Exhibit 4
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MORGAN STANLEY ABS CAPITAL I INC.,
Depositor,
HOMEQ SERVICING CORPORATION,
Servicer,
COUNTRYWIDE HOME LOANS SERVICING LP,
Servicer,
NC CAPITAL CORPORATION,
Responsible Party,
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
--------------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 2005
--------------------------------------------------
MORGAN STANLEY ABS CAPITAL I INC. TRUST 2005-NC2
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2005-NC2
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage
Loans..............................
Section 2.02 Acceptance by the Trustee of the
Mortgage Loans...........
Section 2.03 Representations and Warranties;
Remedies for Breaches of
Representations and Warranties with Respect to the
Mortgage Loans...........................................
Section 2.04 Execution and Delivery of
Certificates....................
Section 2.05 REMIC
Matters.............................................
Section 2.06 Representations and Warranties of
the Depositor...........
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicers to Service Mortgage
Loans.......................
Section 3.02 Subservicing Agreements between a
Servicer and
Subservicers.............................................
Section 3.03 Successor
Subservicers....................................
Section 3.04 Liability of the
Servicers................................
Section 3.05 No Contractual Relationship
between Subservicers and the
Trustee..................................................
Section 3.06 Assumption or Termination of
Subservicing Agreements by
Trustee..................................................
Section 3.07 Collection of Certain Mortgage
Loan Payments..............
Section 3.08 Subservicing
Accounts.....................................
Section 3.09 Collection of Taxes, Assessments
and Similar Items;
Escrow Accounts..........................................
Section 3.10 Collection
Accounts.......................................
Section 3.11 Withdrawals from the Collection
Accounts..................
Section 3.12 Investment of Funds in the
Collection Accounts and the
Distribution Account.....................................
Section 3.13 Maintenance of Hazard Insurance
and Errors and Omissions
and
Fidelity Coverage....................................
Section 3.14 Enforcement of Due-On-Sale
Clauses; Assumption Agreements.
Section 3.15 Realization upon Defaulted
Mortgage Loans.................
Section 3.16 Release of Mortgage
Files.................................
Section 3.17 Title, Conservation and
Disposition of REO Property.......
Section 3.18 Notification of
Adjustments...............................
Section 3.19 Access to Certain Documentation
and Information Regarding
the
Mortgage Loans.......................................
Section 3.20 Documents, Records and Funds in
Possession of the
Servicers to Be Held for the Trustee.....................
Section 3.21 Servicing
Compensation....................................
Section 3.22 Annual Statement as to
Compliance.........................
Section 3.23 Annual Independent Public
Accountants' Servicing
Statement; Financial Statements..........................
Section 3.24 Trustee to Act as
Servicer................................
Section 3.25 Compensating
Interest.....................................
Section 3.26 Credit Reporting;
Gramm-Leach-Bliley Act..................
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICERS
Section 4.01
Advances..................................................
Section 4.02 Priorities of
Distribution................................
Section 4.03 Monthly Statements to
Certificateholders..................
Section 4.04 Certain Matters Relating to the
Determination of LIBOR....
Section 4.05 Allocation of Applied Realized
Loss Amounts...............
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates..........................................
Section 5.02 Certificate Register; Registration
of Transfer and
Exchange of Certificates.................................
Section 5.03 Mutilated, Destroyed, Lost or
Stolen Certificates.........
Section 5.04 Persons Deemed
Owners.....................................
Section 5.05 Access to List of
Certificateholders' Names and Addresses.
Section 5.06 Maintenance of Office or
Agency...........................
ARTICLE VI
THE DEPOSITOR AND THE SERVICERS
Section 6.01 Respective Liabilities of the
Depositor and the Servicers.
Section 6.02 Merger or Consolidation of the
Depositor or a Servicer....
Section 6.03 Limitation on Liability of the
Depositor, the Servicers
and Others...............................................
Section 6.04 Limitation on Resignation of a
Servicer...................
Section 6.05 Additional Indemnification by the
Servicers; Third Party
Claims...................................................
ARTICLE VII
DEFAULT
Section 7.01 Events of
Default.........................................
Section 7.02 Trustee to Act; Appointment of
Successor..................
Section 7.03 Notification to
Certificateholders........................
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the
Trustee.....................................
Section 8.02 Certain Matters Affecting the
Trustee.....................
Section 8.03 Trustee Not Liable for
Certificates or Mortgage Loans.....
Section 8.04 Trustee May Own
Certificates..............................
Section 8.05 Trustee's Fees and
Expenses...............................
Section 8.06 Eligibility Requirements for the
Trustee..................
Section 8.07 Resignation and Removal of the
Trustee....................
Section 8.08 Successor
Trustee.........................................
Section 8.09 Merger or Consolidation of the
Trustee....................
Section 8.10 Appointment of Co-Trustee or
Separate Trustee.............
Section 8.11 Tax
Matters...............................................
Section 8.12 Periodic
Filings..........................................
Section 8.13 Tax Classification of the Excess
Reserve Fund Account and
the Interest Rate Cap Agreements.........................
ARTICLE IX
TERMINATION
Section 9.01 Termination upon Liquidation or
Purchase of the Mortgage
Loans....................................................
Section 9.02 Final Distribution on the
Certificates....................
Section 9.03 Additional Termination
Requirements.......................
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01
Amendment.................................................
Section 10.02 Recordation of Agreement;
Counterparts....................
Section 10.03 Governing
Law.............................................
Section 10.04 Intention of
Parties......................................
Section 10.05
Notices...................................................
Section 10.06 Severability of
Provisions................................
Section 10.07 Assignment; Sales; Advance
Facilities.....................
Section 10.08 Limitation on Rights of
Certificateholders................
Section 10.09 Inspection and Audit
Rights...............................
Section 10.10 Certificates Nonassessable
and Fully Paid.................
Section 10.11 Rule of
Construction......................................
Section 10.12 Waiver of Jury
Trial......................................
<PAGE>
SCHEDULES
Schedule I
Mortgage Loan Schedule
Schedule IIA
Representations and Warranties of Countrywide, as Servicer
Schedule IIB
Representations and Warranties of HomEq, as Servicer
Schedule III
Representations and Warranties as to the Mortgage Loans
Schedule IV
Representations and Warranties as to the Responsible Party
EXHIBITS
Exhibit A
Form of Class A, Class M and Class B Certificate
Exhibit B
Form of Class P Certificate
Exhibit C
Form of Class R Certificate
Exhibit D
Form of Class X Certificate
Exhibit E
Form of Initial Certification of Trustee
Exhibit F
Form of Document Certification and Exception Report of Trustee
Exhibit G
Form of Residual Transfer Affidavit
Exhibit H
Form of Transferor Certificate
Exhibit I
Form of Rule 144A Letter
Exhibit J
Form of Request for Release
Exhibit K
Form of Contents for Each Mortgage File
Exhibit L
Form of Certification to be provided with Form 10-K
Exhibit M
Form of Certification of the Trustee to be provided to
Depositor
Exhibit N Form
of Certification of the Servicer to be provided to
Depositor
Exhibit O
Form of Servicer Power of Attorney
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of April 1,
2005,
among MORGAN STANLEY ABS CAPITAL I INC., a
Delaware corporation, as depositor
(the "Depositor"), HOMEQ SERVICING
CORPORATION, a New Jersey corporation
("HomEq"), COUNTRYWIDE HOME LOANS SERVICING
LP, a Texas limited partnership
("Countrywide" and, together with HomEq,
the "Servicers"), NC CAPITAL
CORPORATION, a California corporation, as
responsible party (the "Responsible
Party"), and DEUTSCHE BANK NATIONAL TRUST
COMPANY, a national banking
association, as trustee (the
"Trustee"),
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Trustee shall elect that two segregated asset pools within
the
Trust Fund be treated for federal income
tax purposes as comprising two REMICs
(each, a "REMIC" or, in the alternative,
the Lower Tier REMIC and the Upper Tier
REMIC, respectively). Each Class of
Certificates (other than the Class P and
Class R Certificates), other than the right
of each Class of Offered
Certificates to receive Basis Risk
CarryForward Amounts and the right of the
Class X Certificates to receive payments
from the Interest Rate Cap Agreements,
represents ownership of a regular interest
in the Upper Tier REMIC for purposes
of the REMIC Provisions. The Class R
Certificate represents ownership of the
sole class of residual interest in each of
the Lower Tier REMIC and the Upper
Tier REMIC for purposes of the REMIC
Provisions. The Startup Day for each REMIC
described herein is the Closing Date. The
latest possible maturity date for each
Certificate is the latest date referenced
in Section 2.05. The Upper Tier REMIC
shall hold as assets the several classes of
uncertificated Lower Tier Regular
Interests, set out below. Each such Lower
Tier Regular Interest is hereby
designated as a regular interest in the
Lower Tier REMIC. The Class LT-A-1ss,
Class LT-A-2ss, Class LT-A-1mz, Class
LT-A-2mz, Class LT-A-3a, Class LT-A-3b,
Class LT-A-3c, Class LT-A-3mz, Class
LT-M-1, Class LT-M-2, Class LT-M-3, Class
LT-M-4, Class LT-M-5, Class LT-M-6, Class
LT-B-1, Class LT-B-2 and Class LT-B-3
Interests are hereby designated the LT
Accretion Directed Classes (the "LT
Accretion Directed Classes"). The Class P
Certificates represent beneficial
ownership of the Prepayment Charges, each
Class of Offered Certificates
represents beneficial ownership of a
regular interest in the Upper Tier REMIC
and the right to receive Basis Risk
CarryForward Amounts and the Class X
Certificates represent beneficial ownership
of a regular interest in the Upper
Tier REMIC, the Excess Reserve Fund Account
and the Interest Rate Cap
Agreements, which portions of the Trust
Fund shall be treated as a grantor
trust.
<PAGE>
Corresponding
Lower Tier
Lower Tier
Initial Lower Tier
Upper Tier
Class Designation Interest Rate
Principal Amount
REMIC Class
----------------- -------------
----------------
-----------
Class LT-A-1ss
(1) 1/2
initial Corresponding
A-1ss
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-1mz
(1) 1/2
initial Corresponding
A-1mz
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-2ss
(1) 1/2
initial Corresponding
A-2ss
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-2mz
(1) 1/2
initial Corresponding
A-2mz
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-3a
(1) 1/2
initial Corresponding
A-3a
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-3b
(1) 1/2
initial Corresponding
A-3b
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-3c
(1) 1/2
initial Corresponding
A-3c
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-3mz
(1) 1/2
initial Corresponding
A-3mz
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-1
(1) 1/2
initial Corresponding
M-1
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-2
(1) 1/2
initial Corresponding
M-2
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-3
(1) 1/2
initial Corresponding
M-3
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-4
(1) 1/2
initial Corresponding
M-4
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-5
(1) 1/2
initial Corresponding
M-5
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-6
(1) 1/2
initial Corresponding
M-6
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-B-1
(1) 1/2
initial Corresponding
B-1
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-B-2
(1) 1/2
initial Corresponding
B-2
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-B-3
(1) 1/2
initial Corresponding
B-3
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-Accrual
(1) 1/2
Pool Stated Principal
Balance plus 1/2 Subordinated
Amount, less aggregate
initial Lower Tier Principal
Amount of Class LT-Group I,
Class LT-Group II and Class
LT-Group III Interests
Class LT-Group I
(2)
0.001% aggregate Stated
Principal Balance of Group I
Mortgage Loans (3)
Class LT-Group II (4)
0.001% aggregate Stated
Principal Balance of
Group II Mortgage Loans(3)
Class LT-Group III (5)
0.001% aggregate Stated
Principal Balance of
Group III Mortgage Loans(3)
Class LT-R
(6)
(6)
------------
(1) The interest rate with
respect to any Distribution Date for these
interests
is a per annum variable rate equal to the WAC Cap.
(2) The interest rate with
respect to any Distribution Date for the Class
LT-Group I
Interest is a per annum variable rate (expressed as a
percentage rounded to eight
decimal places) equal to the Loan Group I Cap.
(3) For all Distribution Dates,
the Lower Tier Principal Amount of these Lower
Tier
Regular Interests shall be rounded to eight decimal places.
(4) The interest rate with
respect to any Distribution Date for the Class
LT-Group
II Interest is a per annum variable rate (expressed as a
percentage
rounded to eight decimal places) equal to the Loan Group II
Cap.
(5) The interest rate with
respect to any Distribution Date for the Class
LT-Group
III Interest is a per annum variable rate (expressed as a
percentage
rounded to eight decimal places) equal to the Loan Group III
Cap.
(6) The Class LT-R Interest is
the sole class of residual interest in the
Lower Tier
REMIC and it does not have a principal amount or an interest
rate.
The Lower Tier REMIC shall hold as assets all of the assets
included
in the Trust Fund other than Prepayment
Charges, the Interest Rate Cap
Agreements, the Excess Reserve Fund
Account, and the Lower Tier Regular
Interests.
On each Distribution Date, 50% of the increase in the
Subordinated
Amount will be payable as a reduction of
the Lower Tier Principal Amounts of the
LT-Accretion Directed Classes (each such
Class will be reduced by an amount
equal to 50% of any increase in the
Subordinated Amount that is attributable to
a reduction in the Class Certificate
Balance of its Corresponding Class) and
will be accrued and added to the Lower Tier
Principal Amount of the Class
LT-Accrual Interest. On each Distribution
Date, the increase in the Lower Tier
Principal Amount of the Class LT-Accrual
Interest may not exceed interest
accruals for such Distribution Date for the
Class LT-Accrual Interest. In the
event that: (i) 50% of the increase in the
Subordinated Amount exceeds (ii)
interest accruals on the Class LT-Accrual
Interest for such Distribution Date,
the excess for such Distribution Date
(accumulated with all such excesses for
all prior Distribution Dates) will be added
to any increase in the Subordinated
Amount for purposes of determining the
amount of interest accrual on the Class
LT-Accrual Interest payable as principal on
the LT-Accretion Directed Classes on
the next Distribution Date pursuant to the
first sentence of this paragraph. All
payments of scheduled principal and
prepayments of principal generated by the
Mortgage Loans and all Subsequent
Recoveries allocable to principal shall be
allocated (i) 50% to the Class LT-Accrual
Interest, the Class LT-Group I
Interest, the Class LT-Group II Interest
and the Class LT-Group III Interest
(and further allocated among these Lower
Tier Regular Interests in the manner
described below) and (ii) 50% to the
LT-Accretion Directed Classes (such
principal payments and Subsequent
Recoveries shall be allocated among such LT
Accretion Directed Classes in an amount
equal to 50% of the principal amounts
allocated to their respective Corresponding
Classes), until paid in full.
Notwithstanding the above, principal
payments allocated to the Class X
Certificates that result in the reduction
in the Subordinated Amount shall be
allocated to the Class LT-Accrual Interest
(until paid in full). Realized Losses
shall be applied so that after all
distributions have been made on each
Distribution Date (i) the Lower Tier
Principal Amount of each LT-Accretion
Directed Class is equal to 50% of the Class
Certificate Balance of its
Corresponding Class, and (ii) the Class
LT-Accrual Interest, the Class LT-Group
I Interest, the Class LT-Group II Interest
and the Class LT-Group III Interest
(and further allocated among these Lower
Tier Regular Interests in the manner
described below) is equal to 50% of the
aggregate Stated Principal Balance of
the Mortgage Loans plus 50% of the
Subordinated Amount. Any increase in the
Class Certificate Balance of a Class of
Offered Certificates as a result of a
Subsequent Recovery shall increase the
Lower Tier Principal Amount of the
Corresponding Lower Tier Regular Interest
by 50% of such increase and the
remaining 50% of such increase shall
increase the Class LT-Accrual Interest, the
Class LT-Group I Interest, the Class
LT-Group II Interest and the Class LT-Group
III Interest (such increase shall be
further allocated among such Lower Tier
Regular Interests in the manner described
below). As among the Class LT-Accrual
Interest, the Class LT-Group I Interest,
the Class LT-Group II Interest and the
Class LT-Group III Interest, all payments
of scheduled principal and prepayments
of principal generated by the Mortgage
Loans, all Subsequent Recoveries and all
Realized Losses, allocable to such Lower
Tier Regular Interests and increases in
the Lower-Tier Principal Amount of such
Lower Tier Regular Interests as a result
of a Subsequent Recovery shall be allocated
(i) to the Class LT-Group I
Interest, the Class LT-Group II Interest
and the Class LT-Group III Interest,
each from the related Loan Group so that
their respective Lower Tier Principal
Amounts (computed to at least eight decimal
places) are equal to 0.001% of the
aggregate Stated Principal Balance of the
Mortgage Loans in the related Loan
Group and (ii) the remainder to the Class
LT-Accrual Interest.
The Upper Tier REMIC shall issue the following classes of Upper
Tier
Regular Interests and each such interest,
other than the Class UT-R Interest, is
hereby designated as a regular interest in
the Upper Tier REMIC.
<PAGE>
Upper Tier
Interest Rate Initial Upper
Tier
and
Principal Amount
Corresponding and
Corresponding
Upper Tier
Class Pass-Through
Class Certificate Corresponding
Class Designation
Rate
Balance
Certificate Class
-----------------
----
-------
-----------------
Class A-1ss
(1)
$ 273,920,000 Class
A-1ss(12)
Class A-1mz
(2)
$ 68,481,000
Class
A-1mz(12)
Class A-2ss
(3)
$ 235,870,000 Class
A-2ss(12)
Class A-2mz
(4)
$ 58,968,000
Class
A-2mz(12)
Class A-3a
(5)
$ 315,000,000 Class
A-3a(12)
Class A-3b
(6)
$ 109,586,000 Class
A-3b(12)
Class A-3c
(7)
$ 92,500,000
Class
A-3c(12)
Class A-3mz
(8)
$ 57,454,000
Class
A-3mz(12)
Class M-1
(9)
$ 48,771,000
Class
M-1(12)
Class M-2
(9)
$ 44,269,000
Class
M-2(12)
Class M-3
(9)
$ 24,761,000
Class
M-3(12)
Class M-4
(9)
$ 27,012,000
Class
M-4(12)
Class M-5
(9)
$ 23,260,000
Class
M-5(12)
Class M-6
(9)
$ 22,510,000
Class
M-6(12)
Class B-1
(9)
$ 18,758,000
Class
B-1(12)
Class B-2
(9)
$ 17,258,000
Class
B-2(12)
Class B-3
(9)
$ 16,507,000
Class
B-3(12)
Class X
(10)
$
0(10) Class X(10)
Class UT-R
(11)
$
0 Class
R
------------
(1) The Class A-1ss Interest
will bear i nterest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.2050%, (ii) the
Loan Group
I Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.4100%, (ii) the Loan Group I Cap and (iii)
the WAC
Cap.
(2) The Class A-1mz Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.2500%, (ii) the
Loan Group
I Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.5000%, (ii) the Loan Group I Cap and (iii)
the WAC
Cap.
(3) The Class A-2ss Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.2050%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.4100%, (ii) the Loan Group II Cap and (iii)
the WAC
Cap.
(4) The Class A-2mz Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.2500%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.5000%, (ii) the Loan Group II Cap and (iii)
the WAC
Cap.
(5) The Class A-3a Interest will
bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.0800%, (ii) the
Loan Group
III Cap
and (iii) the WAC Cap or (b) after the Optional Termination
Date,
the least
of (i) LIBOR plus 0.1600%, (ii) the Loan Group III Cap and
(iii)
the WAC
Cap.
(6) The Class A-3b Interest will
bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.1800%, (ii) the
Loan Group
III Cap
and (iii) the WAC Cap or (b) after the Optional Termination
Date,
the least
of (i) LIBOR plus 0.3600%, (ii) the Loan Group III Cap and
(iii)
the WAC
Cap.
(7) The Class A-3c Interest will
bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.3200%, (ii) the
Loan Group
III Cap
and (iii) the WAC Cap or (b) after the Optional Termination
Date,
the least
of (i) LIBOR plus 0.6400%, (ii) the Loan Group III Cap and
(iii)
the WAC
Cap.
(8) The Class A-3mz Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.2600%, (ii) the
Loan Group
III Cap
and (iii) the WAC Cap or (b) after the Optional Termination
Date,
the least
of (i) LIBOR plus 0.5200%, (ii) the Loan Group III Cap and
(iii)
the WAC
Cap.
(9) The Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1,
Class B-2 and Class B-3 Interests will bear interest during
each
Interest Accrual Period at a per annum rate equal to (a) on or
prior
to the
Optional Termination Date, the lesser of (i) LIBOR plus
0.3900%,
0.4200%,
0.4500%, 0.6100%, 0.6400%, 0.6900%, 1.1700%, 1.3000% and
1.7500%,
respectively, and (ii) the WAC Cap or (b) after the Optional
Termination
Date, the
lesser of (i) LIBOR plus 0.5850%, 0.6300%, 0.6750%, 0.9150%,
0.9600%,
1.0350%, 1.7550%, 1.9500% and 2.6250% respectively, and (ii)
the
WAC
Cap.
(10) The Class X Interest has an
initial principal balance of $45,770,452 but
it will
not accrue interest on such balance but will accrue interest on
a
notional
principal balance. As of any Distribution Date, the Class X
Interest
shall have a notional principal balance equal to the aggregate
of
the
principal balances of the Lower Tier Regular Interests as of the
first
day of the
related Interest Accrual Period. With respect to any Interest
Accrual
Period, the Class X Interest shall bear interest at a rate
equal
to the
excess, if any, of the WAC Cap over the product of (i) 2 and
(ii)
the
weighted average Lower-Tier Interest Rates of the Lower Tier
Regular
Interests,
where the Lower-Tier Interest Rate on each of the Class
LT-Accrual
Interest, Class LT-Group I Interest, Class LT-Group II Interest
and Class
LT-Group III Interest is subject to a cap equal to zero and
each
LT
Accretion Directed Class is subject to a cap equal to the
Pass-Through
Rate on
its Corresponding Class. With respect to any Distribution Date,
interest
that so accrues on the notional principal balance of the Class
X
Interest
shall be deferred in an amount equal to any increase in the
Subordinated Amount on such Distribution Date. Such deferred
interest
shall not
itself bear interest. The Class X Certificates will represent
beneficial
ownership of the Class X Interest, the Interest Rate Cap
Agreements, and amounts in the Excess Reserve Fund Account, subject
to the
obligation
to make payments from the Excess Reserve Fund Account in
respect of
Basis Risk CarryForward Amounts. For federal income tax
purposes,
the Trustee will treat a Class X Certificateholder's obligation
to make
payments from the Excess Reserve Fund Account as payments made
pursuant
to an interest rate cap contract written by the Class X
Certificateholders in favor of each Class of Offered Certificates.
Such
rights of
the Class X Certificateholders and Offered Certificateholders
shall be
treated as held in a portion of the Trust Fund that is treated
as
a grantor
trust under subpart E, Part I of subchapter J of the Code.
(11) The Class UT-R Interest is the
sole class of residual interest in the
Upper Tier
REMIC. The Class UT-R Interest does not have an interest rate.
(12) Each of these Certificates will
represent not only the ownership of the
Corresponding Class of Upper Tier Regular Interest but also the
right to
receive
payments from the Excess Reserve Fund Account in respect of any
Basis Risk
CarryForward Amounts. For federal income tax purposes, the
Trustee
will treat a Certificateholder's right to receive payments from
the Excess
Reserve Fund Account as payments made pursuant to an interest
rate cap
contract written by the Class X Certificateholders.
The minimum denomination for each Class of Certificates, other
than
the Class P, Class R and the Class X
Certificates, will be $25,000 with integral
multiples of $1 in excess thereof. The
minimum denomination for the Class P and
the Class X Certificates will each be a 1%
Percentage Interest in such Class.
The Class R Certificate will represent a
100% Percentage Interest in such Class.
It is expected that each Class of Certificates will receive its
final distribution of principal and
interest on or prior to the Final Scheduled
Distribution Date.
Set forth below are designations of Classes of Certificates to
the
categories used herein:
Book-Entry Certificates..... All Classes of Certificates other than the
Physical Certificates.
Class A Certificates........ Class A-1ss, Class
A-1mz, Class
A-2ss,
Class A-2mz, Class
A-3a, Class A-3b, Class A-3c
and Class A-3mz Certificates.
Delay Certificates.......... None.
ERISA-Restricted
Certificates..............
Class R Certificates,
Class P Certificates and
Class X Certificates; any certificate with a
rating below the lowest applicable permitted
rating under the Underwriters' Exemption.
Non-Delay Certificates...... Class A, Class X and Subordinated
Certificates.
Offered Certificates........ All Classes of Certificates other than the
Private Certificates.
Physical Certificates....... Class P, Class X and Class R
Certificates.
Private Certificates........ Class P, Class X and Class R
Certificates.
Rating Agencies............. Moody's, Fitch and Standard &
Poor's.
Regular Certificates........ All Classes of Certificates other than the
Class P and Class R Certificates.
Residual Certificates....... Class R Certificates.
Subordinated Certificates... Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6,
Class B-1, Class B-2
and
Class B-3 Certificates.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases,
unless the context otherwise requires,
shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage
Loan,
those mortgage servicing practices set
forth in Section 3.01(a) of this
Agreement.
Account: Any of the Collection Accounts, the Distribution
Account,
any Escrow Account or the Excess Reserve
Fund Account. Each Account shall be an
Eligible Account.
Accrued Certificate Interest Distribution Amount: With respect
to
any Distribution Date for each Class of
Offered Certificates, the amount of
interest accrued during the related
Interest Accrual Period at the applicable
Pass-Through Rate on the related Class
Certificate Balance immediately prior to
such Distribution Date, as reduced by such
Class's share of Net Prepayment
Interest Shortfalls and Relief Act Interest
Shortfalls for such Distribution
Date allocated to such Class pursuant to
Section 4.02.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage
Loan.
Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the
Mortgage Rate less the Expense Fee Rate.
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first
Due Date on which the related Mortgage Rate
adjusts as set forth in the related
Mortgage Note and each Due Date thereafter
on which the Mortgage Rate adjusts as
set forth in the related Mortgage Note.
Advance: Any P&I Advance or Servicing Advance.
Advance Facility: A financing or other facility as described in
Section 10.07.
Advancing Person: The Person to whom any Servicer's rights
under
this Agreement to be reimbursed for any
P&I Advances or Servicing Advances have
been assigned pursuant to Section
10.07.
Affiliate: With respect to any Person, any other Person
controlling,
controlled by or under common control with
such first Person. For the purposes
of this definition, "control" means the
power to direct the management and
policies of such Person, directly or
indirectly, whether through the ownership
of voting securities, by contract or
otherwise; and the terms "controlling" and
"controlled" have meanings correlative to
the foregoing.
Agreement: This Pooling and Servicing Agreement and all
amendments
or supplements hereto.
Amount Held for Future Distribution: As to the Certificates on
any
Distribution Date, the aggregate amount
held in each Collection Account at the
close of business on the related
Determination Date on account of (i) Principal
Prepayments, Insurance Proceeds,
Condemnation Proceeds and Liquidation Proceeds
on the Mortgage Loans received after the
end of the related Prepayment Period
and (ii) all Scheduled Payments on the
Mortgage Loans due after the end of the
related Due Period.
Applied Realized Loss Amount: With respect to any Distribution
Date,
the amount, if any, by which the aggregate
Class Certificate Balance of the
Offered Certificates after distributions of
principal on such Distribution Date
exceeds the aggregate Stated Principal
Balance of the Mortgage Loans for such
Distribution Date.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the
related Mortgage Loan as the value of the
Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice
of
transfer or equivalent instrument in
recordable form (other than the assignee's
name and recording information not yet
returned from the recording office),
reflecting the sale of the Mortgage to the
Trustee.
Available Funds: With respect to any Distribution Date and the
Mortgage Loans to the extent received by
the Trustee (x) the sum of (i) all
scheduled installments of interest (net of
the related Expense Fees) and
principal due on the Due Date on such
Mortgage Loans in the related Due Period
and received by the Servicers on or prior
to the related Determination Date,
together with any P&I Advances in
respect thereof; (ii) all Condemnation
Proceeds, Insurance Proceeds and
Liquidation Proceeds received by the Servicers
during the related Prepayment Period (in
each case, net of unreimbursed expenses
incurred in connection with a liquidation
or foreclosure and unreimbursed
Advances, if any); (iii) all partial or
full prepayments on the Mortgage Loans
received by the Servicers during the
related Prepayment Period together with all
Compensating Interest, if applicable,
thereon (excluding any Prepayment
Charges); (iv) all Substitution Adjustment
Amounts with respect to the
substitutions of Mortgage Loans that occur
during the month in which such
Distribution Date occurs; (v) amounts
received with respect to such Distribution
Date as the Repurchase Price in respect of
a Mortgage Loan repurchased by the
Responsible Party with respect to such
Distribution Date; (vi) the Closing Date
Deposit Amount; and (vii) the proceeds
received with respect to the termination
of the Trust Fund pursuant to clause (a) of
Section 9.01; reduced by (y) amounts
in reimbursement for Advances previously
made with respect to the Mortgage Loans
and other amounts as to which the
Servicers, the Depositor or the Trustee are
entitled to be paid or reimbursed pursuant
to this Agreement.
Balloon Loan: Any Mortgage Loan that requires only payments of
interest until the stated maturity date of
the Mortgage Loan or Scheduled
Payments of principal which (not including
the payment due on its stated
maturity date) are based on an amortization
schedule that would be insufficient
to fully amortize the principal thereof by
the stated maturity date of the
Mortgage Loan.
Basic Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
Principal Remittance Amount for such
Distribution Date over (ii) the Excess
Subordinated Amount, if any, for such
Distribution Date.
Basis Risk CarryForward Amount: With respect to each Class of
Offered Certificates, as of any
Distribution Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for
any Class of Offered Certificates is
based upon a Loan Group Cap or the WAC Cap,
the excess of (i) the amount of
interest such Class of Certificates would
otherwise be entitled to receive on
such Distribution Date had such
Pass-Through Rate been calculated as the sum of
LIBOR and the applicable Pass-Through
Margin on such Class of Certificates for
such Distribution Date, over (ii) the
amount of interest received on such
Distribution Date with respect to such
Class of Certificates at, with respect to
the Group I Class A Certificates, the
lesser of the Loan Group I Cap or the WAC
Cap, with respect to the Group II Class A
Certificates, the lesser of the Loan
Group II Cap or the WAC Cap, with respect
to the Group III Class A Certificates,
the lesser of the Loan Group III Cap or the
WAC Cap, and with respect to each
other Class of Offered Certificates, the
WAC Cap, as applicable, for such
Distribution Date and (B) the Basis Risk
CarryForward Amount for such Class of
Certificates for all previous Distribution
Dates not previously paid, together
with interest thereon at a rate equal to
the sum of LIBOR and the applicable
Pass-Through Margin for such Class of
Certificates for such Distribution Date.
Basis Risk Payment: For any Distribution Date, an amount equal
to
the lesser of (i) the aggregate of the
Basis Risk CarryForward Amounts for such
Distribution Date and (ii) the Class X
Distributable Amount (prior to any
reduction for Basis Risk Payments).
Best's: Best's Key Rating Guide, as the same shall be amended
from
time to time.
Book-Entry Certificates: As specified in the Preliminary
Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii)
a
day on which banking and savings and loan
institutions, in (a) the States of New
York, California, New Jersey, Texas,
Arizona or Delaware, (b) a State in which
any Servicer's servicing operations are
located, or (c) the State in which the
Trustee's operations are located, are
authorized or obligated by law or
executive order to be closed.
Cap Provider: Morgan Stanley Capital Services, Inc., a Delaware
corporation, and its successors in
interest.
Certificate: Any one of the Certificates executed by the Trustee
in
substantially the forms attached hereto as
exhibits.
Certificate Balance: With respect to any Class of Certificates,
other than the Class X, Class P or Class R
Certificates, at any date, the
maximum dollar amount of principal to which
the Holder thereof is then entitled
hereunder, such amount being equal to the
Denomination thereof minus all
distributions of principal previously made
with respect thereto and in the case
of any Certificates, reduced by any Applied
Realized Loss Amounts allocated to
such Class of Certificates pursuant to
Section 4.05; provided, however, that
immediately following the Distribution Date
on which a Subsequent Recovery is
distributed, the Class Certificate Balances
of any Class or Classes of
Certificates that have been previously
reduced by Applied Realized Loss Amounts
will be increased, in order of seniority,
by the amount of the Subsequent
Recovery distributed on such Distribution
Date (up to the amount of Unpaid
Realized Loss Amount for such Class or
Classes for such Distribution Date). The
Class P, Class X and Class R Certificates
have no Certificate Balance.
Certificate Owner: With respect to a Book-Entry Certificate,
the
Person who is the beneficial owner of such
Book-Entry Certificate.
Certificate Register: The register maintained pursuant to
Section
5.02.
Certificateholder or Holder: The person in whose name a
Certificate
is registered in the Certificate Register,
except that, solely for the purpose
of giving any consent pursuant to this
Agreement, any Certificate registered in
the name of the Depositor or any affiliate
of the Depositor shall be deemed not
to be Outstanding and the Percentage
Interest evidenced thereby shall not be
taken into account in determining whether
the requisite amount of Percentage
Interests necessary to effect such consent
has been obtained; provided, however,
that if any such Person (including the
Depositor) owns 100% of the Percentage
Interests evidenced by a Class of
Certificates, such Certificates shall be
deemed to be Outstanding for purposes of
any provision hereof that requires the
consent of the Holders of Certificates of a
particular Class as a condition to
the taking of any action hereunder. The
Trustee is entitled to rely conclusively
on a certification of the Depositor or any
affiliate of the Depositor in
determining which Certificates are
registered in the name of an affiliate of the
Depositor.
Certification: As defined in Section 8.12.
Class: All Certificates bearing the same class designation as
set
forth in the Preliminary Statement.
Class A Certificate Group: The Group I Class A Certificates,
the
Group II Class A Certificates or the Group
III Class A Certificates, as
applicable.
Class A Certificates: The Group I Class A Certificates, the Group
II
Class A Certificates and the Group III
Class A Certificates.
Class A Principal Allocation Percentage: With respect to any
Distribution Date, the percentage
equivalent of a fraction, determined as
follows: (A) with respect to the Group I
Class A Certificates, a fraction, the
numerator of which is (x) the portion of
the Principal Remittance Amount for
such Distribution Date that is attributable
to the principal received or
advanced on the Group I Mortgage Loans and
the denominator of which is (y) the
Principal Remittance Amount for such
Distribution Date; (B) with respect to the
Group II Class A Certificates, a fraction,
the numerator of which is (x) the
portion of the Principal Remittance Amount
for such Distribution Date that is
attributable to the principal received or
advanced on the Group II Mortgage
Loans and the denominator of which is (y)
the Principal Remittance Amount for
such Distribution Date; and (C) with
respect to the Group III Class A
Certificates, a fraction, the numerator of
which is (x) the portion of the
Principal Remittance Amount for such
Distribution Date that is attributable to
the principal received or advanced on the
Group III Mortgage Loans and the
denominator of which is (y) the Principal
Remittance Amount for such
Distribution Date.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
aggregate Class Certificate Balances of
the Class A Certificates immediately prior
to such Distribution Date over (ii)
the lesser of (A) 61.50% of the aggregate
Stated Principal Balance of the
Mortgage Loans for such Distribution Date
and (B) the excess, if any, of the
aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution
Date over $7,503,277.
Class A-1ss Certificates: All Certificates bearing the class
designation of "Class A-1ss".
Class A-1mz Certificates: All Certificates bearing the class
designation of "Class A-1mz".
Class A-2ss Certificates: All Certificates bearing the class
designation of "Class A-2ss".
Class A-2mz Certificates: All Certificates bearing the class
designation of "Class A-2mz".
Class A-3a Certificates: All Certificates bearing the class
designation of "Class A-3a".
Class A-3b Certificates: All Certificates bearing the class
designation of "Class A-3b".
Class A-3c Certificates: All Certificates bearing the class
designation of "Class A-3c".
Class A-3mz Certificates: All Certificates bearing the class
designation of "Class A-3mz".
Class B Cap Agreement: The interest rate cap agreement, dated
April
29, 2005, between Morgan Stanley Capital
Services Inc. and the Trustee, relating
to the Class B Certificates.
Class B Certificates: The Class B-1, Class B-2 and Class B-3
Certificates.
Class B-1 Certificates: All Certificates bearing the class
designation of "Class B-1".
Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date), (G) the Class
Certificate Balance of the Class M-6
Certificates (after taking into account the
distribution of the Class M-6
Principal Distribution Amount for such
Distribution Date) and (H) the Class
Certificate Balance of the Class B-1
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 89.40% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$7,503,277.
Class B-2 Certificates: All Certificates bearing the class
designation of "Class B-2".
Class B-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date), (G) the Class
Certificate Balance of the Class M-6
Certificates (after taking into account the
distribution of the Class M-6
Principal Distribution Amount for such
Distribution Date), (H) the Class
Certificate Balance of the Class B-1
Certificates (after taking into account the
distribution of the Class B-1 Principal
Distribution Amount for such
Distribution Date) and (I) the Class
Certificate Balance of the Class B-2
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 91.70% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess,
if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date over
$7,503,277.
Class B-3 Certificates: All Certificates bearing the class
designation of "Class B-3".
Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date), (G) the Class
Certificate Balance of the Class M-6
Certificates (after taking into account the
distribution of the Class M-6
Principal Distribution Amount for such
Distribution Date), (H) the Class
Certificate Balance of the Class B-1
Certificates (after taking into account the
distribution of the Class B-1 Principal
Distribution Amount for such
Distribution Date), (I) the Class
Certificate Balance of the Class B-2
Certificates (after taking into account the
distribution of the Class B-2
Principal Distribution Amount for such
Distribution Date) and (J) the Class
Certificate Balance of the Class B-3
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 93.90% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$7,503,277.
Class Certificate Balance: With respect to any Class and as to
any
date of determination, the aggregate of the
Certificate Balances of all
Certificates of such Class as of such
date.
Class M Cap Agreement: The interest rate cap agreement, dated
April
29, 2005, between Morgan Stanley Capital
Services Inc. and the Trustee, relating
to the Class M Certificates.
Class M Certificates: The Class M-1, Class M-2, Class M-3,
Class
M-4, Class M-5 and Class M-6
Certificates.
Class M-1 Certificates: All Certificates bearing the class
designation of "Class M-1".
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), and (B) the Class Certificate
Balance of the Class M-1 Certificates
immediately prior to such Distribution Date
over (ii) the lesser of (A) 68.00%
of the aggregate Stated Principal Balance
of the Mortgage Loans for such
Distribution Date and (B) the excess, if
any, of the aggregate Stated Principal
Balance of the Mortgage Loans for such
Distribution Date over $7,503,277.
Class M-2 Certificates: All Certificates bearing the class
designation of "Class M-2".
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date) and (C)
the Class Certificate Balance of the
Class M-2 Certificates immediately prior to
such Distribution Date over (ii) the
lesser of (A) 73.90% of the aggregate
Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (B)
the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage
Loans for such Distribution Date over
$7,503,277.
Class M-3 Certificates: All Certificates bearing the class
designation of "Class M-3".
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date) and (D) the Class
Certificate Balance of the Class M-3
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 77.20% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$7,503,277.
Class M-4 Certificates: All Certificates bearing the class
designation of "Class M-4".
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date) and (E) the Class
Certificate Balance of the Class M-4
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 80.80% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess,
if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date over
$7,503,277.
Class M-5 Certificates: All Certificates bearing the class
designation of "Class M-5".
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date) and (F) the Class
Certificate Balance of the Class M-5
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 83.90 % of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$7,503,277.
Class M-6 Certificates: All Certificates bearing the class
designation of "Class M-6".
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date) and (G) the Class
Certificate Balance of the Class M-6
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 86.90% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess,
if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date over
$7,503,277.
Class P Certificates: All Certificates bearing the class
designation
of "Class P".
Class R Certificates: All Certificates bearing the class
designation
of "Class R".
Class X Certificates: All Certificates bearing the class
designation
of "Class X".
Class X Distributable Amount: On any Distribution Date, the sum
of
(i) as a distribution in respect of
interest, the amount of interest that has
accrued on the Class X Interest and not
applied as an Extra Principal
Distribution Amount on such Distribution
Date, plus any such accrued interest
remaining undistributed from prior
Distribution Dates, plus, without duplication
(ii) as a distribution in respect of
principal, any portion of the principal
balance of the Class X Interest which is
distributable as a Subordination
Reduction Amount, minus (iii) any amounts
paid as a Basis Risk Payment.
Class X Interest: The Upper Tier Regular Interest represented by
the
Class X Certificates as specified and
described in the Preliminary Statement and
the related footnote thereto.
Closing Date: April 29, 2005.
Closing Date Deposit Amount: $12,291,018.00 (all of which is
allocable to principal) deposited by the
Depositor into the Distribution Account
on the Closing Date. $202.78 of the Closing
Date Deposit Amount shall be
attributable to the Group I Mortgage Loans,
$250.87 of the Closing Date Deposit
Amount shall be attributable to the Group
II Mortgage Loans, and $12,290,564.35
of the Closing Date Deposit Amount shall be
attributable to the Group III
Mortgage Loans.
Code: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
Collection Account: As defined in Section 3.10(a).
Combined Loan to Value Ratio or CLTV: As of any date and as to
any
Second Lien Mortgage Loan, the ratio,
expressed as a percentage, of the (a) sum
of (i) the outstanding principal balance of
the Second Lien Mortgage Loan and
(ii) the outstanding principal balance as
of such date of any mortgage loan or
mortgage loans that are senior or equal in
priority to the Second Lien Mortgage
Loan and which are secured by the same
Mortgaged Property to (b) the Appraised
Value as determined pursuant to the
Underwriting Guidelines of the related
Mortgaged Property as of the origination of
the Second Lien Mortgage Loan.
Compensating Interest: For any Distribution Date, the lesser of
(a)
the Prepayment Interest Shortfall, if any,
for such Distribution Date, with
respect to voluntary Principal Prepayments
in Full (excluding any payments made
upon liquidation of the Mortgage Loan) (or,
in the case of HomEq, the amount by
which such Prepayment Interest Shortfall
exceeds all Prepayment Interest
Excesses for such Distribution Date) and
(b) the amount of the Servicing Fee
payable to the applicable Servicer for such
Distribution Date.
Condemnation Proceeds: All awards of settlements in respect of
a
Mortgaged Property, whether permanent or
temporary, partial or entire, by
exercise of the power of eminent domain or
condemnation.
Convertible Mortgage Loan: Any individual Adjustable Rate
Mortgage
Loan which contains a provision whereby the
Mortgagor is permitted to convert
the Adjustable Rate Mortgage Loan to a
Fixed Rate Mortgage Loan in accordance
with the terms of the related Mortgage
Note.
Corporate Trust Office: The designated office of the Trustee in
the
State of California at which at any
particular time its corporate trust business
with respect to this Agreement is
administered, which office at the date of the
execution of this Agreement is located at
1761 East St. Andrew Place, Santa Ana,
California 92705, Attn: Trust
Administration- MS05C2, facsimile no. (714)
247-6329, and which is the address to which
notices to and correspondence with
the Trustee should be directed.
Corresponding Class: The class of interests in either REMIC
created
under this Agreement that corresponds to
the class of interests in the other
such REMIC or to a Class of Certificates in
the manner set out below:
Corresponding
Corresponding Lower Tier
Upper Tier
Corresponding Class of
Class
Designation Regular
Interest
Certificates
-----------------
----------------
------------
Class LT-A-1ss
Class A-1ss
Class A-1ss
Class LT-A-1mz
Class A-1mz
Class A-1mz
Class LT-A-2ss
Class A-2ss
Class A-2ss
Class LT-A-2mz
Class A-2mz
Class A-2mz
Class LT-A-3a
Class A-3a
Class A-3a
Class LT-A-3b
Class A-3b
Class A-3b
Class LT-A-3c
Class A-3c
Class A-3c
Class LT-A-3mz
Class A-3mz
Class A-3mz
Class LT-M-1
Class M-1
Class M-1
Class LT-M-2
Class M-2
Class M-2
Class LT-M-3
Class M-3
Class M-3
Class LT-M-4
Class M-4
Class M-4
Class LT-M-5
Class M-5
Class M-5
Class LT-M-6
Class M-6
Class M-6
Class LT-B-1
Class B-1
Class B-1
Class LT-B-2
Class B-2
Class B-2
Class LT-B-3
Class B-3
Class B-3
N/A
Class X
Class X
Countrywide: Countrywide Home Loans Servicing LP, a Texas
limited
partnership, and its successors in
interest.
Cumulative Loss Percentage: With respect to any Distribution
Date,
the percentage equivalent of a fraction,
the numerator of which is the aggregate
amount of Realized Losses incurred from the
Cut-off Date to the last day of the
calendar month preceding the month in which
such Distribution Date occurs and
the denominator of which is the Cut-off
Date Pool Principal Balance of the
Mortgage Loans.
Cumulative Loss Trigger Event: With respect to any Distribution
Date, a Cumulative Loss Trigger Event
exists if the quotient (expressed as a
percentage) of (x) the aggregate amount of
Realized Losses incurred since the
Cut-off Date through the last day of the
related Prepayment Period, divided by
(y) the Cut-off Date Pool Principal
Balance, exceeds the applicable cumulative
loss percentages set forth below with
respect to such Distribution Date:
Distribution Date Occurring In
Cumulative Loss Percentage
------------------------------
--------------------------
May 2007
through April 2008
1.250% for the first month, plus
an additional 1/12th of 1.750%
for each month thereafter (e.g.,
2.125% in November 2007)
May 2008
through April 2009
3.000% for the first month, plus
an additional 1/12th of 1.500%
for each month thereafter (e.g.,
3.750% in November
2008)
May 2009
through April 2010
4.500% for the first month, plus
an additional 1/12th of 1.500%
for each month thereafter (e.g.,
5.250% in November 2009)
May 2010 through April 2011
6.000% for the first month, plus
an additional 1/12th of 0.500%
for each month thereafter (e.g.,
6.250% in November 2010)
May 2011
and thereafter
6.500%
Custodial File: With respect to each Mortgage Loan, the file
retained by the Trustee consisting of items
(a)-(h) as listed on Exhibit K
hereto.
Cut-off Date: April 1, 2005.
Cut-off Date Pool Principal Balance: The aggregate Stated
Principal
Balances of all Mortgage Loans as of the
Cut-off Date plus the portion of the
Closing Date Deposit Amount allocable to
principal.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
Stated
Principal Balance thereof as of the close
of business on the Cut-off Date (after
giving effect to payments of principal due
on that date, whether or not
received).
Data Tape Information: The information provided by the
Responsible
Party as of the Cut-off Date to the
Depositor or the Purchaser setting forth the
following information with respect to each
Mortgage Loan: (1) the Mortgagor's
name; (2) as to each Mortgage Loan, the
Scheduled Principal Balance as of the
Cut-off Date; (3) the Mortgage Rate Cap;
(4) the Index; (5) a code indicating
whether the Mortgaged Property is
owner-occupied; (6) the type of Mortgaged
Property; (7) the first date on which the
Scheduled Payment was due on the
Mortgage Loan and, if such date is not
consistent with the Due Date currently in
effect, such Due Date; (8) the "paid
through date" based on payments received
from the related Mortgagor; (9) the
original principal amount of the Mortgage
Loan; (10) with respect to Adjustable Rate
Mortgage Loans, the Maximum Mortgage
Rate; (11) the type of Mortgage Loan (i.e.,
Fixed Rate or Adjustable Rate
Mortgage Loan, First Lien or Second Lien
Mortgage Loan); (12) a code indicating
the purpose of the loan (i.e., purchase,
rate and term refinance, equity
take-out refinance); (13) a code indicating
the documentation style (i.e., full,
asset verification, income verification and
no documentation); (14) the credit
risk score (FICO score); (15) the loan
credit grade classification (as described
in the underwriting guidelines); (16) with
respect to each Adjustable Rate
Mortgage Loan, the Minimum Mortgage Rate;
(17) the Mortgage Rate at origination;
(18) with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment
Date immediately following the Cut-off
Date; (19) the value of the Mortgaged
Property; (20) a code indicating the type
of Prepayment Charges applicable to
such Mortgage Loan (including any
prepayment penalty term), if any; (21) with
respect to each Adjustable Rate Mortgage
Loan, the Periodic Mortgage Rate Cap;
(22) with respect to each First Lien
Mortgage Loan, the LTV at origination and
with respect to each Second Lien Mortgage
Loan, the CLTV at origination; and
(23) if such Mortgage Loan is covered by a
primary mortgage insurance policy or
a lender-paid primary mortgage insurance
policy, the primary mortgage insurance
rate. With respect to the Mortgage Loans in
the aggregate, the Data Tape
Information shall set forth the following
information, as of the Cut-off Date:
(1) the number of Mortgage Loans; (2) the
current aggregate outstanding
principal balance of the Mortgage Loans;
(3) the weighted average Mortgage Rate
of the Mortgage Loans; and (4) the weighted
average maturity of the Mortgage
Loans.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent
jurisdiction in a proceeding under the United
States Bankruptcy Code in the Scheduled
Payment for such Mortgage Loan which
became final and non-appealable, except
such a reduction resulting from a
Deficient Valuation or any reduction that
results in a permanent forgiveness of
principal.
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 United States
Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a
Physical
Certificate and any Certificate issued in
lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Deleted Mortgage Loan: As defined in Section 2.03.
Delinquency Trigger Event: With respect to any Distribution Date,
a
Delinquency Trigger Event exists if the
quotient (expressed as a percentage) of
(x) the rolling three month average of the
aggregate Stated Principal Balance of
60+ Day Delinquent Mortgage Loans for such
Distribution Date, divided by (y) the
aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution
Date equals or exceeds 41.00% of the prior
period's Senior Enhancement
Percentage.
Denomination: With respect to each Certificate, the amount set
forth
on the face thereof as the "Initial
Certificate Balance of this Certificate" or
the Percentage Interest appearing on the
face thereof.
Depositor: Morgan Stanley ABS Capital I Inc., a Delaware
corporation, and its successors in
interest.
Depository: The initial Depository shall be The Depository
Trust
Company, the nominee of which is CEDE &
Co., as the registered Holder of the
Book-Entry Certificates. The Depository
shall at all times be a "clearing
corporation" as defined in Section
8-102(a)(5) of the Uniform Commercial Code of
the State of New York.
Depository Institution: Any depository institution or trust
company,
including the Trustee, that (a) is
incorporated under the laws of the United
States of America or any State thereof, (b)
is subject to supervision and
examination by federal or state banking
authorities and (c) has outstanding
unsecured commercial paper or other
short-term unsecured debt obligations that
are rated "P-1" by Moody's, "F1+" by Fitch
and "A-1" by Standard & Poor's.
Depository Participant: A broker, dealer, bank or other
financial
institution or other Person for whom from
time to time a Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
Determination Date: With respect to each Distribution Date, the
18th
day (or if such day is not a Business Day,
the immediately preceding Business
Day) in the calendar month in which such
Distribution Date occurs.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to
Section 3.07(d) in the name of the Trustee
for the benefit of the Certificateholders
and designated "Deutsche Bank National
Trust Company in trust for registered
holders of Morgan Stanley ABS Capital I
Inc. Trust 2005-NC2 Mortgage Pass-Through
Certificates, Series 2005-NC2". Funds
in the Distribution Account shall be held
in trust for the Certificateholders
for the uses and purposes set forth in this
Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:00 noon New York City time on the third
Business Day immediately preceding
such Distribution Date.
Distribution Date: The 25th day of each calendar month, or if
such
day is not a Business Day, the next
succeeding Business Day, commencing in May
2005.
Document Certification and Exception Report: The report attached
to
Exhibit F hereto.
Due Date: The day of the month on which the Scheduled Payment is
due
on a Mortgage Loan, exclusive of any days
of grace.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the
calendar month preceding the month in which
such Distribution Date occurs and ending on
the first day of the calendar month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account maintained with a federal
or
state chartered depository institution or
trust company the short-term unsecured
debt obligations of which (or, in the case
of a depository institution or trust
company that is a subsidiary of a holding
company, the short-term unsecured debt
obligations of such holding company) are
rated "A-1+" by Standard & Poor's,
"F-1" by Fitch and "P-1" by Moody's (or a
comparable rating if another Rating
Agency is specified by the Depositor by
written notice to each Servicer) at the
time any amounts are held on deposit
therein, (ii) an account or accounts the
deposits in which are fully insured by the
FDIC, (iii) a trust account or
accounts maintained with a federal or state
chartered depository institution or
trust company acting in its fiduciary
capacity or (iv) any other account
acceptable to each Rating Agency. Eligible
Accounts may bear interest, and may
include, if otherwise qualified under this
definition, accounts maintained with
the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that
meets the requirements of Prohibited
Transaction Exemption ("PTE") 2002-41, 67
Fed. Reg. 54487 (2002) (or any
successor thereto), or any substantially
similar administrative exemption
granted by the U.S. Department of
Labor.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established
and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b).
Event of Default: As defined in Section 7.01.
Excess Reserve Fund Account: The separate Eligible Account
created
and maintained by the Trustee pursuant to
Sections 3.07(b) and 3.07(c) in the
name of the Trustee for the benefit of the
Regular Certificateholders and
designated "Deutsche Bank National Trust
Company in trust for registered holders
of Morgan Stanley ABS Capital I Inc. Trust
2005-NC2, Mortgage Pass-Through
Certificates, Series 2005-NC2". Funds in
the Excess Reserve Fund Account shall
be held in trust for the Regular
Certificateholders for the uses and purposes
set forth in this Agreement. Amounts on
deposit in the Excess Reserve Fund
Account shall not be invested.
Excess Subordinated Amount: With respect to any Distribution
Date,
the excess, if any, of (a) the Subordinated
Amount on such Distribution Date
over (b) the Specified Subordinated Amount
for such Distribution Date.
Exchange Act: As defined in Section 8.12(a).
Expense Fee Rate: As to each Mortgage Loan, a per annum rate
equal
to the sum of the Servicing Fee Rate, the
Trustee Fee Rate and any lender-paid
primary mortgage insurance fee rate, if
applicable.
Expense Fees: As to each Mortgage Loan, the sum of the
Servicing
Fee, the Trustee Fee and any lender-paid
primary mortgage insurance fee, if
applicable.
Extra Principal Distribution Amount: As of any Distribution
Date,
the lesser of (x) the related Total Monthly
Excess Spread for such Distribution
Date and (y) the related Subordination
Deficiency for such Distribution Date.
Fannie Mae: The Federal National Mortgage Association, or any
successor thereto.
Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie
Mae
Servicers' Guide and all amendments or
additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor
thereto.
Final Recovery Determination: With respect to any defaulted
Mortgage
Loan or any REO Property (other than a
Mortgage Loan or REO Property purchased
by the Responsible Party as contemplated by
this Agreement), a determination
made by the applicable Servicer that all
Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds and other
payments or recoveries which the
applicable Servicer, in its reasonable good
faith judgment, expects to be
finally recoverable in respect thereof have
been so recovered. Each Servicer
shall maintain records, prepared by a
Servicing Officer, of each Final Recovery
Determination made thereby.
Final Scheduled Distribution Date: The Final Scheduled
Distribution
Date for each Class of Certificates is the
Distribution Date in each of the
following months:
Month of Final
Scheduled
Distribution Date
-----------------
Class A-1ss
Certificates..................................
March 2035
Class A-1mz
Certificates..................................
March 2035
Class A-2ss
Certificates..................................
March 2035
Class A-2mz
Certificates..................................
March 2035
Class A-3a
Certificates...................................
March 2035
Class A-3b
Certificates...................................
March 2035
Class A-3c
Certificates...................................
March 2035
Class A-3mz
Certificates..................................
March 2035
Class M-1
Certificates....................................
March 2035
Class M-2
Certificates....................................
March 2035
Class M-3
Certificates....................................
March 2035
Class M-4
Certificates....................................
March 2035
Class M-5
Certificates....................................
March 2035
Class M-6
Certificates....................................
March 2035
Class B-1
Certificates....................................
March 2035
Class B-2
Certificates....................................
March 2035
Class B-3
Certificates....................................
March 2035
Class X
Certificates......................................
March 2035
Class P
Certificates......................................
March 2035
Class R
Certificates......................................
March 2035
First Lien Mortgage Loan: A Mortgage Loan secured by a first
lien
Mortgage on the related Mortgaged
Property.
Fitch: Fitch, Inc., and its successors in interest. If Fitch is
designated as a Rating Agency in the
Preliminary Statement, for purposes of
Section 10.05(b) the address for notices to
Fitch shall be Fitch, Inc., One
State Street Plaza, New York, New York
10004, Attention: MBS Monitoring - Morgan
Stanley ABS Capital I Inc. Trust 2005-NC2,
or such other address as Fitch may
hereafter furnish to the Depositor, the
Trustee and the Servicers.
Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan.
Freddie Mac: The Federal Home Loan Mortgage Corporation, a
corporate
instrumentality of the United States
created and existing under Title III of the
Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
Gross Margin: With respect to each Adjustable Rate Mortgage
Loan,
the fixed percentage amount set forth in
the related Mortgage Note to be added
to the applicable Index to determine the
Mortgage Rate.
Group I Class A Cap Agreement: The interest rate cap agreement,
dated April 29, 2005, between Morgan
Stanley Capital Services Inc. and the
Trustee, relating to the Group I Class A
Certificates.
Group I Class A Certificates: The Class A-1ss Certificates and
the
Class A-1mz Certificates, collectively.
Group I Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group I Mortgage
Loans.
Group II Class A Cap Agreement: The interest rate cap
agreement,
dated April 29, 2005, between Morgan
Stanley Capital Services Inc. and the
Trustee, relating to the Group II Class A
Certificates.
Group II Class A Certificates: The Class A-2ss and Class A-2mz
Certificates.
Group II Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group II Mortgage
Loans.
Group III Class A Cap Agreement: The interest rate cap
agreement,
dated April 29, 2005, between Morgan
Stanley Capital Services Inc. and the
Trustee, relating to the Group III Class A
Certificates.
Group III Class A Certificates: The Class A-3a, Class A-3b,
Class
A-3c and Class A-3mz Certificates.
Group III Class A Sequential Certificates: The Class A-3a,
Class
A-3b and Class A-3c Certificates.
Group III Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group III
Mortgage Loans.
HomEq: HomEq Servicing Corporation, a New Jersey corporation,
and
its successors in interest.
Index: As to each Adjustable Rate Mortgage Loan, the index from
time
to time in effect for the adjustment of the
Mortgage Rate set forth as such on
the related Mortgage Note.
Insurance Policy: With respect to any Mortgage Loan included in
the
Trust Fund, any insurance policy, including
all riders and endorsements thereto
in effect, including any replacement policy
or policies for any Insurance
Policies.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds
of
insurance policies insuring the Mortgage
Loan or the related Mortgaged Property.
Interest Accrual Period: With respect to each Class of
Non-Delay
Certificates and the Corresponding Class of
Lower Tier Regular Interests and any
Distribution Date, the period commencing on
the Distribution Date occurring in
the month preceding the month in which the
current Distribution Date occurs and
ending on the day immediately preceding the
current Distribution Date (or, in
the case of the first Distribution Date,
the period from and including the
Closing Date to but excluding such first
Distribution Date). For purposes of
computing interest accruals on each Class
of Non-Delay Certificates, each
Interest Accrual Period has the actual
number of days in such month and each
year is assumed to have 360 days.
Interest Rate Adjustment Date: With respect to each Adjustable
Rate
Mortgage Loan, the date, specified in the
related Mortgage Note and the Mortgage
Loan Schedule, on which the Mortgage Rate
is adjusted.
Interest Rate Cap Agreements: The Group I Class A Cap Agreement,
the
Group II Class A Cap Agreement, the Group
III Class A Cap Agreement, the Class M
Cap Agreement and the Class B Cap
Agreement.
Interest Rate Cap Payment: (a) With respect to the Group I Class
A
Certificates and the first 33 Distribution
Dates, the amount, if any, equal to
the product, determined on an "actual/360"
basis, of (i) the excess, if any, of
the lesser of (A) the one-month LIBOR rate
as of the related reset date
determined pursuant to the Group I Class A
Cap Agreement and (B) the applicable
cap ceiling rate set forth on Schedule A to
such Interest Rate Cap Agreement for
such Distribution Date over the applicable
cap strike rate set forth on Schedule
A to such Interest Rate Cap Agreement for
such Distribution Date, (ii) the
applicable Group I Class A notional amount
set forth on Schedule A to such
Interest Rate Cap Agreement for such
Distribution Date and (iii) the multiplier
set forth on Schedule A to such Interest
Rate Cap Agreement; (b) with respect to
the Group II Class A Certificates and the
first 33 Distribution Dates, the
amount, if any, equal to the product,
determined on an "actual/360" basis, of
(i) the excess, if any, of the lesser of
(A) the one-month LIBOR rate as of the
related reset date determined pursuant to
the Group II Class A Cap Agreement and
(B) the applicable cap ceiling rate set
forth on Schedule A to such Interest
Rate Cap Agreement for such Distribution
Date over the applicable cap strike
rate set forth on Schedule A to such
Interest Rate Cap Agreement for such
Distribution Date, (ii) the applicable
Group II Class A notional amount set
forth on Schedule A to such Interest Rate
Cap Agreement for such Distribution
Date and (iii) the multiplier set forth on
Schedule A to such Interest Rate Cap
Agreement; (c) with respect to the Group
III Class A Certificates and the first
33 Distribution Dates, the amount, if any,
equal to the product, determined on
an "actual/360" basis, of (i) the excess,
if any, of the lesser of (A) the
one-month LIBOR rate as of the related
reset date determined pursuant to the
Group III Class A Cap Agreement and (B) the
applicable cap ceiling rate set
forth on Schedule A to such Interest Rate
Cap Agreement for such Distribution
Date over the applicable cap strike rate
set forth on Schedule A to such
Interest Rate Cap Agreement for such
Distribution Date, (ii) the applicable
Group III Class A notional amount set forth
on Schedule A to such Interest Rate
Cap Agreement for such Distribution Date
and (iii) the multiplier set forth on
Schedule A to such Interest Rate Cap
Agreement; (d) with respect to the Class M
Certificates and the first 39 Distribution
Dates, the amount, if any, equal to
the product, determined on an "actual/360"
basis, of (i) the excess, if any, of
the lesser of (A) the one-month LIBOR rate
as of the related reset date
determined pursuant to the Class M Cap
Agreement and (B) the applicable cap
ceiling rate set forth on Schedule A to
such Interest Rate Cap Agreement for
such Distribution Date over the applicable
cap strike rate set forth on Schedule
A to such Interest Rate Cap Agreement for
such Distribution Date, (ii) the
applicable Class M notional amount set
forth on Schedule A to such Interest Rate
Cap Agreement for such Distribution Date
and (iii) the multiplier set forth on
Schedule A to such Interest Rate Cap
Agreement; and (e) with respect to the
Class B Certificates and the first 39
Distribution Dates, the amount, if any,
equal to the product, determined on an
"actual/360" basis, of (i) the excess, if
any, of the lesser of (A) the one-month
LIBOR rate as of the related reset date
determined pursuant to the Class B Cap
Agreement and (B) the applicable cap
ceiling rate set forth on Schedule A to
such Interest Rate Cap Agreement for
such Distribution Date over the applicable
cap strike rate set forth on Schedule
A to such Interest Rate Cap Agreement for
such Distribution Date, (ii) the
applicable Class B notional amount set
forth on Schedule A to such Interest Rate
Cap Agreement for such Distribution Date
and (iii) the multiplier set forth on
Schedule A to such Interest Rate Cap
Agreement.
Interest Remittance Amount: With respect to any Distribution
Date
and the Mortgage Loans in a Loan Group,
that portion of Available Funds
attributable to interest relating to
Mortgage Loans in that Loan Group.
Investment Account: As defined in Section 3.12(a).
Late Collections: With respect to any Mortgage Loan and any Due
Period, all amounts received after the
Determination Date immediately following
such Due Period, whether as late payments
of Scheduled Payments or as Insurance
Proceeds, Condemnation Proceeds,
Liquidation Proceeds or otherwise, which
represent late payments or collections of
principal and/or interest due (without
regard to any acceleration of payments
under the related Mortgage and Mortgage
Note) but delinquent for such Due Period
and not previously recovered.
LIBOR: With respect to any Interest Accrual Period for the
Offered
Certificates, the rate determined by the
Trustee on the related LIBOR
Determination Date on the basis of the
offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate
Page 3750 as of 11:00 a.m. (London
time) on such date; provided, that if such
rate does not appear on Telerate Page
3750, the rate for such date will be
determined on the basis of the rates at
which one-month U.S. dollar deposits are
offered by the Reference Banks at
approximately 11:00 a.m. (London time) on
such date to prime banks in the London
interbank market. In such event, the
Trustee shall request the principal London
office of each of the Reference Banks to
provide a quotation of its rate. If at
least two such quotations are provided, the
rate for that date will be the
arithmetic mean of the quotations (rounded
upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two
quotations are provided as
requested, the rate for that date will be
the arithmetic mean of the rates
quoted by major banks in New York City,
selected by the Trustee (after
consultation with the Depositor), at
approximately 11:00 a.m. (New York City
time) on such date for one-month U.S.
dollar loans to leading European banks.
LIBOR Determination Date: With respect to any Interest Accrual
Period for the Offered Certificates, the
second London Business Day preceding
the commencement of such Interest Accrual
Period.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a
defaulted Mortgage Loan (including any REO
Property) which was liquidated in the
calendar month preceding the month of such
Distribution Date and as to which the
applicable Servicer has certified to the
Trustee that it has received all
amounts it expects to receive in connection
with the liquidation of such
Mortgage Loan including the final
disposition of an REO Property.
Liquidation Proceeds: Cash received in connection with the
liquidation of a Liquidated Mortgage Loan,
whether through a trustee's sale,
foreclosure sale or otherwise, including
any Subsequent Recoveries.
Loan Group: The Group I Mortgage Loans or the Group II Mortgage
Loans, as applicable.
Loan Group Cap: The Loan Group I Cap or the Loan Group II Cap,
as
applicable.
Loan Group I Cap: With respect to the Group I Mortgage Loans as
of
any Distribution Date, the product of (i)
the weighted average of the Adjusted
Net Mortgage Rates then in effect on the
beginning of the related Due Period on
the Group I Mortgage Loans and (ii) a
fraction, the numerator of which is 30 and
the denominator of which is the actual
number of days in the Interest Accrual
Period related to such Distribution
Date.
Loan Group II Cap: With respect to the Group II Mortgage Loans as
of
any Distribution Date, the product of (i)
the weighted average of the Adjusted
Net Mortgage Rates then in effect on the
beginning of the related Due Period on
the Group II Mortgage Loans and (ii) a
fraction, the numerator of which is 30
and the denominator of which is the actual
number of days in the Interest
Accrual Period related to such Distribution
Date.
Loan Group III Cap: With respect to the Group III Mortgage Loans
as
of any Distribution Date, the product of
(i) the weighted average of the
Adjusted Net Mortgage Rates then in effect
on the beginning of the related Due
Period on the Group III Mortgage Loans and
(ii) a fraction, the numerator of
which is 30 and the denominator of which is
the actual number of days in the
Interest Accrual Period related to such
Distribution Date.
Loan-to-Value Ratio or LTV: With respect to any First Lien
Mortgage
Loan, the ratio (expressed as a percentage)
of the original outstanding
principal amount of the First Lien Mortgage
Loan as of the Cut-off Date (unless
otherwise indicated), to the lesser of (a)
the Appraised Value of the Mortgaged
Property at origination, and (b) if the
First Lien Mortgage Loan was made to
finance the acquisition of the related
Mortgaged Property, the purchase price of
the Mortgaged Property.
London Business Day: Any day on which dealings in deposits of
United
States dollars are transacted in the London
interbank market.
Lower Tier Interest Rate: As described in the Preliminary
Statement.
Lower Tier Principal Amount: As described in the Preliminary
Statement.
Lower Tier Regular Interest: Each of the Class LT-A-1ss, Class
LT-A-1mz, Class LT-A-2ss, Class LT-A-2mz,
Class LT-A-3a, Class LT-A-3b, Class
LT-A-3c, Class LT-A-3mz, Class LT-M-1,
Class LT-M-2, Class LT-M-3, Class LT-M-4,
Class LT-M-5, Class LT-M-6, Class LT-B-1,
Class LT-B-2, Class LT-B-3, Class
LT-Group I, Class LT-Group II, Class
LT-Group III and Class LT-Accrual Interests
as described in the Preliminary
Statement.
Lower Tier REMIC: As described in the Preliminary Statement.
Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage
Loan, a rate that (i) is set forth on the
Data Tape Information and in the
related Mortgage Note and (ii) is the
maximum interest rate to which the
Mortgage Rate on such Adjustable Rate
Mortgage Loan may be increased during the
lifetime of such Adjustable Rate Mortgage
Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate
Mortgage
Loan, a rate that (i) is set forth on the
Data Tape Information and in the
related Mortgage Note and (ii) is the
minimum interest rate to which the
Mortgage Rate on such Adjustable Rate
Mortgage Loan may be decreased during the
lifetime of such Adjustable Rate Mortgage
Loan.
Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 4.03.
Moody's: Moody's Investors Service, Inc, and its successors in
interest. If Moody's is designated as a
Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(b)
the address for notices to Moody's
shall be Moody's Investors Service, Inc.,
99 Church Street, New York, New York
10007, Attention: Residential Mortgage
Pass-Through Group, or such other address
as Moody's may hereafter furnish to the
Depositor, the Trustee and the
Servicers.
Mortgage: The mortgage, deed of trust or other instrument
identified
on the Mortgage Loan Schedule as securing a
Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan
contained in either the Servicing File or
Custodial File.
Mortgage Loan: An individual Mortgage Loan which is the subject
of
this Agreement, each Mortgage Loan
originally sold and subject to this Agreement
being identified on the Mortgage Loan
Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the
Scheduled Payments, Principal
Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds,
REO Disposition proceeds, Prepayment
Charges, and all other rights, benefits,
proceeds and obligations arising from or in
connection with such Mortgage Loan,
excluding replaced or repurchased Mortgage
Loans.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed
hereto
as Schedule I, such schedule setting forth
the following information with
respect to each Mortgage Loan: (1) the
Mortgage Loan number; (2) the city, state
and zip code of the Mortgaged Property; (3)
the number and type of residential
units constituting the Mortgaged Property;
(4) the current Mortgage Rate; (5)
the current net Mortgage Rate; (6) the
current Scheduled Payment; (7) with
respect to each Adjustable Rate Mortgage
Loan, the Gross Margin; (8) the
original term to maturity; (9) the
scheduled maturity date; (10) the principal
balance of the Mortgage Loan as of the
Cut-off Date after deduction of payments
of principal due on or before the Cut-off
Date whether or not collected; (11)
with respect to each Adjustable Rate
Mortgage Loan, the next Interest Rate
Adjustment Date; (12) with respect to each
Adjustable Rate Mortgage Loan, the
lifetime Mortgage Interest Rate Cap; (13)
whether the Mortgage Loan is
convertible or not; (14) the Servicing Fee;
(15) whether such Mortgage Loan is a
Group I Mortgage Loan, Group II Mortgage
Loan or a Group III Mortgage Loan; (16)
the date such Mortgage Loan was sold by the
Originator to the Purchaser; (17)
whether such Mortgage Loan provides for a
Prepayment Charge as well as the term
and amount of such Prepayment Charge, if
any; (18) with respect to each First
Lien Mortgage Loan, the LTV at origination
and with respect to each Second Lien
Mortgage Loan, the CLTV at origination;
(19) the applicable Servicer's name; and
(20) the date on which servicing of the
Mortgage Loan was transferred to the
applicable Servicer.
Mortgage Note: The note or other evidence of the indebtedness of
a
Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne on a Mortgage
Note,
which shall be adjusted from time to time
in the case of an Adjustable Rate
Mortgage Loan.
Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage
Loan, the Periodic Mortgage Rate Cap, the
Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.
Mortgaged Property: With respect to each Mortgage Loan, the
real
property (or leasehold estate, if
applicable) identified on the Mortgage Loan
Schedule as securing repayment of the debt
evidenced by the related Mortgage
Note.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Monthly Excess Cash Flow: For any Distribution Date, the
amount
remaining for distribution pursuant to
subsection 4.02(a)(iii) (before giving
effect to distributions pursuant to such
subsection).
Net Prepayment Interest Shortfall: For any Distribution Date,
the
amount by which the sum of the Prepayment
Interest Shortfalls for such
Distribution Date exceeds the sum of (i)
the Compensating Interest payments made
with respect to such Distribution Date and
(ii) in the case of HomEq, all
Prepayment Interest Excesses for such
Distribution Date.
NIM Issuer: The entity established as the issuer of the NIM
Securities.
NIM Securities: Any debt securities secured or otherwise backed
by
some or all of the Class X and Class P
Certificates that are rated by one or
more Rating Agencies.
NIM Trustee: The trustee for the NIM Securities.
Non-Delay Certificates: As specified in the Preliminary
Statement.
Non-Permitted Transferee: A Person other than a Permitted
Transferee.
Nonrecoverable P&I Advance: Any P&I 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
applicable Servicer, will not or, in the
case of a proposed P&I Advance, would
not be ultimately recoverable from related
late payments, Insurance Proceeds,
Condemnation Proceeds, or Liquidation
Proceeds on such Mortgage Loan or REO
Property as provided herein.
Nonrecoverable Servicing Advance: Any Servicing Advances
previously
made or proposed to be made in respect of a
Mortgage Loan or REO Property,
which, in accordance with Accepted
Servicing Practices, will not or, in the case
of a proposed Servicing Advance, would not
be ultimately recoverable from
related Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds or
otherwise. The determination by a Servicer
that it has made a Nonrecoverable
Servicing Advance or that any proposed
Servicing Advances, if made, would
constitute a Nonrecoverable Servicing
Advance, shall be evidenced by an
Officer's Certificate delivered to the
Trustee.
Notice of Final Distribution: The notice to be provided pursuant
to
Section 9.02 to the effect that final
distribution on any of the Certificates
shall be made only upon presentation and
surrender thereof.
Offered Certificates: As specified in the Preliminary
Statement.
Officer's Certificate: A certificate signed by an officer of
any
Servicer with responsibility for the
servicing of the Mortgage Loans required to
be serviced by such Servicer and listed on
a list delivered to the Trustee
pursuant to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
in-house counsel for a Servicer or a
Subservicer, reasonably acceptable to the
Trustee; provided, that any Opinion of
Counsel relating to (a) qualification of
either the Lower Tier REMIC or Upper Tier
REMIC or (b) compliance with the REMIC
Provisions, must be (unless otherwise
stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact
independent of such Servicer of the
Mortgage Loans, (ii) does not have any
material direct or indirect financial
interest in such Servicer of the Mortgage
Loans or in an affiliate of either and
(iii) is not connected with such Servicer
of the Mortgage Loans as an officer,
employee, director or person performing
similar functions.
Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the
Mortgage Loans, as of the last day of
the related Due Period, is equal to 10% or
less of the Cut-off Date Pool
Principal Balance.
Originator: New Century Mortgage Corporation, a California
corporation, and its successors in
interest.
OTS: Office of Thrift Supervision, and any successor thereto.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore
executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered
to
the
Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other
Certificates have been executed and delivered by the Trustee
pursuant to
this
Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan
with
a Stated Principal Balance greater than
zero which was not the subject of a
Principal Prepayment in Full prior to such
Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due
Date.
Ownership Interest: As to any Residual Certificate, any
ownership
interest in such Certificate including any
interest in such Certificate as the
Holder thereof and any other interest
therein, whether direct or indirect, legal
or beneficial.
P&I Advance: As to any Mortgage Loan or REO Property, any
advance
made by the applicable Servicer in respect
of any Remittance Date representing
the aggregate of all payments of principal
and interest, net of the Servicing
Fee, that were due during the related Due
Period on the Mortgage Loans and that
were delinquent on the related
Determination Date, plus certain amounts
representing assumed payments not covered
by any current net income on the
Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure as
determined pursuant to Section 4.01.
Pass-Through Margin: With respect to each Class of Regular
Certificates, the following percentages:
Class A-1ss Certificates, 0.2050%;
Class A-1mz Certificates, 0.2500%; Class
A-2ss Certificates, 0.2050%; Class
A-2mz Certificates, 0.2500%; Class A-3a
Certificates, 0.0800%; Class A-3b
Certificates, 0.1800%; Class A-3c
Certificates, 0.3200%; Class A-3mz
Certificates, 0.2600%; Class M-1
Certificates, 0.3900%; Class M-2 Certificates,
0.4200%; Class M-3 Certificates, 0.4500%;
Class M-4 Certificates, 0.6100%; Class
M-5 Certificates, 0.6400%; Class M-6
Certificates, 0.6900%; Class B-1
Certificates, 1.1700%; Class B-2
Certificates, 1.3000%; and Class B-3
Certificates, 1.7500%. On the first
Distribution Date after the Optional
Termination Date, the Pass-Through Margins
shall increase to: Class A-1ss
Certificates, 0.4100%; Class A-1mz
Certificates, 0.5000%; Class A-2ss
Certificates, 0.4100%; Class A-2mz
Certificates, 0.5000%; Class A-3a
Certificates, 0.1600%; Class A-3b
Certificates, 0.3600%; Class A-3c
Certificates, 0.6400%; Class A-3mz
Certificates, 0.5200%; Class M-1
Certificates, 0.5850%; Class M-2
Certificates, 0.6300%; Class M-3 Certificates,
0.6750%; Class M-4 Certificates, 0.9150%;
Class M-5 Certificates, 0.9600%; Class
M-6 Certificates, 1.0350%; Class B-1
Certificates, 1.7550%; Class B-2
Certificates, 1.9500%; and Class B-3
Certificates, 2.6250%.
Pass-Through Rate: For each Class of Certificates and each
Lower
Tier Regular Interest, the per annum rate
set forth or calculated in the manner
described in the Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage
interest
evidenced thereby in distributions required
to be made on the related Class,
such percentage interest being set forth on
the face thereof or equal to the
percentage obtained by dividing the
Denomination of such Certificate by the
aggregate of the Denominations of all
Certificates of the same Class.
Periodic Mortgage Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the periodic limit on each
Mortgage Rate adjustment as set forth
in the related Mortgage Note.
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 by the Servicers, the
Trustee or any of their respective
Affiliates:
(i) direct obligations of, or obligations fully guaranteed as
to
timely
payment of principal and interest by, the United States or any
agency or
instrumentality thereof, provided such obligations are backed
by
the full
faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of,
or
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 and
issued by,
any Depository Institution and rated "F1+" by Fitch, "A-1+" by
Standard
& Poor's and "P-1" by Moody's (to the extent they are
Rating
Agencies
hereunder);
(iii) repurchase obligations with respect to any security
described
in clause
(i) above entered into with a Depository Institution (acting as
principal);
(iv) securities bearing interest or sold at a discount that are
issued by
any corporation incorporated under the laws of the United
States
of America
or any State thereof and that are rated by each Rating Agency
that rates
such securities in its highest long-term unsecured rating
categories
at the time of such investment or contractual commitment
providing
for such investment;
(v) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified
date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency that rates such securities
in
its
highest short-term unsecured debt rating available at the time of
such
investment;
(vi) units of money market funds, including money market funds
advised by
the Depositor or an Affiliate thereof, that have been rated
"Aaa" by
Moody's, "AAAm" by Standard & Poor's and at least "AA" by
Fitch
(to the
extent they are Rating Agencies hereunder); and
(vii) if previously confirmed in writing to the Trustee, any
other
demand,
money market or time deposit, or any other obligation, security
or
investment, as may be acceptable to the Rating Agencies as a
permitted
investment
of funds backing "Aaa" or "AAA" rated securities;
provided, however, 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 (i) the United
States,
any State or political subdivision thereof,
or any agency or instrumentality of
any of the foregoing, (ii) a foreign
government, international organization or
any agency or instrumentality of either of
the foregoing, (iii) an organization
(except certain farmers' cooperatives
described in Section 521 of the Code)
which is exempt from tax imposed by Chapter
1 of the Code (including the tax
imposed by Section 511 of the Code on
unrelated business taxable income) on any
excess inclusions (as defined in Section
860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural
electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the
Code, (v) a Person that is not a U.S.
Person or a U.S. Person with respect to
whom income from a Residual Certificate
is attributable to a foreign permanent
establishment or fixed base, within the
meaning of an applicable income tax treaty,
of such Person or any other U.S.
Person, (vi) an "electing large
partnership" within the meaning of Section 775
of the Code and (vii) any other Person so
designated by the Depositor based upon
an Opinion of Counsel that the Transfer of
an Ownership Interest in a Residual
Certificate to such Person may cause either
the Lower Tier REMIC or the Upper
Tier REMIC to fail to qualify as a REMIC at
any time that the Certificates are
outstanding. The terms "United States",
"State" and "international organization"
shall have the meanings set forth in
Section 7701 of the Code or successor
provisions. A corporation will not be
treated as an instrumentality of the
United States or of any State or political
subdivision thereof for these
purposes if all of its activities are
subject to tax and, with the exception of
Freddie Mac, a majority of its board of
directors is not selected by such
government unit.
Person: Any individual, corporation, partnership, joint
venture,
association, limited liability company,
joint-stock company, trust,
unincorporated organization or government,
or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary
Statement.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances
of the Mortgage Loans for such
Distribution Date that were Outstanding
Mortgage Loans on the Due Date in the
related Due Period.
Prepayment Charge: Any prepayment premium, penalty or charge
collected by any Servicer with respect to a
Mortgage Loan from a Mortgagor in
connection with any voluntary Principal
Prepayment pursuant to the terms of the
related Mortgage Note.
Prepayment Interest Excess: With respect to any Distribution
Date,
any interest collected by HomEq with
respect to any Mortgage Loan serviced by
HomEq as to which a Principal Prepayment in
Full occurs from the 1st day of the
month through the 15th day of the month in
which such Distribution Date occurs
and that represents interest that accrues
from the 1st day of such month to the
date of such Principal Prepayment in
Full.
Prepayment Interest Shortfall: With respect to any Distribution
Date, the sum of, for each Mortgage Loan
that was, during the related Prepayment
Period (in the case of any Mortgage Loan
serviced by Countrywide) or during the
portion of the Prepayment Period from and
including the 16th day of the month
preceding the month in which such
Distribution Date occurs (or from the day
following the Cut-off Date, in the case of
the first Distribution Date) through
the last day of such month (in the case of
any Mortgage Loan serviced by HomEq),
the subject of a Principal Prepayment which
is not accompanied by an amount
equal to one month of interest that would
have been due on such Mortgage Loan on
the Due Date in the following month and
which was applied by the applicable
Servicer to reduce the outstanding
principal balance of such Mortgage Loan on a
date preceding such Due Date an amount
equal to the product of (a) the Mortgage
Rate net of the Servicing Fee Rate for such
Mortgage Loan, (b) the amount of the
Principal Prepayment for such Mortgage
Loan, (c) 1/360 and (d) the number of
days commencing on the date on which such
Principal Prepayment was applied and
ending on the last day of the calendar
month in which the related Prepayment
Period begins.
Prepayment Period: With respect to any Distribution Date, either
(a)
in the case of any Mortgage Loan serviced
by Countrywide, the calendar month
preceding the month in which such
Distribution Date occurs, or (b) in the case
of any Mortgage Loan serviced by HomEq,
either (i) with respect to any Principal
Prepayments (including all unscheduled
receipts of principal on the Mortgage
Loans other than voluntary partial
Principal Prepayments), the period from and
including the 16th day of the month
preceding the month in which such
Distribution Date occurs (or, in the case
of the first Distribution Date, from
and including the Cut-off Date) to and
including the 15th day of the month in
which such Distribution Date occurs, or
(ii) with respect to any voluntary
partial Principal Prepayments, the calendar
month preceding the month in which
such Distribution Date occurs.
Principal Distribution Amount: For any Distribution Date, the sum
of
(i) the Basic Principal Distribution Amount
for such Distribution Date and (ii)
the Extra Principal Distribution Amount for
such Distribution Date.
Principal Prepayment: Any full or partial payment or other
recovery
of principal on a Mortgage Loan (including
upon liquidation of a Mortgage Loan)
which is received in advance of its
scheduled Due Date, excluding any Prepayment
Charge thereon.
Principal Prepayment in Full: Any Principal Prepayment made by
a
Mortgagor of the entire principal balance
of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution
Date,
the amount equal to the sum of the
following amounts (without duplication) with
respect to the related Due Period: (i) each
scheduled payment of principal on a
Mortgage Loan due during such Due Period
and received by the applicable Servicer
on or prior to the related Determination
Date or advanced by the applicable
Servicer for the related Remittance Date,
and all Principal Prepayments received
during the related Prepayment Period; (ii)
all net Liquidation Proceeds,
Condemnation Proceeds and Insurance
Proceeds on the Mortgage Loans allocable to
principal actually collected by the
Servicers during the related Prepayment
Period; (iii) the portion of the Repurchase
Price allocable to principal with
respect to each Mortgage Loan, repurchased
with respect to such Distribution
Date; (iv) all Substitution Adjustment
Amounts allocable to principal received
in connection with the substitution of any
Mortgage Loans as of such
Distribution Date; (v) with respect to the
Distribution Date in May 2005 only,
the portion of the Closing Date Deposit
Amount allocable to principal; and (vi)
the allocable portion of the proceeds
received with respect to the termination
of the Trust Fund pursuant to clause (a) of
Section 9.01 (to the extent such
proceeds relate to principal).
Private Certificates: As specified in the Preliminary
Statement.
Prospectus Supplement: The Prospectus Supplement, dated April
22,
2005, relating to the Offered
Certificates.
PTCE 95-60: As defined in Section 5.02(b).
Purchase Agreement: The Second Amended and Restated Mortgage
Loan
Purchase and Warranties Agreement, dated as
of July 1, 2003, as amended by
Amendment No. 1, dated as of October 22,
2003, Amendment No. 2, dated as of
December 30, 2003, Amendment No. 3, dated
as of January 29, 2004, Amendment No.
4, dated as of March 30, 2004, Amendment
No. 5, dated as of June 28, 2004 and
Amendment No. 6, dated as of January 28,
2005, each by and between the
Purchaser, as purchaser, and the
Responsible Party, as seller.
Purchaser: Morgan Stanley Mortgage Capital Inc., a New York
corporation, and its successors in
interest, as purchaser of the Mortgage Loans
under the Purchase Agreement.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If such organization
or a successor is no longer in
existence, "Rating Agency" shall be such
nationally recognized statistical
rating organization, or other comparable
Person, as is designated by the
Depositor, notice of which designation
shall be given to the Trustee. References
herein to a given rating or rating category
of a Rating Agency shall mean such
rating category without giving effect to
any modifiers. For purposes of Section
10.05(b), the addresses for notices to each
Rating Agency shall be the address
specified therefor in the definition
corresponding to the name of such Rating
Agency, or such other address as either
such Rating Agency may hereafter furnish
to the Depositor, the Trustee and the
Servicers.
Realized
Losses: With respect to any date of determination and any
Liquidated Mortgage Loan, the amount, if
any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan
together with accrued and unpaid
interest thereon exceeds (b) the
Liquidation Proceeds with respect thereto net
of the expenses incurred by the applicable
Servicer in connection with the
liquidation of such Liquidated Mortgage
Loan and net of the amount of
unreimbursed Servicing Advances with
respect to such Liquidated Mortgage Loan.
Record Date: With respect to any Distribution Date, the close
of
business on the Business Day immediately
preceding such Distribution Date;
provided, however, that, for any
Certificate issued in definitive form, the
Record Date shall be the close of business
on the last Business Day of the month
preceding the month in which such
applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.04.
Regular Certificates: As specified in the Preliminary
Statement.
Relief Act Interest Shortfall: With respect to any Distribution
Date
and any Mortgage Loan, any reduction in the
amount of interest collectible on
such Mortgage Loan for the most recently
ended Due Period as a result of the
application of the Servicemembers Civil
Relief Act or any similar state
statutes.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating
to real estate mortgage investment
conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1
of the Code, and related provisions,
and regulations promulgated thereunder, as
the foregoing may be in effect from
time to time as well as provisions of
applicable state laws.
Remittance Date: With respect to any Distribution Date, the
second
Business Day immediately preceding such
Distribution Date.
REO Disposition: The final sale by the applicable Servicer of
any
REO Property.
REO Imputed Interest: As to any REO Property, for any period,
an
amount equivalent to interest (at the
Mortgage Rate net of the Servicing Fee
Rate that would have been applicable to the
related Mortgage Loan had it been
outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date
of acquisition thereof (as such balance is
reduced pursuant to Section 3.17 by
any income from the REO Property treated as
a recovery of principal).
REO Mortgage Loan: A Mortgage Loan where title to the related
Mortgaged Property has been obtained by the
applicable Servicer in the name of
the Trustee on behalf of the
Certificateholders.
REO Property: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of
foreclosure in connection with a
defaulted Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan, an amount
equal
to the sum of (i) the unpaid principal
balance of such Mortgage Loan as of the
date of repurchase, (ii) interest on such
unpaid principal balance of such
Mortgage Loan at the Mortgage Rate from the
last date through which interest has
been paid and distributed to the Trustee to
the date of repurchase, (iii) all
unreimbursed Servicing Advances and (iv)
all costs and expenses incurred by the
Trustee arising out of or based upon such
breach, including without limitation,
costs and expenses relating to the
Trustee's enforcement of the Responsible
Party's repurchase obligation
hereunder.
Request for Release: The Request for Release submitted by the
applicable Servicer to the Trustee,
substantially in the form of Exhibit J.
Residual Certificates: As specified in the Preliminary
Statement.
Responsible Officer: When used with respect to the Trustee, any
vice
president, any assistant vice president,
any assistant secretary, any assistant
treasurer, any associate, or any other
officer of the Trustee customarily
performing functions similar to those
performed by any of the above designated
officers who at such time shall be officers
to whom, with respect to a
particular matter, such matter is referred
because of such officer's knowledge
of and familiarity with the particular
subject and who shall have direct
responsibility for the administration of
this Agreement.
Responsible Party: NC Capital Corporation, a California
corporation,
and its successors in interest.
Rule 144A Letter: As defined in Section 5.02(b).
Scheduled Payment: The scheduled monthly payment on a Mortgage
Loan
due on any Due Date allocable to principal
and/or interest on such Mortgage Loan
which, unless otherwise specified herein,
shall give effect to any related Debt
Service Reduction and any Deficient
Valuation that affects the amount of the
monthly payment due on such Mortgage
Loan.
Second Lien Mortgage Loan: A Mortgage Loan secured by a second
lien
Mortgage on the related Mortgaged
Property.
Securities Act: The Securities Act of 1933, as amended.
Senior Enhancement Percentage: With respect to any Distribution
Date, the percentage obtained by dividing
(x) the sum of (i) the aggregate Class
Certificate Balance of the Subordinated
Certificates and (ii) the Subordinated
Amount (in each case after taking into
account the distribution of the Principal
Distribution Amount for such Distribution
Date) by (y) the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date.
Senior Specified Enhancement Percentage: As of any date of
determination, 38.50%.
Sequential Trigger Event: (a) With respect to any Distribution
Date
occurring before May 2008, the
circumstances in which the aggregate amount of
Realized Losses incurred since the Cut-off
Date through the last day of the
related Prepayment Period divided by the
aggregate Stated Principal Balance of
the Mortgage Loans as of the Cut-off Date
exceeds 2.50%, and (b) with respect to
any Distribution Date occurring in or after
May 2008, a Trigger Event.
Servicer: Each of HomEq and Countrywide, as applicable, and if
a
successor to any Servicer is appointed
hereunder, such successor. When the term
"Servicer" is used in this Agreement in
connection with the administration of
servicing obligations with respect to any
Mortgage Loan, Mortgaged Property, REO
Property or Mortgage File, "Servicer" shall
mean the Person identified as the
Servicer of such Mortgage Loan on the
Mortgage Loan Schedule.
Servicer Remittance Report: As defined in Section 4.03(d).
Servicing Advances: The reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by
the applicable Servicer in the
performance of its servicing obligations in
connection with a default,
delinquency or other unanticipated event,
including, but not limited to, the
cost of (i) the preservation, restoration,
inspection and protection of a
Mortgaged Property, (ii) any enforcement,
administrative or judicial
proceedings, including foreclosures and
litigation, in respect of a particular
Mortgage Loan, (iii) the management
(including reasonable fees in connection
therewith) and liquidation of any REO
Property and (iv) the performance of its
obligations under Sections 3.01, 3.09, 3.13
and 3.15. The Servicing Advances
shall also include any reasonable
"out-of-pocket" costs and expenses (including
legal fees) incurred by the applicable
Servicer in connection with executing and
recording instruments of satisfaction,
deeds of reconveyance or Assignments of
Mortgage in connection with any foreclosure
in respect of any Mortgage Loan to
the extent not recovered from the Mortgagor
or otherwise payable under this
Agreement. None of the Servicers shall be
required to make any Nonrecoverable
Servicing Advances.
Servicing Fee: With respect to each Servicer, each Mortgage
Loan
serviced by such Servicer and for any
calendar month, an amount equal to one
month's interest (or in the event of any
payment of interest which accompanies a
Principal Prepayment in Full made by the
Mortgagor during such calendar month,
interest for the number of days covered by
such payment of interest) at the
Servicing Fee Rate on the applicable Stated
Principal Balance of such Mortgage
Loan as of the first day of such calendar
month. Such fee shall be payable
monthly, and shall be pro-rated for any
portion of a month during which the
Mortgage Loan is serviced by such Servicer
under this Agreement. The Servicing
Fee is payable solely from the interest
portion (including recoveries with
respect to interest from Liquidation
Proceeds, Insurance Proceeds, Condemnation
Proceeds and proceeds received with respect
to REO Properties, to the extent
permitted by Section 3.11) of such
Scheduled Payment collected by such Servicer,
or as otherwise provided under Section
3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50%
per
annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the applicable Servicer
consisting of originals or copies of all
documents in the Mortgage File which are
not delivered to the Trustee in the
Custodial File and copies of the Mortgage
Loan Documents set forth in Exhibit K
hereto.
Servicing Officer: Any officer of any Servicer involved in, or
responsible for, the administration and
servicing of the Mortgage Loans whose
name and facsimile signature appear on a
list of servicing officers furnished to
the Trustee by such Servicer on the Closing
Date pursuant to this Agreement, as
such list may from time to time be
amended.
Similar Law: As defined in Section 5.02(b).
60+ Day Delinquent Mortgage Loan: Each Mortgage Loan with respect
to
which any portion of a Scheduled Payment
is, as of the last day of the prior Due
Period, two months or more past due
(without giving effect to any grace period),
each Mortgage Loan in foreclosure and all
REO Property.
Specified Subordinated Amount: Prior to the Stepdown Date, an
amount
equal to 3.05% of the Cut-off Date Pool
Principal Balance. On and after the
Stepdown Date, an amount equal to 6.10% of
the aggregate Stated Principal
Balance of the Mortgage Loans for such
Distribution Date, subject, until the
Class Certificate Balance of each Class of
Offered Certificates has been reduced
to zero, to a minimum amount equal to 0.50%
of the aggregate Stated Principal
Balance of the Mortgage Loans as of the
Cut-off Date; provided, however, that
if, on any Distribution Date, a Trigger
Event exists, the Specified Subordinated
Amount shall not be reduced to the
applicable percentage of the then current
aggregate Stated Principal Balance of the
Mortgage Loans until the Distribution
Date on which a Trigger Event no longer
exists. When the Class Certificate
Balance of each Class of Offered
Certificates has been reduced to zero, the
Specified Subordinated Amount will
thereafter equal zero.
Standard & Poor's: Standard & Poor's Ratings Services, a
division of
The McGraw-Hill Companies, Inc., and its
successors in interest. If Standard &
Poor's is designated as a Rating Agency in
the Preliminary Statement, for
purposes of Section 10.05(b) the address
for notices to Standard & Poor's shall
be Standard & Poor's, 55 Water Street,
New York, New York 10041, Attention:
Residential Mortgage Surveillance Group -
Morgan Stanley ABS Capital I Inc.
Trust 2005-NC2, or such other address as
Standard & Poor's may hereafter furnish
to the Depositor, the Trustee and the
Servicers.
Standard & Poor's Glossary: The Standard & Poor's
LEVELS(R)
Glossary, as may be in effect from time to
time.
Startup Day: The Closing Date.
Stated Principal Balance: As to each Mortgage Loan and as of
any
date of determination, (i) the principal
balance of the Mortgage Loan at the
Cut-off Date after giving effect to
payments of principal due on or before such
date, minus (ii) all amounts previously
remitted to the Trustee with respect to
the related Mortgage Loan representing
payments or recoveries of principal
including advances in respect of scheduled
payments of principal. For purposes
of any Distribution Date, the Stated
Principal Balance of any Mortgage Loan will
give effect to any scheduled payments of
principal received by the related
Servicer on or prior to the related
Determination Date or advanced by the
related Servicer for the related Remittance
Date and any unscheduled principal
payments and other unscheduled principal
collections received during the related
Prepayment Period, and the Stated Principal
Balance of any Mortgage Loan that
has prepaid in full or has become a
Liquidated Mortgage Loan during the related
Prepayment Period shall be zero.
Stepdown Date: The later to occur of (i) the earlier to occur of
(a)
the Distribution Date in May 2008 and (b)
the Distribution Date following the
Distribution Date on which the aggregate
Class Certificate Balances of the Class
A Certificates have been reduced to zero
and (ii) the first Distribution Date on
which the Senior Enhancement Percentage
(calculated for this purpose only after
taking into account payments of principal
on the Mortgage Loans applied to
reduce the Stated Principal Balances of the
Mortgage Loans for the applicable
Distribution Date but prior to any
allocation of the Principal Distribution
Amount to the Certificates on such
Distribution Date) is greater than or equal
to the Senior Specified Enhancement
Percentage.
Subordinated Amount: With respect to any Distribution Date, the
excess, if any, of (a) the aggregate Stated
Principal Balance of the Mortgage
Loans for such Distribution Date over (b)
the aggregate of the Class Certificate
Balances of the Offered Certificates as of
such Distribution Date (after giving
effect to the payment of the Principal
Remittance Amount on such Certificates on
such Distribution Date).
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordination Deficiency: With respect to any Distribution Date,
the
excess, if any, of (a) the Specified
Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated
Amount applicable to such
Distribution Date.
Subordination Reduction Amount: With respect to any
Distribution
Date, an amount equal to the lesser of (a)
the Excess Subordinated Amount and
(b) the Net Monthly Excess Cash Flow.
Subsequent Recovery: With respect to any Mortgage Loan or
related
Mortgaged Property that became a Liquidated
Mortgage Loan or was otherwise
disposed of, all amounts received in
respect of such Liquidated Mortgage Loan
after an Applied Realized Loss Amount
related to such Mortgage Loan or Mortgaged
Property is allocated to reduce the Class
Certificate Balance of any Class of
Subordinated Certificates. Any Subsequent
Recovery that is received during a
Prepayment Period will be treated as
Liquidation Proceeds and included as part
of the Principal Remittance Amount for the
related Distribution Date.
Subservicer: As defined in Section 3.02(a).
Subservicing Account: As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a).
Substitute Mortgage Loan: A Mortgage Loan substituted by the
Responsible Party for a Deleted Mortgage
Loan that must, on the date of such
substitution, as confirmed in a Request for
Release, substantially in the form
of Exhibit J, (i) have a Stated Principal
Balance, after deduction of the
principal portion of the Scheduled Payment
due in the month of substitution, not
in excess of, and not more than 10% less
than, the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) be accruing
interest at a rate no lower than and
not more than 1% per annum higher than,
that of the Deleted Mortgage Loan; (iii)
have a Loan-to-Value Ratio no higher than
that of the Deleted Mortgage Loan;
(iv) have a remaining term to maturity no
greater than (and not more than one
year less than that of) the Deleted
Mortgage Loan; and (v) comply with each
representation and warranty set forth in
Section 2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
Tax Matters Person: The Holder of the Class R Certificates
designated as "tax matters person" of the
Lower Tier REMIC and the Upper Tier
REMIC, respectively, in the manner provided
under Treasury Regulations Section
1.860F-4(d) and Treasury Regulations
Section 301.6231(a)(7)-1.
Tax Service Contract: As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on
the
Bridge Telerate Service (or such other page
as may replace that page on that
service for displaying comparable rates or
prices).
Total Monthly Excess Spread: As to any Distribution Date, an
amount
equal to the excess if any, of (i) the
interest on the Mortgage Loans (other
than Prepayment Interest Excesses) received
by the Servicers on or prior to the
related Determination Date or advanced by
the Servicers for the related
Remittance Date (net of Expense Fees) over
(ii) the sum of the amounts payable
to the Certificates pursuant to Section
4.02(a)(i) on such Distribution Date.
Transfer: Any direct or indirect transfer or sale of any
Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: Either a Cumulative Loss Trigger Event or a
Delinquency Trigger Event.
Trust: The express trust created hereunder in Section 2.01(c).
Trust Fund: The corpus of the trust created hereunder consisting
of
(i) the Mortgage Loans and all interest and
principal with respect thereto
received on or after the related Cut-off
Date, other than such amounts which
were due on the Mortgage Loans on or prior
to the related Cut-off Date; (ii) the
Collection Accounts, Excess Reserve Fund
Account, the Distribution Account, and
all amounts deposited therein pursuant to
the applicable provisions of this
Agreement; (iii) property that secured a
Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or
otherwise; (iv) the Interest Rate
Cap Agreements; (v) the Closing Date
Deposit Amount; and (vi) all proceeds of
the conversion, voluntary or involuntary,
of any of the foregoing.
Trustee: Deutsche Bank National Trust Company, a national
banking
association, and its successors in interest
and, if a successor trustee is
appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to
the
product of (a) one-twelfth of the Trustee
Fee Rate and (b) (i) the aggregate
Stated Principal Balance of the Mortgage
Loans as of the first day of the
related Interest Accrual Period and (ii)
with respect to the Distribution Date
in May 2005 only, the portion of the
Closing Date Deposit Amount allocable to
principal.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.003%
per
annum.
Trustee Float Period: With respect to the Distribution Date and
the
related amounts in the Distribution
Account, the period commencing on the
Business Day immediately preceding such
Distribution Date and ending on such
Distribution Date.
Underwriters' Exemption: Any exemption listed under footnote 1
of,
and amended by, Prohibited Transaction
Exemption 2002-41, 67 Fed. Reg. 54487
(2002), or any successor exemption.
Underwriting Guidelines: The underwriting guidelines attached to
the
Purchase Agreement.
Unpaid Interest Amount: As of any Distribution Date and any Class
of
Certificates, the sum of (a) the portion of
the Accrued Certificate Interest
Distribution Amount from Distribution Dates
prior to the current Distribution
Date remaining unpaid immediately prior to
the current Distribution Date and (b)
interest on the amount in clause (a) above
at the applicable Pass-Through Rate
(to the extent permitted by applicable
law).
Unpaid Realized Loss Amount: With respect to any Class of
Subordinated Certificates and as to any
Distribution Date, is the excess of (i)
the Applied Realized Loss Amount with
respect to such Class over (ii) the sum of
(a) all distributions in reduction of such
Applied Realized Loss Amounts on all
previous Distribution Dates, and (b) the
amount by which the Class Certificate
Balance of such Class has been increased
due to the distribution of any
Subsequent Recovery on all previous
Distribution Dates. Any amounts distributed
to a Class of Subordinated Certificates in
respect of any Unpaid Realized Loss
Amount will not be applied to reduce the
Class Certificate Balance of such
Class.
Upper Tier Regular Interest: As described in the Preliminary
Statement.
Upper Tier REMIC: As described in the Preliminary Statement.
U.S. Person: (i) A citizen or resident of the United States; (ii)
a
corporation (or entity treated as a
corporation for tax purposes) created or
organized in the United States or under the
laws of the United States or of any
State thereof, including, for this purpose,
the District of Columbia; (iii) a
partnership (or entity treated as a
partnership for tax purposes) organized in
the United States or under the laws of the
United States or of any State
thereof, including, for this purpose, the
District of Columbia (unless provided
otherwise by future Treasury regulations);
(iv) an estate whose income is
includible in gross income for United
States income tax purposes regardless of
its source; or (v) a trust, if a court
within the United States is able to
exercise primary supervision over the
administration of the trust and one or
more U.S. Persons have authority to control
substantial decisions of the trust.
Notwithstanding the last clause of the
preceding sentence, to the extent
provided in Treasury regulations, certain
trusts in existence on August 20,
1996, and treated as U.S. Persons prior to
such date, may elect to continue to
be U.S. Persons.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any
Certificate. As of any date of
determination, (a) 1% of all Voting Rights
shall be allocated to the Class X
Certificates, if any (such Voting Rights to
be allocated among the holders of
Certificates of each such Class in
accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights
shall be allocated to the Class P
Certificates, if any, and (c) the remaining
Voting Rights shall be allocated
among Holders of the remaining Classes of
Certificates in proportion to the
Certificate Balances of their respective
Certificates on such date.
WAC
Cap: With respect to the Mortgage Loans as of any Distribution
Date, the product of (i) the weighted
average of the Adjusted Net Mortgage Rates
then in effect on the beginning of the
related Due Period on the Mortgage Loans
and (ii) a fraction, the numerator of which
is 30 and the denominator of which
is the actual number of days in the
Interest Accrual Period related to such
Distribution Date.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,
concurrently with the execution and
delivery hereof, hereby sells, transfers,
assigns, sets over and otherwise conveys to
the Trustee for the benefit of the
Certificateholders, without recourse, all
the right, title and interest of the
Depositor in and to the Trust Fund, and the
Trustee, on behalf of the Trust,
hereby accepts the Trust Fund.
(b) In connection with the transfer and assignment of each
Mortgage
Loan, the Depositor has delivered or caused
to be delivered to the Trustee for
the benefit of the Certificateholders the
following documents or instruments
with respect to each Mortgage Loan so
assigned:
(i) the
original Mortgage Note bearing all intervening endorsements
showing a
complete chain of endorsement from the originator to the last
endorsee,
endorsed "Pay to the order of _____________, without recourse"
and signed
(which may be by facsimile signature) in the name of the last
endorsee
by an authorized officer. To the extent that there is no room
on
the face
of the Mortgage Notes for endorsements, the endorsement may be
contained
on an allonge, unless the Trustee is advised in writing by the
Responsible Party that state law does not so allow;
(ii) the original of any guaranty executed in connection with
the
Mortgage
Note;
(iii) the original Mortgage with evidence of recording thereon or
a
certified
true copy of such Mortgage submitted for recording. If, in
connection
with any Mortgage Loan, the original Mortgage cannot be
delivered
with evidence of recording thereon on or prior to the Closing
Date
because of a delay caused by the public recording office where
such
Mortgage
has been delivered for recordation or because such Mortgage has
been lost
or because such public recording office retains the original
recorded
Mortgage, the Responsible Party shall deliver or cause to be
delivered
to the Trustee a photocopy of such Mortgage, together with (A)
in the
case of a delay caused by the public recording office, an
officer's
certificate of the Responsible Party or evidence of certification
on the
face of
such photocopy of such Mortgage or a certificate from an escrow
company, a
title company or closing attorney stating that such Mortgage
has been
dispatched to the appropriate public recording office for
recordation and that the
original recorded Mortgage or a copy of such
Mortgage
certified by such public recording office to be a true and
complete
copy of the original recorded Mortgage will be promptly
delivered
to the
Trustee upon receipt thereof by the Responsible Party; or (B)
in
the case
of a Mortgage where a public recording office retains the
original
recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such
Mortgage
certified
by such public recording office to be a true and complete copy
of the
original recorded Mortgage;
(iv) the originals of all assumption, modification, consolidation
or
extension
agreements, with evidence of recording thereon or a certified
true copy
of such agreement submitted for recording;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed
in blank;
(vi) the originals of all intervening assignments of Mortgage
(if
any)
evidencing a complete chain of assignment from the applicable
originator
to the last endorsee with evidence of recording thereon or a
certified
true copy of such intervening assignments of Mortgage submitted
for recording,
or if any such intervening assignment has not been returned
from the
applicable recording office or has been lost or if such public
recording
office retains the original recorded assignments of Mortgage,
the
Responsible Party shall deliver or cause to be delivered a
photocopy
of such
intervening assignment, together with (A) in the case of a
delay
caused by
the public recording office, an officer's certificate of the
Responsible Party or evidence of certification on the face of
such
photocopy
of such intervening assignment or a certificate from an escrow
company, a
title company or a closing attorney stating that such
intervening assignment of Mortgage has been dispatched to the
appropriate
public
recording office for recordation and that such original
recorded
intervening assignment of Mortgage or a copy of such
intervening
assignment
of Mortgage certified by the appropriate public recording
office to
be a true and complete copy of the original recorded
intervening
assignment
of Mortgage will be promptly delivered to the Trustee upon
receipt
thereof by the Responsible Party; or (B) in the case of an
intervening assignment where a public recording office retains
the
original
recorded intervening assignment or in the case where an
intervening assignment is lost after recordation in a public
recording
office, a
copy of such intervening assignment certified by such public
recording
office to be a true and complete copy of the original recorded
intervening assignment;
(vii) the original mortgagee title insurance policy or, in the
event
such
original title policy is unavailable, a certified true copy of
the
related
policy binder or commitment for title certified to be true and
complete
by the title insurance company; and
(viii) the original of any security agreement, chattel mortgage
or
equivalent
document executed in connection with the Mortgage (if
provided).
The Responsible Party shall cause to be delivered to the Trustee
the
applicable recorded document promptly upon
receipt from the respective recording
office but in no event later than 120 days
from the Closing Date.
From time to time, the Depositor or the applicable Servicer, as
applicable, shall forward to the Trustee,
additional original documents,
additional documents evidencing an
assumption, modification, consolidation or
extension of a Mortgage Loan, in accordance
with the terms of this Agreement
upon receipt of such documents. All such
mortgage documents held by the Trustee
as to each Mortgage Loan shall constitute
the "Custodial File".
On or prior to the Closing Date, the Responsible Party shall
deliver
to the Trustee, Assignments of Mortgage, in
blank, for each Mortgage Loan. The
Responsible Party shall cause the
Assignments of Mortgage and complete recording
information to be provided to the
applicable Servicer in a reasonably acceptable
manner. No later than thirty (30) Business
Days following the later of the
Closing Date and the date of receipt by the
applicable Servicer of the complete
recording information for a Mortgage, the
applicable Servicer shall promptly
submit or cause to be submitted for
recording, at the expense of the Responsible
Party and at no expense to the Trust Fund,
the Trustee, the applicable Servicer,
or the Depositor, in the appropriate public
office for real property records,
each Assignment of Mortgage referred to in
Section 2.01(b)(v). Notwithstanding
the foregoing, however, for administrative
convenience and facilitation of
servicing and to reduce closing costs, the
Assignments of Mortgage shall not be
required to be completed and submitted for
recording with respect to any
Mortgage Loan (i) if the Trustee and each
Rating Agency have received an Opinion
of Counsel, satisfactory in form and
substance to the Trustee and each Rating
Agency to the effect that the recordation
of such Assignments of Mortgage in any
specific jurisdiction is not necessary to
protect the Trustee's interest in the
related Mortgage Note or (ii) if the Rating
Agencies have each notified the
Depositor in writing that not recording any
such Assignments of Mortgage would
not cause the initial ratings on any
Offered Certificates to be downgraded or
withdrawn; provided, however, that no
Servicer shall be held responsible or
liable for any loss that occurs because an
Assignment of Mortgage was not
recorded, but only to the extent that such
Servicer does not have prior
knowledge of the act or omission that
causes such loss. However, with respect to
the Assignments of Mortgage referred to in
clauses (i) and (ii) above, if
foreclosure proceedings occur against a
Mortgaged Property, the Depositor shall
notify the applicable Servicer and the
Servicer shall record such Assignment of
Mortgage at the expense of the Responsible
Party. If the Assignment of Mortgage
is to be recorded, the Mortgage shall be
assigned to "Deutsche Bank National
Trust Company, as trustee under the Pooling
and Servicing Agreement dated as of
April 1, 2005, Morgan Stanley ABS Capital I
Inc. Trust 2005-NC2". In the event
that any such Assignment of Mortgage is
lost or returned unrecorded because of a
defect therein, the Responsible Party shall
promptly cause to be delivered a
substitute Assignment of Mortgage to cure
such defect and thereafter cause each
such assignment to be duly recorded.
In the event that such original or copy of any document
submitted
for recordation to the appropriate public
recording office is not so delivered
to the Trustee within 90 days following the
Closing Date, and in the event that
the Responsible Party does not cure such
failure within 30 days of discovery or
receipt of written notification of such
failure from the Depositor, the related
Mortgage Loan shall, upon the request of
the Depositor, be repurchased by the
Responsible Party at the price and in the
manner specified in Section 2.03. The
foregoing repurchase obligation shall not
apply in the event that the
Responsible Party cannot deliver such
original or copy of any document submitted
for recordation to the appropriate public
recording office within the specified
period due to a delay caused by the
recording office in the applicable
jurisdiction; provided, that the
Responsible Party shall instead deliver a
recording receipt of such recording office
or, if such recording receipt is not
available, an officer's certificate of an
officer of the Responsible Party,
confirming that such document has been
accepted for recording.
Notwithstanding anything to the contrary contained in this
Section
2.01, in those instances where the public
recording office retains or loses the
original Mortgage or assignment after it
has been recorded, the obligations of
the Responsible Party shall be deemed to
have been satisfied upon delivery by
the Responsible Party to the Trustee, prior
to the Closing Date of a copy of
such Mortgage or assignment, as the case
may be, certified (such certification
to be an original thereof) by the public
recording office to be a true and
complete copy of the recorded original
thereof.
(c) The Depositor does hereby establish, pursuant to the
further
provisions of this Agreement and the laws
of the State of New York, an express
trust (the "Trust") to be known, for
convenience, as "MORGAN STANLEY ABS CAPITAL
I INC. TRUST 2005-NC2" and Deutsche Bank
National Trust Company is hereby
appointed as Trustee in accordance with the
provisions of this Agreement. The
parties hereto acknowledge and agree that
it is the policy and intention of the
Trust to acquire only Mortgage Loans
meeting the requirements set forth in this
Agreement, including without limitation,
the representation and warranty set
forth in paragraph (46) of Schedule
III.
(d) The Trust shall have the capacity, power and authority, and
the
Trustee on behalf of the Trust is hereby
authorized, to accept the sale,
transfer, assignment, set over and
conveyance by the Depositor to the Trust of
all the right, title and interest of the
Depositor in and to the Trust Fund
(including, without limitation, the
Mortgage Loans) pursuant to Section 2.01(a).
The Trustee on behalf of the Trust is
hereby authorized to enter into the
Interest Rate Cap Agreements.
Section 2.02 Acceptance by the Trustee of the Mortgage Loans.
The
Trustee shall acknowledge, on the Closing
Date, receipt by the Trustee, of the
documents identified in the Initial
Certification in the form annexed hereto as
Exhibit E, and declares that it holds and
will hold such documents and the other
documents delivered to it pursuant to
Section 2.01, and that it holds or will
hold such other assets as are included in
the Trust Fund, in trust for the
exclusive use and benefit of all present
and future Certificateholders. The
Trustee shall maintain possession of the
related Mortgage Notes in the State of
California unless otherwise permitted by
the Rating Agencies.
In connection with the Closing Date, the Trustee shall be
required
to deliver via facsimile (with original to
follow the next Business Day) to the
Depositor, Countrywide and HomEq an Initial
Certification prior to the Closing
Date, or, as the Depositor agrees to, on
the Closing Date, certifying receipt of
a Mortgage Note and Assignment of Mortgage
for each Mortgage Loan. The Trustee
shall not be responsible to verify the
validity, sufficiency or genuineness of
any document in any Custodial File.
Within 90 days after the Closing Date, the Trustee shall
ascertain
that all documents identified in the
Document Certification and Exception Report
in the form attached hereto as Exhibit F
are in its possession, and shall
deliver to the Depositor, Countrywide and
HomEq a Document Certification and
Exception Report, in the form annexed
hereto as Exhibit F, to the effect 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 such
certification as an exception and not
covered by such certification): (i) all
documents identified in the Document
Certification and Exception Report and
required to be reviewed by it are in its
possession; (ii) such documents have
been reviewed by it and appear regular on
their face and relate to such Mortgage
Loan; (iii) based on its examination and
only as to the foregoing documents, the
information set forth in items (1), (2),
(7) and (9) of the Mortgage Loan
Schedule and items (1), (9) and (17) of the
Data Tape Information respecting
such Mortgage Loan is correct; and (iv)
each Mortgage Note has been endorsed as
provided in Section 2.01 of this Agreement.
The Trustee shall not be responsible
to verify the validity, sufficiency or
genuineness of any document in any
Custodial File.
The Trustee shall retain possession and custody of each
Custodial
File in accordance with and subject to the
terms and conditions set forth
herein. The applicable Servicer shall
promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals
of such other documents or
instruments constituting the Custodial File
as come into the possession of the
Servicer from time to time.
The Responsible Party shall deliver to the applicable Servicer
copies of all trailing documents required
to be included in the Custodial File
at the same time the original or certified
copies thereof are delivered to the
Trustee, including but not limited to such
documents as the title insurance
policy and any other Mortgage Loan
documents upon return from the public
recording office. The documents shall be
delivered by the Responsible Party at
the Responsible Party's expense to such
Servicer.
Section 2.03 Representations and Warranties; Remedies for
Breaches
of Representations and Warranties with
Respect to the Mortgage Loans. (a)
Countrywide hereby makes the
representations and warranties set forth in
Schedule IIA hereto to the Depositor and
the Trustee, as of the dates set forth
in such Schedule. HomEq hereby makes the
representations and warranties set
forth in Schedule IIB hereto to the
Depositor and the Trustee, as of the dates
set forth in such schedule.
(b) The Responsible Party hereby makes the representations and
warranties, set forth in Schedule III and
Schedule IV hereto, to the Depositor,
Countrywide, HomEq and the Trustee as of
the dates set forth in such Schedules.
(c) It is understood and agreed by the parties hereto that the
representations and warranties set forth in
this Section 2.03 shall survive the
transfer of the Mortgage Loans by the
Depositor to the Trustee, and shall inure
to the benefit of the Depositor and the
Trustee notwithstanding any restrictive
or qualified endorsement on any Mortgage
Note or Assignment of Mortgage or the
examination or failure to examine any
Mortgage File. Upon discovery by any of
the Responsible Party, the Depositor, the
Trustee or a Servicer of a breach of
any of the foregoing representations and
warranties, the party discovering such
breach shall give prompt written notice to
the others.
(d) Within 30 days of the earlier of either discovery by or
notice
to the Responsible Party that any Mortgage
Loan does not conform to the
requirements as determined in the Trustee's
review of the related Custodial File
or within 60 days of the earlier of either
discovery by or notice to the
Responsible Party of any breach of a
representation or warranty, set forth in
Section 2.03(b), that materially and
adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the
Certificateholders therein, the
Responsible Party shall use its best
efforts to cause to be remedied a material
defect in a document constituting part of a
Mortgage File or promptly to cure
such breach in all material respects and,
if such defect or breach cannot be
remedied, the Responsible Party shall, at
the Depositor's option as specified in
writing and provided to the Responsible
Party and the Trustee, (i) if such 30 or
60 day period, as applicable, expires prior
to the second anniversary of the
Closing Date, remove such Mortgage Loan (a
"Deleted Mortgage Loan") from the
Trust Fund and substitute in its place a
Substitute Mortgage Loan, in the manner
and subject to the conditions set forth in
this Section 2.03; or (ii) repurchase
such Mortgage Loan at the Repurchase Price;
provided, however, that any such
substitution pursuant to clause (i) above
shall not be effected prior to the
delivery to the Trustee of a Request for
Release substantially in the form of
Exhibit J, and the delivery of the Mortgage
File to the Trustee for any such
Substitute Mortgage Loan. Notwithstanding
the foregoing, a breach (i) which
causes a Mortgage Loan not to constitute a
"qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code
or (ii) by the Responsible Party of
any of the representations and warranties
set forth in clause (46), (47), (49),
(53), (55), (56), (57), (58), (59), (60),
(61), (62) or (63) of Schedule III, in
each case, will be deemed automatically to
materially and adversely affect the
value of such Mortgage Loan and the
interests of the Trustee and
Certificateholders in such Mortgage Loan.
In the event that the Trustee receives
notice of a breach by the Responsible Party
of any of the representations and
warranties set forth in clause (46), (47),
(49), (53), (55), (56), (57), (58),
(59), (60), (61), (62) or (63) of Schedule
III, the Trustee shall give notice of
such breach to the Responsible Party and
request the Responsible Party to
repurchase the Mortgage Loan at the
Repurchase Price within sixty (60) days of
the Responsible Party receipt of such
notice. The Responsible Party shall
repurchase each such Mortgage Loan within
60 days of the earlier of discovery or
receipt of notice with respect to each such
Mortgage Loan, and in any case such
repurchase shall occur or shall be deemed
to occur on the last day of the
applicable Prepayment Period preceding the
Distribution Date on which the
Repurchase Price is to be distributed.
(e) With respect to any Substitute Mortgage Loan or Loans, the
Responsible Party shall deliver to the
Trustee for the benefit of the
Certificateholders the Mortgage Note, the
Mortgage, the related Assignment of
Mortgage, and such other documents and
agreements as are required by Section
2.01, with the Mortgage Note endorsed and
the Mortgage assigned as required by
Section 2.01. No substitution is permitted
to be made in any calendar month
after the Determination Date for such
month. Scheduled Payments due with respect
to Substitute Mortgage Loans in the Due
Period of substitution shall not be part
of the Trust Fund and will be retained by
the Responsible Party on the next
succeeding Distribution Date. For the Due
Period of substitution, distributions
to Certificateholders will include the
Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and
thereafter the Responsible Party shall be
entitled to retain all amounts received in
respect of such Deleted Mortgage
Loan.
(f) The applicable Servicer, based upon information provided by
the
Responsible Party, shall amend the Mortgage
Loan Schedule for the benefit of the
Certificateholders to reflect the removal
of such Deleted Mortgage Loan and the
substitution of the Substitute Mortgage
Loan or Loans and such Servicer shall
deliver the amended Mortgage Loan Schedule
to the Trustee. Upon such
substitution, the Substitute Mortgage Loan
or Loans shall be subject to the
terms of this Agreement in all respects,
and the Responsible Party shall be
deemed to have made with respect to such
Substitute Mortgage Loan or Loans, as
of the date of substitution, the
representations and warranties made pursuant to
Section 2.03(b) with respect to such
Mortgage Loan. Upon any such substitution
and the deposit into the related Collection
Account of the amount required to be
deposited therein in connection with such
substitution as described in the
following paragraph, the Trustee shall
release the Mortgage File held for the
benefit of the Certificateholders relating
to such Deleted Mortgage Loan to the
Responsible Party and shall execute and
deliver at the Responsible Party's
direction such instruments of transfer or
assignment prepared by the Responsible
Party, in each case without recourse, as
shall be necessary to vest title in the
Responsible Party, of the Trustee's
interest in any Deleted Mortgage Loan
substituted for pursuant to this Section
2.03.
(g) For any month in which the Responsible Party substitutes one
or
more Substitute Mortgage Loans for one or
more Deleted Mortgage Loans, the
applicable Servicer will determine the
amount (if any) by which the aggregate
unpaid principal balance of all such
Substitute Mortgage Loans as of the date of
substitution is less than the aggregate
unpaid principal balance of all such
Deleted Mortgage Loans. The amount of such
shortage plus an amount equal to the
sum of (i) any accrued and unpaid interest
on the Deleted Mortgage Loans and
(ii) all unreimbursed Servicing Advances
with respect to such Deleted Mortgage
Loans (collectively, the "Substitution
Adjustment Amount") shall be remitted by
the Responsible Party to the applicable
Servicer for deposit into the related
Collection Account on or before the
Distribution Account Deposit Date for the
Distribution Date in the month succeeding
the calendar month during which the
related Mortgage Loan became required to be
purchased or replaced hereunder.
(h) In addition to such repurchase or substitution obligation,
the
Responsible Party shall indemnify the
Depositor and its Affiliates, the
Servicers, the Purchaser, the Trustee and
the Trust and hold such parties
harmless against any losses, damages,
penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs,
judgments and other costs and
expenses resulting from any claim, demand,
defense or assertion based on or
grounded upon, or resulting from, a breach
by the Responsible Party of any of
its representations and warranties or
obligations contained in this Agreement.
(i) In the event that the Responsible Party shall have repurchased
a
Mortgage Loan, the Repurchase Price
therefor shall be deposited by the
applicable Servicer into the related
Collection Account pursuant to Section 3.10
on or before the Distribution Account
Deposit Date for the Distribution Date
following the Prepayment Period during
which the Responsible Party became
obligated hereunder to repurchase such
Mortgage Loan and upon such deposit of
the Repurchase Price and receipt of a
Request for Release in the form of Exhibit
J hereto, the Trustee shall release the
related Custodial File held for the
benefit of the Certificateholders to such
Person as directed by the applicable
Servicer, and the Trustee shall execute and
deliver at such Person's direction
such instruments of transfer or assignment
prepared by such Person, in each case
without recourse, as shall be necessary to
transfer title from the Trustee.
It is understood and agreed that the obligation of the
Responsible
Party under this Agreement to cure,
repurchase or substitute any Mortgage Loan
as to which a breach of a representation
and warranty has occurred and is
continuing and satisfaction of any related
indemnification obligations of the
Responsible Party set forth in Section
2.03(h), shall constitute the sole
remedies against such Person respecting
such breach available to
Certificateholders, the Depositor, the
Servicers or the Trustee on their behalf.
The provisions of this Section 2.03 shall survive delivery of
the
respective Custodial Files to the Trustee
for the benefit of the
Certificateholders.
Section 2.04 Execution and Delivery of Certificates. The
Trustee
acknowledges the transfer and assignment to
it of the Trust Fund and,
concurrently with such transfer and
assignment, has executed and delivered to or
upon the order of the Depositor, the
Certificates in authorized denominations
evidencing directly or indirectly the
entire ownership of the Trust Fund. The
Trustee agrees to hold the Trust Fund and
exercise the rights referred to above
for the benefit of all present and future
Holders of the Certificates.
Section 2.05 REMIC Matters. The Preliminary Statement sets forth
the
designations for federal income tax
purposes of all interests created hereby.
The "Startup Day" for purposes of the REMIC
Provisions shall be the Closing
Date. The "latest possible maturity date"
is the Distribution Date occurring in
March 2035, which is the Distribution Date
in the month following the month in
which the latest maturity date of any
Mortgage Loan occurs.
Section 2.06 Representations and Warranties of the Depositor.
The
Depositor hereby represents, warrants and
covenants to the Trustee and the
Servicers that as of the date of this
Agreement or as of such date specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly
existing
and in good standing under the laws of the
State of Delaware;
(b) The Depositor has the corporate power and authority to
convey
the Mortgage Loans and to execute, deliver
and perform, and to enter into and
consummate the transactions contemplated
by, this Agreement;
(c) This Agreement has been duly and validly authorized,
executed
and delivered by the Depositor, all
requisite corporate action having been
taken, and, assuming the due authorization,
execution and delivery hereof by the
other parties hereto, constitutes or will
constitute the legal, valid and
binding agreement of the Depositor,
enforceable against the Depositor in
accordance with its terms, except as such
enforcement may be limited by
bankruptcy, insolvency, reorganization,
moratorium or other similar laws
relating to or affecting the rights of
creditors generally, and by general
equity principles (regardless of whether
such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration
or filing with, or notice to, any
governmental authority or court is required
for the execution, delivery and performance
of or compliance by the Depositor
with this Agreement or the consummation by
the Depositor of any of the
transactions contemplated hereby, except as
have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions
contemplated hereby or thereby, or the
fulfillment of or compliance with the terms
and conditions of this Agreement,
(i) conflicts or will conflict with or
results or will result in a breach of, or
constitutes or will constitute a default or
results or will result in an
acceleration under (A) the charter or
bylaws of the Depositor, or (B) of any
term, condition or provision of any
material indenture, deed of trust, contract
or other agreement or instrument to which
the Depositor or any of its
subsidiaries is a party or by which it or
any of its subsidiaries is bound; (ii)
results or will result in a violation of
any law, rule, regulation, order,
judgment or decree applicable to the
Depositor of any court or governmental
authority having jurisdiction over the
Depositor or its subsidiaries; or (iii)
results in the creation or imposition of
any lien, charge or encumbrance which
would have a material adverse effect upon
the Mortgage Loans or any documents or
instruments evidencing or securing the
Mortgage Loans;
(f) There are no actions, suits or proceedings before or against
or
investigations of, the Depositor pending,
or to the knowledge of the Depositor,
threatened, before any court,
administrative agency or other tribunal, and no
notice of any such action, which, in the
Depositor's reasonable judgment, might
materially and adversely affect the
performance by the Depositor of its
obligations under this Agreement, or the
validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order
or
decree of any court or any order,
regulation or demand of any federal, state,
municipal or governmental agency that may
materially and adversely affect its
performance hereunder; and
(h) Immediately prior to the transfer and assignment by the
Depositor to the Trustee on the Closing
Date, the Depositor had good title to,
and was the sole owner of each Mortgage
Loan, free of any interest of any other
Person, and the Depositor has transferred
all right, title and interest in each
Mortgage Loan to the Trustee. The transfer
of the Mortgage Note and the Mortgage
as and in the manner contemplated by this
Agreement is sufficient either (i)
fully to transfer to the Trustee, for the
benefit of the Certificateholders, all
right, title, and interest of the Depositor
thereto as note holder and mortgagee
or (ii) to grant to the Trustee, for the
benefit of the Certificateholders, the
security interest referred to in Section
10.04.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.06
shall survive delivery of the
respective Custodial Files to the Trustee
and shall inure to the benefit of the
Trustee.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicers to Service Mortgage Loans. (a) For and
on
behalf of the Certificateholders, each
Servicer shall service and administer the
Mortgage Loans for which it is acting as
Servicer in accordance with the terms
of this Agreement and the respective
Mortgage Loans and, to the extent
consistent with such terms, in the same
manner in which it services and
administers similar mortgage loans for its
own portfolio, giving due
consideration to customary and usual
standards of practice of mortgage lenders
and loan servicers administering similar
mortgage loans but without regard to:
(i) any relationship that such Servicer, any Subservicer or any
Affiliate
of such Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or non ownership of any Certificate by such
Servicer
or any Affiliate of such Servicer;
(iii) such Servicer's obligation to make P&I Advances or
Servicing
Advances;
or
(iv) such Servicer's or any Subservicer's right to receive
compensation for its services hereunder or with respect to any
particular
transaction.
To the extent consistent with the foregoing, each Servicer
shall
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, each Servicer
shall have full power and authority, acting
alone or through Subservicers 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, each Servicer in
its own name or in the name of a
Subservicer is hereby authorized and empowered
by the Trustee when the Servicer believes
it appropriate in its best judgment in
accordance with Accepted Servicing
Practices, to execute and deliver 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. Each 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. Each Servicer
covenants that its computer and other
systems used in servicing the Mortgage
Loans operate in a manner such that the
Servicer can service the Mortgage Loans
in accordance with the terms of this
Pooling and Servicing Agreement. Each
Servicer shall also comply in the
performance of this Agreement with all
reasonable rules and requirements of each
insurer under any standard hazard
insurance policy. Subject to Section 3.16,
the Trustee shall execute, at the
written request of a Servicer, and furnish
to such Servicer and any Subservicer
such documents provided to the Trustee as
are necessary or appropriate to enable
such Servicer or any Subservicer to carry
out its servicing and administrative
duties hereunder, and the Trustee hereby
grants to each Servicer, and this
Agreement shall constitute, a power of
attorney to carry out such duties,
including a power of attorney in the form
of Exhibit O hereto to take title to
Mortgaged Properties after foreclosure in
the name of and on behalf of the
Trustee. The Trustee shall execute a
separate power of attorney in favor of each
Servicer for the purposes described herein
to the extent necessary or desirable
to enable each Servicer to perform its
duties hereunder. The Trustee shall not
be liable for the actions of any Servicer
or any Subservicers under such powers
of attorney. Notwithstanding anything
contained herein to the contrary, no
Servicer or Subservicer shall without the
Trustee's consent: (i) initiate any
action, suit or proceeding solely under the
Trustee's name without indicating
such Servicer's or Subservicer's, as
applicable, representative capacity, or
(ii) take any action with the intent to, or
which actually does cause, the
Trustee to be registered to do business in
any state.
(b) Subject to Section 3.09(b), in accordance with the standards
of
the preceding paragraph, each 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(b), and
further as provided in Section 3.11.
Any cost incurred by a Servicer or by
Subservicers in effecting the timely
payment of taxes and assessments on a
Mortgaged Property shall not be added to
the unpaid principal balance of the related
Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so
permit.
(c) Notwithstanding anything in this Agreement to the contrary,
a
Servicer may not make any future advances
with respect to a Mortgage Loan
(except as provided in Section 4.01) and
none of the Servicers shall (i) permit
any modification with respect to any
Mortgage Loan that would change the
Mortgage 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 (except for a
reduction of interest payments resulting
from the application of the Servicemembers
Civil Relief Act or any similar state
statutes) 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 Upper Tier
REMIC or the Lower Tier REMIC to fail to
qualify as a REMIC under the Code or
the imposition of any tax on "prohibited
transactions" or "contributions after
the startup date" under the REMIC
Provisions, or (iii) except as provided in
Section 3.07(a), waive any Prepayment
Charges.
(d) Each Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such
delegation shall release that
Servicer from the responsibilities or
liabilities arising under this Agreement.
(e) In the event that the Mortgage Loan Documents relating to
any
Mortgage Loan contain provisions requiring
the related Mortgagor to submit to
binding arbitration with respect to any
disputes arising in connection with such
Mortgage Loan, the applicable Servicer
shall be entitled to waive any such
provisions on behalf of the Trust and to
send written notice of such waiver to
the related Mortgagor, although the
Mortgagor may still require arbitration of
such disputes at its option.
Section 3.02 Subservicing Agreements between a Servicer and
Subservicers. (a) Each Servicer may enter
into subservicing agreements with
subservicers (each, a "Subservicer"), for
the servicing and administration of
the Mortgage Loans ("Subservicing
Agreements"). The applicable Servicer shall,
within a reasonable period of time, give
notice to the Trustee of any such
Subservicing Agreement. The Trustee shall
not be required to review or consent
to such Subservicing Agreements and shall
have no liability in connection
therewith.
(b) Each Subservicer 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
Subservicer to perform its obligations
hereunder and under the Subservicing
Agreement, (ii) an institution approved as
a mortgage loan originator by the
Federal Housing Administration or an
institution that has deposit accounts
insured by the FDIC and (iii) a Freddie Mac
or Fannie Mae approved mortgage
servicer. Each Subservicing Agreement must
impose on the Subservicer
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.
Each Servicer will examine each
Subservicing Agreement to which it is a party
and will be familiar with the terms
thereof. The terms of any Subservicing
Agreement will not be inconsistent with any
of the provisions of this Agreement.
Each Servicer and the respective
Subservicers may enter into and make amendments
to the Subservicing Agreements or enter
into different forms of Subservicing
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 Trustee,
without the consent of the Trustee. Any
variation without the consent of the
Trustee from the provisions set forth in
Section 3.08 relating to insurance or
priority requirements of Subservicing
Accounts, or credits and charges to the
Subservicing Accounts or the timing and
amount of remittances by the
Subservicers to such Servicer, are
conclusively deemed to be inconsistent with
this Agreement and therefore prohibited.
Each Servicer shall deliver to the
Trustee and the Depositor copies of all
Subservicing Agreements, and any
amendments or modifications thereof,
promptly upon such Servicer's execution and
delivery of such instruments.
(c) As part of its servicing activities hereunder, each
Servicer
(except as otherwise provided in the last
sentence of this paragraph), for the
benefit of the Trustee, shall enforce the
obligations of each Subservicer under
the related Subservicing Agreement to which
such Servicer is a party, including,
without limitation, any obligation to make
advances in respect of delinquent
payments as required by a Subservicing
Agreement. Such enforcement, including,
without limitation, the legal prosecution
of claims, termination of Subservicing
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 such Servicer, in its good
faith business judgment, would require were
it the owner of the related Mortgage
Loans. Each Servicer shall pay the costs of
such enforcement at its own expense,
and shall be reimbursed therefor only (i)
from a general recovery resulting from
such enforcement, to the extent, if any,
that such recovery exceeds all amounts
due in respect of the related Mortgage
Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against
the party against whom such
enforcement is directed.
Section 3.03 Successor Subservicers. Each Servicer shall be
entitled
to terminate any Subservicing Agreement to
which such Servicer is a party and
the rights and obligations of any
Subservicer pursuant to any such Subservicing
Agreement in accordance with the terms and
conditions of such Subservicing
Agreement. In the event of termination of
any Subservicer, all servicing
obligations of such Subservicer shall be
assumed simultaneously by the
applicable Servicer party to the related
Subservicing Agreement without any act
or deed on the part of such Subservicer or
such Servicer, and such Servicer
either shall service directly the related
Mortgage Loans or shall enter into a
Subservicing Agreement with a successor
Subservicer which qualifies under
Section 3.02.
Any Subservicing Agreement shall include the provision that
such
agreement may be immediately terminated by
the Depositor or the Trustee without
fee, in accordance with the terms of this
Agreement, in the event that the
Servicer party to the related Subservicing
Agreement shall, for any reason, no
longer be a Servicer (including termination
due to an Event of Default).
Section 3.04 Liability of the Servicers. Notwithstanding any
Subservicing Agreement, any of the
provisions of this Agreement relating to
agreements or arrangements between a
Servicer and a Subservicer or reference to
actions taken through a Subservicer or
otherwise, such Servicer shall remain
obligated and primarily liable to the
Trustee for the servicing and
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
Subservicing Agreements or arrangements or
by virtue of indemnification from the
Subservicer and to the same extent and
under the same terms and conditions as if
such Servicer alone were servicing and
administering such Mortgage Loans. Each
Servicer shall be entitled to enter into
any agreement with a Subservicer for
indemnification of such Servicer by such
Subservicer and nothing contained in
this Agreement shall be deemed to limit or
modify such indemnification.
Section 3.05 No Contractual Relationship between Subservicers
and
the Trustee. Any Subservicing Agreement
that may be entered into and any
transactions or services relating to the
Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to
be between the Subservicer and the
related Servicer alone, and the Trustee (or
any successor to such Servicer)
shall not be deemed a party thereto and
shall have no claims, rights,
obligations, duties or liabilities with
respect to the Subservicer except as set
forth in Section 3.06. Each Servicer shall
be solely liable for all fees owed by
it to any Subservicer, irrespective of
whether such Servicer's compensation
pursuant to this Agreement is sufficient to
pay such fees.
Section 3.06 Assumption or Termination of Subservicing Agreements
by
Trustee. In the event a Servicer at any
time shall for any reason no longer be a
Servicer (including by reason of the
occurrence of an Event of Default), the
Trustee, or its designee, or the successor
Servicer if the successor is not the
Trustee, shall thereupon assume all of the
rights and obligations of such
Servicer under each Subservicing Agreement
that such Servicer may have entered
into, with copies thereof provided to the
Trustee, or the successor Servicer if
the successor is not the Trustee, prior to
the Trustee, or the successor
Servicer if the successor is not the
Trustee, assuming such rights and
obligations, unless the Trustee elects to
terminate any Subservicing Agreement
in accordance with its terms as provided in
Section 3.03.
Upon such assumption, the Trustee, its designee or the
successor
Servicer shall be deemed, subject to
Section 3.03, to have assumed all of such
Servicer's interest therein and to have
replaced such Servicer as a party to
each Subservicing Agreement to which the
predecessor Servicer was a party to the
same extent as if each Subservicing
Agreement had been assigned to the assuming
party, except that (i) such Servicer shall
not thereby be relieved of any
liability or obligations under any such
Subservicing Agreement that arose before
it ceased to be a Servicer and (ii) none of
the Depositor, the Trustee, their
designees or any successor to such Servicer
shall be deemed to have assumed any
liability or obligation of such Servicer
that arose before it ceased to be a
Servicer.
Such Servicer at its expense shall, upon request of the Trustee,
its
designee or the successor Servicer deliver
to the assuming party all documents
and records relating to each Subservicing
Agreement to which it is a party and
the Mortgage Loans then being serviced by
it 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 Subservicing Agreements to the
assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments. (a)
Each
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 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 and Accepted Servicing
Practices, each Servicer may (i) waive any
late payment charge or, if
applicable, any penalty interest, or (ii)
extend the due dates for the Scheduled
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 Servicer
shall make timely advances on such
Mortgage Loan during such extension
pursuant to Section 4.01 and in accordance
with the amortization schedule of such
Mortgage Loan without modification
thereof by reason of such arrangements,
subject to Section 4.01(d) pursuant to
which the Servicer shall not be required to
make any such advances that are
Nonrecoverable P&I Advances.
Notwithstanding the foregoing, the Servicer may
waive, in whole or in part, a Prepayment
Charge only under the following
circumstances: (i) such waiver relates to a
default or a reasonably foreseeable
default and would, in the reasonable
judgment of the Servicer, maximize recovery
of total proceeds taking into account the
value of such Prepayment Charge and
the related Mortgage Loan, (ii) such
Prepayment Charge is not permitted to be
collected by applicable federal, state or
local law or regulation or (iii) the
collection of such Prepayment Charge would
be considered "predatory" pursuant to
written guidance published or issued by any
applicable federal, state or local
regulatory authority acting in its official
capacity and having jurisdiction
over such matters. If a Prepayment Charge
is waived other than as permitted by
the prior sentence, then the applicable
Servicer is required to pay the amount
of such waived Prepayment Charge, for the
benefit of the Holders of the Class P
Certificates, by depositing such amount
into the related Collection Account
together with and at the time that the
amount prepaid on the related Mortgage
Loan is required to be deposited into the
Collection Account; provided, however,
that the applicable Servicer shall not have
an obligation to pay the amount of
any uncollected Prepayment Charge if the
failure to collect such amount is the
direct result of inaccurate or incomplete
information on the Mortgage Loan
Schedule in effect at such time.
(b) (i) The Trustee shall establish and maintain the Excess
Reserve
Fund Account, on behalf of the Class X
Certificateholders, to receive any Basis
Risk Payment and any Interest Rate Cap
Payment and to secure their limited
recourse obligation to pay to the Offered
Certificateholders Basis Risk
CarryForward Amounts.
(ii) On each Distribution Date, the Trustee shall deposit the
amount
of any
Basis Risk Payment and any Interest Rate Cap Payment for such
date
into the
Excess Reserve Fund Account.
(c) (i) On each Distribution Date on which there exists a Basis
Risk
CarryForward Amount on any Class of
Certificates, the Trustee shall (1) withdraw
from the Distribution Account and deposit
in the Excess Reserve Fund Account, as
set forth in Section 4.02(a)(iii)(S), the
lesser of (x) the Class X
Distributable Amount (without regard to the
reduction in the definition thereof
with respect to the Basis Risk Payment) (to
the extent remaining after the
distributions specified in Sections
4.02(a)(iii)(A)-(U)) and (y) the aggregate
Basis Risk CarryForward Amounts for such
Distribution Date and (2) withdraw from
the Excess Reserve Fund Account amounts
necessary to pay to such Class or
Classes of Certificates the Basis Risk
CarryForward Amount. Such payments shall
be allocated to those Classes on a pro rata
basis based upon the amount of Basis
Risk CarryForward Amount owed to each such
Class and shall be paid in the
priority set forth in Sections
4.02(a)(iii)(T)-(U).
(ii) The Trustee shall account for the Excess Reserve Fund
Account
as an
asset of a grantor trust under subpart E, Part I of the subchapter
J
of the
Code and not as an asset of any REMIC created pursuant to this
Agreement.
The beneficial owners of the Excess Reserve Fund Account are
the Class
X Certificateholders. For all federal tax purposes, amounts
transferred by the Upper Tier REMIC to the Excess Reserve Fund
Account
shall be
treated as distributions by the Trustee to the Class X
Certificateholders.
(iii) Any Basis Risk CarryForward Amounts paid by the Trustee to
the
Offered
Certificateholders shall be accounted for by the Trustee as
amounts
paid first to the Holders of the Class X Certificates and then
to
the
respective Class or Classes of Offered Certificates. In addition,
the
Trustee
shall account for the Offered Certificateholders' rights to
receive
payments of Basis Risk CarryForward Amounts as rights in a
limited
recourse
interest rate cap contract written by the Class X
Certificateholders in favor of the Offered Certificateholders.
(iv) Notwithstanding any provision contained in this Agreement,
the
Trustee
shall not be required to make any payments from the Excess
Reserve
Fund
Account except as expressly set forth in this Section 3.07(c)
and
Sections
4.02(a)(iii)(T) and (U).
(d) The Trustee shall establish and maintain the Distribution
Account on behalf of the
Certificateholders. The Depositor shall cause the
Closing Date Deposit Amount to be deposited
into the Distribution Account on the
Closing Date. The Trustee shall, promptly
upon receipt, deposit in the
Distribution Account and retain therein the
following:
(i) the aggregate amount remitted by the Servicers to the
Trustee
pursuant
to Section 3.11;
(ii) any amount deposited by the Servicers pursuant to Section
3.12(b) in
connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required to
be
deposited
in the Distribution Account.
In the event that any Servicer shall remit any amount not
required
to be remitted, it may at any time direct
the Trustee in writing to withdraw
such amount from the Distribution Account,
any provision herein to the contrary
notwithstanding. Such direction may be
accomplished by delivering notice to the
Trustee which describes the amounts
deposited in error in the Distribution
Account. All funds deposited in the
Distribution Account shall be held by the
Trustee in trust for the Certificateholders
until disbursed in accordance with
this Agreement or withdrawn in accordance
with Section 4.02.
(e) The Trustee may invest the funds in the Distribution Account,
in
one or more Permitted Investments, in
accordance with Section 3.12. Each
Servicer shall direct the Trustee to
withdraw from the Distribution Account and
to remit to such Servicer no less than
monthly, all income and gain realized
from the investment of the portion of funds
deposited in the Distribution
Account by such Servicer (except during the
Trustee Float Period). The Trustee
may withdraw from the Distribution Account
any income or gain earned from the
investment of funds deposited therein
during the Trustee Float Period for its
own benefit.
(f) Each Servicer shall give notice to the Trustee of any
proposed
change of the location of the related
Collection Account within a reasonable
period of time prior to any change thereof
and the Trustee shall forward such
notice to the Rating Agencies and the
Depositor.
(g) In order to comply with its duties under the USA Patriot Act
of
2001, the Trustee shall obtain and verify
certain information and documentation
from the other parties to this Agreement
including, but not limited to, each
such party's name, address, and other
identifying information.
Section 3.08 Subservicing Accounts. In those cases where a
Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement,
the Subservicer will be required to
establish and maintain one or more accounts
(collectively, the "Subservicing Account").
The Subservicing Account shall be an
Eligible Account and shall otherwise be
acceptable to the related Servicer. The
Subservicer 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 Subservicer's
receipt thereof, all proceeds of Mortgage
Loans received by the Subservicer less
its servicing compensation to the extent
permitted by the Subservicing
Agreement, and shall thereafter deposit
such amounts in the Subservicing
Account, in no event more than two Business
Days after the deposit of such funds
into the clearing account. The Subservicer
shall thereafter deposit such
proceeds in the Collection Account of the
related Servicer or remit such
proceeds to the related Servicer for
deposit in the Collection Account of the
related Servicer not later than two
Business Days after the deposit of such
amounts in the Subservicing Account. For
purposes of this Agreement, such
Servicer shall be deemed to have received
payments on the Mortgage Loans when
the Subservicer receives such payments.
Section 3.09 Collection of Taxes, Assessments and Similar
Items;
Escrow Accounts. (a) Each Servicer shall
enforce the obligations under each
paid-in-full, life-of-the-loan tax service
contract in effect with respect to
each First Lien Mortgage Loan (each, a "Tax
Service Contract") serviced by such
Servicer. Each Tax Service Contract shall
be assigned to the Trustee, or a
successor Servicer at the applicable
Servicer's expense in the event that a
Servicer is terminated as Servicer of the
related Mortgage Loan.
(b) To the extent that the services described in this paragraph
(b)
are not otherwise provided pursuant to the
Tax Service Contracts described in
paragraph (a) above, each Servicer
undertakes to perform such functions with
respect to the Mortgage Loans serviced by
such Servicer. To the extent the
related Mortgage provides for Escrow
Payments, the related Servicer shall
establish and maintain, or cause to be
established and maintained, one or more
accounts (the "Escrow Accounts"), which
shall be Eligible Accounts. Each
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 Servicer's
receipt thereof, all collections from the
Mortgagors (or related advances from
Subservicers) for the payment of taxes,
assessments, hazard insurance premiums
and comparable items for the account of the
Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans
and shall thereafter deposit such
Escrow Payments in the Escrow 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 an
Escrow Account may be made only to (i)
effect payment of taxes, assessments,
hazard insurance premiums, and comparable
items; (ii) reimburse such Servicer (or a
Subservicer to the extent provided in
the related Subservicing Agreement) out of
related collections for any advances
made pursuant to Section 3.01 (with respect
to taxes and assessments) and
Section 3.13 (with respect to hazard
insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages;
(iv) pay interest, if required and as
described below, to Mortgagors on balances
in the Escrow Account; (v) clear and
terminate the Escrow Account at the
termination of such Servicer's obligations
and responsibilities in respect of the
Mortgage Loans under this Agreement; (vi)
to transfer such funds to a replacement
Escrow Account that meets the
requirements hereof; or (vii) recover
amounts deposited in error. As part of its
servicing duties, each Servicer or
Subservicers shall pay to the Mortgagors
interest on funds in Escrow Accounts, to
the extent required by law and, to the
extent that interest earned on funds in the
Escrow 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 applicable 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 applicable
Servicer assumes full responsibility for
the payment of all such bills within
such time 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; provided, however, that such
advances are deemed to be Servicing
Advances.
Section 3.10 Collection Accounts. (a) On behalf of the Trustee,
each
Servicer shall establish and maintain, or
cause to be established and
maintained, one or more separate Eligible
Accounts (each such account or
accounts, a "Collection Account"), held in
trust for the benefit of the Trustee.
On behalf of the Trustee, each 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 such
Servicer's receipt thereof, and shall
thereafter deposit in the related
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 related 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;
(ii) all payments on account of interest (net of the related
Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Condemnation Proceeds to the
extent
such
Insurance Proceeds and Condemnation Proceeds are not to be applied
to
the
restoration of the related Mortgaged Property or released to
the
related
Mortgagor in accordance with the express requirements of law or
in
accordance
with Accepted Servicing Practices and Liquidation Proceeds;
(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 related Collection Account;
(v) any amounts required to be deposited by such Servicer
pursuant
to the
second paragraph of Section 3.13(a) in respect of any blanket
policy
deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased
in
accordance
with this Agreement; and
(vii) all Prepayment Charges collected or paid (pursuant to
Section
3.07(a))
by such Servicer.
The foregoing requirements for deposit in the Collection
Accounts
shall be exclusive, it being understood and
agreed that, without limiting the
generality of the foregoing, payments in
the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees
and other similar fees and charges need
not be deposited by each Servicer in the
related Collection Account and shall,
upon collection, belong to the applicable
Servicer as additional compensation
for its servicing activities. In the event
a Servicer shall deposit in the
related Collection Account any amount not
required to be deposited therein, it
may at any time withdraw such amount from
its Collection Account, any provision
herein to the contrary notwithstanding.
(b) Funds in the Collection Accounts may be invested in
Permitted
Investments in accordance with the
provisions set forth in Section 3.12. Each
Servicer shall give notice to the Trustee
of the location of the related
Collection Account maintained by it when
established and prior to any change
thereof in accordance with Section
3.07(f).
Section 3.11 Withdrawals from the Collection Accounts. (a) Each
Servicer shall, from time to time, make
withdrawals from the related Collection
Account for any of the following purposes
or as described in Section 4.01:
(i) on or prior to each Remittance Date, to remit to the Trustee
(A)
the
Trustee Fee with respect to such Distribution Date and (B) all
Available
Funds in respect of the related Distribution Date together with
all
amounts representing Prepayment Charges from the Mortgage Loans
received
during the related Prepayment Period;
(ii) to reimburse such Servicer for P&I Advances, but only to
the
extent of
amounts received which represent Late Collections (net of the
related
Servicing Fees) of Scheduled Payments on Mortgage Loans with
respect to
which such P&I Advances were made in accordance with the
provisions
of Section 4.01 (such Servicer's right for recovery or
reimbursement has priority over the Trust);
(iii) to pay such Servicer or any Subservicer (a) any unpaid
Servicing
Fees or (b) any unreimbursed Servicing Advances with respect to
each
Mortgage Loan serviced by such Servicer or Subservicer, but only
to
the extent
of any Late Collections, Liquidation Proceeds, Condemnation
Proceeds,
Insurance Proceeds or other amounts as may be collected by the
Servicer
from a Mortgagor, or otherwise received with respect to such
Mortgage
Loan (or the related REO Property) (such Servicer's right for
recovery
or reimbursement has priority over the Trust);
(iv) to pay to such Servicer as servicing compensation (in
addition
to the
Servicing Fee) on the Remittance Date any interest or
investment
income
earned on funds deposited in its Collection Account;
(v) to pay to the Responsible Party, with respect to each
Mortgage
Loan that
has previously been repurchased or replaced pursuant to this
Agreement
all amounts received thereon subsequent to the date of purchase
or
substitution, as the case may be;
(vi) to reimburse such Servicer for any P&I Advance or
Servicing
Advance
previously made which such Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance
in
accordance
with the provisions of Section 4.01 and (B) any unpaid
Servicing
Fees related to any Second Lien Mortgage Loan to the extent not
recoverable from Liquidation Proceeds, Insurance Proceeds or other
amounts
received
with respect to the related Second Lien Mortgage Loan under
Section
3.11(a)(iii) (such Servicer's right for recovery or
reimbursement
has
priority over the Trust);
(vii) to pay, or to reimburse such Servicer for advances in
respect
of,
expenses incurred in connection with any Mortgage Loan serviced
by
such
Servicer pursuant to Section 3.15 (such Servicer's right for
recovery
or
reimbursement has priority over the Trust);
(viii) to reimburse such Servicer or the Depositor for expenses
incurred
by or reimbursable to such Servicer or the Depositor, as the
case
may be,
pursuant to Section 6.03 (such Servicer's right for recovery or
reimbursement has priority over the Trust);
(ix) to reimburse such Servicer or the Trustee, as the case may
be,
for
expenses reasonably incurred in respect of the breach or defect
giving
rise to
the repurchase obligation of the Responsible Party under this
Agreement
that were included in the Repurchase Price of the Mortgage
Loan,
including
any expenses arising out of the enforcement of the repurchase
obligation, to the extent not otherwise paid pursuant to the terms
hereof
(such
Servicer's right for recovery or reimbursement has priority over
the
Trust);
(x) to withdraw any amounts deposited in the related Collection
Account in
error;
(xi) to withdraw any amounts held in the related Collection
Account
and not
required to be remitted to the Trustee on the Remittance Date
occurring
in the month in which such amounts are deposited into such
Collection
Account, to reimburse such Servicer for unreimbursed P&I
Advances;
(xii) to invest funds in Permitted Investments in accordance
with
Section
3.12; and
(xiii) to clear and terminate the related Collection Account
upon
termination of this Agreement.
(b) Each Servicer shall keep and maintain separate accounting, on
a
Mortgage Loan by Mortgage Loan basis, for
the purpose of justifying any
withdrawal from the related Collection
Account, to the extent held by or on
behalf of it, pursuant to subclauses
(a)(ii), (iii), (v), (vi), (vii), (viii)
and (ix) above. Each Servicer shall provide
written notification (as set forth
in Section 4.01(d)) to the Trustee, on or
prior to the next succeeding
Remittance Date, upon making any
withdrawals from the related Collection Account
pursuant to subclause (a)(vi) above.
Section 3.12 Investment of Funds in the Collection Accounts and
the
Distribution Account. (a) Each Servicer may
invest the funds in the related
Collection Account and the related Escrow
Account (to the extent permitted by
law and the related Mortgage Loan
documents) and the Trustee may (but is not
obligated to) invest funds in the
Distribution Account during the Trustee Float
Period, and, with respect to the portion of
funds in the Distribution Account
deposited by a Servicer, shall (except
during the Trustee Float Period) invest
such funds in the Distribution Account at
the direction of such Servicer (for
purposes of this Section 3.12, such
Accounts are referred to as an "Investment
Account"), in one or more Permitted
Investments bearing interest or sold at a
discount, and maturing, unless payable on
demand, 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; provided, however, that the
Trustee shall have no obligation to invest
funds deposited into the Distribution
Account by a Servicer on the Remittance
Date later than 10:00 a.m. (Pacific
Standard Time). If no investment
instruction is given in a timely manner, the
Trustee shall hold the funds in the
Distribution Account uninvested. All such
Permitted Investments shall be held to
maturity, unless payable on demand. Any
investment of funds in an Investment
Account (other than investments made during
the Trustee Float Period) shall be made in
the name of the applicable Servicer.
The applicable Servicer shall be entitled
to sole possession (except with
respect to investment direction of funds
and any income and gain realized on any
investment in the Distribution Account
during the Trustee Float Period) over
each such related investment, and any
certificate or other instrument evidencing
any such investment shall be delivered
directly to the applicable Servicer (with
a copy to the Trustee or its agent if
related to investment of funds in the
Distribution Account not during the Trustee
Float Period), or with respect to
investments during the Trustee Float
Period, the Trustee or its agent, together
with any document of transfer necessary to
transfer title to such investment to
the applicable Servicer, or with respect to
investments during the Trustee Float
Period, the Trustee or its agent. In the
event amounts on deposit in an
Investment Account are at any time invested
in a Permitted Investment payable on
demand, the applicable Servicer, or with
respect to investments during the
Trustee Float Period, the Trustee may:
(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 that such
Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in an
Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the related Collection Account
or Escrow Account held by or on
behalf of the related Servicer, shall be
for the benefit of such Servicer and
shall be subject to its withdrawal in the
manner set forth in Section 3.11. Such
Servicer shall deposit in its Collection
Account or Escrow Account, as
applicable, the amount of any loss of
principal incurred in respect of any such
Permitted Investment made with funds in
such accounts immediately upon
realization of such loss.
(c) All income and gain realized from the investment of the
portion
of funds deposited in the Distribution
Account by a Servicer and held by the
Trustee, shall be for the benefit of such
Servicer (except for any income or
gain realized from the investment of funds
on deposit in the Distribution
Account during the Trustee Float Period,
which shall be for the benefit of the
Trustee) and shall be subject to the
Trustee's withdrawal in the manner set
forth in Section 3.07(e). Each Servicer
shall deposit in the Distribution
Account (except with respect to losses
incurred during the Trustee Float Period)
the amount of any loss of principal
incurred in respect of any such related
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 shall take such
action as may be appropriate to enforce
such payment or performance, including the
institution and prosecution of
appropriate proceedings.
(e) The Trustee shall not be liable for the amount of any loss
incurred with respect of any investment or
lack of investment of funds held in
any Investment Account or the Distribution
Account (except that if any losses
are incurred from the investment of funds
deposited in the Distribution Account
during the Trustee Float Period, the
Trustee shall be responsible for
reimbursing the Trust for such loss) if
made in accordance with this Section
3.12.
(f) The Trustee or its Affiliates are permitted to receive
additional compensation that could be
deemed to be in the Trustee's economic
self-interest for (i) serving as investment
adviser, administrator, shareholder,
servicing agent, custodian or sub-custodian
with respect to certain of the
Permitted Investments, (ii) using
Affiliates to effect transactions in certain
Permitted Investments and (iii) effecting
transactions in certain Permitted
Investments. Such compensation shall not be
considered an amount that is
reimbursable or payable pursuant to this
Agreement.
Section 3.13 Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage. (a) Each
Servicer shall cause to be maintained
for each Mortgage Loan serviced by such
Servicer fire insurance with extended
coverage on the related Mortgaged Property
in an amount which is at least equal
to the least of (i) the outstanding
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. Each
Servicer shall also cause to be maintained
fire insurance with extended coverage on
each REO Property serviced by such
Servicer 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 Mortgage Rate and related
Servicing Advances. Each 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 any 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 such 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 related
Collection Account, subject to withdrawal
pursuant to Section 3.11. Any cost
incurred by any Servicer in maintaining any
such insurance shall not, for the
purpose of calculating distributions to the
Trustee, 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
or other additional insurance is to be
required of any Mortgagor other than
pursuant to such applicable laws and
regulations as shall at any time be in
force and as shall require such additional
insurance. If the Mortgaged Property
or REO Property is at any time in an area
identified in the Federal Register by
the Federal Emergency Management Agency as
having special flood hazards and
flood insurance has been made available,
the applicable 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 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).
In the event that any Servicer shall obtain and maintain a
blanket
policy with an insurer either (i)
acceptable to Fannie Mae or Freddie Mac or
(ii) having a General Policy Rating of A:X
or better from Best's (or such other
rating that is comparable to such rating)
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 3.13, it
being understood and agreed that such
policy may contain a deductible clause, in
which case such 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 3.13, and there shall have been one
or more losses which would have been
covered by such policy, deposit to the
related 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, each
Servicer agrees to prepare and present, on
behalf of itself and the Trustee
claims under any such blanket policy in a
timely fashion in accordance with the
terms of such policy.
(b) Each 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 such
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 such Servicer has
obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. Each
Servicer shall also maintain a fidelity
bond in the form and amount that would meet
the requirements of Fannie Mae or
Freddie Mac, unless such Servicer has
obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. Each
Servicer shall provide the Trustee upon
request with copies of any such insurance
policies and fidelity bond. Each
Servicer shall be deemed to have complied
with this provision if an Affiliate of
the applicable 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 such
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.
Each Servicer shall also cause each
Subservicer to maintain a policy of
insurance covering errors and omissions and
a fidelity bond which would meet such
requirements.
Section 3.14 Enforcement of Due-On-Sale Clauses; Assumption
Agreements. Each 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 no
Servicer shall be required to take such
action if, in its sole business
judgment, such Servicer believes it is not
in the best interests of the Trust
Fund and shall not exercise any such rights
if prohibited by law from doing so.
If a Servicer reasonably believes it is
unable under applicable law to enforce
such "due-on-sale" clause or if any of the
other conditions set forth in the
proviso to the preceding sentence apply,
such 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. Each 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 such Servicer and such
substitution is in the best interest of the
Certificateholders as determined by
such Servicer. In connection with any
assumption, modification or substitution,
such 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. No
Servicer shall take or enter into any
assumption and modification agreement,
however, unless (to the extent practicable
in the circumstances) it shall have
received confirmation, in writing, of the
continued effectiveness of any
applicable hazard insurance policy, or a
new policy meeting the requirements of
this Section is obtained. Any fee collected
by a Servicer in respect of an
assumption or substitution of liability
agreement will be retained by such
Servicer as additional servicing
compensation. In connection with any such
assumption, no material term of the
Mortgage Note (including but not limited to
the related Mortgage Rate and the amount of
the Scheduled Payment) may be
amended or modified, except as otherwise
required pursuant to the terms thereof.
Each Servicer shall notify the Trustee that
any such substitution, modification
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, a 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 such Servicer may be
restricted by law from preventing, for any
reason whatsoever. For purposes of this
Section 3.14, 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 3.15 Realization upon Defaulted Mortgage Loans. Each
Servicer shall use its best efforts,
consistent with Accepted Servicing
Practices, to foreclose upon or otherwise
comparably convert (which may include
an acquisition of REO Property) 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, and which are not
released from this Agreement
pursuant to any other provision hereof.
Each Servicer shall use reasonable
efforts to realize upon such defaulted
Mortgage Loans in such manner as will
maximize the receipt of principal and
interest by the Trustee, taking into
account, among other things, the timing of
foreclosure proceedings; provided,
however, with respect to any Second Lien
Mortgage Loan for which the related
first lien mortgage loan is not included in
the Trust Fund, if, after such
Mortgage Loan becomes 180 days or more
delinquent, the applicable Servicer
determines that a significant net recovery
is not possible through foreclosure,
such Mortgage Loan may be charged off and
the Mortgage Loan will be treated as a
Liquidated Mortgage Loan giving rise to a
Realized Loss. The foregoing is
subject to the provisions that, in any case
in which Mortgaged Property shall
have suffered damage from an uninsured
cause, a Servicer shall not be required
to expend its own funds toward the
restoration of such property unless it shall
determine in its sole discretion (i) that
such restoration will increase the net
proceeds of liquidation of the related
Mortgage Loan to the Trustee, after
reimbursement to itself for such expenses,
and (ii) that such expenses will be
recoverable by such Servicer through
Insurance Proceeds, Condemnation Proceeds
or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in
Section 3.11. Each Servicer shall be
responsible for all other costs and
expenses incurred by it in any such
proceedings; provided, however, that it
shall be entitled to reimbursement thereof
from the related property, as
contemplated in Section 3.11.
The proceeds of any liquidation or REO Disposition, as well as
any
recovery resulting from a partial
collection of Insurance Proceeds, Condemnation
Proceeds or Liquidation Proceeds or any
income from an REO Property, will be
applied in the following order of priority:
first, to reimburse the applicable
Servicer or any Subservicer for any related
unreimbursed Servicing Advances,
pursuant to Section 3.11 or 3.17; second,
to reimburse the applicable Servicer
for any related unreimbursed P&I
Advances, pursuant to Section 3.11; third, to
accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the
Mortgage Rate, to the date of the
liquidation or REO Disposition, or to the Due
Date prior to the Remittance Date on which
such amounts are to be distributed if
not in connection with a liquidation or REO
Disposition; and fourth, as a
recovery of principal of the Mortgage Loan.
If the amount of the recovery so
allocated to interest is less than a full
recovery thereof, that amount will be
allocated as follows: first, to unpaid
Servicing Fees; and second, as interest
at the Mortgage Rate (net of the Servicing
Fee Rate). The portion of the
recovery so allocated to unpaid Servicing
Fees shall be reimbursed to the
applicable Servicer or any Subservicer
pursuant to Section 3.11 or 3.17. The
portions of the recovery so allocated to
interest at the Mortgage Rate (net of
the Servicing Fee Rate) and to principal of
the Mortgage Loan shall be applied
as follows: first, to reimburse the
applicable Servicer or any Subservicer for
any related unreimbursed Servicing Advances
in accordance with Section 3.11 or
3.17, and second, to the Trustee in
accordance with the provisions of Section
4.02, subject to the last paragraph of
Section 3.17 with respect to certain
excess recoveries from an REO
Disposition.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance
of a deed in lieu of foreclosure, in
the event a Servicer has received actual
notice of, or has actual knowledge of
the presence of, hazardous or toxic
substances or wastes on the related
Mortgaged Property, or if the Trustee
otherwise requests, such Servicer shall
cause an environmental inspection or review
of such Mortgaged Property to be
conducted by a qualified inspector. Upon
completion of the inspection, such
Servicer shall promptly provide the Trustee
and the Depositor with a written
report of the environmental inspection.
After reviewing the environmental inspection report, the
applicable
Servicer shall determine consistent with
Accepted Servicing Practices how the
Servicer shall proceed with respect to the
Mortgaged Property. In the event (a)
the environmental inspection report
indicates that the Mortgaged Property is
contaminated by hazardous or toxic
substances or wastes and (b) the applicable
Servicer determines, consistent with
Accepted Servicing Practices, to proceed
with foreclosure or acceptance of a deed in
lieu of foreclosure, such Servicer
shall be reimbursed for all reasonable
costs associated with such foreclosure or
acceptance of a deed in lieu of foreclosure
and any related environmental
clean-up costs, as applicable, from the
related Liquidation Proceeds, or if the
Liquidation Proceeds are insufficient to
fully reimburse such Servicer, such
Servicer shall be entitled to be reimbursed
from amounts in the related
Collection Account pursuant to Section
3.11. In the event the applicable
Servicer determines not to proceed with
foreclosure or acceptance of a deed in
lieu of foreclosure, such Servicer shall be
reimbursed from general collections
for all Servicing Advances made with
respect to the related Mortgaged Property
from the related Collection Account
pursuant to Section 3.11. The Trustee shall
not be responsible for any determination
made by the applicable Servicer
pursuant to this paragraph or
otherwise.
In the event a Servicer elects to charge-off a Second Lien
Mortgage
Loan 180 days or more delinquent pursuant
to this Section 3.15, no Second Lien
Mortgage Loan shall be characterized as a
Liquidated Mortgage Loan, unless the
Depositor consents in writing to such
characterization after the applicable
Servicer has provided the Depositor with a
combined equity analysis of such
Second Lien Mortgage Loan and the related
first lien mortgage loan; provided,
that if the Depositor has failed to notify
the applicable Servicer within 3
Business Days of receipt of such combined
equity analysis, then the Depositor
shall be deemed to have consented to such
characterization.
Section 3.16 Release of Mortgage Files. (a) Upon the payment in
full
of any Mortgage Loan, or the receipt by a
Servicer of a notification that
payment in full shall be escrowed in a
manner customary for such purposes, such
Servicer will, on or before the last day of
the month in which such payment in
full occurs, notify the Trustee by a
certification (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 related
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 Custodial File by
submitting a Request for Release to the
Trustee. Upon receipt of such
certification and Request for Release, the
Trustee shall promptly release the
related Custodial File to such Servicer
within five (5) Business Days. No
expenses incurred in connection with any
instrument of satisfaction or deed of
reconveyance shall be chargeable to the
related Collection Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan,
including, for this purpose, collection under
any Insurance Policy relating to the
Mortgage Loans, the Trustee shall, upon
request of such Servicer and delivery to
the Trustee of a Request for Release,
release the related Custodial File to such
Servicer, and the Trustee shall, at
the direction of such Servicer, execute
such documents as shall be necessary to
the prosecution of any such proceedings and
such Servicer shall retain the
Mortgage File in trust for the benefit of
the Trustee. Such Request for Release
shall obligate the applicable Servicer to
return each and every document
previously requested from the Custodial
File to the Trustee when the need
therefor by such Servicer no longer exists,
unless the Mortgage Loan has been
charged-off or liquidated and the
Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the related
Collection Account or the Mortgage File
or such document has been delivered to an
attorney, or to a public trustee or
other public official as required by law,
for purposes of initiating or pursuing
legal action or other proceedings for the
foreclosure of the Mortgaged Property
either judicially or non-judicially, and
such Servicer has delivered to the
Trustee a certificate of a Servicing
Officer certifying as to the name and
address of the Person to which such
Mortgage File or such document was delivered
and the purpose or purposes of such
delivery. Upon receipt of a certificate of a
Servicing Officer stating that such
Mortgage Loan was charged-off or liquidated
and that all amounts received or to be
received in connection with such
liquidation that are required to be
deposited into the related Collection
Account have been so deposited, or that
such Mortgage Loan has become an REO
Property, a copy of the Request for Release
shall be released by the Trustee to
the applicable Servicer or its designee
upon request therefor. Upon receipt of a
Request for Release under this Section
3.16, the Trustee shall deliver the
related Custodial File to the requesting
Servicer by overnight courier (which
delivery shall be at such Servicer's
expense); provided, however, that in the
event a Servicer has not previously
received copies of the relevant Mortgage
Loan Documents necessary to service the
related Mortgage Loan in accordance with
Accepted Servicing Practices, the
Responsible Party shall reimburse the
applicable Servicer for any overnight
courier charges incurred for the requested
Custodial Files.
Upon written certification of a Servicing Officer, the Trustee
shall
execute and deliver to the applicable
Servicer copies of any court pleadings,
requests for trustee's sale or other
documents reasonably necessary to the
foreclosure or trustee's sale in respect of
a Mortgaged Property or to any legal
action brought to obtain judgment against
any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency
judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or
Mortgage or otherwise available at law
or in equity, or shall exercise and deliver
to such Servicer a power of attorney
sufficient to authorize such Servicer to
execute such documents on its behalf.
Each such certification shall include a
request that such pleadings or documents
be executed by the Trustee and a statement
as to the reason such documents or
pleadings are required and that the
execution and delivery thereof by the
Trustee will not invalidate or otherwise
affect the lien of the Mortgage, except
for the termination of such a lien upon
completion of the foreclosure or
trustee's sale.
Section 3.17 Title, Conservation and Disposition of REO
Property.
(a) This Section shall apply only to REO
Properties acquired for the account of
the Trustee and shall not apply to any REO
Property relating to a Mortgage Loan
which was purchased or repurchased from the
Trustee pursuant to any provision
hereof. In the event that title to any such
REO Property is acquired, the
applicable Servicer shall cause the deed or
certificate of sale to be issued in
the name of the Trustee, on behalf of the
Certificateholders. Upon written
request by the applicable Servicer, the
Trustee shall provide such Servicer with
a power of attorney, in the form of Exhibit
O hereto, with respect to such REO
Property.
(b) Each Servicer shall manage, conserve, protect and operate
each
related REO Property for the Trustee solely
for the purpose of its prompt
disposition and sale. Each Servicer, either
itself or through an agent selected
by such Servicer, shall manage, conserve,
protect and operate the REO Property
in the same manner that it manages,
conserves, protects and operates other
foreclosed property for its own account,
and in the same manner that similar
property in the same locality as the REO
Property is managed. Each Servicer
shall attempt to sell the same (and may
temporarily rent the same for a period
not greater than one year, except as
otherwise provided below) on such terms and
conditions as such Servicer deems to be in
the best interest of the Trustee. The
Trustee shall have no obligations with
respect to any REO Dispositions.
(c) Each Servicer shall segregate and hold all funds collected
and
received in connection with the operation
of any REO Property separate and apart
from its own funds and general assets and
shall deposit such funds in the
related Collection Account.
(d) Each Servicer shall deposit net of reimbursement to such
Servicer for any related outstanding
Servicing Advances and unpaid Servicing
Fees provided in Section 3.11, or cause to
be deposited, on a daily basis in the
related Collection Account all revenues
received with respect to the related REO
Property and shall withdraw therefrom funds
necessary for the proper operation,
management and maintenance of the REO
Property.
(e) Each Servicer, upon an REO Disposition, shall be entitled
to
reimbursement for any related unreimbursed
Servicing Advances as well as any
unpaid Servicing Fees from proceeds
received in connection with the REO
Disposition, as further provided in Section
3.11.
(f) Any net proceeds from an REO Disposition which are in excess
of
the unpaid principal balance of the related
Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date
of the REO Disposition shall be
retained by the applicable Servicer as
additional servicing compensation.
(g) Each Servicer shall use its reasonable best efforts to sell,
or
cause its Subservicer to sell, in
accordance with Accepted Servicing Practices,
any REO Property serviced by such Servicer
or Subservicer as soon as possible,
but in no event later than the conclusion
of the third calendar year beginning
after the year of its acquisition by the
Lower Tier REMIC unless (i) such
Servicer applies for an extension of such
period from the Internal Revenue
Service pursuant to the REMIC Provisions
and Code Section 856(e)(3), in which
event such REO Property shall be sold
within the applicable extension period, or
(ii) such Servicer obtains for the Trustee
an Opinion of Counsel, addressed to
the Depositor, the Trustee and such
Servicer, to the effect that the holding by
the Lower Tier REMIC of such REO Property
subsequent to such period will not
result in the imposition of taxes on
"prohibited transactions" as defined in
Section 860F of the Code or cause the Lower
Tier REMIC or Upper Tier REMIC to
fail to qualify as a REMIC under the REMIC
Provisions or comparable provisions
of relevant state laws at any time. Each
Servicer shall manage, conserve,
protect and operate each REO Property
serviced by such Servicer for the Trustee
solely for the purpose of its prompt
disposition and sale in a manner which does
not cause such REO Property to fail to
qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) or result
in the receipt by the Lower Tier
REMIC of any "income from non-permitted
assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net
income from foreclosure property" which is
subject to taxation under Section
860G(a)(1) of the Code. Pursuant to its
efforts to sell such REO Property, the
applicable Servicer shall either itself
or through an agent selected by such
Servicer protect and conserve such REO
Property in the same manner and to such
extent as is customary in the locality
where such REO Property is located and may,
incident to its conservation and
protection of the interests of the Trustee
on behalf of the Certificateholders,
rent the same, or any part thereof, as such
Servicer deems to be in the best
interest of the Trustee on behalf of the
Certificateholders for the period prior
to the sale of such REO Property; provided,
however, that any rent received or
accrued with respect to such REO Property
qualifies as "rents from real
property" as defined in Section 856(d) of
the Code.
Section 3.18 Notification of Adjustments. With respect to each
Adjustable Rate Mortgage Loan, the
applicable Servicer shall adjust the Mortgage
Rate on the related Adjustment Date and
shall adjust the Scheduled Payment on
the related mortgage payment adjustment
date, if applicable, in compliance with
the requirements of applicable law and the
related Mortgage and Mortgage Note.
In the event that the applicable Index
becomes unavailable or otherwise
unpublished, the applicable Servicer shall
select a comparable alternative index
over which it has no direct control and
which is readily verifiable. Each
Servicer shall execute and deliver any and
all necessary notices required under
applicable law and the terms of the related
Mortgage Note and Mortgage regarding
the Mortgage Rate and Scheduled Payment
adjustments. Each Servicer shall
promptly, upon written request therefor,
deliver to the Trustee such
notifications and any additional applicable
data regarding such adjustments and
the methods used to calculate and implement
such adjustments. Upon the discovery
by a Servicer or the receipt of notice from
the Trustee that a Servicer has
failed to adjust a Mortgage Rate or
Scheduled Payment in accordance with the
terms of the related Mortgage Note, such
Servicer shall deposit in the related
Collection Account from its own funds
the
