POOLING AND SERVICING AGREEMENT

 

                                                                     Exhibit 4.1

 

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

                                    Depositor

 

                              TERWIN ADVISORS LLC,

                                      Seller

 

                   JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

      Servicing Administrator, Securities Administrator And Backup Servicer

 

                        SPECIALIZED LOAN SERVICING, LLC,

                                     Servicer

 

                                       and

                         U.S. BANK NATIONAL ASSOCIATION,

                                     Trustee

 

             -----------------------------------------------------

 

                         POOLING AND SERVICING AGREEMENT

                          Dated as of September 1, 2005

 

             -----------------------------------------------------

 

                              TERWIN MORTGAGE TRUST

                ASSET-BACKED CERTIFICATES, SERIES TMTS 2005- 14HE

 

<PAGE>

 

                                TABLE OF CONTENTS

 

                                                                            Page

 

ARTICLE I      DEFINITIONS......................................................1

 

ARTICLE II     CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS

              AND WARRANTIES..................................................55

 

       SECTION 2.01.      Conveyance of Mortgage Loans.........................55

       SECTION 2.02.      Acceptance by the Trustee of the

                         Mortgage Loans.......................................58

       SECTION 2.03.      Representations, Warranties and Covenants

                         of the Depositor.....................................61

       SECTION 2.04.      Representations and Warranties of the

                         Servicing Administrator; Representations

                         and Warranties of the Servicer;

                         Representations and Warranties of the

                          Securities Administrator; Representations

                         and Warranties of the Backup Servicer................64

       SECTION 2.05.      Substitutions and Repurchases of Mortgage

                         Loans which are not "Qualified Mortgages."...........67

       SECTION 2.06.      Authentication and Delivery of Certificates..........67

       SECTION 2.07.      REMIC Elections......................................68

       SECTION 2.08.      Covenants of the Servicing Administrator.............72

       SECTION 2.09.      Covenants of the Servicer............................73

       SECTION 2.10.      Related Agreements...................................73

       SECTION 2.11.      Conveyance of Subsequent Mortgage Loans..............73

       SECTION 2.12.      Permitted Activities of the Trust....................76

       SECTION 2.13.      Qualifying Special Purpose Entity....................76

 

ARTICLE III    ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..................76

       SECTION 3.01.      Servicer to Service Mortgage Loans...................76

       SECTION 3.02.      Servicing and Subservicing; Enforcement

                         of the Obligations of the Servicer...................77

       SECTION 3.03.      Rights of the Depositor, the Securities

                         Administrator, the Backup Servicer and

                         the Trustee in Respect of the Servicer...............78

       SECTION 3.04.      The Servicing Administrator or Backup

                          Servicer to Act as Servicer..........................78

       SECTION 3.05.      Collection of Mortgage Loan Payments;

                         Collection Account; Servicing Administrator

                         Collection Account; Certificate Account..............79

       SECTION 3.06.      Collection of Taxes, Assessments and

                         Similar Items; Escrow Accounts.......................83

       SECTION 3.07.      Access to Certain Documentation and

                         Information Regarding the Mortgage Loans.............84

       SECTION 3.08.      Withdrawals from a Collection Account,

                         Servicing Administrator Collection Account

                         and Certificate Account..............................84

       SECTION 3.09.      [RESERVED]...........................................87

       SECTION 3.10.      [RESERVED]...........................................87

       SECTION 3.11.      Enforcement of Due-On-Sale Clauses;

                          Assumption Agreements................................87

       SECTION 3.12.      Realization Upon Defaulted Mortgage

                         Loans; Determination of Excess Proceeds..............88

       SECTION 3.13.      Trustee to Cooperate; Release

                         of Mortgage Files....................................91

       SECTION 3.14.      Documents, Records and Funds in Possession

                         of the Servicer to be Held for the Trustee...........92

       SECTION 3.15.       Servicing Compensation...............................92

       SECTION 3.16.      Access to Certain Documentation......................93

       SECTION 3.17.      Annual Statement as to Compliance....................93

 

 

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                                TABLE OF CONTENTS

                                   (continued)

 

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       SECTION 3.18.      Annual Independent Public Accountants'

                         Servicing Statement; Financial Statements............93

       SECTION 3.19.      Duties and Removal of the Credit Risk Manager........93

       SECTION 3.20.      Periodic Filings.....................................94

       SECTION 3.21.      Annual Certificate by Securities Administrator.......95

       SECTION 3.22.      [RESERVED]...........................................95

       SECTION 3.23.      Prepayment Penalty Reporting Requirements............95

       SECTION 3.24.      Servicer Reports.....................................95

       SECTION 3.25.      Indemnification......................................96

       SECTION 3.26.      Nonsolicitation......................................97

       SECTION 3.27.      SLS as Servicer......................................97

       SECTION 3.28.      Quarterly Audit......................................97

       SECTION 3.29.      Maintenance of LPMI Policy:..........................98

       SECTION 3.30.      SLS Servicing Tape; Storage and Access

                         to Servicing Tape....................................98

 

ARTICLE IV     ADMINISTRATION AND BACKUP SERVICING OF

              THE MORTGAGE LOANS..............................................98

 

       SECTION 4.01.      Servicing Administrator..............................98

       SECTION 4.02.      REMIC Related Covenants..............................99

       SECTION 4.03.      Fidelity Bond........................................99

       SECTION 4.04.      Powers to Act; Procedures...........................100

       SECTION 4.05.      Due-on-Sale Clauses; Assumption Agreements..........100

       SECTION 4.06.      Documents, Records and Funds in Possession

                         of Servicing Administrator to be Held

                         for Trustee.........................................101

       SECTION 4.07.      Monitoring of the Servicer..........................101

       SECTION 4.08.      [RESERVED]..........................................102

        SECTION 4.09.      [RESERVED]..........................................102

       SECTION 4.10.      Presentment of Claims and Collection

                         of Proceeds.........................................102

       SECTION 4.11.      Trustee or Custodian to Retain Possession

                         of Certain Insurance Policies and Documents.........102

       SECTION 4.12.      Realization Upon Defaulted Loans....................102

       SECTION 4.13.      REO Property........................................103

       SECTION 4.14.      Annual Statement as to Compliance...................103

       SECTION 4.15.      Annual Independent Public Accountants'

                         Servicing Statement; Financial Statements...........103

       SECTION 4.16.      Annual Certificate by Servicing

                         Administrator.......................................104

       SECTION 4.17.      Obligation of the Servicing Administrator

                         in Respect of Prepayment Interest Shortfalls........104

       SECTION 4.18.      Obligation of the Servicing Administrator

                         in Respect of Collection Account....................104

       SECTION 4.19.      Backup Servicer.....................................105

 

ARTICLE V      DISTRIBUTIONS..................................................105

 

       SECTION 5.01.      Advances by the Servicing Administrator

                         and the Servicer....................................105

       SECTION 5.02.      Advance Facility....................................106

       SECTION 5.03.      Reduction of Servicing Compensation

                         in Connection with Prepayment Interest

                         Shortfalls..........................................109

       SECTION 5.04.      Distributions on the REMIC Interests................109

 

 

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                                TABLE OF CONTENTS

                                   (continued)

 

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       SECTION 5.05.      Distributions.......................................109

       SECTION 5.06.      Monthly Statements to Certificateholders............114

       SECTION 5.07.      Certificate Insurance Policy Matters................117

       SECTION 5.08.      Effect of Payments by the Certificate Insurer.......122

       SECTION 5.09.      Pre-Funding Account.................................122

       SECTION 5.10.      Capitalized Interest Account........................123

 

ARTICLE VI     THE CERTIFICATES...............................................123

 

       SECTION 6.01.      The Certificates....................................123

       SECTION 6.02.      Appointment of Certificate Registrar;

                         Certificate Register; Registration of Transfer

                         and Exchange of Certificates........................124

       SECTION 6.03.      Mutilated, Destroyed, Lost or

                         Stolen Certificates.................................128

       SECTION 6.04.      Persons Deemed Owners...............................129

       SECTION 6.05.      Access to List of Certificateholders'

                         Names and Addresses.................................129

       SECTION 6.06.      Book-Entry Certificates.............................129

       SECTION 6.07.      Notices to Depository...............................130

       SECTION 6.08.      Definitive Certificates.............................130

        SECTION 6.09.      Maintenance of Office or Agency.....................131

       SECTION 6.10.      Authenticating Agents...............................131

       SECTION 6.11.      Trustee To Act with Consent of the

                         Certificate Insurer.................................132

       SECTION 6.12.      Mortgage Loans, Trust Fund Held for

                         Benefit of Certificate Insurer and Holders

                         of Certificates.....................................132

 

ARTICLE VII    THE DEPOSITOR, THE SERVICING ADMINISTRATOR, THE SERVICER

              AND THE SECURITIES ADMINISTRATOR...............................132

 

       SECTION 7.01.      Respective Liabilities of the Depositor,

                         the Servicing Administrator, the Servicer

                         and the Securities Administrator....................132

       SECTION 7.02.      Merger or Consolidation of the Depositor,

                         the Servicing Administrator, the Servicer

                          or the Securities Administrator.....................132

       SECTION 7.03.      Limitation on Liability of the Depositor,

                         Servicing Administrator, the Servicer,

                         the Backup Servicer, the Trustee, the

                         Securities Administrator and Others.................133

       SECTION 7.04.      Limitation on Resignation of the Servicer...........134

       SECTION 7.05.      Errors and Omissions Insurance; Fidelity Bonds......135

       SECTION 7.06.      Limitation on Resignation of the Servicing

                         Administrator and the Backup Servicer...............135

       SECTION 7.07.      Assignment by Backup Servicer and

                         Servicing Administrator.............................136

       SECTION 7.08.      Limitation Upon Liability of the Credit

                         Risk Manager........................................136

 

ARTICLE VIII   DEFAULT; TERMINATION OF SERVICER...............................137

 

       SECTION 8.01.      Events of Default...................................137

       SECTION 8.02.      Securities Administrator to Act;

                         Servicing Administrator and Backup Servicer

                         to Act; Appointment of Successor....................139

       SECTION 8.03.      Notification to Certificateholders..................141

       SECTION 8.04.      Waiver of Servicer Events of Default................141

       SECTION 8.05.      SLS Events of Termination...........................141

 

 

                                     -iii-

 

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                                TABLE OF CONTENTS

                                   (continued)

 

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ARTICLE IX     CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR........141

 

       SECTION 9.01.      Duties of the Trustee...............................141

       SECTION 9.02.      Certain Matters Affecting the Trustee...............143

       SECTION 9.03.      The Trustee Not Liable for Certificates

                         or Mortgage Loans...................................145

       SECTION 9.04.      The Trustee May Own Certificates....................145

       SECTION 9.05.       Trustee's Fees and Expenses.........................145

       SECTION 9.06.      [RESERVED]..........................................146

       SECTION 9.07.      Eligibility Requirements for the Trustee............146

       SECTION 9.08.      Resignation and Removal of the Trustee..............146

       SECTION 9.09.      [RESERVED]..........................................147

       SECTION 9.10.      Successor Trustee...................................147

       SECTION 9.11.      Merger or Consolidation of the Trustee..............147

       SECTION 9.12.      Appointment of Co-Trustee or Separate Trustee.......147

       SECTION 9.13.      Tax Matters.........................................148

       SECTION 9.14.      Duties of Securities Administrator..................151

       SECTION 9.15.      Certain Matters Affecting the

                         Securities Administrator............................152

       SECTION 9.16.      Securities Administrator Not Liable for

                         Certificates or Mortgage Loans......................153

       SECTION 9.17.      Securities Administrator May

                         Own Certificates....................................154

       SECTION 9.18.      Fees and Expenses of the Securities

                          Administrator.......................................154

       SECTION 9.19.      Eligibility Requirements for the

                         Securities Administrator............................154

       SECTION 9.20.      Resignation and Removal of the Securities

                         Administrator.......................................155

       SECTION 9.21.      Successor Securities Administrator..................155

       SECTION 9.22.      Merger or Consolidation of Securities

                          Administrator.......................................156

 

ARTICLE X      TERMINATION....................................................156

 

       SECTION 10.01.     Termination upon Liquidation or Repurchase

                         of all Mortgage Loans...............................156

       SECTION 10.02.     Final Distribution on the Certificates..............157

       SECTION 10.03.     Additional Termination Requirements.................158

 

ARTICLE XI         MISCELLANEOUS PROVISIONS...................................159

 

       SECTION 11.01.     Amendment...........................................159

       SECTION 11.02.     Counterparts........................................160

       SECTION 11.03.     Governing Law.......................................160

       SECTION 11.04.     Intention of Parties................................160

       SECTION 11.05.     Notices.............................................161

       SECTION 11.06.     Severability of Provisions..........................162

       SECTION 11.07.     Assignment..........................................162

       SECTION 11.08.     Limitation on Rights of Certificateholders..........162

       SECTION 11.09.     Inspection and Audit Rights.........................163

        SECTION 11.10.     Certificates Nonassessable and Fully Paid...........163

 

 

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                                TABLE OF CONTENTS

                                   (continued)

 

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EXHIBIT A      FORMS OF CERTIFICATES

EXHIBIT B-1    MORTGAGE LOAN SCHEDULE--MORTGAGE POOL

EXHIBIT B-2    MORTGAGE LOAN SCHEDULE--GROUP I

EXHIBIT B-3    MORTGAGE LOAN SCHEDULE--GROUP II

EXHIBIT C      [RESERVED]

EXHIBIT D      FORM OF CUSTODIAN CERTIFICATION

EXHIBIT E-1    FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT

EXHIBIT E-2    FORM OF TRANSFEROR'S AFFIDAVIT

EXHIBIT F      FORM OF TRANSFEROR CERTIFICATE

EXHIBIT G      FORM OF INVESTMENT LETTER

EXHIBIT H      FORM OF RULE 144A LETTER

EXHIBIT I      REQUEST FOR RELEASE

EXHIBIT J      [RESERVED]

EXHIBIT K      FORM OF OFFICER'S CERTIFICATE OF SECURITIES ADMINISTRATOR

EXHIBIT L      FORM OF OFFICER'S CERTIFICATE OF SERVICER

EXHIBIT M      FORM OF SUBSEQUENT TRANSFER INSTRUMENT

EXHIBIT N      FORM OF ADDITION NOTICE

EXHIBIT O      [RESERVED]

EXHIBIT P      FORM OF CERTIFICATE OF SERVICING ADMINISTRATOR

EXHIBIT Q      FORM OF CUSTODIAL AGREEMENT

EXHIBIT R      FORM OF SERVICER REPORT

 

 

                                      -v-

 

<PAGE>

 

      POOLING AND SERVICING AGREEMENT, dated as of September 1, 2005, among

MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor

(the "Depositor"), TERWIN ADVISORS LLC, a Delaware limited liability company, as

seller (the "Seller"), JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national

banking association organized under the laws of the United States of America, as

servicing administrator (in such capacity, the "Servicing Administrator") as

securities administrator (in such capacity, the "Securities Administrator") and

backup servicer (in such capacity, the "Backup Servicer"), SPECIALIZED LOAN

SERVICING, LLC, a Delaware limited liability company, as servicer (the

"Servicer") and U.S. BANK NATIONAL ASSOCIATION, a national banking association,

as trustee (the "Trustee").

 

      The Depositor is the owner of the Trust Fund that is hereby conveyed to

the Trustee in return for the Certificates. It is intended that for federal

income tax purposes the Trust Fund will include (i) three real estate mortgage

investment conduits in a tiered REMIC structure, (ii) the Initial ES Strip,

(iii) amounts distributable to the Class X Certificates pursuant to Section

5.05(i), (iv) the grantor trusts described in Section 2.07 and (v) the

Pre-Funding Account and Capitalized Interest Account. The Pre-Funding REMIC will

consist of all of the assets constituting the Trust Fund (other than assets

described in clauses (ii), (iii), (iv) and (v) above, the Pre-Funding REMIC

Regular Interests and the REMIC 1 Regular Interests) and will be evidenced by

the Pre-Funding REMIC Regular Interests (which will be uncertificated and will

represent the "regular interests" in the Pre-Funding REMIC) and the Class PF-R

Interest as the single "residual interest" in the Pre-Funding REMIC. The Trustee

will hold the Pre-Funding REMIC Regular Interests. REMIC 1 will consist of the

Pre-Funding REMIC Regular Interests and will be evidenced by the REMIC 1 Regular

Interests (which will represent the "regular interests" in REMIC 1) and the

Class LT1-R Interest as the single "residual interest" in REMIC 1. The Trustee

will hold the REMIC 1 Regular Interests. REMIC 2 will consist of the REMIC 1

Regular Interests and will be evidenced by the REMIC 2 Regular Interests (which

will represent the "regular interests" in REMIC 2) and the REMIC 2 Residual

Interest as the single "residual interest" in REMIC 2. The Class R Certificate

will represent beneficial ownership of the Class PF-R Interest, the Class LT1-R

Interest and the REMIC 2 Residual Interest. The "latest possible maturity date"

for federal income tax purposes of all the interests created hereby will be the

Latest Possible Maturity Date.

 

      All covenants and agreements made by the Seller in the Sale Agreement and

by the Depositor and the Trustee herein with respect to the Mortgage Loans and

the other property constituting the Trust Fund are for the benefit of the

Holders from time to time of the Certificates.

 

      In consideration of the mutual agreements herein contained, the Depositor,

the Servicing Administrator, the Servicer, the Securities Administrator, the

Backup Servicer and the Trustee hereby agree as follows:

 

                                   ARTICLE I

 

                                   DEFINITIONS

 

      Whenever used in this Agreement, the following words and phrases, unless

the context otherwise requires, shall have the following meanings:

 

      Accepted Servicing Administration Practices: With respect to any Mortgage

Loan, as applicable, either (x) those customary mortgage master servicing

practices of prudent mortgage servicing institutions that master service

mortgage loans of the same type and quality as such Mortgage Loan in the

jurisdiction where the related Mortgaged Property (or Underlying Mortgaged

Property in the case of a Co-op Loan) is located, to the extent applicable to

the Servicing Administrator (except in its capacity as successor to the

Servicer), or (y) as provided in Section 5.01 hereof, but in no event below the

standard set forth in clause (x).

 

<PAGE>

 

      Accepted Servicing Practices: With respect to any Mortgage Loan, the

customary mortgage servicing practices of prudent mortgage lending institutions

which service for their own account mortgage loans of the same type as such

Mortgage Loan in the jurisdiction in which the related Mortgaged Property is

located.

 

      Accrual Period: With respect to the LIBOR Certificates, the REMIC 1

Regular Interests and the REMIC 2 Regular Interests (other than the REMIC 2

Regular Interests related to the Fixed Rate Certificates) and any Distribution

Date, the period commencing on the immediately preceding Distribution Date (or,

in the case of the first Distribution Date, the Closing Date) and ending on the

day immediately preceding such Distribution Date and with respect to the Fixed

Rate Certificates and the REMIC 2 Regular Interests related to the Fixed Rate

Certificates and the Pre-Funding REMIC Regular Interests, the calendar month

immediately preceding the month in which such Distribution Date occurs. All

calculations of interest on the LIBOR Certificates, the REMIC 1 Regular

Interests and the REMIC 2 Regular Interests (other than the REMIC 2 Regular

Interests related to the Fixed Rate Certificates) will be made on the basis of

the actual number of days elapsed in the related Accrual Period and a 360 day

year and all calculations of interest on the Fixed Rate Certificates and the

REMIC 2 Regular Interests related to the Fixed Rate Certificates and the

Pre-Funding REMIC Regular Interests will be made on the basis of a 360 day year

consisting of twelve 30 day months.

 

      Addition Notice: With respect to the transfer of Subsequent Mortgage Loans

to the Trust Fund pursuant to Section 2.11, a notice of the Seller's designation

of the Subsequent Mortgage Loans to be sold to the Trust Fund, the proposed

Mortgage Group to which such Mortgage Loans are to be added, the proposed

Subsequent Cut-off Date, the proposed Subsequent Transfer Date and the aggregate

Stated Principal Balance of such Subsequent Mortgage Loans as of the Subsequent

Cut-off Date. The Addition Notice shall be given to the Servicer, the Trustee,

the Custodian, the Certificate Insurer and the Securities Administrator not

later than three Business Days prior to the related Subsequent Transfer Date and

shall be substantially in the form of Exhibit N.

 

      Administration Fee: The sum of the Aggregate Servicing Fee, the Securities

Administrator Fee and the Credit Risk Manager Fee.

 

      Advance: The aggregate of the advances required to be made by the Servicer

with respect to any Distribution Date pursuant to Section 5.01.

 

      Advance Facility: A financing or other facility as described in Section

5.02(a).

 

      Advance Facility Notice: As defined in Section 5.02(b) hereof.

 

      Advance Financing Person: As defined in Section 5.02(a) hereof.

 

      Advance Reimbursement Amounts: As defined in Section 5.02(b) hereof.

 

      Affiliate: With respect to any specified Person, any other Person

controlling, controlled by or under common control with such Person. For the

purposes of this definition, "control" means the power to direct the management

and policies of a Person, directly or indirectly, whether through ownership of

voting securities, by contract or otherwise; and the terms "controlling" and

"controlled" have meanings correlative to the foregoing.

 

      Aggregate Certificate Principal Balance: For any date of determination,

the sum of the Class A Certificate Principal Balance, the Class R Certificate

Principal Balance, the Class M-1 Certificate Principal Balance, the Class M-2

Certificate Principal Balance, the Class M-3 Certificate Principal

 

 

                                      -2-

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Balance, the Class M-4 Certificate Principal Balance, the Class M-5 Certificate

Principal Balance, the Class M-6 Certificate Principal Balance, the Class B-1

Certificate Principal Balance, the Class B-2 Certificate Principal Balance and

the Class B-3 Certificate Principal Balance, in each case as of such date of

determination.

 

      Aggregate Servicing Fee: As to each Mortgage Loan and any Distribution

Date, an amount equal to one month's interest at the Servicing Fee Rate on the

Stated Principal Balance of such Mortgage Loan as of the immediately preceding

Distribution Date or, in the event of any payment of interest that accompanies a

Principal Prepayment in full made by the Mortgagor, interest at the Servicing

Fee Rate on the Stated Principal Balance of such Mortgage Loan as of the

immediately preceding Distribution Date for the period covered by such payment

of interest (in each case payable from interest collections on such Mortgage

Loan).

 

      Agreement: This Pooling and Servicing Agreement and any and all amendments

or supplements hereto made in accordance with the terms herein.

 

      Amounts For Future Distribution: As to any Distribution Date, the

aggregate amount held in the related Collection Account (with respect to the

Servicer) or the Servicing Administrator Collection Account (with respect to the

Servicing Administrator) at the close of business on the immediately preceding

Determination Date on account of (i) all Scheduled Payments or portions thereof

received in respect of the Mortgage Loans due after the related Due Period and

(ii) Principal Prepayments and Liquidation Proceeds received in respect of the

Mortgage Loans after the last day of the related Prepayment Period.

 

      Applied Realized Loss Amount: With respect to any Distribution Date, the

amount, if any, by which, the Aggregate Certificate Principal Balance after

distributions of principal on such Distribution Date exceeds the sum of the (x)

aggregate Stated Principal Balance of the Mortgage Loans as of such Distribution

Date and (y) the amount on deposit in the Pre-Funding Account as of such

Distribution Date (disregarding income or loss on investments of amount on

deposit in the Pre-Funding Account).

 

      Assignment of Mortgage: An assignment of the Mortgage, notice of transfer

(or UCC-3 assignment (or equivalent instrument) with respect to each Co-op Loan)

or equivalent instrument, in recordable form (except in the case of a Co-op

Loan), sufficient under the laws of the jurisdiction where the related Mortgaged

Property (or Underlying Mortgaged Property, in the case of a Co-op Loan) is

located to reflect of record the sale and assignment of the Mortgage Loan to the

Trustee, which assignment, notice of transfer or equivalent instrument may, if

permitted by law, be in the form of one or more blanket assignments covering

Mortgages secured by Mortgaged Properties located in the same county.

 

      Authenticating Agent: As defined in Section 6.10 hereof.

 

      Available Funds Cap: Any of the Group I Available Funds Cap, the Group I

Net WAC Cap, the Group II Available Funds Cap or the Subordinated Available

Funds Cap, as applicable.

 

       Backup Servicer: JPMorgan, or its permitted successor in interest or

assignee or any successor Backup Servicer appointed pursuant to the provisions

hereof.

 

      Balloon Loan: A Mortgage Loan having an original term to stated maturity

of generally up 15 years which provides for level monthly payments of principal

and interest generally based on a 30 year amortization schedule, with a balloon

payment of the remaining outstanding principal balance due on such Mortgage Loan

at its stated maturity.

 

 

                                       -3-

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      Book-Entry Certificates: Any of the Certificates that shall be registered

in the name of the Depository or its nominee, the ownership of which is

reflected on the books of the Depository or on the books of a Person maintaining

an account with the Depository (directly, as a "Depository Participant," or

indirectly, as an indirect participant in accordance with the rules of the

Depository and as described in Section 6.06). As of the Closing Date, each of

the Class A, Class M and Class B Certificates constitutes a Class of Book-Entry

Certificates.

 

      Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day

on which banking institutions in the City of New York, New York, or the city in

which the Corporate Trust Office of the Trustee, the Securities Administrator or

the Certificate Insurer is located, or financial and savings and loan

institutions in the States of California, Texas, Minnesota, Illinois or Colorado

are authorized or obligated by law or executive order to be closed.

 

      Capitalized Interest Account: The account defined in Section 5.10 herein.

 

      Capitalized Interest Amount: The amount paid by the Seller to the

Securities Administrator for deposit into the Capitalized Interest Account on

the Closing Date pursuant to Section 5.10, which amount is $24,286.

 

      Certificate: Any one of the certificates of any Class executed by the

Securities Administrator and authenticated by the Authenticating Agent in

substantially the forms attached hereto as Exhibits A.

 

      Certificate Account: The separate Eligible Account created and maintained

by the Securities Administrator pursuant to Section 3.05(f) in the name of the

Trustee for the benefit of the Certificateholders and designated "JPMorgan Chase

Bank, N.A., as securities administrator for U.S. Bank National Association, as

trustee, in trust for registered holders of Terwin Mortgage Trust, Asset-Backed

Certificates, Series TMTS 2005-14HE." Funds in the Certificate Account shall be

held in trust for the Certificateholders for the uses and purposes set forth in

this Agreement.

 

      Certificate Group: Either of Certificate Group I or Certificate Group II.

 

      Certificate Group I: The Group I Senior Certificates and Class R

Certificates. For purposes of Section 2.07 hereof, Certificate Group I shall be

related to Group I.

 

      Certificate Group II: The Group II Senior Certificates. For purposes of

Section 2.07 hereof, Certificate Group II shall be related to Group II.

 

      Certificate Insurance Policy: The irrevocable Certificate Guaranty

Insurance Policy, No. 51675-N, including any endorsements thereto, issued by the

Certificate Insurer with respect to the Class AF-2 Certificates.

 

      Certificate Insurer: Financial Security Assurance Inc., a New York

financial guaranty insurance company, or any successor thereto.

 

      Certificate Insurer Account: The account established pursuant to Section

5.07(g) hereof.

 

      Certificate Insurer Contact Persons: Collectively, the officers designated

by each Servicer to provide information to the Certificate Insurer pursuant to

Section 5.07(m).

 

      Certificate Insurer Default: A default by the Certificate Insurer in its

obligations under the Certificate Insurance Policy.

 

 

                                       -4-

<PAGE>

 

      Certificate Insurer Premium: With respect to any Distribution Date, an

amount equal to 1/12th of the product of (a) the aggregate Certificate Principal

Balance of the Class AF-2, Class AF-4 and Class AF-5 Certificates as of such

Distribution Date (prior to giving effect to any distributions thereon on such

Distribution Date) and (b) the Certificate Insurer Premium Rate.

 

      Certificate Insurer Premium Rate: The per annum rate at which the

Certificate Insurer Premium is determined, as described in the commitment letter

dated as of September 9, 2005, between the Depositor, the Seller and the

Certificate Insurer.

 

      Certificate Insurer Reimbursement Amount: The sum of (i) all amounts paid

by the Certificate Insurer under the Certificate Insurance Policy which have not

been previously reimbursed, (ii) all unpaid Certificate Insurer Premiums, (iii)

all costs and expenses incurred by the Certificate Insurer on behalf of itself

or the Class AF-2, Class AF-4 and Class AF-5 Certificates in connection with any

actions, suits or proceedings with respect to the exercise or enforcement of any

rights under the Certificate Insurance Policy or this Agreement and (iv)

interest on the foregoing at the respective Pass-Through Rate on each of the

Class AF-2, Class AF-4 and Class AF-5 Certificates.

 

      Certificate Owner: With respect to a Book-Entry Certificate, the Person

that is the beneficial owner of such Book-Entry Certificate.

 

      Certificate Principal Balance: As to any Certificate (other than a Class X

or Class ES Certificate) and as of any Distribution Date, the Initial

Certificate Principal Balance of such Certificate less the sum of (1) all

amounts distributed with respect to such Certificate in reduction of the

Certificate Principal Balance thereof on previous Distribution Dates pursuant to

Section 5.05, and (2) any Applied Realized Loss Amounts allocated to such

Certificate on previous Distribution Dates pursuant to Section 5.05(j).

Notwithstanding the foregoing on any Distribution Date relating to a Due Period

in which a Subsequent Recovery has been received by the Servicer, the

Certificate Principal Balance of any Class of Certificates then outstanding for

which any Applied Realized Loss Amount has been allocated will be increased, in

order of seniority, by an amount equal to the lesser of (i) the Unpaid Realized

Loss Amount for such Class of Certificates and (ii) the total of any Subsequent

Recovery in respect of principal distributed on such date to the

Certificateholders (reduced by the amount of the increase in the Certificate

Principal Balance of any more senior Class of Certificates pursuant to this

sentence on such Distribution Date). Solely for the purposes of determining the

Certificate Insurer's rights as subrogee for payments pursuant to Section 5.05,

"Certificate Principal Balance" of the Class AF-2, Class AF-4 and Class AF-5

Certificates shall not be reduced by the amount of any payments made by the

Certificate Insurer in respect of principal on such Certificates under the

Certificate Insurance Policy, except to the extent such payment shall have been

reimbursed to the Certificate Insurer pursuant to the provisions of this

Agreement. Instead, the Certificate Insurer shall be subrogated to such amounts

paid under the Certificate Insurance Policy.

 

      Certificate Register: The register maintained pursuant to Section 6.02

hereof.

 

      Certificate Registrar: The Certificate Registrar appointed pursuant to

Section 6.02 hereof.

 

      Certificateholder or Holder: The Person in whose name a Certificate is

registered in the Certificate Register (initially, Cede & Co., as nominee for

the Depository, in the case of the Book-Entry Certificates) in the case of any

Class of Certificates, and, with respect to the Class AF-2, Class AF-4 and Class

AF-5 Certificates, the Certificate Insurer (except with respect to distributions

pursuant to Section 5.05, the Certificate Insurer shall only be a

Certificateholder with respect to the Class AF-2, Class AF-4 and Class AF-5

Certificates to the extent of any amount paid under the Certificate Insurance

Policy), except that solely for the purpose of giving any consent pursuant to

this Agreement, any Certificate

 

 

                                      -5-

<PAGE>

 

registered in the name of the Depositor or any Affiliate of the Depositor shall

be deemed not to be Outstanding and the Percentage Interest evidenced thereby

shall not be taken into account in determining whether the requisite amount of

Percentage Interests necessary to effect such consent has been obtained;

provided, however, that if any such Person (including the Depositor) owns 100%

of the Percentage Interests evidenced by a Class of Certificates, such

Certificates shall be deemed to be Outstanding for purposes of any provision

hereof that requires the consent of the Holders of Certificates of a particular

Class as a condition to the taking of any action hereunder. The Securities

Administrator, the Trustee and the Certificate Registrar are entitled to rely

conclusively on a certification of the Depositor or any Affiliate of the

Depositor in determining which Certificates are registered in the name of an

Affiliate of the Depositor.

 

      Class: All Certificates bearing the same Class designation as set forth in

Section 6.01 hereof.

 

      Class A Certificate Principal Balance: For any date of determination, the

sum of the Class AF-1 Certificate Principal Balance, the Class AF-2 Certificate

Principal Balance, the Class AF-3 Certificate Principal Balance, the Class AF-4

Certificate Principal Balance, the Class AF-5 Certificate Principal Balance, the

Class AV-1 Certificate Principal Balance, the Class AV-2 Certificate Principal

Balance and the Class AV-3 Certificate Principal Balance.

 

      Class A Certificates: Any of the Class AF-1 Certificates, the Class AF-2

Certificates, the Class AF-3 Certificates, the Class AF-4 Certificates, the

Class AF-5 Certificates, the Class AV-1 Certificates, the Class AV-2

Certificates and the Class AV-3 Certificates.

 

      Class A Principal Distribution Amount: With respect to any Distribution

Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger

Event exists, 100% of the Principal Distribution Amount for such Distribution

Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,

the excess of (A) the Class A Certificate Principal Balance and the Class R

Certificate Principal Balance immediately prior to such Distribution Date over

(B) the lesser of (i) 74.10% of the Stated Principal Balance of the Mortgage

Loans as of the end of the immediately preceding Due Period and (ii) the excess

of the Stated Principal Balance of the Mortgage Loans as of the end of the

immediately preceding Due Period over the Minimum Required Overcollateralization

Amount; provided, however, that in no event will the Class A Principal

Distribution Amount with respect to any Distribution Date exceed the aggregate

Certificate Principal Balance of the Class A and Class R Certificates.

 

      Class AF-1 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AF-1 Certificates.

 

      Class AF-1 Certificates: Any Certificate designated as a "Class AF-1

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class AF-1 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AF-1 Pass-Through Rate on

the Class AF-1 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class AF-1 Certificates.

 

      Class AF-1 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AF-1 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AF-1 Certificates with respect to Class AF-1 Current Interest and Class

 

 

                                       -6-

<PAGE>

 

AF-1 Interest Carry Forward Amounts on such prior Distribution Dates and (2)

interest on such excess (to the extent permitted by applicable law) at the Class

AF-1 Pass-Through Rate for the related Accrual Period.

 

      Class AF-1 Margin: As of any Distribution Date up to and including the

Optional Termination Date for the Certificates, 0.140% per annum and, as of any

Distribution Date after the Optional Termination Date, 0.280% per annum.

 

      Class AF-1 Pass-Through Rate: For the first Distribution Date, 3.844% per

annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR

plus the Class AF-1 Margin, (2) the Group I Available Funds Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date.

 

      Class AF-2 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AF-2 Certificates.

 

      Class AF-2 Certificates: Any Certificate designated as a "Class AF-2

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class AF-2 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AF-2 Pass-Through Rate on

the Class AF-2 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class AF-2 Certificates.

 

      Class AF-2 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AF-2 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AF-2 Certificates with respect to Class AF-2 Current Interest and Class AF-2

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class AF-2

Pass-Through Rate for the related Accrual Period.

 

      Class AF-2 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class AF-2 Certificates, the

least of (1) 4.84920% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date and, as of any Distribution Date after the Optional Termination Date, the

least of (1) 5.34920% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date.

 

      Class AF-3 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AF-3 Certificates.

 

      Class AF-3 Certificates: Any Certificate designated as a "Class AF-3

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class AF-3 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AF-3 Pass-Through Rate on

the Class AF-3 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of

 

 

                                      -7-

<PAGE>

 

any previous distributions on such Class that are recovered as a voidable

preference by a trustee in bankruptcy, less any Non-Supported Interest Shortfall

allocated on such Distribution Date to the Class AF-3 Certificates.

 

      Class AF-3 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AF-3 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AF-3 Certificates with respect to Class AF-3 Current Interest and Class AF-3

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class AF-3

Pass-Through Rate for the related Accrual Period.

 

      Class AF-3 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class AF-3 Certificates, the

least of (1) 5.38311% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date and, as of any Distribution Date after the Optional Termination Date, the

least of (1) 5.88311% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date.

 

      Class AF-4 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AF-4 Certificates.

 

      Class AF-4 Certificates: Any Certificate designated as a "Class AF-4

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class AF-4 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AF-4 Pass-Through Rate on

the Class AF-4 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class AF-4 Certificates.

 

      Class AF-4 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AF-4 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AF-4 Certificates with respect to Class AF-4 Current Interest and Class AF-4

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class AF-4

Pass-Through Rate for the related Accrual Period.

 

      Class AF-4 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class AF-4 Certificates, the

least of (1) 5.51497% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date and, as of any Distribution Date after the Optional Termination Date, the

least of (1) 6.01497% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date.

 

      Class AF-5 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AF-5 Certificates.

 

      Class AF-5 Certificates: Any Certificate designated as a "Class AF-5

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

 

                                       -8-

<PAGE>

 

      Class AF-5 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AF-5 Pass-Through Rate on

the Class AF-5 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class AF-5 Certificates.

 

      Class AF-5 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AF-5 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AF-5 Certificates with respect to Class AF-5 Current Interest and Class AF-5

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class AF-5

Pass-Through Rate for the related Accrual Period.

 

      Class AF-5 Lockout Distribution Amount: For any Distribution Date, an

amount equal to the product of (x) the Class AF-5 Lockout Distribution

Percentage for such Distribution Date and (y) the Class AF-5 Pro Rata

Distribution Amount for such Distribution Date. In no event shall the Class AF-5

Lockout Distribution Amount for a Distribution Date exceed the Principal

Distribution Amount for such Distribution Date or the Certificate Principal

Balance of the Class AF-5 Certificates immediately prior to such Distribution

Date.

 

      Class AF-5 Lockout Distribution Percentage: For any Distribution Date, the

applicable percentage for such Distribution Date set forth in the following

table:

 

         Distribution Date Occurring In                Lockout Percentage

         ------------------------------                ------------------

          October 2005 - September 2008                          0%

         October 2008 - September 2010                         45%

         October 2010 - September 2011                         80%

         October 2011 - September 2012                        100%

         October 2012 and thereafter                          300%

 

      Class AF-5 Pro Rata Distribution Amount: For any Distribution Date, an

amount equal to the product of (x) a fraction expressed as a percentage, the

numerator of which is the Certificate Principal Balance of the Class AF-5

Certificates immediately prior to such Distribution Date and the denominator of

which is the aggregate Certificate Principal Balance of the Group I Senior

Certificates immediately prior to such Distribution Date and (y) the Principal

Distribution Amount for such Distribution Date.

 

      Class AF-5 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class AF-5 Certificates, the

least of (1) 5.15198% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date and, as of any Distribution Date after the Optional Termination Date, the

least of (1) 5.65198% per annum, (2) the Group I Net WAC Cap for such

Distribution Date and (3) the Group I Maximum Rate Cap for such Distribution

Date.

 

      Class AV-1 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AV-1 Certificates.

 

 

                                       -9-

<PAGE>

 

      Class AV-1 Certificates: Any Certificate designated as a "Class AV-1

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class AV-1 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AV-1 Pass-Through Rate on

the Class AV-1 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class AV-1 Certificates.

 

      Class AV-1 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AV-1 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AV-1 Certificates with respect to Class AV-1 Current Interest and Class AV-1

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class AV-1

Pass-Through Rate for the related Accrual Period.

 

      Class AV-1 Margin: As of any Distribution Date up to and including the

Optional Termination Date for the Certificates, 0.150% per annum and, as of any

Distribution Date after the Optional Termination Date, 0.300% per annum.

 

      Class AV-1 Pass-Through Rate: For the first Distribution Date, 3.854% per

annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR

plus the Class AV-1 Margin, (2) the Group II Available Funds Cap for such

Distribution Date and (3) the Group II Maximum Rate Cap for such Distribution

Date.

 

      Class AV-2 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AV-2 Certificates.

 

      Class AV-2 Certificates: Any Certificate designated as a "Class AV-2

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class AV-2 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AV-2 Pass-Through Rate on

the Class AV-2 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class AV-2 Certificates.

 

      Class AV-2 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AV-2 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AV-2 Certificates with respect to Class AV-2 Current Interest and Class AV-2

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class AV-2

Pass-Through Rate for the related Accrual Period.

 

      Class AV-2 Margin: As of any Distribution Date up to and including the

Optional Termination Date for the Certificates, 0.280% per annum and, as of any

Distribution Date after the Optional Termination Date, 0.560% per annum.

 

 

                                      -10-

<PAGE>

 

      Class AV-2 Pass-Through Rate: For the first Distribution Date, 3.984% per

annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR

plus the Class AV-2 Margin, (2) the Group II Available Funds Cap for such

Distribution Date and (3) the Group II Maximum Rate Cap for such Distribution

Date.

 

       Class AV-3 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class AV-3 Certificates.

 

      Class AV-3 Certificates: Any Certificate designated as a "Class AV-3

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class AV-3 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class AV-3 Pass-Through Rate on

the Class AV-3 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class AV-3 Certificates.

 

      Class AV-3 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class AV-3 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

AV-3 Certificates with respect to Class AV-3 Current Interest and Class AV-3

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class AV-3

Pass-Through Rate for the related Accrual Period.

 

      Class AV-3 Margin: As of any Distribution Date up to and including the

Optional Termination Date for the Certificates, 0.450% per annum and, as of any

Distribution Date after the Optional Termination Date, 0.900% per annum.

 

      Class AV-3 Pass-Through Rate: For the first Distribution Date, 4.154% per

annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR

plus the Class AV-3 Margin, (2) the Group II Available Funds Cap for such

Distribution Date and (3) the Group II Maximum Rate Cap for such Distribution

Date.

 

      Class B Certificates: The Class B-1 Certificates, Class B-2 Certificates

and Class B-3 Certificates.

 

      Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class B-1 Certificates.

 

      Class B-1 Certificate: Any Certificate designated as a "Class B-1

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class B-1 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class B-1 Certificates.

 

      Class B-1 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on

the Class B-1 Certificate Principal Balance as of such the first day of such

Accrual Period (after giving effect to all distributions of principal made or

 

 

                                      -11-

<PAGE>

 

deemed to be made as of such first day) plus the Current Interest and Interest

Carry Forward Amount portions of any previous distributions on such Class that

are recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class B-1 Certificates.

 

      Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class B-1 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

B-1 Certificates with respect to Class B-1 Current Interest and Class B-1

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class B-1

Pass-Through Rate for the related Accrual Period.

 

      Class B-1 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class B-1 Certificates, the

least of (1) 6.00000% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.50000% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class B-1 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance and the Class M Certificate Principal

Balance have been reduced to zero and a Trigger Event exists, or as long as a

Trigger Event does not exist, the excess of (1) the sum of (A) the Class A

Certificate Principal Balance and Class R Certificate Principal Balance (after

taking into account distributions of the Class A Principal Distribution Amount

on such Distribution Date), (B) the Class M Certificate Principal Balance (after

taking into account distributions of the Class M Principal Distribution Amount

on such Distribution Date) and (C) the Class B-1 Certificate Principal Balance

immediately prior to such Distribution Date over (2) the lesser of (A) 96.20% of

the Stated Principal Balance of the Mortgage Loans as of the end of the

immediately preceding Due Period and (B) the excess of the Stated Principal

Balance of the Mortgage Loans as of the end of the immediately preceding Due

Period over the Minimum Required Overcollateralization Amount. Notwithstanding

the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which

the Certificate Principal Balance of each Class of Class A, Class R and Class M

Certificates has been reduced to zero, the Class B-1 Principal Distribution

Amount will equal the lesser of (x) the outstanding Class B-1 Certificate

Principal Balance and (y) 100% of the Principal Distribution Amount remaining

after any distributions on such Class A, Class R and Class M Certificates and

(II) in no event will the Class B-1 Principal Distribution Amount with respect

to any Distribution Date exceed the Class B-1 Certificate Principal Balance.

 

      Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class B-1 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

      Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class B-2 Certificates.

 

      Class B-2 Certificate: Any Certificate designated as a "Class B-2

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

 

                                      -12-

<PAGE>

 

      Class B-2 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class B-2 Certificates.

 

      Class B-2 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on

the Class B-2 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class B-2 Certificates.

 

      Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class B-2 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

B-2 Certificates with respect to Class B-2 Current Interest and Class B-2

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class B-2

Pass-Through Rate for the related Accrual Period.

 

      Class B-2 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class B-2 Certificates, the

least of (1) 6.00000% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.50000% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class B-2 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance, the Class M Certificate Principal Balance

and the Class B-1 Certificate Principal Balance have been reduced to zero and a

Trigger Event exists, or as long as a Trigger Event does not exist, the excess

of (1) the sum of (A) the Class A Certificate Principal Balance and Class R

Certificate Principal Balance (after taking into account distributions of the

Class A Principal Distribution Amount on such Distribution Date), (B) the Class

M Certificate Principal Balance (after taking into account distributions of the

Class M Principal Distribution Amount on such Distribution Date), (C) the Class

B-1 Certificate Principal Balance (after taking into account distributions of

the Class B-1 Principal Distribution Amount on such Distribution Date) and (D)

the Class B-2 Certificate Principal Balance immediately prior to such

Distribution Date over (2) the lesser of (A) 97.20% of the Stated Principal

Balance of the Mortgage Loans as of the end of the immediately preceding Due

Period and (B) the excess of the Stated Principal Balance of the Mortgage Loans

as of the end of the immediately preceding Due Period over Minimum Required

Overcollateralization Amount. Notwithstanding the foregoing, (I) on any

Distribution Date prior to the Stepdown Date on which the Certificate Principal

Balance of each Class of Class A, Class R, Class M and Class B-1 Certificates

has been reduced to zero, the Class B-2 Principal Distribution Amount will equal

the lesser of (x) the outstanding Class B-2 Certificate Principal Balance and

(y) 100% of the Principal Distribution Amount remaining after any distributions

on such Class A, Class R, Class M and Class B-1 Certificates and (II) in no

event will the Class B-2 Principal Distribution Amount with respect to any

Distribution Date exceed the Class B-2 Certificate Principal Balance.

 

      Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class B-2 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

 

                                      -13-

<PAGE>

 

      Class B-3 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class B-3 Certificates.

 

      Class B-3 Certificate: Any Certificate designated as a "Class B-3

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class B-3 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class B-3 Certificates.

 

      Class B-3 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on

the Class B-3 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class B-3 Certificates.

 

      Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class B-3 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

B-3 Certificates with respect to Class B-3 Current Interest and Class B-3

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class B-3

Pass-Through Rate for the related Accrual Period.

 

      Class B-3 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class B-3 Certificates, the

least of (1) 6.00000% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.50000% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class B-3 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance, the Class M Certificate Principal

Balance, the Class B-1 Certificate Principal Balance and the Class B-2

Certificate Principal Balance have been reduced to zero and a Trigger Event

exists, or as long as a Trigger Event does not exist, the excess of (1) the sum

of (A) the Class A Certificate Principal Balance and Class R Certificate

Principal Balance (after taking into account distributions of the Class A

Principal Distribution Amount on such Distribution Date), (B) the Class M

Certificate Principal Balance (after taking into account distributions of the

Class M Principal Distribution Amount on such Distribution Date), (C) the Class

B-1 Certificate Principal Balance (after taking into account distributions of

the Class B-1 Principal Distribution Amount on such Distribution Date), (D) the

Class B-2 Certificate Principal Balance immediately prior to such Distribution

Date (after taking into account distribution of the Class B-2 Principal

Distribution Amount on such Distribution Date) and (E) the Class B-3 Certificate

Principal Balance over (2) the lesser of (A) 98.20% of the Stated Principal

Balance of the Mortgage Loans as of the end of the immediately preceding Due

Period and (B) the excess of the Stated Principal Balance of the Mortgage Loans

as of the end of the immediately preceding Due Period over Minimum Required

Overcollateralization Amount. Notwithstanding the foregoing, (I) on any

Distribution Date prior to the Stepdown Date on which the Certificate Principal

Balance of each Class of Class A, Class R, Class M, Class B-1 and Class B-2

Certificates has been reduced to zero, the Class B-3 Principal Distribution

Amount will equal the lesser of (x) the outstanding Class B-3 Certificate

Principal Balance and (y) 100% of the Principal Distribution

 

 

                                      -14-

<PAGE>

 

Amount remaining after any distributions on such Class A, Class R, Class M,

Class B-1 and Class B-2 Certificates and (II) in no event will the Class B-3

Principal Distribution Amount with respect to any Distribution Date exceed the

Class B-3 Certificate Principal Balance.

 

      Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class B-3 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

      Class ES Certificate: The Class ES Certificates executed by the Trustee

and authenticated by the Trustee in substantially the form set forth in Exhibit

A.

 

      Class ES Distribution Amount: For any Distribution Date, the lesser of (i)

an amount equal to the product of (x) the Stated Principal Balance of the

Mortgage Loans as of the immediately preceding Distribution Date and (y) the

excess of the Servicing Fee Rate over the SLS Servicing Fee Rate and (ii) the

Initial ES Strip.

 

      Class LT1-AF-1 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-AF-2 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-AF-3 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-AF-4 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-AF-5 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-AV-1 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-AV-2 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-AV-3 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

 

                                      -15-

<PAGE>

 

      Class LT1-B1 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-B2 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-B3 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-M1 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-M2 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-M3 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-M4 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-M5 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-M6 Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 1/4 of the initial principal balance of

its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LT1-R Interest: The sole class of "residual interest" in REMIC 1.

 

      Class LT1-R$100 Interest: An uncertificated regular interest in REMIC 1

with an initial principal balance equal to 1/4 of the initial principal balance

of its Corresponding Certificates and an interest rate equal to the Net Rate.

 

      Class LTIX Interest: An uncertificated regular interest in REMIC 1 with an

initial prinicipal balance equal to the excess of (i) 50% of the sum of (x) the

aggregate Cut-off Date Principal Balance of the Mortgage Loans and (y) the

Original Pre-Funded Amount over (ii) the initial principal balance of the REMIC

1-I Marker Interests, and with an interest rate equal to the Net Rate.

 

      Class LTIIX Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to the excess of (i) 50% of the sum of (x)

the aggregate Cut-off Date Principal Balance of the Mortgage Loans and (y) the

Original Pre-Funded Amount over (ii) the initial principal balance of the REMIC

1-II Marker Interests, and with an interest rate equal to the Net Rate.

 

 

                                      -16-

<PAGE>

 

      Class LTII1A Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 0.05% of the excess of (i) the sum of (x)

the aggregate Cut-off Date Principal Balance of the Group I Mortgage Loans and

(y) the portion of the Original Pre-Funded Amount related to Group I over (ii)

the aggregate of the initial Certificate Principal Balances of Certificate Group

I, and with an interest rate equal to the Net Rate.

 

      Class LTII1B Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 0.05% of the sum of (x) the aggregate

Cut-off Date Principal Balance of the Group I Mortgage Loans and (y) the portion

of the Original Pre-Funded Amount related to Group I, and with an interest rate

equal to the Group I Available Funds Cap.

 

      Class LTII2A Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 0.05% of the excess of (i) the sum of (x)

the aggregate Cut-off Date Principal Balance of the Group II Mortgage Loans and

(y) the portion of the Original Pre-Funded Amount related to Group II over (ii)

the aggregate of the initial Certificate Principal Balances of Certificate Group

II, and with an interest rate equal to the Net Rate.

 

      Class LTII2B Interest: An uncertificated regular interest in REMIC 1 with

an initial principal balance equal to 0.05% of the sum of (x) the aggregate

Cut-off Date Principal Balance of the Group II Mortgage Loans and (y) the

portion of the Original Pre-Funded Amount related to Group II, and with an

interest rate equal to the Group II Available Funds Cap.

 

       Class M Certificates: The Class M-1, Class M-2, Class M-3, Class M-4,

Class M-5 and Class M-6 Certificates.

 

      Class M Certificate Principal Balance: For any Distribution Date, the sum

of the Class M-1 Certificate Principal Balance, the Class M-2 Certificate

Principal Balance, the Class M-3 Certificate Principal Balance, the Class M-4

Certificate Principal Balance, the Class M-5 Certificate Principal Balance and

the Class M-6 Certificate Principal Balance.

 

      Class M Principal Distribution Amount: For any Distribution Date, the sum

of the Class M-1 Principal Distribution Amount, the Class M-2 Principal

Distribution Amount, the Class M-3 Principal Distribution Amount, the Class M-4

Principal Distribution Amount, the Class M-5 Principal Distribution Amount, and

the Class M-6 Principal Distribution Amount.

 

      Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class M-1 Certificates.

 

      Class M-1 Certificate: Any Certificate designated as a "Class M-1

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class M-1 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class M-1 Certificates.

 

      Class M-1 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on

the Class M-1 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class M-1 Certificates.

 

 

                                      -17-

<PAGE>

 

      Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class M-1 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

M-1 Certificates with respect to Class M-1 Current Interest and Class M-1

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class M-1

Pass-Through Rate for the related Accrual Period.

 

      Class M-1 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class M-1 Certificates, the

least of (1) 5.55806% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.05806% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class M-1 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance and the

Class R Certificate Principal Balance has been reduced to zero and a Trigger

Event exists, or as long as a Trigger Event does not exist, the excess of (1)

the sum of (A) the Class A Certificate Principal Balance and Class R Certificate

Principal Balance (after taking into account distributions of the Class A

Principal Distribution Amount on such Distribution Date) and (B) the Class M-1

Certificate Principal Balance immediately prior to such Distribution Date over

(2) the lesser of (A) 82.10% of the Stated Principal Balances of the Mortgage

Loans as of the end of the immediately preceding Due Period and (B) the excess

of the Stated Principal Balances for the Mortgage Loans as of the end of the

immediately preceding Due Period over the Minimum Required Overcollateralization

Amount. Notwithstanding the foregoing, (I) on any Distribution Date prior to the

Stepdown Date on which the Certificate Principal Balance of each Class of Class

A and Class R Certificates has been reduced to zero, the Class M-1 Principal

Distribution Amount will equal the lesser of (x) the outstanding Class M-1

Certificate Principal Balance and (y) 100% of the Principal Distribution Amount

remaining after any distributions on such Class A and Class R Certificates and

(II) in no event will the Class M-1 Principal Distribution Amount with respect

to any Distribution Date exceed the Class M-1 Certificate Principal Balance.

 

      Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class M-1 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

      Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class M-2 Certificates.

 

      Class M-2 Certificate: Any Certificate designated as a "Class M-2

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class M-2 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class M-2 Certificates.

 

      Class M-2 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on

the Class M-2 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any

 

 

                                      -18-

<PAGE>

 

previous distributions on such Class that are recovered as a voidable preference

by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated

on such Distribution Date to the Class M-2 Certificates.

 

      Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class M-2 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

M-2 Certificates with respect to Class M-2 Current Interest and Class M-2

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class M-2

Pass-Through Rate for the related Accrual Period.

 

      Class M-2 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class M-2 Certificates, the

least of (1) 5.60705% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.10705% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class M-2 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance and the Class M-1 Certificate Principal

Balance have been reduced to zero and a Trigger Event exists, or as long as a

Trigger Event does not exist, the excess of (1) the sum of (A) the Class A

Certificate Principal Balance and Class R Certificate Principal Balance (after

taking into account distributions of the Class A Principal Distribution Amount

on such Distribution Date), (B) the Class M-1 Certificate Principal Balance

(after taking into account distributions of the Class M-1 Principal Distribution

Amount on such Distribution Date) and (C) the Class M-2 Certificate Principal

Balance immediately prior to such Distribution Date over (2) the lesser of (A)

85.9% of the Stated Principal Balances of the Mortgage Loans as of the end of

the immediately preceding Due Period and (B) the excess of the Stated Principal

Balances of the Mortgage Loans as of the end of the immediately preceding Due

Period over the Minimum Required Overcollateralization Amount. Notwithstanding

the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which

the Certificate Principal Balance of each Class of Class A, Class R and Class

M-1 Certificates has been reduced to zero, the Class M-2 Principal Distribution

Amount will equal the lesser of (x) the outstanding Class M-2 Certificate

Principal Balance and (y) 100% of the Principal Distribution Amount remaining

after any distributions on such Class A, Class R and Class M-1 Certificates and

(II) in no event will the Class M-2 Principal Distribution Amount with respect

to any Distribution Date exceed the Class M-2 Certificate Principal Balance.

 

      Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class M-2 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

      Class M-3 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class M-3 Certificates.

 

      Class M-3 Certificate: Any Certificate designated as a "Class M-3

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

 

                                       -19-

<PAGE>

 

      Class M-3 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class M-3 Certificates.

 

      Class M-3 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class M-3 Pass-Through Rate on

the Class M-3 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class M-3 Certificates.

 

      Class M-3 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class M-3 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

M-3 Certificates with respect to Class M-3 Current Interest and Class M-3

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class M-3

Pass-Through Rate for the related Accrual Period.

 

      Class M-3 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class M-3 Certificates, the

least of (1) 5.71290% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.21290% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class M-3 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance, the Class M-1 Certificate Principal

Balance and the Class M-2 Certificate Principal Balance have been reduced to

zero and a Trigger Event exists, or as long as a Trigger Event does not exist,

the excess of (1) the sum of (A) the Class A Certificate Principal Balance and

Class R Certificate Principal Balance (after taking into account distributions

of the Class A Principal Distribution Amount on such Distribution Date), (B) the

Class M-1 Certificate Principal Balance (after taking into account distributions

of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)

the Class M-2 Certificate Principal Balance (after taking into account

distributions of the Class M-2 Principal Distribution Amount) and (D) the Class

M-3 Certificate Principal Balance immediately prior to such Distribution Date

over (2) the lesser of (A) 87.90% of the Stated Principal Balances of the

Mortgage Loans as of the end of the immediately preceding Due Period and (B) the

excess of the Stated Principal Balances of the Mortgage Loans as of the end of

the immediately preceding Due Period over the Minimum Required

Overcollateralization Amount. Notwithstanding the foregoing, (I) on any

Distribution Date prior to the Stepdown Date on which the Certificate Principal

Balance of each Class of Class A, Class R, Class M-1 and Class M-2 Certificates

has been reduced to zero, the Class M-3 Principal Distribution Amount will equal

the lesser of (x) the outstanding Class M-3 Certificate Principal Balance and

(y) 100% of the Principal Distribution Amount remaining after any distributions

on such Class A, Class R, Class M-1 and Class M-2 Certificates and (II) in no

event will the Class M-3 Principal Distribution Amount with respect to any

Distribution Date exceed the Class M-3 Certificate Principal Balance.

 

      Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class M-3 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class M-3 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class M-3 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

 

                                      -20-

<PAGE>

 

      Class M-4 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class M-4 Certificates.

 

      Class M-4 Certificate: Any Certificate designated as a "Class M-4

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class M-4 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class M-4 Certificates.

 

      Class M-4 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class M-4 Pass-Through Rate on

the Class M-4 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class M-4 Certificates.

 

      Class M-4 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class M-4 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

M-4 Certificates with respect to Class M-4 Current Interest and Class M-4

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class M-4

Pass-Through Rate for the related Accrual Period.

 

      Class M-4 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class M-4 Certificates, the

least of (1) 5.95455% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.45455% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class M-4 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance, the Class M-1 Certificate Principal

Balance, the Class M-2 Certificate Principal Balance and the Class M-3

Certificate Principal Balance have been reduced to zero and a Trigger Event

exists, or as long as a Trigger Event does not exist, the excess of (1) the sum

of (A) the Class A Certificate Principal Balance and Class R Certificate

Principal Balance (after taking into account distributions of the Class A

Principal Distribution Amount on such Distribution Date), (B) the Class M-1

Certificate Principal Balance (after taking into account distributions of the

Class M-1 Principal Distribution Amount on such Distribution Date), (C) the

Class M-2 Certificate Principal Balance (after taking into account distributions

of the Class M-2 Principal Distribution Amount, (D) the Class M-3 Certificate

Principal Balance (after taking into account distributions of the Class M-3

Principal Distribution Amount), and (E) the Class M-4 Certificate Principal

Balance immediately prior to such Distribution Date over (2) the lesser of (A)

92.60% of the Stated Principal Balances of the Mortgage Loans as of the end of

the immediately preceding Due Period and (B) the excess of the Stated Principal

Balances of the Mortgage Loans as of the end of the immediately preceding Due

Period over the Minimum Required Overcollateralization Amount. Notwithstanding

the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which

the Certificate Principal Balance of each Class of Class A, Class R, Class M-1,

Class M-2 and Class M-3 Certificates has been reduced to zero, the Class M-4

Principal Distribution Amount will equal the lesser of (x) the outstanding Class

M-4 Certificate Principal Balance and (y) 100% of the Principal Distribution

Amount remaining

 

 

                                      -21-

<PAGE>

 

after any distributions on such Class A, Class R, Class M-1, Class M-2 and Class

M-3 Certificates and (II) in no event will the Class M-4 Principal Distribution

Amount with respect to any Distribution Date exceed the Class M-4 Certificate

Principal Balance.

 

      Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class M-4 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class M-4 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class M-4 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

      Class M-5 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class M-5 Certificates.

 

      Class M-5 Certificate: Any Certificate designated as a "Class M-5

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class M-5 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class M-5 Certificates.

 

      Class M-5 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class M-5 Pass-Through Rate on

the Class M-5 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class M-5 Certificates.

 

      Class M-5 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class M-5 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

M-5 Certificates with respect to Class M-5 Current Interest and Class M-5

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class M-5

Pass-Through Rate for the related Accrual Period.

 

      Class M-5 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class M-5 Certificates, the

least of (1) 6.00000% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the least of (1) 6.50000% per annum, (2) the Subordinated

Available Funds Cap for such Distribution Date and (3) the Subordinated Maximum

Rate Cap for such Distribution Date.

 

      Class M-5 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance, the Class M-1 Certificate Principal

Balance, the Class M-2 Certificate Principal balance, the Class M-3 Certificate

Principal Balance and the Class M-4 Certificate Principal Balance have been

reduced to zero and a Trigger Event exists, or as long as a Trigger Event does

not exist, the excess of (1) the sum of (A) the Class A Certificate Principal

Balance and Class R Certificate Principal Balance (after taking into account

distributions of the Class A Principal Distribution Amount on such Distribution

Date), (B) the Class M-1 Certificate Principal Balance (after taking into

account distributions of the Class M-1 Principal Distribution Amount on such

Distribution Date), (C) the Class M-2 Certificate Principal Balance (after

 

 

                                      -22-

<PAGE>

 

taking into account distributions of the Class M-2 Principal Distribution Amount

on such Distribution Date), (D) the Class M-3 Certificate Principal Balance

(after taking into account distributions of the Class M-3 Principal Distribution

Amount on such Distribution Date), (E) the Class M-4 Certificate Principal

Balance (after taking into account distributions of the Class M-4 Principal

Distribution Amount on such Distribution Date) and (F) the Class M-5 Certificate

Principal Balance immediately prior to such Distribution Date over (2) the

lesser of (A) 94.20% of the Stated Principal Balances of the Mortgage Loans as

of the end of the immediately preceding Due Period and (B) the excess of the

Stated Principal Balances of the Mortgage Loans as of the end of the immediately

preceding Due Period over the Minimum Required Overcollateralization Amount.

Notwithstanding the foregoing, (I) on any Distribution Date prior to the

Stepdown Date on which the Certificate Principal Balance of each Class of Class

A, Class R, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates has been

reduced to zero, the Class M-5 Principal Distribution Amount will equal the

lesser of (x) the outstanding Class M-5 Certificate Principal Balance and (y)

100% of the Principal Distribution Amount remaining after any distributions on

such Class A, Class R, Class M-1, Class M-2, Class M-3 and Class M-4

Certificates and (II) in no event will the Class M-5 Principal Distribution

Amount with respect to any Distribution Date exceed the Class M-5 Certificate

Principal Balance.

 

      Class M-5 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class M-5 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class M-5 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class M-5 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

      Class M-6 Applied Realized Loss Amount: As of any Distribution Date, the

sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans

which have been applied to the reduction of the Certificate Principal Balance of

the Class M-6 Certificates.

 

      Class M-6 Certificate: Any Certificate designated as a "Class M-6

Certificate" on the face thereof, in the form of Exhibit A hereto, representing

the right to distributions as set forth herein.

 

      Class M-6 Certificate Principal Balance: As of any date of determination,

the aggregate Certificate Principal Balance of the Class M-6 Certificates.

 

      Class M-6 Current Interest: As of any Distribution Date, the interest

accrued during the related Accrual Period at the Class M-6 Pass-Through Rate on

the Class M-6 Certificate Principal Balance as of the first day of such Accrual

Period (after giving effect to all distributions of principal made or deemed to

be made as of such first day) plus the Current Interest and Interest Carry

Forward Amount portions of any previous distributions on such Class that are

recovered as a voidable preference by a trustee in bankruptcy, less any

Non-Supported Interest Shortfall allocated on such Distribution Date to the

Class M-6 Certificates.

 

      Class M-6 Interest Carry Forward Amount: As of any Distribution Date, the

sum of (1) the excess of (A) the Class M-6 Current Interest with respect to

prior Distribution Dates over (B) the amount actually distributed to the Class

M-6 Certificates with respect to Class M-6 Current Interest and Class M-6

Interest Carry Forward Amounts on such prior Distribution Dates and (2) interest

on such excess (to the extent permitted by applicable law) at the Class M-6

Pass-Through Rate for the related Accrual Period.

 

      Class M-6 Pass-Through Rate: As of any Distribution Date up to and

including the Optional Termination Date for the Class M-6 Certificates, the

least of (1) 6.00000% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date and, as of any Distribution Date after the Optional

Termination Date, the

 

 

                                      -23-

<PAGE>

 

least of (1) 6.50000% per annum, (2) the Subordinated Available Funds Cap for

such Distribution Date and (3) the Subordinated Maximum Rate Cap for such

Distribution Date.

 

      Class M-6 Principal Distribution Amount: With respect to any Distribution

Date on or after the Stepdown Date, 100% of the Principal Distribution Amount

for such Distribution Date if the Class A Certificate Principal Balance, the

Class R Certificate Principal Balance, the Class M-1 Certificate Principal

Balance, the Class M-2 Certificate Principal Balance, the Class M-3 Certificate

Principal Balance, the Class M-4 Certificate Principal Balance and the Class M-5

Certificate Principal Balance have been reduced to zero and a Trigger Event

exists, or as long as a Trigger Event does not exist, the excess of (1) the sum

of (A) the Class A Certificate Principal Balance and Class R Certificate

Principal Balance (after taking into account distributions of the Class A

Principal Distribution Amount on such Distribution Date), (B) the Class M-1

Certificate Principal Balance (after taking into account distributions of the

Class M-1 Principal Distribution Amount on such Distribution Date), (C) the

Class M-2 Certificate Principal Balance (after taking into account distributions

of the Class M-2 Principal Distribution Amount on such Distribution Date), (D)

the Class M-3 Certificate Principal Balance (after taking into account

distributions of the Class M-3 Principal Distribution Amount on such

Distribution Date), (E) the Class M-4 Certificate Principal Balance (after

taking into account distributions of the Class M-4 Principal Distribution Amount

on such Distribution Date), (F) the Class M-5 Certificate Principal Balance

(after taking into account distributions of the Class M-5 Principal Distribution

Amount on such Distribution Date), and (G) the Class M-6 Certificate Principal

Balance immediately prior to such Distribution Date over (2) the lesser of (A)

95.2% of the Stated Principal Balances of the Mortgage Loans as of the end of

the immediately preceding Due Period and (B) the excess of the Stated Principal

Balances of the Mortgage Loans as of the end of the immediately preceding Due

Period over the Minimum Required Overcollateralization Amount. Notwithstanding

the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which

the Certificate Principal Balance of each Class of Class A, Class R, Class M-1,

Class M-2, Class M-3, Class M-4 and Class M-5 Certificates has been reduced to

zero, the Class M-6 Principal Distribution Amount will equal the lesser of (x)

the outstanding Class M-6 Certificate Principal Balance and (y) 100% of the

Principal Distribution Amount remaining after any distributions on such Class A,

Class R, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5 Certificates

and (II) in no event will the Class M-6 Principal Distribution Amount with

respect to any Distribution Date exceed the Class M-6 Certificate Principal

Balance.

 

      Class M-6 Unpaid Realized Loss Amount: As of any Distribution Date, the

excess of (1) the Class M-6 Applied Realized Loss Amount over (2) the sum of (x)

all distributions in reduction of the Class M-6 Unpaid Realized Loss Amounts on

all previous Distribution Dates and (y) all increases in the Certificate

Principal Balance of such Class M-6 Certificates pursuant to the definition of

"Certificate Principal Balance."

 

      Class PF-I Interest: An uncertificated regular interest in the Pre-Funding

REMIC with an initial principal balance equal to the sum of (x) the aggregate

Cut-off Date Principal Balance of the Group I Mortgage Loans and (y) the portion

of the Original Pre-Funded Amount related to Group I, and with an interest rate

equal to the Group I Net WAC Cap.

 

      Class PF-II Interest: An uncertificated regular interest in the

Pre-Funding REMIC with an initial principal balance equal to the sum of (x) the

aggregate Cut-off Date Principal Balance of the Group II Mortgage Loans and (y)

the portion of the Original Pre-Funded Amount related to Group II, and with an

interest rate equal to the Group II Net WAC Cap.

 

      Class PF-R Interest: The sole class of "residual interest" in the

Pre-Funding REMIC.

 

 

                                      -24-

<PAGE>

 

      Class R Certificate: Any Certificate designated as a "Class R Certificate"

on the face thereof, in the form of Exhibit A hereto, representing the right to

distributions as set forth herein.

 

      Class R Certificate Principal Balance: As of any date of determination,

the Certificate Principal Balance of the Class R Certificate.

 

      Class X Certificates: The Class X Certificates executed by the Trustee and

authenticated by the Trustee in substantially the form set forth in Exhibit A.

 

      Class X Distributable Amount: The excess of (x) the sum of (i) the initial

Overcollateralization Amount and (ii) all interest payments accrued on the REMIC

2 X Interest over (y) the sum of (i) all prior distributions to the Class X

Certificates pursuant to Section 5.05(g) and (ii) all payments treated as

distributed by REMIC 2 to the REMIC 2 X Interest then paid to the holders of

Class A, Class M and Class B Certificates pursuant to an interest rate cap

contract as described in Section 2.07(d).

 

      Closing Date: September 13, 2005.

 

      Code: The Internal Revenue Code of 1986, including any successor or

amendatory provisions.

 

      Collateral Value: With respect to a Mortgage Loan, the proceeds of which

were used to purchase the related Mortgaged Property (or applicable dwelling

unit, in the case of a Co-op Loan), the lesser of (x) the appraisal value of

such Mortgaged Property (or applicable dwelling unit, in the case of a Co-op

Loan) based on an appraisal made for the originator by an independent fee

appraiser at the time of the origination of the related Mortgage Loan and (y)

the sales price of such Mortgaged Property (or applicable dwelling unit, in the

case of a Co-op Loan) at such time of origination and means, with respect to a

Mortgage Loan the proceeds of which were used to refinance an existing Mortgage

Loan, the appraised value of the Mortgaged Property (or applicable dwelling

unit, in the case of a Co-op Loan) based upon the appraisal obtained at the time

of refinancing.

 

      Collection Account: The separate Eligible Accounts created and initially

maintained by the Servicer pursuant to Section 3.05(d) in the name of the

Trustee for the benefit of the Certificateholders and designated "Specialized

Loan Servicing LLC, as servicer for U.S. Bank National Association, as trustee,

in trust for registered holders of Terwin Mortgage Trust, Asset-Backed

Certificates, Series TMTS 2005-14HE." Funds in the Collection Account shall be

held in trust for the Certificateholders for the uses and purposes set forth in

this Agreement.

 

      Compensating Interest: For any Distribution Date and with respect to each

voluntary Principal Prepayment on the related Mortgage Loans serviced by the

Servicer, the lesser of (i) one-half of the Aggregate Servicing Fee payable on

such Distribution Date and (ii) the aggregate Prepayment Interest Shortfall if

any, for the related Prepayment Period; provided, however, that any Compensating

Interest remitted by the Servicing Administrator shall not exceed the Securities

Administrator Fee for such Distribution Date.

 

      Co-op Lease: With respect to a Co-op Loan, the lease with respect to a

dwelling unit occupied by the Mortgagor and relating to the stock allocated to

the related dwelling unit.

 

      Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to a

dwelling unit in a residential cooperative housing corporation and a collateral

assignment of the related Co-op Lease.

 

      Corporate Trust Office: With respect to (a) the Trustee, the corporate

trust office at which at any particular time its corporate trust business in

connection with this Agreement shall be administered, which office at the date

of the execution of this instrument is located at 209 South LaSalle Street,

Suite 300,

 

 

                                      -25-

<PAGE>

 

Chicago, Illinois 60604, Attn: Corporate Trust Structured Finance, Terwin

Mortgage Trust 2005-14HE, or at such other address as the Trustee may designate

from time to time by notice to the Certificateholders, the Depositor, the

Seller, the Servicing Administrator, the Securities Administrator, the Backup

Servicer and the Servicer and (b) the Securities Administrator and the Backup

Servicer, the principal corporate trust office at which at any particular time

its corporate trust business in connection with this Agreement shall be

administered, which office at the date of the execution of this instrument is

located at 4 New York Plaza, New York, New York 10004-2477, Attention: Worldwide

Securities Services/Global Debt--Terwin Mortgage Trust 2005-14HE, or at such

other address as the Securities Administrator may designate from time to time by

notice to the Certificateholders, the Trustee, the Depositor, the Seller, the

Servicing Administrator, the Servicer, the Backup Servicer and the Securities

Administrator. With respect to the Securities Administrator, Certificate

Registrar and presentment of Certificates for registration of transfer, exchange

or final payment, 2001 Bryan Street, 10th Floor, Dallas, Texas 75201, Attention:

Worldwide Securities Services/Global Debt--Terwin Mortgage Trust 2005-14HE.

 

      Corresponding Certificates: With respect to the Class LT1-R$100 Interest,

the Class R Certificates. With respect to the Class LT1-AF-1 Interest, the Class

AF-1 Certificates. With respect to the Class LT1-AF-2 Interest, the Class AF-2

Certificates. With respect to the Class LT1-AF-3 Interest, the Class AF-3

Certificates. With respect to the Class LT1-AF-4 Interest, the Class AF-4

Certificates. With respect to the Class LT1-AF-5 Interest, the Class AF-5

Certificates. With respect to the Class LT1-AV-1 Interest, the Class AV-1

Certificates. With respect to the Class LT1-AV-2 Interest, the Class AV-2

Certificates. With respect to the Class LT1-AV-3 Interest, the Class AV-3

Certificates. With respect to the Class LT1-B1 Interest, the Class B-1

Certificates. With respect to the Class LT1-B2 Interest, the Class B-2

Certificates. With respect to the Class LT1-B3 Interest, the Class B-3

Certificates. With respect to the Class LT1-M1 Interest, the Class M-1

Certificates. With respect to the Class LT1-M2 Interest, the Class M-2

Certificates. With respect to the Class LT1-M3 Interest, the Class M-3

Certificates. With respect to the Class LT1-M4 Interest, the Class M-4

Certificates. With respect to the Class LT1-M5 Interest, the Class M-5

Certificates. With respect to the Class LT1-M6 Interest, the Class M-6

Certificates.

 

      Credit Risk Management Agreement: The agreement between the Servicer and

the Credit Risk Manager dated as of September 13, 2005.

 

      Credit Risk Manager: The Murrayhill Company, a Colorado corporation, or

its successor in interest.

 

      Credit Risk Manager Fee: The fee payable on each Distribution Date to the

Credit Risk Manager as compensation for all services rendered by it in exercise

and performance of any of the powers and duties of the Credit Risk Manager under

the Credit Risk Management Agreement, which amount shall equal one-twelfth of

the product of (i) the Credit Risk Manager Fee Rate and (ii) the Stated

Principal Balance of the Mortgage Loans as of the immediately preceding

Distribution Date.

 

      Credit Risk Manager Fee Rate: 0.015% per annum.

 

      Current Interest: Any of the Class AF-1 Current Interest, the Class AF-2

Current Interest, the Class AF-3 Current Interest, the Class AF-4 Current

Interest, the Class AF-5 Current Interest, the Class AV-1 Current Interest, the

Class AV-2 Current Interest, the Class AV-3 Current Interest, the Class M-1

Current Interest, the Class M-2 Current Interest, the Class M-3 Current

Interest, the Class M-4 Current Interest, the Class M-5 Current Interest, the

Class M-6 Current Interest, the Class B-1 Current Interest, the Class B-2

Current Interest and the Class B-3 Current Interest.

 

      Custodian: Deutsche Bank National Trust Company, as custodian, or its

successor in interest.

 

 

                                      -26-

<PAGE>

 

      Cut-off Date: September 1, 2005 for the Initial Mortgage Loans only.

 

      Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid

principal balance thereof as of the close of business on the calendar day

immediately preceding the Cut-off Date after application of all payments of

principal due on or prior to the Cut-off Date, whether or not received, and all

Principal Prepayments received prior to the Cut-off Date, but without giving

effect to any installments of principal received in respect of Due Dates after

the Cut-off Date.

 

      Definitive Certificates: As defined in Section 6.06 hereof.

 

      Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a

Replacement Mortgage Loan.

 

      Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is

not made pursuant to the terms of such Mortgage Loan by the close of business on

the day such payment is scheduled to be due. A Mortgage Loan is "30 days

delinquent" if such payment has not been received by the close of business on

the corresponding day of the month immediately succeeding the month in which

such payment was due, or, if there is no such corresponding day (e.g., as when a

30-day month follows a 31-day month in which a payment was due on the 31st day

of such month), then on the last day of such immediately succeeding month. With

respect to any Mortgage Loan due on any day other than the first day of the

month, such Mortgage Loan shall be deemed to be due on the first day of the

immediately succeeding month. Similarly for "60 days delinquent," "90 days

delinquent" and so on.

 

      Denomination: With respect to each Certificate, the amount set forth on

the face thereof as the "Initial Principal Balance of this Certificate."

 

      Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,

or its successor in interest.

 

      Depository: The initial Depository shall be The Depository Trust Company

("DTC"), the nominee of which is Cede & Co., or any other organization

registered as a "clearing agency" pursuant to Section 17A of the Securities

Exchange Act of 1934, as amended. The Depository shall initially be the

registered Holder of the Book-Entry Certificates. The Depository shall at all

times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform

Commercial Code of the State of New York.

 

      Depository Agreement: With respect to Classes of Book-Entry Certificates,

the agreement among the Trustee, the Securities Administrator and the initial

Depository.

 

      Depository Participant: A broker, dealer, bank or other financial

institution or other Person for whom from time to time a Depository effects

book-entry transfers and pledges of securities deposited with the Depository.

 

      Designated Transaction: A transaction in which the assets underlying the

Certificates consist of single-family residential, multi-family residential,

home equity, manufactured housing and/or commercial mortgage obligations that

are secured by single-family residential, multi-family residential, commercial

real property or leasehold interests therein.

 

      Determination Date: With respect to any Distribution Date, the 18th day of

the month of such Distribution Date or, if such 18th day is not a Business Day,

the immediately preceding Business Day.

 

 

                                      -27-

<PAGE>

 

      Disqualified Organization: (1) the United States, any state or political

subdivision thereof, any foreign government, any international organization, or

any agency or instrumentality of any of the foregoing, (2) any organization

(other than a cooperative described in Section 521 of the Code) which is exempt

from tax under Chapter 1 of Subtitle A of the Code unless such organization is

subject to the tax imposed by Section 511 of the Code and (3) any organization

described in Section 1381(a)(2)(C) of the Code.

 

      Distribution Date: The 25th day of each calendar month after the initial

issuance of the Certificates, or if such 25th day is not a Business Day, the

next succeeding Business Day, commencing in October 2005.

 

      Due Date: With respect to any Distribution Date and any Mortgage Loan, the

day during the related Due Period on which a Scheduled Payment is due.

 

      Due Period: With respect to any Distribution Date, the period beginning on

the second day of the calendar month preceding the calendar month in which such

Distribution Date occurs and ending on the first day of the month in which such

Distribution Date occurs.

 

      Eligible Account: An account that is (1) maintained with a depository

institution the long-term unsecured debt obligations of which are rated by the

Rating Agency in one of its two highest rating categories, or (2) maintained

with the corporate trust department of a bank which (A) has a rating of at least

Baa3 or P-3 by Moody's and (B) is the corporate trust department of a national

bank or banking corporation which has a rating of at least A-1 by S&P or F1 by

Fitch or (i) an account or accounts the deposits in which are fully insured by

the FDIC, or (ii) an account or accounts, acceptable to the Rating Agency

without reduction or withdrawal of the rating of any Class of Certificates, as

evidenced in writing, by a depository institution in which such accounts are

insured by the FDIC (to the limit established by the FDIC), the uninsured

deposits in which accounts are otherwise secured such that, as evidenced by an

Opinion of Counsel delivered to and acceptable to the Securities Administrator,

the Trustee and the Rating Agency, the Certificateholders have a claim with

respect to the funds in such account and 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) maintained at an eligible institution whose commercial paper,

short-term debt or other short-term deposits are rated at least A+ by S&P and

F-1+ by Fitch, or (iv) maintained with a federal or state chartered depository

institution the deposits in which are insured by the FDIC to the applicable

limits and the short-term unsecured debt obligations of which (or, in the case

of a depository institution that is a subsidiary of a holding company, the

short-term unsecured debt obligations of such holding company) are rated A by

S&P or Prime 1 by Moody's at the time any deposits are held on deposit therein,

or (v) otherwise acceptable to each Rating Agency, as evidenced by a letter from

the Rating Agency to the Trustee, or (3) a segregated trust account or accounts

maintained with the Trustee, the Securities Administrator or any other federal

or state chartered depository institution or trust company, acting in its

fiduciary capacity. Eligible Accounts may bear interest.

 

      ERISA: The Employee Retirement Income Security Act of 1974, including any

successor or amendatory provisions.

 

      ERISA-Qualifying Underwriting: A best efforts or firm commitment

underwriting or private placement that would satisfy the requirements of any

applicable underwriter's exemption granted by the United States Department of

Labor, except, in relevant part, for the requirement that the certificates have

received a rating at the time of acquisition that is in one of the three (or

four, in the case of a "designated transaction") highest generic rating

categories by at least one of the Rating Agencies.

 

 

                                      -28-

<PAGE>

 

      ERISA Restricted Certificates: The Class X Certificates, Class ES

Certificates and Class R Certificate and any other Certificate, unless the

acquisition and holding of such other Certificate is covered by and exempt under

any applicable underwriter's exemption granted by the United States Department

of Labor.

 

      Event of Default: As defined in Section 8.01 hereof.

 

      Exception Report: As defined in Section 2.02 hereof.

 

      Excess Interest: On any Distribution Date, for each Class of the Class A,

Class M and Class B Certificates, the excess, if any, of (1) the amount of

interest such Class of Certificates is entitled to receive on such Distribution

Date at its Pass-Through Rate over (2) the amount of interest such Class of

Certificates would have been entitled to receive on such Distribution Date had

the Pass-Through Rate for such Class been the REMIC Pass-Through Rate.

 

      Excess Proceeds: With respect to any Liquidated Loan, any Liquidation

Proceeds that are in excess of the sum of (1) the unpaid principal balance of

such Liquidated Loan as of the date of such liquidation plus (2) interest at the

Mortgage Rate from the Due Date as to which interest was last paid or advanced

to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in

the month in which such Liquidation Proceeds are required to be distributed on

the unpaid principal balance of such Liquidated Loan outstanding during each Due

Period as to which such interest was not paid or advanced.

 

      Exchange Act: The Securities Exchange Act of 1934, as amended.

 

      Extra Principal Distribution Amount: With respect to any Distribution

Date, (1) prior to the Stepdown Date, the excess of (A) the sum of (i) the

Aggregate Certificate Principal Balance immediately preceding such Distribution

Date reduced by the Principal Funds with respect to such Distribution Date and

(ii) $2,925,030 over (B) the sum of (x) the aggregate Stated Principal Balance

of the Mortgage Loans and (y) the amount on deposit in the Pre-Funding Amount as

of such Distribution Date (disregarding income and loss on investments of

amounts on deposit in the Pre-Funding Account) and (2) on and after the Stepdown

Date, (A) the sum of (i) the Aggregate Certificate Principal Balance immediately

preceding such Distribution Date, reduced by the Principal Funds with respect to

such Distribution Date and (ii) the greater of (a) 1.80% of the Pool Stated

Principal Balance of the Mortgage Loans and (b) the Minimum Required

Overcollateralization Amount less (B) the Pool Stated Principal Balance of the

Mortgage Loans as of such Distribution Date; provided, however, that if on any

Distribution Date a Trigger Event is in effect, the Extra Principal Distribution

Amount will not be reduced to the applicable percentage of the then-current Pool

Stated Principal Balance of the Mortgage Loans as of the Due Date immediately

prior to the Trigger Event until the next Distribution Date on which the Trigger

Event is not in effect.

 

      Fannie Mae: A federally chartered and privately owned corporation

organized and existing under the Federal National Mortgage Association Charter

Act, or any successor thereto.

 

      FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.

 

      Federal Funds Rate: The interest rate at which depository institutions

lend balances at the Federal Reserve to other depository institutions overnight.

 

      Fitch: Fitch, Inc., or its successor in interest.

 

      Fixed Rate Certificates: The Class AF-2, the Class AF-3, the Class AF-4,

the Class AF-5 and the Subordinated Certificates.

 

 

                                      -29-

<PAGE>

 

      Floating Rate Certificate Carryover: With respect to a Distribution Date,

in the event that the Pass-Through Rate for a class of Class A, Class M or Class

B Certificates is based upon the related Available Funds Cap, the excess of (1)

the amount of interest that such Class would have been entitled to receive on

such Distribution Date had the Pass-Through Rate for that Class not been

calculated based on the related Available Funds Cap, over (2) the amount of

interest such class was entitled to receive on such Distribution Date based on

the related Available Funds Cap, together with (i) the unpaid portion of any

such excess from prior Distribution Dates (and interest accrued thereon at the

then applicable Pass-Through Rate, without giving effect to the applicable

Available Funds Cap) and (ii) any amount previously distributed with respect to

Floating Rate Certificate Carryover for such class that is recovered as a

voidable preference by a trustee in bankruptcy.

 

      Form 10-K Certification: The certification required pursuant to Rule

13a-14 under the Exchange Act, including any certification that may be required

by any rules or regulations promulgated pursuant to

 

      the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

 

      Freddie Mac: 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.

 

       Funding Period: The period beginning on the Closing Date and ending on the

earlier of (a) the date on which the amount on deposit in the Pre-Funding

Account is reduced to zero or (b) 2:00 p.m., New York City time, on October 12,

2005.

 

      Guaranteed Distributions: As defined in the Certificate Insurance Policy.

 

      Grantor Trusts: The grantor trusts described in Section 2.07 hereof.

 

      Group I: The portion of the Mortgage Pool identified as "Group I" in the

Prospectus Supplement, including Initial Mortgage Loans included in such

Mortgage Group as of the Cut-off Date and Subsequent Mortgage Loans added

thereto.

 

      Group I Administration Fee: The sum of the Group I Servicing Fee, the

Group I Securities Administrator Fee and the Group I Credit Risk Manager Fee.

 

      Group I Available Funds Cap: As of any Distribution Date, for the Class

AF-1 Certificates, a per annum rate equal to the product of (A) 12 times the

quotient obtained by dividing (x) the excess of (a) the total scheduled interest

on the Group I Included Mortgage Loans for the related Due Period over (b) the

sum of the Group I Administration Fee and the Group I Certificate Insurer

Premium for such Distribution Date by (y) the aggregate Stated Principal Balance

of the Group I Included Mortgage Loans as of the first day of the related

Accrual Period (or, in the case of the first Distribution Date, as of the

Cut-off Date) and (B) a fraction, the numerator of which is 30 and the

denominator of which is the actual number of days in the related Accrual Period.

 

      Group I Certificate Insurer Premium: With respect to any Distribution

Date, the Certificate Insurer Premium multiplied by a fraction, the numerator of

which is the Stated Principal Balance of the Mortgage Loans in Group I as of the

immediately preceding Distribution Date and the denominator of which is the

Stated Principal Balance of the Mortgage Loans in Group I and Group II as of the

immediately preceding Distribution Date.

 

      Group I Credit Risk Manager Fee: The product of (i) the Credit Risk

Manager Fee Rate and (ii) the Stated Principal Balance of the Mortgage Loans in

Group I as of the immediately preceding Distribution Date.

 

 

                                      -30-

<PAGE>

 

      Group I Maximum Rate Cap: With respect to the Class AF-1 Certificates and

any Distribution Date, the product of (A) 12 times the quotient obtained by

dividing (x) the aggregate scheduled interest that would have been due on the

adjustable rate Included Mortgage Loans or the fixed rate Included Mortgage

Loans, as applicable, in Group I during the related Due Period had the

adjustable rate mortgage loans in Group I provided for interest at their

respective maximum lifetime Mortgage Rates and the aggregate scheduled interest

that would have been due on the fixed rate mortgage loans in Group I during the

related Due Period had the fixed rate mortgage loans in Group I provided for

interest at their respective Mortgage Rates, less the sum of the Group I

Administration Fee and the Group I Certificate Insurer Premium for such

Distribution Date, divided by (y) the Outstanding Principal Balances of the

Included Group I Mortgage Loans for such Distribution Date (in each case,

disregarding Mortgage Loans that are not Included Mortgage Loans) and (B)

fraction, the numerator of which is 30 and the denominator of which is the

actual number of days in the related Accrual Period; and with respect to the

Class AF-2, Class AF-3, Class AF-4 and Class AF-5 Certificates and any

Distribution Date, 12 times the quotient obtained by dividing (x) the aggregate

scheduled interest that would have been due on the adjustable rate mortgage

loans in Group I during the related Due Period had the adjustable rate mortgage

loans in Group I provided for interest at their respective maximum lifetime

Mortgage Rates and the aggregate scheduled interest that would have been due on

the fixed rate mortgage loans in Group I during the related Due Period had the

fixed rate mortgage loans in Group I provided for interest at their respective

Mortgage Rates, less the sum of the Group I Administration Fee and the Group I

Certificate Insurer Premium for such Distribution Date, divided by (y) the

Outstanding Principal Balances of the Group I Mortgage Loans for such

Distribution Date (in each case, disregarding Mortgage Loans that are not

Included Mortgage Loans).

 

      Group I Mortgage Loan: Any Mortgage Loan at any time identified in the

Group I Mortgage Loan Schedule attached hereto as Exhibit B-2.

 

      Group I Net WAC Cap: As of any Distribution Date, for the Class AF-2,

Class AF-3, Class AF-4 and Class AF-5 Certificates, a per annum rate equal to 12

times the quotient obtained by dividing (x) the excess of (a) the total

scheduled interest on the Group I Included Mortgage Loans for the related Due

Period over (b) the sum of the Group I Administration Fee and the Group I

Certificate Insurer Premium for such Distribution Date by (y) the aggregate

Stated Principal Balance of the Group I Included Mortgage Loans as of the first

day of the related Accrual Period (or, in the case of the first Distribution

Date, as of the Cut-off Date).

 

      Group I Principal Distribution Amount: As of any Distribution Date, the

amount equal to the lesser of (i) the aggregate Certificate Principal Balance of

the Group I Senior Certificates and Class R Certificates and (ii) the product of

(x) the Group I Principal Distribution Percentage and (y) the Class A Principal

Distribution Amount; provided, however, that with respect to any Distribution

Date on which any of the Group I Senior Certificates and Class R Certificates

are outstanding and the Certificate Principal Balance of the Group II Senior

Certificates has been reduced to zero, the Group I Principal Distribution Amount

will equal the Class A Principal Distribution Amount.

 

      Group I Principal Distribution Percentage: With respect to any

Distribution Date, a fraction expressed as a percentage, the numerator of which

is the amount of Principal Funds received with respect to Mortgage Loans in

Group I and with respect to the Distribution Date immediately following the end

of the Funding Period, the portion, if any, of the Original Pre-Funded Amount

relating to Group I remaining in the Pre-Funding Account (disregarding income or

loss on investments of amounts on deposit in the Pre-Funding Account), and the

denominator of which is the amount of Principal Funds received from all of the

Mortgage Loans in the mortgage pool and with respect to the Distribution Date

immediately following the end of the Funding Period, the portion, if any, of the

Original Pre-Funded Amount relating to either Mortgage Group remaining in the

Pre-Funding Account (disregarding income or loss on investments of amounts on

deposit in the Pre-Funding Account).

 

 

                                      -31-

<PAGE>

 

      Group I Securities Administrator Fee: As to any Distribution Date and each

Mortgage Loan in Group I, an amount equal to the product of the applicable

Securities Administrator Fee Rate and the outstanding Stated Principal Balance

of such Mortgage Loan as of the preceding Distribution Date.

 

      Group I Senior Certificates: The Class AF-1, Class AF-2, Class AF-3, Class

AF-4 and Class AF-5 Certificates.

 

      Group I Servicing Fee: As to each Mortgage Loan in Group I and any

Distribution Date, an amount equal to one month's interest at the Servicing Fee

Rate on the Stated Principal Balance of such Mortgage Loan as of the immediately

preceding Distribution Date or, in the event of any payment of interest that

accompanies a Principal Prepayment in full made by the Mortgagor, interest at

the Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan as

of the immediately preceding Distribution Date for the period covered by such

payment of interest (in each case payable from interest collections on such

Mortgage Loan).

 

      Group II: The portion of the Mortgage Pool identified as "Group II" in the

Prospectus Supplement, including Initial Mortgage Loans included in such

Mortgage Group as of the Cut-off Date and Subsequent Mortgage Loans added

thereto.

 

      Group II Administration Fee: The sum of the Group II Servicing Fee, the

Group II Securities Administrator Fee and the Group II Credit Risk Manager Fee.

 

      Group II Available Funds Cap: As of any Distribution Date, for the Group

II Senior Certificates, a per annum rate equal to the product of (A) 12 times

the quotient obtained by dividing (x) the excess of (a) the total scheduled

interest on the Group II Included Mortgage Loans for the related Due Period over

(b) the sum of the Group II Administration Fee and the Group II Certificate

Insurer Premium for such Distribution Date by (y) the aggregate Stated Principal

Balance of the Group II Included Mortgage Loans as of the first day of the

related Accrual Period (or, in the case of the first Distribution Date, as of

the Cut-off Date) and (B) a fraction, the numerator of which is 30 and the

denominator of which is the actual number of days in the related Accrual Period.

 

      Group II Certificate Insurer Premium: With respect to any Distribution

Date, the Certificate Insurer Premium multiplied by a fraction, the numerator of

which is the Stated Principal Balance of the Mortgage Loans in Group II as of

the immediately preceding Distribution Date and the denominator of which is the

Stated Principal Balance of the Mortgage Loans in Group I and Group II as of the

immediately preceding Distribution Date.

 

      Group II Credit Risk Manager Fee: The product of (i) the Credit Risk

Manager Fee Rate and (ii) the Stated Principal Balance of the Mortgage Loans in

Group II as of the immediately preceding Distribution Date.

 

      Group II Maximum Rate Cap: With respect to the Group II Senior

Certificates and any Distribution Date, the product of (I) 12 times the quotient

obtained by dividing (x) the aggregate scheduled interest that would have been

due on the Group II Included Mortgage Loans during the related Due Period had

the Group II Mortgage Loans provided for interest at their respective maximum

lifetime Mortgage Rates, less the sum of the Group II Administration Fee and the

Group II Certificate Insurer Premium for such Distribution Date, divided by (y)

the Outstanding Principal Balances of the Included Group II Mortgage Loans for

such Distribution Date (in each case, disregarding Mortgage Loans that are not

Included Mortgage Loans) and (II) a fraction, the numerator of which is 30 and

the denominator of which is the actual number of days in the related Accrual

Period.

 

 

                                      -32-

<PAGE>

 

      Group II Mortgage Loan: Any Mortgage Loan at any time identified in the

Group II Mortgage Loan Schedule attached hereto as Exhibit B-3. All of the Group

II Mortgage Loans are adjustable rate mortgage loans.

 

      Group II Net WAC Cap: As of any Distribution Date, a per annum rate equal

to 12 times the quotient obtained by dividing (x) the excess of (a) the total

scheduled interest on the Group II Included Mortgage Loans for the related Due

Period over (b) the sum of the Group II Administration Fee and the Group II

Certificate Insurer Premium for such Distribution Date by (y) the aggregate

Stated Principal Balance of the Group II Included Mortgage Loans as of the first

day of the related Accrual Period (or, in the case of the first Distribution

Date, as of the Cut-off Date).

 

      Group II Principal Distribution Amount: As of any Distribution Date, the

amount equal to the lesser of (i) the aggregate Certificate Principal Balance of

the Group II Senior Certificates and (ii) the product of (x) the Group II

Principal Distribution Percentage and (y) the Class A Principal Distribution

Amount; provided, however, that with respect to any Distribution Date on which

any of the Group II Senior Certificates are outstanding and the Certificate

Principal Balances of the Group I Senior Certificates and Class R Certificates

have been reduced to zero, the Group II Principal Distribution Amount will equal

the Class A Principal Distribution Amount.

 

      Group II Principal Distribution Percentage: With respect to any

Distribution Date, a fraction expressed as a percentage, the numerator of which

is the amount of Principal Funds received with respect to Mortgage Loans in

Group II and with respect to the Distribution Date immediately following the end

of the Funding Period, the portion, if any, of the Original Pre-Funded Amount

relating to Group II remaining in the Pre-Funding Account (disregarding income

or loss on investments of amounts on deposit in the Pre-Funding Account), and

the denominator of which is the amount of Principal Funds received from all of

the Mortgage Loans in the mortgage pool and with respect to the Distribution

Date immediately following the end of the Funding Period, the portion, if any,

of the Original Pre-Funded Amount relating to either Mortgage Group remaining in

the Pre-Funding Account (disregarding income or loss on investments of amounts

on deposit in the Pre-Funding Account).

 

      Group II Securities Administrator Fee: As to any Distribution Date and

each Mortgage Loan in Group II, an amount equal to the product of the applicable

Securities Administrator Fee Rate and the outstanding Stated Principal Balance

of such Mortgage Loan as of the preceding Distribution Date.

 

      Group II Senior Certificates: The Class AV-1, Class AV-2 and Class AV-3

Certificates.

 

       Group II Servicing Fee: As to each Mortgage Loan in Group II and any

Distribution Date, an amount equal to one month's interest at the Servicing Fee

Rate on the Stated Principal Balance of such Mortgage Loan as of the immediately

preceding Distribution Date or, in the event of any payment of interest that

accompanies a Principal Prepayment in full made by the Mortgagor, interest at

the Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan as

of the immediately preceding Distribution Date for the period covered by such

payment of interest (in each case payable from interest collections on such

Mortgage Loan).

 

      Included Mortgage Loan: With respect to any Distribution Date, any

Mortgage Loan with a Stated Principal Balance greater than zero as of the

preceding Distribution Date (or, in the case of the first Distribution Date, the

Initial Mortgage Loans); provided, however, that no Subsequent Mortgage Loan as

to which the Subsequent Cut-Off Date is on or after the Due Date in the related

Due Period shall be treated as an Included Mortgage Loan for such Distribution

Date.

 

      Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the

first Adjustment Date following the origination of such Mortgage Loan.

 

 

                                       -33-

<PAGE>

 

      Initial Certificate Principal Balance: With respect to any Certificate,

the Certificate Principal Balance of such Certificate or any predecessor

Certificate on the Closing Date as set forth in Section 6.01 hereof.

 

       Initial Certification: As defined in Section 2.02.

 

      Initial ES Strip: For any Distribution Date, an amount equal to the

product of (x) the Stated Principal Balance of the Mortgage Loans as of the

immediately preceding Distribution Date and (y) the excess of the Servicing Fee

Rate over the SLS Servicing Fee Rate as of the Closing Date.

 

      Initial Mortgage Loans: The Mortgage Loans included in the Trust Fund as

of the Closing Date.

 

      Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in

effect prior to the Initial Adjustment Date.

 

      Insurance Policy: With respect to any Mortgage Loan included in the Trust

Fund, any insurance policy, including all riders and endorsements thereto in

effect with respect to such Mortgage Loan, including any replacement policy or

policies for any insurance policies.

 

      Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans

pursuant to any Insurance Policy or any other insurance policy covering a

Mortgage Loan, to the extent such proceeds are payable to the mortgagee under

the Mortgage, the Servicer or the Trustee under the deed of trust and are not

applied to the restoration of the related Mortgaged Property or released to the

Mortgagor in accordance with the procedures that the Servicer would follow in

servicing mortgage loans held for its own account, in each case other than any

amount included in such Insurance Proceeds in respect of Insured Expenses.

 

      Insured Expenses: Expenses covered by an Insurance Policy or any other

insurance policy with respect to the Mortgage Loans.

 

      Interest Carry Forward Amount: Any of the Class AF-1 Interest Carry

Forward Amount, the Class AF-2 Interest Carry Forward Amount, the Class AF-3

Interest Carry Forward Amount, the Class AF-4 Interest Carry Forward Amount, the

Class AF-5 Interest Carry Forward Amount, the Class AV-1 Interest Carry Forward

Amount, the Class AV-2 Interest Carry Forward Amount, the Class AV-3 Interest

Carry Forward Amount, the Class M-1 Interest Carry Forward Amount, the Class M-2

Interest Carry Forward Amount, the Class M-3 Interest Carry Forward Amount, the

Class M-4 Interest Carry Forward Amount, the Class M-5 Interest Carry Forward

Amount, the Class M-6 Interest Carry Forward Amount, the Class B-1 Interest

Carry Forward Amount, the Class B-2 Interest Carry Forward Amount or the Class

B-3 Interest Carry Forward Amount, as the case may be.

 

      Interest Determination Date: With respect to the LIBOR Certificates, (i)

for any Accrual Period other than the first Accrual Period, the second LIBOR

Business Day preceding the commencement of such Accrual Period and (ii) for the

first Accrual Period, September 9, 2005.

 

      Interest Funds: With respect to any Distribution Date, the sum, without

duplication, of (1) all scheduled interest due on an Included Mortgage Loan

during the related Due Period and received before the related Servicer

Remittance Date or advanced on or before the related Servicer Remittance Date

less the Administration Fee, (2) all Advances relating to interest with respect

to the Mortgage Loans, less unreimbursed Advances due to the Servicer with

respect to such Mortgage Loans, (3) all Compensating Interest with respect to

the Mortgage Loans, (4) Liquidation Proceeds with respect to the Mortgage Loans

(to the extent such Liquidation Proceeds relate to interest) collected during

the related Prepayment Period, (5) proceeds received by the Servicer resulting

from any purchase pursuant to Sections 2.02, 2.03 or 10.01

 

 

                                      -34-

<PAGE>

 

(to the extent such proceeds relate to interest) less (A) all Non-Recoverable

Advances relating to interest and (B) other amounts reimbursable to the

Servicer, the Backup Servicer, the Servicing Administrator, the Securities

Administrator and the Trustee pursuant to this Agreement and allocable to

interest and (6) the amount of any Required Withdrawal from the Capitalized

Interest Account with respect to such Distribution Date.

 

      Investment Letter: As defined in Section 6.02(a) hereof.

 

       JPMorgan: JPMorgan Chase Bank N.A., or its successor in interest.

 

      Last Scheduled Distribution Date: The Distribution Date in August 2036.

 

      Latest Possible Maturity Date: The first Distribution Date following the

third anniversary of the scheduled maturity date of the Mortgage Loan in the

Trust Fund having the latest scheduled maturity date as of the Cut-off Date.

 

      Lender: As defined in Section 5.02(a) hereof.

 

      Letter Agreement: While SLS is the Servicer, means the agreement dated the

Closing Date among SLS, the Depositor and the Trustee (and acknowledged and

agreed to by the Securities Administrator) specifying the SLS Servicing Fee Rate

and after SLS is no longer the Servicer, the agreement among the Depositor, the

Seller, the Trustee, the Securities Administrator and the successor servicer

specifying the SLS Servicing Fee Rate.

 

      LIBOR Business Day: Any day on which banks in the City of London, England

and New York City, New York are open and conducting transactions in foreign

currency and exchange.

 

      LIBOR Certificates: Each of the Class AF-1, Class AV-1, Class AV-2 and

Class AV-3 Certificates.

 

      Liquidated Loan: With respect to any Distribution Date, a defaulted

Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,

foreclosure sale, trustee's sale or other realization as provided by applicable

law governing the real property subject to the related Mortgage and any security

agreements and as to which the Servicer has certified (in accordance with

Section 3.12) in the related Prepayment Period that it has received all amounts

it expects to receive in connection with such liquidation including the final

disposition of the related REO Property (exclusive of any possibility of a

deficiency judgment).

 

      Liquidation Proceeds: Amounts, including Insurance Proceeds, received in

connection with the partial or complete liquidation of Mortgage Loans, whether

through trustee's sale, foreclosure sale, sale by the Servicer pursuant to this

Agreement or otherwise or amounts received in connection with any condemnation

or partial release of a Mortgaged Property and any other proceeds received in

connection with an REO Property, less the sum of related unreimbursed Advances,

the Servicing Fee, Servicing Advances and any other expenses related to such

Mortgage Loan.

 

      Loan-to-Value Ratio: With respect to any Mortgage Loan, the original

principal balance of such Mortgage Loan divided by the Collateral Value of the

related Mortgaged Property (or applicable dwelling unit, in the case of a Co-op

Loan).

 

      Losses: Any losses, claims, damages, liabilities or expenses collectively.

 

 

                                      -35-

<PAGE>

 

      Lower Collar: With respect to each Distribution Date, the applicable per

annum rate set forth under the heading "Lower Collar" in the One-Month LIBOR Cap

Table herein.

 

      LPMI Insurer: The primary mortgage insurer insuring an LPMI Loan.

 

      LPMI Loan: A Mortgage Loan covered by an LPMI Policy, as set forth in the

Mortgage Loan Schedule or otherwise identified to a Servicer in writing.

 

      LPMI Policy: A policy of primary mortgage insurance issued by a LPMI

Insurer pursuant to which the related premium is to be paid by a Servicer from

payments of interest made by the Mortgagor.

 

      Margin: Any of the Class AF-1 Margin, the Class AV-1 Margin, the Class

AV-2 Margin and the Class AV-3 Margin.

 

      Maximum Rate Cap: Any of the Group I Maximum Rate Cap, the Group II

Maximum Rate Cap or the Subordinated Maximum Rate Cap.

 

      MERS: Mortgage Electronic Registration Systems, Inc., a corporation

organized and existing under the laws of the State of Delaware, or any successor

thereto.

 

      MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.

 

      MERS System: The system of recording transfers of mortgages electronically

maintained by MERS.

 

      MIN: The loan number for any MERS Loan.

 

      Minimum Required Overcollateralization Amount: An amount equal to the

product of (x) 0.50% and (y) the sum of (x) the Stated Principal Balance of the

Mortgage Loans as of the Cut-off Date and (y) the Original Pre-Funded Amount.

 

      MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,

solely as nominee for the originator of such Mortgage Loan and its successors

and assigns.

 

      Monthly Excess Interest Amount: With respect to each Distribution Date,

the amount, if any, by which the Interest Funds for such Distribution Date

exceeds the aggregate amount distributed on such Distribution Date pursuant to

Section 5.05(b) (other than the last clause thereof).

 

      Monthly Statement: The statement delivered to the Certificateholders

pursuant to Section 5.06.

 

      Moody's: Moody's Investors Service, Inc. or its successor in interest.

 

      Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the

mortgage, deed of trust or other instrument creating a first lien or a first

priority ownership interest in an estate in fee simple in real property securing

a Mortgage Note. With respect to a Co-op Loan, the security agreement with all

riders attached thereto creating a security interest in the stock allocated to a

dwelling unit in a residential cooperative housing corporation and pledged to

secure such Co-op Loan and the related Co-op Lease.

 

       Mortgage File: The mortgage documents listed in Section 2.01 hereof

pertaining to a particular Mortgage Loan and any additional documents delivered

to the Trustee or the Custodian to be added to the Mortgage File pursuant to

this Agreement.

 

 

                                       -36-

<PAGE>

 

      Mortgage Group: Either of Group I or Group II.

 

      Mortgage Loans: Such of the mortgage loans transferred and assigned to the

Trustee pursuant to the provisions hereof as from time to time are held as a

part of the Trust Fund (including any REO Property and, following the related

Subsequent Mortgage Loan Transfer Dates, any Subsequent Mortgage Loan delivered

pursuant to a Subsequent Transfer Instrument), the mortgage loans so held being

identified in the Mortgage Loan Schedule, notwithstanding foreclosure or other

acquisition of title of the related Mortgaged Property. Any mortgage loan that

was intended by the parties hereto to be transferred to the Trust Fund as

indicated by such Mortgage Loan Schedule which is in fact not so transferred for

any reason shall continue to be a Mortgage Loan hereunder until the Purchase

Price with respect thereto has been paid to the Trust Fund.

 

      Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time

amended by the Trustee to reflect the deletion of Deleted Mortgage Loans and the

addition of Replacement Mortgage Loans pursuant to the provisions of this

Agreement and as supplemented by each schedule of Subsequent Mortgage Loans

attached to a Subsequent Transfer Instrument) transferred to the Trustee as part

of the Trust Fund and from time to time subject to this Agreement, attached

hereto as Exhibits B-1, B-2 and B-3, setting forth the following information

with respect to each Mortgage Loan:

 

            (i)    the loan number;

 

            (ii)   borrower name and/or address;

 

            (iii) the unpaid principal balance of the Mortgage Loans;

 

            (iv)   the Mortgage Rate;

 

            (v)    the maturity date and the months remaining before maturity

                  date;

 

            (vi)   the original principal balance;

 

            (vii) the Cut-off Date Principal Balance or Subsequent Cut-off Date

                  Principal Balance with respect to a Subsequent Mortgage Loan;

 

            (viii) the first payment date of the Mortgage Loan;

 

            (ix)   the Loan-to-Value Ratio

 

            (x)    a code indicating whether the residential dwelling at the time

                  of origination was represented to be owner-occupied;

 

             (xi)   a code indicating the property type;

 

            (xii) location of the related Mortgaged Property (or Underlying

                  Mortgaged Property, in the case of a Co-op Loan);

 

            (xiii) a code indicating whether a prepayment penalty is applicable

                  and, if so, the term of such prepayment penalty; and

 

            (xiv) the Credit Score and date obtained.

 

 

                                      -37-

<PAGE>

 

      Mortgage Note: The original executed note or other evidence of

indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan

and all amendments, modifications and attachments thereto.

 

      Mortgage Pool: The aggregate of the Mortgage Loans identified in the

Mortgage Loan Schedule.

 

      Mortgaged Property: The underlying property securing a Mortgage Loan.

 

      Mortgage Rate: The annual rate of interest borne by a Mortgage Note from

time to time.

 

      Mortgagor: The obligor on a Mortgage Note.

 

      Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per

annum rate equal to the then current Mortgage Rate less the Servicing Fee Rate,

the Securities Administrator Fee Rate and the Credit Risk Manager Fee Rate.

 

      Net Rate: The weighted average of the interest rates on the Pre-Funding

REMIC Regular Interests multiplied by 30 and divided by the actual number of

days in the applicable Accrual Period.

 

      Net WAC: As of any Distribution Date and for any Mortgage Group, a per

annum rate equal to 12 times the quotient obtained by dividing (x) the excess of

(i) the total scheduled interest on the Included Mortgage Loans in such Mortgage

Group for the related Due Period over (ii) the portion allocable to such

Mortgage Group of the sum of the Administration Fee and the Certificate Insurer

Premium for such Distribution Date by (y) the Outstanding Principal Balances of

the Included Mortgage Loans for such Distribution Date.

 

      Non-Recoverable Advance: With respect to any Mortgage Loan, any portion of

an Advance previously made or proposed to be made by the Servicer that, in the

good faith judgment of the Servicer, will not or, in the case of a current

delinquency, would not, be ultimately recoverable by the Servicer from the

related Mortgagor, related Liquidation Proceeds or other proceeds of such

Mortgage Loan.

 

      Non-Recoverable Servicing Advance: With respect to any Mortgage Loan, any

portion of a Servicing Advance previously made or proposed to be made by the

Servicer that, in the good faith judgment of the Servicer, will not or, in the

case of a current Servicing Advance, would not, be ultimately recoverable by the

Servicer from the related Mortgagor, related Liquidation Proceeds or other

proceeds of such Mortgage Loans.

 

      Non-Supported Interest Shortfall: As defined in Section 5.03 hereof.

 

      Notices: As defined in Section 9.01 hereof.

 

      Offered Certificates: The Class A, Class M, Class B and Class R

Certificates.

 

      Officer's Certificate: A certificate (1) signed by the Chairman of the

Board, the Vice Chairman of the Board, the President, a vice president (however

denominated), an Assistant Vice President, the Treasurer, the Secretary, or one

of the assistant treasurers or assistant secretaries of the Depositor, the

Servicing Administrator, the Servicer, the Backup Servicer or the Securities

Administrator (or any other officer customarily performing functions similar to

those performed by any of the above designated officers and also to whom, with

respect to a particular matter, such matter is referred because of such

officer's knowledge of and familiarity with a particular subject) or (2), if

provided for in this Agreement, signed by a Servicing Officer, as the case may

be, and delivered to the Depositor, the Servicing

 

 

                                      -38-

<PAGE>

 

Administrator, the Servicer, the Backup Servicer, the Securities Administrator

or the Trustee, as the case may be, as required by this Agreement.

 

      One-Month LIBOR: With respect to any Accrual Period, the rate determined

by the Securities Administrator on the related Interest Determination Date on

the basis of (a) the offered rates for one-month United States dollar deposits,

as such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on

such Interest Determination Date or (b) if such rate does not appear on Telerate

Page 3750 as of 11:00 a.m. (London time), the offered rates of the Reference

Banks for one-month United States dollar deposits, as such rates appear on the

Reuters Screen LIBOR Page, as of 11:00 a.m. (London time) on such Interest

Determination Date. If One-Month LIBOR is determined pursuant to clause (b)

above, on each Interest Determination Date, One-Month LIBOR for the related

Accrual Period will be established by the Securities Administrator as follows:

 

             (i)    If on such Interest Determination Date two or more Reference

                  Banks provide such offered quotations, One-Month LIBOR for the

                  related Accrual Period shall be the arithmetic mean of such

                  offered quotations (rounded upwards if necessary to the

                  nearest whole multiple of 0.03125%).

 

            (ii)   If on such Interest Determination Date fewer than two

                  Reference Banks provide such offered quotations, One-Month

                   LIBOR for the related Accrual Period shall be the higher of

                  (i) One-Month LIBOR as determined on the previous Interest

                  Determination Date and (ii) the Reserve Interest Rate.

 

      Opinion of Counsel: A written opinion of counsel, who may be counsel for

the Depositor, the Servicing Administrator, the Servicer, the Backup Servicer or

the Securities Administrator, reasonably acceptable to each addressee of such

opinion; provided, however, that with respect to Section 6.04 or 10.01, or the

interpretation or application of the REMIC Provisions, such counsel must (1) in

fact be independent of the Depositor, the Servicing Administrator, the Servicer,

the Backup Servicer or the Securities Administrator, (2) not have any direct

financial interest in the Depositor, the Servicing Administrator, the Servicer

or the Securities Administrator or in any affiliate of any, and (3) not be

connected with the Depositor, the Servicing Administrator, the Servicer, the

Backup Servicer or Securities Administrator as an officer, employee, promoter,

underwriter, trustee, partner, director or person performing similar functions.

The cost of any Opinion of Counsel shall not be at the expense of the Trustee,

Servicing Administrator or Securities Administrator.

 

      Optional Termination: The termination of the trust hereunder pursuant to

clause (a) of Section 10.01 hereof.

 

      Optional Termination Date: The Distribution Date on which the aggregate

Stated Principal Balance of the Mortgage Loans is equal to or less than 10% of

the sum of (i) the aggregate Stated Principal Balance of the Mortgage Loans as

of the Cut-off Date and (ii) the Original Pre-Funded Amount..

 

      Optional Termination Price: As of any Distribution Date on or after the

Optional Termination Date, an amount equal to the sum of (A) the Aggregate

Certificate Principal Balance, plus accrued interest on the Certificates and the

Class X Distributable Amount, (B) any unreimbursed out-of-pocket costs and

expenses owed to the Securities Administrator, the Trustee and the Servicer and

any unreimbursed Advances, Certificate Insurer Reimbursement Amounts, Servicing

Advances and Administration Fees (including any costs and expenses incurred in

connection with the Optional Terminations) and (C) any unreimbursed costs,

penalties and/or damages incurred by the Trust Fund in connection with any

violation relating to any of the Mortgage Loans of any Predatory Lending Law.

 

 

                                      -39-

<PAGE>

 

      Original Pre-Funded Amount: The amount deposited by the Depositor in the

Pre-Funding Account on the Closing Date from the proceeds of the issuance of the

Certificates, which amount is $3,398,174, of which $1,839,663 will relate to

Group I and $1,558,511 will relate to Group II.

 

      OTS: The Office of Thrift Supervision.

 

      Outstanding: With respect to the Certificates as of any date of

determination, all Certificates theretofore executed and authenticated under

this Agreement except: (1) Certificates theretofore canceled by the Securities

Administrator or delivered to the Securities Administrator for cancellation; and

(2) Certificates in exchange for which or in lieu of which other Certificates

have been executed by the Securities Administrator and delivered by the

Securities Administrator pursuant to this Agreement.

 

      Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan

with a Stated Principal Balance greater than zero that was not the subject of a

Principal Prepayment in full, and that did not become a Liquidated Loan, each

prior to the end of the related Due Period.

 

      Outstanding Principal Balance: As of any Distribution Date and with

respect to any Included Mortgage Loan, the Stated Principal Balance of such

Included Mortgage Loan as of the immediately preceding Distribution Date (or, if

later, as of the Cut-Off Date, or Subsequent Cut-Off Date, as the case may be).

 

      Overcollateralization Amount: As of any date of determination, the excess

of (1) the sum of the the Stated Principal Balance of the Mortgage Loans and the

amount on deposit in the Pre-Funding Account (disregarding income or loss on

investments of amounts on deposit in the Pre-Funding Account) over (2) the

Certificate Principal Balance of the Certificates.

 

       Ownership Interest: As to any Certificate, any ownership interest in such

Certificate including any interest in such Certificate as the Holder thereof and

any other interest therein, whether direct or indirect, legal or beneficial.

 

      Pass-Through Rate: With respect to the Class AF-1 Certificates, the Class

AF-1 Pass-Through Rate; with respect to the Class AF-2 Certificates, the Class

AF-2 Pass-Through Rate; with respect to the Class AF-3 Certificates, the Class

AF-3 Pass-Through Rate; with respect to the Class AF-4 Certificates, the Class

AF-4 Pass-Through Rate; with respect to the Class AF-5 Certificates, the Class

AF-5 Pass-Through Rate; with respect to the Class AV-1 Certificates, the Class

AV-1 Pass-Through Rate; with respect to the Class AV-2 Certificates, the Class

AV-2 Pass-Through Rate; with respect to the Class AV-3 Certificates, the Class

AV-3 Pass-Through Rate; with respect to the Class M-1 Certificates, the Class

M-1 Pass-Through Rate; with respect to the Class M-2 Certificates, the Class M-2

Pass-Through Rate; with respect to the Class M-3 Certificates, the Class M-3

Pass-Through Rate; with respect to the Class M-4 Certificates, the Class M-4

Pass-Through Rate; with respect to the Class M-5 Certificates, the Class M-5

Pass-Through Rate; with respect to the Class M-6 Certificates, the Class M-6

Pass-Through Rate; with respect to the Class B-1 Certificates, the Class B-1

Pass-Through Rate; with respect to the Class B-2 Certificates, the Class B-2

Pass-Through Rate; and, with respect to the Class B-3 Certificates, the Class

B-3 Pass-Through Rate.

 

      Percentage Interest: With respect to:

 

            (i)    any Class, the percentage interest in the undivided beneficial

                  ownership interest evidenced by such Class which shall be

                  equal to the Certificate Principal Balance of such Class

                  divided by the aggregate Certificate Principal Balance of all

                  Classes; and

 

 

                                      -40-

<PAGE>

 

            (ii)   any Certificate, the Percentage Interest evidenced thereby of

                  the related Class shall equal the percentage obtained by

                  dividing the Denomination of such Certificate by the aggregate

                  of the Denominations of all Certificates of such Class; except

                  that in the case of any Class X or Class ES Certificates, the

                  Percentage Interest with respect to such Certificate shown on

                  the face of such Certificate.

 

      Permitted Activities: The primary activities of the trust created pursuant

to this Agreement which shall be:

 

            (i)    holding Mortgage Loans transferred from the Depositor and

                  other assets of the Trust Fund, including any credit

                  enhancement and passive derivative financial instruments that

                  pertain to beneficial interests issued or sold to parties

                  other than the Depositor, its Affiliates, or its agents;

 

            (ii)   issuing Certificates and other interests in the assets of the

                  Trust Fund;

 

            (iii) receiving collections on the Mortgage Loans and making

                  payments on such Certificates and interests in accordance with

                   the terms of this Agreement; and

 

            (iv)   engaging in other activities that are necessary or incidental

                  to accomplish these limited purposes, which activities cannot

                  be contrary to the status of the Trust Fund as a qualified

                  special purpose entity under existing accounting literature.

 

      Permitted Investments: At any time, any one or more of the following

obligations and securities:

 

            (i)    obligations of the United States or any agency thereof,

                  provided such obligations are backed by the full faith and

                  credit of the United States;

 

            (ii)   general obligations of or obligations guaranteed by any state

                  of the United States or the District of Columbia receiving the

                  highest long-term debt rating of the Rating Agency;

 

            (iii) commercial or finance company paper, other than commercial or

                  finance company paper issued by the Depositor, the Securities

                  Administrator or any of its Affiliates, which is then

                  receiving the highest commercial or finance company paper

                  rating of the Rating Agency;

 

            (iv)   certificates of deposit, demand or time deposits, federal

                  funds, or bankers' acceptances (other than banker's

                  acceptances issued by the Securities Administrator or any of

                  its Affiliates) issued by any depository institution or trust

                  company incorporated under the laws of the United States or of

                  any state thereof and subject to supervision and examination

                  by federal and/or state banking authorities, provided that the

                  commercial paper and/or long term unsecured debt obligations

                  of such depository institution or trust company are then rated

                  one of the two highest long-term and the highest short-term

                   ratings of the Rating Agency for such securities;

 

 

                                      -41-

<PAGE>

 

            (v)    demand or time deposits or certificates of deposit issued by

                  any bank or trust company or savings institution to the extent

                  that such deposits are fully insured by the FDIC;

 

            (vi)   guaranteed reinvestment agreements issued by any bank,

                  insurance company or other corporation rated in the two

                  highest long-term or the highest short-term ratings of the

                  Rating Agency containing, at the time of the issuance of such

                  agreements, such terms and conditions as will not result in

                  the downgrading or withdrawal of the rating then assigned to

                  the Certificates by any the Rating Agency as evidenced by a

                  letter from the Rating Agency;

 

            (vii) repurchase obligations with respect to any security described

                   in clauses (i) and (ii) above, in either case entered into

                  with a depository institution or trust company (acting as

                  principal) described in clause (v) above;

 

            (viii) securities (other than stripped bonds, stripped coupons or

                  instruments sold at a purchase price in excess of 115% of the

                  face amount thereof) bearing interest or sold at a discount

                  issued by any corporation, other than the Securities

                   Administrator or any of its Affiliates, incorporated under the

                  laws of the United States or any state thereof which, at the

                  time of such investment, have one of the two highest long term

                  ratings of the Rating Agency;

 

            (ix)   interests in any money market fund (including those managed or

                  advised by the Securities Administrator, the Trustee or their

                  respective affiliates) which (A) at the date of acquisition of

                  the interests in such fund and throughout the time such

                  interests are held in such fund has the highest applicable

                  long term rating by the Rating Agency or (B) would not

                  adversely affect the then current rating by the Rating Agency

                  of any of the Certificates. Such investments in this

                  subsection (ix) may include money market mutual funds or

                  common trust funds, including, without limitation, the J.P.

                  Morgan Prime Money Market Fund or any other fund for which

                  JPMorgan, the Securities Administrator or an affiliate thereof

                  serves as an investment advisor, administrator, shareholder

                  servicing agent and/or custodian or subcustodian,

                  notwithstanding that (i) JPMorgan or an affiliate thereof

                  charges and collects fees and expenses from such funds for

                  services rendered, (ii) JPMorgan or an affiliate thereof

                  charges and collects fees and expenses for services rendered

                  pursuant to this Agreement, and (iii) services performed for

                  such funds and pursuant to this Agreement may converge at any

                  time. JPMorgan or an affiliate thereof is specifically

                  authorized to charge and collect from the Trust Fund such fees

                  as are collected from all investors in such funds for services

                  rendered to such funds (but not to exceed investment earnings

                  thereon); and

 

            (x)    short term investment funds sponsored by any trust company or

                  national banking association incorporated under the laws of

                  the United States or any state thereof, other than the

                  Securities Administrator or any of its Affiliates, which on

                  the date of acquisition has been rated by the Rating Agency in

                  their respective highest applicable rating category;

 

 

                                      -42-

<PAGE>

 

provided, that no such instrument shall be a Permitted Investment if such

instrument (i) evidences the right to receive interest only payments with

respect to the obligations underlying such instrument, (ii) is purchased at a

premium or above par or (iii) is purchased at a deep discount; provided,

further, that no such instrument shall be a Permitted Investment (A) if such

instrument evidences principal and interest payments derived from obligations

underlying such instrument and the interest payments with respect to such

instrument provide a yield to maturity of greater than 120% of the yield to

maturity at par of such underlying obligations, or (B) if it may be redeemed at

a price below the purchase price (the foregoing clause (B) not to apply to

investments in units of money market funds pursuant to clause (ix) above); and

provided, further, (I) that no amount beneficially owned by any REMIC

(including, without limitation, any amounts collected by the Servicer but not

yet deposited in the Collection Account) may be invested in investments (other

than money market funds) treated as equity interests for Federal income tax

purposes, unless the Servicer shall receive an Opinion of Counsel, at the

expense of the party requesting that such investment be made, to the effect that

such investment will not adversely affect the status of the any REMIC provided

for herein as a REMIC under the Code or result in imposition of a tax on the

Trust Fund or any REMIC provided for herein and (II) each such investment must

be a "permitted investment" within the meaning of Section 860G(a)(5) of the

Code. Permitted Investments that are subject to prepayment or call may not be

purchased at a price in excess of par.

 

      Permitted Transferee: Any Person other than (i) the United States, any

State or political subdivision thereof, or any agency or instrumentality of any

of the foregoing, (ii) a foreign government, International Organization or any

agency or instrumentality of either of the foregoing, (iii) an organization

(except certain farmers' cooperatives described in section 521 of the Code) that

is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed

by section 511 of the Code on unrelated business taxable income) on any excess

inclusions (as defined in section 860E(c)(1) of the Code) with respect to a

Certificate, (iv) rural electric and telephone cooperatives described in section

1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or resident of

the United States, a corporation or partnership (or other entity treated as a

corporation or partnership for United States federal income tax purposes)

created or organized in or under the laws of the United States or any State

thereof or the District of Columbia or an estate whose income from sources

without the United States is includible in gross income for United States

federal income tax purposes regardless of its connection with the conduct of a

trade or business within the United States, or a trust if a court within the

United States is able to exercise primary supervision over the administration of

the trust and one or more United States persons have authority to control all

substantial decisions of the trust, unless, in the case of this clause (v), such

Person has furnished the transferor, the Securities Administrator and the

Trustee with a duly completed Internal Revenue Service Form W-8ECI or applicable

successor form. The terms "United States," "State" and "International

Organization" shall have the meanings set forth in section 7701 of the Code. A

corporation will not be treated as an instrumentality of the United States or of

any State thereof for these purposes if all of its activities are subject to tax

and, with the exception of the Federal Home Loan Mortgage Corporation, a

majority of its board of directors is not selected by such government unit.

 

      Person: Any individual, corporation, partnership, limited liability

company, joint venture, association, joint-stock company, trust, unincorporated

organization or government, or any agency or political subdivision thereof.

 

      Placement Agent: Terwin Capital LLC, a Delaware limited liability company,

DZ Financial Markets LLC and HSBC Securities (USA) Inc., or their respective

successors in interest, as applicable.

 

      Pool Stated Principal Balance: As to any Distribution Date, the sum of (i)

the aggregate of the Stated Principal Balances, as of such Distribution Date, of

the Mortgage Loans that were Outstanding Mortgage Loans as of such date and (ii)

the Pre-Funded Amount as of such Distribution Date.

 

 

                                      -43-

<PAGE>

 

      Predatory Lending Law: Section 226.32 of Regulation Z or any similar state

or local law (relating to high interest rate credit lending transactions) or any

federal, state or local law dealing with "high cost" or "predatory" mortgage

lending.

 

      Pre-Funded Amount: As of any date of determination, the amount on deposit

in the Pre-Funding Account (not including any income, gain or loss on such

amount).

 

      Pre-Funding Account: The account established and maintained pursuant to

Section 5.09.

 

      Pre-Funding REMIC: As described in the Preliminary Statement and Section

2.07.

 

      Pre-Funding REMIC Regular Interests: Each of the Class PF-I Interest and

the Class PF-II Interest.

 

      Prepayment Assumption: A rate of prepayment, as described in the

Prospectus Supplement in the definition of "Modeling Assumptions," relating to

the Certificates.

 

      Prepayment Interest Shortfall: With respect to any Distribution Date, for

each Mortgage Loan that was the subject of a partial Principal Prepayment or a

Principal Prepayment in full (other than a Principal Prepayment in full

resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03 or

10.01 hereof) during the related Prepayment Period and prior to the Due Date for

such Mortgage Loan occurring during such Prepayment Period, the amount, if any,

by which (i) one month's interest at the applicable Net Mortgage Rate on the

Stated Principal Balance of such Mortgage Loan as of the immediately preceding

Distribution Date or in the case of a partial Principal Prepayment on the amount

of such prepayment exceeds (ii) the amount of interest paid or collected in

connection with such Principal Prepayment.

 

      Prepayment Penalties: Any prepayment premium, penalty or charge payable by

a Mortgagor in connection with any Principal Prepayment on a Mortgage Loan

pursuant to the terms of the related Mortgage Note or Mortgage, as applicable.

 

      Prepayment Period: As to any Distribution Date, the period commencing on

the 12th (or, in the case of the first Distribution Date, the 1st) day of the

calendar month preceding the month in which such Distribution Date occurs and

ending on the 11th day of the month in which such Distribution Date occurs.

 

      Principal Distribution Amount: With respect to each Distribution Date, the

sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra

Principal Distribution Amount for such Distribution Date.

 

      Principal Funds: With respect to the Mortgage Loans and any Distribution

Date, the sum, without duplication, of (1) the scheduled principal due during

the related Due Period and received before the related Servicer Remittance Date

or advanced on or before the related Servicer Remittance Date, (2) prepayments

collected on the Mortgage Loans in the related Prepayment Period, (3) the Stated

Principal Balance of each Mortgage Loan that was purchased by the Depositor or

the Servicer during the related Prepayment Period or, in the case of a purchase

pursuant to Section 10.01, on the Business Day prior to such Distribution Date,

(4) the amount, if any, by which the aggregate unpaid principal balance of any

Replacement Mortgage Loan is less than the aggregate unpaid principal of the

related Deleted Mortgage Loans delivered by the Seller in connection with a

substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation

Proceeds collected during the related Prepayment Period (to the extent such

Liquidation Proceeds related to principal), (6) all Subsequent Recoveries

received during the related Due Period, (7) with respect to the Distribution

Date immediately following the end of the Funding Period,

 

 

                                      -44-

<PAGE>

 

any amounts in the Pre-Funding Account (as determined without regard to income

or losses arising from the investment of amounts on deposit in the Pre-Funding

Account) after giving effect to the purchase of any Subsequent Mortgage Loans

and (8) all other collections and recoveries in respect of principal during the

related Prepayment Period less (A) all Non-Recoverable Advances relating to

principal with respect to the Mortgage Loans and (B) other amounts reimbursable

to the Servicer, the Servicing Administrator, the Securities Administrator and

the Trustee pursuant to this Agreement.

 

      Principal Prepayment: Any Mortgagor payment or other recovery of (or

proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans

purchased or repurchased under Sections 2.02, 2.03, 3.12 and 10.01 hereof) that

is received in advance of its scheduled Due Date and is not accompanied by an

amount as to interest representing scheduled interest due on any date or dates

in any month or months subsequent to the month of prepayment. Partial Principal

Prepayments shall be applied by the Servicer in accordance with the terms of the

related Mortgage Note.

 

       Prospectus Supplement: The Prospectus Supplement dated September 9, 2005

relating to the public offering of the Offered Certificates.

 

      PTCE 95-60: As defined in Section 6.02(a) hereof.

 

      PUD: A Planned Unit Development.

 

      Purchase Price: With respect to any Mortgage Loan required to be

repurchased by the Seller or the applicable Transferor, pursuant to Section 2.02

or 2.03 hereof or purchased by the Servicer pursuant to Section 3.12(c) hereof,

an amount equal to the sum of (i) 100% of the unpaid principal balance of the

Mortgage Loan as of the date of such purchase together with any unreimbursed

Advances, Servicing Advances and Servicing Fees owed to the Servicer, (ii)

accrued and unpaid interest thereon at the applicable Mortgage Rate from (a) the

date through which interest was last paid by the Mortgagor to (b) the Due Date

in the month in which the Purchase Price is to be distributed to

Certificateholders and (iii) any unreimbursed costs, penalties and/or damages

incurred by the Trust Fund in connection with any violation or breach relating

to such Mortgage Loan (including without limitation, any violation of any

Predatory Lending Law).

 

      QIB: As defined in Section 6.02(a) hereof.

 

      Rating Agency: Each of Moody's, Fitch and S&P. If such organization or its

successor is no longer in existence, "Rating Agency" shall be a nationally

recognized statistical rating organization, or other comparable Person,

designated by the Depositor, notice of which designation shall be given to the

Trustee. References herein to a given rating category of a Rating Agency shall

mean such rating category without giving effect to any modifiers.

 

      Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,

by which the Stated Principal Balance and accrued interest thereon at the Net

Mortgage Rate exceeds the amount actually recovered by the Servicer with respect

thereto (net of reimbursement of Advances and Servicing Advances) at the time

such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage

Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor

is no longer legally required to pay (except for the extinguishment of debt that

results from the exercise of remedies due to default by the Mortgagor).

 

      Record Date: With respect to any Distribution Date, the close of business

on the last Business Day of the month preceding the month in which the

applicable Distribution Date occurs.

 

 

                                      -45-

<PAGE>

 

      Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,

N.A., National Association and NatWest, N.A.; provided that if any of the

foregoing banks are not suitable to serve as a Reference Bank, then any leading

banks selected by the Securities Administrator which are engaged in transactions

in Eurodollar deposits in the international Eurocurrency market (i) with an

established place of business in London, England, (ii) whose quotations appear

on the Reuters Screen LIBOR Page on the relevant Interest Determination Date and

(iii) which have been designated as such by the Securities Administrator.

 

      Regular Certificate: Any one of the Class A, Class M and Class B

Certificates.

 

      Relief Act: The Servicemembers Civil Relief Act.

 

      REMIC: A "real estate mortgage investment conduit" within the meaning of

section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall

mean any of (or, as the context requires, all of) the Pre-Funding REMIC, REMIC 1

and REMIC 2.

 

      REMIC Pass-Through Rate: The Group I Available Funds Cap (in the case of

the Class AF-1 Certificates), the Group I Net WAC Cap (in the case of a Class

included in Certificate Group I other than the Class AF-1 Certificates), the

Group II Available Funds Cap (in the case of a Class included in Certificate

Group II) or the Subordinated Available Funds Cap (in the case of the

Subordinated Certificates).

 

      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

proposed, temporary and final regulations and published rulings, notices and

announcements promulgated thereunder, as the foregoing may be in effect from

time to time as well as provisions of applicable state laws.

 

      REMIC 1: As described in the Preliminary Statement and Section 2.07.

 

      REMIC 1 Interests: Each of the Class LT1-R$100 Interest, the Class

LT1-AF-1 Interest, the Class LT1-AF-2 Interest, the Class LT1-AF-3 Interest, the

Class LT1-AF-4 Interest, the Class LT1-AF-5 Interest, the Class LT1-AV-1

Interest, the Class LT1-AV-2 Interest, the Class LT1-AV-3 Interest, the Class

LT1-B1 Interest, the Class LT1-B2 Interest, the Class LT1-B3 Interest, the Class

LT1-M1 Interest, the Class LT1-M2 Interest, the Class LT1-M3 Interest, the Class

LT1-M4 Interest, the Class LT1-M5 Interest, the Class LT1-M6 Interest, the Class

LTIX Interest, the Class LTIIX Interest, the Class LTII1A Interest, the Class

LTII1B Interest, the Class LTII2A Interest, the Class LTII2B Interest and the

Class LT1-R Interest.

 

      REMIC 1-I Marker Interests: Each of the classes of REMIC 1 Regular

Interests other than the Class LTIX Interest, the Class LTIIX Interest, the

Class LTII1A Interest, the Class LTII1B Interest, the Class LTII2A Interest, the

Class LTII2B Interest.

 

      REMIC 1-II Marker Interests: Each of the Class LTII1A Interest, the Class

LTII1B Interest, the Class LTII2A Interest and the Class LTII2B Interest.

 

      REMIC 1 Regular Interests: Each of the REMIC 1 Interests other than the

Class LT1-R Interest.

 

      REMIC 1 Subordinated Balance Ratio: The ratio of (i) the principal balance

of the Class LTII1A Interest to (ii) the principal balance of the Class LTII2A

Interest that is equal to the ratio of (i) the excess of (A) the sum of (1) the

aggregate Stated Principal Balance of Group I and (2) the portion of the

Original Pre-Funded Amount related to Group I remaining in the Pre-Funding

Account (disregarding income or loss on investments of amounts on deposit in the

Pre-Funding Account) over (B) the current Certificate Principal Balances of the

Group I Senior Certificates and Class R Certificates to (ii) the excess of (A)

the

 

 

                                       -46-

<PAGE>

 

sum of (1) the aggregate Stated Principal Balance of Group II and (2) the

portion of the Original Pre-Funded Amount related to Group II remaining in the

Pre-Funding Account (disregarding income or loss on investments of amounts on

deposit in the Pre-Funding Account) over (B) the current Certificate Principal

Balance of the Group II Senior Certificates.

 

      REMIC 2: As described in the Preliminary Statement and Section 2.07.

 

      REMIC 2 Regular Interests: (i) any of the rights under any of the

Certificates (other than the Class ES Certificates, the Class R Certificate and

the Class X Certificates) other than the rights in interest rate cap contracts

described in Section 2.07 and (ii) the REMIC 2 X Interest.

 

      REMIC 2 Residual Interest: An interest in REMIC 2 that is entitled to all

distributions of principal and interest on the Class R Certificate other than

distributions in respect of the Class PF-R Interest, the Class LT1-R Interest

and distributions on the Class R Certificate in respect of Excess Interest.

 

      REMIC 2 X Interest: An uncertificated regular interest in REMIC 2 with an

initial principal balance equal to the excess of (i) the sum of (x) the Cut-off

Principal Balance of the Initial Mortgage Loans and (y) the Original Pre-Funded

Amount over (ii) the aggregate Initial Certificate Principal Balance of the

Class A, Class R, Class M and Class B Certificates and bearing interest on a

notional amount equal to 99.95% of the aggregate principal balance of the REMIC

1 Regular Interests outstanding immediately prior to such Distribution Date

(such amount of interest representing a "specified portion" (within the meaning

of Treasury Regulations Section 1.860G-1(a)(2)(i)(C)) of interest payments on

the REMIC 1 Regular Interests (other than the Class LTII1B Interest and the

Class LTII2B Interest)) at a rate equal to the REMIC 2 X Interest Rate. The

REMIC 2 X Interest will not include any obligation to make any payments in

respect of the deemed interest rate cap contracts described in Section 2.07 or

any right to receive amounts distributable to the Class X Certificates pursuant

to Section 5.05(i).

 

      REMIC 2 X Interest Rate: For any Distribution Date, the excess, if any, of

(a) the weighted average of the interest rates on the REMIC 1 Regular Interests

over (b) two times the weighted average of the interest rates on the REMIC 1-I

Marker Interests and the Class LTIX Interest (treating for purposes of this

clause (b) the interest rate on each of the REMIC 1-I Marker Interests as being

subject to a cap and a floor equal to the interest rate of the Corresponding

Certificates and treating the Class LTIX Interest as being capped at zero). The

averages described in the preceding sentence shall be weighted on the basis of

the respective principal balances of the REMIC 1 Regular Interests immediately

prior to any date of determination.

 

      REO Property: A Mortgaged Property acquired by the Servicer through

foreclosure or deed-in-lieu of foreclosure in connection with a defaulted

Mortgage Loan.

 

      Replacement Mortgage Loan: A Mortgage Loan substituted by the Seller for a

Deleted Mortgage Loan, which must, on the date of such substitution, as

confirmed in a Request for Release, substantially in the form of Exhibit I (1)

have a Stated Principal Balance, after deduction of the principal portion of the

Scheduled Payment due in the month of substitution, not in excess of, and not

less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan

(provided that if such Stated Principal Balance is less the Stated Principal

Balance of the Deleted Mortgage Loan, the Seller must also deposit the

Substitution Adjustment Amount along with Replacement Mortgage Loan); (2) with

respect to any Mortgage Loan, have a Mortgage Rate not less than or no more than

1% per annum higher than the Mortgage Rate of the Deleted Mortgage Loan; (3)

have a similar or higher FICO score or credit grade than that of the Deleted

Mortgage Loan; (4) have a Loan-to-Value Ratio no higher than that of the Deleted

Mortgage Loan; (5) have a remaining term to maturity no greater than one year

beyond that of the Deleted Mortgage Loan, provided that the term of such

Mortgage Loan does not exceed the term of the last maturing Mortgage Loan; (6)

provide for a prepayment charge on terms substantially similar to those of the

prepayment

 

 

                                      -47-

<PAGE>

 

charge, if any, of the Deleted Mortgage Loan; (7) have the same lien priority as

the Deleted Mortgage Loan; (8) constitute the same occupancy type as the Deleted

Mortgage Loan; and (9) comply with each representation and warranty set forth in

Section 2.03 hereof.

 

      Request for Release: The Request for Release of Documents submitted by the

Servicer to the Trustee, substantially in the form of Exhibit I hereto.

 

      Required Insurance Policy: With respect to any Mortgage Loan, any

insurance policy that is required to be maintained from time to time under this

Agreement.

 

      Required Loss Percentage: For any Distribution Date, the applicable

percentage for such Distribution Date set forth in the following table:

 

Distribution Date Occurring In

Required Loss Percentage                      Required Loss Percentage

------------------------------                ------------------------

October 2008 - September 2009                 2.25% with respect to October

                                             2008, plus an additional 1/12th of

                                             0.75% for each month thereafter

 

October 2009 - September 2010                 3.00% with respect to October

                                             2009, plus an additional 1/12th of

                                             0.75% for each month thereafter

 

October 2010 and thereafter                   3.75%

 

      Required Percentage: As of any Distribution Date on or after the Stepdown

Date, the quotient of (1) the excess of (A) the Stated Principal Balances of the

Mortgage Loans as of such Distribution Date, over (B) the Certificate Principal

Balance of the most senior Class of Certificates outstanding, prior to giving

effect to distributions to be made on such Distribution Date and (2) the Stated

Principal Balance of the Mortgage Loans as of such Distribution Date.

 

      Required Withdrawal: With respect to each Distribution Date on or prior to

the Distribution Date in October 2005, an amount equal to the sum of (A) the

product of (i) the amount relating to Group I on deposit in the Pre-Funding

Account (as determined without regard to income from investments of amounts on

deposit in the Pre-Funding Account and without regard to losses from such

investments) as of the close of the preceding calendar month (or, if such date

would be prior to the Closing Date, the portion of the Original Pre-Funded

Amount relating to Group I) and (ii) the Net WAC for Group I and (B) the product

of (i) the amount relating to Group II on deposit in the Pre-Funding Account (as

determined without regard to income from investments of amounts on deposit in

the Pre-Funding Account and without regard to losses from such investments) as

of the close of the preceding calendar month (or, if such date would be prior to

the Closing Date, the portion of the Original Pre-Funded Amount relating to

Group II) and (ii) the Net WAC for Group II.

 

      Reserve Interest Rate: With respect to any Interest Determination Date,

the rate per annum that the Securities Administrator determines to be (1) the

arithmetic mean (rounded upwards if necessary to the nearest whole multiple of

0.03125%) of the one-month United States dollar lending rates which New York

City banks selected by the Securities Administrator are quoting on the relevant

Interest

 

 

                                      -48-

<PAGE>

 

Determination Date to the principal London offices of leading banks in the

London interbank market or (2) in the event that the Securities Administrator

can determine no such arithmetic mean, the lowest one-month United States dollar

lending rate which New York City banks selected by the Securities Administrator

are quoting on such Interest Determination Date to leading European banks.

 

      Residual Excess Interest Amount: With respect to any Distribution Date,

the excess of (x) 0.05% of the Monthly Excess Interest Amount for such

Distribution Date and all prior Distribution Dates over (y) all payments

previously made to the Class R Certificate in respect of the Residual Excess

Interest Amount.

 

      Responsible Officer: When used with respect to the Servicer, any officer

of the Servicer with direct responsibility for the administration of this

Agreement and also means any other officer to whom, with respect to a particular

matter, such matter is referred because of such officer's knowledge of and

familiarity with the particular subject. When used with respect to the Trustee,

any officer of the Trustee who has direct responsibility for the administration

of this Agreement. When used with respect to the Securities Administrator, any

Vice President, any Managing Director, any Director, any associate, any

Assistant Vice President, any Assistant Secretary, any Trust Officer or any

other officer or employee of the Securities Administrator customarily performing

functions similar to those performed by any of the above designated officers and

also to whom, with respect to a particular matter, such matter is referred

because of such officer's or employee's knowledge of and familiarity with the

particular subject and in each case who shall have direct responsibility for the

administration of this Agreement.

 

      Reuters Screen LIBOR Page: The display designated as page "LIBOR" on the

Reuters Monitor Money Rates Service (or such other page as may replace such

LIBOR page on that service for the purpose of displaying London interbank

offered rates of major banks.

 

      Rolling Three Month Delinquency: For any Distribution Date will be the

fraction, expressed as a percentage, equal to the average of the related

delinquency rates for each of the three (or one and two, in the case of the

first and second Distribution Dates) immediately preceding months.

 

      Rule 144A Letter: As defined in Section 6.02(a) hereof.

 

      S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or

its successor in interest.

 

      Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated as

of September 1, 2005 between the Depositor and the Seller.

 

      Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on

any Due Date allocable to principal and/or interest on such Mortgage Loan.

 

      Section 302 Requirements: Any rules or regulations promulgated pursuant to

the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

 

      Securities Act: The Securities Act of 1933, as amended.

 

      Securities Administrator: JPMorgan or its successor in interest.

 

      Securities Administrator Fee: As to any Distribution Date and each

Mortgage Loan, an amount equal to the product of the applicable Securities

Administrator Fee Rate and the outstanding Stated Principal Balance of such

Mortgage Loan as of the preceding Distribution Date.

 

 

                                      -49-

<PAGE>

 

      Securities Administrator Fee Rate: 0.005% per annum.

 

      Seller: Terwin Advisors LLC, a Delaware limited liability company, or its

successor in interest.

 

      Servicer: Specialized Loan Servicing, LLC, a Delaware limited liability

company and its successors and assigns.

 

      Servicer Advance Date: As to any Distribution Date, the related Servicer

Remittance Date.

 

      Servicer's Assignee: As defined in Section 10.14(a) hereof.

 

      Servicer Data Remittance Date: With respect to any Mortgage Loan and any

Distribution Date, the 10th day of the calendar month in which such Distribution

Date occurs, or if such 10th day is not a Business Day, the Business Day

immediately succeeding such 10th day.

 

      Servicer Remittance Date: With respect to any Mortgage Loan and any

Distribution Date, the 18th day of the calendar month in which the related

Distribution Date occurs or, if such 18th day is not a Business Day, the

Business Day immediately preceding such 18th day.

 

      Servicer Withdrawals: As defined in Section 3.08(a) hereof.

 

      Servicing Administrator: JPMorgan.

 

      Servicing Administrator Collection Account: The account established and

maintained by the Servicing Administrator in accordance with Section 3.05.

 

      Servicing Administrator Remittance Date: With respect to any Mortgage Loan

and any Distribution Date, the day that is two (2) Business Days prior to the

related Distribution Date.

 

      Servicing Administrator Withdrawals: As defined in Section 3.08(b) hereof.

 

      Servicing Advances: All customary, reasonable and necessary "out of

pocket" costs and expenses incurred in the performance by the Servicer of its

servicing obligations hereunder, including, but not limited to, the cost of (1)

the preservation, restoration and protection of a Mortgaged Property (or

Underlying Mortgaged Property, in the case of a Co-op Loan), including without

limitation advances in respect of real estate taxes and assessments, (2) any

collection, enforcement or judicial proceedings, including without limitation

foreclosures, collections and liquidations, (3) the conservation, management,

sale and liquidation of any REO Property and (4) compliance with the obligations

under Section 3.10.

 

      Servicing Fee: As to each Mortgage Loan and any Distribution Date, an

amount payable to or retained by the Servicer equal to the product of (x) the

SLS Servicing Fee Rate and (y) the Stated Principal Balance of such Mortgage

Loan as of the immediately preceding Distribution Date.

 

      Servicing Fee Rate: As to any Mortgage Loan, 0.500% per annum.

 

      Servicing Officer: Any officer of the Servicer or the Servicing

Administrator involved in, or responsible for, the administration and servicing

of the Mortgage Loans whose name and facsimile signature appear on a list of

servicing officers furnished to the Securities Administrator, the Backup

Servicer and the Trustee by the Servicer on the Closing Date pursuant to this

Agreement, as such lists may from time to time be amended.

 

 

                                      -50-

<PAGE>

 

      Servicing Rights Owner: Terwin Advisors LLC, or its transferee or

assignee, in its capacity as owner of the servicing rights with respect to the

Mortgage Loans.

 

      Servicing Rights Pledgee: The entity designated by the Servicing Rights

Owner pursuant to Section 7.04.

 

      Servicing Transfer Costs: In the event that the Servicer does not

reimburse the Securities Administrator under this Agreement, all costs

associated with the transfer of servicing from the predecessor Servicer,

including, without limitation, any costs or expenses associated with the

termination of the predecessor Servicer, the appointment of a successor

servicer, the complete transfer of all servicing data and the completion,

correction or manipulation of such servicing data as may be required by the

Securities Administrator or any successor servicer to correct any errors or

insufficiencies in the servicing data or otherwise to enable the Securities

Administrator or successor servicer to service the Mortgage Loans properly and

effectively.

 

      SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting

for Transfers and Servicing of Financial Assets and Extinguishments of

Liabilities dated September 2000, published by the Financial Accounting

Standards Board of the Financial Accounting Foundation.

 

      Similar Law: As defined in Section 6.02(a) hereof.

 

      SLS: Specialized Loan Servicing, LLC, a Delaware limited liability

company, and its successors and assigns.

 

      SLS Cross Default: An SLS Cross Default shall have occurred if SLS is

terminated as servicer under two or more pooling and servicing agreements to

which SLS is a party and pursuant to which it is servicing Mortgage Loans, other

than this Agreement, (i) in which the principal amount of loans then being

serviced by SLS under each agreement is at least $25,000,000 and (ii) which

termination results from an event of default by SLS thereunder.

 

      SLS Event of Termination: As defined in Section 8.05 hereof.

 

      SLS Financial Trigger Event: An SLS Financial Trigger Event shall have

occurred if there is a default by SLS of any financial covenants contained in

Article VII (other than those in Section 7.3) of the Receivables Loan Agreement,

dated as of March 1, 2004, as may be amended from time to time, by and between

SLS Funding, LLC, a Delaware limited liability company, as borrower, SLS, as

collection agent, Wachovia Bank National Association, as a lender, GreenPoint

Bank, as a lender and Wachovia Capital Markets, LLC, as deal agent for the

lenders.

 

      SLS Servicing Fee Rate: As to each Mortgage Loan and any Distribution Date

while SLS is the Servicer, means the per annum rate specified in a Letter

Agreement dated the Closing Date among SLS, the Depositor and the Trustee

(provided that such rate does not exceed the Servicing Fee Rate) and as to each

Mortgage Loan and any Distribution Date while SLS is no longer the Servicer, the

per annum rate specified in a successor Letter agreement among the Depositor,

the Seller, the Trustee, the Securities Administrator and the successor servicer

(provided that such rate does not exceed the Servicing Fee Rate).

 

      SLS Servicing Tape: As defined in Section 3.30 hereof.

 

      SPV: As defined in Section 5.02(a) hereof.

 

      Startup Day: As defined in Section 2.07 hereof.

 

 

                                      -51-

<PAGE>

 

      Stated Principal Balance: With respect to any Mortgage Loan or related REO

Property (1) as of the Cut-off Date (or Subsequent Cut-off Date with respect to

Subsequent Mortgage Loans), the Cut-off Date Principal Balance thereof (or

Subsequent Cut-off Date Principal Balance thereof with respect to Subsequent

Mortgage Loans) and (2) as of any Distribution Date, such Cut-off Date Principal

Balance or Subsequent Cut-off Date Principal Balance (as the case may be), minus

the sum of (A) the principal portion of the Scheduled Payments (x) due with

respect to such Mortgage Loan during each Due Period ending prior to such

Distribution Date and (y) that were received by the Servicer as of the close of

business on the Determination Date related to such Distribution Date or with

respect to which Advances were made on the Servicer Advance Date prior to such

Distribution Date and (B) all Principal Prepayments with respect to such

Mortgage Loan received on or prior to the last day of the related Prepayment

Period, and all Liquidation Proceeds to the extent applied by the Servicer as

recoveries of principal in accordance with Section 3.12 with respect to such

Mortgage Loan, that were received by the Servicer as of the close of business on

the last day of the related Due Period. Notwithstanding the foregoing, the

Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.

 

      Stepdown Date: The later to occur of (1) the Distribution Date in October

2008 or (2) the first Distribution Date on which (A) the Class A Certificate

Principal Balance together with the Class R Certificate Principal Balance

(reduced by the Principal Funds with respect to such Distribution Date) is less

than or equal to (B) 25.90% of the Stated Principal Balances of the Mortgage

Loans as of such Distribution Date.

 

      Subordinated Available Funds Cap: With respect to a Distribution Date, the

per annum rate equal to the weighted average (weighted in proportion to the

results of subtracting the current Certificate Principal Balance of the related

Class A Certificates (and subtracting the current Certificate Principal Balance

of the Class R Certificate, in the case of Group I) from the sum of (x) the

aggregate Stated Principal Balance of the Mortgage Loans in each Mortgage Group

and (y) the amount on deposit in the Pre-Funding Account related to such

Mortgage Group (disregarding income or loss on investments of amounts on deposit

in the Pre-Funding Account) as of the immediately preceding Distribution Date

(or, in the case of the first Distribution Date, as of the Cut-off Date)) of the

Group I Net WAC Cap and the Group II Net WAC Cap.

 

      Subordinated Certificates: The Class M and Class B Certificates.

 

      Subordinated Maximum Rate Cap: With respect to a Distribution Date, the

per annum rate equal to the weighted average (weighted in proportion to the

results of subtracting the current Certificate Principal Balance of the related

Class A Certificates (and subtracting the current Certificate Principal Balance

of the Class R Certificate, in the case of Group I) from the the sum of (x) the

aggregate Stated Principal Balance of the Mortgage Loans in each Mortgage Group

and (y) the amount on deposit in the Pre-Funding Account related to such

Mortgage Group (disregarding income or loss on investments of amounts on deposit

in the Pre-Funding Account) as of the immediately preceding Distribution Date

(or, in the case of the first Distribution Date, as of the Cut-off Date)) of the

Group I Maximum Rate Cap and the Group II Maximum Rate Cap (in each case,

disregarding any adjustment thereto for the actual number of days in the related

Accrual Period).

 

      Subsequent Cut-off Date Principal Balance: As to any Subsequent Mortgage

Loan, the unpaid principal balance thereof as of the close of business on the

calendar day immediately preceding the Subsequent Cut-off Date after application

of all payments of principal due on or prior to the Subsequent Cut-off Date,

whether or not received, and all Principal Prepayments received prior to the

Subsequent Cut-off Date, but without giving effect to any installments of

principal received in respect of Due Dates after the Subsequent Cut-off Date.

 

 

                                      -52-

<PAGE>

 

      Subsequent Cut-off Date: With respect to those Subsequent Mortgage Loans

sold to the Trust Fund pursuant to a Subsequent Transfer Instrument, the first

day of the month in which the related Subsequent Transfer Date occurs.

 

      Subsequent Mortgage Loan: A Mortgage Loan sold by the Depositor to the

Trust Fund pursuant to Section 2.11, such Mortgage Loan being identified on the

Mortgage Loan Schedule attached to a Subsequent Transfer Instrument, all of

which shall be "qualified mortgages" within the meaning of Section 860G(a)(3)(A)

of the Code (as determined without regard to Treasury Regulations Section

1.860G-2(a)(3)(iii) or any similar rule that treats a defective obligation as a

"qualified mortgage" for a temporary period).

 

      Subsequent Mortgage Loan Purchase Agreement: The agreement between the

Depositor and the Mortgage Loan Seller regarding the transfer of the Subsequent

Mortgage Loans by the Seller to the Depositor.

 

      Subsequent Recovery: Any amount received on a Mortgage Loan subsequent to

such Mortgage Loan being determined to be a Liquidated Mortgage Loan.

 

      Subsequent Transfer Date: With respect to each Subsequent Transfer

Instrument, the date on which the related Subsequent Mortgage Loans are sold to

the Trust Fund.

 

      Subsequent Transfer Instrument: Each Subsequent Transfer Instrument, dated

as of a Subsequent Transfer Date, executed by the Depositor and acknowledged by

the Certificate Insurer and the Trustee substantially in the form of Exhibit M,

by which Subsequent Mortgage Loans are sold to the Trust Fund and which will

specify, on Attachment B thereto, among other things, the Mortgage Group to

which each Subsequent Mortgage Loan is to be added.

 

      Subservicer: As defined in Section 3.02(a) hereof.

 

      Subservicing Agreement: As defined in Section 3.02(a) hereof.

 

      Substitution Adjustment Amount: The meaning ascribed to such term pursuant

to Section 2.03(c).

 

      Targeted Overcollateralization Amount: The product of (i) 0.90% and (ii)

the sum of (x) the Cut-off Date Principal Balance of the Initial Mortgage Loans

and (y) the Original Pre-Funded Amount.

 

      Tax Matters Person: The Person designated as "tax matters person" in the

manner provided under Treasury regulation Section 1.860F-4(d) and Treasury

regulation Section 301.6231(a)(7)-1.

 

      Transfer: Any direct or indirect transfer or sale of any Ownership

Interest in a Certificate.

 

       Transfer Affidavit: As defined in Section 6.02(b)(ii) hereof.

 

      Transfer Agreement: Any document pursuant to which the Seller acquired any

Mortgage Loan from the originator of such Mortgage Loan.

 

      Transferor: Any originator of a Mortgage Loan.

 

      Transferor Certificate: As defined in Section 6.02(a) hereof.

 

      Trigger Event: With respect to the Certificates on or after the Stepdown

Date, a Distribution Date on which (1) the quotient of (A) the aggregate Stated

Principal Balance of all Mortgage Loans which are

 

 

                                      -53-

<PAGE>

 

60 or more days Delinquent measured on a rolling three month basis (including,

for the purposes of this calculation, Mortgage Loans in foreclosure and REO

Properties) and (B) the Stated Principal Balance of the Mortgage Loans as of the

last day of the preceding calendar month, equals or exceeds the product of (i)

34.75% and (ii) Required Percentage or (2) the quotient (expressed as a

percentage) of (A) the aggregate Realized Losses incurred from the Cut-off Date

through the last day of the calendar month preceding such Distribution Date and

(B) the sum of (x) the aggregate principal balance of the Mortgage Loans as of

the Cut-off Date and (y) the Original Pre-Funded Amount exceeds the Required

Loss Percentage.

 

      Trust Fund: The corpus of the trust (the "Terwin Mortgage Trust, Series

TMTS 2005-14HE") created hereunder consisting of (i) the Mortgage Loans and all

interest and principal received on or with respect thereto on and after the

Cut-off Date to the extent not applied in computing the Cut-off Date Principal

Balance thereof, exclusive of interest not required to be deposited in the

Collection Account; (ii) the Collection Account, the Certificate Account, the

Servicing Administrator Collection Account, the Pre-Funding Account and the

Capitalized Interest Account, and all amounts deposited therein pursuant to the

applicable provisions of this Agreement; (iii) property that secured a Mortgage

Loan and has been acquired by foreclosure, deed in lieu of foreclosure or

otherwise; (iv) the mortgagee's rights under the Insurance Policies with respect

to the Mortgage Loans; (v) the Certificate Insurance Policy and (vi) all

proceeds of the conversion, voluntary or involuntary, of any of the foregoing

into cash or other liquid property.

 

      Trustee: U.S. Bank National Association, a national banking association,

not in its individual capacity, but solely in its capacity as trustee for the

benefit of the Certificateholders under this Agreement, and any successor

thereto, and any corporation or national banking association resulting from or

surviving any consolidation or merger to which it or its successors may be a

party and any successor trustee as may from time to time be serving as successor

trustee hereunder.

 

      Underlying Mortgaged Property: With respect to each Co-op Loan, the

underlying real property owned by the related residential cooperative housing

corporation.

 

      United States Person: (i) A citizen or resident of the United States, (ii)

a corporation, partnership or other entity treated as a corporation or

partnership for federal income tax purposes organized in or under the laws of

the United States or any state thereof or the District of Columbia (unless, in

the case of a partnership, Treasury regulations provide otherwise), (iii) an

estate the income of which is includible in gross income for United States tax

purposes regardless of its source or (iv) a trust if a court within the United

States is able to exercise primary supervision over the administration of the

trust and one or more United States persons have authority to control all

substantial decisions of the trust. Notwithstanding the preceding sentence, to

the extent provided in Treasury regulations, certain trusts in existence on

August 20, 1996, and treated as United States persons prior to such date, that

elect to continue to be treated as United States persons will also be United

States Persons.

 

      Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,

Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized Loss Amount,

Class M-4 Unpaid Realized Loss Amount, Class M-5 Unpaid Realized Loss Amount,

Class M-6 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,

Class B-2 Unpaid Realized Loss Amount and Class B-3 Unpaid Realized Loss Amount,

collectively.

 

      USAP Report: A report in compliance with the Uniform Single Attestation

Program for Mortgage Bankers delivered in accordance with Section 3.18 or 4.15.

 

      Voting Rights: The portion of the voting rights of all the Certificates

that is allocated to any of the Certificates for purposes of the voting

provisions hereunder. Voting Rights allocated to each Class of

 

 

                                      -54-

<PAGE>

 

Certificates shall be allocated 98% to the Class A, Class R, Class B and Class M

Certificates and 2.00% to the Class X, Class ES Certificates, with the

allocation among the Class A, Class R, Class B and Class M Certificates to be in

proportion to the Certificate Principal Balance of each Class relative to the

Certificate Principal Balance of all other Classes. Voting Rights will be

allocated among the Certificates of each such Class in accordance with their

respective Percentage Interests. The Class R Certificate will have no Voting

Rights.

 

                                   ARTICLE II

 

                          CONVEYANCE OF MORTGAGE LOANS;

                         REPRESENTATIONS AND WARRANTIES

 

            SECTION 2.01. Conveyance of Mortgage Loans.

 

      The Depositor, concurrently with the execution and delivery hereof, does

hereby sell, transfer, assign, set over and convey to the Trustee without

recourse all the right, title and interest of the Depositor in and to the assets

of the Trust Fund. Such assignment includes all interest and principal received

on or with respect to the Mortgage Loans, other than Subsequent Mortgage Loans,

on or after the Cut-off Date (other than Scheduled Payments due on the Mortgage

Loans on or before the Cut-off Date).

 

      (1) In connection with such assignment, the Depositor does hereby deliver

to, and deposit with, the Trustee, or to the Custodian as the Trustee's

designated agent, the following documents or instruments with respect to each

Mortgage Loan and the Depositor shall, in accordance with Section 2.11, deliver

to, and deposit with, the Trustee or to the Custodian, as the Trustee's agent,

the following documents or instruments with respect to each Subsequent Mortgage

Loan:

 

            (A) The electronic Mortgage Loan Schedule, a copy of which has also

      been delivered to the Servicer, the Backup Servicer, the Servicing

      Administrator and the Trustee.

 

            (B) The Original Mortgage Note endorsed in blank or, "Pay to the

      order of U.S. Bank National Association, as Trustee for Terwin Mortgage

      Trust 2005-14HE, Asset-Backed Certificates, Series 2005-14HE, without

      recourse" together with all riders thereto. The Mortgage Note shall

      include all intervening endorsements showing a complete chain of the title

      from the originator to the Transferor.

 

            (C) Except as provided below and for each Mortgage Loan that is not

      a MERS Loan, the original recorded Mortgage together with all riders

      thereto, with evidence of recording thereon, or, if the original Mortgage

      has not yet been returned from the recording office, a copy of the

      original Mortgage together with all riders thereto certified by the

      Transferor to be true copy of the original of the Mortgage that has been

      delivered for recording in the appropriate recording office of the

      jurisdiction in which the Mortgaged Property is located and in the case of

      each MERS Loan, the original Mortgage together with all riders thereto,

      noting the presence of the MIN of the Loan and either language indicating

      that the Mortgage Loan is a MOM Loan or if the Mortgage Loan was not a MOM

      Loan at origination, the original Mortgage and the assignment thereof to

      MERS, with evidence of recording indicated thereon, or a copy of the

      Mortgage certified by the public recording office in which such Mortgage

      has been recorded.

 

            (D) In the case of each Mortgage Loan that is not a MERS Loan, the

      original Assignment of each Mortgage in blank or, to MERS or to "U.S. Bank

      National Association, as Trustee for Terwin Mortgage Trust 2005-14HE,

      Asset-Backed Certificates, Series 2005-14HE, without recourse."

 

 

                                      -55-

<PAGE>

 

            (E) The original policy of title insurance (or a preliminary title

      report, commitment or binder if the original title insurance policy has

      not been received from the title insurance company).

 

            (F) Originals of any intervening assignments of the Mortgage, with

      evidence of recording thereon or, if the original intervening assignment

      has not yet been returned from the recording office, a copy of such

      assignment certified to be a true copy of the original of the assignment

      which has been sent for recording in the appropriate jurisdiction in which

      the Mortgaged Property is located.

 

            (G) Originals of all assumption and modification agreements, if any.

 

      (2) In connection with such assignment, the Depositor does hereby deliver

to, and deposit with, the Trustee the following documents or instruments with

respect to each Mortgage Loan so assigned that is a Co-op Loan:

 

            A. The original Mortgage Note (or a lost note affidavit (including a

      copy of the original Mortgage Note)) or (ii) the original consolidation,

      extension and modification agreement (or a lost note affidavit (including

      a copy of the original consolidation, extension and modification

      agreement)), in either case endorsed either in blank or, "U.S. Bank

      National Association, as Trustee for Terwin Mortgage Trust 2005-14HE,

      Asset-Backed Certificates, Series 2005-14HE, without recourse";

 

            B. The original Mortgage entered into by the Mortgagor with respect

      to such Co-Op Loan;

 

            C. The original Assignment of Mortgage endorsed either in blank or

      to "U.S. Bank National Association, as Trustee for Terwin Mortgage Trust

      2005-14HE, Asset-Backed Certificates, Series 2005-14HE, without recourse";

 

            D. The original assignments of Mortgage showing a complete chain of

      assignment from the originator of the related Co-Op Loan to the last

      endorsee on the Mortgage Note;

 

             E. The original Form UCC-1 and any continuation statements with

      evidence of filing thereon entered into by the Mortgagor with respect to

      such Co-Op Loan (or a recorded copy thereof);

 

            F. Form UCC-3 (or copy thereof) by the Transferor or its agent

      assigning the security interest covered by such Form UCC-1 to "U.S. Bank

      National Association, as Trustee for Terwin Mortgage Trust 2005-14HE,

      Asset-Backed Certificates, Series 2005-14HE, without recourse" together

       with all Forms UCC-3 (or copies thereof) showing a complete chain of

      assignment from the originator of the related Co-op Loan to the

      Transferor, with evidence of recording thereon;

 

            G. The original stock certificate representing the stock allocated

      to the related dwelling unit in the related residential cooperative

      housing corporation and pledged by the related Mortgagor to the originator

      of such Co-op Loan with a stock power in blank attached;

 

            H. The original proprietary lease;

 

            I. The original assignment of proprietary lease or a copy thereof,

      to the Trustee or in blank, and all intervening assignments thereof;

 

 

                                      -56-

<PAGE>

 

            J. The original recognition agreement or a copy thereof of the

      interests of the mortgagee with respect to the Co-op Loan by the

      residential cooperative housing corporation, the stock of which was

      pledged by the related Mortgagor to the originator of such Co-op Loan; and

 

            K. Originals of any assumption, consolidation or modification

      agreements relating to any of the items specified in (A) through (F) above

      with respect to such Co-op Loan.

 

      If in connection with any Mortgage Loan that is not a MERS Mortgage Loan

or Co-op Loan, the Depositor cannot deliver the Mortgage, Assignments of

Mortgage or assumption, consolidation or modification, as the case may be, with

evidence of recording thereon, if applicable, concurrently with the execution

and delivery of this Agreement solely because of a delay caused by the public

recording office where such Mortgage, Assignments of Mortgage or assumption,

consolidation or modification, as the case may be, has been delivered for

recordation, the Depositor shall deliver or cause to be delivered to the Trustee

and the Custodian written notice stating that such Mortgage or assumption,

consolidation or modification, as the case may be, has been delivered to the

appropriate public recording office for recordation. Thereafter, the Depositor

shall deliver or cause to be delivered to the Custodian with notice to the

Trustee such Mortgage, Assignments of Mortgage or assumption, consolidation or

modification, as the case may be, with evidence of recording indicated thereon,

if applicable, upon receipt thereof from the public recording office. To the

extent any required endorsement is not contained on a Mortgage Note or an

Assignment of Mortgage, the Depositor shall make or cause such endorsement to be

made.

 

      In connection with the assignment of any MERS Mortgage Loan, the Seller

agrees that within 360 days of receipt of all information and documentation

required by MERS it will take (or shall cause the Servicing Administrator or the

Servicer to take), at the expense of the Seller (with the cooperation of the

Depositor and the Trustee), such actions as are necessary to cause the MERS

System to indicate that such Mortgage Loans have been assigned to the Trustee in

accordance with this Agreement for the benefit of the Certificateholders by

including (or deleting, in the case of Mortgage Loans that are repurchased in

accordance with this Agreement) in such computer files the information required

by the MERS System to identify the series of the Certificates issued in

connection with the transfer of such Mortgage Loans to the Trust.

 

      With respect to any Mortgage Loan that is not a Co-op Loan, none of the

Depositor, the Servicing Administrator, the Servicer (except as required in

accordance with Accepted Servicing Practices in connection with any delinquent

or defaulted Mortgage Loan), the Securities Administrator or the Trustee shall

be obligated to cause to be recorded the Assignment of Mortgage referred to in

this Section 2.01. With respect to any Mortgage Loan that is a Co-op Loan, none

of the Depositor, the Servicing Administrator, the Servicer, the Securities

Administrator or the Trustee shall be obligated to cause to be recorded the Form

UCC-3 referred to in this Section 2.01. In the event an Assignment of Mortgage

or a Form UCC-3 is not recorded, each of the Servicing Administrator, the

Seller, the Trustee, the Backup Servicer and the Servicer (except, with respect

to the Servicer, as required in accordance with Accepted Servicing Practices in

connection with any delinquent or defaulted Mortgage Loan) shall have no

liability for its failure to record the secured party's interest for such

Mortgage or Form UCC-3, as applicable, in the name of the Trustee, including

without limitation any failure to receive and act on notices related to such

Assignment of Mortgage or such Form UCC-3, as applicable.

 

      The ownership of each Mortgage Note, the Mortgage and the contents of the

related Mortgage File is vested in the Trustee on behalf of the

Certificateholders. None of the Depositor, the Servicing Administrator, the

Servicer nor the Securities Administrator shall take any action inconsistent

with such ownership and shall not claim any ownership interest therein. The

Depositor, the Servicing Administrator, the Servicer and Securities

Administrator shall respond to any third party inquiries with respect to

ownership of the Mortgage Loans by stating that such ownership is held by the

Trustee on behalf of the

 

 

                                      -57-

<PAGE>

 

Certificateholders. The Depositor agrees to take no action inconsistent with the

Trustee's ownership of the Mortgage Loans, to promptly indicate to all inquiring

parties that the Mortgage Loans have been sold and to claim no ownership

interest in the Mortgage Loans.

 

      It is the intention of this Agreement that the conveyance of the

Depositor's right, title and interest in and to the Trust Fund pursuant to this

Agreement shall constitute a purchase and sale and not a loan. If a conveyance

of Mortgage Loans from the Seller to the Depositor is characterized as a pledge

and not a sale, then the Depositor shall be deemed to have transferred to the

Trustee all of the Depositor's right, title and interest in, to and under the

obligations of the Seller deemed to be secured by said pledge; and it is the

intention of this Agreement that the Depositor shall also be deemed to have

granted to the Trustee a first priority security interest in all of the

Depositor's right, title, and interest in, to and under the obligations of the

Seller to the Depositor deemed to be secured by said pledge and that the Trustee

shall be deemed to be an independent custodian for purposes of perfection of the

security interest granted to the Depositor. If the conveyance of the Mortgage

Loans from the Depositor to the Trustee is characterized as a pledge, it is the

intention of this Agreement that this Agreement shall constitute a security

agreement under applicable law, and that the Depositor shall be deemed to have

granted to the Trustee a first priority security interest in all of the

Depositor's right, title and interest in, to and under the Mortgage Loans, all

payments of principal of or interest on such Mortgage Loans, all other rights

relating to and payments made in respect of the Trust Fund, and all proceeds of

any thereof. If the trust created by this Agreement terminates prior to the

satisfaction of the claims of any Person in any Certificates, the security

interest created hereby shall continue in full force and effect and the Trustee

shall be deemed to be the collateral agent for the benefit of such Person.

 

      In addition to the conveyance made in the first paragraph of this Section

2.01, the Depositor does hereby convey, assign and set over to the Trustee for

the benefit of the Certificateholders its rights and interests under the Sale

Agreement, including the Depositor's right, title and interest in the

representations and warranties contained in the Sale Agreement, the rights in

the Transfer Agreement described therein, and the benefit of the repurchase

obligations and the obligation of the Seller contained in the Sale Agreement to

take, at the request of the Depositor or the Trustee, all action on its part

which is reasonably necessary to ensure the enforceability of a Mortgage Loan.

The Trustee hereby accepts such assignment, and shall be entitled to exercise

all rights of the Depositor under the Sale Agreement as if, for such purpose, it

were the Depositor. The foregoing sale, transfer, assignment, set-over, deposit

and conveyance does not and is not intended to result in creation or assumption

by the Trustee of any obligation of the Depositor, the Seller, or any other

Person in connection with the Mortgage Loans or any other agreement or

instrument relating thereto.

 

      It is agreed and understood by the Depositor, the Servicer and the Trustee

that it is not intended that any Mortgage Loan be included in the Trust that is,

without limitation, a "High-Cost Home Loan" as defined in the Home Ownership and

Equity Protection Act of 1994 or any applicable anti-predatory lending laws,

including but not limited to (i) a "High-Cost Home Loan" as defined in the New

Jersey Home Ownership Act effective November 27, 2003, (ii) a "High-Cost Home

Loan" as defined in the New Mexico Home Loan Protection Act, effective January

1, 2004, (iii) the Massachusetts Predatory Home Loan Practices Act, effective

November 7, 2004 or (iv) a "High-Cost Home Loan" as defined in the Indiana

High-Cost Home Loan Law effective January 1, 2005.

 

             SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.

 

      The Trustee accepts its appointment as Trustee hereunder and, except as

set forth as an exception in the exception report (the "Exception Report")

delivered with the Initial Certification (the "Initial Certification") or the

Final Certification, acknowledges the Custodian's receipt, subject to the

provisions of Section 2.01 and subject to the review described below, of the

Mortgage Note for each Mortgage Loan

 

 

                                       -58-

<PAGE>

 

and delivery of a Mortgage File (but does not acknowledge receipt of all

documents required to be included in such Mortgage File) with respect to each

Mortgage Loan and declares that it (or the Custodian, as its designated agent)

holds and will hold such documents and any other documents constituting a part

of the Mortgage Files delivered to it in trust for the use and benefit of all

present and future Certificateholders and the Certificate Insurer. The Depositor

will cause the Seller to repurchase any Mortgage Loan to which a material

exception was taken in the Exception Report unless such exception is cured to

the satisfaction of the Securities Administrator within 90 Business Days of the

Closing Date (or the Subsequent Transfer Date with respect to Subsequent

Mortgage Loans).

 

      The Trustee agrees to cause the Custodian to deliver prior to the Closing

Date (or the Subsequent Transfer Date with respect to Subsequent Mortgage Loans)

to the Depositor, the Securities Administrator, the Certificate Insurer, the

Servicer and the Trustee an Initial Certification in the form annexed as Exhibit

B-1 to the Custodial Agreement. The Trustee shall not be under any duty or

obligation to inspect, review or examine such documents, instruments,

certificates or other papers to determine that the same are genuine, enforceable

or appropriate for the represented purpose or that they have actually been

recorded in the real estate records or that they are other than what they

purport to be on their face.

 

      Not later than 90 days after the Closing Date (or the Subsequent Transfer

Date with respect to Subsequent Mortgage Loans), the Custodial Agreement

requires the Custodian to deliver to the Depositor, the Seller, the Securities

Administrator, the Certificate Insurer and the Servicer a Final Certification in

the form annexed as Exhibit B-3 to the Custodial Agreement, with any applicable

exceptions noted thereon.

 

      If, in the course of such review, the Trustee is notified by the Custodian

that any document constituting a part of a Mortgage File does not meet the

requirements of Section 2.01, the Trustee shall cause the Custodian to list such

as an exception in the Final Certification; provided, however, that the Trustee

shall not make any determination as to whether (i) any endorsement is sufficient

to transfer all right, title and interest of the party so endorsing, as

noteholder or assignee thereof, in and to that Mortgage Note or (ii) any

assignment is in recordable form or is sufficient to effect the assignment of

and transfer to the assignee thereof under the mortgage to which the assignment

relates.

 

      The Seller shall promptly correct or cure such defect within 90 days from

the date it is so notified of such defect and provided with information

indicating the nature of the breach and, if the Seller does not correct or cure

such defect within such period, the Seller shall either (i) substitute for the

related Mortgage Loan pursuant to the provisions of Section 2.03(c), or (ii)

purchase such Mortgage Loan from the Trustee within 90 days from the date the

Seller was notified of such defect in writing at the Purchase Price of such

Mortgage Loan; provided, however, that if the cure, substitution or repurchase

of a Mortgage Loan pursuant to this provision is required by reason of a delay

in delivery of any documents by the appropriate recording office, then, provided

such defect does not cause such Mortgage Loan not to be a "qualified mortgage"

within the meaning of Section 860G(a)(3)(A) of the Code (as determined without

regard to Treasury Regulations Section 1.860G-2(a)(3)(iii) or any similar rule

that treats a defective obligation as a "qualified mortgage" for a temporary

period) the Seller shall be given 270 days from the Closing Date (or the

Subsequent Transfer Date with respect to Subsequent Mortgage Loans) to cure such

defect or, subject to the requirements of Section 2.03(c) hereof, substitute

for, or repurchase such Mortgage Loan; and further provided, that the Seller

shall have no liability for recording any Assignment of Mortgage in favor of the

Trustee or for the Seller's failure to record such Assignment of Mortgage, and

the Seller shall not be obligated to repurchase or cure any Mortgage Loan as to

which such Assignment of Mortgage is not recorded. Any such substitution

effected more than 90 days after the Closing Date shall not be effected prior to

the delivery to the Custodian of the Opinion of Counsel required by Section 2.05

hereof and any substitution shall not be effected prior to the additional

delivery to the Custodian of a Request for Release certifying that such Mortgage

Loan is a Replacement Mortgage Loan substantially in the form of Exhibit I and

the Mortgage File for any such substitute Mortgage Loan. The Purchase Price for

any such Mortgage

 

 

                                      -59-

<PAGE>

 

Loan shall be deposited by the Seller in the Certificate Account on or prior to

the Business Day immediately preceding the Distribution Date in the month

following the month of repurchase and, upon receipt of such deposit and

certification with respect thereto in the form of Exhibit I hereto, the

Custodian shall release the related Mortgage File to the Seller and shall

execute and deliver at such entity's request such instruments of transfer or

assignment prepared by such entity, in each case without recourse, as shall be

necessary to vest in such entity, or a designee, the Trustee's interest in any

Mortgage Loan released pursuant hereto.

 

      The Trustee shall request that the Seller correct or cure such omission,

defect or other irregularity, or substitute a Mortgage Loan pursuant to the

provisions of Section 2.03(c), within 90 days from the date the Seller was

notified of such omission or defect and provided with information indicating the

nature of the breach and, if the Seller does not correct or cure such omission

or defect within such period, the Trustee shall require that the Seller purchase

such Mortgage Loan from the Trust Fund within 90 days from the date the Trustee

notified the Seller of such omission, defect or other irregularity and provided

information indicating the nature of the breach at the Purchase Price of such

Mortgage Loan. The Purchase Price for any Mortgage Loan purchased pursuant to

this Section 2.02 shall be paid to the Servicer and deposited by the Servicer in

the Certificate Account, promptly upon receipt, and, upon receipt by the Trustee

of written notification of such deposit signed by a Servicing Officer, the

Trustee, upon receipt of a Request for Release, shall promptly release to the

Seller the related Mortgage File and the Trustee shall execute and deliver such

instruments of transfer or assignment, without recourse, as shall be requested

by the Seller and necessary to vest in the Seller or its designee, as the case

may be, any Mortgage Loan released pursuant hereto, and the Trustee shall have

no further responsibility with regard to such Mortgage Loan. It is understood

and agreed that the obligation of the Seller to purchase, cure or substitute 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 the Trustee on behalf of Certificateholders. The preceding

sentence shall not, however, limit any remedies available to the

Certificateholders, the Depositor, Securities Administrator or the Trustee

pursuant to the Sale Agreement and any Transfer Agreement. The Trustee shall be

under no duty or obligation to inspect, review and examine such documents,

instruments, certificates or other papers to determine that they are genuine,

enforceable, recordable or appropriate to the represented purpose, or that they

have actually been recorded, or that they are other than what they purport to be

on their face. The Servicer, the Servicing Administrator, the Securities

Administrator, the Credit Risk Manager and the Trustee shall keep confidential

the name of each Mortgagor except as required by this Agreement and the

Servicing Administrator, the Securities Administrator and the Trustee shall not

solicit any such Mortgagor for the purpose of refinancing the related Mortgage

Loan; notwithstanding anything herein to the contrary, the foregoing shall not

be construed to prohibit (i) disclosure of any and all information that is or

becomes publicly known, or information obtained from sources other than the

other parties hereto, (ii) disclosure of any and all information (A) if required

to do so by any applicable law, rule or regulation, (B) to any government agency

or regulatory body having or claiming authority to regulate or oversee any

aspect of Trustee's, the Servicer's, the Servicing Administrator's or the

Securities Administrator's business or that of their affiliates, (C) pursuant to

any subpoena, civil investigation demand or similar demand or request of any

court, regulatory authority, or arbitrator or pursuant to any arbitration to

which Trustee, the Servicer, the Servicing Administrator or the Securities

Administrator or any affiliate or officer, director, employer or shareholder

thereof is a party or (D) to any affiliate, independent or internal auditor,

agent, employee or attorney of Trustee, the Servicer, the Servicing

Administrator or the Securities Administrator having a need to know the same,

provided that such Person advises such recipient of the confidential nature of

the information being disclosed, or (iii) any other disclosure authorized by the

Depositor or Servicing Administrator.

 

      All of the Mortgage Files are being held by the Custodian pursuant to the

Custodial Agreement. Notwithstanding anything to the contrary contained herein,

the parties hereto acknowledge that the

 

 

                                      -60-

<PAGE>

 

functions of the Trustee or the Custodian, as the Trustee's agents with respect

to the custody, acceptance, inspection and release of the Mortgage Files

pursuant to this Agreement shall be performed by the Custodian pursuant to the

Custodial Agreement.

 

            SECTION 2.03. Representations, Warranties and Covenants of the

Depositor.

 

                  (a) The Depositor hereby represents and warrants to the

Servicer, the Servicing Administrator, the Securities Administrator, the Seller,

the Certificate Insurer and the Trustee as follows, as of the date hereof:

 

                        (i) The Depositor is duly organized and is validly

existing as a corporation in good standing under the laws of the State of

Delaware and has full power and authority (corporate and other) necessary to own

or hold its properties and to conduct its business as now conducted by it and to

enter into and perform its obligations under this Agreement and the Sale

Agreement.

 

            (ii) The Depositor has the full corporate power and authority to

      execute, deliver and perform, and to enter into and consummate the

      transactions contemplated by, this Agreement and the Sale Agreement and

      has duly authorized, by all necessary corporate action on its part, the

      execution, delivery and performance of this Agreement and the Sale

      Agreement; and this Agreement and the Sale Agreement, assuming the due

      authorization, execution and delivery hereof by the other parties hereto,

      constitutes a legal, valid and binding obligation of the Depositor,

      enforceable against the Depositor in accordance with its terms, subject,

      as to enforceability, to (i) bankruptcy, insolvency, reorganization,

      moratorium and other similar laws affecting creditors' rights generally

      and (ii) general principles of equity, regardless of whether enforcement

      is sought in a proceeding in equity or at law.

 

            (iii) The execution and delivery of this Agreement and the Sale

      Agreement by the Depositor, the consummation of the transactions

      contemplated by this Agreement and the Sale Agreement, and the fulfillment

      of or compliance with the terms hereof are in the ordinary course of

      business of the Depositor and will not (A) result in a material breach of

      any term or provision of the charter or by-laws of the Depositor or (B)

      materially conflict with, result in a violation or acceleration of, or

      result in a material default under, the terms of any other material

      agreement or instrument to which the Depositor is a party or by which it

      may be bound or (C) constitute a material violation of any statute, order

      or regulation applicable to the Depositor of any court, regulatory body,

      administrative agency or governmental body having jurisdiction over the

       Depositor; and the Depositor is not in breach or violation of any material

      indenture or other material agreement or instrument, or in violation of

      any statute, order or regulation of any court, regulatory body,

      administrative agency or governmental body having jurisdiction over it

      which breach or violation may materially impair the Depositor's ability to

      perform or meet any of its obligations under this Agreement.

 

            (iv) No litigation is pending, or, to the best of the Depositor's

      knowledge, threatened, against the Depositor that would materially and

      adversely affect the execution, delivery or enforceability of this

      Agreement and the Sale Agreement or the ability of the Depositor to

      perform its obligations under this Agreement and the Sale Agreement in

      accordance with the terms hereof.

 

            (v) No consent, approval, authorization or order of any court or

      governmental agency or body is required for the execution, delivery and

      performance by the Depositor of, or compliance by the Depositor with, this

      Agreement and the Sale Agreement or the consummation of the transactions

      contemplated hereby, or if any such consent, approval, authorization or

      order is required, the Depositor has obtained the same. The Depositor

      hereby represents and warrants

 

 

                                      -61-

<PAGE>

 

      to the Trustee with respect to each Mortgage Loan as of the Closing Date

      (or the Subsequent Transfer Date with respect to Subsequent Mortgage

      Loans), and following the transfer of the Mortgage Loans to it by the

      Seller, the Depositor had good title to the Mortgage Loans and the

      Mortgage Notes were subject to no offsets, claims, liens, mortgage,

      pledge, charge, security interest, defenses or counterclaims.

 

                  (b) The representations and warranties of each Transferor with

respect to the related Mortgage Loans in the applicable Transfer Agreement,

which have been assigned to the Trustee hereunder, were made as of the date

specified in the applicable Transfer Agreement (or underlying agreement, if such

Transfer Agreement is in the form of an assignment of a prior agreement). To the

extent that any fact, condition or event with respect to a Mortgage Loan

constitutes a breach of both (i) a representation or warranty of the applicable

Transferor under the applicable Transfer Agreement and (ii) a representation or

warranty of the Seller under the Sale Agreement, the obligations of the Seller

under the Sale Agreement shall be enforced and to the extent the Seller does not

fulfill its contracted obligations then the obligations of the applicable

Transferor shall be enforced under any applicable representation or warranty

made by it. The Trustee further acknowledges that the Depositor shall have no

obligation or liability with respect to any breach of any representation or

warranty with respect to the Mortgage Loans under any circumstances.