ACE SECURITIES CORP.
Depositor
OCWEN FEDERAL BANK FSB
a Servicer
WELLS FARGO BANK, N.A.
Master Servicer and Securities Administrator
HSBC BANK USA, NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
ACE Securities Corp. Home Equity Loan Trust, Series 2005-SN1
Asset Backed Pass-Through Certificates
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ARTICLE I
DEFINITIONS..........................................................................................................4
Section 1.01. Defined
Terms.................................................................................................4
Section 1.02. Allocation of Certain
Interest
Shortfalls....................................................................49
ARTICLE II CONVEYANCE OF MORTGAGE
LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES.....................................................51
Section 2.01. Conveyance of the
Mortgage
Loans.............................................................................51
Section 2.02. Acceptance of REMIC I
by
Trustee.............................................................................52
Section 2.03. Repurchase or
Substitution of Mortgage
Loans.................................................................52
Section 2.04. Representations and
Warranties of the Master
Servicer........................................................55
Section 2.05. Representations,
Warranties and Covenants of
Ocwen...........................................................56
Section 2.06. Issuance of the REMIC
I Regular Interests and the Class R-I
Interest.........................................58
Section 2.07. Conveyance of the
REMIC I Regular Interests; Acceptance of REMIC I by the
Trustee............................59
Section 2.08. Issuance of Residual
Certificates............................................................................59
Section 2.09. Establishment of the
Trust...................................................................................59
ARTICLE III ADMINISTRATION AND SERVICING OF
THE OCWEN MORTGAGE LOANS;
ACCOUNTS..................................................60
Section 3.01. Ocwen to Act as a
Servicer...................................................................................60
Section 3.02. Sub-Servicing
Agreements Between Ocwen and
Sub-Servicers.....................................................62
Section 3.03. Successor
Sub-Servicers......................................................................................63
Section 3.04. No Contractual
Relationship Between Sub-Servicer, Trustee or the
Certificateholders..........................63
Section 3.05. Assumption or
Termination of Sub-Servicing Agreement by Successor
Servicer...................................63
Section 3.06. Collection of Certain
Mortgage Loan
Payments.................................................................64
Section 3.07. Collection of Taxes,
Assessments and Similar Items; Servicing
Accounts.......................................64
Section 3.08. Collection Account,
Simple Interest Excess Sub-Account and Distribution
Account..............................66
Section 3.09. Withdrawals from the
Collection Account and Distribution
Account.............................................69
Section 3.10. Investment of Funds in
the Investment
Accounts...............................................................71
Section 3.11. Maintenance of Hazard
Insurance, Errors and Omissions and Fidelity Coverage and
Primary
Mortgage
Insurance...........................................................................................72
Section 3.12. Enforcement of
Due-on-Sale Clauses; Assumption
Agreements....................................................74
Section 3.13. Realization Upon
Defaulted Mortgage
Loans....................................................................75
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Section 3.14. Trustee to Cooperate;
Release of Mortgage
Files..............................................................77
Section 3.15. Servicing
Compensation.......................................................................................78
Section 3.16. Collection Account
Statements................................................................................79
Section 3.17. Statement as to
Compliance...................................................................................79
Section 3.18. Independent Public
Accountants' Servicing
Report.............................................................79
Section 3.19. Annual
Certification.........................................................................................80
Section 3.20. Access to Certain
Documentation..............................................................................80
Section 3.21. Title, Management and
Disposition of REO
Property............................................................81
Section 3.22. Obligations of Ocwen
in Respect of Prepayment Interest Shortfalls; Relief Act
Interest
Shortfalls..........................................................................................84
Section 3.23. Obligations of Ocwen
in Respect of Mortgage Rates and Monthly
Payments......................................84
Section 3.24. Reserve
Fund.................................................................................................84
Section 3.25. Advance
Facility.............................................................................................86
Section 3.26. Ocwen's
Indemnification
Obligation...........................................................................88
ARTICLE IV ADMINISTRATION AND MASTER
SERVICING OF THE MORTGAGE LOANS BY THE MASTER
SERVICER....................................89
Section 4.01. Master
Servicer..............................................................................................89
Section 4.02. REMIC-Related
Covenants......................................................................................90
Section 4.03. Monitoring of
Servicer.......................................................................................90
Section 4.04. Fidelity
Bond................................................................................................91
Section 4.05. Power to Act;
Procedures.....................................................................................91
Section 4.06. Due-on-Sale Clauses;
Assumption
Agreements...................................................................92
Section 4.07. Documents, Records and
Funds in Possession of Master Servicer To Be Held for
Trustee.........................93
Section 4.08. Standard Hazard
Insurance and Flood Insurance
Policies.......................................................93
Section 4.09. Presentment of Claims
and Collection of
Proceeds.............................................................93
Section 4.10. Maintenance of Primary
Mortgage Insurance
Policies...........................................................94
Section 4.11. Trustee to Retain
Possession of Certain Insurance Policies and
Documents.....................................94
Section 4.12. Realization Upon
Defaulted Mortgage
Loans....................................................................95
Section 4.13. Compensation for the
Master
Servicer.........................................................................95
Section 4.14. REO
Property.................................................................................................95
Section 4.15. Annual Officer's
Certificate as to
Compliance................................................................96
Section 4.16. Annual Independent
Accountant's Servicing
Report.............................................................96
Section 4.17.
UCC..........................................................................................................97
Section 4.18. Obligation of the
Master Servicer in Respect of Prepayment Interest
Shortfalls...............................97
Section 4.19. Prepayment Penalty
Verification..............................................................................97
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Section 4.20. WMMSC
Reporting..............................................................................................98
ARTICLE V PAYMENTS TO
CERTIFICATEHOLDERS......................................................................................99
Section 5.01.
Distributions................................................................................................99
Section 5.02. Statements to
Certificateholders............................................................................106
Section 5.03. Servicer Reports;
P&I
Advances..............................................................................109
Section 5.04. Allocation of Realized
Losses...............................................................................111
Section 5.05. Compliance with
Withholding
Requirements....................................................................113
Section 5.06. Reports Filed with
Securities and Exchange
Commission.......................................................113
ARTICLE VI THE
CERTIFICATES...................................................................................................115
Section 6.01. The
Certificates............................................................................................115
Section 6.02. Registration of
Transfer and Exchange of
Certificates.......................................................117
Section 6.03. Mutilated, Destroyed,
Lost or Stolen
Certificates...........................................................122
Section 6.04. Persons Deemed
Owners.......................................................................................122
Section 6.05. Certain Available
Information...............................................................................122
ARTICLE VII THE DEPOSITOR, Ocwen AND THE
MASTER
SERVICER.......................................................................124
Section 7.01. Liability of the
Depositor, Ocwen and
the Master
Servicer..................................................124
Section 7.02. Merger or
Consolidation of the Depositor, Ocwen or the Master
Servicer......................................124
Section 7.03. Limitation on
Liability of the Depositor, Ocwen, the Master Servicer and
Others.............................124
Section 7.04. Limitation on
Resignation of
Ocwen..........................................................................125
Section 7.05. Limitation on
Resignation of the Master
Servicer............................................................126
Section 7.06. Assignment of Master
Servicing..............................................................................127
Section 7.07. Rights of the
Depositor in Respect of the Servicers and the Master
Servicer.................................127
Section 7.08. Duties of the Credit
Risk
Manager...........................................................................128
Section 7.09. Limitation Upon
Liability of the Credit Risk
Manager........................................................128
Section 7.10. Removal of the Credit
Risk
Manager..........................................................................129
ARTICLE VIII
DEFAULT............................................................................................................130
Section 8.01. Servicer Events of
Default..................................................................................130
Section 8.02. Master Servicer to
Act; Appointment of
Successor............................................................134
Section 8.03. Notification to
Certificateholders..........................................................................136
Section 8.04. Waiver of Servicer
Events of
Default........................................................................136
ARTICLE IX CONCERNING THE TRUSTEE AND
THE SECURITIES
ADMINISTRATOR............................................................137
Section 9.01. Duties of Trustee and
Securities
Administrator..............................................................137
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Section 9.02. Certain Matters
Affecting Trustee and Securities
Administrator..............................................138
Section 9.03. Trustee and Securities
Administrator not Liable for Certificates or Mortgage
Loans..........................140
Section 9.04. Trustee and Securities
Administrator May Own
Certificates...................................................140
Section 9.05. Fees and Expenses of
Trustee and Securities
Administrator...................................................140
Section 9.06. Eligibility
Requirements for Trustee and Securities
Administrator...........................................141
Section 9.07. Resignation and
Removal of Trustee and Securities
Administrator.............................................142
Section 9.08. Successor Trustee or
Securities
Administrator...............................................................143
Section 9.09. Merger or
Consolidation of Trustee or Securities
Administrator..............................................143
Section 9.10. Appointment of
Co-Trustee or Separate
Trustee...............................................................144
Section 9.11. Appointment of Office
or
Agency.............................................................................145
Section 9.12. Representations and
Warranties..............................................................................145
ARTICLE X
TERMINATION........................................................................................................146
Section 10.01. Termination Upon Repurchase
or Liquidation of All Mortgage
Loans............................................146
Section 10.02. Additional Termination
Requirements.........................................................................148
ARTICLE XI REMIC
PROVISIONS...................................................................................................150
Section 11.01. REMIC
Administration........................................................................................150
Section 11.02. Prohibited Transactions and
Activities......................................................................152
Section 11.03.
Indemnification.............................................................................................153
ARTICLE XII MISCELLANEOUS
PROVISIONS...........................................................................................154
Section 12.01.
Amendment...................................................................................................154
Section 12.02. Recordation of Agreement;
Counterparts......................................................................155
Section 12.03. Limitation on Rights of
Certificateholders..................................................................155
Section 12.04. Governing
Law...............................................................................................156
Section 12.05.
Notices.....................................................................................................156
Section 12.06. Severability of
Provisions..................................................................................157
Section 12.07. Notice to Rating
Agencies...................................................................................157
Section 12.08. Article and Section
References..............................................................................158
Section 12.09. Grant of Security
Interest..................................................................................158
Section 12.10. Survival of
Indemnification.................................................................................159
Section 12.11. Servicing
Agreements........................................................................................159
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<PAGE>
Exhibits
--------
Exhibit A-1 Form of Class A
Certificate
Exhibit A-2 Form of Class M
Certificate
Exhibit A-3 Form of Class CE [-1] [-2]
Certificate
Exhibit A-4 Form of Class R
Certificate
Exhibit B-1 Form of Transferor
Representation Letter and Form of
Transferee Representation Letter in Connection with Transfer
Class CE-1 Certificates, Class CE-2 Certificates and Residual
Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit B-2 Form of Transferor
Representation Letter and Form of
Transferee Representation Letter in Connection with Transfer
of Class CE-1 Certificates, Class CE-2 Certificates and
Residual Certificates Pursuant to Rule 501 (a) Under the 1933
Act
Exhibit B-3 Form of Transfer Affidavit
and Agreement and Form of
Transferor Affidavit in Connection with Transfer of Residual
Certificates
Exhibit C Form of Servicer
Certification
Exhibit D Form of Power of
Attorney
Schedule 1 Mortgage Loan
Schedule
Schedule 2 Prepayment Charge
Schedule
Schedule 3 Reserved.
Schedule 4 Standard File Layout -
Delinquency Reporting
Schedule 5 Standard File Layout -
Scheduled/Scheduled
Schedule 6 Servicing Advances
Incurred Prior to the Cut-off Date
v
<PAGE>
This Pooling and Servicing Agreement, is dated and effective
as of March 1, 2005, among ACE SECURITIES
CORP., as Depositor, OCWEN FEDERAL
BANK FSB, as a Servicer, WELLS FARGO BANK,
N.A., as Master Servicer and
Securities Administrator and HSBC BANK USA,
NATIONAL ASSOCIATION, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which
in the aggregate will evidence the
entire beneficial ownership interest of the
Trust Fund created hereunder. The
Trust Fund will consist of a segregated
pool of assets comprised of the Mortgage
Loans and certain other related assets
subject to this Agreement.
REMIC I
-------
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the
Mortgage Loans and certain other
related assets subject to this Agreement
(other than the Reserve Fund) as a
REMIC for federal income tax purposes, and
such segregated pool of assets will
be designated as "REMIC I". The Class R-I
Interest will be the sole class of
"residual interests" in REMIC I for
purposes of the REMIC Provisions (as defined
herein). The following table irrevocably
sets forth the designation, the REMIC I
Remittance Rate, the initial Uncertificated
Balance and, for purposes of
satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I
Regular Interests (as defined herein).
None of the REMIC I Regular Interests will
be certificated.
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REMIC I
INITIAL
REMITTANCE UNCERTIFICATED
LATEST POSSIBLE
DESIGNATION RATE
BALANCE
MATURITY DATE (1)
----------- ----
-------
-----------------
I-LTAA
Variable(2) $161,905,867.62
November
25, 2039
I-LTA1
Variable(2) $ 970,310.00
November
25, 2039
I-LTA2
Variable(2) $ 586,800.00
November
25, 2039
I-LTM1
Variable(2) $ 45,430.00
November
25, 2039
I-LTM2
Variable(2) $ 24,780.00
November
25, 2039
I-LTM3
Variable(2) $ 12,390.00
November
25, 2039
I-LTM4
Variable(2) $ 12,390.00
November
25, 2039
I-LTZZ
Variable(2) $ 1,652,101.38 November 25, 2039
----------
(1) For
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the
maturity
date for the Mortgage Loan with the latest maturity date has
been
designated as the "latest possible maturity date" for each REMIC
I
Regular Interest.
(2) Calculated
in accordance with the definition of "REMIC I Remittance
Rate" herein.
REMIC II
--------
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the
REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such
segregated pool of assets will be
designated as "REMIC II." The Class R-II
Interest will evidence the sole class
of "residual interests" in REMIC II for
purposes of the REMIC Provisions. The
following table irrevocably sets forth the
designation, the Pass-Through Rate,
the initial aggregate Certificate Principal
Balance and, for purposes of
satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible
maturity date" for the indicated Classes of
Certificates.
2
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INITIAL
AGGREGATE
PASS-
CERTIFICATE
THROUGH
PRINCIPAL
LATEST POSSIBLE
DESIGNATION RATE
BALANCE
MATURITY DATE
(1)
----------- ----
-------
-----------------
Class A-1
Variable(2) $ 97,031,000
November
25, 2039
Class A-2
Variable(2) $ 58,680,000
November
25, 2039
Class M-1
Variable(2) $ 4,543,000 November 25, 2039
Class M-2
Variable(2) $ 2,478,000
November
25, 2039
Class M-3
Variable(2) $ 1,239,000
November
25, 2039
Class M-4
Variable(2) $ 1,239,000
November
25, 2039
Class CE-1
N/A(3) $
69
November 25, 2039
Class CE-2
N/A(4)
N/A(4)
November 25, 2039
----------
(1) For
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the
maturity
date for the Mortgage Loan with the latest maturity date has
been
designated as the "latest possible maturity date" for each Class
of
Certificates.
(2) Calculated
in accordance with the definition of "Pass-Through Rate"
herein.
(3) The Class
CE-1 Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE-1
Certificates
outstanding from time to time which shall equal the
Uncertificated
Balance of the REMIC I Regular Interests. The Class CE-1
Certificates
will not accrue interest on their Certificate Principal
Balance.
(4) The Class
CE-2 Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE-2
Certificates
which shall equal the Uncertificated Balance of the REMIC I
Regular
Interests. The Class CE-2 Certificates will not have a
Certificate
Principal Balance.
As of the Cut-off Date, the Mortgage Loans had an aggregate
Scheduled Principal Balance equal to
approximately $165,210,069.
In consideration of the mutual agreements herein contained,
the Depositor, Ocwen, the Master Servicer,
the Securities Administrator and the
Trustee agree as follows:
3
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement
hereto, the following words and
phrases, unless the context otherwise
requires, shall have the meanings
specified in this Article. Unless otherwise
specified, all calculations
described herein shall be made on the basis
of a 360-day year consisting of
twelve 30-day months.
"Accepted Master Servicing Practices": With respect to any
Mortgage Loan, as applicable, either (x)
those customary mortgage master
servicing practices of prudent mortgage
servicing institutions that master
service mortgage loans of the same type and
quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged
Property is located, to the extent
applicable to the Master Servicer (except
in its capacity as successor to a
Servicer), or (y) as provided in Section
3.01 hereof, but in no event below the
standard set forth in clause (x).
"Accepted Servicing Practices": As defined in Section 3.01.
"Account": The Collection Account and the Distribution Account
as the context may require.
"Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate, Class
CE-1 Certificate or Class CE-2
Certificate and each Distribution Date,
interest accrued during the related
Interest Accrual Period at the Pass-Through
Rate for such Certificate for such
Distribution Date on the Certificate
Principal Balance, in the case of the Class
A Certificates and the Mezzanine
Certificates, or on the Notional Amount in the
case of the Class CE-1 Certificates and
Class CE-2 Certificates, of such
Certificate immediately prior to such
Distribution Date. All distributions of
interest on the Certificates will be based
on a 360-day year consisting of
twelve 30-day months. Accrued Certificate
Interest with respect to each
Distribution Date, as to any Class A
Certificate, Mezzanine Certificate or Class
CE-1 Certificate shall be reduced by an
amount equal to the portion allocable to
such Certificate pursuant to Section 1.02
hereof, if any, of the sum of (a) the
aggregate Prepayment Interest Shortfall, if
any, for such Distribution Date to
the extent not covered by payments pursuant
to Section 3.22 or Section 4.18 of
this Agreement or pursuant to the Servicing
Agreement and (b) the aggregate
amount of any Relief Act Interest
Shortfall, if any, for such Distribution Date.
In addition, Accrued Certificate Interest
with respect to each Distribution
Date, as to any CE-1 Certificate, shall be
reduced by an amount equal to the
portion allocable to such Class CE-1
Certificate of Realized Losses, if any,
pursuant to Section 1.02 and Section 5.04
hereof.
"Administration Fees": The sum of (i) the Servicing Fee, (ii)
the Master Servicing Fee and (iii) the
Credit Risk Management Fee.
"Administration Fee Rate": The sum of (i) the Servicing Fee
Rate, (ii) the Master Servicer Fee Rate and
(iii) the Credit Risk Management Fee
Rate.
4
<PAGE>
"Advance Facility": As defined in Section 3.25(a).
"Advance Financing Person": As defined in Section 3.25(a).
"Advance Reimbursement Amounts": As defined in Section
3.25(b).
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or
under common control with such specified
Person. For the purposes of this
definition, "control" when used with respect to
any specified Person means the power to
direct the management and policies of
such Person, directly or indirectly,
whether through the ownership of voting
securities, by contract or otherwise, and
the terms "controlling" and
"controlled" have meanings correlative to
the foregoing.
"Aggregate Loss Severity Percentage": With respect to any
Distribution Date, the percentage
equivalent of a fraction, the numerator of
which is the aggregate amount of Realized
Losses incurred on any Mortgage Loans
from the Cut-off Date to the last day of
the preceding calendar month and the
denominator of which is the aggregate
principal balance of such Mortgage Loans
immediately prior to the liquidation of
such Mortgage Loans.
"Agreement": This Pooling and Servicing Agreement, including
all exhibits and schedules hereto and all
amendments hereof and supplements
hereto.
"Allocated Realized Loss Amount": With respect to any Class of
Mezzanine Certificates and any Distribution
Date, an amount equal to the sum of
any Realized Loss allocated to that Class
of Certificates on the Distribution
Date and any Allocated Realized Loss Amount
for that Class remaining unpaid from
the previous Distribution Date.
"Amounts Held for Future Distribution": As to any Distribution
Date, the aggregate amount held in the
Custodial Account and the Collection
Account at the close of business on the
immediately preceding Determination Date
on account of (i) all Monthly Payments or
portions thereof received in respect
of the Mortgage Loans due after the related
Due Period and (ii) Principal
Prepayments and Liquidation Proceeds
received in respect of such Mortgage Loans
after the last day of the related
Prepayment Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form,
which is sufficient under the laws of
the jurisdiction wherein the related
Mortgaged Property is located to reflect of
record the sale of the Mortgage, which
assignment, notice of transfer or
equivalent instrument may be in the form of
one or more blanket assignments
covering Mortgages secured by Mortgaged
Properties located in the same county,
if permitted by law.
"Assignment Agreement": The Assignment, Assumption and
Recognition Agreement, dated as of March
30, 2005, by and among the Seller, the
Depositor and WMMSC evidencing the
assignment of the Servicing Agreement to the
Depositor.
"Authorized Officers": A managing director of the whole loan
trading desk and a managing director in
global markets.
5
<PAGE>
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1)
the sum of (a) the aggregate of the
amounts on deposit in the Custodial
Account, Collection Account and Distribution
Account as of the close of business on the
related Servicer Remittance Date, (b)
the aggregate of any amounts deposited in
the Distribution Account by the
related Servicer or the Master Servicer in
respect of Prepayment Interest
Shortfalls for such Distribution Date
pursuant to Section 3.22 or Section 4.18
of this Agreement or pursuant to the
Servicing Agreement, (c) the aggregate of
any P&I Advances for such Distribution
Date made by the related Servicer
pursuant to Section 5.03 of this Agreement
or pursuant to the Servicing
Agreement and (d) the aggregate of any
P&I Advances made by a successor Servicer
(including the Master Servicer) for such
Distribution Date pursuant to Section
8.02 of this Agreement or pursuant to the
Servicing Agreement, reduced (to not
less than zero) by (2) the portion of the
amount described in clause (1)(a)
above that represents (i) Amounts Held for
Future Distribution, (ii) Principal
Prepayments on the Mortgage Loans received
after the related Prepayment Period
(together with any interest payments
received with such Principal Prepayments to
the extent they represent the payment of
interest accrued on the Mortgage Loans
during a period subsequent to the related
Prepayment Period), (iii) Liquidation
Proceeds and Insurance Proceeds received in
respect of the Mortgage Loans after
the related Prepayment Period, (iv) amounts
reimbursable or payable to the
Depositor, a Servicer, the Trustee, the
Master Servicer, the Securities
Administrator or the Custodian pursuant to
Section 3.09 or Section 9.05 of this
Agreement or otherwise payable in respect
of Extraordinary Trust Fund Expenses
or reimbursable or payable under the
Servicing Agreement, (v) amounts deposited
in the Custodial Account, the Collection
Account or the Distribution Account in
error, (vi) the Credit Risk Management Fee,
(vii) the amount of any Prepayment
Charges collected by a Servicer in
connection with the Principal Prepayment of
the Mortgage Loans and (viii) amounts
reimbursable to a successor Servicer
(including the Master Servicer) pursuant to
Section 8.02 of this Agreement or
pursuant to the Servicing Agreement.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal
balance of such Mortgage Loan in a single
payment, that is substantially greater than
the preceding monthly payment at the
maturity of such Mortgage Loan.
"Balloon Payment": A payment of the unamortized principal
balance of a Mortgage Loan in a single
payment, that is substantially greater
than the preceding Monthly Payment at the
maturity of such Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Book-Entry Certificates": The Offered Certificates for so
long as the Certificates of such Class
shall be registered in the name of the
Depository or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 6.01.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan
institutions in the States of New York,
Florida, Maryland, Washington, California,
Illinois, Minnesota or in the city in
which the Corporate Trust Office of the
Trustee is located, are authorized or
obligated by law or executive order to be
closed.
6
<PAGE>
"Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which are more than a nominal
amount in excess of the principal
balance of any existing first mortgage plus
any subordinate mortgage on the
related Mortgaged Property and related
closing costs.
"Certificate": Any one of ACE Securities Corp., Asset Backed
Pass-Through Certificates, Series 2005-SN1,
Class A-1, Class A-2, Class M-1,
Class M-2, Class M-3, Class M-4, Class
CE-1, Class CE-2 and Class R issued under
this Agreement.
"Certificate Factor": With respect to any Class of
Certificates (other than the Residual
Certificates) as of any Distribution Date,
a fraction, expressed as a decimal carried
to six places, the numerator of which
is the aggregate Certificate Principal
Balance (or Notional Amount, in the case
of the Class CE-1 Certificates and Class
CE-2 Certificates) of such Class of
Certificates on such Distribution Date
(after giving effect to any distributions
of principal and allocations of Realized
Losses resulting in reduction of the
Certificate Principal Balance (or Notional
Amount, in the case of the Class CE-1
Certificates and Class CE-2 Certificates)
of such Class of Certificates to be
made on such Distribution Date), and the
denominator of which is the initial
aggregate Certificate Principal Balance (or
Notional Amount, in the case of the
Class CE-1 Certificates and Class CE-2
Certificates) of such Class of
Certificates as of the Closing Date.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the
Certificate Register, except that a
Disqualified Organization or a Non-United
States Person shall not be a Holder of
a Residual Certificate for any purposes
hereof, and solely for the purposes of
giving any consent pursuant to this
Agreement, any Certificate registered in the
name of or beneficially owned by the
Depositor, the Seller, a Servicer, the
Master Servicer, the Securities
Administrator, the Trustee or any Affiliate
thereof shall be deemed not to be
outstanding and the Voting Rights to which it
is entitled shall not be taken into account
in determining whether the requisite
percentage of Voting Rights necessary to
effect any such consent has been
obtained, except as otherwise provided in
Section 12.01. The Trustee and the
Securities Administrator may conclusively
rely upon a certificate of the
Depositor, the Seller, the Master Servicer,
the Securities Administrator or a
Servicer in determining whether a
Certificate is held by an Affiliate thereof.
All references herein to "Holders" or
"Certificateholders" shall reflect the
rights of Certificate Owners as they may
indirectly exercise such rights through
the Depository and participating members
thereof, except as otherwise specified
herein; provided, however, that the Trustee
and the Securities Administrator
shall be required to recognize as a
"Holder" or "Certificateholder" only the
Person in whose name a Certificate is
registered in the Certificate Register.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of
such Certificate as reflected on the
books of the Depository or on the books of
a Depository Participant or on the
books of an indirect participating
brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class A
Certificate or Mezzanine Certificate as of
any date of determination, the
Certificate Principal Balance of such
Certificate on the Distribution Date
immediately prior to such date of
determination plus any Subsequent Recoveries
added to the Certificate Principal Balance
of such Certificate pursuant to
Section 5.04, minus all distributions
allocable to principal made thereon and
Realized Losses
7
<PAGE>
allocated thereto, if any, on such
immediately prior Distribution Date (or, in
the case of any date of determination up to
and including the first Distribution
Date, the initial Certificate Principal
Balance of such Certificate, as stated
on the face thereof). With respect to each
Class CE-1 Certificate as of any date
of determination, an amount equal to the
Percentage Interest evidenced by such
Certificate times the excess, if any, of
(A) the then aggregate Uncertificated
Balances of the REMIC I Regular Interests
over (B) the then aggregate
Certificate Principal Balances of the Class
A Certificates and the Mezzanine
Certificates then outstanding. The
aggregate initial Certificate Principal
Balance of each Class of Regular
Certificates is set forth in the Preliminary
Statement hereto.
"Certificate Register": The register maintained pursuant to
Section 6.02.
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A Certificate": Any Class A-1 Certificate or Class A-2
Certificate.
"Class A Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown
Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of
the Certificate Principal Balances
of the Class A-1 Certificates and Class A-2
Certificates immediately prior to
such Distribution Date over (y) the lesser
of (A) the product of (i) 87.50% and
(ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last
day of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced
and unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced and unscheduled collections of
principal received during the related
Prepayment Period) minus the product of (i)
0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as
of the Cut-off Date.
"Class A-1 Certificate": Any one of the Class A-1 Certificates
executed and authenticated by the
Securities Administrator and delivered by the
Trustee, substantially in the form annexed
hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes
of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Class A-2 Certificates
executed and authenticated by the
Securities Administrator and delivered by the
Trustee, substantially in the form annexed
hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes
of the REMIC Provisions.
"Class CE-1 Certificate": Any one of the Class CE-1
Certificates executed and authenticated by
the Securities Administrator and
delivered by the Trustee, substantially in
the form annexed hereto as Exhibit
A-3 and evidencing a Regular Interest in
REMIC II for purposes of the REMIC
Provisions.
"Class CE-2 Certificate": Any one of the Class CE-2
Certificates executed and authenticated by
the Securities Administrator and
delivered by the Trustee, substantially in
the
8
<PAGE>
form annexed hereto as Exhibit A-3 and
evidencing a Regular Interest in REMIC II
for purposes of the REMIC Provisions.
"Class M Certificates": The Class M-1, Class M-2, Class M-3
and Class M-4 Certificates.
"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed and authenticated by the
Securities Administrator and delivered by the
Trustee, substantially in the form annexed
hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes
of the REMIC Provisions.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown
Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of
(i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
payment of the Class A Principal
Distribution Amount on such Distribution Date)
and (ii) the Certificate Principal Balance
of the Class M-1 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 93.00% and (ii) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related Due Period, to the
extent received or advanced and unscheduled
collections of principal received
during the related Prepayment Period) and
(B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the
last day of the related Due Period
(after giving effect to scheduled payments
of principal due during the related
Due Period, to the extent received or
advanced and unscheduled collections of
principal received during the related
Prepayment Period) minus the product of
(i) 0.50% and (ii) the aggregate principal
balance of the Mortgage Loans as of
the Cut-off Date.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed and authenticated by the
Securities Administrator and delivered by the
Trustee, substantially in the form annexed
hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes
of the REMIC Provisions.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown
Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of
(i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
payment of the Class A Principal
Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of
the Class M-1 Certificates (after
taking into account the payment of the
Class M-1 Principal Distribution Amount
on such Distribution Date) and (iii) the
Certificate Principal Balance of the
Class M-2 Certificates immediately prior to
such Distribution Date over (y) the
lesser of (A) the product of (i) 96.00% and
(ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the
last day of the related Due Period
(after giving effect to scheduled payments
of principal due during the related
Due Period, to the extent received or
advanced and unscheduled collections of
principal received during the related
Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage
Loans as of the last day of the related
Due Period (after giving effect to
scheduled payments of principal due during
the related Due Period, to the extent
received or advanced and unscheduled
collections of principal received during
the related Prepayment Period) minus
the
9
<PAGE>
product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage
Loans as of the Cut-off Date.
"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed and authenticated by the
Securities Administrator and delivered by the
Trustee, substantially in the form annexed
hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes
of the REMIC Provisions.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown
Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of
(i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
payment of the Class A Principal
Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of
the Class M-1 Certificates (after
taking into account the payment of the
Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the
Certificate Principal Balance of the Class
M-2 Certificates (after taking into account
the payment of the Class M-2
Principal Distribution Amount on such
Distribution Date) and (iv) the
Certificate Principal Balance of the Class
M-3 Certificates immediately prior to
such Distribution Date over (y) the lesser
of (A) the product of (i) 97.50% and
(ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last
day of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced
and unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced and unscheduled collections of
principal received during the related
Prepayment Period) minus the product of (i)
0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as
of the Cut-off Date.
"Class M-4 Certificate": Any one of the Class M-4 Certificates
executed and authenticated by the
Securities Administrator and delivered by the
Trustee, substantially in the form annexed
hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes
of the REMIC Provisions.
"Class M-4 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown
Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of
(i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
payment of the Class A Principal
Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of
the Class M-1 Certificates (after
taking into account the payment of the
Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the
Certificate Principal Balance of the Class
M-2 Certificates (after taking into account
the payment of the Class M-2
Principal Distribution Amount on such
Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3
Certificates (after taking into account the
payment of the Class M-3 Principal
Distribution Amount on such Distribution
Date) and (v) the Certificate Principal
Balance of the Class M-4 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 99.00% and (ii) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related
10
<PAGE>
Due Period, to the extent received or
advanced and unscheduled collections of
principal received during the related
Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage
Loans as of the last day of the related
Due Period (after giving effect to
scheduled payments of principal due during
the related Due Period, to the extent
received or advanced and unscheduled
collections of principal received during
the related Prepayment Period) minus
the product of (i) 0.50% and (ii) the
aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
"Class R Certificates": Any one of the Class R Certificates
executed and authenticated by the
Securities Administrator and delivered by the
Trustee, substantially in the form annexed
hereto as Exhibit A-4, and evidencing
the Class R-I Interest and the Class R-II
Interest.
"Class R-I Interest": The uncertificated residual interest in
REMIC I.
"Class R-II Interest": The uncertificated residual interest in
REMIC II.
"Closing Date": March 30, 2005.
"Code": The Internal Revenue Code of 1986, as amended from
time to time.
"Collection Account": The account or accounts created and
maintained, or caused to be created and
maintained, by Ocwen pursuant to Section
3.08(a) of this Agreement, which shall be
entitled "Ocwen Federal Bank FSB, as
Servicer for HSBC Bank USA, National
Association as Trustee, in trust for the
registered holders of ACE Securities Corp.,
Home Equity Loan Trust, Series
2005-SN1, Asset Backed Pass-Through
Certificates". The Collection Account
maintained by Ocwen must be an Eligible
Account.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office
of the Trustee which office at the date of
the execution of this instrument is
located at 452 Fifth Avenue, New York, New
York 10018, Attention: ACE Securities
Corp., 2005-SN1, or at such other address
as the Trustee may designate from time
to time by notice to the
Certificateholders, the Depositor, the Master Servicer,
the Securities Administrator and the
Servicers. The office of the Securities
Administrator, which for purposes of
Certificate transfers and surrender is
located at Wells Fargo Bank, N.A., Sixth
Street and Marquette Avenue,
Minneapolis, Minnesota 55479, Attention:
Corporate Trust (ACE 2005-SN1), and for
all other purposes is located at Wells
Fargo Bank, N.A., P.O. Box 98, Columbia,
Maryland 21046, Attention: Corporate Trust
(ACE 2005-SN1) (or for overnight
deliveries, at 9062 Old Annapolis Road,
Columbia, Maryland 21045, Attention:
Corporate Trust (ACE 2005-SN1)).
11
<PAGE>
"Corresponding Certificate": With respect to each REMIC I
Regular Interest, as follows:
REMIC I Regular Interest
Class
------------------------
-----
REMIC I Regular Interest I-LTA1
A-1
REMIC I Regular Interest I-LTA2
A-2
REMIC I Regular Interest I-LTM1
M-1
REMIC I Regular Interest I-LTM2
M-2
REMIC I Regular Interest I-LTM3
M-3
REMIC I Regular Interest I-LTM4
M-4
"Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction,
the numerator of which is the sum of
the aggregate Certificate Principal
Balances of the Mezzanine Certificates and
the Class CE-1 Certificates, and the
denominator of which is the aggregate
Stated Principal Balance of the Mortgage
Loans, calculated after taking into
account distributions of principal on the
Mortgage Loans and distribution of the
Principal Distribution Amount to the
Certificates then entitled to distributions
of principal on such Distribution Date.
"Credit Risk Management Agreements": The agreement between the
Credit Risk Manager and each Servicer, and
the agreement between the Credit Risk
Manager and the Master Servicer, each
regarding the loss mitigation and advisory
services to be provided by the Credit Risk
Manager.
"Credit Risk Management Fee": The amount payable to the Credit
Risk Manager on each Distribution Date as
compensation for all services rendered
by it in the exercise and performance of
any and all powers and duties of the
Credit Risk Manager under the Credit Risk
Management Agreements, which amount
shall equal one twelfth of the product of
(i) the Credit Risk Management Fee
Rate multiplied by (ii) the Scheduled
Principal Balance of the Mortgage Loans
and any related REO Properties as of the
first day of the related Due Period.
"Credit Risk Management Fee Rate": 0.025% per annum.
"Credit Risk Manager": Risk Management Group, LLC, a New York
limited liability company, and its
successors and assigns.
"Custodial Account": Shall mean the account or accounts
maintained by WMMSC under the Servicing
Agreement.
"Custodial Agreement": The Custodial Agreement dated as of
March 1, 2005, among the Trustee, the
Custodian and the Servicers as such
agreement may be amended or supplemented
from time to time, or any other
custodial agreement entered into after the
date hereof with respect to any
Mortgage Loan subject to this
Agreement.
"Custodian": Wells Fargo or any other custodian appointed
under any custodial agreement entered into
after the date of this Agreement.
"Cut-off Date": With respect to each Mortgage Loan, March 1,
2005. With respect to all Qualified
Substitute Mortgage Loans, their respective
dates of substitution.
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<PAGE>
References herein to the "Cut-off Date,"
when used with respect to more than one
Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment
for such Mortgage Loan by a court of
competent jurisdiction in a proceeding
under the Bankruptcy Code, except such a
reduction resulting from a Deficient
Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property
by a court of competent jurisdiction
in an amount less than the then outstanding
principal balance of the Mortgage
Loan, which valuation results from a
proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 6.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage
Loan.
"Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a
fraction, the numerator of which is
the aggregate Stated Principal Balance of
all Mortgage Loans that, as of the
last day of the previous calendar month,
are 60 or more days delinquent, are in
foreclosure, have been converted to REO
Properties or have been discharged by
reason of bankruptcy, and the denominator
of which is the aggregate Stated
Principal Balance of the Mortgage Loans and
REO Properties as of the last day of
the previous calendar month.
"Depositor": ACE Securities Corp., a Delaware corporation, or
its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of
the initial Depository, for purposes
of registering those Certificates that are
to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all
times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New
York and a "clearing agency" registered
pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934,
as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is
incorporated under the laws of the
United States of America or any State
thereof, (b) is subject to supervision and
examination by federal or state banking
authorities and (c) has outstanding
unsecured commercial paper or other
short-term unsecured debt obligations (or,
in the case of a depository institution
that is the principal subsidiary of a
holding company, such holding company has
unsecured commercial paper or other
short-term unsecured debt obligations) that
are rated at least A-1+ by S&P, F-1+
by Fitch and P-1 by Moody's (or, if such
Rating Agencies are no longer rating
the Offered Certificates, comparable
ratings by any other nationally recognized
statistical rating agency then rating the
Offered Certificates).
13
<PAGE>
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for
whom from time to time a Depository
effects book-entry transfers and pledges of
securities deposited with the
Depository.
"Determination Date": With respect to Ocwen and each
Distribution Date, the 15th day of the
calendar month in which such Distribution
Date occurs, or if such 15th day is not a
Business Day, the Business Day
immediately preceding such 15th day. With
respect to WMMSC, the date specified
in the Servicing Agreement.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the
tenants thereof, the management or
operation of such REO Property, the holding
of such REO Property primarily for
sale to customers, the performance of any
construction work thereon or any use
of such REO Property in a trade or business
conducted by REMIC I other than
through an Independent Contractor;
provided, however, that the related Servicer,
on behalf of the Trustee, shall not be
considered to Directly Operate an REO
Property solely because the related
Servicer establishes rental terms, chooses
tenants, enters into or renews leases,
deals with taxes and insurance, or makes
decisions as to repairs or capital
expenditures with respect to such REO
Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political
subdivision thereof, any possession of the
United States, or any agency or
instrumentality of any of the foregoing (other
than an instrumentality which is a
corporation if all of its activities are
subject to tax and, except for Freddie Mac,
a majority of its board of directors
is not selected by such governmental unit),
(ii) any foreign government, any
international organization, or any agency
or instrumentality of any of the
foregoing, (iii) any organization (other
than certain farmers' cooperatives
described in Section 521 of the Code) which
is exempt from the tax imposed by
Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on
unrelated business taxable income), (iv)
rural electric and telephone
cooperatives described in Section
1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other
Person so designated by the Trustee based
upon an Opinion of Counsel that the holding
of an Ownership Interest in a
Residual Certificate by such Person may
cause any Trust REMIC or any Person
having an Ownership Interest in any Class
of Certificates (other than such
Person) to incur a liability for any
federal tax imposed under the Code that
would not otherwise be imposed but for the
Transfer of an Ownership Interest in
a Residual Certificate to such Person. The
terms "United States," "State" and
"international organization" shall have the
meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Securities
Administrator pursuant to Section 3.08(c) in
the name of the Securities Administrator
for the benefit of the
Certificateholders and designated "Wells
Fargo Bank, N.A., in trust for
registered holders of ACE Securities Corp.
Home Equity Loan Trust, Series
2005-SN1". Funds in the Distribution
Account shall be held in trust for the
Certificateholders for the uses and
purposes set forth in this Agreement. The
Distribution Account must be an Eligible
Account.
14
<PAGE>
"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the
Business Day immediately following such 25th
day, commencing in April 2005.
"Due Date": With respect to each Distribution Date, the day of
the month on which the Monthly Payment is
due on a Mortgage Loan during the
related Due Period, exclusive of any days
of grace.
"Due Period": With respect to any
Distribution Date, the period commencing on
the second day of the month
immediately preceding the month in which
such Distribution Date occurs and
ending on the first day of the month in
which such
Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution,
(ii) an account or accounts the
deposits in which are fully insured by the
FDIC or (iii) a trust account or
accounts maintained with a federal
depository institution or state chartered
depository institution acting in its
fiduciary capacity. Eligible Accounts may
bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Liquidation Proceeds": To the extent that such amount
is not required by law to be paid to the
related mortgagor, the amount, if any,
by which Liquidation Proceeds with respect
to a liquidated Mortgage Loan exceed
the sum of (i) the outstanding principal
balance of such Mortgage Loan and
accrued but unpaid interest at the related
Net Mortgage Rate through the last
day of the month in which the related
Liquidation Event occurs, plus (ii)
related liquidation expenses or other
amounts to which the related Servicer is
entitled to be reimbursed from Liquidation
Proceeds with respect to such
liquidated Mortgage Loan pursuant to
Section 3.09 of this Agreement or pursuant
to the Servicing Agreement.
"Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO Property, the then applicable
Mortgage Rate thereon minus the
Administration Fee Rate.
"Extraordinary Trust Fund Expense": Any amounts payable or
reimbursable to the Trustee, the Master
Servicer, the Securities Administrator,
the Custodian or any director, officer,
employee or agent of any such Person
from the Trust Fund pursuant to the terms
of this Agreement and any amounts
payable from the Distribution Account in
respect of taxes pursuant to Section
11.01(g)(v).
"Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (i) the
Net Monthly Excess Cashflow for such
Distribution Date and (ii) the
Overcollateralization Increase Amount for such
Distribution Date.
"Fannie Mae": Fannie Mae, formerly known as the Federal
National Mortgage Association, or any
successor thereto.
15
<PAGE>
"FDIC":
Federal Deposit Insurance Corporation or any successor
thereto.
"Final Maturity Date": The Distribution Date occurring in
November 2039.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other
than a Mortgage Loan or REO Property
purchased by an originator, the Seller or
the Master Servicer pursuant to or as
contemplated by Section 2.03, Section
3.13(c) or Section 10.01), a determination
made by the related Servicer that all
Insurance Proceeds, Liquidation Proceeds
and other payments or recoveries which the
related Servicer in its reasonable
good faith judgment, expects to be finally
recoverable in respect thereof have
been so recovered, which determination
shall be evidenced by a certificate of a
Servicing Officer delivered to the Master
Servicer and maintained in its
records.
"Fitch": Fitch Ratings, or any successor thereto.
"Freddie Mac": Freddie Mac, formerly known as the Federal Home
Loan Mortgage Corporation, or any successor
thereto.
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact
independent of the Depositor, the Master
Servicer, the Securities Administrator, the
Servicers, the Seller, any
originator and their respective Affiliates,
(b) does not have any direct
financial interest in or any material
indirect financial interest in the
Depositor, the Master Servicer, the
Securities Administrator, the Servicers, the
Seller, any originator or any Affiliate
thereof, and (c) is not connected with
the Depositor, the Master Servicer, the
Securities Administrator, the Servicers,
the Seller, any originator or any Affiliate
thereof as an officer, employee,
promoter, underwriter, trustee, partner,
director or Person performing similar
functions; provided, however, that a Person
shall not fail to be Independent of
the Depositor, the Master Servicer, the
Securities Administrator, the Servicers,
the Seller, any originator or any Affiliate
thereof merely because such Person
is the beneficial owner of 1% or less of
any class of securities issued by the
Depositor, the Master Servicer, the
Securities Administrator, the Servicers, the
Seller, any originator or any Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than a
Servicer) that would be an "independent
contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of
the Code if REMIC I were a real
estate investment trust (except that the
ownership tests set forth in that
section shall be considered to be met by
any Person that owns, directly or
indirectly, 35% or more of any Class of
Certificates), so long as REMIC I does
not receive or derive any income from such
Person and provided that the
relationship between such Person and REMIC
I is at arm's length, all within the
meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person
(including a Servicer) if the Trustee has
received an Opinion of Counsel to the
effect that the taking of any action in
respect of any REO Property by such
Person, subject to any conditions therein
specified, that is otherwise herein
contemplated to be taken by an Independent
Contractor will not cause such REO
Property to cease to qualify as
"foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined
without regard to the exception
applicable for purposes of Section 860D(a)
of the Code), or cause any income
realized in respect of such REO Property to
fail to qualify as Rents from Real
Property.
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<PAGE>
"Institutional Accredited Investor": As defined in Section
6.01(c).
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy, covering
a Mortgage Loan or the related
Mortgaged Property, to the extent such
proceeds are not to be applied to the
restoration of the related Mortgaged
Property or released to the Mortgagor or a
senior lienholder in accordance with
Accepted Servicing Practices, subject to
the terms and conditions of the related
Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and the Certificates and the REMIC I
Regular Interests, the one-month
period ending on the last day of the
calendar month immediately preceding the
month in which such Distribution Date
occurs.
"Interest Carry Forward Amount": With respect to any
Distribution Date and any Class A
Certificate or Mezzanine Certificate, the sum
of (i) the amount, if any, by which (a) the
Interest Distribution Amount for
such Class as of the
immediately preceding Distribution Date
exceeded (b) the actual amount
distributed on such Class in respect of
interest on such immediately preceding
Distribution Date and (ii) the amount of
any Interest Carry Forward Amount for
such Class remaining unpaid from the
previous Distribution Date, plus accrued
interest on such sum calculated at the
related Pass-Through Rate for the most
recently ended Interest Accrual Period.
"Interest Distribution Amount": With respect to any
Distribution Date and any Class A
Certificates, any Mezzanine Certificates, the
Class CE-1 Certificates and the Class CE-2
Certificates, the aggregate Accrued
Certificate Interest on the Certificates of
such Class for such Distribution
Date.
"Interest Remittance Amount": With respect to any Distribution
Date, the portion of the Available
Distribution Amount for such Distribution
Date that represents interest received or
advanced on the Mortgage Loans (other
than any Simple Interest Excess, if
applicable, and net of the Administration
Fees and any Prepayment Charges and after
taking into account amounts payable or
reimbursable to the Trustee, the Custodian,
the Securities Administrator, the
Master Servicer, the Credit Risk Manager or
the Servicers pursuant to this
Agreement, the Servicing Agreement or the
Custodial Agreement), plus any amounts
withdrawn from the Simple Interest Excess
Sub-Account.
"Last Scheduled Distribution Date": The Distribution Date in
November 2039, which is the Distribution
Date immediately following the maturity
date for the Mortgage Loan with the latest
maturity date.
"Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent
to the Determination Date
immediately following such Due Period with
respect to such Mortgage Loan,
whether as late payments of Monthly
Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which
represent late payments or collections
of principal and/or interest due (without
regard to any acceleration of payments
under the related Mortgage and Mortgage
Note) but delinquent for such Due Period
and not previously recovered.
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<PAGE>
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage
Loan is paid in full; (ii) a Final
Recovery Determination is made as to such
Mortgage Loan or (iii) such Mortgage
Loan is removed from REMIC I by reason of
its being purchased, sold or replaced
pursuant to or as contemplated by Section
2.03, Section 3.13(c) or Section
10.01. With respect to any REO Property,
either of the following events: (i) a
Final Recovery Determination is made as to
such REO Property or (ii) such REO
Property is removed from REMIC I by reason
of its being purchased pursuant to
Section 10.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds, amounts received in respect of
the rental of any REO Property prior to
REO Disposition, or required to be released
to a Mortgagor or a senior
lienholder in accordance with applicable
law or the terms of the related
Mortgage Loan Documents) received by the
related Servicer in connection with (i)
the taking of all or a part of a Mortgaged
Property by exercise of the power of
eminent domain or condemnation (other than
amounts required to be released to
the Mortgagor or a senior lienholder), (ii)
the liquidation of a defaulted
Mortgage Loan through a trustee's sale,
foreclosure sale or otherwise, (iii) the
repurchase, substitution or sale of a
Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03,
Section 3.13(c), Section 3.21 or Section
10.01 of this Agreement or pursuant to the
Servicing Agreement or (iv) any
Subsequent Recoveries.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the
numerator of which is the principal
balance of the related Mortgage Loan at
such date and the denominator of which
is the Value of the related Mortgaged
Property.
"Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a
fraction, the numerator of which is the
amount of Realized Losses incurred on a
Mortgage Loan and the denominator of
which is the principal balance of such
Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.
"Marker Rate": With respect to the Class CE-1 Certificates and
any Distribution Date, a per annum rate
equal to two (2) times the weighted
average of the REMIC I Remittance Rate for
each of REMIC I Regular Interest
I-LTA1, REMIC I Regular I-LTA2, REMIC I
Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC I Regular Interest
I-LTM4 and REMIC I Regular Interest I-LTZZ,
with the rate on each such REMIC I
Regular Interest (other than REMIC I
Regular Interest I-LTZZ) subject to a cap
equal to the related Pass-Through Rate for
the corresponding Certificate for the
purpose of this calculation for such
Distribution Date and with the rate on
REMIC I Regular Interest I-LTZZ subject to
a cap of zero for the purpose of this
calculation.
"Master Servicer": As of the Closing Date, Wells Fargo Bank,
N.A. and thereafter, its respective
successors in interest who meet the
qualifications of this Agreement. The
Master Servicer and the Securities
Administrator shall at all times be the
same Person.
"Master Servicer Certification": A written certification
covering servicing of the Mortgage Loans by
a Servicer and signed by an officer
of the Master Servicer that complies with
(i) the Sarbanes-Oxley Act of 2002, as
amended from time to time, and (ii) the
February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of
the Securities and
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<PAGE>
Exchange Commission Regarding Compliance by
Asset-Backed Issuers with Exchange
Act Rules 13a-14 and 15d-14, as in effect
from time to time; provided that if,
after the Closing Date (a) the
Sarbanes-Oxley Act of 2002 is amended, (b) the
Statement referred to in clause (ii) is
modified or superseded by any subsequent
statement, rule or regulation of the
Securities and Exchange Commission or any
statement of a division thereof, or (c) any
future releases, rules and
regulations are published by the Securities
and Exchange Commission from time to
time pursuant to the Sarbanes-Oxley Act of
2002, which in any such case affects
the form or substance of the required
certification and results in the required
certification being, in the reasonable
judgment of the Master Servicer,
materially more onerous than the form of
the required certification as of the
Closing Date, the Master Servicer
Certification shall be as agreed to by the
Master Servicer, the Depositor and the
Seller following a negotiation in good
faith to determine how to comply with any
such new requirements.
"Master Servicer Event of Default": One or more of the events
described in Section 8.01(b).
"Master Servicer Fee Rate": 0.080% per annum.
"Master Servicing Fee": With respect to each Mortgage Loan and
for any calendar month, an amount equal to
one twelfth of the product of the
Master Servicer Fee Rate multiplied by the
Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the
preceding calendar month.
"Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the
excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC
I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the
Uncertificated Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I
Overcollateralization Amount, in each
case for such Distribution Date, over (ii)
Uncertificated Interest on REMIC I
Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest
I-LTM3 and REMIC I Regular Interest I-LTM4
with the rate on each such REMIC I
Regular Interest subject to a cap equal to
the related Pass-Through Rate for the
corresponding Certificate for the purpose
of this calculation for such
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(R) System": The system of recording transfers of
mortgages electronically maintained by
MERS.
"Mezzanine Certificate": Any Class M-1, Class M-2, Class M-3
or Class M-4 Certificate.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R)
System.
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<PAGE>
"MOM Loan": With respect to any Mortgage Loan, MERS acting as
the mortgagee of such Mortgage Loan, solely
as nominee for the originator of
such Mortgage Loan and its successors and
assigns, at the origination thereof.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and
interest on such Mortgage Loan which
is payable by the related Mortgagor from
time to time under the related Mortgage
Note, determined: (a) after giving effect
to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such
Mortgage Loan and (ii) any reduction
in the amount of interest collectible from
the related Mortgagor pursuant to the
Relief Act or similar state laws; (b)
without giving effect to any extension
granted or agreed to by the related
Servicer pursuant to Section 3.01 of this
Agreement or pursuant to the Servicing
Agreement; and (c) on the assumption that
all other amounts, if any, due under such
Mortgage Loan are paid when due.
"Moody's": Moody's Investors Service, Inc. or any successor
interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on, or
first or second priority security
interest in, a Mortgaged Property securing
a Mortgage Note.
"Mortgage File": The Mortgage Loan Documents pertaining to a
particular Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and the Mortgage Loan
Documents for which have been delivered to
the Custodian pursuant to Section 2.01 of
this Agreement and pursuant to the
Custodial Agreement, as held from time to
time as a part of the Trust Fund, the
Mortgage Loans so held being identified in
the Mortgage Loan Schedule.
"Mortgage Loan Documents": The documents evidencing or
relating to each Mortgage Loan delivered to
the Custodian under the Custodial
Agreement on behalf of the Trustee.
"Mortgage Loan Purchase Agreement": Shall mean the Mortgage
Loan Purchase Agreement dated as of March
30, 2005, between the Depositor and
the Seller.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date,
separately identifying the Mortgage
Loans, attached hereto as Schedule 1. The
Depositor shall deliver or cause the
delivery of the initial Mortgage Loan
Schedule to the Servicers, the Master
Servicer, the Custodian and the Trustee on
the Closing Date. The Mortgage Loan
Schedule shall set forth the following
information with respect to each Mortgage
Loan:
(i) the
Mortgage Loan identifying number;
(ii)
the Mortgagor's first and last name;
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<PAGE>
(iii) the
street address of the Mortgaged Property
including the state and zip code;
(iv)
a code indicating whether the Mortgaged
Property is owner-occupied;
(v) the type
of Residential Dwelling
constituting the Mortgaged Property;
(vi)
the original months to maturity;
(vii) the
original date of the Mortgage Loan and
the remaining months to maturity from the Cut-off Date, based on
the
original amortization schedule;
(viii) the
Loan-to-Value Ratio at origination;
(ix)
the Mortgage Rate in effect immediately
following the Cut-off Date;
(x) the date
on which the first Monthly Payment
was due on the Mortgage Loan;
(xi)
the stated maturity date;
(xii) the
amount of the Monthly Payment at
origination;
(xiii) the
amount of the Monthly Payment as of the
Cut-off Date;
(xiv) the
last Due Date on which a Monthly Payment
was actually applied to the unpaid Stated Principal Balance;
(xv)
the original principal amount of the
Mortgage Loan;
(xvi) the
Stated Principal Balance of the Mortgage
Loan as of the close of business on the Cut-off Date;
(xvii) a code
indicating the purpose of the loan
(i.e., purchase financing, rate/term refinancing, cash-out
refinancing);
(xviii) the Mortgage
Rate at origination;
(xix) the
date on which the first Monthly Payment
was due on the Mortgage Loan and, if such date is not consistent
with
the Due Date currently in effect, such Due Date;
(xx)
a code indicating the documentation style
(i.e., full, stated or limited);
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<PAGE>
(xxi) a
code indicating if the Mortgage Loan is
subject to a primary insurance policy or lender paid mortgage
insurance
policy and the name of the insurer;
(xxii) the
Appraised Value of the Mortgaged
Property;
(xxiii) the sale price
of the Mortgaged Property, if
applicable;
(xxiv) a code
indicating whether the Mortgage Loan
is subject to a Prepayment Charge, the term of such Prepayment
Charge
and the amount of such Prepayment Charge;
(xxv) the
product type (e.g., 2/28, 15 year fixed,
30 year fixed, 15/30 balloon, etc.);
(xxvi) the
Mortgagor's debt to income ratio;
(xxvii)
the FICO score at
origination;
(xxviii) whether such Mortgage Loan is a Simple
Interest Mortgage Loan;
(xxix) the
Servicing Fee with respect to each
Servicer and any primary Servicer of the related Mortgage Loans;
and
(xxx) the
Servicer.
The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage
Loans in the aggregate as of the
Cut-off Date: (1) the number of Mortgage
Loans; (2) the current principal
balance of the Mortgage Loans; (3) the
weighted average Mortgage Rate of the
Mortgage Loans; and (4) the weighted
average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended
from time to time by the Depositor in
accordance with the provisions of this
Agreement. With respect to any Qualified
Substitute Mortgage Loan, the Cut-off Date
shall refer to the related Cut-off
Date for such Mortgage Loan, determined in
accordance with the definition of
Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of the indebtedness of a Mortgagor under a
Mortgage Loan.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on
such Mortgage Loan from time to time in
accordance with the provisions of the
related Mortgage Note. With respect to
each Mortgage Loan that becomes an REO
Property, as of any date of
determination, the annual rate determined
in accordance with the immediately
preceding sentence as of the date such
Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property,
consisting of an Estate in Real
Property improved by a Residential
Dwelling.
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<PAGE>
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any
Overcollateralization Reduction Amount for
such Distribution Date and (ii) the excess
of (x) the Available Distribution
Amount for such Distribution Date over (y)
the sum for such Distribution Date of
(A) the aggregate Senior Interest
Distribution Amounts payable to the Holders of
the Class A Certificates, (B) the aggregate
Interest Distribution Amounts
payable to the holders of the Mezzanine
Certificates and (C) the Principal
Remittance Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of
determination, a per annum rate of
interest equal to the then applicable
Mortgage Rate for such Mortgage Loan minus
the Administration Fee Rate.
"Net Simple Interest Excess": As of any Distribution Date, an
amount equal to the excess, if any, of the
aggregate amount of Simple Interest
Excess with respect to the Mortgage Loans
over the amount of Simple Interest
Shortfall with respect to the Mortgage
Loans.
"Net Simple Interest Shortfall": As of any Distribution Date,
an amount equal to the excess, if any, of
the aggregate amount of Simple
Interest Shortfall with respect to the
Mortgage Loans over the amount of Simple
Interest Excess with respect to the
Mortgage Loans.
"Net WAC Pass-Through Rate": With respect to the Class A
Certificates and the Mezzanine Certificates
and any Distribution Date, a rate
per annum equal to the weighted average of
the Expense Adjusted Mortgage Rates
on the then outstanding Mortgage Loans,
weighted based on their Stated Principal
Balances as of the first day of the
calendar month preceding the month in which
the Distribution Date occurs. For federal
income tax purposes, the economic
equivalent of such rate shall be expressed
as the weighted average of the REMIC
I Remittance Rates on the REMIC I Regular
Interests, weighted on the basis of
the Uncertificated Balance of each such
REMIC I Regular Interest; provided that
for purposes of this definition the REMIC I
Remittance Rate shall be calculated
using a Servicing Fee Rate equal to
0.50%.
"Net WAC Rate Carryover Amount" : With respect to any Class A
Certificate or Mezzanine Certificate and
any Distribution Date on which the
Pass-Through Rate is limited to the
applicable Net WAC Pass-Through Rate, an
amount equal to the sum of (i) the excess
of (x) the amount of interest such
Class would have been entitled to receive
on such Distribution Date if the
applicable Net WAC Pass-Through Rate would
not have been applicable to such
Class on such Distribution Date over (y)
the amount of interest paid to such
Class on such Distribution Date at the
applicable Net WAC Pass-Through Rate plus
(ii) the related Net WAC Rate Carryover
Amount for the previous Distribution
Date not previously distributed to such
Class together with interest thereon at
a rate equal to the Pass-Through Rate for
such Class for the most recently ended
Interest Accrual Period without taking into
account the applicable Net WAC
Pass-Through Rate.
"New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or
extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the
terms of such lease.
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<PAGE>
"Nonrecoverable P&I Advance": Any P&I Advance previously
made
or proposed to be made in respect of a
Mortgage Loan or REO Property that, in
the good faith business judgment of the
related Servicer or a successor to the
related Servicer (including the Master
Servicer) will not or, in the case of a
proposed P&I Advance, would not be
ultimately recoverable from related Late
Collections, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in
respect of a Mortgage Loan or REO
Property that, in the good faith business
judgment of the related Servicer will
not or, in the case of a proposed Servicing
Advance, would not be ultimately
recoverable from related Late Collections,
Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO
Property as provided herein or in the
Servicing Agreement.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount" : With respect to the Class CE-1
Certificates and Class CE-2 Certificates
and any Distribution Date, the
Uncertificated Balance of the REMIC I
Regular Interests for such Distribution
Date. As of the Closing Date, the Notional
Amount of the Class CE-1 Certificates
is equal to $165,210,069.
"Ocwen": Ocwen Federal Bank FSB, or any successor thereto.
"Ocwen Mortgage Loans": The Mortgage Loans serviced by Ocwen
pursuant to the terms of this Agreement as
specified on the Mortgage Loan
Schedule.
"Ocwen Servicing Fee Rate": The rate set forth in a separate
letter agreement among Ocwen, the
Depositor, the Trustee, the Master Servicer,
the Securities Administrator and the Class
CE-2 Certificateholder.
"Offered Certificates": The Class A Certificates and the
Mezzanine Certificates, collectively.
"Officer's Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the
Board, the President or a vice president
(however denominated), or by the Treasurer,
the Secretary, or one of the
assistant treasurers or assistant
secretaries of the related Servicer, the
Seller or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for
the Depositor, the related Servicer,
the Securities Administrator or the Master
Servicer, acceptable to the Trustee,
except that any opinion of counsel relating
to (a) the qualification of any
REMIC as a REMIC or (b) compliance with the
REMIC Provisions must be an opinion
of Independent counsel.
"Optional Termination Date": The Distribution Date on which
the aggregate principal balance of the
Mortgage Loans (and properties acquired
in respect thereof) remaining in the Trust
Fund is equal to or less than 10% of
the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
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<PAGE>
"Overcollateralization Amount": With respect to any
Distribution Date, the excess, if any, of
(a) the aggregate Stated Principal
Balances of the Mortgage Loans and REO
Properties immediately following such
Distribution Date over (b) the sum of the
aggregate Certificate Principal
Balances of the Class A Certificates and
the Mezzanine Certificates as of such
Distribution Date (after taking into
account the payment of the Principal
Remittance Amount on such Distribution
Date).
"Overcollateralization Increase Amount": With respect to the
Class A Certificates and the Mezzanine
Certificates and any Distribution Date is
any amount of Net Monthly Excess Cashflow
actually applied as an accelerated
payment of principal to the extent the
Required Overcollateralization Amount
exceeds the Overcollateralization
Amount.
"Overcollateralization Reduction Amount" : With respect to any
Distribution Date, is the lesser of (i) the
amount by which the
Overcollateralization Amount exceeds the
Required Overcollateralization Amount
and (ii) the Principal Remittance Amount;
provided however that on any
Distribution Date on which a Trigger Event
is in effect, the
Overcollateralization Reduction Amount
shall equal zero.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate,
including any interest in such
Certificate as the Holder thereof and any
other interest therein, whether direct
or indirect, legal or beneficial, as owner
or as pledgee.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the related Servicer in
respect of any Determination Date
pursuant to Section 5.03 of this Agreement,
an Advance Financing Person pursuant
to Section 3.25 of this Agreement or in
respect of any Distribution Date by a
successor Servicer (including the Master
Servicer) pursuant to Section 8.02 of
this Agreement or pursuant to the Servicing
Agreement (which advances shall not
include principal or interest shortfalls
due to bankruptcy proceedings or
application of the Relief Act or similar
state or local laws.)
"Pass-Through Rate": With respect to the Class A-1
Certificates, a rate per annum equal to the
lesser of (i) 4.25% and (ii) the Net
WAC Pass Through Rate for such Distribution
Date.
With respect to the Class A-2 Certificates, a rate per annum
equal to the lesser of (i) 5.13% in the
case of each Distribution Date through
and including the Optional Termination
Date, or 5.63%, in the case of any
Distribution Date thereafter and (ii) the
Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class M-1 Certificates, a rate per annum
equal to the lesser of (i) 5.52% in the
case of each Distribution Date through
and including the Optional Termination
Date, or 6.02%, in the case of any
Distribution Date thereafter and (ii) the
Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class M-2 Certificates, a rate per annum
equal to the lesser of (i) 5.77% in the
case of each Distribution Date through
and including the Optional Termination
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<PAGE>
Date, or 6.27%, in the case of any
Distribution Date thereafter and (ii) the Net
WAC Pass Through Rate for such Distribution
Date.
With respect to the Class M-3 Certificates, a rate per annum
equal to the lesser of (i) 6.00% in the
case of each Distribution Date through
and including the Optional Termination
Date, or 6.50%, in the case of any
Distribution Date thereafter and (ii) the
Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class M-4 Certificates, a rate per annum
equal to the lesser of (i) 6.00% in the
case of each Distribution Date through
and including the Optional Termination
Date, or 6.50%, in the case of any
Distribution Date thereafter and (ii) the
Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class CE-1 Certificates and any
Distribution Date, a rate per annum equal
to the percentage equivalent of a
fraction, the numerator of which is the sum
of the amounts calculated pursuant
to clauses (i) through (viii) below, and
the denominator of which is the
aggregate Uncertificated Balances of REMIC
I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ. For
purposes of calculating the Pass-Through
Rate for the Class CE-1 Certificates,
the numerator is equal to the sum of the
following components:
(i) the REMIC
I Remittance Rate for REMIC I
Regular Interest I-LTAA minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTAA;
(ii)
the REMIC I Remittance Rate for REMIC I
Regular Interest I-LTA1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTA1;
(iii) the
REMIC I Remittance Rate for REMIC I
Regular Interest I-LTA2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTA2;
(iv)
the REMIC I Remittance Rate for REMIC I
Regular Interest I-LTM1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTM1;
(v) the REMIC
I Remittance Rate for REMIC I
Regular Interest I-LTM2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTM2;
(vi)
the REMIC I Remittance Rate for REMIC I
Regular Interest I-LTM3 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTM3;
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<PAGE>
(vii) the
REMIC I Remittance Rate for REMIC I
Regular Interest I-LTM4 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTM4;
and
(viii) the REMIC
I Remittance Rate for REMIC I
Regular Interest I-LTZZ minus the Marker Rate, applied to an
amount
equal to the Uncertificated Balance of REMIC I Regular Interest
I-LTZZ.
With respect to the Class CE-2 Certificates and any
Distribution Date, a rate per annum equal
to the percentage equivalent of a
fraction, the numerator of which is the sum
of the amounts calculated pursuant
to clauses (i) through (viii) below, and
the denominator of which is the
aggregate Uncertificated Balances of the
REMIC I Regular Interests. For purposes
of calculating the Pass-Through Rate for
the Class CE-2 Certificates, the
numerator is equal to the sum of the
following components:
(i) the excess
of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTAA over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTAA (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTAA;
(ii)
the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTA1 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTA1 (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA1;
(iii) the
excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTA2 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTA2 (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA2;
(iv)
the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM1 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM1 (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM1;
(v) the excess
of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM2 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM2 (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM2;
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(vi)
the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM3 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM3 (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM3;
(vii) the
excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM4 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM4 (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM4; and
(viii) the
excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTZZ over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTZZ (calculated
for
purposes of clause (ii) of this definition using a Servicing Fee
Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTZZ.
"Percentage Interest": With respect to any Class of
Certificates (other than the Residual
Certificates), the undivided percentage
ownership in such Class evidenced by such
Certificate, expressed as a
percentage, the numerator of which is the
initial Certificate Principal Balance
represented by such Certificate and the
denominator of which is the aggregate
initial Certificate Principal Balance or
Notional Amount of all of the
Certificates of such Class. The Class A
Certificates and the Mezzanine
Certificates are issuable only in minimum
Percentage Interests corresponding to
minimum initial Certificate Principal
Balances of $25,000 and integral multiples
of $1.00 in excess thereof. The Class CE-1
Certificates and Class CE-2
Certificates are issuable only in minimum
Percentage Interests corresponding to
minimum initial Notional Balances of
$10,000 and integral multiples of $1.00 in
excess thereof; provided, however, that a
single Certificate of each such Class
of Certificates may be issued having a
Percentage Interest corresponding to the
remainder of the aggregate initial Notional
Balance of such Class or to an
otherwise authorized denomination for such
Class plus such remainder. With
respect to any Residual Certificate, the
undivided percentage ownership in such
Class evidenced by such Certificate, as set
forth on the face of such
Certificate. The Residual Certificates are
issuable in Percentage Interests of
20% and integral multiples of 5% in excess
thereof.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a
purchase price of not greater than par,
regardless of whether issued by the
Depositor, a Servicer, the Master Servicer,
the Trustee or any of their respective
Affiliates:
(i) direct
obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by,
the
United States or any agency or instrumentality thereof, provided
such
obligations are backed by the full faith and credit of the
United
States;
(ii)
(A) demand and time deposits in,
certificates of deposit of, bankers' acceptances issued by or
federal
funds sold by any depository institution or trust company
(including
the Trustee or its agent acting in their respective commercial
28
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capacities) incorporated under the laws of the United States of
America
or any state thereof and subject to supervision and examination
by
federal and/or state authorities, so long as, at the time of
such
investment or contractual commitment providing for such
investment,
such depository institution or trust company (or, if the only
Rating
Agency is S&P, in the case of the principal depository
institution in a
depository institution holding company, debt obligations of the
depository institution holding company) or its ultimate parent has
a
short-term uninsured debt rating in the highest available
rating
category of Moody's, Fitch and S&P and provided that each
such
investment has an original maturity of no more than 365 days;
and
provided further that, if the only Rating Agency is S&P and if
the
depository or trust company is a principal subsidiary of a bank
holding
company and the debt obligations of such subsidiary are not
separately
rated, the applicable rating shall be that of the bank holding
company;
and, provided further that, if the original maturity of such
short-term
obligations of a domestic branch of a foreign depository
institution or
trust company shall exceed 30 days, the short-term rating of
such
institution shall be A-1+ in the case of S&P if S&P is the
Rating
Agency; and (B) any other demand or time deposit or deposit which
is
fully insured by the FDIC;
(iii)
repurchase obligations with a term not to
exceed 30 days with respect to any security described in clause
(i)
above and entered into with a depository institution or trust
company
(acting as principal) rated A-1+ or higher by S&P, F-1 or
higher by
Fitch and A2 or higher by Moody's, provided, however, that
collateral
transferred pursuant to such repurchase obligation must be of the
type
described in clause (i) above and must (A) be valued daily at
current
market prices plus accrued interest, (B) pursuant to such
valuation, be
equal, at all times, to 105% of the cash transferred by a party
in
exchange for such collateral and (C) be delivered to such party or,
if
such party is supplying the collateral, an agent for such party,
in
such a manner as to accomplish perfection of a security interest in
the
collateral by possession of certificated securities;
(iv)
securities bearing interest or sold at a
discount that are issued by any corporation incorporated under the
laws
of the United States of America or any state thereof and that are
rated
by each Rating Agency that rates such securities in its highest
long-term unsecured rating categories at the time of such
investment or
contractual commitment providing for such investment;
(v) commercial
paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than
30
days after the date of acquisition thereof) that is rated by
each
Rating Agency that rates such securities in its highest
short-term
unsecured debt rating available at the time of such investment;
(vi)
units of money market funds that have been
rated "AAA" by Fitch (if rated by Fitch), "AAAm" by S&P or
"Aaa" by
Moody's including any such money market fund managed or advised by
the
Master Servicer, the Trustee or any of their Affiliates; and
(vii) if
previously confirmed in writing to the
Trustee, any other demand, money market or time deposit, or any
other
obligation, security or investment,
29
<PAGE>
as may be acceptable to the Rating Agencies as a permitted
investment
of funds backing securities having ratings equivalent to its
highest
initial rating of the Class A Certificates;
provided, however, that no instrument
described hereunder shall evidence either
the right to receive (a) only interest with
respect to the obligations
underlying such instrument or (b) both
principal and interest payments derived
from obligations underlying such instrument
and the interest and principal
payments with respect to such instrument
provide a yield to maturity at par
greater than 120% of the yield to maturity
at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified
Organization or Non-United States Person.
"Person" : Any individual, limited liability company,
corporation, partnership, joint venture,
association, joint-stock company,
trust, unincorporated organization or
government or any agency or political
subdivision thereof.
"Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including
individual retirement accounts and annuities,
Keogh plans and bank collective investment
funds and insurance company general
or separate accounts in which such plans,
accounts or arrangements are invested,
that are subject to ERISA or Section 4975
of the Code.
"Prepayment Assumption": A prepayment rate for the Mortgage
Loans of 30% CPR. The Prepayment Assumption
is used solely for determining the
accrual of original issue discount on the
Certificates for federal income tax
purposes. A CPR (or Constant Prepayment
Rate) represents an annualized constant
assumed rate of prepayment each month of a
pool of mortgage loans relative to
its outstanding principal balance for the
life of such pool.
"Prepayment Charge": With respect to any Principal Prepayment,
any prepayment premium, penalty or charge
payable by a Mortgagor in connection
with any Principal Prepayment on a Mortgage
Loan pursuant to the terms of the
related Mortgage Note.
"Prepayment Charge Schedule": As of any date, the list of
Mortgage Loans providing for a Prepayment
Charge included in the Trust Fund on
such date, attached hereto as Schedule 2
(including the prepayment charge
summary attached thereto). The Depositor
shall deliver or cause the delivery of
the Prepayment Charge Schedule to the
related Servicer, the Master Servicer and
the Trustee on the Closing Date. The
Prepayment Charge Schedule shall set forth
the following information with respect to
each Prepayment Charge:
(i) the
Mortgage Loan identifying number;
(ii)
a code indicating the type of Prepayment
Charge;
(iii) the
date on which the first Monthly Payment
was due on the related Mortgage Loan;
(iv)
the term of the related Prepayment Charge;
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<PAGE>
(v) the
original Stated Principal Balance of the
related
Mortgage Loan; and
(vi)
the Stated Principal Balance of the related
Mortgage Loan as of the Cut-off Date.
"Prepayment Interest Excess": With respect to each Ocwen
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 Distribution
Date occurs and the Determination Date
of the calendar month in which such
Distribution Date occurs, an amount equal to
interest (to the extent received) at the
applicable 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 Distribution Date occurs and
ending on the last date through which
interest is collected from the related
Mortgagor. Ocwen may withdraw such
Prepayment Interest Excess from the
Collection Account in accordance with
Section 3.09(a)(x).
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each such Mortgage
Loan that was the subject of a
Principal Prepayment in full or in part
during the portion of the related
Prepayment Period occurring between the
first day of the related Prepayment
Period and the last day of the calendar
month preceding the month in which such
Distribution Date occurs that was applied
by the related Servicer to reduce the
outstanding principal balance of such
Mortgage Loan on a date preceding the Due
Date in the succeeding Prepayment Period,
an amount equal to interest at the
applicable Net Mortgage Rate on the amount
of such Principal Prepayment for the
number of days commencing on the date on
which the prepayment is applied and
ending on the last day of the calendar
month preceding such Distribution Date.
The obligations of Ocwen and the Master
Servicer in respect of any Prepayment
Interest Shortfall are set forth in Section
3.22 and Section 4.18, respectively
of this Agreement. The obligations of WMMSC
in respect of any Prepayment
Interest Shortfalls are set forth in the
Servicing Agreement.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the month in
which the related Distribution Date
occurs with respect to prepayments in part,
and the period beginning on the 16th
day of the month preceding the related
Distribution Date (or, the period
commencing on the Cut-off Date, in
connection with the first Prepayment Period)
and ending on the 15th day of the month in
which such Distribution Date occurs
with respect to prepayments in full.
"Principal Prepayment": Any voluntary payment of principal
made by the Mortgagor on a Mortgage Loan
which is received in advance of its
scheduled Due Date and which is not
accompanied by an amount of interest
representing the full amount of scheduled
interest due on any Due Date in any
month or months subsequent to the month of
prepayment.
"Principal Distribution Amount": With respect to any
Distribution Date will be the sum of (i)
the principal portion of all Monthly
Payments on the Mortgage Loans due during
the related Due Period, whether or not
received on or prior to the related
Determination Date; (ii) the principal
portion of all proceeds received in respect
of the repurchase of a Mortgage Loan
or, in the case of a substitution, certain
amounts representing a principal
adjustment, during the
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<PAGE>
related Prepayment Period pursuant to or as
contemplated by Section 2.03,
Section 3.13(c) and Section 10.01 of this
Agreement or the Servicing Agreement;
(iii) the principal portion of all other
unscheduled collections, including
Insurance Proceeds, Liquidation Proceeds
and all Principal Prepayments in full
and in part, received during the related
Prepayment Period, to the extent
applied as recoveries of principal on the
Mortgage Loans, net in each case of
payments or reimbursements to the Trustee,
the Custodian, the Master Servicer,
the Securities Administrator, the Servicers
or the Credit Risk Manager and (iv)
the amount of any Overcollateralization
Increase Amount for such Distribution
Date MINUS (v) the amount of any
Overcollateralization Reduction Amount for such
Distribution Date.
"Principal Remittance Amount": With respect to any
Distribution Date will be the sum of the
amounts described in clauses (i)
through (iii) of the definition of
Principal Distribution Amount.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as
contemplated by Section 2.03, Section
3.13(c) or Section 10.01, and as confirmed
by a certification of a Servicing
Officer to the Trustee, an amount equal to
the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of
purchase (or such other price as
provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance
at the applicable Net Mortgage Rate in
effect from time to time from the Due Date
as to which interest was last covered
by a payment by the Mortgagor or a P&I
Advance by a Servicer, which payment or
P&I Advance had as of the date of
purchase been distributed pursuant to Section
5.01, through the end of the calendar month
in which the purchase is to be
effected and (y) an REO Property, the sum
of (1) accrued interest on such Stated
Principal Balance at the applicable Net
Mortgage Rate in effect from time to
time from the Due Date as to which interest
was last covered by a payment by the
Mortgagor or a P&I Advance by a
Servicer, through the end of the calendar month
immediately preceding the calendar month in
which such REO Property was
acquired, plus (2) REO Imputed Interest for
such REO Property for each calendar
month commencing with the calendar month in
which such REO Property was acquired
and ending with the calendar month in which
such purchase is to be effected, net
of the total of all net rental income,
Insurance Proceeds, Liquidation Proceeds
and P&I Advances that as of the date of
purchase had been distributed as or to
cover REO Imputed Interest pursuant to
Section 5.01, (iii) any unreimbursed
Servicing Advances and P&I Advances
(including Nonrecoverable P&I Advances and
Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property, (iv)
any amounts previously withdrawn from
the Collection Account pursuant to Section
3.09(a)(ix) and Section 3.13(b) and
(v) in the case of a Mortgage Loan required
to be purchased pursuant to Section
2.03, expenses reasonably incurred or to be
incurred by a Servicer or the
Trustee in respect of the breach or defect
giving rise to the purchase
obligation and any costs and damages
incurred by the Trust Fund and the Trustee
in connection with any violation by any
such Mortgage Loan of any predatory or
abusive lending law.
"QIB": As defined in Section 6.01(d).
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan
pursuant to the terms of this Agreement
which must, on the date of such
substitution, (i) have an outstanding principal
balance, after application of all
scheduled
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<PAGE>
payments of principal and interest due
during or prior to the month of
substitution, not in excess of the
Scheduled Principal Balance of the Deleted
Mortgage Loan as of the Due Date in the
calendar month during which the
substitution occurs, (ii) have a Mortgage
Rate not less than (and not more than
one percentage point in excess of) the
Mortgage Rate of the Deleted Mortgage
Loan, (iii) have a remaining term to
maturity not greater than (and not more
than one year less than) that of the
Deleted Mortgage Loan, (iv) have the same
Due Date as the Due Date on the Deleted
Mortgage Loan, (v) have a Loan-to-Value
Ratio as of the date of substitution equal
to or lower than the Loan-to-Value
Ratio of the Deleted Mortgage Loan as of
such date, (vi) be secured by the same
lien priority on the related Mortgaged
Property as the Deleted Loan, (vii) have
a credit grade at least equal to the credit
grading assigned on the Deleted
Mortgage Loan, (viii) be a "qualified
mortgage" as defined in the REMIC
Provisions and (ix) conform to each
representation and warranty set forth in
Section 6 of the Mortgage Loan Purchase
Agreement applicable to the Deleted
Mortgage Loan. In the event that one or
more mortgage loans are substituted for
one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof
shall be determined on the basis of
aggregate principal balances, the Mortgage
Rates described in clause (ii) hereof shall
be determined on the basis of
weighted average Mortgage Rates, the terms
described in clause (iii) hereof
shall be determined on the basis of
weighted average remaining term to maturity,
the Loan-to-Value Ratios described in
clause (v) hereof shall be satisfied as to
each such mortgage loan, the credit grades
described in clause (vii) hereof
shall be satisfied as to each such mortgage
loan and, except to the extent
otherwise provided in this sentence, the
representations and warranties
described in clause (ix) hereof must be
satisfied as to each Qualified
Substitute Mortgage Loan or in the
aggregate, as the case may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than a
nominal amount in excess of the existing
first mortgage loan and any subordinate
mortgage loan on the related Mortgaged
Property and related closing costs, and
were used exclusively (except for such
nominal amount) to satisfy the then
existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor
on the related Mortgaged Property and
to pay related closing costs.
"Rating Agency or Rating Agencies": Fitch and S&P or their
successors. If such agencies or their
successors are no longer in existence,
"Rating Agencies" shall be such nationally
recognized statistical rating
agencies, or other comparable Persons,
designated by the Depositor, notice of
which designation shall be given to the
Trustee and the Servicers.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has
been made, an amount (not less than
zero), as reported by Ocwen to the Master
Servicer (in substantially the form of
Schedule 4 hereto) or by WMMSC to the
Master Servicer pursuant to the Servicing
Agreement, equal to (i) the unpaid
principal balance of such Mortgage Loan as of
the commencement of the calendar month in
which the Final Recovery Determination
was made, plus (ii) accrued interest from
the Due Date as to which interest was
last paid by the Mortgagor through the end
of the calendar month in which such
Final Recovery Determination was made,
calculated in the case of each calendar
month during such period (A) at an annual
rate equal to the annual rate at which
interest was then accruing on such Mortgage
Loan and (B) on a principal amount
equal to the Stated Principal Balance of
such Mortgage Loan as of the close of
business on the Distribution Date during
such calendar month, plus (iii) any
amounts previously withdrawn from the
Collection Account or Custodial Account
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in respect of such Mortgage Loan pursuant
to Section 3.09(a)(ix) and Section
3.13(b) of this Agreement or pursuant to
the Servicing Agreement, minus (iv) the
proceeds, if any, received in respect of
such Mortgage Loan during the calendar
month in which such Final Recovery
Determination was made, net of amounts that
are payable therefrom to a Servicer with
respect to such Mortgage Loan pursuant
to Section 3.09(a)(iii) of this Agreement
or pursuant to the Servicing
Agreement.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not
less than zero) equal to (i) the
unpaid principal balance of the related
Mortgage Loan as of the date of
acquisition of such REO Property on behalf
of REMIC I, plus (ii) accrued
interest from the Due Date as to which
interest was last paid by the Mortgagor
in respect of the related Mortgage Loan
through the end of the calendar month
immediately preceding the calendar month in
which such REO Property was
acquired, calculated in the case of each
calendar month during such period (A)
at an annual rate equal to the annual rate
at which interest was then accruing
on the related Mortgage Loan and (B) on a
principal amount equal to the Stated
Principal Balance of the related Mortgage
Loan as of the close of business on
the Distribution Date during such calendar
month, plus (iii) REO Imputed
Interest for such REO Property for each
calendar month commencing with the
calendar month in which such REO Property
was acquired and ending with the
calendar month in which such Final Recovery
Determination was made, plus (iv)
any amounts previously withdrawn from the
Collection Account or Custodial
Account in respect of the related Mortgage
Loan pursuant to Section 3.09(a)(ix)
and Section 3.13(b) of this Agreement or
pursuant to the Servicing Agreement,
minus (v) the aggregate of all P&I
Advances and Servicing Advances (in the case
of Servicing Advances, without duplication
of amounts netted out of the rental
income, Insurance Proceeds and Liquidation
Proceeds described in clause (vi)
below) made by a Servicer in respect of
such REO Property or the related
Mortgage Loan for which a Servicer has been
or, in connection with such Final
Recovery Determination, will be reimbursed
pursuant to Section 3.21 of this
Agreement or pursuant to the Servicing
Agreement out of rental income, Insurance
Proceeds and Liquidation Proceeds received
in respect of such REO Property,
minus (vi) the total of all net rental
income, Insurance Proceeds and
Liquidation Proceeds received in respect of
such REO Property that has been, or
in connection with such Final Recovery
Determination, will be transferred to the
Distribution Account pursuant to Section
3.21 of this Agreement or pursuant to
the Servicing Agreement.
With respect to each Mortgage Loan which has
become the subject of a Deficient
Valuation, the difference between the
principal balance of the Mortgage Loan
outstanding immediately prior to such
Deficient Valuation and the principal
balance
of the Mortgage Loan as reduced by the
Deficient Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the
portion, if any, of the reduction in
each affected Monthly Payment attributable
to a reduction in the Mortgage Rate
imposed by a court of competent
jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due
Date for each affected Monthly Payment.
To the extent a Servicer receives Subsequent Recoveries, with
respect to any Mortgage Loan, the amount of
Realized Loss with respect to that
Mortgage Loan will be reduced
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<PAGE>
to the extent such recoveries are applied
to reduce the Certificate Principal
Balance of any Class on any Distribution
Date.
"Record Date": With respect to each Distribution Date and any
Class of Certificates, including any
Definitive Certificates, the last day of
the calendar month immediately preceding
the month in which such Distribution
Date occurs.
"Reference Banks": Barclay's Bank PLC, The Tokyo Mitsubishi
Bank and National Westminster Bank PLC and
their successors in interest;
provided, however, that if any of the
foregoing banks are not suitable to serve
as a Reference Bank, then any leading banks
selected by the Securities
Administrator which are engaged in
transactions in Eurodollar deposits in the
International Eurocurrency market (i) with
an established place of business in
London, (ii) not controlling, under the
control of or under common control with
the Depositor or any Affiliate thereof and
(iii) which have been designated as
such by the Securities Administrator.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related
Mortgaged Property.
"Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class CE-1 Certificate or
Class CE-2 Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the
Code.
"Relief Act": The Servicemembers Civil Relief Act, as amended,
or similar state or local laws.
"Relief Act Interest Shortfall" : With respect to any
Distribution Date and any Mortgage Loan,
any reduction in the amount of interest
collectible on such Mortgage Loan for the
most recently ended Due Period as a
result of the application of the Relief
Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the
Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created
hereby and to be administered hereunder,
with respect to which a REMIC election is
to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as
from time to time are subject to this
Agreement, together with the Mortgage Files
relating thereto, and together with
all collections thereon and proceeds
thereof; (ii) any REO Property, together
with all collections thereon and proceeds
thereof; (iii) the Trustee's rights
with respect to the Mortgage Loans under
all insurance policies required to be
maintained pursuant to this Agreement and
any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan
Purchase Agreement (including any
security interest created thereby), the
Assignment Agreement and the Servicing
Agreement and (v) the Custodial Accounts,
Collection Account, the Distribution
Account and any REO Account, and such
assets that are deposited therein from
time to time and any investments thereof,
together with any and all income,
proceeds and payments with respect thereto.
Notwithstanding the foregoing,
however, REMIC I specifically excludes (i)
all payments and other collections of
principal and interest due on the
Mortgage
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Loans on or before the Cut-off Date and all
Prepayment Charges payable in
connection with Principal Prepayments made
before the Cut-off Date; and (ii) the
Reserve Fund and any amounts on deposit
therein from time to time and any
proceeds thereof.
"REMIC I Interest Loss Allocation Amount" : With respect to
any Distribution Date, an amount equal to
(a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage
Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance
Rate for REMIC I Regular Interest
I-LTAA minus the Marker Rate, divided by
(b) 12. "REMIC I Overcollateralization
Amount": With respect to any date of
determination, (i) 1.00% of the aggregate
Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the
aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I
Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular
Interest I-LTM3 and REMIC I Regular
Interest I-LTM4, in each case as of such
date of determination.
"REMIC I Principal Loss Allocation Amount" : With respect to
any Distribution Date, an amount equal to
(a) the product of (i) 1.00% of the
aggregate Stated Principal Balance of the
Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction,
the numerator of which is two times the
aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I
Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular
Interest I-LTM3 and REMIC I Regular
Interest I-LTM4 and the denominator of
which is the aggregate of the
Uncertificated Balances of REMIC I Regular
Interest I-LTA1, REMIC I Regular
Interest I-LTA2, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3,
REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ.
"REMIC I Regular Interest": Any of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC
I. Each REMIC I Regular Interest
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto. The
designations for the respective REMIC I
Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTAA": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTAA
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA1": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTA1
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal,
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subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Balance as set forth
in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA2": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTA2
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM1": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTM1
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM2": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTM2
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM3": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTM3
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM4": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTM4
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LTZZ": One of the separate
non-certificated beneficial ownership
interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC
I. REMIC I Regular Interest I-LTZZ
shall accrue interest at the related REMIC
I Remittance Rate in effect from time
to time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to its initial
Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest, the weighted average of
the Expense Adjusted Mortgage Rates of
the Mortgage Loans.
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"REMIC I Required Overcollateralization Amount": 1% of the
Required Overcollateralization Amount.
"REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in
trust to the Trustee, for the benefit
of the REMIC II Certificateholders pursuant
to Section 2.07, and all amounts
deposited therein, with respect to which a
separate REMIC election is to be
made.
"REMIC II Certificate": Any Regular Certificate or Class R
Certificate.
"REMIC II Certificateholder": The Holder of any REMIC II
Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment
conduits, which appear at Section
860A through 860G of the Code, and related
provisions, and proposed, temporary
and final regulations and published
rulings, notices and announcements
promulgated thereunder, as the foregoing
may be in effect from time to time.
"REMIC Regular Interest": Any REMIC I Regular Interest.
"REMIC Remittance Rate": The REMIC I Remittance Rate.
"Remittance Report": A report by Ocwen pursuant to Section
5.03(a) of this Agreement or WMMSC pursuant
to the Servicing Agreement.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in
Section 856(d) of the Code as being
included in the term "rents from real
property."
"REO Account": The account or accounts maintained, or caused
to be maintained, by Ocwen in respect of an
REO Property pursuant to Section
3.21 of this Agreement or by WMMSC pursuant
to the Servicing Agreement.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO
Property was at any time part of REMIC I,
one month's interest at the applicable Net
Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the
case of the first such calendar month,
of the related Mortgage Loan, if
appropriate) as of the close of business on the
Distribution Date in such calendar
month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the
excess, if any, of (a) the aggregate of
all amounts received in respect of such REO
Property during such calendar month,
whether in the form of rental income, sale
proceeds (including, without
limitation, that portion of the Termination
Price paid in connection with a
purchase of all of the Mortgage Loans and
REO Properties pursuant to Section
10.01 of this Agreement that is allocable
to such REO Property) or otherwise,
net of any portion of such
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<PAGE>
amounts (i) payable in respect of the
proper operation, management and
maintenance of such REO Property or (ii)
payable or reimbursable to Ocwen
pursuant to Section 3.21(d) of this
Agreement or WMMSC pursuant to the Servicing
Agreement for unpaid Servicing Fees in
respect of the related Mortgage Loan and
unreimbursed Servicing Advances and P&I
Advances in respect of such REO Property
or the related Mortgage Loan, over (b) the
REO Imputed Interest in respect of
such REO Property for such calendar
month.
"REO Property": A Mortgaged Property acquired by the Trustee
or its nominee on behalf of REMIC I through
foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.21
of this Agreement or WMMSC pursuant to
the Servicing Agreement.
"Required Overcollateralization Amount" : As of the Closing
Date, $0. With respect to any Distribution
Date, the product of (A) 0.50% and
(B) the aggregate principal balance of the
Mortgage Loans as of the Cut-off
Date. Notwithstanding the foregoing, on and
after any Distribution Date
following the reduction of the aggregate
principal balance of the Class A
Certificates and Mezzanine Certificates to
zero, the Required
Overcollateralization Amount shall be
zero.
"Reserve Fund": A fund created pursuant to Section 3.24 which
shall be an asset of the Trust Fund but
which shall not be an asset of any Trust
REMIC.
"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a
detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a
Fannie Mae eligible condominium project,
(iv) a cooperative, (v) a townhouse, (vi) a
manufactured home, or (vii) a
detached one-family dwelling in a planned
unit development, none of which is a
mobile home.
"Residual Certificate": Any one of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section
860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any officer of the Trustee having direct
responsibility for the administration
of this Agreement and, with respect to a
particular matter, to whom such matter
is referred because of such officer's
knowledge of and familiarity with the
particular subject.
"Rule 144A": As defined in Section 6.01(d).
"S&P": Standard and Poor's, a division of the McGraw-Hill
Companies, Inc.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the
outstanding principal balance of such
Mortgage Loan as of such date, net of the
principal portion of all unpaid
Monthly Payments, if any, due on or before
such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and
including the Due Date in the calendar
month in which a Liquidation Event occurs
with respect to such Mortgage Loan,
the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion
of each Monthly Payment due on or
before such Due Date but subsequent to
the
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<PAGE>
Cut-off Date, whether or not received, (ii)
all Principal Prepayments received
before such Due Date but after the Cut-off
Date, (iii) the principal portion of
all Liquidation Proceeds and Insurance
Proceeds received before such Due Date
but after the Cut-off Date, net of any
portion thereof that represents principal
due (without regard to any acceleration of
payments under the related Mortgage
and Mortgage Note) on a Due Date occurring
on or before the date on which such
proceeds were received and (iv) any
Realized Loss incurred with respect thereto
as a result of a Deficient Valuation
occurring before such Due Date, but only to
the extent such Realized Loss represents a
reduction in the portion of principal
of such Mortgage Loan not yet due (without
regard to any acceleration of
payments under the related Mortgage and
Mortgage Note) as of the date of such
Deficient Valuation; and (c) as of any Due
Date subsequent to the occurrence of
a Liquidation Event with respect to such
Mortgage Loan, zero. With respect to
any REO Property: (a) as of any Due Date
subsequent to the date of its
acquisition on behalf of the Trust Fund up
to and including the Due Date in the
calendar month in which a Liquidation Event
occurs with respect to such REO
Property, an amount (not less than zero)
equal to the Scheduled Principal
Balance of the related Mortgage Loan as of
the Due Date in the calendar month in
which such REO Property was acquired, minus
the aggregate amount of REO
Principal Amortization, if any, in respect
of REO Property for all previously
ended calendar months; and (b) as of any
Due Date subsequent to the occurrence
of a Liquidation Event with respect to such
REO Property, zero.
"Securities Act": The Securities Act of 1933, as amended.
"Securities Administrator": As of the Closing Date, Wells
Fargo Bank, N.A. and thereafter, its
respective successors in interest that meet
the qualifications of this Agreement. The
Securities Administrator and the
Master Servicer shall at all times be the
same Person.
"Seller": DB Structured Products, Inc. or its successor in
interest, in its capacity as seller under
the Mortgage Loan Purchase Agreement.
"Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the
sum of (i) the Interest Distribution
Amount for such Distribution Date for the
Class A Certificates and (ii) the
Interest Carry Forward Amount, if any, for
such Distribution Date for the Class
A Certificates.
"Servicer": Ocwen or WMMSC, or any successor thereto appointed
hereunder or under the Servicing Agreement,
as applicable, in connection with
the servicing and administration of the
related Mortgage Loans.
"Servicer Event of Default": One or more of the events
described in Section 8.01(a).
"Servicer Remittance Date": With respect to any Distribution
Date and (i) Ocwen, by 12:00 noon on the
22nd of day of each month; provided
that if the 22nd day of a given month is
not a Business Day, the Servicer
Remittance Date shall be the immediately
preceding Business Day and (ii) WMMSC,
as set forth in the Servicing
Agreement.
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<PAGE>
"Servicer Report": A report (substantially in the form of
Schedule 5 hereto) or otherwise in form and
substance acceptable to the Master
Servicer and Securities Administrator on an
electronic data file or tape
prepared by the related Servicer pursuant
to Section 5.03(a) of this Agreement
or pursuant to the Servicing Agreement, as
applicable, with such additions,
deletions and modifications as agreed to by
the Master Servicer, the Securities
Administrator and the related Servicer.
"Servicing Advances": The customary and reasonable
"out-of-pocket" costs and expenses incurred
prior to or on or after the Cut-off
Date (the amounts incurred prior to the
Cut-off Date are identified on Schedule
6 hereto) by the related Servicer in
connection with a default, delinquency or
other unanticipated event by the related
Servicer in the performance of its
servicing obligations, including, but not
limited to, the cost of (i) the
preservation, restoration and protection of
a Mortgaged Property, (ii) any
enforcement or judicial proceedings,
including but not limited to foreclosures,
in respect of a particular Mortgage Loan,
including any expenses incurred in
relation to any such proceedings that
result from the Mortgage Loan being
registered on the MERS(R) System, (iii) the
management (including reasonable
fees in connection therewith) and
liquidation of any REO Property and (iv) the
performance of its obligations under
Section 3.01, Section 3.07, Section 3.11,
Section 3.13 and Section 3.21 of this
Agreement or under the Servicing
Agreement. Servicing Advances also include
any reasonable "out-of-pocket" cost
and expenses (including legal fees)
incurred by the related Servicer in
connection with executing and recording
instruments of satisfaction, deeds of
reconveyance or Assignments to the extent
not recovered from the Mortgagor or
otherwise payable under this Agreement or
the Servicing Agreement. The Servicers
shall not be required to make any
Nonrecoverable Servicing Advances.
"Servicing Agreement": The Servicing Agreement, dated as of
January 1, 2005 between Washington Mutual
Mortgage Securities Corp. and DB
Structured Products Inc.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to
one-twelfth of the product of the
Servicing Fee Rate multiplied by the
Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceding
calendar month. The Servicing Fee is
payable solely from collections of interest
on the Mortgage Loans; provided,
however, that the Servicers shall only be
entitled to a portion of the servicing
fee calculated at the Ocwen Servicing Fee
Rate or WMMSC Servicing Fee Rate, as
applicable.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the related Servicer
involved in, or responsible for, the
administration and servicing of Mortgage
Loans, whose name and specimen signature
appear on a list of Servicing Officers
furnished by the related Servicer to the
Trustee, the Master Servicer, the
Securities Administrator and the Depositor
on the Closing Date, as such list may
from time to time be amended.
"Simple Interest Excess": As of any Determination Date for
each Simple Interest Qualifying Loan, the
excess, if any, of (i) the portion of
the Monthly Payment received from the
Mortgagor for such Mortgage Loan allocable
to interest with respect to the related Due
Period,
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<PAGE>
over (ii) 30 days' interest on the
Scheduled Principal Balance of such Mortgage
Loan at the Mortgage Rate.
"Simple Interest Excess Sub-Account": The sub-account of the
Collection Account established by Ocwen
pursuant to Section 3.08(b). Each Simple
Interest Excess Sub-Account shall be an
Eligible Account.
"Simple Interest Mortgage Loan": Any Mortgage Loan for which
the interest due thereon is calculated
based on the actual number of days
elapsed between the date on which interest
was last paid through the date on
which the most current payment is received
and identified as such on the
Mortgage Loan Schedule.
"Simple Interest Qualifying Loan": As of any Determination
Date, any Simple Interest Mortgage Loan
that was neither prepaid in full during
the related Due Period, nor delinquent with
respect to a payment that became due
during the related Due Period as of the
close of business on the Determination
Date following such Due Period.
"Simple Interest Shortfall": As of any Determination Date for
each Simple Interest Qualifying Loan, the
excess, if any, of (i) 30 days'
interest on the Scheduled Principal Balance
of such Mortgage Loan at the
Mortgage Rate, over (ii) the portion of the
Monthly Payment received from the
Mortgagor for such Mortgage Loan allocable
to interest with respect to the
related Due Period.
"Single Certificate": With respect to any Class of
Certificates (other than the Residual
Certificates), a hypothetical Certificate
of such Class evidencing a Percentage
Interest for such Class corresponding to
an initial Certificate Principal Balance of
$1,000. With respect to the Residual
Certificates, a hypothetical Certificate of
such Class evidencing a 100%
Percentage Interest in such Class.
"Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section
11.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to
but not including the Distribution
Date on which the proceeds, if any, of a
Liquidation Event with respect to such
Mortgage Loan would be distributed, the
Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date, as
shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion
of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the
extent received from the Mortgagor
or advanced by the related Servicer or a
successor to such Servicer (including
the Master Servicer) and distributed
pursuant to Section 5.01 of this Agreement
on or before such date of determination,
(ii) all Principal Prepayments received
after the Cut-off Date, to the extent
distributed pursuant to Section 5.01 of
this Agreement on or before such date of
determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by
the related Servicer as recoveries of
principal in accordance with the provisions
of Section 3.13 of this Agreement or
pursuant to the Servicing Agreement, to the
extent distributed pursuant to
Section 5.01 of this Agreement on or before
such date of determination, and (iv)
any Realized Loss incurred with respect
thereto as a result of a Deficient
Valuation made during or prior to the
Prepayment Period for the most recent
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Distribution Date coinciding with or
preceding such date of determination; and
(b) as of any date of determination
coinciding with or subsequent to the
Distribution Date on which the proceeds, if
any, of a Liquidation Event with
respect to such Mortgage Loan would be
distributed, zero. With respect to any
REO Property: (a) as of any date of
determination up to but not including the
Distribution Date on which the proceeds, if
any, of a Liquidation Event with
respect to such REO Property would be
distributed, an amount (not less than
zero) equal to the Stated Principal Balance
of the related Mortgage Loan as of
the date on which such REO Property was
acquired on behalf of REMIC I, minus the
sum of (i) if such REO Property was
acquired before the Distribution Date in any
calendar month, the principal portion of
the Monthly Payment due on the Due Date
in the calendar month of acquisition, to
the extent advanced by the related
Servicer or a successor to such Servicer
(including the Master Servicer) and
distributed pursuant to Section 5.01 of
this Agreement, on or before such date
of determination and (ii) the aggregate
amount of REO Principal Amortization in
respect of such REO Property for all
previously ended calendar months, to the
extent distributed pursuant to Section 4.01
of this Agreement on or before such
date of determination; and (b) as of any
date of determination coinciding with
or subsequent to the Distribution Date on
which the proceeds, if any, of a
Liquidation Event with respect to such REO
Property would be distributed, zero.
"Stepdown Date": The earlier to occur of (i) the later to
occur of (a) the Distribution Date
occurring in April 2008 and (b) the first
Distribution Date on which the Credit
Enhancement Percentage (calculated for
this purpose only after taking into account
distributions of principal on the
Mortgage Loans but prior to any
distribution of the Principal Distribution
Amount to the Certificates then entitled to
distributions of principal on such
Distribution Date) is equal to or greater
than 12.50% and (ii) the first
Distribution Date on which the aggregate
Certificate Principal Balance of the
Class A Certificates has been reduced to
zero.
"Subordinate Certificates": Collectively, the Mezzanine
Certificates and the Class CE-1
Certificates.
"Subsequent Recoveries": As of any Distribution Date, amounts
received during the related Prepayment
Period by the related Servicer
specifically related to a defaulted
Mortgage Loan or disposition of an REO
Property prior to the related Prepayment
Period that resulted in a Realized
Loss, after the liquidation or disposition
of such defaulted Mortgage Loan, net
of any amount reimbursable to the related
Servicer with respect to such
defaulted Mortgage Loan or REO
Property.
"Sub-Servicer": Any Person with which a Servicer has entered
into a Sub-Servicing Agreement and which
meets the qualifications of a
Sub-Servicers pursuant to Section 3.02 of
this Agreement or the Servicing
Agreement, as applicable.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer relating to
servicing and administration of certain
Mortgage Loans as provided in Section 3.02
of this Agreement or Servicing
Agreement, as applicable.
"Substitution Shortfall Amount": As defined in Section 2.03.
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"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate
Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto,
Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss
Allocation, or any successor forms,
to be filed on behalf of the Trust REMICs
under the REMIC Provisions, together
with any and all other information reports
or returns that may be required to be
furnished to the Certificateholders or
filed with the Internal Revenue Service
or any other governmental taxing authority
under any applicable provisions of
federal, state or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets
Report (or such other page as may replace
page 3750 on that report for the purpose of
displaying London interbank offered
rates of major banks). "Termination Price":
As defined in Section 10.01.
"Terminator": As defined in Section 10.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment
of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger
Event": A Trigger Event has occurred with respect to
a Distribution Date if either (x) the
Delinquency Percentage exceeds 44.00% of
the Credit Enhancement Percentage with
respect to such Distribution Date or (y)
the aggregate amount of Realized Losses
incurred since the Cut-off Date through
the last day of the related Due Period
divided by the aggregate principal
balance of the Mortgage Loans as of the
Cut-off Date exceeds the applicable
percentages set forth below with respect to
such Distribution Date:
Distribution Date
Percentage
-----------------
----------
April 2008 to March 2008
1.50%, plus 1/12 of 0.25% for each month
thereafter
April 2009 to March 2009
1.75%, plus 1/12 of 0.50% for each month
thereafter
April 2010 to March 2010
2.25%, plus 1/12 of 0.25% for each month
thereafter
April 2011 and thereafter
2.50%
"Trust": ACE Securities Corp., Home Equity Loan Trust, Series
2005-SN1, the trust created hereunder.
"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and the Reserve Fund and any
amounts on deposit therein and any
proceeds thereof.
"Trust REMIC": REMIC I or REMIC II.
"Trustee": HSBC Bank USA, National Association a national
banking association, or its successor in
interest, or any successor trustee
appointed as herein provided.
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"Uncertificated Balance": The amount of the REMIC I Regular
Interests outstanding as of any date of
determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I
Regular Interest shall equal the
amount set forth in the Preliminary
Statement hereto as its initial
uncertificated balance. On each
Distribution Date, the Uncertificated Balance of
the REMIC I Regular Interest shall be
reduced by all distributions of principal
made on such REMIC I Regular Interest on
such Distribution Date pursuant to
Section 5.01 and, if and to the extent
necessary and appropriate, shall be
further reduced on such Distribution Date
by Realized Losses as provided in
Section 5.04 and the Uncertificated Balance
of REMIC I Regular Interest I-LTZZ
shall be increased by interest deferrals as
provided in Section 5.01. (a)(1)(i).
The Uncertificated Balance of each REMIC I
Regular Interest shall never be less
than zero.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one
month's interest at the REMIC I
Remittance Rate applicable to such REMIC I
Regular Interest for such
Distribution Date, accrued on the
Uncertificated Balance thereof immediately
prior to such Distribution Date.
Uncertificated Interest in respect of the REMIC
I Regular Interests shall accrue on the
basis of a 360-day year consisting of
twelve 30-day months. Uncertificated
Interest with respect to each Distribution
Date, as to any REMIC I Regular Interest,
shall be reduced by an amount equal to
the sum of (a) the aggregate Prepayment
Interest Shortfall, if any, for such
Distribution Date to the extent not covered
by payments pursuant to Section 3.22
or Section 4.18 of this Agreement or
pursuant to the Servicing Agreement and (b)
the aggregate amount of any Relief Act
Interest Shortfall, if any allocated, in
each case, to such REMIC I Regular Interest
or REMIC I Regular Interest pursuant
to Section 1.02. In addition,
Uncertificated Interest with respect to each
Distribution Date, as to any Uncertificated
REMIC Regular Interest, shall be
reduced by Realized Losses, if any,
allocated to such Uncertificated REMIC
Regular Interest pursuant to Section 1.02
and Section 5.04.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such
property is not fully reimbursable by
the hazard insurance policies required to
be maintained pursuant to Section
3.11.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other
entity created or organized in, or
under the laws of, the United States or any
political subdivision thereof
(except, in the case of a partnership, to
the extent provided in regulations)
provided that, for purposes solely of the
restrictions on the transfer of any
Class R Certificate, no partnership or
other entity treated as a partnership for
United States federal income tax purposes
shall be treated as a United States
Person unless all persons that own an
interest in such partnership either
directly or through any entity that is not
a corporation for United States
federal income tax purposes are required to
be United States Persons, or an
estate whose income is subject to United
States federal income tax regardless of
its source, 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 the authority to
control all substantial decisions of the
trust. To the extent prescribed in
regulations by the Secretary of the Treasury,
a trust which was in existence on August
20, 1996 (other than a trust treated as
owned by the grantor under subpart E of
part I of subchapter J of chapter I of
the Code), and which was treated as a
United States person on August 20, 1996
may elect to continue to be treated as a
United States person notwithstanding
the previous sentence. The term "United
States" shall have the meaning set forth
in Section 7701 of the Code.
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"Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as
determined by an appraisal made for
the related originator of the Mortgage Loan
at the time of origination of the
Mortgage Loan by an appraiser who met the
minimum requirements of Fannie Mae and
Freddie Mac and (b) the value thereof as
determined by a review appraisal
conducted by the related originator of the
Mortgage Loan in accordance with the
related originator's underwriting
guidelines, and (ii) the purchase price paid
for the related Mortgaged Property by the
Mortgagor with the proceeds of the
Mortgage Loan; provided, however, (A) in
the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is
based solely upon the lesser of (1) the
value determined by an appraisal made for
the related originator of the Mortgage
Loan of such Refinanced Mortgage Loan at
the time of origination of such
Refinanced Mortgage Loan by an appraiser
who met the minimum requirements of
Fannie Mae and Freddie Mac and (2) the
value thereof as determined by a review
appraisal conducted by the related
originator of the Mortgage Loan in accordance
with the related originator's underwriting
guidelines, and (B) in the case of a
Mortgage Loan originated in connection with
a "lease-option purchase," such
value of the Mortgaged Property is based on
the lower of the value determined by
an appraisal made for the originator of
such Mortgage Loan at the time of
origination or the sale price of such
Mortgaged Property if the "lease option
purchase price" was set less than 12 months
prior to origination, and is based
on the value determined by an appraisal
made for the related originator of such
Mortgage Loan at the time of origination if
the "lease option purchase price"
was set 12 months or more prior to
origination.
"Verification Report": As defined in Section 4.19.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any
such Certificate. With respect to any
date of determination, 99% of all Voting
Rights will be allocated among the
holders of the Class A Certificates, the
Mezzanine Certificates and the Class
CE-1 Certificates in proportion to the then
outstanding Certificate Principal
Balances of their respective Certificates
1% of all Voting Rights will be
allocated among the holders of the Class R
Certificates. The Voting Rights
allocated to each Class of Certificate
shall be allocated among Holders of each
such Class in accordance with their
respective Percentage Interests as of the
most recent Record Date.
"Wells Fargo": Wells Fargo Bank, N.A. or any successor
thereto.
"WMMSC": Washington Mutual Mortgage Securities Corp.
"WMMSC Mortgage Loans": The Mortgage Loans serviced by WMMSC
pursuant to the terms of the Servicing
Agreement as specified on the Mortgage
Loan Schedule.
"WMMSC Servicing Fee Rate": With respect to each WMMSC
Mortgage Loan, as set forth on the Mortgage
Loan Schedule.
Section 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest
Distribution Amount for the Class A
Certificates, the Mezzanine Certificates
and the Class CE-1 Certificates for any
Distribution Date, (1) the aggregate
amount
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of any Prepayment Interest Shortfalls (to
the extent not covered by payments by
the related Servicer pursuant to Section
3.22 of this Agreement or pursuant to
the Servicing Agreement or by the Master
Servicer pursuant to Section 4.18 of
this Agreement and any Relief Act Interest
Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date
shall be allocated first, to the Class
CE-1 Certificates, second, to the Class M-4
Certificates, third, to the Class
M-3 Certificates, fourth, to the Class M-2
Certificates, fifth, to the Class M-1
Certificates and sixth, to the Class A
Certificates on a PRO RATA basis, in each
case based on, and to the extent of, one
month's interest at the then applicable
respective Pass-Through Rate on the
respective Certificate Principal Balance or
Notional Amount, as applicable, of each
Certificate, and (2) the amount of any
Realized Losses allocated to the Mezzanine
Certificates and Net WAC Rate
Carryover Amounts paid to the Class A
Certificates and the Mezzanine
Certificates incurred for any Distribution
Date shall be allocated to the Class
CE-1 Certificates to the extent of one
month's interest at the then applicable
respective Pass-Through Rate on the
respective Certificate Principal Balance or
Notional Amount thereof, as applicable.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests
for any Distribution Date, the
aggregate amount of any Prepayment Interest
Shortfalls (to the extent not
covered by payments by the related Servicer
pursuant to Section 3.22 of this
Agreement or the Servicing Agreement or the
Master Servicer pursuant to Section
4.18 of this Agreement) and any Relief Act
Interest Shortfalls incurred in
respect of the Mortgage Loans for any
Distribution Date shall be allocated among
REMIC I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular
Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest
I-LTM3 and REMIC I Regular Interest
I-LTM4 and REMIC I Regular Interest I-LTZZ
PRO RATA based on, and to the extent
of, one month's interest at the then
applicable respective REMIC I Remittance
Rate on the respective Uncertificated
Balance of each such REMIC I Regular
Interest.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set
over and otherwise convey to the
Trustee, on behalf of the Trust, without
recourse, for the benefit of the
Certificateholders, all the right, title
and interest of the Depositor,
including any security interest therein for
the benefit of the Depositor, in and
to the Mortgage Loans identified on the
Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan
Purchase Agreement (including, without
limitation the right to enforce the
obligations of the other parties thereto
thereunder), and all other assets included
or to be included in REMIC I. Such
assignment includes all interest and
principal received by the Depositor and the
Servicers on or with respect to the
Mortgage Loans (other than payments of
principal and interest due on such Mortgage
Loans on or before the Cut-off
Date). The Depositor herewith delivers to
the Trustee and the Servicers an
executed copy of the Mortgage Loan Purchase
Agreement.
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with
the Custodian pursuant to the Custodial
Agreement the documents with respect to
each Mortgage Loan as described under
Section 2 of the Custodial Agreement (the
"Mortgage Loan Documents"). In
connection with such delivery and as
further described in the Custodial
Agreement, the Custodian will be required
to review such Mortgage Loan Documents
and deliver to the Trustee, the Depositor,
the Servicer and the Seller
certifications (in the forms attached to
the Custodial Agreement) with respect
to such review with exceptions noted
thereon. In addition, under the Custodial
Agreement the Depositor will be required to
cure certain defects with respect to
the Mortgage Loan Documents for the related
Mortgage Loans after the delivery
thereof by the Depositor to the Custodian
as more particularly set forth
therein.
Notwithstanding anything to the contrary contained herein, the
parties hereto acknowledge that the
functions of the Trustee with respect to the
custody, acceptance, inspection and release
of the Mortgage Files, including,
but not limited to certain insurance
policies and documents contemplated by
Section 4.11, and preparation and delivery
of the certifications shall be
performed by the Custodian pursuant to the
terms and conditions of the Custodial
Agreement.
The Depositor shall deliver or cause the related originator to
deliver to each Servicer copies of all
trailing documents required to be
included in the Mortgage File at the same
time the originals or certified copies
thereof are delivered to the Trustee or
Custodian, such documents including the
mortgagee policy of title insurance and any
Mortgage Loan Documents upon return
from the recording office. The Servicers
shall not be responsible for any
custodian fees or other costs incurred in
obtaining such documents and the
Depositor shall cause the Servicers to be
reimbursed for any such costs the
Servicers may incur in connection with
performing its obligations under this
Agreement or the Servicing Agreement, as
applicable.
The Mortgage Loans permitted by the terms of this Agreement to
be included in the Trust are limited to (i)
Mortgage Loans (which the Depositor
acquired pursuant to the
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Mortgage Loan Purchase Agreement, which
contains, among other representations
and warranties, a representation and
warranty of the Seller that no Mortgage
Loan is a "High-Cost Home Loan" as defined
in the New Jersey Home Ownership Act
effective November 27, 2003, as defined in
the New Mexico Home Loan Protection
Act effective January 1, 2004, as defined
in the Massachusetts Predatory Home
Loan Practices Act, effective November 7,
2004 (Mass. Ann. Laws Ch. 183C) or as
defined in the Indiana High Cost Home Loan
Act) and (ii) Qualified Substitute
Mortgage Loans (which, by definition as set
forth herein and referred to in the
Mortgage Loan Purchase Agreement, are
required to conform to, among other
representations and warranties, the
representation and warranty of the Seller
that no Qualified Substitute Mortgage Loan
is a "High-Cost Home Loan" as defined
in the New Jersey Home Ownership Act
effective November 27, 2003, as defined in
the New Mexico Home Loan Protection Act
effective January 1, 2004 or as defined
in the Massachusetts Predatory Home Loan
Practices Act, effective November 7,
2004 (Mass. Ann. Laws Ch. 183C). The
Depositor and the Trustee on behalf of the
Trust understand and agree that it is not
intended that any mortgage loan be
included in the Trust that is a "High-Cost
Home Loan" as defined in the New
Jersey Home Ownership Act effective
November 27, 2003, as defined in the New
Mexico Home Loan Protection Act effective
January 1, 2004, as defined in the
Massachusetts Predatory Home Loan Practices
Act, effective November 7, 2004
(Mass. Ann. Laws Ch. 183C) or as defined in
the Indiana High Cost Home Loan Act.
Section 2.02. Acceptance of REMIC I by Trustee.
The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 hereof and Section 2 of the
Custodial Agreement, of the Mortgage
Loan Documents and all other assets
included in the definition of "REMIC I"
under clauses (i), (iii), (iv) and (v) (to
the extent of amounts deposited into
the Distribution Account) and declares that
it holds (or the Custodian on its
behalf holds) and will hold such documents
and the other documents delivered to
it constituting a Mortgage Loan Document,
and that it holds (or the Custodian on
its behalf holds) or will hold all such
assets and such other assets included in
the definition of "REMIC I" in trust for
the exclusive use and benefit of all
present and future Certificateholders.
Section 2.03. Repurchase or Substitution of Mortgage Loans.
(a)
Upon discovery or
receipt of notice of any materially
defective document in, or that a document
is missing from, a Mortgage File or of
a breach by the Seller of any
representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect
of any Mortgage Loan that materially
and adversely affects the value of such
Mortgage Loan or the interest therein of
the Certificateholders, the Trustee shall
promptly notify the Seller and the
related Servicer of such defect, missing
document or breach and request that the
Seller deliver such missing document, cure
such defect or breach within 60 days
from the date the Seller was notified of
such missing document, defect or
breach, and if the Seller does not deliver
such missing document or cure such
defect or breach in all material respects
during such period, the Trustee shall
enforce the obligations of the Seller under
the Mortgage Loan Purchase Agreement
to repurchase such Mortgage Loan from REMIC
I at the Purchase Price within 90
days after the date on which the Seller was
notified of such missing document,
defect or breach, if and to the extent that
the Seller is obligated to do so
under the Mortgage Loan Purchase Agreement.
The Purchase Price for the
repurchased Mortgage Loan shall be remitted
to the related Servicer for
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<PAGE>
deposit in the Collection Account or the
Custodial Account, as applicable, and
the Trustee, upon receipt of written
certification from the related Servicer of
such deposit, shall release or cause the
Custodian (upon receipt of a request
for release in the form attached to the
Custodial Agreement) to release to the
Seller the related Mortgage File and the
Trustee shall execute and deliver such
instruments of transfer or assignment, in
each case without recourse,
representation or warranty, as the Seller
shall furnish to it and as shall be
necessary to vest in the Seller any
Mortgage Loan released pursuant hereto, and
the Trustee shall not have any further
responsibility with regard to such
Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above,
if so provided in the Mortgage Loan
Purchase Agreement, the Seller may cause
such Mortgage Loan to be removed from REMIC
I (in which case it shall become a
Deleted Mortgage Loan) and substitute one
or more Qualified Substitute Mortgage
Loans in the manner and subject to the
limitations set forth in Section 2.03(b).
It is understood and agreed that the
obligation of the Seller to cure or to
repurchase (or to substitute for) any
Mortgage Loan as to which a document is
missing, a material defect in a constituent
document exists or as to which such
a breach has occurred and is continuing
shall constitute the sole remedy
respecting such omission, defect or breach
available to the Trustee and the
Certificateholders.
The Trustee shall enforce the obligations of the Seller under
the Mortgage Loan Purchase Agreement to
remedy any breach of the representation
or covenant of the Seller set forth in
Section 5(xiii) of the Mortgage Loan
Purchase Agreement which materially and
adversely affects the interests of the
Holders of the Class CE-1 Certificates in
any Prepayment Charge.
(b) Any
substitution of Qualified Substitute Mortgage
Loans for Deleted Mortgage Loans made
pursuant to Section 2.03(a) must be
effected prior to the date which is two
years after the Startup Day for REMIC I.
As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage
Loan or Loans, such substitution
shall be effected by the Seller delivering
to the Trustee or the Custodian on
behalf of the Trustee, for such Qualified
Substitute Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the Assignment
to the Trustee, and such other
documents and agreements, with all
necessary endorsements thereon, as are
required by Section 2 of the Custodial
Agreement, as applicable, together with
an Officers' Certificate providing that
each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and
specifying the Substitution Shortfall
Amount (as described below), if any, in
connection with such substitution. The
Custodian on behalf of the Trustee shall
acknowledge receipt of such Qualified
Substitute Mortgage Loan or Loans and,
within ten Business Days thereafter,
review such documents and deliver to the
Depositor, the Trustee and the related
Servicer, with respect to such Qualified
Substitute Mortgage Loan or Loans, an
initial certification pursuant to the
Custodial Agreement, with any applicable
exceptions noted thereon. Within one year
of the date of substitution, the
Custodian on behalf of the Trustee shall
deliver to the Depositor, the Trustee
and the related Servicer a final
certification pursuant to the Custodial
Agreement with respect to such Qualified
Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon.
Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the
month of substitution are not part of
REMIC I and will be retained by the Seller.
For the month of substitution,
distributions to Certificateholders will
reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due
Date in the month of substitution,
and the Seller
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shall thereafter be entitled to retain all
amounts subsequently received in
respect of such Deleted Mortgage Loan. The
Depositor shall give or cause to be
given written notice to the
Certificateholders that such substitution has taken
place, shall amend the Mortgage Loan
Schedule to reflect the removal of such
Deleted Mortgage Loan from the terms of
this Agreement and the substitution of
the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the
Trustee and the related Servicer. Upon
such substitution, such Qualified
Substitute Mortgage Loan or Loans shall
constitute part of the Trust Fund and shall
be subject in all respects to the
terms of this Agreement and the Mortgage
Loan Purchase Agreement, including all
applicable representations and warranties
thereof included herein or in the
Mortgage Loan Purchase Agreement.
For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one
or more Deleted Mortgage Loans, the
related Servicer will determine the amount
(the "Substitution Shortfall
Amount"), if any, by which the aggregate
Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate of, as
to each such Qualified Substitute
Mortgage Loan, the Scheduled Principal
Balance thereof as of the date of
substitution, together with one month's
interest on such Scheduled Principal
Balance at the applicable Net Mortgage
Rate, plus all outstanding P&I Advances
and Servicing Advances (including
Nonrecoverable P&I Advances and Nonrecoverable
Servicing Advances) related thereto. On the
date of such substitution, the
Seller will deliver or cause to be
delivered to the related Servicer for deposit
in the Collection Account an amount equal
to the Substitution Shortfall Amount,
if any, and the Trustee or the Custodian on
behalf of the Trustee, upon receipt
of the related Qualified Substitute
Mortgage Loan or Loans, upon receipt of a
request for release in the form attached to
the Custodial Agreement and
certification by the related Servicer of
such deposit, shall release to the
Seller the related Mortgage File or Files
and the Trustee shall execute and
deliver such instruments of transfer or
assignment, in each case without
recourse, representation or warranty, as
the Seller shall deliver to it and as
shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant
hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of
Counsel to the effect that such
substitution will not cause (a) any federal
tax to be imposed on any Trust
REMIC, including without limitation, any
federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of
the Code or on "contributions after
the startup date" under Section 860G(d)(1)
of the Code, or (b) any Trust REMIC
to fail to qualify as a REMIC at any time
that any Certificate is outstanding.
(c) Upon
discovery by the Depositor, the Seller, a
Servicer or the Trustee that any Mortgage
Loan does not constitute a "qualified
mortgage" within the meaning of Section
860G(a)(3) of the Code, the party
discovering such fact shall within two
Business Days give written notice thereof
to the other parties. In connection
therewith, the Seller shall repurchase or
substitute one or more Qualified Substitute
Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier
of discovery or receipt of such
notice with respect to such affected
Mortgage Loan. Such repurchase or
substitution shall be made by (i) the
Seller if the affected Mortgage Loan's
status as a non-qualified mortgage is or
results from a breach of any
representation, warranty or covenant made
by the Seller under the Mortgage Loan
Purchase Agreement or (ii) the Depositor,
if the affected Mortgage Loan's status
as a non-qualified mortgage is a breach of
no representation or warranty. Any
such repurchase or substitution shall
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be made in the same manner as set forth in
Section 2.03(a). The Trustee shall
reconvey to the Seller 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.
(d) With
respect to a breach of the representations made
pursuant to Section 5(xiv) of the Mortgage
Loan Purchase Agreement that
materially and adversely affects the value
of such Mortgage Loan or the interest
therein of the Certificateholders, the
Seller shall be required to take the
actions set forth in this Section 2.03.
(e) Within 90
days of the earlier of discovery by Ocwen
or receipt of notice by Ocwen of the breach
of any representation, warranty or
covenant of Ocwen set forth in Section 2.05
which materially and adversely
affects the interests of the
Certificateholders in any Mortgage Loan or
Prepayment Charge, Ocwen shall cure such
breach in all material respects.
Section 2.04. Representations and Warranties of the Master
Servicer.
The Master Servicer hereby represents, warrants and covenants
to the Servicers, the Depositor and the
Trustee, for the benefit of each of the
Trustee and the Certificateholders, that as
of the Closing Date or as of such
date specifically provided herein:
(i) The Master
Servicer is a national banking
association duly formed, validly existing and in good standing
under
the laws of the United States of America and is duly authorized
and
qualified to transact any and all business contemplated by this
Agreement to be conducted by the Master Servicer;
(ii)
The Master Servicer has the full power and
authority to conduct its business as presently conducted by it and
to
execute, deliver and perform, and to enter into and consummate,
all
transactions contemplated by this Agreement. The Master Servicer
has
duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and
this
Agreement, assuming due authorization, execution and delivery by
the
other parties hereto, constitutes a legal, valid and binding
obligation
of the Master Servicer, enforceable against it in accordance with
its
terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
the
enforcement of creditors' rights generally and by general
principles of
equity;
(iii) The
execution and delivery of this Agreement
by the Master Servicer, the consummation by the Master Servicer of
any
other of the transactions herein contemplated, and the fulfillment
of
or compliance with the terms hereof are in the ordinary course
of
business of the Master Servicer and will not (A) result in a breach
of
any term or provision of charter and by-laws of the Master Servicer
or
(B) conflict with, result in a breach, violation or acceleration
of, or
result in a default under, the terms of any other material
agreement or
instrument to which the Master Servicer is a party or by which it
may
be bound, or any statute, order or regulation applicable to the
Master
Servicer of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over the Master Servicer; and
the
Master Servicer is not a party to,
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bound by, or in breach or violation of any indenture or other
agreement
or instrument, or subject to or in violation of any statute, order
or
regulation of any court, regulatory body, administrative agency
or
governmental body having jurisdiction over it, which materially
and
adversely affects or, to the Master Servicer's knowledge, would in
the
future materially and adversely affect, (x) the ability of the
Master
Servicer to perform its obligations under this Agreement or (y)
the
business, operations, financial condition, properties or assets of
the
Master Servicer taken as a whole;
(iv)
The Master Servicer does not believe, nor
does it have any reason or cause to believe, that it cannot
perform
each and every covenant made by it and contained in this
Agreement;
(v) No
litigation is pending against the Master
Servicer that would materially and adversely affect the
execution,
delivery or enforceability of this Agreement or the ability of
the
Master Servicer to perform any of its other obligations hereunder
in
accordance with the terms hereof,
(vi)
There are no actions or proceedings against,
or investigations known to it of, the Master Servicer before any
court,
administrative or other tribunal (A) that might prohibit its
entering
into this Agreement, (B) seeking to prevent the consummation of
the
transactions contemplated by this Agreement or (C) that might
prohibit
or materially and adversely affect the performance by the
Master
Servicer of its obligations under, or validity or enforceability
of,
this Agreement; and
(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 Master Servicer of,
or
compliance by the Master Servicer with, this Agreement or the
consummation by it of the transactions contemplated by this
Agreement,
except for such consents, approvals, authorizations or orders, if
any,
that have been obtained prior to the Closing Date.
It is understood and agreed that the representations,
warranties and covenants set forth in this
Section 2.04 shall survive the
resignation or termination of the parties
hereto and the termination of this
Agreement and shall inure to the benefit of
the Trustee, the Depositor and the
Certificateholders.
Section 2.05. Representations, Warranties and Covenants of
Ocwen.
Ocwen hereby represents, warrants and covenants to the Master
Servicer, the Securities Administrator, the
Depositor and the Trustee, for the
benefit of each of such Persons and the
Certificateholders that as of the
Closing Date or as of such date
specifically provided herein:
(i) Ocwen is
federally chartered savings bank
duly organized and validly existing under the laws of the United
States
and is duly authorized and qualified to transact any and all
business
contemplated by this Agreement to be conducted by Ocwen in any
state in
which a Mortgaged Property related to an Ocwen Mortgage Loan
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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 Ocwen Mortgage Loan and to service the
Ocwen
Mortgage Loans in accordance with the terms of this Agreement;
(ii) Ocwen has the full
power and authority to
conduct its business as presently conducted by it and to
execute,
deliver and perform, and to enter into and consummate, all
transactions
contemplated by this Agreement. Ocwen has duly authorized the
execution, delivery and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement, assuming
due
authorization, execution and delivery by the other parties
hereto,
constitutes a legal, valid and binding obligation of Ocwen,
enforceable
against it in accordance with its terms, except as the
enforceability
thereof may be limited by bankruptcy, insolvency, reorganization
or
similar laws affecting the enforcement of creditors' rights
generally
and by general principles of equity;
(iii) The
execution and delivery of this Agreement
by Ocwen, the servicing of the Ocwen Mortgage Loans by Ocwen
hereunder,
the consummation by Ocwen of any other of the transactions
herein
contemplated, and the fulfillment of or compliance with the
terms
hereof are in the ordinary course of business of Ocwen and will not
(A)
result in a breach of any term or provision of the charter or
bylaws of
Ocwen or (B) conflict with, result in a breach, violation or
acceleration of, or result in a default under, the terms of any
other
material agreement or instrument to which Ocwen is a party or by
which
it may be bound, or any statute, order or regulation applicable
to
Ocwen of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Ocwen; and Ocwen is not
a
party to, bound by, or in breach or violation of any indenture or
other
agreement or instrument, or subject to or in violation of any
statute,
order or regulation of any court, regulatory body,
administrative
agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to Ocwen's knowledge, would in
the
future materially and adversely affect, (x) the ability of Ocwen
to
perform its obligations under this Agreement, (y) the business,
operations, financial condition, properties or assets of Ocwen
taken as
a whole or (z) the legality, validity or enforceability of this
Agreement;
(iv)
Ocwen does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and
every
covenant made by it and contained in this Agreement;
(v) No
litigation is pending against Ocwen that
would materially and adversely affect the execution, delivery
or
enforceability of this Agreement or the ability of Ocwen to service
the
Ocwen Mortgage Loans or to perform any of its other obligations
hereunder in accordance with the terms hereof;
(vi)
There are no actions or proceedings against,
or investigations known to it of, Ocwen before any court,
administrative or other tribunal (A) that might prohibit its
entering
into this Agreement, (B) seeking to prevent the consummation of
the
transactions contemplated by this Agreement or (C) that might
prohibit
or materially and
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adversely affect the performance by Ocwen of its obligations under,
or
the validity or enforceability of, this Agreement;
(vii) No
consent, approval, authorization or order
of any court or governmental agency or body is required for the
execution, delivery and performance by Ocwen of, or compliance by
Ocwen
with, this Agreement or the consummation by it of the
transactions
contemplated by this Agreement, except for such consents,
approvals,
authorizations or orders, if any, that have been obtained prior to
the
Closing Date;
(viii) Ocwen has
fully furnished and will continue
to fully furnish, in accordance with the Fair Credit Reporting Act
and
its implementing regulations, accurate and complete information
(e.g.,
favorable and unfavorable) on its borrower credit files to
Equifax,
Experian and Trans Union Credit Information Company or their
successors
on a monthly basis; and
(ix)
Ocwen will not waive any Prepayment Charge
other than in accordance with the standard set forth in Section
3.01.
Notwithstanding anything to the contrary contained in this
Agreement, if the covenant of Ocwen set
forth in Section 2.05(ix) above is
breached, Ocwen will pay the amount of such
waived Prepayment Charge, from its
own funds without any right of
reimbursement, for the benefit of the Holders of
the Class CE-1 Certificates, by depositing
such amount into the Collection
Account within 90 days of the earlier of
discovery by Ocwen or receipt of notice
by Ocwen of such breach. Furthermore,
notwithstanding any other provisions of
this Agreement, any payments made by Ocwen
in respect of any waived Prepayment
Charges pursuant to this paragraph shall be
deemed to be paid outside of the
Trust Fund.
It is understood and agreed that the representations,
warranties and covenants set forth in this
Section 2.05 shall survive the
resignation or termination of the parties
hereto, the termination of this
Agreement and the delivery of the Mortgage
Files to the Custodian and shall
inure to the benefit of the Trustee, the
Master Servicer, the Securities
Administrator, the Depositor and the
Certificateholders. Upon discovery by any
such Person or Ocwen of a breach of any of
the foregoing representations,
warranties and covenants which materially
and adversely affects the value of any
Mortgage Loan, Prepayment Charge or the
interests therein of the
Certificateholders, the party discovering
such breach shall give prompt written
notice (but in no event later than two
Business Days following such discovery)
to the Trustee. Subject to Section 8.01,
unless such breach shall not be
susceptible of cure within 90 days, the
obligation of Ocwen set forth in Section
2.03(e) to cure breaches shall constitute
the sole remedy against Ocwen
available to the Certificateholders, the
Depositor or the Trustee on behalf of
the Certificateholders respecting a breach
of the representations, warranties
and covenants contained in this Section
2.05.
Section 2.06. Issuance of the REMIC I Regular Interests and
the Class R-I Interest.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on
its behalf of the Mortgage Loan
Documents, subject to the
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provisions of Section 2.01 and Section 2.02
hereof and Section 2 of the
Custodial Agreement, together with the
assignment to it of all other assets
included in REMIC I, the receipt of which
is hereby acknowledged. The interests
evidenced by the Class R-I Interest,
together with the REMIC I Regular
Interests, constitute the entire beneficial
ownership interest in REMIC I. The
rights of the Holders of the Class R-I
Interest and REMIC I (as holder of the
REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC I
in respect of the Class R-I Interest and
the REMIC I Regular Interests,
respectively, and all ownership interests
evidenced or constituted by the Class
R-I Interest and the REMIC I Regular
Interests, shall be as set forth in this
Agreement.
Section 2.07. Conveyance of the REMIC I Regular Interests;
Acceptance of REMIC I by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set
over and otherwise convey to the
Trustee, without recourse all the right,
title and interest of the Depositor in
and to the REMIC I Regular Interests for
the benefit of the Class R-II Interest
and REMIC II (as holder of the REMIC I
Regular Interests). The Trustee
acknowledges receipt of the REMIC I Regular
Interests and declares that it holds
and will hold the same in trust for the
exclusive use and benefit of all present
and future Holders of the Class R-II
Interest and REMIC II (as holder of the
REMIC I Regular Interests). The rights of
the Holder of the Class R-II Interest
and REMIC II (as holder of the REMIC I
Regular Interests) to receive
distributions from the proceeds of REMIC II
in respect of the Class R-II
Interest and the Regular Certificates,
respectively, and all ownership interests
evidenced or constituted by the Class R-II
Interest and the Regular
Certificates, shall be as set forth in this
Agreement. The Class R-II Interest
and the Regular Certificates shall
constitute the entire beneficial ownership
interest in REMIC II.
Section 2.08. Issuance of Residual Certificates.
The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently
therewith and in exchange therefor, pursuant
to the written request of the Depositor
executed by an officer of the Depositor,
the Securities Administrator has executed
and authenticated and the Trustee has
delivered to or upon the order of the
Depositor, the Class R Certificates in
authorized denominations. The Class R
Certificates evidence ownership in the
Class R-I Interest and the Class R-II
Interest.
Section 2.09. Establishment of the Trust.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws
of the State of New York, an express
trust to be known, for convenience, as "ACE
Securities Corp., Home Equity Loan
Trust, Series 2005-SN1" and does hereby
appoint HSBC Bank USA, National
Association as Trustee in accordance with
the provisions of this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE OCWEN MORTGAGE LOANS; ACCOUNTS
Section 3.01. Ocwen to Act as a Servicer.
From and after the Closing Date, the WMMSC Mortgage Loans will
be serviced and administered by WMMSC
pursuant to the Servicing Agreement, and
Ocwen will have no responsibility to
service or administer the WMMSC Mortgage
Loans or have any other obligation with
respect to the WMMSC Mortgage Loans
(including reporting or remitting funds to
the Master Servicer). On and after
the Closing Date, Ocwen shall service and
administer the Ocwen Mortgage Loans on
behalf of the Trust Fund and in the best
interests of and for the benefit of the
Certificateholders (as determined by Ocwen
in its reasonable judgment) in
accordance with the terms of this Agreement
and the respective Ocwen Mortgage
Loans and all applicable law and
regulations and, to the extent consistent with
such terms, in the same manner in which it
services and administers similar
mortgage loans for its own portfolio,
giving due consideration to customary and
usual standards of practice of prudent
mortgage lenders and loan servicers
administering similar mortgage loans but
without regard to:
(i) any
relationship that Ocwen or any Affiliate
of Ocwen may have with the related Mortgagor;
(ii)
the ownership of any Certificate by Ocwen or
any
Affiliate of Ocwen;
(iii)
Ocwen's obligation to make P&I Advances or
Servicing Advances; or
(iv)
Ocwen's right to receive compensation for
its services hereunder.
To the extent consistent with the foregoing, Ocwen shall also
seek to maximize the timely and complete
recovery of principal and interest on
the Mortgage Notes and shall waive (or
permit a Sub-Servicer to waive) a
Prepayment Charge only under the following
circumstances: (i) such waiver is
standard and customary in servicing similar
Mortgage Loans and such waiver is
related to a default or reasonably
foreseeable default and would, in the
reasonable judgment of Ocwen, maximize
recovery of total proceeds taking into
account the value of such Prepayment Charge
and the related Mortgage Loan and,
if such waiver is made in connection with a
refinancing of the related Mortgage
Loan, such refinancing is related to a
default or a reasonably foreseeable
default, (ii) such Prepayment Charge is
unenforceable in accordance with
applicable law or the collection of such
related Prepayment Charge would
otherwise violate applicable law or (iii)
the collection of such Prepayment
Charge would be considered "predatory"
pursuant to written guidance published or
issued by any applicable federal, state or
local regulatory authority acting in
its official capacity and having
jurisdiction over such matters. Notwithstanding
any provision in this Agreement to the
contrary, in the event the Prepayment
Charge payable under the terms of the
Mortgage Note is less than the amount of
the Prepayment Charge set forth in the
Prepayment Charge Schedule or other
information
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provided to Ocwen, Ocwen shall not have any
liability or obligation with respect
to such difference, and in addition shall
not have any liability or obligation
to pay the amount of any uncollected
Prepayment Charge if the failure to collect
such amount is the direct result of
inaccurate or incomplete information on the
Prepayment Charge Schedule.
Subject only to the above-described servicing standards (the
"Accepted Servicing Practices") and the
terms of this Agreement and of the
respective Ocwen Mortgage Loans, Ocwen
shall have full power and authority, to
do or cause to be done any and all things
in connection with such servicing and
administration which it may deem necessary
or desirable with the goal of
maximizing proceeds of the Mortgage Loan.
Without limiting the generality of the
foregoing, Ocwen in its own name is hereby
authorized and empowered by the
Trustee when Ocwen believes it appropriate
in its best judgment, to execute and
deliver, on behalf of the Trust Fund, the
Certificateholders and the Trustee or
any of them, and upon written notice to the
Trustee, any and all instruments of
satisfaction or cancellation, or of partial
or full release or discharge or
subordination, and all other comparable
instruments, with respect to the Ocwen
Mortgage Loans and the related Mortgaged
Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the
ownership of such properties, and to hold
or cause to be held title to such
properties, on behalf of the Trustee, for
the benefit of the Trust Fund and the
Certificateholders. Ocwen shall service and
administer the Ocwen Mortgage Loans
in accordance with applicable state and
federal law and shall provide to the
Mortgagors any reports required to be
provided to them thereby. Ocwen shall also
comply in the performance of this Agreement
with all reasonable rules and
requirements of each insurer under any
standard hazard insurance policy. Subject
to Section 3.14, the Trustee shall execute,
at the written request of a
Servicer, and furnish to such Servicer a
power of attorney in the form of
Exhibit D hereto and other documents
necessary or appropriate to enable the
related Servicer to carry out its servicing
and administrative duties hereunder
or under the Servicing Agreement, as
applicable, and furnished to the Trustee by
the related Servicer, and the Trustee shall
not be liable for the actions of the
related Servicer under such powers of
attorney and shall be indemnified by the
related Servicer for any cost, liability or
expense incurred by the Trustee in
connection with the Servicer's use or
misuse of any such power of attorney.
In accordance with Accepted Servicing Practices, Ocwen shall
make or cause to be made Servicing Advances
as necessary for the purpose of
effecting the payment of taxes and
assessments on the Mortgaged Properties
related to the Ocwen Mortgage Loans, which
Servicing Advances shall be
reimbursable in the first instance from
related collections from the related
Mortgagors pursuant to Section 3.07, and
further as provided in Section 3.09;
provided, however, Ocwen shall only make
such Servicing Advance if the related
Mortgagor has not made such payment and if
the failure to make such Servicing
Advance would result in the loss of the
related Mortgaged Property due to a tax
sale or foreclosure as result of a tax
lien. Any cost incurred by Ocwen in
effecting the payment of taxes and
assessments on a Mortgaged Property related
to a Ocwen Mortgage Loan shall not, for the
purpose of calculating the Stated
Principal Balance of such Ocwen Mortgage
Loan or distributions to
Certificateholders, be added to the unpaid
principal balance of the related
Ocwen Mortgage Loan, notwithstanding that
the terms of such Ocwen Mortgage Loan
so permit.
The parties to this Agreement acknowledge that Servicing
Advances shall be reimbursable pursuant to
Section 3.06 of this Agreement, and
agree that no Servicing Advance
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shall be rejected or disallowed by any
party unless it has been shown that such
Servicing Advance was not made in
accordance with the terms of this Agreement.
Notwithstanding the foregoing, the
Servicers shall be reimbursed for Servicing
Advances made by the Seller or the related
Servicer prior to the Cut-off Date to
the extent not previously reimbursed.
Notwithstanding anything in this Agreement to the contrary,
Ocwen may not make any future advances with
respect to an Ocwen Mortgage Loan
and Ocwen shall not permit any modification
with respect to any related Ocwen
Mortgage Loan that would change the
Mortgage Rate, reduce or increase the
principal balance (except for reductions
resulting from actual payments of
principal) or change the final maturity
date on such related Ocwen Mortgage Loan
(unless, as provided in Section 3.06, the
related Mortgagor is in default with
respect to the related Ocwen Mortgage Loan
or such default is, in the judgment
of Ocwen, reasonably foreseeable) or any
modification, waiver or amendment of
any term of any Ocwen Mortgage Loan that
would both (A) effect an exchange or
reissuance of such Ocwen Mortgage Loan
under Section 1001 of the Code (or final,
temporary or proposed Treasury regulations
promulgated thereunder) and (B) cause
any Trust REMIC created hereunder to fail
to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited
transactions" or "contributions
after the startup date" under the REMIC
Provisions.
In the event that the Mortgage Loan Documents relating to any
Ocwen Mortgage Loan contain provisions
requiring the related Mortgagor to
arbitrate disputes (at the option of the
Trustee, on behalf of the Trust), the
Trustee hereby authorizes Ocwen to waive
the Trustee's right or option to
arbitrate disputes and to send written
notice of such waiver to the Mortgagor,
although the Mortgagor may still require
arbitration at its option.
From and after the Closing Date, Ocwen will fully furnish, in
accordance with the Fair Credit Reporting
Act and its implementing regulations,
accurate and complete information (e.g.,
favorable and unfavorable) on its
borrower credit files to Equifax, Experian
and Trans Union Credit Information
Company or their successors on a monthly
basis.
Section 3.02. Sub-Servicing Agreements Between Ocwen and
Sub-Servicers.
Ocwen may arrange for the subservicing of any Ocwen Mortgage
Loan by a Sub- Servicer pursuant to a
Sub-Servicing Agreement; provided that
such sub-servicing arrangement and the
terms of the related Sub-Servicing
Agreement must provide for the servicing of
such Ocwen Mortgage Loans in a
manner consistent with the servicing
arrangements contemplated hereunder. Each
Sub-Servicer shall be (i) authorized to
transact business in the state or states
where the related Mortgaged Properties it
is to service are situated, if and to
the extent required by applicable law to
enable the Sub-Servicer to perform its
obligations hereunder and under the
Sub-Servicing Agreement and (ii) a Freddie
Mac or Fannie Mae approved mortgage
servicer. Notwithstanding the provisions of
any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to
agreements or arrangements between Ocwen or
a Sub-Servicer or reference to
actions taken through Ocwen or otherwise,
Ocwen shall remain obligated and
liable to the Depositor, the Trustee and
the Certificateholders for the
servicing and administration of the Ocwen
Mortgage Loans in accordance with the
provisions of this Agreement without
diminution of such obligation or liability
by virtue of such Sub-Servicing Agreements
or arrangements or by virtue of
indemnification from the Sub-Servicer and
to the same extent and
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under the same terms and conditions as if
Ocwen alone were servicing and
administering the Mortgage Loans. Every
Sub-Servicing Agreement entered into by
Ocwen shall contain a provision giving the
successor Servicer the option to
terminate such agreement in the event a
successor Servicer is appointed. All
actions of each Sub-Servicer performed
pursuant to the related Sub-Servicing
Agreement shall be performed as an agent of
Ocwen with the same force and effect
as if performed directly by Ocwen.
For purposes of this Agreement, Ocwen shall be deemed to have
received any collections, recoveries or
payments with respect to the Ocwen
Mortgage Loans that are received by a
Sub-Servicer regardless of whether such
payments are remitted by the Sub-Servicer
to Ocwen.
Section 3.03. Successor Sub-Servicers.
Any Sub-Servicing Agreement shall provide that Ocwen shall be
entitled to terminate any Sub-Servicing
Agreement and to either itself directly
service the related Ocwen Mortgage Loans or
enter into a Sub-Servicing Agreement
with a successor Sub-Servicer which
qualifies under Section 3.02. Any
Sub-Servicing Agreement shall include the
provision that such agreement may be
immediately terminated by any successor to
Ocwen (which may be the Trustee or
the Master Servicer) without fee, in
accordance with the terms of this
Agreement, in the event that Ocwen (or any
successor to Ocwen) shall, for any
reason, no longer be the Servicer of the
Ocwen Mortgage Loans (including
termination due to a Servicer Event of
Default).
Section 3.04. No Contractual Relationship Between
Sub-Servicer, Trustee or the
Certificateholders.
Any Sub-Servicing Agreement and any other transactions or
services relating to the Ocwen Mortgage
Loans involving a Sub-Servicer shall be
deemed to be between the Sub-Servicer and
Ocwen alone and the Master Servicer,
Trustee and the Certificateholders shall
not be deemed parties thereto and shall
have no claims, rights, obligations, duties
or liabilities with respect to any
Sub-Servicer except as set forth in Section
3.05.
Section 3.05. Assumption or Termination of Sub-Servicing
Agreement by Successor Servicer.
In connection with the assumption of the responsibilities,
duties and liabilities and of the
authority, power and rights of Ocwen hereunder
by a successor Servicer (which may be the
Trustee or the Master Servicer)
pursuant to Section 8.02, it is understood
and agreed that Ocwen's rights and
obligations under any Sub-Servicing
Agreement then in force between Ocwen and a
Sub-Servicer shall be assumed
simultaneously by such successor Servicer without
act or deed on the part of such successor
Servicer; provided, however, that any
successor Servicer may terminate the
Sub-Servicer.
Ocwen shall, upon the reasonable request of the Master
Servicer, but at its own expense, deliver
to the assuming party documents and
records relating to each Sub-Servicing
Agreement and an accounting of amounts
collected and held by it and otherwise use
its best
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efforts to effect the orderly and efficient
transfer of the Sub-Servicing
Agreements to the assuming party.
The Servicing Fee payable to any such successor Servicer shall
be payable from payments received on the
Ocwen Mortgage Loans in the amount and
in the manner set forth in this
Agreement.
Section 3.06. Collection of Certain Mortgage Loan Payments.
Ocwen shall make reasonable efforts to collect all payments
called for under the terms and provisions
of the Ocwen Mortgage Loans, and
shall, to the extent such procedures shall
be consistent with this Agreement and
Accepted Servicing Practices, follow such
collection procedures as it would
follow with respect to mortgage loans
comparable to the Ocwen Mortgage Loans and
held for its own account. Consistent with
the foregoing, Ocwen may in its
discretion (i) waive any late payment
charge or, if applicable, penalty interest
or (ii) extend the due dates for the
Monthly Payments due on a Mortgage Note
related to a Ocwen Mortgage Loan for a
period of not greater than 180 days;
provided that any extension pursuant to
this clause shall not affect the
amortization schedule of any Ocwen Mortgage
Loan for purposes of any computation
hereunder. Notwithstanding the foregoing,
in the event that any Ocwen Mortgage
Loan is in default or, in the judgment of
Ocwen, such default is reasonably
foreseeable, Ocwen, consistent with
Accepted Servicing Practices may waive,
modify or vary any term of such Ocwen
Mortgage Loan (including modifications
that change the Mortgage Rate, forgive the
payment of principal or interest or
extend the final maturity date of such
Ocwen Mortgage Loan), accept payment from
the related Mortgagor of an amount less
than the Stated Principal Balance in
final satisfaction of such Ocwen Mortgage
Loan, or consent to the postponement
of strict compliance with any such term or
otherwise grant indulgence to any
Mortgagor if in Ocwen's determination such
waiver, modification, postponement or
indulgence is not materially adverse to the
interests of the Certificateholders
(taking into account any estimated Realized
Loss that might result absent such
action).
Section 3.07. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
To the extent the terms of a Mortgage related to a Ocwen
Mortgage Loan provide for Escrow Payments,
Ocwen shall establish and maintain
one or more accounts (the "Servicing
Accounts"), into which all collections from
the Mortgagors (or related advances from
Sub-Servicers) for the payment of
taxes, assessments, fire, flood, and hazard
insurance premiums, and comparable
items for the account of the Mortgagors
("Escrow Payments") shall be deposited
and retained. Servicing Accounts shall be
Eligible Accounts. Ocwen shall deposit
in the clearing account in which it
customarily deposits payments and
collections on mortgage loans in connection
with its mortgage loan servicing
activities on a daily basis, and in no
event more than one Business Day after
the Ocwen's receipt thereof, all Escrow
Payments collected on account of the
Mortgage Loans and shall thereafter deposit
such Escrow Payments in the
Servicing Accounts, in no event later than
the second Business Day after the
deposit of good funds into the clearing
account, and retain therein, all Escrow
Payments collected on account of the
Mortgage Loans, for the purpose of
effecting the timely payment of any such
items as required under the terms of
this Agreement. Withdrawals of amounts from
a Servicing Account may be made only
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to (i) effect timely payment of taxes,
assessments, fire, flood, and hazard
insurance premiums, and comparable items;
(ii) reimburse itself out of related
collections for any Servicing Advances made
pursuant to Section 3.01 (with
respect to taxes and assessments) and
Section 3.11, (with respect to fire, flood
and hazard insurance); (iii) refund to
Mortgagors any sums as may be determined
to be overages; (iv) pay interest, if
required and as described below, to
Mortgagors on balances in the Servicing
Account; or (v) clear and terminate the
Servicing Account at the termination of
Ocwen's obligations and responsibilities
in respect of the Ocwen Mortgage Loans
under this Agreement in accordance with
Article X. As part of its servicing duties,
Ocwen shall pay to the Mortgagors
interest on funds in Servicing Accounts, to
the extent required by law and, to
the extent that interest earned on funds in
the Servicing Accounts is
insufficient, to pay such interest from its
or their own funds, without any
reimbursement therefor. Notwithstanding the
foregoing, Ocwen shall not be
obligated to collect Escrow Payments if the
related Ocwen Mortgage Loan does not
require such payments but Ocwen shall
nevertheless be obligated to make
Servicing Advances as provided in Section
3.01 and Section 3.11. In the event
Ocwen shall deposit in the Servicing
Accounts any amount not required to be
deposited therein, it may at any time
withdraw such amount from the Servicing
Accounts, any provision to the contrary
notwithstanding.
To the extent that a Mortgage related to a Ocwen Mortgage Loan
does not provide for Escrow Payments, Ocwen
(i) shall determine whether any such
payments are made by the Mortgagor in a
manner and at a time that is necessary
to avoid the loss of the Mortgaged Property
due to a tax sale or the foreclosure
as a result of a tax lien and (ii) shall
ensure that all insurance required to
be maintained on the Mortgaged Property
pursuant to this Agreement is
maintained. If any such payment has not
been made and Ocwen receives notice of a
tax lien with respect to the Ocwen Mortgage
Loan being imposed, Ocwen shall,
promptly and to the extent required to
avoid loss of the Mortgaged Property,
advance or cause to be advanced funds
necessary to discharge such lien on the
Mortgaged Property unless Ocwen determines
the advance to be nonrecoverable.
Ocwen assumes full responsibility for the
payment of all such bills and shall
effect payments of all such bills
irrespective of the Mortgagor's faithful
performance in the payment of same or the
making of the Escrow Payments and
shall make Servicing Advances to effect
such payments subject to its
determination of recoverability.
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Section 3.08. Collection Account, Simple Interest Excess
Sub-Account and Distribution Account.
(a) On behalf
of the Trust Fund, Ocwen shall establish
and maintain one or more "Collection
Accounts", held in trust for the benefit of
the Trustee and the Certificateholders. On
behalf of the Trust Fund, Ocwen shall
deposit or cause to be deposited in the
clearing account in which it customarily
deposits payments and collections on
mortgage loans in connection with its
mortgage loan servicing activities on a
daily basis, and in no event more than
one Business Day after Ocwen's receipt
thereof, and shall thereafter deposit in
the Collection Account, in no event later
than two Business Days after the
deposit of good funds into the clearing
account, as and when received or as
otherwise required hereunder, the following
payments and collections received or
made by it on or subsequent to the Cut-off
Date other than amounts attributable
to a Due Date on or prior to the Cut-off
Date:
(i) all
payments on account of principal,
including Principal Prepayments, on the Ocwen Mortgage Loans;
(ii)
all payments on account of interest (net of
the related Servicing Fee and any Prepayment Interest Excess) on
each
Ocwen Mortgage Loan;
(iii) all
Insurance Proceeds and Liquidation
Proceeds (other than proceeds collected in respect of any
particular
REO Property and all Subsequent Recoveries with respect to the
Ocwen
Mortgage Loans;
(iv)
any amounts required to be deposited by
Ocwen pursuant to Section 3.10 in connection with any losses
realized
on Permitted Investments with respect to funds held in the
Collection
Account;
(v) any
amounts required to be deposited by
Ocwen pursuant to the second paragraph of Section 3.11(a) in
respect of
any blanket policy deductibles;
(vi)
any Purchase Price or Substitution Shortfall
Amount delivered to Ocwen and all proceeds (net of amounts payable
or
reimbursable to Ocwen, the Master Servicer, the Trustee, the
Custodian
or the Securities Administrator) of Ocwen Mortgage Loans purchased
in
accordance
with Section 2.03, Section 3.13 or Section 10.01; and
(vii) any
Prepayment Charges collected by Ocwen in
connection with the Principal Prepayment of any of the Ocwen
Mortgage
Loans or amounts required to be deposited by Ocwen in connection
with a
breach of its obligations under Section 2.05.
The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being
understood and agreed that, without
limiting the generality of the foregoing,
payments in the nature of late payment
charges, assumption fees or other similar
fees need not be deposited by Ocwen in
the Collection Account and may be retained
by Ocwen as additional servicing
compensation. In the event Ocwen shall
deposit in the Collection Account any
amount not required to be deposited
therein, it may at any time withdraw such
amount from the Collection Account, any
provision herein to the contrary
notwithstanding.
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(b) Except as
set forth below, no later than the Closing
Date, Ocwen shall establish and maintain a
sub-account of the Collection Account
titled "Ocwen Federal Bank FSB, Simple
Interest Excess Sub-Account in trust for
the Holders of ACE Securities Corp., Home
Equity Loan Trust, Series 2005-SN1,
Asset Backed Pass-Through Certificates".
Ocwen shall, on each Determination Date
transfer from the Collection Account to the
Simple Interest Excess Sub-Account
all Net Simple Interest Excess, if any,
pursuant to Section 3.09(a)(xi), and
shall maintain a record of all such
deposits. In lieu of establishing a Simple
Interest Excess Sub-Account, Ocwen may
maintain any Net Simple Interest Excess
in the Collection Account and maintain a
separate accounting therefore.
Ocwen shall withdraw amounts on deposit in the Simple Interest
Excess Sub-Account or in the Collection
Account (in respect of any Net Simple
Interest Excess) on each Determination Date
for deposit to the Distribution
Account in an amount equal to the lesser of
(i) the amount on deposit therein,
and (ii) the Net Simple Interest Shortfall
for such Distribution Date.
Ocwen shall remit to the Securities Administrator which shall
thereupon distribute to the Class CE-1
Certificateholder, based on the
information provided to it by Ocwen, the
amount of any Net Simple Interest
Excess remaining in the Simple Interest
Excess Sub-Account or in the Collection
Account, as applicable, on the Distribution
Date in the month following the
month in which the last Simple Interest
Mortgage Loan remaining in the Trust
Fund is paid in full or upon the
liquidation or other disposition of the last
Simple Interest Mortgage Loan remaining in
the Trust Fund. Such distributions
shall be deemed to be made on a first-in,
first-out basis. In addition, Ocwen
shall clear and terminate the Simple
Interest Excess Sub-Account, if any, in the
month following the month in which the last
Simple Interest Mortgage Loan
remaining in the Trust Fund is paid in
full, liquidated or otherwise disposed
of, and shall distribute any funds
remaining therein to the Class CE-1
Certificateholder.
(c) On behalf
of the Trust Fund, the Securities
Administrator shall establish and maintain
one or more accounts (such account or
accounts, the "Distribution Account"), held
in trust for the benefit of the
Trustee, the Trust Fund and the
Certificateholders. On behalf of the Trust Fund,
WMMSC shall deliver funds to the Securities
Administrator for deposit in the
Distribution Account as specified in the
Servicing Agreement. On behalf of the
Trust Fund, Ocwen shall deliver to the
Securities Administrator in immediately
available funds for deposit in the
Distribution Account on or before 12:00 noon
New York time on the Servicer Remittance
Date, that portion of the Available
Distribution Amount (calculated without
regard to the references in clause (2)
of the definition thereof to amounts that
may be withdrawn from the Distribution
Account) for the related Distribution Date
then on deposit in the Collection
Account and the amount of all Prepayment
Charges collected by Ocwen in
connection with the Principal Prepayment of
any of the Ocwen Mortgage Loans then
on deposit in the Collection Account and
the amount of any funds reimbursable to
an Advance Financing Person pursuant to
Section 3.25. If the balance on deposit
in the Collection Account exceeds $100,000
as of the commencement of business on
any Business Day and the Collection Account
constitutes an Eligible Account
solely pursuant to clause (ii) of the
definition of "Eligible Account," Ocwen
shall, on or before 5:00 p.m. New York time
on such Business Day, withdraw from
the Collection Account any and all amounts
payable or reimbursable to the
Depositor, Ocwen, the Trustee, the Master
Servicer, the Securities Administrator
or the Seller pursuant to Section 3.09 and
shall pay such amounts to
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the Persons entitled thereto or shall
establish a separate Collection Account
(which shall also be an Eligible Account)
and withdraw from the existing
Collection Account the amount on deposit
therein in excess of $100,000 and
deposit such excess in the newly created
Collection Account.
With respect to any remittance received by the Securities
Administrator on or after the first
Business Day following the Business Day on
which such payment was due, the Securities
Administrator shall send written
notice thereof to Ocwen. Ocwen shall pay to
the Securities Administrator
interest on any such late payment by Ocwen
at an annual rate equal to Prime Rate
(as defined in The Wall Street Journal)
plus one percentage point, but in no
event greater than the maximum amount
permitted by applicable law. Such interest
shall be paid by Ocwen to the Securities
Administrator on the date such late
payment is made and shall cover the period
commencing with the day following
such first Business Day and ending with the
Business Day on which such payment
is made, both inclusive. The payment by
Ocwen of any such interest, or the
failure of the Securities Administrator to
notify Ocwen of such interest, shall
not be deemed an extension of time for
payment or a waiver of any Event of
Default by Ocwen.
(d) Funds in
the Collection Account in the Simple
Interest Excess Sub-Account and funds in
the Distribution Account may be
invested in Permitted Investments in
accordance with the provisions set forth in
Section 3.10. Ocwen shall give notice to
the Trustee, the Securities
Administrator and the Master Servicer of
the location of the Collection Account
maintained by it when established and prior
to any change thereof. The
Securities Administrator shall give notice
to the Servicers and the Depositor of
the location of the Distribution Account
when established and prior to any
change thereof.
(e) Funds held
in the Collection Account at any time may
be delivered by Ocwen in immediately
available funds to the Securities
Administrator for deposit in the
Distribution Account. In the event Ocwen shall
deliver to the Securities Administrator for
deposit in the Distribution Account
any amount not required to be deposited
therein, it may at any time request that
the Securities Administrator withdraw such
amount from the Distribution Account
and remit to it any such amount, any
provision herein to the contrary
notwithstanding. In no event shall the
Securities Administrator incur liability
as a result of withdrawals from the
Distribution Account at the direction of
Ocwen in accordance with the immediately
preceding sentence. In addition, Ocwen
shall deliver to the Securities
Administrator no later than the Servicer
Remittance Date the amounts set forth in
clauses (i) through (iv) below:
(i) any
P&I Advances, as required pursuant to
Section 5.03;
(ii)
any amounts required to be deposited
pursuant to Section 3.21(d) or Section 3.21(f) in connection with
any
REO Property related to a Ocwen Mortgage Loan;
(iii) any
amounts to be paid in connection with a
purchase of Ocwen Mortgage Loans and REO Properties pursuant to
Section
10.01; and
(iv)
any amounts required to be deposited
pursuant to Section 3.22 in connection with any Prepayment
Interest
Shortfalls with respect to a Ocwen Mortgage Loan.
