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PHH MORTGAGE CAPITAL LLC,
Depositor
PHH MORTGAGE CORPORATION,
Master Servicer
CITIBANK, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
PHHMC Mortgage Pass-Through Certificates, Series 2005-2
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
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Section 1.01
Defined
Terms...........................................................................4
Section 1.02
Accounting.............................................................................41
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01
Conveyance of Mortgage
Loans...........................................................42
Section 2.02
Acceptance of Trust Fund by the
Trustee................................................46
Section 2.03
Repurchase or Substitution of Mortgage Loans by the Sellers-
Assignment of Interest in
Additional
Collateral..................................................................47
Section 2.04
Representations, Warranties and Covenants of the Master
Servicer.......................50
Section 2.05
Representations and Warranties of the
Depositor........................................52
Section 2.06
Purpose and Powers of the
Trust........................................................54
Section 2.07
Issuance of
Certificates...............................................................54
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01
Master Servicer to Act as Master
Servicer..............................................55
Section 3.02
Sub-Servicing Agreements Between the Master Servicer and
Sub-Servicers.................57
Section 3.03
Successor
Sub-Servicers................................................................58
Section 3.04
Liability of the Master
Servicer.......................................................59
Section 3.05
No Contractual Relationship Between Sub-Servicers and Trustee or
Certificateholders....59
Section 3.06
Assumption or Termination of Sub-Servicing Agreements by
Trustee.......................59
Section 3.07
Collection of Certain Mortgage Loan
Payments...........................................60
Section 3.08
Sub-Servicing
Accounts.................................................................60
Section 3.09
Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.................61
Section 3.10
Collection Account and Distribution
Account............................................61
Section 3.11
Withdrawals from the Collection Account and Distribution
Account.......................63
Section 3.12
Investment of Funds in the Collection Account, Servicing
Accounts
and the Distribution
Account...........................................................65
Section 3.13
Maintenance of the Primary Insurance Policies; Collections
Thereunder..................66
Section 3.14
Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.........67
Section 3.15
Enforcement of Due-On-Sale Clauses. Assumption
Agreements..............................69
Section 3.16
Realization Upon Defaulted Mortgage
Loans..............................................70
Section 3.17
Trustee to Cooperate; Release of Mortgage
Files........................................72
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Section 3.18
Servicing
Compensation.................................................................73
Section 3.19
Reports to the Trustee; Collection Account
Statements..................................74
Section 3.20
Statement as to
Compliance.............................................................74
Section 3.21
Independent Public Accountants' Servicing
Report.......................................75
Section 3.22
Access to Certain
Documentation........................................................75
Section 3.23
Title, Management and Disposition of REO
Property......................................75
Section 3.24
Obligations of the Master Servicer in Respect of Prepayment
Interest Shortfalls........78
Section 3.25
Administration of Buydown
Funds........................................................79
Section 3.26
Obligations of the Master Servicer in Respect of Loan Rates and
Monthly Payments.......79
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01
Distribution Account;
Distributions....................................................80
Section 4.02
Statements to
Certificateholders.......................................................87
Section 4.03
Remittance Reports; Advances by the Master
Servicer....................................89
Section 4.04
Allocation of Realized
Losses..........................................................91
Section 4.05
Information Reports to Be Filed by the Master
Servicer.................................92
Section 4.06
Compliance with Withholding
Requirements...............................................92
Section 4.07
[Reserved].............................................................................92
Section 4.08
Limited Purpose Surety
Bond............................................................92
ARTICLE V
THE CERTIFICATES
Section 5.01
The
Certificates.......................................................................93
Section 5.02
Registration of Transfer and Exchange of
Certificates..................................93
Section 5.03
Mutilated. Destroyed. Lost or Stolen
Certificates.....................................100
Section 5.04
Persons Deemed
Owners.................................................................100
Section 5.05
Appointment of Paying
Agent...........................................................101
ARTICLE VI
THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01
Liability of the Master Servicer and the
Depositor....................................102
Section 6.02
Merger or Consolidation of or Assumption of the Obligations
of the Master Servicer or the
Depositor...............................................102
Section 6.03
Limitation on Liability of the Master Servicer and
Others.............................102
Section 6.04
Master Servicer Not to
Resign.........................................................103
Section 6.05
Delegation of
Duties..................................................................103
ARTICLE VII
DEFAULT
Section 7.01
Master Servicer Events of
Termination.................................................105
Section 7.02
Trustee to Act: Appointment of
Successor..............................................107
Section 7.03
Waiver of Master Servicer Events of
Termination.......................................108
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Section 7.04
Notification to
Certificateholders....................................................108
Section 7.05
Survivability of Master Servicer
Liabilities..........................................109
ARTICLE VIII
THE TRUSTEE
Section 8.01
Duties of
Trustee.....................................................................110
Section 8.02
Certain Matters Affecting the
Trustee.................................................112
Section 8.03
Trustee Not Liable for Certificates or Mortgage
Loans.................................113
Section 8.04
Trustee May Own
Certificates..........................................................114
Section 8.05
Master Servicer to Pay Trustee Expenses; Trustee
Fees.................................114
Section 8.06
Eligibility Requirements for
Trustee..................................................115
Section 8.07
Resignation or Removal of
Trustee.....................................................115
Section 8.08
Successor
Trustee.....................................................................116
Section 8.09
Merger or Consolidation of
Trustee....................................................116
Section 8.10
Appointment of Co-Trustee or Separate
Trustee.........................................116
Section 8.11
Limitation of
Liability...............................................................118
Section 8.12
Trustee May Enforce Claims Without Possession of
Certificates.........................118
Section 8.13
Suits for
Enforcement.................................................................118
Section 8.14
Waiver of Bond
Requirement............................................................118
Section 8.15
Waiver of Inventory. Accounting and Appraisal
Requirement.............................119
Section 8.16
Right of Trustee in Capacity of Certificate Registrar or Paying
Agent.................119
Section 8.17
Periodic
Filings......................................................................119
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01
REMIC
Administration..................................................................120
Section 9.02
Prohibited Transactions and
Activities................................................122
Section 9.03
Master Servicer and Trustee
Indemnification...........................................123
ARTICLE X
TERMINATION
Section 10.01
Termination...........................................................................124
Section 10.02
Additional Termination
Requirements...................................................125
ARTICLE XI
[RESERVED]
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01
Amendment.............................................................................128
Section 12.02
Recordation of Agreement:
Counterparts................................................129
Section 12.03
Limitation on Rights of
Certificateholders............................................129
Section 12.04
Governing Law:
Jurisdiction...........................................................130
Section 12.05
Notices...............................................................................130
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Section 12.06
Severability of
Provisions............................................................131
Section 12.07
Article and Section
References........................................................131
Section 12.08
Notice to the Rating
Agency...........................................................131
Section 12.09
Further
Assurances....................................................................132
Section 12.10
Benefits of
Agreement.................................................................132
Section 12.11
Acts of
Certificateholders............................................................132
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EXHIBITS:
Exhibit A
Form of Class A Certificates
Exhibit B
[reserved]
Exhibit C-1 Form
of Class R Certificates
Exhibit C-2 Form
of Class B Certificates
Exhibit D
Mortgage Loan Schedule
Exhibit E
Form of Request for Release
Exhibit F-1 Form
of Rule 144A Representation Letter
Exhibit F-2 Form
of Transferor Certificate
Exhibit F-3 Form
of Transferee Representation Letter
Exhibit F-4 Form
of Transfer Affidavit and Agreement
and Form of Transferor Affidavit
Exhibit G-1 Form
of ERISA Representation Letter
(Class B-4, Class B-5 and Class B-6)
Exhibit G-2 Form
of ERISA Representation Letter
(Class B-1, Class B-2 and Class B-3)
Exhibit H
Form of Lost Note Affidavit
Exhibit I-1 Form
of Trustee's Initial Certification
Exhibit I-2 Form
of Trustee's Final Certification
Exhibit J
Mortgage Loan Purchase Agreement
Exhibit K
Assignment, Assumption and Recognition Agreement
(Additional Collateral Servicing Agreement)
Exhibit L
[Reserved]
Exhibit M
Form of Form 10-K Certificate
Exhibit N
Form of Back-up Certification to Form 10-K Certificate
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This Pooling and Servicing Agreement is dated as of March 1, 2005
(the
"Agreement"), among PHH MORTGAGE CAPITAL
LLC, as depositor (the "Depositor"),
PHH MORTGAGE CORPORATION, as master
servicer (the "Master Servicer") and
CITIBANK, N.A., as trustee (the
"Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage 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 Mortgage Loans (as defined herein). As
provided herein, the Trustee will
make, in accordance with Section 9.01, an
election to treat the entire
segregated pool of assets described in the
definition of Trust Fund (as defined
herein), and subject to this Agreement
(including the Mortgage Loans), as two
real estate mortgage investment conduits
(each a "REMIC") for federal income tax
purposes.
REMIC I
The following table sets forth (or
describes) the Class designation,
Pass-Through Rate and Uncertificated
Principal Balance, for each Class of REMIC
I Regular Interest comprising the interests
in REMIC I created hereunder:
REMIC I Regular Uncertificated
Uncertificated
Assumed Final
Interest Principal
Balance Pass-Through
Rate(1) Maturity
Date(2)
A-1
$ 50,035,202.00
Variable Rate
April 18, 2035
A-2
$ 43,229,633.00
Variable Rate
April 18, 2035
A-3
$ 2,386,163.00
Variable Rate
April 18, 2035
A-4
$ 2,958,278.00
Variable Rate
April 18, 2035
A-5
$ 1,500,956.00
Variable Rate
April 18, 2035
A-6
$ 14,650,307.00
Variable Rate
April 18, 2035
R-II Interest $
100.00
Variable Rate
April 18, 2035
B-1
$ 5,554,908.00
Variable Rate
April 18, 2035
B-2
$ 732,515.00
Variable Rate
April 18, 2035
B-3
$
366,258.00
Variable Rate
April 18, 2035
B-4
$
305,215.00
Variable Rate
April 18, 2035
B-5
$
183,129.00
Variable Rate
April 18, 2035
B-6
$
183,128.14
Variable Rate
April 18, 2035
(1) Calculated in accordance with the
definition of "Uncertificated Pass-Through
Rate" herein.
(2) For purposes of Section
1.860G-1(a)(4)(iii) of the Treasury regulations, the
Distribution Date immediately following the
maturity date for the Mortgage Loan
with the latest maturity date has been
designated as the "latest possible
maturity date" for each REMIC I Regular
Interest.
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REMIC II
The following table sets forth (or
describes) the Class designation,
Pass-Through Rate and Original Certificate
Principal Balance for each Class of
Certificates comprising the interests in
the Trust Fund created hereunder:
Class Original
Certificate
Initial Pass-Through Assumed Final Maturity
Principal Balance
Rate
Dates(6)
A-1
$ 50,035,202.00
Variable
Rate(1)
April 18, 2035
A-2
$ 43,229,633.00
Variable
Rate(2)
April 18, 2035
A-3
$
2,386,163.00 Variable
Rate(3)
April 18, 2035
A-4
$
2,958,278.00 Variable
Rate(3)
April 18, 2035
A-5
$
1,500,956.00 Variable
Rate(3)
April 18, 2035
A-6(4) $ 14,650,307.00 Variable
Rate(5)
April 18, 2035
R-I
$
100.00 Variable
Rate(3)
April 18, 2035
R-II $
100.00 Variable
Rate(3)
April 18, 2035
B-1
$
5,554,908.00 Variable
Rate(3)
April 18, 2035
B-2
$ 732,515.00
Variable
Rate(3)
April 18, 2035
B-3
$ 366,258.00
Variable
Rate(3)
April 18, 2035
B-4
$ 305,215.00
Variable
Rate(3)
April 18, 2035
B-5
$ 183,129.00
Variable
Rate(3)
April 18, 2035
B-6
$ 183,128.14
Variable
Rate(3)
April 18, 2035
(1) Varies according to (i) the weighted
average of the Net Mortgage Rate on
each Mortgage Loan minus (ii) 0.40% per
annum.
(2) Varies according to (i) the weighted
average of the Net Mortgage Rate on
each Mortgage Loan minus (ii) 0.45% per
annum.
(3) Varies according to the weighted
average of the Net Mortgage Rate on each
Mortgage Loan.
(4) For federal income tax purposes, the
Class A-6 Certificates represent
ownership of three components which are
regular interests in REMIC II: the Class
A-6A Component, the Class A-6B Component
and the Class A-6C Component. The Class
A-6A Component has a principal balance
equal to the Certificate Principal
Balance of the Class A-6 Certificates and a
Pass-Through Rate as set forth
herein. The Class A-6B Component is an
interest only component which has a
Pass-Through Rate as set forth herein and a
notional amount equal to the
Uncertificated Principal Balance of REMIC I
Regular Interest A-1. The Class A-6C
Component is an interest only component
which has a Pass-Through Rate as set
forth herein and a notional amount equal to
the Uncertificated Principal Balance
of REMIC I Regular Interest A-2.
(5) Varies according to the sum (i) the
weighted average of the Net Mortgage
Rate on each Mortgage Loan, (ii) 0.40% per
annum multiplied by a fraction, the
numerator of which is the Certificate
Principal Balance of the Class A-1
Certificates and the denominator of which
is the Certificate Principal Balance
of the Class A-6 Certificates and (iii)
0.45% per annum multiplied by a
fraction, the numerator of which is the
Certificate Principal Balance of the
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Class A-2 Certificates and the denominator
of which is the Certificate Principal
Balance of the Class A-6 Certificates.
(6) For purposes of Section
1.860G-1(a)(4)(iii) of the Treasury regulations, the
Distribution Date immediately following the
maturity date for the REMIC I
Regular Interest with the latest maturity
date has been designated as the
"latest possible maturity date" for each
Regular Certificate.
3
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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
will be calculated for all Certificates on
the basis of a 360-day year
consisting of twelve 30-day months.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Any of the Collection Account and Distribution
Account.
"Accretion Termination Date": With respect to the Class A-3
Certificates, the Class A-3 Accretion
Termination Date, with respect to the
Class A-4 Certificates, the Class A-4
Accretion Termination Date, with respect
to the Class A-5 Certificates, the Class
A-5 Accretion Termination Date and with
respect to the Class A-6 Certificates, the
Class A-6 Accretion Termination Date.
"Accrual Distribution Amount": With respect to the Class A-3
Certificates, the Class A-3 Accrual
Distribution Amount, with respect to the
Class A-4 Certificates, the Class A-4
Accrual Distribution Amount, with respect
to the Class A-5 Certificates, the Class
A-5 Accrual Distribution Amount and
with respect to the Class A-6 Certificates,
the Class A-6 Accrual Distribution
Amount.
"Additional Collateral": (i) With respect to any Mortgage 100(sm)
Loan,
the Securities Account and the financial
assets held therein subject to a
security interest pursuant to the related
Mortgage 100(sm) Pledge Agreement, or
(ii) with respect to any Parent Power(R)
Mortgage Loan, the related Parent
Power(R) Agreement and collateral pledged
pursuant thereto.
"Additional Collateral Agreements": Each Mortgage 100(sm)
Pledge
Agreement, Parent Power(R) Guaranty and
Security Agreement for Securities
Account and Control Agreement, as
applicable, for each Additional Collateral
Mortgage Loan.
"Additional Collateral Mortgage Loan": A Mortgage Loan that is
supported by Additional Collateral.
"Additional Collateral Servicer": MLCC.
"Additional Collateral Servicing Agreement": The Additional
Collateral
Transfer and Servicing Agreement, dated as
of November 1, 2001, between MLCC and
the Master Servicer.
"Advance": As to any Mortgage Loan or REO Property, any advance
made by
the Master Servicer in respect of any
Distribution Date pursuant to Section
4.03.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
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"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.
"Agreement": This Pooling and Servicing Agreement and all
amendments
and supplements hereto.
"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 Distribution Amount": With respect to any Distribution
Date
and the Mortgage Loans, an amount equal to
the excess of (i) the sum of (a) the
aggregate of the related Monthly Payments
received on or prior to the related
Determination Date, (b) Liquidation
Proceeds, Insurance Proceeds, Subsequent
Recoveries and other unscheduled recoveries
of principal and interest in respect
of the Mortgage Loans, and Principal
Prepayments during the related Prepayment
Period, (c) the aggregate of any amounts
received in respect of a related REO
Property withdrawn from any REO Account and
deposited in the Collection Account
for such Distribution Date, (d) the
aggregate of any amounts deposited in the
Collection Account by the Master Servicer
in respect of related Prepayment
Interest Shortfalls for such Distribution
Date and (e) the aggregate of any
related Advances made by the Master
Servicer for such Distribution Date, over
(ii) the sum of (a) related amounts
reimbursable or payable to the Master
Servicer pursuant to Section 3.10, (b)
related Stayed Funds, (c) related amounts
deposited in the Collection Account or the
Distribution Account, as the case may
be, in error, (d) any Extraordinary Trust
Fund Expenses and (e) the Trustee Fee.
The Available Distribution Amount shall
also be increased by any Required Surety
Payment.
"Bankruptcy Amount": As of any date of determination prior to the
first
anniversary of the Cut-off Date, an amount
equal to the excess, if any, of (A)
$50,000 over (B) the aggregate amount of
Bankruptcy Losses allocated solely to
one or more specific Classes of
Certificates in accordance with Section 4.02. As
of any date of determination on or after
the first anniversary of the Cut-off
Date, an amount equal to the excess, if
any, of (1) the lesser of (a) the
Bankruptcy Amount calculated as of the
close of business on the Business Day
immediately preceding the most recent
anniversary of the Cut-off Date coinciding
with or preceding such date of
determination (or, if such date of determination
is an anniversary of the Cut-off Date, the
Business Day immediately preceding
such date of determination) (for purposes
of this definition, the "Relevant
Anniversary") and (b) the greater of:
(A) the greater of (i) 0.0006 times the aggregate principal
balance of all the Mortgage Loans in the Mortgage Pool as of
the
Relevant Anniversary having a Loan-to-Value Ratio at origination
which
exceeds 75% and (ii) $50,000; and (B) the greater of (i) the
product of
(x) an amount equal to the largest difference in the related
Monthly
Payment for any Non-Primary Residence Loan remaining in the
Mortgage
Pool which had an original Loan-to-Value Ratio greater than 80%
that
would result if the Net
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Mortgage Rate thereof was equal to the greater of (I) 5% or (II)
the
weighted average (based on the principal balance of the Mortgage
Loans
as of the Relevant Anniversary) of the Net Mortgage Rates of
all
Mortgage Loans as of the Relevant Anniversary less 1.25% per annum,
(y)
a number equal to the weighted average remaining term to maturity,
in
months, of all Mortgage Loans with a Loan-to-Value Ratio of
greater
than 80% remaining in the Mortgage Pool as of the Relevant
Anniversary,
and (z) one plus the quotient of the number of all Non-Primary
Residence Loans with a Loan-to-Value Ratio of greater than 80%
remaining in the Mortgage Pool divided by the total number of
outstanding Mortgage Loans in the Mortgage Pool as of the
Relevant
Anniversary, and (ii) $50,000,
over (2) the aggregate amount of Bankruptcy
Losses allocated solely to one or
more specific Classes of Certificates in
accordance with Section 4.02 since the
Relevant Anniversary.
The Bankruptcy Amount may be further reduced by the Master
Servicer
(including accelerating the manner in which
such coverage is reduced) provided
that prior to any such reduction, the
Master Servicer shall (i) obtain written
confirmation from the Rating Agency that
such reduction shall not reduce the
rating assigned to any Class of
Certificates by the Rating Agency below the
lower of the then current rating or the
rating assigned to such Certificates as
of the Closing Date by such Rating Agency
and (ii) provide a copy of such
written confirmation to the Trustee.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the
United States Code), as amended.
"Bankruptcy Losses": Losses that are incurred as a result of
Debt
Service Reductions and Deficient
Valuations.
"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 Certificates (other than the
Class R, Class B-4, Class B-5 and Class
B-6 Certificates) shall be Book-Entry
Certificates.
"Business Day": Any day other than (a) a Saturday or Sunday, (b)
a
legal holiday in the State of New Jersey or
the State of New York, or (c) a day
on which banking or savings and loan
institutions in the State of New Jersey or
the State of New York are authorized or
obligated by law or executive order to
be closed.
"Buydown Account": The custodial account or accounts created
and
maintained pursuant to Section 3.25.
"Buydown Agreement": An agreement between the applicable originator
and
a Mortgagor, or an agreement among such
originator, a Mortgagor and an employer
of a relocated Mortgagor which, in each
case, provides for the application of
Buydown Funds.
6
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"Buydown Funds": In respect of any Buydown Mortgage Loan, any
amount
contributed by the related originator or
the employer of a relocated borrower in
order to enable the Mortgagor to reduce the
payments required to be made from
the Mortgagor's funds during the Buydown
Period. The Buydown Funds are not part
of the Trust Fund prior to deposit into the
Collection Account or the
Distribution Account.
"Buydown Mortgage Loan": Any Mortgage Loan in respect of which,
pursuant to a Buydown Agreement, (i) the
Mortgagor pays less than the full
monthly payment specified in the Mortgage
Note during the Buydown Period and
(ii) the difference between the payments
required under such Buydown Agreement
and the Mortgage Note is paid from the
related Buydown Funds.
"Buydown Period": The period during which Buydown Funds are
required to
be applied to the related Buydown Mortgage
Loans as provided in Section 3.25.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds
of
which were more than 2% or $2,000 in excess
of the principal balance of any
existing first mortgage or seasoned
subordinate mortgage on the related
Mortgaged Property and related closing
costs.
"Cash Liquidation": As to any defaulted Mortgage Loan other than
REO
Property which has been acquired by the
Master Servicer on behalf of the Trustee
for the benefit of the Certificateholders,
a determination by the Master
Servicer that it has received all Insurance
Proceeds, Liquidation Proceeds and
other payments or cash recoveries which the
Master Servicer reasonably or in
good faith expects to be finally
recoverable with respect to such Mortgage Loan,
plus, with respect to a defaulted Mortgage
Loan that is an Additional Collateral
Mortgage Loan, the amount realized on the
related Additional Collateral with
respect to such Mortgage Loan in accordance
with Section 3.16.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificateholder" or "Holder": The Person in whose name a
Certificate
is registered in the Certificate Register,
except that a Disqualified
Organization or non-U.S. Person shall not
be a Holder of a Class R Certificate
for any purpose hereof.
"Certificate Owner": With respect to each Book-Entry Certificate,
any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Certificate as
of
any date of determination, (x) the
Certificate Principal Balance of such
Certificate on the Distribution Date
immediately prior to such date of
determination, plus (y) (i) in the case of
the Class A-3 Certificates, an amount
equal to the Monthly Interest Distributable
Amount added to the Certificate
Principal Balance of the Class A-3
Certificates on the Distribution Date
immediately prior to such date of
determination on or prior to the Class A-3
Accretion Termination Date and (ii) in the
case of the Class A-4 Certificates,
an amount equal to the Monthly Interest
Distributable Amount added to the
Certificate Principal Balance of the Class
A-4 Certificates on the Distribution
Date immediately prior to such date of
determination on or prior to the Class
A-4 Accretion Termination Date, (iii) in
the case of the Class A-5 Certificates,
an amount equal to the Monthly Interest
Distributable Amount added to the
Certificate Principal Balance of the Class
A-5 Certificates on the Distribution
Date immediately prior to such date of
determination
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<PAGE>
on or prior to the Class A-5 Accretion
Termination Date and (iv) in the case of
the Class A-6 Certificates, an amount equal
to the Monthly Interest
Distributable Amount added to the
Certificate Principal Balance of the Class A-6
Certificates on the Distribution Date
immediately prior to such date of
determination on or prior to the Class A-6
Accretion Termination Date plus (z)
in the case of the Class B Certificates,
any Subsequent Recoveries added to the
Certificate Principal Balance of any such
Certificate pursuant to Section
4.01(g), reduced by the aggregate of (a)
all distributions of principal made
thereon on such immediately prior
Distribution Date and (b) without duplication
of amounts described in clause (a) above,
reductions in the Certificate
Principal Balance thereof in connection
with allocations thereto of Realized
Losses on the Mortgage Loans and
Extraordinary Trust Fund Expenses on such
immediately prior Distribution Date (or, in
the case of any date of
determination up to and including the
initial Distribution Date, the initial
Certificate Principal Balance of such
Certificate, as stated on the face
thereon); provided, however, that the
Certificate Principal Balance of each
Subordinate Certificate of the Class of
Subordinate Certificates outstanding
with the highest numerical designation at
any given time shall be calculated to
equal the Percentage Interest evidenced by
such Certificate multiplied by the
excess, if any, of (A) the then aggregate
Stated Principal Balance of the
Mortgage Loans over (B) the then aggregate
Certificate Principal Balances of all
other Classes of Certificates then
outstanding.
"Certificate Register" and "Certificate Registrar": The
register
maintained and registrar appointed pursuant
to Section 5.02 hereof.
"Class": Collectively, Certificates which have the same priority
of
payment and bear the same class designation
and the form of which is identical
except for variation in the Percentage
Interest evidenced thereby.
"Class A Certificate": Any of the Class A-1, Class A-2, Class
A-3,
Class A-4, Class A-5 or Class A-6
Certificates as designated on the face thereof
substantially in the form annexed hereto as
Exhibit A, executed by the Trustee
and authenticated and delivered by the
Trustee, representing the right to
distributions as set forth herein and
therein.
"Class A Certificateholder": Any Holder of a Class A
Certificate.
"Class A-3 Accretion Termination Date": The earlier to occur of (i)
the
Distribution Date on which the Certificate
Principal Balance of the Class A-2
Certificates has been reduced to zero and
(ii) the Credit Support Depletion
Date.
"Class A-3 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-3
Accretion Termination Date, an amount
equal to the aggregate amount of Monthly
Interest Distributable Amount on the
Class A-3 Certificates, for such date, to
the extent added to the Certificate
Principal Balance thereof pursuant to
Section 4.01(i); provided that, with
respect to each Distribution Date on or
after the Class A-3 Accretion
Termination Date, the Monthly Interest
Distributable Amount on the Class A-3
Certificates for such date remaining after
reduction of the Certificate
Principal Balance of the Class A-2
Certificates to zero on the Class A-3
Accretion Termination Date will be payable
to the Class A-3 Certificateholders
pursuant to Section 4.01(c)(i) hereof; and
provided further, that if the Class
A-3 Accretion Termination Date is the
Credit Support Depletion Date, the entire
amount of Monthly Interest Distributable
Amount on the Class A-3 Certificates
for that date will be payable to the Class
A-3 Certificateholders pursuant to
Section 4.01(c)(i) hereof.
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<PAGE>
"Class A-4 Accretion Termination Date": The earlier to occur of (i)
the
Distribution Date on which the aggregate
Certificate Principal Balance of the
Class A-1, Class A-2 and Class A-3
Certificates has been reduced to zero and
(ii) the Credit Support Depletion Date.
"Class A-4 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-4
Accretion Termination Date, an amount
equal to the aggregate amount of Monthly
Interest Distributable Amount on the
Class A-4 Certificates, for such date, to
the extent added to the Certificate
Principal Balance thereof pursuant to
Section 4.01(j); provided that, with
respect to each Distribution Date on or
after the Class A-4 Accretion
Termination Date, the Monthly Interest
Distributable Amount on the Class A-4
Certificates for such date remaining after
reduction of the aggregate
Certificate Principal Balance of the Class
A-1, Class A-2 and Class A-3
Certificates to zero on the Class A-4
Accretion Termination Date will be payable
to the Class A-4 Certificateholders
pursuant to Section 4.01(c)(i) hereof; and
provided further, that if the Class A-4
Accretion Termination Date is the Credit
Support Depletion Date, the entire amount
of Monthly Interest Distributable
Amount on the Class A-4 Certificates for
that date will be payable to the Class
A-4 Certificateholders pursuant to Section
4.01(c)(i) hereof.
"Class A-5 Accretion Termination Date": The earlier to occur of (i)
the
Distribution Date on which the aggregate
Certificate Principal Balance of the
Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates has been reduced to
zero and (ii) the Credit Support Depletion
Date.
"Class A-5 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-5
Accretion Termination Date, an amount
equal to the aggregate amount of Monthly
Interest Distributable Amount on the
Class A-5 Certificates, for such date, to
the extent added to the Certificate
Principal Balance thereof pursuant to
Section 4.01(k); provided that, with
respect to each Distribution Date on or
after the Class A-5 Accretion
Termination Date, the Monthly Interest
Distributable Amount on the Class A-5
Certificates for such date remaining after
reduction of the aggregate
Certificate Principal Balance of the Class
A-1, Class A-2, Class A-3 and Class
A-4 Certificates to zero on the Class A-5
Accretion Termination Date will be
payable to the Class A-5 Certificateholders
pursuant to Section 4.01(c)(i)
hereof; and provided further, that if the
Class A-5 Accretion Termination Date
is the Credit Support Depletion Date, the
entire amount of Monthly Interest
Distributable Amount on the Class A-5
Certificates for that date will be payable
to the Class A-4 Certificateholders
pursuant to Section 4.01(c)(i) hereof.
"Class A-6 Accretion Termination Date": The earliest to occur of
(i)
the Distribution Date on which the
aggregate Certificate Principal Balance of
the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates has
been reduced to zero, (ii) the Credit
Support Depletion Date and (iii) the
Distribution Date occurring in April
2010.
"Class A-6 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-6
Accretion Termination Date, an amount
equal to the aggregate amount of Monthly
Interest Distributable Amount on the
Class A-6 Certificates, for such date, to
the extent added to the Certificate
Principal Balance thereof pursuant to
Section 4.01(l); provided that, with
respect to each Distribution Date on or
after the Class A-6 Accretion
Termination Date, the Monthly Interest
Distributable Amount on the Class A-6
Certificates for such date remaining after
reduction of the aggregate
Certificate Principal Balance of the Class
A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates to zero on the
Class A-6 Accretion Termination Date
will be payable to the Class A-6
Certificateholders pursuant to Section
4.01(c)(i) hereof; and provided further,
that if the Class A-6 Accretion
Termination Date is the Credit Support
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<PAGE>
Depletion Date or the distribution date
occurring in April 2010, the entire
amount of Monthly Interest Distributable
Amount on the Class A-6 Certificates
for that date will be payable to the Class
A-6 Certificateholders pursuant to
Section 4.01(c)(i) hereof.
"Class A-6A Component": A regular interest in REMIC II which has
a
principal amount which will at all times be
equal to the Certificate Principal
Balance of the Class A-6 Certificates and a
per annum Pass-Through Rate as set
forth herein.
"Class A-6A Component Principal Amount": An amount equal to the
Certificate Principal Balance of the Class
A-6 Certificates.
"Class A-6B Component": A regular interest in REMIC II which has
a
notional amount which will at all times be
equal to the Uncertificated Principal
Balance of REMIC I Regular Interest A-1, a
per annum Pass-Through Rate as set
forth herein, and no principal amount.
"Class A-6B Component Notional Amount": An amount equal to the
Uncertificated Principal Balance of REMIC I
Regular Interest A-1.
"Class A-6C Component": A regular interest in REMIC II which has
a
notional amount which will at all times be
equal to the Uncertificated Principal
Balance of REMIC I Regular Interest A-2, a
per annum Pass-Through Rate as set
forth herein, and no principal amount.
"Class A-6C Component Notional Amount": An amount equal to the
Uncertificated Principal Balance of REMIC I
Regular Interest A-2.
"Class B Certificate": Any one of the Class B-1, Class B-2, Class
B-3,
Class B-4, Class B-5 or Class B-6
Certificates as designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-2, executed by the Trustee
and authenticated and delivered by the
Trustee, representing the right to
distributions as set forth herein and
therein.
"Class B Certificateholder": Any Holder of a Class B
Certificate.
"Class B Percentage": The Class B-1 Percentage, Class B-2
Percentage,
Class B-3 Percentage, Class B-4 Percentage,
Class B-5 Percentage or Class B-6
Percentage.
"Class B-1 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as
a percentage, the numerator of which
is the aggregate Certificate Principal
Balance of the Class B-1 Certificates
immediately prior to such Distribution Date
and the denominator of which is the
aggregate Stated Principal Balance of all
of the Mortgage Loans (or related REO
Properties) immediately prior to such
Distribution Date. The initial Class B-1
Percentage is approximately 4.55%.
"Class B-2 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as
a percentage, the numerator of which
is the aggregate Certificate Principal
Balance of the Class B-2 Certificates
immediately prior to such Distribution Date
and the denominator of which is the
aggregate Stated Principal Balance of all
of the Mortgage Loans (or related REO
Properties) immediately prior to such
Distribution Date. The initial Class B-2
Percentage is approximately 0.60%.
10
<PAGE>
"Class B-3 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as
a percentage, the numerator of which
is the aggregate Certificate Principal
Balance of the Class B-3 Certificates
immediately prior to such Distribution Date
and the denominator of which is the
aggregate Stated Principal Balance of all
of the Mortgage Loans (or related REO
Properties) immediately prior to such
Distribution Date. The initial Class B-3
Percentage is approximately 0.30%.
"Class B-4 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as
a percentage, the numerator of which
is the aggregate Certificate Principal
Balance of the Class B-4 Certificates
immediately prior to such Distribution Date
and the denominator of which is the
aggregate Stated Principal Balance of all
of the Mortgage Loans (or related REO
Properties) immediately prior to such
Distribution Date. The initial Class B-4
Percentage is approximately 0.25%.
"Class B-5 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as
a percentage, the numerator of which
is the aggregate Certificate Principal
Balance of the Class B-5 Certificates
immediately prior to such Distribution Date
and the denominator of which is the
aggregate Stated Principal Balance of all
of the Mortgage Loans (or related REO
Properties) immediately prior to such
Distribution Date. The initial Class B-5
Percentage is approximately 0.15%.
"Class B-6 Percentage": With respect to any Distribution Date,
the
lesser of 100% and a fraction, expressed as
a percentage, the numerator of which
is the aggregate Certificate Principal
Balance of the Class B-6 Certificates
immediately prior to such Distribution Date
and the denominator of which is the
aggregate Stated Principal Balance of all
of the Mortgage Loans (or related REO
Properties) immediately prior to such
Distribution Date. The initial Class B-6
Percentage is approximately 0.15%.
"Class R Certificates": The Class R-I and Class R-II
Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit C-1 and each
evidencing the ownership of an interest
designated as the Residual Interest in
the related REMIC.
"Class Subordination Percentage": With respect to any Distribution
Date
and each Class of Subordinate Certificates,
the fraction (expressed as a
percentage) the numerator of which is the
Certificate Principal Balance of such
Class of Subordinate Certificates
immediately prior to such Distribution Date
and the denominator of which is the
aggregate of the Certificate Principal
Balances of all Classes of Certificates
immediately prior to such Distribution
Date.
"Closing Date": March 29, 2005.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The account or accounts created and
maintained by
the Master Servicer pursuant to Section
3.10, which shall be entitled "PHH
Mortgage Corporation, as Master Servicer
for Citibank, N.A., as Trustee, in
trust for registered Holders of PHHMC
Mortgage Pass-Through Certificates, Series
2005-2", and which must be an Eligible
Account.
"Commission": The Securities and Exchange Commission.
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<PAGE>
"Compensating Interest": As defined in Section 3.24 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.
"Control Agreement": With respect to each Mortgage 100(sm) Loan,
the
Merrill Lynch Pledged Collateral Account
Control Agreement between the guarantor
or mortgagor, as applicable, the Additional
Collateral Servicer and Merrill
Lynch, Pierce, Fenner & Smith
Incorporated, pursuant to which the guarantor or
mortgagor, as applicable, has granted a
security interest in a Securities
Account.
"Cooperative": A corporation that has been formed for the purpose
of
cooperative apartment ownership.
"Cooperative Assets": Shares issued by Cooperatives, the
related
Cooperative Lease and any other collateral
securing the Cooperative Loans.
"Cooperative Building": The building and other property owned by
a
Cooperative.
"Cooperative Lease": With respect to a Cooperative Loan, the
proprietary lease or occupancy agreement
with respect to the Cooperative
Apartment occupied by the Mortgagor and
relating to the related Cooperative
Assets, which lease or agreement confers an
exclusive right to the holder of
such Cooperative Assets to occupy such
apartment.
"Cooperative Loan": The indebtedness of a Mortgagor evidenced by
a
Mortgage Note which is secured by
Cooperative Assets and which is being sold to
the Depositor pursuant to this Agreement,
the Mortgage Loans so sold being
identified in the Mortgage Loan
Schedule.
"Cooperative Unit": A specific dwelling unit in a Cooperative
Building
as to which exclusive occupancy rights have
been granted pursuant to a Lease.
"Corporate Trust Office": The principal corporate trust office of
the
Trustee at which at any particular time its
corporate trust business in
connection with this Agreement shall be
administered, which office at the date
of the execution of this instrument is
located, for Certificate transfer
purposes, at 111 Wall Street, 15th Floor,
Attn: Securities Window, New York, New
York 10005, Attention: PHHMC, Series
2005-2, or at such other address as the
Trustee may designate from time to time by
notice to the Certificateholders, the
Depositor and the Master Servicer.
"Corresponding Certificated Interests": With respect to each REMIC
I
Regular Interest, the Class with the same
designation.
"Credit Support Depletion Date": The first Distribution Date on
which
the Senior Percentage equals 100%.
"Curtailment": Any Principal Prepayment made by a Mortgagor which
is
not a Principal Prepayment in Full.
"Cut-off Date": March 1, 2005.
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<PAGE>
"Cut-off Date Principal Balance": With respect to any Mortgage
Loan,
the unpaid principal balance thereof as of
the Cut-off Date (or as of the
applicable date of substitution with
respect to a 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": As used herein, a Mortgage Loan is considered to be:
"one
month" delinquent when a payment due on any
scheduled due date remains unpaid as
of the close of business on the last
Business Day immediately prior to the next
following monthly scheduled due date; "two
months" delinquent when a payment due
on any scheduled due date remains unpaid as
of the close of business on the last
Business Day immediately prior to the
second following monthly scheduled due
date; and so on. The determination as to
whether a Mortgage Loan falls into
these categories is made as of the close of
business on the last Business Day of
each month. For example, a Mortgage Loan
with a payment due on July 1 that
remained unpaid as of the close of business
on July 31 would then be considered
to be one month delinquent. Delinquency
information as of the Cut-off Date is
determined and prepared as of the close of
business on the last Business Day
immediately prior to the Cut-off Date.
"Depositor": PHH Mortgage Capital LLC, a Delaware limited
liability
company, 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 Securities Exchange Act of
1934, as amended. The Depository shall
initially be the registered Holder of the
Book-Entry Certificates. The Depository
shall at all times be a "clearing
corporation" as defined in Section 8-102(3)
of the Uniform Commercial Code of
the State of New York.
"Depository Agreement": With respect to any Book-Entry
Certificates,
either of the agreements among the
Depositor, the Trustee and the initial
Depository, to be dated on or about the
Closing Date.
"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.
13
<PAGE>
"Determination Date": With respect to any Distribution Date, the
8th
day of the calendar month in which such
Distribution Date occurs or, if such 8th
day is not a Business Day, the Business Day
immediately preceding such 8th 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 Fund other than
through an Independent Contractor,
provided, however, that the Trustee (or the
Master Servicer on behalf of the Trustee)
shall not be considered to Directly
Operate an REO Property solely because the
Trustee (or the Master Servicer on
behalf of the Trustee) establishes rental
terms, chooses tenants, enters into or
renews leases, deals with taxes and
insurance, or makes decisions as to repairs
or capital expenditures with respect to
such REO Property.
"Disqualified Organization": Any of the following: (i) the
United
States, any State or political subdivision
thereof, any possession of the United
States, or any agency or instrumentality of
any of the foregoing (other than an
instrumentality which is a corporation if
all of its activities are subject to
tax and, except for the Freddie Mac or any
successor thereto, a majority of its
board of directors is not selected by such
governmental unit), (ii) any foreign
government, any international organization,
or any agency or instrumentality of
any of the foregoing, (iii) any
organization (other than certain farmers'
cooperatives described in Section 521 of
the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including
the tax imposed by Section 511 of
the Code on unrelated business taxable
income), (iv) rural electric and
telephone cooperatives described in Section
1381(a)(2)(C) of the Code or (v) any
other Person so designated by the Trustee
based upon an Opinion of Counsel,
which Opinion of Counsel shall not be an
expense of the Trustee, that the
holding of an ownership interest in a
Residual Certificate by such Person may
cause the Trust or any Person having an
ownership interest in the Residual
Certificate (other than such Person) to
incur a liability for any federal tax
imposed under the Code that would not
otherwise be imposed but for the transfer
of an ownership interest in a Residual
Certificate to such Person. The terms
"United States," "State" and "international
organization" shall have the
meanings set forth in Section 7701 of the
Code or successor provisions.
"Distribution Account": The trust account or accounts created
and
maintained by the Trustee pursuant to
Section 3.10(b) which shall be entitled
"Distribution Account, Citibank, N.A., as
Trustee, in trust for the registered
Holders of the PHHMC Mortgage Pass-Through
Certificates, Series 2005-2" and
which must be an Eligible Account.
"Distribution Date": The 18th day of any calendar month, or if
such
18th day is not a Business Day, the
Business Day immediately following such 18th
day, commencing in April 2005.
"Due Date": With respect to each Mortgage Loan and any
Distribution
Date, the first day of the calendar month
in which such Distribution Date occurs
on which the Monthly Payment for such
Mortgage Loan was due, exclusive of any
days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month
preceding the month in which such
Distribution Date (or with respect to
14
<PAGE>
the first Due Period, the day following the
Cut-off Date) occurs and ending on
the first day of the month in which such
Distribution Date occurs.
"Effective Loan-to-Value Ratio": With respect to an Additional
Collateral Mortgage Loan, the ratio,
expressed as a percentage, of (A) the
principal amount of the Mortgage Loan at
origination less the value of any
Additional Collateral securing the Mortgage
Loan, to (B) the lesser of (1) the
appraised value determined in an appraisal
or other collateral assessment tool
obtained at origination of the Mortgage
Loan and (2) the sales price for the
related Mortgaged Property.
"Eligible Account": Any of (i) an account or accounts maintained
with a
depository institution the short-term debt
obligations of which have been rated
by the Rating Agency in its highest rating
available, (ii) in a depository
institution in which such accounts are
fully insured to the limits established
by the FDIC, provided that any deposits not
so insured shall, to the extent
acceptable to the Rating Agency, as
evidenced in writing, be maintained such
that (as evidenced by an Opinion of Counsel
delivered to the Trustee and the
Rating Agency) the registered Holders of
Certificates have a claim with respect
to the funds in such account or a perfected
first security interest against any
collateral (which shall be limited to
Permitted Investments) securing such funds
that is superior to claims of any other
depositors or creditors of the
depository institution with which such
account is maintained, (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, (iv) an
account or accounts of a depository
institution acceptable to the Rating Agency
(as evidenced in writing by the
Rating Agency that use of any such account
will not reduce the rating assigned
to any Class of Certificates by the Rating
Agency below the lower of the
then-current rating or the rating assigned
to such Certificates as of the
Closing Date by such Rating Agency) or (v)
an account or accounts maintained
with a federal or state chartered
depository institution or trust company that
meet the depository requirements of Fannie
Mae or Freddie Mac. Eligible Accounts
may bear interest.
"Eligible Funds": With respect to each Distribution Date, the
portion,
if any, of the Available Distribution
Amount remaining after reduction by the
sum of the Senior Interest Distribution
Amount, the Senior Principal
Distribution Amount, determined without
regard to clause (D) of its definition,
and the aggregate amount of the Monthly
Interest Distributable Amount on the
Class B-1, Class B-2, Class B-3, Class B-4
and Class B-5 Certificates.
"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 the outstanding principal
balance of the Defective Mortgage Loan as
of the Due Date in the calendar month
during which the substitution occurs, the
amount of any shortfall to be
deposited by the Master Servicer in the
Collection Account in the month of
substitution, (ii) have a Loan Rate, not
less than the Loan Rate of the
Defective Mortgage Loan and not more than
1% in excess of the Loan Rate of such
Defective Mortgage Loan, (iii) have a
remaining term to maturity not greater
than (and not more than one year less than)
that of the Defective Mortgage Loan,
(iv) be current as of the date of
substitution, (v) have a Loan-to-Value Ratio
as of the date of substitution equal to or
lower than the Loan-to-Value Ratio of
the Defective Mortgage Loan as of such date
and (vi) 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
15
<PAGE>
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 Loan Rates described in
clause (ii) hereof shall be determined on
the basis of weighted average Loan Rates,
the terms described in clause (iii)
hereof shall be determined on the basis of
weighted average remaining term to
maturity, the Loan-to-Value Ratios
described in clause (v) hereof shall be
satisfied as to each such mortgage loan
and, except to the extent otherwise
provided in this sentence, the
representations and warranties described in
clause (vi) hereof must be satisfied as to
each Eligible Substitute Mortgage
Loan or in the aggregate, as the case may
be. Any Mortgage Loan substituted for
a Mortgage Loan which has an arrearage due
to the application of any related
forbearance plan with respect to such
Mortgage Loan, will be treated as having
such an arrearage due to the application of
any related forbearance plan with
respect to such Mortgage Loan.
"ERISA": The Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA-Restricted Certificates": Any of the Class B-4, Class B-5,
Class
B-6 and Class R Certificates.
"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.
"Excess Losses": (i) Special Hazard Losses in excess of the
Special
Hazard Amount, (ii) Bankruptcy Losses in
excess of the Bankruptcy Amount, (iii)
Fraud Losses in excess of the Fraud Loss
Amount and (iv) Extraordinary Losses.
"Excess Subordinate Principal Amount": With respect to any
Distribution
Date on which the Certificate Principal
Balance of the Class or Classes of
Certificates then outstanding with the
Lowest Priority is to be reduced to zero
and on which Realized Losses are to be
allocated to that Class or those Classes,
the amount, if any, by which (i) the amount
of principal that would otherwise be
distributable on that Class or those
Classes of Certificates on such
Distribution Date is greater than (ii) the
excess, if any, of the aggregate
Certificate Principal Balance of that Class
or those Classes of Certificates
immediately prior to such Distribution Date
over the aggregate amount of
Realized Losses to be allocated to that
Class or those Classes of Certificates
on such Distribution Date.
"Exchange Act": The Securities and Exchange Act of 1934, as
amended.
"Extraordinary Loss": Any Realized Loss or portion thereof caused
by or
resulting from:
(i) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled
or
uncontrolled and whether such loss be direct or indirect, proximate
or
remote or be in whole or in part caused by, contributed to or
aggravated by a peril covered by the definition of the term
"Special
Hazard Loss";
(ii) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending against
an
actual, impending or expected attack by any government or
sovereign
power, de jure or de facto, or by any authority maintaining
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or using military, naval or air forces, or by military, naval or
air
forces, or by an agent of any such government, power, authority
or
forces;
(iii) any weapon of war employing atomic fission or
radioactive forces whether in time of peace or war, and
(iv) insurrection, rebellion, revolution, civil war, usurped
power or action taken by governmental authority in hindering,
combating
or defending against such an occurrence, seizure or destruction
under
quarantine or customs
regulations, confiscation by order of any
government or public authority, or risks of contraband or
illegal
transactions or trade.
"Extraordinary Trust Fund Expenses": Any amounts reimbursable to
the
Master Servicer or the Depositor pursuant
to Section 6.03, any amounts
reimbursable to the Trustee from the Trust
Fund pursuant to this Agreement,
including but not limited to Section 8.05,
and any other costs, expenses,
liabilities and losses borne by the Trust
Fund (exclusive of any cost, expense,
liability or loss that is specific to a
particular Mortgage Loan or REO Property
and is taken into account in calculating a
Realized Loss in respect thereof) for
which the Trust Fund has not and, in the
reasonable good faith judgment of the
Trustee, shall not, obtain reimbursement or
indemnification from any other
Person.
"Fannie Mae": Federal National Mortgage Association or any
successor
thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section
3.14.
"Final Recovery Determination": With respect to any defaulted
Mortgage
Loan or any REO Property (other than a
Mortgage Loan or REO Property purchased
by a Seller or the Master Servicer pursuant
to or as contemplated by Section
2.03 or 10.01), a determination made by the
Master Servicer that all Insurance
Proceeds, Liquidation Proceeds and other
payments or recoveries which the Master
Servicer, in its reasonable good faith
judgment, expects to be finally
recoverable in respect thereof have been so
recovered. The Master Servicer shall
maintain records, prepared by a Servicing
Officer, of each Final Recovery
Determination made thereby.
"Fitch": Fitch, Inc., doing business as Fitch Ratings, and any
successor thereto or its successor in
interest.
"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.
"Foreclosure Profits": As to any Distribution Date or related
Determination Date and any Mortgage Loan,
the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and proceeds
from any REO Disposition (net of all
amounts reimbursable therefrom pursuant to
Section 3.11(a)(iii)) in respect of
each Mortgage Loan or REO Property for
which a Cash Liquidation or REO
Disposition occurred in the related
Prepayment Period over the sum of the unpaid
principal balance of such Mortgage Loan or
REO Property (determined, in the case
of an REO Disposition, in accordance with
Section 3.16) plus accrued and unpaid
interest at the Mortgage Rate on such
unpaid principal balance from the Due Date
to which interest was last paid by the
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Mortgagor to the first day of the month
following the month in which such Cash
Liquidation or REO Disposition
occurred.
"Fraud Loss Amount": As of any date of determination after the
Cut-off
Date, prior to the third anniversary of the
Cut-off Date, an amount equal to
1.00% of the aggregate outstanding
principal balance of all of the Mortgage
Loans as of the Cut-off Date minus the
Fraud Losses allocated solely to one or
more specific Classes of Certificates in
accordance with Section 4.02 since the
most recent anniversary of the Cut-off Date
up to such date of determination. On
and after the third anniversary of the
Cut-off Date, the Fraud Loss Amount shall
be zero.
The Fraud Loss Amount may be further reduced by the Master
Servicer
(including accelerating the manner in which
such coverage is reduced) provided
that prior to any such reduction, the
Master Servicer shall (i) obtain written
conformation from the Rating Agency that
such reduction shall not reduce the
rating assigned to any Class of
Certificates by such Rating Agency below the
lower of the then-current rating or the
rating assigned to such Certificates as
of the Closing Date by such Rating Agency
and (ii) provide a copy of such
written conformation to the Trustee.
"Fraud Losses": Losses sustained on a Liquidated Mortgage Loan
by
reason of a default arising from fraud,
dishonesty or misrepresentation.
"Freddie Mac": Federal Home Loan Mortgage Corporation or any
successor
thereto.
"Highest Priority": As of any date of determination, the Class
of
Subordinate Certificates then outstanding
with the earliest priority for
payments pursuant to Section 4.01(c), in
the following order: Class B-1, Class
B-2, Class B-3, Class B-4, Class B-5 and
Class B-6 Certificates.
"HUD": The United States Department of Housing and Urban
Development,
or any successor thereto and 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 (a) is in fact independent of
the Depositor, the Master Servicer and
their respective Affiliates, (b) does not
have any direct financial interest in
or any material indirect financial interest
in the Depositor or the Master
Servicer or any Affiliate thereof, and (c)
is not connected with the Depositor
or the Master 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 Master 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 Master
Servicer or any Affiliate thereof, as the
case may be.
"Independent Contractor": Either (i) any Person (other than the
Master
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
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between such Person and the Trust Fund is
at arm's length, all within the
meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person
(including the Master 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.
"Initial Certificate Principal Balance": With respect to any
Regular
Certificate, the amount designated "Initial
Certificate Principal Balance" on
the face thereof.
"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 Master
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
any Class of Certificates, the calendar
month immediately preceding the month in
which such Distribution Date occurs.
"Late Collections": With respect to any Mortgage Loan, all
amounts
received subsequent to the Determination
Date immediately following any related
Due Period, whether as late payments of
Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or
otherwise, which represent late payments or
collections of principal and/or interest
due (without regard to any acceleration
of payments under the related Mortgage and
Mortgage Note) but delinquent on a
contractual basis for such Due Period and
not previously recovered.
"Limited Purpose Surety Bond": The Limited Purpose Surety Bond
(Policy
No. AB0039BE), dated February 28, 1996 in
respect to certain Additional
Collateral Mortgage Loans, issued by Ambac
Assurance Corporation (f/k/a Ambac
Indemnity Corporation) for the benefit of
certain beneficiaries, including the
Trustee for the benefit of the
Certificateholders, but only to the extent that
such Limited Purpose Surety Bond covers any
Additional Collateral Mortgage
Loans.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage
Loan in respect of which the Master
Servicer has determined, in accordance with
the servicing procedures specified herein,
as of the end of the related Due
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
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<PAGE>
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 3.23 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 Master Servicer in connection with (i)
the taking of all or a part of a
Mortgaged Property by exercise of the power
of eminent domain or condemnation,
(ii) the liquidation of a defaulted
Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise (including,
with respect to a defaulted Mortgage
Loan that is an Additional Collateral
Mortgage Loan, the amount realized on the
related Additional Collateral with respect
to such Mortgage Loan in accordance
with Section 3.16), or (iii) the
repurchase, substitution or sale of a Mortgage
Loan or an REO Property pursuant to or as
contemplated by Section 2.03, Section
3.16 or Section 10.01.
"Loan Balance": As of any date, the aggregate Stated Principal
Balance
of all of the Mortgage Loans as of such
date.
"Loan-to-Value Ratio": As of any date and Mortgage Loan (other than
an
Additional Collateral Mortgage Loan), the
fraction, expressed as a percentage,
the numerator of which is the Stated
Principal Balance of the Mortgage Loan, and
the denominator of which is the Value of
the related Mortgaged Property. As of
any date and any Additional Collateral
Mortgage Loan, the related Effective
Loan-to-Value Ratio.
"Loan 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 shall remain
constant at the rate set forth in the
Mortgage Loan Schedule as the Loan Rate in
effect immediately following the Cut-off
Date. 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.
"Lockout Percentage": With respect to any Distribution Date,
the
Certificate Principal Balance of the Class
A-6 Certificates, divided by the
aggregate Certificate Principal Balance of
the Senior Certificates, in each case
immediately prior to any allocations of
losses or distributions on that
Distribution Date.
"Lockout Prepayment Percentage": With respect to any Distribution
Date,
the product of (i) the Lockout Percentage
and (ii) the Stepdown Percentage.
"Lockout Scheduled Percentage": With respect to any Distribution
Date
(i) occurring prior to April 2010, 0% and
(ii) occurring in or after April 2010,
the Lockout Percentage.
"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
Depositor as applicable 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.
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<PAGE>
"Lower Priority": As of any date of determination and with respect
to
any Class of Subordinate Certificates, any
other Class of Subordinate
Certificates then outstanding with a later
priority for payments pursuant to
Section 4.01(c).
"Lowest Priority": As of any date of determination, the Class
of
Subordinate Certificates then outstanding
with the latest priority for payments
pursuant to Section 4.01(c), in the
following order: Class B-6, Class B-5, Class
B-4, Class B-3, Class B-2 and Class B-1
Certificates.
"Majority Certificateholders": The Holders of Certificates
evidencing
at least 51% of the Voting Rights.
"Master Servicer Affiliate": A Person (i) controlling, controlled
by or
under common control with the Master
Servicer or which is 50% or more owned by
the Master Servicer and (ii) which is
qualified to service residential mortgage
loans.
"Master Servicer Event of Termination": One or more of the
events
described in Section 7.01.
"Master Servicer Remittance Date": With respect to any
Distribution
Date, the Business Day prior to such
Distribution Date.
"MERS": Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of
the State of Delaware, or any successor
thereto.
"MERS(R) System": The system of recording transfers of
Mortgages
electronically maintained by MERS.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered
with MERS on the MERS(R) System.
"MLCC": Merrill Lynch Credit Corporation and its successors in
interest.
"MOM Loan": With respect to any Mortgage Loan, MERS acting as
the
mortgagee of such Mortgage Loan, solely as
nominee for the originator of such
Mortgage Loan and its successors and
assigns, at the origination thereof.
"Monthly Interest Distributable Amount": An amount equal to the
interest accrued during the related
Interest Accrual Period on the Certificate
Principal Balance of each Class of
Certificates at the then-applicable
Pass-Through Rate. The Monthly Interest
Distributable Amount on any Class of
Certificates will be reduced by the amount
of (i) Prepayment Interest Shortfalls
(to the extent not offset by the Master
Servicer with a payment of Compensating
Interest as provided in Section 3.24), (ii)
the interest portion (adjusted to
the Net Mortgage Rate) of Realized Losses
(including Excess Losses and
Extraordinary Losses) not allocated solely
to one or more specific Classes of
Certificates pursuant to Section 4.02,
(iii) the interest portion of Advances
previously made with respect to a Mortgage
Loan or REO Property which remained
unreimbursed following the Cash Liquidation
or REO Disposition of such Mortgage
Loan or REO Property that were made with
respect to delinquencies that were
ultimately determined to be Excess Losses
or Extraordinary Losses and (iv) any
other interest shortfalls not covered
by
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<PAGE>
the subordination provided by the Class B
Certificates, including Relief Act
Shortfalls, with all such reductions
allocated among all of the Certificates in
proportion to their respective amounts of
Monthly Interest Distributable Amount
payable on such Distribution Date which
would have resulted absent such
reductions.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled
monthly payment of principal and interest
on such Mortgage Loan which is payable
by the related Mortgagor from time to time
under the related Mortgage Note,
determined: (a) after giving effect to (i)
any Deficient Valuation and/or Debt
Service Reduction with respect to such
Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the
related Mortgagor pursuant to the
Relief Act; (b) without giving effect to
any extension granted or agreed to by
the Master 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.
"Mortgage": The mortgage, deed of trust or other instrument
creating a
first lien on, or first priority security
interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage 100(sm) Loan": A Mortgage Loan secured by Additional
Collateral in the form of a security
interest in the Securities Account and the
financial assets held therein and having a
value, as of the date of origination
of such Mortgage Loan, of at least equal to
the related Original Additional
Collateral Requirement.
"Mortgage 100(sm) Pledge Agreement": With respect to each
Mortgage
100(sm) Loan, the Pledge Agreement for
Securities Account between the related
mortgagor and the Additional Collateral
Servicer pursuant to which such
mortgagor granted a security interest in
the related securities and other
financial assets held therein.
"Mortgage File": The mortgage documents listed in Section 2.01(A)
and
(B) pertaining to a particular Mortgage
Loan and any additional documents
required to be added to the Mortgage File
pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan (including the Cooperative
Loans)
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.
"Mortgage Loan Purchase Agreement": The mortgage loan purchase
agreement, dated as of March 1, 2005, among
the Sellers and the Depositor,
regarding the transfer of the Mortgage
Loans.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans
identifying the Mortgage Loans transferred
from the Sellers, and attached hereto
as Exhibit D. The Mortgage Loan Schedule
shall set forth the following
information with respect to each Mortgage
Loan:
(i) the
Sellers' Mortgage Loan identifying number;
(ii)
[reserved];
(iii) the
zip code of the related Mortgaged Property;
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(iv)
a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type
of Residential Dwelling constituting the
Mortgaged Property;
(vi)
the original months to maturity;
(vii) the
original date of the mortgage;
(viii) the Loan-to-Value Ratio or
Effective Loan-to-Value
Ratio, as applicable, at origination;
(ix)
the loan rate;
(x) the date
on which the first Monthly Payment was due
on the Mortgage Loan;
(xi)
the stated maturity date;
(xii) the
amount of the Monthly Payment at origination;
(xiii) the
amount of the Monthly Payment as of the Cut-off
Date;
(xiv) the
next Due Date on which a Monthly Payment is due;
(xv)
the original principal amount of the Mortgage Loan;
(xvi) the
unpaid principal balance of the Mortgage Loan as
of the close of business on the Cut-off Date;
(xvii) a code
indicating the purpose of the Mortgage Loan
(i.e., purchase financing, Rate/Term Refinancing,
Cash-Out Refinancing);
(xviii) a code
indicating the documentation style (i.e.,
full, alternative or reduced);
(xix) a
code indicating if the Mortgage Loan is subject to
a Primary Insurance Policy;
(xx)
the name of the Qualified Insurer and the certificate
number for any Primary Insurance Policy, if
applicable;
(xxi) the
depth of coverage of any Primary Insurance
Policy, if applicable;
(xxii) the Value
of the Mortgaged Property;
(xxiii) the sale price
of the Mortgaged Property, if
applicable;
(xxiv) the
Servicing Fee;
(xxv)
whether the Mortgage Loan is a Buydown Mortgage Loan;
and
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<PAGE>
(xxvi) the
amount of the Original Additional Collateral
Requirement, if any.
The Mortgage Loan Schedule shall set forth the following
information
with respect to the Mortgage Loans in the
aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the
current principal balance of the Mortgage
Loans; (3) the weighted average Loan 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
Master Servicer 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 Exhibit
D
from time to time, and any REO Properties
acquired in respect thereof.
"Mortgaged Property": The underlying property securing a Mortgage
Loan,
including any REO Property, consisting of
an Estate in Real Property improved by
a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage
Loan or any other disposition of related
Mortgaged Property (including REO
Property) the related Liquidation Proceeds
net of 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 Rate.
"Net Mortgage Rate": With respect to any Mortgage Loan, (x) the
Loan
Rate minus (y) the Servicing Fee Rate and
the Trustee 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
Master 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.
"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 Master Servicer 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 Master Servicer,
acceptable to the Trustee, except that
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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
Master Servicer may opt to terminate the
Trust Fund pursuant to Section 10.01.
"Original Additional Collateral Requirement': With respect to
any
Additional Collateral Mortgage Loan, an
amount equal to the Additional
Collateral required at the time of the
origination of such Additional Collateral
Mortgage Loan in order to achieve an
Effective Loan-to-Value Ratio for such
Additional Collateral Mortgage Loan,
generally equal to seventy percent (70%);
for purposes of the Required Surety
Payment, in no event shall the Original
Additional Collateral Requirement for an
Additional Collateral Mortgage Loan
exceed thirty percent (30%) of its original
principal balance.
"Original Certificate Principal Balance": With respect to each
Class of
the Certificates, the Certificate Principal
Balance thereof on the Closing Date,
as set forth opposite such Class above in
the Preliminary Statement.
"Original Subordinated Principal Balance": The aggregate of the
Certificate Principal Balances of the
Subordinate Certificates as of the Cut-off
Date.
"Other Insurance Proceeds": Proceeds of any title policy, hazard
policy
or other insurance policy covering a
Mortgage Loan, other than the Primary
Insurance Policy, if any, 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
Master Servicer would follow in
servicing mortgage loans held for its own
account.
"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.
"Parent Power(R) Agreement": With respect to each Parent
Power(R)
Mortgage Loan, a Parent Power(R) Guaranty
and Security Agreement for Securities
Account.
"Parent Power(R) Guaranty and Security Agreement for Securities
Account": With respect to a Parent Power(R)
Mortgage Loan, an agreement between
the Additional Collateral Servicer and a
guarantor on behalf of the mortgagor
under such Parent Power(R) Mortgage Loan
pursuant to which such guarantor
guarantees the payment of certain losses
under such Parent Power(R) Mortgage
Loan and has granted a security interest to
the Additional Collateral Servicer
in certain marketable securities to
collateralize such guaranty. The required
amount of such collateral is at least equal
to the Original Additional
Collateral Requirement for such Parent
Power(R) Mortgage Loan.
"Parent Power(R) Mortgage Loan": A Mortgage Loan having at the time
of
origination a Loan-to-Value Ratio generally
in excess of the Master Servicer's
maximum acceptable Loan-to-Value Ratio for
such Mortgage Loan as set forth in
the Underwriting Guide, which Mortgage Loan
is supported by a Parent Power(R)
Agreement.
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"Pass-Through Rate": With respect to the Certificates (other than
the
Class A-1, Class A-2 and Class A-6
Certificates) and any Distribution Date, a
per annum rate equal to the weighted
average of the Net Mortgage Rates on each
Mortgage Loan. With respect to the Class
A-1 Certificates and any Distribution
Date, a per annum rate equal to (i) the
weighted average of the Net Mortgage
Rate on each Mortgage Loan minus (ii)
0.40%. For federal income tax purposes,
however, the Class A-1 Certificates will
have a per annum rate equal to (i) the
Uncertificated Pass-Through Rate on the
REMIC I Regular Interest A-1 minus (ii)
0.40%. With respect to the Class A-2
Certificates and any Distribution Date, a
per annum rate equal to (i) the weighted
average of the Net Mortgage Rate on
each Mortgage Loan minus (ii) 0.45%. For
federal income tax purposes, however,
the Class A-2 Certificates will have a per
annum rate equal to (i) the
Uncertificated Pass-Through Rate on the
REMIC I Regular Interest A-2 minus (ii)
0.45%. With respect to the Class A-6
Certificates and any Distribution Date, a
per annum rate equal to the sum of (i) the
weighted average of the Net Mortgage
Rate on each Mortgage Loan, (ii) 0.40% per
annum multiplied by a fraction, the
numerator of which is the Certificate
Principal Balance of the Class A-1
Certificates and the denominator of which
is the Certificate Principal Balance
of the Class A-6 Certificates and (iii)
0.45% per annum multiplied by a
fraction, the numerator of which is the
Certificate Principal Balance of the
Class A-2 Certificates and the denominator
of which is the Certificate Principal
Balance of the Class A-6 Certificates. For
federal income tax purposes, the
Class A-6 Certificates will represent
ownership of the Class A-6A Component,
Class A-6B Component and Class A-6C
Component; the Pass-Through Rate with
respect to the Class A-6A Component is a
per annum rate equal to the
Uncertificated Pass-Through Rate on REMIC I
Regular Interest A-6, which will be
applied to the Class A-6A Component
Principal Amount, the Pass-Through Rate with
respect to the Class A-6B Component is
0.40% per annum, which will be applied to
the Class A-6B Component Notional Amount
and the Pass-Through Rate with respect
to the Class A-6C Component is 0.45% per
annum, which will be applied to the
Class A-6C Component Notional Amount.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other than
a
Class R 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 Certificate Principal
Balance of the related Class. With respect
to any Class of Class R Certificates,
the portion of such 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%.
"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 Master Servicer, the Trustee
or any of their respective Affiliates or
for which an Affiliate of the Trustee
serves as an advisor:
(i) obligations of or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof when
such
obligations are backed by the full faith and credit of the
United
States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of
acquisition
thereof, provided that the unsecured
26
<PAGE>
obligations of the party agreeing to repurchase such obligations
are at
the time rated by the Rating Agency in its highest short-term
rating
available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have
an
original maturity of not more than 90 days and, in the case of
bankers'
acceptances, shall in no event have an original maturity of more
than
365 days or a remaining maturity of more than 30 days) denominated
in
United States dollars of any U.S. depository institution or
trust
company incorporated under the laws of the United States or any
state
thereof or of any domestic branch of a foreign depository
institution
or trust company; provided that the debt obligations of such
depository
institution or trust company (or, if the only Rating Agency is
S&P, in
the case of the principal depository institution in a
depository
institution holding company, debt obligations of the depository
institution holding company) at the date of acquisition thereof
have
been rated by the Rating Agency in its highest short-term
rating
available; and provided further that, if the only Rating Agency is
S&P
and if the depository or trust company is a principal subsidiary of
a
bank holding company and the debt obligations of such subsidiary
are
not separately rated, the applicable rating shall be that of the
bank
holding company; and, provided further that, if the original
maturity
of such short-term obligations of a domestic branch of a
foreign
depository institution or trust company shall exceed 30 days,
the
short-term rating of such institution shall be A-1+ in the case of
S&P
if S&P is the Rating Agency;
(iv) commercial paper and demand notes (having original
maturities of not more than 365 days) of any corporation
incorporated
under the laws of the United States or any state thereof which on
the
date of acquisition has been rated by the Rating Agency in its
highest
short-term rating available; provided that such commercial paper
shall
have a remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated
by the Rating Agency in its highest long-term rating available;
and
(vi) other obligations or securities that are acceptable to
the Rating Agency as a Permitted Investment hereunder and will
not
reduce the rating assigned to any Class of Certificates by such
Rating
Agency below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such
Rating
Agency, as evidenced in writing;
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 Person other than a Disqualified
Organization, an "electing large
partnership" as defined in Section 775(a) of
the Code, or a 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.
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<PAGE>
"Prepayment Distribution Trigger": With respect to any
Distribution
Date and any Class of Subordinate
Certificates (other than the Class B-1
Certificates), a test that shall be
satisfied if the fraction (expressed as a
percentage) equal to the sum of the
Certificate Principal Balances of such Class
and each Class of Subordinate Certificates
with a Lower Priority than such Class
immediately prior to such Distribution Date
divided by the aggregate Stated
Principal Balance of all of the Mortgage
Loans (or related REO Properties)
immediately prior to such Distribution Date
is greater than or equal to the sum
of the related initial Class B Percentages
of such Classes of Subordinate
Certificates.
"Prepayment Interest Shortfall": As to any Distribution Date and
any
Mortgage Loan (other than a Mortgage Loan
relating to an REO Property) that was
the subject of (a) a Principal Prepayment
in Full during the related Prepayment
Period, an amount equal to the excess of
one month's interest at the Net
Mortgage Rate on the Stated Principal
Balance of such Mortgage Loan over the
amount of interest (adjusted to the Net
Mortgage Rate) paid by the Mortgagor for
such Prepayment Period to the date of such
Principal Prepayment in Full or (b) a
Curtailment during the prior calendar
month, an amount equal to one month's
interest at the Net Mortgage Rate on the
amount of such Curtailment. The
obligations of the Master Servicer in
respect of any Prepayment Interest
Shortfall are set forth in Section
3.24.
"Prepayment Period": With respect to any Distribution Date, the
calendar month 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 Master Servicer
pursuant to Section 3.13.
"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 Prepayment in Full": Any Principal Prepayment made by
a
Mortgagor of the entire unpaid principal
balance of the Mortgage Loan.
"Private Certificates": Any of the Class B-1, Class B-2, Class
B-3,
Class B-4, Class B-5 and Class B-6
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 Master
Servicer and are not to be applied to the
restoration of the related Mortgaged
Property or released to the Mortgagor in
accordance with the Master Servicer's
servicing procedures, subject to the terms
and conditions of the related Mortgage Note
and Mortgage.
"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 Master Servicer to the Trustee,
an amount equal to the sum of (i) 100% of
the Stated Principal Balance thereof
as of the date of purchase (or such other
price as provided in Section 10.01),
(ii) in the case of (x) a Mortgage Loan,
accrued interest on such Stated
Principal Balance at the applicable Loan
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 Master 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, the sum of (1) accrued interest
on such Stated Principal Balance at
the applicable Loan Rate in effect from
time to time from the Due Date as to
which
28
<PAGE>
interest was last covered by a payment by
the Mortgagor or an advance by the
Master Servicer through the end of the
calendar month immediately preceding the
calendar month in which such REO Property
was acquired, plus (2) REO Imputed
Interest for such REO Property for each
calendar month commencing with the
calendar month in which such REO Property
was acquired and ending with the
calendar month in which such purchase is to
be effected, net of the total of all
net rental income, Insurance Proceeds,
Liquidation Proceeds and Advances that as
of the date of purchase had been
distributed as or to cover REO Imputed Interest
pursuant to Section 4.07, (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 3.23, 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 Master 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.
"Rate/Term Refinancing": A Refinanced Mortgage Loan which is not
a
Cash-Out Refinancing.
"Rating Agency": Fitch or its successor. If such agency or its
successor is no longer in existence,
"Rating Agency" shall be such nationally
recognized statistical rating agency, or
other comparable Persons, designated by
the Depositor, notice of which designation
shall be given to the Trustee and
Master Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan, the
amount
by which the remaining unpaid principal
balance of the Mortgage Loan exceeds the
amount of Liquidation Proceeds applied to
the principal balance of the related
Mortgage Loan. To the extent the Master
Servicer receives Subsequent Recoveries
with respect to any Mortgage Loan, the
amount of the Realized Loss with respect
to that Mortgage Loan will be reduced to
the extent such recoveries are applied
to reduce the Certificate Principal Balance
of any Class of Certificates on any
Distribution Date.
"Record Date": With respect to all of the Certificates, the
last
Business Day of the month immediately
preceding the month in which the related
Distribution Date occurs.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were
used to satisfy an existing mortgage loan
on the Mortgaged Property.
"Regular Certificate": Any of the Class A Certificates and Class
B
Certificates.
"Related Documents": With respect to any Mortgage Loan, the
related
Mortgage Notes, Mortgages and other related
documents.
"Relief Act": The Servicemembers Civil Relief Act.
29
<PAGE>
"Relief Act Interest Shortfall": With respect to any Distribution
Date,
for any Mortgage Loan as to which there has
been a reduction in the amount of
interest collectible thereon for the most
recently ended Due Period as a result
of the application of the Relief Act, the
amount by which (i) interest
collectible on such Mortgage Loan during
such Due Period is less than (ii) one
month's interest on the Stated Principal
Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before
giving effect to the application of the
Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the
meaning
of Section 860D of the Code.
"REMIC I": The segregated pool of assets, with respect to which a
REMIC
election is to be made, consisting of: (i)
each Mortgage Loan (exclusive of
payments of principal and interest due on
or before the Cut-off Date, if any,
received by the Master Servicer which shall
not constitute an asset of the Trust
Fund) as from time to time are subject to
this Agreement and all payments under
and proceeds of such Mortgage Loans
(exclusive of any prepayment fees and late
payment charges received on the Mortgage
Loans), together with all documents
included in the related Mortgage File,
subject to Section 2.01; (ii) such funds
or assets as from time to time are
deposited in the Collection Account or the
Distribution Account and belonging to the
Trust Fund; (iii) any REO Property;
(iv) the Primary Hazard Insurance Policies,
if any, the Primary Insurance
Policies, if any, and all other Insurance
Policies with respect to the Mortgage
Loans; (v) the Depositor's rights in
respect of the Additional Collateral and
the Limited Purpose Surety Bond, including
the assignment of the Depositor's
rights under the Additional Collateral
Servicing Agreement; and (vi) the
Depositor's interest in respect of the
representations and warranties made by
the Sellers in the Mortgage Loan Purchase
Agreement as assigned to the Trustee
pursuant to Section 2.04 hereof. The Trust
Fund shall not include the Buydown
Account.
"REMIC I Regular Interests": The uncertificated partial
undivided
beneficial ownership interests in REMIC I,
designated as REMIC I Regular
Interests A-1, A-2, A-3, A-4, A-5, A-6,
B-1, B-2, B-3, B-4, B-5, B-6 and R-II,
with respect to which a REMIC election is
to be made.
"REMIC II": The segregated pool of assets consisting of the REMIC
I
Regular Interests conveyed in trust to the
Trustee for the benefit of the
holders of the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6,
Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5, Class B-6 and Class R-II
Certificates pursuant to Section 9.01, with
respect to which a separate REMIC
election is to be made pursuant to Section
9.01.
"REMIC Provisions": Provisions of the federal income tax law
relating
to real estate mortgage investment conduits
which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the
Code, and related provisions, and
regulations and rulings promulgated
thereunder, as the foregoing may be in
effect from time to time.
"Remittance Report": A report prepared by the Master Servicer
and
delivered to the Trustee pursuant to
Section 4.03.
"Rents from Real Property": With respect to any REO Property,
gross
income of the character described in
Section 856(d) of the Code.
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<PAGE>
"REO Account": The account or accounts maintained by the Master
Servicer in respect of an REO Property
pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property
on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar
month
during which such REO Property was at any
time part of the Trust Fund, one
month's interest at the applicable Net
Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the
case of the first such calendar month,
of the related Mortgage Loan if
appropriate) as of the close of business on the
Distribution Date in such calendar
month.
"REO Principal Amortization": With respect to any REO Property, for
any
calendar month, the excess, if any, of (a)
the aggregate of all amounts received
in respect of such REO Property during such
calendar month, whether in the form
of rental income, sale proceeds (including,
without limitation, that portion of
the Termination Price paid in connection
with a purchase of all of the Mortgage
Loans and REO Properties pursuant to
Section 10.01 that is allocable to such REO
Property) or otherwise, net of any portion
of such amounts (i) payable pursuant
to Section 3.23 in respect of the proper
operation, management and maintenance
of such REO Property or (ii) payable or
reimbursable to the Master Servicer
pursuant to Section 3.23 for unpaid
Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing
Advances and Advances in respect of
such REO Property or the related Mortgage
Loan, over (b) the REO Imputed
Interest in respect of such REO Property
for such calendar month.
"REO Property": A Mortgaged Property acquired by the Master
Servicer on
behalf of the Trust Fund through
foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23 hereto.
"Request for Release": A release signed by a Servicing Officer, in
the
form of Exhibit E attached
"Required Surety Payment": With respect to any Additional
Collateral
Mortgage Loan that becomes a Liquidated
Mortgage Loan, the lesser of (i) the
principal portion of the Realized Loss with
respect to such Mortgage Loan and
(ii) the excess, if any, of (a) the
Original Additional Collateral Requirement
with respect to such Mortgage Loan over (b)
the net proceeds realized by the
Additional Collateral Servicer from the
related Additional Collateral as set
forth in Section 3.16.
"Residential Dwelling": Any one of the following: (i) an attached
or
detached one-family dwelling unit, (ii)
two- to four-family dwelling unit, (iii)
condominium, (iv) townhouse, (v) row house,
or (vi) individual unit in a planned
unit development.
"Residual Certificate": Any of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in a
REMIC
within the meaning of Section 860G(a)(2) of
the Code.
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<PAGE>
"Responsible Officer": When used with respect to the Trustee,
any
officer, 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.
"Restricted Classes": With respect to any Class of Certificates,
any
Classes of Certificates with a lower
priority of payment relative to such Class.
"S&P": Standard & Poor's, a division of The McGraw-Hill
Companies,
Inc., and its successors.
"Securities Account": With respect to any Additional Collateral
Mortgage Loans, the account, together with
the financial assets held therein,
that is the subject of the related Mortgage
100(sm) Pledge Agreement.
"Security Agreement": With respect to a Cooperative Loan, the
agreement
creating a security interest in favor of
the originator in the related
Cooperative Assets.
"Seller": Either of (i) PHH Mortgage Corporation, a New Jersey
corporation, or any successor in interest
or (ii) Bishop's Gate Residential
Mortgage Trust, a Delaware business trust,
or any successor in interest.
"Senior Certificates": The Class A-1, Class A-2, Class A-3, Class
A-4,
Class A-5, Class A-6 and Class R
Certificates.
"Senior Interest Distribution Amount": With respect to each
Distribution Date, the aggregate amount of
the Monthly Interest Distributable
Amount to be distributed to the Holders of
the Senior Certificates for such
Distribution Date.
"Senior Percentage": As of any Distribution Date, the lesser of
100%
and a fraction, expressed as a percentage,
the numerator of which is the
aggregate Certificate Principal Balance of
the Class A Certificates and Class R
Certificates immediately prior to such
Distribution Date and the denominator of
which is the aggregate Stated Principal
Balance of all of the Mortgage Loans or
related REO Properties immediately prior to
such Distribution Date.
"Senior Prepayment Percentage": With respect to any Distribution
Date,
the percentage indicated below:
<TABLE>
<CAPTION>
DISTRIBUTION DATE
SENIOR PREPAYMENT PERCENTAGE
<S>
<C>
April 2005 through March 2010
100%
April 2010 through March 2011
Senior Percentage, plus 70% of the Subordinate
Percentage
April 2011 through March 2012
Senior Percentage, plus 60% of the Subordinate
Percentage
April 2012 through March 2013
Senior Percentage, plus 40% of the Subordinate
Percentage
April 2013 through March 2014
Senior Percentage, plus 20% of the Subordinate
Percentage
April 2014 and thereafter
Senior Percentage
</TABLE>
32
<PAGE>
provided, however, (i) that any scheduled
reduction to the Senior Prepayment
Percentage described above shall not occur
as of any Distribution Date unless
either (a)(1)(x) the outstanding principal
balance of Mortgage Loans Delinquent
60 days or more (including Mortgage Loans
in foreclosure and REO Property)
averaged over the last six months as a
percentage of the aggregate outstanding
Certificate Principal Balance of the Class
B Certificates as of such
Distribution Date, is less than 50%, or (y)
the outstanding principal balance of
Mortgage Loans Delinquent 60 days or more
(including Mortgage Loans in
foreclosure and REO Property) averaged over
the last six months, as a percentage
of the aggregate outstanding principal
balance of all Mortgage Loans as of such
Distribution Date, does not exceed 2% and
(2) Realized Losses on the Mortgage
Loans to date for such Distribution Date if
occurring during the sixth, seventh,
eighth, ninth or tenth year (or any year
thereafter) after the Closing Date are
less than 30%, 35%, 40%, 45% or 50%,
respectively, of the sum of the Initial
Certificate Principal Balances of the Class
B Certificates or (b) (1) the
aggregate outstanding principal balance of
the Mortgage Loans Delinquent 60 days
or more (including Mortgage Loans in
foreclosure and REO Property) averaged over
the last six months, as a percentage of the
aggregate outstanding principal
balance of all Mortgage Loans as of such
Distribution Date, does not exceed 4%
and (2) Realized Losses on the Mortgage
Loans to date for such Distribution Date
if occurring during the sixth, seventh,
eighth, ninth or tenth year (or any year
thereafter) after the Closing Date are less
than 10%, 15%, 20%, 25% or 30%,
respectively, of the sum of the Initial
Certificate Principal Balances of the
Class B Certificates and (ii) that for any
Distribution Date on which the Senior
Percentage is greater than the Original
Senior Percentage, the Senior Prepayment
Percentage for such Distribution Date shall
be 100%. Notwithstanding the
foregoing, upon the reduction of the
aggregate Certificate Principal Balance of
the Senior Certificates to zero, the Senior
Prepayment Percentage will equal 0%.
"Senior Principal Distribution Amount": As to any Distribution
Date,
the lesser of (a) the balance of the
Available Distribution Amount remaining
after the distribution of all amounts
required to be distributed pursuant to
Section 4.01(c)(i) and (b) the sum of the
following:
(A) the Senior Percentage for such Distribution Date times the
sum of the following:
(1) the principal portion of each Monthly Payment due
during the related Due Period on each Outstanding Mortgage
Loan whether or not received on or prior to the related
Determination Date, minus the principal portion of any Debt
Service Reduction, which together with other Bankruptcy Losses
exceeds the Bankruptcy Amount;
(2) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period pursuant to
Section 2.02, 2.03, 3.15 or 3.16; and
(3) the principal portion of all other unscheduled
collections (other than Principal Prepayments in Full and
Curtailments and amounts received in connection with a Cash
Liquidation or REO Disposition of a Mortgage Loan,
33
<PAGE>
including without limitation Insurance Proceeds, Liquidation
Proceeds, Subsequent Recoveries and REO Proceeds), received
during the related Prepayment Period to the extent applied by
the Master Servicer as recoveries of principal of the related
Mortgage Loan pursuant to Section 3.16;
(B) with respect to each Mortgage Loan for which a Cash
Liquidation or a REO Disposition occurred during the related
Prepayment
Period and did not result in any Excess Special Hazard Losses,
Excess
Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses,
an
amount equal to the lesser of (a) the Senior Percentage for
such
Distribution Date times the Stated Principal Balance of such
Mortgage
Loan and (b) the Senior Prepayment Percentage for such
Distribution
Date times the related unscheduled collections (including
without
limitation Insurance Proceeds, Liquidation Proceeds and REO
Proceeds)
to the extent applied by the Master Servicer as recoveries of
principal
of the related Mortgage Loan pursuant to Section 3.16;
(C) the Senior Prepayment Percentage for such Distribution
Date times the aggregate of all Principal Prepayments in Full
and
Curtailments received in the related Prepayment Period with respect
to
the Mortgage Loans;
(D) any Excess Subordinate Principal Amount for such
Distribution Date; and
(E) any amounts described in clauses (A), (B) or (C) of this
definition, as determined for any previous Distribution Date,
which
remain unpaid after application of amounts previously
distributed
pursuant to this clause (E) to the extent that such amounts are
not
attributable to Realized Losses which have been allocated to the
Class
B Certificates;
"Servicing Account": The account or accounts created and
maintained
pursuant to Section 3.09.
"Servicer Event of Termination": One or more of the events
described in
Section 7.01.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses
incurred by the Master Servicer in
connection with a default, delinquency or
other unanticipated event by the Master
Servicer in the performance of its
servicing obligations, including, but not
limited to, (a) reasonable attorneys'
fees and (b) the cost of (i) the
preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or
judicial proceedings, including
foreclosures, in respect of a particular
Mortgage Loan, including any expenses
incurred in relation to any such
proceedings that result from the Mortgage Loan
being registered on the MERS System, (iii)
the management (including reasonable
fees in connection therewith) and
liquidation of any REO Property, and (iv) the
performance of its obligations under
Section 3.01, Section 3.09, Section 3.13,
Section 3.14, Section 3.16 and Section
3.23. The Master Servicer shall not be
required to make any Servicing Advance in
respect of a Mortgage Loan or REO
Property that, in the good faith business
judgment of the Master Servicer, would
not be ultimately recoverable from related
Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO
Property as provided herein.
"Servicing Officer": Any officer of the Master Servicer involved
in, or
responsible for, the administration and
servicing of Mortgage Loans, whose name
and specimen signature appear
34
<PAGE>
on a list of servicing officers famished by
the Master Servicer to the Trustee
and the Depositor on the Closing Date, as
such list may from time to time be
amended.
"Servicing Fee": With respect to each Mortgage Loan 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 applicable
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, a rate
equal
to 0.25% per annum.
"Special Hazard Amount": As of any Distribution Date, an amount
equal
to $708,098 minus the sum of (i) the
aggregate amount of Special Hazard Losses
allocated solely to one or more specific
Classes of Certificates in accordance
with Section 4.02 and (ii) the Adjustment
Amount (as defined below) as most
recently calculated. For each anniversary
of the Cut-off Date, the Adjustment
Amount shall be equal to the amount, if
any, by which the amount calculated in
accordance with the preceding sentence
(without giving effect to the deduction
of the Adjustment Amount for such
anniversary) exceeds the greater of (A) the
greatest of (i) twice the outstanding
principal balance of the Mortgage Loan in
the Trust Fund which has the largest
outstanding principal balance on the
Distribution Date immediately preceding
such anniversary, (ii) the product of
1.00% multiplied by the outstanding
principal balance of all Mortgage Loans on
the Distribution Date immediately preceding
such anniversary and (iii) the
aggregate outstanding principal balance (as
of the immediately preceding
Distribution Date) of the Mortgage Loans in
any single five-digit California zip
code area with the largest amount of
Mortgage Loans by aggregate principal
balance as of such anniversary and (B) the
greater of (i) the product of 0.50%
multiplied by the outstanding principal
balance of all Mortgage Loans on the
Distribution Date immediately preceding
such anniversary multiplied by a
fraction, the numerator of which is equal
to the aggregate outstanding principal
balance (as of the immediately preceding
Distribution Date) of all of the
Mortgage Loans secured by Mortgaged
Properties located in the State of
California divided by the aggregate
outstanding principal balance (as of the
immediately preceding Distribution Date) of
all of the Mortgage Loans, expressed
as a percentage, and the denominator of
which is equal to 16.75% (which
percentage is equal to the percentage of
Mortgage Loans initially secured by
Mortgaged Properties located in the State
of California) and (ii) the aggregate
outstanding principal balance (as of the
immediately preceding Distribution
Date) of the largest Mortgage Loan secured
by a Mortgaged Property located in
the State of California.
The Special Hazard Amount may be further reduced by the Master
Servicer
(including accelerating the manner in which
coverage is reduced) provided that
prior to any such reduction, the Master
Servicer shall (i) obtain written
confirmation from the Rating Agency that
such reduction shall not reduce the
rating assigned to any Class of
Certificates by such Rating Agency below the
lower of the then-current rating or the
rating assigned to such Certificates as
of the Closing Date by such Rating Agency
and (ii) provide a copy of such
written confirmation to the Trustee.
"Special Hazard Losses": Realized Losses in respect of Special
Hazard
Mortgage Loans.
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"Special Hazard Mortgage Loan": A Liquidated Mortgage Loan as to
which
the ability to recover the full amount due
thereunder was substantially unpaired
by a hazard not insured against under a
standard hazard insurance policy.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan and
Due
Date, the unpaid principal balance of such
Mortgage Loan as of such Due Date, as
specified in the amortization schedule at
the time relating thereto (before any
adjustment to such amortization schedule by
reason of any moratorium or similar
waiver or grace period), after giving
effect to any previous partial prepayments
and Liquidation Proceeds received and to
the payment of principal due on such
Due Date and irrespective of any
delinquency in payment by the related
Mortgagor.
"Stayed Funds": If the Master Servicer is the subject of a
proceeding
under the federal Bankruptcy Code and the
mailing of a remittance by the Master
Servicer pursuant to this Agreement is
prohibited by Section 362 of the federal
Bankruptcy Code, funds which are in the
custody of the Master Servicer, a
trustee in bankruptcy or a federal
bankruptcy court and should have been the
subject of such remittance absent such
prohibition.
"Stepdown Percentage": With respect to any Distribution Date,
the
percentage indicated below:
Distribution Date
Stepdown Percentage
-----------------
-------------------
April 2005 through March 2010
0%
April 2010 through March 2011
30%
April 2011 through March 2012
40%
April 2012 through March 2013
60%
April 2013 through March 2014
80%
April 2014 and thereafter
100%
"Subordinate Certificates": The Class B-1, Class B-2, Class B-3,
Class
B-4, Class B-5 and Class B-6
Certificates.
"Subordinate Percentage": For any Distribution Date, the
difference
between 100% and the Senior Percentage for
such date.
"Subordinate Prepayment Percentage": With respect to any
Distribution
Date and each Class of Subordinate
Certificates, under the applicable
circumstances set forth below, the
respective percentages set forth below:
(i) For any Distribution Date prior to the Distribution Date
in April 2010, 0%.
(ii) For any Distribution Date for which clause (i) does not
apply, and on which any Class of Subordinate Certificates are
outstanding:
(a) in the case of the Class of Subordinate
Certificates then outstanding with the Highest Priority and
each other Class of Subordinate
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Certificates for which the related Prepayment Distribution
Trigger has been satisfied, a fraction, expressed as a
percentage, the numerator of which is the Certificate
Principal Balance of such Class immediately prior to such date
and the denominator of which is the sum of the Certificate
Principal Balances immediately prior to such date of (1) the
Class of Subordinate Certificates then outstanding with the
Highest Priority and (2) all other Classes of Subordinate
Certificates for which the respective Prepayment Distribution
Triggers have been satisfied; and
(b) in the case of each other Class of Subordinate
Certificates for which the Prepayment Distribution Triggers
have not been satisfied, 0%; and
(iii) Notwithstanding the foregoing, if the application of the
foregoing percentages on any Distribution Date as provided in
Section
4.01(c) of this Agreement (determined without regard to the proviso
to
the
definition of "Subordinate Principal Distribution Amount")
would
result in a distribution in respect of principal of any Class
or
Classes of Subordinate Certificates in an amount greater than
the
remaining Certificate Principal Balance thereof (any such class,
a
"Maturing Class"), then: (a) the Subordinate Prepayment Percentage
of
each Maturing Class shall be reduced to a level that, when applied
as
described above, would exactly reduce the Certificate Principal
Balance
of such Class to zero; (b) the Subordinate Prepayment Percentage
of
each other Class of Subordinate Certificates (any such Class, a
"Non-Maturing Class") shall be recalculated in accordance with
the
provisions
in paragraph (ii) above, as if the Certificate Principal
Balance of each Maturing Class had been reduced to zero (such
percentage as recalculated, the "Recalculated Percentage"); (c)
the
total amount of the reductions in the Subordinate Prepayment
Percentages of the Maturing Class or Classes pursuant to clause (a)
of
this sentence, expressed as an aggregate percentage, shall be
allocated
among the Non-Maturing Classes in proportion to their
respective
Recalculated Percentages (the portion of such aggregate reduction
so
allocated to any Non-Maturing Class, the "Adjustment Percentage");
and
(d) for purposes of such Distribution Date, the Subordinate
Prepayment
Percentage
of each Non-Maturing Class shall be equal to the sum of (1)
the Subordinate Prepayment Percentage thereof, calculated in
accordance
with the provisions in paragraph (ii) above as if the
Certificate
Principal Balance of each Maturing Class had not been reduced to
zero,
plus (2) the related Adjustment Percentage.
"Subordinate Principal Distribution Amount": With respect to
any
Distribution Date and each Class of Class B
Certificates, the sum of the
following:
(i) the product of (x) the related Class B Percentage for such
Class and (y) the aggregate of the following amounts:
(1) the principal portion of each Monthly Payment due
during the related Due Period on each Outstanding Mortgage
Loan, whether or not received on or prior to the related
Determination Date minus the principal portion of any Debt
Service Reduction, which together with other Bankruptcy Losses
exceeds the Bankruptcy Amount;
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<PAGE>
(2) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period pursuant to
Section 2.02, 2.03, 3.15 or 3.16; and
(3) the principal portion of all other unscheduled
collections (other than Principal Prepayments in Full and
Curtailments and amounts received in connection with a Cash
Liquidation or REO Disposition of a Mortgage Loan, including
without limitation Insurance Proceeds, Liquidation Proceeds,
Subsequent Recoveries and REO Proceeds) received during the
related Prepayment Period to the extent applied by the Master
Servicer as recoveries of principal of the related Mortgage
Loan pursuant to Section 3.16;
(ii) such Class's pro rata share, based on the Certificate
Principal Balance of each Class of Class B Certificates then
outstanding, of, with respect to each Mortgage Loan, for which a
Cash
Liquidation or a REO Disposition occurred during the related
Prepayment
Period and did not result in any Excess Special Hazard Losses,
Excess
Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses,
an
amount equal to the related unscheduled collections (including
without
limitation Insurance Proceeds, Liquidation Proceeds and REO
Proceeds)
to the extent applied by the Master Servicer as recoveries of
principal
of the related Mortgage Loan pursuant to Section 3.16, to the
extent
such collections are not otherwise distributed to the Senior
Certificates;
(iii) the product of (x) the related Subordinate Prepayment
Percentage for such Distribution Date and (y) the aggregate of
all
Principal Prepayments in Full and Curtailments on the Mortgage
Loans
received in the related Prepayment Period, to the extent not
payable to
the Senior Certificates; and
(iv) if such Class is the Class of Class B Certificates then
outstanding with the Highest Priority, an amount equal to the
Excess
Subordinate Principal Amount; and
(v) any amounts described in clauses (i), (ii) and (iii) as
determined for any previous Distribution Date, that remain
undistributed to the extent that such amounts are not attributable
to
Realized Losses which have been allocated to a Class of
Subordinate
Certificates;
provided, however, that such amount shall
in no event exceed the outstanding
Certificate Principal Balance of such Class
of Certificates immediately prior to
such date.
"Subsequent Recoveries": Any amount recovered by the Master
Servicer
(net of reimbursable expenses) with respect
to a Liquidated Mortgage Loan with
respect to which a Realized Loss was
incurred after the liquidation or
disposition of such Mortgage Loan.
"Sub-Servicer": Any Person with which the Master Servicer has
entered
into a Sub-Servicing Agreement and which
meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer
which
meets the requirements set forth in Section
3.08 and is otherwise acceptable to
the Master Servicer.
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<PAGE>
"Sub-Servicing Agreement": The written contract between the
Master
Servicer and a Sub-Servicer relating to
servicing and administration of certain
Mortgage Loans as provided in Section
3.02.
"Substitution Shortfall Amount": As defined in Section 2.03(c)
hereof.
"Tax Matters Person": The tax matters person appointed pursuant
to
Section 9.01(c) hereof.
"Tax Returns": The federal income tax return on Internal
Revenue
Service Form 1066, U.S. Real Estate
Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto,
Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net
Loss Allocation, or any successor
forms, to be filed on behalf of the Trust
in its capacity as a REMIC under the
REMIC Provisions, together with any and all
other information reports or returns
that may be required to be famished 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.
"Termination Price": As defined in Section 10.01(a) hereof.
"Transition Cost: Any documented fees, expenses and allocated
costs
reasonably incurred by a successor master
servicer or the Trustee in connection
with a transfer of servicing from the
Master Servicer to a successor master
servicer, including without limitation, any
costs or expenses associated with
the complete transfer of all master
servicing data and the completion,
correction or manipulation of such master
servicing data as may be required by
the Trustee to correct any errors or
insufficiencies in the master servicing
data or otherwise to enable the Trustee to
master service the Mortgage Loans
properly and effectively.
"Trustee Fee": With respect to each Mortgage Loan and for any
calendar
month, an amount equal to one month's
interest at the applicable Trustee Fee
Rate on the same principal amount on which
interest on such Mortgage Loan
accrues for such calendar month.
Notwithstanding the foregoing, in no event
shall the aggregate Trustee Fee in a
calendar year be less than $7,000.
"Trustee Fee Rate": With respect to any Mortgage Loan, a rate equal
to
0.0125% per annum.
"Trust Fund": REMIC I and REMIC II.
"Uncertificated Monthly Interest Distributable Amount": An amount
equal
to the interest accrued during the related
Interest Accrual Period on the
Uncertificated Principal Balance of each
Class of REMIC I Regular Interest at
the then-applicable Uncertificated
Pass-Through Rate. The Uncertificated Monthly
Interest Distributable Amount on any Class
of REMIC I Regular Interest will be
reduced by the amount of (i) Prepayment
Interest Shortfalls (to the extent not
offset by the Master Servicer with a
payment of Compensating Interest as
provided in Section 3.24), (ii) the
interest portion (adjusted to the Net
Mortgage Rate) of Realized Losses
(including Excess Losses) not allocated solely
to one or more specific Classes of
Certificates pursuant to Section 4.02, (iii)
the interest portion of Advances previously
made with respect to a Mortgage Loan
or REO Property which remained unreimbursed
following the Cash Liquidation or
REO
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<PAGE>
Disposition of such Mortgage Loan or REO
Property that were made with respect to
delinquencies that were ultimately
determined to be Excess Losses and (iv) any
other interest shortfalls not covered by
the subordination provided by the Class
B Certificates, including Relief Act
Shortfalls, with all such reductions
allocated among all of the REMIC I Regular
Interests in proportion to their
respective amounts of Uncertificated
Monthly Interest Distributable Amount
payable on such Distribution Date which
would have resulted absent such
reductions.
"Uncertificated Pass-Through Rate": With respect to each REMIC
I
Regular Interest and any Distribution Date,
a per annum rate equal to the
weighted average of the Net Mortgage Rates
on each mortgage loan as of the Due
Date in the related Due Period, weighted on
the basis of the respective Stated
Principal Balances of such Mortgage Loans
as of the day immediately preceding
such Distribution Date (or, with respect to
the initial Distribution Date, at
the close of business on the Cut-off
Date).
"Uncertificated Principal Balance": The principal amount of any
REMIC I
Regular Interest outstanding as of any date
of determination. The Uncertificated
Principal Balance of each REMIC I Regular
Interest initially shall be equal to
the amount set forth in the Preliminary
Statement with respect to such REMIC I
Regular Interest, and thereafter shall be
reduced by all distributions of
principal made on such REMIC I Regular
Interest and shall be further reduced by
Realized Losses allocated thereto. The
Uncertificated Principal Balance of each
REMIC I Regular Interest shall never be
less than zero.
"Underwriting Guide": The underwriting guide of the Master
Servicer, as
revised from time to time.
"Uninsured Cause" Any cause of damage to property subject to a
Mortgage
such that the complete restoration of such
property is not fully reimbursable by
the hazard insurance policies.
"United States Person" or "U.S. Person": A citizen or resident of
the
United States, a corporation or partnership
(including an entity treated as a
corporation or partnership for federal
income tax purposes) created or organized
in, or under the laws of, the United States
or any state thereof or the District
of Columbia (except, in the case of a
partnership, to the extent provided in
regulations), provided that, for purposes
solely of the Class R Certificates, no
partnership or other entity treated as a
partnership for United States federal
income tax purposes shall be treated as a
United States Person unless all
persons that own an interest in such
partnership either directly or through any
entity that is not a corporation for United
States federal income tax purposes
are United States Persons, or an estate
whose income is subject to United States
federal income tax regardless of its
source, or a trust if (i) a court within
the United States is able to exercise
primary supervision over the
administration of the trust and one or more
such United States Persons have the
authority to control all substantial
decisions of the trust or (ii) it is a
trust which was in existence on August 20,
1996, and was treated as a United
States person, for federal income tax
purposes, on the previous day, and elected
to continue to be so treated.
"Value": With respect to any Mortgaged Property, the value thereof
as
determined by an independent appraisal (or
other collateral assessment,
permitted by the Underwriting Guide) made
at the time of the origination of the
related Mortgage Loan; 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 (or other
collateral assessment, permitted by the
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<PAGE>
Underwriting Guide) 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 such Certificates
outstanding shall be 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
Certificates then outstanding. 99% of all
Voting Rights will be allocated among
all holders of the Certificates (other than
the Class R Certificates) in
proportion to their then outstanding
Certificate Principal Balances, 0.50% and
0.50% of all Voting Rights will be
allocated to the holders of the Class R-I
Certificates and Class R-II Certificates,
respectively, in proportion to the
Percentage Interests evidenced by their
respective Certificates; provided,
however, that any Certificate registered in
the name of the Master Servicer, the
Depositor or the Trustee or any of their
respective affiliates shall not be
included in the calculation of Voting
Rights.
"Written Order to Authenticate": A written order by which the
Depositor
directs the Trustee to issue the
Certificates.
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.
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<PAGE>
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
without recourse for the benefit of the
Certificateholders all the right, title
and interest of the Depositor, including
any security interest therein for the
benefit of the Depositor, in and to the
Mortgage Loans identified on the
Mortgage Loan Schedule, the rights of the
Depositor under the Mortgage Loan
Purchase Agreement (except Section 3.2
thereof), the interest in the Limited
Purpose Surety Bond transferred to the
Trustee pursuant to Section 2.03(e) and
all other assets included or to be included
in the Trust Fund. Such assignment
includes all interest and principal
received by the Depositor or the Master
Servicer on or with respect to the Mortgage
Loans (but excluding any payments of
principal and interest due on or prior to
the Cut-off Date). The Depositor
herewith delivers to the Trustee an
executed copy of the Mortgage Loan Purchase
Agreement.
The parties hereto agree that it is not intended that any mortgage
loan
be included in the Trust that is (i) a
"High-Cost Home Loan" as defined in the
New Jersey Home Ownership Act effective
November 27, 2003, (ii) a "High-Cost
Home Loan" as defined in the New Mexico
Home Loan Protection Act effective
January 1, 2004, (iii) a "High Cost Home
Mortgage Loan" as defined in the
Massachusetts Predatory Home Practices Act
effective November 7, 2004 or (iv) a
"High-Cost Home Loan" as defined in the
Indiana High Cost Home Loan Law
effective January 1, 2005.
In connection with the transactions contemplated by this Agreement,
PHH
Mortgage Corporation and the Trustee shall
enter into an Assignment, Assumption
and Recognition Agreement with MLCC, in the
form of Exhibit K hereto, pursuant
to which PHH Mortgage Corporation shall
assign to the Trustee, for the benefit
of the Certificateholders, all of its
right, title and interest in and to the
Additional Collateral Servicing Agreement
with respect to the Additional
Collateral Mortgage Loans, and the Trustee
shall assume all of PHH Mortgage
Corporation's obligations under the
Additional Collateral Servicing Agreement
with respect to the Additional Collateral
Mortgage Loans from and after the date
hereof.
In connection with the transfer and assignment described herein,
the
Master Servicer on behalf of the Depositor,
shall deliver to, and deposit with,
the Trustee, the following documents or
instruments:
(A) with respect to each Mortgage Loan, other than a Cooperative
Loan:
(i) the original Mortgage Note endorsed "Pay to the order of
Citibank, N.A., as Trustee for the registered holders of the
PHHMC
Mortgage Pass-Through Certificates, Series 2005-2, without
recourse",
or endorsed "Pay to the order of_____________________ without
recourse," and signed in the name of the last named endorsee by
an
authorized officer, together with all prior and intervening
42
<PAGE>
endorsements showing a complete chain of endorsement from the
originator to the Person so endorsing to the last endorsee;
(ii) the original Mortgage, noting the presence of the MIN of
the Mortgage Loan and language indicating that the Mortgage Loan is
a
MOM Loan if the Mortgage Loan is a MOM Loan, with evidence of
recording
thereon which have been recorded, with evidence of recording
thereon or
a copy of the Mortgage certified by the public recording office
in
which such Mortgage has been recorded;
(iii) Unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment of the Mortgage (A) executed in
the
following form "Citibank, N.A., as Trustee for the registered
holders
of the PHHMC Mortgage Pass-Through Certificates, Series 2005-2", or
(B)
in blank, which assignment appears to be in form and substance
acceptable for recording;
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator
to
the Person assigning the Mortgage to the Trustee (or to MERS, if
the
Mortgage Loan is registered on the MERS(R) System and noting
the
presence of a MIN) as contemplated by the immediately preceding
clause
(iii), if applicable and only to the extent available to the
Depositor
with evidence of recording thereon;
(v) the originals of all assumption, modification,
consolidation or extension agreements, with evidence of
recording
thereon, if any;
(vi) a copy of any guarantee (other than Additional
Collateral) executed in connection with the Mortgage Note;
(vii) the original of any security agreement, chattel mortgage
or equivalent document executed in connection with the
Mortgage;
(viii) the original power of attorney, if applicable; and
(ix) if such Mortgage Loan is a Buydown Mortgage Loan (as
shown in the Mortgage Loan Schedule), the original Buydown
Agreement or
a copy thereof; and
(B) in addition, with respect to each Mortgage Loan that is an
Additional Collateral Mortgage Loan (as
indicated on the Mortgage Loan
Schedule):
(i) a copy of the related Mortgage 100(sm) Pledge Agreement or
Parent Power Agreement, as applicable; and
(ii) a copy of the related UCC-1, to the extent that MLCC was
required to deliver such UCC-1 to the Master Servicer, and an
original
form UCC-3, if applicable, to the extent that MLCC was required
to
deliver such UCC-3 to the Master Servicer; or
(C) with respect to each Mortgage Loan that is a Cooperative Loan
(as
indicated on the Mortgage Loan
Schedule):
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<PAGE>
(i) the original Mortgage Note endorsed "Pay to the order of
Citibank, N.A., as Trustee for the registered holders of the
PHHMC
Mortgage Pass-Through Certificates, Series 2005-2, without
recourse",
or endorsed "Pay to the order of _____________________ without
recourse," and signed in the name of the last named endorsee by
an
authorized officer, together with all prior and intervening
endorsements showing a complete chain of endorsement from the
originator to the Person so endorsing to the last endorsee;
(ii) the original duly executed assignment of Security
Agreement to the Trustee;
(iii) the acknowledgment copy of the original executed Form
UCC-1 (or certified copy thereof) with respect to the Security
Agreement, and any required continuation statements;
(iv) the acknowledgment copy of the original executed Form
UCC-3 with respect to the security agreement, indicating the
Trustee as
the assignee of the secured party;
(v) the stock certificate representing the Cooperative Assets
allocated to the cooperative unit, with a stock power in blank
attached;
(vi) the original collateral assignment of the proprietary
lease by Mortgagor to the originator;
(vii) a copy of the recognition agreement;
(viii) if applicable and to the extent available, the original
intervening assignments, including warehousing assignments, if
any,
showing, to the extent available, an unbroken chain of the
related
Mortgage Loan to the Trustee, together with a copy of the related
Form
UCC-3 with
evidence of filing thereon; and
(ix) the originals of each assumption, modification or
substitution agreement, if any, relating to the Mortgage Loan;
provided, however, that in lieu of the
foregoing, the Depositor may deliver the
following documents, under the
circumstances set forth below: (x) in lieu of the
original Mortgage, assignments to the
Trustee or intervening assignments thereof
which have been delivered, are being
delivered or will, upon receipt of
recording information relating to the
Mortgage required to be included thereon,
be delivered to recording offices for
recording and have not been returned to
the Depositor within 270 days of the
Closing Date, the Depositor may deliver a
true copy thereof with an Officer's
Certificate certifying that such Mortgage,
assignment to the Trustee or intervening
assignment has been delivered to the
appropriate recording office for recording;
and (y) in lieu of the Mortgage,
assignment to the Trustee or intervening
assignments thereof, if the applicable
jurisdiction retains the originals of such
documents (as evidenced by a
certification from the Depositor or the
Master Servicer, to such effect) the
Depositor may deliver photocopies of such
documents containing an original
certification by the judicial or other
governmental authority of the
jurisdiction where such documents were
recorded; and provided, further, however,
that in the case of Mortgage Loans which
have been prepaid in full after the
Cut-off
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<PAGE>
Date and prior to the Closing Date, the
Depositor, in lieu of delivering the
above documents, may deliver to the Trustee
a certification to such effect and
shall deposit all amounts paid in respect
of such Mortgage Loans in the
Distribution Account on the Closing Date.
The Depositor shall deliver such
original documents (including any original
documents as to which certified
copies had previously been delivered) to
the Trustee promptly after they are
received.
The Depositor may, in lieu of delivering the original of the
documents
set forth in Section 2.01(A), (B) and (C)
(other than Section 2.01(A)(i) and
Section 2.01(C)(i)) (or copies thereof as
permitted by this Section 2.01) to the
Trustee, deliver such documents to the
Master Servicer, and the Master Servicer
shall hold such documents in trust for the
use and benefit of all present and
future Certificateholders until such time
as is set forth in the next sentence.
Within 60 days following the earlier of (i)
the receipt of the original of all
of the documents or instruments set forth
in Section 2.01(A), (B) and (C) (other
than Section 2.01(A)(i) and Section
2.01(C)(i)) (or copies thereof as permitted
by such Section) for any Mortgage Loan and
(ii) a written request by the Trustee
to deliver those documents with respect to
any or all of the Mortgage Loans then
being held by the Master Servicer, the
Master Servicer shall deliver a complete
set of such documents to the Trustee.
The Depositor shall, at its expense, cause the Assignment of
the
Mortgage to the Trustee to be recorded not
later than 270 days after the Closing
Date, unless (a) such recordation is not
required by the Rating Agency or an
Opinion of Counsel has been provided as set
forth below in this Section 2.01 or
(b) MERS is identified on the Mortgage or
on a properly recorded assignment of
the Mortgage as the mortgagee of record.
With respect to the Cooperative Loans,
the Depositor will, promptly after the
Closing Date, cause the related financing
statements (if not yet filed) and an
assignment thereof from the Depositor to
the Trustee to be filed in the appropriate
offices. The Depositor need not cause
to be recorded any assignment in any
jurisdiction under the laws of which, as
evidenced by an Opinion of Counsel
delivered by the Depositor to the Trustee and
the Rating Agency, the recordation of such
assignment is not necessary to
protect the Trustee's interest in the
related Mortgage Loan; provided, however,
notwithstanding the delivery of any Opinion
of Counsel, each assignment shall be
submitted for recording by the Depositor in
the manner described above, at no
expense to the Trust Fund or the Trustee,
upon the earliest to occur of: (i)
reasonable direction by the Holders of
Certificates evidencing Fractional
Undivided Interests aggregating not less
than 25% of the Trust Fund, (ii) the
occurrence of a Master Servicer Event of
Termination, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure
relating to the Depositor, (iv) the
occurrence of a servicing transfer as
described in Section 7.02 hereof and (v)
with respect to any one assignment, the
occurrence of a bankruptcy, insolvency
or foreclosure relating to the Mortgagor
under the related Mortgage.
Notwithstanding the foregoing, if the
Depositor fails to pay the cost of
recording the assignments, such expense
will be paid by the Trustee and the
Trustee shall be reimbursed for such
expenses by the Trust Fund in accordance
with Section 8.05.
In connection with the assignment of any Mortgage Loan registered
on
the MERS(R) System, the Depositor further
agrees that it will cause, at the
Depositor's own expense, within 30 Business
Days after the Closing Date, the
MERS(R) System to indicate that such
Mortgage Loans have been assigned by the
Depositor to the Trustee in accordance with
this Agreement for the benefit of
the Certificateholders by including (or
deleting, in the case of Mortgage Loans
which are repurchased in accordance with
this Agreement) in such computer files
(a) the code in the field which identifies
the specific Trustee and (b) the code
in the field "Pool Field" which
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identifies the series of the Certificates
issued in connection with such
Mortgage Loans. The Depositor further
agrees that it will not, and will not
permit the Master Servicer to, and the
Master Servicer agrees that it will not,
alter the codes referenced in this
paragraph with respect to any Mortgage Loan
during the term of this Agreement unless
and until such Mortgage Loan is
repurchased in accordance with the terms of
this Agreement.
If any original Mortgage Note referred to in Section 2.01(A)(i)
or
2.01(C)(i) above cannot be located, the
obligations of the Depositor to deliver
such documents shall be deemed to be
satisfied upon delivery to the Trustee of a
photocopy of such Mortgage Note, if
available, with a Lost Note Affidavit. If
any of the original Mortgage Notes for
which a Lost Note Affidavit was delivered
to the Trustee is subsequently located,
such original Mortgage Note shall be
delivered to the Trustee within three
Business Days.
Section 2.02 ACCEPTANCE OF TRUST FUND BY THE TRUSTEE.
Subject to the provisions of Section 2.01 and subject to any
exceptions
noted on the exception report described in
the next paragraph below, the Trustee
acknowledges receipt of the documents
referred to in Section 2.01 above and
declares that it holds and will hold such
documents and the other documents
delivered to it constituting the Mortgage
File, and that it holds or will hold
all such assets and such other assets
included in the definition of the "Trust
Fund" and the rights of the Sellers with
respect to any Additional Collateral
and the Limited Purpose Surety Bond
assigned to the Trustee pursuant to Section
2.03(e) in trust for the exclusive use and
benefit of all present and future
Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders,
to
review each Mortgage File on or before the
Closing Date and to certify on the
Closing Date in substantially the form
attached hereto as Exhibit I-1 that, as
to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage
Loan specifically identified in the
exception report annexed thereto as not
being covered by such certification),
(i) all documents constituting part of such
Mortgage File required to be
delivered to it pursuant to this Agreement
are in its possession, provided that
with respect to the documents described in
Section 2.01(A)(v), (vi) and (vii)
and 2.01(C)(ix) to the extent the Trustee
has actual knowledge that such
documents exist, (ii) such documents have
been reviewed by it and are not torn,
mutilated, defaced or otherwise altered
(except if initialed by the obligor) and
relate to such Mortgage Loan, (iii) based
on its examination and only as to the
foregoing, the information set forth in the
Mortgage Loan Schedule that
corresponds to items (i) through (iii)
(except the ZIP Code), (ix) and (xv) of
the definition of "Mortgage Loan Schedule"
accurately reflects information set
forth in the Mortgage File. Notwithstanding
anything to the contrary in this
Agreement, it is herein acknowledged that,
in conducting such review, the
Trustee is under no duty or obligation to
inspect, review or examine any such
documents, instruments, certificates or
other papers to determine whether they
are genuine, enforceable, or appropriate
for the represented purpose or whether
they have actually been recorded or that
they are other than what they purport
to be on their face, or to determine
whether any Person executing any documents
is authorized to do so or whether any
signature is genuine.
The Trustee agrees, for the benefit of the Certificateholders,
to
review each Mortgage File within 60 days
following the Closing Date and to
certify in substantially the form attached
hereto as Exhibit I-2 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
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exception report annexed thereto as not
being covered by such certification),
(i) all documents constituting part of such
Mortgage File (other than such
documents described in Section 2.01(A)(v))
required to be delivered to it
pursuant to this Agreement are in its
possession, provided that with respect to
the documents described in Section
2.01(A)(v), (vi) and (vii) and 2.01(C)(ix) to
the extent the Trustee has actual knowledge
that such documents exist, (ii) such
documents have been reviewed by it and are
not tom, mutilated, defaced or
otherwise altered (except if initialed by
the obligor) and appear regular on
their face and relate to such Mortgage
Loan, (iii) based on its examination and
only as to the foregoing, the information
set forth in the Mortgage Loan
Schedule that corresponds to items (i)
through (iii)(except the ZIP code), (ix)
and (xv) of the definition of "Mortgage
Loan Schedule" accurately reflects
information set forth in the Mortgage File.
It is herein acknowledged that, in
conducting such review, the Trustee is
under no duty or obligation (i) to
inspect, review or examine any such
documents, instruments, certificates or
other papers to determine whether they are
genuine, enforceable, or appropriate
for the represented purpose or whether they
have actually been recorded or that
they are other than what they purport to be
on their face, or to determine
whether any Person executing any documents
is authorized to do so or whether any
signature is genuine.
Prior to the first anniversary date of this Agreement the Trustee
shall
deliver to the Depositor and the Master
Servicer a final certification in the
form annexed hereto as Exhibit I-2
evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted
thereon, except with respect to the
documents described in Section 2.01(A)(v),
(vi) and (vii) and 2.01(C)(ix), to
the extent the Trustee has actual knowledge
that such documents exist.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the
certifications referred to above, the Trustee
finds any document or documents
constituting a part of a Mortgage File to be
missing or defective in any material
respect, at the conclusion of its review
the Trustee shall so notify the Depositor
and the Master Servicer. In addition,
upon the discovery by the Depositor, the
Master Servicer or the Trustee of a
breach of any of the representations and
warranties made by the Sellers in the
Mortgage Loan Purchase Agreement in respect
of any Mortgage Loan which
materially adversely affects such Mortgage
Loan or the interests of the related
Certificateholders in such Mortgage Loan,
the party discovering such breach
shall give prompt written notice to the
other parties.
The Trustee shall, at the written request and expense of any
Certificateholder, provide a written report
to such Certificateholder of all
Mortgage Files released to the Master
Servicer for servicing purposes.
Section 2.03
REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY THE
SELLERS- ASSIGNMENT OF INTEREST IN ADDITIONAL COLLATERAL.
(a) Upon discovery or receipt of notice of any materially
defective
document in, or that a document is missing
from, a Mortgage File or of the
breach by a Seller of any representation,
warranty or covenant under the
Mortgage Loan Purchase Agreement in respect
of any Mortgage Loan which
materially adversely affects the value of
such Mortgage Loan or the interest
therein of the Certificateholders, by the
Trustee, the Master Servicer or the
Depositor shall promptly notify such Seller
and the Trustee, the Master Servicer
and the Depositor of such defect, missing
document or breach and request that
such Seller deliver such missing document
or cure such defect or breach within
90 days from the date such Seller was
notified of such missing document, defect
or breach, and if such Seller does not
deliver such missing document
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or cure such defect or breach in all
material respects during such period, the
Master Servicer (or, in accordance with
Section 3.02(b), the Trustee) shall
enforce the obligations of such Seller
under the Mortgage Loan Purchase
Agreement to repurchase such Mortgage Loan
from the Trust Fund at the Purchase
Price within 90 days after the date on
which such Seller was notified (subject
to Section 2.03(d)) of such missing
document, defect or breach, if and to the
extent that such Seller is obligated to do
so under the Mortgage Loan Purchase
Agreement. If such defect or breach can
ultimately be cured but is not
reasonably expected to be cured within the
90-day period, then the applicable
Seller shall have such additional time, if
any, as is reasonable, to cure such
defect or breach, provided that the
applicable Seller has commenced curing or
correcting such defect or breach and is
diligently pursuing same. The Purchase
Price for the repurchased Mortgage Loan
shall be deposited in the Collection
Account, within three Business Days of
expiration of the applicable time period
referred to above, and the Trustee, upon
receipt of written certification from
the Master Servicer of such deposit, shall
release to the applicable Seller the
related Mortgage File and shall execute and
deliver such instruments of transfer
or assignment, in each case without
recourse, as such Seller shall furnish to it
and as shall be necessary to vest in such
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, if so provided in the
related Mortgage Loan Purchase Agreement,
a 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). If the breach
of representation and warranty that
gave rise to the obligation to repurchase
or substitute a Mortgage Loan pursuant
to Section 3.2 of the Mortgage Loan
Purchase Agreement was the representation
and warranty set forth in clause (xlvi) of
Section 3.1 thereof, then the Master
Servicer shall request that PHH Mortgage
pay to the Trust Fund, concurrently
with and in addition to the remedies
provided in the preceding four sentences,
an amount equal to any liability, penalty
or expense that was actually incurred
and paid out of or on behalf of the Trust
Fund, and that directly resulted from
such breach, or if incurred and paid by the
Trust Fund thereafter, concurrently
with such payment. In furtherance of the
foregoing, if the Seller that
repurchases the Mortgage Loan is not a
member of MERS and the Mortgage is
registered on the MERS(R) System, the
Master Servicer, at its own expense and
without any right of reimbursement, shall
cause MERS to execute and deliver an
assignment of the Mortgage in recordable
form to transfer the Mortgage from MERS
to such Seller and shall cause such
Mortgage to be removed from registration on
the MERS(R) System in accordance with MERS'
rules and regulations. It is
understood and agreed that the obligation
of a Seller to cure or to repurchase
(or to substitute for) any Mortgage Loan as
to which a document is missing, a
material defect in a constituent document
exists or as to which such a breach
has occurred and is continuing shall
constitute the sole remedy respecting such
omission, defect or breach available to the
Depositor, the Master Servicer or
the Trustee on behalf of the
Certificateholders.
(b) Within 90 days of the earlier of discovery by the Master
Servicer
or receipt of notice by the Master Servicer
of the breach of any representation,
warranty or covenant of the Master Servicer
set forth in Section 2.04 which
materially and adversely affects the
interests of the Certificateholders in any
Mortgage Loan, the Master Servicer shall
cure such breach in all material
respects.
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<PAGE>
(c) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to
Section 2.03(a), in the case of a
Seller, must be effected prior to the date
which is two years after the Closing
Date.
As to any Defective Mortgage Loan for which a Seller substitutes
a
Eligible Substitute Mortgage Loan or Loans,
such substitution shall be effected
by such 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 Shortfall Amount (as
described below), if any, in connection
with such substitution. The Trustee
shall acknowledge receipt of the original
Mortgage Note for such Eligible
Substitute Mortgage Loan or Loans and,
within ten Business Days thereafter,
review such documents in the manner
specified in Section 2.02 and deliver to the
Depositor and the Master Servicer, with
respect to such Eligible Substitute
Mortgage Loan or Loans, a certification
substantially in the form attached
hereto as Exhibit I-1, with any applicable
exceptions noted thereon. Within one
year of the date of substitution, the
Trustee shall deliver to the Depositor and
the Master Servicer a certification
substantially in the form of Exhibit I-2
hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon.
Monthly Payments due with respect to
Eligible Substitute Mortgage Loans in the
month of substitution are not part of
the Trust Fund and will be retained by the
related Seller. For the month of
substitution, distributions to
Certificateholders will reflect the Monthly
Payment due on such Defective Mortgage Loan
on or before the Due Date in the
month of substitution, and the related
Seller shall thereafter be entitled to
retain all amounts subsequently received in
respect of such Defective Mortgage
Loan. The Depositor shall give or cause to
be given written notice to the
Certificateholders 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 a Seller, the
Mortgage Loan Purchase Agreement,
including, in the case of a substitution
effected by a Seller, all applicable
representations and warranties thereof
included in the Mortgage Loan Purchase
Agreement in each case as of the date of
substitution.
For any month in which a Seller substitutes one or more
Eligible
Substitute Mortgage Loans for one or more
Defective Mortgage Loans, the Master
Servicer will determine the amount (the
"Substitution Shortfall Amount"), if
any, by which the aggregate principal
balance of all such Eligible Substitute
Mortgage Loans as of the date of
substitution is less than the aggregate Stated
Principal Balance of all such Defective
Mortgage Loans (in each case after
application of the principal portion of the
Monthly Payments due in the month of
substitution that are to be distributed to
the Certificateholders in the month
of substitution). On the date of such
substitution, the applicable Seller will
deliver or cause to be delivered to the
Master Servicer for deposit in the
Collection Account an amount equal to the
Substitution Shortfall Amount, if any,
and the Trustee, upon receipt of the
related Eligible Substitute Mortgage Loan
or Loans and certification by the Master
Servicer of such deposit, shall release
to the applicable Seller the related
Mortgage File or Files and shall execute
and deliver such instruments of
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<PAGE>
transfer or assignment, in each case
without recourse, as such Seller shall
deliver to it and as shall be necessary to
vest therein any Defective Mortgage
Loan released pursuant hereto.
In addition, the applicable 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)(1) of
the Code or on "contributions after
the startup date" under Section 860G(d)(1)
of the Code, or (b) any REMIC to fail
to qualify as a REMIC at any time that any
Certificate is outstanding.
(d) Upon discovery by the Depositor, a Seller, the Master 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
related Seller shall repurchase or,
subject to the limitations set forth in
Section 2.03(c), substitute one or more
Eligible Substitute Mortgage Loans for the
affected Mortgage Loan within 60 days
of the earlier of discovery or receipt of
such notice with respect to such
affected Mortgage Loan. Such repurchase or
substitution shall be made by the
related Seller, as the case may be, if the
affected Mortgage Loan's status as a
non-qualified mortgage is or results from a
breach of any representation,
warranty or covenant made by the related
Seller under the Mortgage Loan Purchase
Agreement. Any such repurchase or
substitution shall be made in the same manner
as set forth in Sections 2.03(a), if made
by the related Seller. The Trustee
shall reconvey to the related 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.
(e) The Depositor hereby assigns to the Trustee its security
interest
in and to any Additional Collateral, its
right to receive amounts due or to
become due in respect of any Additional
Collateral, all of its rights in each
Additional Collateral Agreement, and its
rights as beneficiary under the Limited
Purpose Surety Bond in respect of any
Additional Collateral Mortgage Loans. With
respect to any Additional Collateral
Mortgage Loan, the Additional Collateral
Servicer shall cause to be filed in the
appropriate recording office a Form
UCC-3 giving notice of the assignment of
the related security interest to the
Trust Fund and shall thereafter cause the
timely filing of all necessary
continuation statements with regard to such
financing statements.
Section 2.04 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
MASTER
SERVICER.
The Master 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 Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of
New Jersey and is duly authorized and qualified to transact any and
all
business contemplated by this Agreement to be conducted by the
Master
Servicer in any state in which a Mortgaged Property is located or
is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the
doing
business laws of any such State, to the extent
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<PAGE>
necessary to ensure its ability to enforce each Mortgage Loan and
to
service the Mortgage Loans in accordance with the terms of this
Agreement;
(ii) The Master Servicer has the full corporate power and
authority to service each Mortgage Loan, and to execute, deliver
and
perform, and to enter into and consummate the transactions
contemplated
by this Agreement and has duly authorized by all necessary
corporate
action on the part of the Master Servicer the execution, delivery
and
performance of this Agreement; and this Agreement, assuming the
due
authorization, execution and delivery thereof by the Depositor and
the
Trustee, constitutes a legal, valid and binding obligation of
the
Master Servicer, enforceable against the Master Servicer in
accordance
with its terms, except to the extent that (a) the
enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors'
rights
generally and (b) the remedy of specific performance and injunctive
and
other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any
proceeding
therefor may be brought;
(iii) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the
Master
Servicer hereunder, the consummation of any other of the
transactions
herein
contemplated, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of the
Master
Servicer and will not (A) result in a breach of any term or
provision
of the charter or by-laws of the Master Servicer or (B) conflict
with,
result in a breach, violation or acceleration of, or result in
a
default under, the terms of any other material agreement or
instrument
to which the Master Servicer is a party or by which it may be
bound, or
any statute, order or regulation applicable to the Master Servicer
of
any court, regulatory body, administrative agency or governmental
body
having jurisdiction over the Master Servicer; and the Master
Servicer
is not a party to, bound by, or in breach or violation of any
indenture
or other agreement or instrument, or subject to or in violation of
any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it,
which materially and adversely affects or, to the Master
Servicer's
knowledge, would in the future materially and adversely affect, (x)
the
ability of the Master Servicer to perform its obligations under
this
Agreement or (y) the business, operations, financial condition,
properties or assets of the Master Servicer taken as a whole;
(iv) The Master Servicer is an approved seller/servicer for
Fannie Mae or Freddie Mac in good standing and is a HUD
approved
mortgagee pursuant to Section 203 of the National Housing Act;
(v) No litigation is pending against the Master Servicer that
would materially and adversely affect the execution, delivery
or
enforceability of this Agreement or the ability of the Master
Servicer
to service the Mortgage Loans or to perform any of its other
obligations hereunder in accordance with the terms hereof;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery
and performance by the Master Servicer of, or compliance by the
Master
Servicer with, this Agreement or the consummation of the
transactions
contemplated by this Agreement, except for such
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<PAGE>
consents, approvals, authorizations or orders, if any, that have
been
obtained prior to the Closing Date; and
(vii) The Master Servicer is a member of MERS in good
standing, and will comply in all material respects with the rules
and
procedures of MERS in connection with the servicing of the
Mortgage
Loans that are registered with MERS.
It is understood and agreed that the representations, warranties
and
covenants 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 Trustee, the
Depositor and the Certificateholders. Upon
discovery by any of the Depositor,
the Master Servicer or the Trustee of a
breach of any of the foregoing
representations, warranties and covenants
which materially and adversely affects
the value of any Mortgage Loan or the
interests therein of the
Certificateholders, the party discovering
such breach shall give prompt written
notice (but in no event later than two
Business Days following such discovery)
to the Trustee. Subject to Section 7.01,
the obligation of the Master Servicer
set forth in Section 2.03(c) to cure
breaches shall constitute the sole remedies
against the Master Servicer available to
the Certificateholders, the Depositor
or the Trustee on behalf of the
Certificateholders respecting a breach of the
representations, warranties and covenants
contained in this Section 2.04.
Section 2.05 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 a Seller, as set forth
in
the Mortgage Loan Purchase Agreement) 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 and 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 formed and is validly existing
as a limited liability company in good standing under the laws
of
Delaware, with full corporate power and authority to own its assets
and
conduct its business as presently being conducted;
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<PAGE>
(vi) The Depositor is not in violation of its certificate of
formation or limited liability company agreement 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 formation or limited liability company agreement 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 2.06 PURPOSE AND POWERS OF THE TRUST.
The purpose of the trust, as created hereunder, is to engage in
the
following activities:
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(i) to issue the Certificates to or at the direction of the
Depositor in exchange for the Mortgage Loans;
(ii) to perform the activities of the trust that are expressly
set forth in this Agreement;
(iii) to engage in those activities that are reasonably
necessary, suitable or convenient to accomplish the foregoing or
are
incidental thereto or connected therewith; and
(iv) subject to compliance with this Agreement, to engage in
such other activities as may be required in connection with
conservation of the Trust Fund and the making of distributions to
the
Certificateholders.
The trust is hereby authorized to engage in the foregoing
activities.
Section 2.07 ISSUANCE OF CERTIFICATES.
(a) The Trustee acknowledges the assignment to it on behalf of
the
Trust Fund of the Mortgage Loans and the
other assets comprising the Trust Fund
and, concurrently therewith, has signed,
and authenticated and delivered to the
Depositor, in exchange therefor,
Certificates in such authorized denominations
representing such Percentage Interests as
the Depositor has requested. The
Trustee agrees that it will hold the
Mortgage Loans and such other assets as may
from time to time be delivered to it
segregated on the books of the Trustee in
trust for the benefit of the
Certificateholders.
(b) The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and
otherwise convey in trust to the
Trustee without recourse all the right,
title and interest of the Depositor in
and to the assets of REMIC I for the
benefit of the holders of the REMIC I
Regular Interests. The Trustee acknowledges
receipt of the assets of REMIC I and
declares that it holds and will hold the
same in trust for the exclusive use and
benefit of the holders of the REMIC I
Regular Interests.
(c) The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and
otherwise convey in trust to the
Trustee without recourse all the right,
title and interest of the Depositor in
and to the REMIC I Regular Interests and
the other assets of REMIC II for the
benefit of the Certificateholders. The
Trustee acknowledges receipt of the REMIC
I Regular Interests (which are
uncertificated) and the other assets of REMIC II
and declares that it holds and will hold
the same in trust for the exclusive use
and benefit of the Certificateholders.
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ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01 MASTER SERVICER TO ACT AS MASTER SERVICER.
The Master Servicer shall service and administer the Mortgage Loans
on
behalf of the Trustee and in the best
interests of and for the benefit of the
Certificateholders (as determined by the
Master Servicer in its reasonable
judgment) in accordance with the terms of
this Agreement and the respective
Mortgage Loans and, to the extent
consistent with such terms, in the same manner
in which it services and administers
similar mortgage loans for its own
portfolio, giving due consideration to
customary and usual standards of practice
of prudent mortgage lenders and loan
servicers administering similar mortgage
loans but without regard to:
(i) any relationship that the Master Servicer, any
Sub-Servicer or any Affiliate of the Master Servicer or any
Sub-Servicer may have with the related Mortgagor;
(ii) the ownership of any Certificate by the Master Servicer
or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to make Advances or
Servicing Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right to
receive compensation for its services hereunder or with respect to
any
particular transaction.
To the extent consistent with the
foregoing, the Master Servicer shall also seek
to maximize the timely and complete
recovery of principal and interest on the
Mortgage Notes. Subject only to the
above-described servicing standards and the
terms of this Agreement and of the
respective Mortgage Loans, the Master
Servicer shall have full power and
authority, acting alone or through
Sub-Servicers as provided in Section 3.02,
to do or cause to be done any and all
things in connection with such servicing
and administration which it may deem
necessary or desirable. Without limiting
the generality of the foregoing, the
Master Servicer in its own name or in the
name of a Sub-Servicer is hereby
authorized and empowered by the Trustee
when the Master Servicer believes it
appropriate in its best judgment in
accordance with the servicing standards set
forth above, to execute and deliver, on
behalf of the Certificateholders and the
Trustee, and upon notice to the Trustee,
any and all instruments of satisfaction
or cancellation, or of partial or full
release or discharge, and all other
comparable instruments, with respect to the
Mortgage Loans and the Mortgaged
Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership
of such properties, and to hold or
cause to be held title to such properties,
on behalf of the Trustee and
Certificateholders. The Master Servicer
shall service and administer the
Mortgage Loans in accordance with
applicable state and federal law and shall
provide to the Mortgagors any reports
required to be provided to them thereby.
The Master Servicer shall also comply in
the performance of this Agreement with
all reasonable rules and requirements of
each insurer under each Primary
Insurance Policy and any standard hazard
insurance policy. Subject to Section
3.17, the Trustee shall execute, at the
written request of the Master Servicer,
and furnish to the Master Servicer and any
Sub-Servicer such documents as are
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necessary or appropriate to enable the
Master Servicer or any Sub-Servicer to
carry out their servicing and
administrative duties hereunder, and the Trustee
hereby grants to the Master Servicer a
power of attorney to carry out such
duties. The Trustee shall not be liable for
the actions of the Master Servicer
or any Sub-Servicers under such powers of
attorney.
In accordance with the standards of the preceding paragraph, the
Master
Servicer shall advance or cause to be
advanced funds as necessary for the
purpose of effecting the timely payment of
taxes and assessments on the
Mortgaged Properties, which advances shall
be Servicing Advances reimbursable in
the first instance from related collections
from the Mortgagors pursuant to
Section 3.09, and further as provided in
Section 3.11. Any cost incurred by the
Master Servicer or by Sub-Servicers in
effecting the timely payment of taxes and
assessments on a Mortgaged Property shall
not, for the purpose of calculating
distributions to Certificateholders, be
added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding
that the terms of such Mortgage Loan
so permit.
The Master Servicer further is authorized and empowered by the
Trustee,
on behalf of the Certificateholders and the
Trustee, in its own name or in the
name of the Sub-Servicer, when the Master
Servicer or the Sub-Servicer, as the
case may be, believes it is appropriate in
its best judgment to register any
Mortgage Loan on the MERS(R) System, or
cause the removal from the registration
of any Mortgage Loan on the MERS(R) System,
to execute and deliver, on behalf of
the Trustee and the Certificateholders or
any of them, any and all instruments
of assignment and other comparable
instruments with respect to such assignment
or re-recording of a Mortgage in the name
of MERS, solely as nominee for the
Trustee and its successors and assigns. Any
expenses incurred in connection with
the actions described in the preceding
sentence shall be borne by the Master
Servicer in accordance with Section 3.18,
with no right of reimbursement;
provided, that if, as a result of MERS
discontinuing or becoming unable to
continue operations in connection with the
MERS System, it becomes necessary to
remove any Mortgage Loan from registration
on the MERS System and to arrange for
the assignment of the related Mortgages to
the Trustee, then any related
expenses shall be reimbursable to the
Master Servicer.
Notwithstanding anything in this Agreement to the contrary, the
Master
Servicer may not make any future advances
with respect to a Mortgage Loan
(except as provided in Section 4.06) and
the Master Servicer shall not (i)
permit any modification with respect to any
Mortgage Loan that would change the
Loan Rate, reduce or increase the principal
balance (except for reductions
resulting from actual payments of
principal) or change the final maturity date
on such Mortgage Loan (unless, as provided
in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan
or such default is, in the judgment of
the Master Servicer, reasonably
foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any
Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage
Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury
regulations promulgated thereunder)
and (B) cause either 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 date" under the REMIC
Provisions.
Notwithstanding any other provision of this Agreement or the
Additional
Collateral Servicing Agreement to the
contrary, except as provided below, the
Master Servicer shall have no duty or
obligation to service and administer the
Additional Collateral and the Master
Servicer shall not be deemed to be the
Additional Collateral Servicer, unless and
until MLCC's obligations to
administer the Additional Collateral under
the Additional Collateral Servicing
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Agreement have been terminated with respect
to the Additional Collateral
Mortgage Loans, in which case, the Master
Servicer shall be bound to service and
administer the Additional Collateral and
the Limited Purpose Surety Bond in
accordance with the provisions of this
Agreement and the related Additional
Collateral Agreements from the date of such
termination. The Trustee, as
assignee of the Additional Collateral
Servicing Agreement, shall enforce the
obligations of MLCC to service and
administer the Additional Collateral as
provided in the Additional Collateral
Servicing Agreement, and shall take
appropriate action thereunder if MLCC fails
to substantially comply with its
obligations to administer the Additional
Collateral. In the event the Trustee
receives an indemnification payment from
MLCC under Section 3 of the Additional
Collateral Servicing Agreement that is
attributable to losses resulting from
MLCC's failure to administer the Additional
Collateral in accordance with the
terms of the Additional Collateral
Servicing Agreement in connection with
Additional Collateral Mortgage Loans, the
Trustee shall deposit such amount in
the Collection Account.
The Master Servicer may delegate its responsibilities under
this
Agreement; provided, however, that no such
delegation shall release the Master
Servicer from the responsibilities or
liabilities arising under this Agreement.
Section 3.02 SUB-SERVICING AGREEMENTS BETWEEN THE MASTER SERVICER
AND
SUB-SERVICERS.
(a) The Master Servicer may enter into Sub-Servicing Agreements
(provided that such agreements would not
result in a withdrawal or a downgrading
by any Rating Agency of the rating on any
Class of Certificates) with
Sub-Servicers, for the servicing and
administration of the Mortgage Loans.
Notwithstanding any other provision of this
Agreement, the Master Servicer shall
not be precluded from selling all or part
of the Servicing Fee relating to any
Mortgage Loans to any Sub-Servicer,
provided that with respect to any Mortgage
Loan as to which the Master Servicer sells
all or a part of the related
Servicing Fee, the Master Servicer shall
retain full responsibility under this
Agreement for the servicing activities
relating to such Mortgage Loan.
Each Sub-Servicer shall be (i) authorized to transact business in
the
state or states in which the related
Mortgaged Properties it is to service are
situated, if and to the extent required by
applicable law to enable the
Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing
Agreement, (ii) an institution approved as
a mortgage loan originator by the
Federal Housing Administration or an
institution the deposit accounts of which
are insured by the FDIC and (iii) a Freddie
Mac or Fannie Mae approved mortgage
servicer. Each Sub-Servicing Agreement must
impose on the Sub-Servicer
requirements conforming to the provisions
set forth in Section 3.08 and provide
for servicing of the Mortgage Loans
consistent with the terms of this Agreement.
The Master Servicer will examine each
Sub-Servicing Agreement and will be
familiar with the terms thereof. The terms
of any Sub-Servicing Agreement will
not be inconsistent with any of the
provisions of this Agreement. The Master
Servicer and the Sub-Servicers may enter
into and make amendments to the
Sub-Servicing Agreements or enter into
different forms of Sub-Servicing
Agreements; provided, however, that any
such amendments or different forms shall
be consistent with and not violate the
provisions of this Agreement, and that no
such amendment or different form shall be
made or entered into which could be
reasonably expected to be materially
adverse to the interests of the
Certificateholders, without the consent of
the Holders of Certificates entitled
to at least 66% of the Voting Rights. Any
variation without the consent of the
Holders of Certificates entitled to at
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least 66% of the Voting Rights from the
provisions set forth in Section 3.08
relating to insurance or priority
requirements of Sub-Servicing Accounts, or
credits and charges to the Sub-Servicing
Accounts or the timing and amount of
remittances by the Sub-Servicers to the
Master Servicer, are conclusively deemed
to be inconsistent with this Agreement and
therefore prohibited. The Master
Servicer shall deliver to the Trustee
copies of all Sub-Servicing Agreements,
and any amendments or modifications
thereof, promptly upon the Master Servicer's
execution and delivery of such
instruments.
(b) As part of its servicing activities hereunder, the Master
Servicer
(except as otherwise provided in the last
sentence of this paragraph), for the
benefit of the Trustee and the
Certificateholders, shall enforce the obligations
of each Sub-Servicer under the related
Sub-Servicing Agreement and of each
Seller under the Mortgage Loan Purchase
Agreement, including, without
limitation, any obligation to make advances
in respect of delinquent payments as
required by a Sub-Servicing Agreement, or
to purchase a Mortgage Loan on account
of missing or defective documentation or on
account of a breach of a
representation, warranty or covenant, as
described in Section 2.03(a). Such
enforcement, including, without limitation,
the legal prosecution of claims,
termination of Sub-Servicing Agreements,
and the pursuit of other appropriate
remedies, shall be in such form and carried
out to such an extent and at such
time as the Master Servicer, in its good
faith business judgment, would require
were it the owner of the related Mortgage
Loans. The Master Servicer shall pay
the costs of such enforcement at its own
expense, and shall be reimbursed
therefor only (i) from a general recovery
resulting from such enforcement, to
the extent, if any, that such recovery
exceeds all amounts due in respect of the
related Mortgage Loans, or (ii) from a
specific recovery of costs, expenses or
attorneys' fees against the party against
whom such enforcement is directed.
Enforcement of the obligations under the
Mortgage Loan Purchase Agreement
against the Sellers shall be effected by
the Master Servicer, in accordance with
the foregoing provisions of this
paragraph.
Section 3.03 SUCCESSOR SUB-SERVICERS.
The Master Servicer shall be entitled to terminate any
Sub-Servicing
Agreement and the rights and obligations of
any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with
the terms and conditions of such
Sub-Servicing Agreement. In the event of
termination of any Sub Servicer, all
servicing obligations of such Sub-Servicer
shall be assumed simultaneously by
the Master Servicer without any act or deed
on the part of such Sub-Servicer or
the Master Servicer, and the Master
Servicer either shall service directly the
related Mortgage Loans or shall enter into
a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies
under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that
such
agreement may be immediately terminated by
the Trustee without fee, in
accordance with the terms of this
Agreement, in the event that the Master
Servicer shall, for any reason, no longer
be the Master Servicer (including
termination due to a Master Servicer Event
of Termination).
Section 3.04 LIABILITY OF THE MASTER SERVICER.
Notwithstanding any Sub-Servicing Agreement, any of the provisions
of
this Agreement relating to agreements or
arrangements between the Master
Servicer and a Sub-Servicer or reference to
actions taken through a Sub-Servicer
or otherwise, the Master Servicer shall
remain obligated and primarily liable to
the Trustee and the Certificateholders for
the servicing and
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administering of the Mortgage Loans in
accordance with the provisions of Section
3.01 without diminution of such obligation
or liability by virtue of such
Sub-Servicing Agreements or arrangements or
by virtue of indemnification from
the Sub-Servicer and to the same extent and
under the same terms and conditions
as if the Master Servicer alone were
servicing and administering the Mortgage
Loans. The Master Servicer shall be
entitled to enter into any agreement with a
Sub-Servicer for indemnification of the
Master Servicer by such Sub-Servicer and
nothing contained in this Agreement shall
be deemed to limit or modify such
indemnification.
Section 3.05 NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICERS
AND
TRUSTEE OR CERTIFICATEHOLDERS.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the
Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to
be between the Sub-Servicer and the
Master Servicer alone, and the Trustee and
Certificateholders shall not be
deemed parties thereto and shall have no
claims, rights, obligations, duties or
liabilities with respect to the
Sub-Servicer except as set forth in Section
3.06. The Master Servicer shall be solely
liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the
Master Servicer's compensation
pursuant to this Agreement is sufficient to
pay such fees.
Section 3.06 ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS
BY
TRUSTEE.
In the event the Master Servicer shall for any reason no longer be
the
master servicer (including by reason of the
occurrence of a Master Servicer
Event of Termination), the Trustee or its
designee or the successor master
servicer as appointed pursuant to Section
7.02 herein, shall thereupon assume
all of the rights and obligations of the
Master Servicer under each
Sub-Servicing Agreement that the Master
Servicer may have entered into, unless
the Trustee elects to terminate any
Sub-Servicing Agreement in accordance with
its terms as provided in Section 3.03. Upon
such assumption, the Trustee, its
designee or the successor servicer for the
Trustee appointed pursuant to Section
7.02 shall be deemed, subject to Section
3.03, to have assumed all of the Master
Servicer's interest therein and to have
replaced the Master Servicer as a party
to each Sub-Servicing Agreement to the same
extent as if each Sub-Servicing
Agreement had been assigned to the assuming
party, except that (i) the Master
Servicer shall not thereby be relieved of
any liability or obligations under any
Sub-Servicing Agreement and (ii) none of
the Trustee, its designee or any
successor master servicer shall be deemed
to have assumed any liability or
obligation of the Master Servicer that
arose before it ceased to be the Master
Servicer.
The Master Servicer at its expense shall, upon request of the
Trustee,
deliver to the assuming party all documents
and records relating to each
Sub-Servicing Agreement and the Mortgage
Loans then being serviced and an
accounting of amounts collected and held by
or on behalf of it, and otherwise
use its best efforts to effect the orderly
and efficient transfer of the
Sub-Servicing Agreements to the assuming
party.
Section 3.07 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Master Servicer shall make reasonable efforts to collect
all
payments called for under the terms and
provisions of the Mortgage Loans, and
shall, to the extent such procedures shall
be consistent with this Agreement and
the terms and provisions of any related
Primary Insurance
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Policy and any other applicable insurance
policies, follow such collection
procedures as it would follow with respect
to mortgage loans comparable to the
Mortgage Loans and held for its own
account. Consistent with the foregoing, the
Master Servicer may in its discretion (i)
waive any late payment charge or, if
applicable, penalty interest, only upon
determining that the coverage of such
Mortgage Loan by the related Primary
Insurance Policy, if any, will not be
affected, or (ii) extend the due dates for
Monthly Payments due on a Mortgage
Note for a period of not greater than 180
days; provided that any extension
pursuant to clause (ii) above shall not
affect the amortization schedule of any
Mortgage Loan for purposes of any
computation hereunder, except as provided
below. In the event of any such arrangement
pursuant to clause (ii) above, the
Master Servicer shall make timely advances
on such Mortgage Loan during such
extension pursuant to Section 4.06 and in
accordance with the amortization
schedule of such Mortgage Loan without
modification thereof by reason of such
arrangements. Notwithstanding the
foregoing, in the event that any Mortgage Loan
is in default or, in the judgment of the
Master Servicer, such default is
reasonably foreseeable, the Master
Servicer, consistent with the standards set
forth in Section 3.01, may also, waive,
modify or vary any term of such Mortgage
Loan (including modifications that would
change the Loan Rate, forgive the
payment of principal or interest or extend
the final maturity date of such
Mortgage Loan), accept payment from the
related Mortgagor of an amount less than
the Stated Principal Balance in final
satisfaction of such Mortgage Loan (such
payment, a "Short Pay-off") or consent to
the postponement of strict compliance
with any such term or otherwise grant
indulgence to any Mortgagor.
Section 3.08 SUB-SERVICING ACCOUNTS.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan
pursuant to a Sub-Servicing Agreement, the
Sub-Servicer will be required to
establish and maintain one or more accounts
(collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall
be an Eligible Account and shall
comply with all requirements of this
Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in
the clearing account (which account
must be an Eligible Account) in which it
customarily deposits payments and
collections on mortgage loans in connection
with its mortgage loan servicing
activities on a daily basis, and in no
event more than one Business Day after
the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by
the Sub-Servicer less its servicing
compensation to the extent permitted by the
Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the
Sub-Servicing Account, in no event more
than two Business Days after the deposit
of such funds into the clearing account.
The Sub-Servicer shall thereafter
deposit such proceeds in the Collection
Account or remit such proceeds to the
Master Servicer for deposit in the
Collection Account not later than two
Business Days after the deposit of such
amounts in the Sub-Servicing Account.
For purposes of this Agreement, the Master
Servicer shall be deemed to have
received payments on the Mortgage Loans
when the Sub-Servicer receives such
payments.
Section 3.09 COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR
ITEMS;
SERVICING ACCOUNTS.
The Master Servicer shall establish and maintain one or more
accounts
(the "Servicing Accounts"), into which all
collections from the Mortgagors (or
related advances from Sub-Servicers) for
the payment of ground rents, taxes,
assessments, fire and hazard insurance
premiums, Primary Insurance Policy
premiums, water charges, sewer rents and
comparable items for the account of the
Mortgagors ("Escrow Payments") shall be
deposited and retained. Servicing
Accounts shall be Eligible Accounts. The
Master Servicer shall deposit in the
clearing
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account (which account must be an Eligible
Account) in which it customarily
deposits payments and collections on
mortgage loans in connection with its
mortgage loan servicing activities on a
daily basis, and in no event more than
one Business Day after the Master
Servicer's receipt thereof, all Escrow
Payments collected on account of the
Mortgage Loans and shall thereafter deposit
such Escrow Payments in the Servicing
Accounts, in no event more than two
Business Days after the deposit of such
funds in the clearing account, for the
purpose of effecting the payment of any
such items as required under the terms
of this Agreement. Withdrawals of amounts
from a Servicing Account may be made
only to (i) effect payment of Escrow
Payments; (ii) reimburse the Master
Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing
Agreement) out of related collections for
any advances made pursuant to Section
3.01 (with respect to taxes and
assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to
Mortgagors any sums as may be determined to
be overages; (iv) make Permitted
Investments as provided in Section 3.12; (v)
pay interest, to the Master Servicer or to
the Mortgagor if required and as
described below, on balances in the
Servicing Account; (vi) clear and terminate
the Servicing Account at the termination of
the Master Servicer's obligations
and responsibilities in respect of the
Mortgage Loans under this Agreement in
accordance with Article IX; or (vii)
recover amounts deposited in error. As part
of its servicing duties, the Master
Servicer or Sub-Servicers shall pay to the
Mortgagors interest on funds in Servicing
Accounts, to the extent required by
law and, to the extent that interest earned
on funds in the Servicing Accounts
is insufficient, to pay such interest from
its or their own funds, without any
reimbursement therefor. To the extent that
a Mortgage does not provide for
Escrow Payments, the Master Servicer shall
determine whether any such payments
are made by the Mortgagor in a manner and
at a time that avoids the loss of the
Mortgaged Property due to a tax sale or the
foreclosure of a tax lien. The
Master Servicer assumes full responsibility
for the payment of all such bills
and shall effect payments of all such bills
irrespective of the Mortgagor's
faithful performance in the payment of same
or the making of the Escrow Payments
and shall make advances from its own funds
to effect such payments. The Master
Servicer shall be entitled to retain any
interest paid on funds deposited in the
Servicing Account to effect Escrow Payments
other than interest on escrowed
funds required by law to be paid to the
Mortgagor.
Section 3.10 COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.
(a) On behalf of the Trust Fund, the Master Servicer shall
establish
and maintain one or more accounts (such
account or accounts, the "Collection
Account"), held in trust for the benefit of
the Trustee and the
Certificateholders. On behalf of the Trust
Fund, the Master Servicer shall
deposit or cause to be deposited in the
clearing account (which account must be
an Eligible Account) in which it
customarily deposits payments and collections
on mortgage loans in connection with its
mortgage loan servicing activities on a
daily basis, and in no event more than one
Business Day after the Master
Servicer's receipt thereof, and shall
thereafter deposit in the Collection
Account, in no event more than two Business
Days after the deposit of such funds
into the clearing account, as and when
received or as otherwise required
hereunder, the following payments and
collections received or made by it
subsequent to the Cut-off Date (other than
in respect of principal or interest
on the related Mortgage Loans due on or
before the Cut-off Date), or payments
(other than Principal Prepayments) received
by it on or prior to the Cut-off
Date but allocable to a Due Period
subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
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(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds, Liquidation Proceeds and
Subsequent Recoveries (other than proceeds collected in respect of
any
particular REO Property and amounts paid by the Master Servicer
in
connection with a purchase of Mortgage Loans and REO Properties
pursuant to Section 9.01);
(iv) any amounts required to be deposited pursuant to Section
3.12 in connection with any losses realized on Permitted
Investments
with respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Master
Servicer pursuant to the second paragraph of Section 3.14(a) in
respect
of any blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or
purchased in accordance with Section 2.03 or Section 9.01;
(vii) all amounts required to be deposited in connection with
shortfalls in principal amount of Eligible Substitute Mortgage
Loans
pursuant to Section 2.03;
(viii) any amounts required to be transferred from any Buydown
Account pursuant to Section 3.25; and
(ix) any (x) amounts realized by MLCC or (y) Required Surety
Payments received by the Trustee or the Master Servicer in respect
of
any Additional Collateral.
For purposes of the immediately preceding
sentence, the Cut-off Date with
respect to any Eligible Substitute Mortgage
Loan shall be deemed to be the date
of substitution.
The foregoing requirements for deposit in the Collection Account
shall
be exclusive, it being understood and
agreed that, without limiting the
generality of the foregoing, payments in
the nature of late payment charges or
assumption fees need not be deposited by
the Master Servicer in the Collection
Account and shall be retained by the Master
Servicer as additional servicing
compensation. In the event the Master
Servicer shall deposit in the Collection
Account any amount not required to be
deposited therein, it may at any time
withdraw such amount from the Collection
Account, any provision herein to the
contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish
and
maintain one or more accounts (such account
or accounts, the "Distribution
Account"), held in trust for the benefit of
the Certificateholders. On behalf of
the Trust Fund, the Master Servicer shall
deliver to the Trustee in immediately
available funds for deposit in the
Distribution Account on or before 5:00 p.m.
New York time on the Master Servicer
Remittance Date, that portion of the
Available Distribution Amount for the
related Distribution Date then on deposit
in the Collection Account.
(c) Funds in the Collection Account and the Distribution Account
may be
invested in Permitted Investments in
accordance with the provisions set forth in
Section 3.12. The Master Servicer shall
give notice to the Trustee and the
Depositor of the location of the Collection
Account maintained by it when
established and prior to any change
thereof. The Trustee shall
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give notice to the Master Servicer and the
Depositor of the location of the
Distribution Account when established and
prior to any change thereof.
(d) Funds held in the Collection Account at any time may be
delivered
by the Master Servicer to the Trustee for
deposit in an account (which may be
the Distribution Account and must satisfy
the standards for the Distribution
Account as set forth in the definition
thereof) and for all purposes of this
Agreement shall be deemed to be a part of
the Collection Account; provided,
however, that the Trustee shall have the
sole authority to withdraw any funds
held pursuant to this subsection (d). In
the event the Master Servicer shall
deliver to the Trustee for deposit in the
Distribution Account any amount not
required to be deposited therein, it may at
any time request that the Trustee
withdraw such amount from the Distribution
Account and remit to it any such
amount, any provision herein to the
contrary notwithstanding. In addition, the
Master Servicer shall deliver to the
Trustee from time to time for deposit, and
upon written notification from the Master
Servicer, the Trustee shall so
deposit, in the Distribution Account:
(i) any Advances, as required pursuant to Section 4.06;
(ii) any amounts required to be deposited pursuant to Section
3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid by the Master Servicer in
connection with a purchase of Mortgage Loans and REO Properties
pursuant to Section 9.01;
(iv) any amounts required to be deposited pursuant to Section
3.24 in connection with any Prepayment Interest Shortfalls; and
(v) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from the
Master
Servicer, a trustee in bankruptcy, or
federal bankruptcy court or other source,
the Trustee shall deposit such funds in the
Distribution Account.
Section 3.11 WITHDRAWALS FROM THE COLLECTION ACCOUNT AND
DISTRIBUTION
ACCOUNT.
(a) The Master Servicer shall, from time to time, make withdrawals
from
the Collection Account for any of the
following purposes or as described in
Section 4.06:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to
Section
3.10(b) or permitted to be so remitted pursuant to the first
sentence
of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master
Servicer for Advances;
(iii) subject to Section 3.16(d), to pay the Master Servicer
or any Sub-Servicer any unpaid Servicing Fees and reimburse any
unreimbursed Servicing Advances with respect to each Mortgage Loan,
but
only to the extent of any Liquidation Proceeds, Insurance Proceeds
or
other amounts as may be collected by the Master Servicer;
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(iv) to pay to the Master Servicer as servicing compensation
(in addition to the Servicing Fee) on the Master Servicer
Remittance
Date any interest or investment income earned on funds deposited in
the
Collection Account, any Foreclosure Profits and any prepayment
penalties or premiums relating to any Principal Prepayments;
provided,
however, that no such amounts shall be payable as servicing
compensation to the extent they relate to a Mortgage Loan with
respect
to which a default, breach, violation or event of acceleration
exists
or would exist but for the lapse of time, the giving of notice,
or
both;
(v) to pay to the Master Servicer, the Depositor or a Seller,
as the case may be, with respect to each Mortgage Loan that has
previously been purchased or replaced pursuant to Section 2.03
or
Section 3.16(c) all amounts received thereon subsequent to the date
of
purchase or substitution, as the case may be;
(vi) to reimburse the Master Servicer for any Advance
previously made which the Master Servicer has determined to be
a
Nonrecoverable Advance in accordance with the provisions of
Section
4.06; (vii) to reimburse the Master Servicer or the Depositor
for
expenses incurred by or reimbursable to the Master Servicer or
the
Depositor, as the case may be, pursuant to Section 6.03;
(viii) to reimburse the Master Servicer or the Trustee, as the
case may be, for expenses reasonably incurred in respect of the
breach
or defect giving rise to the purchase obligation under Section 2.03
or
Section 2.04 of this Agreement that were included in the Purchase
Price
of the Mortgage Loan, including any expenses arising out of the
enforcement of the purchase obligation;
(ix) to pay, or to reimburse the Master Servicer for advances
in respect of, expenses incurred in connection with any Mortgage
Loan
pursuant to Section 3.16(b); and
(x) to clear and terminate the Collection Account pursuant to
Section 10.01;
(xi) to reimburse the Master Servicer for amounts deposited in
error.
The Master Servicer shall keep and maintain separate accounting, on
a
Mortgage Loan by Mortgage Loan basis, for
the purpose of justifying any
withdrawal from the Collection Account, to
the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii),
(iv), (v), (vi), (viii) and (ix) above.
The Master Servicer shall provide written
notification to the Trustee, on or
prior to the next succeeding Master
Servicer Remittance Date, upon making any
withdrawals from the Collection Account
pursuant to subclause (vii) above.
(b) The Trustee shall, from time to time, make withdrawals from
the
Distribution Account, for any of the
following purposes, without priority:
(i) to make distributions to Certificateholders in accordance
with Section 4.01;
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(ii) to pay to itself amounts to which it is entitled pursuant
to Section 8.05;
(iii) to pay itself any interest income earned on funds
deposited in the Distribution Account pursuant to Section
3.12(c);
(iv) to reimburse itself pursuant to Section 7.02 and 7.01(b);
(v) to pay any amounts in respect of taxes pursuant to
10.01(g)(iii); and
(vi)
to clear and terminate the Distribution Account pursuant
to Section 10.01.
Section 3.12 INVESTMENT OF FUNDS IN THE COLLECTION ACCOUNT,
SERVICING
ACCOUNTS AND THE DISTRIBUTION ACCOUNT.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account or
Servicing Accounts (for purposes of this
Section 3.12, an "Investment Account'), and
the Trustee, in its individual
capacity, may direct any depository
institution maintaining the Distribution
Account (for purposes of this Section 3.12,
also an "Investment Account'), to
invest the funds in such Investment Account
in one or more Permitted Investments
bearing interest or sold at a discount, and
maturing, unless payable on demand,
(i) no later than the Business Day
immediately preceding the date on which such
funds are required to be withdrawn from
such account pursuant to this Agreement,
if a Person other than the Trustee is the
obligor thereon, and (ii) no later
than the date on which such funds are
required to be withdrawn from such account
pursuant to this Agreement, if the Trustee
is the obligor thereon. All such
