STANWICH ASSET ACCEPTANCE COMPANY, L.L.C.
Depositor
NEW CENTURY MORTGAGE CORPORATION,
Servicer
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2005
Carrington Home Equity Loan Trust, Series 2005-NC4
Asset-Backed Pass-Through Certificates
TABLE OF CONTENTS
<TABLE>
PAGE
----
ARTICLE I
DEFINITIONS....................................................................
3
SECTION 1.01
Defined
Terms..............................................................
3
SECTION 1.02
Allocation of Certain Interest
Shortfalls..................................
46
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES................
47
SECTION 2.01
Conveyance of the Mortgage
Loans...........................................
47
SECTION 2.02
Acceptance of REMIC I by
Trustee...........................................
49
SECTION 2.03
Repurchase or Substitution of Mortgage Loans by the Responsible
Party
and the
Seller.............................................................
51
SECTION 2.04
[Reserved].................................................................
53
SECTION 2.05
Representations, Warranties and Covenants of the
Servicer..................
53
SECTION 2.06
Issuance of the REMIC I Regular Interests and the Class R-I
Interest.......
56
SECTION 2.07
Conveyance of the REMIC I Regular Interests; Acceptance of REMIC II
by the
Trustee.............................................................
56
SECTION 2.08
Issuance of Class R
Certificates...........................................
56
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE
LOANS.............................
57
SECTION 3.01
Servicer to Act as
Servicer................................................
57
SECTION 3.02
Sub-Servicing Agreements Between Servicer and
Sub-Servicers................
59
SECTION 3.03
Successor
Sub-Servicers....................................................
60
SECTION 3.04
Liability of the
Servicer..................................................
60
SECTION 3.05
No Contractual Relationship Between Sub-Servicers, the Trustee or
the
Certificateholders.........................................................
60
SECTION 3.06
Assumption or Termination of Sub-Servicing Agreements by the
Trustee.......
61
SECTION 3.07
Collection of Certain Mortgage Loan
Payments...............................
61
SECTION 3.08
Sub-Servicing
Accounts.....................................................
62
SECTION 3.09
Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.....
62
SECTION 3.10
Custodial Account and Certificate
Account..................................
63
</TABLE>
-i-
TABLE OF CONTENTS
(continued)
<TABLE>
PAGE
----
SECTION 3.11
Withdrawals from the Custodial Account and Certificate
Account.............
65
SECTION 3.12
Investment of Funds in the Custodial Account and the Certificate
Account....................................................................
67
SECTION 3.13
[Reserved].................................................................
68
SECTION 3.14
Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity
Coverage...................................................................
68
SECTION 3.15
Enforcement of Due-On-Sale Clauses; Assumption
Agreements..................
69
SECTION 3.16
Realization Upon Defaulted Mortgage
Loans..................................
70
SECTION 3.17
Trustee to Cooperate; Release of Mortgage
Files............................
72
SECTION 3.18
Servicing
Compensation.....................................................
73
SECTION 3.19
Reports to the Trustee and Others; Custodial Account
Statements............
74
SECTION 3.20
Statement as to
Compliance.................................................
74
SECTION 3.21
Independent Public Accountants' Servicing
Report...........................
74
SECTION 3.22
Access to Certain
Documentation............................................
75
SECTION 3.23
Title, Management and Disposition of REO
Property..........................
75
SECTION 3.24
Obligations of the Servicer in Respect of Prepayment Interest
Shortfalls.................................................................
78
SECTION 3.25
Obligations of the Servicer in Respect of Mortgage Rates and
Monthly
Payments...................................................................
79
SECTION 3.26
Advance
Facility...........................................................
79
ARTICLE IV
PAYMENTS TO
CERTIFICATEHOLDERS.................................................
80
SECTION 4.01
Distributions..............................................................
80
SECTION 4.02
Statements to
Certificateholders...........................................
86
SECTION 4.03
Remittance Reports;
Advances...............................................
89
SECTION 4.04
Allocation of Realized
Losses..............................................
90
SECTION 4.05
Compliance with Withholding
Requirements...................................
92
SECTION 4.06
Exchange Commission; Additional
Information................................
93
SECTION 4.07
The Swap
Agreement.........................................................
94
SECTION 4.08
Tax Treatment of Swap Payments and Swap Termination
Payments...............
96
</TABLE>
-ii-
TABLE OF CONTENTS
(continued)
<TABLE>
PAGE
----
ARTICLE V
THE
CERTIFICATES...............................................................
96
SECTION 5.01
The
Certificates...........................................................
96
SECTION 5.02
Registration of Transfer and Exchange of
Certificates......................
98
SECTION 5.03
Mutilated, Destroyed, Lost or Stolen
Certificates..........................
104
SECTION 5.04
Persons Deemed
Owners......................................................
104
SECTION 5.05
Certain Available
Information..............................................
104
ARTICLE VI
THE DEPOSITOR AND THE
SERVICER.................................................
105
SECTION 6.01
Respective Liabilities of the Depositor and the
Servicer...................
105
SECTION 6.02
Merger or Consolidation of the Depositor or the
Servicer...................
105
SECTION 6.03
Limitation on Liability of the Depositor, the Servicer and
Others..........
105
SECTION 6.04
Limitation on Resignation of the
Servicer..................................
106
SECTION 6.05
Rights of the Depositor in Respect of the
Servicer.........................
107
ARTICLE VII
DEFAULT........................................................................
107
SECTION 7.01
Servicer Events of
Default.................................................
107
SECTION 7.02
Trustee to Act; Appointment of
Successor...................................
109
SECTION 7.03
Notification to
Certificateholders.........................................
110
SECTION 7.04
Waiver of Servicer Events of
Default.......................................
111
ARTICLE VIII CONCERNING THE
TRUSTEE.........................................................
111
SECTION 8.01
Duties of
Trustee..........................................................
111
SECTION 8.02
Certain Matters Affecting the
Trustee......................................
112
SECTION 8.03
Trustee Not Liable for Certificates or Mortgage
Loans......................
114
SECTION 8.04
Trustee May Own
Certificates...............................................
114
SECTION 8.05
Trustee's Fees and
Expenses................................................
114
SECTION 8.06
Eligibility Requirements for
Trustee.......................................
115
SECTION 8.07
Resignation and Removal of the
Trustee.....................................
115
SECTION 8.08
Successor
Trustee..........................................................
116
SECTION 8.09
Merger or Consolidation of
Trustee.........................................
116
SECTION 8.10
Appointment of Co-Trustee or Separate
Trustee..............................
116
SECTION 8.11
Trustee to Execute Swap
Agreement..........................................
117
</TABLE>
-iii-
TABLE OF CONTENTS
(continued)
<TABLE>
PAGE
----
SECTION 8.12
Appointment of Office or
Agency............................................
118
SECTION 8.13
Representations and Warranties of the
Trustee..............................
118
ARTICLE IX
TERMINATION....................................................................
118
SECTION 9.01
Termination Upon Repurchase or Liquidation of All Mortgage
Loans...........
118
SECTION 9.02
Additional Termination
Requirements........................................
120
ARTICLE X
REMIC
PROVISIONS...............................................................
121
SECTION 10.01 REMIC
Administration.......................................................
121
SECTION 10.02 Prohibited Transactions and
Activities.....................................
124
SECTION 10.03 Servicer and Trustee
Indemnification.......................................
124
ARTICLE XI
MISCELLANEOUS
PROVISIONS.......................................................
124
SECTION 11.01
Amendment..................................................................
124
SECTION 11.02 Recordation of Agreement;
Counterparts.....................................
126
SECTION 11.03 Limitation on Rights of
Certificateholders.................................
126
SECTION 11.04 Governing
Law..............................................................
127
SECTION 11.05
Notices....................................................................
127
SECTION 11.06 Severability of
Provisions.................................................
128
SECTION 11.07 Notice to Rating
Agencies..................................................
128
SECTION 11.08 Article and Section
References.............................................
129
SECTION 11.09 Grant of Security
Interest.................................................
129
SECTION 11.10 Intention of
Parties.......................................................
130
SECTION 11.11
Assignment.................................................................
130
SECTION 11.12 Inspection and Audit
Rights................................................
130
SECTION 11.13 Certificates Nonassessable and Fully
Paid..................................
131
SECTION 11.14 Third Party
Beneficiaries..................................................
131
ARTICLE XII
RIGHTS OF THE CLASS CE
CERTIFICATEHOLDER.......................................
131
SECTION 12.01 Reports and
Notices........................................................
131
SECTION 12.02 Class CE Certificateholder's Directions With Respect
to Defaulted
Mortgage
Loans.............................................................
133
</TABLE>
-iv-
Exhibits
--------
Exhibit A-1
Form of Class A-1 Certificate
Exhibit A-2
Form of Class A-2 Certificate
Exhibit A-3
Form of Class A-3 Certificate
Exhibit A-4
Form of Class M-1 Certificate
Exhibit A-5
Form of Class M-2 Certificate
Exhibit A-6
Form of Class M-3 Certificate
Exhibit A-7
Form of Class M-4 Certificate
Exhibit A-8
Form of Class M-5 Certificate
Exhibit A-9
Form of Class M-6 Certificate
Exhibit A-10
Form of Class M-7 Certificate
Exhibit A-11
Form of Class M-8 Certificate
Exhibit A-12
Form of Class M-9 Certificate
Exhibit A-13
Form of Class M-10 Certificate
Exhibit A-14
Form of Class CE Certificate
Exhibit A-15
Form of Class P Certificate
Exhibit A-16
Form of Class R Certificate
Exhibit B
[Reserved]
Exhibit C-1
Form of Trustee's Initial Certification
Exhibit C-2
Form of Trustee's Final Certification
Exhibit D
Form of Mortgage Loan Purchase Agreement
Exhibit E
Request for Release
Exhibit F-1
Form of Transferor Representation Letter and Form of Transferee
Representation Letter in Connection with Transfer of the
Private Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit F-2
Form of Transfer Affidavit and Agreement and Form of Transferor
Affidavit in Connection with Transfer of Residual Certificates
Exhibit G
Form of Certification with respect to ERISA and the Code
Exhibit H
Form of Lost Note Affidavit
Exhibit I-1
Form of Certification to Be Provided by the Servicer with Form
10-K
Exhibit I-2
Form of Certification to Be Provided to Servicer by the Trustee
Exhibit J
Form of Annual Statement as to Compliance
Exhibit K-1
Form of Swap Agreement
Exhibit K-2
Schedule of Swap Agreement Notional Balances
Exhibit L
Form of Report Pursuant to Section 12.01
Schedule 1
Mortgage Loan Schedule
Schedule 2
Prepayment Charge Schedule
-v-
This Pooling and Servicing Agreement, is dated and effective as of
July 1,
2005, among STANWICH ASSET ACCEPTANCE COMPANY, L.L.C. as Depositor,
NEW CENTURY
MORTGAGE CORPORATION as Servicer and DEUTSCHE BANK NATIONAL TRUST
COMPANY as
Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to be
issued
hereunder in multiple classes, which in the aggregate will evidence
the entire
beneficial ownership interest in each REMIC (as defined herein)
created
hereunder. The Trust Fund (as defined herein) will consist of a
segregated pool
of assets comprised of the Mortgage Loans and certain other related
assets
subject to this Agreement.
REMIC I
As provided herein, the Trustee will elect to treat the segregated
pool of
assets consisting of the Mortgage Loans and certain other related
assets (other
than any Servicer Prepayment Charge Payment Amounts, the Swap
Account and the
Swap Agreement) subject to this Agreement as a REMIC for federal
income tax
purposes, and such segregated pool of assets will be designated as
"REMIC I."
The Class R-I Interest will be the sole class of "residual
interests" in REMIC I
for purposes of the REMIC Provisions (as defined herein). The
following table
irrevocably sets forth the designation, the REMIC I Remittance
Rate, the initial
Uncertificated Balance and, for purposes of satisfying Treasury
regulation
Section 1.860G-1(a)(4)(iii), the "latest possible maturity date"
for each of the
REMIC I Regular Interests (as defined herein). None of the REMIC I
Regular
Interests will be certificated.
REMIC I
INITIAL
LATEST POSSIBLE
DESIGNATION
REMITTANCE RATE
UNCERTIFICATED BALANCE
MATURITY DATE(1)
-----------
---------------
----------------------
------------------
I-LTAA
Variable (2)
$678,605,702.40
April 25, 2027
I-LTA1
Variable (2)
$
3,070,520
November 25, 2031
I-LTA2
Variable (2)
$
978,750
September 25, 2035
I-LTA3
Variable (2)
$
1,081,810
September 25, 2035
I-LTM1
Variable (2)
$
290,830
September 25, 2035
I-LTM2
Variable (2)
$
259,670
September 25, 2035
I-LTM3
Variable (2)
$
180,040
September 25, 2035
I-LTM4
Variable (2)
$
270,060
September 25, 2035
I-LTM5
Variable (2)
$
117,720
September 25, 2035
I-LTM6
Variable (2)
$
114,250
September 25, 2035
I-LTM7
Variable (2)
$
93,480
September 25, 2035
I-LTM8
Variable (2)
$
69,250
September 25, 2035
I-LTM9
Variable (2)
$
131,570
September 25, 2035
I-LTM10
Variable (2)
$
55,390
September 25, 2035
I-LTZZ
Variable (2)
$
7,134,737.60
September 25, 2035
I-LTP
Variable (2)
$
100.00
September 25, 2035
----------
(1)
For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations,
the Distribution Date immediately following the maturity date for
the
Mortgage Loan with the latest maturity date has been designated as
the
"latest possible maturity date" for each REMIC I Regular Interest.
(2)
Calculated in accordance with the definition of "REMIC I Remittance
Rate"
herein.
REMIC II
As provided herein, the Trustee will elect to treat the segregated
pool of
assets consisting of the REMIC I Regular Interests as a REMIC for
federal income
tax purposes, and such segregated pool of assets will be designated
as "REMIC
II." The Class R-II Interest will evidence the sole class of
"residual
interests" in REMIC II for purposes of the REMIC Provisions under
federal income
tax law. The following table irrevocably sets forth the
designation, the
Pass-Through Rate, the initial aggregate Certificate Principal
Balance and, for
purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the
"latest possible maturity date" for the indicated Classes of
Certificates.
<TABLE>
INITIAL AGGREGATE
CERTIFICATE PRINCIPAL
LATEST POSSIBLE MATURITY
DESIGNATION
PASS-THROUGH RATE
BALANCE
DATE(1)
-----------
-----------------
---------------------
------------------------
Class A-1(2)
Variable(2)
$
307,052,000
November 25, 2027
Class A-2(2)
Variable(2)
$
97,875,000
September 25, 2031
Class A-3(2)
Variable(2)
$
108,181,000
September 25, 2035
Class M-1(2)
Variable(2)
$
29,083,000
September 25, 2035
Class M-2(2)
Variable(2)
$
25,967,000
September 25, 2035
Class M-3(2)
Variable(2)
$
18,004,000
September 25, 2035
Class M-4(2)
Variable(2)
$
27,006,000
September 25, 2035
Class M-5(2)
Variable(2)
$
11,772,000
September 25, 2035
Class M-6(2)
Variable(2)
$
11,425,000
September 25, 2035
Class M-7(2)
Variable(2)
$
9,348,000
September 25, 2035
Class M-8(2)
Variable(2)
$
6,925,000
September 25, 2035
Class M-9(2)
Variable(2)
$
13,157,000
September 25, 2035
Class M-10(2)
Variable(2)
$
5,539,000
September 25, 2035
Class CE (3)
Variable(4)
$
21,019,880
September 25, 2035
Class P
N/A(5)
$
100.00
September 25, 2035
</TABLE>
----------
(1)
For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations,
the Distribution Date immediately following the maturity date for
the
Mortgage Loans with the latest maturity date has been designated as
the
"latest possible maturity date" for each Class of Certificates.
(2)
Calculated in accordance with the definition of "Pass-Through Rate"
herein.
The Class A and Class M Certificates represent ownership of REMIC
II
Regular Interests, together with certain rights to payments to be
made from
amounts received under the Swap Agreement which payments are
treated for
federal income tax purposes as being made outside of REMIC II by
the holder
of the Class CE Certificates, as the owner of the Swap Agreement.
(3)
The Class CE Certificates will be comprised of two REMIC II Regular
Interests, a principal only regular interest designated REMIC II
Regular
Interest CE-PO and an interest only regular interest designated
REMIC II
Regular Interest CE-IO, each of which will be entitled to
distributions as
set forth herein.
(4)
The Class CE Certificates will accrue interest at its variable
Pass-Through
Rate on the Notional Amount of the Class CE-IO outstanding from
time to
time which notional amount shall equal the aggregate Uncertificated
Balance
of the REMIC I Regular Interests. The Class CE Certificates will
not accrue
interest on its Certificate Principal Balance. The rights of the
Holder of
the Class CE Certificates to payments from the Swap Agreement shall
be
outside and apart from its rights under the REMIC II Regular
Interests
CE-IO and CE-PO.
(5)
The Class P Certificates will not accrue interest.
As of the Cut-off Date, the Mortgage Loans had an aggregate Stated
Principal Balance equal to $702,638,786.40.
In consideration of the mutual agreements herein contained, the
Depositor,
the Servicer and the Trustee agree as follows:
2
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms. Whenever used in this Agreement,
including,
without limitation, in the Preliminary Statement hereto, the
following words and
phrases, unless the context otherwise requires, shall have the
meanings
specified in this Article. Unless otherwise specified, all
calculations
described herein shall be made on the basis of a 360-day year
consisting of
twelve 30-day months.
"Accepted Servicing Practices": The servicing standards set forth
in
Section 3.01.
"Accrued Certificate Interest": With respect to any Class A
Certificate,
Mezzanine Certificate and the Class CE Certificates and each
Distribution Date,
interest accrued during the related Interest Accrual Period at the
Pass-Through
Rate for such Certificate for such Distribution Date on the
Certificate
Principal Balance, in the case of the Class A Certificates and the
Mezzanine
Certificates, or on the Notional Amount, in the case of the Class
CE
Certificates, of such Certificate immediately prior to such
Distribution Date.
The Class P Certificates is not entitled to distributions in
respect of interest
and, accordingly, will not accrue interest. All distributions of
interest on the
Class A Certificates and the Mezzanine Certificates will be
calculated on the
basis of a 360-day year and the actual number of days in the
applicable Interest
Accrual Period. All distributions of interest on the Class CE
Certificates will
be based on a 360-day year consisting of twelve 30-day months.
Accrued
Certificate Interest with respect to each Distribution Date, as to
any Class A
Certificate, Mezzanine Certificate or the Class CE Certificates,
shall be
reduced by an amount equal to the portion allocable to such
Certificate pursuant
to Section 1.02 hereof of the sum of (a) the aggregate Prepayment
Interest
Shortfall, if any, for such Distribution Date to the extent not
covered by
payments pursuant to Section 3.24 and (b) the aggregate amount of
any Relief Act
Interest Shortfall, if any, for such Distribution Date. In
addition, Accrued
Certificate Interest with respect to each Distribution Date, as to
the Class CE
Certificates shall be reduced by an amount equal to the portion
allocable to the
Class CE Certificates of Realized Losses, if any, pursuant to
Section 4.04
hereof.
"Adjustable-Rate Mortgage Loan": Each of the Mortgage Loans
identified on
the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to
adjustment.
"Adjustment Date": With respect to each Adjustable-Rate Mortgage
Loan, the
first day of the month in which the Mortgage Rate of such Mortgage
Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date
following the
Cut-off Date as to each Adjustable-Rate Mortgage Loan is set forth
in the
Mortgage Loan Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance
made by the
Servicer in respect of any Distribution Date pursuant to Section
4.03.
"Advance Facility": As defined in Section 3.26(a).
"Advance Facility Trustee": As defined in Section 3.26(b).
3
"Advancing Person": As defined in Section 3.26(a) hereof.
"Affected Party": As defined in the Swap Agreement.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such
specified Person.
For the purposes of this definition, "control" when used with
respect to any
specified Person means the power to direct the management and
policies of such
Person, directly or indirectly, whether through the ownership of
voting
securities, by contract or otherwise, and the terms "controlling"
and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof
and supplements hereto.
"Allocated Realized Loss Amount": With respect to any Distribution
Date and
any Class of Mezzanine Certificates, the sum of (i) any Realized
Losses
allocated to such Class of Certificates on such Distribution Date
and (ii) the
amount of any Allocated Realized Loss Amount for such Class of
Certificates
remaining unpaid from the previous Distribution Date minus the
amount of the
increase in the related Certificate Principal Balance due to the
receipt of
Subsequent Recoveries as provided in Section 4.01.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent
instrument, in recordable form (excepting therefrom, if applicable,
the mortgage
recordation information which has not been required pursuant to
Section 2.01
hereof or returned by the applicable recorder's office), which is
sufficient
under the laws of the jurisdiction wherein the related Mortgaged
Property is
located to reflect of record the sale of the Mortgage, which
assignment, notice
of transfer or equivalent instrument may be in the form of one or
more blanket
assignments covering Mortgages secured by Mortgaged Properties
located in the
same county, if permitted by law.
"Available Distribution Amount": With respect to any Distribution
Date, an
amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in
the Custodial Account and Certificate Account as of the close of
business on the
related Determination Date, (b) the aggregate of any amounts
received in respect
of an REO Property withdrawn from any REO Account and deposited in
the
Certificate Account for such Distribution Date pursuant to Section
3.23, (c) the
aggregate of any amounts deposited in the Certificate Account by
the Servicer in
respect of Prepayment Interest Shortfalls for such Distribution
Date pursuant to
Section 3.24, (d) the aggregate of any Advances made by the
Servicer for such
Distribution Date pursuant to Section 4.03 and (e) the aggregate of
any Advances
made by the Trustee as successor Servicer or any other successor
Servicer for
such Distribution Date pursuant to Section 7.02, reduced (to not
less than
zero), by (2) the portion of the amount described in clause (1)(a)
above that
represents (i) Monthly Payments on the Mortgage Loans received from
a Mortgagor
on or prior to the Determination Date but due during any Due Period
subsequent
to the related Due Period, (ii) Principal Prepayments on the
Mortgage Loans
received after the related Prepayment Period (together with any
interest
payments received with such Principal Prepayments to the extent
they represent
the payment of interest accrued on the Mortgage Loans during a
period subsequent
to
4
the related Prepayment Period) (other than Prepayment Charges),
(iii)
Liquidation Proceeds and Insurance Proceeds received in respect of
the Mortgage
Loans after the related Prepayment Period, (iv) amounts
reimbursable or payable
to the Depositor, the Servicer, the Trustee, the Seller or any
Sub-Servicer
pursuant to Section 3.11, Section 3.12, Section 8.05 or otherwise
payable in
respect of Extraordinary Trust Fund Expenses, (v) the Trustee Fee
payable from
the Certificate Account pursuant to Section 8.05, (vi) amounts
deposited in the
Custodial Account or the Certificate Account in error, (vii) the
amount of any
Prepayment Charges collected by the Servicer in connection with the
Principal
Prepayment of any of the Mortgage Loans or any Servicer Prepayment
Charge
Payment Amount and (viii) any Net Swap Payments owed to the Swap
Counterparty
and Swap Termination Payments owed to the Swap Counterparty not due
to a Swap
Counterparty Trigger Event for such Distribution Date.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the
United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized
Loss
resulting from a Deficient Valuation or Debt Service Reduction.
"Bloomberg": As defined in Section 4.02.
"Book-Entry Certificate": The Class A Certificates and the
Mezzanine
Certificates for so long as the Certificates of such Class shall be
registered
in the name of the Depository or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to Section
5.01.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which
banking or savings and loan institutions in the State of
California, the State
of New York or in the city in which the Corporate Trust Office of
the Trustee is
located, are authorized or obligated by law or executive order to
be closed.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of
which
are more than a nominal amount in excess of the principal balance
of any
existing first mortgage or subordinate mortgage on the related
Mortgaged
Property and any closing costs related to such Refinance Mortgage
Loan.
"Certificate": Any one of the Carrington Home Equity Loan Trust,
Series
2005-NC4 Asset-Backed Pass-Through Certificates, Class A-1, Class
A-2, Class
A-3, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class
M-6, Class
M-7, Class M-8, Class M-9, Class M-10, Class CE, Class P and Class
R issued
under this Agreement.
"Certificate Account": The trust account or accounts created and
maintained
by the Trustee pursuant to Section 3.10(b), which shall be entitled
"Deutsche
Bank National Trust Company, as Trustee, in trust for the
registered holders of
Carrington Home Equity Loan Trust, Series 2005-NC4 Asset-Backed
Pass-Through
Certificates." The Certificate Account must be an Eligible Account.
5
"Certificate Factor": With respect to any Class of Regular
Certificates as
of any Distribution Date, a fraction, expressed as a decimal
carried to six
places, the numerator of which is the aggregate Certificate
Principal Balance
(or the Notional Amount, in the case of the Class CE Certificates)
of such Class
of Certificates on such Distribution Date (after giving effect to
any
distributions of principal and in the case of the Mezzanine
Certificates and the
Class CE Certificates, the allocations of Realized Losses in
reduction of the
Certificate Principal Balance (or the Notional Amount, in the case
of the Class
CE Certificates) of such Class of Certificates to be made on such
Distribution
Date), and the denominator of which is the initial aggregate
Certificate
Principal Balance (or the Notional Amount, in the case of the Class
CE
Certificates) of such Class of Certificates as of the Closing Date.
"Certificate Margin": With respect to each class of the Class A
Certificates and Mezzanine Certificates and, for purposes of the
Marker Rate and
the Maximum I-LTZZ Uncertificated Interest Deferral Amount, the
specified REMIC
I Regular Interest, as follows:
Margin
---------------
Class
REMIC I Regular Interest
(1)(%)
(2)(%)
-----
------------------------
------
------
A-1
0.150%
0.300%
A-2
0.270%
0.540%
A-3
0.400%
0.800%
M-1
0.480%
0.720%
M-2
0.500%
0.750%
M-3
0.530%
0.795%
M-4
0.750%
1.125%
M-5
0.800%
1.200%
M-6
1.400%
2.100%
M-7
1.550%
2.325%
M-8
1.850%
2.775%
M-9
2.150%
3.225%
M-10
2.150%
3.225%
----------
(1)
For each Interest Accrual Period for each Distribution Date on or
prior to
the Optional Termination Date.
(2)
For each Interest Accrual Period thereafter.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is
registered in the Certificate Register, except that a Disqualified
Organization
or a Non-United States Person shall not be a Holder of a Residual
Certificate
for any purpose hereof and, solely for the purpose of giving any
consent
pursuant to this Agreement, any Certificate registered in the name
of the
Depositor or the Servicer or any Affiliate thereof shall be deemed
not to be
outstanding and the Voting Rights to which it is entitled shall not
be taken
into account in determining whether the requisite percentage of
Voting Rights
necessary to effect any such consent has been obtained, except as
otherwise
provided in Section 11.01. The Trustee may conclusively rely upon a
certificate
of the Depositor or the Servicer in determining whether a
Certificate is held by
an Affiliate thereof. All references herein to "Holders" or
"Certificateholders"
shall reflect the rights of Certificate Owners as they may
indirectly exercise
such rights through the Depository and participating members
thereof, except as
otherwise specified herein; provided, however, that the Trustee
shall be
required to recognize as a "Holder" or "Certificateholder" only the
Person in
whose name a Certificate is registered in the Certificate Register.
6
"Certificate Owner": With respect to a Book-Entry Certificate, the
Person
who is the beneficial owner of such Certificate as reflected on the
books of the
Depository or on the books of a Depository Participant or on the
books of an
indirect participating brokerage firm for which a Depository
Participant acts as
agent.
"Certificate Principal Balance": With respect to each Class A
Certificate,
Mezzanine Certificate or Class P Certificate as of any date of
determination,
the Certificate Principal Balance of such Certificate on the
Distribution Date
immediately prior to such date of determination plus any Subsequent
Recoveries
added to the Certificate Principal Balance of such Certificate
pursuant to
Section 4.01, minus all distributions allocable to principal made
thereon and,
in the case of the Mezzanine Certificates, Realized Losses
allocated thereto on
such immediately prior Distribution Date (or, in the case of any
date of
determination up to and including the first Distribution Date, the
initial
Certificate Principal Balance of such Certificate, as stated on the
face
thereof). With respect to each Class CE Certificates as of any date
of
determination, an amount equal to the Percentage Interest evidenced
by such
Certificate times the excess, if any, of (A) the then aggregate
Uncertificated
Balance of the REMIC I Regular Interests over (B) the then
aggregate Certificate
Principal Balance of the Class A Certificates, the Mezzanine
Certificates and
the Class P Certificates then outstanding.
"Certificate Register": The register maintained pursuant to Section
5.02.
"Class": Collectively, all of the Certificates bearing the same
class
designation.
"Class A-1 Certificates": Any one of the Class A-1 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-1 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class A-2 Certificates": Any one of the Class A-2 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-2 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class A-3 Certificates": Any one of the Class A-3 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-3 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class A Certificates": Collectively, the Class A-1 Certificates,
the Class
A-2 Certificates and the Class A-3 Certificates.
"Class A Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the aggregate Certificate Principal Balance
of the Class
A Certificates immediately prior to such Distribution Date over (y)
the lesser
of (A) the product of (i) 48.20% and (ii) the aggregate Stated
Principal Balance
of the Mortgage Loans as of the last day of the related Due Period
and (B) the
excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans
as of the last day of the related Due Period over the
Overcollateralization
Floor Amount.
7
"Class CE Certificate": Any one of the Class CE Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-13 and evidencing a Regular Interest in REMIC
II for
purposes of the REMIC Provisions together with certain rights to
payments under
the Swap Agreement.
"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-4 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates
immediately
prior to such Distribution Date over (y) the lesser of (A) the
product of (i)
56.60% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as
of the last day of the related Due Period and (B) the excess, if
any, of the
aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of
the related Due Period over the Overcollateralization Floor Amount.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-5 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date), (ii)
the Certificate Principal Balance of the Class M-1 Certificates
(after taking
into account the distribution of the Class M-1 Principal
Distribution Amount on
such Distribution Date) and (iii) the Certificate Principal Balance
of the Class
M-2 Certificates immediately prior to such Distribution Date over
(y) the lesser
of (A) the product of (i) 64.10% and (ii) the aggregate Stated
Principal Balance
of the Mortgage Loans as of the last day of the related Due Period
and (B) the
excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans
as of the last day of the related Due Period over the
Overcollateralization
Floor Amount.
"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-6 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after
8
taking into account the distribution of the Class A Principal
Distribution
Amount on such Distribution Date), (ii) the Certificate Principal
Balance of the
Class M-1 Certificates (after taking into account the distribution
of the Class
M-1 Principal Distribution Amount on such Distribution Date), (iii)
the
Certificate Principal Balance of the Class M-2 Certificates (after
taking into
account the distribution of the Class M-2 Principal Distribution
Amount on such
Distribution Date) and (iv) the Certificate Principal Balance of
the Class M-3
Certificates immediately prior to such Distribution Date over (y)
the lesser of
(A) the product of (i) 69.30% and (ii) the aggregate Stated
Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and
(B) the
excess, if any, of the aggregate Stated Principal Balance of the
Mortgage Loans
as of the last day of the related Due Period over the
Overcollateralization
Floor Amount.
"Class M-4 Certificate": Any one of the Class M-4 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-7 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-4 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date), (ii)
the Certificate Principal Balance of the Class M-1 Certificates
(after taking
into account the distribution of the Class M-1 Principal
Distribution Amount on
such Distribution Date), (iii) the Certificate Principal Balance of
the Class
M-2 Certificates (after taking into account the distribution of the
Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the
Certificate
Principal Balance of the Class M-3 Certificates (after taking into
account the
distribution of the Class M-3 Principal Distribution Amount on such
Distribution
Date) and (v) the Certificate Principal Balance of the Class M-4
Certificates
immediately prior to such Distribution Date over (y) the lesser of
(A) the
product of (i) 77.10% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period and (B)
the excess,
if any, of the aggregate Stated Principal Balance of the Mortgage
Loans as of
the last day of the related Due Period over the
Overcollateralization Floor
Amount.
"Class M-5 Certificate": Any one of the Class M-5 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-8 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-5 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date), (ii)
the Certificate Principal Balance of the Class M-1 Certificates
(after taking
into account the distribution of the Class M-1 Principal
Distribution Amount on
such Distribution Date), (iii) the Certificate Principal Balance of
the Class
M-2 Certificates (after taking into account the distribution of the
Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the
Certificate
Principal Balance of the Class M-3 Certificates (after taking into
account the
distribution of the Class M-3 Principal Distribution Amount on such
Distribution
Date), (v) the Certificate Principal Balance of the Class M-4
Certificates
9
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-4 Principal Distribution Amount on such
Distribution
Date) and (vi) the Certificate Principal Balance of the Class M-5
Certificates
immediately prior to such Distribution Date over (y) the lesser of
(A) the
product of (i) 80.50% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period and (B)
the excess,
if any, of the aggregate Stated Principal Balance of the Mortgage
Loans as of
the last day of the related Due Period over the
Overcollateralization Floor
Amount.
"Class M-6 Certificate": Any one of the Class M-6 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-9 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-6 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date), (ii)
the Certificate Principal Balance of the Class M-1 Certificates
(after taking
into account the distribution of the Class M-1 Principal
Distribution Amount on
such Distribution Date), (iii) the Certificate Principal Balance of
the Class
M-2 Certificates (after taking into account the distribution of the
Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the
Certificate
Principal Balance of the Class M-3 Certificates (after taking into
account the
distribution of the Class M-3 Principal Distribution Amount on such
Distribution
Date), (v) the Certificate Principal Balance of the Class M-4
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-4 Principal Distribution Amount on such
Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-5 Principal Distribution Amount on such
Distribution
Date) and (vii) the Certificate Principal Balance of the Class M-6
Certificates
immediately prior to such Distribution Date over (y) the lesser of
(A) the
product of (i) 83.80% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the related Due Period and (B)
the excess,
if any, of the aggregate Stated Principal Balance of the Mortgage
Loans as of
the last day of the related Due Period over the
Overcollateralization Floor
Amount.
"Class M-7 Certificate": Any one of the Class M-7 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-10 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-7 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date), (ii)
the Certificate Principal Balance of the Class M-1 Certificates
(after taking
into account the distribution of the Class M-1 Principal
Distribution Amount on
such Distribution Date), (iii) the Certificate Principal Balance of
the Class
M-2 Certificates (after taking into account the distribution of the
Class M-2
Principal Distribution Amount on such
10
Distribution Date), (iv) the Certificate Principal Balance of the
Class M-3
Certificates (after taking into account the distribution of the
Class M-3
Principal Distribution Amount on such Distribution Date), (v) the
Certificate
Principal Balance of the Class M-4 Certificates immediately prior
to such
Distribution Date (after taking into account the distribution of
the Class M-4
Principal Distribution Amount on such Distribution Date), (vi) the
Certificate
Principal Balance of the Class M-5 Certificates immediately prior
to such
Distribution Date (after taking into account the distribution of
the Class M-5
Principal Distribution Amount on such Distribution Date), (vii) the
Certificate
Principal Balance of the Class M-6 Certificates immediately prior
to such
Distribution Date (after taking into account the distribution of
the Class M-6
Principal Distribution Amount on such Distribution Date), the
Certificate
Principal Balance of the Class M-6 Certificates immediately prior
to such
Distribution Date (after taking into account the distribution of
the Class M-6
Principal Distribution Amount on such Distribution Date) and (viii)
the
Certificate Principal Balance of the Class M-7 Certificates
immediately prior to
such Distribution Date over (y) the lesser of (A) the product of
(i) 86.50% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans
as of the last
day of the related Due Period and (B) the excess, if any, of the
aggregate
Stated Principal Balance of the Mortgage Loans as of the last day
of the related
Due Period over the Overcollateralization Floor Amount.
"Class M-8 Certificate": Any one of the Class M-8 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-11 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-8 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date), (ii)
the Certificate Principal Balance of the Class M-1 Certificates
(after taking
into account the distribution of the Class M-1 Principal
Distribution Amount on
such Distribution Date), (iii) the Certificate Principal Balance of
the Class
M-2 Certificates (after taking into account the distribution of the
Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the
Certificate
Principal Balance of the Class M-3 Certificates (after taking into
account the
distribution of the Class M-3 Principal Distribution Amount on such
Distribution
Date), (v) the Certificate Principal Balance of the Class M-4
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-4 Principal Distribution Amount on such
Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-5 Principal Distribution Amount on such
Distribution
Date), (vii) the Certificate Principal Balance of the Class M-6
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-6 Principal Distribution Amount on such
Distribution
Date), the Certificate Principal
11
Balance of the Class M-6 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-6
Principal
Distribution Amount on such Distribution Date), (viii) the
Certificate Principal
Balance of the Class M-7 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-7
Principal
Distribution Amount on such Distribution Date), the Certificate
Principal
Balance of the Class M-7 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-7
Principal
Distribution Amount on such Distribution Date), and (ix) the
Certificate
Principal Balance of the Class M-8 Certificates immediately prior
to such
Distribution Date over (y) the lesser of (A) the product of (i)
88.50% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of
the last day
of the related Due Period and (B) the excess, if any, of the
aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the
related Due
Period over the Overcollateralization Floor Amount.
"Class M-9 Certificate": Any one of the Class M-9 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-12 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-9 Principal Distribution Amount": With respect to any
Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal
Balance of the Class A Certificates (after taking into account the
distribution
of the Class A Principal Distribution Amount on such Distribution
Date), (ii)
the Certificate Principal Balance of the Class M-1 Certificates
(after taking
into account the distribution of the Class M-1 Principal
Distribution Amount on
such Distribution Date), (iii) the Certificate Principal Balance of
the Class
M-2 Certificates (after taking into account the distribution of the
Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the
Certificate
Principal Balance of the Class M-3 Certificates (after taking into
account the
distribution of the Class M-3 Principal Distribution Amount on such
Distribution
Date), (v) the Certificate Principal Balance of the Class M-4
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-4 Principal Distribution Amount on such
Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-5 Principal Distribution Amount on such
Distribution
Date), (vii) the Certificate Principal Balance of the Class M-6
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-6 Principal Distribution Amount on such
Distribution
Date), the Certificate Principal Balance of the Class M-6
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-6 Principal Distribution Amount on such
Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-7 Principal Distribution Amount on such
Distribution
Date), the Certificate Principal Balance of the Class M-7
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-7 Principal Distribution Amount on such
Distribution
Date), (ix) the Certificate Principal Balance of the Class M-8
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-8 Principal Distribution Amount on such
Distribution
Date), the Certificate Principal Balance of the Class M-8
Certificates
immediately prior to such Distribution Date (after taking into
account the
distribution of the Class M-8 Principal Distribution Amount on such
Distribution
Date), and (x) the Certificate Principal Balance of the Class M-9
Certificates
immediately prior to such Distribution Date over (y) the lesser of
(A) the
product of (i) 92.30% and (ii) the aggregate Stated Principal
Balance of the
Mortgage Loans as of the last day of the
12
related Due Period and (B) the excess, if any, of the aggregate
Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due
Period over
the Overcollateralization Floor Amount.
"Class M-10 Certificate": Any one of the Class M-10 Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-13 and evidencing (i) a Regular Interest in
REMIC II for
purposes of the REMIC Provisions and (ii) the right to receive
payments from the
Swap Account to the extent described herein.
"Class M-10 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate
Principal Balance of the Class A Certificates (after taking into
account the
distribution of the Class A Principal Distribution Amount on such
Distribution
Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates
(after taking into account the distribution of the Class M-1
Principal
Distribution Amount on such Distribution Date), (iii) the
Certificate Principal
Balance of the Class M-2 Certificates (after taking into account
the
distribution of the Class M-2 Principal Distribution Amount on such
Distribution
Date), (iv) the Certificate Principal Balance of the Class M-3
Certificates
(after taking into account the distribution of the Class M-3
Principal
Distribution Amount on such Distribution Date), (v) the Certificate
Principal
Balance of the Class M-4 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-4
Principal
Distribution Amount on such Distribution Date), (vi) the
Certificate Principal
Balance of the Class M-5 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-5
Principal
Distribution Amount on such Distribution Date), (vii) the
Certificate Principal
Balance of the Class M-6 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-6
Principal
Distribution Amount on such Distribution Date), the Certificate
Principal
Balance of the Class M-6 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-6
Principal
Distribution Amount on such Distribution Date), (viii) the
Certificate Principal
Balance of the Class M-7 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-7
Principal
Distribution Amount on such Distribution Date), the Certificate
Principal
Balance of the Class M-7 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-7
Principal
Distribution Amount on such Distribution Date), (ix) the
Certificate Principal
Balance of the Class M-8 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-8
Principal
Distribution Amount on such Distribution Date), (x) the Certificate
Principal
Balance of the Class M-8 Certificates immediately prior to such
Distribution
Date (after taking into account the distribution of the Class M-9
Principal
Distribution Amount on such Distribution Date) and (xi) the
Certificate
Principal Balance of the Class M-10 Certificates immediately prior
to such
Distribution Date over (y) the lesser of (A) the product of (i)
93.90% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of
the last day
of the related Due Period and (B) the excess, if any, of the
aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the
related Due
Period over the Overcollateralization Floor Amount.
13
"Class P Certificate": Any one of the Class P Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-14 and evidencing a Regular Interest in REMIC
II for
purposes of the REMIC Provisions.
"Class Principal Distribution Amount": The Class A Principal
Distribution
Amount, Class M-1 Principal Distribution Amount, Class M-2
Principal
Distribution Amount, Class M-3 Principal Distribution Amount, Class
M-4
Principal Distribution Amount, Class M-5 Principal Distribution
Amount, Class
M-6 Principal Distribution Amount, Class M-7 Principal Distribution
Amount,
Class M-8 Principal Distribution Amount, Class M-9 Principal
Distribution Amount
or Class M-10 Principal Distribution Amount.
"Class R Certificate": Any one of the Class R Certificates
executed,
authenticated and delivered by the Trustee, substantially in the
form annexed
hereto as Exhibit A-15 and evidencing the ownership of the Class
R-I Interest
and the Class R-II Interest.
"Class R-I Interest": The uncertificated Residual Interest in REMIC
I.
"Class R-II Interest": The uncertificated Residual Interest in
REMIC II.
"Closing Date": August 16, 2005.
"Code": The Internal Revenue Code of 1986, as amended.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office of
the
Trustee at which at any particular time its corporate trust
business in
connection with this Agreement shall be administered, which office
at the date
of the execution of this instrument is located at 1761 East St.
Andrew Place,
Santa Ana, California 92705-4934, Attn: CA0504, or at such other
address as the
Trustee may designate from time to time by notice to the
Certificateholders, the
Depositor and the Servicer.
"Corresponding Certificate": With respect to each REMIC I Regular
Interest
set forth below, the Regular Certificate set forth in the table
below:
REMIC I REGULAR INTEREST
CERTIFICATE
------------------------
-----------
I-LTA1
Class A-1
I-LTA2
Class A-2
I-LTA3
Class A-3
I-LTM1
Class M-1
I-LTM2
Class M-2
I-LTM3
Class M-3
I-LTM4
Class M-4
I-LTM5
Class M-5
I-LTM6
Class M-6
I-LTM7
Class M-7
I-LTM8
Class M-8
I-LTM9
Class M-9
I-LTM10
Class M-10
I-LTP
Class P
14
"Credit Enhancement Percentage": For any Distribution Date, the
percentage
equivalent of a fraction, the numerator of which is the sum of the
aggregate
Certificate Principal Balances of the Mezzanine Certificates and
the Class CE
Certificates calculated after taking into account payments of
principal on the
Mortgage Loans and distribution of the Principal Distribution
Amount to the
Certificates then entitled to distributions of principal on such
Distribution
Date, and the denominator of which is the aggregate Stated
Principal Balance of
the Mortgage Loans as of the last day of the related Due Period.
"Custodial Account": The account or accounts created and
maintained, or
caused to be created and maintained, by the Servicer pursuant to
Section
3.10(a), which shall be entitled "New Century Mortgage Corporation,
as Servicer
for Deutsche Bank National Trust Company, as Trustee, in trust for
the
registered holders of Carrington Home Equity Loan Trust, Series
2005-NC4,
Asset-Backed Pass-Through Certificates." The Custodial Account must
be an
Eligible Account.
"Cut-off Date": With respect to each Original Mortgage Loan, August
1,
2005. With respect to all Qualified Substitute Mortgage Loans,
their respective
dates of substitution. References herein to the "Cut-off Date,"
when used with
respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates
for each such Mortgage Loan.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of
competent
jurisdiction in a proceeding under the Bankruptcy Code, except such
a reduction
resulting from a Deficient Valuation.
"Defaulting Party": As defined in the Swap Agreement.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of
the related Mortgaged Property by a court of competent jurisdiction
in an amount
less than the then outstanding Stated Principal Balance of the
Mortgage Loan,
which valuation results from a proceeding initiated under the
Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by a
Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of the related Due
Period, the
percentage equivalent of a fraction, the numerator of which is the
aggregate
Stated Principal Balance of the Rolling Three-Month Delinquency
Rate of the
Mortgage Loans that, as of the last day of the previous calendar
month, are 60
or more days delinquent, are in foreclosure, have been converted to
REO
Properties or have been discharged by reason of bankruptcy, and the
denominator
of which is the aggregate Stated Principal Balance of the Mortgage
Loans and REO
Properties as of the last day of the previous calendar month;
provided, however,
that any
15
Mortgage Loan purchased by the Servicer pursuant to Section 3.16(c)
shall not be
included in either the numerator or the denominator for purposes of
calculating
the Delinquency Percentage.
"Depositor": Stanwich Asset Acceptance Company, L.L.C., a Delaware
limited
liability company, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository
hereafter named. The nominee of the initial Depository, for
purposes of
registering those Certificates that are to be Book-Entry
Certificates, is Cede &
Co. The Depository shall at all times be a "clearing corporation"
as defined in
Section 8-102(a)(5) of the Uniform Commercial Code of the State of
New York and
a "clearing agency" registered pursuant to the provisions of
Section 17A of the
Exchange Act.
"Depository Institution": Any depository institution or trust
company,
including the Trustee, that (a) is incorporated under the laws of
the United
States of America or any State thereof, (b) is subject to
supervision and
examination by federal or state banking authorities and (c) has
outstanding
unsecured commercial paper or other short-term unsecured debt
obligations (or,
in the case of a depository institution that is the principal
subsidiary of a
holding company, such holding company has unsecured commercial
paper or other
short-term unsecured debt obligations) that are rated at least P-1
by Moody's,
F-1 by Fitch (if rated by Fitch) and A-1+ by S&P.
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to each Distribution Date, the
15th day
of the calendar month in which such Distribution Date occurs or, if
such 15th
day is not a Business Day, the Business Day immediately preceding
such 15th day.
"Directly Operate": With respect to any REO Property, the
furnishing or
rendering of services to the tenants thereof, the management or
operation of
such REO Property, the holding of such REO Property primarily for
sale to
customers, the performance of any construction work thereon or any
use of such
REO Property in a trade or business conducted by REMIC I other than
through an
Independent Contractor; provided, however, that the Trustee (or the
Servicer on
behalf of the Trustee) shall not be considered to Directly Operate
an REO
Property solely because the Trustee (or the Servicer on behalf of
the Trustee)
establishes rental terms, chooses tenants, enters into or renews
leases, makes
payment on or otherwise discharges tax or insurance obligations, or
makes
decisions as to repairs or capital expenditures with respect to
such REO
Property.
"Disqualified Organization": Any organization defined as a
"disqualified
organization" under Section 860E(e)(5) of the Code, including, if
not otherwise
included, any of the following: (i) the United States, any State or
political
subdivision thereof, any possession of the United States, or any
agency or
instrumentality of any of the foregoing (other than an
instrumentality which is
a corporation if all of its activities are subject to tax and,
except for
Freddie Mac, a
16
majority of its board of directors is not selected by such
governmental unit),
(ii) any foreign government, any international organization, or any
agency or
instrumentality of any of the foregoing, (iii) any organization
(other than
certain farmers' cooperatives described in Section 521 of the Code)
which is
exempt from the tax imposed by Chapter 1 of the Code (including the
tax imposed
by Section 511 of the Code on unrelated business taxable income),
(iv) rural
electric and telephone cooperatives described in Section
1381(a)(2)(C) of the
Code, (v) an "electing large partnership" and (vi) any other Person
as set forth
in an Opinion of Counsel delivered to the Trustee and the Depositor
to the
effect that the holding of an Ownership Interest in a Residual
Certificate by
such Person may cause any Trust REMIC or any Person having an
Ownership Interest
in any Class of Certificates (other than such Person) to incur a
liability for
any federal tax imposed under the Code that would not otherwise be
imposed but
for the Transfer of an Ownership Interest in a Residual Certificate
to such
Person. The terms "United States," "State" and "international
organization"
shall have the meanings set forth in Section 7701 of the Code or
successor
provisions.
"Distribution Date": The 25th day of any month, or if such 25th day
is not
a Business Day, the Business Day immediately following such 25th
day, commencing
in September 2005.
"Due Date": With respect to each Mortgage Loan and any Distribution
Date,
the first day of the calendar month in which such Distribution Date
occurs on
which the Monthly Payment for such Mortgage Loan was due (or, in
the case of any
Mortgage Loan under terms of which the Monthly Payment for such
Mortgage Loan
was due on a day other than the first day of the calendar month in
which such
Distribution Date occurs, the day during the related Due Period on
which such
Monthly Payment was due), in each case exclusive of any days of
grace.
"Due Period": With respect to any Distribution Date, the period
commencing
on the second day of the month immediately preceding the month in
which such
Distribution Date occurs and ending on the first day of the month
of such
Distribution Date.
"EDGAR": As defined in Section 4.06.
"Eligible Account": Any of (i) an account or accounts maintained
with a
Depository Institution, (ii) an account or accounts the deposits in
which are
fully insured by the FDIC or (iii) a segregated non-interest
bearing trust
account or accounts maintained with the corporate trust department
of a federal
depository institution or state-chartered depository institution
subject to
regulations regarding fiduciary funds on deposit similar to Title
12 of the Code
of Federal Regulation Section 9.10(b), which, in either case, has
corporate
trust powers, acting in its fiduciary capacity.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution
Date, the
excess, if any, of (i) the Overcollateralization Amount for such
Distribution
Date (calculated for this purpose only after assuming that 100% of
the Principal
Remittance Amount on such Distribution Date has been distributed)
over (ii) the
Overcollateralization Target Amount for such Distribution Date.
17
"Exchange Act": As defined in Section 4.06.
"Expense Adjusted Mortgage Rate": With respect to any Mortgage Loan
(or the
related REO Property) and any Distribution Date, a per annum rate
of interest
equal to the then applicable Mortgage Rate thereon as of the first
day of the
related Due Period minus the sum of (i) the Trustee Fee Rate and
(ii) the
Servicing Fee Rate.
"Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee
or any director, officer, employee or agent of the Trustee from the
Trust Fund
pursuant to Section 8.05 or Section 10.01(c) and any amounts
payable from the
Certificate Account in respect of taxes pursuant to Section
10.01(g)(iii) and
any costs of the Trustee for the recording of the Assignments
pursuant to
Section 2.01 (to the extent the Seller is unable to pay such
costs).
"Fannie Mae": 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": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property
purchased by the
Responsible Party, the Depositor or the Servicer pursuant to or as
contemplated
by Section 2.03, Section 3.16(c) or Section 9.01), a determination
made by the
Servicer that all Insurance Proceeds, Liquidation Proceeds and
other payments or
recoveries which the Servicer, in its reasonable good faith
judgment, expects to
be finally recoverable in respect thereof have been so recovered.
The Servicer
shall maintain records, prepared by a Servicing Officer, of each
Final Recovery
Determination made thereby.
"Fitch": Fitch Ratings, or its successor in interest.
"Fixed Swap Payment": With respect to any Distribution Date on or
prior to
the distribution date in December 2008, an amount equal to the
product of (x) a
fixed rate equal to 4.409% per annum, (y) the Swap Agreement
Notional Balance
for that Distribution Date and (z)(i) with respect to the initial
Distribution
Date, a fraction, the numerator of which is 40 and the denominator
of which is
360 and (ii) with respect to each Distribution Date thereafter, a
fraction, the
numerator of which is 30 and the denominator of which is 360.
"Floating Swap Payment": With respect to any Distribution Date on
or prior
to the Distribution Date in December 2008, an amount equal to the
product of (x)
Swap LIBOR as determined pursuant to the Swap Agreement, (y) the
Swap Agreement
Notional Balance for that Distribution Date and (z) a fraction, the
numerator of
which is equal to the number of days in the related calculation
period as
provided in the Swap Agreement and the denominator of which is 360.
"Formula Rate": For any Distribution Date and the Class A
Certificates and
the Mezzanine Certificates, One-Month LIBOR plus the related
Margin.
18
"Freddie Mac": 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.
"Gross Margin": With respect to each Adjustable-Rate Mortgage Loan,
the
fixed percentage set forth in the related Mortgage Note that is
added to the
Index on each Adjustment Date in accordance with the terms of the
related
Mortgage Note used to determine the Mortgage Rate for such
Adjustable-Rate
Mortgage Loan.
"Highest Priority": As of any date of determination, the Class of
Mezzanine
Certificates then outstanding with a Certificate Principal Balance
greater than
zero, with the highest priority for payments pursuant to Section
4.01, in the
following order: Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class
M-6, Class M-7, Class M-8, Class M-9 and Class M-10 Certificates.
"Indenture": An indenture relating to the issuance of notes secured
by the
Class CE Certificates, the Class P Certificates and/or the Class R
Certificates
(or any portion thereof).
"Independent": When used with respect to any specified Person, any
such
Person who (i) is in fact independent of the Depositor, the
Servicer, the Seller
and their respective Affiliates, (ii) does not have any direct
financial
interest in or any material indirect financial interest in the
Depositor, the
Servicer, the Seller or any Affiliate thereof, and (iii) is not
connected with
the Depositor, the Servicer, the Seller or any Affiliate thereof as
an officer,
employee, promoter, underwriter, trustee, partner, director or
Person performing
similar functions; provided, however, that a Person shall not fail
to be
Independent of the Depositor, the Servicer, the Seller or any
Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of
any class of
securities issued by the Depositor, the Servicer, the Seller or any
Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicer)
that would be an "independent contractor" with respect to REMIC I
within the
meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate
investment trust (except that the ownership tests set forth in that
section
shall be considered to be met by any Person that owns, directly or
indirectly,
35% or more of any Class of Certificates), so long as REMIC I does
not receive
or derive any income from such Person and provided that the
relationship between
such Person and REMIC I is at arm's length, all within the meaning
of Treasury
Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the
Servicer) if the Trustee has received an Opinion of Counsel to the
effect that
the taking of any action in respect of any REO Property by such
Person, subject
to any conditions therein specified, that is otherwise herein
contemplated to be
taken by an Independent Contractor will not cause such REO Property
to cease to
qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of
the Code (determined without regard to the exception applicable for
purposes of
Section 860D(a) of the Code), or cause any income realized in
respect of such
REO Property to fail to qualify as Rents from Real Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and
each
related Adjustment Date, the index specified in the related
Mortgage Note.
19
"Insurance Proceeds": Proceeds of any title policy, hazard policy
or other
insurance policy covering a Mortgage Loan, to the extent such
proceeds are not
to be applied to the restoration of the related Mortgaged Property
or released
to the Mortgagor in accordance with the procedures that the
Servicer would
follow in servicing mortgage loans held for its own account,
subject to the
terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date
and the
Class A Certificates and the Mezzanine Certificates, the period
commencing on
the Distribution Date of the month immediately preceding the month
in which such
Distribution Date occurs (or, in the case of the first Distribution
Date,
commencing on the Closing Date) and ending on the day preceding
such
Distribution Date. With respect to any Distribution Date and the
Class CE
Certificates and the REMIC I Regular Interests, the one-month
period ending on
the last day of the calendar month preceding the month in which
such
Distribution Date occurs.
"Interest Carry Forward Amount": With respect to any Distribution
Date and
the Class A Certificates or the Mezzanine Certificates, the sum of
(i) the
amount, if any, by which (a) the Interest Distribution Amount for
such Class of
Certificates as of the immediately preceding Distribution Date
exceeded (b) the
actual amount distributed on such Class of Certificates in respect
of interest
on such immediately preceding Distribution Date, (ii) the amount of
any Interest
Carry Forward Amount for such Class of Certificates remaining
unpaid from the
previous Distribution Date and (iii) accrued interest on the sum of
(i) and (ii)
above calculated at the related Pass-Through Rate for the most
recently ended
Interest Accrual Period.
"Interest Determination Date": With respect to the Class A
Certificates,
the Mezzanine Certificates, REMIC I Regular Interest I-LTA1, REMIC
I Regular
Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I Regular
Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I
Regular
Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular
Interest
I-LTM8, REMIC I Regular Interest I-LTM9 and REMIC I Regular
Interest I-LTM10 and
any Interest Accrual Period therefor, the second London Business
Day preceding
the commencement of such Interest Accrual Period.
"Interest Distribution Amount": With respect to any Distribution
Date and
the Class A Certificates, the Mezzanine Certificates and the Class
CE
Certificates, the aggregate Accrued Certificate Interest on the
Certificates of
such Class for such Distribution Date.
"Interest Remittance Amount": For any Distribution Date, that
portion of
the Available Distribution Amount for the related Distribution Date
that
represents interest received or advanced on the Mortgage Loans.
"Investment Account": As defined in Section 3.12.
"Late Collections": With respect to any Mortgage Loan and any Due
Period,
all amounts received subsequent to the Determination Date
immediately following
such Due Period, whether as late payments of Monthly Payments or as
Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or
collections of principal and/or interest due (without
20
regard to any acceleration of payments under the related Mortgage
and Mortgage
Note) but delinquent for such Due Period and not previously
recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a
Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is
removed from REMIC I, by reason of its being purchased, sold or
replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or
Section 9.01.
With respect to any REO Property, either of the following events:
(i) a Final
Recovery Determination is made as to such REO Property; or (ii)
such REO
Property is removed from REMIC I by reason of its being purchased
pursuant to
Section 9.01.
"Liquidation Proceeds": The amount (other than Insurance Proceeds
or
amounts received in respect of the rental of any REO Property prior
to REO
Disposition) received by the Servicer in connection with (i) the
taking of all
or a part of a Mortgaged Property by exercise of the power of
eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan
through a
trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase,
substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as
contemplated by Section 2.03, Section 3.16(c), Section 3.23 or
Section 9.01.
"Loan-to-Value Ratio": As of any date of determination, the
fraction,
expressed as a percentage, the numerator of which is the principal
balance of
the related Mortgage Loan at such date and the denominator of which
is the Value
of the related Mortgaged Property.
"London Business Day": Any day on which banks in the City of London
and New
York are open and conducting transactions in United States dollars.
"Marker Rate": With respect to the Class CE Certificates or the
REMIC II
Regular Interest CE-IO and any Distribution Date, a per annum rate
equal to two
(2) multiplied by the weighted average of the REMIC I Remittance
Rates for the
REMIC I Regular Interests (other than REMIC I Regular Interest
I-LTP and REMIC I
Regular Interest I-LTAA), with the rate on each such REMIC I
Regular Interest
(other than REMIC I Regular Interest I-LTZZ) subject to a cap equal
to the
Pass-Through Rate for the related Corresponding Certificate and
with the rate on
REMIC I Regular Interest I-LTZZ subject to a cap of zero, in each
case for
purposes of this calculation; provided, however, each cap shall be
multiplied by
a fraction, the numerator of which is the actual number of days
elapsed in the
related Interest Accrual Period and the denominator of which is 30.
"Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to
any Distribution Date, the excess of (i) accrued interest at the
REMIC I
Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for
such
Distribution Date on a balance equal to the Uncertificated Balance
of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralized
Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest
on REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I
Regular
Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4, REMIC
I Regular
21
Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular
Interest
I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular Interest
I-LTM9 and
REMIC I Regular Interest I-LTM10 for such Distribution Date, with
the rate on
each such REMIC I Regular Interest subject to a cap equal to the
lesser of (i)
One-Month LIBOR plus the related Margin for the related
Corresponding
Certificate and (ii) the Net WAC Pass-Through Rate for the related
Corresponding
Certificate; provided, however, each cap shall be multiplied by a
fraction, the
numerator of which is the actual number of days elapsed in the
related Interest
Accrual Period and the denominator of which is 30.
"Maximum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage
Loan, the percentage set forth in the related Mortgage Note as the
maximum
Mortgage Rate thereunder.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates,
the
Class M-2 Certificates, the Class M-3 Certificates, the Class M-4
Certificates,
the Class M-5 Certificates, the Class M-6 Certificates, the Class
M-7
Certificates, the Class M-8 Certificates, the Class M-9
Certificates and the
Class M-10 Certificates.
"Minimum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage
Loan, the percentage set forth in the related Mortgage Note as the
minimum
Mortgage Rate thereunder.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly
payment of principal and interest on such Mortgage Loan which is
payable by the
related Mortgagor from time to time under the related Mortgage
Note, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt
Service
Reduction with respect to such Mortgage Loan and (ii) any reduction
in the
amount of interest collectible from the related Mortgagor pursuant
to the Relief
Act; (b) without giving effect to any extension granted or agreed
to by the
Servicer pursuant to Section 3.07 and (c) on the assumption that
all other
amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Moody's Investors Service, Inc., or its successor in
interest.
"Mortgage": With respect to each Mortgage Note, the mortgage, deed
of trust
or other instrument creating a first lien or second lien on, or
first or second
priority security interest in, a Mortgaged Property securing a
Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining
to a particular Mortgage Loan and any additional documents required
to be added
to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee
and delivered to the Trustee pursuant to Section 2.01 or Section
2.03(b) of this
Agreement, as held from time to time as a part of the Trust Fund,
the Mortgage
Loans so held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement among the Seller,
the
Responsible Party and the Depositor, regarding the sale of the
Mortgage Loans by
the Seller to the Depositor, substantially in the form of Exhibit D
annexed
hereto.
22
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans
included in REMIC I on such date, attached hereto as Schedule 1.
The Mortgage
Loan Schedule shall set forth the following information with
respect to each
Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the state and zip code of the Mortgaged Property;
(iii) a code indicating whether the Mortgaged Property is
owner-occupied;
(iv) the type of Residential Dwelling constituting the Mortgaged
Property;
(v) the original months to maturity;
(vi) the stated remaining months to maturity from the Cut-off Date
based on the original amortization schedule;
(vii) the Loan-to-Value Ratio at origination;
(viii) the Mortgage Rate in effect immediately following the
Cut-off
Date;
(ix) (A) the date on which the first Monthly Payment was due on the
Mortgage Loan and (B) if such date is not consistent with the Due
Date
currently in effect, such Due Date;
(x) the stated maturity date;
(xi) the amount of the Monthly Payment at origination;
(xii) the amount of the Monthly Payment due on the first Due Date
after the Cut-off Date;
(xiii) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(xiv) the original principal amount of the Mortgage Loan;
(xv) the Stated Principal Balance of the Mortgage Loan as of the
close
of business on the Cut-off Date;
(xvi) with respect to each Adjustable-Rate Mortgage Loan, the
Adjustment Dates, the Gross Margin, the Maximum Mortgage Rate, the
Minimum
Mortgage Rate, the Periodic Rate Cap, the maximum first Adjustment
Date
Mortgage Rate adjustment, the first Adjustment Date immediately
following
the origination date and the rounding code (i.e., nearest 0.125%,
next
highest 0.125%);
(xvii) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase financing, Rate/Term Refinancing, Cash-Out Refinancing);
23
(xviii) the Mortgage Rate at origination;
(xix) a code indicating the documentation program (i.e., Full
Documentation, Limited Documentation, Stated Income Documentation);
(xx) the risk grade;
(xxi) the Value of the Mortgaged Property;
(xxii) the sale price of the Mortgaged Property, if applicable;
(xxiii) the actual unpaid principal balance of the Mortgage Loan as
of
the Cut-off Date;
(xxiv) the type and term of the related Prepayment Charge;
(xxv) the program code; and
(xxvi) the total amount of points and fees charged such Mortgage
Loan.
The Mortgage Loan Schedule shall set forth the following
information with
respect to the Mortgage Loans in the aggregate as of the Cut-off
Date:
(1)
the number of Mortgage Loans;
(2)
the current Stated Principal Balance of the Mortgage Loans;
(3)
the weighted average Mortgage Rate of the Mortgage Loans and
(4)
weighted average maturity of the Mortgage Loans.
The Mortgage Loan Schedule shall be amended from time to time by
the
Depositor in accordance with the provisions of this Agreement. With
respect to
any Qualified Substitute Mortgage Loan, the Cut-off Date shall
refer to the
related Cut-off Date for such Mortgage Loan, determined in
accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of
the
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Schedule
1 and
existing from time to time thereafter, and any REO Properties
acquired in
respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the annual
rate at
which interest accrues on such Mortgage Loan from time to time in
accordance
with the provisions of the related Mortgage Note, which rate, with
respect to
the Adjustable-Rate Mortgage Loans, (A) as of any date of
determination until
the first Adjustment Date following the Cut-off Date shall be the
rate set forth
in the Mortgage Loan Schedule as the Mortgage Rate in effect
immediately
following the Cut-off Date and (B) as of any date of determination
thereafter
shall be the rate as
24
adjusted on the most recent Adjustment Date equal to the sum,
rounded as
provided in the Mortgage Note, of the Index, as most recently
available as of a
date prior to the Adjustment Date as set forth in the related
Mortgage Note,
plus the related Gross Margin; provided that the Mortgage Rate on
such
Adjustable-Rate Mortgage Loan on any Adjustment Date shall never be
more than
the lesser of (i) the sum of the Mortgage Rate in effect
immediately prior to
the Adjustment Date plus the related Periodic Rate Cap, if any, and
(ii) the
related Maximum Mortgage Rate, and shall never be less than the
greater of (i)
the Mortgage Rate in effect immediately prior to the Adjustment
Date less the
Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage
Rate. With
respect to each Mortgage Loan that becomes an REO Property, as of
any date of
determination, the annual rate determined in accordance with the
immediately
preceding sentence as of the date such Mortgage Loan became an REO
Property.
"Mortgaged Property": The underlying property securing a Mortgage
Loan,
including any REO Property, consisting of a fee simple estate in a
parcel of
land improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any Distribution
Date, the
sum of (i) any Overcollateralization Reduction Amount and (ii) the
excess of (x)
the Available Distribution Amount for such Distribution Date over
(y) the sum
for such Distribution Date of (A) the Senior Interest Distribution
Amount
distributable to the holders of the Class A Certificates, (B) the
Interest
Distribution Amount distributable to the holders of the Mezzanine
Certificates
and (C) the Principal Remittance Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO
Property) as of any date of determination, a per annum rate of
interest equal to
the then applicable Mortgage Rate for such Mortgage Loan minus the
Servicing Fee
Rate.
"Net Swap Payment": With respect to each Distribution Date, the net
payment
required to be made pursuant to the terms of the Swap Agreement by
either the
Swap Counterparty or the Trustee, on behalf of the Trust, which net
payment
shall not take into account any Swap Termination Payment.
"Net WAC Pass-Through Rate": With respect to the Class A
Certificates and
the Mezzanine Certificates and any Distribution Date, a rate per
annum equal to
the product of (x) the excess, if any, of (i) the weighted average
of the Expense
Adjusted Net Mortgage Rates of the Mortgage Loans, weighted on the
basis of the
respective Stated Principal Balances of the Mortgage Loans as of
the first day
of the month preceding the month of such Distribution Date over
(ii) the Net
Swap Payment owed to the Swap Counterparty or Swap Termination
Payment owed to
the Swap Counterparty not due to a Swap Counterparty Trigger Event,
if any,
expressed as a percentage, equal to a fraction, the numerator of
which is equal
to such Net Swap Payment owed to the Swap Counterparty or Swap
Termination
Payment owed to the Swap Counterparty not due to a Swap
Counterparty Trigger
Event and the denominator of which is equal to the Stated Principal
Balance of
the Mortgage Loans, multiplied by 12 and (y) a fraction, the
numerator of which
is 30 and the denominator of which is the actual number of days
elapsed in the
related Interest Accrual Period. For federal income tax purposes,
however,
clause (i) above shall be the equivalent of that which is provided
in such
clause expressed as a per annum rate equal to the weighted average
of the REMIC
I Remittance Rates on the REMIC I Regular Interests, weighted on
the basis of
the Uncertificated Balance of each such REMIC I Regular Interests.
25
"Net WAC Rate Carryover Amount": With respect to any Class of the
Class A
Certificates and the Mezzanine Certificates and any Distribution
Date, the sum
of (A) the positive excess of (i) the amount of interest accrued on
such Class
of Certificates for such Distribution Date calculated at the
related Formula
Rate for such Distribution Date over (ii) the amount of interest
accrued on such
Class of Certificates at the Net WAC Pass-Through Rate for such
Distribution
Date and (B) the related Net WAC Rate Carryover Amount for the
previous
Distribution Date not previously distributed, together with
interest thereon at
a rate equal to the related Formula Rate for such Class of
Certificates for such
Distribution Date.
"New Lease": Any lease of REO Property entered into on behalf of
REMIC I,
including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the
right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance previously made or proposed
to be
made in respect of a Mortgage Loan or REO Property that, in the
good faith
business judgment of the Servicer, will not or, in the case of a
proposed
Advance, would not be ultimately recoverable from related Late
Collections,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property
as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made
or proposed to be made in respect of a Mortgage Loan or REO
Property that, in
the good faith business judgment of the Servicer, will not or, in
the case of a
proposed Servicing Advance, would not be ultimately recoverable
from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage
Loan or REO Property as provided herein.
"Non-United States Person": Any Person other than a United States
Person.
"Notional Amount": With respect to the Class CE Certificates and
any
Distribution Date, the aggregate Uncertificated Balance of the
REMIC I Regular
Interests for such Distribution Date.
"Officers' Certificate": A certificate signed by the Chairman of
the Board,
the Vice Chairman of the Board, the President or a vice president
(however
denominated), and by the Treasurer, the Secretary, or one of the
assistant
treasurers or assistant secretaries of the Servicer, the Seller or
the
Depositor, as applicable.
"One-Month LIBOR": With respect to the Class A Certificates, the
Mezzanine
Certificates and for purposes of the Marker Rate and Maximum I-LTZZ
Uncertificated Interest Deferral Amount, REMIC I Regular Interest
I-LTA1, REMIC
I Regular Interest I-LTA2,
26
REMIC I Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1,
REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular
Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest
I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular Interest
I-LTM8, REMIC
I Regular Interest I-LTM9 and REMIC I Regular Interest I-LTM10 and
any Interest
Accrual Period therefor, the rate determined by the Trustee on the
related
Interest Determination Date on the basis of the offered rate for
one-month U.S.
dollar deposits, as such rate appears on Telerate Page 3750 as of
11:00 a.m.
(London time) on such Interest Determination Date; provided that if
such rate
does not appear on Telerate Page 3750, the rate for such date will
be determined
on the basis of the offered rates of the Reference Banks for
one-month U.S.
dollar deposits, as of 11:00 a.m. (London time) on such Interest
Determination
Date. In such event, the Trustee will request the principal London
office of
each of the Reference Banks to provide a quotation of its rate. If
on such
Interest Determination Date, two or more Reference Banks provide
such offered
quotations, One-Month LIBOR for the related Interest Accrual Period
shall be the
arithmetic mean of such offered quotations (rounded upwards if
necessary to the
nearest whole multiple of 1/16%). If on such Interest Determination
Date, fewer
than two Reference Banks provide such offered quotations, One-Month
LIBOR for
the related Interest Accrual Period shall be the higher of (i)
LIBOR as
determined on the previous Interest Determination Date and (ii) the
Reserve
Interest Rate. Notwithstanding the foregoing, if, under the
priorities described
above, LIBOR for an Interest Determination Date would be based on
LIBOR for the
previous Interest Determination Date for the third consecutive
Interest
Determination Date, the Trustee, after consultation with the
Depositor, shall
select an alternative comparable index (over which the Trustee has
no control),
used for determining one-month Eurodollar lending rates that is
calculated and
published (or otherwise made available) by an independent party.
"Opinion of Counsel": A written opinion of counsel, who may,
without
limitation, be salaried counsel for the Depositor or the Servicer,
acceptable to
the Trustee, if such opinion is delivered to the Trustee, except
that any
opinion of counsel relating to (a) the qualification of any Trust
REMIC as a
REMIC or (b) compliance with the REMIC Provisions must be an
opinion of
Independent counsel.
"Original Mortgage Loan": Any of the Mortgage Loans included in
REMIC I as
of the Closing Date.
"Originator": New Century Mortgage Corporation, a California
corporation,
or its successor in interest.
"Overcollateralization Amount": With respect to any Distribution
Date, the
excess, if any, of (a) the aggregate Stated Principal Balances of
the Mortgage
Loans and REO Properties as of the last day of the related Due
Period over (b)
the sum of the aggregate Certificate Principal Balance of the Class
A
Certificates, the Mezzanine Certificates and the Class P
Certificates.
"Overcollateralization Deficiency Amount": With respect to any
Distribution
Date, the excess, if any, of (a) the Overcollateralization Target
Amount
applicable to such Distribution Date over (b) the
Overcollateralization Amount
applicable to such Distribution Date (calculated
27
for this purpose only after assuming that 100% of the Principal
Remittance
Amount on such Distribution Date has been distributed).
"Overcollateralization Floor Amount": With respect to any
Distribution
Date, the amount equal to 0.50% of the aggregate Stated Principal
Balance of the
Mortgage Loans as of the Cut-off Date.
"Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization
Deficiency Amount
as of such Distribution Date (calculated for this purpose only
after assuming
that 100% of the Principal Remittance Amount on such Distribution
Date has been
distributed) and (b) the sum of (i) Accrued Certificate Interest
payable on the
Class CE Certificates on such Distribution Date as reduced by
Realized Losses
allocated thereto with respect to such Distribution Date pursuant
to Section
4.04. and (ii) payments made by the Swap Counterparty pursuant to
Section
4.07(c)(C).
"Overcollateralization Reduction Amount": With respect to any
Distribution
Date, an amount equal to the lesser of (a) the Principal Remittance
Amount on
such Distribution Date and (b) the Excess Overcollateralized
Amount.
"Overcollateralization Target Amount": With respect to any
Distribution
Date, (i) prior to the Stepdown Date, an amount equal to 3.05% of
the aggregate
outstanding Stated Principal Balance of the Mortgage Loans as of
the Cut-off
Date, (ii) on or after the Stepdown Date provided a Trigger Event
is not in
effect, the greater of (x) 6.10% of the then current aggregate
outstanding
Stated Principal Balance of the Mortgage Loans as of the last day
of the related
Due Period and (y) the Overcollateralization Floor Amount, or (iii)
on or after
the Stepdown Date and if a Trigger Event is in effect, the
Overcollateralization
Target Amount for the immediately preceding Distribution Date.
Notwithstanding
the foregoing, on and after any Distribution Date following the
reduction of the
aggregate Certificate Principal Balance of the Class A Certificates
and the
Mezzanine Certificates to zero, the Overcollateralization Target
Amount shall be
zero.
"Ownership Interest": As to any Certificate, any ownership or
security
interest in such Certificate, including any interest in such
Certificate as the
Holder thereof and any other interest therein, whether direct or
indirect, legal
or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to the Class A Certificates and
the
Mezzanine Certificates and any Distribution Date, the lesser of (x)
the related
Formula Rate for such Distribution Date and (y) the Net WAC
Pass-Through Rate
for such Distribution Date. With respect to the Class CE
Certificates and any
Distribution Date, (i) a per annum rate equal to the percentage
equivalent of a
fraction, the numerator of which is (x) the interest on the
Uncertificated
Balance of each REMIC I Regular Interest described in clause (y)
below computed
at a rate equal to the related REMIC I Remittance Rate minus the
Marker Rate and
the denominator of which is (y) the aggregate Uncertificated
Balance of REMIC I
Regular Interest I-LTAA, I-LTA1, I-LTA2, I-LTA3, I-LTM1, I-LTM2,
I-LTM3, I-LTM4,
I-LTM5, I-LTM6, I-LTM7, I-LTM8, I-LTM9, I-LTM10 and I-LTZZ and (ii)
100% of the
interest on REMIC I Regular Interest I-LTP, expressed as a per
annum rate.
28
"Percentage Interest": With respect to any Class of Certificates
(other
than the Residual Certificates), the undivided percentage ownership
in such
Class evidenced by such Certificate, expressed as a percentage, the
numerator of
which is the initial Certificate Principal Balance or Notional
Amount
represented by such Certificate and the denominator of which is the
aggregate
initial Certificate Principal Balance or initial Notional Amount of
all of the
Certificates of such Class. The Class A Certificates and the
Mezzanine
Certificates are issuable only in minimum Percentage Interests
corresponding to
minimum initial Certificate Principal Balances of $25,000 and
integral multiples
of $1.00 in excess thereof. The Class P Certificates are issuable
only in
Percentage Interests corresponding to initial Certificate Principal
Balances of
$20 and integral multiples thereof. The Class CE Certificates are
issuable only
in minimum Percentage Interests corresponding to minimum initial
Certificate
Principal Balances of $100,000 and integral multiples of $1.00 in
excess
thereof; provided, however, that a single Certificate of each such
Class of
Certificates may be issued having a Percentage Interest
corresponding to the
remainder of the aggregate initial Certificate Principal Balance or
Notional
Amount of such Class or to an otherwise authorized denomination for
such Class
plus such remainder. With respect to any Residual Certificate, the
undivided
percentage ownership in such Class evidenced by such Certificate,
as set forth
on the face of such Certificate. The Residual Certificates are
issuable in
Percentage Interests of 20% and multiples thereof.
"Periodic Rate Cap": With respect to each Adjustable-Rate Mortgage
Loan and
any Adjustment Date therefor, the fixed percentage set forth in the
related
Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such
Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage
Rate or the Minimum Mortgage Rate) on such Adjustment Date from the
Mortgage
Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or
securities acquired at a purchase price of not greater than par,
regardless of
whether issued or managed by the Depositor, the Servicer, the
Trustee or any of
their respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or
any
agency or instrumentality thereof, provided such obligations are
backed by
the full faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of, or
bankers' acceptances issued by, any Depository Institution;
(iii) repurchase obligations with respect to any security described
in
clause (i) above entered into with a Depository Institution (acting
as
principal);
(iv) securities bearing interest or sold at a discount that are
issued
by any corporation incorporated under the laws of the United States
of
America or any state thereof and that are rated by each Rating
Agency that
rates such securities in its highest long-term unsecured rating
categories
at the time of such investment or contractual commitment providing
for such
investment;
29
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or
on a
specified date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency that rates such securities in
its
highest short-term unsecured debt rating available at the time of
such
investment;
(vi) units of money market funds, including those managed or
advised
by the Trustee or its Affiliates, that have been rated "AAA" by
Fitch (if
rated by Fitch) and "AAAm" or "AAAm-G" by S&P and "Aaa" by
Moody's; and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation,
security or
investment, as may be acceptable to the Rating Agencies as a
permitted
investment of funds backing securities having ratings equivalent to
its
highest initial rating of the Class A Certificates;
provided, however, that no instrument described hereunder shall
evidence either
the right to receive (a) only interest with respect to the
obligations
underlying such instrument or (b) both principal and interest
payments derived
from obligations underlying such instrument and the interest and
principal
payments with respect to such instrument provide a yield to
maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations.
"Permitted Transferee": Any Transferee of a Residual Certificate
other than
a Disqualified Organization or Non-United States Person.
"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.
"Plan": Any "employee benefit plan" as defined in Section 3(3) of
ERISA
that is subject to Title I of ERISA, any "plan" as defined in
Section 4975 of
the Code that is subject to Section 4975 of the Code or any entity
deemed to
hold plan assets of any of the foregoing.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Charge": With respect to any Prepayment Period, 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 (other than any Servicer Prepayment Charge Payment
Amount).
"Prepayment Charge Schedule": As of any date, the list of
Prepayment
Charges included in the Trust Fund on such date, attached hereto as
Schedule 2
(including the prepayment charge summary attached thereto). The
Prepayment
Charge Schedule shall set forth the following information with
respect to each
Prepayment Charge:
(i)
the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
30
(iii) the date on which the first Monthly Payment was due on the
related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Stated Principal Balance of the related Mortgage
Loan; and
(vi) remaining prepayment term in months.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for
each Mortgage Loan that was, during the related Prepayment Period,
the subject
of a Principal Prepayment in full or in part that was applied by
the Servicer to
reduce the outstanding principal balance of such loan on a date
preceding the
Due Date in the succeeding Prepayment Period, an amount equal to
one month's
interest at the applicable Net Mortgage Rate less any payments made
by the
Mortgagor. The obligations of the Servicer in respect of any
Prepayment Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the
calendar
month immediately preceding the calendar month in which such
Distribution Date
occurs.
"Principal Distribution Amount": With respect to any Distribution
Date, an
amount, not less than zero, equal to the sum of:
(i) the principal portion of each Monthly Payment on the Mortgage
Loans due during the related Due Period, received on or prior to
the
related Determination Date or Advanced on or prior to the related
Determination Date;
(ii) the Stated Principal Balance of any Mortgage Loan that was
purchased during the related Prepayment Period pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01 and
the
amount of any shortfall deposited in the Custodial Account in
connection
with the substitution of a Deleted Mortgage Loan pursuant to
Section 2.03
during the related Prepayment Period;
(iii) the principal portion of all other unscheduled collections
(including, without limitation, Principal Prepayments, Insurance
Proceeds,
Liquidation Proceeds, Subsequent Recoveries and REO Principal
Amortization)
received during the related Prepayment Period, net of any portion
thereof
that represents a recovery of principal for which an Advance was
made by
the Servicer pursuant to Section 4.03 in respect of a preceding
Distribution Date; and
(iv) the amount of any Overcollateralization Increase Amount for
such
Distribution Date; minus
(v) the amount of any Overcollateralization Reduction Amount for
such
Distribution Date; and
31
(vi) any Net Swap Payments owed to the Swap Counterparty or Swap
Termination Payment owed to the Swap Counterparty not due to a Swap
Counterparty Trigger Event to the extent not previously paid from
interest
or principal collections on the Mortgage Loans.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due
Date and which
is not accompanied by an amount of interest representing the full
amount of
scheduled interest due on any Due Date in any month or months
subsequent to the
month of prepayment.
"Principal Remittance Amount": With respect to any Distribution
Date the
sum of the amounts set forth in (i) through (iii) of the definition
of Principal
Distribution Amount.
"Private Certificates": As defined in Section 5.02(b).
"Prospectus Supplement": The Prospectus Supplement, dated August
11, 2005,
relating to the public offering of the Class A Certificates and the
Mezzanine
Certificates (other than the Class M-8 Certificates, Class M-9
Certificates and
Class M-10 Certificates).
"PTCE": A Prohibited Transaction Class Exemption issued by the
United
States Department of Labor which provides that exemptive relief is
available to
any party to any transaction which satisfies the conditions of the
exemption.
"Purchase Price": With respect to any Mortgage Loan or REO Property
to be
purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or
Section 9.01, and as confirmed by a certification from a Servicing
Officer to
the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal
Balance thereof as of the date of purchase (or such other price as
provided in
Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such
Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time
to time from the Due Date as to which interest was last covered by
a payment by
the Mortgagor or an Advance by the Servicer, which payment or
Advance had as of
the date of purchase been distributed pursuant to Section 4.01,
through the end
of the calendar month in which the purchase is to be effected plus
and (y) an
REO Property, the sum of (1) accrued interest on such Stated
Principal Balance
at the applicable Net Mortgage Rate in effect from time to time
from the Due
Date as to which interest was last covered by a payment by the
Mortgagor or an
Advance by the Servicer through the end of the calendar month
immediately
preceding the calendar month in which such REO Property was
acquired, plus (2)
REO Imputed Interest for such REO Property for each calendar month
commencing
with the calendar month in which such REO Property was acquired and
ending with
the calendar month in which such purchase is to be effected, net of
the total of
all net rental income, Insurance Proceeds, Liquidation Proceeds and
Advances
that as of the date of purchase had been distributed as or to cover
REO Imputed
Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing
Advances and
Advances (including Nonrecoverable Advances and Nonrecoverable
Servicing
Advances) and any unpaid Servicing Fees allocable to such Mortgage
Loan or REO
Property, (iv) any amounts previously withdrawn from the Custodial
Account in
respect of such Mortgage Loan or REO Property pursuant to Section
3.11(a)(ix)
and Section 3.16(b), and (v) in the case of a Mortgage Loan
32
required to be purchased pursuant to Section 2.03, expenses
reasonably incurred
or to be incurred by the Servicer or the Trustee in respect of the
breach or
defect giving rise to the purchase obligation including any costs
and damages
incurred by the Trust Fund in connection with any violation by such
loan of any
predatory or abusive lending law.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted
for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which
must, on the
date of such substitution, (i) have an outstanding Stated Principal
Balance,
after application of all scheduled payments of principal and
interest due during
or prior to the month of substitution, not in excess of the Stated
Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month
during which the substitution occurs, (ii) have a Mortgage Rate not
less than
(and not more than one percentage point in excess of) the Mortgage
Rate of the
Deleted Mortgage Loan, (iii) with respect to any Adjustable-Rate
Mortgage Loan,
have a Maximum Mortgage Rate not less than the Maximum Mortgage
Rate on the
Deleted Mortgage Loan, (iv) with respect to any Adjustable-Rate
Mortgage Loan,
have a Minimum Mortgage Rate not less than the Minimum Mortgage
Rate of the
Deleted Mortgage Loan, (v) with respect to any Adjustable-Rate
Mortgage Loan,
have a Gross Margin equal to the Gross Margin of the Deleted
Mortgage Loan, (vi)
with respect to any Adjustable-Rate Mortgage Loan, have a next
Adjustment Date
not more than two months later than the next Adjustment Date on the
Deleted
Mortgage Loan, (vii) have a remaining term to maturity not greater
than (and not
more than one year less than) that of the Deleted Mortgage Loan,
(viii) have the
same Due Date as the Due Date on the Deleted Mortgage Loan, (ix)
have a
Loan-to-Value Ratio as of the date of substitution equal to or
lower than the
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date,
(x) have a
risk grading determined by the Originator at least equal to the
risk grading
assigned on the Deleted Mortgage Loan and (xi) conform to each
representation
and warranty set forth in Section 6 of the Mortgage Loan Purchase
Agreement
applicable to the Deleted Mortgage Loan. In the event that one or
more mortgage
loans are substituted for one or more Deleted Mortgage Loans, the
amounts
described in clause (i) hereof shall be determined on the basis of
aggregate
principal balances, the Mortgage Rates described in clause (ii)
hereof shall be
determined on the basis of weighted average Mortgage Rates, the
terms described
in clause (vii) hereof shall be determined on the basis of weighted
average
remaining term to maturity, the Loan-to-Value Ratios described in
clause (ix)
hereof shall be satisfied as to each such mortgage loan, the risk
gradings
described in clause (x) hereof shall be satisfied as to each such
mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xi) hereof must
be satisfied
as to each Qualified Substitute Mortgage Loan or in the aggregate,
as the case
may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds
of which
are not more than a nominal amount in excess of the existing first
mortgage loan
and any subordinate mortgage loan on the related Mortgaged Property
and related
closing costs, and were used exclusively (except for such nominal
amount) to
satisfy the then existing first mortgage loan and any subordinate
mortgage loan
of the Mortgagor on the related Mortgaged Property and to pay
related closing
costs.
"Rating Agency or Rating Agencies": Fitch, Moody's and S&P or
their
successors. If such agencies or their successors are no longer in
existence,
"Rating Agencies" shall be such
33
nationally recognized statistical rating agencies, or other
comparable Persons,
designated by the Depositor, notice of which designation shall be
given to the
Trustee and the Servicer.
"Realized Loss": With respect to each Mortgage Loan as to which a
Final
Recovery Determination has been made, an amount (not less than
zero) equal to
(i) the unpaid principal balance of such Mortgage Loan as of the
commencement of
the calendar month in which the Final Recovery Determination was
made, plus (ii)
accrued interest from the Due Date as to which interest was last
paid by the
Mortgagor through the end of the calendar month in which such Final
Recovery
Determination was made, calculated in the case of each calendar
month during
such period (A) at an annual rate equal to the annual rate at which
interest was
then accruing on such Mortgage Loan and (B) on a principal amount
equal to the
Stated Principal Balance of such Mortgage Loan as of the close of
business on
the Distribution Date during such calendar month, plus (iii) any
amounts
previously withdrawn from the Custodial Account in respect of such
Mortgage Loan
pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv) the
proceeds, if
any, received in respect of such Mortgage Loan during the calendar
month in
which such Final Recovery Determination was made, net of amounts
that are
payable therefrom to the Servicer with respect to such Mortgage
Loan pursuant to
Section 3.11(a)(iii).
With respect to any REO Property as to which a Final Recovery
Determination
has been made, an amount (not less than zero) equal to (i) the
unpaid principal
balance of the related Mortgage Loan as of the date of acquisition
of such REO
Property on behalf of REMIC I, plus (ii) accrued interest from the
Due Date as
to which interest was last paid by the Mortgagor in respect of the
related
Mortgage Loan through the end of the calendar month immediately
preceding the
calendar month in which such REO Property was acquired, calculated
in the case
of each calendar month during such period (A) at an annual rate
equal to the
annual rate at which interest was then accruing on the related
Mortgage Loan and
(B) on a principal amount equal to the Stated Principal Balance of
the related
Mortgage Loan as of the close of business on the Distribution Date
during such
calendar month, plus (iii) REO Imputed Interest for such REO
Property for each
calendar month commencing with the calendar month in which such REO
Property was
acquired and ending with the calendar month in which such Final
Recovery
Determination was made, plus (iv) any amounts previously withdrawn
from the
Custodial Account in respect of the related Mortgage Loan pursuant
to Section
3.11(a)(ix) and Section 3.16(b), minus (v) the aggregate of all
Advances and
Servicing Advances (in the case of Servicing Advances, without
duplication of
amounts netted out of the rental income, Insurance Proceeds and
Liquidation
Proceeds described in clause (vi) below) made by the Servicer in
respect of such
REO Property or the related Mortgage Loan for which the Servicer
has been or, in
connection with such Final Recovery Determination, will be
reimbursed pursuant
to Section 3.23 out of rental income, Insurance Proceeds and
Liquidation
Proceeds received in respect of such REO Property, minus (vi) the
total of all
net rental income, Insurance Proceeds and Liquidation Proceeds
received in
respect of such REO Property that has been, or in connection with
such Final
Recovery Determination, will be transferred to the Certificate
Account pursuant
to Section 3.23.
With respect to each Mortgage Loan which has become the subject of
a
Deficient Valuation, the difference between the principal balance
of the
Mortgage Loan outstanding
34
immediately prior to such Deficient Valuation and the principal
balance of the
Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the subject of
a Debt
Service Reduction, the portion, if any, of the reduction in each
affected
Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a
court of competent jurisdiction. Each such Realized Loss shall be
deemed to have
been incurred on the Due Date for each affected Monthly Payment.
If the Servicer receives Subsequent Recoveries with respect to any
Mortgage
Loan, the amount of the Realized Loss with respect to that Mortgage
Loan will be
reduced to the extent such recoveries are applied to principal
distributions on
any Distribution Date.
Realized Losses allocated to the Class CE Certificates shall be
allocated
first to the REMIC II Regular Interest CE-IO in reduction of the
accrued but
unpaid interest thereon until such accrued and unpaid interest
shall have been
reduced to zero and then to the REMIC II Regular Interest CE-PO in
reduction of
the Principal Balance thereof.
"Record Date": With respect to each Distribution Date and any
Book-Entry
Certificate, the Business Day immediately preceding such
Distribution Date. With
respect to each Distribution Date and any other Certificates,
including any
Definitive Certificates, the last Business Day of the month
immediately
preceding the month in which such Distribution Date occurs, except
in the case
of the first Record Date which shall be the Closing Date.
"Reference Banks": Deutsche Bank AG, Barclays' Bank PLC, The Tokyo
Mitsubishi Bank and National Westminster Bank PLC and their
successors in
interest; provided, however, that if any of the foregoing banks are
not suitable
to serve as a Reference Bank, then any leading banks selected by
the Trustee,
after consultation with the Depositor, which are engaged in
transactions in
Eurodollar deposits in the international Eurocurrency market (i)
with an
established place of business in London and (ii) not controlling,
under the
control of or under common control with the Depositor or any
Affiliate thereof.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not
used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A Certificate, Mezzanine
Certificate,
Class CE Certificate or Class P Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of
Section 860G(a)(1) of the Code.
"Relief Act": The Servicemembers Civil Relief Act.
"Relief Act Interest Shortfall": With respect to any Distribution
Date and
any Mortgage Loan, any reduction in the amount of interest
collectible on such
Mortgage Loan for the most recently ended calendar month as a
result of the
application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of
Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto (exclusive
of the
Swap Account and the Swap Agreement, each of which is not an asset
of any
REMIC), constituting the
35
primary trust created hereby and to be administered hereunder, with
respect to
which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and
Prepayment Charges related thereto as from time to time are subject
to this
Agreement, together with the Mortgage Files relating thereto, and
together with
all collections thereon and proceeds thereof; (ii) any REO
Property, together
with all collections thereon and proceeds thereof; (iii) the
Trustee's rights
with respect to the Mortgage Loans under all insurance policies
required to be
maintained pursuant to this Agreement and any proceeds thereof;
(iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement
(including any
security interest created thereby); and (v) the Custodial Account
(other than
any amounts representing any Servicer Prepayment Charge Payment
Amount), the
Certificate Account (other than any amounts representing any
Servicer Prepayment
Charge Payment Amount) and any REO Account, and such assets that
are deposited
therein from time to time and any investments thereof, together
with any and all
income, proceeds and payments with respect thereto. Notwithstanding
the
foregoing, however, REMIC I specifically excludes all payments and
other
collections of principal and interest due on the Mortgage Loans on
or before the
Cut-off Date, all Prepayment Charges payable in connection with
Principal
Prepayments on the Mortgage Loans made before the Cut-off Date.
"REMIC I Interest Loss Allocation Amount": With respect to any
Distribution
Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal
Balance of the Mortgage Loans and REO Properties then outstanding
and (ii) the
REMIC I Remittance Rate for REMIC I Regular Interest I-LTAA minus
the Marker
Rate, divided by (b) 12.
"REMIC I Overcollateralized Amount": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Balance of
the REMIC I
Regular Interests (other than REMIC I Regular Interest I-LTP) minus
(ii) the
aggregate Uncertificated Balance of REMIC I Regular Interest
I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I
Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
Interest
I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular Interest
I-LTM5, REMIC
I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I
Regular
Interest I-LTM8, REMIC I Regular Interest I-LTM9 and REMIC I
Regular Interest
I-LTM10, in each case as of such date of determination.
"REMIC I Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to the product of (i) the
aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties then
outstanding and
(ii) 1 minus a fraction, the numerator of which is two times the
aggregate
Uncertificated Balance of REMIC I Regular Interest I-LTA1, REMIC I
Regular
Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I Regular
Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I
Regular
Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular
Interest
I-LTM8, REMIC I Regular Interest I-LTM9 and REMIC I Regular
Interest I-LTM10 and
the denominator of which is the aggregate Uncertificated Balance of
REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I
Regular
Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4, REMIC
I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I
36
Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I
Regular
Interest I-LTM9, REMIC I Regular Interest I-LTM10 and REMIC I
Regular Interest
I-LTZZ.
"REMIC I Regular Interest": Any of the separate non-certificated
beneficial
ownership interests in REMIC I issued hereunder and designated as a
"regular
interest" in REMIC I. Each REMIC I Regular Interest shall accrue
interest at the
related REMIC I Remittance Rate in effect from time to time or
shall otherwise
be entitled to interest as set forth herein, and shall be entitled
to
distributions of principal, subject to the terms and conditions
hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set
forth in the
Preliminary Statement hereto. The REMIC I Regular Interests are as
follows:
REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1,
REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I
Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
Interest
I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular Interest
I-LTM5, REMIC
I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I
Regular
Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I Regular
Interest
I-LTM10, REMIC I Regular Interest I-LTZZ and REMIC I Regular
Interest I-LTP.
"REMIC I Remittance Rate": With respect to each REMIC I Regular
Interest
and any Distribution Date, the weighted average of the Expense
Adjusted Mortgage
Rates of the Mortgage Loans, weighted based on their Stated
Principal Balances
as of the first day of the related Due Period.
"REMIC I Required Overcollateralized Amount": 1% of the
Overcollateralization Target Amount.
"REMIC II": The segregated pool of assets consisting of all of the
REMIC I
Regular Interests conveyed in trust to the Trustee, for the benefit
of the Class
A Certificates, the Mezzanine Certificates, the Class CE
Certificates, the Class
P Certificates and the Class R-II Interest, with respect to which a
separate
REMIC election is to be made.
"REMIC II Regular Interest": Any Regular Interest issued by REMIC
II, the
ownership of which is evidenced by a Class A Certificate, Class M
Certificate,
or Class CE Certificate.
"REMIC II Regular Interest CE-IO": A separate non-certificated
regular
interest of REMIC II designated as a REMIC II Regular Interest.
REMIC II Regular
Interest CE-IO shall have no entitlement to principal and shall be
entitled to
distributions of interest subject to the terms and conditions
hereof, in an
aggregate amount equal to interest distributable with respect to
the Class CE
Certificates pursuant to the terms and conditions hereof.
"REMIC II Regular Interest CE-PO": A separate non-certificated
regular
interest of REMIC II designated as a REMIC II Regular Interest.
REMIC II Regular
Interest CE-PO shall have no entitlement to interest and shall be
entitled to
distributions of principal subject to the terms and conditions
hereof, in an
aggregate amount equal to principal distributable with respect to
the Class CE
Certificates pursuant to the terms and conditions hereof.
"REMIC Provisions": Provisions of the federal income tax law
relating to
real estate mortgage investment conduits, which appear at Section
860A through
860G 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.
"Remittance Report": A report in form and substance acceptable to
the
Trustee on an electronic data file or tape prepared by the Servicer
pursuant to
Section 4.03 with such additions, deletions and modifications as
agreed to by
the Trustee and the Servicer.
37
"Rents from Real Property": With respect to any REO Property, gross
income
of the character described in Section 856(d) of the Code as being
included in
the term "rents from real property."
"REO Account": The account or accounts maintained, or caused to be
maintained, by the Servicer in respect of an REO Property pursuant
to Section
3.23.
"REO Disposition": The sale or other disposition of an REO Property
on
behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any calendar
month
during which such REO Property was at any time part of REMIC I, one
month's
interest at the applicable Net Mortgage Rate on the Stated
Principal Balance of
such REO Property (or, in the case of the first such calendar
month, of the
related Mortgage Loan, if appropriate) as of the close of business
on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for
any
calendar month, the excess, if any, of (a) the aggregate of all
amounts received
in respect of such REO Property during such calendar month, whether
in the form
of rental income, sale proceeds (including, without limitation,
that portion of
the Termination Price paid in connection with a purchase of all of
the Mortgage
Loans and REO Properties pursuant to Section 9.01 that is allocable
to such REO
Property) or otherwise, net of any portion of such amounts (i)
payable pursuant
to Section 3.23(c) in respect of the proper operation, management
and
maintenance of such REO Property or (ii) payable or reimbursable to
the Servicer
pursuant to Section 3.23(d) for unpaid Servicing Fees in respect of
the related
Mortgage Loan and unreimbursed Servicing Advances and Advances in
respect of
such REO Property or the related Mortgage Loan, over (b) the REO
Imputed
Interest in respect of such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of
REMIC I through foreclosure or deed-in-lieu of foreclosure, as
described in
Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in
the form
of Exhibit E attached hereto.
"Reserve Interest Rate": With respect to any Interest Determination
Date,
the rate per annum that the Trustee determines to be either (i) the
arithmetic
mean (rounded upwards if necessary to the nearest whole multiple of
1/16%) of
the one-month U.S. dollar lending rates which New York City banks
selected by
the Trustee, after consultation with the Depositor, are quoting on
the relevant
Interest Determination Date to the principal London offices of
leading banks in
the London interbank market or (ii) in the event that the Trustee
can determine
no such arithmetic mean, the lowest one-month U.S. dollar lending
rate which New
York City banks selected by the Trustee, after consultation with
the Depositor,
are quoting on such Interest Determination Date to leading European
banks.
"Residential Dwelling": Any one of the following: (i) an attached,
detached
or semi-detached one-family dwelling, (ii) an attached, detached or
semi-detached two-to four-family dwelling, (iii) a one-family
dwelling unit in a
Fannie Mae eligible condominium project, or (iv)
38
an attached, detached or semi-detached one-family dwelling in a
planned unit
development, none of which is a co-operative or mobile home (as
defined in 42
United States Code, Section 5402(6)).
"Residual Certificates": The Class R Certificates.
"Residual Interest": The sole class of "residual interests" in a
REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, any
vice
president, managing director, director, any assistant vice
president, the
Secretary, any assistant secretary, the Treasurer, any assistant
treasurer, any
associate, any trust officer or assistant trust officer or any
other officer of
the Trustee having direct responsibility over this Agreement or
otherwise
engaged in performing functions similar to those performed by any
of the above
designated officers and, with respect to a particular matter, to
whom such
matter is referred because of such officer's knowledge of and
familiarity with
the particular subject.
"Responsible Party": NC Capital Corporation, a California
corporation, or
its successor in interest, in its capacity as responsible party
under the
Mortgage Loan Purchase Agreement.
"S&P": Standard & Poor's Ratings Services, a division of
the McGraw-Hill
Companies, Inc., or its successor in interest.
"Seller": Stanwich Asset Acceptance Company, L.L.C., a Delaware
limited
liability company, or its successor in interest, in its capacity as
seller under
the Mortgage Loan Purchase Agreement.
"Senior Interest Distribution Amount": With respect to any
Distribution
Date, an amount equal to the sum of (i) the Interest Distribution
Amount for
such Distribution Date for the Class A Certificates and (ii) the
Interest Carry
Forward Amount, if any, for such Distribution Date for the Class A
Certificates.
"Servicer": New Century Mortgage Corporation, a California
corporation, or
any successor servicer appointed as herein provided, in its
capacity as Servicer
hereunder.
"Servicer Certification": A written certification covering
servicing of the
Mortgage Loans by the Servicer and signed by an officer of the
Servicer that
complies with (i) the Sarbanes-Oxley Act of 2002, as amended from
time to time,
and (ii) the February 21, 2003 Statement by the Staff of the
Division of
Corporation Finance of the Securities and Exchange Commission
Regarding
Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14
and 15d-14, as
in effect from time to time; provided that if, after the Closing
Date (a) the
Sarbanes-Oxley Act of 2002 is amended, (b) the Statement referred
to in clause
(ii) is modified or superceded by any subsequent statement, rule or
regulation
of the Securities and Exchange Commission or any statement of a
division
thereof, or (c) any future releases, rules and regulations are
published by the
Securities and Exchange Commission from time to time pursuant to
the
Sarbanes-Oxley Act of 2002, which in any such case affects the form
or substance
of the required certification and results in the required
certification being,
in the
39
reasonable judgment of the Servicer, materially more onerous than
the form of
the required certification as of the Closing Date, the Servicer
Certification
shall be as agreed to by the Servicer, the Depositor and the Seller
following a
negotiation in good faith to determine how to comply with any such
new
requirements.
"Servicer Event of Default": One or more of the events described in
Section
7.01.
"Servicer Prepayment Charge Payment Amount": The amounts payable by
the
Servicer in respect of any waived Prepayment Charges pursuant to
Section 3.01.
"Servicer Remittance Date": With respect to any Distribution Date,
by 3:00
p.m. New York time on the Business Day preceding the related
Distribution Date.
"Servicer Termination Test": The Servicer Termination Test will be
failed
with respect to any Distribution Date if the aggregate amount of
Realized Losses
incurred since the Cut-off Date through the last day of the related
Due Period
(reduced by the aggregate amount of Subsequent Recoveries received
from the
Cut-off Date through the last day of the related Due Period)
divided by
aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date
exceeds the applicable percentages set forth below with respect to
such
Distribution Date:
PAYMENT DATE OCCURRING IN
PERCENTAGE
----------------------------------
----------
September 2008 through August 2009
3.50%
September 2009 through August 2010
5.25%
September 2010 through August 2011
6.50%
September 2011 and thereafter
6.75%
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses
incurred by the Servicer in connection with a default, delinquency
or other
unanticipated event by the Servicer in the performance of its
servicing
obligations, including, but not limited to, the cost of (i) the
preservation,
restoration and protection of a Mortgaged Property, (ii) any
enforcement or
judicial proceedings, including but not limited to foreclosures, in
respect of a
particular Mortgage Loan, (iii) the management (including
reasonable fees in
connection therewith) and liquidation of any REO Property and (iv)
the
performance of its obligations under Section 3.01, Section 3.09,
Section 3.14,
Section 3.16 and Section 3.23. The Servicer shall not be required
to make any
Nonrecoverable Servicing Advances.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar
month, an amount equal to the Servicing Fee Rate accrued for one
month (or in
the event of any payment of interest which accompanies a Principal
Prepayment in
full or in part made by the Mortgagor during such calendar month,
interest for
the number of days covered by such payment of interest) on the same
principal
amount on which interest on such Mortgage Loan accrues for such
calendar month,
calculated on the basis of a 360-day year consisting of twelve
30-day months. A
portion of such Servicing Fee may be retained by any Sub-Servicer
as its
servicing compensation.
40
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage
Loans, whose name
and specimen signature appear on a list of Servicing Officers
furnished by the
Servicer to the Trustee and the Depositor on the Closing Date, as
such list may
from time to time be amended.
"Servicing Transfer Costs": Shall mean all reasonable costs and
expenses
incurred by the Trustee in connection with the transfer of
servicing from a
predecessor servicer, including, without limitation, any reasonable
costs or
expenses associated with the complete transfer of all servicing
data and the
completion, correction or manipulation of such servicing data as
may be required
by the Trustee to correct any errors or insufficiencies in the
servicing data or
otherwise to enable the Trustee (or any successor servicer
appointed pursuant to
Section 7.02) to service the Mortgage Loans properly and
effectively.
"Single Certificate": With respect to any Class of Certificates
(other than
the Class P Certificates and the Residual Certificates), a
hypothetical
Certificate of such Class evidencing a Percentage Interest for such
Class
corresponding to an initial Certificate Principal Balance of
$1,000. With
respect to the Class P Certificates and the Residual Certificates,
a
hypothetical Certificate of such Class evidencing a 100% Percentage
Interest in
such Class.
"Startup Day": With respect to each Trust REMIC, the day designated
as such
pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a)
as of
any date of determination up to but not including the Distribution
Date on which
the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan
would be distributed, the principal balance of such Mortgage Loan
as of the
Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum
of (i) the
principal portion of each Monthly Payment due on a Due Date
subsequent to the
Cut-off Date, to the extent received from the Mortgagor or advanced
by the
Servicer and distributed pursuant to Section 4.01 on or before such
date of
determination, (ii) all Principal Prepayments received after the
Cut-off Date,
to the extent distributed pursuant to Section 4.01 on or before
such date of
determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by
the Servicer as recoveries of principal in accordance with the
provisions of
Section 3.16, to the extent distributed pursuant to Section 4.01 on
or before
such date of determination, and (iv) any Realized Loss incurred
with respect
thereto as a result of a Deficient Valuation made during or prior
to the
Prepayment Period for the most recent Distribution Date coinciding
with or
preceding such date of determination; and (b) as of any date of
determination
coinciding with or subsequent to the Distribution Date on which the
proceeds, if
any, of a Liquidation Event with respect to such Mortgage Loan
would be
distributed, zero. With respect to any REO Property: (a) as of any
date of
determination up to but not including the Distribution Date on
which the
proceeds, if any, of a Liquidation Event with respect to such REO
Property would
be distributed, an amount (not less than zero) equal to the Stated
Principal
Balance of the related Mortgage Loan as of the date on which such
REO Property
was acquired on behalf of REMIC I, minus the sum of (i) if such REO
Property was
acquired before the Distribution Date in any calendar month, the
principal
portion of the Monthly Payment due on the Due Date in the
41
calendar month of acquisition, to the extent advanced by the
Servicer and
distributed pursuant to Section 4.01 on or before such date of
determination,
and (ii) the aggregate amount of REO Principal Amortization in
respect of such
REO Property for all previously ended calendar months, to the
extent distributed
pursuant to Section 4.01 on or before such date of determination;
and (b) as of
any date of determination coinciding with or subsequent to the
Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect
to such REO
Property would be distributed, zero.
"Stepdown Date": The later to occur of (a) the Distribution Date
occurring
in September 2008 and (b) the first Distribution Date on which the
Credit
Enhancement Percentage (calculated for this purpose only prior to
any
distribution of the Principal Distribution Amount to the
Certificates then
entitled to distributions of principal on such Distribution Date)
is equal to or
greater than 51.80%.
"Sub-Servicer": Any Person with which the Servicer has entered into
a
Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": As defined in Section 3.08.
"Sub-Servicing Agreement": The written contract between the
Servicer and a
Sub-Servicer relating to servicing and administration of certain
Mortgage Loans
as provided in Section 3.02.
"Subsequent Recoveries": As of any Distribution Date, unexpected
amounts
received by the Servicer (net of any related expenses permitted to
be reimbursed
to the Servicer) specifically related to a Mortgage Loan that was
the subject of
a liquidation or an REO Disposition prior to the related Prepayment
Period that
resulted in a Realized Loss.
"Substitution Shortfall Amount": As defined in Section 2.03(b).
"Swap Account": The separate trust account created and maintained
by the
Trustee.
"Swap Agreement": The interest rate swap agreement between the Swap
Counterparty and the Trustee, on behalf of the Trust, which
agreement provides
for Net Swap Payments and Swap Termination Payments to be paid, as
provided
therein, together with any schedules, confirmations or other
agreements relating
thereto, attached hereto as Exhibit K-1.
"Swap Agreement Notional Balance": As to the Swap Agreement and
each
Floating Rate Payer Payment Date (as defined in the Swap
Agreement), the amount
set forth on Exhibit K-2 hereto for such Floating Rate Payer
Payment Date.
"Swap Counterparty": The swap counterparty under the Swap Agreement
either
(a) entitled to receive payments from the Trustee from amounts
payable by the
Trust Fund under this Agreement or (b) required to make payments to
the Trustee
for payment to the Trust Fund, in either case pursuant to the terms
of the Swap
Agreement, and any successor in interest or assign. Initially, the
Swap
Counterparty shall be Swiss Re Financial Corporation.
42
"Swap LIBOR": LIBOR as determined pursuant to the Swap Agreement.
"Swap Counterparty Trigger Event": With respect to any Distribution
Date,
(i) an "Event of Default" under the Swap Agreement with respect to
which the
Swap Counterparty is a Defaulting Party, (ii) a "Termination Event"
under the
Swap Agreement with respect to which the Swap Counterparty is the
sole Affected
Party, or (iii) an "Additional Termination Event" under the Swap
Agreement with
respect to which the Swap Counterparty is the sole Affected Party.
"Swap Termination Payment": Upon the designation of an "Early
Termination
Date" as defined in the Swap Agreement, the payment to be made by
the Trustee on
behalf of the Trust to the Swap Counterparty from payments from the
Trust Fund,
or by the Swap Counterparty to the Trustee for payment to the Trust
Fund, as
applicable, pursuant to the terms of the Swap Agreement.
"Tax Returns": The federal income tax return on Internal Revenue
Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed
on behalf of the Trust Fund due to the classification of portions
thereof as
REMICs under the REMIC Provisions, together with any and all other
information
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or
any other
governmental taxing authority under any applicable provisions of
federal, state
or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on the
Dow
Jones Telerate Capital Markets Report (or such other page as may
replace page
3750 on that report for the purpose of displaying London interbank
offered rates
of major banks).
"Termination Price": As defined in Section 9.01.
"Terminator": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation,
or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership
Interest in a Certificate.
"Trigger Event": A Trigger Event is in effect on any Distribution
Date on
or after the Stepdown Date if:
(a) the Delinquency Percentage exceeds 31.00% of the then current
Credit Enhancement Percentage; or
43
(b) the aggregate amount of Realized Losses incurred since the
Cut-off
Date through the last day of the related Due Period (reduced by the
aggregate amount of Subsequent Recoveries received since the
Cut-off Date
through the last day of the related Due Period) divided by
aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date
exceeds the
applicable percentages set forth below with respect to such
Distribution
Date:
DISTRIBUTION DATE OCCURRING IN
PERCENTAGE
----------------------------------
----------
September 2008 through August 2009
3.50%
September 2009 through August 2010
5.25%
September 2010 through August 2011
6.50%
September 2011 and thereafter
6.75%
"Trust Fund": Collectively, all of the assets of each Trust REMIC
and the
other assets conveyed by the Depositor to the Trustee pursuant to
Section 2.01.
"Trust REMIC": Any of REMIC I or REMIC II.
"Trustee": Deutsche Bank National Trust Company, a national banking
association, or its successor in interest, or any successor trustee
appointed as
herein provided.
"Trustee Fee": The amount payable to the Trustee on each
Distribution Date
pursuant to Section 8.05 as compensation for all services rendered
by it in the
execution of the trust hereby created and in the exercise and
performance of any
of the powers and duties of the Trustee hereunder, which amount
shall equal the
Trustee Fee Rate accrued for one month on the aggregate Stated
Principal Balance
of the Mortgage Loans and any REO Properties as of the first day of
the related
Due Period (or, in the case of the initial Distribution Date, as of
the Cut-off
Date), calculated on the basis of a 360-day year consisting of
twelve 30-day
months.
"Trustee Fee Rate": 0.0043% per annum.
"Uncertificated Balance": The amount of any REMIC I Regular
Interest
outstanding as of any date of determination. As of the Closing
Date, the
Uncertificated Balance of each REMIC I Regular Interest shall equal
the amount
set forth in the Preliminary Statement hereto as its initial
uncertificated
balance. On each Distribution Date, the Uncertificated Balance of
each REMIC I
Regular Interest shall be reduced by all distributions of principal
made on such
REMIC I Regular Interest on such Distribution Date pursuant to
Section 4.01 and,
if and to the extent necessary and appropriate, shall be further
reduced on such
Distribution Date by Realized Losses as provided in Section 4.04.
The
Uncertificated Balance of REMIC I Regular Interest I-LTZZ shall be
increased by
interest deferrals as provided in Section 4.01(a)(1)(i)(A). The
Uncertificated
Balance of each REMIC I Regular Interest shall never be less than
zero.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for
any Distribution Date, one month's interest at the REMIC I
Remittance Rate
applicable to such REMIC I Regular Interest for such Distribution
Date, accrued
on the Uncertificated Balance thereof immediately prior to such
Distribution
Date. Uncertificated Interest in respect of any
44
REMIC I Regular Interest shall accrue on the basis of a 360-day
year consisting
of twelve 30-day months. Uncertificated Interest with respect to
each
Distribution Date, as to any REMIC I Regular Interest, shall be
reduced by an
amount equal to the sum of (a) the aggregate Prepayment Interest
Shortfall, if
any, for such Distribution Date to the extent not covered by
payments pursuant
to Section 3.24 and (b) the aggregate amount of any Relief Act
Interest
Shortfall, if any allocated, in each case, to such REMIC I Regular
Interest
pursuant to Section 1.02. In addition, Uncertificated Interest with
respect to
each Distribution Date, as to any REMIC I Regular Interest shall be
reduced by
Realized Losses, if any, allocated to such REMIC I Regular Interest
pursuant to
Section 1.02 and Section 4.04.
"Underwriters' Exemption": An individual exemption issued by the
United
States Department of Labor, Prohibited Transaction Exemption 90-30,
as amended,
to Bear, Stearns & Co. Inc, for specific offerings in which
Bear, Stearns & Co.
Inc. or any person directly or indirectly, through one or more
intermediaries,
controlling, controlled by or under common control with Bear,
Stearns & Co. Inc.
is an underwriter, placement agent or a manager or co-manager of
the
underwriting syndicate or selling group where the trust and the
offered
certificates meet specified conditions. The Underwriters'
Exemption, as amended,
provides a partial exemption for transactions involving
certificates
representing a beneficial interest in a trust and entitling the
holder to
pass-through payments of principal, interest and/or other payments
with respect
to the trust's assets.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that
the complete restoration of such property is not fully reimbursable
by the
hazard insurance policies required to be maintained pursuant to
Section 3.14.
"United States Person": A citizen or resident of the United States,
a
corporation, 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, any state thereof, or
the District
of Columbia (except in the case of a partnership, to the extent
provided in
Treasury regulations) provided that, for purposes solely of the
restrictions on
the transfer of Class R Certificates, no partnership or other
entity treated as
a partnership for United States federal income tax purposes shall
be treated as
a United States Person unless all persons that own an interest in
such
partnership either directly or through any entity that is not a
corporation for
United States federal income tax purposes are required by the
applicable
operative agreement to be United States Persons, or an estate the
income of
which 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. The term "United
States"
shall have the meaning set forth in Section 7701 of the Code or
successor
provisions.
"Value": With respect to any Mortgaged Property, the lesser of (i)
the
lesser of (a) the value thereof as determined by an appraisal made
for the
Originator of the Mortgage Loan at the time of origination of the
Mortgage Loan
by an appraiser who met the minimum requirements of Fannie Mae and
Freddie Mac
and (b) the value thereof as determined by a review appraisal
45
conducted by the Originator in accordance with the Originator's
underwriting
guidelines, and (ii) the purchase price paid for the related
Mortgaged Property
by the Mortgagor with the proceeds of the Mortgage Loan; provided,
however, (A)
in the case of a Refinanced Mortgage Loan, such value of the
Mortgaged Property
is based solely upon the lesser of (1) the value determined by an
appraisal made
for the Originator of such Refinanced Mortgage Loan at the time of
origination
of such Refinanced Mortgage Loan by an appraiser who met the
minimum
requirements of Fannie Mae and Freddie Mac and (2) the value
thereof as
determined by a review appraisal conducted by the Originator in
accordance with
the Originator's underwriting guidelines, and (B) in the case of a
Mortgage Loan
originated in connection with a "lease-option purchase," such value
of the
Mortgaged Property is based on the lower of the value determined by
an appraisal
made for the Originator of such Mortgage Loan at the time of
origination or the
sale price of such Mortgaged Property if the "lease option purchase
price" was
set less than 12 months prior to origination, and is based on the
value
determined by an appraisal made for the Originator of such Mortgage
Loan at the
time of origination if the "lease option purchase price" was set 12
months or
more prior to origination.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. With respect to
any date of
determination, 98% of all Voting Rights will be allocated among the
holders of
the Class A Certificates, the Mezzanine Certificates and the Class
CE
Certificates in proportion to the then outstanding Certificate
Principal
Balances of their respective Certificates, 1% of all Voting Rights
will be
allocated to the holders of the Class P Certificates and 1% of all
Voting Rights
will be allocated among the holders of the Residual Certificates.
The Voting
Rights allocated to each Class of Certificate shall be allocated
among Holders
of each such Class in accordance with their respective Percentage
Interests as
of the most recent Record Date.
SECTION 1.02 Allocation of Certain Interest Shortfalls. For
purposes of
calculating the amount of Accrued Certificate Interest and the
amount of the
Interest Distribution Amount for the Class A Certificates, the
Mezzanine
Certificates and the Class CE Certificates for any Distribution
Date, (1) the
aggregate amount of any Prepayment Interest Shortfalls (to the
extent not
covered by payments by the Servicer pursuant to Section 3.24) and
any Relief Act
Interest Shortfall incurred in respect of the Mortgage Loans for
any
Distribution Date shall be allocated first, to the Class CE
Certificates based
on, and to the extent of, one month's interest at the then
applicable
Pass-Through Rate on the Notional Amount of the Class CE
Certificates and,
thereafter, among the Class A Certificates and the Mezzanine
Certificates on a
pro rata basis based on, and to the extent of, one month's interest
at the then
applicable respective Pass-Through Rate on the respective
Certificate Principal
Balance of each such Certificate and (2) the aggregate amount of
any Realized
Losses incurred for any Distribution Date shall be allocated to the
Class CE
Certificates based on, and to the extent of, one month's interest
at the then
applicable Pass-Through Rate on the Notional Amount of the Class CE
Certificates.
For purposes of calculating the amount of Uncertificated Interest
for the
REMIC I Regular Interests for any Distribution Date, the aggregate
amount of any
Prepayment Interest Shortfalls (to the extent not covered by
payments by the
Servicer pursuant to Section 3.24) and any Relief Act Interest
Shortfalls
incurred in respect of the Mortgage Loans for any Distribution Date
shall be
allocated among REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest
I-
46
LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular Interest
I-LTA3, REMIC I
Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular
Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular
Interest
I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular Interest
I-LTM7, REMIC
I Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I
Regular
Interest I-LTM10 and REMIC I Regular Interest I-LTZZ pro rata based
on, and to
the extent of, one month's interest at the then applicable
respective
Pass-Through Rate on the respective Uncertificated Balance of each
such REMIC I
Regular Interest.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01 Conveyance of the Mortgage Loans. The Depositor,
concurrently
with the execution and delivery hereof, does hereby transfer,
assign, set over
and otherwise convey to the Trustee without recourse, for the
benefit of the
Certificateholders, all the right, title and interest of the
Depositor,
including any security interest therein for the benefit of the
Depositor, in and
to the Mortgage Loans identified on the Mortgage Loan Schedule, the
rights of
the Depositor under the Mortgage Loan Purchase Agreement, and all
other assets
included or to be included in REMIC I. Such assignment includes all
interest and
principal received by the Depositor or the Servicer on or with
respect to the
Mortgage Loans (other than payments of principal and interest due
on such
Mortgage Loans on or before the Cut-off Date). The Depositor
herewith delivers
to the Trustee an executed copy of the Mortgage Loan Purchase
Agreement. In
addition, on the Closing Date, the Trustee is hereby directed to
enter into the
Swap Agreement on behalf of the Trust Fund with the Swap
Counterparty.
In connection with such transfer and assignment, the Depositor,
does hereby
deliver to, and deposit with the Trustee the following documents or
instruments
with respect to each Mortgage Loan so transferred and assigned (in
each case, a
"Mortgage File"):
(i) the original Mortgage Note, endorsed in blank or in the
following
form "Pay to the order of Deutsche Bank National Trust Company, as
Trustee
under the applicable agreement, without recourse," with all prior
and
intervening endorsements showing a complete chain of endorsement
from the
originator to the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording thereon, and
the
original recorded power of attorney, if the Mortgage was executed
pursuant
to a power of attorney, with evidence of recording thereon;
(iii) an original Assignment in blank;
(iv) the original recorded Assignment or Assignments showing a
complete chain of assignment from the originator to the Person
assigning
the Mortgage to the Trustee as contemplated by the immediately
preceding
clause (iii);
47
(v) the original or copies of each assumption, modification or
substitution agreement, if any; and
(vi) the original lender's title insurance policy or, if the
original
title policy has not been issued, the irrevocable commitment to
issue the
same.
With respect to a maximum of approximately 2.0% of the Original
Mortgage
Loans, by outstanding Stated Principal Balance of the Original
Mortgage Loans as
of the Cut-off Date, if any original Mortgage Note referred to in
Section
2.01(i) above cannot be located, the obligations of the Depositor
to deliver
such documents shall be deemed to be satisfied upon delivery to the
Trustee of a
photocopy of such Mortgage Note, if available, with a lost note
affidavit
substantially in the form of Exhibit H attached hereto. If any of
the original
Mortgage Notes for which a lost note affidavit was delivered to the
Trustee is
subsequently located, such original Mortgage Note shall be
delivered to the
Trustee within three Business Days.
If any of the documents referred to in Sections 2.01(ii), (iii) or
(iv)
above has, as of the Closing Date, been submitted for recording but
either (x)
has not been returned from the applicable public recording office
or (y) has
been lost or such public recording office has retained the original
of such
document, the obligations of the Depositor to deliver such
documents shall be
deemed to be satisfied upon (1) delivery to the Trustee of a copy
of each such
document certified by the Originator in the case of (x) above or
the applicable
public recording office in the case of (y) above to be a true and
complete copy
of the original that was submitted for recording and (2) if such
copy is
certified by the Originator, delivery to the Trustee promptly upon
receipt
thereof of either the original or a copy of such document certified
by the
applicable public recording office to be a true and complete copy
of the
original. Notice shall be provided to the Trustee and the Rating
Agencies by the
Depositor if delivery pursuant to clause (2) above will be made
more than 180
days after the Closing Date. If the original lender's title
insurance policy was
not delivered pursuant to Section 2.01(vi) above, the Depositor
shall deliver or
cause to be delivered to the Trustee, promptly after receipt
thereof, the
original lender's title insurance policy. The Depositor shall
deliver or cause
to be delivered to the Trustee promptly upon receipt thereof any
other original
documents constituting a part of a Mortgage File received with
respect to any
Mortgage Loan, including, but not limited to, any original
documents evidencing
an assumption or modification of any Mortgage Loan.
The Trustee shall enforce the obligations of the Seller under the
Mortgage
Loan Purchase Agreement to promptly (within sixty Business Days
following the
later of the Closing Date and the date of receipt by the Trustee of
the
recording information for a Mortgage, but in no event later than
ninety days
following the Closing Date) submit or cause to be submitted for
recording, at
the expense of the Responsible Party and at no expense to the Trust
Fund, the
Trustee or the Depositor, in the appropriate public office for real
property
records, each Assignment referred to in Sections 2.01(iii) and (iv)
above and
the Depositor shall execute each original Assignment or cause each
original
Assignment to be executed in the following form: "Deutsche Bank
National Trust
Company, as Trustee under the applicable agreement." In the event
that any such
Assignment is lost or returned unrecorded because of a defect
therein, the
Seller shall promptly prepare or cause to be prepared (at the
expense of the
Responsible Party) a substitute Assignment or cure or cause to be
cured such
defect, as the case may be, and thereafter cause each such
48
Assignment to be duly recorded. If the Responsible Party is unable
to pay the
cost of recording the Assignments, such expense will be paid by the
Trustee and
shall be reimbursable to the Trustee as an Extraordinary Trust Fund
Expense.
Notwithstanding the foregoing, the Trustee shall not be responsible
for
determining whether any Assignment delivered by the Depositor
hereunder is in
recordable form.
Notwithstanding the foregoing, however, for administrative
convenience and
facilitation of servicing and to reduce closing costs, the
Assignments shall not
be required to be submitted for recording (except with respect to
any Mortgage
Loan located in Maryland) unless the Trustee or the Depositor
receives written
notice that failure to record would result in a withdrawal or a
downgrading by
any Rating Agency of the rating on any Class of Certificates;
provided, however,
the Trustee shall enforce the obligations of the Seller under the
Mortgage Loan
Purchase Agreement to submit or cause to be submitted each
Assignment for
recording in the manner described above, at no expense to the Trust
Fund or the
Trustee, upon the earliest to occur of: (i) reasonable direction by
Holders of
Certificates entitled to at least 25% of the Voting Rights, (ii)
the occurrence
of a Servicer Event of Default, (iii) the occurrence of a
bankruptcy, insolvency
or foreclosure relating to the Servicer, (iv) the occurrence of a
servicing
transfer as described in Section 7.02 hereof, (v) with respect to
any one
Assignment, the occurrence of a bankruptcy, insolvency or
foreclosure relating
to the Mortgagor under the related Mortgage and (vi) any Mortgage
Loan that is
90 days or more Delinquent. Upon receipt of written notice by the
Trustee from
the Servicer that recording of the Assignments is required pursuant
to one or
more of the conditions set forth in the preceding sentence, the
Depositor shall
be required to deliver such Assignments or shall cause such
Assignments to be
delivered within 30 days following receipt of such notice.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by or on behalf of
the Seller,
the Depositor or the Servicer, as the case may be, in trust for the
benefit of
the Trustee on behalf of the Certificateholders. In the event that
any such
original document is required pursuant to the terms of this Section
2.01 to be a
part of a Mortgage File, such document shall be delivered promptly
to the
Trustee. Any such original document delivered to or held by the
Depositor that
is not required pursuant to the terms of this Section to be a part
of a Mortgage
File, shall be delivered promptly to the Servicer.
The parties hereto understand and agree that it is not intended
that any
Mortgage Loans be included in the Trust that are (a) "high cost"
loans under the
Home Ownership and Equity Protection Act of 1994 or (b) "high
cost,"
"threshold," "covered" or "predatory" loans under any other
applicable federal,
state or local law (including without limitation any regulation or
ordinance)
(or a similarly classified loan using different terminology under a
law imposing
heightened regulatory scrutiny or additional legal liability for
residential
mortgage loans having high interest rates, points and/or fees).
SECTION 2.02 Acceptance of REMIC I by Trustee. The Trustee,
acknowledges
receipt, subject to the provisions of Section 2.01 above and
subject to any
exceptions noted on the exception report described in the next
paragraph below,
of the documents referred to in Section 2.01 (other than such
documents
described in Section 2.01(v)) and all other assets included in the
definition of
"REMIC I" under clauses (i), (iii), (iv) and (v) (to the extent of
amounts
attributable
49
thereto deposited into the Certificate Account) and declares that
it holds and
will hold such documents and the other documents delivered to it
constituting a
Mortgage File, and that it holds or will hold all such assets and
such other
assets included in the definition of "REMIC I" in trust for the
exclusive use
and benefit of all present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders, to
review
each Mortgage File on or before the Closing Date and to certify in
substantially
the form attached hereto as Exhibit C-1 that, as to each Mortgage
Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any
Mortgage Loan specifically identified in the exception report
annexed thereto as
not being covered by such certification), (i) all documents
constituting part of
such Mortgage File (other than such documents described in Section
2.01(v))
required to be delivered to it pursuant to this Agreement are in
its possession,
(ii) such documents have been reviewed by it and appear regular on
their face
and relate to such Mortgage Loan and (iii) based on its examination
and only as
to the foregoing, the information set forth in the Mortgage Loan
Schedule that
corresponds to items (i), (ii), (x), (xi) and (xiv) of the
definition of
"Mortgage Loan Schedule" accurately reflects information set forth
in the
Mortgage File. It is herein acknowledged that, in conducting such
review, the
Trustee was under no duty or obligation (i) to inspect, review or
examine any
such documents, instruments, certificates or other papers to
determine whether
they are genuine, enforceable, valid, legally binding, effective or
appropriate
for the represented purpose or whether they have actually been
recorded or are
in recordable form or that they are other than what they purport to
be on their
face, (ii) to determine whether any Mortgage File should include
any of the
documents specified in clause (v) of Section 2.01 or (iii) to
determine the
perfection or priority of any security interest in any such
documents or
instruments. Notwithstanding the foregoing, in conducting the
review described
in this Section 2.02, the Trustee shall not be responsible for
determining (i)
if an Assignment is sufficient under the laws of the jurisdiction
wherein the
related Mortgaged Property is located to reflect of record the sale
of the
Mortgage or (ii) if a Mortgage creates a first lien on, or first
priority
security interest in, a Mortgaged Property.
Prior to the first anniversary date of this Agreement, the Trustee
shall
deliver to the Depositor and the Servicer a final certification in
the form
annexed hereto as Exhibit C-2 evidencing the completeness of the
Mortgage Files,
with any applicable exceptions noted thereon, and the Servicer
shall forward a
copy thereof to any Sub-Servicer.
If in the process of reviewing the Mortgage Files and making or
preparing,
as the case may be, the certifications referred to above, the
Trustee finds any
document or documents constituting a part of a Mortgage File to be
missing or
defective in any material respect, at the conclusion of its review
the Trustee
shall so notify the Depositor and the Servicer. In addition, upon
the discovery
by the Depositor, the Servicer or the Trustee of a breach of any of
the
representations and warranties made by either the Responsible Party
or the
Seller in the related Mortgage Loan Purchase Agreement in respect
of any
Mortgage Loan which materially adversely affects such Mortgage Loan
or the
interests of the Certificateholders in such Mortgage Loan, the
party discovering
such breach shall give prompt written notice to the other parties.
50
The Trustee shall, at the written request and expense of any
Certificateholder, provide a written report to such
Certificateholder of all
Mortgage Files released to the Servicer for servicing purposes.
The Depositor and the Trustee intend that the assignment and
transfer
herein contemplated is absolute and constitutes a sale of the
Mortgage Loans,
the related Mortgage Notes and the related documents, conveying
good title
thereto free and clear of any liens and encumbrances, from the
Depositor to the
Trustee in trust for the benefit of the Certificateholders and that
such
property not be part of the Depositor's estate or property of the
Depositor in
the event of any insolvency by the Depositor. In the event that
such conveyance
is deemed to be, or to be made as security for, a loan, the parties
intend that
the Depositor shall be deemed to have granted and does hereby grant
to the
Trustee a first priority perfected security interest in all of the
Depositor's
right, title and interest in and to the Mortgage Loans, the related
Mortgage
Notes and the related documents, and that this Agreement shall
constitute a
security agreement under applicable law.
SECTION 2.03 Repurchase or Substitution of Mortgage Loans by the
Responsible Party and the Seller. (a) Upon discovery or receipt of
notice of any
materially defective document in, or that a document is missing
from, a Mortgage
File or of the breach by the Responsible Party or the Seller of any
representation, warranty or covenant under the Mortgage Loan
Purchase Agreement
in respect of any Mortgage Loan that materially adversely affects
the value of
such Mortgage Loan or the interest therein of the
Certificateholders, the
Trustee shall promptly notify the Seller, the Responsible Party and
the Servicer
of such defect, missing document or breach and request that the
Responsible
Party or the Seller, as applicable, deliver such missing document
or cure such
defect or breach within 60 days from the date the Responsible Party
or the
Seller, as applicable, was notified of such missing document,
defect or breach,
and if the Responsible Party or the Seller, as applicable, does not
deliver such
missing document or cure such defect or breach in all material
respects during
such period, the Trustee shall enforce the obligations of the
Responsible Party
or the Seller, as applicable, under the Mortgage Loan Purchase
Agreement to
repurchase such Mortgage Loan from REMIC I at the Purchase Price
within 90 days
after the date on which the Responsible Party or the Seller, as
applicable, was
notified (subject to Section 2.03(c)) of such missing document,
defect or
breach, if and to the extent that the Responsible Party or the
Seller, as
applicable, is obligated to do so under the Mortgage Loan Purchase
Agreement.
The Purchase Price for the repurchased Mortgage Loan shall be
remitted to the
Servicer for deposit in the Custodial Account and the Trustee, upon
receipt of
written certification from the Servicer of such deposit, shall
release to the
Responsible Party or the Seller, as applicable, the related
Mortgage File and
the Trustee shall execute and deliver such instruments of transfer
or
assignment, in each case without recourse, as the Responsible Party
or the
Seller, as applicable, shall furnish to it and as shall be
necessary to vest in
the Responsible Party or the Seller, as applicable, any Mortgage
Loan released
pursuant hereto. The Trustee shall not have any further
responsibility with
regard to such Mortgage File. In lieu of repurchasing any such
Mortgage Loan as
provided above, if so provided in the Mortgage Loan Purchase
Agreement, the
Responsible Party or the Seller, as applicable, may cause such
Mortgage Loan to
be removed from REMIC I (in which case it shall become a Deleted
Mortgage Loan)
and substitute one or more Qualified Substitute Mortgage Loans in
the manner and
subject to the limitations set forth in Section 2.03(b); provided,
however, the
51
Responsible Party may not substitute a Qualified Substitute
Mortgage Loan for
any Deleted Mortgage Loan that violates any predatory or abusive
lending law. It
is understood and agreed that the obligation of the Responsible
Party and the
Seller to cure or to repurchase (or to substitute for) any Mortgage
Loan as to
which a document is missing, a material defect in a constituent
document exists
or as to which such a breach has occurred and is continuing shall
constitute the
sole remedy respecting such omission, defect or breach available to
the Trustee
and the Certificateholders.
(b) Any substitution of Qualified Substitute Mortgage Loans for
Deleted
Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the
date which is two years after the Startup Day for REMIC I.
As to any Deleted Mortgage Loan for which the Responsible Party or
the
Seller, as applicable, substitutes a Qualified Substitute Mortgage
Loan or
Loans, such substitution shall be effected by the Responsible Party
or the
Seller, as applicable, delivering to the Trustee, for such
Qualified Substitute
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the
Assignment to the
Trustee, and such other documents and agreements, with all
necessary
endorsements thereon, as are required by Section 2.01, together
with an
Officers' Certificate providing that each such Qualified Substitute
Mortgage
Loan satisfies the definition thereof and specifying the
Substitution Shortfall
Amount (as described below), if any, in connection with such
substitution. The
Trustee shall acknowledge receipt for such Qualified Substitute
Mortgage Loan or
Loans and, within ten Business Days thereafter, shall review such
documents as
specified in Section 2.02 and deliver to the Depositor and the
Servicer, with
respect to such Qualified Substitute Mortgage Loan or Loans, a
certification
substantially in the form attached hereto as Exhibit C-1, with any
applicable
exceptions noted thereon. Within one year of the date of
substitution, the
Trustee shall deliver to the Depositor and the Servicer a
certification
substantially in the form of Exhibit C-2 hereto with respect to
such Qualified
Substitute Mortgage Loan or Loans, with any applicable exceptions
noted thereon.
Monthly Payments due with respect to Qualified Substitute Mortgage
Loans in the
month of substitution are not part of REMIC I and will be retained
by the
Responsible Party or the Seller, as applicable. For the month of
substitution,
distributions to Certificateholders will reflect the Monthly
Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of
substitution,
and the Responsible Party or the Seller, as applicable, shall
thereafter be
entitled to retain all amounts subsequently received in respect of
such Deleted
Mortgage Loan. The Depositor shall give or cause to be given
written notice to
the Certificateholders that such substitution has taken place,
shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified
Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended
Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Qualified
Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool
and shall be
subject in all respects to the terms of this Agreement and the
Mortgage Loan
Purchase Agreement, including, all applicable representations and
warranties
thereof included in the Mortgage Loan Purchase Agreement.
For any month in which the Responsible Party or the Seller, as
applicable,
substitutes one or more Qualified Substitute Mortgage Loans for one
or more
Deleted Mortgage Loans, the Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the
52
aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the
aggregate of, as to each such Qualified Substitute Mortgage Loan,
the Stated
Principal Balance thereof as of the date of substitution, together
with one
month's interest on such Stated Principal Balance at the applicable
Net Mortgage
Rate, plus all outstanding Advances and Servicing Advances
(including
Nonrecoverable Advances and Nonrecoverable Servicing Advances)
related thereto.
On the date of such substitution, the Responsible Party or the
Seller, as
applicable, will deliver or cause to be delivered to the Servicer
for deposit in
the Custodial Account an amount equal to the Substitution Shortfall
Amount, if
any, and the Trustee, upon receipt of the related Qualified
Substitute Mortgage
Loan or Loans and certification by the Servicer of such deposit,
shall release
to the Responsible Party or the Seller, as applicable, the related
Mortgage File
or Files and the Trustee shall execute and deliver such instruments
of transfer
or assignment, in each case without recourse, the Responsible Party
or the
Seller, as applicable, shall deliver to it and as shall be
necessary to vest
therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Responsible Party or the Seller, as applicable,
shall
obtain at its own expense and deliver to the Trustee an Opinion of
Counsel to
the effect that such substitution will not cause (a) any federal
tax to be
imposed on any Trust REMIC, including without limitation, any
federal tax
imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on
"contributions after the startup date" under Section 860G(d)(1) of
the Code, or
(b) any Trust REMIC to fail to qualify as a REMIC at any time that
any
Certificate is outstanding.
(c) Upon discovery by the Depositor, the Servicer or the Trustee
that any
Mortgage Loan does not constitute a "qualified mortgage" within the
meaning of
Section 860G(a)(3) of the Code, the party discovering such fact
shall within two
Business Days give written notice thereof to the other parties. In
connection
therewith, the Responsible Party shall repurchase or, subject to
the limitations
set forth in Section 2.03(b), substitute one or more Qualified
Substitute
Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of
discovery or receipt of such notice with respect to such affected
Mortgage Loan.
Such repurchase or substitution shall be made by (i) the
Responsible Party or
the Seller, as the case may be, if the affected Mortgage Loan's
status as a
non-qualified mortgage is or results from a breach of any
representation,
warranty or covenant made by the Responsible Party or the Seller,
as the case
may be, under the Mortgage Loan Purchase Agreement, or (ii) the
Depositor, if
the affected Mortgage Loan's status as a non-qualified mortgage is
a breach of
no representation or warranty. Any such repurchase or substitution
shall be made
in the same manner as set forth in Section 2.03(a). The Trustee
shall reconvey
to the Responsible Party the Mortgage Loan to be released pursuant
hereto in the
same manner, and on the same terms and conditions, as it would a
Mortgage Loan
repurchased for breach of a representation or warranty.
SECTION 2.04 [Reserved].
SECTION 2.05 Representations, Warranties and Covenants of the
Servicer. The
Servicer hereby represents, warrants and covenants to the Trustee,
for the
benefit of the Certificateholders and to the Depositor that as of
the Closing
Date or as of such date specifically provided herein:
53
(i) The Servicer is a corporation duly organized and validly
existing
under the laws of the State of California and is duly authorized
and
qualified to transact any and all business contemplated by this
Agreement
to be conducted by the Servicer in any state in which a Mortgaged
Property
is located or is otherwise not required under applicable law to
effect such
qualification and, in any event, is in compliance with the doing
business
laws of any such State, to the extent necessary to ensure its
ability to
enforce each Mortgage Loan and to service the Mortgage Loans in
accordance
with the terms of this Agreement;
(ii) The Servicer has the full power and authority to conduct its
business as presently conducted by it and to execute, deliver and
perform,
and to enter into and consummate, all transactions contemplated by
this
Agreement. The Servicer has duly authorized the execution, delivery
and
performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization,
execution and
delivery by the Depositor and the Trustee, constitutes a legal,
valid and
binding obligation of the Servicer, enforceable against it in
accordance
with its terms except as the enforceability thereof may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting
the
enforcement of creditors' rights generally and by general
principles of
equity;
(iii) The execution and delivery of this Agreement by the Servicer,
the servicing of the Mortgage Loans by the Servicer hereunder, the
consummation by the Servicer of any other of the transactions
herein
contemplated, and the fulfillment of or compliance with the terms
hereof
are in the ordinary course of business of the Servicer and will not
(A)
result in a breach of any term or provision of the charter or
by-laws of
the Servicer or (B) conflict with, result in a breach, violation or
acceleration of, or result in a default under, the terms of any
other
material agreement or instrument to which the Servicer is a party
or by
which it may be bound, or any statute, order or regulation
applicable to
the Servicer of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over the Servicer; and the
Servicer
is not a party to, bound by, or in breach or violation of any
indenture or
other agreement or instrument, or subject to or in violation of any
statute, order or regulation of any court, regulatory body,
administrative
agency or governmental body having jurisdiction over it, which
materially
and adversely affects or, to the Servicer's knowledge, would in the
future
materially and adversely affect, (x) the ability of the Servicer to
perform
its obligations under this Agreement or (y) the business,
operations,
financial condition, properties or assets of the Servicer taken as
a whole;
(iv) The Servicer is a HUD approved servicer. No event has
occurred,
including but not limited to a change in insurance coverage, that
would
make the Servicer unable to comply with HUD eligibility
requirements or
that would require notification to HUD;
(v) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant
made by it
and contained in this Agreement;
54
(vi) No litigation is pending against the Servicer that would
materially and adversely affect the execution, delivery or
enforceability
of this Agreement or the ability of the Servicer to service the
Mortgage
Loans or to perform any of its other obligations hereunder in
accordance
with the terms hereof;
(vii) There are no actions or proceedings against, or
investigations
known to it of, the Servicer before any court, administrative or
other
tribunal (A) that might prohibit its entering into this Agreement,
(B)
seeking to prevent the consummation of the transactions
contemplated by
this Agreement or (C) that might prohibit or materially and
adversely
affect the performance by the Servicer of its obligations under, or
validity or enforceability of, this Agreement;
(viii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and
performance by the Servicer of, or compliance by the Servicer with,
this
Agreement or the consummation by it of the transactions
contemplated by
this Agreement, except for such consents, approvals, authorizations
or
orders, if any, that have been obtained prior to the Closing Date;
(ix) The Servicer will not waive any Prepayment Charge unless it is
waived in accordance with the standard set forth in Section 3.01;
(x) The Servicer has fully furnished and will continue to fully
furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian and Trans Union Credit Information Company or their
successors on
a monthly basis; and
(xi) No information, certificate of an officer, statement furnished
in
writing or report delivered to the Depositor, any Affiliate of the
Depositor or the Trustee by the Servicer will, to the knowledge of
the
Servicer, contain any untrue statement of a material fact or omit a
material fact necessary to make the information, certificate,
statement or
report not misleading.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.05 shall survive delivery of
the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee,
the
Depositor and the Certificateholders. Upon discovery by any of the
Depositor,
the Servicer or the Trustee of a breach of any of the foregoing
representations,
warranties and covenants which materially and adversely affects the
value of any
Mortgage Loan or the interests therein of the Certificateholders,
the party
discovering such breach shall give prompt written notice (but in no
event later
than two Business Days following such discovery) to the Trustee.
Subject to
Section 7.01, unless such breach shall not be susceptible of cure
within 90
days, the obligation of the Servicer set forth in this Section 2.05
to cure
breaches shall constitute the sole remedy against the Servicer
available to the
Certificateholders, the Depositor and the Trustee on behalf of the
Certificateholders respecting a breach of the representations,
warranties and
covenants contained in this Section 2.05. Notwithstanding the
foregoing, within
90 days of the earlier of discovery by the Servicer or receipt of
notice by the
Servicer of the
55
breach of the representation or covenant of the Servicer set forth
in Section
2.05(ix) above, which breach materially and adversely affects the
interests of
the Holders of the Class P Certificates in any Prepayment Charge,
the Servicer
shall pay the amount of such waived Prepayment Charge, for the
benefit of the
Holders of the Class P Certificates, by depositing such amount into
the
Custodial Account.
SECTION 2.06 Issuance of the REMIC I Regular Interests and the
Class R-I
Interest. The Trustee acknowledges the assignment to it of the
Mortgage Loans
and the delivery to it of the Mortgage Files, subject to the
provisions of
Section 2.01 and Section 2.02, together with the assignment to it
of all other
assets included in REMIC I, the receipt of which is hereby
acknowledged.
Concurrently with such assignment and delivery and in exchange
therefor, the
Trustee, pursuant to the written request of the Depositor executed
by an officer
of the Depositor, has executed, authenticated and delivered to or
upon the order
of the Depositor, the Class R Certificates (in respect of the Class
R-I
Interest) in authorized denominations. The interests evidenced by
the Class R-I
Interest, together with the REMIC I Regular Interests, constitute
the entire
beneficial ownership interest in REMIC I. The rights of the Class
R-I Interest
and REMIC II (as holder of the REMIC I Regular Interest) to receive
distributions from the proceeds of REMIC I in respect of the Class
R-I Interest
and the REMIC I Regular Interests, and all ownership interests
evidenced or
constituted by the Class R-I Interest and the REMIC I Regular
Interests, shall
be as set forth in this Agreement.
SECTION 2.07 Conveyance of the REMIC I Regular Interests;
Acceptance of
REMIC II by the Trustee. The Depositor, concurrently with the
execution and
delivery hereof, does hereby transfer, assign, set over and
otherwise convey to
the Trustee, without recourse all the right, title and interest of
the Depositor
in and to the REMIC I Regular Interests for the benefit of the
Class R-II
Interest and REMIC II (as holder of the REMIC I Regular Interests).
The Trustee
acknowledges receipt of the REMIC I Regular Interests and declares
that it holds
and will hold the same in trust for the exclusive use and benefit
of all present
and future holders of the Class R-II Interest and REMIC II (as
holder of the
REMIC I Regular Interests). The rights of the holders of the Class
R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests) to
receive
distributions from the proceeds of REMIC II in respect of the Class
R-II
Interest and REMIC II Regular Interests, respectively, and all
ownership
interests evidenced or constituted by the Class R-II Interest and
the REMIC II
Regular Interests, shall be as set forth in this Agreement.
SECTION 2.08 Issuance of Class R Certificates. The Trustee
acknowledges the
assignment to it of the REMIC Regular Interests and, concurrently
therewith and
in exchange therefor, pursuant to the written request of the
Depositor executed
by an officer of the Depositor, the Trustee has executed,
authenticated and
delivered to or upon the order of the Depositor, the Class R
Certificates in
authorized denominations.
56
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01 Servicer to Act as Servicer. The Servicer shall
service and
administer the Mortgage Loans on behalf of the Trust Fund and in
the best
interests of and for the benefit of the Certificateholders (as
determined by the
Servicer in its reasonable judgment) in accordance with the terms
of this
Agreement and the respective Mortgage Loans and, to the extent
consistent with
such terms, in the same manner in which it services and administers
similar
mortgage loans for its own portfolio, and in accordance with
customary and usual
standards of practice of mortgage lenders and loan servicers
administering
similar mortgage loans but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or any
Affiliate of the Servicer or any Sub-Servicer may have with the
related
Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer
or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make Advances or Servicing
Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any
particular
transaction.
To the extent consistent with the foregoing, the Servicer (a) shall
seek to
maximize the timely and complete recovery of principal and interest
on the
Mortgage Notes and (b) shall waive (or permit a Sub-Servicer to
waive) a
Prepayment Charge only under the following circumstances: (i) such
waiver is
standard and customary in servicing similar Mortgage Loans and (ii)
such waiver
would, in the reasonable judgment of the Servicer, maximize
recovery of total
proceeds taking into account the value of such Prepayment Charge
and the related
Mortgage Loan and, if such waiver is made in connection with a
refinancing of
the related Mortgage Loan, such refinancing is related to a default
or a
reasonably foreseeable default or (iii) collection of the related
Prepayment
Charge would violate applicable law. If a Prepayment Charge is
waived as
permitted by meeting both of the standards described in clauses (i)
and (ii)
above, then the Servicer is required to pay the amount of such
waived Prepayment
Charge, for the benefit of the Holders of the Class P Certificates,
by
depositing such amount into the Custodial Account together with and
at the time
that the amount prepaid on the related Mortgage Loan is required to
be deposited
into the Custodial Account. Notwithstanding any other provisions of
this
Agreement, any payments made by the Servicer in respect of any
waived Prepayment
Charges pursuant to clauses (i) and (ii) shall be deemed to be paid
outside of
the Trust Fund.
Subject only to the above-described servicing standards and the
terms of
this Agreement and of the respective Mortgage Loans, the Servicer
shall have
full power and authority, acting alone or through Sub-Servicers as
provided in
Section 3.02, to do or cause to be done any and all things in
connection with
such servicing and administration which it may deem necessary or
desirable.
Without limiting the generality of the foregoing, the Servicer in
its own name
or in the
57
name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when
the Servicer believes it appropriate in its best judgment, for the
benefit of
the Certificateholders, in accordance with the servicing standards
set forth
above, to execute and deliver, on behalf of the Trust Fund, the
Certificateholders and the Trustee or any of them, and upon written
notice to
the Trustee, any and all instruments of satisfaction or
cancellation, or of
partial or full release or discharge, and all other comparable
instruments, with
respect to the Mortgage Loans and the Mortgaged Properties and to
institute
foreclosure proceedings or obtain a deed-in-lieu of foreclosure so
as to convert
the ownership of such properties, and to hold or cause to be held
title to such
properties, on behalf of the Trustee and Certificateholders. The
Servicer shall
service and administer the Mortgage Loans in accordance with
applicable state
and federal law and shall provide to the Mortgagors any reports
required to be
provided to them thereby. The Servicer shall also comply in the
performance of
this Agreement with all reasonable rules and requirements of each
insurer under
any standard hazard insurance policy. Subject to Section 3.17, the
Trustee shall
execute, at the written request of the Servicer, and furnish to the
Servicer and
any Sub-Servicer any special or limited powers of attorney and
other documents
necessary or appropriate to enable the Servicer or any Sub-Servicer
to carry out
their servicing and administrative duties hereunder and the Trustee
shall not be
liable for the actions of the Servicer or any Sub-Servicers under
such powers of
attorney.
Subject to Section 3.09 hereof, in accordance with the standards of
the
preceding paragraph, the Servicer shall advance or cause to be
advanced funds as
necessary for the purpose of effecting the timely payment of taxes
and
assessments on the Mortgaged Properties, which advances shall be
Servicing
Advances reimbursable in the first instance from related
collections from the
Mortgagors pursuant to Section 3.09, and further as provided in
Section 3.11.
Any cost incurred by the Servicer or by Sub-Servicers in effecting
the timely
payment of taxes and assessments on a Mortgaged Property shall not,
for the
purpose of calculating distributions to Certificateholders, be
added to the
unpaid principal balance of the related Mortgage Loan,
notwithstanding that the
terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the
Servicer
may not make any future advances with respect to a Mortgage Loan
(except as
provided in Section 4.03) and the Servicer shall not (i) permit any
modification
with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or
increase the principal balance (except for reductions resulting
from actual
payments of principal) or change the final maturity date on such
Mortgage Loan
(unless, as provided in Section 3.07, the Mortgagor is in default
with respect
to the Mortgage Loan or such default is, in the judgment of the
Servicer,
reasonably foreseeable) or (ii) permit any modification, waiver or
amendment of
any term of any Mortgage Loan that would both (A) effect an
exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or
Treasury
regulations promulgated thereunder) and (B) cause any Trust REMIC
to fail to
qualify as a REMIC under the Code or the imposition of any tax on
"prohibited
transactions" or "contributions after the startup date" under the
REMIC
Provisions.
The Servicer may delegate its responsibilities under this
Agreement;
provided, however, that no such delegation shall release the
Servicer from the
responsibilities or liabilities arising under this Agreement.
58
SECTION 3.02 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for
the servicing and administration of the Mortgage Loans; provided,
however, that
such agreements would not result in a withdrawal or a downgrading
by any Rating
Agency of the rating on any Class of Certificates. The Trustee is
hereby
authorized to acknowledge, at the request of the Servicer, any
Sub-Servicing
Agreement that, based on an Officers' Certificate of the Servicer
delivered to
the Trustee (upon which the Trustee can conclusively rely), meets
the
requirements applicable to Sub-Servicing Agreements set forth in
this Agreement
and that is otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in
the state
or states where the related Mortgaged Properties it is to service
are situated,
if and to the extent required by applicable law to enable the
Sub-Servicer to
perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii)
a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub-Servicing
Agreement must impose on the Sub-Servicer requirements conforming
to the
provisions set forth in Section 3.08 and provide for servicing of
the Mortgage
Loans consistent with the terms of this Agreement. The Servicer
will examine
each Sub-Servicing Agreement and will be familiar with the terms
thereof. The
terms of any Sub-Servicing Agreement will not be inconsistent with
any of the
provisions of this Agreement. The Servicer and the Sub-Servicers
may enter into
and make amendments to the Sub-Servicing Agreements or enter into
different
forms of Sub-Servicing Agreements; provided, however, that any such
amendments
or different forms shall be consistent with and not violate the
provisions of
this Agreement, and that no such amendment or different form shall
be made or
entered into which could be reasonably expected to be materially
adverse to the
interests of the Certificateholders without the consent of the
Holders of
Certificates entitled to at least 66% of the Voting Rights;
provided, further,
that the consent of the Holders of Certificates entitled to at
least 66% of the
Voting Rights shall not be required (i) to cure any ambiguity or
defect in a
Sub-Servicing Agreement, (ii) to correct, modify or supplement any
provisions of
a Sub-Servicing Agreement, or (iii) to make any other provisions
with respect to
matters or questions arising under a Sub-Servicing Agreement,
which, in each
case, shall not be inconsistent with the provisions of this
Agreement. Any
variation without the consent of the Holders of Certificates
entitled to at
least 66% of the Voting Rights from the provisions set forth in
Section 3.08
relating to insurance or priority requirements of Sub-Servicing
Accounts, or
credits and charges to the Sub-Servicing Accounts or the timing and
amount of
remittances by the Sub-Servicers to the Servicer, are conclusively
deemed to be
inconsistent with this Agreement and therefore prohibited. The
Servicer shall
deliver to the Trustee, upon its request, copies of all
Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly
upon the
Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer,
for the
benefit of the Trustee and the Certificateholders, shall enforce
the obligations
of each Sub-Servicer under the related Sub-Servicing Agreement,
including,
without limitation, any obligation of a Sub-Servicer to make
advances in respect
of delinquent payments as required by a Sub-Servicing Agreement.
Such
enforcement, including, without limitation, the legal prosecution
of claims,
termination of Sub-Servicing Agreements, and the pursuit of other
appropriate
remedies, shall be in such form and carried out to such an extent
and at such
time as the Servicer, in its good faith business
59
judgment, would require were it the owner of the related Mortgage
Loans. The
Servicer shall pay the costs of enforcing the obligations of a
Sub-Servicer at
its own expense, and shall be reimbursed therefor only (i) from a
general
recovery resulting from such enforcement, to the extent, if any,
that such
recovery exceeds all amounts due in respect of the related Mortgage
Loans, or
(ii) from a specific recovery of costs, expenses or attorneys' fees
against the
party against whom such enforcement is directed.
SECTION 3.03 Successor Sub-Servicers. The Servicer shall be
entitled to
terminate any Sub-Servicing Agreement and the rights and
obligations of any
Sub-Servicer pursuant to any Sub-Servicing Agreement in accordance
with the
terms and conditions of such Sub-Servicing Agreement. In the event
of
termination of any Sub-Servicer, all servicing obligations of such
Sub-Servicer
shall be assumed simultaneously by the Servicer without any act or
deed on the
part of such Sub-Servicer or the Servicer, and the Servicer either
shall service
directly the related Mortgage Loans or shall enter into a
Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under
Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such
agreement
may be immediately terminated by the Trustee without fee, in
accordance with the
terms of this Agreement, in the event that the Servicer (or the
Trustee, if it
is then acting as Servicer) shall, for any reason, no longer be the
Servicer
(including termination due to a Servicer Event of Default).
SECTION 3.04 Liability of the Servicer. Notwithstanding any
Sub-Servicing
Agreement or the provisions of this Agreement relating to
agreements or
arrangements between the Servicer and a Sub-Servicer or reference
to actions
taken through a Sub-Servicer or otherwise, the Servicer shall
remain obligated
and primarily liable to the Trustee and the Certificateholders for
the servicing
and administering of the Mortgage Loans in accordance with the
provisions of
Section 3.01 without diminution of such obligation or liability by
virtue of
such Sub-Servicing Agreements or arrangements or by virtue of
indemnification
from the Sub-Servicer and to the same extent and under the same
terms and
conditions as if the Servicer alone were servicing and
administering the
Mortgage Loans. The Servicer shall be entitled to enter into any
agreement with
a Sub-Servicer for indemnification of the Servicer by such
Sub-Servicer and
nothing contained in this Agreement shall be deemed to limit or
modify such
indemnification.
SECTION 3.05 No Contractual Relationship Between Sub-Servicers, the
Trustee
or the Certificateholders. Any Sub-Servicing Agreement that may be
entered into
and any other transactions or services relating to the Mortgage
Loans involving
a Sub-Servicer in its capacity as such shall be deemed to be
between the
Sub-Servicer and the Servicer alone, and the Trustee and the
Certificateholders
shall not be deemed parties thereto and shall have no claims,
rights,
obligations, duties or liabilities with respect to the Sub-Servicer
except as
set forth in Section 3.06. The Servicer shall be solely liable for
all fees owed
by it to any Sub-Servicer, irrespective of whether the Servicer's
compensation
pursuant to this Agreement is sufficient to pay such fees. The
foregoing
provision shall not in any way limit a Sub-Servicer's obligation to
cure an
omission or defect.
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SECTION 3.06 Assumption or Termination of Sub-Servicing Agreements
by the
Trustee. In the event the Servicer shall for any reason no longer
be the
Servicer (including by reason of the occurrence of a Servicer Event
of Default),
the Trustee, its designee or other successor Servicer shall
thereupon assume all
of the rights and obligations of the Servicer under each
Sub-Servicing Agreement
that the Servicer may have entered into, unless the Trustee, such
designee or
other successor Servicer elects to terminate any Sub-Servicing
Agreement in
accordance with its terms as provided in Section 3.03. Upon such
assumption, the
Trustee, its designee or the successor Servicer for the Trustee
appointed
pursuant to Section 7.02 shall be deemed, subject to Section 3.03,
to have
assumed all of the Servicer's interest therein and to have replaced
the Servicer
as a party to each Sub-Servicing Agreement to the same extent as if
each
Sub-Servicing Agreement had been assigned to the assuming party,
except that (i)
the Servicer shall not thereby be relieved of any liability or
obligations under
any Sub-Servicing Agreement that arose before it ceased to be the
Servicer and
(ii) none of the Trustee, its designee or any successor Servicer
shall be deemed
to have assumed any liability or obligation of the Servicer that
arose before it
ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Trustee,
deliver to
the assuming party all documents and records relating to each
Sub-Servicing
Agreement and the Mortgage Loans then being serviced and an
accounting of
amounts collected and held by or on behalf of it, and otherwise use
its best
efforts to effect the orderly and efficient transfer of each
Sub-Servicing
Agreement to the assuming party.
The Servicing Fee payable to the Trustee as successor Servicer or
other
successor Servicer shall be payable from payments received on the
Mortgage Loans
in the amount and in the manner set forth in this Agreement.
SECTION 3.07 Collection of Certain Mortgage Loan Payments. The
Servicer
shall make reasonable efforts to collect all payments called for
under the terms
and provisions of the Mortgage Loans, and shall, to the extent such
procedures
shall be consistent with this Agreement and the terms and
provisions of any
applicable insurance policies, follow such collection procedures as
it would
follow with respect to mortgage loans comparable to the Mortgage
Loans and held
for its own account. Consistent with the foregoing, the Servicer
may in its
discretion (i) waive any late payment charge or, if applicable, any
penalty
interest, or (ii) extend the due dates for the Monthly Payments due
on a
Mortgage Note for a period of not greater than 180 days; provided,
however, that
any extension pursuant to clause (ii) above shall not affect the
amortization
schedule of any Mortgage Loan for purposes of any computation
hereunder, except
as provided below. In the event of any such arrangement pursuant to
clause (ii)
above, the Servicer shall make timely advances on such Mortgage
Loan during such
extension pursuant to Section 4.03 and in accordance with the
amortization
schedule of such Mortgage Loan without modification thereof by
reason of such
arrangement. Notwithstanding the foregoing, in the event that any
Mortgage Loan
is in default or, in the judgment of the Servicer, such default is
reasonably
foreseeable, the Servicer, consistent with the standards set forth
in Section
3.01, may also waive, modify or vary any term of such Mortgage Loan
(including
modifications that would change the Mortgage Rate, forgive the
payment of
principal or interest or extend the final maturity date of such
Mortgage Loan),
accept payment from the related Mortgagor of an amount less than
the Stated
Principal Balance in final satisfaction of such Mortgage Loan (such
payment,
61
a "Short Pay-off"), or consent to the postponement of strict
compliance with any
such term or otherwise grant indulgence to any Mortgagor.
SECTION 3.08 Sub-Servicing Accounts. In those cases where a
Sub-Servicer is
servicing a Mortgage Loan pursuant to a Sub-Servicing Agreement,
the
Sub-Servicer will be required to establish and maintain one or more
accounts
(collectively, the "Sub-Servicing Account"). The Sub-Servicing
Account shall be
an Eligible Account and shall comply with all requirements of this
Agreement
relating to the Custodial Account. The Sub-Servicer shall deposit
in the
clearing account in which it customarily deposits payments and
collections on
mortgage loans in connection with its mortgage loan servicing
activities on a
daily basis, and in no event more than one Business Day after the
Sub-Servicer's
receipt thereof, all proceeds of Mortgage Loans received by the
Sub-Servicer
less its servicing compensation to the extent permitted by the
Sub-Servicing
Agreement, and shall thereafter deposit such amounts in the
Sub-Servicing
Account, in no event more than two Business Days after the receipt
of such
amounts. The Sub-Servicer shall thereafter deposit such proceeds in
the
Custodial Account or remit such proceeds to the Servicer for
deposit in the
Custodial Account not later than two Business Days after the
deposit of such
amounts in the Sub-Servicing Account. For purposes of this
Agreement, the
Servicer shall be deemed to have received payments on the Mortgage
Loans when
the Sub-Servicer receives such payments.
SECTION 3.09 Collection of Taxes, Assessments and Similar Items;
Servicing
Accounts. The Servicer shall establish and maintain, or cause to be
established
and maintained, one or more accounts (the "Servicing Accounts"),
into which all
collections from the Mortgagors (or related advances from
Sub-Servicers) for the
payment of taxes, assessments, hazard insurance premiums and
comparable items
for the account of the Mortgagors ("Escrow Payments") shall be
deposited and
retained. Servicing Accounts shall be Eligible Accounts. The
Servicer shall
deposit in the clearing account in which it customarily deposits
payments and
collections on mortgage loans in connection with its mortgage loan
servicing
activities on a daily basis, and in no event more than one Business
Day after
the Servicer's receipt thereof, all Escrow Payments collected on
account of the
Mortgage Loans and shall thereafter deposit such Escrow Payments in
the
Servicing Accounts, in no event more than two Business Days after
the receipt of
such Escrow Payments, all Escrow Payments collected on account of
the Mortgage
Loans for the purpose of effecting the payment of any such items as
required
under the terms of this Agreement. Withdrawals of amounts from a
Servicing
Account may be made only to (i) effect payment of taxes,
assessments, hazard
insurance premiums, and comparable items in a manner and at a time
that assures
that the lien priority of the Mortgage is not jeopardized (or, with
respect to
the payment of taxes, in a manner and at a time that avoids the
loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result
of a tax
lien); (ii) reimburse the Servicer (or a Sub-Servicer to the extent
provided in
the related Sub-Servicing Agreement) out of related collections for
any advances
made pursuant to Section 3.01 (with respect to taxes and
assessments) and
Section 3.14 (with respect to hazard insurance); (iii) refund to
Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if
required and as
described below, to Mortgagors on balances in the Servicing
Account; or (v)
clear and terminate the Servicing Account at the termination of the
Servicer's
obligations and responsibilities in respect of the Mortgage Loans
under this
Agreement in accordance with Article IX. As part of its servicing
duties, the
Servicer or Sub-Servicers shall pay to the Mortgagors interest on
funds in the
62
Servicing Accounts, to the extent required by law and, to the
extent that
interest earned on funds in the Servicing Accounts is insufficient,
to pay such
interest from its or their own funds, without any reimbursement
therefor.
SECTION 3.10 Custodial Account and Certificate Account. (a) On
behalf of
the Trust Fund, the Servicer shall establish and maintain, or cause
to be
established and maintained, one or more accounts (such account or
accounts, the
"Custodial Account"), held in trust for the benefit of the Trustee
and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall
deposit or
cause to be deposited in the clearing account in which it
customarily deposits
payments and collections on mortgage loans in connection with its
mortgage loan
servicing activities on a daily basis, and in no event more than
one Business
Day after the Servicer's receipt thereof, and shall thereafter
deposit in the
Custodial Account, in no event more than two Business Days after
the Servicer's
receipt thereof, as and when received or as otherwise required
hereunder, the
following payments and collections received or made by it
subsequent to the
Cut-off Date (other than in respect of principal or interest on the
related
Mortgage Loans due on or before the Cut-off Date), or payments
(other than
Principal Prepayments) received by it on or prior to the Cut-off
Date but
allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds, Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and
amounts
paid in connection with a purchase of Mortgage Loans and REO
Properties
pursuant to Section 9.01) and Subsequent Recoveries;
(iv) any amounts required to be deposited pursuant to Section 3.12
in
connection with any losses realized on Permitted Investments with
respect
to funds held in the Custodial Account;
(v) any amounts required to be deposited by the Servicer pursuant
to
the second paragraph of Section 3.14(a) in respect of any blanket
policy
deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03, Section 3.16 or Section 9.01;
(vii) all amounts required to be deposited in connection with
shortfalls in principal amount of Qualified Substitute Mortgage
Loans
pursuant to Section 2.03; and
(viii) all Prepayment Charges collected by the Servicer in
connection
with the Principal Prepayment of any of the Mortgage Loans.
The foregoing requirements for deposit in the Custodial Account
shall be
exclusive, it being understood and agreed that, without limiting
the generality
of the foregoing, payments in
63
the nature of late payment charges, modification or assumption
fees, or
insufficient funds charges need not be deposited by the Servicer in
the
Custodial Account and may be retained by the Servicer as additional
compensation. In the event the Servicer shall deposit in the
Custodial Account
any amount not required to be deposited therein, it may at any time
withdraw
such amount from the Custodial Account, any provision herein to the
contrary
notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain
one or more accounts (such account or accounts, the "Certificate
Account"), held
in trust for the benefit of the Trustee, the Trust Fund and the
Certificateholders. On the Closing Date, the Trustee shall deposit
an amount
equal to $239,174 in the Certificate Account. On behalf of the
Trust Fund,
the Servicer shall deliver to the Trustee in immediately available
funds for
deposit in the Certificate Account by 3:00 p.m. New York time (i)
on the
Servicer Remittance Date, that portion of the Available
Distribution Amount
(calculated without regard to the references in clause (2) of the
definition
thereof to amounts that may be withdrawn from the Certificate
Account) for the
related Distribution Date then on deposit in the Custodial Account
and the
amount of all Prepayment Charges collected by the Servicer in
connection with
the Principal Prepayment of any of the Mortgage Loans then on
deposit in the
Custodial Account and the amount of any funds reimbursable to an
Advancing
Person pursuant to Section 3.26 and (ii) on each Business Day as of
the
commencement of which the balance on deposit in the Custodial
Account exceeds
$75,000 following any withdrawals pursuant to the next succeeding
sentence, the
amount of such excess, but only if the Custodial Account
constitutes an Eligible
Account solely pursuant to clause (ii) of the definition of
"Eligible Account."
If the balance on deposit in the Custodial Account exceeds $75,000
as of the
commencement of business on any Business Day and the Custodial
Account
constitutes an Eligible Account solely pursuant to clause (ii) of
the definition
of "Eligible Account," the Servicer shall, by 3:00 p.m. New York
time on such
Business Day, withdraw from the Custodial Account any and all
amounts payable or
reimbursable to the Depositor, the Servicer, the Trustee, the
Responsible Party,
the Seller or any Sub-Servicer pursuant to Section 3.11 and shall
pay such
amounts to the Persons entitled thereto.
(c) On or prior to the Business Day immediately following each
Determination Date, the Servicer shall determine any amounts owed
by the Swap
Counterparty under the Swap Agreement and inform the Trustee in
writing of the
amount so calculated.
(d) Funds in the Custodial Account and the Certificate Account may
be
invested in Permitted Investments in accordance with the provisions
set forth in
Section 3.12. The Servicer shall give notice to the Trustee of the
location of
the Custodial Account maintained by it when established and prior
to any change
thereof. The Trustee shall give notice to the Servicer and the
Depositor of the
location of the Certificate Account when established and prior to
any change
thereof.
(e) Funds held in the Custodial Account at any time may be
delivered by the
Servicer to the Trustee for deposit in an account (which may be the
Certificate
Account and must satisfy the standards for the Certificate Account
as set forth
in the definition thereof) and for all purposes of this Agreement
shall be
deemed to be a part of the Custodial Account (and in such event,
the Servicer
shall provide the Trustee with written instructions regarding the
investment of
such funds); provided, however, that the Trustee shall have the
sole authority
to withdraw any
64
funds held pursuant to this subsection (d). In the event the
Servicer shall
deliver to the Trustee for deposit in the Certificate Account any
amount not
required to be deposited therein, it may at any time request in
writing that the
Trustee withdraw such amount from the Certificate Account and remit
to it any
such amount, any provision herein to the contrary notwithstanding.
In no event
shall the Trustee incur liability as a result of withdrawals from
the
Certificate Account at the direction of the Servicer in accordance
with the
immediately preceding sentence. In addition, the Servicer shall
deliver to the
Trustee from time to time for deposit, and the Trustee shall so
deposit, in the
Certificate Account:
(i) any Advances, as required pursuant to Section 4.03;
(ii) any amounts required to be deposited pursuant to Section
3.23(d)
or (f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase of
Mortgage
Loans and REO Properties pursuant to Section 9.01; and
(iv) any amounts required to be deposited pursuant to Section 3.24
in
connection with any Prepayment Interest Shortfall.
(f) The Servicer shall deposit in the Custodial Account any amounts
required to be deposited pursuant to Section 3.12(b) in connection
with losses
realized on Permitted Investments with respect to funds held in the
Custodial
Account (and the Certificate Account to the extent that funds
therein are deemed
to be part of the Custodial Account).
SECTION 3.11 Withdrawals from the Custodial Account and Certificate
Account. (a) The Servicer shall, from time to time, make
withdrawals from the
Custodial Account for any of the following purposes or as described
in Section
4.03:
(i) to remit to the Trustee for deposit in the Certificate Account
the
amounts required to be so remitted pursuant to Section 3.10(b) or
permitted
to be so remitted pursuant to the first sentence of Section
3.10(e);
(ii) subject to Section 3.16(d), to reimburse the Servicer for
Advances, but only to the extent of amounts received which
represent Late
Collections (net of the related Servicing Fees) of Monthly Payments
on
Mortgage Loans with respect to which such Advances were made in
accordance
with the provisions of Section 4.03;
(iii) subject to Section 3.16(d), to pay the Servicer or any
Sub-Servicer, as applicable, (a) any unpaid Servicing Fees, (b) any
unreimbursed Servicing Advances with respect to each Mortgage Loan,
but
only to the extent of any Late Collections, Liquidation Proceeds,
Insurance
Proceeds and Subsequent Recoveries received with respect to such
Mortgage
Loan and (c) any Nonrecoverable Servicing Advances with respect to
the
final liquidation of a Mortgage Loan, but only to the extent that
Late
Collections, Liquidation Proceeds, Insurance Proceeds and
Subsequent
Recoveries received with respect to such Mortgage Loan are
insufficient to
reimburse the Servicer or any Sub-Servicer for Servicing Advances;
65
(iv) to pay to the Servicer as servicing compensation (in addition
to
the Servicing Fee) on the Servicer Remittance Date any interest or
investment income earned on funds deposited in the Custodial
Account;
(v) to pay to the Servicer, the Depositor, the Responsible Party or
the Seller, as the case may be, with respect to each Mortgage Loan
that has
previously been purchased or replaced pursuant to Section 2.03 or
Section
3.16(c) all amounts received thereon subsequent to the date of
purchase or
substitution, as the case may be;
(vi) to reimburse the Servicer for any Advance previously made
which
the Servicer has determined to be a Nonrecoverable Advance in
accordance
with the provisions of Section 4.03;
(vii) to reimburse the Servicer or the Depositor for expenses
incurred
by or reimbursable to the Servicer or the Depositor, as the case
may be,
pursuant to Section 3.02(b) and Section 6.03;
(viii) to reimburse the Servicer or Trustee for expenses reasonably
incurred in connection with any breach or defect giving rise to the
purchase obligation under Section 2.03 of this Agreement, including
any
expenses arising out of the enforcement of the purchase obligation;
(ix) to pay, or to reimburse the Servicer for Servicing Advances in
respect of, expenses incurred in connection with any Mortgage Loan
pursuant
to Section 3.16(b); and
(x) to clear and terminate the Custodial Account pursuant to
Section
9.01.
The Servicer shall keep and maintain separate accounting, on a
Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from
the Custodial Account, to the extent held by or on behalf of it,
pursuant to
subclauses (ii), (iii), (iv), (v), (vi), (viii) and (ix) above. The
Servicer
shall provide written notification to the Trustee, on or prior to
the next
succeeding Servicer Remittance Date, upon making any withdrawals
from the
Custodial Account pursuant to subclauses (vi) and (vii) above;
provided that an
Officers' Certificate in the form described under Section 4.03(d)
shall suffice
for such written notification to the Trustee in respect of clause
(vi) hereof.
(b) The Trustee shall, from time to time, make withdrawals from the
Certificate Account, for any of the following purposes, without
priority:
(i) to make distributions to Certificateholders in accordance with
Section 4.01;
(ii) to pay to itself amounts to which it is entitled pursuant to
Section 8.05 or for Extraordinary Trust Fund Expenses;
(iii) to reimburse itself pursuant to Section 7.02;
66
(iv) to pay any amounts in respect of taxes pursuant to Section
10.01(g)(iii);
(v) to pay to an Advancing Person reimbursements for Advances
and/or
Servicing Advances pursuant to Section 3.26; and
(vi) to clear and terminate the Certificate Account pursuant to
Section 9.01.
SECTION 3.12 Investment of Funds in the Custodial Account and the
Certificate Account. (a) The Servicer may direct any depository
institution
maintaining the Custodial Account (for purposes of this Section
3.12, an
"Investment Account") to invest the funds in such Investment
Account in one or
more Permitted Investments bearing interest or sold at a discount,
and maturing,
unless payable on demand, (i) no later than the Business Day
immediately
preceding the date on which such funds are required to be withdrawn
from such
account pursuant to this Agreement, if a Person other than the
Trustee is the
obligor thereon, and (ii) no later than the date on which such
funds are
required to be withdrawn from such account pursuant to this
Agreement, if the
Trustee is the obligor thereon. Amounts in the Certificate Account
shall be held
uninvested. All such Permitted Investments shall be held to
maturity, unless
payable on demand. Any investment of funds in an Investment Account
shall be
made in the name of the Trustee for the benefit of the
Certificateholders. The
Trustee shall be entitled to sole possession (except with respect
to investment
direction of funds held in the Custodial Account and any income and
gain
realized thereon) over each such investment, and any certificate or
other
instrument evidencing any such investment shall be delivered
directly to the
Trustee or its agent, together with any document of transfer
necessary to
transfer title to such investment to the Trustee or its nominee. In
the event
amounts on deposit in an Investment Account are at any time
invested in a
Permitted Investment payable on demand, the party with investment
discretion
over such Investment Account shall:
(x) consistent with any notice required to be given thereunder,
demand
that payment thereon be made on the last day such Permitted
Investment may
otherwise mature hereunder in an amount equal to the lesser of (1)
all
amounts then payable thereunder and (2) the amount required to be
withdrawn
on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such
Permitted
Investment would not constitute a Permitted Investment in respect
of funds
thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds
deposited in
the Custodial Account and any REO Account held by or on behalf of
the Servicer,
shall be for the benefit of the Servicer and shall be subject to
its withdrawal
in accordance with Section 3.11 or Section 3.23, as applicable. The
Servicer
shall deposit in the Custodial Account or any REO Account, as
applicable, the
amount of any loss of principal incurred in respect of any such
Permitted
Investment made with funds in such accounts immediately upon
realization of such
loss.
67
(c) Except as otherwise expressly provided in this Agreement, if
any
default occurs in the making of a payment due under any Permitted
Investment, or
if a default occurs in any other performance required under any
Permitted
Investment (of which a Responsible Officer of the Trustee obtains
actual
knowledge), the Trustee may and, subject to Section 8.01 and
Section 8.02(v),
upon the request of the Holders of Certificates representing more
than 50% of
the Voting Rights allocated to any Class of Certificates, shall
take such action
as may be appropriate to enforce such payment or performance,
including the
institution and prosecution of appropriate proceedings.
(d) The Trustee or its Affiliates are permitted to receive
additional
compensation that could be deemed to be in the Trustee's economic
self-interest
for (i) serving as investment adviser, administrator, shareholder
servicing
agent, custodian or sub-custodian with respect to certain of the
Permitted
Investments and (ii) effecting or using Affiliates to effect
transactions in
certain Permitted Investments. Such compensation shall not be
considered an
amount that is reimbursable or payable to the Trustee pursuant to
Section 3.11
or 3.12 or otherwise payable in respect of Extraordinary Trust Fund
Expenses.
SECTION 3.13 [Reserved].
SECTION 3.14 Maintenance of Hazard Insurance and Errors and
Omissions and
Fidelity Coverage. (a) The Servicer shall cause to be maintained
for each
Mortgage Loan fire insurance with extended coverage on the related
Mortgaged
Property in an amount which is at least equal to the lesser of the
current
principal balance of such Mortgage Loan and the amount necessary to
fully
compensate for any damage or loss to the improvements that are a
part of such
property on a replacement cost basis, in each case in an amount not
less than
such amount as is necessary to avoid the application of any
coinsurance clause
contained in the related hazard insurance policy. The Servicer
shall also cause
to be maintained fire insurance with extended coverage on each REO
Property in
an amount which is at least equal to the lesser of (i) the maximum
insurable
value of the improvements which are a part of such property and
(ii) the
outstanding principal balance of the related Mortgage Loan at the
time it became
an REO Property, plus accrued interest at the Mortgage Rate and
related
Servicing Advances. The Servicer will comply in the performance of
this
Agreement with all reasonable rules and requirements of each
insurer under any
such hazard policies. Any amounts to be collected by the Servicer
under any such
policies (other than amounts to be applied to the restoration or
repair of the
property subject to the related Mortgage or amounts to be released
to the
Mortgagor in accordance with the procedures that the Servicer would
follow in
servicing loans held for its own account, subject to the terms and
conditions of
the related Mortgage and Mortgage Note) shall be deposited in the
Custodial
Account, subject to withdrawal pursuant to Section 3.11, if
received in respect
of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to
Section 3.23, if received in respect of an REO Property. Any cost
incurred by
the Servicer in maintaining any such insurance shall not, for the
purpose of
calculating distributions to Certificateholders, be added to the
unpaid
principal balance of the related Mortgage Loan, notwithstanding
that the terms
of such Mortgage Loan so permit. It is understood and agreed that
no earthquake
or other additional insurance is to be required of any Mortgagor
other than
pursuant to such applicable laws and regulations as shall at any
time be in
force and as shall require such additional insurance. If the
Mortgaged Property
or REO Property is at any time in an area identified in the
68
Federal Register by the Federal Emergency Management Agency as
having special
flood hazards and flood insurance has been made available, the
Servicer will
cause to be maintained a flood insurance policy in respect thereof.
Such flood
insurance shall be in an amount equal to the lesser of (i) the
unpaid principal
balance of the related Mortgage Loan and (ii) the maximum amount of
such
insurance available for the related Mortgaged Property under the
national flood
insurance program (assuming that the area in which such Mortgaged
Property is
located is participating in such program).
In the event that the Servicer shall obtain and maintain a blanket
policy
with an insurer having a General Policy Rating of A:X or better in
Best's Key
Rating Guide (or such other rating that is comparable to such
rating) insuring
against hazard losses on all of the Mortgage Loans, it shall
conclusively be
deemed to have satisfied its obligations as set forth in the first
two sentences
of this Section 3.14, it being understood and agreed that such
policy may
contain a deductible clause, in which case the Servicer shall, in
the event that
there shall not have been maintained on the related Mortgaged
Property or REO
Property a policy complying with the first two sentences of this
Section 3.14,
and there shall have been one or more losses which would have been
covered by
such policy, deposit to the Custodial Account from its own funds
the amount not
otherwise payable under the blanket policy because of such
deductible clause. In
connection with its activities as administrator and servicer of the
Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of
itself, the
Trustee and Certificateholders, claims under any such blanket
policy in a timely
fashion in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a
policy or policies of insurance covering errors and omissions for
failure in the
performance of the Servicer's obligations under this Agreement,
which policy or
policies shall be in such form and amount that would meet the
requirements of
Fannie Mae or Freddie Mac if it were the purchaser of the Mortgage
Loans, unless
the Servicer has obtained a waiver of such requirements from Fannie
Mae or
Freddie Mac. The Servicer shall also maintain a fidelity bond in
the form and
amount that would meet the requirements of Fannie Mae or Freddie
Mac, unless the
Servicer has obtained a waiver of such requirements from Fannie Mae
or Freddie
Mac. The Servicer shall be deemed to have complied with this
provision if an
Affiliate of the Servicer has such errors and omissions and
fidelity bond
coverage and, by the terms of such insurance policy or fidelity
bond, the
coverage afforded thereunder extends to the Servicer. Any such
errors and
omissions policy and fidelity bond shall by its terms not be
cancelable without
thirty days prior written notice to the Trustee. The Servicer shall
also cause
each Sub-Servicer to maintain a policy of insurance covering errors
and
omissions and a fidelity bond which would meet such requirements.
SECTION 3.15 Enforcement of Due-On-Sale Clauses; Assumption
Agreements. The
Servicer will, to the extent it has knowledge of any conveyance or
prospective
conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute
conveyance or by contract of sale, and whether or not the Mortgagor
remains or
is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its
rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale"
clause, if any, applicable thereto; provided, however, that the
Servicer shall
not be required to take such action if in its sole business
judgment the
Servicer believes it is not in the best interests of the Trust Fund
and shall
not exercise any such rights if prohibited by law from doing so. If
the Servicer
reasonably believes it is unable under applicable law to enforce
69
such "due-on-sale" clause, or if any of the other conditions set
forth in the
proviso to the preceding sentence apply, the Servicer will enter
into an
assumption and modification agreement from or with the person to
whom such
property has been conveyed or is proposed to be conveyed, pursuant
to which such
person becomes liable under the Mortgage Note and, to the extent
permitted by
applicable state law, the Mortgagor remains liable thereon. The
Servicer is also
authorized to enter into a substitution of liability agreement with
such person,
pursuant to which the original Mortgagor is released from liability
and such
person is substituted as the Mortgagor and becomes liable under the
Mortgage
Note, provided that no such substitution shall be effective unless
such person
satisfies the underwriting criteria of the Originator and has a
credit risk
rating at least equal to that of the original Mortgagor. In
connection with any
assumption or substitution, the Servicer shall apply the
Originator's
underwriting standards and follow such practices and procedures as
shall be
normal and usual in its general mortgage servicing activities and
as it applies
to other mortgage loans owned solely by it. The Servicer shall not
take or enter
into any assumption and modification agreement, however, unless (to
the extent
practicable in the circumstances) it shall have received
confirmation, in
writing, of the continued effectiveness of any applicable hazard
insurance
policy. Any fee collected by the Servicer in respect of an
assumption,
modification or substitution of liability agreement shall be
retained by the
Servicer as additional servicing compensation. In connection with
any such
assumption, no material term of the Mortgage Note (including but
not limited to
the related Mortgage Rate and the amount of the Monthly Payment)
may be amended
or modified, except as otherwise required pursuant to the terms
thereof. The
Servicer shall notify the Trustee that any such substitution,
modification or
assumption agreement has been completed by forwarding to the
Trustee the
executed original of such substitution, modification or assumption
agreement,
which document shall be added to the related Mortgage File and
shall, for all
purposes, be considered a part of such Mortgage File to the same
extent as all
other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of
this
Agreement, the Servicer shall not be deemed to be in default,
breach or any
other violation of its obligations hereunder by reason of any
assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage
Note or any
assumption which the Servicer may be restricted by law from
preventing, for any
reason whatever. For purposes of this Section 3.15, the term
"assumption" is
deemed to also include a sale (of the Mortgaged Property) subject
to the
Mortgage that is not accompanied by an assumption or substitution
of liability
agreement.
SECTION 3.16 Realization Upon Defaulted Mortgage Loans. (a) The
Servicer
shall exercise its discretion, consistent with customary servicing
procedures
and the terms of this Agreement, with respect to the enforcement
and servicing
of defaulted Mortgage Loans in such manner as will maximize the
receipt of
principal and interest with respect thereto, including, but not
limited to, the
modification of such Mortgage Loan, or foreclosure upon the related
Mortgaged
Property and disposition thereof.
In furtherance of the foregoing, the Servicer shall use its best
efforts,
consistent with Accepted Servicing Practices, to foreclose upon or
otherwise
comparably convert the ownership of properties securing such of the
Mortgage
Loans as come into and continue in default and as to which no
satisfactory
arrangements can be made for collection of delinquent payments
pursuant
70
to Section 3.07. The Servicer shall be responsible for all costs
and expenses
incurred by it in any such proceedings; provided, however, that
such costs and
expenses will be recoverable as Servicing Advances by the Servicer
as
contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the
provision that, in any case in which Mortgaged Property shall have
suffered
damage from an Uninsured Cause, the Servicer shall not be required
to expend its
own funds toward the restoration of such property unless it shall
determine in
its discretion that such restoration will increase the proceeds of
liquidation
of the related Mortgage Loan after reimbursement to itself for such
expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16
or any
other provision of this Agreement, with respect to any Mortgage
Loan as to which
the Servicer has received actual notice of, or has actual knowledge
of, the
presence of any toxic or hazardous substance on the related
Mortgaged Property,
the Servicer shall not, on behalf of the Trust Fund either (i)
obtain title to
such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise,
or (ii) otherwise acquire possession of, or take any other action
with respect
to, such Mortgaged Property, if, as a result of any such action,
the Trustee,
the Trust Fund or the Certificateholders would be considered to
hold title to,
to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such
Mortgaged Property within the meaning of the Comprehensive
Environmental
Response, Compensation and Liability Act of 1980, as amended from
time to time,
or any comparable law, unless the Servicer has also previously
determined, based
on its reasonable judgment and a report prepared by an Independent
Person who
regularly conducts environmental audits using customary industry
standards,
that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best
economic
interest of the Trust Fund to take such actions as are necessary to
bring
the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances,
hazardous materials, hazardous wastes, or petroleum-based materials
for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law
or
regulation, or that if any such materials are present for which
such action
could be required, that it would be in the best economic interest
of the
Trust Fund to take such actions with respect to the affected
Mortgaged
Property.
The cost of the environmental audit report contemplated by this
Section
3.16 shall be advanced by the Servicer, subject to the Servicer's
right to be
reimbursed therefor from the Custodial Account as provided in
Section
3.11(a)(ix), such right of reimbursement being prior to the rights
of
Certificateholders to receive any amount in the Custodial Account
received in
respect of the affected Mortgage Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in the
best
economic interest of the Trust Fund to take such actions as are
necessary to
bring any such Mortgaged Property into compliance with applicable
environmental
laws, or to take such action with respect to the containment,
clean-up or
remediation of hazardous substances, hazardous materials, hazardous
71
wastes or petroleum-based materials affecting any such Mortgaged
Property, then
the Servicer shall take such action as it deems to be in the best
economic
interest of the Trust Fund; provided that any amounts disbursed by
the Servicer
pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to
Section 4.03(d). The cost of any such compliance, containment,
cleanup or
remediation shall be advanced by the Servicer, subject to the
Servicer's right
to be reimbursed therefor from the Custodial Account as provided in
Section
3.11(a)(iii) and (a)(ix), such right of reimbursement being prior
to the rights
of Certificateholders to receive any amount in the Custodial
Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
(c) The Servicer may at its option purchase from REMIC I any
Mortgage Loan
or related REO Property that is 90 days or more delinquent, which
the Servicer
determines in good faith will otherwise become subject to
foreclosure
proceedings (evidence of such determination to be delivered in
writing to the
Trustee, in form and substance satisfactory to the Trustee prior to
purchase),
at a price equal to the Purchase Price; provided, however, that the
Servicer
shall purchase any such Mortgage Loans or related REO Properties on
the basis of
delinquency, purchasing the most delinquent Mortgage Loans or
related REO
Properties first. The Purchase Price for any Mortgage Loan or
related REO
Property purchased hereunder shall be deposited in the Custodial
Account, and
the Trustee, upon receipt of written certification from the
Servicer of such
deposit, shall release or cause to be released to the Servicer the
related
Mortgage File and the Trustee shall execute and deliver such
instruments of
transfer or assignment, in each case without recourse, as the
Servicer shall
furnish and as shall be necessary to vest in the Servicer title to
any Mortgage
Loan or related REO Property released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination,
as well as any recovery resulting from a partial collection of
Insurance
Proceeds, Liquidation Proceeds or Subsequent Recoveries, in respect
of any
Mortgage Loan, will be applied in the following order of priority:
first, to
reimburse the Servicer or any Sub-Servicer for any related
unreimbursed
Servicing Advances and Advances, pursuant to Section 3.11(a)(ii) or
(a)(iii);
second, to accrued and unpaid interest on the Mortgage Loan, to the
date of the
Final Recovery Determination, or to the Due Date prior to the
Distribution Date
on which such amounts are to be distributed if not in connection
with a Final
Recovery Determination; and third, as a recovery of principal of
the Mortgage
Loan. If the amount of the recovery so allocated to interest is
less than the
full amount of accrued and unpaid interest due on such Mortgage
Loan, the amount
of such recovery will be allocated by the Servicer as follows:
first, to unpaid
Servicing Fees; and second, to the balance of the interest then due
and owing.
The portion of the recovery so allocated to unpaid Servicing Fees
shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).
SECTION 3.17 Trustee to Cooperate; Release of Mortgage Files. (a)
Upon the
payment in full of any Mortgage Loan, or upon the receipt by the
Servicer of a
notification that payment in full shall be escrowed in a manner
customary for
such purposes, the Servicer shall immediately notify or cause to be
notified the
Trustee by a certification in the form of Exhibit E (which
certification shall
include a statement to the effect that all amounts received or to
be received in
connection with such payment which are required to be deposited in
the Custodial
Account pursuant to Section 3.10 have been or will be so deposited)
of a
Servicing Officer and
72
shall request delivery to it of the Mortgage File. Upon receipt of
such
certification and request, the Trustee shall promptly release the
related
Mortgage File to the Servicer at no cost to the Trustee or the
Trust Fund. No
expenses incurred in connection with any instrument of satisfaction
or deed of
reconveyance shall be chargeable to the Custodial Account or the
Certificate
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure
of any Mortgage Loan, including, for this purpose, collection under
any
insurance policy relating to the Mortgage Loans, the Trustee shall,
upon any
request made by or on behalf of the Servicer and delivery to the
Trustee of a
Request for Release in the form of Exhibit E, release the related
Mortgage File
to the Servicer, and the Trustee shall, at the direction of the
Servicer,
execute such documents as shall be necessary to the prosecution of
any such
proceedings. Such Request for Release shall obligate the Servicer
to return each
and every document previously requested from the Mortgage File to
the Trustee
when the need therefor by the Servicer no longer exists, unless (i)
the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage
Loan have been deposited in the Custodial Account or (ii) the
Mortgage File or
such document has been delivered to an attorney, or to a public
trustee or other
public official as required by law, for purposes of initiating or
pursuing legal
action or other proceedings for the foreclosure of the Mortgaged
Property either
judicially or non-judicially, and the Servicer has delivered, or
caused to be
delivered, to the Trustee an additional Request for Release
certifying as to
such liquidation or action or proceedings. Upon the request of the
Trustee, the
Servicer shall provide notice to the Trustee of the name and
address of the
Person to which such Mortgage File or such document was delivered
and the
purpose or purposes of such delivery. Upon receipt of a certificate
of a
Servicing Officer stating that such Mortgage Loan was liquidated
and that all
amounts received or to be received in connection with such
liquidation that are
required to be deposited into the Custodial Account have been so
deposited, or
that such Mortgage Loan has become an REO Property, any outstanding
Requests for
Release with respect to such Mortgage Loan shall be released by the
Trustee to
the Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the Trustee
shall
execute and deliver to the Servicer or the Sub-Servicer, as the
case may be, any
court pleadings, requests for trustee's sale or other documents
necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or
to any legal
action brought to obtain judgment against any Mortgagor on the
Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any
other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise
available at law
or in equity. Each such certification shall include a request that
such
pleadings or documents be executed by the Trustee and a statement
as to the
reason such documents or pleadings are required and that the
execution and
delivery thereof by the Trustee will not invalidate or otherwise
affect the lien
of the Mortgage, except for the termination of such a lien upon
completion of
the foreclosure or trustee's sale.
SECTION 3.18 Servicing Compensation. As compensation for the
activities of
the Servicer hereunder, the Servicer shall be entitled to the
Servicing Fee with
respect to each Mortgage Loan payable solely from payments of
interest in
respect of such Mortgage Loan, subject to Section 3.24. In
addition, the
Servicer shall be entitled to recover unpaid Servicing Fees out of
Insurance
Proceeds, Liquidation Proceeds or Subsequent Recoveries to the
extent
73
permitted by Section 3.11(a)(iii) and out of amounts derived from
the operation
and sale of an REO Property to the extent permitted by Section
3.23. Except as
provided in Sections 3.26, the right to receive the Servicing Fee
may not be
transferred in whole or in part except in connection with the
transfer of all of
the Servicer's responsibilities and obligations under this
Agreement; provided,
however, that the Servicer may pay from the Servicing Fee any
amounts due to a
Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section
3.02.
Additional servicing compensation in the form of assumption fees,
late
payment charges, insufficient funds charges or otherwise (subject
to Section
3.24 and other than Prepayment Charges) shall be retained by the
Servicer only
to the extent such fees or charges are received by the Servicer.
The Servicer
shall also be entitled pursuant to Section 3.11(a)(iv) to withdraw
from the
Custodial Account and pursuant to Section 3.23(b) to withdraw from
any REO
Account, as additional servicing compensation, interest or other
income earned
on deposits therein, subject to Section 3.12 and Section 3.24. The
Servicer
shall be required to pay all expenses incurred by it in connection
with its
servicing activities hereunder (including premiums for the
insurance required by
Section 3.14, to the extent such premiums are not paid by the
related Mortgagors
or by a Sub-Servicer, servicing compensation of each Sub-Servicer,
and to the
extent provided herein in Section 8.05, the expenses of the
Trustee) and shall
not be entitled to reimbursement therefor except as specifically
provided
herein.
SECTION 3.19 Reports to the Trustee and Others; Custodial Account
Statements. Not later than twenty days after each Distribution
Date, the
Servicer shall forward to the Trustee (upon the Trustee's request)
and the
Depositor the most current available bank statement for the
Custodial Account.
Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a
prospective
transferee of a Certificate, upon request at the expense of the
requesting
party, provided such statement is delivered by the Servicer to the
Trustee.
SECTION 3.20 Statement as to Compliance. Not later than March 1 of
each
calendar year commencing in 2006, the Servicer will deliver to the
Trustee and
the Depositor an Officers' Certificate (upon which the Trustee can
conclusively
rely in connection with its obligations under Section 4.06)
substantially in the
form of Exhibit J attached hereto stating, as to each signatory
thereof, that
(i) a review of the activities of the Servicer during the preceding
calendar
year and of performance under this Agreement has been made under
such officer's
supervision and (ii) to the best of such officer's knowledge, based
on such
review, the Servicer has fulfilled all of its obligations under
this Agreement
throughout such calendar year, or, if there has been a default in
the
fulfillment of any such obligation, specifying each such default
known to such
officer and the nature and status thereof. Copies of any such
statement shall be
provided by the Trustee to any Certificateholder and to any Person
identified to
the Trustee as a prospective transferee of a Certificate, upon
request at the
expense of the requesting party, provided such statement is
delivered by the
Servicer to the Trustee.
SECTION 3.21 Independent Public Accountants' Servicing Report. Not
later
than March 1 of each calendar year commencing in 2006, the
Servicer, at its
expense, shall cause a nationally recognized firm of independent
certified
public accountants to furnish to the Servicer a report stating that
(i) it has
obtained a letter of representation regarding certain matters from
the
74
management of the Servicer which includes an assertion that the
Servicer has
complied with certain minimum residential mortgage loan servicing
standards,
identified in the Uniform Single Attestation Program for Mortgage
Bankers
established by the Mortgage Bankers Association of America, with
respect to the
servicing of residential mortgage loans during the most recently
completed
calendar year and (ii) on the basis of an examination conducted by
such firm in
accordance with standards established by the American Institute of
Certified
Public Accountants, such representation is fairly stated in all
material
respects, subject to such exceptions and other qualifications that
may be
appropriate. In rendering its report such firm may rely, as to
matters relating
to the direct servicing of residential mortgage loans by
Sub-Servicers, upon
comparable reports of firms of independent certified public
accountants rendered
on the basis of examinations conducted in accordance with the same
standards
(rendered within one year of such report) with respect to those
Sub-Servicers.
Immediately upon receipt of such report, the Servicer shall, at its
own expense,
furnish a copy of such report to the Trustee and each Rating
Agency. Copies of
such statement shall be provided by the Trustee to any
Certificateholder upon
request, provided that such statement is delivered by the Servicer
to the
Trustee.
SECTION 3.22 Access to Certain Documentation. The Servicer shall
provide to
the Office of Thrift Supervision, the FDIC, and any other federal
or state
banking or insurance regulatory authority that may exercise
authority over any
Certificateholder or Certificate Owner, access to the documentation
in the
Servicer's possession regarding the Mortgage Loans required by
applicable laws
and regulations. Such access shall be afforded without charge, but
only upon
reasonable request and during normal business hours at the offices
of the
Servicer designated by it. In addition, access to the documentation
in the
Servicer's possession regarding the Mortgage Loans will be provided
to any
Certificateholder or Certificate Owner, the Trustee and to any
Person identified
to the Servicer as a prospective transferee of a Certificate;
provided, however,
that providing access to such Person will not violate any
applicable laws, upon
reasonable request during normal business hours at the offices of
the Servicer
designated by it at the expense of the Person requesting such
access.
SECTION 3.23 Title, Management and Disposition of REO Property. (a)
The
deed or certificate of sale of any REO Property shall be taken in
the name of
the Trustee, or its nominee, on behalf of the Trust Fund and for
the benefit of
the Certificateholders. The Servicer, on behalf of REMIC I, shall
either sell
any REO Property prior to the end of the third taxable year after
REMIC I
acquires ownership of such REO Property for purposes of Section
860G(a)(8) of
the Code or request from the Internal Revenue Service, no later
than 60 days
before the day on which the three-year grace period would otherwise
expire, an
extension of the three-year grace period, unless the Servicer shall
have
delivered to the Trustee an Opinion of Counsel, addressed to the
Trustee and the
Depositor, to the effect that the holding by REMIC I of such REO
Property
subsequent to three years after its acquisition will not result in
the
imposition on any Trust REMIC of taxes on "prohibited transactions"
thereof, as
defined in Section 860F of the Code, or cause any Trust REMIC to
fail to qualify
as a REMIC under Federal law at any time that any Certificates are
outstanding.
The Servicer shall manage, conserve, protect and operate each REO
Property for
the Certificateholders solely for the purpose of its prompt
disposition and sale
in a manner which does not cause such REO Property to fail to
qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or
result in the receipt by any Trust REMIC of any "income from
non-permitted
assets" within the meaning of Section
75
860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which
is subject to taxation under the REMIC Provisions.
(b) The Servicer shall segregate and hold all funds collected and
received
in connection with the operation of any REO Property separate and
apart from its
own funds and general assets and shall establish and maintain, or
cause to be
established and maintained, with respect to REO Properties, an
account held in
trust for the Trustee for the benefit of the Certificateholders
(the "REO
Account"), which shall be an Eligible Account. The Servicer shall
be permitted
to allow the Custodial Account to serve as the REO Account, subject
to separate
ledgers for each REO Property. The Servicer shall be entitled to
retain or
withdraw any interest income paid on funds deposited in the REO
Account.
(c) The Servicer shall have the sole discretion to determine
whether an
immediate sale of an REO Property or continued management of such
REO Property
is in the best interests of the Certificateholders. In furtherance
of the
foregoing, the Servicer shall have full power and authority,
subject only to the
specific requirements and prohibitions of this Agreement, to do any
and all
things in connection with any REO Property as are consistent with
the manner in
which the Servicer manages and operates similar property owned by
the Servicer
or any of its Affiliates, all on such terms and for such period as
the Servicer
deems to be in the best interests of Certificateholders. In
connection
therewith, the Servicer shall deposit, or cause to be deposited in
the clearing
account in which it customarily deposits payments and collections
on mortgage
loans in connection with its mortgage loan servicing activities on
a daily
basis, and in no event more than one Business Day after the
Servicer's receipt
thereof, and shall thereafter deposit in the REO Account, in no
event more than
two Business Days after the Servicer's receipt thereof, all
revenues received by
it with respect to an REO Property and shall withdraw therefrom
funds necessary
for the proper operation, management and maintenance of such REO
Property
including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with
respect to an
REO Property are insufficient for the purposes set forth in clauses
(i) through
(iii) above with respect to such REO Property, the Servicer shall
advance from
its own funds such amount as is necessary for such purposes if, but
only if, the
Servicer would make such advances if the Servicer owned the REO
Property and if
in the Servicer's judgment, the payment of such amounts will be
recoverable from
the rental or sale of the REO Property.
Notwithstanding the foregoing, the Servicer shall not and the
Trustee shall
not knowingly authorize the Servicer to:
76
(i) authorize the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its
terms will
give rise to any income that does not constitute Rents from Real
Property;
(ii) authorize any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real
Property;
(iii) authorize any construction on any REO Property, other than
the
completion of a building or other improvement thereon, and then
only if
more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage
Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of
the
Code; or
(iv) authorize any Person to Directly Operate any REO Property on
any
date more than 90 days after its date of acquisition by the Trust
Fund;
unless, in any such case, the Servicer has obtained an Opinion of
Counsel,
provided to the Servicer and the Trustee, to the effect that such
action will
not cause such REO Property to fail to qualify as "foreclosure
property" within
the meaning of Section 860G(a)(8) of the Code at any time that it
is held by
REMIC I, in which case the Servicer may take such actions as are
specified in
such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for the
operation
and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such
REO
Property, including those listed above and remit all related
revenues (net
of such costs and expenses) to the Servicer as soon as practicable,
but in
no event later than thirty days following the receipt thereof by
such
Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to
any
such contract or to actions taken through any such Independent
Contractor
shall be deemed to relieve the Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders with
respect
to the operation and management of any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to the
same
extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its
duties and
obligations hereunder for
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indemnification of the Servicer by such Independent Contractor, and
nothing in
this Agreement shall be deemed to limit or modify such
indemnification. The
Servicer shall be solely liable for all fees owed by it to any such
Independent
Contractor, irrespective of whether the Servicer's compensation
pursuant to
Section 3.18 is sufficient to pay such fees; provided, however,
that to the
extent that any payments made by such Independent Contractor would
constitute
Servicing Advances if made by the Servicer, such amounts shall be
reimbursable
as Servicing Advances made by the Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c),
the
Servicer may from time to time make withdrawals from the REO
Account for any REO
Property: (i) to pay itself or any Sub-Servicer unpaid Servicing
Fees in respect
of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer
for unreimbursed Servicing Advances and Advances made in respect of
such REO
Property or the related Mortgage Loan. On the Servicer Remittance
Date, the
Servicer shall withdraw from each REO Account maintained by it and
deposit into
the Certificate Account in accordance with Section 3.10(e)(ii), for
distribution
on the related Distribution Date in accordance with Section 4.01,
the income
from the related REO Property received during the prior calendar
month, net of
any withdrawals made pursuant to Section 3.23(c) or this Section
3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a),
each REO
Disposition shall be carried out by the Servicer at such price and
upon such
terms and conditions as the Servicer shall deem necessary or
advisable, as shall
be normal and usual in its Accepted Servicing Practices.
(f) The proceeds from the REO Disposition, net of any amount
required by
law to be remitted to the Mortgagor under the related Mortgage Loan
and net of
any payment or reimbursement to the Servicer or any Sub-Servicer as
provided
above, shall be deposited in the Certificate Account in accordance
with Section
3.10(e)(ii) on the Servicer Remittance Date in the month following
the receipt
thereof for distribution on the related Distribution Date in
accordance with
Section 4.01. Any REO Disposition shall be for cash only (unless
changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale
for other
consideration).
(g) The Servicer shall file information returns with respect to the
receipt
of mortgage interest received in a trade or business, reports of
foreclosures
and abandonments of any Mortgaged Property and cancellation of
indebtedness
income with respect to any Mortgaged Property as required by
Sections 6050H,
6050J and 6050P of the Code, respectively. Such reports shall be in
form and
substance sufficient to meet the reporting requirements imposed by
such Sections
6050H, 6050J and 6050P of the Code.
SECTION 3.24 Obligations of the Servicer in Respect of Prepayment
Interest
Shortfalls. The Servicer shall deliver to the Trustee for deposit
into the
Certificate Account by 1:00 p.m. New York time on the Servicer
Remittance Date
from its own funds an amount equal to the lesser of (i) the
aggregate of the
Prepayment Interest Shortfalls for the related Distribution Date
resulting from
full or partial Principal Prepayments during the related Prepayment
Period and
(ii) the aggregate Servicing Fee for the related Prepayment Period.
Any amounts
paid by the
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Servicer pursuant to this Section 3.24 shall not be reimbursed by
any Trust
REMIC or the Trust Fund.
SECTION 3.25 Obligations of the Servicer in Respect of Mortgage
Rates and
Monthly Payments. In the event that a shortfall in any collection
on or
liability with respect to any Mortgage Loan results from or is
attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal
Balances
that were made by the Servicer in a manner not consistent with the
terms of the
related Mortgage Note and this Agreement, the Servicer, upon
discovery or
receipt of notice thereof, shall immediately deliver to the Trustee
for deposit
in the Certificate Account from its own funds the amount of any
such shortfall
and shall indemnify and hold harmless the Trust Fund, the Trustee,
the Depositor
and any successor Servicer in respect of any such liability. Such
indemnities
shall survive the termination or discharge of this Agreement.
Notwithstanding
the foregoing, this Section 3.25 shall not limit the ability of the
Servicer to
seek recovery of any such amounts from the related Mortgagor under
the terms of
the related Mortgage Note, as permitted by law.
SECTION 3.26 Advance Facility. (a) The Servicer is hereby
authorized to
enter into a financing or other facility (any such arrangement an
"Advance
Facility") with any Person which provides that such Person (an
"Advancing
Person") may fund Advances and/or Servicing Advances to the Trust
Fund under
this Agreement, although no such facility shall reduce or otherwise
affect the
Servicer's obligation to fund such Advances and/or Servicing
Advances. If the
Servicer enters into such an Advance Facility pursuant to this
Section 3.26,
upon reasonable request of the Advancing Person, the Trustee shall
execute a
letter of acknowledgment, confirming its receipt of notice of the
existence of
such Advance Facility. If the Trustee enters into such an Advance
Facility
pursuant to this Section 3.26, the Servicer shall also be a party
to such
Advance Facility. To the extent that an Advancing Person funds any
Advance or
any Servicing Advance and the Servicer provides the Trustee with an
Officers'
Certificate that such Advancing Person is entitled to
reimbursement, such
Advancing Person shall be entitled to receive reimbursement
pursuant to this
Agreement for such amount to the extent provided in Section
3.26(b). Such
Officers' Certificate must specify the amount of the reimbursement,
the Section
of this Agreement that permits the applicable Advance or Servicing
Advance to be
reimbursed and the section(s) of the Advance Facility that entitle
the Advancing
Person to request reimbursement from the Trustee, rather than the
Servicer or
proof of an Event of Default under the Advance Facility. The
Trustee shall have
no duty or liability with respect to any calculation of any
reimbursement to be
paid to an Advancing Person and shall be entitled to rely without
independent
investigation on the Advancing Person's notice provided pursuant to
this Section
3.26. The Trustee shall have no responsibility to track or monitor
the
administration of the Advance Facility. An Advancing Person whose
obligations
hereunder are limited to the funding of Advances and/or Servicing
Advances shall
not be required to meet the qualifications of the Servicer or a
Sub-Servicer
pursuant to Section 3.02 hereof and will not be deemed to be a
Sub-Servicer
under this Agreement.
(b) If an advancing facility is entered into, then the Servicer
shall not
be permitted to reimburse itself therefor under Section
3.11(a)(ii), Section
3.11(a)(iii) and Section 3.11(a)(vi) prior to the remittance to the
Trust Fund,
but instead the Servicer shall remit such amounts in accordance
with the
documentation establishing the Advance Facility to such Advancing
Person
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or to a trustee, agent or custodian (an "Advance Facility Trustee")
designated
by such Advancing Person. The Trustee is hereby authorized to pay
to the
Advancing Person, reimbursements for Advances and Servicing
Advances from the
Certificate Account to the same extent the Servicer would have been
permitted to
reimburse itself for such Advances and/or Servicing Advances in
accordance with
Section 3.11(a)(ii), Section 3.11(a)(iii) and Section 3.11(a)(vi),
as the case
may be, had the Servicer itself funded such Advance or Servicing
Advance. The
Trustee is hereby authorized to pay directly to the Advancing
Person such
portion of the Servicing Fee as the parties to any advancing
facility agree in
writing.
(c) All Advances and Servicing Advances made pursuant to the terms
of this
Agreement shall be deemed made and shall be reimbursed on a "first
in-first out"
(FIFO) basis.
(d) Any amendment to this Section 3.26 or to any other provision of
this
Agreement that may be necessary or appropriate to effect the terms
of an Advance
Facility as described generally in this Section 3.26, including
amendments to
add provisions relating to a successor Servicer, may be entered
into by the
Trustee and the Servicer without the consent of any
Certificateholder,
notwithstanding anything to the contrary in this Agreement;
provided, however,
such amendment shall otherwise comply with Section 11.01 hereof.
All costs and
expenses (including attorneys' fees) of each party hereto related
to such
amendment shall be borne by the Servicer without reimbursement from
the Trust
Fund.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01 Distributions. (a) (1) On each Distribution Date, the
following amounts, in the following order of priority, shall be
distributed by
REMIC I to REMIC II on account of the REMIC I Regular Interests or
withdrawn
from the Certificate Account and distributed to the holders of the
Class R-I
Interest, as the case may be:
(i) first, to Holders of REMIC I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I
Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I
Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I
Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I
Regular Interest I-LTM10 and REMIC I Regular Interest I-LTZZ, in an
amount equal to (A) the Uncertificated Interest for such
Distribution
Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates. Amounts payable as Uncertificated
Interest in respect of REMIC I Regular Interest I-LTZZ shall be
reduced when the sum of the REMIC I Overcollateralized Amount is
less
than the REMIC I Required Overcollateralized Amount, by the lesser
of
(x) the amount of such difference and (y) the Maximum I-LTZZ
Uncertificated Interest Deferral Amount and such amounts will be
payable to the Holders of REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTA3, REMIC I
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Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I
Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I
Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I
Regular Interest I-LTM9 and REMIC I Regular Interest I-LTM10 in the
same proportion as the Overcollateralization Increase Amount is
allocated to the Corresponding Certificates and the Uncertificated
Balance of REMIC I Regular Interest I-LTZZ shall be increased by
such
amount;
(ii) second, to the Holders of REMIC I Regular Interests, in an
amount equal to the remainder of the Available Distribution Amount
for
such Distribution Date after the distributions made pursuant to
clause
(i) above, allocated as follows:
(a) 98.00% of such remainder (less the amount payable in
clause (e) below), to the Holders of REMIC I Regular Interest
I-LTAA, until the Uncertificated Balance of such REMIC I Regular
Interest is reduced to zero;
2% of such remainder, first to the Holders of REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I
Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I
Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I
Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9 and
REMIC I Regular Interest I-LTM10, 1.00% of and in the same
proportion as principal payments are allocated to the
Corresponding Certificates, until the Uncertificated Balances of
such REMIC I Regular Interests are reduced to zero; and second,
to the Holders of REMIC I Regular Interest I-LTZZ, (less the
amount payable in clause (c) below), until the Uncertificated
Balance of such REMIC I Regular Interest is reduced to zero; then
(b) to the Holders of REMIC I Regular Interest I-LTP, on the
Distribution Date immediately following the expiration of the
latest Prepayment Charge as identified on the Prepayment Charge
Schedule or any Distribution Date thereafter until $100 has been
distributed pursuant to this clause; and
(c) any remaining amount to the Holders of the Class R
Certificates (as Holder of the Class R-I Interest);
provided, however, that 98.00% and 2.00% of any principal payments
that are
attributable to an Overcollateralization Reduction Amount shall be
allocated to
Holders of REMIC I Regular Interest I-LTAA and REMIC I Regular
Interest I-LTZZ,
respectively.
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(2) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account an amount equal to the Interest Remittance
Amount and
distribute to the Certificateholders the following amounts, in the
following order of priority:
(i) to the Holders of each Class of the Class A Certificates, on
a pro rata basis based on the entitlement of each such Class, an
amount equal to the Senior Interest Distribution Amount allocable
to
such Class of the Class A Certificates; and
(ii) sequentially, to the Holders of the Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class M-6 Certificates, Class
M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates
and
Class M-10 Certificates, in that order, an amount equal to the
Interest Distribution Amount allocable to each such Class.
(3) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account an amount equal to the Principal Distribution
Amount
and distribute to the Certificateholders the following amounts, in
the
following order of priority:
(A) On each Distribution Date (a) prior to the Stepdown Date or (b)
on
which a Trigger Event is in effect, the Principal Distribution
Amount shall
be distributed in the following order of priority:
(i) sequentially, to the Holders of the Class A-1 Certificates,
Class A-2 Certificates and Class A-3 Certificates, in that order,
until the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero; and
(ii) sequentially, to the holders of the Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class M-6 Certificates, Class
M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates
and
Class M-10 Certificates, in that order, until the Certificate
Principal Balance of each such Class has been reduced to zero.
(B) On each Distribution Date (a) on or after the Stepdown Date and
(b) on which a Trigger Event is not in effect, the Principal
Distribution
Amount shall be distributed in the following order of priority:
(i) sequentially, to the Holders of the Class A-1 Certificates,
Class A-2 Certificates and Class A-3 Certificates, in that order,
up
to an amount equal to the Class A Principal Distribution Amount,
until
the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero; and
(ii) sequentially, to the Holders of the Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class M-6 Certificates, Class
M-7 Certificates, Class M-8
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Certificates, Class M-9 Certificates and Class M-10 Certificates,
in
that order, the related Class M Principal Distribution Amount,
until
the Certificate Principal Balances have been reduced to zero.
(4) On each Distribution Date, the Net Monthly Excess Cashflow
shall
be distributed by the Trustee as follows, in each case to the
extent not
covered by amounts from the Swap Agreement:
(i) to the Holders of the Class or Classes of Certificates then
entitled to receive distributions in respect of principal, as part
of
the Principal Distribution Amount in an amount equal to the
Overcollateralization Increase Amount for the Certificates, applied
to
reduce the Certificate Principal Balance of such Certificates until
the aggregate Certificate Principal Balance of such Certificates is
reduced to zero;
(ii) sequentially, to the Holders of the Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6 Certificates, Class M-7
Certificates, Class M-8 Certificates, Class M-9 Certificates and
Class
M-10 Certificates in that order, in each case, in an amount equal
to
the Interest Carry Forward Amount allocable to such Class of
Certificates;
(iii) sequentially to the Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9
Certificates and Class M-10 Certificates, in that order, in each
case
up to the related Allocated Realized Loss Amount related to each
such
Class of Certificates for such Distribution Date;
(iv) to the Holders of the Class A Certificates and the Mezzanine
Certificates, any related unpaid Net WAC Rate Carryover Amount
distributed to the Class A Certificates, on a pro rata basis based
on
the remaining Net WAC Rate Carryover Amount for each such Class and
then to the Class of Mezzanine Certificates with the next Highest
Priority;
(v) to pay any Swap Termination Payments owed to the Swap
Counterparty due to a Swap Counterparty Trigger Event;
(vi) to the Holders of the Class CE Certificates, (a) the
Interest Distribution Amount and any Overcollateralization
Reduction
Amount for such Distribution Date and (b) on any Distribution Date
on
which the aggregate Certificate Principal Balance of the Class A
Certificates and the Mezzanine Certificates have been reduced to
zero,
any remaining amounts in reduction of the Certificate Principal
Balance of the Class CE Certificates, until the Certificate
Principal
Balance thereof has been reduced to zero; and
(vii) to the Holders of the Class R Certificates, any remaining
amounts; provided that if such Distribution Date is the
Distribution
Date immediately following the expiration of the latest Prepayment
Charge term on a Mortgage Loan as identified on the Mortgage Loan
Schedule or any Distribution Date
83
thereafter, then any such remaining amounts will be distributed
first,
to the Holders of the Class P Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and second, to
the
Holders of the Class R Certificates.
(b) On each Distribution Date, the Trustee shall withdraw any
amounts then
on deposit in the Certificate Account that represent Prepayment
Charges
collected by the Servicer, during the related Prepayment Period in
connection
with the Principal Prepayment of any of the Mortgage Loans or any
Servicer
Prepayment Charge Payment Amount and shall distribute such amounts
to the
Holders of the Class P Certificates. Such distributions shall not
be applied to
reduce the Certificate Principal Balance of the Class P
Certificates.
Following the foregoing distributions, an amount equal to the
amount of
Subsequent Recoveries shall be applied to increase the Certificate
Principal
Balance of the Class of Certificates with the Highest Priority up
to the extent
of such Realized Losses previously allocated to that Class of
Certificates
pursuant to Section 4.04. An amount equal to the amount of any
remaining
Subsequent Recoveries shall be applied to increase the Certificate
Principal
Balance of the Class of Certificates with the next Highest
Priority, up to the
amount of such Realized Losses previously allocated to that Class
of
Certificates pursuant to Section 4.04. Holders of such Certificates
will not be
entitled to any distribution in respect of interest on the amount
of such
increases for any Interest Accrual Period preceding the
Distribution Date on
which such increase occurs. Any such increases shall be applied to
the
Certificate Principal Balance of each Certificate of such Class in
accordance
with its respective Percentage Interest.
(c) All distributions made with respect to each Class of
Certificates on
each Distribution Date shall be allocated pro rata among the
outstanding
Certificates in such Class based on their respective Percentage
Interests.
Payments in respect of each Class of Certificates on each
Distribution Date
shall be made to the Holders of the respective Class of record on
the related
Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01
respecting the final distribution on such Class), based on the
aggregate
Percentage Interest represented by their respective Certificates,
and shall be
made by wire transfer of immediately available funds to the account
of any such
Holder at a bank or other entity having appropriate facilities
therefor, if such
Holder shall (i) own Certificates having denominations aggregating
at least
$1,000,000 and (ii) have so notified the Trustee in writing at
least five
Business Days prior to the Record Date immediately prior to such
Distribution
Date, or otherwise by check mailed by first class mail to the
address of such
Holder appearing in the Certificate Register. The final
distribution on each
Certificate shall be made in like manner, but only upon presentment
and
surrender of such Certificate at the office of the Trustee
maintained for such
purpose pursuant to Section 8.12 or such other location specified
in the notice
to Certificateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate shall be
paid to
the Depository, as Holder thereof, and the Depository shall be
responsible for
crediting the amount of such distribution to the accounts of its
Depository
Participants in accordance with its normal procedures. Each
Depository
Participant shall be responsible for disbursing such distribution
to the
Certificate Owners that it represents and to each indirect
participating
brokerage firm (a "brokerage firm" or "indirect participating
firm") for which
it acts as agent. Each brokerage firm shall be responsible for
disbursing funds
to the Certificate Owners that it represents. None of the
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Trustee, the Depositor or the Servicer shall have any
responsibility therefor
except as otherwise provided by this Agreement or applicable law.
(d) The rights of the Certificateholders to receive distributions
in
respect of the Certificates, and all interests of the
Certificateholders in such
distributions, shall be as set forth in this Agreement. None of the
Holders of
any Class of Certificates, the Trustee or the Servicer shall in any
way be
responsible or liable to the Holders of any other Class of
Certificates in
respect of amounts properly previously distributed on the
Certificates.
(e) Except as otherwise provided in Section 9.01, whenever the
Trustee
expects that the final distribution with respect to any Class of
Certificates
will be made on the next Distribution Date, the Trustee shall, no
later than
three (3) days before the related Distribution Date (to the extent
that an
accurate Remittance Report is received in a timely manner by the
Trustee), mail
to each Holder on such date of such Class of Certificates a notice
to the effect
that:
(i) the Trustee expects that the final distribution with respect
to such Class of Certificates will be made on such Distribution
Date
but only upon presentation and surrender of such Certificates at
the
office of the Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and after
the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates
of such
Class on such Distribution Date because of the failure of such
Holder or Holders
to tender their Certificates shall, on such date, be set aside and
held in trust
by the Trustee and credited to the account of the appropriate
non-tendering
Holder or Holders. If any Certificates as to which notice has been
given
pursuant to this Section 4.01(e) shall not have been surrendered
for
cancellation within six months after the time specified in such
notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation
in order to
receive the final distribution with respect thereto. If within one
year after
the second notice all such Certificates shall not have been
surrendered for
cancellation, the Trustee shall, directly or through an agent, mail
a final
notice to the remaining non-tendering Certificateholders concerning
surrender of
their Certificates and shall continue to hold any remaining funds
for the
benefit of non-tendering Certificateholders. The costs and expenses
of
maintaining the funds in trust and of contacting such
Certificateholders shall
be paid out of the assets held in trust for such
Certificateholders. If within
one year after the final notice any such Certificates shall not
have been
surrendered for cancellation, the Trustee shall pay to Bear,
Stearns & Co. Inc.,
in accordance with its wiring instructions, all such amounts, and
all rights of
non-tendering Certificateholders in or to such amounts shall
thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any
amount held
in trust by the Trustee as a result of such Certificateholder's
failure to
surrender its Certificate(s) for final payment thereof in
accordance with this
Section 4.01(e). Any such amounts held in trust by the Trustee
shall be held in
an Eligible Account and shall be held uninvested.
85
(f) Notwithstanding anything to the contrary herein, (i) in no
event shall
the Certificate Principal Balance of a Class A Certificate or a
Mezzanine
Certificate be reduced more than once in respect of any particular
amount
allocated to such Certificate in respect of Realized Losses
pursuant to Section
4.04 and (ii) in no event shall the Uncertificated Balance of a
REMIC I Regular
Interest be reduced more than once in respect of any particular
amount both (a)
allocated to such REMIC I Regular Interest in respect of Realized
Losses
pursuant to Section 4.04 and (b) distributed on such REMIC I
Regular Interest in
reduction of the Uncertificated Balance thereof pursuant to this
Section 4.01.
SECTION 4.02 Statements to Certificateholders. On each Distribution
Date,
the Trustee shall prepare and make available via its website to
each Holder of
the Regular Certificates, a statement as to the distributions made
on such
Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution Date
to
the Holders of the Certificates of each Class allocable to
principal, and
the amount of the distribution made on such Distribution Date to
the
Holders of the Class P Certificates allocable to Prepayment
Charges;
(ii) the amount of the distribution made on such Distribution Date
to
the Holders of the Certificates of each Class allocable to
interest;
(iii) the aggregate Servicing Fee received by the Servicer during
the
related Due Period and such other customary information as the
Trustee
deems necessary or desirable, or which a Certificateholder
reasonably
requests, to enable Certificateholders to prepare their tax
returns;
(iv) the aggregate amount of Advances for such Distribution Date;
(v) the aggregate Stated Principal Balance of the Mortgage Loans
and
any REO Properties as of the close of business on such Distribution
Date;
(vi) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of
the
Mortgage Loans as of the related Due Date;
(vii) the number and aggregate unpaid principal balance of Mortgage
Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89 days,
(c)
delinquent 90 or more days, in each case, as of the last day of the
preceding calendar month, (d) as to which foreclosure proceedings
have been
commenced and (e) with respect to which the related Mortgagor has
filed for
protection under applicable bankruptcy laws, with respect to whom
bankruptcy proceedings are pending or with respect to whom
bankruptcy
protection is in force;
(viii) with respect to any Mortgage Loan that became an REO
Property
during the preceding calendar month, the loan number of such
Mortgage Loan,
the unpaid principal balance and the Stated Principal Balance of
such
Mortgage Loan as of the date it became an REO Property;
86
(ix) the book value of any REO Property as of the close of business
on
the last Business Day of the calendar month preceding the
Distribution
Date;
(x) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xi) the aggregate amount of Realized Losses incurred during the
related Prepayment Period (or, in the case of Bankruptcy Losses
allocable
to interest, during the related Due Period), separately identifying
whether
such Realized Losses constituted Bankruptcy Losses and the
aggregate amount
of Realized Losses incurred since the Closing Date and the
aggregate amount
of Subsequent Recoveries received during the related Prepayment
Period and
the cumulative amount of Subsequent Recoveries received since the
Closing
Date;
(xii) the aggregate amount of Extraordinary Trust Fund Expenses
withdrawn from the Custodial Account or the Certificate Account for
such
Distribution Date;
(xiii) the aggregate Certificate Principal Balance and Notional
Amount, as applicable, of each Class of Certificates, after giving
effect
to the distributions, and allocations of Realized Losses, made on
such
Distribution Date, separately identifying any reduction thereof due
to
allocations of Realized Losses;
(xiv) the Certificate Factor for each such Class of Certificates
applicable to such Distribution Date;
(xv) the Interest Distribution Amount in respect of the Class A
Certificates, the Mezzanine Certificates and the Class CE
Certificates for
such Distribution Date and the Interest Carry Forward Amount, if
any, with
respect to the Class A Certificates and the Mezzanine Certificates
on such
Distribution Date, and in the case of the Class A Certificates, the
Mezzanine Certificates and the Class CE Certificates, separately
identifying any reduction thereof due to allocations of Realized
Losses,
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls;
(xvi) the aggregate amount of any Prepayment Interest Shortfall for
such Distribution Date, to the extent not covered by payments by
the
Servicer pursuant to Section 3.24;
(xvii) the aggregate amount of Relief Act Interest Shortfalls for
such
Distribution Date;
(xviii) the Overcollateralization Target Amount and the Credit
Enhancement Percentage for such Distribution Date;
(xix) the Overcollateralization Increase Amount, if any, for such
Distribution Date;
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(xx) the Overcollateralization Reduction Amount, if any, for such
Distribution Date;
(xxi) the respective Pass-Through Rates applicable to the Class A
Certificates, the Mezzanine Certificates, the Class CE Certificates
for
such Distribution Date and the Pass-Through Rate applicable to the
Class A
Certificates and the Mezzanine Certificates for the immediately
succeeding
Distribution Date;
(xxii) the Net WAC Rate Carryover Amount for the Class A
Certificates
and the Mezzanine Certificates, if any, for such Distribution Date
and the
amount remaining unpaid after reimbursements therefor on such
Distribution
Date;
(xxiii) whether a Trigger Event is in effect; and
(xxiv) the amount of any Net Swap Payment payable to the Trustee on
behalf of the Trust, any Net Swap Payment payable to the Swap
Counterparty,
any Swap Termination Payment payable to the Trustee on behalf of
the Trust
and any Swap Termination Payment payable to the Swap Counterparty.
The Trustee shall make such statement (and, at its option, any
additional
files containing the same information in an alternative format)
available each
month to Certificateholders, the Servicer and the Rating Agencies
via the
Trustee's internet website. The Trustee's internet website shall
initially be
located at https://www.tss.db.com/invr and assistance in using the
website can
be obtained by calling the Trustee's investor relations desk at
1-800-735-7777.
Parties that are unable to use the above distribution options are
entitled to
have a paper copy mailed to them via first class mail by calling
the investor
relations desk and indicating such. The Trustee shall have the
right to change
the way such statements are distributed in order to make such
distribution more
convenient and/or more accessible to the above parties and the
Trustee shall
provide timely and adequate notification to all above parties
regarding any such
changes.
In the case of information furnished pursuant to subclauses (i)
through
(iii) above, the amounts shall be expressed as a dollar amount per
Single
Certificate of the relevant Class.
Within a reasonable period of time after the end of each calendar
year, the
Trustee shall furnish to each Person who at any time during the
calendar year
was a Holder of a Regular Certificate a statement containing the
information set
forth in subclauses (i) through (iii) above, aggregated for such
calendar year
or applicable portion thereof during which such person was a
Certificateholder.
Such obligation of the Trustee shall be deemed to have been
satisfied to the
extent that substantially comparable information shall be provided
by the
Trustee pursuant to any requirements of the Code as from time to
time are in
force.
Within a reasonable period of time after the end of each calendar
year, the
Trustee shall furnish to each Person who at any time during the
calendar year
was a Holder of a Residual Certificate a statement setting forth
the amount, if
any, actually distributed with respect to the Residual
Certificates, as
appropriate, aggregated for such calendar year or applicable
portion thereof
during which such Person was a Certificateholder.
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The Trustee shall, upon request, furnish to each Certificateholder,
during
the term of this Agreement, such periodic, special, or other
reports or
information, whether or not provided for herein, as shall be
reasonable with
respect to the Certificateholder, or otherwise with respect to the
purposes of
this Agreement, all such reports or information to be provided at
the expense of
the Certificateholder in accordance with such reasonable and
explicit
instructions and directions as the Certificateholder may provide.
For purposes
of this Section 4.02, the Trustee's duties are limited to the
extent that the
Trustee receives timely reports as required from the Servicer.
On each Distribution Date the Trustee shall provide Bloomberg
Financial
Markets, L.P. ("Bloomberg") CUSIP level factors for each class of
Certificates
as of such Distribution Date, using a format and media mutually
acceptable to
the Trustee and Bloomberg.
SECTION 4.03 Remittance Reports; Advances. (a) On the Business Day
following each Determination Date, the Servicer shall deliver to
the Trustee by
telecopy (or by such other means as the Servicer or the Trustee may
agree from
time to time) a Remittance Report with respect to the related
Distribution Date.
On the same date, the Servicer shall electronically transmit (in a
format
acceptable to the Trustee), a data file containing the information
set forth in
such Remittance Report with respect to the related Distribution
Date or if
electronic transmission is not available, the Servicer shall
forward to the
Trustee by overnight mail a computer readable magnetic tape. Such
Remittance
Report will include (i) the amount of Advances to be made by the
Servicer in
respect of the related Distribution Date, the aggregate amount of
Advances
outstanding after giving effect to such Advances, and the aggregate
amount of
Nonrecoverable Advances in respect of such Distribution Date and
(ii) such other
information with respect to the Mortgage Loans as the Trustee may
reasonably
require to perform the calculations necessary to make the
distributions
contemplated by Section 4.01 and to prepare the statements to
Certificateholders
contemplated by Section 4.02. The Trustee shall not be responsible
to recompute,
recalculate or verify any information provided to it by the
Servicer.
(b) The amount of Advances to be made by the Servicer for any
Distribution
Date shall equal, subject to Section 4.03(d), the sum of, (i) the
aggregate
amount of Monthly Payments (with each interest portion thereof net
of the
related Servicing Fee), due on the related Due Date in respect of
the Mortgage
Loans, which Monthly Payments were delinquent as of the close of
business on the
related Determination Date and (ii) with respect to each REO
Property, which REO
Property was acquired during or prior to the related Prepayment
Period and as to
which REO Property an REO Disposition did not occur during the
related
Prepayment Period, an amount equal to the excess, if any, of the
REO Imputed
Interest on such REO Property for the most recently ended calendar
month, over
the net income from such REO Property transferred to the
Certificate Account
pursuant to Section 3.23 for distribution on such Distribution
Date; provided,
however, that the Servicer shall not be required to make Advances
with respect
to Relief Act Interest Shortfalls or Prepayment Interest Shortfalls
in excess of
their respective obligations under Section 3.24.
By 1:00 p.m. New York time on the Servicer Remittance Date, the
Servicer
shall remit in immediately available funds to the Trustee for
deposit in the
Certificate Account an amount equal to the aggregate amount of
Advances, if any,
to be made in respect of the Mortgage Loans and REO Properties for
the related
Distribution Date either (i) from its own funds or (ii) from the
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Custodial Account, to the extent of funds held therein for future
distribution
(in which case it will cause to be made an appropriate entry in the
records of
the Custodial Account that amounts held for future distribution
have been, as
permitted by this Section 4.03, used by the Servicer in discharge
of any such
Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating the
total amount of Advances to be made by the Servicer with respect to
the Mortgage
Loans and REO Properties. Any amounts held for future distribution
and so used
shall be appropriately reflected in the Servicer's records and
replaced by the
Servicer by deposit in the Custodial Account on or before any
future Servicer
Remittance Date to the extent that the Available Distribution
Amount for the
related Distribution Date (determined without regard to Advances to
be made on
the Servicer Remittance Date) shall be less than the total amount
that would be
distributed to the Classes of Certificateholders pursuant to
Section 4.01 on
such Distribution Date if such amounts held for future
distributions had not
been so used to make Advances. The Trustee will provide notice to
the Servicer
by telecopy by the close of business on the Business Day prior to
the
Distribution Date in the event that the amount remitted by the
Servicer to the
Trustee on such date is less than the amount required to be
remitted by the
Servicer as set forth in the Remittance Report for the related
Distribution
Date.
(c) The obligation of the Servicer to make such Advances is
mandatory,
notwithstanding any other provision of this Agreement but subject
to (d) below,
and, with respect to any Mortgage Loan or REO Property, shall
continue until a
Final Recovery Determination in connection therewith or the removal
thereof from
the Trust Fund pursuant to any applicable provision of this
Agreement, except as
otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the
Servicer if such
Advance or Servicing Advance would, if made, constitute a
Nonrecoverable Advance
or Nonrecoverable Servicing Advance, respectively. The
determination by the
Servicer that it has made a Nonrecoverable Advance or a
Nonrecoverable Servicing
Advance or that any proposed Advance or Servicing Advance, if made,
would
constitute a Nonrecoverable Advance or Nonrecoverable Servicing
Advance,
respectively, shall be evidenced by a certification of a Servicing
Officer
delivered to the Depositor and the Trustee.
SECTION 4.04 Allocation of Realized Losses. (a) Prior to each
Determination
Date, the Servicer shall determine as to each Mortgage Loan and REO
Property:
(i) the total amount of Realized Losses, if any, incurred in
connection with any
Final Recovery Determinations made during the related Prepayment
Period; (ii)
whether and the extent to which such Realized Losses constituted
Bankruptcy
Losses; and (iii) the respective portions of such Realized Losses
allocable to
interest and allocable to principal. Prior to each Determination
Date, the
Servicer shall also determine as to each Mortgage Loan: (i) the
total amount of
Realized Losses, if any, incurred in connection with any Deficient
Valuations
made during the related Prepayment Period; and (ii) the total
amount of Realized
Losses, if any, incurred in connection with Debt Service Reductions
in respect
of Monthly Payments due during the related Due Period. The
information described
in the two preceding sentences that is to be supplied by the
Servicer shall be
evidenced by an Officers' Certificate delivered to the Trustee by
the Servicer
prior to the Determination Date immediately following the end of
(i) in the case
of Bankruptcy Losses allocable to interest, the Due Period during
which any such
Realized Loss was incurred, and (ii)
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in the case of all other Realized Losses, the Prepayment Period
during which any
such Realized Loss was incurred.
(b) All Realized Losses on the Mortgage Loans shall be covered or
allocated
by the Trustee on each Distribution Date as follows: first, by any
amounts
available from the Swap Agreement for such Distribution Date
pursuant to Section
4.07; second, to Net Monthly Excess Cash Flow; third, to the
Accrued Certificate
Interest for the Class CE Certificates for the related Interest
Accrual Period;
fourth, to the Class CE Certificates, until the Certificate
Principal Balance
thereof has been reduced to zero; fifth, to the Class M-10
Certificates until
the Certificate Principal Balance thereof has been reduced to zero;
sixth, to
the Class M-9 Certificates until the Certificate Principal Balance
thereof has
been reduced to zero; seventh, to the Class M-8 Certificates until
the
Certificate Principal Balance thereof has been reduced to zero;
eighth, to the
Class M-7 Certificates until the Certificate Principal Balance
thereof has been
reduced to zero; ninth, to the Class M-6 Certificates until the
Certificate
Principal Balance thereof has been reduced to zero; tenth, to the
Class M-5
Certificates, until the Certificate Principal Balance thereof has
been reduced
to zero; eleventh, to the Class M-4 Certificates, until the
Certificate
Principal Balance thereof has been reduced to zero; twelfth, to the
Class M-3
Certificates, until the Certificate Principal Balance thereof has
been reduced
to zero, thirteenth, to the Class M-2 Certificates, until the
Certificate
Principal Balance thereof has been reduced to zero and fourteenth,
to the Class
M-1 Certificates, until the Certificate Principal Balance thereof
has been
reduced to zero.
All Realized Losses to be allocated to the Certificate Principal
Balances
of all Classes on any Distribution Date shall be so allocated after
the actual
distributions to be made on such date as provided above. All
references above to
the Certificate Principal Balance of any Class of Certificates
shall be to the
Certificate Principal Balance of such Class immediately prior to
the relevant
Distribution Date, before reduction thereof by any Realized Losses,
in each case
to be allocated to such Class of Certificates, on such Distribution
Date.
Any allocation of Realized Losses to a Mezzanine Certificate on any
Distribution Date shall be made by reducing the Certificate
Principal Balance
thereof by the amount so allocated and any allocation of Realized
Losses to a
Class CE Certificates shall be made by reducing the amount
otherwise payable in
respect thereof pursuant to Section 4.01(a)(4)(vi). No allocations
of any
Realized Losses shall be made to the Certificate Principal Balances
of the Class
A Certificates or the Class P Certificates.
As used herein, an allocation of a Realized Loss on a "pro rata
basis"
among two or more specified Classes of Certificates means an
allocation on a pro
rata basis, among the various Classes so specified, to each such
Class of
Certificates on the basis of their then outstanding Certificate
Principal
Balances prior to giving effect to distributions to be made on such
Distribution
Date. All Realized Losses and all other losses allocated to a Class
of
Certificates hereunder will be allocated among the Certificates of
such Class in
proportion to the Percentage Interests evidenced thereby.
(c) All Realized Losses on the Mortgage Loans shall be allocated by
the
Trustee on each Distribution Date to the following REMIC I Regular
Interests in
the specified percentages,
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as follows: first, to Uncertificated Interest payable to the REMIC
I Regular
Interest I-LTAA and REMIC I Regular Interest I-LTZZ up to an
aggregate amount
equal to the REMIC I Interest Loss Allocation Amount, 98% and 2%,
respectively;
second, to the Uncertificated Balances of the REMIC I Regular
Interest I-LTAA
and REMIC I Regular Interest I-LTZZ up to an aggregate amount equal
to the REMIC
I Principal Loss Allocation Amount, 98% and 2%, respectively;
third, to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular
Interest I-LTM10 and REMIC I Regular Interest I-LTZZ, 98%, 1% and
1%,
respectively, until the Uncertificated Balance of REMIC I Regular
Interest
I-LTM10 has been reduced to zero, fourth to the Uncertificated
Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM9 and
REMIC I Regular
Interest I-LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Balance
of REMIC I Regular Interest I-LTM9 has been reduced to zero; fifth,
to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular
Interest I-LTM8 and REMIC I Regular Interest I-LTZZ, 98%, 1% and
1%,
respectively, until the Uncertificated Balance of REMIC I Regular
Interest
I-LTM8 has been reduced to zero; sixth, to the Uncertificated
Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM7 and
REMIC I Regular
Interest I-LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Balance
of REMIC I Regular Interest I-LTM7 has been reduced to zero;
seventh, to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular
Interest I-LTM6 and REMIC I Regular Interest I-LTZZ, 98%, 1% and
1%,
respectively, until the Uncertificated Balance of REMIC I Regular
Interest
I-LTM6 has been reduced to zero; eighth, to the Uncertificated
Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM5 and
REMIC I Regular
Interest I-LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Balance
of REMIC I Regular Interest I-LTM5 has been reduced to zero; ninth
to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular
Interest I-LTM4 and REMIC I Regular Interest I-LTZZ, 98%, 1% and
1%,
respectively, until the Uncertificated Balance of REMIC I Regular
Interest
I-LTM4 has been reduced to zero; tenth to the Uncertificated
Balances of REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTM3 and REMIC
I Regular
Interest I-LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Balance
of REMIC I Regular Interest I-LTM3 has been reduced to zero;
eleventh to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular
Interest I-LTM2 and REMIC I Regular Interest I-LTZZ, 98%, 1% and
1%,
respectively, until the Uncertificated Balance of REMIC I Regular
Interest
I-LTM2 has been reduced to zero; and twelfth, to the Uncertificated
Balances of
REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM1
and REMIC I
Regular Interest I-LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated
Balance of REMIC I Regular Interest I-LTM1 has been reduced to
zero.
SECTION 4.05 Compliance with Withholding Requirements.
Notwithstanding any
other provision of this Agreement, the Trustee shall comply with
all federal
withholding requirements respecting payments to Certificateholders
of interest
or original issue discount that the Trustee reasonably believes are
applicable
under the Code. The consent of Certificateholders shall not be
required for such
withholding. In the event the Trustee does withhold any amount from
interest or
original issue discount payments or advances thereof to any
Certificateholder
pursuant to federal withholding requirements, the Trustee shall
indicate the
amount withheld to such Certificateholders.
92
SECTION 4.06 Exchange Commission; Additional Information. Within 15
days
after each Distribution Date, the Trustee shall, in accordance with
applicable
law, file with the Commission via the Electronic Data Gathering and
Retrieval
System ("EDGAR"), a Form 8-K (or other comparable Form containing
the same or
comparable information or other information mutually agreed upon)
with a copy of
the statement to the Certificateholders for such Distribution Date
as an exhibit
thereto. Prior to January 30 in each year, the Trustee shall, in
accordance with
applicable law and only if instructed by the Depositor, file a Form
15
Suspension Notice with respect to the Trust Fund, if applicable.
Prior to (i)
March 15, 2006 and (ii) unless and until a Form 15 Suspension
Notice shall have
been filed, prior to March 15 of each year thereafter, the Servicer
shall
provide the Trustee and the Depositor with a Servicer
Certification,
substantially in the form attached hereto as Exhibit I-1 which
shall be signed
by the senior officer of the Servicer in charge of securitization,
together with
a copy of the annual independent accountant's servicing report and
annual
statement of compliance to be delivered pursuant to this Agreement
and each
Sub-Servicer, in each case, required to be delivered pursuant to
the related
Sub-Servicing Agreement, and, if applicable, the annual independent
accountant's
servicing report and annual statement of compliance to be delivered
by the
Servicer pursuant to Sections 3.20 and 3.21. In addition, the
Trustee shall sign
a certification (in the form attached hereto as Exhibit I-2) for
the benefit of
the Servicer and its officers, directors and Affiliates regarding
certain
aspects of the Servicer Certification (the "Trustee Certification")
(provided,
however, that the Trustee shall not undertake an analysis of the
accountant's
report attached as an exhibit to the Form 10-K). Prior to (i) March
31, 2006 and
(ii) unless and until a Form 15 Suspension Notice shall have been
filed, March
31 of each year thereafter, the Trustee shall file a Form 10-K, in
substance as
required by applicable law or applicable Security and Exchange
Commission
staff's interpretations. Such Form 10-K shall include the Servicer
Certification
and other documentation provided by the Servicer pursuant to the
second
preceding sentence. The Depositor hereby grants to the Trustee a
limited power
of attorney to execute each Form 8-K and file such Forms 8-K and
10-K on behalf
of the Depositor. Such power of attorney shall continue until
either the earlier
of (i) receipt by the Trustee from the Depositor of written
termination of such
power of attorney and (ii) the termination of the Trust Fund.
Notwithstanding
anything herein to the contrary, the Servicer, and not the Trustee,
shall be
responsible for executing each Form 10-K filed on behalf of the
Trust. The
Depositor agrees to promptly furnish to the Trustee, from time to
time upon
request, such further information, reports and financial statements
within its
control related to this Agreement, the Mortgage Loans as the
Trustee reasonably
deems appropriate to prepare and file all necessary reports with
the Commission.
If they are not so timely delivered, the Trustee shall file an
amended Form 10-K
including such documents as exhibits reasonably promptly after they
are
delivered to the Trustee. The Trustee shall have no liability with
respect to
any failure to properly prepare or file such periodic reports
resulting from or
relating to the Trustee's inability or failure to obtain any
information not
resulting from its own negligence or willful misconduct. The
Trustee shall have
no responsibility to file any items other than those specified in
this Section
4.06; provided, however, the Trustee and the Servicer will
cooperate with the
Depositor in connection with any additional filings with respect to
the Trust
Fund as the Depositor deems necessary under the Securities Exchange
Act of 1934,
as amended (the "Exchange Act"). Copies of all reports filed by the
Trustee
under the Exchange Act shall be sent to the Depositor.
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SECTION 4.07 The Swap Agreement 
