STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
DEPOSITOR,
JPMORGAN CHASE BANK, N.A.
TRUSTEE,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
MASTER SERVICER,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
SECURITIES ADMINISTRATOR,
and
EMC
MORTGAGE CORPORATION
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
Structured Asset Mortgage Investments II Trust 2005-AR1
Mortgage Pass-Through Certificates
Series 2005-AR1
<PAGE>
TABLE OF CONTENTS
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Page
ARTICLE I
Definitions
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Section 1.01.
Definitions...............................................................................1
Section 1.02.
Calculation of
LIBOR.....................................................................40
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01.
Conveyance of Mortgage Loans to
Trustee..................................................41
Section 2.02.
Acceptance of Trust Fund by
Trustee......................................................43
Section 2.03.
Assignment of Interest in the Mortgage Loan Purchase
Agreement...........................45
Section 2.04.
Substitution of Mortgage
Loans...........................................................46
Section 2.05.
Issuance of
Certificates.................................................................47
Section 2.06.
Representations and Warranties Concerning the
Depositor..................................48
Section 2.07
Covenants of the Master Servicer and the EMC
Servicer....................................49
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01.
Master
Servicer..........................................................................50
Section 3.02.
REMIC-Related
Covenants..................................................................51
Section 3.03.
Monitoring of
Servicers..................................................................51
Section 3.04.
Fidelity
Bond............................................................................52
Section 3.05.
Power to Act;
Procedures.................................................................52
Section 3.06.
Due-on-Sale Clauses; Assumption
Agreements...............................................53
Section 3.07.
Release of Mortgage
Files................................................................53
Section 3.08.
Documents, Records and Funds in Possession of Master Servicer To Be
Held for
Trustee..................................................................................54
Section 3.09.
Standard Hazard Insurance and Flood Insurance
Policies...................................55
Section 3.10.
Presentment of Claims and Collection of
Proceeds.........................................56
Section 3.11.
Maintenance of the Primary Mortgage Insurance
Policies...................................56
Section 3.12.
Trustee to Retain Possession of Certain Insurance Policies and
Documents.................56
Section 3.13.
Realization Upon Defaulted Mortgage
Loans................................................57
Section 3.14.
Compensation for the Servicers and the Master
Servicer...................................57
Section 3.15.
REO
Property.............................................................................57
Section 3.16.
Annual Officer's Certificate as to
Compliance............................................58
Section 3.17.
Annual Independent Accountant's Servicing
Report.........................................58
Section 3.18.
Reports Filed with Securities and Exchange
Commission....................................59
Section 3.19.
EMC......................................................................................60
Section 3.20.
UCC......................................................................................60
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Section 3.21.
Optional Purchase of Defaulted Mortgage
Loans............................................60
ARTICLE IV
Accounts
Section 4.01.
Protected
Accounts.......................................................................62
Section 4.02.
Distribution
Account.....................................................................63
Section 4.03.
Permitted Withdrawals and Transfers from the Distribution
Account........................64
Section 4.04.
Distribution of Carryover Shortfall Amount; Carryover Shortfall
Reserve Fund.............66
ARTICLE V
Certificates
Section 5.01.
Certificates.............................................................................68
Section 5.02.
Registration of Transfer and Exchange of
Certificates....................................76
Section 5.03.
Mutilated, Destroyed, Lost or Stolen
Certificates........................................79
Section 5.04.
Persons Deemed
Owners....................................................................79
Section 5.05.
Transfer Restrictions on Residual
Certificates...........................................80
Section 5.06.
Restrictions on Transferability of
Certificates..........................................81
Section 5.07.
ERISA
Restrictions.......................................................................81
Section 5.08.
Rule 144A
Information....................................................................83
Section 5.09.
Appointment of Paying Agent and Certificate
Registrar....................................83
ARTICLE VI
Payments to Certificateholders
Section 6.01.
Distributions on the
Certificates........................................................84
Section 6.02.
Allocation of
Losses.....................................................................88
Section 6.03.
Payments.................................................................................91
Section 6.04.
Statements to
Certificateholders.........................................................91
Section 6.05.
Monthly
Advances.........................................................................94
Section 6.06.
Compensating Interest
Payments...........................................................94
ARTICLE VII
The Master Servicer
Section 7.01.
Liabilities of the Master
Servicer.......................................................96
Section 7.02.
Merger or Consolidation of the Master
Servicer...........................................96
Section 7.03.
Indemnification of the Trustee, the Custodian and the
Securities
Administrator............................................................................96
Section 7.04.
Limitations on Liability of the Master Servicer and
Others...............................97
Section 7.05.
Master Servicer Not to
Resign............................................................98
Section 7.06.
Successor Master
Servicer................................................................98
Section 7.07.
Sale and Assignment of Master
Servicing..................................................99
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ii
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ARTICLE VIII
Default
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Section 8.01.
"Event of
Default"......................................................................100
Section 8.02.
Trustee to Act; Appointment of
Successor................................................102
Section 8.03.
Notification to
Certificateholders......................................................102
Section 8.04.
Waiver of
Defaults......................................................................103
Section 8.05.
List of
Certificateholders..............................................................103
ARTICLE IX
Concerning the Trustee and the Securities Administrator
Section 9.01.
Duties of
Trustee.......................................................................104
Section 9.02.
Certain Matters Affecting the Trustee and the Securities
Administrator..................106
Section 9.03.
Trustee and Securities Administrator Not Liable for Certificates or
Mortgage
Loans...................................................................................108
Section 9.04.
Trustee and Securities Administrator May Own
Certificates...............................108
Section 9.05.
Trustee's and Securities Administrator's Fees and
Expenses..............................108
Section 9.06.
Eligibility Requirements for Trustee, Paying Agent and
Securities
Administrator...........................................................................109
Section 9.07.
Insurance...............................................................................109
Section 9.08.
Resignation and Removal of the Trustee and Securities
Administrator.....................109
Section 9.09.
Successor Trustee, Paying Agent and Successor Securities
Administrator..................110
Section 9.10.
Merger or Consolidation of Trustee, Paying Agent or Securities
Administrator............111
Section 9.11.
Appointment of Co-Trustee or Separate
Trustee...........................................111
Section 9.12.
Federal Information Returns and Reports to Certificateholders;
REMIC
Administration..........................................................................113
Section 10.01.
Termination Upon Repurchase by the Depositor or its Designee or
Liquidation
of the Mortgage
Loans...................................................................116
Section 10.02.
Additional Termination
Requirements.....................................................118
ARTICLE XI
Miscellaneous Provisions
Section 11.01.
Intent of
Parties.......................................................................120
Section 11.02.
Amendment...............................................................................120
Section 11.03.
Recordation of
Agreement................................................................121
Section 11.04.
Limitation on Rights of
Certificateholders..............................................122
Section 11.05. Acts
of
Certificateholders..............................................................123
Section 11.06.
GOVERNING
LAW...........................................................................124
Section 11.07.
Notices.................................................................................124
Section 11.08.
Severability of
Provisions..............................................................124
Section 11.09.
Successors and
Assigns..................................................................124
Section 11.10.
Article and Section
Headings............................................................125
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Section 11.11.
Counterparts............................................................................125
Section 11.12.
Notice to Rating
Agencies...............................................................125
</TABLE>
iv
<PAGE>
EXHIBITS
Exhibit A-1 -
Form of Class A
and Class X Certificates
Exhibit A-2 -
Form of Class M
Certificates
Exhibit A-3 -
Form of Class B
Certificates
Exhibit A-4 -
Form of Class R
Certificates
Exhibit B
- Mortgage Loan
Schedule
Exhibit C
- [Reserved]
Exhibit D
- Request for
Release of Documents
Exhibit E
- Form of
Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 -
Form of
Investment Letter
Exhibit F-2 -
Form of Rule
144A and Related Matters Certificate
Exhibit G
- Form of
Custodial Agreement
Exhibit H-1 -
EverHome
Subservicing Agreement
Exhibit H-2 -
Wachovia
Servicing Agreement
Exhibit H-3 -
Bank of America
Servicing Agreement
Exhibit H-4 -
GMAC Servicing
Agreement
Exhibit H-5 -
First Tennessee
Servicing Agreement
Exhibit H-6 -
GreenPoint
Servicing Agreement
Exhibit H-7 -
EMC Servicing
Agreement
Exhibit I
- Assignment
Agreements
Exhibit J
- Mortgage Loan Purchase
Agreement
Exhibit K
- Form of
Trustee Limited Power of Attorney
v
<PAGE>
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement, dated as of March 1, 2005,
among
Structured Asset Mortgage Investments II
Inc., a Delaware corporation, as
depositor (the "Depositor"), JPMorgan Chase
Bank, N.A., a banking association
organized under the laws of the United
States of America, not in its individual
capacity but solely as trustee (the
"Trustee"), Wells Fargo Bank, National
Association, as master servicer (in such
capacity, the "Master Servicer") and as
securities administrator (in such capacity,
the "Securities Administrator"), and
EMC Mortgage Corporation ("EMC").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Depositor has acquired the
Mortgage Loans from EMC. On the Closing
Date, the Depositor will sell the
Mortgage Loans and certain other property
to the Trust Fund and receive in
consideration therefor Certificates
evidencing the entire beneficial ownership
interest in the Trust Fund.
The Trustee on behalf of the Trust shall make an election for
the
assets constituting REMIC I to be treated
for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC I
Regular Interests will be designated
"regular interests" in such REMIC and the
Class R-I Certificate will be
designated the "residual interests" in such
REMIC.
The Trustee on
behalf of the Trust shall make an election for the
assets constituting REMIC II to be treated
for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC II
Regular Certificates will be designated
"regular interests" in such REMIC and the
Class R-II Certificate will be
designated the "residual interests" in such
REMIC.
The Trustee on behalf of the Trust shall make an election for
the
assets constituting REMIC III to be treated
for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC III
Regular Certificates will be designated
"regular interests" in such REMIC and the
Class R-III Certificate will be
designated the "residual interests" in such
REMIC.
The Mortgage Loans will have an Outstanding Principal Balance as of
the
Cut-off Date, after deducting all Scheduled
Principal due on or before the
Cut-off Date, of $817,459,122.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the
Securities Administrator, EMC and the
Trustee agree as follows:
ARTICLE I
Definitions
Section 1.01.
Definitions. Whenever used in this Agreement, the
following words and phrases, unless
otherwise expressly provided or unless the
context otherwise requires, shall have the
meanings specified in this Article.
<PAGE>
Accepted Master Servicing Practices: With respect to any Mortgage
Loan,
as applicable, those customary mortgage
master servicing practices of prudent
institutions that master service mortgage
loans of the same type and quality as
such Mortgage Loan in the jurisdiction
where the related Mortgaged Property is
located, to the extent applicable to the
Trustee or the Master Servicer (except
in its capacity as successor to a
Servicer).
Account: The Distribution Account and the related Protected
Account, as
the context may require.
Accrued Certificate Interest: For any Certificate (other than a
Residual Certificate) or for any Component
of the Class X-1 Certificates on any
Distribution Date, the amount of interest
accrued during the related Interest
Accrual Period at the applicable
Pass-Through Rate on the Current Principal
Amount (or Notional Amount, with respect to
the Class X-1 and Class X-2
Certificates) of such Certificate or
Notional Amount of such Component
immediately prior to such Distribution
Date, less (i) in the case of a Senior
Certificate (other than a Residual
Certificate) or a Component of the Class X-1
Certificates, such Certificate's or
Component's share of any Net Interest
Shortfall from the Mortgage Loans in the
related Loan Group and, after the
Cross-Over Date, the interest portion of
any Realized Losses on the related
Mortgage Loans in the related Loan Group to
the extent allocated thereto in
accordance with Section 6.02(g), (ii) in
the case of a Senior Mezzanine
Certificate, such Certificate's share of
any Net Interest Shortfall and the
interest portion of any Realized Losses on
the related Mortgage Loans to the
extent allocated thereto in accordance with
Section 6.02(g) and (iii) in the
case of a Subordinate Certificate, such
Certificate's share of any Net Interest
Shortfall and the interest portion of any
Realized Losses on the Mortgage Loans
in the related Loan Group, to the extent
allocated thereto in accordance with
Section 6.02(g). Such Net Interest
Shortfalls will be allocated among the
Certificates (other than the Residual
Certificates) in proportion to the amount
of Accrued Certificate Interest that would
have been allocated thereto in the
absence of such shortfalls. The amount of
any interest shortfalls (not including
Interest Shortfalls or the interest portion
of Realized Losses) with respect to
the Mortgage Loans that are not covered by
servicing advances will constitute
unpaid Accrued Certificate Interest and
will be distributable to holders of the
Certificates entitled to such amounts on
subsequent Distribution Dates, to the
extent of the Available Funds remaining
after current interest distributions.
Any such amounts so carried forward will
not bear interest. Any Interest
Shortfalls will not be offset by a
reduction in the servicing compensation of
the Master Servicer, the Servicers or
otherwise, except to the extent of
applicable Compensating Interest Payments.
The interest portion of Realized
Losses for the Mortgage Loans will be
allocated sequentially, in the following
order, to the Class B-6, Class B-5, Class
B-4, Class B-3, Class B-2, Class B-1
and Class M Certificates, and, following
the Cross-Over Date, (A) the interest
portion of Realized Losses on the Group I
Mortgage Loans will be allocated on a
pro rata basis to the Class A-1
Certificates, to Component 1X of the Class X-1
Certificates and to Component 2X of the
Class X-1 Certificates to the extent of
the Group I Allocation Fraction thereof and
(B) the interest portion of Realized
Losses on the Group II Mortgage Loans will
be allocated on a pro rata basis to
the Class A-2 Certificates, to the Class
X-2 Certificates and to Component 2X of
the Class X-1 Certificates to the extent of
the Group II Allocation Fraction
thereof. Interest on the Certificates
(other than the Residual Certificates) and
the Components of the Class X-1
Certificates shall be calculated on the basis of
a 360-day year consisting of twelve 30-day
months; provided, that the initial
Interest Accrual Period for the Adjustable
Rate Certificates is only 18 days. An
additional 12 days of interest will be paid
to the
2
<PAGE>
Class X-1 Certificates as an additional
distribution on the first Distribution
Date. The Residual Certificates shall not
bear interest. No Accrued Certificate
Interest will be payable with respect to
any Class or Classes of Certificates
that bear interest after the Distribution
Date on which the outstanding Current
Principal Amount or Notional Amount of such
Certificate or Certificates or
Notional Amount of a Component of such
Certificate or Certificates has been
reduced to zero.
Adjustable Rate Certificates: The Class A-1 Certificates, Class
M
Certificates, Class B-1 Certificates, Class
B-2 Certificates and Class B-3
Certificates.
Aegis: Aegis Mortgage
Corporation and its successor in interest.
Affiliate: As to any Person, any other Person controlling,
controlled
by or under common control with such
Person. "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. "Controlled" and
"Controlling" have meanings correlative to
the foregoing. The Trustee may
conclusively presume that a Person is not
an Affiliate of another Person unless
a Responsible Officer of the Trustee has
actual knowledge to the contrary.
Agreement: This Pooling and Servicing Agreement and all
amendments
hereof and supplements hereto made in
accordance with the terms herein.
Alliance Mortgage: Alliance Mortgage Banking Corporation and
its
successor in interest.
Allocable
Share: With respect to the Senior Mezzanine Certificates and
each Class of Subordinate Certificates:
(a) as to any Distribution Date and amounts distributable pursuant
to
clauses (1) and (4) of the definition of
Senior Mezzanine and Subordinate
Optimal Principal Amount, the fraction,
expressed as a percentage, the numerator
of which is the Current Principal Amount of
such Class of Certificates and the
denominator of which is the aggregate
Current Principal Amount of all Classes of
the Senior Mezzanine Certificates and
Subordinate Certificates; and
(b) as to any Distribution Date and amounts distributable pursuant
to
clauses (2), (3), (5) and (6) of the
definition of Senior Mezzanine and
Subordinate Optimal Principal Amount,
(1) for any Distribution Date on which the Senior
Mezzanine Loss and Delinquency Test has been satisfied, as to
the
Senior Mezzanine and each Class of Subordinate Certificates (or,
if
the aggregate Current Principal Amounts of the Senior Mezzanine
Certificates has been reduced to zero, the Class of Subordinate
Certificates having the lowest numerical designation as to
which
the Class Prepayment Distribution Trigger shall not be
applicable)
for which (x) the related Class Prepayment Distribution Trigger
has
been satisfied on such Distribution Date, the fraction,
expressed
as a percentage, the numerator of which is the Current
Principal
Amount of such Class of Certificates and the denominator of
which
is the aggregate Current Principal Amount of all such Classes
of
Senior Mezzanine Certificates and Subordinate Certificates for
which the related Class Prepayment Distribution Trigger has
been
satisfied and (y) the related Class Prepayment Distribution
Trigger
has not been satisfied on such Distribution Date,
3
<PAGE>
0%; provided that if on a Distribution Date, the Current
Principal
Amount of the Senior Mezzanine Certificates or any Class of
Subordinate Certificates for which the related Class Prepayment
Distribution Trigger was satisfied on such Distribution Date is
reduced to zero, any amounts distributed pursuant to this
clause
(b)(1), to the extent of such Class's remaining Allocable
Share,
shall be distributed to the Class of Subordinate Certificates
having the lowest numerical designation and to the Subordinate
Certificates which satisfy the related Class Prepayment
Distribution Trigger in reduction of their respective Current
Principal Amounts, in the order of their numerical Class
designations; and
(2) for any Distribution Date on which the Senior
Mezzanine Loss and Delinquency Test has not been satisfied, as
to
the Senior Mezzanine Certificates, 100%, and as to the
Subordinate
Certificates, 0%; provided that if on a Distribution Date, the
Current Principal Amount of the Senior Mezzanine Certificates
is
reduced to zero, any remaining amounts distributed pursuant to
this
clause (b)(2) shall be distributed to the Classes of
Subordinate
Certificates which satisfy the related Class Prepayment
Distribution Trigger and to the Class of Subordinate
Certificates
having the lowest numerical designation in reduction of their
respective Current Principal Amounts in the order of their
numerical Class designations.
American Gold: American Gold Mortgage Corp. and its successor
in
interest.
American Residential: American Mortgage Express Corp. doing
business as
American Residential Mortgage Corp. and its
successor in interest.
Applicable Credit Rating: For any long-term deposit or security,
a
credit rating of AAA in the case of S&P
and Aaa in the case of Moody's (or with
respect to investments in money market
funds, a credit rating of "AAAm" or
"AAAm-G", in the case of S&P, and the
highest rating given by Moody's for money
market funds, in the case of Moody's). For
any short-term deposit or security, a
rating of A-l+ in the case of S&P and
P-1 in the case of Moody's.
Applicable State Law: For purposes of Section 9.12(d), the
Applicable
State Law shall be (a) the law of the State
of New York and (b) such other state
law whose applicability shall have been
brought to the attention of the
Securities Administrator and the Trustee by
either (i) an Opinion of Counsel
reasonably acceptable to the Securities
Administrator and the Trustee delivered
to it by the Master Servicer or the
Depositor, or (ii) written notice from the
appropriate taxing authority as to the
applicability of such state law.
Appraised Value: With respect to any Mortgage Loan originated
in
connection with a refinancing, the
appraised value of the related Mortgaged
Property based upon the appraisal made at
the time of such refinancing or, with
respect to any other Mortgage Loan, the
amount set forth as the appraised value
of the related Mortgaged Property in an
appraisal made for the mortgage
originator in connection with its
origination of the related Mortgage Loan.
4
<PAGE>
Assignment Agreements: The agreements attached hereto as Exhibit
I,
whereby the Assigned Loans (as defined
therein) and the related Servicing
Agreements were assigned to the Trustee for
the benefit of the
Certificateholders.
Assumed Final Distribution Date: April 19, 2035, or if such day is
not
a Business Day, the next succeeding
Business Day.
Available Funds: With respect to any Distribution Date, the sum of
the
Group I Available Funds and the Group II
Available Funds for such Distribution
Date.
Average Loss Severity Percentage: With respect to any Distribution
Date
and each Loan Group, the percentage
equivalent of a fraction, the numerator of
which is the sum of the Loss Severity
Percentages for each Mortgage Loan in such
Loan Group which had a Realized Loss and
the denominator of which is the number
of Mortgage Loans in the related Loan Group
which had Realized Losses.
BancMortgage: BancMortgage, a division of SunTrust Mortgage, Inc.,
and
its successor in interest.
Bank of America: Bank of America, National Association and its
successor in interest.
Bank of America AAR: That certain Assignment, Assumption and
Recognition Agreement, made and entered
into as of March 31, 2005, among EMC,
the Trustee and Bank of America.
Bank of America Servicing Agreement: That certain Flow Mortgage
Loan
Sale and Servicing Agreement, dated as of
March 1, 2003, by and between Bank of
America and EMC, as attached hereto as
Exhibit H-3, as modified pursuant to the
Bank of America AAR.
Bankruptcy Code: The United States Bankruptcy Code, as amended,
as
codified in 11 U.S.C. ss.ss.101-1330.
Bankruptcy Loss: With respect to any Mortgage Loan, any
Deficient
Valuation or Debt Service Reduction related
to such Mortgage Loan as reported by
the applicable Servicer to the Master
Servicer.
Book-Entry Certificates: Initially, all Classes of Certificates
other
than the Private Certificates and the
Residual Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or
(ii) a
day on which the New York Stock Exchange or
the Federal Reserve is closed or on
which banking institutions in New York City
or in any of the jurisdictions in
which the Trustee, the Master Servicer, any
Servicer or the Securities
Administrator is located are authorized or
obligated by law or executive order
to be closed.
Carryover Shortfall: With respect to the Class A-1, Class M, Class
B-1,
Class B-2 and Class B-3 Certificates and
any Distribution Date for which the
respective Pass-Through Rate for such
Certificates is equal to the weighted
average of the Net Rates on the related
Mortgage
5
<PAGE>
Loans, the excess, if any, of (x) Accrued
Certificate Interest on the Class A-1,
Class M, Class B-1, Class B-2 or Class B-3
Certificates, as applicable, for such
Distribution Date, using the lesser of (a)
LIBOR plus the related Margin, as
calculated for such Distribution Date, and
(b) 11.00% per annum, over (y)
Accrued Certificate Interest on the Class
A-1, Class M, Class B-1, Class B-2 or
Class B-3 Certificates, as applicable, for
such Distribution Date at the
weighted average of the Net Rates on the
related Mortgage Loans.
Carryover Shortfall Amount: With respect to the Class A-1, Class
M,
Class B-1, Class B-2 and Class B-3
Certificates and each Distribution Date, the
sum of (a) the aggregate amount of
Carryover Shortfall for such Class of
Certificates on such Distribution Date
which is not covered on such Distribution
Date by interest distributions otherwise
payable to the Class X-1 Certificates,
plus (b) any Carryover Shortfall Amount for
such Class of Certificates remaining
unpaid from the preceding Distribution
Date, plus (c) one month's interest on
the amount in clause (b) (based on the
number of days in the preceding Interest
Accrual Period) at a rate equal to the
lesser of (i) LIBOR plus the related
Margin for such Distribution Date and (ii)
11.00% per annum.
Carryover Shortfall Reserve Fund: An "outside reserve fund" within
the
meaning of Treasury regulation Section
1.860G-2(h), which is not an asset of any
REMIC, ownership of which is evidenced by
the Class X-1 Certificates, and which
is established and maintained pursuant to
Section 4.04.
Certificate: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust
Fund signed by the Trustee and
countersigned by the Certificate Registrar
in substantially the forms annexed
hereto as Exhibits A-1, A-2, A-3, and A-4
with the blanks therein appropriately
completed.
Certificate Group: The Group I Senior Certificates and the Group
II
Senior Certificates, as applicable.
Certificate Owner: Any Person who is the beneficial owner of a
Certificate registered in the name of the
Depository or its nominee.
Certificate Register: The register maintained pursuant to Section
5.02.
Certificate Registrar: The Securities Administrator or any
successor
certificate registrar appointed
hereunder.
Certificate Registrar Office: The office of the Certificate
Registrar
located at Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 44579,
Attention: SAMI II Series 2005-AR1.
Certificateholder: A Holder of a Certificate.
Class: With respect to the Certificates, A-1, A-2, X-1, X-2, R-I,
R-II,
R-III, M, B-1, B-2, B-3, B-4, B-5 and
B-6.
Class Prepayment Distribution Trigger: For the Senior Mezzanine
Certificates or a Class of Subordinate
Certificates for any Distribution Date,
the Class Prepayment Distribution
Trigger
6
<PAGE>
is satisfied if the fraction (expressed as
a percentage), the numerator of which
is the Current Principal Amount of such
Class of Certificates and each Class of
Certificates subordinate thereto, if any,
and the denominator of which is the
Scheduled Principal Balance of all of the
Mortgage Loans as of the related Due
Date, equals or exceeds such percentage
calculated as of the Closing Date. If on
any Distribution Date the Current Principal
Amount of any Class or Classes of
Senior Mezzanine Certificates and
Subordinate Certificates for which the related
Class Prepayment Distribution Trigger was
satisfied on such Distribution Date is
reduced to zero, any amounts distributable
to such Class or Classes of
Certificates pursuant to clauses (2), (3),
(5) and (6) of the definition of
"Senior Mezzanine and Subordinate Optimal
Principal Amount," to the extent of
such Class' or Classes' remaining Allocable
Share, shall be distributed to the
remaining Class or Classes of Senior
Mezzanine Certificates and Subordinate
Certificates in reduction of their
respective Current Principal Amounts,
sequentially, in the order of their
numerical class designations.
Class R Certificates: The Class R-I, Class R-II and Class R-III
Certificates.
Class R-I Certificate: Any one of the Class R-I Certificates
executed
by the Trustee and authenticated by the
Certificate Registrar substantially in
the form annexed hereto as Exhibit A-4 and
evidencing an interest designated as
a "residual interest" in REMIC I for
purposes of the REMIC Provisions.
Class R-II Certificate: Any one of the Class R-II Certificates
executed
by the Trustee and authenticated by the
Certificate Registrar substantially in
the form annexed hereto as Exhibit A-4 and
evidencing an interest designated as
a "residual interest" in REMIC II for
purposes of the REMIC Provisions.
Class R-III Certificate: Any one of the Class R-III
Certificates
executed by the Trustee and authenticated
by the Certificate Registrar
substantially in the form annexed hereto as
Exhibit A-4 and evidencing an
interest designated as a "residual
interest" in REMIC III for purposes of the
REMIC Provisions.
Class X-1 Payment: An amount equal to the interest that would
have
accrued on the Class A-1, Class M, Class
B-1, Class B-2 and Class B-3
Certificates for the period beginning on
March 19, 2005 and ending on (but not
including) the Closing Date had interest
accrued on such Certificates during
such period. Such amount shall be
distributed from Group I Available Funds to
the Class X-1 Certificates on the first
Distribution Date.
Closing Date: March
31, 2005.
Code: The Internal
Revenue Code of 1986, as amended.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage,
the numerator of which is the sum of the
original principal balance of the
related Mortgage Loan at the date of
origination and the principal balance of
the related secondary financing and the
denominator of which is the lesser of
the selling price of the Mortgaged Property
and its Appraised Value.
Commission: The United
States Securities and Exchange Commission.
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Compensating Interest Payment: As defined in Section 6.06.
Component: With respect to the Class X-1 Certificates, Component 1X
and
Component 2X, as applicable.
Component 1X: Component 1X of the Class X-1 Certificates.
Component 1X Distribution Percentage: The percentage equal to (i)
the
Notional Amount of Component 1X immediately
prior to the first Distribution Date
divided by (ii) the sum of the Notional
Amount of Component 1X and the Notional
Amount of Component 2X immediately prior to
that Distribution Date.
Component 2X:
Component 2X of the Class X-1 Certificates.
Component 2X Distribution Percentage: The percentage equal to (i)
the
Notional Amount of Component 2X immediately
prior to the first Distribution Date
divided by (ii) the sum of the Notional
Amount of Component 1X and the Notional
Amount of Component 2X immediately prior to
that Distribution Date.
Corporate Trust Office: The office of the Trustee at which at
any
particular time its corporate trust
business is administered, which office, at
the date of the execution of this
Agreement, is located at 4 New York Plaza, 6th
Floor, New York, New York 10004, Attention:
Institutional Trust Services/Global
Debt, SAMI Series II 2005-AR1. With respect
to the Certificate Registrar and the
presentment of Certificates for
registration of transfer, exchange or final
payment, Wells Fargo Bank, National
Association, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479,
Attention: Corporate Trust, SAMI II Series
2005-AR1, and for all other purposes, P.O.
Box 98, Columbia, Maryland 21046 (or
for overnight deliveries, 9062 Old
Annapolis Road, Columbia, Maryland 21045),
Attention: Corporate Trust, SAMI II Series
2005-AR1.
Corresponding Certificate: With respect to (i) REMIC II Regular
Interest A-1, (ii) REMIC II Regular
Interest A-2, (iii) REMIC II Regular
Interest M, (iv) REMIC II Regular Interest
B-1, (v) REMIC II Regular Interest
B-2, (vi) REMIC II Regular Interest B-3,
(vii) REMIC II Regular Interest B-4,
(viii) REMIC II Regular Interest B-5, (ix)
REMIC II Regular Interest B-6, and
(x) REMIC II Regular Interest MT-R, (i) the
Class A-1 Certificates, (ii) the
Class A-2 Certificates, (iii) the Class M
Certificates, (iv) the Class B-1
Certificates, (v) the Class B-2
Certificates, (vi) the Class B-3 Certificates,
(vii) the Class B-4 Certificates, (viii)
the Class B-5 Certificates, (ix) the
Class B-6 Certificates and (x) the Class
R-III Certificates, respectively. With
respect to (i) REMIC I Regular Interests
1A, 1B and ZZZ, (ii) REMIC I Regular
Interest 2A, 2B and ZZZ, and (iii) REMIC I
Regular Interest ZZZ, (i) REMIC II
Regular Interest A-1, (ii) REMIC II Regular
Interests A-2, and (iii) REMIC II
Regular Interests M, B-1, B-2, B-3, B-4,
B-5 and B-6.
Cross-Over Date: The first Distribution Date on which the
aggregate
Current Principal Amounts of the Senior
Mezzanine Certificates and Subordinate
Certificates have been reduced to zero
(after giving effect to all related
distributions on such Distribution
Date).
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<PAGE>
Current Principal Amount: With respect to any Certificate (other
than
an Interest Only Certificate) as of any
Distribution Date, an amount equal to
the initial principal amount of such
Certificate on the Closing Date plus, in
the case of a Senior Mezzanine Certificate
or a Subordinate Certificate, any
Subsequent Recoveries on the Mortgage Loans
added to the Current Principal
Amount of such Certificate pursuant to
Section 6.02(h) hereof, as reduced by (i)
all amounts distributed on previous
Distribution Dates on such Certificate with
respect to principal, (ii) the principal
portion of all Realized Losses on the
Mortgage Loans (other than Realized Losses
on the Mortgage Loans resulting from
Debt Service Reductions) allocated (as
applicable) prior to such Distribution
Date to such Certificate, taking account of
its applicable Loss Allocation
Limitation, (iii) in the case of a Senior
Mezzanine Certificate, such
Certificate's pro rata share, if any, of
the applicable Senior Mezzanine
Certificate Writedown Amount for previous
Distribution Dates and (iv) in the
case of a Subordinate Certificate, such
Certificate's pro rata share, if any, of
the applicable Subordinate Certificate
Writedown Amount for previous
Distribution Dates. With respect to any
Class of Certificates (other than the
Interest Only Certificates), the Current
Principal Amount thereof will equal the
sum of the Current Principal Amounts of all
Certificates in such Class.
Notwithstanding the foregoing, solely for
purposes of giving consents,
directions, waivers, approvals, requests
and notices, the Class R-I, Class R-II
and Class R-III Certificates after the
Distribution Date on which they each
receive the distribution of the last dollar
of their respective original
principal amount shall be deemed to have
Current Principal Amounts equal to
their respective Current Principal Amounts
on the day immediately preceding such
Distribution Date.
Custodial Agreement: An agreement, dated as of the Closing Date,
among
the Depositor, the Master Servicer, the
Trustee and the Custodian, in
substantially the form of Exhibit G
hereto.
Custodian: Wells Fargo Bank, National Association, or any
successor
custodian appointed pursuant to the
provisions hereof and of the Custodial
Agreement.
Cut-off Date: March 1,
2005.
Cut-off Date Balance:
$817,459,122.
Debt Service Reduction: Any reduction of the Scheduled Payments
which a
Mortgagor is obligated to pay with respect
to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any
other similar state law or other
proceeding.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
of
the Mortgaged Property by a court of
competent jurisdiction in an amount less
than the then-outstanding indebtedness
under such Mortgage Loan secured by such
Mortgage Property, which valuation results
from a proceeding initiated under the
Bankruptcy Code or any other similar state
law or other proceeding.
Deposit
Amount: The amount of $150.00 deposited by the Depositor on the
Closing Date into the Distribution
Account.
Depositor: Structured Asset Mortgage Investments II Inc., a
Delaware
corporation, or its successors in
interest.
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<PAGE>
Depository: The Depository Trust Company, the nominee of which is
Cede
& Co., and any successor thereto.
Depository Agreement: The meaning specified in Subsection
5.01(a)
hereof.
Depository Participant: A broker, dealer, bank or other
financial
institution or other Person for whom from
time to time the Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
Designated Depository Institution: A depository institution
(commercial
bank, federal savings bank, mutual savings
bank or savings and loan association)
or trust company (which may include the
Trustee), the deposits of which are
fully insured by the FDIC to the extent
provided by law.
Determination Date: With respect to any Distribution Date and
each
Mortgage Loan, the Determination Date as
defined in the related Servicing
Agreement.
Disqualified Organization: Any of the following: (i) the United
States,
any State or political subdivision thereof,
any possession of the United States,
or any agency or instrumentality of any of
the foregoing (other than an
instrumentality which is a corporation if
all of its activities are subject to
tax and, except for Freddie Mac 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, (v) any
Person with respect to which income on any
Residual Certificate is attributable
to a foreign permanent establishment or
fixed base, within the meaning of an
applicable income tax treaty, of such
Person or any other Person, (vi) any
Person that does not satisfy the
requirements of United States Treasury
Department Regulation Section 1.860E-1(c)
with respect to a transfer of a
noneconomic residual interest, as defined
therein, or (vii) any other Person so
designated by the Trustee and the
Certificate Registrar based upon an Opinion of
Counsel that the holding of an ownership
interest in a Residual Certificate by
such Person may cause any REMIC contained
in 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 pursuant to Section 4.02, which
shall be denominated "Wells Fargo
Bank, National Association, as Paying
Agent, for the benefit of the registered
holders of Structured Asset Mortgage
Investments II Trust 2005-AR1, Mortgage
Pass-Through Certificates, Series 2005-AR1
- Distribution Account," and which
shall be an Eligible Account.
Distribution Account Deposit Date: The Business Day prior to
each
Distribution Date.
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<PAGE>
Distribution Date: The 19th day of any month, beginning in the
month
immediately following the month of the
Closing Date, or, if such 19th day is not
a Business Day, the Business Day
immediately following.
DTC Custodian: The Securities Administrator, and its successors
in
interest as custodian for the
Depository.
Due Date: With respect to each Mortgage Loan, the date in each
month on
which its Scheduled Payment is due, if such
due date is the first day of a
month, and otherwise is deemed to be the
first day of the following month or
such other date specified in the related
Servicing Agreement. For purposes of
calculating the Net Rates of the Mortgage
Loans for the first Distribution Date,
the second preceding Due Date with respect
to the first Distribution Date will
be the Cut-off Date.
Due Period: With respect to any Distribution Date and each
Mortgage
Loan, the period commencing on the second
day of the month immediately preceding
the month in which such Distribution Date
occurs and ending at the close of
business on the first day of the month in
which such Distribution Date occurs.
Eligible Account: Any of (i) a segregated account maintained with
a
federal or state chartered depository
institution (A) the short-term obligations
of which are rated A-1+ or better by
S&P and P-1 by Moody's at the time of any
deposit therein or (B) insured by the FDIC
(to the limits established by such
Corporation), the uninsured deposits in
which account are otherwise secured such
that, as evidenced by an Opinion of Counsel
(obtained by the Person requesting
that the account be held pursuant to this
clause (i)(B)) delivered to the
Trustee prior to the establishment of such
account, the Certificateholders will
have a claim with respect to the funds in
such account and a perfected first
priority security interest against any
collateral (which shall be limited to
Permitted Investments, each of which shall
mature not later than the Business
Day immediately preceding the Distribution
Date next following the date of
investment in such collateral, or the
Distribution Date (if such Permitted
Investment is an obligation of the
institution that maintains the Distribution
Account)) securing such funds that is
superior to claims of any other depositors
or general creditors of the depository
institution with which such account is
maintained, (ii) a segregated trust account
or accounts maintained with a
federal or state chartered depository
institution or trust company with trust
powers acting in its fiduciary capacity or
(iii) a segregated account or
accounts of a depository institution
acceptable to the Rating Agencies (as
evidenced in writing by the Rating Agencies
that use of any such account as the
Distribution Account will not have an
adverse effect on the then-current ratings
assigned to the Classes of the Certificates
then rated by the respective Rating
Agencies). Eligible Accounts may bear
interest.
EMC: EMC Mortgage
Corporation, or its successor in interest.
EMC AAR: That certain Assignment, Assumption and Recognition
Agreement,
made and entered into as of March 31, 2005,
among EMC, the Trustee and the
Depositor.
EMC Mortgage Loans: The Mortgage Loans listed on the Mortgage
Loan
Schedule as being serviced by the EMC
Servicer.
11
<PAGE>
EMC Servicer: EMC, in its capacity as servicer hereunder, and
its
successors and assigns.
EMC Servicing Agreement: That certain Servicing Agreement, dated as
of
March 31, 2005, by and between EMC and the
Depositor, as attached hereto as
Exhibit H-7, as modified pursuant to the
EMC AAR.
ERISA: The Employee
Retirement Income Security Act of 1974, as
amended.
Event of Default: An
event of default described in Section 8.01.
EverHome: EverHome Mortgage Company (formerly known as Alliance
Mortgage Company), and its successor in
interest.
EverHome AAR: That certain Assignment, Assumption and
Recognition
Agreement, made and entered into as of
March 31, 2005, among EMC, the Trustee
and EverHome.
EverHome Subservicing Agreement: That certain Subservicing
Agreement,
dated as of August 1, 2002, and attached
hereto as Exhibit H-1, between EverHome
as servicer and EMC as owner, as modified
pursuant to the EverHome AAR.
Excess Liquidation Proceeds: To the extent that such amount is
not
required by law to be paid to the related
Mortgagor, the amount, if any, by
which the sum of any Liquidation Proceeds
with respect to a Liquidated Mortgage
Loan received in the calendar month in
which such Mortgage Loan became a
Liquidated Mortgage Loan exceeds the sum of
(i) the Scheduled Principal Balance
of such Liquidated Mortgage Loan plus (ii)
accrued interest at the Mortgage
Interest Rate from the Due Date as to which
interest was last paid or advanced
(and not reimbursed) to the related
Certificateholders up to the Due Date
applicable to the Distribution Date
immediately following the calendar month
during which such liquidation occurred plus
(iii) related Liquidation Expenses.
Exchange Act: As
defined in Section 3.18.
Fannie Mae: Fannie Mae (also known as Federal National Mortgage
Association) or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor
thereto.
Final Certification: The certification substantially in the form
of
Exhibit Three to the Custodial
Agreement.
First Horizon: First Horizon Home Loan Corporation and its
successor in
interest.
First Tennessee: First Tennessee Mortgage Services, Inc. and
its
successor in interest.
First Tennessee AAR: That certain Assignment, Assumption and
Recognition Agreement, made and entered
into as of March 31, 2005, among EMC,
the Trustee, First Horizon and First
Tennessee.
12
<PAGE>
First Tennessee Servicing Agreement: That certain Purchase,
Warranties
and Servicing Agreement, dated as of
September 1, 2003, by and among First
Horizon, First Tennessee and EMC, as
amended, as attached hereto as Exhibit H-5,
as modified pursuant to the First Tennessee
AAR.
Fiscal Quarter: December 1 through the last day of February, March
1
through May 31, June 1 through August 31,
or September 1 through November 30, as
applicable.
Fractional Undivided Interest: With respect to any Class of
Certificates, the fractional undivided
interest evidenced by any Certificate of
such Class the numerator of which is the
Current Principal Amount, or Notional
Amount in the case of the Interest Only
Certificates, of such Certificate and
the denominator of which is the Current
Principal Amount, or Notional Amount in
the case of the Interest Only Certificates,
of such Class. With respect to the
Certificates in the aggregate, the
fractional undivided interest evidenced by
(i) each Class of Residual Certificates
will be deemed to equal 0.25%, (ii) each
Class of Interest Only Certificates will be
deemed to equal 1.0% multiplied by a
fraction, the numerator of which is the
Notional Amount of such Certificate and
the denominator of which is the aggregate
Notional Amount of such respective
Class and (iii) a Certificate of any other
Class will be deemed to equal 98.25%
multiplied by a fraction, the numerator of
which is the Current Principal Amount
of such Certificate and the denominator of
which is the aggregate Current
Principal Amounts of all the Certificates;
provided, however, the percentage in
clause (iii) above shall be increased by 1%
upon the retirement of each Class of
Interest Only Certificates.
Freddie Mac: Freddie Mac (also known as Federal Home Loan
Mortgage
Corporation), or any successor thereto.
Global Certificate: Any Private Certificate registered in the name
of
the Depository or its nominee, beneficial
interests in which are reflected on
the books of the Depository or on the books
of a Person maintaining an account
with such Depository (directly or as an
indirect participant in accordance with
the rules of such depository).
GMAC: GMAC Mortgage
Corporation and its successor in interest.
GMAC AAR: That certain Assignment, Assumption and Recognition
Agreement, made and entered into as of
March 31, 2005, among EMC, the Trustee
and GMAC.
GMAC Servicing Agreement: That certain Servicing Agreement, dated
as of
May 1, 2001, by and between GMAC and EMC,
as amended on October 1, 2001 and on
July 31, 2002, as attached hereto as
Exhibit H-4, as modified pursuant to the
GMAC AAR.
GreenPoint: GreenPoint Mortgage Funding, Inc., and its successor
in
interest.
GreenPoint AAR: That
certain Assignment, Assumption and Recognition
Agreement, made and entered into as of
March 31, 2005, among EMC, the Trustee
and GreenPoint.
GreenPoint Servicing Agreement: That certain Purchase, Warranties
and
Servicing Agreement, dated as of September
1, 2003, by and between GreenPoint
and EMC, as attached hereto as Exhibit H-6,
as modified pursuant to the
GreenPoint AAR.
13
<PAGE>
Gross Margin: As to each Mortgage Loan, the fixed percentage set
forth
in the related Mortgage Note and indicated
on the Mortgage Loan Schedule, which
percentage is added to the related Index on
each Interest Adjustment Date to
determine (subject to rounding, the Minimum
Lifetime Mortgage Rate, the Maximum
Lifetime Mortgage Rate and the Periodic
Rate Cap) the Mortgage Interest Rate
from such Interest Adjustment Date until
the next Interest Adjustment Date.
Group I Allocation Fraction: With respect to any Distribution Date,
the
fraction equal to (x) the excess of (a) the
aggregate Scheduled Principal
Balances of the Group I Mortgage Loans over
(b) the Current Principal Amount of
the Class A-1 Certificates over (y) the
excess of (a) the aggregate Scheduled
Principal Balances of the Mortgage Loans
over (b) the aggregate Current
Principal Amounts of the Senior
Certificates (other than the Residual
Certificates and the Interest Only
Certificates).
Group II Allocation Fraction: With respect to any Distribution
Date,
the fraction equal to (x) the excess of (a)
the aggregate Scheduled Principal
Balances of the Group II Mortgage Loans
over (b) the Current Principal Amount of
the Class A-2 Certificates over (y) the
excess of (a) the aggregate Scheduled
Principal Balances of the Mortgage Loans
over (b) the aggregate Current
Principal Amounts of the Senior
Certificates (other than the Residual
Certificates and the Interest Only
Certificates).
Group I Available Funds or Group II Available Funds: With respect
to
any Distribution Date, an amount equal to
the aggregate of the following amounts
with respect to the Mortgage Loans in the
related Loan Group: (a) all previously
undistributed payments on account of
principal collections on the Mortgage Loans
(including the principal portion of
Scheduled Payments, Principal Prepayments
and the principal amount of Net Liquidation
Proceeds and Subsequent Recoveries
on the Mortgage Loans) and all previously
undistributed payments on account of
interest collections on the Mortgage Loans
received after the Cut-off Date and
on or prior to the related Determination
Date, in each case from the Mortgage
Loans in the related Loan Group, (b) any
Monthly Advances and Compensating
Interest Payments by a Servicer or the
Master Servicer (or by the Trustee, as
successor master servicer) with respect to
such Distribution Date, in each case,
from the Mortgage Loans in the related Loan
Group, (c) any other miscellaneous
amounts remitted by the Master Servicer or
a Servicer pursuant to the related
Servicing Agreement, and (d) any amount
reimbursed by the Master Servicer for
such Distribution Date in connection with
losses on certain eligible
investments, except:
(i) all payments that were due on or before the Cut-off Date
with respect to the Mortgage Loans;
(ii) all Principal Prepayments and Liquidation Proceeds
received after the applicable Prepayment Period;
(iii) all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or
dates
subsequent to the related Due Date;
14
<PAGE>
(iv) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which, and to
the
extent that, there are any unreimbursed Monthly Advances;
(v) amounts representing Monthly Advances determined to be
Nonrecoverable Advances; and
(vi) any investment earnings on amounts on deposit in the
Distribution Account and amounts permitted to be withdrawn from
the
Distribution Account, and amounts to pay the Master Servicing Fee
and
the Servicing Fees or to reimburse any Servicer, the Securities
Administrator, the Trustee, the Custodian or the Master Servicer
for
fees and the related Loan Group's pro rata share of
reimbursable
expenses as are due under the applicable Servicing Agreement,
this
Agreement or the
Custodial Agreement and have not been retained by or
paid to such Servicer, the Trustee, the Custodian or the Master
Servicer.
Group I Mortgage Loans: The Mortgage Loans identified as such on
the
Mortgage Loan Schedule.
Group II Mortgage Loans: The Mortgage Loans identified as such on
the
Mortgage Loan Schedule.
Group I Senior Certificates: The Class A-1 Certificates, the Class
R-I
Certificates, the Class R-II Certificates
and the Class R-III Certificates.
Group II Senior Certificates: The Class A-2 Certificates.
Group I Senior Mezzanine and Subordinate Percentage: With respect
to
the Group I Mortgage Loans, on any
Distribution Date, 100% minus the Group I
Senior Percentage.
Group II Senior Mezzanine and Subordinate Percentage: On any
Distribution Date, 100% minus the Group II
Senior Percentage.
Group I Senior Mezzanine and Subordinate Prepayment Percentage: For
the
Senior Mezzanine Certificates and
Subordinate Certificates and with respect to
Loan Group I, on any Distribution Date,
100% minus the Group I Senior Prepayment
Percentage, except that on any Distribution
Date after the Current Principal
Amount of the Class A-1 Certificates has
been reduced to zero, the Group I
Senior Mezzanine and Subordinate Prepayment
Percentage for the Senior Mezzanine
Certificates and the Subordinate
Certificates with respect to Loan Group I will
equal 100%.
Group II Senior Mezzanine and Subordinate Prepayment Percentage:
For
the Senior Mezzanine Certificates and the
Subordinate Certificates and with
respect to Loan Group II, on any
Distribution Date, 100% minus the Group II
Senior Prepayment Percentage, except that
on any Distribution Date after the
Current Principal Amount of the Group II
Senior Certificates has been reduced to
zero, the Group II Senior Mezzanine and
Subordinate Prepayment Percentage for
the Senior Mezzanine Certificates and
Subordinate Certificates with respect to
Loan Group II will equal 100%.
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<PAGE>
Group I Senior Optimal Principal Amount and Group II Senior
Optimal
Principal Amount: With respect to each
Distribution Date and the Group I Senior
Certificates (other than the Residual
Certificates) and the Group II Senior
Certificates, respectively, an amount equal
to the sum, without duplication, of
the following (but in no event greater than
the Current Principal Amount of the
Group I Senior Certificates (other than the
Residual Certificates) and the Group
II Senior Certificates, as applicable,
immediately prior to such Distribution
Date):
(1) the applicable Senior Percentage of all scheduled
payments of principal allocated to the Scheduled Principal
Balance due on each Outstanding Mortgage Loan in the related
Loan Group on the related Due Date as specified in the
amortization schedule at the time applicable thereto (after
adjustments for previous Principal Prepayments but before any
adjustment to such amortization schedule by reason of any
bankruptcy or similar proceeding or any moratorium or similar
waiver or grace period);
(2) the applicable Senior Prepayment Percentage of
the Scheduled Principal Balance of each Mortgage Loan in the
related Loan Group which was the subject of a Principal
Prepayment in full received by the Master Servicer during the
related Prepayment Period;
(3) the applicable Senior Prepayment Percentage of
all Principal Prepayments in part received by the Master
Servicer during the related Prepayment Period with respect to
each Mortgage Loan in the related Loan Group;
(4) the lesser of (a) the applicable Senior
Prepayment Percentage of the sum of (i) all Net Liquidation
Proceeds allocable to principal received in respect of each
Mortgage Loan in the related Loan Group which became a
Liquidated Mortgage Loan during the related Prepayment Period
(other than Mortgage Loans described in the immediately
following clause (ii)) and all Subsequent Recoveries received
in respect of each Liquidated Mortgage Loan in the related
Loan Group
during the related Due Period and (ii) the
Scheduled Principal Balance of each such Mortgage Loan in the
related Loan Group purchased by an insurer from the Trustee
during the related Prepayment Period pursuant to the related
Primary Mortgage Insurance Policy, if any, or otherwise; and
(b) the applicable Senior Percentage of the sum of (i) the
Scheduled Principal Balance of each Mortgage Loan in the
related Loan Group which became a Liquidated Mortgage Loan
during the related Prepayment Period (other than the Mortgage
Loans described in the immediately following clause (ii)) and
all Subsequent Recoveries received in respect of each
Liquidated Mortgage Loan in the related Loan Group during the
related Due Period and (ii) the Scheduled Principal Balance of
each such Mortgage Loan in the related Loan Group that was
purchased by an insurer from the Trustee during the related
Prepayment Period pursuant to the related Primary Mortgage
Insurance Policy, if any or otherwise; and
16
<PAGE>
(5) the applicable Senior Prepayment Percentage of
the sum of (a) the Scheduled Principal Balance of each
Mortgage Loan in the related Loan Group which was repurchased
by the Seller in connection with such Distribution Date and
(b) the excess, if any, of the Scheduled Principal Balance of
a Mortgage Loan in the related Loan Group that has been
replaced by the Seller with a Substitute Mortgage Loan
pursuant to the Agreement or the Mortgage Loan Purchase
Agreement in connection with such Distribution Date over the
Scheduled Principal Balance of such Substitute Mortgage Loan.
Group I Senior Percentage: Initially, 91.50%. On any Distribution
Date,
the lesser of (i) 100% and (ii) the
percentage (carried to six places rounded
up) obtained by dividing the Current
Principal Amount of the Group I Senior
Certificates (other than the Residual
Certificates) immediately preceding such
Distribution Date by the sum of (i) the
aggregate Scheduled Principal Balance of
the Group I Mortgage Loans as of the
beginning of the related Due Period.
Group II Senior Percentage: Initially, 91.50%. On any
Distribution
Date, the lesser of (i) 100% and (ii) the
percentage (carried to six places
rounded up) obtained by dividing the
Current Principal Amount of the Group II
Senior Certificates immediately preceding
such Distribution Date by the sum of
(i) the aggregate Scheduled Principal
Balance of the Group II Mortgage Loans as
of the beginning of the related Due
Period.
Group I Senior Prepayment Percentage: The Senior Prepayment
Percentage
for Group I Senior Certificates (other than
the Residual Certificates) on any
Distribution Date occurring during the
periods set forth below will be as
follows:
<TABLE>
<CAPTION>
Period (dates inclusive)
Group I Senior Prepayment Percentage
----------------------------------------------------------------------------------------------------------------------
<S>
<C>
April 19, 2005 - March 19, 2015
100%
April 19, 2015 - March 19, 2016
Group I Senior Percentage plus 70% of the Group I
Senior Mezzanine and Subordinate Percentage
April 19, 2016 - March 19, 2017
Group I Senior Percentage plus 60% of the Group I
Senior Mezzanine and Subordinate Percentage
April 19, 2017 - March 19, 2018
Group I Senior Percentage plus 40% of the Group I
Senior Mezzanine and Subordinate Percentage
April 19, 2018 - March 19, 2019
Group I Senior Percentage plus 20% of the Group I
Senior Mezzanine and Subordinate Percentage
April 19, 2019 and thereafter
Group I Senior Percentage
</TABLE>
In addition, no reduction of the Group I Senior Prepayment
Percentage
shall occur on any Distribution Date
unless, as of the last day of the month
preceding such Distribution Date, (A) the
aggregate Scheduled Principal Balances
of the Mortgage Loans delinquent 60 days or
more (including for this purpose any
such Mortgage Loans in foreclosure and
Mortgage Loans with
17
<PAGE>
respect to which the related Mortgaged
Property has been acquired by the Trust),
averaged over the last six months, as a
percentage of the sum of the aggregate
Current Principal Amounts of the Senior
Mezzanine Certificates and the
Subordinate Certificates, does not exceed
50%; and (B) cumulative Realized
Losses on the Mortgage Loans do not exceed
(a) 30% of the Original Senior
Mezzanine and Subordinate Principal Balance
if such Distribution Date occurs
between and including April 2015 and March
2016, (b) 35% of the Original Senior
Mezzanine and Subordinate Principal Balance
if such Distribution Date occurs
between and including April 2016 and March
2017, (c) 40% of the Original Senior
Mezzanine and Subordinate Principal Balance
if such Distribution Date occurs
between and including April 2017 and March
2018, (d) 45% of the Original Senior
Mezzanine and Subordinate Principal Balance
if such Distribution Date occurs
between and including April 2018 and March
2019, and (e) 50% of the Original
Senior Mezzanine and Subordinate Principal
Balance if such Distribution Date
occurs during or after April 2019.
In addition, if on any Distribution Date after the Distribution
Date
occurring in March 2008 the current
weighted average Senior Mezzanine and
Subordinate Percentages are equal to or
greater than two times the initial
weighted average Senior Mezzanine and
Subordinate Percentages and (a) the
aggregate Scheduled Principal Balances of
the Mortgage Loans delinquent 60 days
or more (including for this purpose any
such Mortgage Loans in foreclosure and
such Mortgage Loans with respect to which
the related Mortgaged Property has
been acquired by the Trust), averaged over
the last six months, as a percentage
of the sum of the aggregate Current
Principal Amounts of the Senior Mezzanine
Certificates and Subordinate Certificates,
does not exceed 50% and (b)(i) on or
prior to the Distribution Date in March
2008, cumulative Realized Losses on the
Mortgage Loans as of the end of the related
Prepayment Period do not exceed 20%
of the Original Senior Mezzanine and
Subordinate Principal Balance and (ii)
after the Distribution Date in March 2008,
cumulative Realized Losses on the
Mortgage Loans as of the end of the related
Prepayment Period do not exceed 30%
of the Original Senior Mezzanine and
Subordinate Principal Balance, then, in
each case, the Group I Senior Prepayment
Percentage for such Distribution Date
will equal the Group I Senior Percentage;
provided, however, if on a
Distribution Date prior to the Distribution
Date in March 2008 the current
weighted average Senior Mezzanine and
Subordinate Percentages is equal to or
greater than two times the initial weighted
average Senior Mezzanine and
Subordinate Percentages for the Group I
Senior Certificates (other than the
Residual Certificates) and the above
delinquency and loss tests are met, then
the Group I Senior Prepayment Percentage
for such Distribution Date will equal
the Group I Senior Percentage plus 50% of
the Group I Senior Mezzanine and
Subordinate Percentage.
Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator of which is the
Current Principal Amount of the Group
I Senior Certificates (other than the
Residual Certificates) immediately
preceding such Distribution Date, and the
denominator of which is the sum of the
Scheduled Principal Balance of the Group I
Mortgage Loans as of the beginning of
the related Due Period, exceeds such
percentage as of the Cut-off Date, then the
Senior Prepayment Percentage with respect
to the Group I Senior Certificates
(other than the Residual Certificates) for
such Distribution Date will equal
100%.
18
<PAGE>
Group II Senior Prepayment Percentage: The Senior Prepayment
Percentage
for the Group II Senior Certificates on any
Distribution Date occurring during
the periods set forth below will be as
follows:
<TABLE>
<CAPTION>
Period (dates inclusive)
Group II Senior Prepayment Percentage
----------------------------------------------------------------------------------------------------------------------
<S>
<C>
April 19, 2005 - March 19, 2015
100%
April 19, 2015 - March 19, 2016
Group II Senior
Percentage
plus 70% of the Group II
Senior Mezzanine and Subordinate Percentage
April 19, 2016 - March 19, 2017
Group II Senior
Percentage
plus 60% of the Group II
Senior Mezzanine and Subordinate Percentage
April 19, 2017 - March 19, 2018
Group II Senior
Percentage
plus 40% of the Group II
Senior Mezzanine and Subordinate Percentage
April 19, 2018 - March 19, 2019
Group II Senior
Percentage
plus 20% of the Group II
Senior Mezzanine and Subordinate Percentage
April 19, 2019 and thereafter
Group II Senior Percentage
</TABLE>
In addition, no reduction of the Group II Senior Prepayment
Percentage
shall occur on any Distribution Date
unless, as of the last day of the month
preceding such Distribution Date, (A) the
aggregate Scheduled Principal Balances
of the Mortgage Loans delinquent 60 days or
more (including for this purpose any
such Mortgage Loans in foreclosure and
Mortgage Loans with respect to which the
related Mortgaged Property has been
acquired by the Trust), averaged over the
last six months, as a percentage of the sum
of the aggregate Current Principal
Amounts of the Senior Mezzanine
Certificates and Subordinate Certificates, does
not exceed 50%; and (B) cumulative Realized
Losses on the Mortgage Loans do not
exceed (a) 30% of the Original Senior
Mezzanine and Subordinate Principal
Balance if such Distribution Date occurs
between and including April 2015 and
March 2016, (b) 35% of the Original Senior
Mezzanine and Subordinate Principal
Balance if such Distribution Date occurs
between and including April 2016 and
March 2017, (c) 40% of the Original Senior
Mezzanine and Subordinate Principal
Balance if such Distribution Date occurs
between and including April 2017 and
March 2018, (d) 45% of the Original Senior
Mezzanine and Subordinate Principal
Balance if such Distribution Date occurs
between and including April 2018 and
March 2019, and (e) 50% of the Original
Senior Mezzanine and Subordinate
Principal Balance if such Distribution Date
occurs during or after April 2019.
In addition, if on any Distribution Date after the Distribution
Date
occurring in March 2008 the current
weighted average Senior Mezzanine and
Subordinate Percentages is equal to or
greater than two times the initial
weighted average Senior Mezzanine and
Subordinate Percentages, and (a) the
aggregate Scheduled Principal Balances of
the Mortgage Loans delinquent 60 days
or more (including for this purpose any
such Mortgage Loans in foreclosure and
such Mortgage Loans with respect to which
the related Mortgaged Property has
been
19
<PAGE>
acquired by the Trust), averaged over the
last six months, as a percentage of
the sum of the aggregate Current Principal
Amounts of the Senior Mezzanine
Certificates and Subordinate Certificates,
does not exceed 50% and (b)(i) on or
prior to the Distribution Date in March
2008, cumulative Realized Losses on the
Mortgage Loans as of the end of the related
Prepayment Period do not exceed 20%
of the Original Senior Mezzanine and
Subordinate Principal Balance and (ii)
after the Distribution Date in March 2008,
cumulative Realized Losses on the
Mortgage Loans as of the end of the related
Prepayment Period do not exceed 30%
of the Original Senior Mezzanine and
Subordinate Principal Balance, then, in
each case, the Group II Senior Prepayment
Percentage for such Distribution Date
will equal the Group II Senior Percentage;
provided, however, if on a
Distribution Date prior to the Distribution
Date in March 2008 the current
weighted average Senior Mezzanine and
Subordinate Percentages is equal to or
greater than two times the initial weighted
average Senior Mezzanine and
Subordinate Percentage, for the Group II
Senior Certificates and the above
delinquency and loss tests are met, then
the Group II Senior Prepayment
Percentage for such Distribution Date will
equal the Group II Senior Percentage
plus 50% of the Group II Senior Mezzanine
and Subordinate Percentage.
Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator of which is the
Current Principal Amount of the Group
II Senior Certificates immediately
preceding such Distribution Date, and the
denominator of which is the Scheduled
Principal Balance of the Group II Mortgage
Loans as of the beginning of the related
Due Period, exceeds such percentage as
of the Cut-off Date, then the Senior
Prepayment Percentage with respect to the
Group II Senior Certificates for such
Distribution Date will equal 100%.
HomeBanc: HomeBanc
Mortgage Corporation and its successor in interest.
Holder: The Person in whose name a Certificate is registered in
the
Certificate Register, except that, subject
to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any
consent pursuant to this Agreement, any
Certificate registered in the name of the
Depositor, the Master Servicer or the
Trustee or any Affiliate thereof shall be
deemed not to be outstanding and the
Fractional Undivided Interest evidenced
thereby shall not be taken into account
in determining whether the requisite
percentage of Fractional Undivided
Interests necessary to effect any such
consent has been obtained.
Huntington: The
Huntington National Bank, and its successor in
interest.
Indemnified Persons: The Trustee, the Master Servicer, the
Custodian
and the Securities Administrator and their
respective officers, directors,
agents and employees and, with respect to
the Trustee, any separate co-trustee
and its officers, directors, agents and
employees.
Independent: When used with respect to any specified Person, this
term
means that such Person (a) is in fact
independent of the Depositor or the Master
Servicer and of any Affiliate of the
Depositor or the Master Servicer, (b) does
not have any direct financial interest or
any material indirect financial
interest in the Depositor or the Master
Servicer or any Affiliate of the
Depositor or the Master Servicer and (c) is
not connected with the Depositor or
the Master Servicer or any Affiliate of the
Depositor or the Master Servicer as
an officer, employee, promoter,
underwriter, trustee, partner, director or
person performing similar functions.
20
<PAGE>
Index: The index, if any, specified in a Mortgage Note by reference
to
which the related Mortgage Interest Rate
will be adjusted from time to time.
Individual Certificate: Any Private Certificate registered in the
name
of the Holder other than the Depository or
its nominee.
Initial Certification: The certification substantially in the form
of
Exhibit One to the Custodial Agreement.
Institutional Accredited Investor: Any Person meeting the
requirements
of Rule 501(a)(l), (2), (3) or (7) of
Regulation D under the Securities Act or
any entity all of the equity holders in
which come within such paragraphs.
Insurance Policy: With respect to any Mortgage Loan, any
standard
hazard insurance policy, flood insurance
policy or title insurance policy.
Insurance Proceeds: Amounts paid by the insurer under any
Insurance
Policy covering any Mortgage Loan or
Mortgaged Property, other than amounts
required to be paid over to the Mortgagor
pursuant to law or the related
Mortgage Note or Security Instrument, and
other than amounts used to repair or
restore the Mortgaged Property or to
reimburse insured expenses, including the
related Servicer's costs and expenses
incurred in connection with presenting
claims under the related Insurance
Policies.
Interest Accrual Period: With respect to each Distribution Date,
for
each Class of Certificates (other than the
Residual Certificates and the
Adjustable Rate Certificates), the calendar
month preceding the month in which
such Distribution Date occurs. With respect
to each Distribution Date and the
Adjustable Rate Certificates, the period
commencing on the 19th day of the
preceding calendar month (or in the case of
the first Distribution Date, the
Closing Date), to the 18th day of the month
of that Distribution Date. The
Residual Certificates shall not bear
interest.
Interest Adjustment Date: With respect to a Mortgage Loan, the
date, if
any, specified in the related Mortgage Note
on which the Mortgage Interest Rate
is subject to adjustment.
Interest Determination Date: With respect to each Distribution Date
and
the Adjustable Rate Certificates, the
second LIBOR Business Day immediately
preceding the commencement of the related
Interest Accrual Period.
Interest Only Certificates: The Class X-1 and Class X-2
Certificates.
Interest Shortfall: With respect to any Distribution Date and
each
Mortgage Loan that during the related
Prepayment Period was the subject of a
Principal Prepayment or constitutes a
Relief Act Mortgage Loan, an amount
determined as follows:
(a) Partial Principal Prepayments received during the relevant
Prepayment Period: The difference between
(i) one month's interest at the
applicable Net Rate on the amount of such
prepayment and (ii) the amount of
interest for the calendar month of such
prepayment (adjusted to the applicable
Net Rate) received at the time of such
prepayment;
21
<PAGE>
(b) Principal
Prepayments in full received during the relevant
Prepayment Period: The difference between
(i) one month's interest at the
applicable Net Rate on the Scheduled
Principal Balance of such Mortgage Loan
immediately prior to such prepayment and
(ii) the amount of interest for the
calendar month of such prepayment (adjusted
to the applicable Net Rate) received
at the time of such prepayment; and
(c) Relief Act Mortgage Loans: As to any Relief Act Mortgage Loan,
the
excess of (i) 30 days' interest (or, in the
case of a Principal Prepayment in
full, interest to the date of prepayment)
on the Scheduled Principal Balance
thereof (or, in the case of a Principal
Prepayment in part, on the amount so
prepaid) at the related Net Rate over (ii)
30 days' interest (or, in the case of
a Principal Prepayment in full, interest to
the date of prepayment) on such
Scheduled Principal Balance (or, in the
case of a Principal Prepayment in part,
on the amount so prepaid) at the Net Rate
required to be paid by the Mortgagor
as limited by application of the Relief Act
or similar state laws.
Interim Certification: The certification substantially in the form
of
Exhibit Two to the Custodial Agreement.
Investment Letter: The letter to be furnished by each
Institutional
Accredited Investor which purchases any of
the Private Certificates in
connection with such purchase,
substantially in the form set forth as Exhibit
F-1 hereto.
Lender-Paid PMI Rate: With respect to any Mortgage Loan covered by
a
lender-paid Primary Mortgage Insurance
Policy, the premium to be paid by the
applicable Servicer out of interest
collections on the related Mortgage Loan, as
stated in the Mortgage Loan Schedule.
LIBOR: With respect to any Distribution Date, the arithmetic mean
of
the London interbank offered rate
quotations for one-month U.S. dollar deposits,
expressed on a per annum basis, determined
in accordance with Section 1.02.
LIBOR Business Day: A day on which banks are open for dealing
in
foreign currency and exchange in London,
England and New York City.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a
defaulted Mortgage Loan that has been
liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's
sale or other realization as provided
by applicable law governing the real
property subject to the related Mortgage
and any security agreements and as to which
the related Servicer has certified
(in accordance with Section 3.07) in the
related Prepayment Period that it has
received all amounts it expects to receive
in connection with such liquidation.
Liquidation Date: With respect to any Liquidated Mortgage Loan,
the
date on which the related Servicer has
certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.
Liquidation Expenses: With respect to a Mortgage Loan in
liquidation,
unreimbursed expenses paid or incurred by
or for the account of the related
Servicer or the Master Servicer in
connection with the liquidation of such
Mortgage Loan and the related Mortgaged
Property, such expenses including (a)
property protection expenses, (b) property
sales expenses, (c) foreclosure
22
<PAGE>
and sale costs, including court costs and
reasonable attorneys' fees, and (d)
similar expenses reasonably paid or
incurred in connection with the liquidation
of a Mortgage Loan.
Liquidation Proceeds: Amounts received by the related Servicer
in
connection with the liquidation of a
defaulted Mortgage Loan, whether through
trustee's sale, foreclosure sale, Insurance
Proceeds, condemnation proceeds or
otherwise.
Loan City:
Loancity.com and its successor in interest.
Loan Group: Loan Group
I or Loan Group II, as applicable.
Loan Group I: The group of Mortgage Loans designated as belonging
to
Loan Group I on the Mortgage Loan
Schedule.
Loan Group II: The group of Mortgage Loans designated as belonging
to
Loan Group II on the Mortgage Loan
Schedule.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the
fraction,
expressed as a percentage, the numerator of
which is the principal balance of
the related Mortgage Loan at origination
and the denominator of which is the
Original Value of the related Mortgaged
Property.
Loss Allocation Limitation: The meaning specified in Section
6.02(c)
hereof.
Loss Severity Percentage: With respect to any Distribution Date,
the
percentage equivalent of a fraction, the
numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan
and the denominator of which is the
Scheduled Principal Balance of such
Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.
Lost Notes: The original Mortgage Notes that have been lost, as
indicated on the Mortgage Loan
Schedule.
Margin: With respect to the Class A-1 Certificates, initially
0.240%
per annum, and starting on the first
Distribution Date after the first possible
Optional Termination Date and on each
Distribution Date thereafter, 0.480% per
annum. With respect to the Class M
Certificates, initially 0.450% per annum, and
starting on the first Distribution Date
after the first possible Optional
Termination Date and on each Distribution
Date thereafter, 0.675% per annum.
With respect to the Class B-1 Certificates,
initially 0.500% per annum, and
starting on the first Distribution Date
after the first possible Optional
Termination Date and on each Distribution
Date thereafter, 0.750% per annum.
With respect to the Class B-2 Certificates,
initially 0.700% per annum, and
starting on the first Distribution Date
after the first possible Optional
Termination Date and on each Distribution
Date thereafter, 1.050% per annum.
With respect to the Class B-3 Certificates,
initially 1.400% per annum, and
starting on the first Distribution Date
after the first possible Optional
Termination Date and on each Distribution
Date thereafter, 2.100% per annum.
Market Street: Market Street Mortgage Corporation and its successor
in
interest.
23
<PAGE>
Master Servicer: As of the Closing Date, Wells Fargo Bank,
National
Association and, thereafter, its respective
successors in interest who meet the
qualifications of a successor Master
Servicer as set forth in this Agreement.
Master Servicer Certification: A written certification covering
servicing of the Mortgage Loans by all
Servicers and signed by an officer of the
Master Servicer that complies with (i) the
Sarbanes-Oxley Act of 2002, as
amended from time to time, and (ii) the
February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of
the Securities and Exchange Commission
Regarding Compliance by Asset-Backed
Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time,
provided that if after the Closing Date
(a) the Sarbanes-Oxley Act of 2002 is
amended, (b) the Statement referred to in
clause (ii) is modified or superceded by
any subsequent statement, rule or
regulation of the Commission or any
statement of a division thereof, or (c) any
future releases, rules and regulations are
published by the Commission from time
to time pursuant to the Sarbanes-Oxley Act
of 2002, which in any such case
affects the form or substance of the
required certification and results in the
required certification being, in the
reasonable judgment of the Master Servicer,
materially more onerous than the form of
the required certification as of the
Closing Date, the Master Servicer
Certification shall be as agreed to by the
Master Servicer and the Depositor following
a negotiation in good faith to
determine how to comply with any such new
requirements.
Master Servicing Compensation: The meaning specified in Section
3.14.
Master Servicing
Fee: The meaning specified in Section 3.14.
Master Servicing Fee Rate: For each Mortgage Loan, 0.0025% per
annum.
Maximum Lifetime Mortgage Rate: As to each Mortgage Loan, the rate,
if
any, set forth in the related Mortgage Note
and indicated on the Mortgage Loan
Schedule, that is the maximum level to
which a Mortgage Interest Rate can adjust
in accordance with its terms, regardless of
changes in the applicable Index.
Metrocities:
Metrocities Mortgage LLC and its successor in interest.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of
the State of Delaware, and 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.
Minimum Lifetime Mortgage Rate: As to each Mortgage Loan, the rate,
if
any, set forth in the related Mortgage Note
and indicated on the Mortgage Loan
Schedule, that is the minimum level to
which a Mortgage Interest Rate can adjust
in accordance with its terms, regardless of
changes in the applicable Index.
24
<PAGE>
MOM Loan: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as
nominee for the originator of such
Mortgage Loan and its successors and
assigns, at the origination thereof, or as
nominee for any subsequent assignee of the
originator pursuant to an assignment
of mortgage to MERS.
Monthly Advance: An advance of principal or interest required to
be
made by a Servicer pursuant to the related
Servicing Agreement or the Master
Servicer pursuant to Section 6.05.
Monthly Payment: With respect to any Mortgage Loan and any month,
the
scheduled payment or payments of principal
and interest due during such month on
such Mortgage Loan which either is payable
by a Mortgagor in such month under
the related Mortgage Note, or in the case
of an REO Property, would otherwise
have been payable under the related
Mortgage Note.
Moody's: Moody's
Investors Service, Inc. and its successor in
interest.
Mortgage File: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan
and any additional documents required
to be added to the Mortgage File pursuant
to this Agreement or the Mortgage Loan
Purchase Agreement.
Mortgage Interest Rate: The annual rate at which interest accrues
from
time to time on any Mortgage Loan pursuant
to the related Mortgage Note, which
rate is equal to the "Mortgage Interest
Rate" set forth with respect thereto on
the Mortgage Loan Schedule.
Mortgage Loan: A mortgage loan transferred and assigned to the
Trustee
pursuant to Section 2.01 or Section 2.04
and held as a part of the Trust Fund,
as identified in the Mortgage Loan
Schedule, including a mortgage loan the
property securing which has become an REO
Property. Any Mortgage Loan that was
intended by the parties hereto to be
transferred to the Trust Fund as indicated
by the Mortgage Loan Schedule which is in
fact not so transferred for any reason
including, without limitation, a breach of
a representation or warranty with
respect thereto, shall continue to be a
Mortgage Loan hereunder until the
Repurchase Price with respect thereto has
been paid to the Trust Fund.
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase
Agreement,
dated as of March 31, 2005, between EMC, as
seller, and Structured Asset
Mortgage Investments II Inc., as purchaser,
and all amendments thereof and
supplements thereto, attached hereto as
Exhibit J.
Mortgage Loan Schedule: The schedule attached hereto as Exhibit B
with
respect to the Mortgage Loans, as amended
from time to time to reflect the
repurchase or substitution of Mortgage
Loans pursuant to this Agreement or the
Mortgage Loan Purchase Agreement.
Mortgage Note: The originally executed note or other evidence of
the
indebtedness of a Mortgagor under the
related Mortgage Loan.
Mortgaged Property: Land and improvements securing the indebtedness
of
a Mortgagor under the related Mortgage Loan
or, in the case of REO Property,
such REO Property.
Mortgagor: The obligor
on a Mortgage Note.
25
<PAGE>
Net Interest Shortfall: With respect to any Distribution Date,
the
Interest Shortfall, if any, for such
Distribution Date net of Compensating
Interest Payments made with respect to such
Distribution Date.
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation
Expenses which are payable therefrom
to the related Servicer in accordance with
the related Servicing Agreement or
this Agreement, (ii) unreimbursed advances
by the related Servicer and Monthly
Advances made with respect to such Mortgage
Loan and the related Mortgaged
Property, and (iii) any other amounts
payable to the related Servicer under the
related Servicing Agreement.
Net Rate: With respect to each Mortgage Loan, the Mortgage
Interest
Rate less the related Servicing Fee Rate,
the Master Servicing Fee Rate and the
Lender-Paid PMI Rate, if any, attributable
thereto, in each case expressed as
per annum rate.
Nonrecoverable Advance: Any advance or Monthly Advance (i) which
was
previously made or is proposed to be made
by the Master Servicer, the Trustee
(as successor Master Servicer) or the
related Servicer and (ii) which, in the
good faith judgment of the Master Servicer,
the Trustee or the related Servicer,
as the case may be, will not or, in the
case of a proposed advance or Monthly
Advance, would not, be ultimately
recoverable by the Master Servicer, the
Trustee (as successor Master Servicer) or
the related Servicer from Liquidation
Proceeds, Insurance Proceeds or future
payments on the Mortgage Loan for which
such advance or Monthly Advance was made or
is proposed to be made.
Notional Amount: The Notional Amount of the Class X-1 Certificates
is
equal to the sum of the Notional Amount of
Component 1X and the Notional Amount
of Component 2X. On any Distribution Date,
the Notional Amount of Component 1X
of the Class X-1 Certificates is equal to
the Current Principal Amount of the
Class A-1 Certificates (before taking into
account the payment of principal on
such Certificates on such Distribution
Date). On any Distribution Date, the
Notional Amount of Component 2X of the
Class X-1 Certificates is equal to the
aggregate Current Principal Amounts of the
Class M Certificates, the Class B-1
Certificates, the Class B-2 Certificates
and the Class B-3 Certificates (in each
case before taking into account the payment
of principal on such Certificates on
such Distribution Date). On any
Distribution Date, the Notional Amount of the
Class X-2 Certificates is equal to the
Current Principal Amount of the Class A-2
Certificates (before taking into account
the payment of principal on such
Certificates on such Distribution
Date).
Offered Certificate: Any Senior Certificate, any Senior
Mezzanine
Certificate or any Offered Subordinate
Certificate.
Offered Subordinate Certificates: The Class B-1, Class B-2 and
Class
B-3 Certificates.
Officer's Certificate: A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the
President or a Vice President or
Assistant Vice President or other
authorized officer of the Master Servicer or
the Depositor, as applicable, and delivered
to the Trustee, as required by this
Agreement.
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One-Month LIBOR: A per annum rate equal to the average of
interbank
offered rates for one-month U.S.
dollar-denominated deposits in the London
market based on quotations of major banks
as published in The Wall Street
Journal and most recently available as of
the time specified in the related
Mortgage Note.
Opinion of Counsel: A written opinion of counsel who is or are
acceptable to each addressee of such
opinion and who, unless required to be
Independent (an "Opinion of Independent
Counsel"), may be internal counsel for
EMC, the Master Servicer or the
Depositor.
Opteum: Opteum
Financial Services, LLC and its successor in interest.
Optional Termination Date: Any Distribution Date on or after which
the
Scheduled Principal Balance (before giving
effect to distributions to be made on
such Distribution Date) of the Mortgage
Loans is less than or equal to 10% of
the Cut-off Date Balance.
Original Senior Mezzanine and Subordinate Principal Balance:
The
aggregate Current Principal Amounts of the
Senior Mezzanine Certificates and
Subordinate Certificates as of the Closing
Date.
Original Value: The lesser of (i) the Appraised Value or (ii) the
sales
price of a Mortgaged Property at the time
of origination of a Mortgage Loan,
except if either clause (i) or clause (ii)
is unavailable, then the other may be
used to determine the Original Value, or if
both clauses (i) and (ii) are
unavailable, then Original Value may be
determined from other sources reasonably
acceptable to the Depositor.
Outstanding Mortgage Loan: With respect to any Due Date, a
Mortgage
Loan with a Scheduled Principal Balance
greater than zero which, prior to such
Due Date, was not the subject of a
Principal Prepayment in full, did not become
a Liquidated Mortgage Loan and was not
purchased or replaced.
Outstanding Principal Balance: As of the time of any determination,
the
principal balance of a Mortgage Loan
remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the
principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor
at the time such property was
acquired by the Trust Fund less any Net
Liquidation Proceeds with respect
thereto to the extent applied to
principal.
Pass-Through Rate: As to each Class of Certificates (other than
the
Residual Certificates) and the REMIC I
Regular Interests and the REMIC II
Regular Interests, the rate of interest
determined as provided with respect
thereto, in Section 5.01(c). The Residual
Certificates shall not bear interest.
Any monthly calculation of interest at a
stated rate shall be based upon annual
interest at such rate divided by
twelve.
Paul Financial: Paul
Financial, LLC, and its successor in interest.
Paying Agent: The Securities Administrator or any successor
paying
agent appointed hereunder.
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<PAGE>
Periodic Rate Cap: As to each Mortgage Loan, the rate, if any,
set
forth in the related Mortgage Note and
indicated on the Mortgage Loan Schedule,
that is the maximum adjustment that can be
made to the Mortgage Interest Rate on
each Interest Adjustment Date in accordance
with its terms, regardless of
changes in the applicable Index.
Permitted Investments: Any one or more of the following obligations
or
securities held in the name of the Trustee
for the benefit of the
Certificateholders:
(i) direct obligations of, and obligations the timely payment
of which are fully guaranteed by the United
States of America or any agency or
instrumentality of the United States of
America the obligations of which are
backed by the full faith and credit of the
United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances (which shall each have a
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) issued by any
depository institution or trust company
incorporated under the laws of the
United States of America or any state
thereof (including the Trustee or the
Master Servicer or its Affiliates acting in
its commercial banking capacity) and
subject to supervision and examination by
federal and/or state banking
authorities, provided that the commercial
paper and/or the short-term debt
rating and/or the long-term unsecured debt
obligations of such depository
institution or trust company at the time of
such investment or contractual
commitment providing for such investment
have the Applicable Credit Rating or
better from each Rating Agency and (b) any
other demand or time deposit or
certificate of deposit that is fully
insured by the Federal Deposit Insurance
Corporation;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any
other security issued or guaranteed by
an agency or instrumentality of the United
States of America, the obligations of
which are backed by the full faith and
credit of the United States of America,
in either case entered into with a
depository institution or trust company
(acting as principal) described in clause
(ii)(a) above where the Trustee holds
the security therefor; provided that such
repurchase obligations shall have a
remaining maturity of not more than 365
days;
(iv) securities bearing interest or sold at a discount issued
by any corporation (including the Trustee
or the Master Servicer or its
Affiliates) incorporated under the laws of
the United States of America or any
state thereof that have the Applicable
Credit Rating or better from each Rating
Agency at the time of such investment or
contractual commitment providing for
such investment; provided, however, that
securities issued by any particular
corporation will not be Permitted
Investments to the extent that investments
therein will cause the then outstanding
principal amount of securities issued by
such corporation and held as part of the
Trust to exceed 10% of the aggregate
Outstanding Principal Balances of all the
Mortgage Loans and Permitted
Investments held as part of the Trust;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing
obligations payable on demand or on a
specified date not more than one year after
the date of issuance thereof) having
the Applicable Credit Rating or better
28
<PAGE>
from each Rating Agency at the time of such
investment; provided, that such
commercial paper shall have a remaining
maturity of not more than 365 days;
(vi) a Reinvestment Agreement issued by any bank, insurance
company or other corporation or entity;
(vii) any other demand, money market or time deposit,
obligation, security or investment as may
be acceptable to each Rating Agency as
evidenced in writing by each Rating Agency
to the Trustee; and
(viii) any money market or common trust fund having the
Applicable Credit Rating or better from
each Rating Agency, including any such
fund for which the Trustee or Master
Servicer or any affiliate of the Trustee or
Master Servicer acts as a manager or an
advisor; provided, however, that no
instrument or security shall be a Permitted
Investment if such instrument or
security evidences a right to receive only
interest payments with respect to the
obligations underlying such instrument or
if such security provides for payment
of both principal and interest with a yield
to maturity in excess of 120% of the
yield to maturity at par or if such
instrument or security is purchased at a
price greater than par; provided, further,
that, if rated, any such obligation
or security shall not have an "r"
highlighter affixed to its rating.
Permitted Transferee: Any Person other than a Disqualified
Organization
or an "electing large partnership" (as
defined by Section 775 of the Code).
Person: Any individual, corporation, partnership, joint
venture,
association, limited liability company,
joint-stock company, trust,
unincorporated organization or government
or any agency or political subdivision
thereof.
Physical Certificates: The Residual Certificates and the
Private
Certificates.
Pinnacle: Pinnacle Financial Corporation and its successor in
interest.
Platinum: Platinum Home Mortgage Corp. and its successor in
interest.
Plaza: Plaza Home
Mortgage, Inc. and its successor in interest.
Prepayment Charge: With respect to any Mortgage Loan, the charges
or
premiums, if any, due in connection with a
full or partial prepayment of such
Mortgage Loan in accordance with the terms
of the related Mortgage Note.
Prepayment Period: As to any Distribution Date and (i) the
Mortgage
Loans serviced by each Servicer, other than
the EMC Servicer, the prepayment
period specified in the related Servicing
Agreement and (ii) the Mortgage Loans
serviced by the EMC Servicer, the calendar
month immediately preceding the month
in which such Distribution Date occurs.
Primary Capital: Primary Capital Advisors LC doing business as
Primary
Capital Mortgage and its successor in
interest.
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<PAGE>
Primary Mortgage Insurance Policy: Any primary mortgage
guaranty
insurance policy issued in connection with
a Mortgage Loan which provides
compensation to a Mortgage Note holder in
the event of default by the obligor
under such Mortgage Note or the related
Security Instrument, if any, or any
replacement policy therefor through the
related Interest Accrual Period for such
Class relating to a Distribution Date.
Principal Prepayment: Any payment (whether partial or full) or
other
recovery of (or proceeds with respect to)
principal on a Mortgage Loan which is
received in advance of its scheduled Due
Date to the extent that it is not
accompanied by an amount as to interest
representing scheduled interest due on
any date or dates in any month or months
subsequent to the month of prepayment,
including Insurance Proceeds and Repurchase
Proceeds, but excluding the
principal portion of Net Liquidation
Proceeds received at the time a Mortgage
Loan becomes a Liquidated Mortgage
Loan.
Private Certificates: Any Class B-4, Class B-5 or Class B-6
Certificate.
Prospectus: The Prospectus, dated December 20, 2004, relating to
the
offering of the Offered Certificates.
Prospectus Supplement:
The Prospectus Supplement, dated March 29, 2005,
relating to the offering of the Offered
Certificates.
Protected Account: An account or accounts established and
maintained
for the benefit of Certificateholders by
each Servicer with respect to the
related Mortgage Loans and with respect to
REO Property serviced by such
Servicer pursuant to the related Servicing
Agreement, and which is an Eligible
Account.
QIB: A Qualified Institutional Buyer as defined in Rule 144A
promulgated under the Securities Act.
Qualified Insurer: Any insurance company duly qualified as such
under
the laws of the state or states in which
the related Mortgaged Property or
Mortgaged Properties is or are located,
duly authorized and licensed in such
state or states to transact the type of
insurance business in which it is
engaged and approved as an insurer by the
Master Servicer, so long as its
claims-paying ability is acceptable to the
Rating Agencies for pass-through
certificates having the same rating as the
Certificates rated by the Rating
Agencies as of the Closing Date.
Rating Agencies: Each of S&P and Moody's. If any such
organization or
its successor is no longer in existence,
"Rating Agency" shall be a nationally
recognized statistical rating organization,
or other comparable Person,
designated by the Depositor, notice of
which designation shall be given to the
Trustee. References herein to a given
rating category of a Rating Agency shall
mean such rating category without giving
effect to any modifiers.
Realized Loss: With respect to (i) a Mortgage Loan, a Bankruptcy
Loss,
and (ii) a Liquidated Mortgage Loan, an
amount (not less than zero nor greater
than the Scheduled Principal Balance of
such Mortgage Loan) equal to (x) the
Outstanding Principal Balance of such
Liquidated Mortgage Loan plus accrued and
unpaid interest thereon at the Mortgage
Interest Rate through the last day of
the month of such liquidation, less (y) the
Net Liquidation Proceeds
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<PAGE>
with respect to such Liquidated Mortgage
Loan and the related Mortgaged Property
that are allocated to principal. In
addition, to the extent the Paying Agent
receives from the related Servicer
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
Current Principal Amount of any Class or
Classes of Certificates (other than the
Residual Certificates) on any Distribution
Date. As to any Mortgage Loan which
has become the subject of a Deficient
Valuation, if the principal amount due
under the related Mortgage Note has been
reduced, then "Realized Loss" is the
difference between the principal balance of
such Mortgage Loan outstanding
immediately prior to such Deficient
Valuation and the principal balance of such
Mortgage Loan as reduced by the Deficient
Valuation.
Record Date: With respect to each Distribution Date and each Class
of
Certificates (other than the Residual
Certificates and the Adjustable Rate
Certificates), the close of business on the
last Business Day of the month next
preceding the month in which the related
Distribution Date occurs. With respect
to each Distribution Date and the
Adjustable Rate Certificates, the 18th day of
the month of such Distribution Date. With
respect to the Residual Certificates,
the Closing Date.
Reinvestment Agreements: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a
bank, insurance company or other
corporation or entity (including the
Trustee).
Relief Act: The
Servicemembers' Civil Relief Act or similar state law.
Relief Act Mortgage Loan: Any Mortgage Loan as to which the
Scheduled
Payment thereof has been reduced due to the
application of the Relief Act or
similar state laws.
REMIC: A real estate mortgage investment conduit, as defined in
the
Code.
REMIC I: That group of assets contained in the Trust Fund
designated as
a REMIC consisting of (i) the Mortgage
Loans, (ii) the Protected Accounts, (iii)
any REO Property relating to the Mortgage
Loans, (iv) the rights with respect to
the Servicing Agreements, (v) the rights
with respect to the Assignment
Agreements, (vi) such funds or assets as
from time to time are deposited in the
Distribution Account and belonging to the
Trust Fund (exclusive of the Carryover
Shortfall Reserve Fund) and (vii) any
proceeds of the foregoing.
REMIC I Interests: The REMIC I Regular Interests and the Class
R-I
Certificates.
REMIC I Regular Interests: The REMIC I Regular Interests, with
such
terms as described in Section 5.01(c).
REMIC I Subordinated Balance Ratio: The ratio among the
Uncertificated
Principal Balances of each of the REMIC I
Regular Interests ending with the
designation "A", equal to the ratio
between, with respect to each such REMIC I
Regular Interest, the excess of (x) the
aggregate Scheduled Principal Balance of
the Mortgage Loans in the related Loan
Group over (y) the Current Principal
Amount of the Senior Certificates (other
than the Residual Certificates and the
Interest Only Certificates) in the related
Loan Group.
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<PAGE>
REMIC II: That group of assets contained in the Trust Fund
designated
as a REMIC consisting of the REMIC I
Regular Interests.
REMIC II Interests: The REMIC II Regular Interests and the Class
R-II
Certificates.
REMIC II Regular Interests: The REMIC II Regular Interests, with
such
terms as described in Section 5.01(c).
REMIC III: That group of assets contained in the Trust Fund
designated
as a REMIC consisting of the REMIC II
Regular Interests.
REMIC III Interests: The REMIC III Regular Certificates and the
Class
R-III Certificates.
REMIC III Regular Certificates: The REMIC III Regular Interests,
with
such terms as described in Section
5.01(c).
REMIC Opinion: An Opinion of Independent Counsel, to the effect
that
the proposed action described therein would
not, under the REMIC Provisions, (i)
cause REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC while any
regular interest in such REMIC is
outstanding, (ii) result in a tax on
prohibited transactions with respect to any
REMIC or (iii) constitute a taxable
contribution to any REMIC after the Startup
Day.
REMIC Provisions: The provisions of the federal income tax law
relating
to REMICs, which appear at Sections 860A
through 860G of the Code, and related
provisions and regulations promulgated
thereunder, as the foregoing may be in
effect from time to time.
REO Property: A Mortgaged Property acquired in the name of the
Trustee,
for the benefit of Certificateholders, by
foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted
Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan (or any
property
acquired with respect thereto) required to
be repurchased by the Seller pursuant
to the Mortgage Loan Purchase Agreement or
Article II or Section 3.21 of this
Agreement, an amount equal to the sum of
(i) (A) 100% of the Outstanding
Principal Balance of such Mortgage Loan as
of the date of repurchase (or if the
related Mortgaged Property was acquired
with respect thereto, 100% of the
Outstanding Principal Balance of such
Mortgage Loan as of the date of the
acquisition), plus (B) accrued but unpaid
interest on the Outstanding Principal
Balance of such Mortgage Loan at the
related Mortgage Interest Rate, through and
including the last day of the month of
repurchase, and reduced by (C) any
portion of the Master Servicing
Compensation, Servicing Fee and Monthly Advances
relating to such Mortgage Loan and advances
payable to the purchaser of such
Mortgage Loan, and (ii) any costs and
damages incurred by the Trust in
connection with any violation of such
Mortgage Loan of any predatory or abusive
lending laws.
Repurchase Proceeds: The Repurchase Price in connection with
any
repurchase of a Mortgage Loan by the Seller
or any cash deposit in connection
with the substitution of a Mortgage
Loan.
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<PAGE>
Request for Release: A request for release in the form attached
hereto
as Exhibit D.
Required Insurance Policy: With respect to any Mortgage Loan,
any
insurance policy which is required to be
maintained from time to time under this
Agreement or the related Servicing
Agreement with respect to such Mortgage Loan.
Residual Certificates:
Any of the Class R Certificates.
Responsible Officer: Any officer assigned to the Corporate Trust
Office
(or any successor thereto), including any
Vice President, Assistant Vice
President, Trust Officer, any Assistant
Secretary, any trust officer or any
other officer of the Trustee customarily
performing functions similar to those
performed by any of the above designated
officers and having direct
responsibility for the administration of
this Agreement, and any other officer
of the Trustee to whom a matter arising
hereunder may be referred.
Rule 144A: Rule 144A promulgated under the Securities Act.
Rule 144A Certificate: The certificate to be furnished by each
purchaser of a Private Certificate (which
is also a Physical Certificate) which
is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under
the Securities Act, substantially in the
form set forth as Exhibit F-2 hereto.
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.,
and its successors in interest.
Scheduled Payment: With respect to any Mortgage Loan and any
Due
Period, the scheduled payment or payments
of principal and interest due during
such Due Period on such Mortgage Loan which
either is payable by a Mortgagor in
such month under the related Mortgage Note
or, in the case of REO Property,
would otherwise have been payable under the
related Mortgage Note.
Scheduled Principal:
The principal portion of any Scheduled Payment.
Scheduled Principal Balance: With respect to any Mortgage Loan
or
related REO Property on any Distribution
Date, the principal balance thereof as
of the Cut-off Date minus the sum of (1)
the principal portion of the scheduled
Monthly Payments due from Mortgagors with
respect to such Mortgage Loan during
each Due Period ending prior to such
Distribution Date, irrespective of any
delinquency in its payment, (2) all
Principal Prepayments with respect to such
Mortgage Loan received prior to or during
the related Prepayment Period, and all
Net Liquidation Proceeds to the extent
applied by the related Servicer as
recoveries of principal in accordance with
this Agreement or the related
Servicing Agreement that were received by
the related Servicer as of the close
of business on the last day of the
Prepayment Period related to such
Distribution Date and (3) any Realized Loss
thereon incurred prior to or during
the related Prepayment Period; provided
that the Scheduled Principal Balance of
any Liquidated Mortgage Loan is zero.
Securities Act: The
Securities Act of 1933, as amended.
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<PAGE>
Securities Administrator: Wells Fargo Bank, National Association,
and
its successor in interest, and any
successor securities administrator appointed
as herein provided.
Securities Legend: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT
BE
REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE
MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER
REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE
ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2)
PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL
ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3)
or (7) OF REGULATION D UNDER THE
SECURITIES ACT OR ANY ENTITY IN WHICH ALL
OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE
AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED
IN THE AGREEMENT AND (B) THE RECEIPT
BY THE TRUSTEE AND THE CERTIFICATE
REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE AND THE CERTIFICATE
REGISTRAR THAT SUCH REOFFER, RESALE, PLEDGE
OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS
OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY OTHER APPLICABLE
JURISDICTION. THIS CERTIFICATE MAY NOT BE
ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED
[in the case of a Residual Certificate
or a Private Certificate] UNLESS THE
OPINION OF COUNSEL REQUIRED BY SECTION 5.07
OF THE POOLING AND SERVICING AGREEMENT IS
PROVIDED [in the case of the Class
B-4, Class B-5 and Class B-6
Certificates]:, UNLESS THE TRANSFEREE CERTIFIES OR
REPRESENTS THAT THE PROPOSED TRANSFER AND
HOLDING OF A CERTIFICATE AND THE
SERVICING, MANAGEMENT AND OPERATION OF THE
TRUST AND ITS ASSETS: (I) WILL NOT
RESULT IN ANY PROHIBITED TRANSACTION WHICH
IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO,
PROHIBITED TRANSACTION EXEMPTION ("PTE")
84-14, PTE 91-38, PTE 90-1, PTE 95-60
OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO
ANY ADDITIONAL FIDUCIARY DUTIES ON
THE PART OF THE DEPOSITOR, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER,
ANY SERVICER OR THE TRUSTEE, WHICH WILL BE
DEEMED REPRESENTED BY AN OWNER OF A
BOOK-
34
<PAGE>
ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE
AND WILL BE EVIDENCED BY A
REPRESENTATION OR AN OPINION OF COUNSEL TO
SUCH EFFECT BY OR ON BEHALF OF AN
INSTITUTIONAL ACCREDITED INVESTOR."
Security Instrument: A written instrument creating a valid first
lien
on a Mortgaged Property securing a Mortgage
Note, which may be any applicable
form of mortgage, deed of trust, deed to
secure debt or security deed, including
any riders or addenda thereto.
Seller: EMC Mortgage Corporation, as seller under the Mortgage
Loan
Purchase Agreement.
Senior Certificates: The Class A-1 Certificates, the Class A-2
Certificates, the Class X-1 Certificates,
the Class X-2 Certificates and the
Residual Certificates.
Senior Mezzanine Certificates: The Class M Certificates.
Senior Mezzanine Certificate Writedown Amount: As to any
Distribution
Date on or after which the aggregate
Current Principal Amounts of the
Subordinate Certificates have been reduced
to zero, the amount by which (a) the
sum of the Current Principal Amounts of all
of the Certificates other than the
Residual Certificates and the Interest Only
Certificates (after giving effect to
the distribution of principal and the
allocation of applicable Realized Losses
on the Mortgage Loans on a pro rata basis
in reduction of the Current Principal
Amounts of such Certificates on such
Distribution Date) exceeds (b) the
Scheduled Principal Balances of the
Mortgage Loans on the Due Date related to
such Distribution Date.
Senior Mezzanine Loss and Delinquency Test: On any Distribution
Date,
the Senior Mezzanine Loss and Delinquency
Test is satisfied if, as of the last
day of the month preceding such
Distribution Date, (A) the aggregate Scheduled
Principal Balances of the Mortgage Loans
delinquent 60 days or more (including
for this purpose any such Mortgage Loans in
foreclosure and Mortgage Loans with
respect to which the related Mortgaged
Property has been acquired by the Trust),
averaged over the last six months, as a
percentage of the aggregate Current
Principal Amounts of the Senior Mezzanine
Certificates and Subordinate
Certificates, does not exceed 50%; and (B)
cumulative Realized Losses on the
Mortgage Loans do not exceed (a) 30% of the
Original Senior Mezzanine and
Subordinate Principal Balance if such
Distribution Date occurs between and
including April 2015 and March 2016, (b)
35% of the Original Senior Mezzanine
and Subordinate Principal Balance if such
Distribution Date occurs between and
including April 2016 and March 2017, (c)
40% of the Original Senior Mezzanine
and Subordinate Principal Balance if such
Distribution Date occurs between and
including April 2017 and March 2018, (d)
45% of the Original Senior Mezzanine
and Subordinate Principal Balance if such
Distribution Date occurs between and
including April 2018 and March 2019, and
(e) 50% of the Original Senior
Mezzanine and Subordinate Principal Balance
if such Distribution Date occurs on
or after April 19, 2019.
Senior Mezzanine and Subordinate Optimal Principal Amount: With
respect
to the Senior Mezzanine Certificates and
Subordinate Certificates and as to any
Distribution Date, an amount equal to the
sum, without duplication, of the
following for the Group I Mortgage Loans
and the Group II Mortgage Loans (but in
no event greater than the aggregate Current
Principal
35
<PAGE>
Amounts of the Senior Mezzanine
Certificates and Subordinate Certificates
immediately prior to such Distribution
Date):
(1) the applicable Senior Mezzanine and Subordinate
Percentage of the principal portion of all Monthly Payments due
on
each Outstanding Mortgage Loan in the related Loan Group on the
related Due Date, as specified in the amortization schedule at
the
time applicable thereto (after adjustment for previous
Principal
Prepayments but before any adjustment to such amortization schedule
by
reason of any bankruptcy or similar proceeding or any moratorium
or
similar waiver or grace period);
(2) the applicable Senior Mezzanine and Subordinate
Prepayment Percentage of the Scheduled Principal Balance of
each
Mortgage Loan in the related Loan Group that was the subject of
a
Principal Prepayment in full during the related Prepayment
Period;
(3) the applicable Senior Mezzanine and Subordinate
Prepayment Percentage of all partial prepayments of principal
received
during the applicable Prepayment Period for each Mortgage Loan in
the
related Loan Group;
(4) the excess, if any, of (A) all Net Liquidation
Proceeds with respect to the Mortgage Loans allocable to
principal
received during the related Prepayment Period in respect of
each
Liquidated Mortgage Loan in the related Loan Group over (B) the sum
of
the amounts distributable pursuant to clause (4) of the definition
of
Group I Senior Optimal Principal Amount or Group II Senior
Optimal
Principal Amount, as the case may be, on such Distribution
Date;
(5) the applicable Senior Mezzanine and Subordinate
Prepayment Percentage of the sum of (a) the Scheduled Principal
Balance of each Mortgage Loan or related REO Property in the
related
Loan Group which was repurchased with respect to such
Distribution
Date and (b) the excess, if any, of the Scheduled Principal Balance
of
a Mortgage Loan that has been replaced with a Substitute Mortgage
Loan
pursuant to Section 2.04 of this Agreement or the Mortgage Loan
Purchase Agreement, with respect to such Distribution Date over
the
Scheduled Principal Balance of such Substitute Mortgage Loan;
and
(6) on the Distribution Date on which the Current
Principal Amounts of the related Senior Certificates (other than
the
Residual Certificates and the Interest Only Certificates) have
all
been reduced to zero, 100% of any applicable Senior Optimal
Principal
Amount.
After the aggregate Current Principal Amounts of the Senior
Mezzanine
Certificates and Subordinate Certificates has been reduced to
zero, the
Senior Mezzanine and Subordinate Optimal Principal Amount shall
be
zero.
Senior
Mezzanine and Subordinate Percentage: The Group I Senior
Mezzanine
and Subordinate Percentage or the Group II
Senior Mezzanine and Subordinate
Percentage.
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Senior Mezzanine and Subordinate Prepayment Percentage: The Group
I
Senior Mezzanine and Subordinate Prepayment
Percentage or the Group II Senior
Mezzanine and Subordinate Prepayment
Percentage.
Senior Optimal Principal Amount: The Group I Senior Optimal
Principal
Amount or the Group II Senior Optimal
Principal Amount.
Senior Percentage: The Group I Senior Percentage or the Group II
Senior
Percentage.
Senior Prepayment Percentage: The Group I Senior Prepayment
Percentage
or the Group II Senior Prepayment
Percentage.
Servicer: With respect to each Mortgage Loan, any of EverHome,
Wachovia, EMC, GreenPoint, GMAC, Bank of
America and First Tennessee, as set
forth in the Mortgage Loan Schedule.
Servicer Remittance Date: With respect to each Mortgage Loan, the
18th
day of each month, or if such day is not a
Business Day, the preceding Business
Day.
Servicing Agreement(s): The EverHome Subservicing Agreement, the
Bank
of America Servicing Agreement, the
Wachovia Servicing Agreement, the EMC
Servicing Agreement, the GreenPoint
Servicing Agreement, the GMAC Servicing
Agreement and the First Tennessee Servicing
Agreement, as applicable.
Servicing Fee: As to any Mortgage Loan and a Distribution Date,
an
amount equal to the product of (i) the
Scheduled Principal Balance of such
Mortgage Loan as of the Due Date in the
month preceding the month in which such
Distribution Date occurs and (ii) the
applicable Servicing Fee Rate, or, in the
event of any payment of interest that
accompanies a Principal Prepayment in full
during the related Due Period made by the
Mortgagor immediately prior to such
prepayment, interest at the Servicing Fee
Rate on the Scheduled Principal
Balance of such Mortgage Loan for the
period covered by such payment of
interest.
Servicing Fee Rate: As to any Mortgage Loan, a per annum rate
(including, as applicable, any additional
servicing fees) as set forth in the
Mortgage Loan Schedule.
Servicing Officer: As
defined in the related Servicing Agreement.
SouthStar: SouthStar Funding LLC and/or HomeStar Mortgage Services,
LLC
and/or their respective successors in
interest, as the case may be.
Startup Day: March 31,
2005.
Subordinate Certificates: The Class B-1, Class B-2, Class B-3,
Class
B-4, Class B-5 and Class B-6
Certificates.
Subordinate Certificate Writedown Amount: With respect to the
Subordinate Certificates, the amount by
which (a) the sum of the Current
Principal Amounts of all of the
Certificates other than the Residual
Certificates and the Interest Only
Certificates (after giving
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effect to the distribution of principal
collections on the Mortgage Loans and
the allocation of applicable Realized
Losses on the Mortgage Loans on a pro rata
basis in reduction of the Current Principal
Amounts of such Certificates on such
Distribution Date) exceeds (b) the
Scheduled Principal Balances of the Mortgage
Loans on the Due Date related to such
Distribution Date.
Subsequent Recoveries: As of any Distribution Date, amounts
received
during the related Due Period by the
related Servicer specifically related to a
Liquidated Mortgage Loan or disposition of
an REO property prior to the related
Prepayment Period that result in a Realized
Loss on a Mortgage Loan, after
liquidation or disposition of such Mortgage
Loan.
Substitute Mortgage Loan: A mortgage loan tendered to the
Trustee
pursuant to the related Servicing
Agreement, the Mortgage Loan Purchase
Agreement or Section 2.04 of this
Agreement, as applicable, in each case, (i)
which has an Outstanding Principal Balance
not greater nor materially less than
the Mortgage Loan for which it is to be
substituted; (ii) which has a Mortgage
Interest Rate and Net Rate not less than,
and not materially greater than, such
Mortgage Loan; (iii) which has a maturity
date not materially earlier or later
than such Mortgage Loan and not later than
the latest maturity date of any
Mortgage Loan; (iv) which is of the same
property type and occupancy type as
such Mortgage Loan; (v) which has a
Loan-to-Value Ratio not greater than the
Loan-to-Value Ratio of such Mortgage Loan;
(vi) which (to the extent applicable)
has a Combined Loan-to-Value Ratio not
greater than the Combined Loan-to-Value
Ratio of such Mortgage Loan; (vii) which is
current in payment of principal and
interest as of the date of substitution;
(viii) as to which the payment terms do
not vary in any material respect from the
payment terms of the Mortgage Loan for
which it is to be substituted; (ix) which
has a Gross Margin, Periodic Rate Cap
and Maximum Lifetime Mortgage Rate no less
than those of such Mortgage Loan, has
the same Index and interval between
Interest Adjustment Dates as such Mortgage
Loan, and has a Minimum Lifetime Mortgage
Rate no lower than that of such
Mortgage Loan; and (x) which is not secured
by Mortgaged Property located in (A)
the State of New Jersey, if such Mortgage
Loan was originated on or after
November 27, 2003 or (B) the State of New
Mexico, if such Mortgage Loan was
originated on or after January 1, 2004.
Tax Administration and Tax Matters Person: The person designated
as
"tax matters person" in the manner provided
under Treasury regulation ss.
1.860F-4(d) and temporary Treasury
regulation ss. 301.6231(a)(7)-1T. The
Securities Administrator or any successor
thereto or assignee thereof shall
serve as tax administrator hereunder and as
agent for the Tax Matters Person.
The Holder of each Class of Residual
Certificates shall be the Tax Matters
Person for the related REMIC, as more
particularly set forth in Section 9.12
hereof.
Termination Costs: The costs and expenses related to the
termination of
any Servicer, the appointment of a
successor servicer or the transfer and
assumption of servicing with respect to the
related Servicing Agreement,
including, without limitation, the items
set forth in Section 3.03(c).
Trust Fund or Trust: The corpus of the trust created by this
Agreement,
consisting of the Mortgage Loans and the
other assets described in Section
2.01(a).
Trustee: JPMorgan Chase Bank, N.A., and its successor in interest,
or
any successor trustee appointed as herein
provided.
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Uncertificated Principal Balance: With respect to any REMIC I
Regular
Interest or REMIC II Regular Interest as of
any Distribution Date, the initial
principal amount of such Regular Interest,
reduced by (i) all amounts
distributed on previous Distribution Dates
on such Regular Interest with respect
to principal, (ii) the principal portion of
all Realized Losses on the Mortgage
Loans allocated prior to such Distribution
Date to such Regular Interest, taking
account of the Loss Allocation Limitation
and (iii) in the case of a REMIC II
Regular Interest for which the
Corresponding Certificate is a Senior Mezzanine
Certificate or a Subordinate Certificate,
such Regular Interest's pro rata
share, if any, of the applicable Senior
Mezzanine Certificate Writedown Amount
or Subordinate Certificate Writedown Amount
allocated to such Corresponding
Certificate for previous Distribution
Dates.
Underlying Seller: With respect to each Mortgage Loan,
GreenPoint,
Wachovia, Opteum, American Residential,
GMAC, Primary Capital, HomeBanc, Bank of
America, First Horizon, American Gold,
Alliance Mortgage, Huntington, Plaza,
Loan City, EverHome, BancMortgage,
Platinum, WinStar, Market Street, Aegis,
Pinnacle, Paul Financial, Metrocities or
SouthStar, as indicated on the Mortgage
Loan Schedule.
Uninsured Cause: Any cause of damage to a Mortgaged Property or
related
REO Property such that the complete
restoration of such Mortgaged Property or
related REO Property is not fully
reimbursable by the hazard insurance policies
or flood insurance policies required to be
maintained pursuant to the related
Servicing Agreement, without regard to
whether or not such policy is maintained.
United States Person: A citizen or individual 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 a court within the
United States is able to exercise primary
supervision over the administration of
such trust and one or more such United
States Persons have the authority to
control all substantial decisions of such
trust or if the Trust was in existence
on August 20, 1996 and properly elected to
continue to be treated as such a
United States Person.
Wachovia: Wachovia Mortgage Corporation, as successor-in-interest
to
SouthTrust Mortgage Corporation, and its
successor in interest.
Wachovia AAR: That certain Assignment, Assumption and
Recognition
Agreement, made and entered into as of
March 31, 2005, among EMC, the Trustee
and Wachovia.
Wachovia Servicing Agreement: That certain Purchase, Warranties
and
Servicing Agreement, dated as of November
1, 2002, by and between SouthTrust
Mortgage Corporation
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(as the predecessor-in-interest of
Wachovia) and EMC, as amended, as attached
hereto as Exhibit H-2, as modified pursuant
to the Wachovia AAR.
WinStar: Summit
Mortgage Partners, Inc., and its successor in
interest.
Section 1.02. Calculation of LIBOR. LIBOR applicable to the
calculation
of the Pass-Through Rate on the Adjustable
Rate Certificates for any Interest
Accrual Period will be determined on each
Interest Determination Date. On each
Interest Determination Date, LIBOR shall be
established by the Securities
Administrator and, as to any Interest
Accrual Period, will equal the rate for
one month United States dollar deposits
that appears on the Telerate Screen Page
3750 as of 11:00 a.m., London time, on such
Interest Determination Date.
"Telerate Screen Page 3750" means the
display designated as page 3750 on the
Telerate Service (or such other page as may
replace page 3750 on that service
for the purpose of displaying London
interbank offered rates of major banks). If
such rate does not appear on such page (or
such other page as may replace that
page on that service, or if such service is
no longer offered, LIBOR shall be so
established by use of such other service
for displaying LIBOR or comparable
rates as may be reasonably selected by the
Securities Administrator), the rate
will be the Reference Bank Rate. The
"Reference Bank Rate" will be determined on
the basis of the rates at which deposits in
U.S. dollars are offered by the
reference banks (which shall be any three
major banks that are engaged in
transactions in the London interbank
market, selected by the Securities
Administrator) as of 11:00 a.m., London
time, on the Interest Determination Date
to prime banks in the London interbank
market for a period of one month in
amounts approximately equal to the
aggregate Current Principal Amounts of the
Adjustable Rate Certificates, then
outstanding. The Securities Administrator
will request the principal London office of
each of the reference banks to
provide a quotation of its rate. If at
least two such quotations are provided,
the rate will be the arithmetic mean of the
quotations rounded up to the nearest
whole multiple of 0.03125%. If on such date
fewer than two quotations are
provided as requested, the rate will be the
arithmetic mean of the rates quoted
by one or more major banks in New York
City, selected by the Securities
Administrator, as of 11:00 a.m., New York
City time, on such date for loans in
U.S. dollars to leading European banks for
a period of one month in amounts
approximately equal to the aggregate
Current Principal Amounts of the Adjustable
Rate Certificates, then outstanding. If no
such quotations can be obtained, the
rate will be LIBOR for the prior
Distribution Date; provided, however, if, under
the priorities described above, LIBOR for a
Distribution Date would be based on
LIBOR for the previous Distribution Date
for the third consecutive Distribution
Date, the Securities Administrator shall
select an alternative comparable index
(over which the Securities Administrator
has no control), used for determining
one-month Eurodollar lending rates that is
calculated and published (or
otherwise made available) by an independent
party. The establishment of LIBOR by
the Securities Administrator on any
Interest Determination Date and the
Securities Administrator's subsequent
calculation of the Pass-Through Rate
applicable to the Adjustable Rate
Certificates for the relevant Interest Accrual
Period, in the absence of manifest error,
will be final and binding. Promptly
following each Interest Determination Date,
the Securities Administrator shall
supply the Master Servicer with the results
of its determination of LIBOR on
such date.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans to Trustee. (a) The
Depositor, concurrently with the execution
and delivery of this Agreement,
sells, transfers and assigns to the Trust
without recourse all its right, title
and interest in and to (i) the Mortgage
Loans identified in the Mortgage Loan
Schedule, including all interest and
principal due with respect to the Mortgage
Loans after the Cut-off Date, but excluding
any payments of principal and
interest due on or prior to the Cut-off
Date with respect to the Mortgage Loans,
(ii) such assets as shall from time to time
be credited or are required by the
terms of this Agreement to be credited to
the Distribution Account, (iii) such
assets relating to the Mortgage Loans as
from time to time may be held by the
related Servicer in Protected Accounts and
the Paying Agent in the Distribution
Account for the benefit of the Paying Agent
on behalf of the Certificateholders,
(iv) any REO Property, (v) the Required
Insurance Policies and any amounts paid
or payable by the insurer under any
Insurance Policy (to the extent the
mortgagee has a claim thereto), (vi) the
Mortgage Loan Purchase Agreement to the
extent provided in Subsection 2.03(a),
(vii) the rights with respect to the
Servicing Agreements as assigned to the
Trustee on behalf of the
Certificateholders by the Assignment
Agreements, and (viii) any proceeds of the
foregoing. Although it is the intent of the
parties to this Agreement that the
conveyance of the Depositor's right, title
and interest in and to the Mortgage
Loans and other assets in the Trust Fund
pursuant to this Agreement shall
constitute a purchase and sale and not a
loan, in the event that such conveyance
is deemed to be a loan, it is the intent of
the parties to this Agreement that
the Depositor shall be deemed to have
granted to the Trustee a first priority
perfected security interest in all of the
Depositor's right, title and interest
in, to and under the Mortgage Loans and
other assets in the Trust Fund, and that
this Agreement shall constitute a security
agreement under applicable law.
(b) In connection with the above sale, transfer and assignment,
the
Depositor hereby deposits with the Trustee,
or the Custodian, as its agent, as
described in the Mortgage Loan Purchase
Agreement, with respect to each Mortgage
Loan, (i) the original Mortgage Note,
including any riders thereto, endorsed
without recourse (A) to the order of the
Trustee, or (B) in the case of a
Mortgage Loan registered on the MERS(R)
System, in blank, and in each case
showing an unbroken chain of endorsements
from the original payee thereof to the
Person endorsing it to the Trustee, or a
lost note affidavit with indemnity,
together with a copy of the related
Mortgage Note, (ii) the original Security
Instrument (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), which shall have been recorded (or
if the original is not available, a
copy), with evidence of such recording
indicated thereon (or if clause (x) in
the proviso below applies, shall be in
recordable form), (iii) unless the
Mortgage Loan is registered on the MERS(R)
System, a certified copy of the
assignment (which may be in the form of a
blanket assignment if permitted in the
jurisdiction in which the Mortgaged
Property is located) to "JPMorgan Chase
Bank, N.A., as Trustee," with evidence of
recording with respect to each
Mortgage Loan in the name of the Trustee
thereon (or if clause (x) in the
proviso below applies or for Mortgage Loans
with respect to which the related
Mortgaged Property is located in a state
other than Maryland or an Opinion of
Counsel has been provided as set forth in
this Section 2.01(b), shall be in
recordable form), (iv) all intervening
assignments of the Security Instrument,
if applicable and only to the extent
available to the Depositor with evidence of
recording thereon,
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(v) the original or a copy of the policy or
certificate of primary mortgage
guaranty insurance, to the extent
available, if any, (vi) the original policy of
title insurance or mortgagee's certificate
of title insurance or commitment or
binder for title insurance and (vii)
originals of all assumption and
modification agreements, if applicable and
available; 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 Security
Instrument, 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 Security
Instrument required to be included thereon,
be delivered to recording offices for
recording and have not been returned to
the Depositor in time to permit their
delivery as specified above, the Depositor
may deliver, or cause to be delivered, a
true copy thereof with a certification
by the Depositor, the applicable Servicer
or the title company issuing the
related commitment for title insurance, on
the face of such copy, substantially
as follows: "Certified to be a true and
correct copy of the original, which has
been transmitted for recording"; (y) in
lieu of the Security Instrument,
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, to such
effect) the Depositor may deliver, or
cause to be delivered, photocopies of such
documents containing an original
certification by the judicial or other
governmental authority of the
jurisdiction where such documents were
recorded; and (z) the Depositor shall not
be required to deliver intervening
assignments or Mortgage Note endorsements
between the related Underlying Seller and
EMC Mortgage Corporation, between EMC
Mortgage Corporation and the Depositor, and
between the Depositor and the
Trustee; and provided, further, however,
that, in the case of Mortgage Loans
which have been prepaid in full after the
Cut-off Date and prior to the Closing
Date, the Depositor, in lieu of delivering
the above documents, may deliver to
the Trustee or the Custodian, as its agent,
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 or the Custodian, as its
agent, promptly after they are received.
The Depositor shall cause, at its
expense, the assignment of the related
Security Instrument to the Trustee to be
recorded not later than 180 days after the
Closing Date with respect to the
Mortgage Loans, unless (1) such recordation
is not required by the Rating
Agencies, (2) an Opinion of Counsel has
been provided to the Trustee (with a
copy to the Custodian) which states that
recordation of such Security Instrument
is not required to protect the interests of
the Certificateholders in the
related Mortgage Loans or (3) MERS is
identified on the related Security
Instrument or on a properly recorded
assignment of such Security Instrument as
mortgagee of record solely as nominee for
Depositor and its successors and
assigns; provided, however, that each
assignment shall be submitted for
recording by the Depositor in the manner
described above, at no expense to the
Trust or the Trustee, or the Custodian, as
its agent, 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, (ii)
the occurrence of an Event of Default,
(iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the
Depositor, (iv) the rating of The Bear
Stearns Companies Inc. falls below Baa3,
(v) the occurrence of a servicing
transfer as described in Section 8.02
hereof, or (vi) with respect to any one
assignment of Mortgage, the occurrence of a
bankruptcy, insolvency or
foreclosure relating to the Mortgagor under
the related Mortgage.
Notwithstanding the foregoing, if the
Depositor
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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
in accordance with Section 9.05.
Section 2.02. Acceptance of Trust Fund by Trustee. (a) The
Trustee
acknowledges the sale, transfer and
assignment of the Trust Fund to it by the
Depositor and receipt of, subject to
further review and the exceptions which may
be noted pursuant to the procedures
described below, and declares that it holds,
the documents (or certified copies thereof)
delivered to it pursuant to Section
2.01, and declares that it will continue to
hold those documents and any
amendments, replacements or supplements
thereto and all other assets of the
Trust Fund delivered to it as Trustee in
trust for the use and benefit of all
present and future Holders of the
Certificates. On the Closing Date, the
Custodian shall acknowledge, with respect
to each Mortgage Loan by an Initial
Certification substantially in the form of
Exhibit One to the Custodial
Agreement, receipt of the Mortgage File,
but without review of such Mortgage
File, except to the extent necessary to
confirm that such Mortgage File contains
the related Mortgage Note or a lost note
affidavit in lieu thereof. No later
than 90 days after the Closing Date (or,
with respect to any Substitute Mortgage
Loan, within five Business Days after the
receipt by the Trustee or Custodian
thereof), the Trustee agrees, for the
benefit of the Certificateholders, to
review or cause to be reviewed by the
Custodian on its behalf (under the
Custodial Agreement), each Mortgage File
delivered to it and to execute and
deliver, or cause to be executed and
delivered, to the Depositor and the Trustee
an Interim Certification substantially in
the form annexed as Exhibit Two to the
Custodial Agreement. In conducting such
review, the Trustee or Custodian will
ascertain whether all required documents
have been executed and received, and
based on the Mortgage Loan Schedule,
whether those documents relate, determined
on the basis of the Mortgagor name,
original principal balance and loan number,
to the Mortgage Loans it has received, as
identified in the Mortgage Loan
Schedule. In performing any such review,
the Trustee or the Custodian, as its
agent, may conclusively rely on the
purported due execution and genuineness of
any such document and on the purported
genuineness of any signature thereon. If
the Trustee or the Custodian, as its agent,
finds any document constituting part
of the Mortgage File not to have been
executed or received, or to be unrelated
to the Mortgage Loans or to appear to be
defective on its face, then the Trustee
or the Custodian, as its agent, shall
promptly notify the Seller. In accordance
with the Mortgage Loan Purchase Agreement,
the Seller shall correct or cure any
such defect within ninety (90) days from
the date of notice from the Trustee or
the Custodian, as its agent, of the defect
and, if the Seller fails to correct
or cure the defect within such period, and
such defect materially and adversely
affects the interests of the
Certificateholders in the related Mortgage Loan,
the Trustee or the Custodian, as its agent,
shall enforce the Seller's
obligation pursuant to the Mortgage Loan
Purchase Agreement, to, within 90 days
from the Trustee's or the Custodian's
notification, provide a Substitute
Mortgage Loan (if within two years of the
Closing Date) or purchase such
Mortgage Loan at the Repurchase Price;
provided that, if such defect would cause
the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure or
repurchase must occur within 90 days
from the date such breach was discovered;
provided, however, that if such defect
relates solely to the inability of the
Seller to deliver the original Security
Instrument or intervening assignments
thereof, or a certified copy thereof,
because the originals of such documents or
a certified copy have not been
returned by the applicable jurisdiction,
then the Seller shall not be required
to purchase such Mortgage Loan if the
Seller delivers such original documents or
certified copy promptly upon receipt, but
in no event later than 360 days after
the Closing Date. The foregoing repurchase
obligation shall not apply in the
event that the Seller
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cannot deliver such original or copy of any
document submitted for recording to
the appropriate recording office in the
jurisdiction because such document has
not been returned by such office; provided
that the Seller shall instead deliver
a recording receipt of such recording
office or, if such receipt is not
available, a certificate of the Seller or a
Servicing Officer confirming that
such documents have been accepted for
recording, and delivery to the Trustee or
the Custodian, as its agent, shall be
effected by the Seller within thirty days
of its receipt of the original recorded
document.
(b) No later than 180 days after the Closing Date (or, with respect
to
any Substitute Mortgage Loan, within five
Business Days after the receipt by the
Trustee or the Custodian thereof), the
Trustee or the Custodian, as its agent,
will review, for the benefit of the
Certificateholders, the Mortgage Files
delivered to it and will execute and
deliver or cause to be executed and
delivered to the Depositor and the Trustee
a Final Certification substantially
in the form annexed as Exhibit Three to the
Custodial Agreement. In conducting
such review, the Trustee or the Custodian,
as its agent, will ascertain whether
an original of each document required to be
recorded has been returned from the
recording office with evidence of recording
thereon or a certified copy has been
obtained from the recording office. If the
Trustee or the Custodian, as its
agent, finds any document constituting part
of the Mortgage File has not been
received, or to be unrelated, determined on
the basis of the Mortgagor name,
original principal balance and loan number,
to the Mortgage Loans, or to appear
defective on its face, the Trustee or the
Custodian, as its agent, shall
promptly notify the Seller (provided,
however, that with respect to those
documents described in subsection (b)(iv),
(b)(v) and (b)(vii) of Section 2.01,
the Trustee's and the Custodian's
obligations shall extend only to the documents
actually delivered to the Trustee or
Custodian pursuant to such subsections). In
accordance with the Mortgage Loan Purchase
Agreement, the Seller shall correct
or cure any such defect or EMC shall
deliver to the Trustee an Opinion of
Counsel to the effect that such defect does
not materially or adversely affect
the interests of Certificateholders in such
Mortgage Loan within 90 days from
the date of notice from the Trustee of the
defect and if the Seller is unable to
cure such defect within such period, and if
such defect materially and adversely
affects the interests of the
Certificateholders in the related Mortgage Loan,
then the Trustee shall enforce the Seller's
obligation under the Mortgage Loan
Purchase Agreement to, within 90 days from
the Trustee's or Custodian's
notification, provide a Substitute Mortgage
Loan (if within two years of the
Closing Date) or purchase such Mortgage
Loan at the Repurchase Price; provided
that, if such defect would cause the
Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3)
of the Code, any such cure,
repurchase or substitution must occur
within 90 days from the date such breach
was discovered; provided, further, however,
that if such defect relates solely
to the inability of the Seller to deliver
the original Security Instrument or
intervening assignments thereof, or a
certified copy thereof, because the
originals of such documents or a certified
copy have not been returned by the
applicable jurisdiction, then the Seller
shall not be required to purchase such
Mortgage Loan if the Seller delivers such
original documents or certified copy
promptly upon receipt, but in no event
later than 360 days after the Closing
Date. The foregoing repurchase obligation
shall not apply in the event that the
Seller cannot deliver such original or copy
of any document submitted for
recording to the appropriate recording
office in the applicable jurisdiction
because such document has not been returned
by such office; provided that the
Seller shall instead deliver a recording
receipt of such recording office or, if
such receipt is not available, a
certificate confirming that such documents have
been
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accepted for recording, and delivery to the
Trustee or the Custodian, as its
agent, shall be effected by the Seller
within thirty days of its receipt of the
original recorded document.
(c) In the event that a Mortgage Loan is purchased by the Seller
in
accordance with Subsections 2.02(a) or (b)
above, the Seller shall remit to the
Paying Agent the applicable Repurchase
Price for deposit in the Distribution
Account and the Seller shall provide to the
Master Servicer, the Paying Agent
and the Trustee written notification
detailing the components of the Repurchase
Price. Upon deposit of the Repurchase Price
in the Distribution Account, the
Depositor shall notify the Trustee and the
Trustee or the Custodian, as its
agent (upon receipt of a Request for
Release in the form of Exhibit D attached
hereto with respect to such Mortgage Loan),
shall release to the Seller the
related Mortgage File and the Trustee shall
execute and deliver all instruments
of transfer or assignment, without
recourse, furnished to it by the Seller as
are necessary to vest in the Seller title
to and rights under the related
Mortgage Loan. Such purchase shall be
deemed to have occurred on the date on
which the Repurchase Price in available
funds is received by the Paying Agent.
The Trustee shall amend the Mortgage Loan
Schedule, which was previously
delivered to it by the Depositor in a form
agreed to between the Depositor and
the Trustee, to reflect such repurchase and
shall promptly notify the Rating
Agencies and the Master Servicer of such
amendment. The obligation of the Seller
to repurchase any Mortgage Loan as to which
such a defect in a constituent
document exists shall be the sole remedy
respecting such defect available to the
Certificateholders or to the Trustee on
their behalf.
Section 2.03. Assignment of Interest in the Mortgage Loan
Purchase
Agreement. (a) The Depositor hereby assigns
to the Trustee, on behalf of the
Certificateholders, all of its right, title
and interest in the Mortgage Loan
Purchase Agreement, including but not
limited to the Depositor's rights and
obligations pursuant to the Servicing
Agreements (noting that the Seller has
retained the right in the event of breach
of the representations, warranties and
covenants, if any, with respect to the
related Mortgage Loans of the related
Servicer under the related Servicing
Agreement to enforce the provisions thereof
and to seek all or any available remedies).
The obligations of the Seller to
substitute or repurchase, as applicable, a
Mortgage Loan shall be the Trustee's
and the Certificateholders' sole remedy for
any breach thereof. At the request
of the Trustee, the Depositor shall take
such actions as may be necessary to
enforce the above right, title and interest
on behalf of the Trustee and the
Certificateholders or shall execute such
further documents as the Trustee may
reasonably require in order to enable the
Trustee to carry out such enforcement.
(b) If the Depositor, the Securities Administrator or the
Trustee
discovers a breach of any of the
representations and warranties set forth in the
Mortgage Loan Purchase Agreement, which
breach materially and adversely affects
the value of the interests of
Certificateholders or the Trustee in the related
Mortgage Loan, the party discovering the
breach shall give prompt written notice
of the breach to the other parties. The
Seller, within 90 days of its discovery
or receipt of notice that such breach has
occurred (whichever occurs earlier),
shall cure the breach in all material
respects or, subject to the Mortgage Loan
Purchase Agreement or Section 2.04 of this
Agreement, as applicable, shall
purchase the Mortgage Loan or any property
acquired with respect thereto from
the Trustee; provided, however, that if
there is a breach of any representation
set forth in the Mortgage Loan Purchase
Agreement or Section 2.04 of this
Agreement, as applicable, and the Mortgage
Loan or the related property acquired
with respect
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thereto has been sold, then the Seller
shall pay, in lieu of the Repurchase
Price, any excess of the Repurchase Price
over the Net Liquidation Proceeds
received upon such sale. (If the Net
Liquidation Proceeds exceed the Repurchase
Price, any excess shall be paid to the
Seller, to the extent not required by law
to be paid to the related borrower.) Any
such purchase by the Seller shall be
made by providing an amount equal to the
Repurchase Price to the Paying Agent
for deposit in the Distribution Account and
written notification detailing the
components of such Repurchase Price to the
Trustee, the Paying Agent and the
Master Servicer. The Depositor shall notify
the Trustee and submit to the
Trustee or the Custodian, as its agent, a
Request for Release in the form of
Exhibit D attached hereto, and the Trustee
shall release, or the Trustee shall
cause the Custodian to release, to the
Seller, the related Mortgage File and the
Trustee shall execute and deliver all
instruments of transfer or assignment
furnished to it by the Seller, without
recourse, as are necessary to vest in the
Seller title to and rights under the
Mortgage Loan or any property acquired with
respect thereto. Such purchase shall be
deemed to have occurred on the date on
which the Repurchase Price in available
funds is received by the Securities
Administrator. The Trustee shall amend the
Mortgage Loan Schedule to reflect
such repurchase and shall promptly notify
the Master Servicer and the Rating
Agencies of such amendment. Enforcement of
the obligation of the Seller to
purchase (or substitute a Substitute
Mortgage Loan for) any Mortgage Loan or any
property acquired with respect thereto (or
pay the Repurchase Price as set forth
in the above proviso) as to which a breach
has occurred and is continuing shall
constitute the sole remedy respecting such
breach available to the
Certificateholders or the Trustee on their
behalf.
Section 2.04. Substitution of Mortgage Loans. Notwithstanding
anything
to the contrary in this Agreement, in lieu
of purchasing a Mortgage Loan
pursuant to the Mortgage Loan Purchase
Agreement or Sections 2.02 or 2.03 of
this Agreement, the Seller may, no later
than the date by which such purchase by
the Seller would otherwise be required,
tender to the Trustee a Substitute
Mortgage Loan accompanied by a certificate
of an authorized officer of the
Seller that such Substitute Mortgage Loan
conforms to the requirements set forth
in the definition of "Substitute Mortgage
Loan" in the Mortgage Loan Purchase
Agreement or this Agreement, as applicable;
provided, however, that substitution
pursuant to the Mortgage Loan Purchase
Agreement or Section 2.04 of this
Agreement, as applicable, in lieu of
purchase shall not be permitted after the
termination of the two-year period
beginning on the Startup Day; provided,
further, that if the breach of a Mortgage
Loan representation or warranty would
cause such Mortgage Loan to be other than a
"qualified mortgage" as defined in
Section 860G(a)(3) of the Code, then any
such substitution must occur within 90
days from the date the breach was
discovered. The Trustee or the Custodian, as
its agent, shall examine the Mortgage File
for any Substitute Mortgage Loan in
the manner set forth in Section 2.02(a) and
the Trustee or the Custodian, as its
agent, shall notify the Seller in writing,
within five Business Days after
receipt, whether or not the documents
relating to the Substitute Mortgage Loan
satisfy the requirements of the fourth
sentence of Subsection 2.02(a). Within
two Business Days after such notification,
the Seller shall provide to the
Paying Agent for deposit in the
Distribution Account the amount, if any, by
which the Outstanding Principal Balance as
of the next preceding Due Date of the
Mortgage Loan for which substitution is
being made, after giving effect to
Scheduled Principal due on such date,
exceeds the Outstanding Principal Balance
as of such date of the Substitute Mortgage
Loan, after giving effect to
Scheduled Principal due on such date, which
amount shall be treated for the
purposes of this Agreement as if it were
the payment by the Seller of the
Repurchase Price for the purchase of a
Mortgage Loan by the Seller. After such
notification to
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the Seller and, if any such excess exists,
upon receipt of such deposit, the
Trustee shall accept such Substitute
Mortgage Loan which shall thereafter be
deemed to be a Mortgage Loan hereunder. In
the event of such a substitution,
accrued interest on the Substitute Mortgage
Loan for the month in which the
substitution occurs and any Principal
Prepayments made thereon during such month
shall be the property of the Trust Fund and
accrued interest for such month on
the Mortgage Loan for which the
substitution is made and any Principal
Prepayments made thereon during such month
shall be the property of the Seller.
The Scheduled Principal on a Substitute
Mortgage Loan due on the Due Date in the
month of substitution shall be the property
of the Seller and the Scheduled
Principal on the Mortgage Loan for which
the substitution is made due on such
Due Date shall be the property of the Trust
Fund. Upon acceptance of the
Substitute Mortgage Loan (and delivery to
the Trustee or Custodian of a Request
for Release for such Mortgage Loan), the
Trustee (or the Custodian, as its
agent) shall release to the Seller the
Mortgage File related to any Mortgage
Loan released pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04
of this Agreement, as applicable, and the
Trustee shall execute and deliver all
instruments of transfer or assignment,
without recourse, in form as provided to
it as are necessary to vest in the Seller
title to and rights under any Mortgage
Loan released pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04
of this Agreement, as applicable. The
Seller shall deliver the documents related
to the Substitute Mortgage Loan in
accordance with the provisions of the
Mortgage Loan Purchase Agreement or
Subsections 2.01(b) and 2.02(b) of this
Agreement, as applicable, with the date of
acceptance of the Substitute Mortgage
Loan deemed to be the Closing Date for
purposes of the time periods set forth in
those Subsections. The representations and
warranties set forth in the Mortgage
Loan Purchase Agreement shall be deemed to
have been made by the Seller with
respect to each Substitute Mortgage Loan as
of the date of acceptance of such
Mortgage Loan by the Trustee. The
Securities Administrator shall amend the
Mortgage Loan Schedule to reflect such
substitution and shall provide a copy of
such amended Mortgage Loan Schedule to the
Master Servicer, the Trustee and the
Rating Agencies.
Section 2.05. Issuance of Certificates. The Trustee acknowledges
the
assignment to it of the Mortgage Loans and
the other assets comprising the Trust
Fund and, concurrently therewith, has
signed, and the Certificate Registrar has
countersigned and delivered to the
Depositor, in exchange therefor, Certificates
in such authorized denominations
representing such Fractional Undivided
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.
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 holders of the REMIC II
Interests. 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 holders of the REMIC II
Certificates.
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 II Regular Interests, and
the other assets of
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REMIC III for the benefit of the holders of
the REMIC III Certificates. The
Trustee acknowledges receipt of the REMIC
II Regular Interests (which are
uncertificated) and the other assets of
REMIC III and declares that it holds and
will hold the same in trust for the
exclusive use and benefit of the holders of
the REMIC III Certificates.
Section 2.06. Representations and Warranties Concerning the
Depositor.
The Depositor hereby represents and
warrants to the Trustee, the Master Servicer
and the Securities Administrator as
follows:
(i) the Depositor (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware
and (b) is qualified and in good standing as a foreign corporation
to
do business in each jurisdiction where such qualification is
necessary,
except where the failure so to qualify would not reasonably be
expected
to have a material adverse effect on the Depositor's business
as
presently conducted or on the Depositor's ability to enter into
this
Agreement and to consummate the transactions contemplated
hereby;
(ii) the Depositor has full corporate power to own its
property, to carry on its business as presently conducted and to
enter
into and perform its obligations under this Agreement;
(iii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate
action
on the part of the Depositor; and neither the execution and
delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will
conflict
with or result in a breach of, or constitute a default under, any
of
the provisions of any law, governmental rule, regulation,
judgment,
decree or order binding on the Depositor or its properties or
the
articles of incorporation or by-laws of the Depositor, except
those
conflicts, breaches or defaults which would not reasonably be
expected
to have a material adverse effect on the Depositor's ability to
enter
into this Agreement and to consummate the transactions
contemplated
hereby;
(iv) the execution, delivery and performance by the Depositor
of this Agreement and the consummation of the transactions
contemplated
hereby do not require the consent or approval of, the giving of
notice
to, the registration with, or the taking of any other action in
respect
of, any state, federal or other governmental authority or
agency,
except those consents, approvals, notices, registrations or
other
actions as have already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery
by
the other parties hereto, constitutes a valid and binding
obligation of
the Depositor enforceable against it in accordance with its
terms
(subject to applicable bankruptcy and insolvency laws and other
similar
laws affecting the enforcement of the rights of creditors
generally);
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Depositor, threatened against the
Depositor,
before or by any court, administrative
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agency, arbitrator or governmental body (i) with respect to any of
the
transactions contemplated by this Agreement or (ii) with respect to
any
other matter which in the judgment of the Depositor will be
determined
adversely to the Depositor and will, if determined adversely to
the
Depositor, materially and adversely affect the Depositor's ability
to
enter into this Agreement or perform its obligations under this
Agreement; and the Depositor is not in default with respect to
any
order of any court, administrative agency, arbitrator or
governmental
body so as to materially and adversely affect the transactions
contemplated by this Agreement; and
(vii) immediately prior to the transfer and assignment thereof
to the Trustee, each Mortgage Note and each Mortgage was not
subject to
an assignment or pledge, and the Depositor had good and
marketable
title to and was the sole owner thereof and had full right to
transfer
and sell the Mortgage Loans to the Trustee free and clear of
any
encumbrance, equity, lien, pledge, charge, claim or security
interest.
Section 2.07 Covenants of the Master Servicer and the EMC
Servicer.The
Master Servicer covenants to the Depositor,
the Securities Administrator and the
Trustee, and the EMC Servicer covenants to
the Master Servicer, as follows:
(i) it shall comply in the performance of its obligations
under this Agreement;
(ii) no written information, certificate of an officer,
statement furnished in writing or written report prepared by the
Master
Servicer or the EMC Servicer, as applicable, pursuant to this
Agreement
and delivered, in the case of the Master Servicer, to the
Securities
Administrator, the Depositor, any affiliate of the Depositor or
the
Trustee, or, in the case of the EMC Servicer, to the Master
Servicer,
will contain any untrue statement of a material fact or omit to
state a
material fact necessary to make the information, certificate,
statement
or report not misleading; and
(iii) it shall (in the case of the Master Servicer, only in
its capacity as successor servicer pursuant to a Servicing
Agreement)
accurately and fully provide information regarding payment
performance
of the Mortgagors to the nationally recognized credit repositories,
to
the extent such reporting remains customary and prudent in the
servicing of mortgage loans similar to the Mortgage Loans.
Nothing in this Section shall derogate from the obligation of
the
Master Servicer or the EMC Servicer to
observe any applicable law prohibiting
disclosure of information regarding the
Mortgagors, and the failure of the
Master Servicer or the EMC Servicer to
provide access as provided in this
Section as a result of such obligation
shall not constitute a breach of this
Section.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. Master Servicer. The Master Servicer shall, from
and
after the Closing Date, supervise, monitor
and oversee the obligation of the
Servicers to service and administer their
respective Mortgage Loans in
accordance with the terms of the related
Servicing Agreement and shall have full
power and authority to do any and all
things which it may deem necessary or
desirable in connection with such master
servicing and administration. In
performing its obligations hereunder, the
Master Servicer shall act in a manner
consistent with Accepted Master Servicing
Practices. Furthermore, the Master
Servicer shall oversee and consult with
each Servicer as necessary from
time-to-time to carry out the Master
Servicer's obligations hereunder, shall
receive, review and evaluate all reports,
information and other data provided to
the Master Servicer by each Servicer and
shall cause each Servicer to perform
and observe the covenants, obligations and
conditions to be performed or
observed by such Servicer under the related
Servicing Agreement. The Master
Servicer shall independently and separately
monitor each Servicer's servicing
activities with respect to each related
Mortgage Loan, reconcile the results of
such monitoring with such information
provided in the previous sentence on a
monthly basis and coordinate corrective
adjustments to the related Servicer's
and Master Servicer's records, and based on
such reconciled and corrected
information, the Master Servicer shall
provide such information to the
Securities Administrator as shall be
necessary in order for it to prepare the
statements specified in Section 6.04, and
prepare any other information and
statements required to be forwarded by the
Master Servicer hereunder. The Master
Servicer shall reconcile the results of its
Mortgage Loan monitoring with the
actual remittances of the related Servicer
to the Distribution Account pursuant
to the related Servicing Agreement.
The Trustee shall furnish each Servicer and the Master Servicer
with
any powers of attorney, in substantially
the form attached hereto as Exhibit K,
and other documents in form as provided to
it necessary or appropriate to enable
such Servicer and the Master Servicer to
service and administer the related
Mortgage Loans and REO Property.
The Trustee shall provide access to the records and documentation
in
possession of the Trustee regarding the
related Mortgage Loans and REO Property
and the servicing thereof to the
Certificateholders, the FDIC, and the
supervisory agents and examiners of the
FDIC, such access being afforded only
upon reasonable prior written request and
during normal business hours at the
office of the Trustee; provided, however,
that, unless otherwise required by
law, the Trustee shall not be required to
provide access to such records and
documentation if the provision thereof
would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow
representatives of the above entities
to photocopy any of the records and
documentation and shall provide equipment
for that purpose at a charge that covers
the Trustee's actual costs.
The Trustee shall execute and deliver to the related Servicer and
the
Master Servicer any court pleadings,
requests for trustee's sale or other
documents necessary or desirable to (i) the
foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any
legal action brought to obtain
judgment against any Mortgagor on the
Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against
the Mortgagor; or (iv) enforce any
other rights or remedies provided by the
Mortgage Note or Security Instrument or
otherwise available at law or equity.
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Section 3.02. REMIC-Related Covenants. For as long as each REMIC
shall
exist, the Trustee and the Securities
Administrator shall act in accordance
herewith to assure continuing treatment of
such REMIC as a REMIC, and the
Trustee and the Securities Administrator
shall comply with any directions of the
Depositor, the Servicers or the Master
Servicer to assure such continuing
treatment. In particular, the Trustee shall
not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or
of any investment of deposits in an
Account unless such sale is as a result of
a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee
has received a REMIC Opinion, prepared
at the expense of the Trust Fund; and (b)
other than with respect to a
substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04 of
this Agreement, as applicable, accept any
contribution to any REMIC after the
Startup Day without receipt of a REMIC
Opinion. In addition, the Trustee shall
comply with all of the requirements of
Treasury Regulation ss. 1.860F-2(a)(2),
including, without limitation, the
requirement that each REMIC account for items
of income and ownership of assets in a
manner that respects the separate
existence of each REMIC.
Section 3.03. Monitoring of Servicers. (a) The Master Servicer
shall be
responsible for reporting to the Trustee
and the Depositor the compliance by the
Servicers with their respective duties
under the related Servicing Agreement. In
the review of each Servicer's activities,
the Master Servicer may rely upon an
officer's certificate of such Servicer (or
similar document signed by an officer
of the Servicer) with regard to such
Servicer's compliance with the terms of the
related Servicing Agreement. In the event
that the Master Servicer, in its
judgment, determines that such Servicer
should be terminated in accordance with
the related Servicing Agreement, or that a
notice should be sent pursuant to the
related Servicing Agreement with respect to
the occurrence of an event that,
unless cured, would constitute grounds for
such termination, the Master Servicer
shall notify the Depositor and the Trustee
thereof and the Master Servicer shall
issue such notice or take such other action
as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the
obligations of each Servicer under the
related Servicing Agreement, and shall, in
the event that a Servicer fails to
perform its obligations in accordance with
the related Servicing Agreement,
subject to the preceding paragraph,
terminate the rights and obligations of such
Servicer thereunder and act as servicer of
the related Mortgage Loans or cause
the Trustee to enter into a new Servicing
Agreement with a successor Servicer
selected by the Master Servicer; provided,
however, it is understood and
acknowledged by the parties hereto that
there will be a period of transition
(not to exceed 90 days) before the actual
servicing functions can be fully
transferred to such successor Servicer.
Such enforcement, including, without
limitation, the legal prosecution of
claims, termination of the related
Servicing Agreement 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, provided
that the Master Servicer shall not be
required to prosecute or defend any legal
action except to the extent that the
Master Servicer shall have received
reasonable indemnity for its costs and
expenses in pursuing such action.
(c) To the extent that the costs and expenses of the Master
Servicer
related to any termination of a Servicer,
appointment of a successor Servicer or
the transfer and assumption of servicing by
the Master Servicer with respect to
the related Servicing Agreement
(including,
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without limitation, (i) all legal costs and
expenses and all due diligence costs
and expenses associated with an evaluation
of the potential termination of a
Servicer as a result of an event of default
by such Servicer and (ii) all costs
and expenses associated with the complete
transfer of servicing, including all
servicing files and all servicing data and
the completion, correction or
manipulation of such servicing data as may
be required by the successor servicer
to correct any errors or insufficiencies in
the servicing data or otherwise to
enable the successor servicer to service
the Mortgage Loans in accordance with
the related Servicing Agreement) are not
fully and timely reimbursed by the
terminated Servicer, the Master Servicer
shall be entitled to reimbursement of
such costs and expenses from the
Distribution Account.
(d) The Master Servicer shall require each Servicer to comply with
the
remittance requirements and other
obligations set forth in the related Servicing
Agreement, including any related Assignment
Agreement. The Master Servicer shall
enforce the obligation of each Servicer
pursuant to the related Servicing
Agreement to provide it with the annual
officer's certificate of compliance and
annual independent accountants' servicing
reports, as well as back-up
certifications to each Master Servicer
Certification pursuant to Section 3.18.
(e) If the Master Servicer acts as Servicer, it will not assume
liability for the representations and
warranties of the Servicers, if any, that
it replaces.
Section 3.04. Fidelity Bond. The Master Servicer, at its expense,
shall
maintain in effect a blanket fidelity bond
and an errors and omissions insurance
policy, affording coverage with respect to
all directors, officers, employees
and other Persons acting on such Master
Servicer's behalf, and covering errors
and omissions in the performance of the
Master Servicer's obligations hereunder.
The amount of coverage to be maintained by
the Master Servicer with respect to
the blanket fidelity bond policy shall be
$50,000,000 per occurrence, and, with
respect to the errors and omissions
insurance policy, shall be $20,000,000 per
occurrence.
Section 3.05. Power to Act; Procedures. The Master Servicer
shall
master service the Mortgage Loans and shall
have full power and authority,
subject to the REMIC Provisions and the
provisions of Article X hereof, to do
any and all things that it may deem
necessary or desirable in connection with
the master servicing and administration of
the Mortgage Loans, including but not
limited to the power and authority (i) to
execute and deliver, on behalf of the
Certificateholders and the Trustee,
customary consents or waivers and other
instruments and documents, (ii) to consent
to transfers of any Mortgaged
Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the
ownership of the Mortgaged Property
securing any Mortgage Loan, in each case,
in accordance with the provisions of
this Agreement and the related Servicing
Agreement, as applicable; provided,
however, that the Master Servicer shall not
(and, consistent with its
responsibilities under Section 3.03, shall
not permit a Servicer to) knowingly
or intentionally take any action, or fail
to take (or fail to cause to be taken)
any action reasonably within its control
and the scope of duties more
specifically set forth herein, that, under
the REMIC Provisions, if taken or not
taken, as the case may be, would cause any
REMIC hereunder to fail to qualify as
a REMIC or result in the imposition of a
tax upon the Trust Fund (including but
not limited to the tax on prohibited
transactions as defined in Section
860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the
Master Servicer has received an
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Opinion of Counsel (but not at the expense
of the Master Servicer) to the effect
that the contemplated action will not cause
any REMIC hereunder to fail to
qualify as a REMIC or result in the
imposition of a tax upon any REMIC
hereunder. The Trustee shall furnish the
Master Servicer, upon written request
from a Servicing Officer, with any powers
of attorney empowering the Master
Servicer or the related Servicer to execute
and deliver instruments of
satisfaction or cancellation, or of partial
or full release or discharge, and to
foreclose upon or otherwise liquidate
Mortgaged Property, and to appear in,
prosecute or defend any court action
relating to the Mortgage Loans or the
Mortgaged Property, in accordance with the
related Servicing Agreement and this
Agreement, and the Trustee shall execute
and deliver such other documents as the
Master Servicer may request, to enable the
Master Servicer to master service and
administer the Mortgage Loans and carry out
its duties hereunder, in each case
in accordance with Accepted Master
Servicing Practices (and the Trustee shall
have no liability for misuse of any such
powers of attorney by the Master
Servicer or a Servicer). If the Master
Servicer or the Trustee has been advised
that it is likely that the laws of the
state in which action is to be taken
prohibit such action if taken in the name
of the Trustee or that the Trustee
would be adversely affected under the
"doing business" or tax laws of such state
if such action is taken in its name, then
the Master Servicer shall join with
the Trustee in the appointment of a
co-trustee pursuant to Section 9.11 hereof.
In the performance of its duties hereunder,
the Master Servicer shall be an
independent contractor and shall not,
except in those instances where it is
taking action in the name of the Trustee,
be deemed to be the agent of the
Trustee.
The Trustee shall execute and deliver to the related Servicer any
court
pleadings, requests for trustee's sale or
other documents necessary or desirable
or relating to (i) the foreclosure or
trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to
obtain judgment against any Mortgagor
on the related Mortgage Note or related
Mortgage; (iii) obtaining a deficiency
judgment against the related Mortgagor; or
(iv) enforcing any other rights or
remedies provided by a Mortgage Note or
related Mortgage or otherwise available
at law or equity.
Section 3.06. Due-on-Sale Clauses; Assumption Agreements. To the
extent
provided in the related Servicing
Agreement, to the extent Mortgage Loans
contain enforceable due-on-sale clauses,
the Master Servicer shall cause the
related Servicer to enforce such clauses in
accordance with the related
Servicing Agreement. If applicable law
prohibits the enforcement of a
due-on-sale clause or such clause is
otherwise not enforced in accordance with
the related Servicing Agreement, and, as a
consequence, a Mortgage Loan is
assumed, the original Mortgagor may be
released from liability in accordance
with the related Servicing Agreement.
Section 3.07. Release of Mortgage Files. (a) Upon becoming aware of
the
payment in full of any Mortgage Loan, or
the receipt by the related Servicer of
a notification that payment in full has
been escrowed in a manner customary for
such purposes for payment to
Certificateholders on the next Distribution Date,
such Servicer will (and if such Servicer
does not, then the Master Servicer
may), if required under the related
Servicing Agreement, promptly furnish to the
Custodian, on behalf of the Trustee, two
copies of a certification substantially
in the form of Exhibit D hereto signed by a
Servicing Officer or in a mutually
agreeable electronic format which will, in
lieu of a signature on its face,
originate from a Servicing Officer (which
certification shall include a
statement to the effect that all amounts
received in connection with such
payment that are required to be deposited
in the related Protected Account
maintained by
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such Servicer pursuant to Section 4.01 or
by such Servicer pursuant to the
related Servicing Agreement have been or
will be so deposited) and shall request
that the Custodian, on behalf of the
Trustee, deliver to such Servicer the
related Mortgage File. Upon receipt of such
certification and request, the
Custodian, on behalf of the Trustee, shall
promptly release the related Mortgage
File to the related Servicer, and the
Trustee and Custodian shall have no
further responsibility with regard to such
Mortgage File. Upon any such payment
in full, the related Servicer is authorized
to give, as agent for the Trustee,
as the mortgagee under the Mortgage that
secured the Mortgage Loan, an
instrument of satisfaction (or assignment
of mortgage without recourse)
regarding the Mortgaged Property subject to
the Mortgage, which instrument of
satisfaction or assignment, as the case may
be, shall be delivered to the Person
or Persons entitled thereto against receipt
therefor of such payment, it being
understood and agreed that no expenses
incurred in connection with such
instrument of satisfaction or assignment,
as the case may be, shall be
chargeable to the related Protected
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in
accordance with the related Servicing
Agreement, the Trustee shall execute such
documents as shall be prepared and
furnished to the Trustee by the related
Servicer or the Master Servicer (in form
reasonably acceptable to the Trustee) and
as are necessary to the prosecution of
any such proceedings. The Custodian, on
behalf of the Trustee, shall, upon the
request of the related Servicer or the
Master Servicer, and delivery to the
Custodian, on behalf of the Trustee, of two
copies of a Request for Release
signed by a Servicing Officer substantially
in the form of Exhibit D (or in a
mutually agreeable electronic format which
will, in lieu of a signature on its
face, originate from a Servicing Officer),
release the related Mortgage File
held in its possession or control to such
Servicer or the Master Servicer, as
applicable. Such trust receipt shall
obligate the related Servicer or the Master
Servicer to return the Mortgage File to the
Custodian on behalf of the Trustee
when the need therefor by such Servicer or
the Master Servicer no longer exists,
unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar
to that hereinabove specified, the
Mortgage File shall be released by the
Custodian, on behalf of the Trustee, to
the related Servicer or the Master
Servicer.
(c) The Master Servicer hereby covenants that it shall not alter
the
codes referenced in Section 4(c) of the
Mortgage Loan Purchase Agreement, 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.
Section 3.08. Documents, Records and Funds in Possession of
Master
Servicer To Be Held for Trustee.
(a) The Master Servicer shall transmit and the Servicers (to the
extent
required by the related Servicing
Agreement) shall transmit to the Trustee or
Custodian such documents and instruments
coming into the possession of the
Master Servicer or the Servicers from time
to time as are required by the terms
hereof, or in the case of the Servicers,
the related Servicing Agreement, to be
delivered to the Trustee or Custodian. Any
funds received by the Master Servicer
or by the related Servicer in respect of
any Mortgage Loan or which otherwise
are collected by the Master Servicer or by
such Servicer as Liquidation Proceeds
or Insurance Proceeds in respect of any
Mortgage Loan shall be held for the
benefit of the Trustee and the
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Certificateholders subject to the Master
Servicer's right to retain the Master
Servicing Compensation and other amounts
provided in this Agreement, and to the
right of such Servicer to retain its
Servicing Fee and other amounts as provided
in the related Servicing Agreement. The
Master Servicer shall, and (to the
extent provided in the related Servicing
Agreement) shall cause the Servicers
to, provide access to information and
documentation regarding the Mortgage Loans
to the Trustee, the Securities
Administrator and their respective agents and
accountants at any time upon reasonable
request and during normal business
hours, and to Certificateholders that are
savings and loan associations, banks
or insurance companies, the Office of
Thrift Supervision, the FDIC and the
supervisory agents and examiners of such
Office and Corporation or examiners of
any other federal or state banking or
insurance regulatory authority if so
required by applicable regulations of the
Office of Thrift Supervision or other
regulatory authority, such access to be
afforded without charge but only upon
reasonable request in writing and during
normal business hours at the offices of
the Master Servicer designated by it. In
fulfilling such a request the Master
Servicer shall not be responsible for
determining the sufficiency of such
information.
(b) All Mortgage Files and funds collected or held by, or under
the
control of, the Master Servicer in respect
of any Mortgage Loans, whether from
the collection of principal and interest
payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the
Master Servicer for and on behalf of
the Trustee and the Certificateholders and
shall be and remain the sole and
exclusive property of the Trustee;
provided, however, that the Master Servicer
and the Servicers shall be entitled to
setoff against, and deduct from, any such
funds any amounts that are properly due and
payable to the Master Servicer or
such Servicer under this Agreement or the
related Servicing Agreement.
Section 3.09. Standard Hazard Insurance and Flood Insurance
Policies.
(a) For each Mortgage Loan, the Master Servicer shall enforce
any
obligation of the Servicer under the
related Servicing Agreement to maintain or
cause to be maintained standard fire and
casualty insurance and, where
applicable, flood insurance, all in
accordance with the provisions of the
related Servicing Agreement. It is
understood and agreed that such insurance
shall be with insurers meeting the
eligibility requirements set forth in the
related Servicing Agreement and that no
earthquake or other additional insurance
is to be required of any Mortgagor or to be
maintained on property acquired in
respect of a defaulted Mortgage Loan, other
than pursuant to such applicable
laws and regulations as shall at any time
be in force and as shall require such
additional insurance.
(b) Pursuant to Section 4.01, any amounts collected by a Servicer
or
the Master Servicer under any insurance
policies (other than amounts to be
applied to the restoration or repair of the
property subject to the related
Mortgage or released to the Mortgagor in
accordance with the related Servicing
Agreement) shall be deposited into the
Distribution Account, subject to
withdrawal pursuant to Section 4.03. Any
cost incurred by the Master Servicer or
the related Servicer in maintaining any
such insurance (if the Mortgagor
defaults in its obligation to do so) shall
be added to the amount owing under
the Mortgage Loan where the terms of the
Mortgage Loan so permit; provided,
however, that the addition of any such cost
shall not be taken into account for
purposes of calculating the distributions
to be made to Certificateholders and
shall be recoverable by the Master Servicer
or such Servicer pursuant to
Sections 4.01 and 4.03.
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Section 3.10. Presentment of Claims and Collection of Proceeds.
The
Master Servicer shall (to the extent
provided in the Servicing Agreements) cause
each Servicer to prepare and present on
behalf of the Trustee and the
Certificateholders all claims under the
Insurance Policies and take such actions
(including the negotiation, settlement,
compromise or enforcement of the
insured's claim) as shall be necessary to
realize recovery under such policies.
Any proceeds disbursed to the Master
Servicer (or disbursed to a Servicer and
remitted to the Master Servicer) in respect
of such policies, bonds or contracts
shall be promptly deposited in the
Distribution Account upon receipt, except
that any amounts realized that are to be
applied to the repair or restoration of
the related Mortgaged Property as a
condition precedent to the presentation of
claims on the related Mortgage Loan to the
insurer under any applicable
Insurance Policy need not be so deposited
(or remitted).
Section 3.11.
Maintenance of the Primary Mortgage Insurance Policies.
(a) The Master Servicer shall not take, or permit a Servicer (to
the
extent such action is prohibited under the
related Servicing Agreement) to take,
any action that would result in noncoverage
under any applicable Primary
Mortgage Insurance Policy of any loss
which, but for the actions of such Master
Servicer or Servicer, would have been
covered thereunder. The Master Servicer
shall use its best reasonable efforts to
cause each Servicer (to the extent
required under the related Servicing
Agreement) to keep in force and effect (to
the extent that the Mortgage Loan requires
the Mortgagor to maintain such
insurance) primary mortgage insurance
applicable to each Mortgage Loan in
accordance with the provisions of this
Agreement and the related Servicing
Agreement, as applicable. The Master
Servicer shall not, and shall not permit a
Servicer (to the extent required under the
related Servicing Agreement) to,
cancel or refuse to renew any such Primary
Mortgage Insurance Policy that is in
effect at the date of the initial issuance
of the Mortgage Note and is required
to be kept in force hereunder except in
accordance with the provisions of this
Agreement and the related Servicing
Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each
Servicer
(to the extent required under the related
Servicing Agreement) to present, on
behalf of the Trustee and the
Certificateholders, claims to the insurer under
any Primary Mortgage Insurance Policies
and, in this regard, to take such
reasonable action as shall be necessary to
permit recovery under any Primary
Mortgage Insurance Policies respecting
defaulted Mortgage Loans. Any amounts
collected by the Master Servicer or the
related Servicer under any Primary
Mortgage Insurance Policies shall be
deposited in the Distribution Account,
subject to withdrawal pursuant to Section
4.03.
Section 3.12. Trustee to Retain Possession of Certain Insurance
Policies and Documents.
The Trustee (or the Custodian, as directed by the Trustee),
shall
retain possession and custody of the
originals (to the extent available) of any
Primary Mortgage Insurance Policies, or
certificate of insurance, if applicable,
and any certificates of renewal as to the
foregoing as may be issued from time
to time as contemplated by this Agreement.
Until all amounts distributable in
respect of the Certificates have been
distributed in full and the Master
Servicer otherwise has fulfilled its
obligations under this Agreement, the
Trustee (or its Custodian, if any, as
directed by the Trustee) shall also retain
possession and custody of each Mortgage
File in accordance with
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and subject to the terms and conditions of
this Agreement. The Master Servicer
shall promptly deliver or cause to be
delivered to the Trustee (or the
Custodian, as directed by the Trustee),
upon the execution or receipt thereof
the originals of any Primary Mortgage
Insurance Policies, any certificates of
renewal, and such other documents or
instruments that constitute portions of the
Mortgage File that come into the possession
of the Master Servicer from time to
time.
Section 3.13. Realization Upon Defaulted Mortgage Loans. The
Master
Servicer shall cause each Servicer (to the
extent required under the related
Servicing Agreement) to foreclose upon,
repossess or otherwise comparably
convert the ownership of Mortgaged
Properties securing such of the Mortgage
Loans as come into and continue in default
and as to which no satisfactory
arrangements can be made for collection of
delinquent payments, all in
accordance with the related Servicing
Agreement.
Section 3.14. Compensation for the Servicers and the Master
Servicer.
The Master Servicer will be entitled to the sum of (i) the
Master
Servicing Fee Rate multiplied by the
Scheduled Principal Balance of each related
Mortgage Loan as of the Due Date in the
month preceding the month in which the
related Distribution Date occurs (the
"Master Servicing Fee") and (ii) all
income and gain realized from any
investment of funds in the Distribution
Account with respect to the related
Distribution Date (clauses (i) and (ii)
collectively, the "Master Servicing
Compensation"). Servicing compensation in
the form of assumption fees, if any, late
payment charges, as collected, if any,
or otherwise (but not including any
prepayment premium or penalty) shall be
retained by the related Servicer and shall
not be deposited in the related
Protected Account. The Master Servicer will
be entitled to retain, as additional
compensation, any interest remitted by the
related Servicer in connection with a
Principal Prepayment in full or otherwise
in excess of amounts required to be
remitted to the Distribution Account. The
Master Servicer shall be required to
pay all expenses incurred by it in
connection with its activities hereunder and
shall not be entitled to reimbursement
therefor except as provided in this
Agreement.
Section 3.15. REO Property.
(a) In the event the Trust Fund acquires ownership of any REO
Property
in respect of any related Mortgage Loan,
the deed or certificate of sale shall
be issued to the Trustee, or to its
nominee, on behalf of the related
Certificateholders. The Master Servicer
shall, to the extent provided in the
Servicing Agreements, cause the related
Servicer to sell any REO Property as
expeditiously as possible and in accordance
with the provisions of this
Agreement and the related Servicing
Agreement, as applicable. Pursuant to its
efforts to sell such REO Property, the
Master Servicer shall cause the related
Servicer to protect and conserve such REO
Property in the manner and to the
extent required by the related Servicing
Agreement, in accordance with the REMIC
Provisions and in a manner that does not
result in a tax on "net income from
foreclosure property" or cause such REO
Property to fail to qualify as
"foreclosure property" within the meaning
of Section 860G(a)(8) of the Code.
(b) The Master Servicer shall, to the extent required by the
Servicing
Agreements, cause the related Servicer to
deposit all funds collected and
received in connection with the operation
of any REO Property in the related
Protected Account.
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(c) The Master Servicer and the related Servicer, upon the
final
disposition of any REO Property, shall be
entitled to reimbursement for any
related unreimbursed Monthly Advances and
other unreimbursed advances as well as
any unpaid Master Servicing Fee or
Servicing Fees from Liquidation Proceeds
received in connection with the final
disposition of such REO Property;
provided, that any such unreimbursed
Monthly Advances as well as any unpaid
Master Servicing Fee or Servicing Fees may
be reimbursed or paid, as the case
may be, prior to final disposition, out of
any net rental income or other net
amounts derived from such REO Property.
(d) To the extent provided in the Servicing Agreements, the
Liquidation
Proceeds from the final disposition of the
REO Property, net of any payment to
the Master Servicer and the related
Servicer as provided above, shall be
deposited in the related Protected Account
on or prior to the Determination Date
in the month following receipt thereof and
be remitted by wire transfer in
immediately available funds to the Master
Servicer for deposit into the
Distribution Account on the next succeeding
Servicer Remittance Date.
Section 3.16. Annual
Officer's Certificate as to Compliance.
(a) The Master Servicer shall deliver to the Trustee and the
Rating
Agencies on or before March 1 of each year,
commencing on March 1, 2006, an
Officer's Certificate, certifying that with
respect to the year ending December
31 of the prior year: (i) such Servicing
Officer has reviewed the activities of
such Master Servicer during the preceding
calendar year or portion thereof and
its performance under this Agreement, (ii)
to the best of such Servicing
Officer's knowledge, based on such review,
such Master Servicer has performed
and fulfilled its duties, responsibilities
and obligations under this Agreement
in all material respects throughout such
year, or, if there has been a default
in the fulfillment of any such duties,
responsibilities or obligations,
specifying each such default known to such
Servicing Officer and the nature and
status thereof, and (iii) nothing has come
to the attention of such Servicing
Officer to lead such Servicing Officer to
believe that a Servicer has failed to
perform any of its duties, responsibilities
and obligations under the related
Servicing Agreement in all material
respects throughout such year, or, if there
has been a material default in the
performance or fulfillment of any such
duties, responsibilities or obligations,
specifying each such default known to
such Servicing Officer and the nature and
status thereof.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the
Master Servicer or by the Trustee at the
Master Servicer's expense if the Master
Servicer failed to provide such copies
(unless (i) the Master Servicer shall have
failed to provide the Trustee with
such statement or (ii) the Trustee shall be
unaware of the Master Servicer's
failure to provide such statement).
Section 3.17. Annual Independent Accountant's Servicing Report. If
the
Master Servicer has, during the course of
any fiscal year, directly serviced any
of the Mortgage Loans, then the Master
Servicer at its expense shall cause a
nationally recognized firm of independent
certified public accountants to
furnish a statement to the Trustee, the
Rating Agencies and the Depositor on or
before March 1 of each year, commencing on
March 1, 2006, to the effect that,
with respect to the most recently ended
fiscal year, such firm has examined
certain records and documents relating to
the Master Servicer's performance of
its servicing obligations under this
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Agreement and pooling and servicing and
trust agreements in material respects
similar to this Agreement and to each other
and that, on the basis of such
examination conducted substantially in
compliance with the Audit Program for
Mortgages Serviced for Freddie Mac or the
Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the
opinion that the Master Servicer's
activities have been conducted in
compliance with this Agreement, or that such
examination has disclosed no material items
of noncompliance except for (i) such
exceptions as such firm believes to be
immaterial, (ii) such other exceptions as
are set forth in such statement and (iii)
such exceptions that the Uniform
Single Attestation Program for Mortgage
Bankers or the Audit Program for
Mortgages Serviced by Freddie Mac requires
it to report. Copies of such
statements shall be provided by the Master
Servicer to any Certificateholder
upon request, or by the Trustee at the
expense of the Master Servicer if the
Master Servicer shall fail to provide such
copies. If such report discloses
exceptions that are material, the Master
Servicer shall advise the Trustee
whether such exceptions have been or are
susceptible of cure, and will take
prompt action to do so.
Section 3.18. Reports Filed with Securities and Exchange
Commission.
(a) Within 15 days after each Distribution
Date, the Securities Administrator
shall, in accordance with industry
standards, file with the Commission via the
Electronic Data Gathering and Retrieval
System ("EDGAR"), a Form 8-K (or other
comparable form containing the same or
comparable information, or other
information mutually agreed upon) with a
copy of the statement to the
Certificateholders for such Distribution
Date as an exhibit thereto. Prior to
January 30 in any year, the Securities
Administrator shall, in accordance with
industry standards and only if instructed
by the Depositor, file a Form 15
Suspension Notice with respect to the Trust
Fund, if applicable. Prior to (i)
March 15, 2006 and (ii) unless and until a
Form 15 Suspension Notice shall have
been filed, prior to March 15 of each year
thereafter, the Master Servicer shall
provide the Securities Administrator with a
Master Servicer Certification,
together with a copy of the annual
independent accountant's servicing report and
annual statement of compliance of each
Servicer, in each case, required to be
delivered pursuant to the related Servicing
Agreement, and, if applicable, the
annual statement of compliance and the
annual independent accountant's servicing
report to be delivered by the Master
Servicer pursuant to Sections 3.16 and
3.17. Prior to (i) March 31, 2006, or such
earlier filing date as may be
required by the Commission, and (ii) unless
and until a Form 15 Suspension
Notice shall have been filed, March 31 of
each year thereafter, or such earlier
filing date as may be required by the
Commission, the Securities Administrator
shall prepare and file a Form 10-K, in
substance conforming to industry
standards, with respect to the Trust. Such
Form 10-K shall include the Master
Servicer Certification and other
documentation provided by the Master Servicer
pursuant to the second preceding sentence.
The Depositor hereby grants to the
Securities Administrator a limited power of
attorney to execute and file each
such document on behalf of the Depositor.
Such power of attorney shall continue
until either the earlier of (i) receipt by
the Securities Administrator from the
Depositor of written termination of such
power of attorney and (ii) the
termination of the Trust Fund. The
Depositor agrees to promptly furnish to the
Securities Administrator, from time to time
upon request, such further
information, reports and financial
statements within its control related to this
Agreement and the Mortgage Loans as the
Securities Administrator reasonably
deems appropriate to prepare and file all
necessary reports with the Commission.
The Securities Administrator shall have no
responsibility to file any items
other than those specified in this Section
3.18; provided, however, the
Securities Administrator will cooperate
with the Depositor
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in connection with any additional filings
with respect to the Trust Fund as the
Depositor deems necessary under the
Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(b) The Master Servicer shall indemnify and hold harmless the
Depositor, the Trustee and their respective
officers, directors and Affiliates
from and against any losses, damages,
penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs,
judgments and other costs and
expenses arising out of or based upon a
breach of the Master Servicer's
obligations under this Section 3.18 or the
Master Servicer's negligence, bad
faith or willful misconduct in connection
therewith. Fees and expenses incurred
by the Master Servicer in connection with
this Section 3.18 shall not be
reimbursable from the Trust Fund.
Section 3.19. EMC. On the Closing Date, EMC will receive from
the
Depositor a payment of $5,000.
Section 3.20. UCC. The Depositor shall inform the Trustee in
writing of
any Uniform Commercial Code financing
statements that were filed on the Closing
Date in connection with the Trust with
stamped recorded copies of such financing
statements to be delivered to the Trustee
promptly upon receipt by the
Depositor. The Trustee agrees to monitor
and notify the Depositor if any
continuation statements for such Uniform
Commercial Code financing statements
need to be filed. If directed by the
Depositor in writing, the Trustee will file
any such continuation statements solely at
the expense of the Depositor. The
Depositor shall file any financing
statements or amendments thereto required by
any change in the Uniform Commercial
Code.
Section 3.21. Optional Purchase of Defaulted Mortgage Loans.
With
respect to any Mortgage Loan which as of
the first day of a Fiscal Quarter is
delinquent in payment by 90 days or more or
is an REO Property, EMC shall have
the right to purchase such Mortgage Loan
from the Trust at a price equal to the
Repurchase Price; provided, however, (i)
that such Mortgage Loan is still 90
days or more delinquent or is an REO
Property as of the date of such purchase
and (ii) this purchase option, if not
theretofore exercised, shall terminate on
the date prior to the last day of the
related Fiscal Quarter. This purchase
option, if not exercised, shall not be
thereafter reinstated unless the
delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or
more delinquent or becomes an REO Property,
in which case the option shall again
become exercisable as of the first day of
the related Fiscal Quarter.
In addition, EMC shall, at its option, purchase any Mortgage Loan
from
the Trust if the first Due Date for such
Mortgage Loan is subsequent to the
Cut-off Date, and the initial Monthly
Payment with respect to such Mortgage Loan
is not made within thirty (30) days of such
Due Date. Such purchase shall be
made at a price equal to the Repurchase
Price.
If at any time EMC remits to the Paying Agent a payment for deposit
in
the Distribution Account covering the
amount of the Repurchase Price for such a
Mortgage Loan, and EMC provides to the
Trustee and the Master Servicer a
certification signed by a Servicing Officer
stating that the amount of such
payment has been deposited in the
Distribution Account, then the Trustee shall
execute the assignment of such Mortgage
Loan at the request of EMC, without
recourse, to EMC which shall succeed to all
the Trustee's right, title and
interest in and to such Mortgage Loan, and
all security and documents relative
thereto. Such assignment shall be an
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assignment outright and not for security.
EMC will thereupon own such Mortgage
Loan, and all such security and documents,
free of any further obligation to the
Trustee or the Certificateholders with
respect thereto.
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ARTICLE IV
Accounts
Section 4.01. Protected Accounts. (a) The Master Servicer shall
enforce
the obligation of each respective Servicer
to establish and maintain a Protected
Account in accordance with the related
Servicing Agreement, with records to be
kept with respect thereto on a Mortgage
Loan by Mortgage Loan basis, into which
Protected Account shall be deposited,
within 48 hours (or as of such other time
specified in the related Servicing
Agreement) of receipt thereof, all
collections of principal and interest on
any Mortgage Loan and with respect to
any REO Property received by the related
Servicer, including Principal
Prepayments, Insurance Proceeds,
Liquidation Proceeds, and advances made from
such Servicer's own funds (less servicing
compensation as permitted by the
related Servicing Agreement) and all other
amounts to be deposited in the
related Protected Account. Each Servicer is
hereby authorized to make
withdrawals from and deposits to the
related Protected Account for purposes
required or permitted by this Agreement. To
the extent provided in the related
Servicing Agreement, the related Protected
Account shall be held in a Designated
Depository Institution and segregated as a
trust account on the books of such
institution in the name of the Trustee for
the benefit of Certificateholders.
(b) To the extent provided in a Servicing Agreement, amounts on
deposit
in the related Protected Account may be
invested in Permitted Investments in the
name of the Trustee for the benefit of
Certificateholders and, except as
provided in the preceding paragraph, not
commingled with any other funds, such
Permitted Investments to mature, or to be
subject to redemption or withdrawal,
no later than the date on which such funds
are required to be withdrawn for
deposit in the Distribution Account, and
shall be held until required for such
deposit. The income earned from Permitted
Investments made pursuant to this
Section 4.01 shall be paid to the related
Servicers under the related Servicing
Agreement, and the risk of loss of moneys
required to be distributed to the
Certificateholders resulting from such
investments shall be borne by and be the
risk of the related Servicer. Each Servicer
(to the extent provided in the
related Servicing Agreement) shall deposit
the amount of any such loss in the
related Protected Account within two
Business Days of receipt of notification of
such loss but not later than the second
Business Day prior to the Distribution
Date on which the moneys so invested are
required to be distributed to the
Certificateholders.
(c) To the extent provided in a Servicing Agreement and subject to
this
Article IV, on or before each Servicer
Remittance Date, the Master Servicer
shall (if acting as a successor servicer to
a Servicer), or shall cause the
related Servicer to, withdraw or shall
cause to be withdrawn from the related
Protected Account, and shall immediately
deposit or cause to be deposited in the
Distribution Account, amounts representing
the following collections and
payments (other than with respect to
principal of or interest on the Mortgage
Loans due on or before the Cut-off Date)
with respect to each Mortgage Loan
serviced by it:
(i) Scheduled Payments on the Mortgage Loans received or any
related portion thereof advanced by the related Servicer pursuant
to
the related Servicing Agreement which were due on or before the
related
Due Date, net of the amount thereof comprising the related
Servicing
Fee or any fees with respect to any lender-paid primary
mortgage
insurance policy;
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(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the related Servicer with respect to such Mortgage
Loans in
the related Prepayment Period (or, in the case of Subsequent
Recoveries, during the related Due Period), with interest to the
date
of prepayment or liquidation, net of the amount thereof comprising
the
related Servicing Fee;
(iii) Partial Principal Prepayments received by the related
Servicer for such Mortgage Loans in the related Prepayment
Period;
(iv) All funds collected and received in connection with the
operation of any REO Property, and Liquidation Proceeds received
upon
the final disposition of any REO Property (net of any
unreimbursed
Monthly Advances, other advances of the related Servicer or
Master
Servicer with respect thereto, and unpaid Master Servicing Fee
and
related Servicing Fees with respect thereto); and
(v) Any amount to be used as a Monthly Advance.
(d) Withdrawals may be made from a Protected Account only to
make
remittances as provided in Section 4.01(c);
to reimburse the Master Servicer or
the related Servicer for Monthly Advances
which have been recovered by
subsequent collection from the related
Mortgagor; to remove amounts deposited in
error; to remove fees, charges or other
such amounts deposited on a temporary
basis; or to clear and terminate the
account at the termination of this
Agreement in accordance with Section 10.01.
As provided in Section 4.01(c),
certain amounts otherwise due to the
related Servicers may be retained by them
and need not be deposited in the
Distribution Account.
Section 4.02. Distribution Account. (a) The Paying Agent shall
establish and maintain in the name of the
Paying Agent, for the benefit of the
Certificateholders, the Distribution
Account as a segregated trust account or
accounts. On the Closing Date, the
Depositor shall deposit the Deposit Amount
into the Distribution Account.
(b) All amounts deposited to the Distribution Account shall be held
by
the Paying Agent in the name of the Paying
Agent in trust for the benefit of the
Certificateholders in accordance with the
terms and provisions of this
Agreement.
(c) The Distribution Account shall constitute a trust account of
the
Trust Fund segregated on the books of the
Paying Agent. The Distribution Account
shall be an Eligible Account. The
Distribution Account and the funds deposited
therein shall not be subject to, and shall
be protected from, all claims, liens,
and encumbrances of any creditors or
depositors of the Trustee, the Paying
Agent, the Securities Administrator or the
Master Servicer (whether made
directly, or indirectly through a
liquidator or receiver of the Trustee, the
Paying Agent, the Securities Administrator
or the Master Servicer). The amount
at any time credited to the Distribution
Account shall, if invested, be invested
in the name of the Trustee, in such
Permitted Investments selected by the Master
Servicer. All Permitted Investments shall
mature or be subject to redemption or
withdrawal on or before, and shall be held
until, the next succeeding
Distribution Date if the obligor for such
Permitted Investment is the Paying
Agent or, if such obligor is any other
Person, the Business Day preceding such
Distribution Date. All investment
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earnings from Permitted Investments in the
Distribution Account from time to
time shall be for the account of the Master
Servicer. The Master Servicer shall
be permitted to withdraw or receive
distribution of any and all investment
earnings from the Distribution Account on
each Distribution Date. If there is
any loss on a Permitted Investment or
demand deposit, the Master Servicer shall
promptly remit the amount of the loss to
the Paying Agent, who shall deposit
such amount in the Distribution Account.
With respect to the Distribution
Account and the funds deposited therein,
the Paying Agent shall take such action
as may be necessary to ensure that the
Certificateholders shall be entitled to
the priorities afforded to such a trust
account (in addition to a claim against
the estate of the Paying Agent) as provided
by 12 U.S.C. ss. 92a(e), and
applicable regulations pursuant thereto, if
applicable, or any applicable
comparable state statute applicable to
state chartered banking corporations.
Section 4.03. Permitted Withdrawals and Transfers from the
Distribution
Account. (a) The Paying Agent will, from
time to time on demand of the Master
Servicer or the Securities Administrator,
make or cause to be made such
withdrawals or transfers from the
Distribution Account as the Master Servicer
has designated for such transfer or
withdrawal pursuant to the related Servicing
Agreement or this Agreement or as the
Securities Administrator has instructed
hereunder for the following purposes:
(i) to reimburse the Master Servicer or the related Servicer
for any Monthly Advance of its own funds or any advance of such
Master
Servicer's or Servicer's own funds, the right of the Master
Servicer or
a Servicer to reimbursement pursuant to this subclause (i)
being
limited to amounts received on a particular Mortgage Loan
(including,
for this purpose, the Repurchase Price therefor, Insurance Proceeds
and
Liquidation Proceeds) which represent late payments or recoveries
of
the principal of or interest on such Mortgage Loan respecting
which
such Monthly Advance or advance was made;
(ii) to reimburse the Master Servicer or the related Servicer
from Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the Master
Servicer or
the related Servicer in good faith in connection with the
restoration
of the related Mortgaged Property which was damaged by an
Uninsured
Cause or in connection with the liquidation of such Mortgage
Loan;
(iii) to reimburse the Master Servicer or the related Servicer
from Insurance Proceeds relating to a particular Mortgage Loan
for
insured expenses incurred with respect to such Mortgage Loan and
to
reimburse the Master Servicer or the related Servicer from
Liquidation
Proceeds from a particular Mortgage Loan for Liquidation
Expenses
incurred with respect to such Mortgage Loan; provided that the
Master
Servicer shall not be entitled to reimbursement for Liquidation
Expenses with respect to a Mortgage Loan to the extent that (i)
any
amounts with respect to such Mortgage Loan were paid as Excess
Liquidation Proceeds pursuant to clause (x) of this Subsection
4.03(a)
to the Master Servicer, and (ii) such Liquidation Expenses were
not
included in the computation of such Excess Liquidation
Proceeds;
(iv) to pay the Master Servicer or the related Servicer, as
appropriate, from Liquidation Proceeds or Insurance Proceeds
received
in connection with the liquidation
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of any Mortgage Loan, the amount which the Master Servicer or
the
related Servicer would have been entitled to receive under
subclause
(xi) of this Subsection 4.03(a) as servicing compensation on
account of
each defaulted Scheduled Payment on such Mortgage Loan if paid in
a
timely manner by the related Mortgagor;
(v) to pay the Master Servicer or the related Servicer from
the Repurchase Price for any Mortgage Loan, the amount which the
Master
Servicer or the related Servicer would have been entitled to
receive
under subclause (xi) of this Subsection 4.03(a) as servicing
compensation;
(vi) to reimburse the Master Servicer or the related Servicer
for advances of funds, and the right to reimbursement pursuant to
this
subclause being limited to amounts received on the related
Mortgage
Loan (including, for this purpose, the Repurchase Price
therefor,
Insurance Proceeds and Liquidation Proceeds) which represent
late
recoveries of the payments for which such advances were made;
(vii) to reimburse the Master Servicer or the related Servicer
for any Monthly Advance or advance, after a Realized Loss has
been
allocated with respect to the related Mortgage Loan, if the
Monthly
Advance or advance has not been reimbursed pursuant to clauses (i)
and
(vi);
(viii) to pay the Master Servicer as set forth in Section
3.14;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to
Sections
3.03, 7.04(c) and 7.04 (d);
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not
retained by the related Servicer;
(xi) to reimburse or pay a Servicer any such amounts as are
due thereto under the related Servicing Agreement and have not
been
retained by or paid to such Servicer, to the extent provided in
the
related Servicing Agreement;
(xii) to reimburse or pay the Trustee, the Securities
Administrator or the Custodian for fees, expenses, costs and
liabilities incurred by and reimbursable or payable to it pursuant
to
this Agreement and not otherwise reimbursable or payable to it;
(xiii) to remove amounts deposited in error;
(xiv) to clear and terminate the Distribution Account pursuant
to Section 10.01;
(xv) on the first Distribution Date, to withdraw an amount
equal to the Deposit Amount from the Distribution Account and
distribute such amount to the holders of the Class R-I, Class R-II
and
Class R-III Certificates, pro rata, until their respective
Current
Principal Amounts have been reduced to zero; and
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(xvi) on the first Distribution Date, to withdraw an amount
equal to the Class X-1 Payment from the Distribution Account
and
distribute such amount to the holders of the Class X-1
Certificates.
(b) The Master Servicer shall keep and maintain separate
accounting, on
a Mortgage Loan by Mortgage Loan basis, for
the purpose of accounting for any
reimbursement from the Distribution Account
pursuant to subclauses (i) through
(vii), inclusive, and (x).
(c) On each Distribution Date, the Paying Agent shall distribute
the
Available Funds to the extent on deposit in
the Distribution Account for each
Loan Group to the Holders of the
Certificates (other than the Residual
Certificates) in accordance with
distribution instructions provided to it by the
Securities Administrator no later than two
Business Days prior to such
Distribution Date and determined by the
Securities Administrator in accordance
with Section 6.01.
Section 4.04. Distribution of Carryover Shortfall Amount;
Carryover
Shortfall Reserve Fund.(a) On the Closing
Date, the Paying Agent shall establish
and maintain in its name, in trust for the
benefit of Class A-1, Class M, Class
B-1, Class B-2 and Class B-3 Certificates,
the Carryover Shortfall Reserve Fund.
The Paying Agent shall, promptly upon
receipt, deposit in the Carryover
Shortfall Reserve Fund an amount equal to
$5,000 to be remitted on the Closing
Date to the Paying Agent by the Depositor.
On each Distribution Date, the Paying
Agent shall transfer from the Distribution
Account to the Carryover Shortfall
Reserve Fund the amounts specified pursuant
to Section 6.01(a)(A) and (B). On
each Distribution Date, to the extent
required, the Paying Agent shall make
withdrawals from the Carryover Shortfall
Reserve Fund and use the amounts in the
Carryover Shortfall Reserve Fund to make
distributions to the Class A-1, Class
M, Class B-1, Class B-2 and Class B-3
Certificates, in an amount equal to the
amount of any Carryover Shortfall Amount on
such Certificate. Any such amounts
transferred shall be treated for federal
tax purposes as amounts distributed by
REMIC III to the Class X-1
Certificateholders as transferee thereof. For federal
tax return and information reporting
purposes, the rights of the Holders of the
Class A-1, Class M, C
