|
<PAGE>
EXHIBIT 4.1
================================================================================
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
LITTON LOAN SERVICING LP,
Servicer
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 2004
2004-CB8 Trust
C-BASS Mortgage Loan Asset-Backed Certificates, Series
2004-CB8
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS...........................................................................
4
Section 1.01 Defined
Terms....................................................................
4
Section 1.02
Accounting.......................................................................
43
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES....................... 43
Section 2.01 Conveyance of Mortgage
Loans..................................................... 43
Section 2.02 Acceptance by
Trustee............................................................
45
Section 2.03 Repurchase or Substitution of Mortgage Loans by the
Seller....................... 46
Section 2.04 Representations and Warranties of the Seller with
Respect to the
Mortgage
Loans...................................................................
49
Section 2.05 Representations, Warranties and Covenants of the
Servicer........................ 49
Section 2.06 Representations and Warranties of the
Depositor.................................. 51
Section 2.07 Issuance of Certificates and the Uncertificated
Regular Interests................ 52
Section 2.08 Representations and Warranties of the
Seller..................................... 53
Section 2.09 Covenants of the
Seller..........................................................
54
ARTICLE III ADMINISTRATION AND SERVICING OF THE TRUST
FUND........................................ 55
Section 3.01 Servicer to Act as
Servicer......................................................
55
Section 3.02 Collection of Mortgage Loan
Payments............................................. 56
Section 3.03 Realization Upon Defaulted Mortgage
Loans........................................ 57
Section 3.04 Collection Account and Distribution
Account...................................... 58
Section 3.05 Permitted Withdrawals From the Collection
Account................................ 59
Section 3.06 Establishment of Escrow Account; Deposits in Escrow
Account...................... 60
Section 3.07 Permitted Withdrawals From Escrow
Account........................................ 61
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder............ 61
Section 3.09 Transfer of
Accounts.............................................................
62
Section 3.10 Maintenance of Hazard
Insurance.................................................. 62
Section 3.11 Maintenance of Mortgage Impairment Insurance
Policy.............................. 63
Section 3.12 Fidelity Bond, Errors and Omissions
Insurance.................................... 63
Section 3.13 Title, Management and Disposition of REO Property
and Certain
Delinquent Mortgage
Loans........................................................
64
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements...................... 65
Section 3.15 Notification of
Adjustments......................................................
66
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C> <C>
Section 3.16 Optional Purchases of Mortgage Loans by
Servicer................................. 66
Section 3.17 Trustee to Cooperate; Release of
Files........................................... 67
Section 3.18 Servicing
Compensation...........................................................
68
Section 3.19 Annual Statement as to
Compliance................................................ 68
Section 3.20 Annual Independent Certified Public Accountants'
Reports......................... 69
Section 3.21 Access to Certain Documentation and Information
Regarding the
Mortgage
Loans...................................................................
69
Section 3.22
Reserved.........................................................................
69
Section 3.23 Obligations of the Servicer in Respect of
Compensating Interest.................. 69
Section 3.24 Obligations of the Servicer in Respect of Mortgage
Interest Rates and
Monthly
Payments.................................................................
70
Section 3.25 Investment of Funds in the Collection Account and
the Distribution
Account..........................................................................
70
Section 3.26 Liability of Servicer;
Indemnification........................................... 71
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties................... 72
Section 3.28 Protection of
Assets.............................................................
72
Section 3.29 Periodic
Filings.................................................................
72
Section 3.30 Advance
Facility.................................................................
74
ARTICLE IV FLOW OF
FUNDS.........................................................................
76
Section 4.01 Interest
Distributions...........................................................
76
Section 4.02 Distributions of Principal and Monthly Excess
Cashflow Amounts................... 77
Section 4.03 Allocation of
Losses.............................................................
83
Section 4.04 Method of
Distribution...........................................................
83
Section 4.05 Distributions on Book-Entry
Certificates......................................... 84
Section 4.06
Statements.......................................................................
84
Section 4.07 Remittance Reports;
Advances.....................................................
86
Section 4.08 REMIC
Distributions..............................................................
88
ARTICLE V THE
CERTIFICATES......................................................................
91
Section 5.01 The
Certificates.................................................................
91
Section 5.02 Registration of Transfer and Exchange of
Certificates............................ 91
Section 5.03 Mutilated, Destroyed, Lost or Stolen
Certificates................................ 97
Section 5.04 Persons Deemed
Owners............................................................
97
Section 5.05 Appointment of Paying
Agent...................................................... 97
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C> <C>
ARTICLE VI THE SELLER, THE SERVICER AND THE
DEPOSITOR........................................... 98
Section 6.01 Liability of the Seller, the Servicer and the
Depositor......................... 98
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the
Seller, the Servicer or the
Depositor........................................... 98
Section 6.03 Limitation on Liability of the Servicer and
Others.............................. 98
Section 6.04 Servicer Not to
Resign..........................................................
99
Section 6.05 Delegation of
Duties............................................................
99
ARTICLE VII
DEFAULT..............................................................................
100
Section 7.01 Servicer Events of
Termination..................................................
100
Section 7.02 Trustee to Act; Appointment of
Successor........................................ 101
Section 7.03 Waiver of
Defaults..............................................................
102
Section 7.04 Notification to
Certificateholders..............................................
102
Section 7.05 Survivability of Servicer
Liabilities........................................... 103
ARTICLE VIII THE
TRUSTEE..........................................................................
103
Section 8.01 Duties of
Trustee...............................................................
103
Section 8.02 Certain Matters Affecting the
Trustee........................................... 104
Section 8.03 Trustee Not Liable for Certificates or Mortgage
Loans........................... 105
Section 8.04 Trustee May Own
Certificates....................................................
106
Section 8.05 Seller to Pay Trustee Fees and
Expenses......................................... 106
Section 8.06 Eligibility Requirements for
Trustee............................................ 107
Section 8.07 Resignation or Removal of
Trustee............................................... 107
Section 8.08 Successor
Trustee...............................................................
108
Section 8.09 Merger or Consolidation of
Trustee.............................................. 108
Section 8.10 Appointment of Co-Trustee or Separate
Trustee................................... 108
Section 8.11 Limitation of
Liability.........................................................
110
Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates................... 110
Section 8.13 Suits for
Enforcement...........................................................
110
Section 8.14 Waiver of Bond
Requirement......................................................
110
Section 8.15 Waiver of Inventory, Accounting and Appraisal
Requirement....................... 110
Section 8.16 Compliance with National Housing Act of
1934.................................... 111
ARTICLE IX REMIC AND GRANTOR TRUST
ADMINISTRATION...............................................
111
Section 9.01 REMIC
Administration............................................................
111
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C> <C>
Section 9.02 Prohibited Transactions and
Activities.......................................... 114
Section 9.03 Indemnification with Respect to Certain Taxes and
Loss of REMIC
Status..........................................................................
114
Section 9.04 REO
Property....................................................................
114
Section 9.05 Grantor Trust
Administration....................................................
115
ARTICLE X
TERMINATION..........................................................................
115
Section 10.01
Termination.....................................................................
115
Section 10.02 Additional Termination
Requirements............................................. 117
ARTICLE XI MISCELLANEOUS
PROVISIONS.............................................................
117
Section 11.01
Amendment.......................................................................
117
Section 11.02 Recordation of Agreement;
Counterparts.......................................... 118
Section 11.03 Limitation on Rights of
Certificateholders...................................... 119
Section 11.04 Governing Law;
Jurisdiction.....................................................
119
Section 11.05
Notices.........................................................................
120
Section 11.06 Severability of
Provisions......................................................
120
Section 11.07 Article and Section
References..................................................
120
Section 11.08 Notice to the Rating
Agencies................................................... 120
Section 11.09 Further
Assurances..............................................................
121
Section 11.10 Section 11.10 Benefits of
Agreement........................................... 121
Section 11.11 Acts of
Certificateholders......................................................
121
</TABLE>
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<PAGE>
EXHIBITS:
Exhibit A-1 Form of Class AV-1 Certificates
Exhibit A-2 Form of Class AF-1 Certificates
Exhibit A-3 Form of Class AF-2 Certificates
Exhibit A-4 Form of Class AF-3 Certificates
Exhibit A-5 Form of Class AF-4 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-4-1 Form of Class B-4 Certificates (144A)
Exhibit B-4-2 Form of Class B-4 Certificates (Regulation S)
Exhibit C-1-1 Form of Class R Certificate
Exhibit C-1-2 Form of Class R-X Certificates
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 Custodian's Initial Certification
Exhibit F-2 Form of Custodian'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 Forms of Investment Letters
Exhibit K Form of Residual Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M Monthly Information Provided by Servicer
Exhibit N Form of Certification to be Provided with Form
10-K
Exhibit O Form of Certification to be Provided by Trustee to
the
Servicer
Exhibit P [Reserved]
Exhibit Q Form of Power of Attorney
-i-
<PAGE>
This Pooling and Servicing Agreement is dated as of December 1,
2004 (the
"Agreement"), among MERRILL LYNCH MORTGAGE INVESTORS, INC., as
depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING AND SECURITIZATION
LLC, as seller
(the "Seller"), LITTON LOAN SERVICING LP, as servicer (the
"Servicer") and
JPMORGAN CHASE 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 sixteen
Classes of
Certificates, designated as (i) the Class AV-1, Class AF-1,
Class AF-2, Class
AF-3 and Class AF-4 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, (vi)
the Class R Certificates and the Class R-X Certificates.
As provided herein, the Trustee shall elect that the Trust Fund
(other
than the Grantor Trust) be treated for federal income tax
purposes as six
separate real estate mortgage investment conduits (each a
"REMIC" or, in the
alternative, "REMIC 1," "REMIC 2," "REMIC B-2," "REMIC B-3,"
"REMIC B-4" and
"REMIC X/N" respectively). The REMIC X/N Regular Interests
represent all of the
"regular interests" in REMIC X/N. The REMIC B-4 Regular
Interests represent all
of the "regular interests" in REMIC B-4. The REMIC B-3 Regular
Interests
represent all of the "regular interests" in REMIC B-3. The REMIC
B-2 Regular
Interests represent all of the "regular interests" in REMIC B-2.
The REMIC 2
Regular Interests represent all of the "regular interests" in
REMIC 2. The REMIC
1 Regular Interests represent all of the "regular interests" in
REMIC 1. Each
Class of Cap Carryover Certificates (other than the Class B-2,
Class B-3 and
Class B-4 Certificates) represents beneficial ownership of the
Corresponding
REMIC 2 Regular Interest and the right to receive LIBOR
Carryover Amounts. The
Class B-2 Certificates represent beneficial ownership of the
REMIC B-2 Regular
Interest and the right to receive LIBOR Carryover Amounts. The
Class B-3
Certificates represent beneficial ownership of the REMIC B-3
Regular Interest
and the right to receive LIBOR Carryover Amounts. The Class B-4
Certificates
represent beneficial ownership of the REMIC B-4 Regular Interest
and the right
to receive LIBOR Carryover Amounts. For federal income tax
purposes, the Class N
and Class X Certificates together represent beneficial ownership
of the REMIC
X/N X/N Interest subject to the obligation to pay LIBOR
Carryover Amounts. Each
of the Class R-1 and Class R-2 Interests, represented
collectively by the Class
R Certificates, represents the sole Class of "residual interest"
in REMIC 1 and
REMIC 2, respectively, for purposes of the REMIC Provisions.
Each of the Class
R-B-2, Class R-B-3, Class R-B-4 and Class R-X/N Interests,
represented
collectively by the Class R-X Certificates, represent the sole
Class of
"residual interest" in REMIC B-2, REMIC B-3, REMIC B-4 and REMIC
X/N,
respectively, for purposes of the REMIC provisions. The REMIC 1
Regular
Interests will be held as assets of REMIC 2. The REMIC 2 X/N
Interest will be
held as the sole asset of REMIC X/N. For federal income tax
purposes, the REMIC
X/N X/N Interest will be held as the asset of the Grantor Trust.
The REMIC 2 B-2
Interest will be held as the sole asset of REMIC B-2. The REMIC
2 B-3 Interest
will be held as the sole asset of REMIC B-3. The REMIC 2 B-4
Interest will be
held as the sole asset of REMIC B-4. The "latest possible
maturity date" for
federal income tax purposes of all interests created hereby will
be the
Distribution Date in December 2034.
<PAGE>
REMIC 1
The following table specifies the class designation, interest
rate, and
initial principal amount for each class of REMIC 1
Interests.
<TABLE>
<CAPTION>
Related Loan
Group or Related
Designation Interest Rate Initial Principal Amount
Certificate
-------------- ------------- ------------------------
-----------------
<S> <C> <C> <C>
LT1-AV1 (1) $ 81,434,750.000000 Class AV-1
LT1-AF1 (1) $ 14,609,250.000000 Class AF-1
LT1-AF2 (1) $ 5,836,000.000000 Class AF-2
LT1-AF3 (1) $ 4,449,500.000000 Class AF-3
LT1-AF4 (1) $ 2,766,000.000000 Class AF-4
LT1-M1 (1) $ 8,555,000.000000 Class M-1
LT1-M2 (1) $ 7,049,250.000000 Class M-2
LT1-M3 (1) $ 1,984,750.000000 Class M-3
LT1-B1 (1) $ 1,916,250.000000 Class B-1
LT1-B2 (1) $ 1,574,000.000000 Class B-2
LT1-B3 (1) $ 1,368,750.000000 Class B-3
LT1-B4 (1) $ 2,737,500.000000 Class B-4
LT1-X1 (1) $139,484,377.940000 N/A
LT1-IA (1) $ 41,483.793765 Loan Group I
LT1-IB (2) $ 204,353.293765 Loan Group I
LT1-IIA (1) $ 14,090.584175 Loan Group II
LT1-IIB (3) $ 69,412.084175 Loan Group II
LT1-X2 (1) $273,436,038.184120 N/A
R-1 (4) (4) N/A
</TABLE>
------------------
(1) For any Distribution Date, the interest rate for these
interests shall be
the Net Rate.
(2) For any Distribution Date, the interest rate for the LT1-IB
Interest shall
be a per annum rate equal to the Group I Net Rate.
(3) For any Distribution Date, the interest rate for the LT1-IIB
Interest
shall be a per annum rate equal to the Group II Net Rate
Cap.
(4) The Class R-1 Interest shall represent the sole class of
residual interest
in REMIC 1. The Class R-1 Interest will not have a principal
amount or an
interest rate. The Class R-1 Interest shall be represented by
the Class R
Certificate.
All computations with respect to any REMIC 1 Interest shall be
taken out
to ten decimal places.
REMIC 2
The sole assets of REMIC 2 shall be the REMIC 1 Regular
Interests. The
regular interests in REMIC 2 shall be the REMIC 2 Regular
Interests. The
residual interest in REMIC 2 will be the Class R-2 Interest,
which will be
represented by the Class R Certificate.
REMIC B-2
2
<PAGE>
The sole asset of REMIC B-2 shall be the REMIC 2 B-2 Interest.
The sole
regular interest in REMIC B-2 will be the REMIC B-2 B-2
Interest. The residual
interest in REMIC B-2 will be the Class R-B-2 Interest, which
will be
represented by the Class R-X Certificate.
REMIC B-3
The sole asset of REMIC B-3 shall be the REMIC 2 B-3 Interest.
The sole
regular interest in REMIC B-3 will be the REMIC B-3 B-3
Interest. The residual
interest in REMIC B-3 will be the Class R-B-3 Interest, which
will be
represented by the Class R-X Certificate.
REMIC B-4
The sole asset of REMIC B-4 shall be the REMIC 2 B-4 Interest.
The sole
regular interest in REMIC B-4 will be the REMIC B-4 B-4
Interest. The residual
interest in REMIC B-4 will be the Class R-B-4 Interest, which
will be
represented by the Class R-X Certificate.
REMIC X/N
The sole asset of REMIC X/N shall be the REMIC 2 X/N Interest.
The sole
regular interest in REMIC X/N will be the REMIC X/N X/N
Interest. The residual
interest in REMIC X/N will be the Class R- X/N Interest, which
will be
represented by the Class R-X Certificate.
The following table sets forth (or describes) the Class
designation,
Pass-Through Rate and Original Class Certificate Principal
Balance or Original
Notional Amount, for each Class of Certificates comprising the
interests in the
Trust Fund created hereunder:
<TABLE>
<CAPTION>
Original Class
Certificate
Principal Balance or Notional Pass-Through Assumed Final
Class Amount Rate Maturity Dates
--------- ----------------------------- ------------
------------------
<S> <C> <C> <C>
AV-1 $325,739,000 (1) November 25, 2035
AF-1 $ 58,437,000 (2) November 25
AF-2 $ 23,344,000 (3) November 25
AF-3 $ 17,798,000 (4) November 25
AF-4 $ 11,064,000 (5) November 25
M-1 $ 34,220,000 (6) November 25
M-2 $ 28,197,000 (7) November 25
M-3 $ 7,939,000 (8) November 25
B-1 $ 7,665,000 (9) November 25
B-2 $ 6,296,000 (10) November 25
B-3 $ 5,475,000 (11) November 25
B-4 $ 10,950,000 (12) November 25
N $ 22,000,000 (13) 8% N/A
X N/A (13) N/A N/A
R N/A N/A N/A
R -X N/A N/A N/A
Total ____________ (14)
</TABLE>
(1) Interest will accrue on the Class AV-1 Certificates during
each Interest
Accrual Period at a rate equal to the least of: (i) the Class
AV-1
Pass-Through Rate, (ii) the Group I Available Funds Cap for
such
Distribution Date and (iii) the Group I Maximum Rate Cap.
3
<PAGE>
(2) Interest will accrue on the Class AF-1 Certificates at a
rate equal to the
lesser of: (i) the Class AF-1 Pass-Through Rate and (ii) the
Group II Net
Rate Cap for such Distribution Date.
(3) Interest will accrue on the Class AF-2 Certificates at a
rate equal to the
lesser of: (i) the Class AF-2 Pass-Through Rate and (ii) the
Group II Net
Rate Cap for such Distribution Date.
(4) Interest will accrue on the Class AF-3 Certificates at a
rate equal to the
lesser of: (i) the Class AF-3 Pass-Through Rate and (ii) the
Group II Net
Rate Cap for such Distribution Date.
(5) Interest will accrue on the Class AF-4 Certificates at a
rate equal to the
lesser of (i) the Class AF-4 Pass-Through Rate and (ii) the
Group II Net
Rate Cap for such Distribution Date.
(6) Interest will accrue on the Class M-1 Certificates at a rate
equal to the
least of: (i) the Class M-1 Pass-Through Rate, (ii) the
Subordinate Rate
Cap for such Distribution Date and (iii) the Subordinate Maximum
Rate Cap.
(7) Interest will accrue on the Class M-2 Certificates at a rate
equal to the
least of: (i) the Class M-2 Pass-Through Rate, (ii) the
Subordinate Rate
Cap for such Distribution Date and (iii) the Subordinate Maximum
Rate Cap.
(8) Interest will accrue on the Class M-3 Certificates at a rate
equal to the
least of: (i) the Class M-3 Pass-Through Rate, (ii) the
Subordinate Rate
Cap for such Distribution Date and (iii) the Subordinate Maximum
Rate Cap.
(9) Interest will accrue on the Class B-1 Certificates at a rate
equal to the
least of: (i) the Class B-1 Pass-Through Rate, (ii) the
Subordinate Rate
Cap for such Distribution Date and (iii) the Subordinate Maximum
Rate Cap.
(10) Interest will accrue on the Class B-2 Certificates at a
rate equal to the
least of: (i) the Class B-2 Pass-Through Rate, (ii) the
Subordinate Rate
Cap for such Distribution Date and (iii) the Subordinate Maximum
Rate Cap.
(11) Interest will accrue on the Class B-3 Certificates at a
rate equal to the
least of: (i) the Class B-3 Pass-Through Rate, (ii) the
Subordinate Rate
Cap for such Distribution Date and (iii) the Subordinate Maximum
Rate Cap.
(12) Interest will accrue on the Class B-4 Certificates at a
rate equal to the
least of: (i) the Class B-4 Pass-Through Rate, (ii) the
Subordinate Rate
Cap for such Distribution Date and (iii) the Subordinate Maximum
Rate Cap.
(13) The Class N and Class X Certificates, collectively,
represent the
beneficial ownership of the REMIC X/N X/N Interest, subject to
the
obligation to make payments in respect of LIBOR Carryover
Amounts.
(14) Exclusive of the Class N Notional Amount. The Class N
Original Notional
Amount is $22,000,000.
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 M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class
B-3 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 AF-2, Class AF-3, Class AF-4, Class B-4, Class N and
Class X
Certificates and the REMIC 1 Regular Interests and the REMIC 2
X/N Interest 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.
4
<PAGE>
"60+ Day Delinquent Loan": With respect to any date of
determination, 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 and the
Escrow 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 for such Class in the table in the
Preliminary
Statement during the related Interest Accrual Period on the
Certificate
Principal Balance or Notional Amount of such Class of
Certificates, reduced by
such Class's Interest Percentage of Relief Act Interest
Shortfalls for such
Distribution Date.
"Adjustment Date": With respect to each Group I Mortgage Loan,
each
adjustment date, on which the Mortgage Interest Rate of a Group
I Mortgage Loan
changes pursuant to the related Mortgage Note. The first
Adjustment Date
following the Cut-off Date as to each Group I Mortgage Loan is
set forth in the
Mortgage Loan Schedule for the Group I Mortgage Loans.
"Adjustment Period": As defined in the Preliminary
Statement.
"Advance": As to any 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 3.30(a) hereof.
"Advance Facility Notice": As defined in Section 3.30(b)
hereof.
"Advance Financing Person": As defined in Section 3.30(a)
hereof.
"Advance Reimbursement Amounts": As defined in Section 3.30(b)
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.
"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 and with respect to each VA Loan, the VA Regulations
and the related VA
Guaranty.
"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.
5
<PAGE>
"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 Subsequent 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 AV-1, Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class
B-4 Certificates
shall be Book-Entry Certificates.
"Book-Entry Regulation S Global Securities": As defined in
Section 5.01.
"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 I Available Funds Cap, the Group II Net
Rate Cap,
the Group I Maximum Rate Cap, the Subordinate Rate Cap or the
Subordinate
Maximum Rate Cap.
"Cap Carryover Certificates": The Class AV-1, Class M-1, Class
M-2, Class
M-3, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates.
6
<PAGE>
"Certificate": Any Regular Certificate or Residual
Certificate.
"Certificate Custodian": Initially, JPMorgan Chase 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 X, Class N 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.
Notwithstanding the foregoing on any Distribution Date relating
to a Collection
Period in which a Subsequent Recovery has been received by the
Servicer, the
Certificate Principal Balance of any Class of Certificates then
outstanding for
which any Applied Realized Loss Amount has been allocated will
be increased, in
order of seniority, by an amount equal to the lesser of (i) the
Unpaid Realized
Loss Amount for such Class of Certificates and (ii) the amount
of any Subsequent
Recovery allocable to principal distributed on such date to
the
Certificateholders (reduced by the amount of the increase in the
Certificate
Principal Balance of any more senior Class of Certificates
pursuant to this
sentence on such Distribution Date).
"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, 3.633% per annum and
(ii) following the
Optional Termination Date, 4.133% per annum, subject in each
case to a cap equal
to the Group II Net Rate Cap.
"Class AF-2 Pass-Through Rate": For each Distribution Date (i)
on or prior
to the Optional Termination Date, 4.134% per annum, and (ii)
following the
Optional Termination Date, 4.634% per annum, subject in either
case to a cap
equal to the Group II Net Rate Cap.
"Class AF-3 Pass-Through Rate": For each Distribution Date (i)
on or prior
to the Optional Termination Date, 5.090% per annum, and (ii)
following the
Optional Termination Date, 5.590% per annum, subject in either
case to a cap
equal to the Group II Net Rate Cap.
"Class AF-4 Lockout Distribution Amount": For any Distribution
Date, the
product of (x) the Class AF-4 Lockout Distribution Percentage
and (y) the Class
AF-4 Pro Rata Distribution Amount. In no event shall the Class
AF-4 Lockout
Distribution Amount for a Distribution Date exceed the Group
II
7
<PAGE>
Principal Distribution Amount for such Distribution Date or the
Certificate
Principal Balance of the Class AF-4 Certificates immediately
prior to such
Distribution Date.
"Class AF-4 Lockout Percentage" means, for a Distribution Date
in any
period listed in the table below, the applicable percentage
listed opposite such
period:
<TABLE>
<CAPTION>
Distribution Dates Lockout Percentage
------------------------------------------------
------------------
<S> <C>
January 2005 through and including December 2007 0%
January 2008 through and including December 2009 45%
January 2010 through and including December 2010 80%
January 2011 through and including December 2011 100%
January 2012 and thereafter 300%
</TABLE>
"Class AF-4 Pass-Through Rate": For each Distribution Date, (i)
on or
prior to the Optional Termination Date, 4.658% per annum, and
(ii) following the
Optional Termination Date, 5.158% per annum, subject in each
case to a cap equal
to the Group II Net Rate Cap.
"Class AF-4 Pro Rata Distribution Amount" means, for any
Distribution
Date, an amount equal to the product of (x) a fraction, the
numerator of which
is the Certificate Principal Balance of the Class AF-4
Certificates immediately
prior to such Distribution Date and the denominator of which is
the aggregate
Certificate Principal Balance of the Class AF-1, Class AF-2,
Class AF-3 and
Class AF-4 Certificates immediately prior to that Distribution
Date and (y) the
Group II Principal Distribution Amount for that Distribution
Date.
"Class AV-1 Certificate Margin": For each Distribution Date (i)
on or
prior to the Optional Termination Date, 0.26% per annum, and
(ii) following the
Optional Termination Date, 0.52% per annum.
"Class AV-1 Pass-Through Rate": For each Distribution Date, the
least of
(i) LIBOR as of the related LIBOR Determination Date, plus the
Class AV-1
Certificate Margin, (ii) the Group I Available Funds Cap and
(iii) the Group I
Maximum Rate Cap.
"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, A-4 and A-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 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.
8
<PAGE>
"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) 59.40%
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 Certificate": Any one of the Certificates with a "B"
designated
on the face thereof substantially in the form annexed hereto as
Exhibits B-1,
B-2, B-3 and 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, in each case as of such Distribution
Date.
"Class B-1 Certificate Margin": For each Distribution Date (i)
on or prior
to the Optional Termination Date, 1.500% per annum, and (ii)
following the
Optional Termination Date, 2.250% per annum.
"Class B-1 Pass-Through Rate": For each Distribution Date, the
least of
(i) LIBOR as of the related LIBOR Determination Date, plus the
Class B-1
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the
Subordinate
Maximum Rate Cap.
"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)
87.90% 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.
9
<PAGE>
"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, in each
case as of such
Distribution Date.
"Class B-2 Certificate Margin": For each Distribution Date (i)
on or prior
to the Optional Termination Date, 1.750% per annum, and (ii)
following the
Optional Termination Date, 2.625% per annum.
"Class B-2 Pass-Through Rate": For each Distribution Date, the
least of
(i) LIBOR as of the related LIBOR Determination Date, plus the
Class B-2
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the
Subordinate
Maximum Rate Cap.
"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) 90.20% 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, 2.750% per annum, and (ii)
following the
Optional Termination Date, 4.125% per annum.
10
<PAGE>
"Class B-3 Pass-Through Rate": For each Distribution Date, the
least of
(i) LIBOR as of the related LIBOR Determination Date, plus the
Class B-3
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the
Subordinate
Maximum Rate Cap.
"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) 92.20% 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 Pass-Through Rate": For each Distribution Date, the
least of
(i) (x) on or prior to the Optional Termination Date, 6.000% per
annum, and (y)
following the Optional Termination Date, 6.500% per annum, (ii)
the Subordinate
Rate Cap and (iii) the Subordinate Maximum Rate Cap.
"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
11
<PAGE>
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)
96.20% 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, 0.530% per annum, and (ii)
following the
Optional Termination Date, 0.795% per annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, the
least of
(i) LIBOR as of the related LIBOR Determination Date, plus the
Class M-1
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the
Subordinate
Maximum Rate Cap.
"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)
71.90% 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.
12
<PAGE>
"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, 0.880% per annum, and (ii)
following the
Optional Termination Date, 1.320% per annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, the
least of
(i) LIBOR as of the related LIBOR Determination Date, plus the
Class M-2
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the
Subordinate
Maximum Rate Cap.
"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 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) 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) 82.20% 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, 1.000% per annum, and (ii)
following the
Optional Termination Date, 1.500% per annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, the
least of
(i) LIBOR as of the related LIBOR Determination Date, plus the
Class M-3
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the
Subordinate
Maximum Rate Cap.
13
<PAGE>
"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 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), 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) 85.10% 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-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 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-1-1 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 Excess Interest Amount": For any Distribution Date,
0.05% of the
Monthly Excess Interest Amount for such Distribution Date.
"Class R Excess Interest Carryforward Amount": For any
Distribution Date,
the excess of the Class R Excess Interest Amount for all prior
Distribution
Dates over all amounts previously distributed to the Class R
Certificates in
respect of Class R Excess Interest Amounts or Class R Excess
Interest
Carryforward Amounts.
"Class R-1 Interest": The uncertificated residual interest in
REMIC 1.
"Class R-2 Interest": The uncertificated residual interest in
REMIC 2.
"Class R-B-2 Interest": The uncertificated residual interest in
REMIC B-2.
"Class R-B-3 Interest": The uncertificated residual interest in
REMIC B-3.
"Class R-B-4 Interest": The uncertificated residual interest in
REMIC B-4.
"Class R-X/N Interest": The uncertificated residual interest in
REMIC X/N.
14
<PAGE>
"Class R-X Certificate": The Class R-X 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 B-2, REMIC
B-3, REMIC B-4 and REMIC X/N. The Class R-X Certificate
represents the ownership
of the Class R-B-2 Interest, Class R-B-3 Interest, Class R-B-4
Interest and
Class R-X/N 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-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 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, for federal income tax purposes, ownership of the
REMIC X/N X/N
Interest, and which is entitled to all distributions in respect
of the REMIC X/N
X/N Interest less the amount of any LIBOR Carryover Amounts paid
pursuant to
Section 4.02(b)(xxvii) or (xxviii).
"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": January 7, 2005.
"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 December 1, 2004 among
Merrill Lynch
Mortgage Investors, Inc., as Depositor, Credit-Based Asset
Servicing and
Securitization LLC, as Seller, Litton Loan Servicing LP, as
Servicer, and
JPMorgan Chase Bank, National Association, as Trustee, in trust
for registered
Holders of 2004-CB8 Trust, C-BASS Mortgage Loan Asset-Backed
Certificates,
Series 2004-CB8," 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 the Cut-off Date plus the
principal balance
of any related senior mortgage loan, 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 or
VA Loan.
"Corporate Trust Office": With respect to the Trustee, (i) the
principal
corporate trust office of the Trustee at which at any particular
time its
corporate trust business in connection with this Agreement
15
<PAGE>
shall be administered, which office at the date of the execution
of this
instrument is located at 4 New York Plaza, New York, New York
10004-2477,
Attention: Institutional Trust Services/Global Debt, C-BASS
2004-CB8 and (ii)
for purposes of Certificate transfers, is located at 2001 Bryan
Street, 8th
Floor, Dallas, Texas 75201, Attention: Institutional Trust
Services-C-BASS
2004-CB8, or at such other addresses as the Trustee may
designate from time to
time by notice to the Certificateholders, the Depositor, the
Servicer and the
Seller.
"Corresponding Cap Carryover Certificate" and "Corresponding
REMIC 2
Regular Interest": For any REMIC 2 Regular Interest set forth
below, the
corresponding Cap Carryover Certificate set forth below, and for
any Cap
Carryover Certificate set forth below, the corresponding REMIC 2
Regular
Interest set forth below:
<TABLE>
<CAPTION>
Corresponding Cap Carryover Certificate Corresponding REMIC 2
Regular Interest
-------------------------------------------------
---------------------------------------------
<S> <C>
Class AV-1 Certificate REMIC 2 AV-1 Interest
Class M-1 Certificate REMIC 2 M-1 Interest
Class M-2 Certificate REMIC 2 M-2 Interest
Class M-3 Certificate REMIC 2 M-3 Interest
Class B-1 Certificate REMIC 2 B-1 Interest
Class B-2 Certificate REMIC 2 B-2 Interest
Class B-3 Certificate REMIC 2 B-3 Interest
Class B-4 Certificate REMIC 2 B-4 Interest
</TABLE>
"Custodial Agreement": The Custodial Agreement, dated as of
December 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": December 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.
16
<PAGE>
"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": Merrill Lynch Mortgage Investors, Inc., 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 Securities
Exchange Act of
1934, as amended. The Depository shall initially be the
registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a
"clearing
corporation" as defined in Section 8-102(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
17
<PAGE>
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, JPMorgan Chase Bank, National
Association, as Trustee, in
trust for the registered Holders of 2004-CB8 Trust, C-BASS
Mortgage Loan
Asset-Backed Certificates, Series 2004-CB8" and which must be an
Eligible
Account.
"Distribution Date": The 25th day of any calendar month, or if
such 25th
day is not a Business Day, the Business Day immediately
following such 25th day,
commencing in January 2005.
"DBRS": Dominion Bond Rating Service and its successors and if
such
company shall for any reason no longer perform the functions of
a securities
rating agency, "DBRS" shall be deemed to refer to any other
"nationally
recognized statistical rating organization" as set forth on the
most current
list of such organizations released by the Securities and
Exchange Commission.
"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 - 2" (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 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 Group II 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 a Group I Mortgage Loan, have a Maximum Loan Rate not less
than the Maximum
Loan Rate for the Defective
18
<PAGE>
Mortgage Loan, (iv) if a Group I Mortgage Loan, have a Minimum
Loan Rate not
less than the Minimum Loan Rate of the Defective Mortgage Loan,
(v) if a Group I
Mortgage Loan, have a Gross Margin equal to or greater than the
Gross Margin of
the Defective Mortgage Loan, (vi) if a Group I Mortgage Loan,
have the same
Index as the Defective Mortgage Loan, (vii) if a Group I
Mortgage Loan, have a
next Adjustment Date not more than two months later than the
next Adjustment
Date on the Defective Mortgage Loan, (viii) have a remaining
term to maturity
not greater than (and not more than one year less than) that of
the Defective
Mortgage Loan, (ix) be current as of the date of substitution,
(x) have a
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, (xi) have a risk grading determined by the Seller at least
equal to the
risk grading assigned on the Defective Mortgage Loan, (xii) have
been
reunderwritten by the Seller in accordance with the same
underwriting criteria
and guidelines as the Defective Mortgage Loan, (xiii) have the
same Due Date as
the Defective Mortgage Loan and (xiv) conform to each
representation and
warranty set forth in Section 2.04 hereof applicable to the
Defective Mortgage
Loan. In the event that one or more mortgage loans are
substituted for one or
more Defective Mortgage Loans, the amounts described in clause
(i) hereof shall
be determined on the basis of aggregate principal 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 (xi) hereof shall be satisfied as to each such mortgage
loan, the terms
described in clause (viii) hereof shall be determined on the
basis of weighted
average remaining term to maturity, the Combined Loan-to-Value
Ratios described
in clause (x) hereof shall be satisfied as to each such mortgage
loan and,
except to the extent otherwise provided in this sentence, the
representations
and warranties described in clause (xiv) hereof must be
satisfied as to each
Eligible Substitute Mortgage Loan or in the aggregate, as the
case may be.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA-Qualifying Underwriting": A best efforts or firm
commitment
underwriting or private placement that would satisfy the
requirements of
Prohibited Transaction Exemption 90-25, 55 Fed. Reg. 21459
(1990), as amended,
granted to the Underwriter by the United States Department of
Labor (or any
other applicable underwriter's exemption granted by the United
States Department
of Labor), except, in relevant part, for the requirement that
the certificates
have received a rating at the time of acquisition that is in one
of the three
(or four, in the case of a "designated transaction") highest
generic rating
categories by at least one of the Rating Agencies.
"ERISA-Restricted Certificate": 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-X and Class R
Certificates and any other Certificate, unless the acquisition
and holding of
such other Certificate is covered by and exempt under Prohibited
Transaction
Exemption 90-25, 55 Fed. Reg. 21459 (1990), as amended, granted
to the
Underwriter by the United States Department of Labor (or any
other applicable
underwriter's exemption granted by the United States Department
of Labor).
"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.
"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).
19
<PAGE>
"Extra Principal Distribution Amount": As of any Distribution
Date, the
lesser of (x) 99.95% of 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 Mortgage Loans which are
secured by
a first mortgage lien that is senior to a Second Lien Mortgage
Loan 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.
"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 Fund exclusive of
REMIC 1,
REMIC 2, REMIC B-2, REMIC B-3, REMIC B-4 and REMIC X/N which
holds (a) the REMIC
X/N X/N Interest and (b) the obligation to pay LIBOR Carryover
Amounts.
"Gross Margin": With respect to each Group I 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.
20
<PAGE>
"Group I Available Funds Cap": With respect to any Distribution
Date, a
per annum rate (subject to adjustment based on the actual number
of days elapsed
in the related Interest Accrual Period) equal to 12 times the
quotient of (x)
the total scheduled interest on the Group I Mortgage Loans for
the related
Interest Accrual Period at the Net Mortgage Interest Rates and
(y) the aggregate
Principal Balance of the Group I Mortgage Loans (as of the first
day of the
related Collection Period).
"Group I Group Subordinate Amount": For any Distribution Date,
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 aggregate
Certificate
Principal Balance of the Class AV-1 Certificates as of such
Distribution Date
(before distributions in respect of principal on 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 Subsequent
Recovery allocable
to interest related to the Group I Mortgage Loans received
during the related
Prepayment Period.
"Group I Maximum Rate Cap": With respect to any Distribution
Date, a per
annum rate (subject to adjustment based on the actual number of
days elapsed in
the related Interest Accrual Period) equal to the 12 times the
quotient of (x)
the total scheduled interest that would have accrued on the
Group I Mortgage
Loans at their maximum lifetime Net Mortgage Interest Rates and
(y) the
aggregate Principal Balance of the Group I Mortgage Loans (as of
the first day
of the related Collection Period).
"Group I Mortgage Loan": A Mortgage Loan in Loan Group I.
"Group I Net Rate": With respect to any Distribution Date, a per
annum
rate equal to 12 times the quotient of (x) the total scheduled
interest on the
Group I Mortgage Loans for the related Interest Accrual Period
at their Net
Mortgage Interest Rates and (y) the aggregate Principal Balance
of the Group I
Mortgage Loans (as of the first day of the related Collection
Period).
"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 during
the related
Collection Period 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.
21
<PAGE>
"Group II Group Subordinate Amount": For any Distribution Date,
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 AF-1, Class AF-2, Class AF-3 and
Class AF-4
Certificates as of such Distribution Date (before distributions
in respect of
principal on such Distribution Date).
"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 Subsequent
Recovery related to
the Group II Mortgage Loans related to interest received during
the related
Prepayment Period.
"Group II Mortgage Loan": A Mortgage Loan in Loan Group II.
"Group II Net Rate": With respect to any Distribution Date, a
per annum
rate equal to 12 times the quotient of (x) the total scheduled
interest on the
Group II Mortgage Loans for the related Interest Accrual Period
at their Net
Mortgage Interest Rates and (y) the aggregate Principal Balance
of the Group II
Mortgage Loans (as of the first day of the related Collection
Period).
"Group II Net Rate Cap": With respect to any Distribution Date,
a per
annum rate equal to 12 times the quotient of (x) the total
scheduled interest on
the Group II Mortgage Loans for the related Interest Accrual
Period at their Net
Mortgage Interest Rates and (y) the aggregate Principal Balance
of the Group II
Mortgage Loans (as of the first day of the related Collection
Period).
"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
during the related
Collection Period and the denominator of which is equal to the
Principal
Remittance Amount for such Distribution Date.
"Group II Principal Distribution Amount": As of any Distribution
Date, the
product of the Group II Principal Allocation Percentage and the
Class A
Principal Distribution Amount.
"Group Subordinate Amount": In the case of Loan Group I, the
Group I Group
Subordinate Amount, and, in the case of Loan Group II, the Group
II Group
Subordinate Amount.
"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.
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"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 Regulation 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 Group I 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 Notional Amount": With respect to any Class N
Certificate, the
amount designated "Initial Notional Amount" on the face
thereof.
"Initial Overcollateralization Amount": $10,406,755.88.
"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 M-1, Class M-2, Class M-3,
Class B-1,
Class B-2 and Class B-3 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 January
24, 2005), and (ii) with respect to the Class AF-1, Class AF-2,
Class AF-3,
Class AF-4, Class B-4, Class N and Class X Certificates, the
REMIC 1 Regular
Interests and the REMIC 2 X/N Interest, the calendar month
immediately preceding
the month in which such Distribution Date occurs.
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"Interest Carry Forward Amount": For any Class of Certificates
(other than
the 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, Class
AF-2, Class AF-3, Class AF-4, Class B-4, Class N and Class X
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, Class
AF-2, Class AF-3, Class AF-4, Class B-4, Class N and Class X
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
ten 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 law.
"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 3.30(a) hereof.
"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 M-1,
Class M-2, Class
M-3, Class B-1, Class B-2 and Class B-3 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
Servicer, 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 M-1, Class M-2, Class M-3, Class B-1, Class B-2 and
Class B-3
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.
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"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 Certificates is
based upon the Group
I Available Funds 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
Subordinate Rate
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 (up to but not exceeding the Group I Maximum Rate Cap in
the case of the
Class AV-1 Certificates and up to but not exceeding the
Subordinate Maximum Rate
Cap in the case of the Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2,
Class B-3 and Class B-4 Certificates), over (ii) the amount of
interest such
Certificate was entitled to receive 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, Class AF-2, Class AF-3 and Class
AF-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 Loan Group I or Loan Group II, as the
context
requires.
"Loan Group Balance": Either 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.
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<PAGE>
"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 Interest": Each of the LT1-AV1 Interest, the LT1-AF1
Interest, the
LT1-AF2 Interest, the LT1-AF3 Interest, the LT1-AF4 Interest,
the LT1-M1
Interest, the LT1-M2 Interest, the LT1-M3 Interest, the LT1-B1
Interest, the
LT1-B2 Interest, the LT1-B3 Interest and the LT1-B4
Interest.
"Maximum Loan Rate": With respect to each Group I Mortgage Loan,
the
percentage set forth in the related Mortgage Note as the maximum
Mortgage
Interest Rate thereunder.
"Minimum Loan Rate": With respect to each Group I Mortgage Loan,
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 or second lien on, or first or second priority security
interest in, a
Mortgaged Property securing a Mortgage Note.
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<PAGE>
"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 Group I 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 Schedule 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 and (ii) in the case of each Group II Mortgage
Loan shall remain
constant at the rate set forth in the Mortgage Loan Schedule as
the Mortgage
Interest Rate in effect immediately following the Cut-off Date.
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 and D-2
attached hereto.
"Mortgage Loan Purchase Agreement": The agreement between the
Seller and
the Depositor, dated as of January 7, 2005, regarding the
transfer of the
Mortgage Loans by the Seller to or at the direction of the
Depositor attached
hereto as Exhibit G.
"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;
27
<PAGE>
(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 Mortgaged Property is in
bankruptcy or
in its forbearance period as of the Cut-off Date;
(18) a code indicating whether the Mortgage Loan is
conventional, insured
by the FHA or guaranteed by the VA;
(19) a code indicating the Index that is associated with such
Mortgage
Loan;
(20) the Gross Margin;
(21) the Periodic Rate Cap;
(22) the Minimum Loan Rate;
(23) the Maximum Loan Rate;
(24) a code indicating whether the Mortgage Loan has a
prepayment penalty
and the type of prepayment penalty;
(25) the first Adjustment Date immediately following the Cut-off
Date;
(26) the rate adjustment frequency;
(27) the payment adjustment frequency;
(28) a code indicating whether the Mortgage Loan is
owner-financed; and
(29) a code indicating whether the Mortgage Loan is a Second
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
28
<PAGE>
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.
"Net Rate": With respect to any Distribution Date, a per annum
rate equal
to 12 times the quotient of (x) the excess of the total
scheduled interest on
the Mortgage Loans for the related Interest Accrual Period at
their Net Mortgage
Rates over the Insurer Fee for such Distribution Date and (y)
the aggregate
Principal Balance of the Mortgage Loans (as of the first day of
the related
Collection Period).
"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 in respect of the
Class N
Notional Amount pursuant to Section 4.02(b)(xxix) or Section
4.02(c).
"Offered Certificates": The Class AV-1, Class AF-1, Class AF-2,
Class
AF-3, Class AF-4, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and
Class B-3 Certificates.
"Officer's Certificate": A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President or a vice
president
(however denominated), or by the Treasurer, the Secretary, or
one of the
assistant treasurers or assistant secretaries of the Servicer,
the Seller or the
Depositor, as applicable.
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<PAGE>
"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.
"Original Notional Amount": The Original Class N Notional
Amount.
"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 on or 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 AV-1 Pass-Through Rate,
the Class
AF-1 Pass-Through Rate, the Class AF-2 Pass-Through Rate, the
Class AF-3
Pass-Through Rate, the Class AF-4 Pass-Through Rate, the Class
M-1 Pass-Through
Rate, the Class M-2 Pass-Through Rate, the Class M-3
Pass-Through Rate, 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 8.00% per annum.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
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"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 Notional
Amount evidenced by such Certificate by the Original Class N
Notional Amount, as
the case may be, 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 Group I 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;
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(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 (i) 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 and (ii) each
such investment must be a "permitted investment" within the
meaning of Section
860G(a)(5) of the Code.
"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.
"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
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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, Condemnation
Proceeds and
Subsequent 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.
"Proportionate Holder": A Person that beneficially owns pro rata
shares of
the Class N and Class X Certificates.
"Prospectus Supplement": That certain Prospectus Supplement
dated January
4, 2005 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 Officer's 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
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<PAGE>
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, (x) any costs
and damages
incurred by the Trust in connection with any violation by such
Mortgage Loan of
any predatory and abusive lending law and (y) 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, S&P and
DBRS, or their
respective successors. If such agencies or their successors are
no longer in
existence, "Rating Agencies" shall be such nationally recognized
statistical
rating organizations as set forth on the most current list of
such organizations
released by the 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 AF-2, Class AF-3, Class AF-4, Class B-4, Class
N, Class X,
Class R and Class R-X 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
AF-2, Class
AF-3, Class AF-4, Class B-4, Class N, Class X, Class R and Class
R-X
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.
"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.
"Regulation S": Regulation S promulgated under the Securities
Act or any
successor provision thereto, in each case as the same may be
amended from time
to time; and all references to any rule, section or subsection
of, or definition
or term contained in, Regulation S means such rule, section,
subsection,
definition or term, as the case may be, or any successor
thereto, in each case
as the same may be amended from time to time.
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<PAGE>
"Regulation S Global Securities": The Book-Entry Regulation S
Global
Securities and the Definitive Regulation S Global
Securities.
"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 Provisions": Provisions of the federal income tax law
relating to
real estate mortgage investment conduits which appear at Section
860A through
860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and
regulations and rulings promulgated thereunder, as the foregoing
may be in
effect from time to time.
"REMIC Regular Interest": Any REMIC 1 Regular Interest, REMIC 2
Regular
Interest, REMIC B-2 Regular Interest, REMIC B-3 Regular
Interest, REMIC B-4
Regular Interest or REMIC X/N Regular Interest.
"REMIC 1": As defined in the Preliminary Statement.
"REMIC 1 Interest": Each interest in REMIC 1 as described in
the
Preliminary Statement.
"REMIC 1 Regular Interest": Each REMIC 1 Interest other than the
Class R-1
Interest.
"REMIC 1 Subordinated Balance Ratio": The ratio among the
principal
balances of the Class LT1-IA Interest and the Class LT1-IIA
Interest that is
equal to the ratio among, with respect to each such REMIC 1
Regular Interest,
the Group Subordinate Amount for the related Loan Group.
"REMIC 2": As defined in the Preliminary Statement.
"REMIC 2 Interest": Each of the REMIC 2 Regular Interests and
the Class
R-2 Interest.
"REMIC 2 Regular Interest": Each of the Class AF-1 Certificates,
the Class
AF-2 Certificates, the Class AF-3 Certificates, the Class AF-4
Certificates, the
REMIC 2 AV-1 Interest, the REMIC 2 M-1 Interest, the REMIC 2 M-2
Interest, the
REMIC 2 M-3 Interest, the REMIC 2 B-1 Interest, the REMIC 2 B-2
Interest, the
REMIC 2 B-3 Interest, the REMIC 2 B-4 Interest and the REMIC 2
X/N Interest.
"REMIC 2 AV-1 Interest": An uncertificated "regular interest" in
REMIC 2
represented by the Class AV-1 Certificates having the same
rights to payments as
the Class AV-1 Certificates other than the right to any payments
in respect of
LIBOR Carryover Amounts.
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<PAGE>
"REMIC 2 M-1 Interest": An uncertificated "regular interest" in
REMIC 2
represented by the Class M-1 Certificates having the same rights
to payments as
the Class M-1 Certificates other than the right to any payments
in respect of
LIBOR Carryover Amounts.
"REMIC 2 M-2 Interest": An uncertificated "regular interest" in
REMIC 2
represented by the Class M-2 Certificates having the same rights
to payments as
the Class M-2 Certificates other than the right to any payments
in respect of
LIBOR Carryover Amounts.
"REMIC 2 M-3 Interest": An uncertificated "regular interest" in
REMIC 2
represented by the Class M-3 Certificates having the same rights
to payments as
the Class M-3 Certificates other than the right to any payments
in respect of
LIBOR Carryover Amounts.
"REMIC 2 B-1 Interest": An uncertificated "regular interest" in
REMIC 2
represented by the Class B-1 Certificates having the same rights
to payments as
the Class B-1 Certificates other than the right to any payments
in respect of
LIBOR Carryover Amounts.
"REMIC 2 B-2 Interest": An uncertificated "regular interest" in
REMIC 2
held by REMIC B-2 having the same rights to payments as the
Class B-2
Certificates other than the right to any payments in respect of
LIBOR Carryover
Amounts.
"REMIC 2 B-3 Interest": An uncertificated "regular interest" in
REMIC 2
held by REMIC B-3 having the same rights to payments as the
Class B-3
Certificates other than the right to any payments in respect of
LIBOR Carryover
Amounts.
"REMIC 2 B-4 Interest": An uncertificated "regular interest" in
REMIC 2
held by REMIC B-4 having the same rights to payments as the
Class B-4
Certificates other than the right to any payments in respect of
LIBOR Carryover
Amounts.
"REMIC 2 X/N Interest": An uncertificated "regular interest" in
REMIC 2
held by REMIC X/N having an initial principal balance of
$10,406,755.88 and
bearing interest at the REMIC 2 X/N Interest Distributable
Interest Rate on a
notional balance equal to 99.95% of the aggregate of the
Principal Balance of
the Mortgage Loans outstanding as of the beginning of the
related Interest
Accrual Period. The REMIC 2 X/N Interest shall be entitled to
all prepayment
penalties (including amounts deposited in connection with the
full or partial
waiver of such prepayment penalties pursuant to Section
3.01).
"REMIC 2 X/N Interest Current Interest": As of any Distribution
Date, the
interest accrued during the related Interest Accrual Period at
the REMIC 2 X/N
Interest Distributable Interest Rate on a notional amount equal
to 99.95% of the
aggregate of the Principal Balance of the Mortgage Loans
outstanding as of the
beginning of such Interest Accrual Period (such amount of
interest representing
a "specified portion" (within the meaning of Treasury
Regulations Section
1.860G-1(a)(2)(i)(C)) of interest payments on the REMIC 1
Regular Interests
(other than the LT1-IB Interest and the LT1-IIB Interest)).
"REMIC 2 X/N Interest Distributable Interest Rate": The excess,
if any, of
(a) the weighted average of the interest rates on the REMIC 1
Regular Interests
over (b) two times the weighted average of the interest rates on
the Marker
Interests and the LT1-X1 Interest (treating for purposes of this
clause (b) the
interest rate on each of the Marker Interests as being subject
to a cap and a
floor equal to the Pass-Through Rate (as adjusted to reflect a
30-day accrual
period) of the Related Certificate of such Marker Interest (as
described in the
Preliminary Statement) and treating the LT1-X1 Interest as being
capped at
zero). The averages described in the preceding sentence shall be
weighted on the
basis of the respective principal balances of the relevant REMIC
1 Regular
Interests immediately prior to any date of determination.
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<PAGE>
"REMIC B-2": As defined in the Preliminary Statement.
"REMIC B-2 Interest": Each of the REMIC B-2 Regular Interests
and the
Class R-B-2 Interest.
"REMIC B-2 Regular Interest": The REMIC B-2 B-2 Interest.
"REMIC B-2 B-2 Interest": An uncertificated "regular interest"
in REMIC
B-2 represented by the Class B-2 Certificates having the same
rights to payments
as the Class B-2 Certificates other than the right to any
payments in respect of
LIBOR Carryover Amounts.
"REMIC B-3": As defined in the Preliminary Statement.
"REMIC B-3 Interest": Each of the REMIC B-3 Regular Interests
and the
Class R-B-3 Interest.
"REMIC B-3 Regular Interest": The REMIC B-3 B-3 Interest.
"REMIC B-3 B-3 Interest": An uncertificated "regular interest"
in REMIC
B-3 represented by the Class B-3 Certificates having the same
rights to payments
as the Class B-3 Certificates other than the right to any
payments in respect of
LIBOR Carryover Amounts.
"REMIC B-4": As defined in the Preliminary Statement.
"REMIC B-4 Interest": Each of the REMIC B-4 Regular Interests
and the
Class R-B-4 Interest.
"REMIC B-4 Regular Interest": The REMIC B-4 B-4 Interest.
"REMIC B-4 B-4 Interest": An uncertificated "regular interest"
in REMIC
B-4 having the same rights to payments as the Class B-4
Certificates other than
the right to any payments in respect of LIBOR Carryover
Amounts.
"REMIC X/N": As defined in the Preliminary Statement.
"REMIC X/N Interest": Each of the REMIC X/N Regular Interests
and the
Class R-X/N Interest.
"REMIC X/N Regular Interest": The REMIC X/N X/N Interest.
"REMIC X/N X/N Interest": An uncertificated "regular interest"
in REMIC
X/N held by the Trustee on behalf of the holders of the Class X
and Class N
Certificates and entitled to all payments in respect of the
REMIC 2 X/N
Interest.
"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 M.
"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
37
<PAGE>
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.
"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 Certificates and the Class
R-X
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 Mortgage Loans which are
secured
by a second mortgage lien that is junior to a First Lien
Mortgage Loan 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 AV-1, Class AF-1, Class AF-2,
Class AF-3
and Class AF-4 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, 40.60%.
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<PAGE>
"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 3.30(b) 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 to the extent such costs or expenses
constitute
"unanticipated expenses" within the meaning of Treasury
Regulations
1.860G-1(b)(3)(ii), 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 may 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.
"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.
39
<PAGE>
"SPV": As defined in Section 3.30(a) hereof.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms
of the
Certificates and this Agreement but which is not remitted by the
Servicer
because the Servicer is the subject of a proceeding under the
Bankruptcy Code
and the making of such remittance is prohibited by Section 362
of the Bankruptcy
Code.
"Stepdown Date": The later to occur of (x) the earlier to occur
of (A) the
Distribution Date in January 2008 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.
"Subordinate Maximum Rate Cap": For any Distribution Date will
be a per
annum rate equal to the weighted average of the Group I Maximum
Rate Cap and the
Group II Net Rate Cap (as adjusted to reflect the actual number
of days in the
related Interest Accrual Period) weighted on the basis of the
Group I Group
Subordinate Amount and the Group II Group Subordinate Amount,
respectively.
"Subordinate Rate Cap": With respect to any Distribution Date, a
per annum
rate equal to the weighted average of the Group I Available
Funds Cap and the
Group II Net Rate Cap (as adjusted to reflect the actual number
of days in the
related Interest Accrual Period), weighted on the basis of the
Group I Group
Subordinate Amount and the Group II Group Subordinate Amount,
respectively.
"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-X
Certificates.
"Subsequent Overcollateralization Amount": As of any
Distribution Date,
after the application of principal payments and Applied Realized
Loss Amounts,
an amount equal to the excess, if any of (a) the Pool Balance
over (b) the sum
of (i) the Certificate Principal Balance of each Class of
Offered Certificates
and the Class B-4 Certificates and (ii) the remaining
Initial
Overcollateralization Amount.
"Subsequent Recovery": Any amount received on a Mortgage Loan
subsequent
to such Mortgage Loan being determined to be a Liquidated
Mortgage Loan.
"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, 1.90% 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) 1.90% of the Pool Balance on the Cut-off Date and
(b) the greater
of (A) 3.80% 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. Notwithstanding the
foregoing, on and
after any Distribution Date following the reduction of the
Aggregate Certificate
Principal Balance of the Offered Certificates and the Class B-4
Certificates
to zero, the Targeted Overcollateralization Amount shall be
zero.
"Tax Matters Person": The tax matters person appointed pursuant
to Section
9.01(e) hereof.
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<PAGE>
"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 eight 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.
"Trigger Event": With respect to any Distribution Date, if (i)
the
six-month rolling average of 60+ Day Delinquent Loans equals or
exceeds 37.00%
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:
<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
<S> <C>
January 2008 through December 2008 2.75%
January 2009 through December 2009 4.50%
January 2010 through December 2010 5.75%
January 2011 and thereafter 6.50%
</TABLE>
"Trust": 2004-CB8 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 eight 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) and (v) the Collection
Account, the
Distribution 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": JPMorgan Chase Bank, National Association, a national
banking
association organized and existing under the laws of United
States of America,
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.
41
<PAGE>
"Trustee Fee Rate": With respect to any Distribution Date,
0.0075% per
annum.
"Underwriter": Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as
underwriter 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.
"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 (1) the cumulative amount of
related Applied
Realized Loss Amounts with respect to such Class for all prior
Distribution
Dates over (2) the sum of (x) the cumulative amount of related
Realized Loss
Amortization Amounts with respect to such Class for all prior
Distribution Dates
and (y) all increases in the Certificate Principal Balance of
such Class
pursuant to the last sentence of the definition of "Certificate
Principal
Balance."
"VA": The United States Department of Veterans Affairs.
"VA Approved Lender": Those institutions that are approved by
the VA to
act as servicer and mortgagee of record pursuant to the VA
Regulations.
"VA Guaranty": The obligation of VA respecting the guaranty of a
VA Loan
pursuant to the Servicemen's Readjustment Act of 1944, as
amended.
"VA Regulations" Any and all regulations promulgated by the VA
under the
Servicemen's Readjustment Act of 1944, as amended.
"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
42
<PAGE>
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.
"Written Order to Authenticate": A written order by which the
Depositor
directs the Trustee to execute, authenticate and deliver the
Certificates.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any
definition or
calculation, whenever amounts are required to be netted,
subtracted or added or
any distributions are taken into account such definition or
calculation and any
related definitions or calculations shall be determined without
duplication of
such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
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 and all
rights under the
related FHA Insurance Contract and VA Guaranty; (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 Depositor, the Seller, the
Servicer and
the Trustee that it is not intended that any Mortgage Loan be
included in the
Trust that is a "High-Cost Home Loan" as defined in (i) the New
Jersey Home
Ownership Act effective November 27, 2003; (ii) the New Mexico
Home Loan
Protection Act effective January 1, 2004 or (iii) the
Massachusetts Predatory
Home Loan Practices Act, effective November 7, 2004.
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:
43
<PAGE>
(i) the original Mortgage Note including any riders thereto,
endorsed either (A) in blank or (B) in the following form: "Pay
to the order of
JPMorgan Chase Bank, National Association, as Trustee, C-BASS
Mortgage Loan
Asset-Backed Certificates, Series 2004-CB8, 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 including any riders thereto,
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 "JPMorgan Chase Bank, National Association, as
Trustee, C-BASS
Mortgage Loan Asset-Backed Certificates, Series 2004-CB8,
without recourse";
(iv) an original or a certified 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;
(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 and for each VA Loan, the original VA Guaranty.
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
44
<PAGE>
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 at the Servicer's expense and of no cost to the Trust
Fund; 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 JPMorgan Chase Bank, National Association, as
Trustee, C-BASS
Mortgage Loan Asset-Backed Certificates, Series 2004-CB8,
without recourse."
In the event that any Assignments of Mortgage is not recorded or
is
improperly recorded (as a result of actions taken or not taken
by a person other
than the Servicer), neither the Servicer nor the Trustee shall
have any
liability for its failure to receive notices related to such
Assignment of
Mortgage.
The Depositor herewith delivers to the Trustee executed copies
of the
Mortgage Loan Purchase Agreement.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges its (or the Custodian's) 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 (or the
Custodian) holds and
will hold such documents and the other documents delivered to it
constituting a
Mortgage File, and that it (or the Custodian) 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 (or
cause the
Custodian 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
Schedule that
corresponds to items (1), (2), (3), (5), (13) and (26) (in the
case of (26),
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
45
<PAGE>
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 (upon its notification by
the Custodian)
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.
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 inform
the Seller of its obligation 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 is susceptible to cure
but 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 120 days. 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
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deliver such instruments of transfer or assignment, in each case
without
recourse, representation or warranty, 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 Officer's 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 (or cause the Custodian to 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
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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, and
consistent with the standard of care which the Servicer uses
and/or would use in
servicing mortgage loans for its own account 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 by it or the Custodian 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,
representation or warranty, 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 cannot 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.
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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 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) and (c)
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:
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(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, is a VA Approved Lender and
has not been
suspended as a mortgagee or servicer by the FHA or VA 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 a VA Approved
Lender and to
service 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,
Freddie Mac or
FHA eligibility requirements or which would require notification
to any of HUD,
Fannie Mae, Freddie Mac, FHA or VA;
(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;
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(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;
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(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 and Class R
Certificates are
issuable only in minimum Percentage Interests of 10%. The Class
R-X Certificates
are issuable only in minimum Percentage Interests of 50%. The
Trustee
acknowledges the issuance of the uncertificated REMIC 1 Regular
Interests, the
uncertificated REMIC 2 Regular Interests, the uncertificated
REMIC B-2 Regular
Interests, the uncertificated REMIC B-3 Regular Interests,
the
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uncertificated REMIC B-4 Regular Interests and the
uncertificated REMIC X/N
Regular Interests and declares that it holds the REMIC 1 Regular
Interests as
assets of REMIC 2, the REMIC 2 B-2 Interest as the asset of
REMIC B-2, the REMIC
2 B-3 Interest as the asset of REMIC B-3, the REMIC 2 B-4
Interest as the asset
of REMIC B-4 and the REMIC 2 X/N Interest as the asset of REMIC
X/N. The Trustee
acknowledges the issuance of the uncertificated REMIC X/N X/N
Interest,
beneficial ownership of which is evidenced by the Class X/N
Interest, and
declares that it holds the same as assets of the Grantor Trust
on behalf of the
Holders of the Class N and Class X Certificates. 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.
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(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
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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
and consistent with the standard of care which the Servicer uses
and/or would
use in servicing mortgage loans for its own account including,
in the case of
FHA Loans and the VA Loans, taking all actions that a mortgagee
is permitted or
required to take by the FHA or VA, as applicable (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
and in the case of the VA Loans, affect the VA Guaranty 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 a power of attorney (substantially in
the form
annexed hereto as Exhibit Q) 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, the
Servicemen's
Readjustment Act and administrative guidelines
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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, the Servicer may not waive
any prepayment
penalty or portion thereof required by the terms of the related
Mortgage Note
unless (i) the related Mortgage Loan is in default or
foreseeable default and
such waiver (a) is standard and customary in servicing mortgage
loans similar to
the Mortgage Loans and (b) would, in the reasonable judgment of
the Servicer,
maximize recovery of total proceeds taking into account the
value of such
prepayment penalty and the related Mortgage Loan, (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, or
(iii) the Servicer has not been provided with information
sufficient to enable
it to collect the prepayment penalty. For the avoidance of
doubt, the Servicer
may waive a prepayment penalty in connection with a short sale
or short payoff
on a defaulted Mortgage Loan. If the Servicer has waived all or
a portion of a
prepayment penalty relating to a Principal Prepayment, other
than as provided
above, the Servicer shall deliver to the Trustee no later than
the next
succeeding Servicer Remittance Date, for deposit into the
Distribution Account
the amount of such prepayment penalty (or such portion thereof
as had been
waived) for distribution in accordance with the terms of this
Agreement.
Based solely on information provided to it by the Servicer, the
Trustee
shall prepare and deliver to the Depositor and the owners 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.
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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).
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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 and Distribution 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
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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. Funds on deposit in the Distribution Account will remain
uninvested.
(c) Funds in the Collection 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 in writing 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.
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 the first sentence of
Section 3.04(d) or
clause (ii) of the first sentence of the second paragraph of
Section 4.07(b);
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(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 distributions 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 the related REO Property or have been written-off
pursuant to
Section 3.13 hereof;
(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
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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, as the
case may be,
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, 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.
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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/VA 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
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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
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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 or a nominee
thereof, on
behalf of the Certificateholders, or in the event the Trustee or
a nominee
thereof 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 if the
Trust Fund has
received (at the expense of the Trust Fund) from the Internal
Revenue Service an
extension of the period during which it may hold such REO
Property without such
REO Property failing to be treated as "foreclosure property"
(within the meaning
of Section 860G(a)(8) of the Code), before the end of such
extension, 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
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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
that
has been Delinquent for a period of 180 days or more if the
Servicer determines
that any amount that could be recovered on such Mortgage Loan
would be less than
the cost required to achieve such recovery.
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
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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 Group I 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 or 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 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
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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(a) 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 necessary documentation provided by it 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, representation or warranty) 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, representation or warranty 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,
representation or warranty of the related Mortgage to the
Servicer. Such receipt
shall obligate the Servicer to return the Mortgage File to the
Trustee (or the
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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,
customary 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 March 15 of each year,
commencing in 2006, 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 its 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 is
entitled to rely exclusively on Officers' Certificates).
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Section 3.20 Annual Independent Certified Public Accountants'
Reports.
(a) Not later than March 15 of each year, commencing in 2006,
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 Mortgage Loans for the
related
Distribution Date resulting from Principal Prepayments on the
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
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
Relief Act Interest
Shortfalls.
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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. In the absence of such
direction, funds in the
Collection Account shall remain uninvested. 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
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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.
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
(or
its successor 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, the termination or resignation of
the Servicer or
the Trustee 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.
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Section 3.27 Reports of Foreclosure and Abandonment of
Mortgaged
Properties.
On or before the last day of February of each year beginning in
2006, 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 March 2006 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 at
the expense of
the Seller 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 N (the "Certification"),
which shall be
signed by the senior officer of the Servicer in charge of
servicing.
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(c) The Trustee shall sign a certification (in the form
attached
hereto as Exhibit O) 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 O) 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 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. 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.
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(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.
Section 3.30 Advance Facility.
(a) The Servicer is hereby authorized to enter into a financing
or
other facility (any such arrangement, an "Advance Facility"),
the documentation
for which complies with Section 3.30(e) below, under which (1)
the Servicer
assigns or pledges its rights under this Agreement to be
reimbursed for any or
all Advances and/or Servicing Advances to (i) a Person, which
may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a
Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a
lender (a
"Lender"), which, in the case of any Person or SPV of the type
described in
either of the preceding clauses (i) or (ii), may directly or
through other
assignees and/or pledgees, assign or pledge such rights to a
Person, which may
include a trustee acting on behalf of holders of debt
instruments (any such
Person or any such Lender, an "Advance Financing Person"),
and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or
Servicing Advances
required to be made by the Servicer pursuant to this Agreement.
No consent of
the Trustee, Certificateholders or any other party shall be
required before the
Servicer may enter into an Advance Facility nor shall the
Trustee or the
Certificateholders be a third party beneficiary of any
obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence
of any Advance
Facility under which an Advance Financing Person agrees to fund
Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated
pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to
and as required
by this Agreement and (ii) shall not be relieved of such
obligations by virtue
of such Advance Facility and (B) neither the Advance Financing
Person nor any
Servicer's Assignee (as hereinafter defined) shall have any
right to proceed
against or otherwise contact any Mortgagor for the purpose of
collecting any
payment that may be due with respect to any related Mortgage
Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan
documents.
(b) If the Servicer enters into an Advance Facility, the
Servicer
and the related Advance Financing Person shall deliver to the
Trustee at the
address set forth in Section 11.05 hereof a written notice (an
"Advance Facility
Notice"), stating (a) the identity of the Advance Financing
Person and (b) the
identity of the Person (the "Servicer's Assignee") that will,
subject to Section
3.30(c) hereof, have the right to make withdrawals from the
Collection Account
pursuant to Section 3.05 hereof to reimburse previously
unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts").
Advance
Reimbursement Amounts (i) shall consist solely of amounts in
respect of Advances
and/or Servicing Advances for which the Servicer would be
permitted to reimburse
itself in accordance with Section 3.05 hereof, assuming the
Servicer had made
the related Advance(s) and/or Servicing Advance(s) and (ii)
shall not consist of
amounts payable to a successor Servicer in accordance with
Section 3.05 hereof
to the extent permitted under Section 3.30(e) below.
(c) Notwithstanding the existence of an Advance Facility,
the
Servicer, on behalf of the Advance Financing Person, and the
Servicer's Assignee
shall be entitled to receive reimbursements of Advances and/or
Servicing
Advances in accordance with Section 3.05 hereof, which
entitlement may be
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terminated by the Advance Financing Person pursuant to a written
notice to the
Trustee in the manner set forth in Section 11.05 hereof. Upon
receipt of such
written notice, the Servicer shall no longer be entitled to
receive
reimbursement for any Advance Reimbursement Amounts and the
Servicer's Assignee
shall immediately have the right to receive from the Collection
Account all
Advance Reimbursement Amounts. Notwithstanding the foregoing,
and for the
avoidance of doubt, (i) the Servicer and/or the Servicer's
Assignee shall only
be entitled to reimbursement of Advance Reimbursement Amounts
hereunder pursuant
to Section 3.05 of this Agreement and shall not otherwise be
entitled to make
withdrawals of, or receive, Advance Reimbursement Amounts that
shall be
deposited in the Distribution Account pursuant to Section
3.04(b) hereof, and
(ii) none of the Trustee or the Certificateholders shall have
any right to, or
otherwise be entitled to, receive any Advance Reimbursement
Amounts to which the
Servicer or Servicer's Assignee, as applicable, shall be
entitled pursuant to
Section 3.05 hereof. An Advance Facility may be terminated by
the joint written
direction of the Servicer and the related Advance Financing
Person. Written
notice of such termination shall be delivered to the Trustee in
the manner set
forth in Section 11.05 hereof. The Trustee shall have no duty or
liability with
respect to the calculation of any Advance Reimbursement Amount
and shall be
entitled to rely without independent investigation on the
Advance Facility
Notice and on such Servicer's report of the amount of Advance
Reimbursement
Amounts and Servicing Advance Reimbursement Amounts that were
included in the
remittance from such Servicer to the Trustee pursuant to Section
4.07. Such
Servicer shall maintain and provide to any successor Servicer a
detailed
accounting on a loan-by-loan basis as to amounts advanced by,
pledged or
assigned to, and reimbursed to any Advance Financing Person. The
successor
Servicer shall be entitled to rely on any such information
provided by the
predecessor Servicer, and the successor Servicer shall not be
liable for any
errors in such information.
(d) [Reserved.]
(e) As between a predecessor Servicer and its Advance
Financing
Person, on the one hand, and a successor Servicer and its
Advance Financing
Person, if any, on the other hand, Advance Reimbursement Amounts
on a
loan-by-loan basis with respect to each Mortgage Loan as to
which a Advance
and/or Servicing Advance shall have been made and be outstanding
shall be
allocated on a "first-in, first out" basis. In the event the
Servicer's Assignee
shall have received some or all of an Advance Reimbursement
Amount related to
Advances and/or Servicing Advances that were made by a Person
other than such
predecessor Servicer or its related Advance Financing Person in
error, then such
Servicer's Assignee shall be required to remit any portion of
such Advance
Reimbursement Amount to each Person entitled to such portion of
such Advance
Reimbursement Amount. Without limiting the generality of the
foregoing, the
Servicer shall remain entitled to be reimbursed by the Advance
Financing Person
for all Advances and/or Servicing Advances funded by the
Servicer to the extent
the related Advance Reimbursement Amounts have not been assigned
or pledged to
such Advance Financing Person or Servicer's Assignee.
(f) For purposes of any certification of a Servicing Officer of
the
Servicer made pursuant to Section 4.07(d), any Nonrecoverable
Advance referred
to therein may have been made by such Servicer or any
predecessor Servicer. In
making its determination that any Advance or Servicing Advance
theretofore made
has become a Nonrecoverable Advance, the Servicer shall apply
the same criteria
in making such determination regardless of whether such Advance
or Servicing
Advance shall have been made by the Servicer or any predecessor
Servicer.
(g) The Trustee shall not, as a result of the existence of
any
Advance Facility, have any additional responsibility to track or
monitor Advance
Reimbursement Amounts or any Advance Facility, and is not and
shall not be
obligated to make any payment with respect to any Advance
Reimbursement Amount.
The Servicer hereby indemnifies the Trustee, the Trust Fund and
any successor
Servicer, as applicable, from and against any claims, losses,
liabilities or
damages resulting from any
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claim by the related Advancing Person, except to the extent that
such claim,
loss, liability or damage resulted from or arose out of
negligence, recklessness
or willful misconduct on the part of the Trustee or the
successor Servicer, or
failure by the successor Servicer to remit funds as required by
this Agreement
or the commission of an act or omission to act by the successor
Servicer or the
Trustee.
Any amendment to this Section 3.30 or to any other provision of
this
Agreement that may be necessary or appropriate to effect the
terms of an Advance
Facility as described generally in this Section 3.30, including
amendments to
add provisions relating to a successor Servicer, may be entered
into by the
Trustee, the Depositor, the Seller and the Servicer without the
consent of any
Certificateholder, provided such amendment complies with Section
11.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of
each party
hereto of any such amendment shall be borne solely by the
Servicer. The parties
hereto hereby acknowledge and agree that (a) the Advances and/or
Servicing
Advances financed by and/or pledged to an Advance Financing
Person under any
Advance Facility are obligations owed to the Servicer payable
only from the cash
flows and proceeds received under this Agreement for
reimbursement of Advances
and/or Servicing Advances only to the extent provided herein,
and the Trustee
and the Trust are not, as a result of the existence of any
Advance Facility,
obligated or liable to pay any Advances and/or Servicing
Advances financed by
the Advance Financing Person; (b) the Servicer will be
responsible for remitting
to the Advance Financing Person the applicable amounts collected
by it as
reimbursement for Advances and/or Servicing Advances funded by
the Advance
Financing Person, subject to the provisions of this Agreement;
and (c) the
Trustee shall not have any responsibility to track or monitor
the administration
of the financing arrangement between the Servicer and any
Advance Financing
Person.
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),
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 AV-1 Certificates, the applicable Accrued Certificate
Interest for such
Distribution Date; and
(B) from the Group II Interest Remittance Amount to the
Class AF-1, Class AF-2, Class AF-3 and Class AF-4 Certificates,
pro rata, the
applicable Accrued Certificate Interest for such Distribution
Date;
(iii) concurrently, as follows:
(A) from the Group I Interest Remittance Amount, to the
Class AV-1 Certificates, the applicable Interest Carry Forward
Amount for such
Distribution Date for the Class AV-1 Certificates; and
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(B) from the Group II Interest Remittance Amount, pro
rata, all applicable Interest Carry Forward Amounts for such
Distribution Date
to the Class AF-1, Class AF-2, Class AF-3 and the Class AF-4
Certificates;
(iv) concurrently, as follows:
(A) from the Group I Interest Remittance Amount, pro
rata, to the Class AF-1, Class AF-2, Class AF-3 and Class AF-4
Certificates, 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 AV-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;
(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:
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(1) the Group I Principal Distribution Amount to
the Class AV-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 AF-4
Certificates, the
Class AF-4 Lockout Distribution Amount; and (b) sequentially, to
the Class AF-1
Certificates until the Certificate Principal Balance thereof has
been reduced to
zero, to the Class AF-2 Certificates until the Certificate
Principal Balance
thereof has been reduced to zero, to the Class AF-3 Certificates
until the
Certificate Principal Balance thereof has been reduced to zero
and to the Class
AF-4 Certificates until the Certificate Principal Balance
thereof has been
reduced to zero, in that order;
(B) concurrently, as follows:
(1) the Group I Principal Distribution Amount
remaining after distributions pursuant to priority (A)(1) above,
pro rata, as
follows: (a) to the Class AF-4 Certificates, the Class AF-4
Lockout Distribution
Amount and (b) sequentially, to the Class AF-1 Certificates,
until the
Certificate Principal Balance thereof has been reduced to zero,
to the Class
AF-2 Certificates, until the Certificate Principal Balance
thereof has been
reduced to zero, to the Class AF-3 Certificates, until the
Certificate Principal
Balance thereof has been reduced to zero, and to the Class AF-4
Certificates,
until the Certificate Principal Balance thereof has been reduced
to zero, in
that order; and
(2) the Group II Principal Distribution Amount
remaining after distributions pursuant to priority (A)(2) above,
to the Class
AV-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
(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;
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(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 AV-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 AF-4
Certificates, the Class
AF-4 Lockout Distribution Amount and (b) sequentially, to the
Class AF-1
Certificates, until the Certificate Principal Balance thereof
has been reduced
to zero, to the Class AF-2 Certificates, until the Certificate
Principal Balance
thereof has been reduced to zero, to the Class AF-3
Certificates, until the
Certificate Principal Balance thereof has been reduced to zero,
and to the Class
AF-4 Certificates, until the Certificate Principal Balance
thereof has been
reduced to zero, in that order;
(B) concurrently, as follows:
(1) the Group I Principal Distribution Amount
remaining after distributions pursuant to priority (A)(1) above,
pro rata, as
follows: (a) to the Class AF-4 Certificates, the Class AF-4
Lockout Distributin
Amount and (b) sequentially to the Class AF-1 Certificates,
until the
Certificate Principal Balance thereof has been reduced to zero,
to the Class
AF-2 Certificates, until the Certificate Principal Balance
thereof has been
reduced to zero, to the Class AF-3 Certificates, until the
Certificate Principal
Balance thereof has been reduced to zero, and to the Class AF-4
Certificates,
until the Certificate Principal Balance thereof has been reduced
to zero, in
that order; and
(2) the Group II Principal Distribution Amount
remaining after distributions pursuant to priority (A)(2) above,
to the Class
AV-1 Certificates, until the Certificate Principal Balance
thereof has been
reduced to zero;
(C) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A
Certificates in clauses (A) and (B) above and (y) the Class M-1
Principal
Distribution Amount will be distributed to the Class M-1
Certificates, until the
Certificate Principal Balance thereof has been reduced to
zero;
(D) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A
Certificates in clauses (A) and (B) above and the amount
distributed to the
Class M-1 Certificates in clause (C) above and (y) the Class M-2
Principal
Distribution Amount will be distributed to the Class M-2
Certificates, until the
Certificate Principal Balance thereof has been reduced to
zero;
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(E) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A
Certificates in clauses (A) and (B) above, the amount
distributed to the Class
M-1 Certificates in clause (C) above and the amount distributed
to the Class M-2
Certificates in clause (D) above and (y) the Class M-3 Principal
Distribution
Amount will be distributed to the Class M-3 Certificates, until
the Certificate
Principal Balance thereof has been reduced to zero;
(F) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount
distributed to
the Class M-1 Certificates pursuant to clause (C) above, the
amount distributed
to the Class M-2 Certificates pursuant to clause (D) above and
the amount
distributed to the Class M-3 Certificates pursuant to clause (E)
above and (y)
the Class B-1 Principal Distribution Amount will be distributed
to the Class B-1
Certificates, until the Certificate Principal Balance thereof
has been reduced
to zero;
(G) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount
distributed to
the Class M-1 Certificates pursuant to clause (C) above, the
amount distributed
to the Class M-2 Certificates pursuant to clause (D) above, the
amount
distributed to the Class M-3 Certificates pursuant to clause (E)
above and the
amount distributed to the Class B-1 Certificates pursuant to
clause (F) above
and (y) the Class B-2 Principal Distribution Amount will be
distributed to the
Class B-2 Certificates, until the Certificate Principal Balance
thereof has been
reduced to zero;
(H) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount
distributed to
the Class M-1 Certificates pursuant to clause (C) above, the
amount distributed
to the Class M-2 Certificates pursuant to clause (D) above, the
amount
distributed to the Class M-3 Certificates pursuant to clause (E)
above, the
amount distributed to the Class B-1 Certificates pursuant to
clause (F) above
and the amount distributed to the Class B-2 Certificates
pursuant to clause (G)
above and (y) the Class B-3 Principal Distribution Amount will
be distributed to
the Class B-3 Certificates, until the Certificate Principal
Balance thereof has
been reduced to zero;
(I) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount
distributed to
the Class M-1 Certificates pursuant to clause (C) above, the
amount distributed
to the Class M-2 Certificates pursuant to clause (D) above, the
amount
distributed to the Class M-3 Certificates pursuant to clause (E)
above, the
amount distributed to the Class B-1 Certificates pursuant to
clause (F) above,
the amount distributed to the Class B-2 Certificates pursuant to
clause (G)
above and the amount distributed to the Class B-3 Certificates
pursuant to
clause (H) above and (y) the Class B-4 Principal Distribution
Amount will be
distributed to the Class B-4 Certificates, until the Certificate
Principal
Balance thereof 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) above shall be applied as set forth
in Section
4.02(b).
(b) On each Distribution Date, any Monthly Excess Cashflow
Amount
shall be distributed, to the extent available, in the following
order of
priority on such Distribution Date:
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(i) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date, pro rata, among the Class AV-1,
Class AF-1, Class
AF-2, Class AF-3, Class AF-4 Certificates;
(ii) pro rata, to pay any remaining Interest Carry Forward
Amounts for the classes of Class A Certificates, if any, among
the Class AV-1,
Class AF-1, Class AF-2, Class AF-3 and Class AF-4
Certificates;
(iii) to pay the Extra Principal Distribution Amount for
such
Distribution Date in accordance with Section 4.02(a);
(iv) to pay any remaining unpaid Accrued Certificate
Interest
for such Distribution Date for the Class M-1 Certificates;
(v) to pay the remaining Class M-1 Interest Carry Forward
Amount, if any;
(vi) to pay the Class M-1 Realized Loss Amortization Amount
for such Distribution Date;
(vii) to pay any remaining unpaid Accrued Certificate
Interest
for such Distribution Date for the Class M-2 Certificates;
(viii) to pay the remaining Class M-2 Interest Carry Forward
Amount, if any;
(ix) to pay the Class M-2 Realized Loss Amortization Amount
for such Distribution Date;
(x) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-3 Certificates;
(xi) to pay the remaining Class M-3 Interest Carry Forward
Amount, if any;
(xii) to pay the Class M-3 Realized Loss Amortization Amount
for such Distribution Date;
(xiii) to pay any remaining unpaid Accrued Certificate
Interest for such Distribution Date for the Class B-1
Certificates;
(xiv) to pay the remaining Class B-1 Interest Carry Forward
Amount, if any;
(xv) to pay the Class B-1 Realized Loss Amortization Amount
for such Distribution Date;
(xvi) to pay any remaining unpaid Accrued Certificate
Interest
for such Distribution Date for the Class B-2 Certificates;
(xvii) to pay the remaining Class B-2 Interest Carry Forward
Amount, if any;
(xviii) to pay the Class B-2 Realized Loss Amortization
Amount
for such Distribution Date;
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(xix) to pay any remaining unpaid Accrued Certificate
Interest
for such Distribution Date for the Class B-3 Certificates;
(xx) to pay the remaining Class B-3 Interest Carry Forward
Amount, if any;
(xxi) to pay the Class B-3 Realized Loss Amortization Amount
for such Distribution Date;
(xxii) to pay any remaining unpaid Accrued Certificate
Interest for such Distribution Date for the Class B-4
Certificates;
(xxiii) to pay the remaining Class B-4 Interest Carry
Forward
Amount, if any;
(xxiv) to pay the Class B-4 Realized Loss Amortization
Amount
for such Distribution Date;
(xxv) to pay the Class R Excess Interest Amount for such
Distribution Date;
(xxvi) to pay the Class R Excess Interest Carryforward
Amount
for such Distribution Date;
(xxvii) to the Class AV-1 Certificates, the aggregate amount
of any LIBOR Carryover Amount due to such Certificates;
(xxviii) sequentially, to the Class M-1, Class M-2, Class
M-3,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates, in
that order, any
LIBOR Carryover Amount due to such Certificates;
(xxix) to pay the Class N Certificates, from the remaining
amount distributable on the Class X/N Interest, (A) the Accrued
Certificate
Interest for the Class N Certificates, (B) the unpaid Interest
Carry Forward
Amount for the Class N Certificates and (C) any remaining
Monthly Excess
Cashflow Amount to reduce the Class N Notional Amount, until the
Class N
Notional Amount has been reduced to zero; and
(xxx) to the Class X Certificates, the Class X Distributable
Amount for such Distribution Date.
On each Distribution Date, there shall be distributed to the
Holders of
the Class R Certificates any remaining amount in the
Distribution Account on
such date after the application pursuant to Sections 4.01,
4.02(a),
4.02(b)(i)-(xxx) and 4.02(c).
(c) On each Distribution Date, all prepayment penalties
(including
amounts deposited in connection with the full or partial waiver
of such
prepayment penalties pursuant to Section 3.01) shall be
allocated to the Class N
Certificates (first as payments of Accrued Certificate Interest
for the Class N
Certificates, then as payments in respect of the unpaid Interest
Carry Forward
Amount for the Class N Certificates and finally as payments in
respect of the
Class N Notional Amount) for so long as the Notional Amount of
the Class N
Certificates is greater than zero pursuant to Section
4.02(b)(xxix) above and
this Section 4.02(c)), and to the Class X Certificates after the
Class N
Notional Amount has been reduced to zero.
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(d) Any amounts distributed to the Certificates in respect of
LIBOR
Carryover Amounts pursuant to Sections 4.02(b)(xxvii) and
(xxviii) shall first
be deemed distributed by REMIC 2 as a distribution in respect of
the REMIC 2 X/N
Interest, to REMIC X/N and distributed thereby as a distribution
to the REMIC
X/N Class X/N Interest, and then distributed to the Certificates
from the
Grantor Trust as payments on notional principal contracts in the
nature of cap
contracts. The Trustee shall account for the rights to receive
LIBOR Carryover
Amounts as rights in a limited recourse interest rate cap
contract written by
the Holder of the Class X/N Interest. For federal information
reporting
purposes, such rights shall be assigned a value of zero.
(e) Any amounts distributed to the Class B-2 Certificates
pursuant
to Section 4.01 or this Section 4.02, other than LIBOR Carryover
Amounts, shall
be deemed distributed by REMIC 2 to REMIC B-2 in respect of the
REMIC 2 B-2
Interest, and distributed thereby as a distribution in respect
of the REMIC B-2
B-2 Interest. Any amounts distributed to the Class B-3
Certificates pursuant to
Section 4.01 or this Section 4.02, other than LIBOR Carryover
Amounts, shall be
deemed distributed by REMIC 2 to REMIC B-3 in respect of the
REMIC 2 B-3
Interest, and distributed thereby as a distribution in respect
of the REMIC B-3
B-3 Interest. Any amounts distributed to the Class B-4
Certificates pursuant to
Section 4.01 or this Section 4.02, other than LIBOR Carryover
Amounts, shall be
deemed distributed by REMIC 2 to REMIC B-4 in respect of the
REMIC 2 B-4
Interest, and distributed thereby as a distribution in respect
of the REMIC B-4
B-4 Interest.
Section 4.03 Allocation of Losses.
Realized Losses shall be allocated first against any Initial
Overcollateralization Amount remaining and second to the
Subsequent
Overcollateralization Amount, until the Overcollateralization
Amount has been
reduced to zero. If, after giving effect to the distribution of
the Principal
Distribution Amount on any Distribution Date the aggregate
Certificate Principal
Balance of the Offered Certificates and Class B-4 Certificates
exceeds the Pool
Balance as of the end of the related Collection Period, such
excess will be
allocated against the Class B-4, Class B-3, Class B-2, Class
B-1, Class M-3,
Class M-2 and Class M-1 Certificates, in that order, until the
respective
Certificate Principal Balances thereof are reduced to zero.
Special Hazard Losses will be allocated as described above,
provided that
if the cumulative amount of such losses, as of any date of
determination,
exceeds the greatest of (i) 1.0% of the Pool Balance as of the
Cut-off Date,
(ii) two times the amount of the principal balance of the
largest Mortgage Loan
as of the date of determination and (iii) an amount equal to the
aggregate
principal balances of the Mortgage Loans in the largest zip-code
concentration
in the State of California as of the date of determination, such
losses will be
allocated among the Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2, Class
B-3 and Class B-4 Certificates, pro rata, based on their
respective Certificate
Principal Balances.
Section 4.04 Method of Distribution.
The Trustee shall make distributions in respect of a
Distribution Date to
each Certificateholder of record on the related Record Date
(other than as
provided in Section 10.01 respecting the final distribution), in
the case of
Certificateholders of the Certificates, by wire transfer in
immediately
available funds to the account of the Person entitled thereto if
such Person
shall have so notified the Trustee in writing at least five
Business Days prior
to the Record Date immediately prior to such Distribution Date
and is the
registered owner of such Certificates the aggregate initial
Certificate
Principal Balance or Notional Amount of which is in excess of
$5,000,000, or by
check mailed by first class mail to the address of the Person
entitled thereto,
as such name and address shall appear on the Certificate
Register, provided that
the Trustee may deduct a reasonable wire transfer fee from any
payment made by
wire
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transfer. Distributions among Certificateholders shall be made
in proportion to
the Percentage Interests evidenced by the Certificates held by
such
Certificateholders.
Section 4.05 Distributions on Book-Entry Certificates.
Each distribution with respect to a Book-Entry Certificate shall
be paid
to the Depository, which shall credit the amount of such
distribution to the
accounts of its Depository Participants in accordance with its
normal
procedures. Each Depository Participant shall be responsible for
disbursing such
distribution to the Certificate Owners that it represents and to
each indirect
participating brokerage firm (a "brokerage firm" or "indirect
participating
firm") for which it acts as agent. Each brokerage firm shall be
responsible for
disbursing funds to the Certificate Owners that it represents.
All such credits
and disbursements with respect to a Book-Entry Certificate are
to be made by the
Depository and the Depository Participants in accordance with
the provisions of
the Certificates. None of the Trustee, the Depositor, the
Servicer or the Seller
shall have any responsibility therefor except as otherwise
provided by
applicable law.
Section 4.06 Statements.
(a) On each Distribution Date, based, as applicable, on the
Mortgage
Loan information contained in the Remittance Report, the Trustee
shall prepare
and post on its website at www.jpmorgan.com/sfr, a statement as
to the
distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution
Date to the Holders of each Class of Certificates allocable to
principal or
reduction of Notional Amount, separately identified;
(ii) the amount of the distribution made on such
Distribution
Date to the Holders of each Class of Certificates allocable to
interest or Class
X Distributable Amount, separately identified;
(iii) the Overcollateralization Amount, the
Overcollateralization Release Amount, the Overcollateralization
Deficiency and
the Targeted Overcollateralization Amount as of such
Distribution Date and the
Monthly Excess Interest Amount and Monthly Excess Cashflow
Amount for such
Distribution Date;
(iv) the aggregate amount of servicing compensation received
by the Servicer during the related Collection Period;
(v) the aggregate amount of Advances for the related
Collection Period;
(vi) the Pool Balance and the Loan Group Balance for each
Loan
Group at the close of business at the end of the related
Collection Period;
(vii) separately stated for each Loan Group, the number,
weighted average remaining term to maturity and weighted average
Mortgage
Interest Rate of the Mortgage Loans as of the related Due
Date;
(viii) separately stated for each Loan Group, the number and
aggregate unpaid principal balance of Mortgage Loans (a) 30 to
59 days past due
on a contractual basis, (b) 60 to 89 days past due on a
contractual basis, (c)
90 or more days past due on a contractual basis, (d) as to
which
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foreclosure proceedings have been commenced and (e) in
bankruptcy as of the
close of business on the last day of the calendar month
preceding such
Distribution Date;
(ix) separately stated for each Loan Group, with respect to
any Mortgage Loan that became an REO Property during the
preceding calendar
month, the loan number of such Mortgage Loan, the unpaid
principal balance and
the Principal Balance of such Mortgage Loan as of the date it
became an REO
Property;
(x) separately stated for
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