Exhibit 4
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ASSET BACKED FUNDING CORPORATION,
Depositor
SAXON MORTGAGE SERVICES, INC.,
Servicer
and
WELLS FARGO BANK, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2005
ABFC 2005-HE2 Trust
ABFC Asset-Backed Certificates, Series 2005-HE2
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Defined
Terms................................................
Section 1.02
Accounting...................................................
Section 1.03 Rights of the NIMS
Insurer...................................
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage
Loans.................................
Section 2.02 Acceptance by
Trustee........................................
Section 2.03 Repurchase or Substitution of
Mortgage Loans by the
Originators or the Seller....................................
Section 2.04
[Reserved]...................................................
Section 2.05 Representations, Warranties and
Covenants of the Servicer....
Section 2.06 Representations and Warranties of
the Depositor..............
Section 2.07 Issuance of Certificates and the
Uncertificated Regular
Interests....................................................
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as
Servicer..................................
Section 3.02 Collection of Mortgage Loan
Payments.........................
Section 3.03 Realization Upon Defaulted
Mortgage Loans....................
Section 3.04 Collection Account, Distribution
Account and Reserve
Accounts.....................................................
Section 3.05 Permitted Withdrawals From the
Collection Account............
Section 3.06 Establishment of Escrow Accounts;
Deposits in Escrow
Accounts.....................................................
Section 3.07 Permitted Withdrawals From Escrow
Account....................
Section 3.08 Payment of Taxes, Insurance and
Other Charges;
Collections Thereunder.......................................
Section 3.09 Transfer of
Accounts.........................................
Section 3.10 Maintenance of Hazard
Insurance..............................
Section 3.11 Maintenance of Mortgage Impairment
Insurance Policy..........
Section 3.12 Fidelity Bond, Errors and
Omissions Insurance................
Section 3.13 Title, Management and Disposition
of REO Property............
Section 3.14 Due-on-Sale Clauses; Assumption
and Substitution
Agreements...................................................
Section 3.15 Notification of
Adjustments..................................
Section 3.16 Optional Purchases of Mortgage
Loans by Servicer.............
Section 3.17 Trustee to Cooperate; Release of
Files.......................
Section 3.18 Servicing
Compensation.......................................
Section 3.19 Annual Statement as to
Compliance............................
Section 3.20 Annual Independent Certified
Public Accountants' Reports.....
Section 3.21 Access to Certain Documentation
and Information Regarding
the Mortgage Loans...........................................
Section 3.22 Duties of Credit Risk
Manager................................
Section 3.23 Obligations of the Servicer in
Respect of Compensating
Interest.....................................................
Section 3.24 Obligations of the Servicer in
Respect of Mortgage
Interest Rates and Monthly Payments..........................
Section 3.25 Investment of Funds in the
Collection Account and the
Distribution Account.........................................
Section 3.26 Liability of Servicer;
Indemnification.......................
Section 3.27 Reports of Foreclosure and
Abandonment of Mortgaged
Properties...................................................
Section 3.28 Protection of
Assets.........................................
Section 3.29 Limitation of Liability of the
Credit Risk Manager...........
Section 3.30 No Personal
Solicitation.....................................
Section 3.31 Periodic
Filings.............................................
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest
Distributions.......................................
Section 4.02 Distributions of Principal and
Monthly Excess Cashflow
Amounts......................................................
Section 4.03 Allocation of
Losses.........................................
Section 4.04 Method of
Distribution.......................................
Section 4.05 Distributions on Book-Entry
Certificates.....................
Section 4.06
Statements...................................................
Section 4.07 Remittance Reports;
Advances.................................
Section 4.08 REMIC
Distributions..........................................
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates.............................................
Section 5.02 Registration of Transfer and
Exchange of Certificates........
Section 5.03 Mutilated, Destroyed, Lost or
Stolen Certificates............
Section 5.04 Persons Deemed
Owners........................................
Section 5.05 Appointment of Paying
Agent..................................
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Servicer and the
Depositor..................
Section 6.02 Merger or Consolidation of, or
Assumption of the
Obligations of, the Servicer or the Depositor................
Section 6.03 Limitation on Liability of the
Servicer and Others...........
Section 6.04 Servicer Not to
Resign.......................................
Section 6.05 Delegation of
Duties.........................................
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of
Termination...............................
Section 7.02 Trustee to Act; Appointment of
Successor.....................
Section 7.03 Waiver of
Defaults...........................................
Section 7.04 Notification to
Certificateholders...........................
Section 7.05 Survivability of Servicer
Liabilities........................
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of
Trustee............................................
Section 8.02 Certain Matters Affecting the
Trustee........................
Section 8.03 Trustee Not Liable for
Certificates or Mortgage Loans........
Section 8.04 Trustee May Own
Certificates.................................
Section 8.05 Trustee
Expenses.............................................
Section 8.06 Eligibility Requirements for
Trustee.........................
Section 8.07 Resignation or Removal of
Trustee............................
Section 8.08 Successor
Trustee............................................
Section 8.09 Merger or Consolidation of
Trustee...........................
Section 8.10 Appointment of Co-Trustee or
Separate Trustee................
Section 8.11 Limitation of
Liability......................................
Section 8.12 Trustee May Enforce Claims Without
Possession of
Certificates.................................................
Section 8.13 Suits for
Enforcement........................................
Section 8.14 Waiver of Bond
Requirement...................................
Section 8.15 Waiver of Inventory, Accounting
and Appraisal Requirement....
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01 REMIC
Administration.........................................
Section 9.02 Prohibited Transactions and
Activities.......................
Section 9.03 Indemnification with Respect to
Certain Taxes and Loss of
REMIC Status.................................................
Section 9.04 REO
Property.................................................
Section 9.05 Grantor Trust
Administration.................................
ARTICLE X
TERMINATION
Section 10.01
Termination..................................................
Section 10.02 Additional Termination
Requirements..........................
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01
Amendment....................................................
Section 11.02 Recordation of Agreement;
Counterparts.......................
Section 11.03 Limitation on Rights of
Certificateholders...................
Section 11.04 Governing Law;
Jurisdiction..................................
Section 11.05
Notices......................................................
Section 11.06 Severability of
Provisions...................................
Section 11.07 Article and Section
References...............................
Section 11.08 Notice to the Rating Agencies
and the NIMS Insurer...........
Section 11.09 Further
Assurances...........................................
Section 11.10 Third Party
Beneficiary......................................
Section 11.11 Acts of
Certificateholders...................................
<PAGE>
EXHIBITS
Exhibit A-1 Form
of Class A-1 Certificates
Exhibit A-2 Form
of Class A-2A Certificates
Exhibit A-3 Form
of Class A-2B Certificates
Exhibit A-4 Form
of Class A-2C Certificates
Exhibit A-5 Form
of Class A-2D Certificates
Exhibit B-1 Form
of Class M-1 Certificates
Exhibit B-2 Form
of Class M-2 Certificates
Exhibit B-3 Form
of Class M-3 Certificates
Exhibit B-4 Form
of Class M-4 Certificates
Exhibit B-5 Form
of Class M-5 Certificates
Exhibit B-6 Form
of Class M-6 Certificates
Exhibit B-7 Form
of Class M-7 Certificates
Exhibit B-8 Form
of Class M-8 Certificates
Exhibit B-9 Form of
Class M-9 Certificates
Exhibit B-10 Form of
Class M-10 Certificates
Exhibit B-11 Form of
Class M-11 Certificates
Exhibit B-12 Form of
Class B-1 Certificates
Exhibit B-13 Form of
Class B-2 Certificates
Exhibit C-1 Form
of Class CE Certificates
Exhibit C-2 Form
of Class P Certificates
Exhibit C-3 Form
of Class R Certificates
Exhibit D-1
Group 1 Mortgage Loan Schedule
Exhibit D-2
Group 2 Mortgage Loan Schedule
Exhibit E
Form of Request for Release
Exhibit F-1 Form
of Trustee's Initial Certification
Exhibit F-2 Form
of Trustee's Final Certification
Exhibit F-3 Form
of Receipt of Mortgage Note
Exhibit G
Mortgage Loan Purchase Agreement
Exhibit H
Form of Lost Note Affidavit
Exhibit I
Form of ERISA Representation
Exhibit J-1 Form
of Investment Letter (Non-Rule 144A)
Exhibit J-2 Form
of Rule 144A Investment Letter
Exhibit K
Form of Class R Certificate Transfer Affidavit
Exhibit L
Form of
Transferor Certificate
Exhibit M
Monthly Information Provided by Servicer
Exhibit N
Form of Yield Maintenance Agreements
Exhibit O
Form of Certification
Exhibit P-1 Form
of Certification of the Trustee to be Provided to
Depositor
Exhibit P-2 Form
of Certification of the Servicer to be Provided to
Depositor
Exhibit Q
Representations and Warranties Regarding Prepayment Charges
<PAGE>
ASSET BACKED FUNDING CORPORATION, as depositor (the
"Depositor"),
SAXON MORTGAGE SERVICES, INC., as servicer
(the "Servicer"), and WELLS FARGO
BANK, N.A., as trustee (the "Trustee") are
entering into this Pooling and
Servicing Agreement, dated as of August 1,
2005 (the "Agreement").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be
issued hereunder in multiple Classes,
which in the aggregate will evidence the
entire beneficial ownership interest in
the Trust Fund created hereunder. The
Certificates will consist of twenty-one
Classes of Certificates, designated as (i)
the Class A-1, Class A-2A, Class
A-2B, Class A-2C and Class A-2D
Certificates, (ii) 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,
Class M-10 and Class M-11 Certificates,
(iii) the Class B-1 and Class B-2
Certificates, (iv) the Class CE
Certificates, (v) the Class P Certificates and
(vi) the Class R Certificate.
REMIC 1
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of the
Mortgage Loans and certain other
related assets subject to this Agreement
(but exclusive of the Yield Maintenance
Agreements, the Reserve Accounts, the Cap
Carryover Amounts, the Prepayment
Charges, the Originator Prepayment Charge
Payment Amounts and the Servicer
Prepayment Charge Payment Amounts) as a
real estate investment conduit (a
"REMIC") for federal income tax purposes,
and such segregated pool of assets
will be designated as "REMIC 1." The Class
R-1 Interest will represent the sole
class of "residual interests" in REMIC 1
for purposes of the REMIC Provisions
under federal income tax law. The following
table irrevocably sets forth the
designation, the Uncertificated REMIC 1
Pass-Through Rate, the initial
Uncertificated Principal Balance, and
solely for purposes of satisfying Treasury
Regulations Section 1.860G-1(a)(4)(iii),
the "latest possible maturity date" for
each of the REMIC 1 Regular Interests. None
of the REMIC 1 Regular Interests
will be certificated.
Uncertificated
Initial
REMIC Pass- Uncertificated
Latest
Possible
Designation Through Rate
Balance
Maturity Date(1)
----------- -------------- --------------- ----------------
LT1AA
Variable(2) $601,571,467.61
June 25,
2035
LT1A1
Variable(2)
$1,250,000.00 June 25, 2035
LT1A2A
Variable(2)
$1,533,405.00 June 25, 2035
LT1A2B
Variable(2)
$617,795.00 June 25, 2035
LT1A2C
Variable(2)
$1,012,640.00 June 25, 2035
LT1A2D
Variable(2)
$285,165.00 June 25, 2035
LT1M1
Variable(2)
$233,265.00 June 25, 2035
LT1M2
Variable(2)
$208,710.00 June 25, 2035
LT1M3
Variable(2)
$119,700.00 June 25, 2035
LT1M4
Variable(2)
$181,085.00 June 25, 2035
LT1M5
Variable(2)
$92,075.00
June 25, 2035
LT1M6
Variable(2)
$92,080.00
June 25, 2035
LT1M7
Variable(2)
$64,455.00
June 25, 2035
LT1M8
Variable(2)
$67,520.00
June 25, 2035
LT1M9
Variable(2)
$98,215.00
June 25, 2035
LT1M10
Variable(2)
$46,040.00
June 25, 2035
LT1M11
Variable(2)
$64,450.00
June 25, 2035
LT1B1
Variable(2)
$98,220.00
June 25, 2035
LT1B2
Variable(2)
$42,970.00
June 25, 2035
LT1ZZ
Variable(2)
$6,169,178.73 June 25, 2035
LT1SUB
Variable(2)
$7,658.40
June 25, 2035
LT1GRP
Variable(2)
$32,658.40
June 25, 2035
LT2SUB
Variable(2)
$21,131.19
June 25, 2035
LT2GRP
Variable(2)
$90,111.29
June 25, 2035
LT1XX
Variable(2) $613,696,877.06
June 25,
2035
(1) Solely for purposes of
Treasury Regulations Section 1.860G-1(a)(4)(iii),
the
Distribution Date in the month 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 1 Regular Interest and
each
Class of
Regular Certificates.
(2) Calculated in accordance
with the definition of "Uncertificated REMIC 1
Pass-Through Rate" herein.
REMIC 2
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of the
REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such
segregated pool of assets will be
designated as "REMIC 2." The Class R-2
Interest represents the sole class of
"residual interests" in REMIC 2 for
purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class
designation,
Certificate Interest Rate and Original
Class Certificate Principal Balance for
each Class of Certificates comprising the
interests in the Trust Fund created
hereunder:
Original Class
Certificate
Principal
Certificate Assumed
Final
Class
Balance
Interest Rate Maturity Dates
----- -----------------
-------------
-----------------
A-1
$250,000,000.00
(1)
June 25, 2035
A-2A
$306,681,000.00
(2)
December 25, 2024
A-2B
$123,559,000.00
(3)
October 25, 2028
A-2C
$202,528,000.00
(4)
June 25, 2035
A-2D
$57,033,000.00
(5)
June 25, 2035
M-1
$46,653,000.00
(6)
June 25, 2035
M-2
$41,742,000.00
(7)
June 25, 2035
M-3
$23,940,000.00
(8)
June 25, 2035
M-4
$36,217,000.00
(9)
June 25, 2035
M-5
$18,415,000.00 (10)
June 25, 2035
M-6
$18,416,000.00 (11)
June 25, 2035
M-7
$12,891,000.00 (12)
June 25, 2035
M-8
$13,504,000.00 (13)
June 25, 2035
M-9
$19,643,000.00 (14)
June 25, 2035
M-10
$9,208,000.00 (15)
June 25, 2035
M-11
$12,890,000.00 (16)
June 25, 2035
B-1
$19,644,000.00 (17)
June 25, 2035
B-2
$8,594,000.00 (18)
June 25, 2035
CE
(19)
(19)
N/A
P
N/A
N/A
N/A
R
N/A
N/A
N/A
Total $1,221,558,000.00
(1) Interest will accrue on the
Class A-1 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-1
Pass-Through Rate and (ii) the Group 1 Cap for such Distribution
Date.
(2) Interest will accrue on the
Class A-2A Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-2A
Pass-Through Rate and (ii) the Group 2 Cap for such Distribution
Date.
(3) Interest will accrue on the
Class A-2B Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-2B
Pass-Through Rate and (ii) the Group 2 Cap for such Distribution
Date.
(4) Interest will accrue on the
Class A-2C Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-2C
Pass-Through Rate and (ii) the Group 2 Cap for such Distribution
Date.
(5) Interest will accrue on the
Class A-2D Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-2D
Pass-Through Rate and (ii) the Group 2 Cap for such Distribution
Date.
(6) Interest will accrue on the
Class M-1 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-1
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(7) Interest will accrue on the
Class M-2 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-2
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(8) Interest will accrue on the
Class M-3 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-3
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(9) Interest will accrue on the
Class M-4 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-4
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(10) Interest will accrue on the Class
M-5 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-5
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(11) Interest will accrue on the Class
M-6 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-6
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(12) Interest will accrue on the Class
M-7 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-7
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(13) Interest will accrue on the Class
M-8 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-8
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(14) Interest will accrue on the Class
M-9 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-9
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(15) Interest will accrue on the Class
M-10 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-10
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(16) Interest will accrue on the Class
M-11 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-11
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(17) Interest will accrue on the Class
B-1 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class B-1
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(18) Interest will accrue on the Class
B-2 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class B-2
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(19) Solely for REMIC purposes, the
Class CE Certificates will (i) have an
Original
Class Certificate Principal Balance equal to the Initial
Overcollateralization Amount and (ii) will bear interest on their
Notional
Amount.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement,
the
following words and phrases, unless the
context otherwise requires, shall have
the meanings specified in this Article.
Interest on all Classes of REMIC 1
Regular Interests will be calculated on the
basis of a 360-day year consisting
of twelve 30-day months. Interest on all
Regular Certificates will be calculated
on the basis of the actual number of days
in the related Interest Accrual Period
and a 360-day year.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan (including each
Mortgage Loan in foreclosure and each
Mortgage Loan for which the Mortgagor has
filed for bankruptcy after the Closing
Date) with respect to which any portion
of a Monthly Payment is, as of the last day
of the prior Collection Period, two
months or more past due and each Mortgage
Loan relating to an REO Property.
"Account": Any of the Collection Account, the Distribution
Account,
the Class A-1 Reserve Account, the Group 2
Reserve Account, the Class M/B
Reserve Account or the Escrow Account.
"Accrued Certificate Interest": With respect to each
Distribution
Date and Class of Certificates, an amount
equal to the interest accrued at the
Certificate Interest Rate described
opposite such Class in the table in the
Preliminary Statement during the related
Interest Accrual Period on the
Certificate Principal Balance of such Class
of Certificates, reduced by such
Class' Interest Percentage of Relief Act
Interest Shortfalls for such
Distribution Date.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan which has a rate
at
which interest accrues that adjusts based
on the Index plus a related Gross
Margin, as set forth and subject to the
limitations in the related Mortgage
Note.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage
Loan, each adjustment date on which the
Mortgage Interest Rate of an
Adjustable-Rate 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 Schedules.
"Advance": As to any Mortgage Loan, any advance made by the
Servicer
in respect of any Distribution Date
pursuant to Section 4.07.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common
control with such Person. For
purposes of this definition, "control"
means the power to direct the management
and policies of a Person, directly or
indirectly, whether through ownership of
voting securities, by contract or otherwise
and "controlling" and "controlled"
shall have meanings correlative to the
foregoing.
"Aggregate Overcollateralization Release Amount": With respect
to
any Distribution Date, the lesser of (i)
the Principal Remittance Amount and
(ii) the Overcollateralization Release
Amount.
"Agreement": This Pooling and Servicing Agreement and all
amendments
and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and
regulations applicable thereto.
"Applied Realized Loss Amount": With respect to each
Distribution
Date, the excess, if any, of the aggregate
of (a) the Certificate Principal
Balances of the Certificates (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date and any increase in any
Certificate Principal Balance as a result
of Subsequent Recoveries) over (b) the
Pool Balance as of the end of the related
Collection Period after giving effect
to Principal Prepayments in the related
Prepayment Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form,
which is sufficient under the laws of
the jurisdiction wherein the related
Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates,
the
date set forth as such in the Preliminary
Statement.
"Available Funds": As to any Distribution Date, an amount equal
to
the excess of (i) the sum of (a) the
aggregate of the Monthly Payments due
during the related Collection Period and
received on or prior to the related
Determination Date by the Servicer, (b)
Liquidation Proceeds, Insurance
Proceeds, Condemnation Proceeds, Principal
Prepayments, Substitution Adjustment
Amounts, the Purchase Price for any
repurchased Mortgage Loan, the Termination
Price with respect to the termination of
the Trust pursuant to Section 10.01
hereof and other unscheduled recoveries of
principal and interest (excluding
Prepayment Charges, Originator Prepayment
Charge Payment Amounts, Servicer
Prepayment Charge Payment Amounts and
Prepayment Interest Excess) in respect of
the Mortgage Loans during the related
Prepayment Period, (c) the aggregate of
any amounts received in respect of an REO
Property deposited in the Collection
Account for such Distribution Date, (d) any
Compensating Interest for such
Distribution Date, (e) the aggregate of any
Advances made by the Servicer for
such Distribution Date and (f) any
Reimbursement Amount or Subsequent Recovery
deposited into the Collection Account
during the related Prepayment Period over
(ii) the sum of (a) amounts reimbursable or
payable to the Servicer pursuant to
Sections 3.05 or 6.03, (b) amounts
reimbursable or payable to the Trustee
pursuant to Section 8.05 or Section
9.01(c), (c) Stayed Funds, (d) the Servicing
Fee and (e) amounts deposited in the
Collection Account or the Distribution
Account, as the case may be, in error.
"Balloon Payment": A payment of the unamortized principal balance
of
a Mortgage Loan in a single payment at the
maturity of such Mortgage Loan that
is substantially greater than the preceding
Monthly Payment.
"Bankruptcy Code": Title 11 of the United States Code, as
amended.
"Book-Entry Certificates": Any of the Certificates that shall
be
registered in the name of the Depository or
its nominee, the ownership of which
is reflected on the books of the Depository
or on the books of a Person
maintaining an account with the Depository
(directly, as a "Depository
Participant," or indirectly, as an indirect
participant in accordance with the
rules of the Depository and as described in
Section 5.02 hereof). On the Closing
Date, the Class A-1, Class A-2A, Class
A-2B, Class A-2C, Class A-2D, 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 M-11, Class
B-1 and Class B-2 Certificates shall be
Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day
on
which banking institutions in the State of
Delaware, the State of New York, the
State of Texas or any city in which the
Corporate Trust Office of the Trustee is
located are authorized or obligated by law
or executive order to be closed.
"Cap": Any of the Group 1 Cap, the Group 2 Cap or the Pool Cap.
"Cap Carryover Amount": If on any Distribution Date, the
Accrued
Certificate Interest for any Offered
Certificate or any Class B Certificates is
based upon the related Cap, the excess of
(i) the amount of interest such
Certificate would have been entitled to
receive on such Distribution Date based
on the related Pass-Through Rate, over (ii)
the amount of interest such
Certificate received on such Distribution
Date based on such related Cap,
together with the unpaid portion of any
such excess from prior Distribution
Dates (and interest accrued thereon at the
then applicable Pass-Through Rate on
such Certificate).
"Certificate": Any Regular Certificate, Class P Certificate or
Class
R Certificate.
"Certificate Interest Rate": With respect to each Distribution
Date
and Class of Certificates, the per annum
rate described in the table in the
Preliminary Statement during the related
Interest Accrual Period on the
Certificate Principal Balance.
"Certificate Owner": With respect to each Book-Entry
Certificate,
any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of
Certificates (other than the Class CE,
Class P and Class R Certificates) and any
Distribution Date, the Original Class
Certificate Principal Balance (a) reduced
by the sum of (i) all amounts actually
distributed in respect of principal of
such Class on all prior Distribution Dates
and (ii) Applied Realized Loss
Amounts allocated thereto for previous
Distribution Dates and (b) increased by
any Subsequent Recoveries allocated to such
Class for previous Distribution
Dates. The Class CE, Class P and Class R
Certificates do not have a Certificate
Principal Balance. With respect to any
Certificate (other than a Class CE, Class
P or Class R Certificate) of a Class and
any Distribution Date, the portion of
the Certificate Principal Balance of such
Class represented by such Certificate
equal to the product of the Percentage
Interest evidenced by such Certificate
and the Certificate Principal Balance of
such Class.
"Certificate Register" and "Certificate Registrar": The
register
maintained and registrar appointed pursuant
to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the
Certificate Register, except that a
Disqualified Organization or non-U.S.
Person shall not be a Holder of the Class
R Certificate for any purpose hereof.
"Certification": As defined in Section 3.31(b) hereof.
"Class": Collectively, Certificates or REMIC Regular Interests
which
have the same priority of payment and bear
the same class designation and the
form of which is identical except for
variation in the Percentage Interest
evidenced thereby.
"Class A-1 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.240% per annum, and (ii) following the
Optional Termination Date, 0.480% per
annum.
"Class A-1 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class A-1 Certificate Margin and (b)
the Group 1 Maximum Rate Cap.
"Class A-1 Reserve Account": The trust account created and
maintained by the Trustee pursuant to
Section 3.04(g) which shall be entitled
"Class A-1 Reserve Account, Wells Fargo
Bank, N.A., as Trustee, in trust for
registered Holders of the Class A-1
Certificates of the ABFC 2005-HE2 Trust,
ABFC Asset-Backed Certificates, Series
2005-HE2" and which must be an Eligible
Account. Amounts on deposit in the Class
A-1 Reserve Account shall not be
invested. The Class A-1 Reserve Account
shall not be an asset of any REMIC
formed under this Agreement.
"Class A-1 Yield Maintenance Agreement": The yield maintenance
agreement between the Trustee, on behalf of
the Trust, and the Class A-1 Yield
Maintenance Agreement Provider
substantially in the form attached hereto as
Exhibit N. The Class A-1 Yield Maintenance
Agreement shall not be an asset of
any REMIC formed under this Agreement.
"Class A-1 Yield Maintenance Agreement Payment": On each
Distribution Date through the Distribution
Date in September 2008, the amount
equal to the product of (a) the excess of
the lesser of (i) One-Month LIBOR and
(ii) the applicable ceiling rate for such
Distribution Date over the strike rate
for such Distribution Date, in each case as
set forth on the schedule attached
to the confirmation to the Class A-1 Yield
Maintenance Agreement, (b) the lesser
of (x) the cap notional amount, as set
forth for that Distribution Date on the
schedule attached to the confirmation to
the Class A-1 Yield Maintenance
Agreement and (y) the aggregate Certificate
Principal Balance of the Class A-1
Certificates immediately prior to such
Distribution Date and (c) a fraction, the
numerator of which is the actual number of
days elapsed since the previous
Distribution Date (or the Closing Date, in
the case of the first Distribution
Date) to but excluding the current
Distribution Date and the denominator of
which is 360.
"Class A-1 Yield Maintenance Agreement Provider": The Bank of
New
York and any successor thereto.
"Class A-2A Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.110% per annum, and (ii) following
the Optional Termination Date, 0.220% per
annum.
"Class A-2A Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class A-2A Certificate Margin and (b)
the Group 2 Maximum Rate Cap.
"Class A-2B Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.170% per annum, and (ii) following
the Optional Termination Date, 0.340% per
annum.
"Class A-2B Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class A-2B Certificate Margin and (b)
the Group 2 Maximum Rate Cap.
"Class A-2C Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.300% per annum, and (ii) following
the Optional Termination Date, 0.600% per
annum.
"Class A-2C Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class A-2C Certificate Margin and (b)
the Group 2 Maximum Rate Cap.
"Class A-2D Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.400% per annum, and (ii) following
the Optional Termination Date, 0.800% per
annum.
"Class A-2D Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class A-2D Certificate Margin and (b)
the Group 2 Maximum Rate Cap.
"Class A Certificate": Any one of the Certificates with an "A"
designated on the face thereof
substantially in the form annexed hereto as
Exhibits A-1, A-2, A-3, A-4 and A-5,
executed by the Trustee on behalf of the
Trust and authenticated and delivered by
the Certificate Registrar, representing
the right to distributions as set forth
herein and therein.
"Class A Certificateholders": Collectively, the Holders of the
Class
A Certificates.
"Class B Certificate": Any one of the Certificates with an "B"
designated on the face thereof
substantially in the form annexed hereto as
Exhibits B-12 and B-13, executed by the
Trustee on behalf of the Trust and
authenticated and delivered by the
Certificate Registrar, representing the right
to distributions as set forth herein and
therein.
"Class B Certificateholders": Collectively, the Holders of the
Class
B Certificates.
"Class B-1 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
2.500% per annum, and (ii) following the
Optional Termination Date, 3.750% per
annum.
"Class B-1 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class B-1 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class B-1 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the payment of
the Class M-6 Principal Distribution Amount
on such Distribution Date), (viii)
the Certificate Principal Balance of the
Class M-7 Certificates (after taking
into account the payment of the Class M-7
Principal Distribution Amount on such
Distribution Date), (ix) the Certificate
Principal Balance of the Class M-8
Certificates (after taking into account the
payment of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the payment of
the Class M-9 Principal Distribution Amount
on such Distribution Date), (xi) the
Certificate Principal Balance of the Class
M-10 Certificates (after taking into
account the payment of the Class M-10
Principal Distribution Amount on such
Distribution Date), (xii) the Certificate
Principal Balance of the Class M-11
Certificates (after taking into account the
payment of the Class M-11 Principal
Distribution Amount on such Distribution
Date) and (xiii) the Certificate
Principal Balance of the Class B-1
Certificates the immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 97.60% and (ii)
the Pool Balance as of the last day of the
related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period and (B)
the Pool Balance as of the last day of the
related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period minus
the product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class B-1 Realized Loss Amortization Amount": As to the Class
B-1
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-1
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xxxvii) hereof, in each
case for such Distribution Date.
"Class B-2 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
2.500% per annum, and (ii) following the
Optional Termination Date, 3.750% per
annum.
"Class B-2 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class B-2 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class B-2 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the payment of
the Class M-6 Principal Distribution Amount
on such Distribution Date), (viii)
the Certificate Principal Balance of the
Class M-7 Certificates (after taking
into account the payment of the Class M-7
Principal Distribution Amount on such
Distribution Date), (ix) the Certificate
Principal Balance of the Class M-8
Certificates (after taking into account the
payment of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the payment of
the Class M-9 Principal Distribution Amount
on such Distribution Date), (xi) the
Certificate Principal Balance of the Class
M-10 Certificates (after taking into
account the payment of the Class M-10
Principal Distribution Amount on such
Distribution Date), (xii) the Certificate
Principal Balance of the Class M-11
Certificates (after taking into account the
payment of the Class M-11 Principal
Distribution Amount on such Distribution
Date), (xiii) the Certificate Principal
Balance of the Class B-1 Certificates
(after taking into account the payment of
the Class B-1 Principal Distribution Amount
on such Distribution Date) and (xiv)
the Certificate Principal Balance of the
Class B-2 Certificates the immediately
prior to such Distribution Date over (y)
the lesser of (A) the product of (i)
99.00% and (ii) the Pool Balance as of the
last day of the related Collection
Period after giving effect to Principal
Prepayments in the related Prepayment
Period and (B) the Pool Balance as of the
last day of the related Collection
Period after giving effect to Principal
Prepayments in the related Prepayment
Period minus the product of 0.50% and the
Cut-off Date Aggregate Principal
Balance.
"Class B-2 Realized Loss Amortization Amount": As to the Class
B-2
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-2
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xl) hereof, in each case
for such Distribution Date.
"Class CE Certificates": Any one of the Class CE Certificates
as
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-1, executed by the Trustee on
behalf of the Trust and authenticated
and delivered by the Certificate Registrar,
representing the right to
distributions as set forth herein and
therein.
"Class CE Distributable Amount": With respect to any
Distribution
Date, the sum of (i) the interest accrued
on such Class CE Certificate at its
Pass-Through Rate calculated on its
Notional Amount less the amount (without
duplication) of Cap Carryover Amounts paid
pursuant to Section 4.02(b)(xlii),
(ii) any remaining Aggregate
Overcollateralization Release Amounts, (iii) the
aggregate of amounts remaining in the
Reserve Accounts after the distributions
in Section 3.04(g)(i)(A) through Section
3.04(g)(i)(E).
"Class CE Uncertificated Principal Balance": As of any date of
determination, the Initial
Overcollateralization Amount minus the sum of (i) any
Realized Losses allocated thereto and (ii)
any amounts distributed (or deemed
distributed) to the Class CE Certificates
with respect thereto.
"Class M Certificate": Any one of the Certificates with an "M"
designated on the face thereof
substantially in the form annexed hereto as
Exhibits B-1, B-2, B-3, B-4, B-5, B-6, B-7,
B-8, B-9, B-10 and B-11, executed by
the Trustee on behalf of the Trust and
authenticated and delivered by the
Certificate Registrar, representing the
right to distributions as set forth
herein and therein.
"Class M Certificateholders": Collectively, the Holders of the
Class
M Certificates.
"Class M-1 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.480% per annum, and (ii) following the
Optional Termination Date, 0.720% per
annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-1 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-1 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior 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) 60.70% and
(ii) the Pool Balance as of the last day of
the related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period and (B)
the Pool Balance as of the last day of the
related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period minus
the product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-1 Realized Loss Amortization Amount": As to the Class
M-1
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (iv) hereof, in each case
for such Distribution Date.
"Class M-2 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.500% per annum, and (ii) following the
Optional Termination Date, 0.750% per
annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-2 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-2 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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) 67.50% and (ii) the
Pool Balance as of the last day of
the related Collection Period after giving
effect to Principal Prepayments in
the related Prepayment Period and (B) the
Pool Balance as of the last day of the
related Collection Period after giving
effect to Principal Prepayments in the
related Prepayment Period minus the product
of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-2 Realized Loss Amortization Amount": As to the Class
M-2
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (vii) hereof, in each
case for such Distribution Date.
"Class M-3 Certificate
Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date,
0.520% per annum, and (ii) following the
Optional Termination Date, 0.780% per
annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-3 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-3 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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) 71.40% and (ii)
the Pool Balance as of the last day of the
related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period and (B)
the Pool Balance as of the last day of the
related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period minus
the product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-3 Realized Loss Amortization Amount": As to the Class
M-3
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-3
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (x) hereof, in each case
for such Distribution Date.
"Class M-4 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.650% per annum, and (ii) following the
Optional Termination Date, 0.975% per
annum.
"Class M-4 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-4 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-4 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment 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)
77.30% and (ii) the Pool Balance as of the
last day of the related Collection
Period after giving effect to Principal
Prepayments in the related Prepayment
Period and (B) the Pool Balance as of the
last day of the related Collection
Period after giving effect to Principal
Prepayments in the related Prepayment
Period minus the product of 0.50% and the
Cut-off Date Aggregate Principal
Balance.
"Class M-4 Realized Loss Amortization Amount": As to the Class
M-4
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-4
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xiii) hereof, in each
case for such Distribution Date.
"Class M-5 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.800% per annum, and (ii) following the
Optional Termination Date, 1.200% per
annum.
"Class M-5 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-5 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-5 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment 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) 80.30% and (ii) the
Pool Balance as of the last day of
the related Collection Period after giving
effect to Principal Prepayments in
the related Prepayment Period and (B) the
Pool Balance as of the last day of the
related Collection Period after giving
effect to Principal Prepayments in the
related Prepayment Period minus the product
of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-5 Realized Loss Amortization Amount": As to the Class
M-5
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-5
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xvi) hereof, in each
case for such Distribution Date.
"Class M-6 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.100% per annum, and (ii) following the
Optional Termination Date, 1.650% per
annum.
"Class M-6 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-6 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-6 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment 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) 83.30% and (ii)
the Pool Balance as of the last day of the
related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period and (B)
the Pool Balance as of the last day of the
related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period minus
the product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-6 Realized Loss Amortization Amount": As to the Class
M-6
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-6
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xix) hereof, in each
case for such Distribution Date.
"Class M-7
Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date,
1.350% per annum, and (ii) following the
Optional Termination Date, 2.025% per
annum.
"Class M-7 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-7 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-7 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the payment of
the Class M-6 Principal Distribution Amount
on such Distribution Date) and
(viii) the Certificate Principal Balance of
the Class M-7 Certificates the
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 85.40% and (ii) the Pool
Balance as of the last day of the
related Collection Period after giving
effect to Principal Prepayments in the
related Prepayment Period and (B) the Pool
Balance as of the last day of the
related Collection Period after giving
effect to Principal Prepayments in the
related Prepayment Period minus the product
of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-7 Realized Loss Amortization Amount": As to the Class
M-7
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-7
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xxii) hereof, in each
case for such Distribution Date.
"Class M-8 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.750% per annum, and (ii) following the
Optional Termination Date, 2.625% per
annum.
"Class M-8 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-8 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-8 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the payment of
the Class M-6 Principal Distribution Amount
on such Distribution Date), (viii)
the Certificate Principal Balance of the
Class M-7 Certificates (after taking
into account the payment of the Class M-7
Principal Distribution Amount on such
Distribution Date) and (ix) the Certificate
Principal Balance of the Class M-8
Certificates the immediately prior to such
Distribution Date over (y) the lesser
of (A) the product of (i) 87.60% and (ii)
the Pool Balance as of the last day of
the related Collection Period after giving
effect to Principal Prepayments in
the related Prepayment Period and (B) the
Pool Balance as of the last day of the
related Collection Period after giving
effect to Principal Prepayments in the
related Prepayment Period minus the product
of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-8 Realized Loss Amortization Amount": As to the Class
M-8
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-8
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xxv) hereof, in each
case for such Distribution Date.
"Class M-9 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
2.150% per annum, and (ii) following the
Optional Termination Date, 3.225% per
annum.
"Class M-9 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-9 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-9 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the payment of
the Class M-6 Principal Distribution Amount
on such Distribution Date), (viii)
the Certificate Principal Balance of the
Class M-7 Certificates (after taking
into account the payment of the Class M-7
Principal Distribution Amount on such
Distribution Date), (ix) the Certificate
Principal Balance of the Class M-8
Certificates (after taking into account the
payment of the Class M-8 Principal
Distribution Amount on such Distribution
Date) and (x) the Certificate Principal
Balance of the Class M-9 Certificates the
immediately prior to such Distribution
Date over (y) the lesser of (A) the product
of (i) 90.80% and (ii) the Pool
Balance as of the last day of the related
Collection Period after giving effect
to Principal Prepayments in the related
Prepayment Period and (B) the Pool
Balance as of the last day of the related
Collection Period after giving effect
to Principal Prepayments in the related
Prepayment Period minus the product of
0.50% and the Cut-off Date Aggregate
Principal Balance.
"Class M-9 Realized Loss Amortization Amount": As to the Class
M-9
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-9
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xxviii) hereof, in each
case for such Distribution Date.
"Class M-10 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
3.000% per annum, and (ii) following
the Optional Termination Date, 4.500% per
annum.
"Class M-10 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-10 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-10 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the payment of
the Class M-6 Principal Distribution Amount
on such Distribution Date), (viii)
the Certificate Principal Balance of the
Class M-7 Certificates (after taking
into account the payment of the Class M-7
Principal Distribution Amount on such
Distribution Date), (ix) the Certificate
Principal Balance of the Class M-8
Certificates (after taking into account the
payment of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the payment of
the Class M-9 Principal Distribution Amount
on such Distribution Date) and (xi)
the Certificate Principal Balance of the
Class M-10 Certificates the immediately
prior to such Distribution Date over (y)
the lesser of (A) the product of (i)
92.30% and (ii) the Pool Balance as of the
last day of the related Collection
Period after giving effect to Principal
Prepayments in the related Prepayment
Period and (B) the Pool Balance as of the
last day of the related Collection
Period after giving effect to Principal
Prepayments in the related Prepayment
Period minus the product of 0.50% and the
Cut-off Date Aggregate Principal
Balance.
"Class M-10 Realized Loss Amortization Amount": As to the Class
M-10
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-10
Certificates as of such Distribution
Date and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the
sum of the amounts described in Section
4.02(b)(i) through (xxxi) hereof, in
each case for such Distribution Date.
"Class M-11 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
2.500% per annum, and (ii) following
the Optional Termination Date, 3.750% per
annum.
"Class M-11 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-11 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-11 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the aggregate Certificate Principal
Balance of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment 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
payment 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 payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the payment of
the Class M-6 Principal Distribution Amount
on such Distribution Date), (viii)
the Certificate Principal Balance of the
Class M-7 Certificates (after taking
into account the payment of the Class M-7
Principal Distribution Amount on such
Distribution Date), (ix) the Certificate
Principal Balance of the Class M-8
Certificates (after taking into account the
payment of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the payment of
the Class M-9 Principal Distribution Amount
on such Distribution Date), (xi) the
Certificate Principal Balance of the Class
M-10 Certificates (after taking into
account the payment of the Class M-10
Principal Distribution Amount on such
Distribution Date) and (xii) the
Certificate Principal Balance of the Class M-11
Certificates the immediately prior to such
Distribution Date over (y) the lesser
of (A) the product of (i) 94.40% and (ii)
the Pool Balance as of the last day of
the related Collection Period after giving
effect to Principal Prepayments in
the related Prepayment Period and (B) the
Pool Balance as of the last day of the
related Collection Period after giving
effect to Principal Prepayments in the
related Prepayment Period minus the product
of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-11 Realized Loss Amortization Amount": As to the Class
M-11
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-11
Certificates as of such Distribution
Date and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the
sum of the amounts described in Section
4.02(b)(i) through (xxxiv) hereof, in
each case for such Distribution Date.
"Class M/B Cap Amount": With respect to each Distribution Date
and
each class of Class M and Class B
Certificates, the product of (i) the Class M/B
Yield Maintenance Agreement Payment for
such Distribution Date and (ii) a
fraction, the numerator of which is the
Certificate Principal Balance of such
Class immediately prior to such
Distribution Date and the denominator of which
is the aggregate Certificate Principal
Balance of the Class M and Class B
Certificates with unpaid Cap Carryover
Amounts immediately prior to such
Distribution Date.
"Class M/B
Reserve Account": The trust account created and
maintained by the Trustee pursuant to
Section 3.04(g) which shall be entitled
"Class M/B Reserve Account, Wells Fargo
Bank, N.A., as Trustee, in trust for
registered Holders of the Class M and Class
B Certificates of the ABFC 2005-HE2
Trust, ABFC Asset-Backed Certificates,
Series 2005-HE2" and which must be an
Eligible Account. Amounts on deposit in the
Class M/B Reserve Account shall not
be invested. The Class M/B Reserve Account
shall not be an asset of any REMIC
formed under this Agreement.
"Class M/B Yield Maintenance Agreement": The yield maintenance
agreement between the Trustee, on behalf of
the Trust, and the Class M/B Yield
Maintenance Agreement Provider
substantially in the form attached hereto as
Exhibit N. The Class M/B Yield Maintenance
Agreement shall not be an asset of
any REMIC formed under this Agreement.
"Class M/B Yield Maintenance Agreement Payment": On each
Distribution Date through the Distribution
Date in September 2008, the amount
equal to the product of (a) the excess of
the lesser of (i) One-Month LIBOR and
(ii) the applicable ceiling rate for such
Distribution Date over the strike rate
for such Distribution Date, in each case as
set forth on the schedule attached
to the confirmation to the Class M/B Yield
Maintenance Agreement, (b) the lesser
of (x) the cap notional amount as set forth
for that Distribution Date on the
schedule attached to the confirmation to
the Class M/B Yield Maintenance
Agreement and (y) the aggregate Certificate
Principal Balance of the Class M and
Class B Certificates, immediately prior to
such Distribution Date and (c) a
fraction, the numerator of which is the
actual number of days elapsed since the
previous Distribution Date (or the Closing
Date, in the case of the first
Distribution Date) to but excluding the
current Distribution Date and the
denominator of which is 360.
"Class M/B Yield Maintenance Agreement Provider": The Bank of
New
York and any successor thereto.
"Class P Certificate": Any one of the Certificates with a "P"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-2, executed by the Trustee on
behalf of the Trust and authenticated
and delivered by the Certificate Registrar,
representing the right to
distributions as set forth herein and
therein.
"Class R Certificate": The Class R Certificate executed by the
Trustee on behalf of the Trust, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit C-3
and evidencing the ownership of the
Residual Interest in each of REMIC 1 and
REMIC 2. The Class R Certificate represents
the ownership of the Class R-1
Interest and the Class R-2 Interest.
"Class R-1 Interest": The uncertificated residual interest in
REMIC
1.
"Class R-2 Interest": The uncertificated residual interest in
REMIC
2.
"Closing Date": August 30, 2005.
"Code": The Internal Revenue Code of 1986, as it may be amended
from
time to time.
"Collection Account": The account or accounts created and
maintained
by the Servicer pursuant to Section
3.04(a), which shall be entitled "Collection
Account, Saxon Mortgage Services, Inc., as
Servicer for the Trust under the
Pooling and Servicing Agreement dated as of
August 1, 2005 among Asset Backed
Funding Corporation, as Depositor, Saxon
Mortgage Services, Inc., as Servicer,
and Wells Fargo Bank, N.A., as Trustee, in
trust for registered Holders of ABFC
2005-HE2 Trust, ABFC Asset-Backed
Certificates, Series 2005-HE2," and which must
be an Eligible Account.
"Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar
month preceding the month in which
such Distribution Date occurs through the
first day of the month in which such
Distribution Date occurs.
"Combined Loan-to-Value Ratio": For any Mortgage Loan, the
fraction,
expressed as a percentage, the numerator of
which is the sum of (i) the
Principal Balance of the Mortgage Loan at
origination and (ii) the principal
balance of the senior mortgage loan, if
any, on the date of origination of the
Mortgage Loan and the denominator of which
is the Value of the related Mortgaged
Property.
"Commission": The United States Securities and Exchange
Commission.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in respect of
a
taking of a Mortgaged Property by exercise
of the power of eminent domain or
condemnation.
"Consulting Agreement": The Consulting Agreement, dated as of
August
30, 2005, between The Murrayhill Company,
as Credit Risk Manager, and the
Depositor.
"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 (i) for certificate transfer
purposes, Wells Fargo Center, Sixth Street
and Marquette Avenue, Minneapolis,
Minnesota, 55479-0113, Attention: Client
Manager-ABFC, Series 2005-HE2 and (ii)
for all other purposes, 9062 Old Annapolis
Road, Columbia, Maryland 21045,
Attention: Client Manager-ABFC, Series
2005-HE2 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 Classes": With respect to REMIC 1 and REMIC 2,
the
following Classes shall be Corresponding
Classes:
Corresponding REMIC 1 Classes
Corresponding REMIC 2 Classes
-----------------------------
-----------------------------
LT1A1
Class A-1 Certificates
LT1A2A
Class A-2A Certificates
LT1A2B
Class A-2B Certificates
LT1A2C
Class A-2C Certificates
LT1A2D
Class A-2D Certificates
LT1M1
Class M-1 Certificates
LT1M2
Class M-2 Certificates
LT1M3
Class M-3 Certificates
LT1M4
Class M-4 Certificates
LT1M5
Class M-5 Certificates
LT1M6
Class M-6 Certificates
LT1M7
Class M-7 Certificates
LT1M8
Class M-8 Certificates
LT1M9
Class M-9 Certificates
LT1M10
Class M-10 Certificates
LT1M11
Class M-11 Certificates
LT1B1
Class B-1 Certificates
LT1B2
Class B-2 Certificates
"Credit Risk Manager": The Murrayhill Company, a Colorado
corporation.
"Credit Risk Manager Fee": The fee payable to the Credit Risk
Manager on each Distribution Date for its
services as Credit Risk Manager, in an
amount equal to the product of (i)
one-twelfth of the Credit Risk Manager Fee
Rate and (ii) the Pool Balance as of the
opening of business on the first day of
the related Collection Period.
"Credit Risk Manager Fee Rate": With respect to any
Distribution
Date, 0.0150% per annum.
"Credit Risk Management Agreement": The Credit Risk Management
Agreement between the Servicer and the
Credit Risk Manager dated as of August
30, 2005.
"Cut-off Date": August 1, 2005.
"Cut-off Date Aggregate Principal Balance": The aggregate of
the
Cut-off Date Principal Balances of the
Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage
Loan,
the unpaid principal balance thereof as of
the Cut-off Date after application of
funds received or advanced on or before
such date (or as of the applicable date
of substitution with respect to an Eligible
Substitute 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.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Eligible Substitute
Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property
by a court of competent jurisdiction
in an amount less than the then outstanding
principal balance of the Mortgage
Loan, which valuation results from a
proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 5.02(c)
hereof.
"Delinquent": Any Mortgage Loan with respect to which the
Monthly
Payment due on a Due Date is not made by
the close of business on the next
scheduled Due Date for such Mortgage
Loan.
"Depositor": Asset Backed Funding Corporation, a Delaware
corporation, or any successor in
interest.
"Depository": The initial depository shall be The Depository
Trust
Company, whose nominee is Cede & Co.,
or any other organization registered as a
"clearing agency" pursuant to Section 17A
of the Exchange Act. The Depository
shall initially be the registered Holder of
the Book-Entry Certificates. The
Depository shall at all times be a
"clearing corporation" as defined in Section
8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository 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 any 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 the Trust other than through an
Independent Contractor; provided, however,
that the Trustee (or the Servicer
under this Agreement) shall not be
considered to Directly Operate an REO
Property solely because the Trustee (or the
Servicer under this Agreement)
establishes rental terms, chooses tenants,
enters into or renews leases, deals
with taxes and insurance, or makes
decisions as to repairs or capital
expenditures with respect to such REO
Property.
"Disqualified Organization": A "disqualified organization"
under
Section 860E of the Code, which as of the
Closing Date is any of: (i) the United
States, any state or political subdivision
thereof, any possession of the United
States, any foreign government, any
international organization, or any agency or
instrumentality of any of the foregoing,
(ii) any organization (other than a
cooperative described in Section 521 of the
Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless
such organization is subject to the tax
imposed by Section 511 of the Code, (iii)
any organization described in Section
1381(a)(2)(C) of the Code, or (iv) any
other Person so designated by the Trustee
based upon an Opinion of Counsel provided
by nationally recognized counsel to
the Trustee that the holding of an
ownership interest in the Class R Certificate
by such Person may cause the Trust Fund or
any Person having an ownership
interest in any Class of Certificates
(other than such Person) to incur
liability for any federal tax imposed under
the Code that would not otherwise be
imposed but for the transfer of an
ownership interest in the Class R Certificate
to such Person. A corporation will not be
treated as an instrumentality of the
United States or of any state or political
subdivision thereof if all of its
activities are subject to tax and a
majority of its board of directors is not
selected by a governmental unit. The term
"United States," "state" and
"international organization" shall have the
meanings set forth in Section 7701
of the Code.
"Distribution Account": The trust account or accounts created
and
maintained by the Trustee pursuant to
Section 3.04(b), which shall be entitled
"Distribution Account, Wells Fargo Bank,
N.A., as Trustee, in trust for the
registered Holders of ABFC 2005-HE2 Trust,
ABFC Asset-Backed Certificates,
Series 2005-HE2" and which must be an
Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if
such
25th day is not a Business Day, the
Business Day immediately following such 25th
day, commencing in September 2005.
"Distribution Date Statement": As defined in Section 4.06(a)
hereof.
"Due Date": With respect to each Mortgage Loan and any
Distribution
Date, the day of the calendar month in
which such Distribution Date occurs on
which the Monthly Payment for such Mortgage
Loan was due, exclusive of any grace
period.
"Eligible Account": Any of (i) an account or accounts
maintained
with a federal or state chartered
depository institution or trust company the
short-term unsecured debt obligations of
which (or, in the case of a depository
institution or trust company that is the
principal subsidiary of a holding
company, the short-term unsecured debt
obligations of such holding company) are
rated "A-1+" by S&P, "P-1" by Moody's
and "F-1+" by Fitch (or comparable ratings
if S&P, Moody's and Fitch are not the
Rating Agencies) by each of the Rating
Agencies at the time any amounts are held
on deposit therein, (ii) an account or
accounts the deposits in which are fully
insured by the FDIC, (iii) a trust
account or accounts maintained with the
trust department of a federal or state
chartered depository institution, national
banking association or trust company
acting in its fiduciary capacity or (iv) an
account otherwise acceptable to each
Rating Agency without reduction or
withdrawal of their then current ratings of
the Certificates as evidenced by a letter
from each Rating Agency to the Trustee
and the NIMS Insurer. Eligible Accounts may
bear interest.
"Eligible 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 NIMS Insurer,
the Trustee or any of their respective
Affiliates or for which an Affiliate of
the Trustee serves as an advisor:
(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) (A) demand and time deposits in, certificates of deposit
of,
bankers'
acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents
acting
in their
respective commercial capacities) incorporated under the laws
of
the United
States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so
long
as, at the
time of such investment or contractual commitment providing for
such
investment, such depository institution or trust company or its
ultimate
parent has a short-term uninsured debt rating in one of the two
highest
available rating categories of S&P and Moody's and the
highest
available
rating category of Fitch and provided that each such investment
has an
original maturity of no more than 365 days and (B) any other
demand
or time
deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with
respect to
any security described in clause (i) above and entered into
with a
depository institution or trust company (acting as principal)
rated
A or
higher by S&P, A+ or higher by Fitch and A2 or higher by
Moody's,
provided,
however, that collateral transferred pursuant to such
repurchase
obligation
must be of the type described in clause (i) above and must (A)
be valued
daily at current market prices plus accrued interest or (B)
pursuant
to such valuation, be equal, at all times, to 105% of the cash
transferred by the Trustee in exchange for such collateral and (C)
be
delivered
to the Trustee or, if the Trustee is supplying the collateral,
an agent
for the Trustee, in such a manner as to accomplish perfection
of
a security
interest in the collateral by possession of certificated
securities;
(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
in its
highest long-term unsecured rating categories at the time of
such
investment
or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified
date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency in its highest short-term
unsecured
debt rating available at the time of such investment;
(vi) units of money market funds registered under the
Investment
Company
Act of 1940 (including funds managed or advised by the Trustee
or
affiliates
thereof) that, if rated by each Rating Agency, are rated in its
highest
rating category (if so rated by such Rating Agency); and
(vii) if previously confirmed in writing to the Trustee and
consented
to by the NIMS Insurer, any other demand, money market or time
deposit,
or any other obligation, security or investment, as may be
acceptable
to the Rating Agencies in writing as an eligible investment of
funds
backing securities having ratings equivalent to its highest
initial
rating of
the Senior Certificates;
provided, 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.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted
for
a Defective Mortgage Loan pursuant to the
terms of this Agreement which must, on
the date of such substitution, (i) have an
outstanding principal balance (or in
the case of a substitution of more than one
Mortgage Loan for a Defective
Mortgage Loan, an aggregate principal
balance) not in excess of the then
outstanding principal balance of the
Defective Mortgage Loan as of the Due Date
in the calendar month during which the
substitution occurs, (ii) be of the same
type (fixed-rate or adjustable-rate) and
have a Mortgage Interest Rate not less
than the Mortgage Interest Rate of the
Defective Mortgage Loan and not more than
2% in excess of the Mortgage Interest Rate
of such Defective Mortgage Loan and,
with respect to an Adjustable-Rate Mortgage
Loan, have the same Index as the
Defective Mortgage Loan and have a Gross
Margin equal to or greater than the
Defective Mortgage Loan, (iii) have a
Credit Score not less than the Defective
Mortgage Loan, (iv) have a remaining term
to maturity not more than one year
earlier and not later than the remaining
term to maturity of the Defective
Mortgage Loan, (v) have a Combined
Loan-to-Value Ratio as of the date of
substitution not greater than the Combined
Loan-to-Value Ratio of the Defective
Mortgage Loan as of such date, (vi) have a
Prepayment Charge at least equal in
amount of that of the Defective Mortgage
Loan and (vii) comply with each
representation and warranty as to the
Mortgage Loans set forth in the applicable
Originator Mortgage Loan Purchase Agreement
and Section 3.01 of the Mortgage
Loan Purchase Agreement applicable to the
Defective Mortgage Loan. In the event
that one or more mortgage loans are
substituted for one or more Defective
Mortgage Loans, the amounts described in
clause (i) hereof shall be determined
on the basis of aggregate principal
balance, the Mortgage Interest Rates
described in clause (ii) hereof shall be
determined on the basis of weighted
average Mortgage Interest Rates, the terms
described in clause (iv) hereof shall
be determined on the basis of weighted
average remaining term to maturity, the
Combined Loan-to-Value Ratios described in
clause (v) 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 (vii)
hereof must be satisfied as to each
Eligible Substitute Mortgage Loan or in the
aggregate, as the case may be. Any
Defective Mortgage Loan that is a Group 1
Mortgage Loan or Group 2 Mortgage Loan must
be replaced by an Eligible
Substitute Mortgage Loan that will be a
Group 1 Mortgage Loan or Group 2
Mortgage Loan, as applicable.
"ERISA": The Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA-Restricted Certificates": Any of the Class B-1, Class
B-2,
Class CE, Class P and Class R
Certificates.
"Escrow Account": The account or accounts created and
maintained
pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents,
taxes,
assessments, water rates, mortgage
insurance premiums, fire and hazard insurance
premiums and other payments required to be
escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage
Loan.
"Estate in Real Property": A fee simple estate in a parcel of
real
property.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Expense Fee Rate": The sum of (i) the Servicing Fee Rate and
(ii)
the Credit Risk Manager Fee Rate.
"Extended Period": As defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any Distribution
Date,
the lesser of (x) the Monthly Excess
Interest Amount for such Distribution Date
and (y) the Overcollateralization
Deficiency for such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section
3.12.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other
than a Mortgage Loan or REO Property
(i) purchased by an Originator or the
Seller pursuant to or as contemplated by
Section 2.03, (ii) purchased by the
Servicer pursuant to Section 3.16 or (iii)
purchased by the Majority Class CE
Certificateholders or the Servicer pursuant
to Section 10.01), a determination made by
the Servicer that all Insurance
Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or
recoveries which the Servicer, in its
reasonable good faith judgment, expects to
be finally recoverable in respect thereof
have been so recovered. The Servicer
shall maintain records, prepared by a
Servicing Officer, of each Final Recovery
Determination made thereby.
"Fitch": Fitch Ratings and its successors, and if such company
shall
for any reason no longer perform the
functions of a securities rating agency,
"Fitch" shall be deemed to refer to any
other "nationally recognized statistical
rating organization" as set forth on the
most current list of such organizations
released by the Commission.
"Fixed-Rate Mortgage Loan": A Mortgage Loan which has a
constant
annual rate at which interest accrues in
accordance with the provisions of the
related Mortgage Note.
"Foreclosure Price": The amount reasonably expected to be
received
from the sale of the related Mortgaged
Property net of any expenses associated
with foreclosure proceedings.
"Form 10-K": As defined in Section 3.31(a) hereof.
"Grantor Trust": That portion of the Trust exclusive of REMIC 1
and
REMIC 2 consisting of (a) the Prepayment
Charges, any Originator Prepayment
Charge Payment Amounts and any Servicer
Prepayment Charge Payment Amounts and
the right of the Class P Certificateholders
to receive such Prepayment Charges,
Originator Prepayment Charge Payment
Amounts and Servicer Prepayment Charge
Payment Amounts, (b) the right of the
Offered Certificates and the Class B
Certificates to receive Cap Carryover
Amounts, (c) each Yield Maintenance
Agreement, the Reserve Accounts and the
beneficial interest of the Class CE
Certificates with respect thereto and (d)
the obligation of the Class CE
Certificates to pay Cap Carryover
Amounts.
"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 Interest Rate for such Mortgage
Loan.
"Group 1 Cap": As of any Distribution Date and the Class A-1
Certificates, a per annum rate, adjusted by
multiplying such rate by a fraction
equal to 30 over the actual number of days
in the related Interest Accrual
Period, equal to the Weighted Average Net
Mortgage Interest Rate for the Group 1
Mortgage Loans.
"Group 1 Interest Remittance Amount": As of any Distribution
Date,
the sum, without duplication, of (i) all
interest due and collected or advanced
with respect to the related Collection
Period on the Group 1 Mortgage Loans
received by the Servicer on or prior to the
Determination Date for such
Distribution Date (less the Servicing Fee,
amounts available for reimbursement
of Advances and Servicing Advances pursuant
to Section 3.05 and expenses
reimbursable pursuant to Section 6.03 and
Section 8.05), (ii) all Compensating
Interest paid by the Servicer on the
related Distribution Date with respect to
such Mortgage Loans, (iii) the portion of
any payment in connection with any
Principal Prepayment (other than any
Prepayment Interest Excess), substitution,
Purchase Price, Termination Price,
Insurance Proceeds or Net Liquidation
Proceeds relating to interest with respect
to such Mortgage Loans received
during the related Prepayment Period and
(iv) any Reimbursement Amount relating
to such Mortgage Loans received during the
related Prepayment Period.
"Group 1 Maximum Net Rate": As of any Distribution Date, the
weighted average of the Net Maximum
Mortgage Interest Rates of the Mortgage
Loans in Loan Group 1, weighted on the
basis of the Principal Balances of the
Group 1 Mortgage Loans as of the first day
of the related Collection Period.
"Group 1 Maximum Rate Cap": As of any Distribution Date and the
Class A-1 Certificates, a per annum rate
equal to (i) on or prior to the
Distribution Date in September 2008, the
greater of (a) the Group 1 Maximum Net
Rate, adjusted by multiplying such rate by
a fraction equal to 30 over the
actual number of days in the related
Interest Accrual Period and (b) 10% and
(ii) after the Distribution Date in
September 2008, the Group 1 Maximum Net
Rate, adjusted by multiplying such rate by
a fraction equal to 30 over the
actual number of days in the related
Interest Accrual Period.
"Group 1
Mortgage Loan": Each Mortgage Loan listed on Exhibit D-1
hereto.
"Group 1 Principal Percentage": With respect to any
Distribution
Date and the Class A-1 Certificates, the
percentage equivalent to a fraction,
the numerator of which is the Principal
Remittance Amount allocable to the Group
1 Mortgage Loans for such Distribution Date
and the denominator of which is the
Principal Remittance Amount allocable to
the Mortgage Loans for such
Distribution Date.
"Group 1 Senior Principal Distribution Amount": With respect to
any
Distribution Date, (i) before the Stepdown
Date or as to which a Trigger Event
is in effect, the Group 1 Principal
Percentage of the Principal Distribution
Amount and (ii) on or after the Stepdown
Date and as long as a Trigger Event is
not in effect, the excess of (a) the
Certificate Principal Balance of the Class
A-1 Certificates immediately prior to such
Distribution Date over (b) the lesser
of (x) the product of (1) 53.10% and (2)
the aggregate Principal Balance of the
Group 1 Mortgage Loans as of the last day
of the related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period and (y)
the amount by which the aggregate Principal
Balance of the Group 1 Mortgage
Loans as of the last day of the related
Collection Period after giving effect to
Principal Prepayments in the related
Prepayment Period exceeds the product of
(1) 0.50% and (2) the aggregate Principal
Balance of the Group 1 Mortgage Loans
on the Cut-off Date.
"Group 2 Cap": As of any Distribution Date and the Class A-2A,
Class
A-2B, Class A-2C and Class A-2D
Certificates, a per annum rate, adjusted by
multiplying such rate by a fraction equal
to 30 over the actual number of days
in the related Interest Accrual Period,
equal to the Weighted Average Net
Mortgage Interest Rate for the Group 2
Mortgage Loans.
"Group 2 Cap Amount": With respect to each Distribution Date
and
each Class of the Class A-2A, Class A-2B,
Class A-2C and Class A-2D
Certificates, the product of (i) the Group
2 Yield Maintenance Agreement Payment
for such Distribution Date and (ii) a
fraction, the numerator of which is the
Certificate Principal Balance of such Class
immediately prior to such
Distribution Date and the denominator of
which is the aggregate Certificate
Principal Balance of the Class A-2A, Class
A-2B, Class A-2C and Class A-2D
Certificates with unpaid Cap Carryover
Amounts immediately prior to such
Distribution Date.
"Group 2 Interest Remittance Amount": As of any Distribution
Date,
the sum, without duplication, of (i) all
interest due and collected or advanced
with respect to the related Collection
Period on the Group 2 Mortgage Loans
received by the Servicer on or prior to the
Determination Date for such
Distribution Date (less the Servicing Fee,
amounts available for reimbursement
of Advances and Servicing Advances pursuant
to Section 3.05 and expenses
reimbursable pursuant to Section 6.03 and
Section 8.05), (ii) all Compensating
Interest paid by the Servicer on the
related Distribution Date with respect to
such Mortgage Loans, (iii) the portion of
any payment in connection with any
Principal Prepayment (other than any
Prepayment Interest Excess), substitution,
Purchase Price, Termination Price,
Insurance Proceeds or Net Liquidation
Proceeds relating to interest with respect
to such Mortgage Loans received
during the related Prepayment Period and
(iv) any Reimbursement Amount relating
to such Mortgage Loans received during the
related Prepayment Period.
"Group 2 Maximum Net Rate": As of any Distribution Date, the
weighted average of the Net Maximum
Mortgage Interest Rates of the Mortgage
Loans in Loan Group 2, weighted on the
basis of the Principal Balances of the
Group 2 Mortgage Loans as of the first day
of the related Collection Period.
"Group 2 Maximum Rate Cap": As of any Distribution Date and the
Class A-2A, Class A-2B, Class A-2C and
Class A-2D Certificates, a per annum rate
equal to (i) on or prior to the
Distribution Date in September 2008, the greater
of (a) the Group 2 Maximum Net Rate,
adjusted by multiplying such rate by a
fraction equal to 30 over the actual number
of days in the related Interest
Accrual Period and (b) 10% and (ii) after
the Distribution Date in September
2008, the Group 2 Maximum Net Rate,
adjusted by multiplying such rate by a
fraction equal to 30 over the actual number
of days in the related Interest
Accrual Period.
"Group 2 Mortgage Loan": Each Mortgage Loan listed on Exhibit
D-2
hereto.
"Group 2 Principal Percentage": With respect to any
Distribution
Date and the Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates, the
percentage equivalent to a fraction, the
numerator of which is the Principal
Remittance Amount allocable to the Group 2
Mortgage Loans for such Distribution
Date and the denominator of which is the
Principal Remittance Amount allocable
to the Mortgage Loans for such Distribution
Date.
"Group 2 Reserve Account": The trust account created and
maintained
by the Trustee pursuant to Section 3.04(g)
which shall be entitled "Group 2
Reserve Account, Wells Fargo Bank, N.A., as
Trustee, in trust for registered
Holders of the Class A-2A, Class A-2B,
Class A-2C and Class A-2D Certificates of
the ABFC 2005-HE2 Trust, ABFC Asset-Backed
Certificates, Series 2005-HE2" and
which must be an Eligible Account. Amounts
on deposit in the Group 2 Reserve
Account shall not be invested. The Group 2
Reserve Account shall not be an asset
of any REMIC formed under this
Agreement.
"Group 2 Senior Principal Distribution Amount": With respect to
any
Distribution Date (i) before the Stepdown
Date or as to which a Trigger Event is
in effect, the Group 2 Principal Percentage
of the Principal Distribution Amount
and (ii) on or after the Stepdown Date and
as long as a Trigger Event is not in
effect, the excess of (a) the aggregate
Certificate Principal Balance of the
Class A-2A, Class A-2B, Class A-2C and
Class A-2D Certificates immediately prior
to such Distribution Date over (b) the
lesser of (x) the product of (1) 53.10%
and (2) the aggregate Principal Balance of
the Group 2 Mortgage Loans as of the
last day of the related Collection Period
after giving effect to Principal
Prepayments in the related Prepayment
Period and (y) the amount by which the
aggregate Principal Balance of the Group 2
Mortgage Loans as of the last day of
the related Collection Period after giving
effect to Principal Prepayments in
the related Prepayment Period exceeds the
product of (1) 0.50% and (2) the
aggregate Principal Balance of the Group 2
Mortgage Loans on the Cut-off Date.
"Group 2 Yield Maintenance Agreement": The yield maintenance
agreement between the Trustee, on behalf of
the Trust, and the Group 2 Yield
Maintenance Agreement Provider
substantially in the form attached hereto as
Exhibit N. The Group 2 Yield Maintenance
Agreement shall not be an asset of any
REMIC formed under this Agreement.
"Group 2 Yield Maintenance Agreement Payment": On each
Distribution
Date through the Distribution Date in
September, the amount equal to the product
of (a) the excess of the lesser of (i)
One-Month LIBOR and (ii) the applicable
ceiling rate for such Distribution Date
over the strike rate for such
Distribution Date, in each case as set
forth on the schedule attached to the
confirmation to the Group 2 Yield
Maintenance Agreement, (b) the lesser of (x)
the cap notional amount, as set forth for
that Distribution Date on the schedule
attached to the confirmation to the Group 2
Yield Maintenance Agreement and (y)
the aggregate Certificate Principal Balance
of the Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates
immediately prior to such Distribution Date and
(c) a fraction, the numerator of which is
the actual number of days elapsed
since the previous Distribution Date (or
the Closing Date, in the case of the
first Distribution Date) to but excluding
the current Distribution Date and the
denominator of which is 360.
"Group 2 Yield Maintenance Agreement Provider": The Bank of New
York
and any successor thereto.
"Group Subordinate Amount" for any Distribution Date and (i)
the
Group 1 Mortgage Loans, will be equal to
the greater of zero and the excess of
the aggregate Principal Balance of the
Group 1 Mortgage Loans as of the first
day of the related Collection Period over
the Certificate Principal Balance of
the Class A-1 Certificates immediately
prior to such Distribution Date and (ii)
the Group 2 Mortgage Loans, will be equal
to the greater of zero and the excess
of the aggregate Principal Balance of the
Group 2 Mortgage Loans as of the first
day of the related Collection Period over
the aggregate Certificate Principal
Balance of the Class A-2A, Class A-2B,
Class A-2C and Class A-2D Certificates
immediately prior to such Distribution
Date.
"Indenture": An indenture relating to the issuance of net
interest
margin notes secured by the Class CE
Certificates and the Class P Certificates,
which may or may not be guaranteed by the
NIMS Insurer.
"Independent": When used with respect to any specified Person,
any
such Person who (i) is in fact independent
of the Depositor, the Servicer and
their respective Affiliates, (ii) does not
have any direct financial interest in
or any material indirect financial interest
in the Depositor or the Servicer or
any Affiliate thereof, and (iii) is not
connected with the Depositor or the
Servicer 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 or the Servicer 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 or the Servicer 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 the Trust
Fund within the meaning of Section
856(d)(3) of the Code if the Trust Fund 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 percent or more of any Class
of Certificates), so long as the
Trust Fund does not receive or derive any
income from such Person and provided
that the relationship between such Person
and the Trust Fund is at arm's length,
all within the meaning of Treasury
Regulations Section 1.856-4(b)(5), or (ii)
any other Person (including the Servicer)
if the Trustee has received an Opinion
of Counsel, which Opinion of Counsel shall
be an expense of the Trust Fund, 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 with
respect to each related Adjustment Date,
the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any
Certificate of a Class other than a Class
CE, Class P or Class R Certificate,
the amount designated "Initial Certificate
Principal Balance" on the face
thereof.
"Initial Overcollateralization Amount": $6,138,872.67.
"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 Offered Certificates and the Class B
Certificates, the period from the
preceding Distribution Date to the day
prior to the current Distribution Date
or, in the case of the first Distribution
Date, from the Closing Date through
and including the day prior to the current
Distribution Date.
"Interest Carry Forward Amount": For any Class of Certificates
(other than the Class CE, Class P and Class
R Certificates) and any Distribution
Date, the sum of (a) the excess, if any, of
the Accrued Certificate Interest and
any Interest Carry Forward Amount for the
prior Distribution Date, over the
amount in respect of interest actually
distributed on such Class on such prior
Distribution Date and (b) interest on such
excess at the applicable Certificate
Interest Rate for the actual number of days
elapsed on the basis of a 360-day
year since the prior Distribution Date.
"Interest Percentage": With respect to any Class of Certificates
and
any Distribution Date, the ratio (expressed
as a decimal carried to six places)
of the Accrued Certificate Interest for
such Class to the sum of the Accrued
Certificate Interest for all Classes, in
each case with respect to such
Distribution Date, without regard to
shortfalls caused by the Relief Act or
similar state laws.
"Interest Remittance Amount": As of any Determination Date, the
sum
of the Group 1 Interest Remittance Amount
and the Group 2 Interest Remittance
Amount.
"Late Collections": With respect to any Mortgage Loan, all
amounts
received subsequent to the Determination
Date immediately following any related
Collection Period, whether as late payments
of Monthly Payments or as Insurance
Proceeds, Condemnation Proceeds,
Liquidation Proceeds or otherwise, which
represent late payments or collections of
principal and/or interest due (without
regard to any acceleration of payments
under the related Mortgage and Mortgage
Note) but delinquent on a contractual basis
for such Collection Period and not
previously recovered.
"LIBOR Business Day": Any day on which banks in London, England
and
The City of New York are open and
conducting transactions in foreign currency
and exchange.
"LIBOR Determination Date": With respect to the Offered
Certificates
and the Class B Certificates, (i) for the
first Distribution Date, the second
LIBOR Business Day preceding the Closing
Date and (ii) for each subsequent
Distribution Date, the second LIBOR
Business Day prior to the immediately
preceding Distribution Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the
Servicer has determined, in accordance
with the servicing procedures specified
herein, as of the end of the related
Prepayment Period, that all Liquidation
Proceeds, Condemnation Proceeds and
Insurance Proceeds which it expects to
recover with respect to the liquidation
of the Mortgage Loan or disposition of the
related REO Property have been
recovered.
"Liquidation Proceeds": The amount (other than 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 or (ii) the
liquidation of a defaulted Mortgage Loan by
means of a trustee's sale,
foreclosure sale or otherwise.
"Liquidation Report": The report with respect to a Liquidated
Mortgage Loan in such form as is agreed to
by the Servicer and the Trustee
listing (i) the sale price of the related
Mortgaged Property or amount of the
REO Disposition, (ii) the amount of any
Realized Loss (or gain) with respect to
such Liquidated Mortgage Loan, (iii) the
expenses relating to the liquidation of
such Liquidated Mortgage Loan and (iv) such
other information as is agreed to by
the Servicer and the Trustee.
"Loan Group": Any of Loan Group 1 or Loan Group 2.
"Loan Group 1": The Group 1 Mortgage Loans.
"Loan Group 2": The Group 2 Mortgage Loans.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to
which
the original Mortgage Note has been
permanently lost or destroyed and has not
been replaced, an affidavit from the Seller
certifying that the original
Mortgage Note has been lost, misplaced or
destroyed (together with a copy of the
related Mortgage Note and indemnifying the
Trust against any loss, cost or
liability resulting from the failure to
deliver the original Mortgage Note) in
the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting
Rights.
"Majority Class CE Certificateholders": The Holders of Class CE
Certificates evidencing at least a 51%
Percentage Interest in the Class CE
Certificates.
"Marker Rate": With respect to the Class CE Certificates and
any
Distribution Date, a per annum rate equal
to two (2) times the weighted average
of the Uncertificated REMIC Pass-Through
Rates for REMIC 1 Regular Interest
LT1A1, REMIC 1 Regular Interest LT1A2A,
REMIC 1 Regular Interest LT1A2B, REMIC 1
Regular Interest LT1A2C, REMIC 1 Regular
Interest LT1A2D, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1
Regular Interest LT1M5, REMIC 1 Regular
Interest LT1M6, REMIC 1 Regular Interest
LT1M7, REMIC 1 Regular Interest LT1M8,
REMIC 1 Regular Interest LT1M9, REMIC 1
Regular Interest LT1M10, REMIC 1 Regular
Interest LT1M11, REMIC 1 Regular Interest
LT1B1, REMIC 1 Regular Interest LT1B2
and REMIC 1 Regular Interest LT1ZZ, (i)
with the rate on each such REMIC Regular
Interest (other than REMIC 1 Regular
Interest LT1ZZ) subject to a cap equal to
the Pass-Through Rate of its Corresponding
Class (taking into account in
determining any such Pass-through Rate the
imposition of the Group 1 Cap, the
Group 2 Cap or the Pool Cap, as applicable,
as described in footnotes (1)
through (18) to the table in the
Preliminary Statement relating to the
Certificates) for the purposes of this
calculation and (ii) with the rate on
REMIC 1 Regular Interest LT1ZZ subject to a
cap of zero for the purpose of this
calculation; provided, however, that for
this purpose, calculations of the
Uncertificated REMIC 1 Pass-Through Rate
and the related caps with respect to
each such REMIC Regular Interest (other
than REMIC 1 Regular Interest LT1ZZ)
shall be multiplied by a fraction, the
numerator of which is the actual number
of days in the Interest Accrual Period and
the denominator of which is 30.
"Maximum LT1ZZ Uncertificated Accrued Interest Deferral
Amount":
With respect to any Distribution Date, the
excess of (a) accrued interest at the
Uncertificated REMIC 1 Pass-Through Rate
applicable to REMIC 1 Regular Interest
LT1ZZ for such Distribution Date on a
balance equal to the Uncertificated
Principal Balance of REMIC 1 Regular
Interest LT1ZZ minus the REMIC 1
Overcollateralized Amount, in each case for
such Distribution Date, over (b)
Uncertificated Accrued Interest on REMIC 1
Regular Interest LT1A1, REMIC 1
Regular Interest LT1A2A, REMIC 1 Regular
Interest LT1A2B, REMIC 1 Regular
Interest LT1A2C, REMIC 1 Regular Interest
LT1A2D, REMIC 1 Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest LT1M4, REMIC 1 Regular
Interest LT1M5, REMIC 1 Regular Interest
LT1M6, REMIC 1 Regular Interest LT1M7,
REMIC 1 Regular Interest LT1M8, REMIC 1
Regular Interest LT1M9, REMIC 1 Regular
Interest LT1M10, REMIC 1 Regular
Interest LT1M11, REMIC 1 Regular Interest
LT1B1 and REMIC 1 Regular Interest
LT1B2 each subject to a cap equal to the
Pass-Through Rate of the related
Corresponding Class for the purpose of this
calculation; provided, however, that
for this purpose, calculations of the
Uncertificated REMIC 1 Pass-Through Rate
and the related caps with respect to
Uncertificated Accrued Interest on REMIC 1
Regular Interest LT1A1, REMIC 1 Regular
Interest LT1A2A, REMIC 1 Regular
Interest LT1A2B, REMIC 1 Regular Interest
LT1A2C, REMIC 1 Regular Interest
LT1A2D, REMIC 1 Regular Interest LT1M1,
REMIC 1 Regular Interest LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular
Interest LT1M4, REMIC 1 Regular Interest
LT1M5, REMIC 1 Regular Interest LT1M6,
REMIC 1 Regular Interest LT1M7, REMIC 1
Regular Interest LT1M8, REMIC 1 Regular
Interest LT1M9, REMIC 1 Regular Interest
LT1M10, REMIC 1 Regular Interest LT1M11,
REMIC 1 Regular Interest LT1B1 and
REMIC 1 Regular Interest LT1B2 shall be
multiplied by a fraction, the numerator
of which is the actual number of days in
the Interest Accrual Period and the
denominator of which is 30.
"Maximum Mortgage Interest Rate": With respect to each
Adjustable-Rate Mortgage Loan, the
percentage set forth in the related Mortgage
Note as the maximum Mortgage Interest Rate
thereunder.
"Minimum Mortgage Interest Rate": With respect to each
Adjustable-Rate Mortgage Loan, the
percentage set forth in the related Mortgage
Note as the minimum Mortgage Interest Rate
thereunder.
"Monthly Excess Cashflow Amount": The sum of the Monthly Excess
Interest Amount, the Overcollateralization
Release Amount and (without
duplication) any portion of the Principal
Distribution Amount remaining after
principal distributions on the Offered
Certificates and the Class B
Certificates.
"Monthly Excess Interest Amount": With respect to each
Distribution
Date, the amount, if any, by which the
Interest Remittance Amount for such
Distribution Date exceeds the aggregate
amount distributed on such Distribution
Date pursuant to paragraphs (i) through
(xviii) under Section 4.01.
"Monthly Form 8-K": As defined in Section 3.31(a) hereof.
"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 or similar state laws; (b)
without giving effect to any extension
granted or agreed to by the Servicer
pursuant to Section 3.01; 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., and its successors,
and
if such company shall for any reason no
longer perform the functions of a
securities rating agency, "Moody's" shall
be deemed to refer to any other
"nationally recognized statistical rating
organization" as set forth on the most
current list of such organizations released
by the Securities and Exchange
Commission.
"Mortgage": The mortgage, deed of trust or other instrument
creating
a first 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 Interest 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 (i) in
the case of each Fixed-Rate Mortgage Loan
shall remain constant at the rate set
forth in the applicable Mortgage Loan
Schedule as the Mortgage Interest Rate in
effect immediately following the Cut-off
Date and (ii) in the case of each
Adjustable-Rate Mortgage Loan (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 applicable Mortgage Loan Schedule as
the Mortgage Interest Rate in effect
immediately following the Cut-off Date and
(B) as of any date of determination
thereafter shall be the rate as adjusted on
the most recent Adjustment Date, to
equal the sum, rounded as provided in the
Mortgage Note, of the Index,
determined as set forth in the related
Mortgage Note, plus the related Gross
Margin subject to the limitations set forth
in the related Mortgage Note. 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.
"Mortgage Loan": Each
mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section
2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage
Loans so held being identified in the
Mortgage Loan Schedules.
"Mortgage Loan Purchase Agreement": The agreement between the
Seller
and the Depositor, dated as of August 1,
2005, regarding the transfer of the
Mortgage Loans by the Seller to or at the
direction of the Depositor.
"Mortgage Loan Schedule": As of any date with respect to the
Mortgage Loans, the lists of such Mortgage
Loans included in the Trust Fund on
such date, separately identifying the
Fixed-Rate Mortgage Loans and the
Adjustable-Rate Mortgage Loans, attached
hereto as Exhibits D-1 and D-2. The
Mortgage Loan Schedules shall set forth the
following information with respect
to each Mortgage Loan:
(1) the
Mortgage Loan identifying number;
(2) the
state and zip code of the Mortgaged Property;
(3) the
type of Residential Dwelling constituting the Mortgaged
Property;
(4) the
occupancy status of the Mortgaged Property at origination;
(5) the
original months to maturity;
(6) the
date of origination;
(7) the
first payment date;
(8) the
stated maturity date;
(9) the
stated remaining months to maturity;
(10) the
original principal amount of the Mortgage Loan;
(11) the
Principal Balance of each Mortgage Loan as of the Cut-off Date;
(12) the
Mortgage Interest Rate of the Mortgage Loan as of the Cut-off
Date;
(13) the
current principal and interest payment of the Mortgage Loan as
of
the Cut-off Date;
(14) the
contractual interest paid to date of the Mortgage Loan;
(15) the
Combined Loan-to-Value Ratio at origination and as of the
Cut-off
Date;
(16) a
code indicating the loan performance status of the Mortgage Loan
as
of the Cut-off Date;
(17) a
code indicating the Index that is associated with such Mortgage
Loan;
(18) the
Gross Margin;
(19) the
Periodic Rate Cap;
(20) the
Minimum Mortgage Interest Rate;
(21) the
Maximum Mortgage Interest Rate;
(22) a
code indicating whether the Mortgage Loan has a Prepayment
Charge
and the type of Prepayment Charge and the
term;
(23) the
first Adjustment Date immediately following the Cut-off Date;
(24) the
rate adjustment frequency;
(25) the
payment adjustment frequency;
(26) the
purpose of the Mortgage Loan; and
(27) a
code indicating whether the Mortgage Loan is a second lien.
The Mortgage Loan Schedules shall set forth the following
information, as of the Cut-off Date, with
respect to the Mortgage Loans in the
aggregate, for the Fixed-Rate Mortgage
Loans and for the Adjustable-Rate
Mortgage Loans: (1) the number of Mortgage
Loans; (2) the current Principal
Balance of the Mortgage Loans; (3) the
weighted average Mortgage Interest Rate
of the Mortgage Loans; and (4) the weighted
average maturity of the Mortgage
Loans. The Mortgage Loan Schedules shall be
amended from time to time in
accordance with the provisions of this
Agreement and a copy of such amended
Mortgage Loan Schedules shall be furnished
by the Servicer to the NIMS Insurer.
With respect to any Eligible Substitute
Mortgage Loan, Cut-off Date shall refer
to the applicable date of substitution.
"Mortgage Note": The original executed note or other evidence
of
indebtedness evidencing the indebtedness of
a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibits
D-1 and D-2 from time to time, and any REO
Properties acquired in respect
thereof.
"Mortgaged Property": The underlying property securing a
Mortgage
Loan, including any REO Property,
consisting of an Estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage
Loan or any other disposition of related
Mortgaged Property (including REO
Property) the related Liquidation Proceeds
net of unreimbursed Advances,
unreimbursed Servicing Advances, Servicing
Fees and any other accrued and unpaid
servicing fees received and retained in
connection with the liquidation of such
Mortgage Loan or Mortgaged Property.
"Net Maximum Mortgage Interest Rate": With respect to any (a)
Adjustable-Rate Mortgage Loan, the
applicable Maximum Mortgage Interest Rate
less the sum of (i) the Servicing Fee Rate
and (ii) the Credit Risk Manager Fee
Rate and (b) Fixed-Rate Mortgage Loan, the
Mortgage Interest Rate for such
Mortgage Loan less the sum of (i) the
Servicing Fee Rate and (ii) the Credit
Risk Manager Fee Rate.
"Net Mortgage Interest Rate": With respect to any Mortgage Loan,
the
Mortgage Interest Rate borne by such
Mortgage Loan minus the Expense Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf of
the
Trust, including any lease renewed or
extended on behalf of the Trust if the
Trust has the right to renegotiate the
terms of such lease.
"NIMS Insurer": Any insurer that is guaranteeing certain
payments
under notes secured by collateral which
includes all or a portion of the Class
CE, Class P and Class R Certificates.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in
respect of a Mortgage Loan that, in
the good faith business judgment of the
Servicer, will not or, in the case of a
proposed Advance or Servicing Advance,
would not be ultimately recoverable from
Late Collections on such Mortgage Loan as
provided herein.
"Notional Amount": With respect to the Class CE Certificates,
an
amount equal to the aggregate principal
balance of the REMIC 1 Regular
Interests.
"Offered Certificates": The Class A-1, Class A-2A, Class A-2B,
Class
A-2C, Class A-2D, 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 and Class M-11 Certificates.
"Officers' Certificate": A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the
President, a vice president (however
denominated) or a principal, 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 each Interest Accrual Period,
the
rate determined by the Trustee on the
related LIBOR Determination Date on the
basis of the offered rate for one-month
United States dollar deposits, as such
rate appears on the Telerate Page 3750, as
of 11:00 a.m. (London time) on such
LIBOR Determination Date. If no such
quotations are available on an LIBOR
Determination Date, One-Month LIBOR for the
related Interest Accrual Period will
be established by the Trustee as
follows:
(i) If on such LIBOR 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 0.001%);
(ii) If on such LIBOR Determination Date fewer than two
Reference
Banks provide such offered
quotations, One-Month LIBOR for the related
Interest
Accrual Period shall be the arithmetic mean of the rates quoted
by one or
more major banks in New York City, selected by the Trustee
after
consultation with the Depositor and the NIMS Insurer, as of 11:00
A.M.,
New York
City time, on such date for loans in U.S. Dollars to leading
European
banks for a period of one month in amounts approximately equal
to
the
aggregate Certificate Principal Balance of the Offered
Certificates
and the
Class B Certificates; and
(iii) If no such quotations can be obtained, One-Month LIBOR for
the
related
Interest Accrual Period shall be One-Month LIBOR for the prior
Distribution Date.
"Opinion of Counsel": A written opinion of counsel, who may,
without
limitation, be a salaried counsel for the
Depositor or the Servicer except that
any opinion of counsel relating to (a) the
qualification of any REMIC as a REMIC
or (b) compliance with the REMIC Provisions
must be an opinion of Independent
counsel.
"Optional Termination Date": The first Distribution Date on
which
the Majority Class CE Certificateholders
or, if such holder is the Seller or is
an affiliate of the Seller, the Servicer,
may opt to terminate the Mortgage Pool
pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to
each
Class of Certificates, the Certificate
Principal Balance thereof on the Closing
Date, as set forth opposite such Class in
the Preliminary Statement, except with
respect to (i) the Class P and Class R
Certificates, which have an Original
Class Certificate Principal Balance of zero
and (ii) the Class CE Certificates,
which, solely for REMIC purposes, have an
Original Class Certificate Principal
Balance equal to the Initial
Overcollateralization Amount.
"Originator": Either Ownit Mortgage or WMC Mortgage, as the case
may
be, or their successors in interest.
"Originator Mortgage Loan Purchase Agreement": Either the Ownit
Sale
Agreement or the WMC Sale Agreement.
"Originator Prepayment Charge Payment Amount": The amount payable
by
(i) Ownit Mortgage pursuant to Section 9.03
of the Ownit Sale Agreement or (ii)
WMC Mortgage pursuant to Section 4.21(b) of
the WMC Sale Agreement in respect of
certain Prepayment Charges that are not
collected from the Mortgagor.
"Overcollateralization Amount": As of any Distribution Date,
the
excess, if any, of (x) the Pool Balance as
of the last day of the related
Collection Period after giving effect to
principal prepayments in the related
Prepayment Period over (y) the aggregate
Certificate Principal Balance of all
Classes of Offered Certificates and the
Class B Certificates (after taking into
account all distributions of principal on
such Distribution Date and the
increase of any Certificate Principal
Balance as a result of Subsequent
Recoveries).
"Overcollateralization Deficiency": As of any Distribution Date,
the
excess, if any, of (x) the Targeted
Overcollateralization Amount for such
Distribution Date over (y) the
Overcollateralization Amount for such
Distribution Date, calculated for this
purpose after taking into account the
reduction on such Distribution Date of the
Certificate Principal Balances of all
Classes of Offered Certificates and the
Class B Certificates resulting from the
distribution of the Principal Distribution
Amount (but not the Extra Principal
Distribution Amount) on such Distribution
Date, but prior to taking into account
any Applied Realized Loss Amounts on such
Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date
on which a Trigger Event is not in
effect, the excess, if any, of (i) the
Overcollateralization Amount for such
Distribution Date, assuming that 100% of
the Principal Remittance Amount is
applied as a principal payment on the
Offered Certificates and the Class B
Certificates on such Distribution Date,
over (ii) the Targeted
Overcollateralization Amount for such
Distribution Date. With respect to any
Distribution Date on which a Trigger Event
is in effect, the
Overcollateralization Release Amount will
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.
"Ownit
Mortgage": Ownit Mortgage Solutions, Inc. or its successor in
interest.
"Ownit Sale Agreement": The Mortgage Loan Purchase and
Warranties
Agreement, dated as of March 1, 2005, by
and between Bank of America, N.A., as
purchaser, and Ownit Mortgage, as seller
and the related Memoranda of Sale,
dated as of March 9, 2005 and March 17,
2005, as amended by the Assignment,
Assumption and Recognition Agreement, dated
August 30, 2005, among the
Depositor, Bank of America, N.A., the
Trustee, the Servicer, and Ownit Mortgage.
"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate,
the
Class A-2A Pass-Through Rate, the Class
A-2B Pass-Through Rate, the Class A-2C
Pass-Through Rate, the Class A-2D
Pass-Through Rate, the Class M-1 Pass-Through
Rate, the Class M-2 Pass-Through Rate, the
Class M-3 Pass-Through Rate, the
Class M-4 Pass-Through Rate, the Class M-5
Pass-Through Rate, the Class M-6
Pass-Through Rate, the Class M-7
Pass-Through Rate, the Class M-8 Pass-Through
Rate, the Class M-9 Pass-Through Rate, the
Class M-10 Pass-Through Rate, the
Class M-11 Pass-Through Rate, the Class B-1
Pass-Through Rate and the Class B-2
Pass-Through Rate; and in the case of any
Regular Interest, the Pass-Through
Rate set forth in the definition
thereof.
With respect to the Class CE Certificates and any Distribution
Date,
a per annum rate equal to the percentage
equivalent of a fraction, the numerator
of which is the sum of the amounts
calculated pursuant to clauses (A) through
(T) below, and the denominator of which is
the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1AA, REMIC 1 Regular Interest
LT1A1, REMIC 1 Regular Interest LT1A2A,
REMIC 1 Regular Interest LT1A2B, REMIC 1
Regular Interest LT1A2C, REMIC 1 Regular
Interest LT1A2D, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1
Regular Interest LT1M5, REMIC 1 Regular
Interest LT1M6, REMIC 1 Regular Interest
LT1M7, REMIC 1 Regular Interest LT1M8,
REMIC 1 Regular Interest LT1M9, REMIC 1
Regular Interest LT1M10, REMIC 1 Regular
Interest LT1M11, REMIC 1 Regular Interest
LT1B1, REMIC 1 Regular Interest LT1B2
and REMIC 1 Regular Interest LT1ZZ. For
purposes of calculating the Pass-Through
Rate for the Class CE Certificates, the
numerator is equal to the sum of the
following components:
(A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1AA minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1AA;
(B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A1 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A1;
(C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A2A minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A2A;
(D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A2B minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A2B;
(E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A2C minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A2C;
(F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A2D minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A2D;
(G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M1 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M1;
(H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M2 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M2;
(I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M3 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M3;
(J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M4 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M4;
(K) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M5 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M5;
(L) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M6 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M6;
(M) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M7 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M7;
(N) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M8 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M8;
(O) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M9 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M9;
(P) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M10 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M10;
(Q) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M11 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M11;
(R) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1B1 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1B1;
(S) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M6 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1B2; and
(T) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1ZZ minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1ZZ.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other than
a
Class CE, Class P or Class R Certificate),
a fraction, expressed as a
percentage, the numerator of which is the
Initial Certificate Principal Balance,
as the case may be, represented by such
Certificate and the denominator of which
is the Original Class Certificate Principal
Balance of the related Class. With
respect to a Class CE or Class P
Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as
stated on the face of such Certificate;
provided, however, that the sum of all such
percentages for each such Class
totals 100%. With respect to the Class R
Certificate, 100%.
"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
Interest Rate for such Mortgage Loan may
increase or decrease (without regard to
the Maximum Mortgage Interest Rate or the
Minimum Mortgage Interest Rate) on
such Adjustment Date from the Mortgage
Interest Rate in effect immediately prior
to such Adjustment Date.
"Permitted Transferee": Any transferee of a Class R Certificate
other than a Disqualified Organization, a
non-U.S. Person or a U.S. Person with
respect to whom income on the Class R
Certificate is attributable to a foreign
permanent establishment or fixed base,
within the meaning of an applicable
income tax treaty, of such Person or any
other U.S. Person.
"Person": Any individual, corporation, partnership, joint
venture,
association, joint stock company, trust,
limited liability company,
unincorporated organization or government
or any agency or political subdivision
thereof.
"Pool Balance": As of any date of determination, the aggregate
Principal Balance of the Mortgage
Loans.
"Pool Cap": As of any Distribution Date, a per annum rate,
adjusted
by multiplying such rate by a fraction
equal to 30 over the actual number of
days in the related Interest Accrual
Period, equal to the weighted average of
the Group 1 Cap and the Group 2 Cap,
weighted on the basis of the related Group
Subordinate Amount. For federal income tax
purposes, the economic equivalent of
such rate shall be expressed as the
weighted average of the REMIC 1 Remittance
Rate on (a) REMIC 1 Regular Interest
LT1SUB, subject to a cap and floor equal to
the Weighted Average Net Mortgage Interest
Rates of the Group 1 Mortgage Loans
and (b) REMIC 1 Regular Interest LT2SUB,
subject to a cap and floor equal to the
Weighted Average Net Mortgage Interest
Rates of the Group 2 Mortgage Loans,
weighted on the basis of the Uncertificated
Balance of such REMIC 1 Regular
Interest.
"Pool Maximum Net Rate": As of any Distribution Date, the
weighted
average of the Group 1 Maximum Net Rate and
the Group 2 Maximum Net Rate,
weighted on the basis of the related Group
Subordinate Amount.
"Pool Maximum Rate Cap": As of any Distribution Date and the Class
M
and Class B Certificates, a per annum rate
equal to (i) on or prior to the
Distribution Date in September 2008, the
greater of (a) the Pool Maximum Net
Rate, adjusted by multiplying such rate by
a fraction equal to 30 over the
actual number of days in the related
Interest Accrual Period and (b) 10% and
(ii) after the Distribution Date in
September 2008, the Pool Maximum Net Rate,
adjusted by multiplying such rate by a
fraction equal to 30 over the actual
number of days in the related Interest
Accrual Period.
"Prepayment Charge": With respect to any Prepayment Period, any
prepayment premium, penalty or charge
collected by the Servicer from a Mortgagor
in connection with any voluntary Principal
Prepayment pursuant to the terms of
the related Mortgage Note as from time to
time held as a part of the Trust Fund,
the Prepayment Charges so held being
identified in the Mortgage Loan Schedules
(other than any Originator Prepayment
Charge Payment Amount or Servicer
Prepayment Charge Payment Amount).
"Prepayment Interest Excess": With respect to any Distribution
Date,
for each Mortgage Loan that was the subject
of a Principal Prepayment in full
during the portion of the related
Prepayment Period beginning on the first day
of the calendar month in which such
Distribution Date occurs through the
Determination Date of the calendar month in
which such Distribution Date occurs,
an amount equal to interest (to the extent
received) at the applicable Mortgage
Interest Rate (net of the Servicing Fee
Rate) on the amount of such Principal
Prepayment for the number of days
commencing on the first day of the calendar
month in which such Distribution Date
occurs and ending on the date on which
such prepayment is so applied.
"Prepayment Interest Shortfall": With respect to any
Distribution
Date, for each Mortgage Loan that was the
subject of a Principal Prepayment in
full during the portion of the related
Prepayment Period occurring in the prior
calendar month that was applied by the
Servicer to reduce the outstanding
Principal Balance of such Mortgage Loan on
a date preceding the related Due
Date, an amount equal to interest at the
applicable Mortgage Interest Rate (net
of the Servicing Fee Rate) on the amount of
such Principal Prepayment for the
number of days commencing on the date on
which the Principal Prepayment is
applied and ending on the last day of the
calendar month in which applied.
"Prepayment Period": With respect to any Distribution Date, the
period commencing on the day after the
Determination Date in the calendar month
preceding the calendar month in which such
Distribution Date occurs (or, in the
case of the first Distribution Date, on
August 1, 2005) and ending on the
Determination Date in the calendar month in
which such Distribution Date occurs.
"Principal Balance": As to any Mortgage Loan and any day, other
than
a Liquidated Mortgage Loan, the related
Cut-off Date Principal Balance, minus
the sum of (i) all collections and other
amounts credited against the principal
balance of any such Mortgage Loan, (ii) the
principal portion of Advances, (iii)
any Deficient Valuation and (iv) any
principal reduction resulting from a
Servicer Modification. For purposes of this
definition, a Liquidated Mortgage
Loan shall be deemed to have a Principal
Balance equal to the Principal Balance
of the related Mortgage Loan as of the
final recovery of related Liquidation
Proceeds and a Principal Balance of zero
thereafter. As to any REO Property and
any day, the Principal Balance of the
related Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property
minus any REO Principal Amortization
received with respect thereto on or prior
to such day.
"Principal
Distribution Amount": As to any Distribution Date, the
sum of (i) the Principal Remittance Amount
minus the Overcollateralization
Release Amount, if any, and (ii) the Extra
Principal Distribution Amount, if
any.
"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, to the extent of funds available
therefor, the sum (less amounts available
for reimbursement of Advances and Servicing
Advances pursuant to Section 3.05
and expenses reimbursable pursuant to
Section 6.03 and Section 8.05) of: (i)
each payment of principal on a Mortgage
Loan due during the related Collection
Period and received by the Servicer on or
prior to the related Determination
Date, and any Advances with respect
thereto, (ii) all full and partial Principal
Prepayments received by the Servicer during
the related Prepayment Period, (iii)
Insurance Proceeds, Net Liquidation
Proceeds and Subsequent Recoveries allocable
to principal actually collected by the
Servicer during the related Prepayment
Period, (iv) with respect to Defective
Mortgage Loans repurchased with respect
to such Prepayment Period, the portion of
the Purchase Price allocable to
principal, (v) any Substitution Adjustment
Amounts received during the related
Prepayment Period and (vi) on the
Distribution Date on which the Trust is to be
terminated in accordance with Section 10.01
hereof, that portion of the
Termination Price in respect of
principal.
"Private Certificates": Any of the Class B-1, Class B-2, Class
CE,
Class P and Class R Certificates.
"Prospectus Supplement": That certain Prospectus Supplement
dated
August 26, 2005 relating to the public
offering of the Offered Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property
to be purchased pursuant to or as
contemplated by Section 2.03 or 10.01, an
amount equal to the sum of (i) 100% of the
Principal Balance thereof as of the
date of purchase (or such other price as
provided in Section 10.01), (ii) in the
case of a Mortgage Loan, accrued interest
on such Principal Balance at the
applicable Mortgage Interest 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,
(iii) any unreimbursed Servicing
Advances and Advances and any unpaid
Servicing Fees allocable to such Mortgage
Loan or REO Property, (iv) any amounts
previously withdrawn from the Collection
Account in respect of such Mortgage Loan or
REO Property pursuant to Section
3.13 and (v) in the case of a Mortgage Loan
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.
"Rating Agency or Rating Agencies": Moody's, Fitch and S&P, or
their
respective successors. If such agencies or
their successors are no longer in
existence, "Rating Agencies" shall be such
nationally recognized statistical
rating organizations as set forth on the
most current list of such organizations
released by the Commission and designated
by the Depositor, notice of which
designation shall be given to the Trustee
and the Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan,
the
amount by which the remaining unpaid
principal balance of the Mortgage Loan
exceeds the amount of Net Liquidation
Proceeds applied to the principal balance
of the related Mortgage Loan. With respect
to any Mortgage Loan, a Deficient
Valuation or a reduction in the Principal
Balance thereof resulting from a
Servicer Modification.
"Realized Loss Amortization Amount": Any of the Class M-1
Realized
Loss Amortization Amount, the Class M-2
Realized Loss Amortization Amount, the
Class M-3 Realized Loss Amortization
Amount, the Class M-4 Realized Loss
Amortization Amount, the Class M-5 Realized
Loss Amortization Amount, the Class
M-6 Realized Loss Amortization Amount, the
Class M-7 Realized Loss Amortization
Amount, the Class M-8 Realized Loss
Amortization Amount, the Class M-9 Realized
Loss Amortization Amount, the Class M-10
Realized Loss Amortization Amount, the
Class M-11 Realized Loss Amortization
Amount, the Class B-1 Realized Loss
Amortization Amount and the Class B-2
Realized Loss Amortization Amount.
"Record Date": With respect to all of the Certificates (other
than
the Private Certificates), the Business Day
immediately preceding such
Distribution Date; provided, however, that
if any such Certificate becomes a
Definitive Certificate, the Record Date for
such Certificate shall be the last
Business Day of the month immediately
preceding the month in which the related
Distribution Date occurs. With respect to
the Private Certificates, the last
Business Day of the month immediately
preceding the month in which the related
Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not
controlling, under the control of or under
common control with the Depositor or the
Trustee, (iii) whose quotations appear
on the Telerate Page 3750 on the relevant
LIBOR Determination Date and (iv)
which have been designated as such by the
Trustee; provided, however, that if
fewer than two of such banks provide a
One-Month LIBOR rate, then any leading
banks selected by the Trustee which are
engaged in transactions in United States
dollar deposits in the international
Eurocurrency market.
"Regular Certificate": Any of the Offered Certificates, the Class
B
Certificates and the Class CE
Certificates.
"Reimbursement Amount": With respect to any Mortgage Loan, any
costs
or damages incurred by the Trust in
connection with a breach of (i) Ownit
Mortgage's representations and warranties
set forth in clauses (g), (tt), (uu),
(vv) or (nnn) of Section 9.02 of the Ownit
Sale Agreement and (ii) WMC
Mortgage's representation and warranties
regarding predatory and abusive lending
laws set forth in clauses (i), (ddd) or
(ooo) of Section 3.02 of the WMC Sale
Agreement.
"Related Documents": With respect to any Mortgage Loan, the
related
Mortgage Notes, Mortgages and other related
documents.
"Relief Act": The Servicemembers Civil Relief Act, as it may be
amended from time to time.
"Relief
Act Interest Shortfall": With respect to any Distribution
Date, for any Mortgage Loan with respect to
which there has been a reduction in
the amount of interest collectible thereon
for the most recently ended
Collection Period as a result of the
application of the Relief Act or similar
state laws, the amount by which (i)
interest collectible on such Mortgage Loan
during such Collection Period is less than
(ii) one month's interest on the
Principal Balance of such Mortgage Loan at
the Mortgage Interest Rate for such
Mortgage Loan before giving effect to the
application of the Relief Act or
similar state laws.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC 1 Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a)
the product of (i) 50% of the sum of
the aggregate Principal Balance of the
Mortgage Loans and related REO Properties
then outstanding and (ii) the
Uncertificated REMIC 1 Pass-Through Rate for REMIC
1 Regular Interest LT1AA minus the Marker
Rate, divided by (b) 12.
"REMIC 1 Marker Allocation Percentage": 50% of any amount
payable
from or loss attributable to the Mortgage
Loans, which shall be allocated to
REMIC 1 Regular Interest LT1AA, REMIC 1
Regular Interest LT1A1, REMIC 1 Regular
Interest LT1A2A, REMIC 1 Regular Interest
LT1A2B, REMIC 1 Regular Interest
LT1A2C, REMIC 1 Regular Interest LT1A2D,
REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1M4, REMIC 1 Regular Interest LT1M5,
REMIC 1 Regular Interest LT1M6, REMIC 1
Regular Interest LT1M7, REMIC 1 Regular
Interest LT1M8, REMIC 1 Regular Interest
LT1M9, REMIC 1 Regular Interest LT1M10,
REMIC 1 Regular Interest LT1M11, REMIC 1
Regular Interest LT1B1, REMIC 1 Regular
Interest LT1B2 and REMIC 1 Regular
Interest LT1ZZ.
"REMIC 1 Overcollateralization Target Amount": 0.50% of the
Targeted
Overcollateralization Amount.
"REMIC 1 Overcollateralized Amount": With respect to any date
of
determination, (i) 0.50% of the aggregate
Uncertificated Principal Balances of
the REMIC 1 Regular Interests minus (ii)
the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest
LT1A2A, REMIC 1 Regular Interest LT1A2B,
REMIC 1 Regular Interest LT1A2C, REMIC
1 Regular Interest LT1A2D, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular Interest
LT1M3, REMIC 1 Regular Interest LT1M4,
REMIC 1 Regular Interest LT1M5, REMIC 1
Regular Interest LT1M6, REMIC 1 Regular
Interest LT1M7, REMIC 1 Regular Interest
LT1M8, REMIC 1 Regular Interest LT1M9,
REMIC 1 Regular Interest LT1M10, REMIC 1
Regular Interest LT1M11, REMIC 1
Regular Interest LT1B1 and REMIC 1 Regular
Interest LT1B2, in each case as of
such date of determination.
"REMIC 1 Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a)
the product of (i) 50% of the
aggregate Principal Balance of the Mortgage
Loans and related REO Properties
then outstanding and (ii) 1 minus a
fraction, the numerator of which is two
times the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest
LT1A2A, REMIC 1 Regular Interest
LT1A2B, REMIC 1 Regular Interest LT1A2C,
REMIC 1 Regular Interest LT1A2D, REMIC
1 Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1M4, REMIC 1 Regular Interest LT1M5,
REMIC 1 Regular Interest LT1M6 and REMIC 1
Regular Interest LT1M7 and the
denominator of which is the aggregate of
the Uncertificated Principal Balances
of REMIC 1 Regular Interest LT1A1, REMIC 1
Regular Interest LT1A2A, REMIC 1
Regular Interest LT1A2B, REMIC 1 Regular
Interest LT1A2C, REMIC 1 Regular
Interest LT1A2D, REMIC 1 Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest LT1M4, REMIC 1 Regular
Interest LT1M5, REMIC 1 Regular Interest
LT1M6, REMIC 1 Regular Interest LT1M7,
REMIC 1 Regular Interest LT1M8, REMIC 1
Regular Interest LT1M9, REMIC 1 Regular
Interest LT1M10, REMIC 1 Regular Interest
LT1M11, REMIC 1 Regular Interest
LT1B1, REMIC 1 Regular Interest LT1B2 and
REMIC 1 Regular Interest LT1ZZ.
"REMIC 1 Regular Interest LT1AA": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1AA
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1A1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A1
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1A2A": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A2A
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1A2B": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A2B
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1A2C": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A2C
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1A2D": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A2D
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M1
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M2": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M2
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M3": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M3
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M4": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M4
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M5": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M5
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M6": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M6
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M7": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M7
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M8": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M8
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M9": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M9
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M10": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M10
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M11": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M11
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1B1
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B2": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1B2
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1SUB": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1SUB
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1GRP": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1GRP
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2SUB": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT2SUB
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2GRP": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT2GRP
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1XX": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1XX
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1ZZ": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1ZZ
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interests": REMIC 1 Regular Interest LT1AA, REMIC
1
Regular Interest LT1A1, REMIC 1 Regular
Interest LT1A2A, REMIC 1 Regular
Interest LT1A2B, REMIC 1 Regular Interest
LT1A2C, REMIC 1 Regular Interest
LT1A2D, REMIC 1 Regular Interest LT1M1,
REMIC 1 Regular Interest LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular
Interest LT1M4, REMIC 1 Regular Interest
LT1M5, REMIC 1 Regular Interest LT1M6,
REMIC 1 Regular Interest LT1M7, REMIC 1
Regular Interest LT1M8, REMIC 1 Regular
Interest LT1M9, REMIC 1 Regular Interest
LT1M10, REMIC 1 Regular Interest LT1M11,
REMIC 1 Regular Interest LT1B1, REMIC 1
Regular Interest LT1B2, REMIC 1 Regular
Interest LT1SUB, REMIC 1 Regular
Interest LT1GRP, REMIC 1 Regular Interest
LT2SUB, REMIC 1 Regular Interest
LT2GRP, REMIC 1 Regular Interest LT1XX and
REMIC 1 Regular Interest LT1ZZ.
"REMIC 1 Sub WAC Allocation Percentage": 50% of any amount
payable
or loss attributable from the Mortgage
Loans, which shall be allocated to REMIC
1 Regular Interest LT1SUB, REMIC 1 Regular
Interest LT1GRP, REMIC 1 Regular
Interest LT2SUB, REMIC 1 Regular Interest
LT2GRP and REMIC 1 Regular Interest
LT1XX.
"REMIC 1 Subordinated Balance Ratio": The ratio among the
Uncertificated Principal Balances of each
REMIC 1 Regular Interest ending with
the designation "SUB," equal to the ratio
among, with respect to each such REMIC
1 Regular Interest, the excess of (x) the
aggregate Principal Balance of the
Mortgage Loans in the related Loan Group
over (y) the current Certificate
Principal Amount of the Class A
Certificates in the related Loan Group.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment
conduits which appear at Section
860A through 860G of Subchapter M of
Chapter 1 of the Code, and related
provisions, and regulations and rulings
promulgated thereunder, as the foregoing
may be in effect from time to time.
"REMIC Regular Interest": Any REMIC 1 Regular Interest or any of
the
Certificates (other than the Class P and
Class R Certificates).
"Remittance Report": A report prepared by the Servicer and
delivered
to the Trustee and the NIMS Insurer
pursuant to Section 4.07, containing the
information attached hereto as Exhibit
M.
"Rents from Real Property": With respect to any REO Property,
gross
income of the character described in
Section 856(d) of the Code.
"REO
Disposition": The sale or other disposition of an REO Property
on behalf of the Trust.
"REO Imputed Interest": As to any REO Property, for any
Collection
Period, an amount equivalent to interest
(at the Net Mortgage Interest Rate that
would have been applicable to the related
Mortgage Loan had it been outstanding)
for such Collection Period on the unpaid
Principal Balance of the Mortgage Loan
as of the date of acquisition.
"REO Principal Amortization": With respect to any REO Property,
for
any calendar month, 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 10.01 that
is allocable to such REO Property) or
otherwise, net of any portion of such
amounts (i) payable pursuant to Section
3.13 in respect of the proper operation,
management and maintenance of such REO
Property or (ii) payable or reimbursable to
the Servicer pursuant to Section
3.13 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.
"REO Property": A Mortgaged Property acquired by the Servicer
on
behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure, as
described in Section 3.13.
"Request for Release": A release signed by a Servicing Officer,
in
the form of Exhibit E attached hereto.
"Reserve Account": Any of the Class A-1 Reserve Account, the Group
2
Reserve Account or the Class M/B Reserve
Account.
"Residential Dwelling": Any one of the following: (i) a
detached
one-family dwelling, (ii) a detached two-
to four-family dwelling, (iii) a
one-family dwelling unit in a Fannie Mae
eligible condominium project, (iv) a
manufactured home, or (v) a detached
one-family dwelling in a planned unit
development, none of which is a
co-operative or mobile home.
"Residual Interest": The sole Class of "residual interests" in
each
REMIC within the meaning of Section
860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any
officer assigned to the Corporate Trust
Division (or any successor thereto),
including any Vice President, Assistant
Vice President, Trust Officer, any
Assistant Secretary, any trust officer or
any other officer of the Trustee
customarily performing functions similar to
those performed by any of the above
designated officers and in each case having
direct responsibility for the
administration of this Agreement.
"S&P": Standard & Poor's, a division of The McGraw-Hill
Companies,
Inc., and its successors, and if such
company shall for any reason no longer
perform the functions of a securities
rating agency, "S&P" shall be deemed to
refer to any other "nationally recognized
statistical rating organization" as
set forth on the most current list of such
organizations released by the
Commission.
"Seller": Bank of America, N.A., or its successor in interest,
in
its capacity as seller under the Mortgage
Loan Purchase Agreement.
"Senior
Certificates": The Class A-1, Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates.
"Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum
of (i) the aggregate Certificate
Principal Balance of the Subordinated
Certificates before taking into account
the distribution of the Principal
Distribution Amount on such Distribution Date
and (ii) the Overcollateralization Amount
as of the prior Distribution Date by
(y) the Pool Balance as of the last day of
the related Collection Period after
giving effect to Principal Prepayments in
the related Prepayment Period.
"Senior Principal Distribution Amount": For any Distribution
Date,
the sum of the Group 1 Senior Principal
Distribution Amount and the Group 2
Senior Principal Distribution Amount.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 46.90%.
"Servicer": Saxon Mortgage Services, Inc., a Texas corporation,
or
any successor servicer appointed as herein
provided, in its capacity as Servicer
hereunder.
"Servicer Event of Termination": One or more of the events
described
in Section 7.01.
"Servicer Modification": A modification to the terms of a
Mortgage
Loan, in accordance with the terms of
Section 3.01, as to which the Mortgagor is
in default or as to which, in the judgment
of the Servicer, default is
reasonably foreseeable.
"Servicer Prepayment Charge Payment Amount": The amount payable
by
the Servicer in respect of any waived
Prepayment Charges pursuant to Section
3.01, which amount shall be equal to the
difference between the amount of
Prepayment Charge due by a Mortgagor before
any waiver and the actual amount of
the Prepayment Charge that was paid by the
Mortgagor.
"Servicer Remittance Date": With respect to any Distribution
Date,
the 21st day of the calendar month in which
such Distribution Date occurs or if
such day is a Saturday not a Business Day,
the immediately preceding Business
Day, or if such day is a Sunday or
otherwise not a Business Day, the immediately
following Business Day.
"Servicing Advances": All customary, reasonable and necessary
"out
of pocket" costs and expenses incurred by
the Servicer (including reasonable
attorneys' fees and disbursements) in the
performance of its servicing
obligations, including, but not limited to,
the cost of (i) the preservation,
restoration, inspection and protection of
the Mortgaged Property, (ii) any
enforcement or judicial proceedings,
including foreclosures, (iii) the
management and liquidation of the REO
Property and (iv) compliance with the
obligations under Section 3.08.
"Servicing Fee": With respect to each Mortgage Loan (including
each
REO Property) and for any calendar month,
an amount equal to one month's
interest (or in the event of any payment of
interest which accompanies a
Principal Prepayment in full made by the
Mortgagor during such calendar month,
interest for the number of days covered by
such payment of interest) at the
Servicing Fee Rate on the same principal
amount on which interest on such
Mortgage Loan accrues for such calendar
month.
"Servicing Fee Rate": With respect to each Mortgage Loan, 0.50%
per
annum.
"Servicing Officer": Any representative or 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 Standard": The standards set forth in Section 3.01.
"Similar Law": As defined in Section 5.02(d) hereof.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms
of
the Certificates and this Agreement but
which is not remitted by the Servicer
because the Servicer is the subject of a
proceeding under the Bankruptcy Code
and the making of such remittance is
prohibited by Section 362 of the Bankruptcy
Code.
"Stepdown Date": The earlier to occur of (i) the Distribution
Date
on which the aggregate Certificate
Principal Balance of the Class A Certificates
is reduced to zero and (ii) the later to
occur of (x) the Distribution Date in
September 2008 and (y) the Distribution
Date on which the Senior Enhancement
Percentage is greater than or equal to the
Senior Specified Enhancement
Percentage.
"Subordinated Certificates": 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, Class M-10,
Class M-11, Class B-1, Class B-2, Class CE
and Class R Certificates.
"Subordination
Depletion Date": The Distribution Date on which the
aggregate Certificate Principal Balance of
the Class M and Class B Certificates
has been reduced to zero.
"Subsequent Recovery": Any amount (net of reimbursable
expenses)
received on a Mortgage Loan subsequent to
such Mortgage Loan being determined to
be a Liquidated Mortgage Loan that resulted
in a Realized Loss in a prior month.
"Substitution Adjustment Amount": As defined in Section 2.03(d)
hereof.
"Targeted Overcollateralization Amount": As of any Distribution
Date, (x) prior to the Stepdown Date, 0.50%
of the Cut-off Date Aggregate
Principal Balance and (y) on and after the
Stepdown Date, (i) if a Trigger Event
has not occurred, the greater of (A) 1.00%
of the Pool Balance as of the last
day of the related Collection Period after
giving effect to Principal
Prepayments in the related Prepayment
Period and (B) 0.50% of the Cut-off Date
Aggregate Principal Balance and (ii) if a
Trigger Event has occurred, the
Targeted Overcollateralization Amount for
the immediately preceding Distribution
Date.
"Tax Matters Person": The tax matters person appointed pursuant
to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns 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 the REMIC Taxable Income or Net
Loss Allocation, or any successor
forms, to be filed on behalf of the Trust
for each of the two REMICs created
pursuant to this Agreement 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 page currently so designated
on
the Reuters Telerate Service (or such other
page as may replace the Telerate
Page 3750 page on that service for the
purpose of displaying London interbank
offered rates of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Trigger Event": With respect to any Distribution Date on or
after
the Stepdown Date, if (i) the three-month
rolling average of 60+ Day Delinquent
Loans equals or exceeds 32.00% of the
Senior Enhancement Percentage or (ii) the
aggregate amount of Realized Losses
incurred since the Cut-off Date through the
last day of the related Collection Period
(reduced by the aggregate amount of
Subsequent Recoveries received since the
Cut-off Date through the last day of
the related Collection Period) divided by
the Cut-off Date Aggregate Principal
Balance exceeds the applicable percentages
set forth below with respect to such
Distribution Date:
Distribution Date Occurring In
Percentage
----------------------------------
-------------------------------------------
September 2007 through August 2008
3.25% for the
first month, plus an
additional 1/12th of 1.00% for each month
thereafter
September 2008 through August 2009
4.25% for the
first month, plus an
additional 1/12th of 1.50% for each month
thereafter
September 2009 through August 2010
5.75% for the
first month, plus an
additional 1/12th of 0.75% for each month
thereafter
September 2010 through August 2011
6.50% for the
first month, plus an
additional 1/12th of 0.75% for each month
thereafter
September 2011 and thereafter
7.25%
"Trust": ABFC 2005-HE2 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created
hereby and to be administered hereunder,
with respect to a portion of which two
REMIC elections are to be made, such
entire Trust Fund consisting of: (i) such
Mortgage Loans 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 each Originator Mortgage
Loan Purchase Agreement and the Mortgage
Loan Purchase Agreement (including any
security interest created thereby), (v) the
Trustee's rights under each Yield
Maintenance Agreement and (vi) the
Collection Account, the Distribution Account
and the Reserve Accounts 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.
"Trustee": Wells Fargo Bank, N.A., a national banking
association,
or any successor Trustee appointed as
herein provided.
"Uncertificated Accrued Interest": With respect to each REMIC 1
Regular Interest on each Distribution Date,
an amount equal to one month's
interest at the related Uncertificated
REMIC 1 Pass-Through Rate on the
Uncertificated Principal Balance of such
REMIC Regular Interest. In each case,
Uncertificated Accrued Interest will be
reduced by any Prepayment Interest
Shortfalls and Relief Act Interest
Shortfalls (allocated to such REMIC Regular
Interests based on their respective
entitlements to interest irrespective of any
Prepayment Interest Shortfalls and Relief
Act Interest Shortfalls for such
Distribution Date).
"Uncertificated Principal Balance": The amount of any REMIC 1
Regular Interest outstanding as of any date
of determination. As of the Closing
Date, the Uncertificated Balance of each
REMIC 1 Regular Interest shall equal
the amount set forth in the Preliminary
Statement hereto as its initial
uncertificated balance. On each
Distribution Date, the Uncertificated Principal
Balance of each REMIC 1 Regular Interest
shall be reduced by all distributions
of principal made on such REMIC 1 Regular
Interest on such Distribution Date
pursuant to Section 4.08 and, if and to the
extent necessary and appropriate,
shall be further reduced on such
Distribution Date by Realized Losses as
provided in Section 4.08(b). The
Uncertificated Balance of REMIC 1 Regular
Interest LT1ZZ shall be increased by
interest deferrals as provided in Section
4.08(a)(i). The Uncertificated Balance of
each REMIC 1 Regular Interest shall
never be less than zero.
"Uncertificated REMIC 1 Pass-Through Rate": With respect to REMIC
1
Regular Interest LT1AA, REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest
LT1A2A, REMIC 1 Regular Interest LT1A2B,
REMIC 1 Regular Interest LT1A2C, REMIC
1 Regular Interest LT1A2D, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular Interest
LT1M3, REMIC 1 Regular Interest LT1M4,
REMIC 1 Regular Interest LT1M5, REMIC 1
Regular Interest LT1M6, REMIC 1 Regular
Interest LT1M7, REMIC 1 Regular Interest
LT1M8, REMIC 1 Regular Interest LT1M9,
REMIC 1 Regular Interest LT1M10, REMIC 1
Regular Interest LT1M11, REMIC 1
Regular Interest LT1B1, REMIC 1 Regular
Interest LT1B2, REMIC 1 Regular Interest
LT1ZZ, REMIC 1 Regular Interest LT1SUB,
REMIC 1 Regular Interest LT2SUB and
REMIC 1 Regular Interest LT1XX, the
Weighted Average Net Mortgage Rate of the
Mortgage Loans. With respect to REMIC 1
Regular Interest LT1GRP, the Weighted
Average Net Mortgage Rate of the Group 1
Mortgage Loans. With respect REMIC 1
Regular Interest LT2GRP, the Weighted
Average Net Mortgage Interest Rate of the
Group 2 Mortgage Loans.
"United States Person" or "U.S. Person": (i) A citizen or
resident
of the United States, (ii) a corporation,
partnership or other entity treated as
a corporation or partnership for United
States federal income tax purposes
organized in or under the laws of the
United States or any state thereof or the
District of Columbia (unless, in the case
of a partnership, Treasury Regulations
provide otherwise), (iii) an estate the
income of which is includible in gross
income for United States tax purposes,
regardless of its source, or (iv) a trust
if a court within the United States is able
to exercise primary supervision over
the administration of the trust and one or
more United States persons have
authority to control all substantial
decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided
in Treasury Regulations, certain
Trusts in existence on August 20, 1996, and
treated as United States persons
prior to such date, that elect to continue
to be treated as United States
persons will also be a U.S. Person;
provided, that for purposes of the
definition of a "Permitted Transferee," a
U.S. Person shall not include any
person whose income is attributable to a
foreign permanent establishment or
fixed base, within the meaning of an
applicable income tax treaty, of such
Person or any other U.S. Person.
"Unpaid Realized Loss Amount": For any of 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,
Class M-10, Class M-11, Class B-1, Class
B-2 Certificates and as to any
Distribution Date, the excess of (x) the
aggregate Applied Realized Loss Amounts
allocated to such Class for all prior
Distribution Dates over (y) the sum of (a)
the cumulative amount of any Subsequent
Recoveries allocated to such Class and
(b) the aggregate Realized Loss
Amortization Amounts with respect to such Class
for all prior Distribution Dates.
"Value": With
respect to any Mortgaged Property, the lesser of: (i)
an amount determined by an appraisal done
at origination of the Mortgage Loan;
provided, however, the amount may be
reduced to reflect the results of a review
of such appraisal in accordance with the
applicable 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, that
in the case of a refinanced Mortgage Loan,
the value of the Mortgaged Property
is based solely upon clause (i) above.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any
Certificate. The Voting Rights allocated
among Holders of the Offered Certificates
and the Class B Certificates shall be
98%, and shall be allocated among each such
Class according to the fraction,
expressed as a percentage, the numerator of
which is the aggregate Certificate
Principal Balance of all the Certificates
of such Class then outstanding and the
denominator of which is the aggregate
Certificate Principal Balance of all the
Offered Certificates and the Class B
Certificates then outstanding. The Voting
Rights allocated to each such Class of
Certificates shall be allocated among all
holders of each such Class in proportion to
the outstanding Certificate
Principal Balance of such Certificates;
provided, however, that any Certificate
registered in the name of the Servicer, the
Depositor or the Trustee or any of
their respective affiliates shall not be
included in the calculation of Voting
Rights; provided that only such
Certificates as are known by a Responsible
Officer of the Trustee to be so registered
will be so excluded. 1% of all the
Voting Rights will be allocated to the
Holders of each of the Class CE and Class
P Certificates. The Class R Certificates
shall have no Voting Rights.
"Weighted Average Net Mortgage Rate": The weighted average (based
on
Principal Balance as of the first day of
the related Collection Period or, in
the case of the first Distribution Date,
the Cut-Off Date) of the Net Mortgage
Interest Rates of the Mortgage Loans, the
Group 1 Mortgage Loans or the Group 2
Mortgage Loans, as applicable, expressed
for each such Mortgage Loan as an
annual rate and calculated on the basis of
twelve months consisting of 30 days
each and a 360-day year.
"WMC Mortgage": WMC Mortgage Corp. or its successor in
interest.
"WMC Sale Agreement": The Flow Sale and Interim Servicing
Agreement,
dated as of June 1, 2005, by and between
Bank of America, N.A., as purchaser,
and WMC Mortgage, as seller and the related
Memoranda of Sale, dated as of June
27, 2005 and July 6, 2005, as amended by
the Assignment, Assumption and
Recognition Agreement, dated August 30,
2005, among the Depositor, Bank of
America, N.A., the Trustee, the Servicer
and WMC Mortgage.
"Written Order to Authenticate": A written order by which the
Depositor directs the Trustee to execute,
authenticate and deliver the
Certificates.
"Yield Maintenance Agreement": Any of the Class A-1 Yield
Maintenance Agreement, the Group 2 Yield
Maintenance Agreement or the Class M/B
Yield Maintenance Agreement.
"Yield Maintenance Agreement Payment": Any of the Class A-1
Yield
Maintenance Agreement Payment, the Group 2
Yield Maintenance Agreement Payment
or the Class M/B Yield Maintenance
Agreement Payment.
"Yield Maintenance Agreement Provider": Any of the Class A-1
Yield
Maintenance Agreement Provider, the Group 2
Yield Maintenance Agreement Provider
or the Class M/B Yield Maintenance
Agreement Provider.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any
definition
or calculation, whenever amounts are
required to be netted, subtracted or added
or any distributions are taken into account
such definition or calculation and
any related definitions or calculations
shall be determined without duplication
of such functions.
Section 1.03 Rights of the NIMS Insurer.
Each of the rights of the NIMS Insurer set forth in this
Agreement
shall exist so long as (i) the NIMS Insurer
has undertaken to guarantee certain
payments of notes issued pursuant to the
Indenture and (ii) any series of notes
issued pursuant to the Indenture remains
outstanding or the NIMS Insurer is owed
amounts in respect of its guarantee of
payment on such notes; provided, however,
the NIMS Insurer shall not have any rights
hereunder (except pursuant to Section
11.01 in the case of clause (ii) below)
during the period of time, if any, that
(i) the NIMS Insurer has not undertaken to
guarantee certain payments of notes
issued pursuant to the Indenture or (ii)
any default has occurred and is
continuing under the insurance policy
issued by the NIMS Insurer with respect to
such notes.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and
otherwise convey to the Trustee, on
behalf of the Trust, 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 (i) each Mortgage
Loan identified on the Mortgage Loan
Schedule, including the related Cut-off
Date Principal Balance, all interest
accruing thereon after the Cut-off Date and
all collections in respect of interest and
principal due after the Cut-off Date;
(ii) property which secured each such
Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any
insurance policies in respect of the
Mortgage Loans; (iv) all other assets
included or to be included in the Trust
Fund; (v) all proceeds of any of the
foregoing; (vi) the rights of the Depositor
under the Consulting Agreement; and
(vii) the rights of the Depositor under
each Originator Mortgage Loan Purchase
Agreement and the Mortgage Loan Purchase
Agreement. Such assignment includes all
interest and principal due to the Depositor
or the Servicer after the Cut-off
Date with respect to the Mortgage
Loans.
In connection with such transfer and assignment, the Depositor
does
hereby deliver to, and deposit with the
Trustee, or its designated agent, the
following documents or instruments with
respect to each Mortgage Loan (a
"Mortgage File") so transferred and
assigned:
(i)
the original
Mortgage Note, endorsed in blank or with respect to any
lost Mortgage Note, an original Lost Note Affidavit, together with
a
copy of the related Mortgage Note;
(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
or, if such Mortgage or power of attorney has been submitted
for
recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available,
a
copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original
submitted
for recording;
(iii) an
original Assignment of Mortgage, in form and substance
acceptable
for recording. The Mortgage shall be assigned in blank;
(iv)
an original copy of
any intervening assignment of Mortgage showing a
complete chain of assignments;
(v)
the original or
a certified copy of lender's title insurance policy;
and
(vi)
the original or copies
of each assumption, modification, written
assurance or substitution agreement, if any.
The Trustee agrees to execute and deliver to the Depositor on
or
prior to the Closing Date an acknowledgment
of receipt of the original Mortgage
Note (with any exceptions noted),
substantially in the form attached as Exhibit
F-3 hereto.
If any of the documents referred to in Section 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 no later than the
Closing Date, of a copy of each such
document certified by the Seller 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 Seller, 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. The
Depositor shall deliver or cause to be
delivered to the Trustee promptly upon
receipt thereof any other 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.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing
from, a Mortgage File, the Seller
shall have 120 days to cure such defect or
deliver such missing document to the
Trustee. If the Seller does not cure such
defect or deliver such missing
document within such time period, the
Seller shall either repurchase or
substitute for such Mortgage Loan in
accordance with Section 2.03.
The Depositor herewith delivers to the Trustee executed copies
of
the Originator Mortgage Loan Purchase
Agreements and the Mortgage Loan Purchase
Agreement.
It is agreed and understood by the parties hereto that it is
not
intended that any mortgage loan be included
in the Trust that is a "High-Cost
Home Loan" as defined in any of (i) the New
Jersey Home Ownership Act effective
November 27, 2003, (ii) the New Mexico Home
Loan Protection Act, effective
January 1, 2004, (iii) the Massachusetts
Predatory Home Loan Practices Act,
effective November 7, 2004 or (iv) the
Indiana Home Loan Practices Act,
effective January 1, 2005.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the
provisions
of Section 2.01 and subject to the review
described below and any exceptions
noted on the exception report described in
the next paragraph below, the
documents referred to in Section 2.01 above
and all other assets included in the
definition of "Trust Fund" 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 "Trust Fund" 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 within 60 days
after the Closing Date (or, with
respect to any document delivered after the
Startup Day, within 60 days of
receipt and with respect to any Qualified
Substitute Mortgage, within 60 days
after the assignment thereof) and to
certify in substantially the form attached
hereto as Exhibit F-1 that, as to each
Mortgage Loan listed in the Mortgage Loan
Schedules (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 required to be delivered to it
pursuant to Section 2.01 of this Agreement
are in its possession, (ii) such
documents have been reviewed by it and have
not been mutilated, damaged or torn
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 Schedules that
corresponds to items (1), (2), (3), (10)
and (22) of the Mortgage Loan Schedules
accurately reflects information set forth
in the Mortgage File. It is herein
acknowledged that, in conducting such
review, the Trustee is under no duty or
obligation to inspect, review or examine
any such documents, instruments,
certificates or other papers to determine
that they are genuine, enforceable, or
appropriate for the represented purpose or
that they have actually been recorded
or that they are other than what they
purport to be on their face.
Prior to the first anniversary date of this Agreement the
Trustee
shall deliver to the Depositor, the
Servicer and the NIMS Insurer a final
certification in the form annexed hereto as
Exhibit F-2 evidencing the
completeness of the Mortgage Files, with
any applicable exceptions noted
thereon.
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 Seller, the
Depositor, the NIMS Insurer and the
Servicer. In addition, upon the discovery
by the Originators, the Seller, the
Depositor, the NIMS Insurer, the Trustee or
the Servicer (or upon receipt by the
Trustee of written notification of such
breach) of a breach of any of the
representations and warranties made by the
related Originator in the applicable
Originator Mortgage Loan Purchase Agreement
or the Seller in the Mortgage Loan
Purchase Agreement in respect of any
Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests
of the related Certificateholders in
such Mortgage Loan, the party discovering
such breach shall give prompt written
notice to the other parties.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a
sale of the Mortgage Loans and the
Related Documents, conveying good title
thereto free and clear of any liens and
encumbrances, from the Depositor to the
Trustee 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, on behalf
of the Trust, a first priority perfected
security interest in all of the
Depositor's right, title and interest in
and to the Mortgage Loans and the
Related Documents, and that this Agreement
shall constitute a security agreement
under applicable law.
The Trustee is hereby directed to execute and deliver, on behalf
of
the Trust, the Class A-1 Yield Maintenance
Agreement, the Group 2 Yield
Maintenance Agreement and the Class M/B
Yield Maintenance Agreement.
Section 2.03 Repurchase or Substitution of Mortgage Loans by
the
Originators or the Seller.
(a) Upon discovery or receipt of written notice of any
materially
defective document in, or that a document
is missing from, a Mortgage File or of
the breach by the Originators or the Seller
of any representation or warranty
under the related Originator Mortgage Loan
Purchase Agreement or the Mortgage
Loan Purchase Agreement, as applicable, in
respect of any Mortgage Loan which
materially adversely affects the value of
such Mortgage Loan, Prepayment Charge
or the interest therein of the
Certificateholders, the Trustee shall promptly
notify the applicable Originator or the
Seller, as the case may be, the Servicer
and the NIMS Insurer of such defect,
missing document or breach and request
that, in the case of a defective or missing
document, the Seller cure such
defect or deliver such missing document
within 120 days from the date the Seller
was notified of such missing document or
defect or, in the case of a beach of a
representation or warranty, request the
related Originator or the Seller, as
applicable, cure such breach within 90 days
from the date the applicable
Originator or the Seller, as the case may
be, was notified of such breach. If
the Seller does not deliver such missing
document or cure such defect or if the
related Originator or the Seller, as
applicable, does not cure such breach in
all material respects during such period,
the Trustee shall enforce such
Originator's or the Seller's obligation, as
the case may be, under the
applicable Originator Mortgage Loan
Purchase Agreement or the Mortgage Loan
Purchase Agreement, as applicable, and
cause such Originator or the Seller, as
applicable, to repurchase such Mortgage
Loan from the Trust Fund at the Purchase
Price on or prior to the Determination Date
following the expiration of such
period (subject to Section 2.03(d)). The
Purchase Price for the repurchased
Mortgage Loan shall be deposited in the
Collection Account, and the Trustee,
upon receipt of written notice from the
Servicer of such deposit, shall release
to the related Originator or the Seller, as
applicable, the related Mortgage
File and shall execute and deliver such
instruments of transfer or assignment,
in each case without recourse, as such
Originator or the Seller, as applicable,
shall furnish to it and as shall be
necessary to vest in such Originator or the
Seller, as the case may be, any Mortgage
Loan released pursuant hereto and the
Trustee shall have no further
responsibility with regard to such Mortgage File.
In lieu of repurchasing any such Mortgage
Loan as provided above, the related
Originator or the Seller, as the case may
be, may cause such Mortgage Loan to be
removed from the Trust Fund (in which case
it shall become a Defective Mortgage
Loan) and substitute one or more Eligible
Substitute Mortgage Loans in the
manner and subject to the limitations set
forth in Section 2.03(c).
With respect to the representations and warranties set forth in
the
Originator Mortgage Loan Purchase
Agreements and the Mortgage Loan Purchase
Agreement that are made to the best of the
related Originator's or the Seller's
knowledge, as applicable, or as to which
such Originator or the Seller, as the
case may be, has no knowledge, if it is
discovered by the Depositor, the
Servicer, the NIMS Insurer or the Trustee
that the substance of such
representation and warranty is inaccurate
and such inaccuracy materially and
adversely affects the value of the related
Mortgage Loan, Prepayment Charge or
the interest therein of the
Certificateholders then, notwithstanding such
Originator's or the Seller's lack of
knowledge with respect to the substance of
such representation and warranty being
inaccurate at the time the representation
or warranty was made, such inaccuracy shall
be deemed a breach of the applicable
representation or warranty.
It is understood and agreed that the representations and
warranties
set forth in each Originator Mortgage Loan
Purchase Agreement and the Mortgage
Loan Purchase Agreement shall survive
delivery of the Mortgage Files to the
Trustee and the Closing Date and shall
inure to the benefit of the
Certificateholders notwithstanding any
restrictive or qualified endorsement or
assignment. It is understood and agreed
that the obligations of the Originators
and the Seller set forth in this Section
2.03(a) to cure, substitute for or
repurchase a Mortgage Loan pursuant to the
related Originator Mortgage Loan
Purchase Agreement or the Mortgage Loan
Purchase Agreement, as applicable, and
to pay the Reimbursement Amount constitute
the sole remedies available to the
Certificateholders and to the Trustee on
their behalf respecting a breach of the
representations and warranties contained in
each Originator Mortgage Loan
Purchase Agreement and the Mortgage Loan
Purchase Agreement.
The representations and warranties of WMC Mortgage with respect
to
the Mortgage Loans in the WMC Sale
Agreement, which have been assigned to the
Trustee hereunder, were made as of June 27,
2005 and July 6, 2005. To the extent
that any fact, condition or event with
respect to a Mortgage Loan constitutes a
breach of both (i) a representation or
warranty of WMC Mortgage under the WMC
Sale Agreement and (ii) a representation or
warranty of the Seller under the
Mortgage Loan Purchase Agreement with
respect to the Mortgage Loans purchased
from WMC Mortgage under the WMC Sale
Agreement (other than Seller's
representations with respect to predatory
and abusive lending laws in Section
3.01(k) and 3.01(s) of the Mortgage Loan
Purchase Agreement), the only right or
remedy of the Trustee or of any
Certificateholder shall be the Trustee's right
to enforce the obligations of WMC Mortgage
under any applicable representation
or warranty made by it. The Trustee
acknowledges that the Seller shall have no
obligation or liability with respect to any
breach of a representation or
warranty made by it with respect to such
Mortgage Loans (except as otherwise set
forth in this paragraph) if the fact,
condition or event constituting such
breach also constitutes a breach of a
representation or warranty made by WMC
Mortgage in the WMC Sale Agreement, without
regard to whether WMC Mortgage
fulfills its contractual obligations in
respect of such representation or
warranty. In addition, to the extent that
any fact, condition or event with
respect to a Mortgage Loan constitutes a
breach of both (x) WMC Mortgage's
representation with respect to predatory
and abusive lending laws in clauses
(i), (ddd) or (ooo) of Section 3.02 of the
WMC Sale Agreement and (y) the
Seller's representation with respect to
predatory and abusive lending laws in
Section 3.01(k) or 3.01(s) of the Mortgage
Loan Purchase Agreement, WMC Mortgage
shall be obligated to pay the Reimbursement
Amount relating to such Mortgage
Loan, and, to the extent WMC Mortgage fails
to do so, the Trustee shall be
entitled to enforce the Seller's obligation
to pay such Reimbursement Amount.
The representations and warranties of Ownit Mortgage with respect
to
the Mortgage Loans in the Ownit Sale
Agreement, which have been assigned to the
Trustee hereunder, were made as of March 9,
2005 and March 17, 2005. To the
extent that any fact, condition or event
with respect to a Mortgage Loan
constitutes a breach of both (i) a
representation or warranty of Ownit Mortgage
under the Ownit Sale Agreement and (ii) a
representation or warranty of the
Seller under the Mortgage Loan Purchase
Agreement, Ownit Mortgage shall be
obligated to cure such breach or repurchase
the affected Mortgage Loan pursuant
to the terms of the Ownit Sale Agreement
and, to the extent Ownit Mortgage fails
to do so, the Trustee shall be entitled to
enforce the Seller's obligation to
cure such breach or repurchase the affected
Mortgage Loan under the Mortgage
Loan Purchase Agreement. In addition, to
the extent Ownit Mortgage fails to pay
any Reimbursement Amount, the Trustee shall
be entitled to enforce the Seller's
obligation to pay such Reimbursement
Amount.
In any event, the Reimbursement Amount shall be delivered to
the
Servicer for deposit into the Collection
Account within 10 days from the date
the Seller was notified by the Trustee of
the Reimbursement Amount.
(b) Within 90 days of the earlier of discovery by the Servicer
or
receipt of notice by the Servicer of the
breach of any representation, warranty
or covenant of the Servicer set forth in
Section 2.05 which materially and
adversely affects the interests of the
Certificateholders in any Mortgage Loan,
the Servicer shall cure such breach in all
material respects.
(c) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to
Section 2.03(a) must be effected prior
to the last Business Day that is within two
years after the Closing Date. As to
any Defective Mortgage Loan for which an
Originator or the Seller substitutes an
Eligible Substitute Mortgage Loan or Loans,
such substitution shall be effected
by such Originator or the Seller, as
applicable, delivering to the Trustee for
such Eligible 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 Eligible
Substitute Mortgage Loan satisfies the
definition thereof and specifying the
Substitution Adjustment Amount (as
described below), if any, in connection with
such substitution. The Trustee shall
acknowledge receipt for such Eligible
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
Servicer and the NIMS Insurer, with respect
to such Eligible Substitute Mortgage
Loan or Loans, a certification
substantially in the form attached hereto as
Exhibit F-1, with any applicable exceptions
noted thereon. Within one year of
the date of substitution, the Trustee shall
deliver to the Servicer and the NIMS
Insurer a certification substantially in
the form of Exhibit F-2 hereto with
respect to such Eligible Substitute
Mortgage Loan or Loans, with any applicable
exceptions noted thereon. Monthly Payments
due with respect to Eligible
Substitute Mortgage Loans in the month of
substitution are not part of the Trust
Fund and will be retained by the related
Originator or the Seller, as
applicable. For the month of substitution,
distributions to Certificateholders
will reflect the collections and recoveries
in respect of such Defective
Mortgage Loan in the Collection Period or
Prepayment Period, as applicable,
preceding the date of substitution and the
Depositor, an Originator or the
Seller, as the case may be, shall
thereafter be entitled to retain all amounts
subsequently received in respect of such
Defective Mortgage Loan. The Depositor
shall give or cause to be given written
notice to the Certificateholders and the
NIMS Insurer that such substitution has
taken place, shall amend the Mortgage
Loan Schedule to reflect the removal of
such Defective Mortgage Loan from the
terms of this Agreement and the
substitution of the Eligible Substitute Mortgage
Loan or Loans and shall deliver a copy of
such amended Mortgage Loan Schedule to
the Trustee and the NIMS Insurer. Upon such
substitution, such Eligible
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, in the case
of a substitution effected by an Originator
or the Seller, the applicable
Originator Mortgage Loan Purchase Agreement
or the Mortgage Loan Purchase
Agreement, as the case may be, including,
in the case of a substitution effected
by such Originator or the Seller, all
applicable representations and warranties
thereof included in such Originator
Mortgage Loan Purchase Agreement and, in the
case of a substitution made by Ownit
Mortgage or the Seller, and the Mortgage
Loan Purchase Agreement, as of the date of
substitution.
For any month in which an Originator or the Seller substitutes
one
or more Eligible Substitute Mortgage Loans
for one or more Defective Mortgage
Loans, the Servicer will determine the
amount (the "Substitution Adjustment
Amount"), if any, by which the aggregate
Purchase Price of all such Defective
Mortgage Loans exceeds the aggregate, as to
each such Eligible Substitute
Mortgage Loan, of the principal balance
thereof as of the date of substitution,
together with one month's interest on such
principal balance at the applicable
Net Mortgage Interest Rate. On the date of
such substitution, the related
Originator or the Seller, as the case may
be, will deliver or cause to be
delivered to the Servicer for deposit in
the Collection Account an amount equal
to the Substitution Adjustment Amount, if
any, and the Trustee, upon receipt of
the related Eligible Substitute Mortgage
Loan or Loans and notice by the
Servicer of such deposit, shall release to
such Originator or the Seller, as
applicable, the related Mortgage File or
Files and shall execute and deliver
such instruments of transfer or assignment,
in each case without recourse, as
such Originator or the Seller, as the case
may be, shall deliver to it and as
shall be necessary to vest therein any
Defective Mortgage Loan released pursuant
hereto.
In addition, such Originator or the Seller, as applicable,
shall
obtain at its own expense and deliver to
the Trustee and the NIMS Insurer an
Opinion of Counsel to the effect that such
substitution will not cause (a) any
federal tax to be imposed on the Trust
Fund, including without limitation, any
federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the
Code or on "contributions after the startup
date" under Section 860G(d)(l) of
the Code, or (b) any REMIC to fail to
qualify as a REMIC at any time that any
Certificate is outstanding. If such Opinion
of Counsel can not be delivered,
then such substitution may only be effected
at such time as the required Opinion
of Counsel can be given.
(d) Upon discovery by an Originator, the Seller, the Servicer,
the
NIMS Insurer 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, such Originator or the
Seller, as applicable, shall repurchase or,
subject to the limitations set forth
in Section 2.03(c), substitute one or more
Eligible 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. In addition,
upon discovery that a Mortgage Loan is
defective in a manner that would cause it
to be a "defective obligation" within the
meaning of Treasury Regulations
relating to REMICs, such Originator or the
Seller, as the case may be, shall
cure the defect or make the required
purchase or substitution no later than 90
days after the discovery of the defect. 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 such Originator or the
Seller, as applicable, 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 each of the
Trustee and the Certificateholders and
to the Depositor and the NIMS Insurer that
as of the Closing Date or as of such
date specifically provided herein:
(i) The Servicer is a corporation duly organized, validly
existing
and in
good standing under the laws of the State of Texas and has all
licenses
necessary to carry on its business as now being conducted,
except
for such
licenses, certificates and permits the absence of which,
individually or in the aggregate, would not have a material adverse
effect
on the
ability of the Servicer to conduct its business as it is
presently
conducted,
and is licensed, qualified and in good standing in the states
where the
Mortgaged Property is located if the laws of such state require
licensing
or qualification in order to conduct business of the type
conducted
by the Servicer or to ensure the enforceability or validity of
each
Mortgage Loan; the Servicer has the power and authority to
execute
and
deliver this Agreement and to perform in accordance herewith;
the
execution,
delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement)
by the
Servicer
and the consummation of the transactions contemplated hereby
have
been duly
and validly authorized; and all requisite corporate action has
been taken
by the Servicer to make this Agreement valid and binding upon
the
Servicer in accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in
the ordinary course of business of the Servicer and will
not result
in the breach of any term or provision of the articles of
incorporation or by-laws of the Servicer or result in the breach of
any
term or
provision of, or conflict with or constitute a default under or
result in
the acceleration of any obligation under, any agreement,
indenture
or loan or credit agreement or other instrument to which the
Servicer
or its property is subject, or result in the violation of any
law, rule,
regulation, order, judgment or decree to which the Servicer or
its
property is subject;
(iii) The Servicer is an approved seller/servicer of
conventional
residential mortgage loans for Fannie Mae or Freddie Mac, with
the
facilities, procedures, and experienced personnel necessary for the
sound
servicing
of mortgage loans of the same type as the Mortgage Loans. The
Servicer
is a HUD approved mortgagee pursuant to Section 203 of the
National
Housing Act and is in good standing to sell mortgage loans to
and
service
mortgage loans for Fannie Mae or Freddie Mac, and no event has
occurred,
including but not limited to a change in insurance coverage,
which
would make the Servicer unable to comply with Fannie Mae or
Freddie
Mac
eligibility requirements or which would require notification to
either
Fannie Mae
or Freddie Mac;
(iv) This Agreement, and all documents and instruments
contemplated
hereby
which are executed and delivered by the Servicer, constitute
and
will
constitute valid, legal and binding obligations of the
Servicer,
enforceable in accordance with their respective terms, except as
the
enforcement thereof may be limited by applicable bankruptcy,
insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement
of
creditors' rights generally (whether considered in a proceeding at
law
or in
equity);
(v) The Servicer does not believe, nor does it have any reason
or
cause to
believe, that it cannot perform each and every covenant
contained
in this
Agreement;
(vi) There is no action, suit, proceeding or investigation
pending
or, to its
knowledge, threatened against the Servicer that, either
individually or in the aggregate, may result in any material
adverse
change in
the business, operations, financial condition, properties or
assets of
the Servicer, or in any material impairment of the right or
ability of
the Servicer to carry on its business substantially as now
conducted,
or in any material liability on the part of the Servicer, or
that would
draw into question the validity or enforceability of this
Agreement
or of any action taken or to be taken in connection with the
obligations of the Servicer contemplated herein, or that would be
likely
to impair
materially the ability of the Servicer to perform under the
terms of
this Agreement;
(vii) No consent, approval 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 of
the transactions contemplated by this Agreement, except
for such
consents, approvals, authorizations and orders, if any, that
have
been
obtained; and
(viii) No information in this Agreement provided by the Servicer
nor
any
information, certificate of an officer, statement furnished in
writing
or report
delivered to the Trustee by the Servicer in connection with the
transactions contemplated hereby contains or will contain any
untrue
statement
of a material fact or omits or will omit to state a material
fact
necessary in order to make the statements contained therein, in
light
of the
circumstances under which they were made, not misleading.
(ix) The Servicer has fully furnished, and shall continue to
fully
furnish
for so long as it is servicing the Mortgage Loans hereunder, in
accordance
with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information on the Mortgagor
credit
files to
Equifax, Experian and Trans Union Credit Information Company on
a
monthly
basis.
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, the NIMS Insurer and the
Certificateholders. Upon discovery by any of
the Depositor, the Servicer, the NIMS
Insurer 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, Prepayment Charge 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 other
parties hereto.
Section 2.06 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the
Trustee
on behalf of the Certificateholders and to
the Servicer and the NIMS Insurer as
follows:
(i) This agreement constitutes a legal, valid and binding
obligation
of the
Depositor, enforceable against the Depositor in accordance with
its
terms,
except as enforceability may be limited by applicable
bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or
hereafter
in effect affecting the enforcement of creditors' rights in
general
and except as such enforceability may be limited by general
principles
of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the
Depositor
to the
Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor
had good
and marketable title to each Mortgage Loan (insofar as such
title
was
conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge
or
other
encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right,
title interest in the Mortgage Loans to the Trustee on behalf
of
the
Trust;
(iv) The Depositor has not transferred the Mortgage Loans to
the
Trustee on
behalf of the Trust with any intent to hinder, delay or defraud
any of its
creditors;
(v) The Depositor has been duly incorporated and is validly
existing
as a
corporation in good standing under the laws of the State of
Delaware,
with full
corporate power and authority to own its assets and conduct its
business
as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of
any
material obligation, agreement, covenant or condition contained in
any
contract,
indenture, mortgage, loan agreement, note, lease or other
instrument
to which the Depositor is a party or by which it or its
properties
may be bound, which default might result in any material
adverse
changes in the financial condition, earnings, affairs or
business
of the
Depositor or which might materially and adversely affect the
properties
or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement
by
the
Depositor, and the consummation of the transactions
contemplated
thereby,
do not and will not result in a material breach or violation of
any of the
terms or provisions of, or, to the knowledge of the Depositor,
constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement
or other agreement or instrument to which the Depositor is a
party or
by which the Depositor is bound or to which any of the property
or assets
of the Depositor is subject, nor will such actions result in
any
violation
of the provisions of the certificate of incorporation or
by-laws
of the
Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or
regulation of
any court
or governmental agency or body having jurisdiction over the
Depositor
or any of its properties or assets (except for such conflicts,
breaches,
violations and defaults as would not have a material adverse
effect on
the ability of the Depositor to perform its obligations under
this
Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order,
registration or qualification of or with any court or governmental
agency
or body of
the United States or any other jurisdiction is required for the
issuance
of the Certificates, or the consummation by the Depositor of
the
other
transactions contemplated by this Agreement, except such
consents,
approvals,
authorizations, registrations or qualifications as (a) may be
required
under State securities or Blue Sky laws, (b) have been
previously
obtained
or (c) the failure of which to obtain would not have a material
adverse
effect on the performance by the Depositor of its obligations
under, or
the validity or enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations
pending
before or,
to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a
party
or of
which any of its properties is the subject: (a) which if
determined
adversely
to the Depositor would have a material adverse effect on the
business,
results of operations or financial condition of the Depositor;
(b)
asserting the invalidity of this Agreement or the Certificates;
(c)
seeking to
prevent the issuance of the Certificates or the consummation by
the
Depositor of any of the transactions contemplated by this
Agreement,
as the
case may be; (d) which might materially and adversely affect
the
performance by the Depositor of its obligations under, or the
validity or
enforceability of, this Agreement.
Section 2.07 Issuance of Certificates and the Uncertificated
Regular
Interests.
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
Sections 2.01 and 2.02, and the Trustee
acknowledges the assignment to it of all
other assets included in the Trust Fund,
receipt of which is hereby
acknowledged. Concurrently with such
assignment and delivery and in exchange
therefor, the Trustee, pursuant to the
Written Order to Authenticate executed by
an officer of the Depositor, has executed,
and the Certificate Registrar has
authenticated and delivered to or upon the
order of the Depositor, the
Certificates (other than the Class CE,
Class P and Class R Certificates) in
minimum dollar denominations of $25,000 and
integral dollar multiples of $1 in
excess. The Class CE and Class P
Certificates are issuable only in minimum
Percentage Interests of 10%. The Class R
Certificate is issuable only as a
single certificate. The Trustee
acknowledges the issuance of the uncertificated
REMIC 1 Regular Interests and declares that
it hold such regular interests as
assets of REMIC 2. The Trustee acknowledges
the obligation of the Class CE
Certificates to pay Cap Carryover Amounts,
and declares that it hold the same as
assets of the Grantor Trust on behalf of
the Holders of the Class A-1, Class
A-2A, Class A-2B, Class A-2C, Class A-2D,
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
M-11, Class B-1 and Class B-2 Certificates,
respectively, which shall be treated
as beneficially owning the right to receive
the Cap Carryover Amounts from the
Grantor Trust. In addition to the assets
described in the preceding sentence,
the assets of the Grantor Trust shall also
include (i) Prepayment Charges, any
Originator Prepayment Charge Payment
Amounts, any Servicer Prepayment Charge
Payment Amounts and the beneficial interest
of the Class P Certificates with
respect thereto and (ii) the Yield
Maintenance Agreements, the Reserve Accounts
and the beneficial interest of the Class CE
Certificates with respect thereto,
subject to the obligation to pay Cap
Carryover Amounts. The interests evidenced
by the Certificates constitute the entire
beneficial ownership interest in the
Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service
and
administer the Mortgage Loans in accordance
with this Agreement and the normal
and usual standards of practice of prudent
mortgage servicers servicing similar
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 shall have full power and
authority, acting alone, to do or cause
to be done any and all things in connection
with such servicing and
administration which the Servicer may deem
necessary or desirable and consistent
with the terms of this Agreement (the
"Servicing Standard").
Consistent with the terms of this Agreement, the Servicer may
waive,
modify or vary any term of any Mortgage
Loan or consent to the postponement of
strict compliance with any such term or in
any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable
and prudent determination such waiver,
modification, postponement or indulgence is
not materially adverse to the
Certificateholders; provided, however, that
the Servicer shall not make future
advances and, except as set forth in the
following sentence or Section 3.03, the
Servicer shall not permit any modification
with respect to any Mortgage Loan
that would (i) change the Mortgage Interest
Rate, defer or forgive the payment
thereof of any principal or interest
payments, reduce the outstanding principal
amount (except for actual payments of
principal) or extend the final maturity
date with respect to such Mortgage Loan,
(ii) affect adversely the status of any
REMIC constituting part of the Trust Fund
as a REMIC or (iii) cause any such
REMIC to be subject to a tax on "prohibited
transactions" or "contributions"
pursuant to the REMIC Provisions. In the
event that the Mortgagor is in default
with respect to the Mortgage Loan or such
default is, in the judgment of the
Servicer, reasonably foreseeable, the
Servicer may permit a modification of such
Mortgage Loan to reduce the Principal
Balance thereof and/or extend the term,
but not beyond the latest maturity date of
any other Mortgage Loan.
Notwithstanding the foregoing, the Servicer
shall not permit any modification
with respect to any Mortgage Loan that
would both (x) effect an exchange or
reissuance of such Mortgage Loan under
Section 1.860G-2(b) of the Treasury
Regulations and (y) cause any REMIC
constituting part of the Trust Fund to fail
to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited
transactions" or "contributions" after the
Startup Day under the REMIC
Provisions. The NIMS Insurer's prior
written consent shall be required for any
modification, waiver or amendment if the
aggregate number of outstanding
Mortgage Loans which have been modified,
waived or amended exceeds 5% of the
number of Mortgage Loans as of the Cut-off
Date. Without limiting the generality
of the foregoing, the Servicer shall
continue, and is hereby authorized and
empowered to execute and deliver on behalf
of itself, and the Trustee, all
instruments of satisfaction or
cancellation, or of partial or full release,
discharge and all other comparable
instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged
Property. The Servicer shall make all
required Servicing Advances and shall
service and administer the Mortgage Loans
in accordance with Applicable Regulations,
and shall provide to the Mortgagor
any reports required to be provided to them
thereby. The Trustee shall execute
and deliver to the Servicer within at least
fifteen (15) Business Day of
receipt, upon request, any powers of
attorney furnished to it by the Servicer
empowering the Servicer to execute and
deliver instruments of satisfaction or
cancellation, or of partial or full release
or discharge, and to foreclose upon
or otherwise liquidate any Mortgaged
Property, and to appeal, prosecute or
defend in any court action relating to the
Mortgage Loans or the Mortgaged
Properties, in accordance with this
Agreement, and the Trustee shall execute and
deliver such other documents as the
Servicer may request, necessary or
appropriate to enable the Servicer to
service and administer the Mortgage Loans
and carry out its duties hereunder, in each
case in accordance with Servicing
Standard (and the Trustee shall have no
liability for misuse of any such powers
of attorney by the Servicer).
Notwithstanding anything contained herein to the
contrary, the Servicer shall not without
the Trustee's written consent: (i)
initiate any action, suit or proceeding
solely under the Trustee's name without
indicating the Servicer's representative
capacity or (ii) take any action with
the intent to cause, and which results in,
the Trustee being registered to do
business in any state.
In servicing and administering the Mortgage Loans, the Servicer
shall employ procedures including
collection procedures and exercise the same
care that it customarily employs and
exercises in servicing and administering
mortgage loans for its own account giving
due consideration to accepted mortgage
servicing practices of prudent lending
institutions and the Certificateholders'
reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any
action,
of which the Servicer has actual knowledge,
to (i) assert a claim against the
Trust Fund or (ii) assert jurisdiction over
the Trust Fund.
Notwithstanding anything in this Agreement to the contrary, in
the
event of a voluntary Principal Prepayment
of a Mortgage Loan, the Servicer may
not waive any Prepayment Charge or portion
thereof required by the terms of the
related Mortgage Note unless (i)(a) the
Servicer determines that such waiver is
standard and customary in servicing similar
mortgage loans, (b) such waiver
relates to a default or a reasonably
foreseeable default and (c) would, in the
reasonable judgment of the Servicer,
maximize recovery of Liquidation Proceeds
for such Mortgage Loan, taking into account
the value of such Prepayment Charge,
or (ii) the enforceability thereof is
limited (1) by bankruptcy, insolvency,
moratorium, receivership, or other similar
law relating to creditors' rights
generally or (2) due to acceleration in
connection with a foreclosure or other
involuntary payment, or (iii) the
collection of such Prepayment Charge would be
in violation of applicable law or the terms
of the related Mortgage Note.
If a Prepayment Charge is waived as permitted by meeting the
standard described in clause (iii) of the
immediately preceding paragraph, then
the Servicer shall use commercially
reasonable efforts to determine whether an
Originator is obligated to pay a related
Originator Prepayment Charge Payment
Amount based on whether the representations
and warranties of the applicable
Originator as set forth on Exhibit Q hereto
are breached and such breach
materially and adversely affects the
interests of the Certificateholders and, if
the Servicer determines that such
Originator Prepayment Charge Payment Amount is
due, the Servicer shall promptly notify
such Originator, and the Servicer shall
enforce such Originator's obligations to
pay in a timely manner any Originator
Prepayment Charge Payment Amounts and, to
the extent that such amounts are
received by the Servicer, shall cause such
amounts to be deposited into the
Collection Account within one Business Day
of receipt. To the extent the related
Originator fails to remit the Originator
Prepayment Charge Amount, the Servicer
shall notify the Depositor and the Trustee
of such failure.
If the Servicer has waived or does not collect all or a portion of
a
Prepayment Charge relating to a voluntary
Principal Prepayment due to any action
or omission of the Servicer, other than as
provided in the two paragraphs above,
the Servicer shall, on the date on which
the Principal Prepayment is remitted to
the Trustee, deliver to the Trustee the
Servicer Prepayment Charge Amount with
respect to such Mortgage Loan for
distribution in accordance with the terms of
this Agreement.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and
interest
on all Mortgage Loans are paid in full or
as long as the Mortgage Loan remains
subject to this Agreement, the Servicer
will diligently collect all payments due
under each Mortgage Loan when the same
shall become due and payable and shall,
to the extent such procedures shall be
consistent with this Agreement and
Applicable Regulations, follow such
collection procedures as it follows with
respect to mortgage loans comparable to the
Mortgage Loans and held for its own
account. Further, the Servicer will take
special care in ascertaining and
estimating on escrowed Mortgage Loans
annual ground rents, taxes, assessments,
water rates, fire and hazard insurance
premiums, mortgage insurance premiums,
and all other charges that, as provided in
the Mortgage, will become due and
payable to that end that the installments
payable by the Mortgagors will be
sufficient to pay such charges as and when
they become due and payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Mortgage Loan is
not
paid when the same becomes due and payable,
or in the event the Mortgagor fails
to perform any other covenant or obligation
under the Mortgage Loan and such
failure continues beyond any applicable
grace period, the Servicer shall take
such action as it shall deem to be in the
best interest of the
Certificateholders. With respect to any
defaulted Mortgage Loan, the Servicer
shall have the right to review the status
of the related forbearance plan and,
subject to the second paragraph of Section
3.01, may modify such forbearance
plan; including extending the Mortgage Loan
repayment date for a period of one
year or reducing the Mortgage Interest Rate
up to 50 basis points.
In connection with a foreclosure or other conversion, the
Servicer
shall exercise such rights and powers
vested in it hereunder and use the same
degree of care and skill in its exercise as
prudent mortgage servicers would
exercise or use under the circumstances in
the conduct of their own affairs and
consistent with Applicable Regulations and
the Servicing Standards, including,
without limitation, advancing funds for the
payment of taxes and insurance
premiums.
Notwithstanding the foregoing provisions of this Section 3.03,
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 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
Trust 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 received the prior written consent of
the NIMS Insurer and has received a
prudent report prepared by a Person who
regularly conducts environmental audits
using customary industry standards,
that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it
would be in the best economic interest of
the Certificateholders to take such actions
as are necessary to bring the
Mortgaged Property into compliance
therewith; and
B. 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 Certificateholders to take such
actions with respect to the affected
Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.03 shall be advanced by the
Servicer, subject to the Servicer's right
to be reimbursed therefor from the
Collection Account as provided in Section
3.05(iv).
If the Servicer determines, as described above, that it is in
the
best economic interest of the
Certificateholders 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
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 Certificateholders. The
cost of any such compliance,
containment, clean-up or remediation shall
be advanced by the Servicer, subject
to the Servicer's right to be reimbursed
therefor from the Collection Account as
provided in Section 3.05.
Section 3.04 Collection Account, Distribution Account and
Reserve
Accounts.
(a) The Servicer shall segregate and hold all funds collected
and
received pursuant to each Mortgage Loan
separate and apart from any of its own
funds and general assets and shall
establish and maintain one or more Collection
Accounts. Each Collection Account shall be
an Eligible Account.
The Servicer shall deposit or cause to be deposited on a daily
basis
and in no event more than one Business Day
after receipt thereof in the clearing
account (which must be an Eligible Account)
in which it customarily deposits
payments and collections on mortgage loans
in connection with its mortgage loan
servicing activities, and shall thereafter
deposit in the Collection Account, in
no event more than one Business Day after
deposit of such funds in the clearing
account, and retain therein, the following
payments and collections received or
made by it after the Cut-off Date with
respect to the Mortgage Loans (other than
in respect of principal and interest due on
or before the Cut-off Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted
to the Mortgage Interest Rate less the Servicing Fee Rate;
(iii) all Liquidation Proceeds and any Subsequent Recoveries;
(iv) all Insurance Proceeds including amounts required to be
deposited
pursuant to Section 3.10, other than proceeds to be held in the
Escrow
Account and applied to the restoration or repair of the
Mortgaged
Property
or released to the Mortgagor in accordance with the Servicer's
normal
servicing procedures, the loan documents or applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property
which
are not
released to the Mortgagor in accordance with the Servicer's
normal
servicing
procedures, the loan documents or applicable law;
(vi) any amounts required to be deposited by the Servicer in
connection
with any REO Property pursuant to Section 3.13;
(vii) all Prepayment Charges collected by the Servicer in
connection
with the
voluntary Principal Prepayment in full of any Mortgage Loan,
all
Originator
Prepayment Charge Payment Amounts paid by the related
Originator
and all Servicer Prepayment Charge Payment Amounts required to
be paid by
the Servicer pursuant to Section 3.01 in connection with any
such
Principal Prepayment; and
(viii) all amounts required to be deposited by the Servicer
pursuant
to Section
2.03.
Any interest paid on funds deposited in the Collection Account,
subject to Section 3.25, shall accrue to
the benefit of the Servicer and the
Servicer shall be entitled to retain and
withdraw such interest from the
Collection Account pursuant to Section
3.05(vi). The foregoing requirements for
deposit from the Collection Account shall
be exclusive, it being understood and
agreed that, without limiting the
generality of the foregoing, payments in the
nature of late payment charges, bad check
fees, prepayment charges that are not
Prepayment Charges, Originator Prepayment
Charge Payment Amounts or Servicer
Prepayment Charge Payment Amounts,
assumption fees and other similar fees need</
