EXHIBIT 4
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MORGAN STANLEY ABS CAPITAL I INC.,
Depositor,
COUNTRYWIDE HOME LOANS SERVICING LP,
Servicer,
WMC MORTGAGE CORP.,
Responsible Party,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Custodian
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2005
------------------------------------------
MORGAN STANLEY ABS CAPITAL I INC. TRUST 2005-WMC1
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2005-WMC1
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<PAGE>
TABLE OF CONTENTS
Page
----
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 Servicer
to Service Mortgage Loans...........................
Section 3.02
Subservicing Agreements between the Servicer and
Subservicers................................................
Section 3.03 Successor
Subservicers.......................................
Section 3.04 Liability
of the Servicer....................................
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 Account...........................................
Section 3.11
Withdrawals from the Collection Account......................
Section 3.12
Investment of Funds in the Collection Account 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
Servicer 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 SERVICER
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 SERVICER
Section 6.01
Respective Liabilities of the Depositor and the Servicer.....
Section 6.02 Merger or
Consolidation of the Depositor or the Servicer.....
Section 6.03
Limitation on Liability of the Depositor, the Servicer
and Others..................................................
Section 6.04
Limitation on Resignation of the Servicer....................
Section 6.05
Additional Indemnification by the Servicer; 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 and the Custodian......
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............................
Section 8.14 Custodial
Responsibilities...................................
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.........................................
Section 10.13 Opinions of Internal Counsel of the Responsible
Party........
SCHEDULES
Schedule I
Mortgage Loan Schedule
Schedule II
Representations and Warranties of the Servicer
Schedule III
Representations and Warranties of the Responsible Party as to
the Mortgage Loans
Schedule IV
Representations and Warranties of the Responsible Party as to
the Responsible Party
Schedule V
Representations and Warranties of the Depositor as to the
Mortgage Loans
Schedule VI
Representations and Warranties of the Custodian
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 and Custodian
Exhibit F
Form of Document Certification and Exception Report of Trustee
and Custodian
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
Servicer Power of Attorney
Exhibit P
Purchase Agreement
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of February 1,
2005,
among MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation, as
depositor
(the "Depositor"), COUNTRYWIDE HOME LOANS SERVICING LP, a Texas
limited
partnership, as servicer (the "Servicer"), WMC MORTGAGE CORP., a
California
corporation, as responsible party (the "Responsible Party"), WELLS
FARGO BANK,
NATIONAL ASSOCIATION, a national banking association, as custodian
(the
"Custodian"), 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 LIBOR
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-1mz, Class LT-A-2a, Class LT-A-2b, Class LT-A-2c, 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 LIBOR
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.
Lower
Tier
Corresponding
Lower Tier
Interest
Initial Lower Tier
Upper Tier
Class Designation 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-2a
(1) 1/2
initial Corresponding
A-2a
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-2b
(1) 1/2
initial Corresponding
A-2b
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-2c
(1) 1/2
initial Corresponding
A-2c
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 and Class
LT-Group II
Class LT-Group I
(2)
0.001% aggregate Stated
Principal
Balance of
Group I Mortgage Loans (4)
Class LT-Group II
(3)
0.001% aggregate Stated
Principal Balance of Group
II Mortgage Loans (4)
Class LT-R
(5)
(5)
------------
(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) 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.
(4) For all
Distribution Dates, the Lower Tier Principal Amount of these
Lower
Tier
Regular Interests shall be rounded to eight decimal places.
(5) 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 shall be allocated (i) 50% to the Class LT-Accrual
Interest, the
Class LT-Group I Interest and the Class LT-Group II Interest (and
further
allocated among these Lower Tier Regular Interests in the manner
described
below) and (ii) 50% to the LT Accretion Directed Classes (principal
payments
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 and the Class LT-Group II 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. As among the Class
LT-Accrual
Interest, the Class LT-Group I Interest and the Class LT-Group II
Interest, all
payments of scheduled principal and prepayments of principal
generated by the
Mortgage Loans, and all Realized Losses, allocable to such Lower
Tier Regular
Interests shall be allocated (i) to the Class LT-Group I Interest
and the Class
LT-Group II 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.
Upper Tier
Interest Rate Initial Upper
Tier
and
Principal Amount
Corresponding and
Corresponding
Corresponding
Upper Tier
Class
Class Certificate
Class of
Class Designation
Pass-Through
Rate
Balance
Certificates
------------------- -----------------
----------------- -----------------
Class A-1ss
(1)
$425,115,000
Class A-1ss(9)
Class A-1mz
(2)
$106,279,000
Class A-1mz(9)
Class A-2a
(3)
$166,533,000
Class A-2a(9)
Class A-2b
(4)
$185,000,000
Class A-2b(9)
Class A-2c
(5)
$37,000,000
Class A-2c(9)
Class M-1
(6)
$39,024,000
Class M-1(9)
Class M-2
(6)
$35,006,000
Class M-2(9)
Class M-3
(6)
$22,382,000
Class M-3(9)
Class M-4
(6)
$20,085,000
Class M-4(9)
Class M-5
(6)
$18,364,000
Class M-5(9)
Class M-6
(6)
$17,217,000
Class M-6(9)
Class B-1
(6)
$16,069,000
Class
B-1(9)
Class B-2
(6)
$12,625,000
Class B-2(9)
Class B-3
(6)
$12,625,000
Class B-3(9)
Class X
(7)
$0 (7) Class X(7)
Class UT-R
(8)
$0 (8) Class R
------------
(1) The Class
A-1ss 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 0.4225%, (ii) the
Loan Group
I Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.8450%, (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 0.2900%, (ii) the
Loan Group
I Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.5800%, (ii) the Loan Group I Cap and (iii)
the WAC
Cap.
(3) The Class
A-2a 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 0.1000%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.2000%, (ii) the Loan
Group II
Cap and (iii) the WAC Cap.
(4) The Class
A-2b 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 0.2200%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.4400%, (ii) the Loan Group II Cap and (iii)
the WAC
Cap.
(5) The Class
A-2c 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 0.3500%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.7000%, (ii) the Loan Group II Cap and (iii)
the WAC
Cap.
(6) 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
0.4700%,
0.4900%,
0.5200%, 0.6900%, 0.7300%, 0.8000%, 1.2200%, 1.3000% and
2.1500%,
respectively, and (ii) the WAC Cap or (b) after the Optional
Termination
Date, the
lesser of (i) LIBOR plus 0.7050%, 0.7350%, 0.7800%, 1.0350%,
1.0950%,
1.2000%, 1.8300%, 1.9500% and 3.2250%, respectively, and (ii)
the
WAC
Cap.
(7) The Class X
Interest has an initial principal balance of $34,433,233, 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 Rates on each of the Class
LT-Accrual
Interest, Class LT-Group I Interest and Class LT-Group II
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 LIBOR
Certificates. Such rights of the Class X Certificateholders and
LIBOR
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.
(8) 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.
(9) 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-2a,
Class A-2b
and Class A-2c 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.
LIBOR Certificates........... Class A and Subordinated
Certificates.
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 A-1ss, 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.
<PAGE>
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 Account, 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 LIBOR 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 the 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 the 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
LIBOR 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 Servicer 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 Servicer
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 Servicer 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
Depositor or the Responsible Party, as applicable, as of such
Distribution Date;
(vi) the proceeds received with respect to the termination of the
Trust Fund
pursuant to clause (a) of Section 9.01; and (vii) the Closing Date
Deposit
Amount; reduced by (y) amounts in reimbursement for Advances
previously made
with respect to the Mortgage Loans and other amounts as to which
the Servicer,
the Depositor, the Custodian 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
LIBOR
Certificates, as of any Distribution Date, the sum of (A) if on
such
Distribution Date the Pass-Through Rate for any Class of LIBOR
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 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 payable on such
Class of
Certificates at, with respect to each Class of Group I Class A
Certificates, the
lesser of the Loan Group I Cap or the WAC Cap, with respect to each
Class of
Group II Class A Certificates, the lesser of the Loan Group II Cap
or the WAC
Cap, and with respect to each other Class of LIBOR 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, Texas or Delaware, (b) the State in which the
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
the 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 or
the
Group II Class A Certificates, as applicable.
Class A Certificates: The Class A-1ss, Class A-1mz, Class A-2a,
Class A-2b and Class A-2c 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; and (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.
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) 60.30% 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 $5,738,786.
Class A-1mz Certificates: All Certificates bearing the class
designation of "Class A-1mz".
Class A-1ss Certificates: All Certificates bearing the class
designation of "Class A-1ss".
Class A-2a Certificates: All Certificates bearing the class
designation of "Class A-2a".
Class A-2b Certificates: All Certificates bearing the class
designation of "Class A-2b".
Class A-2c Certificates: All Certificates bearing the class
designation of "Class A-2c".
Class B Cap Agreement: The interest rate cap agreement, dated
February 24, 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) 89.60% 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 $5,738,786.
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) 91.80% 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
$5,738,786.
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) 94.00% 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 $5,738,786.
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
February 24, 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 and Class M-3
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) 67.10%
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
$5,738,786.
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) 73.20% 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
$5,738,786.
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) 77.10% 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 $5,738,786.
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) 80.60% 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
$5,738,786.
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) 83.80% 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 $5,738,786.
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) approximately 86.80% 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 $5,738,786.
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: February 24, 2005.
Closing Date Deposit Amount: $326.77 (all of which is allocable
to
principal) deposited by the Depositor into the Distribution Account
on the
Closing Date. $22.01 of the Closing Date Deposit Amount shall be
attributable to
the Group I Mortgage Loans, and $304.76 of the Closing Date Deposit
Amount shall
be attributable to the Group II 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 any Mortgage Loan) and (b) the amount of the
Servicing Fee
payable to the 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-MS05W1, 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 any REMIC
created
under this Agreement that corresponds to the class of interests in
another 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-2a
Class A-2a
Class A-2a
Class LT-A-2b
Class A-2b
Class A-2b
Class LT-A-2c
Class A-2c
Class A-2c
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
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
------------------------------
--------------------------
March 2008 through February 2009
3.000% for the first
month, plus an
additional 1/12th of
1.750% for each
month thereafter
(e.g., 3.875% in
September 2008)
March 2009 through February 2010
4.750% for the first
month, plus an
additional 1/12th of
1.500% for each
month thereafter
(e.g., 5.500% in
September 2009)
March 2010 through February 2011
6.250% for the first
month, plus an
additional 1/12th of
0.750% for each
month thereafter
(e.g., 6.625% in
September 2010)
March 2011 and thereafter
7.000%
Custodial File: With respect to each Mortgage Loan, the file
retained by the Trustee or Custodian, as applicable, consisting of
items (a)-(h)
as listed on Exhibit K hereto.
Custodian: Wells Fargo Bank, National Association, a national
banking association, and its successors in interest.
Custodian Fee: With respect to each Distribution Date, the
aggregate
amount of fees and expenses that the Custodian is entitled to
receive, pursuant
to the fee schedule related to the Wells Fargo Mortgage Loans to
which the
Depositor and the Custodian have previously agreed, for custodial
services
rendered with respect to the Wells Fargo Mortgage Loans during the
related Due
Period. The Custodian shall inform the Servicer and the Trustee of
the Custodian
Fee on or prior to the related Determination Date.
Custodian Fee Rate: As to any Distribution Date, the Custodian
Fee
for such Distribution Date, converted to a per annum rate on (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
Determination Date
in March 2005 only, the portion of the Closing Date Deposit Amount
allocable to
principal (calculated on an actual/360 basis).
Cut-off Date: February 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 Mortgage Loan 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, term
and amount of Prepayment Charges applicable to such Mortgage Loan,
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
Loan-to-Value Ratio
at origination, and with respect to each Second Lien Mortgage Loan,
the Combined
Loan-to-Value Ratio 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 Stated Principal
Balances 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 40% 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-WMC1 Mortgage Pass-Through Certificates, Series
2005-WMC1".
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 March
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 the
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 as specified in writing. 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-WMC1, Mortgage
Pass-Through
Certificates, Series 2005-WMC1". 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, the
Custodian 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, the Custodian 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 any Mortgage Loan or REO
Property purchased
by the Responsible Party or the Depositor as contemplated by this
Agreement), a
determination made by the Servicer that all Insurance Proceeds,
Condemnation
Proceeds, Liquidation Proceeds and other payments or recoveries
which the
Servicer, in its reasonable good faith judgment, expects to be
finally
recoverable in respect thereof have been so recovered. The Servicer
shall
maintain records, prepared by a Servicing Officer, of each Final
Recovery
Determination made thereby.
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...................................
January
2035
Class A-1mz Certificates...................................
January
2035
Class A-2a Certificates....................................
January
2035
Class A-2b Certificates....................................
January
2035
Class A-2c Certificates....................................
January
2035
Class M-1 Certificates.....................................
January
2035
Class M-2 Certificates.....................................
January
2035
Class M-3 Certificates.....................................
January
2035
Class M-4 Certificates.....................................
January
2035
Class M-5 Certificates.....................................
January
2035
Class M-6 Certificates.....................................
January
2035
Class B-1 Certificates.....................................
January
2035
Class B-2 Certificates.....................................
January
2035
Class B-3 Certificates.....................................
January
2035
Class X Certificates.......................................
January
2035
Class P Certificates.......................................
January
2035
Class R Certificates.......................................
January
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-WMC1, or such other address
as Fitch may
hereafter furnish to the Depositor, the Trustee and the
Servicer.
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 February 24, 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 and Class A-1mz
Certificates, collectively.
Group I Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group I Mortgage Loans.
Group I Sequential Trigger Event: (a) With respect to any
Distribution Date occurring before March 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
equals or exceeds
3.00% and (b) with respect to any Distribution Date occurring in or
after March
2008, a Trigger Event.
Group II Class A Cap Agreement: The interest rate cap
agreement,
dated February 24, 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-2a Certificates, the
Class A-2b Certificates and the Class A-2c Certificates,
collectively.
Group II Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group II Mortgage Loans.
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 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 under
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 the
Group I Class A
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
under 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 the
Group II Class A
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 Class M
Certificates and the first 45 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 under
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 the Class M Cap Agreement for
such
Distribution Date and (iii) the multiplier set forth on Schedule A
to such
Interest Rate Cap Agreement; and (d) with respect to the Class B
Certificates
and the first 45 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 under 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 the Class B 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
LIBOR
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 Certificates: As specified in the Preliminary Statement.
LIBOR Determination Date: With respect to any Interest Accrual
Period for the LIBOR 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 either
(a) was
liquidated in the calendar month preceding the month of such
Distribution Date
and as to which the 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,
or (b) is a
Second Lien Mortgage Loan (1) that is delinquent 180 days or
longer, (2) for
which the related first lien mortgage loan is not a Mortgage Loan,
and (3) as to
which the Servicer has certified to the Trustee that it does not
believe there
is a reasonable likelihood that any further net proceeds will be
received or
recovered with respect to such Second Lien Mortgage Loan.
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 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, adjusted in each case to accrue on the basis of a
360-day year
and the actual number of days in the related Interest Accrual
Period.
Loan Group II Cap: With respect to the Group II Mortgage Loans as
of
any Distribution Date, 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, adjusted in each case to accrue on the basis of a
360-day year
and the actual number of days in the related Interest Accrual
Period.
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-2a, Class LT-A-2b, Class LT-A-2c, 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 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.
MERS: Mortgage Electronic Registration Systems, Inc., a
Delaware
corporation, and its successors in interest.
MERS Custodian: With respect to each MERS Designated Mortgage
Loan,
the Person named on the MERS System as the custodian pursuant to
the MERS
Procedures Manual.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Servicer on behalf of the Trust has designated or will designate
MERS as, and
has taken or will take such action as is necessary to cause MERS to
be, the
mortgagee of record, as nominee for the Trust, in accordance with
MERS Procedure
Manual, (b) the Servicer has designated or will designate the Trust
as the MERS
Investor on the MERS System, and (c) the Servicer has designated or
will
designate the Trustee as the MERS Custodian on the MERS System.
MERS Interim Funder: With respect to each MERS Designated
Mortgage
Loan, the Person named on the MERS System as the interim funder
pursuant to the
MERS Procedures Manual.
MERS Investor: With respect to each MERS Designated Mortgage
Loan,
the Person named on the MERS System as the investor pursuant to the
MERS
Procedures Manual.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
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 Servicer.
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 First Lien Mortgage Loan, the Loan-to-Value
Ratio at
origination, and with respect to each Second Lien Mortgage Loan,
the Combined
Loan-to-Value Ratio at origination; (12) with respect to each
Adjustable Rate
Mortgage Loan, the next Interest Rate Adjustment Date; (13) with
respect to each
Adjustable Rate Mortgage Loan, the lifetime Mortgage Rate Cap; (14)
whether the
Mortgage Loan is convertible or not; (15) the Servicing Fee; (16)
whether such
Mortgage Loan is a Group I Mortgage Loan or a Group II Mortgage
Loan; (17) the
date such Mortgage Loan was sold by the Responsible Party to the
Purchaser; (18)
whether such Mortgage Loan provides for a Prepayment Charge as well
as the term
and amount of such Prepayment Charge, if any; and (19) whether
Wells Fargo Bank,
National Association will be acting as Custodian with respect to
such Mortgage
Loan.
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 Compensating Interest payments made with
respect to
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 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 the 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
the
Servicer with responsibility for the servicing of the Mortgage
Loans 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 the Servicer or the 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 the
Servicer of the
Mortgage Loans, (ii) does not have any material direct or indirect
financial
interest in the Servicer of the Mortgage Loans or in an affiliate
of either and
(iii) is not connected with the 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.
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 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,
0.4225%;
Class A-1mz Certificates, 0.2900%; Class A-2a Certificates,
0.1000%; Class A-2b
Certificates, 0.2200%; Class A-2c Certificates, 0.3500%; Class M-1
Certificates,
0.4700%; Class M-2 Certificates, 0.4900%; Class M-3 Certificates,
0.5200%; Class
M-4 Certificates, 0.6900%; Class M-5 Certificates, 0.7300%; Class
M-6
Certificates, 0.8000%; Class B-1 Certificates, 1.2200%; Class B-2
Certificates,
1.3000%; and Class B-3 Certificates, 2.1500%. On the first
Distribution Date
after the Optional Termination Date, the Pass-Through Margins shall
increase to:
Class A-1ss Certificates, 0.8450%; Class A-1mz Certificates,
0.5800%; Class A-2a
Certificates, 0.2000%; Class A-2b Certificates, 0.4400%; Class
A-2c
Certificates, 0.7000%; Class M-1 Certificates, 0.7050%; Class M-2
Certificates,
0.7350%; Class M-3 Certificates, 0.7800%; Class M-4 Certificates,
1.0350%; Class
M-5 Certificates, 1.0950%; Class M-6 Certificates, 1.2000%; Class
B-1
Certificates, 1.8300%; Class B-2 Certificates, 1.9500%; and Class
B-3
Certificates, 3.2250%.
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 Servicer, 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
managed or
advised by the Depositor, the Trustee or an Affiliate thereof,
that have
been rated "Aaa" by Moody's, "AAAm" by Standard & Poor's and,
if
rated by
Fitch, 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 the Servicer with respect to a Mortgage Loan from a
Mortgagor in
connection with any voluntary Principal Prepayment in Full pursuant
to the terms
of the related Mortgage Note.
Prepayment Interest Shortfall: With respect to any Distribution
Date
and each Mortgage Loan that was, during the related Prepayment
Period, 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 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, the
calendar month preceding the calendar 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
Servicer on or
prior to the related Determination Date or advanced by the Servicer
for the
related Remittance Date, and all Principal Prepayments received
during the
related Prepayment Period; (ii) all Liquidation Proceeds,
Condemnation Proceeds
and Insurance Proceeds on the Mortgage Loans allocable to principal
actually
collected by the Servicer during the related Prepayment Period;
(iii) the
portion of the Repurchase Price allocable to principal with respect
to each
Mortgage Loan repurchased during the related Prepayment Period;
(iv) all
Substitution Adjustment Amounts allocable to principal with respect
to the
substitutions of Mortgage Loans that occur during the calendar
month in which
such Distribution Date occurs; (v) with respect to the Distribution
Date in
March 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 February
18,
2005, relating to the Offered Certificates.
PTCE 95-60: As
defined in Section 5.02(b).
Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of April 1, 2004, as amended by Amendment No.
1, dated as of
October 29, 2004, each by and between the Purchaser, as purchaser,
and the
Responsible Party, as seller (a copy of which is attached hereto as
Exhibit P).
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 Servicer.
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 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 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 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 for which a
breach of a representation and warranty made by the Depositor or
the Responsible
Party hereunder exists, 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 repurchase obligation of the Depositor
or the
Responsible Party hereunder. In addition to the Repurchase Price,
the
Responsible Party is obligated to make certain payments for
material breaches of
representations and warranties as further set forth in Section
2.03(k) in this
Agreement.
Request for Release: The Request for Release submitted by the
Servicer to the Trustee or Custodian, as applicable, 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: WMC Mortgage Corp., 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 distributions 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, 39.70%.
Servicer: Countrywide Home Loans Servicing LP, a Texas limited
partnership, and its successors in interest, and if a successor
servicer is
appointed hereunder, such successor.
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 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 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. The
Servicer shall
not be required to make any Nonrecoverable Servicing Advances.
Servicing Fee: With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the
event of any
payment of interest which accompanies a Principal Prepayment in
Full made by the
Mortgagor during such calendar month, interest for the number of
days covered by
such payment of interest) at the 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 the
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 the 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 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 the 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 the Servicer on the Closing Date pursuant to this
Agreement, as
such list may from time to time be amended.
Servicing Transfer Date: With respect to any Mortgage Loan, the
date
on which servicing of such Mortgage Loan was transferred from the
Responsible
Party to the Purchaser or its designee, as set forth on the
Mortgage Loan
Schedule.
Similar Law: As defined in Section 5.02(b).
60+ Day Delinquent Mortgage Loan: (i) 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), including, without limitation, such Mortgage Loans
that are
subject to bankruptcy proceedings, (ii) each Mortgage Loan in
foreclosure and
(iii) all REO Property.
Specified Subordinated Amount: Prior to the Stepdown Date, an
amount
equal to 3.00% of the Cut-off Date Pool Principal Balance. On and
after the
Stepdown Date, an amount equal to 6.00% of the aggregate Stated
Principal
Balance of the Mortgage Loans for such Distribution Date, subject,
until the
Class Certificate Balance of each Class of LIBOR 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 LIBOR 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-WMC1, or such other address as Standard & Poor's may
hereafter
furnish to the Depositor, the Trustee and the Servicer.
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
Servicer on
or prior to the related Determination Date or advanced by the
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 March 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 Balance 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: As of 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 LIBOR 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
Depositor or the Responsible Party for a Deleted Mortgage Loan
which 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 or a
Combined
Loan-to-Value Ratio, as applicable, 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 relating to the Mortgage Loans set
forth in Section
2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
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 received
by the Servicer on or prior to the related Determination Date or
advanced by the
Servicer 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 Account, 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 March 2005 only, the portion of the Closing Date Deposit Amount
allocable to
principal.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.004%
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 Recoveries 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 weighted average of the Adjusted Net Mortgage Rates then
in effect on
the beginning of the related Due Period on the Mortgage Loans,
adjusted in each
case to accrue on the basis of a 360-day year and the actual number
of days in
the related Interest Accrual Period.
Wells Fargo Mortgage Loans: Mortgage Loans for which Wells
Fargo
Bank, National Association will be acting as Custodian, as
identified on the
Mortgage Loan Schedule.
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 with
respect to the Mortgage Loans other than the Wells Fargo Mortgage
Loans, and to
the Custodian with respect to the Wells Fargo Mortgage Loans, 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 Note 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) (A) with respect to the Mortgage Loans other than the
Wells
Fargo
Mortgage Loans, the original Mortgage with evidence of
recording
thereon or
a certified true copy of such Mortgage submitted for recording.
If, in
connection with any such 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
(i) in the
case of a delay caused by the public recording office, an
officer's
certificate of the Responsible Party or a certificate from an
escrow
company, a title company or closing attorney certifying 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 (ii)
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; or (B) with respect to the Wells
Fargo
Mortgage
Loans, the original Mortgage with evidence of recording thereon
or a
certified true copy of such Mortgage submitted for recording. If,
in
connection
with any Wells Fargo 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 Custodian a photocopy of such Mortgage certified
by
the
Responsible Party to be a true and complete copy of such Mortgage
and
shall
forward to the Custodian such original recorded Mortgage within
14
days
following the Responsible Party's receipt of such Mortgage from
the
applicable
public recording office; or 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;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed
in blank (except with respect to MERS Designated Mortgage
Loans);
(vi) (A) with respect to the Mortgage Loans other than the
Wells
Fargo
Mortgage Loans, the originals of all intervening assignments of
Mortgage
(if any) evidencing a complete chain of assignment from the
applicable
originator (or MERS with respect to each MERS Designated
Mortgage
Loan) to the last endorsee with evidence of recording thereon,
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 (i) in the case of a
delay
caused by
the public recording office, an officer's certificate of the
Responsible Party or a certificate from an escrow company, a title
company
or a
closing attorney certifying 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
(ii) 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; or (B) with respect to the Wells Fargo
Mortgage
Loans, 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, certified by the Responsible Party to be
a
true and
complete copy of such intervening assignment and shall forward
to
the
Custodian such original recorded intervening assignment within 14
days
following
the Responsible Party's receipt of such from the applicable
public
recording office; or 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
or
Custodian, as applicable, the applicable recorded document promptly
upon receipt
from the respective recording office but in no event later than one
year from
the date on which the Responsible Party sold the related Mortgage
Loan to the
Purchaser.
If any Mortgage has been recorded in the name of MERS or its
designee, no Assignment of Mortgage in favor of the Trustee will be
required to
be prepared or delivered and instead, the Servicer shall take all
reasonable
actions as are necessary to cause the Trust to be shown as the
owner of the
related Mortgage Loan on the records of MERS for the purpose of the
system of
recording transfers of beneficial ownership of Mortgages maintained
by MERS.
From time to time, the Depositor or the Servicer, as
applicable,
shall forward to the Trustee or Custodian, as applicable,
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 or Custodian, as applicable, 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 or the Custodian, as applicable, Assignments of
Mortgages, in
blank, for each Mortgage Loan. The Responsible Party shall cause
the Assignments
of Mortgages and complete recording information to be provided to
the 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 Servicer
of the complete recording information for a Mortgage, the 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
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, (ii) if such
Mortgage Loan
is a MERS Designated Mortgage Loan or (iii) 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 LIBOR
Certificates to be
downgraded or withdrawn; provided, however, that the Servicer shall
not be held
responsible or liable for any loss that occurs because an
Assignment of Mortgage
was not recorded, but only to the extent that the 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), (ii) and
(iii) above, if
foreclosure proceedings occur against a Mortgaged Property, the
Depositor shall
notify the 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
February 1, 2005, Morgan Stanley ABS Capital I Inc. Trust
2005-WMC1". 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 or Custodian, as applicable, within one year
following the date
on which the Responsible Party sold the related Mortgage Loan to
the Purchaser,
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 or the Custodian, as
applicable, 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.
On or prior to the Closing Date, the Depositor shall deliver to
the
Trustee and the Custodian a copy of the Data Tape Information in an
electronic,
machine readable medium in a form mutually acceptable to the
Trustee or
Custodian, as applicable.
(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-WMC1" 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 (43) 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 and the Custodian shall acknowledge, on the Closing Date,
receipt by the
Trustee or the Custodian, as applicable, 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 and the
Custodian 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 and the
Custodian
shall be required to deliver via facsimile (with original to follow
the next
Business Day) to the Depositor and the Servicer an Initial
Certification prior
to the Closing Date, or, with the Depositor's consent, on the
Closing Date,
certifying receipt of a Mortgage Note and Assignment of Mortgage
for each
Mortgage Loan. Neither the Trustee nor the Custodian shall be
responsible for
verifying the validity, sufficiency or genuineness of any document
in any
Custodial File.
Within 90 days after the Closing Date, the Trustee and the
Custodian
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, the Servicer and the Trustee
(if delivered
by the Custodian) 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.
Neither the Trustee nor the Custodian shall be responsible for
verifying the
validity, sufficiency or genuineness of any document in any
Custodial File.
The Trustee and the Custodian shall retain possession and custody
of
each Custodial File in accordance with and subject to the terms and
conditions
set forth herein. The Servicer shall promptly deliver to the
Trustee or to the
Custodian, as applicable, 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 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 or to
the Custodian, 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 the Servicer.
Section 2.03 Representations and Warranties; Remedies for
Breaches
of Representations and Warranties with Respect to the Mortgage
Loans. (a) The
Servicer hereby makes the representations and warranties set forth
in Schedule
II 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,
the Servicer and the Trustee as of the dates set forth in such
schedules.
(c) The Depositor hereby makes the representations and
warranties
set forth in Schedule V hereto to the Trustee as of the date set
forth in such
schedule.
(d) The Custodian hereby makes the representations and
warranties
set forth in Schedule VI hereto to the Trustee as of the date set
forth in such
schedule.
(e) 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 parties to whom the representations and
warranties were
made 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 the Servicer of a breach of any of the foregoing
representations
and warranties that materially and adversely affect the value of
any Mortgage
Loan or the interest of the Trustee or the Certificateholders
therein, the party
discovering such breach shall give prompt written notice to the
other parties.
(f) 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 or the Custodian'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
commercially
reasonable 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 or the Custodian, as applicable, of a
Request for
Release substantially in the form of Exhibit J, and the delivery of
the Mortgage
File to the Trustee or the Custodian, as applicable, 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 (43), (44),
(46), (48), (50),
(52), (53), (54), (55), (56), (57), (58), (59) or (69) 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 (43), (44), (46), (48), (50), (52), (53), (54), (55), (56),
(57), (58),
(59) or (69) 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 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.
(g) Within 90 days of the earlier of either discovery by or
notice
to the Depositor of any breach of a representation or warranty set
forth on
Schedule V hereto, the Depositor shall use its best efforts to
promptly cure
such breach and, if such defect or breach cannot be remedied, the
Depositor
shall purchase such Mortgage Loan at the Repurchase Price or
substitute a
Substitute Mortgage Loan for such Mortgage Loan.
(h) With respect to any Substitute Mortgage Loan or Loans
substituted by the Depositor or the Responsible Party, the
Depositor or the
Responsible Party, as applicable, shall deliver to the Trustee or
the Custodian,
as applicable, for the benefit of the Certificateholders the
Mortgage Note, the
Mortgage, the related assignment of the 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 Depositor or the Responsible Party, as applicable, 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 Depositor or
the
Responsible Party, as applicable, shall be entitled to retain all
amounts
received in respect of such Deleted Mortgage Loan.
(i) The Servicer, based upon information provided by the
Depositor
or the Responsible Party, as applicable, 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
the Servicer shall deliver the amended Mortgage Loan Schedule to
the Trustee or
the Custodian, as applicable. Upon such substitution, the
Substitute Mortgage
Loan or Loans shall be subject to the terms of this Agreement in
all respects.
If such substitution is made by the Responsible Party, 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 Substitute
Mortgage Loan or
Loans (and pursuant to Section 2.03(c) if the related Deleted
Mortgage Loan is a
Group I Mortgage Loan), and if such substitution is made by the
Depositor, the
Depositor 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 Sections 2.03(b) and (c) with respect
to such
Substitute Mortgage Loan or Loans. Upon any such substitution and
the deposit to
the Collection Account of the amount required to be deposited
therein in
connection with such substitution as described in the following
paragraph, the
Trustee or the Custodian, as applicable, shall release the Mortgage
File held
for the benefit of the Certificateholders relating to such Deleted
Mortgage Loan
to the Depositor or the Responsible Party, as applicable, and shall
execute and
deliver at the direction of the Responsible Party or the Depositor,
as
applicable, such instruments of transfer or assignment prepared by
the Depositor
or the Responsible Party, as applicable, in each case without
recourse, as shall
be necessary to vest title in the Depositor or the Responsible
Party, as
applicable, of the Trustee's interest in any Deleted Mortgage Loan
substituted
for pursuant to this Section 2.03.
(j) For any month in which the Depositor or the Responsible
Party
substitutes one or more Substitute Mortgage Loans for one or more
Deleted
Mortgage Loans, the 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
deposited into the Collection Account by the Depositor or the
Responsible Party,
as applicable, 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.
(k) In addition to such repurchase or substitution obligation,
the
Responsible Party shall indemnify the Depositor and its Affiliates,
the
Servicer, the Custodian, 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.
(l) In the event that the Depositor or the Responsible Party
shall
have repurchased a Mortgage Loan, the Repurchase Price therefor
shall be
deposited by the Servicer into the Collection Account pursuant to
Section 3.10
on or before the Distribution Account Deposit Date for the
Distribution Date in
the month following the month during which the Depositor or the
Responsible
Party, as applicable, became obligated hereunder to repurchase or
replace 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 or
the
Custodian, as applicable, shall release the related Custodial File
held for the
benefit of the Certificateholders to such Person as directed by the
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.
(m) Any Mortgage Loan repurchased pursuant to this Section 2.03
will
be removed from the Trust Fund. The Servicer shall amend the
Mortgage Loan
Schedule for the benefit of the Certificateholders to reflect the
removal of any
Mortgage Loan repurchased, and the Servicer shall deliver the
amended Mortgage
Loan Schedule to the Trustee and the Custodian.
It is understood and agreed that the obligation of the Depositor
or
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, together with any related indemnification
obligations of the
Responsible Party set forth in Section 2.03(k), shall constitute
the sole
remedies against such Person respecting such breach available
to
Certificateholders, the Depositor (if applicable), the Servicer or
the Trustee.
The provisions of this Section 2.03 shall survive delivery of
the
respective Custodial Files to the Trustee or the Custodian, as the
case may be,
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
January 2035, which is the Distribution Date following the latest
Mortgage Loan
maturity date.
Section 2.06 Representations and Warranties of the Depositor.
The
Depositor hereby represents, warrants and covenants to the Trustee
and the
Servicer 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 Servicer to Service Mortgage Loans. (a) For and on
behalf of the Certificateholders, the Servicer shall service and
administer the
Mortgage Loans in accordance with the terms of this Agreement and
the respective
Mortgage Loans and, to the extent consistent with such terms, in
the same manner
in which it services and administers similar mortgage loans for its
own
portfolio, giving due consideration to customary and usual
standards of practice
of mortgage lenders and loan servicers administering similar
mortgage loans but
without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate
of the Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer
or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing
Advances;
or
(iv) the 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, the 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, the
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, the 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. The Servicer shall service and administer the
Mortgage Loans in
accordance with applicable state and federal law and shall provide
to the
Mortgagors any reports required to be provided to them thereby. The
Servicer
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. The
Servicer shall also comply in the performance of this Agreement
with all
reasonable rules and requirements of each insurer under any
standard hazard
insurance policy. Subject to Section 3.16, the Trustee shall
execute, at the
written request of the Servicer, and furnish to the Servicer and
any Subservicer
such documents provided to the Trustee as are necessary or
appropriate to enable
the Servicer or any Subservicer to carry out their servicing and
administrative
duties hereunder, and the Trustee hereby grants to the 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 on behalf of the Trustee.
The Trustee
shall execute a separate power of attorney in favor of the Servicer
for the
purposes described herein to the extent necessary or desirable to
enable the
Servicer to perform its duties hereunder. The Trustee shall not be
liable for
the actions of the Servicer or any Subservicers under such powers
of attorney.
Notwithstanding anything contained herein to the contrary, neither
the Servicer
nor any Subservicer shall without the Trustee's consent: (i)
initiate any
action, suit or proceeding solely under the Trustee's name without
indicating
the 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, the Servicer shall advance or cause to be
advanced
funds as necessary for the purpose of effecting the timely payment
of taxes and
assessments on the Mortgaged Properties, which advances shall be
Servicing
Advances reimbursable in the first instance from related
collections from the
Mortgagors pursuant to Section 3.09(b), and further as provided in
Section 3.11.
Any cost incurred by the 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,
the
Servicer may not make any future advances with respect to a
Mortgage Loan
(except as provided in Section 4.01) and the Servicer shall not (i)
permit any
modification with respect to any Mortgage Loan that would change
the Mortgage
Rate, reduce or increase the 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) The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release
the Servicer
from the responsibilities or liabilities arising under this
Agreement.
(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 any disputes arising in connection with such
Mortgage Loan,
the 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 the Servicer and
Subservicers.(a) The Servicer may enter into subservicing
agreements with
subservicers (each, a "Subservicer"), for the servicing and
administration of
the Mortgage Loans ("Subservicing Agreements"). The 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.
The Servicer will examine each Subservicing Agreement 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. The
Servicer and the
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 the Servicer, are conclusively deemed to be
inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver
to the
Trustee and the Depositor copies of all Subservicing Agreements,
and any
amendments or modifications thereof, promptly upon the Servicer's
execution and
delivery of such instruments.
(c) As part of its servicing activities hereunder, the 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, 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 the Servicer, in its good faith
business
judgment, would require were it the owner of the related Mortgage
Loans. The
Servicer shall pay the costs of such enforcement at its own
expense, and shall
be reimbursed therefor only (i) from a general recovery resulting
from such
enforcement, to the extent, if any, that such recovery exceeds all
amounts due
in respect of the related Mortgage Loans or (ii) from a specific
recovery of
costs, expenses or attorneys' fees against the party against whom
such
enforcement is directed.
Section 3.03 Successor Subservicers. The Servicer shall be
entitled
to terminate any Subservicing Agreement and the rights and
obligations of any
Subservicer pursuant to any 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 Servicer without any act or deed on the part
of such
Subservicer or the Servicer, and the 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 shall, for any reason, no longer be the Servicer
(including termination
due to an Event of Default).
Section 3.04 Liability of the Servicer. Notwithstanding any
Subservicing Agreement, any of the provisions of this Agreement
relating to
agreements or arrangements between the Servicer and a Subservicer
or reference
to actions taken through a Subservicer or otherwise, the 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
the Servicer alone were servicing and administering the Mortgage
Loans. The
Servicer shall be entitled to enter into any agreement with a
Subservicer for
indemnification of the 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
Servicer alone, and the Trustee (or any successor 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.
The Servicer shall be solely liable for all fees owed by it to any
Subservicer,
irrespective of whether the 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 the Servicer at any time shall for any reason
no longer be
the 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 the
Servicer under each Subservicing Agreement that the 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 the
Servicer's interest therein and to have replaced the Servicer as a
party to each
Subservicing Agreement to the same extent as if each Subservicing
Agreement had
been assigned to the assuming party, except that (i) the Servicer
shall not
thereby be relieved of any liability or obligations under any
Subservicing
Agreement that arose before it ceased to be the Servicer and (ii)
none of the
Depositor, the Trustee, their designees or any successor Servicer
shall be
deemed to have assumed any liability or obligation of the Servicer
that arose
before it ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Trustee,
its
designee or the successor Servicer deliver to the assuming party
all documents
and records relating to each Subservicing Agreement and the
Mortgage Loans then
being serviced and an accounting of amounts collected and held by
or on behalf
of it, and otherwise use its best efforts to effect the orderly and
efficient
transfer of the Subservicing Agreements to the assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments. (a)
The
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, the 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 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 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
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 LIBOR 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)-(R)) 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
LIBOR
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 LIBOR Certificates. In addition, the
Trustee
shall account for the LIBOR 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 LIBOR 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)-(V).
(d) The Trustee shall establish and maintain the Distribution
Account on behalf of the Certificateholders. The Depositor shall
cause to be
deposited into the Distribution Account on the Closing Date the
Closing Date
Deposit Amount. The Trustee shall, promptly upon receipt, deposit
in the
Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Servicer to the
Trustee
pursuant
to Section 3.11;
(ii) any amount deposited by the Servicer 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 the 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.
The Servicer
shall direct the Trustee to withdraw from the Distribution Account
and to remit
to the Servicer no less than monthly, all income and gain realized
from the
investment of the portion of funds deposited in the Distribution
Account by the
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) The Servicer shall give notice to the Trustee, each Rating
Agency and the Depositor of any proposed change of the location of
the
Collection Account within a reasonable period of time prior to any
change
thereof.
(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.
(h) On or prior to the Determination Date, the Custodian shall
deliver an invoice to the Trustee, setting forth the amount of the
Custodian Fee
for the related Distribution Date. The Trustee shall calculate the
Custodian Fee
Rate for such Distribution Date, based upon the Custodian Fee as
set forth in
such invoice. On each Distribution Date, the Trustee shall remit
the Custodian
Fee to the Custodian from the Distribution Account.
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 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 or remit such proceeds to the
Servicer for
deposit in the Collection Account not later than two Business Days
after the
deposit of such amounts in the Subservicing Account. For purposes
of this
Agreement, the 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) The 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").
Each Tax Service
Contract shall be assigned to the Trustee, or a successor Servicer
at the
Servicer's expense in the event that the 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, the Servicer undertakes to perform such
functions. To the
extent the related Mortgage provides for Escrow Payments, the
Servicer shall
establish and maintain, or cause to be established and maintained,
one or more
accounts (the "Escrow Accounts"), which shall be Eligible Accounts.
The 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 the 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 the Servicer's
obligations
and responsibilities in respect of the Mortgage Loans under this
Agreement; or
(vi) recover amounts deposited in error. As part of its servicing
duties, the
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 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 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 Account. (a) On behalf of the Trustee,
the
Servicer shall establish and maintain, or cause to be established
and
maintained, one or more separate Eligible Accounts (such account or
accounts,
the "Collection Account"), held in trust for the benefit of the
Trustee on
behalf of the Certificateholders. On behalf of the Trustee, the
Servicer shall
deposit or cause to be deposited in the clearing account (which
account must be
an Eligible Account) in which it customarily deposits payments and
collections
on mortgage loans in connection with its mortgage loan servicing
activities on a
daily basis, and in no event more than one Business Day after the
Servicer's
receipt thereof, and shall thereafter deposit in the Collection
Account, in no
event more than two Business Days after the deposit of such funds
into the
clearing account, as and when received or as otherwise required
hereunder, the
following payments and collections received or made by it
subsequent to the
Cut-off Date (other than in respect of principal or interest on the
related
Mortgage Loans due on or before the Cut-off Date), or payments
(other than
Principal Prepayments) received by it on or prior to the Cut-off
Date but
allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(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 Collection Account;
(v) any amounts required to be deposited by the 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 the Servicer.
The foregoing requirements for deposit in the Collection
Account
shall be exclusive, it being understood and agreed that, without
limiting the
generality of the foregoing, payments in the nature of late payment
charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and
charges need
not be deposited by the Servicer in the Collection Account and
shall, upon
collection, belong to the Servicer as additional compensation for
its servicing
activities. In the event the Servicer shall deposit in the
Collection Account
any amount not required to be deposited therein, it may at any time
withdraw
such amount from the Collection Account, any provision herein to
the contrary
notwithstanding.
(b) Funds in the Collection Account may be invested in
Permitted
Investments in accordance with the provisions set forth in Section
3.12. The
Servicer shall give notice to the Trustee and the Depositor of the
location of
the Collection Account maintained by it when established and prior
to any change
thereof in accordance with Section 3.07(f).
Section 3.11 Withdrawals from the Collection Account. (a) The
Servicer shall, from time to time, make withdrawals from the
Collection Account
for any of the following purposes or as described in Section
4.01:
(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 the 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 (the Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the
definition of
"Available
Funds");
(iii) to pay the Servicer or any Subservicer (a) any unpaid
Servicing
Fees or (b) any unreimbursed Servicing Advances with respect to
each
Mortgage Loan serviced by the 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) (the Servicer's right for
recovery
or reimbursement has priority over the Trust as stated in the
definition
of "Available Funds");
(iv) to pay to the Servicer as servicing compensation (in
addition
to the
Servicing Fee) on each Remittance Date any interest or
investment
income
earned on funds deposited in the Collection Account;
(v) to pay to the Responsible Party or the Depositor, as
applicable,
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 further described
herein;
(vi) to reimburse the Servicer for (A) any P&I Advance or
Servicing
Advance
previously made which the 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) (the Servicer's right for recovery or
reimbursement
has
priority over the Trust as stated in the definition of
"Available
Funds");
(vii) to pay, or to reimburse the Servicer for advances in
respect
of,
expenses incurred in connection with any Mortgage Loan serviced by
the
Servicer
pursuant to Section 3.15 (the Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the
definition of
"Available
Funds");
(viii) to reimburse the Servicer or the Depositor for expenses
incurred
by or reimbursable to the Servicer or the Depositor, as the
case
may be,
pursuant to Section 6.03 (the Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the
definition of
"Available
Funds");
(ix) to reimburse the 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 or the
Depositor,
as applicable, 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 (the Servicer's right for recovery or reimbursement has
priority
over the Trust as stated in the definition of "Available
Funds");
(x) to withdraw any amounts deposited in the Collection Account
in
error;
(xi) to withdraw any amounts held in the 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 the Collection
Account,
to
reimburse the 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 Collection Account upon
termination of this Agreement.
(b) The Servicer shall keep and maintain separate accounting, on
a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any
withdrawal from the Collection Account, to the extent held by or on
behalf of
it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii)
and (ix)
above. The 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 Collection Account pursuant to
subclause
(a)(vi) above.
Section 3.12 Investment of Funds in the Collection Account and
the
Distribution Account. (a) The Servicer may invest the funds in the
Collection
Account in one or more Permitted Investments bearing interest or
sold at a
discount, and maturing, unless payable on demand, 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. 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 the Servicer, shall (except during the Trustee Float
Period) invest
such funds in the Distribution Account at the direction of the
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 the 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
Servicer. The
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 investment,
and any certificate or other instrument evidencing any such
investment shall be
delivered directly to the Servicer, or with respect to investments
during the
Trustee Float Period, the Trustee or its agent (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), together with any document of
transfer
necessary to transfer title to such investment to the 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 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 Collection Account, held by or on behalf of the
Servicer, shall
be for the benefit of the Servicer and shall be subject to its
withdrawal in the
manner set forth in Section 3.11. The Servicer shall deposit in the
Collection
Account the amount of any loss of principal incurred in respect of
any such
Permitted Investment made with funds in such accounts immediately
upon
realization of such loss.
(c) All income and gain realized from the investment of the
portion
of funds deposited in the Distribution Account by the Servicer and
held by the
Trustee, shall be for the benefit of the 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). The 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 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 such
losses are incurred during the Trustee Float Period, the Trustee
shall be
responsible for reimbursing the Trust for such loss immediately
upon realization
of 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) The Servicer shall cause to be
maintained
for each Mortgage Loan fire insurance with extended coverage on the
related
Mortgaged Property in an amount which is at least equal to the
least of (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. The Servicer shall also cause to be maintained fire
insurance with
extended coverage on each REO Property in an amount which is at
least equal to
the 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. The Servicer will
comply in
the performance of this Agreement with all reasonable rules and
requirements of
each insurer under any such hazard policies. Any amounts to be
collected by the
Servicer under any such policies (other than amounts to be applied
to the
restoration or repair of the property subject to the related
Mortgage or amounts
to be released to the Mortgagor in accordance with the procedures
that the
Servicer would follow in servicing loans held for its own account,
subject to
the terms and conditions of the related Mortgage and Mortgage Note)
shall be
deposited in the Collection Account, subject to withdrawal pursuant
to Section
3.11. Any cost incurred by the 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 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 the 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 the Servicer shall, in the event that there shall not
have been
maintained on the related Mortgaged Property or REO Property a
policy complying
with the first two sentences of this Section 3.13, and there shall
have been one
or more losses which would have been covered by such policy,
deposit to the
Collection Account from its own funds the amount not otherwise
payable under the
blanket policy because of such deductible clause. In connection
with its
activities as administrator and servicer of the Mortgage Loans, the
Servicer
agrees to prepare and present, on behalf of itself and the Trustee
claims under
any such blanket policy in a timely fashion in accordance with the
terms of such
policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and
omissions for
failure in the performance of the Servicer's obligations under this
Agreement,
which policy or policies shall be in such form and amount that
would meet the
requirements of Fannie Mae or Freddie Mac if it were the purchaser
of the
Mortgage Loans, unless the Servicer has obtained a waiver of such
requirements
from Fannie Mae or Freddie Mac. The Servicer shall also maintain a
fidelity bond
in the form and amount that would meet the requirements of Fannie
Mae or Freddie
Mac, unless the Servicer has obtained a waiver of such requirements
from Fannie
Mae or Freddie Mac. The Servicer shall provide the Trustee upon
request with
copies of any such insurance policies and fidelity bond. The
Servicer shall be
deemed to have complied with this provision if an Affiliate of the
Servicer has
such errors and omissions and fidelity bond coverage and, by the
terms of such
insurance policy or fidelity bond, the coverage afforded thereunder
extends to
the Servicer. Any such errors and omissions policy and fidelity
bond shall by
its terms not be cancelable without thirty days' prior written
notice to the
Trustee. The 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. The Servicer will, to the extent it has knowledge of
any conveyance
or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the
Mortgagor
remains or is to remain liable under the Mortgage Note and/or the
Mortgage),
exercise its rights to accelerate the maturity of such Mortgage
Loan under the
"due-on-sale" clause, if any, applicable thereto; provided,
however, that the
Servicer shall not be required to take such action if, in its sole
business
judgment, the Servicer believes it is not in the best interests of
the Trust
Fund and shall not exercise any such rights if prohibited by law
from doing so.
If the Servicer reasonably believes it is unable under applicable
law to enforce
such "due-on-sale" clause or if any of the other conditions set
forth in the
proviso to the preceding sentence apply, the Servicer shall enter
into either
(i) 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 or
(ii) a
substitution agreement as provided in the succeeding sentence. The
Servicer is
also authorized to enter into a substitution of liability agreement
with such
person, pursuant to which the original Mortgagor is released from
liability and
such person is substituted as the Mortgagor and becomes liable
under the
Mortgage Note, provided, that no such substitution shall be
effective unless
such person satisfies the underwriting criteria of the Servicer and
such
substitution is in the best interest of the Certificateholders as
determined by
the Servicer. In connection with any assumption, modification or
substitution,
the Servicer shall apply such underwriting standards and follow
such practices
and procedures as shall be normal and usual in its general mortgage
servicing
activities and as it applies to other mortgage loans owned solely
by it. The
Servicer shall not take or enter into any assumption and
modification agreement,
however, unless (to the extent practicable in the circumstances) it
shall have
received confirmation, in writing, of the continued effectiveness
of any
applicable hazard insurance policy, or a new policy meeting the
requirements of
this Section is obtained. Any fee collected by the Servicer in
respect of an
assumption or substitution of liability agreement will be retained
by the
Servicer as additional servicing compensation. In connection with
any such
assumption, no material term of the Mortgage Note (including but
not limited to
the related Mortgage Rate and the amount of the Scheduled Payment)
may be
amended or modified, except as otherwise required pursuant to the
terms thereof.
The Servicer shall notify the Trustee that any such substitution,
modification
or assumption agreement has been completed by forwarding to the
Trustee or the
Custodian, as applicable, the executed original of such
substitution or
assumption agreement, which document shall be added to the related
Custodial
File and shall, for all purposes, be considered a part of such
Custodial File to
the same extent as all other documents and instruments constituting
a part
thereof.
Notwithstanding the foregoing paragraph or any other provision
of
this Agreement, the Servicer shall not be deemed to be in default,
breach or any
other violation of its obligations hereunder by reason of any
assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage
Note or any
assumption which the Servicer may be restricted by law from
preventing, for any
reason 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. The
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. The 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 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, the
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 the Servicer
through
Insurance Proceeds, Condemnation Proceeds or Liquidation Proceeds
from the
related Mortgaged Property, as contemplated in Section 3.11. The
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
Servicer or
any Subservicer for any related unreimbursed Servicing Advances,
pursuant to
Section 3.11 or 3.17; second, to reimburse the 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
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 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 the 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, the
Servicer shall
cause an environmental inspection or review of such Mortgaged
Property to be
conducted by a qualified inspector. Upon completion of the
inspection, the
Servicer shall promptly provide the Trustee and the Depositor with
a written
report of the environmental inspection.
After reviewing the environmental inspection report, the
Depositor
shall determine 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 Depositor directs the Servicer to proceed with
foreclosure or
acceptance of a deed in lieu of foreclosure, the 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 the Servicer, the
Servicer shall be
entitled to be reimbursed from amounts in the Collection Account
pursuant to
Section 3.11. In the event the Depositor directs the Servicer not
to proceed
with foreclosure or acceptance of a deed in lieu of foreclosure,
the Servicer
shall be reimbursed from general collections for all Servicing
Advances made
with respect to the related Mortgaged Property from the Collection
Account
pursuant to Section 3.11.
In the event the 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
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 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 the Servicer of a
notification that
payment in full shall be escrowed in a manner customary for such
purposes, the
Servicer will, on or before the last day of the month in which such
payment in
full occurs, notify the Trustee or the Custodian, as applicable, 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 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
or the Custodian, as applicable. Upon receipt of such certification
and Request
for Release (which may be in an electronic format acceptable to the
Trustee or
the Custodian, as applicable), the Trustee or the Custodian, as
applicable,
shall promptly release the related Custodial File to the 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
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 or
the
Custodian, as applicable, shall, upon request of the Servicer and
delivery to
the Trustee or the Custodian, as applicable, of a Request for
Release, release
the related Custodial File to the Servicer, and the Trustee or the
Custodian, as
applicable, shall, at the direction of the Servicer, execute such
documents as
shall be necessary to the prosecution of any such proceedings and
the Servicer
shall retain the Mortgage File in trust for the benefit of the
Trustee. Such
Request for Release shall obligate the Servicer to return each and
every
document previously requested from the Custodial File to the
Trustee or the
Custodian, as applicable, when the need therefor by the 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
Collection Account or the Mortgage File or such document has been
delivered to
an attorney, or to a public trustee or other public official as
required by law,
for purposes of initiating or pursuing legal action or other
proceedings for the
foreclosure of the Mortgaged Property either judicially or
non-judicially, and
the Servicer has delivered to the Trustee or the Custodian, as
applicable, 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 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 or the
Custodian, as
applicable, to the Servicer or its designee upon request therefor.
Upon receipt
of a Request for Release under this Section 3.16, the Trustee or
the Custodian,
as applicable, shall deliver the related Custodial File to the
Servicer by
overnight courier (which delivery shall be at the Servicer's
expense); provided,
however, that in the event the 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 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 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 the Servicer a power of
attorney
sufficient to authorize the 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
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
Servicer, the Trustee shall provide the Servicer with a power of
attorney
prepared by the Servicer with respect to such REO Property in the
form of
Exhibit O and shall deliver such power of attorney by overnight
courier at the
Servicer's expense.
(b) The Servicer shall manage, conserve, protect and operate
each
REO Property for the Trustee solely for the purpose of its prompt
disposition
and sale. The Servicer, either itself or through an agent selected
by the
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. The 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
the Servicer deems to be in the best interest of the Trustee. The
Trustee shall
have no obligations with respect to any REO Dispositions.
(c) The 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
Collection Account.
(d) The Servicer shall deposit net of reimbursement to the
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
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) The 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 Servicer as additional servicing compensation.
(g) The Servicer shall use its reasonable best efforts to sell,
or
cause the Subservicer to sell, in accordance with Accepted
Servicing Practices,
any REO Property 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) the 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) the Servicer obtains for the
Trustee an
Opinion of Counsel, addressed to the Depositor, the Trustee and the
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.
The Servicer shall manage, conserve, protect and operate each REO
Property 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 Servicer
shall either
itself or through an agent selected by the 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 the
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 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 an Index becomes unavailable or otherwise
unpublished, the
Servicer shall select a comparable alternative index over which it
has no direct
control and which is readily verifiable. The 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. The 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 the Servicer or the receipt of
notice from
the Trustee that the Servicer has failed to adjust a Mortgage Rate
or Scheduled
Pay
