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EXECUTION COPY
MORTGAGE ASSET SECURITIZATION TRANSACTIONS, INC.
Depositor
Ocwen Federal Bank FSB
Servicer
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2005
MASTR Asset Backed Securities Trust 2005-NC1
Mortgage Pass-Through Certificates
Series 2005-NC1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 6
SECTION 1.01. Defined
Terms..........................................................................6
SECTION 1.02. Allocation of Certain Interest
Shortfalls.............................................53
SECTION 1.03. Rights of the NIMS
Insurer............................................................54
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES 55
SECTION 2.01. Conveyance of the Mortgage
Loans......................................................55
SECTION 2.02. Acceptance of REMIC I by
Trustee......................................................58
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by NC
Capital or the Seller..............59
SECTION 2.04.
Reserved..............................................................................62
SECTION 2.05. Representations, Warranties and Covenants of the
Servicer.............................62
SECTION 2.06. Conveyance of REMIC Regular Interests and
Acceptance of REMIC I, REMIC II,
REMIC III and REMIC IV by the Trustee; Issuance of
Certificates.......................65
SECTION 2.07. Issuance of Class R Certificates and Class R-X
Certificates...........................66
ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
67
SECTION 3.01. Servicer to Act as
Servicer...........................................................67
SECTION 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers...........................69
SECTION 3.03. Successor
Sub-Servicers...............................................................70
SECTION 3.04. Liability of the
Servicer.............................................................70
SECTION 3.05. No Contractual Relationship Between Sub-Servicers
and the Trustee, the NIMS
Insurer or
Certificateholders.........................................................71
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee......................71
SECTION 3.07. Collection of Certain Mortgage Loan
Payments..........................................71
SECTION 3.08. Sub-Servicing
Accounts................................................................72
SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts................73
SECTION 3.10. Collection Account and Distribution
Account...........................................73
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account......................76
SECTION 3.12. Investment of Funds in the Collection Account and
the Distribution Account............78
SECTION 3.13.
[Reserved]............................................................................79
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage........79
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.............................81
SECTION 3.16. Realization Upon Defaulted Mortgage
Loans.............................................82
SECTION 3.17. Trustee to Cooperate; Release of Mortgage
Files.......................................84
SECTION 3.18. Servicing
Compensation................................................................85
i
<PAGE>
SECTION 3.19. Reports to the Trustee; Collection Account
Statements.................................85
SECTION 3.20. Statement as to
Compliance............................................................86
SECTION 3.21. Independent Public Accountants' Servicing
Report......................................86
SECTION 3.22. Access to Certain
Documentation.......................................................86
SECTION 3.23. Title, Management and Disposition of REO
Property.....................................87
SECTION 3.24. Obligations of the Servicer in Respect of
Prepayment Interest Shortfalls..............90
SECTION 3.25. Obligations of the Servicer in Respect of Mortgage
Rates and Monthly Payments.........90
SECTION 3.26. Advance
Facility......................................................................91
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS 93
SECTION 4.01.
Distributions.........................................................................93
SECTION 4.02. Statements to
Certificateholders.....................................................105
SECTION 4.03. Remittance Reports;
Advances.........................................................108
SECTION 4.04. Allocation of Realized
Losses........................................................109
SECTION 4.05. Compliance with Withholding
Requirements.............................................112
SECTION 4.06. Exchange Commission; Additional
Information..........................................112
SECTION 4.07. Net WAC Rate Carryover Reserve
Account...............................................114
ARTICLE V THE CERTIFICATES 116
SECTION 5.01. The
Certificates.....................................................................116
SECTION 5.02. Registration of Transfer and Exchange of
Certificates................................118
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates....................................123
SECTION 5.04. Persons Deemed
Owners................................................................123
SECTION 5.05. Certain Available
Information........................................................123
ARTICLE VI THE DEPOSITOR AND THE SERVICER 125
SECTION 6.01. Liability of the Depositor and the
Servicer..........................................125
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicer.............................125
SECTION 6.03. Limitation on Liability of the Depositor, the
Servicer and Others....................125
SECTION 6.04. Limitation on Resignation of the
Servicer............................................127
SECTION 6.05. Rights of the Depositor in Respect of the
Servicer...................................127
SECTION 6.06. Duties of the Credit Risk
Manager....................................................128
SECTION 6.07. Limitation Upon Liability of the Credit Risk
Manager.................................128
SECTION 6.08. Removal of the Credit Risk
Manager...................................................129
ARTICLE VII DEFAULT 129
SECTION 7.01. Servicer Events of
Default...........................................................129
SECTION 7.02. Trustee to Act; Appointment of
Successor.............................................131
SECTION 7.03. Notification to
Certificateholders...................................................133
SECTION 7.04. Waiver of Servicer Events of
Default.................................................134
SECTION 7.05. Survivability of Servicer
Liabilities................................................134
ARTICLE VIII CONCERNING THE TRUSTEE 135
SECTION 8.01. Duties of
Trustee....................................................................135
SECTION 8.02. Certain Matters Affecting the
Trustee................................................136
ii
<PAGE>
SECTION 8.03. Trustee not Liable for Certificates or Mortgage
Loans................................137
SECTION 8.04. Trustee May Own
Certificates.........................................................138
SECTION 8.05. Trustee's Fees and
Expenses..........................................................138
SECTION 8.06. Eligibility Requirements for
Trustee.................................................138
SECTION 8.07. Resignation and Removal of the
Trustee...............................................138
SECTION 8.08. Successor
Trustee....................................................................139
SECTION 8.09. Merger or Consolidation of
Trustee...................................................140
SECTION 8.10. Appointment of Co-Trustee or Separate
Trustee........................................140
SECTION 8.11. Appointment of Office or Agency; Appointment of
Custodian............................141
SECTION 8.12. Representations and
Warranties.......................................................142
ARTICLE IX TERMINATION 143
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.....................143
SECTION 9.02. Additional Termination
Requirements..................................................145
ARTICLE X REMIC PROVISIONS 147
SECTION 10.01. REMIC
Administration.................................................................147
SECTION 10.02. Prohibited Transactions and
Activities...............................................149
SECTION 10.03. Servicer and Trustee
Indemnification.................................................150
ARTICLE XI MISCELLANEOUS PROVISIONS 152
SECTION 11.01.
Amendment............................................................................152
SECTION 11.02. Recordation of Agreement;
Counterparts...............................................153
SECTION 11.03. Limitation on Rights of
Certificateholders...........................................153
SECTION 11.04. Governing
Law........................................................................154
SECTION 11.05.
Notices..............................................................................154
SECTION 11.06. Severability of
Provisions...........................................................155
SECTION 11.07. Notice to Rating Agencies and the NIMS
Insurer.......................................155
SECTION 11.08. Article and Section
References.......................................................156
SECTION 11.09. Grant of Security
Interest...........................................................156
SECTION 11.010. Third Party
Rights...................................................................157
</TABLE>
iii
<PAGE>
Exhibits
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class A-2 Certificate
Exhibit A-3 Form of Class A-3 Certificate
Exhibit A-4 Form of Class A-4 Certificate
Exhibit A-5 Form of Class A-5 Certificate
Exhibit A-6 Form of Class M-1 Certificate
Exhibit A-7 Form of Class M-2 Certificate
Exhibit A-8 Form of Class M-3 Certificate
Exhibit A-9 Form of Class M-4 Certificate
Exhibit A-10 Form of Class M-5 Certificate
Exhibit A-11 Form of Class M-6 Certificate
Exhibit A-12 Form of Class M-7 Certificate
Exhibit A-13 Form of Class M-8 Certificate
Exhibit A-14 Form of Class M-9 Certificate
Exhibit A-15 Form of Class M-10 Certificate
Exhibit A-16 [Reserved] Exhibit A-17 Form of Class CE
Certificate
Exhibit A-18 Form of Class P Certificate
Exhibit A-19 Form of Class R Certificate
Exhibit A-20 Form of Class R-X Certificate
Exhibit B [Reserved]
Exhibit C-1 Form of Trustee's Initial Certification
Exhibit C-2 Form of Trustee's Final Certification
Exhibit C-3 Form of Trustee's Receipt of Mortgage Notes
Exhibit D Form of Mortgage Loan Purchase Agreement
Exhibit E Request for Release
Exhibit F-1 Form of Transferor Representation Letter and Form
of
Transferee Representation Letter in Connection with Transfer
of
the Private Certificates Pursuant to Rule 144A Under the 1933
Act
Exhibit F-2 Form of Transfer Affidavit and Agreement and Form of
Transferor
Affidavit in Connection with Transfer of Residual
Certificates
Exhibit G Form of Certification with respect to ERISA and the
Code
Exhibit H Form of Report Pursuant to Section 4.06
Exhibit I Form of Lost Note Affidavit
Exhibit J-1 Form of Certification to Be Provided by the Trustee
with Form 10-K
Exhibit J-2 Form of Backup Certification to Be Provided by the
Servicer with
respect to the Form 10-K Exhibit K [Reserved]
Exhibit L Annual Statement of Compliance pursuant to Section
3.20
Exhibit M Forms of Cap Contracts
Exhibit N Form of Credit Risk Management Agreement
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
iv
<PAGE>
This Pooling and Servicing Agreement, is dated and effective
as of January 1, 2005 among MORTGAGE ASSET SECURITIZATION
TRANSACTIONS, INC. as
Depositor, OCWEN FEDERAL BANK FSB as Servicer and U.S. BANK
NATIONAL ASSOCIATION
as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to
be
issued hereunder in multiple classes, which in the aggregate
will evidence the
entire beneficial ownership interest in each REMIC (as defined
herein) created
hereunder. The Trust Fund will consist of a segregated pool of
assets comprised
of the Mortgage Loans and certain other related assets subject
to this
Agreement.
<PAGE>
REMIC I
-------
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and
certain other
related assets (other than the Net WAC Rate Carryover Reserve
Account, the
Servicer Prepayment Charge Payment Amount and the Cap Contracts)
subject to this
Agreement as a REMIC for federal income tax purposes, and such
segregated pool
of assets will be designated as "REMIC I." The Class R-I
Interest will be the
sole class of "residual interests" in REMIC I for purposes of
the REMIC
Provisions (as defined herein). The following table irrevocably
sets forth the
designation, the REMIC I Remittance Rate, the initial
Uncertificated Balance
and, for purposes of satisfying Treasury Regulation Section
1.860G-1(a)(4)(iii),
the "latest possible maturity date" for each of the REMIC I
Regular Interests
(as defined herein). None of the REMIC I Regular Interests will
be certificated.
<TABLE>
<CAPTION>
REMIC I Initial Latest Possible
Designation Remittance Rate Uncertificated Balance ($) Maturity
Date(1)
----------- --------------- --------------------------
----------------
<S> <C> <C> <C>
I-LTAA Variable(2) 480,324.342.07 November 2034
I-LTA1 Variable(2) 1,750,445.00 November 2034
I-LTA2 Variable(2) 437,610.00 November 2034
I-LTA3 Variable(2) 864,540.00 November 2034
I-LTA4 Variable(2) 642,215.00 November 2034
I-LTA5 Variable(2) 81,620.00 November 2034
I-LTM1 Variable(2) 267,120.00 November 2034
I-LTM2 Variable(2) 205,855.00 November 2034
I-LTM3 Variable(2) 83,320.00 November 2034
I-LTM4 Variable(2) 83,320.00 November 2034
I-LTM5 Variable(2) 85,770.00 November 2034
I-LTM6 Variable(2) 68,620.00 November 2034
I-LTM7 Variable(2) 56,365.00 November 2034
I-LTM8 Variable(2) 49,015.00 November 2034
I-LTM9 Variable(2) 56,365.00 November 2034
I-LTM10 Variable(2) 17,155.00 November 2034
I-LTZZ Variable(2) 5,053,202.59 November 2034
I-LTP Variable(2) 100.00 November 2034
I-LT1SUB Variable(2) 13,034.60 November 2034
I-LT1GRP Variable(2) 56,795.71 November 2034
I-LT2SUB Variable(2) 9,462.18 November 2034
I-LT2GRP Variable(2) 41,229.68 November 2034
I-LTXX Variable(2) 490,006,357.50 November 2034
</TABLE>
----------------
(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations,
the Distribution Date immediately following the maturity date
for the
Mortgage Loan with the latest maturity date has been designated
as the
"latest possible maturity date" for each REMIC I Regular
Interest.
(2) Calculated in accordance with the definition of "REMIC I
Remittance Rate"
herein.
2
<PAGE>
REMIC II
--------
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular
Interests as a REMIC
for federal income tax purposes, and such segregated pool of
assets will be
designated as "REMIC II." The Class R-II Interest will evidence
the sole class
of "residual interests" in REMIC II for purposes of the REMIC
Provisions under
federal income tax law. The following table irrevocably sets
forth the
designation, the Pass-Through Rate, the initial aggregate
Certificate Principal
Balance and, for purposes of satisfying Treasury regulation
section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for the
indicated
Classes of Certificates.
<TABLE>
<CAPTION>
Initial Aggregate Latest Possible
Designation Pass-Through Rate Certificate Principal Balance
Maturity Date(1)
----------- ----------------- -----------------------------
----------------
<S> <C> <C> <C>
Class A-1 Variable(1) $ 350,089,000 November 2034
Class A-2 Variable(1) $ 87,522,000 November 2034
Class A-3 Variable(1) $ 172,908,000 November 2034
Class A-4 Variable(1) $ 128,443,000 November 2034
Class A-5 Variable(1) $ 16,324,000 November 2034
Class M-1 Variable(1) $ 53,424,000 November 2034
Class M-2 Variable(1) $ 41,171,000 November 2034
Class M-3 Variable(1) $ 16,664,000 November 2034
Class M-4 Variable(1) $ 16,664,000 November 2034
Class M-5 Variable(1) $ 17,154,000 November 2034
Class M-6 Variable(1) $ 13,724,000 November 2034
Class M-7 Variable(1) $ 11,273,000 November 2034
Class M-8 Variable(1) $ 9,803,000 November 2034
Class M-9 Variable(1) $ 11,273,000 November 2034
Class M-10 Variable(1) $ 3,431,000 November 2034
Class CE Interest Variable(2) $ 30,386,759 November 2034
Class P Interest N/A(3) $ 100 November 2034
</TABLE>
---------------
(1) Calculated in accordance with the definition of
"Pass-Through Rate" herein.
(2) The Class CE Interest will accrue interest at its variable
Pass-Through
Rate on the Notional Amount of the Class CE Interest outstanding
from time
to time; which shall equal the Uncertificated Balance of the
REMIC I
Regular Interests (other than REMIC I Regular Interest I-LTP).
The Class CE
Interest will not accrue interest on its Uncertificated
Balance.
(3) The Class P Interest will not accrue interest.
3
<PAGE>
REMIC III
---------
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets consisting of the Class CE
Interest as a
REMIC for federal income tax purposes, and such segregated pool
of assets will
be designated as "REMIC III." The Class R-III Interest
represents the sole class
of "residual interests" in REMIC III for purposes of the REMIC
Provisions.
The following table irrevocably sets forth the Class
designation, Pass-Through Rate and Original Class Certificate
Principal Balance
for the indicated Class of Certificates that represents a
"regular interest" in
REMIC III created hereunder:
<TABLE>
<CAPTION>
Initial Aggregate
Certificate Principal Latest Possible
Class Designation Pass-Through Rate Balance Maturity Date(1)
----------------- ----------------- ------- ----------------
<S> <C> <C> <C>
Class CE Certificates Variable(2) $ 30,386,759 November 2034
</TABLE>
---------------
(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations,
the Distribution Date immediately following the maturity date
for the
Mortgage Loans with the latest maturity date has been designated
as the
"latest possible maturity date" for the Class CE
Certificates.
(2) The Class CE Certificates will receive 100% of amounts
received in respect
of the Class CE Interest.
4
<PAGE>
REMIC IV
--------
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets consisting of the Class P
Interest as a
REMIC for federal income tax purposes, and such segregated pool
of assets will
be designated as "REMIC IV." The Class R-IV Interest represents
the sole class
of "residual interests" in REMIC IV for purposes of the REMIC
Provisions.
The following table irrevocably sets forth the Class
designation, Pass-Through Rate and Original Class Certificate
Principal Balance
for the indicated Class of Certificates that represents a
"regular interest" in
REMIC IV created hereunder:
<TABLE>
<CAPTION>
Initial Aggregate
Certificate Principal Latest Possible
Class Designation Pass-Through Rate Balance Maturity Date(1)
----------------- ----------------- ------- ----------------
<S> <C> <C> <C>
Class P Certificates Variable(2) $100.00 November 2034
</TABLE>
---------------
(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations,
the Distribution Date immediately following the maturity date
for the
Mortgage Loans with the latest maturity date has been designated
as the
"latest possible maturity date" for the Class P
Certificates.
(2) The Class P Certificates will receive 100% of amounts
received in respect
of the Class P Interest.
As of the Cut-off Date, the Mortgage Loans had an aggregate
Stated Principal Balance equal to $980,243,859.
In consideration of the mutual agreements herein contained,
the Depositor, the Servicer and the Trustee agree as
follows:
5
<PAGE>
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following
words and
phrases, unless the context otherwise requires, shall have the
meanings
specified in this Article. Unless otherwise specified, all
calculations
described herein shall be made on the basis of a 360-day year
consisting of
twelve 30-day months.
"Accrual Period": With respect to the Class A Certificates
and
the Mezzanine Certificates and each Distribution Date, the
period commencing on
the preceding Distribution Date (or in the case of the first
such Accrual
Period, commencing on the Closing Date) and ending on the day
preceding the
current Distribution Date. With respect to the Class CE
Certificates and the
REMIC I Regular Interests and each Distribution Date, the
calendar month prior
to the month of such Distribution Date.
"Adjustable-Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage
Rate that is
subject to adjustment.
"Adjusted Net Maximum Mortgage Rate": With respect to any
Mortgage Loan (or the related REO Property), as of any date of
determination, a
per annum rate of interest equal to the applicable Maximum
Mortgage Rate for
such Mortgage Loan (or the Mortgage Rate in the case of any
Fixed-Rate Mortgage
Loan) as of the first day of the month preceding the month in
which the related
Distribution Date occurs minus the sum of (i) the Trustee Fee
Rate, (ii) the
Servicing Fee Rate and (iii) the Credit Risk Manager Fee
Rate.
"Adjusted Net Mortgage Rate": With respect to any Mortgage
Loan (or the related REO Property), as of any date of
determination, a per annum
rate of interest equal to the applicable Mortgage Rate for such
Mortgage Loan as
of the first day of the month preceding the month in which the
related
Distribution Date occurs minus the sum of (i) the Trustee Fee
Rate, (ii) the
Servicing Fee Rate and (iii) the Credit Risk Manager Fee
Rate.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage Loan, the first day of the month in which the Mortgage
Rate of such
Mortgage Loan changes pursuant to the related Mortgage Note. The
first
Adjustment Date following the Cut-off Date as to each
Adjustable-Rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.
"Advance": With respect to any Distribution Date, as to any
Mortgage Loan or REO Property, any advance made by the Servicer
in respect of
Monthly Payments due during the related Due Period pursuant to
Section 4.03.
"Advance Facility": As defined in Section 3.29 hereof.
"Advancing Person": As defined in Section 3.29 hereof.
6
<PAGE>
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with
such specified
Person. For the purposes of this definition, "control" when used
with respect to
any specified Person means the power to direct the management
and policies of
such Person, directly or indirectly, whether through the
ownership of voting
securities, by contract or otherwise, and the terms
"controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Loss Severity Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the
numerator of
which is the aggregate amount of Realized Losses incurred on any
Mortgage Loans
from the Cut-off Date to the last day of the preceding calendar
month and the
denominator of which is the aggregate principal balance of such
Mortgage Loans
immediately prior to the liquidation of such Mortgage Loans.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of Mezzanine Certificates, (i)
the sum of (a)
any Realized Losses allocated to such Class of Certificates on
such Distribution
Date and (b) the amount of any Allocated Realized Loss Amount
for such Class of
Certificates remaining undistributed from the previous
Distribution Date reduced
by (ii) the amount of any Subsequent Recoveries added to the
Certificate
Principal Balance of such Class of Certificates.
"Assignment": An assignment of Mortgage, notice of transfer
or
equivalent instrument, in recordable form (excepting therefrom,
if applicable,
the mortgage recordation information which has not been required
pursuant to
Section 2.01 hereof or returned by the applicable recorder's
office), which is
sufficient under the laws of the jurisdiction wherein the
related Mortgaged
Property is located to reflect the record of sale of the
Mortgage, which
assignment, notice of transfer or equivalent instrument may be
in the form of
one or more blanket assignments covering Mortgages secured by
Mortgaged
Properties located in the same county, if permitted by law.
"Available Funds": With respect to any Distribution Date, an
amount equal to the excess of (i) the sum of (a) the aggregate
of the related
Monthly Payments received on the Mortgage Loans on or prior to
the related
Determination Date, (b) Net Liquidation Proceeds, Insurance
Proceeds, Principal
Prepayments, Subsequent Recoveries, proceeds from repurchases of
and
substitutions for such Mortgage Loans and other unscheduled
recoveries of
principal and interest in respect of the Mortgage Loans received
during the
related Prepayment Period, (c) the aggregate of any amounts
received in respect
of a related REO Property and withdrawn from any REO Account and
deposited in
the Collection Account for such Distribution Date, (d) the
aggregate of any
amounts deposited in the Collection Account by the Servicer in
respect of
related Prepayment Interest Shortfalls for such Distribution
Date, (e) the
aggregate of any Advances made by the Servicer for such
Distribution Date in
respect of the Mortgage Loans and (f) the aggregate of any
related advances made
by the Trustee in respect of the Mortgage Loans for such
Distribution Date
pursuant to Section 7.02 over (ii) the sum of (a) amounts
reimbursable or
payable to the Servicer pursuant to Section 3.11(a), (b)
Extraordinary Trust
Fund Expenses reimbursable to the Trustee pursuant to Section
3.11(b), (c)
amounts deposited in the Collection
7
<PAGE>
Account or the Distribution Account pursuant to clauses (a)
through (f) above,
as the case may be, in error, (d) the amount of any Prepayment
Charges collected
by the Servicer in connection with the full or partial
prepayment of any of the
Mortgage Loans and any Servicer Prepayment Charge Payment
Amount, (e) the Credit
Risk Manager Fee and (f) the Trustee Fee and any indemnification
amounts owed to
the Trustee payable from the Distribution Account pursuant to
Section 8.05.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title
11
of the United States Code), as amended.
"Book-Entry Certificate": The Class A Certificates and the
Mezzanine Certificates for so long as the Certificates of such
Class shall be
registered in the name of the Depository or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the the
State of New
Jersey, the State of California, the State of New York, the
State of Florida, or
in the cities in which the Corporate Trust Office of the Trustee
is located, are
authorized or obligated by law or executive order to be
closed.
"Cap Contracts": The Group I Cap Contract, the Group II Cap
Contract and the Mezzanine Cap Contract in the forms attached
hereto as Exhibit
L.
"Certificate": Any one of the Mortgage Pass-Through
Certificates, Series 2005-NC1, Class A-1, Class A-2, Class A-3,
Class A-4, Class
A-5, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class
M-7, Class M-8, Class M-9, Class M-10, Class CE, Class P, Class
R or Class R-X,
issued under this Agreement.
"Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed
as a decimal
carried to at least six places, the numerator of which is the
aggregate
Certificate Principal Balance (or the Notional Amount, in the
case of the Class
CE Certificates) of such Class of Certificates on such
Distribution Date (after
giving effect to any distributions of principal and allocations
of Realized
Losses in reduction of the Certificate Principal Balance (or the
Notional
Amount, in the case of the Class CE Certificates) of such Class
of Certificates
to be made on such Distribution Date), and the denominator of
which is the
initial aggregate Certificate Principal Balance (or the Notional
Amount, in the
case of the Class CE Certificates) of such Class of Certificates
as of the
Closing Date.
"Certificate Margin": With respect to the Class A-1
Certificates and REMIC I Regular Interest I-LTA1, 0.290% in the
case of each
Distribution Date through and including the Distribution Date on
which the
aggregate Stated Principal Balance of the Mortgage Loans (and
properties
acquired in respect thereof) remaining in the Trust Fund is
reduced to less than
10% of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans and
0.580% in the case of each Distribution Date thereafter.
With respect to the Class A-2 Certificates and REMIC I
Regular
Interest I-LTA2, 0.320% in the case of each Distribution Date
through and
including the Distribution Date on
8
<PAGE>
which the aggregate Stated Principal Balance of the Mortgage
Loans (and
properties acquired in respect thereof) remaining in the Trust
Fund is reduced
to less than 10% of the aggregate Cut-off Date Principal Balance
of the Mortgage
Loans and 0.640% in the case of each Distribution Date
thereafter.
With respect to the Class A-3 Certificates and REMIC I
Regular
Interest I-LTA3, 0.130% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 0.260% in the case
of each
Distribution Date thereafter.
With respect to the Class A-4 Certificates and REMIC I
Regular
Interest I-LTA4, 0.230% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 0.460% in the case
of each
Distribution Date thereafter.
With respect to the Class A-5 Certificates and REMIC I
Regular
Interest I-LTA5, 0.350% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 0.700% in the case
of each
Distribution Date thereafter.
With respect to the Class M-1 Certificates and REMIC I
Regular
Interest I-LTM1, 0.480% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 0.720% in the case
of each
Distribution Date thereafter.
With respect to the Class M-2 Certificates and REMIC I
Regular
Interest I-LTM2, 0.500% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 0.750% in the case
of each
Distribution Date thereafter.
With respect to the Class M-3 Certificates and REMIC I
Regular
Interest I-LTM3, 0.550% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 0.825% in the case
of each
Distribution Date thereafter.
9
<PAGE>
With respect to the Class M-4 Certificates and REMIC I
Regular
Interest I-LTM4, 0.760% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 1.140% in the case
of each
Distribution Date thereafter.
With respect to the Class M-5 Certificates and REMIC I
Regular
Interest I-LTM5, 0.800% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 1.200% in the case
of each
Distribution Date thereafter.
With respect to the Class M-6 Certificates and REMIC I
Regular
Interest I-LTM6, 0.870% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 1.305% in the case
of each
Distribution Date thereafter.
With respect to the Class M-7 Certificates and REMIC I
Regular
Interest I-LTM7, 1.400% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 2.100% in the case
of each
Distribution Date thereafter.
With respect to the Class M-8 Certificates and REMIC I
Regular
Interest I-LTM8, 1.530% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 2.295% in the case
of each
Distribution Date thereafter.
With respect to the Class M-9 Certificates and REMIC I
Regular
Interest I-LTM9, 2.400% in the case of each Distribution Date
through and
including the Distribution Date on which the aggregate Stated
Principal Balance
of the Mortgage Loans (and properties acquired in respect
thereof) remaining in
the Trust Fund is reduced to less than 10% of the aggregate
Cut-off Date
Principal Balance of the Mortgage Loans and 3.600% in the case
of each
Distribution Date thereafter.
With respect to the Class M-10 Certificates and REMIC I
Regular Interest I-LTM10, 3.500% in the case of each
Distribution Date through
and including the Distribution Date on which the aggregate
Stated Principal
Balance of the Mortgage Loans (and properties acquired in
respect thereof)
remaining in the Trust Fund is reduced to less than 10% of
the
10
<PAGE>
aggregate Cut-off Date Principal Balance of the Mortgage Loans
and 5.250% in the
case of each Distribution Date thereafter.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except
that a
Disqualified Organization or a Non-United States Person shall
not be a Holder of
a Residual Certificate for any purposes hereof and, solely for
the purposes of
giving any consent pursuant to this Agreement, any Certificate
registered in the
name of the Depositor or the Servicer or any Affiliate thereof
shall be deemed
not to be outstanding and the Voting Rights to which it is
entitled shall not be
taken into account in determining whether the requisite
percentage of Voting
Rights necessary to effect any such consent has been obtained,
except as
otherwise provided in Section 11.01. The Trustee and the NIMS
Insurer may
conclusively rely upon a certificate of the Depositor or the
Servicer in
determining whether a Certificate is held by an Affiliate
thereof. All
references herein to "Holders" or "Certificateholders" shall
reflect the rights
of Certificate Owners as they may indirectly exercise such
rights through the
Depository and participating members thereof, except as
otherwise specified
herein; provided, however, that the Trustee and the NIMS Insurer
shall be
required to recognize as a "Holder" or "Certificateholder" only
the Person in
whose name a Certificate is registered in the Certificate
Register.
"Certificate Owner": With respect to a Book-Entry
Certificate,
the Person who is the beneficial owner of such Certificate as
reflected on the
books of the Depository or on the books of a Depository
Participant or on the
books of an indirect participating brokerage firm for which a
Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class
A
Certificate, Mezzanine Certificate or Class P Certificate as of
any date of
determination, the Certificate Principal Balance of such
Certificate on the
Distribution Date immediately prior to such date of
determination plus any
Subsequent Recoveries added to the Certificate Principal Balance
of such
Certificate pursuant to Section 4.01, minus all distributions
allocable to
principal made thereon and Realized Losses allocated thereto on
such immediately
prior Distribution Date (or, in the case of any date of
determination up to and
including the first Distribution Date, the initial Certificate
Principal Balance
of such Certificate, as stated on the face thereof). With
respect to each Class
CE Certificate as of any date of determination, an amount equal
to the
Percentage Interest evidenced by such Certificate times the
excess, if any, of
(A) the then aggregate Uncertificated Balance of the REMIC I
Regular Interests
over (B) the then aggregate Certificate Principal Balance of the
Class A
Certificates, the Mezzanine Certificates and the Class P
Certificates then
outstanding.
"Certificate Register": The register maintained pursuant to
Section 5.02.
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A Certificates": Any of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates or Class
A-5 Certificates.
11
<PAGE>
"Class A-1 Certificate": Any one of the Class A-1
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-1 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class A-2 Certificates": Any one of the Class A-2
Certificates executed, authenticated and delivered by the
Trustee, substantially
in the form annexed hereto as Exhibit A-2 and evidencing a
Regular Interest in
REMIC II for purposes of the REMIC Provisions.
"Class A-3 Certificate": Any one of the Class A-3
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-3 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class A-4 Certificate": Any one of the Class A-4
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-4 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class A-5 Certificate": Any one of the Class A-5
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-5 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class CE Certificate": Any one of the Class CE Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-17 and evidencing a Regular Interest
in REMIC III
for purposes of the REMIC Provisions.
"Class CE Interest": An uncertificated interest in the Trust
Fund held by the Trustee on behalf of the Holders of the Class
CE Certificates,
evidencing a Regular Interest in REMIC II for purposes of the
REMIC Provisions.
"Class M-1 Certificate": Any one of the Class M-1
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-6 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-1 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate Principal Balance of
the Class A
Certificates (after taking into account the distribution of the
Senior 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)
65.00% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day
of the related Due Period (after giving effect to scheduled
payments of
principal due during the related Due Period, to the extent
received or advanced,
and unscheduled collections of principal received during the
related Prepayment
Period) and (B) the excess of the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) over $4,901,269 .
"Class M-2 Certificate": Any one of the Class M-2
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-7 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
12
<PAGE>
"Class M-2 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Senior Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution 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)
73.40% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day
of the related Due Period (after giving effect to scheduled
payments of
principal due during the related Due Period, to the extent
received or advanced,
and unscheduled collections of principal received during the
related Prepayment
Period) and (B) the excess of the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) over $4,901,269.
"Class M-3 Certificate": Any one of the Class M-3
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-8 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-3 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Senior Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution 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
distribution 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) 76.80% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) and (B) the excess of the
aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of
the related Due
Period (after giving effect to scheduled payments of principal
due during the
related Due Period, to the extent received or advanced, and
unscheduled
collections of principal received during the related Prepayment
Period) over
$4,901,269 .
"Class M-4 Certificate": Any one of the Class M-4
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-9 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-4 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Senior Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution of the Class M-1
Principal
Distribution
13
<PAGE>
Amount on such Distribution Date), (iii) the Certificate
Principal Balance of
the Class M-2 Certificates (after taking into account the
distribution 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 distribution of the Class M-3 Principal Distribution
Amount on such
Distribution Date) and (v) the Certificate Principal Balance of
the Class M-4
Certificates immediately prior to such Distribution Date over
(y) the lesser of
(A) the product of (i) 80.20% and (ii) the aggregate Stated
Principal Balance of
the Mortgage Loans as of the last day of the related Due Period
(after giving
effect to scheduled payments of principal due during the related
Due Period, to
the extent received or advanced, and unscheduled collections of
principal
received during the related Prepayment Period) and (B) the
excess of the
aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of
the related Due Period (after giving effect to scheduled
payments of principal
due during the related Due Period, to the extent received or
advanced, and
unscheduled collections of principal received during the related
Prepayment
Period) over $4,901,269 .
"Class M-5 Certificate": Any one of the Class M-5
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-10 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-5 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Senior Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution 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
distribution 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 distribution of the Class M-3
Principal
Distribution Amount on such Distribution Date), (v) the
Certificate Principal
Balance of the Class M-4 Certificates (after taking into account
the
distribution of the Class M-4 Principal Distribution Amount on
such Distribution
Date) and (vi) the Certificate Principal Balance of the Class
M-5 Certificates
immediately prior to such Distribution Date over (y) the lesser
of (A) the
product of (i) 83.70% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) and (B) the excess of the
aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of
the related Due
Period (after giving effect to scheduled payments of principal
due during the
related Due Period, to the extent received or advanced, and
unscheduled
collections of principal received during the related Prepayment
Period) over
$4,901,269.
"Class M-6 Certificate": Any one of the Class M-6
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-11 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-6 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A
14
<PAGE>
Certificates (after taking into account the distribution of the
Senior Principal
Distribution Amount on such Distribution Date), (ii) the
Certificate Principal
Balance of the Class M-1 Certificates (after taking into account
the
distribution 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 distribution 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
distribution of the Class M-3 Principal Distribution Amount on
such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4
Certificates
(after taking into account the distribution of the Class M-4
Principal
Distribution Amount on such Distribution Date), (vi) the
Certificate Principal
Balance of the Class M-5 Certificates (after taking into account
the
distribution of the Class M-5 Principal Distribution Amount on
such Distribution
Date) and (vii) the Certificate Principal Balance of the Class
M-6 Certificates
immediately prior to such Distribution Date over (y) the lesser
of (A) the
product of (i) 86.50% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) and (B) the excess of the
aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of
the related Due
Period (after giving effect to scheduled payments of principal
due during the
related Due Period, to the extent received or advanced, and
unscheduled
collections of principal received during the related Prepayment
Period) over
$4,901,269 .
"Class M-7 Certificate": Any one of the Class M-7
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-12 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-7 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Senior Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution 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
distribution 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 distribution of the Class M-3
Principal
Distribution Amount on such Distribution Date), (v) the
Certificate Principal
Balance of the Class M-4 Certificates (after taking into account
the
distribution of the Class M-4 Principal Distribution Amount on
such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5
Certificates
(after taking into account the distribution of the Class M-5
Principal
Distribution Amount on such Distribution Date), (vii) the
Certificate Principal
Balance of the Class M-6 Certificates (after taking into account
the
distribution of the Class M-6 Principal Distribution Amount on
such Distribution
Date) and (viii) the Certificate Principal Balance of the Class
M-7 Certificates
immediately prior to such Distribution Date over (y) the lesser
of (A) the
product of (i) 88.80% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) and (B) the excess of the
aggregate
15
<PAGE>
Stated Principal Balance of the Mortgage Loans as of the last
day of the related
Due Period (after giving effect to scheduled payments of
principal due during
the related Due Period, to the extent received or advanced, and
unscheduled
collections of principal received during the related Prepayment
Period) over
$4,901,269 .
"Class M-8 Certificate": Any one of the Class M-8
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-13 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-8 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Senior Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution 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
distribution 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 distribution of the Class M-3
Principal
Distribution Amount on such Distribution Date), (v) the
Certificate Principal
Balance of the Class M-4 Certificates (after taking into account
the
distribution of the Class M-4 Principal Distribution Amount on
such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5
Certificates
(after taking into account the distribution of the Class M-5
Principal
Distribution Amount on such Distribution Date), (vii) the
Certificate Principal
Balance of the Class M-6 Certificates (after taking into account
the
distribution of the Class M-6 Principal Distribution Amount on
such Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7
Certificates
(after taking into account the distribution of the Class M-7
Principal
Distribution Amount on such Distribution Date) and (ix) the
Certificate
Principal Balance of the Class M-8 Certificates immediately
prior to such
Distribution Date over (y) the lesser of (A) the product of (i)
90.80% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day
of the related Due Period (after giving effect to scheduled
payments of
principal due during the related Due Period, to the extent
received or advanced,
and unscheduled collections of principal received during the
related Prepayment
Period) and (B) the excess of the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) over $4,901,269.
"Class M-9 Certificate": Any one of the Class M-9
Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-14 and evidencing a Regular Interest
in REMIC II for
purposes of the REMIC Provisions.
"Class M-9 Principal Distribution Amount": With respect to
any
Distribution Date, the excess of (x) the sum of (i) the
aggregate Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Senior Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution of the Class M-1
Principal
Distribution Amount on such Distribution Date), (iii) the
Certificate Principal
Balance of the Class M-2
16
<PAGE>
Certificates (after taking into account the distribution 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
distribution of the Class M-3 Principal Distribution Amount on
such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4
Certificates
(after taking into account the distribution of the Class M-4
Principal
Distribution Amount on such Distribution Date), (vi) the
Certificate Principal
Balance of the Class M-5 Certificates (after taking into account
the
distribution of the Class M-5 Principal Distribution Amount on
such Distribution
Date), (vii) the Certificate Principal Balance of the Class M-6
Certificates
(after taking into account the distribution of the Class M-6
Principal
Distribution Amount on such Distribution Date), (viii) the
Certificate Principal
Balance of the Class M-7 Certificates (after taking into account
the
distribution of the Class M-7 Principal Distribution Amount on
such Distribution
Date), (ix) the Certificate Principal Balance of the Class M-8
Certificates
(after taking into account the distribution of the Class M-8
Principal
Distribution Amount on such Distribution Date) and (x) the
Certificate Principal
Balance of the Class M-9 Certificates immediately prior to such
Distribution
Date over (y) the lesser of (A) the product of (i) 93.10% and
(ii) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last
day of the related
Due Period (after giving effect to scheduled payments of
principal due during
the related Due Period, to the extent received or advanced, and
unscheduled
collections of principal received during the related Prepayment
Period) and (B)
the excess of the aggregate Stated Principal Balance of the
Mortgage Loans as of
the last day of the related Due Period (after giving effect to
scheduled
payments of principal due during the related Due Period, to the
extent received
or advanced, and unscheduled collections of principal received
during the
related Prepayment Period) over $4,901,269.
"Class M-10 Certificate": Any one of the Class M-10
Certificates executed, authenticated and delivered by the
Trustee, substantially
in the form annexed hereto as Exhibit A-15 and evidencing a
Regular Interest in
REMIC II for purposes of the REMIC Provisions.
"Class M-10 Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the
aggregate
Certificate Principal Balance of the Class A Certificates (after
taking into
account the distribution of the Senior Principal Distribution
Amount on such
Distribution Date), (ii) the Certificate Principal Balance of
the Class M-1
Certificates (after taking into account the distribution 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
distribution 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 distribution of the Class M-3
Principal
Distribution Amount on such Distribution Date), (v) the
Certificate Principal
Balance of the Class M-4 Certificates (after taking into account
the
distribution of the Class M-4 Principal Distribution Amount on
such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5
Certificates
(after taking into account the distribution of the Class M-5
Principal
Distribution Amount on such Distribution Date), (vii) the
Certificate Principal
Balance of the Class M-6 Certificates (after taking into account
the
distribution of the Class M-6 Principal Distribution Amount on
such Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7
Certificates
(after taking into account the distribution of the Class M-7
Principal
Distribution Amount on such Distribution Date), (ix) the
Certificate Principal
Balance of the Class M-8 Certificates (after taking into account
the
distribution of the Class M-8 Principal Distribution
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Amount on such Distribution Date), (x) the Certificate Principal
Balance of the
Class M-9 Certificates (after taking into account the
distribution of the Class
M-9 Principal Distribution Amount on such Distribution Date) and
(xi) the
Certificate Principal Balance of the Class M-10 Certificates
immediately prior
to such Distribution Date over (y) the lesser of (A) the product
of (i) 93.80%
and (ii) the aggregate Stated Principal Balance of the Mortgage
Loans as of the
last day of the related Due Period (after giving effect to
scheduled payments of
principal due during the related Due Period, to the extent
received or advanced,
and unscheduled collections of principal received during the
related Prepayment
Period) and (B) the excess of the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period
(after giving effect
to scheduled payments of principal due during the related Due
Period, to the
extent received or advanced, and unscheduled collections of
principal received
during the related Prepayment Period) over $4,901,269.
"Class P Certificate": Any one of the Class P Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-18 and evidencing a Regular Interest
in REMIC IV for
purposes of the REMIC Provisions.
"Class P Interest": An uncertificated interest in the Trust
Fund held by the Trustee on behalf of the Holders of the Class P
Certificates,
evidencing a Regular Interest in REMIC II for purposes of the
REMIC Provisions.
"Class R Certificate": Any one of the Class R Certificates
executed, authenticated and delivered by the Trustee,
substantially in the form
annexed hereto as Exhibit A-19 and evidencing the ownership of
the Class R-I
Interest and the Class R-II Interest.
"Class R-X Certificate": The Class R-X Certificate executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-20 and evidencing the ownership of the Class
R-III Interest
and the Class R-IV Interest.
"Class R-I Interest": The uncertificated Residual Interest
in
REMIC I.
"Class R-II Interest": The uncertificated Residual Interest
in
REMIC II.
"Class R-III Interest": The uncertificated Residual Interest
in REMIC III.
"Class R-IV Interest": The uncertificated Residual Interest
in
REMIC IV.
"Closing Date": January 20, 2005.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by the
Servicer pursuant to
Section 3.10(a), which shall be entitled "Ocwen Federal Bank
FSB, as Servicer
for U.S. Bank National Association, as Trustee, in trust for the
registered
holders of MASTR Asset Backed Securities Trust 2005-NC1,
Mortgage Pass-Through
Certificates." The Collection Account must be an Eligible
Account.
"Commission": The Securities and Exchange Commission.
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<PAGE>
"Compensating Interest": As defined in Section 3.24 hereof.
"Corporate Trust Office": The principal corporate trust
office
of the Trustee at which at any particular time its corporate
trust business in
connection with this Agreement shall be administered, which
office, at the date
of the execution of this instrument, is located at 60 Livingston
Avenue, St.
Paul, Minnesota 55107, Attention: Structured Finance/MASTR
2005-NC1, or at such
other address as the Trustee may designate from time to time by
notice to the
Certificateholders, the Depositor, the Servicer, NC Capital and
the Orginator.
"Corresponding Certificate": With respect to each REMIC I
Regular Interest set forth below, the corresponding Regular
Certificate set
forth in the table below:
REMIC I REGULAR INTEREST REGULAR CERTIFICATE
------------------------ -------------------
I-LTA1 Class A-1
I-LTA2 Class A-2
I-LTA3 Class A-3
I-LTA4 Class A-4
I-LTA5 Class A-5
I-LTM1 Class M-1
I-LTM2 Class M-2
I-LTM3 Class M-3
I-LTM4 Class M-4
I-LTM5 Class M-5
I-LTM6 Class M-6
I-LTM7 Class M-7
I-LTM8 Class M-8
I-LTM9 Class M-9
I-LTM10 Class M-10
I-LTP Class P
"Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which
is the sum of
the aggregate Certificate Principal Balances of the Mezzanine
Certificates and
the Class CE Certificates, and the denominator of which is the
aggregate Stated
Principal Balance of the Mortgage Loans, calculated prior to
taking into account
distributions of principal on the Mortgage Loans and
distribution of the Group I
Principal Distribution Amount and the Group II Principal
Distribution Amount to
the Certificates then entitled to distributions of principal on
such
Distribution Date.
"Credit Risk Management Agreement": The credit risk
management
agreement, dated January 20, 2005, entered into between the
Credit Risk Manager
and the Servicer in the form of Exhibit N attached hereto.
"Credit Risk Manager": Risk Management Group, LLC, a New
York
limited liability company, or its successor in interest.
"Credit Risk Manager Fee": The amount payable to the Credit
Risk Manager on each Distribution Date pursuant to Section
3.11(b) as
compensation for all services rendered by
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it in the exercise and performance of any of the powers and
duties of the Credit
Risk Manager hereunder or in the Credit Risk Management
Agreement, which amount
shall be equal to one-twelfth of the Credit Risk Manager Fee
Rate (without
regards to the words "per annum" in the definition thereof)
multiplied by the
Stated Principal Balance of the Mortgage Loans as of the first
day of the
related Due Period.
"Credit Risk Manager Fee Rate": 0.01% per annum.
"Cumulative Loss Percentage": With respect to any
Distribution
Date, the percentage equivalent of a fraction, the numerator of
which is the
aggregate amount of Realized Losses incurred from the Cut-off
Date to the last
day of the preceding calendar month and the denominator of which
is the sum of
the aggregate Stated Principal Balance of the Mortgage Loans as
of the Cut-off
Date.
"Custodian": U.S. Bank National Association, a national
banking association, or its successor in interest.
"Cut-off Date": With respect to each Original Mortgage Loan,
January 1, 2005. With respect to all Qualified Substitute
Mortgage Loans, their
respective dates of substitution. References herein to the
"Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to
the respective
Cut-off Dates for such Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any
Mortgage
Loan, the unpaid State Principal Balance thereof as of the
Cut-off Date of such
Mortgage Loan, after giving effect to scheduled payments due on
or before the
Cut-off Date, whether or not received.
"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.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of
competent jurisdiction
in an amount less than the then outstanding principal balance of
the Mortgage
Loan, which valuation results from a proceeding initiated under
the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the
numerator of which is
the aggregate Stated Principal Balance of all Mortgage Loans
that, as of the
last day of the previous calendar month, are 60 or more days
delinquent, are in
foreclosure, have been converted to REO Properties or have been
discharged by
reason of bankruptcy, and the denominator of which is the
aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of
the last day of
the previous calendar month.
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<PAGE>
"Depositor": Mortgage Asset Securitization Transactions,
Inc.,
a Delaware corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial
Depository, for purposes
of registering those Certificates that are to be Book-Entry
Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing
corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New
York and a "clearing agency" registered pursuant to the
provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"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 15th day of the calendar month in which such Distribution
Date occurs or, if
such 15th day is not a Business Day, the Business Day
immediately preceding such
15th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the
management or
operation of such REO Property, the holding of such REO Property
primarily for
sale to customers, the performance of any construction work
thereon or any use
of such REO Property in a trade or business conducted by REMIC I
other than
through an Independent Contractor; provided, however, that the
Trustee (or the
Servicer on behalf of the Trustee) shall not be considered to
Directly Operate
an REO Property solely because the Trustee (or the Servicer on
behalf of the
Trustee) establishes rental terms, chooses tenants, enters into
or renews
leases, deals with taxes and insurance, or makes decisions as to
repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any
possession of the
United States, or any agency or instrumentality of any of the
foregoing (other
than an instrumentality which is a corporation if all of its
activities are
subject to tax and, except for Freddie Mac, a majority of its
board of directors
is not selected by such governmental unit), (ii) any foreign
government, any
international organization, or any agency or instrumentality of
any of the
foregoing, (iii) any organization (other than certain
farmers'cooperatives
described in Section 521 of the Code) which is exempt from the
tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511
of the Code on
unrelated business taxable income), (iv) rural electric and
telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v)
an "electing
large partnership" and (vi) any other Person so designated by
the Trustee based
upon an Opinion of Counsel that the holding of an Ownership
Interest in a
Residual Certificate by such Person may cause any Trust REMIC or
any Person
having an Ownership Interest in any Class of Certificates (other
than such
Person) to incur a liability for any federal tax imposed under
the Code that
would not otherwise be imposed but for the Transfer of an
Ownership Interest in
a Residual Certificate to such Person. The terms "United
States," "State" and
"international organization" shall have the meanings set forth
in Section 7701
of the Code or successor provisions.
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<PAGE>
"Distribution Account": The trust account or accounts
created
and maintained by the Trustee pursuant to Section 3.10(b), which
shall be
entitled "U.S. Bank National Association, as Trustee, in trust
for the
registered holders of MASTR Asset Backed Securities Trust
2005-NC1, Mortgage
Pass-Through Certificates, Series 2005-NC1." The Distribution
Account must be an
Eligible Account.
"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately
following such 25th
day, commencing in February 2005.
"Due Date": With respect to each Distribution Date, the
first
day of the calendar month in which such Distribution Date
occurs, which is
generally the day of the month on which the Monthly Payment is
due on a Mortgage
Loan, exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately
preceding the month
in which such Distribution Date occurs and ending on the related
Due Date.
"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 "P-1" by Moody's or "A-1+" by S&P (or
comparable ratings if
Moody's and S&P are not the Rating Agencies) at the time any
amounts are held on
deposit therein, (ii) with respect to any escrow account, an
account or accounts
the deposits in which are fully insured by the FDIC (to the
limits established
by such corporation) and any uninsured deposits in which are
otherwise secured
such that, as evidenced by an Opinion of Counsel delivered to
the NIMS Insurer,
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 the NIMS Insurer and 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 and
the NIMS Insurer. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of
1974,
as amended.
"Escrow Payments": The amounts constituting ground rents,
taxes, assessments, water rates, 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
land.
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<PAGE>
"Excess Overcollateralized Amount": With respect to the
Class
A Certificates and the Mezzanine Certificates and any
Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such
Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied
as a principal
distribution on such Distribution Date over (ii) the
Overcollateralization
Target Amount for such Distribution Date.
"Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (x) the Monthly Interest
Distributable Amount
payable on the Class CE Certificates on such Distribution Date
as reduced by
Realized Losses allocated thereto with respect to such
Distribution Date
pursuant to Section 4.04 and (y) the Overcollateralization
Deficiency Amount for
such Distribution Date.
"Extraordinary Trust Fund Expense": Any amounts reimbursable
to the Trustee, or any director, officer, employee or agent of
the Trustee from
the Trust Fund pursuant to Section 8.05 or Section 10.01(c) and
any amounts
payable from the Distribution Account in respect of taxes
pursuant to Section
10.01(g)(iii).
"Fannie Mae": Fannie Mae, formally known as the Federal
National Mortgage Association, or any successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any
successor
thereto.
"Final Recovery Determination": With respect to any
defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or
REO Property
purchased or repurchased by NC Capital, the Seller, the
Depositor,the Servicer
or the NIMS Insurer pursuant to or as contemplated by Section
2.03, Section
3.16(c) or Section 9.01), 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.
"Fitch": Fitch, Inc. or its successor in interest.
"Fixed-Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage
Rate that is fixed
for the entire term of the Mortgage Loan.
"Formula Rate": For any Distribution Date and the Class A
Certificates and the Mezzanine Certificates, the lesser of (i)
One-Month LIBOR
plus the related Certificate Margin and (ii) the Maximum Cap
Rate.
"Freddie Mac": Freddie Mac, formally known as the Federal
Home
Loan Mortgage Corporation, or any successor thereto.
"Gross Margin": With respect to each Adjustable-Rate
Mortgage
Loan, the fixed percentage set forth in the related Mortgage
Note that is added
to the Index on each Adjustment Date in accordance with the
terms of the related
Mortgage Note used to determine the Mortgage Rate for such
Adjustable-Rate
Mortgage Loan.
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<PAGE>
"Group I Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the
numerator of
which is the Group I Principal Remittance Amount for such
Distribution Date, and
the denominator of which is the Principal Remittance Amount for
such
Distribution Date.
"Group I Basic Principal Distribution Amount": With respect
to
any Distribution Date, the excess of (i) the Group I Principal
Remittance Amount
for such Distribution Date over (ii)(a) the
Overcollateralization Release
Amount, if any, for such Distribution Date multiplied by (b) the
Group I
Allocation Percentage.
"Group I Cap Contract": The cap contract between the Trustee
and the counterparty thereunder relating to the Group I
Certificates.
"Group I Certificates": The Class A-1 Certificates and the
Class A-2 Certificates.
"Group I Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Funds for such
Distribution
Date attributable to interest received or advanced with respect
to the Group I
Mortgage Loans.
"Group I Mortgage Loan": A Mortgage Loan assigned to Loan
Group I with a principal balance that conforms to Fannie Mae and
Freddie Mac
loan limits.
"Group I Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Group I Basic Principal
Distribution
Amount for such Distribution Date and (ii)(a) the Extra
Principal Distribution
Amount for such Distribution Date multiplied by (b) the Group I
Allocation
Percentage.
"Group I Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) each scheduled payment of
principal collected
or advanced on the Group I Mortgage Loans by the Servicer that
was due during
the related Due Period, (ii) the principal portion of all
partial and full
Principal Prepayments of the Group I Mortgage Loans applied by
the Servicer
during the related Prepayment Period, (iii) the principal
portion of all related
Net Liquidation Proceeds, Insurance Proceeds and Subsequent
Recoveries received
during such Prepayment Period with respect to the Group I
Mortgage Loans, (iv)
that portion of the Purchase Price, representing principal of
any repurchased
Group I Mortgage Loan, deposited in the Collection Account
during such
Prepayment Period, (v) the principal portion of any related
Substitution
Adjustment Amounts deposited in the Collection Account during
such Prepayment
Period with respect to the Group I Mortgage Loans and (vi) on
the Distribution
Date on which the Trust Fund is to be terminated pursuant to
Section 9.01, that
portion of the Termination Price, in respect of principal on the
Group I
Mortgage Loans.
"Group I Senior Principal Distribution Amount": The excess
of
(x) the aggregate Certificate Principal Balance of the Group I
Certificates
immediately prior to such Distribution Date over (y) the lesser
of (A) the
product of (i) 54.10% and (ii) the aggregate Stated Principal
Balance of the
Group I Mortgage Loans as of the last day of the related Due
Period (after
giving effect to scheduled payments of principal due during the
related Due
Period, to the extent received or advanced, and unscheduled
collections of
principal received during the related
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<PAGE>
Prepayment Period) and (B) the excess of the aggregate Stated
Principal Balance
of the Group I Mortgage Loans as of the last day of the related
Due Period
(after giving effect to scheduled payments of principal due
during the related
Due Period, to the extent received or advanced, and unscheduled
collections of
principal received during the related Prepayment Period) over
$2,839,785.
"Group II Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the
numerator of
which is the Group II Principal Remittance Amount for such
Distribution Date,
and the denominator of which is the Principal Remittance Amount
for such
Distribution Date.
"Group II Basic Principal Distribution Amount": With respect
to any Distribution Date, the excess of (i) the Group II
Principal Remittance
Amount for such Distribution Date over (ii)(a) the
Overcollateralization Release
Amount, if any, for such Distribution Date multiplied by (b) the
Group II
Allocation Percentage.
"Group II Cap Contract": The cap contract between the
Trustee
and the counterparty thereunder relating to the Group II
Certificates.
"Group II Certificates": The Class A-3 Certificates, the
Class
A-4 Certificates and the Class A-5 Certificates.
"Group II Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Funds for such
Distribution
Date attributable to interest received or advanced with respect
to the Group II
Mortgage Loans.
"Group II Mortgage Loan": A Mortgage Loan assigned to Loan
Group II with a principal balance that may or may not conform to
Fannie Mae and
Freddie Mac loan limits.
"Group II Principal Distribution Amount": With respect to
any
Distribution Date, the sum of (i) the Group II Basic Principal
Distribution
Amount for such Distribution Date and (ii)(a) the Extra
Principal Distribution
Amount for such Distribution Date multiplied by (b) the Group II
Allocation
Percentage.
"Group II Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) each scheduled payment of
principal collected
or advanced on the Group II Mortgage Loans by the Servicer that
was due during
the related Due Period, (ii) the principal portion of all
partial and full
principal prepayments of the Group II Mortgage Loans applied by
the Servicer
during the related Prepayment Period, (iii) the principal
portion of all related
Net Liquidation Proceeds, Insurance Proceeds and Subsequent
Recoveries received
during such Prepayment Period with respect to the Group II
Mortgage Loans, (iv)
that portion of the Purchase Price, representing principal of
any repurchased
Group II Mortgage Loan, deposited in the Collection Account
during such
Prepayment Period, (v) the principal portion of any related
Substitution
Adjustment Amounts deposited in the Collection Account during
such Prepayment
Period with respect to the Group II Mortgage Loans and (vi) on
the Distribution
Date on which the Trust Fund is to be terminated pursuant to
Section 9.01, that
portion of the Termination Price, in respect of principal on the
Group II
Mortgage Loans.
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<PAGE>
"Group II Senior Principal Distribution Amount": The excess
of
(x) the aggregate Certificate Principal Balance of the Group II
Certificates
immediately prior to such Distribution Date over (y) the lesser
of (A) the
product of (i) 54.10% and (ii) the aggregate Stated Principal
Balance of the
Group II Mortgage Loans as of the last day of the related Due
Period (after
giving effect to scheduled payments of principal due during the
related Due
Period, to the extent received or advanced, and unscheduled
collections of
principal received during the related Prepayment Period) and (B)
the excess of
the aggregate Stated Principal Balance of the Group II Mortgage
Loans as of the
last day of the related Due Period (after giving effect to
scheduled payments of
principal due during the related Due Period, to the extent
received or advanced,
and unscheduled collections of principal received during the
related Prepayment
Period) over $2,061,484.
"Highest Priority": As of any date of determination, the
Class
of Mezzanine Certificates then outstanding with a Certificate
Principal Balance
greater than zero, with the highest priority for payments
pursuant to Section
4.01, in the following order: Class M-1, Class M-2, Class M-3,
Class M-4, Class
M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class M-10
Certificates.
"Indenture": An indenture relating to the issuance of notes
secured by the Class CE Certificates, the Class P Certificates
and/or the Class
R Certificates (or any portion thereof) which may or may not be
guaranteed by
the NIMS Insurer.
"Independent": When used with respect to any specified
Person,
any such Person who (a) is in fact independent of the Servicer,
the Depositor,
the Trustee, the Seller, the Originator and their respective
Affiliates, (b)
does not have any direct financial interest in or any material
indirect
financial interest in the Servicer, the Depositor, the Trustee,
the Seller, the
Originator or any Affiliate thereof, and (c) is not connected
with the Servicer,
the Depositor, the Trustee, the Seller, the Originator 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 Servicer, the Depositor the
Trustee, the Seller,
the Originator or any Affiliate thereof merely because such
Person is the
beneficial owner of 1% or less of any class of securities issued
by the
Servicer, the Depositor, the Trustee, the Seller, the Originator
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 REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I
were a real
estate investment trust (except that the ownership tests set
forth in that
section shall be considered to be met by any Person that owns,
directly or
indirectly, 35% or more of any Class of Certificates), so long
as REMIC I does
not receive or derive any income from such Person and provided
that the
relationship between such Person and REMIC I is at arm's length,
all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii)
any other Person
(including the Servicer) if the Trustee has received an Opinion
of Counsel to
the effect that the taking of any action in respect of any REO
Property by such
Person, subject to any conditions therein specified, that is
otherwise herein
contemplated to be taken by an Independent Contractor will not
cause such REO
Property to cease to qualify as "foreclosure property" within
the meaning of
Section 860G(a)(8) of the Code (determined without regard to the
exception
applicable for purposes of Section 860D(a) of the Code), or
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<PAGE>
cause any income realized in respect of such REO Property to
fail to qualify as
Rents from Real Property.
"Index": With respect to each Adjustable Rate Mortgage Loan
and with respect to each related Adjustment Date, the index as
specified in the
related Mortgage Note.
"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 Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, REMIC I Regular
Interest I-LTA1, REMIC
I Regular Interest I-LTA2, REMIC I Regular Interest I-LTA3,
REMIC I Regular
Interest I-LTA4, REMIC I Regular Interest I-LTA5, REMIC I
Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
Interest I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5,
REMIC I Regular
Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I
Regular Interest
I-LTM8, REMIC I Regular Interest I-LTM9 and REMIC I Regular
Interest I-LTM10 and
any Accrual Period therefor, the second London Business Day
preceding the
commencement of such Accrual Period.
"Late Collections": With respect to any Mortgage Loan and
any
Due Period, all amounts received by the Servicer subsequent to
the Determination
Date immediately following such Due Period, whether as late
payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or
otherwise, which
represent late payments or collections of principal and/or
interest due (without
regard to any acceleration of payments under the related
Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously
recovered.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the Servicer has determined,
in its reasonable
judgment, as of the end of the related Prepayment Period, that
all Liquidation
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 REMIC I by reason of its being purchased,
repurchased or
replaced pursuant to or as contemplated by Section 2.03, Section
3.16(c) or
Section 9.01. 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 REMIC I by reason of its being
purchased pursuant
to Section 9.01.
"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,
(ii) the liquidation of a defaulted Mortgage Loan through a
trustee's
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<PAGE>
sale, foreclosure sale or otherwise, or (iii) the purchase,
repurchase or
substitution of a Mortgage Loan or an REO Property pursuant to
or as
contemplated by Section 2.03, Section 3.16(c), Section 3.23 or
Section 9.01.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is
the principal
balance of the related Mortgage Loan at such date and the
denominator of which
is the Value of the related Mortgaged Property.
"Loan Group": Any of Loan Group I or Loan Group II, as the
context requires.
"Loan Group I": The group of Mortgage Loans identified in
the
Mortgage Loan Schedule as having been assigned to Loan Group
I.
"Loan Group II": The group of Mortgage Loans identified in
the
Mortgage Loan Schedule as having been assigned to Loan Group
II.
"London Business Day": Any day on which banks in the City of
London and New York are open and conducting transactions in
United States
dollars.
"Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of
which is the
amount of Realized Losses incurred on a Mortgage Loan and the
denominator of
which is the principal balance of such Mortgage Loan immediately
prior to the
liquidation of such Mortgage Loan.
"Marker Rate": With respect to the Class CE Interest and any
Distribution Date, a per annum rate equal to two (2) times the
weighted average
of the REMIC I Remittance Rate for each of REMIC I Regular
Interests I-LTA1,
I-LTA2, I-LTA3, I-LTA4, I-LTA5, I-LTM1, I-LTM2, I-LTM3, I-LTM4,
I-LTM5, I-LTM6,
I-LTM7, I-LTM8, I-LTM9, I-LTM10 and I-LTZZ, with the rate on
each such REMIC I
Regular Interest (other than REMIC I Regular Interest I-LTZZ)
subject to a cap
equal to the lesser of (a) One-Month LIBOR plus the related
Certificate Margin
and (b) the related Net WAC Rate for the purpose of this
calculation and, with
the rate on REMIC I Regular Interest I-LTZZ, subject to a cap of
zero for the
purpose of this calculation; provided, however, that solely for
this purpose,
calculations of the REMIC I Remittance Rate and the related caps
with respect to
such REMIC I Regular Interests (other than REMIC I Regular
Interest I-LTZZ)
shall be multiplied by a fraction, the numerator of which is the
actual number
of days elapsed in the related Accrual Period and the
denominator of which is
30.
"Maximum Cap Rate": For any Distribution Date with respect
to
the Class A Certificates and the Mezzanine Certificates, a per
annum rate equal
to the weighted average of the Adjusted Net Maximum Mortgage
Rates of the
Mortgage Loans multiplied by a fraction, the numerator of which
is 30 and the
denominator of which is the actual number of days elapsed in the
related Accrual
Period.
"Maximum I-LTZZ Uncertificated Interest Deferral Amount":
With
respect to any Distribution Date, the excess of (i) accrued
interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest
I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated
Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralized
Amount, in each
case for such Distribution Date, over (ii) Uncertificated
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<PAGE>
Interest on REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2,
REMIC I Regular Interest I-LTA3, REMIC I Regular Interest
I-LTA4, REMIC I
Regular Interest I-LTA5, REMIC I Regular Interest I-LTM1, REMIC
I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest
I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6, REMIC
I Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8,
REMIC I Regular
Interest I-LTM9 and REMIC I Regular Interest I-LTM10 for such
Distribution Date,
with the rate on each such REMIC I Regular Interest subject to a
cap equal to
the lesser of (a) One-Month LIBOR plus the related Certificate
Margin and (b)
the related Net WAC Rate; provided, however, each cap shall be
multiplied by a
fraction, the numerator of which is the actual number of days
elapsed in the
related Accrual Period and the denominator of which is 30.
"Maximum Mortgage Rate": With respect to each
Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage
Note as the
maximum Mortgage Rate thereunder.
"MERS": Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State
of Delaware, or
any successor thereto.
"MERS(R) System": The system of recording transfers of
Mortgages electronically maintained by MERS.
"Mezzanine Cap Contract": The cap contract between the
Trustee
and the counterparty thereunder relating to the Mezzanine
Certificates.
"Mezzanine Certificate": Any Class M-1 Certificate, Class
M-2
Certificate, Class M-3 Certificate, Class M-4 Certificates,
Class M-5
Certificates, Class M-6 Certificate, Class M-7 Certificates,
Class M-8
Certificates, Class M-9 Certificate or Class M-10
Certificates.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"Minimum Mortgage Rate": With respect to each
Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage
Note as the
minimum Mortgage Rate thereunder.
"MOM Loan": With respect to any Mortgage Loan, MERS acting
as
the mortgagee of such Mortgage Loan, solely as nominee for the
originator of
such Mortgage Loan and its successors and assigns, at the
origination thereof.
"Monthly Interest Distributable Amount": With respect to the
Class A Certificates, the Mezzanine Certificates and the Class
CE Certificates
and any Distribution Date, the amount of interest accrued during
the related
Accrual Period at the related Pass-Through Rate on the
Certificate Principal
Balance (or Notional Amount in the case of the Class CE
Certificates) of such
Class immediately prior to such Distribution Date, reduced by
any Prepayment
Interest Shortfalls (to the extent not covered by payments made
by the Servicer
pursuant to Section 3.24) and Relief Act Interest Shortfalls
(allocated to each
such Certificate
29
<PAGE>
based on its respective entitlements to interest irrespective of
any Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution
Date).
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such
Mortgage Loan, which
is payable by the related Mortgagor from time to time under the
related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient
Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and
(ii) any reduction
in the amount of interest collectible from the related Mortgagor
pursuant to the
Relief Act; (b) without giving effect to any extension granted
or agreed to by
the Servicer pursuant to Section 3.07; and (c) on the assumption
that all other
amounts, if any, due under such Mortgage Loan are paid when
due.
"Monthly Statement": The statement prepared by the Trustee
pursuant to Section 4.02.
"Moody's": Moody's Investors Service, Inc. or its successor
in
interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on, or first or second priority
security
interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section
2.01
pertaining to a particular Mortgage Loan and any additional
documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and delivered to the Trustee pursuant to Section
2.01 or Section
2.03(b) as held from time to time as a part of the Trust, the
Mortgage Loans so
held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement among the
Seller, NC Capital and the Depositor, regarding the sale of the
Mortgage Loans
by the Seller to the Depositor, substantially in the form of
Exhibit D annexed
hereto.
"Mortgage Loan Schedule": As of any date, the list of
Mortgage
Loans included in REMIC I on such date, attached hereto as
Schedule 1. The
Mortgage Loan Schedule shall set forth the following information
with respect to
each Mortgage Loan:
(1) the Mortgage Loan identifying number;
(2) [reserved];
(3) the state and zip code of the Mortgaged Property;
(4) a code indicating whether the Mortgaged Property was
represented by the borrower, at the time of origination, as
being
owner-occupied;
(5) the type of Residential Dwelling constituting the
Mortgaged Property;
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<PAGE>
(6) the original months to maturity;
(7) the stated remaining months to maturity from the Cut-off
Date, based on the original amortization schedule;
(8) the Loan-to-Value Ratio at origination;
(9) the Mortgage Rate in effect immediately following the
Cut-off Date;
(10) the date on which the first Monthly Payment was due on
the Mortgage Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment due on the first Due
Date after the Cut-off Date;
(14) the last Due Date on which a Monthly Payment was
actually
applied to the unpaid Stated Principal Balance;
(15) the original principal amount of the Mortgage Loan;
(16) the Stated Principal Balance of the Mortgage Loan as of
the close of business on the Cut-off Date;
(17) a code indicating the purpose of the Mortgage Loan
(i.e.,
purchase financing, rate/term refinancing, cash-out
refinancing);
(18) the Mortgage Rate at origination;
(19) a code indicating the documentation program (i.e., full
documentation, limited documentation, stated income
documentation);
(20) the risk grade;
(21) the Value of the Mortgaged Property;
(22) the sale price of the Mortgaged Property, if
applicable;
(23) the actual unpaid principal balance of the Mortgage
Loan
as of the Cut-off Date;
(24) the type and term of the related Prepayment Charge;
(25) the rounding code;
(26) the program code;
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<PAGE>
(27) a code indicating the lien priority for Mortgage Loans;
(28) with respect to each Adjustable Rate Mortgage Loan, the
Minimum Mortgage Rate, the Maximum Mortgage Rate, the Gross
Margin, the
next Adjustment Date and the Periodic Rate Cap;
(29) the credit score ("FICO") of such Mortgage Loan; and
(30) the total amount of points and fees charged such
Mortgage
Loan.
The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate
and for each
Loan Group as of the Cut-off Date: (1) the number of Mortgage
Loans (separately
identifying the number of Fixed-Rate Mortgage Loans and the
number of
Adjustable-Rate Mortgage Loans); (2) the current Stated
Principal Balance of the
Mortgage Loans; (3) the weighted average Mortgage Rate of the
Mortgage Loans and
(4) the weighted average maturity of the Mortgage Loans. The
Mortgage Loan
Schedule shall be amended from time to time by the Depositor in
accordance with
the provisions of this Agreement. With respect to any Qualified
Substitute
Mortgage Loan, the Cut-off Date shall refer to the related
Cut-off Date for such
Mortgage Loan, determined in accordance with the definition of
Cut-off Date
herein.
"Mortgage Note": The original executed note or other
evidence
of the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 and existing from time to time thereafter, and any
REO Properties
acquired in respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from
time to time in
accordance with the provisions of the related Mortgage Note,
which rate with
respect to the Adjustable-Rate Mortgage Loans, (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 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, equal to the sum, rounded to the nearest or
next highest 0.125%
as provided in the Mortgage Note, of the Index, as most recently
available as of
a date prior to the Adjustment Date as set forth in the related
Mortgage Note,
plus the related Gross Margin; provided that the Mortgage Rate
on such
Adjustable-Rate Mortgage Loan on any Adjustment Date shall never
be more than
the lesser of (i) the sum of the Mortgage Rate in effect
immediately prior to
the Adjustment Date plus the related Periodic Rate Cap, if any,
and (ii) the
related Maximum Mortgage Rate, and shall never be less than the
greater of (i)
the Mortgage Rate in effect immediately prior to the Adjustment
Date less the
Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage
Rate. 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.
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<PAGE>
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an
Estate in Real
Property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"NC Capital": NC Capital Corporation, a California
corporation, or its successor in interest.
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan or any other disposition of the related Mortgaged
Property
(including REO Property) the related Liquidation Proceeds and
Insurance 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 related Mortgaged Property.
"Net Monthly Excess Cashflow": With respect to each
Distribution Date, the sum of (a) any Overcollateralization
Release Amount for
such Distribution Date and (b) the excess of (x) Available Funds
for such
Distribution Date over (y) the sum for such Distribution Date of
(A) the Monthly
Interest Distributable Amounts for the Class A Certificates and
the Mezzanine
Certificates, (B) the Unpaid Interest Shortfall Amounts for the
Class A
Certificates and (C) the Principal Remittance Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or
the
related REO Property) as of any date of determination, a per
annum rate of
interest equal to the then applicable Mortgage Rate for such
Mortgage Loan minus
the Servicing Fee Rate.
"Net WAC Rate": For any Distribution Date with respect to
the
Group I Certificates, a per annum rate equal to the product of
(x) the weighted
average of the Adjusted Net Mortgage Rates of the Group I
Mortgage Loans,
weighted based on their outstanding Principal Balances as of the
first day of
the calendar month preceding the month in which the Distribution
Date occurs and
(y) a fraction, the numerator of which is 30 and the denominator
of which is the
actual number of days elapsed in the related Accrual Period. For
federal income
tax purposes, the economic equivalent of such rate shall be
expressed as the
weighted average of the REMIC I Remittance Rate on REMIC I
Regular Interest
I-LT1GRP, weighted on the basis of the Uncertificated Balance of
such REMIC I
Regular Interest.
For any Distribution Date with respect to the Group II
Certificates, a per annum rate equal to the product of (x) the
weighted average
of the Adjusted Net Mortgage Rates of the Group II Mortgage
Loans, weighted
based on their outstanding Stated Principal Balances as of the
first day of the
calendar month preceding the month in which the Distribution
Date occurs and (y)
a fraction, the numerator of which is 30 and the denominator of
which is the
actual number of days elapsed in the related Accrual Period. For
federal income
tax purposes, the economic equivalent of such rate shall be
expressed as the
weighted average of the REMIC I Remittance Rate on REMIC I
Regular Interest
I-LT2GRP, weighted on the basis of the Uncertificated Balance of
such REMIC I
Regular Interest.
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<PAGE>
For any Distribution Date with respect to the Mezzanine
Certificates, a per annum rate equal to the product of (x) the
weighted average
of the Adjusted Net Mortgage Rates of the Group I Mortgage Loans
and the Group
II Mortgage Loans, weighted in proportion to the results of
subtracting from the
aggregate Stated Principal Balance of each Loan Group the
aggregate Certificate
Principal Balance of the related Class A Certificates and (y) a
fraction, the
numerator of which is 30 and the denominator of which is the
actual number of
days elapsed in the related Accrual Period. For federal income
tax purposes, the
economic equivalent of such rate shall be expressed as the
weighted average of
the REMIC I Remittance Rates on (a) REMIC I Regular Interest
I-LT1SUB, subject
to a cap and a floor equal to the Adjusted Net Mortgage Rates of
the Group I
Mortgage Loans and (b) REMIC I Regular Interest I-LT2SUB,
subject to a cap and a
floor equal to the Adjusted Net Mortgage Rates of the Group II
Mortgage Loans,
weighted on the basis of the Uncertificated Balance of each such
REMIC I Regular
Interest.
"Net WAC Rate Carryover Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution
Date, the sum
of (A) the positive excess of (i) the amount of interest accrued
on such Class
of Certificates on such Distribution Date calculated at the
related Formula
Rate, over (ii) the amount of interest accrued on such Class of
Certificates at
the Net WAC Rate for such Distribution Date and (B) the Net WAC
Rate Carryover
Amount for the previous Distribution Date not previously paid,
together with
interest thereon at a rate equal to the Formula Rate for such
Class of
Certificates for such Distribution Date and for such Accrual
Period.
"Net WAC Rate Carryover Reserve Account": The account
established and maintained pursuant to Section 4.07.
"New Lease": Any lease of REO Property entered into on
behalf
of REMIC I, including any lease renewed or extended on behalf of
REMIC I, if
REMIC I has the right to renegotiate the terms of such
lease.
"NIMS Insurer": Any insurer that is guaranteeing certain
payments under notes secured by collateral which includes all or
a portion of
the Class CE Certificates, the Class P Certificates and/or the
Class R
Certificates.
"Nonrecoverable Advance": Any 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, would not, be ultimately recoverable from
related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or
REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage
Loan or REO
Property that, in the good faith business judgment of the
Servicer, will not or,
in the case of a proposed Servicing Advance, would not, be
ultimately
recoverable from related Late Collections, Insurance Proceeds or
Liquidation
Proceeds on such Mortgage Loan or REO Property as provided
herein.
"Non-United States Person": Any Person other than a United
States Person.
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<PAGE>
"Notional Amount": With respect to the Class CE Interest and
any Distribution Date, the aggregate Uncertificated Balance of
the REMIC I
Regular Interests (other than REMIC I Regular Interest I-LTP)
for such
Distribution Date.
"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), and by the Treasurer, the Secretary, or
one of the
assistant treasurers or assistant secretaries of the Servicer,
the Originator,
NC Capital, the Seller or the Depositor, as applicable.
"One-Month LIBOR": With respect to the Class A Certificates,
the Mezzanine Certificates, REMIC I Regular Interest I-LTA1,
REMIC I Regular
Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I
Regular Interest
I-LTA4, REMIC I Regular Interest I-LTA5, REMIC I Regular
Interest I-LTM1, REMIC
I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3,
REMIC I Regular
Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I
Regular Interest
I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular
Interest I-LTM8, REMIC
I Regular Interest I-LTM9 and REMIC I Regular Interest I-LTM10
and any Accrual
Period therefor, the rate determined by the Trustee on the
related Interest
Determination Date on the basis of the offered rate for
one-month U.S. dollar
deposits, as such rate appears on Telerate Page 3750 as of 11:00
a.m. (London
time) on such Interest Determination Date; provided that if such
rate does not
appear on Telerate Page 3750, the rate for such date will be
determined on the
basis of the offered rates of the Reference Banks for one-month
U.S. dollar
deposits, as of 11:00 a.m. (London time) on such Interest
Determination Date. In
such event, the Trustee will request the principal London office
of each of the
Reference Banks to provide a quotation of its rate. If on such
Interest
Determination Date, two or more Reference Banks provide such
offered quotations,
One-Month LIBOR for the related Accrual Period shall be the
arithmetic mean of
such offered quotations (rounded upwards if necessary to the
nearest whole
multiple of 1/16%). If on such Interest Determination Date,
fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR
for the related
Accrual Period shall be the higher of (i) LIBOR as determined on
the previous
Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding
the foregoing, if, under the priorities described above, LIBOR
for an Interest
Determination Date would be based on LIBOR for the previous
Interest
Determination Date for the third consecutive Interest
Determination Date, the
Trustee shall select, after consultation with the NIMS Insurer,
an alternative
comparable index (over which the Trustee has no control), used
for determining
one-month Eurodollar lending rates that is calculated and
published (or
otherwise made available) by an independent party.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor, the
Seller or the
Servicer, acceptable to the Trustee, except that any opinion of
counsel relating
to (a) the qualification of any Trust REMIC as a REMIC or (b)
compliance with
the REMIC Provisions must be an opinion of Independent
counsel.
"Original Mortgage Loan": Any of the Mortgage Loans included
in REMIC I as of the Closing Date.
"Originator": New Century Mortgage Corporation, a California
corporation.
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<PAGE>
"Overcollateralization Deficiency Amount": With respect to
any
Distribution Date, the amount, if any, by which the
Overcollateralization Target
Amount exceeds the Overcollateralized Amount on such
Distribution Date (after
giving effect to distributions in respect of the Group I Basic
Principal
Distribution Amount and the Group II Basic Principal
Distribution Amount).
"Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the Principal Remittance
Amount for such
Distribution Date and (y) the Excess Overcollateralized
Amount.
"Overcollateralization Target Amount": With respect to any
Distribution Date, (i) approximately 3.10% of the Cut-off Date
Principal Balance
of the Mortgage Loans, (ii) on or after the Stepdown Date,
provided that a
Trigger Event is not in effect, the greater of (x) approximately
6.20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of
the related Due Period (after giving effect to scheduled
payments of principal
due during the related Due Period, to the extent received or
advanced, and
unscheduled collections of principal received during the related
Prepayment
Period) and (y) $4,901,269, or (iii) on or after the Stepdown
Date if a Trigger
Event is in effect, the Overcollateralization Target 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 Class A Certificates and the Mezzanine
Certificates to zero, the
Overcollateralization Target Amount shall be zero.
"Overcollateralized Amount": For any Distribution Date, the
amount equal to (i) the aggregate Stated Principal Balance of
the Mortgage Loans
as of the last day of the related Due Period (after giving
effect to scheduled
payments of principal due during the related Due Period, to the
extent received
or advanced, and unscheduled collections of principal received
during the
related Prepayment Period) as of the related Determination Date
minus (ii) the
sum of the aggregate Certificate Principal Balance of the Class
A Certificates,
the Mezzanine Certificates and the Class P Certificates as of
such Distribution
Date after giving effect to distributions to be made on such
Distribution Date.
"Ownership Interest": As to any Certificate, any ownership
or
security interest in such Certificate, including any interest in
such
Certificate as the Holder thereof and any other interest
therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to the Class A
Certificates
and the Mezzanine Certificates and any Distribution Date, a rate
per annum equal
to the lesser of (i) the related Formula Rate for such
Distribution Date and
(ii) the related Net WAC Rate for such Distribution Date.
With respect to the Class CE Interest and any Distribution
Date, a rate per annum equal to the percentage equivalent of a
fraction, the
numerator of which is (x) the sum of (i) 100% of the interest on
REMIC I Regular
Interest I-LTP and (ii) interest on the Uncertificated Balance
of each REMIC I
Regular Interest listed in clause (y) at a rate equal to the
related REMIC I
Remittance Rate minus the Marker Rate and the denominator of
which is (y) the
aggregate Uncertificated Balance of REMIC I Regular Interests
I-LTAA, I-LTA1,
I-LTA2, I-
36
<PAGE>
LTA3, I-LTA4, I-LTA5, I-LTM1, I-LTM2, I-LTM3, I-LTM4, I-LTM5,
I-LTM6, I-LTM7,
I-LTM8, I-LTM9, I-LTM10 and I-LTZZ.
With respect to the Class CE Certificates, 100% of the
interest
distributable to the Class CE Interest, expressed as a per annum
rate.
"Percentage Interest": With respect to any Class of
Certificates
(other than the Residual Certificates), the undivided percentage
ownership in
such Class evidenced by such Certificate, expressed as a
percentage, the
numerator of which is the initial Certificate Principal Balance
or Notional
Amount represented by such Certificate and the denominator of
which is the
aggregate initial Certificate Principal Balance or Notional
Amount of all of the
Certificates of such Class. The Class A Certificates and the
Mezzanine
Certificates are issuable only in minimum Percentage Interests
corresponding to
minimum initial Certificate Principal Balances of $25,000 and
integral multiples
of $1.00 in excess thereof. The Class P Certificates are
issuable only in
Percentage Interests corresponding to initial Certificate
Principal Balances of
$20 and integral multiples thereof. The Class CE Certificates
are issuable only
in minimum Percentage Interests corresponding to minimum initial
Certificate
Principal Balances of $10,000 and integral multiples of $1.00 in
excess thereof;
provided, however, that a single Certificate of each such Class
of Certificates
may be issued having a Percentage Interest corresponding to the
remainder of the
aggregate initial Certificate Principal Balance or Notional
Amount of such Class
or to an otherwise authorized denomination for such Class plus
such remainder.
With respect to any Residual Certificate, the undivided
percentage ownership in
such Class evidenced by such Certificate, as set forth on the
face of such
Certificate. The Residual Certificates are issuable in
Percentage Interests of
20% and multiples thereof.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage Loan and any Adjustment Date therefor, the fixed
percentage set forth
in the related Mortgage Note, which is the maximum amount by
which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without
regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such
Adjustment Date
(other than the first Adjustment Date) from the Mortgage Rate in
effect
immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not
greater than par,
regardless of whether issued or managed by the Depositor, the
Servicer, the NIMS
Insurer, the Trustee or any of their respective Affiliates or
for which an
Affiliate of the NIMS Insurer or 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
agent 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
37
<PAGE>
investment, such depository institution or trust company (or, if
the
only Rating Agency is S&P, in the case of the principal
depository
institution in a depository institution holding company,
debt
obligations of the depository institution holding company) or
its
ultimate parent has a short-term uninsured debt rating in the
highest
available rating of Moody's and S&P and provided that each
such
investment has an original maturity of no more than 365 days;
and
provided further that, if the only Rating Agency is S&P and
if the
depository or trust company is a principal subsidiary of a bank
holding
company and the debt obligations of such subsidiary are not
separately
rated, the applicable rating shall be that of the bank holding
company;
and, provided further that, if the original maturity of such
short-term
obligations of a domestic branch of a foreign depository
institution or
trust company shall exceed 30 days, the short-term rating of
such
institution shall be "A-1+" in the case of S&P, if S&P
is the Rating
Agency; 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-1+" or higher by S&P and "A2" or higher
by Moody's;
provided, however, that collateral transferred pursuant to
such
repurchase obligation must be of the type described in clause
(i) above
and must (A) be valued daily at current market prices plus
accrued
interest, (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 a
Rating
Agency in its highest long-term unsecured rating category at the
time
of such investment or contractual commitment providing for
such
investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand
or on a specified date not more than 30 days after the date
of
acquisition thereof) that is rated by a Rating Agency in its
highest
short-term unsecured debt rating available at the time of
such
investment;
(vi) units of money market funds, including those managed or
advised by the Trustee or its Affiliates, that have been rated
"AAA" by
S&P and "Aaa" by Moody's; and
(vii) if previously confirmed in writing to the Trustee and
consented to by the NIMS Insurer, 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;
38
<PAGE>
provided, that no instrument described hereunder shall evidence
either the right
to receive (a) only interest with respect to the obligations
underlying such
instrument or (b) both principal and interest payments derived
from obligations
underlying such instrument and the interest and principal
payments with respect
to such instrument provide a yield to maturity at par greater
than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United
States Person.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock
company, trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
"Plan": Any employee benefit plan or certain other
retirement
plans and arrangements, including individual retirement accounts
and annuities,
Keogh plans and bank collective investment funds and insurance
company general
or separate accounts in which such plans, accounts or
arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.
"Prepayment Assumption": As defined in the Prospectus
Supplement.
"Prepayment Charge": With respect to any Prepayment Period,
any prepayment premium, fee, penalty or charge payable by a
Mortgagor in
connection with any full or partial Principal Prepayment on a
Mortgage Loan
pursuant to the terms of the related Mortgage Note (other than
any Servicer
Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in REMIC I on
such date,
attached hereto as Schedule 2 (including the Prepayment Charge
Summary attached
thereto). The Prepayment Charge Schedule shall set forth the
following
information with respect to each related Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on
the related Mortgage Loan;
(v) the term of the related Mortgage Loan; and
(vi) the Stated Principal Balance of the related Mortgage
Loan
as of the Cut-off Date.
The Prepayment Charge Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this
Agreement and a
copy of such amended Prepayment Charge Schedule shall be
furnished by the
Depositor to the NIMS Insurer.
39
<PAGE>
"Prepayment Interest Excess": With respect to any
Distribution
Date, for each Mortgage Loan that was the subject of a Principal
Prepayment in
full during the portion of the related Prepayment Period
occurring between the
first day and the fifteenth day of the calendar month in which
such Distribution
Date occurs, an amount equal to interest (to the extent
received) at the
applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the
number of days commencing on the first day of the calendar month
in which such
Distribution Date occurs and ending on the date on which such
prepayment is so
applied.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject
of a Principal
Prepayment in full during the portion of the related Prepayment
Period occurring
from the first day of the related Prepayment Period through the
last day of the
calendar month preceding the month in which such Distribution
Date occurs, an
amount equal to one month's interest on the Mortgage Loan less
any payments in
respect of interest for such month made by the related
Mortgagor.
"Prepayment Period": With respect to any Distribution Date
and
any Principal Prepayment in full, the period commencing on the
16th day of the
calendar month preceding the calendar month in which such
Distribution Date
occurs (or, in the case of the first Distribution Date,
commencing on January 1,
2005) and ending on the 15th day of the calendar month in which
such
Distribution Date occurs and for any Distribution Date and any
Principal
Prepayment in part, the calendar month preceding the month in
which such
Distribution Date occurs.
"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, the sum of the Group I Principal Remittance
Amount and the
Group II Principal Remittance Amount.
"Prospectus Supplement": That certain Prospectus Supplement
dated January 5, 2005 relating to the public offering of the
Class A
Certificates and the Mezzanine Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by
Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officer's
Certificate from the
Servicer and to the Trustee, an amount equal to the sum of (i)
100% of the
Stated Principal Balance thereof as of the date of purchase (or
such other price
as provided in Section 9.01), (ii) in the case of (x) a Mortgage
Loan, accrued
interest on such Stated Principal Balance at the applicable Net
Mortgage Rate in
effect from time to time from the Due Date as to which interest
was last covered
by a payment by the Mortgagor or an Advance 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, the sum of (1) accrued interest on such Stated
Principal Balance at
the applicable Net Mortgage Rate in effect from time to time
from the Due Date
as to which interest was last covered by a payment by the
Mortgagor or an
Advance through the end of the calendar month immediately
preceding the calendar
month in which such REO Property was acquired, plus (2) REO
Imputed Interest for
such REO Property for each calendar month commencing with
40
<PAGE>
the calendar month in which such REO Property was acquired and
ending with the
calendar month in which such purchase is to be effected, net of
the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and
Advances that as
of the date of purchase had been distributed as or to cover REO
Imputed Interest
pursuant to Section 4.01, (iii) any unreimbursed Advances and
Servicing Advances
(including Nonrecoverable Advances and Nonrecoverable Servicing
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 3.11(a)(ix)
and Section
3.16(b), and (v) in the case of a Mortgage Loan required to be
purchased
pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the
Servicer, the NIMS Insurer or the Trustee in respect of the
breach or defect
giving rise to the purchase obligation, including any costs and
damages incurred
by the Trust in connection with any violation by such loan of
any predatory or
abusive lending law.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of
this Agreement
which must, on the date of such substitution, (i) have an
outstanding Stated
Principal Balance, after application of all scheduled payments
of principal and
interest due during or prior to the month of substitution, not
in excess of, and
not more than 5% less than, the Stated Principal Balance of the
Deleted Mortgage
Loan as of the Due Date in the calendar month during which the
substitution
occurs, (ii) have a Mortgage Rate not less than (and not more
than one
percentage point in excess of) the Mortgage Rate of the Deleted
Mortgage Loan,
(iii) with respect to any Adjustable-Rate Mortgage Loan, have a
Maximum Mortgage
Rate not less than the Maximum Mortgage Rate of the Deleted
Mortgage Loan, (iv)
with respect to any Adjustable-Rate Mortgage Loan, have a
Minimum Mortgage Rate
not less than the Minimum Mortgage Rate of the Deleted Mortgage
Loan, (v) with
respect to any Adjustable-Rate Mortgage Loan, have a Gross
Margin equal to or
greater than the Gross Margin of the Deleted Mortgage Loan, (vi)
with respect to
any Adjustable-Rate Mortgage Loan, have a next Adjustment Date
not more than two
months later than the next Adjustment Date on the Deleted
Mortgage Loan, (vii)
have a remaining term to maturity not greater than (and not more
than one year
less than) that of the Deleted Mortgage Loan, (viii) have the
same Due Date as
the Due Date on the Deleted Mortgage Loan, (ix) have a
Loan-to-Value Ratio as of
the date of substitution equal to or lower than the
Loan-to-Value Ratio of the
Deleted Mortgage Loan as of such date, (x) have a risk grading
determined by the
Originator at least equal to the risk grading assigned on the
Deleted Mortgage
Loan, (xi) have a Prepayment Charge provision at least equal to
the Prepayment
Charge provision in the Deleted Mortgage Loan, (xii) [reserved]
and (xiii)
conform to each representation and warranty set forth in Section
6 of the
Mortgage Loan Purchase Agreement applicable to the Deleted
Mortgage Loan. In the
event that one or more mortgage loans are substituted for one or
more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall
be determined
on the basis of aggregate principal balances, the Mortgage Rates
described in
clause (ii) hereof shall be determined on the basis of weighted
average Mortgage
Rates, the terms described in clause (vii) hereof shall be
determined on the
basis of weighted average remaining term to maturity, the
Loan-to-Value Ratios
described in clause (ix) hereof shall be satisfied as to each
such mortgage
loan, the risk gradings described in clause (x) hereof shall be
satisfied as to
each such mortgage loan and, except to the extent otherwise
provided in this
sentence, the representations and warranties described in clause
(xiii) hereof
must be satisfied as to each Qualified Substitute Mortgage Loan
or in the
aggregate, as the case may be.
41
<PAGE>
"Rating Agency or Rating Agencies": Moody's, S&P and Fitch
or
their successors. If such agencies or their successors are no
longer in
existence, "Rating Agencies" shall be such nationally recognized
statistical
rating agencies, or other comparable Persons, designated by the
Depositor,
notice of which designation shall be given to the Trustee and
the Servicer.
"Realized Loss": With respect to any Liquidated Mortgage
Loan
or any Mortgage Loan charged off by the Servicer pursuant to
this Agreement, the
amount of loss realized equal to the portion of the Stated
Principal Balance
remaining unpaid after application of all Net Liquidation
Proceeds in respect of
such Mortgage Loan. If the Servicer receives Subsequent
Recoveries with respect
to any Mortgage Loan, the amount of the Realized Loss with
respect to that
Mortgage Loan will be reduced to the extent such recoveries are
applied to
principal distributions on any Distribution Date.
"Record Date": With respect to each Distribution Date and
any
Book-Entry Certificate, the Business Day immediately preceding
such Distribution
Date. With respect to each Distribution Date and any other
Certificates,
including any Definitive Certificates, the last Business Day of
the month
immediately preceding the month in which such Distribution Date
occurs.
"Reference Banks": Bankers Trust Company, Barclay's Bank
PLC,
The Tokyo Mitsubishi Bank and National Westminster Bank PLC and
their successors
in interest; provided, however, that if any of the foregoing
banks are not
suitable to serve as a Reference Bank, then any leading banks
selected by the
Trustee (after consultation with the NIMS Insurer) which are
engaged in
transactions in Eurodollar deposits in the international
Eurocurrency market (i)
with an established place of business in London, (ii) not
controlling, under the
control of or under common control with the Depositor or any
Affiliate thereof
and (iii) which have been designated as such by the Trustee.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged
Property.
"Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class CE Certificate or Class P Certificate.
"Regular Interest": A "regular interest" in a REMIC within
the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Servicemembers Civil Relief Act.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the
amount of interest
collectible on such Mortgage Loan for the most recently ended
calendar month as
a result of the application of the Relief Act or any similar
state or local law.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
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<PAGE>
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be
administered hereunder,
with respect to which a REMIC election is to be made, consisting
of: (i) such
Mortgage Loans and Prepayment Charges 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 (other than
any amounts representing any Servicer Prepayment Charge Payment
Amount), the
Distribution Account (other than any amounts representing any
Servicer
Prepayment Charge Payment Amount) and any REO Account, and such
assets that are
deposited therein from time to time and any investments thereof,
together with
any and all income, proceeds and payments with respect thereto.
Notwithstanding
the foregoing, however, REMIC I specifically excludes the Net
WAC Rate Carryover
Reserve Account, the Cap Contracts, all payments and other
collections of
principal and interest due on the Mortgage Loans on or before
the Cut-off Date
and all Prepayment Charges payable in connection with Principal
Prepayments made
before the Cut-off Date.
"REMIC I Interest Loss Allocation Amount": With respect to
any
Distribution Date, an amount (subject to adjustment based on the
actual number
of days elapsed in the respective Accrual Periods for the
indicated Regular
Interests for such Distribution Date) equal to (a) the product
of (i) 50% of the
aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I
Regular Interest
I-LTAA minus the Marker Rate, divided by (b) 12.
"REMIC I Marker Allocation Percentage": 50% of any amount
payable or loss attributable from the Mortgage Loans, which
shall be allocated
to the REMIC I Regular Interests.
"REMIC I Overcollateralized Amount": With respect to any
date
of determination, (i) 0.50% of the aggregate Uncertificated
Balance of the REMIC
I Regular Interests minus (ii) the aggregate Uncertificated
Balance of REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC
I Regular
Interest I-LTA3, REMIC I Regular Interest I-LTA4, REMIC I
Regular Interest
I-LTA5, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC
I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4,
REMIC I Regular
Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I
Regular Interest
I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular
Interest I-LTM9, REMIC
I Regular Interest I-LTM10 and REMIC I Regular Interest I-LTP,
in each case as
of such date of determination.
"REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) 50%
of the
aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which
is two times the
aggregate Uncertificated Balance of REMIC I Regular Interest
I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC
I Regular
Interest I-LTA4, REMIC I Regular Interest I-LTA5, REMIC I
Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
Interest I-LTM3, REMIC
I Regular Interest I-
43
<PAGE>
LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular Interest
I-LTM6, REMIC I
Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC
I Regular
Interest I-LTM9, REMIC I Regular Interest I-LTM10 and the
denominator of which
is the aggregate Uncertificated Balance of REMIC I Regular
Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I Regular Interest
I-LTA3, REMIC I
Regular Interest I-LTA4, REMIC I Regular Interest I-LTA5, REMIC
I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest
I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular
Interest I-LTM5, REMIC
I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7,
REMIC I Regular
Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I
Regular Interest
I-LTM10, and REMIC I Regular Interest I-LTZZ.
"REMIC I Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I
issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I
Regular Interest
shall accrue interest at the related REMIC I Remittance Rate in
effect from time
to time, and shall be entitled to distributions of principal,
subject to the
terms and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Balance as set forth in the Preliminary Statement
hereto. The
REMIC I Regular Interests are as follows: REMIC I Regular
Interest I-LTAA, REMIC
I Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2,
REMIC I Regular
Interest I-LTA3, REMIC I Regular Interest I-LTA4, REMIC I
Regular Interest
I-LTA5, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC
I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4,
REMIC I Regular
Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I
Regular Interest
I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular
Interest I-LTM9, REMIC
I Regular Interest I-LTM10, REMIC I Regular Interest I-LTP,
REMIC I Regular
Interest I-LTXX, REMIC I Regular Interest I-TLZZ, REMIC I
Regular Interest
I-LT1GRP, REMIC I Regular Interest I-LT1SUB, REMIC I Regular
Interest I-LT2GRP
and REMIC I Regular Interest I-LT2SUB.
"REMIC I Remittance Rate": With respect to REMIC I Regular
Interest I-LTAA, REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest
I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I Regular
Interest I-LTA4, REMIC
I Regular Interest I-LTA5, REMIC I Regular Interest I-LTM1,
REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest
I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6, REMIC
I Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8,
REMIC I Regular
Interest I-LTM9, REMIC I Regular Interest I-LTM10, REMIC I
Regular Interest
I-LTZZ, REMIC I Regular Interest I-LTP, REMIC I Regular Interest
I-LT1SUB, REMIC
I Regular Interest I-LT2SUB and REMIC I Regular Interest I-LTXX,
the weighted
average of the Adjusted Net Mortgage Rates of the Mortgage
Loans. With respect
to REMIC I Regular Interest I-LT1GRP, the weighted average of
the Adjusted Net
Mortgage Rates of the Group I Mortgage Loans. With respect REMIC
I Regular
Interest I-LT2GRP, the weighted average of the Adjusted Net
Mortgage Rates of
the Group II Mortgage Loans.
"REMIC I Required Overcollateralized Amount": 1.00% of the
Overcollateralization Target Amount.
"REMIC I Subordinated Balance Ratio": The ratio among the
Uncertificated Balance of each REMIC I Regular Interest ending
with the
designation "SUB," equal to the ratio
44
<PAGE>
among, with respect to each such REMIC I Regular Interest, the
excess of (x) the
aggregate Stated Principal Balance of the Mortgage Loans in the
related Loan
Group over (y) the current Certificate Principal Balance of the
Class A
Certificates in the related Loan Group.
"REMIC I Sub WAC Allocation Percentage": 50% of any amount
payable or loss attributable from the Mortgage Loans, which
shall be allocated
to REMIC I Regular Interest I-LT1SUB, REMIC I Regular Interest
I-LT1GRP, REMIC I
Regular Interest I-LT2SUB, REMIC I Regular Interest I-LT2GRP and
REMIC I Regular
Interest I-LTXX.
"REMIC II": The segregated pool of assets consisting of all
of the REMIC I Regular Interests conveyed in trust to the
Trustee, for the
benefit of the REMIC II Certificateholders pursuant to Section
2.07, and all
amounts deposited therein, with respect to which a separate
REMIC election is to
be made.
"REMIC II Certificate": Any Regular Certificate (other than
a
Class CE Certificate or Class P Certificate) or Class R
Certificate.
"REMIC II Certificateholder": The Holder of any REMIC II
Certificate.
"REMIC II Regular Interest": Any Class A Certificate,
Mezzanine Certificate, the Class CE Interest or the Class P
Interest.
"REMIC III": The segregated pool of assets consisting of all
of the Class CE Interest conveyed in trust to the Trustee, for
the benefit of
the Holders of the Regular Certificates and the Class R-X
Certificate (in
respect of the Class R-III Interest), pursuant to Article II
hereunder, and all
amounts deposited therein, with respect to which a separate
REMIC election is to
be made.
"REMIC IV": The segregated pool of assets consisting of all
of
the Class P Interest conveyed in trust to the Trustee, for the
benefit of the
Holders of the Regular Certificates and the Class R-X
Certificate (in respect of
the Class R-IV Interest), pursuant to Article II hereunder, and
all amounts
deposited therein, with respect to which a separate REMIC
election is to be
made.
"REMIC Provisions": Provisions of the federal income tax law
relating to REMICs, which appear at Section 860A through 860G of
the Code, and
related provisions, and proposed, temporary and final
regulations and published
rulings, notices and announcements promulgated thereunder, as
the foregoing may
be in effect from time to time.
"Remittance Report": A report prepared by the Servicer and
delivered to the Trustee and the NIMS Insurer pursuant to
Section 4.03.
"Rents from Real Property": With respect to any REO
Property,
gross income of the character described in Section 856(d) of the
Code as being
included in the term "rents from real property."
"REO Account": The account or accounts maintained, or caused
to be maintained, by the Servicer in respect of an REO Property
pursuant to
Section 3.23.
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"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time
part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the
Stated Principal
Balance of such REO Property (or, in the case of the first such
calendar month,
of the related Mortgage Loan, if appropriate) as of the close of
business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the
aggregate of
all amounts received in respect of such REO Property during such
calendar month,
whether in the form of rental income, sale proceeds (including,
without
limitation, that portion of the Termination Price paid in
connection with a
purchase of all of the Mortgage Loans and REO Properties
pursuant to Section
9.01 that is allocable to such REO Property) or otherwise, net
of any portion of
such amounts (i) payable pursuant to Section 3.23(c) in respect
of the proper
operation, management and maintenance of such REO Property or
(ii) payable or
reimbursable to the Servicer pursuant to Section 3.23(d) for
unpaid Servicing
Fees in respect of the related Mortgage Loan and unreimbursed
Advances and
Servicing Advances in respect of such REO Property or the
related Mortgage Loan,
over (b) the REO Imputed Interest in respect of such REO
Property for such
calendar month.
"REO Property": A Mortgaged Property acquired by the
Servicer
on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as
described in Section 3.23.
"Request for Release": A request for release in such
electronic or other format as shall be mutually agreeable by the
Trustee and the
Servicer, in substantially the form of Exhibit E attached
hereto.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee
determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the
nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates
which New York
City banks selected by the Trustee are quoting on the relevant
Interest
Determination Date to the principal London offices of leading
banks in the
London interbank market or (ii) in the event that the Trustee
can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending
rate which New
York City banks selected by the Trustee are quoting on such
Interest
Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to
four-family dwelling,
(iii) a one-family dwelling unit in a Fannie Mae eligible
condominium project,
(iv) a manufactured home, or (v) a detached one-family dwelling
in a planned
unit development, none of which is a co-operative or mobile
home.
"Residual Certificate": Any one of the Class R Certificates
and the Class R-X Certificates.
"Residual Interest": The sole class of "residual interests"
in
a REMIC within the meaning of Section 860G(a)(2) of the
Code.
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"Responsible Officer": When used with respect to the
Trustee,
the Chairman or Vice Chairman of the Board of Directors or
Trustees, the
Chairman or Vice Chairman of the Executive or Standing Committee
of the Board of
Directors or Trustees, the President, the Chairman of the
Committee on Trust
Matters, any vice president, any assistant vice president, the
Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the
Cashier, any
assistant cashier, any trust officer or assistant trust officer,
the Controller
and any assistant controller or any other officer of the
Trustee, customarily
performing functions similar to those performed by any of the
above designated
officers and, with respect to a particular matter, to whom such
matter is
referred because of such officer's knowledge of and familiarity
with the
particular subject.
"S&P": Standard & Poor's Ratings Services, a division of
the
McGraw-Hill Companies, Inc. or its successor in interest.
"Seller": UBS Real Estate Securities Inc. or its successor
in
interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.
"Senior Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Group I Senior Principal
Distribution
Amount and (ii) the Group II Senior Principal Distribution
Amount.
"Servicer": Ocwen Federal Bank FSB or its successor in
interest, in its capacity as servicer hereunder.
"Servicer Event of Default": One or more of the events
described in Section 7.01.
"Servicer Prepayment Charge Payment Amount": The amounts
payable by the Servicer in respect of any waived Prepayment
Charges pursuant to
Section 2.05 or Section 3.01.
"Servicer Remittance Date": With respect to any Distribution
Date, by 3:00 p.m. New York time on the 18th day of the month in
which such
Distribution Date occurs, or if such 18th day is not a Business
Day, the
immediately following Business Day.
"Servicer Termination Test": With respect to any
Distribution
Date, the Servicer Termination Test shall not be satisfied if
either:
(a) the Cumulative Loss Percentage exceeds (i) in months 1
through 24, 2.50%, (ii) in months 25 through 36, 4.00%, (iii) in
months 37
through 48, 5.25% and (iv) in month 49 and thereafter, 6.70%;
or
(b) the Delinquency Percentage exceeds 20%.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and
necessary
"out of pocket" costs and expenses (including reasonable
attorneys' fees and
disbursements), other than Advances, incurred by the Servicer or
a Prior
Servicer (to be reimbursed by the Servicer) prior
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to, on or after the Cut-off Date in the performance of its
servicing
obligations, including, but not limited to, the cost of (i) the
preservation,
restoration, inspection and protection of the Mortgaged
Property, (ii) any
enforcement or judicial proceedings, including foreclosures, in
respect of a
particular Mortgage Loan, (iii) the management and liquidation
of the REO
Property, (iv) taxes, assessments, water rates, sewer rents and
other charges
which are or may become a lien upon the Mortgaged Property.
Servicing Advances
also include any reasonable "out-of-pocket" costs and expenses
(including legal
fees) incurred by the Servicer in connection with executing and
recording
instruments of satisfaction, deeds of reconveyance or
Assignments of Mortgage in
connection with any foreclosure in respect of any Mortgage Loan
to the extent
not recovered from the related Mortgagor or otherwise payable
under this
Agreement. The Servicer shall not be required to make any
Servicing Advance that
would be a Nonrecoverable Servicing Advance.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one-twelfth of the
Servicing Fee Rate
(without regards to the words "per annum" in the definition
thereof) multiplied
by the Stated Principal Balance of the Mortgage Loans as of the
first day of the
related Due Period.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in
or responsible for the administration and servicing of the
Mortgage Loans, whose
name appears on a list of servicing officers furnished by the
Servicer to the
Trustee upon request, as such list may from time to time be
amended.
"Servicing Transfer Costs": Shall mean all reasonable costs
and expenses incurred by the Trustee in connection with the
transfer of
servicing from a predecessor servicer, including, without
limitation, any
reasonable costs or expenses associated with the complete
transfer of all
servicing data and the completion, correction or manipulation of
such servicing
data as may be required by the Trustee to correct any errors or
insufficiencies
in the servicing data or otherwise to enable the Trustee to
service the Mortgage
Loans properly and effectively.
"Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the
Residual
Certificates), a hypothetical Certificate of such Class
evidencing a Percentage
Interest for such Class corresponding to an initial Certificate
Principal
Balance of $1,000. With respect to the Class P Certificates and
the Residual
Certificates, a hypothetical Certificate of such Class
evidencing a 100%
Percentage Interest in such Class.
"Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage
Loan:
(a) as of any date of determination up to but not including the
Distribution
Date on which the proceeds, if any, of a Liquidation Event with
respect to such
Mortgage Loan would be distributed, the Cut-off Date Principal
Balance of such
Mortgage Loan, as shown in the Mortgage Loan Schedule, minus the
sum of (i) the
principal portion of each Monthly Payment due on a Due Date
subsequent to the
Cut-off Date, to the extent received from the Mortgagor or
advanced by the
Servicer and distributed pursuant to Section 4.01 on or before
such date of
determination, (ii) all Principal
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Prepayments received after the Cut-off Date, to the extent
distributed pursuant
to Section 4.01 on or before such date of determination, (iii)
all Liquidation
Proceeds and Insurance Proceeds applied by the Servicer as
recoveries of
principal in accordance with the provisions of Section 3.16, to
the extent
distributed pursuant to Section 4.01 on or before such date of
determination,
and (iv) any Realized Loss incurred with respect thereto as a
result of a
Deficient Valuation made during or prior to the Prepayment
Period for the most
recent Distribution Date coinciding with or preceding such date
of
determination; and (b) as of any date of determination
coinciding with or
subsequent to the Distribution Date on which the proceeds, if
any, of a
Liquidation Event with respect to such Mortgage Loan would be
distributed, zero.
With respect to any REO Property: (a) as of any date of
determination up to but
not including the Distribution Date on which the proceeds, if
any, of a
Liquidation Event with respect to such REO Property would be
distributed, an
amount (not less than zero) equal to the Stated Principal
Balance of the related
Mortgage Loan as of the date on which such REO Property was
acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was
acquired before the
Distribution Date in any calendar month, the principal portion
of the Monthly
Payment due on the Due Date in the calendar month of
acquisition, to the extent
advanced by the Servicer and distributed pursuant to Section
4.01 on or before
such date of determination, and (ii) the aggregate amount of REO
Principal
Amortization in respect of such REO Property for all previously
ended calendar
months, to the extent distributed pursuant to Section 4.01 on or
before such
date of determination; and (b) as of any date of determination
coinciding with
or subsequent to the Distribution Date on which the proceeds, if
any, of a
Liquidation Event with respect to such REO Property would be
distributed, zero.
"Stepdown Date": The earlier to occur of (i) the
Distribution
Date on which the aggregate Certificate Principal Balance of the
Class A
Certificates has been reduced to zero and (ii) the later to
occur of (x) the
Distribution Date occurring in February 2008 and (y) the first
Distribution Date
on which the Credit Enhancement Percentage (calculated for this
purpose only
after taking into account payments of principal on the Mortgage
Loans but prior
to distribution of the Group I Principal Distribution Amount and
the Group II
Principal Distribution Amount to the Certificates then entitled
to distributions
of principal on such Distribution Date) For the Class A
Certificates is equal to
or greater than45.90%.
"Sub-Servicer": Any Person with which the Servicer has
entered
into a Sub-Servicing Agreement.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section
3.08 and is
otherwise acceptable to the Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer, relating to servicing and
administration of certain
Mortgage Loans, which meets the requirements set forth in
Section 3.02.
"Subsequent Recoveries": As of any Distribution Date,
unexpected amounts received by the Servicer (net of any related
expenses
permitted to be reimbursed to the Servicer) specifically related
to a Mortgage
Loan that was the subject of a liquidation or an REO Disposition
prior to the
related Prepayment Period that resulted in a Realized Loss.
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"Substitution Adjustment Amount": As defined in Section
2.03(b).
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment
Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to
Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any
successor forms,
to be filed on behalf of the Trust Fund due to the
classification of portions
thereof as REMICs under the REMIC Provisions, together with any
and all other
information reports or returns that may be required to be
furnished to the
Certificateholders or filed with the Internal Revenue Service or
any other
governmental taxing authority under any applicable provisions of
federal, state
or local tax laws.
"Telerate Page 3750": The display designated as page "3750"
on
the Dow Jones Telerate Capital Markets Report (or such other
page as may replace
page 3750 on that report for the purpose of displaying London
interbank offered
rates of major banks).
"Termination Price": As defined in Section 9.01.
"Terminator": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership
Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event is in effect with respect
to
any Distribution Date on or after the Stepdown Date if:
(a) the Delinquency Percentage exceeds 33.00% of the Credit
Enhancement Percentage; or
(b) the aggregate amount of Realized Losses incurred since
the
Cut-off Date through the last day of the related Due Period
(reduced by the
aggregate amount of Subsequent Recoveries received since the
Cut-off Date
through the last day of the related Due Period) divided by the
aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date
exceeds the
applicable percentages set forth below with respect to such
Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
February 2008 through January 2009 3.00%
February 2009 through January 2010 4.75%
February 2010 through January 2011 6.25%
February 2011 and thereafter 7.00%
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"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II, REMIC III, REMIC IV, the Net WAC Rate Carryover
Reserve Account, the
Cap Contracts and the other assets conveyed by the Depositor to
the Trustee
pursuant to Section 2.01.
"Trust REMIC": Any of REMIC I, REMIC II, REMIC III or REMIC
IV.
"Trustee": U.S. Bank National Association, a national
banking
association, or its successor in interest, or any successor
trustee appointed as
herein provided.
"Trustee Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for
all services
rendered by it in the execution of the trust hereby created and
in the exercise
and performance of any of the powers and duties of the Trustee
hereunder, which
amount shall be equal to one-twelfth of the Trustee Fee Rate
(without regards to
the words "per annum" in the definition thereof) multiplied by
the Stated
Principal Balance of the Mortgage Loans as of the first day of
the related Due
Period.
"Trustee Fee Rate": 0.015% per annum.
"Uncertificated Balance": The amount of any REMIC I Regular
Interest outstanding as of any date of determination. As of the
Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest
shall equal the
amount set forth in the Preliminary Statement hereto as its
initial
uncertificated balance. On each Distribution Date, the
Uncertificated Balance of
each REMIC I Regular Interest shall be reduced by all
distributions of principal
made on such REMIC I Regular Interest on such Distribution Date
pursuant to
Section 4.01 and, if and to the extent necessary and
appropriate, shall be
further reduced on such Distribution Date by Realized Losses as
provided in
Section 4.04. The Uncertificated Balance of REMIC I Regular
Interest I-LTZZ
shall be increased by interest deferrals as provided in Section
4.01(a)(1)(i).
The Uncertificated Balance of each REMIC I Regular Interest
shall never be less
than zero. With respect to the Class CE Interest as of any date
of
determination, an amount equal to the excess, if any, of (A) the
then aggregate
Uncertificated Principal Balance of the REMIC I Regular
Interests over (B) the
then aggregate Certificate Principal Balances of the Class A
Certificates,
Mezzanine Certificates and the Class P Interest then
outstanding.
"Uncertificated Interest": With respect to any REMIC I
Regular
Interest for any Distribution Date, one month's interest at the
REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for
such
Distribution Date, accrued on the Uncertificated Balance thereof
immediately
prior to such Distribution Date. Uncertificated Interest in
respect of any REMIC
I Regular Interest shall accrue on the basis of a 360-day year
consisting of
twelve 30-day months. Uncertificated Interest with respect to
each Distribution
Date, as to any REMIC I Regular Interest, shall be reduced by an
amount equal to
the sum of (a) the aggregate Prepayment Interest Shortfall, if
any, for such
Distribution Date to the extent not covered by payments pursuant
to Section 3.24
and (b) the aggregate amount of any Relief Act Interest
Shortfall, if any
allocated, in each case, to such REMIC I Regular Interest
pursuant to Section
1.02. In addition, Uncertificated Interest with respect to each
Distribution
Date, as to any REMIC I Regular Interest, shall be reduced by
Realized Losses,
if any, allocated to such REMIC I Regular Interest pursuant to
Section 1.02 and
Section 4.04.
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<PAGE>
"Underwriters' Exemption": As defined in the Prospectus
Supplement.
"Uninsured Cause": Any cause of damage to a Mortgaged
Property
such that the complete restoration of such property is not fully
reimbursable by
the hazard insurance policies required to be maintained pursuant
to Section
3.14.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or
organized in, or
under the laws of, the United States, any state thereof or, the
District of
Columbia (except, in the case of a partnership, to the extent
provided in
regulations); provided that, for purposes solely of the
restrictions on the
transfer of Class R Certificates, no partnership or other entity
treated as a
partnership for United States federal income tax purposes shall
be treated as a
United States Person unless all persons that own an interest in
such partnership
either directly or through any entity that is not a corporation
for United
States federal income tax purposes are required by the
applicable operative
agreement to be United States Persons or an estate whose income
is subject to
United States federal income tax regardless of its source, or a
trust if a court
within the United States is able to exercise primary supervision
over the
administration of the trust and one or more United States
persons have the
authority to control all substantial decisions of the trust. To
the extent
prescribed in regulations by the Secretary of the Treasury,
which have not yet
been issued, a trust which was in existence on August 20, 1996
(other than a
trust treated as owned by the grantor under subpart E of part I
of subchapter J
of chapter 1 of the Code), and which was treated as a United
States person on
August 20, 1996 may elect to continue to be treated as a United
States person
notwithstanding the previous sentence. The term "United States"
shall have the
meaning set forth in Section 7701 of the Code.
"Unpaid Interest Shortfall Amount": With respect to the
Class
A Certificates and the Mezzanine Certificates and (i) the first
Distribution
Date, zero, and (ii) any Distribution Date after the first
Distribution Date,
the amount, if any, by which (a) the sum of (1) the Monthly
Interest
Distributable Amount for such Class for the immediately
preceding Distribution
Date and (2) the outstanding Unpaid Interest Shortfall Amount,
if any, for such
Class for such preceding Distribution Date exceeds (b) the
aggregate amount
distributed on such Class in respect of interest pursuant to
clause (a) of this
definition on such preceding Distribution Date, plus interest on
the amount of
interest due but not paid on the Certificates of such Class on
such preceding
Distribution Date, to the extent permitted by law, at the
Pass-Through Rate for
such Class for the related Accrual Period.
"Value": With respect to any Mortgage Loan, and the related
Mortgaged Property, the lesser of:
(i) the lesser of (a) the value thereof as determined by an
appraisal made for the Originator at the time of origination
of the Mortgage Loan by an appraiser who met the minimum
requirements of Fannie Mae and Freddie Mac, and (b) the
value
thereof as determined by a review appraisal conducted by the
Originator in the event any such review appraisal determines
an appraised value more than 10% lower than the value
thereof,
in the case of a Mortgage Loan with a Loan-to-Value Ratio
less
than or equal to 80%, or more than 5% lower than the value
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<PAGE>
thereof, in the case of a Mortgage Loan with a Loan-to-Value
Ratio greater than 80%, as determined by the appraisal
referred to in clause (i)(a) above; and
(ii) the purchase price paid for the related Mortgaged Property
by
the Mortgagor with the proceeds of the Mortgage Loan;
provided, however, that in the case of a Refinanced Mortgage
Loan or a Mortgage Loan originated in connection with a
"lease
option purchase" if the "lease option purchase price" was
set
12 months or more prior to origination, such value of the
Mortgaged Property is based solely upon clause (i) above.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With
respect to any date
of determination, 98% of all Voting Rights will be allocated
among the holders
of the Class A Certificates, the Mezzanine Certificates and the
Class CE
Certificates in proportion to the then outstanding Certificate
Principal
Balances of their respective Certificates, 1% of all Voting
Rights will be
allocated to the holders of the Class P Certificates and 1% of
all Voting Rights
will be allocated among the holders of the Residual
Certificates. The Voting
Rights allocated to each Class of Certificate shall be allocated
among Holders
of each such Class in accordance with their respective
Percentage Interests as
of the most recent Record Date.
SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of the Monthly
Interest
Distributable Amount for the Class A Certificates, the Mezzanine
Certificates
and the Class CE Certificates for any Distribution Date, (1) the
aggregate
amount of any Prepayment Interest Shortfalls (to the extent not
covered by
payments by the Servicer pursuant to Section 3.24) and any
Relief Act Interest
Shortfall incurred in respect of the Mortgage Loans for any
Distribution Date
shall be allocated first, to the Class CE Certificates based on,
and to the
extent of, one month's interest at the then applicable
respective Pass-Through
Rate on the respective Notional Amount of each such Certificate
and, thereafter,
among the Class A Certificates and the Mezzanine Certificates on
a PRO RATA
basis based on, and to the extent of, one month's interest at
the then
applicable respective Pass-Through Rate on the respective
Certificate Principal
Balance of each such Certificate and (2) the aggregate amount of
any Realized
Losses and Net WAC Rate Carryover Amounts incurred for any
Distribution Date
shall be allocated to the Class CE Certificates based on, and to
the extent of,
one month's interest at the then applicable respective
Pass-Through Rate on the
respective Notional Amount of each such Certificate.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution
Date:
(A) The REMIC I Marker Allocation Percentage of the
aggregate
amount of any Prepayment Interest Shortfalls (to the extent
not covered by payments by the Servicer pursuant to Section
3.24) and the REMIC I Marker Allocation Percentage of the
aggregate amount of any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any
Distribution
Date shall be allocated among REMIC I Regular Interest
I-LTAA,
REMIC I Regular Interest I-LTA1, REMIC I Regular Interest
I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I
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Regular Interest I-LTA4, REMIC I Regular Interest I-LTA5,
REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I
Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7,
REMIC I Regular Interest I-LTM8, REMIC I Regular Interest
I-LTM9, REMIC I Regular Interest I-LTM10 REMIC I Regular
Interest I-LTZZ, on a PRO RATA basis based on, and to the
extent of, one month's interest at the then applicable
respective Pass-Through Rate on the respective
Uncertificated
Balance of each such REMIC I Regular Interest; and
(B) The REMIC I Sub WAC Allocation Percentage of the
aggregate
amount of any Prepayment Interest Shortfalls (to the extent
not covered by payments by the Servicer pursuant to Section
3.24) and the REMIC I Sub WAC Allocation Percentage of the
aggregate amount of any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any
Distribution
Date shall be allocated to Uncertificated Interest payable
to
REMIC I Regular Interest I-LT1SUB, REMIC I Regular Interest
I-LT1GRP, REMIC I Regular Interest I-LT2SUB, REMIC I Regular
Interest I-LT2GRP and REMIC I Regular Interest I-LTXX, on a
PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate
on the respective Uncertificated Balance of each such REMIC
I
Regular Interest.
SECTION 1.03. Rights of the NIMS Insurer.
Each of the rights of the NIMS Insurer set forth in this
Agreement shall exist so long as (i) the NIMS Insurer has
undertaken to
guarantee certain payments of notes issued pursuant to the
Indenture and (ii)
the notes issued pursuant to the Indenture remain outstanding or
the NIMS
Insurer is owed amounts in respect of its guarantee of payment
on such notes;
provided, however, the NIMS Insurer shall not have any rights
hereunder (except
pursuant to Section 11.01 and any rights to indemnification
hereunder in the
case of clause (ii) below) so long as (i) the NIMS Insurer has
not undertaken to
guarantee certain payments of notes issued pursuant to the
Indenture or (ii) any
default has occurred and is continuing under the insurance
policy issued by the
NIMS Insurer with respect to such notes.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of the Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise
convey to the
Trustee without recourse, for the benefit of the
Certificateholders, all the
right, title and interest of the Depositor, including any
security interest
therein for the benefit of the Depositor, in and to the Mortgage
Loans
identified on the Mortgage Loan Schedule, the rights of the
Depositor under the
Mortgage Loan Purchase Agreement, and all other assets included
or to be
included in REMIC I. Such assignment includes all interest and
principal
received by the Depositor or the Servicer on or with respect to
the Mortgage
Loans (other than payments of principal and interest due on such
Mortgage Loans
on or before the Cut-off Date). The Depositor herewith delivers
to the Trustee
an executed original Mortgage Loan Purchase Agreement.
In connection with such transfer and assignment, the
Depositor
does hereby deliver to, and deposit with, the Trustee (or the
Custodian on
behalf of the Trustee) the following documents or instruments
with respect to
each Mortgage Loan so transferred and assigned (a "Mortgage
File"):
(i) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of U.S. Bank National
Association, as
Trustee under the applicable agreement, without recourse," with
all
prior and intervening endorsements showing a complete chain
of
endorsement from the Originator to the Person so endorsing to
the
Trustee;
(ii) the original Mortgage, noting the presence of the MIN
of
the Mortgage Loan and language indicating that the Mortgage Loan
is a
MOM Loan if the Mortgage Loan is a MOM Loan, 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;
(iii) unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment in blank;
(iv) the original recorded Assignment or Assignments showing
a
complete chain of assignment from the Originator to the
Person
assigning the Mortgage to the Trustee (or to MERS, if the
Mortgage Loan
is registered on the MERS(R) System and noting the presence of
the MIN)
as contemplated by the immediately preceding clause (iii);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
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(vi) the original lender's title insurance policy, together
with all endorsements or riders that were issued with or
subsequent to
the issuance of such policy, insuring the priority of the
Mortgage as a
first or second lien on the Mortgaged Property represented
therein as a
fee interest vested in the Mortgagor, or in the event such
original
title policy is unavailable, a written commitment or uniform
binder or
preliminary report of title issued by the title insurance or
escrow
company.
With respect to a maximum of approximately 1.0% of the
Mortgage Loans, by outstanding Stated Principal Balance of the
Mortgage Loans as
of the Cut-off Date, if any original Mortgage Note referred to
in Section
2.01(i) above cannot be located, the obligations of the
Depositor to deliver
such documents shall be deemed to be satisfied upon delivery to
the Trustee (or
the Custodian on behalf of the Trustee) of a photocopy of such
Mortgage Note, if
available, with a lost note affidavit substantially in the form
of Exhibit I
attached hereto. If any of the original Mortgage Notes for which
a lost note
affidavit was delivered to the Trustee (or the Custodian on
behalf of the
Trustee) is subsequently located, such original Mortgage Note
shall be delivered
to the Trustee (or the Custodian on behalf of the Trustee)
within three Business
Days.
Except with respect to any Mortgage Loan for which MERS is
identified on the Mortgage or on a properly recorded assignment
of the Mortgage
as the mortgagee of record, the Trustee shall promptly (within
sixty Business
Days following the later of the Closing Date and the date of
receipt by the
Trustee or the Custodian of the recording information for a
Mortgage, but in no
event later than ninety days following the Closing Date) enforce
the obligations
of NC Capital pursuant to the terms of the Mortgage Loan
Purchase Agreement to
submit or cause to be submitted for recording, at no expense to
the Trust Fund,
the Trustee, the Custodian, the Servicer or the Depositor, in
the appropriate
public office for real property records, each Assignment
referred to in Sections
2.01(iii) and (iv) above and in connection therewith, the
Trustee shall enforce
the obligation of NC Capital pursuant to the terms of the
Mortgage Loan Purchase
Agreement to execute each original Assignment in the following
form: "U.S. Bank
National Association, as Trustee under the applicable
agreement." In the event
that any such Assignment is lost or returned unrecorded because
of a defect
therein, the Trustee shall enforce the obligation of NC Capital
pursuant to the
Mortgage Loan Purchase Agreement to promptly prepare or cause to
be prepared a
substitute Assignment or cure or cause to be cured such defect,
as the case may
be, and thereafter cause each such Assignment to be duly
recorded.
In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the Depositor further agrees
that it will
cause, within 30 Business Days after the Closing Date, the
MERS(R) System to
indicate that such Mortgage Loans have been assigned by the
Depositor to the
Trustee in accordance with this Agreement for the benefit of
the
Certificateholders by including (or deleting, in the case of
Mortgage Loans
which are repurchased in accordance with this Agreement) in such
computer files
(a) the code in the field which identifies the specific Trustee
and (b) the code
in the field "Pool Field" which identifies the series of the
Certificates issued
in connection with such Mortgage Loans. The Depositor further
agrees that it
will not, and will not permit the Servicer to, and the Servicer
agrees that it
will not, alter the codes referenced in this paragraph with
respect to any
Mortgage Loan during the term of this Agreement unless and until
such Mortgage
Loan is repurchased in accordance with the terms of this
Agreement.
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If any of the documents referred to in Sections 2.01(ii),
(iii) or (iv) has, as of the Closing Date, been submitted for
recording but
either (x) has not been returned from the applicable public
recording office or
(y) has been lost or such public recording office has retained
the original of
such document, the obligations of the Depositor to deliver such
documents shall
be deemed to be satisfied upon (1) delivery to the Trustee (or
the Custodian on
behalf of the Trustee) of a copy of each such document certified
by the
Originator 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
Originator,
delivery to the Trustee (or the Custodian on behalf of the
Trustee) 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. Pursuant to the Mortgage Loan Purchase Agreement,
notice shall be
provided to the Trustee and the Rating Agencies by the NC
Capital if delivery
pursuant to clause (2) above will be made more than 180 days
after the Closing
Date.
If the original lender's title insurance policy was not
delivered pursuant to Section 2.01(vi) above, the Depositor
shall deliver or
cause to be delivered to the Trustee (or the Custodian on behalf
of the
Trustee), promptly after receipt thereof, the original lender's
title insurance
policy with a copy thereof to the Servicer. The Depositor shall
deliver or cause
to be delivered to the Trustee (or the Custodian on behalf of
the Trustee)
promptly upon receipt thereof any other original documents
constituting a part
of a Mortgage File received with respect to any Mortgage Loan,
including, but
not limited to, any original documents evidencing an assumption
or modification
of any Mortgage Loan with a copy thereof to the Servicer.
The Depositor shall deliver or cause the Originator, NC
Capital, the Trustee or the Custodian to deliver to the Servicer
copies of all
trailing documents required to be included in the servicing file
at the same
time the originals or certified copies thereof are delivered to
the Trustee or
Custodian, such documents including but not limited to the
mortgagee policy of
title insurance and any mortgage loan documents upon return from
the recording
office. The Servicer shall not be responsible for any custodian
fees or other
costs incurring in obtaining such documents and the Depositor
shall cause the
Servicer to be reimbursed for any such costs it may incur in
connection with
performing its obligations under this Agreement. Subject to
Section 6.03(a), the
Servicer shall have no liability as a result of an inability to
service any
Mortgage Loan due to its failure to receive any documents
missing from the
Mortgage File or servicing file.
All original documents relating to the Mortgage Loans that
are
not delivered to the Trustee (or the Custodian on behalf of the
Trustee) are and
shall be held by or on behalf of the Originator, NC Capital, the
Seller, the
Depositor or the Servicer, as the case may be, in trust for the
benefit of the
Trustee on behalf of the Certificateholders. In the event that
any such original
document is required pursuant to the terms of this Section 2.01
to be a part of
a Mortgage File, such document shall be delivered promptly to
the Trustee (or
the Custodian on behalf of the Trustee). Any such original
document delivered to
or held by the Depositor that is not required pursuant to the
terms of this
Section to be a part of a Mortgage File, shall be delivered
promptly to the
Servicer.
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The Depositor and the Trustee hereto understand and agree
that
it is not intended that any Mortgage Loan be included in the
Trust that is a
"High-Cost Home Loan" as defined by the Homeownership and Equity
Protection Act
of 1994 or any other applicable predatory or abusive lending
laws.
The Depositor hereby directs the Trustee to, and the Trustee
hereby agrees to execute, deliver and perform its obligations
under each of the
Cap Contracts on the Closing Date and thereafter on behalf of
the Holders of the
Group I Certificates, the Group II Certificates and the
Mezzanine Certificates.
The Depositor, the Servicer and the Holders of the Group I
Certificates, the
Group II Certificates and the Mezzanine Certificates, by their
acceptance of
such Certificates, acknowledge and agree that the Trustee shall
execute, deliver
and perform its obligations under each of the Cap Contracts and
shall do so
solely in its capacity as Trustee of the Trust Fund and not in
its individual
capacity.
SECTION 2.02. Acceptance of REMIC I by Trustee.
The Trustee acknowledges receipt (or receipt by the
Custodian
as the duly appointed agent of the Trustee), subject to the
provisions of
Section 2.01 and subject to any exceptions noted on the
exception report
described in the next paragraph below, of the documents referred
to in Section
2.01 (other than such documents described in Section 2.01(v))
above and all
other assets included in the definition of "REMIC I" under
clauses (i), (iii),
(iv) and (v) (to the extent of amounts deposited into the
Distribution Account)
and declares that it holds and will hold such documents and the
other documents
delivered to it constituting a Mortgage File, and that it holds
or will hold all
such assets and such other assets included in the definition of
"REMIC I" in
trust for the exclusive use and benefit of all present and
future
Certificateholders.
The Trustee (or the Custodian on behalf of the Trustee)
agrees
to execute and deliver to the Depositor and the NIMS Insurer 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 C-3 hereto.
The Trustee (or the Custodian on behalf of the Trustee)
agrees, for the benefit of the Certificateholders and the NIMS
Insurer, to
review each Mortgage File and, within 45 days of the Closing
Date, to certify in
substantially the form attached hereto as Exhibit C-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
constituting part of such Mortgage File (other than such
documents described in
Section 2.01(v)) required to be delivered to it pursuant to this
Agreement are
in its possession, (ii) such documents have been reviewed by it
or the Custodian
and appear regular on their face and relate to such Mortgage
Loan and (iii)
based on its or the Custodian's examination and only as to the
foregoing, the
information set forth in the Mortgage Loan Schedule that
corresponds to items
(1), (3), (12), (15) and (18) of the definition of "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 on
behalf of the Trustee) is under no duty or obligation (i) to
inspect, review or
examine any such documents, instruments, certificates or other
papers to
determine whether they are genuine,
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enforceable, or appropriate for the represented purpose or
whether they have
actually been recorded or that they are other than what they
purport to be on
their face or (ii) to determine whether any Mortgage File should
include any of
the documents specified in clause (v) of Section 2.01.
Prior to the first anniversary date of this Agreement, the
Trustee shall deliver (or cause the Custodian to deliver) to the
Depositor, the
NIMS Insurer and the Servicer a final certification in the form
annexed hereto
as Exhibit C-2 evidencing the completeness of the Mortgage
Files, with any
applicable exceptions noted thereon, and the Servicer shall
forward a copy
thereof to any Sub-Servicer.
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 on behalf of the Trustee) 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 (or the
Custodian on behalf of the Trustee) shall so notify the
Depositor, the NIMS
Insurer and the Servicer. In addition, upon the discovery by the
Depositor, the
NIMS Insurer, the Servicer or the Trustee of a breach of any of
the
representations and warranties made by NC Capital or the Seller
in the 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 Trustee (or the Custodian on behalf of the Trustee)
shall,
at the written request and expense of any Certificateholder,
provide a written
report to such Certificateholder of all Mortgage Files released
to the Servicer
for servicing purposes.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage
Loans, the
related Mortgage Notes and the related documents, conveying good
title thereto
free and clear of any liens and encumbrances, from the Depositor
to the Trustee
in trust for the benefit of the Certificateholders 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 a first
priority perfected security interest in all of the Depositor's
right, title and
interest in and to the Mortgage Loans, the related Mortgage
Notes 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
NC Capital or the Seller.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a
Mortgage File or of
the breach by NC Capital or the Seller of any representation,
warranty or
covenant under the Mortgage Loan Purchase Agreement (including
any
representation, warranty or covenant regarding the Prepayment
Charge Schedule)
in respect of any Mortgage Loan that materially adversely
affects the value of
such Mortgage Loan or the interest therein of the
Certificateholders, the
Trustee shall promptly
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notify NC Capital, the NIMS Insurer, the Seller and the Servicer
of such defect,
missing document or breach and request that NC Capital or the
Seller, as
applicable, deliver such missing document or cure such defect or
breach within
90 days from the date NC Capital or the Seller, as applicable,
was notified of
such missing document, defect or breach, and if NC Capital or
the Seller, as
applicable, does not deliver such missing document or cure such
defect or breach
in all material respects during such period, the Trustee shall
enforce the
obligations of NC Capital or the Seller, as applicable, under
the Mortgage Loan
Purchase Agreement to repurchase such Mortgage Loan from REMIC I
at the Purchase
Price within 90 days after the date on which NC Capital or the
Seller, as
applicable, was notified (subject to Section 2.03(c)) of such
missing document,
defect or breach, if and to the extent that NC Capital or the
Seller, as
applicable, is obligated to do so under the Mortgage Loan
Purchase Agreement.
The Purchase Price for the repurchased Mortgage Loan shall be
remitted to the
Servicer for deposit in the Collection Account and the Trustee
(or the Custodian
on behalf of the Trustee), upon receipt of written certification
from the
Servicer of such deposit, shall release to NC Capital or the
Seller, as
applicable, the related Mortgage File and the Trustee (or the
Custodian on
behalf of the Trustee) shall execute and deliver such
instruments of transfer or
assignment, in each case without recourse, as NC Capital or the
Seller, as
applicable, shall furnish to it and as shall be necessary to
vest in NC Capital
or the Seller, as applicable, any Mortgage Loan released
pursuant hereto. In
furtherance of the foregoing, if NC Capital or the Seller, as
applicable, is not
a member of MERS and repurchases a Mortgage Loan which is
registered on the
MERS(R) System, NC Capital or the Seller, as applicable, at its
own expense and
without any right of reimbursement, shall cause MERS to execute
and deliver an
assignment of the Mortgage in recordable form to transfer the
Mortgage from MERS
to NC Capital or the Seller, as applicable, and shall cause such
Mortgage to be
removed from registration on the MERS(R) System in accordance
with MERS' rules
and regulations. Neither the Trustee nor the Custodian shall
have any further
responsibility with regard to such Mortgage File. In lieu of
repurchasing any
such Mortgage Loan as provided above, if so provided in the
Mortgage Loan
Purchase Agreement, NC Capital or the Seller, as applicable, may
cause such
Mortgage Loan to be removed from REMIC I (in which case it shall
become a
Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage
Loans in the manner and subject to the limitations set forth in
Section 2.03(b);
provided, however, NC Capital or the Seller, as applicable, may
not substitute a
Qualified Substitute Mortgage Loan for any Deleted Mortgage Loan
that violates
any predatory or abusive lending law. It is understood and
agreed that the
obligation of NC Capital or the Seller, as applicable, to cure
or to repurchase
(or to substitute for) any Mortgage Loan as to which a document
is missing, a
material defect in a constituent document exists or as to which
such a breach
has occurred and is continuing shall constitute the sole remedy
respecting such
omission, defect or breach available to the Trustee and the
Certificateholders.
(b) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) must
be effected
prior to the date which is two years after the Startup Day for
REMIC I.
As to any Deleted Mortgage Loan for which NC Capital or the
Seller, as applicable, substitutes a Qualified Substitute
Mortgage Loan or
Loans, such substitution shall be effected by NC Capital or the
Seller, as
applicable, delivering to the Trustee (or the Custodian on
behalf of the
Trustee), for such Qualified Substitute Mortgage Loan or Loans,
the Mortgage
Note, the Mortgage, the Assignment in blank or to the Trustee,
and such other
documents and
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agreements, with all necessary endorsements thereon, as are
required by Section
2.01, together with an Officers' Certificate providing that each
such Qualified
Substitute Mortgage Loan satisfies the definition thereof and
specifying the
Substitution Adjustment Amount (as described below), if any, in
connection with
such substitution. The Trustee (or the Custodian on behalf of
the Trustee) shall
acknowledge receipt for such Qualified Substitute Mortgage Loan
or Loans and,
within ten Business Days thereafter, review such documents as
specified in
Section 2.02 and deliver to the Depositor, the NIMS Insurer and
the Servicer,
with respect to such Qualified Substitute Mortgage Loan or
Loans, a
certification substantially in the form attached hereto as
Exhibit C-1, with any
applicable exceptions noted thereon. Within one year of the date
of
substitution, the Trustee (or the Custodian on behalf of the
Trustee) shall
deliver to the Depositor, the NIMS Insurer and the Servicer a
certification
substantially in the form of Exhibit C-2 hereto with respect to
such Qualified
Substitute Mortgage Loan or Loans, with any applicable
exceptions noted thereon.
Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the
month of substitution are not part of REMIC I and will be
retained by NC Capital
or the Seller, as applicable. For the month of substitution,
distributions to
Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage
Loan on or before the Due Date in the month of substitution, and
NC Capital or
the Seller, as applicable, shall thereafter be entitled to
retain all amounts
subsequently received in respect of such Deleted Mortgage Loan.
The Depositor
shall give or cause to be given written notice to the
Certificateholders and the
NIMS Insurer that such substitution has taken place, shall amend
the Mortgage
Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the
terms of this Agreement and the substitution of the Qualified
Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended
Mortgage Loan
Schedule to the Trustee, the Custodian, the Servicer and the
NIMS Insurer. Upon
such substitution, such Qualified Substitute Mortgage Loan or
Loans shall
constitute part of the Mortgage Pool and shall be subject in all
respects to the
terms of this Agreement and the Mortgage Loan Purchase
Agreement, including, all
applicable representations and warranties thereof included in
the Mortgage Loan
Purchase Agreement.
For any month in which NC Capital or the Seller, as
applicable, substitutes one or more Qualified Substitute
Mortgage Loans for one
or more Deleted Mortgage Loans, the Servicer will determine the
amount (the
"Substitution Adjustment Amount"), if any, by which the
aggregate Purchase Price
of all such Deleted Mortgage Loans exceeds the aggregate of, as
to each such
Qualified Substitute Mortgage Loan, the Stated Principal Balance
thereof as of
the date of substitution, together with one month's interest on
such Stated
Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding
Advances and Servicing Advances (including Nonrecoverable
Advances and
Nonrecoverable Servicing Advances) related thereto. On the date
of such
substitution, NC Capital or the Seller, as applicable, 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 (or the
Custodian on behalf of the Trustee), upon receipt of the related
Qualified
Substitute Mortgage Loan or Loans and written notice by the
Servicer of such
deposit, shall release to NC Capital or the Seller, as
applicable, the related
Mortgage File or Files and the Trustee (or the Custodian on
behalf of the
Trustee) shall execute and deliver such instruments of transfer
or assignment,
in each case without recourse, NC Capital or the Seller, as
applicable, shall
deliver to it and as shall be necessary to vest therein any
Deleted Mortgage
Loan released pursuant hereto.
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In addition, NC Capital or the Seller, as applicable, shall
obtain at its own expense and deliver to the Trustee and the
NIMS Insurer an
Opinion of Counsel to the effect that such substitution will not
cause (a) any
federal tax to be imposed on any Trust REMIC, including without
limitation, any
federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the
Code or on "contributions after the startup date" under Section
860G(d)(1) of
the Code, or (b) any Trust REMIC to fail to qualify as a REMIC
at any time that
any Certificate is outstanding.
(c) Upon discovery by the Depositor, the NIMS Insurer, the
Originator, NC Capital, 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
hereto and the
Trustee shall give written notice to NC Capital and the Seller.
In connection
therewith, NC Capital, the Seller or the Depositor shall
repurchase or, subject
to the limitations set forth in Section 2.03(b), substitute one
or more
Qualified Substitute Mortgage Loans for the affected Mortgage
Loan within 90
days of the earlier of discovery or receipt of such notice with
respect to such
affected Mortgage Loan. Such repurchase or substitution shall be
made by (i) NC
Capital or the Seller, as the case may be, if the affected
Mortgage Loan's
status as a non-qualified mortgage is or results from a breach
of any
representation, warranty or covenant made by NC Capital or the
Seller, as the
case may be, under the Mortgage Loan Purchase Agreement, or (ii)
the Depositor,
if the affected Mortgage Loan's status as a non-qualified
mortgage is a breach
of no representation or warranty. Any such repurchase or
substitution shall be
made in the same manner as set forth in Section 2.03(a). The
Trustee (or the
Custodian on behalf of the Trustee) shall reconvey to the
Depositor, NC Capital
or the Seller, as the case may be, the Mortgage Loan to be
released pursuant
hereto in the same manner, and on the same terms and conditions,
as it would a
Mortgage Loan repurchased for breach of a representation or
warranty.
SECTION 2.04. Reserved
SECTION 2.05. Representations, Warranties and Covenants of
the
Servicer.
The Servicer hereby represents, warrants and covenants to
the
Trustee, for the benefit of each of the Trustee and the
Certificateholders, and
to the Depositor that as of the Closing Date or as of such date
specifically
provided herein:
(i) The Servicer is a federally chartered savings bank duly
organized and validly existing under the laws of the United
States and
is duly authorized and qualified to transact any and all
business
contemplated by this Agreement to be conducted by the Servicer
in any
state in which a Mortgaged Property is located or is otherwise
not
required under applicable law to effect such qualification and,
in any
event, is in compliance with the doing business laws of any such
State,
to the extent necessary to ensure its ability to enforce each
Mortgage
Loan and to service the Mortgage Loans in accordance with the
terms of
this Agreement;
(ii) The Servicer has the full power and authority to
conduct
its business as presently conducted by it and to execute,
deliver and
perform, and to enter into and
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consummate, all transactions contemplated by this Agreement.
The
Servicer has duly authorized the execution, delivery and
performance of
this Agreement, has duly executed and delivered this Agreement,
and
this Agreement, assuming due authorization, execution and
delivery by
the Depositor and the Trustee, constitutes a legal, valid and
binding
obligation of the Servicer, enforceable against it in accordance
with
its terms except as the enforceability thereof may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting
the
enforcement of creditors' rights generally and by general
principles of
equity;
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans by the
Servicer
hereunder, the consummation by the Servicer of any other of
the
transactions herein contemplated, and the fulfillment of or
compliance
with the terms hereof are in the ordinary course of business of
the
Servicer and will not (A) result in a breach of any term or
provision
of the charter or by-laws of the Servicer or (B) conflict with,
result
in a breach, violation or acceleration of, or result in a
default
under, the terms of any other material agreement or instrument
to which
the Servicer is a party or by which it may be bound, or any
statute,
order or regulation applicable to the Servicer of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over the Servicer; and the Servicer is not a party to, bound by,
or in
breach or violation of any indenture or other agreement or
instrument,
or subject to or in violation of any statute, order or
regulation of
any court, regulatory body, administrative agency or
governmental body
having jurisdiction over it, which materially and adversely
affects or,
to the Servicer's knowledge, would in the future materially
and
adversely affect, (x) the ability of the Servicer to perform
its
obligations under this Agreement or (y) the business,
operations,
financial condition, properties or assets of the Servicer taken
as a
whole;
(iv) The Servicer is a HUD approved servicer. No event has
occurred, including but not limited to a change in insurance
coverage,
that would make the Servicer unable to comply with HUD
eligibility
requirements or that would require notification to HUD;
(v) The Servicer does not believe, nor does it have any
reason
or cause to believe, that it cannot perform each and every
covenant
made by it and contained in this Agreement;
(vi) No 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
any
untrue statement of a material fact or omits 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
(except
to the extent that any such information, statement or report has
been
corrected or superseded in writing by the Servicer as of the
Closing
Date, it being understood (i) that the Servicer has delivered
no
certificate of an officer prior to the Closing Date and (ii)
that any
representations, warranties and indemnifications as to the
accuracy and
completeness of the Prospectus Supplement made by the Servicer
in
agreements and Officers' Certificates delivered by the Servicer
on the
Closing Date in connection with the transactions contemplated by
this
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Agreement shall be interpreted such that the information in
the
Prospectus Supplement is deemed to correct and/or supersede as
of the
Closing Date, within the meaning of this parenthetical, any
information, statement or report delivered by the Servicer to
the
Trustee prior to the Closing Date that is inconsistent with
the
information in the Prospectus Supplement or that was omitted
from such
information, statement or report delivered prior to the Closing
Date);
(vii) No litigation is pending against the Servicer that
would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Servicer
to
service the Mortgage Loans or to perform any of its other
obligations
hereunder in accordance with the terms hereof;
(viii) There are no actions or proceedings against, or
investigations known to it of, the Servicer before any
court,
administrative or other tribunal (A) that might prohibit its
entering
into this Agreement, (B) seeking to prevent the consummation of
the
transactions contemplated by this Agreement or (C) that might
prohibit
or materially and adversely affect the performance by the
Servicer of
its obligations under, or validity or enforceability of,
this
Agreement;
(ix) No consent, approval, authorization 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 by it of the transactions
contemplated by this Agreement, except for such consents,
approvals,
authorizations or orders, if any, that have been obtained prior
to the
Closing Date;
(x) The Servicer will not waive any Prepayment Charge unless
it is waived in accordance with the standard set forth in
Section 3.01;
and
(xi) With respect to each Mortgage Loan, the Servicer has
fully and accurately furnished with respect to the period in
which it
serviced the Mortgage Loans, and will continue to fully and
accurately
furnish, complete information on the related borrower credit
files to
Equifax, Experian and Trans Union Credit Information Company,
in
accordance with the Fair Credit Reporting Act and its
implementing
regulations.
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 or the Custodian and shall
inure to the
benefit of the Trustee, the Depositor and the
Certificateholders. Upon discovery
by any of the Depositor, the Servicer, the NIMS Insurer 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 Servicer, the NIMS Insurer and the
Trustee.
Notwithstanding the foregoing, within 90 days of the earlier of
discovery by the
Servicer or receipt of notice by the Servicer of the breach of
the
representation or covenant of the Servicer set forth in Section
2.05(x) above
which materially and adversely affects the interests of the
Holders of the Class
P Certificates in any Prepayment Charge, the Servicer must pay
the amount of
such waived Prepayment Charge, for the benefit of the Holders of
the Class P
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Certificates, by depositing such amount into the Collection
Account. The
foregoing shall not, however, limit any remedies available to
the
Certificateholders, the Depositor or the Trustee on behalf of
the
Certificateholders, pursuant to the Mortgage Loan Purchase
Agreement respecting
a breach of the representations, warranties and covenants of the
Originator made
in its capacity as a party to the Mortgage Loan Purchase
Agreement.
SECTION 2.06. Conveyance of REMIC Regular Interests and
Acceptance of REMIC I, REMIC II, REMIC III and
REMIC IV by the Trustee; Issuance of
Certificates.
(a) The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and otherwise convey in
trust to the
Trustee without recourse all the right, title and interest of
the Depositor in
and to the assets described in the definition of REMIC I for the
benefit of the
holders of the REMIC I Regular Interests (which are
uncertificated) and the
Class R Certificates (in respect of the Class R-I Interest). The
Trustee
acknowledges receipt of the assets described in the definition
of REMIC I and
declares that it holds and will hold the same in trust for the
exclusive use and
benefit of the holders of the REMIC I Regular Interests and the
Class R
Certificates (in respect of the Class R-I Interest). The
interests evidenced by
the Class R-I Interest, together with the REMIC I Regular
Interests, constitute
the entire beneficial ownership interest in REMIC I.
(b) The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and otherwise convey in
trust to the
Trustee without recourse all the right, title and interest of
the Depositor in
and to the REMIC I Regular Interests (which are uncertificated)
for the benefit
of the Holders of the REMIC II Regular Interests and the Class R
Certificates
(in respect of the Class R-II Interest). The Trustee
acknowledges receipt of the
REMIC I Regular Interests and declares that it holds and will
hold the same in
trust for the exclusive use and benefit of the Holders of the
REMIC II Regular
Interests and the Class R Certificates (in respect of the Class
R-II Interest).
The interests evidenced by the Class R-II Interest, together
with the Regular
Certificates (other than the Class CE Certificates and the Class
P
Certificates), the Class CE Interest and the Class P Interest,
constitute the
entire beneficial ownership interest in REMIC II.
(c) The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and otherwise convey in
trust to the
Trustee without recourse all the right, title and interest of
the Depositor in
and to the Class CE Interest (which is uncertificated) for the
benefit of the
Holders of the Class CE Certificates and the Class R-X
Certificates (in respect
of the Class R-III Interest). The Trustee acknowledges receipt
of the Class CE
Interest and declares that it holds and will hold the same in
trust for the
exclusive use and benefit of the Holders of the Class CE
Certificates and the
Class R-X Certificates (in respect of the Class R-III Interest).
The interests
evidenced by the Class R-III Interest, together with the Class
CE Certificates,
constitute the entire beneficial ownership interest in REMIC
III.
(d) The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and otherwise convey in
trust to the
Trustee without recourse all the right, title and interest of
the Depositor in
and to the Class P Interest (which is uncertificated) for the
benefit of the
Holders of the Class P Certificates and the Class R-X
Certificates (in
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respect of the Class R-IV Interest). The Trustee acknowledges
receipt of the
Class P Interest and declares that it holds and will hold the
same in trust for
the exclusive use and benefit of the Holders of the Class P
Certificates and the
Class R-X Certificates (in respect of the Class R-IV Interest).
The interests
evidenced by the Class R-IV Interest, together with the Class P
Certificates,
constitute the entire beneficial ownership interest in REMIC
IV.
SECTION 2.07. Issuance of Class R Certificates and Class R-X
Certificates.
(a) The Trustee acknowledges the assignment to it of the
REMIC
I Regular Interests and, concurrently therewith and in exchange
therefor,
pursuant to the written request of the Depositor executed by an
officer of the
Depositor, the Trustee has executed, authenticated and delivered
to or upon the
order of the Depositor, the Class R Certificates in authorized
denominations.
The interests evidenced by the Class R Certificates, together
with the REMIC II
Certificates, constitute the entire beneficial ownership
interest in REMIC II.
(b) The Trustee acknowledges the assignment to it of the
Class
CE Interest and the Class P Interest and, concurrently therewith
and in exchange
therefor, pursuant to the written request of the Depositor
executed by an
officer of the Depositor, the Trustee has executed,
authenticated and delivered
to or upon the order of the Depositor, the Class R-X
Certificates in authorized
denominations. The interests evidenced by the Class R-X
Certificates, together
with the Class CE Certificates and the Class P Certificates
constitute the
entire beneficial ownership interest in REMIC III and REMIC
IV.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans
on behalf of the Trust Fund and in the best interests of and for
the benefit of
the Certificateholders (as determined by the Servicer in its
reasonable
judgment) in accordance with the terms of this Agreement and the
respective
Mortgage Loans and, to the extent consistent with such terms, in
the same manner
in which it services and administers similar mortgage loans for
its own
portfolio, giving due consideration to customary and usual
standards of practice
of mortgage lenders and loan servicers administering similar
mortgage loans but
without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or
any Affiliate of the Servicer or any Sub-Servicer may have with
the
related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by
the
Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make Advances or
Servicing
Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to
any
particular transaction.
To the extent consistent with the foregoing, the Servicer
(a)
shall seek to maximize the timely and complete recovery of
principal and
interest on the Mortgage Notes and (b) shall waive (or permit a
Sub-Servicer to
waive) a Prepayment Charge only under the following
circumstances: (i) such
waiver is standard and customary in servicing similar mortgage
loans and such
waiver relates to a default or a reasonably foreseeable default
and would, in
the reasonable judgment of the Servicer, maximize recovery of
total proceeds
taking into account the value of such Prepayment Charge and the
related Mortgage
Loan, (ii) the collection of such Prepayment Charge would be in
violation of
applicable laws, (iii) the amount of the Prepayment Charge set
forth on the
Prepayment Charge Schedule is not consistent with the related
Mortgage Note or
is otherwise unenforceable or (iv) the collection of such
Prepayment Charge
would be considered "predatory" pursuant to written guidance
published or issued
by any applicable federal, state or local regulatory authority
acting in its
official capacity and having jurisdiction over such matters. If
a Prepayment
Charge is waived as permitted by meeting the standard described
in clauses (ii),
(iii) or (iv) above, then the Trustee shall, enforce the
obligation of NC
Capital to pay the amount of such waived Prepayment Charge to
the Trustee for
deposit in the Distribution Account for the benefit of the
Holders of the Class
P Certificates. Subject only to the above-described servicing
standards and the
terms of this Agreement and of the Mortgage Loans, the Servicer
shall have full
power and authority, acting alone or through Sub-Servicers as
provided in
Section 3.02, to do or cause to be done any and all things in
connection with
such servicing and administration which it may deem necessary or
desirable.
Without limiting the generality of the foregoing, the Servicer
in its own name
or in the name of a Sub-Servicer is
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hereby authorized and empowered by the Trustee when the Servicer
believes it
appropriate in its best judgment in accordance with the
servicing standards set
forth above, to execute and deliver, on behalf of the
Certificateholders and the
Trustee, and upon notice to the Trustee, any and all instruments
of satisfaction
or cancellation, or of partial or full release or discharge, and
all other
comparable instruments, with respect to the Mortgage Loans and
the Mortgaged
Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of
foreclosure so as to convert the ownership of such properties,
and to hold or
cause to be held title to such properties, on behalf of the
Trustee and
Certificateholders. The Servicer shall service and administer
the Mortgage Loans
in accordance with applicable state and federal law and shall
provide to the
Mortgagors any reports required to be provided to them thereby.
The Servicer
shall also comply in the performance of this Agreement with all
reasonable rules
and requirements of each insurer under any standard hazard
insurance policy.
Subject to Section 3.17, within 15 days of the Closing Date, the
Trustee shall
execute, at the written request of the Servicer, and furnish to
the Servicer and
any Sub-Servicer any special or limited powers of attorney and
other documents
necessary or appropriate to enable the Servicer or any
Sub-Servicer to carry out
their servicing and administrative duties hereunder and the
Trustee shall not be
liable for the actions of the Servicer or any Sub-Servicers
under such powers of
attorney.
The Servicer further is authorized and empowered by the
Trustee, on behalf of the Certificateholders and the Trustee, in
its own name or
in the name of the Sub-Servicer, when the Servicer or the
Sub-Servicer, as the
case may be, believes it is appropriate in its best judgment to
register any
Mortgage Loan on the MERS(R) System, or cause the removal from
the registration
of any Mortgage Loan on the MERS(R) System, to execute and
deliver, on behalf of
the Trustee and the Certificateholders or any of them, any and
all instruments
of assignment and other comparable instruments with respect to
such assignment
or re-recording of a Mortgage in the name of MERS, solely as
nominee for the
Trustee and its successors and assigns. Any reasonable expenses
incurred in
connection with the actions described in the preceding sentence
or as a result
of MERS discontinuing or becoming unable to continue operations
in connection
with the MERS(R) System, shall be reimbursable to the Servicer
by withdrawal
from the Collection Account pursuant to Section 3.11.
Subject to Section 3.09, in accordance with the standards of
the preceding paragraph, the Servicer shall advance or cause to
be advanced
funds as necessary for the purpose of effecting the timely
payment of taxes and
assessments on the Mortgaged Properties, which advances shall be
Servicing
Advances reimbursable in the first instance from related
collections from the
Mortgagors pursuant to Section 3.09, and further as provided in
Section 3.11.
Any cost incurred by the Servicer or by Sub-Servicers in
effecting the timely
payment of taxes and assessments on a Mortgaged Property shall
not, for the
purpose of calculating distributions to Certificateholders, be
added to the
unpaid Stated Principal Balance of the related Mortgage Loan,
notwithstanding
that the terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a
Mortgage Loan
(except as provided in Section 4.03) and the Servicer shall not
(i) permit any
modification with respect to any Mortgage Loan that would change
the Mortgage
Rate, reduce or increase the Stated Principal Balance (except
for reductions
resulting from actual payments of principal) or change the final
maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the
Mortgagor is in
default with respect to
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the Mortgage Loan or such default is, in the judgment of the
Servicer,
reasonably foreseeable) or (ii) permit any modification, waiver
or amendment of
any term of any Mortgage Loan that would both (A) effect an
exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code
(or Treasury
regulations promulgated thereunder) and (B) cause any Trust
REMIC to fail to
qualify as a REMIC under the Code or the imposition of any tax
on "prohibited
transactions" or "contributions after the startup date" under
the REMIC
Provisions.
Notwithstanding anything in this Agreement to the contrary
and
notwithstanding its ability to do so pursuant to the terms of
the related
Mortgage Note, the Servicer shall not be required to enforce any
provision in
any Mortgage Note the enforcement of which would violate
federal, state or local
laws or ordinances designed to discourage predatory lending
practices.
The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall
release the Servicer
from the responsibilities or liabilities arising under this
Agreement.
SECTION 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements
with
Sub-Servicers for the servicing and administration of the
Mortgage Loans;
provided, however, that (i) such sub-servicing arrangement and
the terms of the
related Sub-Servicing Agreement must provide for the servicing
of the Mortgage
Loans in a manner consistent with the servicing arrangement
contemplated
hereunder and (ii) the NIMS Insurer shall have consented to such
Sub-Servicing
Agreement. The Trustee is hereby authorized to acknowledge, at
the request of
the Servicer, any Sub-Servicing Agreement that meets the
requirements applicable
to Sub-Servicing Agreements set forth in this Agreement and that
is otherwise
permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact
business
in the state or states where the related Mortgaged Properties it
is to service
are situated, if and to the extent required by applicable law to
enable the
Sub-Servicer to perform its obligations hereunder and under the
Sub-Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage
servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer
requirements conforming
to the provisions set forth in Section 3.08 and provide for
servicing of the
Mortgage Loans consistent with the terms of this Agreement. The
Servicer will
examine each Sub-Servicing Agreement and will be familiar with
the terms
thereof. The terms of any Sub-Servicing Agreement will not be
inconsistent with
any of the provisions of this Agreement. The Servicer and the
Sub-Servicers may
enter into and make amendments to the Sub-Servicing Agreements
or enter into
different forms of Sub-Servicing Agreements; provided, however,
that any such
amendments or different forms shall be consistent with and not
violate the
provisions of this Agreement, and that no such amendment or
different form shall
be made or entered into which could be reasonably expected to be
materially
adverse to the interests of the Certificateholders without the
consent of the
Holders of Certificates entitled to at least 66% of the Voting
Rights; provided,
further, that the consent of the Holders of Certificates
entitled to at least
66% of the Voting Rights shall not be required (i) to cure any
ambiguity or
defect in a Sub-Servicing Agreement, (ii) to correct, modify or
supplement any
provisions of a Sub-Servicing Agreement, or (iii) to make any
other provisions
with respect to matters or questions arising under a Sub-
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Servicing Agreement, which, in each case, shall not be
inconsistent with the
provisions of this Agreement. Any variation without the consent
of the Holders
of Certificates entitled to at least 66% of the Voting Rights
from the
provisions set forth in Section 3.08 relating to insurance or
priority
requirements of Sub-Servicing Accounts, or credits and charges
to the
Sub-Servicing Accounts or the timing and amount of remittances
by the
Sub-Servicers to the Servicer, are conclusively deemed to be
inconsistent with
this Agreement and therefore prohibited. The Servicer shall
deliver to the
Trustee and the NIMS Insurer copies of all Sub-Servicing
Agreements, and any
amendments or modifications thereof, promptly upon the
Servicer's execution and
delivery of such instruments.
(b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee and the
Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related
Sub-Servicing
Agreement, including, without limitation, any obligation of a
Sub-Servicer to
make advances in respect of delinquent payments as required by a
Sub-Servicing
Agreement. Such enforcement, including, without limitation, the
legal
prosecution of claims, termination of Sub-Servicing Agreements,
and the pursuit
of other appropriate remedies, shall be in such form and carried
out to such an
extent and at such time as the Servicer, in its good faith
business judgment,
would require were it the owner of the related Mortgage Loans.
The Servicer
shall pay the costs of such enforcement at its own expense, and
shall be
reimbursed therefor only (i) from a general recovery resulting
from such
enforcement, to the extent, if any, that such recovery exceeds
all amounts due
in respect of the related Mortgage Loans, or (ii) from a
specific recovery of
costs, expenses or attorneys'fees against the party against whom
such
enforcement is directed.
SECTION 3.03. Successor Sub-Servicers.
The Servicer, with the consent of the NIMS Insurer, shall be
entitled to terminate any Sub-Servicing Agreement and the rights
and obligations
of any Sub-Servicer pursuant to any Sub-Servicing Agreement in
accordance with
the terms and conditions of such Sub-Servicing Agreement. In the
event of
termination of any Sub-Servicer, all servicing obligations of
such Sub-Servicer
shall be assumed simultaneously by the Servicer without any act
or deed on the
part of such Sub-Servicer or the Servicer, and the Servicer
either shall service
directly the related Mortgage Loans or shall enter into a
Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under
Section 3.02.
Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trustee (if
the Trustee is
acting as Servicer) without fee, in accordance with the terms of
this Agreement,
in the event that the Servicer (or the Trustee, if it is then
acting as
Servicer) shall, for any reason, no longer be the Servicer
(including
termination due to a Servicer Event of Default).
SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement or the
provisions
of this Agreement relating to agreements or arrangements between
the Servicer
and a Sub-Servicer or reference to actions taken through a
Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily
liable to the
Trustee and the Certificateholders for the servicing and
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administering of the Mortgage Loans in accordance with the
provisions of Section
3.01 without diminution of such obligation or liability by
virtue of such
Sub-Servicing Agreements or arrangements or by virtue of
indemnification from
the Sub-Servicer and to the same extent and under the same terms
and conditions
as if the Servicer alone were servicing and administering the
Mortgage Loans.
The Servicer shall be entitled to enter into any agreement with
a Sub-Servicer
for indemnification of the Servicer by such Sub-Servicer and
nothing contained
in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between
Sub-Servicers and the Trustee, the NIMS Insurer
or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans
involving a Sub-Servicer
in its capacity as such shall be deemed to be between the
Sub-Servicer and the
Servicer alone, and the Trustee, the NIMS Insurer and the
Certificateholders
shall not be deemed parties thereto and shall have no claims,
rights,
obligations, duties or liabilities with respect to the
Sub-Servicer except as
set forth in Section 3.06. The Servicer shall be solely liable
for all fees owed
by it to any Sub-Servicer, irrespective of whether the
Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee.
In the event the Servicer shall for any reason no longer be
the Servicer (including by reason of the occurrence of a
Servicer Event of
Default), the Trustee or its designee shall thereupon assume all
of the rights
and obligations of the Servicer under each Sub-Servicing
Agreement that the
Servicer may have entered into, unless the Trustee elects to
terminate any
Sub-Servicing Agreement in accordance with its terms as provided
in Section
3.03. Upon such assumption, the Trustee, its designee or the
successor servicer
for the Trustee appointed pursuant to Section 7.02 shall be
deemed, subject to
Section 3.03, to have assumed all of the Servicer's interest
therein and to have
replaced the Servicer as a party to each Sub-Servicing Agreement
to the same
extent as if each Sub-Servicing Agreement had been assigned to
the assuming
party, except that (i) the Servicer shall not thereby be
relieved of any
liability or obligations under any Sub-Servicing Agreement that
arose before it
ceased to be the Servicer and (ii) neither of the Trustee nor,
its designee or
any successor Servicer shall be deemed to have assumed any
liability or
obligation of the Servicer that arose before it ceased to be the
Servicer.
The Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records
relating to
each Sub-Servicing Agreement and the Mortgage Loans then being
serviced and an
accounting of amounts collected and held by or on behalf of it,
and otherwise
use its best efforts to effect the orderly and efficient
transfer of the
Sub-Servicing Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall diligently collect all payments called
for
under the terms and provisions of the Mortgage Loans, and shall,
to the extent
such procedures shall be consistent
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with this Agreement and the terms and provisions of any
applicable insurance
policies provided to the Servicer, follow such collection
procedures as it would
follow with respect to mortgage loans comparable to the Mortgage
Loans and held
for its own account. Consistent with the foregoing, the Servicer
may in its
discretion (i) waive any late payment charge or, if applicable,
any penalty
interest, (ii) waive any provisions of any Mortgage Loan
requiring the related
Mortgagor to submit to mandatory arbitration with respect to
disputes arising
thereunder or (iii) extend the due dates for the Monthly
Payments due on a
Mortgage Note for a period of not greater than 180 days;
provided, however, that
any extension pursuant to clause (ii) above shall not affect the
amortization
schedule of any Mortgage Loan for purposes of any computation
hereunder, except
as provided below; provided further that the NIMS Insurer's
prior written
consent shall be required for any modification, waiver or
amendment if the
aggregate number of outstanding Mortgage Loans which have been
modified, waived
or amended exceeds 5% of the number of Mortgage Loans as of the
Cut-off Date. In
the event of any such arrangement pursuant to clause (iii)
above, the Servicer
shall make timely Advances on such Mortgage Loan during such
extension pursuant
to Section 4.03 and in accordance with the amortization schedule
of such
Mortgage Loan without modification thereof by reason of such
arrangement.
Notwithstanding the foregoing, in the event that any Mortgage
Loan is in default
or, in the judgment of the Servicer, such default is reasonably
foreseeable, the
Servicer, consistent with the standards set forth in Section
3.01, may also
waive, modify or vary any term of such Mortgage Loan (including
modifications
that would change the Mortgage Rate, forgive the payment of
principal or
interest or extend the final maturity date of such Mortgage
Loan), accept
payment from the related Mortgagor of an amount less than the
Stated Principal
Balance in final satisfaction of such Mortgage Loan (such
payment, a "Short
Pay-off"), or consent to the postponement of strict compliance
with any such
term or otherwise grant indulgence to any Mortgagor without the
prior written
consent of the NIMS Insurer.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer
will be required to
establish and maintain one or more accounts (collectively, the
"Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible
Account and shall
comply with all requirements of this Agreement relating to the
Collection
Account. The Sub-Servicer shall deposit in the clearing account
in which it
customarily deposits payments and collections on mortgage loans
in connection
with its mortgage loan servicing activities on a daily basis,
and in no event
more than one Business Day after the Sub-Servicer's receipt
thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its
servicing
compensation to the extent permitted by the Sub-Servicing
Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in
no event more
than two Business Days after the receipt of such amounts. The
Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or
remit such
proceeds to the Servicer for deposit in the Collection Account
not later than
two Business Days after the deposit of such amounts in the
Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be
deemed to have
received payments on the Mortgage Loans when the Sub-Servicer
receives such
payments.
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SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing
Accounts"),
into which all collections from the Mortgagors (or related
advances from
Sub-Servicers) for the payment of taxes, assessments, hazard
insurance premiums
and comparable items for the account of the Mortgagors ("Escrow
Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible
Accounts. The
Servicer shall deposit in the clearing account in which it
customarily deposits
payments and collections on mortgage loans in connection with
its mortgage loan
servicing activities on a daily basis, and in no event more than
one Business
Day after the Servicer's receipt thereof, all Escrow Payments
collected on
account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments
in the Servicing Accounts, in no event more than two Business
Days after the
receipt of such Escrow Payments, all Escrow Payments collected
on account of the
Mortgage Loans for the purpose of effecting the timely payment
of any such items
as required under the terms of this Agreement. Withdrawals of
amounts from a
Servicing Account may be made only to (i) effect payment of
taxes, assessments,
hazard insurance premiums, and comparable items in a manner and
at a time that
assures that the lien priority of the Mortgage is not
jeopardized (or, with
respect to the payment of taxes, in a manner and at a time that
avoids the loss
of the Mortgaged Property due to a tax sale or the foreclosure
as a result of a
tax lien); (ii) reimburse the Servicer (or a Sub-Servicer to the
extent provided
in the related Sub-Servicing Agreement) out of related
collections for any
advances made pursuant to Section 3.01 (with respect to taxes
and assessments)
and Section 3.14 (with respect to hazard insurance); (iii)
refund to Mortgagors
any sums as may be determined to be overages; (iv) pay interest,
if required and
as described below, to Mortgagors on balances in the Servicing
Account; or (v)
clear and terminate the Servicing Account at the termination of
the Servicer's
obligations and responsibilities in respect of the Mortgage
Loans under this
Agreement in accordance with Article IX. In the event the
Servicer shall deposit
in a Servicing Account any amount not required to be deposited
therein or any
amount previously deposited therein is unpaid by the related
Mortgagor's banking
institution, it may at any time withdraw such amount from such
Servicing
Account, any provision herein to the contrary notwithstanding.
As part of its
servicing duties, the Servicer or Sub-Servicers shall pay to the
Mortgagors
interest on funds in the Servicing Accounts, to the extent
required by law and,
to the extent that interest earned on funds in the Servicing
Accounts is
insufficient, to pay such interest from its or their own funds,
without any
reimbursement therefor. The Servicer may pay to itself any
excess interest on
funds in the Servicing Accounts, to the extent such action is in
conformity with
the servicing standard set forth in Section 3.01, is permitted
by law and such
amounts are not required to be paid to Mortgagors or used for
any of the other
purposes set forth above.
SECTION 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Servicer shall
establish
and maintain, or cause to be established and maintained, one or
more accounts
(such account or accounts, the "Collection Account"), held in
trust for the
benefit of the Trustee and the Certificateholders. On behalf of
the Trust Fund,
the Servicer shall deposit or cause to be deposited in the
clearing account in
which it customarily deposits payments and collections on
mortgage loans in
connection with its mortgage loan servicing activities on a
daily basis, and in
no event more than
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one Business Day after the Servicer's receipt thereof, and shall
thereafter
deposit in the Collection Account, in no event more than two
Business Days after
the Servicer's receipt thereof, as and when received or as
otherwise required
hereunder, the following payments and collections received or
made by it
subsequent to the Cut-off Date (other than in respect of
principal or interest
on the Mortgage Loans due on or before the Cut-off Date), or
payments (other
than Principal Prepayments) received by it on or prior to the
Cut-off Date but
allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including
Principal
Prepayments (but not Prepayment Charges), on the Mortgage
Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds, Liquidation Proceeds,
Subsequent
Recoveries and condemnation proceeds (other than proceeds
collected in
respect of any particular REO Property and amounts paid in
connection
with a purchase of Mortgage Loans and REO Properties pursuant
to
Section 9.01);
(iv) any amounts required to be deposited pursuant to
Section
3.12 in connection with any losses realized on Permitted
Investments
with respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer
pursuant to the second paragraph of Section 3.14(a) in respect
of any
blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or
purchased in accordance with Section 2.03, Section 3.16(c) or
Section
9.01;
(vii) all amounts required to be deposited in connection
with
Substitution Adjustments pursuant to Section 2.03; and
(viii) all Prepayment Charges collected by the Servicer in
connection with the Principal Prepayment of any of the Mortgage
Loans
and any Servicer Prepayment Charge Payment Amounts.
The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that,
without
limiting the generality of the foregoing, payments in the nature
of Servicing
Fees, late payment charges, Prepayment Interest Excess,
assumption fees,
insufficient funds charges and ancillary income (other than
Prepayment Charges)
need not be deposited by the Servicer in the Collection Account
and may be
retained by the Servicer as additional compensation. 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.
(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
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Trustee in immediately available funds for deposit in the
Distribution Account
by 3:00 p.m. New York time (i) on the Servicer Remittance Date,
that portion of
Available Funds (calculated without regard to the references in
clause (ii) of
the definition thereof to amounts that may be withdrawn from the
Distribution
Account) for the related Distribution Date then on deposit in
the Collection
Account and the amount of all Prepayment Charges collected by
the Servicer in
connection with the Principal Prepayment of any of the Mortgage
Loans and any
Servicer Prepayment Charge Payment Amounts then on deposit in
the Collection
Account and the amount of any funds reimbursable to an Advancing
Person pursuant
to Section 3.26 (unless such amounts are to be remitted in
another manner as
specified in the documentation establishing the related Adavance
Facility) and
(ii) on each Business Day as of the commencement of which the
balance on deposit
in the Collection Account exceeds $75,000 following any
withdrawals pursuant to
the next succeeding sentence, the amount of such excess, but
only if the
Collection Account constitutes an Eligible Account solely
pursuant to clause
(ii) of the definition of "Eligible Account." If the balance on
deposit in the
Collection Account exceeds $75,000 as of the commencement of
business on any
Business Day and the Collection Account constitutes an Eligible
Account solely
pursuant to clause (ii) of the definition of "Eligible Account,"
the Servicer
shall, by 3:00 p.m. New York time on such Business Day, withdraw
from the
Collection Account any and all amounts payable or reimbursable
to the Depositor,
the Servicer, the Trustee, NC Capital, the Seller or any
Sub-Servicer pursuant
to Section 3.11 and shall pay such amounts to the Persons
entitled thereto.
(c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance
with the
provisions set forth in Section 3.12. The Servicer shall give
written notice to
the Trustee and the NIMS Insurer of 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, the NIMS Insurer and the
Depositor of the
location of the Distribution Account when established and prior
to any change
thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Servicer to the Trustee for deposit in an
account (which may be
the Distribution Account and must satisfy the standards for the
Distribution
Account as set forth in the definition thereof) and for all
purposes of this
Agreement shall be deemed to be a part of the Collection
Account; provided,
however, that the Trustee shall have the sole authority to
withdraw any funds
held pursuant to this subsection (d). In the event the Servicer
shall deliver to
the Trustee for deposit in the Distribution Account any amount
not required to
be deposited therein, it may at any time request that the
Trustee withdraw such
amount from the Distribution Account and remit to it 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:
(i) any Advances, as required pursuant to Section 4.03;
(ii) any amounts required to be deposited pursuant to
Section
3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase
of
Mortgage Loans and REO Properties pursuant to Section 9.01;
and
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(iv) any amounts required to be deposited pursuant to
Section
3.24 in connection with any Prepayment Interest Shortfall;
(e) The Servicer shall deposit in the Collection Account any
amounts required to be deposited pursuant to Section 3.12(b) in
connection with
losses realized on Permitted Investments with respect to funds
held in the
Collection Account. The Trustee shall deposit in the
Distribution Account any
amounts required to be deposited pursuant to Section 3.12(b) in
connection with
losses realized on Permitted Investments with respect to funds
held in the
Distribution Account.
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.
(a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or
as described in
Section 4.03:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to
Section
3.10(b) or permitted to be so remitted pursuant to the first
sentence
of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Servicer
for
unreimbursed Advances, but only to the extent of amounts
received which
represent Late Collections (net of the related Servicing Fees)
on
Mortgage Loans or REO Properties with respect to which such
Advances
were made in accordance with the provisions of Section 4.03;
(iii) subject to Section 3.16(d), to pay the Servicer or any
Sub-Servicer (a) any unpaid Servicing Fees, (b) any
unreimbursed
Servicing Advances with respect to each Mortgage Loan, but only
to the
extent of any Late Collections, received with respect to such
Mortgage
Loan or REO Property and (c) any Nonrecoverable Servicing
Advances with
respect to the final liquidation of a Mortgage Loan, but only to
the
extent that Late Collections, received with respect to such
Mortgage
Loan are insufficient to reimburse the Servicer or any
Sub-Servicer for
Servicing Advances;
(iv) to pay to the Servicer as servicing compensation (in
addition to the Servicing Fee) on the Servicer Remittance Date
any
interest or investment income earned on funds deposited in
the
Collection Account; (v) to pay to the Servicer, the Depositor,
NC
Capital or the Seller, as the case may be, with respect to
each
Mortgage Loan that has previously been purchased or replaced
pursuant
to Section 2.03 or Section 3.16(c) all amounts received
thereon
subsequent to the date of purchase or substitution, as the case
may be;
(vi) to reimburse the Servicer for any Advance or Servicing
Advance previously made which the Servicer has determined to be
a
Nonrecoverable Advance in accordance with the provisions of
Section
4.03;
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(vii) to reimburse the Servicer or the Depositor for
expenses
incurred by or reimbursable to the Servicer or the Depositor, as
the
case may be, pursuant to Section 6.03;
(viii) to reimburse the Servicer, the NIMS Insurer or the
Trustee, as the case may be, for expenses reasonably incurred
in
connection with any breach or defect giving rise to the
purchase
obligation under Section 2.03 of this Agreement, including any
expenses
arising out of the enforcement of the purchase obligation;
(ix) to pay, or to reimburse the Servicer for Servicing
Advances in respect of, expenses incurred in connection with
any
Mortgage Loan pursuant to Section 3.16(b);
(x) to withdraw amounts deposited therein in error;
(xi) to pay itself any Prepayment Interest Excess (to the
extent not otherwise retained);
(xii) to withdraw amounts deposited therein in error; and
(xiii) to clear and terminate the Collection Account
pursuant
to Section 9.01.
The Servicer shall keep and maintain separate accounting, on
a
Mortgage Loan-by-Mortgage Loan basis, for the purpose of
justifying any
withdrawal from the Collection Account, to the extent held by or
on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii)
and (ix) above.
The Servicer shall provide written notification to the Trustee
and the NIMS
Insurer on or prior to the next succeeding Servicer Remittance
Date, upon making
any withdrawals from the Collection Account pursuant to
subclauses (iii(c)) and
(vi) above; provided that an Officer's Certificate in the form
described under
Section 4.03(d) shall suffice for such written notification to
the Trustee
respect of clause (vi) hereof.
(b) The Trustee shall, from time to time, make withdrawals
from the Distribution Account, for any of the following
purposes, without
priority:
(i) to make distributions to Certificateholders in
accordance
with Section 4.01;
(ii) to pay itself the Trustee Fee and any Extraordinary
Trust
Fund Expenses pursuant to Section 8.05;
(iii) to pay the Credit Risk Manager the Credit Risk
Manager;
(iv) to pay to itself on each Distribution Date any interest
or investment income earned on funds deposited in the
Distribution
Account pursuant to Section 3.12(b);
(v) to reimburse itself pursuant to Section 7.02;
(vi) to pay any amounts in respect of taxes pursuant to
Section 10.01(g)(iii);
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(vii) to pay to an Advancing Person reimbursements for
Advances and/or Servicing Advances pursuant to Section 3.26;
and
(viii) to clear and terminate the Distribution Account
pursuant to Section 9.01.
The foregoing requirements for withdrawal from the
Distribution Account shall be exclusive. In the event the
Trustee shall deposit
in the Distribution Account any amount not required to be
deposited therein, it
may at any time withdraw such amount from the Distribution
Account, any
provision herein to the contrary notwithstanding.
SECTION 3.12. Investment of Funds in the Collection Account
and the Distribution Account.
(a) The Servicer may direct any depository institution
maintaining the Collection Account and any REO Account and the
Trustee may
direct any depository institution maintaining the Distribution
Account (each,
for purposes of this Section 3.12, an "Investment Account") to
invest the funds
in such Investment Account in one or more Permitted Investments
bearing interest
or sold at a discount, and maturing, unless payable on demand,
(i) no later than
the Business Day immediately preceding the date on which such
funds are required
to be withdrawn from such account pursuant to this Agreement, if
a Person other
than the Trustee is the obligor thereon or if such investment is
managed or
advised by a Person other than the Trustee or an Affiliate of
the Trustee, 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 or if such investment is managed or advised by the
Trustee or any
Affiliate. All such Permitted Investments shall be held to
maturity, unless
payable on demand. Any investment of funds in an Investment
Account shall be
made in the name of the Trustee (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 or
any REO Account and any income and gain realized thereon) over
each such
investment, 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
an Investment
Account are at any time invested in a Permitted Investment
payable on demand,
the Trustee shall:
(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 Investment Account.
(b) All income and gain realized from the investment of
funds
deposited in the Collection Account and any REO Account held by
or on behalf of
the Servicer shall be for the
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benefit of the Servicer and shall be subject to its withdrawal
in accordance
with Section 3.11 or Section 3.23, as applicable. All income and
gain realized
from the investment of funds deposited in the Distribution
Account held by or on
behalf of the Trustee shall be for the benefit of the Trustee
and shall be
subject to its withdrawal in accordance with Section 3.11. The
Servicer shall
deposit in the Collection Account and any REO Account, as
applicable, the amount
of any loss of principal incurred in respect of any such
Permitted Investment
made with funds in such accounts immediately upon realization of
such loss. The
Trustee shall deposit in the Distribution Account the amount of
any loss of
principal incurred in respect of any such Permitted Investment
made with funds
in such accounts immediately upon realization of such loss.
(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 NIMS Insurer or the Holders
of Certificates
representing more than 50% of the Voting Rights allocated to any
Class of
Certificates, shall take such action as may be appropriate to
enforce such
payment or performance, including the institution and
prosecution of appropriate
proceedings.
SECTION 3.13. [Reserved].
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the
related Mortgaged
Property in an amount which is at least equal to the least of
the (i) current
Stated Principal Balance of such Mortgage Loan (ii) the amount
necessary to
fully compensate for any damage or loss to the improvements that
are a part of
such property on a replacement cost basis and (iii) the maximum
insurable value
of the improvements which are part of such mortgaged property,
in each case in
an amount not less than such amount as is necessary to avoid the
application of
any coinsurance clause contained in the related hazard insurance
policy. The
Servicer shall also cause to be maintained fire insurance with
extended coverage
on each REO Property in an amount which is at least equal to the
least of (i)
the maximum insurable value of the improvements which are a part
of such
property, (ii) the outstanding Stated Principal Balance of the
related Mortgage
Loan at the time it became an REO Property and (iii) the maximum
insurable value
of the improvements which are part of such REO Property. The
Servicer will
comply in the performance of this Agreement with all reasonable
rules and
requirements of each insurer under any such hazard policies. Any
amounts to be
collected by the Servicer under any such policies (other than
amounts to be
applied to the restoration or repair of the property subject to
the related
Mortgage or amounts to be released to the Mortgagor in
accordance with the
procedures that the Servicer would follow in servicing loans
held for its own
account, subject to the terms and conditions of the related
Mortgage and
Mortgage Note) shall be deposited in the Collection Account,
subject to
withdrawal pursuant to Section 3.11, if received in respect of a
Mortgage Loan,
or in the REO Account, subject to withdrawal pursuant to Section
3.23, if
received in respect of an REO Property. Any cost incurred by the
Servicer in
maintaining any such insurance shall not, for the purpose of
calculating
distributions to Certificateholders, be added to the unpaid
Stated Principal
Balance of the related Mortgage Loan, notwithstanding that the
terms of such
Mortgage Loan so permit. It is
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understood and agreed that no earthquake or other additional
insurance is to be
required of any Mortgagor other than pursuant to such applicable
laws and
regulations as shall at any time be in force and as shall
require such
additional insurance. If the Mortgaged Property or REO Property
is at any time
in an area identified in the Federal Register by the Federal
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 in respect thereof. Such flood insurance shall be in an
amount equal to
the least of (i) the unpaid Stated Principal Balance of the
related Mortgage
Loan, (ii) the maximum amount of such insurance available for
the related
Mortgaged Property under the national flood insurance program
(assuming that the
area in which such Mortgaged Property is located is
participating in such
program) and (iii) the maximum insurable value of the
improvements which are
part of such Mortgaged Property.
In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of
A:X or better
in Best's Key Rating Guide (or such other rating that is
comparable to such
rating) or otherwise acceptable to Fannie Mae or Freddie Mac
insuring against
hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to
have satisfied its obligations as set forth in the first two
sentences of this
Section 3.14, 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 the first two sentences of this Section
3.14, and there
shall have been one or more losses which would have been covered
by such policy,
deposit to the Collection Account from its own funds the amount
not otherwise
payable under the blanket policy because of such deductible
clause. In
connection with its activities as administrator and servicer of
the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of
itself, the
Trustee and Certificateholders, claims under any such blanket
policy in a timely
fashion in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and
omissions for
failure in the performance of the Servicer's obligations under
this Agreement,
which policy or policies shall be in such form and amount that
would meet the
requirements of Fannie Mae or Freddie Mac if it were the
purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of
such requirements
from Fannie Mae or Freddie Mac. The Servicer shall provide the
Trustee and the
NIMS Insurer, upon request, with copies of such insurance
policies and fidelity
bond. The Servicer shall also maintain a fidelity bond in the
form and amount
that would meet the requirements of Fannie Mae or Freddie Mac,
unless the
Servicer has obtained a waiver of such requirements from Fannie
Mae or Freddie
Mac. The Servicer shall be deemed to have complied with this
provision if an
Affiliate of the Servicer has such errors and omissions and
fidelity bond
coverage and, by the terms of such insurance policy or fidelity
bond, the
coverage afforded thereunder extends to the Servicer. Any such
errors and
omissions policy and fidelity bond shall by its terms not be
cancelable or
materially modifiable without thirty days' prior written notice
to the Trustee
and the NIMS Insurer. The Servicer shall also cause each
Sub-Servicer to
maintain a policy of insurance covering errors and omissions and
a fidelity bond
which would meet such requirements.
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SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property
by any Mortgagor
(whether by absolute conveyance or by contract of sale, and
whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note
and/or the
Mortgage), exercise its rights to accelerate the maturity of
such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto;
provided, however,
that the Servicer shall not be required to take such action if
in its sole
business judgment the Servicer believes it is not in the best
interests of the
Trust Fund and shall not exercise any such rights if prohibited
by law from
doing so. If the Servicer reasonably believes it is unable under
applicable law
to enforce such "due-on-sale" clause, or if any of the other
conditions set
forth in the proviso to the preceding sentence apply, the
Servicer will enter
into an assumption and modification agreement from or with the
person to whom
such property has been conveyed or is proposed to be conveyed,
pursuant to which
such person becomes liable under the Mortgage Note and, to the
extent permitted
by applicable state law, the Mortgagor remains liable thereon.
The Servicer is
also 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 the Mortgagor and becomes liable
under the
Mortgage Note; provided that no such substitution shall be
effective unless such
person satisfies the underwriting criteria of the Servicer and
has a credit risk
rating at least equal to that of the original Mortgagor. In
connection with any
assumption or substitution, the Servicer shall apply such
underwriting standards
and follow such practices and procedures as shall be normal and
usual in its
general mortgage servicing activities and as it applies to other
mortgage loans
owned solely by it. The Servicer shall not take or enter into
any assumption and
modification agreement, however, unless (to the extent
practicable in the
circumstances) it shall have received confirmation, in writing,
of the continued
effectiveness of any applicable hazard insurance policy. Any fee
collected by
the Servicer in respect of an assumption, modification or
substitution of
liability agreement shall be retained by the Servicer as
additional servicing
compensation. In connection with any such assumption, no
material term of the
Mortgage Note (including but not limited to the related Mortgage
Rate and the
amount of the Monthly Payment) may be amended or modified,
except as otherwise
required pursuant to the terms thereof. The Servicer shall
notify the Trustee
and the Custodian that any such substitution, modification or
assumption
agreement has been completed by forwarding to the Custodian the
executed
original of such substitution, modification or assumption
agreement, which
document shall be added to the related Mortgage File and 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.
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 by the terms of the
Mortgage Note or any
assumption which the Servicer may be restricted by law from
preventing, for any
reason whatever. For purposes of this Section 3.15, the term
"assumption" is
deemed to also include a sale (of the Mortgaged Property)
subject to the
Mortgage that is not accompanied by an assumption or
substitution of liability
agreement.
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SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with
the servicing standards set forth in Section 3.01, to foreclose
upon or
otherwise comparably convert the ownership of properties
securing such of the
Mortgage Loans as come into and continue in default and as to
which no
satisfactory arrangements can be made for collection of
delinquent payments
pursuant to Section 3.07. The Servicer shall be responsible for
all costs and
expenses incurred by it in any such proceedings; provided,
however, that such
costs and expenses will be recoverable as Servicing Advances by
the Servicer as
contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the
provision that, in any case in which a Mortgaged Property shall
have suffered
damage from an Uninsured Cause, the Servicer shall not be
required to expend its
own funds toward the restoration of such property unless it
shall determine in
its discretion that such restoration will increase the proceeds
of liquidation
of the related Mortgage Loan after reimbursement to itself for
such expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, 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, on behalf of the Trustee,
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 Trustee, the Trust Fund or the Certificateholders would be
considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or
"operator" of such Mortgaged Property within the meaning of the
Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended from
time to time, or any comparable law, unless the Servicer has
also previously
determined, based on its reasonable judgment and a report
prepared by a Person
who regularly conducts environmental audits using customary
industry standards,
that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best
economic interest of
the Trust Fund to take such actions as are necessary to bring
the Mortgaged
Property into compliance therewith; and
(2) 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 Trust
Fund to take such actions with respect to the affected Mortgaged
Property.
Notwithstanding the foregoing, if such environmental audit
reveals, or if the Servicer has actual knowledge or notice, that
such Mortgaged
Property contains such toxic or hazardous wastes or substances,
the Servicer
shall not foreclose or accept a deed in lieu of foreclosure
without the prior
written consent of the NIMS Insurer.
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The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Servicer, subject to
the Servicer's
right to be reimbursed therefor from the Collection Account as
provided in
Section 3.11(a)(ix), such right of reimbursement being prior to
the rights of
Certificateholders to receive any amount in the Collection
Account received in
respect of the affected Mortgage Loan or other Mortgage
Loans.
If the Servicer determines, as described above, that it is
in
the best economic interest of the Trust Fund 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 Trust Fund; provided that any amounts disbursed
by the Servicer
pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to
Section 4.03(d). 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
3.11(a)(iii) and (a)(ix), such right of reimbursement being
prior to the rights
of Certificateholders to receive any amount in the Collection
Account received
in respect of the affected Mortgage Loan or other Mortgage
Loans.
(c) The Servicer or the NIMS Insurer may, at the option of
each, purchase a Mortgage Loan which has become 90 or more days
delinquent or
for which the Servicer has accepted a deed in lieu of
foreclosure. Prior to
purchase pursuant to this Section 3.16(c), the Servicer shall be
required to
continue to make Advances pursuant to Section 4.03. The Servicer
or the NIMS
Insurer shall not use any procedure in selecting Mortgage Loans
to be
repurchased which is materially adverse to the interests of
the
Certificateholders. The Servicer or the NIMS Insurer shall
purchase such
delinquent Mortgage Loan at a price equal to the Purchase Price
of such Mortgage
Loan. Any such purchase of a Mortgage Loan pursuant to this
Section 3.16(c)(i)
shall be accomplished by remittance to the Servicer for deposit
in the
Collection Account of the amount of the Purchase Price.
Notwithstanding the
foregoing, the Servicer or the NIM Insurer shall purchase
Mortgage Loans that
are delinquent the greatest number of days before it may
purchase any that are
delinquent any fewer number of days. The Trustee shall
immediately effectuate
the conveyance of such delinquent Mortgage Loan to the Servicer
or the NIMS
Insurer, as applicable, to the extent necessary to vest in the
Servicer or the
NIMS Insurer, as applicable, title to such Mortgage Loan,
including the prompt
delivery of all documentation to the Servicer or the NIMS
Insurer, as
applicable.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial
collection of
Insurance Proceeds, Liquidation Proceeds or condemnation
proceeds, in respect of
any Mortgage Loan, will be applied in the following order of
priority: first, to
unpaid Servicing Fees; second, to reimburse the Servicer or any
Sub-Servicer for
any related unreimbursed Servicing Advances pursuant to Section
3.11(a)(iii) and
Advances pursuant to Section 3.11(a)(ii); third, to accrued and
unpaid interest
on the Mortgage Loan, to the date of the Final Recovery
Determination, or to the
Due Date prior to the Distribution Date on which such amounts
are to be
distributed if not in connection with a Final Recovery
Determination; and
fourth, as a recovery of principal of the Mortgage Loan. The
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portion of the recovery so allocated to unpaid Servicing Fees
shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to
Section 3.11(a)(iii).
SECTION 3.17. Trustee to Cooperate; Release of Mortgage
Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full
shall be escrowed
in a manner customary for such purposes, the Servicer shall
deliver to the
Trustee (or the Custodian on its behalf), in written (with two
executed copies)
or electronic format, a Request for Release in the form of
Exhibit E (which
certification shall include a statement to the effect that all
amounts received
or to be received in connection with such payment which are
required to be
deposited in the Collection Account pursuant to Section 3.10
have been or will
be so deposited) signed by a Servicing Officer (or in a mutually
agreeable
electronic format that will, in lieu of a signature on its face,
originate from
a Servicing Officer) and shall request delivery to it of the
Mortgage File. Upon
receipt of such certification and request, the Custodian shall,
within three
Business Days, release and send by overnight mail, the related
Mortgage File to
the Servicer and the Servicer is authorized to cause the removal
from the
registration on the MERS(R) System of any such Mortgage Loan, if
applicable. The
Trustee agrees to indemnify the Servicer, out of its own funds,
for any loss,
liability or expense (other than special, indirect, punitive or
consequential
damages which will not be paid by the Trustee) incurred by the
Servicer as a
proximate result of the Trustee's breach of its obligations
pursuant to this
Section 3.17. Except as otherwise provided herein, expenses
incurred in
connection with any instrument of satisfaction or deed of
reconveyance shall be
chargeable to the Collection Account or the Distribution
Account.
(b) From time to time and as appropriate for the servicing
or
foreclosure of any Mortgage Loan, including, for this purpose,
collection under
any insurance policy relating to the Mortgage Loans, the
Custodian shall, upon
any request made by or on behalf of the Servicer and delivery to
the Custodian,
in written or electronic format, of a Request for Release in the
form of Exhibit
E, release the related Mortgage File within three Business Days
to the Servicer,
and shall, at the direction of the Servicer, execute such
documents as shall be
necessary to the prosecution of any such proceedings. Such
Request for Release
shall obligate the Servicer to return each and every document
previously
requested from the Mortgage File to the Custodian when the need
therefor by the
Servicer no longer exists, unless the Mortgage Loan has been
liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the
Collection Account or the Mortgage File or such document has
been delivered to
an attorney, or to a public trustee or other public official as
required by law,
for purposes of initiating or pursuing legal action or other
proceedings for the
foreclosure of the Mortgaged Property either judicially or
non-judicially, and
the Servicer has delivered, or caused to be delivered, to the
Custodian an
additional Request for Release certifying as to such liquidation
or action or
proceedings. Upon the request of the Trustee, the Servicer shall
provide notice
to the Trustee of the name and address of the Person to which
such Mortgage File
or such document was delivered and the purpose or purposes of
such delivery.
Upon receipt of a Request for Release, in written or electronic
format from, a
Servicing Officer stating that such Mortgage Loan was liquidated
and that all
amounts received or to be received in connection with such
liquidation that are
required to be deposited into the Collection Account have been
so deposited, or
that such Mortgage Loan has become an REO Property, any
outstanding Requests for
Release with respect to such Mortgage Loan shall be released by
the Custodian to
the Servicer or its designee.
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(c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Servicer or the
Sub-Servicer, as the
case may be, any court pleadings, requests for trustee's sale or
other documents
necessary to the foreclosure or trustee's sale in respect of a
Mortgaged
Property or to any legal action brought to obtain judgment
against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency
judgment, or to
enforce any other remedies or rights provided by the Mortgage
Note or Mortgage
or otherwise available at law or in equity. Each such
certification shall
include a request that such pleadings or documents be executed
by the Trustee
and a statement as to the reason such documents or pleadings are
required and
that the execution and delivery thereof by the Trustee will not
invalidate or
otherwise affect the lien of the Mortgage, except for the
termination of such a
lien upon completion of the foreclosure or trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Servicer
hereunder,
the Servicer shall be entitled to the Servicing Fee with respect
to each
Mortgage Loan payable solely from payments of interest in
respect of such
Mortgage Loan, subject to Section 3.24. In addition, the
Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance
Proceeds, Liquidation
Proceeds and condemnation proceeds to the extent permitted by
Section
3.11(a)(iii) and out of amounts derived from the operation and
sale of an REO
Property to the extent permitted by Section 3.23. Except as
provided in Section
6.04, the right to receive the Servicing Fee may not be
transferred in whole or
in part except in connection with the transfer of all of the
Servicer's
responsibilities and obligations under this Agreement; provided,
however, that
the Servicer may pay from the Servicing Fee any amounts due to a
Sub-Servicer
pursuant to a Sub-Servicing Agreement entered into under Section
3.02. As part
of its servicing compensation, the Servicer shall also be
entitled to Prepayment
Interest Excess.
Additional servicing compensation in the form of assumption
or
modification fees, late payment charges, insufficient funds
charges, ancillary
income or otherwise (subject to Section 3.24 and other than
Prepayment Charges)
shall be retained by the Servicer only to the extent such fees
or charges are
received by the Servicer. The Servicer shall also be entitled
pursuant to
Section 3.11(a)(iv) to withdraw from the Collection Account and
pursuant to
Section 3.23(b) to withdraw from any REO Account, as additional
servicing
compensation, interest or other income earned on deposits
therein, subject to
Section 3.12 and Section 3.24. The Servicer shall be required to
pay all
expenses incurred by it in connection with its servicing
activities hereunder
(including premiums for the insurance required by Section 3.14,
to the extent
such premiums are not paid by the related Mortgagors or by a
Sub-Servicer and
servicing compensation of each Sub-Servicer) and shall not be
entitled to
reimbursement therefor except as specifically provided
herein.
SECTION 3.19. Reports to the Trustee; Collection Account
Statements.
Not later than twenty days after each Distribution Date, the
Servicer shall forward, upon request, to the Trustee, the NIMS
Insurer and the
Depositor the most current available bank statement for the
Collection Account.
Copies of such statement shall be provided by the Trustee to
any
Certificateholder and to any Person identified to the Trustee as
a
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prospective transferee of a Certificate, upon request at the
expense of the
requesting party; provided that such statement is delivered by
the Servicer to
the Trustee.
SECTION 3.20. Statement as to Compliance.
The Servicer will deliver to the Trustee, the NIMS Insurer and
the Depositor not
later than March 15th of each calendar year (beginning in 2006),
an Officer's
Certificate, in a form similar to Exhibit L attached hereto as
agreed upon by
the parties hereto, stating, as to each signatory thereof, that
(i) a review of
the activities of the Servicer during the preceding year 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 of its obligations under this Agreement throughout
such year, or,
if there has been a default in the fulfillment of any such
obligation,
specifying each such default known to such officer and the
nature and status
thereof. Copies of any such statement shall be provided by the
Trustee to any
Certificateholder and to any Person identified to the Trustee as
a prospective
transferee of a Certificate, upon request at the expense of the
requesting
party; provided that such statement is delivered by the Servicer
to the Trustee.
In addition to the foregoing, the Servicer will, to the extent
reasonable,
provide any other servicing information required by the
Commission pursuant to
applicable law.
SECTION 3.21. Independent Public Accountants' Servicing
Report.
Not later than March 15th of each calendar year (beginning
in
2006), the Servicer, at its expense, shall cause a nationally
recognized firm of
independent certified public accountants to furnish to the
Servicer 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 the Uniform Single Attestation Program
for Mortgage
Bankers established by the Mortgage Bankers Association of
America, with respect
to the servicing of residential mortgage loans during the most
recently
completed calendar 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. In rendering its report such firm may rely, as
to matters
relating to the direct servicing of residential mortgage loans
by Sub-Servicers,
upon comparable reports of firms of independent certified public
accountants
rendered on the basis of examinations conducted in accordance
with the same
standards (rendered within one year of such report) with respect
to those
Sub-Servicers. Immediately upon receipt of such report, the
Servicer shall
furnish a copy of such report to the Trustee, the NIMS Insurer
and the
Depositor. Copies of such statement shall be provided by the
Trustee to any
Certificateholder upon request at the expense of the requesting
party, provided
that such statement is delivered by the Servicer to the
Trustee.
SECTION 3.22. Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or
insurance
regulatory authority that may exercise authority over
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any Certificateholder, access to the documentation in the
Servicer's possession
regarding the Mortgage Loans required by applicable laws and
regulations. Such
access shall be afforded without charge, but only upon
reasonable request and
during normal business hours at the offices of the Servicer
designated by it. In
addition, access to the documentation in the Servicer's
possession regarding the
Mortgage Loans will be provided to the Trustee on behalf of
the
Certificateholders and the NIMS Insurer upon reasonable request
during normal
business hours at the offices of the Servicer designated by it
at the expense of
the Person requesting such access; provided however that
providing access to
such Person will not violate any applicable laws. Nothing in
this Section shall
limit the obligation of the Servicer to observe any applicable
law prohibiting
disclosure of information regarding the Mortgagors (absent proof
that it is in
compliance with applicable law) and the failure of the Servicer
to provide
access as provided in this Section as a result of such
obligation shall not
constitute a breach of this Section. Nothing in this Section
3.22 shall require
the Servicer to collect, create, collate or otherwise generate
any information
that it does not generate in its usual course of business. The
Servicer shall
not be required to make copies of or ship documents to any party
unless
provisions have been made for the reimbursement of the costs
thereof.
SECTION 3.23. Title, Management and Disposition of REO
Property.
(a) The deed or certificate of sale of any REO Property
shall,
subject to applicable laws, be taken in the name of the Trustee,
or its nominee,
in trust for the benefit of the Certificateholders. The
Servicer, on behalf of
REMIC I, shall sell any REO Property as soon as practical and in
any event no
later than the end of the third full taxable year after the
taxable year in
which such REMIC acquires ownership of such REO Property for
purposes of Section
860G(a)(8) of the Code or request from the Internal Revenue
Service, no later
than 60 days before the day on which the three-year grace period
would otherwise
expire, an extension of such three-year period, unless the
Servicer shall have
delivered to the Trustee and the NIMS Insurer an Opinion of
Counsel acceptable
to the NIMS Insurer and addressed to the Trustee, the NIMS
Insurer and the
Depositor, to the effect that the holding by the REMIC of such
REO Property
subsequent to three years after its acquisition will not result
in the
imposition on the REMIC of taxes on "prohibited transactions"
thereof, as
defined in Section 860F of the Code, or cause any of the REMICs
created
hereunder to fail to qualify as a REMIC under Federal law at any
time that any
Certificates are outstanding. The Servicer shall manage,
conserve, protect and
operate each REO Property for the Certificateholders 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 any
of the REMICs
created hereunder 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.
(b) The Servicer shall separately account for all funds
collected and received in connection with the operation of any
REO Property and
shall establish and maintain, or cause to be established and
maintained, with
respect to REO Properties an account held in trust for the
Trustee for the
benefit of the Certificateholders (the "REO Account"), which
shall be an
Eligible Account. The Servicer shall be permitted to allow the
Collection
Account to serve as the REO Account, subject to separate ledgers
for each REO
Property. The Servicer shall be entitled to retain or withdraw
any interest
income paid on funds deposited in the REO Account.
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(c) The Servicer shall have full power and authority,
subject
only to the specific requirements and prohibitions of this
Agreement, to do any
and all things in connection with any REO Property as are
consistent with the
manner in which the Servicer manages and operates similar
property owned by the
Servicer or any of its Affiliates, all on such terms and for
such period
(subject to the requirement of prompt disposition set forth in
Section 3.23(a))
as the Servicer deems to be in the best interests of
Certificateholders. In
connection therewith, the Servicer shall deposit, or cause to be
deposited in
the clearing account in which it customarily deposits payments
and collections
on mortgage loans in connection with its mortgage loan servicing
activities on a
daily basis, and in no event more than one Business Day after
the Servicer's
receipt thereof, and shall thereafter deposit in the REO
Account, in no event
more than two Business Days after the Servicer's receipt
thereof, all revenues
received by it with respect to an REO Property and shall
withdraw therefrom
funds necessary for the proper operation, management and
maintenance of such REO
Property including, without limitation:
(i) all insurance premiums due and payable in respect of
such
REO Property;
(ii) all real estate taxes and assessments in respect of
such
REO Property that may result in the imposition of a lien
thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account
with
respect to an REO Property are insufficient for the purposes set
forth in
clauses (i) through (iii) above with respect to such REO
Property, the Servicer
shall advance from its own funds such amount as is necessary for
such purposes
if, but only if, the Servicer would make such advances if the
Servicer owned the
REO Property and if in the Servicer's judgment, the payment of
such amounts will
be recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, neither the Servicer nor the
Trustee shall:
(a) authorize the Trust Fund to enter into, renew or extend
any New Lease with respect to any REO Property, if the New Lease
by its terms
will give rise to any income that does not constitute Rents from
Real Property;
(b) authorize any amount to be received or accrued under any
New Lease other than amounts that will constitute Rents from
Real Property;
(c) authorize any construction on any REO Property, other
than
the completion of a building or other improvement thereon, and
then only if more
than ten percent of the construction of such building or other
improvement was
completed before default on the related Mortgage Loan became
imminent, all
within the meaning of Section 856(e)(4)(B) of the Code; or
(d) authorize any Person to Directly Operate any REO
Property
on any date more than 90 days after its date of acquisition by
the Trust Fund;
unless, in any such case, the Servicer has obtained an
Opinion
of Counsel, provided to the Trustee and the NIMS Insurer, to the
effect that
such action will not cause such
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REO Property to fail to qualify as "foreclosure property" within
the meaning of
Section 860G(a)(8) of the Code at any time that it is held by
the REMIC, in
which case the Servicer may take such actions as are specified
in such Opinion
of Counsel.
The Servicer may contract with any Independent Contractor
for
the operation and management of any REO Property; provided
that:
(i) the terms and conditions of any such contract shall not
be
inconsistent herewith;
(ii) any such contract shall require, or shall be
administered
to require, that the Independent Contractor pay all costs and
expenses
incurred in connection with the operation and management of such
REO
Property, including those listed above and remit all related
revenues
(net of such costs and expenses) to the Servicer as soon as
practicable, but in no event later than thirty days following
the
receipt thereof by such Independent Contractor;
(iii)none of the provisions of this Section 3.23(c) relating
to any such contract or to actions taken through any such
Independent
Contractor shall be deemed to relieve the Servicer of any of its
duties
and obligations to the Trustee on behalf of the
Certificateholders with
respect to the operation and management of any such REO
Property; and
the Servicer shall be obligated with respect thereto to the same
extent
as if it alone were performing all duties and obligations in
connection
with the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it
related to its duties
and obligations hereunder for indemnification of the Servicer by
such
Independent Contractor, and nothing in this Agreement shall be
deemed to limit
or modify such indemnification. The Servicer shall be solely
liable for all fees
owed by it to any such Independent Contractor, irrespective of
whether the
Servicer's compensation pursuant to Section 3.18 is sufficient
to pay such fees;
provided, however, that to the extent that any payments made by
such Independent
Contractor would constitute Servicing Advances if made by the
Servicer, such
amounts shall be reimbursable as Servicing Advances made by the
Servicer.
(d) In addition to the withdrawals permitted under Section
3.23(c), the Servicer may from time to time make withdrawals
from the REO
Account for any REO Property: (i) to pay itself or any
Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii)
to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances
and Advances made
in respect of such REO Property or the related Mortgage Loan. On
the Servicer
Remittance Date, the Servicer shall withdraw from each REO
Account maintained by
it and deposit into the Distribution Account in accordance with
Section
3.10(d)(ii), for distribution on the related Distribution Date
in accordance
with Section 4.01, the income from the related REO Property
received during the
prior calendar month, net of any withdrawals made pursuant to
Section 3.23(c) or
this Section 3.23(d).
(e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the
Servicer at such price
and upon such terms and conditions
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as the Servicer shall deem necessary or advisable, as shall be
normal and usual
in the servicing standards set forth in Section 3.01.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the
related Mortgage Loan
and net of any payment or reimbursement to the Servicer or any
Sub-Servicer as
provided above, shall be deposited in the Distribution Account
in accordance
with Section 3.10(d)(ii) on the Servicer Remittance Date in the
month following
the receipt thereof for distribution on the related Distribution
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).
(g) The Servicer shall file information returns with respect
to the receipt of mortgage interest received in a trade or
business, reports of
foreclosures and abandonments of any Mortgaged Property and
cancellation of
indebtedness income with respect to any Mortgaged Property as
required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be
in form and substance sufficient to meet the reporting
requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Servicer in Respect of
Prepayment Interest Shortfalls.
The Servicer shall deliver to the Trustee for deposit into
the
Distribution Account by 3:00 p.m. New York time on the Servicer
Remittance Date
from its own funds an amount ("Compensating Interest") equal to
the lesser of
(i) the aggregate of the Prepayment Interest Shortfalls for the
related
Distribution Date resulting from full Principal Prepayments
during the related
Prepayment Period and (ii) the aggregate Servicing Fee received
in the related
Due Period. The Servicer shall not be obligated to pay
Compensating Interrst
with respect to Relief Act Interest Shortfalls. Any amounts paid
by the Servicer
pursuant to this Section 3.24 shall not be reimbursed by REMIC
I.
SECTION 3.25. Obligations of the Servicer in Respect of
Mortgage Rates and Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to the Mortgage Loans in the aggregate
results from or is
attributable to adjustments to Mortgage Rates, Monthly Payments
or Stated
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
deposit in the
Collection 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.
Notwithstanding the
foregoing, this Section 3.25 shall not limit the ability of the
Servicer to seek
recovery of any such amounts from the related Mortgagor under
the terms of the
related Mortgage Note, as permitted by law.
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SECTION 3.26. Advance Facility
(a) Notwithstanding anything to the contrary contained
herein,
(i) the Servicer is hereby authorized to enter into an advance
facility
("ADVANCE FACILITY") under which (A) the Servicer sells, assigns
or pledges to
another Person (together with such person's successors and
assigns, an
"Advancing Person") the Servicer's rights under this Agreement
to be reimbursed
for any Advances or Servicing Advances and/or (B) an Advancing
Person agrees to
fund some or all Advances or Servicing Advances required to be
made by the
Servicer pursuant to this Agreement and (ii) the Servicer is
hereby authorized
to assign its rights to the Servicing Fee; it being understood
that neither the
Trust Fund nor any party hereto shall have a right or claim
(including without
limitation any right of offset) to the portion of the Servicing
Fee so assigned.
No consent of the Trustee, Certificateholders or any other party
is required
before the Servicer may enter into an Advance Facility.
Notwithstanding the
existence of any Advance Facility under which an Advancing
Person agrees to fund
Advances and/or Servicing Advances on the Servicer's behalf, the
Servicer shall
remain obligated pursuant to this Agreement to make Advances and
Servicing
Advances pursuant to and as required by this Agreement, and
shall not be
relieved of such obligations by virtue of such Advance Facility.
If the Servicer
enters into an Advance Facility, and for so long as an Advancing
Person remains
entitled to receive reimbursement for any Advances including
Nonrecoverable
Advances related thereto ("Advance Reimbursement Amounts")
and/or Servicing
Advances, including Nonrecoverable Servicing Advances related
thereto
("Servicing Advance Reimbursement Amounts" and, together with
Advance
Reimbursement Amounts, "Reimbursement Amounts") (in each case to
the extent that
such type of Reimbursement Amount is included in the Advance
Facility), then the
Servicer shall identify such Reimbursement Amounts as received,
consistently
with the reimbursement rights set forth in this Agreement, and
shall remit such
Reimbursement Amounts in accordance with the documentation
establishing the
Advance Facility to such Advancing Person or to a trustee, agent
or custodian
(an "Advance Facility Trustee") designated by such Advancing
Person.
Notwithstanding the foregoing, if so required pursuant to the
terms of the
Advance Facility, the Servicer may direct the Trustee to, and if
so directed the
Trustee is hereby authorized to and shall, pay to the Advancing
Person or the
Advance Facility Trustee the Reimbursement Amounts identified
pursuant to the
preceding sentence. Notwithstanding anything to the contrary
herein, in no event
shall Reimbursement Amounts be included in Available Funds or
distributed to
Certificateholders.
If the Servicer enters into an Advance Facility, the Servicer
and the related
Advancing Person shall deliver to the Trustee a written notice
of the existence
of such Advance Facility (an "Advance Facility Notice"), stating
the identity of
the Advancing Person and any related Advance Facility Trustee.
An Advance
Facility Notice may only be terminated by the joint written
direction of the
Servicer and the related Advancing Person as described in
Section 3.26(h) below.
(b) Reimbursement Amounts shall consist solely of amounts in
respect of Advances
and/or Servicing Advances made with respect to the Mortgage
Loans for which the
Servicer would be permitted to reimburse itself in accordance
with this
Agreement, assuming the Servicer had made the related Advance(s)
and/or
Servicing Advance(s). The Trustee shall have no duty or
liability with respect
to the calculation of any Reimbursement Amount, nor shall the
Trustee have any
responsibility to track or monitor the administration of the
Advance Facility or
the payment of
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Reimbursement Amounts to the related Advancing Person or Advance
Facility
Trustee. The 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 Advancing 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.
(c) An Advancing Person who receives an assignment or pledge of
the rights to be
reimbursed for Advances and/or Servicing Advances, and/or whose
obligations are
limited to the making or funding of Advances will not be deemed
to be a
Sub-servicer under this Agreement or be required to meet the
criteria for
qualification as a Sub-servicer under this Agreement.
(d) Reimbursement Amounts allocated to reimburse Advances or
Servicing Advances
made with respect to any particular Mortgage Loan shall be
allocated to the
reimbursement of the unreimbursed Advances or Servicing Advances
(as the case
may be) made with respect to that Mortgage Loan on a "first-in,
first out"
("FIFO") basis, such that the Reimbursement Amounts shall be
applied to
reimburse the Advance or Servicing Advance (as the case may be)
for that
Mortgage Loan that was disbursed earliest in time first, and to
reimburse the
Advance or Servicing Advance (as the case may be) for that
Mortgage Loan that
was disbursed latest in time last. Liquidation Proceeds with
respect to a
Mortgage Loan shall be applied to reimburse Servicing Advances
outstanding with
respect to that Mortgage Loan before being applied to reimburse
Advances
outstanding with respect to that Mortgage Loan. The Servicer
shall provide to
the related Advancing Person or Advance Facility Trustee
loan-by-loan
information with respect to each Reimbursement Amount remitted
to such Advancing
Person or Advance Facility Trustee, to enable the Advancing
Person or Advance
Facility Trustee to make the FIFO allocation of each such
Reimbursement Amount
with respect to each Mortgage Loan.
(e) The Servicer who enters into an Advance Facility shall
indemnify the
Trustee, the Trust Fund, the Depositor and any successor
Servicer for any claim,
loss, liability or damage resulting from any claim by the
related Advancing
Person, except to the extent that such claim, loss, liability or
damage (i) in
the case of the Depositor, was incurred by reason of the
Depositor's willful
misfeasance, bad faith or negligence in the performance of
duties hereunder or
by reason of its reckless disregard of obligations and duties
hereunder, (ii) in
the case of a successor Servicer, was incurred by reason of such
successor
Servicer's willful misfeasance, bad faith or negligence in the
performance of
duties hereunder or by reason of its reckless disregard of
obligations and
duties hereunder or by reason of a breach of such successor
Servicer's
obligations and duties under this Agreement or (iii) in the case
of the Trustee
or the Trust Fund, (A) resulted from a breach of the Servicer's
or a successor
Servicer's obligations and duties under this Agreement for which
the Trustee is
indemnified under Section 6.03(a) or (B) was incurred by reason
of willful
misfeasance, bad faith or negligence of the Trustee in the
performance of its
duties hereunder or by reason of the Trustee's reckless
disregard of obligations
and duties hereunder or as a result of a breach of the Trustee's
obligations
under Article VIII hereof. Notwithstanding the foregoing, the
exclusions set
forth in clauses (i), (ii) and (iii) above from the Servicer's
obligation to
indemnify the Depositor, any successor Servicer, the Trustee and
the Trust Fund
shall not be applicable, in any case, to the extent the
applicable claim, loss,
liability or damage was incurred by reason of the Servicer's
willful
misfeasance, bad faith or negligence in the performance of
duties hereunder or
by reason of its reckless disregard of obligations and
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duties hereunder or by reason of a breach of the Servicer's
obligations and
duties under this Agreement.
(f) Any amendment to this Section 3.26 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 3.26, including
amendments to
add provisions relating to a successor Servicer, may be entered
into by the
Depositor, the Trustee and the Servicer without the consent of
any
Certificateholder, notwithstanding anything to the contrary in
this Agreement.
(g) Any rights of set-off that the Trust Fund, the Trustee, the
Depositor, any
successor Servicer or any other Person might otherwise have
against the Servicer
under this Agreement shall not attach to any rights to be
reimbursed for
Advances or Servicing Advances that have been sold, transferred,
pledged,
conveyed or assigned to any Advancing Person.
(h) At any time when an Advancing Person shall have ceased
funding Advances
and/or Servicing Advances (as the case may be) and the Advancing
Person or
related Advance Facility Trustee shall have received
Reimbursement Amounts
sufficient in the aggregate to reimburse all Advances and/or
Servicing Advances
(as the case may be) the right to reimbursement for which were
assigned to the
Advancing Person, then upon the delivery of a written notice
signed by the
Advancing Person and the Servicer to the Trustee terminating the
Advance
Facility Notice (the "Notice of Facility Termination"), the
Servicer shall again
be entitled to withdraw and retain the related Reimbursement
Amounts from the
Collection Account pursuant to the applicable Sections of this
Agreement.
(i) After delivery of any Advance Facility Notice, and until any
such Advance
Facility Notice has been terminated by a Notice of Facility
Termination, this
Section 3.26 may not be amended or otherwise modified without
the prior written
consent of the related Advancing Person.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) (1) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I
to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the
Distribution
Account and distributed to the holders of the Class R
Certificates (in respect
of the Class R-I Interest), as the case may be:
(i) (a) to Holders of REMIC I Regular Interest I-LTAA, REMIC
I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC
I
Regular Interest I-LTA3, REMIC I Regular Interest I-LTA4, REMIC
I
Regular Interest I-LTA5, REMIC I Regular Interest I-LTM1, REMIC
I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC
I
Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC
I
Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC
I
Regular Interest I-LTM10,
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REMIC I Regular Interest I-LTZZ and REMIC I Regular Interest
I-LTP, PRO
RATA, in an amount equal to (A) the Uncertificated Interest for
such
Distribution Date, plus (B) any amounts in respect thereof
remaining
unpaid from previous Distribution Dates. Amounts payable as
Uncertificated Interest in respect of REMIC I Regular Interest
I-LTZZ
shall be reduced and deferred when the REMIC I
Overcollateralized
Amount is less than the REMIC I Required Overcollateralization
Amount,
by the lesser of (x) the amount of such difference and (y) the
Maximum
I-LTZZ Uncertificated Interest Deferral Amount and such amount
will be
payable to the Holders of REMIC I Regular Interest I-LTA1, REMIC
I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC
I
Regular Interest I-LTA4, REMIC I Regular Interest I-LTA5, REMIC
I
Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I
Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC
I
Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC
I
Regular Interest I-LTM9 and REMIC I Regular Interest I-LTM10 in
the
same proportion as the Overcollateralization Deficiency Amount
is
allocated to the Corresponding Certificates and the
Uncertificated
Balance of REMIC I Regular Interest I-LTZZ shall be increased by
such
amount; and
(b) to Holders of REMIC I Regular Interest I-LT1SUB, REMIC I
Regular Interest I-LT1GRP, REMIC I Regular Interest I-LT2SUB,
REMIC I
Regular Interest I-LT2GRP and REMIC I Regular Interest I-LTXX,
PRO
RATA, in an amount equal to (A) the Uncertificated Interest for
such
Distribution Date, plus (B) any amounts in respect thereof
remaining
unpaid from previous Distribution Dates;
(ii) second, to the Holders of REMIC I Regular Interests, in an
amount
equal to the remainder of the REMIC I Marker Allocation
Percentage of Available
Funds for such Distribution Date after the distributions made
pursuant to clause
(i) above, allocated as follows:
(a) 98.00% of such remainder to the Holders of REMIC I
Regular
Interest I-LTAA and REMIC I Regular Interest I-LTP, until
the
Uncertificated Balance of such REMIC I Regular Interests are
reduced to
zero; provided, however, that REMIC I Regular Interest I-LTP
shall not
be reduced until the Distribution Date immediately following
the
expiration of the latest Prepayment Charge as identified on
the
Prepayment Charge Schedule or any Distribution Date thereafter,
at
which point such amount shall be distributed to REMIC I
Regular
Interest I-LTP, until $100 has been distributed pursuant to
this
clause;
(b) 2.00% of such remainder, first to the Holders of REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC
I
Regular Interest I-LTA3, REMIC I Regular Interest I-LTA4, REMIC
I
Regular Interest I-LTA5, REMIC I Regular Interest I-LTM1, REMIC
I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC
I
Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC
I
Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9 and
REMIC I
Regular Interest I-LTM10 equal to 1.00% of and in the same
proportion
as principal payments are allocated to the Corresponding
Certificates,
until the Uncertificated Balances of such REMIC I Regular
Interests are
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reduced to zero and second, to the Holders of REMIC I Regular
Interest
I-LTZZ, 1.00%, until the Uncertificated Balance of such REMIC I
Regular
Interest is reduced to zero; and
(c) any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-I Interest);
provided, however, that (i) 98.00% and (ii) 2.00% of any
principal payments that
are attributable to an Overcollateralization Release Amount
shall be allocated
to Holders of (i) REMIC I Regular Interest I-LTAA and REMIC I
Regular Interest
I-LTP, in that order and (ii) REMIC I Regular Interest I-LTZZ,
respectively;
provided that REMIC I Regular Interest I-LTP shall not be
reduced until the
Distribution Date immediately following the expiration of the
latest Prepayment
Charge as identified on the Prepayment Charge Schedule or any
Distribution Date
thereafter, at which point such amount shall be distributed to
REMIC I Regular
Interest I-LTP, until $100 has been distributed pursuant to this
clause.
On each Distribution Date, all amounts representing
Prepayment
Charges in respect of the Mortgage Loans during the related
Prepayment Period
and any Servicer Prepayment Charge Payment Amount paid by the
Servicer during
the related Prepayment Period will be distributed by REMIC I to
the Holders of
REMIC I Regular Interest I-LTP. The payment of the foregoing
amounts to the
Holders of REMIC I Regular Interest I-LTP shall not reduce the
Uncertificated
Balance thereof.
(iii) to the Holders of REMIC I Regular Interests, in an
amount equal to the remainder of the REMIC I Sub WAC
Allocation
Percentage of Available Funds for such Distribution Date after
the
distributions made pursuant to clause (i) above, allocated so
that
distributions of principal shall be deemed to be made to the
REMIC I
Regular Interests first, so as to keep the Uncertificated
Balance of
each REMIC I Regular Interest ending with the designation "GRP"
equal
to 0.01% of the aggregate Stated Principal Balance of the
Mortgage
Loans in the related Loan Group; second, to each REMIC I
Regular
Interest ending with the designation "SUB," so that the
Uncertificated
Balance of each such REMIC I Regular Interest is equal to 0.01%
of the
excess of (x) the aggregate Stated Principal Balance of the
Mortgage
Loans in the related Loan Group over (y) the Certificate
Principal
Balance of the Class A Certificate in the related Loan Group
(except
that if any such excess is a larger number than in the
preceding
distribution period, the least amount of principal shall be
distributed
to such REMIC I Regular Interests such that the REMIC I
Subordinated
Balance Ratio is maintained); and third, any remaining principal
to
REMIC I Regular Interest I-LTXX.
(2)(I) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account that portion of Available Funds
for such
Distribution Date consisting of the Group I Interest Remittance
Amount for such
Distribution Date, and make the following distributions in the
order of priority
described below, in each case to the extent of the Group I
Interest Remittance
Amount remaining for such Distribution Date:
(i) concurrently, to the Holders of the Group I
Certificates,
on a PRO RATA basis based on the entitlement of each such Class,
the
related Monthly Interest
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<PAGE>
Distributable Amount and the related Unpaid Interest Shortfall
Amount,
if any, for such Certificates for such Distribution Date;
and
(ii) concurrently, to the Holders of the Group II
Certificates, on a PRO RATA basis, based on the entitlement of
each
such Class, an amount equal to the excess, if any, of (x) the
amount
required to be distributed pursuant to Section 4.01(a)(2)(II)(i)
for
such Distribution Date over (y) the amount actually
distributed
pursuant to such sections, from the Group II Interest
Remittance
Amount.
(II) On each Distribution Date the Trustee shall withdraw
from
the Distribution Account that portion of Available Funds for
such Distribution
Date consisting of the Group II Interest Remittance Amount for
such Distribution
Date, and make the following distributions in the order of
priority described
below, in each case to the extent of the Group II Interest
Remittance Amount
remaining for such Distribution Date:
(i) concurrently, to the Holders of the Group II
Certificates,
on a PRO RATA basis based on the entitlement of each such Class,
the
related Monthly Interest Distributable Amount and the related
Unpaid
Interest Shortfall Amount, if any, for such Certificates for
such
Distribution Date; and
(ii) concurrently, to the Holders of the Group I
Certificates,
on a PRO RATA basis, based on the entitlement of each such
Class, an
amount equal to the excess, if any, of (x) the amount required
to be
distributed pursuant to Section 4.01(a)(2)(I)(i) for such
Distribution
Date over (y) the amount actually distributed pursuant to such
sections
from the Group I Interest Remittance Amount. (III) On each
Distribution
Date, following the distributions made pursuant to Section
4.01(a)(2)(I) and Section 4.01(a)(2)(II) above, the Trustee
shall make
the following distributions in the order of priority described
below,
in each case to the extent of the sum of the Group I
Interest
Remittance Amount and the Group II Interest Remittance Amount
remaining
undistributed for such Distribution Date:
(iii) to the Holders of the Class M-1 Certificates, the
Monthly Interest Distributable Amount allocable to such
Certificates;
(ii) to the Holders of the Class M-2 Certificates, the
Monthly
Interest Distributable Amount allocable to such
Certificates;
(iii) to the Holders of the Class M-3 Certificates, the
Monthly Interest Distributable Amount allocable to such
Certificates;
(iv) to the Holders of the Class M-4 Certificates, the
Monthly
Interest Distributable Amount allocable to such
Certificates;
(v) to the Holders of the Class M-5 Certificates, the
Monthly
Interest Distributable Amount allocable to such
Certificates;
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(vi) to the Holders of the Class M-6 Certificates, the
Monthly
Interest Distributable Amount allocable to such Certificates;
and
(vii) to the Holders of the Class M-7 Certificates, the
Monthly Interest Distributable Amount allocable to such
Certificates.
(viii) to the Holders of the Class M-8 Certificates, the
Monthly Interest Distributable Amount allocable to such
Certificates.
(ix) to the Holders of the Class M-9 Certificates, the
Monthly
Interest Distributable Amount allocable to such Certificates;
and
(x) to the Holders of the Class M-10 Certificates, the
Monthly
Interest Distributable Amount allocable to such
Certificates.
(3)(I) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, distributions
in respect of
principal to the extent of the Group I Principal Distribution
Amount shall be
made in the following amounts and order of priority:
(i) first, to the Holders of the Group I Certificates
(allocated among the Group I Certificates in the priority
described
below), until the Certificate Principal Balances thereof have
been
reduced to zero; and
(ii) second, to the Holders of the Group II Certificates
(allocated among the Group II Certificates in the priority
described
below), after taking into account the distribution of the Group
II
Principal Distribution Amount already distributed, until the
Certificate Principal Balances thereof have been reduced to
zero.
(II) On each Distribution Date (a) prior to the Stepdown
Date
or (b) on which a Trigger Event is in effect, distributions in
respect of
principal to the extent of the Group II Principal Distribution
Amount shall be
made in the following amounts and order of priority:
(i) first, to the Holders of the Group II Certificates
(allocated among the Group II Certificates in the priority
described
below), until the Certificate Principal Balances thereof have
been
reduced to zero; and
(ii) second, to the Holders of the Group I Certificates
(allocated among the Group I Certificates in the priority
described
below), after taking into account the distribution of the Group
I
Principal Distribution Amount already distributed until the
Certificate
Principal Balances thereof have been reduced to zero.
(III) On each Distribution Date (a) prior to the Stepdown
Date
or (b) on which a Trigger Event is in effect, distributions in
respect of
principal to the extent of the sum of the Group I Principal
Distribution Amount
and the Group II Principal Distribution Amount remaining
undistributed for such
Distribution Date shall be made in the following amounts and
order of priority:
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(i) first, to the Holders of the Class M-1 Certificates,
until
the Certificate Principal Balance thereof has been reduced to
zero;
(ii) second, to the Holders of the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero;
(iii) third, to the Holders of the Class M-3 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero;
(iv) fourth, to the Holders of the Class M-4 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero;
(v) fifth, to the Holders of the Class M-5 Certificates,
until
the Certificate Principal Balance thereof has been reduced to
zero;
(vi) sixth, to the Holders of the Class M-6 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero;
(vii) seventh, to the Holders of the Class M-7 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero;
(viii) eighth, to the Holders of the Class M-8 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero;
(ix) ninth, to the Holders of the Class M-9 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero; and
(x) tenth, to the Holders of the Class M-10 Certificates,
until the Certificate Principal Balance thereof has been reduced
to
zero;
(IV) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect,
distributions in respect
of principal to the extent of the Group I Principal Distribution
Amount shall be
made in the following amounts and order of priority:
(i) first, to the Holders of the Group I Certificates
(allocated among the Group I Certificates in the priority
described
below), the Group I Senior Principal Distribution Amount until
the
Certificate Principal Balances thereof have been reduced to
zero; and
(ii) second, to the Holders of the Group II Certificates
(allocated among the Group II Certificates in the priority
described
below), the remaining undistributed Group II Senior
Principal
Distribution Amount, after taking into account the distribution
of the
Group II Principal Distribution Amount, up to an amount equal to
the
Group II Senior Principal Distribution Amount remaining
undistributed,
until the Certificate Principal Balances thereof have been
reduced to
zero.
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(V) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect,
distributions in respect
of principal to the extent of the Group II Principal
Distribution Amount shall
be made in the following amounts and order of priority:
(i) first, to the Holders of the Group II Certificates
(allocated among the Group II Certificates in the priority
described
below), the Group II Senior Principal Distribution Amount until
the
Certificate Principal Balances thereof have been reduced to
zero; and
(ii) second, to the Holders of the Group I Certificates
(allocated among the Group I Certificates in the priority
described
below), the remaining undistributed Group I Senior Principal
Distribution Amount, after taking into account the distribution
of the
Group I Principal Distribution Amount, up to an amount equal to
the
Group I Senior Principal Distribution Amount remaining
undistributed,
until the Certificate Principal Balances thereof have been
reduced to
zero.
(VI) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect,
distributions in respect
of principal to the extent of the sum of the Group I Principal
Distribution
Amount and the Group II Principal Distribution Amount remaining
undistributed
for such Distribution Date shall be made in the following
amounts and order of
priority:
(i) first, to the Holders of the Class M-1 Certificates, the
Class M-1 Principal Distribution Amount until the Certificate
Principal
Balance thereof has been reduced to zero;
(ii) second, to the Holders of the Class M-2 Certificates,
the
Class M-2 Principal Distribution Amount until the Certificate
Principal
Balance thereof has been reduced to zero;
(iii) third, to the Holders of the Class M-3 Certificates,
the
Class M-3 Principal Distribution Amount until the Certificate
Principal
Balance thereof has been reduced to zero;
(iv) fourth, to the Holders of the Class M-4 Certificates,
the
Class M-4 Principal Distribution Amount until the Certificate
Principal
Balance thereof has been reduced to zero;
(v) fifth, to the Holders of the Class M-5 Certificates, the
Class M-5 Principal Distribution Amount until the Certificate
Principal
Balance thereof has been reduced to zero;
(vi) sixth, to the Holders of the Class M-6 Certificates,
the
Class M-6 Principal Distribution Amount until the Certificate
Principal
Balance thereof has been reduced to zero; and
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(vii) seventh, to the Holders of the Class M-7 Certificates,
the Class M-7 Principal Distribution Amount until the
Certificate
Principal Balance thereof has been reduced to zero.
(viii) eigth, to the Holders of the Class M-8 Certificates,
the Class M-8 Principal Distribution Amount until the
Certificate
Principal Balance thereof has been reduced to zero;
(ix) ninth, to the Holders of the Class M-9 Certificates,
the
Class M-9 Principal Distribution Amount until the Certificate
Principal
Balance thereof has been reduced to zero; and
(x) tenth, to the Holders of the Class M-10 Certificates,
the
Class M-10 Principal Distribution Amount until the
Certificate
Principal Balance thereof has been reduced to zero.
With respect to the Group I Certificates, all principal
distributions will be distributed on a PRO RATA basis based on
the Certificate
Principal Balance of each such Class, with the exception that if
on any
Distribution Date on or after the Stepdown Date, a Trigger Event
is in effect,
principal distributions will be allocated sequentially, to the
Class A-1 and
Class A-2 Certificates, in that order, until their respective
Certificate
Principal Balances have been reduced to zero.
With respect to the Group II Certificates, all principal
distributions will be distributed sequentially, to the Class
A-3, Class A-4 and
Class A-5 Certificates, in that order, until their respective
Certificate
Principal Balances have been reduced to zero.
Notwithstanding any provisions contained in this Agreement
to
the contrary, on any Distribution Date on which the aggregate
Certificate
Principal Balance of the Subordinate Certificates has been
reduced to zero, all
distributions of principal to the Group I Certificates or Group
II Certificates,
as applicable, shall be distributed on a PRO RATA basis based on
the Certificate
Principal Balance of each such Class.
(4) On each Distribution Date, the Net Monthly Excess
Cashflow
shall be distributed as follows:
(i) to the Holders of the Class or Classes of Certificates
then entitled to receive distributions in respect of principal,
in an
amount equal to any Extra Principal Distribution Amount,
distributable
to such Holders as part of the Group I Principal Distribution
Amount
and/or the Group II Principal Distribution Amount as described
under
Section 4.01(a)(3) above;
(ii) to the Holders of the Class M-1 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(iii) to the Holders of the Class M-1 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
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(iv) to the Holders of the Class M-2 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(v) to the Holders of the Class M-2 Certificates, in an
amount
equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(vi) to the Holders of the Class M-3 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(vii) to the Holders of the Class M-3 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(viii) to the Holders of the Class M-4 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(ix) to the Holders of the Class M-4 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(x) to the Holders of the Class M-5 Certificates, in an
amount
equal to the Unpaid Interest Shortfall Amount allocable to
such
Certificates;
(xi) to the Holders of the Class M-5 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(xii) to the Holders of the Class M-6 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(xiii) to the Holders of the Class M-6 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(xiv) to the Holders of the Class M-7 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(xv) to the Holders of the Class M-7 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(xvi) to the Holders of the Class M-8 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(xvii) to the Holders of the Class M-8 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(xviii) to the Holders of the Class M-9 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(xix) to the Holders of the Class M-9 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
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(xx) to the Holders of the Class M-10 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable
to such
Certificates;
(xxi) to the Holders of the Class M-10 Certificates, in an
amount equal to the Allocated Realized Loss Amount allocable to
such
Certificates;
(xxii) to the Net WAC Rate Carryover Reserve Account, the
amount by which any Net WAC Rate Carryover Amounts for such
Distribution Date exceed the amounts received by the Trustee
under the
Cap Contracts;
(xxiii) to the Holders of the Class CE Certificates, (a) the
Monthly Interest Distributable Amount and any
Overcollateralization
Release Amount for such Distribution Date and (b) on any
Distribution
Date on which the aggregate Certificate Principal Balance of the
Class
A Certificates and the Mezzanine Certificates has been reduced
to zero,
any remaining amounts in reduction of the Certificate Principal
Balance
of the Class CE Certificates, until the Certificate Principal
Balance
thereof has been reduced to zero;
(xxiv) if such Distribution Date follows the Prepayment
Period
during which occurs the latest date on which a Prepayment Charge
may be
required to be paid in respect of any Mortgage Loans, to the
Holders of
the Class P Certificates, in reduction of the Certificate
Principal
Balance thereof, until the Certificate Principal Balance thereof
is
reduced to zero; and
(xxv) any remaining amounts to the Holders of the Residual
Certificates (in respect of the appropriate Class R
Interest).
Without limiting the provisions of Section 9.01(b), by
acceptance of the Residual Certificates, the Holders of the
Residual
Certificates agree, and it is the understanding of the parties
hereto, that for
so long as any of the notes issued pursuant to the Indenture are
outstanding or
any amounts are reimbursable or payable to the NIMS Insurer in
accordance with
the terms of the Indenture, to pledge their rights to receive
any amounts
otherwise distributable to the Holders of the Class R
Certificates (and such
rights are hereby assigned and transferred) to the Holders of
the Class CE
Certificates.
On each Distribution Date, after making the distributions of
the Available Funds as set forth above, the Trustee will FIRST,
withdraw from
the Net WAC Rate Carryover Reserve Account all income from the
investment of
funds in the Net WAC Rate Carryover Reserve Account and
distribute such amount
to the Holders of the Class CE Certificates, and SECOND,
withdraw from the Net
WAC Rate Carryover Reserve Account, to the extent of amounts
remaining on
deposit therein, the amount of any Net WAC Rate Carryover Amount
for such
Distribution Date and distribute such amount in the following
order of priority:
(A) to the Group I Certificates, on a PRO RATA basis based
on
the Net WAC Rate Carryover Amount for each such Class, the Net
WAC Rate
Carryover Amount for each such Class, but only to the extent of
amounts
paid under the Group I Cap Contract;
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(B) to the Group II Certificates, on a PRO RATA basis based
on
the Net WAC Rate Carryover Amount for each such Class, the Net
WAC Rate
Carryover Amount for each such Class, but only to the extent of
amounts
paid under the Group II Cap Contract;
(C) concurrently, to the Mezzanine Certificates, on a PRO
RATA
basis based on the Net WAC Rate Carryover Amount for each such
Class,
the Net WAC Rate Carryover Amount for each such Class, but only
to the
extent of amounts paid under the Mezzanine Cap Contract;
(E) to the Class A Certificates and the Mezzanine
Certificates, any related unpaid Net WAC Rate Carryover Amount
(after
taking into account distributions pursuant to (A), (B) and (C)
above),
distributed in the following order of priority:
(i) to the Class A Certificates, on a PRO RATA basis based
on
the remaining Net WAC Rate Carryover Amount for each such
Class;
to the Class M-1 Certificates , Class M-2 Certificates, Class
M-3 Certificates,
Class M-4 Certificates, Class M-5 Certificates, Class M-6
Certificates, Class
M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates
and Class M-10
Certificates, in that order, based on the remaining Net WAC Rate
Carryover
Amount for each such Class and
On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that
represent (i)
Prepayment Charges collected by the Servicer in connection with
the Principal
Prepayment of any of the Mortgage Loans or (ii) any Servicer
Prepayment Charge
Payment Amount, and shall distribute such amounts to the Holders
of the Class P
Certificates. Such distributions shall not be applied to reduce
the Certificate
Principal Balance of the Class P Certificates.
Following the foregoing distributions, an amount equal to
the
amount of Subsequent Recoveries remitted to the Servicer shall
be applied to
increase the Certificate Principal Balance of the Class of
Certificates with the
Highest Priority up to the extent of such Realized Losses
previously allocated
to that Class of Certificates pursuant to Section 4.04. An
amount equal to the
amount of any remaining Subsequent Recoveries shall be applied
to increase the
Certificate Principal Balance of the Class of Certificates with
the next Highest
Priority, up to the amount of such Realized Losses previously
allocated to that
Class of Certificates pursuant to Section 4.04. Holders of such
Certificates
will not be entitled to any distribution in respect of interest
on the amount of
such increases for any Accrual Period preceding the Distribution
Date on which
such increase occurs. Any such increases shall be applied to the
Certificate
Principal Balance of each Certificate of such Class in
accordance with its
respective Percentage Interest.
(b) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO
RATA among the
outstanding Certificates in such Class based on their respective
Percentage
Interests. Distributions in respect of each Class of
Certificates on each
Distribution Date will be made to the Holders of the respective
Class of record
on the related Record Date (except as otherwise provided in
Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class),
based on the
aggregate Percentage Interest represented by their respective
Certificates, and
shall be made by wire transfer of immediately
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available funds to the account of any such Holder at a bank or
other entity
having appropriate facilities therefor, if such Holder 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
Certificates having an initial aggregate Certificate Principal
Balance or
Notional Amount that is in excess of the lesser of (i)
$5,000,000 or (ii)
two-thirds of the initial Certificate Principal Balance or
Notional Amount of
such Class of Certificates, or otherwise by check mailed by
first class mail to
the address of such Holder appearing in the Certificate
Register. The final
distribution on each Certificate will be made in like manner,
but only upon
presentment and surrender of such Certificate at the Corporate
Trust Office of
the Trustee or such other location specified in the notice to
Certificateholders
of such final distribution.
Each distribution with respect to a Book-Entry Certificate
shall be paid to
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