EXHIBIT 4.1
TACONIC ASSET ACCEPTANCE COMPANY, L.L.C.,
Company,
[NAME OF SERVICER],
Servicer,
and
[NAME OF TRUSTEE],
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of [___, 20__]
Mortgage Pass-Through Certificates
Series 20[__-__]
<PAGE>
This Pooling and Servicing Agreement, effective as of [_____,
20__],
among TACONIC ASSET ACCEPTANCE COMPANY, L.L.C., as the company
(together with
its permitted successors and assigns, the "COMPANY"), [NAME OF
SERVICER], as
servicer (together with its permitted successors and assigns, the
"SERVICER"),
and [NAME OF TRUSTEE], as trustee (together with its permitted
successors and
assigns, the "TRUSTEE"),
PRELIMINARY STATEMENT
The Company intends to sell mortgage pass-through certificates
(collectively, the "CERTIFICATES"), to be issued hereunder in
multiple classes,
which in the aggregate will evidence the entire beneficial
ownership interest in
the Mortgage Loans (as defined herein). As provided herein, the
Servicer will
make an election to treat the entire segregated pool of assets
subject to this
Agreement (including the Mortgage Loans but excluding the Initial
Monthly
Payment Fund), as a real estate mortgage investment conduit (a
"REMIC") for
federal income tax purposes and such segregated pool of assets will
be
designated as the "Trust Fund". The Class A-1 Certificates, Class
A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, each
of the
Uncertificated REMIC Regular Interests (as defined herein), Class M
Certificates
and Class B Certificates will represent ownership of "regular
interests" in the
REMIC, and the Class R Certificates will be the sole class of
"residual
interests" therein for purposes of the REMIC Provisions (as defined
herein)
under federal income tax law. The Class A-5 Certificates will
represent the
entire beneficial ownership interest in the Uncertificated REMIC
Regular
Interests.
The following table sets forth the designation, type,
Pass-Through
Rate, aggregate Initial Certificate Principal Balance, Maturity
Date, initial
ratings and certain features for each Class of Certificates
comprising the
interests in the Trust Fund created hereunder.
<TABLE>
<CAPTION>
Aggregate Initial
Designation
Type
Pass-Through Rate
Certificate Principal Balance
-----------
----
-----------------
-----------------------------
<S>
<C>
<C>
<C>
Class A-1
Senior
[_________]%
$ [________.__]
Class A-2
Senior
[_________]%
$ [________.__]
Class A-3
Senior
[_________]%
$ [________.__]
Class A-4
Senior/Principal Only
0.00%
$ 0.00
Class A-5
Senior/Stripped Interest
Variable Rate
$ [________.__]
Class R
Residual
[_________]
$ [________.__]
Class M
Mezzanine
[_________]
$ [________.__]
Class B
Subordinate
[_________]
$ [________.__]
<CAPTION>
Initial Ratings
----------------------------------------
Designation
Features
Maturity Date
[S&P]
[Fitch]
[Moody's]
-----------
--------
-------------
---
-----
-------
<S>
<C>
<C>
<C>
<C>
<C>
Class A-1
Senior
[_______ __,____]
[_____]
[_____]
[_____]
Class A-2
Senior
[_______ __,____]
[_____]
[_____]
[_____]
Class A-3
Senior
[_______ __,____]
[_____]
[_____]
[_____]
Class A-4
Senior/Principal
[_______ __,____]
[_____]
[_____]
[_____]
Only
Class A-5
Senior/Stripped
[_______ __,____]
[_____]
[_____]
[_____]
Interest
Class R
Residual
[_______ __,____]
[_____]
[_____]
[_____]
Class M
Mezzanine
[_______ __,____]
[_____]
[_____]
[_____]
</TABLE>
The Mortgage Loans have an aggregate Cut-off Date Principal
Balance
equal to $[]. The Mortgage Loans are [fixed] [adjustable] rate
mortgage loans.
In consideration of the mutual agreements herein contained, the
Company, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01
DEFINITIONS.
Whenever used in this Agreement, the following words and
phrases,
unless the context otherwise requires, shall have the meanings
specified in this
Article.
"ACCRETION TERMINATION DATE": With respect to the Class A-3
Certificates, the earlier to occur of (i) the Distribution Date on
which the
Certificate Principal Balances of the Class A-1 and Class A-2
Certificates have
been reduced to zero and (ii) the Credit Support Depletion
Date.
"ACCRUED CERTIFICATE INTEREST": With respect to each Distribution
Date,
as to any Class A Certificate (other than a Class A-4 Certificate
or Class A-5
Certificate), any Class M Certificate, any Class B Certificate or
any Class R
Certificate, one month's interest accrued at the related
Pass-Through Rate on
the Certificate Principal Balance thereof immediately prior to such
Distribution
Date. With respect to each Distribution Date, as to the Class A-5
Certificates,
one month's interest accrued at the then applicable Pass-Through
Rate on the
Notional Amount thereof. Accrued Certificate Interest will be
calculated on the
basis of a 360-day year consisting of twelve 30-day months. In each
case Accrued
Certificate Interest on any Class of Certificates will be reduced
by the amount
of (i) Prepayment Interest Shortfalls [(to the extent not offset by
the Servicer
with a payment of Compensating Interest as provided in SECTION
3.16(E))], (ii)
the interest portion (adjusted to the Net Mortgage Rate) of
Realized Losses
(including Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy
Losses and Extraordinary Losses) not allocated solely to one or
more specific
Classes of Certificates pursuant to SECTION 4.05, (iii) the
interest portion of
Advances previously made with respect to a Mortgage Loan or REO
Property which
remained unreimbursed following the Cash Liquidation or REO
Disposition of such
Mortgage Loan or REO Property that were made with respect to
delinquencies that
were ultimately determined to be Excess Special Hazard Losses,
Excess Fraud
Losses, Excess Bankruptcy Losses or Extraordinary Losses and (iv)
any other
interest shortfalls not covered by the subordination provided by
the Class M
Certificates and Class B Certificates, including interest that is
not
collectible from the Mortgagor pursuant to the Soldiers' and
Sailors' Civil
Relief Act of 1940, as amended, or similar legislation or
regulations as in
effect from time to time, with all such reductions allocated among
all of the
Certificates in proportion to their respective amounts of Accrued
Certificate
Interest which would have resulted absent such reduction. With
respect to the
Class A-3 Certificates on each Distribution Date that occurs prior
to the
Accretion Termination Date, interest shortfalls allocable to the
Class A-3
Certificates on such Distribution Date will be so allocated by
reducing the
amount that is added to the Certificate Principal Balance thereof
in respect of
Accrued Certificate Interest pursuant to SECTION 4.02(d). In
addition to that
portion of the reductions described in the second preceding
sentence that are
allocated to the Class B Certificates or any Class of Class M
Certificates,
Accrued Certificate Interest on the Class B Certificates or such
Class of Class
M Certificates will be reduced by the interest portion (adjusted to
the Net
Mortgage Rate) of Realized Losses that are allocated solely to the
Class B
Certificates or such Class of Class M Certificates pursuant to
SECTION 4.05. The
Class A-4 Certificates receive no distributions of Accrued
Certificate Interest.
"ADJUSTED MORTGAGE RATE": With respect to any Mortgage Loan and
any
date of determination, the Mortgage Rate borne by the related
Mortgage Note,
less the rate at which the related Subservicing Fee accrues.
"ADVANCE": As to any Mortgage Loan, any advance made by the
Servicer,
pursuant to SECTION 4.04.
"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
hereof and supplements hereto.
"AMOUNT HELD FOR FUTURE DISTRIBUTION": As to any Distribution Date,
the
total of the amounts held in the Custodial Account at the close of
business on
the preceding Determination Date on account of (i) Liquidation
Proceeds,
Insurance Proceeds, Principal Prepayments, Mortgage Loan purchases
made pursuant
to SECTION 2.02, 2.03 or 2.04 and Mortgage Loan substitutions made
pursuant to
SECTION 2.03 or 2.04 received or made in the month of such
Distribution Date
(other than such Liquidation Proceeds, Insurance Proceeds and
purchases of
Mortgage Loans that the Servicer has deemed to have been received
in the
preceding month in accordance with SECTION 3.07(B)) and (ii)
payments which
represent early receipt of scheduled payments of principal and
interest due on a
date or dates subsequent to the related Due Date.
"APPRAISED VALUE": As to any Mortgaged Property, the lesser of (i)
the
appraised value of such Mortgaged Property based upon the appraisal
made at the
time of the origination of the related Mortgage Loan, and (ii) the
sales price
of the Mortgaged Property at such time of origination, except in
the case of a
Mortgaged Property securing a refinanced or modified Mortgage Loan
as to which
it is either the appraised value determined above or the appraised
value
determined in an appraisal at the time of refinancing or
modification, as the
case may be.
"ASSIGNMENT": An assignment of the Mortgage, notice of transfer
or
equivalent instrument, in recordable form, sufficient under the
laws of the
jurisdiction wherein the related Mortgaged Property is located to
reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit
of
Certificateholders, which assignment, notice of transfer or
equivalent
instrument may be in the form of one or more blanket assignments
covering
Mortgages secured by Mortgaged Properties located in the same
county, if
permitted by law and accompanied by an Opinion of Counsel to that
effect.
"AVAILABLE DISTRIBUTION AMOUNT": As to any Distribution Date, an
amount
equal to (a) the sum of (i) the amount relating to the Mortgage
Loans on deposit
in the Custodial Account as of the close of business on the
immediately
preceding Determination Date and amounts deposited in the Custodial
Account in
connection with the substitution of Qualified Substitute Mortgage
Loans, (ii)
the amount of any Advance made on the immediately preceding
Certificate Account
Deposit Date, (iii) any amount deposited in the Custodial Account
pursuant to
SECTION 3.12(A), (iv) any amount deposited in the Custodial Account
pursuant to
SECTION 2.01(F); (v) any amount deposited in the Certificate
Account pursuant to
SECTION 4.07 and (vi) any amount deposited in the Certificate
Account pursuant
to SECTION 3.16(E), reduced by (b) the sum as of the close of
business on the
immediately preceding Determination Date of (w) aggregate
Foreclosure Profits,
(x) the Amount Held for Future Distribution, and (y) amounts
permitted to be
withdrawn by the Servicer from the Custodial Account in respect of
the Mortgage
Loans pursuant to CLAUSES (II)-(X), inclusive, of SECTION
3.10(A).
"BANKRUPTCY AMOUNT": As of any date of determination prior to the
first
anniversary of the Cutoff Date, an amount equal to the excess, if
any, of (A) $[
] over (B) the aggregate amount of Bankruptcy Losses allocated
solely to one or
more specific Classes of Certificates in accordance with SECTION
4.05. As of any
date of determination prior to the first anniversary of the Cut-off
Date, an
amount equal to the excess, if any, of (1) the lesser of (a) the
Bankruptcy
Amount calculated as of the close of business on the Business Day
immediately
preceding the most recent anniversary of the Cut-off Date
coinciding with or
preceding such date of determination (or, if such date of
determination is an
anniversary of the Cut-off Date, the Business Day immediately
preceding such
date of determination) (for purposes of this definition, the
"RELEVANT
ANNIVERSARY") and (b) the greater of (A) the greater of (i) [ ]
times the
aggregate principal balance of all the Mortgage Loans in the
Mortgage Pool as of
the Relevant Anniversary having a Loan-to-Value at origination
which exceeds 75%
and (ii) $[ ]; and (B) the greater of (i) the product of (x) an
amount equal to
the largest difference in the related Monthly Payment for any
Non-Primary
Residence Loan remaining in the Mortgage Pool which had an
original
Loan-to-Value Ratio of 80% or greater that would result if the Net
Mortgage Rate
thereof was equal to the weighted average (based on the principal
balance of the
Mortgage Loans as of the Relevant Anniversary) of the Net Mortgage
Rates of all
Outstanding Mortgage Loans as of the Relevant Anniversary less [ ]%
per annum,
(y) a number equal to the weighted average remaining term to
maturity, in
months, of all Non-Primary Residence Loans remaining in the
Mortgage Pool as of
the Relevant Anniversary, and (z) one plus the quotient of the
number of all
Non-Primary Residence Loans remaining in the Mortgage Pool divided
by the total
number of Outstanding Mortgage Loans in the Mortgage Pool as of the
Relevant
Anniversary, and (ii) $[ ], over (2) the aggregate amount of
Bankruptcy Losses
allocated solely to one or more specific Classes of Certificates in
accordance
with Section 4.05 since the Relevant Anniversary. The Bankruptcy
Amount may be
further reduced by the Servicer (including accelerating the manner
in which such
coverage is reduced) PROVIDED THAT prior to any such reduction, the
Servicer
shall (i) obtain written confirmation from each Rating Agency that
such
reduction shall not reduce the rating assigned to any Class of
Certificates by
such Rating Agency below the lower of the then-current rating or
the rating
assigned to such Certificates as of the Closing Date by such Rating
Agency and
(ii) provide a copy of such written confirmation to the
Trustee.
"BANKRUPTCY CODE": The
Bankruptcy Code of 1978, as amended.
"BANKRUPTCY LOSS": With respect to any Mortgage Loan, a
Deficient
Valuation or Debt Service Reduction; PROVIDED, HOWEVER, that
neither a Deficient
Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss
hereunder so long as the Servicer has notified the Trustee in
writing that the
Servicer is diligently pursuing any remedies that may exist in
connection with
the representations and warranties made regarding the related
Mortgage Loan and
either (A) the related Mortgage Loan is not in default with regard
to payments
due thereunder or (B) delinquent payments of principal and interest
under the
related Mortgage Loan and any premiums on any applicable primary
hazard
insurance policy and any related escrow payments in respect of such
Mortgage
Loan are being advanced on a current basis by the Servicer or a
Subservicer, in
either case without giving effect to any Debt Service
Reduction.
"BUSINESS DAY": Any day other than (i) a Saturday or a Sunday or
(ii) a
day on which banking institutions in the State of New York or the
State of
California (and such other state or states in which the Custodial
Account or the
Certificate Account are at the time located) are required or
authorized by law
or executive order to be closed.
"CASH LIQUIDATION": As to any defaulted Mortgage Loan other than
a
Mortgage Loan as to which an REO Acquisition occurred, a
determination by the
Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and
other payments or cash recoveries which the Servicer reasonably and
in good
faith expects to be finally recoverable with respect to such
Mortgage Loan.
"CERTIFICATE": Any
Class A Certificate, Class M Certificate, Class B
Certificate or Class R Certificate.
"CERTIFICATE ACCOUNT": The account or accounts created and
maintained
pursuant to SECTION 4.01, which shall be entitled "[name of
Trustee], as
trustee, in trust for the registered holders of Taconic Asset
Acceptance
Company, L.L.C. Mortgage Pass-Through Certificates, Series
20[__-__]" and which
must be an Eligible Account.
"CERTIFICATE ACCOUNT DEPOSIT DATE": As to any Distribution Date,
the
Business Day prior thereto.
"CERTIFICATEHOLDER OR HOLDER": The Person in whose name a
Certificate
is registered in the Certificate Register, except that neither a
Disqualified
organization nor a Non-United States Person shall be a Holder of a
Class R
Certificate for purposes hereof. Solely for the purpose of giving
any consent or
direction pursuant to this Agreement, any Certificate, other than a
Class R
Certificate, registered in the name of the Company, the Servicer or
any
Subservicer or any Affiliate thereof shall be deemed not to be
outstanding and
the Percentage Interest or Voting Rights evidenced thereby shall
not be taken
into account in determining whether the requisite amount of
Percentage Interests
or Voting Rights necessary to effect any such consent or direction
has been
obtained. The Trustee shall be required to recognize as a "Holder"
or
"Certificateholder" only the Person in whose name a Certificate is
registered in
the Certificate Register.
"CERTIFICATE PRINCIPAL BALANCE": With respect to each Class A
Certificate (other than a Class A-5 Certificate) and Class R
Certificate, on any
date of determination, an amount equal to (i) the Initial
Certificate Principal
Balance of such Certificate as specified on the face thereof, plus
(ii) in the
case of each Class A-3 Certificate, all Accrued Certificate
Interest added to
the Certificate Principal Balance thereof on each Distribution Date
on or prior
to the Accretion Termination Date pursuant to SECTION 4.02(D),
minus (iii) the
sum of (x) the aggregate of all amounts previously distributed with
respect to
such Certificate (or any predecessor Certificate) and applied to
reduce the
Certificate Principal Balance thereof pursuant to SECTION 4.02(A)
and (y) the
aggregate of all reductions in Certificate Principal Balance deemed
to have
occurred in connection with Realized Losses which were previously
allocated to
such Certificate (or any predecessor Certificate) pursuant to
SECTION 4.05. With
respect to each Class M Certificate, on any date of determination,
an amount
equal to (i) the Initial Certificate Principal Balance of such
Class M
Certificate as specified on the face thereof, minus (ii) the sum of
(x) the
aggregate of all amounts previously distributed with respect to
such Certificate
(or any predecessor Certificate) and applied to reduce the
Certificate Principal
Balance thereof pursuant to SECTION 4.02(A) and (y) the aggregate
of all
reductions in Certificate Principal Balance deemed to have occurred
in
connection with Realized Losses which were previously allocated to
such
Certificate (or any predecessor Certificate) pursuant to SECTION
4.05; PROVIDED,
that if the Certificate Principal Balances of the Class B
Certificates have been
reduced to zero, the Certificate Principal Balance of each Class M
Certificate
shall thereafter be calculated to equal the Percentage Interest
evidenced by
such Certificate times the excess, if any, of (A) the then
aggregate Stated
Principal Balance of the Mortgage Loans over (B) the then aggregate
Certificate
Principal Balance of all other Classes of Certificates then
outstanding. With
respect to each Class B Certificate, on any date of determination,
an amount
equal to (i) the Initial Certificate Principal Balance of such
Class B
Certificate as specified on the face thereof, minus (ii) the sum of
(x) the
aggregate of all amounts previously distributed with respect to
such Certificate
(or any predecessor Certificate) and applied to reduce the
Certificate Principal
Balance thereof pursuant to SECTION 4.02(a) and (y) the aggregate
of all
reductions in Certificate Principal Balance deemed to have occurred
in
connection with Realized Losses which were previously allocated to
such
Certificate (or any predecessor Certificate) pursuant to SECTION
4.05; PROVIDED,
THAT the Certificate Principal Balance of each Class B Certificate
shall be
calculated to equal the Percentage Interest evidenced by such
Certificate times
the excess, if any, of (A) the then aggregate Stated Principal
Balance of the
Mortgage Loans over (B) the then aggregate Certificate Principal
Balance of all
other Classes of Certificates then outstanding. The Class A-5
Certificates have
no Certificate Principal Balance.
"CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR": The register
maintained and the registrar appointed pursuant to SECTION
5.02.
"CLASS": Collectively,
all of the Certificates bearing the same
designation.
"CLASS A CERTIFICATE": Any one of the Class A-1, Class A-2, Class
A-3,
Class A-4 or Class A-5 Certificates, executed by the Trustee and
authenticated
by the Certificate Registrar substantially in the form annexed
hereto as Exhibit
A, each such Certificate (other than the Class A-5 Certificates)
evidencing an
interest designated as a "regular interest" in the REMIC for
purposes of the
REMIC Provisions. The Class A-5 Certificates will represent the
entire
beneficial ownership interest in the Uncertificated REMIC Regular
Interests.
"CLASS A-4 PRINCIPAL DISTRIBUTION AMOUNT": As defined in SECTION
4.02(b)(i).
"CLASS B CERTIFICATE": Any one of the Class B Certificates executed
by
the Trustee and authenticated by the Certificate Registrar
substantially in the
form annexed hereto as Exhibit C and evidencing an interest
designated as a
"regular interest" in the REMIC purposes of the REMIC
Provisions.
"CLASS B PERCENTAGE": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the
aggregate
Certificate Principal Balance of the Class B Certificates
immediately prior to
such date and the denominator of which is the aggregate Stated
Principal Balance
of all of the Mortgage Loans (or related REO Properties) (other
than the related
Discount Fraction of each Discount Mortgage Loan) immediately prior
to such
Distribution Date.
"CLASS B PREPAYMENT DISTRIBUTION TRIGGER": With respect to any
Distribution Date, a test that shall be satisfied if the fraction
(expressed as
a percentage) equal to the sum of the Certificate Principal
Balances of the
Class B Certificates immediately prior to such Distribution Date
divided by the
aggregate Stated Principal Balance of all of the Mortgage Loans (or
related REO
Properties) immediately prior to such Distribution Date is greater
than or equal
to [ ]%.
"CLASS M CERTIFICATE": Any one of the Class M Certificates executed
by
the Trustee and authenticated by the Certificate Registrar
substantially in the
form annexed hereto as EXHIBIT B and evidencing an interest
designated as a
"regular interest" in the REMIC for purposes of the REMIC
Provisions.
"CLASS M PERCENTAGE": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the
aggregate
Certificate Principal Balance of the Class M Certificates
immediately prior to
such date and the denominator of which is the aggregate Stated
Principal Balance
of all of the Mortgage Loans (or related REO Properties) (other
than the related
Discount Fraction of each Discount Mortgage Loan) immediately prior
to such
Distribution Date.
"CLASS M PREPAYMENT DISTRIBUTION TRIGGER": With respect to any
Distribution Date, a test that shall be satisfied if the fraction
(expressed as
a percentage) equal to the sum of the Certificate Principal
Balances of the
Class M Certificates and Class B Certificates immediately prior to
such
Distribution Date divided by the aggregate Stated Principal Balance
of all of
the Mortgage Loans (or related REO Properties) immediately prior to
such
Distribution Date is greater than or equal to [ ]%.
"CLASS R CERTIFICATE": Any one of the Class R Certificates executed
by
the Trustee and authenticated by the Certificate Registrar
substantially in the
form annexed hereto as Exhibit D and evidencing an interest
designated as a
"residual interest" in the REMIC for purposes of the REMIC
Provisions.
"CLOSING DATE":
[__________, 20__].
"CODE": The Internal
Revenue Code of 1986.
["COMPENSATING INTEREST": With respect to any Distribution Date,
an
amount equal to Prepayment Interest Shortfalls resulting from
Principal
Prepayments in Full during the related Prepayment Period, but not
more than
one-twelfth of [______]% of the Stated Principal Balance of the
Mortgage Loans
immediately preceding such Distribution Date.]
"CORPORATE TRUST OFFICE": The principal office of the Trustee at
which
at any particular time its corporate trust business with respect to
this
Agreement shall be administered, which office at the date of the
execution of
this instrument is located at [address of Trustee], Attention:
Corporate Trust
Administration Series 20[__-__].
"CREDIT SUPPORT DEPLETION DATE": The first Distribution Date on
which
the Senior Percentage equals 100%.
"CURTAILMENT": Any Principal Prepayment made by a Mortgagor which
is
not a Principal Prepayment in Full.
"CUSTODIAL ACCOUNT": The custodial account or accounts created
and
maintained pursuant to SECTION 3.07 in the name of a depository
institution, as
custodian for the holders of the Certificates, for the holders of
certain other
interests in mortgage loans serviced or sold by the Servicer and
for the
Servicer, into which the amounts set forth in SECTION 3.07 shall be
deposited
directly. Any such account or accounts shall be an Eligible
Account.
"CUSTODIAL AGREEMENT": An agreement that may be entered into among
the
Company, the Servicer, the Trustee and a Custodian in substantially
the form of
EXHIBIT E hereto.
"CUSTODIAN": A
custodian appointed pursuant to a Custodial Agreement.
"CUT-OFF DATE":
[________ 1, 20__].
"CUT-OFF DATE PRINCIPAL BALANCE": As to any Mortgage Loan, the
unpaid
principal balance thereof at the Cut-off Date after giving effect
to all
installments of principal due on or prior thereto, whether or not
received.
"DEBT SERVICE REDUCTION": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan
by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code,
except such a
reduction constituting a Deficient Valuation or any reduction that
results in a
permanent forgiveness of principal.
"DEFICIENT VALUATION": With respect to any Mortgage Loan, a
valuation
by a court of competent jurisdiction of the Mortgaged Property in
an amount less
than the then outstanding indebtedness under the Mortgage Loan, or
any reduction
in the amount of principal to be paid in connection with any
scheduled Monthly
Payment that constitutes a permanent forgiveness of principal,
which valuation
or reduction results from a proceeding under the Bankruptcy
Code.
"DELETED MORTGAGE LOAN": A Mortgage Loan replaced or to be
replaced
with a Qualified Substitute Mortgage Loan.
"DESTROYED MORTGAGE NOTE": A Mortgage Note the original of which
was
permanently lost or destroyed and has not been replaced.
"DETERMINATION DATE": With respect to any Distribution Date, the
20th
day (or if such 20th day is not a Business Day, the Business Day
immediately
following such 20th day) of the month of the related Distribution
Date.
"DISCOUNT FRACTION": With respect to each Discount Mortgage Loan,
the
fraction expressed as a percentage, the numerator of which is
[___]% minus the
Net Mortgage Rate (or the initial Net Mortgage Rate with respect to
any Discount
Mortgage Loans as to which the Mortgage Rate is modified pursuant
to SECTION
3.07(A)) for such Mortgage Loan and the denominator of which is
[___]%. The
Discount Fraction with respect to each Discount Mortgage Loan is
set forth on
EXHIBIT P attached hereto.
"DISCOUNT MORTGAGE LOAN": Any Mortgage Loan having a Net Mortgage
Rate
of less than [____]% and any Mortgage Loan deemed to be a Discount
Mortgage Loan
pursuant to the definition of Qualified Substitute Mortgage
Loan.
"DISQUALIFIED ORGANIZATION": Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code,
which includes
any of the following: (i) the United States, any State or political
subdivision
thereof, any possession of the United States, or any agency or
instrumentality
of any of the foregoing (other than an instrumentality which is a
corporation if
all of its activities are subject to tax and, except for the FHLMC,
a majority
of its board of directors is not selected by such governmental
unit), (ii) a
foreign government, any international organization, or any agency
or
instrumentality of any of the foregoing, (iii) any organization
(other than
certain farmers' cooperatives described in Section 521 of the Code)
which is
exempt from the tax imposed by Chapter 1 of the Code (including the
tax imposed
by Section 511 of the Code on unrelated business taxable income),
(iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)
of the Code
and (v) any other Person so designated by the Trustee based upon an
Opinion of
Counsel that the holding of an Ownership Interest in a Class R
Certificate by
such Person may cause the REMIC or any Person having an Ownership
Interest in
any Class of Certificates (other than such Person) to incur a
liability for any
federal tax imposed under the Code that would not otherwise be
imposed but for
the Transfer of an Ownership Interest in a Class R Certificate to
such Person.
The terms "United States", "State" and "international organization"
shall have
the meanings set forth in Section 7701 of the Code or successor
provisions.
"DISTRIBUTION DATE": The 25th day of any month beginning in the
month
immediately following the month of the initial issuance of the
Certificates or,
if such 25th day is not a Business Day, the Business Day
immediately following
such 25th day.
"DUE DATE": With
respect to any Distribution Date, the first day of
the month in which such Distribution Date occurs.
"DUE PERIOD": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of
such
Distribution Date and ending on the related Due Date.
"ELIGIBLE ACCOUNT": An account that is any of the following:
(i)
maintained with a depository institution the debt obligations of
which have been
rated by each Rating Agency in its highest rating available, or
(ii) an account
or accounts in a depository institution in which such accounts are
fully insured
to the limits established by the FDIC, PROVIDED THAT any deposits
not so insured
shall, to the extent acceptable to each Rating Agency, as evidenced
in writing,
be maintained such that (as evidenced by an Opinion of Counsel
delivered to the
Trustee and each Rating Agency) the registered Holders of
Certificates have a
claim with respect to the funds in such account or a perfected
first security
interest against any collateral (which shall be limited to
Permitted
Investments) securing such funds that is superior to claims of any
other
depositors or creditors of the depository institution with which
such account is
maintained, or (iii) in the case of the Custodial Account, either
(A) a trust
account or accounts maintained in the corporate trust department
of
[____________________] or (B) an account or accounts maintained in
the corporate
asset services department of [____________________], as long as its
short term
debt obligations are rated P-1 (or the equivalent) or better by
each Rating
Agency, and its long term debt obligations are rated A2 (or the
equivalent) or
better, by each Rating Agency, or (iv) in the case of the
Certificate Account, a
trust account or accounts maintained in the corporate trust
division of
[____________________], or (v) an account or accounts of a
depository
institution acceptable to each Rating Agency (as evidenced in
writing by each
Rating Agency that use of any such account as the Custodial Account
or the
Certificate Account will not reduce the rating assigned to any
Class of
Certificates by such Rating Agency below the lower of the
then-current rating or
the rating assigned to such Certificates as of the Closing Date by
such Rating
Agency).
"EVENT OF DEFAULT": As
defined in SECTION 7.01.
"EXCESS BANKRUPTCY LOSS": Any Bankruptcy Loss, or portion
thereof,
which exceeds the then applicable Bankruptcy Amount.
"EXCESS FRAUD LOSS": Any Fraud Loss, or portion thereof, which
exceeds
the then applicable Fraud Loss Amount.
"EXCESS SPECIAL HAZARD LOSS": Any Special Hazard Loss, or
portion
thereof, that exceeds the then applicable Special Hazard
Amount.
"EXCESS SUBORDINATE PRINCIPAL AMOUNT": With respect to any
Distribution
Date on which the Certificate Principal Balance of the most
subordinate class or
classes of Certificates (as established in SECTION 4.05 hereof)
then outstanding
is to be reduced to zero and on which Realized Losses are to be
allocated to
such class or classes, the amount, if any, by which (i) the amount
that would
otherwise be distributable in respect of principal on such classes
of
Certificates on such Distribution Date is greater than (ii) the
excess, if any,
of the Certificate Principal Balance of such classes of
Certificates immediately
prior to such Distribution Date over the aggregate amount of
Realized Losses to
be allocated to such classes of Certificates on such Distribution
Date.
"EXTRAORDINARY EVENTS": Any of the following conditions with
respect to
a Mortgaged Property or Mortgage Loan causing or resulting in a
loss which
causes the liquidation of such Mortgage Loan:
(a) losses that are of a type that would be covered by the
fidelity bond and the errors and omissions insurance policy
required to
be maintained pursuant to SECTION 3.12(B) but are in excess of
the
coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether
such
loss be direct or indirect, proximate or remote or be in whole or
in
part caused by, contributed to or aggravated by a peril covered by
the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending against
an
actual, impending or expected attack:
1. by any government or sovereign power, de jure or
de facto, or by any authority maintaining or using military,
naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power,
authority or forces;
(d) any weapon of war employing atomic fission or radioactive
force whether in time of peace or war; or
(e) insurrection,
rebellion, revolution, civil war, usurped
power or action taken by governmental authority in hindering,
combating
or defending against such an occurrence, seizure or destruction
under
quarantine or customs regulations, confiscation by order of any
government or public authority; or risks of contraband or
illegal
transportation or trade.
"EXTRAORDINARY LOSSES": Any loss incurred on a Mortgage Loan caused
by
or resulting from an Extraordinary Event.
"FDIC": Federal
Deposit Insurance Corporation or any successor
thereto.
"FHLMC": 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.
"FINAL DISTRIBUTION DATE": The Distribution Date on which the
final
distribution in respect of the Certificates will be made pursuant
to SECTION
9.01 which Final Distribution Date shall in no event be later than
the end of
the 90-day liquidation period described in SECTION 9.03.
"FITCH": Fitch
Investors Service, Inc. or its successor in interest.
"FNMA": Federal National Mortgage Association, a federally
chartered
and privately owned corporation organized and existing under the
Federal
National Mortgage Association Charter Act, or any successor
thereto.
"FORECLOSURE PROFITS": As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of
Liquidation
Proceeds, Insurance Proceeds and REO Proceeds (net of all amounts
reimbursable
therefrom pursuant to SECTION 3.10(A)(II)) in respect of each
Mortgage Loan or
REO Property for which a Cash Liquidation or REO Disposition
occurred in the
related Prepayment Period over the sum of the unpaid principal
balance of such
Mortgage Loan or REO Property (determined, in the case of an REO
Disposition, in
accordance with SECTION 3.14) plus accrued and unpaid interest at
the Mortgage
Rate on such unpaid principal balance from the Due Date to which
interest was
last paid by the Mortgagor to the first day of the month following
the month in
which such Cash Liquidation or REO Disposition occurred.
"FRAUD LOSS AMOUNT": As of any date of determination after the
Cut-off
Date, an amount equal to: (X) prior to the first anniversary of the
Cut-off Date
an amount equal to [2.00]% of the aggregate outstanding principal
balance of all
of the Mortgage Loans as of the Cut-off Date minus the aggregate
amount of Fraud
Losses allocated solely to one or more specific Classes of
Certificates in
accordance with SECTION 4.05 since the Cut-off Date up to such date
of
determination and (Y) from the first to the [fifth] anniversary of
the Cut-off
Date, an amount equal to (1) the lesser of (a) the Fraud Loss
Amount as of the
most recent anniversary of the Cut-off Date and (b) [1.00]% of the
aggregate
outstanding principal balance of all of the Mortgage Loans as of
the most recent
anniversary of the Cut-off Date minus (2) the Fraud Losses
allocated solely to
one or more specific Classes of Certificates in accordance with
SECTION 4.05
since the most recent anniversary of the Cut-off Date up to such
date of
determination. On and after the fifth anniversary of the Cut-off
Date the Fraud
Loss Amount shall be zero.
The Fraud Loss Amount may be further reduced by the Servicer
(including
accelerating the manner in which such coverage is reduced) PROVIDED
THAT prior
to any such reduction, the Servicer shall (i) obtain written
confirmation from
each Rating Agency that such reduction shall not reduce the rating
assigned to
any Class of Certificates by such Rating Agency below the lower of
the
then-current rating and the rating assigned to such Certificates as
of the
Closing Date by such Rating Agency and (ii) provide a copy of such
written
confirmation to the Trustee.
"FRAUD LOSSES": Losses on Mortgage Loans as to which there was
fraud in
the origination of such Mortgage Loan.
"INDEPENDENT": When used with respect to any specified Person,
means
such a Person who (i) is in fact independent of the Company, the
Servicer and
the Trustee, or any Affiliate thereof, (ii) does not have any
direct financial
interest or any material indirect financial interest in the
Company, the
Servicer or the Trustee or in an Affiliate thereof, and (iii) is
not connected
with the Company, the Servicer or the Trustee as an officer,
employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.
"INITIAL CERTIFICATE PRINCIPAL BALANCE": With respect to each Class
of
Certificates, the Certificate Principal Balance of such Class of
Certificates as
of the Cut-off Date as set forth in the Preliminary Statement
hereto.
"INITIAL MONTHLY PAYMENT FUND": As defined in Section 2.01(f).
"INSURANCE PROCEEDS": Proceeds paid in respect of the Mortgage
Loans
pursuant to any Primary Insurance Policy or any other related
insurance policy
covering a Mortgage Loan, to the extent such proceeds are payable
to the
mortgagee under the Mortgage, any Subservicer, the Servicer or the
Trustee and
are not applied to the restoration of the related Mortgaged
Property or released
to the Mortgagor in accordance with the procedures that the
Servicer would
follow in servicing mortgage loans held for its own account.
"INSURER": Any named insurer under any Primary Insurance Policy or
any
successor thereto or the named insurer in any replacement
policy.
"LATE COLLECTIONS": With respect to any Mortgage Loan, all
amounts
received during any Due Period, whether as late payments of Monthly
Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late
payments or collections of Monthly Payments due but delinquent for
a previous
Due Period and not previously recovered.
"LIQUIDATION PROCEEDS": Amounts (other than Insurance Proceeds)
received by the Servicer in connection with the taking of an entire
Mortgaged
Property by exercise of the power of eminent domain or condemnation
or in
connection with the liquidation of a defaulted Mortgage Loan
through trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds.
"LOAN-TO-VALUE RATIO": As of any date, the fraction, expressed as
a
percentage, the numerator of which is the current principal balance
of the
related Mortgage Loan at the date of determination and the
denominator of which
is the Appraised Value of the related Mortgaged Property.
"MATURITY DATE": With respect to (i) a Class of Certificates
representing a regular interest in the REMIC or (ii) an
Uncertificated REMIC
Regular Interest, the latest possible maturity date, solely for
purposes of
Section 1.860G-l(a)(4)(iii) of the Treasury regulations, by which
the
Certificate Principal Balance or Uncertificated Notional Amount,
respectively,
thereof would be reduced to zero.
"MONTHLY PAYMENT": With respect to any Mortgage Loan (including any
REO
Property) and any Due Date, the payment of principal and interest
due thereon in
accordance with the amortization schedule at the time applicable
thereto (after
adjustment, if any, for curtailments and for Deficient Valuations
occurring
prior to such Due Date but before any adjustment to such
amortization schedule
by reason of any bankruptcy, other than a Deficient Valuation, or
similar
proceeding or any moratorium or similar waiver or grace
period).
"MOODY'S": Moody's Investors Service, Inc. or its successor in
interest.
["MORTGAGE": The mortgage, deed of trust or other comparable
instrument
creating a first lien on an estate in fee simple or leasehold
interest in real
property securing a Mortgage Note.]
"MORTGAGE FILE": The mortgage documents listed in SECTION 2.01
pertaining to a particular Mortgage Loan and any additional
documents required
to be added to the Mortgage File pursuant to this Agreement.
"MORTGAGE LOAN PURCHASE AGREEMENT": The agreement among the Seller,
the
Responsible Party and the Company, regarding the sale of the
Mortgage Loans by
the Seller to the Company.
"MORTGAGE LOAN SCHEDULE": The list of the Mortgage Loans
attached
hereto as EXHIBIT F (as amended from time to time to reflect the
addition of
Qualified Substitute Mortgage Loans), which list shall set forth at
a minimum
the following information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the street address of the Mortgaged Property including
state and zip code;
(iii) the maturity of the Mortgage Note;
(iv) the Mortgage Rate;
(v) the Subservicer pass-through rate;
(vi) the Net Mortgage Rate;
(vii) [the Pool Strip Rate];
(viii) the initial scheduled monthly payment of principal, if
any, and interest;
(ix) the Cut-off Date Principal Balance;
(x) the Loan-to-Value Ratio at origination;
(xi) the rate at which the Subservicing Fee accrues; and
(xii) a code indicating whether the Mortgage Loan is an owner
occupied residence.
Such schedule may consist of multiple reports that collectively set
forth all of
the information requested.
"MORTGAGE LOANS": Such of the mortgage loans transferred and
assigned
to the Trustee pursuant to SECTION 2.01 as from time to time are
held or deemed
to be held as a part of the Trust Fund, the Mortgage Loans
originally so held
being identified in the initial Mortgage Loan Schedule, and
Qualified Substitute
Mortgage Loans held or deemed held as part of the Trust Fund
including, without
limitation, each related Mortgage Note, Mortgage and Mortgage File
and all
rights appertaining thereto.
"MORTGAGE NOTE": The originally executed note or other evidence
of
indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan,
together with any modification thereto.
"MORTGAGE RATE": As to any Mortgage Loan, the interest rate borne
by
the related Mortgage Note, or any modification thereto.
"MORTGAGED PROPERTY": The underlying real property securing a
Mortgage
Loan.
"MORTGAGOR": The
obligor on a Mortgage Note.
"NET MORTGAGE RATE": As to each Mortgage Loan, a per annum rate
of
interest equal to the Adjusted Mortgage Rate less the Servicing Fee
Rate.
"NON-DISCOUNT MORTGAGE LOANS": The Mortgage Loans other than
the
Discount Mortgage Loans.
"NON-PRIMARY RESIDENCE LOANS": The Mortgage Loans designated as
secured
by second or vacation residences, or by non-owner occupied
residences, on the
Mortgage Loan Schedule.
"NON-UNITED STATES PERSON": Any Person other than a United
States
Person.
"NONRECOVERABLE ADVANCE": Any Advance previously made or proposed
to be
made by the Servicer in respect of a Mortgage Loan (other than a
Deleted
Mortgage Loan) which, in the good faith judgment of the Servicer,
will not, or,
in the case of a proposed Advance, would not, be ultimately
recoverable by the
Servicer from related Late Collections, Insurance Proceeds,
Liquidation
Proceeds, REO Proceeds or amounts reimbursable to the Servicer
pursuant to
SECTION 4.02(A) hereof.
"NONSUBSERVICED MORTGAGE LOAN": Any Mortgage Loan that, at the time
of
reference thereto, is not subject to a Subservicing Agreement.
"NOTIONAL AMOUNT": As of any Distribution Date, and with respect to
the
Class A-5 Certificates, the aggregate Certificate Principal Balance
of all
Classes of Certificates immediately prior to such date.
"OFFICERS' CERTIFICATE": A certificate signed by the President,
the
Chief Financial Officer, the Treasurer, any Vice President, the
Secretary or any
other officer specifically authorized by the board of directors of
the Company
or of the Servicer, as the case may be, and delivered to the
Trustee, as
required by this Agreement.
"OPINION OF COUNSEL": A written opinion of counsel acceptable to
the
Trustee and the Servicer, who may be counsel for the Company or the
Servicer,
PROVIDED THAT any opinion of counsel (i) referred to in the
definition of
"Permitted Transferee" or (ii) relating to the qualification of the
Trust Fund
as a REMIC or compliance with the REMIC Provisions must, unless
otherwise
specified, be an opinion of Independent counsel.
"ORIGINAL SENIOR PERCENTAGE": [_____]%, which is the fraction,
expressed as a percentage, the numerator of which is the aggregate
Initial
Certificate Principal Balance of the Class A Certificates (other
than the Class
A-4 Certificates) and Class R Certificates and the denominator of
which is the
aggregate Stated Principal Balance of the Mortgage Loans (other
than the
Discount Fraction of the Discount Mortgage Loans).
"OUTSTANDING MORTGAGE LOAN": As to any Due Date, a Mortgage
Loan
(including an REO Property) which was not the subject of a
Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not
purchased,
deleted or substituted for prior to such Due Date pursuant to
SECTION 2.02, 2.03
or 2.04.
"OWNERSHIP INTEREST": As to any Certificate, any ownership or
security
interest in such Certificate, including any interest in such
Certificate as the
Holder thereof and any other interest therein, whether direct or
indirect, legal
or beneficial, as owner or as pledgee.
"PASS-THROUGH RATE": With respect to the Class A Certificates
(other
than the Class A-5 Certificates), Class M Certificates, Class B
Certificates and
Class R Certificates and any Distribution Date, the per annum rate
set forth in
the PRELIMINARY STATEMENT hereto. With respect to the Class A-5
Certificates and
any Distribution Date, a rate equal to the weighted average,
expressed as a
percentage, of the Pool Strip Rates of all Mortgage Loans in the
Trust Fund as
of the Due Date in the month immediately preceding the month in
which such
Distribution Date occurs, weighted on the basis of the respective
Stated
Principal Balances of such Mortgage Loans, which Stated Principal
Balances shall
be the Stated Principal Balances of such Mortgage Loans at the
close of business
on the immediately preceding Distribution Date after giving effect
to
distributions thereon allocable to principal (or, in the case of
the
Pass-Through Rate for the initial Distribution Date, at the close
of business on
the Cutoff Date). With respect to the Class A-5 Certificates and
the initial
Distribution Date, the Pass-Through Rate is equal to [____]% per
annum.
"PAYING AGENT": [Name of Trustee] or any successor Paying Agent
appointed by the Trustee.
"PERCENTAGE INTEREST": With respect to any Certificate (other than
a
Class A-5 or Class R Certificate), the undivided percentage
ownership interest
in the related Class evidenced by such Certificate, which
percentage ownership
interest shall be equal to the Initial Certificate Principal
Balance thereof
divided by the aggregate Initial Certificate Principal Balance of
all of the
Certificates of the same Class. With respect to a Class A-5 or
Class R
Certificate, the interest in distributions to be made with respect
to such Class
evidenced thereby, expressed as a percentage, as stated on the face
of each such
Certificate.
"PERMITTED INVESTMENTS": One or more of the following:
(i) obligations of or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof when
such
obligations are backed by the full faith and credit of the
United
States;
(ii) repurchase agreements on obligations specified in CLAUSE
(I) maturing not more than one month from the date of
acquisition
thereof, PROVIDED THAT the unsecured obligations of the party
agreeing
to repurchase such obligations are at the time rated by each
Rating
Agency in its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have
an
original maturity of not more than 90 days and, in the case of
bankers'
acceptances, shall in no event have an original maturity of more
than
365 days or a remaining maturity of more than 30 days) denominated
in
United States dollars of any U.S. depository institution or
trust
company incorporated under the laws of the United States or any
state
thereof or of any domestic branch of a foreign depository
institution
or trust company; PROVIDED THAT the debt obligations of such
depository
institution or trust company (or, if the only Rating Agency is
Standard
& Poor's, in the case of the principal depository institution
in a
depository institution holding company, debt obligations of the
depository institution
holding company) at the date of acquisition
thereof have been rated by each Rating Agency in its highest
short-term
rating available; and PROVIDED FURTHER THAT, if the only Rating
Agency
is Standard & Poor's and if the depository or trust company is
a
principal subsidiary of a bank holding company and the debt
obligations
of such subsidiary are not separately rated, the applicable
rating
shall be that of the bank holding company; and, PROVIDED FURTHER
that,
if the original maturity of such short-term obligations of a
domestic
branch of a foreign depository institution or trust company
shall
exceed 30 days, the short-term rating of such institution shall be
A-l+
in the case of Standard & Poor's if Standard & Poor's is
the Rating
Agency;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of
the
United States or any state thereof which on the date of acquisition
has
been rated by each Rating Agency in its highest short-term
rating
available; PROVIDED THAT such commercial paper shall have a
remaining
maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated
by each Rating Agency in its highest long-term rating available;
and
(vi) other obligations or securities that are acceptable to
each Rating Agency as a Permitted Investment hereunder and will
not
reduce the rating assigned to any Class of Certificates by such
Rating
Agency below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such
Rating
Agency, as evidenced in writing;
PROVIDED, HOWEVER, that no instrument shall be a Permitted
Investment if it
represents, either (1) the right to receive only interest payments
with respect
to the underlying debt instrument or (2) the right to receive both
principal and
interest payments derived from obligations underlying such
instrument and the
principal and interest payments with respect to such instrument
provide a yield
to maturity greater than 120% of the yield to maturity at par of
such underlying
obligations. References herein to the highest rating available on
unsecured
long-term debt shall mean AAA in the case of Standard & Poor's
and Fitch and Aaa
in the case of Moody's, and references herein to the highest rating
available on
unsecured commercial paper and short-term debt obligations shall
mean A-1 in the
case of Standard & Poor's, P-1 in the case of Moody's and
either A-1 by Standard
& Poor's, P-1 by Moody's or F-1 by Fitch in the case of
Fitch.
"PERMITTED TRANSFEREE": Any Transferee of a Class R Certificate,
other
than a Disqualified Organization or Non-United States Person.
"PERSON": Any individual, corporation, partnership, joint
venture,
association, joint-stock company, trust, unincorporated
organization or
government or any agency or political subdivision thereof.
"POOL STATED PRINCIPAL BALANCE": As of any date of determination,
the
aggregate of the Stated Principal Balances of each Mortgage Loan
that was an
Outstanding Mortgage Loan on the Due Date in the month preceding
the month of
such date of determination.
["POOL STRIP RATE": With respect to each Mortgage Loan, the rate
per
annum designated on the Mortgage Loan Schedule for such Mortgage
Loan. For
purposes of the definition of Qualified Substitute Mortgage Loan,
Pool Strip
Rate is the excess of the Net Mortgage Rate over [ ]% per annum
(but not less
than 0.00% per annum).]
"PREPAYMENT ASSUMPTION": A prepayment assumption of [____]% of
the
standard prepayment assumption, used for determining the accrual of
original
issue discount and market discount and premium on the Certificates
for federal
income tax purposes. The standard prepayment assumption assumes a
constant rate
of prepayment of mortgage loans of 0.2% per annum of the then
outstanding
principal balance of such mortgage loans in the first month of the
life of the
mortgage loans, increasing by an additional 0.2% per annum in each
succeeding
month until the thirtieth month, and a constant 6% per annum rate
of prepayment
thereafter for the life of the mortgage loans.
"PREPAYMENT DISTRIBUTION PERCENTAGE": With respect to any
Distribution
Date and each Class of Class M Certificates and Class B
Certificates, under the
applicable circumstances set forth below, the respective
percentages set forth
below:
(i) For any Distribution Date on which the Class M
Certificates are outstanding and prior to the later to occur of (x)
the
Distribution Date in [_______, 20_] and (y) the Distribution Date
on
which the Class B Percentage (before taking into account such
month's
distribution) equals or exceeds [____]%:
(a) in the case of the Class M Certificates, 100%;
and
(b) in the case of the Class B Certificates, 0%.
(ii) Notwithstanding the foregoing, if the application of the
foregoing percentages on any Distribution Date as provided in
SECTION
4.02 (determined without regard to the proviso to the definition
of
"Subordinate Principal Distribution Amount") would result in a
distribution in respect of principal of the Class M Certificates
and
Class B Certificates in an amount greater than the remaining
Certificate Principal Balance thereof (any such class, a
"MATURING
CLASS"), then: (a) the Prepayment Distribution Percentage of
each
Maturing Class shall be reduced to a level that, when applied
as
described above, would exactly reduce the Certificate Principal
Balance
of such Class to zero; (b) the Prepayment Distribution Percentage
of
the Class M Certificates (any such Class, a "NONMATURING CLASS")
shall
be recalculated in accordance with the provisions in paragraph
(ii)
above, as if the Certificate Principal Balance of each Maturing
Class
had been reduced to zero (such percentage as recalculated, the
"RECALCULATED PERCENTAGE"); (c) the total amount of the reductions
in
the Prepayment Distribution Percentages of the Maturing Class
pursuant
to clause (a) of this sentence, expressed as an aggregate
percentage,
shall be allocated among the NonMaturing Class in proportion to
their
respective Recalculated Percentages (the portion of such
aggregate
reduction so allocated to any Non-Maturing Class, the
"ADJUSTMENT
PERCENTAGE"); and (d) for purposes of such Distribution Date,
the
Prepayment Distribution Percentage of each Non-Maturing Class shall
be
equal to the sum of (1) the Prepayment Distribution Percentage
thereof,
calculated in accordance with the provisions in PARAGRAPH (II)
above as
if the Certificate Principal Balance of each Maturing Class had
not
been reduced to zero, plus (2) the related Adjustment
Percentage.
"PREPAYMENT DISTRIBUTION TRIGGER": The Class M Prepayment
Distribution
Trigger or Class B Prepayment Distribution Trigger.
"PREPAYMENT INTEREST SHORTFALL": As to any Distribution Date and
any
Mortgage Loan (other than a Mortgage Loan relating to an REO
Property) that was
the subject of (a) a Principal Prepayment in Full during the
related Prepayment
Period, an amount equal to the excess of one month's interest at
the Net
Mortgage Rate on the Stated Principal Balance of such Mortgage Loan
over the
amount of interest (adjusted to the Net Mortgage Rate) paid by the
Mortgagor for
such Prepayment Period to the date of such Principal Prepayment in
Full or (b) a
Curtailment during the prior calendar month, an amount equal to one
month's
interest at the Net Mortgage Rate on the amount of such
Curtailment.
"PREPAYMENT PERIOD": As to any Distribution Date, the calendar
month
preceding the month of distribution.
"PRIMARY INSURANCE POLICY": Each primary policy of mortgage
guaranty
insurance or any replacement policy therefor referred to in SECTION
2.03(b)(iv)
and (v).
"PRINCIPAL PREPAYMENT": Any payment of principal or other recovery
on a
Mortgage Loan, including a recovery that takes the form of
Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its
scheduled Due Date
and is not accompanied by an amount as to interest representing
scheduled
interest on such payment due on any date or dates in any month or
months
subsequent to the month of prepayment.
"PRINCIPAL PREPAYMENT IN FULL": Any Principal Prepayment made by
a
Mortgagor of the entire principal balance of a Mortgage Loan.
"PURCHASE PRICE": With respect to any Mortgage Loan (or REO
Property)
required to be purchased on any date pursuant to SECTION 2.02,
2.03, 2.04 or
4.07, an amount equal to the sum of (i) 100% of the Stated
Principal Balance
thereof plus the principal portion of any related unreimbursed
Advances and (ii)
unpaid accrued interest at the Adjusted Mortgage Rate (or at the
Net Mortgage
Rate in the case of a purchase made by the Servicer) on the Stated
Principal
Balance thereof to the first day of the month following the month
of purchase
from the Due Date to which interest was last paid by the
Mortgagor.
"QUALIFIED SUBSTITUTE MORTGAGE LOAN": A Mortgage Loan substituted
by
the Seller or the Company for a Deleted Mortgage Loan which must,
on the date of
such substitution, as confirmed in an Officers' Certificate
delivered to the
Trustee, (i) have an outstanding principal balance, after deduction
of the
principal portion of the monthly payment due in the month of
substitution (or in
the case of a substitution of more than one Mortgage Loan for a
Deleted Mortgage
Loan, an aggregate outstanding principal balance, after such
deduction), not in
excess of the Stated Principal Balance of the Deleted Mortgage Loan
(the amount
of any shortfall to be deposited by the Seller, in the Custodial
Account in the
month of substitution); (ii) have a Mortgage Rate and a Net
Mortgage Rate no
lower than and not more than 1% per annum higher than the Mortgage
Rate and Net
Mortgage Rate, respectively, of the Deleted Mortgage Loan as of the
date of
substitution; (iii) have a Loan-to-Value Ratio at the time of
substitution no
higher than that of the Deleted Mortgage Loan at the time of
substitution; (iv)
have a remaining term to stated maturity not greater than (and not
more than one
year less than) that of the Deleted Mortgage Loan; (v) comply with
each
representation and warranty set forth in SECTIONS 2.03 and 2.04
hereof; and (vi)
have a Pool Strip Rate equal to or greater than that of the Deleted
Mortgage
Loan. Notwithstanding any other provisions herein, [(x) with
respect to any
Qualified Substitute Mortgage Loan substituted for a Deleted
Mortgage Loan which
was a Discount Mortgage Loan, such Qualified Substitute Mortgage
Loan shall be
deemed to be a Discount Mortgage Loan and to have a Discount
Fraction equal to
the Discount Fraction of the Deleted Mortgage Loan and (y)] in the
event that
the Pool Strip Rate of any Qualified Substitute Mortgage Loan as
calculated
pursuant to the definition of "Pool Strip Rate" is greater than the
Pool Strip
Rate of the related Deleted Mortgage Loan (i) the Pool Strip Rate
of such
Qualified Substitute Mortgage Loan shall be equal to the Pool Strip
Rate of the
related Deleted Mortgage Loan for purposes of calculating the
Pass-Through Rate
on the Class A-5 Certificates and (ii) the excess of the Pool Strip
Rate on such
Qualified Substitute Mortgage Loan as calculated pursuant to the
definition of
"Pool Strip Rate" over the Pool Strip Rate on the related Deleted
Mortgage Loan
shall be payable to the Class R Certificates pursuant to SECTION
4.02 hereof.
"RATING AGENCY": [Fitch] [Standard & Poor's] [Moody's], with
respect to
the Class [A] Certificates and Class [R] Certificates, [Fitch]
[Standard &
Poor's] [Moody's] with respect to the Class [M] Certificates and
Class [B]
Certificates. If any agency or a successor is no longer in
existence, "Rating
Agency" shall be such statistical credit rating agency, or other
comparable
Person, designated by the Company, notice of which designation
shall be given to
the Trustee and the Servicer.
"REALIZED LOSS": With respect to each Mortgage Loan (or REO
Property)
as to which a Cash Liquidation or REO Disposition has occurred, an
amount (not
less than zero) equal to (i) the Stated Principal Balance of the
Mortgage Loan
(or REO Property) as of the date of Cash Liquidation or REO
Disposition, plus
(ii) interest (and REO Imputed Interest, if any) at the Net
Mortgage Rate from
the Due Date as to which interest was last paid or advanced to
Certificateholders up to the last day of the month in which the
Cash Liquidation
(or REO Disposition) occurred on the Stated Principal Balance of
such Mortgage
Loan (or REO Property) outstanding during each Due Period that such
interest was
not paid or advanced, minus (iii) the proceeds, if any, received
during the
month in which such Cash Liquidation (or REO Disposition) occurred,
to the
extent applied as recoveries of interest at the Net Mortgage Rate
and to
principal of the Mortgage Loan, net of the portion thereof
reimbursable to the
Servicer or any Subservicer with respect to related Advances or
expenses as to
which the Servicer or Subservicer is entitled to reimbursement
thereunder but
which have not been previously reimbursed. With respect to each
Mortgage Loan
which has become the subject of a Deficient Valuation, the
difference between
the principal balance of the Mortgage Loan outstanding immediately
prior to such
Deficient Valuation and the principal balance of the Mortgage Loan
as reduced by
the Deficient Valuation. With respect to each Mortgage Loan which
has become the
object of a Debt Service Reduction, the amount of such Debt Service
Reduction.
"RECORD DATE": With respect to each Distribution Date, the close
of
business on the last Business Day of the month next preceding the
month in which
the related Distribution Date occurs.
"REGULAR CERTIFICATE": Any of the Certificates other than a Class
R
Certificate.
"REMIC": A "real estate mortgage investment conduit" within the
meaning
of Section 860D of the Code. As used herein, the term "the REMIC"
shall mean the
REMIC created under this Agreement.
"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 temporary and final regulations (or, to the extent not
inconsistent with
such temporary or final regulations, proposed regulations) and
published
rulings, notices and announcements promulgated thereunder, as the
foregoing may
be in effect from time to time.
"REO ACQUISITION": The acquisition by the Servicer on behalf of
the
Trustee for the benefit of the Certificateholders of any REO
Property pursuant
to SECTION 3.14.
"REO DISPOSITION": As to any REO Property, a determination by
the
Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds, REO
Proceeds and other payments and recoveries (including proceeds of a
final sale)
which the Servicer expects to be finally recoverable from the sale
or other
disposition of the REO Property.
"REO IMPUTED INTEREST": As to any REO Property, for any period,
an
amount equivalent to interest (at the Net Mortgage 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 for
such period.
"REO PROCEEDS": Proceeds, net of expenses, received in respect of
any
REO Property (including, without limitation, proceeds from the
rental of the
related Mortgaged Property) which proceeds are required to be
deposited into the
Custodial Account only upon the related REO Disposition.
"REO PROPERTY": A Mortgaged Property acquired by the Servicer
through
foreclosure or deed in lieu of foreclosure in connection with a
defaulted
Mortgage Loan.
"REQUEST FOR RELEASE": A request for release, the forms of which
are
attached as EXHIBIT H hereto.
"REQUIRED INSURANCE POLICY": With respect to any Mortgage Loan,
any
insurance policy which is required to be maintained from time to
time under this
Agreement, the Program Guide or the related Subservicing Agreement
in respect of
such Mortgage Loan.
"RESPONSIBLE OFFICER": When used with respect to the Trustee,
any
officer of the Corporate Trust Department of the Trustee, including
any Senior
Vice President, any Vice President, any Assistant Vice President,
any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any
other officer of
the Trustee customarily performing functions similar to those
performed by any
of the above designated officers to whom, with respect to a
particular matter,
such matter is referred.
"RESPONSIBLE PARTY": [___________] in its capacity as Responsible
Party
under the Mortgage Loan Purchase Agreement.
"SCHEDULE OF DISCOUNT FRACTIONS": The schedule setting forth
the
Discount Fractions with respect to the Discount Mortgage Loans,
attached hereto
as EXHIBIT P.
"SELLER": Carrington Securities, LP a Delaware limited partnership,
in
its capacity as seller of the Mortgage Loans to the Company under
the Mortgage
Loan Purchase Agreement, and any successor thereto.
"SENIOR ACCELERATED DISTRIBUTION PERCENTAGE": With respect to
any
Distribution Date, the percentage indicated below:
<TABLE>
<CAPTION>
Senior Accelerated
Distribution Date
Distribution Percentage
---------------------------------------
------------------------------------------------------
<S>
<C>
[____ 20__] through [_______, ____]
[____]%
[_______, ____] through [_______, ____] Senior Percentage,
plus [_]% of the difference between
100% and the Senior Percentage
[_______, ____] through [_______, ____] Senior Percentage,
plus [_]% of the difference between
100% and the Senior Percentage
[_______, ____] through [_______, ____] Senior Percentage,
plus [_]% of the difference between
100% and the Senior Percentage
[_______, ____] through [_______, ____] Senior Percentage,
plus [_]% of the difference between
100% and the Senior Percentage
[_______, ____] and thereafter
Senior Percentage;
</TABLE>
PROVIDED, HOWEVER, (i) that any scheduled reduction to the Senior
Accelerated
Distribution Percentage described above shall not occur as of any
Distribution
Date unless either (a) (1) the outstanding principal balance of
Mortgage Loans
delinquent [__] days or more averaged over the last [__] months, as
a percentage
of the aggregate outstanding principal balance of all Mortgage
Loans averaged
over the last [__] months, does not exceed [__]% and (2) Realized
Losses on the
Mortgage Loans to date for such Distribution Date if occurring
during the
[__],[__], [__], [__] or [__] year (or any year thereafter) after
the Delivery
Date are less than [__]%, [__]%, [__]%, [__]% and [__]%,
respectively, of the
sum of the Initial Certificate Principal Balances of the Class M
Certificates
and Class B Certificates or (b) (1) the outstanding principal
balance of the
Mortgage Loans delinquent [__] days or more averaged over the last
[__] months,
as a percentage of the aggregate outstanding principal balance of
all Mortgage
Loans averaged over the last [__] months, does not exceed [__]% and
(2) Realized
Losses on the Mortgage Loans to date for such Distribution Date are
less than
[__]% of the sum of the Initial Certificate Principal Balances of
the Class M
Certificates and Class B Certificates and (ii) that for any
Distribution Date on
which the Senior Percentage is greater than the original Senior
Percentage, the
Senior Accelerated Distribution Percentage for such Distribution
Date shall be
100%. Notwithstanding the foregoing, upon the reduction of the
aggregate
Certificate Principal Balance of the Class A Certificates (other
than the Class
A-4 Certificates) and Class R Certificates to zero, the Senior
Accelerated
Distribution Percentage shall thereafter be 0%.
"SENIOR PERCENTAGE": As of any Distribution Date, the lesser of
100%
and a fraction, expressed as a percentage, the numerator of which
is the
aggregate Certificate Principal Balance of the Class A (other than
the Class A-4
Certificates) and Class R Certificates immediately prior to such
Distribution
Date and the denominator of which is the aggregate Stated Principal
Balance of
all of the Mortgage Loans (or related REO Properties) [other than
the related
Discount Fraction of each Discount Mortgage Loan)]immediately prior
to such
Distribution Date.
"SENIOR PRINCIPAL DISTRIBUTION AMOUNT": As to any Distribution
Date,
the lesser of (a) the balance of the Available Distribution Amount
remaining
after the distribution of all amounts required to be distributed
pursuant to
SECTION 4.02(A)(I) and (II)(X) and (b) the sum of the amounts
required to be
distributed to the Class A (other than the Class A-4
Certificateholders) and
Class R Certificateholders on such Distribution Date pursuant to
SECTION
4.02(A)(II), (XVI) and (XVII).
"SERVICING ACCOUNTS": The account or accounts created and
maintained
pursuant to SECTION 3.08.
"SERVICING ADVANCES": All customary, reasonable and necessary "out
of
pocket" costs and expenses incurred in the performance by the
Servicer of its
servicing obligations, including, but not limited to, the cost of
(i) the
preservation, restoration and protection of a Mortgaged Property,
(ii) any
enforcement or judicial proceedings, including foreclosures, (iii)
the
management and liquidation of any REO Property and (iv) compliance
with the
obligations under SECTIONS 3.01, 3.08, 3.12(A) and 3.14.
"SERVICING FEE": With respect to any Mortgage Loan and
Distribution
Date, the fee payable monthly to the Servicer in respect of master
servicing
compensation that accrues at Servicing Fee Rate on the Stated
Principal Balance
of such Mortgage Loan as of the related Due Date, as may be
adjusted with
respect to successor Servicers as provided in SECTION 7.02.
"SERVICING FEE RATE":
[___]% per annum for each Due Period.
"SERVICING OFFICER": Any officer of the Servicer involved in,
or
responsible for, the administration and servicing of the Mortgage
Loans whose
name and specimen signature appear on a list of servicing officers
furnished to
the Trustee by the Servicer, as such list may from time to time be
amended.
"SPECIAL HAZARD AMOUNT": As of any Distribution Date, an amount
equal
to $[___] minus the sum of (i) the aggregate amount of Special
Hazard Losses
allocated solely to one or more specific Classes of Certificates in
accordance
with SECTION 4.05 and (ii) the Adjustment Amount (as defined below)
as most
recently calculated. For each anniversary of the Cut-off Date, the
Adjustment
Amount shall be calculated and shall be equal to the amount, if
any, by which
the amount calculated in accordance with the preceding sentence
(without giving
effect to the deduction of the Adjustment Amount for such
anniversary) exceeds
the greater of (A) [the greater of (i) the product of [__]%
multiplied by the
outstanding principal balance of all the Mortgage Loans on the
Distribution Date
immediately preceding such anniversary times a fraction, the
numerator of which
is equal to the aggregate outstanding principal balance (as of the
immediately
preceding Distribution Date) of all of the Mortgage Loans secured
by Mortgaged
Properties located in the State of California divided by the
aggregate
outstanding principal balance (as of the immediately preceding
Distribution
Date) of all the Mortgage Loans, expressed as a percentage, and the
denominator
of which is equal to [__]% (which percentage is equal to the
percentage of
Mortgage Loans initially secured by Mortgaged Properties located in
the State of
California) and (ii) the aggregate outstanding principal balance
(as of the
immediately preceding Distribution Date) of the largest Mortgage
Loan secured by
a Mortgaged Property located in the State of California, and (B)
the lesser of
(i) the product of the Special Hazard Percentage for such
anniversary and the
outstanding principal balance of all the Mortgage Loans on the
Distribution Date
immediately preceding such anniversary, (ii) twice the outstanding
principal
balance of the Mortgage Loan in the Trust Fund which has the
largest outstanding
principal balance on the Distribution Date immediately preceding
such
anniversary and (iii) an amount calculated by the Servicer and
approved by each
Rating Agency, which amount shall not be less than $[___].]
The Special Hazard Amount may be further reduced by the
Servicer
(including accelerating the manner in which coverage is reduced)
PROVIDED THAT
prior to any such reduction, the Servicer shall (i) obtain written
confirmation
from each Rating Agency that such reduction shall not reduce the
rating assigned
to any Class of Certificates by such Rating Agency below the lower
of the
then-current rating and the rating assigned to such Certificates as
of the
Closing Date by such Rating Agency and (ii) provide a copy of such
written
confirmation to the Trustee.
"SPECIAL HAZARD LOSS": Any Realized Loss not in excess of the cost
of
the lesser of repair and replacement of a Mortgaged Property
suffered by such
Mortgaged Property on account of direct physical loss, exclusive of
(i) any loss
of a type covered by a hazard policy or a flood insurance policy
required to be
maintained in respect of such Mortgaged Property pursuant to
SECTION 3.12(A),
except to the extent of the portion of such loss not covered as a
result of any
coinsurance provision and (ii) any Extraordinary Loss.
"SPECIAL HAZARD PERCENTAGE": As of each anniversary of the
Cut-off
Date, the greater of (i) [___]% and (ii) the largest percentage
obtained by
dividing the aggregate outstanding principal balance (as of the
immediately
preceding Distribution Date) of the Mortgage Loans secured by
Mortgaged
Properties located in a single, five-digit zip code area in the
State of
California by the outstanding principal balance of all of the
Mortgage Loans as
of the immediately preceding Distribution Date.
"STANDARD &
POOR'S": Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or its successor in interest.
"STATED PRINCIPAL BALANCE": With respect to any Mortgage Loan
or
related REO Property, at any given time, (i) the Cut-off Date
Principal Balance
of the Mortgage Loan, minus (ii) the sum of (a) the principal
portion of the
Monthly Payments due with respect to such (Mortgage Loan or REO
Property during
each Due Period ending prior to the most recent Distribution Date
which were
received or with respect to which an Advance was made, and (b) all
Principal
Prepayments with respect to such Mortgage Loan or REO Property, and
all
Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the
extent applied
by the Servicer as recoveries of principal in accordance with
SECTION 3.14 with
respect to such Mortgage Loan or REO Property, in each case which
were
distributed pursuant to SECTION 4.02 on any previous Distribution
Date, and (c)
any Realized Loss allocated to Certificateholders with respect
thereto for any
previous Distribution Date.
"STARTUP DAY": With respect to the REMIC, the day designated as
such
pursuant to Section 10.1(b).
"SUBORDINATE PRINCIPAL DISTRIBUTION AMOUNT": With respect to
any
Distribution Date and each Class of Class M Certificates and Class
B
Certificates, (a) the sum of (i) the product of (x) the related
Class M
Percentage or Class B Percentage, as applicable, and (y) the
aggregate of the
amounts calculated for such Distribution Date under CLAUSES (1),
(2) and (3) of
SECTION 4.02(A)(II) (Y)(A) without giving effect to the Senior
Percentage, (ii)
such Class's pro rata share, based on the Certificate Principal
Balance of each
Class of Class M Certificates and Class B Certificates then
outstanding, of the
principal collections described in SECTION 4.02(A)(II)(Y)(B) to the
extent such
collections are not otherwise distributed to the Senior
Certificates, (iii) the
product of (x) the related Prepayment Distribution Percentage, (y)
100% minus
the Senior Accelerated Distribution Percentage and (z) the
aggregate of all
Principal Prepayments in Full and Curtailments received in the
related
Prepayment Period (other than the Discount Fraction of the Discount
Mortgage
Loans), (iv) if such Class is the most senior Class of Certificates
then
outstanding (as established in SECTION 4.05 hereof), any Excess
Subordinate
Principal Amount for such Distribution Date and (v) any amounts
described in
CLAUSES (I), (II) and (III) as determined for any previous
Distribution Date,
that remain undistributed to the extent that such amounts are not
attributable
to Realized Losses which have been allocated to a subordinate Class
of Class M
or Class B Certificates minus (b) any Excess Subordinate Principal
Amount not
payable to such Class on such Distribution Date pursuant to the
definition
thereof; PROVIDED, HOWEVER, that such amount shall in no event
exceed the
outstanding Certificate Principal Balance of such Class of
Certificates
immediately prior to such date.
"SUBSERVICED MORTGAGE LOAN": Any Mortgage Loan that, at the time
of
reference thereto, is subject to a Subservicing Agreement.
"SUBSERVICER": Any Person with whom the Servicer has entered into
a
Subservicing Agreement and who generally satisfied the requirements
set forth in
the Program Guide in respect of the qualification of a Subservicer
as of the
date of its approval as a Subservicer by the Servicer.
"SUBSERVICER ADVANCE": Any delinquent installment of principal
and
interest on a Mortgage Loan which is advanced by the related
Subservicer (net of
its Subservicing Fee) pursuant to the Subservicing Agreement.
"Subservicing Account": An account established by a Subservicer
in
accordance with SECTION 3.08.
"SUBSERVICING AGREEMENT": The written contract between the Servicer
and
any Subservicer relating to servicing and administration of certain
Mortgage
Loans as provided in SECTION 3.02, generally in the form of the
servicer
contract referred to or contained in the Program Guide or in such
other form as
has been approved by the Servicer and the Company.
"SUBSERVICING FEE": As to any Mortgage Loan, the fee payable
monthly to
the related Subservicer (or, in the case of a Nonsubserviced
Mortgage Loan, to
the Servicer) in respect of subservicing and other compensation
that accrues at
an annual rate equal to the excess of the Mortgage Rate borne by
the related
Mortgage Note over the rate per annum designated on the Mortgage
Loan Schedule
for such Mortgage Loan.
"TAX RETURNS": The federal income tax return on Internal
Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit
Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual
Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any
successor forms,
to be filed on behalf of the Trust Fund due to its classification
as a REMIC
under the REMIC Provisions, together with any and all other
information, reports
or returns that may be required to be furnished to the
Certificateholders or
filed with the Internal Revenue Service or any other governmental
taxing
authority under any applicable provisions of federal, state or
local tax laws.
"TRANSFER": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest
in a
Certificate.
"TRANSFEREE": Any Person who is acquiring by Transfer any
Ownership
Interest in a Certificate.
"TRANSFEROR": Any Person who is disposing by Transfer of any
ownership
Interest in a Certificate.
"TRUST FUND": The segregated pool of assets, with respect to which
a
REMIC election is to be made, consisting of:
(i) the Mortgage Loans and the related Mortgage Files.
(ii) all payments on and collections in respect of the
Mortgage Loans due after the Cut-off Date as shall be on deposit in
the
Custodial Account or in the Certificate Account and identified
as
belonging to the Trust Fund.
(iii) property which secured a Mortgage Loan and which has
been acquired for the benefit of the Certificateholders by
foreclosure
or deed in lieu of foreclosure, and
(iv) the hazard insurance policies and Primary Insurance
Policies, if any, and certain proceeds thereof.
"TRUSTEE FEE": The amount payable to the Trustee on each
Distribution
Date pursuant to Section 8.05 as compensation for all services
rendered by it in
the execution of the trust hereby created and in the exercise and
performance of
any of the powers and duties of the Trustee hereunder, which amount
shall equal
the Trustee Fee Rate accrued for one month on the aggregate Stated
Principal
Balance of the Mortgage Loans and any REO Properties as of the
first day of the
related Due Period (or, in the case of the initial Distribution
Date, as of the
Cut-off Date), calculated on the basis of a 360-day year consisting
of twelve
30-day months.
"TRUSTEE FEE RATE":
[___] per annum.
"UNCERTIFICATED ACCRUED INTEREST": With respect to each
Distribution
Date, as to each Uncertificated REMIC Regular Interest, an amount
equal to the
aggregate amount of Accrued Certificate Interest that would result
under the
terms of the definition thereof on each such uncertificated
interest, if the
Pass-Through Rate on such uncertificated interest were equal to the
related
Uncertificated Pass-Through Rate and the notional amount of such
uncertificated
interest were equal to the related Uncertificated Notional Amount.
Any reduction
in the amount of Accrued Certificate Interest resulting from the
allocation of
Prepayment Interest Shortfalls, Realized Losses or other amounts to
the Class
A-5 Certificateholders pursuant to SECTION 4.05 shall be allocated
to the
Uncertificated REMIC Regular Interests pro rata in accordance with
the amount of
interest accrued with respect to each related Uncertificated
Notional Amount and
such Distribution Date.
"UNCERTIFICATED NOTIONAL AMOUNT": With respect to each
Uncertificated
REMIC Regular Interest, the aggregate Stated Principal Balance of
the related
Mortgage Loan.
"UNCERTIFICATED PASS-THROUGH RATE": With respect to each
Uncertificated
REMIC Regular Interest, the related Uncertificated REMIC Regular
Interest Pool
Strip Rate.
"UNCERTIFICATED REMIC REGULAR INTEREST POOL STRIP RATE": With
respect
to each Uncertificated REMIC Regular Interest, the Pool Strip Rate
for the
related Mortgage Loan.
"UNCERTIFICATED REMIC REGULAR INTERESTS": The uncertificated
partial
undivided beneficial ownership interests in the Trust Fund, each
relating to a
particular Mortgage Loan, each having no principal balance and each
bearing
interest at the respective Uncertificated Pass-Through Rate on the
respective
Uncertificated Notional Amount.
"UNCERTIFICATED REMIC REGULAR INTERESTS DISTRIBUTION AMOUNTS":
With
respect to any Distribution Date, the sum of the amounts deemed to
be
distributed on the Uncertificated REMIC Regular Interests for such
Distribution
Date pursuant to SECTION 4.08(A).
"UNINSURED CAUSE": Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not
fully
reimbursable by the hazard insurance policies.
"UNITED STATES PERSON": A citizen or resident of the United States,
a
corporation, partnership or other entity created or organized in,
or under the
laws of, the United States or any political subdivision thereof, or
an estate or
trust whose income from sources without the United States is
includable in gross
income for United States federal income tax purposes regardless of
its
connection with the conduct of a trade or business within the
United States.
"VOTING RIGHTS": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. [__]% of all of
the Voting
Rights shall be allocated among Holders of Certificates,
respectively, other
than the Class A-5 and Class R Certificates, in proportion to the
outstanding
Certificate Principal Balances of their respective Certificates;
and the Holders
of the Class A-5 and Class R Certificates shall be entitled to
[__]% and [__]%
of all of the Voting Rights, respectively, allocated among the
Certificates of
each such Class in accordance with their respective Percentage
Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01 CONVEYANCE OF MORTGAGE LOANS. (a) The Company,
concurrently with the execution and delivery hereof, does hereby
assign to the
Trustee without recourse all the right, title and interest of the
Company in and
to the Mortgage Loans, including all interest and principal
received on or with
respect to the Mortgage Loans after the Cut-off Date (other than
payments of
principal and interest due on the Mortgage Loans on or before the
Cut-off Date)
except for scheduled payments due on [______, 20__], with respect
to which the
Servicer made a deposit pursuant to SECTION 2.01(F).
(b) In connection with such assignment, except as set forth in
SECTION
2.01(C) below, the Company does hereby deliver to, and deposit
with, the
Trustee, or to and with one or more Custodians, as the duly
appointed agent or
agents of the Trustee for such purpose, the following documents or
instruments
(or copies thereof as permitted by this Section) with respect to
each Mortgage
Loan so assigned:
(i) The original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of
endorsements
from the originator thereof to the Person endorsing it to the
Trustee,
or with respect to any Destroyed Mortgage Note, an original lost
note
affidavit from
the Responsible Party or Seller stating that the
original Mortgage Note was lost, misplaced or destroyed, together
with
a copy of the related Mortgage Note;
(ii) The original Mortgage with evidence of recording
indicated thereon or [a copy] [copies] of the Mortgage certified by
the
public recording office in which such Mortgage [has] [have]
been
recorded;
(iii) An original Assignment of the Mortgage to the Trustee
with evidence of recording indicated thereon or a copy of such
assignment certified by the public recording office in which
such
assignment has been recorded;
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator
thereof
to the Person assigning it to the Trustee or a copy of such
assignment
or assignments of the Mortgage certified by the public recording
office
in which such assignment or assignments have been recorded; and
(v) The original of each modification, assumption agreement or
preferred loan agreement, if any, relating to such Mortgage Loan or
a
copy of each modification, assumption agreement or preferred
loan
agreement certified by the public recording office in which
such
document has been recorded.
(c) The Company may, in lieu of delivering the documents set forth
in
SECTION 2.01(B)(IV) and (V) to the Trustee or the Custodian or
Custodians,
deliver such documents to the Servicer, and the Servicer shall hold
such
documents in trust for the use and benefit of all present and
future
Certificateholders until such time as is set forth below. Within
ten Business
Days following the earlier of (i) the receipt of the original of
each of the
documents or instruments set forth in SECTION 2.01(B)(IV) and (V)
(or copies
thereof as permitted by such Section) for any Mortgage Loan and
(ii) a written
request by the Trustee to deliver those documents with respect to
any or all of
the Mortgage Loans then being held by the Servicer, the Servicer
shall deliver a
complete set of such documents to the Trustee or the Custodian or
Custodians
that are the duly appointed agent or agents of the Trustee.
On the Closing Date, the Servicer shall certify that it has in
its
possession an original or copy of each of the documents referred to
in SECTION
2.01(B)(IV) and (V) which has been delivered to it by the Company.
Every six
months after the Closing Date, for so long as the Servicer is
holding documents
pursuant to this SECTION 2.01(C), the Servicer shall deliver to (i)
Moody's, if
it is one of the Rating Agencies, (ii) Standard & Poor's if it
is one of the
Rating Agencies, (iii) the Trustee and (iv) each Custodian a report
setting
forth the status of the documents which it is holding.
(d) In the event that in connection with any Mortgage Loan the
Company
cannot deliver the Mortgage, any assignment, modification,
assumption agreement
or preferred loan agreement (or copy thereof certified by the
public recording
office) with evidence of recording thereon concurrently with the
execution and
delivery of this Agreement solely because of a delay caused by the
public
recording office where such Mortgage, assignment, modification,
assumption
agreement or preferred loan agreement, as the case may be, has been
delivered
for recordation, the Company shall deliver or cause to be delivered
to the
Trustee or the respective Custodian a true and correct photocopy of
such
Mortgage, assignment, modification, assumption agreement or
preferred loan
agreement.
The Company shall promptly cause to be recorded in the
appropriate
public office for real property records the Assignment referred to
in CLAUSE
(III) of SECTION 2.01(B), except in states where, in the opinion of
counsel
acceptable to the Trustee and the Servicer, such recording is not
required to
protect the Trustee's interests in the Mortgage Loan against the
claim of any
subsequent transferee or any successor to or creditor of the
Company or the
originator of such Mortgage Loan. If any Assignment is lost or
returned
unrecorded to the Company because of any defect therein, the
Company shall
prepare a substitute Assignment or cure such defect, as the case
may be, and
cause such Assignment to be recorded in accordance with this
paragraph. The
Company shall promptly deliver or cause to be delivered to the
Trustee or the
respective Custodian such Mortgage or assignment (or copy thereof
certified by
the public recording office) with evidence of recording indicated
thereon upon
receipt thereof from the public recording office or from the
related
Subservicer.
Any of the items set forth in SECTION 2.01(B) that may be delivered
as
a copy rather than the original may be delivered in microfiche
form.
(e) It is intended that the conveyances by the Company to the
Trustee
of the Mortgage Loans as provided for in this SECTION 2.01 be
construed as a
sale by the Company to the Trustee of the Mortgage Loans for the
benefit of the
Certificateholders. Further, it is not intended that any such
conveyance be
deemed to be a pledge of the Mortgage Loans by the Company to the
Trustee to
secure a debt or other obligation of the Company. However, in the
event that the
Mortgage Loans are held to be property of the Company or Seller, or
if for any
reason this Agreement is held or deemed to create a security
interest in the
Mortgage Loans, then it is intended that (a) this Agreement shall
also be deemed
to be a security agreement within the meaning of Articles 8 and 9
of the New
York Uniform Commercial Code and the Uniform Commercial Code of any
other
applicable jurisdiction; (b) the conveyance provided for in SECTION
2.01 shall
be deemed to be (1) a grant by the Company to the Trustee of a
security interest
in all of the Company's right (including the power to convey title
thereto),
title and interest, whether now owned or hereafter acquired, in and
to (A) the
Mortgage Loans, including the Mortgage Notes, the Mortgages, any
related
insurance policies and all other documents in the related Mortgage
Files, (B)
all amounts payable pursuant to the Mortgage Loans in accordance
with the terms
thereof and (C) any and all general intangibles consisting of,
arising from or
relating to any of the foregoing, and all proceeds of the
conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities
or other
property, including without limitation all amounts from time to
time held or
invested in the Certificate Account or the Custodial Account,
whether in the
form of cash, instruments, securities or other property and (2) an
assignment by
the Company to the Trustee of any security interest in any and all
of the
Seller' right (including the power to convey title thereto), title
and interest,
whether now owned or hereafter acquired, in and to the property
described in the
foregoing CLAUSES (1)(A), (B) and (C) granted by Seller to the
Company pursuant
to the Mortgage Loan Purchase Agreement; (c) the possession by the
Trustee, the
Custodian or any other agent of the Trustee of Mortgage Notes or
such other
items of property as constitute instruments, money, negotiable
documents or
chattel paper shall be deemed to be "possession by the secured
party," or
possession by a purchaser or a person designated by such secured
party, for
purposes of perfecting the security interest pursuant to the
Delaware Uniform
Commercial Code and the Uniform Commercial Code of any other
applicable
jurisdiction (including, without limitation, Section 9-305, 8-313
or 8-321
thereof); and (d) notifications to persons holding such property,
and
acknowledgments, receipts or confirmations from persons holding
such property,
shall be deemed notifications to, or acknowledgments, receipts or
confirmations
from, financial intermediaries, bailees or agents (as applicable)
of the Trustee
for the purpose of perfecting such security interest under
applicable law.
The Company and, at the Company's direction, the Seller and the
Trustee
shall, to the extent consistent with this Agreement, take such
reasonable
actions as may be necessary to ensure that, if this Agreement were
deemed to
create a security interest in the Mortgage Loans, Uncertificated
REMIC Regular
Interests and the other property described above, such security
interest would
be deemed to be a perfected security interest of first priority
under applicable
law and will be maintained as such throughout the term of this
Agreement.
Without limiting the generality of the foregoing, the Company shall
prepare and
deliver to the Trustee not less than 15 days prior to any filing
date and, the
Trustee shall forward for filing, or shall cause to be forwarded
for filing, at
the expense of the Company, all filings necessary to maintain the
effectiveness
of any original filings necessary under the Uniform Commercial Code
as in effect
in any jurisdiction to perfect the Trustee's security interest in
or lien on the
Mortgage Loans as evidenced by an Officer's Certificate of the
Company,
including without limitation (x) continuation statements, and (y)
such other
statements as may be occasioned by (1) any change of name of the
Seller, the
Company or the Trustee (such preparation and filing shall be at the
expense of
the Trustee, if occasioned by a change in the Trustee's name), (2)
any change of
location of the place of business or the chief executive office of
the Seller or
the Company, (3) any transfer of any interest of the Seller or the
Company in
any Mortgage Loan or (4) any transfer of any interest of the Seller
or the
Company in any Uncertificated REMIC Regular Interest.
(f) The Servicer hereby acknowledges the receipt by it of cash in
an
amount equal to $[_________] (the "INITIAL MONTHLY PAYMENT FUND"),
representing
scheduled principal amortization and interest at the Net Mortgage
Rate for the
Due Date in [________, 20__], for those Mortgage Loans for which
the Trustee
will not be entitled to receive such payment. The Servicer shall
hold such
Initial Monthly Payment Fund in the Custodial Account and shall
include such
Initial Monthly Payment Fund in the Available Distribution Amount
for the
Distribution Date in [________, 20__]. Notwithstanding anything
herein to the
contrary, the Initial Monthly Payment Fund shall not be an asset of
the REMIC.
To the extent that the Initial Monthly Payment Fund constitutes a
reserve fund
for federal income tax purposes, (1) it shall be an outside reserve
fund and not
an asset of the REMIC, (2) it shall be owned by the Seller and (3)
amounts
transferred by the REMIC to the Initial Monthly Payment Fund shall
be treated as
transferred to the Seller or any successor, all within the meaning
of Section
1.860G-2(h) of the Treasury Regulations.
SECTION 2.02 ACCEPTANCE BY TRUSTEE. The Trustee acknowledges
receipt
(or, with respect to Mortgage Loans subject to a Custodial
Agreement, and based
solely upon a receipt or certification executed by the Custodian,
receipt by the
respective Custodian as the duly appointed agent of the Trustee) of
the
documents referred to in SECTION 2.01(B)(I) through (III) above
(except that for
purposes of such acknowledgment only, a Mortgage Note may be
endorsed in blank
and an Assignment of Mortgage may be in blank) and declares that
it, or a
Custodian as its agent, holds and will hold such documents and the
other
documents constituting a part of the Mortgage Files delivered to
it, or a
Custodian as its agent, in trust for the use and benefit of all
present and
future Certificateholders. The Trustee or Custodian (such Custodian
being so
obligated under a Custodial Agreement) agrees, for the benefit
of
Certificateholders, to review each Mortgage File delivered to it
pursuant to
SECTION 2.01(B) within 45 days after the Closing Date to ascertain
that all
required documents (specifically as set forth in SECTION 2.01(B)),
have been
executed and received, and that such documents relate to the
Mortgage Loans
identified on the Mortgage Loan Schedule, as supplemented, that
have been
conveyed to it. Upon delivery of the Mortgage Files by the Company
or the
Servicer, the Trustee shall acknowledge receipt (or, with respect
to Mortgage
Loans subject to a Custodial Agreement, and based solely upon a
receipt or
certification executed by the Custodian, receipt by the respective
Custodian as
the duly appointed agent of the Trustee) of the documents referred
to in SECTION
2.01(C) above. The Trustee or Custodian (such Custodian being so
obligated under
a Custodial Agreement) agrees to review each Mortgage File
delivered to it
pursuant to SECTION 2.01(C) within 45 days after receipt thereof to
ascertain
that all documents required to be delivered pursuant to such
Section have been
received, and that such documents relate to the Mortgage Loans
identified on the
Mortgage Loan Schedule, as supplemented, that have been conveyed to
it.
If the Custodian, as the Trustee's agent, finds any document or
documents constituting a part of a Mortgage File to be missing or
defective in
any material respect, the Trustee shall promptly so notify the
Servicer and the
Company. Pursuant to Section 2.3 of the Custodial Agreement, the
Custodian will
notify the Servicer, the Company and the Trustee of any such
omission or defect
found by it in respect of any Mortgage File held by it. The
Servicer shall
promptly notify the related Subservicer or Seller of such omission
or defect and
request that such Subservicer or Seller correct or cure such
omission or defect
within 60 days from the date the Servicer was notified of such
omission or
defect and, if such Subservicer or Seller does not correct or cure
such omission
or defect within such period, that such Subservicer or Seller
purchase such
Mortgage Loan from the Trust Fund at its Purchase Price, in either
case within
90 days from the date the Servicer was notified of such omission or
defect. The
Purchase Price for any such Mortgage Loan, whether purchased by the
Seller or
the Subservicer, shall be deposited or caused to be deposited by
the Servicer in
the Custodial Account maintained by it pursuant to SECTION 3.07
and, upon
receipt by the Trustee of written notification of such deposit
signed by a
Servicing Officer, the Trustee or any Custodian, as the case may
be, shall
release to the Servicer the related Mortgage File and the Trustee
shall execute
and deliver such instruments of transfer or assignment prepared by
the Servicer,
in each case without recourse, as shall be necessary to vest in the
Seller or
its designee or the Subservicer or its designee, as the case may
be, any
Mortgage Loan released pursuant hereto and thereafter such Mortgage
Loan shall
not be part of the Trust Fund. It is understood and agreed that the
obligation
of the Seller or the Subservicer, as the case may be, to so cure or
purchase any
Mortgage Loan as to which a material defect in or omission of a
constituent
document exists shall constitute the sole remedy respecting such
defect or
omission available to Certificateholders or the Trustee on behalf
of
Certificateholders.
SECTION 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER
AND THE COMPANY. (a) The Servicer hereby represents and warrants to
the Trustee
for the benefit of Certificateholders that:
(i) The Servicer is a [corporation] duly organized, validly
existing and in good standing under the laws governing its creation
and
existence and is or will be in compliance with the laws of each
state
in which any Mortgaged Property is located to the extent necessary
to
ensure the enforceability of each Mortgage Loan in accordance with
the
terms of this Agreement;
(ii) The execution and delivery of this Agreement by the
Servicer and its performance and compliance with the terms of
this
Agreement will not violate the Servicer's Certificate of
[Incorporation] or Bylaws or constitute a default (or an event
which,
with notice or lapse of time, or both, would constitute a
material
default) under, or result in the material breach of, any
material
contract, agreement or other instrument to which the Servicer is
a
party or which may be applicable to the Servicer or any of its
assets;
(iii) This Agreement, assuming due authorization, execution
and delivery by the Trustee and the Company, constitutes a valid,
legal
and binding obligation of the Servicer, enforceable against it
in
accordance with the terms hereof subject to applicable
bankruptcy,
insolvency, reorganization, moratorium and other laws affecting
the
enforcement of creditors' rights generally and to general
principles of
equity, regardless of whether such enforcement is considered in
a
proceeding in equity or at law;
(iv) The Servicer 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, which default
might
have consequences that would materially and adversely affect
the
condition (financial or other) or operations of the Servicer or
its
properties or might have consequences that would materially
adversely
affect its performance hereunder;
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened against the Servicer which would prohibit
its
entering into this Agreement or performing its obligations under
this
Agreement;
(vi) The Servicer will comply in all material respects in the
performance of this Agreement with all reasonable rules and
requirements of each insurer under each Required Insurance
Policy;
(vii) No information, certificate of an officer, statement
furnished in writing or report delivered to the Company, any
Affiliate
of the Company or the Trustee by the Servicer will, to the
knowledge of
the Servicer, contain any untrue statement of a material fact or
omit a
material fact necessary to make the information, certificate,
statement
or report not misleading; and
(viii) The Servicer has examined each existing, and will
examine each new, Subservicing Agreement and is or will be
familiar
with the terms thereof. The terms of each existing Subservicing
Agreement and each designated Subservicer are acceptable to the
Servicer and any new Subservicing Agreements will comply with
the
provisions of SECTION 3.02.
It is understood and agreed that the representations and warranties
set forth in
this SECTION 2.03(A) shall survive delivery of the respective
Mortgage Files to
the Trustee or any Custodian.
Upon discovery by either the Company, the Servicer, the Trustee or
any
Custodian of a breach of any representation or warranty set forth
in this
SECTION 2.03(A) which materially and adversely affects the
interests of the
Certificateholders in any Mortgage Loan, the party discovering such
breach shall
give prompt written notice to the other parties (any Custodian
being so
obligated under a Custodial Agreement). Within 90 days of its
discovery or its
receipt of notice of such breach, the Servicer shall either (i)
cure such breach
in all material respects or (ii) to the extent that such breach is
with respect
to a Mortgage Loan or a related document, purchase such Mortgage
Loan from the
Trust Fund at the Purchase Price and in the manner set forth in
SECTION 2.02.
The obligation of the Servicer to cure such breach or to so
purchase such
Mortgage Loan shall constitute the sole remedy in respect of a
breach of a
representation and warranty set forth in this SECTION 2.03(A)
available to the
Certificateholders or the Trustee on behalf of the
Certificateholders.
SECTION 2.04 REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY
THE
RESPONSIBLE PARTY OR SELLER. (a) Upon discovery or receipt of
notice of any
materially defective document in, or that a document is missing
from, a Mortgage
File or of the breach by the Responsible Party or the Seller of
any
representation, warranty or covenant under the Mortgage Loan
Purchase Agreement
in respect of any Mortgage Loan that materially adversely affects
the value of
such Mortgage Loan or the interest therein of the
Certificateholders, the
Trustee shall promptly notify the Seller, the Responsible Party and
the Servicer
of such defect, missing document or breach and request that the
Responsible
Party or the Seller, as applicable, deliver such missing document
or cure such
defect or breach within 60 days from the date the Responsible Party
or the
Seller, as applicable, was notified of such missing document,
defect or breach,
and if the Responsible Party or the Seller, as applicable, does not
deliver such
missing document or cure such defect or breach in all material
respects during
such period, the Trustee shall enforce the obligations of the
Responsible Party
or the Seller, as applicable, under the Mortgage Loan Purchase
Agreement to
repurchase such Mortgage Loan from the REMIC at the Purchase Price
within 90
days after the date on which the Responsible Party or the Seller,
as applicable,
was notified (subject to Section 2.03(b)(iii)) of such missing
document, defect
or breach, if and to the extent that the Responsible Party or the
Seller is
obligated to do so under the Mortgage Loan Purchase Agreement. The
Purchase
Price for the repurchased Mortgage Loan shall be remitted to the
Servicer for
deposit in the Custodial Account and the Trustee, upon receipt of
written
certification from the Servicer of such deposit, shall release to
the
Responsible Party or the Seller, as applicable, the related
Mortgage File and
the Trustee shall execute and deliver such instruments of transfer
or
assignment, in each case without recourse, as the Responsible Party
or the
Seller, as applicable, shall furnish to it and as shall be
necessary to vest in
the Responsible Party or the Seller, as applicable, any Mortgage
Loan released
pursuant hereto. The Trustee shall not have any further
responsibility with
regard to such Mortgage File. In lieu of repurchasing any such
Mortgage Loan as
provided above, if so provided in the Mortgage Loan Purchase
Agreement, the
Responsible Party or the Seller, as applicable, may cause such
Mortgage Loan to
be removed from the REMIC (in which case it shall become a Deleted
Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the
manner and subject to the limitations set forth in Section 2.03(b).
It is
understood and agreed that the obligation of the Responsible Party
and the
Seller to cure or to repurchase (or to substitute for) any Mortgage
Loan as to
which a document is missing, a material defect in a constituent
document exists
or as to which such a breach has occurred and is continuing shall
constitute the
sole remedy respecting such omission, defect or breach available to
the Trustee
and the Certificateholders.
(b) Any substitution of Qualified Substitute Mortgage Loans for
Deleted
Mortgage Loans made pursuant to Section 2.03(b) (i) must be
effected prior to
the date which is two years after the Startup Day for the
REMIC.
As to any Deleted Mortgage Loan for which the Responsible Party or
the
Seller substitutes a Qualified Substitute Mortgage Loan or Loans,
such
substitution shall be effected by the Responsible Party or the
Seller, as
applicable, delivering to the Trustee, for such Qualified
Substitute Mortgage
Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to
the Trustee,
and such other documents and agreements, with all necessary
endorsements
thereon, as are required by Section 2.1, together with an Officers'
Certificate
providing that each such Qualified Substitute Mortgage Loan
satisfies the
definition thereof and specifying the Substitution Shortfall Amount
(as
described below), if any, in connection with such substitution. The
Trustee
shall acknowledge receipt for such Qualified Substitute Mortgage
Loan or Loans
and, within ten Business Days thereafter, shall review such
documents as
specified in Section 2.2 and deliver to the Depositor and the
Servicer, with
respect to such Qualified Substitute Mortgage Loan or Loans, a
certification
substantially in the form attached hereto as Exhibit One, with any
applicable
exceptions noted thereon. Within one year of the date of
substitution, the
Trustee shall deliver to the Depositor and the Servicer a
certification
substantially in the form of Exhibit Two hereto with respect to
such Qualified
Substitute Mortgage Loan or Loans, with any applicable exceptions
noted thereon.
Monthly Payments due with respect to Qualified Substitute Mortgage
Loans in the
month of substitution are not part of the REMIC and will be
retained by the
Responsible Party or the Seller, as applicable. For the month of
substitution,
distributions to Certificateholders will reflect the Monthly
Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of
substitution,
and the Responsible Party or the Seller, as applicable, shall
thereafter be
entitled to retain all amounts subsequently received in respect of
such Deleted
Mortgage Loan. The Depositor shall give or cause to be given
written notice to
the Certificateholders that such substitution has taken place,
shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified
Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended
Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Qualified
Substitute
Mortgage Loan or Loans shall constitute Mortgage Loans and shall be
subject in
all respects to the terms of this Agreement and the Mortgage Loan
Purchase
Agreement, including, all applicable representations and warranties
thereof
included in the Mortgage Loan Purchase Agreement.
For any month in which the Responsible Party or the Seller, as
applicable, substitutes one or more Qualified Substitute Mortgage
Loans for one
or more Deleted Mortgage Loans, the Servicer will determine the
amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate
Purchase Price
of all such Deleted Mortgage Loans exceeds the aggregate of, as to
each such
Qualified Substitute Mortgage Loan, the Stated Principal Balance
thereof as of
the date of substitution, together with one month's interest on
such Stated
Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding
Advances and Servicing Advances (including Nonrecoverable Advances)
related
thereto. On the date of such substitution, the Responsible Party or
the Seller,
as applicable, will deliver or cause to be delivered to the
Servicer for deposit
in the Custodial Account an amount equal to the Substitution
Shortfall Amount,
if any, and the Trustee, upon receipt of the related Qualified
Substitute
Mortgage Loan or Loans and certification by the Servicer of such
deposit, shall
release to the Responsible Party or the Seller, as applicable, the
related
Mortgage File or Files and the Trustee shall execute and deliver
such
instruments of transfer or assignment, in each case without
recourse, the
Responsible Party or the Seller, as applicable, shall deliver to it
and as shall
be necessary to vest therein any Deleted Mortgage Loan released
pursuant hereto.
In
addition, the Responsible Party or the Seller, as applicable,
shall
obtain at its own expense and deliver to the Trustee an Opinion of
Counsel to
the effect that such substitution will not cause (a) any federal
tax to be
imposed on the REMIC, including without limitation, any federal tax
imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or
on
"contributions after the startup date" under Section 860G(d)(1) of
the Code, or
(b) the REMIC to fail to qualify as a REMIC at any time that any
Certificate is
outstanding.
(c) Upon discovery by the Depositor, the Servicer or the Trustee
that
any Mortgage Loan does not constitute a "qualified mortgage" within
the meaning
of Section 860G(a)(3) of the Code, the party discovering such fact
shall within
two Business Days give written notice thereof to the other parties.
In
connection therewith, the Responsible Party shall repurchase or,
subject to the
limitations set forth in Section 2.03(b)(ii), substitute one or
more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90
days of the
earlier of discovery or receipt of such notice with respect to such
affected
Mortgage Loan. Any such repurchase or substitution shall be made in
the same
manner as set forth in Section 2.03(b)(i). The Trustee shall
reconvey to the
Responsible Party the Mortgage Loan to be released pursuant hereto
in the same
manner, and on the same terms and conditions, as it would a
Mortgage Loan
repurchased for breach of a representation or warranty.
SECTION 2.05 EXECUTION AND AUTHENTICATION OF CERTIFICATES. The
Trustee
acknowledges the assignment to it of the Mortgage Loans and the
delivery of the
Mortgage Files to it, or any Custodian on its behalf, subject to
any exceptions
noted, together with the assignment to it of all other assets
included in the
Trust Fund, receipt of which is hereby acknowledged. Concurrently
with such
delivery and in exchange therefor, the Trustee, pursuant to the
written request
of the Company executed by an officer of the Company has executed
and caused to
be authenticated and delivered to or upon the order of the Company
the
Certificates in authorized denominations which evidence ownership
of the entire
Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS
SECTION 3.01 SERVICER TO ACT AS SERVICER. (a) The Servicer
shall
service and administer the Mortgage Loans in accordance with the
terms of this
Agreement and the respective Mortgage Loans and shall have full
power and
authority, acting alone or through Subservicers as provided in
SECTION 3.02, to
do any and all things which it may deem necessary or desirable in
connection
with such servicing and administration. 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 or
the
Subservicer, as the case may be, believes it appropriate in its
best judgment,
to execute and deliver, on behalf of the Certificateholders and the
Trustee or
any of them, any and all instruments of satisfaction or
cancellation, or of
partial or full release or discharge, or of consent to assumption
or
modification in connection with a proposed conveyance, or of
assignment of any
Mortgage and Mortgage Note in connection with the repurchase of a
Mortgage Loan
and all other comparable instruments, or with respect to the
modification or
rerecording of a Mortgage for the purpose of correcting the
Mortgage, the
subordination of the lien of the Mortgage in favor of a public
utility company
or government agency or unit with powers of eminent domain, the
taking of a deed
in lieu of foreclosure, the completion of judicial or non-judicial
foreclosure,
the conveyance of a Mortgaged Property to an Insurer, the
acquisition of any
property acquired by foreclosure or deed in lieu of foreclosure, or
the
management, marketing and conveyance of any property acquired by
foreclosure or
deed in lieu of foreclosure with respect to the Mortgage Loans and
with respect
to the Mortgaged Properties. Notwithstanding the foregoing, subject
to SECTION
3.07(A), the Servicer shall not permit any modification with
respect to any
Mortgage Loan that would constitute a sale or exchange of such
Mortgage Loan
within the meaning of Section 1001 of the Code and any proposed,
temporary or
final regulations promulgated thereunder (other than in connection
with a
proposed conveyance or assumption of such Mortgage Loan that is
treated as a
Principal Prepayment in Full pursuant to SECTION 3.13(D) hereof)
and cause the
REMIC to fail to qualify as such under the Code. The Trustee shall
furnish the
Servicer with any powers of attorney and other documents necessary
or
appropriate to enable the Servicer to service and administer the
Mortgage Loans.
In servicing and administering any Nonsubserviced Mortgage Loan,
the Servicer
shall, to the extent not inconsistent with this Agreement, comply
with the
Program Guide as if it were the originator of such Mortgage Loan
and had
retained the servicing rights and obligations in respect
thereof.
(b) All costs incurred by the Servicer or by Subservicers in
effecting
the timely payment of taxes and assessments on the properties
subject to the
Mortgage Loans shall not, for the purpose of calculating monthly
distributions
to Certificateholders, be added to the amount owing under the
related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such
costs shall be recoverable to the extent permitted by SECTION
3.10(A)(II).
(c) The Servicer may enter into one or more agreements in
connection
with the offering of pass-through certificates evidencing interests
in one or
more of the Certificates providing for the payment by the Servicer
of amounts
received by the Servicer as servicing compensation hereunder and
required to
cover certain Prepayment Interest Shortfalls on the Mortgage Loans,
which
payment obligation will thereafter be an obligation of the Servicer
hereunder.
SECTION 3.02 SUBSERVICING AGREEMENTS BETWEEN SERVICER AND
SUBSERVICERS;
ENFORCEMENT OF SUBSERVICERS' AND SELLERS' OBLIGATIONS. (a) The
Servicer may
enter into new Subservicing Agreements with Subservicers, for the
servicing and
administration of all or some of the Mortgage Loans. Each
Subservicer of a
Mortgage Loan shall be entitled to receive and retain, as provided
in the
related Subservicing Agreement and in SECTION 3.07, the related
Subservicing Fee
from payments of interest received on such Mortgage Loan after
payment of all
amounts required to be remitted to the Servicer in respect of such
Mortgage
Loan. For any Mortgage Loan that is a Nonsubserviced Mortgage Loan,
the Servicer
shall be entitled to receive and retain an amount equal to the
Subservicing Fee
from payments of interest. Unless the context otherwise requires,
references in
this Agreement to actions taken or to be taken by the Servicer in
servicing the
Mortgage Loans include actions taken or to be taken by a
Subservicer on behalf
of the Servicer. Each Subservicing Agreement will be upon such
terms and
conditions as are generally required or permitted by the Program
Guide and are
not inconsistent with this Agreement and as the Servicer and the
Subservicer
have agreed. A representative form of Subservicing Agreement is
attached to this
Agreement as EXHIBIT G. With the approval of the Servicer, a
Subservicer may
delegate its servicing obligations to third-party servicers, but
such
Subservicer will remain obligated under the related Subservicing
Agreement. The
Servicer and a Subservicer may enter into amendments thereto or a
different form
of Subservicing Agreement, and the form referred to or included in
the Program
Guide is merely provided for information and shall not be deemed to
limit in any
respect the discretion of the Servicer to modify or enter into
different
Subservicing Agreements; PROVIDED, HOWEVER, that any such
amendments or
different forms shall be consistent with and not violate the
provisions of
either this Agreement or the Program Guide in a manner which would
materially
and adversely affect the interests of the Certificateholders.
(b) As part of its servicing activities hereunder, the Servicer,
for
the benefit of the Trustee and the Certificateholders, shall use
its best
reasonable efforts to enforce the obligations of each Subservicer
under the
related Subservicing Agreement and of each Seller under the related
Mortgage
Loan Purchase Agreement, to the extent that the non-performance of
any such
obligation would have a material and adverse effect on a Mortgage
Loan,
including, without limitation, the obligation to purchase a
Mortgage Loan on
account of defective documentation, as described in SECTION 2.02,
or on account
of a breach of a representation or warranty, as described in
SECTION 2.04. Such
enforcement, including, without limitation, the legal prosecution
of claims,
termination of Subservicing Agreements or Mortgage Loan Purchase
Agreements, as
appropriate, 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 would
employ in its good faith business judgment and which are normal and
usual in its
general mortgage servicing activities. 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 Loan 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 that may exist in accordance
with the terms
and conditions of such Subservicing Agreement and without any
limitation by
virtue of this Agreement; PROVIDED, HOWEVER, that in the event of
termination of
any Subservicing Agreement by the Servicer or the Subservicer, the
Servicer
shall either act as servicer of the related Mortgage Loan or enter
into a
Subservicing Agreement with a successor Subservicer which will be
bound by the
terms of the related Subservicing Agreement. If the Servicer enters
into a
Subservicing Agreement with a successor Subservicer, the Servicer
shall use
reasonable efforts to have the successor Subservicer assume
liability for the
representations and warranties made by the terminated Subservicer
in respect of
the related Mortgage Loans and, in the event of any such assumption
by the
successor Subservicer, the Servicer may, in the exercise of its
business
judgment, release the terminated Subservicer from liability for
such
representations and warranties.
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 or a Subservicer or
reference to
actions taken through a Subservicer or otherwise, the Servicer
shall remain
obligated and liable to the Trustee and Certificateholders 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 or the Company 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 or Seller for indemnification of the Servicer and
nothing
contained in this Agreement shall be deemed to limit or modify
such
indemnification.
SECTION 3.05 NO CONTRACTUAL RELATIONSHIP BETWEEN SUBSERVICER
AND
TRUSTEE OR CERTIFICATEHOLDERS. Any Subservicing Agreement that may
be entered
into and any other transactions or services relating to the
Mortgage Loans
involving a Subservicer in its capacity as such and not as an
originator shall
be deemed to be between the Subservicer and the Servicer alone and
the Trustee
and Certificateholders shall not be deemed parties thereto and
shall have no
claims, rights, obligations, duties or liabilities with respect to
the
Subservicer in its capacity as such except as set forth in SECTION
3.06. The
foregoing provision shall not in any way limit a Subservicer's
obligation to
cure an omission or defect or to repurchase a Mortgage Loan as
referred to in
SECTION 2.02 hereof.
SECTION 3.06 ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS
BY
TRUSTEE. (a) In the event the Servicer shall for any reason no
longer be the
master servicer (including by reason of an Event of Default), the
Trustee, its
designee or its successor shall thereupon assume all of the rights
and
obligations of the Servicer under each Subservicing Agreement that
may have been
entered into. The Trustee, its designee or the successor servicer
for the
Trustee shall be deemed to have assumed all of the Servicer's
interest therein
and to have replaced the Servicer as a party to the Subservicing
Agreement to
the same extent as if the Subservicing Agreement had been assigned
to the
assuming party except that the Servicer shall not thereby be
relieved of any
liability or obligations under the Subservicing Agreement.
(b) The Servicer shall, upon request of the Trustee but at the
expense
of the 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 it and
otherwise use
its best efforts to effect the orderly and efficient transfer of
each
Subservicing Agreement to the assuming party.
SECTION 3.07 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; DEPOSITS
TO
CUSTODIAL ACCOUNT. (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 related Primary Insurance Policy,
follow such
collection procedures as it would employ in its good faith business
judgment and
which are normal and usual in its general mortgage servicing
activities.
Consistent with the foregoing, the Servicer may in its discretion
(i) waive any
late payment charge or any prepayment charge or penalty interest in
connection
with the prepayment of a Mortgage Loan and (ii) extend the Due Date
for payments
due on a Mortgage Loan in accordance with the Program Guide,
PROVIDED, HOWEVER,
that the Servicer shall first determine that any such waiver or
extension will
not impair the coverage of any related Primary Insurance Policy or
materially
adversely affect the lien of the related Mortgage. Consistent with
the terms of
this Agreement, the Servicer may also waive, modify or vary any
term of any
Mortgage Loan or consent to the postponement of strict compliance
with any such
term or in any manner grant indulgence to any Mortgagor if in the
Servicer's
determination such waiver, modification, postponement or indulgence
is not
materially adverse to the interests of the Certificateholders,
PROVIDED,
HOWEVER, that the Servicer may not modify materially or permit any
Subservicer
to modify any Mortgage Loan, including without limitation any
modification that
would change the Mortgage Rate, forgive the payment of any
principal or interest
(unless in connection with the liquidation of the related Mortgage
Loan or
except in connection with prepayments to the extent that such
reamortization is
not inconsistent with the terms of the Mortgage Loan), or extend
the final
maturity date of such Mortgage Loan, unless such Mortgage Loan is
in default or,
in the judgment of the Servicer, such default is reasonably
foreseeable.
(b) The Servicer shall establish and maintain a Custodial Account
in
which the Servicer shall deposit or cause to be deposited on a
daily basis,
except as otherwise specifically provided herein, the following
payments and
collections remitted by Subservicers or received by it in respect
of the
Mortgage Loans subsequent to the Cut-off Date (other than in
respect of
principal and interest on the Mortgage Loans due on or before the
Cut-off Date):
(i) All payments on account of principal, including Principal
Prepayments made by Mortgagors on the Mortgage Loans and the
principal
component of any Subservicer Advance or of any REO Proceeds
received in
connection with an REO Property for which an REO Disposition
has
occurred;
(ii) All payments on account of interest at the Adjusted
Mortgage Rate on the Mortgage Loans, and the interest component of
any
Subservicer Advance or of any REO Proceeds received in connection
with
an REO Property for which an REO Disposition has occurred;
(iii) Insurance Proceeds and Liquidation Proceeds (net of any
related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased pursuant to
SECTION 2.02, 2.03, 2.04 or 4.07 and all amounts required to be
deposited in connection with the substitution of a Qualified
Substitute
Mortgage Loan pursuant to SECTION 2.03 or 2.04;
(v) Any amounts required to be deposited pursuant to SECTION
2.01(F), 3.07(C) or 3.21; and
(vi) All amounts transferred from the Certificate Account to
the Custodial Account in accordance with SECTION 4.02(A).
The foregoing requirements for deposit in the Custodial Account
shall be
exclusive, it being understood and agreed that, without limiting
the generality
of the foregoing, payments on the Mortgage Loans which are not part
of the Trust
Fund (consisting of payments in respect of principal and interest
on the
Mortgage Loans due on or before the Cut-off Date) and payments or
collections in
the nature of prepayment charges or late payment charges or
assumption fees may
but need not be deposited by the Servicer in the Custodial Account.
In the event
any amount not required to be deposited in the Custodial Account is
so
deposited, the Servicer may at any time withdraw such amount from
the Custodial
Account, any provision herein to the contrary notwithstanding. The
Custodial
Account may contain funds that belong to one or more trust funds
created for
mortgage pass-through certificates of other series and may contain
other funds
respecting payments on mortgage loans belonging to the Servicer or
serviced or
master serviced by it on behalf of others. Notwithstanding such
commingling of
funds, the Servicer shall keep records that accurately reflect the
funds on
deposit in the Custodial Account that have been identified by it as
being
attributable to the Mortgage Loans.
With respect to Insurance Proceeds, Liquidation Proceeds, REO
Proceeds
and the proceeds of the purchase of any Mortgage Loan pursuant to
SECTIONS 2.02,
2.03, 2.04 and 4.07 received in any calendar month, the Servicer
may elect to
treat such amounts as included in the Available Distribution Amount
for the
Distribution Date in the month of receipt, but is not obligated to
do so. If the
Servicer so elects, such amounts will be deemed to have been
received (and any
related Realized Loss shall be deemed to have occurred) on the last
day of the
month prior to the receipt thereof.
(c) The Servicer shall use its best efforts to cause the
institution
maintaining the Custodial Account to invest the funds in the
Custodial Account
attributable to the Mortgage Loans in Permitted Investments which
shall mature
not later than the Certificate Account Deposit Date next following
the date of
such investment (with the exception of the Amount Held for Future
Distribution)
and which shall not be sold or disposed of prior to their
maturities. All income
and gain realized from any such investment shall be for the benefit
of the
Servicer as additional servicing compensation and shall be subject
to its
withdrawal or order from time to time. The amount of any losses
incurred in
respect of any such investments attributable to the investment of
amounts in
respect of the Mortgage Loans shall be deposited in the Custodial
Account by the
Servicer out of its own funds immediately as realized.
(d) The Servicer shall give notice to the Trustee and the Company
of
any change in the location of the Custodial Account and the
location of the
Certificate Account prior to the use thereof.
SECTION 3.08 SUBSERVICING ACCOUNTS; SERVICING ACCOUNTS. (a) In
those
cases where a Subservicer is servicing a Mortgage Loan pursuant to
a
Subservicing Agreement, the Servicer shall cause the Subservicer,
pursuant to
the Subservicing Agreement, to establish and maintain one or more
Subservicing
Accounts which shall be an Eligible Account or, if such account is
not an
Eligible Account, shall generally satisfy the requirements of the
Program Guide
and be otherwise acceptable to the Servicer and each Rating Agency.
The
Subservicer will be required thereby to deposit into the
Subservicing Account on
a daily basis all proceeds of Mortgage Loans received by the
Subservicer, less
its Subservicing Fees and unreimbursed advances and expenses, to
the extent
permitted by the Subservicing Agreement. If the Subservicing
Account is not an
Eligible Account, the Servicer shall be deemed to have received
such monies upon
receipt thereof by the Subservicer. The Subservicer shall not be
required to
deposit in the Subservicing Account payments or collections in the
nature of
prepayment charges or late charges or assumption fees. On or before
the date
specified in the Program Guide, but in no event later than the
Determination
Date, the Servicer shall cause the Subservicer, pursuant to the
Subservicing
Agreement, to remit to the Servicer for deposit in the Custodial
Account all
funds held in the Subservicing Account with respect to each
Mortgage Loan
serviced by such Subservicer that are required to be remitted to
the Servicer.
The Subservicer will also be required, pursuant to the Subservicing
Agreement,
to advance on such scheduled date of remittance amounts equal to
any scheduled
monthly installments of principal and interest less its
Subservicing Fees on any
Mortgage Loans for which payment was not received by the
Subservicer. This
obligation to advance with respect to each Mortgage Loan will
continue up to and
including the first of the month following the date on which the
related
Mortgaged Property is sold at a foreclosure sale or is acquired by
the Trust
Fund by deed in lieu of foreclosure or otherwise. All such advances
received by
the Servicer shall be deposited promptly by it in the Custodial
Account.
(b) The Subservicer may also be required, pursuant to the
Subservicing
Agreement, to remit to the Servicer for deposit in the Custodial
Account
interest at the Adjusted Mortgage Rate on any Curtailment received
by such
Subservicer in respect of a Mortgage Loan from the related
Mortgagor during any
month that is to be applied by the Subservicer to reduce the unpaid
principal
balance of the related Mortgage Loan as of the first day of such
month, from the
date of application of such Curtailment to the first day of the
following month.
Any amounts paid by a Subservicer pursuant to the preceding
sentence shall be
for the benefit of the Servicer as additional servicing
compensation and shall
be subject to its withdrawal or order from time to time pursuant to
SECTIONS
3.10(A)(IV) and (V).
(c) In addition to the Custodial Account and the Certificate
Account,
the Servicer shall for any Nonsubserviced Mortgage Loan, and shall
cause the
Subservicers for Subserviced Mortgage Loans to, establish and
maintain one or
more Servicing Accounts and deposit and retain therein all
collections from the
Mortgagors (or advances from Subservicers) for the payment of
taxes,
assessments, hazard insurance premiums, Primary Insurance Policy
premiums, if
applicable, or comparable items for the account of the Mortgagors.
Each
Servicing Account shall satisfy the requirements for a Subservicing
Account and,
to the extent permitted by the Program Guide or as is otherwise
acceptable to
the Servicer, may also function as a Subservicing Account.
Withdrawals of
amounts related to the Mortgage Loans from the Servicing Accounts
may be made
only to effect timely payment of taxes, assessments, hazard
insurance premiums,
Primary Insurance Policy premiums, if applicable, or comparable
items, to
reimburse the Servicer or Subservicer out of related collections
for any
payments made pursuant to SECTIONS 3.11 (with respect to the
Primary Insurance
Policy) and 3.12(A) (with respect to hazard insurance), to refund
to any
Mortgagors any sums as may be determined to be overages, to pay
interest, if
required, to Mortgagors on balances in the Servicing Account or to
clear and
terminate the Servicing Account at the termination of this
Agreement in
accordance with SECTION 9.01 or in accordance with the Program
Guide. As part of
its servicing duties, the Servicer shall, and the Subservicers
will, pursuant to
the Subservicing Agreements, be required to pay to the Mortgagors
interest on
funds in this account to the extent required by law.
(d) The Servicer shall advance the payments referred to in the
preceding subsection that are not timely paid by the Mortgagors or
advanced by
the Subservicers on the date when the tax, premium or other cost
for which such
payment is intended is due, but the Servicer shall be required so
to advance
only to the extent that such advances, in the good faith judgment
of the
Servicer, will be recoverable by the Servicer out of Insurance
Proceeds,
Liquidation Proceeds or otherwise.
SECTION 3.09 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING
THE MORTGAGE LOANS. In the event that compliance with this SECTION
3.09 shall
make any Class of Certificates legal for investment by federally
insured savings
and loan associations, the Servicer shall provide, or cause the
Subservicers to
provide, to the Trustee, the Office of Thrift Supervision or the
FDIC and the
supervisory agents and examiners thereof access to the
documentation regarding
the Mortgage Loans required by applicable regulations of the Office
of Thrift
Supervision, such access being afforded without charge but only
upon reasonable
request and during normal business hours at the offices designated
by the
Servicer. The Servicer shall permit such representatives to
photocopy any such
documentation and shall provide equipment for that purpose at a
charge
reasonably approximating the cost of such photocopying to the
Servicer.
SECTION 3.10 PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT. (a)
The
Servicer may, from time to time as provided herein, make
withdrawals from the
Custodial Account of amounts on deposit therein pursuant to SECTION
3.07 that
are attributable to the Mortgage Loans for the following
purposes:
(i) to make deposits into the Certificate Account in the
amounts and in the manner provided for in SECTION 4.01;
(ii) to reimburse itself or the related Subservicer for
previously unreimbursed advances or expenses made pursuant to
SECTIONS
3.01, 3.08, 3.11, 3.12(A), 3.14 and 4.04 or otherwise
reimbursable
pursuant to the terms of this Agreement, such withdrawal right
being
limited to amounts received on particular Mortgage Loans
(including,
for this purpose, REO Proceeds, Insurance Proceeds, Liquidation
Proceeds and proceeds from the purchase of a Mortgage Loan pursuant
to
SECTION 2.02, 2.03, 2.04 or 4.07) which represent (A) Late
Collections
of Monthly Payments for which any such advance was made in the case
of
Subservicer Advances or Advances pursuant to SECTION 4.04 and (B)
late
recoveries of the payments for which such advances were made in
the
case of Servicing Advances;
(iii) to pay to itself or the related Subservicer (if not
previously retained by such Subservicer) out of each payment
received
by the Servicer on account of interest on a Mortgage Loan as
contemplated by SECTIONS 3.14 and 3.16, an amount equal to that
remaining portion of any such payment as to interest (but not in
excess
of the Servicing Fee and the Subservicing Fee, if not
previously
retained) which, when deducted, will result in the remaining amount
of
such interest being interest at the Net Mortgage Rate on the
amount
specified in the amortization schedule of the related Mortgage Loan
as
the principal balance thereof at the beginning of the period
respecting
which such interest was paid after giving effect to any
previous
Curtailments;
(iv) to pay to itself as additional servicing compensation any
interest or investment income earned on funds deposited in the
Custodial Account that it is entitled to withdraw pursuant to
SECTION
3.07(C);
(v) to pay to itself as additional servicing compensation any
Foreclosure Profits, and any amounts remitted by Subservicers
as
interest in respect of Curtailments pursuant to SECTION
3.08(B);
(vi) to pay to itself, a Subservicer, a Seller, the Company or
any other appropriate Person, as the case may be, with respect to
each
Mortgage Loan or property acquired in respect thereof that has
been
purchased or otherwise transferred pursuant to SECTION 2.02,
2.03,
2.04, 4.07 or 9.01, all amounts received thereon and not required
to be
distributed to
Certificateholders as of the date on which the related
Stated Principal Balance or Purchase Price is determined;
(vii) to reimburse itself or the related Subservicer for any
Nonrecoverable Advance or Advances in the manner and to the
extent
provided in SUBSECTION (C) below or any Advance reimbursable to
the
Servicer pursuant to SECTION 4.02 (A) (III);
(viii) to reimburse itself or the Company for expenses
incurred by and reimbursable to it or the Company pursuant to
SECTION
3.13, 3.14(C), 6.03, 10.01 or otherwise;
(ix) to reimburse itself for amounts expended by it (a)
pursuant to SECTION 3.14 in good faith in connection with the
restoration of property damaged by an Uninsured Cause, and (b)
in
connection with the liquidation of a Mortgage Loan or disposition
of an
REO Property to the extent not otherwise reimbursed pursuant to
CLAUSE
(II) or (VIII) above; and
(x) to withdraw any amount deposited in the Custodial Account
that was not required to be deposited therein pursuant to SECTION
3.07.
Since, in connection with withdrawals pursuant to CLAUSES (II),
(III),
(V) and (VI), the Servicer's entitlement thereto is limited to
collections or
other recoveries on the related Mortgage Loan, 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 Custodial Account
pursuant to such
clauses.
Notwithstanding any other provision of this Agreement, the
Servicer
shall be entitled to reimburse itself or the related Subservicer
for (i) any
advance made in respect of a Mortgage Loan that the Servicer
determines to be a
Nonrecoverable Advance and (ii) any previously unreimbursed
advances or expenses
made pursuant to SECTION 3.01, 3.08, 3.11, 3.12 or 3.14 or
otherwise
reimbursable pursuant to the terms of this Agreement that the
Servicer
determines to be otherwise nonrecoverable, by withdrawal from the
Custodial
Account of amounts on deposit therein attributable to the Mortgage
Loans on any
Certificate Account Deposit Date succeeding the date of such
determination. Such
right of reimbursement in respect of a Nonrecoverable Advance on
any such
Certificate Account Deposit Date shall be limited to an amount not
exceeding the
portion of such advance previously paid to Certificateholders (and
not
theretofore reimbursed to the Servicer or the related
Subservicer).
(b) The Trustee shall, from time to time, make withdrawals from
the
Distribution Account, for any of the following purposes, without
priority:
(i) to make distributions to Certificateholders in accordance
with Section 4.02;
(ii) to pay to itself amounts to which it is entitled pursuant
to Section 8.05 or for Extraordinary Trust Fund Expenses;
(iii) to reimburse itself pursuant to Section 7.02;
(iv) to pay any amounts in respect of taxes pursuant to
Section 10.01(g)(iii); and
(v) to clear and terminate the Certificate Account pursuant to
Section 9.01.
SECTION 3.11 MAINTENANCE OF THE PRIMARY INSURANCE POLICIES;
COLLECTIONS
THEREUNDER. (a) The Servicer shall not take, or permit any
Subservicer to take,
any action which would result in non-coverage under any applicable
Primary
Insurance Policy of any loss which, but for the actions of the
Servicer or
Subservicer, would have been covered thereunder. To the extent
coverage is
available, the Servicer shall keep or cause to be kept in full
force and effect
each such Primary Insurance Policy until the principal balance of
the related
Mortgage Loan secured by a Mortgaged Property is reduced to 80% or
less of the
Appraised Value in the case of such a Mortgage Loan having a
Loan-to-Value Ratio
at origination in excess of 80%, PROVIDED that such Primary
Insurance Policy was
in place as of the Cut-off Date and the Company had knowledge of
such Primary
Insurance Policy. In the event that the Company gains knowledge
that as of the
Closing Date, a Mortgage Loan had a Loan-to-Value Ratio at
origination in excess
of 80% and is not the subject of a Primary Insurance Policy (and
was not
included in any exception to the representation in SECTION
2.03(B)(IV)) and that
such Mortgage Loan has a current Loan-to-Value Ratio in excess of
80% then the
Servicer shall use its reasonable efforts to obtain and maintain a
Primary
Insurance Policy to the extent that such a policy is obtainable at
a reasonable
price. The Servicer shall not cancel or refuse to renew any such
Primary
Insurance Policy applicable to a Nonsubserviced Mortgage Loan, or
consent to any
Subservicer canceling or refusing to renew any such Primary
Insurance Policy
applicable to a Mortgage Loan subserviced by it, that is in effect
at the date
of the initial issuance of the Certificates and is required to be
kept in force
hereunder unless the replacement Primary Insurance Policy for such
canceled or
non-renewed policy is maintained with an insurer whose
claims-paying ability is
acceptable to each Rating Agency for mortgage pass-through
certificates having a
rating equal to or better than the lower of the then-current rating
or the
rating assigned to the Certificates as of the Closing Date by such
Rating
Agency.
(b) In connection with its activities as administrator and servicer
of
the Mortgage Loans, the Servicer agrees to present or to cause the
related
Subservicer to present, on behalf of the Servicer, the Subservicer,
if any, the
Trustee and Certificateholders, claims to the Insurer under any
Primary
Insurance Policies, in a timely manner in accordance with such
policies, and, in
this regard, to take or cause to be taken such reasonable action as
shall be
necessary to permit recovery under any Primary Insurance Policies
respecting
defaulted Mortgage Loans. Pursuant to SECTION 3.07, any Insurance
Proceeds
collected by or remitted to the Servicer under any Primary
Insurance Policies
shall be deposited in the Custodial Account, subject to withdrawal
pursuant to
SECTION 3.10.
SECTION 3.12 MAINTENANCE OF FIRE INSURANCE AND OMISSIONS AND
FIDELITY
COVERAGE. (a) The Servicer shall cause to be maintained for each
Mortgage Loan
fire insurance with extended coverage in an amount which is equal
to the lesser
of the principal balance owing on such Mortgage Loan and 100
percent of the
insurable value of the improvements; PROVIDED, HOWEVER, that such
coverage may
not be less than the minimum amount required to fully compensate
for any loss or
damage on a replacement cost basis. To the extent it may do so
without breaching
the related Subservicing Agreement, the Servicer shall replace any
Subservicer
that does not cause such insurance, to the extent it is available,
to be
maintained. The Servicer shall also cause to be maintained on
property acquired
upon foreclosure, or deed in lieu of foreclosure, of any Mortgage
Loan, fire
insurance with extended coverage in an amount which is at least
equal to the
amount necessary to avoid the application of any co-insurance
clause contained
in the related hazard insurance policy. Pursuant to SECTION 3.07,
any amounts
collected by the Servicer under any such policies (other than
amounts to be
applied to the restoration or repair of the related Mortgaged
Property or
property thus acquired or amounts released to the Mortgagor in
accordance with
the Servicer's normal servicing procedures) shall be deposited in
the Custodial
Account, subject to withdrawal pursuant to SECTION 3.10. Any cost
incurred by
the Servicer in maintaining any such insurance shall not, for the
purpose of
calculating monthly distributions to Certificateholders, be added
to the amount
owing under the Mortgage Loan, notwithstanding that the terms of
the Mortgage
Loan so permit. Such costs shall be recoverable by the Servicer as
provided in
SECTION 3.10. It is understood and agreed that no earthquake or
other additional
insurance is to be required of any Mortgagor or maintained on
property acquired
in respect of a Mortgage Loan other than pursuant to such
applicable laws and
regulations as shall at any time be in force and as shall require
such
additional insurance. When the improvements securing a Mortgage
Loan are located
at the time of origination of such Mortgage Loan in a federally
designated
special flood hazard area, the Servicer shall cause flood insurance
(to the
extent available) to be maintained in respect thereof. Such flood
insurance
shall be in an amount equal to the lesser of (i) the amount
required to
compensate for any loss or damage to the Mortgaged Property on a
replacement
cost basis 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
fire
insurance policy with extended coverage insuring against hazard
losses on all of
the Mortgage Loans, it shall conclusively be deemed to have
satisfied its
obligations as set forth in the first sentence of this SECTION
3.12(A), 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 a policy complying with the first
sentence of
this SECTION 3.12(A) and there shall have been a loss which would
have been
covered by such policy, deposit in the Certificate Account the
amount not
otherwise payable under the blanket policy because of such
deductible clause.
Any such deposit by the Servicer shall be made on the Certificate
Account
Deposit Date next preceding the Distribution Date which occurs in
the month
following the month in which payments under any such policy would
have been
deposited in the Custodial Account. In connection with its
activities as
administrator and servicer of the Mortgage Loans, the Servicer
agrees to
present, on behalf of itself, the Trustee and Certificateholders,
claims under
any such blanket policy.
(b) The Servicer shall obtain and maintain at its own expense and
keep
in full force and effect throughout the term of this Agreement a
blanket
fidelity bond and an errors and omissions insurance policy covering
the
Servicer's officers and employees and other persons acting on
behalf of the
Servicer in connection with its activities under this Agreement.
The amount of
coverage shall be at least equal to the coverage that would be
required by FNMA
or FHLMC, whichever is greater, with respect to the Servicer if the
Servicer
were servicing and administering the Mortgage Loans for FNMA or
FHLMC. In the
event that any such bond or policy ceases to be in effect, the
Servicer shall
obtain a comparable replacement bond or policy from an issuer or
insurer, as the
case may be, meeting the requirements, if any, of the Program Guide
and
acceptable to the Company. Coverage of the Servicer under a policy
or bond
obtained by an Affiliate of the Servicer and providing the coverage
required by
this SECTION 3.12(B) shall satisfy the requirements of this SECTION
3.12(B).
SECTION 3.13 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AND
MODIFICATION AGREEMENTS; CERTAIN Assignments. (a) When any
Mortgaged Property is
conveyed by the Mortgagor, the Servicer or Subservicer, to the
extent it has
knowledge of such conveyance, shall enforce any due-on-sale clause
contained in
any Mortgage Note or Mortgage to the extent permitted under
applicable law and
governmental regulations, but only to the extent that such
enforcement will not
adversely affect or jeopardize coverage under any Required
Insurance Policy.
Notwithstanding the foregoing:
(i) the Servicer shall not be deemed to be in default under
this SECTION 3.13(A) by reason of any transfer or assumption which
the
Servicer is restricted by law from preventing; and
(ii) if the Servicer determines that it is reasonably likely
that any mortgagor will bring, or if any mortgagor does bring,
legal
action to declare invalid or otherwise avoid enforcement of a
due-on-sale clause contained in any Mortgage Note or Mortgage,
the
Servicer shall not be required to enforce the due-on-sale clause or
to
contest such action.
(b) Subject to the Servicer's duty to enforce any due-on-sale
clause to
the extent set forth in SECTION 3.13(A), in any case in which a
Mortgaged
Property is to be conveyed to a Person by a Mortgagor, and such
Person is to
enter into an assumption or modification agreement or supplement to
the Mortgage
Note or Mortgage which requires the signature of the Trustee, or if
an
instrument of release signed by the Trustee is required releasing
the Mortgagor
from liability on the Mortgage Loan, the Servicer is authorized,
subject to the
requirements of the sentence next following, to execute and
deliver, on behalf
of the Trustee, the assumption agreement with the Person to whom
the Mortgaged
Property is to be conveyed and such modification agreement or
supplement to the
Mortgage Note or Mortgage or other instruments as are reasonable or
necessary to
carry out the terms of the Mortgage Note or Mortgage or otherwise
to comply with
any applicable laws regarding assumptions or the transfer of the
Mortgaged
Property to such Person; PROVIDED, HOWEVER, none of such terms and
requirements
shall constitute a "significant modification" effecting an exchange
or
reissuance of such Mortgage Loan under the Code (or final,
temporary or proposed
Treasury Regulations promulgated thereunder) and causing the REMIC
to fail to
qualify as such under the Code. The Servicer shall execute and
deliver such
documents only if it reasonably determines that (i) its execution
and delivery
thereof will not conflict with or violate any terms of this
Agreement or cause
the unpaid balance and interest on the Mortgage Loan to be
uncollectible in
whole or in part, (ii) any required consents of insurers under any
Required
Insurance Policies have been obtained and (iii) subsequent to the
closing of the
transaction involving the assumption or transfer (A) the Mortgage
Loan will
continue to be secured by a first mortgage lien pursuant to the
terms of the
Mortgage, (B) such transaction will not adversely affect the
coverage under any
Required Insurance Policies, (C) the Mortgage Loan will fully
amortize over the
remaining term thereof, (D) no material term of the Mortgage Loan
(including the
interest rate on the Mortgage Loan) will be altered nor will the
term of the
Mortgage Loan be changed and (E) if the seller/transferor of the
Mortgaged
Property is to be released from liability on the Mortgage Loan,
such release
will not (based on the Servicer's or Subservicer's good faith
determination)
adversely affect the collectability of the Mortgage Loan. Upon
receipt of
appropriate instructions from the Servicer in accordance with the
foregoing, the
Trustee shall execute any necessary instruments for such assumption
or
substitution of liability as directed by the Servicer. Upon the
closing of the
transactions contemplated by such documents, the Servicer shall
cause the
originals or true and correct copies of the assumption agreement,
the release
(if any), or the modification or supplement to the Mortgage Note or
Mortgage to
be delivered to the Trustee or the Custodian and deposited with the
Mortgage
File for such Mortgage Loan. Any fee collected by the Servicer or
such related
Subservicer for entering into an assumption or substitution of
liability
agreement will be retained by the Servicer or such Subservicer as
additional
servicing compensation.
(c) The Servicer or the related Subservicer, as the case may be,
shall
be entitled to approve a request from a Mortgagor for a partial
release of the
related Mortgaged Property, the granting of an easement thereon in
favor of
another Person, any alteration or demolition of the related
Mortgaged Property
or other similar matters if it has determined, exercising its good
faith
business judgment in the same manner as it would if it were the
owner of the
related Mortgage Loan, that the security for, and the timely and
full
collectability of, such Mortgage Loan would not be adversely
affected thereby
and that the REMIC would not fail to continue to qualify as a REMIC
under the
Code as a result thereof. Any fee collected by the Servicer or the
related
Subservicer for processing such a request will be retained by the
Servicer or
such Subservicer as additional servicing compensation.
(d) Subject to any other applicable terms and conditions of
this
Agreement, the Trustee and Servicer shall be entitled to approve an
assignment
in lieu of satisfaction with respect to any Mortgage Loan, PROVIDED
the obligee
with respect to such Mortgage Loan following such proposed
assignment provides
the Trustee and Servicer with a "Lender Certification for
Assignment of Mortgage
Loan" in the form attached hereto as EXHIBIT O, in form and
substance
satisfactory to the Trustee and Servicer, PROVIDING the following:
(i) that the
Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in
which an assignment in lieu of satisfaction is required to preserve
lien
priority, minimize or avoid mortgage recording taxes or otherwise
comply with,
or facilitate a refinancing under, the laws of such jurisdiction;
(ii) that the
substance of the assignment is, and is intended to be, a
refinancing of such
Mortgage Loan and that the form of the transaction is solely to
comply with, or
facilitate the transaction under, such local laws; (iii) that the
Mortgage Loan
following the proposed assignment will have a rate of interest at
least 0.25
percent below or above the rate of interest on such Mortgage Loan
prior to such
proposed assignment; and (iv) that such assignment is at the
request of the
borrower under the related Mortgage Loan. Upon approval of an
assignment in lieu
of satisfaction with respect to any Mortgage Loan, the Servicer
shall receive
cash in an amount equal to the unpaid principal balance of and
accrued interest
on such Mortgage Loan and the Servicer shall treat such amount as a
Principal
Prepayment in Full with respect to such Mortgage Loan for all
purposes hereof.
SECTION 3.14 REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The
Servicer shall foreclose upon or otherwise comparably convert
(which may include
an REO Acquisition) 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. In connection with such foreclosure or other
conversion, the
Servicer shall, consistent with SECTION 3.11, follow such practices
and
procedures as it shall deem necessary or advisable, as shall be
normal and usual
in its general mortgage servicing activities and as shall be
required or
permitted by the Program Guide; PROVIDED THAT the Servicer shall
not be liable
in any respect hereunder if the Servicer is acting in connection
with any such
foreclosure or other conversion in a manner that is consistent with
the
provisions of this Agreement. The Servicer, however, shall not be
required to
expend its own funds in connection with any foreclosure, or
attempted
foreclosure which is not completed, or towards the restoration of
any property
unless it shall determine (i) that such restoration and/or
foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to
Holders of
Certificates of one or more Classes after reimbursement to itself
for such
expenses and (ii) that such expenses will be recoverable to it
through
Liquidation Proceeds, Insurance Proceeds, or REO Proceeds
(respecting which it
shall have priority for purposes of withdrawals from the Custodial
Account
pursuant to SECTION 3.10, whether or not such expenses are actually
recoverable
from related Liquidation Proceeds, Insurance Proceeds or REO
Proceeds). In the
event of a determination by the Servicer pursuant to this SECTION
3.14(A), the
Servicer shall be entitled to reimbursement of its funds so
expended pursuant to
SECTION 3.10. Concurrently with the foregoing, the Servicer may
pursue any
remedies that may be available in connection with a breach of a
representation
and warranty with respect to any such Mortgage Loan in accordance
with SECTIONS
2.03 and 2.04. However, the Servicer is not required to continue to
pursue both
foreclosure (or similar remedies) with respect to the Mortgage
Loans and
remedies in connection with a breach of a representation and
warranty if the
Servicer determines in its reasonable discretion that one such
remedy is more
likely to result in a greater recovery as to the Mortgage Loan.
Upon the
occurrence of a Cash Liquidation or REO Disposition, following the
deposit in
the Custodial Account of all Insurance Proceeds, Liquidation
Proceeds and other
payments and recoveries referred to in the definition of "Cash
Liquidation" or
"REO Disposition," as applicable, upon receipt by the Trustee of
written
notification of such deposit signed by a Servicing Officer, the
Trustee or any
Custodian, as the case may be, shall release to the Servicer the
related
Mortgage File and the Trustee shall execute and deliver such
instruments of
transfer or assignment prepared by the Servicer, in each case
without recourse,
as shall be necessary to vest in the Servicer or its designee, as
the case may
be, the related Mortgage Loan, and thereafter such Mortgage Loan
shall not be
part of the Trust Fund. Notwithstanding the foregoing or any other
provision of
this Agreement, in the Servicer's sole discretion with respect to
any defaulted
Mortgage Loan or REO Property as to either of the following
provisions, (i) a
Cash Liquidation or REO Disposition may be deemed to have occurred
if
substantially all amounts expected by the Servicer to be received
in connection
with the related defaulted Mortgage Loan or REO Property have been
received, and
(ii) for purposes of determining the amount of any Liquidation
Proceeds,
Insurance Proceeds, REO Proceeds or any other unscheduled
collections or the
amount of any Realized Loss, the Servicer may take into account
minimal amounts
of additional receipts expected to be received or any estimated
additional
liquidation expenses expected to be incurred in connection with the
related
defaulted Mortgage Loan or REO Property.
(b) In the event that title to any Mortgaged Property is acquired
by
the Trust Fund as an REO Property by foreclosure or by deed in lieu
of
foreclosure, the deed or certificate of sale shall be issued to the
Trustee or
to its nominee on behalf of Certificateholders. Notwithstanding any
such
acquisition of title and cancellation of the related Mortgage Loan,
such REO
Property shall (except as otherwise expressly provided herein) be
considered to
be an Outstanding Mortgage Loan held in the Trust Fund until such
time as the
REO Property shall be sold. Consistent with the foregoing for
purposes of all
calculations hereunder so long as such REO Property shall be
considered to be an
Outstanding Mortgage Loan it shall be assumed that, notwithstanding
that the
indebtedness evidenced by the related Mortgage Note shall have been
discharged,
such Mortgage Note and the related amortization schedule in effect
at the time
of any such acquisition of title (after giving effect to any
previous
Curtailments and before any adjustment thereto by reason of any
bankruptcy or
similar proceeding or any moratorium or similar waiver or grace
period) remain
in effect.
(c) In the event that the Trust Fund acquires any REO Property
as
aforesaid or otherwise in connection with a default or imminent
default on a
Mortgage Loan, the Servicer shall dispose of such REO Property
either (i) within
two years after its acquisition by the Trust Fund, as determined
for the
purposes of Section 860G(a)(8) of the Code or (ii) prior to the
expiration of
any extension of such two-year grace period which is requested on
behalf of the
Trust Fund by the Servicer (at the expense of the Trust Fund) more
than 60 days
prior to the end of such two-year grace period and granted by the
Internal
Revenue Service unless the Servicer has delivered to the Trustee an
Opinion of
Counsel, addressed to the Trustee and the Servicer, to the effect
that the
holding by the Trust Fund of such REO Property subsequent to such
two-year
period will not result in the imposition of taxes on "prohibited
transactions"
as defined in Section 860F of the Code or cause the Trust Fund to
fail to
qualify as a REMIC at any time that any Certificates or
Uncertificated REMIC
Regular Interests are outstanding, in which case the Trust Fund may
continue to
hold such REO Property (subject to any conditions contained in such
Opinion of
Counsel). The Servicer shall be entitled to be reimbursed from the
Custodial
Account for any costs incurred in obtaining such Opinion of
Counsel, as provided
in SECTION 3.10. Notwithstanding any other provision of this
Agreement, no REO
Property acquired by the Trust Fund shall be rented (or allowed to
continue to
be rented) or otherwise used by or on behalf of the Trust Fund in
such a manner
or pursuant to any terms that would (i) cause such REO Property to
fail to
qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of
the Code or (ii) subject the Trust Fund to the imposition of any
federal income
taxes on the income earned from such REO Property, including any
taxes imposed
by reason of Section 860G(c) of the Code, unless the Servicer has
agreed to
indemnify and hold harmless the Trust Fund with respect to the
imposition of any
such taxes.
(d) The proceeds of any Cash Liquidation, REO Disposition or
purchase
or repurchase of any Mortgage Loan pursuant to the terms of this
Agreement, as
well as any recovery resulting from a collection of Liquidation
Proceeds,
Insurance Proceeds or REO Proceeds, will be applied in the
following order of
priority: first, to reimburse the Servicer or the related
Subservicer in
accordance with SECTION 3.10(A)(II); second, to the
Certificateholders to the
extent of accrued and unpaid interest on the Mortgage Loan, and any
related REO
Imputed Interest, at the Net Mortgage Rate to the Due Date prior to
the
Distribution Date on which such amounts are to be distributed;
third, to the
Certificateholders as a recovery of principal on the Mortgage Loan
(or REO
Property); fourth, to all Servicing Fees and Subservicing Fees
payable therefrom
(and the Servicer and the Subservicer shall have no claims for any
deficiencies
with respect to such fees which result from the foregoing
allocation); and
fifth, to Foreclosure Profits.
SECTION 3.15 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES. (a)
Upon
becoming aware of the payment in full of any Mortgage Loan, or upon
the receipt
by the Servicer of a notification that payment in full will be
escrowed in a
manner customary for such purposes, the Servicer will immediately
notify the
Trustee (if it holds the related Mortgage File) or the Custodian by
a
certification of a Servicing Officer (which certification shall
include a
statement to the effect that all amounts received or to be received
in
connection with such payment which are required to be deposited in
the Custodial
Account pursuant to SECTION 3.07 have been or will be so
deposited),
substantially in one of the forms attached hereto as EXHIBIT H
requesting
delivery to it of the Mortgage File. Upon receipt of such
certification and
request, the Trustee shall promptly release, or cause the Custodian
to release,
the related Mortgage File to the Servicer. The Servicer is
authorized to execute
and deliver to the Mortgagor the request for reconveyance, deed of
reconveyance
or release or satisfaction of mortgage or such instrument releasing
the lien of
the Mortgage, together with the Mortgage Note with, as appropriate,
written
evidence of cancellation thereon. No expenses incurred in
connection with any
instrument of satisfaction or deed of reconveyance shall be
chargeable to the
Custodial Account or the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Servicer shall deliver to the
Custodian,
with a copy to the Trustee, a certificate of a Servicing Officer
substantially
in one of the forms attached as EXHIBIT H hereto, requesting that
possession of
all, or any document constituting part of, the Mortgage File be
released to the
Servicer and certifying as to the reason for such release and that
such release
will not invalidate any insurance coverage provided in respect of
the Mortgage
Loan under any Required Insurance Policy. Upon receipt of the
foregoing, the
Trustee shall deliver, or cause the Custodian to deliver, the
Mortgage File or
any document therein to the Servicer. The Servicer shall cause each
Mortgage
File or any document therein so released to be returned to the
Trustee, or the
Custodian as agent for the Trustee when the need therefor by the
Servicer no
longer exists, unless (i) the Mortgage Loan has been liquidated and
the
Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the
Custodial Account or (ii) the Mortgage File or such document has
been delivered
directly or through a Subservicer 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
directly or
through a Subservicer to the Trustee a certificate of a Servicing
Officer
certifying as to the name and address of the Person to which such
Mortgage File
or such document was delivered and the purpose or purposes of such
delivery. In
the event of the liquidation of a Mortgage Loan, the Trustee shall
deliver the
Request for Release with respect thereto to the Servicer upon
deposit of the
related Liquidation Proceeds in the Custodial Account.
(c) The Trustee or the Servicer on the Trustee's behalf shall
execute
and deliver to the Servicer, if necessary, any court pleadings,
requests for
trustee's sale or other documents necessary to the foreclosure or
trustee's sale
in respect of a Mortgaged Property or to any legal action brought
to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or
to obtain a
deficiency judgment, or to enforce any other remedies or rights
provided by the
Mortgage Note or Mortgage or otherwise available at law or in
equity. Together
with such documents or pleadings (if signed by the Trustee), the
Servicer shall
deliver to the Trustee a certificate of a Servicing Officer
requesting that such
pleadings or documents be executed by the Trustee and certifying as
to the
reason such documents or pleadings are required and that the
execution and
delivery thereof by the Trustee will not invalidate any insurance
coverage under
any Required Insurance Policy or 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 3.16 SERVICING AND OTHER COMPENSATION[; COMPENSATING
INTEREST].
(a) The Servicer, as compensation for its activities hereunder,
shall be
entitled to receive on each Distribution Date the amounts provided
for by
CLAUSES (III), (IV) and (V) of SECTION 3.10(A), subject to CLAUSE
(E) below. The
amount of servicing compensation provided for in such clauses shall
be accounted
for on a Mortgage Loan-by-Mortgage Loan basis. In the event that
Liquidation
Proceeds, Insurance Proceeds and REO Proceeds (net of amounts
reimbursable
therefrom pursuant to SECTION 3.10(A)(II)) in respect of a Cash
Liquidation or
REO Disposition exceed the unpaid principal balance of such
Mortgage Loan plus
unpaid interest accrued thereon (including REO Imputed Interest) at
the related
Net Mortgage Rate, the Servicer shall be entitled to retain
therefrom and to pay
to itself and/or the related Subservicer any Servicing Fee or
Subservicing Fee
considered to be accrued but unpaid.
(b) Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges, investment income
on amounts in
the Custodial Account or the Certificate Account or otherwise shall
be retained
by the Servicer or the Subservicer to the extent provided herein,
[subject to
CLAUSE (E) below].
(c) The Servicer shall be required to pay, or cause to be paid,
all
expenses incurred by it in connection with its servicing activities
hereunder
(including payment of premiums for the Primary Insurance Policies,
if any, to
the extent such premiums are not required to be paid by the related
Mortgagors,
and the fees and expenses of the Trustee and any Custodian) and
shall not be
entitled to reimbursement therefor except as specifically provided
in SECTIONS
3.10 and 3.14.
(d) The Servicer's right to receive servicing compensation may not
be
transferred in whole or in part except in connection with the
transfer of all of
the responsibilities and obligations of the Servicer under this
Agreement.
(e) [Notwithstanding CLAUSES (A) and (B) above, the amount of
servicing
compensation that the Servicer shall be entitled to receive for its
activities
hereunder for the one-month period ending on each Distribution Date
shall be
reduced (not below zero) by an amount equal to Compensating
Interest (if any)
for such Distribution Date and the Servicer shall not be entitled
to servicing
compensation to the extent of such reduction. Such reduction shall
be applied
during such period as follows: first, to any Servicing Fee to which
the Servicer
is entitled pursuant to SECTION 3.10(A)(III); second, to any income
or gain
realized from any investment of funds held in the Custodial Account
or the
Certificate Account to which the Servicer is entitled pursuant to
SECTION
3.07(C) or 4.01(B), respectively; and third, to any other
compensation to which
the Servicer is entitled for its activities hereunder (excluding
any additional
amounts payable in respect of any Nonsubserviced Mortgage Loans).
To the extent
that any such reduction is required on any Distribution Date, the
Servicer will
(i) first reduce the amount withdrawn from the Custodial Account
pursuant to
SECTION 3.10(A)(III); (ii) next reduce the amount withdrawn from
the Custodial
Account or Certificate Account pursuant to SECTION 3.07(C) or
4.01(B); and (iii)
third deposit to the Certificate Account any other amounts
representing
compensation to which the Servicer would otherwise be entitled for
its
activities hereunder, but not in the aggregate more than the amount
of
Compensating Interest due with respect to such Distribution
Date.]
SECTION 3.17 REPORTS TO THE TRUSTEE AND THE COMPANY. Not later
than
fifteen days after each Distribution Date, the Servicer shall
forward to the
Trustee and the Company a statement, certified by a Servicing
Officer, setting
forth the status of the Custodial Account as of the close of
business on such
Distribution Date as it relates to the Mortgage Loans and showing,
for the
period covered by such statement, the aggregate of deposits in or
withdrawals
from the Custodial Account in respect of the Mortgage Loans for
each category of
deposit specified in SECTION 3.07 and each category of withdrawal
specified in
SECTION 3.10.
SECTION 3.18 ANNUAL STATEMENT AS TO COMPLIANCE. The Servicer
will
deliver to the Company and the Trustee on or before March 31 of
each year,
beginning with the first March 31 that occurs at least six months
after the
Cut-off Date, an Officers' Certificate stating, as to each signer
thereof, that
(i) a review of the activities of the Servicer during the preceding
calendar
year and of its performance under the pooling and servicing
agreements,
including this Agreement, has been made under such officers'
supervision, (ii)
to the best of such officers' knowledge, based on such review, the
Servicer has
fulfilled all of its material obligations in all material respects
throughout
such year, or, if there has been a default in the fulfillment in
all material
respects of any such obligation relating to this Agreement,
specifying each such
default known to such officer and the nature and status thereof and
(iii) to the
best of such officers' knowledge, each Subservicer has fulfilled
its material
obligations under its Subservicing Agreement in all material
respects, or if
there has been a material default in the fulfillment of such
obligations
relating to this Agreement, specifying such default known to such
officer and
the nature and status thereof.
SECTION 3.19 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
REPORT.
On or before March 31 of each year, beginning with the first March
31 that
occurs at least six months after the Cut-off Date, the Servicer at
its expense
shall cause a firm of Independent public accountants which is a
member of the
American Institute of Certified Public Accountants to furnish a
statement to the
Company and the Trustee to the effect that such firm has examined
certain
documents and records relating to the servicing of the mortgage
loans under
pooling and servicing agreements (including this Agreement)
substantially
similar one to another (such statement to have attached thereto a
schedule
setting forth the pooling and servicing agreements covered thereby,
including
this Agreement) and that, on the basis of such examination
conducted
substantially in compliance with the Uniform Single Audit Program
for Mortgage
Bankers or the Audit Program for Mortgages serviced for FHLMC, such
servicing
has been conducted in compliance with such pooling and servicing
agreements
except for such significant exceptions or errors in records that,
in the opinion
of such firm, the Uniform Single Audit Program for Mortgage Bankers
or the Audit
Program for Mortgages serviced for FHLMC requires it to report. In
rendering
such statement, such firm may rely, as to matters relating to
direct servicing
of mortgage loans by Subservicers, upon comparable statements for
examinations
conducted substantially in compliance with the Uniform Single Audit
Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC (rendered
within one year of such statement) of Independent public
accountants with
respect to the related Subservicer. For purposes of such statement,
such firm
may conclusively assume that all pooling and servicing agreements
among the
Company, the Servicer and the Trustee relating to Mortgage
Asset-Backed
Pass-Through Certificates evidencing an interest in first mortgage
loans are
substantially similar one to another except for any such pooling
and servicing
agreement which, by its terms, specifically states otherwise.
SECTION 3.20 RIGHTS OF THE COMPANY IN RESPECT OF THE SERVICER.
The
Servicer shall afford the Company, upon reasonable notice, during
normal
business hours access to all records maintained by the Servicer in
respect of
its rights and obligations hereunder and access to officers of the
Servicer
responsible for such obligations. Upon request, the Servicer shall
furnish the
Company with its most recent financial statements and such other
information as
the Servicer possesses regarding its business, affairs, property
and condition,
financial or otherwise. The Servicer shall also cooperate with all
reasonable
requests for information including, but not limited to, notices,
tapes and
copies of files, regarding itself, the Mortgage Loans or the
Certificates from
any Person or Persons identified by the Company. The Company may,
but is not
obligated to, enforce the obligations of the Servicer hereunder and
may, but is
not obligated to, perform, or cause a designee to perform, any
defaulted
obligation of the Servicer hereunder or exercise the rights of the
Servicer
hereunder; PROVIDED that the Servicer shall not be relieved of any
of its
obligations hereunder by virtue of such performance by the Company
or its
designee. The Company shall not have any responsibility or
liability for any
action or failure to act by the Servicer and is not obligated to
supervise the
performance of the Servicer under this Agreement or otherwise.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01 CERTIFICATE ACCOUNT. (a) The Servicer acting as agent
of
the Trustee shall establish and maintain a Certificate Account in
which the
Servicer shall cause to be deposited on behalf of the Trustee on or
before 2:00
P.M. New York time on each Certificate Account Deposit Date by wire
transfer of
immediately available funds an amount equal to the sum of (i) any
Advance for
the immediately succeeding Distribution Date, (ii) any amount
required to be
deposited in the Custodial Account pursuant to SECTION 3.12(A),
(iii) any amount
required to be deposited in the Certificate Account pursuant to
SECTION 4.07,
(iv) the amount by which the servicing compensation is reduced with
respect to
the period ending on the immediately succeeding Distribution Date
pursuant to
SECTION 3.16(E); and (v) all other amounts constituting the
Available
Distribution Amount for the immediately succeeding Distribution
Date.
(b) The Trustee shall, upon written request from the Servicer,
invest
or cause the institution maintaining the Certificate Account to
invest the funds
in the Certificate Account in Permitted Investments designated in
the name of
the Trustee for the benefit of the Certificateholders, which shall
mature not
later than the Business Day next preceding the Distribution Date
next following
the date of such investment (except that (i) any investment in the
institution
with which the Certificate Account is maintained may mature on such
Distribution
Date and (ii) any other investment may mature on such Distribution
Date if the
Trustee shall advance funds on such Distribution Date to the
Certificate Account
in the amount payable on such investment on such Distribution Date,
pending
receipt thereof to the extent necessary to make distributions on
the
Certificates) and shall not be sold or disposed of prior to
maturity. All income
and gain realized from any such investment shall be for the benefit
of the
Servicer and shall be subject to its withdrawal or order from time
to time. The
amount of any losses incurred in respect of any such investments
shall be
deposited in the Certificate Account by the Servicer out of its own
funds
immediately as realized.
SECTION 4.02 DISTRIBUTIONS. (a) On each Distribution Date the
Servicer
on behalf of the Trustee or the Paying Agent appointed by the
Trustee, shall
distribute to the Servicer, in the case of a distribution pursuant
to SECTION
4.02(A)(III), the amount required to be distributed to the Servicer
or a
Subservicer pursuant to SECTION 4.02(A)(III), and to each
Certificateholder of
record on the next preceding Record Date (other than as provided in
SECTION 9.01
respecting the final distribution) either in immediately available
funds (by
wire transfer or otherwise) to the account of such
Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder has so notified the Servicer or the Paying Agent,
as the case
may be, or, if such Certificateholder has not so notified the
Servicer or the
Paying Agent by the Record Date, by check mailed to such
Certificateholder at
the address of such Holder appearing in the Certificate Register
such
Certificateholder's share (based on the aggregate of the Percentage
Interests
represented by Certificates of the applicable Class held by such
Holder) of the
following amounts, in the following order of priority (subject to
the provisions
of SECTION 4.02(B)), in each case to the extent of the Available
Distribution
Amount:
(i) to the Class A Certificateholders (other than the Class
A-4 Certificateholders) and Class R Certificateholders on a pro
rata
basis based on Accrued Certificate Interest payable thereon,
Accrued
Certificate Interest on such Classes of Certificates as applicable
for
such Distribution Date, plus any Accrued Certificate Interest
thereon
remaining unpaid from any previous Distribution Date except as
provided
below; PROVIDED THAT if such Distribution Date is on or prior to
the
Accretion Termination Date, no distribution shall be made pursuant
to
this CLAUSE (i) to the Class A-3 Certificateholders to the extent
that
Accrued Certificate Interest is not then payable in accordance
with
SECTION 4.02(d);
(ii) (X) to the Class A-4 Certificateholders, except as
otherwise provided in SECTION 4.02(C), the Class A-4 Principal
Distribution Amount; and
(Y) to the Class A (other than the Class A-4 and
Class A-5 Certificateholders) and Class R Certificateholders,
in the priorities and amounts set forth in SECTION 4.02(B),
(C) and (D) the sum of the following (applied to reduce the
Certificate Principal Balances of such Class A or Class R
Certificates, as applicable):
(A) the Senior Percentage for such Distribution Date
times the sum of the following:
(1) the principal portion of each Monthly
Payment due during the related Due Period on each
Outstanding Mortgage Loan (other than the related
Discount Fraction of the principal portion of such
payment with respect to a Discount Mortgage Loan),
whether or not received, minus the principal portion
of any Debt Service Reduction (other than the related
Discount Fraction of the principal portion of such
Debt Service Reduction with respect to a Discount
Mortgage Loan) which together with other Bankruptcy
Losses exceeds the Bankruptcy Amount;
(2) the Stated Principal Balance of any
Mortgage Loan repurchased during the related
Prepayme
