EXHIBIT 4
================================================================================
ASSET BACKED FUNDING CORPORATION,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
LITTON LOAN SERVICING LP,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2004
2004-CB1 Trust
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB1
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms
Section 1.02 Accounting
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL
ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans
Section 2.02 Acceptance by Trustee
Section 2.03 Repurchase or Substitution of
Mortgage Loans by the Seller
Section 2.04 Representations and Warranties of
the Seller with Respect to the
Mortgage Loans
Section 2.05 Representations, Warranties and
Covenants of the Servicer
Section 2.06 Representations and Warranties of
the Depositor
Section 2.07 Issuance of Certificates and the
Uncertificated Regular Interests
Section 2.08 Representations and Warranties of
the Seller
Section 2.09 Covenants of the Seller
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer
Section 3.02 Collection of Mortgage Loan
Payments
Section 3.03 Realization Upon Defaulted
Mortgage Loans
Section 3.04 Collection Account, Distribution
Account and Reserve Account
Section 3.05 Permitted Withdrawals From the
Collection Account
Section 3.06 Establishment of Escrow Account;
Deposits in Escrow Account
Section 3.07 Permitted Withdrawals From Escrow
Account
Section 3.08 Payment of Taxes, Insurance and
Other Charges; Collections
Thereunder
Section 3.09 Transfer of Accounts
Section 3.10 Maintenance of Hazard Insurance
Section 3.11 Maintenance of Mortgage Impairment
Insurance Policy
Section 3.12 Fidelity Bond, Errors and
Omissions Insurance
Section 3.13 Title, Management and Disposition
of REO Property and Certain
Delinquent Mortgage Loans
Section 3.14 Due-on-Sale Clauses; Assumption
and Substitution Agreements
Section 3.15 Notification of Adjustments
Section 3.16 Optional Purchases and Sales of
Mortgage Loans by Servicer
Section 3.17 Trustee to Cooperate; Release of
Files
Section 3.18 Servicing Compensation
Section 3.19 Annual Statement as to Compliance
Section 3.20 Annual Independent Certified
Public Accountants' Reports
Section 3.21 Access to Certain Documentation
and Information Regarding the
Mortgage Loans
Section 3.22 Reserved
Section 3.23 Obligations of the Servicer in
Respect of Compensating Interest
Section 3.24 Obligations of the Servicer in
Respect of Mortgage Interest Rates
and Monthly Payments
Section 3.25 Investment of Funds in the
Collection Account and the Distribution
Account
Section 3.26 Liability of Servicer;
Indemnification
Section 3.27 Reports of Foreclosure and
Abandonment of Mortgaged Properties
Section 3.28 Protection of Assets
Section 3.29 Periodic Filings
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions
Section 4.02 Distributions of Principal and
Monthly Excess Cashflow Amounts
Section 4.03 Allocation of Losses
Section 4.04 Method of Distribution
Section 4.05 Distributions on Book-Entry
Certificates
Section 4.06 Statements
Section 4.07 Remittance Reports; Advances
Section 4.08 REMIC Distributions
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates
Section 5.02 Registration of Transfer and
Exchange of Certificates
Section 5.03 Mutilated, Destroyed, Lost or
Stolen Certificates
Section 5.04 Persons Deemed Owners
Section 5.05 Appointment of Paying Agent
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the
Servicer and the Depositor
Section 602 Merger or Consolidation of,
or Assumption of the Obligations of,
the Seller, the Servicer or the Depositor
Section 6.03 Limitation on Liability of the
Servicer and Others
Section 6.04 Servicer Not to Resign
Section 6.05 Delegation of Duties
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of Termination
Section 7.02 Trustee to Act; Appointment of
Successor
Section 7.03 Waiver of Defaults
Section 7.04 Notification to Certificateholders
Section 7.05 Survivability of Servicer
Liabilities
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee
Section 8.02 Certain Matters Affecting the
Trustee
Section 8.03 Trustee Not Liable for
Certificates or Mortgage Loans
Section 8.04 Trustee May Own Certificates
Section 8.05 Seller to Pay Trustee Fees and
Expenses
Section 8.06 Eligibility Requirements for
Trustee
Section 8.07 Resignation or Removal of Trustee
Section 8.08 Successor Trustee
Section 8.09 Merger or Consolidation of Trustee
Section 8.10 Appointment of Co-Trustee or
Separate Trustee
Section 8.11 Limitation of Liability
Section 8.12 Trustee May Enforce Claims Without
Possession of Certificates
Section 8.13 Suits for Enforcement
Section 8.14 Waiver of Bond Requirement
Section 8.15 Waiver of Inventory, Accounting
and Appraisal Requirement
Section 8.16 Compliance with National Housing
Act of 1934
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01 REMIC Administration
Section 9.02 Prohibited Transactions and
Activities
Section 9.03 Indemnification with Respect to
Certain Taxes and Loss of REMIC
Status
Section 9.04 REO Property
Section 9.05 Grantor Trust Administration
ARTICLE X
TERMINATION
Section 10.01 Termination
Section 10.02 Additional Termination
Requirements
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment
Section 11.02 Recordation of Agreement;
Counterparts
Section 11.03 Limitation on Rights of
Certificateholders
Section 11.04 Governing Law; Jurisdiction
Section 11.05 Notices
Section 11.06 Severability of Provisions
Section 11.07 Article and Section References
Section 11.08 Notice to the Rating Agencies
Section 11.09 Further Assurances
Section 11.10 Benefits of Agreement
Section 11.11 Acts of Certificateholders
<PAGE>
EXHIBITS:
Exhibit A-1 Form
of Class AF-1 Certificates
Exhibit A-2 Form
of Class AV-1 Certificates
Exhibit A-3 Form
of Class AV-2 Certificates
Exhibit A-4 Form
of Class AV-3 Certificates
Exhibit B-1 Form
of Class B-1 Certificates
Exhibit B-2 Form
of Class B-2 Certificates
Exhibit B-3 Form
of Class B-3 Certificates
Exhibit B-4 Form
of Class B-4 Certificates
Exhibit C-1-1 Form of Class R
Certificate
Exhibit C-1-2 Form of Class
R-A Certificate
Exhibit C-2 Form
of Class M-1 Certificates
Exhibit C-3 Form
of Class M-2 Certificates
Exhibit C-4 Form
of Class M-3 Certificates
Exhibit C-5 Form
of Class X Certificates
Exhibit C-6 Form
of Class N Certificates
Exhibit D-1
Mortgage Loan Schedule for Group I Mortgage Loans
Exhibit D-2
Mortgage Loan Schedule for Group II Mortgage Loans
Exhibit E
Form of Request for Release of Documents
Exhibit F-1 Form
of Trustee's Initial Certification
Exhibit F-2 Form
of Trustee's Final Certification
Exhibit F-3 Form
of Receipt of Mortgage Note
Exhibit G
Mortgage Loan Purchase Agreement
Exhibit H
Form of Lost Note Affidavit
Exhibit I
Form of ERISA Representation
Exhibit J
Form of Investment Letter
Exhibit K
Form of Residual Certificate Transfer Affidavit
Exhibit L
Form of Transferor Certificate
Exhibit M
[Reserved]
Exhibit N
DTC Letter of Representations
Exhibit O
[Reserved]
Exhibit P
Monthly Information Provided by Servicer
Exhibit Q
Form of Officer's Certificate with Respect to Prepayments
Exhibit R
Form of Notice of Prepayment Penalty Inconsistency
Exhibit S
Form of Yield Maintenance Agreement
Exhibit T
Form of Certification
Exhibit U
Form of Certification to be Provided by Trustee
Exhibit V
Schedule of Mortgage Loan without Title Policies
Exhibit W
Form of Power of Attorney
<PAGE>
This Pooling and Servicing Agreement is dated as of January 1,
2004
(the "Agreement"), among ASSET BACKED
FUNDING CORPORATION, as depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING
AND SECURITIZATION LLC, as seller
(the "Seller"), LITTON LOAN SERVICING LP,
as servicer (the "Servicer"), and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be
issued hereunder in multiple Classes,
which in the aggregate will evidence the
entire beneficial ownership interest in
the Trust Fund created hereunder. The
Certificates will consist of fifteen
Classes of Certificates, designated as (i)
the Class AF-1, Class AV-1, Class
AV-2 and Class AV-3 Certificates, (ii) the
Class M-1, Class M-2 and Class M-3
Certificates, (iii) the Class B-1, Class
B-2, Class B-3 and Class B-4
Certificates, (iv) the Class N
Certificates, (v) the Class X Certificates and
(vi) the Class R and Class R-A
Certificates.
REMIC 1
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of the
Mortgage Loans and certain other
related assets subject to this Agreement
(but exclusive of the Yield Maintenance
Agreement, the Reserve Fund, any LIBOR
Carryover Amount and the prepayment
charges) as a real estate investment
conduit (a "REMIC") for federal income tax
purposes, and such segregated pool of
assets will be designated as "REMIC 1."
The Class R-1 Interest will represent the
sole class of "residual interests" in
REMIC 1 for purposes of the REMIC
Provisions under federal income tax law. The
following table irrevocably sets forth the
designation, the Uncertificated REMIC
1 Pass-Through Rate, the initial
Uncertificated Principal Balance, and solely
for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of
the REMIC 1 Regular Interests. None
of the REMIC 1 Regular Interests will be
certificated.
<TABLE>
<CAPTION>
==================================================================================================================
Initial
Uncertificated REMIC
Uncertificated Principal
Latest Possible
Designation
Pass-Through Rate(1)
Balance
Maturity Date(1)
------------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
LT1AA
(2)
$207,876,867.17
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AF1
(2)
$522,280.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AV1
(2)
$400,000.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AV2
(2)
$660,930.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1AV3
(2)
$134,955.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1M1
(2)
$121,970.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1M2
(2)
$106,060.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1M3
(2)
$31,820.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B1
(2)
$26,515.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B2
(2)
$26,515.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B3
(2)
$26,515.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1B4
(2)
$42,425.00
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1ZZ
(2)
$2,142,400.04
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1SUB
(2)
$2,450.23
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1GRP
(2)
$12,895.83
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT2SUB
(2)
$5,610.32
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT2GRP
(2)
$29,528.02
February 25, 2034
------------------------------------------------------------------------------------------------------------------
LT1XX
(2)
$212,068,767.81
February 25, 2034
==================================================================================================================
</TABLE>
(1) Solely 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 1 Regular
Interest.
(2) Calculated in accordance
with the definition of "Uncertificated REMIC 1
Pass-Through Rate" herein.
REMIC 2
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of the
REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such
segregated pool of assets will be
designated as "REMIC 2." REMIC 2 will issue
as regular interests (i) the Classes
of Certificates (exclusive of the rights of
such Classes of Certificates other
than the Class AF-1 Certificates to receive
LIBOR Carryover Amounts) indicated
as issued by REMIC 2 in the table at the
end of the Preliminary Statement, (ii)
the REMIC 2 Class B-4 Interest (as
described in footnote 11 to the table at the
end of the Preliminary Statement) and (iii)
the REMIC 2 Class X/N Interest(as
described in footnote 13 at the end of the
Preliminary Statement). The Class R-2
Interest represents the sole class of
"residual interests" in REMIC 2 for
purposes of the REMIC Provisions.
REMIC A
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of
REMIC 2 Regular Interest X/N as a REMIC
for federal income tax purposes, and such
segregated pool of assets will be
designated as "REMIC A." The REMIC A Class
X/N Regular Interest represents the
sole class of regular interests and the
Class R-A Interest represents the sole
class of "residual interests" in REMIC A
for purposes of the REMIC Provisions.
The REMIC A Class X/N Interest shall have a
principal balance equal to the REMIC
2 Class X/N Interest and shall bear
interest at the same rate as the REMIC 2
Class X/N Interest.
REMIC B
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of the
REMIC 2 Regular Interest B-4 as a
REMIC for federal income tax purposes, and
such segregated pool of assets will
be designated as "REMIC B." The Class B-4
Certificates (exclusive of the right
to LIBOR Carryover Amounts) represent the
sole class of "regular interests" and
the Class R-B Interest represents the sole
class of "residual interests" in
REMIC B for purposes of the REMIC
Provisions. The Class B-4 Certificates shall
have a principal balance equal to the REMIC
2 Class B-4 Interest and shall bear
interest at the same rate as the REMIC 2
Class B-4 Interest.
Solely for purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury
regulations, the Distribution Date
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 that represents one or more of the
"regular interests" in REMIC 2, REMIC A or
REMIC B.
The following table sets forth (or describes) the Class
designation,
Pass-Through Rate and the Original Class
Certificate Principal Balance or the
Original Class N Notional Amount, for each
Class of Certificates comprising the
interests in the Trust Fund created
hereunder:
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================
Original Class
Certificate
Issuing
Principal Balance or
Pass-Through
Assumed Final
Class
REMIC
Notional Amount
Rate
Maturity Dates
------------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
<C>
AF-1
2
$104,456,000.00
(1)
October 25, 2032
------------------------------------------------------------------------------------------------------------------
AV-1
2
$80,000,000.00
(2)
September 25, 2033
------------------------------------------------------------------------------------------------------------------
AV-2
2
$132,186,000.00
(3)
September 25, 2030
------------------------------------------------------------------------------------------------------------------
AV-3
2
$26,991,000.00
(4)
September 25, 2033
------------------------------------------------------------------------------------------------------------------
M-1
2
$24,394,000.00
(5)
August 25, 2033
------------------------------------------------------------------------------------------------------------------
M-2
2
$21,212,000.00
(6)
June 25, 2033
------------------------------------------------------------------------------------------------------------------
M-3
2
$6,364,000.00
(7)
April 25, 2033
------------------------------------------------------------------------------------------------------------------
B-1
2
$5,303,000.00
(8)
March 25, 2033
------------------------------------------------------------------------------------------------------------------
B-2
2
$5,303,000.00
(9)
January 25, 2033
------------------------------------------------------------------------------------------------------------------
B-3
2
$5,303,000.00
(10)
October 25, 2032
------------------------------------------------------------------------------------------------------------------
B-4(11)
B
$8,485,000.00
(12)
May 25, 2032
------------------------------------------------------------------------------------------------------------------
N(13)
(13)
$25,837,220.00(13)(14)
3.50%
N/A
------------------------------------------------------------------------------------------------------------------
X(13)
(13)
N/A(13)
N/A
N/A
------------------------------------------------------------------------------------------------------------------
R
1, 2(15)
N/A
N/A
N/A
------------------------------------------------------------------------------------------------------------------
R-A
1, 2(16)
N/A
N/A
N/A
------------------------------------------------------------------------------------------------------------------
Total
$419,997,000.00(17)
==================================================================================================================
</TABLE>
(1) Interest will accrue on the
Class AF-1 Certificates during each Interest
Accrual
Period at a rate equal to the Class AF-1 Pass-Through Rate.
(2) Interest will accrue on the
Class AV-1 Certificates at a rate equal to the
lesser of:
(i) the Class AV-1 Pass-Through Rate and (ii) the Group II Cap
for such
Distribution Date.
(3) Interest will accrue on the
Class AV-2 Certificates at a rate equal to the
lesser of:
(i) the Class AV-2 Pass-Through Rate and (ii) the Group II Cap
for such
Distribution Date.
(4) Interest will accrue on the
Class AV-3 Certificates at a rate equal to the
lesser of:
(i) the Class AV-3 Pass-Through Rate and (ii) the Group II Cap
for such
Distribution Date.
(5) Interest will accrue on the
Class M-1 Certificates at a rate equal to the
lesser of:
(i) the Class M-1 Pass-Through Rate and (ii) the Pool Cap for
such
Distribution Date.
(6) Interest will accrue on the
Class M-2 Certificates at a rate equal to the
lesser of:
(i) the Class M-2 Pass-Through Rate and (ii) the Pool Cap for
such
Distribution Date.
(7) Interest will accrue on the
Class M-3 Certificates at a rate equal to the
lesser of:
(i) the Class M-3 Pass-Through Rate and (ii) the Pool Cap for
such
Distribution Date.
(8) Interest will accrue on the
Class B-1 Certificates at a rate equal to the
lesser of:
(i) the Class B-1 Pass-Through Rate and (ii) the Pool Cap for
such
Distribution Date.
(9) Interest will accrue on the
Class B-2 Certificates at a rate equal to the
lesser of:
(i) the Class B-2 Pass-Through Rate and (ii) the Pool Cap for
such
Distribution Date.
(10) Interest will accrue on the Class
B-3 Certificates at a rate equal to the
lesser of:
(i) the Class B-3 Pass-Through Rate and (ii) the Pool Cap for
such
Distribution Date.
(11) REMIC 2 will issue an
Uncertificated Regular Interest economically
equivalent
to the Class B-4 Certificates. That Regular Interest will be an
asset of
REMIC B which will issue the Class B-4 Certificates as
described
under
"REMIC B" in this Preliminary Statement.
(12) Interest will accrue on the Class
B-4 Certificates at a rate equal to the
lesser of:
(i) the Class B-4 Pass-Through Rate and (ii) the Pool Cap for
such
Distribution Date.
(13) The Class N and Class X
Certificates, collectively, represent the
beneficial
ownership of the Class X/N Interest. REMIC 2 will issue the
REMIC 2
Class X/N Interest, which will be an asset of REMIC A. REMIC A
will issue
the REMIC A Class X/N Interest. The REMIC 2 Class X/N Interest
and the REMIC A
Class X/N Interest will have a principal balance equal to
the Class
X/N Uncertificated Principal Balance but will not bear interest
on that
balance. The REMIC 2 Class X/N Interest and the REMIC A Class
X/N
Interest
will bear interest on the Notional Balance therefor at the Pass
Through
Rate therefor. The X Certificates and Class N Certificates will
represent
the beneficial ownership of the REMIC A Class X/N Interest and
beneficial
rights with respect to the Yield Maintenance Agreement and the
Reserve
Account, subject to the obligation to pay LIBOR Carryover
Amounts.
(14) Initial Class N Notional
Amount.
(15) The Class R Certificate will
represent beneficial ownership of the Class
R-1
Interest and the Class R-2 Interest.
(16) The Class R-A Certificate will
represent beneficial ownership of the Class
R-A
Interest and the Class R-B Interest.
(17) Exclusive of the Class N Notional
Amount.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement,
the
following words and phrases, unless the
context otherwise requires, shall have
the meanings specified in this Article.
Unless otherwise specified, interest on
the Class AV-1, Class AV-2, Class AV-3,
Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3 and Class B-4
Certificates will be calculated on the
basis of the actual number of days in the
related Interest Accrual Period and a
360-day year. Interest on the Class AF-1,
Class N and Class X Certificates and
the REMIC Regular Interests will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months.
"1933 Act": The
Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan with respect to
which
any portion of a Monthly Payment is, as of
the last day of the prior Collection
Period, two months or more past due, each
Mortgage Loan in foreclosure, all REO
Property and each Mortgage Loan for which
the Mortgagor has filed for bankruptcy
after the Closing Date.
"Account": Any of the Collection Account, the Distribution
Account,
the Escrow Account and the Reserve
Account.
"Accrued Certificate Interest": With respect to each
Distribution
Date and Class of Certificates, an amount
equal to the interest accrued at the
applicable rate set forth or described
opposite such Class in the table in the
Preliminary Statement during the related
Interest Accrual Period on the
Certificate Principal Balance of such Class
of Certificates, reduced by such
Class's Interest Percentage of Relief Act
Interest Shortfalls for such
Distribution Date.
"Actuarial Mortgage Loan": Any Mortgage Loan other than a
Simple
Interest Mortgage Loan.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan which has a rate
at
which interest accrues that adjusts based
on the Index plus a related Gross
Margin, as set forth and subject to the
limitations in the related Mortgage
Note.
"Adjusted Pool Balance": As of any Distribution Date, the Pool
Balance minus the Remaining Initial
Overcollateralization Amount.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage
Loan, each adjustment date, on which the
Mortgage Interest Rate of an
Adjustable-Rate Mortgage Loan changes
pursuant to the related Mortgage Note. The
first Adjustment Date following the Cut-off
Date as to each Adjustable-Rate
Mortgage Loan is set forth in the Mortgage
Loan Schedules.
"Advance": As to any Actuarial Mortgage Loan (other than a
Third
Lien Mortgage Loan) or REO Property, any
advance made by the Servicer in respect
of any Distribution Date pursuant to
Section 4.07.
"Advance Facility": As defined in Section 6.05(b) hereof.
"Advance Facility Notice": As defined in Section 6.05(c)
hereof.
"Advance Financing Person": As defined in Section 6.05(b)
hereof.
"Advance Reimbursement Amounts": As defined in Section 6.05(c)
hereof.
"Adverse REMIC Event":
As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common
control with such Person. For
purposes of this definition, "control"
means the power to direct the management
and policies of a Person, directly or
indirectly, whether through ownership of
voting securities, by contract or otherwise
and "controlling" and "controlled"
shall have meanings correlative to the
foregoing.
"Agency Insurance Agreements": The FHA Insurance Contracts.
"Agreement": This Pooling and Servicing Agreement and all
amendments
and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and
regulations applicable thereto,
including with respect to each FHA Loan,
the FHA Regulations and the related FHA
Insurance Contract.
"Applied
Realized Loss Amount": With respect to each Distribution
Date, the excess, if any, of (a) the
aggregate of the Certificate Principal
Balances of the Certificates (after giving
effect to all distributions on such
Distribution Date) over (b) the Pool
Balance as of the end of the related
Collection Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form,
which is sufficient under the laws of
the jurisdiction wherein the related
Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates,
the
date set forth as such in the Preliminary
Statement.
"Available Funds": As to any Distribution Date, an amount equal
to
the excess of (i) the sum of (a) the
aggregate of the Monthly Payments due
during the related Collection Period and
received by the Servicer on or prior to
the related Determination Date, (b)
Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds, Principal
Prepayments, Substitution Adjustment Amounts,
the Purchase Price for any repurchased
Mortgage Loan, the Termination Price with
respect to the termination of the Trust
pursuant to Section 10.01 hereof, any
Reimbursement Amount or Recovery deposited
to the Collection Account and other
unscheduled recoveries of principal and
interest (excluding prepayment
penalties) in respect of the Mortgage Loans
during the related Prepayment
Period, (c) the aggregate of any amounts
received in respect of an REO Property
withdrawn from any REO Account and
deposited in the Collection Account for such
Distribution Date, (d) any Compensating
Interest for such Distribution Date, and
(e) the aggregate of any Advances made by
the Servicer for such Distribution
Date over (ii) the sum of (a) amounts
reimbursable or payable to the Servicer
pursuant to Section 3.05, (b) Stayed Funds,
(c) the Servicing Fee and (d)
amounts deposited in the Collection Account
or the Distribution Account, as the
case may be, in error.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal
balance of such Mortgage Loan in a single
payment at the maturity of such Mortgage
Loan that is substantially greater than
the preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance
of
a Mortgage Loan in a single payment at the
maturity of such Mortgage Loan that
is substantially greater than the preceding
Monthly Payment.
"Bankruptcy Code": Title 11 of the United States Code, as
amended.
"Book-Entry Certificates": Any of the Certificates that shall
be
registered in the name of the Depository or
its nominee, the ownership of which
is reflected on the books of the Depository
or on the books of a Person
maintaining an account with the Depository
(directly, as a "Depository
Participant," or indirectly, as an indirect
participant in accordance with the
rules of the Depository and as described in
Section 5.02 hereof). On the Closing
Date, the Class AF-1, Class AV-1, Class
AV-2, Class AV-3, Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2 and Class
B-3 Certificates shall be Book-Entry
Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day
on
which banking institutions in the State of
Delaware, the State of New York, the
State of Texas or 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.
"Cap": Any of the Group II Cap or the Pool Cap.
"Certificate": Any Regular Certificate or Residual Certificate.
"Certificate Custodian": Initially, U.S. Bank National
Association;
thereafter any other Certificate Custodian
acceptable to the Depository and
selected by the Trustee.
"Certificate Owner": With respect to each Book-Entry
Certificate,
any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of
Certificates (other than the Class N, Class
X and Residual Certificates) and any
Distribution Date, the Original Class
Certificate Principal Balance reduced by
the sum of (i) all amounts actually
distributed in respect of principal of such
Class on all prior Distribution Dates and
(ii) Applied Realized Loss Amounts
allocated thereto. The Class N, Class X and
Residual Certificates do not have a
Certificate Principal Balance. With respect
to any Certificate (other than a
Class N, Class X or a Residual Certificate)
of a Class and any Distribution
Date, the portion of the Certificate
Principal Balance of such Class represented
by such Certificate equal to the product of
the Percentage Interest evidenced by
such Certificate and the Certificate
Principal Balance of such Class.
"Certificate Register" and "Certificate Registrar": The
register
maintained and registrar appointed pursuant
to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the
Certificate Register, except that a
Disqualified Organization or Disqualified
Non-U.S. Person shall not be a Holder
of a Residual Certificate for any purpose
hereof.
"Class": Collectively, Certificates or REMIC Regular Interests
which
have the same priority of payment and bear
the same class designation and the
form of which is identical except for
variation in the Percentage Interest
evidenced thereby.
"Class AF-1 Pass-Through Rate": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
4.020% per annum and (ii) following the
Optional Termination Date, 4.520% per
annum.
"Class AV-1 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.310% per annum, and (ii) following
the Optional Termination Date, 0.620% per
annum.
"Class AV-1 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class AV-1 Certificate Margin.
"Class AV-2
Certificate Margin": For each Distribution Date (i) on
or prior to the Optional Termination Date,
0.180% per annum, and (ii) following
the Optional Termination Date, 0.360% per
annum.
"Class AV-2 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class AV-2 Certificate Margin.
"Class AV-3 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.430% per annum, and (ii) following
the Optional Termination Date, 0.860% per
annum.
"Class AV-3 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class AV-3 Certificate Margin.
"Class A Certificate": Any one of the Certificates with an "A"
designated on the face thereof
substantially in the form annexed hereto as
Exhibits A-1, A-2, A-3 and A-4, executed by
the Trustee on behalf of the Trust
and authenticated and delivered by the
Certificate Registrar, representing the
right to distributions as set forth herein
and therein.
"Class A Certificateholders": Collectively, the Holders of the
Class
A Certificates.
"Class A Interest Carry Forward Amount": For any Distribution
Date,
the sum of the Interest Carry Forward
Amounts for the Class A Certificates for
such Distribution Date.
"Class A Principal Distribution Amount": As of any Distribution
Date
(a) prior to the Stepdown Date or with
respect to which a Trigger Event is in
effect, the Principal Distribution Amount
and (b) on or after the Stepdown Date
and as long as a Trigger Event is not in
effect, the excess of (x) the sum of
the Certificate Principal Balances of the
Class A Certificates immediately prior
to such Distribution Date over (y) the
lesser of (A) the product of (i) 62.00%
and (ii) the Pool Balance as of the last
day of the related Collection Period
and (B) the Pool Balance as of the last day
of the related Collection Period
minus the product of (i) 0.50% and (ii) the
Pool Balance on the Cut-off Date.
"Class B Certificate": Any one of the Certificates with a "B"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit B-1, Exhibit B-2, Exhibit B-3 and
Exhibit B-4, executed by the Trustee
on behalf of the Trust and authenticated
and delivered by the Certificate
Registrar, representing the right to
distributions as set forth herein and
therein.
"Class B Certificateholders": Collectively, the Holders of the
Class
B Certificates.
"Class B-1 Applied Realized Loss Amount": As to the Class B-1
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class B-1 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the sum
of the Class B-2 Applied Realized
Loss Amount, the Class B-3 Applied Realized
Loss Amount and the Class B-4
Applied Realized Loss Amount as of such
Distribution Date.
"Class B-1 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.700% per annum, and (ii) following the
Optional Termination Date, 2.550% per
annum.
"Class B-1 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class B-1 Certificate Margin.
"Class B-1 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances 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 B-1 Certificates immediately
prior to such Distribution Date over (y)
the lesser of (A) the product of (i)
89.00% and (ii) the Pool Balance as of the
last day of the related Collection
Period and (B) the Pool Balance as of the
last day of the related Collection
Period minus the product of 0.50% and the
Pool Balance on the Cut-off Date.
"Class B-1 Realized Loss Amortization Amount": As to the Class
B-1
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-1
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xiv) hereof, in each
case for such Distribution Date.
"Class B-2
Applied Realized Loss Amount": As to the Class B-2
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class B-2 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the sum
of the Class B-3 Applied Realized
Loss Amount and the Class B-4 Applied
Realized Loss Amount as of such
Distribution Date.
"Class B-2 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.800% per annum, and (ii) following the
Optional Termination Date, 2.700% per
annum.
"Class B-2 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class B-2 Certificate Margin.
"Class B-2 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances 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), (v) the
Certificate Principal Balance of the Class
B-1 Certificates (after taking into
account the payment of the Class B-1
Principal Distribution Amount on such
Distribution Date) and (vi) the Certificate
Principal Balance of the Class B-2
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 91.50% and (ii) the
Pool Balance as of the last day of
the related Collection Period and (B) the
Pool Balance as of the last day of the
related Collection Period minus the product
of 0.50% and the Pool Balance on the
Cut-off Date.
"Class B-2 Realized Loss Amortization Amount": As to the Class
B-2
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-2
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xvii) hereof, in each
case for such Distribution Date.
"Class B-3 Applied Realized Loss Amount": As to the Class B-3
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class B-3 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the
Class B-4 Applied Realized Loss Amount
as of such Distribution Date.
"Class B-3 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
2.950% per annum, and (ii) following the
Optional Termination Date, 4.425% per
annum.
"Class B-3 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class B-3 Certificate Margin.
"Class B-3 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances 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), (v) the
Certificate Principal Balance of the Class
B-1 Certificates (after taking into
account the payment of the Class B-1
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class B-2
Certificates (after taking into account the
payment of the Class B-2 Principal
Distribution Amount on such Distribution
Date), and (vii) the Certificate
Principal Balance of the Class B-3
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 94.00% and (ii)
the Pool Balance as of the last day of the
related Collection Period and (B) the
Pool Balance as of the last day of the
related Collection Period minus the
product of 0.50% and the Pool Balance on
the Cut-off Date.
"Class B-3 Realized Loss Amortization Amount": As to the Class
B-3
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-3
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xx) hereof, in each case
for such Distribution Date.
"Class B-4 Applied Realized Loss Amount": As to the Class B-4
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class B-4 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the Applied
Realized Loss Amount as of such
Distribution Date.
"Class B-4 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
4.000% per annum, and (ii) following the
Optional Termination Date, 6.000% per
annum.
"Class B-4 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class B-4 Certificate Margin.
"Class B-4 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances 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), (v) the
Certificate Principal Balance of the Class
B-1 Certificates (after taking into
account the payment of the Class B-1
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class B-2
Certificates (after taking into account the
payment of the Class B-2 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class B-3 Certificates
(after taking into account the payment of
the Class B-3 Principal Distribution Amount
on such Distribution Date) and
(viii) the Certificate Principal Balance of
the Class B-4 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 98.00% and (ii) the Pool
Balance as of the last day of the
related Collection Period and (B) the Pool
Balance as of the last day of the
related Collection Period minus the product
of 0.50% and the Pool Balance on the
Cut-off Date.
"Class B-4
Realized Loss Amortization Amount": As to the Class B-4
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-4
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xxiii) hereof, in each
case for such Distribution Date.
"Class M Certificate": Any one of the Certificates with an "M"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-2, Exhibit C-3 and Exhibit C-4,
executed by the Trustee on behalf of
the Trust and authenticated and delivered
by the Certificate Registrar,
representing the right to distributions as
set forth herein and therein.
"Class M Certificateholders": Collectively, the Holders of the
Class
M Certificates.
"Class M-1 Applied Realized Loss Amount": As to the Class M-1
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-1 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the sum
of the Class M-2 Applied Realized
Loss Amount, the Class M-3 Applied Realized
Loss Amount, the Class B-1 Applied
Realized Loss Amount, the Class B-2 Applied
Realized Loss Amount, the Class B-3
Applied Realized Loss Amount and the Class
B-4 Applied Realized Loss Amount, in
each case as of such Distribution Date.
"Class M-1 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.600% per annum, and (ii) following the
Optional Termination Date, 0.900% per
annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class M-1 Certificate Margin.
"Class M-1 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balances 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) 73.50% and
(ii) the Pool Balance as of the last day of
the related Collection Period and
(B) the Pool Balance as of the last day of
the related Collection Period minus
the product of 0.50% and the Pool Balance
on the Cut-off Date.
"Class M-1 Realized Loss Amortization Amount": As to the Class
M-1
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (v) hereof, in each case
for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to the Class M-2
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-2 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss
Amount as of such Distribution Date over
(ii) the sum of the Class M-3 Applied
Realized Loss Amount, the Class B-1 Applied
Realized Loss Amount, the Class B-2
Applied Realized Loss Amount, the Class B-3
Applied Realized Loss Amount and the
Class B-4 Applied Realized Loss Amount, in
each case as of such Distribution
Date.
"Class M-2 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.180% per annum, and (ii) following the
Optional Termination Date, 1.770% per
annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class M-2 Certificate Margin.
"Class M-2 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balances 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) 83.50% and (ii) the Pool
Balance as of the last day of the
related Collection Period and (B) the Pool
Balance as of the last day of the
related Collection Period minus the product
of 0.50% and the Pool Balance on the
Cut-off Date.
"Class M-2 Realized
Loss Amortization Amount": As to the Class M-2
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (viii) hereof, in each
case for such Distribution Date.
"Class M-3 Applied Realized Loss Amount": As to the Class M-3
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-3 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss
Amount as of such Distribution Date over
(ii) the sum of the Class B-1 Applied
Realized Loss Amount, the Class B-2 Applied
Realized Loss Amount, the Class B-3
Applied Realized Loss Amount and the Class
B-4 Applied Realized Loss Amount, in
each case as of such Distribution Date.
"Class M-3 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.400% per annum, and (ii) following the
Optional Termination Date, 2.100% per
annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, LIBOR
as
of the related LIBOR Determination Date,
plus the Class M-3 Certificate Margin.
"Class M-3 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balances 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), (ii) 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) 86.50%
and (ii) the Pool Balance as of the
last day of the related Collection Period
and (B) the Pool Balance as of the
last day of the related Collection Period
minus the product of 0.50% and the
Pool Balance on the Cut-off Date.
"Class M-3 Realized Loss Amortization Amount": As to the Class
M-3
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-3
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xi) hereof, in each case
for such Distribution Date.
"Class N Certificate": Any one of the Certificates with an "N"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-6, executed by the Trustee on
behalf of the Trust and authenticated
and delivered by the Certificate Registrar,
representing the right to
distributions as set forth herein and
therein.
"Class N Notional Amount": As of any date, the Notional Amount
of
the Class N Certificates.
"Class R Certificate": The Class R Certificate executed by the
Trustee on behalf of the Trust, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit C-1
and evidencing the ownership of the
Residual Interest in each of REMIC 1 and
REMIC 2. The Class R Certificate represents
the ownership of the Class R-1
Interest and Class R-2 Interest.
"Class R-A Interest": The uncertificated residual interest in
REMIC
A.
"Class R-B Interest": The uncertificated residual interest in
REMIC
B.
"Class R-1 Interest": The uncertificated residual interest in
REMIC
1.
"Class R-2 Interest": The uncertificated residual interest in
REMIC
2.
"Class R-A Certificate": The Class R-A Certificate executed by
the
Trustee on behalf of the Trust, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit C-1-2
and evidencing the ownership of the
Residual Interest in each of REMIC A and
REMIC B. The Class R-A Certificate
represents the ownership of the Class R-A
Interest and Class R-B Interest.
"Class X": Any one of the Class X Certificates as designated on
the
face thereof substantially in the form
annexed hereto as Exhibit C-5, executed
by the Trustee on behalf of the Trust and
authenticated and delivered by the
Certificate Registrar, representing the
right to distributions as set forth
herein and therein.
"Class X/N Interest": An uncertificated interest in the Trust
held
by the Trustee on behalf of the holders of
the Class X and Class N Certificates,
representing ownership of the REMIC A Class
X/N Regular Interest and beneficial
rights with respect to the Yield
Maintenance Agreement and the Reserve Account,
less the amount (without duplication) of
any LIBOR Carryover Amounts paid
pursuant to Section 4.02(b)(xxv) and
(xxvi).
"Class X/N Uncertificated Principal Balance": The Initial
Overcollateralization Amount minus the sum
of (i) any Realized Losses allocated
thereto and (ii) any amounts distributed
(or deemed distributed) to the REMIC 2
Class X/N Interest with respect
thereto.
"Class X Distributable Amount": With respect to any
Distribution
Date, the excess of (i) the aggregate of
amounts distributable on the Class X/N
Interest for such Distribution Date, over
(ii) the aggregate of amounts
distributable to the Class N Certificates
pursuant to Section 4.02(b).
"Closing Date":
February 12, 2004.
"Code": The Internal Revenue Code of 1986, as it may be amended
from
time to time.
"Collection Account": The account or accounts created and
maintained
by the Servicer pursuant to Section 3.04,
which shall be entitled "Collection
Account, Litton Loan Servicing LP, as
Servicer for the Trust under the Pooling
and Servicing Agreement dated as of January
1, 2004 among Asset Backed Funding
Corporation, as Depositor, Credit-Based
Asset Servicing and Securitization LLC,
as Seller, Litton Loan Servicing LP, as
Servicer, and U.S. Bank National
Association, as Trustee, in trust for
registered Holders of 2004-CB1 Trust,
C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2004-CB1," and which must
be an Eligible Account.
"Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar
month preceding the month in which
such Distribution Date occurs through the
first day of the month in which such
Distribution Date occurs.
"Combined Loan-to-Value Ratio": As of any date and Mortgage
Loan,
the fraction, expressed as a percentage,
the numerator of which is the Principal
Balance of the Mortgage Loan as of such
date of determination plus the principal
balance of any related senior mortgage loan
or mortgage loans, if any, at
origination of the Mortgage Loan and the
denominator of which is the Value of
the related Mortgaged Property.
"Compensating Interest": As defined in Section 3.23
hereof.
"Condemnation Proceeds": All awards or settlements in respect of
a
taking of a Mortgaged Property by exercise
of the power of eminent domain or
condemnation.
"Conventional Mortgage Loan": Any Mortgage Loan that is not an
FHA
Loan.
"Corporate Trust Office": With respect to the Trustee, the
principal
corporate trust office of the Trustee at
which at any particular time its
corporate trust business in connection with
this Agreement shall be
administered, which office at the date of
the execution of this instrument is
located at 60 Livingston Avenue,
EP-MN-WS3D, St. Paul, Minnesota 55107-2292,
Attention: Institutional Trust Services,
C-BASS Series 2004-CB1, or at such
other address as the Trustee may designate
from time to time by notice to the
Certificateholders, the Depositor, the
Servicer and the Seller.
"Corresponding Classes": With respect to REMIC 1 and REMIC 2,
the
following Classes shall be Corresponding
Classes:
--------------------------------------------------------------------------------
Corresponding REMIC 1 Classes
Corresponding REMIC 2 Classes
--------------------------------------------------------------------------------
LT1AF1
Class AF-1 Certificates
--------------------------------------------------------------------------------
LT1AV1
Class AV-1 Certificates
--------------------------------------------------------------------------------
LT1AV2
Class AV-2 Certificates
--------------------------------------------------------------------------------
LT1AV3
Class AV-3 Certificates
--------------------------------------------------------------------------------
LT1M1
Class M-1 Certificates
--------------------------------------------------------------------------------
LT1M2
Class M-2 Certificates
--------------------------------------------------------------------------------
LT1M3
Class M-3 Certificates
--------------------------------------------------------------------------------
LT1B1
Class B-1 Certificates
--------------------------------------------------------------------------------
LT1B2
Class B-2 Certificates
--------------------------------------------------------------------------------
LT1B3
Class B-3 Certificates
--------------------------------------------------------------------------------
LT1B4
REMIC 2 Class B-4 Regular Interest
--------------------------------------------------------------------------------
"Custodial Agreement": The Custodial Agreement, dated as of
January
1, 2004, among the Trustee, the Servicer
and the Custodian, as the same may be
amended or supplemented pursuant to the
terms thereof.
"Custodian": The Bank of New York, a New York banking
corporation,
or any successor custodian appointed
pursuant to the terms of the Custodial
Agreement.
"Cut-off Date": January 1, 2004.
"Cut-off Date Principal Balance": With respect to any Mortgage
Loan,
the unpaid principal balance thereof as of
the Cut-off Date after application of
funds received or advanced on or before
such date (or as of the applicable date
of substitution with respect to an Eligible
Substitute Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment
for such Mortgage Loan by a court of
competent jurisdiction in a proceeding
under the Bankruptcy Code, except such a
reduction resulting from a Deficient
Valuation.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Eligible Substitute
Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property
by a court of competent jurisdiction
in an amount less than the then outstanding
principal balance of the Mortgage
Loan, which valuation results from a
proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 5.02(c)
hereof.
"Delinquent": Any Mortgage Loan with respect to which the
Monthly
Payment and/or any Escrow Payment due on a
Due Date is not made by the close of
business on the next scheduled Due Date for
such Mortgage Loan or any Mortgage
Loan with respect to which any Servicing
Advances made on or before the Cut-off
Date has not been reimbursed by the related
Mortgagor.
"Depositor": Asset Backed Funding Corporation, a Delaware
corporation, or any successor in
interest.
"Depository": The initial depository shall be The Depository
Trust
Company, whose nominee is Cede & Co.,
or any other organization registered as a
"clearing agency" pursuant to Section 17A
of the Exchange Act. The Depository
shall initially be the registered Holder of
the Book-Entry Certificates. The
Depository shall at all times be a
"clearing corporation" as defined in Section
8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Participant": A broker, dealer, bank or other
financial
institution or other person for whom from
time to time a Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date,
the
10th day of the calendar month in which
such Distribution Date occurs or, if
such 10th day is not a Business Day, the
Business Day immediately preceding such
10th day.
"Directly Operate": With respect to any REO Property, the
furnishing
or rendering of services to the tenants
thereof, the management or operation of
such REO Property, the holding of such REO
Property primarily for sale to
customers, the performance of any
construction work thereon or any use of such
REO Property in a trade or business
conducted by the Trust other than through an
Independent Contractor; provided, however,
that the Trustee (or the Servicer
under this Agreement) shall not be
considered to Directly Operate an REO
Property solely because the Trustee (or the
Servicer under this Agreement)
establishes rental terms, chooses tenants,
enters into or renews leases, deals
with taxes and insurance, or makes
decisions as to repairs or capital
expenditures with respect to such REO
Property.
"Disqualified Non-U.S. Person": With respect to a Residual
Certificate, any (A) non-U.S. Person or
agent thereof or (B) U.S. Person with
respect to whom income from a Residual
Certificate is attributable to a foreign
permanent establishment or fixed base,
within the meaning of an applicable
income tax treaty, of such Person or any
other U.S. Person.
"Disqualified Organization": A "disqualified organization"
under
Section 860E of the Code, which as of the
Closing Date is any of: (i) the United
States, any state or political subdivision
thereof, any possession of the United
States, any foreign government, any
international organization, or any agency or
instrumentality of any of the foregoing,
(ii) any organization (other than a
cooperative described in Section 521 of the
Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless
such organization is subject to the tax
imposed by Section 511 of the Code, (iii)
any organization described in Section
1381(a)(2)(C) of the Code, or (iv) any
other Person so designated by the Trustee
based upon an Opinion of Counsel provided
by nationally recognized counsel to
the Trustee that the holding of an
ownership interest in a Residual Certificate
by such Person may cause the Trust Fund or
any Person having an ownership
interest in any Class of Certificates
(other than such Person) to incur
liability for any federal tax imposed under
the Code that would not otherwise be
imposed but for the transfer of an
ownership interest in a Residual Certificate
to such Person. A corporation will not be
treated as an instrumentality of the
United States or of any state or political
subdivision thereof if all of its
activities are subject to tax and a
majority of its board of directors is not
selected by a governmental unit. The term
"United States," "state" and
"international organization" shall have the
meanings set forth in Section 7701
of the Code.
"Distribution Account": The trust account or accounts created
and
maintained by the Trustee pursuant to
Section 3.04(b) which shall be entitled
"Distribution Account, U.S. Bank National
Association, as Trustee, in trust for
the registered Holders of 2004-CB1 Trust,
C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2004-CB1" and which
must be an Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if
such
25th day is not a Business Day, the
Business Day immediately following such 25th
day, commencing in February 2004.
"Distribution Information": The items calculated and reported by
the
Trustee pursuant to Section 4.06(a)(i),
(ii), (iii) and (xiv) through (xxiv) and
any other information included in the
monthly statement to certificateholders
set forth in Section 4.06 of the Pooling
Agreement aggregated and/or calculated
by the Trustee from (a) information
contained in the Remittance Report or (b)
other information furnished to the Trustee
by the Servicer pursuant to Section
4.07.
"Due Date": With respect to each Mortgage Loan and any
Distribution
Date, the day of the calendar month in
which such Distribution Date occurs on
which the Monthly Payment for such Mortgage
Loan was due, exclusive of any grace
period.
"Eligible Account": Any of (i) an account or accounts
maintained
with a federal or state chartered
depository institution or trust company the
short-term unsecured debt obligations of
which (or, in the case of a depository
institution or trust company that is the
principal subsidiary of a holding
company, the short-term unsecured debt
obligations of such holding company) are
rated "A-1" (or the equivalent) by each of
the Rating Agencies at the time any
amounts are held on deposit therein, (ii)
an account or accounts the deposits in
which are fully insured by the FDIC (to the
limits established by such
corporation), the uninsured deposits in
which account are otherwise secured such
that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each
Rating Agency, the Certificateholders will
have a claim with respect to the
funds in such account or a perfected first
priority security interest against
such collateral (which shall be limited to
Permitted Investments) securing such
funds that is superior to claims of any
other depositors or creditors of the
depository institution with which such
account is maintained, (iii) a trust
account or accounts maintained with the
trust department of a federal or state
chartered depository institution, national
banking association or trust company
acting in its fiduciary capacity or (iv) an
account otherwise acceptable to each
Rating Agency without reduction or
withdrawal of their then current ratings of
the Certificates as evidenced by a letter
from each Rating Agency to the
Trustee. Eligible Accounts may bear
interest.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted
for
a Defective Mortgage Loan pursuant to the
terms of this Agreement which must, on
the date of such substitution, (i) have an
outstanding principal balance, after
application of all scheduled payments of
principal and interest due during or
prior to the month of substitution, not in
excess of, and not more than 5% less
than, the outstanding principal balance of
the Defective Mortgage Loan as of the
Due Date in the calendar month during which
the substitution occurs, (ii) have a
Mortgage Interest Rate, with respect to a
Fixed-Rate Mortgage Loan, not less
than the Mortgage Interest Rate of the
Defective Mortgage Loan and not more than
1% in excess of the Mortgage Interest Rate
of such Defective Mortgage Loan,
(iii) if an Adjustable-Rate Mortgage Loan,
have a Maximum Loan Rate not less
than the Maximum Loan Rate for the
Defective Mortgage Loan, (iv) if an
Adjustable-Rate Mortgage Loan, have a
Minimum Loan Rate not less than the
Minimum Loan Rate of the Defective Mortgage
Loan, (v) if an Adjustable-Rate
Mortgage Loan, have the same Index as the
Defective Mortgage Loan, (vi) if an
Adjustable-Rate Mortgage Loan, have a Gross
Margin equal to or greater than the
Gross Margin of the Defective Mortgage
Loan, (vii) if an Adjustable-Rate
Mortgage Loan, have the same Index as the
Defective Mortgage Loan, (viii) if an
Adjustable-Rate Mortgage Loan, have a next
Adjustment Date not more than two
months later than the next Adjustment Date
on the Defective Mortgage Loan, (ix)
have a remaining term to maturity not
greater than (and not more than one year
less than) that of the Defective Mortgage
Loan, (x) be current as of the date of
substitution, (xi) have a Combined
Loan-to-Value Ratio as of the date of
substitution equal to or lower than the
Combined Loan-to-Value Ratio of the
Defective Mortgage Loan as of such date,
(xii) have a risk grading determined by
the Seller at least equal to the risk
grading assigned on the Defective Mortgage
Loan, (xiii) have been reunderwritten by
the Seller in accordance with the same
underwriting criteria and guidelines as the
Defective Mortgage Loan, (xiv) have
the same Due Date as the Defective Mortgage
Loan and (xv) conform to each
representation and warranty set forth in
Section 2.04 hereof applicable to the
Defective Mortgage Loan. In the event that
one or more mortgage loans are
substituted for one or more Defective
Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on
the basis of aggregate principal
balances, the Mortgage Interest Rates
described in clause (ii) hereof shall be
determined on the basis of weighted average
Mortgage Interest Rates, the risk
gradings described in clause (xii) hereof
shall be satisfied as to each such
mortgage loan, the terms described in
clause (ix) hereof shall be determined on
the basis of weighted average remaining
term to maturity, the Combined
Loan-to-Value Ratios described in clause
(xi) 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 (xv) hereof
must be satisfied as to each Eligible
Substitute Mortgage Loan or in the
aggregate, as the case may be.
"ERISA": The Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA-Restricted Certificates": Any of the Class M-1, Class
M-2,
Class M-3, Class B-1, Class B-2, Class B-3,
Class B-4, Class N, Class X, Class R
and Class R-A Certificates.
"Escrow Account": The account or accounts created and
maintained
pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents,
taxes,
assessments, water rates, mortgage
insurance premiums, fire and hazard insurance
premiums and other payments required to be
escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage
Loan.
"Estate in Real Property": A fee simple estate in a parcel of
real
property.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Expense Fee Rate": The sum of (i) the Trustee Fee Rate and (ii)
the
Servicing Fee Rate.
"Extended Period": As
defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any Distribution
Date,
the lesser of (x) the Monthly Excess
Interest Amount for such Distribution Date
and (y) the Overcollateralization
Deficiency for such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHA": The Federal Housing Administration, an agency within
HUD.
"FHA Approved Mortgagee": Those institutions which are approved
by
FHA to act as servicer and mortgagee of
record pursuant to FHA Regulations.
"FHA Insurance Contract" or "FHA Insurance": The contractual
obligation of FHA respecting the insurance
of an FHA Loan pursuant to the
National Housing Act, as amended.
"FHA Loan": A Mortgage Loan which is the subject of an FHA
Insurance
Contract as evidenced by a Mortgage
Insurance Certificate.
"FHA Regulations": Regulations promulgated by HUD under the
National
Housing Act, codified in 24 Code of Federal
Regulations, and other HUD issuances
relating to FHA Loans, including the
related handbooks, circulars, notices and
mortgagee letters.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section
3.12.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other
than a Mortgage Loan or REO Property
purchased by the Seller or the Servicer
pursuant to or as contemplated by
Section 2.03 or 10.01), a determination
made by the Servicer that all Insurance
Proceeds, Liquidation Proceeds and other
payments or recoveries which the
Servicer, in its reasonable good faith
judgment, expects to be finally
recoverable in respect thereof have been so
recovered. The Servicer shall
maintain records, prepared by a Servicing
Officer, of each Final Recovery
Determination made thereby.
"First Lien Mortgage Loan": Any of the of the Mortgage Loans
which
are secured by a first mortgage lien that
is senior to a Second Lien Mortgage
Loan and Third Lien Mortgage Loan, if any,
on the related Mortgaged Property.
"Fitch": Fitch Ratings and its successors, and if such company
shall
for any reason no longer perform the
functions of a securities rating agency,
"Fitch" shall be deemed to refer to any
other "nationally recognized statistical
rating organization" as set forth on the
most current list of such organizations
released by the Securities and Exchange
Commission.
"Fixed-Rate Mortgage Loan": A Mortgage Loan which has a
constant
annual rate at which interest accrues in
accordance with the provisions of the
related Mortgage Note.
"Foreclosure Price": The amount reasonably expected to be
received
from the sale of the related Mortgaged
Property net of any expenses associated
with foreclosure proceedings.
"Grantor Trust": That portion of the Trust exclusive of REMIC
1,
REMIC 2, REMIC A and REMIC B consisting of
(a) the right of the Offered
Certificates (other than the Class AF-1
Certificates) and the Class B-4
Certificates to receive LIBOR Carryover
Amounts, (b) the Yield Maintenance
Agreement, the Reserve Account and the
beneficial interest of the Class X/N
Interest with respect thereto and (c) the
obligation of the Class X/N Interest
to pay LIBOR Carryover Amounts.
"Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan,
the fixed percentage, if any, set forth in
the related Mortgage Note that is
added to the Index on each Adjustment Date
in accordance with the terms of the
related Mortgage Note used to determine the
Mortgage Interest Rate for such
Mortgage Loan.
"Group Subordinate Amount": With respect to any Distribution
Date
and (i) Loan Group I, the excess of the
aggregate Principal Balance of the Group
I Mortgage Loans as of the first day of the
related Collection Period over the
Certificate Principal Balance of the Class
AF-1 Certificates immediately prior
to such Distribution Date and (ii) Loan
Group II, the excess of the aggregate
Principal Balance of the Group II Mortgage
Loans as of the first day of the
related Collection Period over the
aggregate Certificate Principal Balance of
the Class AV-1, Class AV-2 and Class AV-3
Certificates immediately prior to such
Distribution Date.
"Group I Interest Remittance Amount": As of any Distribution
Date,
the sum, without duplication, of (i) all
interest received by the Servicer on or
prior to the related Determination Date for
such Distribution Date or advanced
with respect to Monthly Payments due during
the related Collection Period on the
Group I Mortgage Loans (less the Servicing
Fee, amounts available for
reimbursement of Advances and Servicing
Advances pursuant to Section 3.05 and
expenses reimbursable pursuant to Section
6.03), (ii) the portion of any full or
partial Principal Prepayment related to
interest with respect to a Group I
Mortgage Loan received during the related
Prepayment Period, (iii) all
Compensating Interest paid by the Servicer
on the related Determination Date
with respect to the Group I Mortgage Loans,
(iv) the portion of any payment in
connection with any Purchase Price, Net
Liquidation Proceeds, Insurance Proceeds
or Condemnation Proceeds relating to
interest with respect to the Group I
Mortgage Loans received during the related
Prepayment Period, (v) the portion of
any Substitution Adjustment Amount relating
to interest with respect to the
Group I Mortgage Loans received during the
related Prepayment Period, (vi) with
respect to the related Distribution Date on
which the Trust is to be terminated
in accordance with the Section 10.01
hereof, that portion of the Termination
Price with respect to the Group I Mortgage
Loans in respect of interest and
(vii) the portion of any Reimbursement
Amount or Recovery related to the Group I
Mortgage Loans received during the related
Prepayment Period.
"Group I Mortgage Loan": A Mortgage Loan in Loan Group I.
"Group I Principal Allocation Percentage": As of any
Distribution
Date, a fraction expressed as a percentage,
the numerator of which is the
Principal Remittance Amount allocable to
the Group I Mortgage Loans for such
Distribution Date and the denominator of
which is equal to the Principal
Remittance Amount for such Distribution
Date.
"Group I Principal Distribution Amount": As of any Distribution
Date, the product of the Group I Principal
Allocation Percentage and the Class A
Principal Distribution Amount.
"Group II Cap": With respect to any Distribution Date, a per
annum
rate (adjusted by multiplying such rate by
a fraction equal to 30 over the
actual number of days in the related
Interest Accrual Period) equal to the
Weighted Average Net Mortgage Rate for the
Group II Mortgage Loans for such
Distribution Date as of the first day of
the related Collection Period.
"Group II Interest Remittance Amount": As of any Distribution
Date,
the sum, without duplication, of (i) all
interest received by the Servicer on or
prior to the related Determination Date for
such Distribution Date or advanced
with respect to Monthly Payments due during
the related Collection Period on the
Group II Mortgage Loans (less the Servicing
Fee, amounts available for
reimbursement of Advances and Servicing
Advances pursuant to Section 3.05 and
expenses reimbursable pursuant to Section
6.03), (ii) the portion of any full or
partial Principal Prepayment related to
interest with respect to a Group II
Mortgage Loan received during the related
Prepayment Period, (iii) all
Compensating Interest paid by the Servicer
on the related Determination Date
with respect to the Group II Mortgage
Loans, (iv) the portion of any payment in
connection with any Purchase Price, Net
Liquidation Proceeds, Insurance Proceeds
or Condemnation Proceeds relating to
interest with respect to the Group II
Mortgage Loans received during the related
Prepayment Period, (v) the portion of
any Substitution Adjustment Amount relating
to interest with respect to the
Group II Mortgage Loans received during the
related Prepayment Period, (vi) with
respect to the related Distribution Date on
which the Trust is to be terminated
in accordance with the Section 10.01
hereof, that portion of the Termination
Price with respect to the Group II Mortgage
Loans in respect of interest and
(vii) the portion of any Reimbursement
Amount or Recovery related to the Group
II Mortgage Loans received during the
related Prepayment Period.
"Group II Mortgage Loan": A Mortgage Loan in Loan Group II.
"Group II
Principal Allocation Percentage": As of any Distribution
Date, a fraction expressed as a percentage,
the numerator of which is the
Principal Remittance Amount allocable to
the Group II Mortgage Loans for such
Distribution Date and the denominator of
which is equal to the Principal
Remittance Amount for such Distribution
Date.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto,
including the Federal Housing
Commissioner and the Secretary of Housing
and Urban Development where
appropriate under the FHA Regulations.
"Independent": When used with respect to any specified Person,
any
such Person who (i) is in fact independent
of the Depositor, the Servicer and
their respective Affiliates, (ii) does not
have any direct financial interest in
or any material indirect financial interest
in the Depositor or the Servicer or
any Affiliate thereof, and (iii) is not
connected with the Depositor or the
Servicer or any Affiliate thereof as an
officer, employee, promoter,
underwriter, trustee, partner, director or
Person performing similar functions;
provided, however, that a Person shall not
fail to be Independent of the
Depositor or the Servicer or any Affiliate
thereof merely because such Person is
the beneficial owner of 1% or less of any
Class of securities issued by the
Depositor or the Servicer or any Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent
contractor" with respect to the Trust
Fund within the meaning of Section
856(d)(3) of the Code if the Trust Fund were
a real estate investment trust (except that
the ownership tests set forth in
that section shall be considered to be met
by any Person that owns, directly or
indirectly, 35 percent or more of any Class
of Certificates), so long as the
Trust Fund does not receive or derive any
income from such Person and provided
that the relationship between such Person
and the Trust Fund is at arm's length,
all within the meaning of Treasury
Regulations Section 1.856-4(b)(5), or (ii)
any other Person (including the Servicer)
if the Trustee has received an Opinion
of Counsel, which Opinion of Counsel shall
be an expense of the Trust Fund, to
the effect that the taking of any action in
respect of any REO Property by such
Person, subject to any conditions therein
specified, that is otherwise herein
contemplated to be taken by an Independent
Contractor will not cause such REO
Property to cease to qualify as
"foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined
without regard to the exception
applicable for purposes of Section 860D(a)
of the Code), or cause any income
realized in respect of such REO Property to
fail to qualify as Rents from Real
Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and
with
respect to each related Adjustment Date,
the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any
Certificate of a Class other than a Class
N, Class X or Residual Certificate,
the amount designated "Initial Certificate
Principal Balance" on the face
thereof.
"Initial Overcollateralization Amount": $4,241,504.43.
"Insurance Proceeds": Proceeds of any title policy, hazard policy
or
other insurance policy covering a Mortgage
Loan, to the extent such proceeds are
not to be applied to the restoration of the
related Mortgaged Property or
released to the Mortgagor in accordance
with the procedures that the Servicer
would follow in servicing mortgage loans
held for its own account, subject to
the terms and conditions of the related
Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date
and
(i) with respect to the Class AV-1, Class
AV-2, Class AV-3, Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2, Class
B-3 and Class B-4 Certificates, the
period from the preceding Distribution Date
through the day prior to the current
Distribution Date (or, in the case of the
first Distribution Date, the period
from the Closing Date through February 24,
2004), and (ii) with respect to (a)
the Class AF-1, Class N and Class X
Certificates, the REMIC 2 Class X/N Interest
and the REMIC A Class X/N Interest and (b)
the REMIC 1 Regular Interests, the
calendar month immediately preceding the
month in which such Distribution Date
occurs.
"Interest Carry Forward Amount": For any Class of Certificates
(other than the Class X and Residual
Certificates) and any Distribution Date,
the sum of (a) the excess, if any, of the
Accrued Certificate Interest and any
Interest Carry Forward Amount for each
Class for the prior Distribution Date,
over the amount in respect of interest
actually distributed on such Class on
such prior Distribution Date and (b)
interest on such excess at the applicable
Pass-Through Rate (x) with respect to the
Certificates (other than the Class
AF-1 and Class N Certificates), on the
basis of the actual number of days
elapsed on the basis of a 360-day year
since the prior Distribution Date, and
(y) with respect to the Class AF-1 and
Class N Certificates, on the basis of a
360-day year consisting of twelve 30-day
months.
"Interest Percentage": With respect to any Class of Certificates
and
any Distribution Date, the ratio (expressed
as a decimal carried to six places)
of the Accrued Certificate Interest for
such Class to the sum of the Accrued
Certificate Interest for all Classes of
Certificates, in each case with respect
to such Distribution Date and without
regard to shortfalls caused by the Relief
Act or similar state laws.
"Interest Remittance Amount": As of any Determination Date, the
sum
of the Group I Interest Remittance Amount
and the Group II Interest Remittance
Amount.
"Late Collections": With respect to any Mortgage Loan, all
amounts
received subsequent to the Determination
Date immediately following any related
Collection Period, whether as late payments
of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or
otherwise, which represent late payments or
collections of principal and/or interest
due (without regard to any acceleration
of payments under the related Mortgage and
Mortgage Note) but delinquent on a
contractual basis for such Collection
Period and not previously recovered.
"Lender": As defined
in Section 6.05(b).
"LIBOR": With respect to each Interest Accrual Period, the rate
determined by the Trustee on the related
LIBOR Determination Date on the basis
of the offered rate for one-month United
States dollar deposits, as such rate
appears on the Telerate Page 3750, as of
11:00 a.m. (London time) on such LIBOR
Determination Date. If no such quotations
are available on an LIBOR
Determination Date, LIBOR for the related
Interest Accrual Period will be
established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more Reference
Banks
provide
quotations as to the rate at which deposits in U.S. Dollars are
offered as
of 11:00 a.m. (London time) to prime banks in the London
interbank
market for a period of one month in amounts approximately equal
to the
aggregate Certificate Principal Balance of the Class AV-1,
Class
AV-2,
Class AV-3, Class M-1, Class M-2, Class M-3, Class B-1, Class
B-2,
Class B-3
and Class B-4 Certificates, LIBOR for the related Interest
Accrual
Period shall be the arithmetic mean of such offered quotations
(rounded
upwards if necessary to the nearest whole multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two
Reference
Banks
provide such offered quotations, LIBOR for the related Interest
Accrual
Period shall be the arithmetic mean of the rates quoted by one
or
more major
banks in New York City, selected by the Trustee after
consultation with the Depositor, as of 11:00 a.m., New York City
time, on
such date
for loans in U.S. Dollars to leading European banks for a
period
of one
month in amounts approximately equal to the aggregate
Certificate
Principal
Balance of the Class AV-1, Class AV-2, Class AV-3, Class M-1,
Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates; and
(iii) If no such quotations can be obtained, LIBOR for the
related
Interest
Accrual Period shall be LIBOR for the prior Distribution Date.
"LIBOR Business Day": Any day on which banks in London, England
and
The City of New York are open and
conducting transactions in foreign currency
and exchange.
"LIBOR Carryover Amount": If on any Distribution Date, the
Accrued
Certificate Interest for (a) the Class
AV-1, Class AV-2 or Class AV-3
Certificates is based upon the Group II Cap
or (b) the Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3
or Class B-4 Certificates is based on
the Pool Cap, the excess of (i) the amount
of interest such Certificate would
have been entitled to receive on such
Distribution Date based on the related
Pass-Through Rate, over (ii) the amount of
interest such Certificate received on
such Distribution Date based on the
applicable Cap, together with the unpaid
portion of any such excess from prior
Distribution Dates (and interest accrued
thereon at the then applicable Pass-Through
Rate on such Certificate).
"LIBOR Determination Date": With respect to the Offered
Certificates
(other than the Class AF-1 Certificates)
and the Class B-4 Certificates, (i) for
the first Distribution Date, the second
LIBOR Business Day preceding the Closing
Date and (ii) for each subsequent
Distribution Date, the second LIBOR Business
Day prior to the immediately preceding
Distribution Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the
Servicer has determined, in accordance
with the servicing procedures specified
herein, as of the end of the related
Prepayment Period, that all Liquidation
Proceeds and Insurance Proceeds which it
expects to recover with respect to the
liquidation of the Mortgage Loan or
disposition of the related REO Property
have been recovered.
"Liquidation 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 the Trust Fund by reason of
its being purchased, sold or replaced
pursuant to or as contemplated by Section
2.03 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 the Trust Fund by reason of
its being sold or purchased pursuant to
Section 3.13 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received
in
respect of the rental of any REO Property
prior to REO Disposition) received by
the Servicer in connection with (i) the
taking of all or a part of a Mortgaged
Property by exercise of the power of
eminent domain or condemnation or (ii) the
liquidation of a defaulted Mortgage Loan by
means of a trustee's sale,
foreclosure sale or otherwise.
"Liquidation Report": The report with respect to a Liquidated
Mortgage Loan in such form and containing
such information as is agreed to by
the Servicer and the Trustee.
"Loan Group": Either of Loan Group I or Loan Group II, as the
context requires.
"Loan Group Balance": Either of the Group I Loan Balance or the
Group II Loan Balance, as applicable.
"Loan Group I": The pool of Mortgage Loans identified in Exhibit
D-1
of the Mortgage Loan Schedule as having
been assigned to Loan Group I.
"Loan Group II": The pool of Mortgage Loans identified in
Exhibit
D-2 of the Mortgage Loan Schedule as having
been assigned to Loan Group II.
"Losses": As defined
in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to
which
the original Mortgage Note has been
permanently lost or destroyed and has not
been replaced, an affidavit from the Seller
certifying that the original
Mortgage Note has been lost, misplaced or
destroyed (together with a copy of the
related Mortgage Note and indemnifying the
Trust against any loss, cost or
liability resulting from the failure to
deliver the original Mortgage Note) in
the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting
Rights.
"Majority Class R Certificateholders": The Holders of Class R
Certificates evidencing at least a 51%
Percentage Interest in the Class R
Certificates.
"Marker Rate": With respect to the Class CE Certificates and
any
Distribution Date, a per annum rate equal
to two (2) times the weighted average
of the Uncertificated REMIC Pass-Through
Rates for REMIC 1 Regular Interest
LT1AF1, REMIC 1 Regular Interest LT1AV1,
REMIC 1 Regular Interest LT1AV2, REMIC
1 Regular Interest LT1AV3, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular Interest
LT1M3, REMIC 1 Regular Interest LT1B1,
REMIC 1 Regular Interest LT1B2, REMIC 1
Regular Interest LT1B3, REMIC 1 Regular
Interest LTB4 and REMIC 1 Regular Interest
LT1ZZ, (i) with the rate on each such
REMIC Regular Interest (other than REMIC 1
Regular Interest LT1ZZ) subject to a
cap equal to the Pass-Through Rate of its
Corresponding Class (taking into
account in determining any such
Pass-Through Rate the imposition of the Group II
Cap or Pool Cap, as applicable, as
described in footnotes 2 through 12 to the
table at the end of the Preliminary
Statement) for the purposes of this
calculation and (ii) with the rate on REMIC
1 Regular Interest LT1ZZ subject to
a cap of zero for the purpose of this
calculation; provided, however, that for
this purpose, calculations of the
Uncertificated REMIC 1 Pass-Through Rate and
the related caps with respect to each such
REMIC Regular Interest (other than
REMIC 1 Regular Interest LT1ZZ) shall be
multiplied by a fraction, the numerator
of which is the actual number of days in
the Interest Accrual Period and the
denominator of which is 30.
"Maximum Loan Rate": With respect to each Adjustable-Rate
Mortgage
Loan, the percentage set forth in the
related Mortgage Note as the maximum
Mortgage Interest Rate thereunder.
"Maximum LT1ZZ Uncertificated Accrued Interest Deferral
Amount":
With respect to any Distribution Date, the
excess of (a) accrued interest at the
Uncertificated REMIC 1 Pass-Through Rate
applicable to REMIC 1 Regular Interest
LT1ZZ for such Distribution Date on a
balance equal to the Uncertificated
Principal Balance of REMIC 1 Regular
Interest LT1ZZ minus the REMIC 1
Overcollateralized Amount, in each case for
such Distribution Date, over (b)
Uncertificated Accrued Interest on REMIC 1
Regular Interest LT1AF1, REMIC 1
Regular Interest LT1AV1, REMIC 1 Regular
Interest LT1AV2, REMIC 1 Regular
Interest LT1AV3, REMIC 1 Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest LT1B1, REMIC 1 Regular
Interest LT1B2, REMIC 1 Regular Interest
LT1B3 and REMIC 1 Regular Interest
LT1B4, each subject to a cap equal to the
Pass-Through Rate of the related
Corresponding Class (taking into account in
determining any such Pass-Through
Rate the imposition of the Group II Cap or
Pool Cap, as applicable, as described
in footnotes 2 through 12 to the table at
the end of the Preliminary Statement)
for the purpose of this calculation;
provided, however, that for this purpose,
calculations of the Uncertificated REMIC 1
Pass-Through Rate and the related
caps with respect to Uncertificated Accrued
Interest on REMIC 1 Regular Interest
LT1AV1, REMIC 1 Regular Interest LT1AV2,
REMIC 1 Regular Interest LT1AV3, REMIC
1 Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1B1, REMIC 1 Regular Interest LT1B2,
REMIC 1 Regular Interest LT1B3 and REMIC 1
Regular Interest LT1B4 shall be
multiplied by a fraction, the numerator of
which is the actual number of days in
the Interest Accrual Period and the
denominator of which is 30.
"Minimum Loan Rate": With respect to each Adjustable-Rate
Mortgage
Loan, either the percentage set forth in
the related Mortgage Note as the
minimum Mortgage Interest Rate thereunder
or if no such percentage is set forth
in the related Mortgage Note, the Gross
Margin set forth in the related Mortgage
Note.
"Monthly Excess Cashflow Amount": The sum of the Monthly Excess
Interest Amount, the Overcollateralization
Release Amount and (without
duplication) any portion of the Principal
Distribution Amount remaining after
principal distributions on the Offered
Certificates and the Class B-4
Certificates.
"Monthly Excess Interest Amount": With respect to each
Distribution
Date, the amount, if any, by which the
Interest Remittance Amount for such
Distribution Date exceeds the aggregate
amount distributed on such Distribution
Date pursuant to paragraphs (i) through
(xi) under Section 4.01.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled
monthly payment of principal and interest
on such Mortgage Loan which is payable
by the related Mortgagor from time to time
under the related Mortgage Note,
determined: (a) after giving effect to (i)
any Deficient Valuation and/or Debt
Service Reduction with respect to such
Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the
related Mortgagor pursuant to the
Relief Act or similar state laws; (b)
without giving effect to any extension
granted or agreed to by the Servicer
pursuant to Section 3.01; and (c) on the
assumption that all other amounts, if any,
due under such Mortgage Loan are paid
when due.
"Moody's": Moody's Investors Service, Inc. and its successors,
and
if such company shall for any reason no
longer perform the functions of a
securities rating agency, "Moody's" shall
be deemed to refer to any other
"nationally recognized statistical rating
organization" as set forth on the most
current list of such organizations released
by the Securities and Exchange
Commission.
"Mortgage": The mortgage, deed of trust or other instrument
creating
a first, second or third lien on, or first
or second priority security interest
in, a Mortgaged Property securing a
Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan
and any additional documents required
to be added to the Mortgage File pursuant
to this Agreement.
"Mortgage Insurance Certificate": The certificate evidencing an
FHA
Insurance Contract.
"Mortgage Interest Rate": With respect to each Mortgage Loan,
the
annual rate at which interest accrues on
such Mortgage Loan from time to time in
accordance with the provisions of the
related Mortgage Note, which rate (i) in
the case of each Fixed-Rate Mortgage Loan
shall remain constant at the rate set
forth in the Mortgage Loan Schedules as the
Mortgage Interest Rate in effect
immediately following the Cut-off Date and
(ii) in the case of each
Adjustable-Rate Mortgage Loan (A) as of any
date of determination until the
first Adjustment Date following the Cut-off
Date shall be the rate set forth in
the Mortgage Loan Schedules as the Mortgage
Interest Rate in effect immediately
following the Cut-off Date and (B) as of
any date of determination thereafter
shall be the rate as adjusted on the most
recent Adjustment Date, to equal the
sum, rounded to the nearest 0.125% as
provided in the Mortgage Note, of the
Index, determined as set forth in the
related Mortgage Note, plus the related
Gross Margin subject to the limitations set
forth in the related Mortgage Note.
With respect to each Mortgage Loan that
becomes an REO Property, as of any date
of determination, the annual rate
determined in accordance with the immediately
preceding sentence as of the date such
Mortgage Loan became an REO Property.
"Mortgage Loan": Each mortgage loan transferred and assigned to
the
Trustee pursuant to Section 2.01 or Section
2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage
Loans so held being identified in the
Mortgage Loan Schedule and set forth in
Exhibits D-1 or D-2 attached hereto.
"Mortgage Loan Purchase Agreement": The agreement between the
Seller
and the Depositor, dated as of January 1,
2004, regarding the transfer of the
Mortgage Loans by the Seller to or at the
direction of the Depositor.
"Mortgage Loan Schedule": As of any date (i) with respect to
the
Mortgage Loans, the list of such Mortgage
Loans included in the Trust Fund on
such date, separately identifying the Group
I Mortgage Loans and the Group II
Mortgage Loans, attached hereto as Exhibits
D-1 and D-2. The Mortgage Loan
Schedule shall be prepared by the Seller
and shall set forth the following
information with respect to each Mortgage
Loan:
(1) the
Seller's Mortgage Loan identifying number;
(2) the city, state,
and zip code of the Mortgaged Property;
(3) the
type of Residential Dwelling constituting the Mortgaged
Property
or a designation that the Mortgaged
Property is a multi-family property;
(4) the
occupancy status of the Mortgaged Property at origination;
(5) the
original months to maturity;
(6) the
date of origination;
(7) the
first payment date;
(8) the
stated maturity date;
(9) the
stated remaining months to maturity;
(10) the
original principal amount of the Mortgage Loan;
(11) the
Principal Balance of each Mortgage Loan as of the Cut-off Date;
(12) the
Mortgage Interest Rate of the Mortgage Loan as of the Cut-off
Date;
(13) the
current principal and interest payment of the Mortgage Loan as
of
the Cut-off Date;
(14) the
contractual interest paid to date of the Mortgage Loan;
(15) if
the Mortgage Loan is not owner-financed, the Combined
Loan-to-Value Ratio at origination;
(16) a
code indicating the loan performance status of the Mortgage Loan
as
of the Cut-off Date;
(17) a
code indicating whether the Mortgage Loan is a Simple Interest
Mortgage Loan or an Actuarial Mortgage
Loan;
(18) a
code indicating whether the Mortgaged Property is in bankruptcy
or
in its forbearance period as of the Cut-off
Date;
(19) a
code indicating whether the Mortgage Loan is conventional or
insured by the FHA
(20) a
code indicating the Index that is associated with such Mortgage
Loan;
(21) the Gross
Margin;
(22) the
Periodic Rate Cap;
(23) the
Minimum Loan Rate;
(24) the
Maximum Loan Rate;
(25) a
code indicating whether the Mortgage Loan has a prepayment
penalty
and the type of prepayment penalty;
(26) the first Adjustment Date
immediately following the Cut-off Date;
(27) the
rate adjustment frequency;
(28) the
payment adjustment frequency;
(29) a
code indicating whether the Mortgage Loan is owner-financed;
and
(30) a
code indicating whether the Mortgage Loan is a Second Lien
Mortgage
Loan or Third Lien Mortgage Loan.
The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date, with
respect to the Mortgage Loans in the
aggregate, for each Loan Group: (1) the
number of Mortgage Loans; (2) the
current Principal Balance of the Mortgage
Loans; (3) the weighted average
Mortgage Interest Rate of the Mortgage
Loans; and (4) the weighted average
maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from
time to time by the Seller in accordance
with the provisions of this Agreement.
With respect to any Eligible Substitute
Mortgage Loan, 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
indebtedness evidencing the indebtedness of
a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibits
D-1 and D-2 from time to time, and any REO
Properties acquired in respect
thereof.
"Mortgaged Property": The underlying property securing a
Mortgage
Loan, including any REO Property,
consisting of an Estate in Real Property
improved by a Residential Dwelling or
multi-family dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage
Loan or any other disposition of related
Mortgaged Property (including REO
Property) the related Liquidation Proceeds
net of Advances, Servicing Advances,
Servicing Fees and any other accrued and
unpaid servicing fees received and
retained in connection with the liquidation
of such Mortgage Loan or Mortgaged
Property.
"Net Mortgage Interest Rate": With respect to any Mortgage Loan,
the
Mortgage Interest Rate borne by such
Mortgage Loan minus the Expense Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf of
the
Trust, including any lease renewed or
extended on behalf of the Trust if the
Trust has the right to renegotiate the
terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in
respect of a Mortgage Loan or REO
Property that, in the good faith business
judgment of the Servicer, will not or,
in the case of a proposed Advance or
Servicing Advance, would not be ultimately
recoverable from Late Collections on such
Mortgage Loan or REO Property as
provided herein.
"Notional Amount": With respect to the Class N Certificates, an
amount equal to the Original Class N
Notional Amount reduced by the aggregate
distributions made to the Class N
Certificates pursuant to Section
4.02(b)(xxvii). With respect to the REMIC 2
Class X/N Interest and the REMIC A
Class X/N Interest, an amount equal to the
aggregate principal balance of the
REMIC 1 Regular Interests.
"Offered Certificates": The Class AF-1, Class AV-1, Class AV-2,
Class AV-3, Class M-1, Class M-2, Class
M-3, Class B-1, Class B-2 and Class B-3
Certificates.
"Officers' Certificate": A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the
President or a vice president
(however denominated), and by the
Treasurer, the Secretary, or one of the
assistant treasurers or assistant
secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without
limitation, be a salaried counsel for the
Depositor or the Servicer except that
any opinion of counsel relating to (a) the
qualification of any REMIC as a REMIC
or (b) compliance with the REMIC Provisions
must be an opinion of Independent
counsel.
"Optional Termination Date": The first Distribution Date on
which
the Servicer may opt to terminate the
Mortgage Pool pursuant to Section 10.01.
"Original Class N Notional Amount": The Notional Amount of the
Class
N Certificates on the Closing Date, as set
forth opposite such Class in the
Preliminary Statement.
"Original Class Certificate Principal Balance": With respect to
each
Class of Certificates, the Certificate
Principal Balance thereof on the Closing
Date, as set forth opposite such Class in
the Preliminary Statement, except with
respect to the Class N, Class X and
Residual Certificates, which have an
Original Class Certificate Principal
Balance of zero.
"Overcollateralization Amount": As of any Distribution Date,
the
excess, if any, of (x) the Pool Balance as
of the last day of the immediately
preceding Collection Period over (y) the
aggregate Certificate Principal
Balances of all Classes of Offered
Certificates and the Class B-4 Certificates
(after taking into account all
distributions of principal on such Distribution
Date).
"Overcollateralization Deficiency": As of any Distribution Date,
the
excess, if any, of (x) the Targeted
Overcollateralization Amount for such
Distribution Date over (y) the
Overcollateralization Amount for such
Distribution Date, calculated for this
purpose after taking into account the
reduction on such Distribution Date of the
Certificate Principal Balances of all
Classes of Offered Certificates and the
Class B-4 Certificates resulting from
the distribution of the Principal
Distribution Amount (but not the Extra
Principal Distribution Amount) on such
Distribution Date, but prior to taking
into account any Applied Realized Loss
Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date
on which a Trigger Event is not in
effect, the lesser of (x) the Principal
Remittance Amount for such Distribution
Date and (y) the excess, if any, of (i) the
Overcollateralization Amount for
such Distribution Date, assuming that 100%
of the Principal Remittance Amount is
applied as a principal payment on the
Offered Certificates and the Class B-4
Certificates on such Distribution Date,
over (ii) the Targeted
Overcollateralization Amount for such
Distribution Date. With respect to any
Distribution Date on which a Trigger Event
is in effect, the
Overcollateralization Release Amount will
be zero.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate,
including any interest in such
Certificate as the Holder thereof and any
other interest therein, whether direct
or indirect, legal or beneficial, as owner
or as pledgee.
"Pass-Through Rate": Any of the Class AF-1 Pass-Through Rate,
the
Class AV-1 Pass-Through Rate, the Class
AV-2 Pass-Through Rate, the Class AV-3
Pass-Through Rate, the Class M-1
Pass-Through Rate, the Class M-2 Pass-Through
Rate, the Class M-3 Pass-Through Rate, the
Class B-1 Pass-Through Rate, the
Class B-2 Pass-Through Rate, the Class B-3
Pass-Through Rate and the Class B-4
Pass-Through Rate. With respect to the
Class N Certificates, the Pass-Through
Rate is 5.43% per annum.
With respect to the REMIC 2 Class X/N Interest and the REMIC A
Class
X/N Interest and any Distribution Date, a
per annum rate equal to the percentage
equivalent of a fraction, the numerator of
which is the sum of the amounts
calculated pursuant to clauses (A) through
(M) below, and the denominator of
which is the aggregate of the
Uncertificated Principal Balances of REMIC 1
Regular Interest LT1AA, REMIC 1 Regular
Interest LT1AF1, REMIC 1 Regular
Interest LT1AV1, REMIC 1 Regular Interest
LT1AV2, REMIC 1 Regular Interest
LT1AV3, REMIC 1 Regular Interest LT1M1,
REMIC 1 Regular Interest LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular
Interest LT1B1, REMIC 1 Regular Interest
LT1B2, REMIC 1 Regular Interest LT1B3,
REMIC 1 Regular Interest LT1B4 and REMIC
1 Regular Interest LT1ZZ. For purposes of
calculating the Pass-Through Rate for
the REMIC 2 Class X/N Interest and the
REMIC A Class X/N Interest, the numerator
is equal to the sum of the following
components:
(A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AA minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AA;
(B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AF1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AF1;
(C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AV1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AV1;
(D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AV2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AV2;
(E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1AV3 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1AV3;
(F) the
Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1M1;
(G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1M2;
(H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1M3 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1M3;
(I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B1 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B1;
(J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B2 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B2;
(K) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B3 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B3;
(L) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1B4 minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1B4; and
(M) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT1ZZ minus the Marker Rate, applied to an
amount
equal to the Uncertificated Principal Balance of REMIC 1
Regular
Interest LT1ZZ.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other than
a
Class N, Class X or Residual Certificate),
a fraction, 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 Original
Class Certificate Principal Balance of the
related Class. With respect to a
Class N Certificate, the undivided
percentage interest obtained by dividing the
Initial Class N Notional Amount by the
Original Class N Notional Amount of such
Class. With respect to a Class X or
Residual Certificate, the portion of the
Class evidenced thereby, expressed as a
percentage, as stated on the face of
such Certificate; provided, however, that
the sum of all such percentages for
each such Class totals 100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage
Loan and any Adjustment Date therefor, the
fixed percentage set forth in the
related Mortgage Note, which is the maximum
amount by which the Mortgage
Interest Rate for such Mortgage Loan may
increase or decrease (without regard to
the Maximum Loan Rate or the Minimum Loan
Rate) on such Adjustment Date from the
Mortgage Interest Rate in effect
immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a
purchase price of not greater than par,
regardless of whether issued or managed by
the Depositor, the Servicer, the
Trustee or any of their respective
Affiliates or for which an Affiliate of the
Trustee serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as
to
timely
payment of principal and interest by, the United States or any
agency or
instrumentality thereof, provided such obligations are backed
by
the full
faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit
of,
bankers'
acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents
acting
in their
respective commercial capacities) incorporated under the laws
of
the United
States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so
long
as, at the
time of such investment or contractual commitment providing for
such
investment, such depository institution or trust company or its
ultimate
parent has a short-term uninsured debt rating in one of the two
highest
available rating categories of S&P and Moody's and the
highest
available
rating category of Fitch and provided that each such investment
has an
original maturity of no more than 365 days and (B) any other
demand
or time
deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with
respect to
any security described in clause (i) above and entered into
with a
depository institution or trust company (acting as principal)
rated
A or
higher by S&P and Fitch and rated A2 or higher by Moody's,
provided,
however,
that collateral transferred pursuant to such repurchase
obligation
must be of the type described in clause (i) above and must (A)
be valued
daily at current market prices plus accrued interest or (B)
pursuant
to such valuation, be equal, at all times, to 105% of the cash
transferred by the Trustee in exchange for such collateral and (C)
be
delivered
to the Trustee or, if the Trustee is supplying the collateral,
an agent
for the Trustee, in such a manner as to accomplish perfection
of
a security
interest in the collateral by possession of certificated
securities;
(iv) securities bearing interest or sold at a discount that are
issued by
any corporation incorporated under the laws of the United
States
of America
or any State thereof and that are rated by each Rating Agency
in its
highest long-term unsecured rating categories at the time of
such
investment
or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified
date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency in its highest short-term
unsecured
debt rating available at the time of such investment;
(vi) units of money market funds registered under the
Investment
Company
Act of 1940 including funds managed or advised by the Trustee
or
affiliates
thereof having the highest rating category by the applicable
Rating
Agency; and
(vii) if previously confirmed in writing to the Trustee, any
other
demand,
money market or time deposit, or any other obligation, security
or
investment, as may be acceptable to the Rating Agencies in writing
as a
permitted
investment of funds backing securities having ratings
equivalent
to its
highest initial rating of the Class A Certificates;
provided, that no instrument described
hereunder shall evidence either the right
to receive (a) only interest with respect
to the obligations underlying such
instrument or (b) both principal and
interest payments derived from obligations
underlying such instrument and the interest
and principal payments with respect
to such instrument provide a yield to
maturity at par greater than 120% of the
yield to maturity at par of the underlying
obligations.
"Permitted Transferee": Any transferee of a Residual
Certificate
other than a Disqualified Organization or a
Disqualified Non-U.S. Person.
"Person": Any individual, corporation, partnership, joint
venture,
association, joint stock company, trust,
limited liability company,
unincorporated organization or government
or any agency or political subdivision
thereof.
"Pool Balance": As of any date of determination, the aggregate
Principal Balance of the Mortgage
Loans.
"Pool Cap": With respect to any Distribution Date, a per annum
rate
(adjusted by multiplying such rate by a
fraction equal to 30 over the actual
number of days in the related Interest
Accrual Period) equal to (i) the Net
Mortgage Interest Rates for the Group I
Mortgage Loans (weighted on the basis of
the Principal Balances of the Group I
Mortgage Loans as of the first day of the
related Collection Period) and (ii) the Net
Mortgage Interest Rates for the
Group II Mortgage Loans (weighted on the
basis of the Principal Balances of the
Group II Mortgage Loans as of the first day
of the related Collection Period),
in each case weighted on the basis of the
related Group Subordinate Amount. For
federal income tax purposes, the economic
equivalent of such rate shall be
expressed as the weighted average of the
Uncertificated REMIC 1 Pass-Through
Rate on (a) REMIC 1 Regular Interest
LT1SUB, subject to a cap and floor equal to
the Weighted Average Net Mortgage Interest
Rates of the Group 1 Mortgage Loans
and (b) REMIC 1 Regular Interest LT2SUB,
subject to a cap and floor equal to the
Weighted Average Net Mortgage Interest
Rates of the Group 2 Mortgage Loans,
weighted on the basis of the Uncertificated
Balances of such REMIC 1 Regular
Interests.
"Prepayment Interest Shortfall": With respect to any
Distribution
Date, for each Mortgage Loan that was
during the related Prepayment Period the
subject of a Principal Prepayment in full
that was applied by the Servicer to
reduce the outstanding principal balance of
such loan on a date preceding the
related Due Date, an amount equal to
interest at the applicable Mortgage
Interest Rate (net of the Servicing Fee
Rate) on the amount of such Principal
Prepayment for the number of days
commencing on the date on which the prepayment
is applied and ending on the last day of
the related Prepayment Period.
"Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the month in which
such Distribution Date occurs.
"Primary Insurance Policy": Each policy of primary guaranty
mortgage
insurance issued by a Qualified Insurer in
effect with respect to any Mortgage
Loan, or any replacement policy therefor
obtained by the Servicer pursuant to
Section 3.08.
"Principal Balance": As to any Mortgage Loan and any day, other
than
a Liquidated Mortgage Loan, the related
Cut-off Date Principal Balance, minus
the sum of (i) all collections and other
amounts credited against the principal
balance of any such Mortgage Loan, (ii) the
principal portion of Advances, (iii)
any Deficient Valuation and (iv) any
principal reduction resulting from a
Servicer Modification. For purposes of this
definition, a Liquidated Mortgage
Loan shall be deemed to have a Principal
Balance equal to the Principal Balance
of the related Mortgage Loan as of the
final recovery of related Liquidation
Proceeds and a Principal Balance of zero
thereafter. As to any REO Property and
any day, the Principal Balance of the
related Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property
minus any REO Principal Amortization
received with respect thereto on or prior
to such day.
"Principal Distribution Amount": As to any Distribution Date,
the
sum of (i) the Principal Remittance Amount
minus, for Distribution Dates
occurring on and after the Stepdown Date
and for which a Trigger Event is not in
effect, the Overcollateralization Release
Amount, if any, and (ii) the Extra
Principal Distribution Amount, if any.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is
received in advance of its scheduled Due
Date and which is not accompanied by an
amount of interest representing the full
amount of scheduled interest due on any Due
Date in any month or months
subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution
Date, to the extent of funds available
therefor, the sum (less amounts available
for reimbursement of Advances and Servicing
Advances pursuant to Section 3.05
and expenses reimbursable pursuant to
Section 6.03) of: (i) each payment of
principal on a Mortgage Loan due during the
related Collection Period and
received by the Servicer on or prior to the
related Determination Date, and any
Advances with respect thereto, (ii) the
portion of all full and partial
Principal Prepayments or Insurance Proceeds
and Recoveries allocable to
principal received by the Servicer during
the related Prepayment Period, (iii)
the Net Liquidation Proceeds allocable to
principal actually collected by the
Servicer during the related Prepayment
Period, (iv) with respect to Defective
Mortgage Loans repurchased with respect to
such Prepayment Period, the portion
of the Purchase Price allocable to
principal, (v) any Substitution Adjustment
Amounts allocable to principal received
during the related Prepayment Period and
(vi) on the Distribution Date on which the
Trust is to be terminated in
accordance with Section 10.01 hereof, that
portion of the Termination Price in
respect of principal.
"Private Certificates": Any of the Class B-4, Class N, Class X
and
Residual Certificates.
"Property Insurance Proceeds": Proceeds of any title policy,
hazard
policy or other insurance policy covering a
Mortgage Loan, to the extent such
proceeds are received by the Servicer and
are not to be applied to the
restoration of the related Mortgaged
Property or released to the Mortgagor in
accordance with the Servicer's servicing
procedures, subject to the terms and
conditions of the related Mortgage Note and
Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement
dated
February 9, 2004 relating to the public
offering of the Offered Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property
to be purchased pursuant to or as
contemplated by Section 2.03 or 10.01, and as
confirmed by an Officers' Certificate from
the Servicer to the Trustee, an
amount equal to the sum of (i) 100% of the
Principal Balance thereof as of the
date of purchase (or such other price as
provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued
interest on such Principal Balance at the
applicable Mortgage Interest Rate in effect
from time to time from the Due Date
as to which interest was last covered by a
payment by the Mortgagor or an
Advance by the Servicer, which payment or
Advance had as of the date of purchase
been distributed pursuant to Section 4.01,
through the end of the calendar month
in which the purchase is to be effected,
and (y) an REO Property, its fair
market value, determined in good faith by
the Servicer, (iii) any unreimbursed
Servicing Advances and Advances and any
unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the
Collection Account in respect of such
Mortgage Loan or REO Property pursuant to
Section 3.13, and (v) in the case of a
Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses
reasonably incurred or to be incurred by the
Servicer or the Trustee in respect of the
breach or defect giving rise to the
purchase obligation.
"Qualified Insurer": Any insurance company acceptable to Fannie
Mae
or Freddie Mac.
"Rating Agency or Rating Agencies": Fitch, Moody's and S&P, or
their
respective successors. If such agencies or
their successors are no longer in
existence, "Rating Agencies" shall be such
nationally recognized statistical
rating organizations as set forth on the
most current list of such organizations
released by the Securities and Exchange
Commission and designated by the
Depositor, notice of which designation
shall be given to the Trustee and the
Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan,
the
amount by which the remaining unpaid
Principal Balance of the Mortgage Loan plus
accrued and unpaid interest thereon at the
Mortgage Interest Rate through the
last day of the month of liquidation,
exceeds the amount of Net Liquidation
Proceeds applied to the principal balance
of the related Mortgage Loan. With
respect to any Mortgage Loan, a Deficient
Valuation or a reduction in the
Principal Balance thereof resulting from a
Servicer Modification.
"Realized Loss Amortization Amount": Any of the Class M-1
Realized
Loss Amortization Amount, the Class M-2
Realized Loss Amortization Amount, the
Class M-3 Realized Loss Amortization
Amount, the Class B-1 Realized Loss
Amortization Amount, the Class B-2 Realized
Loss Amortization Amount, the Class
B-3 Realized Loss Amortization Amount and
the Class B-4 Realized Loss
Amortization Amount.
"Record Date": With respect to all of the Certificates (except
for
the Class AF-1, Class B-4, Class N, Class
X, Class R and Class R-A
Certificates), the Business Day immediately
preceding such Distribution Date;
provided, however, that if any such
Certificate becomes a Definitive
Certificate, the Record Date for such
Certificate shall be the last Business Day
of the month immediately preceding the
month in which the related Distribution
Date occurs. With respect to the Class
AF-1, Class B-4, Class N, Class X, Class
R and Class R-A Certificates, the last
Business Day of the month immediately
preceding the month in which the related
Distribution Date occurs or the Closing
Date, in the case of the first Distribution
Date.
"Recovery": Any amount received on a Mortgage Loan subsequent
to
such Mortgage Loan being determined to be a
Liquidated Mortgage Loan.
"Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not
controlling, under the control of or under
common control with the Depositor or the
Trustee, (iii) that have been
designated as such by the Trustee, after
consultation with the Servicer and (iv)
that are engaged in transactions in the
London interbank market.
"Regular Certificate": Any of the Offered Certificates, the
Class
B-4 Certificates the Class N Certificates
and the Class X Certificates.
"Reimbursement Amount": As defined in Section 2.03.
"Related Documents": With respect to any Mortgage Loan, the
related
Mortgage Notes, Mortgages and other related
documents.
"Relief Act": The
Servicemembers Civil Relief Act.
"Relief Act Interest Shortfall": With respect to any
Distribution
Date, for any Mortgage Loan with respect to
which there has been a reduction in
the amount of interest collectible thereon
for the most recently ended
Collection Period as a result of the
application of the Relief Act or similar
state laws, the amount by which (i)
interest collectible on such Mortgage Loan
during such Collection Period is less than
(ii) one month's interest on the
Principal Balance of such Mortgage Loan at
the Mortgage Interest Rate for such
Mortgage Loan before giving effect to the
application of the Relief Act or
similar state laws.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC 1 Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a)
the product of (i) 50% of the sum of
the aggregate Principal Balance of the
Mortgage Loans and related REO Properties
then outstanding and (ii) the
Uncertificated REMIC 1 Pass-Through Rate for REMIC
1 Regular Interest LT1AA minus the Marker
Rate, divided by (b) 12.
"REMIC 1 Marker Allocation Percentage": 50% of any amount
payable
from or loss attributable to the Mortgage
Loans, which shall be allocated to
REMIC 1 Regular Interest LT1AA, REMIC 1
Regular Interest LT1AF1, REMIC 1 Regular
Interest LT1AV1, REMIC 1 Regular Interest
LT1AV2, REMIC 1 Regular Interest
LT1AV3, REMIC 1 Regular Interest LT1M1,
REMIC 1 Regular Interest LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular
Interest LT1B1, REMIC 1 Regular Interest
LT1B2, REMIC 1 Regular Interest LT1B3,
REMIC 1 Regular Interest LT1B4 and REMIC
1 Regular Interest LT1ZZ.
"REMIC 1 Overcollateralization Target Amount": 0.50% of the
Targeted
Overcollateralization Amount.
"REMIC 1 Overcollateralized Amount": With respect to any date
of
determination, (i) 0.50% of the aggregate
Uncertificated Principal Balances of
the REMIC 1 Regular Interests minus (ii)
the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1AF1, REMIC 1 Regular Interest
LT1AV1, REMIC 1 Regular Interest LT1AV2,
REMIC 1 Regular Interest LT1AV3, REMIC
1 Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1B1, REMIC 1 Regular Interest LT1B2,
REMIC 1 Regular Interest LT1B3 and REMIC 1
Regular Interest LT1B4, in each case
as of such date of determination.
"REMIC 1 Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a)
the product of (i) 50% of the
aggregate Principal Balance of the Mortgage
Loans and related REO Properties
then outstanding and (ii) 1 minus a
fraction, the numerator of which is two
times the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1AF1, REMIC 1 Regular Interest
LT1AV1, REMIC 1 Regular Interest
LT1AV2, REMIC 1 Regular Interest LT1AV3,
REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1B1, REMIC 1 Regular Interest LT1B2,
REMIC 1 Regular Interest LT1B3 and REMIC
1 Regular Interest LT1B4 and the
denominator of which is the aggregate of the
Uncertificated Principal Balances of REMIC
1 Regular Interest LT1AF1, REMIC 1
Regular Interest LT1AV1, REMIC 1 Regular
Interest LT1AV2, REMIC 1 Regular
Interest LT1AV3, REMIC 1 Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest LT1B1, REMIC 1 Regular
Interest LT1B2, REMIC 1 Regular Interest
LT1B3, REMIC 1 Regular Interest LT1B4
and REMIC 1 Regular Interest LT1ZZ.
"REMIC 1 Regular Interest LT1AA": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1AA
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1AF1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1AF1
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1AV1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1AV1
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1AV2": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1AV2
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance as set forth in the
Preliminary Statement hereto.
"REMIC 1
Regular Interest LT1AV3": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1AV3
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance as set forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1M1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M1
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance as set forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1M2": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M2
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M3": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M3
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1B1
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B2": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1B2
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B3": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1B3
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B4": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1B4
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1SUB": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1SUB
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1GRP": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1GRP
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2SUB": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT2SUB
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2GRP": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT2GRP
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1XX": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1XX
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1ZZ": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1ZZ
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance as set forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interests": REMIC 1 Regular Interest LT1AA, REMIC
1
Regular Interest LT1AF1, REMIC 1 Regular
Interest LT1AV1, REMIC 1 Regular
Interest LT1AV2, REMIC 1 Regular Interest
LT1AV3, REMIC 1 Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest LT1B1, REMIC 1 Regular
Interest LT1B2, REMIC 1 Regular Interest
LT1B3, REMIC 1 Regular Interest LT1B4,
REMIC 1 Regular Interest LT1SUB, REMIC 1
Regular Interest LT1GRP, REMIC 1 Regular
Interest LT2SUB, REMIC 1 Regular
Interest LT2GRP, REMIC 1 Regular Interest
LT1XX and REMIC 1 Regular Interest
LT1ZZ.
"REMIC 1 Sub WAC Allocation Percentage": 50% of any amount
payable
or loss attributable from the Mortgage
Loans, which shall be allocated to REMIC
1 Regular Interest LT1SUB, REMIC 1 Regular
Interest LT1GRP, REMIC 1 Regular
Interest LT2SUB, REMIC 1 Regular Interest
LT2GRP and REMIC 1 Regular Interest
LT1XX.
"REMIC 1 Subordinated Balance Ratio": The ratio among the
Uncertificated Principal Balances of each
REMIC 1 Regular Interest ending with
the designation "SUB," equal to the ratio
among, with respect to each such REMIC
1 Regular Interest, the excess of (x) the
aggregate Principal Balance of the
Mortgage Loans in the related Loan Group
over (y) the current Certificate
Principal Amount of the Class A
Certificates in the related Loan Group.
"REMIC 2 Regular Interests": The Class AV-1, Class AV-2, Class
AV-3,
Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3 Certificates
(exclusive of the right of such
Certificates to LIBOR Carryover Amounts), the
Class AF-1 Certificates, the REMIC 2 Class
X/N Interest and the REMIC 2 Class B
Interest.
"REMIC 2 Class B Interest": One of the separate
non-certificated
beneficial ownership interests in REMIC 2
issued hereunder and designated as a
Regular Interest in REMIC 2, and which is
held as an asset of REMIC B. The REMIC
2 Class B Interest shall have a principal
balance and Pass-Through Rate equal to
the principal balance and Pass-Through Rate
of the Class B Certificates.
"REMIC 2 Class X/N Interest": One of the separate
non-certificated
beneficial ownership interests in REMIC 2
issued hereunder and designated as a
Regular Interest in REMIC 2, and which is
held as an asset of REMIC A. The REMIC
2 Class X/N Interest shall accrue interest
at its Pass- Through Rate in effect
from time to time, and shall be entitled to
distributions of principal, subject
to the terms and conditions hereof, in an
aggregate amount equal to the Class
X/N Uncertificated Principal Balance, as
set forth in the Preliminary Statement
hereto.
"REMIC A Class X/N Interest": The separate non-certificated
beneficial ownership interests in REMIC A
issued hereunder and designated as a
Regular Interest in REMIC A, which is
represented by the Class X/N Interest in
the Grantor Trust and is beneficially owned
by the Class N and Class X
Certificates. The REMIC A Class X/N
Interest shall accrue interest at its
Pass-Through Rate in effect from time to
time, and shall be entitled to
distributions of principal, subject to the
terms and conditions hereof, in an
aggregate amount equal to the Class X/N
Uncertificated Principal Balance, as set
forth in the Preliminary Statement hereto
(in all cases, subject to the
obligation of the REMIC A Class X/N
Interest to pay LIBOR Carryover Amounts).
"REMIC Regular Interest": Any regular interest in REMIC 1, REMIC
2,
REMIC A or REMIC B.
"Remittance Report": A report prepared by the Servicer and
delivered
to the Trustee pursuant to Section 4.07,
containing the information attached
hereto as Exhibit P.
"Rents from Real Property": With respect to any REO Property,
gross
income of the character described in
Section 856(d) of the Code.
"REO Disposition": The sale or other disposition of an REO
Property
on behalf of the Trust Fund.
"REO Principal Amortization": With respect to any REO Property,
for
any calendar month, the aggregate of all
amounts received in respect of such REO
Property during such calendar month,
whether in the form of rental income, sale
proceeds (including, without limitation,
that portion of the Termination Price
paid in connection with a purchase of all
of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that
is allocable to such REO Property) or
otherwise, net of any portion of such
amounts (i) payable pursuant to Section
3.13 in respect of the proper operation,
management and maintenance of such REO
Property or (ii) payable or reimbursable to
the Servicer pursuant to Section
3.13 for unpaid Servicing Fees in respect
of the related Mortgage Loan and
unreimbursed Servicing Advances and
Advances in respect of such REO Property or
the related Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Servicer
on
behalf of the Trust Fund through
foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.13.
"Request for Release": A release signed by a Servicing Officer,
in
the form of Exhibit E attached hereto.
"Reserve Account": The trust account created and maintained by
the
Trustee pursuant to Section 3.04(g) which
shall be entitled "Reserve Account,
U.S. Bank National Association, as Trustee,
in trust for registered Holders of
C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2004-CB1" and which must
be an Eligible Account. Amounts on deposit
in the Reserve Account shall not be
invested. The Reserve Account shall not be
an asset of any REMIC formed under
this Agreement.
"Residential Dwelling": Any one of the following: (i) a
one-family
dwelling, (ii) a two- to four-family
dwelling, (iii) a one-family dwelling unit
in a Fannie Mae eligible condominium
project, (iv) a one-family dwelling in a
planned unit development, which is not a
co-operative, or (v) a mobile or
manufactured home (as defined in 42 United
States Code, Section 5402(6)).
"Residual
Certificates": The Class R and Class R-A Certificates.
"Residual Interest": The sole Class of "residual interests" in
each
REMIC within the meaning of Section
860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any
officer assigned to the Corporate Trust
Division (or any successor thereto),
including any Vice President, Assistant
Vice President, Trust Officer, any
Assistant Secretary, any trust officer or
any other officer of the Trustee
customarily performing functions similar to
those performed by any of the above
designated officers and in each case having
direct responsibility for the
administration of this Agreement.
"S&P": Standard & Poor's, a division of The McGraw-Hill
Companies,
Inc., and its successors, and if such
company shall for any reason no longer
perform the functions of a securities
rating agency, "S&P" shall be deemed to
refer to any other "nationally recognized
statistical rating organization" as
set forth on the most current list of such
organizations released by the
Securities and Exchange Commission.
"Second Lien Mortgage Loan": Any of the of the Mortgage Loans
which
are secured by a second mortgage lien that
is junior to a First Lien Mortgage
Loan on the related Mortgaged Property and
that is senior to a Third Lien
Mortgage Loan, if any, on the related
Mortgaged Property.
"Seller": Credit-Based Asset Servicing and Securitization LLC,
or
its successor in interest, in its capacity
as seller under the Mortgage Loan
Purchase Agreement.
"Senior Certificates": The Class AF-1, Class AV-1, Class AV-2
and
Class AV-3 Certificates.
"Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum
of (i) the aggregate Certificate
Principal Balances of the Subordinated
Certificates and (ii) the
Overcollateralization Amount, in each case
after taking into account the
distribution of the Principal Distribution
Amount on such Distribution Date by
(y) the Pool Balance as of the last day of
the related Collection Period.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 38%.
"Servicer": Litton Loan Servicing LP, a Delaware limited
partnership, or any successor servicer
appointed as herein provided, in its
capacity as Servicer hereunder.
"Servicer Affiliate": A Person (i) controlling, controlled by
or
under common control with the Servicer or
which is 50% or more owned by the
Servicer and (ii) which is qualified to
service residential mortgage loans.
"Servicer Event of Termination": One or more of the events
described
in Section 7.01.
"Servicer Modification": A modification to the terms of a
Mortgage
Loan, in accordance with the terms of
Section 3.01, as to which the Mortgagor is
in default or as to which, in the judgment
of the Servicer, default is
reasonably foreseeable.
"Servicer Remittance Date": With respect to any Distribution
Date,
one Business Day prior to such Distribution
Date.
"Servicer's Assignee": As defined in Section 6.05(c) hereof.
"Servicing Advances": All customary, reasonable and necessary
"out
of pocket" costs and expenses incurred by
the Servicer in the performance of its
servicing obligations, including, but not
limited to, the cost of (i) the
preservation, restoration and protection of
the Mortgaged Property, (ii) any
enforcement or judicial proceedings,
including foreclosures, (iii) the
management and liquidation of the REO
Property and (iv) compliance with the
obligations under Section 3.08.
"Servicing Fee": With respect to each Mortgage Loan (including
each
REO Property) and for any calendar month,
an amount equal to one month's
interest (or in the event of any payment of
interest which accompanies a
Principal Prepayment in full made by the
Mortgagor during such calendar month,
interest for the number of days covered by
such payment of interest) at the
Servicing Fee Rate on the same principal
amount on which interest on such
Mortgage Loan accrues for such calendar
month.
"Servicing Fee Rate": With respect to each Mortgage Loan, 0.50%
per
annum.
"Servicing Officer": Any officer of the Servicer involved in,
or
responsible for, the administration and
servicing of Mortgage Loans, whose name
and specimen signature appear on a list of
servicing officers furnished by the
Servicer to the Trustee and the Depositor
on the Closing Date, as such list may
from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by
the
Servicer, to which the Servicer will pledge
and assign all of its right, title
and interest in, to and under this
Agreement, including Wachovia Bank, National
Association, as the representative of
certain lenders.
"Servicing Standard": Shall mean the standards set forth in
Section
3.01.
"Simple Interest Method": The method of allocating a payment to
principal and interest, pursuant to which
the portion of such payment that is
allocated to interest is equal to the
product of the fixed rate of interest
multiplied by the unpaid principal balance
multiplied by the period of time
elapsed since the preceding payment of
interest was made and divided by either
360 or 365, as specified in the related
Mortgage Note, and the remainder of such
payment is allocated to principal.
"Simple Interest Mortgage Loan": Any Mortgage Loan under which
the
portion of a payment allocable to interest
and the portion of such payment
allocable to principal is determined in
accordance with the Simple Interest
Method.
"Special Hazard Loss": Any Realized Losses that result from
direct
physical damage to Mortgaged Properties
caused by natural disasters and other
hazards (i) which are not covered by hazard
insurance policies (such as
earthquakes) and (ii) for which claims have
been submitted and rejected by the
related hazard insurer and any shortfall in
insurance proceeds for partial
damage due to the application of the
co-insurance clauses contained in hazard
insurance policies.
"SPV": As defined in Section 6.05(c).
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms
of
the Certificates and this Agreement but
which is not remitted by the Servicer
because the Servicer is the subject of a
proceeding under the Bankruptcy Code
and the making of such remittance is
prohibited by Section 362 of the Bankruptcy
Code.
"Stepdown Date": The later to occur of (x) the earlier to occur
of
(A) the Distribution Date in February 2007
and (B) the Distribution Date on
which the aggregate Certificate Principal
Balance of the Class A Certificates is
reduced to zero, and (y) the first
Distribution Date on which the Senior
Enhancement Percentage (after taking into
account distributions of principal on
such Distribution Date) is greater than or
equal to the Senior Specified
Enhancement Percentage.
"Subordinated Certificates": The Class M-1, Class M-2, Class
M-3,
Class B-1, Class B-2, Class B-3, Class B-4,
Class N, Class X, Class R and Class
R-A Certificates.
"Substitution Adjustment Amount": As defined in Section 2.03(d)
hereof.
"Targeted Overcollateralization Amount": As of any Distribution
Date, (x) prior to the Stepdown Date, 1.00%
of the Pool Balance on the Cut-off
Date and (y) on and after the Stepdown
Date, (i) if a Trigger Event has not
occurred, the lesser of (a) 1.00% of the
Pool Balance on the Cut-off Date and
(b) the greater of (A) 2.00% of the Pool
Balance as of the last day of the
related Collection Period and (B) 0.50% of
the Pool Balance on the Cut-off Date
and (ii) if a Trigger Event has occurred,
the Targeted Overcollateralization
Amount for the immediately preceding
Distribution Date.
"Tax Matters Person": The tax matters person appointed pursuant
to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal
Revenue
Service Form 1066, U.S. Real Estate
Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto,
Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net
Loss Allocation, or any successor
forms, to be filed on behalf of the Trust
for each of the four REMICs created
pursuant to this Agreement under the REMIC
Provisions, together with any and all
other information reports or returns that
may be required to be furnished to the
Certificateholders or filed with the
Internal Revenue Service or any other
governmental taxing authority under any
applicable provisions of federal, state
or local tax laws.
"Telerate Page 3750": The display page currently so designated
on
the Moneyline Telerate Service (or such
other page as may replace the Telerate
Page 3750 page on that service for the
purpose of displaying London interbank
offered rates of major banks).
"Termination Price":
As defined in Section 10.01(a) hereof.
"Third Lien Mortgage Loan": Any of the of the Mortgage Loans
which
are secured by a third mortgage lien a that
is junior to a First Lien Mortgage
Loan and Second Lien Mortgage Loan on the
related Mortgaged Property.
"Trigger Event": With respect to any Distribution Date, if (i)
the
six-month rolling average of 60+ Day
Delinquent Loans equals or exceeds 40% of
the Senior Enhancement Percentage or (ii)
the aggregate amount of Realized
Losses incurred since the Cut-off Date
through the last day of the related
Collection Period divided by the Pool
Balance as of the Cut-off Date exceeds the
applicable percentages set forth below with
respect to such Distribution Date:
Distribution Date Occurring In
Percentage
------------------------------
----------
February 2007 through January 2008 2.50%
February 2008 through January 2009 4.00%
February 2009 through January 2010 5.20%
February 2010 and thereafter
5.50%
"Trust": 2004-CB1 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created
hereby and to be administered hereunder,
with respect to a portion of which four
REMIC elections are to be made, such
entire Trust Fund consisting of: (i) such
Mortgage Loans as from time to time
are subject to this Agreement, together
with the Mortgage Files relating
thereto, and together with all collections
thereon and proceeds thereof, (ii)
any REO Property, together with all
collections thereon and proceeds thereof,
(iii) the Trustee's rights with respect to
the Mortgage Loans under all
insurance policies required to be
maintained pursuant to this Agreement and any
proceeds thereof, (iv) the Depositor's
rights under the Mortgage Loan Purchase
Agreement (including any security interest
created thereby), (v) the Trustee's
rights under the Yield Maintenance
Agreement and (vi) the Collection Account,
the Distribution Account, the Reserve
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.
"Trustee": U.S. Bank National Association, a national banking
association, or any successor Trustee
appointed as herein provided.
"Trustee Fee": With respect to any Distribution Date, the product
of
(x) one-twelfth of the Trustee Fee Rate and
(y) the aggregate of the Principal
Balances of all Mortgage Loans as of the
opening of business on the first day of
the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date,
0.0060%
per annum.
"Uncertificated Accrued Interest": With respect to each REMIC 1
Regular Interest on each Distribution Date,
an amount equal to one month's
interest at the related Uncertificated
REMIC 1 Pass-Through Rate on the
Uncertificated Principal Balance of such
REMIC Regular Interest. In each case,
Uncertificated Accrued Interest will be
reduced by any Prepayment Interest
Shortfalls and Relief Act Interest
Shortfalls (allocated to such REMIC Regular
Interests based on their respective
entitlements to interest irrespective of any
Prepayment Interest Shortfalls and Relief
Act Interest Shortfalls for such
Distribution Date).
"Uncertificated Principal Balance": The amount of any REMIC 1
Regular Interest outstanding as of any date
of determination. As of the Closing
Date, the Uncertificated Balance of each
REMIC 1 Regular Interest shall equal
the amount set forth in the Preliminary
Statement hereto as its initial
uncertificated balance. On each
Distribution Date, the Uncertificated Principal
Balance of each REMIC 1 Regular Interest
shall be reduced by all distributions
of principal made on such REMIC 1 Regular
Interest on such Distribution Date
pursuant to Section 4.08 and, if and to the
extent necessary and appropriate,
shall be further reduced on such
Distribution Date by Realized Losses as
provided in Section 4.08(b). The
Uncertificated Balance of REMIC 1 Regular
Interest LT1ZZ shall be increased by
interest deferrals as provided in Section
4.08(a)(i). The Uncertificated Balance of
each REMIC 1 Regular Interest shall
never be less than zero.
"Uncertificated REMIC 1 Pass-Through Rate": With respect to REMIC
1
Regular Interest LT1AA, REMIC 1 Regular
Interest LT1AF1, REMIC 1 Regular
Interest LT1AV1, REMIC 1 Regular Interest
LT1AV2, REMIC 1 Regular Interest
LT1AV3, REMIC 1 Regular Interest LT1M1,
REMIC 1 Regular Interest LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular
Interest LT1B1, REMIC 1 Regular Interest
LT1B2, REMIC 1 Regular Interest LT1B3,
REMIC 1 Regular Interest LT1B4, REMIC 1
Regular Interest LT1ZZ, REMIC 1 Regular
Interest LT1SUB, REMIC 1 Regular
Interest LT2SUB and REMIC 1 Regular
Interest LT1XX, the Weighted Average Net
Mortgage Rate of the Mortgage Loans. With
respect to REMIC 1 Regular Interest
LT1GRP, the Weighted Average Net Mortgage
Rate of the Group 1 Mortgage Loans.
With respect REMIC 1 Regular Interest
LT2GRP, the Weighted Average Net Mortgage
Interest Rate of the Group 2 Mortgage
Loans.
"Underwriters": Banc of America Securities LLC and J.P. Morgan
Securities Inc., as underwriters with
respect to the Offered Certificates.
"United States Person" or "U.S. Person": (i) A citizen or
resident
of the United States, (ii) a corporation,
partnership or other entity treated as
a corporation or partnership for United
States federal income tax purposes
organized in or under the laws of the
United States or any state thereof or the
District of Columbia (unless, in the case
of a partnership, Treasury regulations
provide otherwise) or (iii) an estate the
income of which is includible in gross
income for United States tax purposes,
regardless of its source, or (iv) a trust
if a court within the United States is able
to exercise primary supervision over
the administration of the trust and one or
more United States persons have
authority to control all substantial
decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided
in Treasury regulations, certain
Trusts in existence on August 20, 1996, and
treated as United States persons
prior to such date, that elect to continue
to be treated as United States
persons will also be a U.S. Person ;
provided, that for purposes of the
definition of a "Permitted Transferee," a
U.S. Person shall not include any
person whose income is attributable to a
foreign permanent establishment or
fixed base, within the meaning of an
applicable income tax treaty, of such
Person or any other Person.
"Unpaid Realized Loss Amount": For any Class M-1, Class M-2,
Class
M-3, Class B-1, Class B-2, Class B-3 and
Class B-4 Certificates and as to any
Distribution Date, the excess of (x) the
cumulative amount of related Applied
Realized Loss Amounts with respect to such
Class for all prior Distribution
Dates over (y) the cumulative amount of
related Realized Loss Amortization
Amounts with respect to such Class for all
prior Distribution Dates.
"Value": With respect to any Mortgaged Property, the lower of
the
value thereof as determined by an
independent appraisal made at the time of the
origination of the related Mortgage Loan or
the sale price, if the appraisal is
not available; except that, with respect to
any Mortgage Loan that is a purchase
money mortgage loan, the lesser of (i) the
value thereof as determined by an
independent appraisal made at the time of
the origination of such Mortgage Loan,
if any, and (ii) the sales price of the
related Mortgaged Property.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any
Certificate. The Voting Rights allocated
among Holders of the Offered Certificates
and the Class B-4 Certificates shall
be 98%, and shall be allocated among each
such Class according to the fraction,
expressed as a percentage, the numerator of
which is the aggregate Certificate
Principal Balance of all the Certificates
of such Class then outstanding and the
denominator of which is the aggregate
Certificate Principal Balance of all the
Offered Certificates and the Class B-4
Certificates then outstanding. The Voting
Rights allocated to each such Class of
Certificates shall be allocated among all
holders of each such Class in proportion to
the outstanding Certificate
Principal Balance of such Certificates;
provided, however, that any Certificate
registered in the name of the Servicer, the
Depositor or the Trustee or any of
their respective affiliates shall not be
included in the calculation of Voting
Rights; provided that only such
Certificates as are known by a Responsible
Officer of the Trustee to be so registered
will be so excluded. On each
Distribution Date (a) prior to the date on
which the Notional Amount of the
Class N Certificates is reduced to zero,
the percentage of all the Voting Rights
allocated among the Holders of the Class N
and Class X Certificates,
respectively, shall be 1% and (b) on and
after the date on which the Notional
Amount of the Class N Certificates is
reduced to zero, the percentage of all the
Voting Rights allocated among the Holders
of the Class N Certificates shall be
0% and the percentage of all the Voting
Rights allocated among the Holder of the
Class X Certificates shall be 2%. The
Residual Certificates shall have no Voting
Rights.
"Weighted Average Net Mortgage Rate": With respect to any of
Loan
Group I or Loan Group II, the weighted
average (based on Principal Balance as of
the first day of the related Collection
Period or, in the case of the first
Distribution Date, the Cut-Off Date) of the
Net Mortgage Interest Rates of the
Mortgage Loans of such Loan Group or
Groups, expressed as an annual rate and
calculated on the basis of twelve months
consisting of 30 days each and a
360-day year.
"Written Order to Authenticate": A written order by which the
Depositor directs the Trustee to execute,
authenticate and deliver the
Certificates.
"Yield Maintenance Agreement": The interest rate cap agreement
between the Trustee, on behalf of the
Trust, and the Yield Maintenance Agreement
Provider substantially in the form attached
hereto as Exhibit S. The Yield
Maintenance Agreement shall not be an asset
of any REMIC formed under this
Agreement.
"Yield Maintenance Agreement Payment": On each Distribution
Date
through the Distribution Date in October
2006, the amount equal to the product
of (a) the excess of the lesser of (i)
LIBOR and (ii) 7.71% over the strike rate
for such Distribution Date set forth on the
schedule attached to the
confirmation to the Yield Maintenance
Agreement for such Distribution Date, (b)
the product of the cap notional amount and
the scale factor, both as set forth
on the schedule attached to the
confirmation to the Yield Maintenance Agreement
for such Distribution Date and (c) a
fraction, the numerator of which is the
actual number of days elapsed since the
previous Distribution Date to but
excluding the current Distribution Date and
the denominator of which is 360.
"Yield Maintenance Agreement Provider": Bank of America, N.A.,
and
any successor thereto.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any
definition
or calculation, whenever amounts are
required to be netted, subtracted or added
or any distributions are taken into account
such definition or calculation and
any related definitions or calculations
shall be determined without duplication
of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and
otherwise convey to the Trustee, on
behalf of the Trust, without recourse for
the benefit of the Certificateholders
all the right, title and interest of the
Depositor, including any security
interest therein for the benefit of the
Depositor, in and to (i) each Mortgage
Loan identified on the Mortgage Loan
Schedule, including the related Cut-off
Date Principal Balance, all interest
accruing thereon after the Cut-off Date and
all collections in respect of interest and
principal due after the Cut-off Date;
(ii) property which secured each such
Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any
insurance policies in respect of the
Mortgage Loans; (iv) all proceeds of any of
the foregoing; (v) the rights of the
Depositor under the Mortgage Loan Purchase
Agreement, and (vi) all other assets
included or to be included in the Trust
Fund; provided, however, so long as the
Servicer is an FHA Approved Mortgagee,
the Commissioner of HUD shall have no
obligation to recognize or deal with any
person other than the Servicer with respect
to FHA Insurance. Such assignment
includes all interest and principal due to
the Depositor or the Servicer after
the Cut-off Date with respect to the
Mortgage Loans.
It is agreed and understood by the parties hereto that it is
not
intended that any mortgage loan be included
in the Trust that is a "High-Cost
Home Loan" as defined in the New Jersey
Home Ownership Act effective November
27, 2003.
In connection with such transfer and assignment, the Seller, on
behalf of the Depositor, does hereby
deliver to, and deposit with the Trustee,
or its designated agent (the "Custodian"),
the following documents or
instruments with respect to each Mortgage
Loan (a "Mortgage File") so
transferred and assigned:
(i)
the original
Mortgage Note, endorsed either (A) in blank or (B) in
the following form: "Pay to the order of U.S. Bank National
Association, as Trustee under the Pooling and Servicing
Agreement,
dated as of January 1, 2004, among Credit-Based Asset Servicing
and
Securitization LLC, Asset Backed Funding Corporation, Litton
Loan
Servicing LP and U.S. Bank National Association, C-BASS
Mortgage
Loan Asset-Backed Certificates, Series 2004-CB1, without
recourse,"
or with respect to any lost Mortgage Note, an original Lost
Note
Affidavit, together with a copy of the related Mortgage Note;
(ii)
the original Mortgage
with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was
executed
pursuant to a power of attorney, with evidence of recording
thereon
or, if such Mortgage or power of attorney has been submitted
for
recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available,
a
copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original
submitted
for recording;
(iii) an
original Assignment of Mortgage, in form and substance
acceptable
for recording. The Mortgage shall be assigned either (A) in blank
or
(B) to "U.S. Bank National Association, as Trustee under the
Pooling
and Servicing Agreement, dated as of January 1, 2004, among
Credit-Based Asset Servicing and Securitization LLC, Asset
Backed
Funding Corporation, Litton Loan Servicing LP and U.S. Bank
National
Association, C-BASS Mortgage Loan Asset-Backed Certificates,
Series
2004-CB1, without recourse";
(iv)
an original or copy of
any intervening assignment of Mortgage
showing a complete chain of assignments;
(v)
the original or
a certified copy of lender's title insurance policy
except with respect to those Mortgage Loans identified on Exhibit
V
hereto;
(vi)
the original or copies
of each assumption, modification, written
assurance or substitution agreement, if any; and
(vii) for
each FHA Loan, the original Mortgage Insurance Certificate.
The Trustee agrees to execute and deliver (or cause the Custodian
to
execute and deliver) to the Depositor on or
prior to the Closing Date an
acknowledgment of receipt of the original
Mortgage Note (with any exceptions
noted), substantially in the form attached
as Exhibit F-3 hereto.
If any of the documents referred to in Section 2.01(ii), (iii)
or
(iv) above has as of the Closing Date been
submitted for recording but either
(x) has not been returned from the
applicable public recording office or (y) has
been lost or such public recording office
has retained the original of such
document, the obligations of the Seller to
deliver such documents shall be
deemed to be satisfied upon (1) delivery to
the Trustee or the Custodian no
later than the Closing Date, of a copy of
each such document certified by the
Seller in the case of (x) above or the
applicable public recording office in the
case of (y) above to be a true and complete
copy of the original that was
submitted for recording and (2) if such
copy is certified by the Seller,
delivery to the Trustee or the Custodian,
promptly upon receipt thereof of
either the original or a copy of such
document certified by the applicable
public recording office to be a true and
complete copy of the original. The
Seller shall deliver or cause to be
delivered to the Trustee or the Custodian
promptly upon receipt thereof any other
documents constituting a part of a
Mortgage File received with respect to any
Mortgage Loan, including, but not
limited to, any original documents
evidencing an assumption or modification of
any Mortgage Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing
from, a Mortgage File, the Seller
shall have 120 days to cure such defect or
150 days following the Closing Date,
in the case of missing Mortgages or
Assignments or deliver such missing document
to the Trustee or the Custodian. If the
Seller does not cure such defect or
deliver such missing document within such
time period, the Seller shall either
repurchase or substitute for such Mortgage
Loan in accordance with Section 2.03.
The Servicer shall cause the Assignments of Mortgage which were
delivered in blank to be completed and
shall cause all Assignments referred to
in Section 2.01(iii) hereof and, to the
extent necessary, in Section 2.01(iv)
hereof to be recorded; provided, however,
the Servicer need not cause to be
recorded any Assignment which relates to a
Mortgage Loan in any jurisdiction
under the laws of which, as evidenced by an
Opinion of Counsel delivered by the
Servicer to the Trustee and the Rating
Agencies, the recordation of such
assignment is not necessary to protect the
Trustee's interest, on behalf of the
Trust, in the related Mortgage Loan. The
Servicer shall be required to deliver
such assignments for recording within 30
days of the Closing Date. The Servicer
shall furnish the Trustee, or its
designated agent, with a copy of each
assignment of Mortgage submitted for
recording. In the event that any such
Assignment is lost or returned unrecorded
because of a defect therein, the
Servicer shall promptly have a substitute
Assignment prepared or have such
defect cured, as the case may be, and
thereafter cause each such Assignment to
be duly recorded. In the event that any
Mortgage Note is endorsed in blank as of
the Closing Date, promptly following the
Closing Date the Servicer shall cause
to be completed such endorsements "Pay to
the order of U.S. Bank National
Association, as Trustee under the Pooling
and Servicing Agreement, dated as of
January 1, 2004, among Credit-Based Asset
Servicing and Securitization LLC,
Asset Backed Funding Corporation, Litton
Loan Servicing LP and U.S. Bank
National Association, C-BASS Mortgage Loan
Asset-Backed Certificates, Series
2004-CB1, without recourse."
The Depositor herewith delivers to the Trustee executed copies
of
the Mortgage Loan Purchase Agreement.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the
provisions
of Section 2.01 and subject to the review
described below and any exceptions
noted on the exception report described in
the next paragraph below, the
documents referred to in Section 2.01 above
and all other assets included in the
definition of "Trust Fund" and declares
that it holds and will hold such
documents and the other documents delivered
to it constituting a Mortgage File,
and that it holds or will hold all such
assets and such other assets included in
the definition of "Trust Fund" in trust for
the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders,
to
review (or cause the Custodian to review)
each Mortgage File within 60 days
after the Closing Date (or, with respect to
any document delivered after the
Startup Day, within 60 days of receipt and
with respect to any Qualified
Substitute Mortgage, within 60 days after
the assignment thereof) and to certify
in substantially the form attached hereto
as Exhibit F-1 that, as to each
Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan
specifically identified in the exception
report annexed thereto as not being covered
by such certification), (i) all
documents required to be delivered to it
pursuant to Section 2.01 of this
Agreement are in its possession, (ii) such
documents have been reviewed by it
and have not been mutilated, damaged or
torn and relate to such Mortgage Loan
and (iii) based on its examination and only
as to the foregoing, the information
set forth in the Mortgage Loan Schedules
that corresponds to items (1), (2),
(3), (5), (13) and (25) (in the case of
(25), only as to whether there is a
prepayment penalty) of the Mortgage Loan
Schedule accurately reflects
information set forth in the Mortgage File.
It is herein acknowledged that, in
conducting such review, the Trustee (or the
Custodian, as applicable) is under
no duty or obligation to inspect, review or
examine any such documents,
instruments, certificates or other papers
to determine that they are genuine,
enforceable, or appropriate for the
represented purpose or that they have
actually been recorded or that they are
other than what they purport to be on
their face.
Prior to the first anniversary date of this Agreement the
Trustee
shall deliver (or cause the Custodian to
deliver) to the Depositor and the
Servicer a final certification in the form
annexed hereto as Exhibit F-2
evidencing the completeness of the Mortgage
Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the
certifications referred to above, the Trustee
(or the Custodian, as applicable) finds any
document or documents constituting a
part of a Mortgage File to be missing or
defective in any material respect, at
the conclusion of its review the Trustee
shall so notify the Seller, the
Depositor and the Servicer. In addition,
upon the discovery by the Seller,
Depositor, the Trustee or the Servicer (or
upon receipt by the Trustee of
written notification of such breach) of a
breach of any of the representations
and warranties made by the Seller in the
related Mortgage Loan Purchase
Agreement in respect of any Mortgage Loan
which materially adversely affects
such Mortgage Loan or the interests of the
related Certificateholders in such
Mortgage Loan, the party discovering such
breach shall give prompt written
notice to the other parties.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a
sale of the Mortgage Loans and the
Related Documents, conveying good title
thereto free and clear of any liens and
encumbrances, from the Depositor to the
Trustee and that such property not be
part of the Depositor's estate or property
of the Depositor in the event of any
insolvency by the Depositor. In the event
that such conveyance is deemed to be,
or to be made as security for, a loan, the
parties intend that the Depositor
shall be deemed to have granted and does
hereby grant to the Trustee, on behalf
of the Trust, a first priority perfected
security interest in all of the
Depositor's right, title and interest in
and to the Mortgage Loans and the
Related Documents, and that this Agreement
shall constitute a security agreement
under applicable law.
The Trustee is hereby directed to execute and deliver, on behalf
of
the Trust, the Yield Maintenance
Agreement.
Section 2.03 Repurchase or Substitution of Mortgage Loans by
the
Seller.
(a) Upon discovery or receipt of written notice of any
materially
defective document in, or that a document
is missing from, a Mortgage File or of
the breach by the Seller of any
representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or in
Section 2.04 in respect of any Mortgage
Loan which materially adversely affects the
value of such Mortgage Loan or the
interest therein of the Certificateholders,
the Trustee (or the Custodian, as
applicable) shall promptly notify the
Seller, the Servicer and the Trustee of
such defect, missing document or breach and
request that the Seller deliver such
missing document or cure such defect or
breach within 120 days or 150 days
following the Closing Date, in the case of
missing Mortgages or Assignments 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 Seller's obligation under the Mortgage
Loan Purchase Agreement and cause the
Seller to repurchase such Mortgage Loan
from the Trust Fund at the Purchase
Price on or prior to the Determination Date
following the expiration of such 120
day period (subject to Section 2.03(e));
provided that, in connection with any
such breach that could not reasonably have
been cured within such 120 day or 150
day period, if the Seller shall have
commenced to cure such breach within such
120 day or 150 day period, the Seller shall
be permitted to proceed thereafter
diligently and expeditiously to cure the
same within the additional period
provided under the Mortgage Loan Purchase
Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be
deposited in the Collection Account, and the
Trustee, upon receipt of written
certification from the Servicer of such
deposit, shall release to the Seller the
related Mortgage File and shall execute
and deliver such instruments of transfer or
assignment, in each case without
recourse, 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 have
no further responsibility with regard to
such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as
provided above, the Seller may cause such
Mortgage Loan to be removed from the Trust
Fund (in which case it shall become a
Defective Mortgage Loan) and substitute one
or more Eligible Substitute Mortgage
Loans in the manner and subject to the
limitations set forth in Section 2.03(d).
In addition to the foregoing, in the case
of a breach of the Seller's
representation set forth in Section 3.01(f)
of the Mortgage Loan Purchase
Agreement, the Seller shall reimburse the
Trust for all costs or damages
incurred by the Trust as a result of the
violation of such law (such amount, the
"Reimbursement Amount"). The Reimbursement
Amount shall be delivered to the
Servicer for deposit into the Collection
Account within 10 days from the date
the Seller was notified by the Trustee of
the amount of such costs and damages.
It is understood and agreed that the
obligation of the Seller to pay the
Reimbursement Amount and to either cure or
repurchase (or 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
against the Seller respecting such
omission, defect or breach available to the
Trustee and the Trustee on behalf of
the Certificateholders.
(b) [Reserved].
(c) Within 90 days of the earlier of discovery by the Servicer
or
receipt of notice by the Servicer of the
breach of any representation, warranty
or covenant of the Servicer set forth in
Section 2.05 which materially and
adversely affects the interests of the
Certificateholders in any Mortgage Loan,
the Servicer shall cure such breach in all
material respects.
(d) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to
Section 2.03(a) must be effected prior
to the last Business Day that is within two
years after the Closing Date. As to
any Defective Mortgage Loan for which the
Seller substitutes a Eligible
Substitute Mortgage Loan or Loans, such
substitution shall be effected by the
Seller delivering to the Trustee for such
Eligible Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the
Assignment to the Trustee, and such
other documents and agreements, with all
necessary endorsements thereon, as are
required by Section 2.01, together with an
Officers' Certificate providing that
each such Eligible Substitute Mortgage Loan
satisfies the definition thereof and
specifying the Substitution Adjustment
Amount (as described below), if any, in
connection with such substitution. The
Trustee shall acknowledge receipt for
such Eligible Substitute Mortgage Loan or
Loans and, within ten Business Days
thereafter, shall review such documents as
specified in Section 2.02 and deliver
(or cause the Custodian to deliver) to the
Servicer, with respect to such
Eligible Substitute Mortgage Loan or Loans,
a certification substantially in the
form attached hereto as Exhibit F-1, with
any applicable exceptions noted
thereon. Within one year of the date of
substitution, the Trustee shall deliver
(or cause the Custodian to deliver) to the
Servicer a certification
substantially in the form of Exhibit F-2
hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon.
Monthly Payments due with respect to
Eligible Substitute Mortgage Loans in the
month of substitution are not part of the
Trust Fund and will be retained by the
Seller. For the month of substitution,
distributions to Certificateholders will
reflect the collections and recoveries in
respect of such Defective Mortgage
Loan in the Collection Period preceding the
month of substitution and the
Depositor or the Seller, as the case may
be, shall thereafter be entitled to
retain all amounts subsequently received in
respect of such Defective Mortgage
Loan. The Seller 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 Defective Mortgage Loan
from the terms of this Agreement and the
substitution of the Eligible Substitute
Mortgage Loan or Loans and shall deliver a
copy of such amended Mortgage Loan
Schedule to the Trustee. Upon such
substitution, such Eligible Substitute
Mortgage Loan or Loans shall constitute
part of the Mortgage Pool and shall be
subject in all respects to the terms of
this Agreement and, in the case of a
substitution effected by the Seller, the
Mortgage Loan Purchase Agreement,
including, in the case of a substitution
effected by the Seller all applicable
representations and warranties thereof
included in the Mortgage Loan Purchase
Agreement and all applicable
representations and warranties thereof set forth in
Section 2.04, in each case as of the date
of substitution.
For any month in which the Seller substitutes one or more
Eligible
Substitute Mortgage Loans for one or more
Defective Mortgage Loans, the Servicer
will determine the amount (the
"Substitution Adjustment Amount"), if any, by
which the aggregate Purchase Price of all
such Defective Mortgage Loans exceeds
the aggregate, as to each such Eligible
Substitute Mortgage Loan, of the
principal balance thereof as of the date of
substitution, together with one
month's interest on such principal balance
at the applicable Net Mortgage
Interest Rate. On the date of such
substitution, the Seller will deliver or
cause to be delivered to the Servicer for
deposit in the Collection Account an
amount equal to the Substitution Adjustment
Amount, if any, and the Trustee,
upon receipt of the related Eligible
Substitute Mortgage Loan or Loans and
certification by the Servicer of such
deposit, shall release to the Seller the
related Mortgage File or Files and shall
execute and deliver such instruments of
transfer or assignment, in each case
without recourse, as the Seller shall
deliver to it and as shall be necessary to
vest therein any Defective 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 the Trust Fund, including without
limitation, any federal tax imposed on
"prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions
after the startup date" under
Section 860G(d)(l) of the Code, or (b) any
REMIC formed under this Agreement to
fail to qualify as a REMIC at any time that
any Certificate is outstanding. If
such Opinion of Counsel can not be
delivered, then such substitution may only be
effected at such time as the required
Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Servicer or the Trustee
that
any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code, the
party discovering such fact shall within
two Business Days give written notice
thereof to the other parties. In
connection therewith, the Seller shall
repurchase or, subject to the limitations
set forth in Section 2.03(d), substitute
one or more Eligible Substitute
Mortgage Loans for the affected Mortgage
Loan within 90 days of the earlier of
discovery or receipt of such notice with
respect to such affected Mortgage Loan.
In addition, upon discovery that a Mortgage
Loan is defective in a manner that
would cause it to be a "defective
obligation" within the meaning of Treasury
regulations relating to REMICs, the Seller
shall cure the defect or make the
required purchase or substitution no later
than 90 days after the discovery of
the defect. Any such repurchase or
substitution shall be made in the same manner
as set forth in Section 2.03(a), if made by
the Seller. 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.
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 pursuant to
Sections 2.01, 2.02 and 2.03 and
preparation and delivery of the certifications
in the form of Exhibit F-1 and Exhibit F-2
shall be performed by the Custodian
pursuant to the terms and conditions of the
Custodial Agreement. The fees and
expenses of the Custodian shall be paid by
the Servicer.
Section 2.04 Representations and Warranties of the Seller with
Respect to the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for
the
benefit of the Certificateholders that as
of the Closing Date or as of such
other date specifically provided
herein:
(a) The representations and warranties made by the Seller
pursuant
to Section 3.01 of the Mortgage Loan
Purchase Agreement are hereby being made to
the Trustee and are true and correct as of
the Closing Date.
(b) Any written agreement between the Mortgagor in respect of a
Mortgage Loan and the Servicer modifying
such Mortgagor's obligation to make
payments under the Mortgage Loan (such
modified Mortgage Loan, a "Modified
Mortgage Loan") involved the application of
the Seller's underwriting standards
or some assessment of the Mortgagor's
ability to repay the Modified Mortgage
Loan.
With respect to the representations and warranties set forth in
this
Section 2.04 that are made to the best of
the Seller's knowledge or as to which
the Seller has no knowledge, if it is
discovered by the Depositor, the Seller,
the Servicer or the Trustee that the
substance of such representation and
warranty is inaccurate and such inaccuracy
materially and adversely affects the
value of the related Mortgage Loan or the
interest therein of the
Certificateholders then, notwithstanding
the Seller's lack of knowledge with
respect to the substance of such
representation and warranty being inaccurate at
the time the representation or warranty was
made, such inaccuracy shall be
deemed a breach of the applicable
representation or warranty.
Upon discovery by the Depositor, the Seller, the Servicer or
the
Trustee of a breach of any of the
representations and warranties contained in
this Section that materially and adversely
affects the value of any Mortgage
Loan or the interest therein of the
Certificateholders, the party discovering
the breach shall give prompt written notice
to the others and in no event later
than two Business Days from the date of
such discovery. Within ninety days of
its discovery or its receipt of notice of
any such missing or materially
defective documentation or any such breach
of a representation or warranty, the
Seller shall promptly deliver such missing
document or cure such defect or
breach in all material respects, or in the
event such defect or breach cannot be
cured, the Seller shall repurchase the
affected Mortgage Loan or cause the
removal of such Mortgage Loan from the
Trust Fund and substitute for it one or
more Eligible Substitute Mortgage Loans, in
either case, in accordance with
Section 2.03.
It is understood and agreed that the representations and
warranties
set forth in this Section 2.04 shall
survive delivery of the Mortgage Files to
the Trustee and shall inure to the benefit
of the Certificateholders
notwithstanding any restrictive or
qualified endorsement or assignment. It is
understood and agreed that the obligations
of the Seller set forth in Section
2.03(a) to cure, substitute for or
repurchase a Mortgage Loan pursuant to the
Mortgage Loan Purchase Agreement and to
reimburse the Trust the Reimbursement
Amount, constitute the sole remedies
available to the Certificateholders or to
the Trustee on their behalf respecting a
breach of the representations and
warranties contained in this Section
2.04.
Section 2.05 Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the
Trustee and the Certificateholders and
to the Depositor that as of the Closing
Date or as of such date specifically
provided herein:
(i) The Servicer is duly organized, validly existing, and in
good
standing
under the laws of the jurisdiction of its formation and has all
licenses
necessary to carry on its business as now being conducted,
except
for such
licenses, certificates and permits the absence of which,
individually or in the aggregate, would not have a material adverse
effect
on the
ability of the Servicer to conduct its business as it is
presently
conducted,
and is licensed, qualified and in good standing in the states
where the
Mortgaged Property is located if the laws of such state require
licensing
or qualification in order to conduct business of the type
conducted
by the Servicer or to ensure the enforceability or validity of
each
Mortgage Loan; the Servicer has the power and authority to
execute
and
deliver this Agreement and to perform in accordance herewith;
the
execution,
delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement)
by the
Servicer
and the consummation of the transactions contemplated hereby
have
been duly
and validly authorized; this Agreement evidences the valid,
binding
and enforceable obligation of the Servicer, subject to
applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws
affecting
the enforcement of creditors' rights generally; and all
requisite
corporate action has been taken by the Servicer to make this
Agreement
valid and binding upon the Servicer in accordance with its
terms;
(ii) The consummation of the transactions contemplated by this
Agreement
are in the ordinary course of business of the Servicer and will
not result
in the breach of any term or provision of the certificate of
formation
or the partnership agreement of the Servicer or result in the
breach of
any term or provision of, or conflict with or constitute a
default
under or result in the acceleration of any obligation under,
any
agreement,
indenture or loan or credit agreement or other instrument to
which the
Servicer or its property is subject, or result in the violation
of any
law, rule, regulation, order, judgment or decree to which the
Servicer
or its property is subject;
(iii) The Servicer is an approved seller/servicer of
conventional
mortgage
loans for Fannie Mae and is an FHA Approved Mortgagee in good
standing
to service mortgages and has not been suspended as a mortgagee
or
servicer
by the FHA and has the facilities, procedures and experienced
personnel
necessary for the sound servicing of mortgage loans of the same
type as
the Mortgage Loans. The Servicer is, and shall remain for as
long
as it is
servicing the Mortgage Loans hereunder, in good standing as a
FHA
Approved
Mortgagee and servicer of mortgage loans for HUD, Fannie Mae or
Freddie
Mac, and no event has occurred, including but not limited to a
change in insurance
coverage, which would make the Servicer unable to
comply
with HUD, Fannie Mae or Freddie Mac or FHA eligibility
requirements
or which
would require notification to any of HUD, Fannie Mae, Freddie
Mac
or
FHA;
(iv) This
Agreement, and all documents and instruments contemplated
hereby
which are executed and delivered by the Servicer, constitute
and
will
constitute valid, legal and binding obligations of the
Servicer,
enforceable in accordance with their respective terms, except as
the
enforcement thereof may be limited by applicable bankruptcy laws
and
general
principles of equity;
(v) The Servicer does not believe, nor does it have any reason
or
cause to
believe, that it cannot perform each and every covenant
contained
in this
Agreement;
(vi) There is no action, suit, proceeding or investigation
pending
or, to its
knowledge, threatened against the Servicer that, either
individually or in the aggregate, may result in any material
adverse
change in
the business, operations, financial condition, properties or
assets of
the Servicer, or in any material impairment of the right or
ability of
the Servicer to carry on its business substantially as now
conducted,
or in any material liability on the part of the Servicer, or
that would
draw into question the validity or enforceability of this
Agreement
or of any action taken or to be taken in connection with the
obligations of the Servicer contemplated herein, or that would be
likely
to impair
materially the ability of the Servicer to perform under the
terms of
this Agreement;
(vii) No consent, approval or order of any court or
governmental
agency or
body is required for the execution, delivery and performance by
the
Servicer of or compliance by the Servicer with this Agreement or
the
consummation of the transactions contemplated by this Agreement,
except
for such
consents, approvals, authorizations and orders, if any, that
have
been
obtained;
(viii) Neither this Agreement nor any information, certificate of
an
officer,
statement furnished in writing or report delivered to the
Trustee
by the
Servicer in connection with the transactions contemplated
hereby
contains
or will contain any untrue statement of a material fact or
omits
or will
omit to state a material fact necessary in order to make the
statements
contained therein, in light of the circumstances under which
they were
made, not misleading; and
(ix) The Servicer has fully furnished, and shall continue to
fully
furnish
for so long as it is servicing the Mortgage Loans hereunder, in
accordance
with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information on the Mortgagor
credit
files to
Equifax, Experian and Trans Union Credit Information Company on
a
monthly
basis.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.05
shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the
benefit of the Trustee, the
Depositor and the Certificateholders. Upon
discovery by any of the Depositor,
the Servicer, the Seller or the Trustee of
a breach of any of the foregoing
representations, warranties and covenants
which materially and adversely affects
the value of any Mortgage Loan or the
interests therein of the
Certificateholders, the party discovering
such breach shall give prompt written
notice (but in no event later than two
Business Days following such discovery)
to the other parties hereto.
Section 2.06 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the
Trustee
on behalf of the Certificateholders as
follows:
(i) This agreement constitutes a legal, valid and binding
obligation
of the
Depositor, enforceable against the Depositor in accordance with
its
terms,
except as enforceability may be limited by applicable
bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or
hereafter
in effect affecting the enforcement of creditors' rights in
general
and except as such enforceability may be limited by general
principles
of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the
Depositor
to the
Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor
had good
and marketable title to each Mortgage Loan (insofar as such
title
was
conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge
or
other
encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right,
title interest in the Mortgage Loans to the Trustee on behalf
of
the
Trust;
(iv) The Depositor has not transferred the Mortgage Loans to
the
Trustee on
behalf of the Trust with any intent to hinder, delay or defraud
any of its
creditors;
(v) The Depositor has been duly incorporated and is validly
existing
as a
corporation in good standing under the laws of the State of
Delaware,
with full
corporate power and authority to own its assets and conduct its
business
as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of
any
material obligation, agreement, covenant or condition contained in
any
contract,
indenture, mortgage, loan agreement, note, lease or other
instrument
to which the Depositor is a party or by which it or its
properties
may be bound, which default might result in any material
adverse
changes in the financial condition, earnings, affairs or
business
of the
Depositor or which might materially and adversely affect the
properties
or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement
by
the
Depositor, and the consummation of the transactions
contemplated
thereby,
do not and will not result in a material breach or violation of
any of the
terms or provisions of, or, to the knowledge of the Depositor,
constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement
or other agreement or instrument to which the Depositor is a
party or
by which the Depositor is bound or to which any of the property
or assets
of the Depositor is subject, nor will such actions result in
any
violation
of the provisions of the certificate of incorporation or
by-laws
of the
Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or
regulation of
any court
or governmental agency or body having jurisdiction over the
Depositor
or any of its properties or assets (except for such conflicts,
breaches,
violations and defaults as would not have a material adverse
effect on the ability
of the Depositor to perform its obligations under
this
Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order,
registration or qualification of or with any court or governmental
agency
or body of
the United States or any other jurisdiction is required for the
issuance
of the Certificates, or the consummation by the Depositor of
the
other
transactions contemplated by this Agreement, except such
consents,
approvals,
authorizations, registrations or qualifications as (a) may be
required
under State securities or Blue Sky laws, (b) have been
previously
obtained
or (c) the failure of which to obtain would not have a material
adverse
effect on the performance by the Depositor of its obligations
under, or
the validity or enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations
pending
before or,
to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a
party
or of
which any of its properties is the subject: (a) which if
determined
adversely
to the Depositor would have a material adverse effect on the
business,
results of operations or financial condition of the Depositor;
(b)
asserting the invalidity of this Agreement or the Certificates;
(c)
seeking to
prevent the issuance of the Certificates or the consummation by
the
Depositor of any of the transactions contemplated by this
Agreement,
as the
case may be; (d) which might materially and adversely affect
the
performance by the Depositor of its obligations under, or the
validity or
enforceability of, this Agreement.
Section 2.07 Issuance of Certificates and the Uncertificated
Regular
Interests.
The Trustee acknowledges the assignment to
it of the Mortgage Loans and the
delivery to it (or the Custodian, as bailee
and Custodian of the Trustee) of the
Mortgage Files, subject to the provisions
of Sections 2.01 and 2.02, and the
Trustee acknowledges the assignment to it
of all other assets included in the
Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such
assignment and delivery and in exchange
therefor, the Trustee, pursuant to the
Written Order to Authenticate executed by
an officer of the Depositor, has
executed, and the Certificate Registrar has
authenticated and delivered to or
upon the order of the Depositor, the
Certificates (other than the Class X and
Residual Certificates) in minimum dollar
denominations or $25,000 and integral
dollar multiples of $1 in excess. The Class
X, Class R and Class R-A
Certificates are issuable only in minimum
Percentage Interests of 10%. The
Trustee acknowledges the issuance of the
uncertificated REMIC 1 Regular
Interests and declares that it hold such
regular interests as assets of REMIC 2.
The Trustee acknowledges the issuance of
the uncertificated REMIC 2 Class X/N
Regular Interest and declares that it hold
such regular interest as the asset of
REMIC A. The Trustee acknowledges the
issuance of the uncertificated REMIC 2
Class B-4 Regular Interest and declares
that it hold such regular interest as
the asset of REMIC B. The Trustee
acknowledges that it holds the REMIC A Class
X/N Interest as an asset of the Grantor
Trust, which Grantor Trust will issue
the Class X/N Interest, subject to the
obligation thereof to pay LIBOR Carryover
Amounts on behalf of the Holders of the
Class AV-1, Class AV-2, Class AV-3,
Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2, Class B-3 and Class B-4
Certificates, respectively. In addition to
the assets described in the preceding
sentence, the assets of the Grantor Trust
shall also include the Yield
Maintenance Agreement, the Reserve Account
and the beneficial interest of the
Class X/N Interest with respect thereto,
subject to the obligation to pay LIBOR
Carryover Amounts. The interests evidenced
by the Certificates constitute the
entire beneficial ownership interest in the
Trust Fund.
Section 2.08 Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and the
Trustee on behalf of the Certificateholders
that as of the Closing Date or as of
such date specifically provided herein:
(i) The Seller is duly organized, validly existing and in good
standing
as a limited liability company under the laws of the State of
Delaware
and has the power and authority to own its assets and to
transact
the
business in which it is currently engaged. The Seller is duly
qualified
to do business and is in good standing in each jurisdiction in
which the
character of the business transacted by it or properties owned
or leased
by it requires such qualification and in which the failure to
so
qualify
would have a material adverse effect on (a) its business,
properties, assets or condition (financial or other), (b) the
performance
of its
obligations under this Agreement, (c) the value or marketability
of
the
Mortgage Loans, or (d) its ability to foreclose on the related
Mortgaged
Properties.
(ii) The Seller has the power and authority to make, execute,
deliver
and perform this Agreement and to consummate all of the
transactions contemplated hereunder and has taken all necessary
action to
authorize
the execution, delivery and performance of this Agreement. When
executed and
delivered, this Agreement will constitute the Seller's legal,
valid and
binding obligations enforceable in accordance with its terms,
except as
enforcement of such terms may be limited by (1) bankruptcy,
insolvency, reorganization, receivership, moratorium or similar
laws
affecting
the enforcement of creditors' rights generally and by the
availability of equitable remedies, (2) general equity
principles
(regardless of whether such enforcement is considered in a
proceeding in
equity or
at law) or (3) public policy considerations underlying the
securities
laws, to the extent that such policy considerations limit the
enforceability of the provisions of this Agreement which purport
to
provide
indemnification from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates and
permits
from all governmental authorities necessary for conducting its
business
as it is presently conducted, except for such licenses,
certificates and permits the absence of which, individually or in
the
aggregate,
would not have a material adverse effect on the ability of the
Seller to
conduct its business as it is presently conducted. It is not
required
to obtain the consent of any other party or any consent,
license,
approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution,
delivery,
performance, validity or enforceability of this Agreement,
except for
such consents, licenses, approvals or authorizations, or
registrations or declarations as shall have been obtained or filed,
as the
case may
be, prior to the Closing Date.
(iv) The execution, delivery and performance of this Agreement
by
the Seller
will not conflict with or result in a breach of, or constitute
a default
under, any provision of any existing law or regulation or any
order or
decree of any court applicable to the Seller or any of its
properties
or any provision of its Limited Liability Company Agreement, or
constitute
a material breach of, or result in the creation or imposition
of any
lien, charge or encumbrance upon any of its properties pursuant
to
any
mortgage, indenture, contract or other agreement to which it is
a
party or
by which it may be bound.
(v) No certificate of an officer, written statement or report
delivered
pursuant to the terms hereof by the Seller contains any untrue
statement
of a material fact or omits to state any material fact
necessary
to make
the certificate, statement or report not misleading.
(vi) The transactions contemplated by this Agreement are in the
ordinary
course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be made
insolvent
by the transfer of the Mortgage Loans to the Depositor, nor is
the Seller
aware of any pending insolvency.
(viii) The Seller is not in violation of, and the execution and
delivery
of this Agreement by it and its performance and compliance with
the terms
of this Agreement will not constitute a violation with respect
to any
order or decree of any court, or any order or regulation of any
federal,
state, municipal or governmental agency having jurisdiction,
which
violation would materially and adversely affect the Seller's
condition
(financial or otherwise) or operations or any of the Seller's
properties, or materially and adversely affect the performance of
any of
its duties
hereunder.
(ix) There are no actions or proceedings against, or
investigations
of, the
Seller pending or, to its knowledge, threatened, before any
court,
administrative agency or other tribunal (i) that, if determined
adversely,
would
prohibit the Seller from entering into this Agreement, (ii)
seeking
to prevent
the consummation of any of the transactions contemplated by
this
Agreement or (iii) that, if determined adversely, would prohibit
or
materially
and adversely affect the Seller's performance of any of its
respective
obligations under, or the validity or enforceability of, this
Agreement.
(x) The Seller did not transfer the Mortgage Loans to the
Depositor
with any
intent to hinder, delay or defraud any of its creditors.
(xi) The Seller acquired title to the Mortgage Loans in good
faith,
without
notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the Mortgage
Notes
and the
Mortgages by the Seller to the Depositor are not subject to the
bulk
transfer laws or any similar statutory provisions in effect in
any
applicable
jurisdiction.
Section 2.09 Covenants of the Seller.
(a) The Seller hereby covenants that except for the transfer
hereunder, the Seller will not sell,
pledge, assign or transfer to any other
Person, or grant, create, incur, assume or
suffer to exist any lien on any
Mortgage Loan, or any interest therein; the
Seller will notify the Trustee, as
assignee of the Depositor, of the existence
of any lien on any Mortgage Loan
immediately upon discovery thereof, and the
Seller will defend the right, title
and interest of the Trust, as assignee of
the Depositor, in, to and under the
Mortgage Loans, against all claims of third
parties claiming through or under
the Seller; provided, however, that nothing
in this Section 2.09 shall prevent
or be deemed to prohibit the Seller from
suffering to exist upon any of the
Mortgage Loans any liens for municipal or
other local taxes and other
governmental charges if such taxes or
governmental charges shall not at the time
be due and payable or if the Seller shall
currently be contesting the validity
thereof in good faith by appropriate
proceedings and shall have set aside on its
books adequate reserves with respect
thereto.
(b) The Seller hereby covenants that neither it nor any Affiliate
of
the Seller will directly solicit any
Mortgagor hereunder to refinance the
related Mortgage Loan. For the purposes of
the foregoing, neither the Seller nor
any Affiliate of the Seller shall be deemed
to directly solicit any Mortgagor if
the Seller responds to a request from a
Mortgagor regarding a refinancing or if
the Mortgagor receives marketing materials
which are generally disseminated.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service
and
administer the Mortgage Loans in accordance
with this Agreement and the normal
and usual standards of practice of prudent
mortgage servicers, and shall have
full power and authority, acting alone, to
do or cause to be done any and all
things in connection with such servicing
and administration which the Servicer
may deem necessary or desirable and
consistent with the terms of this Agreement
including, in the case of FHA Loans, taking
all actions that a mortgagee is
permitted or required to take by the FHA
(the "Servicing Standards").
Consistent with the terms of this Agreement, the Servicer may
waive,
modify or vary any term of any Mortgage
Loan or consent to the postponement of
strict compliance with any such term or in
any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable
and prudent determination such waiver,
modification, postponement or indulgence is
not materially adverse to the
Certificateholders; provided, however, that
the Servicer shall not make future
advances and (unless the Mortgagor is in
default with respect to the Mortgage
Loan or such default is, in the judgment of
the Servicer, reasonably
foreseeable) the Servicer shall not permit
any modification with respect to any
Mortgage Loan that would (i) change the
Mortgage Interest Rate, defer or forgive
the payment thereof of any principal or
interest payments, reduce the
outstanding principal amount (except for
actual payments of principal) or extend
the final maturity date with respect to
such Mortgage Loan, (ii) in the case of
FHA Loans, affect the FHA Insurance
Contract with respect to such Mortgage Loan,
(iii) affect adversely the status of any
REMIC constituting part of the Trust
Fund as a REMIC or (iv) cause any REMIC to
be subject to a tax on "prohibited
transactions" or "contributions" pursuant
to the REMIC Provisions.
Notwithstanding the foregoing, the Servicer
shall not permit any modification
with respect to any Mortgage Loan that
would both (x) effect an exchange or
reissuance of such Mortgage Loan under
Section 1.860G-2(b) of the Treasury
Regulations and (y) cause any REMIC
constituting part of the Trust Fund to fail
to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited
transactions" or "contributions" after the
Startup Day under the REMIC
Provisions. Without limiting the generality
of the foregoing, the Servicer shall
continue, and is hereby authorized and
empowered to execute and deliver on
behalf of itself, and the Trustee, all
instruments of satisfaction or
cancellation, or of partial or full
release, discharge and all other comparable
instruments, with respect to the Mortgage
Loans and with respect to the
Mortgaged Property. The Servicer shall make
all required Servicing Advances and
shall service and administer the Mortgage
Loans in accordance with Applicable
Regulations, and shall provide to the
Mortgagors any reports required to be
provided to them thereby. If reasonably
required by the Servicer, the Trustee
shall furnish the Servicer with a power of
attorney (substantially in the form
annexed hereto as Exhibit W) and other
documents necessary or appropriate to
enable the Servicer to carry out its
servicing and administrative duties under
this Agreement.
In servicing and administering FHA Loans, the Servicer shall
comply
strictly with the National Housing Act, the
FHA Regulations and the Servicemen's
Readjustment Act and administrative
guidelines issued thereunder or pursuant
thereto (insofar as the same apply to any
Mortgage Loan) and, to the extent
permitted hereunder, promptly discharge all
of the obligations of the mortgagee
thereunder and under each Mortgage
including the timely giving of notices, the
essence hereof being that the full benefits
of each FHA Insurance Contract inure
to the Trustee, on behalf of the
Certificateholders.
In servicing and administering the Mortgage Loans, the Servicer
shall employ procedures including
collection procedures and exercise the same
care that it customarily employs and
exercises in servicing and administering
mortgage loans for its own account giving
due consideration to accepted mortgage
servicing practices of prudent lending
institutions and the FHA Insurance
Contracts and the Certificateholders'
reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any
action,
of which the Servicer has actual knowledge,
which action purports to (i) assert
a claim against the Trust Fund or (ii)
assert jurisdiction over the Trust Fund.
Notwithstanding anything in this Agreement to the contrary, in
the
event of a Principal Prepayment in full of
a Mortgage Loan, the Servicer may not
waive any prepayment penalty or portion
thereof required by the terms of the
related Mortgage Note unless (i) the
Servicer determines that such waiver would
maximize recovery of Liquidation Proceeds
for such Mortgage Loan, taking into
account the value of such prepayment
penalty, or (ii) (A) the enforceability
thereof is limited (1) by bankruptcy,
insolvency, moratorium, receivership, or
other similar law relating to creditors'
rights generally or (2) due to
acceleration in connection with a
foreclosure or other involuntary payment, or
(B) the enforceability is otherwise limited
or prohibited by applicable law. In
the event of a Principal Prepayment in full
with respect to any Mortgage Loan,
the Servicer shall deliver to the Trustee
an Officer's Certificate substantially
in the form of Exhibit Q no later than the
third Business Day following the
immediately succeeding Determination Date
with a copy to the Class X
Certificateholder. If the Servicer has
waived or does not collect all or a
portion of a prepayment penalty relating to
a Principal Prepayment in full due
to any action or omission of the Servicer,
other than as provided above, the
Servicer shall, within 90 days of the date
on which the Principal Prepayment in
full is remitted to the Trustee, deliver to
the Trustee the amount of such
prepayment penalty (or such portion thereof
as had been waived for deposit) into
the Distribution Account for distribution
in accordance with the terms of this
Agreement.
The Trustee shall prepare and deliver to the Depositor and the
owner
of the Class N and Class X Certificates, on
a monthly basis, a statement setting
forth the amounts received with respect to
prepayment penalties.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and
interest
on all Mortgage Loans are paid in full, the
Servicer will diligently collect all
payments due under each Mortgage Loan when
the same shall become due and payable
and shall, to the extent such procedures
shall be consistent with this Agreement
and the terms and provisions of any related
Primary Insurance Policy and
Applicable Regulations, follow such
collection procedures as it follows with
respect to mortgage loans comparable to the
Mortgage Loans and held for its own
account. Further, the Servicer will take
special care in ascertaining and
estimating annual ground rents, taxes,
assessments, water rates, fire and hazard
insurance premiums, mortgage insurance
premiums, and all other charges that, as
provided in the Mortgage, will become due
and payable to that end that the
installments payable by the Mortgagors will
be sufficient to pay such charges as
and when they become due and payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Conventional
Mortgage
Loan is not paid when the same becomes due
and payable, or in the event the
Mortgagor fails to perform any other
covenant or obligation under the Mortgage
Loan and such failure continues beyond any
applicable grace period, the Servicer
shall take such action as it shall deem to
be in the best interest of the
Certificateholders. In the event that any
payment due under any FHA Loan becomes
delinquent, the Servicer shall take all
such actions as are in the best
interests of the Certificateholders and
permitted under any applicable FHA loss
mitigation proceedings, including, but not
limited to, requesting the FHA to
accept an assignment of such FHA Loan, and,
upon the Servicer's determination
that foreclosure is in the best interest of
the Certificateholders, commencing
foreclosure proceedings. With respect to
any defaulted Mortgage Loan, the
Servicer shall have the right to review the
status of the related forbearance
plan and, subject to the second paragraph
of Section 3.01, may modify such
forbearance plan; including, extending the
Mortgage Loan repayment date for a
period of one year or reducing the Mortgage
Interest Rate up to 50 basis points.
In connection with a foreclosure or other conversion, the
Servicer
shall exercise such rights and powers
vested in it hereunder and use the same
degree of care and skill in its exercise as
prudent mortgage servicers would
exercise or use under the circumstances in
the conduct of their own affairs and
consistent with Applicable Regulations and
the servicing standards set forth in
the Fannie Mae Guide, including, without
limitation, advancing funds for the
payment of taxes and insurance premiums
with respect to first lien Mortgage
Loans.
Notwithstanding the foregoing provisions of this Section 3.03,
with
respect to any Mortgage Loan as to which
the Servicer has received actual notice
of, or has actual knowledge of, the
presence of any toxic or hazardous substance
on the related Mortgaged Property, the
Servicer shall not either (i) obtain
title to such Mortgaged Property as a
result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire
possession of, or take any other action
with respect to, such Mortgaged Property
if, as a result of any such action, the
Trust Fund would be considered to hold
title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such
Mortgaged Property within the meaning
of the Comprehensive Environmental
Response, Compensation and Liability Act of
1980, as amended from time to time, or any
comparable law, unless the Servicer
has also previously determined, based on
its reasonable judgment and a prudent
report prepared by a Person who regularly
conducts environmental audits using
customary industry standards, that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it
would be in the best economic interest of
the Certificateholders to take such actions
as are necessary to bring the
Mortgaged Property into compliance
therewith; and
B. there are no circumstances present at such Mortgaged
Property
relating to the use, management or disposal
of any hazardous substances,
hazardous materials, hazardous wastes, or
petroleum-based materials for which
investigation, testing, monitoring,
containment, clean-up or remediation could
be required under any federal, state or
local law or regulation, or that if any
such materials are present for which such
action could be required, that it
would be in the best economic interest of
the Certificateholders to take such
ac
