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BEAR STEARNS ASSET BACKED SECURITIES I LLC,
Depositor
EMC MORTGAGE CORPORATION,
Seller and Company
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Master Servicer and Securities Administrator
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
--------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
----------------------------------------
BEAR STEARNS ASSET BACKED SECURITIES I TRUST 2005-AC2
ASSET-BACKED CERTIFICATES, SERIES 2005-AC2
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TABLE OF CONTENTS
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PAGE
ARTICLE I
DEFINITIONS
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Section 1.01 Defined
Terms.....................................................................4
Section 1.02 Allocation of Certain Interest
Shortfalls........................................46
ARTICLE II
CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Trust
Fund.........................................................49
Section 2.02 Acceptance of the Mortgage
Loans.................................................51
Section 2.03 Representations, Warranties and Covenants of the
Company, the Master
Servicer and the
Seller..........................................................53
Section 2.04 Representations and Warranties of the
Depositor..................................58
Section 2.05 Delivery of Opinion of Counsel in Connection
with Substitutions and
Repurchases...............................................59
Section 2.06 Countersignature and Delivery of
Certificates....................................60
ARTICLE III
ADMINISTRATION AND SERVICING OF EMC MORTGAGE LOANS BY
COMPANY
Section 3.01 The
Company......................................................................61
Section 3.02 Due-on-Sale Clauses; Assumption
Agreements.......................................62
Section 3.03
Subservicers.....................................................................63
Section 3.04 Documents, Records and Funds in Possession of
Company To Be Held for Trustee.....63
Section 3.05 Maintenance of Hazard
Insurance..................................................64
Section 3.06 Presentment of Claims and Collection of
Proceeds.................................65
Section 3.07 Maintenance of the Primary Mortgage Insurance
Policies...........................65
Section 3.08 Fidelity Bond, Errors and Omissions
Insurance....................................65
Section 3.09 Realization Upon Defaulted Mortgage Loans;
Determination of Excess Liquidation
Proceeds and Realized Losses; Repurchases of Certain Mortgage
Loans..............66
Section 3.10 Servicing
Compensation...........................................................69
Section 3.11 REO
Property.....................................................................69
Section 3.12 Liquidation
Reports..............................................................70
Section 3.13 Annual Statement as to Compliance; Annual
Certification..........................70
Section 3.14 Annual Independent Certified Public Accountants'
Servicing Report................70
Section 3.15 Books and
Records................................................................71
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ARTICLE IV
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY MASTER
SERVICER
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Section 4.01 Master
Servicer..................................................................72
Section 4.02 REMIC-Related
Covenants..........................................................73
Section 4.03 Monitoring of Company and
Servicer...............................................73
Section 4.04 Fidelity
Bond....................................................................74
Section 4.05 Power to Act;
Procedures.........................................................74
Section 4.06 Due-on-Sale Clauses; Assumption
Agreements.......................................75
Section 4.07 Release of Mortgage
Files........................................................75
Section 4.08 Documents, Records and Funds in Possession of
Master Servicer,
Company and Servicer To Be Held for
Trustee......................................76
Section 4.09 Standard Hazard Insurance and Flood Insurance
Policies...........................77
Section 4.10 Presentment of Claims and Collection of
Proceeds.................................78
Section 4.11 Maintenance of the Primary Mortgage Insurance
Policies...........................78
Section 4.12 Trustee to Retain Possession of Certain Insurance
Policies and Documents.........79
Section 4.13 Realization Upon Defaulted Mortgage
Loans........................................79
Section 4.14 Compensation for the Master
Servicer.............................................79
Section 4.15 REO
Property.....................................................................79
Section 4.16 Annual Officer's Certificate as to
Compliance....................................80
Section 4.17 Annual Independent Accountant's Servicing
Report.................................81
Section 4.18 Reports Filed with Securities and Exchange
Commission............................81
Section 4.19
UCC..............................................................................82
Section 4.20 Optional Purchase of Certain Mortgage
Loans......................................82
ARTICLE V
ACCOUNTS
Section 5.01 Collection of Mortgage Loan Payments; Protected
Account..........................84
Section 5.02 Permitted Withdrawals From the Protected
Account.................................86
Section 5.03 Reports to Master
Servicer.......................................................87
Section 5.04 Collection of Taxes; Assessments and Similar Items;
Escrow Accounts..............88
Section 5.05 Servicer Protected
Accounts......................................................89
Section 5.06 Master Servicer Collection
Account...............................................90
Section 5.07 Permitted Withdrawals and Transfers from the Master
Servicer
Collection
Account...............................................................91
Section 5.08 Distribution
Account.............................................................92
Section 5.09 Permitted Withdrawals and Transfers from the
Distribution Account................93
ARTICLE VI
DISTRIBUTIONS AND ADVANCES
Section 6.01
Advances.........................................................................95
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Section 6.02 Compensating Interest
Payments...................................................96
Section 6.03 REMIC
Distributions..............................................................96
Section 6.04
Distributions....................................................................96
Section 6.05 Allocation of Realized
Losses...................................................102
Section 6.06 Monthly Statements to
Certificateholders........................................105
Section 6.07 REMIC Designations and REMIC I
Distributions....................................108
Section 6.08 Net WAC Reserve
Fund............................................................111
Section 6.09 Class P Certificate
Accounts....................................................112
ARTICLE VII
THE CERTIFICATES
Section 7.01 The
Certificates................................................................113
Section 7.02 Certificate Register; Registration of Transfer
and
Exchange of
Certificates........................................................114
Section 7.03 Mutilated, Destroyed, Lost or Stolen
Certificates...............................118
Section 7.04 Persons Deemed
Owners...........................................................118
Section 7.05 Access to List of Certificateholders' Names and
Addresses.......................118
Section 7.06 Book-Entry
Certificates.........................................................118
Section 7.07 Notices to
Depository...........................................................119
Section 7.08 Definitive
Certificates.........................................................120
Section 7.09 Maintenance of Office or
Agency.................................................120
ARTICLE VIII
THE COMPANY AND THE MASTER SERVICER
Section 8.01 Liabilities of the Depositor, the Company and the
Master Servicer...............121
Section 8.02 Merger or Consolidation of the Depositor, the
Company or
the Master
Servicer.............................................................121
Section 8.03 Indemnification of the Trustee, the Master Servicer
and
the Securities
Administrator....................................................121
Section 8.04 Limitations on Liability of the Depositor, the
Company,
the Master Servicer and
Others..................................................122
Section 8.05 Master Servicer and Company Not to
Resign.......................................123
Section 8.06 Successor Master
Servicer.......................................................124
Section 8.07 Sale and Assignment of Master
Servicing.........................................124
ARTICLE IX
DEFAULT; TERMINATION OF MASTER SERVICER; TERMINATION OF
COMPANY
Section 9.01 Events of
Default...............................................................126
Section 9.02 Trustee to Act; Appointment of
Successor........................................127
Section 9.03 Notification to
Certificateholders..............................................129
Section 9.04 Waiver of
Defaults..............................................................129
Section 9.05 Company
Default.................................................................129
Section 9.06 Waiver of Company
Defaults......................................................131
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ARTICLE X
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
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Section 10.01 Duties of Trustee and Securities
Administrator..................................132
Section 10.02 Certain Matters Affecting the Trustee and the
Securities Administrator..........134
Section 10.03 Trustee and Securities Administrator Not Liable
for
Certificates or Mortgage
Loans..................................................136
Section 10.04 Trustee and Securities Administrator May Own
Certificates.......................136
Section 10.05 Trustee's and Securities Administrator's Fees and
Expenses......................136
Section 10.06 Eligibility Requirements for Trustee and
Securities Administrator...............137
Section 10.07
Insurance.......................................................................137
Section 10.08 Resignation and Removal of Trustee and Securities
Administrator.................137
Section 10.09 Successor Trustee or Securities
Administrator...................................138
Section 10.10 Merger or Consolidation of Trustee or Securities
Administrator..................139
Section 10.11 Appointment of Co-Trustee or Separate
Trustee...................................139
Section 10.12 Tax
Matters.....................................................................140
ARTICLE XI
TERMINATION
Section 11.01 Termination upon Liquidation or Repurchase of all
Mortgage Loans................144
Section 11.02 Final Distribution on the Group I Certificates and
Group II Certificates........145
Section 11.03 Additional Termination
Requirements.............................................146
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01
Amendment.......................................................................148
Section 12.02 Recordation of Agreement;
Counterparts..........................................149
Section 12.03 Governing
Law...................................................................149
Section 12.04 Intention of
Parties............................................................149
Section 12.05
Notices.........................................................................150
Section 12.06 Severability of
Provisions......................................................151
Section 12.07
Assignment......................................................................151
Section 12.08 Limitation on Rights of
Certificateholders......................................151
Section 12.09 Inspection and Audit
Rights.....................................................152
Section 12.10 Certificates Nonassessable and Fully
Paid.......................................152
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Exhibits
Exhibit A-1 Form of Class A Certificates
Exhibit A-2 Form of Class M Certificates
Exhibit A-3 Form of Class B Certificates
Exhibit A-4 Form of Class C Certificates
Exhibit A-5 Form of Class P Certificates
Exhibit A-6 Form of Class R Certificates
Exhibit B Mortgage Loan Schedule
Exhibit C Form of Transfer Affidavit
Exhibit D Form of Transferor Certificate
Exhibit E Form of Investment Letter (Non-Rule 144A)
Exhibit F Form of Rule 144A Investment Letter
Exhibit G Form of Request for Release
Exhibit H DTC Letter of Representations
Exhibit I Schedule of Mortgage Loans with Lost Notes
Exhibit J Form of Custodial Agreement
Exhibit K Form of Company Certification
Exhibit L Form of Mortgage Loan Purchase Agreement
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POOLING AND SERVICING AGREEMENT, dated as of March 1, 2005,
among BEAR
STEARNS ASSET BACKED SECURITIES I LLC, a Delaware limited
liability company, as
depositor (the "Depositor"), EMC MORTGAGE CORPORATION, a
Delaware corporation,
as seller (in such capacity, the "Seller") and as company (in
such capacity, the
"Company"), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national
banking
association, as master servicer (in such capacity, the "Master
Servicer") and as
securities administrator (in such capacity, the "Securities
Administrator") and
U.S. BANK NATIONAL ASSOCIATION, a national banking association,
not in its
individual capacity, but solely as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to
the Trustee in return for the Certificates.
REMIC I
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of Loan Group I and certain
other related
assets subject to this Agreement as a REMIC (as defined herein)
for federal
income tax purposes, and such segregated pool of assets will be
designated as
"REMIC I." The Class I-R-1 Certificates will represent the sole
class of
Residual Interests in REMIC I for purposes of the REMIC
Provisions (as defined
herein) under federal income tax law. The following table
irrevocably sets forth
the designation, the Uncertificated REMIC I Pass-Through Rate,
the initial
Uncertificated Principal 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.
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Initial Uncertificated Uncertificated REMIC I Latest Possible
Maturity
Designation Principal Balance Pass-Through Rate Date(1)
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AA $ 359,778,845.76 Variable (2) April 25, 2035
I-A $ 2,903,920.00 Variable (2) April 25, 2035
I-M-1 $ 198,250.00 Variable (2) April 25, 2035
I-M-2 $ 209,260.00 Variable (2) April 25, 2035
I-M-3 $ 71,590.00 Variable (2) April 25, 2035
I-B-1 $ 86,270.00 Variable (2) April 25, 2035
I-B-2 $ 56,900.00 Variable (2) April 25, 2035
I-B-3 $ 111,980.00 Variable (2) April 25, 2035
ZZ $ 3,704,255.42 Variable (2) April 25, 2035
I-P $ 100.00 0.00% April 25, 2035
</TABLE>
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(1) For purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury
regulations, the Distribution Date in the month following the
maturity date for
the Mortgage Loan with the latest maturity date has been
designated as the
"latest possible maturity date" for each of the REMIC I Regular
Interests.
(2) Calculated in accordance with the definition of
"Uncertificated REMIC I
Pass-Through Rate" herein.
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REMIC II
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of Loan Group II and
certain other related
assets subject to this Agreement as a REMIC for federal income
tax purposes, and
such segregated pool of assets will be designated as "REMIC II."
The Class II-R
Certificates will represent 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 Uncertificated
REMIC II
Pass-Through Rate, the initial Uncertificated Principal 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 II Regular
Interests (as
defined herein). None of the REMIC II Regular Interests will be
certificated.
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Initial Uncertificated Uncertificated REMIC II Latest Possible
Maturity
Designation Principal Balance Pass-Through Rate Date(1)
------------------------------ ---------------------------
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<S> <C> <C> <C>
AA $ 191,043,932.86 Variable (2) April 25, 2035
II-A-1 $ 1,380,000.00 Variable (2) April 25, 2035
II-A-2 $ 130,800.00 Variable (2) April 25, 2035
II-M-1 $ 140,360.00 Variable (2) April 25, 2035
II-M-2 $ 107,220.00 Variable (2) April 25, 2035
II-M-3 $ 38,010.00 Variable (2) April 25, 2035
II-B-1 $ 45,810.00 Variable (2) April 25, 2035
II-B-2 $ 38,990.00 Variable (2) April 25, 2035
II-B-3 $ 52,640.00 Variable (2) April 25, 2035
ZZ $ 1,965,025.77 Variable (2) April 25, 2035
II-P $ 100.00 0.00% April 25, 2035
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(1) For purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury
regulations, the Distribution Date in the month following the
maturity date for
the Mortgage Loan with the latest maturity date has been
designated as the
"latest possible maturity date" for each of the REMIC II Regular
Interests.
(2) Calculated in accordance with the definition of
"Uncertificated REMIC
II Pass-Through Rate" herein.
REMIC III
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of the REMIC I Regular
Interests and REMIC
II Regular Interests as a REMIC for federal income tax purposes,
and such
segregated pool of assets will be designated as "REMIC III". The
Class I-R-2
Certificates will represent 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, Initial Certificate Principal Balance and,
for purposes of
satisfying Treasury Regulation Section 1.860G-1(a)(4)(iii), the
"latest possible
maturity date" for each Class of Certificates that represents
one or more of the
Regular Interests in REMIC III created hereunder.
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Initial Uncertificated Latest Possible Maturity
Class Designation Principal Balance Pass-Through Rate
Date(1)
---------------------- --------------------------
-------------------------------- ---------------------------
<S> <C> <C> <C>
Class I-A $ 290,392,000.00 Class I-A Pass-Through Rate April 25,
2035
Class I-M-1 $ 19,825,000.00 Class I-M-1 Pass-Through Rate April
25, 2035
Class I-M-2 $ 20,926,000.00 Class I-M-2 Pass-Through Rate April
25, 2035
Class I-M-3 $ 7,159,000.00 Class I-M-3 Pass-Through Rate April
25, 2035
Class I-B-1 $ 8,627,000.00 Class I-B-1 Pass Through Rate April
25, 2035
Class I-B-2 $ 5,690,000.00 Class I-B-2 Pass-Through Rate April
25, 2035
Class I-B-3 $ 11,198,000.00 Class I-B-3 Pass Through Rate April
25, 2035
Class I-C $ 3,304,271.18(3) (2) April 25, 2035
Class I-P $ 100.00(4) N/A(4) April 25, 2035
Class II-A-1 $ 138,000,000.00 Class II-A-1 Pass-Through Rate
April 25, 2035
Class II-A-2 $ 13,080,000.00 Class II-A-2 Pass-Through Rate
April 25, 2035
Class II-M-1 $ 14,036,000.00 Class II-M-1 Pass-Through Rate
April 25, 2035
Class II-M-2 $ 10,722,000.00 Class II-M-2 Pass-Through Rate
April 25, 2035
Class II-M-3 $ 3,801,000.00 Class II-M-3 Pass-Through Rate April
25, 2035
Class II-B-1 $ 4,581,000.00 Class II-B-1 Pass Through Rate April
25, 2035
Class II-B-2 $ 3,899,000.00 Class II-B-2 Pass-Through Rate April
25, 2035
Class II-B-3 $ 5,264,000.00 Class II-B-3 Pass Through Rate April
25, 2035
Class II-C $ 1,559,788.63(3) (2) April 25, 2035
Class II-P $ 100.00(4) N/A(4) April 25, 2035
</TABLE>
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(1) For purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury
regulations, the Distribution Date in the month following the
maturity
date for the Mortgage Loan with the latest maturity date has
been
designated as the "latest possible maturity date" for each Class
of
Certificates that represents one or more of the "regular
interests" in
REMIC III.
(2) Calculated in accordance with the definition of
"Pass-Through Rate"
herein.
(3) The Class I-C Certificates and Class II-C Certificates will
not accrue
interest on their respective Certificate Principal Balances, but
will
accrue interest on their respective Certificate Notional Amounts
as
described herein.
(4) The Class I-P Certificates and Class II-P Certificates are
not entitled
to distributions in respect of interest.
The Trust Fund shall be named, and may be referred to as, the
"Bear
Stearns Asset Backed Securities I Trust 2005-AC2." The
Certificates issued
hereunder may be referred to as "Asset-Backed Certificates
Series 2005-AC2"
(including for purposes of any endorsement or assignment of a
Mortgage Note or
Mortgage).
In consideration of the mutual agreements herein contained,
the
Depositor, the Master Servicer, the Securities Administrator,
the Seller, the
Company and the Trustee agree as follows:
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Article I
DEFINITIONS
Section 1.01 DEFINED TERMS.
In addition to those terms defined in Section 1.02, whenever
used in
this Agreement, the following words and phrases, unless the
context otherwise
requires, shall have the following meanings:
ACCEPTED MASTER SERVICING PRACTICES: With respect to any
Mortgage Loan
those customary mortgage servicing practices of prudent mortgage
servicing
institutions that master service mortgage loans of the same type
and quality as
such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is
located, to the extent applicable to the Trustee or the Master
Servicer (except
in its capacity as successor to the Company or the related
Servicer).
ACCEPTED SERVICING PRACTICES: With respect to each EMC Mortgage
Loan,
those mortgage servicing practices (including collection
procedures) that are in
accordance with all applicable statutes, regulations and prudent
mortgage
banking practices for similar mortgage loans.
ACCOUNT: The Distribution Account, the Master Servicer
Collection
Account, the Net WAC Reserve Fund and any Protected Account.
ACCRUAL PERIOD: With respect to the Class I-A, Class II-A-1 and
Class C
Certificates and any Distribution Date, the calendar month
immediately preceding
such Distribution Date. With respect to the Class II-A-2, Class
M and Class B
Certificates and any Distribution Date, the period from and
including the 25th
day of the calendar month preceding the calendar month in which
the Distribution
Date occurs (or, with respect to the first Accrual Period for
the Class II-A-2,
Class M and Class B Certificates, the Closing Date) to and
including the 24th
day of the calendar month in which such Distribution Date
occurs. All
calculations of interest on the Class I-A, Class II-A-1 and
Class C Certificates
will be made on the basis of a 360-day year consisting of twelve
30-day months.
All calculations of interest on the Class II-A-2, Class M and
Class B
Certificates will be made on the basis of the actual number of
days elapsed in
the related Accrual Period.
ADDITIONAL MASTER SERVICING COMPENSATION: The meaning specified
in
Section 4.14.
ADVANCE: An advance of delinquent payments of principal or
interest in
respect of a Mortgage Loan required to be made by the Company as
provided in
Section 6.01(a) hereof, by the related Servicer in accordance
with the related
Servicing Agreement or by the Master Servicer as provided in
Section 6.01(b)
hereof.
AGREEMENT: This Pooling and Servicing Agreement and any and
all
amendments or supplements hereto made in accordance with the
terms herein.
AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution
Date, the
aggregate amount held in the Company's or the related Sevicer's
Protected
Account at the close of business on the immediately preceding
Determination Date
on account of (i) all Scheduled Payments or portions
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thereof received in respect of the Mortgage Loans due after the
related Due
Period and (ii) Principal Prepayments, Liquidation Proceeds and
Insurance
Proceeds received in respect of such Mortgage Loans after the
last day of the
related Prepayment Period.
APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution
Date and
a Class of Subordinate Certificates the sum of the Realized
Losses with respect
to the related Mortgage Loans which have been applied in
reduction of the
Certificate Principal Balance of that Class of Certificates
pursuant to Section
6.05 of this Agreement, which have not previously been
reimbursed.
APPRAISED VALUE: With respect to any Mortgage Loan originated
in
connection with a refinancing, the appraised value of the
Mortgaged Property
based upon the appraisal made at the time of such refinancing
or, with respect
to any other Mortgage Loan, the lesser of (x) the appraised
value of the
Mortgaged Property based upon the appraisal made by a fee
appraiser at the time
of the origination of the related Mortgage Loan, and (y) the
sales price of the
Mortgaged Property at the time of such origination.
ASSIGNMENT AGREEMENT: Shall mean any of the Southtrust
Assignment
Agreement, the PHH Assignment Agreement, Greenpoint Assignment
Agreement, or the
HSBC Assignment Agreement.
BANKRUPTCY CODE: Title 11 of the United States Code.
BISHOP'S GATE: Bishop's Gate Residential Mortgage Trust, and
any
successor thereto.
BOOK-ENTRY CERTIFICATES: Any of the Certificates that shall
be
registered in the name of the Depository or its nominee, the
ownership of which
is reflected on the books of the Depository or on the books of a
person
maintaining an account with the Depository (directly, as a
"Depository
Participant", or indirectly, as an indirect participant in
accordance with the
rules of the Depository and as described in Section 7.06). As of
the Closing
Date, each Class of Offered Certificates constitutes a Class of
Book-Entry
Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or
(ii) a
day on which banking institutions in The City of New York, New
York,
Minneapolis, Minnesota, Columbia, Maryland or the city in which
the Corporate
Trust Office of the Trustee or the principal office of the
Company or the Master
Servicer is located are authorized or obligated by law or
executive order to be
closed.
CERTIFICATE: Any one of the certificates of any Class executed
and
authenticated by the Securities Administrator in substantially
the forms
attached hereto as Exhibits A-1 through A-6.
CERTIFICATE NOTIONAL AMOUNT: As to the Class I-C Certificates
and any
Distribution Date, an amount equal to the aggregate Stated
Principal Balance of
Loan Group I. The initial Certificate Notional Amount of the
Class I-C
Certificates shall be $367,121,271.18. As to the Class II-C
Certificates and any
Distribution Date, an amount equal to the aggregate Stated
Principal Balance of
Loan Group II. The initial Certificate Notional Amount of the
Class II-C
Certificates shall be $194,942,788.63. For federal income tax
purposes, however,
the Class I-C Certificates will have a Certificate Notional
Amount equal to the
aggregate Uncertificated
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Principal Balance of the REMIC I Regular Interests (other than
REMIC I Regular
Interest I-P), and the Class II-C Certificates will have a
Certificate Notional
Amount equal to the aggregate Uncertificated Principal Balance
of the REMIC II
Regular Interests (other than REMIC II Regular Interest
II-P).
CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the
Person
that is the beneficial owner of such Book-Entry Certificate.
CERTIFICATE PRINCIPAL BALANCE: As to any Certificate (other than
any
Class I-C, Class II-C or Class R Certificate) and as of any
Distribution Date,
the Initial Certificate Principal Balance of such Certificate
plus any
Subsequent Recoveries added to the Certificate Principal Balance
of such
Certificate pursuant to Section 6.05 less the sum of (i) all
amounts distributed
with respect to such Certificate in reduction of the Certificate
Principal
Balance thereof on previous Distribution Dates pursuant to
Section 6.04 and (ii)
any Applied Realized Loss Amounts allocated to such Certificate
on previous
Distribution Dates.
CERTIFICATE REGISTER: The register maintained pursuant to
Section 7.02
hereof.
CERTIFICATEHOLDER OR HOLDER: The person in whose name a
Certificate is
registered in the Certificate Register (initially, Cede &
Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).
CLASS: All Certificates bearing the same Class designation as
set forth
in Section 7.01 hereof.
CLASS A CERTIFICATE: Any of the Class I-A, Class II-A-1 and
Class
II-A-2 Certificates.
CLASS B CERTIFICATES: Any of the Class I-B-1, Class I-B-2, Class
I-B-3,
Class II-B-1 Class II-B-2 and Class II-B-3 Certificates.
CLASS C CERTIFICATE: Any of the Class I-C Certificates and Class
II-C
Certificates.
CLASS M CERTIFICATE: Any of the Class I-M-1, Class I-M-2, Class
I-M-3,
Class II-M-1 Class II-M-2 and Class II-M-3 Certificates.
CLASS P CERTIFICATE: Any of the Class I-P Certificates and Class
II-P
Certificates.
CLASS P CERTIFICATE ACCOUNT: Each account established and
maintained by
the Securities Administrator pursuant to Section 6.09
hereof.
CLASS R CERTIFICATE: Any of the Class I-R-1, Class I-R-2 and
Class II-R
Certificates.
CLASS I-A CERTIFICATE: Any Certificate designated as a "Class
I-A
Certificate" on the face thereof, in the form of Exhibit A-1
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class I-A Certificates as set forth herein and evidencing a
Regular Interest
in REMIC III.
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<PAGE>
CLASS I-A PASS-THROUGH RATE: Shall mean (i) on any Distribution
Date
which occurs on or prior to the Group I Optional Termination
Date, 5.250% per
annum, subject to a cap equal to the related Inerest Rate Cap
for such
Distribution Date and (ii) for each Distribution Date
thereafter, 5.750% per
annum, subject to a cap equal to the related Interest Rate Cap
for such
Distribution Date.
CLASS I-B CERTIFICATES: Any of the Class I-B-1, Class I-B-2 and
Class
I-B-3 Certificates.
CLASS I-B-1 CERTIFICATE: Any Certificate designated as a "Class
I-B-1
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class I-B-1 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS I-B-1 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group I Optional Termination
Date, the lesser of
(a) 9.00% per annum and (b) One-Month LIBOR plus 1.300% per
annum and (ii) for
each Distribution Date thereafter, the lesser of (a) 9.00% per
annum and (b)
One-Month LIBOR plus 1.950% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS I-B-2 CERTIFICATE: Any Certificate designated as a "Class
I-B-2
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class I-B-2 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS I-B-2 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group I Optional Termination
Date, the lesser of
(a) 9.00% per annum and (b) One-Month LIBOR plus 1.400% per
annum and (ii) for
each Distribution Date thereafter, the lesser of (a) 9.00% per
annum and (b)
One-Month LIBOR plus 2.100% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS I-B-3 CERTIFICATE: Any Certificate designated as a "Class
I-B-3
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class I-B-3 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS I-B-3 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group I Optional Termination
Date, the lesser of
(a) 9.00% per annum and (b) One-Month LIBOR plus 1.850% per
annum and (ii) for
each Distribution Date thereafter, the lesser of (a) 9.00% per
annum and (b)
One-Month LIBOR plus 2.775% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS I-C CERTIFICATE: Any Certificate designated as a "Class
I-C
Certificate" on the face thereof, in the form of Exhibit A-4
hereto,
representing the right to its Percentage Interest of
distributions provided for
the Class I-C Certificates herein and evidencing a Regular
Interest in REMIC
III.
CLASS I-C DISTRIBUTION AMOUNT: With respect to any Distribution
Date,
the sum of (i) the related Monthly Interest Distributable Amount
for the Class
I-C Certificates for such Distribution
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<PAGE>
Date, (ii) any Group I Overcollateralization Release Amount for
such
Distribution Date and (iii) without duplication, any Subsequent
Recoveries for
Loan Group I not distributed to the Class I-A, Class I-M and
Class I-B
Certificates on such Distribution Date; provided, however, that
on and after the
Distribution Date on which the Certificate Principal Balance of
the Group I
Offered Certificates has been reduced to zero, the Class I-C
Distribution Amount
shall include the Group I Overcollateralized Amount.
CLASS I-M CERTIFICATES: Any of the Class I-M-1, Class I-M-2 and
Class
I-M-3 Certificates.
CLASS I-M-1 CERTIFICATE: Any Certificate designated as a "Class
I-M-1
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class I-M-1 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS I-M-1 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group I Optional Termination
Date, the lesser of
(a) 9.00% per annum and (b) One-Month LIBOR plus 0.450% per
annum and (ii) for
each Distribution Date thereafter, the lesser of (a) 9.00% per
annum and (b)
One-Month LIBOR plus 0.675% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS I-M-2 CERTIFICATE: Any Certificate designated as a "Class
I-M-2
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class I-M-2 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS I-M-2 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group I Optional Termination
Date, the lesser of
(a) 9.00% per annum and (b) One-Month LIBOR plus 0.650% per
annum and (ii) for
each Distribution Date thereafter, the lesser of (a) 9.00% per
annum and (b)
One-Month LIBOR plus 0.975% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS I-M-3 CERTIFICATE: Any Certificate designated as a "Class
I-M-3
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class I-M-3 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS I-M-3 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group I Optional Termination
Date, the lesser of
(a) 9.00% per annum and (b) One-Month LIBOR plus 0.680% per
annum and (ii) for
each Distribution Date thereafter, the lesser of (a) 9.00% per
annum and (b)
One-Month LIBOR plus 1.020% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS I-P CERTIFICATE: Any Certificate designated as a "Class
I-P
Certificate" on the face thereof, in the form of Exhibit A-5
hereto,
representing the right to its Percentage Interest of
distributions provided for
the Class I-P Certificates as set forth herein and evidencing a
Regular Interest
in REMIC III.
CLASS I-R CERTIFICATES: Any of the Class I-R-1 Certificates
or Class I-R-2 Certificates.
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<PAGE>
CLASS I-R-1 CERTIFICATE: Any Certificate designated as a "Class
I-R-1
Certificate" on the face thereof, in the form set forth in
Exhibit A-6 hereto,
evidencing the Residual Interest in REMIC I and representing the
right to the
Percentage Interest of distributions provided for the Class
I-R-1 Certificates
as set forth herein.
CLASS I-R-2 CERTIFICATE: Any Certificate designated a "Class
I-R-2
Certificate" on the face thereof, in the form set forth in
Exhibit A-6 hereto,
evidencing the Residual Interest in REMIC III and representing
the right to the
Percentage Interest of distributions provided for the Class
I-R-2 Certificates
as set forth herein.
CLASS II-A CERTIFICATE: Any of the Class II-A-1 Certificates and
Class
II-A-2 Certificates.
CLASS II-A-1 CERTIFICATE: Any Certificate designated as a "Class
II-A-1
Certificate" on the face thereof, in the form of Exhibit A-1
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-A-1 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-A-1 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, 5.250% per
annum, subject to a cap equal to the related Interest Rate Cap
for such
Distribution Date and (ii) for each Distribution Date
thereafter, 5.750% per
annum, subject to a cap equal to the related Interest Rate Cap
for such
Distribution Date.
CLASS II-A-2 CERTIFICATE: Any Certificate designated as a "Class
II-A-2
Certificate" on the face thereof, in the form of Exhibit A-1
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-A-2 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-A-2 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, the lesser
of (a) 8.00% per annum and (b) One-Month LIBOR plus 0.350% per
annum and (ii)
for each Distribution Date thereafter, the lesser of (a) 8.00%
per annum and (b)
One-Month LIBOR plus 0.525% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS II-B CERTIFICATE: Any of the Class II-B-1, Class II-B-2
and Class
II-B-3 Certificates.
CLASS II-B-1 CERTIFICATE: Any Certificate designated as a "Class
II-B-1
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-B-1 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-B-1 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, the lesser
of (a) 9.00% per annum and (b) One-Month LIBOR plus 1.200% per
annum and (ii)
for each Distribution Date thereafter, the lesser of (a) 9.00%
per annum and (b)
One-Month LIBOR plus 1.800% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
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<PAGE>
CLASS II-B-2 CERTIFICATE: Any Certificate designated as a "Class
II-B-2
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-B-2 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-B-2 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, the lesser
of (a) 9.00% per annum and (b) One-Month LIBOR plus 1.300% per
annum and (ii)
for each Distribution Date thereafter, the lesser of (a) 9.00%
per annum and (b)
One-Month LIBOR plus 1.950% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS II-B-3 CERTIFICATE: Any Certificate designated as a "Class
II-B-3
Certificate" on the face thereof, in the form of Exhibit A-3
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-B-3 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-B-3 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, the lesser
of (a) 9.00% per annum and (b) One-Month LIBOR plus 1.850% per
annum and (ii)
for each Distribution Date thereafter, the lesser of (a) 9.00%
per annum and (b)
One-Month LIBOR plus 2.775% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS II-C CERTIFICATE: Any Certificate designated as a "Class
II-C
Certificate" on the face thereof, in the form of Exhibit A-4
hereto,
representing the right to its Percentage Interest of
distributions provided for
the Class II-C Certificates herein and evidencing a Regular
Interest in REMIC
III.
CLASS II-C DISTRIBUTION AMOUNT: With respect to any Distribution
Date,
the sum of (i) the related Monthly Interest Distributable Amount
for the Class
II-C Certificates for such Distribution Date, (ii) any Group
II
Overcollateralization Release Amount for such Distribution Date
and (iii)
without duplication, any Subsequent Recoveries for Loan Group II
not distributed
to the Class II-A, Class II-M and Class II-B Certificates on
such Distribution
Date; provided, however, that on and after the Distribution Date
on which the
Certificate Principal Balance of the Group II Offered
Certificates has been
reduced to zero, the Class II-C Distribution Amount shall
include the Group II
Overcollateralized Amount.
CLASS II-M CERTIFICATES: Any of the Class II-M-1, Class II-M-2
and
Class II-M-3 Certificates.
CLASS II-M-1 CERTIFICATE: Any Certificate designated as a "Class
II-M-1
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-M-1 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-M-1 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, the lesser
of (a) 9.00% per annum and (b) One-Month LIBOR plus 0.460% per
annum and (ii)
for each Distribution Date thereafter, the
- 10 -
<PAGE>
lesser of (a) 9.00% per annum and (b) One-Month LIBOR plus
0.690% per annum, in
each case subject to a cap equal to the related Interest Rate
Cap for such
Distribution Date.
CLASS II-M-2 CERTIFICATE: Any Certificate designated as a "Class
II-M-2
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-M-2 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-M-2 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, the lesser
of (a) 9.00% per annum and (b) One-Month LIBOR plus 0.650% per
annum and (ii)
for each Distribution Date thereafter, the lesser of (a) 9.00%
per annum and (b)
One-Month LIBOR plus 0.975% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS II-M-3 CERTIFICATE: Any Certificate designated as a "Class
II-M-3
Certificate" on the face thereof, in the form of Exhibit A-2
hereto,
representing the right to the Percentage Interest of
distributions provided for
the Class II-M-3 Certificates as set forth herein and evidencing
a Regular
Interest in REMIC III.
CLASS II-M-3 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date
which occurs on or prior to the Group II Optional Termination
Date, the lesser
of (a) 9.00% per annum and (b) One-Month LIBOR plus 0.680% per
annum and (ii)
for each Distribution Date thereafter, the lesser of (a) 9.00%
per annum and (b)
One-Month LIBOR plus 1.020% per annum, in each case subject to a
cap equal to
the related Interest Rate Cap for such Distribution Date.
CLASS II-P CERTIFICATE: Any Certificate designated as a "Class
II-P
Certificate" on the face thereof, in the form of Exhibit A-5
hereto,
representing the right to its Percentage Interest of
distributions provided for
the Class II-P Certificates as set forth herein and evidencing a
Regular
Interest in REMIC III.
CLASS II-R CERTIFICATE: Any Certificate designated a "Class
II-R
Certificate" on the face thereof, in substantially the form set
forth in Exhibit
A-6 hereto, evidencing the Residual Interest in REMIC II and
representing the
right to the Percentage Interest of distributions provided for
the Class II-R
Certificates as set forth herein.
CLOSING DATE: March 31, 2005.
CODE: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
COMPANY: EMC.
COMPENSATING INTEREST: An amount, not to exceed the Servicing
Fee, to
be deposited in the Master Servicer Collection Account by the
Company or the
related Servicer to the payment of a Prepayment Interest
Shortfall on a Mortgage
Loan subject to this Agreement; provided that in the event the
Company or the
related Servicer fails to make such payment, the Master Servicer
shall be
obligated to do so to the extent provided in Section 6.02(c)
hereof.
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<PAGE>
CORPORATE TRUST OFFICE: The designated office of the Trustee
where at
any particular time its corporate trust business with respect to
this Agreement
shall be administered, which office at the date of the execution
of this
Agreement is located at US Bank Corporate Trust Services, One
Federal Street,
3rd Floor, Boston, Massachusetts 02110, Attention: Corporate
Trust
Services/BSABS I 2005-AC2, or at such other address as the
Trustee may designate
from time to time.
CORRESPONDING CERTIFICATE: With respect to each REMIC I
Regular
Interest (other than REMIC I Regular Interests AA and ZZ) or
each REMIC II
Regular Interest (other than REMIC II Regular Interests AA and
ZZ), as
applicable, the Certificate with the corresponding
designation.
CROSS-OVER DATE: The first Distribution Date on which the
aggregate
Certificate Principal Balance of the related Subordinate
Certificates has been
reduced to zero (giving effect to all related distributions on
such Distribution
Date).
CUSTODIAL AGREEMENT: An agreement, dated as of March 31, 2005,
among
the Depositor, the Seller, the Trustee and the Custodian in
substantially the
form of Exhibit J hereto.
CUSTODIAN: Wells Fargo Bank, National Association, or any
successor
custodian appointed pursuant to the provisions hereof and the
Custodial
Agreement.
CUT-OFF DATE: The close of business on March 1, 2005.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the
unpaid
principal balance thereof as of the close of business on the
Cut-off Date after
application of all Principal Prepayments received prior to the
Cut-off Date and
scheduled payments of principal due on or before the Cut-off
Date, whether or
not received, but without giving effect to any installments of
principal
received in respect of Due Dates after the Cut-off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction
by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan that became
final and
non-appealable, except such a reduction resulting from a
Deficient Valuation or
any other reduction that results in a permanent forgiveness of
principal.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation by
a court of competent jurisdiction of the Mortgaged Property in
an amount less
than the then outstanding indebtedness under such Mortgage Loan,
or any
reduction in the amount of principal to be paid in connection
with any Scheduled
Payment that results in a permanent forgiveness of principal,
which valuation or
reduction results from an order of such court that is final and
non-appealable
in a proceeding under the Bankruptcy Code.
DEFINITIVE CERTIFICATES: As defined in Section 7.06.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be
replaced by a
Replacement Mortgage Loan.
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<PAGE>
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due
thereon
is not made pursuant to the terms of such Mortgage Loan by the
close of business
on the day such payment is scheduled to be due. A Mortgage Loan
is "30 days
delinquent" if such payment has not been received by the close
of business on
the corresponding day of the month immediately succeeding the
month in which
such payment was due, or, if there is no such corresponding day
(e.g., as when a
30-day month follows a 31-day month in which a payment was due
on the 31st day
of such month), then on the last day of such immediately
succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so
on.
DENOMINATION: With respect to each Certificate, the amount set
forth on
the face thereof as the "Initial Principal Balance or initial
notional amount of
this Certificate".
DEPOSITOR: Bear Stearns Asset Backed Securities I LLC, a
Delaware
limited liability company, or its successor in interest.
DEPOSITORY: The initial Depository shall be The Depository
Trust
Company ("DTC"), the nominee of which is Cede & Co., or any
other organization
registered as a "clearing agency" pursuant to Section 17A of the
Securities
Exchange Act of 1934, as amended. The Depository shall initially
be the
registered Holder of the Book-Entry Certificates. The Depository
shall at all
times be a "clearing corporation" as defined in Section
8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
DEPOSITORY AGREEMENT: With respect to the Class of
Book-Entry
Certificates, the agreement among the Depositor, the Trustee and
the initial
Depository, dated as of the Closing Date, substantially in the
form of Exhibit
H.
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 month of such Distribution Date or, if such 15th day is
not a Business
Day, the immediately preceding Business Day.
DISTRIBUTION ACCOUNT: The separate Eligible Account created
and
maintained by the Securities Administrator pursuant to Section
5.08 in the name
of the Trustee for the benefit of the Certificateholders and
designated "U.S.
Bank National Association, in trust for registered Holders of
Bear Stearns Asset
Backed Securities I LLC, Asset-Backed Certificates, Series
2005-AC2" shall be
held in trust for the Certificateholders for the uses and
purposes set forth in
this Agreement.
DISTRIBUTION ACCOUNT DEPOSIT DATE: As to any Distribution Date,
on or
before 3:00 p.m. Eastern time on the Business Day immediately
preceding such
Distribution Date.
DISTRIBUTION DATE: The 25th day of each calendar month after
the
initial issuance of the Certificates, or if such 25th day is not
a Business Day,
the next succeeding Business Day, commencing in April 2005.
- 13 -
<PAGE>
DUE DATE: As to any Mortgage Loan, the date in each month on
which the
related Scheduled Payment is due, as set forth in the related
Mortgage Note.
DUE PERIOD: With respect to any Distribution Date, the period
from the
second day of the calendar month preceding the calendar month in
which such
Distribution Date occurs through close of business on the first
day of the
calendar month in which such Distribution Date occurs.
ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained
with a
federal or state chartered depository institution or trust
company, the
long-term unsecured debt obligations and short-term unsecured
debt obligations
of which (or, in the case of a depository institution or trust
company that is
the principal subsidiary of a holding company, the debt
obligations of such
holding company, so long as Moody's is not a Rating Agency) are
rated by each
Rating Agency in one of its two highest long-term and its
highest short-term
rating categories respectively, at the time any amounts are held
on deposit
therein, or (ii) an account or accounts in a depository
institution or trust
company in which such accounts are insured by the FDIC (to the
limits
established by the FDIC) and the uninsured deposits in which
accounts are
otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders
have a claim with
respect to the funds in such account or a perfected first
priority security
interest against any collateral (which shall be limited to
Permitted
Investments) securing such funds that is superior to claims of
any other
depositors or creditors of the depository institution or trust
company in which
such account is maintained, or (iii) a trust account or accounts
maintained with
the corporate trust department of a federal or state chartered
depository
institution or trust company having capital and surplus of not
less than
$50,000,000, acting in its fiduciary capacity or (iv) any other
account
acceptable to the Rating Agencies. Eligible Accounts may bear
interest, and may
include, if otherwise qualified under this definition, accounts
maintained with
the Trustee.
EMC: EMC Mortgage Corporation, a Delaware corporation.
EMC MORTGAGE LOANS: Those Mortgage Loans serviced by the
Company
pursuant to the terms of this Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA RESTRICTED CERTIFICATES: Any of the Class C, Class P and
Residual
Certificates.
EVENT OF DEFAULT: As defined in Section 9.01 hereof.
EXCESS LIQUIDATION PROCEEDS: To the extent not required by law
to be
paid to the related Mortgagor, the excess, if any, of any
Liquidation Proceeds
with respect to a Mortgage Loan over the Stated Principal
Balance of such
Mortgage Loan and accrued and unpaid interest at the related
Mortgage Rate
through the last day of the month in which the Mortgage Loan has
been
liquidated.
EXCESS SPREAD: With respect to any Distribution Date and each
Loan
Group, the excess, if any, of (i) the Interest Funds for such
Loan Group for
such Distribution Date over (ii) the related Monthly Interest
Distributable
Amounts payable to the related group of Offered Certificates on
such
Distribution Date.
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<PAGE>
EXEMPTION: Prohibited Transaction Exemption 90-30, as amended
from time
to time.
FANNIE MAE: Fannie Mae (formerly, Federal National Mortgage
Association), or any successor thereto.
FDIC: The 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
by the Seller or the Class C Certificateholder pursuant to or as
contemplated by
Section 2.03(c) or Section 11.01), a determination made by the
Company pursuant
to this Agreement or the applicable Servicer pursuant to the
related Servicing
Agreement that all Insurance Proceeds, Liquidation Proceeds and
other payments
or recoveries which the Company or such Servicer, in its
reasonable good faith
judgment, expects to be finally recoverable in respect thereof
have been so
recovered. The Master Servicer shall maintain records, based
solely on
information provided by each Servicer, of each Final Recovery
Determination made
thereby.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement
Act of 1989.
FISCAL QUARTER: December 1 to February 29 (or the last day in
such
month), March 1 to May 31, June 1 to August 31, or September to
November 30, as
applicable.
FREDDIE MAC: Freddie Mac (formerly The Federal Home Loan
Mortgage
Corporation), or any successor thereto.
GREENPOINT: GreenPoint Mortgage Funding, Inc., and any
successor
thereto.
GREENPOINT ASSIGNMENT AGREEMENT: The Assignment, Assumption
and
Recognition Agreement, dated as of March 31, 2005, by and among
the Seller,
GreenPoint and the Trustee evidencing the assignment of the
GreenPoint Servicing
Agreement to the Trust.
GREENPOINT LOANS: Those Mortgage Loans subject to this Agreement
which
were purchased by the Seller from GreenPoint pursuant to the
GreenPoint
Servicing Agreement.
GREENPOINT SERVICING AGREEMENT: The Purchase, Warranties and
Servicing
Agreement, dated as of September 1, 2003, by and between the
Seller and
GreenPoint, as modified by the GreenPoint Assignment
Agreement.
GROUP I 20% CLEAN-UP CALL DATE: With respect to Loan Group I,
the first
Distribution Date upon which the aggregate Stated Principal
Balance of Loan
Group I as of the end of the related Due Period is less than or
equal to 20% of
the aggregate Cut-off Date Principal Balance of the Mortgage
Loans in Loan Group
I.
GROUP I AVAILABLE FUNDS: The sum of Interest Funds and Principal
Funds
with respect to the Mortgage Loans in Loan Group I.
GROUP I BASIC PRINCIPAL DISTRIBUTION AMOUNT: Shall mean, with
respect
to any Distribution Date, the lesser of (a) the excess of (i)
the Group I
Available Funds for such
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<PAGE>
Distribution Date over (ii) the aggregate Monthly Interest
Distributable Amount
for the Group I Certificates (other than the Class I-P, Class
I-C, Class I-R-1
and Class I-R-2 Certificates) for such Distribution Date and (b)
the excess of
(i) the related Principal Remittance Amount for such
Distribution Date over (ii)
the Group I Overcollateralization Release Amount, if any, for
such Distribution
Date.
GROUP I CERTIFICATES: Any of the Class I-A, Class I-M or Class
I-B
Certificates.
GROUP I EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to
any
Distribution Date and Loan Group I (a) on or prior to the
earlier of (1) the
Group I 20% Clean-Up Call Date and (2) the Distribution Date in
March 2015, the
lesser of (x) the Excess Spread for Loan Group I for such
Distribution Date and
(y) the Group I Overcollateralization Increase Amount for such
Distribution
Date; and (b) thereafter, the Excess Spread for Loan Group I for
such
Distribution Date.
GROUP I OFFERED CERTIFICATE: Any of the Class I-A, Class I-M-1,
Class
I-M-2, Class I-M-3, Class I-B-1, Class I-B-2 and Class I-B-3
Certificates.
GROUP I OPTIONAL TERMINATION: The termination of the Group I
Sub-Trust
created hereunder as a result of the purchase of all of the
assets related to
Loan Group I and any related REO Property pursuant to the last
sentence of
Section 11.01 hereof.
GROUP I OPTIONAL TERMINATION DATE: The first Distribution Date
on which
the Group I Sub-Trust may be terminated at the option of the
Majority Class I-C
Certificateholder as described under Section 11.01.
GROUP I OVERCOLLATERALIZATION INCREASE AMOUNT: As of any
Distribution
Date, the lesser of (a) the excess, if any, of (i) the Group
I
Overcollateralization Target Amount over (ii) the Group I
Overcollateralized
Amount on such Distribution Date (after taking into account
payments to the
Group I Offered Certificates of the Group I Basic Principal
Distribution Amount
on such Distribution Date) and (b) the related Excess Spread for
such
Distribution Date.
GROUP I OVERCOLLATERALIZATION RELEASE AMOUNT: With respect to
any
Distribution Date, the lesser of (x) the related Principal
Remittance Amount for
such Distribution Date and (y) the excess, if any, of (i) the
Group I
Overcollateralized Amount for such Distribution Date (assuming
that 100% of the
related Principal Remittance Amount is applied as a principal
payment on such
Distribution Date) over (ii) the Group I Overcollateralization
Target Amount for
such Distribution Date (with the amount pursuant to clause (y)
deemed to be $0
if the Group I Overcollateralized Amount is less than or equal
to the Group I
Overcollateralization Target Amount on that Distribution
Date).
GROUP I OVERCOLLATERALIZATION TARGET AMOUNT: With respect to
any
Distribution Date, $3,304,091.18.
GROUP I OVERCOLLATERALIZED AMOUNT: With respect to any
Distribution
Date, is the excess, if any, of (a) the aggregate Stated
Principal Balance of
Loan Group I as of the last day of the related Due Period over
(b) the aggregate
Certificate Principal Balance of the Group I Offered
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<PAGE>
Certificates on such Distribution Date (after taking into
account the payment of
principal other than any Group I Extra Principal Distribution
Amount on such
Certificates).
GROUP I SENIOR CERTIFICATES: The Class I-A Certificates.
GROUP I SUBORDINATE CERTIFICATES: Any of the Class I-M-1, Class
I-M-2,
Class I-M-3, Class I-B-1, Class I-B-2 and Class I-B-3
Certificates.
GROUP I SUB-TRUST: The portion of the Trust Fund allocated to
Loan
Group I.
GROUP II 20% CLEAN-UP CALL DATE: Shall mean the first
Distribution Date
upon which the aggregate Stated Principal Balance of Loan Group
II as of the end
of the related Due Period is less than or equal to 20% of the
aggregate Cut-off
Date Principal Balance of Loan Group II.
GROUP II AVAILABLE FUNDS: The sum of Interest Funds and
Principal Funds
with respect to the Mortgage Loans in Loan Group II.
GROUP II BASIC PRINCIPAL DISTRIBUTION AMOUNT: Shall mean, with
respect
to any Distribution Date, the lesser of (a) the excess of (i)
the Group II
Available Funds for such Distribution Date over (ii) the
aggregate Monthly
Interest Distributable Amount for the Group II Certificates
(other than the
Class II-P, Class II-C and Class II-R Certificates) for such
Distribution Date
and (b) the excess of (i) the related Principal Remittance
Amount for such
Distribution Date over (ii) the Group II Overcollateralization
Release Amount,
if any, for such Distribution Date.
GROUP II CERTIFICATES: Any of the Class II-A, Class II-M or
Class II-B
Certificates.
GROUP II EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to
any
Distribution Date and Loan Group II (a) on or prior to the
earlier of (1) the
Group II 20% Clean-Up Call Date and (2) the Distribution Date in
March 2015, the
lesser of (x) the Excess Spread for Loan Group II for such
Distribution Date and
(y) the Group II Overcollateralization Increase Amount for such
Distribution
Date; and (b) thereafter, the Excess Spread for Loan Group II
for such
Distribution Date.
GROUP II OFFERED CERTIFICATES: Any of the Class II-A-1, Class
II-A-2,
Class II-M-1, Class II-M-2, Class II-M-3, Class II-B-1, Class
II-B-2 and Class
II-B-3 Certificates.
GROUP II OPTIONAL TERMINATION: The termination of the Group
II
Sub-Trust created hereunder as a result of the purchase of all
Loan Group II and
any related REO Property pursuant to the last sentence of
Section 11.01 hereof.
GROUP II OPTIONAL TERMINATION DATE: The first Distribution Date
on
which the Group II Sub-Trust may be terminated at the option of
the Majority
Class II-C Certificateholder as described under Section
11.01.
GROUP II OVERCOLLATERALIZED AMOUNT: With respect to any
Distribution
Date, is the excess, if any, of (a) the aggregate Stated
Principal Balance of
Loan Group II as of the last day of the related Due Period over
(b) the
aggregate Certificate Principal Balance of the Group II
Offered
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<PAGE>
Certificates on such Distribution Date (after taking into
account the payment of
principal other than any Group II Extra Principal Distribution
Amount on such
Certificates).
GROUP II OVERCOLLATERALIZATION INCREASE AMOUNT: As of any
Distribution
Date, the lesser of (a) the excess, if any, of (i) the Group
II
Overcollateralization Target Amount over (ii) the Group II
Overcollateralized
Amount on such Distribution Date (after taking into account
payments to the
Group II Offered Certificates of the Group II Basic Principal
Distribution
Amount on such Distribution Date) and (b) the related Excess
Spread for such
Distribution Date.
GROUP II OVERCOLLATERALIZATION RELEASE AMOUNT: With respect to
any
Distribution Date, the lesser of (x) the related Principal
Remittance Amount for
such Distribution Date and (y) the excess, if any, of (i) the
Group II
Overcollateralized Amount for such Distribution Date (assuming
that 100% of the
related Principal Remittance Amount is applied as a principal
payment on such
Distribution Date) over (ii) the Group II Overcollateralization
Target Amount
for such Distribution Date (with the amount pursuant to clause
(y) deemed to be
$0 if the Group I Overcollateralized Amount is less than or
equal to the Group
II Overcollateralization Target Amount on that Distribution
Date).
GROUP II OVERCOLLATERALIZATION TARGET AMOUNT: With respect to
any
Distribution Date, $1,559,542.63.
GROUP II SENIOR CERTIFICATES: The Class II-A-1 Certificates and
Class
II-A-2 Certificates.
GROUP II SUBORDINATE CERTIFICATES: Any of the Class II-M-1,
Class
II-M-2, Class II-M-3, Class II-B-1, Class II-B-2 and Class
II-B-3 Certificates.
GROUP II SUB-TRUST: The portion of the Trust Fund allocated to
Loan
Group II.
HSBC: HSBC Mortgage Corporation (USA), and any successor
thereto.
HSBC ASSIGNMENT AGREEMENT: The Assignment, Assumption and
Recognition
Agreement, dated as of March 31, 2005, by and among the Seller,
HSBC and the
Trustee evidencing the assignment of the HSBC Servicing
Agreement to the Trust.
HSBC LOANS: Those Mortgage Loans subject to this Agreement which
were
purchased by the Seller from HSBC pursuant to the HSBC Servicing
Agreement.
HSBC SERVICING AGREEMENT: The Purchase, Warranties and
Servicing
Agreement, dated as of May 1, 2002, by and between the Seller
and HSBC, as
modified by the HSBC Assignment Agreement.
INDEMNIFIED PERSONS: The Trustee, the Master Servicer, the
Company, the
Trust Fund and the Securities Administrator and their officers,
directors,
agents and employees and, with respect to the Trustee, any
separate co-trustee
and its officers, directors, agents and employees.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any
Certificate,
the Certificate Principal Balance of such Certificate or any
predecessor
Certificate on the Closing Date.
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<PAGE>
INSURANCE POLICY: With respect to any Mortgage Loan included in
the
Trust Fund, any insurance policy or LPMI Policy, including all
riders and
endorsements thereto in effect with respect to such Mortgage
Loan, including any
replacement policy or policies for any Insurance Policies.
INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage
Loans
pursuant to any Insurance Policy or any other insurance policy
covering a
Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under
the Mortgage, the Company, the related Servicer or the trustee
under the deed of
trust and are not applied to the restoration of the related
Mortgaged Property
or released to the Mortgagor in accordance with the procedures
that the Company
or the related Servicer would follow in servicing mortgage loans
held for its
own account, in each case other than any amount included in such
Insurance
Proceeds in respect of Insured Expenses.
INSURED EXPENSES: Expenses covered by an Insurance Policy or any
other
insurance policy with respect to the Mortgage Loans.
INTEREST DETERMINATION DATE: Shall mean the second LIBOR
Business Day
preceding the commencement of each Accrual Period.
INTEREST FUNDS: For any Distribution Date and each Loan Group,
(i) the
sum, without duplication, of (a) all scheduled interest during
the related Due
Period with respect to the related Mortgage Loans less the
Servicing Fee and the
LPMI Fee, if any, (b) all Advances relating to interest with
respect to the
related Mortgage Loans made on or prior to the related
Distribution Account
Deposit Date, (c) all Compensating Interest with respect to the
related Mortgage
Loans required to be remitted by the Company or the Master
Servicer pursuant to
this Agreement or the related Servicer pursuant to the related
Servicing
Agreement with respect to such Distribution Date, (d)
Liquidation Proceeds and
Subsequent Recoveries with respect to the related Mortgage Loans
collected
during the related Prepayment Period (to the extent such
Liquidation Proceeds
and Subsequent Recoveries relate to interest), (e) all amounts
relating to
interest with respect to each Mortgage Loan in the related Loan
Group
repurchased by the Seller pursuant to Sections 2.02 and 2.03 and
by EMC pursuant
to Section 4.20 and (f) all amounts in respect of interest in
respect of the
related Loan Group paid by the Master Servicer pursuant to
Section 11.01, in
each case to the extent remitted by the Company or the related
Servicer, as
applicable, to the Distribution Account pursuant to this
Agreement or the
related Servicing Agreement minus (ii) all amounts relating to
interest in
respect of the related Loan Group required to be reimbursed
pursuant to Sections
5.02, 5.05, 5.07 and 5.09 or as otherwise set forth in this
Agreement.
INTEREST RATE CAP: With respect to the Class I-A Certificates
and on
any Distribution Date, the weighted average of the Net Mortgage
Rates of Loan
Group I for such Distribution Date; provided, however, that for
federal income
tax purposes the Interest Rate Cap for such Certificates shall
be the equivalent
of the foreogoing, expressed as the weighted average of the
Uncertificated REMIC
I Pass-Through Rates on the REMIC I Regular Interests (other
than REMIC I
Regular Interest I-P).
With respect to the Class I-M Certificates and Class I-B
Certificates
and any Distribution Date, the weighted average of the Net
Mortgage Rates of
Loan Group I for such Distribution Date, adjusted for the actual
number of days
elapsed in the related Accrual Period; provided,
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<PAGE>
however, that for federal income tax purposes the Interest Rate
Cap for such
Certificates shall be the equivalent of the foreogoing,
expressed as the
weighted average of the Uncertificated REMIC I Pass-Through
Rates on the REMIC I
Regular Interests (other than REMIC I Regular Interest I-P),
adjusted for the
actual number of days elapsed in the related Accrual Period.
With respect to the Class II-A-1 Certificates and on any
Distribution
Date, the weighted average of the Net Mortgage Rates of Loan
Group II for such
Distribution Date; provided, however, that for federal income
tax purposes the
Interest Rate Cap for such Certificates shall be the equivalent
of the
foreogoing, expressed as the weighted average of the
Uncertificated REMIC II
Pass-Through Rates on the REMIC II Regular Interests (other than
REMIC II
Regular Interest II-P).
With respect to the Class II-A-2, Class II-M and Class II-B
Certificates and any Distribution Date, the weighted average of
the Net Mortgage
Rates of Loan Group II for such Distribution Date, adjusted for
the actual
number of days elapsed in the related Accrual Period; provided,
however, that
for federal income tax purposes the Interest Rate Cap for such
Certificates
shall be the equivalent of the foreogoing, expressed as the
weighted average of
the Uncertificated REMIC II Pass-Through Rates on the REMIC II
Regular Interests
(other than REMIC II Regular Interest II-P), adjusted for the
actual number of
days elapsed in the related Accrual Period.
INTEREST SHORTFALL: With respect to any Distribution Date, means
the
aggregate shortfall, if any, in collections of interest
(adjusted to the related
Net Mortgage Rates) on the related Mortgage Loans resulting from
(a) Principal
Prepayments with respect to the related Loan Group in full
received during the
related Prepayment Period, (b) the partial Principal Prepayments
with respect to
the related Loan Group received during the related Prepayment
Period to the
extent applied prior to the Due Date in the month of the
Distribution Date and
(c) interest payments on the related Loan Group being limited
pursuant to the
provisions of the Relief Act or similar state laws.
LAST SCHEDULED DISTRIBUTION DATE: April 25, 2035.
LATEST POSSIBLE MATURITY DATE: The Distribution Date following
the
final scheduled maturity date of the Mortgage Loan in the Trust
Fund having the
latest scheduled maturity date as of the Cut-off Date. For
purposes of the
Treasury regulations under Sections 860A through 860G of the
Code, the latest
possible maturity date of each Regular Interest issued by REMIC
I, REMIC II and
REMIC III shall be the Latest Possible Maturity Date.
LIBOR BUSINESS DAY: Shall mean a day on which banks are open
for
dealing in foreign currency and exchange in London and New York
City.
LIQUIDATED LOAN: With respect to any Distribution Date, a
defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure,
foreclosure sale, trustee's sale or other realization as
provided by applicable
law governing the real property subject to the related Mortgage
and any security
agreements and as to which the Company or the related Servicer
has made a Final
Recovery Determination with respect thereto.
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<PAGE>
LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds,
received
in connection with the partial or complete liquidation of a
Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise,
or in connection
with any condemnation or partial release of a Mortgaged Property
and any other
proceeds received with respect to an REO Property, less the sum
of related
unreimbursed Advances, Servicing Fees and Servicing Advances and
all expenses of
liquidation, including property protection expenses and
foreclosure and sale
costs, including court and reasonable attorneys fees.
LOAN GROUP: Any of Loan Group I or Loan Group II.
LOAN GROUP I: The Mortgage Loans included as part of Loan Group
I on
the Mortgage Loan Schedule.
LOAN GROUP II: The Mortgage Loans included as as part of Loan
Group II
on the Mortgage Loan Schedule.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage,
the
numerator of which is the original principal balance of the
related Mortgage
Loan and the denominator of which is the Appraised Value of the
related
Mortgaged Property.
LOSS ALLOCATION LIMITATION: The meaning specified in Section
6.05(c)
hereof.
LPMI FEE: Shall mean the fee payable to the insurer for each
Mortgage
Loan subject to an LPMI Policy as set forth in such LPMI
Policy.
LPMI POLICY: A policy of mortgage guaranty insurance issued by
an
insurer meeting the requirements of Fannie Mae and Freddie Mac
in which the
Company or the related Servicer of the related Mortgage Loan is
responsible for
the payment of the LPMI Fee thereunder from collections on the
related Mortgage
Loan.
MAJORITY CLASS I-C CERTIFICATEHOLDER: Shall mean the Holder of a
50.01%
or greater Percentage Interest in the Class I-C
Certificates.
MAJORITY CLASS II-C CERTIFICATEHOLDER: Shall mean the Holder of
a
50.01% or greater Percentage Interest in the Class II-C
Certificates.
MASTER SERVICER: Wells Fargo Bank, National Association, in
its
capacity as master servicer, and its successors and assigns.
MASTER SERVICER CERTIFICATION: A written certification
covering
servicing of the Mortgage Loans by the Company and all Servicers
and signed by
an officer of the Master Servicer that complies with (i) the
Sarbanes-Oxley Act
of 2002, as amended from time to time, and (ii) the February 21,
2003 Statement
by the Staff of the Division of Corporation Finance of the
Securities and
Exchange Commission Regarding Compliance by Asset-Backed Issuers
with Exchange
Act Rules 13a-14 and 15d-14, as in effect from time to time;
provided that if,
after the Closing Date (a) the Sarbanes-Oxley Act of 2002 is
amended, (b) the
Statement referred to in clause (ii) is modified or superceded
by any subsequent
statement, rule or regulation of the Securities and Exchange
Commission or any
statement of a division thereof, or (c) any future
- 21 -
<PAGE>
releases, rules and regulations are published by the Securities
and Exchange
Commission from time to time pursuant to the Sarbanes-Oxley Act
of 2002, which
in any such case affects the form or substance of the required
certification and
results in the required certification being, in the reasonable
judgment of the
Master Servicer, materially more onerous than the form of the
required
certification as of the Closing Date, the Master Servicer
Certification shall be
as agreed to by the Master Servicer, the Depositor and the
Seller following a
negotiation in good faith to determine how to comply with any
such new
requirements.
MASTER SERVICER COLLECTION ACCOUNT: The trust accounts or
accounts
created and maintained pursuant to Section 5.06 hereof, which
shall be entitled
"U.S. Bank National Association, as Trustee f/b/o Holders of
Bear Stearns Asset
Backed Securities I LLC, Asset Backed Certificates, Series
2005-AC2 - Master
Servicer Collection Account".
MASTER SERVICING COMPENSATION: The meaning specified in Section
4.14.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of the State of Delaware,
or any successor
thereto.
MERS(R) SYSTEM: The system of recording transfers of
Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans
registered
with MERS on the MERS(R) System.
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
related
Certificates (other than the Class P Certificates and Class R
Certificates) for
any Distribution Date, means an amount equal to the interest
accrued during the
related Accrual Period at the applicable Pass-Through Rate on
the Certificate
Principal Balance (or Certificate Notional Amount) of such
Certificate
immediately prior to such Distribution Date less such
Certificate's share of any
Unpaid Interest Shortfall and the interest portion of any
Realized Losses on the
related Mortgage Loans allocated to such Certificate pursuant to
Section 1.02.
The Monthly Interest Distributable Amount with respect to the
Class I-A, Class
II-A-1 and Class C Certificates is calculated on the basis of a
360-day year
consisting of twelve 30-day months. The Monthly Interest
Distributable Amount
with respect to the Class II-A-2 Certificates and Subordinate
Certificates is
calculated on the basis of a 360-day year and the actual number
of days elapsed
during the related Accrual Period. No Monthly Interest
Distributable Amount will
be payable with respect to any Class of Certificates after the
Distribution Date
on which the outstanding Certificate Principal Balance (or
Certificate Notional
Amount) of such Certificate has been reduced to zero.
MONTHLY STATEMENT: The statement delivered to the
Certificateholders
pursuant to Section 6.06.
MOODY'S: Moody's Investors Service, Inc.
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<PAGE>
MORTGAGE: The mortgage, deed of trust or other instrument
creating a
first lien on or first priority ownership interest in an estate
in fee simple in
real property securing a Mortgage Note.
MORTGAGE FILE: The mortgage documents listed in Section 2.01
hereof
pertaining to a particular Mortgage Loan and any additional
documents delivered
to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
MORTGAGE LOANS: Such of the Mortgage Loans transferred and
assigned to
the Trustee pursuant to the provisions hereof, as from time to
time are held as
a part of the Trust Fund (including any REO Property), the
mortgage loans so
held being identified in the Mortgage Loan Schedule,
notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property.
Any mortgage
loan that was intended by the parties hereto to be transferred
to the Trust Fund
as indicated by such Mortgage Loan Schedule which is in fact not
so transferred
for any reason including, without limitation, a breach of the
representation
contained in Section 2.03(b)(v) hereof, shall continue to be a
Mortgage Loan
hereunder until the Purchase Price with respect thereto has been
paid to the
Trust Fund.
MORTGAGE LOAN PURCHASE AGREEMENT: Shall mean the Mortgage Loan
Purchase
Agreement, dated as of March 31, 2005, between the Seller, as
seller and the
Depositor, as purchaser.
MORTGAGE LOAN PURCHASE PRICE: The price, calculated as set forth
in
Section 11.01, to be paid in connection with the repurchase of
the Mortgage
Loans pursuant to Section 11.01.
MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans (as from time
to
time amended by the Company or the Master Servicer to reflect
the deletion of
Deleted Mortgage Loans and the addition of Replacement Mortgage
Loans pursuant
to the provisions of this Agreement) transferred to the Trustee
as part of the
Trust Fund and from time to time subject to this Agreement, the
initial Mortgage
Loan Schedule being attached hereto as Exhibit B, setting forth
the following
information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the loan group;
(iii) the Mortgage Rate in effect as of the Cut-off Date;
(iv) the Servicer (or the Company, if it services the
Mortgage
Loan), the Servicing Fee Rate;
(v) the LPMI Fee, if applicable;
(vi) the Net Mortgage Rate in effect as of the Cut-off Date;
(vii) the maturity date;
(viii) the original principal balance;
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<PAGE>
(ix) the Cut-off Date Principal Balance;
(x) the original term;
(xi) the remaining term;
(xii) the property type; and
(xiii) the MIN with respect to each Mortgage Loan.
Such schedule shall also set forth the aggregate Cut-off Date
Principal Balance
for all of the Mortgage Loans in each Loan Group.
MORTGAGE NOTE: The original executed note or other evidence
of
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage
Note.
MORTGAGED PROPERTY: The underlying property securing a Mortgage
Loan.
MORTGAGOR: The obligors on a Mortgage Note.
NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution
Date and
each Loan Group, the sum of (a) any Group I
Overcollateralization Release Amount
or Group II Overcollateralization Release Amount, as applicable,
for such
Distribution Date and (b) the Remaining Excess Spread for such
Loan Group for
such Distribution Date.
NET MORTGAGE RATE: As to each Mortgage Loan, and at any time,
the per
annum rate equal to the related Mortgage Rate less the sum of
(i) the Servicing
Fee Rate and (ii) the rate at which the LPMI Fee is calculated,
if any.
NET WAC RATE CARRYOVER AMOUNT: With respect to each Class of
Offered
Certificates and any Distribution Date, an amount equal to the
sum of (i) the
excess, if any, of (x) the amount of interest such Class would
have been
entitled to receive on such Distribution Date if the
Pass-Through Rate
applicable to such Class would not have been reduced by the
related Interest
Rate Cap on such Distribution Date (not to exceed 8.00% per
annum, in the case
of the Class II-A-2 Certificates, and 9.00% per annum, in the
case of the Class
M Certificates and Class B Certificates) over (y) the amount of
interest paid on
such Distribution Date if the Pass-Through Rate is limited by
the related
Interest Rate Cap plus (ii) the related Net WAC Rate Carryover
Amount for the
previous Distribution Date not previously distributed together
with interest
thereon at a rate equal to the Pass-Through Rate for such Class
for the most
recently ended Accrual Period.
NET WAC RESERVE FUND: Shall mean the separate trust account
created and
maintained by the Securities Administrator pursuant to Section
6.08 hereof.
NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a
Book-Entry
Certificate.
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<PAGE>
NONRECOVERABLE ADVANCE: Any portion of an Advance previously
made or
proposed to be made by the Company or the Master Servicer
pursuant to this
Agreement or the related Servicer pursuant to the related
Servicing Agreement,
that, in the good faith judgment of the Company, the Master
Servicer or the
related Servicer, will not or, in the case of a proposed
advance, would not, be
ultimately recoverable by it from the related Mortgagor, related
Liquidation
Proceeds, Insurance Proceeds or otherwise.
OFFERED CERTIFICATES: Any of the Class I-A, Class I-M-1, Class
I-M-2,
Class I-M-3, Class I-B-1, Class I-B-2, Class I-B-3, Class
II-A-1, Class II-A-2,
Class II-M-1, Class II-M-2, Class II-M-3, Class II-B-1, Class
II-B-2, Class
II-B-3 Certificates.
OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman
of the
Board, the Vice Chairman of the Board, the President, a Vice
President (however
denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor or the
Master Servicer (or any other officer customarily performing
functions similar
to those performed by any of the above designated officers and
also to whom,
with respect to a particular matter, such matter is referred
because of such
officer's knowledge of and familiarity with a particular
subject) or (ii), if
provided for in this Agreement, signed by a Servicing Officer,
as the case may
be, and delivered to the Depositor, the Seller, the Securities
Administrator,
the Master Servicer and/or the Trustee, as the case may be, as
required by this
Agreement.
ONE-MONTH LIBOR: With respect to any Accrual Period, the
rate
determined by the Securities Administrator on the related
Interest Determination
Date on the basis of the rate for U.S. dollar deposits for one
month that
appears on Telerate Screen Page 3750 as of 11:00 a.m. (London
time) on such
Interest Determination Date; provided that the parties hereto
acknowledge that
One-Month LIBOR for the first Accrual Period shall equal 2.850%
per annum. If
such rate does not appear on such page (or such other page as
may replace that
page on that service, or if such service is no longer offered,
such other
service for displaying One-Month LIBOR or comparable rates as
may be reasonably
selected by the Securities Administrator), One-Month LIBOR for
the applicable
Accrual Period will be the Reference Bank Rate. If no such
quotations can be
obtained by the Securities Administrator and no Reference Bank
Rate is
available, One-Month LIBOR will be One-Month LIBOR applicable to
the preceding
Accrual Period. The establishment of One-Month LIBOR on each
Interest
Determination Date by the Securities Administrator and the
Securities
Administrator's calculation of the rate of interest applicable
to the Class
II-A-2, Class M and Class B Certificates for the related Accrual
Period shall,
in the absence of manifest error, be final and binding.
OPINION OF COUNSEL: A written opinion of counsel, who may be
counsel
for the Seller, the Depositor, the Company or the Master
Servicer, reasonably
acceptable to each addressee of such opinion; provided that with
respect to
Section 2.05, 8.05, 8.07 or 12.01, or the interpretation or
application of the
REMIC Provisions, such counsel must (i) in fact be independent
of the Seller,
Depositor, the Company and the Master Servicer, (ii) not have
any direct
financial interest in the Seller, Depositor, the Company or the
Master Servicer
or in any affiliate of either, and (iii) not be connected with
the Seller,
Depositor, the Company or the Master Servicer as an officer,
employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.
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<PAGE>
ORIGINAL VALUE: The value of the property underlying a Mortgage
Loan
based, in the case of the purchase of the underlying Mortgaged
Property, on the
lower of an appraisal or the sales price of such property or, in
the case of a
refinancing, on an appraisal.
ORIGINATOR: With respect to each Mortgage Loan, shall mean
the
originator set forth in the Mortgage Loan Schedule for such
Mortgage Loan.
OTS: The Office of Thrift Supervision.
OUTSTANDING: With respect to the Certificates as of any date
of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Securities
Administrator or delivered to the Securities Administrator for
cancellation; and
(b) Certificates in exchange for which or in lieu of
which other Certificates have been executed and delivered by the
Securities
Administrator pursuant to this Agreement.
OUTSTANDING MORTGAGE LOAN: As of any date of determination, a
Mortgage
Loan with a Stated Principal Balance greater than zero that was
not the subject
of a Principal Prepayment in full, and that did not become a
Liquidated Loan,
prior to the end of the related Prepayment Period.
OWNERSHIP INTEREST: As to any Certificate, any ownership
interest in
such Certificate including any interest in such Certificate as
the Holder
thereof and any other interest therein, whether direct or
indirect, legal or
beneficial.
PASS-THROUGH RATE: With respect to each Class of Certificates
(other
than the Class I-C Certificates and Class II-C Certificates),
the Class I-A
Pass-Through Rate, Class I-M-1 Pass-Through Rate, Class I-M-2
Pass-Through Rate,
Class I-M-3 Pass-Through Rate, Class I-B-1 Pass-Through Rate,
Class I-B-2
Pass-Through Rate, Class I-B-3, Class II-A-1 Pass-Through Rate,
Class II-A-2
Pass-Through Rate, Class II-M-1 Pass-Through Rate, Class II-M-2
Pass-Through
Rate, Class II-M-3 Pass-Through Rate, Class II-B-1 Pass-Through
Rate, Class
II-B-2 Pass-Through Rate or Class II-B-3 Pass-Through Rate, as
applicable.
With respect to the Class I-C Certificates, a per annum rate
equal to
the percentage equivalent of a fraction, the numerator of which
is (x) the sum
of the amounts calculated pursuant to clauses (A) through (I)
below, and the
denominator of which is (y) the aggregate Uncertificated
Principal Balance of
the REMIC I Regular Interests (other than REMIC I Regular
Interest I-P). For
purposes of calculating the Pass-Through Rate for the Class I-C
Certificates,
the numerator of the fraction described above is equal to the
sum of the
following components:
(A) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest AA minus the REMIC I Marker Rate,
applied to
an amount equal to the Uncertificated Principal Balance of REMIC
I
Regular Interest AA;
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<PAGE>
(B) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest I-A minus the REMIC I Marker Rate,
applied to
an amount equal to the Uncertificated Principal Balance of REMIC
I
Regular Interest I-A;
(C) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest I-M-1 minus the REMIC I Marker Rate,
applied
to an amount equal to the Uncertificated Principal Balance of
REMIC I
Regular Interest I-M-1;
(D) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest I-M-2 minus the REMIC I Marker Rate,
applied
to an amount equal to the Uncertificated Principal Balance of
REMIC I
Regular Interest I-M-2;
(E) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest I-M-3 minus the REMIC I Marker Rate,
applied
to an amount equal to the Uncertificated Principal Balance of
REMIC I
Regular Interest I-M-3;
(F) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest I-B-1 minus the REMIC I Marker Rate,
applied
to an amount equal to the Uncertificated Principal Balance of
REMIC I
Regular Interest I-B-1;
(G) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest I-B-2 minus the REMIC I Marker Rate,
applied
to an amount equal to the Uncertificated Principal Balance of
REMIC I
Regular Interest I-B-2;
(H) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest I-B-3 minus the REMIC I Marker Rate,
applied
to an amount equal to the Uncertificated Principal Balance of
REMIC I
Regular Interest I-B-3; and
(I) the Uncertificated REMIC I Pass-Through Rate for
REMIC I Regular Interest ZZ minus the REMIC I Marker Rate,
applied to
an amount equal to the Uncertificated Principal Balance of REMIC
I
Regular Interest ZZ.
With respect to the Class II-C Certificates, a per annum rate
equal to
the percentage equivalent of a fraction, the numerator of which
is (x) the sum
of the amounts calculated pursuant to clauses (A) through (J)
below, and the
denominator of which is (y) the aggregate Uncertificated
Principal Balance of
the REMIC II Regular Interests (other than REMIC II Regular
Interest II-P). For
purposes of calculating the Pass-Through Rate for the Class II-C
Certificates,
the numerator of the fraction described above is equal to the
sum of the
following components:
(A) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest AA minus the REMIC II Marker Rate,
applied to
an amount equal to the Uncertificated Principal Balance of REMIC
II
Regular Interest AA;
(B) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-A-1 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-A-1;
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<PAGE>
(C) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-A-2 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-A-2;
(D) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-M-1 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-M-1;
(E) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-M-2 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-M-2;
(F) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-M-3 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-M-3;
(G) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-B-1 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-B-1;
(H) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-B-2 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-B-2;
(I) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest II-B-3 minus the REMIC II Marker
Rate,
applied to an amount equal to the Uncertificated Principal
Balance of
REMIC II Regular Interest II-B-3; and
(J) the Uncertificated REMIC II Pass-Through Rate for
REMIC II Regular Interest ZZ minus the REMIC II Marker Rate,
applied to
an amount equal to the Uncertificated Principal Balance of REMIC
II
Regular Interest ZZ.
PERCENTAGE INTEREST: With respect to any Certificate of a
specified
Class, the Percentage Interest set forth on the face thereof or
the percentage
obtained by dividing the Denomination of such Certificate by the
aggregate of
the Denominations of all Certificates of the such Class.
PERMITTED INVESTMENTS: At any time, any one or more of the
following
obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith
and
credit of the United States;
(ii) general obligations of or obligations guaranteed by
any state of the United States or the District of Columbia
receiving
the highest long-term debt rating of each Rating Agency, or such
lower
rating as will not result in the downgrading or withdrawal of
the
ratings then assigned to the Certificates by each Rating
Agency;
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<PAGE>
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating
of
each Rating Agency, or such lower rating as will not result in
the
downgrading or withdrawal of the ratings then assigned to
the
Certificates by each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or
trust
company incorporated under the laws of the United States or of
any
state thereof and subject to supervision and examination by
federal
and/or state banking authorities (including the Trustee in
its
commercial banking capacity), provided that the commercial paper
and/or
long term unsecured debt obligations of such depository
institution or
trust company are then rated one of the two highest long-term
and the
highest short-term ratings of each such Rating Agency for
such
securities, or such lower ratings as will not result in the
downgrading
or withdrawal of the rating then assigned to the Certificates by
any
Rating Agency;
(v) demand or time deposits or certificates of deposit
issued by any bank or trust company or savings institution to
the
extent that such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation containing, at the
time of
the issuance of such agreements, such terms and conditions as
will not
result in the downgrading or withdrawal of the rating then
assigned to
the Certificates by any such Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered
into
with a depository institution or trust company (acting as
principal)
described in clause (iv) above;
(viii) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in excess of
115% of
the face amount thereof) bearing interest or sold at a discount
issued
by any corporation incorporated under the laws of the United
States or
any state thereof which, at the time of such investment, have
one of
the two highest long term ratings of each Rating Agency (except
if the
Rating Agency is Moody's, such rating shall be the highest
commercial
paper rating of Moody's for any such securities), or such lower
rating
as will not result in the downgrading or withdrawal of the
rating then
assigned to the Certificates by any Rating Agency, as evidenced
by a
signed writing delivered by each Rating Agency;
(ix) interests in any money market fund (including any
such fund managed or advised by the Trustee or Master Servicer
or any
affiliate thereof) which at the date of acquisition of the
interests in
such fund and throughout the time such interests are held in
such fund
has the highest applicable long term rating by each Rating
Agency or
such lower rating as will not result in the downgrading or
withdrawal
of the ratings then assigned to the Certificates by each Rating
Agency;
(x) short term investment funds sponsored by any trust
company or banking association incorporated under the laws of
the
United States or any state thereof
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<PAGE>
(including any such fund managed or advised by the Trustee or
any
affiliate thereof) which on the date of acquisition has been
rated by
each Rating Agency in their respective highest applicable
rating
category or such lower rating as will not result in the
downgrading or
withdrawal of the ratings then assigned to the Certificates by
each
Rating Agency; and
(xi) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable
to each
Rating Agency as will not result in the downgrading or
withdrawal of
the rating then assigned to the Certificates by any Rating
Agency, as
evidenced by a signed writing delivered by each Rating
Agency;
provided, that no such instrument shall be a Permitted
Investment if such
instrument (i) evidences the right to receive interest only
payments with
respect to the obligations underlying such instrument, (ii) is
purchased at a
premium or (iii) is purchased at a deep discount; provided
further that no such
instrument shall be a Permitted Investment (A) if such
instrument evidences
principal and interest payments derived from obligations
underlying such
instrument and the interest payments with respect to such
instrument provide a
yield to maturity of greater than 120% of the yield to maturity
at par of such
underlying obligations, or (B) if it may be redeemed at a price
below the
purchase price (the foregoing clause (B) not to apply to
investments in units of
money market funds pursuant to clause (vi) above); provided
further that no
amount beneficially owned by any REMIC may be invested in
investments (other
than money market funds) treated as equity interests for federal
income tax
purposes, unless the Master Servicer shall receive an Opinion of
Counsel, at the
expense of the Master Servicer, to the effect that such
investment will not
adversely affect the status of any such REMIC as a REMIC under
the Code or
result in imposition of a tax on any such REMIC. Permitted
Investments that are
subject to prepayment or call may not be purchased at a price in
excess of par.
PERMITTED TRANSFEREE: Any Person (x) other than (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, (ii) a
foreign
government, International Organization or any agency or
instrumentality of
either of the foregoing, (iii) an organization (except certain
farmers'
cooperatives described in section 521 of the Code) that is
exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by
section 511 of
the Code on unrelated business taxable income) on any excess
inclusions (as
defined in section 860E(c)(1) of the Code) with respect to any
Residual
Certificate, (iv) rural electric and telephone cooperatives
described in section
1381(a)(2)(C) of the Code or (v) an electing large partnership
within the
meaning of Section 775(a) of the Code, (y) that is a citizen or
resident of the
United States, a corporation, partnership (other than a
partnership that has any
direct or indirect foreign partners) or other entity (treated as
a corporation
or a partnership for federal income tax purposes), created or
organized in or
under the laws of the United States, any State thereof or the
District of
Columbia, an estate whose income from sources without the United
States is
includible in gross income for United States federal income tax
purposes
regardless of its connection with the conduct of a trade or
business within the
United States, or a trust if a court within the United States is
able to
exercise primary supervision over the administration of the
trust and one or
more United States persons have authority to control all
substantial decisions
of the trust or if it has a valid election in effect under
applicable U.S.
Treasury regulations to be treated as a United States person and
(z) other than
any other Person so designated by the Trustee based upon an
Opinion of Counsel
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<PAGE>
addressed to the Trustee (which shall not be an expense of the
Trustee) that
states that the Transfer of an Ownership Interest in a Residual
Certificate to
such Person may cause REMIC I, REMIC II or REMIC III to fail to
qualify as a
REMIC at any time that any Certificates are Outstanding. The
terms "United
States," "State" and "International Organization" shall have the
meanings set
forth in section 7701 of the Code or successor provisions. A
corporation will
not be treated as an instrumentality of the United States or of
any State or
political subdivision thereof for these purposes if all of its
activities are
subject to tax and, with the exception of Freddie Mac, a
majority of its board
of directors is not selected by such government unit.
PERSON: Any individual, corporation, partnership, joint
venture,
association, joint- stock company, limited liability company,
trust,
unincorporated organization or government, or any agency or
political
subdivision thereof.
PHH: PHH Mortgage Corporation, and any successor thereto.
PHH ASSIGNMENT AGREEMENT: The Assignment, Assumption and
Recognition
Agreement, dated as of March 31, 2005, by and among the Seller,
PHH, Bishop's
Gate and the Trustee evidencing the assignment of the PHH
Servicing Agreement to
the Trust.
PHH LOANS: Those Mortgage Loans subject to this Agreement which
were
purchased by the Seller from PHH and Bishop's Gate pursuant to
the PHH Servicing
Agreement.
PHH SERVICING AGREEMENT: The Purchase, Warranties and
Servicing
Agreement, dated as of October 23, 2001, by and among the
Seller, PHH, as
successor to Cendant Mortgage Corporation, and Bishop's Gate, as
modified by the
PHH Assignment Agreement.
PREPAYMENT ASSUMPTION: The applicable rate of prepayment, as
described
in the Prospectus Supplement relating to each Class of Offered
Certificates.
PREPAYMENT CHARGE: Any prepayment premium, penalty or charge
payable by
a Mortgagor in connection with any Principal Prepayment on a
Mortgage Loan
pursuant to the terms of the related Mortgage Note.
PREPAYMENT INTEREST EXCESS: With respect to any Distribution
Date, for
each EMC Mortgage Loan that was the subject of a Principal
Prepayment in full or
in part during the portion of the related Prepayment Period
occurring between
the first day of the calendar month in which such Distribution
Date occurs and
the Determination Date 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 last date through
which interest is
collected from the related Mortgagor.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution
Date,
for each Mortgage Loan that was the subject of a partial
Principal Prepayment, a
Principal Prepayment in full, or that became a Liquidated Loan
during the
related Prepayment Period, (other than a Principal Prepayment in
full resulting
from the purchase of a Mortgage Loan pursuant to Section 2.02,
2.03, 4.20 or
11.01 hereof), the amount, if any, by which (i) one month's
interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of
such Mortgage
Loan
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<PAGE>
immediately prior to such prepayment (or liquidation) or in the
case of a
partial Principal Prepayment on the amount of such prepayment
(or liquidation
proceeds) exceeds (ii) the amount of interest paid or collected
in connection
with such Principal Prepayment or such liquidation proceeds less
the sum of (a)
the related Servicing Fee and (b) the LPMI Fee, if any.
PREPAYMENT PERIOD: As to any Distribution Date and (i) each
EMC
Mortgage Loan, the period commencing on the 16th day of the
month prior to the
month in which the related Distribution Date occurs and ending
on the 15th day
of the month in which such Distribution Date occurs and (ii) any
other Mortgage
Loan, the period set forth in the related Servicing
Agreement.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage
guaranty
insurance policy issued in connection with a Mortgage Loan which
provides
compensation to a Mortgage Note holder in the event of default
by the obligor
under such Mortgage Note or the related security instrument, if
any or any
replacement policy therefor through the related Accrual Period
for such Class
relating to a Distribution Date.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Loan Group
and any
Distribution Date, the sum of (a) the Group I Basic Principal
Distribution
Amount or Group II Basic Principal Distribution Amount, as
applicable, for such
Loan Group for such Distribution Date and (b) any Group I Extra
Principal
Distribution Amount or Group II Extra Principal Distribution
Amount, as
applicable, for such Distribution Date.
PRINCIPAL FUNDS: With respect to any Distribution Date and each
Loan
Group, (i) the sum, without duplication, of (a) all scheduled
principal
collected on the related Mortgage Loans during the related Due
Period, (b) all
Advances relating to principal made with respect to the Mortgage
Loans in the
related Loan Group on or prior to the Distribution Account
Deposit Date, (c)
Principal Prepayments with respect to the Mortgage Loans in the
related Loan
Group exclusive of Prepayment Charges or penalties collected
during the related
Prepayment Period, (d) the Stated Principal Balance of each
Mortgage Loan in the
related Loan Group that was repurchased by the Seller pursuant
to Sections 2.02
or 2.03 or by EMC pursuant to Section 4.20, (e) the aggregate of
all
Substitution Adjustment Amounts with respect to the related
Mortgage Loans for
the related Determination Date in connection with the
substitution of related
Mortgage Loans pursuant to Section 2.03(c), (e) all Liquidation
Proceeds and
Subsequent Recoveries with respect to the Mortgage Loans in the
related Loan
Group collected during the related Prepayment Period (to the
extent such
Liquidation Proceeds and Subsequent Recoveries relate to
principal) and remitted
by the Company or the related Servicer to the Distribution
Account pursuant to
this Agreement or the related Servicing Agreement and (f)
amounts in respect of
principal paid by the Majority Class I-C Certificateholder or by
the Majority
Class II-C Certificateholder, as applicable, pursuant to Section
11.01 minus
(ii) all related amounts required to be reimbursed pursuant to
Sections 5.02,
5.05, 5.07 and 5.09 or as otherwise set forth in this
Agreement.
PRINCIPAL REMITTANCE AMOUNT: With respect to each Distribution
Date and
each Loan Group, the sum of the amounts listed in clauses (a)
through (e) of the
definition of Principal Funds for the related Loan Group.
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<PAGE>
PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of
(or
proceeds with respect to) principal on a Mortgage Loan
(including loans
purchased or repurchased under Sections 2.02, 2.03, 4.20 and
11.01 hereof) that
is received in advance of its scheduled Due Date and is not
accompanied by an
amount as to interest representing scheduled interest due on any
date or dates
in any month or months subsequent to the month of prepayment.
Partial Principal
Prepayments shall be applied by the Company or the related
Servicer, as
appropriate, in accordance with the terms of the related
Mortgage Note.
PRIVATE CERTIFICATES: Any of the Class C, Class P and
Residual
Certificates.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated March 29,
2005
relating to the public offering of the Offered Certificates.
PROTECTED ACCOUNT: Each account established and maintained by
the
Company with respect to receipts on the Mortgage Loans and REO
Property in
accordance with Section 5.01 hereof or by the related Servicer
in accordance
with the related Servicing Agreement.
PUD: A Planned Unit Development.
PURCHASE PRICE: With respect to any Mortgage Loan required to
be
repurchased by the Seller pursuant to Section 2.02 or 2.03
hereof, an amount
equal to the sum of (i) 100% of the outstanding principal
balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued
interest thereon
at the applicable Mortgage Rate through the first day of the
month in which the
Purchase Price is to be distributed to Certificateholders,
reduced by any
portion of the Servicing Fee, Servicing Advances and Advances
payable to the
purchaser of the Mortgage Loan plus and (iii) any costs and
damages (if any)
incurred by the Trust in connection with any violation of such
Mortgage Loan of
any predatory lending laws.
RATING AGENCY: Each of Moody's and S&P. If any such
organization or its
successor is no longer in existence, "Rating Agency" shall be a
nationally
recognized statistical rating organization, or other comparable
Person,
designated by the Depositor, notice of which designation shall
be given to the
Trustee. References herein to a given rating category of a
Rating Agency shall
mean such rating category without giving effect to any
modifiers.
REALIZED LOSS: With respect to each Mortgage Loan as to which a
Final
Recovery Determination has been made, an amount (not less than
zero) equal to
(i) the unpaid principal balance of such Mortgage Loan as of the
commencement of
the calendar month in which the Final Recovery Determination was
made, plus (ii)
accrued interest from the Due Date as to which interest was last
paid by the
Mortgagor through the end of the calendar month in which such
Final Recovery
Determination was made, calculated in the case of each calendar
month during
such period (A) at an annual rate equal to the annual rate at
which interest was
then accruing on such Mortgage Loan and (B) on a principal
amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close
of business on
the Distribution Date during such calendar month, minus (v) the
proceeds, if
any, received in respect of such Mortgage Loan during the
calendar month in
which such Final Recovery Determination was made, net of amounts
that are
payable therefrom to the Company pursuant to this Agreement or
the applicable
Servicer pursuant to the related Servicing Agreement. In
addition, to the extent
the Master
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<PAGE>
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 distributed to any Class of
related
Subordinate Certificates or applied to increase Excess Spread on
the related
Loan Group on any Distribution Date.
With respect to any REO Property as to which a Final
Recovery
Determination has been made, an amount (not less than zero)
equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the
date of
acquisition of such REO Property on behalf of REMIC I, plus (ii)
accrued
interest from the Due Date as to which interest was last paid by
the Mortgagor
in respect of the related Mortgage Loan through the end of the
calendar month
immediately preceding the calendar month in which such REO
Property was
acquired, calculated in the case of each calendar month during
such period (A)
at an annual rate equal to the annual rate at which interest was
then accruing
on the related Mortgage Loan and (B) on a principal amount equal
to the Stated
Principal Balance of the related Mortgage Loan as of the close
of business on
the Distribution Date during such calendar month, plus (iii) REO
Imputed
Interest for such REO Property for each calendar month
commencing with the
calendar month in which such REO Property was acquired and
ending with the
calendar month in which such Final Recovery Determination was
made, minus (iv)
the aggregate of all unreimbursed Advances and Servicing
Advances.
With respect to each Mortgage Loan which has become the subject
of a
Deficient Valuation, the difference between the principal
balance of the
Mortgage Loan outstanding immediately prior to such Deficient
Valuation and the
principal balance of the Mortgage Loan as reduced by the
Deficient Valuation.
With respect to each Mortgage Loan which has become the subject
of a
Debt Service Reduction, the portion, if any, of the reduction in
each affected
Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a
court of competent jurisdiction. Each such Realized Loss shall
be deemed to have
been incurred on the Due Date for each affected Monthly
Payment.
RECORD DATE: With respect to the Class I-A, Class II-A-1, Class
I-C,
Class II-C, Class I-P, Class II-P and Class R Certificates and
any Distribution
Date, the close of business on the last Business Day of the
month preceding the
month in which such Distribution Date occurs. With respect to
any Distribution
Date and the Class II-A-2, Class M and Class B Certificates, so
long as such
Certificates are Book-Entry Certificates, the Business Day
preceding such
Distribution Date, and otherwise, the close of business on the
last Business Day
of the month preceding the month in which such Distribution Date
occurs.
REFERENCE BANKS: Shall mean leading banks selected by the
Securities
Administrator and engaged in transactions in Eurodollar deposits
in the
international Eurocurrency market (i) with an established place
of business in
London, (ii) which have been designated as such by the
Securities Administrator
and (iii) which are not controlling, controlled by, or under
common control
with, the Depositor, the Seller or the Master Servicer.
REFERENCE BANK RATE: With respect to any Accrual Period shall
mean the
arithmetic mean, rounded upwards, if necessary, to the nearest
whole multiple of
0.03125%, of the offered
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<PAGE>
rates for United States dollar deposits for one month that are
quoted by the
Reference Banks as of 11:00 a.m., New York City time, on the
related Interest
Determination Date to prime banks in the London interbank market
for a period of
one month in an amount approximately equal to the aggregate
Certificate
Principal Balance of the Class II-A-2, Class M and Class B
Certificates for such
Accrual Period, provided that at least two such Reference Banks
provide such
rate. If fewer than two offered rates appear, the Reference Bank
Rate will be
the arithmetic mean, rounded upwards, if necessary, to the
nearest whole
multiple of 0.03125%, of the rates quoted by one or more major
banks in New York
City, selected by the Securities Administrator, as of 11:00
a.m., New York City
time, on such date for loans in United States dollars to leading
European banks
for a period of one month in amounts approximately equal to the
aggregate
Certificate Principal Balance of the Class II-A-2, Class M and
Class B
Certificates for such Accrual Period.
REGULAR CERTIFICATE: Any Certificate other than a Residual
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, as amended or
any
similar state law.
REMAINING EXCESS SPREAD: With respect to each Loan Group and
any
Distribution Date, (i) the Excess Spread for such Loan Group,
less (ii) the
Group I Extra Principal Distribution Amount or Group II Extra
Principal
Distribution Amount, as applicable, in each case for such
Distribution Date.
REMIC: A "real estate mortgage investment conduit" within the
meaning
of section 860D of the Code.
REMIC I: The segregated pool of assets described in Section
6.07(a).
REMIC I INTERESTS: The REMIC I Regular Interests and the Class
I-R-1
Certificates.
REMIC I INTEREST LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the
aggregate
Stated Principal Balance of Loan Group I and related REO
Properties then
outstanding and (ii) the Uncertificated REMIC I Pass-Through
Rate for REMIC I
Regular Interest AA minus the REMIC I Marker Rate, divided by
(b) 12.
REMIC I MARKER RATE: With respect to the Class I-C Certificates
and any
Distribution Date, a per annum rate equal to two (2) times the
weighted average
of the Uncertificated REMIC I Pass-Through Rates for REMIC I
Regular Interest
I-A, REMIC I Regular Interest I-M-1, REMIC I Regular Interest
I-M-2, REMIC I
Regular Interest I-M-3, REMIC I Regular Interest I-B-1, REMIC I
Regular Interest
I-B-2, REMIC I Regular Interest I-B-3 and REMIC I Regular
Interest ZZ, with the
rate on each such REMIC I Regular Interest (other than REMIC I
Regular Interest
ZZ) subject to a cap equal to the Pass-Through Rate for the
Corresponding
Certificate and with the rate on REMIC I Regular Interest ZZ
subject to a cap of
zero for the purpose of this calculation; provided, however,
that for this
purpose, the calculation of the Uncertificated REMIC I
Pass-Through Rate and the
related cap with respect to REMIC I Regular Interest I-M-1,
REMIC I Regular
Interest I-M-2, REMIC I Regular Interest I-M-3, REMIC I Regular
Interest I-B-1,
REMIC I Regular Interest I-B-2 and REMIC I Regular Interest
I-B-3 shall be
multiplied
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<PAGE>
by a fraction, the numerator of which is the actual number of
days in the
Accrual Period and the denominator of which is 30.
REMIC I OVERCOLLATERALIZATION AMOUNT: With respect to any date
of
determination, (i) 1% of the aggregate Uncertificated Principal
Balance of the
REMIC I Regular Interests (other than REMIC I Regular Interest
I-P) minus (ii)
the aggregate Uncertificated Principal Balance of REMIC I
Regular Interest I-A,
REMIC I Regular Interest I-M-1, REMIC I Regular Interest I-M-2,
REMIC I Regular
Interest I-M-3, REMIC I Regular Interest I-B-1, REMIC I Regular
Interest I-B-2
and REMIC I Regular Interest I-B-3, in each case as of such date
of
determination.
REMIC I OVERCOLLATERALIZATION TARGET AMOUNT: 1% of the Group
I
Overcollateralization Target Amount.
REMIC I PRINCIPAL LOSS ALLOCATION AMOUNT: With respect to
any
Distribution Date, an amount equal to (a) the product of (i) the
aggregate
Stated Principal Balance of Loan Group I and related REO
Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which
is two (2) times
the aggregate Uncertificated Principal Balance of REMIC I
Regular Interest I-A,
REMIC I Regular Interest I-M-1, REMIC I Regular Interest I-M-2,
REMIC I Regular
Interest I-M-3, REMIC I Regular Interest I-B-1, REMIC I Regular
Interest I-B-2
and REMIC I Regular Interest I-B-3 and the denominator of which
is the aggregate
Uncertificated Principal Balance of REMIC I Regular Interest
I-A, REMIC I
Regular Interest I-M-1, REMIC I Regular Interest I-M-2, REMIC I
Regular Interest
I-M-3, REMIC I Regular Interest I-B-1, REMIC I Regular Interest
I-B-2, REMIC I
Regular Interest I-B-3 and REMIC I Regular Interest ZZ.
REMIC I REGULAR INTEREST ZZ MAXIMUM INTEREST DEFERRAL AMOUNT:
With
respect to any Distribution Date, the excess of (i) accrued
interest at the
Uncertificated REMIC I Pass-Through Rate applicable to REMIC I
Regular Interest
ZZ for such Distribution Date on a balance equal to the
Uncertificated Principal
Balance of REMIC I Regular Interest ZZ minus the REMIC I
Overcollateralization
Amount, in each case for such Distribution Date, over (ii) the
Uncertificated
Accrued Interest on REMIC I Regular Interest I-A, REMIC I
Regular Interest
I-M-1, REMIC I Regular Interest I-M-2, REMIC I Regular Interest
I-M-3, REMIC I
Regular Interest I-B-1, REMIC I Regular Interest I-B-2 and REMIC
I Regular
Interest I-B-3 for such Distribution Date, with the rate on each
such REMIC I
Regular Interest subject to a cap equal to the Pass-Through Rate
for the
Corresponding Certificate.
REMIC I REGULAR INTERESTS: REMIC I Regular Interest AA, REMIC I
Regular
Interest I-A, REMIC I Regular Interest I-M-1, REMIC I Regular
Interest I-M-2,
REMIC I Regular Interest I-M-3, REMIC I Regular Interest I-B-1,
REMIC I Regular
Interest I-B-2, REMIC I Regular Interest I-B-3, REMIC I Regular
Interest ZZ and
REMIC I Regular Interest I-P.
REMIC I REGULAR INTEREST AA: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest AA shall
accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in
effect from time to
time, and shall be entitled to distributions of principal,
subject to the terms
and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
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<PAGE>
REMIC I REGULAR INTEREST I-A: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-A shall
accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in
effect from time to
time, and shall be entitled to distributions of principal,
subject to the terms
and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC I REGULAR INTEREST I-B-1: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-B-1
shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate
in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC I REGULAR INTEREST I-B-2: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-B-2
shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate
in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC I REGULAR INTEREST I-B-3: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-B-3
shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate
in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC I REGULAR INTEREST I-M-1: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-M-1
shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate
in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC I REGULAR INTEREST I-M-2: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-M-2
shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate
in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC I REGULAR INTEREST I-M-3: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-M-3
shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate
in effect from
time to time, and shall be entitled to distributions of
principal,
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<PAGE>
subject to the terms and conditions hereof, in an aggregate
amount equal to its
initial Uncertificated Principal Balance as set forth in the
Preliminary
Statement hereto.
REMIC I REGULAR INTEREST I-P: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-P will
not accrue
interest and shall be entitled to distributions of principal,
subject to the
terms and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC I REGULAR INTEREST ZZ: One of the separate
non-certificated
beneficial ownership interests in REMIC I issued hereunder and
designated as a
Regular Interest in REMIC I. REMIC I Regular Interest ZZ shall
accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in
effect from time to
time, and shall be entitled to distributions of principal,
subject to the terms
and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II: The segregated pool of assets described in Section
6.07(a).
REMIC II INTEREST LOSS ALLOCATION AMOUNT: With respect to
any
Distribution Date, an amount equal to (a) the product of (i) the
aggregate
Stated Principal Balance of Loan Group II and related REO
Properties then
outstanding and (ii) the Uncertificated REMIC II Pass-Through
Rate for REMIC II
Regular Interest AA minus the REMIC II Marker Rate, divided by
(b) 12.
REMIC II MARKER RATE: With respect to the Class II-C
Certificates and
any Distribution Date, a per annum rate equal to two (2) times
the weighted
average of the Uncertificated REMIC II Pass-Through Rates for
REMIC II Regular
Interest II-A-1, REMIC II Regular Interest II-A-2, REMIC II
Regular Interest
II-M-1, REMIC II Regular Interest II-M-2, REMIC II Regular
Interest II-M-3,
REMIC II Regular Interest II-B-1, REMIC II Regular Interest
II-B-2, REMIC II
Regular Interest II-B-3 and REMIC II Regular Interest ZZ, with
the rate on each
such REMIC II Regular Interest (other than REMIC II Regular
Interest ZZ) subject
to a cap equal to the Pass-Through Rate for the Corresponding
Certificate and
with the rate on REMIC II Regular Interest ZZ subject to a cap
of zero for the
purpose of this calculation; provided, however, that for this
purpose, the
calculation of the Uncertificated REMIC II Pass-Through Rate and
the related cap
with respect to REMIC II Regular Interest II-A-2, REMIC II
Regular Interest
II-M-1, REMIC II Regular Interest II-M-2, REMIC II Regular
Interest II-M-3,
REMIC II Regular Interest II-B-1, REMIC II Regular Interest
II-B-2 and REMIC II
Regular Interest II-B-3 shall be multiplied by a fraction, the
numerator of
which is the actual number of days in the Accrual Period and the
denominator of
which is 30.
REMIC II OVERCOLLATERALIZATION AMOUNT: With respect to any date
of
determination, (i) 1% of the aggregate Uncertificated Principal
Balance of the
REMIC II Regular Interests (other than REMIC II Regular Interest
II-P) minus
(ii) the aggregate Uncertificated Principal Balance of REMIC II
Regular Interest
II-A-1, REMIC II Regular Interest II-A-2, REMIC II Regular
Interest II-M-1,
REMIC II Regular Interest II-M-2, REMIC II Regular Interest
II-M-3, REMIC II
Regular Interest II-B-1, REMIC II Regular Interest II-B-2 and
REMIC II Regular
Interest II-B-3, in each case as of such date of
determination.
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<PAGE>
REMIC II OVERCOLLATERALIZATION TARGET AMOUNT: 1% of the Group
II
Overcollateralization Target Amount.
REMIC II PRINCIPAL LOSS ALLOCATION AMOUNT: With respect to
any
Distribution Date, an amount equal to (a) the product of (i) the
aggregate
Stated Principal Balance of Loan Group II and related REO
Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which
is two (2) times
the aggregate Uncertificated Principal Balance of REMIC II
Regular Interest
II-A-1, REMIC II Regular Interest II-A-2, REMIC II Regular
Interest II-M-1,
REMIC II Regular Interest II-M-2, REMIC II Regular Interest
II-M-3, REMIC II
Regular Interest II-B-1, REMIC II Regular Interest II-B-2 and
REMIC II Regular
Interest II-B-3 and the denominator of which is the aggregate
Uncertificated
Principal Balance of REMIC II Regular Interest II-A-1, REMIC II
Regular Interest
II-A-2, REMIC II Regular Interest II-M-1, REMIC II Regular
Interest II-M-2,
REMIC II Regular Interest II-M-3, REMIC II Regular Interest
II-B-1, REMIC II
Regular Interest II-B-2 and REMIC II Regular Interest II-B-3 and
REMIC II
Regular Interest ZZ.
REMIC II REGULAR INTEREST ZZ MAXIMUM INTEREST DEFERRAL AMOUNT:
With
respect to any Distribution Date, the excess of (i) accrued
interest at the
Uncertificated REMIC II Pass-Through Rate applicable to REMIC II
Regular
Interest ZZ for such Distribution Date on a balance equal to the
Uncertificated
Principal Balance of REMIC II Regular Interest ZZ minus the
REMIC II
Overcollateralization Amount, in each case for such Distribution
Date, over (ii)
the Uncertificated Accrued Interest on REMIC II Regular Interest
II-A-1, REMIC
II Regular Interest II-A-2, REMIC II Regular Interest II-M-1,
REMIC II Regular
Interest II-M-2, REMIC II Regular Interest II-M-3, REMIC II
Regular Interest
II-B-1, REMIC II Regular Interest II-B-2 and REMIC II Regular
Interest II-B-3
for such Distribution Date, with the rate on each such REMIC II
Regular Interest
subject to a cap equal to the Pass-Through Rate for the
Corresponding
Certificate.
REMIC II REGULAR INTERESTS: REMIC II Regular Interest AA, REMIC
II
Regular Interest II-A-1, REMIC II Regular Interest II-A-2, REMIC
II Regular
Interest II-M-1, REMIC II Regular Interest II-M-2, REMIC II
Regular Interest
II-M-3, REMIC II Regular Interest II-B-1, REMIC II Regular
Interest II-B-2 and
REMIC II Regular Interest II-B-3, REMIC II Regular Interest ZZ
and REMIC II
Regular Interest II-P.
REMIC II REGULAR INTEREST AA: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest AA shall
accrue interest
at the related Uncertificated REMIC II Pass-Through Rate in
effect from time to
time, and shall be entitled to distributions of principal,
subject to the terms
and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST II-A-1: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-A-1
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
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<PAGE>
REMIC II REGULAR INTEREST II-A-2: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-A-2
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST II-B-1: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-B-1
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST II-B-2: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-B-2
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST II-B-3: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-B-3
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST II-M-1: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-M-1
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST II-M-2: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-M-2
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
principal, subject to
the terms and conditions hereof, in an aggregate amount equal to
its initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST II-M-3: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-M-3
shall accrue
interest at the related Uncertificated REMIC II Pass-Through
Rate in effect from
time to time, and shall be entitled to distributions of
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<PAGE>
principal, subject to the terms and conditions hereof, in an
aggregate amount
equal to its initial Uncertificated Principal Balance as set
forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST II-P: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest II-P
will not accrue
interest and shall be entitled to distributions of principal,
subject to the
terms and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC II REGULAR INTEREST ZZ: One of the separate
non-certificated
beneficial ownership interests in REMIC II issued hereunder and
designated as a
Regular Interest in REMIC II. REMIC II Regular Interest ZZ shall
accrue interest
at the related Uncertificated REMIC II Pass-Through Rate in
effect from time to
time, and shall be entitled to distributions of principal,
subject to the terms
and conditions hereof, in an aggregate amount equal to its
initial
Uncertificated Principal Balance as set forth in the Preliminary
Statement
hereto.
REMIC III: The segregated pool of assets described in the
Preliminary
Statement hereto consisting of the REMIC I Regular Interests and
the REMIC II
Regular Interests.
REMIC III CERTIFICATES: The Regular Certificates and the Class
II-R
Certificates.
REMIC OPINION: Shall mean an Opinion of Counsel to the effect
that the
proposed action will not have an adverse affect on any REMIC
created hereunder.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to
real estate mortgage investment conduits, which appear at
Sections 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,
as well as
provisions of applicable state laws.
REMIC REGULAR INTEREST: A REMIC I Regular Interest, REMIC II
Regular
Interest or Regular Certificate.
REMITTANCE DATE: Shall mean (i) with respect to the Company,
the
Business Day immediately preceding the Distribution Account
Deposit Date and
(ii) with respect to the related Servicer, the date specified in
the related
Servicing Agreement.
REMITTANCE REPORT: As defined in Section 6.04(e).
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
or REMIC II, 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 PROPERTY: A Mortgaged Property acquired by the Company or
the
related Servicer through foreclosure or deed-in-lieu of
foreclosure in
connection with a defaulted Mortgage Loan.
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<PAGE>
REPLACEMENT MORTGAGE LOAN: A Mortgage Loan or Mortgage Loans in
the
aggregate substituted by the Seller for a Deleted Mortgage Loan,
which must, on
the date of such substitution, as confirmed in a Request for
Release, (i) have a
Stated Principal Balance, after deduction of the principal
portion of the
Scheduled Payment due in the month of substitution, not in
excess of, and not
less than 90% of, the Stated Principal Balance of the Deleted
Mortgage Loan;
(ii) have a fixed Mortgage Rate not less than or more than 1%
per annum higher
than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have
the same or
higher credit quality characteristics than that of the Deleted
Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the
Deleted Mortgage
Loan; (v) have a remaining term to maturity no greater than (and
not more than
one year less than) that of the Deleted Mortgage Loan; (vi) not
permit
conversion of the Mortgage Rate from a fixed rate to a variable
rate; (vii) have
the same lien priority as the Deleted Mortgage Loan; (viii)
constitute the same
occupancy type as the Deleted Mortgage Loan or be owner
occupied; and (ix)
comply with each representation and warranty set forth in
Section 2.03 hereof.
REPURCHASE PRICE: With respect to each Mortgage Loan, a price
equal to
(i) the outstanding principal balance of such Mortgage Loan,
plus (ii) interest
on such outstanding principal balance at the Mortgage Rate (net
of the Servicing
Fee Rate) from the last date through which interest has been
paid to the end of
the month of repurchase, less (iii) amounts advanced by the
Company or the
related Servicer in respect of such repurchased Mortgage Loan
which are being
held in the Master Servicer Collection Account for remittance to
the Trustee
plus (iv) any costs and damages (if any) incurred by the Trust
in connection
with any violation of such Mortgage Loan of any anti-predatory
lending laws.
REQUEST FOR RELEASE: The Request for Release to be submitted by
the
Seller, the Company, the related Servicer or the Master Servicer
to the
Custodian substantially in the form of Exhibit G. Each Request
for Release
furnished to the Custodian by the Seller, the Company, the
related Servicer or
the Master Servicer shall be in duplicate and shall be executed
by an officer of
such Person or a Servicing Officer (or, if furnished
electronically to the
Custodian, shall be deemed to have been sent and executed by an
officer of such
Person or a Servicing Officer) of the Company or the related
Servicer, as
applicable.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan,
any
insurance policy that is required to be maintained from time to
time under this
Agreement or the related Servicing Agreement.
RESIDUAL CERTIFICATES: Any of the Class I-R-1, Class I-R-2 and
Class
II-R Certificates, each evidencing the sole class of "residual
interests"
(within the meaning of Section 860G(a)(2) of the Code) in the
related REMIC.
RESIDUAL INTEREST: The sole class of "residual interests" in a
REMIC
within the meaning of Section 860G(a)(2) of the Code.
RESPONSIBLE OFFICER: With respect to the Trustee, any Vice
President,
any Assistant Vice President, the Secretary, any Assistant
Secretary, or any
Trust Officer with specific responsibility for the transactions
contemplated
hereby, any other officer customarily performing functions
similar to those
performed by any of the above designated officers or other
officers of the
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Trustee specified by the Trustee, as to whom, with respect to a
particular
matter, such matter is referred because of such officer's
knowledge of and
familiarity with the particular subject.
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.
SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage
Loan due
on any Due Date allocable to principal and/or interest on such
Mortgage Loan.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES ADMINISTRATOR: Wells Fargo Bank, National
Association, in
its capacity as securities administrator hereunder, and its
successors and
assigns.
SELLER: EMC Mortgage Corporation, a Delaware corporation, and
its
successors and assigns, in its capacity as seller of the
Mortgage Loans to the
Depositor.
SENIOR CERTIFICATES: Any of the Class I-A, Class II-A-1 and
Class
II-A-2 Certificates.
SERVICER: Any of GreenPoint, Cendant, HSBC or SouthTrust.
SERVICING ADVANCES: All customary, reasonable and necessary "out
of
pocket" costs and expenses (including reasonable legal fees)
incurred in the
performance by the Company or the related Servicer of its
servicing obligations
hereunder or under the related Servicing Agreement, including,
but not limited
to, the cost of (i) the preservation, restoration and protection
of a Mortgaged
Property, (ii) any enforcement or judicial proceedings,
including foreclosures,
and including any expenses incurred in relation to any such
proceedings that
result from the Mortgage Loan being registered in the MERS(R)
System, (iii) the
management and liquidation of any REO Property (including,
without limitation,
realtor's commissions) and (iv) compliance with any obligations
under Section
3.07 hereof to cause insurance to be maintained.
SERVICING AGREEMENT: Any of the GreenPoint Servicing Agreement,
PHH
Servicing Agreement, HSBC Servicing Agreement or SouthTrust
Servicing Agreement.
SERVICING FEE: As to each Mortgage Loan and any Distribution
Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by
the Stated
Principal Balance of such Mortgage Loan as of the last day of
the related Due
Period.
SERVICING FEE RATE: 0.250% per annum.
SERVICING MODIFICATION: With respect to any Mortgage Loan that
is in
default or, in the reasonable judgment of the Company or the
related Servicer,
as to which default is reasonably foreseeable, any modification
which is
effected by the Company or the related Servicer in accordance
with the terms of
this Agreement or the related Servicing Agreement which results
in any change in
the outstanding Stated Principal Balance, any change in the
Mortgage Rate or any
extension of the term of such Mortgage Loan.
SERVICING OFFICER: Any officer of the Company or the related
Servicer
involved in, or responsible for, the administration and
servicing of the
Mortgage Loans (i) in the case of the
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Company, whose name and facsimile signature appear on a list of
servicing
officers furnished to the Trustee by the Company on the Closing
Date pursuant to
this Agreement, as such list may from time to time be amended
and (ii) in the
case of the related Servicer, as to which evidence reasonably
acceptable to the
Trustee, as applicable, of due authorization, by such party has
been furnished
from time to time to the Trustee.
SOUTHTRUST: SouthTrust Mortgage Corporation, and any successor
thereto.
SOUTHTRUST ASSIGNMENT AGREEMENT: The Assignment, Assumption
and
Recognition Agreement, dated as of January 31, 2005, by and
among the Seller,
SouthTrust and the Trustee evidencing the assignment of the
SouthTrust Servicing
Agreement to the Trust.
SOUTHTRUST LOANS: Those Mortgage Loans subject to this Agreement
which
were purchased by the Seller from SouthTrust pursuant to the
SouthTrust
Servicing Agreement.
SOUTHTRUST SERVICING AGREEMENT: The Purchase, Warranties and
Servicing
Agreement, dated as of November 1, 2002, by and between the
Seller and
SouthTrust, as modified by the SouthTrust Assignment
Agreement.
STARTUP DAY: The Startup Day for each REMIC formed hereunder
shall be
the Closing Date.
STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or
related
REO Property and any Distribution Date, the Cut-off Date
Principal Balance
thereof minus the sum of (i) the principal portion of the
Scheduled Payments due
with respect to such Mortgage Loan during each Due Period ending
prior to such
Distribution Date (and irrespective of any delinquency in their
payment), (ii)
all Principal Prepayments with respect to such Mortgage Loan
received prior to
or during the related Prepayment Period, and all Liquidation
Proceeds to the
extent applied by the Company or the related Servicer as
recoveries of principal
in accordance with Section 3.09 or the related Servicing
Agreement with respect
to such Mortgage Loan, that were received by the Company or the
related Servicer
as of the close of business on the last day of the Prepayment
Period related to
such Distribution Date and (iii) any Realized Losses on such
Mortgage Loan
incurred during the related Prepayment Period. The Stated
Principal Balance of a
Liquidated Loan equals zero.
SUBORDINATE CERTIFICATES: Any of the Class I-M-1, Class I-M-2,
Class
I-M-3, Class I-B-1, Class I-B-2, Class I-B-3, Class II-M-1,
Class II-M-2, Class
II-M-3, Class II-B-1, Class II-B-2 and Class II-B-3
Certificates.
SUBSEQUENT RECOVERIES: As of any Distribution Date, amounts
received by
the Master Servicer during the related Due Period or surplus
amounts held by the
Master Servicer to cover estimated expenses (including, but not
limited to,
recoveries in respect of the representations and warranties made
by the Seller
pursuant to the Mortgage Loan Purchase Agreement) specifically
related to a
Liquidated Mortgage Loan or disposition of an REO Property prior
to the related
Prepayment Period that resulted in a Realized Loss, after the
liquidation or
disposition of such Mortgage Loan.
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<PAGE>
SUBSERVICING AGREEMENT: Any agreement entered into between the
Company
and a subservicer with respect to the subservicing of any
Mortgage Loan
hereunder by such subservicer.
SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such
term
pursuant to Section 2.03(c).
SUB-TRUST: Each of Loan Group I and Loan Group II.
SUCCESSOR MASTER SERVICER: The meaning ascribed to such term
pursuant
to Section 9.01.
TAX MATTERS PERSON: The person designated as "tax matters
person" in
the manner provided under Treasury Regulation Sections
1.860F-4(d) and
301.6231(a)(7)-1T. The Holder of the greatest Percentage
Interest in a Class of
Residual Certificates shall be the Tax Matters Person for the
related REMIC. The
Securities Administrator or any successor thereto or assignee
thereof shall
serve as tax administrator hereunder and as agent for the
related Tax Matters
Person.
TRANSFER AFFIDAVIT: As defined in Section 7.02(c).
TRANSFER: Any direct or indirect transfer or sale of any
Ownership
Interest in a Certificate.
TRUST FUND: The corpus of the trust created hereunder consisting
of (i)
the Mortgage Loans and all interest accruing and principal due
with respect
thereto after the Cut-off Date to the extent not applied in
computing the
Cut-off Date Principal Balance thereof; (ii) the Class P
Certificate Accounts,
the Net WAC Reserve Fund, the Distribution Account, the Master
Servicer
Collection Account maintained by the Master Servicer and the
Protected Accounts
maintained by the Company and the Servicers and all amounts
deposited therein
pursuant to the applicable provisions of this Agreement and the
Servicing
Agreements; (iii) property that secured a Mortgage Loan and has
been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the
mortgagee's
rights under the Insurance Policies with respect to the Mortgage
Loans; (v) the
Servicing Agreements and the Assignment Agreements; (vi) the
rights under the
Mortgage Loan Purchase Agreement, and (vii) all proceeds of the
foregoing,
including proceeds of conversion, voluntary or involuntary, of
any of the
foregoing into cash or other liquid property. The Net WAC
Reserve Fund shall
constitute an asset of the Trust Fund but will not be included
in REMIC I, REMIC
II or REMIC III.
TRUSTEE: U.S. Bank National Association, a national banking
association, not in its individual capacity, but solely in its
capacity as
trustee for the benefit of the Certificateholders under this
Agreement, and any
successor thereto, and any corporation or national banking
association resulting
from or surviving any consolidation or merger to which it or its
successors may
be a party and any successor trustee as may from time to time be
serving as
successor trustee hereunder.
UNCERTIFICATED ACCRUED INTEREST: With respect to each REMIC I
Regular
Interest or REMIC II Regular Interest, as applicable, on each
Distribution Date,
an amount equal to one month's interest at the related
Uncertificated REMIC I
Pass-Through Rate or Uncertificated REMIC II Pass-Through Rate,
as applicable,
on the Uncertificated Principal Balance of such
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REMIC Regular Interest. In each case, Uncertificated Accrued
Interest will be
reduced by any Unpaid Interest Shortfalls in respect of Loan
Group I or Loan
Group II, as applicable (allocated to such REMIC Regular
Interests as set forth
in Section 1.02).
UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC I
Regular
Interest or REMIC II Regular Interest, as applicable, the
principal amount of
such REMIC Regular Interest outstanding as of any date of
determination. As of
the Closing Date, the Uncertificated Principal Balance of each
REMIC I Regular
Interest or REMIC II Regular Interest, as applicable, shall
equal the amount set
forth in the Preliminary Statement hereto as its initial
Uncertificated
Principal Balance. On each Distribution Date, the Uncertificated
Principal
Balance of each REMIC I Regular Interest or REMIC II Regular
Interest, as
applicable, shall be reduced by all distributions of principal
made on such
REMIC Regular Interest on such Distribution Date pursuant to
Section 6.07 and,
if and to the extent necessary and appropriate, shall be further
reduced on such
Distribution Date by Realized Losses as provided in Section
6.07. The
Uncertificated Principal Balance of each REMIC I Regular
Interest or REMIC II
Regular Interest, as applicable, shall never be less than
zero.
UNCERTIFICATED REMIC I PASS-THROUGH RATE: With respect to any
REMIC I
Regular Interest other than REMIC I Regular Interest I-P, and
any Distribution
Date, a per annum rate equal to the weighted average of the Net
Mortgage Rates
of Loan Group I as of the first day of the related Due Period,
weighted on the
basis of the Stated Principal Balances of Loan Group I as of the
first day of
the related Due Period. With respect to REMIC I Regular Interest
I-P and any
Distribution Date, 0.00%.
UNCERTIFICATED REMIC II PASS-THROUGH RATE: With respect to any
REMIC II
Regular Interest other than REMIC II Regular Interest II-P and
any Distribution
Date, a per annum rate equal to the weighted average of the Net
Mortgage Rates
of Loan Group II as of the first day of the related Due Period,
weighted on the
basis of the Stated Principal Balances of Loan Group II as of
the first day of
the related Due Period. With respect to REMIC II Regular
Interest II-P and any
Distribution Date, 0.00%.
UNPAID INTEREST SHORTFALLS: Shall mean Interest Shortfalls with
respect
to each Loan Group, net of payments by the Company, the related
Servicer or the
Master Servicer in respect of Compensating Interest for the
related Loan Group.
VOTING RIGHTS: The portion of the voting rights of all the
Certificates
that is allocated to any Certificate for purposes of the voting
provisions
hereunder. Voting Rights shall be allocated (i) 90.50% to the
Certificates
(other than the Class P, Class C and Residual Certificates),
(ii) 1% to each of
the Class I-P Certificates and Class II-P Certificates, (iii) 3%
to each of the
Class I-C Certificates and Class II-C Certificates and (iv)
0.50% to each Class
of Residual Certificates, with the allocation among the
Certificates other than
the Class P, Class C and Residual Certificates to be in
proportion to the
Certificate Principal Balance of each Class relative to the
Certificate
Principal Balance of all other such Classes. Voting Rights will
be allocated
among the Certificates of each such Class in accordance with
their respective
Percentage Interests.
Section 1.02 ALLOCATION OF CERTAIN INTEREST SHORTFALLS. For
purposes of
calculating the amount of the Monthly Interest Distributable
Amount for the
Class I-A, Class I-M-1, Class I-M-
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2, Class I-M-3, Class I-B-1, Class I-B-2, Class I-B-3 and Class
I-C Certificates
for any Distribution Date, (1) the aggregate amount of any
Unpaid Interest
Shortfalls in respect of Loan Group I for any Distribution Date
shall be
allocated first, in reduction of amounts otherwise distributable
to the Class
I-C Certificates, Class I-R-1 and Class I-R-2 Certificates, and
thereafter,
among the Group I Offered Certificates in proportion to the
amount of the
Monthly Interest Distributable Amount that would have been
allocated to such
Certificates in the absence of such Unpaid Interest Shortfalls,
and (2) the
interest portion of Realized Losses for Loan Group I will be
allocated first, to
the Class I-C Certificates based on, and to the extent of, one
month's interest
at the then applicable Pass-Through Rate on the Certificate
Notional Amount
thereof, second to the Class I-B-3 Certificates, third to the
Class I-B-2
Certificates, fourth to the Class I-B-1 Certificates, fifth to
the Class I-M-3
Certificates, sixth to the Class I-M-2 Certificates, seventh to
the Class I-M-1
Certificates, and following the Cross-Over Date, to the Group I
Senior
Certificates, on a pro rata basis, in each case, based on, and
to the extent of,
one month's interest at the then applicable respective
Pass-Through Rates on the
respective Certificate Principal Balances of each such
Certificate.
For purposes of calculating the amount of Uncertificated
Accrued
Interest for the REMIC I Regular Interests (other than REMIC I
Regular Interest
I-P), for any Distribution Date, the aggregate amount of any
Unpaid Interest
Shortfalls incurred in respect of Loan Group I for any
Distribution Date shall
be allocated first, to Uncertificated Accrued Interest payable
to REMIC I
Regular Interest AA and REMIC I Regular Interest ZZ up to an
aggregate amount
equal to the REMIC I Interest Loss Allocation Amount, 98% and
2%, respectively,
and thereafter among REMIC I Regular Interest I-A, REMIC I
Regular Interest
I-M-1, REMIC I Regular Interest I-M-2, REMIC I Regular Interest
I-M-3, REMIC I
Regular Interest I-B-1, REMIC I Regular Interest I-B-2, REMIC I
Regular Interest
I-B-3 and REMIC I Regular Interest ZZ, pro rata, in each case
based on, and to
the extent of, one month's interest at the then applicable
respective
Uncertificated REMIC I Pass-Through Rates on the respective
Uncertificated
Principal Balances of each such REMIC I Regular Interest.
For purposes of calculating the amount of the Monthly
Interest
Distributable Amount for the Class II-A-1, Class II-A-2, Class
II-M-1, Class
II-M-2, Class II-M-3, Class II-B-1, Class II-B-2, Class II-B-3
and Class II-C
Certificates for any Distribution Date, (1) the aggregate amount
of any Unpaid
Interest Shortfalls in respect of Loan Group II for any
Distribution Date shall
be allocated first, in reduction of amounts otherwise
distributable to the Class
II-C Certificates, Class II-R Certificates, and thereafter,
among the Group II
Offered Certificates in proportion to the amount of the Monthly
Interest
Distributable Amount that would have been allocated to such
Certificates in the
absence of such Unpaid Interest Shortfalls, and (2) the interest
portion of
Realized Losses for Loan Group II will be allocated first, to
the Class II-C
Certificates based on, and to the extent of, one month's
interest at the then
applicable Pass-Through Rate on the Certificate Notional Amount
thereof, second
to the Class II-B-3 Certificates, third to the Class II-B-2
Certificates, fourth
to the Class II-B-1 Certificates, fifth to the Class II-M-3
Certificates, sixth
to the Class II-M-2 Certificates, seventh to the Class II-M-1
Certificates, and
following the Cross-Over Date, to the Group II Senior
Certificates, on a pro
rata basis.
For purposes of calculating the amount of Uncertificated
Accrued
Interest for the REMIC II Regular Interests (other than REMIC II
Regular
Interest II-P) for any Distribution Date, the aggregate amount
of any Unpaid
Interest Shortfalls incurred in respect of Loan Group II for
any
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<PAGE>
Distribution Date shall be allocated first, to Uncertificated
Accrued Interest
payable to REMIC II Regular Interest AA and REMIC II Regular
Interest ZZ up to
an aggregate amount equal to the REMIC II Interest Loss
Allocation Amount, 98%
and 2%, respectively, and thereafter among REMIC II Regular
Interest II-A-1,
REMIC II Regular Interest II-A-2, REMIC II Regular Interest
II-M-1, REMIC II
Regular Interest II-M-2, REMIC II Regular Interest II-M-3, REMIC
II Regular
Interest II-B-1, REMIC II Regular Interest II-B-2, REMIC II
Regular Interest
II-B-3 and REMIC II Regular Interest ZZ, pro rata, in each case
based on, and to
the extent of, one month's interest at the then applicable
respective
Uncertificated REMIC II Pass-Through Rates on the respective
Uncertificated
Principal Balances of each such REMIC II Regular Interest.
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Article II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 CONVEYANCE OF TRUST FUND. Pursuant to the Mortgage
Loan
Purchase Agreement, the Seller sold, transferred, assigned, set
over and
otherwise conveyed to the Depositor, without recourse, all the
right, title and
interest of the Seller in and to the assets in the Trust
Fund.
The Seller has entered into this Agreement in consideration for
the
purchase of the Mortgage Loans by the Depositor pursuant to the
Mortgage Loan
Purchase Agreement and has agreed to take the actions specified
herein.
The Depositor, concurrently with the execution and delivery
hereof,
hereby sells, transfers, assigns, sets over and otherwise
conveys to the Trustee
for the use and benefit of the Certificateholders, without
recourse, all the
right, title and interest of the Depositor in and to the Trust
Fund.
In connection with such sale, the Depositor has delivered to,
and
deposited with, the Trustee or the Custodian, as its agent, the
following
documents or instruments with respect to each Mortgage Loan so
assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed
without recourse
(A) to the order of "U.S. Bank National Association, as Trustee
for
certificateholders of Bear Stearns Asset Backed Securities I
LLC, Asset Backed
Certificates, Series 2005-AC2," or (B) in the case of a loan
registered on the
MERS system, in blank, and in each case showing to the extent
available to the
Seller an unbroken chain of endorsements from the original payee
thereof to the
Person endorsing it to the Trustee, (ii) the original Mortgage
and, if the
related Mortgage Loan is a MOM Loan, noting the presence of the
MIN and language
indicating that such Mortgage Loan is a MOM Loan, which shall
have been recorded
(or if the original is not available, a copy), with evidence of
such recording
indicated thereon (or if clause (x) in the proviso below
applies, shall be in
recordable form), (iii) unless the Mortgage Loan is a MOM Loan,
the assignment
(either an original or a copy, which may be in the form of a
blanket assignment
if permitted in the jurisdiction in which the Mortgaged Property
is located) to
the Trustee of the Mortgage with respect to each Mortgage Loan
in the name of
"U.S. Bank National Association, as Trustee for
certificateholders of Bear
Stearns Asset Backed Securities I LLC, Asset Backed
Certificates, Series
2005-AC2," which shall have been recorded (or if clause (x) in
the proviso below
applies, shall be in recordable form) (iv) an original or a copy
of all
intervening assignments of the Mortgage, if any, to the extent
available to the
Seller, with evidence of recording thereon, (v) the original
policy of title
insurance or mortgagee's certificate of title insurance or
commitment or binder
for title insurance, if available, or a copy thereof, or, in the
event that such
original title insurance policy is unavailable, a photocopy
thereof, or in lieu
thereof, a current lien search on the related Mortgaged Property
and (vi)
originals or copies of all available assumption, modification or
substitution
agreements, if any; provided, however, that in lieu of the
foregoing, the Seller
may deliver the following documents, under the circumstances set
forth below:
(x) if any Mortgage, assignment thereof to the Trustee or
intervening
assignments thereof have been delivered or are being delivered
to recording
offices for recording and have not been returned in time to
permit their
delivery as specified above, the Depositor may
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<PAGE>
deliver a true copy thereof with a certification by the Seller
or the title
company issuing the commitment for title insurance, on the face
of such copy,
substantially as follows: "Certified to be a true and correct
copy of the
original, which has been transmitted for recording"; and (y) in
lieu of the
Mortgage Notes relating to the Mortgage Loans identified in the
list set forth
in Exhibit I, the Depositor may deliver a lost note affidavit
and indemnity and
a copy of the original note, if available; and provided,
further, however, that
in the case of Mortgage Loans which have been prepaid in full
after the Cut-off
Date and prior to the Closing Date, the Depositor, in lieu of
delivering the
above documents, may deliver to the Trustee and its Custodian a
certification of
a Servicing Officer to such effect and in such case shall
deposit all amounts
paid in respect of such Mortgage Loans, in the Master Servicer
Collection
Account or in the Distribution Account on the Closing Date. In
the case of the
documents referred to in clause (x) above, the Depositor shall
deliver such
documents to the Trustee or its Custodian promptly after they
are received. The
Seller shall cause, at its expense, the Mortgage and intervening
assignments, if
any, and to the extent required in accordance with the
foregoing, the assignment
of the Mortgage to the Trustee to be submitted for recording
promptly after the
Closing Date provided that the Seller need not cause to be
recorded any
assignment (a) in any jurisdiction under the laws of which, as
evidenced by an
Opinion of Counsel addressed to the Trustee delivered by the
Seller to the
Trustee and the Rating Agencies, the recordation of such
assignment is not
necessary to protect the Trustee's interest in the related
Mortgage Loan or (b)
if MERS is identified on the Mortgage or on a properly recorded
assignment of
the Mortgage as mortgagee of record solely as nominee for Seller
and its
successors and assigns. In the event that the Seller, the
Depositor or the
Master Servicer gives written notice to the Trustee that a court
has
recharacterized the sale of the Mortgage Loans as a financing,
the Seller shall
submit or cause to be submitted for recording as specified above
or, should the
Seller fail to perform such obligations, the Master Servicer
shall cause each
such previously unrecorded assignment to be submitted for
recording as specified
above at the expense of the Trust. In the event a Mortgage File
is released to
the Company or the Servicer as a result of such Person having
completed a
Request for Release, the Custodian shall, if not so completed,
complete the
assignment of the related Mortgage in the manner specified in
clause (iii)
above.
In connection with the assignment of any Mortgage Loan
registered on
the MERS(R) System, the Seller further agrees that it will
cause, at the
Seller's own expense, within 30 days after the Closing Date, the
MERS(R) System
to indicate that such Mortgage Loans have been assigned by the
Seller to the
Depositor and by the Depositor to the Trustee in accordance with
this Agreement
for the benefit of the Certificateholders by including (or
deleting, in the case
of Mortgage Loans which are repurchased in accordance with this
Agreement) in
such computer files (a) the code in the field which identifies
the specific
Trustee and (b) the code in the field "Pool Field" which
identifies the series
of the Certificates issued in connection with such Mortgage
Loans. The Seller
further agrees that it will not, and will not permit the
Company, any Servicer
or the Master Servicer to, and the Master Servicer agrees that
it will not,
alter the codes referenced in this paragraph with respect to any
Mortgage Loan
during the term of this Agreement unless and until such Mortgage
Loan is
repurchased in accordance with the terms of this Agreement or
the Mortgage Loan
Purchase Agreement.
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Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS.
(a) Based on the Initial Certification received by it
from the Custodian, the Trustee acknowledges receipt of, subject
to the further
review and exceptions reported by the Custodian pursuant to the
procedures
described below, the documents (or certified copies thereof)
delivered to the
Trustee or the Custodian on its behalf pursuant to Section 2.01
and declares
that it holds and will continue to hold directly or through a
custodian those
documents and any amendments, replacements or supplements
thereto and all other
assets of the Trust Fund delivered to it in trust for the use
and benefit of all
present and future Holders of the Certificates. On the Closing
Date, the Trustee
or the Custodian on its behalf will deliver an Initial
Certification confirming
whether or not it has received the Mortgage File for each
Mortgage Loan, but
without review of such Mortgage File, except to the extent
necessary to confirm
whether such Mortgage File contains the original Mortgage Note
or a lost note
affidavit and indemnity in lieu thereof. No later than 90 days
after the Closing
Date, the Trustee or the Custodian on its behalf shall, for the
benefit of the
Certificateholders, review each Mortgage File delivered to it
and execute and
deliver to the Seller and, if reviewed by the Custodian, the
Trustee, an Interim
Certification. In conducting such review, the Trustee or the
Custodian on its
behalf will ascertain whether all required documents have been
executed and
received and whether those documents relate, determined on the
basis of the
Mortgagor name, original principal balance and loan number, to
the Mortgage
Loans identified in Exhibit B to this Agreement, as supplemented
(provided,
however, that with respect to those documents described in
subclauses (iv) and
(vi) of Section 2.01, such obligations shall extend only to
documents actually
delivered pursuant to such subclauses). In performing any such
review, the
Trustee and the Custodian may conclusively rely on the purported
due execution
and genuineness of any such document and on the purported
genuineness of any
signature thereon. If the Trustee or the Custodian on its behalf
finds any
document constituting part of the Mortgage File not to have been
executed or
received, or to be unrelated to the Mortgage Loans identified in
Exhibit B or to
appear to be defective on its face, the Trustee or the Custodian
on its behalf
shall include such information in the exception report. The
Seller shall correct
or cure any such defect or, if prior to the end of the second
anniversary of the
Closing Date, the Seller may substitute for the related Mortgage
Loan a
Replacement Mortgage Loan, which substitution shall be
accomplished in the
manner and subject to the conditions set forth in Section 2.03
or shall deliver
to the Trustee an Opinion of Counsel addressed to the Trustee to
the effect that
such defect does not materially or adversely affect the
interests of the
Certificateholders in such Mortgage Loan within 60 days from the
date of notice
from the Trustee of the defect and if the Seller fails to
correct or cure the
defect or deliver such opinion within such period, the Seller
will, subject to
Section 2.03, within 90 days from the notification of the
Trustee purchase such
Mortgage Loan at the Purchase Price; provided, however, that if
such defect
relates solely to the inability of the Seller to deliver the
Mortgage,
assignment thereof to the Trustee, or intervening assignments
thereof with
evidence of recording thereon because such documents have been
submitted for
recording and have not been returned by the applicable
jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan if the
Seller delivers such
documents promptly upon receipt, but in no event later than 360
days after the
Closing Date.
(b) No later than 180 days after the Closing Date, the
Trustee or the Custodian on its behalf will review, for the
benefit of the
Certificateholders, the Mortgage Files and will execute and
deliver or cause to
be executed and delivered to the Seller and, if reviewed by
the
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<PAGE>
Custodian, the Trustee, a Final Certification. In conducting
such review, the
Trustee or the Custodian on its behalf will ascertain whether
each document
required to be recorded has been returned from the recording
office with
evidence of recording thereon and the Trustee or the Custodian
on its behalf has
received either an original or a copy thereof, as required in
Section 2.01
(provided, however, that with respect to those documents
described in subclauses
(iv) and (vi) of Section 2.01, such obligations shall extend
only to documents
actually delivered pursuant to such subclauses). If the Trustee
or the Custodian
on its behalf finds any document with respect to a Mortgage Loan
has not been
received, or to be unrelated, determined on the basis of the
Mortgagor name,
original principal balance and loan number, to the Mortgage
Loans identified in
Exhibit B or to appear defective on its face, the Trustee or the
Custodian on
its behalf shall note such defect in the exception report
attached to the Final
Certification and shall promptly notify the Seller. The Seller
shall correct or
cure any such defect or, if prior to the end of the second
anniversary of the
Closing Date, the Seller may substitute for the related Mortgage
Loan a
Replacement Mortgage Loan, which substitution shall be
accomplished in the
manner and subject to the conditions set forth in Section 2.03
or shall deliver
to the Trustee an Opinion of Counsel addressed to the Trustee to
the effect that
such defect does not materially or adversely affect the
interests of
Certificateholders in such Mortgage Loan within 60 days from the
date of notice
from the Trustee of the defect and if the Seller is unable
within such period to
correct or cure such defect, or to substitute the related
Mortgage Loan with a
Replacement Mortgage Loan or to deliver such opinion, the Seller
shall, subject
to Section 2.03, within 90 days from the notification of the
Trustee, purchase
such Mortgage Loan at the Purchase Price; provided, however,
that if such defect
relates solely to the inability of the Seller to deliver the
Mortgage,
assignment thereof to the Trustee or intervening assignments
thereof with
evidence of recording thereon, because such documents have not
been returned by
the applicable jurisdiction, the Seller shall not be required to
purchase such
Mortgage Loan, if the Seller delivers such documents promptly
upon receipt, but
in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by the
Seller in accordance with subsections 2.02(a) or (b) above or
Section 2.03, the
Seller shall remit the applicable Purchase Price to the Master
Servicer for
deposit in the Master Servicer Collection Account and shall
provide written
notice to the Trustee detailing the components of the Purchase
Price, signed by
a Servicing Officer. Upon deposit of the Purchase Price in the
Master Servicer
Collection Account and upon receipt of a Request for Release
with respect to
such Mortgage Loan, the Trustee or the Custodian will release to
the Seller the
related Mortgage File and the Trustee shall execute and deliver
all instruments
of transfer or assignment, without recourse, representation or
warranty
furnished to it by the Seller, as are necessary to vest in the
Seller title to
and rights under the Mortgage Loan. Such purchase shall be
deemed to have
occurred on the date on which the deposit into the Master
Servicer Collection
Account was made. The Trustee shall promptly notify the Rating
Agencies of such
repurchase. The obligation of the Seller to cure, repurchase or
substitute for
any Mortgage Loan as to which a defect in a constituent document
exists shall be
the sole remedies respecting such defect available to the
Certificateholders or
to the Trustee on their behalf.
(d) The Seller shall deliver to the Trustee or the
Custodian on its behalf, and Trustee agrees to accept the
Mortgage Note and
other documents constituting the Mortgage File with respect to
any Replacement
Mortgage Loan, which the Trustee or the Custodian will review as
provided in
subsections 2.02(a) and 2.02(b), provided, that the Closing Date
referred to
therein
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<PAGE>
shall instead be the date of delivery of the Mortgage File with
respect to each
Replacement Mortgage Loan.
Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY,
THE MASTER SERVICER AND THE SELLER.
(a) The Company hereby represents and warrants to the
Master Servicer, the Depositor, the Securities Administrator and
the Trustee as
follows, as of the Closing Date:
(i) It is duly organized and is validly existing and in
good standing under the laws of the State of Delaware and is
duly
authorized and qualified to transact any and all business
contemplated
by this Agreement to be conducted by it in any state in which
a
Mortgaged Property related to an EMC Mortgage Loan 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 EMC Mortgage Loan, to service the EMC
Mortgage
Loans in accordance with the terms of this Agreement and to
perform any
of its other obligations under this Agreement in accordance with
the
terms hereof.
(ii) It has the full corporate power and authority to
service each EMC Mortgage Loan, and to execute, deliver and
perform,
and to enter into and consummate the transactions contemplated
by this
Agreement and has duly authorized by all necessary corporate
action on
its part the execution, delivery and performance of this
Agreement; and
this Agreement, assuming the due authorization, execution and
delivery
hereof by the other parties hereto, constitutes its legal, valid
and
binding obligation, enforceable against it in accordance with
its
terms, except that (a) the enforceability hereof may be limited
by
bankruptcy, insolvency, moratorium, receivership and other
similar laws
relating to creditors' rights generally and (b) the remedy of
specific
performance and injunctive and other forms of equitable relief
may be
subject to equitable defenses and to the discretion of the court
before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it,
the servicing of the EMC Mortgage Loans by it under this
Agreement, the
consummation of any other of the transactions contemplated by
this
Agreement, and the fulfillment of or compliance with the terms
hereof
are in its ordinary course of business and will not (A) result
in a
material breach of any term or provision of its charter or
by-laws or
(B) materially conflict with, result in a material breach,
violation or
acceleration of, or result in a material default under, the
terms of
any other material agreement or instrument to which it is a
party or by
which it may be bound, or (C) constitute a material violation of
any
statute, order or regulation applicable to it of any court,
regulatory
body, administrative agency or governmental body having
jurisdiction
over it; and it is not in breach or violation of any material
indenture
or other material agreement or instrument, or in violation of
any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction
over it
which breach or violation may materially impair its ability to
perform
or meet any of its obligations under this Agreement.
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<PAGE>
(iv) It is an approved servicer of conventional mortgage
loans for Fannie Mae or Freddie Mac and is a mortgagee approved
by the
Secretary of Housing and Urban Development pursuant to sections
203 and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of its
knowledge, threatened, against it that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement or
its ability to service the EMC Mortgage Loans or to perform any
of its
other obligations under this Agreement in accordance with the
terms
hereof.
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for its
execution,
delivery and performance of, or compliance with, this Agreement
or the
consummation of the transactions contemplated hereby, or if any
such
consent, approval, authorization or order is required, it has
obtained
the same.
(b) Wells Fargo Bank, National Association, in its
capacity as Master Servicer and Securities Administrator hereby
represents and
warrants to the Seller, the Depositor and the Trustee as
follows, as of the
Closing Date:
(i) It is a national banking association duly formed,
validly existing and in good standing under the laws of the
United
States of America and is duly authorized and qualified to
transact any
and all business contemplated by this Agreement to be conducted
by the
Master Servicer and the Securities Administrator in any state in
which
a Mortgaged Property is located or is otherwise not required
under
applicable law to effect such qualification and, in any event,
is in
compliance with the doing business laws of any such state, to
the
extent necessary to ensure its ability to enforce each Mortgage
Loan,
to service the Mortgage Loans in accordance with the terms of
this
Agreement and to perform any of its other obligations under
this
Agreement in accordance with the terms hereof;
(ii) It has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate
the
transactions contemplated by this Agreement and has duly
authorized by
all necessary corporate action on its part the execution,
delivery and
performance of this Agreement; and this Agreement, assuming the
due
authorization, execution and delivery hereof by the other
parties
hereto, constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except that
(a)
the enforceability hereof may be limited by bankruptcy,
insolvency,
moratorium, receivership and other similar laws relating to
creditors'
rights generally and (b) the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before
which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it,
the consummation of any other of the transactions contemplated
by this
Agreement, and the fulfillment of or compliance with the terms
hereof
are in its ordinary course of business and will not (A) result
in a
material breach of any term or provision of its charter or
by-laws or
(B) materially conflict with, result in a material breach,
violation or
acceleration of, or result
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<PAGE>
in a material default under, the terms of any other material
agreement
or instrument to which it is a party or by which it may be
bound, or
(C) constitute a material violation of any statute, order or
regulation
applicable to it of any court, regulatory body, administrative
agency
or governmental body having jurisdiction over it; and it is not
in
breach or violation of any material indenture or other
material
agreement or instrument, or in violation of any statute, order
or
regulation of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over it which breach or
violation
may materially impair its ability to perform or meet any of
its
obligations under this Agreement.
(iv) No litigation is pending or, to the best of its
knowledge, threatened, against it that would materially and
adversely
affect the execution, delivery or enforceability of this
Agreement or
its ability to perform any of its other obligations under
this
Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any
court or governmental agency or body is required for its
execution,
delivery and performance of, or compliance with, this Agreement
or the
consummation of the transactions contemplated hereby, or if any
such
consent, approval, authorization or order is required, it has
obtained
the same.
(c) The Seller hereby represents and warrants to the
Depositor, the Securities Administrator, the Master Servicer and
the Trustee as
follows, as of the Closing Date:
(i) The Seller is duly organized as a Delaware
corporation and is validly existing and in good standing under
the laws
of the State of Delaware and is duly authorized and qualified
to
transact any and all business contemplated by this Agreement to
be
conducted by the Seller in any state in which a Mortgaged
Property is
located or is otherwise not required under applicable law to
effect
such qualification and, in any event, is in compliance with the
doing
business laws of any such state, to the extent necessary to
ensure its
ability to enforce each Mortgage Loan, to sell the Mortgage
Loans in
accordance with the terms of this Agreement and to perform any
of its
other obligations under this Agreement in accordance with the
terms
hereof.
(ii) The Seller has the full corporate power and authority
to sell each Mortgage Loan, and to execute, deliver and perform,
and to
enter into and consummate the transactions contemplated by
this
Agreement and has duly authorized by all necessary corporate
action on
the part of the Seller the execution, delivery and performance
of this
Agreement; and this Agreement, assuming the due
authorization,
execution and delivery hereof by the other parties hereto,
constitutes
a legal, valid and binding obligation of the Seller,
enforceable
against the Seller in accordance with its terms, except that (a)
the
enforceability hereof may be limited by bankruptcy,
insolvency,
moratorium, receivership and other similar laws relating to
creditors'
rights generally and (b) the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before
which any
proceeding therefor may be brought.
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<PAGE>
(iii) The execution and delivery of this Agreement by the
Seller, the sale of the Mortgage Loans by the Seller under the
Mortgage
Loan Purchase Agreement, the consummation of any other of
the
transactions contemplated by this Agreement, and the fulfillment
of or
compliance with the terms hereof and thereof are in the ordinary
course
of business of the Seller and will not (A) result in a material
breach
of any term or provision of the charter or by-laws of the Seller
or (B)
materially conflict with, result in a material breach, violation
or
acceleration of, or result in a material default under, the
terms of
any other material agreement or instrument to which the Seller
is a
party or by which it may be bound, or (C) constitute a
material
violation of any statute, order or regulation applicable to the
Seller
of any court, regulatory body, administrative agency or
governmental
body having jurisdiction over the Seller; and the Seller is not
in
breach or violation of any material indenture or other
material
agreement or instrument, or in violation of any statute, order
or
regulation of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over it which breach or
violation
may materially impair the Seller's ability to perform or meet
any of
its obligations under this Agreement.
(iv) The Seller is an approved seller of conventional
mortgage loans for Fannie Mae or Freddie Mac and is a
mortgagee
approved by the Secretary of Housing and Urban Development
pursuant to
sections 203 and 211 of the National Housing Act.
(v) No litigation is pending or, to the best of the
Seller's knowledge, threatened, against the Seller that
would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Seller to
sell
the Mortgage Loans or to perform any of its other obligations
under
this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution,
delivery and performance by the Seller of, or compliance by the
Seller
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is required, the Seller has obtained the same.
(vii) As of the Closing Date, the representations and
warranties concerning the Mortgage Loans set forth in Section 7
of the
Mortgage Loan Purchase Agreement are true and correct in all
material
respects.
(d) Upon discovery by any of the parties hereto of a
breach of a representation or warranty set forth in Section 7 of
the Mortgage
Loan Purchase Agreement that materially and adversely affects
the interests of
the Certificateholders in any Mortgage Loan, the party
discovering such breach
shall give prompt written notice thereof to the other parties.
The Seller hereby
covenants with respect to the representations and warranties set
forth in
Section 7 of the Mortgage Loan Purchase Agreement, that within
90 days of the
discovery of a breach of any representation or warranty set
forth therein that
materially and adversely affects the interests of the
Certificateholders in any
Mortgage Loan, it shall cure such breach in all material
respects and, if such
breach is not so cured, (i) if such 90-day period expires prior
to the second
anniversary of the Closing Date, remove such Mortgage Loan (a
"Deleted Mortgage
Loan") from
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<PAGE>
the Trust Fund and substitute in its place a Replacement
Mortgage Loan, in the
manner and subject to the conditions set forth in this Section;
or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the
Trustee at the
Purchase Price in the manner set forth below; provided that any
such
substitution pursuant to (i) above or repurchase pursuant to
(ii) above shall
not be effected prior to the delivery to the Trustee of an
Opinion of Counsel if
required by Section 2.05 hereof and any such substitution
pursuant to (i) above
shall not be effected prior to the additional delivery to the
Trustee of a
Request for Release. The Seller shall promptly reimburse the
Master Servicer and
the Trustee for any expenses reasonably incurred by the Master
Servicer or the
Trustee in respect of enforcing the remedies for such breach. To
enable the
Securities Administrator to amend the Mortgage Loan Schedule,
the Seller shall,
unless it cures such breach in a timely fashion pursuant to this
Section 2.03,
promptly notify the Securities Administrator whether it intends
either to
repurchase, or to substitute for, the Mortgage Loan affected by
such breach.
With respect to the representations and warranties in Section 7
of the Mortgage
Loan Purchase Agreement that are made to the best of the
Seller's knowledge, if
it is discovered by any of the Depositor, the Master Servicer,
the Seller, the
Securities Administrator or the Trustee that the substance of
such
representation and warranty is inaccurate and such inaccuracy
materially and
adversely affects the value of the related Mortgage Loan,
notwithstanding the
Seller's lack of knowledge with respect to the substance of such
representation
or warranty, the Seller shall nevertheless be required to cure,
substitute for
or repurchase the affected Mortgage Loan in accordance with the
foregoing.
With respect to any Replacement Mortgage Loan or Loans, the
Seller
shall deliver to the Trustee for the benefit of the
Certificateholders such
documents and agreements as are required by Section 2.01. No
substitution will
be made in any calendar month after the Determination Date for
such month.
Scheduled Payments due with respect to Replacement Mortgage
Loans in the Due
Period related to the Distribution Date on which such proceeds
are to be
distributed shall not be part of the Trust Fund and will be
retained by the
Seller. For the month of substitution, distributions to
Certificateholders will
include the Scheduled Payment due on any Deleted Mortgage Loan
for the related
Due Period and thereafter the Seller shall be entitled to retain
all amounts
received in respect of such Deleted Mortgage Loan. The
Securities Administrator
shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders
to reflect the removal of such Deleted Mortgage Loan and the
substitution of the
Replacement Mortgage Loan or Loans and the Securities
Administrator shall
deliver the amended Mortgage Loan Schedule to the Trustee and
the Custodian.
Upon such substitution, the Replacement Mortgage Loan or Loans
shall be subject
to the terms of this Agreement in all respects, and the Seller
shall be deemed
to have made with respect to such Replacement Mortgage Loan or
Loans, as of the
date of substitution, the representations and warranties set
forth in Section 7
of the Mortgage Loan Purchase Agreement with respect to such
Mortgage Loan. Upon
any such substitution and the deposit into the Master Servicer
Collection
Account of the amount required to be deposited therein in
connection with such
substitution as described in the following paragraph and receipt
by the Trustee
of a Request for Release for such Mortgage Loan, the Trustee or
the Custodian
shall release to the Seller the Mortgage File relating to such
Deleted Mortgage
Loan and held for the benefit of the Certificateholders and the
Trustee shall
execute and deliver at the Seller's direction such instruments
of transfer or
assignment as have been prepared by the Seller, in each case
without recourse,
representation or warranty as shall be necessary to vest in the
Seller, or its
respective designee, title to the Trustee's interest in any
Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.
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<PAGE>
For any month in which the Seller substitutes one or more
Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer
will determine
the amount (if any) by which the aggregate principal balance of
all the
Replacement Mortgage Loans as of the date of substitution is
less than the
Stated Principal Balance (after application of the principal
portion of the
Scheduled Payment due in the month of substitution) of such
Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies,
described in the
preceding sentence for any Distribution Date (such amount, the
"Substitution
Adjustment Amount") shall be deposited into the Master Servicer
Collection
Account, by the Seller delivering such Replacement Mortgage Loan
on the
Determination Date for the Distribution Date relating to the
Prepayment Period
during which the related Mortgage Loan became required to be
purchased or
replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage
Loan,
the Purchase Price therefor shall be deposited into the Master
Servicer
Collection Account maintained by the Master Servicer, on the
Determination Date
for the Distribution Date in the month following the month
during which the
Seller became obligated to repurchase or replace such Mortgage
Loan and upon
such deposit of the Purchase Price, the delivery of an Opinion
of Counsel if
required by Section 2.05 and the receipt of a Request for
Release, the Trustee
or the Custodian shall release the related Mortgage File held
for the benefit of
the Certificateholders to the Seller, and the Trustee shall
execute and deliver
at such Person's direction the related instruments of transfer
or assignment
prepared by the Seller, in each case without recourse,
representation or
warranty as shall be necessary to transfer title from the
Trustee for the
benefit of the Certificateholders and transfer the Trustee's
interest to the
Seller to any Mortgage Loan purchased pursuant to this Section
2.03. It is
understood and agreed that the obligation under this Agreement
of the Seller to
cure, repurchase or replace any Mortgage Loan as to which a
breach has occurred
and is continuing shall constitute the sole remedies against the
Seller
respecting such breach available to Certificateholders, the
Depositor or the
Trustee.
(e) The representations and warranties set forth in
Section 2.03 hereof shall survive delivery of the respective
Mortgage Loans and
Mortgage Files to the Trustee or the Custodian for the benefit
of the
Certificateholders.
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The
Depositor hereby represents and warrants to the Master Servicer,
the Securities
Administrator and the Trustee as follows, as of the date hereof
and as of the
Closing Date:
(i) The Depositor is duly organized and is validly
existing as limited liability company in good standing under the
laws
of the State of Delaware and has full power and authority
necessary to
own or hold its properties and to conduct its business as now
conducted
by it and to enter into and perform its obligations under
this
Agreement.
(ii) The Depositor has the full power and authority to
execute, deliver and perform, and to enter into and consummate
the
transactions contemplated by, this Agreement and has duly
authorized,
by all necessary action on its part, the execution, delivery
and
performance of this Agreement; and this Agreement, assuming the
due
authorization, execution and delivery hereof by the other
parties
hereto, constitutes a legal, valid and binding obligation of
the
Depositor, enforceable against the Depositor in accordance with
its
terms, subject, as to enforceability, to (i) bankruptcy,
insolvency,
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<PAGE>
reorganization, moratorium and other similar laws affecting
creditors'
rights generally and (ii) general principles of equity,
regardless of
whether enforcement is sought in a proceeding in equity or at
law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by
this
Agreement, and the fulfillment of or compliance with the terms
hereof
are in the ordinary course of business of the Depositor and will
not
(A) result in a material breach of any term or provision of
the
organizational documents of the Depositor or (B) materially
conflict
with, result in a material breach, violation or acceleration of,
or
result in a material default under, the terms of any other
material
agreement or instrument to which the Depositor is a party or by
which
it may be bound or (C) constitute a material violation of any
statute,
order or regulation applicable to the Depositor of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over the Depositor; and the Depositor is not in
breach or
violation of any material indenture or other material agreement
or
instrument, or in violation of any statute, order or regulation
of any
court, regulatory body, administrative agency or governmental
body
having jurisdiction over it which breach or violation may
materially
impair the Depositor's ability to perform or meet any of its
obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that
would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor
to
perform its obligations under this Agreement in accordance with
the
terms hereof.
(v) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution,
delivery and performance by the Depositor of, or compliance by
the
Depositor with, this Agreement or the consummation of the
transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as
of the
Closing Date, following the transfer of the Mortgage Loans to it
by the Seller,
the Depositor had good title to the Mortgage Loans and the
related Mortgage
Notes were subject to no offsets, claims, defenses or
counterclaims.
It is understood and agreed that the representations and
warranties set
forth in the immediately preceding paragraph shall survive
delivery of the
Mortgage Files to the Trustee or the Custodian for the benefit
of the
Certificateholders. Upon discovery by the Depositor or the
Trustee of a breach
of such representations and warranties, the party discovering
such breach shall
give prompt written notice to the others and to each Rating
Agency.
Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION
WITH
SUBSTITUTIONS AND REPURCHASES.
(a) Notwithstanding any contrary provision of this
Agreement, with respect to any Mortgage Loan that is not in
default or as to
which default is not imminent, no repurchase or
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substitution pursuant to Sections 2.02 or 2.03 shall be made
unless the Seller
delivers to the Trustee an Opinion of Counsel, addressed to the
Trustee, to the
effect that such repurchase or substitution would not (i) result
in the
imposition of the tax on "prohibited transactions" of REMIC I,
REMIC II or REMIC
III or contributions after the Closing Date, as defined in
Sections 860F(a)(2)
and 860G(d) of the Code, respectively, or (ii) cause any of
REMIC I, REMIC II or
REMIC III to fail to qualify as a REMIC at any time that any
Certificates are
outstanding. Any Mortgage Loan as to which repurchase or
substitution was
delayed pursuant to this paragraph shall be repurchased or the
substitution
therefor shall occur (subject to compliance with Sections 2.02
or 2.03) upon the
earlier of (a) the occurrence of a default or imminent default
with respect to
such Mortgage Loan and (b) receipt by the Trustee of an Opinion
of Counsel
addressed to the Trustee to the effect that such repurchase or
substitution, as
applicable, will not result in the events described in clause
(i) or clause (ii)
of the preceding sentence.
(b) Upon discovery by the Depositor, the Seller or the
Master Servicer 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 promptly (and in any event within 5
Business Days of
discovery) give written notice thereof to the other parties and
the Trustee. In
connection therewith, the Trustee shall require the Seller, at
the Seller's
option, to either (i) substitute, if the conditions in Section
2.03(c) with
respect to substitutions are satisfied, a Replacement Mortgage
Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage
Loan within 90
days of such discovery in the same manner as it would a Mortgage
Loan for a
breach of representation or warranty contained in Section 2.03.
The Trustee
shall reconvey to the Seller the Mortgage Loan to be released
pursuant hereto
(and the Custodian shall deliver the related Mortgage File) 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 contained in Section
2.03.
Section 2.06 COUNTERSIGNATURE AND DELIVERY OF CERTIFICATES.
(a) The Trustee acknowledges the sale, transfer and
assignment to it of the Trust Fund and, concurrently with such
transfer and
assignment, the Securities Administrator has executed,
countersigned and
delivered, to or upon the order of the Depositor, the
Certificates in authorized
denominations evidencing the entire ownership of the Trust Fund.
The Trustee
agrees to hold the Trust Fund and exercise the rights referred
to above for the
benefit of all present and future Holders of the Certificates
and to perform the
duties set forth in this Agreement in accordance with its
terms.
(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, REMIC II
Regular Interests
and the other assets of REMIC III for the benefit of the Holders
of the REMIC
III Certificates. The Trustee acknowledges receipt of the REMIC
I Regular
Interests, REMIC II Regular Interests (all of which are
uncertificated) and the
other assets of REMIC III and declares that it holds and will
hold the same in
trust for the exclusive use and benefit of the Holders of the
REMIC III
Certificates.
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Article III
ADMINISTRATION AND SERVICING OF EMC MORTGAGE LOANS BY
COMPANY
Section 3.01 THE COMPANY. The Company shall service and
administer the
EMC Mortgage Loans in accordance with customary and usual
standards of practice
of prudent mortgage loan servicers in the respective states in
which the related
Mortgaged Properties are located. In connection with such
servicing and
administration, the Company shall have full power and authority,
acting alone
and/or through subservicers as provided in Section 3.03, to do
or cause to be
done any and all things that it may deem necessary or desirable
in connection
with such servicing and administration, including but not
limited to, the power
and authority, subject to the terms hereof (i) to execute and
deliver, on behalf
of the Certificateholders and the Trustee, customary consents or
waivers and
other instruments and documents, (ii) to consent to transfers of
any related
Mortgaged Property and assumptions of the Mortgage Notes and
related Mortgages
(but only in the manner provided herein), (iii) to collect any
Insurance
Proceeds and other Liquidation Proceeds, and (iv) subject to
Section 3.09, to
effectuate foreclosure or other conversion of the ownership of
the Mortgaged
Property securing any EMC Mortgage Loan; provided that the
Company shall take no
action that is inconsistent with or prejudices the interests of
the Trust Fund
or the Certificateholders in any EMC Mortgage Loan or the rights
and interests
of the Depositor and the Trustee under this Agreement.
Without limiting the generality of the foregoing, the Company,
in its
own name or in the name of the Trust, the Depositor or the
Trustee, is hereby
authorized and empowered by the Trust, the Depositor and the
Trustee, when the
Company believes it appropriate in its reasonable judgment, to
execute and
deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any
of them, 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 EMC Mortgage Loans, and with respect to the related
Mortgaged Properties
held for the benefit of the Certificateholders. The Company
shall prepare and
deliver to the Depositor and/or the Trustee such documents
requiring execution
and delivery by any or all of them as are necessary or
appropriate to enable the
Company to service and administer the EMC Mortgage Loans. Upon
receipt of such
documents, the Depositor and/or the Trustee shall execute such
documents and
deliver them to the Company.
In accordance with the standards of the first paragraph of this
Section
3.01, the Company shall advance or cause to be advanced funds as
necessary for
the purpose of effecting the payment of taxes and assessments on
the Mortgaged
Properties relating to the EMC Mortgage Loans, which advances
shall be
reimbursable in the first instance from related collections from
the Mortgagors
pursuant to Section 5.04, and further as provided in Section
5.02. All costs
incurred by the Company, if any, in effecting the timely
payments of taxes and
assessments on the Mortgaged Properties relating to the EMC
Mortgage Loans and
related insurance premiums shall not, for the purpose of
calculating monthly
distributions to the Certificateholders, be added to the Stated
Principal
Balance under the related EMC Mortgage Loans, notwithstanding
that the terms of
such Mortgage Loans so permit.
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Section 3.02 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(a) Except as otherwise provided in this Section 3.02,
when any property subject to a Mortgage has been or is about to
be conveyed by
the Mortgagor, the Company shall to the extent that it has
knowledge of such
conveyance, enforce any due-on-sale clause contained in any
Mortgage Note or
Mortgage, to the extent permitted under applicable law and
governmental
regulations, but only to the extent that such enforcement will
not adversely
affect or jeopardize coverage under any Required Insurance
Policy.
Notwithstanding the foregoing, the Company is not required to
exercise such
rights with respect to an EMC Mortgage Loan if the Person to
whom the related
Mortgaged Property has been conveyed or is proposed to be
conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage
related thereto
and the consent of the mortgagee under such Mortgage Note or
Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a
condition to
such transfer. In the event that the Company is prohibited by
law from enforcing
any such due-on-sale clause, or if coverage under any Required
Insurance Policy
would be adversely affected, or if nonenforcement is otherwise
permitted
hereunder, the Company is authorized, subject to Section
3.02(b), to take or
enter into an assumption and modification agreement from or with
the person to
whom such property has been or is about to be conveyed, pursuant
to which such
person becomes liable under the Mortgage Note and, unless
prohibited by
applicable state law, the Mortgagor remains liable thereon,
provided that the
Mortgage Loan shall continue to be covered (if so covered before
the Company
enters such agreement) by the applicable Required Insurance
Policies. The
Company, subject to Section 3.02(b), is also authorized with the
prior approval
of the insurers under any Required Insurance Policies to enter
into a
substitution of liability agreement with such Person, pursuant
to which the
original Mortgagor is released from liability and such Person is
substituted as
Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the
foregoing, the Company shall not be deemed to be in default
under this Section
3.02(a) by reason of any transfer or assumption that the Company
reasonably
believes it is restricted by law from preventing.
(b) Subject to the Company's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.02(a),
in any case in
which a Mortgaged Property has been conveyed to a Person by a
Mortgagor, and
such Person is to enter into an assumption agreement or
modification agreement
or supplement to the Mortgage Note or Mortgage that requires the
signature of
the Trustee, or if an instrument of release signed by the
Trustee is required
releasing the Mortgagor from liability on the related EMC
Mortgage Loan, the
Company shall prepare and deliver or cause to be prepared and
delivered to the
Trustee for signature and shall direct, in writing, the Trustee
to execute the
assumption agreement with the Person to whom the Mortgaged
Property is to be
conveyed and such modification agreement or supplement to the
Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to
carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply
with any
applicable laws regarding assumptions or the transfer of the
Mortgaged Property
to such Person. In connection with any such assumption, no
material term of the
Mortgage Note (including, but not limited to, the Mortgage Rate,
the amount of
the Scheduled Payment and any other term affecting the amount or
timing of
payment on the EMC Mortgage Loan) may be changed. In addition,
the substitute
Mortgagor and the Mortgaged Property must be acceptable to the
Company in
accordance with its servicing standards as then in effect. The
Company shall
notify the Trustee that any such substitution or assumption
agreement has been
completed by forwarding to the
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Trustee the original of such substitution or assumption
agreement, which in the
case of the original 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.
Any fee
collected by the Company for entering into an assumption or
substitution of
liability agreement will be retained by the Company as
additional servicing
compensation.
Section 3.03 SUBSERVICERS. The Company shall perform all of
its
servicing responsibilities hereunder or may cause a subservicer
to perform any
such servicing responsibilities on its behalf, but the use by
the Company of a
subservicer shall not release the Company from any of its
obligations hereunder
and the Company shall remain responsible hereunder for all acts
and omissions of
each subservicer as fully as if such acts and omissions were
those of the
Company. The Company shall pay all fees of each subservicer from
its own funds,
and a subservicer's fee shall not exceed the Servicing Fee
payable to the
Company hereunder.
At the cost and expense of the Company, without any right of
reimbursement from its Protected Account, the Company shall be
entitled to
terminate the rights and responsibilities of a subservicer and
arrange for any
servicing responsibilities to be performed by a successor
subservicer; provided,
however, that nothing contained herein shall be deemed to
prevent or prohibit
the Company, at the Company's option, from electing to service
the related EMC
Mortgage Loans itself. In the event that the Company's
responsibilities and
duties under this Agreement are terminated pursuant to Section
9.03, the Company
shall at its own cost and expense terminate the rights and
responsibilities of
each subservicer effective as of the date of termination of the
Company. The
Company shall pay all fees, expenses or penalties necessary in
order to
terminate the rights and responsibilities of each subservicer
from the Company's
own funds without reimbursement from the Trust Fund.
Notwithstanding the foregoing, the Company shall not be relieved
of its
obligations hereunder and shall be obligated to the same extent
and under the
same terms and conditions as if it alone were servicing and
administering the
EMC Mortgage Loans. The Company shall be entitled to enter into
an agreement
with a subservicer for indemnification of the Company by the
subservicer and
nothing contained in this Agreement shall be deemed to limit or
modify such
indemnification.
Any subservicing agreement and any other transactions or
services
relating to the EMC Mortgage Loans involving a subservicer shall
be deemed to be
between such subservicer and the Company alone, and neither the
Master Servicer
nor the Trustee shall have any obligations, duties or
liabilities with respect
to such subservicer including any obligation, duty or liability
of either the
Master Servicer or the Trustee to pay such subservicer's fees
and expenses. For
purposes of remittances to the Master Servicer pursuant to this
Agreement, the
Company shall be deemed to have received a payment on an EMC
Mortgage Loan when
a subservicer has received such payment.
Section 3.04 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF
COMPANY TO
BE HELD FOR TRUSTEE. Notwithstanding any other provisions of
this Agreement, the
Company shall transmit to the Trustee as required by this
Agreement all
documents and instruments in respect of an EMC Mortgage Loan
coming into the
possession of the Company from time to time and shall
account
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fully to the Trustee for any funds received by the Company or
that otherwise are
collected by the Company as Liquidation Proceeds or Insurance
Proceeds in
respect of any such Mortgage Loan. All Mortgage Files and funds
collected or
held by, or under the control of, the Company in respect of any
EMC Mortgage
Loans, whether from the collection of principal and interest
payments or from
Liquidation Proceeds, including but not limited to, any funds on
deposit in the
Protected Account maintained by the Company, shall be held by
the Company for
and on behalf of the Trustee and shall be and remain the sole
and exclusive
property of the Trustee, subject to the applicable provisions of
this Agreement.
The Company also agrees that it shall not create, incur or
subject any Mortgage
File or any funds that are deposited in the Protected Account
maintained by the
Company or the Master Servicer Collection Account or in any
Escrow Account, or
any funds that otherwise are or may become due or payable to the
Trustee for the
benefit of the Certificateholders, to any claim, lien, security
interest,
judgment, levy, writ of attachment or other encumbrance, or
assert by legal
action or otherwise any claim or right of set off against any
Mortgage File or
any funds collected on, or in connection with, an EMC Mortgage
Loan, except,
however, that the Company shall be entitled to set off against
and deduct from
any such funds any amounts that are properly due and payable to
the Company
under this Agreement.
Section 3.05 MAINTENANCE OF HAZARD INSURANCE. The Company shall
cause
to be maintained, for each EMC Mortgage Loan, hazard insurance
on buildings
upon, or comprising part of, the Mortgaged Property against loss
by fire,
hazards of extended coverage and such other hazards as are
customary in the area
where the related Mortgaged Property is located with an insurer
which is
licensed to do business in the state where the related Mortgaged
Property is
located. Each such policy of standard hazard insurance shall
contain, or have an
accompanying endorsement that contains, a standard mortgagee
clause. The Company
shall also cause flood insurance to be maintained on property
acquired upon
foreclosure or deed in lieu of foreclosure of any EMC Mortgage
Loan, to the
extent described below. Pursuant to Section 5.01, any amounts
collected by the
Company under any such policies (other than the amounts to be
applied to the
restoration or repair of the related Mortgaged Property or
property thus
acquired or amounts released to the Mortgagor in accordance with
the Company's
normal servicing procedures) shall be deposited in the Protected
Account
maintained by the Company. Any cost incurred by the Company in
maintaining any
such insurance shall not, for the purpose of calculating monthly
distributions
to the Certificateholders or remittances to the Trustee for
their benefit, be
added to the principal balance of the Mortgage Loan,
notwithstanding that the
terms of the EMC Mortgage Loan so permit. Such costs shall be
recoverable by the
Company out of late payments by the related Mortgagor or out of
Liquidation
Proceeds to the extent permitted by Section 5.02. It is
understood and agreed
that no earthquake or other additional insurance is to be
required of any
Mortgagor or maintained on property acquired in respect of a
Mortgage 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
is located at the time of origination of the related EMC
Mortgage Loan in a
federally designated special flood hazard area and such area is
participating in
the national flood insurance program, the Company shall cause
flood insurance to
be maintained with respect to such EMC Mortgage Loan. Such flood
insurance shall
be in an amount equal to the least of (i) the Stated Principal
Balance of the
related EMC Mortgage Loan, (ii) minimum amount required to
compensate for damage
or loss on a replacement cost basis or (iii) the maximum amount
of such
insurance available for the related Mortgaged Property under the
Flood Disaster
Protection Act of 1973, as amended.
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<PAGE>
In the event that the Company shall obtain and maintain a
blanket
policy insuring against hazard losses on all of the EMC Mortgage
Loans, it shall
conclusively be deemed to have satisfied its obligations as set
forth in the
first sentence of this Section 3.05, it being understood and
agreed that such
policy may contain a deductible clause on terms substantially
equivalent to
those commercially available and maintained by comparable
servicers. If such
policy contains a deductible clause, the Company shall, in the
event that there
shall not have been maintained on the related Mortgaged Property
a policy
complying with the first sentence of this Section 3.05, and
there shall have
been a loss that would have been covered by such policy, deposit
in the
Protected Account maintained by the Company the amount not
otherwise payable
under the blanket policy because of such deductible clause. Such
deposit shall
be from the Company's own funds without reimbursement therefor.
In connection
with its activities as administrator and servicer of the EMC
Mortgage Loans, the
Company agrees to present, on behalf of itself, the Depositor
and the Trustee
for the benefit of the Certificateholders, claims under any such
blanket policy.
Section 3.06 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The
Company shall prepare and present on behalf of the Trustee and
the
Certificateholders all claims under the Insurance Policies
relating to the EMC
Mortgage Loans and take such actions (including the negotiation,
settlement,
compromise or enforcement of the insured's claim) as shall be
necessary to
realize recovery under such Insurance Policies. Any proceeds
disbursed to the
Company in respect of such Insurance Policies shall be promptly
deposited in the
Protected Account maintained by the Company upon receipt, except
that any
amounts realized that are to be applied to the repair or
restoration of the
related Mortgaged Property as a condition precedent to the
presentation of
claims on the related EMC Mortgage Loan to the insurer under any
applicable
Insurance Policy need not be so deposited (or remitted).
Section 3.07 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE
POLICIES.
(a) The Company shall not take any action that would
result in noncoverage under any applicable Primary Mortgage
Insurance Policy of
any loss which, but for the actions of the Company would have
been covered
thereunder. The Company shall use its best efforts to keep in
force and effect
(to the extent that the EMC Mortgage Loan requires the Mortgagor
to maintain
such insurance), Primary Mortgage Insurance applicable to each
EMC Mortgage
Loan. The Company shall not cancel or refuse to renew any such
Primary Mortgage
Insurance Policy that is in effect at the date of the initial
issuance of the
related Mortgage Note and is required to be kept in force
hereunder.
(b) The Company agrees to present on behalf of the
Trustee and the Certificateholders, claims to the insurer under
any Primary
Mortgage Insurance Policies relating to the EMC Mortgage Loans
and, in this
regard, to take such reasonable action as shall be necessary to
permit recovery
under any Primary Mortgage Insurance Policies respecting
defaulted EMC Mortgage
Loans. Pursuant to Section 5.01, any amounts collected by the
Company under any
Primary Mortgage Insurance Policies shall be deposited in the
Protected Account
maintained by the Company, subject to withdrawal pursuant to
Section 5.02
hereof.
Section 3.08 FIDELITY BOND, ERRORS AND OMISSIONS INSURANCE. The
Company
shall maintain, at its own expense, a blanket fidelity bond and
an errors and
omissions insurance
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policy, with broad coverage with responsible companies on all
officers,
employees or other persons acting in any capacity with regard to
the EMC
Mortgage Loans and who handle funds, money, documents and papers
relating to the
EMC Mortgage Loans. The fidelity bond and errors and omissions
insurance shall
be in the form of the Mortgage Banker's Blanket Bond and shall
protect and
insure the Company against losses, including forgery, theft,
embezzlement,
fraud, errors and omissions and negligent acts of such persons.
Such fidelity
bond shall also protect and insure the Company against losses in
connection with
the failure to maintain any insurance policies required pursuant
to this
Agreement and the release or satisfaction of an EMC Mortgage
Loan which is not
in accordance with Accepted Servicing Practices. No provision of
this Section
3.08 requiring the fidelity bond and errors and omissions
insurance shall
diminish or relieve the Company from its duties and obligations
as set forth in
this Agreement. The minimum coverage under any such bond and
insurance policy
shall be at least equal to the corresponding amounts required by
Accepted
Servicing Practices. The Company shall deliver to the Master
Servicer a
certificate from the surety and the insurer as to the existence
of the fidelity
bond and errors and omissions insurance policy and shall obtain
a statement from
the surety and the insurer that such fidelity bond or insurance
policy shall in
no event be terminated or materially modified without thirty
days prior written
notice to the Master Servicer and the Trustee. The Company shall
notify the
Master Servicer and the Trustee within five business days of
receipt of notice
that such fidelity bond or insurance policy will be, or has
been, materially
modified or terminated. The Trustee for the benefit of the
Certificateholders
must be named as loss payees on the fidelity bond and as
additional insured on
the errors and omissions policy.
Section 3.09 REALIZATION UPON DEFAULTED MORTGAGE LOANS;
DETERMINATION
OF EXCESS LIQUIDATION PROCEEDS AND REALIZED LOSSES; REPURCHASES
OF CERTAIN
MORTGAGE LOANS.
(a) The Company shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of properties
securing such
of the EMC Mortgage Loans as come into and continue in default
and as to which
no satisfactory arrangements can be made for collection of
delinquent payments.
In connection with such foreclosure or other conversion, the
Company shall
follow such practices and procedures as it shall deem necessary
or advisable and
as shall be normal and usual in its general mortgage servicing
activities and
the requirements of the insurer under any Required Insurance
Policy; provided
that the Company shall not be required to expend its own funds
in connection
with any foreclosure or towards the restoration of any property
unless it shall
determine (i) that such restoration and/or foreclosure will
increase the
proceeds of liquidation of the EMC Mortgage Loan after
reimbursement to itself
of such expenses and (ii) that such expenses will be recoverable
to it through
Insurance Proceeds or Liquidation Proceeds (respecting which it
shall have
priority for purposes of withdrawals from the Protected Account
maintained by
the Company pursuant to Section 5.02). If the Company reasonably
believes that
Liquidation Proceeds with respect to any such EMC Mortgage Loan
would not be
increased as a result of such foreclosure or other action, such
EMC Mortgage
Loan will be charged-off and will become a Liquidated Loan. The
Company will
give notice of any such charge-off to the Trustee and the
Securities
Administrator. The Company shall be responsible for all other
costs and expenses
incurred by it in any such proceedings; provided that such costs
and expenses
shall be Servicing Advances and that it shall be entitled to
reimbursement
thereof from the proceeds of liquidation of the related
Mortgaged Property, as
contemplated in Section 5.02. If the Company has knowledge that
a Mortgaged
Property that the
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Company is contemplating acquiring in foreclosure or by deed-
in-lieu of
foreclosure is located within a one-mile radius of any site with
environmental
or hazardous waste risks known to the Company, the Company will,
prior to
acquiring the related Mortgaged Property, consider such risks
and only take
action in accordance with its established environmental review
procedures.
With respect to any REO Property relating to an EMC Mortgage
Loan, the
deed or certificate of sale shall be taken in the name of the
Trustee for the
benefit of the Certificateholders (or the Trustee's nominee on
behalf of the
Certificateholders). The Trustee's name shall be placed on the
title to such REO
Property solely as the Trustee hereunder and not in its
individual capacity. The
Company shall ensure that the title to such REO Property
references this
Agreement and the Trustee's capacity hereunder. Pursuant to its
efforts to sell
such REO Property, the Company shall either itself or through an
agent selected
by the Company protect and conserve such REO Property in the
same manner and to
such extent as is customary in the locality where such REO
Property is located
and may, incident to its conservation and protection of the
interests of the
Certificateholders, rent the same, or any part thereof, as the
Company deems to
be in the best interest of the Company and the
Certificateholders for the period
prior to the sale of such REO Property. The Company shall
prepare for and
deliver to the Trustee and the Securities Administrator a
statement with respect
to each such REO Property that has been rented showing the
aggregate rental
income received and all expenses incurred in connection with the
management and
maintenance of such REO Property at such times as is necessary
to enable the
Trustee to comply with the reporting requirements of the REMIC
Provisions. The
net monthly rental income, if any, from such REO Property shall
be deposited in
the Protected Account maintained by the Company no later than
the close of
business on each Determination Date. The Company shall perform
the tax reporting
and withholding related to foreclosures, abandonments and
cancellation of
indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code
by preparing and filing such tax and information returns, as may
be required.
In the event that the Trust Fund acquires any Mortgaged Property
as
aforesaid or otherwise in connection with a default or imminent
default on an
EMC Mortgage Loan, the Company shall dispose of such Mortgaged
Property prior to
three years after its acquisition by the Trust Fund or, at the
expense of the
Trust Fund, request more than 60 days prior to the day on which
such three-year
period would otherwise expire, an extension of the three-year
grace period
unless the Trustee shall have been supplied with an Opinion of
Counsel addressed
to the Trustee (such opinion not to be an expense of the
Trustee) to the effect
that the holding by the Trust Fund of such Mortgaged Property
subsequent to such
three-year period will not result in the imposition of taxes on
"prohibited
transactions" of REMIC I, REMIC II or REMIC III as defined in
Section 860F of
the Code or cause either REMIC I, REMIC II or REMIC III to fail
to qualify as a
REMIC at any time that any Certificates are outstanding, in
which case the Trust
Fund may continue to hold such Mortgaged Property (subject to
any conditions
contained in such Opinion of Counsel). Notwithstanding any other
provision of
this Agreement, no Mortgaged Property acquired by the Trust Fund
shall be rented
(or allowed to continue to be rented) or otherwise used for the
production of
income by or on behalf of the Trust Fund in such a manner or
pursuant to any
terms that would (i) cause such Mortgaged Property to fail to
qualify as
"foreclosure property" within the meaning of Section 860G(a)(8)
of the Code or
(ii) subject any of REMIC I, REMIC II or REMIC III to the
imposition of any
federal, state or local income taxes on the income earned from
such Mortgaged
Property under Section 860G(c) of the Code or otherwise,
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unless the Company has agreed to indemnify and hold harmless the
Trust Fund with
respect to the imposition of any such taxes.
The decision of the Company to foreclose on a defaulted EMC
Mortgage
Loan shall be subject to a determination by the Company that the
proceeds of
such foreclosure would exceed the costs and expenses of bringing
such a
proceeding. The income earned from the management of any
Mortgaged Properties
acquired through foreclosure or other judicial proceeding, net
of reimbursement
to the Company for expenses incurred (including any property or
other taxes) in
connection with such management and net of unreimbursed
Servicing Fees,
Advances, Servicing Advances and any management fee paid or to
be paid with
respect to the management of such Mortgaged Property, shall be
applied to the
payment of principal of, and interest on, the related defaulted
EMC Mortgage
Loans (with interest accruing as though such Mortgage Loans were
still current)
and all such income shall be deemed, for all purposes in the
Agreement, to be
payments on account of principal and interest on the related
Mortgage Notes and
shall be deposited into the Protected Account maintained by the
Company. To the
extent the income received during a Prepayment Period is in
excess of the amount
attributable to amortizing principal and accrued interest at the
related
Mortgage Rate on the related EMC Mortgage Loan, such excess
shall be considered
to be a partial Principal Prepayment for such Mortgage Loan for
all purposes
hereof.
The Liquidation Proceeds with respect to each Loan Group from
any
liquidation of a related EMC Mortgage Loan, net of any payment
to the Company as
provided above, shall be deposited in the Protected Account for
such Loan Group
maintained by the Company on the next succeeding Determination
Date following
receipt thereof for distribution on the related Distribution
Date, except that
any Excess Liquidation Proceeds shall be retained by the Company
as additional
servicing compensation.
The proceeds of any Liquidated Loan from each Loan Group, as
well as
any recovery resulting from a partial collection of related
Liquidation Proceeds
or any income from a related REO Property, will be applied in
the following
order of priority: first, to reimburse the Company for any
related unreimbursed
Servicing Advances and Servicing Fees, pursuant to Section 5.02
or this Section
3.09; second, to reimburse the Company for any unreimbursed
Advances with
respect to such Loan Group, pursuant to Section 5.02 or this
Section 3.09;
third, to accrued and unpaid interest (to the extent no Advance
has been made
for such amount) on the EMC Mortgage Loan or related REO
Property, at the Net
Mortgage Rate to the first day of the month in which such
amounts are required
to be distributed; and fourth, as a recovery of principal of the
EMC Mortgage
Loan.
(b) On each Determination Date, the Company shall
determine with respect to each Loan Group, the respective
aggregate amounts of
Excess Liquidation Proceeds and Realized Losses, if any, for the
related
Prepayment Period.
(c) The Company has no intent to foreclose on any EMC
Mortgage Loan based on the delinquency characteristics as of the
Closing Date;
provided, that the foregoing does not prevent the Company from
initiating
foreclosure proceedings on any date hereafter if the facts and
circumstances of
such EMC Mortgage Loans including delinquency characteristics in
the Company's
discretion so warrant such action.
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Section 3.10 SERVICING COMPENSATION. As compensation for its
activities
hereunder, the Company shall be entitled to retain or withdraw
from its
Protected Account out of each payment of interest on an EMC
Mortgage Loan
included in the Trust Fund an amount equal to the Servicing
Fee.
Additional servicing compensation in the form of any Excess
Liquidation
Proceeds, assumption fees, late payment charges, all Prepayment
Interest Excess
on any EMC Mortgage Loan, all income and gain net of any losses
realized from
Permitted Investments with respect to funds in or credited to
the Protected
Account maintained by the Company shall be retained by the
Company to the extent
not required to be deposited in the Protected Account maintained
by the Company
pursuant to Section 5.02. The Company shall be required to pay
all expenses
incurred by it in connection with its servicing activities
hereunder (including
payment of any premiums for hazard insurance, as required by
Section 3.05 and
maintenance of the other forms of insurance coverage required by
Section 3.07)
and shall not be entitled to reimbursement therefor except as
specifically
provided in Section 5.02.
EMC will be entitled to retain any Prepayment Interest Excess
pursuant
to Section 5.07(e).
Section 3.11 REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any
REO Property in respect of any related EMC Mortgage Loan, the
deed or
certificate of sale shall be issued to the Trustee, or to its
nominee, on behalf
of the related Certificateholders. The Company shall sell any
such REO Property
as expeditiously as possible and in accordance with the
provisions of this
Agreement. Pursuant to its efforts to sell such REO Property,
the Company shall
protect and conserve such REO Property in the manner and to the
extent required
herein, in accordance with the REMIC Provisions.
(b) The Company shall deposit all funds collected and
received in connection with the operation of any REO Property in
respect of any
EMC Mortgage Loan into the Protected Account maintained by the
Company.
(c) The Company, upon the final disposition of any REO
Property in respect of any EMC Mortgage Loan, shall be entitled
to reimbursement
for any related unreimbursed Advances, unreimbursed Servicing
Advances or
Servicing Fees from Liquidation Proceeds received in connection
with the final
disposition of such REO Property; provided, that any such
unreimbursed Advances
or Servicing Fees as well as any unpaid Servicing Fees may be
reimbursed or
paid, as the case may be, prior to final disposition, out of any
net rental
income or other net amounts derived from such REO Property.
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Section 3.12 LIQUIDATION REPORTS. Upon the foreclosure of any
Mortgaged
Property relating to an EMC Mortgage Loan or the acquisition
thereof by the
Trust Fund pursuant to a deed-in-lieu of foreclosure, the
Company shall submit a
liquidation report to the Master Servicer containing such
information as shall
be mutually acceptable to the Company and the Master Servicer
with respect to
such Mortgaged Property.
Section 3.13 ANNUAL STATEMENT AS TO COMPLIANCE; ANNUAL
CERTIFICATION.
(a) The Company will deliver to the Master Servicer not
later than March 1, 2006 and not later than March 1 of each year
thereafter, a
certificate of a Servicing Officer stating, as to each signatory
thereof, that
(i) a review of the activities of the Company during the
preceding calendar 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 Company 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
officers and the
nature and status thereof except for such defaults as such
officer in its good
faith judgment believe to be immaterial.
(b) (i) The Company will deliver to the Master Servicer,
on or before March 1 of each year beginning March 1, 2006 (or,
if any such day
is not a Business Day, the immediately preceding Business Day),
or on any
alternative date specified by the Master Servicer upon thirty
(30) days written
request, a certification containing the information set forth in
Exhibit K. Such
certification shall be signed by the senior officer in charge of
servicing of
the Company. In addition, the Company shall provide such other
information with
respect to the EMC Mortgage Loans and the servicing and
administration thereof
within the control of the Company which shall be required to
enable the Master
Servicer to comply with the reporting requirements of the
Securities and
Exchange Act of 1934, as amended.
(ii) The Company shall indemnify and hold harmless the
Master Servicer and its officers, directors, agents and
affiliates from
and against any losses, damages, penalties, fines,
forfeitures,
reasonable legal fees and related costs, judgments and other
costs and
expenses arising out of or based upon a breach by the Company or
any of
its officers, directors, agents or affiliates of its obligations
under
this Section 3.13(b) or the Company's negligence, bad faith or
willful
misconduct in connection therewith. If the indemnification
provided for
herein is unavailable or insufficient to hold harmless the
Master
Servicer, then the Company agrees that it shall contribute to
the
amount paid or payable by the Master Servicer as a result of
the
losses, claims, damages or liabilities of the Master Servicer in
such
proportion as is appropriate to reflect the relative fault of
the
Master Servicer on the one hand and the Company on the other
in
connection with a breach of the Company's obligations under
this
Section 3.13(b).
Section 3.14 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
SERVICING
REPORT. The Company at its expense shall cause a firm of
independent public
accountants which is a member of the American Institute of
Certified Public
Accountants to furnish not later than March 1, 2006 and not
later than March 1
of each year thereafter a statement, in a form acceptable for
filing with the
Commission on an Exhibit to Form 10-K, to the Master Servicer to
the effect
that, with respect to the preceding calendar year such firm has
examined certain
documents and records
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relating to the Company's servicing of mortgage loans of the
same type as the
EMC Mortgage Loans pursuant to servicing agreements
substantially similar to
this Agreement, which agreements may include this Agreement, and
that, on the
basis of such an examination, conducted substantially in
compliance with the
Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the
opinion that the Company's servicing has been conducted in
compliance with the
agreements examined pursuant to this Section 3.14, except for
(i) such
exceptions as such firm shall believe to be immaterial,(ii) such
other
exceptions as shall be set forth in such statement and (iii)
such exceptions
that the Uniform Single Attestation Program for Mortgage Bankers
requires it to
report.
Section 3.15 BOOKS AND RECORDS. The Company shall be responsible
for
maintaining, and shall maintain, a complete set of books and
records for the EMC
Mortgage Loans which shall be appropriately identified in the
Company's computer
system to clearly reflect the ownership of the EMC Mortgage
Loans by the Trust.
In particular, the Company shall maintain in its possession,
available for
inspection by the Master Servicer and the Trustee and shall
deliver to Master
Servicer and the Trustee upon demand, evidence of compliance
with all federal,
state and local laws, rules and regulations. To the extent that
original
documents are not required for purposes of realization of
Liquidation Proceeds
or Insurance Proceeds, documents maintained by the Company may
be in the form of
microfilm or microfiche or such other reliable means of
recreating original
documents, including, but not limited to, optical imagery
techniques so long as
the Company complies with the requirements of Accepted Servicing
Practices.
The Company shall maintain with respect to each EMC Mortgage
Loan and
shall make available for inspection by the Master Servicer and
the Trustee the
related servicing file during the time such EMC Mortgage Loan is
subject to this
Agreement and thereafter in accordance with applicable law.
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Article IV
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY
MASTER
SERVICER
Section 4.01 MASTER SERVICER. The Master Servicer shall,
beginning on
the Closing Date, supervise, monitor and oversee the obligation
of the Company
and the related Servicer to service and administer their
respective Mortgage
Loans in accordance with the terms of this Agreement and the
related Servicing
Agreement and shall have full power and authority to do any and
all things which
it may deem necessary or desirable in connection with such
master servicing and
administration. In performing its obligations hereunder, the
Master Servicer
shall act in a manner consistent with Accepted Master Servicing
Practices.
Furthermore, the Master Servicer shall oversee and consult with
the Company and
the related Servicer as necessary from time-to-time to carry out
the Master
Servicer's obligations hereunder, shall receive, review and
evaluate all
reports, information and other data provided to the Master
Servicer by the
Company and the related Servicer and shall cause the Company and
related
Servicer to perform and observe the covenants, obligations and
conditions to be
performed or observed by such Person under this Agreement and
the related
Servicing Agreement. The Master Servicer shall independently and
separately
monitor the Company and the related Servicer's servicing
activities with respect
to each related Mortgage Loan, reconcile the results of such
monitoring with
such information provided in the previous sentence on a monthly
basis and
coordinate corrective adjustments to the Company's, the related
Servicer's and
Master Servicer's records, and based on such reconciled and
corrected
information, the Master Servicer shall provide such information
to the
Securities Administrator as shall be necessary in order for it
to prepare the
statements specified in Section 6.06 and any other information
and statements
required hereunder. The Master Servicer shall reconcile the
results of its
Mortgage Loan monitoring with the actual remittances of the
Company and each
Servicer pursuant to this Agreement and the related Servicing
Agreement.
The Trustee shall furnish the Company, the Servicers and the
Master
Servicer with any powers of attorney and other documents in form
as provided to
it necessary or appropriate to enable the Company, the Servicer
and the Master
Servicer to service and administer the related Mortgage Loans
and REO Property.
The Trustee and the Securities Administrator shall provide
access to
the records and documentation in possession of the Trustee or
the Securities
Administrator regarding the related Mortgage Loans and REO
Property and the
servicing thereof to the Certificateholders, the FDIC, and the
supervisory
agents and examiners of the FDIC, such access being afforded
only upon
reasonable prior written request and during normal business
hours at the office
of the Trustee or the Securities Administrator; provided,
however, that, unless
otherwise required by law, neither the Trustee nor the
Securities Administrator
shall be required to provide access to such records and
documentation if the
provision thereof would violate the legal right to privacy of
any Mortgagor. The
Trustee and the Securities Administrator shall allow
representatives of the
above entities to photocopy any of the records and documentation
and shall
provide equipment for that purpose at a charge that covers the
Trustee's or the
Securities Administrator's actual costs.
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The Trustee shall execute and deliver to the Company or the
related
Servicer and the Master Servicer any court pleadings, requests
for trustee's
sale or other documents necessary or desirable to (i) the
foreclosure or
trustee's sale with respect to a Mortgaged Property; (ii) any
legal action
brought to obtain judgment against any Mortgagor on the Mortgage
Note or
Security Instrument; (iii) obtain a deficiency judgment against
the Mortgagor;
or (iv) enforce any other rights or remedies provided by the
Mortgage Note or
Security Instrument or otherwise available at law or equity.
Section 4.02 REMIC-RELATED COVENANTS. For as long as each REMIC
created
hereunder shall exist, the Trustee and the Securities
Administrator shall act in
accordance herewith to assure continuing treatment of such REMIC
as a REMIC, and
the Trustee and the Securities Administrator shall comply with
any directions of
the Seller, the Company, the Servicers or the Master Servicer to
assure such
continuing treatment. In particular, the Trustee shall not (a)
sell or permit
the sale of all or any portion of the Mortgage Loans or of any
investment of
deposits in an Account unless such sale is as a result of a
repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has
received a REMIC
Opinion addressed to the Trustee prepared at the expense of the
Trust Fund; and
(b) other than with respect to a substitution pursuant to the
Mortgage Loan
Purchase Agreement or Section 2.03 of this Agreement, as
applicable, accept any
contribution to any REMIC after the Startup Day without receipt
of a REMIC
Opinion.
Section 4.03 MONITORING OF COMPANY AND SERVICER.
(a) The Master Servicer shall be responsible for
reporting to the Trustee and the Seller the compliance by the
Company and the
related Servicer with its duties under this Agreement and the
related Servicing
Agreement. In the review of the Company's and the related
Servicer's activities,
the Master Servicer may rely upon an Officer's Certificate of
the Company and
the related Servicer with regard to such Person's compliance
with the terms of
this Agreement or the related Servicing Agreement. In the event
that the Master
Servicer, in its judgment, determines that the Company or the
related Servicer
should be terminated in accordance with this Agreement or the
related Servicing
Agreement, or that a notice should be sent pursuant to this
Agreement or the
related Servicing Agreement with respect to the occurrence of an
event that,
unless cured, would constitute grounds for such termination, the
Master Servicer
shall notify the Seller and the Trustee thereof and the Master
Servicer shall
issue such notice or take such other action as it deems
appropriate.
(b) The Master Servicer, for the benefit of the Trustee
and the Certificateholders, shall enforce the obligations of the
Company under
this Agreement and the related Servicer under the related
Servicing Agreement,
and shall, in the event that the Company or the related Servicer
fails to
perform its obligations in accordance with this Agreement or the
related
Servicing Agreement, subject to the preceding paragraph,
terminate the rights
and obligations of such Person thereunder and act as servicer of
the related
Mortgage Loans or to cause the Trustee to enter into a new
Servicing Agreement
with a successor Servicer selected by the Master Servicer;
provided, however, it
is understood and acknowledged by the parties hereto that there
will be a period
of transition (not to exceed 90 days) before the actual
servicing functions can
be fully transferred to such successor Servicer. Such
enforcement, including,
without limitation, the legal prosecution of claims, termination
of the related
Servicing
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Agreement 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 Master
Servicer, in
its good faith business judgment, would require were it the
owner of the related
Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at
its own expense, subject to its right of reimbursement pursuant
to the
provisions of this Agreement or the related Servicing Agreement,
provided that
the Master Servicer shall not be required to prosecute or defend
any legal
action except to the extent that the Master Servicer shall have
received
reasonable indemnity for its costs and expenses in pursuing such
action.
(c) To the extent that the costs and expenses of the
Master Servicer related to any termination of the Company or the
related
Servicer, appointment of a successor Servicer or the transfer
and assumption of
servicing by the Master Servicer with respect to this Agreement
or the related
Servicing Agreement (including, without limitation, (i) all
legal costs and
expenses and all due diligence costs and expenses associated
with an evaluation
of the potential termination of the Company or the related
Servicer as a result
of an event of default by such Person and (ii) all costs and
expenses associated
with the complete transfer of servicing, including all servicing
files and all
servicing data and the completion, correction or manipulation of
such servicing
data as may be required by the successor servicer to correct any
errors or
insufficiencies in the servicing data or otherwise to enable the
successor
service to service the Mortgage Loans in accordance with this
Agreement or the
related Servicing Agreement) are not fully and timely reimbursed
by the Company
or the terminated Servicer, the Master Servicer shall be
entitled to
reimbursement of such costs and expenses from the Master
Servicer Collection
Account.
(d) The Master Servicer shall require the Company and the
related Servicer to comply with the remittance requirements and
other
obligations set forth in this Agreement or the related Servicing
Agreement, as
applicable.
(e) If the Master Servicer acts as a servicer, it will
not assume liability for the representations and warranties of
the Company or
the related Servicer, if any, that it replaces.
Section 4.04 FIDELITY BOND. The Master Servicer, at its expense,
shall
maintain in effect a blanket fidelity bond and an errors and
omissions insurance
policy, affording coverage with respect to all directors,
officers, employees
and other Persons acting on such Master Servicer's behalf, and
covering errors
and omissions in the performance of the Master Servicer's
obligations hereunder.
The errors and omissions insurance policy and the fidelity bond
shall be in such
form and amount generally acceptable for entities serving as
master servicers or
trustees.
Section 4.05 POWER TO ACT; PROCEDURES. The Master Servicer shall
master
service the Mortgage Loans and shall have full power and
authority, subject to
the REMIC Provisions and the provisions of Article XI hereof, to
do any and all
things that it may deem necessary or desirable in connection
with the master
servicing and administration of the Mortgage Loans, including
but not limited to
the power and authority (i) to execute and deliver, on behalf of
the
Certificateholders and the Trustee, customary consents or
waivers and other
instruments and documents, (ii) to consent to transfers of any
Mortgaged
Property and assumptions of the Mortgage Notes and related
Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and
(iv) to effectuate
foreclosure or other conversion of the
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ownership of the Mortgaged Property securing any Mortgage Loan,
in each case, in
accordance with the provisions of this Agreement and the related
Servicing
Agreement, as applicable; provided, however, that the Master
Servicer shall not
(and, consistent with its responsibilities under Section 4.03,
shall not permit
the Company or the related Servicer to) knowingly or
intentionally take any
action, or fail to take (or fail to cause to be taken) any
action reasonably
within its control and the scope of duties more specifically set
forth herein,
that, under the REMIC Provisions, if taken or not taken, as the
case may be,
would cause REMIC I, REMIC II or REMIC III to fail to qualify as
a REMIC or
result in the imposition of a tax upon the Trust Fund (including
but not limited
to the tax on prohibited transactions as defined in Section
860F(a)(2) of the
Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the
Code) unless the Master Servicer has received an Opinion of
Counsel (but not at
the expense of the Master Servicer) to the effect that the
contemplated action
will not cause REMIC I, REMIC II or REMIC III to fail to qualify
as a REMIC or
result in the imposition of a tax upon REMIC I, REMIC II or
REMIC III, as the
case may be. The Trustee shall furnish the Master Servicer, upon
written request
from a Servicing Officer, with any powers of attorney empowering
the Master
Servicer, the Company or the related Servicer to execute and
deliver instruments
of satisfaction or cancellation, or of partial or full release
or discharge, and
to foreclose upon or otherwise liquidate Mortgaged Property, and
to appeal,
prosecute or defend in any court action relating to the Mortgage
Loans or the
Mortgaged Property, in accordance with the related Servicing
Agreement and this
Agreement, and the Trustee shall execute and deliver such other
documents, as
the Master Servicer may request, to enable the Master Servicer
to master service
and administer the Mortgage Loans and carry out its duties
hereunder, in each
case in accordance with Accepted Master Servicing Practices (and
the Trustee
shall have no liability for misuse of any such powers of
attorney by the Master
Servicer, the Company or the related Servicer). If the Master
Servicer or the
Trustee has been advised that it is likely that the laws of the
state in which
action is to be taken prohibit such action if taken in the name
of the Trustee
or that the Trustee would be adversely affected under the "doing
business" or
tax laws of such state if such action is taken in its name, the
Master Servicer
shall join with the Trustee in the appointment of a co-trustee
pursuant to
Section 10.11 hereof. In the performance of its duties
hereunder, the Master
Servicer shall be an independent contractor and shall not,
except in those
instances where it is taking action in the name of the Trustee,
be deemed to be
the agent of the Trustee.
Section 4.06 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the
extent
provided in this Agreement or the related Servicing Agreement,
to the extent
Mortgage Loans contain enforceable due-on-sale clauses, the
Master Servicer
shall cause the Company and the related Servicer to enforce such
clauses in
accordance with this Agreement or the related Servicing
Agreement. If applicable
law prohibits the enforcement of a due-on-sale clause or such
clause is
otherwise not enforced in accordance with this Agreement or the
related
Servicing Agreement, and, as a consequence, a Mortgage Loan is
assumed, the
original Mortgagor may be released from liability in accordance
with this
Agreement or the related Servicing Agreement.
Section 4.07 RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any
Mortgage Loan, or the receipt by the Company or the related
Servicer of a
notification that payment in full has been escrowed in a manner
customary for
such purposes for payment to Certificateholders on the next
Distribution Date,
the Company or the related Servicer will, if required under the
related
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Servicing Agreement (or if the Company or the related Servicer
does not, the
Master Servicer may), promptly furnish to the Custodian, on
behalf of the
Trustee, two copies of a certification substantially in the form
of Exhibit G
hereto signed by a Servicing Officer or in a mutually agreeable
electronic
format which will, in lieu of a signature on its face, originate
from a
Servicing Officer (which certification shall include a statement
to the effect
that all amounts received in connection with such payment that
are required to
be deposited in the Protected Account maintained by the Company
or the Servicer
pursuant to Article V or by the related Servicer pursuant to the
related
Servicing Agreement have been or will be so deposited) and shall
request that
the Custodian, on behalf of the Trustee, deliver to the Company
or the related
Servicer the related Mortgage File. Upon receipt of such
certification and
request, the Custodian, on behalf of the Trustee, shall promptly
release the
related Mortgage File to the Company or the related Servicer and
the Trustee and
Custodian shall have no further responsibility with regard to
such Mortgage
File. Upon any such payment in full, the Company or the related
Servicer is
authorized, to give, as agent for the Trustee, as the mortgagee
under the
Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or
assignment of mortgage without recourse, representation or
warranty) regarding
the Mortgaged Property subject to the Mortgage, which instrument
of satisfaction
or assignment, as the case may be, shall be delivered to the
Person or Persons
entitled thereto against receipt therefor of such payment, it
being understood
and agreed that no expenses incurred in connection with such
instrument of
satisfaction or assignment, as the case may be, shall be
chargeable to the
Protected Account.
(b) From time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan and in accordance
with this
Agreement or the related Servicing Agreement, the Trustee shall
execute such
documents as shall be prepared and furnished to the Trustee by
the Company, the
related Servicer or the Master Servicer (in form reasonably
acceptable to the
Trustee) and as are necessary to the prosecution of any such
proceedings. The
Custodian, on behalf of the Trustee, shall, upon the request of
the Company, the
related Servicer or the Master Servicer, and delivery to the
Custodian, on
behalf of the Trustee, of two copies of a request for release
signed by a
Servicing Officer substantially in the form of Exhibit G (or in
a mutually
agreeable electronic format which will, in lieu of a signature
on its face,
originate from a Servicing Officer), release the related
Mortgage File held in
its possession or control to the Company, the related Servicer
or the Master
Servicer, as applicable. Such trust receipt shall obligate the
Company, the
related Servicer or the Master Servicer to return the Mortgage
File to the
Custodian on behalf of the Trustee, when the need therefor by
such Person no
longer exists unless the Mortgage Loan shall be liquidated, in
which case, upon
receipt of a certificate of a Servicing Officer similar to that
hereinabove
specified, the Mortgage File shall be released by the Custodian,
on behalf of
the Trustee, to the Company, the related Servicer or the Master
Servicer.
Section 4.08 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF
MASTER
SERVICER, COMPANY AND SERVICER TO BE HELD FOR TRUSTEE.
(a) The Master Servicer shall transmit and the Company or
the related Servicer (to the extent required by this Agreement
or the related
Servicing Agreement) shall transmit to the Trustee or Custodian
such documents
and instruments coming into the possession of such Person from
time to time as
are required by the terms hereof, or in the case of the related
Servicer, the
related Servicing Agreement, to be delivered to the Trustee or
Custodian. Any
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funds received by the Master Servicer, the Company or by the
related Servicer in
respect of any Mortgage Loan or which otherwise are collected by
the Master
Servicer, the Company or by the related Servicer as Liquidation
Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held
for the benefit
of the Trustee and the Certificateholders subject to the Master
Servicer's right
to retain or withdraw from the Master Servicer Collection
Account, the Master
Servicing Compensation and other amounts provided in this
Agreement, and to the
right of the Company and the related Servicer to retain its
Servicing Fee and
other amounts as provided in this Agreement or the related
Servicing Agreement.
The Master Servicer shall, and (to the extent provided in this
Agreement or the
related Servicing Agreement) shall cause the Company and the
related Servicer
to, provide access to information and documentation regarding
the Mortgage Loans
to the Trustee, its agents and accountants at any time upon
reasonable request
and during normal business hours, and to Certificateholders that
are savings and
loan associations, banks or insurance companies, the Office of
Thrift
Supervision, the FDIC and the supervisory agents and examiners
of such Office
and Corporation or examiners of any other federal or state
banking or insurance
regulatory authority if so required by applicable regulations of
the Office of
Thrift Supervision or other regulatory authority, such access to
be afforded
without charge but only upon reasonable request in writing and
during normal
business hours at the offices of the Master Servicer designated
by it. In
fulfilling such a request the Master Servicer shall not be
responsible for
determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or
under the control of, the Master Servicer, in respect of any
Mortgage Loans,
whether from the collection of principal and interest payments
or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the
Master Servicer
for and on behalf of the Trustee and the Certificateholders and
shall be and
remain the sole and exclusive property of the Trustee; provided,
however, that
the Master Servicer, the Company and the related Servicer shall
be entitled to
setoff against, and deduct from, any such funds any amounts that
are properly
due and payable to the Master Servicer or such Servicer under
this Agreement or
the related Servicing Agreement.
Section 4.09 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE
POLICIES.
(a) For each Mortgage Loan, the Master Servicer shall
enforce any obligation of the Company and the related Servicer
under this
Agreement or the related Servicing Agreement to maintain or
cause to be
maintained standard fire and casualty insurance and, where
applicable, flood
insurance, all in accordance with the provisions of this
Agreement or the
related Servicing Agreement. It is understood and agreed that
such insurance
shall be with insurers meeting the eligibility requirements set
forth in this
Agreement and the related Servicing Agreement and that no
earthquake or other
additional insurance is to be required of any Mortgagor or to be
maintained on
property acquired in respect of a defaulted loan, other than
pursuant to such
applicable laws and regulations as shall at any time be in force
and as shall
require such additional insurance.
(b) Pursuant to Sections 5.01, 5.04 and 5.05 any amounts
collected by the Company, the Servicers or the Master Servicer,
or by the
Company or the Servicers, under any insurance policies (other
than amounts to be
applied to the restoration or repair of the property subject to
the related
Mortgage or released to the Mortgagor in accordance with this
Agreement or the
Servicing Agreements) shall be deposited by the Company in its
Protected Account
or by
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the related Servicer or the Master Servicer into the Master
Servicer Collection
Account, subject to withdrawal pursuant to Sections 5.02, 5.04,
5.05 and 5.07,
as applicable. Any cost incurred by the Master Servicer, the
Company or the
related Servicer in maintaining any such insurance if the
Mortgagor defaults in
its obligation to do so shall be added to the amount owing under
the Mortgage
Loan where the terms of the Mortgage Loan so permit; provided,
however, that the
addition of any such cost shall not be taken into account for
purposes of
calculating the distributions to be made to Certificateholders
and shall be
recoverable by the Master Servicer, the Company or the related
Servicer pursuant
to Sections 5.02, 5.04, 5.05 and 5.07, as applicable.
Section 4.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The
Master Servicer shall (to the extent provided in this Agreement
and the related
Servicing Agreement) cause the Company or the Servicer to,
prepare and present
on behalf of the Trustee and the Certificateholders all claims
under the
Insurance Policies and take such actions (including the
negotiation, settlement,
compromise or enforcement of the insured's claim) as shall be
necessary to
realize recovery under such policies. Any proceeds disbursed to
the Master
Servicer (or disbursed to the Company or the related Servicer
and remitted to
the Master Servicer) in respect of such policies, bonds or
contracts shall be
promptly deposited in the Master Servicer Collection Account
upon receipt,
except that any amounts realized that are to be applied to the
repair or
restoration of the related Mortgaged Property as a condition
precedent to the
presentation of claims on the related Mortgage Loan to the
insurer under any
applicable Insurance Policy need not be so deposited (or
remitted).
Section 4.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE
POLICIES.
(a) The Master Servicer shall not take, or permit the
Company or the related Servicer (to the extent such action is
prohibited under
this Agreement or the related Servicing Agreement) to take, any
action that
would result in noncoverage under any applicable Primary
Mortgage Insurance
Policy of any loss which, but for the actions of the Master
Servicer, the
Company or the related Servicer, would have been covered
thereunder. The Master
Servicer shall use its best reasonable efforts to cause the
Company and the
related Servicer (to the extent required under this Agreement
and the related
Servicing Agreement) to keep in force and effect (to the extent
that the
Mortgage Loan requires the Mortgagor to maintain such
insurance), primary
mortgage insurance applicable to each Mortgage Loan (including
any LPMI Policy)
in accordance with the provisions of this Agreement and the
related Servicing
Agreement, as applicable. The Master Servicer shall not, and
shall not permit
the Company or the related Servicer (to the extent required
under this Agreement
or the related Servicing Agreement) to, cancel or refuse to
renew any such
Primary Mortgage Insurance Policy that is in effect at the date
of the initial
issuance of the Mortgage Note and is required to be kept in
force hereunder
except in accordance with the provisions of this Agreement and
the related
Servicing Agreement, as applicable.
(b) The Master Servicer agrees to cause the Company and
the related Servicer (to the extent required under this
Agreement and the
related Servicing Agreement) to present, on behalf of the
Trustee and the
Certificateholders, claims to the insurer under any Primary
Mortgage Insurance
Policies and, in this regard, to take such reasonable action as
shall be
necessary to permit recovery under any Primary Mortgage
Insurance Policies
respecting defaulted Mortgage Loans. Pursuant to Sections 5.01,
5.04 and 5.05,
any amounts collected by
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the Company or the related Servicer under any Primary Mortgage
Insurance
Policies shall be deposited by the Company in its Protected
Account or by the
related Servicer in the Master Servicer Collection Account,
subject to
withdrawal pursuant to Section 5.04 or 5.05, as applicable.
Section 4.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE
POLICIES
AND DOCUMENTS. The Trustee (or the Custodian, as directed by the
Trustee), shall
retain possession and custody of the originals (to the extent
available) of any
Primary Mortgage Insurance Policies, or certificate of insurance
if applicable,
and any certificates of renewal as to the foregoing as may be
issued from time
to time as contemplated by this Agreement. Until all amounts
distributable in
respect of the Certificates have been distributed in full and
the Master
Servicer otherwise has fulfilled its obligations under this
Agreement, the
Trustee (or its Custodian, if any, as directed by the Trustee)
shall also retain
possession and custody of each Mortgage File in accordance with
and subject to
the terms and conditions of this Agreement. The Master Servicer
shall promptly
deliver or cause to be delivered to the Trustee (or the
Custodian, as directed
by the Trustee), upon the execution or receipt thereof the
originals of any
Primary Mortgage Insurance Policies, any certificates of
renewal, and such other
documents or instruments that constitute portions of the
Mortgage File that come
into the possession of the Master Servicer from time to
time.
Section 4.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS. The
Master
Servicer shall cause the Company and the related Servicer (to
the extent
required under this Agreement and the related Servicing
Agreement) to foreclose
upon, repossess or otherwise comparably convert the ownership of
Mortgaged
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, all in accordance with this Agreement or
the related
Servicing Agreement.
Section 4.14 COMPENSATION FOR THE MASTER SERVICER. The Master
Servicer
shall be entitled to (i) all income and gain realized from any
investment of
funds on Permitted Investments in the Master Servicer Collection
Account and
Distribution Account as compensation for the performance of its
obligations
hereunder ("Master Servicing Compensation") and (ii) any
interest remitted by
the related Servicer in connection with a Principal Prepayment
in full or
otherwise in excess of amounts required to be remitted to the
Master Servicer
Collection Account ("Additional Master Servicing Compensation").
The Master
Servicer shall be required to pay all expenses incurred by it in
connection with
its activities hereunder and shall not be entitled to
reimbursement therefor
except as provided in this Agreement.
Section 4.15 REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any
REO Property in respect of any related Mortgage Loan, the deed
or certificate of
sale shall be issued to the Trustee, or to its nominee, on
behalf of the related
Certificateholders. The Master Servicer shall, to the extent
provided in this
Agreement or the related Servicing Agreement, cause the Company
or the related
Servicer to sell, any REO Property as expeditiously as possible
and in
accordance with the provisions of this Agreement and the related
Servicing
Agreement, as applicable. Pursuant to its efforts to sell such
REO Property, the
Master Servicer shall cause the Company or
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the related Servicer to protect and conserve, such REO Property
in the manner
and to the extent required by this Agreement or the related
Servicing Agreement,
in accordance with the REMIC Provisions and in a manner that
does not result in
a tax on "net income from foreclosure property" or cause such
REO Property to
fail to qualify as "foreclosure property" within the meaning of
Section
860G(a)(8) of the Code.
(b) The Master Servicer shall, to the extent required by
this Agreement or the related Servicing Agreement, cause the
Company or the
related Servicer to deposit all funds collected and received in
connection with
the operation of any REO Property in the Protected Account.
(c) The Master Servicer and the Company or the related
Servicer, upon the final disposition of any REO Property, shall
be entitled to
reimbursement for any related unreimbursed Advances and other
unreimbursed
advances as well as any unpaid Servicing Fees from Liquidation
Proceeds received
in connection with the final disposition of such REO Property;
provided, that
any such unreimbursed Monthly Advances as well as any unpaid
Servicing Fees may
be reimbursed or paid, as the case may be, prior to final
disposition, out of
any net rental income or other net amounts derived from such REO
Property.
(d) To the extent provided in this Agreement or the
related Servicing Agreement, the Liquidation Proceeds from the
final disposition
of the REO Property, net of any payment to the Master Servicer
and the Company
or the related Servicer as provided above shall be deposited in
the Protected
Account on or prior to the Determination Date in the month
following receipt
thereof and be remitted by wire transfer in immediately
available funds to the
Master Servicer for deposit into the related Master Servicer
Collection Account
on the next succeeding Remittance Date.
Section 4.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The Master Servicer shall deliver to the Securities
Administrator, the Trustee and the Rating Agencies on or before
March 1 of each
year, commencing on March 1, 2006, an Officer's Certificate,
certifying that
with respect to the period ending December 31 of the prior year:
(i) such
Servicing Officer has reviewed the activities of such Master
Servicer during the
preceding calendar year or portion thereof and its performance
under this
Agreement, (ii) to the best of such Servicing Officer's
knowledge, based on such
review, such Master Servicer has performed and fulfilled its
duties,
responsibilities and obligations under this Agreement in all
material respects
throughout such year, or, if there has been a default in the
fulfillment of any
such duties, responsibilities or obligations, specifying each
such default known
to such Servicing Officer and the nature and status thereof,
(iii) nothing has
come to the attention of such Servicing Officer to lead such
Servicing Officer
to believe that the Company or any Servicer has failed to
perform any of its
duties, responsibilities and obligations under this Agreement or
the related
Servicing Agreement in all material respects throughout such
year, or, if there
has been a material default in the performance or fulfillment of
any such
duties, responsibilities or obligations, specifying each such
default known to
such Servicing Officer and the nature and status thereof.
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(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the
Trustee at the
Master Servicer's expense if the Master Servicer failed to
provide such copies
(unless (i) the Master Servicer shall have failed to provide the
Trustee with
such statement or (ii) the Trustee shall be unaware of the
Master Servicer's
failure to provide such statement).
Section 4.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT.
If the
Master Servicer has, during the course of any fiscal year,
directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense
shall cause a
nationally recognized firm of independent certified public
accountants to
furnish a statement to the Securities Administrator, the
Trustee, the Rating
Agencies and the Seller on or before March 1 of each year,
commencing on March
1, 2006 to the effect that, with respect to the most recently
ended fiscal year,
such firm has examined certain records and documents relating to
the Master
Servicer's performance of its servicing obligations under this
Agreement and
pooling and servicing and trust agreements in material respects
similar to this
Agreement and to each other and that, on the basis of such
examination conducted
substantially in compliance with the audit program for mortgages
serviced for
Freddie Mac or the Uniform Single Attestation Program for
Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities
have been conducted
in compliance with this Agreement, or that such examination has
disclosed no
material items of noncompliance except for (i) such exceptions
as such firm
believes to be immaterial, (ii) such other exceptions as are set
forth in such
statement and (iii) such exceptions that the Uniform Single
Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced
by Freddie Mac
requires it to report. Copies of such statements shall be
provided to any
Certificateholder upon request by the Master Servicer, or by the
Trustee at the
expense of the Master Servicer if the Master Servicer shall fail
to provide such
copies (unless (i) the Master Servicer shall have failed to
provide the Trustee
with such statement or (ii) the Trustee shall be unaware of the
Master
Servicer's failure to provide such statement). If such report
discloses
exceptions that are material, the Master Servicer shall advise
the Trustee
whether such exceptions have been or are susceptible of cure,
and will take
prompt action to do so.
Section 4.18 REPORTS FILED WITH SECURITIES AND EXCHANGE
COMMISSION.
Within 15 days after each Distribution Date, the Securities
Administrator shall,
in accordance with industry standards, file with the Commission
via the
Electronic Data Gathering and Retrieval System ("EDGAR"), a Form
8-K (or other
comparable Form containing the same or comparable information or
other
information mutually agreed upon) with a copy of the statement
to the Trustee
who shall make available a copy of the monthly statement to
the
Certificateholders for such Distribution Date as an exhibit
thereto. Prior to
January 30 in each year, the Securities Administrator shall, in
accordance with
industry standards and only if instructed by the Depositor, file
a Form 15
Suspension Notice with respect to the Trust Fund, if applicable.
Prior to (i)
March 15, 2006 and (ii) unless and until a Form 15 Suspension
Notice shall have
been filed, prior to March 15 of each year thereafter, the
Master Servicer shall
provide the Securities Administrator with a Master Servicer
Certification,
together with a copy of the annual independent accountant's
servicing report and
annual statement of compliance of the Company to be delivered
pursuant to this
Agreement and each Servicer, in each case, required to be
delivered pursuant to
the related Servicing Agreement, and, if applicable, the annual
independent
accountant's servicing report and annual statement of compliance
to be delivered
by the Master Servicer pursuant to Sections 4.16 and 4.17. Prior
to (i) March
31, 2006 and (ii) unless and until
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a Form 15 Suspension Notice shall have been filed, March 31 of
each year
thereafter, the Securities Administrator shall file a Form 10-K,
in substance
conforming to industry standards, with respect to the Trust.
Such Form 10-K
shall include the Master Servicer Certification and other
documentation provided
by the Master Servicer pursuant to the second preceding
sentence. The Depositor
hereby grants to the Securities Administrator a limited power of
attorney to
execute and file each such document on behalf of the Depositor.
Such power of
attorney shall continue until either the earlier of (i) receipt
by the
Securities Administrator from the Depositor of written
termination of such power
of attorney and (ii) the termination of the Trust Fund. The
Depositor agrees to
promptly furnish to the Securities Administrator, from time to
time upon
request, such further information, reports and financial
statements within its
control related to this Agreement, the Mortgage Loans as the
Securities
Administrator reasonably deems appropriate to prepare and file
all necessary
reports with the Commission. The Securities Administrator shall
have no
responsibility to file any items other than those specified in
this Section
4.18; provided, however, the Securities Administrator will
cooperate with the
Depositor in connection with any additional filings with respect
to the Trust
Fund as the Depositor deems necessary under the Securities
Exchange Act of 1934,
as amended (the "Exchange Act"). Copies of all reports filed by
the Securities
Administrator under the Exchange Act shall be sent to: the
Depositor c/o Bear,
Stearns & Co. Inc., Attn: Managing Director-Analysis and
Control, One Metrotech
Center North, Brooklyn, New York 11202-3859. Fees and expenses
incurred by the
Securities Administrator in connection with this Section 4.18
shall not be
reimbursable from the Trust Fund.
Section 4.19 UCC. The Trustee agrees to file continuation
statements
for any Uniform Commercial Code financing statements which the
Seller has
informed the Trustee were filed on the Closing Date in
connection with the
Trust. The Seller shall file any financing statements or
amendments thereto
required by any change in the Uniform Commercial Code.
Section 4.20 OPTIONAL PURCHASE OF CERTAIN MORTGAGE LOANS. With
respect
to any Mortgage Loans which as of the first day of a Fiscal
Quarter is
delinquent in payment by 90 days or more or is an REO Property,
EMC shall have
the right to purchase any Mortgage Loan from the Trust which
becomes 90 days or
more delinquent or becomes an REO Property at a price equal to
the Repurchase
Price; provided however (i) that such Mortgage Loan is still 90
days or more
delinquent or is an REO Property as of the date of such purchase
and (ii) this
purchase option, if not theretofore exercised, shall terminate
on the date prior
to the last day of the related Fiscal Quarter. This purchase
option, if not
exercised, shall not be thereafter reinstated unless the
delinquency is cured
and the Mortgage Loan thereafter again becomes 90 days or more
delinquent or
becomes an REO Property, in which case the option shall again
become exercisable
as of the first day of the related Fiscal Quarter.
In addition, EMC shall, at its option, purchase any Mortgage
Loan from
the Trust if the first Due Date for such Mortgage Loan is
subsequent to the
Cut-off Date and the initial Monthly Payment is not made within
thirty (30) days
of such Due Date. Such purchase shall be made at a price equal
to the Repurchase
Price.
If at any time EMC remits to the Master Servicer a payment for
deposit
in the Master Servicer Collection Account covering the amount of
the Repurchase
Price for such a Mortgage Loan, and EMC provides to the Trustee
a certification
signed by a Servicing Officer stating that
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the amount of such payment has been deposited in the Master
Servicer Collection
Account, then the Trustee shall execute the assignment of such
Mortgage Loan
prepared and delivered to the Trustee, at the request of EMC,
without recourse,
representation or warranty, to EMC which shall succeed to all
the Trustee's
right, title and interest in and to such Mortgage Loan, and all
security and
documents relative thereto. Such assignment shall be an
assignment outright and
not for security. EMC will thereupon own such Mortgage, and all
such security
and documents, free of any further obligation to the Trustee or
the
Certificateholders with respect thereto.
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Article V
ACCOUNTS
Section 5.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; PROTECTED
ACCOUNT.
(a) The Company shall make reasonable efforts in
accordance with customary and usual standards of practice of
prudent mortgage
lenders in the respective states in which the Mortgaged
Properties related to
the EMC Mortgage Loans are located to collect all payments
called for under the
terms and provisions of the EMC Mortgage Loans to the extent
such procedures
shall be consistent with this Agreement and the terms and
provisions of any
related Required Insurance Policy. Consistent with the
foregoing, the Company
may in its discretion (i) waive any late payment charge and (ii)
extend the due
dates for payments due on a Mortgage Note related to an EMC
Mortgage Loan for a
period not greater than 125 days. In the event of any such
arrangement, the
Company shall make Advances on the related EMC Mortgage Loan
during the
scheduled period in accordance with the amortization schedule of
such EMC
Mortgage Loan without modification thereof by reason of such
arrangements, and
shall be entitled to reimbursement therefor in accordance with
Section 6.01. The
Company shall not be required to institute or join in litigation
with respect to
collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise
or against any public or governmental authority with respect to
a taking or
condemnation) if it reasonably believes that enforcing the
provision of the
Mortgage or other instrument pursuant to which such payment is
required is
prohibited by applicable law. In addition, if (x) an EMC
Mortgage Loan is in
default or default is imminent or (y) the Company delivers to
the Trustee a
certification addressed to the Trustee, based on the advice of
counsel or
certified public accountants, in either case, that have a
national reputation
with respect to taxation of REMICs, that a modification of such
EMC Mortgage
Loan will not result in the imposition of taxes on or disqualify
from REMIC
status any of REMIC I, REMIC II or REMIC III, the Company may,
(A) amend the
related Mortgage Note to reduce the Mortgage Rate applicable
thereto, provided
that such reduced Mortgage Rate shall in no event be lower than
5.00% with
respect to any EMC Mortgage Loan and (B) amend any Mortgage Note
related to an
EMC Mortgage Loan to extend to the maturity thereof.
In accordance with the standards of the first paragraph of
Section
3.01, the Company shall not waive (or permit a sub-servicer to
waive) any
Prepayment Charge related to an EMC Mortgage Loan unless: (i)
the enforceability
thereof shall have been limited by bankruptcy, insolvency,
moratorium,
receivership and other similar laws relating to creditors'
rights generally,
(ii) the enforcement thereof is illegal, or any local, state or
federal agency
has threatened legal action if the prepayment penalty is
enforced, (iii) the
collectability thereof shall have been limited due to
acceleration in connection
with a foreclosure or other involuntary payment or (iv) such
waiver is standard
and customary in servicing similar Mortgage Loans and relates to
a default or a
reasonably foreseeable default and would, in the reasonable
judgment of the
Company, maximize recovery of total proceeds taking into account
the value of
such Prepayment Charge and the related EMC Mortgage Loan. If a
Prepayment Charge
is waived, but does not meet the standards described above, then
the Company is
required to pay the amount of such waived Prepayment Charge, for
the benefit of
the Class P Certificates, by remitting such amount to the Master
Servicer by the
Remittance Date.
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(b) The Company shall establish and maintain a Protected
Account (which shall at all times be an Eligible Account) with a
depository
institution in the name of the Company for the benefit of the
Trustee on behalf
of the Certificateholders and designated "U.S. Bank National
Association, in
trust for registered holders of Bear Stearns Asset Backed
Securities I LLC,
Asset-Backed Certificates Series 2005-AC2". The Company shall
deposit or cause
to be deposited into the Protected Account on a daily basis
within one Business
Day of receipt, except as otherwise specifically provided
herein, the following
payments and collections remitted by subservicers or received by
it in respect
of the EMC Mortgage Loans subsequent to the Cut-off Date (other
than in respect
of principal and interest due on the EMC Mortgage Loans on or
before the Cut-off
Date) and the following amounts required to be deposited
hereunder:
(i) all payments on account of principal, including
Principal Prepayments, on the EMC Mortgage Loans;
(ii) all payments on account of interest on the EMC
Mortgage Loans net of the related Servicing Fee permitted under
Section
3.10 and LPMI Fees, if any;
(iii) all Liquidation Proceeds and Insurance Proceeds with
respect to any EMC Mortgage Loans, other than proceeds to be
applied to
the restoration or repair of the Mortgaged Property or released
to the
Mortgagor in accordance with the Company's normal servicing
procedures;
(iv) any amount required to be deposited by the Company
pursuant to Section 5.01(c) in connection with any losses on
Permitted
Investments;
(v) any amounts required to be deposited by the Company
pursuant to Section 3.05;
(vi) any Prepayment Charges collected on the EMC Mortgage
Loans; and
(vii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Company into
the
Protected Account shall be exclusive, it being understood and
agreed that,
without limiting the generality of the foregoing, payments in
the nature of late
payment charges or assumption fees, if collected, need not be
remitted by the
Company. In the event that the Company shall remit any amount
not required to be
remitted and not otherwise subject to withdrawal pursuant to
Section 5.02, it
may at any time withdraw or direct the institution maintaining
the Protected
Account, to withdraw such amount from the Protected Account, any
provision
herein to the contrary notwithstanding. Such withdrawal or
direction may be
accomplished by delivering written notice thereof to the
institution maintaining
the Protected Account, that describes the amounts deposited in
error in the
Protected Account. The Company shall maintain adequate records
with respect to
all withdrawals made pursuant to this Section. All funds
deposited in the
Protected Account shall be held in trust for the
Certificateholders until
withdrawn in accordance with Section 5.02.
(c) The institution that maintains the Protected Account
shall invest the funds in the Protected Account, in the manner
directed by the
Company, in Permitted Investments which shall mature not later
than the
Remittance Date and shall not be sold or disposed of prior
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to its maturity. All such Permitted Investments shall be made in
the name of the
Trustee, for the benefit of the Certificateholders. All income
and gain net of
any losses realized from any such investment shall be for the
benefit of the
Company as servicing compensation and shall be remitted to it
monthly as
provided herein. The amount of any losses incurred in the
Protected Account in
respect of any such investments shall be deposited by the
Company into the
Protected Account, out of the Company's own funds.
(d) The Company shall give at least 30 days advance
notice to the Trustee, the Seller, the Master Servicer, each
Rating Agency and
the Depositor of any proposed change of location of the
Protected Account prior
to any change thereof.
Section 5.02 PERMITTED WITHDRAWALS FROM THE PROTECTED
ACCOUNT.
(a) The Company may from time to time make withdrawals
from the Protected Account for the following purposes:
(i) to pay itself (to the extent not previously paid to
or withheld by the Company), as servicing compensation in
accordance
with Section 3.10, that portion of any payment of interest that
equals
the Servicing Fee for the period with respect to which such
interest
payment was made, and, as additional servicing compensation,
those
other amounts set forth in Section 3.10;
(ii) to reimburse the Company for Advances made by it with
respect to the Mortgage Loans, provided, however, that the
Company's
right of reimbursement pursuant to this subclause (ii) shall be
limited
to amounts received on particular EMC Mortgage Loan(s)
(including, for
this purpose, Liquidation Proceeds and Insurance Proceeds)
that
represent late recoveries of payments of principal and/or
interest on
such particular EMC Mortgage Loan(s) in respect of which any
such
Advance was made;
(iii) to reimburse the Company for any previously made
portion of a Servicing Advance or an Advance made by the Company
that,
in the good faith judgment of the Company, will not be
ultimately
recoverable by it from the related Mortgagor, any related
Liquidation
Proceeds, Insurance Proceeds or otherwise (a "Nonrecoverable
Advance"),
to the extent not reimbursed pursuant to clause (ii) or clause
(v);
(iv) to reimburse the Company from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) to pay the Company any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances,
provided,
however, that the Company's right to reimbursement for
Servicing
Advances pursuant to this subclause (v) with respect to any
EMC
Mortgage Loan shall be limited to amounts received on particular
EMC
Mortgage Loan(s) (including, for this purpose, Liquidation
Proceeds,
Insurance Proceeds and purchase and repurchase proceeds) that
represent
late recoveries of the payments for which such Servicing
Advances were
made;
(vi) to pay to the Seller, the Depositor or itself, as
applicable, with respect to each EMC Mortgage Loan or property
acquired
in respect thereof that has been
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purchased pursuant to Section 2.02, 2.03 or 4.20 of this
Agreement, all
amounts received thereon and not taken into account in
determining the
related Stated Principal Balance of such repurchased EMC
Mortgage Loan;
(vii) to pay any expenses recoverable by the Company
pursuant to Section 8.04 of this Agreement;
(viii) to withdraw pursuant to Section 5.01 any amount
deposited in the Protected Account and not required to be
deposited
therein; and
(ix) to clear and terminate the Protected Account upon
termination of this Agreement pursuant to Section 11.01
hereof.
In addition, no later than 1:00 p.m. Eastern time on the
Remittance
Date, the Company shall withdraw from the Protected Account and
remit to the
Master Servicer the amount required to be withdrawn therefrom
pursuant to
Section 5.05 hereof. With respect to any remittance received by
the Master
Servicer from EMC after the date on which such remittance was
due, EMC shall pay
to the Master Servicer interest on any such late remittance at
an annual rate
equal to the prime rate announced to be in effect from time to
time as published
as the average rate in The Wall Street Journal (Northeast
Edition), plus two
percentage points, but in no event greater than the maximum
amount permitted by
applicable law. Such interest shall be deposited in EMC's
Protected Account by
EMC on the date such late payment is made and shall cover the
period commencing
with the day following the date on which such remittance was due
and ending with
the Business Day on which such remittance is made, both
inclusive. Such interest
shall be remitted along with the distribution payable on the
next succeeding
Remittance Date. The payment by EMC of any such interest shall
not be deemed an
extension of time for payment or a waiver of any Event of
Default with respect
to EMC.
The Company shall keep and maintain separate accounting, on a
Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from
the Protected Account pursuant to subclauses (i), (ii), (iv),
(v) and (vi)
above. Prior to making any withdrawal from the Protected Account
pursuant to
subclause (iii), the Company shall deliver to the Trustee an
Officer's
Certificate of a Servicing Officer indicating the amount of any
previous Advance
or Servicing Advance determined by the Company to be a
Nonrecoverable Advance
and identifying the related EMC Mortgage Loan(s), and their
respective portions
of such Nonrecoverable Advance.
Section 5.03 REPORTS TO MASTER SERVICER. On or before the
tenth
calendar day of each month, the Company shall furnish to the
Master Servicer
electronically in a format acceptable to the Master Servicer
loan accounting
reports in the investor's assigned loan number order to document
the payment
activity on each EMC Mortgage Loan on an individual mortgage
loan basis. With
respect to each month, such loan accounting reports shall
contain the following:
(i) with respect to each Scheduled Payment and each Loan
Group (on both an actual and scheduled basis with respect to
mortgage
loan balances and on an actual basis with respect to
paid-through
dates), the amount of such remittance allocable to
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principal (including a separate breakdown of any Principal
Prepayment,
including the amount of any Prepayment Interest Shortfall);
(ii) with respect to each Monthly Payment and each Loan
Group, the amount of such remittance allocable to scheduled
interest;
(iii) the amount of servicing compensation received by the
Company during the prior calendar month;
(iv) with respect to each Loan Group, the aggregate
scheduled principal balance of the EMC Mortgage Loans;
(v) with respect to each Loan Group, the aggregate amount
of Advances made by the Company pursuant to Section 6.01;
(vi) with respect to each Loan Group the aggregate of any
expenses reimbursed to the Company during the prior calender
month
pursuant to Section 5.02;
(vii) with respect to each Loan Group the number and
aggregate outstanding principal balances of EMC Mortgage Loans
(a)
delinquent (1) 30 to 59 days, (2) 60 to 89 days, (3) 90 days or
more;
(b) as to which foreclosure has commenced; and (c) as to which
REO
Property has been acquired; and
(viii) with respect to each Loan Group the amount of any
Prepayment Charges collected by the Company and the amount
of
Prepayment Charges paid by the Company in connection with a
waiver that
is not permitted under this Agreement.
Section 5.04 COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS;
ESCROW
ACCOUNTS. With respect to each EMC Mortgage Loan, to the extent
required by the
related Mortgage Note, the Company shall establish and maintain
one or more
accounts (each, an "Escrow Account") and deposit and retain
therein all
collections from the Mortgagors (or advances by the Company) for
the payment of
taxes, assessments, hazard insurance premiums or comparable
items for the
account of the Mortgagors. Nothing herein shall require the
Company to compel a
Mortgagor to establish an Escrow Account in violation of
applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may
be
made only to effect timely payment of taxes, assessments, hazard
insurance
premiums, condominium or PUD association dues, or comparable
items, to reimburse
the Company out of related collections for any payments made
with respect to
each EMC Mortgage Loan pursuant to Section 3.01 (with respect to
taxes and
assessments and insurance premiums) and Section 3.05 (with
respect to hazard
insurance), to refund to any Mortgagors for any EMC Mortgage
Loans any sums as
may be determined to be overages, to pay interest, if required
by law or the
terms of the related Mortgage or Mortgage Note, to such
Mortgagors on balances
in the Escrow Account or to clear and terminate the Escrow
Account at the
termination of this Agreement in accordance with Section 11.01
thereof. The
Escrow Account shall not be a part of the Trust Fund.
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<PAGE>
Section 5.05 SERVICER PROTECTED ACCOUNTS.
(a) The Master Servicer shall enforce the obligation of
the Company and the Servicers to establish and maintain a
Protected Account in
accordance with this Agreement and the Servicing Agreements,
with records to be
kept with respect thereto on a Mortgage Loan by Mortgage Loan
basis, into which
accounts shall be deposited within one Business Day (or as of
such other time
specified in the Servicing Agreements) of receipt all
collections of principal
and interest on any Mortgage Loan and with respect to any REO
Property received
by the Company or the related Servicer, including Principal
Prepayments,
Insurance Proceeds, Liquidation Proceeds, and advances made from
the Company's
or such Servicer's own funds (less servicing compensation as
permitted by this
Agreement or the related Servicing Agreement) and all other
amounts to be
deposited in the Protected Accounts. Each of the Company and the
Servicers are
hereby authorized to make withdrawals from and deposits to the
related Protected
Account for purposes required or permitted by this Agreement. To
the extent
provided in this Agreement or any Servicing Agreement, the
Protected Account
shall be held in a Designated Depository Institution and
segregated on the books
of such institution in the name of the Trustee for the benefit
of
Certificateholders.
(b) To the extent provided in this Agreement or any
Servicing Agreement, amounts on deposit in a Protected Account
may be invested
in Permitted Investments in the name of the Trustee for the
benefit of
Certificateholders and, except as provided in the preceding
paragraph, not
commingled with any other funds, such Permitted Investments to
mature, or to be
subject to redemption or withdrawal, no later than the date on
which such funds
are required to be withdrawn for deposit in the Master Servicer
Collection
Account, and shall be held until required for such deposit. The
income earned
from Permitted Investments made pursuant to this Section 5.04
shall be paid to
the Company or the related Servicer under this Agreement or the
related
Servicing Agreement, and the risk of loss of moneys required to
be distributed
to the Certificateholders resulting from such investments shall
be borne by and
be the risk of the Company or the related Servicer, as the case
may be. The
Company or the related Servicer (to the extent provided in this
Agreement or the
related Servicing Agreement) shall deposit the amount of any
such loss in the
Protected Account within two Business Days of receipt of
notification of such
loss but not later than the second Business Day prior to the
Distribution Date
on which the moneys so invested are required to be distributed
to the
Certificateholders.
(c) To the extent provided in this Agreement or the
related Servicing Agreement and subject to this Article V, on or
before each
Remittance Date, the Company or the related Servicer shall
withdraw or shall
cause to be withdrawn from its Protected Account and shall
immediately deposit
or cause to be deposited in the Master Servicer Collection
Account amounts
representing the following collections and payments (other than
with respect to
principal of or interest on the Mortgage Loans due on or before
the Cut-off
Date):
(i) With respect to each Loan Group Scheduled Payments on
the Mortgage Loans received or any related portion thereof
advanced by
the Company or the related Servicer pursuant to the related
Servicing
Agreement which were due on or before the related Due Date, net
of the
amount thereof comprising the Servicing Fees;
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(ii) with respect to each Loan Group, Full Principal
Prepayments and any Liquidation Proceeds received by the Company
or the
related Servicer with respect to such Mortgage Loans in the
related
Prepayment Period, with interest to the date of prepayment
or
liquidation, net of the amount thereof comprising the Servicing
Fees
and LPMI Fees, if any;
(iii) With respect to each Loan Group, Partial Principal
Prepayments received by the Company or the related Servicer for
such
Mortgage Loans in the related Prepayment Period;
(iv) With respect to each Loan Group any amount to be used
as an Advance; and
(v) With respect to each Loan Group, the amount of any
Prepayment Charges collected with respect to the Mortgage Loans
and the
amount of any Prepayment Charges paid by the Company or the
related
Servicer in connection with the waiver of a Prepayment Charge in
a
manner that is not permitted under this Agreement or the
related
Servicing Agreement.
(d) with respect to each Loan Group, withdrawals may be
made from a Protected Account by the Company as described in
Section 5.02 hereof
and by the Master Servicer or the related Servicer only to make
remittances as
provided in Section 5.05(c), 5.06 and 5.07; to reimburse the
Master Servicer or
the Servicer for Advances which have been recovered by
subsequent collection
from the related Mortgagor; to remove amounts deposited in
error; to remove
fees, charges or other such amounts deposited on a temporary
basis; or to clear
and terminate the account at the termination of this Agreement
in accordance
with Section 11.01. As provided in Sections 5.05(c) and 5.06(b)
certain amounts
otherwise due to the related Servicer may be retained by the
related Servicer
and need not be deposited in the Master Servicer Collection
Account.
Section 5.06 MASTER SERVICER COLLECTION ACCOUNT.
(a) The Master Servicer shall establish and maintain in
the name of the Trustee, for the benefit of the
Certificateholders, the Master
Servicer Collection Account which shall be an Eligible Account.
The Master
Servicer will deposit in the Master Servicer Collection Account
as identified by
the Master Servicer and as received by the Master Servicer, the
following
amounts:
(i) with respect to each Loan Group, any Advance and any
Compensating Interest Payments;
(ii) with respect to each Loan Group, any Insurance
Proceeds, Liquidation Proceeds or Subsequent Recoveries received
by or
on behalf of the Master Servicer or which were not deposited in
a
Protected Account;
(iii) with respect to each Loan Group, the Repurchase Price
with respect to any Mortgage Loans purchased by the Seller or
Section
2.02 or 2.03, any amounts which are to be treated pursuant to
Section
2.04 of this Agreement as the payment of such a
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<PAGE>
Repurchase Price, the Repurchase Price with respect to any
Mortgage
Loans purchased by EMC pursuant to Section 4.20, and all
proceeds of
any Mortgage Loans or property acquired with respect thereto
repurchased by the Seller or its designee pursuant to Section
11.01;
(iv) with respect to each Loan Group, any amounts required
to be deposited with respect to losses on investments of
deposits in an
Account; and
(v) with respect to each Loan Group, any other amounts
received by or on behalf of the Master Servicer or the Trustee
and
required to be deposited in the Master Servicer Collection
Account
pursuant to this Agreement.
(b) All amounts deposited to the Master Servicer
Collection Account shall be held by the Master Servicer in the
name of
the Trustee in trust for the benefit of the Certificateholders
in
accordance with the terms and provisions of this Agreement.
The
requirements for crediting the Master Servicer Collection
Account or
the Distribution Account shall be exclusive, it being understood
and
agreed that, without limiting the generality of the foregoing,
payments
in the nature of late payment charges or assumption, tax
service,
statement account or payoff, substitution, satisfaction, release
and
other like fees and charges, need not
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