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POOLING AND SERVICING AGREEMENT

Pooling and Servicing Agreement

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 This Pooling and Servicing Agreement involves

BEAR STEARNS ASSET BACKED SECURITIES I LLC | EMC MORTGAGE CORPORATION | WELLS FARGO BANK, N.A | JPMORGAN CHASE BANK, N.A.

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Title: POOLING AND SERVICING AGREEMENT
Governing Law: Delaware     Date: 2/23/2005

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                                                                  EXECUTION COPY

 

 

                   BEAR STEARNS ASSET BACKED SECURITIES I LLC,

 

                                    Depositor

 

                            EMC MORTGAGE CORPORATION,

 

                                Seller and Servicer

 

                             WELLS FARGO BANK, N.A.,

 

                  Master Servicer and Securities Administrator

 

                                       and

 

                            JPMORGAN CHASE BANK, N.A.

 

                                     Trustee

 

 

                     ______________________________________

 

                         POOLING AND SERVICING AGREEMENT

 

                           Dated as of January 1, 2005

                     ______________________________________

 

 

               BEAR STEARNS ASSET BACKED SECURITIES TRUST 2005-SD1

 

                   ASSET-BACKED CERTIFICATES, SERIES 2005-SD1

 

 

 

 

<PAGE>

 

<TABLE>

<CAPTION>

 

                                                          TABLE OF CONTENTS

 

                                                                Page

                                                                ----

                                                             ARTICLE I.

 

                                                              DEFINITIONS

 

<S>                                                                                                               <C>

Section 1.01. Defined Terms.......................................................................................1

 

                                                             ARTICLE II.

 

                                       CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES

 

Section 2.01.      Conveyance of Trust Fund.......................................................................35

Section 2.02.      Acceptance of the Mortgage Loans...............................................................37

Section 2.03.      Representations, Warranties and Covenants of the Master Servicer, the EMC Servicer and

                  the Seller.....................................................................................39

Section 2.03(A)    Assignment of Interests in the Servicing Agreements............................................48

Section 2.04.      Representations and Warranties of the Depositor................................................48

Section 2.05.      Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................50

Section 2.06.      Authentication and Delivery of Certificates....................................................50

Section 2.07.      Covenants of the Master Servicer and the EMC Servicer..........................................50

Section 2.08.      Lost Mortgage Notes Indemnity..................................................................51

 

                                                            ARTICLE III.

 

                                        ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS

 

Section 3.01.      The Master Servicer............................................................................52

Section 3.02.      REMIC-Related Covenants........................................................................52

Section 3.03.      Monitoring of Servicers........................................................................52

Section 3.04.      Successor Master Servicer and Subservicing Agreements..........................................54

Section 3.05.      Power to Act; Procedures.......................................................................54

Section 3.06.      Due-on-Sale Clauses; Assumption Agreements.....................................................55

Section 3.07.      Release of Mortgage Files......................................................................55

Section 3.08.      Documents, Records and Funds in Possession of the Master Servicer To Be Held for Trustee.......56

Section 3.09.      Maintenance of Hazard Insurance................................................................56

Section 3.10.      Presentment of Claims and Collection of Proceeds...............................................57

Section 3.11.      Maintenance of the Primary Mortgage Insurance Policies.........................................57

Section 3.12.      Custodian to Retain Possession of Certain Insurance Policies and Documents.....................57

Section 3.13.      Realization Upon Defaulted Mortgage Loans......................................................58

Section 3.14.      Compensation for the Servicers and the Master Servicer.........................................58

Section 3.15.      REO Property...................................................................................58

Section 3.16.      Annual Officer's Certificate as to Compliance..................................................58

Section 3.17.      Annual Independent Accountant's Servicing Report...............................................59

Section 3.18.      Reports Filed with Securities and Exchange Commission..........................................59

Section 3.19.      The EMC Servicer...............................................................................60

Section 3.20.      Optional Purchase of Defaulted Mortgage Loans..................................................60

 

                                                              ARTICLE IV.

 

                                                              ACCOUNTS

Section 4.01.      Protected Accounts.............................................................................61

Section 4.02.      Master Servicer Collection Account.............................................................61

 

 

                                                                 i

<PAGE>

 

Section 4.03.      Permitted Withdrawals and Transfers from the Master Servicer Collection Account................63

Section 4.04.      Distribution Account...........................................................................63

Section 4.05.      Permitted Withdrawals and Transfers from the Distribution Account..............................64

Section 4.06.      Yield Maintenance Account and Yield Maintenance Agreements.....................................65

 

                                                             ARTICLE V.

 

                                           DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER

 

Section 5.01.      Advances.......................................................................................67

Section 5.02.      Compensating Interest Payments.................................................................67

Section 5.03.      REMIC Distributions............................................................................68

Section 5.04.      Distributions..................................................................................68

Section 5.04A.     Allocation of Realized Losses..................................................................74

Section 5.05.      Monthly Statements to Certificateholders.......................................................75

Section 5.06.      REMIC Designations and Allocations.............................................................78

Section 5.07.      Supplemental Interest Reserve Fund; WAC Excess.................................................79

 

                                                              ARTICLE VI.

 

                                                          THE CERTIFICATES

 

Section 6.01.      The Certificates...............................................................................81

Section 6.02.      Certificate Register; Registration of Transfer and Exchange of Certificates....................83

Section 6.03.      Mutilated, Destroyed, Lost or Stolen Certificates..............................................86

Section 6.04.      Persons Deemed Owners..........................................................................86

Section 6.05.      Access to List of Certificateholders' Names and Addresses......................................86

Section 6.06.      Book-Entry Certificates........................................................................87

Section 6.07.      Notices to Depository..........................................................................87

Section 6.08.      Definitive Certificates........................................................................88

Section 6.09.      Maintenance of Office or Agency................................................................88

 

                                                            ARTICLE VII.

 

                                 THE DEPOSITOR, THE MASTER SERVICER, THE EMC SERVICER AND THE SELLER

 

Section 7.01.      Respective Liabilities of the Depositor, the Master Servicer, the EMC Servicer and the

                  Seller.........................................................................................89

Section 7.02.      Merger or Consolidation of the Depositor, the Master Servicer, the EMC Servicer or the

                  Seller.........................................................................................89

Section 7.03.      Indemnification of the Trustee, the Master Servicer, the Securities Administrator and

                  Others.........................................................................................89

Section 7.04.      Limitation on Liability of the Depositor, the Seller, the Master Servicer and Others...........90

Section 7.05.      Limitation on Resignation of Master Servicer and the EMC Master Servicer.......................91

Section 7.06.      Errors and Omissions Insurance; Fidelity Bonds.................................................91

 

                                                            ARTICLE VIII.

 

                                               DEFAULT; TERMINATION OF MASTER SERVICER

 

Section 8.01.      Events of Default..............................................................................92

Section 8.02.      Trustee to Act; Appointment of Successor.......................................................93

Section 8.03.      Notification to Certificateholders.............................................................95

 

                                                             ARTICLE IX.

 

                                       CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

 

Section 9.01.      Duties of Trustee and Securities Administrator................................................96

Section 9.02.      Certain Matters Affecting the Trustee and the Securities Administrator........................97

Section 9.03.      Trustee and Securities Administrator Not Liable for Certificates or Mortgage Loans............99

Section 9.04.      Trustee and Securities Administrator May Own Certificates.....................................99

Section 9.05.      Trustee's and Securities Administrator's Fees and Expenses....................................100

Section 9.06.      Eligibility Requirements for Trustee and Securities Administrator.............................100

Section 9.07.      Insurance.....................................................................................101

Section 9.08.      Resignation and Removal of Trustee and Securities Administrator...............................101

Section 9.09.      Successor Trustee or Securities Administrator.................................................102

Section 9.10.      Merger or Consolidation of Trustee or Securities Administrator................................102

Section 9.11.      Appointment of Co-Trustee or Separate Trustee.................................................102

Section 9.12.      Tax Matters...................................................................................104

 

                                                             ARTICLE X.

 

                                                             TERMINATION

 

Section 10.01.     Termination upon Liquidation or Repurchase of all Mortgage Loans..............................107

Section 10.02.     Final Distribution on the Certificates........................................................107

Section 10.03.     Additional Termination Requirements...........................................................108

 

                                                             ARTICLE XI.

 

                                                      MISCELLANEOUS PROVISIONS

 

Section 11.01.     Amendment.....................................................................................110

Section 11.02.     Recordation of Agreement; Counterparts........................................................111

Section 11.03.     Governing Law.................................................................................111

Section 11.04.     Intention of Parties..........................................................................111

Section 11.05.     Notices.......................................................................................112

Section 11.06.     Severability of Provisions....................................................................113

Section 11.07.     Assignment....................................................................................113

Section 11.08.     Limitation on Rights of Certificateholders....................................................113

Section 11.09.     Inspection and Audit Rights...................................................................114

Section 11.10.     Certificates Nonassessable and Fully Paid.....................................................114

 

</TABLE>

 

 

Schedules

 

Schedule I             List of Servicing Agreements

Schedule II            List of Assignment, Assumptions and Recognition Agreements

 

Exhibits

Exhibit A-1             Form of Class I-A-1

Exhibit A-2            Form of Class I-A-2

Exhibit A-3            Form of Class I-A-3

Exhibit A-4            Form of Class I-M-1

Exhibit A-5            Form of Class I-M-2

Exhibit A-6            Form of Class I-M-3

Exhibit A-7             Form of Class I-M-4

Exhibit A-8            Form of Class I-M-5

Exhibit A-9            Form of Class I-M-6

 

 

                                      iii

 

 

                                      

<PAGE>

 

Exhibit A-10           Form of Class I-B

Exhibit A-11           Form of Class II-A

Exhibit A-12           Form of Class II-M-1

Exhibit A-13           Form of Class II-M-2

Exhibit A-14           Form of Class II-M-3

Exhibit A-15           Form of Class II-B

Exhibit A-16           Form of Class I-B-IO Certificates

Exhibit A-17           Form of Class II-B-IO Certificates

Exhibit A-18           Form of Class R Certificates

Exhibit B              Mortgage Loan Schedule

Exhibit B-I:           Schedule of Group I Mortgage Loans

Exhibit B-II:          Schedule of Group II Mortgage Loans

Exhibit C              Reserved

Exhibit D              Form of Transfer Affidavit

Exhibit E              Form of Transferor Certificate

Exhibit F              Form of Investment Letter (Non-Rule 144A)

Exhibit G              Form of Rule 144A Investment Letter

Exhibit H              Form of Request for Release

Exhibit I              DTC Letter of Representations

Exhibit J              Schedule of Mortgage Loans with Lost Notes

Exhibit K              EMC Mortgage Loan Servicing

 

 

                                        iv

 

<PAGE>

 

     POOLING AND SERVICING AGREEMENT, dated as of January 1, 2005, among BEAR

STEARNS ASSET BACKED SECURITIES I LLC, a Delaware limited liability company, as

depositor (the "Depositor"), EMC MORTGAGE CORPORATION, a Delaware corporation,

as seller (in such capacity, the "Seller") and as servicer (in such capacity,

the "EMC Servicer"), WELLS FARGO BANK, N.A., a national banking association, as

master servicer (in such capacity, the "Master Servicer") and as securities

administrator (in such capacity, the "Securities Administrator") and JPMORGAN

CHASE BANK, N.A., a New York banking corporation, as trustee (the "Trustee").

 

                              PRELIMINARY STATEMENT

 

     The parties to this Agreement hereby create a common law trust pursuant to

the laws of the State of New York. The Depositor is the owner of the Trust Fund

that is hereby conveyed to the Trustee in return for the Certificates. As

provided herein, the Trustee shall make two separate real estate mortgage

investment conduit (each a "REMIC") elections with respect to the Trust Fund for

Federal income tax purposes.

 

     The Trust Fund shall be named, and may be referred to as, the "Bear Stearns

Asset Backed Securities Trust 2005-SD1." The Certificates issued hereunder may

be referred to as "Asset-Backed Certificates Series 2005-SD1" (including for

purposes of any endorsement or assignment of a Mortgage Note or Mortgage).

 

     In consideration of the mutual agreements herein contained, the Depositor,

the Master Servicer, the Securities Administrator, the Seller, the EMC Servicer

and the Trustee agree as follows:

 

 

 

<PAGE>

 

                                   ARTICLE I.

                                   DEFINITIONS

 

     Section 1.01. Defined Terms.

 

     In addition to those terms defined in Section 1.02, whenever used in this

Agreement, the following words and phrases, unless the context otherwise

requires, shall have the following meanings:

 

     Accepted Master Servicing Practices: With respect to any Mortgage Loan

those customary mortgage servicing practices of prudent mortgage servicing

institutions that master service mortgage loans of the same type and quality as

such Mortgage Loan in the jurisdiction where the related Mortgaged Property is

located, to the extent applicable to the Master Servicer (except in its capacity

as successor to a Servicer) or to the Trustee (in its capacity, if at all, as

Successor Master Servicer).

 

     Account: The Master Servicer Collection Account, each Protected Account,

the Distribution Account and the Yield Maintenance Account.

 

     Accrual Period: With respect to the Adjustable Rate Certificates and any

Distribution Date, the period from and including the preceding Distribution Date

(or, in the case of the first Distribution Date, from the Closing Date) to and

including the day prior to the current Distribution Date. All calculations of

interest on the Adjustable Rate Certificates (including the Interest Rate Cap)

will be made on the basis of the actual number of days elapsed in the related

Accrual Period and in a 360-day year.

 

     Adjustable Rate Certificates: All of the certificates other than the Class

B-IO Certificates and the Residual Certificates.

 

     Advance: An advance of delinquent payments of principal (other than in

respect of delinquent payments of principal on any Simple Interest Loans) or

interest in respect of a Mortgage Loan required to be made by the applicable

Servicer pursuant to the related Servicing Agreement, or by the Master Servicer

pursuant to Section 5.01.

 

     Agreement: This Pooling and Servicing Agreement and any and all amendments

or supplements hereto made in accordance with the terms herein.

 

     Amount Held for Future Distribution: As to any Distribution Date, the

aggregate amount held in the Master Servicer Collection Account at the close of

business on the immediately preceding Determination Date on account of (i) all

Scheduled Payments or portions thereof received in respect of the Mortgage Loans

due after the related Due Period and (ii) Principal Prepayments, Liquidation

Proceeds, Insurance Proceeds and Subsequent Recoveries received in respect of

such Mortgage Loans after the last day of the related Prepayment Period.

 

     Applicable Written Notice: For purposes of Section 8.01, written notice (i)

in the case of the Master Servicer, to the Master Servicer by the Trustee or the

Depositor, or to the Trustee and the Master Servicer by the Holders of

Certificates evidencing not less than 25% of the Voting Rights evidenced by the

Certificates and (b) in the case of the EMC Servicer, to the EMC Servicer by the

Master Servicer

 

     Applied Realized Loss Amount: With respect to any Distribution Date and

each Class of Subordinated Certificates of a Group, the sum of the Realized

Losses with respect to the Mortgage Loans of the related Group, which are to be

applied in reduction of the Certificate Principal Balance of that

 

 

<PAGE>

 

Class of Certificates pursuant to, and in the order of priority set forth

in Section 5.04A of this Agreement, which shall on any such Distribution Date,

so long as their respective Certificate Principal Balances have not been reduced

to zero, equal the amount, if any, by which, (i) the aggregate Certificate

Principal Balance of all of the Certificates of the related Group (after all

distributions of principal on such Distribution Date) exceeds (ii) the aggregate

Stated Principal Balance of all of the related Mortgage Loans as of the last day

of the related Due Period.

 

     Appraised Value: With respect to any Mortgage Loan originated in connection

with a refinancing, the appraised value of the Mortgaged Property based upon the

appraisal made at the time of such refinancing or, with respect to any other

Mortgage Loan, the appraised value of the Mortgaged Property based upon the

appraisal made by a fee appraiser at the time of the origination of the related

Mortgage Loan.

 

     Assumption Agreement: Any Assignment, Assumption and Recognition Agreement

or comparable document transferring or acknowledging the transfer of a Servicing

Agreement to the Trust listed on Schedule II hereto.

 

     Balloon Loan: A Mortgage Loan, identified as such on the Mortgage Loan

Schedule, where the related Mortgage Note provides for lowered payments of

principal over the life of such Mortgage Loan and a larger payment of principal

than is usual at its stated maturity.

 

     Bankruptcy Code: Title 11 of the United States Code.

 

     Basis Risk Shortfall: As of any Distribution Date and for any Class of

Adjustable Rate Certificates, the excess of (i) the amount of Current Interest

that such Class would have been entitled to receive on such Distribution Date

had the applicable Pass-Through Rate been calculated based upon the lesser of

11.5% and One-Month LIBOR plus the applicable Certificate Margin for the related

Accrual Period; over (ii) the sum of interest for such Class calculated at the

applicable Interest Rate Cap for such Distribution Date and any amount paid to

such Class under the applicable Yield Maintenance Agreement expressed as a per

annum rate.

 

      Basis Risk Shortfall Carry Forward Amount: As of any Distribution Date and

for any Class of Adjustable Rate Certificates, the sum of: (i) if on such

Distribution Date the applicable Pass-Through Rate for such Class is based upon

the applicable Interest Rate Cap, the applicable Basis Risk Shortfall; and (ii)

the Basis Risk Shortfall for all previous Distribution Dates not previously paid

(including interest accrued thereon at the applicable Pass-Through Rate for the

Accrual Period with respect to each such prior Distribution Date), together with

interest thereon at a rate equal to the applicable Pass-Through Rate for such

Distribution Date.

 

     Book-Entry Certificates: Any of the Certificates that shall be registered

in the name of the Depository or its nominee, the ownership of which is

reflected on the books of the Depository or on the books of a person maintaining

an account with the Depository (directly, as a "Depository Participant", or

indirectly, as an indirect participant in accordance with the rules of the

Depository and as described in Section 6.06). As of the Closing Date, each Class

of Regular Certificates (other than the Class B-IO Certificates) constitutes a

Class of Book-Entry Certificates.

 

     Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day

on which banking institutions in The City of New York, New York, or the States

of Maryland, Minnesota or Texas, or, if different, the city in which the

Corporate Trust Office of the Trustee or the principal office of the Securities

Administrator, the Master Servicer or of a Servicer is located are authorized or

obligated by law or executive order to be closed.

 

 

                                       2

<PAGE>

 

     Cede: Cede & Co., or its successors in interest.

 

     Ceiling Rate: For the Group I Senior Yield Maintenance Agreement, 11.00%

and, for the Group I Subordinate Yield Maintenance Agreement, 10.00%.

 

     Certificate: Any one of the certificates of any Class executed and

authenticated by the Trustee in substantially the forms attached hereto as

Exhibits A-1 through A-17.

 

     Certificate Group: Either of the Group I Certificates or the Group II

Certificates.

 

     Certificate Margin: Reference to any of the Class I-A-1 Margin, the Class

I-A-2 Margin, the Class I-A-3 Margin, the Class I-M-1 Margin, the Class I-M-2

Margin, the Class I-M-3 Margin, the Class I-M-4 Margin, the Class I-M-5 Margin,

the Class I-M-6 Margin, the Class I-B Margin, the Class II-A Margin, the Class

II-M-1 Margin, the Class II-M-2 Margin, the Class II-M-3 Margin, or the Class

II-B Margin.

 

     Certificate Notional Balance: As to the Class B-IO Certificates and any

Distribution Date, the aggregate Stated Principal Balance of the Mortgage Loans

as of the last day of the related Due Period.

 

     Certificate Owner: With respect to a Book-Entry Certificate, the Person

that is the beneficial owner of such Book-Entry Certificate.

 

     Certificate Principal Balance: As to any Certificate (other than any Class

B-IO Certificate or Residual Certificate) and as of any Distribution Date, the

Initial Certificate Principal Balance of such Certificate, reduced by the sum of

(i) all amounts distributed with respect to such Certificate in reduction of the

Certificate Principal Balance thereof on previous Distribution Dates pursuant to

Section 5.04, and (ii) in the case of any Subordinated Certificate, any Applied

Realized Loss Amounts allocated to such Certificate on previous Distribution

Dates, and increased by (iii) in the case of each such Class of Subordinated

Certificates, any Subsequent Recoveries allocated to such Class on previous

Distribution Dates pursuant to Section 5.04A. References herein to the

Certificate Principal Balance of a Class of Certificates shall mean the

Certificate Principal Balances of all Certificates in such Class.

 

     Certificate Register: The register maintained pursuant to Section 6.02

hereof.

 

     Certificateholder or Holder: The person in whose name a Certificate is

registered in the Certificate Register (initially, Cede & Co., as nominee for

the Depository, in the case of any Book-Entry Certificates).

 

     Class: All Certificates bearing the same Class designation as set forth in

Section 6.01 hereof.

 

     Class I-A-1 Certificate: Any Certificate designated as a "Class I-A-1

Certificate" on the face thereof, in the form of Exhibit A-1 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-A-1 Certificates as set forth herein.

 

     Class I-A-1 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.15% per annum and (ii) thereafter, 0.30% per annum.

 

 

 

                                       3

<PAGE>

 

 

     Class I-A-1 Pass-Through Rate: For the first Distribution Date, 2.74% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-A-1 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-A-2 Certificate: Any Certificate designated as a "Class I-A-2

Certificate" on the face thereof, in the form of Exhibit A-2 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-A-2 Certificates as set forth herein.

 

     Class I-A-2 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.30% per annum and (ii) thereafter, 0.60% per annum.

 

     Class I-A-2 Pass-Through Rate: For the first Distribution Date, 2.89% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-A-2 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-A-3 Certificate: Any Certificate designated as a "Class I-A-3

Certificate" on the face thereof, in the form of Exhibit A-3 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-A-3 Certificates as set forth herein.

 

     Class I-A-3 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.40% per annum and (ii) thereafter, 0.80% per annum.

 

     Class I-A-3 Pass-Through Rate: For the first Distribution Date, 2.99% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-A-3 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-B Certificate: Any Certificate designated as a "Class I-B

Certificate" on the face thereof, in the form of Exhibit A-10 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-B Certificates as set forth herein.

 

     Class I-B Margin: For any Distribution Date (i) on or prior to the Optional

Termination Date, 3.00% per annum and (ii) thereafter, 4.50% per annum.

 

     Class I-B Pass-Through Rate: For the first Distribution Date, 5.59% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-B Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-B-IO Certificate: Any Certificate designated as a "Class I-B-IO

Certificate" on the face thereof, in the form of Exhibit A-16 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-B-IO Certificates herein.

 

     Class I-B-IO Distribution Amount: With respect to any Distribution Date,

the amount allocable to the Class I-B-IO Certificates as provided in Section

5.06(b), note 3, for such Distribution Date and all prior Distribution Dates,

less the aggregate of all amounts distributed (or deemed distributed in

accordance with Section 5.06(e)) with respect to the Class I-B-IO Certificates

on prior Distribution Dates.

 

 

                                       4

<PAGE>

 

 

     Class I-M-1 Certificate: Any Certificate designated as a "Class I-M-1

Certificate" on the face thereof, in the form of Exhibit A-4 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-M-1 Certificates as set forth herein.

 

     Class I-M-1 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.50% per annum and (ii) thereafter, 0.75% per annum.

 

     Class I-M-1 Pass-Through Rate: For the first Distribution Date, 3.09% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-M-1 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-M-2 Certificate: Any Certificate designated as a "Class I-M-2

Certificate" on the face thereof, in the form of Exhibit A-5 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-M-2 Certificates as set forth herein.

 

     Class I-M-2 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.80% per annum and (ii) thereafter, 1.20% per annum.

 

     Class I-M-2 Pass-Through Rate: For the first Distribution Date, 3.39% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-M-2 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-M-3 Certificate: Any Certificate designated as a "Class I-M-3

Certificate" on the face thereof, in the form of Exhibit A-6 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-M-3 Certificates as set forth herein.

 

     Class I-M-3 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.82% per annum and (ii) thereafter, 1.23% per annum.

 

     Class I-M-3 Pass-Through Rate: For the first Distribution Date, 3.41% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-M-3 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-M-4 Certificate: Any Certificate designated as a "Class I-M-4

Certificate" on the face thereof, in the form of Exhibit A-7 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-M-4 Certificates as set forth herein.

 

     Class I-M-4 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 1.35% per annum and (ii) thereafter, 2.025% per

annum.

 

     Class I-M-4 Pass-Through Rate: For the first Distribution Date, 3.94% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-M-4 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-M-4 Principal Distribution Amount: For any Distribution Date, an

amount equal to the excess, if any, of the sum of (i) the aggregate Certificate

Principal Balance of the related Class A Certificates (after taking into account

distributions of the related Class A Principal Distribution Amount

 

 

                                       5

<PAGE>

 

 

for that Distribution Date), the Certificate Principal Balance of the

related Class M-1 Certificates (after taking into account distributions of the

related Class M-1 Principal Distribution Amount for that Distribution Date), the

Certificate Principal Balance of the related Class M-2 Certificates (after

taking into account distributions of the related Class M-2 Principal

Distribution Amount for that Distribution Date), the Certificate Principal

Balance of the related Class M-3 Certificates (after taking into account

distributions of the related Class M-3 Principal Distribution Amount for that

Distribution Date) and the Certificate Principal Balance of the Class I-M-4

Certificates immediately prior to that Distribution Date, over (ii) the lesser

of (a) 90.70% of the aggregate Stated Principal Balance of the Group I Mortgage

Loans as of the last day of the related Due Period (after reduction for Realized

Losses incurred during the related Prepayment Period) and (b) the aggregate

Stated Principal Balance of the Group I Mortgage Loans as of the last day of the

related Due Period (after reduction for Realized Losses incurred during the

related Prepayment Period) minus the related Overcollateralization Floor.

 

     Class I-M-5 Certificate: Any Certificate designated as a "Class I-M-5

Certificate" on the face thereof, in the form of Exhibit A-8 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-M-5 Certificates as set forth herein.

 

     Class I-M-5 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 1.47% per annum and (ii) thereafter, 2.205% per

annum.

 

     Class I-M-5 Pass-Through Rate: For the first Distribution Date, 4.06% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-M-5 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-M-5 Principal Distribution Amount: For any Distribution Date, an

amount equal to the excess, if any, of (i) the sum of the aggregate Certificate

Principal Balance of the related Class A Certificates (after taking into account

distributions of the related Class A Principal Distribution Amount for that

Distribution Date), the Certificate Principal Balance of the related Class M-1

Certificates (after taking into account distributions of the related Class M-1

Principal Distribution Amount for that Distribution Date), the Certificate

Principal Balance of the related Class M-2 Certificates (after taking into

account distributions of the related Class M-2 Principal Distribution Amount for

that Distribution Date), the Certificate Principal Balance of the related Class

M-3 Certificates (after taking into account distributions of the related Class

M-3 Principal Distribution Amount for that Distribution Date), the Certificate

Principal Balance of the Class I-M-4 Certificates (after taking into account

distributions of the Class I-M-4 Principal Distribution Amount for that

Distribution Date) and the Certificate Principal Balance of the Class I-M-5

Certificates immediately prior to that Distribution Date, over (ii) the lesser

of (a) 92.70% of the aggregate Stated Principal Balance of the Group I Mortgage

Loans as of the last day of the related Due Period (after reduction for Realized

Losses incurred during the related Prepayment Period) and (b) the aggregate

Stated Principal Balance of the Group I Mortgage Loans as of the last day of the

related Due Period (after reduction for Realized Losses incurred during the

related Prepayment Period) minus the related Overcollateralization Floor.

 

     Class I-M-6 Certificate: Any Certificate designated as a "Class I-M-6

Certificate" on the face thereof, in the form of Exhibit A-9 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class I-M-6 Certificates as set forth herein.

 

      Class I-M-6 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 2.45% per annum and (ii) thereafter, 3.675% per

annum.

 

 

                                       6

<PAGE>

 

 

     Class I-M-6 Pass-Through Rate: For the first Distribution Date, 5.04% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class I-M-6 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class I-M-6 Principal Distribution Amount: For any Distribution Date, an

amount equal to the excess, if any, of (i) the sum of the aggregate Certificate

Principal Balance of the related Class A Certificates (after taking into account

distributions of the related Class A Principal Distribution Amount for that

Distribution Date), the Certificate Principal Balance of the related Class M-1

Certificates (after taking into account distributions of the related Class M-1

Principal Distribution Amount for that Distribution Date), the Certificate

Principal Balance of the related Class M-2 Certificates (after taking into

account distributions of the related Class M-2 Principal Distribution Amount for

that Distribution Date), the Certificate Principal Balance of the related Class

M-3 Certificates (after taking into account distributions of the related Class

M-3 Principal Distribution Amount for that Distribution Date), the Certificate

Principal Balance of the Class I-M-4 Certificates (after taking into account

distributions of the Class I-M-4 Principal Distribution Amount for that

Distribution Date), the Certificate Principal Balance of the Class I-M-5

Certificates (after taking into account distributions of the Class I-M-5

Principal Distribution Amount for that Distribution Date) and the Certificate

Principal Balance of the Class I-M-6 Certificates immediately prior to that

Distribution Date, over (ii) the lesser of (a) 94.70% of the aggregate Stated

Principal Balance of the Group I Mortgage Loans as of the last day of the

related Due Period (after reduction for Realized Losses incurred during the

related Prepayment Period) and (b) the aggregate Stated Principal Balance of the

Group I Mortgage Loans as of the last day of the related Due Period (after

reduction for Realized Losses incurred during the related Prepayment Period)

minus the related Overcollateralization Floor.

 

     Class II-A Certificate: Any Certificate designated as a "Class II-A-1

Certificate" on the face thereof, in the form of Exhibit A-11 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class II-A-1 Certificates as set forth herein.

 

     Class II-A Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.29% per annum and (ii) thereafter, 0.58% per annum.

 

     Class II-A Pass-Through Rate: For the first Distribution Date, 2.88% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class II-A-1 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class II-A Yield Maintenance Agreement: The Confirmation, Ref. No.

FXBS05SD11, dated the Closing Date, by and between the Yield Maintenance

Provider and the Trust, relating to the Class II-A Certificates.

 

     Class II-B Certificate: Any Certificate designated as a "Class II-B

Certificate" on the face thereof, in the form of Exhibit A-15 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class II-B Certificates as set forth herein.

 

     Class II-B Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 2.50% per annum and (ii) thereafter, 3.75% per annum.

 

     Class II-B Pass-Through Rate: For the first Distribution Date, 5.09% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus

 

 

                                       7

<PAGE>

 

 

the Class II-B Margin for such Distribution Date and (ii) the applicable

Interest Rate Cap for such Distribution Date.

 

     Class II-B-IO Certificate: Any Certificate designated as a "Class II-B-IO

Certificate" on the face thereof, in the form of Exhibit A-17 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class II-B-IO Certificates herein.

 

     Class II-B-IO Distribution Amount: With respect to any Distribution Date,

the amount allocable to the Class II-B-IO Certificates as provided in Section

5.06(b), note 3, for such Distribution Date and all prior Distribution Dates,

less the aggregate of all amounts distributed (or deemed distributed in

accordance with Section 5.06(e)) with respect to the Class II-B-IO Certificates

on prior Distribution Dates.

 

     Class II-B Yield Maintenance Agreement: The Confirmation, Ref.

No.FXBS05SD15 , dated the Closing Date, by and between the Yield Maintenance

Provider and the Trust, relating to the Class II-B Certificates.

 

     Class II-M-1 Certificate: Any Certificate designated as a "Class II-M-1

Certificate" on the face thereof, in the form of Exhibit A-12 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class II-M-1 Certificates as set forth herein.

 

     Class II-M-1 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.55% per annum and (ii) thereafter, 0.825% per

annum.

 

     Class II-M-1 Pass-Through Rate: For the first Distribution Date, 3.14% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class II-M-1 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class II-M-1 Yield Maintenance Agreement: The Confirmation, Ref. No.

FXBS05SD12, dated the Closing Date, by and between the Yield Maintenance

Provider and the Trust, relating to the Class II-M-1 Certificates.

 

     Class II-M-2 Certificate: Any Certificate designated as a "Class II-M-2

Certificate" on the face thereof, in the form of Exhibit A-13 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class II-M-2 Certificates as set forth herein.

 

     Class II-M-2 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 0.80% per annum and (ii) thereafter, 1.20% per annum.

 

     Class II-M-2 Pass-Through Rate: For the first Distribution Date, 3.39% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class II-M-2 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class II-M-2 Yield Maintenance Agreement: The Confirmation, Ref. No.

FXBS05SD13, dated the Closing Date, by and between the Yield Maintenance

Provider and the Trust, relating to the Class II-M-2 Certificates.

 

 

                                       8

<PAGE>

 

 

     Class II-M-3 Certificate: Any Certificate designated as a "Class II-M-3

Certificate" on the face thereof, in the form of Exhibit A-14 hereto,

representing the right to its Percentage Interest of distributions provided for

the Class II-M-3 Certificates as set forth herein.

 

     Class II-M-3 Margin: For any Distribution Date (i) on or prior to the

Optional Termination Date, 1.45% per annum and (ii) thereafter, 2.175% per

annum.

 

     Class II-M-3 Pass-Through Rate: For the first Distribution Date, 4.04% per

annum, and on any Distribution Date thereafter, the lesser of (i) One-Month

LIBOR for the related Accrual Period plus the Class II-M-3 Margin for such

Distribution Date and (ii) the applicable Interest Rate Cap for such

Distribution Date.

 

     Class II-M-3 Yield Maintenance Agreement: The Confirmation, Ref.

No.FXBS05SD14 , dated the Closing Date, by and between the Yield Maintenance

Provider and the Trust, relating to the Class II-M-3 Certificates.

 

     Class A Certificates: The Class I-A-1 Certificates, the Class I-A-2, the

Class I-A-3 and the Class II-A Certificates.

 

     Class A Principal Distribution Amount: For a Group and any Distribution

Date and each Group, an amount equal to the excess, if any, of (i) the aggregate

Certificate Principal Balance of the related Class A Certificates immediately

prior to that Distribution Date, over (ii) the lesser of (a) 76.70%, in the case

of Group I and 63.40%, in the case of Group II, of the aggregate Stated

Principal Balance of the Mortgage Loans in the related Group as of the last day

of the related Due Period (after reduction for Realized Losses incurred during

the related Prepayment Period) and (b) the aggregate Stated Principal Balance of

the Mortgage Loans in the related Group as of the last day of the related Due

Period (after reduction for Realized Losses incurred during the related

Prepayment Period) minus the related Overcollateralization Floor

 

     Class B Principal Distribution Amount: For a Group and any Distribution

Date and each Group, an amount equal to the excess, if any, of (i) the sum of

the aggregate Certificate Principal Balance of the related Class A Certificates

(after taking into account distributions of the related Class A Principal

Distribution Amount for that Distribution Date), the Certificate Principal

Balance of the related Class M-1 Certificates (after taking into account

distributions of the related Class M-1 Principal Distribution Amount for that

Distribution Date), the Certificate Principal Balance of the related Class M-2

Certificates (after taking into account distributions of the Class M-2 Principal

Distribution Amount for that Distribution Date), the Certificate Principal

Balance of the related Class M-3 Certificates (after taking into account

distributions of the related Class M-3 Principal Distribution Amount for that

Distribution Date), with respect to Group I, the Certificate Principal Balance

of the Class I-M-4 Certificates (after taking into account distributions of the

Class I-M-4 Principal Distribution Amount for that Distribution Date), with

respect to Group I, the Certificate Principal Balance of the Class I-M-5

Certificates (after taking into account distributions of the Class I-M-5

Principal Distribution Amount for that Distribution Date), with respect to Group

I, the Certificate Principal Balance of the Class I-M-6 Certificates (after

taking into account distributions of the Class I-M-6 Principal Distribution

Amount for that Distribution Date), and the Certificate Principal Balance of the

related Class B Certificates immediately prior to that Distribution Date

over(ii) the lesser of (a) 96.70%, in the case of Group I and 90.90%, in the

case of Group II, of the aggregate Stated Principal Balance of the Mortgage

Loans of the related Group as of the last day of the related Due Period (after

reduction for Realized Losses incurred during the related Prepayment Period) and

(b) the aggregate Stated Principal Balance of the Mortgage Loans of the related

Group as of the last day of the related Due Period (after reduction for Realized

Losses incurred during the related Prepayment Period) minus the related

Overcollateralization Floor.

 

 

 

                                       9

<PAGE>

 

 

     Class B-IO Certificates: Collective reference to the Class I-B-IO

Certificates and the Class II-B-IO Certificates.

 

     Class M-1 Principal Distribution Amount: For a Group and any Distribution

Date, an amount equal to the excess, if any, of (i) the sum of the aggregate

Certificate Principal Balance of the related Class A Certificates (after taking

into account distributions of the related Class A Principal Distribution Amount

for that Distribution Date) and the Certificate Principal Balance of the related

Class M-1 Certificates immediately prior to that Distribution Date, over (ii)

the lesser of (a) 83.40%, in the case of Group I and 73.80%, in the case of

Group II, of the aggregate Stated Principal Balance of the Mortgage Loans of the

related Group as of the last day of the related Due Period (after reduction for

Realized Losses incurred during the related Prepayment Period) and (b) the

aggregate Stated Principal Balance of the Mortgage Loans of the related Group as

of the last day of the related Due Period (after reduction for Realized Losses

incurred during the related Prepayment Period) minus the related

Overcollateralization Floor.

 

     Class M-2 Principal Distribution Amount: For a Group and any Distribution

Date, an amount equal to the excess, if any, of (i) the sum of the aggregate

Certificate Principal Balance of the related Class A Certificates (after taking

into account distributions of the related Class A Principal Distribution Amount

for that Distribution Date), the Certificate Principal Balance of the related

Class M-1 Certificates (after taking into account distributions of the related

Class M-1 Principal Distribution Amount for that Distribution Date) and the

Certificate Principal Balance of the related Class M-2 Certificates immediately

prior to that Distribution Date, over (ii) the lesser of (a) 86.70%, in the case

of Group I and 80.60%, in the case of Group II, of the aggregate Stated

Principal Balance of the Mortgage Loans of the related Group as of the last day

of the related Due Period (after reduction for Realized Losses incurred during

the related Prepayment Period) and (b) the aggregate Stated Principal Balance of

the Mortgage Loans of the related Group as of the last day of the related Due

Period (after reduction for Realized Losses incurred during the related

Prepayment Period) minus the related Overcollateralization Floor.

 

     Class M-3 Principal Distribution Amount: For a Group and any Distribution

Date, an amount equal to the excess, if any, of (i) the sum of the aggregate

Certificate Principal Balance of the related Class A Certificates (after taking

into account distributions of the related Class A Principal Distribution Amount

for that Distribution Date), the Certificate Principal Balance of the related

Class M-1 Certificates (after taking into account distributions of the related

Class M-1 Principal Distribution Amount for that Distribution Date), the

Certificate Principal Balance of the related Class M-2 Certificates (after

taking into account distributions of the related Class M-2 Principal

Distribution Amount for that Distribution Date) and the Certificate Principal

Balance of the related Class M-3 Certificates immediately prior to that

Distribution Date over (ii) the lesser of (a) 88.70%, in the case of Group I and

86.30%, in the case of Group II, of the aggregate Stated Principal Balance of

the Mortgage Loans of the related Group as of the last day of the related Due

Period (after reduction for Realized Losses incurred during the related

Prepayment Period) and (b) the aggregate Stated Principal Balance of the

Mortgage Loans of the related Group as of the last day of the related Due Period

(after reduction for Realized Losses incurred during the related Prepayment

Period) minus the related Overcollateralization Floor.

 

     Class R Certificate: Any Certificate designated as a "Class R Certificate"

on the face thereof, in substantially the form set forth in Exhibit A-18 hereto,

and evidencing ownership of each of the residual interest in REMIC I and REMIC

II and representing the right to the Percentage Interest of distributions

provided for the Class R Certificate as set forth herein.

 

     Closing Date: February 8, 2005.

 

 

                                        10

<PAGE>

 

 

     Code: The Internal Revenue Code of 1986, including any successor or

amendatory provisions.

 

     Combined Loan-to-Value Ratio: The fraction, expressed as a percentage, the

numerator of which is the sum of (x) the original principal balance of the

related Mortgage Loan and (y) the outstanding principal balance at the date of

origination of the Mortgage Loan of any senior mortgage loan, and the

denominator of which is the Appraised Value of the related Mortgaged Property.

 

     Compensating Interest: With respect to any Mortgage Loan and any

Distribution Date, an amount, not to exceed the related Servicing Fee, to be

applied by the EMC Servicer pursuant to Section 2.02 of Exhibit K or by any

other Servicer pursuant to the related Servicing Agreement to the payment of a

Prepayment Interest Shortfall on such Mortgage Loan or by the Master Servicer

pursuant to Section 5.02 hereof.

 

     Corporate Trust Office: The designated office of the Trustee where at any

particular time its corporate trust business with respect to this Agreement

shall be administered, which office at the date of the execution of this

Agreement is located, (i) for Certificate transfer purposes, at 2001 Bryan

Street, Floor 8, Dallas, Texas 75201, Attention: Institutional Trust Services

Transfer Department--BSABS Series 2005-SD1 and (ii) for all other purposes, at 4

New York Plaza, 6th Floor, New York, New York 10004 Attention: Institutional

Trust Services/Global Debt--BSABS Series 2005-SD1, or at such other address as

the Trustee may designate from time to time.

 

     Current Interest: As of any Distribution Date, with respect to each Class

of Certificates (other than the Class B-IO Certificates and Residual

Certificates), (i) the interest accrued on the Certificate Principal Balance,

during the related Accrual Period at the applicable Pass-Through Rate plus any

amount previously distributed with respect to interest for such Certificate that

has been recovered as a voidable preference by a trustee in bankruptcy, minus,

to the extent allocated to such Class, (ii) the sum of (a) any Prepayment

Interest Shortfall for such Distribution Date, to the extent not covered by

Compensating Interest, and (b) any shortfalls resulting from application of the

Relief Act or similar state laws during the related Due Period, provided,

however, that for purposes of calculating Current Interest for any such Class,

amounts specified in clause (ii) hereof for any such Distribution Date and

either Group shall be allocated first to the related Class B-IO Certificates and

the Residual Certificates in reduction of amounts otherwise distributable to

such Certificates from each Group on such Distribution Date and then any excess

shall be allocated to each Class of Certificates of the related Group pro rata

based on the respective amounts of interest accrued pursuant to clause (i)

hereof for each such Class on such Distribution Date.

 

     Custodial Agreement: The Custodial Agreement, dated as of January 1, 2005,

among the Trustee, the Depositor, the Master Servicer and the Custodian, as

amended or supplemented from time to time.

 

     Custodian: Wells Fargo Bank, N.A., as custodian and agent for the Trustee

with respect to the Mortgage Loans.

 

     Cut-off Date: The close of business on January 1, 2005.

 

     Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid

principal balance thereof as of the close of business on the Cut-off Date after

application of all Principal Prepayments received prior to the Cut-off Date and,

except with respect to any Simple Interest Loans, scheduled payments of

principal due on or before the Cut-off Date, whether or not received but without

giving effect to any installments of principal received in respect of Due Dates

after the Cut-off Date. The aggregate

 

 

 

                                        11

<PAGE>

 

 

Cut-Off Date Principal Balance of the Mortgage Loans in Group I and Group

II is $227,691,541 and $113,983,732, respectively.

 

     Definitive Certificates: As defined in Section 6.06.

 

     Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a

Replacement Mortgage Loan.

 

     Delinquency Event: A Delinquency Event with respect to a Group shall have

occurred and be continuing if at any time, (x) the three-month rolling average

of the percent equivalent of a fraction, the numerator of which is the aggregate

Stated Principal Balance of the Mortgage Loans of the related Group that are 61

days or more Delinquent or are in bankruptcy or foreclosure or are REO

Properties, and the denominator of which is the aggregate Stated Principal

Balance of all of the Mortgage Loans of the related Group as of the last day of

the related Due Period equals or exceeds (y) 50%, in the case of Group I and

40%, in the case of Group II of the aggregate Certificate Principal Balance of

the related Subordinated Certificates plus such Group's Overcollateralization

Amount (in each case after taking into account distribution of the related

Principal Distribution Amount on such Distribution Date) as a percentage of the

sum of the Stated Principal Balances of the Mortgage Loans of the related Group

as of the last day of the related Due Period.

 

     Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is

not made pursuant to the terms of such Mortgage Loan by the close of business on

the day such payment is scheduled to be due. A Mortgage Loan is "30 days

delinquent" if such payment has not been received by the close of business on

the corresponding day of the month immediately succeeding the month in which

such payment was due, or, if there is no such corresponding day (e.g., as when a

30-day month follows a 31-day month in which a payment was due on the 31st day

of such month), then on the last day of such immediately succeeding month.

Similarly for "60 days delinquent," "90 days delinquent" and so on.

 

     Denomination: With respect to the Certificates, the amount set forth on the

face thereof as, in the case of an Offered Certificate, the "Initial Principal

Balance of this Certificate," and, in the case of a Class B-IO Certificate, as

the "Initial Principal Balance (Notional) of this Certificate."

 

     Depositor: Bear Stearns Asset Backed Securities I LLC, a Delaware limited

liability company, or its successor in interest.

 

     Depository: The initial Depository shall be DTC, the nominee of which is

Cede, or any other organization registered as a "clearing agency" pursuant to

Section 17A of the Securities Exchange Act of 1934, as amended. The Depository

shall initially be the registered Holder of the Book-Entry Certificates. The

Depository shall at all times be a "clearing corporation" as defined in Section

8-102(a)(5) of the Uniform Commercial Code of the State of New York.

 

     Depository Agreement: With respect to the Class of Book-Entry Certificates,

the agreement among the Depositor, the Trustee and the initial Depository, dated

February 7, 2005, substantially in the form of Exhibit I.

 

     Depository Participant: A broker, dealer, bank or other financial

institution or other Person for whom from time to time a Depository effects

book-entry transfers and pledges of securities deposited with the Depository.

 

     Determination Date: With respect to any Distribution Date and (i) the EMC

Servicer, the 15th day of the month of such Distribution Date or, if such 15th

day is not a Business Day, the

 

 

                                       12

<PAGE>

 

 

immediately preceding Business Day or (ii) each other Servicer, the date

specified in the related Servicing Agreement.

 

     Distribution Account: The separate Eligible Account created and maintained

by the Trustee pursuant to Section 4.04 in the name of the Trustee for the

benefit of the Certificateholders and designated "JPMorgan Chase Bank N.A., in

trust for registered holders of Bear Stearns Asset Backed Securities Trust

2005-SD1, Asset-Backed Certificates, Series 2005-SD1". Funds in the Distribution

Account shall be held in trust for the Certificateholders for the uses and

purposes set forth in this Agreement.

 

     Distribution Account Deposit Date: As to any Distribution Date, on or

before 1:00 p.m. Central time on the Business Day immediately preceding such

Distribution Date.

 

     Distribution Date: The 25th day of each calendar month after the initial

issuance of the Certificates, or if such 25th day is not a Business Day, the

next succeeding Business Day, commencing in February 2005.

 

     DTC: The Depository Trust Company, or its successors in interest.

 

     Due Date: As to any Mortgage Loan (other than a Simple Interest Loan), the

date in each month on which the related Scheduled Payment is due, as set forth

in the related Mortgage Note, and with respect to any Simple Interest Loans, the

last day of the immediately preceding Prepayment Period, if its Scheduled

Payment is due during such Prepayment Period.

 

     Due Period: With respect to any Distribution Date and any Mortgage Loan

(other than any Simple Interest Mortgage Loan), the period from the second day

of the calendar month preceding the calendar month in which such Distribution

Date occurs through close of business on the first day of the calendar month in

which such Distribution Date occurs, and with respect to any Simple Interest

Mortgage Loans, the related Prepayment Period.

 

     Eligible Account: Any of (i) an account or accounts maintained with a

federal or state chartered depository institution or trust company, the

long-term unsecured debt obligations and short-term unsecured debt obligations

of which (or, in the case of a depository institution or trust company that is

the principal subsidiary of a holding company, the debt obligations of such

holding company, but only if Moody's is not a Rating Agency) are rated by each

Rating Agency in one of its two highest long-term and its highest short-term

rating, respectively (or, if S&P is a Rating Agency, in its highest long-term

and one of its two highest short-term ratings, respectively,) at the time any

amounts are held on deposit therein, or (ii) an account or accounts in a

depository institution or trust company in which such accounts are insured by

the FDIC (to the limits established by the FDIC) and the uninsured deposits in

which accounts are otherwise secured such that, as evidenced by an Opinion of

Counsel delivered to the Trustee and to each Rating Agency, the

Certificateholders have a claim with respect to the funds in such account or a

perfected first priority security interest against any collateral (which shall

be limited to Permitted Investments) securing such funds that is superior to

claims of any other depositors or creditors of the depository institution or

trust company in which such account is maintained, or (iii) a trust account or

accounts maintained with the corporate trust department of a federal or state

chartered depository institution or trust company having capital and surplus of

not less than $50,000,000, acting in its fiduciary capacity or (iv) any other

account acceptable to the Rating Agencies. Eligible Accounts may bear interest,

and may include, if otherwise qualified under this definition, accounts

maintained with the Trustee.

 

     EMC: EMC Mortgage Corporation, a Delaware corporation.

 

 

                                       13

<PAGE>

 

 

     EMC Mortgage Loans: The Mortgage Loans listed on the Mortgage Loan Schedule

as being serviced by the EMC Servicer.

 

     EMC Servicer: EMC, in its capacity as servicer hereunder, and its

successors and assigns.

 

     ERISA: The Employee Retirement Income Security Act of 1974, as amended.

 

     ERISA Restricted Certificate: Each Class of Certificates other than the

Class A Certificates.

 

      Event of Default: As defined in Section 8.01 hereof.

 

     Excess Cashflow: With respect to a Group and any Distribution Date, an

amount, if any, equal to the sum of (a) the related Excess Overcollateralization

Amount and (b) the related Remaining Excess Spread, in each case for such Group

and Distribution Date.

 

     Excess Liquidation Proceeds: To the extent not required by law to be paid

to the related Mortgagor, the excess, if any, of any Liquidation Proceeds with

respect to a Mortgage Loan over the Stated Principal Balance of such Mortgage

Loan and accrued and unpaid interest at the related Mortgage Rate through the

last day of the month in which the Mortgage Loan has been liquidated.

 

     Excess Overcollateralization Amount: With respect to a Group and any

Distribution Date, the lesser of (i) Principal Funds of the related Group and

(ii) the excess, if any, of the related Overcollateralization Amount over the

related Specified Overcollateralization Amount, in each case for such Group and

Distribution Date.

 

     Excess Spread: With respect to a Group and any Distribution Date, the

excess, if any, of (i) Interest Funds of the related Group for such Distribution

Date over (ii) the sum of Current Interest on the Certificates of the related

Group and Interest Carry Forward Amounts on the related Class A Certificates, in

each case for such Group and Distribution Date.

 

     Excess Yield Maintenance Amount: With respect to each Group and the first

Distribution Date, $0. With respect to a Group and any subsequent Distribution

Date, the excess, if any, of (a) the sum of the Yield Maintenance Payments for

such Distribution Date and the related Group over (b) the sum of the Yield

Maintenance Agreement Amounts for the Adjustable Rate Certificates for such

Distribution Date.

 

     Extra Principal Distribution Amount: With respect to a Group and any

Distribution Date, the lesser of (i) the excess, if any, of the related

Specified Overcollateralization Amount for such Distribution Date over the

related Overcollateralization Amount for such Distribution Date and (ii) the

related Excess Spread for such Distribution Date.

 

     Fannie Mae: Fannie Mae (also known as Federal National Mortgage

Association), or any successor thereto.

 

     FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.

 

     FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act of

1989.

 

 

                                       14

<PAGE>

 

 

     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.

 

     Fitch: Fitch Ratings.

 

     Freddie Mac: Freddie Mac (also known as Federal Home Loan Mortgage

Corporation), or any successor thereto.

 

     Gross Margin: With respect to each Mortgage Loan that bears an adjustable

rate of interest, 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, each as applicable) the Mortgage Rate until the next

succeeding Interest Adjustment Date.

 

     Group: Either a Loan Group or a Certificate Group, as the context requires.

 

     Group I: Either of the Group I Certificates or Loan Group I, as the context

requires.

 

     Group I Certificates: The Class I-A-1 Certificates, the Class I-A-2

Certificates, the Class I-A-3 Certificates, Class I-M-1 Certificates, Class

I-M-2 Certificates, Class I-M-3 Certificates, Class I-M-4 Certificates, Class

I-M-5 Certificates, Class I-M-6 Certificates and Class I-B Certificates.

 

     Group I Senior Certificates: The Class I-A-1 Certificates, the Class I-A-2

Certificates and the Class I-A-3 Certificates.

 

     Group I Senior Certificates Yield Maintenance Agreement: The Confirmation,

Ref. No. FXNEC6726 , dated the Closing Date, by and between the Yield

Maintenance Provider and the Trust, relating to the Class A-1 Certificates.

 

     Group I Subordinate Certificates: The Class I-M-1 Certificates, the Class

I-M-2 Certificates, the Class I-M-3 Certificates, the Class I-M-4 Certificates,

the Class I-M-5 Certificates, the Class I-M-6 Certificates and the Class I-B

Certificates.

 

     Group I Subordinate Certificates Yield Maintenance Agreement: The

Confirmation, Ref. No. FXNEC6725, dated the Closing Date, by and between the

Yield Maintenance Provider and the Trust, relating to the Group I Subordinate

Certificates.

 

     Group II: Either of the Group II Certificates or Loan Group II, as the

context requires.

 

     Group II Certificates: The Class II-A Certificates, the Class II-M-1

Certificates, the Class II-M-2 Certificates, the Class II-M-3 Certificates and

the Class II-B Certificates.

 

     Group II Senior Certificates: The Class II-A Certificates.

 

     Group II Subordinate Certificates: The Class II-M-1 Certificates, the Class

II-M-2 Certificates, the Class II-M-3 Certificatesand the Class II-B

Certificates.

 

     Indemnified Persons: The Trustee, the Master Servicer, the Seller, the

Depositor, the Custodian and the Securities Administrator and their officers,

directors, agents and employees and, with respect to the Trustee, any separate

co-trustee and its officers, directors, agents and employees.

 

 

                                       15

<PAGE>

 

 

     Index: With respect to each Mortgage Loan that bears an adjustable rate of

interest, the index set forth in the related Mortgage Note and indicated on the

Mortgage Loan Schedule, by reference to which the related Mortgage Rate will be

adjusted from time to time.

 

     Initial Certificate Principal Balance: With respect to any Certificate, the

Certificate Principal Balance of such Certificate or any predecessor Certificate

on the Closing Date.

 

     Initial Overcollateralization Amount: $541, in the case of Group I and

$4,103,414, in the case of Group II.

 

     Insurance Policy: With respect to any Mortgage Loan included in the Trust

Fund, any insurance policy, including all riders and endorsements thereto in

effect with respect to such Mortgage Loan, including any replacement policy or

policies for any such insurance policies.

 

     Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans pursuant

to any Insurance Policy, to the extent such proceeds are payable to the

mortgagee under the Mortgage, the related Servicer, the Master Servicer or the

trustee under the deed of trust and are not applied to the restoration of the

related Mortgaged Property or released to the Mortgagor in accordance with the

procedures that such Servicer or the Master Servicer would follow in servicing

mortgage loans held for its own account, in each case other than any amount

included in such Insurance Proceeds in respect of Insured Expenses and exclusive

of Subsequent Recoveries.

 

     Insured Expenses: Expenses covered by an Insurance Policy or any other

insurance policy with respect to the Mortgage Loans.

 

     Interest Carry Forward Amount: As of any Distribution Date and with respect

to each Class of Certificates (other than the Class B-IO Certificates and the

Residual Certificates), the sum of (i) the excess of (a) the Current Interest

for such Class with respect to prior Distribution Dates over (b) the amount

actually distributed to such Class with respect to interest on such prior

Distribution Dates and (ii) interest thereon (to the extent permitted by

applicable law) at the applicable Pass-Through Rate for such Class for the

related Accrual Period including the Accrual Period relating to such

Distribution Date.

 

     Interest Determination Date: With respect to each Adjustable Rate

Certificate, for the first Accrual Period February 4, 2005, and with respect to

any Accrual Period thereafter, the second LIBOR Business Day preceding the

commencement of such Accrual Period.

 

     Interest Funds: For a Group and any Distribution Date (i) the sum, without

duplication, of the following amounts, in each case with respect to the related

Group: (a) all interest received during the related Due Period with respect to

the related Mortgage Loans less the related Servicing Fee and Master Servicing

Fee referred to in clause (ii) of the definition thereof, (b) all Advances

relating to interest with respect to the related Mortgage Loans made on or prior

to the related Master Servicer Advance Date, (c) all Compensating Interest with

respect to the related Mortgage Loans and required to be remitted pursuant to

the related Servicing Agreement or this Agreement with respect to such

Distribution Date, (d) Liquidation Proceeds with respect to the related Mortgage

Loans collected during the related Prepayment Period (to the extent such

Liquidation Proceeds relate to interest), (e) all amounts relating to interest

with respect to each related Mortgage Loan repurchased by the Seller pursuant to

Sections 2.02, 2.03 and 3.20 and (f) all amounts in respect of interest paid by

EMC pursuant to Section 10.01, in each case to the extent remitted by the Master

Servicer or Servicer to the Master Servicer Collection Account pursuant to this

Agreement or the related Servicing Agreement, minus (ii) all amounts relating to

such Group's (or, if not allocable to a Group, such Group's pro rata share of

such amounts) interest reimbursed pursuant to Sections 4.03 and 4.05.

 

 

                                       16

<PAGE>

 

 

     Interest Rate Adjustment Date: With respect to each Mortgage Loan that

bears an adjustable rate of interest, the date set forth in the related Mortgage

Note and indicated on the Mortgage Loan Schedule, on which the related Mortgage

Rate is subject to adjustment.

 

     Interest Rate Cap: For any Distribution Date and the Adjustable Rate

Certificates in each respective Group, the weighted average of the Net Mortgage

Rates of the Mortgage Loans of the related Group as of the close of business on

the first day of the month immediately preceding the month in which such

Distribution Date occurs, adjusted to reflect the accrual of interest based on

the actual number of days elapsed in the related Accrual Period divided by 360.

 

     Latest Possible Maturity Date: For the Class I-A-1 Certificates, the

Distribution Date in April 2022 and, for the Class I-A-2 Certificates, the

Distribution Date in July 2027 which, in each case, is the Distribution Date on

which the Certificate Principal Balance for the related Class would be reduced

to zero assuming that no prepayments are received on the related Mortgage Loans,

scheduled monthly payments of principal and interest are timely received on the

related Mortgage Loans, no Excess Spread is applied to pay principal on the

Certificates and the Depositor does not exercise its related Optional

Termination on the related Optional Termination Date. The "Latest Possible

Maturity Date" for the Group I Certificates, other than the Class I-A-1 and

Class I-A-2 Certificates, and the Class I-BIO Certificates is the Distribution

Date in August 2043 and, for all of the Group II Certificates, the Class II-B-IO

Certificates and the Class R Certificates, is the Distribution Date in January

2045, which in each case is the Distribution Date in the month following the

latest maturing mortgage loan in the related group. For purposes of the Treasury

Regulations under Code section 860A through 860G, the latest possible maturity

date of each regular interest issued by REMIC I and REMIC II shall be the

related Latest Possible Maturity Date.

 

     LIBOR Business Day: Any day on which banks in the London, England and New

York City, U.S.A. are open and conducting transactions in foreign currency and

exchange.

 

     Liquidated 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 Master Servicer or a 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 Proceeds: Amounts, other than Insurance Proceeds and Subsequent

Recoveries, received in connection with the partial or complete liquidation of a

Mortgage Loan, whether through trustee's sale, foreclosure sale or otherwise, or

in connection with any condemnation or partial release of a Mortgaged Property

and any other proceeds received with respect to an REO Property, less the sum of

related unreimbursed Advances, Servicing Fees and Servicing Advances and all

expenses of liquidation, including property protection expenses and foreclosure

and sale costs, including court and reasonable attorneys fees.

 

     Loan Group: Either Loan Group I or Loan Group II, as the context requires.

 

     Loan Group II: The pool of Mortgage Loans identified in the related

Schedule of Mortgage Loans as having been assigned to Group I in Schedule B-I

hereto.

 

       Loan Group II: The pool of Mortgage Loans identified in the related

Schedule of Mortgage Loans as having been assigned to Group II in Schedule B-II

hereto.

 

 

                                       17

<PAGE>

 

 

     Master Servicer: Wells Fargo Bank, N.A., a national banking association, in

its capacity as master servicer hereunder, and its successors and assigns.

 

     Master Servicer Advance Date: As to any Distribution Date, on or before

1:00 p.m. Central time on the Business Day immediately preceding such

Distribution Date.

 

     Master Servicing Fee: For any Distribution Date, the sum of (i) all income

and gain, net of losses, realized from any investment of funds in the

Distribution Account and the Master Servicer Collection Account since the prior

Distribution Date and (ii) with respect to each Mortgage Loan, an amount equal

to 1/12th of the Master Servicing Fee Rate multiplied by the Stated Principal

Balance of such Mortgage Loan as of the close of business on the first day of

the month immediately preceding the month in which such Distribution Date

occurs.

 

     Master Servicing Fee Rate: 0.01% per annum.

 

     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 Securities and Exchange Commission or any statement of a

division thereof, or (c) any future releases, rules and regulations are

published by the Securities and Exchange Commission from time to time pursuant

to the Sarbanes-Oxley Act of 2002, which in any such case affects the form or

substance of the required certification and results in the required

certification being, in the reasonable judgment of the Master Servicer,

materially more onerous than the form of the required certification as of the

Closing Date, the Master Servicer Certification shall be as agreed to by the

Master Servicer, the Depositor and the Seller following a negotiation in good

faith to determine how to comply with any such new requirements.

 

     Master Servicer Collection Account: The separate Eligible Account created

and initially maintained by the Master Servicer pursuant to Section 4.02 with a

depository institution in the name of the Trustee for the benefit of the

Certificateholders and designated "JPMorgan Chase Bank, in trust for registered

holders of Bear Stearns Asset Backed Securities Trust 2005-SD1, Asset-Backed

Certificates, Series 2005-SD1." Funds in the Master Servicer Collection Account

shall be held in trust for the Certificateholders for the uses and purposes set

forth in this Agreement.

 

     Maximum Lifetime Mortgage Rate: As to each Mortgage Loan that bears an

adjustable rate of interest, 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 Rate can adjust in accordance with its terms, regardless of the

change in the applicable Index.

 

     MERS: Mortgage Electronic Registration Systems, Inc., a corporation

organized and existing under the laws of the State of Delaware, or any successor

thereto.

 

     MERS(R) System: The system of recording transfers of Mortgages

electronically maintained by MERS.

 

     MIN: The Mortgage Identification Number for Mortgage Loans registered with

MERS on the MERS(R) System.

 

 

                                       18

<PAGE>

 

 

     Minimum Lifetime Mortgage Rate: As to each Mortgage Loan that bears an

adjustable rate of interest, 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 Rate can adjust in accordance with its terms, regardless of the

change in the applicable Index.

 

     MOM Loan: Any Mortgage Loan as to which, at origination thereof, MERS acts

as the mortgagee, solely as nominee for the originator of such Mortgage Loan and

its successors and assigns.

 

     Monthly Statement: The statement delivered to the Certificateholders

pursuant to Section 5.05.

 

     Moody's: Moody's Investors Service, Inc.

 

     Mortgage: The mortgage, deed of trust or other instrument creating a first

lien on or first priority ownership interest, or creating a second lien on or

second priority ownership interest, as applicable, in an estate in fee simple in

real property securing a Mortgage Note.

 

     Mortgage File: The mortgage documents listed in Section 2.01 hereof

pertaining to a particular Mortgage Loan and any additional documents delivered

to the Custodian on behalf of the Trustee to be added to the Mortgage File

pursuant to this Agreement.

 

     Mortgage Loans: Such of the mortgage loans transferred and assigned to the

Trustee pursuant to the provisions hereof, as from time to time are held as a

part of the Trust Fund (including any REO Property), the mortgage loans so held

being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or

other acquisition of title of the related Mortgaged Property. Any mortgage loan

that was intended by the parties hereto to be transferred to the Trust Fund as

indicated by such Mortgage Loan Schedule which is in fact not so transferred for

any reason including, without limitation, a breach of the representation

contained in Section 2.03(b)(v) hereof, shall continue to be a Mortgage Loan

hereunder until the Purchase Price with respect thereto has been paid to the

Trust Fund.

 

     Mortgage Loan Purchase Price: The price, calculated as set forth in Section

10.01, to be paid in connection with the repurchase of the Mortgage Loans

pursuant to Section 10.01.

 

     Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time

amended by the Master Servicer to reflect the deletion of Deleted Mortgage Loans

and the addition of Replacement Mortgage Loans pursuant to the provisions of

this Agreement) transferred to the Trustee as part of the Trust Fund and from

time to time subject to this Agreement. The initial Mortgage Loan Schedule is

attached hereto as Exhibit B and sets forth the following information with

respect to each Mortgage Loan:

 

     (i)        the loan number;

 

     (ii)       the Servicer and/or Master Servicer thereof;

 

     (iii)      the Mortgage Rate in effect as of the Cut-off Date;

 

     (iv)       the Master Servicing Fee Rate;

 

     (v)        the related Servicing Fee Rate;

 

     (vi)       the Net Mortgage Rate in effect as of the Cut-off Date;

 

 

                                       19

<PAGE>

 

     (vii)      the stated maturity date;

 

     (viii)     the original principal balance;

 

     (ix)       the stated original term;

 

     (x)        the next payment date;

 

     (xi)       the monthly payment;

 

     (xii)      the remaining term;

 

     (xiii)     the property type;

 

     (xiv)      if it is a first or second lien on the related Mortgaged

               Property;

 

     (xv)       if applicable, that such Mortgage Loan is a Balloon Loan;

 

     (xvi)      whether interest accrues at a fixed rate, and otherwise, the

               applicable Index (with respect to adjustable rate Mortgage

               Loans);

 

     (xvii)     the Gross Margin, if applicable;

 

     (xviii)    the intervals between Interest Adjustment Dates, if applicable;

 

     (xix)       the next succeeding Interest Adjustment Date, if applicable;

 

     (xx)       the Periodic Rate Cap, if applicable;

 

     (xxi)      the Minimum Lifetime Mortgage Rate, if applicable;

 

     (xxii)     the Maximum Lifetime Mortgage Rate, if applicable;

 

     (xxiii)    the Combined Loan-to-Value Ratio as of the Cut-off Date;

 

     (xxiv)     [Reserved];

 

     (xxv)      the Cut-off Date Principal Balance;

 

     (xxvi)     if applicable, that such Mortgage Loan is a Simple Interest Loan;

 

     (xxvii)    if applicable, that such Mortgage Loan provides for negative

               amortization; and

 

     (xxviii)   the MIN with respect to each Mortgage Loan registered on the

               MERS(R) System.

 

Such schedule shall also set forth the total of the amounts described under

(xxv) above for all of the Mortgage Loans.

 

     Mortgage Note: The original executed note or other evidence of indebtedness

of a Mortgagor under a Mortgage Loan.

 

 

                                       20

<PAGE>

 

     Mortgage Rate: The annual rate of interest borne by a Mortgage Note.

 

     Mortgaged Property: The underlying property securing a Mortgage Loan.

 

     Mortgagor: The obligor on a Mortgage Note.

 

     Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum

rate equal to the Mortgage Rate less the sum of the related Servicing Fee Rate

and the Master Servicing Fee Rate.

 

     Non-Book-Entry Certificate: Any Certificate other than a Book-Entry

Certificate.

 

     Nonrecoverable Advance: Any portion of an Advance previously made or

proposed to be made by the Master Servicer that, in the good faith judgment of

the Master Servicer, will not or, in the case of a proposed advance, would not,

be ultimately recoverable by it from the related Mortgagor, related Liquidation

Proceeds or otherwise.

 

     Offered Certificates: The Adjustable Rate Certificates.

 

     Officer's Certificate: A certificate (i) signed by the Chairman of the

Board, the Vice Chairman of the Board, the President, a Vice President (however

denominated), an Assistant Vice President, the Treasurer, the Secretary, or one

of the assistant treasurers or assistant secretaries of the Depositor, the EMC

Servicer or the Master Servicer (or any other officer customarily performing

functions similar to those performed by any of the above designated officers and

also to whom, with respect to a particular matter, such matter is referred

because of such officer's knowledge of and familiarity with a particular

subject) or (ii), if provided for in this Agreement, signed by a Servicing

Officer, as the case may be, and delivered to the Depositor, the Seller, the

Securities Administrator, the Master Servicer and/or the Trustee, as the case

may be, as required by this Agreement.

 

     One-Month LIBOR: With respect to any Accrual Period, the rate determined by

the Securities Administrator on the related Interest Determination Date on the

basis of the rate for U.S. dollar deposits for one month that appears on

Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such Interest

Determination Date; provided that the parties hereto acknowledge that One-Month

LIBOR for the first Accrual Period shall equal 2.59% per annum. 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, such other service for

displaying One-Month LIBOR or comparable rates as may be reasonably selected by

the Securities Administrator), One-Month LIBOR for the applicable Accrual Period

will be the Reference Bank Rate. If no such quotations can be obtained by the

Securities Administrator and no Reference Bank Rate is available, One-Month

LIBOR will be One-Month LIBOR applicable to the preceding Accrual Period. The

establishment of One-Month LIBOR on each Determination Date by the Securities

Administrator and the Securities Administrator's calculation of the rate of

interest applicable to the Certificates bearing interest based on One-Month

LIBOR shall, in the absence of manifest error, be conclusive and binding.

 

     Opinion of Counsel: A written opinion of counsel, who may be counsel for

the Depositor or the Master Servicer, reasonably acceptable to each addressee of

such opinion; provided that with respect to Section 7.05 or 11.01, or the

interpretation or application of the REMIC Provisions, such counsel must (i) in

fact be independent of the Depositor and the Master Servicer, (ii) not have any

direct financial interest in the Depositor or the Master Servicer or in any

affiliate of either, and (iii) not be connected with the Depositor or the Master

Servicer as an officer, employee, promoter, underwriter, trustee, partner,

director or person performing similar functions. For purposes of the EMC

Servicer's

 

 

                                       21

<PAGE>

 

 

obligations pursuant to Exhibit K, a written opinion of counsel, who

may be counsel to the EMC Servicer, reasonably acceptable to each addressee of

such opinion.

 

     Optional Termination: The termination of either Loan Group I or Loan Group

II as a result of the purchase of all of the Mortgage Loans of the related Group

and any related REO Property pursuant to the last sentence of Section 10.01

hereof.

 

     Optional Termination Date: The Distribution Date on which the Stated

Principal Balance of all of the Mortgage Loans in the related Loan Group is

equal to or less than 10% , in the case of Group I and 20%, in the case of Group

II, of the aggregate Cut-off Date Principal Balance of all of the Mortgage Loans

in the related Group.

 

     Original Value: The value of the property underlying a Mortgage Loan based

on an appraisal.

 

     Originator: Any of the entities which either originated or acquired a

Mortgage Loan and transferred such Mortgage Loan to the Seller.

 

     OTS: The Office of Thrift Supervision.

 

     Outstanding: With respect to the Certificates as of any date of

determination, all Certificates theretofore executed and authenticated under

this Agreement except:

 

     (a) Certificates theretofore canceled by the Trustee or delivered to the

Trustee for cancellation; and

 

     (b) Certificates in exchange for which or in lieu of which other

Certificates have been executed and delivered by the Trustee pursuant to this

Agreement.

 

     Outstanding Mortgage Loan: As of any date of determination, a Mortgage Loan

with a Stated Principal Balance greater than zero that was not the subject of a

Principal Prepayment in full, and that did not become a Liquidated Loan, prior

to the end of the related Prepayment Period.

 

     Overcollateralization Amount: With respect to a Group and any Distribution

Date, the excess, if any, of (i) the aggregate Stated Principal Balance of the

Mortgage Loans of a Group as of the last day of the related Due Period, over

(ii) the sum of the Certificate Principal Balances of the Certificates of a

related Group (after taking into account the payment of principal other than any

related Extra Principal Distribution Amount on such Certificates) on such

Distribution Date.

 

     Overcollateralization Floor: For a Group and any date of determination,

0.50% of the aggregate Cut-off Date Principal Balance of the Mortgage Loans of

the related Group.

 

     Ownership Interest: As to any Certificate, any ownership interest in such

Certificate including any interest in such Certificate as the Holder thereof and

any other interest therein, whether direct or indirect, legal or beneficial.

 

     Pass-Through Rate: With respect to each Class of Certificates, other than

the Class B-IO Certificates and the Residual Certificates, the applicable

interest rate for each such Class as set forth in Section 6.01, subject to the

related Interest Rate Cap.

 

 

                                       22

<PAGE>

 

     Percentage Interest: With respect to any Certificate of a specified Class,

the Percentage Interest set forth on the face thereof or the percentage obtained

by dividing the Denomination of such Certificate by the aggregate of the

Denominations of all Certificates of such Class.

 

     Periodic Rate Cap: As to each Mortgage Loan that bears an adjustable rate

of interest, 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 a Mortgage Rate on each Interest Adjustment Date in accordance with

its terms, regardless of the change in the applicable Index.

 

     Permitted Investments: At any time, any one or more of the following

obligations and securities:

 

          (i) obligations of the United States or any agency thereof, provided

     such obligations are backed by the full faith and credit of the United

     States;

 

          (ii) general obligations of or obligations guaranteed by any state of

     the United States or the District of Columbia receiving the highest

     short-term debt rating of each Rating Agency, or such lower rating as will

     not result in the downgrading or withdrawal of the ratings then assigned to

     the Certificates by each Rating Agency (but only if S&P is not a Rating

     Agency);

 

          (iii) [Reserved];

 

          (iv) commercial or finance company paper which is then receiving the

     highest short-term rating of each Rating Agency, or such lower rating as

     will not result in the downgrading or withdrawal of the ratings then

     assigned to the Certificates by each Rating Agency (but only if S&P is not

     a Rating Agency);

 

          (v) certificates of deposit, demand or time deposits, or bankers'

     acceptances issued by any depository institution or trust company

     incorporated under the laws of the United States or of any state thereof

     and subject to supervision and examination by federal and/or state banking

     authorities, provided that the commercial paper and/or long term unsecured

     debt obligations of such depository institution or trust company (or in the

     case of the principal depository institution in a holding company system,

     the commercial paper or long-term unsecured debt obligations of such

     holding company, but only if Moody's is not a Rating Agency) are then rated

     one of the two highest long-term and the highest short-term ratings of each

     such Rating Agency for such securities (or, if S&P is a Rating Agency, the

     highest long-term and one of the two highest short-term ratings of such

     securities), or such lower ratings as will not result in the downgrading or

     withdrawal of the rating then assigned to the Certificates by any Rating

     Agency (but only if S&P is not a Rating Agency);

 

          (vi) demand or time deposits or certificates of deposit issued by any

     bank or trust company or savings institution to the extent that such

     deposits are fully insured by the FDIC;

 

          (vii) guaranteed reinvestment agreements issued by any bank, insurance

     company or other corporation containing, at the time of the issuance of

     such agreements, such terms and conditions as will not result in the

     downgrading or withdrawal of the rating then assigned to the Certificates

     by any such Rating Agency (but only if S&P is not a Rating Agency);

 

          (viii) repurchase obligations with respect to any security described

     in clauses (i) and (ii) above, in either case entered into with a

     depository institution or trust company (acting as principal) described in

     clause (v) above;

 

 

                                        23

<PAGE>

 

 

          (ix) securities (other than stripped bonds, stripped coupons or

     instruments sold at a purchase price in excess of 115% of the face amount

     thereof) bearing interest or sold at a discount issued by any corporation

     incorporated under the laws of the United States or any state thereof

     which, at the time of such investment, have one of the two highest long

     term ratings of each Rating Agency (provided that, for so long as Moody's

     is a Rating Agency, such rating shall be the highest commercial paper

     rating of Moody's for any such securities) (but only if S&P is not a Rating

     Agency), or such lower rating as will not result in the downgrading or

     withdrawal of the rating then assigned to the Certificates by any Rating

     Agency, as evidenced by a signed writing delivered by each Rating Agency

     (but only if S&P is not a Rating Agency);

 

          (x) interests in any money market fund (including any such fund

     managed or advised by the Trustee, the Master Servicer, the Securities

     Administrator or any affiliate thereof) which at the date of acquisition of

     the interests in such fund and throughout the time such interests are held

     in such fund has the highest applicable long term rating by each Rating

     Agency rating such fund (and, so long as S&P is a Rating Agency, the long

     term ratings must be either AAAm or AAAm-G) or such lower rating as will

     not result in the downgrading or withdrawal of the ratings then assigned to

     the Certificates by each Rating Agency (but only if S&P is not a Rating

     Agency);

 

          (xi) short term investment funds sponsored by any trust company or

     national banking association incorporated under the laws of the United

     States or any state thereof (including any such fund managed or advised by

     the Trustee, the Master Servicer, the Securities Administrator or any

     affiliate thereof) which on the date of acquisition has been rated by each

     Rating Agency in their respective highest applicable rating or such lower

     rating as will not result in the downgrading or withdrawal of the ratings

     then assigned to the Certificates by each Rating Agency (but only if S&P is

     not a Rating Agency); and

 

          (xii) such other investments having a specified stated maturity and

     bearing interest or sold at a discount acceptable to each Rating Agency as

     will not result in the downgrading or withdrawal of the rating then

     assigned to the Certificates by any Rating Agency, as evidenced by a signed

     writing delivered by each Rating Agency (but only if S&P is not a Rating

     Agency);

 

     provided, that no such instrument shall be a Permitted Investment if such

instrument (i) evidences the right to receive interest only payments with

respect to the obligations underlying such instrument, (ii) is purchased at a

premium or (iii) is purchased at a deep discount; provided further that no such

instrument shall be a Permitted Investment (A) if such instrument evidences

principal and interest payments derived from obligations underlying such

instrument and the interest payments with respect to such instrument provide a

yield to maturity of greater than 120% of the yield to maturity at par of such

underlying obligations, or (B) if it may be redeemed at a price below the

purchase price (the foregoing clause (B) not to apply to investments in units of

money market funds pursuant to clause (vii) above); provided further that no

amount beneficially owned by any REMIC (including, without limitation, any

amounts collected by the Master Servicer but not yet deposited in the Master

Servicer Collection Account) may be invested in investments (other than money

market funds) treated as equity interests for Federal income tax purposes,

unless the Master Servicer shall receive an Opinion of Counsel, at the expense

of the Master Servicer, to the effect that such investment will not adversely

affect the status of any such REMIC as a REMIC under the Code or result in

imposition of a tax on any such REMIC. Permitted Investments that are subject to

prepayment or call may not be purchased at a price in excess of par.

 

     Permitted Transferee: Any person other than (i) the United States, any

State or political subdivision thereof, or any agency or instrumentality of any

of the foregoing, (ii) a foreign government, International Organization or any

agency or instrumentality of either of the foregoing, (iii) an

 

 

                                       24

<PAGE>

 

organization (except certain farmers' cooperatives described in section 521

of the Code) that is exempt from tax imposed by Chapter 1 of the Code (including

the tax imposed by section 511 of the Code on unrelated business taxable income)

on any excess inclusions (as defined in section 860E(c)(1) of the Code) with

respect to any Residual Certificate, (iv) rural electric and telephone

cooperatives described in section 1381(a)(2)(C) of the Code, (v) a Person that

is not a citizen or resident of the United States, a corporation, partnership

(other than a partnership that has any direct or indirect foreign partners) or

other entity (treated as a corporation or a partnership for federal income tax

purposes), created or organized in or under the laws of the United States, any

state thereof or the District of Columbia, an estate whose income from sources

without the United States is includible in gross income for United States

federal income tax purposes regardless of its connection with the conduct of a

trade or business within the United States, or a trust if a court within the

United States is able to exercise primary supervision over the administration of

the trust and one or more United States persons have authority to control all

substantial decisions of the trust or and (vi) any other Person so designated by

the Trustee based upon an Opinion of Counsel (which shall not be an expense of

the Trustee) that states that the Transfer of an Ownership Interest in a

Residual Certificate to such Person may cause the Trust Fund to fail to qualify

as a REMIC at any time that any Certificates are Outstanding. The terms "United

States," "State" and "International Organization" shall have the meanings set

forth in section 7701 of the Code or successor provisions. A corporation will

not be treated as an instrumentality of the United States or of any State or

political subdivision thereof for these purposes if all of its activities are

subject to tax and, with the exception of the Federal Home Loan Mortgage

Corporation, a majority of its board of directors is not selected by such

government unit.

 

     Person: Any individual, corporation, partnership, joint venture,

association, joint-stock company, limited liability company, trust,

unincorporated organization or government, or any agency or political

subdivision thereof.

 

     Prepayment Assumption: The applicable rate of prepayment, as described in

the Prospectus Supplement relating to each Class of Offered Certificates.

 

     Prepayment Charge: Any prepayment premium, penalty or charge payable by a

Mortgagor in connection with any Principal Prepayment on a Mortgage Loan

pursuant to the terms of the related Mortgage Note.

 

     Prepayment Interest Shortfall: With respect to any Distribution Date, for

each Mortgage Loan that was the subject of a partial Principal Prepayment, a

Principal Prepayment in full, or that became a Liquidated Loan during the

related Prepayment Period, (other than a Principal Prepayment in full resulting

from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 3.20 or

10.01 hereof), the amount, if any, by which (i) one month's interest at the

applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage

Loan immediately prior to such prepayment (or liquidation) or in the case of a

partial Principal Prepayment on the amount of such prepayment (or Liquidation

Proceeds) exceeds (ii) the amount of interest paid or collected in connection

with such Principal Prepayment or such Liquidation Proceeds.

 

     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 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

 

 

                                       25

<PAGE>

 

 

any replacement policy therefor through the related Accrual Period for such

Class relating to a Distribution Date.

 

     Principal Distribution Amount: With respect to a Group and any each

Distribution Date, an amount equal to (x) the related Principal Funds for such

Distribution Date plus (y) any related Extra Principal Distribution Amount for

such Distribution Date minus (z) any related Excess Overcollateralization Amount

for such Distribution Date.

 

     Principal Funds: With respect to a Group and any Distribution Date, (i) the

sum, without duplication, of the following amounts, in each case with respect to

a related Group (a) all scheduled principal (or with respect to any Simple

Interest Loans, actual principal) collected during the related Due Period, (b)

all Advances (except with respect to any Simple Interest Loans) relating to

principal made on or before the Master Servicer Advance Date, (c) Principal

Prepayments exclusive of Prepayment Charges collected during the related

Prepayment Period, (d) the Stated Principal Balance of each Mortgage Loan that

was repurchased by the Seller or a Servicer pursuant to Sections 2.02, 2.03 or

3.20, (e) the aggregate of all Substitution Adjustment Amounts for the related

Determination Date in connection with the substitution of Mortgage Loans

pursuant to Section 2.03(c), (f) amounts in respect of principal paid by the EMC

Servicer pursuant to Section 10.01 and (g) all Liquidation Proceeds collected

during the related Prepayment Period (to the extent such Liquidation Proceeds

relate to principal), in each case to the extent remitted by the Master Servicer

or the applicable Servicer to the Master Servicer Collection Account pursuant to

this Agreement or the related Servicing Agreement and all Subsequent Recoveries

received during the related Prepayment Period and minus (ii) all amounts

relating to such Group's (or if not allocable to a Group, such Group's pro rata

share of such amounts) principal or not allocable to either interest or

principal reimbursed pursuant to Sections 4.03 and 4.05.

 

     Principal Prepayment: Any Mortgagor payment or other recovery of (or

proceeds with respect to) principal on a Mortgage Loan (including loans

purchased or repurchased under Sections 2.02, 2.03, 3.20 and 10.01 hereof) that

is received in advance of its scheduled Due Date and is not accompanied by an

amount as to interest representing scheduled interest due on any date or dates

in any month or months subsequent to the month of prepayment. Partial Principal

Prepayments shall be applied by the Master Servicer or the applicable Servicer,

as appropriate, in accordance with the terms of the related Mortgage Note.

 

     Projected Principal Balances: For any Yield Maintenance Agreement and

Distribution Date, the related Notional Amount for such Distribution Date set

forth on Schedule I of the related Yield Maintenance Agreement.

 

     Prospectus Supplement: The Prospectus Supplement dated February 7, 2005

relating to the public offering of the Offered Certificates.

 

     Protected Account: An account established and maintained by each Servicer

with respect to receipts on the Mortgage Loans and REO Property serviced by such

Servicer in accordance with the related Servicing Agreement or Exhibit K hereto.

 

     Protected Party: As defined in Section 7.04 hereof.

 

     PUD: A Planned Unit Development.

 

     Purchase Price: With respect to any Mortgage Loan (x) required to be

repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof or (y) that

the Seller has a right to purchase pursuant to Section 3.20 hereof, an amount

equal to the sum of (i) 100% of the outstanding principal balance of the

 

 

                                        26

<PAGE>

 

 

Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon

at the applicable Mortgage Rate through the first day of the month in which the

Purchase Price is to be distributed to Certificateholders plus (iii) in the case

of a repurchase of such Mortgage Loan resulting from breach of the

representation or warranty contained in Section 2.03(b)(vii)(G) or

2.03(b)(vii)(LL), any costs or damages incurred by the Trust in connection with

the violation by such Mortgage Loan of any predatory or abusive lending law,

reduced by (iv) any portion of the Servicing Fee, Servicing Advances and

Advances payable to the purchaser of the Mortgage Loan.

 

     Rating Agency: Each of Moody's, S&P and Fitch. 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 each Liquidated Loan, an amount (not less

than zero or more than the Stated Principal Balance of the Mortgage Loan) as of

the date of such liquidation, equal to (i) the Stated Principal Balance of such

Liquidated Loan as of the date of such liquidation, minus (ii) the Liquidation

Proceeds, if any, received in connection with such liquidation during the month

in which such liquidation occurs, to the extent applied as recoveries of

principal of the Liquidated Loan.

 

     Realized Loss Event: A Realized Loss Event with respect to a Group will be

deemed to have occurred if the aggregate of Realized Losses (reduced by the

aggregate amount of Subsequent Recoveries) from the Closing Date through the

last day of the related Due Period with respect to the Mortgage Loans of such

Group, as a percentage of the aggregate Stated Principal Balance of the related

Mortgage Loans as of the Cut-off Date, exceed for Distribution Dates occurring:

<TABLE>

<CAPTION>

 

        DISTRIBUTION DATE                                      LOSS PERCENTAGE

<S>                                                            <C>                           

                                                              2.00%, in the case of Group I and

        February 2008 through January 2009.................    3.00%, in the case of Group II

                                                               2.50%, in the case of Group I and

        February 2009 through January 2010.................    4.50%, in the case of Group II

                                                              3.00%, in the case of Group I and

        February 2010 through January 2011.................    5.75%, in the case of Group II

                                                              3.25%, in the case of Group I and

        February 2011 and each month thereafter............    6.00%, in the case of Group II

</TABLE>

 

     Record Date: With respect to each Class of Certificates (except the

Adjustable Rate Certificates) and (a) the first Distribution Date, the Closing

Date, and (b) with respect to any other Distribution Date, the close of business

on the last Business Day of the month preceding the month in which such

Distribution Date occurs. With respect to the Adjustable Rate Certificates and

any Distribution Date, so long as such Certificates are Book-Entry Certificates,

the Business Day preceding such Distribution Date, and otherwise, the close of

business on the last Business Day of the month preceding the month in which such

Distribution Date occurs.

 

     Reference Bank Rate: With respect to any Accrual Period, the arithmetic

mean (rounded upwards, if necessary, to the nearest whole multiple of 0.03125%)

of the offered rates for United States

 

 

                                       27

<PAGE>

 

 

dollar deposits for one month that are quoted by the Reference Banks as of

11:00 a.m., New York City time, on the related Interest Determination Date to

prime banks in the London interbank market for a period of one month in amounts

approximately equal to the aggregate Certificate Principal Balance of all

Adjustable Rate Certificates on such Interest Determination Date, provided that

at least two such Reference Banks provide such rate. If fewer than two offered

rates appear, the Reference Bank Rate will be the arithmetic mean (rounded

upwards, if necessary, to the nearest whole multiple of 0.03125%) 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 Certificate Principal Balance of the

Certificates which bear an adjustable rate of interest on such Interest

Determination Date.

 

     Reference Banks: Barclays Bank PLC, Citibank, N.A. and Deutsche Bank AG,

provided that if any of the foregoing banks are not suitable to serve as a

Reference Bank, then any leading banks selected by the Securities Administrator

which are engaged in transactions in Eurodollar deposits in the international

Eurocurrency market (i) with an established place of business in London,

England, (ii) not controlling, under the control of or under common control with

the Depositor, the Seller, the Master Servicer or any affiliate thereof and

(iii) which have been designated as such by the Trustee.

 

     Regular Certificate: Any Certificate other than a Residual Certificate.

 

     Relief Act: The Servicemembers Civil Relief Act.

 

     Remaining Excess Spread: With respect to a Group and any Distribution Date,

the related Excess Spread less any related Extra Principal Distribution Amount,

in each case for such Distribution Date.

 

     REMIC: A "real estate mortgage investment conduit" within the meaning of

section 860D of the Code.

 

     REMIC I: The segregated pool of assets described in Section 5.06(a).

 

     REMIC I Certificates: The REMIC I Regular Interests and the Class R-1

Certificate.

 

     REMIC I Regular Interests: As defined in Section 5.06(b).

 

     REMIC II: The segregated pool of assets consisting of the REMIC I regular

interests and constituting a REMIC hereunder.

 

     REMIC II Certificates: The REMIC II Regular Interests and the Class R-2

Certificate.

 

     REMIC II Regular Interests: As defined in Section 5.06(c).

 

     REMIC Opinion: An Opinion of Counsel, to the effect that the proposed

action described therein would not, under the REMIC Provisions, (i) cause either

REMIC I or REMIC II to fail to qualify as a REMIC while any regular interest in

any such REMIC is outstanding, (ii) result in a tax on prohibited transactions

or (iii) constitute a taxable contribution after the Startup Day.

 

     REMIC Provisions: Provisions of the federal income tax law relating to real

estate mortgage investment conduits, which appear at sections 860A through 860G

of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed,

temporary and final regulations and published

 

 

                                       28

<PAGE>

 

 

rulings, notices and announcements promulgated thereunder, as the foregoing

may be in effect from time to time as well as provisions of applicable state

laws.

 

     Remittance Report: As defined in Section 5.04(c).

 

     REO Property: A Mortgaged Property acquired by a Servicer or the Master

Servicer through foreclosure or deed-in-lieu of foreclosure in connection with a

defaulted Mortgage Loan.

 

     Replacement Mortgage Loan: A Mortgage Loan or Mortgage Loans in the

aggregate substituted by the Seller for a Deleted Mortgage Loan, which must, on

the date of such substitution, as confirmed in a Request for Release, (i) have a

Stated Principal Balance, after deduction of the principal portion of the

Scheduled Payment due in the month of substitution, not in excess of, and not

less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (ii)

have a Mortgage Rate not less than or more than 1% per annum higher than the

Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or higher credit

quality characteristics than that of the Deleted Mortgage Loan; (iv) if the

Deleted Mortgage Loan is an EMC Mortgage Loan, be an EMC Mortgage Loan; (v) have

a Combined Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan;

(vi) have a remaining term to maturity no greater than (and not more than one

year less than) that of the Deleted Mortgage Loan; (vii) not permit conversion

of the Mortgage Rate from a fixed rate to a variable rate; (viii) provide for a

Prepayment Charge on terms substantially similar to those of the Prepayment

Charge, if any, of the Deleted Mortgage Loan; (ix) have the same lien priority

as the Deleted Mortgage Loan; (x) constitute the same occupancy type as the

Deleted Mortgage Loan or be owner occupied; (xi) be current in payment of

principal and interest as of the date of substitution; (xii) have payment terms

that do not vary in any material respect from the payment terms of the Mortgage

Loan for which it is to be substituted; (xiii) if the Deleted Mortgage Loan

bears an adjustable rate of interest, have a Gross Margin, Periodic Rate Cap and

Maximum Lifetime Mortgage Rate no less than those of the Deleted Mortgage Loan,

have the same Index and interval between Interest Adjustment Dates, and a

Minimum Lifetime Mortgage Rate no lower than that of such Deleted Mortgage Loan;

and (xiv) comply with each representation and warranty set forth in Section 2.03

hereof.

 

     Request for Release: The Request for Release to be submitted by the Seller,

a Servicer or the Master Servicer to the Trustee and/or the Custodian, as

appropriate, substantially in the form of Exhibit H. Each Request for Release

furnished to the Trustee and/or the Custodian by the Seller, a Servicer or the

Master Servicer shall be in duplicate and shall be executed by a Servicing

Officer (or, if furnished electronically to the Trustee and/or Custodian, shall

be deemed to have been sent and executed by a Servicing Officer) of the Seller,

the Servicer or the Master Servicer, as applicable.

 

     Required Insurance Policy: With respect to any Mortgage Loan, any insurance

policy that is required to be maintained from time to time under this Agreement

or the related Servicing Agreement.

 

     Residual Certificates: The Class R-1 Certificates and Class R-2

Certificates.

 

     Responsible Officer: With respect to the Trustee, any Vice President, any

Assistant Vice President, the Secretary, any Assistant Secretary, any Trust

Officer with specific responsibility for the transaction contemplated hereby or

other officers of the Trustee specified by the Trustee, as to whom, with respect

to a particular matter, such matter is referred because of such officer's

knowledge of and familiarity with the particular subject.

 

     S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc.

 

 

                                       29

<PAGE>

 

 

     Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on

any Due Date allocable to principal and/or interest on such Mortgage Loan.

 

     Securities Act: The Securities Act of 1933, as amended.

 

     Securities Administrator: Wells Fargo Bank, N.A., in its capacity as

securities administrator hereunder, and its successors and assigns.

 

     Securities Administrator Fee: As to any Distribution Date, a fee payable to

the Securities Administrator by the Master Servicer out of its own funds in such

capacity as they may separately agree.

 

     Seller: EMC, in its capacity as seller of the Mortgage Loans to the

Depositor.

 

     Servicer: Each of the EMC Servicer and WFB.

 

     Servicers: The EMC Servicer and WFB.

 

     Servicer Remittance Date: With respect to each Mortgage Loan, (i) in the

case of the EMC Servicer, the 23rd day of each calendar month, or if such 23rd

day is not a Business Day, the next succeeding Business Day (or, if such next

succeeding Business Day would be the Distribution Date, the immediately

preceding Business Day), commencing in February 2005 and (ii) in the case of any

other Servicer, the date set forth in the related Servicing Agreement, when the

related Servicer is required to remit funds in the related Protected Account to

the Master Servicer.

 

     Servicing Agreement: Any servicing agreement listed on Schedule I hereto,

and, in the case of the EMC Servicer, the obligations of the EMC Servicer set

forth in this Agreement, including Exhibit K hereto, as amended, including by

the related Assumption Agreement, if applicable.

 

      Servicing Advances: All customary, reasonable and necessary "out of pocket"

costs and expenses (including reasonable legal fees) incurred in the performance

by a Servicer of its servicing obligations under the related Servicing

Agreement, including, but not limited to, the cost of (i) the preservation,

restoration and protection of a Mortgaged Property, (ii) any enforcement or

judicial proceedings, including foreclosures, and including any expenses

incurred in relation to any such proceedings that result from a Mortgage Loan

being registered in the MERS(R) System, (iii) the management and liquidation of

any REO Property (including, without limitation, realtor's commissions) and (iv)

compliance with any obligations under a Servicing Agreement or Section 3.09

hereof to cause insurance to be maintained.

 

     Servicing Fee: As to each Mortgage Loan and any Distribution Date, an

amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated

Principal Balance of such Mortgage Loan as of the close of business on the first

day of the month immediately preceding the month in which such Distribution Date

occurs 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

Stated Principal Balance of such Mortgage Loan for the period covered by such

payment of interest.

 

     Servicing Fee Rate: With respect to each Mortgage Loan, the per annum rate

set forth in the Mortgage Loan Schedule under the heading "Servicing Fee."

 

     Servicing Officer: Any officer of a Servicer or the Master Servicer

involved in, or responsible for, the administration and servicing or master

servicing of the Mortgage Loans (i) in the case

 

 

                                       30

<PAGE>

 

 

of the EMC Servicer, whose name and facsimile signature appear on a list of

servicing officers furnished to the Trustee by the EMC Servicer on the Closing

Date pursuant to this Agreement, as such list may from time to time be amended

and (ii) in the case of the Master Servicer or any other Servicer, as to which

evidence reasonably acceptable to the Custodian or the Trustee, as applicable,

of due authorization, by such party has been furnished from time to time to the

Custodian or the Trustee, as applicable.

 

     Simple Interest Loan: A Mortgage Loan that provides for daily accrual of

interest and is identified as such on the Mortgage Loan Schedule. None of the

Mortgage Loans are Simple Interest Loans.

 

     Specified Overcollateralization Amount: With respect to the Mortgage Loans

of either Group and the first Distribution Date, $0. With respect to the

Mortgage Loans of a Group and any subsequent Distribution Date (i) prior to the

related Stepdown Date, 1.65%, in the case of Group I and 4.55%, in the case of

Group II, of the aggregate Cut-off Date Principal Balance of the related

Mortgage Loans and (ii) on and after the related Stepdown Date provided a

Trigger Event for such Group is not in effect, the greater of (a) 3.30%, in the

case of Group I and 9.10%, in the case of Group II, of the Stated Principal

Balance of the related Mortgage Loans as of the last day of the related Due

Period and (b) such Group's Overcollateralization Floor or (iii) on and after

the related Stepdown Date and if a Trigger Event for such Group is in effect,

the Specified Overcollateralization Amount for the immediately preceding

Distribution Date.

 

     Startup Day: The startup day, within the meaning of Section 860G(a)(9), for

each REMIC formed hereunder shall be the Closing Date.

 

     Stated Principal Balance: With respect to any Mortgage Loan or related REO

Property and any Distribution Date, the Cut-off Date Principal Balance thereof

minus the sum of (i) the principal portion of the Scheduled Payments due (or,

with respect to any Simple Interest Loans, the principal portion of payments

actually received) with respect to such Mortgage Loan during each related Due

Period ending prior to such Distribution Date (and other than with respect to

any Simple Interest Loans irrespective of any delinquency in their payment),

(ii) all Principal Prepayments with respect to such Mortgage Loan received prior

to or during the related Prepayment Period, and all Liquidation Proceeds to the

extent applied by the related Servicer or the Master Servicer as recoveries of

principal in accordance with Section 3.13 with respect to such Mortgage Loan,

that were received by the related Servicer or the Master Servicer as of the

close of business on the last day of the Prepayment Period related to such

Distribution Date, and (iii) any Realized Losses on such Mortgage Loan incurred

during the related Prepayment Period. The Stated Principal Balance of a

Liquidated Loan equals zero.

 

     Stepdown Date: With respect to a Group, the earlier to occur of (i) the

Distribution Date on which the aggregate Certificate Principal Balance of the

Class A Certificates of such Group has been reduced to zero and (ii) the later

to occur of (a) the Distribution Date in February 2008 and (b) the first

Distribution Date on which the aggregate Certificate Principal Balance of the

Subordinated Certificates of such Group plus the Overcollateralization Amount

for such Group and Distribution Date divided by the Stated Principal Balance of

the related Mortgage Loans as of the last day of the related Due Period is

greater than or equal to 23.30%, in the case of Group I and 36.60%, in the case

of Group II.

 

     Strike Price: For any Yield Maintenance Agreement and Distribution Date,

the related "Cap Rate" set forth for such Distribution Date in the applicable

Yield Maintenance Agreement.

 

     Subordinated Certificates: The Group I Subordinate Certificates and the

Group II Subordinate Certificates.

 

 

 

                                        31

<PAGE>

 

 

     Subsequent Recovery: The recovery of any amount (including the release of

surplus funds held to cover expenses) in respect of a Liquidated Loan after a

Realized Loss has been allocated with respect thereto to one or more Classes of

Subordinated Certificates.

 

     Substitution Adjustment Amount: The meaning ascribed to such term pursuant

to Section 2.03(c).

 

     Successor Master Servicer: The meaning ascribed to such term pursuant to

Section 8.01.

 

     Supplemental Interest Reserve Fund: The fund maintained as described in

Section 5.07.

 

     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 holder of the greatest Percentage Interest

in a Class of Residual Certificates shall be the Tax Matters Person for the

related REMIC. The Securities Administrator, or any successor thereto or

assignee thereof shall serve as tax administrator hereunder and as agent for the

related Tax Matters Person.

 

     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).

 

     Transfer Affidavit: As defined in Section 6.02(c).

 

     Transfer: Any direct or indirect transfer or sale of any Ownership Interest

in a Certificate.

 

     Trigger Event: With respect to a Group and any Distribution Date on or

after the related Stepdown Date, a Trigger Event for such Group exists if either

a related Delinquency Event or a related Realized Loss Event shall have occurred

and be continuing.

 

      Trust Fund: The corpus of the trust created hereunder consisting of (i) the

Mortgage Loans and all interest accruing and principal due (or in the case of

any Simple Interest Loan, received) with respect thereto after the Cut-off Date

to the extent not applied in computing the Cut-off Date Principal Balance

thereof; (ii) the Master Servicer Collection Account and the Distribution

Account and all amounts deposited therein pursuant to the applicable provisions

of this Agreement; (iii) property that secured a Mortgage Loan and has been

acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv) the

mortgagee's rights under the Insurance Policies with respect to the Mortgage

Loans; (v) the Servicing Agreements and Assumption Agreements; (vi) rights under

the Yield Maintenance Agreements and the Yield Maintenance Account and (vii) all

proceeds of the foregoing, including proceeds of conversion, voluntary or

involuntary, of any of the foregoing into cash or other liquid property.

 

     Trustee: JPMorgan Chase Bank, N.A., a national banking association, not in

its individual capacity, but solely in its capacity as trustee for the benefit

of the Certificateholders under this Agreement, and any successor thereto, and

any corporation or national banking association resulting from or surviving any

consolidation or merger to which it or its successors may be a party and any

successor trustee as may from time to time be serving as successor trustee

hereunder.

 

     Trustee Fee: As to any Distribution Date, a fee payable to the Trustee by

the Master Servicer out of its own funds in such amount as they may separately

agree.

 

 

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     Unpaid Applied Realized Loss Amount: As of any Distribution Date, and each

Class of Subordinated Certificates, the excess of (i) the Applied Realized Loss

Amount for such Class over (ii) the sum of all distributions on such Class in

reduction of the Applied Realized Loss Amount and any Subsequent Recoveries

allocated to such Class, in each case, on all previous Distribution Dates.

 

     Voting Rights: The portion of the voting rights of all the Certificates

that is allocated to any Certificate for purposes of the voting provisions

hereunder. Voting Rights shall be allocated (i) 95% to the Certificates (other

than the Class B-IO and Residual Certificates), (ii) 1 1/2% to the Class I-B-IO

Certificates, (iii) 1 1/2% to the Class II-B-IO Certificates and (iv) 2% to the

Residual Certificates, with the allocation among the Adjustable Rate

Certificates to be in proportion to the Certificate Principal Balance of each

Class relative to the Certificate Principal Balance of all other such Classes.

Voting Rights will be allocated among the Certificates of each Class of

Adjustable Rate Certificates, and among the Class B-IO Certificates and Residual

Certificates, in accordance with their respective Percentage Interests.

 

     WAC Excess: With respect to any Distribution Date and for any Class of

Adjustable Rate Certificates, the sum of (A) the excess of (1) the amount of

interest that such Class of Adjustable Rate Certificates would otherwise be

entitled to receive on the Distribution Date had the Pass-Through Rate for such

Class been calculated at the Pass-Through Rate for such Class and Distribution

Date without regard to the applicable Interest Rate Cap, over (2) the amount of

interest payable on such Class at the respective Pass-Through Rate for such

Class for the Distribution Date and (B) the excess described in clause (A) for

such Class for all previous Distribution Dates (including any interest accrued

on that amount at the related Pass-Through Rate without regard to the applicable

Interest Rate Cap) not previously paid to such Class.

 

     WFB: Wells Fargo Bank, N.A., in its capacity as a Servicer of Mortgage

Loans and its successors and assigns in such capacity.

 

     Yield Maintenance Account: The separate Eligible Account created and

maintained by the Trustee pursuant to Section 4.06 in the name of the Trustee

primarily for the benefit of the Adjustable Rate Certificateholders and

designated "JPMorgan Chase Bank, in trust for registered holders of Bear Stearns

Asset Backed Securities Trust 2005-SD1, Asset-Backed Certificates, Series

2005-SD1." The Yield Maintenance Account shall not constitute an asset of any

REMIC hereunder.

 

     Yield Maintenance Agreements: The Group I Senior Certificates Yield

Maintenance Agreement, the Group I Subordinate Certificates Yield Maintenance

Agreement, the Class II-A Yield Maintenance Agreement, the Class II-M-1 Yield

Maintenance Agreement, the Class II-M-2 Yield Maintenance Agreement, the Class

II-M-3 Yield Maintenance Agreement and the Class II-B Yield Maintenance

Agreement.

 

     Yield Maintenance Agreement Amount: In the case of the Group I

Certificates, with respect to any Distribution Date through the Distribution

Date in October 2012, if One-Month LIBOR is greater than the applicable Strike

Price, an amount equal to the result of multiplying (A) the actual number of

days in the applicable Accrual Period divided by 360 by (B) the product of (a)

the rate equal to the excess of (x) the lesser of One-Month LIBOR and the

applicable Ceiling Rate over (y) the applicable Strike Price and (b) an amount

equal to the lesser of the aggregate Certificate Principal Balance of the

applicable Classes of Certificates and the Projected Principal Balance for such

Classes for that Distribution Date.

 

     In the case of the Group II Certificates, with respect to any Distribution

Date through the Distribution Date in February 2010, if One-Month LIBOR is

greater than the applicable Strike Price, an amount equal to the result of

multiplying (A) the actual number of days in the applicable Accrual Period

 

 

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divided by 360 by (B) the product of (a) the rate equal to the excess of (x)

One-Month LIBOR over (y) the applicable Strike Price and (b) an amount equal to

the lesser of the aggregate Certificate Principal Balance of the applicable

Class of Certificates and the Projected Principal Balance for such Class for

that Distribution Date.

 

     Yield Maintenance Payment: With respect to either Yield Maintenance

Agreement and any Distribution Date, the amount, if any distributed to the

Trustee by the Yield Maintenance Provider pursuant to such Yield Maintenance

Agreement with respect to such Distribution Date.

 

     Yield Maintenance Provider: Bear Stearns Financial Products Inc. or any

successor in interest.

 

 

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                                  ARTICLE II.

 

                            CONVEYANCE OF TRUST FUND

                         REPRESENTATIONS AND WARRANTIES

 

     Section 2.01. Conveyance of Trust Fund.

 

     The Seller hereby sells, transfers, assigns, sets over and otherwise

conveys to the Depositor, without recourse, all the right, title and interest of

the Seller in and to the assets in the Trust Fund.

 

     The Seller has entered into this Agreement in consideration for the

purchase of the Mortgage Loans by the Depositor and has agreed to take the

actions specified herein.

 

     The Depositor, concurrently with the execution and delivery hereof, hereby

sells, transfers, assigns, sets over and otherwise conveys to the Trustee for

the use and benefit of the Certificateholders, without recourse, all the right,

title and interest of the Depositor in and to the Trust Fund.

 

     In connection with any such transfer and assignment, the Depositor has

delivered to or caused to be delivered to, and deposited with, the Custodian the

following documents or instruments with respect to each Mortgage Loan so

assigned:

 

          (i) the original Mortgage Note, including any riders thereto, endorsed

     without recourse (A) to the order of "JPMorgan Chase Bank, as Trustee for

     certificateholders of Bear Stearns Asset Backed Securities Trust 2005-SD1,

     Asset Backed Certificates, Series 2005-SD1, without recourse", or (B) in

     the case of a Mortgage Loan registered on the MERS(R) System, in blank and,

     in each case, showing to the extent available to the Seller an unbroken

     chain of endorsements from the original payee thereof to the Person

     endorsing it to the Trustee,

 

          (ii) the original Mortgage and, if the related Mortgage Loan is a MOM

     Loan, noting the presence of the MIN and language indicating that such

     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,

     the assignment (either an original or a copy, which may be in the form of a

     blanket assignment if permitted in the jurisdiction in which the Mortgaged

     Property is located) to the Trustee of the Mortgage, in recordable form,

     with respect to each Mortgage Loan in the name of "JPMorgan Chase Bank, as

     Trustee for certificateholders of Bear Stearns Asset Backed Securities

      Trust 2005-SD1, Asset Backed Certificates, Series 2005-SD1" or in blank,

 

          (iv) an original or a copy of all intervening assignments of the

     Mortgage, if any, to the extent available to the Seller, with evidence of

     recording thereon,

 

          (v) the original policy of title insurance or mortgagee's certificate

     of title insurance or commitment or binder for title insurance, if

     available, or a copy thereof, or, in the event that such original title

     insurance policy is unavailable, a photocopy thereof, or in lieu thereof, a

     current lien search on the related Mortgaged Property and

 

 

 

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          (vi) originals or copies of all available assumption, modification or

      substitution agreements, if any;

 

     provided, however, that the assignment of the Mortgage to the Trustee will

not be required to be submitted for recording with respect to any Mortgage Loan:

(a) if the Trustee and the Custodian shall have received an Opinion of Counsel

addressed to the Trustee stating that in such counsel's opinion, the recordation

of the assignment to the Trustee of the Mortgage securing a particular Mortgage

Note is not necessary to transfer to the assignee thereof all the benefits and

security provided by the Mortgage as against the related assignor or any

creditor of such assignor, and the Mortgage will continue to secure the Mortgage

Note to the same extent as if the Mortgage Note and Mortgage had not been

assigned and delivered, (b) such recordation is not required by the Rating

Agencies or (c) if MERS is identified on the Mortgage or on a properly recorded

assignment of the Mortgage as the mortgagee of record solely as nominee for the

Seller and its successors and assigns;

 

     and provided, further, however, that in lieu of the foregoing, the

Depositor may deliver, or cause to be delivered, the following documents, under

the circumstances set forth below: (x) if any Mortgage, assignment thereof to

the Trustee or intervening assignments thereof have been delivered or are being

delivered to recording offices for recording and have not been returned 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 applicable

Servicer or the title company issuing the 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"; and (y) in lieu

of the Mortgage Notes relating to the Mortgage Loans identified in the list set

forth in Exhibit J, the Depositor may deliver, or cause to be delivered, a lost

note affidavit (or a blanket lost note affidavit covering some or all of the

Mortgage Loans in Exhibit J) and a copy of the original note, if available; 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 cause the Seller to,

and the Seller shall, (i) deposit or cause to be deposited on the Closing Date

all amounts paid in respect of such Mortgage Loans (to the extent required to be

remitted by the related Servicers pursuant to their Servicing Agreements) into

the Master Servicer Collection Account or the Distribution Account or (ii)

deliver to the Custodian on the Closing Date a certification of an authorized

officer of the Seller stating that the Seller will deposit or cause to be

deposited all such amounts on or before the Distribution Account Deposit Date

relating to the first Distribution Date, in which case the Seller shall so

deposit or cause to be deposited such amounts into the Master Servicer

Collection Account or the Distribution Account on or before such Distribution

Account Deposit Date.

 

     In the case of the documents referred to in clause (x) above, the Depositor

shall deliver, or cause to be delivered, such documents to the Custodian

promptly after they are received. The Seller shall cause, at its expense, the

Mortgage and intervening assignments, if any, and to the extent required in

accordance with the foregoing, the assignment of the Mortgage to the Trustee to

be submitted for recording promptly after the Closing Date. In the event that

the Seller, the Depositor or the Master Servicer gives written notice to the

Trustee (a) that recording of the assignment of the Mortgage to the Trustee is

required to protect the right, title and interest of the Trustee on behalf of

the Certificateholders in and to any Mortgage Loan, (b) a court recharacterizes

the sale of the Mortgage Loans as a financing, or (c) as a result of any change

in or amendment to the laws of a State in which recording was not effected or

any applicable political subdivision thereof, or any change in official position

regarding application or interpretation of such laws, including a holding by a

court of competent jurisdiction, such recording is so required, the Seller shall

submit or cause to be submitted for recording as specified above or, should the

Seller fail to perform such obligations, the Trustee shall cause each such

previously unrecorded assignment to be submitted for recording as specified

above at the expense of the Trust pursuant to Section 9.05. In the event a

Mortgage File is released to the Master Servicer or a Servicer as a result of

 

 

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the Master Servicer's or a Servicer's having completed a Request for Release,

the Trustee shall, if not so completed, complete, or cause the Custodian to

complete, the assignment of the related Mortgage in the manner specified in

clause (iii) above.

 

     In connection with the assignment of any Mortgage Loans registered on the

MERS(R) System, the Seller further agrees that it will cause, at the Seller's

own expense, within 30 days after the Closing Date, the MERS(R) System to

indicate that such Mortgage Loans have been assigned by the Seller to the

Depositor and by the Depositor to the Trustee in accordance with this Agreement

for the benefit of the Certificateholders by including (or deleting, in the case

of Mortgage Loans which are repurchased in accordance with this Agreement) in

such computer files (a) the code in the field which identifies the specific

Trustee, (b) the code in the field "Pool Field" which identifies the series of

the Certificates issued in connection with such Mortgage Loans and (c) a code

that provides the Custodian with access to such Mortgage Loans. The Seller

further agrees that it will not, and will not permit any Servicer or the Master

Servicer to, and the Master Servicer agrees that it will not, alter the codes

referenced in this paragraph with respect to any Mortgage Loan during the term

of this Agreement unless and until such Mortgage Loan is repurchased in

accordance with the terms of this Agreement.

 

     Since the mortgage loans permitted to be purchased pursuant to this

Agreement are limited to (i) the Mortgage Loans purchased hereunder on the

Closing Date and (ii) any Replacement Mortgage Loans purchased hereafter

pursuant to the provisions of this Agreement, and the Seller has made the

representations and warranties contained herein with respect to all such

Mortgage Loans, including, a representation and warranty contained in Section

2.03(b)(vii)(S) of this Agreement, that, as of the Closing Date or date of

substitution, as applicable, no Mortgage Loan is a "High-Cost Home Loan" as

defined in the New Jersey Home Ownership Security Act of 2002 (the "New Jersey

Act"), a "High-Cost Home Loan" as defined in the New Mexico Home Loan Protection

Act (the "New Mexico Act"), a "High Cost Home Mortgage Loan" under the

Massachusetts Predatory Home Loan Practices Act of 2004 (the "Massachusetts

Act") or a "High-Cost Home Loan" under the Indiana High Cost Home Loan Law of

2005 (the "Indiana Act"), it is agreed and understood by the Depositor, the

Seller and the Trustee that it is not intended that any mortgage loan be

purchased hereunder that is a "High-Cost Home Loan" as defined in the New Jersey

Act, a "High-Cost Home Loan" as defined in the New Mexico Act, a "High Cost Home

Mortgage Loan" as defined in the Massachusetts Act or a "High-Cost Home Loan" as

defined in the Indiana Act.

 

     Section 2.02. Acceptance of the Mortgage Loans.

 

      (a) The Trustee acknowledges receipt based on receipt by the Custodian of,

subject to the further review and the exceptions the Custodian notes pursuant to

the procedures described below, the documents (or certified copies thereof)

delivered to the Custodian pursuant to Section 2.01 and declares that it holds

and will continue to hold directly or through the Custodian those documents and

any amendments, replacements or supplements thereto and all other assets of the

Trust Fund delivered to the Custodian on its behalf in trust for the use and

benefit of all present and future Holders of the Certificates. On the Closing

Date, the Custodian will deliver an initial certification in the form annexed as

Exhibit One to the Custodial Agreement confirming whether or not it has received

the Mortgage File for each Mortgage Loan, but without review of such Mortgage

File, except to the extent necessary to confirm whether such Mortgage File

contains the original Mortgage Note or a lost note affidavit in lieu thereof. No

later than 90 days after the Closing Date, the Custodian agrees pursuant to the

Custodial Agreement, for the benefit of the Certificateholders, to review each

Mortgage File delivered to it and to execute and deliver, or cause to be

executed and delivered, to the Seller and to the Trustee an interim

certification substantially in the form annexed as Exhibit Two to the Custodial

Agreement. In conducting such review, the Custodian on behalf of the Trustee

will ascertain whether all required documents have been executed and received

and whether those documents relate, determined on the basis of the Mortgagor

 

 

 

                                       37

<PAGE>

 

 

name, original principal balance and loan number, to the Mortgage Loans

identified in Exhibit B to this Agreement, as supplemented (provided, however,

that with respect to those documents described in clauses (iv) and (vi) of the

fourth paragraph of Section 2.01, such obligations shall extend only to

documents actually delivered pursuant to such clauses). In performing any such

review, the Custodian on behalf of the Trustee and in accordance with the

Custodial Agreement 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 Custodian finds any document constituting part of the

Mortgage File not to have been executed or received, or to be unrelated to the

Mortgage Loans identified in Exhibit B or to appear to be defective on its face,

the Custodian shall include such information in the exception report attached to

such interim certification. The Seller shall correct or cure any such defect or,

if prior to the end of the second anniversary of the Closing Date, the Seller

may substitute for the related Mortgage Loan a Replacement Mortgage Loan, which

substitution shall be accomplished in the manner and subject to the conditions

set forth in Section 2.03 or shall deliver to the Trustee and the Custodian an

Opinion of Counsel, addressed to the Trustee and the Custodian, at the Seller's

expense, 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 Custodian of the defect and if the Seller fails to

correct or cure the defect or deliver such opinion within such period, the

Seller will, subject to Section 2.03, within 90 days from the notification of

the Custodian purchase such Mortgage Loan at the Purchase Price; provided,

however, that if such defect relates solely to the inability of the Seller to

deliver the Mortgage, assignment thereof to the Trustee, or intervening

assignments thereof with evidence of recording thereon because such documents

have been submitted for recording and have not been returned by the applicable

jurisdiction, the Seller shall not be required to purchase such Mortgage Loan if

the Seller delivers such documents promptly upon receipt, but in no event later

than 360 days after the Closing Date.

 

     (b) No later than 180 days after the Closing Date, the Custodian on behalf

of the Trustee and in accordance with the Custodial Agreement will review, for

the benefit of the Certificateholders, the Mortgage Files and will execute and

deliver or cause to be executed and delivered to the Seller and to the Trustee,

a final certification substantially in the form annexed as Exhibit Three to the

Custodial Agreement. In conducting such review, the Custodian will ascertain

whether each document required to be recorded has been returned from the

recording office with evidence of recording thereon and the Custodian has

received either an original or a copy thereof, as required in Section 2.01

(provided, however, that with respect to those documents described in clauses

(iv) and (vi) of the fourth paragraph of Section 2.01, such obligations shall

extend only to documents actually delivered pursuant to such clauses). If the

Custodian finds any document with respect to a Mortgage Loan 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 identified in

Exhibit B or to appear defective on its face, the Custodian shall note such

defect in the exception report attached to the Final Certification and shall

promptly notify the Seller. The Seller shall correct or cure any such defect or,

if prior to the end of the second anniversary of the Closing Date, the Seller

may substitute for the related Mortgage Loan a Replacement Mortgage Loan, which

substitution shall be accomplished in the manner and subject to the conditions

set forth in Section 2.03 or shall deliver to the Trustee and the Custodian an

Opinion of Counsel, addressed to the Trustee and the Custodian, at the Seller's

expense, 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 Custodian of the defect and if the Seller is unable

within such period to correct or cure such defect, or to substitute the related

Mortgage Loan with a Replacement Mortgage Loan or to deliver such opinion, the

Seller shall, subject to Section 2.03, within 90 days from the notification of

the Custodian, purchase such Mortgage Loan at the Purchase Price; provided,

however, that if such defect relates solely to the inability of the Seller to

deliver the Mortgage, assignment thereof to the Trustee or intervening

assignments thereof with evidence of recording thereon, because such documents

have not been returned by the applicable jurisdiction, the Seller shall not be

required to

 

 

                                       38

<PAGE>

 

 

purchase such Mortgage Loan, if the Seller delivers such documents promptly

upon receipt, but in no event later than 360 days after the Closing Date.

 

     (c) In the event that a Mortgage Loan is purchased by the Seller in

accordance with subsections 2.02(a) or (b) above or Section 2.03, the Seller

shall remit the applicable Purchase Price to the Trustee for deposit in the

Distribution Account and shall provide written notice to the Trustee detailing

the components of the Purchase Price, signed by a Servicing Officer. Upon

deposit of the Purchase Price in the Distribution Account and receipt of a

Request for Release, the Trustee will release or notify the Custodian which,

upon receipt of such notice from the Trustee, shall release to the Seller the

related Mortgage File and the Trustee shall execute and deliver all instruments

of transfer or assignment, without recourse, representation or warranty,

furnished to it by the Seller, as are necessary to vest in the Seller title to

and rights under the Mortgage Loan. Such purchase shall be deemed to have

occurred on the date on which the deposit into the Distribution Account was made

or if the Custodian is then acting, the date on which notice of the deposit of

the Purchase Price into the Distribution Account was received by the Custodian

from the Trustee. The Trustee shall promptly notify the Rating Agencies of such

repurchase. The obligation of the Seller to cure, repurchase or substitute for

any Mortgage Loan as to which 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.

 

     (d) The Seller shall deliver to the Trustee or upon its direction to the

Custodian, and the Trustee agrees to accept or to cause the Custodian to accept,

the Mortgage Note and other documents constituting the Mortgage File with

respect to any Replacement Mortgage Loan, which the Custodian will review as

provided in subsections 2.02(a) and 2.02(b), provided, that the Closing Date

referred to therein shall instead be the date of delivery of the Mortgage File

with respect to each Replacement Mortgage Loan.

 

     (e) Until all amounts distributable in respect of the Certificates have

been distributed in full and the Master Servicer has otherwise fulfilled its

respective obligations under this Agreement, the Trustee, or the Custodian

acting on its behalf, shall retain possession and custody of each Mortgage File

in accordance with and subject to the terms and conditions of this Agreement.

 

     Section 2.03. Representations, Warranties and Covenants of the Master

                   Servicer, the EMC Servicer and the Seller.

 

     (a) The Master Servicer and the EMC Servicer each hereby represents and

warrants to the Depositor, the Securities Administrator and the Trustee (and in

the case of the EMC Servicer, to the Master Servicer) as follows, as of the

Closing Date:

 

          (i) It is duly organized and is validly existing and in good standing

     (a) in the case of the EMC Servicer, under the laws of the State of

     Delaware and (b) in the case of the Master Servicer, as a national banking

     association organized under the laws of the United States, and is duly

     authorized and qualified to transact any and all business contemplated by

     this Agreement to be conducted by it in any state in which a Mortgaged

     Property is located or is otherwise not required under applicable law to

     effect such qualification and, in any event, is in compliance with the

     doing business laws of any such state, to the extent necessary to ensure

     its ability to enforce each Mortgage Loan, to service the Mortgage Loans in

     accordance with the terms of this Agreement and to perform any of its other

     obligations under this Agreement in accordance with the terms hereof.

 

          (ii) It has the full corporate power and authority to service each

     Mortgage Loan, and to execute, deliver and perform, and to enter into and

     consummate the transactions contemplated

 

 

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     by this Agreement and has duly authorized by all necessary corporate

     action on its part the execution, delivery and performance of this

     Agreement; and this Agreement, assuming the due authorization, execution

     and delivery hereof by the other parties hereto, constitutes its legal,

     valid and binding obligation, enforceable against it in accordance with its

     terms, except that (a) the enforceability hereof may be limited by

     bankruptcy, insolvency, moratorium, receivership and other similar laws

     relating to creditors' rights generally and (b) the remedy of specific

     performance and injunctive and other forms of equitable relief may be

     subject to equitable defenses and to the discretion of the court before

     which any proceeding therefor may be brought.

 

          (iii) The execution and delivery of this Agreement by it, the

     servicing of the Mortgage Loans by it under this Agreement, the

     consummation of any other of the transactions contemplated by this

     Agreement, and the fulfillment of or compliance with the terms hereof are

     in its ordinary course of business and will not (A) result in a material

     breach of any term or provision of its charter or by-laws or (B) materially

     conflict with, result in a material breach, violation or acceleration of,

     or result in a material default under, the terms of any other material

     agreement or instrument to which it is a party or by which it may be bound,

     or (C) constitute a material violation of any statute, order or regulation

     applicable to it of any court, regulatory body, administrative agency or

     governmental body having jurisdiction over it; and it is not in breach or

     violation of any material indenture or other material agreement or

     instrument, or in violation of any statute, order or regulation of any

     court, regulatory body, administrative agency or governmental body having

     jurisdiction over it which breach or violation may materially impair its

     ability to perform or meet any of its obligations under this Agreement.

 

          (iv) It or one or more of its affiliates is an approved servicer of

     conventional mortgage loans for Fannie Mae or Freddie Mac and is a

     mortgagee approved by the Secretary of Housing and Urban Development

     pursuant to sections 203 and 211 of the National Housing Act.

 

          (v) No litigation is pending or, to the best of its knowledge,

     threatened, against it that would materially and adversely affect the

     execution, delivery or enforceability of this Agreement or its ability to

     service the Mortgage Loans or to perform any of its other obligations under

     this Agreement in accordance with the terms hereof.

 

          (vi) No consent, approval, authorization or order of any court or

     governmental agency or body is required for its execution, delivery and

     performance of, or compliance with, this Agreement or the consummation of

     the transactions contemplated hereby, or if any such consent, approval,

     authorization or order is required, it has obtained the same.

 

     (b) The Seller hereby represents and warrants to the Depositor, the

Securities Administrator, the Master Servicer and the Trustee as follows,

as of the Closing Date:

 

          (i) The Seller is duly organized as a Delaware corporation and is

     validly existing and in good standing under the laws of the State of

     Delaware and is duly authorized and qualified to transact any and all

     business contemplated by this Agreement to be conducted by the Seller in

     any state in which a Mortgaged Property is located or is otherwise not

     required under applicable law to effect such qualification and, in any

     event, is in compliance with the doing business laws of any such state, to

     the extent necessary to ensure its ability to enforce each Mortgage Loan,

     to sell the Mortgage Loans in accordance with the terms of this Agreement

     and to perform any of its other obligations under this Agreement in

     accordance with the terms hereof.

 

          (ii) The Seller has the full corporate power and authority to sell

     each Mortgage Loan, and to execute, deliver and perform, and to enter into

     and consummate the transactions

 

 

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<PAGE>

 

     contemplated by this Agreement and has duly authorized by all

     necessary corporate action on the part of the Seller the execution,

     delivery and performance of this Agreement; and this Agreement, assuming

     the due authorization, execution and delivery hereof by the other parties

     hereto, constitutes a legal, valid and binding obligation of the Seller,

     enforceable against the Seller in accordance with its terms, except that

     (a) the enforceability hereof may be limited by bankruptcy, insolvency,

     moratorium, receivership and other similar laws relating to creditors'

     rights generally and (b) the remedy of specific performance and injunctive

     and other forms of equitable relief may be subject to equitable defenses

     and to the discretion of the court before which any proceeding therefor may

     be brought.

 

          (iii) The execution and delivery of this Agreement by the Seller, the

     sale of the Mortgage Loans by the Seller under this Agreement, the

     consummation of any other of the transactions contemplated by this

     Agreement, and the fulfillment of or compliance with the terms hereof are

     in the ordinary course of business of the Seller and will not (A) result in

     a material breach of any term or provision of the charter or by-laws of the

     Seller or (B) materially conflict with, result in a material breach,

     violation or acceleration of, or result in a material default under, the

     terms of any other material agreement or instrument to which the Seller is

     a party or by which it may be bound, or (C) constitute a material violation

     of any statute, order or regulation applicable to the Seller of any court,

     regulatory body, administrative agency or governmental body having

     jurisdiction over the Seller; and the Seller is not in breach or violation

     of any material indenture or other material agreement or instrument, or in

     violation of any statute, order or regulation of any court, regulatory

     body, administrative agency or governmental body having jurisdiction over

      it which breach or violation may materially impair the Seller's ability to

     perform or meet any of its obligations under this Agreement.

 

          (iv) The Seller is an approved seller of conventional mortgage loans

     for Fannie Mae or Freddie Mac and is a mortgagee approved by the Secretary

     of Housing and Urban Development pursuant to sections 203 and 211 of the

     National Housing Act.

 

          (v) No litigation is pending or, to the best of the Seller's

     knowledge, threatened, against the Seller that would materially and

     adversely affect the execution, delivery or enforceability of this

     Agreement or the ability of the Seller to sell the Mortgage Loans or to

     perform any of its other obligations under this Agreement in accordance

     with the terms hereof.

 

          (vi) No consent, approval, authorization or order of any court or

     governmental agency or body is required for the execution, delivery and

     performance by the Seller of, or compliance by the Seller with, this

     Agreement or the consummation of the transactions contemplated hereby, or

     if any such consent, approval, authorization or order is required, the

     Seller has obtained the same.

 

          (vii) With respect to each Mortgage Loan as of the Cut-off Date

     (unless otherwise expressly provided) or, with respect to clauses (G) or

     (U), as of the Closing Date:

 

          (A) The information set forth in the Mortgage Loan Schedule on the

Closing Date is complete, true and correct.

 

           (B) No Mortgage Loan is delinquent 61 or more days; and the Seller has

  not advanced funds, or induced, solicited or knowingly received any advance

  of funds from a party other than the owner of the Mortgaged Property

  subject to the Mortgage, directly or indirectly, for the payment of any

  amount required under any Mortgage Loan.

 

 

                                       41

<PAGE>

 

     (C) Except with respect to taxes, insurance and other amounts previously

advanced by a Servicer with respect to any Mortgage Loan, to the best of

Seller's knowledge, there are no delinquent taxes, water charges, sewer rents,

assessments, insurance premiums, leasehold payments, including assessments

payable in future installments, or other outstanding charges affecting the

related Mortgaged Property.

 

     (D) The terms of the Mortgage Note and the Mortgage have not been impaired,

waived, altered or modified in any respect, except by written instruments which

in the case of the Mortgage Loans are in the Mortgage File and have been or will

be recorded, if necessary to protect the interests of the Trustee, and which

have been or will be delivered to the Trustee, all in accordance with this

Agreement. The substance of any such waiver, alteration or modification has been

approved by the title insurer, to the extent required by the related policy. No

Mortgagor has been released, in whole or in part, except in connection with an

assumption agreement approved by the title insurer, to the extent required by

the policy, and which assumption agreement in the case of the Mortgage Loans is

part of the Mortgage File.

 

     (E) The Mortgage Note and the Mortgage are not subject to any right of

rescission, set-off, counterclaim or defense, including the defense of usury,

nor will the operation of any of the terms of the Mortgage Note and the

Mortgage, or the exercise of any right thereunder, render the Mortgage

unenforceable, in whole or in part, or subject to any right of rescission,

set-off, counterclaim or defense, including the defense of usury and no such

right of rescission, set-off, counterclaim or defense has been asserted with

respect thereto.

 

     (F) All buildings upon, or comprising part of, the Mortgaged Property are

insured by an insurer acceptable to Fannie Mae and Freddie Mac against loss by

fire, hazards of extended coverage and such other hazards as are customary in

the area where the Mortgaged Property is located, and such insurer is licensed

to do business in the state where the Mortgaged Property is located. All such

insurance policies contain a standard mortgagee clause naming the Originator,

its successors and assigns as mortgagee and Seller has received no notice that

all premiums thereon have not been paid. If upon origination of the Mortgage

Loan, the Mortgaged Property was, or was subsequently deemed to be, in an area

identified in the Federal Register by the Federal Emergency Management Agency as

having special flood hazards (and such flood insurance has been made available),

which require under applicable law that a flood insurance policy meeting the

requirements of the current guidelines of the Federal Insurance Administration

(or any successor thereto) be obtained, such flood insurance policy is in effect

which policy is with a generally acceptable carrier in an amount representing

coverage not less than the least of (A) the Stated Principal Balance of the

related Mortgage Loan (together with, in the case of a Mortgage Loan that is not

a first priority lien, the outstanding principal balance of all related liens

that are prior to the applicable lien of such Mortgage Loan), (B) the minimum

amount required to compensate for damage or loss on a replacement cost basis, or

(C) the maximum amount of insurance that is available under the Flood Disaster

Protection Act of 1973. The Mortgage obligates the Mortgagor thereunder to

maintain all such insurance at Mortgagor's cost and expense and, on the

Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain

such insurance at Mortgagor's cost and expense and to obtain reimbursement

therefor from the Mortgagor.

 

     (G) None of the Mortgage Loans are (a) Mortgage Loans subject to 12 CFR

Part 226.31, 12 CFR Part 226.32 or 226.34 of Regulation Z, the regulation

implementing TILA, which implements the Home Ownership and Equity Protection Act

of 1994, as amended, (b) classified and/or defined, as a "high cost",

"threshold", "predatory" or "covered" loan (or a similarly classified loan using

different terminology under a law imposing additional legal liability for

mortgage loans having high interest rates, points and/or fees) under any other

applicable state, federal or local law including, but not limited to, the States

of New York, North Carolina, Arkansas, Kentucky, New Mexico, Illinois and

 

 

 

                                        42

<PAGE>

 

 

Oklahoma, (c) Mortgage Loans governed by the Georgia Fair Lending Act, if such

Mortgage Loan was originated on or after October 1, 2002 through May 6, 2003 or

(d) Mortgage Loans subject to the New Jersey Home Ownership Security Act of 2002

(the "New Jersey Act"), unless such Mortgage Loan is a (1) "Home Loan" as

defined in the New Jersey Act that is a first lien Mortgage Loan, which is not a

"High Cost Home Loan" as defined in the New Jersey Act or (2) "Covered Home

Loan" as defined in the New Jersey Act that is a first lien purchase money

Mortgage Loan, which is not a High Cost Home Loan under the New Jersey Act. In

addition to and notwithstanding anything to the contrary herein, no Mortgage

Loan for which the Mortgaged Property is located in New Jersey is a Home Loan as

defined in the Act that was made, arranged, or assigned by a person selling

either a manufactured home or home improvements to the Mortgaged Property or was

made by an originator to whom the Mortgagor was referred by any such seller.

Each Mortgage Loan at the time it was made otherwise complied in all material

respects with any and all requirements of any federal, state or local law

including, but not limited to, all predatory lending laws, usury, truth in

lending, real estate settlement procedures (including the Real Estate Settlement

Procedures Act of 1974, as amended, consumer credit protection, equal credit

opportunity or disclosure laws applicable to such Mortgage Loan.

 

     (H) The Mortgage has not been satisfied, canceled, subordinated, or

rescinded, in whole or in part, and the Mortgaged Property has not been released

from the lien of the Mortgage, in whole or in part, nor has any instrument been

executed that would effect any such release, cancellation, subordination or

rescission.

 

     (I) The Mortgage is a valid, existing and enforceable first lien on the

Mortgaged Property, including all improvements on the Mortgaged Property, if

any, subject only to (1) the lien of current real property taxes and assessments

not yet due and payable, (2) covenants, conditions and restrictions, rights of

way, easements and other matters of the public record as of the date of

recording being acceptable to mortgage lending institutions generally and

specifically referred to in the lender's title insurance policy delivered to the

Originator of the Mortgage Loan and which do not adversely affect the Appraised

Value of the Mortgaged Property, (3) if applicable, in the case of a Mortgage

that is a second priority lien, the first lien on the Mortgaged Property

identified in the related Mortgage File, and (4) other matters to which like

properties are commonly subject which do not materially interfere with the

benefits of the security intended to be provided by the Mortgage. The Seller has

full right to sell and assign the Mortgage to the Depositor. None of the

Mortgages related to the Mortgage Loans is a second lien.

 

     (J) The Mortgage Note and the related Mortgage are genuine and each is the

legal, valid and binding obligation of the maker thereof, enforceable in

accordance with its terms, except as the enforceability thereof may be limited

by bankruptcy, insolvency or reorganization or general principles of equity.

 

     (K) All parties to the Mortgage Note and the Mortgage had the legal

capacity to enter into the Mortgage Loan transaction and to execute and deliver

the Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have

been duly and properly executed by such parties.

 

     (L) The proceeds of the Mortgage Loan have been fully disbursed and there

is no requirement for future advances thereunder and any and all requirements as

to completion of any on-site or off-site improvement and as to disbursements of

any escrow funds therefor have been complied with. All costs, fees and expenses

incurred in making or closing the Mortgage Loan and the recording of the

Mortgage were paid, and the Mortgagor is not entitled to any refund of any

amounts paid or due under the Mortgage Note or Mortgage.

 

     (M) Immediately prior to the conveyance of the Mortgage Loans by the Seller

to the Depositor hereunder, the Seller was the sole owner and holder of the

Mortgage Loan and either serviced

 

 

 

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<PAGE>

 

 

the Mortgage Loan itself or the Mortgage Loan was being serviced pursuant

to a Servicing Agreement with the Servicer indicated on the Mortgage Loan

Schedule; the related Originator or the Seller or the applicable Servicer was

the custodian of the related escrow account, if applicable; the Mortgage Loan

had neither been assigned nor pledged, and the Seller had good and marketable

title thereto, and had full right to transfer and sell the Mortgage Loan and the

related servicing rights to the Depositor free and clear of any encumbrance,

equity, lien, pledge, charge, claim or security interest subject to the

applicable Servicing Agreement, if any, and had full right and authority subject

to no interest or participation of, or agreement with, any other party, to sell

and assign the Mortgage Loan and the related servicing rights to the Depositor

pursuant to the terms of this Agreement.

 

     (N) All parties which have had any interest in the Mortgage, whether as

mortgagee, assignee, pledgee or otherwise, are (or, during the period in which

they held and disposed of such interest, were) (1) in compliance with any and

all applicable licensing requirements of the laws of the state wherein the

Mortgaged Property is located, and (2) organized under the laws of such state,

qualified to do business in such state, a federal savings and loan association

or national bank having principal offices in such state or not deemed to be

doing business in such state under applicable law.

 

     (0) The Mortgage Loan is covered by an ALTA lender's title insurance policy

or equivalent form acceptable to the Department of Housing and Urban

Development, or any successor thereto, and qualified to do business in the

jurisdiction where the Mortgaged Property is located, insuring (subject to the

exceptions contained in clause (I) above) the Seller (as assignee), its

successors and assigns as to the first or, if applicable, more junior priority

lien of the Mortgage in the original principal amount of the Mortgage Loan and

against any loss by reason of the invalidity or unenforceability of the lien

resulting from the provisions of the Mortgage Note and/or Mortgage providing for

adjustment in the Mortgage Rate and monthly payment. Additionally, such lender's

title insurance policy affirmatively insures ingress and egress, and against

encroachments by or upon the Mortgaged Property or any interest therein. With

respect to each Mortgage Loan, the Seller (as assignee) is the sole insured of

such lender's title insurance policy, and such lender's title insurance policy

is in full force and effect. No claims have been made under such lender's title

insurance policy, and no prior holder of the related Mortgage, including the

Seller in the case of a Mortgage Loan, has done, by act or omission, anything

which would impair the coverage of such lender's title insurance policy.

 

     (P) Except as provided in clause (B), immediately prior to the Cut-off

Date, there was no default, breach, violation or event of acceleration existing

under the Mortgage or the Mortgage Note and there was no event which, with the

passage of time or with notice and the expiration of any grace or cure period,

would constitute a default, breach, violation or event of acceleration, and the

Seller has not waived any default, breach, violation or event of acceleration.

 

     (Q) There are no mechanics' or similar liens or claims which have been

filed for work, labor or material (and no rights are outstanding that under law

could give rise to such lien) affecting the related Mortgaged Property which are

or may be liens prior to or equal with, the lien of the related Mortgage.

 

     (R) All improvements which were considered in any appraisal which was used

in determining the Appraised Value of the related Mortgaged Property lay wholly

within the boundaries and building restriction lines of the Mortgaged Property,

and no improvements on adjoining properties encroach upon the Mortgaged

Property.

 

     (S) No Mortgage Loan is a "High Cost Home Loan" as defined in the New

Jersey Home Ownership Security Act of 2002, a "High Cost Home Loan" as defined

in the New Mexico Home Loan Protection Act, a "High Cost Home Mortgage Loan" as

defined in the Massachusetts Predatory

 

 

                                       44

<PAGE>

 

 

Home Loan Practices Act of 2004 or a "High-Cost Home Loan" as defined in

the Indiana High Cost Home Loan Law of 2005.

 

     (T) The origination, servicing and collection practices with respect to

each Mortgage Note and Mortgage including, the establishment, maintenance and

servicing of the escrow accounts and escrow payments, if any, since origination,

have been conducted in all respects in accordance with the terms of Mortgage

Note and in compliance with all applicable laws and regulations and, unless

otherwise required by law or Fannie Mae/Freddie Mac standard, in accordance with

the proper, prudent and customary practices in the mortgage origination and

servicing business. With respect to the escrow accounts and escrow payments, if

any, and a Mortgage Loan all such payments are in the possession or under the

control of the Seller (including pursuant to a Servicing Agreement) and there

exists no deficiencies in connection therewith for which customary arrangements

for repayment thereof have not been made. All Mortgage Rate adjustments have

been made in strict compliance with state and federal law and the terms of the

related Mortgage Note. Any interest required to be paid pursuant to state and

local law has been properly paid and credited.

 

     (U) The Mortgaged Property is free of material damage and waste and there

is no proceeding pending for the total or partial condemnation thereof.

 

     (V) The Mortgage contains customary and enforceable provisions to render

the rights and remedies of the holder thereof adequate for the realization

against the Mortgaged Property of the benefits of the security intended to be

provided thereby, including, (1) in the case of a Mortgage designated as a deed

of trust, by trustee's sale, and (2) otherwise by judicial foreclosure. There is

no other exemption available to the Mortgagor which would interfere with the

right to sell the Mortgaged Property at a trustee's sale or the right to

foreclose the Mortgage. The Mortgagor has not notified the Seller and the Seller

has no knowledge of any relief requested or allowed to the Mortgagor under the

Relief Act.

 

     (W) The Mortgage Note is not and has not been secured by any collateral

except the lien of the applicable Mortgage.

 

     (X) [Reserved].

 

     (Y) In the event the Mortgage constitutes a deed of trust, a trustee, duly

qualified under applicable law to serve as such, has been properly designated

and currently so serves and is named in the Mortgage, and no fees or expenses

are or will become payable by the Certificateholders to the trustee under the

deed of trust, except in connection with a trustee's sale after default by the

Mortgagor.

 

     (Z) No Mortgage Loan contains a permanent or temporary "buydown" provision.

The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan

does not have a shared appreciation or other contingent interest feature.

 

     (AA) The Mortgagor has received all disclosure materials required by

applicable law with respect to the making of the Mortgage Loan. The Seller has

maintained or caused to be maintained all such statements in the Mortgage File.

 

     (BB) No Mortgage Loan was made in connection with the construction or

rehabilitation of a Mortgaged Property.

 

     (CC) To the best of Seller's knowledge, the Mortgaged Property is lawfully

occupied under applicable law and all inspections, licenses and certificates

required to be made or issued with respect to all occupied portions of the

Mortgaged Property and, with respect to the use and occupancy of

 

 

                                       45

<PAGE>

 

 

the same, including but not limited to certificates of occupancy, have been

made or obtained from the appropriate authorities.

 

     (DD) The assignment of Mortgage with respect to a Mortgage Loan (other than

a Mortgage Loan registered on the MERS(R) system) is in recordable form and is

acceptable for recording under the laws of the jurisdiction in which the

Mortgaged Property is located.

 

     (EE) Any future advances made to the Mortgagor prior to the Cut-off Date

have been consolidated with the outstanding principal amount secured by the

Mortgage, and the secured principal amount, as consolidated, bears a single

interest rate and single repayment term. The lien of the Mortgage securing the

consolidated principal amount is expressly insured as having first priority, by

a title insurance policy, an endorsement to the policy insuring the mortgagee's

consolidated interest or by other title evidence acceptable to Fannie Mae and

Freddie Mac. The consolidated principal amount does not exceed the original

principal amount of the Mortgage Loan.

 

     (FF) With respect to any Mortgage Loan that bears, or will upon conversion

from a fixed rate bear, interest at an adjustable rate, on each Interest

Adjustment Date, the Mortgage Rate has been adjusted to equal the respective

Index plus the respective Gross Margin (subject to standard rounding

conventions), subject to the Periodic Rate Cap, the Maximum Lifetime Mortgage

Rate and the Minimum Lifetime Mortgage Rate, if any, as set forth in the related

Mortgage Note.

 

     (GG) Without exception in either Group, the Mortgaged Property consists of

a single parcel of real property with or without a detached single family

residence erected thereon, or an individual condominium unit, or a cooperative,

or a 2-4 family dwelling, or an individual unit in a planned unit development as

defined by Fannie Mae or a manufactured dwelling which conforms with Fannie Mae

and Freddie Mac requirements regarding such dwellings, or a townhouse, each

structure of which is permanently affixed to the Mortgaged Property, and is

legally classified as real estate.

 

     (HH) [Reserved].

 

     (II) 85.83% of the Group II Mortgage Loans (by Cut-off Date Principal

Balance) are Hybrid Mortgage Loans in their fixed rate period. None of the

Mortgage Loans contain a provision allowing the Mortgagor to convert an

adjustable rate Mortgage Loan to a fixed rate Mortgage Loan. The principal and

interest due on each Mortgage Loan is calculated pursuant to the standard

amortization method (30/360 day interest accrual). 0.03% and 0% of the Mortgage

Loans (by cut-off Date Principal Balance) in Group I and Group II, respectively,

are Simple Interest Loans.

 

     (JJ) Each Mortgage Loan at the time of origination was underwritten in

general in accordance with guidelines not inconsistent with the guidelines set

forth in the Prospectus Supplement and generally accepted prime or sub-prime

credit underwriting guidelines.

 

     (KK) No error, omission, misrepresentation, fraud or similar occurrence

with respect to a Mortgage Loan has taken place on the part of the Seller or the

related Originator.

 

     (LL) None of the Mortgage Loans is a "High Cost Loan" or "Covered Loan" as

defined in the current Standard & Poor's LEVELS(R) Glossary which is now Version

5.6 Revised, Appendix E.

 

     (MM) No more than 0% and 11.15% of the Mortgage Loans, by Cut-off Date

Principal Balance, in Group I and Group II, respectively, provided for negative

amortization.

 

 

                                       46

<PAGE>

 

     (c) Upon discovery by any of the parties hereto of a breach of a

representation or warranty set forth in Section 2.03(b)(vii) that materially and

adversely affects the interests of the Certificateholders in any Mortgage Loan,

the party discovering such breach shall give prompt written notice thereof to

the other parties. The Seller hereby covenants with respect to the

representations and warranties set forth in Section 2.03(b)(vii), that within 90

days of the discovery of a breach of any representation or warranty set forth

therein that materially and adversely affects the interests of the

Certificateholders in any Mortgage Loan, it shall cure such breach in all

material respects and, if such breach is not so cured, (i) if such 90-day period

expires prior to the second anniversary of the Closing Date, remove such

Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute in

its place a Replacement Mortgage Loan, in the manner and subject to the

conditions set forth in this Section; or (ii) repurchase the affected Mortgage

Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner set

forth below; provided that any such substitution pursuant to (i) above or

repurchase pursuant to (ii) above shall not be effected prior to the delivery to

the Trustee of an Opinion of Counsel if required by Section 2.05 hereof and any

such substitution pursuant to (i) above shall not be effected prior to the

additional delivery to the Trustee of a Request for Release. The Seller shall

promptly reimburse the Master Servicer and the Trustee for any expenses

reasonably incurred by the Master Servicer or the Trustee in respect of

enforcing the remedies for such breach. To enable the Master Servicer to amend

the Mortgage Loan Schedule, the Seller shall, unless it cures such breach in a

timely fashion pursuant to this Section 2.03, promptly notify the Master

Servicer whether it intends either to repurchase, or to substitute for, the

Mortgage Loan affected by such breach. With respect to the representations and

warranties in Section 2.03(b)(vii) that are made to the best of the Seller's

knowledge, if it is discovered by any of the Depositor, the Master Servicer, the

Seller, the Securities Administrator or the Trustee that the substance of such

representation and warranty is inaccurate and such inaccuracy materially and

adversely affects the value of the related Mortgage Loan, notwithstanding the

Seller's lack of knowledge with respect to the substance of such representation

or warranty, the Seller shall nevertheless be required to cure, substitute for

or repurchase the affected Mortgage Loan in accordance with the foregoing.

 

     With respect to any Replacement Mortgage Loan or Loans, the Seller shall

deliver to the Trustee for the benefit of the Certificateholders such documents

and agreements as are required by Section 2.01. No substitution will be made in

any calendar month after the Determination Date for such month. Scheduled

Payments due with respect to Replacement Mortgage Loans in the Due Period

related to the Distribution Date on which such proceeds are to be distributed

shall not be part of the Trust Fund and will be retained by the Seller. For the

month of substitution, except with respect to any Simple Interest Loans,

distributions to Certificateholders will include the Scheduled Payment due on

any Deleted Mortgage Loan for the related Due Period (and with respect to any

Simple Interest Loans, payments of principal actually received during such Due

Period) and thereafter the Seller shall be entitled to retain all amounts

received in respect of such Deleted Mortgage Loan. The Master Servicer shall

amend the Mortgage Loan Schedule for the benefit of the Certificateholders to

reflect the removal of such Deleted Mortgage Loan and the substitution of the

Replacement Mortgage Loan or Loans and the Master Servicer shall deliver the

amended Mortgage Loan Schedule to the Trustee and the Custodian. Upon such

substitution, the Replacement Mortgage Loan or Loans shall be subject to the

terms of this Agreement in all respects, and the Seller shall be deemed to have

made with respect to such Replacement Mortgage Loan or Loans, as of the date of

substitution, the representations and warranties set forth in Section

2.03(b)(vii) with respect to such Mortgage Loan. Upon any such substitution and

the deposit to the Master Servicer Collection Account, of the amount required to

be deposited therein in connection with such substitution as described in the

following paragraph, the Trustee shall release to the Seller the Mortgage File

relating to such Deleted Mortgage Loan and held for the benefit of the

Certificateholders and shall execute and deliver at the Seller's direction such

instruments of transfer or assignment as have been prepared by the Seller, in

each case without recourse, representation or warranty, as shall be necessary to

vest in the Seller, or its respective designee, title to the Trustee's interest

in any Deleted Mortgage Loan substituted for pursuant to this Section 2.03.

 

 

 

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<PAGE>

 

     For any month in which the Seller substitutes one or more Replacement

Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer will determine

the amount (if any) by which the aggregate principal balance of all the

Replacement Mortgage Loans as of the date of substitution is less than the

Stated Principal Balance (after application of the principal portion of the

Scheduled Payment due in the month of substitution, except the actual payment

received with respect to any Simple Interest Loans) of such Deleted Mortgage

Loan. An amount equal to the aggregate of such deficiencies, described in the

preceding sentence for any Distribution Date (such amount, the "Substitution

Adjustment Amount") shall be deposited into the Master Servicer Collection

Account by the Seller delivering such Replacement Mortgage Loan on the

Determination Date for the Distribution Date relating to the Prepayment Period

during which the related Mortgage Loan became required to be purchased or

replaced hereunder.

 

     In the event that the Seller shall have repurchased a Mortgage Loan, the

Purchase Price therefor shall be deposited in the Master Servicer Collection

Account pursuant to Section 3.08 on the Determination Date for the Distribution

Date in the month following the month during which the Seller became obligated

to repurchase or replace such Mortgage Loan and upon such deposit of the

Purchase Price, the delivery of an Opinion of Counsel if required by Section

2.05 and the receipt of a Request for Release, the Trustee shall release the

related Mortgage File held for the benefit of the Certificateholders to the

Seller, and the Trustee shall execute and deliver at such Person's direction the

related instruments of transfer or assignment prepared by the Seller, in each

case without recourse, representation or warranty, as shall be necessary to

transfer title from the Trustee for the benefit of the Certificateholders and

transfer the Trustee's interest to the Seller to any Mortgage Loan purchased

pursuant to this Section 2.03. It is understood and agreed that the obligation

under this Agreement of the Seller to cure, repurchase or replace any Mortgage

Loan as to which a breach has occurred and is continuing shall constitute the

sole remedy against the Seller respecting such breach available to

Certificateholders, the Depositor or the Trustee.

 

     (d)   The representations and warranties set forth in Section 2.03 hereof

shall survive delivery of the respective Mortgage Files to the Trustee for the

benefit of the Certificateholders.

 

     Section 2.03(A) Assignment of Interests in the Servicing Agreements.

 

          To the extent not provided for in the related Assumption

Agreements, the Seller hereby assigns to the Depositor who concurrently with the

execution and delivery of this Agreement assigns to the Trustee, on behalf of

the Certificateholders, all of their respective right, title and interest in the

Servicing Agreements and, if applicable, the Assumption Agreements, including

but not limited to the Seller's rights 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 Mortgage

Loans of WFB under the related Servicing Agreement to enforce the provisions

thereof and to seek all or any available remedies); provided that the Seller

shall retain the right to terminate WFB without cause as set forth in Section

11.02 of the related Servicing Agreement.

 

     Section 2.04. Representations and Warranties of the Depositor.

 

     The Depositor hereby represents and warrants to the Master Servicer, the

Securities Administrator and the Trustee as follows, as of the date hereof and

as of the Closing Date:

 

          (i) The Depositor is duly organized and is validly existing as a

     limited liability company in good standing under the laws of the State of

     Delaware and has full power and authority necessary to own or hold its

     properties and to conduct its business as now conducted by it and to enter

     into and perform its obligations under this Agreement.

 

 

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<PAGE>

 

          (ii) The Depositor has the full power and authority to execute,

     deliver and perform, and to enter into and consummate the transactions

     contemplated by, this Agreement and has duly authorized, by all necessary

     action on its part, the execution, delivery and performance of this

     Agreement; and this Agreement, assuming the due authorization, execution

     and delivery hereof by the other parties hereto, constitutes a legal, valid

     and binding obligation of the Depositor, enforceable against the Depositor

     in accordance with its terms, subject, as to enforceability, to (i)

     bankruptcy, insolvency, reorganization, moratorium and other similar laws

      affecting creditors' rights generally and (ii) general principles of

     equity, regardless of whether enforcement is sought in a proceeding in

     equity or at law.

 

          (iii) The execution and delivery of this Agreement by the Depositor,

      the consummation of the transactions contemplated by this Agreement, and

     the fulfillment of or compliance with the terms hereof are in the ordinary

     course of business of the Depositor and will not (A) result in a material

     breach of any term or provision of the certificate of formation or limited

     liability company agreement of the Depositor or (B) materially conflict

     with, result in a material breach, violation or acceleration of, or result

     in a material default under, the terms of any other material agreement or

     instrument to which the Depositor is a party or by which it may be bound or

     (C) constitute a material violation of any statute, order or regulation

     applicable to the Depositor of any court, regulatory body, administrative

     agency or governmental body having jurisdiction over the Depositor; and the

     Depositor is not in breach or violation of any material indenture or other

     material agreement or instrument, or in violation of any statute, order or

     regulation of any court, regulatory body, administrative agency or

     governmental body having jurisdiction over it which breach or violation may

     materially impair the Depositor's ability to perform or meet any of its

     obligations under this Agreement.

 

          (iv) No litigation is pending, or, to the best of the Depositor's

     knowledge, threatened, against the Depositor that would materially and

     adversely affect the execution, delivery or enforceability of this

     Agreement or the ability of the Depositor to perform its obligations under

     this Agreement in accordance with the terms hereof.

 

          (v) No consent, approval, authorization or order of any court or

     governmental agency or body is required for the execution, delivery and

     performance by the Depositor of, or compliance by the Depositor with, this

     Agreement or the consummation of the transactions contemplated hereby, or

     if any such consent, approval, authorization or order is required, the

      Depositor has obtained the same.

 

     The Depositor hereby represents and warrants to the Trustee as of the

Closing Date, following the transfer of the Mortgage Loans to it by the Seller,

the Depositor had good title to the Mortgage Loans free and clear of all liens,

claims and encumbrances, and the related Mortgage Notes were subject to no

offsets, claims, defenses or counterclaims.

 

     It is understood and agreed that the representations and warranties set

forth in the immediately preceding paragraph shall survive delivery of the

Mortgage Files to the Custodian on behalf of the Trustee to the Trustee. Upon

discovery by the Depositor or the Trustee of a breach of such representations

and warranties, the party discovering such breach shall give prompt written

notice to the others and to each Rating Agency.

 

 

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     Section 2.05. Delivery of Opinion of Counsel in Connection with

                   Substitutions and Repurchases.

 

     (a) Notwithstanding any contrary provision of this Agreement, with respect

to any Mortgage Loan that is not in default or as to which default is not

imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03 shall

be made unless the Seller delivers to the Trustee, with a copy to the Custodian,

an Opinion of Counsel, addressed to the Trustee, to the effect that such

repurchase or substitution would not (i) result in the imposition of the tax on

"prohibited transactions" of REMIC I or REMIC II or contributions after the

Closing Date, as defined in sections 860F(a)(2) and 860G(d) of the Code,

respectively or (ii) cause either REMIC I or REMIC II to fail to qualify as a

REMIC at any time that any Certificates are outstanding. Any Mortgage Loan as to

which repurchase or substitution was delayed pursuant to this paragraph shall be

repurchased or the substitution therefor shall occur (subject to compliance with

Sections 2.02 or 2.03) upon the earlier of (a) the occurrence of a default or

imminent default with respect to such Mortgage Loan and (b) receipt by the

Trustee, with a copy to the Custodian, of an Opinion of Counsel addressed to the

Trustee to the effect that such repurchase or substitution, as applicable, will

not result in the events described in clause (i) or clause (ii) of the preceding

sentence.

 

     (b) Upon discovery by the Depositor, the Seller, the Master Servicer, the

Custodian or the Trustee that any Mortgage Loan does not constitute a "qualified

mortgage" within the meaning of section 860G(a)(3) of the Code, the party

discovering such fact shall promptly (and in any event within 5 Business Days of

discovery) give written notice thereof to the other parties. In connection

therewith, the Trustee shall require the Seller, at the Seller's option, to

either (i) substitute, if the conditions in Section 2.03(c) with respect to

substitutions are satisfied, a Replacement Mortgage Loan for the affected

Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of

such discovery in the same manner as it would a Mortgage Loan for a breach of

representation or warranty contained in Section 2.03. The Trustee shall reconvey

to the Seller the Mortgage Loan to be released pursuant hereto in the same

manner, and on the same terms and conditions, as it would a Mortgage Loan

repurchased for breach of a representation or warranty contained in Section

2.03.

 

     Section 2.06. Authentication and Delivery of Certificates.

 

     The Trustee acknowledges the transfer and assignment to it of the Trust

Fund and, concurrently with such transfer and assignment, has executed,

authenticated and delivered, to or upon the order of the Depositor, the

Certificates in authorized denominations evidencing the entire ownership of the

Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights

referred to above for the benefit of all present and future Holders of the

Certificates and to perform the duties set forth in this Agreement, to the end

that the interests of the Holders of the Certificates may be adequately and

effectively protected.

 

     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:

 

          (a) it shall comply in the performance of its obligations under this

     Agreement;

 

          (b) no written information, certificate of an officer, statement

     furnished in writing (other than annual compliance certificates and annual

     accountants' reports of the Servicers delivered by the Master Servicer

     pursuant to Section 3.18) or written report prepared by the Master Servicer

     or the EMC Servicer, as applicable, pursuant to this Agreement and

     delivered, the case of the Master Servicer, to the Securities

     Administrator, the Depositor, any affiliate of the

 

 

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     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

 

          (c) 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.

 

     Section 2.08. Lost Mortgage Notes Indemnity

 

     With respect to each Mortgage Loan for which the Seller has delivered a

lost note affidavit in lieu of an original Mortgage Note, the Seller does hereby

agree to defend, indemnify, and hold harmless the Trust Fund and the Trustee,

from and against any and all losses or damages, together with all reasonable

costs, charges and expenses (whether or not a lawsuit is filed), incurred as a

result of (i) the inability to enforce the related Mortgage Note according to

its terms, (ii) any claim, demand, suit, cause of action or proceeding by a

third party arising out of a Servicer's, the Master Servicer's or the Trustee's

inability to enforce the related Mortgage Note according to its terms due to the

lack of an original Mortgage Note, or (iii) the inability to receive any related

Insurance Proceeds, Liquidation Proceeds or other amounts due to the lack of an

original Mortgage Note. Upon demand from a Servicer, the Master Servicer or the

Trustee, the Seller shall deposit all amounts constituting lost principal with

respect to such Mortgage Loan into the Master Servicer Collection Account to be

treated as a Principal Prepayment, and reimburse such Servicer, the Master

Servicer or the Trustee, as applicable, for all costs and expenses incurred in

connection with such lost Mortgage Note.

 

 

 

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                                  ARTICLE III.

 

              ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS

 

     Section 3.01. The Master Servicer.

 

     The Master Servicer shall supervise, monitor and oversee the obligation of

the Servicers to service and administer their respective Mortgage Loans in

accordance with the terms of the applicable 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 such Servicer as necessary from

time-to-time to carry out the Master Servicer's obligations hereunder, shall

receive and review all reports, information and other data provided to the

Master Servicer by each such Servicer and shall cause each such Servicer to

perform and observe the covenants, obligations and conditions to be performed or

observed by such Servicer under the applicable Servicing Agreement. The Master

Servicer shall independently and separately monitor each such 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 such

Servicers' and the Master Servicer's records, and based on such reconciled and

corrected information, prepare the statements specified in Section 5.04(c) and

any other information and statements required hereunder. The Master Servicer

shall reconcile the results of its Mortgage Loan monitoring with the actual

remittances of each such Servicer to its Protected Account pursuant to the

applicable Servicing Agreement.

 

     Section 3.02. REMIC-Related Covenants.

 

     For as long as each REMIC shall exist, the Trustee shall act in accordance

herewith to assure continuing treatment of such REMIC as a REMIC, and the

Trustee shall comply with any directions of the Seller, the Depositor, any

Servicer 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, addressed to the

Trustee and prepared at the expense of the Trust Fund; and (b) other than with

respect to a substitution pursuant to a Servicing 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 addressed to the Trustee.

 

     Section 3.03. Monitoring of Servicers.

 

     (a) The Master Servicer shall be responsible for reporting to the

Securities Administrator, the Depositor and the Seller the compliance by each

Servicer with its duties under the related Servicing Agreement. In the review of

each such Servicer's activities, the Master Servicer may rely upon an officer's

certificate of such Servicer with regard to such Servicer's compliance with the

terms of its Servicing Agreement. In the event that the Master Servicer, in its

judgment, determines that any such Servicer should be terminated in accordance

with its Servicing Agreement, or that a notice should be sent pursuant to such

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 Seller, the Depositor, the EMC Servicer and the Trustee thereof and

the Master Servicer shall issue such notice or take such other action as it

deems appropriate.

 

 

 

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     (b) Subject to the preceding paragraph, the Master Servicer, on behalf of

the Trustee and the Certificateholders, shall enforce the obligations of each

Servicer under the related Servicing Agreement, and, in the event that any such

Servicer fails to perform its obligations in accordance with the related

Servicing Agreement, then either the EMC Servicer (if such defaulting Servicer

is WFB) or the Master Servicer (if such defaulting Servicer is any Servicer

other than WFB), shall terminate the rights and obligations of the defaulting

Servicer thereunder and act as successor servicer of the related Mortgage Loans

or cause the Trustee to enter into a new Servicing Agreement with a successor

servicer selected by either the EMC Servicer (if the defaulting Servicer is WFB)

or by the Master Servicer (if the defaulting Servicer is any Servicer other than

WFB) (which new Servicing Agreement shall, in any case, have terms generally in

accordance with the terms of the terminated Servicing Agreement); 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

Servicing Agreements and the pursuit of other appropriate remedies, shall be in

such form and carried out to such an extent and at such time as the Master

Servicer, in its good faith business judgment, would require were it the owner

of the related Mortgage Loans. Except as contemplated by subsection (c) below,

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. Without limiting the generality of the foregoing, WFB shall reimburse

the EMC Servicer for all Termination Costs associated with a termination of WFB

as Servicer. To the extent that any Termination Costs with respect to WFB are

not fully and timely reimbursed by WFB, the EMC Servicer shall be entitled to

reimbursement of such Termination Costs from its Protected Account.

 

     (c) The EMC Servicer shall reimburse the Master Servicer for the costs and

expenses of the Master Servicer related to the termination of the EMC 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, without limitation, (i) all legal costs and expenses and all due

diligence costs and expenses associated with an evaluation of the potential

termination of the EMC 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. To the extent

that any Termination Costs with respect to the EMC Servicer or any other

terminated servicer pursuant to the related Servicing Agreement are not fully

and timely reimbursed by the EMC Servicer or such other terminated Servicer, as

applicable, the Master Servicer shall be entitled to reimbursement of such

Termination Costs from the Master Servicer Collection 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 Assumption 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 or the EMC Servicer assumes the servicing with

respect to any of the Mortgage Loans, it will not assume liability for the

representations and warranties of any Servicer that it replaces.

 

 

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     Section 3.04. Successor Master Servicer and Subservicing Agreements.

 

     In the event that, pursuant to Section 8.01 hereof, the Trustee or any

other Person shall become Successor Master Servicer, such Successor Master

Servicer may, at its option, succeed to any rights and obligations of the

predecessor Master Servicer under any subservicing agreement in accordance with

the terms thereof; provided that such Successor Master Servicer shall not incur

any liability or have any obligations in its capacity as servicer under a

subservicing agreement arising prior to the date of such succession unless it

expressly elects to succeed to the rights and obligations of the predecessor

Master Servicer thereunder; and the predecessor Master Servicer shall not

thereby be relieved of any liability or obligations under the subservicing

agreement arising prior to the date of such succession.

 

     Such predecessor Master Servicer shall, upon request of the Trustee, but at

the expense of such predecessor Master Servicer, deliver to the assuming party

all documents and records relating to each subservicing agreement and the

Mortgage Loans then being serviced thereunder and an accounting of amounts

collected held by it and otherwise use its best efforts to effect the orderly

and efficient transfer of the subservicing agreement to the assuming party.

 

     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 such

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 the related Servicing Agreement,

including any related Assumption Agreement. The Trustee shall furnish the Master

Servicer, upon written request from a Servicing Officer, with any powers of

attorney empowering it or any 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 appeal,

prosecute or defend in any court action relating to the Mortgage Loans or the

Mortgaged Property, in accordance with the applicable Servicing Agreement and

this Agreement, and the Trustee shall execute and deliver such other documents,

as the Master Servicer may request, to enable it 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 the use or misuse of any such powers of attorney by the

Master Servicer or any 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, 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 and the Securities Administrator shall each execute and deliver

to 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 related

Mortgage; (iii) obtain a deficiency judgment against the Mortgagor; or (iv)

enforce any other rights or remedies provided by the Mortgage Note or related

Mortgage or otherwise available at law or equity.

 

 

 

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     Section 3.06. Due-on-Sale Clauses; Assumption Agreements.

 

     To the extent provided in the applicable Servicing Agreement, for any

Mortgage Loans that contain enforceable due-on-sale clauses, the Master Servicer

shall cause the related Servicer to enforce such clauses in accordance with the

applicable Servicing Agreement. If applicable law prohibits the enforcement of a

due-on-sale clause or such clause is otherwise not enforced in accordance with

such applicable Servicing Agreement, and, as a consequence, a Mortgage Loan is

assumed, the original Mortgagor may be released from liability in accordance

with the applicable 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 Master Servicer or any 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, or if it

does not, the Master Servicer may, if required under the applicable Servicing

Agreement, promptly furnish to the Custodian on behalf of the Trustee two copies

of a certification substantially in the form of Exhibit H 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

Protected Account maintained by the Master Servicer (as successor servicer) or

the applicable Servicer pursuant to its Servicing Agreement have been or will be

so deposited or escrowed) and shall request that the Custodian on behalf of the

Trustee deliver to the Master Servicer or the applicable Servicer, as

appropriate, 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 Master Servicer or the applicable Servicer, as

appropriate, and neither the Custodian nor the Trustee shall have any further

responsibility with regard to such Mortgage File. Upon any such payment in full,

the Master Servicer and each 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 Protected Account.

 

     (b) From time to time and as appropriate for the servicing or foreclosure

of any Mortgage Loan and in accordance with the applicable Servicing Agreement,

the Trustee shall execute such documents as shall be prepared and furnished to

the Trustee by a 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 a 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 H (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 the

Servicer or the Master Servicer, as applicable. Such trust receipt shall

obligate the Servicer or the Master Servicer to return the Mortgage File to the

Custodian on behalf of the Trustee, when the need therefor by the 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 Servicer or the Master Servicer.

 

 

 

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     Section 3.08. Documents, Records and Funds in Possession of the Master

                   Servicer To Be Held for Trustee.

 

     (a) The Master Servicer and each Servicer (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

such Servicer from time to time as are required by the terms hereof, or in the

case of the Servicers, in accordance with the applicable Servicing Agreement, to

be delivered to the Trustee or the Custodian. Any funds received by the Master

Servicer or a Servicer in respect of any Mortgage Loan or which otherwise are

collected by the Master Servicer or a Servicer as Liquidation Proceeds or

Insurance Proceeds in respect of any Mortgage Loan shall be held for the benefit

of the Trustee and the Certificateholders subject to, in the case of the Master

Servicer, the Master Servicer's right to retain or withdraw from the Master

Servicer Collection Account the Master Servicing Fee and other amounts provided

in this Agreement and to the right of each Servicer to retain its Servicing Fee

and other amounts as provided in the applicable Servicing Agreement. The Master

Servicer shall, and, to the extent provided in the applicable Servicing

Agreement, shall cause each Servicer 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 each Servicer 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 applicable Servicing Agreement.

 

     Section 3.09. Maintenance of Hazard Insurance.

 

     (a) For each Mortgage Loan, the Master Servicer shall enforce any

obligation of a Servicer under the related Servicing Agreement to maintain or

cause to be maintained hazard insurance in accordance with the provisions of the

related Servicing Agreement.

 

     (b) Pursuant to Section 4.01, any amounts collected by the Master Servicer,

or by any 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 applicable

Servicing Agreement) shall be deposited into the Master Servicer Collection

Account, subject to withdrawal pursuant to Section 4.03. Any cost incurred by

the Master Servicer or any such 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 Section 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 applicable

Servicing Agreement) cause the related 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 Insurance Policies. Any proceeds disbursed to the

Master Servicer (or disbursed to a Servicer and remitted to the Master Servicer)

in respect of such Insurance Policies shall be promptly deposited in the Master

Servicer Collection 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 any Servicer, to the

extent such action is prohibited under the applicable 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 the Master

Servicer or such Servicer, would have been covered thereunder. The Master

Servicer shall use its best efforts to cause each such 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 the related Servicing Agreement. The Master

Servicer shall not, and shall not permit any 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 the related Servicing Agreement.

 

     (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. Pursuant to Section 4.01, any

amounts collected by the Master Servicer or any such Servicer under any Primary

Mortgage Insurance Policies shall be deposited in the Master Servicer Collection

Account, subject to withdrawal pursuant to Section 4.03.

 

     Section 3.12. Custodian to Retain Possession of Certain Insurance Policies

                   and Documents.

 

     The Custodian shall, on behalf of the Trustee, 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.

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 Custodian, on behalf of the Trustee, shall

also retain possession and custody of each Mortgage File in accordance with and

subject to the terms and conditions of this Agreement and the Custodial

Agreement. The Master Servicer shall promptly deliver or cause to be delivered

to the Custodian, on behalf of 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.

 

 

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     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 terms of the applicable Servicing Agreement, including

any related Assumption Agreement.

 

     Section 3.14. Compensation for the Servicers and the Master Servicer.

 

     Servicing compensation in the form of any prepayment charges and penalties,

assumption fees, tax service fees, fees for statement of account payoff or late

payment charges collected by any Servicer shall be retained by such Servicer and

shall not be deposited in the Master Servicer Collection Account. In accordance

with Sections 4.02(b) and 4.03, the Master Servicer shall be entitled to pay

itself the Master Servicing Fee in respect of remittances from Servicers prior

to deposit in the Master Servicer Collection Account or to withdraw such portion

of the Master Servicing Fee from the Master Servicer Collection 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 specifically provided in this Agreement.

Pursuant to Article IV, all income and gain realized from any investment of

funds in the Distribution Account and the Master Servicer Collection Account

shall be for the benefit of the Master Servicer.

 

     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

applicable Servicing Agreement, cause the applicable Servicer to sell any REO

Property as expeditiously as possible and in accordance with the provisions of

this Agreement and the related Servicing Agreement. Pursuant to its efforts to

sell such REO Property, the Master Servicer shall cause such applicable Servicer

to protect and conserve such REO Property in the manner and to the extent

required by the applicable Servicing Agreement, subject to the REMIC Provisions.

 

     (b) The Master Servicer shall, to the extent required by the related

Servicing Agreement, cause the applicable Servicer to deposit all funds

collected and received in connection with the operation of any REO Property into

the related Protected Account.

 

     (c) The Master Servicer and such applicable Servicer, upon the final

disposition of any REO Property, shall be entitled to reimbursement for any

related unreimbursed Advances, unreimbursed Servicing Advances or Servicing Fees

from Liquidation Proceeds received in connection with the final disposition of

such REO Property; provided, that any such unreimbursed Advances or Servicing

Fees as well as any unpaid 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.

 

     Section 3.16. Annual Officer's Certificate as to Compliance.

 

     (a) The Master Servicer shall deliver to the Depositor, the Trustee and the

Rating Agencies by March 1, 2006, and by March 1 of each year thereafter, in

each case for the immediately preceding calendar year, an Officer's Certificate,

certifying that with respect to the period ending on such calendar year end: (i)

such Servicing Officer has reviewed the activities of the Master Servicer during

the preceding calendar year or portion thereof and its performance under this

Agreement, (ii) to the best of

 

 

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such Servicing Officer's knowledge, based on such review, the 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 any Servicer has failed to perform any of its duties,

responsibilities and obligations under its 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 by the Trustee to any

Certificateholder upon request at the Master Servicer's expense, provided that

such statement shall have been delivered to the Trustee.

 

     Section 3.17. Annual Independent Accountant's Servicing Report.

 

     If the Master Servicer has, during the course of any calendar year,

directly serviced any of the Mortgage Loans, 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 Seller by March 1, 2006, and by March 1 of each year thereafter, in each

case for the immediately preceding calendar year, to the effect that, with

respect to the most recently ended calendar year, such firm has examined certain

records and documents relating to the Master Servicer's performance of its

servicing obligations under this 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 to any Certificateholder,

upon request, by the Master Servicer, or by the Trustee at the expense of the

Master Servicer if the Master Servicer shall fail to provide such copies. If any

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.

 

     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 with a copy

of the statement to the Trustee. Prior to January 30 in each 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

its Servicing Agreement, and, if applicable, the annual independent accountant's

servicing report and annual statement of compliance to be delivered by the

Master Servicer pursuant to Sections 3.16 and 3.17. Prior to (i) March 31, 2006

and (ii) unless and until a Form 15 Suspension Notice shall have been filed, the

90th day of each year thereafter, the Securities Administrator

 

 

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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, 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 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"). Copies of all reports filed by the Securities Administrator under the

Exchange Act shall be sent to: the Depositor c/o Bear, Stearns & Co. Inc., Attn:

Managing Director-Analysis and Control, One Metrotech Center North, Brooklyn,

New York 11202-3859. Fees and expenses incurred by the Securities Administrator

in connection with this Section 3.18 shall not be reimbursable from the Trust

Fund.

 

     Section 3.19. The EMC Servicer.

 

     The EMC Servicer shall service the EMC Mortgage Loans pursuant to and in

accordance with the terms and provisions of Exhibit K hereto.

 

     Section 3.20. Optional Purchase of Defaulted Mortgage Loans.

 

     Beginning on the first Business Day of the Fiscal Quarter immediately

following the date on which a Mortgage Loan has become at least 91 days

delinquent, the EMC Servicer, in its sole discretion, shall have the right to

elect (by written notice sent to the Trustee, with a copy to the Master Servicer

and the applicable Servicer) to purchase for its own account from the Trust Fund

any such Mortgage Loan at a price equal to the Purchase Price. The Purchase

Price for any Mortgage Loan purchased hereunder shall be deposited in the Master

Servicer Collection Account, and the Trustee, upon receipt of a Request for

Release from the EMC Servicer, shall release or cause the Custodian to release

to the EMC Servicer, the related Mortgage File and shall execute and deliver

such instruments of transfer or assignment prepared by the EMC Servicer, in each

case without recourse, representation or warranty as shall be necessary to vest

in the EMC Servicer any Mortgage Loan released pursuant hereto and the EMC

Servicer shall succeed to all the Trust's right, title and interest in and to

such Mortgage Loan and all security and documents related thereto. Such

assignment shall be an assignment outright and not for security. The EMC

Servicer shall thereupon own such Mortgage Loan, and all security and documents,

free of any further obligation to the Trustee or the Certificateholders with

respect thereto. Notwithstanding the foregoing, any such optional right of

repurchase by the EMC Servicer hereunder with respect to a delinquent Mortgage

Loan shall, if unexercised, terminate on the earlier of (i) the date on which

such delinquency has been cured or (ii) the last Business Day of such Fiscal

Quarter immediately following the date on which such Mortgage Loan became 91

days delinquent, provided however, that such optional right of repurchase shall

be reinstated if (a) in the case of clause (i), the related Mortgage Loan shall

thereafter again have become 91 or more days delinquent and (b) in the case of

clause (ii), such delinquency shall have been subsequently cured and the related

Mortgage Loan shall thereafter again become 91 or more days delinquent in any

subsequent Fiscal Quarter. In either event, the purchase option shall again

become exercisable on the first day of the Fiscal Quarter immediately following

the date on which the related Mortgage Loan again becomes at least 91 days

delinquent.

 

 

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                                  ARTICLE IV.

 

                                     ACCOUNTS

 

     Section 4.01. Protected Accounts.

 

     (a) The Master Servicer shall enforce the obligation of each Servicer to

establish and maintain a Protected Account in accordance with the applicable

Servicing Agreement, with records to be kept with respect thereto on a Mortgage

Loan by Mortgage Loan basis, into which Protected Accounts shall be deposited

daily (or as of such other time specified in the related Servicing Agreement)

all collections of principal and interest on any Mortgage Loan and with respect

to any REO Property received by a Servicer, including Principal Prepayments,

Insurance Proceeds, Liquidation Proceeds, and advances made from the Servicer's

own funds (less Servicing Fees as permitted by such applicable Servicing

Agreement in the case of any such Servicer) and all other amounts to be

deposited in the Protected Account pursuant to the related Servicing Agreement.

 

     (b) [Reserved].

 

     (c) Subject to this Article IV, on or before each Servicer Remittance Date,

the Master Servicer shall (if acting as successor servicer to a Servicer), or

shall cause the related Servicer to withdraw or shall cause to be withdrawn from

the Protected Accounts and immediately deposit or cause to be deposited into the

Master Servicer Collection 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 Servicers pursuant to the Servicing

     Agreements which were due on or before the related Due Date, net of the

     amount thereof comprising the Servicing Fees;

 

          (ii) full Principal Prepayments, any Liquidation Proceeds received by

     the Servicers with respect to such Mortgage Loans in the related Prepayment

     Period, with interest to the date of prepayment or liquidation, net of the

      amount thereof comprising the Servicing Fees and any Subsequent Recoveries;

 

          (iii) partial Principal Prepayments received by the Servicers for such

     Mortgage Loans in the related Prepayment Period; and

 

          (iv) any amount to be used as an Advance and any payments of

     Compensating Interest.

 

     Section 4.02. Master Servicer Collection Account.

 

     (a) The Master Servicer shall establish and maintain in the name of the

Trustee, for the benefit of the Certificateholders, the Master Servicer

Collection Account as a segregated trust account or accounts. The Master

Servicer will deposit in the Master Servicer Collection Account as identified by

the Master Servicer and as received by the Master Servicer, the following:

 

          (i) Any amounts withdrawn from a Protected Account and remitted to the

     Master Servicer Collection Account pursuant to Section 4.01(c);

 

 

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          (ii) Any Advances and any payments of Compensating Interest which were

     not deposited in a Protected Account;

 

          (iii Any Insurance Proceeds, Liquidation Proceeds or Subsequent

     Recoveries received by or on behalf of the Master Servicer or which were

     not deposited in a Protected Account;

 

           (iv) The Purchase Price with respect to any Mortgage Loans purchased

     by the Seller pursuant to Sections 2.02, 2.03 or 3.20;

 

          (v) Any amounts required to be deposited with respect to losses on

     investments of deposits in the Master Servicer Collection Account; and

 

          (vi) Any other amounts received by or on behalf of the Master Servicer

     or the Trustee and required to be deposited in the Master Servicer

     Collection Account pursuant to this Agreement.

 

     (b) All amounts deposited to the Master Servicer Collection Account shall

be held by the Master Servicer in the name of the Trustee in trust for the

benefit of the Certificateholders in accordance with the terms and provisions of

this Agreement. The requirements for crediting the Master Servicer Collection

Account or the Distribution Account shall be exclusive, it being understood and

agreed that, without limiting the generality of the foregoing, payments in the

nature of (i) prepayment or late payment charges or assumption, tax service,

statement account or payoff, substitution, satisfaction, release and other like

fees and charges and (ii) the items enumerated in Subsections 4.05(a)(i), (ii),

(iii), (iv), (vi), (vii), (ix) and (xi) need not be credited by the Master

Servicer or the related Servicer to the Master Servicer Collection Account. In

the event that the Master Servicer shall deposit or cause to be deposited to the

Distribution Account any amount not required to be credited thereto, the

Trustee, upon receipt of a written request therefor signed by a Servicing

Officer of the Master Servicer, shall promptly transfer such amount to the

Master Servicer, any provision herein to the contrary notwithstanding.

 

     (c) The amount at any time credited to the Master Servicer Collection

Account may be invested, in the name of the Trustee, or its nominee, for the

benefit of the Certificateholders, in Permitted Investments as directed by the

Master Servicer. In the absence of such direction, amounts will remain

uninvested. All Permitted Investments shall mature or be subject to redemption

or withdrawal on or before, and shall be held until, the next succeeding

Distribution Account Deposit Date. Any and all investment earnings from the

Master Servicer Collection Account shall be paid to the Master Servicer. 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 Master

Servicer. The Master Servicer shall deposit the amount of any such loss in the

Master Servicer Collection 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.

 

     (d) On or before each Distribution Account Deposit Date, the Master

Servicer shall deposit in the Distribution Account (or separately remit to the

Trustee for deposit in the Distribution Account) any Advances or payments of

Compensating Interest required to be made by the Master Servicer with respect to

the Mortgage Loans.

 

 

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     Section 4.03. Permitted Withdrawals and Transfers from the Master Servicer

                   Collection Account.

 

     (a) The Master Servicer will, from time to time in its discretion or on

demand of the Securities Administrator, make or cause to be made such

withdrawals or transfers from the Master Servicer Collection Account as the

Master Servicer has designated for such transfer or withdrawal pursuant to the

Servicing Agreements. The Master Servicer may make withdrawals in payment of any

Master Servicing Fee not previously reimbursed or withheld from funds in the

Master Servicer Collection Account or the Distribution Account, and may clear

and terminate the Master Servicer Collection Account pursuant to Section 10.01

and remove amounts from time to time deposited in error.

 

     (b) On an ongoing basis, Master Servicer shall withdraw from the Master

Servicer Collection Account any expenses recoverable by the Trustee, the Master

Servicer, the EMC Servicer, the Custodian, the Seller or the Securities

Administrator pursuant to Sections 3.03, 7.01, 7.03, 7.04 and 9.05.

 

     (c) No later than 1:00 p.m. New York time on each Distribution Account

Deposit Date, the Master Servicer will transfer all amounts on deposit in the

Master Servicer Collection Account to the Distribution Account.

 

     Section 4.04. Distribution Account.

 

     (a) The Trustee shall establish and maintain in the name of the Trustee,

for the benefit of the Certificateholders, the Distribution Account as a

segregated trust account or accounts.

 

     (b) All amounts deposited to the Distribution Account shall be held by the

Trustee in the name of the Trustee in trust for the benefit of the

Certificateholders in accordance with the terms and provisions of this

Agreement.

 

     (c) The Distribution Account shall constitute an Eligible Account of the

Trust Fund segregated on the books of the Trustee and held by the Trustee in a

financial institution located in the State of the Corporate Trustee Office or in

the State of New York, and 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 or the Master

Servicer (whether made directly, or indirectly through a liquidator or receiver

of the Trustee or the Master Servicer). The amount at any time credited to the

Distribution Account shall be (i) fully insured by the FDIC to the maximum

coverage provided thereby or (ii) invested in the name of the Trustee in such

Permitted Investments, or deposited in demand deposits with such depository

institutions, as directed in writing by the Master Servicer. In the absence of

such direction, amounts will remain uninvested. 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 Trustee or, if such obligor is any other Person, the Business

Day preceding such Distribution Date. All investment earnings on amounts on

deposit in the Distribution Account 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 deposit the amount of the loss in the

Distribution Account. With respect to the Distribution Account and the funds

deposited therein, the Master Servicer 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 Trustee) 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.

 

 

 

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     Section 4.05. Permitted Withdrawals and Transfers from the Distribution

                   Account.

 

     (a) The Trustee 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 Servicing Agreements or as the

Securities Administrator has instructed hereunder for the following purposes

(limited in the case of amounts due the Master Servicer to those not withdrawn

from the Master Servicer Collection Account in accordance with the terms of this

Agreement, and in the case of amounts due the EMC Servicer or any other Servicer

to those not withdrawn from its Protected Account in accordance with the related

Servicing Agreement):

 

          (i) to reimburse the Master Servicer or any Servicer for any Advance,

     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 Purchase 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 Advance or advance was made;

 

          (ii) to reimburse the Master Servicer or any Servicer from Insurance

     Proceeds or Liquidation Proceeds relating to a particular Mortgage Loan for

     amounts expended by the Master Servicer or such Servicer in good faith in

     connection with the restoration of the related Mortgaged Property which was

     damaged not covered by any Insurance Policy, including any hazard insurance

     or in connection with the liquidation of such Mortgage Loan;

 

          (iii) to reimburse the Master Servicer or any 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 such 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 (xi) of this

     Subsection (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 any Servicer, as appropriate, from

     Liquidation Proceeds or Insurance Proceeds received in connection with the

     liquidation of any Mortgage Loan, the amount which it or such 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 any Servicer from the Purchase Price

     for any Mortgage Loan, the amount which it or such Servicer would have been

     entitled to receive under subclause (xi) of this subsection (a) as

     servicing compensation;

 

          (vi) to reimburse the Master Servicer or any Servicer for unreimbursed

     Servicing Advances made pursuant to the applicable Servicing Agreement, the

     right to reimbursement pursuant to this subclause being limited to amounts

     received on the related Mortgage Loan (including, for this purpose, the

     Purchase Price therefor, Insurance Proceeds and Liquidation Proceeds) which

     represent late recoveries of the payments for which such Servicing Advances

     were made;

 

 

 

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          (vii) to reimburse the Master Servicer or any Servicer for any

     unreimbursed Advance or any Servicing Advance, from collections with

     respect to a related Group, after a Realized Loss has been allocated with

     respect to the related Mortgage Loan, if the Advance or Servicing Advance

     has not been reimbursed pursuant to clause (i) or (vi);

 

          (viii) to pay any Master Servicing Fee;

 

          (ix) from collections with respect to a related Group, to reimburse

     the Master Servicer for expenses, costs and liabilities incurred by and

     reimbursable to it, with respect to the related Group or otherwise

     allocable to such Group, pursuant to Sections 3.03, 7.04 and 11.02, as

     applicable;

 

          (x) to pay to the Master Servicer, as additional compensation, any

     Excess Liquidation Proceeds with respect to a Mortgage Loan to the extent

     not retained by the related Servicer and to pay to the EMC Servicer, as

     additional servicing compensation, any Excess Liquidation Proceeds with

     respect to an EMC Mortgage Loan;

 

          (xi) from collections with respect to a related Group, to reimburse or

     pay any Servicer or the Master Servicer any such amounts as are due

     thereto, with respect to the related Group or otherwise allocable to such

     Group, under the applicable Servicing Agreement and have not been retained

     by or paid to the Servicer, to the extent provided in the related Servicing

     Agreement;

 

          (xii) from collections with respect to a related Group, to reimburse

     the Trustee, the Securities Administrator or the Custodian for expenses,

     costs and liabilities incurred by or reimbursable to it, with respect to

     the related Group or otherwise allocable to such Group, pursuant to this

     Agreement;

 

          (xiii) to remove amounts deposited in error; and

 

          (xiv) to clear and terminate the Distribution Account pursuant to

     Section 10.01.

 

     (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

(xii), inclusive, or with respect to any such amounts which would have been

covered by such subclauses had the amounts not been retained by the Master

Servicer without being deposited in the Distribution Account under Section

4.02(b).

 

     (c) On each Distribution Date, based solely on the applicable Remittance

Report, the Trustee shall distribute Interest Funds and Principal Funds in the

Distribution Account to the Holders of the Certificates in accordance with

Section 5.04(a).

 

     Section 4.06. Yield Maintenance Account and Yield Maintenance Agreements.

 

     The Trustee is hereby directed to execute each Yield Maintenance Agreement

on behalf of the Trust Fund. Amounts payable by the Trust Fund on the Closing

Date pursuant to each Yield Maintenance Agreement shall be paid by the Seller.

The Trustee in its individual capacity shall have no responsibility for any of

the undertakings, agreements or representations with respect to any Yield

Maintenance Agreement, including, without limitation, for making any payments

thereunder.

 

     The Trustee shall establish and maintain in the name of the Trustee, for

the benefit of the Adjustable Rate Certificateholders, the Yield Maintenance

Account as a segregated trust account. The

 

 

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Yield Maintenance Account shall not constitute an asset of any REMIC

hereunder. For federal income tax purposes, the Class B-IO Certificateholders

shall be treated as the owners of the Yield Maintenance Account. Any Yield

Maintenance Payments received by the Trustee shall be deposited by the Trustee

into the Yield Maintenance Account. On the Distribution Date immediately

succeeding its receipt thereof, the Trustee shall distribute from each such

Yield Maintenance Payment, to the related Class of Adjustable Rate Certificates,

the Yield Maintenance Agreement Amount owed to such Class for such Distribution

Date.

 

     On each Distribution Date following application of any Yield Maintenance

Payments as described in the immediately preceding paragraph, any Excess Yield

Maintenance Amount will be distributed by the Trustee on such Distribution Date

in the manner set forth in Section 5.04(a) in accordance with the Remittance

Report for such Distribution Date.

 

 

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                                   ARTICLE V.

                            DISTRIBUTIONS AND ADVANCES

                             BY THE MASTER SERVICER

 

     Section 5.01. Advances.

 

     Except with respect to any Simple Interest Loans, for which no Advances of

principal are required to be made, if the Scheduled Payment on a Mortgage Loan,

that was due on a related Due Date and is delinquent other than as a result of

application of the Relief Act or similar state laws and for which the related

Servicer was required to make an Advance pursuant to the related Servicing

Agreement exceeds the amount deposited in the Master Servicer Collection Account

for use as an Advance with respect to such Mortgage Loan, the Master Servicer

will make an Advance in an amount equal to such deficiency for deposit into the

Master Servicer Collection Account or the Distribution Account, as applicable.

Each such Advance shall be remitted to the Master Servicer Collection Account or

the Distribution Account, as appropriate, no later than 1:00 p.m. Central time

on the Master Servicer Advance Date in immediately available funds. The Master

Servicer shall be obligated to make any such Advance only to the extent that

such advance would not be a Nonrecoverable Advance. If the Master Servicer shall

have determined that it has made a Nonrecoverable Advance or that a proposed

Advance or a lesser portion of such Advance would constitute a Nonrecoverable

Advance, the Master Servicer shall deliver (i) to the Trustee for the benefit of

the Certificateholders funds constituting the remaining portion of such Advance,

if applicable, and (ii) to the Depositor, each Rating Agency and the Trustee an

Officer's Certificate setting forth the basis for such determination.

 

     In lieu of making all or a portion of such Advance from its own funds, the

Master Servicer may (i) cause to be made an appropriate entry in its records

relating to the Master Servicer Collection Account that any Amount Held for

Future Distributions with respect to a Group has been used by the Master

Servicer in discharge of its obligation to make any such Advance and (ii)

transfer such funds from the Master Servicer Collection Account to the

Distribution Account. Any funds so applied and transferred shall be replaced by

the Master Servicer by deposit in the Master Servicer Collection Account, no

later than the close of business on the Business Day immediately preceding the

Distribution Date on which such funds are required to be distributed pursuant to

this Agreement.

 

     The Master Servicer shall be entitled to be reimbursed from the Master

Servicer Collection Account or the Distribution Account for all Advances of its

own funds made pursuant to this Section as provided in Section 4.05. The

obligation to make Advances with respect to any Mortgage Loan shall continue

until such Mortgage Loan is paid in full or the related Mortgaged Property or

related REO Property has been liquidated or until the purchase or repurchase

thereof (or substitution therefor) from the Trust Fund pursuant to any

applicable provision of this Agreement, except as otherwise provided in this

Section 5.01.

 

     Subject to and in accordance with the provisions of Article VIII hereof, in

the event of a failure by the Master Servicer to make an Advance pursuant to

this Section 5.01, then the EMC Servicer, as Successor Master Servicer, shall be

obligated to make such Advance, and if the EMC Servicer, as Successor Master

Servicer, fails to make such Advance, then the Trustee, as Successor Master

Servicer, shall be obligated to make such Advance.

 

     Section 5.02. Compensating Interest Payments.

 

     The Master Servicer shall deposit into the Distribution Account, no later

than the close of business on the Business Day immediately preceding such

Distribution Date, an amount equal to the

 

 

 

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aggregate amount of Compensating Interest required to be paid by a Servicer

pursuant to the related Servicing Agreement for such Distribution Date, that is

not so paid by such Servicer; provided that such amount shall not exceed the

Master Servicing Fee for such Distribution Date; and in case of such deposit,

the Master Servicer shall not be entitled to any recovery or reimbursement in

respect of any such payment.

 

     Section 5.03. REMIC Distributions.

 

     On each Distribution Date the Securities Administrator, shall allocate

distributions to the REMIC I Regular Interests and the REMIC II Regular

Interests, in accordance with Section 5.06 hereof.

 

     Section 5.04. Distributions.

 

     (a) On each Distribution Date, an amount equal to the Interest Funds and

Principal Funds with respect to each Group for such Distribution Date shall be

withdrawn by the Trustee from the Distribution Account and distributed as

directed in accordance with the Remittance Report for such Distribution Date, in

the manner set forth in clauses (i), (ii) and (iii) below:

 

          (i)   The Trustee shall apply Interest Funds with respect to each Group

     for such Distribution Date as follows:

 

               I.    From Interest Funds with respect to Group I:

 

                     first, to the related Class A Certificates, Current Interest

               and then any Interest Carry Forward Amount for each such Class,

               pro rata, based upon the amount of Current Interest or Interest

               Carry Forward Amount, as applicable, due to each such Class;

 

                    second, from remaining related Interest Funds, to the Class

               I-M-1 Certificates, the Class I-M-2 Certificates, the Class I-M-3

               Certificates, the Class I-M-4 Certificates, the Class I-M-5

               Certificates, the Class I-M-6 Certificates and the Class I-B

               Certificates, sequentially, in that order, Current Interest for

               each such Class;

 

                    third, any Excess Spread with respect to Group I, to the

               extent necessary to meet a level of overcollateralization for

               such Group equal to the related Specified Overcollateralization

               Amount, will be the Extra Principal Distribution Amount with

               respect to Group I and will be included as part of the related

               Principal Distribution Amount; and

 

                    fourth, any Remaining Excess Spread with respect to Group I

               will be added to any Excess Overcollateralization Amount for such

               Group and will be included in Excess Cashflow with respect to

               Group I and applied as described under clause (iii), below.

 

               II.   From Interest Funds with respect to Group II:

 

                    first, to the Class II-A Certificates, Current Interest and

               then any Interest Carry Forward Amount for such Class;

 

 

 

 

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                    second, from remaining related Interest Funds, to the Class

               II-M-1 Certificates, the Class II-M-2 Certificates, the Class

               II-M-3 Certificates and the Class II-B Certificates,

               sequentially, in that order, Current Interest for each such

               Class;

 

                    third, any Excess Spread with respect to Group II, to the

               extent necessary to meet a level of overcollateralization for

               such Group equal to the related Specified Overcollateralization

               Amount, will be the Extra Principal Distribution Amount with

               respect to Group II and will be included as part of the related

               Principal Distribution Amount; and

 

                    fourth, any Remaining Excess Spread with respect to Group II

               will be added to any Excess Overcollateralization Amount for such

               Group and will be included in Excess Cashflow in respect of Group

               II and applied as described under clause (iii), below.

 

     Notwithstanding the above, on the first Distribution Date, all Excess

Spread with respect to Group I and Group II will be paid to the holders of the

Class I-B-IO Certificates and Class II-B-IO Certificates, respectively.

 

     On any Distribution Date, any shortfalls on mortgage loans of a Group

resulting from the application of the Relief Act or similar state laws, and any

related Prepayment Interest Shortfalls to the extent not covered by Compensating

Interest will be allocated, first, in reduction of amounts otherwise

distributable to the related Class B-IO Certificates and Residual Certificates,

and thereafter, to the Current Interest payable to the Certificates of the

related Group on such Distribution Date, on a pro rata basis, based on the

respective amounts of interest accrued on such Certificates for such

Distribution Date. The holders of the Certificates will not be entitled to

reimbursement for any such interest shortfalls.

 

          (ii) The Trustee shall apply the Principal Distribution Amount with

     respect to each Group for such Distribution Date as follows:

 

               I. From the Principal Distribution Amount with respect to Group

I:

 

               (A) for each Distribution Date (i) prior to the related Stepdown

Date or (ii) on which a related Trigger Event is in effect:

 

                    first, to the Class I-A-1 Certificates, Class I-A-2

               Certificates and Class I-A-3 Certificates, sequentially, in that

               order, in each case until the Certificate Principal Balance of

               each such Class is reduced to zero;

 

                    second, to the Class I-M-1 Certificates, any remaining

               related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero;

 

                    third, to the Class I-M-2 Certificates, any remaining

               related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero;

 

                     fourth, to the Class I-M-3 Certificates, any remaining

               related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero;

 

 

 

 

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                    fifth, to the Class I-M-4 Certificates, any remaining

               related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero;

 

                    sixth, to the Class I-M-5 Certificates, any remaining

               related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero;

 

                    seventh, to the Class I-M-6 Certificates, any remaining

                related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero; and

 

                    eighth, to the Class I-B Certificates, any remaining related

               Principal Distribution Amount until the Certificate Principal

               Balance thereof is reduced to zero.

 

               (B) For each Distribution Date on or after the related Stepdown

Date, so long as a related Trigger Event is not in effect:

 

                    first, to the Class I-A-1 Certificates, Class I-A-2

               Certificates and Class I-A-3 Certificates, sequentially, in that

               order, the Class A Principal Distribution Amount for Group I, in

               each case until the Certificate Principal Balance of each such

               Class is reduced to zero;

 

                    second, to the Class I-M-1 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 1 Principal

               Distribution Amount for Group I, until the Certificate Principal

               Balance thereof is reduced to zero;

 

                    third, to the Class I-M-2 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 2 Principal

                Distribution Amount for Group I, until the Certificate Principal

               Balance thereof is reduced to zero;

 

                    fourth, to the Class I-M-3 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 3 Principal

               Distribution Amount for Group I, until the Certificate Principal

               Balance thereof is reduced to zero;

 

                    fifth, to the Class I-M-4 Certificates, from any remaining

                related Principal Distribution Amount, the Class M 4 Principal

               Distribution Amount for Group I, until the Certificate Principal

               Balance thereof is reduced to zero;

 

                    sixth, to the Class I-M-5 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 5 Principal

               Distribution Amount for Group I, until the Certificate Principal

               Balance thereof is reduced to zero;

 

                    seventh, to the Class I-M-6 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 6 Principal

               Distribution Amount for Group I, until the Certificate Principal

               Balance thereof is reduced to zero; and

 

                    eighth, to the Class I-B Certificates, from any remaining

               related Principal Distribution Amount, the Class B Principal

               Distribution Amount for Group I, until the Certificate Principal

                Balance thereof is reduced to zero.

 

 

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               II.   From the Principal Distribution Amount with respect to Group

II:

 

               (A)   For each Distribution Date (i) prior to the related Stepdown

Date or (ii) on which a related Trigger Event is in effect:

 

                    first, to the Class II-A Certificates, until the Certificate

               Principal Balance of such Class is reduced to zero;

 

                    second, to the Class II-M-1 Certificates, any remaining

               related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero;

 

                    third, to the Class II-M-2 Certificates, any remaining

                related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero;

 

                    fourth, to the Class II-M-3 Certificates, any remaining

               related Principal Distribution Amount until the Certificate

               Principal Balance thereof is reduced to zero; and

 

                    fifth, to the Class II-B Certificates, any remaining related

               Principal Distribution Amount until the Certificate Principal

                Balance thereof is reduced to zero.

 

               (B)   For each Distribution Date on or after the related Stepdown

Date, so long as a related Trigger Event is not in effect:

 

                    first, to the Class II-A Certificates, the Class A Principal

               Distribution Amount for Group II, until the Certificate Principal

               Balance of such Class is reduced to zero;

 

                    second, to the Class II-M-1 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 1 Principal

               Distribution Amount for Group II, until the Certificate Principal

               Balance thereof is reduced to zero;

 

                    third, to the Class II-M-2 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 2 Principal

               Distribution Amount for Group II, until the Certificate Principal

               Balance thereof is reduced to zero;

 

                    fourth, to the Class II-M-3 Certificates, from any remaining

               related Principal Distribution Amount, the Class M 3 Principal

               Distribution Amount for Group II, until the Certificate Principal

               Balance thereof is reduced to zero; and

 

                    fifth, to the Class II-B Certificates, from any remaining

               related Principal Distribution Amount, the Class B Principal

               Distribution Amount for Group II, until the Certificate Principal

               Balance thereof is reduced to zero.

 

               The Trustee shall apply the sum of any Excess Cashflow and Yield

Maintenance Amount with respect to each Group for such Distribution Date as

follows:

 

 

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<PAGE>

 

 

                I. On each Distribution Date, the sum of any Excess Cashflow and

Yield Maintenance Amount with respect to Group I will be applied as

follows:

 

                    first, to the related Class A Certificates, to the extent

               not fully paid pursuant to paragraph first of clause (i) I.,

               above, any remaining Interest Carry Forward Amount for each such

               Class for such Distribution Date, pro rata, based on the amount

               of unpaid Interest Carry Forward Amount owed to each such Class;

 

                    second, from the sum of any remaining related Excess

               Cashflow and any remaining related Yield Maintenance Amount, (i)

               to the Class I-B-IO Certificates, for deposit to the Supplemental

               Interest Reserve Fund, the amount required for distribution in

               accordance with clause (ii) of this paragraph second, and (ii)

               from and to the extent of funds on deposit in the Supplemental

                Interest Reserve Fund with respect to Group I, to the related

               Class A Certificates, any Basis Risk Shortfall Carry Forward

               Amount for each such Class for such Distribution Date, pro rata,

               based on the amount of Basis Risk Shortfall Carry Forward Amount

               owed to each such Class;

 

                    third, from the sum of any remaining related Excess Cashflow

               and any remaining related Yield Maintenance Amount, to the Class

                I-M-1 Certificates, Class I-M-2 Certificates, Class I-M-3

               Certificates, Class I-M-4 Certificates, Class I-M-5 Certificates,

               Class I-M-6 Certificates and Class I-B Certificates,

               sequentially, in that order, an amount equal to any Interest

               Carry Forward Amount for each such Class and Distribution Date;

 

                    fourth, from the sum of any remaining related Excess

               Cashflow and any remaining related Yield Maintenance Amount, to

               the Class I-M-1 Certificates, Class I-M-2 Certificates, Class

               I-M-3 Certificates, Class I-M-4 Certificates, Class I-M-5

               Certificates, Class I-M-6 Certificates and Class I-B

               Certificates, sequentially, in that order, an amount equal to any

               Unpaid Applied Realized Loss Amount for each such Class and

               Distribution Date;

 

                    fifth, from the sum of any remaining related Excess Cashflow

                and any remaining related Yield Maintenance Amount, (i) to the

               Class I-B-IO Certificates, for deposit to the Supplemental

               Interest Reserve Fund, the amount required for distribution in

               accordance with clause (ii) of this paragraph fifth, and (ii)

               from and to the extent of funds on deposit in the Supplemental

               Interest Reserve Fund with respect to Group I, to the Class I-M-1

               Certificates, Class I-M-2 Certificates, Class I-M-3 Certificates,

               Class I-M-4 Certificates, Class I-M-5 Certificates, Class I-M-6

               Certificates and Class I-B Certificates, sequentially, in that

               order, an amount equal to any Basis Risk Shortfall Carry Forward

               Amount for each such Class and Distribution Date;

 

                    sixth, from the sum of any remaining related Excess Cashflow

               and any remaining related Yield Maintenance Amount, for

               distribution to the Group II Certificates, in accordance with the

               priorities set forth under clause II. of this clause (iii),

               below, first, to the Class II-A Certificates, to the extent that

               any Interest Carry Forward Amount for such Class has not

               otherwise been distributed in full for that Distribution Date,

               and then, to the Group II Subordinate Certificates, to the extent

               that any (1) Interest Carry Forward Amount and (2)

 

 

 

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<PAGE>

 

 

               Unpaid Applied Realized Loss Amount, in that order, for such

               Classes, has not otherwise been distributed in full for that

               Distribution Date;

 

                    seventh, from the sum of any remaining related Excess

               Cashflow and any remaining related Yield Maintenance Amount, to

               the Class II-B-IO Certificates, the Class I-B-IO Distribution

               Amount and the remaining Excess Yield Maintenance Amount for

               Group I; and

 

                    eighth, any remaining amounts to the Residual Certificates,

               based on the related REMIC in which such amounts remain.

 

               II. On each Distribution Date, the sum of any Excess Cashflow and

any Excess Yield Maintenance Amount with respect to Group II will be

applied as follows:

 

                    first, to the Class II-A Certificates, to the extent not

               fully paid pursuant to paragraph first of clause (i) II., above,

               any remaining Interest Carry Forward Amount for such Class for

               such Distribution Date;

 

                    second, from the sum of any remaining related Excess

               Cashflow and any remaining related Yield Maintenance Amount, (i)

               to the Class II-B-IO Certificates, for deposit to the

               Supplemental Interest Reserve Fund, the amount required for

               distribution in accordance with clause (ii) of this paragraph

               second, and (ii) from and to the extent of funds on deposit in

               the Supplemental Interest Reserve Fund with respect to Group II,

               to the Class II-A Certificates, any Basis Risk Shortfall Carry

               Forward Amount for such Class for such Distribution Date;

 

                    third, from the sum of any remaining related Excess Cashflow

               and any remaining related Yield Maintenance Amount, to the Class

               II-M-1 Certificates, Class II-M-2 Certificates, Class II-M-3

               Certificates and Class II-B Certificates, sequentially, in that

               order, an amount equal to any Interest Carry Forward Amount for

               each such Class and Distribution Date;

 

                     fourth, from the sum of any remaining related Excess

               Cashflow and any remaining related Yield Maintenance Amount, to

               the Class II-M-1 Certificates, Class II-M-2 Certificates, Class

               II-M-3 Certificates and Class II-B Certificates, sequentially, in

               that order, an amount equal to any Unpaid Applied Realized Loss

               Amount for each such Class and Distribution Date;

 

                    fifth, from the sum of any remaining related Excess Cashflow

               and any remaining related Yield Maintenance Amount, (i) to the

               Class II-B-IO Certificates, for deposit to the Supplemental

               Interest Reserve Fund, the amount required for distribution in

                accordance with clause (ii) of this paragraph fifth, and (ii)

               from and to the extent of funds on deposit in the Supplemental

               Interest Reserve Fund with respect to Group II, to the Class

               II-M-1 Certificates, Class II-M-2 Certificates, Class II-M-3

               Certificates and Class II-B Certificates, sequentially, in that

               order, an amount equal to any Basis Risk Shortfall Carry Forward

               Amount for each such Class and Distribution Date;

 

                    sixth, from the sum of any remaining related Excess Cashflow

               and any remaining related Yield Maintenance Amount, for

               distribution to the Group I Certificates, in accordance with the

                priorities set forth under clause I. of this

 

 

 

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               clause (iii), above, first, to the Group I Class A Certificates,

               to the extent that any Interest Carry Forward Amount for such

               Classes has not otherwise been distributed in full for that

               Distribution Date, and then, to the Group I Subordinate

               Certificates, to the extent that any (1) Interest Carry Forward

               Amount and (2) Unpaid Applied Realized Loss Amount, in that

               order, for such Classes, has not otherwise been distributed in

               full for that Distribution Date;

 

                    seventh, from the sum of any remaining related Excess

               Cashflow and any remaining related Yield Maintenance Amount, to

               the Class II-B-IO Certificates, the Class II-B-IO Distribution

               Amount and the remaining Excess Yield Maintenance Amount for

               Group II; and

 

                    eighth, any remaining amounts to the Residual Certificates,

               based on the related REMIC in which such amounts remain.

 

     (b) Subject to Section 10.02 hereof respecting the final distribution, on

each Distribution Date the Trustee shall make distributions to each

Certificateholder of record on the preceding Record Date either by wire transfer

in immediately available funds to the account of such holder at a bank or other

entity having appropriate facilities therefor, if such Holder has so notified

the Trustee at least five (5) Business Days prior to the related Record Date or,

if not, by check mailed by first class mail to such Certificateholder at the

address of such holder appearing in the Certificate Register. Notwithstanding

the foregoing, but subject to Section 10.02 hereof respecting the final

distribution, distributions with respect to Certificates registered in the name

of a Depository shall be made to such Depository in immediately available funds.

 

      (c) On or before 5:00 p.m. Central time (i) on the twelfth calendar day of

each month (or if such day is not a Business Day, the immediately preceding

Business Day), the EMC Servicer shall deliver to the Master Servicer with

respect to the EMC Mortgage Loans and (ii) on the fifth Business Day immediately

preceding each Distribution Date, the Master Servicer shall deliver to the

Securities Administrator with respect to all Mortgage Loans, a report in the

form of a computer readable magnetic tape (or by such other means as the Master

Servicer and the Securities Administrator may agree from time to time)

containing such data and information, as agreed to by the EMC Servicer, the

Master Servicer and the Securities Administrator such as to permit the

Securities Administrator to prepare the Monthly Statement to Certificateholders

and to direct the Trustee in writing to make the required distributions for the

related Distribution Date (the "Remittance Report"). The Securities

Administrator shall deliver a Remittance Report to the Trustee on or before 2:00

p.m. Eastern time on the Business Day immediately preceding each Distribution

Date. The Trustee shall, provide to the Master Servicer a monthly Statement of

the account activity in the Distribution Account by the 15th day of the month

following the Distribution Date.

 

     Section 5.04A. Allocation of Realized Losses.

 

     Any Realized Losses with respect to the Mortgage Loans shall be applied on

each Distribution Date after the distributions provided for in Section 5.04 in

reduction of the Certificate Principal Balance of the Class or Classes of

Certificates as provided in the definition of Applied Realized Loss Amount.

 

     Any amounts distributed to the Class of Subordinated Certificates in

respect of any Unpaid Applied Realized Loss Amount will not be applied to reduce

the Certificate Principal Balance of such Class.

 

 

 

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     If a Servicer or the Master Servicer receives a Subsequent Recovery in a

Prepayment Period, it will be distributed on the following Distribution Date in

accordance with the priorities described under Section 5.04(a). Additionally,

the Certificate Principal Balance of each Class of Subordinated Certificates

that had been reduced by the allocation of a Realized Loss will be increased, in

order of seniority, by the amount of such Subsequent Recovery, but not in excess

of the Unpaid Applied Realized Loss Amount for such Class immediately prior to

that Distribution Date. Holders of such Certificates will not be entitled to any

payment in respect of Current Interest on the amount of such increases for an

Interest Accrual Period preceding the Distribution Date on which such increase

occurs.

 

     Section 5.05. Monthly Statements to Certificateholders.

 

     (a) Not later than each Distribution Date, the Securities Administrator

shall prepare and deliver to the Trustee and the Yield Maintenance Provider, and

make available to each Holder of Certificates, the Trustee, the Rating Agencies,

the Master Servicer, the EMC Servicer and the Depositor a statement setting

forth for the Certificates:

 

          (i) the amount of the related distribution to Holders of each Class

     allocable to principal, separately identifying (A) the aggregate amount of

     any Principal Prepayments included therein, (B) the aggregate of all

     scheduled payments (except with respect to any Simple Interest Loans) of

     principal included therein (and with respect to any Simple Interest Loans,

     the amount of principal actually received included therein), and (C) the

     Extra Principal Distribution Amount (if any);

 

          (ii) the amount of such distribution to Holders of each Class

     allocable to interest, and, if applicable, the portion thereof allocable to

      amounts provided pursuant to the Yield Maintenance Agreements to the extent

     such information is provided to the Securities Administrator by the

     Trustee;

 

          (iii) any Interest Carry Forward Amounts, any Basis Risk Shortfall

     Carry Forward Amounts for each Class of Adjustable Rate Certificates;

 

          (iv) the Certificate Principal Balance of the Offered Certificates

     before and after giving effect to all distributions of principal and

     allocation of Applied Realized Loss Amounts in reduction of Certificate

     Principal Balance for such Distribution Date and the allocation of any

     Subsequent Recoveries to increase the Certificate Principal Balance for

     such Distribution Date;

 

          (v) the cumulative amount of Applied Realized Loss Amounts to date and

     the Unpaid Applied Realized Loss Amounts for each applicable Class of

     Subordinate Certificates after giving effect to the distribution of

     principal (including Subsequent Recoveries) and allocation of Applied

     Realized Loss Amounts on such Distribution Date;

 

          (vi) the Pass-Through Rate for each Class of Adjustable Rate

     Certificates with respect to the current Accrual Period, and, if

     applicable, whether such Pass-Through Rate was limited by the Interest Rate

     Cap;

 

          (vii) the amount of any Excess Cashflow Amount and any Excess Yield

     Maintenance Amount with respect to each Group;

 

          (viii) the aggregate of the Stated Principal Balances of the Mortgage

      Loans with respect to each Group on the related Due Date;

 

 

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          (ix) the related amount of the Master Servicing Fees paid to or

     retained by the Master Servicer and the Servicing Fees paid to or retained

     by each Servicer for the related Due Period;

 

          (x) the amount of Advances included in the distribution on such

     Distribution Date;

 

          (xi) the number and aggregate principal amounts of Mortgage Loans (A)

     Delinquent (exclusive of Mortgage Loans in foreclosure and bankruptcy) (1)

     31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, (B) in

     foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91

     or more days and (C) in bankruptcy and delinquent (1) 31 to 60 days, (2) 61

     to 90 days and (3) 91 or more days, in each case as of the close of

     business on the last day of the calendar month preceding such Distribution

     Date;

 

          (xii) with respect to any Mortgage Loan that was liquidated during the

     preceding calendar month, the loan number and Stated Principal Balance of,

     and Realized Loss on, such Mortgage Loan as of the end of the related

     Prepayment Period;

 

          (xiii) whether a Trigger Event exists in a Group;

 

          (xiv) the total number and principal balance of any REO Properties

     with respect to each Group as of the end of the related Prepayment Period;

 

          (xv) the Realized Losses with respect to each Group during the related

      Prepayment Period and the cumulative Realized Losses with respect to each

     Group through the end of the preceding month;

 

          (xvi) the three month rolling average of the percent equivalent of a

     fraction, the numerator of which is the aggregate stated Principal Balance

     of the Mortgage Loans in each Group that are 61 days or more delinquent or

     are in bankruptcy or foreclosure or are REO Properties, and the denominator

     of which is the aggregate Stated Principal Balance of all of the Mortgage

     Loans in the related Group as of the last day of the calendar month

     preceding such Distribution Date;

 

          (xvii) the aggregate Realized Losses on the Mortgage Loans in each

     Group since the Closing Date as a percentage of the aggregate Stated

     Principal Balance of the Mortgage Loans in the related Group on the Closing

     Date; and

 

          (xviii) the amount of any Subsequent Recovery for such Distribution

     Date and the amount by which the Certificate Principal Balance of each

     Class of Subordinated Certificates was increased as a result thereof.

 

     The Securities Administrator may make the foregoing monthly statement (and,

at its option, any additional files containing the same information in an

alternative format) available each month to Certificateholders via the

Securities Administrator's internet website. The Securities Administrator's

internet website shall initially be located at "www.ctslink.com". Assistance in

using the Securities Administrator's website can be obtained by calling the

Securities Administrator's customer service desk at (301) 815-6600. To the

extent timely received from the Securities Administrator, the Trustee will also

make monthly statements available each month to Certificateholders and the Yield

Maintenance Provider via the Trustee's internet website. The trustee's internet

website will initially be located at www.jpmorgan.com/sfr. Assistance in using

the Trustee's website service can be obtained by calling the Trustee's customer

service desk at (877) 722-1095. Parties that are unable to use the above

distribution options are entitled to have a paper copy mailed to them via first

class mail by calling the

 

 

                                       76

<PAGE>

 

Securities Administrator's customer service desk and

indicating such. The Securities Administrator may change the way monthly

statements are distributed in order to make such distributions more convenient

or more accessible to the above parties.

 

     (b) The Securities Administrator's responsibility for making the above

information available to the Certificateholders is limited to the availability,

timeliness and accuracy of the information derived from the Master Servicer and

the EMC Servicer. The Securities Administrator will make available a copy of

each statement provided pursuant to this Section 5.05 to each Rating Agency.

 

     (c) Within a reasonable period of time after the end of each calendar year,

the Securities Administrator will prepare and the Trustee will provide to the

EMC Servicer, and upon request to each Person who at any time during the

calendar year was a Certificateholder, a statement containing the information

set forth in clauses (a)(i) and (a)(ii) of this Section 5.05 aggregated for such

calendar year or applicable portion thereof during which such Person was a

Certificateholder. Such obligation of the Trustee shall be deemed to have been

satisfied to the extent that substantially comparable information shall be

provided by the Trustee pursuant to any requirements of the Code as from time to

time in effect.

 

     (d) Upon filing with the Internal Revenue Service, the Securities

Administrator shall furnish to the Holders of the Residual Certificates the

applicable Form 1066 and each applicable Form 1066Q and shall respond promptly

to written requests made not more frequently than quarterly by any Holder of a

Residual Certificate with respect to the following matters:

 

          (i) The original projected principal and interest cash flows on the

     Closing Date on each Class of regular and residual interests created

     hereunder and on the Mortgage Loans, based on the Prepayment Assumption;

 

          (ii) The projected remaining principal and interest cash flows as of

     the end of any calendar quarter with respect to each Class of regular and

     residual interests created hereunder and the Mortgage Loans, based on the

     Prepayment Assumption;

 

          (iii) The applicable Prepayment Assumption and any interest rate

     assumptions used in determining the projected principal and interest cash

     flows described above;

 

          (iv) The original issue discount (or, in the case of the Mortgage

     Loans, market discount) or premium accrued or amortized through the end of

     such calendar quarter with respect to each Class of regular or residual

     interests created hereunder and to the Mortgage Loans, together with each

     constant yield to maturity used in computing the same;

 

          (v) The treatment of losses realized with respect to the Mortgage

     Loans or the regular interests created hereunder, including the timing and

     amount of any cancellation of indebtedness income of a REMIC with respect

     to such regular interests or bad debt deductions claimed with respect to

     the Mortgage Loans;

 

          (vi) The amount and timing of any non-interest expenses of a REMIC;

     and

 

          (vii) Any taxes (including penalties and interest) imposed on the

     REMIC, including, without limitation, taxes on "prohibited transactions,"

     "contributions" or "net income from foreclosure property" or state or local

     income or franchise taxes.

 

     The information pursuant to clauses (i), (ii), (iii) and (iv) above shall

be provided by the Depositor pursuant to Section 9.12.

 

 

                                       77

<PAGE>

 

 

     Section 5.06. REMIC Designations and Allocations.

 

     (a) The Trustee shall elect that each of REMIC I and REMIC II shall be

treated as a REMIC under Section 860D of the Code. Any inconsistencies or

ambiguities in this Agreement or in the administration of this Agreement shall

be resolved in a manner that preserves the validity of such REMIC elections. The

assets of REMIC I shall include the Mortgage Loans and all interest owing in

respect of and principal due thereon, the Master Servicer Collection Account,

the Distribution Account, any REO Property, and any proceeds of the foregoing.

 

     (b) REMIC I will be evidenced by (x) the Class I-A-1, Class I-A-2, Class

I-A-3, Class I-M-1, Class I-M-2, Class I-M-3, Class I-M-4, Class I-M-5, Class

I-M-6, Class I-B, Class II-A, Class II-M-1, Class II-M-2, Class II-M-3 and Class

II-B (the "REMIC I Regular Interests"), which are hereby designated as the

"regular interests" in REMIC I and will be uncertificated and non-transferable

and (y) the Class R-1 Certificate, which is hereby designated as the single

"residual interest" in REMIC I (the REMIC I Regular Interests, together with the

Class R-1 Certificate, the "REMIC I Certificates"). The REMIC I Regular

Interests shall be recorded on the records of REMIC I as being issued to and

held by the Trustee on behalf of REMIC II.

 

     Principal shall be payable to, and shortfalls, losses and prepayments are

allocable to, the REMIC I Regular Interests as such amounts are payable and

allocable to the Certificates with the corresponding designations.

 

     The REMIC I Certificates will have the following designations, initial

principal balances, pass-through rates and allocations of interest:

<TABLE>

<CAPTION>

 

                                                                      Pass-        Allocation

          REMIC I                      Initial Principal              Through           of

        Certificates                        Balance                    Rate          Interest        Related Group

        ------------                        -------                    ----          --------        -------------

 

<S>                                <C>                                  <C>            <C>                 <C>              

           I-A-1                   $         115,232,000                 (1)            (2),(3)              I

           I-A-2                   $          35,967,000                 (1)            (2),(3)              I

           I-A-3                   $          53,723,000                 (1)            (2),(3)              I

           I-M-1                   $           7,627,000                 (1)            (2),(3)              I

           I-M-2                   $           3,757,000                 (1)            (2),(3)              I

           I-M-3                   $           2,277,000                 (1)            (2),(3)              I

           I-M-4                   $           2,277,000                 (1)            (2),(3)              I

           I-M-5                    $           2,277,000                 (1)            (2),(3)              I

           I-M-6                   $           2,277,000                 (1)            (2),(3)              I

            I-B                    $           2,277,000                 (1)            (2),(3)              I

            II-A                   $          94,207,300                 (1)            (2),(3)             II

           II-M-1                  $           5,927,200                 (1)            (2),(3)             II

            II-M-2                  $           3,875,500                 (1)            (2),(3)             II

           II-M-3                  $           3,248,600                 (1)            (2),(3)             II

            II-B                   $           2,621,718                 (1)            (2),(3)             II

            R-1                               N/A                      0%(4)           ---                 N/A

</TABLE>

 

_______________

 

(1)       The pass-through rate on this REMIC I Regular Interest shall at any

         time of determination equal the weighted average of the Net Mortgage

         Rates of the Mortgage Loans of the related Group. However, the

         Pass-Through Rate due on the first Distribution Date will be a fixed

         rate equal to the weighted average of the Net Mortgage Rates of the

         Mortgage Loans of the related Group.

 

(2)       Except as provided in note (3) below, interest will be allocated among

         the Class I-A-1, Class I-A-2, Class I-A-3, Class I-M-1, Class I-M-2,

         Class I-M-3, Class I-M-4, Class I-M-5, Class I-M-6 and Class I-B, Class

         II-

 

 

                                       78

<PAGE>

 

         A, Class II-M-1, Class II-M-2, Class II-M-3 and Class II-B REMIC I

         Certificates in the same proportion as interest is payable on the

         Certificates with the corresponding designations.

 

(3)       Any interest with respect to these REMIC I Regular Interests in excess

         of the weighted average coupon of the REMIC I Regular Interests of the

         same related Group, where each such REMIC I Regular Interests is first

         subject to a cap and floor equal to the Pass-Through Rate of the

         Certificate with the corresponding designation will be allocated to the

         Class B-IO Certificates of the corresponding related Group. In

         addition, an amount equal to the Initial Overcollateralization Amount

         with respect to each Group shall be allocated to the corresponding

         Class B-IO Certificates on the first Distribution Date. However, the

         Class B-IO Certificates shall be subordinated to the extent provided in

         Section 5.04.

 

(4)       On each Distribution Date, amounts, if any, remaining in REMIC I after

         payments of interest and principal, as designated above, will be

         distributed to the Class R-1 Certificate.

 

     (c) The Adjustable Rate Certificates (exclusive of any rights such

Certificates may have to receive, and payments of, Basis Risk Shortfall Carry

Forward Amounts and Yield Maintenance Amounts) and the Class B-IO Certificates

(exclusive of any rights or obligations associated with these Certificates in

connection with the treatment of the Holders of such Certificates as the owners,

for federal income tax purposes, of the Yield Maintenance Account and the

payments of Basis Risk Shortfall Carry Forward Amounts, as described in Section

5.06(e) below) are hereby designated as "regular interests" with respect to

REMIC II (the "REMIC II Regular Interests") and the Class R-2 Certificate is

hereby designated as the single "residual interest" with respect to REMIC II. On

each Distribution Date, amounts, if any, remaining in REMIC II after payments of

interest and principal as designated herein shall be distributed to the Class

R-2 Certificate. The terms of the REMIC II Regular Interests are set out in

Section 6.01.

 

     (d) For federal income tax purposes, each of REMIC I and REMIC II shall

have a tax year that is a calendar year and shall report income on an accrual

basis.

 

     (e) Payments of Basis Risk Shortfall Carry Forward Amounts and Yield

Maintenance Payments shall be deemed to be made to the holders of the Class B-IO

Certificate of the related Group with respect to which such payments were made,

who will be the owners of such amounts (on a pro rata basis based upon their

Percentage Interest in such Class) for federal income tax purposes. The Class

I-B-IO Certificateholders will be considered to pay such amounts to the Class

I-A-1, Class I-A-2, Class I-A-3, Class I-M-1, Class I-M-2, Class I-M-3, Class

I-M-4, Class I-M-5, Class I-M-6 and Class I-B, and the Class II-B-IO

Certificateholders will be considered to pay such amounts to the Class II-A,

Class II-M-1, Class II-M-2, Class II-M-3 and Class II-B Certificates, as and to

the extent appropriate, pursuant to a notional principal contract.

 

     Section 5.07. Supplemental Interest Reserve Fund; WAC Excess.

 

     (a)   On the Closing Date, the holders of the Class B-IO Certificates will

deposit, or cause to be deposited, into the Supplemental Interest Reserve Fund,

$10,000. On each Distribution Date as to which there is WAC Excess to the extent

not paid under Section 5.04(a), the Trustee has been directed to, and shall

therefore, deposit into the Supplemental Interest Reserve Fund an amount equal

to the WAC Excess to the extent of the Class I-B-IO Distribution Amount or Class

II-B-IO Distribution Amount, as applicable, which is payable pursuant to Section

5.04(a). If no WAC Excess is payable on a Distribution Date, the Trustee shall

deposit into the Supplemental Interest Reserve Fund on behalf of the Class B-IO

Certificateholders an amount such that when added to other amounts already on

deposit in the fund, the aggregate amount on deposit therein is equal to

$10,000. For federal and state income tax purposes, the Class B-IO

Certificateholders will be deemed to be the owners of the Supplemental Interest

Reserve Fund and all amounts deposited into the Supplemental Interest Reserve

Fund (other than the

 

 

 

                                        79

<PAGE>

 

 

initial $10,000 deposit) shall be treated as amounts distributed by the

REMIC II with respect to the Class B-IO Distribution Amount and Class II-B-IO

Distribution Amount. Amounts held in the Supplemental Interest Reserve Fund and

not distributable to the Adjustable Rate Certificateholders on any Distribution

Date will be invested by the Trustee in investments designated by the Class B-IO

Certificateholders having maturities on or prior to the next succeeding

Distribution Date on which such amounts will be distributable to the Adjustable

Rate Certificateholders. Upon the termination of the Trust, or the payment in

full of the Adjustable Rate Certificates, all amounts remaining on deposit in

the Supplemental Interest Reserve Fund will be released from the lien of the

Trust and distributed to the Class B-IO Certificateholders or their designees,

pro rata. The Supplemental Interest Reserve Fund will be part of the Trust but

not part of any REMIC created hereunder and any payments to the Adjustable Rate

Certificates of WAC Excess will not be payments with respect to a "regular

interest" in a REMIC within the meaning of Code Section 860G(a)(1).

 

     (b) The Trustee shall treat the Supplemental Interest Reserve Fund as an

outside reserve fund within the meaning of Treasury Regulation Section

1.860G-2(h) that is owned by the Class B-IO Certificateholders and that is not

an asset of any REMIC. The Trustee shall treat the rights of the Adjustable Rate

Certificateholders to receive payments from the Supplemental Interest Reserve

Fund as rights in an interest rate cap contract written by the Class B-IO

Certificateholders in favor of the Adjustable Rate Certificateholders. Thus,

each Adjustable Rate Certificate shall be treated as representing not only

ownership of a regular interest in REMIC II, but also ownership of an interest

in an interest rate cap contract.

 

     (c) Notwithstanding the priority and sources of payments set forth in

Section 5.04(a) hereof or otherwise, the Trustee shall account for all

distributions on the Certificates as set forth in this section. In no event

shall any payments provided for in this section be treated as payments with

respect to a "regular interest" in a REMIC within the meaning of Code Section

860G(a)(1) and shall be treated as an asset held separate and apart from any

REMIC created under this Agreement in accordance with Treasury regulation

section 1.860G-2(i).

 

 

                                       80

<PAGE>

 

                                  ARTICLE VI.

 

                                THE CERTIFICATES

 

     Section 6.01. The Certificates.

 

     The Certificates shall be substantially in the forms attached hereto as

Exhibits A-1 through A-[_]. The Certificates shall be issuable in registered

form, in the minimum dollar denominations, integral dollar multiples in excess

thereof (except that one Certificate of each Class may be issued in a different

amount which must be in excess of the applicable minimum dollar denomination)

and aggregate dollar denominations as set forth in the following table:

 

<TABLE>

<CAPTION>

 

                                               Integral

                                              Multiples               Initial

                          Minimum             in Excess of             Principal         Pass-Through        Related

      Class             Denomination             Minimum                Balance              Rate             Group

-------------------   ------------------    -------------------    ------------------    ------------------------------

 

<S>                      <C>                   <C>                 <C>                     <C>                  <C>

      I-A-1              $25,000               $1,000              $    115,232,000          Adjustable

                                                                                                (1)          I

      I-A-2              $25,000               $1,000              $     35,967,000          Adjustable

                                                                                                (2)          I

      I-A-3              $25,000               $1,000              $     53,723,000          Adjustable

                                                                                               (3)          I

      I-M-1              $25,000               $1,000              $      7,627,000          Adjustable

                                                                                               (4)          I

      I-M-2              $25,000               $1,000               $      3,757,000          Adjustable

                                                                                               (5)          I

      I-M-3              $25,000               $1,000              $      2,277,000          Adjustable

                                                                                                (6)          I

      I-M-4              $25,000               $1,000              $      2,277,000          Adjustable

                                                                                                (7)          I

      I-M-5              $25,000               $1,000              $      2,277,000          Adjustable

                                                                                               (8)           I

      I-M-6              $25,000               $1,000              $      2,277,000          Adjustable

                                                                                               (9)          I

       I-B               $25,000                $1,000                                      Adjustable

                                                                $        2,277,000              (10)          I

       II-A              $25,000               $1,000                                      Adjustable

                                                                $       94,207,300              (11)         II

      II-M-1             $25,000               $1,000                                      Adjustable

                                                                 $        5,927,200              (12)         II

      II-M-2             $25,000               $1,000                                      Adjustable

                                                                $        3,875,500               (13)         II

      II-M-3             $25,000               $1,000                                      Adjustable

                                                                $        3,248,600              (14)         II

       II-B              $25,000               $1,000                                      Adjustable

                                                                $        2,621,718              (15)         II

      I-B-IO          $10,000,000           $1,000,000                 Notional (16)          N/A               I

     II-B-IO          $10,000,000           $1,000,000                 Notional (17)          N/A              II

        R                   100%                  N/A                     N/A                 N/A              N/A

 

</TABLE>

 

___________________

 

(1)       For the first Distribution Date, 2.74% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-A-1 Margin for such

          Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date.

 

(2)       For the first Distribution Date, 2.89% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

          related Accrual Period plus the Class I-A-2 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date.

 

(3)       For the first Distribution Date, 2.99% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-A-3 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date.

 

(4)       For the first Distribution Date, 3.09% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-M-1 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date.

 

(5)       For the first Distribution Date, 3.39% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-M-2 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date.

 

 

                                       81

<PAGE>

 

(6)       For the first Distribution Date, 3.41% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-M-3 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date

 

(7)       For the first Distribution Date, 3.94% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-M-4 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date

 

(8)       For the first Distribution Date, 4.06% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-M-5 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date

 

(9)       For the first Distribution Date, 5.04% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-M-6 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date

 

(10)      For the first Distribution Date, 5.59% per annum, and on any

          Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class I-B Margin for such Distribution

         Date and (ii) the related Interest Rate Cap for such Distribution Date

 

(11)      For the first Distribution Date, 2.88% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class II-A Margin for such Distribution

         Date and (ii) the related Interest Rate Cap for such Distribution Date

 

(12)      For the first Distribution Date, 3.14% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class II-M-1 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date

 

(13)      For the first Distribution Date, 3.39% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

          related Accrual Period plus the Class II-M-2 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date

 

(14)      For the first Distribution Date, 4.04% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class II-M-3 Margin for such

         Distribution Date and (ii) the related Interest Rate Cap for such

         Distribution Date

 

(15)      For the first Distribution Date, 5.09% per annum, and on any

         Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the

         related Accrual Period plus the Class II-B Margin for such Distribution

         Date and (ii) the related Interest Rate Cap for such Distribution Date

 

(16)      Initially $541 and thereafter the aggregate Stated Principal Balance of

         the Group I Mortgage Loans as of the last day of the related Due

         Period. The Class I-B-IO Certificates will be entitled to receive

         certain distributions as provided for in Section 5.04. Other than for

         federal income tax purposes, the Class I-B-IO Distribution Amount may

         be deemed to be interest on the notional principal balance of the Class

          I-B-IO Certificates.

 

(17)      Initially $4,103,414 and thereafter the aggregate Stated Principal

         Balance of the Group II Mortgage Loans as of the last day of the

         related Due Period. The Class II-B-IO Certificates will be entitled to

         receive certain distributions as provided for in Section 5.04. Other

         than for federal income tax purposes, the Class II-B-IO Distribution

         Amount may be deemed to be interest on the notional principal balance

         of the Class II-B-IO Certificates.

 

 

                                       82

<PAGE>

 

 

     The Certificates shall be executed by manual or facsimile signature on

behalf of the Trustee by an authorized officer. Certificates bearing the manual

or facsimile signatures of individuals who were, at the time when such

signatures were affixed, authorized to sign on behalf of the Trustee shall bind

the Trustee, notwithstanding that such individuals or any of them have ceased to

be so authorized prior to the authentication and delivery of such Certificates

or did not hold such offices at the date of such authentication and delivery. No

Certificate shall be entitled to any benefit under this Agreement, or be valid

for any purpose, unless there appears on such Certificate the authentication of

the Trustee by manual signature, and such authentication upon any Certificate

shall be conclusive evidence, and the only evidence, that such Certificate has

been duly authenticated and delivered hereunder. All Certificates shall be dated

the date of their authentication. On the Closing Date, the Trustee shall

authenticate the Certificates to be issued at the written direction of the

Depositor, or any affiliate thereof.

 

     The Depositor shall provide, or cause to be provided, to the Trustee on a

continuous basis, an adequate inventory of Certificates to facilitate transfers.

 

     Section 6.02. Certificate Register; Registration of Transfer and Exchange

                   of Certificates.

 

     (a) The Trustee shall maintain, or cause to be maintained in accordance

with the provisions of Section 6.09 hereof, a Certificate Register for the Trust

Fund in which, subject to the provisions of subsections (b) and (c) below and to

such reasonable regulations as it may prescribe, the Trustee shall provide for

the registration of Certificates and of Transfers and exchanges of Certificates

as herein provided. Upon surrender for registration of Transfer of any

Certificate, the Trustee shall authenticate and deliver, in the name of the

designated transferee or transferees, one or more new Certificates of the same

Class and of like aggregate Percentage Interest.

 

     At the option of a Certificateholder, Certificates may be exchanged for

other Certificates of the same Class in authorized denominations and evidencing

the same aggregate Percentage Interest upon surrender of the Certificates to be

exchanged at the office or agency of the Trustee. Whenever any Certificates are

so surrendered for exchange, the Trustee shall execute, authenticate, and

deliver the Certificates that the Certificateholder making the exchange is

entitled to receive. Every Certificate presented or surrendered for registration

of Transfer or exchange shall be accompanied by a written instrument of Transfer

in form satisfactory to the Trustee duly executed by the holder thereof or his

attorney duly authorized in writing.

 

     No service charge to the Certificateholders shall be made for any

registration of Transfer or exchange of Certificates, but payment of a sum

sufficient to cover any tax or governmental charge that may be imposed in

connection with any Transfer or exchange of Certificates may be required.

 

     All Certificates surrendered for registration of Transfer or exchange

shall be canceled and subsequently destroyed by the Trustee in accordance with

the Trustee's customary procedures.

 

     (b) No Transfer of a Class I-B Certificate or a Class B-IO Certificate

shall be made unless such Transfer is made pursuant to an effective registration

statement under the Securities Act and any applicable state securities laws or

is exempt from the registration requirements under the Securities Act and such

state securities laws. In the event that a Transfer is to be made in reliance

upon an exemption from the Securities Act and such laws, in order to assure

compliance with the Securities Act and such laws, the Certificateholder desiring

to effect such Transfer and such Certificateholder's prospective transferee

shall each certify to the Trustee and the Securities Administrator in writing

the facts surrounding the Transfer in substantially the forms set forth in

Exhibit E (the "Transferor Certificate") and (x) deliver a letter in

substantially the form of either Exhibit F (the "Investment Letter") or Exhibit

G (the "Rule 144A Letter") or (y) there shall be delivered to the Trustee and

the Securities

 

 

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Administrator an Opinion of Counsel addressed to the Trustee and the

Securities Administrator that such Transfer may be made pursuant to an exemption

from the Securities Act, which Opinion of Counsel shall not be an expense of the

Depositor, the Seller, any Servicer, the Master Servicer, the Securities

Administrator or the Trustee. The Depositor shall provide to any Holder of a

Class I-B Certificates or a Class B-IO Certificate and any prospective

transferee designated by any such Holder, information regarding the related

Certificates and the Mortgage Loans and such other information as shall be

necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)

for Transfer of any such Certificate without registration thereof under the

Securities Act pursuant to the registration exemption provided by Rule 144A. The

Trustee, the Securities Administrator and the Master Servicer shall cooperate

with the Depositor in providing the Rule 144A information referenced in the

preceding sentence, including providing to the Depositor such information

regarding the Certificates, the Mortgage Loans and other matters regarding the

Trust Fund as the Depositor shall reasonably request to meet its obligation

under the preceding sentence. Each Holder of a Class I-B Certicates or a Class

B-IO Certificate desiring to effect such Transfer shall, and does hereby agree

to, indemnify the Trustee, the Depositor, the Seller, the Securities

Administrator and the Master Servicer against any liability that may result if

the Transfer is not so exempt or is not made in accordance with such federal and

state laws.

 

     No Transfer of an ERISA Restricted Certificate shall be made unless the

Trustee, the Master Servicer and the Securities Administrator shall have

received either (i) a representation from the transferee of such Certificate

acceptable to and in form and substance satisfactory to the Trustee and the

Securities Administrator, to the effect that such transferee is not an employee

benefit plan subject to Section 406 of ERISA and/or a plan subject to Section

4975 of the Code ("Plan"), or a Person, directly or indirectly, acting on behalf

of any such Plan, or (ii) in the case of any such ERISA Restricted Certificate

presented for registration in the name of a Plan, or a trustee of any Plan or

any other person, directly or indirectly, acting on behalf of any such Plan, a

representation satisfactory to the Trustee and the Securities Administrator to

the effect that neither the purchase or holding of such ERISA Restricted

Certificate nor the servicing, management and operation of the Trust Fund will

result in any prohibited transactions under ERISA or Section 4975 of the Code

which will not be covered under Prohibited Transactions Class Exemption ("PTCE")

84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or some other applicable

exemption and will not subject the Trustee, the Securities Administrator, any

Servicer, the Master Servicer or the Depositor to any fiduciary duties under

ERISA in addition to those expressly undertaken in this Agreement, which in the

case of a Book-Entry Certificate shall be deemed to have been represented by the

Transferee. Notwithstanding anything else to the contrary herein, any purported

transfer of an ERISA Restricted Certificate to or on behalf of any Plan without

satisfying the above conditions shall be void and of no effect. None of the

Trustee, the Securities Administrator or the Master Servicer shall be required

to monitor, determine or inquire as to compliance with the transfer restrictions

with respect to any ERISA Restricted Certificate that is a Book-Entry

Certificate, and none of the Trustee, the Securities Administrator or the Master

Servicer shall have any liability for transfers of any such Book-Entry

Certificates made through the book-entry facilities of any Depository or between

or among participants of the Depository or Certificate Owners made in violation

of the transfer restrictions set forth herein. None of the Trustee, the

Securities Administrator or the Master Servicer shall be under any liability to

any Person for any registration of transfer of any ERISA Restricted Certificate

that is in fact not permitted by this Section 6.02(b) or for making any payments

due on such Certificate to the Holder thereof or taking any other action with

respect to such Holder under the provisions of this Agreement. The Trustee and

the Securities Administrator shall be entitled, but not obligated, to recover

from any Holder of any ERISA Restricted Certificate that was in fact a Plan or a

Person, directly or indirectly, acting on behalf of any Plan at the time it

became a Holder or, at such subsequent time as it became a Plan or Person acting

on behalf of a Plan, all payments made on such ERISA Restricted Certificate at

and after either such time. Any such payments so recovered by the Trustee or the

Securities Administrator shall be paid and delivered by the Trustee or the

Securities Administrator to the last preceding Holder of such Certificate that

is not a Plan or Person acting on behalf of a Plan.

 

 

 

 

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     (c) Each Person who has or who acquires any Ownership Interest in a

Residual Certificate shall be deemed by the acceptance or acquisition of such

Ownership Interest to have agreed to be bound by the following provisions, and

the rights of each Person acquiring any Ownership Interest in a Residual

Certificate are expressly subject to the following provisions:

 

          (i) Each Person holding or acquiring any Ownership Interest in a

     Residual Certificate which shall always be issued as a physical certificate

     and not as a Book-Entry Certificate shall be a Permitted Transferee and

      shall promptly notify the Trustee of any change or impending change in its

     status as a Permitted Transferee.

 

          (ii) No Ownership Interest in a Residual Certificate may be registered

     on the Closing Date or thereafter transferred, and the Trustee shall not

     register the Transfer of any Residual Certificate unless, in addition to

     the certificates required to be delivered to the Trustee under subparagraph

     (b) above, the Trustee shall have been furnished with an affidavit (a

      "Transfer Affidavit") of the initial owner or the proposed transferee in

     the form attached hereto as Exhibit D.

 

          (iii) Each Person holding or acquiring any Ownership Interest in a

     Residual Certificate shall agree (A) to obtain a Transfer Affidavit from

     any other Person to whom such Person attempts to Transfer its Ownership

     Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit from

     any Person for whom such Person is acting as nominee, trustee or agent in

     connection with any Transfer of a Residual Certificate and (C) not to

     Transfer its Ownership Interest in a Residual Certificate or to cause the

     Transfer of an Ownership Interest in a Residual Certificate to any other

     Person if it has actual knowledge that such Person is not a Permitted

     Transferee.

 

          (iv) Any attempted or purported Transfer of any Ownership Interest in

     a Residual Certificate in violation of the provisions of this Section

     6.02(c) shall be absolutely null and void and shall vest no rights in the

     purported Transferee. If any purported transferee shall become a Holder of

     a Residual Certificate in violation of the provisions of this Section

     6.02(c), then the last preceding Permitted Transferee shall be restored to

     all rights as Holder thereof retroactive to the date of registration of

     Transfer of such Residual Certificate. The Trustee shall be under no

     liability to any Person for any registration of Transfer of a Residual

      Certificate that is in fact not permitted by Section 6.02(b) and this

     Section 6.02(c) or for making any payments due on such Certificate to the

     Holder thereof or taking any other action with respect to such Holder under

     the provisions of this Agreement so long as the Transfer was registered

     after receipt of the related Transfer Affidavit and Transferor Certificate.

     The Trustee shall be entitled but not obligated to recover from any Holder

     of a Residual Certificate that was in fact not a Permitted Transferee at

     the time it became a Holder or, at such subsequent time as it became other

     than a Permitted Transferee, all payments made on such Residual Certificate

     at and after either such time. Any such payments so recovered by the

     Trustee shall be paid and delivered by the Trustee to the last preceding

     Permitted Transferee of such Certificate.

 

          (v) The Master Servicer shall make available within 60 days of written

     request from the Trustee, all information necessary to compute any tax

     imposed under Section 860E(e) of the Code as a result of a Transfer of an

     Ownership Interest in a Residual Certificate to any Holder who is not a

     Permitted Transferee.

 

     The restrictions on Transfers of a Residual Certificate set forth in this

Section 6.02(c) shall cease to apply (and the applicable portions of the legend

on a Residual Certificate may be deleted) with respect to Transfers occurring

after delivery to the Trustee of an Opinion of Counsel addressed to the

 

 

 

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Trustee, which Opinion of Counsel shall not be an expense of the Trustee,

the Securities Administrator, the Seller, any Servicer or the Master Servicer to

the effect that the elimination of such restrictions will not cause the REMIC I

and/or REMIC II, as applicable, to fail to qualify as a REMIC at any time that

the Certificates are outstanding or result in the imposition of any tax on the

Trust Fund, a Certificateholder or another Person. Each Person holding or

acquiring any Ownership Interest in a Residual Certificate hereby consents to

any amendment of this Agreement that, based on an Opinion of Counsel furnished

to the Trustee, is reasonably necessary (a) to ensure that the record ownership

of, or any beneficial interest in, a Residual Certificate is not transferred,

directly or indirectly, to a Person that is not a Permitted Transferee and (b)

to provide for a means to compel the Transfer of a Residual Certificate that is

held by a Person that is not a Permitted Transferee to a Holder that is a

Permitted Transferee.

 

     (d) The preparation and delivery of all certificates and opinions referred

to above in this Section 6.02 shall not be an expense of the Trust Fund, the

Trustee, the Depositor, the Seller, the Securities Administrator, the Master

Servicer or any Servicer.

 

     Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.

 

     If (a) any mutilated Certificate is surrendered to the Trustee, or the

Trustee receives evidence to its satisfaction of the destruction, loss or theft

of any Certificate and of the ownership thereof and (b) there is delivered to

the Master Servicer, the Securities Administrator and the Trustee such security

or indemnity as may be required by them to save each of them harmless, then, in

the absence of notice to the Trustee that such Certificate has been acquired by

a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in

exchange for or in lieu of any such mutilated, destroyed, lost or stolen

Certificate, a new Certificate of like Class, tenor and Percentage Interest. In

connection with the issuance of any new Certificate under this Section 6.03, the

Trustee may require the payment of a sum sufficient to cover any tax or other

governmental charge that may be imposed in relation thereto and any other

expenses (including the fees and expenses of the Trustee) connected therewith.

Any replacement Certificate issued pursuant to this Section 6.03 shall

constitute complete and indefeasible evidence of ownership in the Trust Fund, as

if originally issued, whether or not the lost, stolen or destroyed Certificate

shall be found at any time. All Certificates surrendered to the Trustee under

the terms of this Section 6.03 shall be canceled and destroyed by the Trustee in

accordance with its standard procedures without liability on its part.

 

     Section 6.04. Persons Deemed Owners.

 

     The Securities Administrator, the Trustee and any agent of the Securities

Administrator or the Trustee may treat the person in whose name any Certificate

is registered as the owner of such Certificate for the purpose of receiving

distributions as provided in this Agreement and for all other purposes

whatsoever, and neither the Securities Administrator, the Trustee nor any agent

of the Securities Administrator or the Trustee shall be affected by any notice

to the contrary.

 

     Section 6.05. Access to List of Certificateholders' Names and Addresses.

 

     If three or more Certificateholders (a) request such information in writing

from the Trustee, (b) state that such Certificateholders desire to communicate

with other Certificateholders with respect to their rights under this Agre



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