidelity Bond and errors and omissions insurance shall diminish
or relieve the
Servicer from its duties and obligations as set forth in this
Agreement. The
minimum coverage under any such bond and insurance policy shall
be at least
equal to the corresponding amounts required by Fannie Mae in the
Fannie Mae MBS
Selling and Servicing Guide or by Freddie Mac in the Freddie Mac
Servicer's
Guide. Upon request of the Trustee, the Servicer shall cause to
be delivered to
the requesting party a certified true copy of the Fidelity Bond
and errors and
omissions insurance policy and a statement from the surety and
the insurer that
such Fidelity Bond and errors and omissions insurance policy
shall in no event
be terminated or materially modified without thirty days' prior
written notice
to the Trustee.
Section 3.13 Title, Management and Disposition of REO Property
and
Certain Delinquent Mortgage Loans.
(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 (pursuant to a limited power of attorney to be
provided by the
Trustee to the Servicer) 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.
(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 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 REMIC
constituting part of the Trust Fund 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 REMIC
constituting part of
the Trust Fund 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 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
shall cause each REO Property to be inspected at least annually
thereafter. The
Servicer shall make or cause to be made a written report of each
such
inspection. Such reports shall be retained in the Mortgage
Servicing 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
account
separately for each REO Property with respect to all funds
collected and
received in connection with the operation of such REO
Property.
The Servicer shall deposit or cause to be deposited, on a
daily
basis, within two Business Days of receipt, in the Collection
Account, all
revenues received with respect to each REO Property and shall
withdraw therefrom
funds necessary for the proper operation, management and
maintenance of the
related 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 Trustee, on each Servicer
Remittance Date, an operating statement for each REO Property
covering the
operation of each REO Property for the previous month. Such
operating statement
shall be accompanied by such other information as 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 or the related
Mortgage Loan, 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 proceeds
from the REO
Disposition, net of any payment to the Servicer as provided
above, shall be
deposited in the Collection Account for distribution on the
succeeding Servicer
Remittance Date 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).
(c) The Servicer may write-off any Second Lien Mortgage Loan
or
Third Lien Mortgage Loan that has been Delinquent for a period
of 180 days or
more.
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. An
Opinion of Counsel at
the expense of the Servicer (which expense shall constitute a
Servicing Advance)
delivered to the Trustee and the Depositor to the foregoing
effect shall
conclusively establish the reasonableness of such belief. 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. In addition to the foregoing, the
Servicer shall
not be required to enforce any "due-on-sale" clause if, in the
reasonable
judgment of the Servicer, entering into an assumption and
modification agreement
with a person to whom such Mortgaged Property shall be conveyed
and releasing
the original Mortgagor from liability would be in the best
interests of the
Certificateholders. 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. 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 Notification of Adjustments.
On each Adjustment Date, the Servicer shall make Mortgage
Interest
Rate adjustments for each Adjustable-Rate Mortgage Loan in
compliance with the
requirements of the related Mortgage and Mortgage Note and
Applicable
Regulations. The Servicer shall execute and deliver the notices
required by each
Mortgage and Mortgage Note and Applicable Regulations regarding
Mortgage
Interest Rate adjustments. The Servicer also shall provide
timely notification
to the Trustee of all applicable data and information regarding
such Mortgage
Interest Rate adjustments and the Servicer's methods of
implementing such
Mortgage Interest Rate adjustments. Upon the discovery by the
Servicer, the
Trustee that the Servicer has failed to adjust or has
incorrectly adjusted a
Mortgage Interest Rate or a Monthly Payment pursuant to the
terms of the related
Mortgage Note and Mortgage, the Servicer shall deliver to the
Trustee for
deposit in the Distribution Account from its own funds the
amount of any
interest loss caused thereby without reimbursement therefor;
provided, however,
the Servicer shall be held harmless with respect to any Mortgage
Interest Rate
adjustments made by any servicer prior to the Servicer.
Section 3.16 Optional Purchases and Sales of Mortgage Loans
by
Servicer.
The Servicer (or an affiliate of the Servicer) may, at its
option,
repurchase a Mortgage Loan or REO Property which becomes 120 or
more days
Delinquent or for which the Servicer has accepted a deed in lieu
of foreclosure,
during the period commencing on the first day of the calendar
quarter succeeding
the calendar quarter in which the Initial Delinquency Date
occurred with respect
to such Mortgage Loan and ending on the last Business Day of
such calendar
quarter. If the Servicer (or an affiliate of the Servicer) does
not exercise its
purchase right with respect to a Mortgage Loan during the period
specified in
the preceding sentence, such Mortgage Loan shall thereafter
again become
eligible for purchase pursuant to the preceding sentence only
after the Mortgage
Loan ceases to be 120 days or more Delinquent and thereafter
becomes 120 days
Delinquent again. The "Initial Delinquency Date" of a Mortgage
Loan shall mean
the date on which the Mortgage Loan first became 120 days
Delinquent. Prior to
repurchase pursuant to this Section 3.16, the Servicer shall be
required to
continue to make monthly advances pursuant to Section 4.07. The
Servicer shall
not use any procedure in selecting Mortgage Loans to be
repurchased which is
materially adverse to the interests of the Certificateholders.
The Servicer
shall purchase such (i) delinquent Mortgage Loan at a price
equal to the
Principal Balance of the Mortgage Loan plus accrued interest
thereon at the
Mortgage Interest Rate from the date to which interest has last
been paid to the
Trust Fund to the date of purchase plus any unreimbursed
Servicing Advances and
Advances or (ii) REO Property at its fair market value as
determined in good
faith by the Servicer. Any such repurchase of a Mortgage Loan or
REO Property
pursuant to this Section 3.16 shall be accomplished by delivery
to the Trustee
for deposit in the Distribution Account of the amount of the
purchase price. The
Trustee shall immediately effectuate the conveyance of such
delinquent Mortgage
Loan or REO Property to the Servicer to the extent necessary,
including the
prompt delivery of all documentation to the Servicer.
Section 3.17 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including
any
liquidation of such 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
deliver to the
Trustee (or the Custodian as the case may be) two executed
copies of a completed
"Request for Release" in the form of Exhibit E. Upon receipt of
such Request for
Release of Documents, the Trustee (or the Custodian as the case
may be) shall
promptly release the related Mortgage File, in trust to (i) the
Servicer, or
(ii) such other party identified in the related Request for
Release. Upon any
such payment in full, or the receipt of such notification that
such funds have
been placed in escrow, the Servicer shall direct the Trustee in
writing to
execute an instrument of satisfaction (or assignment of Mortgage
without
recourse) regarding the Mortgaged Property relating to such
Mortgage, which
instrument of satisfaction or assignment, as the case may be,
shall be delivered
to the Person or Persons entitled thereto against receipt
therefor of payment in
full, it being understood and agreed that no expense incurred in
connection with
such instrument of satisfaction or assignment, as the case may
be, shall be
chargeable to the Collection Account. In lieu of executing any
such satisfaction
or assignment, as the case may be, the Servicer may prepare and
submit to the
Trustee a satisfaction (or assignment without recourse, if
requested by the
Person or Persons entitled thereto) in form for execution by the
Trustee with
all requisite information completed by the Servicer; in such
event, the Trustee
shall execute and acknowledge such satisfaction or assignment,
as the case may
be, and deliver the same with the related Mortgage File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of
any
Mortgage Loan, including, without limitation, foreclosure or
other comparable
conversion of a Mortgage Loan or collection under any insurance
policy relating
to a Mortgage Loan, the Trustee shall (except in the case of the
payment or
liquidation pursuant to which the related Mortgage File is
released to an escrow
agent or an employee, agent or attorney of the Trustee), upon
written request of
the Servicer and delivery to the Trustee (or the Custodian, as
the case may be)
of two executed copies of a "Request for Release" in the form of
Exhibit E
signed by a Servicing Officer, release the related Mortgage File
to the Servicer
and shall execute such documents as shall be necessary to the
prosecution of any
such proceedings, including, without limitation, an assignment
without recourse
of the related Mortgage to the Servicer. Such receipt shall
obligate the
Servicer to return the Mortgage File to the Trustee (or the
Custodian, as the
case may be) when the need therefor by the Servicer no longer
exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt
of a Request for
Release evidencing such liquidation, the receipt shall be
released by the
Trustee (or the Custodian, as the case may be) to the
Servicer.
(c) 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, (iii) removal, demolition or
division of properties
subject to Mortgages and (iv) second mortgage subordination
agreements. No
application for approval shall be considered by the Servicer
unless: (w) 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 REMIC constituting part of the Trust Fund as a REMIC or
cause any REMIC
constituting part of the Trust Fund to be subject to a tax on
"prohibited
transactions" or "contributions" pursuant to the REMIC
Provisions; (x) the
provisions of the related Note and Mortgage have been complied
with; (y) the
Combined Loan-to-Value Ratio and debt-to-income ratio after any
release does not
exceed the maximum Combined 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 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,
real-estate referral fees or any other service-related fees,
Insurance Proceeds
and Liquidation Proceeds not required to be deposited in the
Collection Account
or the Distribution Account and similar items, to the extent
collected from
Mortgagors.
Section 3.19 Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the
Trustee
and the Depositor, not later than 90 days following the end of
the fiscal year
of the Servicer which as of the Startup Day ends on the last day
of December,
commencing in 2004, a Servicing Officer's certificate stating,
as to each signer
thereof, that (i) a review of the activities of the Servicer
during such
preceding fiscal year (or such shorter period in the case of the
first such
report) and of performance under this Agreement has been made
under such
officers' supervision, and (ii) to the best of such officers'
knowledge, based
on such review, the Servicer has fulfilled all its obligations
under this
Agreement for such year, or, if there has been a default in the
fulfillment of
all such obligations, specifying each such default known to such
officers and
the nature and status thereof including the steps being taken by
the Servicer to
remedy such default.
(b) Delivery of such reports, information and documents to
the
Trustee is for informational purposes only and their 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 are
entitled to rely exclusively on Officers' Certificates).
Section 3.20 Annual Independent Certified Public
Accountants'
Reports.
(a) Not later than 90 days following the end of each fiscal year
of
the Servicer commencing in 2004, the Servicer, at its expense,
shall cause a
nationally recognized firm of independent certified public
accountants to
furnish to the Trustee and the Depositor a report stating that
(i) it has
obtained a letter of representation regarding certain matters
from the
management of the Servicer which includes an assertion that the
Servicer has
complied with certain minimum residential mortgage loan
servicing standards,
identified in either the Uniform Single Attestation Program for
Mortgage Bankers
established by the Mortgage Bankers Association of America or
the Audit Program
for Mortgages serviced by Freddie Mac, with respect to the
servicing of
residential mortgage loans during the most recently completed
fiscal year and
(ii) on the basis of an examination conducted by such firm in
accordance with
standards established by the American Institute of Certified
Public Accountants,
such representation is fairly stated in all material respects,
subject to such
exceptions and other qualifications that may be appropriate.
Immediately upon
receipt of such report, the Servicer shall furnish a copy of
such report to the
Trustee, the Depositor and each Rating Agency. Copies of such
statement shall be
provided by the Trustee to any Certificateholder upon request at
the Servicer's
expense, provided that such statement is delivered by the
Servicer to the
Trustee.
(b) Delivery of such reports, information and documents to
the
Trustee is for informational purposes only and their 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 the
Trustee is entitled to
rely exclusively on Officers' Certificates).
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Servicer shall provide to the Trustee, 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
documentation regarding the Mortgage Loans, such access being
afforded without
charge but only upon reasonable request and during normal
business hours at the
offices of the Servicer designated by it.
Section 3.22 Reserved.
Section 3.23 Obligations of the Servicer in Respect of
Compensating
Interest.
Not later than the close of business on each Servicer
Remittance
Date, the Servicer shall deliver to the Trustee 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 Actuarial
Mortgage Loans
for the related Distribution Date resulting from Principal
Prepayments on the
Actuarial Mortgage Loans during the related Prepayment Period
and (B) 50% of its
aggregate Servicing Fee received in the related Collection
Period. The Servicer
shall apply Compensating Interest to offset any Prepayment
Interest Shortfalls
on the Actuarial Mortgage Loans. The Servicer shall not have the
right to
reimbursement for any amounts remitted to the Trustee in respect
of Compensating
Interest. Such amounts so remitted shall be included in the
Available Funds and
distributed therewith on the next Distribution Date. The
Servicer shall not be
obligated to pay Compensating Interest with respect to
Prepayment Interest
Shortfalls on Simple Interest Mortgage Loans or Relief Act
Interest Shortfalls.
Section 3.24 Obligations of the Servicer in Respect of
Mortgage
Interest Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability
with
respect to any Mortgage Loan results from or is attributable to
adjustments to
Mortgage Interest Rates, Monthly Payments or Principal Balances
that were made
by the Servicer in a manner not consistent with the terms of the
related
Mortgage Note and this Agreement, the Servicer, upon discovery
or receipt of
notice thereof, immediately shall deliver to the Trustee for
deposit in the
Distribution Account from its own funds the amount of any such
shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee,
the Depositor and
any successor servicer in respect of any such liability. Such
indemnities shall
survive the termination or discharge of this Agreement.
Section 3.25 Investment of Funds in the Collection Account and
the
Distribution Account.
(a) The Servicer may direct any depository institution
maintaining
the Collection Account to invest the funds in the Collection
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
Trustee 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
Trustee is the obligor thereon. All such Permitted Investments
shall be held to
maturity, unless payable on demand. Any investment of funds in
the Collection
Account shall be made in the name of the Trustee or the
Servicer, as applicable
(in its capacity as such) or in the name of a nominee of the
Trustee. The
Trustee shall be entitled to sole possession (except with
respect to investment
direction of funds held in the Collection Account) over each
such investment and
the income thereon, and any certificate or other instrument
evidencing any such
investment shall be delivered directly to the Trustee or its
agent, together
with any document of transfer necessary to transfer title to
such investment to
the Trustee or its nominee. In the event amounts on deposit in
the Collection
Account are at any time invested in a Permitted Investment
payable on demand,
the Trustee shall at the direction of the Servicer:
(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
Trustee that such Permitted Investment would not
constitute a Permitted Investment in respect of funds
thereafter on deposit in the Collection 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. Funds on deposit in the Distribution
Account will
remain uninvested.
(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 Trustee 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.
Except as set forth in clause (b) above with respect to the
Distribution Account, the Trustee shall not in any way be held
liable by reason
of any insufficiency in any Account held by the Trustee
resulting from any
investment loss on any Permitted Investment included therein
(except to the
extent that the Trustee is the obligor and has defaulted
thereon).
Section 3.26 Liability of Servicer; Indemnification.
(a) Subject to clause (b) below and Section 6.03, the
Servicer
(except the Trustee if it is required to succeed the Servicer
hereunder)
indemnifies and holds the Trustee, the Seller, the Depositor 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 Depositor and
any
Certificateholder may sustain in any way related to the failure
of the Servicer
to perform its duties and service the Mortgage Loans in
compliance with the
Servicing Standards. The Servicer shall immediately notify the
Trustee, 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 the Trustee) 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, Trustee, the Depositor and/or
Certificateholder in respect
of such claim. The provisions of this Section 3.26 shall survive
the termination
of this Agreement and the payment of the outstanding
Certificates.
(b) None of the Depositor, the Seller, the Servicer, or any of
the
directors, officers, employees or agents of the Depositor, the
Seller 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, the
Seller 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, the Seller and any director,
officer,
employee or agent of the Depositor, the Seller 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, the Seller, and any
director, officer,
employee or agent of the Depositor, the Seller 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, the Seller 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 the Depositor,
the Seller or
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.
Section 3.27 Reports of Foreclosure and Abandonment of
Mortgaged
Properties.
On or before the last day of February of each year beginning
in
2005, 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 3.27 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 3.28 Protection of Assets.
(a) Except for transactions and activities entered into in
connection with the securitization that is the subject of this
Agreement, the
Trust is not authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or sell
assets;
or
(3) engage in any business or activities.
(b) Each party to this Agreement agrees that it will not file
an
involuntary bankruptcy petition against the Trustee or the Trust
Fund or
initiate any other form of insolvency proceeding until after the
Certificates
have been paid.
Section 3.29 Periodic Filings.
(a) The Trustee and the Servicer shall reasonably cooperate with
the
Depositor in connection with the Trust's satisfying the
reporting requirements
under the Exchange Act. Without limiting the generality of the
foregoing, the
Trustee shall prepare on behalf of the Trust any monthly Current
Reports on Form
8-K (each, a "Monthly Form 8-K") and Annual Reports on Form 10-K
customary for
similar securities as required by the Exchange Act and the rules
and regulations
of the Securities and Exchange Commission thereunder, and the
Trustee shall sign
(other than any Annual Reports on Form 10-K) and file (via the
Securities and
Exchange Commission's Electronic Data Gathering and Retrieval
System) such forms
on behalf of the Trust. The Servicer shall sign any Annual
Reports on Form 10-K.
(b) Each Monthly Form 8-K shall be filed by the Trustee within
15
days after each Distribution Date (commencing on the
Distribution Date occurring
in February 2004 and ending with the Distribution Date following
the filing of
the Form 15 Suspension Notification as set forth in Section
3.29(h) hereof),
including a copy of the statement set forth in Section 4.06(a)
hereof for such
Distribution Date as an exhibit thereto. Prior to March 30th of
each year (or
such earlier date as may be required by the Exchange Act and the
rules and
regulations of the Securities and Exchange Commission), the
Trustee shall file a
Form 10-K, in substance as required by applicable law or
applicable Securities
and Exchange Commission staff's interpretations. Such Form 10-K
shall include as
exhibits the Servicer's annual statement of compliance described
under Section
3.19 and the accountant's report described under Section 3.20,
in each case to
the extent they have been timely delivered to the Trustee. If
they are not so
timely delivered, the Trustee shall file an amended Form 10-K
including such
documents as exhibits reasonably promptly after they are
delivered to the
Trustee. The Form 10-K shall also include a certification in the
form attached
hereto as Exhibit S (the "Certification"), which shall be signed
by the senior
officer of the Servicer in charge of servicing.
(c) The Trustee shall sign a certification (in the form
attached
hereto as Exhibit T) for the benefit of the Servicer and its
officers, directors
and Affiliates (provided, however, that the Trustee shall not
undertake an
analysis of the accountant's report attached as an exhibit to
the Form 10-K). No
later than the 20th day prior to the latest date on which the
Form 10-K is
permitted to be filed, without regard to extension (or if such
day is not a
Business Day, the immediately preceding Business Day), the
Trustee shall deliver
to the Servicer (i) such certification and (ii) a completed Form
10-K to be
executed by the Servicer. No later than the 10th day prior to
the latest date on
which the Form 10-K is permitted to be filed, without regard to
extension (or if
such day is not a Business Day, the immediately preceding
Business Day), the
Servicer shall deliver the signed Form 10-K and the signed
Certification to be
filed to the Trustee. In addition, the Trustee shall indemnify
and hold harmless
the Servicer and its officers, directors and Affiliates from and
against any
losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal
fees and related costs, judgments and other costs and expenses
arising out of
the Trustee's failure to deliver the certification (in the form
attached hereto
as Exhibit T) pursuant to this Section 3.29(c) or any inaccuracy
in such
certification, other than any losses, damages, penalties, fines,
forfeitures,
reasonable and necessary legal fees and related costs, judgments
and other costs
and expenses arising out of the Servicer's breach of its
obligations under this
Agreement. If the indemnification provided for herein is
unavailable or
insufficient to hold harmless the Servicer and its officers,
directors and
Affiliates, then the Trustee shall contribute to the amount paid
or payable by
the Servicer, its officers, directors or Affiliates as a result
of the losses,
claims, damages or liabilities of the Servicer, its officers,
directors or
Affiliates in such proportion as is appropriate to reflect the
relative fault of
the Servicer and its officers, directors and Affiliates on the
one hand and the
Trustee on the other.
(d) The Servicer shall indemnify and hold harmless the Trustee
and
its officers, directors and Affiliates from and against any
losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal
fees and related
costs, judgments and other costs and expenses arising out of the
Servicer's
failure to sign and deliver either the Certification or the Form
10-K within the
time frame provided in Section 3.29(c), other than any losses,
damages,
penalties, fines, forfeitures, reasonable and necessary legal
fees and related
costs, judgments and other costs and expenses arising out of the
Trustee's
breach of its obligations under this Agreement. If the
indemnification provided
for herein is unavailable or insufficient to hold harmless the
Trustee and its
officers, directors and Affiliates, then the Servicer shall
contribute to the
amount paid or payable by the Trustee, its officers, directors
or Affiliates as
a result of the losses, claims, damages or liabilities of the
Trustee, its
officers, directors or Affiliates in such proportion as is
appropriate to
reflect the relative fault of the Trustee and its officers,
directors and
Affiliates on the one hand and the Servicer on the other.
(e) If the Securities and Exchange Commission issues
additional
interpretative guidance or promulgates additional rules or
regulations, or if
other changes in applicable law occur, that would require the
reporting
arrangements, or the allocation of responsibilities with respect
thereto,
described in this Section 3.29, to be conducted differently than
as described,
the Depositor, Servicer and Trustee will reasonably cooperate to
amend the
provisions of this Section 3.29 in order to comply with such
amended reporting
requirements and such amendment of this Section 3.29. Any such
amendment shall
be made in accordance with the first paragraph of Section 11.01
without further
consent of the Certificateholders and without the requirement to
deliver (i)
notice in writing to the Depositor, the Servicer and the Trustee
from the Rating
Agencies that such action will not result in the reduction or
withdrawal of the
rating of any outstanding Class of Certificates with respect to
which it is a
Rating Agency, or (ii) an Opinion of Counsel delivered to the
Servicer and the
Trustee. Such amendment may result in the reduction of the
reports filed by the
Trustee on behalf of the Trust under the Exchange Act.
Notwithstanding the
foregoing, none of the Depositor, Servicer or Trustee shall be
obligated to
enter into any amendment pursuant to this Section 3.29 that
adversely affects
its obligations and immunities under this Agreement.
(f) In filing any Monthly Form 8-K or Form 10-K, the Trustee
shall
not undertake any analysis of, and shall have no responsibility
for, any
financial information, accountant's report, certification or
other matter
contained therein, except for computations performed by the
Trustee and
reflected in the statement set forth in Section 4.06(a)
hereof.
(g) Upon any filing with the Securities and Exchange Commission,
the
Trustee shall promptly deliver to the Depositor and the Servicer
a copy of any
such executed report, statement or information.
(h) Prior to January 30 of the first year in which the Trustee
is
able to do so under applicable law, the Trustee shall file a
Form 15 Suspension
Notification with respect to the Trust.
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions.
On each Distribution Date, the Trustee shall withdraw from
the
Distribution Account the Interest Remittance Amount and apply it
in the
following order of priority (based upon the Mortgage Loan
information provided
to it in the Remittance Report, upon which the Trustee may
conclusively rely),
and the calculations required to be made by the Trustee, to the
extent
available:
(i) to the Trustee, the Trustee Fee for such Distribution
Date;
(ii) concurrently, as follows:
(A) from the Group I Interest Remittance Amount, to the
Class
AF-1 Certificates, the Accrued Certificate Interest thereon for
such
Distribution Date; and
(B) from the Group II Interest Remittance Amount, to the
Class
AV-1, Class AV-2 and Class AV-3 Certificates, pro rata, the
applicable Accrued Certificate Interest thereon for such
Distribution Date;
(iii) concurrently, as follows:
(A) from the Group I Interest Remittance Amount, to the
Class
AF-1 Certificates, the Interest Carry Forward Amount thereon
for
such Distribution Date for the Class AF-1 Certificates; and
(B) from the Group II Interest Remittance Amount, to the
Class
AV-1, Class AV-2 and Class AV-3 Certificates, pro rata, the
applicable Interest Carry Forward Amount for such Distribution
Date
for the Class AV-1, Class AV-2 and Class AV-3 Certificates;
(iv) concurrently, as follows:
(A) from the Group I Interest Remittance Amount, to the
Class
AV-1, Class AV-2 and Class AV-3 Certificates, pro rata, any
unpaid
Accrued Certificate Interest and Interest Carry Forward Amount
for
each such Class for such Distribution Date; and
(B) from the Group II Interest Remittance Amount, to the
Class
AF-1 Certificates, any unpaid Accrued Certificate Interest
and
Interest Carry Forward Amount for such Class for such
Distribution
Date;
(v) to the Class M-1 Certificates, the Accrued Certificate
Interest
thereon for such Distribution Date;
(vi) to the Class M-2 Certificates, the Accrued Certificate
Interest
thereon for such Distribution Date;
(vii) to the Class M-3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(viii) to the Class B-1 Certificates, the Accrued
Certificate
Interest thereon for such Distribution Date;
(ix) to the Class B-2 Certificates, the Accrued Certificate
Interest
thereon for such Distribution Date;
(x) to the Class B-3 Certificates, the Accrued Certificate
Interest
thereon for such Distribution Date; and
(xi) to the Class B-4 Certificates, the Accrued Certificate
Interest
thereon for such Distribution Date; and
(xii) the amount, if any, of the Interest Remittance Amount
remaining after application with respect to the priorities set
forth above
will be applied as described under Section 4.02(b) hereof.
Section 4.02 Distributions of Principal and Monthly Excess
Cashflow
Amounts.
(a) On each Distribution Date, the Trustee shall make the
following
distributions in the following order of priority (based upon the
Mortgage Loan
information provided to it in the Remittance Report), and the
calculations
required to be made by the Trustee, to the extent of the
Principal Distribution
Amount:
(i) before the Stepdown Date or with respect to which a
Trigger
Event is in effect, sequentially, as follows:
(A) concurrently, as follows:
(1) the Group I Principal Distribution Amount to the
Class AF-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and
(2) the Group II Principal Distribution Amount,
concurrently, pro rata, as follows:
(a) to the Class AV-1 until the Certificate
Principal Balance thereof has been reduced to zero; and
(b) sequentially, to the Class AV-2 and Class AV-3
Certificates, in that order, until the Certificate
Principal Balances thereof have been reduced to zero;
(B) concurrently, as follows:
(1) the Group I Principal Distribution Amount remaining
after distributions pursuant to priority (A)(1) above,
concurrently, pro rata, as follows:
(a) to the Class AV-1 until the Certificate
Principal Balance thereof has been reduced to zero; and
(b) sequentially, to the Class AV-2 and Class AV-3
Certificates, in that order, until the Certificate
Principal Balances thereof have been reduced to zero;
(2) the Group II Principal Distribution Amount remaining
after distributions pursuant to priority (A)(2) above, to
the
Class AF-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;
(C) to the Holders of the Class M-1 Certificates, 100% of
the
remaining Principal Distribution Amount for such Distribution
Date,
until the Certificate Principal Balance of the Class M-1
Certificates has been reduced to zero;
(D) to the Holders of the Class M-2 Certificates, 100% of
the
remaining Principal Distribution Amount, until the
Certificate
Principal Balance of the Class M-2 Certificates has been reduced
to
zero;
(E) to the Holders of the Class M-3 Certificates, 100% of
the
remaining Principal Distribution Amount, until the
Certificate
Principal Balance of the Class M-3 Certificates has been reduced
to
zero;
(F) to the Holders of the Class B-1 Certificates, 100% of
the
remaining Principal Distribution Amount, until the
Certificate
Principal Balance of the Class B-1 Certificates has been reduced
to
zero;
(G) to the Holders of the Class B-2 Certificates, 100% of
the
remaining Principal Distribution Amount, until the
Certificate
Principal Balance of the Class B-2 Certificates has been reduced
to
zero; and
(H) to the Holders of the Class B-3 Certificates, 100% of
the
remaining Principal Distribution Amount, until the
Certificate
Principal Balance of the Class B-3 Certificates has been reduced
to
zero; and
(I) to the Holders of the Class B-4 Certificates, 100% of
the
remaining Principal Distribution Amount, until the
Certificate
Principal Balance of the Class B-4 Certificates has been reduced
to
zero; and
(J) any amount of the Principal Distribution Amount
remaining
after making all of the distributions in clauses (A), (B), (C),
(D),
(E), (F), (G), (H) and (I) shall be applied as set forth in
Section
4.02(b).
(ii) on or after the Stepdown Date and as long as a Trigger
Event is
not in effect:
(A) concurrently, as follows:
(1) the Group I Principal Distribution Amount to the
Class AF-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and
(2) the Group II Principal Distribution Amount to the
Class AV-1, Class AV-2 and Class AV-3 Certificates,
concurrently, pro rata, as follows:
(a) to the Class AV-1 Certificates, until the
Certificate P
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