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PHH MORTGAGE CAPITAL LLC,
Depositor
PHH MORTGAGE CORPORATION,
Master Servicer
CITIBANK, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
PHHMC Mortgage Pass-Through Certificates, Series 2005-2
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
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Section 1.01 Defined
Terms...........................................................................4
Section 1.02
Accounting.............................................................................41
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES
Section 2.01 Conveyance of Mortgage
Loans...........................................................42
Section 2.02 Acceptance of Trust Fund by the
Trustee................................................46
Section 2.03 Repurchase or Substitution of Mortgage Loans by the
Sellers-
Assignment of Interest in
Additional
Collateral..................................................................47
Section 2.04 Representations, Warranties and Covenants of the
Master Servicer.......................50
Section 2.05 Representations and Warranties of the
Depositor........................................52
Section 2.06 Purpose and Powers of the
Trust........................................................54
Section 2.07 Issuance of
Certificates...............................................................54
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01 Master Servicer to Act as Master
Servicer..............................................55
Section 3.02 Sub-Servicing Agreements Between the Master
Servicer and Sub-Servicers.................57
Section 3.03 Successor
Sub-Servicers................................................................58
Section 3.04 Liability of the Master
Servicer.......................................................59
Section 3.05 No Contractual Relationship Between Sub-Servicers
and Trustee or Certificateholders....59
Section 3.06 Assumption or Termination of Sub-Servicing
Agreements by Trustee.......................59
Section 3.07 Collection of Certain Mortgage Loan
Payments...........................................60
Section 3.08 Sub-Servicing
Accounts.................................................................60
Section 3.09 Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.................61
Section 3.10 Collection Account and Distribution
Account............................................61
Section 3.11 Withdrawals from the Collection Account and
Distribution Account.......................63
Section 3.12 Investment of Funds in the Collection Account,
Servicing Accounts
and the Distribution
Account...........................................................65
Section 3.13 Maintenance of the Primary Insurance Policies;
Collections Thereunder..................66
Section 3.14 Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.........67
Section 3.15 Enforcement of Due-On-Sale Clauses. Assumption
Agreements..............................69
Section 3.16 Realization Upon Defaulted Mortgage
Loans..............................................70
Section 3.17 Trustee to Cooperate; Release of Mortgage
Files........................................72
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Section 3.18 Servicing
Compensation.................................................................73
Section 3.19 Reports to the Trustee; Collection Account
Statements..................................74
Section 3.20 Statement as to
Compliance.............................................................74
Section 3.21 Independent Public Accountants' Servicing
Report.......................................75
Section 3.22 Access to Certain
Documentation........................................................75
Section 3.23 Title, Management and Disposition of REO
Property......................................75
Section 3.24 Obligations of the Master Servicer in Respect of
Prepayment Interest Shortfalls........78
Section 3.25 Administration of Buydown
Funds........................................................79
Section 3.26 Obligations of the Master Servicer in Respect of
Loan Rates and Monthly Payments.......79
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01 Distribution Account;
Distributions....................................................80
Section 4.02 Statements to
Certificateholders.......................................................87
Section 4.03 Remittance Reports; Advances by the Master
Servicer....................................89
Section 4.04 Allocation of Realized
Losses..........................................................91
Section 4.05 Information Reports to Be Filed by the Master
Servicer.................................92
Section 4.06 Compliance with Withholding
Requirements...............................................92
Section 4.07
[Reserved].............................................................................92
Section 4.08 Limited Purpose Surety
Bond............................................................92
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates.......................................................................93
Section 5.02 Registration of Transfer and Exchange of
Certificates..................................93
Section 5.03 Mutilated. Destroyed. Lost or Stolen
Certificates.....................................100
Section 5.04 Persons Deemed
Owners.................................................................100
Section 5.05 Appointment of Paying
Agent...........................................................101
ARTICLE VI
THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Master Servicer and the
Depositor....................................102
Section 6.02 Merger or Consolidation of or Assumption of the
Obligations
of the Master Servicer or the
Depositor...............................................102
Section 6.03 Limitation on Liability of the Master Servicer and
Others.............................102
Section 6.04 Master Servicer Not to
Resign.........................................................103
Section 6.05 Delegation of
Duties..................................................................103
ARTICLE VII
DEFAULT
Section 7.01 Master Servicer Events of
Termination.................................................105
Section 7.02 Trustee to Act: Appointment of
Successor..............................................107
Section 7.03 Waiver of Master Servicer Events of
Termination.......................................108
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Section 7.04 Notification to
Certificateholders....................................................108
Section 7.05 Survivability of Master Servicer
Liabilities..........................................109
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of
Trustee.....................................................................110
Section 8.02 Certain Matters Affecting the
Trustee.................................................112
Section 8.03 Trustee Not Liable for Certificates or Mortgage
Loans.................................113
Section 8.04 Trustee May Own
Certificates..........................................................114
Section 8.05 Master Servicer to Pay Trustee Expenses; Trustee
Fees.................................114
Section 8.06 Eligibility Requirements for
Trustee..................................................115
Section 8.07 Resignation or Removal of
Trustee.....................................................115
Section 8.08 Successor
Trustee.....................................................................116
Section 8.09 Merger or Consolidation of
Trustee....................................................116
Section 8.10 Appointment of Co-Trustee or Separate
Trustee.........................................116
Section 8.11 Limitation of
Liability...............................................................118
Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates.........................118
Section 8.13 Suits for
Enforcement.................................................................118
Section 8.14 Waiver of Bond
Requirement............................................................118
Section 8.15 Waiver of Inventory. Accounting and Appraisal
Requirement.............................119
Section 8.16 Right of Trustee in Capacity of Certificate
Registrar or Paying Agent.................119
Section 8.17 Periodic
Filings......................................................................119
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01 REMIC
Administration..................................................................120
Section 9.02 Prohibited Transactions and
Activities................................................122
Section 9.03 Master Servicer and Trustee
Indemnification...........................................123
ARTICLE X
TERMINATION
Section 10.01
Termination...........................................................................124
Section 10.02 Additional Termination
Requirements...................................................125
ARTICLE XI
[RESERVED]
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01
Amendment.............................................................................128
Section 12.02 Recordation of Agreement:
Counterparts................................................129
Section 12.03 Limitation on Rights of
Certificateholders............................................129
Section 12.04 Governing Law:
Jurisdiction...........................................................130
Section 12.05
Notices...............................................................................130
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Section 12.06 Severability of
Provisions............................................................131
Section 12.07 Article and Section
References........................................................131
Section 12.08 Notice to the Rating
Agency...........................................................131
Section 12.09 Further
Assurances....................................................................132
Section 12.10 Benefits of
Agreement.................................................................132
Section 12.11 Acts of
Certificateholders............................................................132
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EXHIBITS:
Exhibit A Form of Class A Certificates
Exhibit B [reserved]
Exhibit C-1 Form of Class R Certificates
Exhibit C-2 Form of Class B Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E Form of Request for Release
Exhibit F-1 Form of Rule 144A Representation Letter
Exhibit F-2 Form of Transferor Certificate
Exhibit F-3 Form of Transferee Representation Letter
Exhibit F-4 Form of Transfer Affidavit and Agreement
and Form of Transferor Affidavit
Exhibit G-1 Form of ERISA Representation Letter
(Class B-4, Class B-5 and Class B-6)
Exhibit G-2 Form of ERISA Representation Letter
(Class B-1, Class B-2 and Class B-3)
Exhibit H Form of Lost Note Affidavit
Exhibit I-1 Form of Trustee's Initial Certification
Exhibit I-2 Form of Trustee's Final Certification
Exhibit J Mortgage Loan Purchase Agreement
Exhibit K Assignment, Assumption and Recognition Agreement
(Additional Collateral Servicing Agreement)
Exhibit L [Reserved]
Exhibit M Form of Form 10-K Certificate
Exhibit N Form of Back-up Certification to Form 10-K
Certificate
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This Pooling and Servicing Agreement is dated as of March 1,
2005 (the
"Agreement"), among PHH MORTGAGE CAPITAL LLC, as depositor (the
"Depositor"),
PHH MORTGAGE CORPORATION, as master servicer (the "Master
Servicer") and
CITIBANK, N.A., as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage pass-through
certificates
(collectively, the "Certificates"), to be issued hereunder in
multiple classes,
which in the aggregate will evidence the entire beneficial
ownership interest in
the Mortgage Loans (as defined herein). As provided herein, the
Trustee will
make, in accordance with Section 9.01, an election to treat the
entire
segregated pool of assets described in the definition of Trust
Fund (as defined
herein), and subject to this Agreement (including the Mortgage
Loans), as two
real estate mortgage investment conduits (each a "REMIC") for
federal income tax
purposes.
REMIC I
The following table sets forth (or describes) the Class
designation,
Pass-Through Rate and Uncertificated Principal Balance, for each
Class of REMIC
I Regular Interest comprising the interests in REMIC I created
hereunder:
REMIC I Regular Uncertificated Uncertificated Assumed Final
Interest Principal Balance Pass-Through Rate(1) Maturity
Date(2)
A-1 $ 50,035,202.00 Variable Rate April 18, 2035
A-2 $ 43,229,633.00 Variable Rate April 18, 2035
A-3 $ 2,386,163.00 Variable Rate April 18, 2035
A-4 $ 2,958,278.00 Variable Rate April 18, 2035
A-5 $ 1,500,956.00 Variable Rate April 18, 2035
A-6 $ 14,650,307.00 Variable Rate April 18, 2035
R-II Interest $ 100.00 Variable Rate April 18, 2035
B-1 $ 5,554,908.00 Variable Rate April 18, 2035
B-2 $ 732,515.00 Variable Rate April 18, 2035
B-3 $ 366,258.00 Variable Rate April 18, 2035
B-4 $ 305,215.00 Variable Rate April 18, 2035
B-5 $ 183,129.00 Variable Rate April 18, 2035
B-6 $ 183,128.14 Variable Rate April 18, 2035
(1) Calculated in accordance with the definition of
"Uncertificated Pass-Through
Rate" herein.
(2) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the
Distribution Date immediately following the maturity date for
the Mortgage Loan
with the latest maturity date has been designated as the "latest
possible
maturity date" for each REMIC I Regular Interest.
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REMIC II
The following table sets forth (or describes) the Class
designation,
Pass-Through Rate and Original Certificate Principal Balance for
each Class of
Certificates comprising the interests in the Trust Fund created
hereunder:
Class Original Certificate Initial Pass-Through Assumed Final
Maturity
Principal Balance Rate Dates(6)
A-1 $ 50,035,202.00 Variable Rate(1) April 18, 2035
A-2 $ 43,229,633.00 Variable Rate(2) April 18, 2035
A-3 $ 2,386,163.00 Variable Rate(3) April 18, 2035
A-4 $ 2,958,278.00 Variable Rate(3) April 18, 2035
A-5 $ 1,500,956.00 Variable Rate(3) April 18, 2035
A-6(4) $ 14,650,307.00 Variable Rate(5) April 18, 2035
R-I $ 100.00 Variable Rate(3) April 18, 2035
R-II $ 100.00 Variable Rate(3) April 18, 2035
B-1 $ 5,554,908.00 Variable Rate(3) April 18, 2035
B-2 $ 732,515.00 Variable Rate(3) April 18, 2035
B-3 $ 366,258.00 Variable Rate(3) April 18, 2035
B-4 $ 305,215.00 Variable Rate(3) April 18, 2035
B-5 $ 183,129.00 Variable Rate(3) April 18, 2035
B-6 $ 183,128.14 Variable Rate(3) April 18, 2035
(1) Varies according to (i) the weighted average of the Net
Mortgage Rate on
each Mortgage Loan minus (ii) 0.40% per annum.
(2) Varies according to (i) the weighted average of the Net
Mortgage Rate on
each Mortgage Loan minus (ii) 0.45% per annum.
(3) Varies according to the weighted average of the Net Mortgage
Rate on each
Mortgage Loan.
(4) For federal income tax purposes, the Class A-6 Certificates
represent
ownership of three components which are regular interests in
REMIC II: the Class
A-6A Component, the Class A-6B Component and the Class A-6C
Component. The Class
A-6A Component has a principal balance equal to the Certificate
Principal
Balance of the Class A-6 Certificates and a Pass-Through Rate as
set forth
herein. The Class A-6B Component is an interest only component
which has a
Pass-Through Rate as set forth herein and a notional amount
equal to the
Uncertificated Principal Balance of REMIC I Regular Interest
A-1. The Class A-6C
Component is an interest only component which has a Pass-Through
Rate as set
forth herein and a notional amount equal to the Uncertificated
Principal Balance
of REMIC I Regular Interest A-2.
(5) Varies according to the sum (i) the weighted average of the
Net Mortgage
Rate on each Mortgage Loan, (ii) 0.40% per annum multiplied by a
fraction, the
numerator of which is the Certificate Principal Balance of the
Class A-1
Certificates and the denominator of which is the Certificate
Principal Balance
of the Class A-6 Certificates and (iii) 0.45% per annum
multiplied by a
fraction, the numerator of which is the Certificate Principal
Balance of the
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Class A-2 Certificates and the denominator of which is the
Certificate Principal
Balance of the Class A-6 Certificates.
(6) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the
Distribution Date immediately following the maturity date for
the REMIC I
Regular Interest with the latest maturity date has been
designated as the
"latest possible maturity date" for each Regular
Certificate.
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ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS.
Whenever used in this Agreement or in the Preliminary Statement,
the
following words and phrases, unless the context otherwise
requires, shall have
the meanings specified in this Article. Unless otherwise
specified, interest
will be calculated for all Certificates on the basis of a
360-day year
consisting of twelve 30-day months.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Any of the Collection Account and Distribution
Account.
"Accretion Termination Date": With respect to the Class A-3
Certificates, the Class A-3 Accretion Termination Date, with
respect to the
Class A-4 Certificates, the Class A-4 Accretion Termination
Date, with respect
to the Class A-5 Certificates, the Class A-5 Accretion
Termination Date and with
respect to the Class A-6 Certificates, the Class A-6 Accretion
Termination Date.
"Accrual Distribution Amount": With respect to the Class A-3
Certificates, the Class A-3 Accrual Distribution Amount, with
respect to the
Class A-4 Certificates, the Class A-4 Accrual Distribution
Amount, with respect
to the Class A-5 Certificates, the Class A-5 Accrual
Distribution Amount and
with respect to the Class A-6 Certificates, the Class A-6
Accrual Distribution
Amount.
"Additional Collateral": (i) With respect to any Mortgage
100(sm) Loan,
the Securities Account and the financial assets held therein
subject to a
security interest pursuant to the related Mortgage 100(sm)
Pledge Agreement, or
(ii) with respect to any Parent Power(R) Mortgage Loan, the
related Parent
Power(R) Agreement and collateral pledged pursuant thereto.
"Additional Collateral Agreements": Each Mortgage 100(sm)
Pledge
Agreement, Parent Power(R) Guaranty and Security Agreement for
Securities
Account and Control Agreement, as applicable, for each
Additional Collateral
Mortgage Loan.
"Additional Collateral Mortgage Loan": A Mortgage Loan that
is
supported by Additional Collateral.
"Additional Collateral Servicer": MLCC.
"Additional Collateral Servicing Agreement": The Additional
Collateral
Transfer and Servicing Agreement, dated as of November 1, 2001,
between MLCC and
the Master Servicer.
"Advance": As to any Mortgage Loan or REO Property, any advance
made by
the Master Servicer in respect of any Distribution Date pursuant
to Section
4.03.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
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"Affiliate": With respect to any Person, any other Person
controlling,
controlled by or under common control with such Person. For
purposes of this
definition, "control" means the power to direct the management
and policies of a
Person, directly or indirectly, whether through ownership of
voting securities,
by contract or otherwise and "controlling" and "controlled"
shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all
amendments
and supplements hereto.
"Assignment": An assignment of Mortgage, notice of transfer
or
equivalent instrument, in recordable form, which is sufficient
under the laws of
the jurisdiction wherein the related Mortgaged Property is
located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates,
the
date set forth as such in the Preliminary Statement.
"Available Distribution Amount": With respect to any
Distribution Date
and the Mortgage Loans, an amount equal to the excess of (i) the
sum of (a) the
aggregate of the related Monthly Payments received on or prior
to the related
Determination Date, (b) Liquidation Proceeds, Insurance
Proceeds, Subsequent
Recoveries and other unscheduled recoveries of principal and
interest in respect
of the Mortgage Loans, and Principal Prepayments during the
related Prepayment
Period, (c) the aggregate of any amounts received in respect of
a related REO
Property withdrawn from any REO Account and deposited in the
Collection Account
for such Distribution Date, (d) the aggregate of any amounts
deposited in the
Collection Account by the Master Servicer in respect of related
Prepayment
Interest Shortfalls for such Distribution Date and (e) the
aggregate of any
related Advances made by the Master Servicer for such
Distribution Date, over
(ii) the sum of (a) related amounts reimbursable or payable to
the Master
Servicer pursuant to Section 3.10, (b) related Stayed Funds, (c)
related amounts
deposited in the Collection Account or the Distribution Account,
as the case may
be, in error, (d) any Extraordinary Trust Fund Expenses and (e)
the Trustee Fee.
The Available Distribution Amount shall also be increased by any
Required Surety
Payment.
"Bankruptcy Amount": As of any date of determination prior to
the first
anniversary of the Cut-off Date, an amount equal to the excess,
if any, of (A)
$50,000 over (B) the aggregate amount of Bankruptcy Losses
allocated solely to
one or more specific Classes of Certificates in accordance with
Section 4.02. As
of any date of determination on or after the first anniversary
of the Cut-off
Date, an amount equal to the excess, if any, of (1) the lesser
of (a) the
Bankruptcy Amount calculated as of the close of business on the
Business Day
immediately preceding the most recent anniversary of the Cut-off
Date coinciding
with or preceding such date of determination (or, if such date
of determination
is an anniversary of the Cut-off Date, the Business Day
immediately preceding
such date of determination) (for purposes of this definition,
the "Relevant
Anniversary") and (b) the greater of:
(A) the greater of (i) 0.0006 times the aggregate principal
balance of all the Mortgage Loans in the Mortgage Pool as of
the
Relevant Anniversary having a Loan-to-Value Ratio at origination
which
exceeds 75% and (ii) $50,000; and (B) the greater of (i) the
product of
(x) an amount equal to the largest difference in the related
Monthly
Payment for any Non-Primary Residence Loan remaining in the
Mortgage
Pool which had an original Loan-to-Value Ratio greater than 80%
that
would result if the Net
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Mortgage Rate thereof was equal to the greater of (I) 5% or (II)
the
weighted average (based on the principal balance of the Mortgage
Loans
as of the Relevant Anniversary) of the Net Mortgage Rates of
all
Mortgage Loans as of the Relevant Anniversary less 1.25% per
annum, (y)
a number equal to the weighted average remaining term to
maturity, in
months, of all Mortgage Loans with a Loan-to-Value Ratio of
greater
than 80% remaining in the Mortgage Pool as of the Relevant
Anniversary,
and (z) one plus the quotient of the number of all
Non-Primary
Residence Loans with a Loan-to-Value Ratio of greater than
80%
remaining in the Mortgage Pool divided by the total number
of
outstanding Mortgage Loans in the Mortgage Pool as of the
Relevant
Anniversary, and (ii) $50,000,
over (2) the aggregate amount of Bankruptcy Losses allocated
solely to one or
more specific Classes of Certificates in accordance with Section
4.02 since the
Relevant Anniversary.
The Bankruptcy Amount may be further reduced by the Master
Servicer
(including accelerating the manner in which such coverage is
reduced) provided
that prior to any such reduction, the Master Servicer shall (i)
obtain written
confirmation from the Rating Agency that such reduction shall
not reduce the
rating assigned to any Class of Certificates by the Rating
Agency below the
lower of the then current rating or the rating assigned to such
Certificates as
of the Closing Date by such Rating Agency and (ii) provide a
copy of such
written confirmation to the Trustee.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the
United States Code), as amended.
"Bankruptcy Losses": Losses that are incurred as a result of
Debt
Service Reductions and Deficient Valuations.
"Book-Entry Certificates": Any of the Certificates that shall
be
registered in the name of the Depository or its nominee, the
ownership of which
is reflected on the books of the Depository or on the books of a
Person
maintaining an account with the Depository (directly, as a
"Depository
Participant", or indirectly, as an indirect participant in
accordance with the
rules of the Depository and as described in Section 5.02
hereof). On the Closing
Date, the Certificates (other than the Class R, Class B-4, Class
B-5 and Class
B-6 Certificates) shall be Book-Entry Certificates.
"Business Day": Any day other than (a) a Saturday or Sunday, (b)
a
legal holiday in the State of New Jersey or the State of New
York, or (c) a day
on which banking or savings and loan institutions in the State
of New Jersey or
the State of New York are authorized or obligated by law or
executive order to
be closed.
"Buydown Account": The custodial account or accounts created
and
maintained pursuant to Section 3.25.
"Buydown Agreement": An agreement between the applicable
originator and
a Mortgagor, or an agreement among such originator, a Mortgagor
and an employer
of a relocated Mortgagor which, in each case, provides for the
application of
Buydown Funds.
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"Buydown Funds": In respect of any Buydown Mortgage Loan, any
amount
contributed by the related originator or the employer of a
relocated borrower in
order to enable the Mortgagor to reduce the payments required to
be made from
the Mortgagor's funds during the Buydown Period. The Buydown
Funds are not part
of the Trust Fund prior to deposit into the Collection Account
or the
Distribution Account.
"Buydown Mortgage Loan": Any Mortgage Loan in respect of
which,
pursuant to a Buydown Agreement, (i) the Mortgagor pays less
than the full
monthly payment specified in the Mortgage Note during the
Buydown Period and
(ii) the difference between the payments required under such
Buydown Agreement
and the Mortgage Note is paid from the related Buydown
Funds.
"Buydown Period": The period during which Buydown Funds are
required to
be applied to the related Buydown Mortgage Loans as provided in
Section 3.25.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds
of
which were more than 2% or $2,000 in excess of the principal
balance of any
existing first mortgage or seasoned subordinate mortgage on the
related
Mortgaged Property and related closing costs.
"Cash Liquidation": As to any defaulted Mortgage Loan other than
REO
Property which has been acquired by the Master Servicer on
behalf of the Trustee
for the benefit of the Certificateholders, a determination by
the Master
Servicer that it has received all Insurance Proceeds,
Liquidation Proceeds and
other payments or cash recoveries which the Master Servicer
reasonably or in
good faith expects to be finally recoverable with respect to
such Mortgage Loan,
plus, with respect to a defaulted Mortgage Loan that is an
Additional Collateral
Mortgage Loan, the amount realized on the related Additional
Collateral with
respect to such Mortgage Loan in accordance with Section
3.16.
"Certificate": Any Regular Certificate or Class R
Certificate.
"Certificateholder" or "Holder": The Person in whose name a
Certificate
is registered in the Certificate Register, except that a
Disqualified
Organization or non-U.S. Person shall not be a Holder of a Class
R Certificate
for any purpose hereof.
"Certificate Owner": With respect to each Book-Entry
Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Certificate
as of
any date of determination, (x) the Certificate Principal Balance
of such
Certificate on the Distribution Date immediately prior to such
date of
determination, plus (y) (i) in the case of the Class A-3
Certificates, an amount
equal to the Monthly Interest Distributable Amount added to the
Certificate
Principal Balance of the Class A-3 Certificates on the
Distribution Date
immediately prior to such date of determination on or prior to
the Class A-3
Accretion Termination Date and (ii) in the case of the Class A-4
Certificates,
an amount equal to the Monthly Interest Distributable Amount
added to the
Certificate Principal Balance of the Class A-4 Certificates on
the Distribution
Date immediately prior to such date of determination on or prior
to the Class
A-4 Accretion Termination Date, (iii) in the case of the Class
A-5 Certificates,
an amount equal to the Monthly Interest Distributable Amount
added to the
Certificate Principal Balance of the Class A-5 Certificates on
the Distribution
Date immediately prior to such date of determination
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on or prior to the Class A-5 Accretion Termination Date and (iv)
in the case of
the Class A-6 Certificates, an amount equal to the Monthly
Interest
Distributable Amount added to the Certificate Principal Balance
of the Class A-6
Certificates on the Distribution Date immediately prior to such
date of
determination on or prior to the Class A-6 Accretion Termination
Date plus (z)
in the case of the Class B Certificates, any Subsequent
Recoveries added to the
Certificate Principal Balance of any such Certificate pursuant
to Section
4.01(g), reduced by the aggregate of (a) all distributions of
principal made
thereon on such immediately prior Distribution Date and (b)
without duplication
of amounts described in clause (a) above, reductions in the
Certificate
Principal Balance thereof in connection with allocations thereto
of Realized
Losses on the Mortgage Loans and Extraordinary Trust Fund
Expenses on such
immediately prior Distribution Date (or, in the case of any date
of
determination up to and including the initial Distribution Date,
the initial
Certificate Principal Balance of such Certificate, as stated on
the face
thereon); provided, however, that the Certificate Principal
Balance of each
Subordinate Certificate of the Class of Subordinate Certificates
outstanding
with the highest numerical designation at any given time shall
be calculated to
equal the Percentage Interest evidenced by such Certificate
multiplied by the
excess, if any, of (A) the then aggregate Stated Principal
Balance of the
Mortgage Loans over (B) the then aggregate Certificate Principal
Balances of all
other Classes of Certificates then outstanding.
"Certificate Register" and "Certificate Registrar": The
register
maintained and registrar appointed pursuant to Section 5.02
hereof.
"Class": Collectively, Certificates which have the same priority
of
payment and bear the same class designation and the form of
which is identical
except for variation in the Percentage Interest evidenced
thereby.
"Class A Certificate": Any of the Class A-1, Class A-2, Class
A-3,
Class A-4, Class A-5 or Class A-6 Certificates as designated on
the face thereof
substantially in the form annexed hereto as Exhibit A, executed
by the Trustee
and authenticated and delivered by the Trustee, representing the
right to
distributions as set forth herein and therein.
"Class A Certificateholder": Any Holder of a Class A
Certificate.
"Class A-3 Accretion Termination Date": The earlier to occur of
(i) the
Distribution Date on which the Certificate Principal Balance of
the Class A-2
Certificates has been reduced to zero and (ii) the Credit
Support Depletion
Date.
"Class A-3 Accrual Distribution Amount": With respect to
each
Distribution Date prior to the Class A-3 Accretion Termination
Date, an amount
equal to the aggregate amount of Monthly Interest Distributable
Amount on the
Class A-3 Certificates, for such date, to the extent added to
the Certificate
Principal Balance thereof pursuant to Section 4.01(i); provided
that, with
respect to each Distribution Date on or after the Class A-3
Accretion
Termination Date, the Monthly Interest Distributable Amount on
the Class A-3
Certificates for such date remaining after reduction of the
Certificate
Principal Balance of the Class A-2 Certificates to zero on the
Class A-3
Accretion Termination Date will be payable to the Class A-3
Certificateholders
pursuant to Section 4.01(c)(i) hereof; and provided further,
that if the Class
A-3 Accretion Termination Date is the Credit Support Depletion
Date, the entire
amount of Monthly Interest Distributable Amount on the Class A-3
Certificates
for that date will be payable to the Class A-3
Certificateholders pursuant to
Section 4.01(c)(i) hereof.
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<PAGE>
"Class A-4 Accretion Termination Date": The earlier to occur of
(i) the
Distribution Date on which the aggregate Certificate Principal
Balance of the
Class A-1, Class A-2 and Class A-3 Certificates has been reduced
to zero and
(ii) the Credit Support Depletion Date.
"Class A-4 Accrual Distribution Amount": With respect to
each
Distribution Date prior to the Class A-4 Accretion Termination
Date, an amount
equal to the aggregate amount of Monthly Interest Distributable
Amount on the
Class A-4 Certificates, for such date, to the extent added to
the Certificate
Principal Balance thereof pursuant to Section 4.01(j); provided
that, with
respect to each Distribution Date on or after the Class A-4
Accretion
Termination Date, the Monthly Interest Distributable Amount on
the Class A-4
Certificates for such date remaining after reduction of the
aggregate
Certificate Principal Balance of the Class A-1, Class A-2 and
Class A-3
Certificates to zero on the Class A-4 Accretion Termination Date
will be payable
to the Class A-4 Certificateholders pursuant to Section
4.01(c)(i) hereof; and
provided further, that if the Class A-4 Accretion Termination
Date is the Credit
Support Depletion Date, the entire amount of Monthly Interest
Distributable
Amount on the Class A-4 Certificates for that date will be
payable to the Class
A-4 Certificateholders pursuant to Section 4.01(c)(i)
hereof.
"Class A-5 Accretion Termination Date": The earlier to occur of
(i) the
Distribution Date on which the aggregate Certificate Principal
Balance of the
Class A-1, Class A-2, Class A-3 and Class A-4 Certificates has
been reduced to
zero and (ii) the Credit Support Depletion Date.
"Class A-5 Accrual Distribution Amount": With respect to
each
Distribution Date prior to the Class A-5 Accretion Termination
Date, an amount
equal to the aggregate amount of Monthly Interest Distributable
Amount on the
Class A-5 Certificates, for such date, to the extent added to
the Certificate
Principal Balance thereof pursuant to Section 4.01(k); provided
that, with
respect to each Distribution Date on or after the Class A-5
Accretion
Termination Date, the Monthly Interest Distributable Amount on
the Class A-5
Certificates for such date remaining after reduction of the
aggregate
Certificate Principal Balance of the Class A-1, Class A-2, Class
A-3 and Class
A-4 Certificates to zero on the Class A-5 Accretion Termination
Date will be
payable to the Class A-5 Certificateholders pursuant to Section
4.01(c)(i)
hereof; and provided further, that if the Class A-5 Accretion
Termination Date
is the Credit Support Depletion Date, the entire amount of
Monthly Interest
Distributable Amount on the Class A-5 Certificates for that date
will be payable
to the Class A-4 Certificateholders pursuant to Section
4.01(c)(i) hereof.
"Class A-6 Accretion Termination Date": The earliest to occur of
(i)
the Distribution Date on which the aggregate Certificate
Principal Balance of
the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Certificates has
been reduced to zero, (ii) the Credit Support Depletion Date and
(iii) the
Distribution Date occurring in April 2010.
"Class A-6 Accrual Distribution Amount": With respect to
each
Distribution Date prior to the Class A-6 Accretion Termination
Date, an amount
equal to the aggregate amount of Monthly Interest Distributable
Amount on the
Class A-6 Certificates, for such date, to the extent added to
the Certificate
Principal Balance thereof pursuant to Section 4.01(l); provided
that, with
respect to each Distribution Date on or after the Class A-6
Accretion
Termination Date, the Monthly Interest Distributable Amount on
the Class A-6
Certificates for such date remaining after reduction of the
aggregate
Certificate Principal Balance of the Class A-1, Class A-2, Class
A-3, Class A-4
and Class A-5 Certificates to zero on the Class A-6 Accretion
Termination Date
will be payable to the Class A-6 Certificateholders pursuant to
Section
4.01(c)(i) hereof; and provided further, that if the Class A-6
Accretion
Termination Date is the Credit Support
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<PAGE>
Depletion Date or the distribution date occurring in April 2010,
the entire
amount of Monthly Interest Distributable Amount on the Class A-6
Certificates
for that date will be payable to the Class A-6
Certificateholders pursuant to
Section 4.01(c)(i) hereof.
"Class A-6A Component": A regular interest in REMIC II which has
a
principal amount which will at all times be equal to the
Certificate Principal
Balance of the Class A-6 Certificates and a per annum
Pass-Through Rate as set
forth herein.
"Class A-6A Component Principal Amount": An amount equal to
the
Certificate Principal Balance of the Class A-6 Certificates.
"Class A-6B Component": A regular interest in REMIC II which has
a
notional amount which will at all times be equal to the
Uncertificated Principal
Balance of REMIC I Regular Interest A-1, a per annum
Pass-Through Rate as set
forth herein, and no principal amount.
"Class A-6B Component Notional Amount": An amount equal to
the
Uncertificated Principal Balance of REMIC I Regular Interest
A-1.
"Class A-6C Component": A regular interest in REMIC II which has
a
notional amount which will at all times be equal to the
Uncertificated Principal
Balance of REMIC I Regular Interest A-2, a per annum
Pass-Through Rate as set
forth herein, and no principal amount.
"Class A-6C Component Notional Amount": An amount equal to
the
Uncertificated Principal Balance of REMIC I Regular Interest
A-2.
"Class B Certificate": Any one of the Class B-1, Class B-2,
Class B-3,
Class B-4, Class B-5 or Class B-6 Certificates as designated on
the face thereof
substantially in the form annexed hereto as Exhibit C-2,
executed by the Trustee
and authenticated and delivered by the Trustee, representing the
right to
distributions as set forth herein and therein.
"Class B Certificateholder": Any Holder of a Class B
Certificate.
"Class B Percentage": The Class B-1 Percentage, Class B-2
Percentage,
Class B-3 Percentage, Class B-4 Percentage, Class B-5 Percentage
or Class B-6
Percentage.
"Class B-1 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as a percentage, the
numerator of which
is the aggregate Certificate Principal Balance of the Class B-1
Certificates
immediately prior to such Distribution Date and the denominator
of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans
(or related REO
Properties) immediately prior to such Distribution Date. The
initial Class B-1
Percentage is approximately 4.55%.
"Class B-2 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as a percentage, the
numerator of which
is the aggregate Certificate Principal Balance of the Class B-2
Certificates
immediately prior to such Distribution Date and the denominator
of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans
(or related REO
Properties) immediately prior to such Distribution Date. The
initial Class B-2
Percentage is approximately 0.60%.
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<PAGE>
"Class B-3 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as a percentage, the
numerator of which
is the aggregate Certificate Principal Balance of the Class B-3
Certificates
immediately prior to such Distribution Date and the denominator
of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans
(or related REO
Properties) immediately prior to such Distribution Date. The
initial Class B-3
Percentage is approximately 0.30%.
"Class B-4 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as a percentage, the
numerator of which
is the aggregate Certificate Principal Balance of the Class B-4
Certificates
immediately prior to such Distribution Date and the denominator
of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans
(or related REO
Properties) immediately prior to such Distribution Date. The
initial Class B-4
Percentage is approximately 0.25%.
"Class B-5 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as a percentage, the
numerator of which
is the aggregate Certificate Principal Balance of the Class B-5
Certificates
immediately prior to such Distribution Date and the denominator
of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans
(or related REO
Properties) immediately prior to such Distribution Date. The
initial Class B-5
Percentage is approximately 0.15%.
"Class B-6 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as a percentage, the
numerator of which
is the aggregate Certificate Principal Balance of the Class B-6
Certificates
immediately prior to such Distribution Date and the denominator
of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans
(or related REO
Properties) immediately prior to such Distribution Date. The
initial Class B-6
Percentage is approximately 0.15%.
"Class R Certificates": The Class R-I and Class R-II
Certificates
executed by the Trustee, and authenticated and delivered by the
Certificate
Registrar, substantially in the form annexed hereto as Exhibit
C-1 and each
evidencing the ownership of an interest designated as the
Residual Interest in
the related REMIC.
"Class Subordination Percentage": With respect to any
Distribution Date
and each Class of Subordinate Certificates, the fraction
(expressed as a
percentage) the numerator of which is the Certificate Principal
Balance of such
Class of Subordinate Certificates immediately prior to such
Distribution Date
and the denominator of which is the aggregate of the Certificate
Principal
Balances of all Classes of Certificates immediately prior to
such Distribution
Date.
"Closing Date": March 29, 2005.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The account or accounts created and
maintained by
the Master Servicer pursuant to Section 3.10, which shall be
entitled "PHH
Mortgage Corporation, as Master Servicer for Citibank, N.A., as
Trustee, in
trust for registered Holders of PHHMC Mortgage Pass-Through
Certificates, Series
2005-2", and which must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
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<PAGE>
"Compensating Interest": As defined in Section 3.24 hereof.
"Condemnation Proceeds": All awards or settlements in respect of
a
taking of a Mortgaged Property by exercise of the power of
eminent domain or
condemnation.
"Control Agreement": With respect to each Mortgage 100(sm) Loan,
the
Merrill Lynch Pledged Collateral Account Control Agreement
between the guarantor
or mortgagor, as applicable, the Additional Collateral Servicer
and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, pursuant to
which the guarantor or
mortgagor, as applicable, has granted a security interest in a
Securities
Account.
"Cooperative": A corporation that has been formed for the
purpose of
cooperative apartment ownership.
"Cooperative Assets": Shares issued by Cooperatives, the
related
Cooperative Lease and any other collateral securing the
Cooperative Loans.
"Cooperative Building": The building and other property owned by
a
Cooperative.
"Cooperative Lease": With respect to a Cooperative Loan, the
proprietary lease or occupancy agreement with respect to the
Cooperative
Apartment occupied by the Mortgagor and relating to the related
Cooperative
Assets, which lease or agreement confers an exclusive right to
the holder of
such Cooperative Assets to occupy such apartment.
"Cooperative Loan": The indebtedness of a Mortgagor evidenced by
a
Mortgage Note which is secured by Cooperative Assets and which
is being sold to
the Depositor pursuant to this Agreement, the Mortgage Loans so
sold being
identified in the Mortgage Loan Schedule.
"Cooperative Unit": A specific dwelling unit in a Cooperative
Building
as to which exclusive occupancy rights have been granted
pursuant to a Lease.
"Corporate Trust Office": The principal corporate trust office
of the
Trustee at which at any particular time its corporate trust
business in
connection with this Agreement shall be administered, which
office at the date
of the execution of this instrument is located, for Certificate
transfer
purposes, at 111 Wall Street, 15th Floor, Attn: Securities
Window, New York, New
York 10005, Attention: PHHMC, Series 2005-2, or at such other
address as the
Trustee may designate from time to time by notice to the
Certificateholders, the
Depositor and the Master Servicer.
"Corresponding Certificated Interests": With respect to each
REMIC I
Regular Interest, the Class with the same designation.
"Credit Support Depletion Date": The first Distribution Date on
which
the Senior Percentage equals 100%.
"Curtailment": Any Principal Prepayment made by a Mortgagor
which is
not a Principal Prepayment in Full.
"Cut-off Date": March 1, 2005.
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<PAGE>
"Cut-off Date Principal Balance": With respect to any Mortgage
Loan,
the unpaid principal balance thereof as of the Cut-off Date (or
as of the
applicable date of substitution with respect to a Eligible
Substitute Mortgage
Loan).
"Debt Service Reduction": With respect to any Mortgage Loan,
a
reduction in the scheduled Monthly Payment for such Mortgage
Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy
Code, except such a
reduction resulting from a Deficient Valuation.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be
replaced
by one or more Eligible Substitute Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation
of the related Mortgaged Property by a court of competent
jurisdiction in an
amount less than the then outstanding principal balance of the
Mortgage Loan,
which valuation results from a proceeding initiated under the
Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c)
hereof.
"Delinquent": As used herein, a Mortgage Loan is considered to
be: "one
month" delinquent when a payment due on any scheduled due date
remains unpaid as
of the close of business on the last Business Day immediately
prior to the next
following monthly scheduled due date; "two months" delinquent
when a payment due
on any scheduled due date remains unpaid as of the close of
business on the last
Business Day immediately prior to the second following monthly
scheduled due
date; and so on. The determination as to whether a Mortgage Loan
falls into
these categories is made as of the close of business on the last
Business Day of
each month. For example, a Mortgage Loan with a payment due on
July 1 that
remained unpaid as of the close of business on July 31 would
then be considered
to be one month delinquent. Delinquency information as of the
Cut-off Date is
determined and prepared as of the close of business on the last
Business Day
immediately prior to the Cut-off Date.
"Depositor": PHH Mortgage Capital LLC, a Delaware limited
liability
company, or any successor in interest.
"Depository": The initial Depository shall be The Depository
Trust
Company, whose nominee is Cede & Co., or any other
organization registered as a
"clearing agency" pursuant to Section 17A of the Securities
Exchange Act of
1934, as amended. The Depository shall initially be the
registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a
"clearing
corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of
the State of New York.
"Depository Agreement": With respect to any Book-Entry
Certificates,
either of the agreements among the Depositor, the Trustee and
the initial
Depository, to be dated on or about the Closing Date.
"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.
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<PAGE>
"Determination Date": With respect to any Distribution Date, the
8th
day of the calendar month in which such Distribution Date occurs
or, if such 8th
day is not a Business Day, the Business Day immediately
preceding such 8th day.
"Directly Operate": With respect to any REO Property, the
furnishing or
rendering of services to the tenants thereof, the management or
operation of
such REO Property, the holding of such REO Property primarily
for sale to
customers, the performance of any construction work thereon or
any use of such
REO Property in a trade or business conducted by the Trust Fund
other than
through an Independent Contractor, provided, however, that the
Trustee (or the
Master Servicer on behalf of the Trustee) shall not be
considered to Directly
Operate an REO Property solely because the Trustee (or the
Master Servicer on
behalf of the Trustee) establishes rental terms, chooses
tenants, enters into or
renews leases, deals with taxes and insurance, or makes
decisions as to repairs
or capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the
United
States, any State or political subdivision thereof, any
possession of the United
States, or any agency or instrumentality of any of the foregoing
(other than an
instrumentality which is a corporation if all of its activities
are subject to
tax and, except for the Freddie Mac or any successor thereto, a
majority of its
board of directors is not selected by such governmental unit),
(ii) any foreign
government, any international organization, or any agency or
instrumentality of
any of the foregoing, (iii) any organization (other than certain
farmers'
cooperatives described in Section 521 of the Code) which is
exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of
the Code on unrelated business taxable income), (iv) rural
electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the
Code or (v) any
other Person so designated by the Trustee based upon an Opinion
of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee,
that the
holding of an ownership interest in a Residual Certificate by
such Person may
cause the Trust or any Person having an ownership interest in
the Residual
Certificate (other than such Person) to incur a liability for
any federal tax
imposed under the Code that would not otherwise be imposed but
for the transfer
of an ownership interest in a Residual Certificate to such
Person. The terms
"United States," "State" and "international organization" shall
have the
meanings set forth in Section 7701 of the Code or successor
provisions.
"Distribution Account": The trust account or accounts created
and
maintained by the Trustee pursuant to Section 3.10(b) which
shall be entitled
"Distribution Account, Citibank, N.A., as Trustee, in trust for
the registered
Holders of the PHHMC Mortgage Pass-Through Certificates, Series
2005-2" and
which must be an Eligible Account.
"Distribution Date": The 18th day of any calendar month, or if
such
18th day is not a Business Day, the Business Day immediately
following such 18th
day, commencing in April 2005.
"Due Date": With respect to each Mortgage Loan and any
Distribution
Date, the first day of the calendar month in which such
Distribution Date occurs
on which the Monthly Payment for such Mortgage Loan was due,
exclusive of any
days of grace.
"Due Period": With respect to any Distribution Date, the
period
commencing on the second day of the month preceding the month in
which such
Distribution Date (or with respect to
14
<PAGE>
the first Due Period, the day following the Cut-off Date) occurs
and ending on
the first day of the month in which such Distribution Date
occurs.
"Effective Loan-to-Value Ratio": With respect to an
Additional
Collateral Mortgage Loan, the ratio, expressed as a percentage,
of (A) the
principal amount of the Mortgage Loan at origination less the
value of any
Additional Collateral securing the Mortgage Loan, to (B) the
lesser of (1) the
appraised value determined in an appraisal or other collateral
assessment tool
obtained at origination of the Mortgage Loan and (2) the sales
price for the
related Mortgaged Property.
"Eligible Account": Any of (i) an account or accounts maintained
with a
depository institution the short-term debt obligations of which
have been rated
by the Rating Agency in its highest rating available, (ii) in a
depository
institution in which such accounts are fully insured to the
limits established
by the FDIC, provided that any deposits not so insured shall, to
the extent
acceptable to the Rating Agency, as evidenced in writing, be
maintained such
that (as evidenced by an Opinion of Counsel delivered to the
Trustee and the
Rating Agency) the registered Holders of Certificates have a
claim with respect
to the funds in such account or a perfected first 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 with which such account is maintained,
(iii) a trust
account or accounts maintained with the trust department of a
federal or state
chartered depository institution, national banking association
or trust company
acting in its fiduciary capacity, (iv) an account or accounts of
a depository
institution acceptable to the Rating Agency (as evidenced in
writing by the
Rating Agency that use of any such account will not reduce the
rating assigned
to any Class of Certificates by the Rating Agency below the
lower of the
then-current rating or the rating assigned to such Certificates
as of the
Closing Date by such Rating Agency) or (v) an account or
accounts maintained
with a federal or state chartered depository institution or
trust company that
meet the depository requirements of Fannie Mae or Freddie Mac.
Eligible Accounts
may bear interest.
"Eligible Funds": With respect to each Distribution Date, the
portion,
if any, of the Available Distribution Amount remaining after
reduction by the
sum of the Senior Interest Distribution Amount, the Senior
Principal
Distribution Amount, determined without regard to clause (D) of
its definition,
and the aggregate amount of the Monthly Interest Distributable
Amount on the
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5
Certificates.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted
for a
Defective Mortgage Loan pursuant to the terms of this Agreement
which must, on
the date of such substitution, (i) have an outstanding principal
balance, after
application of all scheduled payments of principal and interest
due during or
prior to the month of substitution, not in excess of the
outstanding principal
balance of the Defective Mortgage Loan as of the Due Date in the
calendar month
during which the substitution occurs, the amount of any
shortfall to be
deposited by the Master Servicer in the Collection Account in
the month of
substitution, (ii) have a Loan Rate, not less than the Loan Rate
of the
Defective Mortgage Loan and not more than 1% in excess of the
Loan Rate of such
Defective Mortgage Loan, (iii) have a remaining term to maturity
not greater
than (and not more than one year less than) that of the
Defective Mortgage Loan,
(iv) be current as of the date of substitution, (v) have a
Loan-to-Value Ratio
as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of
the Defective Mortgage Loan as of such date and (vi) conform to
each
representation and warranty set forth in Section 2.04 hereof
applicable to the
Defective Mortgage Loan. In the event that one or more mortgage
loans
15
<PAGE>
are substituted for one or more Defective Mortgage Loans, the
amounts described
in clause (i) hereof shall be determined on the basis of
aggregate principal
balances, the Loan Rates described in clause (ii) hereof shall
be determined on
the basis of weighted average Loan Rates, the terms described in
clause (iii)
hereof shall be determined on the basis of weighted average
remaining term to
maturity, the Loan-to-Value Ratios described in clause (v)
hereof shall be
satisfied as to each such mortgage loan and, except to the
extent otherwise
provided in this sentence, the representations and warranties
described in
clause (vi) hereof must be satisfied as to each Eligible
Substitute Mortgage
Loan or in the aggregate, as the case may be. Any Mortgage Loan
substituted for
a Mortgage Loan which has an arrearage due to the application of
any related
forbearance plan with respect to such Mortgage Loan, will be
treated as having
such an arrearage due to the application of any related
forbearance plan with
respect to such Mortgage Loan.
"ERISA": The Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA-Restricted Certificates": Any of the Class B-4, Class
B-5, Class
B-6 and Class R Certificates.
"Escrow Payments": The amounts constituting ground rents,
taxes,
assessments, water rates, mortgage insurance premiums, fire and
hazard insurance
premiums and other payments required to be escrowed by the
Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of
real
property.
"Excess Losses": (i) Special Hazard Losses in excess of the
Special
Hazard Amount, (ii) Bankruptcy Losses in excess of the
Bankruptcy Amount, (iii)
Fraud Losses in excess of the Fraud Loss Amount and (iv)
Extraordinary Losses.
"Excess Subordinate Principal Amount": With respect to any
Distribution
Date on which the Certificate Principal Balance of the Class or
Classes of
Certificates then outstanding with the Lowest Priority is to be
reduced to zero
and on which Realized Losses are to be allocated to that Class
or those Classes,
the amount, if any, by which (i) the amount of principal that
would otherwise be
distributable on that Class or those Classes of Certificates on
such
Distribution Date is greater than (ii) the excess, if any, of
the aggregate
Certificate Principal Balance of that Class or those Classes of
Certificates
immediately prior to such Distribution Date over the aggregate
amount of
Realized Losses to be allocated to that Class or those Classes
of Certificates
on such Distribution Date.
"Exchange Act": The Securities and Exchange Act of 1934, as
amended.
"Extraordinary Loss": Any Realized Loss or portion thereof
caused by or
resulting from:
(i) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled
or
uncontrolled and whether such loss be direct or indirect,
proximate or
remote or be in whole or in part caused by, contributed to
or
aggravated by a peril covered by the definition of the term
"Special
Hazard Loss";
(ii) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending against
an
actual, impending or expected attack by any government or
sovereign
power, de jure or de facto, or by any authority maintaining
16
<PAGE>
or using military, naval or air forces, or by military, naval or
air
forces, or by an agent of any such government, power, authority
or
forces;
(iii) any weapon of war employing atomic fission or
radioactive forces whether in time of peace or war, and
(iv) insurrection, rebellion, revolution, civil war, usurped
power or action taken by governmental authority in hindering,
combating
or defending against such an occurrence, seizure or destruction
under
quarantine or customs regulations, confiscation by order of
any
government or public authority, or risks of contraband or
illegal
transactions or trade.
"Extraordinary Trust Fund Expenses": Any amounts reimbursable to
the
Master Servicer or the Depositor pursuant to Section 6.03, any
amounts
reimbursable to the Trustee from the Trust Fund pursuant to this
Agreement,
including but not limited to Section 8.05, and any other costs,
expenses,
liabilities and losses borne by the Trust Fund (exclusive of any
cost, expense,
liability or loss that is specific to a particular Mortgage Loan
or REO Property
and is taken into account in calculating a Realized Loss in
respect thereof) for
which the Trust Fund has not and, in the reasonable good faith
judgment of the
Trustee, shall not, obtain reimbursement or indemnification from
any other
Person.
"Fannie Mae": Federal National Mortgage Association or any
successor
thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section
3.14.
"Final Recovery Determination": With respect to any defaulted
Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO
Property purchased
by a Seller or the Master Servicer pursuant to or as
contemplated by Section
2.03 or 10.01), a determination made by the Master Servicer that
all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries
which the Master
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, prepared by a Servicing Officer, of each Final
Recovery
Determination made thereby.
"Fitch": Fitch, Inc., doing business as Fitch Ratings, and
any
successor thereto or its successor in interest.
"Foreclosure Price": The amount reasonably expected to be
received from
the sale of the related Mortgaged Property net of any expenses
associated with
foreclosure proceedings.
"Foreclosure Profits": As to any Distribution Date or
related
Determination Date and any Mortgage Loan, the excess, if any, of
Liquidation
Proceeds, Insurance Proceeds and proceeds from any REO
Disposition (net of all
amounts reimbursable therefrom pursuant to Section 3.11(a)(iii))
in respect of
each Mortgage Loan or REO Property for which a Cash Liquidation
or REO
Disposition occurred in the related Prepayment Period over the
sum of the unpaid
principal balance of such Mortgage Loan or REO Property
(determined, in the case
of an REO Disposition, in accordance with Section 3.16) plus
accrued and unpaid
interest at the Mortgage Rate on such unpaid principal balance
from the Due Date
to which interest was last paid by the
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Mortgagor to the first day of the month following the month in
which such Cash
Liquidation or REO Disposition occurred.
"Fraud Loss Amount": As of any date of determination after the
Cut-off
Date, prior to the third anniversary of the Cut-off Date, an
amount equal to
1.00% of the aggregate outstanding principal balance of all of
the Mortgage
Loans as of the Cut-off Date minus the Fraud Losses allocated
solely to one or
more specific Classes of Certificates in accordance with Section
4.02 since the
most recent anniversary of the Cut-off Date up to such date of
determination. On
and after the third anniversary of the Cut-off Date, the Fraud
Loss Amount shall
be zero.
The Fraud Loss Amount may be further reduced by the Master
Servicer
(including accelerating the manner in which such coverage is
reduced) provided
that prior to any such reduction, the Master Servicer shall (i)
obtain written
conformation from the Rating Agency that such reduction shall
not reduce the
rating assigned to any Class of Certificates by such Rating
Agency below the
lower of the then-current rating or the rating assigned to such
Certificates as
of the Closing Date by such Rating Agency and (ii) provide a
copy of such
written conformation to the Trustee.
"Fraud Losses": Losses sustained on a Liquidated Mortgage Loan
by
reason of a default arising from fraud, dishonesty or
misrepresentation.
"Freddie Mac": Federal Home Loan Mortgage Corporation or any
successor
thereto.
"Highest Priority": As of any date of determination, the Class
of
Subordinate Certificates then outstanding with the earliest
priority for
payments pursuant to Section 4.01(c), in the following order:
Class B-1, Class
B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates.
"HUD": The United States Department of Housing and Urban
Development,
or any successor thereto and including the Federal Housing
Commissioner and the
Secretary of Housing and Urban Development where appropriate
under the FHA
Regulations.
"Independent": When used with respect to any specified Person,
any such
Person who (a) is in fact independent of the Depositor, the
Master Servicer and
their respective Affiliates, (b) does not have any direct
financial interest in
or any material indirect financial interest in the Depositor or
the Master
Servicer or any Affiliate thereof, and (c) is not connected with
the Depositor
or the Master Servicer or any Affiliate thereof as an officer,
employee,
promoter, underwriter, trustee, partner, director or Person
performing similar
functions; PROVIDED, HOWEVER, that a Person shall not fail to be
Independent of
the Depositor or the Master Servicer or any Affiliate thereof
merely because
such Person is the beneficial owner of 1% or less of any class
of securities
issued by the Depositor or the Master Servicer or any Affiliate
thereof, as the
case may be.
"Independent Contractor": Either (i) any Person (other than the
Master
Servicer) that would be an "independent contractor" with respect
to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the
Trust Fund were
a real estate investment trust (except that the ownership tests
set forth in
that section shall be considered to be met by any Person that
owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so
long as the
Trust Fund does not receive or derive any income from such
Person and provided
that the relationship
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between such Person and the Trust Fund is at arm's length, all
within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii)
any other Person
(including the Master Servicer) if the Trustee has received an
Opinion of
Counsel, which Opinion of Counsel shall be an expense of the
Trust Fund, to the
effect that the taking of any action in respect of any REO
Property by such
Person, subject to any conditions therein specified, that is
otherwise herein
contemplated to be taken by an Independent Contractor will not
cause such REO
Property to cease to qualify as "foreclosure property" within
the meaning of
Section 860G(a)(8) of the Code (determined without regard to the
exception
applicable for purposes of Section 860D(a) of the Code), or
cause any income
realized in respect of such REO Property to fail to qualify as
rents from real
property.
"Initial Certificate Principal Balance": With respect to any
Regular
Certificate, the amount designated "Initial Certificate
Principal Balance" on
the face thereof.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or
other insurance policy covering a Mortgage Loan, to the extent
such proceeds are
not to be applied to the restoration of the related Mortgaged
Property or
released to the Mortgagor in accordance with the procedures that
the Master
Servicer would follow in servicing mortgage loans held for its
own account,
subject to the terms and conditions of the related Mortgage Note
and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date
and
any Class of Certificates, the calendar month immediately
preceding the month in
which such Distribution Date occurs.
"Late Collections": With respect to any Mortgage Loan, all
amounts
received subsequent to the Determination Date immediately
following any related
Due Period, whether as late payments of Monthly Payments or as
Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent
late payments or
collections of principal and/or interest due (without regard to
any acceleration
of payments under the related Mortgage and Mortgage Note) but
delinquent on a
contractual basis for such Due Period and not previously
recovered.
"Limited Purpose Surety Bond": The Limited Purpose Surety Bond
(Policy
No. AB0039BE), dated February 28, 1996 in respect to certain
Additional
Collateral Mortgage Loans, issued by Ambac Assurance Corporation
(f/k/a Ambac
Indemnity Corporation) for the benefit of certain beneficiaries,
including the
Trustee for the benefit of the Certificateholders, but only to
the extent that
such Limited Purpose Surety Bond covers any Additional
Collateral Mortgage
Loans.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage
Loan in respect of which the Master Servicer has determined, in
accordance with
the servicing procedures specified herein, as of the end of the
related Due
Period, that all Liquidation Proceeds and Insurance Proceeds
which it expects to
recover with respect to the liquidation of the Mortgage Loan or
disposition of
the related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of
the
following events: (i) such Mortgage Loan is paid in full; (ii) a
Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is
removed from the Trust Fund by reason of its being purchased,
sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01.
With respect to
any REO Property, either of the following events: (i) a Final
Recovery
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<PAGE>
Determination is made as to such REO Property; or (ii) such REO
Property is
removed from the Trust Fund by reason of its being sold or
purchased pursuant to
Section 3.23 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received
in
respect of the rental of any REO Property prior to REO
Disposition) received by
the Master Servicer in connection with (i) the taking of all or
a part of a
Mortgaged Property by exercise of the power of eminent domain or
condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a
trustee's sale,
foreclosure sale or otherwise (including, with respect to a
defaulted Mortgage
Loan that is an Additional Collateral Mortgage Loan, the amount
realized on the
related Additional Collateral with respect to such Mortgage Loan
in accordance
with Section 3.16), or (iii) the repurchase, substitution or
sale of a Mortgage
Loan or an REO Property pursuant to or as contemplated by
Section 2.03, Section
3.16 or Section 10.01.
"Loan Balance": As of any date, the aggregate Stated Principal
Balance
of all of the Mortgage Loans as of such date.
"Loan-to-Value Ratio": As of any date and Mortgage Loan (other
than an
Additional Collateral Mortgage Loan), the fraction, expressed as
a percentage,
the numerator of which is the Stated Principal Balance of the
Mortgage Loan, and
the denominator of which is the Value of the related Mortgaged
Property. As of
any date and any Additional Collateral Mortgage Loan, the
related Effective
Loan-to-Value Ratio.
"Loan Rate": With respect to each Mortgage Loan, the annual rate
at
which interest accrues on such Mortgage Loan from time to time
in accordance
with the provisions of the related Mortgage Note, which rate
shall remain
constant at the rate set forth in the Mortgage Loan Schedule as
the Loan Rate in
effect immediately following the Cut-off Date. With respect to
each Mortgage
Loan that becomes an REO Property, as of any date of
determination, the annual
rate determined in accordance with the immediately preceding
sentence as of the
date such Mortgage Loan became an REO Property.
"Lockout Percentage": With respect to any Distribution Date,
the
Certificate Principal Balance of the Class A-6 Certificates,
divided by the
aggregate Certificate Principal Balance of the Senior
Certificates, in each case
immediately prior to any allocations of losses or distributions
on that
Distribution Date.
"Lockout Prepayment Percentage": With respect to any
Distribution Date,
the product of (i) the Lockout Percentage and (ii) the Stepdown
Percentage.
"Lockout Scheduled Percentage": With respect to any Distribution
Date
(i) occurring prior to April 2010, 0% and (ii) occurring in or
after April 2010,
the Lockout Percentage.
"Lost Note Affidavit": With respect to any Mortgage Loan as to
which
the original Mortgage Note has been permanently lost or
destroyed and has not
been replaced, an affidavit from the Depositor as applicable
certifying that the
original Mortgage Note has been lost, misplaced or destroyed
(together with a
copy of the related Mortgage Note and indemnifying the Trust
against any loss,
cost or liability resulting from the failure to deliver the
original Mortgage
Note) in the form of Exhibit H hereto.
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"Lower Priority": As of any date of determination and with
respect to
any Class of Subordinate Certificates, any other Class of
Subordinate
Certificates then outstanding with a later priority for payments
pursuant to
Section 4.01(c).
"Lowest Priority": As of any date of determination, the Class
of
Subordinate Certificates then outstanding with the latest
priority for payments
pursuant to Section 4.01(c), in the following order: Class B-6,
Class B-5, Class
B-4, Class B-3, Class B-2 and Class B-1 Certificates.
"Majority Certificateholders": The Holders of Certificates
evidencing
at least 51% of the Voting Rights.
"Master Servicer Affiliate": A Person (i) controlling,
controlled by or
under common control with the Master Servicer or which is 50% or
more owned by
the Master Servicer and (ii) which is qualified to service
residential mortgage
loans.
"Master Servicer Event of Termination": One or more of the
events
described in Section 7.01.
"Master Servicer Remittance Date": With respect to any
Distribution
Date, the Business Day prior to such Distribution Date.
"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.
"MLCC": Merrill Lynch Credit Corporation and its successors
in
interest.
"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": An amount equal to
the
interest accrued during the related Interest Accrual Period on
the Certificate
Principal Balance of each Class of Certificates at the
then-applicable
Pass-Through Rate. The Monthly Interest Distributable Amount on
any Class of
Certificates will be reduced by the amount of (i) Prepayment
Interest Shortfalls
(to the extent not offset by the Master Servicer with a payment
of Compensating
Interest as provided in Section 3.24), (ii) the interest portion
(adjusted to
the Net Mortgage Rate) of Realized Losses (including Excess
Losses and
Extraordinary Losses) not allocated solely to one or more
specific Classes of
Certificates pursuant to Section 4.02, (iii) the interest
portion of Advances
previously made with respect to a Mortgage Loan or REO Property
which remained
unreimbursed following the Cash Liquidation or REO Disposition
of such Mortgage
Loan or REO Property that were made with respect to
delinquencies that were
ultimately determined to be Excess Losses or Extraordinary
Losses and (iv) any
other interest shortfalls not covered by
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<PAGE>
the subordination provided by the Class B Certificates,
including Relief Act
Shortfalls, with all such reductions allocated among all of the
Certificates in
proportion to their respective amounts of Monthly Interest
Distributable Amount
payable on such Distribution Date which would have resulted
absent such
reductions.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled
monthly payment of principal and interest on such Mortgage Loan
which is payable
by the related Mortgagor from time to time under the related
Mortgage Note,
determined: (a) after giving effect to (i) any Deficient
Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii)
any reduction in
the amount of interest collectible from the related Mortgagor
pursuant to the
Relief Act; (b) without giving effect to any extension granted
or agreed to by
the Master Servicer pursuant to Section 3.01; and (c) on the
assumption that all
other amounts, if any, due under such Mortgage Loan are paid
when due.
"Mortgage": The mortgage, deed of trust or other instrument
creating a
first lien on, or first priority security interest in, a
Mortgaged Property
securing a Mortgage Note.
"Mortgage 100(sm) Loan": A Mortgage Loan secured by
Additional
Collateral in the form of a security interest in the Securities
Account and the
financial assets held therein and having a value, as of the date
of origination
of such Mortgage Loan, of at least equal to the related Original
Additional
Collateral Requirement.
"Mortgage 100(sm) Pledge Agreement": With respect to each
Mortgage
100(sm) Loan, the Pledge Agreement for Securities Account
between the related
mortgagor and the Additional Collateral Servicer pursuant to
which such
mortgagor granted a security interest in the related securities
and other
financial assets held therein.
"Mortgage File": The mortgage documents listed in Section
2.01(A) and
(B) pertaining to a particular Mortgage Loan and any additional
documents
required to be added to the Mortgage File pursuant to this
Agreement.
"Mortgage Loan": Each mortgage loan (including the Cooperative
Loans)
transferred and assigned to the Trustee pursuant to Section 2.01
or Section
2.03(d) as from time to time held as a part of the Trust Fund,
the Mortgage
Loans so held being identified in the Mortgage Loan
Schedule.
"Mortgage Loan Purchase Agreement": The mortgage loan
purchase
agreement, dated as of March 1, 2005, among the Sellers and the
Depositor,
regarding the transfer of the Mortgage Loans.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans
identifying the Mortgage Loans transferred from the Sellers, and
attached hereto
as Exhibit D. The Mortgage Loan Schedule shall set forth the
following
information with respect to each Mortgage Loan:
(i) the Sellers' Mortgage Loan identifying number;
(ii) [reserved];
(iii) the zip code of the related Mortgaged Property;
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(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
(vi) the original months to maturity;
(vii) the original date of the mortgage;
(viii) the Loan-to-Value Ratio or Effective Loan-to-Value
Ratio, as applicable, at origination;
(ix) the loan rate;
(x) the date on which the first Monthly Payment was due
on the Mortgage Loan;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment as of the Cut-off
Date;
(xiv) the next Due Date on which a Monthly Payment is due;
(xv) the original principal amount of the Mortgage Loan;
(xvi) the unpaid principal balance of the Mortgage Loan as
of the close of business on the Cut-off Date;
(xvii) a code indicating the purpose of the Mortgage Loan
(i.e., purchase financing, Rate/Term Refinancing,
Cash-Out Refinancing);
(xviii) a code indicating the documentation style (i.e.,
full, alternative or reduced);
(xix) a code indicating if the Mortgage Loan is subject to
a Primary Insurance Policy;
(xx) the name of the Qualified Insurer and the certificate
number for any Primary Insurance Policy, if
applicable;
(xxi) the depth of coverage of any Primary Insurance
Policy, if applicable;
(xxii) the Value of the Mortgaged Property;
(xxiii) the sale price of the Mortgaged Property, if
applicable;
(xxiv) the Servicing Fee;
(xxv) whether the Mortgage Loan is a Buydown Mortgage Loan;
and
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<PAGE>
(xxvi) the amount of the Original Additional Collateral
Requirement, if any.
The Mortgage Loan Schedule shall set forth the following
information
with respect to the Mortgage Loans in the aggregate as of the
Cut-off Date: (1)
the number of Mortgage Loans; (2) the current principal balance
of the Mortgage
Loans; (3) the weighted average Loan Rate of the Mortgage Loans;
and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage
Loan Schedule
shall be amended from time to time by the Master Servicer in
accordance with the
provisions of this Agreement. With respect to any Eligible
Substitute Mortgage
Loan, Cut-off Date shall refer to the related Cut-off Date for
such Mortgage
Loan, determined in accordance with the definition of Cut-off
Date herein.
"Mortgage Note": The original executed note or other evidence
of
indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibit D
from time to time, and any REO Properties acquired in respect
thereof.
"Mortgaged Property": The underlying property securing a
Mortgage Loan,
including any REO Property, consisting of an Estate in Real
Property improved by
a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage
Loan or any other disposition of related Mortgaged Property
(including REO
Property) the related Liquidation Proceeds net of Advances,
Servicing Advances,
Servicing Fees and any other accrued and unpaid Servicing Fees
received and
retained in connection with the liquidation of such Mortgage
Loan or Mortgaged
Property Rate.
"Net Mortgage Rate": With respect to any Mortgage Loan, (x) the
Loan
Rate minus (y) the Servicing Fee Rate and the Trustee Fee
Rate.
"New Lease": Any lease of REO Property entered into on behalf of
the
Trust, including any lease renewed or extended on behalf of the
Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously
made or proposed to be made in respect of a Mortgage Loan or REO
Property that,
in the good faith business judgment of the Master Servicer, will
not or, in the
case of a proposed Advance or Servicing Advance, would not be
ultimately
recoverable from Late Collections on such Mortgage Loan or REO
Property as
provided herein.
"Officers' Certificate": A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President or a vice
president
(however denominated), and by the Treasurer, the Secretary, or
one of the
assistant treasurers or assistant secretaries of the Master
Servicer or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without
limitation, be a salaried counsel for the Depositor or the
Master Servicer,
acceptable to the Trustee, except that
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<PAGE>
any opinion of counsel relating to (a) the qualification of any
REMIC as a REMIC
or (b) compliance with the REMIC Provisions must be an opinion
of Independent
counsel.
"Optional Termination Date": The first Distribution Date on
which the
Master Servicer may opt to terminate the Trust Fund pursuant to
Section 10.01.
"Original Additional Collateral Requirement': With respect to
any
Additional Collateral Mortgage Loan, an amount equal to the
Additional
Collateral required at the time of the origination of such
Additional Collateral
Mortgage Loan in order to achieve an Effective Loan-to-Value
Ratio for such
Additional Collateral Mortgage Loan, generally equal to seventy
percent (70%);
for purposes of the Required Surety Payment, in no event shall
the Original
Additional Collateral Requirement for an Additional Collateral
Mortgage Loan
exceed thirty percent (30%) of its original principal
balance.
"Original Certificate Principal Balance": With respect to each
Class of
the Certificates, the Certificate Principal Balance thereof on
the Closing Date,
as set forth opposite such Class above in the Preliminary
Statement.
"Original Subordinated Principal Balance": The aggregate of
the
Certificate Principal Balances of the Subordinate Certificates
as of the Cut-off
Date.
"Other Insurance Proceeds": Proceeds of any title policy, hazard
policy
or other insurance policy covering a Mortgage Loan, other than
the Primary
Insurance Policy, if any, to the extent such proceeds are not to
be applied to
the restoration of the related Mortgaged Property or released to
the Mortgagor
in accordance with the procedures that the Master Servicer would
follow in
servicing mortgage loans held for its own account.
"Ownership Interest": As to any Certificate, any ownership or
security
interest in such Certificate, including any interest in such
Certificate as the
Holder thereof and any other interest therein, whether direct or
indirect, legal
or beneficial, as owner or as pledgee.
"Parent Power(R) Agreement": With respect to each Parent
Power(R)
Mortgage Loan, a Parent Power(R) Guaranty and Security Agreement
for Securities
Account.
"Parent Power(R) Guaranty and Security Agreement for
Securities
Account": With respect to a Parent Power(R) Mortgage Loan, an
agreement between
the Additional Collateral Servicer and a guarantor on behalf of
the mortgagor
under such Parent Power(R) Mortgage Loan pursuant to which such
guarantor
guarantees the payment of certain losses under such Parent
Power(R) Mortgage
Loan and has granted a security interest to the Additional
Collateral Servicer
in certain marketable securities to collateralize such guaranty.
The required
amount of such collateral is at least equal to the Original
Additional
Collateral Requirement for such Parent Power(R) Mortgage
Loan.
"Parent Power(R) Mortgage Loan": A Mortgage Loan having at the
time of
origination a Loan-to-Value Ratio generally in excess of the
Master Servicer's
maximum acceptable Loan-to-Value Ratio for such Mortgage Loan as
set forth in
the Underwriting Guide, which Mortgage Loan is supported by a
Parent Power(R)
Agreement.
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<PAGE>
"Pass-Through Rate": With respect to the Certificates (other
than the
Class A-1, Class A-2 and Class A-6 Certificates) and any
Distribution Date, a
per annum rate equal to the weighted average of the Net Mortgage
Rates on each
Mortgage Loan. With respect to the Class A-1 Certificates and
any Distribution
Date, a per annum rate equal to (i) the weighted average of the
Net Mortgage
Rate on each Mortgage Loan minus (ii) 0.40%. For federal income
tax purposes,
however, the Class A-1 Certificates will have a per annum rate
equal to (i) the
Uncertificated Pass-Through Rate on the REMIC I Regular Interest
A-1 minus (ii)
0.40%. With respect to the Class A-2 Certificates and any
Distribution Date, a
per annum rate equal to (i) the weighted average of the Net
Mortgage Rate on
each Mortgage Loan minus (ii) 0.45%. For federal income tax
purposes, however,
the Class A-2 Certificates will have a per annum rate equal to
(i) the
Uncertificated Pass-Through Rate on the REMIC I Regular Interest
A-2 minus (ii)
0.45%. With respect to the Class A-6 Certificates and any
Distribution Date, a
per annum rate equal to the sum of (i) the weighted average of
the Net Mortgage
Rate on each Mortgage Loan, (ii) 0.40% per annum multiplied by a
fraction, the
numerator of which is the Certificate Principal Balance of the
Class A-1
Certificates and the denominator of which is the Certificate
Principal Balance
of the Class A-6 Certificates and (iii) 0.45% per annum
multiplied by a
fraction, the numerator of which is the Certificate Principal
Balance of the
Class A-2 Certificates and the denominator of which is the
Certificate Principal
Balance of the Class A-6 Certificates. For federal income tax
purposes, the
Class A-6 Certificates will represent ownership of the Class
A-6A Component,
Class A-6B Component and Class A-6C Component; the Pass-Through
Rate with
respect to the Class A-6A Component is a per annum rate equal to
the
Uncertificated Pass-Through Rate on REMIC I Regular Interest
A-6, which will be
applied to the Class A-6A Component Principal Amount, the
Pass-Through Rate with
respect to the Class A-6B Component is 0.40% per annum, which
will be applied to
the Class A-6B Component Notional Amount and the Pass-Through
Rate with respect
to the Class A-6C Component is 0.45% per annum, which will be
applied to the
Class A-6C Component Notional Amount.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other
than a
Class R Certificate), a fraction, expressed as a percentage, the
numerator of
which is the Initial Certificate Principal Balance, represented
by such
Certificate and the denominator of which is the Original
Certificate Principal
Balance of the related Class. With respect to any Class of Class
R Certificates,
the portion of such Class evidenced thereby, expressed as a
percentage, as
stated on the face of such Certificate; provided, however, that
the sum of all
such percentages for each such Class totals 100%.
"Permitted Investments": Any one or more of the following
obligations
or securities acquired at a purchase price of not greater than
par, regardless
of whether issued or managed by the Depositor, the Master
Servicer, the Trustee
or any of their respective Affiliates or for which an Affiliate
of the Trustee
serves as an advisor:
(i) obligations of or guaranteed as to principal and
interest
by the United States or any agency or instrumentality thereof
when such
obligations are backed by the full faith and credit of the
United
States;
(ii) repurchase agreements on obligations specified in
clause
(i) maturing not more than one month from the date of
acquisition
thereof, provided that the unsecured
26
<PAGE>
obligations of the party agreeing to repurchase such obligations
are at
the time rated by the Rating Agency in its highest short-term
rating
available;
(iii) federal funds, certificates of deposit, demand
deposits,
time deposits and bankers' acceptances (which shall each have
an
original maturity of not more than 90 days and, in the case of
bankers'
acceptances, shall in no event have an original maturity of more
than
365 days or a remaining maturity of more than 30 days)
denominated in
United States dollars of any U.S. depository institution or
trust
company incorporated under the laws of the United States or any
state
thereof or of any domestic branch of a foreign depository
institution
or trust company; provided that the debt obligations of such
depository
institution or trust company (or, if the only Rating Agency is
S&P, in
the case of the principal depository institution in a
depository
institution holding company, debt obligations of the
depository
institution holding company) at the date of acquisition thereof
have
been rated by the Rating Agency in its highest short-term
rating
available; and provided further that, if the only Rating Agency
is S&P
and if the depository or trust company is a principal subsidiary
of a
bank holding company and the debt obligations of such subsidiary
are
not separately rated, the applicable rating shall be that of the
bank
holding company; and, provided further that, if the original
maturity
of such short-term obligations of a domestic branch of a
foreign
depository institution or trust company shall exceed 30 days,
the
short-term rating of such institution shall be A-1+ in the case
of S&P
if S&P is the Rating Agency;
(iv) commercial paper and demand notes (having original
maturities of not more than 365 days) of any corporation
incorporated
under the laws of the United States or any state thereof which
on the
date of acquisition has been rated by the Rating Agency in its
highest
short-term rating available; provided that such commercial paper
shall
have a remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated
by the Rating Agency in its highest long-term rating available;
and
(vi) other obligations or securities that are acceptable to
the Rating Agency as a Permitted Investment hereunder and will
not
reduce the rating assigned to any Class of Certificates by such
Rating
Agency below the lower of the then-current rating or the
rating
assigned to such Certificates as of the Closing Date by such
Rating
Agency, as evidenced in writing;
provided, that no instrument described hereunder shall evidence
either the right
to receive (a) only interest with respect to the obligations
underlying such
instrument or (b) both principal and interest payments derived
from obligations
underlying such instrument and the interest and principal
payments with respect
to such instrument provide a yield to maturity at par greater
than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Person other than a Disqualified
Organization, an "electing large partnership" as defined in
Section 775(a) of
the Code, or a non-U.S. Person.
"Person": Any individual, corporation, partnership, joint
venture,
association, joint stock company, trust, limited liability
company,
unincorporated organization or government or any agency or
political subdivision
thereof.
27
<PAGE>
"Prepayment Distribution Trigger": With respect to any
Distribution
Date and any Class of Subordinate Certificates (other than the
Class B-1
Certificates), a test that shall be satisfied if the fraction
(expressed as a
percentage) equal to the sum of the Certificate Principal
Balances of such Class
and each Class of Subordinate Certificates with a Lower Priority
than such Class
immediately prior to such Distribution Date divided by the
aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO
Properties)
immediately prior to such Distribution Date is greater than or
equal to the sum
of the related initial Class B Percentages of such Classes of
Subordinate
Certificates.
"Prepayment Interest Shortfall": As to any Distribution Date and
any
Mortgage Loan (other than a Mortgage Loan relating to an REO
Property) that was
the subject of (a) a Principal Prepayment in Full during the
related Prepayment
Period, an amount equal to the excess of one month's interest at
the Net
Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan over the
amount of interest (adjusted to the Net Mortgage Rate) paid by
the Mortgagor for
such Prepayment Period to the date of such Principal Prepayment
in Full or (b) a
Curtailment during the prior calendar month, an amount equal to
one month's
interest at the Net Mortgage Rate on the amount of such
Curtailment. The
obligations of the Master Servicer in respect of any Prepayment
Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date,
the
calendar month preceding the month in which such Distribution
Date occurs.
"Primary Insurance Policy": Each policy of primary guaranty
mortgage
insurance issued by a Qualified Insurer in effect with respect
to any Mortgage
Loan, or any replacement policy therefor obtained by the Master
Servicer
pursuant to Section 3.13.
"Principal Prepayment": Any payment of principal made by the
Mortgagor
on a Mortgage Loan which is received in advance of its scheduled
Due Date and
which is not accompanied by an amount of interest representing
the full amount
of scheduled interest due on any Due Date in any month or months
subsequent to
the month of prepayment.
"Principal Prepayment in Full": Any Principal Prepayment made by
a
Mortgagor of the entire unpaid principal balance of the Mortgage
Loan.
"Private Certificates": Any of the Class B-1, Class B-2, Class
B-3,
Class B-4, Class B-5 and Class B-6 Certificates.
"Property Insurance Proceeds": Proceeds of any title policy,
hazard
policy or other insurance policy covering a Mortgage Loan, to
the extent such
proceeds are received by the Master Servicer and are not to be
applied to the
restoration of the related Mortgaged Property or released to the
Mortgagor in
accordance with the Master Servicer's servicing procedures,
subject to the terms
and conditions of the related Mortgage Note and Mortgage.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to
be purchased pursuant to or as contemplated by Section 2.03 or
10.01, and as
confirmed by an Officers' Certificate from the Master Servicer
to the Trustee,
an amount equal to the sum of (i) 100% of the Stated Principal
Balance thereof
as of the date of purchase (or such other price as provided in
Section 10.01),
(ii) in the case of (x) a Mortgage Loan, accrued interest on
such Stated
Principal Balance at the applicable Loan Rate in effect from
time to time from
the Due Date as to which interest was last covered by a payment
by the Mortgagor
or an advance by the Master Servicer, which payment or advance
had as of the
date of purchase been distributed pursuant to Section 4.01,
through the end of
the calendar month in which the purchase is to be effected, and
(y) an REO
Property, the sum of (1) accrued interest on such Stated
Principal Balance at
the applicable Loan Rate in effect from time to time from the
Due Date as to
which
28
<PAGE>
interest was last covered by a payment by the Mortgagor or an
advance by the
Master Servicer through the end of the calendar month
immediately preceding the
calendar month in which such REO Property was acquired, plus (2)
REO Imputed
Interest for such REO Property for each calendar month
commencing with the
calendar month in which such REO Property was acquired and
ending with the
calendar month in which such purchase is to be effected, net of
the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and
Advances that as
of the date of purchase had been distributed as or to cover REO
Imputed Interest
pursuant to Section 4.07, (iii) any unreimbursed Servicing
Advances and Advances
and any unpaid Servicing Fees allocable to such Mortgage Loan or
REO Property,
(iv) any amounts previously withdrawn from the Collection
Account in respect of
such Mortgage Loan or REO Property pursuant to Section 3.23, and
(v) in the case
of a Mortgage Loan required to be purchased pursuant to Section
2.03, expenses
reasonably incurred or to be incurred by the Master Servicer or
the Trustee in
respect of the breach or defect giving rise to the purchase
obligation.
"Qualified Insurer": Any insurance company acceptable to Fannie
Mae or
Freddie Mac.
"Rate/Term Refinancing": A Refinanced Mortgage Loan which is not
a
Cash-Out Refinancing.
"Rating Agency": Fitch or its successor. If such agency or
its
successor is no longer in existence, "Rating Agency" shall be
such nationally
recognized statistical rating agency, or other comparable
Persons, designated by
the Depositor, notice of which designation shall be given to the
Trustee and
Master Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan, the
amount
by which the remaining unpaid principal balance of the Mortgage
Loan exceeds the
amount of Liquidation Proceeds applied to the principal balance
of the related
Mortgage Loan. To the extent the Master Servicer receives
Subsequent Recoveries
with respect to any Mortgage Loan, the amount of the Realized
Loss with respect
to that Mortgage Loan will be reduced to the extent such
recoveries are applied
to reduce the Certificate Principal Balance of any Class of
Certificates on any
Distribution Date.
"Record Date": With respect to all of the Certificates, the
last
Business Day of the month immediately preceding the month in
which the related
Distribution Date occurs.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were
used to satisfy an existing mortgage loan on the Mortgaged
Property.
"Regular Certificate": Any of the Class A Certificates and Class
B
Certificates.
"Related Documents": With respect to any Mortgage Loan, the
related
Mortgage Notes, Mortgages and other related documents.
"Relief Act": The Servicemembers Civil Relief Act.
29
<PAGE>
"Relief Act Interest Shortfall": With respect to any
Distribution Date,
for any Mortgage Loan as to which there has been a reduction in
the amount of
interest collectible thereon for the most recently ended Due
Period as a result
of the application of the Relief Act, the amount by which (i)
interest
collectible on such Mortgage Loan during such Due Period is less
than (ii) one
month's interest on the Stated Principal Balance of such
Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the
application of the
Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the
meaning
of Section 860D of the Code.
"REMIC I": The segregated pool of assets, with respect to which
a REMIC
election is to be made, consisting of: (i) each Mortgage Loan
(exclusive of
payments of principal and interest due on or before the Cut-off
Date, if any,
received by the Master Servicer which shall not constitute an
asset of the Trust
Fund) as from time to time are subject to this Agreement and all
payments under
and proceeds of such Mortgage Loans (exclusive of any prepayment
fees and late
payment charges received on the Mortgage Loans), together with
all documents
included in the related Mortgage File, subject to Section 2.01;
(ii) such funds
or assets as from time to time are deposited in the Collection
Account or the
Distribution Account and belonging to the Trust Fund; (iii) any
REO Property;
(iv) the Primary Hazard Insurance Policies, if any, the Primary
Insurance
Policies, if any, and all other Insurance Policies with respect
to the Mortgage
Loans; (v) the Depositor's rights in respect of the Additional
Collateral and
the Limited Purpose Surety Bond, including the assignment of the
Depositor's
rights under the Additional Collateral Servicing Agreement; and
(vi) the
Depositor's interest in respect of the representations and
warranties made by
the Sellers in the Mortgage Loan Purchase Agreement as assigned
to the Trustee
pursuant to Section 2.04 hereof. The Trust Fund shall not
include the Buydown
Account.
"REMIC I Regular Interests": The uncertificated partial
undivided
beneficial ownership interests in REMIC I, designated as REMIC I
Regular
Interests A-1, A-2, A-3, A-4, A-5, A-6, B-1, B-2, B-3, B-4, B-5,
B-6 and R-II,
with respect to which a REMIC election is to be made.
"REMIC II": The segregated pool of assets consisting of the
REMIC I
Regular Interests conveyed in trust to the Trustee for the
benefit of the
holders of the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6,
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6
and Class R-II
Certificates pursuant to Section 9.01, with respect to which a
separate REMIC
election is to be made pursuant to Section 9.01.
"REMIC Provisions": Provisions of the federal income tax law
relating
to real estate mortgage investment conduits which appear at
Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and
regulations and rulings promulgated thereunder, as the foregoing
may be in
effect from time to time.
"Remittance Report": A report prepared by the Master Servicer
and
delivered to the Trustee pursuant to Section 4.03.
"Rents from Real Property": With respect to any REO Property,
gross
income of the character described in Section 856(d) of the
Code.
30
<PAGE>
"REO Account": The account or accounts maintained by the
Master
Servicer in respect of an REO Property pursuant to Section
3.23.
"REO Disposition": The sale or other disposition of an REO
Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar
month
during which such REO Property was at any time part of the Trust
Fund, one
month's interest at the applicable Net Mortgage Rate on the
Stated Principal
Balance of such REO Property (or, in the case of the first such
calendar month,
of the related Mortgage Loan if appropriate) as of the close of
business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property,
for any
calendar month, the excess, if any, of (a) the aggregate of all
amounts received
in respect of such REO Property during such calendar month,
whether in the form
of rental income, sale proceeds (including, without limitation,
that portion of
the Termination Price paid in connection with a purchase of all
of the Mortgage
Loans and REO Properties pursuant to Section 10.01 that is
allocable to such REO
Property) or otherwise, net of any portion of such amounts (i)
payable pursuant
to Section 3.23 in respect of the proper operation, management
and maintenance
of such REO Property or (ii) payable or reimbursable to the
Master Servicer
pursuant to Section 3.23 for unpaid Servicing Fees in respect of
the related
Mortgage Loan and unreimbursed Servicing Advances and Advances
in respect of
such REO Property or the related Mortgage Loan, over (b) the REO
Imputed
Interest in respect of such REO Property for such calendar
month.
"REO Property": A Mortgaged Property acquired by the Master
Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as
described in Section 3.23 hereto.
"Request for Release": A release signed by a Servicing Officer,
in the
form of Exhibit E attached
"Required Surety Payment": With respect to any Additional
Collateral
Mortgage Loan that becomes a Liquidated Mortgage Loan, the
lesser of (i) the
principal portion of the Realized Loss with respect to such
Mortgage Loan and
(ii) the excess, if any, of (a) the Original Additional
Collateral Requirement
with respect to such Mortgage Loan over (b) the net proceeds
realized by the
Additional Collateral Servicer from the related Additional
Collateral as set
forth in Section 3.16.
"Residential Dwelling": Any one of the following: (i) an
attached or
detached one-family dwelling unit, (ii) two- to four-family
dwelling unit, (iii)
condominium, (iv) townhouse, (v) row house, or (vi) individual
unit in a planned
unit development.
"Residual Certificate": Any of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in a
REMIC
within the meaning of Section 860G(a)(2) of the Code.
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<PAGE>
"Responsible Officer": When used with respect to the Trustee,
any
officer, including any Vice President, Assistant Vice President,
Trust Officer,
any Assistant Secretary, any trust officer or any other officer
of the Trustee
customarily performing functions similar to those performed by
any of the above
designated officers and in each case having direct
responsibility for the
administration of this Agreement.
"Restricted Classes": With respect to any Class of Certificates,
any
Classes of Certificates with a lower priority of payment
relative to such Class.
"S&P": Standard & Poor's, a division of The McGraw-Hill
Companies,
Inc., and its successors.
"Securities Account": With respect to any Additional
Collateral
Mortgage Loans, the account, together with the financial assets
held therein,
that is the subject of the related Mortgage 100(sm) Pledge
Agreement.
"Security Agreement": With respect to a Cooperative Loan, the
agreement
creating a security interest in favor of the originator in the
related
Cooperative Assets.
"Seller": Either of (i) PHH Mortgage Corporation, a New
Jersey
corporation, or any successor in interest or (ii) Bishop's Gate
Residential
Mortgage Trust, a Delaware business trust, or any successor in
interest.
"Senior Certificates": The Class A-1, Class A-2, Class A-3,
Class A-4,
Class A-5, Class A-6 and Class R Certificates.
"Senior Interest Distribution Amount": With respect to each
Distribution Date, the aggregate amount of the Monthly Interest
Distributable
Amount to be distributed to the Holders of the Senior
Certificates for such
Distribution Date.
"Senior Percentage": As of any Distribution Date, the lesser of
100%
and a fraction, expressed as a percentage, the numerator of
which is the
aggregate Certificate Principal Balance of the Class A
Certificates and Class R
Certificates immediately prior to such Distribution Date and the
denominator of
which is the aggregate Stated Principal Balance of all of the
Mortgage Loans or
related REO Properties immediately prior to such Distribution
Date.
"Senior Prepayment Percentage": With respect to any Distribution
Date,
the percentage indicated below:
<TABLE>
<CAPTION>
DISTRIBUTION DATE SENIOR PREPAYMENT PERCENTAGE
<S> <C>
April 2005 through March 2010 100%
April 2010 through March 2011 Senior Percentage, plus 70% of the
Subordinate
Percentage
April 2011 through March 2012 Senior Percentage, plus 60% of the
Subordinate
Percentage
April 2012 through March 2013 Senior Percentage, plus 40% of the
Subordinate
Percentage
April 2013 through March 2014 Senior Percentage, plus 20% of the
Subordinate
Percentage
April 2014 and thereafter Senior Percentage
</TABLE>
32
<PAGE>
provided, however, (i) that any scheduled reduction to the
Senior Prepayment
Percentage described above shall not occur as of any
Distribution Date unless
either (a)(1)(x) the outstanding principal balance of Mortgage
Loans Delinquent
60 days or more (including Mortgage Loans in foreclosure and REO
Property)
averaged over the last six months as a percentage of the
aggregate outstanding
Certificate Principal Balance of the Class B Certificates as of
such
Distribution Date, is less than 50%, or (y) the outstanding
principal balance of
Mortgage Loans Delinquent 60 days or more (including Mortgage
Loans in
foreclosure and REO Property) averaged over the last six months,
as a percentage
of the aggregate outstanding principal balance of all Mortgage
Loans as of such
Distribution Date, does not exceed 2% and (2) Realized Losses on
the Mortgage
Loans to date for such Distribution Date if occurring during the
sixth, seventh,
eighth, ninth or tenth year (or any year thereafter) after the
Closing Date are
less than 30%, 35%, 40%, 45% or 50%, respectively, of the sum of
the Initial
Certificate Principal Balances of the Class B Certificates or
(b) (1) the
aggregate outstanding principal balance of the Mortgage Loans
Delinquent 60 days
or more (including Mortgage Loans in foreclosure and REO
Property) averaged over
the last six months, as a percentage of the aggregate
outstanding principal
balance of all Mortgage Loans as of such Distribution Date, does
not exceed 4%
and (2) Realized Losses on the Mortgage Loans to date for such
Distribution Date
if occurring during the sixth, seventh, eighth, ninth or tenth
year (or any year
thereafter) after the Closing Date are less than 10%, 15%, 20%,
25% or 30%,
respectively, of the sum of the Initial Certificate Principal
Balances of the
Class B Certificates and (ii) that for any Distribution Date on
which the Senior
Percentage is greater than the Original Senior Percentage, the
Senior Prepayment
Percentage for such Distribution Date shall be 100%.
Notwithstanding the
foregoing, upon the reduction of the aggregate Certificate
Principal Balance of
the Senior Certificates to zero, the Senior Prepayment
Percentage will equal 0%.
"Senior Principal Distribution Amount": As to any Distribution
Date,
the lesser of (a) the balance of the Available Distribution
Amount remaining
after the distribution of all amounts required to be distributed
pursuant to
Section 4.01(c)(i) and (b) the sum of the following:
(A) the Senior Percentage for such Distribution Date times
the
sum of the following:
(1) the principal portion of each Monthly Payment due
during the related Due Period on each Outstanding Mortgage
Loan whether or not received on or prior to the related
Determination Date, minus the principal portion of any Debt
Service Reduction, which together with other Bankruptcy
Losses
exceeds the Bankruptcy Amount;
(2) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period pursuant to
Section 2.02, 2.03, 3.15 or 3.16; and
(3) the principal portion of all other unscheduled
collections (other than Principal Prepayments in Full and
Curtailments and amounts received in connection with a Cash
Liquidation or REO Disposition of a Mortgage Loan,
33
<PAGE>
including without limitation Insurance Proceeds, Liquidation
Proceeds, Subsequent Recoveries and REO Proceeds), received
during the related Prepayment Period to the extent applied
by
the Master Servicer as recoveries of principal of the
related
Mortgage Loan pursuant to Section 3.16;
(B) with respect to each Mortgage Loan for which a Cash
Liquidation or a REO Disposition occurred during the related
Prepayment
Period and did not result in any Excess Special Hazard Losses,
Excess
Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses,
an
amount equal to the lesser of (a) the Senior Percentage for
such
Distribution Date times the Stated Principal Balance of such
Mortgage
Loan and (b) the Senior Prepayment Percentage for such
Distribution
Date times the related unscheduled collections (including
without
limitation Insurance Proceeds, Liquidation Proceeds and REO
Proceeds)
to the extent applied by the Master Servicer as recoveries of
principal
of the related Mortgage Loan pursuant to Section 3.16;
(C) the Senior Prepayment Percentage for such Distribution
Date times the aggregate of all Principal Prepayments in Full
and
Curtailments received in the related Prepayment Period with
respect to
the Mortgage Loans;
(D) any Excess Subordinate Principal Amount for such
Distribution Date; and
(E) any amounts described in clauses (A), (B) or (C) of this
definition, as determined for any previous Distribution Date,
which
remain unpaid after application of amounts previously
distributed
pursuant to this clause (E) to the extent that such amounts are
not
attributable to Realized Losses which have been allocated to the
Class
B Certificates;
"Servicing Account": The account or accounts created and
maintained
pursuant to Section 3.09.
"Servicer Event of Termination": One or more of the events
described in
Section 7.01.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses
incurred by the Master Servicer in connection with a default,
delinquency or
other unanticipated event by the Master Servicer in the
performance of its
servicing obligations, including, but not limited to, (a)
reasonable attorneys'
fees and (b) the cost of (i) the preservation, restoration and
protection of a
Mortgaged Property, (ii) any enforcement or judicial
proceedings, including
foreclosures, in respect of a particular Mortgage Loan,
including any expenses
incurred in relation to any such proceedings that result from
the Mortgage Loan
being registered on the MERS System, (iii) the management
(including reasonable
fees in connection therewith) and liquidation of any REO
Property, and (iv) the
performance of its obligations under Section 3.01, Section 3.09,
Section 3.13,
Section 3.14, Section 3.16 and Section 3.23. The Master Servicer
shall not be
required to make any Servicing Advance in respect of a Mortgage
Loan or REO
Property that, in the good faith business judgment of the Master
Servicer, would
not be ultimately recoverable from related Insurance Proceeds or
Liquidation
Proceeds on such Mortgage Loan or REO Property as provided
herein.
"Servicing Officer": Any officer of the Master Servicer involved
in, or
responsible for, the administration and servicing of Mortgage
Loans, whose name
and specimen signature appear
34
<PAGE>
on a list of servicing officers famished by the Master Servicer
to the Trustee
and the Depositor on the Closing Date, as such list may from
time to time be
amended.
"Servicing Fee": With respect to each Mortgage Loan and for
any
calendar month, an amount equal to one month's interest (or in
the event of any
payment of interest which accompanies a Principal Prepayment in
Full made by the
Mortgagor during such calendar month, interest for the number of
days covered by
such payment of interest) at the applicable Servicing Fee Rate
on the same
principal amount on which interest on such Mortgage Loan accrues
for such
calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan, a rate
equal
to 0.25% per annum.
"Special Hazard Amount": As of any Distribution Date, an amount
equal
to $708,098 minus the sum of (i) the aggregate amount of Special
Hazard Losses
allocated solely to one or more specific Classes of Certificates
in accordance
with Section 4.02 and (ii) the Adjustment Amount (as defined
below) as most
recently calculated. For each anniversary of the Cut-off Date,
the Adjustment
Amount shall be equal to the amount, if any, by which the amount
calculated in
accordance with the preceding sentence (without giving effect to
the deduction
of the Adjustment Amount for such anniversary) exceeds the
greater of (A) the
greatest of (i) twice the outstanding principal balance of the
Mortgage Loan in
the Trust Fund which has the largest outstanding principal
balance on the
Distribution Date immediately preceding such anniversary, (ii)
the product of
1.00% multiplied by the outstanding principal balance of all
Mortgage Loans on
the Distribution Date immediately preceding such anniversary and
(iii) the
aggregate outstanding principal balance (as of the immediately
preceding
Distribution Date) of the Mortgage Loans in any single
five-digit California zip
code area with the largest amount of Mortgage Loans by aggregate
principal
balance as of such anniversary and (B) the greater of (i) the
product of 0.50%
multiplied by the outstanding principal balance of all Mortgage
Loans on the
Distribution Date immediately preceding such anniversary
multiplied by a
fraction, the numerator of which is equal to the aggregate
outstanding principal
balance (as of the immediately preceding Distribution Date) of
all of the
Mortgage Loans secured by Mortgaged Properties located in the
State of
California divided by the aggregate outstanding principal
balance (as of the
immediately preceding Distribution Date) of all of the Mortgage
Loans, expressed
as a percentage, and the denominator of which is equal to 16.75%
(which
percentage is equal to the percentage of Mortgage Loans
initially secured by
Mortgaged Properties located in the State of California) and
(ii) the aggregate
outstanding principal balance (as of the immediately preceding
Distribution
Date) of the largest Mortgage Loan secured by a Mortgaged
Property located in
the State of California.
The Special Hazard Amount may be further reduced by the Master
Servicer
(including accelerating the manner in which coverage is reduced)
provided that
prior to any such reduction, the Master Servicer shall (i)
obtain written
confirmation from the Rating Agency that such reduction shall
not reduce the
rating assigned to any Class of Certificates by such Rating
Agency below the
lower of the then-current rating or the rating assigned to such
Certificates as
of the Closing Date by such Rating Agency and (ii) provide a
copy of such
written confirmation to the Trustee.
"Special Hazard Losses": Realized Losses in respect of Special
Hazard
Mortgage Loans.
35
<PAGE>
"Special Hazard Mortgage Loan": A Liquidated Mortgage Loan as to
which
the ability to recover the full amount due thereunder was
substantially unpaired
by a hazard not insured against under a standard hazard
insurance policy.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan
and Due
Date, the unpaid principal balance of such Mortgage Loan as of
such Due Date, as
specified in the amortization schedule at the time relating
thereto (before any
adjustment to such amortization schedule by reason of any
moratorium or similar
waiver or grace period), after giving effect to any previous
partial prepayments
and Liquidation Proceeds received and to the payment of
principal due on such
Due Date and irrespective of any delinquency in payment by the
related
Mortgagor.
"Stayed Funds": If the Master Servicer is the subject of a
proceeding
under the federal Bankruptcy Code and the mailing of a
remittance by the Master
Servicer pursuant to this Agreement is prohibited by Section 362
of the federal
Bankruptcy Code, funds which are in the custody of the Master
Servicer, a
trustee in bankruptcy or a federal bankruptcy court and should
have been the
subject of such remittance absent such prohibition.
"Stepdown Percentage": With respect to any Distribution Date,
the
percentage indicated below:
Distribution Date Stepdown Percentage
----------------- -------------------
April 2005 through March 2010 0%
April 2010 through March 2011 30%
April 2011 through March 2012 40%
April 2012 through March 2013 60%
April 2013 through March 2014 80%
April 2014 and thereafter 100%
"Subordinate Certificates": The Class B-1, Class B-2, Class B-3,
Class
B-4, Class B-5 and Class B-6 Certificates.
"Subordinate Percentage": For any Distribution Date, the
difference
between 100% and the Senior Percentage for such date.
"Subordinate Prepayment Percentage": With respect to any
Distribution
Date and each Class of Subordinate Certificates, under the
applicable
circumstances set forth below, the respective percentages set
forth below:
(i) For any Distribution Date prior to the Distribution Date
in April 2010, 0%.
(ii) For any Distribution Date for which clause (i) does not
apply, and on which any Class of Subordinate Certificates
are
outstanding:
(a) in the case of the Class of Subordinate
Certificates then outstanding with the Highest Priority and
each other Class of Subordinate
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Certificates for which the related Prepayment Distribution
Trigger has been satisfied, a fraction, expressed as a
percentage, the numerator of which is the Certificate
Principal Balance of such Class immediately prior to such
date
and the denominator of which is the sum of the Certificate
Principal Balances immediately prior to such date of (1) the
Class of Subordinate Certificates then outstanding with the
Highest Priority and (2) all other Classes of Subordinate
Certificates for which the respective Prepayment
Distribution
Triggers have been satisfied; and
(b) in the case of each other Class of Subordinate
Certificates for which the Prepayment Distribution Triggers
have not been satisfied, 0%; and
(iii) Notwithstanding the foregoing, if the application of
the
foregoing percentages on any Distribution Date as provided in
Section
4.01(c) of this Agreement (determined without regard to the
proviso to
the definition of "Subordinate Principal Distribution Amount")
would
result in a distribution in respect of principal of any Class
or
Classes of Subordinate Certificates in an amount greater than
the
remaining Certificate Principal Balance thereof (any such class,
a
"Maturing Class"), then: (a) the Subordinate Prepayment
Percentage of
each Maturing Class shall be reduced to a level that, when
applied as
described above, would exactly reduce the Certificate Principal
Balance
of such Class to zero; (b) the Subordinate Prepayment Percentage
of
each other Class of Subordinate Certificates (any such Class,
a
"Non-Maturing Class") shall be recalculated in accordance with
the
provisions in paragraph (ii) above, as if the Certificate
Principal
Balance of each Maturing Class had been reduced to zero
(such
percentage as recalculated, the "Recalculated Percentage"); (c)
the
total amount of the reductions in the Subordinate Prepayment
Percentages of the Maturing Class or Classes pursuant to clause
(a) of
this sentence, expressed as an aggregate percentage, shall be
allocated
among the Non-Maturing Classes in proportion to their
respective
Recalculated Percentages (the portion of such aggregate
reduction so
allocated to any Non-Maturing Class, the "Adjustment
Percentage"); and
(d) for purposes of such Distribution Date, the Subordinate
Prepayment
Percentage of each Non-Maturing Class shall be equal to the sum
of (1)
the Subordinate Prepayment Percentage thereof, calculated in
accordance
with the provisions in paragraph (ii) above as if the
Certificate
Principal Balance of each Maturing Class had not been reduced to
zero,
plus (2) the related Adjustment Percentage.
"Subordinate Principal Distribution Amount": With respect to
any
Distribution Date and each Class of Class B Certificates, the
sum of the
following:
(i) the product of (x) the related Class B Percentage for
such
Class and (y) the aggregate of the following amounts:
(1) the principal portion of each Monthly Payment due
during the related Due Period on each Outstanding Mortgage
Loan, whether or not received on or prior to the related
Determination Date minus the principal portion of any Debt
Service Reduction, which together with other Bankruptcy
Losses
exceeds the Bankruptcy Amount;
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(2) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period pursuant to
Section 2.02, 2.03, 3.15 or 3.16; and
(3) the principal portion of all other unscheduled
collections (other than Principal Prepayments in Full and
Curtailments and amounts received in connection with a Cash
Liquidation or REO Disposition of a Mortgage Loan, including
without limitation Insurance Proceeds, Liquidation Proceeds,
Subsequent Recoveries and REO Proceeds) received during the
related Prepayment Period to the extent applied by the
Master
Servicer as recoveries of principal of the related Mortgage
Loan pursuant to Section 3.16;
(ii) such Class's pro rata share, based on the Certificate
Principal Balance of each Class of Class B Certificates then
outstanding, of, with respect to each Mortgage Loan, for which a
Cash
Liquidation or a REO Disposition occurred during the related
Prepayment
Period and did not result in any Excess Special Hazard Losses,
Excess
Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses,
an
amount equal to the related unscheduled collections (including
without
limitation Insurance Proceeds, Liquidation Proceeds and REO
Proceeds)
to the extent applied by the Master Servicer as recoveries of
principal
of the related Mortgage Loan pursuant to Section 3.16, to the
extent
such collections are not otherwise distributed to the Senior
Certificates;
(iii) the product of (x) the related Subordinate Prepayment
Percentage for such Distribution Date and (y) the aggregate of
all
Principal Prepayments in Full and Curtailments on the Mortgage
Loans
received in the related Prepayment Period, to the extent not
payable to
the Senior Certificates; and
(iv) if such Class is the Class of Class B Certificates then
outstanding with the Highest Priority, an amount equal to the
Excess
Subordinate Principal Amount; and
(v) any amounts described in clauses (i), (ii) and (iii) as
determined for any previous Distribution Date, that remain
undistributed to the extent that such amounts are not
attributable to
Realized Losses which have been allocated to a Class of
Subordinate
Certificates;
provided, however, that such amount shall in no event exceed the
outstanding
Certificate Principal Balance of such Class of Certificates
immediately prior to
such date.
"Subsequent Recoveries": Any amount recovered by the Master
Servicer
(net of reimbursable expenses) with respect to a Liquidated
Mortgage Loan with
respect to which a Realized Loss was incurred after the
liquidation or
disposition of such Mortgage Loan.
"Sub-Servicer": Any Person with which the Master Servicer has
entered
into a Sub-Servicing Agreement and which meets the
qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a
Sub-Servicer which
meets the requirements set forth in Section 3.08 and is
otherwise acceptable to
the Master Servicer.
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"Sub-Servicing Agreement": The written contract between the
Master
Servicer and a Sub-Servicer relating to servicing and
administration of certain
Mortgage Loans as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section 2.03(c)
hereof.
"Tax Matters Person": The tax matters person appointed pursuant
to
Section 9.01(c) hereof.
"Tax Returns": The federal income tax return on Internal
Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit
Income Tax
Return, including Schedule Q thereto, Quarterly Notice to
Residual Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or
any successor
forms, to be filed on behalf of the Trust in its capacity as a
REMIC under the
REMIC Provisions, together with any and all other information
reports or returns
that may be required to be famished to the Certificateholders or
filed with the
Internal Revenue Service or any other governmental taxing
authority under any
applicable provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01(a) hereof.
"Transition Cost: Any documented fees, expenses and allocated
costs
reasonably incurred by a successor master servicer or the
Trustee in connection
with a transfer of servicing from the Master Servicer to a
successor master
servicer, including without limitation, any costs or expenses
associated with
the complete transfer of all master servicing data and the
completion,
correction or manipulation of such master servicing data as may
be required by
the Trustee to correct any errors or insufficiencies in the
master servicing
data or otherwise to enable the Trustee to master service the
Mortgage Loans
properly and effectively.
"Trustee Fee": With respect to each Mortgage Loan and for any
calendar
month, an amount equal to one month's interest at the applicable
Trustee Fee
Rate on the same principal amount on which interest on such
Mortgage Loan
accrues for such calendar month. Notwithstanding the foregoing,
in no event
shall the aggregate Trustee Fee in a calendar year be less than
$7,000.
"Trustee Fee Rate": With respect to any Mortgage Loan, a rate
equal to
0.0125% per annum.
"Trust Fund": REMIC I and REMIC II.
"Uncertificated Monthly Interest Distributable Amount": An
amount equal
to the interest accrued during the related Interest Accrual
Period on the
Uncertificated Principal Balance of each Class of REMIC I
Regular Interest at
the then-applicable Uncertificated Pass-Through Rate. The
Uncertificated Monthly
Interest Distributable Amount on any Class of REMIC I Regular
Interest will be
reduced by the amount of (i) Prepayment Interest Shortfalls (to
the extent not
offset by the Master Servicer with a payment of Compensating
Interest as
provided in Section 3.24), (ii) the interest portion (adjusted
to the Net
Mortgage Rate) of Realized Losses (including Excess Losses) not
allocated solely
to one or more specific Classes of Certificates pursuant to
Section 4.02, (iii)
the interest portion of Advances previously made with respect to
a Mortgage Loan
or REO Property which remained unreimbursed following the Cash
Liquidation or
REO
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Disposition of such Mortgage Loan or REO Property that were made
with respect to
delinquencies that were ultimately determined to be Excess
Losses and (iv) any
other interest shortfalls not covered by the subordination
provided by the Class
B Certificates, including Relief Act Shortfalls, with all such
reductions
allocated among all of the REMIC I Regular Interests in
proportion to their
respective amounts of Uncertificated Monthly Interest
Distributable Amount
payable on such Distribution Date which would have resulted
absent such
reductions.
"Uncertificated Pass-Through Rate": With respect to each REMIC
I
Regular Interest and any Distribution Date, a per annum rate
equal to the
weighted average of the Net Mortgage Rates on each mortgage loan
as of the Due
Date in the related Due Period, weighted on the basis of the
respective Stated
Principal Balances of such Mortgage Loans as of the day
immediately preceding
such Distribution Date (or, with respect to the initial
Distribution Date, at
the close of business on the Cut-off Date).
"Uncertificated Principal Balance": The principal amount of any
REMIC I
Regular Interest outstanding as of any date of determination.
The Uncertificated
Principal Balance of each REMIC I Regular Interest initially
shall be equal to
the amount set forth in the Preliminary Statement with respect
to such REMIC I
Regular Interest, and thereafter shall be reduced by all
distributions of
principal made on such REMIC I Regular Interest and shall be
further reduced by
Realized Losses allocated thereto. The Uncertificated Principal
Balance of each
REMIC I Regular Interest shall never be less than zero.
"Underwriting Guide": The underwriting guide of the Master
Servicer, as
revised from time to time.
"Uninsured Cause" Any cause of damage to property subject to a
Mortgage
such that the complete restoration of such property is not fully
reimbursable by
the hazard insurance policies.
"United States Person" or "U.S. Person": A citizen or resident
of the
United States, a corporation or partnership (including an entity
treated as a
corporation or partnership for federal income tax purposes)
created or organized
in, or under the laws of, the United States or any state thereof
or the District
of Columbia (except, in the case of a partnership, to the extent
provided in
regulations), provided that, for purposes solely of the Class R
Certificates, no
partnership or other entity treated as a partnership for United
States federal
income tax purposes shall be treated as a United States Person
unless all
persons that own an interest in such partnership either directly
or through any
entity that is not a corporation for United States federal
income tax purposes
are United States Persons, or an estate whose income is subject
to United States
federal income tax regardless of its source, or a trust if (i) a
court within
the United States is able to exercise primary supervision over
the
administration of the trust and one or more such United States
Persons have the
authority to control all substantial decisions of the trust or
(ii) it is a
trust which was in existence on August 20, 1996, and was treated
as a United
States person, for federal income tax purposes, on the previous
day, and elected
to continue to be so treated.
"Value": With respect to any Mortgaged Property, the value
thereof as
determined by an independent appraisal (or other collateral
assessment,
permitted by the Underwriting Guide) made at the time of the
origination of the
related Mortgage Loan; except that, with respect to any Mortgage
Loan that is a
purchase money mortgage loan, the lesser of (i) the value
thereof as determined
by an independent appraisal (or other collateral assessment,
permitted by the
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<PAGE>
Underwriting Guide) made at the time of the origination of such
Mortgage Loan,
if any, and (ii) the sales price of the related Mortgaged
Property.
"Voting Rights": The portion of the voting rights of all of
the
Certificates which is allocated to any Certificate. The Voting
Rights allocated
among Holders of such Certificates outstanding shall be the
fraction, expressed
as a percentage, the numerator of which is the aggregate
Certificate Principal
Balance of all the Certificates of such Class then outstanding
and the
denominator of which is the aggregate Certificate Principal
Balance of all the
Certificates then outstanding. 99% of all Voting Rights will be
allocated among
all holders of the Certificates (other than the Class R
Certificates) in
proportion to their then outstanding Certificate Principal
Balances, 0.50% and
0.50% of all Voting Rights will be allocated to the holders of
the Class R-I
Certificates and Class R-II Certificates, respectively, in
proportion to the
Percentage Interests evidenced by their respective Certificates;
provided,
however, that any Certificate registered in the name of the
Master Servicer, the
Depositor or the Trustee or any of their respective affiliates
shall not be
included in the calculation of Voting Rights.
"Written Order to Authenticate": A written order by which the
Depositor
directs the Trustee to issue the Certificates.
Section 1.02 ACCOUNTING.
Unless otherwise specified herein, for the purpose of any
definition or
calculation, whenever amounts are required to be netted,
subtracted or added or
any distributions are taken into account such definition or
calculation and any
related definitions or calculations shall be determined without
duplication of
such functions.
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<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 CONVEYANCE OF MORTGAGE LOANS.
The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and otherwise convey to
the Trustee
without recourse for the benefit of the Certificateholders all
the right, title
and interest of the Depositor, including any security interest
therein for the
benefit of the Depositor, in and to the Mortgage Loans
identified on the
Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan
Purchase Agreement (except Section 3.2 thereof), the interest in
the Limited
Purpose Surety Bond transferred to the Trustee pursuant to
Section 2.03(e) and
all other assets included or to be included in the Trust Fund.
Such assignment
includes all interest and principal received by the Depositor or
the Master
Servicer on or with respect to the Mortgage Loans (but excluding
any payments of
principal and interest due on or prior to the Cut-off Date). The
Depositor
herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase
Agreement.
The parties hereto agree that it is not intended that any
mortgage loan
be included in the Trust that is (i) a "High-Cost Home Loan" as
defined in the
New Jersey Home Ownership Act effective November 27, 2003, (ii)
a "High-Cost
Home Loan" as defined in the New Mexico Home Loan Protection Act
effective
January 1, 2004, (iii) a "High Cost Home Mortgage Loan" as
defined in the
Massachusetts Predatory Home Practices Act effective November 7,
2004 or (iv) a
"High-Cost Home Loan" as defined in the Indiana High Cost Home
Loan Law
effective January 1, 2005.
In connection with the transactions contemplated by this
Agreement, PHH
Mortgage Corporation and the Trustee shall enter into an
Assignment, Assumption
and Recognition Agreement with MLCC, in the form of Exhibit K
hereto, pursuant
to which PHH Mortgage Corporation shall assign to the Trustee,
for the benefit
of the Certificateholders, all of its right, title and interest
in and to the
Additional Collateral Servicing Agreement with respect to the
Additional
Collateral Mortgage Loans, and the Trustee shall assume all of
PHH Mortgage
Corporation's obligations under the Additional Collateral
Servicing Agreement
with respect to the Additional Collateral Mortgage Loans from
and after the date
hereof.
In connection with the transfer and assignment described herein,
the
Master Servicer on behalf of the Depositor, shall deliver to,
and deposit with,
the Trustee, the following documents or instruments:
(A) with respect to each Mortgage Loan, other than a Cooperative
Loan:
(i) the original Mortgage Note endorsed "Pay to the order of
Citibank, N.A., as Trustee for the registered holders of the
PHHMC
Mortgage Pass-Through Certificates, Series 2005-2, without
recourse",
or endorsed "Pay to the order of_____________________
without
recourse," and signed in the name of the last named endorsee by
an
authorized officer, together with all prior and intervening
42
<PAGE>
endorsements showing a complete chain of endorsement from
the
originator to the Person so endorsing to the last endorsee;
(ii) the original Mortgage, noting the presence of the MIN
of
the Mortgage Loan and language indicating that the Mortgage Loan
is a
MOM Loan if the Mortgage Loan is a MOM Loan, with evidence of
recording
thereon which have been recorded, with evidence of recording
thereon or
a copy of the Mortgage certified by the public recording office
in
which such Mortgage has been recorded;
(iii) Unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment of the Mortgage (A) executed in
the
following form "Citibank, N.A., as Trustee for the registered
holders
of the PHHMC Mortgage Pass-Through Certificates, Series 2005-2",
or (B)
in blank, which assignment appears to be in form and
substance
acceptable for recording;
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the
originator to
the Person assigning the Mortgage to the Trustee (or to MERS, if
the
Mortgage Loan is registered on the MERS(R) System and noting
the
presence of a MIN) as contemplated by the immediately preceding
clause
(iii), if applicable and only to the extent available to the
Depositor
with evidence of recording thereon;
(v) the originals of all assumption, modification,
consolidation or extension agreements, with evidence of
recording
thereon, if any;
(vi) a copy of any guarantee (other than Additional
Collateral) executed in connection with the Mortgage Note;
(vii) the original of any security agreement, chattel
mortgage
or equivalent document executed in connection with the
Mortgage;
(viii) the original power of attorney, if applicable; and
(ix) if such Mortgage Loan is a Buydown Mortgage Loan (as
shown in the Mortgage Loan Schedule), the original Buydown
Agreement or
a copy thereof; and
(B) in addition, with respect to each Mortgage Loan that is
an
Additional Collateral Mortgage Loan (as indicated on the
Mortgage Loan
Schedule):
(i) a copy of the related Mortgage 100(sm) Pledge Agreement
or
Parent Power Agreement, as applicable; and
(ii) a copy of the related UCC-1, to the extent that MLCC
was
required to deliver such UCC-1 to the Master Servicer, and an
original
form UCC-3, if applicable, to the extent that MLCC was required
to
deliver such UCC-3 to the Master Servicer; or
(C) with respect to each Mortgage Loan that is a Cooperative
Loan (as
indicated on the Mortgage Loan Schedule):
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<PAGE>
(i) the original Mortgage Note endorsed "Pay to the order of
Citibank, N.A., as Trustee for the registered holders of the
PHHMC
Mortgage Pass-Through Certificates, Series 2005-2, without
recourse",
or endorsed "Pay to the order of _____________________
without
recourse," and signed in the name of the last named endorsee by
an
authorized officer, together with all prior and intervening
endorsements showing a complete chain of endorsement from
the
originator to the Person so endorsing to the last endorsee;
(ii) the original duly executed assignment of Security
Agreement to the Trustee;
(iii) the acknowledgment copy of the original executed Form
UCC-1 (or certified copy thereof) with respect to the
Security
Agreement, and any required continuation statements;
(iv) the acknowledgment copy of the original executed Form
UCC-3 with respect to the security agreement, indicating the
Trustee as
the assignee of the secured party;
(v) the stock certificate representing the Cooperative
Assets
allocated to the cooperative unit, with a stock power in
blank
attached;
(vi) the original collateral assignment of the proprietary
lease by Mortgagor to the originator;
(vii) a copy of the recognition agreement;
(viii) if applicable and to the extent available, the
original
intervening assignments, including warehousing assignments, if
any,
showing, to the extent available, an unbroken chain of the
related
Mortgage Loan to the Trustee, together with a copy of the
related Form
UCC-3 with evidence of filing thereon; and
(ix) the originals of each assumption, modification or
substitution agreement, if any, relating to the Mortgage
Loan;
provided, however, that in lieu of the foregoing, the Depositor
may deliver the
following documents, under the circumstances set forth below:
(x) in lieu of the
original Mortgage, assignments to the Trustee or intervening
assignments thereof
which have been delivered, are being delivered or will, upon
receipt of
recording information relating to the Mortgage required to be
included thereon,
be delivered to recording offices for recording and have not
been returned to
the Depositor within 270 days of the Closing Date, the Depositor
may deliver a
true copy thereof with an Officer's Certificate certifying that
such Mortgage,
assignment to the Trustee or intervening assignment has been
delivered to the
appropriate recording office for recording; and (y) in lieu of
the Mortgage,
assignment to the Trustee or intervening assignments thereof, if
the applicable
jurisdiction retains the originals of such documents (as
evidenced by a
certification from the Depositor or the Master Servicer, to such
effect) the
Depositor may deliver photocopies of such documents containing
an original
certification by the judicial or other governmental authority of
the
jurisdiction where such documents were recorded; and provided,
further, however,
that in the case of Mortgage Loans which have been prepaid in
full after the
Cut-off
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Date and prior to the Closing Date, the Depositor, in lieu of
delivering the
above documents, may deliver to the Trustee a certification to
such effect and
shall deposit all amounts paid in respect of such Mortgage Loans
in the
Distribution Account on the Closing Date. The Depositor shall
deliver such
original documents (including any original documents as to which
certified
copies had previously been delivered) to the Trustee promptly
after they are
received.
The Depositor may, in lieu of delivering the original of the
documents
set forth in Section 2.01(A), (B) and (C) (other than Section
2.01(A)(i) and
Section 2.01(C)(i)) (or copies thereof as permitted by this
Section 2.01) to the
Trustee, deliver such documents to the Master Servicer, and the
Master Servicer
shall hold such documents in trust for the use and benefit of
all present and
future Certificateholders until such time as is set forth in the
next sentence.
Within 60 days following the earlier of (i) the receipt of the
original of all
of the documents or instruments set forth in Section 2.01(A),
(B) and (C) (other
than Section 2.01(A)(i) and Section 2.01(C)(i)) (or copies
thereof as permitted
by such Section) for any Mortgage Loan and (ii) a written
request by the Trustee
to deliver those documents with respect to any or all of the
Mortgage Loans then
being held by the Master Servicer, the Master Servicer shall
deliver a complete
set of such documents to the Trustee.
The Depositor shall, at its expense, cause the Assignment of
the
Mortgage to the Trustee to be recorded not later than 270 days
after the Closing
Date, unless (a) such recordation is not required by the Rating
Agency or an
Opinion of Counsel has been provided as set forth below in this
Section 2.01 or
(b) MERS is identified on the Mortgage or on a properly recorded
assignment of
the Mortgage as the mortgagee of record. With respect to the
Cooperative Loans,
the Depositor will, promptly after the Closing Date, cause the
related financing
statements (if not yet filed) and an assignment thereof from the
Depositor to
the Trustee to be filed in the appropriate offices. The
Depositor need not cause
to be recorded any assignment in any jurisdiction under the laws
of which, as
evidenced by an Opinion of Counsel delivered by the Depositor to
the Trustee and
the Rating Agency, the recordation of such assignment is not
necessary to
protect the Trustee's interest in the related Mortgage Loan;
provided, however,
notwithstanding the delivery of any Opinion of Counsel, each
assignment shall be
submitted for recording by the Depositor in the manner described
above, at no
expense to the Trust Fund or the Trustee, upon the earliest to
occur of: (i)
reasonable direction by the Holders of Certificates evidencing
Fractional
Undivided Interests aggregating not less than 25% of the Trust
Fund, (ii) the
occurrence of a Master Servicer Event of Termination, (iii) the
occurrence of a
bankruptcy, insolvency or foreclosure relating to the Depositor,
(iv) the
occurrence of a servicing transfer as described in Section 7.02
hereof and (v)
with respect to any one assignment, the occurrence of a
bankruptcy, insolvency
or foreclosure relating to the Mortgagor under the related
Mortgage.
Notwithstanding the foregoing, if the Depositor fails to pay the
cost of
recording the assignments, such expense will be paid by the
Trustee and the
Trustee shall be reimbursed for such expenses by the Trust Fund
in accordance
with Section 8.05.
In connection with the assignment of any Mortgage Loan
registered on
the MERS(R) System, the Depositor further agrees that it will
cause, at the
Depositor's own expense, within 30 Business Days after the
Closing Date, the
MERS(R) System to indicate that such Mortgage Loans have been
assigned by the
Depositor to the Trustee in accordance with this Agreement for
the benefit of
the Certificateholders by including (or deleting, in the case of
Mortgage Loans
which are repurchased in accordance with this Agreement) in such
computer files
(a) the code in the field which identifies the specific Trustee
and (b) the code
in the field "Pool Field" which
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<PAGE>
identifies the series of the Certificates issued in connection
with such
Mortgage Loans. The Depositor further agrees that it will not,
and will not
permit the 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.
If any original Mortgage Note referred to in Section 2.01(A)(i)
or
2.01(C)(i) above cannot be located, the obligations of the
Depositor to deliver
such documents shall be deemed to be satisfied upon delivery to
the Trustee of a
photocopy of such Mortgage Note, if available, with a Lost Note
Affidavit. If
any of the original Mortgage Notes for which a Lost Note
Affidavit was delivered
to the Trustee is subsequently located, such original Mortgage
Note shall be
delivered to the Trustee within three Business Days.
Section 2.02 ACCEPTANCE OF TRUST FUND BY THE TRUSTEE.
Subject to the provisions of Section 2.01 and subject to any
exceptions
noted on the exception report described in the next paragraph
below, the Trustee
acknowledges receipt of the documents referred to in Section
2.01 above and
declares that it holds and will hold such documents and the
other documents
delivered to it constituting the Mortgage File, and that it
holds or will hold
all such assets and such other assets included in the definition
of the "Trust
Fund" and the rights of the Sellers with respect to any
Additional Collateral
and the Limited Purpose Surety Bond assigned to the Trustee
pursuant to Section
2.03(e) in trust for the exclusive use and benefit of all
present and future
Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders,
to
review each Mortgage File on or before the Closing Date and to
certify on the
Closing Date in substantially the form attached hereto as
Exhibit I-1 that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any
Mortgage Loan paid in full or any Mortgage Loan specifically
identified in the
exception report annexed thereto as not being covered by such
certification),
(i) all documents constituting part of such Mortgage File
required to be
delivered to it pursuant to this Agreement are in its
possession, provided that
with respect to the documents described in Section 2.01(A)(v),
(vi) and (vii)
and 2.01(C)(ix) to the extent the Trustee has actual knowledge
that such
documents exist, (ii) such documents have been reviewed by it
and are not torn,
mutilated, defaced or otherwise altered (except if initialed by
the obligor) and
relate to such Mortgage Loan, (iii) based on its examination and
only as to the
foregoing, the information set forth in the Mortgage Loan
Schedule that
corresponds to items (i) through (iii) (except the ZIP Code),
(ix) and (xv) of
the definition of "Mortgage Loan Schedule" accurately reflects
information set
forth in the Mortgage File. Notwithstanding anything to the
contrary in this
Agreement, it is herein acknowledged that, in conducting such
review, the
Trustee is under no duty or obligation to inspect, review or
examine any such
documents, instruments, certificates or other papers to
determine whether they
are genuine, enforceable, or appropriate for the represented
purpose or whether
they have actually been recorded or that they are other than
what they purport
to be on their face, or to determine whether any Person
executing any documents
is authorized to do so or whether any signature is genuine.
The Trustee agrees, for the benefit of the Certificateholders,
to
review each Mortgage File within 60 days following the Closing
Date and to
certify in substantially the form attached hereto as Exhibit I-2
that, as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified
in the
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exception report annexed thereto as not being covered by such
certification),
(i) all documents constituting part of such Mortgage File (other
than such
documents described in Section 2.01(A)(v)) required to be
delivered to it
pursuant to this Agreement are in its possession, provided that
with respect to
the documents described in Section 2.01(A)(v), (vi) and (vii)
and 2.01(C)(ix) to
the extent the Trustee has actual knowledge that such documents
exist, (ii) such
documents have been reviewed by it and are not tom, mutilated,
defaced or
otherwise altered (except if initialed by the obligor) and
appear regular on
their face and relate to such Mortgage Loan, (iii) based on its
examination and
only as to the foregoing, the information set forth in the
Mortgage Loan
Schedule that corresponds to items (i) through (iii)(except the
ZIP code), (ix)
and (xv) of the definition of "Mortgage Loan Schedule"
accurately reflects
information set forth in the Mortgage File. It is herein
acknowledged that, in
conducting such review, the Trustee is under no duty or
obligation (i) to
inspect, review or examine any such documents, instruments,
certificates or
other papers to determine whether they are genuine, enforceable,
or appropriate
for the represented purpose or whether they have actually been
recorded or that
they are other than what they purport to be on their face, or to
determine
whether any Person executing any documents is authorized to do
so or whether any
signature is genuine.
Prior to the first anniversary date of this Agreement the
Trustee shall
deliver to the Depositor and the Master Servicer a final
certification in the
form annexed hereto as Exhibit I-2 evidencing the completeness
of the Mortgage
Files, with any applicable exceptions noted thereon, except with
respect to the
documents described in Section 2.01(A)(v), (vi) and (vii) and
2.01(C)(ix), to
the extent the Trustee has actual knowledge that such documents
exist.
If in the process of reviewing the Mortgage Files and making
or
preparing, as the case may be, the certifications referred to
above, the Trustee
finds any document or documents constituting a part of a
Mortgage File to be
missing or defective in any material respect, at the conclusion
of its review
the Trustee shall so notify the Depositor and the Master
Servicer. In addition,
upon the discovery by the Depositor, the Master Servicer or the
Trustee of a
breach of any of the representations and warranties made by the
Sellers in the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan
which
materially adversely affects such Mortgage Loan or the interests
of the related
Certificateholders in such Mortgage Loan, the party discovering
such breach
shall give prompt written notice to the other parties.
The Trustee shall, at the written request and expense of any
Certificateholder, provide a written report to such
Certificateholder of all
Mortgage Files released to the Master Servicer for servicing
purposes.
Section 2.03 REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY
THE
SELLERS- ASSIGNMENT OF INTEREST IN ADDITIONAL COLLATERAL.
(a) Upon discovery or receipt of notice of any materially
defective
document in, or that a document is missing from, a Mortgage File
or of the
breach by a Seller of any representation, warranty or covenant
under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan
which
materially adversely affects the value of such Mortgage Loan or
the interest
therein of the Certificateholders, by the Trustee, the Master
Servicer or the
Depositor shall promptly notify such Seller and the Trustee, the
Master Servicer
and the Depositor of such defect, missing document or breach and
request that
such Seller deliver such missing document or cure such defect or
breach within
90 days from the date such Seller was notified of such missing
document, defect
or breach, and if such Seller does not deliver such missing
document
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or cure such defect or breach in all material respects during
such period, the
Master Servicer (or, in accordance with Section 3.02(b), the
Trustee) shall
enforce the obligations of such Seller under the Mortgage Loan
Purchase
Agreement to repurchase such Mortgage Loan from the Trust Fund
at the Purchase
Price within 90 days after the date on which such Seller was
notified (subject
to Section 2.03(d)) of such missing document, defect or breach,
if and to the
extent that such Seller is obligated to do so under the Mortgage
Loan Purchase
Agreement. If such defect or breach can ultimately be cured but
is not
reasonably expected to be cured within the 90-day period, then
the applicable
Seller shall have such additional time, if any, as is
reasonable, to cure such
defect or breach, provided that the applicable Seller has
commenced curing or
correcting such defect or breach and is diligently pursuing
same. The Purchase
Price for the repurchased Mortgage Loan shall be deposited in
the Collection
Account, within three Business Days of expiration of the
applicable time period
referred to above, and the Trustee, upon receipt of written
certification from
the Master Servicer of such deposit, shall release to the
applicable Seller the
related Mortgage File and shall execute and deliver such
instruments of transfer
or assignment, in each case without recourse, as such Seller
shall furnish to it
and as shall be necessary to vest in such Seller any Mortgage
Loan released
pursuant hereto, and the Trustee shall have no further
responsibility with
regard to such Mortgage File. In lieu of repurchasing any such
Mortgage Loan as
provided above, if so provided in the related Mortgage Loan
Purchase Agreement,
a Seller may cause such Mortgage Loan to be removed from the
Trust Fund (in
which case it shall become a Defective Mortgage Loan) and
substitute one or more
Eligible Substitute Mortgage Loans in the manner and subject to
the limitations
set forth in Section 2.03(d). If the breach of representation
and warranty that
gave rise to the obligation to repurchase or substitute a
Mortgage Loan pursuant
to Section 3.2 of the Mortgage Loan Purchase Agreement was the
representation
and warranty set forth in clause (xlvi) of Section 3.1 thereof,
then the Master
Servicer shall request that PHH Mortgage pay to the Trust Fund,
concurrently
with and in addition to the remedies provided in the preceding
four sentences,
an amount equal to any liability, penalty or expense that was
actually incurred
and paid out of or on behalf of the Trust Fund, and that
directly resulted from
such breach, or if incurred and paid by the Trust Fund
thereafter, concurrently
with such payment. In furtherance of the foregoing, if the
Seller that
repurchases the Mortgage Loan is not a member of MERS and the
Mortgage is
registered on the MERS(R) System, the Master Servicer, at its
own expense and
without any right of reimbursement, shall cause MERS to execute
and deliver an
assignment of the Mortgage in recordable form to transfer the
Mortgage from MERS
to such Seller and shall cause such Mortgage to be removed from
registration on
the MERS(R) System in accordance with MERS' rules and
regulations. It is
understood and agreed that the obligation of a Seller to cure or
to repurchase
(or to substitute for) any Mortgage Loan as to which a document
is missing, a
material defect in a constituent document exists or as to which
such a breach
has occurred and is continuing shall constitute the sole remedy
respecting such
omission, defect or breach available to the Depositor, the
Master Servicer or
the Trustee on behalf of the Certificateholders.
(b) Within 90 days of the earlier of discovery by the Master
Servicer
or receipt of notice by the Master Servicer of the breach of any
representation,
warranty or covenant of the Master Servicer set forth in Section
2.04 which
materially and adversely affects the interests of the
Certificateholders in any
Mortgage Loan, the Master Servicer shall cure such breach in all
material
respects.
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(c) Any substitution of Eligible Substitute Mortgage Loans
for
Defective Mortgage Loans made pursuant to Section 2.03(a), in
the case of a
Seller, must be effected prior to the date which is two years
after the Closing
Date.
As to any Defective Mortgage Loan for which a Seller substitutes
a
Eligible Substitute Mortgage Loan or Loans, such substitution
shall be effected
by such Seller delivering to the Trustee, for such Eligible
Substitute Mortgage
Loan or Loans, the Mortgage Note, the Mortgage, the Assignment
to the Trustee,
and such other documents and agreements, with all necessary
endorsements
thereon, as are required by Section 2.01, together with an
Officers' Certificate
providing that each such Eligible Substitute Mortgage Loan
satisfies the
definition thereof and specifying the Substitution Shortfall
Amount (as
described below), if any, in connection with such substitution.
The Trustee
shall acknowledge receipt of the original Mortgage Note for such
Eligible
Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter,
review such documents in the manner specified in Section 2.02
and deliver to the
Depositor and the Master Servicer, with respect to such Eligible
Substitute
Mortgage Loan or Loans, a certification substantially in the
form attached
hereto as Exhibit I-1, with any applicable exceptions noted
thereon. Within one
year of the date of substitution, the Trustee shall deliver to
the Depositor and
the Master Servicer a certification substantially in the form of
Exhibit I-2
hereto with respect to such Eligible Substitute Mortgage Loan or
Loans, with any
applicable exceptions noted thereon. Monthly Payments due with
respect to
Eligible Substitute Mortgage Loans in the month of substitution
are not part of
the Trust Fund and will be retained by the related Seller. For
the month of
substitution, distributions to Certificateholders will reflect
the Monthly
Payment due on such Defective Mortgage Loan on or before the Due
Date in the
month of substitution, and the related Seller shall thereafter
be entitled to
retain all amounts subsequently received in respect of such
Defective Mortgage
Loan. The Depositor shall give or cause to be given written
notice to the
Certificateholders that such substitution has taken place, shall
amend the
Mortgage Loan Schedule to reflect the removal of such Defective
Mortgage Loan
from the terms of this Agreement and the substitution of the
Eligible Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended
Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Eligible
Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage
Pool and shall be
subject in all respects to the terms of this Agreement and, in
the case of a
substitution effected by a Seller, the Mortgage Loan Purchase
Agreement,
including, in the case of a substitution effected by a Seller,
all applicable
representations and warranties thereof included in the Mortgage
Loan Purchase
Agreement in each case as of the date of substitution.
For any month in which a Seller substitutes one or more
Eligible
Substitute Mortgage Loans for one or more Defective Mortgage
Loans, the Master
Servicer will determine the amount (the "Substitution Shortfall
Amount"), if
any, by which the aggregate principal balance of all such
Eligible Substitute
Mortgage Loans as of the date of substitution is less than the
aggregate Stated
Principal Balance of all such Defective Mortgage Loans (in each
case after
application of the principal portion of the Monthly Payments due
in the month of
substitution that are to be distributed to the
Certificateholders in the month
of substitution). On the date of such substitution, the
applicable Seller will
deliver or cause to be delivered to the Master Servicer for
deposit in the
Collection Account an amount equal to the Substitution Shortfall
Amount, if any,
and the Trustee, upon receipt of the related Eligible Substitute
Mortgage Loan
or Loans and certification by the Master Servicer of such
deposit, shall release
to the applicable Seller the related Mortgage File or Files and
shall execute
and deliver such instruments of
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transfer or assignment, in each case without recourse, as such
Seller shall
deliver to it and as shall be necessary to vest therein any
Defective Mortgage
Loan released pursuant hereto.
In addition, the applicable Seller shall obtain at its own
expense and
deliver to the Trustee an Opinion of Counsel to the effect that
such
substitution will not cause (a) any federal tax to be imposed on
the Trust Fund,
including without limitation, any federal tax imposed on
"prohibited
transactions" under Section 860F(a)(1) of the Code or on
"contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b)
any REMIC to fail
to qualify as a REMIC at any time that any Certificate is
outstanding.
(d) Upon discovery by the Depositor, a Seller, the Master
Servicer or
the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party
discovering such
fact shall within two Business Days give written notice thereof
to the other
parties. In connection therewith, the related Seller shall
repurchase or,
subject to the limitations set forth in Section 2.03(c),
substitute one or more
Eligible Substitute Mortgage Loans for the affected Mortgage
Loan within 60 days
of the earlier of discovery or receipt of such notice with
respect to such
affected Mortgage Loan. Such repurchase or substitution shall be
made by the
related Seller, as the case may be, if the affected Mortgage
Loan's status as a
non-qualified mortgage is or results from a breach of any
representation,
warranty or covenant made by the related Seller under the
Mortgage Loan Purchase
Agreement. Any such repurchase or substitution shall be made in
the same manner
as set forth in Sections 2.03(a), if made by the related Seller.
The Trustee
shall reconvey to the related Seller the Mortgage Loan to be
released pursuant
hereto in the same manner, and on the same terms and conditions,
as it would a
Mortgage Loan repurchased for breach of a representation or
warranty.
(e) The Depositor hereby assigns to the Trustee its security
interest
in and to any Additional Collateral, its right to receive
amounts due or to
become due in respect of any Additional Collateral, all of its
rights in each
Additional Collateral Agreement, and its rights as beneficiary
under the Limited
Purpose Surety Bond in respect of any Additional Collateral
Mortgage Loans. With
respect to any Additional Collateral Mortgage Loan, the
Additional Collateral
Servicer shall cause to be filed in the appropriate recording
office a Form
UCC-3 giving notice of the assignment of the related security
interest to the
Trust Fund and shall thereafter cause the timely filing of all
necessary
continuation statements with regard to such financing
statements.
Section 2.04 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
MASTER
SERVICER.
The Master Servicer hereby represents, warrants and covenants to
the
Trustee, for the benefit of each of the Trustee and the
Certificateholders, and
to the Depositor, that as of the Closing Date or as of such date
specifically
provided herein:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of
New Jersey and is duly authorized and qualified to transact any
and all
business contemplated by this Agreement to be conducted by the
Master
Servicer in any state in which a Mortgaged Property is located
or is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the
doing
business laws of any such State, to the extent
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necessary to ensure its ability to enforce each Mortgage Loan
and to
service the Mortgage Loans in accordance with the terms of
this
Agreement;
(ii) The Master Servicer has the full corporate power and
authority to service 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 Master Servicer the execution,
delivery and
performance of this Agreement; and this Agreement, assuming the
due
authorization, execution and delivery thereof by the Depositor
and the
Trustee, constitutes a legal, valid and binding obligation of
the
Master Servicer, enforceable against the Master Servicer in
accordance
with its terms, except to the extent that (a) the
enforceability
thereof 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 the
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 the
Master Servicer, the servicing of the Mortgage Loans by the
Master
Servicer hereunder, the consummation of any other of the
transactions
herein contemplated, and the fulfillment of or compliance with
the
terms hereof are in the ordinary course of business of the
Master
Servicer and will not (A) result in a breach of any term or
provision
of the charter or by-laws of the Master Servicer or (B) conflict
with,
result in a breach, violation or acceleration of, or result in
a
default under, the terms of any other material agreement or
instrument
to which the Master Servicer is a party or by which it may be
bound, or
any statute, order or regulation applicable to the Master
Servicer of
any court, regulatory body, administrative agency or
governmental body
having jurisdiction over the Master Servicer; and the Master
Servicer
is not a party to, bound by, or in breach or violation of any
indenture
or other agreement or instrument, or subject to or in violation
of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction
over it,
which materially and adversely affects or, to the Master
Servicer's
knowledge, would in the future materially and adversely affect,
(x) the
ability of the Master Servicer to perform its obligations under
this
Agreement or (y) the business, operations, financial
condition,
properties or assets of the Master Servicer taken as a
whole;
(iv) The Master Servicer is an approved seller/servicer for
Fannie Mae or Freddie Mac in good standing and is a HUD
approved
mortgagee pursuant to Section 203 of the National Housing
Act;
(v) No litigation is pending against the Master Servicer
that
would materially and adversely affect the execution, delivery
or
enforceability of this Agreement or the ability of the Master
Servicer
to service the Mortgage Loans or to perform any of its other
obligations hereunder 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 Master Servicer of, or compliance by the
Master
Servicer with, this Agreement or the consummation of the
transactions
contemplated by this Agreement, except for such
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consents, approvals, authorizations or orders, if any, that have
been
obtained prior to the Closing Date; and
(vii) The Master Servicer is a member of MERS in good
standing, and will comply in all material respects with the
rules and
procedures of MERS in connection with the servicing of the
Mortgage
Loans that are registered with MERS.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.04 shall survive delivery
of the Mortgage
Files to the Trustee and shall inure to the benefit of the
Trustee, the
Depositor and the Certificateholders. Upon discovery by any of
the Depositor,
the Master Servicer or the Trustee of a breach of any of the
foregoing
representations, warranties and covenants which materially and
adversely affects
the value of any Mortgage Loan or the interests therein of
the
Certificateholders, the party discovering such breach shall give
prompt written
notice (but in no event later than two Business Days following
such discovery)
to the Trustee. Subject to Section 7.01, the obligation of the
Master Servicer
set forth in Section 2.03(c) to cure breaches shall constitute
the sole remedies
against the Master Servicer available to the Certificateholders,
the Depositor
or the Trustee on behalf of the Certificateholders respecting a
breach of the
representations, warranties and covenants contained in this
Section 2.04.
Section 2.05 REPRESENTATIONS AND WARRANTIES OF THE
DEPOSITOR.
The Depositor represents and warrants to the Trust and the
Trustee on
behalf of the Certificateholders as follows:
(i) This agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor
in
accordance with its terms, except as enforceability may be
limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other
similar laws now or hereafter in effect affecting the
enforcement of
creditors' rights in general and except as such enforceability
may be
limited by general principles of equity (whether considered in
a
proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Mortgage
Loan,
the Depositor had good and marketable title to each Mortgage
Loan
(insofar as such title was conveyed to it by a Seller, as set
forth in
the Mortgage Loan Purchase Agreement) subject to no prior lien,
claim,
participation interest, mortgage, security interest, pledge,
charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred
all right, title and interest in the Mortgage Loans to the
Trustee on
behalf of the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to
the Trustee on behalf of the Trust with any intent to hinder,
delay or
defraud any of its creditors;
(v) The Depositor has been duly formed and is validly
existing
as a limited liability company in good standing under the laws
of
Delaware, with full corporate power and authority to own its
assets and
conduct its business as presently being conducted;
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(vi) The Depositor is not in violation of its certificate of
formation or limited liability company agreement or in default
in the
performance or observance of any material obligation,
agreement,
covenant or condition contained in any contract, indenture,
mortgage,
loan agreement, note, lease or other instrument to which the
Depositor
is a party or by which it or its properties may be bound, which
default
might result in any material adverse changes in the
financial
condition, earnings, affairs or business of the Depositor or
which
might materially and adversely affect the properties or assets,
taken
as a whole, of the Depositor;
(vii) The execution, delivery and performance of this
Agreement by the Depositor, and the consummation of the
transactions
contemplated thereby, do not and will not result in a material
breach
or violation of any of the terms or provisions of, or, to the
knowledge
of the Depositor, constitute a default under, any indenture,
mortgage,
deed of trust, loan agreement or other agreement or instrument
to which
the Depositor is a party or by which the Depositor is bound or
to which
any of the property or assets of the Depositor is subject, nor
will
such actions result in any violation of the provisions of
the
certificate of formation or limited liability company agreement
of the
Depositor or, to the best of the Depositor's knowledge
without
independent investigation, any statute or any order, rule or
regulation
of any court or governmental agency or body having jurisdiction
over
the Depositor or any of its properties or assets (except for
such
conflicts, breaches, violations and defaults as would not have
a
material adverse effect on the ability of the Depositor to
perform its
obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order,
registration or qualification of or with any court or
governmental
agency or body of the United States or any other jurisdiction
is
required for the issuance of the Certificates, or the
consummation by
the Depositor of the other transactions contemplated by this
Agreement,
except such consents, approvals, authorizations, registrations
or
qualifications as (a) may be required under State securities or
Blue
Sky laws, (b) have been previously obtained or (c) the failure
of which
to obtain would not have a material adverse effect on the
performance
by the Depositor of its obligations under, or the validity
or
enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations
pending before or, to the Depositor's knowledge, threatened by
any
court, administrative agency or other tribunal to which the
Depositor
is a party or of which any of its properties is the subject: (a)
which
if determined adversely to the Depositor would have a material
adverse
effect on the business, results of operations or financial
condition of
the Depositor; (b) asserting the invalidity of this Agreement or
the
Certificates; (c) seeking to prevent the issuance of the
Certificates
or the consummation by the Depositor of any of the
transactions
contemplated by this Agreement, as the case may be; (d) which
might
materially and adversely affect the performance by the Depositor
of its
obligations under, or the validity or enforceability of,
this
Agreement.
Section 2.06 PURPOSE AND POWERS OF THE TRUST.
The purpose of the trust, as created hereunder, is to engage in
the
following activities:
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(i) to issue the Certificates to or at the direction of the
Depositor in exchange for the Mortgage Loans;
(ii) to perform the activities of the trust that are
expressly
set forth in this Agreement;
(iii) to engage in those activities that are reasonably
necessary, suitable or convenient to accomplish the foregoing or
are
incidental thereto or connected therewith; and
(iv) subject to compliance with this Agreement, to engage in
such other activities as may be required in connection with
conservation of the Trust Fund and the making of distributions
to the
Certificateholders.
The trust is hereby authorized to engage in the foregoing
activities.
Section 2.07 ISSUANCE OF CERTIFICATES.
(a) The Trustee acknowledges the assignment to it on behalf of
the
Trust Fund of the Mortgage Loans and the other assets comprising
the Trust Fund
and, concurrently therewith, has signed, and authenticated and
delivered to the
Depositor, in exchange therefor, Certificates in such authorized
denominations
representing such Percentage Interests as the Depositor has
requested. The
Trustee agrees that it will hold the Mortgage Loans and such
other assets as may
from time to time be delivered to it segregated on the books of
the Trustee in
trust for the benefit of the Certificateholders.
(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 assets of REMIC I for the benefit of the holders of
the REMIC I
Regular Interests. The Trustee acknowledges receipt of the
assets of REMIC I and
declares that it holds and will hold the same in trust for the
exclusive use and
benefit of the holders of the REMIC I Regular Interests.
(c) The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and otherwise convey in
trust to the
Trustee without recourse all the right, title and interest of
the Depositor in
and to the REMIC I Regular Interests and the other assets of
REMIC II for the
benefit of the Certificateholders. The Trustee acknowledges
receipt of the REMIC
I Regular Interests (which are uncertificated) and the other
assets of REMIC II
and declares that it holds and will hold the same in trust for
the exclusive use
and benefit of the Certificateholders.
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ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01 MASTER SERVICER TO ACT AS MASTER SERVICER.
The Master Servicer shall service and administer the Mortgage
Loans on
behalf of the Trustee and in the best interests of and for the
benefit of the
Certificateholders (as determined by the Master Servicer in its
reasonable
judgment) in accordance with the terms of this Agreement and the
respective
Mortgage Loans and, to the extent consistent with such terms, in
the same manner
in which it services and administers similar mortgage loans for
its own
portfolio, giving due consideration to customary and usual
standards of practice
of prudent mortgage lenders and loan servicers administering
similar mortgage
loans but without regard to:
(i) any relationship that the Master Servicer, any
Sub-Servicer or any Affiliate of the Master Servicer or any
Sub-Servicer may have with the related Mortgagor;
(ii) the ownership of any Certificate by the Master Servicer
or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to make Advances or
Servicing Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right to
receive compensation for its services hereunder or with respect
to any
particular transaction.
To the extent consistent with the foregoing, the Master Servicer
shall also seek
to maximize the timely and complete recovery of principal and
interest on the
Mortgage Notes. Subject only to the above-described servicing
standards and the
terms of this Agreement and of the respective Mortgage Loans,
the Master
Servicer shall have full power and authority, acting alone or
through
Sub-Servicers as provided in Section 3.02, to do or cause to be
done any and all
things in connection with such servicing and administration
which it may deem
necessary or desirable. Without limiting the generality of the
foregoing, the
Master Servicer in its own name or in the name of a Sub-Servicer
is hereby
authorized and empowered by the Trustee when the Master Servicer
believes it
appropriate in its best judgment in accordance with the
servicing standards set
forth above, to execute and deliver, on behalf of the
Certificateholders and the
Trustee, and upon notice to the Trustee, any and all instruments
of satisfaction
or cancellation, or of partial or full release or discharge, and
all other
comparable instruments, with respect to the Mortgage Loans and
the Mortgaged
Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of
foreclosure so as to convert the ownership of such properties,
and to hold or
cause to be held title to such properties, on behalf of the
Trustee and
Certificateholders. The Master Servicer shall service and
administer the
Mortgage Loans in accordance with applicable state and federal
law and shall
provide to the Mortgagors any reports required to be provided to
them thereby.
The Master Servicer shall also comply in the performance of this
Agreement with
all reasonable rules and requirements of each insurer under each
Primary
Insurance Policy and any standard hazard insurance policy.
Subject to Section
3.17, the Trustee shall execute, at the written request of the
Master Servicer,
and furnish to the Master Servicer and any Sub-Servicer such
documents as are
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necessary or appropriate to enable the Master Servicer or any
Sub-Servicer to
carry out their servicing and administrative duties hereunder,
and the Trustee
hereby grants to the Master Servicer a power of attorney to
carry out such
duties. The Trustee shall not be liable for the actions of the
Master Servicer
or any Sub-Servicers under such powers of attorney.
In accordance with the standards of the preceding paragraph, the
Master
Servicer shall advance or cause to be advanced funds as
necessary for the
purpose of effecting the timely payment of taxes and assessments
on the
Mortgaged Properties, which advances shall be Servicing Advances
reimbursable in
the first instance from related collections from the Mortgagors
pursuant to
Section 3.09, and further as provided in Section 3.11. Any cost
incurred by the
Master Servicer or by Sub-Servicers in effecting the timely
payment of taxes and
assessments on a Mortgaged Property shall not, for the purpose
of calculating
distributions to Certificateholders, be added to the unpaid
principal balance of
the related Mortgage Loan, notwithstanding that the terms of
such Mortgage Loan
so permit.
The Master Servicer further is authorized and empowered by the
Trustee,
on behalf of the Certificateholders and the Trustee, in its own
name or in the
name of the Sub-Servicer, when the Master Servicer or the
Sub-Servicer, as the
case may be, believes it is appropriate in its best judgment to
register any
Mortgage Loan on the MERS(R) System, or cause the removal from
the registration
of any Mortgage Loan on the MERS(R) System, to execute and
deliver, on behalf of
the Trustee and the Certificateholders or any of them, any and
all instruments
of assignment and other comparable instruments with respect to
such assignment
or re-recording of a Mortgage in the name of MERS, solely as
nominee for the
Trustee and its successors and assigns. Any expenses incurred in
connection with
the actions described in the preceding sentence shall be borne
by the Master
Servicer in accordance with Section 3.18, with no right of
reimbursement;
provided, that if, as a result of MERS discontinuing or becoming
unable to
continue operations in connection with the MERS System, it
becomes necessary to
remove any Mortgage Loan from registration on the MERS System
and to arrange for
the assignment of the related Mortgages to the Trustee, then any
related
expenses shall be reimbursable to the Master Servicer.
Notwithstanding anything in this Agreement to the contrary, the
Master
Servicer may not make any future advances with respect to a
Mortgage Loan
(except as provided in Section 4.06) and the Master Servicer
shall not (i)
permit any modification with respect to any Mortgage Loan that
would change the
Loan Rate, reduce or increase the principal balance (except for
reductions
resulting from actual payments of principal) or change the final
maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the
Mortgagor is in
default with respect to the Mortgage Loan or such default is, in
the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any
modification,
waiver or amendment of any term of any Mortgage Loan that would
both (A) effect
an exchange or reissuance of such Mortgage Loan under Section
1001 of the Code
(or final, temporary or proposed Treasury regulations
promulgated thereunder)
and (B) cause either the Trust Fund to fail to qualify as a
REMIC under the Code
or the imposition of any tax on "prohibited transactions" or
"contributions
after the startup date" under the REMIC Provisions.
Notwithstanding any other provision of this Agreement or the
Additional
Collateral Servicing Agreement to the contrary, except as
provided below, the
Master Servicer shall have no duty or obligation to service and
administer the
Additional Collateral and the Master Servicer shall not be
deemed to be the
Additional Collateral Servicer, unless and until MLCC's
obligations to
administer the Additional Collateral under the Additional
Collateral Servicing
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Agreement have been terminated with respect to the Additional
Collateral
Mortgage Loans, in which case, the Master Servicer shall be
bound to service and
administer the Additional Collateral and the Limited Purpose
Surety Bond in
accordance with the provisions of this Agreement and the related
Additional
Collateral Agreements from the date of such termination. The
Trustee, as
assignee of the Additional Collateral Servicing Agreement, shall
enforce the
obligations of MLCC to service and administer the Additional
Collateral as
provided in the Additional Collateral Servicing Agreement, and
shall take
appropriate action thereunder if MLCC fails to substantially
comply with its
obligations to administer the Additional Collateral. In the
event the Trustee
receives an indemnification payment from MLCC under Section 3 of
the Additional
Collateral Servicing Agreement that is attributable to losses
resulting from
MLCC's failure to administer the Additional Collateral in
accordance with the
terms of the Additional Collateral Servicing Agreement in
connection with
Additional Collateral Mortgage Loans, the Trustee shall deposit
such amount in
the Collection Account.
The Master Servicer may delegate its responsibilities under
this
Agreement; provided, however, that no such delegation shall
release the Master
Servicer from the responsibilities or liabilities arising under
this Agreement.
Section 3.02 SUB-SERVICING AGREEMENTS BETWEEN THE MASTER
SERVICER AND
SUB-SERVICERS.
(a) The Master Servicer may enter into Sub-Servicing
Agreements
(provided that such agreements would not result in a withdrawal
or a downgrading
by any Rating Agency of the rating on any Class of Certificates)
with
Sub-Servicers, for the servicing and administration of the
Mortgage Loans.
Notwithstanding any other provision of this Agreement, the
Master Servicer shall
not be precluded from selling all or part of the Servicing Fee
relating to any
Mortgage Loans to any Sub-Servicer, provided that with respect
to any Mortgage
Loan as to which the Master Servicer sells all or a part of the
related
Servicing Fee, the Master Servicer shall retain full
responsibility under this
Agreement for the servicing activities relating to such Mortgage
Loan.
Each Sub-Servicer shall be (i) authorized to transact business
in the
state or states in which the related Mortgaged Properties it is
to service are
situated, if and to the extent required by applicable law to
enable the
Sub-Servicer to perform its obligations hereunder and under the
Sub-Servicing
Agreement, (ii) an institution approved as a mortgage loan
originator by the
Federal Housing Administration or an institution the deposit
accounts of which
are insured by the FDIC and (iii) a Freddie Mac or Fannie Mae
approved mortgage
servicer. Each Sub-Servicing Agreement must impose on the
Sub-Servicer
requirements conforming to the provisions set forth in Section
3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of
this Agreement.
The Master Servicer will examine each Sub-Servicing Agreement
and will be
familiar with the terms thereof. The terms of any Sub-Servicing
Agreement will
not be inconsistent with any of the provisions of this
Agreement. The Master
Servicer and the Sub-Servicers may enter into and make
amendments to the
Sub-Servicing Agreements or enter into different forms of
Sub-Servicing
Agreements; provided, however, that any such amendments or
different forms shall
be consistent with and not violate the provisions of this
Agreement, and that no
such amendment or different form shall be made or entered into
which could be
reasonably expected to be materially adverse to the interests of
the
Certificateholders, without the consent of the Holders of
Certificates entitled
to at least 66% of the Voting Rights. Any variation without the
consent of the
Holders of Certificates entitled to at
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least 66% of the Voting Rights from the provisions set forth in
Section 3.08
relating to insurance or priority requirements of Sub-Servicing
Accounts, or
credits and charges to the Sub-Servicing Accounts or the timing
and amount of
remittances by the Sub-Servicers to the Master Servicer, are
conclusively deemed
to be inconsistent with this Agreement and therefore prohibited.
The Master
Servicer shall deliver to the Trustee copies of all
Sub-Servicing Agreements,
and any amendments or modifications thereof, promptly upon the
Master Servicer's
execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master
Servicer
(except as otherwise provided in the last sentence of this
paragraph), for the
benefit of the Trustee and the Certificateholders, shall enforce
the obligations
of each Sub-Servicer under the related Sub-Servicing Agreement
and of each
Seller under the Mortgage Loan Purchase Agreement, including,
without
limitation, any obligation to make advances in respect of
delinquent payments as
required by a Sub-Servicing Agreement, or to purchase a Mortgage
Loan on account
of missing or defective documentation or on account of a breach
of a
representation, warranty or covenant, as described in Section
2.03(a). Such
enforcement, including, without limitation, the legal
prosecution of claims,
termination of Sub-Servicing Agreements, and the pursuit of
other appropriate
remedies, shall be in such form and carried out to such an
extent and at such
time as the 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, and shall be
reimbursed
therefor only (i) from a general recovery resulting from such
enforcement, to
the extent, if any, that such recovery exceeds all amounts due
in respect of the
related Mortgage Loans, or (ii) from a specific recovery of
costs, expenses or
attorneys' fees against the party against whom such enforcement
is directed.
Enforcement of the obligations under the Mortgage Loan Purchase
Agreement
against the Sellers shall be effected by the Master Servicer, in
accordance with
the foregoing provisions of this paragraph.
Section 3.03 SUCCESSOR SUB-SERVICERS.
The Master Servicer shall be entitled to terminate any
Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer
pursuant to any
Sub-Servicing Agreement in accordance with the terms and
conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub
Servicer, all
servicing obligations of such Sub-Servicer shall be assumed
simultaneously by
the Master Servicer without any act or deed on the part of such
Sub-Servicer or
the Master Servicer, and the Master Servicer either shall
service directly the
related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a
successor Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that
such
agreement may be immediately terminated by the Trustee without
fee, in
accordance with the terms of this Agreement, in the event that
the Master
Servicer shall, for any reason, no longer be the Master Servicer
(including
termination due to a Master Servicer Event of Termination).
Section 3.04 LIABILITY OF THE MASTER SERVICER.
Notwithstanding any Sub-Servicing Agreement, any of the
provisions of
this Agreement relating to agreements or arrangements between
the Master
Servicer and a Sub-Servicer or reference to actions taken
through a Sub-Servicer
or otherwise, the Master Servicer shall remain obligated and
primarily liable to
the Trustee and the Certificateholders for the servicing and
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administering of the Mortgage Loans in accordance with the
provisions of Section
3.01 without diminution of such obligation or liability by
virtue of such
Sub-Servicing Agreements or arrangements or by virtue of
indemnification from
the Sub-Servicer and to the same extent and under the same terms
and conditions
as if the Master Servicer alone were servicing and administering
the Mortgage
Loans. The Master Servicer shall be entitled to enter into any
agreement with a
Sub-Servicer for indemnification of the Master Servicer by such
Sub-Servicer and
nothing contained in this Agreement shall be deemed to limit or
modify such
indemnification.
Section 3.05 NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICERS
AND
TRUSTEE OR CERTIFICATEHOLDERS.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans
involving a Sub-Servicer
in its capacity as such shall be deemed to be between the
Sub-Servicer and the
Master Servicer alone, and the Trustee and Certificateholders
shall not be
deemed parties thereto and shall have no claims, rights,
obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth
in Section
3.06. The Master Servicer shall be solely liable for all fees
owed by it to any
Sub-Servicer, irrespective of whether the Master Servicer's
compensation
pursuant to this Agreement is sufficient to pay such fees.
Section 3.06 ASSUMPTION OR TERMINATION OF SUB-SERVICING
AGREEMENTS BY
TRUSTEE.
In the event the Master Servicer shall for any reason no longer
be the
master servicer (including by reason of the occurrence of a
Master Servicer
Event of Termination), the Trustee or its designee or the
successor master
servicer as appointed pursuant to Section 7.02 herein, shall
thereupon assume
all of the rights and obligations of the Master Servicer under
each
Sub-Servicing Agreement that the Master Servicer may have
entered into, unless
the Trustee elects to terminate any Sub-Servicing Agreement in
accordance with
its terms as provided in Section 3.03. Upon such assumption, the
Trustee, its
designee or the successor servicer for the Trustee appointed
pursuant to Section
7.02 shall be deemed, subject to Section 3.03, to have assumed
all of the Master
Servicer's interest therein and to have replaced the Master
Servicer as a party
to each Sub-Servicing Agreement to the same extent as if each
Sub-Servicing
Agreement had been assigned to the assuming party, except that
(i) the Master
Servicer shall not thereby be relieved of any liability or
obligations under any
Sub-Servicing Agreement and (ii) none of the Trustee, its
designee or any
successor master servicer shall be deemed to have assumed any
liability or
obligation of the Master Servicer that arose before it ceased to
be the Master
Servicer.
The Master Servicer at its expense shall, upon request of the
Trustee,
deliver to the assuming party all documents and records relating
to each
Sub-Servicing Agreement and the Mortgage Loans then being
serviced and an
accounting of amounts collected and held by or on behalf of it,
and otherwise
use its best efforts to effect the orderly and efficient
transfer of the
Sub-Servicing Agreements to the assuming party.
Section 3.07 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Master Servicer shall make reasonable efforts to collect
all
payments called for under the terms and provisions of the
Mortgage Loans, and
shall, to the extent such procedures shall be consistent with
this Agreement and
the terms and provisions of any related Primary Insurance
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Policy and any other applicable insurance policies, follow such
collection
procedures as it would follow with respect to mortgage loans
comparable to the
Mortgage Loans and held for its own account. Consistent with the
foregoing, the
Master Servicer may in its discretion (i) waive any late payment
charge or, if
applicable, penalty interest, only upon determining that the
coverage of such
Mortgage Loan by the related Primary Insurance Policy, if any,
will not be
affected, or (ii) extend the due dates for Monthly Payments due
on a Mortgage
Note for a period of not greater than 180 days; provided that
any extension
pursuant to clause (ii) above shall not affect the amortization
schedule of any
Mortgage Loan for purposes of any computation hereunder, except
as provided
below. In the event of any such arrangement pursuant to clause
(ii) above, the
Master Servicer shall make timely advances on such Mortgage Loan
during such
extension pursuant to Section 4.06 and in accordance with the
amortization
schedule of such Mortgage Loan without modification thereof by
reason of such
arrangements. Notwithstanding the foregoing, in the event that
any Mortgage Loan
is in default or, in the judgment of the Master Servicer, such
default is
reasonably foreseeable, the Master Servicer, consistent with the
standards set
forth in Section 3.01, may also, waive, modify or vary any term
of such Mortgage
Loan (including modifications that would change the Loan Rate,
forgive the
payment of principal or interest or extend the final maturity
date of such
Mortgage Loan), accept payment from the related Mortgagor of an
amount less than
the Stated Principal Balance in final satisfaction of such
Mortgage Loan (such
payment, a "Short Pay-off") or consent to the postponement of
strict compliance
with any such term or otherwise grant indulgence to any
Mortgagor.
Section 3.08 SUB-SERVICING ACCOUNTS.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be
required to
establish and maintain one or more accounts (collectively, the
"Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible
Account and shall
comply with all requirements of this Agreement relating to the
Collection
Account. The Sub-Servicer shall deposit in the clearing account
(which account
must be an Eligible Account) in which it customarily deposits
payments and
collections on mortgage loans in connection with its mortgage
loan servicing
activities on a daily basis, and in no event more than one
Business Day after
the Sub-Servicer's receipt thereof, all proceeds of Mortgage
Loans received by
the Sub-Servicer less its servicing compensation to the extent
permitted by the
Sub-Servicing Agreement, and shall thereafter deposit such
amounts in the
Sub-Servicing Account, in no event more than two Business Days
after the deposit
of such funds into the clearing account. The Sub-Servicer shall
thereafter
deposit such proceeds in the Collection Account or remit such
proceeds to the
Master Servicer for deposit in the Collection Account not later
than two
Business Days after the deposit of such amounts in the
Sub-Servicing Account.
For purposes of this Agreement, the Master Servicer shall be
deemed to have
received payments on the Mortgage Loans when the Sub-Servicer
receives such
payments.
Section 3.09 COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR
ITEMS;
SERVICING ACCOUNTS.
The Master Servicer shall establish and maintain one or more
accounts
(the "Servicing Accounts"), into which all collections from the
Mortgagors (or
related advances from Sub-Servicers) for the payment of ground
rents, taxes,
assessments, fire and hazard insurance premiums, Primary
Insurance Policy
premiums, water charges, sewer rents and comparable items for
the account of the
Mortgagors ("Escrow Payments") shall be deposited and retained.
Servicing
Accounts shall be Eligible Accounts. The Master Servicer shall
deposit in the
clearing
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account (which account must be an Eligible Account) in which it
customarily
deposits payments and collections on mortgage loans in
connection with its
mortgage loan servicing activities on a daily basis, and in no
event more than
one Business Day after the Master Servicer's receipt thereof,
all Escrow
Payments collected on account of the Mortgage Loans and shall
thereafter deposit
such Escrow Payments in the Servicing Accounts, in no event more
than two
Business Days after the deposit of such funds in the clearing
account, for the
purpose of effecting the payment of any such items as required
under the terms
of this Agreement. Withdrawals of amounts from a Servicing
Account may be made
only to (i) effect payment of Escrow Payments; (ii) reimburse
the Master
Servicer (or a Sub-Servicer to the extent provided in the
related Sub-Servicing
Agreement) out of related collections for any advances made
pursuant to Section
3.01 (with respect to taxes and assessments) and Section 3.14
(with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be
determined to
be overages; (iv) make Permitted Investments as provided in
Section 3.12; (v)
pay interest, to the Master Servicer or to the Mortgagor if
required and as
described below, on balances in the Servicing Account; (vi)
clear and terminate
the Servicing Account at the termination of the Master
Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this
Agreement in
accordance with Article IX; or (vii) recover amounts deposited
in error. As part
of its servicing duties, the Master Servicer or Sub-Servicers
shall pay to the
Mortgagors interest on funds in Servicing Accounts, to the
extent required by
law and, to the extent that interest earned on funds in the
Servicing Accounts
is insufficient, to pay such interest from its or their own
funds, without any
reimbursement therefor. To the extent that a Mortgage does not
provide for
Escrow Payments, the Master Servicer shall determine whether any
such payments
are made by the Mortgagor in a manner and at a time that avoids
the loss of the
Mortgaged Property due to a tax sale or the foreclosure of a tax
lien. The
Master Servicer assumes full responsibility for the payment of
all such bills
and shall effect payments of all such bills irrespective of the
Mortgagor's
faithful performance in the payment of same or the making of the
Escrow Payments
and shall make advances from its own funds to effect such
payments. The Master
Servicer shall be entitled to retain any interest paid on funds
deposited in the
Servicing Account to effect Escrow Payments other than interest
on escrowed
funds required by law to be paid to the Mortgagor.
Section 3.10 COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.
(a) On behalf of the Trust Fund, the Master Servicer shall
establish
and maintain one or more accounts (such account or accounts, the
"Collection
Account"), held in trust for the benefit of the Trustee and
the
Certificateholders. On behalf of the Trust Fund, the Master
Servicer shall
deposit or cause to be deposited in the clearing account (which
account must be
an Eligible Account) in which it customarily deposits payments
and collections
on mortgage loans in connection with its mortgage loan servicing
activities on a
daily basis, and in no event more than one Business Day after
the Master
Servicer's receipt thereof, and shall thereafter deposit in the
Collection
Account, in no event more than two Business Days after the
deposit of such funds
into the clearing account, as and when received or as otherwise
required
hereunder, the following payments and collections received or
made by it
subsequent to the Cut-off Date (other than in respect of
principal or interest
on the related Mortgage Loans due on or before the Cut-off
Date), or payments
(other than Principal Prepayments) received by it on or prior to
the Cut-off
Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including
Principal
Prepayments, on the Mortgage Loans;
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(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds, Liquidation Proceeds and
Subsequent Recoveries (other than proceeds collected in respect
of any
particular REO Property and amounts paid by the Master Servicer
in
connection with a purchase of Mortgage Loans and REO
Properties
pursuant to Section 9.01);
(iv) any amounts required to be deposited pursuant to
Section
3.12 in connection with any losses realized on Permitted
Investments
with respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Master
Servicer pursuant to the second paragraph of Section 3.14(a) in
respect
of any blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or
purchased in accordance with Section 2.03 or Section 9.01;
(vii) all amounts required to be deposited in connection
with
shortfalls in principal amount of Eligible Substitute Mortgage
Loans
pursuant to Section 2.03;
(viii) any amounts required to be transferred from any
Buydown
Account pursuant to Section 3.25; and
(ix) any (x) amounts realized by MLCC or (y) Required Surety
Payments received by the Trustee or the Master Servicer in
respect of
any Additional Collateral.
For purposes of the immediately preceding sentence, the Cut-off
Date with
respect to any Eligible Substitute Mortgage Loan shall be deemed
to be the date
of substitution.
The foregoing requirements for deposit in the Collection Account
shall
be exclusive, it being understood and agreed that, without
limiting the
generality of the foregoing, payments in the nature of late
payment charges or
assumption fees need not be deposited by the Master Servicer in
the Collection
Account and shall be retained by the Master Servicer as
additional servicing
compensation. In the event the Master Servicer shall deposit in
the Collection
Account any amount not required to be deposited therein, it may
at any time
withdraw such amount from the Collection Account, any provision
herein to the
contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish
and
maintain one or more accounts (such account or accounts, the
"Distribution
Account"), held in trust for the benefit of the
Certificateholders. On behalf of
the Trust Fund, the Master Servicer shall deliver to the Trustee
in immediately
available funds for deposit in the Distribution Account on or
before 5:00 p.m.
New York time on the Master Servicer Remittance Date, that
portion of the
Available Distribution Amount for the related Distribution Date
then on deposit
in the Collection Account.
(c) Funds in the Collection Account and the Distribution Account
may be
invested in Permitted Investments in accordance with the
provisions set forth in
Section 3.12. The Master Servicer shall give notice to the
Trustee and the
Depositor of the location of the Collection Account maintained
by it when
established and prior to any change thereof. The Trustee
shall
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give notice to the Master Servicer and the Depositor of the
location of the
Distribution Account when established and prior to any change
thereof.
(d) Funds held in the Collection Account at any time may be
delivered
by the Master Servicer to the Trustee for deposit in an account
(which may be
the Distribution Account and must satisfy the standards for the
Distribution
Account as set forth in the definition thereof) and for all
purposes of this
Agreement shall be deemed to be a part of the Collection
Account; provided,
however, that the Trustee shall have the sole authority to
withdraw any funds
held pursuant to this subsection (d). In the event the Master
Servicer shall
deliver to the Trustee for deposit in the Distribution Account
any amount not
required to be deposited therein, it may at any time request
that the Trustee
withdraw such amount from the Distribution Account and remit to
it any such
amount, any provision herein to the contrary notwithstanding. In
addition, the
Master Servicer shall deliver to the Trustee from time to time
for deposit, and
upon written notification from the Master Servicer, the Trustee
shall so
deposit, in the Distribution Account:
(i) any Advances, as required pursuant to Section 4.06;
(ii) any amounts required to be deposited pursuant to
Section
3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid by the Master Servicer in
connection with a purchase of Mortgage Loans and REO
Properties
pursuant to Section 9.01;
(iv) any amounts required to be deposited pursuant to
Section
3.24 in connection with any Prepayment Interest Shortfalls;
and
(v) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from the
Master
Servicer, a trustee in bankruptcy, or federal bankruptcy court
or other source,
the Trustee shall deposit such funds in the Distribution
Account.
Section 3.11 WITHDRAWALS FROM THE COLLECTION ACCOUNT AND
DISTRIBUTION
ACCOUNT.
(a) The Master Servicer shall, from time to time, make
withdrawals from
the Collection Account for any of the following purposes or as
described in
Section 4.06:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to
Section
3.10(b) or permitted to be so remitted pursuant to the first
sentence
of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master
Servicer for Advances;
(iii) subject to Section 3.16(d), to pay the Master Servicer
or any Sub-Servicer any unpaid Servicing Fees and reimburse
any
unreimbursed Servicing Advances with respect to each Mortgage
Loan, but
only to the extent of any Liquidation Proceeds, Insurance
Proceeds or
other amounts as may be collected by the Master Servicer;
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(iv) to pay to the Master Servicer as servicing compensation
(in addition to the Servicing Fee) on the Master Servicer
Remittance
Date any interest or investment income earned on funds deposited
in the
Collection Account, any Foreclosure Profits and any
prepayment
penalties or premiums relating to any Principal Prepayments;
provided,
however, that no such amounts shall be payable as servicing
compensation to the extent they relate to a Mortgage Loan with
respect
to which a default, breach, violation or event of acceleration
exists
or would exist but for the lapse of time, the giving of notice,
or
both;
(v) to pay to the Master Servicer, the Depositor or a
Seller,
as the case may be, with respect to each Mortgage Loan that
has
previously been purchased or replaced pursuant to Section 2.03
or
Section 3.16(c) all amounts received thereon subsequent to the
date of
purchase or substitution, as the case may be;
(vi) to reimburse the Master Servicer for any Advance
previously made which the Master Servicer has determined to be
a
Nonrecoverable Advance in accordance with the provisions of
Section
4.06; (vii) to reimburse the Master Servicer or the Depositor
for
expenses incurred by or reimbursable to the Master Servicer or
the
Depositor, as the case may be, pursuant to Section 6.03;
(viii) to reimburse the Master Servicer or the Trustee, as
the
case may be, for expenses reasonably incurred in respect of the
breach
or defect giving rise to the purchase obligation under Section
2.03 or
Section 2.04 of this Agreement that were included in the
Purchase Price
of the Mortgage Loan, including any expenses arising out of
the
enforcement of the purchase obligation;
(ix) to pay, or to reimburse the Master Servicer for
advances
in respect of, expenses incurred in connection with any Mortgage
Loan
pursuant to Section 3.16(b); and
(x) to clear and terminate the Collection Account pursuant
to
Section 10.01;
(xi) to reimburse the Master Servicer for amounts deposited
in
error.
The Master Servicer shall keep and maintain separate accounting,
on a
Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any
withdrawal from the Collection Account, to the extent held by or
on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii)
and (ix) above.
The Master Servicer shall provide written notification to the
Trustee, on or
prior to the next succeeding Master Servicer Remittance Date,
upon making any
withdrawals from the Collection Account pursuant to subclause
(vii) above.
(b) The Trustee shall, from time to time, make withdrawals from
the
Distribution Account, for any of the following purposes, without
priority:
(i) to make distributions to Certificateholders in
accordance
with Section 4.01;
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(ii) to pay to itself amounts to which it is entitled
pursuant
to Section 8.05;
(iii) to pay itself any interest income earned on funds
deposited in the Distribution Account pursuant to Section
3.12(c);
(iv) to reimburse itself pursuant to Section 7.02 and
7.01(b);
(v) to pay any amounts in respect of taxes pursuant to
10.01(g)(iii); and
(vi) to clear and terminate the Distribution Account
pursuant
to Section 10.01.
Section 3.12 INVESTMENT OF FUNDS IN THE COLLECTION ACCOUNT,
SERVICING
ACCOUNTS AND THE DISTRIBUTION ACCOUNT.
(a) The Master Servicer may direct any depository
institution
maintaining the Collection Account or Servicing Accounts (for
purposes of this
Section 3.12, an "Investment Account'), and the Trustee, in its
individual
capacity, may direct any depository institution maintaining the
Distribution
Account (for purposes of this Section 3.12, also an "Investment
Account'), to
invest the funds in such Investment Account in one or more
Permitted Investments
bearing interest or sold at a discount, and maturing, unless
payable on demand,
(i) no later than the Business Day immediately preceding the
date on which such
funds are required to be withdrawn from such account pursuant to
this Agreement,
if a Person other than the Trustee is the obligor thereon, and
(ii) no later
than the date on which such funds are required to be withdrawn
from such account
pursuant to this Agreement, if the Trustee is the obligor
thereon. All such
Permitted Investments shall be held to maturity, unless payable
on demand. Any
investment of funds in an Investment Account shall be made in
the name of the
Trustee (in its capacity as such) or in the name of a nominee of
the Trustee.
The Trustee shall be entitled to sole possession (except with
respect to
investment direction of funds held in the Collection Account or
Servicing
Accounts, as applicable, and any income and gain realized
thereon) over each
such investment, and any certificate or other instrument
evidencing any such
investment shall be delivered directly to the Trustee or its
agent, together
with any document of transfer necessary to transfer title to
such investment to
the Trustee or its nominee. In the event amounts on deposit in
an Investment
Account are at any time invested in a Permitted Investment
payable on demand,
the Trustee shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on
the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of
(1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the
Trustee that such Permitted Investment would not
constitute a Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds
deposited
in the Collection Account or Servicing Accounts, as applicable,
held by or on
behalf of the Master Servicer, shall be for the benefit of the
Master Servicer
and shall be subject to its withdrawal in
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accordance with Section 3.11. The Master Servicer shall deposit
in the
Collection Account or Servicing Accounts, as applicable, the
amount of any loss
of principal incurred in respect of any such Permitted
Investment made with
funds in such accounts immediately upon realization of such
loss.
(c) All income and gain realized from the investment of funds
deposited
in the Distribution Account held by or on behalf of the Trustee,
shall be for
the benefit of the Trustee and shall be subject to its
withdrawal at any time.
The Trustee shall deposit in the Distribution Account, the
amount of any loss of
principal incurred in respect of any such Permitted Investment
made with funds
in such accounts immediately upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if
any
default occurs in the making of a payment due under any
Permitted Investment, or
if a default occurs in any other performance required under any
Permitted
Investment, the Trustee may and, subject to Section 8.01 and
Section 8.02(a)(v),
upon the request of the Holders of Certificates representing
more than 50% of
the Voting Rights allocated to any Class of Certificates, shall
take such action
as may be appropriate to enforce such payment or performance,
including the
institution and prosecution of appropriate proceedings.
Section 3.13 MAINTENANCE OF THE PRIMARY INSURANCE POLICIES;
COLLECTIONS
THEREUNDER.
The Master Servicer will maintain or cause the related
Sub-Servicer, if
any, to maintain in full force and effect, if required under the
Mortgage Loan
Purchase Agreement and to the extent available, a Primary
Insurance Policy
conforming in all respects to the description set forth in
Section 2(vii) of the
Mortgage Loan Purchase Agreement with respect to each Mortgage
Loan so insured
as of the Closing Date (or, in the case of a Eligible Substitute
Mortgage Loan,
on the date of substitution). Such coverage will be maintained
with respect to
each such Mortgage Loan for so long as it is outstanding,
subject to any
applicable laws or until the related Loan-to-Value Ratio is
reduced to less than
or equal to 80% based on Mortgagor payments. The Master Servicer
shall cause the
premium for each Primary Insurance Policy to be paid on a timely
basis and shall
pay such premium out of its own funds if it is not otherwise
paid. The Master
Servicer or the related Sub-Servicer, if any, will not cancel or
refuse to renew
any such Primary Insurance Policy in effect on the Closing Date
(or, in the case
of a Eligible Substitute Mortgage Loan, on the date of
substitution) that is
required to be kept in force under this Agreement unless a
replacement Primary
Insurance Policy for such canceled or non-renewed policy is
obtained from and
maintained with an insurer.
The Master Servicer shall not take, or permit any Sub-Servicer
to take,
any action which would result in non-coverage under any
applicable Primary
Insurance Policy of any loss which, but for the actions of the
Master Servicer
or Sub-Servicer, would have been covered thereunder. The Master
Servicer will
comply in the performance of this Agreement with all reasonable
rules and
requirements of each insurer under each Primary Insurance
Policy. In connection
with any assumption and modification agreement or substitution
of liability
agreement entered into or to be entered into pursuant to Section
3.15, the
Master Servicer shall promptly notify the insurer under the
related Primary
Insurance Policy, if any, of such assumption in accordance with
the terms of
such policies and shall take all actions which may be required
by such insurer
as a condition to the continuation of coverage under the Primary
Insurance
Policy. If any such Primary Insurance Policy is terminated as a
result of such
assumption, the Master Servicer or the related Sub-Servicer
shall obtain a
replacement Primary Insurance Policy as provided above.
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In connection with its activities as administrator and servicer
of the
Mortgage Loans, the Master Servicer agrees to prepare and
present, on behalf of
itself, the Trustee and the Certificateholders, claims to the
insurer under any
Primary Insurance Policy in a timely fashion in accordance with
the terms of
such policies and, in this regard, to take such action as shall
be necessary to
permit recovery under any Primary Insurance Policy respecting a
defaulted
Mortgage Loan. Any amounts collected by the Master Servicer
under any Primary
Insurance Policy shall be deposited in the Collection Account,
subject to
withdrawal pursuant to Section 3.11; and any amounts collected
by the Master
Servicer under any Primary Insurance Policy in respect of any
REO Property shall
be deposited in the Collection Account, subject to withdrawal
pursuant to
Section 3.23. In those cases in which a Mortgage Loan is
serviced by a
Sub-Servicer, the Sub-Servicer, on behalf of itself, the
Trustee, and the
Certificateholders, will present claims to the insurer under any
Primary
Insurance Policy and all collections thereunder shall be
deposited initially in
the Sub-Servicing Account.
Section 3.14 MAINTENANCE OF HAZARD INSURANCE AND ERRORS AND
OMISSIONS
AND FIDELITY COVERAGE.
(a) The Master Servicer shall cause to be maintained for each
Mortgage
Loan fire insurance with extended coverage on the related
Mortgaged Property in
an amount which is at least equal to the least of (i) the
current principal
balance of such Mortgage Loan, (ii) the amount necessary to
fully compensate for
any damage or loss to the improvements that are a part of such
property on a
replacement cost basis and (iii) the maximum insurable value of
the improvements
which are a part of such Mortgaged Property, in each case in an
amount not less
than such amount as is necessary to avoid the application of any
coinsurance
clause contained in the related hazard insurance policy. The
Master Servicer
shall also cause to be maintained fire insurance with extended
coverage on each
REO Property in an amount which is at least equal to the lesser
of (i) the
maximum insurable value of the improvements which are a part of
such property
and (ii) the outstanding principal balance of the related
Mortgage Loan at the
time it became an REO Property, plus accrued interest at the
Loan Rate and
related Servicing Advances. The Master Servicer will comply in
the performance
of this Agreement with all reasonable rules and requirements of
each insurer
under any such hazard policies. Any amounts to be collected by
the Master
Servicer under any such policies (other than amounts to be
applied to the
restoration or repair of the property subject to the related
Mortgage or amounts
to be released to the Mortgagor in accordance with the
procedures that the
Master Servicer would follow in servicing loans held for its own
account,
subject to the terms and conditions of the related Mortgage and
Mortgage Note)
shall be deposited in the Collection Account, within two
Business Days after
receipt thereof, subject to withdrawal pursuant to Section 3.11,
if received in
respect of a Mortgage Loan, or in the REO Account, subject to
withdrawal
pursuant to Section 3.23, if received in respect of an REO
Property. Any cost
incurred by the Master Servicer in maintaining any such
insurance shall not, for
the purpose of calculating distributions to Certificateholders,
be added to the
unpaid principal balance of the related Mortgage Loan,
notwithstanding that the
terms of such Mortgage Loan so permit. It is understood and
agreed that no
earthquake, windstorm or other additional insurance is to be
required of any
Mortgagor other than pursuant to such applicable laws and
regulations as shall
at any time be in force and as shall require such additional
insurance. If the
Mortgaged Property or REO Property is at any time in an area
identified in the
Federal Register by the Federal Emergency Management Agency as
having special
flood hazards, the Master Servicer will cause to be maintained a
flood insurance
policy in respect thereof. Such flood insurance shall be in an
amount equal to
the lesser of (i) the unpaid
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principal balance of the related Mortgage Loan and (ii) the
maximum amount of
such insurance available for the related Mortgaged Property
under the national
flood insurance program (assuming that the area in which such
Mortgaged Property
is located is participating in such program).
If the Master Servicer shall obtain and maintain a blanket
fire
insurance policy with extended coverage insuring against hazard
losses on all of
the Mortgage Loans, it shall conclusively be deemed to have
satisfied its
obligations as set forth in the first two sentences of this
Section 3.14, it
being understood and agreed that such policy may contain a
deductible clause, in
which case the Master Servicer shall, in the event that there
shall not have
been maintained on the related Mortgaged Property or REO
Property a policy
complying with the first two sentences of this Section 3.14, and
there shall
have been one or more losses which would have been covered by
such policy,
deposit to the Collection Account from its own funds the amount
not otherwise
payable under the blanket policy because of such deductible
clause. In
connection with its activities as administrator and servicer of
the Mortgage
Loans, the Master Servicer agrees to prepare and present, on
behalf of itself,
the Trustee and Certificateholders, claims under any such
blanket policy in a
timely fashion in accordance with the terms of such policy.
(b) The Master Servicer shall keep in force during the term of
this
Agreement a policy or policies of insurance covering errors and
omissions for
failure in the performance of the Master Servicer's obligations
under this
Agreement, which policy or policies shall be in such form and
amount that would
meet the requirements of Fannie Mae or Freddie Mac if it were
the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a
waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer
shall also
maintain a fidelity bond in the form and amount that would meet
the requirements
of Fannie Mae or Freddie Mac, unless the Master Servicer has
obtained a waiver
of such requirements from Fannie Mae or Freddie Mac. The Master
Servicer shall
provide the Trustee (upon the Trustee's reasonable request) with
copies of any
such insurance policies and fidelity bond. The Master Servicer
shall be deemed
to have complied with this provision if an Affiliate of the
Master Servicer has
such errors and omissions and fidelity bond coverage and, by the
terms of such
insurance policy or fidelity bond, the coverage afforded
thereunder extends to
the Master Servicer. Any such errors and omissions policy and
fidelity bond
shall by its terms not be cancelable without thirty days' prior
written notice
to the Trustee. The Master Servicer shall also cause each
Sub-Servicer to
maintain a policy of insurance covering errors and omissions and
a fidelity bond
which would meet such requirements.
Section 3.15 ENFORCEMENT OF DUE-ON-SALE CLAUSES. ASSUMPTION
AGREEMENTS.
The Master Servicer will, to the extent it has knowledge of
any
conveyance or prospective conveyance of any Mortgaged Property
by any Mortgagor
(whether by absolute conveyance or by contract of sale, and
whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note
and/or the
Mortgage), exercise its rights to accelerate the maturity of
such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto;
provided, however,
that the Master Servicer shall not exercise any such rights if
prohibited by law
from doing so or if the exercise of such rights would impair or
threaten to
impair any recovery under the related Primary Insurance Policy
or Limited
Purpose Surety Bond, if any. If the Master Servicer reasonably
believes it is
unable under applicable law to enforce such "due-on-sale"
clause, or if any of
the other conditions set forth in the proviso to the preceding
sentence
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apply, the Master Servicer will enter into an assumption and
modification
agreement from or with the person to whom such property has been
conveyed or is
proposed to be conveyed, pursuant to which such person becomes
liable under the
Mortgage Note and, to the extent permitted by applicable state
law, the
Mortgagor remains liable thereon. The Master Servicer is also
authorized to
enter into a substitution of liability agreement with such
person, pursuant to
which the original Mortgagor is released from liability and such
person is
substituted as the Mortgagor and becomes liable under the
Mortgage Note,
provided that no such substitution shall be effective unless
such person
satisfies the underwriting criteria of the Master Servicer and
has a credit risk
rating at least equal to that of the original Mortgagor. In
connection with any
assumption or substitution, the Master Servicer shall apply such
underwriting
standards and follow such practices and procedures as shall be
normal and usual
in its general mortgage servicing activities and as it applies
to other mortgage
loans owned solely by it. The Master Servicer shall not take or
enter into any
assumption and modification agreement, however, unless (to the
extent
practicable in the circumstances) it shall have received
confirmation, in
writing, of the continued effectiveness of any applicable
Primary Insurance
Policy or hazard insurance policy, or a new policy meeting the
requirements of
this Section is obtained. Any fee collected by the Master
Servicer in respect of
an assumption or substitution of liability agreement will be
retained by the
Master Servicer as additional servicing compensation. In
connection with any
such assumption, no material term of the Mortgage Note
(including but not
limited to the related Loan Rate and the amount of the Monthly
Payment) may be
amended or modified, except as otherwise required pursuant to
the terms thereof.
The Master Servicer shall notify the Trustee that any such
substitution or
assumption agreement has been completed by forwarding to the
Trustee the
executed original of such substitution or assumption agreement,
which document
shall be added to the related Mortgage File and shall, for all
purposes, be
considered a part of such Mortgage File to the same extent as
all other
documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this
Agreement, the Master Servicer shall not be deemed to be in
default, breach or
any other violation of its obligations hereunder by reason of
any assumption of
a Mortgage Loan by operation of law or by the terms of the
Mortgage Note or any
assumption which the Master Servicer may be restricted by law
from preventing,
for any reason whatever. For purposes of this Section 3.15, the
term
"assumption" is deemed to also include a sale (of the Mortgaged
Property)
subject to the Mortgage that is not accompanied by an assumption
or substitution
of liability agreement.
Section 3.16 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Master Servicer shall, consistent with the servicing
standard
set forth in Section 3.01, foreclose upon or otherwise
comparably convert the
ownership of properties securing such of the Mortgage Loans as
come into and
continue in default and as to which no satisfactory arrangements
can be made for
collection of delinquent payments pursuant to Section 3.07. The
Master Servicer
shall be responsible for all costs and expenses incurred by it
in any such
proceedings; provided, however, that such costs and expenses
will be recoverable
as Servicing Advances by the Master Servicer as contemplated in
Section 3.11 and
Section 3.23. The foregoing is subject to the provision that, in
any case in
which Mortgaged Property shall have suffered damage from an
Uninsured Cause, the
Master Servicer shall not be required to expend its own funds
toward the
restoration of such property unless it shall determine in
its
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discretion that such restoration will increase the proceeds of
liquidation of
the related Mortgage Loan after reimbursement to itself for such
expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.16 or
any other provision of this Agreement, with respect to any
Mortgage Loan as to
which the Master Servicer has received actual notice of, or has
actual knowledge
of, the presence of any toxic or hazardous substance on the
related Mortgaged
Property, the Master Servicer shall not, on behalf of the
Trustee, either (i)
obtain title to such Mortgaged Property as a result of or in
lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take
any other action
with respect to, such Mortgaged Property, if, as a result of any
such action,
the Trustee, the Trust Fund or the Certificateholders would be
considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or
"operator" of such Mortgaged Property within the meaning of the
Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended from
time to time, or any comparable law, unless the Master Servicer
has also
previously determined, based on its reasonable judgment and a
report prepared by
a Person who regularly conducts environmental audits using
customary industry
standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best
economic interest of
the Trust Fund to take such actions as are necessary to bring
the Mortgaged
Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged
Property
relating to the use, management or disposal of any hazardous
substances,
hazardous materials, hazardous wastes, or petroleum-based
materials for which
investigation, testing, monitoring, containment, clean-up or
remediation could
be required under any federal, state or local law or regulation,
or that if any
such materials are present for which such action could be
required, that it
would be in the best economic interest of the Trust Fund to take
such actions
with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section
3.23 shall be advanced by the Master Servicer, subject to the
Master Servicer's
right to be reimbursed therefor from the Collection Account as
provided in
Section 3.11(a)(ix), such right of reimbursement being prior to
the rights of
Certificateholders to receive any amount in the Collection
Account received in
respect of the affected Mortgage Loan or other Mortgage
Loans.
If the Master Servicer determines, as described above, that it
is in
the best economic interest of the Trust Fund to take such
actions as are
necessary to bring any such Mortgaged Property into compliance
with applicable
environmental laws, or to take such action with respect to the
containment,
clean-up or remediation of hazardous substances, hazardous
materials, hazardous
wastes or petroleum based materials affecting any such Mortgaged
Property, then
the Master Servicer shall take such action as it deems to be in
the best
economic interest of the Trust Fund. The cost of any such
compliance,
containment, cleanup or remediation shall be advanced by the
Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor
from the
Collection Account as provided in Section 3.11(a)(ix), such
right of
reimbursement being prior to the rights of Certificateholders to
receive any
amount in the Collection Account received in respect of the
affected Mortgage
Loan or other Mortgage Loans.
(c) The Master Servicer may at its option purchase from the
Trust Fund
any Mortgage Loan that is 90 days or more Delinquent, which the
Master Servicer
determines in
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good faith will otherwise become subject to foreclosure
proceedings (evidence of
such determination to be delivered in writing to the Trustee
prior to purchase),
at a price equal to the sum of the outstanding Stated Principal
Balance of such
Mortgage Loan and accrued and unpaid interest thereon at the
Loan Rate through
the end of the Due Period preceding the last Distribution Date,
less
unreimbursed Servicing Advances, Advances and any unpaid
Servicing Fees
allocable to such Mortgage Loan. The purchase price for any
Mortgage Loan
purchased hereunder shall be deposited in the Collection
Account, and the
Trustee, upon receipt of written certification from the Master
Servicer of such
deposit, shall release or cause to be released to the Master
Servicer the
related Mortgage File and shall execute and deliver such
instruments of transfer
or assignment, in each case without recourse, as the Master
Servicer shall
furnish and as shall be necessary to vest in the Master Servicer
title to any
Mortgage Loan released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial
collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any
Mortgage Loan,
will be applied in the following order of priority: first, to
reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed
Servicing
Advances and Advances, pursuant to Section 3.11(a)(ii) or
(a)(iii); second, to
accrued and unpaid interest on the Mortgage Loan, to the date of
the Final
Recovery Determination, or to the Due Date prior to the
Distribution Date on
which such amounts are to be distributed if not in connection
with a Final
Recovery Determination; third, as a recovery of principal of the
Mortgage Loan;
and fourth, to Foreclosure Profits. If the amount of the
recovery so allocated
to interest is less than the full amount of accrued and unpaid
interest due on
such Mortgage Loan, the amount of such recovery will be
allocated by the Master
Servicer as follows: first, to unpaid Servicing Fees; and
second, to the balance
of the interest then due and owing. The portion of the recovery
so allocated to
unpaid Servicing Fees shall be reimbursed to the Master Servicer
or any
Sub-Servicer pursuant to Section 3.11(a)(iii).
(e) In addition to the foregoing, the Trustee, as assignee of
the
Additional Collateral Servicing Agreement, shall enforce the
obligations of the
Additional Collateral Servicer to use its best reasonable
efforts to realize
upon any Additional Collateral for such of the Additional
Collateral Mortgage
Loans as come into and continue in default and as to which no
satisfactory
arrangements can be made for collection of delinquent payments
pursuant to
Section 3.11; provided that pursuant to the Additional
Collateral Servicing
Agreement, the Additional Collateral Servicer shall not, on
behalf of the
Trustee, obtain title to any such Additional Collateral as a
result of or in
lieu of the disposition thereof or otherwise; and provided
further that (i) the
Additional Collateral Servicer, pursuant to the Additional
Collateral Servicing
Agreement, shall not proceed with respect to such Additional
Collateral in any
manner that would impair the ability to recover against the
related Mortgaged
Property, and (ii) the Master Servicer shall proceed with any
acquisition of REO
Property in a manner that preserves the ability to apply the
proceeds of such
Additional Collateral against amounts owed under the defaulted
Mortgage Loan.
Any proceeds realized from such Additional Collateral (other
than amounts to be
released to the Mortgagor or the related guarantor in accordance
with procedures
that the Master Servicer would follow in servicing loans held
for its own
account, subject to the terms and conditions of the related
Mortgage and
Mortgage Note and to the terms and conditions of any security
agreement,
guarantee agreement, mortgage or other agreement governing the
disposition of
the proceeds of such Additional Collateral) shall be deposited
in the
Distribution Account, subject to withdrawal pursuant to Section
3.11; provided,
that such proceeds shall not
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be so deposited if the Required Surety Payment in respect of
such Additional
Collateral Mortgage Loan has been deposited in the Collection
Account (except to
the extent of any such proceeds taken into account in
calculating the amount of
the Required Surety Payment). Any other payment received by a
Seller in respect
of such Additional Collateral shall be deposited in the
Distribution Account
subject to withdrawal pursuant to Section 3.11.
Section 3.17 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE
FILES.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by
the Master Servicer of a notification that payment in full shall
be escrowed in
a manner customary for such purposes, the Master Servicer will
immediately
notify the Trustee by delivering a certification in duplicate
(one of which will
be returned to the Master Servicer with the Mortgage File) in
the form of
Exhibit E which shall be signed by a Servicing Officer or in a
mutually
agreeable electronic format which will in lieu of a signature be
deemed to
originate from a Servicing Officer (which certification shall
include a
statement to the effect that all amounts received or to be
received in
connection with such payment which are required to be deposited
in the
Collection Account pursuant to Section 3.10 have been or will be
so deposited)
of a Servicing Officer and shall request delivery to it of the
Mortgag
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