<PAGE>
Exhibit 4.1
EXECUTION COPY
MERRILL LYNCH MORTGAGE INVESTORS, INC.
Depositor
WELLS FARGO BANK, N.A.
Trustee
and
WILSHIRE CREDIT CORPORATION,
Servicer
----------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2005
----------
MERRILL LYNCH MORTGAGE INVESTORS TRUST,
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2005-SD1
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS....................................................
1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES.. 36
SECTION 2.01. Conveyance of Mortgage
Loans......................... 36
SECTION 2.02. Acceptance by the
Trustee of the Mortgage Loans...... 40
SECTION 2.03. Representations,
Warranties and Covenants of the
Depositor............................................ 41
SECTION 2.04. Representations and
Warranties of the Servicer....... 45
SECTION 2.05. Substitutions and
Repurchases of Mortgage Loans which
are not "Qualified Mortgages."....................... 46
SECTION 2.06. Authentication and
Delivery of Certificates.......... 46
SECTION 2.07. REMIC
Elections...................................... 46
SECTION 2.08.
[RESERVED]........................................... 49
SECTION 2.09. Covenants of the
Servicer............................ 50
SECTION 2.10.
[RESERVED]........................................... 50
SECTION 2.11. Permitted Activities
of the Trust.................... 50
SECTION 2.12. Qualifying Special
Purpose Entity.................... 50
ARTICLE III ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS............... 50
SECTION 3.01. Servicer to Service
Mortgage Loans................... 50
SECTION 3.02. Servicing and
Subservicing; Enforcement of the
Obligations of Servicer.............................. 52
SECTION 3.03. Rights of the
Depositor and the Trustee in Respect of
the Servicer......................................... 53
SECTION 3.04. Trustee to Act as
Servicer........................... 53
SECTION 3.05. Collection of Mortgage
Loan Payments; Collection
Account; Certificate Account......................... 53
SECTION 3.06. Collection of Taxes,
Assessments and Similar Items;
Escrow Accounts...................................... 57
SECTION 3.07. Access to Certain
Documentation and Information
Regarding the Mortgage Loans......................... 57
SECTION 3.08. Permitted Withdrawals
from the Collection Account and
Certificate Account.................................. 58
SECTION 3.09. Advance Reserve
Account.............................. 60
SECTION 3.10. Maintenance of Hazard
Insurance...................... 61
SECTION 3.11. Enforcement of
Due-On-Sale Clauses; Assumption
Agreements........................................... 62
SECTION 3.12. Realization Upon
Defaulted Mortgage Loans;
Determination of Excess Proceeds..................... 63
SECTION 3.13. Trustee to Cooperate;
Release of Mortgage Files...... 66
SECTION 3.14. Documents, Records and
Funds in Possession of
Servicer to be Held for the Trustee.................. 67
SECTION 3.15. Servicing
Compensation............................... 67
SECTION 3.16. Access to Certain
Documentation...................... 68
SECTION 3.17. Annual Statement as to
Compliance.................... 68
SECTION 3.18. Annual Independent
Public Accountants' Servicing
Statement; Financial Statements...................... 68
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SECTION 3.19. Rights of the NIMs
Insurer........................... 69
SECTION 3.20. Periodic
Filings..................................... 69
SECTION 3.21. Annual Certificate by
Trustee........................ 70
SECTION 3.22. Annual Certificate by
Servicer....................... 70
SECTION 3.23. Prepayment Charge
Reporting Requirements............. 71
SECTION 3.24. Statements to
Trustee................................ 71
SECTION 3.25.
Indemnification...................................... 71
SECTION 3.26.
Nonsolicitation...................................... 72
SECTION 3.27.
[Reserved]........................................... 72
SECTION 3.28. High Cost Mortgage
Loans............................. 72
ARTICLE IV
DISTRIBUTIONS.................................................
72
SECTION 4.01.
Advances............................................. 72
SECTION 4.02. Reduction of Servicing
Compensation in Connection
with Prepayment Interest Shortfalls.................. 74
SECTION 4.03. Distributions on the
REMIC Interests................. 74
SECTION 4.04.
Distributions........................................ 74
SECTION 4.05. Monthly Statements to
Certificateholders............. 79
ARTICLE V THE
CERTIFICATES...............................................
82
SECTION 5.01. The
Certificates..................................... 82
SECTION 5.02. Certificate Register;
Registration of Transfer and
Exchange of Certificates............................. 83
SECTION 5.03. Mutilated, Destroyed,
Lost or Stolen Certificates... 90
SECTION 5.04. Persons Deemed
Owners............................... 91
SECTION 5.05. Access to List of
Certificateholders' Names and
Addresses............................................ 91
SECTION 5.06. Book-Entry
Certificates.............................. 91
SECTION 5.07. Notices to
Depository................................ 92
SECTION 5.08. Definitive
Certificates.............................. 92
SECTION 5.09. Maintenance of Office
or Agency...................... 93
ARTICLE VI THE DEPOSITOR AND THE
SERVICER................................ 93
SECTION 6.01. Respective Liabilities
of the Depositor and the
Servicer............................................. 93
SECTION 6.02. Merger or
Consolidation of the Depositor or the
Servicer............................................. 93
SECTION 6.03. Limitation on
Liability of the Depositor, the
Servicer and Others.................................. 93
SECTION 6.04. Limitation on
Resignation of Servicer................ 94
SECTION 6.05. Errors and Omissions
Insurance; Fidelity Bonds....... 94
ARTICLE VII DEFAULT; TERMINATION OF
SERVICER............................. 95
SECTION 7.01. Events of
Default.................................... 95
SECTION 7.02. Trustee to Act;
Appointment of Successor............. 96
SECTION 7.03. Notification to
Certificateholders................... 97
ARTICLE VIII CONCERNING THE TRUSTEE
..................................... 97
SECTION 8.01. Duties of the
Trustee................................ 97
SECTION 8.02. Certain Matters
Affecting the Trustee................ 98
SECTION 8.03. Trustee Not Liable for
Mortgage Loans................ 100
SECTION 8.04. Trustee May Own
Certificates......................... 100
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SECTION 8.05. Trustee's Fees and
Expenses.......................... 100
SECTION 8.06. Indemnification of
Trustee........................... 100
SECTION 8.07. Eligibility
Requirements for Trustee................. 101
SECTION 8.08. Resignation and
Removal of Trustee................... 101
SECTION 8.09. Successor
Trustee.................................... 102
SECTION 8.10. Merger or
Consolidation of Trustee................... 102
SECTION 8.11. Appointment of
Co-Trustee or Separate Trustee........ 103
SECTION 8.12. Tax
Matters.......................................... 104
ARTICLE IX
TERMINATION...................................................
106
SECTION 9.01. Termination upon
Liquidation or Repurchase of all
Mortgage Loans....................................... 106
SECTION 9.02. Final Distribution on
the Certificates............... 107
SECTION 9.03. Additional Termination
Requirements.................. 108
ARTICLE X MISCELLANEOUS
PROVISIONS....................................... 109
SECTION 10.01.
Amendment............................................ 109
SECTION 10.02.
Counterparts......................................... 111
SECTION 10.03. Governing
Law........................................ 111
SECTION 10.04. Intention of
Parties................................. 111
SECTION 10.05.
Notices.............................................. 111
SECTION 10.06. Severability of
Provisions........................... 112
SECTION 10.07.
Assignment........................................... 113
SECTION 10.08. Limitation on Rights of
Certificateholders........... 114
SECTION 10.09. Inspection and Audit
Rights.......................... 114
SECTION 10.10. Certificates Nonassessable
and Fully Paid............ 115
SECTION 10.11. Third Party
Rights................................... 115
SECTION 10.12. Additional Rights of the
NIMs Insurer................ 115
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EXHIBIT A FORMS OF
CERTIFICATES
EXHIBIT B MORTGAGE LOAN
SCHEDULE
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE
CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER
AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S
AFFIDAVIT
EXHIBIT F FORM OF
TRANSFEROR CERTIFICATE
EXHIBIT G FORM OF
INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H FORM OF RULE
144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I FORM OF REQUEST FOR RELEASE
EXHIBIT J [RESERVED]
EXHIBIT K FORM OF
OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L FORM OF
OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M [RESERVED]
EXHIBIT N-1 FORM OF CLASS A-1 CAP
CONTRACT
EXHIBIT N-2 FORM OF SUBORDINATED
CERTIFICATE CAP CONTRACT
EXHIBIT O-1 ONE-MONTH LIBOR CAP TABLE -
CLASS A-1 CAP CONTRACT
EXHIBIT O-2 ONE MONTH LIBOR CAP TABLE -
SUBORDINATED CERTIFICATE CAP CONTRACT
EXHIBIT P FORM OF
TRANSFEROR REPRESENTATION LETTER
FOR TRANSFER TO REGULATION S BOOK-ENTRY CERTIFICATE
FROM A HOLDER OF A RULE 144A BOOK-ENTRY CERTIFICATE OR
DEFINITIVE CERTIFICATE
EXHIBIT Q FORM OF
TRANSFEROR REPRESENTATION LETTER
FOR TRANSFER PURSUANT TO RULE 144A FROM A HOLDER OF
A REGULATION S BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE
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<PAGE>
POOLING AND
SERVICING AGREEMENT (the "Agreement"), dated as of September 1,
2005, among MERRILL LYNCH MORTGAGE
INVESTORS, INC., a Delaware corporation, as
depositor (the "Depositor"), WELLS FARGO
BANK, N.A, a national banking
association, as trustee (the "Trustee") and
WILSHIRE CREDIT CORPORATION, a
Nevada corporation, as servicer (the
"Servicer").
The Depositor is
the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The
Trust Fund for federal income tax
purposes will consist of (i) two real
estate mortgage investment conduits, (ii)
the right to receive payments distributable
to the Class P Certificates pursuant
to Section 4.04(b)(i) hereof, (iii) each
Cap Contract and the Cap Contract
Account, (iv) the right to receive payments
in respect of P&I Arrearages (v) the
Advance Reserve Account and (vi) the
grantor trusts described in Section 2.07
hereof. The Lower Tier REMIC will consist
of all of the assets constituting the
Trust Fund (other than the assets described
in clauses (ii), (iii), (iv) and (v)
above and the Lower Tier REMIC Regular
Interests) and will be evidenced by the
Lower Tier REMIC Regular Interests (which
will be uncertificated and will
represent the "regular interests" in the
Lower Tier REMIC) and the Class LTR
Interest as the single "residual interest"
in the Lower Tier REMIC. The Trustee
will hold the Lower Tier REMIC Regular
Interests. The Upper Tier REMIC will
consist of the Lower Tier REMIC Regular
Interests and will be evidenced by the
REMIC Regular Interests (which will
represent the "regular interests" in the
Upper Tier REMIC) and the Residual Interest
as the single "residual interest" in
the Upper Tier REMIC. The Class R
Certificate will represent beneficial
ownership of the Class LTR Interest and the
Residual Interest. The "latest
possible maturity date" for federal income
tax purposes of all interests created
hereby will be the Latest Possible Maturity
Date.
All covenants
and agreements made by the Seller in the Sale Agreement and
by the Depositor and the Trustee herein
with respect to the Mortgage Loans and
the other property constituting the Trust
Fund are for the benefit of the
Holders from time to time of the
Certificates and, to the extent provided
herein, the NIMs Insurer.
In consideration
of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Whenever used in
this Agreement, the following words and phrases, unless
the context otherwise requires, shall have
the following meanings:
Accepted
Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage
servicing practices of prudent mortgage
lending institutions that service for their
own account mortgage loans of the
same type as the Mortgages Loans in the
jurisdictions in which the related
Mortgaged Properties (or Underlying
Mortgaged Properties in the case of Co-op
Loans) are located.
Accrual Period:
With respect to each Class of LIBOR Certificates and the
Lower Tier REMIC Interests and any
Distribution Date, the period commencing on
the immediately preceding Distribution Date
(or, in the case of the first
Distribution Date, the Closing Date) and
ending on the day immediately preceding
such Distribution Date and with respect to
each Class of Class A-2 and Class B-2
Certificates and any Distribution Date, the
calendar month immediately preceding
the month in which such Distribution Date
occurs. All calculations of interest
on each Class of LIBOR Certificates and the
Lower Tier REMIC Interests will be
made on the basis of the actual number of
days elapsed in the related
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Accrual Period and a 360 day year and all
calculations of interest on each Class
of Class A-2 and Class B-2 Certificates
will be made on a the basis of a 360 day
year consisting of twelve 30-day
months.
Adjustable Rate
Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate
which is adjustable.
Adjustment Date:
As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject
to adjustment, as provided in the
related Mortgage Note.
Advance: The
aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date
pursuant to Section 4.01, the amount of
any such advances being equal to the sum of
the aggregate amount of all payments
of principal and interest (net of the
Servicing Fee) on the Mortgage Loans that
were due during the applicable Due Period
and not received as of the close of
business on the related Determination Date
(other than the principal portion of
any Balloon Amount), less the aggregate
amount of any such Delinquent payments
that the Servicer has determined would
constitute a Non-Recoverable Advance were
an advance to be made with respect thereto;
provided, however, that with respect
to any Mortgage Loan which is not a first
lien Mortgage Loan that is 150 days
delinquent or more (whether or not the
Mortgage Loan has been converted to an
REO Property), there will be no obligation
to make advances and, provided
further, however, that with respect to any
Mortgage Loan that has been converted
to an REO Property which is less than 150
days delinquent, the obligation to
make Advances shall only be to payments of
interest. There shall be no
obligation of the Servicer to make any
advances with respect to payments due,
but not received, on or prior to the
Cut-off Date.
Advance
Facility: A financing or other facility as described in Section
10.07.
Advance Reserve
Account: The separate Eligible Account created and
maintained by the Trustee pursuant to
Section 3.09(a) in the name of the Trustee
and designated "Wells Fargo Bank, N.A., as
trustee, in trust for the Servicer of
Merrill Lynch Mortgage Investors Trust,
Mortgage Loan Asset-Backed Certificates,
Series 2005-SD1." Funds in the Advance
Reserve Account shall be held in trust
for the uses and purposes set forth in this
Agreement.
Advancing
Person: The Person to whom the Servicer's rights under this
Agreement to be reimbursed for any Advances
or Servicing Advances have been
assigned pursuant to Section 10.07.
Affiliate: With
respect to any specified Person, any other Person
controlling, controlled by or under common
control with such Person. For the
purposes of this definition, "control"
means the power to direct the management
and policies of a Person, directly or
indirectly, whether through ownership of
voting securities, by contract or
otherwise; and the terms "controlling" and
"controlled" have meanings correlative to
the foregoing.
Aggregate
Certificate Principal Balance: For any date of determination,
the
sum of the Class A-1 Certificate Principal
Balance, the Class A-2 Certificate
Principal Balance, the Class R Certificate
Principal Balance, the Class M-1
Certificate Principal Balance, the Class
M-2 Certificate Principal Balance, the
Class B-1 Certificate Principal Balance and
the Class B-2 Certificate Principal
Balance, in each case as of such date of
determination.
Agreement: This
Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance
with the terms herein.
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Applied Realized
Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the sum of (i)
the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate
Principal Balance after distributions
of principal on such Distribution Date
exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such
Distribution Date.
Appraised Value:
With respect to a Mortgage Loan the proceeds of which were
used to purchase the related Mortgaged
Property (or the related residential
dwelling unit in the Underlying Mortgaged
Property in the case of a Co-op Loan),
the "Appraised Value" of a Mortgaged
Property (or the related residential
dwelling unit in the Underlying Mortgaged
Property in the case of a Co-op Loan)
is the lesser of (1) the appraised value
based on an appraisal made for the
Seller by an independent fee appraiser at
the time of the origination of the
related Mortgage Loan, and (2) the sales
price of such Mortgaged Property (or
the related residential dwelling unit in
the Underlying Mortgaged Property in
the case of a Co-op Loan) at such time of
origination. With respect to a
Mortgage Loan the proceeds of which were
used to refinance an existing mortgage
loan, the "Appraised Value" is the
appraised value of the Mortgaged Property (or
the related residential dwelling unit in
the Underlying Mortgaged Property in
the case of a Co-op Loan) based upon the
appraisal obtained at the time of
refinancing.
Arrearages:
P&I Arrearages and Servicing Arrearages. For the avoidance
of
doubt, amounts collected from any Mortgagor
shall be applied to principal and
interest prior to being applied to
Servicing Arrearages, amounts collected in
respect of P&I Arrearages shall be paid
to the Trust Fund and amounts collected
in respect of Servicing Arrearages shall be
paid to the Depositor by the
Servicer.
Assignment of
Mortgage: An assignment of the Mortgage, notice of transfer
(or UCC-3 assignment (or equivalent
instrument) with respect to each Co-op Loan)
or equivalent instrument, in recordable
form (except in the case of a Co-op
Loan) (except for the name of the assignee
if such Mortgage Loan is endorsed in
blank), sufficient under the laws of the
jurisdiction where the related
Mortgaged Property (or Underlying Mortgaged
Property, in the case of a Co-op
Loan) is located to reflect of record the
sale and assignment of the Mortgage
Loan to the Trustee, which assignment,
notice of transfer or equivalent
instrument may, if permitted by law, be in
the form of one or more blanket
assignments covering Mortgages secured by
Mortgaged Properties located in the
same county.
Auction: The
one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.
Auction Date:
The date on which the Auction occurs.
Available Funds
Cap: With respect to any Distribution Date and the LIBOR
Certificates, the per annum rate equal to
12 times the quotient of (x) the total
scheduled interest on the Mortgage Loans
based on the Net Mortgage Rates in
effect on the related Due Date, divided by
(y) the Aggregate Certificate
Principal Balance for such Distribution
Date, multiplied by 30 and divided by
the actual number of days in the related
Accrual Period; and with respect to any
Distribution Date and the Class A-2 and
Class B-2 Certificates, the per annum
rate equal to 12 times the quotient of (x)
the total scheduled interest on the
Mortgage Loans based on the Net Mortgage
Rates in effect on the related Due
Date, divided by (y) the Aggregate
Certificate Principal Balance for such
Distribution Date.
Balloon Loan: A
Mortgage Loan having an original term to stated maturity of
approximately 15 years which provides for
level monthly payments of principal
and interest based on a 30-year
amortization schedule, with a balloon payment of
the remaining outstanding principal balance
due on such Mortgage Loan at its
stated maturity.
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
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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 5.06).
As of the Closing Date, each of the Class A
(other than the Class R
Certificate), Class M and Class B
Certificates constitutes a Class of Book-Entry
Certificates.
Business Day:
Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State
of California, State of Maryland,
State of Minnesota, State of Oregon and in
the City of New York, New York are
authorized or obligated by law or executive
order to be closed.
Cap Contract:
Either of the Class A-1 Cap Contract or the Subordinated
Certificate Cap Contract.
Cap Contract
Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section
4.04(k)(i) in the name of the Trustee for the
benefit of the Trust Fund and designated
"Wells Fargo Bank, N.A., as Trustee, as
trustee, in trust for registered holders of
Merrill Lynch Mortgage Investors
Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-SD1." Funds in the
Cap Contract Account shall be held in trust
for the Trust Fund for the uses and
purposes set forth in this Agreement.
Cap Contract
Counterparty: The Royal Bank of Scotland plc.
Cap Contract
Notional Balance: Either of the Class A-1 Cap Contract
Notional Balance or the Subordinated
Certificate Cap Contract Notional Balance.
Cap Contract
Termination Date: Either of the Class A-1 Cap Contract
Termination Date or the Subordinated
Certificate Cap Contract Termination Date.
Certificate: Any
one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in
substantially the forms attached
hereto as Exhibits A.
Certificate
Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(e)
in the name of the Trustee for the
benefit of the Certificateholders and
designated "Wells Fargo Bank, N.A., as
trustee, in trust for registered holders of
Merrill Lynch Mortgage Investors
Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-SD1." Funds in the
Certificate Account shall be held in trust
for the Certificateholders for the
uses and purposes set forth in this
Agreement.
Certificate
Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such
Book-Entry Certificate.
Certificate
Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate
Principal Balance of such Certificate
less the sum of (1) all amounts distributed
with respect to such Certificate in
reduction of the Certificate Principal
Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any
Applied Realized Loss Amounts
allocated to such Certificate on previous
Distribution Dates pursuant to Section
4.04(i). On each Distribution Date, after
all distributions of principal on such
Distribution Date, a portion of the Class C
Interest Carry Forward Amount in an
amount equal to the excess of the
Overcollateralization Amount on such
Distribution Date over the
Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the
first Distribution Date, the initial
Overcollateralization Amount (based on the
Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date))
will be added to the aggregate
Certificate Principal Balance of the Class
C Certificates (on a pro rata basis).
Notwithstanding the immediately preceding
sentence, however, to the extent any
excess referred to in the immediately
preceding sentence is attributable to
distributions of P&I Arrearages, such
sentence shall be applied by substituting
"Class C Unpaid Realized
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Loss Amount" for "Class C Interest Carry
Forward Amount". Notwithstanding the
foregoing on any Distribution Date relating
to a Due Period in which a
Subsequent Recovery has been received by
the Servicer, the Certificate Principal
Balance of any Class of Certificates then
outstanding for which any Applied
Realized Loss Amount has been allocated
will be increased, in order of
seniority, by an amount equal to the lesser
of (i) the Unpaid Realized Loss
Amount for such Class of Certificates and
(ii) the total of any Subsequent
Recovery distributed on such date to the
Certificateholders (reduced by the
amount of the increase in the Certificate
Principal Balance of any more senior
Class of Certificates pursuant to this
sentence on such Distribution Date).
Certificate
Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate
is
registered in the Certificate Register
(initially, Cede & Co., as nominee for
the Depository) in the case of any Class of
Regular Certificates or the Class R
Certificate, except that solely for the
purpose of giving any consent pursuant
to this Agreement, any Certificate
registered in the name of the Depositor or
any Affiliate of the Depositor shall be
deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall
not be taken into account in
determining whether the requisite amount of
Percentage Interests necessary to
effect such consent has been obtained;
provided, however, that if any such
Person (including the Depositor) owns 100%
of the Percentage Interests evidenced
by a Class of Certificates, such
Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that
requires the consent of the Holders of
Certificates of a particular Class as a
condition to the taking of any action
hereunder. The NIMs Insurer and the Trustee
are entitled to rely conclusively on
a certification of the Depositor or any
Affiliate of the Depositor in
determining which Certificates are
registered in the name of an Affiliate of the
Depositor.
Class: All
Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A
Certificate Principal Balance: For any date of determination,
the
sum of the Class A-1 Certificate Principal
Balance, the Class A-2 Certificate
Principal Balance and the Class R
Certificate Principal Balance.
Class A
Certificates: Any of the Class A-1 Certificates, the Class A-2
Certificates and the Class R
Certificates.
Class A
Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any
Distribution Date on which a Stepdown
Trigger Event exists, 100% of the Principal
Distribution Amount for such
Distribution Date and (2) on or after the
Stepdown Date where a Stepdown Trigger
Event does not exist, the excess of (A) the
Class A Certificate Principal
Balance immediately prior to such
Distribution Date over (B) the lesser of (i)
57.20% of the Stated Principal Balance of
the Mortgage Loans as of the end of
the immediately preceding Due Period and
(ii) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end
of the immediately preceding Due
Period over the Minimum Required
Overcollateralization Amount; provided,
however, that in no event will the Class A
Principal Distribution Amount with
respect to any Distribution Date exceed the
aggregate Certificate Principal
Balance of the Class A Certificates.
Class A-1 Cap
Contract: The amended confirmation and agreement and any
related confirmation thereto, between the
Trust Fund or Trustee and the Cap
Contract Counterparty (in the form of
Exhibit N-1 hereto) for the benefit of the
Class A-1 Certificates.
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Class A-1 Cap
Contract Notional Balance: With respect to any Distribution
Date, the Class A-1 Cap Contract Notional
Balance set forth for such
Distribution Date in the Class A-1
One-Month LIBOR Cap Table attached hereto as
Exhibit O-1.
Class A-1 Cap
Contract Termination Date: The Distribution Date in January
2008.
Class A-1
Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class A-1
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class A-1 Certificates.
Class A-1
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Current
Interest or a Class A-1 Interest Carry
Forward Amount that is recovered as a
voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution
Date to the Class A-1 Certificates.
Class A-1
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
A-1 Certificates with respect to interest
on such prior Distribution Dates and
(2) interest on such excess (to the extent
permitted by applicable law) at the
Class A-1 Pass-Through Rate for the related
Accrual Period.
Class A-1
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.1800%
per annum and, as of any Distribution
Date after the Optional Termination Date,
0.3600% per annum.
Class A-1
Pass-Through Rate: For the first Distribution Date, 4.1600% per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class A-1 Upper
Collar: With respect to each Distribution Date with respect
to which payments are received on the Class
A-1 Cap Contract, a rate equal to
the lesser of One-Month LIBOR and 9.800%
per annum.
Class A-2
Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class A-2
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class A-2 Certificates.
Class A-2
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Current
Interest or a Class A-2 Interest Carry
Forward Amount that is recovered as a
voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution
Date to the Class A-2 Certificates.
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<PAGE>
Class A-2
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
A-2 Certificates with respect to interest
on such prior Distribution Dates and
(2) interest on such excess (to the extent
permitted by applicable law) at the
Class A-2 Pass-Through Rate for the related
Accrual Period.
Class A-2
Pass-Through Rate: As of any Distribution Date, the least of
(1)
5.6658%, (2) the Maximum Rate Cap and (3)
the Available Funds Cap for such
Distribution Date.
Class B
Certificates: Any of the Class B-1 or Class B-2 Certificates.
Class B-1
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class B-1 Certificates.
Class B-1
Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class B-1
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class B-1 Certificates.
Class B-1
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Current
Interest or a Class B-1 Interest Carry
Forward Amount that is recovered as a
voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution
Date to the Class B-1 Certificates.
Class B-1
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
B-1 Certificates with respect to interest
on such prior Distribution Dates and
(2) interest on such excess (to the extent
permitted by applicable law) at the
Class B-1 Pass-Through Rate for the related
Accrual Period.
Class B-1
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the
Certificates, 2.7500% per annum and,
as of any Distribution Date after the
Initial Optional Termination Date, 4.1250%
per annum.
Class B-1
Pass-Through Rate: For the first Distribution Date, 6.7300% per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class B-1
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the Class A
Certificate Principal Balance and the
Class M Certificate Principal Balance have
been reduced to zero and a Stepdown
Trigger Event exists, or as long as a
Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after
taking into account distributions of the
Class A Principal Distribution Amount
on such Distribution Date), (B) the Class
M-1 Certificate Principal Balance
(after taking into account distributions of
the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal
Balance (after taking into account
distributions of the Class M-2 Principal
Distribution Amount on such Distribution
Date) and (D) the Class B-1
-7-
<PAGE>
Certificate Principal Balance immediately
prior to such Distribution Date over
(2) the lesser of (A) 86.70% of the Stated
Principal Balance of the Mortgage
Loans as of the end of the immediately
preceding Due Period and (B) the excess
of the Stated Principal Balance of the
Mortgage Loans as of the end of the
immediately preceding Due Period over the
Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I)
on any Distribution Date prior to the
Stepdown Date on which the Certificate
Principal Balance of each Class of Class
A Certificates and Class M Certificates has
been reduced to zero, the Class B-1
Principal Distribution Amount will equal
the lesser of (x) the outstanding
Certificate Principal Balance of the Class
B-1 Certificates and (y) 100% of the
Principal Distribution Amount remaining
after any distributions on such Class A
Certificates and Class M Certificates and
(II) in no event will the Class B-1
Principal Distribution Amount with respect
to any Distribution Date exceed the
Class B-1 Certificate Principal
Balance.
Class B-1 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class B-1
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class B-2
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class B-2 Certificates.
Class B-2
Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class B-2
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class B-2 Certificates.
Class B-2
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Current
Interest or a Class B-2 Interest Carry
Forward Amount that is recovered as a
voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution
Date to the Class B-2 Certificates.
Class B-2
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
B-2 Certificates with respect to interest
on such prior Distribution Dates and
(2) interest on such excess (to the extent
permitted by applicable law) at the
Class B-2 Pass-Through Rate for the related
Accrual Period.
Class B-2
Pass-Through Rate: As of any Distribution Date, the least of
(1)
5.5000%, (2) the Maximum Rate Cap and (3)
the Available Funds Cap for such
Distribution Date.
Class B-2
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the Class A
Certificate Principal Balance, the
Class M Certificate Principal Balance and
the Class B-1 Certificate Principal
Balance have been reduced to zero and a
Stepdown Trigger Event exists, or as
long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of
(A) the Class A Certificate Principal
Balance (after taking into account
distributions
-8-
<PAGE>
of the Class A Principal Distribution
Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance
(after taking into account distributions
of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance
(after taking into account
distributions of the Class M-2 Principal
Distribution Amount on such
Distribution Date), (D) the Class B-1
Certificate Principal Balance (after
taking into account distributions of the
Class B-1 Principal Distribution Amount
on such Distribution Date) and (E) the
Class B-2 Certificate Principal Balance
immediately prior to such Distribution Date
over (2) the lesser of (A) 94.20% of
the Stated Principal Balance of the
Mortgage Loans as of the end of the
immediately preceding Due Period and (B)
the excess of the Stated Principal
Balance of the Mortgage Loans as of the end
of the immediately preceding Due
Period over the Minimum Required
Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date
prior to the Stepdown Date on which
the Certificate Principal Balance of each
Class of Class A, Class M and Class
B-1 Certificates has been reduced to zero,
the Class B-2 Principal Distribution
Amount will equal the lesser of (x) the
outstanding Certificate Principal
Balance of the Class B-2 Certificates and
(y) 100% of the Principal Distribution
Amount remaining after any distributions on
such Class A, Class M and Class B-1
Certificates and (II) in no event will the
Class B-2 Principal Distribution
Amount with respect to any Distribution
Date exceed the Class B-2 Certificate
Principal Balance.
Class B-2 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class B-2
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class C Applied
Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with
respect to the Mortgage Loans which
have been applied to the reduction of the
Certificate Principal Balance of the
Class C Certificates.
Class C
Certificate: Any Certificate designated as a "Class C
Certificate"
on the face thereof, in the form of Exhibit
A hereto, representing the right to
distributions as set forth herein.
Class C
Certificate Principal Balance: As of any date of determination,
the
aggregate Certificate Principal Balance of
the Class C Certificates.
Class C Current
Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the
Class C Distributable Interest Rate on
a notional amount equal to the aggregate
principal balance of the Lower Tier
REMIC Regular Interests immediately prior
to such Distribution Date (such amount
of interest representing a "specified
portion" (within the meaning of Treasury
Regulations Section 1.860G-1(a)(2)(i)(C))
of interest payments on the Lower Tier
REMIC Regular Interests), plus the interest
portion of any previous
distributions on such Class that is
recovered as a voidable preference by a
trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class C
Certificates.
Class C
Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on
the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of
the interest rates on the Lower Tier
REMIC Regular Interests (treating for
purposes of this clause (b) the interest
rate on each of the Lower Tier REMIC Marker
Classes as being capped at the
interest rate of the Related Certificates
(as adjusted to reflect the length of
the Accrual Period) and treating the Class
LTX Interest as being capped at
zero). The averages described in the
preceding sentence shall be weighted on the
basis of the respective principal balances
of the Lower Tier REMIC Regular
Interests immediately prior to any date of
determination.
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<PAGE>
Class C Interest
Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest
with respect to prior Distribution
Dates over (B) the amount actually
distributed to the Class C Certificates with
respect to interest on such prior
Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class
C Certificates (other than amounts so
added attributable to Subsequent Recoveries
or P&I Arrearages).
Class C Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized
Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
C Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class C
Certificates (A) pursuant to the last sentence
of the definition of "Certificate Principal
Balance" or (B) attributable to
distributions of P&I Arrearages.
Class LTA-1
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificates and an
interest rate equal to the Net Rate.
Class LTA-2
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTB-1
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTB-2
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTX
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to the excess of (i) the aggregate
Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the aggregate
initial principal balance of the Lower Tier
REMIC Marker Classes and an interest
rate equal to the Net Rate.
Class LTM-1
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTM-2
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTR
Interest: The sole class of "residual interest" in the Lower
Tier
REMIC.
Class M
Certificates: Any of the Class M-1 and Class M-2 Certificates.
Class M
Certificate Principal Balance: For any date of determination,
the
sum of the Class M-1 Certificate Principal
Balance and Class M-2 Certificate
Principal Balance.
Class M-1
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class M-1 Certificates.
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<PAGE>
Class M-1
Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class M-1
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class M-1 Certificates.
Class M-1
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Current
Interest or Class M-1 Interest Carry
Forward Amount that is recovered as a
voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution
Date to the Class M-1 Certificates.
Class M-1
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
M-1 Certificates with respect to interest
on such prior Distribution Dates and
(2) interest on such excess (to the extent
permitted by applicable law) at the
Class M-1 Pass-Through Rate for the related
Accrual Period.
Class M-1
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the
Certificates, 0.6500% per annum and,
as of any Distribution Date after the
Initial Optional Termination Date, 0.9750%
per annum.
Class M-1
Pass-Through Rate: For the first Distribution Date, 4.6300% per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class M-1
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the Class A
Certificate Principal Balance has been
reduced to zero and a Stepdown Trigger
Event exists, or as long as a Stepdown
Trigger Event does not exist, the excess of
(1) the sum of (A) the Class A
Certificate Principal Balance (after taking
into account distributions of the
Class A Principal Distribution Amount on
such Distribution Date) and (B) the
Class M-1 Certificate Principal Balance
immediately prior to such Distribution
Date over (2) the lesser of (A) 69.60% of
the Stated Principal Balances of the
Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the
excess of the Stated Principal Balances for
the Mortgage Loans as of the end of
the immediately preceding Due Period over
the Minimum Required
Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown
Date on which the Certificate Principal
Balance of each Class of Class A
Certificates has been reduced to zero, the
Class M-1 Principal Distribution Amount
will equal the lesser of (x) the
outstanding Certificate Principal Balance
of the Class M-1 Certificates and (y)
100% of the Principal Distribution Amount
remaining after any distributions on
such Class A Certificates and (II) in no
event will the Class M-1 Principal
Distribution Amount with respect to any
Distribution Date exceed the Class M-1
Certificate Principal Balance.
Class M-1 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class M-1
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
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<PAGE>
Class M-2
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2
Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class M-2
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class M-2 Certificates.
Class M-2
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Current
Interest or Class M-2 Interest Carry
Forward Amount that is recovered as a
voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution
Date to the Class M-2 Certificates.
Class M-2
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
M-2 Certificates with respect to interest
on such prior Distribution Dates and
(2) interest on such excess (to the extent
permitted by applicable law) at the
Class M-2 Pass-Through Rate for the related
Accrual Period.
Class M-2
Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the
Certificates, 1.3000% per annum and,
as of any Distribution Date after the
Initial Optional Termination Date, 1.9500%
per annum.
Class M-2 Pass-Through
Rate: For the first Distribution Date, 5.2800% per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class M-2
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the Class A
Certificate Principal Balance and the
Class M-1 Certificate Principal Balance
have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a
Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after
taking into account distributions of the
Class A Principal Distribution Amount
on such Distribution Date), (B) the Class
M-1 Certificate Principal Balance
(after taking into account distributions of
the Class M-1 Principal Distribution
Amount on such Distribution Date) and (C)
the Class M-2 Certificate Principal
Balance immediately prior to such
Distribution Date over (2) the lesser of (A)
78.70% of the Stated Principal Balances of
the Mortgage Loans as of the end of
the immediately preceding Due Period and
(B) the excess of the Stated Principal
Balances of the Mortgage Loans as of the
end of the immediately preceding Due
Period over the Minimum Required
Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date
prior to the Stepdown Date on which
the Certificate Principal Balance of each
Class of Class A Certificates and the
Class M-1 Certificates has been reduced to
zero, the Class M-2 Principal
Distribution Amount will equal the lesser
of (x) the outstanding Certificate
Principal Balance of the Class M-2
Certificates and (y) 100% of the Principal
Distribution Amount remaining after any
distributions on such Class A
Certificates and Class M-1 Certificates and
(II) in no event will the Class M-2
Principal Distribution Amount with respect
to any Distribution Date exceed the
Class M-2 Certificate Principal
Balance.
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<PAGE>
Class M-2 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class M-2
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class P
Certificate: Any Certificate designated as a "Class P
Certificate"
on the face thereof, in the form of Exhibit
A hereto, representing the right to
distributions as set forth herein.
Class R
Certificate: Any Certificate designated as a "Class R
Certificate"
on the face thereof, in the form of Exhibit
A hereto, representing the right to
distributions as set forth herein.
Class R
Certificate Principal Balance: As of any date of determination,
the
aggregate Certificate Principal Balance of
the Class R Certificate.
Class R Current
Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the
Class R Pass-Through Rate on the Class
R Certificate Principal Balance as of such
Distribution Date plus the portion of
any previous distributions on such Class in
respect of Current Interest or a
Class R Interest Carry Forward Amount that
is recovered as a voidable preference
by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class R
Certificate.
Class R Interest
Carry Forward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R
Current Interest with respect to prior
Distribution Dates over (B) the amount
actually distributed to the Class R
Certificate with respect to interest on
such prior Distribution Dates and (2)
interest on such excess (to the extent
permitted by applicable law) at the Class
R Pass-Through Rate for the related Accrual
Period.
Class R Margin:
As of any Distribution Date up to and including the Initial
Optional Termination Date for the
Certificates, 0.1800% per annum and, as of any
Distribution Date after the Initial
Optional Termination Date, 0.3600% per
annum.
Class R
Pass-Through Rate: For the first Distribution Date, 4.1600% per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Closing Date:
October 18, 2005.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection
Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to
Section 3.05(d) in the name of the
Trustee for the benefit of the
Certificateholders and designated "Wilshire
Credit Corporation, as servicer for Wells
Fargo Bank, N.A., as Trustee, in trust
for registered holders of Merrill Lynch
Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series
2005-SD1." Funds in the Collection Account
shall be held in trust for the
Certificateholders for the uses and purposes set
forth in this Agreement.
Combined
Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a
percentage, the numerator of which is the
sum of (1) the original principal balance
of the related Mortgage Loan and (2)
any outstanding principal balances of
Mortgage Loans the liens on which are
senior to the lien on such related Mortgage
Loan (such sum calculated at the
date of origination of
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<PAGE>
such related Mortgage Loan) and the
denominator of which is the lesser of (A)
the Appraised Value of the related
Mortgaged Property (or applicable dwelling
unit, in the case of a Co-op Loan) and (B)
the sales price of the related
Mortgaged Property (or applicable dwelling
unit, in the case of a Co-op Loan) at
time of origination.
Compensating
Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the
portion of any Prepayment Interest
Shortfalls required to be deposited in the
Collection Account by the Servicer
pursuant to Section 4.02 hereof.
Condemnation
Proceeds: All awards or settlements in respect of a Mortgaged
Property (or Underlying Mortgaged Property,
in the case of a Co-op Loan),
whether permanent or temporary, partial or
entire, by exercise of the power of
eminent domain or condemnation, to the
extent not required to be released either
to a Mortgagor in accordance with the terms
of the related mortgage loan
documents or to the holder of a senior lien
on the Mortgaged Property (or
Underlying Mortgaged Property, in the case
of a Co-op Loan).
Co-op Lease:
With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and
relating to the stock allocated to
the related dwelling unit.
Co-op Loan: A
Mortgage Loan secured by the pledge of stock allocated to a
dwelling unit in a residential cooperative
housing corporation and a collateral
assignment of the related Co-op Lease.
Current
Interest: Any of the Class A-1 Current Interest, the Class A-2
Current Interest, the Class R Current
Interest, the Class M-1 Current Interest,
the Class M-2 Current Interest, the Class
B-1 Current Interest, the Class B-2
Current Interest and the Class C Current
Interest.
Cut-off Date:
September 1, 2005.
Cut-off Date
Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close
of business on the calendar day
immediately preceding the Cut-off Date
after application of all payments of
principal due on or prior to the Cut-off
Date, whether or not received, and all
Principal Prepayments received prior to the
Cut-off Date, but without giving
effect to any installments of principal
received in respect of Due Dates after
the Cut-off Date.
Definitive
Certificates: As defined in Section 5.06.
Deleted Mortgage
Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A
Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such
Mortgage Loan by the close of business on
the day such payment is scheduled to be
due. A Mortgage Loan is "30 days
delinquent" if such payment has not been
received by the close of business on
the corresponding day of the month
immediately succeeding the month in which
such payment was due, or, if there is no
such corresponding day (e.g., as when a
30-day month follows a 31-day month in
which a payment was due on the 31st day
of such month), then on the last day of
such immediately succeeding month.
Similarly for "60 days delinquent," "90
days delinquent" and so on.
Denomination:
With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Principal
Balance of this Certificate."
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Depositor:
Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.
Depository: The
initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede &
Co., or any other organization
registered as a "clearing agency" pursuant
to Section 17A of the Securities
Exchange Act of 1934, as amended. The
Depository shall initially be the
registered Holder of the Book-Entry
Certificates. The Depository shall at all
times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New
York.
Depository
Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the
initial Depository.
Depository
Participant: A broker, dealer, bank or other financial
institution or other Person for whom from
time to time a Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
Designated
Transaction: A transaction in which the assets underlying the
Certificates consist of single-family
residential, multi-family residential,
home equity, manufactured housing and/or
commercial mortgage obligations that
are secured by single-family residential,
multi-family residential, commercial
real property or leasehold interests
therein.
Determination
Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if
such 15th day is not a Business Day,
the immediately preceding Business Day.
Disqualified
Organization: (1) the United States, any state or political
subdivision thereof, any foreign
government, any international organization, or
any agency or instrumentality of any of the
foregoing, (2) any organization
(other than a cooperative described in
Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of
the Code unless such organization is
subject to the tax imposed by Section 511
of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the
Code.
Distribution
Date: The 25th day of each calendar month, or if such 25th day
is not a Business Day, the next succeeding
Business Day, commencing in October
2005.
Due Date: With
respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which
a Scheduled Payment is due.
Due Period: With
respect to any Distribution Date, the period beginning on
the second day of the calendar month
preceding the calendar month in which such
Distribution Date occurs and ending on the
first day of the month in which such
Distribution Date occurs.
Eligible
Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt
obligations of which are rated by each
Rating Agency in one of its two highest
rating categories, or (ii) maintained
with the corporate trust department of a
bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either
the Depositor or the corporate trust
department of a national bank or banking
corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or
(iii) an account or accounts the deposits in
which are fully insured by the FDIC, or
(iv) an account or accounts, acceptable
to each Rating Agency without reduction or
withdrawal of the rating of any Class
of Certificates, as evidenced in writing,
by a depository institution in which
such accounts are insured by the FDIC (to
the limit established by the FDIC),
the uninsured deposits in which accounts
are otherwise secured such that, as
evidenced by an Opinion of Counsel
delivered to and acceptable to the Trustee,
the
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NIMs Insurer and each Rating Agency, the
Certificateholders have a claim with
respect to the funds in such account and a
perfected first security interest
against any collateral (which shall be
limited to Permitted Investments)
securing such funds that is superior to
claims of any other depositors or
creditors of the depository institution
with which such account is maintained,
or (v) maintained at an eligible
institution whose commercial paper, short-term
debt or other short-term deposits are rated
at least A-1+ by S&P and F-1+ by
Fitch, or (vi) maintained with a federal or
state chartered depository
institution the deposits in which are
insured by the FDIC to the applicable
limits and the short-term unsecured debt
obligations of which (or, in the case
of a depository institution that is a
subsidiary of a holding company, the
short-term unsecured debt obligations of
such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time
any deposits are held on deposit therein,
(vii) a segregated trust account or
accounts maintained with a federal or state
chartered depository institution or trust
company acting in its fiduciary
capacity, that is acceptable to the Rating
Agencies or (viii) otherwise
acceptable to each Rating Agency, as
evidenced by a letter from each Rating
Agency to the Trustee and the NIMs
Insurer.
ERISA: The
Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying
Underwriting: A best efforts or firm commitment
underwriting or private placement that
would satisfy the requirements of
Prohibited Transaction Exemption 90-29,
Exemption Application No. D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted
to the Underwriter by the United
States Department of Labor (or any other
applicable underwriter's exemption
granted by the United States Department of
Labor), except, in relevant part, for
the requirement that the certificates have
received a rating at the time of
acquisition that is in one of the three (or
four, in the case of a "designated
transaction") highest generic rating
categories by at least one of the Rating
Agencies.
ERISA Restricted
Certificates: The Class M, Class B, Class C, Class P and
Class R Certificates and any other
Certificate, unless the acquisition and
holding of such other Certificate is
covered by and exempt under the
Underwriter's exemption.
Event of
Default: As defined in Section 7.01 hereof.
Excess Interest:
On any Distribution Date, for each Class of the Class A,
Class M and Class B Certificates, the
excess, if any, of (1) the amount of
interest such Class of Certificates is
entitled to receive on such Distribution
Date at its Pass-Through Rate over (2) the
amount of interest such Class of
Certificates would have been entitled to
receive on such Distribution Date had
the Pass-Through Rate for such Class been
the REMIC Pass-Through Rate.
Excess Proceeds:
With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of
(1) the unpaid principal balance of
such Liquidated Loan as of the date of such
liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which
interest was last paid or advanced
to Certificateholders (and not reimbursed
to the Servicer) up to the Due Date in
the month in which such Liquidation
Proceeds are required to be distributed on
the unpaid principal balance of such
Liquidated Loan outstanding during each Due
Period as to which such interest was not
paid or advanced.
Exchange Act:
The Securities Exchange Act of 1934, as amended.
Extra Principal
Distribution Amount: With respect to any Distribution Date,
(1) prior to the Stepdown Date, the excess
of (A) the sum of (i) the Aggregate
Certificate Principal Balance immediately
preceding such Distribution Date
reduced by the Principal Funds with respect
to such Distribution Date and (ii)
$3,345,545 over (B) the aggregate Stated
Principal Balance of the Mortgage Loans
as of such Distribution Date and (2) on and
after the Stepdown Date, (A) the sum
of (x) the Aggregate Certificate
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Principal Balance immediately preceding
such Distribution Date, reduced by the
Principal Funds with respect to such
Distribution Date and (y) the greater of
(a) 5.80% of the aggregate Stated Principal
Balance of the Mortgage Loans and
(b) the Minimum Required
Overcollateralization Amount less (B) the aggregate
Stated Principal Balance of the Mortgage
Loans as of such Distribution Date;
provided, however, that if on any
Distribution Date a Stepdown Trigger Event is
in effect, the Extra Principal Distribution
Amount will not be reduced to the
applicable percentage of the then-current
aggregate Stated Principal Balance of
the Mortgage Loans (and will remain fixed
at the applicable percentage of the
aggregate Stated Principal Balance of the
Mortgage Loans as of the Due Date
immediately prior to the Stepdown Trigger
Event) until the next Distribution
Date on which the Stepdown Trigger Event is
not in effect.
Fannie Mae: A
federally chartered and privately owned corporation organized
and existing under the Federal National
Mortgage Association Charter Act, or any
successor thereto.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
Fitch: Fitch,
Inc., or any successor in interest.
Fixed Rate
Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is
fixed.
Floating Rate
Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for
a Class of Class A, Class M or Class
B Certificates is based upon the Available
Funds Cap, the excess of (1) the
amount of interest that such Class would
have been entitled to receive on such
Distribution Date had the Pass-Through Rate
for that Class not been calculated
based on the Available Funds Cap, up to but
not exceeding greater of (x) the
Maximum Rate Cap or (y) the sum of (i) the
Available Funds Cap and (ii) the
product of (A) a fraction, the numerator of
which is 360 and the denominator of
which is the actual number of days in the
related Accrual Period and (B) the
quotient obtained by dividing (I) an amount
equal to the proceeds, if any,
payable under the related Cap Contract with
respect to such Distribution Date by
(II) the aggregate Certificate Principal
Balance of each of the Classes of
Certificates to which such Cap Contract
relates for such Distribution Date over
(2) the amount of interest such Class was
entitled to receive on such
Distribution Date based on the Available
Funds Cap, together with (i) the unpaid
portion of any such excess from prior
Distribution Dates (and interest accrued
thereon at the then applicable Pass-Through
Rate for such Class, without giving
effect to the Available Funds Cap) and (ii)
any amount previously distributed
with respect to Floating Rate Certificate
Carryover for such Class that is
recovered as a voidable preference by a
trustee in bankruptcy.
Freddie Mac: A
corporate instrumentality of the United States created and
existing under Title III of the Emergency
Home Finance Act of 1970, as amended,
or any successor thereto.
Grantor Trusts:
The grantor trusts described in Section 2.07 hereof.
Gross Margin:
The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans
which is to be added to the
applicable index for use in determining the
Mortgage Rate on each Adjustment
Date, and which is set forth in the
Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Indenture: An
indenture relating to the issuance of notes guaranteed by the
NIMs Insurer.
Initial
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first
Adjustment Date following the origination
of such Mortgage Loan.
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Initial
Certificate Principal Balance: With respect to any Certificate,
the
Certificate Principal Balance of such
Certificate or any predecessor Certificate
on the Closing Date as set forth in Section
5.01 hereof.
Initial Mortgage
Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment
Date.
Initial Optional
Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the
Mortgage Loans is equal to or less
than 10% of the aggregate Stated Principal
Balance of the Mortgage Loans as of
the Cut-off Date.
Insurance
Policy: With respect to any Mortgage Loan or the related
Mortgaged Property (or the related
Underlying Mortgaged Property, in the case of
a Co-op Loan) included in the Trust Fund,
any insurance policy, including all
riders and endorsements thereto in effect
with respect to such Mortgage Loan or
Mortgaged Property (or related Underlying
Mortgage Property, in the case of a
Co-op Loan), including any replacement
policy or policies for any insurance
policies.
Insurance
Proceeds: Proceeds paid in respect of a Mortgage Loan or the
related Mortgaged Property (or the related
Underlying Mortgaged Property, in the
case of a Co-op Loan) pursuant to any
Insurance Policy or any other insurance
policy covering such Mortgage Loan or
Mortgaged Property (or Underlying
Mortgaged Property, in the case of a Co-op
Loan), to the extent such proceeds
are payable to the mortgagee under the
Mortgage, the Servicer or the trustee
under the deed of trust and are not applied
to the restoration of the related
Mortgaged Property (or the related
Underlying Mortgaged Property, in the case of
a Co-op Loan) or released either to the
Mortgagor or to the holder of a senior
lien on the related Mortgaged Property (or
the related Underlying Mortgaged
Property in the case of a Co-op Loan) in
accordance with the procedures that the
Servicer would follow in servicing mortgage
loans held for its own account, in
each case other than any amount included in
such Insurance Proceeds in respect
of Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to a Mortgage
Loan or the related Mortgaged
Property (or the related Underlying
Mortgaged Property, in the case of a Co-op
Loan).
Interest Carry
Forward Amount: Any of the Class A-1 Interest Carry Forward
Amount, the Class A-2 Interest Carry
Forward Amount, the Class R Interest Carry
Forward Amount, the Class M-1 Interest
Carry Forward Amount, the Class M-2
Interest Carry Forward Amount, the Class
B-1 Interest Carry Forward Amount, the
Class B-2 Interest Carry Forward Amount or
the Class C Interest Carry Forward
Amount, as the case may be.
Interest
Determination Date: With respect to the LIBOR Certificates, (i)
for any Accrual Period other than the first
Accrual Period, the second LIBOR
Business Day preceding the commencement of
such Accrual Period and (ii) for the
first Accrual Period, October 14, 2005.
Interest Funds:
With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest
due during the related Due Period and
received before the related Servicer
Remittance Date or advanced on or before
the related Servicer Remittance Date less
the Servicing Fee and the Trustee Fee,
(2) all Advances relating to interest with
respect to the Mortgage Loans and
such Distribution Date, (3) all
Compensating Interest with respect to the
Mortgage Loans and such Distribution Date,
(4) Liquidation Proceeds with respect
to the Mortgage Loans (to the extent such
Liquidation Proceeds relate to
interest) collected during the related
Prepayment Period, (5) all proceeds of
any purchase pursuant to Section 2.02 or
2.03 during the related Prepayment
Period or pursuant to Section 9.01 not
later than the
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related Determination Date (to the extent
that such proceeds relate to interest)
less the Servicing Fee and (6) all
Prepayment Charges received with respect to
the Mortgage Loans during the related
Prepayment Period, less (A) all
Non-Recoverable Advances relating to
interest and (B) other amounts reimbursable
to the Servicer and the Trustee pursuant to
this Agreement.
Latest Possible
Maturity Date: The latest maturity date for any Mortgage
Loan in the Trust Fund plus one year.
LIBOR Business
Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and
conducting transactions in foreign
currency and exchange.
LIBOR
Certificates: Any of the Class A-1, Class R, Class M or Class
B-1
Certificates.
Liquidated Loan:
With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) pursuant to
Section 3.12 has been realized upon or
liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale
or other realization as provided by
applicable law governing the real property
subject to the related Mortgage and any
security agreements and as to which the
Servicer has certified (in accordance with
Section 3.12) in the related
Prepayment Period that it has received all
amounts it expects to receive in
connection with such liquidation or (b) as
to which is not a first lien Mortgage
Loan and is delinquent 180 days or longer,
the Servicer has certified in a
certificate of an officer of the Servicer
delivered to the Depositor and the
Trustee that it does not believe that there
is a reasonable likelihood that any
further net proceeds will be received or
recovered with respect to such Mortgage
Loan.
Liquidation
Proceeds: Amounts, including Condemnation Proceeds, Insurance
Proceeds, received in connection with the
partial or complete liquidation of a
Mortgage Loan, whether through trustee's
sale, foreclosure sale, sale by the
Servicer pursuant to this Agreement or
otherwise or amounts received in
connection with any condemnation or partial
release of a Mortgaged Property and
any other proceeds received in connection
with the final sale of a related REO
Property, less the sum of (i) related
unreimbursed Advances, Servicing Fees,
Servicing Advances and any other expenses
(other than Servicing Arrearages)
related to such Mortgage Loan and (ii) any
Servicing Arrearages with respect to
such Mortgage Loan, to the extent that
subtracting such amounts pursuant to this
clause (ii) from Liquidation Proceeds would
not cause the Trust to incur any
loss on such Mortgage Loan.
Loan-to-Value
Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of
which is the original principal
balance of the related Mortgage Loan and
the denominator of which is the lesser
of (X) the Appraised Value of the related
Mortgaged Property (or applicable
dwelling unit, in the case of a Co-op Loan)
and (Y) the sales price of the
related Mortgaged Property (or applicable
dwelling unit, in the case of a Co-op
Loan) at the time of origination.
Losses: Any
losses, claims, damages, liabilities or expenses collectively.
Lower Tier
REMIC: As described in the Preliminary Statement and Section
2.07.
Lower Tier REMIC
Interests: Each of the Class LTA-1 Interest, the Class
LTA-2 Interest, the Class LTM-1 Interest,
the Class LTM-2 Interest, the Class
LTB-1 Interest, the Class LTB-2 Interest,
the Class LTX Interest and the Class
LTR Interest.
Lower Tier REMIC
Marker Classes: Each of the classes of Lower Tier REMIC
Regular Interests other than the Class LTX
Interest.
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Lower Tier REMIC
Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
Maximum Mortgage
Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as
such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage
Loan, the rate of interest set forth in
the related Mortgage Note.
Maximum Rate
Cap: With respect to any Distribution Date and the LIBOR
Certificates, 12 times the quotient of (x)
the aggregate scheduled interest that
would have been due on the Mortgage Loans
during the related Due Period had the
Adjustable Rate Mortgage Loans provided for
interest at their maximum lifetime
Net Mortgage Rates and the Fixed Rate
Mortgage Loans provided for interest at
their Net Mortgage Rates, divided by (y)
the aggregage Stated Principal Balance
of the Mortgage Loans as of the preceding
Distribution Date multiplied by 30 and
divided by the actual number of days in the
related Accrual Period; and with
respect any Distribution Date and the Class
A-2 and Class B-2 Certificates, 12
times the quotient of (x) the aggregate
scheduled interest that would have been
due on the Mortgage Loans during the
related Due Period had the Adjustable Rate
Mortgage Loans provided for interest at
their maximum lifetime Net Mortgage
Rates and the Fixed Rate Mortgage Loans
provided for interest at their Net
Mortgage Rates, divided by (y) the
aggregage Stated Principal Balance of the
Mortgage Loans as of the preceding
Distribution Date.
MERS: Mortgage
Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of
the State of Delaware, or any successor
thereto.
MERS Loan: Any
Mortgage Loan registered with MERS on the MERS System.
MERS System: The
system of recording transfers of mortgage electronically
maintained by MERS.
MIN: The loan
number for any MERS Loan.
Minimum Mortgage
Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as
such in the related Mortgage Note.
Minimum Required
Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated
Principal Balance of the Mortgage Loans
as of the Cut-off Date.
MOM Loan: Any
Mortgage Loan as to which MERS is acting as mortgagee, solely
as nominee for the originator of such
Mortgage Loan and its successors and
assigns.
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: Moody's
Investors Service, Inc. or any successor in interest.
Mortgage: With
respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument
with all riders attached thereto
creating a first or second lien or a first
or second priority ownership interest
in an estate in fee simple in real property
securing a Mortgage Note. With
respect to a Co-op Loan, the security
agreement with all riders attached thereto
creating a security interest in the stock
allocated to a dwelling unit in a
residential cooperative housing corporation
and pledged to secure such Co-op
Loan and the related Co-op Lease.
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Mortgage File:
The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan
and any additional documents delivered
to the Trustee to be added to the Mortgage
File pursuant to this Agreement.
Mortgage Loans:
Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof
as from time to time are held as a
part of the Trust Fund (including any REO
Properties), the mortgage loans so
held being identified in the Mortgage Loan
Schedule, notwithstanding foreclosure
or other acquisition of title of the
related Mortgaged Property. Any mortgage
loan that was intended by the parties
hereto to be transferred to the Trust Fund
as indicated by such Mortgage Loan Schedule
which is in fact not so transferred
for any reason shall continue to be a
Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to
the Trust Fund.
Mortgage Loan
Schedule: The lists of Mortgage Loans (as from time to time
amended by the Trustee to reflect the
deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans
pursuant to the provisions of this
Agreement) transferred to the Trustee as
part of the Trust Fund and from time to
time subject to this Agreement, attached
hereto as Exhibit B, setting forth the
following information with respect to each
Mortgage Loan:
(i) the loan
number;
(ii) the borrower name and address;
(iii) the unpaid principal balance of the Mortgage Loans;
(iv) the Initial Mortgage Rate;
(v) the original
maturity date and the months remaining before
maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment due date of the Mortgage Loan;
(ix) the Loan-to-Value Ratio at origination with respect to a
first
lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
respect to a second lien Mortgage Loan;
(x) a code indicating
whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(xi) a code indicating the property type;
(xii) with respect to each Adjustable Rate Mortgage Loan;
(A) the frequency of
each Adjustment Date;
(B) the next
Adjustment Date;
(C) the Maximum
Mortgage Rate;
(D) the Minimum
Mortgage Rate;
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(E) the Mortgage Rate
as of the Cut-off Date;
(F) the related
Periodic Rate Cap;
(G) the Gross
Margin;
(H) the lifetime rate
cap;
(xiii) location of the related Mortgaged Property (or
Underlying
Mortgaged
Property, in the case of a Co-op Loan);
(xiv) a code indicating whether a Prepayment Charge is applicable
and,
if so the term
of such Prepayment Charge;
(xv) the Credit Score and date obtained; and
(xvi) the MIN;
Mortgage Note:
The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor
under a Mortgage Loan and all
amendments, modifications and attachments
thereto with all riders attached
thereto.
Mortgage Pool:
The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgaged
Property: The underlying property securing a Mortgage Loan.
Mortgage Rate:
The annual rate of interest borne by a Mortgage Note from
time to time.
Mortgagor: The
obligor on a Mortgage Note.
Net Mortgage
Rate: As to each Mortgage Loan, and at any time, the per annum
rate equal to the then current Mortgage
Rate less the Servicing Fee Rate and the
Trustee Fee Rate.
Net Rate: With
respect to any Distribution Date, the product of (x) the
weighted average Net Mortgage Rate for the
Mortgage Loans calculated based on
the respective Net Mortgage Rates and the
Stated Principal Balances of such
Mortgage Loans as of the preceding
Distribution Date (or, in the case of the
first Distribution Date, as of the Cut-off
Date) and (y) a fraction, the
numerator of which is 30 and the
denominator of which is the actual number of
days in the related Accrual Period.
Net WAC: With
respect to any Distribution Date, a per annum rate equal to
12 times the quotient obtained by dividing
(x) the total scheduled interest on
the Mortgage Loans based on the Net
Mortgage Rates in effect on the related Due
Date by (y) the aggregate Stated Principal
Balance of the Mortgage Loans as of
the preceding Distribution Date (or, in the
case of the first Distribution Date,
as of the Cut-off Date).
NIM Notes: The
notes to be issued pursuant to the Indenture.
NIMs Insurer:
Any of the one or more insurers, if any, that is guaranteeing
certain payments under any NIM Notes;
provided, that upon the payment in full of
the NIM Notes, all rights of the NIMs
Insurer hereunder shall terminate.
NIMs Insurer
Default: As defined in Section 10.12.
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Non-Recoverable
Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that,
in the good faith judgment of the
Servicer, will not or, in the case of a
current delinquency, would not, be
ultimately recoverable by the Servicer from
the related Mortgagor, related
Liquidation Proceeds or otherwise with
respect to the related Mortgage Loan.
Non-Recoverable
Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by
the Servicer that, in the good faith
judgment of the Servicer, will not or, in
the case of a current Servicing
Advance, would not, be ultimately
recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or
otherwise with respect to the related
Mortgage Loan.
Non-Supported
Interest Shortfall: As defined in Section 4.02.
Offered
Certificates: The Class A and Class M Certificates.
Officer's
Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the
President, a vice president (however
denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one
of the assistant treasurers or assistant
secretaries of the Depositor or the
Servicer (or any other officer customarily
performing functions similar to those
performed by any of the above designated
officers and also to whom, with respect
to a particular matter, such matter is
referred because of such officer's
knowledge of and familiarity with a
particular subject) or (2), if provided for
in this Agreement, signed by a Servicing
Officer, as the case may be, and
delivered to the Depositor, the Servicer or
the Trustee, as the case may be, as
required by this Agreement.
One-Month LIBOR:
With respect to any Accrual Period, the rate determined by
the Trustee on the related Interest
Determination Date on the basis of (a) the
offered rates for one-month United States
dollar deposits, as such rates appear
on Telerate page 3750, as of 11:00 a.m.
(London time) on such Interest
Determination Date or (b) if such rate does
not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered
rates of the Reference Banks for
one-month United States dollar deposits, as
such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London
time) on such Interest Determination
Date. If One-Month LIBOR is determined
pursuant to clause (b) above, on each
Interest Determination Date, One-Month
LIBOR for the related Accrual Period will
be established by the Trustee as
follows:
(i) If on such
Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the nearest
whole multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the higher of (i) One-Month
LIBOR
as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
Opinion of
Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably
acceptable to each addressee of such
opinion; provided, however, that with
respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC
Provisions, such counsel must (1) in
fact be independent of the Depositor and
the Servicer, (2) not have any direct
financial interest in the Depositor or the
Servicer or in any affiliate of any
such party and (3) not be connected with
the Depositor or the Servicer as an
officer, employee, promoter, underwriter,
trustee, partner, director or person
performing similar functions.
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Optional
Termination: The termination of the Trust Fund hereunder
pursuant
to Section 9.01(a) hereof.
Optional
Termination Amount: The amount received by the Trustee in
connection with any purchase of all of the
Mortgage Loans and REO Properties
pursuant to Section 9.01(b) hereof.
Optional
Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the
sum of (A) the aggregate Stated
Principal Balance of each Mortgage Loan
(other than any Mortgage Loan that has
become an REO Property) as of the
Distribution Date on which the proceeds of the
Optional Termination are distributed to the
Certificateholders, plus accrued
interest thereon at the applicable Mortgage
Rate as of the Due Date preceding
the Distribution Date on which the proceeds
of the Optional Termination are
distributed to Certificateholders and the
fair market value of any REO Property,
plus accrued interest thereon as of the
Distribution Date on which the proceeds
of the Optional Termination are distributed
to Certificateholders, (B) any
unreimbursed out-of-pocket costs and
expenses owed to the Trustee (including any
reasonable fees and expenses incurred by
the Trustee in connection with
conducting the Auction) or the Servicer and
any unpaid or unreimbursed Trustee
Fees, Servicing Fees, Advances and
Servicing Advances and (C) any unreimbursed
costs, penalties and/or damages incurred by
the Trust Fund in connection with
any violation relating to any of the
Mortgage Loans of any predatory or abusive
lending law.
OTS: The Office
of Thrift Supervision.
Outstanding:
With respect to the Certificates as of any date of
determination, all Certificates theretofore
executed and authenticated under
this Agreement except: (1) Certificates
theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
and (2) Certificates in exchange for
which or in lieu of which other
Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to
this Agreement.
Outstanding
Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater
than zero that was not the subject of a
Principal Prepayment in full, and that did
not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the
excess
of (1) the Stated Principal Balance of the
Mortgage Loans over (2) the
Certificate Principal Balance of the
Certificates (other than the Class P
Certificates and the Class C
Certificates).
Ownership
Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such
Certificate as the Holder thereof and
any other interest therein, whether direct
or indirect, legal or beneficial.
P&I
Arrearages: With respect to any Mortgage Loan other than a
Mortgage
Loan originated by Acoustic Home Loans,
LLC, the total amount of scheduled
monthly payments in respect of principal
and/or interest due on or prior to the
Cut-off Date thereon but not received on or
prior to the Cut-off Date, exclusive
of any Servicing Arrearages. As of the
Cut-off Date, the aggregate amount of P&I
Arrearages is $848,840.27. Notwithstanding
any internal designation by the
Servicer with respect to collections on the
Mortgage Loans, any payments or
Advances made on a Mortgage Loan (other
than any Mortgage Loan originated by
Acoustic Home Loans, LLC) in the related
Due Period shall first be applied as
the current Scheduled Payment and any
payments or Advances in excess of one
Scheduled Payment shall be applied as
follows: first, if an Advance has been
made with respect to such Due Period and,
with respect to such Due Period and
such Mortgage Loan, the total amount
received by the Trustee is in excess of one
Scheduled Payment, the excess, up to an
amount equal to the lesser of (i) one
Scheduled Payment and (ii)
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the amount of such Advance made during the
related Due Period, shall be
deposited by the Trustee into the Advance
Reserve Account and utilized in
accordance with Section 3.09 and second,
any remaining amount (not to exceed the
total amount of P&I Arrearages with
respect to such Mortgage Loan, as reduced
from time to time by payments received with
respect to such Mortgage Loan and
distributed pursuant to Section 4.04(l)) to
be distributed as a payment in
respect of P&I Arrearages pursuant to
Section 4.04(l).
Pass-Through
Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such
Class of Certificates.
Percentage
Interest: With respect to:
(i) any Class, the
percentage interest in the undivided beneficial
ownership interest evidenced by such Class which shall be equal
to the Certificate Principal Balance of such Class divided by
the
aggregate
Certificate Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby of
the
related Class shall equal the percentage obtained by dividing
the
Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of such Class; except that in
the case of any Class P Certificates, the Percentage Interest
with respect to such Certificate shown on the face of such
Certificate.
Periodic Rate
Cap: As to each Adjustable Rate Mortgage Loan and the related
Mortgage Note, the provision therein that
limits permissible increases and
decreases in the Mortgage Rate on any
Adjustment Date.
Permitted
Activities: The primary activities of the Trust Fund created
pursuant to this Agreement which shall
be:
(i) holding Mortgage
Loans transferred from the Depositor and other
assets of the Trust Fund, including the Cap Contracts and any
credit enhancement and passive derivative financial instruments
that pertain to beneficial interests issued or sold to parties
other than the Depositor, its Affiliates, or its agents;
(ii)
issuing Certificates and other interests in the assets of the
Trust Fund;
(iii) receiving collections on the Mortgage Loans and the Cap
Contracts and making payments on such Certificates and
interests
in accordance with the terms of this Agreement; and
(iv) engaging in other activities that are necessary or incidental
to
accomplish these limited purposes, which activities cannot be
contrary to the status of the Trust Fund as a qualified special
purpose entity under existing accounting literature.
Permitted
Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the
United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the
United States;
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(ii) general obligations of or obligations guaranteed by any state
of
the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates;
(iii) commercial or finance company paper, other than commercial
or
finance company paper issued by the Depositor, the Trustee or
any
of its Affiliates, which is then receiving the highest
commercial
or finance company paper rating of each such Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers'
acceptances (other than bankers' acceptances issued by the
Trustee or any of its Affiliates) issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to
supervision
and examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured
debt obligations of such depository institution or trust
company
are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such
securities;
(v) demand or time
deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance
company or other corporation rated in the two highest long-term
or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such agreements,
such
terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by
any
such Rating Agency as evidenced by a letter from each Rating
Agency;
(vii) repurchase obligations with respect to any security described
in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons
or
instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount
issued by any corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United States or
any state thereof which, at the time of such investment, have
one
of the two highest long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed
or
advised by the Trustee or its affiliates) which at the date of
acquisition of the interests in such fund and throughout the
time
such interests are held in such fund has the highest applicable
long term rating by each Rating Agency rating such fund; and
(x) short term
investment funds sponsored by any trust company or
national banking association incorporated under the laws of the
United States or any state thereof, other than the Trustee or
any
of its Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective highest
applicable rating category;
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provided, that no such instrument shall be
a Permitted Investment if such
instrument (i) evidences the right to
receive interest only payments with
respect to the obligations underlying such
instrument, (ii) is purchased at a
premium or above par or (iii) is purchased
at a deep discount; provided,
further, that no such instrument shall be a
Permitted Investment (A) if such
instrument evidences principal and interest
payments derived from obligations
underlying such instrument and the interest
payments with respect to such
instrument provide a yield to maturity of
greater than 120% of the yield to
maturity at par of such underlying
obligations, or (B) if it may be redeemed at
a price below the purchase price (the
foregoing clause (B) not to apply to
investments in units of money market funds
pursuant to clause (ix) above); and
provided, further, (I) that no amount
beneficially owned by any REMIC
(including, without limitation, any amounts
collected by the Servicer but not
yet deposited in the Collection Account)
may be invested in investments (other
than money market funds) treated as equity
interests for Federal income tax
purposes, unless the Servicer and/or the
Trustee shall receive an Opinion of
Counsel acceptable to the Servicer and/or
the Trustee, at the expense of the
party requesting that such investment be
made, to the effect that such
investment will not adversely affect the
status of the any REMIC provided for
herein as a REMIC under the Code or result
in imposition of a tax on the Trust
Fund or any REMIC provided for herein and
(II) each such investment must be a
"permitted investment" within the meaning
of Section 860G(a)(5) of the Code.
Permitted Investments that are subject to
prepayment or call may not be
purchased at a price in excess of par.
Permitted
Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or
any agency or instrumentality of any
of the foregoing, (ii) a foreign
government, International Organization or any
agency or instrumentality of either of the
foregoing, (iii) an organization
(except certain farmers' cooperatives
described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of
the Code (including the tax imposed
by Section 511 of the Code on unrelated
business taxable income) on any excess
inclusions (as defined in Section
860E(c)(1) of the Code) with respect to the
Class R Certificate, (iv) rural electric
and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, and (v)
a Person that is not a citizen or
resident of the United States, a
corporation or partnership (or other entity
treated as a corporation or partnership for
United States federal income tax
purposes) created or organized in or under
the laws of the United States or any
State thereof or the District of Columbia
or an estate whose income from sources
without the United States is includable in
gross income for United States
federal income tax purposes regardless of
its connection with the conduct of a
trade or business within the United States,
or a trust if a court within the
United States is able to exercise primary
supervision over the administration of
the trust and one or more United States
persons have authority to control all
substantial decisions of the trust, unless,
in the case of this clause (v), such
Person has furnished the transferor and the
Trustee with a duly completed
Internal Revenue Service Form W-8ECI or
applicable successor form. The terms
"United States," "State" and "International
Organization" shall have the
meanings set forth in Section 7701 of the
Code. A corporation will not be
treated as an instrumentality of the United
States or of any State thereof for
these purposes if all of its activities are
subject to tax and, with the
exception of the Federal Home Loan Mortgage
Corporation, a majority of its board
of directors is not selected by such
government unit.
Person: Any
individual, corporation, partnership, limited liability
company, joint venture, association,
joint-stock company, trust, unincorporated
organization or government, or any agency
or political subdivision thereof.
Pool Stated
Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of
such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans
as of such date.
Preference
Claim: The meaning set forth in Section 4.04(j) hereof.
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Prepayment
Assumption: A rate or rates of prepayment, as described in the
Prospectus Supplement in the definition of
"Modeling Assumptions," relating to
the Offered Certificates or as described in
the Private Placement Memorandum
relating to the Class B Certificates.
Prepayment
Charges: Any prepayment premium, fee or charge payable by a
Mortgagor in connection with any Principal
Prepayment on a Mortgage Loan
pursuant to the terms of the related
Mortgage Note or Mortgage, as applicable,
as identified on the Mortgage Loan
Schedule.
Prepayment
Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject
of a Principal Prepayment in full
during the portion of the related
Prepayment Period occurring between the first
day of the calendar month in which such
Servicer Remittance Date occurs and the
last day of the related Prepayment Period,
an amount equal to interest (to the
extent received) at the applicable Net
Mortgage 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 Servicer
Remittance Date occurs and ending on the
date on which such Principal 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 (other
than a Principal Prepayment in full
resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01
hereof), the amount, if any, by
which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated
Principal Balance of such Mortgage Loan as
of the preceding Distribution Date
exceeds (ii) the amount of interest paid or
collected in connection with such
Principal Prepayment.
Prepayment
Period: As to any Distribution Date, the period beginning with
the opening of business on the 15th day of
the calendar month preceding the
month in which such Distribution Date
occurs (or in the case of the first
Distribution Date, beginning with the
opening of business on the Cut-off Date)
and ending on the close of business on the
14th day of the month in which such
Distribution Date occurs.
Principal
Distribution Amount: With respect to each Distribution Date,
the
sum of (i) the Principal Funds for such
Distribution Date and (ii) any Extra
Principal Distribution Amount for such
Distribution Date.
Principal Funds:
With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1)
all scheduled principal due during
the related Due Period and received before
the related Servicer Remittance Date
or advanced on or before the related
Servicer Remittance Date, (2) all Principal
Prepayments collected in the related
Prepayment Period, (3) the Stated Principal
Balance of each Mortgage Loan that was
purchased by the Depositor or the
Servicer during the related Prepayment
Period or, in the case of a purchase
pursuant to Section 9.01, on any Business
Day prior to such Distribution Date,
(4) the amount, if any, by which the
aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the
aggregate unpaid principal balance of
the related Deleted Mortgage Loans
delivered by the Seller in connection with a
substitution of a Mortgage Loan pursuant to
Section 2.03(c), (5) all Liquidation
Proceeds collected during the related
Prepayment Period (to the extent such
Liquidation Proceeds related to principal),
(6) all Subsequent Recoveries
received during the related Due Period and
(7) all other collections and
recoveries in respect of principal (other
than collections in respect of P&I
Arrearages) during the related Prepayment
Period less (A) all Non-Recoverable
Advances relating to principal with respect
to the Mortgage Loans and all
Non-Recoverable Servicing Advances
reimbursed during the related Prepayment
Period and (B) all other amounts
reimbursable to the Servicer and the Trustee
pursuant to this Agreement and allocable to
principal.
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Principal
Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a
Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections
2.02, 2.03 and 9.01 hereof) that is
received or recovered in advance of its
scheduled Due Date and is not
accompanied by an amount as to interest
representing scheduled interest due on
any date or dates in any month or months
subsequent to the month of prepayment.
Partial Principal Prepayments shall be
applied by the Servicer in accordance
with the terms of the related Mortgage
Note.
Private
Placement Memorandum: The Private Placement Memorandum dated
October 18, 2005 relating to the private
placement of the Class B Certificates.
Prospectus
Supplement: The Prospectus Supplement dated October 17, 2005
relating to the public offering of the
Offered Certificates.
PUD: A Planned
Unit Development.
Purchase Price:
With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to
Section 2.02 or 2.03 hereof, an amount
equal to the sum of (i) 100% of the unpaid
principal balance of the Mortgage
Loan as of the date of such purchase
together with any related unreimbursed
Servicing Advances, (ii) accrued interest
thereon at the applicable Mortgage
Rate from (a) the date through which
interest was last paid by the Mortgagor to
(b) the Due Date in the month in which the
Purchase Price is to be distributed
to Certificateholders and (iii) any
unreimbursed costs, penalties and/or damages
incurred by the Trust Fund (or the Trustee
on behalf of the Trust Fund) in
connection with any violation relating to
such Mortgage Loan of any predatory or
abusive lending law.
Qualification
Defect: With respect to any Mortgage Loan, any of (i) the
inclusion of a materially defective
document in the related Mortgage File, (ii)
the absence of a document from the related
Mortgage File or (iii) the breach of
any representation, warranty or covenant
regarding such Mortgage Loan which, in
any such case, causes such Mortgage Loan
(A) not to be a "qualified mortgage"
within the meaning of Section 860G(a)(3) of
the Code or (B) to be a "defective
obligation" within the meaning of Treasury
regulations relating to REMICs.
QIB: A
"qualified institutional buyer" within the meaning of Rule
144A.
Rating Agency:
Either of Fitch or S&P. If any such organization or its
successor is no longer in existence,
"Rating Agency" shall be a nationally
recognized statistical rating organization,
or other comparable Person,
designated by the Depositor, notice of
which designation shall be given to the
Trustee. References herein to a given
rating category of a Rating Agency shall
mean such rating category without giving
effect to any modifiers.
Realized Loss:
With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and
accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually
recovered by the Servicer with respect
thereto (net of reimbursement of Advances
and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan
or (2) a Mortgage Loan which is not
a Liquidated Loan, any amount of principal
that the Mortgagor is no longer
legally required to pay (except for the
extinguishment of debt that results from
the exercise of remedies due to default by
the Mortgagor).
Record Date:
With respect to any Distribution Date, the close of business
on the last Business Day of the month
preceding the month in which the
applicable Distribution Date occurs (or, in
the case of the first Distribution
Date, the Closing Date).
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Reference Banks:
Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A., Wells Fargo Bank, N.A. and NatWest,
N.A.; provided that if any of the
foregoing banks are not suitable to serve
as a Reference Bank, then any leading
banks selected by the Trustee with the
consent of the NIMs Insurer which are
engaged in transactions in Eurodollar
deposits in the international Eurocurrency
market (i) with an established place of
business in London, England and (ii)
whose quotations appear on the Reuters
Screen LIBO Page on the relevant Interest
Determination Date and (iii) which have
been designated as such by the Servicer.
Regular
Certificate: Any one of the Class A-1, Class A-2, Class M, and
Class B Certificates.
Regulation S:
Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case
as the same may be amended from time
to time; and all references to any rule,
section or subsection of, or definition
or term contained in, Regulation S means
such rule, section, subsection,
definition or term, as the case may be, or
any successor thereto, in each case
as the same may be amended from time to
time.
Regulation S
Book-Entry Certificates: Certificates sold in offshore
transactions in reliance on Regulation S in
the form of one or more permanent
global Certificates in definitive, fully
registered form without interest
coupons, which shall be deposited on behalf
of the subscribers for such
Certificates represented thereby with the
Trustee, as custodian for DTC and
registered in the name of a nominee of
DTC.
Related
Certificates: With respect to the Class LTA-1 Interest, the
Class
A-1 and Class R Certificates. With respect
to the Class LTA-2 Interest, the
Class A-2 Certificates. With respect to the
Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class
LTM-2 Interest, the Class M-2
Certificates. With respect to the Class
LTB-1 Interest, the Class B-1
Certificates. With respect to the Class
LTB-2 Interest, the Class B-2
Certificates.
Relief Act: The
Servicemembers Civil Relief Act or any similar state or
local law.
Relief Act
Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount
of interest or principal collectible
on such Mortgage Loan for the most recently
ended calendar month as a result of
the application of the Relief Act.
REMIC: A "real
estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein
to "the REMICs" or "a REMIC" shall
mean any of (or, as the context requires,
all of) the Lower Tier REMIC and the
Upper Tier REMIC.
REMIC
Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing
"Available Funds Cap" in such definition
with "Net Rate."
REMIC
Provisions: Provisions of the federal income tax law relating to
real
estate mortgage investment conduits, which
appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code,
and related provisions, and proposed,
temporary and final regulations and
published rulings, notices and announcements
promulgated thereunder, as the foregoing
may be in effect from time to time as
well as provisions of applicable state
laws.
REMIC Regular
Interests: (i) any of the rights under any of the
Certificates (other than the Class P
Certificates, the Class R Certificate and
the Class C Certificates) other than the
rights in interest rate cap contracts
described in Section 2.07 and (ii) the
Uncertificated Class C Interest.
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Remittance
Report: As defined in Section 4.04(j) hereof.
REO Property: A
Mortgaged Property acquired by the Servicer, on behalf of
the Trustee for the benefit of the
Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection
with a defaulted Mortgage Loan.
Re-Performing
Loan: means a Mortgage Loan which had defaulted in the past
and which is currently at least 90 days
delinquent with respect to certain
scheduled monthly payments in respect of
principal and/or interest, but for
which the related mortgagor has made, in
the aggregate, at least three scheduled
monthly payments in respect of principal
and/or interest in the four calendar
months preceding the Cut-off Date
(regardless of the timing of receipt of such
payments).
Replacement
Mortgage Loan: A Mortgage Loan substituted by the Seller for a
Deleted Mortgage Loan, which must, on the
date of such substitution, as
confirmed in a Request for Release,
substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after
deduction of the principal portion of the
Scheduled Payment due in the month of
substitution, not in excess of, and not
less than 90% of the Stated Principal
Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage
Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than
the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any
Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per
annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan;
(B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than
the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same
index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross
Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage
Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed
Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per
annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar
or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4)
have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case
of the Mortgage Loans in a second lien
position) no higher than that of the
Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not
more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for
a Prepayment Charge on terms
substantially similar to those of the
Prepayment Charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien
priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the
Deleted Mortgage Loan; and (9) comply
with each representation and warranty set
forth in Section 2.03 hereof.
Request for
Release: The Request for Release of Documents submitted by the
Servicer to the Trustee, substantially in
the form of Exhibit I hereto.
Required
Insurance Policy: With respect to any Mortgage Loan, any
insurance
policy that is required to be maintained
from time to time under this Agreement.
Required
Percentage: As of any Distribution Date, the quotient of (1)
the
excess of (A) the Stated Principal Balances
of the Mortgage Loans as of such
Distribution Date, over (B) the Certificate
Principal Balance of the most senior
Class of Certificates outstanding as of
such Distribution Date, prior to giving
effect to distributions to be made on such
Distribution Date and (2) the Stated
Principal Balance of the Mortgage Loans as
of such Distribution Date. As used
herein, on any Distribution Date when any
of the Class A Certificates are
outstanding, the Certificate Principal
Balance of the most senior Class of
Certificates will equal the aggregate
Certificate Principal Balance of the Class
A Certificates as of such date of
calculation.
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Reserve Interest
Rate: With respect to any Interest Determination Date, the
rate per annum that the Trustee determines
to be (1) the arithmetic mean
(rounded upwards if necessary to the
nearest whole multiple of 0.03125%) of the
one-month United States dollar lending
rates which New York City banks selected
by the Trustee are quoting on the relevant
Interest Determination Date to the
principal London offices of leading banks
in the London interbank market or (2)
in the event that the Trustee can determine
no such arithmetic mean, the lowest
one-month United States dollar lending rate
which New York City banks selected
by the Trustee are quoting on such Interest
Determination Date to leading
European banks.
Residual
Interest: An interest in the Upper Tier REMIC that is entitled
to
all distributions of principal and interest
on the Class R Certificate other
than distributions in respect of the Class
LTR Interest and distributions to the
extent attributable to an interest rate in
excess of the Net Rate.
Responsible
Officer: When used with respect to the Trustee or the Servicer,
any officer of the Trustee or the Servicer
with direct responsibility for the
administration of this Agreement and also
means any other officer to whom, with
respect to a particular matter, such matter
is referred because of such
officer's knowledge of and familiarity with
the particular subject.
Reuters Screen
LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or
such other page as may replace such LIBO
page on that service for the purpose of
displaying London interbank offered
rates of major banks.
Rule 144A: Rule
144A under the Securities Act.
Rule 144A
Book-Entry Certificates: Certificates initially offered and
sold
in reliance on the exemption from
registration under Rule 144A in the form of
one or more permanent global Certificates
in definitive, fully registered form
without interest coupons, which shall be
deposited on behalf of the subscribers
for such Certificates represented thereby
with the Trustee, as custodian for DTC
and registered in the name of a nominee of
DTC.
S&P:
Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., or
any successor in interest.
Sale Agreement:
The Mortgage Loan Sale and Assignment Agreement dated as of
September 1, 2005 between the Depositor and
the Seller.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due
on
any Due Date allocable to principal and/or
interest on such Mortgage Loan.
Section 302
Requirements: Any rules or regulations promulgated pursuant to
the Sarbanes-Oxley Act of 2002 (as such may
be amended from time to time).
Securities Act:
The Securities Act of 1933, as amended.
Seller: Merrill
Lynch Mortgage Lending, Inc., a Delaware corporation, or
its successors in interest.
Servicer:
Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.
Servicer Advance
Date: As to any Distribution Date, the related Servicer
Remittance Date.
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Servicer
Remittance Date: With respect to any Distribution Date, the
later
of two Business Days after the 15th day of
the month in which such Distribution
Date occurs and the 18th day (or if such
day is not a Business Day, the next
succeeding Business Day) of the month in
which such Distribution Date occurs.
Servicing
Advances: All customary, reasonable and necessary "out of
pocket"
costs and expenses incurred in the
performance of the Servicer's servicing
obligations hereunder, including, but not
limited to, the cost of (1) the
preservation, inspection, restoration and
protection of a Mortgaged Property (or
Underlying Mortgaged Property, in the case
of a Co-op Loan), including without
limitation advances in respect of real
estate taxes and assessments, (2) any
collection, enforcement or judicial
proceedings, including without limitation
foreclosures, collections and liquidations,
(3) the conservation, management,
sale and liquidation of any REO Property,
(4) executing and recording
instruments of satisfaction, deeds of
reconveyance, substitutions of trustees on
deeds of trust or Assignments of Mortgage
to the extent not otherwise recovered
from the related Mortgagors or payable
under this Agreement, (5) correcting
errors of prior servicers; costs and
expenses charged to the Servicer by the
Trustee; tax tracking; title research;
flood certifications; lender paid
mortgage insurance, (6) obtaining or
correcting any legal documentation required
to be included in the Mortgage Files and
reasonably necessary for the Servicer
to perform its obligations under this
Agreement and (7) compliance with the
obligations under Sections 3.01 and 3.10;
provided that such amounts are
required to be advanced only to the extent
such advances constitute
"unanticipated expenses" within the meaning
of Treasury Regulation Section
1.860G-1(b)(3)(ii).
Servicing
Arrearages: With respect to any Mortgage Loan, the total amount
of any unreimbursed amounts that would have
constituted Servicing Advances had
such amounts been advanced under this
Agreement and that were advanced on or
prior to the Cut-off Date but not recovered
on or prior to the Cut-off Date.
Servicing Fee:
As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of (x)
one-twelfth of the Servicing Fee Rate and (y)
the Stated Principal Balance of such
Mortgage Loan as of the preceding
Distribution Date or, in the event of any
payment of interest that accompanies a
Principal Prepayment in full made by the
Mortgagor, interest at the Servicing
Fee Rate on the Stated Principal Balance of
such Mortgage Loan as of the
preceding Distribution Date for the period
covered by such payment of interest.
Servicing Fee
Rate: 0.50%.
Servicing
Officer: Any officer of the Servicer involved in, or
responsible
for, the administration and servicing of
the Mortgage Loans whose name and
facsimile signature appear on a list of
servicing officers furnished to the
Trustee by the Servicer on the Closing Date
pursuant to this Agreement, as such
lists may from time to time be amended.
Servicing
Transfer Costs: All costs associated with the transfer of
servicing from the predecessor Servicer,
including, without limitation, any
costs or expenses associated with the
termination of the predecessor Servicer,
the appointment of a successor servicer,
the complete transfer of all servicing
data and the completion, correction or
manipulation of such servicing data as
may be required by the Trustee or any
successor servicer to correct any errors
or insufficiencies in the servicing data or
otherwise to enable the Trustee or
successor servicer to service the Mortgage
Loans properly and effectively.
SFAS 140:
Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial
Assets and Extinguishments of
Liabilities dated September 2000, published
by the Financial Accounting
Standards Board of the Financial Accounting
Foundation.
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Startup Day: As
defined in Section 2.07 hereof.
Stated Principal
Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the
Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such
Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the
Scheduled Payments (x) due with
respect to such Mortgage Loan during each
Due Period ending prior to such
Distribution Date and (y) that were
received by the Servicer as of the close of
business on the Determination Date related
to such Distribution Date or with
respect to which Advances were made on the
Servicer Advance Date prior to such
Distribution Date and (B) all Principal
Prepayments with respect to such
Mortgage Loan received on or prior to the
last day of the related Prepayment
Period, and all Liquidation Proceeds to the
extent applied by the Servicer as
recoveries of principal in accordance with
Section 3.12 with respect to such
Mortgage Loan, that were received by the
Servicer as of the close of business on
the last day of the related Due Period.
Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated
Loan shall be deemed to be zero.
Stepdown Date:
The later to occur of (1) the Distribution Date in October
2008 or (2) the first Distribution Date on
which (A) the Class A Certificate
Principal Balance (reduced by the Principal
Funds with respect to such
Distribution Date) is less than or equal to
(B) 57.20% of the Stated Principal
Balances of the Mortgage Loans as of such
Distribution Date.
Stepdown
Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:
<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS
PERCENTAGE
------------------------------
---------------------------------
<S>
<C>
October 2008 - September 2009 3.50% with respect to
October 2008, plus an
additional 1/12th of 1.50% for each month
thereafter
October 2009 - September 2010 5.00% with respect to
October 2009, plus an
additional 1/12th of 1.25% for each month
thereafter
October 2010 - September 2011 6.25% with respect to
October 2010, plus an
additional 1/12th of 0.75% for each month
thereafter
October 2011 and thereafter 7.00%
</TABLE>
Stepdown Trigger
Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which
(1) the quotient of (A) the
aggregate Stated Principal Balance of all
Mortgage Loans which are 60 or more
days Delinquent measured on a rolling three
month basis (including, for the
purposes of this calculation, Mortgage
Loans in foreclosure and REO Properties
and Mortgage Loans with respect to which
the applicable Mortgagor is in
bankruptcy) and (B) the Stated Principal
Balance of the Mortgage Loans as of the
preceding Servicer Remittance Date, equals
or exceeds the product of (i) 37.00%
and (ii) the Required Percentage or (2) the
quotient (expressed as a percentage)
of (A) the aggregate Realized Losses
incurred from the Cut-off Date through the
last day of the calendar month preceding
such Distribution Date and (B) the
aggregate principal balance of the Mortgage
Loans as of the Cut-off Date exceeds
the Stepdown Required Loss Percentage.
Subordinated
Certificate Cap Contract: The amended confirmation and
agreement and any related confirmation
thereto, between the Trust Fund or
Trustee and the Cap Contract Counterparty
(in the form of Exhibit N-2 hereto)
for the benefit of the Class M and Class
B-1 Certificates.
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Subordinated
Certificate Cap Contract Notional Balance: With respect to any
Distribution Date, the Subordinated
Certificate Cap Contract Notional Balance
set forth for such Distribution Date in the
Subordinated Certificate One-Month
LIBOR Cap Table attached hereto as Exhibit
O-2.
Subordinated
Certificate Cap Contract Termination Date: The Distribution
Date in April 2008.
Subordinated
Certificate Upper Collar: With respect to each Distribution
Date with respect to which payments are
received on the Subordinated Certificate
Cap Contract, a rate equal to the lesser of
One-Month LIBOR and 8.550% per
annum.
Subordinated
Certificates: Each Class of the Class M and Class B
Certificates.
Sub-Performing
Loan: means a Mortgage Loan pursuant to which a scheduled
monthly payment in respect of principal
and/or interest due prior to the Cut-off
Date under the terms of the related
Mortgage Note (or any modification thereto),
is at least 30 but not more than 60 days
delinquent.
Subsequent
Recovery: Any amount received on a Mortgage Loan (net of
amounts
reimbursed to the Servicer related to such
Mortgage Loan) subsequent to such
Mortgage Loan being determined to be a
Liquidated Mortgage Loan.
Subservicing
Agreement: As defined in Section 3.02(a).
Substitution
Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).
Tax Matters
Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation
Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any
direct or indirect transfer or sale of any Ownership Interest
in a Certificate.
Trust Fund: The
corpus of the trust (the "Merrill Lynch Mortgage Investors
Trust, Series 2005-SD1") created hereunder
consisting of (i) the Mortgage Loans
and all interest and principal received on
or with respect thereto on and after
the Cut-off Date to the extent not applied
in computing the Cut-off Date
Principal Balance thereof, exclusive of
interest not required to be deposited in
the Collection Account; (ii) the Collection
Account and the Certificate Account
and all amounts deposited therein pursuant
to the applicable provisions of this
Agreement; (iii) property that secured a
Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or
otherwise; (iv) the mortgagee's
rights under the Insurance Policies with
respect to the Mortgage Loans; (v) the
right to receive payment in respect of
P&I Arrearages; (vi) all proceeds of the
conversion, voluntary or involuntary, of
any of the foregoing into cash or other
liquid property; and (vii) the Cap Contract
and Cap Contract Account.
Trustee: Wells
Fargo Bank, N.A., a national banking association, not in its
individual capacity, but solely in its
capacity as trustee for the benefit of
the Certificateholders under this
Agreement, and any successor thereto, and any
corporation or national banking association
resulting from or surviving any
consolidation or merger to which it or its
successors may be a party and any
successor trustee as may from time to time
be serving as successor trustee
hereunder; it being understood that certain
duties of the Trustee under Sections
2.01 and 2.02 with respect to certain of
the Mortgage Loans and certain duties
with respect to the possession and
administration of the Mortgage Files
generally may be carried out by a custodian
engaged by the Trustee.
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Trustee Fee: The
monthly fee payable to the Trustee from interest collected
with respect to each Mortgage loan equal to
the product of (x) one-twelfth of
the Trustee Fee Rate and (y) the Stated
Principal Balance of such Mortgage Loan.
The Trustee is also entitled to investment
income earned on the amounts on
deposit in the Certificate Account.
Trustee Fee
Rate: 0.0175%.
Uncertificated
Class C Interest: An uncertificated interest having (i) the
same rights to payments as the Class C
Certificates, other than the rights to
payments of amounts with respect to the Cap
Contracts and P&I Arrearages, and
(ii) the rights to the payments treated as
distributed to the Class C
Certificates under Section 2.07(d),
provided, however, that such interest shall
have no obligation to make any payments
treated as paid by the Class C
Certificates pursuant to interest rate cap
agreements under Section 2.07(d).
Underlying
Mortgaged Property: With respect to each Co-op Loan, the
underlying real property owned by the
related residential cooperative housing
corporation.
Unpaid Realized
Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount,
Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount,
collectively.
Upper Collar:
Either of the Class A-1 Upper Collar or the Subordinated
Certificate Upper Collar.
Upper Tier
REMIC: As described in the Preliminary Statement and Section
2.07.
USAP Report: A
report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in
accordance with Section 3.18.
Voting Rights:
The portion of the voting rights of all the Certificates
that is allocated to any of the
Certificates for purposes of the voting
provisions hereunder. Voting Rights
allocated to each Class of Certificates
shall be allocated as follows: (1) 98% to
the Class A, Class M and Class B
Certificates, with the allocation among
such Certificates to be in proportion to
the Certificate Principal Balance of each
Class relative to the Certificate
Principal Balance of all other Classes and
(2) each Class of the Class C and
Class P will be allocated 2% of the Voting
Rights. Voting Rights will be
allocated among the Certificates of each
such Class in accordance with their
respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01.
Conveyance of Mortgage Loans.
The Depositor,
concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and
convey to the Trustee without
recourse all the right, title and interest
of the Depositor in and to the assets
of the Trust Fund. Such assignment includes
all interest and principal received
on or with respect to the Mortgage Loans on
or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage
Loans on or before the Cut-off
Date).
It is agreed and
understood by the Depositor, the Servicer and the Trustee
that it is not intended that any Mortgage
Loan be included in the Trust that is,
without limitation, a "High-Cost Home Loan"
as
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<PAGE>
defined by the Home Ownership and Equity
Protection Act of 1994 or any other
applicable anti-predatory lending laws,
including but not limited to (i) a
"High-Cost Home Loan" as defined in the New
Jersey Home Ownership Act effective
November 27, 2003; (ii) a "High-Cost Home
Loan" as defined in the New Mexico
Home Loan Protection Act effective January
1, 2004; or (iii) a "High-Cost Home
Loan" as defined in the Massachusetts
Predatory Home Loan Practices Act
effective November 7, 2004 or (iv) a
"High-Cost Home Loan" as defined by the
Indiana High Cost Home Loan Law effective
January 1, 2005.
(i) In
connection with such assignment, the Depositor does hereby
deliver
to, and deposit with, the Trustee, the
following documents or instruments with
respect to each Mortgage Loan:
(A) The original Mortgage Note endorsed in blank or, "Pay to the
order
of Wells Fargo
Bank, N.A., as trustee, without recourse" together with all
riders thereto.
The Mortgage Note shall include all intervening
endorsements
showing a complete chain of the title from the originator to
[____________________];
(B) Except as provided below and for each Mortgage Loan that is not
a
MERS Loan, the
original recorded Mortgage together with all riders thereto,
with evidence of
recording thereon, or, if the original Mortgage has not
yet been
returned from the recording office, a copy of the original
Mortgage
together with all riders thereto certified by the Seller to be
true copy of the
original of the Mortgage that has been delivered for
recording in the
appropriate recording office of the jurisdiction in which
the Mortgaged
Property is located and in the case of each MERS Loan, the
original
Mortgage together with all riders thereto, noting the presence
of
the MIN of the
Loan and either language indicating that the Mortgage Loan
is a MOM Loan or
if the Mortgage Loan was not a MOM Loan at origination,
the original
Mortgage and the assignment thereof to MERS, with evidence of
recording
indicated thereon, or a copy of the Mortgage certified by the
public recording
office in which such Mortgage has been recorded;
(C) In the case of each Mortgage Loan that is not a MERS Loan,
the
original Assignment of
each Mortgage endorsed either in blank or, to "Wells
Fargo Bank,
N.A., as trustee;"
(D) The original policy of title insurance (or a preliminary
title
report,
commitment or binder if the original title insurance policy has
not
been received
from the title insurance company);
(E) Originals of any intervening assignments of the Mortgage,
with
evidence of
recording thereon or, if the original intervening assignment
has not yet been
returned from the recording office, a copy of such
assignment
certified to be a true copy of the original of the assignment
which has been
sent for recording in the appropriate jurisdiction in which
the Mortgaged
Property is located; and
(F)
Originals of all assumption and modification agreements, if
any.
(ii) In
connection with such assignment, the Depositor does hereby
deliver
to, and deposit with, the Trustee the
following documents or instruments with
respect to each Mortgage Loan so assigned
that is a Co-op Loan:
(A) (i) The original Mortgage Note (or a lost note affidavit
(including a
copy of the original Mortgage Note)) or (ii) the original
consolidation,
extension and modification agreement (or a lost note
affidavit
(including a copy of the original consolidation, extension and
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<PAGE>
modification
agreement)), in either case endorsed either in blank or, "Pay
to the order of
Wells Fargo Bank, N.A., as trustee, without recourse";
(B) The original Mortgage entered into by the Mortgagor with
respect
to such Co-Op
Loan;
(C) The original Assignment of Mortgage endorsed either in blank or
to
"Wells Fargo
Bank, N.A., as trustee";
(D) The original assignments of Mortgage showing a complete chain
of
assignment from
the originator of the related Co-Op Loan to the last
endorsee on the
Mortgage Note;
(E) The original Form UCC-1 and any continuation statements
with
evidence of
filing thereon entered into by the Mortgagor with respect to
such Co-Op Loan
(or a recorded copy thereof);
(F) Form UCC-3 (or copy thereof) by the Seller or its agent
assigning
the security
interest covered by such Form UCC-1 to "Wells Fargo Bank,
N.A., as
trustee," together with all Forms UCC-3 (or copies thereof)
showing a
complete chain of assignment from the originator of the related
Co-op Loan to
the Seller, with evidence of recording thereon;
(G) The original stock certificate representing the stock allocated
to
the related
dwelling unit in the related residential cooperative housing
corporation and
pledged by the related Mortgagor to the originator of such
Co-op Loan with a
stock power in blank attached;
(H) The original proprietary lease;
(I) The original assignment of proprietary lease or a copy thereof,
to
the Trustee or
in blank, and all intervening assignments thereof;
(J) The original recognition agreement or a copy thereof of the
interests of the
mortgagee with respect to the Co-op Loan by the
residential
cooperative housing corporation, the stock of which was pledged
by the related
Mortgagor to the originator of such Co-op Loan; and
(K) Originals of any assumption, consolidation or modification
agreements
relating to any of the items specified in (A) through (F) above
with respect to
such Co-op Loan.
If in connection
with any Mortgage Loan that is not a Co-op Loan, the
Depositor cannot deliver the Mortgage,
Assignments of Mortgage or assumption,
consolidation or modification, as the case
may be, with evidence of recording
thereon, if applicable, concurrently with
the execution and delivery of this
Agreement solely because of a delay caused
by the public recording office where
such Mortgage, Assignments of Mortgage or
assumption, consolidation or
modification, as the case may be, has been
delivered for recordation, the
Depositor shall deliver or cause to be
delivered to the Trustee written notice
stating that such Mortgage or assumption,
consolidation or modification, as the
case may be, has been delivered to the
appropriate public recording office for
recordation. Thereafter, the Depositor
shall deliver or cause to be delivered to
the Trustee such Mortgage, Assignments of
Mortgage or assumption, consolidation
or modification, as the case may be, with
evidence of recording indicated
thereon, if applicable, upon receipt
thereof from the public recording office.
To the extent any required endorsement is
not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall
make or cause such endorsement to be
made.
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With respect to
any Mortgage Loan that is not a Co-op Loan, none of the
Depositor, the Servicer or the Trustee
shall be obligated to cause to be
recorded the Assignment of Mortgage
referred to in this Section 2.01. With
respect to any Co-op Loan, none of the
Depositor, the Servicer or the Trustee
shall be obligated to cause to be filed the
Form UCC-3 referred to in this
Section 2.01. In the event that any
Assignment of Mortgage referred to in this
Section 2.01 is not recorded or is
improperly recorded, the Servicer and the
Trustee shall have no liability for any
failure to receive or act on notices
related to such Assignment of Mortgage.
The ownership of
each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the
Trustee on behalf of the
Certificateholders. Neither the Depositor
nor the Servicer shall take any action
inconsistent with such ownership and shall
not claim any ownership interest
therein. The Depositor and the Servicer
shall respond to any third party
inquiries with respect to ownership of the
Mortgage Loans by stating that such
ownership is held by the Trustee on behalf
of the Certificateholders. Mortgage
documents relating to the Mortgage Loans
not delivered to the Trustee are and
shall be held in trust by the Servicer, for
the benefit of the Trustee as the
owner thereof, and the Servicer's
possession of the contents of each Mortgage
File so retained is for the sole purpose of
servicing the related Mortgage Loan,
and such retention and possession by the
Servicer is in a custodial capacity
only. The Depositor agrees to take no
action inconsistent with the Trustee's
ownership of the Mortgage Loans, to
promptly indicate to all inquiring parties
that the Mortgage Loans have been sold and
to claim no ownership interest in the
Mortgage Loans.
It is the
intention of this Agreement that the conveyance of the
Depositor's right, title and interest in
and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and
sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the
Depositor is characterized as a pledge
and not a sale, then the Depositor shall be
deemed to have transferred to the
Trustee all of the Depositor's right, title
and interest in, to and under the
obligations of the Seller deemed to be
secured by said pledge; and it is the
intention of this Agreement that the
Depositor shall also be deemed to have
granted to the Trustee a first priority
security interest in all of the
Depositor's right, title, and interest in,
to and under the obligations of the
Seller to the Depositor deemed to be
secured by said pledge and that the Trustee
shall be deemed to be an independent
custodian for purposes of perfection of the
security interest granted to the Depositor.
If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is
characterized as a pledge, it is the
intention of this Agreement that this
Agreement shall constitute a security
agreement under applicable law, and that
the Depositor shall be deemed to have
granted to the Trustee a first priority
security interest in all of the
Depositor's right, title and interest in,
to and under the Mortgage Loans, all
payments of principal of or interest on
such Mortgage Loans, all other rights
relating to and payments made in respect of
the Trust Fund, and all proceeds of
any thereof. If the trust created by this
Agreement terminates prior to the
satisfaction of the claims of any Person in
any Certificates, the security
interest created hereby shall continue in
full force and effect and the Trustee
shall be deemed to be the collateral agent
for the benefit of such Person.
In addition to
the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey,
assign and set over to the Trustee for
the benefit of the Certificateholders its
rights and interests under the Sale
Agreement, including the Depositor's right,
title and interest in the
representations and warranties contained in
the Sale Agreement, and the benefit
of the repurchase obligations and the
obligation of the Seller contained in the
Sale Agreement to take, at the request of
the Depositor or the Trustee, all
action on its part which is reasonably
necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts
such assignment, and shall be
entitled to exercise all rights of the
Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor.
The foregoing sale, transfer,
assignment, set-over, deposit and
conveyance does not and is not intended to
result in creation or assumption by the
Trustee of any obligation of the
Depositor, the Seller, or any other Person
in
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connection with the Mortgage Loans or any
other agreement or instrument relating
thereto except as specifically set forth
herein.
SECTION 2.02.
Acceptance by the Trustee of the Mortgage Loans.
Except as set
forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the
Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and
delivery of a Mortgage File (but does
not acknowledge receipt of all documents
required to be included in such
Mortgage File) with respect to each
Mortgage Loan and declares that it holds and
will hold such documents and any other
documents constituting a part of the
Mortgage Files delivered to it in trust for
the use and benefit of all present
and future Certificateholders. The
Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material
exception was taken in the Exception
Report unless such exception is cured to
the satisfaction of the Trustee within
45 Business Days of the Closing Date.
The Trustee
acknowledges receipt of the two Cap Contracts (forms of which
are attached hereto as Exhibits N-1 and
N-2) and the Sale Agreement.
The Trustee
agrees, for the benefit of Certificateholders and the NIMs
Insurer, to review each Mortgage File
delivered to it within 60 days after the
Closing Date to ascertain and to certify,
within 70 days of the Closing Date, to
the NIMs Insurer, the Depositor and the
Servicer that all documents required by
Section 2.01 have been executed and
received, and that such documents relate to
the Mortgage Loans identified in Exhibit B
that have been conveyed to it. If the
Trustee finds any document or documents
constituting a part of a Mortgage File
to be missing or defective (that is,
mutilated, damaged, defaced or unexecuted)
in any material respect, the Trustee shall
promptly (and in any event within no
more than five Business Days) after such
finding so notify the NIMs Insurer, the
Servicer, the Seller and the Depositor. In
addition, the Trustee shall also
notify the NIMs Insurer, the Servicer, the
Seller and the Depositor if the
original Mortgage with evidence of
recording thereon with respect to a Mortgage
Loan is not received within 60 days of the
Closing Date; if it has not been
received because of a delay caused by the
public recording office where such
Mortgage has been delivered for
recordation, the Depositor shall deliver or
cause to be delivered to the Trustee
written notice stating that such Mortgage
has been delivered to the appropriate
public recording office for recordation
and thereafter the Depositor shall deliver
or cause to be delivered such
Mortgage with evidence of recording thereon
upon receipt thereof from the public
recording office. If such omission, defect
or other irregularity (i) materially
interferes with the ability of the Servicer
to foreclose on the related
Mortgaged Property at the time of
foreclosure, (ii) constitutes a Qualification
Defect with respect to that Mortgage Loan
or (iii) causes a material adverse
change in the value of that Mortgage Loan
or the interest of the Trust therein,
the Trustee shall request that the Seller
correct or cure such omission, defect
or other irregularity, or substitute a
Mortgage Loan pursuant to the provisions
of Section 2.03, within 90 days from the
date the Seller was notified of such
omission or defect and, if the Seller does
not correct or cure such omission or
defect within such period, that the Seller
purchase such Mortgage Loan from the
Trust Fund within 90 days from the date the
Trustee notified the Seller of such
omission, defect or other irregularity at
the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage
Loan purchased pursuant to this
Section 2.02 shall be paid to the Servicer
and deposited by the Servicer in the
Certificate Account or Collection Account,
as appropriate, promptly upon
receipt, and, upon receipt by the Trustee
of written notification of such
deposit signed by a Servicing Officer, the
Trustee, upon receipt of a Request
for Release, shall promptly release to the
Seller the related Mortgage File and
the Trustee shall execute and deliver such
instruments of transfer or
assignment, without recourse, as shall be
requested by the Seller and necessary
to vest in the Seller or its designee, as
the case may be, any Mortgage Loan
released pursuant hereto, and the Trustee
shall have no further responsibility
with regard to such Mortgage Loan. It is
understood and agreed that the
obligation of the Seller to purchase, cure
or substitute any Mortgage Loan as to
which a material defect in or
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omission of a constituent document exists
shall constitute the sole remedy
respecting such defect or omission
available to the Trustee on behalf of
Certificateholders and the NIMs Insurer.
The preceding sentence shall not,
however, limit any remedies available to
the Certificateholders, the NIMs
Insurer, the Depositor or the Trustee
pursuant to the Sale Agreement. The
Trustee shall be under no duty or
obligation to inspect, review and examine such
documents, instruments, certificates or
other papers to determine that they are
genuine, enforceable, recordable or
appropriate to the represented purpose, or
that they have actually been recorded, or
that they are other than what they
purport to be on their face. The Servicer
and the Trustee shall keep
confidential the name of each Mortgagor
except as required for the performance
of this Agreement and the Servicer and the
Trustee shall not solicit any such
Mortgagor for the purpose of refinancing
the related Mortgage Loan;
notwithstanding anything herein to the
contrary, the foregoing shall not be
construed to prohibit (i) disclosure of any
and all information that is or
becomes publicly known, or information
obtained by the Trustee or the Servicer
from sources other than the other parties
hereto, (ii) disclosure of any and all
information (A) if required to do so by any
applicable law, rule or regulation,
(B) to any government agency or regulatory
body having or claiming authority to
regulate or oversee any aspects of the
Trustee's business or that of its
affiliates, (C) pursuant to any subpoena,
civil investigation demand or similar
demand or request of any court, regulatory
authority, arbitrator or pursuant to
any arbitration to which Trustee or any
affiliate or an officer, director,
employer or shareholder thereof is a party
or (D) to any affiliate, independent
or internal auditor, agent, employee or
attorney of the Trustee having a need to
know the same, provided that the Trustee
advises such recipient of the
confidential nature of the information
being disclosed, or (iii) any other
disclosure authorized by the Depositor. The
Servicer shall provide to the
Depositor any information related to the
Mortgage Loans requested by the
Depositor. It is understood and agreed that
all rights and benefits relating to
the solicitation of any Mortgagors and the
attendant rights, title and interest
in and to the list of Mortgagors and data
relating to their Mortgages shall be
retained by the Servicer.
Within 70 days
of the Closing Date, the Trustee shall deliver to the NIMs
Insurer, the Depositor and the Servicer the
Trustee's Certification,
substantially in the form of Exhibit D
attached hereto, evidencing the
completeness of the Mortgage Files, with
any exceptions noted thereto.
SECTION 2.03.
Representations, Warranties and Covenants of the Depositor.
(a) The Depositor hereby represents and warrants to the Servicer,
the
NIMs Insurer and the Trustee as follows, as
of the date hereof:
(i) The Depositor is duly organized and is validly existing as
a
corporation in good standing
under the laws of the State of Delaware and
has full power
and authority (corporate and other) necessary to own or hold
its properties
and to conduct its business as now conducted by it and to
enter into and
perform its obligations under this Agreement and the Sale
Agreement.
(ii) The Depositor has the full corporate power and authority
to
execute, deliver
and perform, and to enter into and consummate the
transactions
contemplated by, this Agreement and the Sale Agreement and has
duly authorized,
by all necessary corporate action on its part, the
execution,
delivery and performance of this Agreement and the Sale
Agreement; and
this Agreement and the Sale Agreement, assuming the due
authorization,
execution and delivery hereof by the other parties hereto,
constitutes a
legal, valid and binding obligation of the Depositor,
enforceable
against the Depositor in accordance with its terms, subject, as
to
enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and
other similar laws affecting creditors' rights generally and
(ii) general
principles of equity, regardless of whether enforcement is
sought in a
proceeding in equity or at law.
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(iii) The execution and delivery of this Agreement and the Sale
Agreement by the
Depositor, the consummation of the transactions
contemplated by
this Agreement and the Sale Agreement, and the fulfillment
of or compliance
with the terms hereof are in the ordinary course of
business of the
Depositor and will not (A) result in a material breach of
any term or
provision of the charter or by-laws of the Depositor or (B)
materially
conflict with, result in a violation or acceleration of, or
result in a
material default under, the terms of any other material
agreement or
instrument to which the Depositor is a party or by which it
may be bound or
(C) constitute a material violation of any statute, order
or regulation
applicable to the Depositor of any court, regulatory body,
administrative
agency or governmental body having jurisdiction over the
Depositor; and
the Depositor is not in breach or violation of any material
indenture or
other material agreement or instrument, or in violation of any
statute, order
or regulation of any court, regulatory body, administrative
agency or
governmental body having jurisdiction over it which breach or
violation may
materially impair the Depositor's ability to perform or meet
any of its
obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's
knowledge,
threatened, against the Depositor that would materially and
adversely affect
the execution, delivery or enforceability of this
Agreement and
the Sale Agreement or the ability of the Depositor to perform
its obligations
under this Agreement and the Sale Agreement in accordance
with the terms
hereof.
(v) No consent, approval, authorization or order of any court
or
governmental
agency or body is required for the execution, delivery and
performance by
the Depositor of, or compliance by the Depositor with, this
Agreement and
the Sale Agreement or the consummation of the transactions
contemplated
hereby, or if any such consent, approval, authorization or
order is
required, the Depositor has obtained the same. The Depositor
hereby represents and
warrants to the Trustee with respect to each Mortgage
Loan as of the
Closing Date, and following the transfer of the Mortgage
Loans to it by
the Seller, the Depositor had good title to the Mortgage
Loans and the
Mortgage Notes were subject to no offsets, claims, liens,
mortgage,
pledge, charge, security interest, defenses or counterclaims.
(b) The representations and warranties of the Seller with respect
to
the Mortgage Loans contained in the Sale
Agreement were made as of the Closing
Date. To the extent that any fact,
condition or event with respect to a Mortgage
Loan constitutes a breach of a
representation or warranty of the Seller under
the Sale Agreement, the only right or
remedy of the Trustee, the NIMs Insurer or
of any Certificateholder shall be the
Trustee's right to enforce the obligations
of the Seller under any applicable
representation or warranty made by it. The
Trustee acknowledges that the Depositor
shall have no obligation or liability
with respect to any breach of any
representation or warranty with respect to the
Mortgage Loans (except as set forth in
Section 2.03(a)(v)) under any
circumstances.
(c) Upon discovery by any of the Depositor, the Servicer, the
NIMs
Insurer or the Trustee of a breach of any
of such representations and warranties
set forth in the Sale Agreement that
adversely and materially affects the value
of the related Mortgage Loan, Prepayment
Charges or the interests of the
Certificateholders, the party discovering
such breach shall give prompt written
notice to the other parties. Within 90 days
of the discovery of such breach of
any representation or warranty, the the
Seller shall either (a) cure such breach
in all material respects, (b) repurchase
such Mortgage Loan or any property
acquired in respect thereof from the
Trustee at the Purchase Price or (c) within
the two year period following the Closing
Date, substitute a Replacement
Mortgage Loan for the affected Mortgage
Loan. In the event of discovery of a
breach of any representation and warranty
of the Seller, the Trustee shall
enforce its rights under the Sale Agreement
for the benefit of
Certificateholders and the NIMs Insurer. If
a breach of the representations and
warranties set forth in the Sale Agreement
exists solely
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due to the unenforceability of a Prepayment
Charge, the Trustee shall notify the
NIMs Insurer thereof and not seek to
enforce the repurchase remedy provided for
herein unless directed in writing to do so
by the NIMs Insurer. In the event of
a breach of the representations and
warranties with respect to the Mortgage
Loans set forth in the Sale Agreement, the
Trustee shall, at the request of the
NIMs Insurer, enforce the right of the
Trust Fund and the NIMs Insurer to be
indemnified for such breach of
representation and warranty. In the event that
such breach relates solely to the
unenforceability of a Prepayment Charge,
amounts received in respect of such
indemnity up to the amount of such
Prepayment Charge shall be distributed
pursuant to Section 4.04(b)(i). As
provided in the Sale Agreement, if the
Seller substitutes for a Mortgage Loan
for which there is a breach of any
representations and warranties in the Sale
Agreement which adversely and materially
affects the value of such Mortgage Loan
and such substitute mortgage loan is not a
Replacement Mortgage Loan, under the
terms of the Sale Agreement, the Seller
will, in exchange for such substitute
Mortgage Loan, (i) provide the applicable
Purchase Price for the affected
Mortgage Loan or (ii) within two years of
the Closing Date, substitute such
affected Mortgage Loan with a Replacement
Mortgage Loan. Any such substitution
shall not be effected prior to the
additional delivery to the Trustee of a
Request for Release substantially in the
form of Exhibit I and shall not be
effected unless it is within two years of
the Startup Day. As provided in the
Sale Agreement, the Seller indemnifies and
holds the Trust Fund, the Trustee,
the Depositor, the NIMs Insurer, the
Servicer and each Certificateholder
harmless against any and all taxes, claims,
losses, penalties, fines,
forfeitures, reasonable legal fees and
related costs, judgments, and any other
costs, fees and expenses that the Trust
Fund, the Trustee, the Depositor, the
NIMs Insurer, the Servicer and any
Certificateholder may sustain in connection
with any actions of the Seller relating to
a repurchase of a Mortgage Loan other
than in compliance with the terms of this
Section 2.03 and the Sale Agreement,
to the extent that any such action causes
(i) any federal or state tax to be
imposed on the Trust Fund or any REMIC
provided for herein, including without
limitation, any federal tax imposed on
"prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions
after the startup day" under Section
860G(d)(1) of the Code, or (ii) any REMIC
created hereunder to fail to qualify
as a REMIC at any time that any Certificate
is outstanding. In furtherance of
the foregoing, if the Seller is not a
member of MERS and repurchases a Mortgage
Loan which is registered on the MERS
System, the Seller, at its own expense and
without any right of reimbursement, shall
cause MERS to execute and deliver an
assignment of the Mortgage in recordable
form to transfer the Mortgage from MERS
to the Seller and shall cause such Mortgage
to be removed from registration on
the MERS System in accordance with MERS'
rules and regulations.
With respect to
any Mortgage Loan repurchased by the Depositor pursuant to
this Agreement or by the Seller pursuant to
the Sale Agreement, the principal
portion of the funds received by the
Servicer in respect of such repurchase of a
Mortgage Loan will be considered a
Principal Prepayment and shall be deposited
by the Servicer in the Collection Account
pursuant to Section 3.05 and the
Servicer shall notify the Trustee of its
receipt of the same. The Trustee, upon
receipt of the full amount of the Purchase
Price for a Deleted Mortgage Loan, or
upon receipt of the Mortgage File for a
Replacement Mortgage Loan substituted
for a Deleted Mortgage Loan, shall release
or cause to be released and reassign
to the Depositor or the Seller, as
applicable, the related Mortgage File for the
Deleted Mortgage Loan and shall execute and
deliver such instruments of transfer
or assignment, in each case without
recourse, representation or warranty, as
shall be necessary to vest in such party or
its designee or assignee title to
any Deleted Mortgage Loan released pursuant
hereto, free and clear of all
security interests, liens and other
encumbrances created by this Agreement,
which instruments shall be prepared by the
Trustee, and the Trustee shall not
have any further responsibility with
respect to the Mortgage File relating to
such Deleted Mortgage Loan.
With respect to
each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this
Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor or the
Seller, as applicable, must deliver to
the Trustee (or its custodian) the Mortgage
File for the Replacement Mortgage
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Loan containing the documents set forth in
Section 2.01 along with a written
certification certifying as to the
satisfaction by such Mortgage Loan of all
requirements under the definition of
Replacement Mortgage Loan and the delivery
of such Mortgage File and containing the
granting language set forth in Section
2.01; and (ii) the Depositor will be deemed
to have made, with respect to such
Replacement Mortgage Loan, each of the
representations and warranties made by it
with respect to the related Deleted
Mortgage Loan. The Trustee (or its
custodian) shall review the Mortgage File
with respect to each Replacement
Mortgage Loan and certify to the NIMs
Insurer and the Depositor that all
documents required by Section 2.01 have
been executed and received.
For any month in
which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted
Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate
principal balance of all such
Replacement Mortgage Loans as of the date
of substitution and the aggregate
Prepayment Charges with respect to such
Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance
(after application of the principal
portion of the Scheduled Payment due in the
month of substitution) and aggregate
Prepayment Charges of all such Deleted
Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in
the preceding sentence (such amount,
the "Substitution Adjustment Amount") plus
an amount equal to any unreimbursed
costs, penalties and/or damages incurred by
the Trust Fund in connection with
any violation relating to such Deleted
Mortgage Loan of any predatory or abusive
lending law shall be remitted by the Seller
to the Servicer for deposit into the
Collection Account on the Determination
Date for the Distribution Date relating
to the Prepayment Period during which the
related Mortgage Loan became required
to be purchased or replaced hereunder.
Notwithstanding
any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this
Article II shall be subject to the
additional limitations that no substitution
of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless
the Trustee and the NIMs Insurer
shall have received an Opinion of Counsel
(at the expense of the party seeking
to make the substitution) that, under
current law, such substitution will not
(A) affect adversely the status of any
REMIC established hereunder as a REMIC,
or of the related "regular interests" as
"regular interests" in any such REMIC,
or (B) cause any such REMIC to engage in a
"prohibited transaction" or
prohibited contribution pursuant to the
REMIC Provisions.
The Trustee
shall cause the Mortgage Loan Schedule to be amended in
accordance with the terms of this
Agreement.
The Seller 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 Deleted
Mortgage Loan from the terms of this
Agreement and the substitution of the
Replacement Mortgage Loan or Replacement
Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to
the NIMs Insurer, the Servicer and the
Trustee. Upon such substitution by the
Seller, such Replacement Mortgage Loan or
Replacement Mortgage Loans shall constitute
part of the Mortgage Pool and shall
be subject in all respects to the terms of
this Agreement and the Sale
Agreement, including all applicable
representations and warranties thereof
included in the Sale Agreement as of the
date of substitution.
(d) It is understood and agreed that the representations,
warranties
and indemnification (i) set forth in this
Section 2.03 and (ii) of the Seller
and the Depositor set forth in the Sale
Agreement and assigned to the Trustee by
the Depositor hereunder shall each survive
delivery of the Mortgage Files and
the Assignment of Mortgage of each Mortgage
Loan to the Trustee and shall
continue throughout the term of this
Agreement.
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(e) The Depositor shall deliver a copy of the Mortgage Loan
Schedule
to the Servicer on the Closing Date.
SECTION 2.04.
Representations and Warranties of the Servicer.
(i) The Servicer hereby represents and warrants to the Depositor
and
the Trustee as
follows, as of the date hereof:
(ii) The Servicer is duly organized and is validly existing as
a
corporation in
good standing under the laws of the State of Nevada and is
duly authorized
and qualified to transact any and all business contemplated
by this
Agreement to be conducted by the Servicer in any state in which
a
Mortgaged
Property (or Underlying Mortgaged Property, in the case of a
Co-op Loan) is
located or is otherwise not required under applicable law to
effect such
qualification and, in any event, is in compliance with the
doing business
laws of any such state, to the extent necessary to ensure
its ability to
enforce each Mortgage Loan, to service the Mortgage Loans in
accordance with
the terms of this Agreement and to perform any of its other
obligations
under this Agreement in accordance with the terms hereof.
(iii) The Servicer has the corporate power and authority to
service
each Mortgage
Loan, and to execute, deliver and perform, and to enter into
and consummate the
transactions contemplated by this Agreement and has duly
authorized by
all necessary corporate action on the part of the Servicer
the execution,
delivery and performance of this Agreement; and this
Agreement,
assuming the due authorization, execution and delivery hereof
by
the other
parties hereto, constitutes a legal, valid and binding
obligation
of the Servicer,
enforceable against the Servicer in accordance with its
terms, except
that (a) the enforceability hereof may be limited by
bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to
creditors' rights generally and (b) the remedy of specific
performance and
injunctive and other forms of equitable relief may be
subject to
equitable defenses and to the discretion of the court before
which any
proceeding therefor may be brought.
(iv) The execution and delivery of this Agreement by the Servicer,
the
servicing of the
Mortgage Loans under this Agreement, the consummation of
any other of the
transactions contemplated by this Agreement, and the
fulfillment of
or compliance with the terms hereof are in the ordinary
course of
business of the Servicer and will not (A) result in a material
breach of any
term or provision of the charter or by-laws of the Servicer
or (B)
materially conflict with, result in a material breach, violation
or
acceleration of,
or result in a material default under, the terms of any
other material
agreement or instrument to which the Servicer is a party or
by which it may
be bound, or (C) constitute a material violation of any
statute, order
or regulation applicable to the Servicer of any court,
regulatory body,
administrative agency or governmental body having
jurisdiction
over the Servicer; and the Servicer is not in breach or
violation of any
material indenture or other material agreement or
instrument, or
in violation of any statute, order or regulation of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction
over it which breach or violation may materially impair the
Servicer's
ability to perform or meet any of its obligations under this
Agreement.
(v) The Servicer is an approved servicer of mortgage loans for
Fannie
Mae and is an
approved servicer of mortgage loans for Freddie Mac.
(vi) No litigation is pending or, to the best of the Servicer's
knowledge,
threatened, against the Servicer that would materially and
adversely affect
the execution, delivery or
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enforceability
of this Agreement or the ability of the Servicer to service
the Mortgage
Loans or to perform any of its other obligations under this
Agreement in
accordance with the terms hereof.
(vii) No consent, approval, authorization or order of any court
or
governmental
agency or body is required for the execution, delivery and
performance by
the Servicer of, or compliance by the Servicer with, this
Agreement or the
consummation of the transactions contemplated hereby, or
if any such
consent, approval, authorization or order is required, the
Servicer has
obtained the same.
(viii) The Servicer has fully furnished and will fully furnish
(for
the period it
serviced the Mortgage Loans), in accordance with the Fair
Credit Reporting
Act and its implementing regulations, accurate and
complete
information (e.g., favorable and unfavorable) on its borrower
credit files to
Equifax, Experian and Trans Union Credit Information
Company on a
monthly basis.
SECTION 2.05.
Substitutions and Repurchases of Mortgage Loans which are not
"Qualified Mortgages."
Upon discovery
by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party
discovering such fact shall promptly
(and in any event within 5 Business Days of
discovery) give written notice
thereof to the other parties. In connection
therewith, the Depositor shall, at
the Depositor's option, either (i)
substitute, if the conditions in Section
2.03(c) with respect to substitutions are
satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii)
repurchase the affected Mortgage Loan
within 90 days of such discovery in the
same manner as it would a Mortgage Loan
for a breach of representation or warranty
contained in Section 2.03. The
Trustee shall reconvey to the Depositor 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
contained in Section 2.03.
SECTION 2.06.
Authentication and Delivery of Certificates.
The Trustee
acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer
and assignment, the Trustee has caused
to be authenticated and delivered to or
upon the order of the Depositor, in
exchange for the Mortgage Loans,
Certificates duly authenticated by the Trustee
in authorized denominations evidencing
ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and
exercise the rights referred to above
for the benefit of all present and future
Holders of the Certificates and to
perform its duties set forth in this
Agreement in accordance with the provisions
hereof to the best of its abilities, to the
end that the interests of the
Holders may be adequately and effectively
protected.
SECTION 2.07.
REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to
make
an appropriate election to treat each of
the Upper Tier REMIC and the Lower Tier
REMIC as a REMIC. The Trustee shall sign
the returns providing for such
elections and such other tax or information
returns which are required to be
signed by the Trustee under applicable law.
This Agreement shall be construed so
as to carry out the intention of the
parties that each of the Upper Tier REMIC
and the Lower Tier REMIC be treated as a
REMIC at all times prior to the date on
which the Trust Fund is terminated.
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(b)
The Preliminary Statement sets forth the designations and
"latest
possible maturity date" for federal income
tax purposes of all interests created
hereby. The "Startup Day" for purposes of
the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year
shall be the calendar year.
The Lower Tier
REMIC shall consist of all of the assets of the Trust Fund,
other than (i) amounts distributable to the
Class P Certificates pursuant to
Section 4.04(b)(i) hereof, (ii) the
interests issued by the Lower Tier REMIC,
(iii) the grantor trusts described in
Section 2.07 hereof, (iv) amounts
collected in respect of P&I Arrearages
(v) the Advance Reserve Account and (vi)
each Cap Contract and the Cap Contract
Account. The Lower Tier REMIC shall issue
the Lower Tier REMIC Regular Interests
which shall be designated as regular
interests of such REMIC and shall issue the
Class LTR Interest that shall be
designated as the sole class of residual
interest in the Lower Tier REMIC. Each
of the Lower Tier REMIC Regular Interests
shall have the characteristics set
forth in its definition.
The assets of
the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The REMIC Regular Interests
shall be designated as the regular
interests in the Upper Tier REMIC and the
Residual Interest shall be designated
as the sole class of residual interest in
the Upper Tier REMIC. For federal
income tax purposes, the pass-through rate
on each REMIC Regular Interest (other
than the Uncertificated Class C Interest)
and on the sole class of residual
interest in the Upper Tier REMIC shall be
subject to a cap equal to the Net
Rate.
The beneficial
ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class
R Certificate. The Class LTR Interest
shall not have a principal balance or bear
interest.
(c) The "tax matters person" with respect to each REMIC for
purposes
of the REMIC Provisions shall be the
beneficial owner of the Class R
Certificate; provided, however, that the
Holder of the Class R Certificate, by
its acceptance thereof, irrevocably
appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters
person" with respect to each REMIC for
purposes of the REMIC Provisions. If there
is more than one beneficial owner of
the Class R Certificate, the "tax matters
person" shall be the Person with the
greatest percentage interest in the Class R
Certificate and, if there is more
than one such Person, shall be determined
under Treasury regulation Section
1.860F-4(d) and Treasury regulation Section
301.6231(a)(7)-1.
(d) It is intended that the rights of each Class of the Class A,
Class
M and Class B Certificates to receive
payments in respect of Excess Interest
shall be treated as a right in interest
rate cap contracts written by the Class
C Certificateholders in favor of the
holders of each Class of the Class A, Class
M and Class B Certificates and such shall
be accounted for as property held
separate and apart from the regular
interests in the Upper Tier REMIC held by
the holders of the Class A (other than the
Class R Certificate), Class M and
Class B Certificates and the residual
interest in the Upper Tier REMIC held by
the holder of the Class R Certificate. For
information reporting requirements,
the rights of the Class A, Class M and
Class B Certificates to receive payments
in respect of Excess Interest shall be
assumed to have zero or a de minimis
value. This provision is intended to
satisfy the requirements of Treasury
Regulations Section 1.860G-2(i) for the
treatment of property rights coupled
with REMIC interests to be separately
respected and shall be interpreted
consistently with such regulation. On each
Distribution Date, to the extent that
any of the Class A, Class M and Class B
Certificates receive payments in respect
of Excess Interest, such amounts, to the
extent not derived from payments on the
Cap Contracts or amounts collected in
respect of P&I Arrearages, will be treated
as distributed by the Upper Tier REMIC to
the Class C Certificates pro rata in
payment of the amounts specified in Section
4.04(g) and then paid to the
relevant Class of Certificates pursuant to
the related interest rate cap
agreement.
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(e) The parties intend that the portion of the Trust Fund
consisting
of the Uncertificated Class C Interest, the
Cap Contracts, the Cap Contract
Account, amounts collected in respect of
P&I Arrearages, and the obligation of
the holders of the Class C Certificates to
pay amounts in respect of Excess
Interest to the holders of the Class A,
Class M and Class B Certificates shall
be treated as a "grantor trust" under the
Code, for the benefit of the holders
of the Class C Certificates, and the
provisions hereof shall be interpreted
consistently with this intention. In
furtherance of such intention, the Trustee
shall (i) furnish or cause to be furnished
to the holders of the Class C
Certificates information regarding their
allocable share, if any, of the income
with respect to such grantor trust, (ii)
file or cause to be filed with the
Internal Revenue Service Form 1041
(together with any necessary attachments) and
such other forms as may be applicable and
(iii) comply with such information
reporting obligations with respect to
payments from such grantor trust to the
holders of Class A, Class M, Class B and
Class C Certificates as may be
applicable under the Code. Amounts
collected in respect of P&I Arrearages shall
be an "outside reserve fund" for federal
income tax purposes and not an asset of
any REMIC. Furthermore, the Holders of the
Class C Certificates shall be the
beneficial owners of amounts collected in
respect of P&I Arrearages for all
federal income tax purposes.
(f) The parties intend that the portion of the Trust Fund
consisting
of the right to receive amounts
distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof shall
be treated as a "grantor trust"
under the Code, for the benefit of the
holders of the Class P Certificates, and
the provisions hereof shall be interpreted
consistently with this intention. In
furtherance of such intention, the Trustee
shall (i) furnish or cause to be
furnished to the holders of the Class P
Certificates information regarding their
allocable share of the income with respect
to such grantor trust and (ii) file
or cause to be filed with the Internal
Revenue Service Form 1041 (together with
any necessary attachments) and such other
forms as may be applicable.
(g) The parties intend that the portion of the Trust Fund
consisting
of the Advance Reserve Account shall be
treated as a "grantor trust" under the
Code for the benefit of the Servicer until
such time as such amounts are applied
in accordance with Section 3.09, and the
provisions hereof shall be interpreted
consistently with such intentions.
(h) All payments of principal and interest at the Net Mortgage Rate
on
each of the Mortgage Loans (other than
amounts distributable to the Class P
Certificates pursuant to Section 4.04(b)(i)
hereof and other than amounts
collected in respect of P&I Arrearages)
received from the Mortgage Loans shall
be paid to the Lower Tier REMIC Regular
Interests until the principal balance of
all such interests have been reduced to
zero and any losses allocated to such
interests have been reimbursed. Any excess
amounts shall be distributed to the
Class LTR Interest. On each Distribution
Date, an amount equal to 50% of the
increase in the Overcollateralization
Amount shall be payable as a reduction of
the principal amounts of the Lower Tier
REMIC Marker Classes (with such amount
allocated among the Lower Tier REMIC Marker
Classes so that each Lower Tier
REMIC Marker Class will have its principal
reduced by an amount equal to 50% of
any increase in the Overcollateralization
Amount that results in a reduction in
the principal balance of its Related
Certificates) and will be accrued and added
to the principal balance of the Class LTX
Interest. All payments of scheduled
principal and prepayments of principal on
the Mortgage Loans shall be allocated
50% to the Class LTX Interest and 50% to
the Lower Tier REMIC Marker Classes
(with principal payments allocated to each
of the Lower Tier REMIC Marker
Classes in an amount equal to 50% of the
principal amounts distributed to the
Related Certificates in reduction of their
principal amounts). Notwithstanding
the preceding sentence, an amount equal to
the principal payments that result in
a reduction in the Overcollateralization
Amount shall be treated as payable
entirely to the Class LTX Interest.
Realized Losses that are allocated to the
Certificates shall be applied to the Lower
Tier REMIC Marker Classes and the
Class LTX Interest so that after all
distributions have been made on each
Distribution Date (i) the principal balance
of each of the Lower Tier REMIC
Marker Classes is equal to 50% of the
principal
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balance of the Related Certificates and
(ii) the principal balance of the Class
LTX Interest is equal to the sum of (x) 50%
of the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50%
of the Overcollateralization Amount.
Each Lower Tier REMIC Marker Class shall be
entitled to receive an amount equal
to 50% of all amounts distributed to the
Related Certificates in respect of
unreimbursed amounts of Realized Losses.
The Class LTX Interest shall be
entitled to receive all other amounts
distributed to the Certificates in respect
of unreimbursed amounts of Realized
Losses.
If on any
Distribution Date the Certificate Principal Balance of any
Class
of Certificates is increased pursuant to
the last sentence of the definition of
"Certificate Principal Balance", then there
shall be an equivalent increase in
the principal amounts of the Lower Tier
REMIC Regular Interests, with such
increase allocated (before the making of
distributions and the allocation of
losses on the Lower Tier REMIC Regular
Interests on such Distribution Date)
among the Lower Tier REMIC Regular
Interests so that (i) each of the Lower Tier
Marker Classes has a principal balance
equal to 50% of the principal balance of
the Related Certificates, (ii) the Class
LTX Interest has a principal balance
equal to the sum of (x) 50% of the
aggregate Stated Principal Balance of the
Mortgage Loans and (y) 50% of the
Overcollateralization Amount.
(i) In the event that any REMIC provided for herein fails to
qualify
as a REMIC, loses its status as a REMIC or
incurs federal, state or local taxes
as a result of a prohibited transaction or
prohibited contribution under the
REMIC Provisions due to the negligent
performance by the Servicer of its duties
and obligations set forth herein, the
Servicer shall indemnify the Trustee, and
the Trust Fund against any and all Losses
resulting from such negligence;
provided, however, that the Servicer shall
not be liable for any such Losses
attributable to the action or inaction of
the Depositor, the Trustee or the
Holder of the Class R Certificate, as
applicable, nor for any such Losses
resulting from misinformation provided by
the Holder of such Class R Certificate
on which the Servicer has relied. The
foregoing shall not be deemed to limit or
restrict the rights and remedies of the
Holder of such Class R Certificate now
or hereafter existing at law or in equity.
Notwithstanding the foregoing,
however, in no event shall the Servicer
have any liability (1) for any action or
omission that is taken in accordance with
and in compliance with the express
terms of, or which is expressly permitted
by the terms of, this Agreement, (2)
for any Losses other than those arising out
of a negligent performance by the
Servicer of its duties and obligations set
forth herein, and (3) for any special
or consequential damages to
Certificateholders (in addition to payment of
principal and interest on the
Certificates).
(j) In the event that any REMIC provided for herein fails to
qualify
as a REMIC, loses its status as a REMIC, or
incurs federal, state or local taxes
as a result of a prohibited transaction or
prohibited contribution under the
REMIC Provisions due to the negligent
performance by the Trustee of its duties
and obligations set forth herein, the
Trustee shall indemnify the Trust Fund
against any and all Losses resulting from
such negligence; provided, however,
that the Trustee shall not be liable for
any such Losses attributable to the
action or inaction of the Servicer, the
Depositor or the Holder of the Class R
Certificate, as applicable, nor for any
such Losses resulting from
misinformation provided by the Holder of
such Class R Certificate on which the
Trustee has relied. The foregoing shall not
be deemed to limit or restrict the
rights and remedies of the Holder of such
Class R Certificate now or hereafter
existing at law or in equity.
Notwithstanding the foregoing, however, in no
event shall the Trustee have any liability
(1) for any action or omission that
is taken in accordance with and in
compliance with the express terms of, or
which is expressly permitted by the terms
of, this Agreement, (2) for any Losses
other than those arising out of a negligent
performance by the Trustee of its
duties and obligations set forth herein,
and (3) for any special or
consequential damages to Certificateholders
(in addition to payment of principal
and interest on the Certificates).
SECTION 2.08.
[RESERVED]
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SECTION 2.09.
Covenants of the Servicer.
The Servicer
hereby covenants to each of the other parties to this
Agreement as follows:
(a) the Servicer shall comply in the performance of its
obligations
under this Agreement with all reasonable
rules and requirements of the insurer
under each Required Insurance Policy;
(b) no written information, certificate of an officer,
statement
furnished in writing or written report
delivered to the Depositor, the NIMs
Insurer or the Trustee, any affiliate of
the Depositor, the NIMs Insurer or the
Trustee and prepared by the Servicer
pursuant to this Agreement is inaccurate in
any material respect, provided, however,
that the Servicer shall not be
responsible for inaccurate information
provided to it by third parties.
SECTION 2.10.
[RESERVED].
SECTION 2.11.
Permitted Activities of the Trust. The Trust is created for
the object and purpose of engaging in the
Permitted Activities. In furtherance
of the foregoing, the Trustee is hereby
authorized and directed to execute and
deliver on behalf of the Trust, and to
perform the duties and obligations of the
Trustee under, the Cap Contracts, an
insurance and indemnity agreement with a
NIMs Insurer and any other agreement or
instrument related thereto, in each case
in such form as the Depositor shall direct
or shall approve, the execution and
delivery of any such agreement by the
Depositor to be conclusive evidence of its
approval thereof.
SECTION 2.12.
Qualifying Special Purpose Entity. For purposes of SFAS 140,
the parties hereto intend that the Trust
Fund shall be treated as a "qualifying
special purpose entity" as such term is
used in SFAS 140 and any successor rule
thereto and its power and authority as
stated in Section 2.11 of this Agreement
shall be limited in accordance with
paragraph 35 thereof.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01.
Servicer to Service Mortgage Loans.
For and on
behalf of the Certificateholders, the Servicer shall service
and
administer the Mortgage Loans, including
without limitation, any powers of
attorney, in accordance with Accepted
Servicing Practices. In connection with
such servicing and administration, the
Servicer shall have full power and
authority, acting alone and/or through
subservicers as provided in Section 3.02
hereof, to do or cause to be done any and
all things that it may deem necessary
or desirable in connection with such
servicing and administration, including but
not limited to, the power and authority,
subject to the terms hereof (i) to
execute and deliver, on behalf of the
Certificateholders and the Trustee,
customary consents or waivers and other
instruments and documents, (ii) to
consent to transfers of any Mortgaged
Property (or the stock allocated to a
dwelling unit related to a Co-op Loan) and
assumptions of the Mortgage Notes and
related Mortgages (but only in the manner
provided in this Agreement), (iii) to
collect any Insurance Proceeds and other
Liquidation Proceeds and (iv) subject
to Section 3.12(a), to effectuate
foreclosure or other conversion of the
ownership of the Mortgaged Property (or the
stock allocated to a dwelling unit
related to a Co-op Loan) securing any
Mortgage Loan; provided that, subject to
Section 6.03, the Servicer shall not take
any action that is inconsistent with
or prejudices the interests of the Trust
Fund or the Certificateholders in any
Mortgage Loan serviced by it under this
Agreement or the rights and interests of
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the other parties to this Agreement except
as otherwise required by this
Agreement or by law. The Servicer shall not
make or permit any modification,
waiver or amendment of any term of any
Mortgage Loan which would cause any of
the REMICs provided for herein to fail to
qualify as a REMIC or result in the
imposition of any tax under Section 860G(a)
or 860G(d) of the Code. The Servicer
shall represent and protect the interest of
the Trust Fund in the same manner as
it currently protects its own interest in
mortgage loans in its own portfolio in
any claim, proceeding or litigation
regarding a Mortgage Loan, but in any case
not in any manner that is a lesser standard
than that provided in the first
sentence of this Section 3.01. Without
limiting the generality of the foregoing,
the Servicer, in its own name or in the
name of the Depositor and the Trustee,
is hereby authorized and empowered by the
Depositor and the Trustee, when the
Servicer believes it appropriate in its
reasonable judgment, to execute and
deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any
of them, any and all instruments of
satisfaction or cancellation, or of partial
or full release or discharge,
subordinations and all other comparable
instruments, with respect to the Mortgage
Loans, and with respect to the
Mortgaged Properties held for the benefit
of the Certificateholders. The
Servicer shall prepare and deliver to the
Depositor and/or the Trustee such
documents requiring execution and delivery
by any or all of them as are
necessary or appropriate to enable the
Servicer to service and administer the
Mortgage Loans, to the extent that the
Servicer is not permitted to execute and
deliver such documents pursuant to the
preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee
shall execute such documents and
deliver them to the Servicer. For purposes
of this Section 3.01, the Trustee
hereby grants to the Servicer a limited
power of attorney to execute and file
any and all documents necessary to fulfill
the obligations of the Servicer under
this Section 3.01.
The Trustee
shall execute any powers of attorney provided by the Servicer
in a form reasonably acceptable to the
Trustee, promptly after request therefor
by the Servicer.
In accordance
with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds
as necessary for the purpose of
effecting the payment of taxes and
assessments on any first lien Mortgaged
Properties, which advances shall be
reimbursable in the first instance from
related collections from the Mortgagors
pursuant to Section 3.06, and further as
provided in Section 3.08.
All costs
incurred by the Servicer, if any, in effecting the timely
payments of taxes and assessments on the
Mortgaged Properties and related
insurance premiums shall not, for the
purpose of calculating monthly
distributions to the Certificateholders, be
added to the Stated Principal
Balance under the related Mortgage Loans,
notwithstanding that the terms of such
Mortgage Loans so permit.
In the event
that the Mortgage Loan Documents relating to any Mortgage Loan
contain provisions requiring the related
Mortgagor to submit to binding
arbitration any disputes arising in
connection with such Mortgage Loan, the
Servicer shall be entitled to waive any
such provisions on behalf of the Trust
and to send written notice of such waiver
to the related Mortgagor, although the
Mortgagor may still require arbitration of
such disputes at its option.
The Servicer
shall not be required to make any Servicing Advance with
respect to a Mortgage Loan that is 150 days
or more delinquent.
The Servicer
shall deliver a list of Servicing Officers to the Trustee by
the Closing Date.
The Servicer
will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide
Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it
shall report one of the following
statuses each month as follows: current,
delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
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The Servicer
further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee,
in its own name or in the name of the
Sub-Servicer, when the Servicer or the
Sub-Servicer, as the case may be,
believes it is appropriate in its best
judgment to register any Mortgage Loan on
the MERS System, or cause the removal from
the registration of any Mortgage Loan
on the MERS System, to execute and deliver,
on behalf of the Trustee and the
Certificateholders or any of them, any and
all instruments of assignment,
release and other comparable instruments
with respect to such assignment,
release or re-recording of a Mortgage in
the name of MERS, solely as nominee for
the Trustee and its successors and assigns.
Any reasonable expenses incurred in
connection with the actions described in
the preceding sentence or as a result
of MERS discontinuing or becoming unable to
continue operations in connection
with the MERS System, shall be subject to
withdrawal by the Servicer from the
Collection Account (provided that such
expenses constitute "unanticipated
expenses" within the meaning of Treasury
Regulation Section 1.860G-1(b)(3)(ii)).
With respect to
any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien
relating to such Mortgage Loan, provided
that the following requirements are
met:
(a) the resulting Combined Loan-to-Value Ratio of such Mortgage
Loan
is no higher than the Combined
Loan-to-Value Ratio prior to such refinancing;
and
(b) the interest rate for the loan evidencing the refinanced
senior
lien is no more than 2.0% higher than the
interest rate on the loan evidencing
the existing senior lien immediately prior
to the date of such refinancing; and
(c) the loan evidencing the refinanced senior lien is not subject
to
negative amortization.
SECTION 3.02.
Servicing and Subservicing; Enforcement of the Obligations of
Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage
Loan
by a subservicer, which may be an affiliate
(each, a "subservicer") pursuant to
a subservicing agreement (each, a
"Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and
the terms of the related Subservicing
Agreement must provide for the servicing of
such Mortgage Loans in a manner
consistent with the servicing arrangements
contemplated hereunder, (ii) that
such agreement would not result in a
withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates
or any of the NIM Notes evidenced by a
letter to that effect delivered by each
Rating Agency to the Depositor and the
NIMs Insurer and (iii) the NIMs Insurer
shall have consented to such
Subservicing Agreement, which consent shall
not be unreasonably withheld.
Notwithstanding the provisions of any
Subservicing Agreement, any of the
provisions of this Agreement relating to
agreements or arrangements between the
Servicer and a subservicer or reference to
actions taken through a subservicer
or otherwise, the Servicer shall remain
obligated and liable to the Depositor,
the Trustee and the Certificateholders for
the servicing and administration of
the Mortgage Loans in accordance with the
provisions of this Agreement without
diminution of such obligation or liability
by virtue of such Subservicing
Agreements or arrangements or by virtue of
indemnification from the subservicer
and to the same extent and under the same
terms and conditions as if the
Servicer alone were servicing and
administering the Mortgage Loans. Every
Subservicing Agreement entered into by the
Servicer shall contain a provision
giving any successor servicer the option to
terminate such agreement, with the
consent of the NIMs Insurer (which consent
shall not be unreasonably withheld),
in the event a successor servicer is
appointed. All actions of the each
subservicer performed pursuant to the
related Subservicing Agreement shall be
performed as an agent of the Servicer with
the same force and effect as if
performed directly by the Servicer. The
Servicer shall deliver to the NIMs
Insurer and the Trustee copies of all
Subservicing Agreements.
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(b) For purposes of this Agreement, the Servicer shall be deemed
to
have received any collections, recoveries
or payments with respect to the
Mortgage Loans that are received by a
subservicer regardless of whether such
payments are remitted by the subservicer to
the Servicer.
SECTION 3.03.
Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the
Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act
by the Servicer, and neither of them
is obligated to supervise the performance
of the Servicer hereunder or
otherwise.
SECTION 3.04.
Trustee to Act as Servicer.
In the event
that the Servicer shall, for any reason, no longer be the
servicer hereunder (including by reason of
an Event of Default), the Trustee or
its designee shall, within a period of time
not to exceed ninety (90) days from
the date of notice
