EXHIBIT 4
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ASSET BACKED FUNDING CORPORATION,
Depositor
OPTION ONE MORTGAGE CORPORATION,
Master Servicer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2004
ABFC 2004-OPT1 Trust
ABFC Asset-Backed Certificates, Series 2004-OPT1
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<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Defined
Terms....................................................
Section 1.02
Accounting.......................................................
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage
Loans.....................................
Section 2.02 Acceptance by
Trustee............................................
Section 2.03 Repurchase or Substitution
of Mortgage Loans by the
Originator or the
Seller.........................................
Section 2.04
[Reserved].......................................................
Section 2.05 Representations, Warranties
and Covenants of the Master
Servicer.........................................................
Section 2.06 Representations and
Warranties of the Depositor..................
Section 2.07 Issuance of Certificates and
the Uncertificated Regular
Interests........................................................
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Master Servicer to Act as
Servicer...............................
Section 3.02 Collection of Mortgage Loan
Payments.............................
Section 3.03 Realization Upon Defaulted
Mortgage Loans........................
Section 3.04 Collection Account,
Distribution Account and Reserve
Account..........................................................
Section 3.05 Permitted Withdrawals From
the Collection Account................
Section 3.06 Establishment of Escrow
Accounts; Deposits in Escrow
Accounts.........................................................
Section 3.07 Permitted Withdrawals From
Escrow Account........................
Section 3.08 Payment of Taxes, Insurance
and Other Charges;
Collections
Thereunder...........................................
Section 3.09 Transfer of
Accounts.............................................
Section 3.10 Maintenance of Hazard
Insurance..................................
Section 3.11 Maintenance of Mortgage
Impairment Insurance Policy..............
Section 3.12 Fidelity Bond, Errors and
Omissions Insurance....................
Section 3.13 Title, Management and
Disposition of REO Property................
Section 3.14 Due-on-Sale Clauses;
Assumption and Substitution
Agreements.......................................................
Section 3.15 Notification of
Adjustments......................................
Section 3.16 Optional Purchases of
Mortgage Loans by Master Servicer..........
Section 3.17 Trustee to Cooperate;
Release of Files...........................
Section 3.18 Servicing
Compensation...........................................
Section 3.19 Annual Statement as to
Compliance................................
Section 3.20 Annual Independent Certified
Public Accountants' Reports.........
Section 3.21 Access to Certain
Documentation and Information Regarding
the Mortgage
Loans...............................................
Section 3.22 Duties of Credit Risk
Manager....................................
Section 3.23 Obligations of the Master
Servicer in Respect of
Compensating
Interest............................................
Section 3.24 Obligations of the Master
Servicer in Respect of Mortgage
Interest Rates and Monthly
Payments..............................
Section 3.25 Investment of Funds in the
Collection Account and the
Distribution
Account.............................................
Section 3.26 Liability of Master
Servicer; Indemnification....................
Section 3.27 Reports of Foreclosure and
Abandonment of Mortgaged
Properties.......................................................
Section 3.28 Protection of
Assets.............................................
Section 3.29 Limitation of Liability of
the Credit Risk Manager...............
Section 3.30 No Personal
Solicitation.........................................
Section 3.31 Periodic
Filings.................................................
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest
Distributions...........................................
Section 4.02 Distributions of Principal
and Monthly Excess Cashflow
Amounts..........................................................
Section 4.03 Allocation of
Losses.............................................
Section 4.04 Method of
Distribution...........................................
Section 4.05 Distributions on Book-Entry
Certificates.........................
Section 4.06
Statements.......................................................
Section 4.07 Remittance Reports;
Advances.....................................
Section 4.08 REMIC
Distributions..............................................
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates.................................................
Section 5.02 Registration of Transfer and
Exchange of Certificates............
Section 5.03 Mutilated, Destroyed, Lost
or Stolen Certificates................
Section 5.04 Persons Deemed
Owners............................................
Section 5.05 Appointment of Paying
Agent......................................
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Master
Servicer and the Depositor...............
Section 6.02 Merger or Consolidation of,
or Assumption of the
Obligations of, the Master Servicer or the
Depositor.............
Section 6.03 Limitation on Liability of
the Master Servicer and Others........
Section 6.04 Master Servicer Not to
Resign....................................
Section 6.05 Delegation of
Duties.............................................
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of
Termination...................................
Section 7.02 Trustee to Act; Appointment
of Successor.........................
Section 7.03 Waiver of
Defaults...............................................
Section 7.04 Notification to
Certificateholders...............................
Section 7.05 Survivability of Master
Servicer Liabilities.....................
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of
Trustee................................................
Section 8.02 Certain Matters Affecting
the Trustee............................
Section 8.03 Trustee Not Liable for
Certificates or Mortgage Loans............
Section 8.04 Trustee May Own
Certificates.....................................
Section 8.05 Trustee Fees and
Expenses........................................
Section 8.06 Eligibility Requirements for
Trustee.............................
Section 8.07 Resignation or Removal of
Trustee................................
Section 8.08 Successor
Trustee................................................
Section 8.09 Merger or Consolidation of
Trustee...............................
Section 8.10 Appointment of Co-Trustee or
Separate Trustee....................
Section 8.11 Limitation of
Liability..........................................
Section 8.12 Trustee May Enforce Claims
Without Possession of
Certificates.....................................................
Section 8.13 Suits for
Enforcement............................................
Section 8.14 Waiver of Bond
Requirement.......................................
Section 8.15 Waiver of Inventory,
Accounting and Appraisal Requirement........
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01 REMIC
Administration.............................................
Section 9.02 Prohibited Transactions and
Activities...........................
Section 9.03 Indemnification with Respect
to Certain Taxes and Loss of
REMIC
Status.....................................................
Section 9.04 REO
Property.....................................................
Section 9.05 Grantor Trust
Administration.....................................
ARTICLE X
TERMINATION
Section 10.01
Termination......................................................
Section 10.02 Additional Termination
Requirements..............................
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01
Amendment........................................................
Section 11.02 Recordation of Agreement;
Counterparts...........................
Section 11.03 Limitation on Rights of
Certificateholders.......................
Section 11.04 Governing Law;
Jurisdiction......................................
Section 11.05
Notices..........................................................
Section 11.06
SeverabilityofProvisions.........................................
Section 11.07 Article and Section
References...................................
Section 11.08 Notice to the Rating
Agencies....................................
Section 11.09 Further
Assurances...............................................
Section 11.10 Benefits of
Agreement............................................
Section 11.11 Acts of
Certificateholders.......................................
<PAGE>
EXHIBITS:
Exhibit A-1 Form
of Class A-1 Certificates
Exhibit A-1A Form of
Class A-1A Certificates
Exhibit A-2 Form
of Class A-2 Certificates
Exhibit B
Form of Class B Certificates
Exhibit C-1 Form
of Class M-1 Certificates
Exhibit C-2 Form
of Class M-2 Certificates
Exhibit C-3 Form
of Class M-3 Certificates
Exhibit C-4 Form
of Class M-4 Certificates
Exhibit C-5 Form
of Class M-5 Certificates
Exhibit C-6 Form
of Class M-6 Certificates
Exhibit C-7 Form
of Class CE Certificates
Exhibit C-8 Form
of Class P Certificates
Exhibit C-9 Form
of Class R Certificates
Exhibit D-1
Group 1 Mortgage Loan Schedule
Exhibit D-2
Group 2 Mortgage Loan Schedule
Exhibit E Form of Request
for Release
Exhibit F-1 Form
of Trustee's Initial Certification
Exhibit F-2 Form
of Trustee's Final Certification
Exhibit F-3 Form
of Receipt of Mortgage Note
Exhibit G
Mortgage Loan Purchase Agreement
Exhibit H
Form of Lost Note Affidavit
Exhibit I
Form of ERISA Representation
Exhibit J
Form of Investment Letter
Exhibit K
Form of Class R Certificate Transfer Affidavit
Exhibit L
Form of Transferor Certificate
Exhibit M Monthly
Information Provided by Master Servicer
Exhibit N
Form of Yield Maintenance Agreement
Exhibit O
Form of Certification
Exhibit P-1 Form
of Certification of the Trustee to be Provided to
Depositor
Exhibit P-2 Form
of Certification of the Master Servicer to be Provided
to Depositor
<PAGE>
This Pooling and Servicing Agreement is dated as of January 1,
2004
(the "Agreement"), among ASSET BACKED
FUNDING CORPORATION, as depositor (the
"Depositor"), OPTION ONE MORTGAGE
CORPORATION, as servicer (the "Master
Servicer"), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be
issued hereunder in multiple Classes,
which in the aggregate will evidence the
entire beneficial ownership interest in
the Trust Fund created hereunder. The
Certificates will consist of thirteen
Classes of Certificates, designated as (i)
the Class A-1, Class A-1A and Class
A-2 Certificates, (ii) the Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5
and Class M-6 Certificates, (iii) the Class
B Certificates, (iv) the Class CE
Certificates, (v) the Class P Certificates
and (vi) the Class R Certificate.
REMIC 1
As provided herein, the Trustee will make an election to treat
the
segregated pool of assets consisting of the
Mortgage Loans and certain other
related assets subject to this Agreement
(but exclusive of the Yield Maintenance
Agreement, the Reserve Account, the Cap
Carryover Amounts, the Prepayment
Charges, the Originator Prepayment Charge
Payment Amounts and the Servicer
Prepayment Charge Payment Amounts) as a
real estate investment conduit (a
"REMIC") for federal income tax purposes,
and such segregated pool of assets
will be designated as "REMIC 1." The Class
R-1 Interest will represent the sole
class of "residual interests" in REMIC 1
for purposes of the REMIC Provisions
under federal income tax law. The following
table irrevocably sets forth the
designation, the Uncertificated REMIC 1
Pass-Through Rate, the initial
Uncertificated Principal Balance, and
solely for purposes of satisfying Treasury
Regulations Section 1.860G-1(a)(4)(iii),
the "latest possible maturity date" for
each of the REMIC 1 Regular Interests. None
of the REMIC 1 Regular Interests
will be certificated.
Uncertificated
Initial
REMIC Pass-
Uncertificated
Latest Possible
Designation
Through Rate
Balance
Maturity Date
-----------
--------------
---------------
-----------------
LT1AA
Variable(2)
$216,974,178.49
February 25, 2034
LT1A1
Variable(2)
$1,437,520.00
February 25, 2034
LT1A1A
Variable(2)
$75,660.00
February 25, 2034
LT1A2
Variable(2)
$246,965.00
February 25, 2034
LT1M1
Variable(2)
$157,195.00
February 25, 2034
LT1M2
Variable(2)
$116,235.00
February 25, 2034
LT1M3
Variable(2)
$38,745.00
February 25, 2034
LT1M4
Variable(2)
$33,210.00
February 25, 2034
LT1M5
Variable(2)
$22,140.00
February 25, 2034
LT1M6
Variable(2)
$27,675.00
February
25, 2034
LT1B
Variable(2)
$38,745.00
February 25, 2034
LT1ZZ
Variable(2)
$2,233,954.46
February 25, 2034
LT1SUB
Variable(2)
$7,803.83
February 25, 2034
LT1GRP
Variable(2)
$38,067.43
February 25, 2034
LT2SUB
Variable(2)
$1,273.71
February 25, 2034
LT2GRP
Variable(2)
$6,213.01
February 25, 2034
LT1XX
Variable(2)
$221,348,864.96
February 25, 2034
(1) Solely for purposes of
Treasury Regulations Section 1.860G-1(a)(4)(iii),
the
Distribution Date immediately following the maturity date for
the
Mortgage
Loan with the latest maturity date has been designated as the
"latest
possible maturity date" for each REMIC 1 Regular Interest.
(2) Calculated in accordance
with the definition of "Uncertificated REMIC 1
Pass-Through Rate" herein.
REMIC 2
As provided herein, the Trustee shall make an election to treat
the
segregated pool of assets consisting of the
REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such
segregated pool of assets will be
designated as "REMIC 2." The Class R-2
Interest represents the sole class of
"residual interests" in REMIC 2 for
purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class
designation,
Certificate Interest Rate and Original
Class Certificate Principal Balance for
each Class of Certificates comprising the
interests in the Trust Fund created
hereunder:
Original Class
Certificate
Principal
Certificate Assumed
Final
Class
Balance
Interest Rate Maturity Dates*
-------------------------- -------------- ------------- ------------------
A-1
$287,504,000
(1)
October 25, 2033
A-1A
$15,132,000
(2)
October 25, 2033
A-2
$49,393,000
(3)
September 25, 2033
M-1
$31,439,000
(4)
August 25, 2033
M-2
$23,247,000
(5)
July 25, 2033
M-3
$7,749,000
(6)
June 25, 2033
M-4
$6,642,000
(7)
April 25, 2033
M-5
$4,428,000
(8)
February 25, 2033
M-6
$5,535,000
(9)
December 25, 2032
B
$7,749,000 (10)
July 25, 2032
CE
(11)
(11)
N/A
P
N/A
N/A
N/A
R
N/A
N/A
N/A
-------------------------- -------------- ------------- ------------------
Total
$438,818,000
* Solely for
purposes of Treasury Regulations Section 1.860G-1(a)(4)(iii),
the
Distribution Date following the maturity date for the Mortgage
Loan
with the
latest maturity date has been designated as the "latest
possible
maturity
date" for each Class of Certificates that represents one or
more
of the
"regular interests" in REMIC 2.
(1) Interest will accrue on the
Class A-1 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-1
Pass-Through Rate and (ii) the Group 1 Cap for such Distribution
Date.
(2) Interest will accrue on the
Class A-1A Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-1A
Pass-Through Rate and (ii) the Group 1 Cap for such Distribution
Date.
(3) Interest will accrue on the
Class A-2 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class A-2
Pass-Through Rate and (ii) the Group 2 Cap for such Distribution
Date.
(4) Interest will accrue on the
Class M-1 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-1
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(5) Interest will accrue on the
Class M-2 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-2
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(6) Interest will accrue on the
Class M-3 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-3
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(7) Interest will accrue on the
Class M-4 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-4
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(8) Interest will accrue on the
Class M-5 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-5
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(9) Interest will accrue on the
Class M-6 Certificates during each Interest
Accrual
Period at a rate equal to the lesser of: (i) the Class M-6
Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.
(10) Interest will accrue on the Class
B Certificates during each Interest
Accrual
Period at a rate equal to the Class B Pass-Through Rate.
(11) Solely for REMIC purposes, the
Class CE Certificates will (i) have an
Original
Class Certificate Principal Balance equal to the Initial
Overcollateralization Amount and (ii) will bear interest on their
Notional
Amount.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement,
the
following words and phrases, unless the
context otherwise requires, shall have
the meanings specified in this Article.
Interest on all Classes of REMIC 1
Regular Interests and on the Class B
Certificates will be calculated on the
basis of a 360-day year consisting of
twelve 30-day months. Interest on all
Regular Certificates other than the Class B
Certificates will be calculated on
the basis of the actual number of days in
the related Interest Accrual Period
and a 360-day year.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan (including each
Mortgage Loan in foreclosure and each
Mortgage Loan for which the Mortgagor has
filed for bankruptcy after the Closing
Date) with respect to which any portion
of a Monthly Payment is, as of the last day
of the prior Collection Period, two
months or more past due and each Mortgage
Loan relating to an REO Property.
"Account": Any of the Collection Account, the Distribution
Account,
the Reserve Account or the Escrow
Account.
"Accrued Certificate Interest": With respect to each
Distribution
Date and Class of Certificates, an amount
equal to the interest accrued at the
Certificate Interest Rate described
opposite such Class in the table in the
Preliminary Statement during the related
Interest Accrual Period on the
Certificate Principal Balance of such Class
of Certificates, reduced by such
Class' Interest Percentage of Relief Act
Interest Shortfalls for such
Distribution Date.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan which has a rate
at
which interest accrues that adjusts based
on the Index plus a related Gross
Margin, as set forth and subject to the
limitations in the related Mortgage
Note.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage
Loan, each adjustment date on which the
Mortgage Interest Rate of an
Adjustable-Rate Mortgage Loan changes
pursuant to the related Mortgage Note. The
first Adjustment Date following the Cut-off
Date as to each Adjustable-Rate
Mortgage Loan is set forth in the Mortgage
Loan Schedules.
"Advance": As to any Mortgage Loan, any advance made by the
Master
Servicer in respect of any Distribution
Date pursuant to Section 4.07.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common
control with such Person. For
purposes of this definition, "control"
means the power to direct the management
and policies of a Person, directly or
indirectly, whether through ownership of
voting securities, by contract or otherwise
and "controlling" and "controlled"
shall have meanings correlative to the
foregoing.
"Aggregate Overcollateralization Release Amount": With respect
to
any Distribution Date, the lesser of (i)
the Principal Remittance Amount and
(ii) the Overcollateralization Release
Amount.
"Agreement": This Pooling and Servicing Agreement and all
amendments
and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and
regulations applicable thereto.
"Applied Realized Loss Amount": With respect to each
Distribution
Date, (i) the allocation to the Class A-1A
Certificates of the excess, if any,
of (a) the aggregate of the Certificate
Principal Balances of the Class A-1 and
Class A-1A Certificates (after giving
effect to all distributions on such
Distribution Date) over (b) the aggregate
Principal Balance of the Group 1
Mortgage Loans as of the end of the related
Collection Period and (ii) the
allocation to the Class M and Class B
Certificates of the excess, if any, of (a)
the aggregate of the Certificate Principal
Balances of the Certificates (after
giving effect to all distributions on such
Distribution Date) over (b) the Pool
Balance as of the end of the related
Collection Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form,
which is sufficient under the laws of
the jurisdiction wherein the related
Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates,
the
date set forth as such in the Preliminary
Statement.
"Available Funds": As to any Distribution Date, an amount equal
to
the excess of (i) the sum of (a) the
aggregate of the Monthly Payments due
during the related Collection Period and
received on or prior to the related
Determination Date by the Master Servicer,
(b) Liquidation Proceeds, Insurance
Proceeds, Condemnation Proceeds, Principal
Prepayments, Substitution Adjustment
Amounts, the Purchase Price for any
repurchased Mortgage Loan, the Termination
Price with respect to the termination of
the Trust pursuant to Section 10.01
hereof and other unscheduled recoveries of
principal and interest (excluding
Prepayment Charges, Originator Prepayment
Charge Payment Amount, Servicer
Prepayment Charge Payment Amounts and
Prepayment Interest Excess) in respect of
the Mortgage Loans during the related
Prepayment Period, (c) the aggregate of
any amounts received in respect of an REO
Property deposited in the Collection
Account for such Distribution Date, (d) any
Compensating Interest for such
Distribution Date, (e) the aggregate of any
Advances made by the Master Servicer
for such Distribution Date and (f) any
Reimbursement Amount deposited into the
Collection Account during the related
Prepayment Period over (ii) the sum of (a)
amounts reimbursable or payable to the
Master Servicer pursuant to Sections 3.05
or 6.03, (b) amounts reimbursable or
payable to the Trustee pursuant to Section
8.05 (other than Trustee Fees) or Section
9.01(c), (c) Stayed Funds, (d) the
Servicing Fee and (e) amounts deposited in
the Collection Account or the
Distribution Account, as the case may be,
in error.
"Bankruptcy Code": Title 11 of the United States Code, as
amended.
"Book-Entry Certificates": Any of the Certificates that shall
be
registered in the name of the Depository or
its nominee, the ownership of which
is reflected on the books of the Depository
or on the books of a Person
maintaining an account with the Depository
(directly, as a "Depository
Participant," or indirectly, as an indirect
participant in accordance with the
rules of the Depository and as described in
Section 5.02 hereof). On the Closing
Date, the Class A-1, Class A-1A, Class A-2,
Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5 and Class M-6
Certificates shall be Book-Entry
Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day
on
which banking institutions in the State of
Delaware, the State of New York, the
State of Florida, the State of California,
the Commonwealth of Pennsylvania or
in the city in which the Corporate Trust
Office of the Trustee is located are
authorized or obligated by law or executive
order to be closed.
"Cap": Any of the Group 1 Cap, the Group 2 Cap or the Pool Cap.
"Cap Amount": With respect to each Distribution Date and Class
of
Offered Certificates, the product of (i)
the Yield Maintenance Agreement Payment
for such Distribution Date and (ii) a
fraction, the numerator of which is the
Certificate Principal Balance of such Class
immediately prior to such
Distribution Date and the denominator of
which is the aggregate Certificate
Principal Balance of the Offered
Certificates immediately prior to such
Distribution Date.
"Cap Carryover Amount": If on any Distribution Date, the
Accrued
Certificate Interest for any Offered
Certificate is based upon a Cap, the excess
of (i) the amount of interest such
Certificate would have been entitled to
receive on such Distribution Date based on
the related Pass-Through Rate, over
(ii) the amount of interest such
Certificate received on such Distribution Date
based on the related Cap, together with the
unpaid portion of any such excess
from prior Distribution Dates (and interest
accrued thereon at the then
applicable Pass-Through Rate on such
Certificate).
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificate Custodian": Initially, Wells Fargo Bank, National
Association; thereafter any other
Certificate Custodian acceptable to the
Depository and selected by the Trustee.
"Certificate Interest Rate": With respect to each Distribution
Date
and Class of Certificates, the per annum
rate described in the table in the
Preliminary Statement during the related
Interest Accrual Period on the
Certificate Principal Balance.
"Certificate Owner": With respect to each Book-Entry
Certificate,
any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of
Certificates (other than the Class CE,
Class P and Class R Certificates) and any
Distribution Date, the Original Class
Certificate Principal Balance reduced by
the sum of (i) all amounts actually
distributed in respect of principal of such
Class on all prior Distribution Dates and
(ii) Applied Realized Loss Amounts
allocated thereto. The Class CE, Class P
and Class R Certificates do not have a
Certificate Principal Balance. With respect
to any Certificate (other than a
Class CE, Class P or Class R Certificate)
of a Class and any Distribution Date,
the portion of the Certificate Principal
Balance of such Class represented by
such Certificate equal to the product of
the Percentage Interest evidenced by
such Certificate and the Certificate
Principal Balance of such Class.
"Certificate Register" and "Certificate Registrar": The
register
maintained and registrar appointed pursuant
to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the
Certificate Register, except that a
Disqualified Organization or non-U.S.
Person shall not be a Holder of the Class
R Certificate for any purpose hereof.
"Certification": As defined in Section 3.31(b) hereof.
"Class": Collectively, Certificates or REMIC Regular Interests
which
have the same priority of payment and bear
the same class designation and the
form of which is identical except for
variation in the Percentage Interest
evidenced thereby.
"Class A-1 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.320% per annum, and (ii) following the
Optional Termination Date, 0.640% per
annum.
"Class A-1 Pass-Through Rate": For each Distribution Date, a
rate
per annum equal to the lesser of (a)
One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class A-1
Certificate Margin and (b) the Group 1
Maximum Rate Cap.
"Class A-1A Applied Realized Loss Amount": As to the Class A-1A
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class A-1A Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
the aggregate Certificate Principal
Balance of the Class A-1 and Class A-1A
Certificates over the aggregate
Principal Balance of the Group 1 Mortgage
Loans after taking into account the
application of the Class M-1 Applied
Realized Loss Amount, the M-2 Applied
Realized Loss Amount, the Class M-3 Applied
Realized Loss Amount, the Class M-4
Applied Realized Loss Amount, the Class M-5
Applied Realized Loss Amount, the
Class M-6 Applied Realized Loss Amount and
the Class B Applied Realized Loss
Amount, in each case as of such
Distribution Date.
"Class A-1A Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.420% per annum, and (ii) following
the Optional Termination Date, 0.840% per
annum.
"Class A-1A Pass-Through Rate": For each Distribution Date, a
rate
per annum equal to the lesser of (a)
One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class A-1A
Certificate Margin and (b) the Group 1
Maximum Rate Cap.
"Class A-1A Realized Loss Amortization Amount": As to the Class
A-1A
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class A-1A
Certificates as of such Distribution
Date and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the
sum of the amounts described in Section
4.02(b)(i) and (ii) hereof, in each case
for such Distribution Date.
"Class A-2 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.350% per annum, and (ii) following the
Optional Termination Date, 0.700% per
annum.
"Class A-2 Pass-Through Rate": For each Distribution Date, a
rate
per annum equal to the lesser of (a)
One-Month LIBOR as of the related LIBOR
Determination Date, plus the Class A-2
Certificate Margin and (b) the Group 2
Maximum Rate Cap.
"Class A Certificate": Any one of the Certificates with an "A"
designated on the face thereof
substantially in the form annexed hereto as
Exhibits A-1, A-1A and A-2, executed by the
Trustee on behalf of the Trust and
authenticated and delivered by the
Certificate Registrar, representing the right
to distributions as set forth herein and
therein.
"Class A Certificateholders": Collectively, the Holders of the
Class
A Certificates.
"Class B Applied Realized Loss Amount": As to the Class B
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class B Applied Realized
Loss Amount, if any, on such
Distribution Date) and (y) the Applied
Realized Loss Amount as of such
Distribution Date.
"Class B Certificate": Any one of the Certificates with a "B"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit B, executed by the Trustee on
behalf of the Trust and authenticated and
delivered by the Certificate Registrar,
representing the right to distributions
as set forth herein and therein.
"Class B Certificateholders": Collectively, the Holders of the
Class
B Certificates.
"Class B Pass-Through Rate": For each Distribution Date (i) on
or
prior to the Optional Termination Date, a
rate per annum equal to 6.000% and
(ii) following the Optional Termination
Date, a rate per annum equal to 6.500%.
"Class B Principal Distribution Amount": As of any Distribution
Date
on or after the Stepdown Date and as long
as a Trigger Event is not in effect,
the excess of (x) the sum of (i) the sum of
the Certificate Principal Balances
of the Class A Certificates (after taking
into account the payment of the Senior
Principal Distribution Amount on such
Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1
Certificates (after taking into account the
payment of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the payment of
the Class M-2 Principal Distribution
Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the
Class M-3 Certificates (after taking into
account the payment of the Class M-3
Principal Distribution Amount on such
Distribution Date), (v) the Certificate
Principal Balance of the Class M-4
Certificates (after taking into account the
payment of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the payment of
the Class M-5 Principal Distribution
Amount on such Distribution Date), (vii)
the Certificate Principal Balance of
the Class M-6 Certificates (after taking
into account the payment of the Class
M-6 Principal Distribution Amount on such
Distribution Date) and (viii) the
Certificate Principal Balance of the Class
B Certificates immediately prior to
such Distribution Date over (y) the lesser
of (A) the product of (i) 98.20% and
(ii) the Pool Balance as of the last day of
the related Collection Period and
(B) the Pool Balance as of the last day of
the related Collection Period minus
the product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class B Realized Loss Amortization Amount": As to the Class B
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xxiii) hereof, in each
case for such Distribution Date.
"Class CE Certificates": Any one of the Class CE Certificates
as
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-7, executed by the Trustee on
behalf of the Trust and authenticated
and delivered by the Certificate Registrar,
representing the right to
distributions as set forth herein and
therein.
"Class CE Distributable Amount": With respect to any
Distribution
Date, the sum of (i) the interest accrued
on such Class CE Certificate at its
Pass-Through Rate calculated on its
Notional Amount less the amount (without
duplication) of Cap Carryover Amounts paid
pursuant to Section 4.02(b)(xxv),
(ii) any remaining Aggregate
Overcollateralization Release Amounts and (iii) the
aggregate of amounts remaining in the
Reserve Account after the distributions in
Section 3.04(g)(i)(B).
"Class CE Uncertificated Principal Balance": As of any date of
determination, the Initial
Overcollateralization Amount minus the sum of (i) any
Realized Losses allocated thereto and (ii)
any amounts distributed (or deemed
distributed) to the Class CE Certificates
with respect thereto.
"Class M Certificate": Any one of the Certificates with an "M"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-1, Exhibit C-2, Exhibit C-3,
Exhibit C-4, Exhibit C-5 and Exhibit C-6,
executed by the Trustee on behalf of the
Trust and authenticated and delivered
by the Certificate Registrar, representing
the right to distributions as set
forth herein and therein.
"Class M Certificateholders": Collectively, the Holders of the
Class
M Certificates.
"Class M-1 Applied Realized Loss Amount": As to the Class M-1
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-1 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the sum
of the Class M-2 Applied Realized
Loss Amount, the Class M-3 Applied Realized
Loss Amount, the Class M-4 Applied
Realized Loss Amount, the Class M-5 Applied
Realized Loss Amount, the Class M-6
Applied Realized Loss Amount and the Class
B Applied Realized Loss Amount, in
each case as of such Distribution Date.
"Class M-1 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
0.700% per annum, and (ii) following the
Optional Termination Date, 1.050% per
annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-1 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-1 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balances of
the Class A Certificates (after taking into
account the payment of the Senior
Principal Distribution Amount on such
Distribution Date) and (ii) the
Certificate Principal Balance of the Class
M-1 Certificates immediately prior to
such Distribution Date over (y) the lesser
of (A) the product of (i) 73.20% and
(ii) the Pool Balance as of the last day of
the related Collection Period and
(B) the Pool Balance as of the last day of
the related Collection Period minus
the product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-1 Realized Loss Amortization Amount": As to the Class
M-1
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (v) hereof, in each case
for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to the Class M-2
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-2 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss
Amount as of such Distribution Date over
(ii) the sum of the Class M-3 Applied
Realized Loss Amount, the Class M-4 Applied
Realized Loss Amount, the Class M-5
Applied Realized Loss Amount, the Class M-6
Applied Realized Loss Amount and the
Class B Applied Realized Loss Amount as of
such Distribution Date.
"Class M-2 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.450% per annum, and (ii) following the
Optional Termination Date, 2.175% per
annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-2 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-2 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balances of
the Class A Certificates (after taking into
account the payment of the Senior
Principal Distribution Amount on such
Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1
Certificates (after taking into account the
payment of the Class M-1 Principal
Distribution Amount on such Distribution
Date) and (iii) the Certificate Principal
Balance of the Class M-2 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 83.70% and (ii) the Pool
Balance as of the last day of the
related Collection Period and (B) the Pool
Balance as of the last day of the
related Collection Period minus the product
of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-2 Realized Loss Amortization Amount": As to the Class
M-2
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (viii) hereof, in each
case for such Distribution Date.
"Class M-3 Applied Realized Loss Amount": As to the Class M-3
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-3 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss
Amount as of such Distribution Date over
(ii) the sum of the Class M-4 Applied
Realized Loss Amount, the Class M-5 Applied
Realized Loss Amount, the Class M-6
Applied Realized Loss Amount and the Class
B Applied Realized Loss Amount as of
such Distribution Date.
"Class M-3 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.600% per annum, and (ii) following the
Optional Termination Date, 2.400% per
annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-3 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-3 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment of the Class M-1
Principal Distribution Amount on such
Distribution Date), (iii) the Certificate
Principal Balance of the Class M-2
Certificates (after taking into account the
payment of the Class M-2 Principal
Distribution Amount on such Distribution
Date), and (iv) the Certificate
Principal Balance of the Class M-3
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 87.20% and (ii)
the Pool Balance as of the last day of the
related Collection Period and (B) the
Pool Balance as of the last day of the
related Collection Period minus the
product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-3 Realized Loss Amortization Amount": As to the Class
M-3
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-3
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xi) hereof, in each case
for such Distribution Date.
"Class M-4 Applied Realized Loss Amount": As to the Class M-4
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-4 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss
Amount as of such Distribution Date over
(ii) the sum of the Class M-5 Applied
Realized Loss Amount, the Class M-6 Applied
Realized Loss Amount and the Class B
Applied Realized Loss Amount as of such
Distribution Date.
"Class M-4 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
1.900% per annum, and (ii) following the
Optional Termination Date, 2.850% per
annum.
"Class M-4 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-4 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-4 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment of the Class M-1
Principal Distribution Amount on such
Distribution Date), (iii) the Certificate
Principal Balance of the Class M-2
Certificates (after taking into account the
payment of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date) and (v)
the Certificate Principal Balance of the
Class M-4 Certificates immediately
prior to such Distribution Date over (y)
the lesser of (A) the product of (i)
90.20% and (ii) the Pool Balance as of the
last day of the related Collection
Period and (B) the Pool Balance as of the
last day of the related Collection
Period minus the product of 0.50% and the
Cut-off Date Aggregate Principal
Balance.
"Class M-4 Realized Loss Amortization Amount": As to the Class
M-4
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-4
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xiv) hereof, in each
case for such Distribution Date.
"Class M-5 Applied Realized Loss Amount": As to the Class M-5
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-5 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss
Amount as of such Distribution Date over
(ii) the sum of the Class M-6 Applied
Realized Loss Amount and the Class B
Applied Realized Loss Amount as of such
Distribution Date.
"Class M-5 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
2.150% per annum, and (ii) following the
Optional Termination Date, 3.225% per
annum.
"Class M-5 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-5 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-5 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment of the Class M-1
Principal Distribution Amount on such
Distribution Date), (iii) the Certificate
Principal Balance of the Class M-2
Certificates (after taking into account the
payment of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date) and (vi) the Certificate
Principal Balance of the Class M-5
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 92.20% and (ii) the
Pool Balance as of the last day of
the related Collection Period and (B) the
Pool Balance as of the last day of the
related Collection Period minus the product
of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-5 Realized Loss Amortization Amount": As to the Class
M-5
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-5
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xvii) hereof, in each
case for such Distribution Date.
"Class M-6 Applied Realized Loss Amount": As to the Class M-6
Certificates and as of any Distribution
Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking
into account the distribution of the
Principal Distribution Amount on such
Distribution Date, but prior to the
application of the Class M-6 Applied
Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss
Amount as of such Distribution Date over
(ii) the Class B Applied Realized Loss
Amount as of such Distribution Date.
"Class M-6 Certificate Margin": For each Distribution Date (i) on
or
prior to the Optional Termination Date,
3.500% per annum, and (ii) following the
Optional Termination Date, 5.250% per
annum.
"Class M-6 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the
related LIBOR Determination Date, plus
the Class M-6 Certificate Margin and (b)
the Pool Maximum Rate Cap.
"Class M-6 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the sum of the Certificate Principal
Balances of the Class A Certificates (after
taking into account the payment of
the Senior Principal Distribution Amount on
such Distribution Date), (ii) the
Certificate Principal Balance of the Class
M-1 Certificates (after taking into
account the payment of the Class M-1
Principal Distribution Amount on such
Distribution Date), (iii) the Certificate
Principal Balance of the Class M-2
Certificates (after taking into account the
payment of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the payment of
the Class M-3 Principal Distribution Amount
on such Distribution Date), (v) the
Certificate Principal Balance of the Class
M-4 Certificates (after taking into
account the payment of the Class M-4
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class M-5
Certificates (after taking into account the
payment of the Class M-5 Principal
Distribution Amount on such Distribution
Date) and (vii) the Certificate
Principal Balance of the Class M-6
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 94.70% and (ii)
the Pool Balance as of the last day of the
related Collection Period and (B) the
Pool Balance as of the last day of the
related Collection Period minus the
product of 0.50% and the Cut-off Date
Aggregate Principal Balance.
"Class M-6 Realized Loss Amortization Amount": As to the Class
M-6
Certificates and as of any Distribution
Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-6
Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum
of the amounts described in Section
4.02(b)(i) through (xx) hereof, in each case
for such Distribution Date.
"Class P Certificate": Any one of the Certificates with a "P"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-8, executed by the Trustee on
behalf of the Trust and authenticated
and delivered by the Certificate Registrar,
representing the right to
distributions as set forth herein and
therein.
"Class R Certificate": The Class R Certificate executed by the
Trustee on behalf of the Trust, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit C-9
and evidencing the ownership of the
Residual Interest in each of REMIC 1 and
REMIC 2. The Class R Certificate represents
the ownership of the Class R-1
Interest and the Class R-2 Interest.
"Class R-1 Interest": The uncertificated residual interest in
REMIC
1.
"Class R-2 Interest": The uncertificated residual interest in
REMIC
2.
"Closing Date": January 30, 2004.
"Code": The Internal Revenue Code of 1986, as it may be amended
from
time to time.
"Collection Account": The account or accounts created and
maintained
by the Master Servicer pursuant to Section
3.04, which shall be entitled
"Collection Account, Option One Mortgage
Corporation, as Master Servicer for the
Trust under the Pooling and Servicing
Agreement dated as of January 1, 2004
among Asset Backed Funding Corporation, as
Depositor, Option One Mortgage
Corporation, as Master Servicer, and Wells
Fargo Bank, National Association, as
Trustee, in trust for registered Holders of
ABFC 2004-OPT1 Trust, ABFC
Asset-Backed Certificates, Series
2004-OPT1," and which must be an Eligible
Account.
"Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar
month preceding the month in which
such Distribution Date occurs through the
first day of the month in which such
Distribution Date occurs.
"Combined Loan-to-Value Ratio": For any Mortgage Loan, the
fraction,
expressed as a percentage, the numerator of
which is the sum of (i) the
Principal Balance of the Mortgage Loan at
origination and (ii) the principal
balance of the senior mortgage loan, if
any, on the date of origination of the
Mortgage Loan and the denominator of which
is the Value of the related Mortgaged
Property.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in respect of
a
taking of a Mortgaged Property by exercise
of the power of eminent domain or
condemnation.
"Consulting Agreement": The Consulting Agreement, dated as of
January 30, 2004, between The Murrayhill
Company, as Credit Risk Manager, and
the Depositor.
"Corporate Trust Office": The principal corporate trust office
of
the Trustee at which at any particular time
its corporate trust business in
connection with this Agreement shall be
administered, which office at the date
of the execution of this instrument is
located at (i) for certificate transfer
purposes, Wells Fargo Center, Sixth and
Marquette, Minneapolis, Minnesota,
55479-0113, Attention: Client Manager-ABFC,
Series 2004-OPT1 and (ii) for all
other purposes, 9062 Old Annapolis Road,
Columbia, Maryland 21045, Attention:
Client Manager-ABFC, Series 2004-OPT1 or at
such other address as the Trustee
may designate from time to time by notice
to the Certificateholders, the
Depositor and the Master Servicer.
"Corresponding Classes": With respect to REMIC 1 and REMIC 2,
the
following Classes shall be Corresponding
Classes:
Corresponding REMIC 1 Classes Corresponding REMIC 2
Classes
-----------------------------
-----------------------------
LT1A1
Class A-1 Certificates
LT1A1A
Class A-1A
Certificates
LT1A2
Class A-2 Certificates
LT1M1
Class M-1 Certificates
LT1M2
Class M-2 Certificates
LT1M3
Class M-3 Certificates
LT1M4
Class M-4 Certificates
LT1M5
Class M-5 Certificates
LT1M6
Class M-6 Certificates
LT1B
Class B Certificates
"Credit Risk Manager": The Murrayhill Company, a Colorado
corporation.
"Credit Risk Manager Fee": The fee payable to the Credit Risk
Manager on each Distribution Date for its
services as Credit Risk Manager, in an
amount equal to the product of (i)
one-twelfth of the Credit Risk Manager Fee
Rate and (ii) the Pool Balance as of the
opening of business on the first day of
the related Collection Period.
"Credit Risk Manager Fee Rate": With respect to any
Distribution
Date, 0.0175% per annum.
"Credit Risk Management Agreement": The Credit Risk Management
Agreement between the Master Servicer and
the Credit Risk Manager dated January
30, 2004.
"Cut-off Date": January 1, 2004.
"Cut-off Date Aggregate Principal Balance": The aggregate of
the
Cut-off Date Principal Balances of the
Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage
Loan,
the unpaid principal balance thereof as of
the Cut-off Date after application of
funds received or advanced on or before
such date (or as of the applicable date
of substitution with respect to an Eligible
Substitute Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment
for such Mortgage Loan by a court of
competent jurisdiction in a proceeding
under the Bankruptcy Code, except such a
reduction resulting from a Deficient
Valuation.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Eligible Substitute
Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property
by a court of competent jurisdiction
in an amount less than the then outstanding
principal balance of the Mortgage
Loan, which valuation results from a
proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 5.02(c)
hereof.
"Delinquent": Any Mortgage Loan with respect to which the
Monthly
Payment due on a Due Date is not made by
the close of business on the next
scheduled Due Date for such Mortgage
Loan.
"Depositor": Asset Backed Funding Corporation, a Delaware
corporation, or any successor in
interest.
"Depository": The initial depository shall be The Depository
Trust
Company, whose nominee is Cede & Co.,
or any other organization registered as a
"clearing agency" pursuant to Section 17A
of the Exchange Act. The Depository
shall initially be the registered Holder of
the Book-Entry Certificates. The
Depository shall at all times be a
"clearing corporation" as defined in Section
8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Participant": A broker, dealer, bank or other
financial
institution or other person for whom from
time to time a Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date,
the
15th day of the calendar month in which
such Distribution Date occurs or, if
such 15th day is not a Business Day, the
Business Day immediately preceding such
15th day.
"Directly Operate": With respect to any REO Property, the
furnishing
or rendering of services to the tenants
thereof, the management or operation of
such REO Property, the holding of such REO
Property primarily for sale to
customers, the performance of any
construction work thereon or any use of such
REO Property in a trade or business
conducted by the Trust other than through an
Independent Contractor; provided, however,
that the Trustee (or the Master
Servicer under this Agreement) shall not be
considered to Directly Operate an
REO Property solely because the Trustee (or
the Master Servicer under this
Agreement) establishes rental terms,
chooses tenants, enters into or renews
leases, deals with taxes and insurance, or
makes decisions as to repairs or
capital expenditures with respect to such
REO Property.
"Disqualified Organization": A "disqualified organization"
under
Section 860E of the Code, which as of the
Closing Date is any of: (i) the United
States, any state or political subdivision
thereof, any possession of the United
States, any foreign government, any
international organization, or any agency or
instrumentality of any of the foregoing,
(ii) any organization (other than a
cooperative described in Section 521 of the
Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless
such organization is subject to the tax
imposed by Section 511 of the Code, (iii)
any organization described in Section
1381(a)(2)(C) of the Code, or (iv) any
other Person so designated by the Trustee
based upon an Opinion of Counsel provided
by nationally recognized counsel to
the Trustee that the holding of an
ownership interest in the Class R Certificate
by such Person may cause the Trust Fund or
any Person having an ownership
interest in any Class of Certificates
(other than such Person) to incur
liability for any federal tax imposed under
the Code that would not otherwise be
imposed but for the transfer of an
ownership interest in the Class R Certificate
to such Person. A corporation will not be
treated as an instrumentality of the
United States or of any state or political
subdivision thereof if all of its
activities are subject to tax and a
majority of its board of directors is not
selected by a governmental unit. The term
"United States," "state" and
"international organization" shall have the
meanings set forth in Section 7701
of the Code.
"Distribution Account": The trust account or accounts created
and
maintained by the Trustee pursuant to
Section 3.04(b) which shall be entitled
"Distribution Account, Wells Fargo Bank,
National Association, as Trustee, in
trust for the registered Holders of ABFC
2004-OPT1 Trust, ABFC Asset-Backed
Certificates, Series 2004-OPT1" and which
must be an Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if
such
25th day is not a Business Day, the
Business Day immediately following such 25th
day, commencing in February 2004.
"Distribution Date Statement": As defined in Section 4.06(a)
hereof.
"Due Date": With respect to each Mortgage Loan and any
Distribution
Date, the day of the calendar month in
which such Distribution Date occurs on
which the Monthly Payment for such Mortgage
Loan was due, exclusive of any grace
period.
"Eligible Account": Any of (i) an account or accounts
maintained
with a federal or state chartered
depository institution or trust company the
short-term unsecured debt obligations of
which (or, in the case of a depository
institution or trust company that is the
principal subsidiary of a holding
company, the short-term unsecured debt
obligations of such holding company) are
rated "A-1+" by S&P, "P-1" by Moody's
and "F-1" by Fitch (or comparable ratings
if S&P, Moody's and Fitch are not the
Rating Agencies) by each of the Rating
Agencies at the time any amounts are held
on deposit therein, (ii) an account or
accounts the deposits in which are fully
insured by the FDIC, (iii) a trust
account or accounts maintained with the
trust department of a federal or state
chartered depository institution, national
banking association or trust company
acting in its fiduciary capacity or (iv) an
account otherwise acceptable to each
Rating Agency without reduction or
withdrawal of their then current ratings of
the Certificates as evidenced by a letter
from each Rating Agency to the
Trustee. Eligible Accounts may bear
interest.
"Eligible Investments": Any one or more of the following
obligations
or securities acquired at a purchase price
of not greater than par, regardless
of whether issued or managed by the
Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates or
for which an Affiliate of the Trustee
serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as
to
timely
payment of principal and interest by, the United States or any
agency or
instrumentality thereof, provided such obligations are backed
by
the full
faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit
of,
bankers'
acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents
acting
in their
respective commercial capacities) incorporated under the laws
of
the United
States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so
long
as, at the
time of such investment or contractual commitment providing for
such
investment, such depository institution or trust company or its
ultimate
parent has a short-term uninsured debt rating in one of the two
highest
available rating categories of S&P and Moody's and the
highest
available
rating category of Fitch and provided that each such investment
has an
original maturity of no more than 365 days and (B) any other
demand
or time
deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with
respect to
any security described in clause (i) above and entered into
with a
depository institution or trust company (acting as principal)
rated
A or
higher by S&P and Fitch and A2 or higher by Moody's,
provided,
however,
that collateral transferred pursuant to such repurchase
obligation
must be of the type described in clause (i) above and must (A)
be valued
daily at current market prices plus accrued interest or (B)
pursuant
to such valuation, be equal, at all times, to 105% of the cash
transferred by the Trustee in exchange for such collateral and (C)
be
delivered
to the Trustee or, if the Trustee is supplying the collateral,
an agent
for the Trustee, in such a manner as to accomplish perfection
of
a security
interest in the collateral by possession of certificated
securities;
(iv) securities bearing interest or sold at a discount that are
issued by
any corporation incorporated under the laws of the United
States
of America
or any State thereof and that are rated by each Rating Agency
in its highest
long-term unsecured rating categories at the time of such
investment
or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified
date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency in its highest short-term
unsecured
debt rating available at the time of such investment;
(vi) units of money market funds registered under the
Investment
Company
Act of 1940 (including funds managed or advised by the Trustee
or
affiliates
thereof) that, if rated by each Rating Agency, are rated in its
highest rating
category (if so rated by such Rating Agency); and
(vii) if previously confirmed in writing to the Trustee, any
other
demand,
money market or time deposit, or any other obligation, security
or
investment, as may be acceptable to the Rating Agencies in writing
as an
eligible
investment of funds backing securities having ratings
equivalent
to its
highest initial rating of the Senior Certificates;
provided, that no instrument described
hereunder shall evidence either the right
to receive (a) only interest with respect
to the obligations underlying such
instrument or (b) both principal and
interest payments derived from obligations
underlying such instrument and the interest
and principal payments with respect
to such instrument provide a yield to
maturity at par greater than 120% of the
yield to maturity at par of the underlying
obligations.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted
for
a Defective Mortgage Loan pursuant to the
terms of this Agreement which must, on
the date of such substitution, (i) have an
outstanding principal balance, after
application of all scheduled payments of
principal and interest due during or
prior to the month of substitution, not in
excess of, and not more than 5% less
than, the outstanding principal balance of
the Defective Mortgage Loan as of the
Due Date in the calendar month during which
the substitution occurs, (ii) have a
Mortgage Interest Rate, with respect to a
Fixed-Rate Mortgage Loan, not less
than the Mortgage Interest Rate of the
Defective Mortgage Loan and not more than
1% in excess of the Mortgage Interest Rate
of such Defective Mortgage Loan,
(iii) have the same Due Date as the
Defective Mortgage Loan; (iv) if an
Adjustable-Rate Mortgage Loan, have a
Maximum Mortgage Interest Rate not less
than the Maximum Mortgage Interest Rate for
the Defective Mortgage Loan, (v) if
an Adjustable-Rate Mortgage Loan, have a
Minimum Mortgage Interest Rate not less
than the Minimum Mortgage Interest Rate of
the Defective Mortgage Loan, (vi) if
an Adjustable-Rate Mortgage Loan, have a
Gross Margin equal to or greater than
the Gross Margin of the Defective Mortgage
Loan, (vii) if an Adjustable-Rate
Mortgage Loan, have the same Index as the
Defective Mortgage Loan (viii) if an
Adjustable-Rate Mortgage Loan, have a next
Adjustment Date not more than two
months later than the next Adjustment Date
on the Defective Mortgage Loan, an
Eligible Substitute Mortgage Loan must have
all Adjustment Dates occurring
during the same Interest Accrual Period
during which Adjustment Dates occur with
respect to the substituted Mortgage Loan,
(ix) have a remaining term to maturity
not greater than (and not more than one
year less than) that of the Defective
Mortgage Loan, (x) be current as of the
date of substitution, (xi) have a
Combined Loan-to-Value Ratio as of the date
of substitution equal to or lower
than the Combined Loan-to-Value Ratio of
the Defective Mortgage Loan as of such
date, (xii) have a risk grading at least
equal to the risk grading assigned on
the Defective Mortgage Loan, (xiii) have
been underwritten or reunderwritten in
accordance with the same underwriting
criteria and guidelines as the Defective
Mortgage Loan, (xiv) have the same lien
priority as the Defective Mortgage Loan;
(xv) have a Prepayment Charge at least
equal in amount and duration of that of
the Defective Mortgage Loan and (xvi)
conform to each representation and
warranty set forth in Section 3.03 of the
Originator Mortgage Loan Purchase
Agreement and Section 3.01 of the Mortgage
Loan Purchase Agreement applicable to
the Defective Mortgage Loan. In the event
that one or more mortgage loans are
substituted for one or more Defective
Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on
the basis of aggregate principal
balance, the Mortgage Interest Rates
described in clause (ii) hereof shall be
determined on the basis of weighted average
Mortgage Interest Rates, the risk
gradings described in clause (xii) hereof
shall be satisfied as to each such
mortgage loan, the terms described in
clause (ix) hereof shall be determined on
the basis of weighted average remaining
term to maturity, the Combined
Loan-to-Value Ratios described in clause
(xi) hereof shall be satisfied as to
each such mortgage loan and, except to the
extent otherwise provided in this
sentence, the representations and
warranties described in clause (xvi) hereof
must be satisfied as to each Eligible
Substitute Mortgage Loan or in the
aggregate, as the case may be. Any
Defective Mortgage Loan that is a Group 1
Mortgage Loan or Group 2 Mortgage Loan must
be replaced by an Eligible
Substitute Mortgage Loan that will be a
Group 1 Mortgage Loan or Group 2
Mortgage Loan, as applicable.
"ERISA": The Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA-Restricted Certificates": Any of the Class B, Class CE,
Class
P and Class R Certificates.
"Escrow Account": The account or accounts created and
maintained
pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents,
taxes,
assessments, water rates, mortgage
insurance premiums, fire and hazard insurance
premiums and other payments required to be
escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage
Loan.
"Estate in Real Property": A fee simple estate in a parcel of
real
property.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Expense Fee Rate": The sum of (i) the Trustee Fee Rate, (ii)
the
Servicing Fee Rate and (iii) the Credit
Risk Manager Fee Rate.
"Extended Period": As defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any Distribution
Date, the lesser of (x) the Monthly Excess
Interest Amount for such
Distribution Date and (y) the
Overcollateralization Deficiency for such
Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section
3.12.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other
than a Mortgage Loan or REO Property
(i) purchased by the Originator or the
Seller pursuant to or as contemplated by
Section 2.03, (ii) purchased by the Master
Servicer pursuant to Section 3.16 or
(iii) purchased by the Majority Class CE
Certificateholders or the Master
Servicer pursuant to Section 10.01), a
determination made by the Master Servicer
that all Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds and
other payments or recoveries which the
Master Servicer, in its reasonable good
faith judgment, expects to be finally
recoverable in respect thereof have been
so recovered. The Master Servicer shall
maintain records, prepared by a
Servicing Officer, of each Final Recovery
Determination made thereby.
"Fitch": Fitch Ratings and its successors, and if such company
shall
for any reason no longer perform the
functions of a securities rating agency,
"Fitch" shall be deemed to refer to any
other "nationally recognized statistical
rating organization" as set forth on the
most current list of such organizations
released by the Securities and Exchange
Commission.
"Fixed-Rate Mortgage Loan": A Mortgage Loan which has a
constant
annual rate at which interest accrues in
accordance with the provisions of the
related Mortgage Note.
"Foreclosure Price": The amount reasonably expected to be
received
from the sale of the related Mortgaged
Property net of any expenses associated
with foreclosure proceedings.
"Form 10-K": As defined in Section 3.31(a) hereof.
"Grantor Trust": That portion of the Trust exclusive of REMIC 1
and
REMIC 2 consisting of (a) the Prepayment
Charges, any Originator Prepayment
Charge Payment Amounts and any Servicer
Prepayment Charge Payment Amounts and
the right of the Class P Certificateholders
to receive such Prepayment Charges,
Originator Prepayment Charge Payment
Amounts and Servicer Prepayment Charge
Payment Amounts, (b) the right of the
Offered Certificates to receive Cap
Carryover Amounts, (c) the Yield
Maintenance Agreement, the Reserve Account and
the beneficial interest of the Class CE
Certificates with respect thereto and
(d) the obligation of the Class CE
Certificates to pay Cap Carryover Amounts.
"Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan,
the fixed percentage set forth in the
related Mortgage Note that is added to the
Index on each Adjustment Date in accordance
with the terms of the related
Mortgage Note used to determine the
Mortgage Interest Rate for such Mortgage
Loan.
"Group 1 Cap": As of any Distribution Date and the Class A-1
and
Class A-1A Certificates, a per annum rate,
adjusted by multiplying such rate by
a fraction equal to 30 over the actual
number of days in the related Interest
Accrual Period, equal to the Weighted
Average Net Mortgage Interest Rate for the
Group 1 Mortgage Loans.
"Group 1 Interest
Remittance Amount": As of any Distribution Date,
the sum, without duplication, of (i) all
interest due and collected or advanced
with respect to the related Collection
Period on the Group 1 Mortgage Loans
received by the Master Servicer on or prior
to the Determination Date for such
Distribution Date (less the Servicing Fee,
amounts available for reimbursement
of Advances and Servicing Advances pursuant
to Section 3.05 and expenses
reimbursable pursuant to Section 6.03),
(ii) all Compensating Interest paid by
the Master Servicer on the related
Distribution Date with respect to such
Mortgage Loans, (iii) the portion of any
payment in connection with any
Principal Prepayment (other than any
Prepayment Interest Excess), substitution,
Purchase Price, Termination Price,
Insurance Proceeds or Net Liquidation
Proceeds relating to interest with respect
to such Mortgage Loans received
during the related Prepayment Period and
(iv) the portion of any Reimbursement
Amount relating to such Mortgage Loans
received during the related Prepayment
Period.
"Group 1 Maximum Rate Cap": With respect to any Distribution
Date
and for the Class A-1 and Class A-1A
Certificates, a per annum rate, adjusted by
multiplying such rate by a fraction equal
to 30 over the actual number of days
in the related Interest Accrual Period,
equal to the average of the Net Maximum
Mortgage Interest Rates for the
Adjustable-Rate Mortgage Loans which are Group 1
Mortgage Loans and the Net Mortgage
Interest Rates for the Fixed-Rate Mortgage
Loans which are Group 1 Mortgage Loans,
weighted on the basis of the Principal
Balances of the Group 1 Mortgage Loans as
of the first day of the related
Collection Period.
"Group 1 Mortgage Loan": Each Mortgage Loan listed on Exhibit
D-1
hereto. Each Group 1 Mortgage Loan had, as
of the Cut-off Date, a Principal
Balance that conforms to Fannie Mae and
Freddie Mac guidelines.
"Group 1 Principal Percentage": With respect to any
Distribution
Date and the Class A-1 and Class A-1A
Certificates, the percentage equivalent to
a fraction, the numerator of which is the
Principal Remittance Amount allocable
to the Group 1 Mortgage Loans for such
Distribution Date and the denominator of
which is the Principal Remittance Amount
allocable to the Mortgage Loans for
such Distribution Date.
"Group 1 Senior Principal Distribution Amount": With respect to
any
Distribution Date, (i) before the Stepdown
Date or as to which a Trigger Event
is in effect, the lesser of (a) the
aggregate Certificate Principal Balance of
the Class A-1 and Class A-1A Certificates
immediately prior to such Distribution
Date and (b) the Group 1 Principal
Percentage of the Principal Distribution
Amount and (ii) on or after the Stepdown
Date and as long as a Trigger Event is
not in effect, the excess of (a) the
aggregate Certificate Principal Balance of
the Class A-1 and Class A-1A Certificates
immediately prior to such Distribution
Date over (b) the lesser of (x) the product
of (1) 59.00% and (2) the aggregate
Principal Balance of the Group 1 Mortgage
Loans as of the last day of the
related Collection Period and (y) the
amount by which the aggregate Principal
Balance of the Group 1 Mortgage Loans as of
the last day of the related
Collection Period exceeds the product of
(1) 0.50% and (2) the aggregate
Principal Balance of the Group 1 Mortgage
Loans on the Cut-off Date.
"Group 2 Cap": As of any Distribution Date and the Class A-2
Certificates, a per annum rate, adjusted by
multiplying such rate by a fraction
equal to 30 over the actual number of days
in the related Interest Accrual
Period, equal to the Weighted Average Net
Mortgage Interest Rate for the Group 2
Mortgage Loans.
"Group 2 Interest Remittance Amount": As of any Distribution
Date,
the sum, without duplication, of (i) all
interest due and collected or advanced
with respect to the related Collection
Period on the Group 2 Mortgage Loans
received by the Master Servicer on or prior
to the Determination Date for such
Distribution Date (less the Servicing Fee,
amounts available for reimbursement
of Advances and Servicing Advances pursuant
to Section 3.05 and expenses
reimbursable pursuant to Section 6.03),
(ii) all Compensating Interest paid by
the Master Servicer on the related
Distribution Date with respect to such
Mortgage Loans, (iii) the portion of any
payment in connection with any
Principal Prepayment (other than any
Prepayment Interest Excess), substitution,
Purchase Price, Termination Price,
Insurance Proceeds or Net Liquidation
Proceeds relating to interest with respect
to such Mortgage Loans received
during the related Prepayment Period and
(iv) the portion of any Reimbursement
Amount relating to such Mortgage Loans
received during the related Prepayment
Period.
"Group 2 Maximum Rate Cap": With respect to any Distribution
Date
and for the Class A-2 Certificates, a per
annum rate, adjusted by multiplying
such rate by a fraction equal to 30 over
the actual number of days in the
related Interest Accrual Period, equal to
the average of the Net Maximum
Mortgage Interest Rates for the
Adjustable-Rate Mortgage Loans which are Group 2
Mortgage Loans and the Net Mortgage
Interest Rates for the Fixed-Rate Mortgage
Loans which are Group 2 Mortgage Loans,
weighted on the basis of the Principal
Balances of the Group 2 Mortgage Loans as
of the first day of the related
Collection Period.
"Group 2 Mortgage Loan": Each Mortgage Loan listed on Exhibit
D-2
hereto. Each Group 2 Mortgage Loan had, as
of the Cut-off Date, a Principal
Balance that does not conform to Fannie Mae
and Freddie Mac guidelines.
"Group 2 Principal Percentage": With respect to any
Distribution
Date and the Class A-2 Certificates, the
percentage equivalent to a fraction,
the numerator of which is the Principal
Remittance Amount allocable to the Group
2 Mortgage Loans for such Distribution Date
and the denominator of which is the
Principal Remittance Amount allocable to
the Mortgage Loans for such
Distribution Date.
"Group 2 Senior Principal Distribution Amount": With respect to
any
Distribution Date (i) before the Stepdown
Date or as to which a Trigger Event is
in effect, the lesser of (a) the
Certificate Principal Balance of the Class A-2
Certificates immediately prior to such
Distribution Date and (b) the Group 2
Principal Percentage of the Principal
Distribution Amount and (ii) on or after
the Stepdown Date and as long as a Trigger
Event is not in effect, the excess of
(a) the Certificate Principal Balance of
the Class A-2 Certificates immediately
prior to such Distribution Date over (b)
the lesser of (x) the product of (1)
59.00% and (2) the aggregate Principal
Balance of the Group 2 Mortgage Loans as
of the last day of the related Collection
Period and (y) the amount by which the
aggregate Principal Balance of the Group 2
Mortgage Loans as of the last day of
the related Collection Period exceeds the
product of (1) 0.50% and (2) the
aggregate Principal Balance of the Group 2
Mortgage Loans on the Cut-off Date.
"Group
Subordinate Amount" for any Distribution Date and (i) Loan
Group 1, will be equal to the excess of the
aggregate Principal Balance of the
Group 1 Mortgage Loans as of the first day
of the related Collection Period over
the aggregate Certificate Principal Balance
of the Class A-1 and Class A-1A
Certificates immediately prior to such
Distribution Date and (ii) Loan Group 2,
will be equal to the excess of the
aggregate Principal Balance of the Group 2
Mortgage Loans as of the first day of the
related Collection Period over the
Certificate Principal Balance of the Class
A-2 Certificates immediately prior to
such Distribution Date.
"Independent": When used with respect to any specified Person,
any
such Person who (i) is in fact independent
of the Depositor, the Master Servicer
and their respective Affiliates, (ii) does
not have any direct financial
interest in or any material indirect
financial interest in the Depositor or the
Master Servicer or any Affiliate thereof,
and (iii) is not connected with the
Depositor or the Master Servicer or any
Affiliate thereof as an officer,
employee, promoter, underwriter, trustee,
partner, director or Person performing
similar functions; provided, however, that
a Person shall not fail to be
Independent of the Depositor or the Master
Servicer or any Affiliate thereof
merely because such Person is the
beneficial owner of 1% or less of any class of
securities issued by the Depositor or the
Master Servicer or any Affiliate
thereof, as the case may be.
"Independent
Contractor": Either (i) any Person (other than the
Master Servicer) that would be an
"independent contractor" with respect to the
Trust Fund within the meaning of Section
856(d)(3) of the Code if the Trust Fund
were a real estate investment trust (except
that the ownership tests set forth
in that section shall be considered to be
met by any Person that owns, directly
or indirectly, 35 percent or more of any
Class of Certificates), so long as the
Trust Fund does not receive or derive any
income from such Person and provided
that the relationship between such Person
and the Trust Fund is at arm's length,
all within the meaning of Treasury
Regulations Section 1.856-4(b)(5), or (ii)
any other Person (including the Master
Servicer) if the Trustee has received an
Opinion of Counsel, which Opinion of
Counsel shall be an expense of the Trust
Fund, to the effect that the taking of any
action in respect of any REO Property
by such Person, subject to any conditions
therein specified, that is otherwise
herein contemplated to be taken by an
Independent Contractor will not cause such
REO Property to cease to qualify as
"foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined
without regard to the exception
applicable for purposes of Section 860D(a)
of the Code), or cause any income
realized in respect of such REO Property to
fail to qualify as Rents from Real
Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and
with
respect to each related Adjustment Date,
the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any
Certificate of a Class other than a Class
CE, Class P or Class R Certificate,
the amount designated "Initial Certificate
Principal Balance" on the face
thereof.
"Initial Overcollateralization Amount": $3,986,445.89.
"Insurance Proceeds": Proceeds of any title policy, hazard policy
or
other insurance policy covering a Mortgage
Loan, to the extent such proceeds are
not to be applied to the restoration of the
related Mortgaged Property or
released to the Mortgagor in accordance
with the procedures that the Master
Servicer would follow in servicing mortgage
loans held for its own account,
subject to the terms and conditions of the
related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date
and
(i) the Offered Certificates, the period
from the preceding Distribution Date to
the day prior to the current Distribution
Date (or, in the case of the first
Distribution Date, the period from the
Closing Date through February 24, 2004),
and (ii) the Class B Certificates, the
calendar month immediately preceding the
month in which such Distribution Date
occurs.
"Interest Carry Forward Amount": For any Class of Certificates
(other than the Class CE, Class P and Class
R Certificates) and any Distribution
Date, the sum of (a) the excess, if any, of
the Accrued Certificate Interest and
any Interest Carry Forward Amount for the
prior Distribution Date, over the
amount in respect of interest actually
distributed on such Class on such prior
Distribution Date and (b) interest on such
excess at the applicable Certificate
Interest Rate (x) with respect to the
Offered Certificates, for the actual
number of days elapsed on the basis of a
360-day year since the prior
Distribution Date, and (y) with respect to
the Class B Certificates, on the
basis of a 360-day year consisting of
twelve 30-day months.
"Interest Percentage": With respect to any Class of Certificates
and
any Distribution Date, the ratio (expressed
as a decimal carried to six places)
of the Accrued Certificate Interest for
such Class to the sum of the Accrued
Certificate Interest for all Classes, in
each case with respect to such
Distribution Date, without regard to Relief
Act Interest Shortfalls.
"Interest Remittance Amount": As of any Determination Date, the
sum
of the Group 1 Interest Remittance Amount
and the Group 2 Interest Remittance
Amount.
"Late Collections": With respect to any Mortgage Loan, all
amounts
received subsequent to the Determination
Date immediately following any related
Collection Period, whether as late payments
of Monthly Payments or as Insurance
Proceeds, Condemnation Proceeds,
Liquidation Proceeds or otherwise, which
represent late payments or collections of
principal and/or interest due (without
regard to any acceleration of payments
under the related Mortgage and Mortgage
Note) but delinquent on a contractual basis
for such Collection Period and not
previously recovered.
"LIBOR Business Day": Any day on which banks in London, England
and
The City of New York are open and
conducting transactions in foreign currency
and exchange.
"LIBOR Determination Date": With respect to the Offered
Certificates, (i) for the first
Distribution Date, the second LIBOR Business Day
preceding the Closing Date and (ii) for
each subsequent Distribution Date, the
second LIBOR Business Day prior to the
immediately preceding Distribution Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the
Master Servicer has determined, in
accordance with the servicing procedures
specified herein, as of the end of the
related Prepayment Period, that all
Liquidation Proceeds, Condemnation Proceeds
and Insurance Proceeds which it expects to
recover with respect to the
liquidation of the Mortgage Loan or
disposition of the related REO Property have
been recovered.
"Liquidation Proceeds": The amount (other than amounts received
in
respect of the rental of any REO Property
prior to REO Disposition) received by
the Master Servicer in connection with (i)
the taking of all or a part of a
Mortgaged Property by exercise of the power
of eminent domain or condemnation or
(ii) the liquidation of a defaulted
Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise.
"Liquidation Report": The report with respect to a Liquidated
Mortgage Loan in such form as is agreed to
by the Master Servicer and the
Trustee listing (i) the sale price of the
related Mortgaged Property or amount
of the REO Disposition, (ii) the amount of
any Realized Loss (or gain) with
respect to such Liquidated Mortgage Loan,
(iii) the expenses relating to the
liquidation of such Liquidated Mortgage
Loan and (iv) such other information as
is agreed to by the Master Servicer and the
Trustee.
"Loan Group": Any of Loan Group 1 or Loan Group 2.
"Loan Group 1": The Group 1 Mortgage Loans.
"Loan Group 2": The Group 2 Mortgage Loans.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to
which
the original Mortgage Note has been
permanently lost or destroyed and has not
been replaced, an affidavit from the Seller
certifying that the original
Mortgage Note has been lost, misplaced or
destroyed (together with a copy of the
related Mortgage Note and indemnifying the
Trust against any loss, cost or
liability resulting from the failure to
deliver the original Mortgage Note) in
the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting
Rights.
"Majority Class CE Certificateholders": The Holders of Class CE
Certificates evidencing at least a 51%
Percentage Interest in the Class CE
Certificates.
"Marker Rate": With respect to the Class CE Certificates and
any
Distribution Date, a per annum rate equal
to two (2) times the weighted average
of the Uncertificated REMIC Pass-Through
Rates for REMIC 1 Regular Interest
LT1A1, REMIC 1 Regular Interest LT1A1A,
REMIC 1 Regular Interest LT1A2, REMIC 1
Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular Interest
LT1M3, REMIC 1 Regular Interest LT1M4,
REMIC 1 Regular Interest LT1M5, REMIC 1
Regular Interest LT1M6, REMIC 1 Regular
Interest LT1B and REMIC 1 Regular
Interest LT1ZZ, (i) with the rate on each
such REMIC Regular Interest (other
than REMIC 1 Regular Interest LT1ZZ)
subject to a cap equal to the Pass-Through
Rate of its Corresponding Class (taking
into account in determining any such
Pass-through Rate the imposition of the
Group 1 Cap, the Group 2 Cap or the Pool
Cap, as applicable, as described in
footnotes (1) through (9) to the table in
the Preliminary Statement relating to the
Certificates) for the purposes of this
calculation and (ii) with the rate on REMIC
1 Regular Interest LT1ZZ subject to
a cap of zero for the purpose of this
calculation; provided, however, that for
this purpose, calculations of the
Uncertificated REMIC 1 Pass-Through Rate and
the related caps with respect to each such
REMIC Regular Interest (other than
REMIC 1 Regular Interest LT1ZZ) shall be
multiplied by a fraction, the numerator
of which is the actual number of days in
the Interest Accrual Period and the
denominator of which is 30.
"Master Servicer": Option One Mortgage Corporation, a
California
corporation, or any successor servicer
appointed as herein provided, in its
capacity as Master Servicer hereunder.
"Maximum LT1ZZ Uncertificated Accrued Interest Deferral
Amount":
With respect to any Distribution Date, the
excess of (a) accrued interest at the
Uncertificated REMIC 1 Pass-Through Rate
applicable to REMIC 1 Regular Interest
LT1ZZ for such Distribution Date on a
balance equal to the Uncertificated
Principal Balance of REMIC 1 Regular
Interest LT1ZZ minus the REMIC 1
Overcollateralized Amount, in each case for
such Distribution Date, over (b)
Uncertificated Accrued Interest on REMIC 1
Regular Interest LT1A1, REMIC 1
Regular Interest LT1A1A, REMIC 1 Regular
Interest LT1A2, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1
Regular Interest LT1M5, REMIC 1 Regular
Interest LT1M6 and REMIC 1 Regular Interest
LT1B each subject to a cap equal to
the Pass-Through Rate of the related
Corresponding Class for the purpose of this
calculation; provided, however, that for
this purpose, calculations of the
Uncertificated REMIC 1 Pass-Through Rate
and the related caps with respect to
Uncertificated Accrued Interest on REMIC 1
Regular Interest LT1A1, REMIC 1
Regular Interest LT1A1A, REMIC 1 Regular
Interest LT1A2, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1
Regular Interest LT1M5 and REMIC 1
Regular Interest LT1M6 shall be multiplied
by a fraction, the numerator of which
is the actual number of days in the
Interest Accrual Period and the denominator
of which is 30.
"Maximum Mortgage Interest Rate": With respect to each
Adjustable-Rate Mortgage Loan, the
percentage set forth in the related Mortgage
Note as the maximum Mortgage Interest Rate
thereunder.
"Minimum Mortgage Interest Rate": With respect to each
Adjustable-Rate Mortgage Loan, the
percentage set forth in the related Mortgage
Note as the minimum Mortgage Interest Rate
thereunder.
"Monthly Excess Cashflow Amount": The sum of the Monthly Excess
Interest Amount, the Overcollateralization
Release Amount and (without
duplication) any portion of the Principal
Distribution Amount remaining after
principal distributions on the Offered
Certificates and the Class B
Certificates.
"Monthly Excess Interest Amount": With respect to each
Distribution
Date, the amount, if any, by which the
Interest Remittance Amount for such
Distribution Date exceeds the aggregate
amount distributed on such Distribution
Date pursuant to paragraphs (i) through
(xii) under Section 4.01.
"Monthly Form 8-K": As defined in Section 3.31(a) hereof.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled
monthly payment of principal and interest
on such Mortgage Loan which is payable
by the related Mortgagor from time to time
under the related Mortgage Note,
determined: (a) after giving effect to (i)
any Deficient Valuation and/or Debt
Service Reduction with respect to such
Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the
related Mortgagor pursuant to the
Relief Act or similar state laws; (b)
without giving effect to any extension
granted or agreed to by the Master Servicer
pursuant to Section 3.01; and (c) on
the assumption that all other amounts, if
any, due under such Mortgage Loan are
paid when due.
"Moody's": Moody's Investors Service, Inc., and its successors,
and
if such company shall for any reason no
longer perform the functions of a
securities rating agency, "Moody's" shall
be deemed to refer to any other
"nationally recognized statistical rating
organization" as set forth on the most
current list of such organizations released
by the Securities and Exchange
Commission.
"Mortgage": The mortgage, deed of trust or other instrument
creating
a first or second lien on, or first or
second priority security interest in, a
Mortgaged Property securing a Mortgage
Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan
and any additional documents required
to be added to the Mortgage File pursuant
to this Agreement.
"Mortgage Interest Rate": With respect to each Mortgage Loan,
the
annual rate at which interest accrues on
such Mortgage Loan from time to time in
accordance with the provisions of the
related Mortgage Note, which rate (i) in
the case of each Fixed-Rate Mortgage Loan
shall remain constant at the rate set
forth in the applicable Mortgage Loan
Schedule as the Mortgage Interest Rate in
effect immediately following the Cut-off
Date and (ii) in the case of each
Adjustable-Rate Mortgage Loan (A) as of any
date of determination until the
first Adjustment Date following the Cut-off
Date shall be the rate set forth in
the applicable Mortgage Loan Schedule as
the Mortgage Interest Rate in effect
immediately following the Cut-off Date and
(B) as of any date of determination
thereafter shall be the rate as adjusted on
the most recent Adjustment Date, to
equal the sum, rounded as provided in the
Mortgage Note, of the Index,
determined as set forth in the related
Mortgage Note, plus the related Gross
Margin subject to the limitations set forth
in the related Mortgage Note. With
respect to each Mortgage Loan that becomes
an REO Property, as of any date of
determination, the annual rate determined
in accordance with the immediately
preceding sentence as of the date such
Mortgage Loan became an REO Property.
"Mortgage Loan": Each mortgage loan transferred and assigned to
the
Trustee pursuant to Section 2.01 or Section
2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage
Loans so held being identified in the
Mortgage Loan Schedules.
"Mortgage Loan Purchase Agreement": The agreement between the
Seller
and the Depositor, dated as of January 1,
2004, regarding the transfer of the
Mortgage Loans by the Seller to or at the
direction of the Depositor.
"Mortgage Loan Schedule": As of any date with respect to the
Mortgage Loans, the lists of such Mortgage
Loans included in the Trust Fund on
such date, separately identifying the
Fixed-Rate Mortgage Loans and the
Adjustable-Rate Mortgage Loans, attached
hereto as Exhibits D-1 and D-2. The
Mortgage Loan Schedules shall set forth the
following information with respect
to each Mortgage Loan:
(1) the
Mortgage Loan identifying number;
(2) the
state and zip code of the Mortgaged Property;
(3) the
type of Residential Dwelling constituting the Mortgaged
Property;
(4) the
occupancy status of the Mortgaged Property at origination;
(5) the
original months to maturity;
(6) the
date of origination;
(7) the
first payment date;
(8) the
stated maturity date;
(9) the
stated remaining months to maturity;
(10) the
original principal amount of the Mortgage Loan;
(11) the
Principal Balance of each Mortgage Loan as of the Cut-off Date;
(12) the
Mortgage Interest Rate of the Mortgage Loan as of the Cut-off
Date;
(13) the
current principal and interest payment of the Mortgage Loan as
of
the Cut-off Date;
(14) the
contractual interest paid to date of the Mortgage Loan;
(15) the
Combined Loan-to-Value Ratio at origination and as of the
Cut-off
Date;
(16) a
code indicating the loan performance status of the Mortgage Loan
as
of the Cut-off Date;
(17) a
code indicating the Index that is associated with such Mortgage
Loan;
(18) the
Gross Margin;
(19) the
Periodic Rate Cap;
(20) the
Minimum Mortgage Interest Rate;
(21) the
Maximum Mortgage Interest Rate;
(22) a
code indicating whether the Mortgage Loan has a Prepayment
Charge
and the type of Prepayment Charge and the
term;
(23) the
first Adjustment Date immediately following the Cut-off Date;
(24) the
rate adjustment frequency;
(25) the
payment adjustment frequency;
(26) the
purpose of the Mortgage Loan; and
(27) a
code indicating whether the Mortgage Loan is a second lien.
The Mortgage Loan Schedules shall set forth the following
information, as of the Cut-off Date, with
respect to the Mortgage Loans in the
aggregate, for the Fixed-Rate Mortgage
Loans and for the Adjustable-Rate
Mortgage Loans: (1) the number of Mortgage
Loans; (2) the current Principal
Balance of the Mortgage Loans; (3) the
weighted average Mortgage Interest Rate
of the Mortgage Loans; and (4) the weighted
average maturity of the Mortgage
Loans. The Mortgage Loan Schedules shall be
amended from time to time in
accordance with the provisions of this
Agreement. With respect to any Eligible
Substitute Mortgage Loan, Cut-off Date
shall refer to the applicable date of
substitution.
"Mortgage Note": The original executed note or other evidence
of
indebtedness evidencing the indebtedness of
a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibits
D-1 and D-2 from time to time, and any REO
Properties acquired in respect
thereof.
"Mortgaged Property": The underlying property securing a
Mortgage
Loan, including any REO Property,
consisting of an Estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage
Loan or any other disposition of related
Mortgaged Property (including REO
Property) the related Liquidation Proceeds
net of unreimbursed Advances,
unreimbursed Servicing Advances, Servicing
Fees and any other accrued and unpaid
servicing fees received and retained in
connection with the liquidation of such
Mortgage Loan or Mortgaged Property.
"Net Maximum Mortgage Interest Rate": With respect to any
Adjustable-Rate Mortgage Loan, the
applicable Maximum Mortgage Interest Rate
minus the Expense Fee Rate.
"Net Mortgage Interest Rate": With respect to any Mortgage Loan,
the
Mortgage Interest Rate borne by such
Mortgage Loan minus the Expense Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf of
the
Trust, including any lease renewed or
extended on behalf of the Trust if the
Trust has the right to renegotiate the
terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in
respect of a Mortgage Loan that, in
the good faith business judgment of the
Master Servicer, will not or, in the
case of a proposed Advance or Servicing
Advance, would not be ultimately
recoverable from Late Collections on such
Mortgage Loan as provided herein.
"Notional Amount": With respect to the Class CE Certificates,
an
amount equal to the aggregate principal
balance of the REMIC 1 Regular
Interests.
"Offered Certificates": The Class A-1, Class A-1A, Class A-2,
Class
M-1, Class M-2, Class M-3, Class M-4, Class
M-5 and Class M-6 Certificates.
"Officers' Certificate": A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the
President, a vice president (however
denominated) or a principal, and by the
Treasurer, the Secretary, or one of the
assistant treasurers or assistant
secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.
"One-Month LIBOR": With respect to each Interest Accrual Period,
the
rate determined by the Trustee on the
related LIBOR Determination Date on the
basis of the offered rate for one-month
United States dollar deposits, as such
rate appears on the Telerate Page 3750, as
of 11:00 a.m. (London time) on such
LIBOR Determination Date. If no such
quotations are available on an LIBOR
Determination Date, One-Month LIBOR for the
related Interest Accrual Period will
be established by the Trustee as
follows:
(i) If on such LIBOR Determination Date two or more Reference
Banks
provide
such offered quotations, One-Month LIBOR for the related
Interest
Accrual
Period shall be the arithmetic mean of such offered quotations
(rounded
upwards if necessary to the nearest whole multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two
Reference
Banks
provide such offered quotations, One-Month LIBOR for the
related
Interest
Accrual Period shall be the arithmetic mean of the rates quoted
by one or
more major banks in New York City, selected by the Trustee
after
consultation with the Depositor, as of 11:00 A.M., New York City
time, on
such date
for loans in U.S. Dollars to leading European banks for a
period
of one
month in amounts approximately equal to the aggregate
Certificate
Principal
Balance of the Offered Certificates; and
(iii) If no such quotations can be obtained, One-Month LIBOR for
the
related
Interest Accrual Period shall be One-Month LIBOR for the prior
Distribution Date.
"Opinion of Counsel": A written opinion of counsel, who may,
without
limitation, be a salaried counsel for the
Depositor or the Master Servicer
except that any opinion of counsel relating
to (a) the qualification of any
REMIC as a REMIC or (b) compliance with the
REMIC Provisions must be an opinion
of Independent counsel.
"Optional Termination Date": The first Distribution Date on
which
the Majority Class CE Certificateholders
or, if such holder is the Seller or is
an affiliate of the Seller, the Master
Servicer, may opt to terminate the
Mortgage Pool pursuant to Section
10.01.
"Original Class Certificate Principal Balance": With respect to
each
Class of Certificates, the Certificate
Principal Balance thereof on the Closing
Date, as set forth opposite such Class in
the Preliminary Statement, except with
respect to (i) the Class P and Class R
Certificates, which have an Original
Class Certificate Principal Balance of zero
and (ii) the Class CE Certificates,
which, solely for REMIC purposes, have an
Original Class Certificate Principal
Balance equal to the Initial
Overcollateralization Amount.
"Originator": Option One Mortgage Corporation and its
successors.
"Originator Mortgage Loan Purchase Agreement": The Flow Sale
and
Servicing Agreement, dated as of April 15,
2003, as amended, by and among the
Seller, as purchaser, Option One Mortgage
Corporation and its affiliates, as
sellers.
"Originator Prepayment Charge Payment Amount": The amount payable
by
the Originator pursuant to Section 4.22 of
the Originator Mortgage Loan Purchase
Agreement in respect of certain Prepayment
Charges that are not collected from
the Mortgagor.
"Overcollateralization Amount": As of any Distribution Date,
the
excess, if any, of (x) the Pool Balance as
of the last day of the related
Collection Period over (y) the aggregate
Certificate Principal Balance of all
Classes of Offered Certificates and the
Class B Certificates (after taking into
account all distributions of principal on
such Distribution Date).
"Overcollateralization Deficiency": As of any Distribution Date,
the
excess, if any, of (x) the Targeted
Overcollateralization Amount for such
Distribution Date over (y) the
Overcollateralization Amount for such
Distribution Date, calculated for this
purpose after taking into account the
reduction on such Distribution Date of the
Certificate Principal Balances of all
Classes of Offered Certificates and the
Class B Certificates resulting from the
distribution of the Principal Distribution
Amount (but not the Extra Principal
Distribution Amount) on such Distribution
Date, but prior to taking into account
any Applied Realized Loss Amounts on such
Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date
on which a Trigger Event is not in
effect, the excess, if any, of (i) the
Overcollateralization Amount for such
Distribution Date, assuming that 100% of
the Principal Remittance Amount is
applied as a principal payment on the
Offered Certificates and the Class B
Certificates on such Distribution Date,
over (ii) the Targeted
Overcollateralization Amount for such
Distribution Date. With respect to any
Distribution Date on which a Trigger Event
is in effect, the
Overcollateralization Release Amount will
be zero.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate,
including any interest in such
Certificate as the Holder thereof and any
other interest therein, whether direct
or indirect, legal or beneficial, as owner
or as pledgee.
"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate,
the
Class A-1A Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class M-1
Pass-Through Rate, the Class M-2
Pass-Through Rate, the Class M-3 Pass-Through
Rate, the Class M-4 Pass-Through Rate, the
Class M-5 Pass-Through Rate, the
Class M-6 Pass-Through Rate and the Class B
Pass-Through Rate; and in the case
of any Regular Interest, the Pass-Through
Rate set forth in the definition
thereof.
With respect to the Class CE Certificates and any Distribution
Date,
a per annum rate equal to the percentage
equivalent of a fraction, the numerator
of which is the sum of the amounts
calculated pursuant to clauses (A) through
(K) below, and the denominator of which is
the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1AA, REMIC 1 Regular Interest
LT1A1, REMIC 1 Regular Interest LT1A1A,
REMIC 1 Regular Interest LT1A2, REMIC 1
Regular Interest LT1M1, REMIC 1 Regular
Interest LT1M2, REMIC 1 Regular Interest
LT1M3, REMIC 1 Regular Interest LT1M4,
REMIC 1 Regular Interest LT1M5, REMIC 1
Regular Interest LT1M6, REMIC 1 Regular
Interest LT1B and REMIC 1 Regular
Interest LT1ZZ. For purposes of calculating
the Pass-Through Rate for the Class
CE Certificates, the numerator is equal to
the sum of the following components:
(A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1AA minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1AA;
(B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A1 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A1;
(C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A1A minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A1A;
(D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1A2 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1A2;
(E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M1 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M1;
(F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M2 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M2;
(G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M3 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M3;
(H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M4 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M4;
(I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M5 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M5;
(J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1M6 minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1M6;
(K) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1B minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1B; and
(L) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular
Interest LT1ZZ minus the Marker Rate,
applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1
Regular Interest LT1ZZ.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other than
a
Class CE, Class P or Class R Certificate),
a fraction, expressed as a
percentage, the numerator of which is the
Initial Certificate Principal Balance,
as the case may be, represented by such
Certificate and the denominator of which
is the Original Class Certificate Principal
Balance of the related Class. With
respect to a Class CE or Class P
Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as
stated on the face of such Certificate;
provided, however, that the sum of all such
percentages for each such Class
totals 100%. With respect to the Class R
Certificate, 100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage
Loan and any Adjustment Date therefor, the
fixed percentage set forth in the
related Mortgage Note, which is the maximum
amount by which the Mortgage
Interest Rate for such Mortgage Loan may
increase or decrease (without regard to
the Maximum Mortgage Interest Rate or the
Minimum Mortgage Interest Rate) on
such Adjustment Date from the Mortgage
Interest Rate in effect immediately prior
to such Adjustment Date.
"Permitted Transferee": Any transferee of a Class R Certificate
other than a Disqualified Organization, a
non-U.S. Person or a U.S. Person with
respect to whom income on the Class R
Certificate is attributable to a foreign
permanent establishment or fixed base,
within the meaning of an applicable
income tax treaty, of such Person or any
other U.S. Person.
"Person": Any individual, corporation, partnership, joint
venture,
association, joint stock company, trust,
limited liability company,
unincorporated organization or government
or any agency or political subdivision
thereof.
"Pool Balance": As of any date of determination, the aggregate
Principal Balance of the Mortgage
Loans.
"Pool Cap": As of any Distribution Date, a per annum rate,
adjusted
by multiplying such rate by a fraction
equal to 30 over the actual number of
days in the related Interest Accrual
Period, equal to the weighted average of
the Group 1 Cap and the Group 2 Cap,
weighted on the basis of the related Group
Subordinate Amount. For federal income tax
purposes, the economic equivalent of
such rate shall be expressed as the
weighted average of the REMIC 1 Remittance
Rate on (a) REMIC 1 Regular Interest
LT1SUB, subject to a cap and floor equal to
the Weighted Average Net Mortgage Interest
Rates of the Group 1 Mortgage Loans
and (b) REMIC 1 Regular Interest LT2SUB,
subject to a cap and floor equal to the
Weighted Average Net Mortgage Interest
Rates of the Group 2 Mortgage Loans,
weighted on the basis of the Uncertificated
Balance of such REMIC 1 Regular
Interest.
"Pool Maximum Rate Cap": With respect to any Distribution Date
and
for the Class M Certificates, a per annum
rate, adjusted by multiplying such
rate by a fraction equal to 30 over the
actual number of days in the related
Interest Accrual Period, equal to the
weighted average of the Group 1 Maximum
Rate Cap and the Group 2 Maximum Rate Cap,
weighted on the basis of the related
Group Subordinate Amount.
"Prepayment Charge": With respect to any Prepayment Period, any
prepayment premium, penalty or charge
collected by the Master Servicer from a
Mortgagor in connection with any voluntary
Principal Prepayment in full pursuant
to the terms of the related Mortgage Note
as from time to time held as a part of
the Trust Fund, the Prepayment Charges so
held being identified in the Mortgage
Loan Schedules (other than any Originator
Prepayment Charge Payment Amount or
Servicer Prepayment Charge Payment
Amount).
"Prepayment Interest Excess": With respect to any Distribution
Date,
for each Mortgage Loan that was the subject
of a Principal Prepayment in full
during the portion of the related
Prepayment Period beginning on the first day
of the calendar month in which such
Distribution Date occurs through the
Determination Date of the calendar month in
which such Distribution Date occurs,
an amount equal to interest (to the extent
received) at the applicable Mortgage
Interest Rate (net of the Servicing Fee
Rate) on the amount of such Principal
Prepayment for the number of days
commencing on the first day of the calendar
month in which such Distribution Date
occurs and ending on the date on which
such prepayment is so applied.
"Prepayment Interest Shortfall": With respect to any
Distribution
Date, for each Mortgage Loan that was the
subject of a Principal Prepayment in
full during the portion of the related
Prepayment Period occurring in the prior
calendar month that was applied by the
Master Servicer to reduce the outstanding
Principal Balance of such Mortgage Loan on
a date preceding the related Due
Date, an amount equal to interest at the
applicable Mortgage Interest Rate (net
of the Servicing Fee Rate) on the amount of
such Principal Prepayment for the
number of days commencing on the date on
which the Principal Prepayment is
applied and ending on the last day of the
calendar month in which applied.
"Prepayment Period": With respect to any Distribution Date, the
period commencing on the day after the
Determination Date in the calendar month
preceding the calendar month in which such
Distribution Date occurs (or, in the
case of the first Distribution Date, on
January 1, 2004) and ending on the
Determination Date in the calendar month in
which such Distribution Date occurs.
"Principal Balance": As to any Mortgage Loan and any day, other
than
a Liquidated Mortgage Loan, the related
Cut-off Date Principal Balance, minus
the sum of (i) all collections and other
amounts credited against the principal
balance of any such Mortgage Loan, (ii) the
principal portion of Advances, (iii)
any Deficient Valuation and (iv) any
principal reduction resulting from a
Servicer Modification. For purposes of this
definition, a Liquidated Mortgage
Loan shall be deemed to have a Principal
Balance equal to the Principal Balance
of the related Mortgage Loan as of the
final recovery of related Liquidation
Proceeds and a Principal Balance of zero
thereafter. As to any REO Property and
any day, the Principal Balance of the
related Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property
minus any REO Principal Amortization
received with respect thereto on or prior
to such day.
"Principal Distribution Amount": As to any Distribution Date,
the
sum of (i) the Principal Remittance Amount
minus the Overcollateralization
Release Amount, if any, and (ii) the Extra
Principal Distribution Amount, if
any.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is
received in advance of its scheduled Due
Date and which is not accompanied by an
amount of interest representing the full
amount of scheduled interest due on any Due
Date in any month or months
subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution
Date, to the extent of funds available
therefor, the sum (less amounts available
for reimbursement of Advances and Servicing
Advances pursuant to Section 3.05
and expenses reimbursable pursuant to
Section 6.03) of: (i) each payment of
principal on a Mortgage Loan due during the
related Collection Period and
received by the Master Servicer on or prior
to the related Determination Date,
and any Advances with respect thereto, (ii)
all full and partial Principal
Prepayments received by the Master Servicer
during the related Prepayment
Period, (iii) Insurance Proceeds and Net
Liquidation Proceeds allocable to
principal actually collected by the Master
Servicer during the related
Prepayment Period, (iv) with respect to
Defective Mortgage Loans repurchased
with respect to such Prepayment Period, the
portion of the Purchase Price
allocable to principal, (v) any
Substitution Adjustment Amounts received during
the related Prepayment Period and (vi) on
the Distribution Date on which the
Trust is to be terminated in accordance
with Section 10.01 hereof, that portion
of the Termination Price in respect of
principal.
"Private Certificates": Any of the Class B, Class CE, Class P
and
Class R Certificates.
"Prospectus Supplement": That certain Prospectus Supplement
dated
January 28, 2004 relating to the public
offering of the Offered Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property
to be purchased pursuant to or as
contemplated by Section 2.03 or 10.01, an
amount equal to the sum of (i) 100% of the
Principal Balance thereof as of the
date of purchase (or such other price as
provided in Section 10.01), (ii) in the
case of a Mortgage Loan, accrued interest
on such Principal Balance at the
applicable Mortgage Interest Rate in effect
from time to time from the Due Date
as to which interest was last covered by a
payment by the Mortgagor or an
Advance by the Master Servicer, which
payment or Advance had as of the date of
purchase been distributed pursuant to
Section 4.01, through the end of the
calendar month in which the purchase is to
be effected, (iii) any unreimbursed
Servicing Advances and Advances and any
unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the
Collection Account in respect of such
Mortgage Loan or REO Property pursuant to
Section 3.13 and (v) in the case of a
Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses
reasonably incurred or to be incurred by the
Master Servicer or the Trustee in respect
of the breach or defect giving rise to
the purchase obligation.
"Rating Agency or Rating Agencies": Fitch, Moody's and S&P, or
their
respective successors. If such agencies or
their successors are no longer in
existence, "Rating Agencies" shall be such
nationally recognized statistical
rating organizations as set forth on the
most current list of such organizations
released by the Securities and Exchange
Commission and designated by the
Depositor, notice of which designation
shall be given to the Trustee and the
Master Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan,
the
amount by which the remaining unpaid
principal balance of the Mortgage Loan
exceeds the amount of Net Liquidation
Proceeds applied to the principal balance
of the related Mortgage Loan. With respect
to any Mortgage Loan, a Deficient
Valuation or a reduction in the Principal
Balance thereof resulting from a
Servicer Modification.
"Realized Loss Amortization Amount": Any of the Class A-1A
Realized
Loss Amortization Amount, the Class M-1
Realized Loss Amortization Amount, the
Class M-2 Realized Loss Amortization
Amount, the Class M-3 Realized Loss
Amortization Amount, the Class M-4 Realized
Loss Amortization Amount, the Class
M-5 Realized Loss Amortization Amount, the
Class M-6 Realized Loss Amortization
Amount and the Class B Realized Loss
Amortization Amount.
"Record Date": With respect to all of the Certificates (other
than
the Private Certificates), the Business Day
immediately preceding such
Distribution Date; provided, however, that
if any such Certificate becomes a
Definitive Certificate, the Record Date for
such Certificate shall be the last
Business Day of the month immediately
preceding the month in which the related
Distribution Date occurs. With respect to
the Private Certificates, the last
Business Day of the month immediately
preceding the month in which the related
Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not
controlling, under the control of or under
common control with the Depositor or the
Trustee, (iii) whose quotations appear
on the Telerate Page 3750 on the relevant
LIBOR Determination Date and (iv)
which have been designated as such by the
Trustee; provided, however, that if
fewer than two of such banks provide a
One-Month LIBOR rate, then any leading
banks selected by the Trustee which are
engaged in transactions in United States
dollar deposits in the international
Eurocurrency market.
"Regular Certificate": Any of the Offered Certificates, the Class
B
Certificates and the Class CE
Certificates.
"Reimbursement Amount": With respect to any Mortgage Loan, any
costs
or damages incurred by the Trust in
connection with a breach of the Originator's
representation set forth in Section 3.03(i)
of the Originator Mortgage Loan
Purchase Agreement.
"Related Documents": With respect to any Mortgage Loan, the
related
Mortgage Notes, Mortgages and other related
documents.
"Relief Act": The Servicemembers Civil Relief Act, as it may be
amended from time to time.
"Relief Act Interest Shortfall": With respect to any
Distribution
Date, for any Mortgage Loan with respect to
which there has been a reduction in
the amount of interest collectible thereon
for the most recently ended
Collection Period as a result of the
application of the Relief Act or similar
state laws, the amount by which (i)
interest collectible on such Mortgage Loan
during such Collection Period is less than
(ii) one month's interest on the
Principal Balance of such Mortgage Loan at
the Mortgage Interest Rate for such
Mortgage Loan before giving effect to the
application of the Relief Act or
similar state laws.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC 1 Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a)
the product of (i) 50% of the sum of
the aggregate Principal Balance of the
Mortgage Loans and related REO Properties
then outstanding and (ii) the
Uncertificated REMIC 1 Pass-Through Rate for REMIC
1 Regular Interest LT1AA minus the Marker
Rate, divided by (b) 12.
"REMIC 1 Marker Allocation Percentage": 50% of any amount
payable
from or loss attributable to the Mortgage
Loans, which shall be allocated to
REMIC 1 Regular Interest LT1AA, REMIC 1
Regular Interest LT1A1, REMIC 1 Regular
Interest LT1A1A, REMIC 1 Regular Interest
LT1A2, REMIC 1 Regular Interest LT1M1,
REMIC 1 Regular Interest LT1M2, REMIC 1
Regular Interest LT1M3, REMIC 1 Regular
Interest LT1M4, REMIC 1 Regular Interest
LT1M5, REMIC 1 Regular Interest LT1M6,
REMIC 1 Regular Interest LT1B and REMIC 1
Regular Interest LT1ZZ.
"REMIC 1 Overcollateralization Target Amount": 0.50% of the
Targeted
Overcollateralization Amount.
"REMIC 1 Overcollateralized Amount": With respect to any date
of
determination, (i) 0.50% of the aggregate
Uncertificated Principal Balances of
the REMIC 1 Regular Interests minus (ii)
the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest
LT1A1A, REMIC 1 Regular Interest LT1A2,
REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1M4, REMIC 1 Regular Interest LT1M5,
REMIC 1 Regular Interest LT1M6 and REMIC
1 Regular Interest LT1B, in each case as of
such date of determination.
"REMIC 1 Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a)
the product of (i) 50% of the
aggregate Principal Balance of the Mortgage
Loans and related REO Properties
then outstanding and (ii) 1 minus a
fraction, the numerator of which is two
times the aggregate of the Uncertificated
Principal Balances of REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest
LT1A1A, REMIC 1 Regular Interest LT1A2,
REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1M4, REMIC 1 Regular Interest LT1M5,
REMIC 1 Regular Interest LT1M6 and REMIC 1
Regular Interest LT1B and the
denominator of which is the aggregate of
the Uncertificated Principal Balances
of REMIC 1 Regular Interest LT1A1, REMIC 1
Regular Interest LT1A1A, REMIC 1
Regular Interest LT1A2, REMIC 1 Regular
Interest LT1M1, REMIC 1 Regular Interest
LT1M2, REMIC 1 Regular Interest LT1M3,
REMIC 1 Regular Interest LT1M4, REMIC 1
Regular Interest LT1M5, REMIC 1 Regular
Interest LT1M6, REMIC 1 Regular Interest
LT1B and REMIC 1 Regular Interest
LT1ZZ.
"REMIC 1 Regular Interest LT1AA": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1AA
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1A1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A1
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1A1A": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A1A
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance asset forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1A2": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1A2
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance asset forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1M1": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M1
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance as set forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interest LT1M2": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M2
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M3": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M3
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M4": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M4
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M5": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M5
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1M6": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1M6
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1B": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1B shall
accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1SUB": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1SUB
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1GRP": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1GRP
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2SUB": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT2SUB
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT2GRP": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT2GRP
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1XX": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1XX
shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto.
"REMIC 1 Regular Interest LT1ZZ": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. REMIC 1 Regular Interest LT1ZZ
shall accrue interest at the related
Uncertificated REMIC 1 Pass- Through Rate
in effect from time to time, and shall be
entitled to distributions of
principal, subject to the terms and
conditions hereof, in an aggregate amount
equal to its initial Uncertificated
Principal Balance as set forth in the
Preliminary Statement hereto.
"REMIC 1 Regular Interests": REMIC 1 Regular Interest LT1AA, REMIC
1
Regular Interest LT1A1, REMIC 1 Regular
Interest LT1A1A, REMIC 1 Regular
Interest LT1A2, REMIC 1 Regular Interest
LT1M1, REMIC 1 Regular Interest LT1M2,
REMIC 1 Regular Interest LT1M3, REMIC 1
Regular Interest LT1M4, REMIC 1 Regular
Interest LT1M5, REMIC 1 Regular Interest
LT1M6, REMIC 1 Regular Interest LT1B,
REMIC 1 Regular Interest LT1SUB, REMIC 1
Regular Interest LT1GRP, REMIC 1
Regular Interest LT2SUB, REMIC 1 Regular
Interest LT2GRP, REMIC 1 Regular
Interest LT1XX and REMIC 1 Regular Interest
LT1ZZ.
"REMIC 1 Sub WAC Allocation Percentage": 50% of any amount
payable
or loss attributable from the Mortgage
Loans, which shall be allocated to REMIC
1 Regular Interest LT1SUB, REMIC 1 Regular
Interest LT1GRP, REMIC 1 Regular
Interest LT2SUB, REMIC 1 Regular Interest
LT2GRP and REMIC 1 Regular Interest
LT1XX.
"REMIC 1 Subordinated Balance Ratio": The ratio among the
Uncertificated Principal Balances of each
REMIC 1 Regular Interest ending with
the designation "SUB," equal to the ratio
among, with respect to each such REMIC
1 Regular Interest, the excess of (x) the
aggregate Principal Balance of the
Mortgage Loans in the related Loan Group
over (y) the current Certificate
Principal Amount of the Class A
Certificates in the related Loan Group.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment
conduits which appear at Section
860A through 860G of Subchapter M of
Chapter 1 of the Code, and related
provisions, and regulations and rulings
promulgated thereunder, as the foregoing
may be in effect from time to time.
"REMIC Regular Interest": Any REMIC 1 Regular Interest or any of
the
Certificates (other than the Class P and
Class R Certificates).
"Remittance Report": A report prepared by the Master Servicer
and
delivered to the Trustee pursuant to
Section 4.07, containing the information
attached hereto as Exhibit M.
"Rents from Real Property": With respect to any REO Property,
gross
income of the character described in
Section 856(d) of the Code.
"REO Disposition": The sale or other disposition of an REO
Property
on behalf of the Trust.
"REO Imputed Interest": As to any REO Property, for any
Collection
Period, an amount equivalent to interest
(at the Net Mortgage Interest Rate that
would have been applicable to the related
Mortgage Loan had it been outstanding)
for such Collection Period on the unpaid
Principal Balance of the Mortgage Loan
as of the date of acquisition.
"REO Principal Amortization": With respect to any REO Property,
for
any calendar month, the aggregate of all
amounts received in respect of such REO
Property during such calendar month,
whether in the form of rental income, sale
proceeds (including, without limitation,
that portion of the Termination Price
paid in connection with a purchase of all
of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that
is allocable to such REO Property) or
otherwise, net of any portion of such
amounts (i) payable pursuant to Section
3.13 in respect of the proper operation,
management and maintenance of such REO
Property or (ii) payable or reimbursable to
the Master Servicer pursuant to
Section 3.13 for unpaid Servicing Fees in
respect of the related Mortgage Loan
and unreimbursed Servicing Advances and
Advances in respect of such REO Property
or the related Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Master
Servicer
on behalf of the Trust through foreclosure
or deed-in-lieu of foreclosure, as
described in Section 3.13.
"Request for Release": A release signed by a Servicing Officer,
in
the form of Exhibit E attached hereto.
"Reserve Account": The trust account created and maintained by
the
Trustee pursuant to Section 3.04(g) which
shall be entitled "Reserve Account,
Wells Fargo Bank, National Association, as
Trustee, in trust for registered
Holders of ABFC 2004-OPT1 Trust, ABFC
Asset-Backed Certificates, Series
2004-OPT1" and which must be an Eligible
Account. Amounts on deposit in the
Reserve Account shall not be invested. The
Reserve Account shall not be an asset
of any REMIC formed under this
Agreement.
"Residential Dwelling": Any one of the following: (i) a
detached
one-family dwelling, (ii) a detached two-
to four-family dwelling, (iii) a
one-family dwelling unit in a Fannie Mae
eligible condominium project, (iv) a
manufactured home, or (v) a detached
one-family dwelling in a planned unit
development, none of which is a
co-operative or mobile home.
"Residual Interest": The sole Class of "residual interests" in
each
REMIC within the meaning of Section
860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any
officer assigned to the Corporate Trust
Division (or any successor thereto),
including any Vice President, Assistant
Vice President, Trust Officer, any
Assistant Secretary, any trust officer or
any other officer of the Trustee
customarily performing functions similar to
those performed by any of the above
designated officers and in each case having
direct responsibility for the
administration of this Agreement.
"S&P": Standard & Poor's, a division of The McGraw-Hill
Companies,
Inc., and its successors, and if such
company shall for any reason no longer
perform the functions of a securities
rating agency, "S&P" shall be deemed to
refer to any other "nationally recognized
statistical rating organization" as
set forth on the most current list of such
organizations released by the
Securities and Exchange Commission.
"Seller": Bank of America, N.A., or its successor in interest,
in
its capacity as seller under the Mortgage
Loan Purchase Agreement.
"Senior Certificates": The Class A-1, Class A-1A and Class A-2
Certificates.
"Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum
of (i) the aggregate Certificate
Principal Balance of the Subordinated
Certificates and (ii) the
Overcollateralization Amount, in each case
after taking into account the
distribution of the Principal Distribution
Amount on such Distribution Date by
(y) the Pool Balance as of the last day of
the related Collection Period.
"Senior Principal Distribution Amount": For any Distribution
Date,
the sum of the Group 1 Senior Principal
Distribution Amount and the Group 2
Senior Principal Distribution Amount.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 41.00%.
"Servicer Event of Termination": One or more of the events
described
in Section 7.01.
"Servicer Modification": A modification to the terms of a
Mortgage
Loan, in accordance with the terms of
Section 3.01, as to which the Mortgagor is
in default or as to which, in the judgment
of the Master Servicer, default is
reasonably foreseeable.
"Servicer
Prepayment Charge Payment Amount": The amount payable by
the Master Servicer in respect of any
waived Prepayment Charges pursuant to
Section 3.01, which amount shall be equal
to the difference between the amount
of Prepayment Charge due by a Mortgagor
before any waiver and the actual amount
of the Prepayment Charge that was paid by
the Mortgagor.
"Servicer Remittance Date": With respect to any Distribution
Date,
one Business Day prior to such Distribution
Date.
"Servicing Advances": All customary, reasonable and necessary
"out
of pocket" costs and expenses incurred by
the Master Servicer (including
reasonable attorneys' fees and
disbursements) in the performance of its
servicing obligations, including, but not
limited to, the cost of (i) the
preservation, restoration, inspection and
protection of the Mortgaged Property,
(ii) any enforcement or judicial
proceedings, including foreclosures, (iii) the
management and liquidation of the REO
Property and (iv) compliance with the
obligations under Section 3.08.
"Servicing Fee": With respect to each Mortgage Loan (including
each
REO Property) and for any calendar month,
an amount equal to one month's
interest (or in the event of any payment of
interest which accompanies a
Principal Prepayment in full made by the
Mortgagor during such calendar month,
interest for the number of days covered by
such payment of interest) at the
Servicing Fee Rate on the same principal
amount on which interest on such
Mortgage Loan accrues for such calendar
month.
"Servicing Fee Rate": With respect to each Mortgage Loan, 0.30%
per
annum for the first 10 calendar months,
0.40% per annum for the 11th through
30th calendar months, 0.65% per annum for
the 31st through 48th calendar months,
and 0.80% per annum for all calendar months
thereafter.
"Servicing Officer": Any officer of the Master Servicer involved
in,
or responsible for, the administration and
servicing of Mortgage Loans, whose
name and specimen signature appear on a
list of servicing officers furnished by
the Master Servicer to the Trustee and the
Depositor on the Closing Date, as
such list may from time to time be
amended.
"Servicing Standard": The standards set forth in Section 3.01.
"Startup
Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms
of
the Certificates and this Agreement but
which is not remitted by the Master
Servicer because the Master Servicer is the
subject of a proceeding under the
Bankruptcy Code and the making of such
remittance is prohibited by Section 362
of the Bankruptcy Code.
"Stepdown Date": The earlier to occur of (i) the Distribution
Date
on which the aggregate Certificate
Principal Balance of the Class A Certificates
is reduced to zero and (ii) the later to
occur of (x) the Distribution Date in
February 2007 and (y) the Distribution Date
on which the Senior Enhancement
Percentage (after taking into account
distributions of principal on such
Distribution Date) is greater than or equal
to the Senior Specified Enhancement
Percentage.
"Subordinated Certificates": The Class M-1, Class M-2, Class
M-3,
Class M-4, Class M-5, Class M-6, Class B,
Class CE and Class R Certificates.
"Substitution Adjustment Amount": As defined in Section 2.03(d)
hereof.
"Targeted Overcollateralization Amount": As of any Distribution
Date, (x) prior to the Stepdown Date, 0.90%
of the Cut-off Date Aggregate
Principal Balance and (y) on and after the
Stepdown Date, (i) if a Trigger Event
has not occurred, the greater of (A) 1.80%
of the Pool Balance as of the last
day of the related Collection Period and
(B) 0.50% of the Cut-off Date Aggregate
Principal Balance and (ii) if a Trigger
Event has occurred, the Targeted
Overcollateralization Amount for the
immediately preceding Distribution Date.
"Tax Matters Person": The tax matters person appointed pursuant
to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal
Revenue
Service Form 1066, U.S. Real Estate
Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto,
Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net
Loss Allocation, or any successor
forms, to be filed on behalf of the Trust
for each of the two REMICs created
pursuant to this Agreement under the REMIC
Provisions, together with any and all
other information reports or returns that
may be required to be furnished to the
Certificateholders or filed with the
Internal Revenue Service or any other
governmental taxing authority under any
applicable provisions of federal, state
or local tax laws.
"Telerate Page 3750": The display page currently so designated
on
the Moneyline Telerate Service (or such
other page as may replace the Telerate
Page 3750 page on that service for the
purpose of displaying London interbank
offered rates of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Trigger Event": With respect to any Distribution Date, if (i)
the
three-month rolling average of 60+ Day
Delinquent Loans equals or exceeds 38.00%
of the Senior Enhancement Percentage or
(ii) the aggregate amount of Realized
Losses incurred since the Cut-off Date
through the last day of the related
Collection Period divided by the Cut-off
Date Aggregate Principal Balance
exceeds the applicable percentages set
forth below with respect to such
Distribution Date:
Distribution Date Occurring In
Percentage
----------------------------------
----------
February 2007 through January 2008
2.250%
February 2008 through January 2009
3.500%
February 2009 through January 2010
4.500%
February 2010 and thereafter
5.250%
"Trust": ABFC 2004-OPT1 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created
hereby and to be administered hereunder,
with respect to a portion of which two
REMIC elections are to be made, such
entire Trust Fund consisting of: (i) such
Mortgage Loans as from time to time
are subject to this Agreement, together
with the Mortgage Files relating
thereto, and together with all collections
thereon and proceeds thereof, (ii)
any REO Property, together with all
collections thereon and proceeds thereof,
(iii) the Trustee's rights with respect to
the Mortgage Loans under all
insurance policies required to be
maintained pursuant to this Agreement and any
proceeds thereof, (iv) the Depositor's
rights under the Originator Mortgage Loan
Purchase Agreement and the Mortgage Loan
Purchase Agreement (including any
security interest created thereby), (v) the
Trustee's rights under the Yield
Maintenance Agreement and (vi) the
Collection Account, the Distribution Account
and the Reserve Account and such assets
that are deposited therein from time to
time and any investments thereof, together
with any and all income, proceeds and
payments with respect thereto.
"Trustee": Wells Fargo Bank, National Association, a national
banking association, or any successor
Trustee appointed as herein provided.
"Trustee Fee": With respect to any Distribution Date, the product
of
(x) one-twelfth of the Trustee Fee Rate and
(y) the aggregate of the Principal
Balances of all Mortgage Loans as of the
opening of business on the first day of
the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date,
0.0085%
per annum.
"Uncertificated Accrued Interest": With respect to each REMIC 1
Regular Interest on each Distribution Date,
an amount equal to one month's
interest at the related Uncertificated
REMIC 1 Pass-Through Rate on the
Uncertificated Principal Balance of such
REMIC Regular Interest. In each case,
Uncertificated Accrued Interest will be
reduced by any Prepayment Interest
Shortfalls and Relief Act Interest
Shortfalls (allocated to such REMIC Regular
Interests based on their respective
entitlements to interest irrespective of any
Prepayment Interest Shortfalls and Relief
Act Interest Shortfalls for such
Distribution Date).
"Uncertificated Principal Balance": The amount of any REMIC 1
Regular Interest outstanding as of any date
of determination. As of the Closing
Date, the Uncertificated Balance of each
REMIC 1 Regular Interest shall equal
the amount set forth in the Preliminary
Statement hereto as its initial
uncertificated balance. On each
Distribution Date, the Uncertificated Principal
Balance of each REMIC 1 Regular Interest
shall be reduced by all distributions
of principal made on such REMIC 1 Regular
Interest on such Distribution Date
pursuant to Section 4.08 and, if and to the
extent necessary and appropriate,
shall be further reduced on such
Distribution Date by Realized Losses as
provided in Section 4.08(b). The
Uncertificated Balance of REMIC 1 Regular
Interest LT1ZZ shall be increased by
interest deferrals as provided in Section
4.08(a)(i). The Uncertificated Balance of
each REMIC 1 Regular Interest shall
never be less than zero.
"Uncertificated REMIC 1 Pass-Through Rate": With respect to REMIC
1
Regular Interest LT1AA, REMIC 1 Regular
Interest LT1A1, REMIC 1 Regular Interest
LT1A1A, REMIC 1 Regular Interest LT1A2,
REMIC 1 Regular Interest LT1M1, REMIC 1
Regular Interest LT1M2, REMIC 1 Regular
Interest LT1M3, REMIC 1 Regular Interest
LT1M4, REMIC 1 Regular Interest LT1M5,
REMIC 1 Regular Interest LT1M6, REMIC 1
Regular Interest LT1B, REMIC 1 Regular
Interest LT1ZZ, REMIC 1 Regular Interest
LT1SUB, REMIC 1 Regular Interest LT2SUB and
REMIC 1 Regular Interest LT1XX, the
Weighted Average Net Mortgage Rate of the
Mortgage Loans. With respect to REMIC
1 Regular Interest LT1GRP, the Weighted
Average Net Mortgage Rate of the Group 1
Mortgage Loans. With respect REMIC 1
Regular Interest LT2GRP, the Weighted
Average Net Mortgage Interest Rate of the
Group 2 Mortgage Loans.
"United States Person" or "U.S. Person": (i) A citizen or
resident
of the United States, (ii) a corporation,
partnership or other entity treated as
a corporation or partnership for United
States federal income tax purposes
organized in or under the laws of the
United States or any state thereof or the
District of Columbia (unless, in the case
of a partnership, Treasury Regulations
provide otherwise), (iii) an estate the
income of which is includible in gross
income for United States tax purposes,
regardless of its source, or (iv) a trust
if a court within the United States is able
to exercise primary supervision over
the administration of the trust and one or
more United States persons have
authority to control all substantial
decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided
in Treasury Regulations, certain
Trusts in existence on August 20, 1996, and
treated as United States persons
prior to such date, that elect to continue
to be treated as United States
persons will also be a U.S. Person;
provided, that for purposes of the
definition of a "Permitted Transferee," a
U.S. Person shall not include any
person whose income is attributable to a
foreign permanent establishment or
fixed base, within the meaning of an
applicable income tax treaty, of such
Person or any other U.S. Person.
"Unpaid Realized Loss Amount": For any Class A-1A, Class M-1,
Class
M-2, Class M-3, Class M-4, Class M-5, Class
M-6 and Class B Certificates and as
to any Distribution Date, the excess of (x)
the aggregate Applied Realized Loss
Amounts applied with respect to such Class
for all prior Distribution Dates over
(y) the aggregate Realized Loss
Amortization Amounts with respect to such Class
for all prior Distribution Dates.
"Value": With respect to any Mortgaged Property, the value
thereof
as determined by an independent appraisal
made at the time of the origination of
the related Mortgage Loan or the sale
price, if the appraisal is not available.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any
Certificate. The Voting Rights allocated
among Holders of the Offered Certificates
and the Class B Certificates shall be
98%, and shall be allocated among each such
Class according to the fraction,
expressed as a percentage, the numerator of
which is the aggregate Certificate
Principal Balance of all the Certificates
of such Class then outstanding and the
denominator of which is the aggregate
Certificate Principal Balance of all the
Offered Certificates and Class B
Certificates then outstanding. The Voting
Rights allocated to each such Class of
Certificates shall be allocated among all
holders of each such Class in proportion to
the outstanding Certificate
Principal Balance of such Certificates;
provided, however, that any Certificate
registered in the name of the Master
Servicer, the Depositor or the Trustee or
any of their respective affiliates shall
not be included in the calculation of
Voting Rights; provided that only such
Certificates as are known by a
Responsible Officer of the Trustee to be so
registered will be so excluded. 1%
of all the Voting Rights will be allocated
to the Holders of each of the Class
CE and Class P Certificates. The Class R
Certificates shall have no Voting
Rights.
"Weighted Average Net Mortgage Rate": The weighted average (based
on
Principal Balance as of the first day of
the related Collection Period or, in
the case of the first Distribution Date,
the Cut-Off Date) of the Net Mortgage
Interest Rates of the Mortgage Loans, the
Group 1 Mortgage Loans or the Group 2
Mortgage Loans, as applicable, expressed
for each such Mortgage Loan as an
annual rate and calculated on the basis of
twelve months consisting of 30 days
each and a 360-day year.
"Written Order to Authenticate": A written order by which the
Depositor directs the Trustee to execute,
authenticate and deliver the
Certificates.
"Yield Maintenance Agreement": The interest rate cap agreement
between the Trustee, on behalf of the
Trust, and the Yield Maintenance Agreement
Provider substantially in the form attached
hereto as Exhibit N. The Yield
Maintenance Agreement shall not be an asset
of any REMIC formed under this
Agreement.
"Yield Maintenance Agreement Payment": On each Distribution
Date
through the Distribution Date in October
2006, the amount equal to the product
of (a) the excess of the lesser of (i)
One-Month LIBOR and (ii) 8.93% over the
strike rate for such Distribution Date set
forth on the schedule attached to the
confirmation to the Yield Maintenance
Agreement for such Distribution Date, (b)
the product of the cap notional amount and
the scale factor, both as set forth
on the schedule attached to the
confirmation to the Yield Maintenance Agreement
for such Distribution Date and (c) a
fraction, the numerator of which is the
actual number of days elapsed since the
previous Distribution Date to but
excluding the current Distribution Date and
the denominator of which is 360.
"Yield Maintenance Agreement Provider": New York Branch of WestLB
AG
and any successor thereto.
Section
1.02 Accounting.
Unless otherwise specified herein, for the purpose of any
definition
or calculation, whenever amounts are
required to be netted, subtracted or added
or any distributions are taken into account
such definition or calculation and
any related definitions or calculations
shall be determined without duplication
of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and
otherwise convey to the Trustee, on
behalf of the Trust, without recourse for
the benefit of the Certificateholders
all the right, title and interest of the
Depositor, including any security
interest therein for the benefit of the
Depositor, in and to (i) each Mortgage
Loan identified on the Mortgage Loan
Schedules, including the related Cut-off
Date Principal Balance, all interest
accruing thereon after the Cut-off Date and
all collections in respect of interest and
principal due after the Cut-off Date;
(ii) property which secured each such
Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any
insurance policies in respect of the
Mortgage Loans; (iv) all other assets
included or to be included in the Trust
Fund; (v) all proceeds of any of the
foregoing; (vi) the rights of the Depositor
under the Consulting Agreement; and
(vii) the rights of the Depositor under the
Originator Mortgage Loan Purchase
Agreement and the Mortgage Loan Purchase
Agreement. Such assignment includes all
interest and principal due to the Depositor
or the Master Servicer after the
Cut-off Date with respect to the Mortgage
Loans.
In connection with such transfer and assignment, the Depositor
does
hereby deliver to, and deposit with the
Trustee, or its designated agent, the
following documents or instruments with
respect to each Mortgage Loan (a
"Mortgage File") so transferred and
assigned:
(i)
the original
Mortgage Note, endorsed in blank or with respect to any
lost Mortgage Note, an original Lost Note Affidavit, together with
a
copy of the related Mortgage Note;
(ii)
the original Mortgage
with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was
executed
pursuant to a power of attorney, with evidence of recording
thereon
or, if such Mortgage or power of attorney has been submitted
for
recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available,
a
copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original
submitted
for recording;
(iii) an
original Assignment of Mortgage, in form and substance
acceptable
for recording. The Mortgage shall be assigned in blank;
(iv)
an original copy of
any intervening assignment of Mortgage showing a
complete chain of assignments;
(v)
the original or
a certified copy of lender's title insurance policy;
and
(vi)
the original or copies
of each assumption, modification, written
assurance or substitution agreement, if any.
The Trustee agrees to execute and deliver to the Depositor on
or
prior to the Closing Date an acknowledgment
of receipt of the original Mortgage
Note (with any exceptions noted),
substantially in the form attached as Exhibit
F-3 hereto.
If any of the documents referred to in Section 2.01(ii), (iii)
or
(iv) above has as of the Closing Date been
submitted for recording but either
(x) has not been returned from the
applicable public recording office or (y) has
been lost or such public recording office
has retained the original of such
document, the obligations of the Depositor
to deliver such documents shall be
deemed to be satisfied upon (1) delivery to
the Trustee no later than the
Closing Date, of a copy of each such
document certified by the Seller in the
case of (x) above or the applicable public
recording office in the case of (y)
above to be a true and complete copy of the
original that was submitted for
recording and (2) if such copy is certified
by the Seller, delivery to the
Trustee, promptly upon receipt thereof of
either the original or a copy of such
document certified by the applicable public
recording office to be a true and
complete copy of the original. The
Depositor shall deliver or cause to be
delivered to the Trustee promptly upon
receipt thereof any other documents
constituting a part of a Mortgage File
received with respect to any Mortgage
Loan, including, but not limited to, any
original documents evidencing an
assumption or modification of any Mortgage
Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing
from, a Mortgage File, the Seller
shall have 120 days to cure such defect or
150 days following the Closing Date,
in the case of missing Mortgages or
Assignments or deliver such missing document
to the Trustee. If the Seller does not cure
such defect or deliver such missing
document within such time period, the
Seller shall either repurchase or
substitute for such Mortgage Loan in
accordance with Section 2.03.
The Depositor herewith delivers to the Trustee executed copies
of
the Originator Mortgage Loan Purchase
Agreement and the Mortgage Loan Purchase
Agreement.
It is agreed and understood by the parties hereto that it is
not
intended that any mortgage loan be included
in the Trust that is a "High-Cost
Home Loan" as defined in the New Jersey
Home Ownership Act effective November
27, 2003.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the
provisions
of Section 2.01 and subject to the review
described below and any exceptions
noted on the exception report described in
the next paragraph below, the
documents referred to in Section 2.01 above
and all other assets included in the
definition of "Trust Fund" and declares
that it holds and will hold such
documents and the other documents delivered
to it constituting a Mortgage File,
and that it holds or will hold all such
assets and such other assets included in
the definition of "Trust Fund" in trust for
the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders,
to
review each Mortgage File within 60 days
after the Closing Date (or, with
respect to any document delivered after the
Startup Day, within 60 days of
receipt and with respect to any Qualified
Substitute Mortgage, within 60 days
after the assignment thereof) and to
certify in substantially the form attached
hereto as Exhibit F-1 that, as to each
Mortgage Loan listed in the Mortgage Loan
Schedules (other than any Mortgage Loan
paid in full or any Mortgage Loan
specifically identified in the exception
report annexed thereto as not being
covered by such certification), (i) all
documents required to be delivered to it
pursuant to Section 2.01 of this Agreement
are in its possession, (ii) such
documents have been reviewed by it and have
not been mutilated, damaged or torn
and relate to such Mortgage Loan and (iii)
based on its examination and only as
to the foregoing, the information set forth
in the Mortgage Loan Schedules that
corresponds to items (1), (2), (3), (10)
and (22) of the Mortgage Loan Schedules
accurately reflects information set forth
in the Mortgage File. It is herein
acknowledged that, in conducting such
review, the Trustee is under no duty or
obligation to inspect, review or examine
any such documents, instruments,
certificates or other papers to determine
that they are genuine, enforceable, or
appropriate for the represented purpose or
that they have actually been recorded
or that they are other than what they
purport to be on their face.
Prior to the first anniversary date of this Agreement the
Trustee
shall deliver to the Depositor and the
Master Servicer a final certification in
the form annexed hereto as Exhibit F-2
evidencing the completeness of the
Mortgage Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the
certifications referred to above, the Trustee
finds any document or documents
constituting a part of a Mortgage File to be
missing or defective in any material
respect, at the conclusion of its review
the Trustee shall so notify the Seller, the
Depositor and the Master Servicer.
In addition, upon the discovery by the
Originator, the Seller, the Depositor,
the Trustee or the Master Servicer (or upon
receipt by the Trustee of written
notification of such breach) of a breach of
any of the representations and
warranties made by the Originator in the
Originator Mortgage Loan Purchase
Agreement or the Seller in the Mortgage
Loan Purchase Agreement in respect of
any Mortgage Loan which materially
adversely affects such Mortgage Loan or the
interests of the related Certificateholders
in such Mortgage Loan, the party
discovering such breach shall give prompt
written notice to the other parties.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a
sale of the Mortgage Loans and the
Related Documents, conveying good title
thereto free and clear of any liens and
encumbrances, from the Depositor to the
Trustee and that such property not be
part of the Depositor's estate or property
of the Depositor in the event of any
insolvency by the Depositor. In the event
that such conveyance is deemed to be,
or to be made as security for, a loan, the
parties intend that the Depositor
shall be deemed to have granted and does
hereby grant to the Trustee, on behalf
of the Trust, a first priority perfected
security interest in all of the
Depositor's right, title and interest in
and to the Mortgage Loans and the
Related Documents, and that this Agreement
shall constitute a security agreement
under applicable law.
The Trustee is hereby directed to execute and deliver, on behalf
of
the Trust, the Yield Maintenance
Agreement.
Section 2.03 Repurchase or Substitution of Mortgage Loans by
the
Originator or the Seller.
(a) Upon discovery or receipt of written notice of any
materially
defective document in, or that a document
is missing from, a Mortgage File or of
the breach by the Originator or the Seller
of any representation or warranty
under the Originator Mortgage Loan Purchase
Agreement or the Mortgage Loan
Purchase Agreement, as applicable, in
respect of any Mortgage Loan which
materially adversely affects the value of
such Mortgage Loan, Prepayment Charge
or the interest therein of the
Certificateholders, the Trustee shall promptly
notify the Originator or the Seller, as the
case may be, and the Master Servicer
of such defect, missing document or breach
and request that, in the case of a
defective or missing document, the Seller
cure such defect or deliver such
missing document within 120 days from the
date the Seller was notified of such
missing document or defect or, in the case
of a beach of a representation or
warranty, request the Originator or the
Seller, as applicable, cure such breach
within 90 days from the date the Originator
or the Seller, as the case may be,
was notified of such breach. If the Seller
does not deliver such missing
document or cure such defect or if the
Originator or the Seller, as applicable,
does not cure such breach in all material
respects during such period, the
Trustee shall enforce the Originator's or
the Seller's obligation, as the case
may be, under the Originator Mortgage Loan
Purchase Agreement or the Mortgage
Loan Purchase Agreement, as applicable, and
cause the Originator or the Seller,
as applicable, to repurchase such Mortgage
Loan from the Trust Fund at the
Purchase Price on or prior to the
Determination Date following the expiration of
such period (subject to Section 2.03(d)).
The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the
Collection Account, and the Trustee,
upon receipt of written notice from the
Master Servicer of such deposit, shall
release to the Originator or the Seller, as
applicable, the related Mortgage
File and shall execute and deliver such
instruments of transfer or assignment,
in each case without recourse, as the
Originator or the Seller, as applicable,
shall furnish to it and as shall be
necessary to vest in the Originator or the
Seller, as the case may be, any Mortgage
Loan released pursuant hereto and the
Trustee shall have no further
responsibility with regard to such Mortgage File.
In lieu of repurchasing any such Mortgage
Loan as provided above, the Originator
or the Seller, as the case may be, may
cause such Mortgage Loan to be removed
from the Trust Fund (in which case it shall
become a Defective Mortgage Loan)
and substitute one or more Eligible
Substitute Mortgage Loans in the manner and
subject to the limitations set forth in
Section 2.03(c).
With respect to the representations and warranties set forth in
the
Originator Mortgage Loan Purchase Agreement
and the Mortgage Loan Purchase
Agreement that are made to the best of the
Originator's or the Seller's
knowledge, as applicable, or as to which
the Originator or the Seller, as the
case may be, has no knowledge, if it is
discovered by the Depositor, the Master
Servicer or the Trustee that the substance
of such representation and warranty
is inaccurate and such inaccuracy
materially and adversely affects the value of
the related Mortgage Loan, Prepayment
Charge or the interest therein of the
Certificateholders then, notwithstanding
the Originator's or the Seller's lack
of knowledge with respect to the substance
of such representation and warranty
being inaccurate at the time the
representation or warranty was made, such
inaccuracy shall be deemed a breach of the
applicable representation or
warranty.
It is understood and agreed that the representations and
warranties
set forth in the Originator Mortgage Loan
Purchase Agreement and the Mortgage
Loan Purchase Agreement shall survive
delivery of the Mortgage Files to the
Trustee and shall inure to the benefit of
the Certificateholders notwithstanding
any restrictive or qualified endorsement or
assignment. It is understood and
agreed that the obligations of the
Originator and the Seller set forth in this
Section 2.03(a) to cure, substitute for or
repurchase a Mortgage Loan pursuant
to the Originator Mortgage Loan Purchase
Agreement or the Mortgage Loan Purchase
Agreement, as applicable, and to pay the
Reimbursement Amount constitute the
sole remedies available to the
Certificateholders and to the Trustee on their
behalf respecting a breach of the
representations and warranties contained in
the Mortgage Loan Purchase Agreement.
The representations and warranties of the Originator with respect
to
the Mortgage Loans in the Originator
Mortgage Loan Purchase Agreement, which
have been assigned to the Trustee
hereunder, were made as of the dates specified
in the Originator Mortgage Loan Purchase
Agreement. To the extent that any fact,
condition or event with respect to a
Mortgage Loan constitutes a breach of both
(i) a representation or warranty of the
Originator under the Originator Mortgage
Loan Purchase Agreement and (ii) a
representation or warranty of the Seller
under the Mortgage Loan Purchase Agreement
(other than Seller's representations
with respect to predatory and abusive
lending laws and "high cost" loans in
Sections 3.01(k) and (l) of the Mortgage
Loan Purchase Agreement), the only
right or remedy of the Trustee or of any
Certificateholder shall be the
Trustee's right to enforce the obligations
of the Originator under any
applicable representation or warranty made
by it. The Trustee acknowledges that
the Seller shall have no obligation or
liability with respect to any breach of a
representation or warranty made by it with
respect to the Mortgage Loans (except
as otherwise set forth in this paragraph)
if the fact, condition or event
constituting such breach also constitutes a
breach of a representation or
warranty made by the Originator in the
Originator Mortgage Loan Purchase
Agreement, without regard to whether the
Originator fulfills its contractual
obligations in respect of such
representation or warranty. In addition, to the
extent that any fact, condition or event
with respect to a Mortgage Loan
constitutes a breach of both (x) the
Originator's representation with respect to
predatory and abusive lending laws in
Section 3.03(i) of the Originator Mortgage
Loan Purchase Agreement and (y) the
Seller's representation with respect to
predatory and abusive lending laws in
Section 3.01(k) of the Mortgage Loan
Purchase Agreement, the Originator shall be
obligated to pay the Reimbursement
Amount relating to such Mortgage Loan, and,
to the extent the Originator fails
to do so, the Trustee shall be entitled to
enforce the Seller's obligation to
pay such Reimbursement Amount. In any
event, the Reimbursement Amount shall be
delivered to the Master Servicer for
deposit into the Collection Account within
10 days from the date the Seller was
notified by the Trustee of the
Reimbursement Amount.
(b) Within 90 days of the earlier of discovery by the Master
Servicer or receipt of notice by the Master
Servicer of the breach of any
representation, warranty or covenant of the
Master Servicer set forth in Section
2.05 which materially and adversely affects
the interests of the
Certificateholders in any Mortgage Loan,
the Master Servicer shall cure such
breach in all material respects.
(c) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to
Section 2.03(a) must be effected prior
to the last Business Day that is within two
years after the Closing Date. As to
any Defective Mortgage Loan for which the
Originator or the Seller substitutes
an Eligible Substitute Mortgage Loan or
Loans, such substitution shall be
effected by the Originator or the Seller,
as applicable, delivering to the
Trustee for such Eligible Substitute
Mortgage Loan or Loans, the Mortgage Note,
the Mortgage, the Assignment to the
Trustee, and such other documents and
agreements, with all necessary endorsements
thereon, as are required by Section
2.01, together with an Officers'
Certificate providing that each such Eligible
Substitute Mortgage Loan satisfies the
definition thereof and specifying the
Substitution Adjustment Amount (as
described below), if any, in connection with
such substitution. The Trustee shall
acknowledge receipt for such Eligible
Substitute Mortgage Loan or Loans and,
within ten Business Days thereafter,
shall review such documents as specified in
Section 2.02 and deliver to the
Master Servicer, with respect to such
Eligible Substitute Mortgage Loan or
Loans, a certification substantially in the
form attached hereto as Exhibit F-1,
with any applicable exceptions noted
thereon. Within one year of the date of
substitution, the Trustee shall deliver to
the Master Servicer a certification
substantially in the form of Exhibit F-2
hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon.
Monthly Payments due with respect to
Eligible Substitute Mortgage Loans in the
month of substitution are not part of the
Trust Fund and will be retained by the
Originator or the Seller, as applicable.
For the month of substitution,
distributions to Certificateholders will
reflect the collections and recoveries
in respect of such Defective Mortgage Loan
in the Collection Period or
Prepayment Period, as applicable, preceding
the date of substitution and the
Depositor, the Originator or the Seller, as
the case may be, shall thereafter be
entitled to retain all amounts subsequently
received in respect of such
Defective Mortgage Loan. The Depositor
shall give or cause to be given written
notice to the Certificateholders that such
substitution has taken place, shall
amend the applicable Mortgage Loan Schedule
to reflect the removal of such
Defective Mortgage Loan from the terms of
this Agreement and the substitution of
the Eligible Substitute Mortgage Loan or
Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, such
Eligible Substitute Mortgage Loan or Loans
shall constitute part of the Mortgage
Pool and shall be subject in all respects
to the terms of this Agreement and, in
the case of a substitution effected by the
Originator or the Seller, the
Originator Mortgage Loan Purchase Agreement
or the Mortgage Loan Purchase
Agreement, as the case may be, including,
in the case of a substitution effected
by the Originator or the Seller, all
applicable representations and warranties
thereof included in the Originator Mortgage
Loan Purchase Agreement or the
Mortgage Loan Purchase Agreement, as the
case may be, as of the date of
substitution.
For any month in which the Originator or the Seller substitutes
one
or more Eligible Substitute Mortgage Loans
for one or more Defective Mortgage
Loans, the Master Servicer will determine
the amount (the "Substitution
Adjustment Amount"), if any, by which the
aggregate Purchase Price of all such
Defective Mortgage Loans exceeds the
aggregate, as to each such Eligible
Substitute Mortgage Loan, of the principal
balance thereof as of the date of
substitution, together with one month's
interest on such principal balance at
the applicable Net Mortgage Interest Rate.
On the date of such substitution, the
Originator or the Seller, as the case may
be, will deliver or cause to be
delivered to the Master Servicer for
deposit in the Collection Account an amount
equal to the Substitution Adjustment
Amount, if any, and the Trustee, upon
receipt of the related Eligible Substitute
Mortgage Loan or Loans and notice by
the Master Servicer of such deposit, shall
release to the Originator or the
Seller, as applicable, the related Mortgage
File or Files and shall execute and
deliver such instruments of transfer or
assignment, in each case without
recourse, as the Originator or the Seller,
as the case may be, shall deliver to
it and as shall be necessary to vest
therein any Defective Mortgage Loan
released pursuant hereto.
In addition, the Originator or the Seller, as applicable, shall
obtain at its own expense and deliver to
the Trustee an Opinion of Counsel to
the effect that such substitution will not
cause (a) any federal tax to be
imposed on the Trust Fund, including
without limitation, any federal tax imposed
on "prohibited transactions" under Section
860F(a)(l) of the Code or on
"contributions after the startup date"
under Section 860G(d)(l) of the Code, or
(b) any REMIC to fail to qualify as a REMIC
at any time that any Certificate is
outstanding. If such Opinion of Counsel can
not be delivered, then such
substitution may only be effected at such
time as the required Opinion of
Counsel can be given.
(d) Upon discovery by the Originator, the Seller, the Master
Servicer or the Trustee that any Mortgage
Loan does not constitute a "qualified
mortgage" within the meaning of Section
860G(a)(3) of the Code, the party
discovering such fact shall within two
Business Days give written notice thereof
to the other parties. In connection
therewith, the Originator or the Seller, as
applicable, shall repurchase or, subject to
the limitations set forth in Section
2.03(c), substitute one or more Eligible
Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of
the earlier of discovery or receipt of
such notice with respect to such affected
Mortgage Loan. In addition, upon
discovery that a Mortgage Loan is defective
in a manner that would cause it to
be a "defective obligation" within the
meaning of Treasury Regulations relating
to REMICs, the Originator or the Seller, as
the case may be, shall cure the
defect or make the required purchase or
substitution no later than 90 days after
the discovery of the defect. Any such
repurchase or substitution shall be made
in the same manner as set forth in Section
2.03(a). The Trustee shall reconvey
to the Originator or the Seller, as
applicable, 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.
Section 2.04 [Reserved].
Section 2.05 Representations, Warranties and Covenants of the
Master
Servicer.
The Master Servicer hereby represents, warrants and covenants to
the
Trustee, for the benefit of each of the
Trustee and the Certificateholders and
to the Depositor that as of the Closing
Date or as of such date specifically
provided herein:
(i) The Master Servicer is a corporation duly organized,
validly
existing
and in good standing under the laws of the State of California
and has
all licenses necessary to carry on its business as now being
conducted,
except for such licenses, certificates and permits the absence
of which,
individually or in the aggregate, would not have a material
adverse
effect on the ability of the Master Servicer to conduct its
business
as it is presently conducted, and is licensed, qualified and in
good
standing in the states where the Mortgaged Property is located if
the
laws of
such state require licensing or qualification in order to
conduct
business
of the type conducted by the Master Servicer or to ensure the
enforceability or validity of each Mortgage Loan; the Master
Servicer has
the power
and authority to execute and deliver this Agreement and to
perform in
accordance herewith; the execution, delivery and performance of
this
Agreement (including all instruments of transfer to be
delivered
pursuant
to this Agreement) by the Master Servicer and the consummation
of
the
transactions contemplated hereby have been duly and validly
authorized; and all requisite corporate action has been taken by
the
Master
Servicer to make this Agreement valid and binding upon the
Master
Servicer
in accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement
are in the ordinary course of business of the Master Servicer
and will
not result in the breach of any term or provision of the
articles
of
incorporation or by-laws of the Master Servicer or result in the
breach
of any
term or provision of, or conflict with or constitute a default
under or
result in the acceleration of any obligation under, any
agreement,
indenture or loan or credit agreement or other instrument to
which the
Master Servicer or its property is subject, or result in the
violation
of any law, rule, regulation, order, judgment or decree to
which
the Master
Servicer or its property is subject;
(iii) The Master Servicer is an approved seller/servicer of
conventional residential mortgage loans for Fannie Mae or Freddie
Mac,
with the
facilities, procedures, and experienced personnel necessary for
the sound
servicing of mortgage loans of the same type as the Mortgage
Loans. The
Master Servicer is a HUD approved mortgagee pursuant to Section
203 of the
National Housing Act and is in good standing to sell mortgage
loans to
and service mortgage loans for Fannie Mae or Freddie Mac, and
no
event has
occurred, including but not limited to a change in insurance
coverage,
which would make the Master Servicer unable to comply with
Fannie Mae
or Freddie Mac eligibility requirements or which would require
notification to either Fannie Mae or Freddie Mac;
(iv) This Agreement, and all documents and instruments
contemplated
hereby
which are executed and delivered by the Master Servicer,
constitute
and will
constitute valid, legal and binding obligations of the Master
Servicer,
enforceable in accordance with their respective terms, except
as
the
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the
enforcement of creditors' rights generally (whether considered in
a
proceeding
at law or in equity);
(v) The Master Servicer does not believe, nor does it have any
reason or
cause to believe, that it cannot perform each and every
covenant
contained
in this Agreement;
(vi) There is no action, suit, proceeding or investigation
pending
or, to its
knowledge, threatened against the Master Servicer that, either
individually or in the aggregate, may result in any material
adverse
change in
the business, operations, financial condition, properties or
assets of
the Master Servicer, or in any material impairment of the right
or ability
of the Master Servicer to carry on its business substantially
as now
conducted, or in any material liability on the part of the
Master
Servicer,
or that would draw into question the validity or enforceability
of this
Agreement or of any action taken or to be taken in connection
with
the
obligations of the Master Servicer contemplated herein, or that
would
be likely
to impair materially the ability of the Master Servicer to
perform
under the terms of this Agreement;
(vii) No consent, approval or order of any court or
governmental
agency or
body is required for the execution, delivery and performance by
the Master
Servicer of or compliance by the Master Servicer with this
Agreement
or the consummation of the transactions contemplated by this
Agreement,
except for such consents, approvals, authorizations and orders,
if any, that have been obtained;
and
(viii) No information in this Agreement provided by the Master
Servicer
nor any information, certificate of an officer, statement
furnished
in writing or report delivered to the Trustee by the Master
Servicer
in connection with the transactions contemplated hereby
contains
or will
contain any untrue statement of a material fact or omits or
will
omit to
state a material fact necessary in order to make the statements
contained
therein, in light of the circumstances under which they were
made, not
misleading.
(ix) The Master Servicer has fully furnished, and shall continue
to
fully
furnish for so long as it is servicing the Mortgage Loans
hereunder,
in accordance
with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information on the Mortgagor
credit
files to
Equifax, Experian and Trans Union Credit Information Company on
a
monthly
basis.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.05
shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the
benefit of the Trustee, the
Depositor and the Certificateholders. Upon
discovery by any of the Depositor,
the Master Servicer or the Trustee of a
breach of any of the foregoing
representations, warranties and covenants
which materially and adversely affects
the value of any Mortgage Loan, Prepayment
Charge or the interests therein of
the Certificateholders, the party
discovering such breach shall give prompt
written notice (but in no event later than
two Business Days following such
discovery) to the other parties hereto.
Section 2.06 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the
Trustee
on behalf of the Certificateholders and to
the Master Servicer as follows:
(i) This agreement constitutes a legal, valid and binding
obligation
of the
Depositor, enforceable against the Depositor in accordance with
its
terms,
except as enforceability may be limited by applicable
bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or
hereafter in
effect affecting the enforcement of creditors' rights in
general
and except as such enforceability may be limited by general
principles
of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the
Depositor
to the
Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor
had good
and marketable title to each Mortgage Loan (insofar as such
title
was
conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge
or
other
encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title interest
in the Mortgage Loans to the Trustee on behalf of
the
Trust;
(iv) The Depositor has not transferred the Mortgage Loans to
the
Trustee on
behalf of the Trust with any intent to hinder, delay or defraud
any of its creditors;
(v) The Depositor has been duly incorporated and is validly
existing
as a
corporation in good standing under the laws of the State of
Delaware,
with full
corporate power and authority to own its assets and conduct its
business
as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of
any
material obligation, agreement, covenant or condition contained in
any
contract,
indenture, mortgage, loan agreement, note, lease or other
instrument
to which the Depositor is a party or by which it or its
properties
may be bound, which default might result in any material
adverse
changes in the financial condition, earnings, affairs or
business
of the
Depositor or which might materially and adversely affect the
properties
or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement
by
the
Depositor, and the consummation of the transactions
contemplated
thereby,
do not and will not result in a material breach or violation of
any of the
terms or provisions of, or, to the knowledge of the Depositor,
constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement
or other agreement or instrument to which the Depositor is a
party or
by which the Depositor is bound or to which any of the property
or assets of the
Depositor is subject, nor will such actions result in any
violation
of the provisions of the certificate of incorporation or
by-laws
of the
Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or
regulation of
any court
or governmental agency or body having jurisdiction over the
Depositor
or any of its properties or assets (except for such conflicts,
breaches,
violations and defaults as would not have a material adverse
effect on
the ability of the Depositor to perform its obligations under
this
Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order,
registration or qualification of or with any court or governmental
agency
or body of
the United States or any other jurisdiction is required for the
issuance
of the Certificates, or the consummation by the Depositor of
the
other
transactions contemplated by this Agreement, except such
consents,
approvals,
authorizations, registrations or qualifications as (a) may be
required
under State securities or Blue Sky laws, (b) have been
previously
obtained
or (c) the failure of which to obtain would not have a material
adverse
effect on the performance by the Depositor of its obligations
under, or
the validity or enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations
pending
before or,
to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a
party
or of
which any of its properties is the subject: (a) which if
determined
adversely
to the Depositor would have a material adverse effect on the
business,
results of operations or financial condition of the Depositor;
(b)
asserting the invalidity of this Agreement or the Certificates;
(c)
seeking to
prevent the issuance of the Certificates or the consummation by
the
Depositor of any of the transactions contemplated by this
Agreement,
as the
case may be; (d) which might materially and adversely affect
the
performance by the Depositor of its obligations under, or the
validity or
enforceability of, this Agreement.
Section 2.07 Issuance of Certificates and the Uncertificated
Regular
Interests.
The Trustee acknowledges the assignment to it of the Mortgage
Loans
and the delivery to it of the Mortgage
Files, subject to the provisions of
Sections 2.01 and 2.02, and the Trustee
acknowledges the assignment to it of all
other assets included in the Trust Fund,
receipt of which is hereby
acknowledged. Concurrently with such
assignment and delivery and in exchange
therefor, the Trustee, pursuant to the
Written Order to Authenticate executed by
an officer of the Depositor, has executed,
and the Certificate Registrar has
authenticated and delivered to or upon the
order of the Depositor, the
Certificates (other than the Class CE,
Class P and Class R Certificates) in
minimum dollar denominations or $25,000 and
integral dollar multiples of $1 in
excess. The Class CE and Class P and Class
R Certificates are issuable only in
minimum Percentage Interests of 10%. The
Class R Certificate is issuable only as
a single certificate. The Trustee
acknowledges the issuance of the
uncertificated REMIC 1 Regular Interests
and declares that it hold such regular
interests as assets of REMIC 2. The Trustee
acknowledges the obligation of the
Class CE Certificates to pay Cap Carryover
Amounts, and declares that it hold
the same as assets of the Grantor Trust on
behalf of the Holders of the Class
A-1, Class A-1A, Class A-2, Class M-1,
Class M-2, Class M-3, Class M-4, Class
M-5 and Class M-6 Certificates,
respectively, which shall be treated as
beneficially owning the right to receive
the Cap Carryover Amounts from the
Grantor Trust. In addition to the assets
described in the preceding sentence,
the assets of the Grantor Trust shall also
include (i) Prepayment Charges, any
Originator Prepayment Charge Payment
Amounts, any Servicer Prepayment Charge
Payment Amounts and the beneficial interest
of the Class P Certificates with
respect thereto and (ii) the Yield
Maintenance Agreement, the Reserve Account
and the beneficial interest of the Class CE
Certificates with respect thereto,
subject to the obligation to pay Cap
Carryover Amounts. The interests evidenced
by the Certificates constitute the entire
beneficial ownership interest in the
Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Master Servicer to Act as Servicer.
The Master Servicer, as independent contract servicer, shall
service
and administer the Mortgage Loans in
accordance with this Agreement and the
normal and usual standards of practice of
prudent mortgage servicers servicing
similar mortgage loans and, to the extent
consistent with such terms, in the
same manner in which it services and
administers similar mortgage loans for its
own portfolio, and shall have full power
and authority, acting alone, to do or
cause to be done any and all things in
connection with such servicing and
administration which the Master Servicer
may deem necessary or desirable and
consistent with the terms of this Agreement
(the "Servicing Standard").
Consistent with the terms of this Agreement, the Master Servicer
may
waive, modify or vary any term of any
Mortgage Loan or consent to the
postponement of strict compliance with any
such term or in any manner grant
indulgence to any Mortgagor if in the
Master Servicer's reasonable and prudent
determination such waiver, modification,
postponement or indulgence is not
materially adverse to the
Certificateholders; provided, however, that the Master
Servicer shall not make future advances
and, except as set forth in the
following sentence or Section 3.03, the
Master Servicer shall not permit any
modification with respect to any Mortgage
Loan that would (i) change the
Mortgage Interest Rate, defer or forgive
the payment thereof of any principal or
interest payments, reduce the outstanding
principal amount (except for actual
payments of principal) or extend the final
maturity date with respect to such
Mortgage Loan, (ii) affect adversely the
status of any REMIC constituting part
of the Trust Fund as a REMIC or (iii) cause
any such REMIC to be subject to a
tax on "prohibited transactions" or
"contributions" pursuant to the REMIC
Provisions. In the event that the Mortgagor
is in default with respect to the
Mortgage Loan or such default is, in the
judgment of the Master Servicer,
reasonably foreseeable, the Master Servicer
may permit a modification of such
Mortgage Loan to reduce the Principal
Balance thereof and/or extend the term,
but not beyond the latest maturity date of
any other Mortgage Loan.
Notwithstanding the foregoing, the Master
Servicer shall not permit any
modification with respect to any Mortgage
Loan that would both (x) effect an
exchange or reissuance of such Mortgage
Loan under Section 1.860G-2(b) of the
Treasury Regulations and (y) cause any
REMIC constituting part of the Trust Fund
to fail to qualify as a REMIC under the
Code or the imposition of any tax on
"prohibited transactions" or
"contributions" after the Startup Day under the
REMIC Provisions. Without limiting the
generality of the foregoing, the Master
Servicer shall continue, and is hereby
authorized and empowered to execute and
deliver on behalf of itself, and the
Trustee, all instruments of satisfaction or
cancellation, or of partial or full
release, discharge and all other comparable
instruments, with respect to the Mortgage
Loans and with respect to the
Mortgaged Property. The Master Servicer
shall make all required Servicing
Advances and shall service and administer
the Mortgage Loans in accordance with
Applicable Regulations, and shall provide
to the Mortgagor any reports required
to be provided to them thereby. The Trustee
shall execute and deliver to the
Master Servicer within at least fifteen
(15) Business Day of receipt, upon
request, any powers of attorney furnished
to it by the Master Servicer
empowering the Master 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 any
Mortgaged Property, and to appeal,
prosecute or defend in any court action
relating to the Mortgage Loans or the
Mortgaged Properties, in accordance with
this Agreement, and the Trustee shall
execute and deliver such other documents as
the Master Servicer may request,
necessary or appropriate to enable the
Master Servicer to service and administer
the Mortgage Loans and carry out its duties
hereunder, in each case in
accordance with Servicing Standard (and the
Trustee shall have no liability for
misuse of any such powers of attorney by
the Master Servicer). Notwithstanding
anything contained herein to the contrary,
the Master Servicer shall not without
the Trustee's written consent: (i) initiate
any action, suit or proceeding
solely under the Trustee's name without
indicating the Master Servicer's
representative capacity, or (ii) take any
action with the intent to cause, and
which results in, the Trustee being
registered to do business in any state.
In servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures including
collection procedures and exercise
the same care that it customarily employs
and exercises in servicing and
administering mortgage loans for its own
account giving due consideration to
accepted mortgage servicing practices of
prudent lending institutions and the
Certificateholders' reliance on the Master
Servicer.
The Master Servicer shall give prompt notice to the Trustee of
any
action, of which the Master Servicer has
actual knowledge, to (i) assert a claim
against the Trust Fund or (ii) assert
jurisdiction over the Trust Fund.
Notwithstanding anything in this Agreement to the contrary, in
the
event of a voluntary Principal Prepayment
in full of a Mortgage Loan, the Master
Servicer may not waive any Prepayment
Charge or portion thereof required by the
terms of the related Mortgage Note unless
(i)(a) the Master Servicer determines
that such waiver is standard and customary
in servicing similar mortgage loans,
(b) such waiver relates to a default or a
reasonably foreseeable default and (c)
would, in the reasonable judgment of the
Master Servicer, maximize recovery of
Liquidation Proceeds for such Mortgage
Loan, taking into account the value of
such Prepayment Charge, or (ii) the
enforceability thereof is limited (1) by
bankruptcy, insolvency, moratorium,
receivership, or other similar law relating
to creditors' rights generally or (2) due
to acceleration in connection with a
foreclosure or other involuntary payment.
If the Master Servicer has waived or
does not collect all or a portion of a
Prepayment Charge relating to a voluntary
Principal Prepayment in full due to any
action or omission of the Master
Servicer, other than as provided above, the
Master Servicer shall, on the date
on which the Principal Prepayment in full
is remitted to the Trustee, deliver to
the Trustee the Servicer Prepayment Charge
Amount with respect to such Mortgage
Loan for distribution in accordance with
the terms of this Agreement.
In the event that a Prepayment Charge due with respect to any
Mortgage Loan is not timely received by the
Master Servicer, the Master Servicer
shall use commercially reasonable efforts
to determine whether the Originator is
obligated to pay a related Originator
Prepayment Charge Payment Amount, and if
the Master Servicer determines that a
Originator Prepayment Charge Payment
Amount is due, the Master Servicer shall
promptly notify the Originator, and the
Master Servicer shall enforce the
Originator's obligations to pay in a timely
manner any such Originator Prepayment
Charge Payment Amounts and, to the extent
that such amounts are received by the
Master Servicer, shall cause such amounts
to be deposited into the Collection Account
within one Business Day of receipt.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and
interest
on all Mortgage Loans are paid in full or
as long as the Mortgage Loan remains
subject to this Agreement, the Master
Servicer will diligently collect all
payments due under each Mortgage Loan when
the same shall become due and payable
and shall, to the extent such procedures
shall be consistent with this Agreement
and Applicable Regulations, follow such
collection procedures as it follows with
respect to mortgage loans comparable to the
Mortgage Loans and held for its own
account. Further, the Master Servicer will
take special care in ascertaining and
estimating on escrowed Mortgage Loans
annual ground rents, taxes, assessments,
water rates, fire and hazard insurance
premiums, mortgage insurance premiums,
and all other charges that, as provided in
the Mortgage, will become due and
payable to that end that the installments
payable by the Mortgagors will be
sufficient to pay such charges as and when
they become due and payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Mortgage Loan is
not
paid when the same becomes due and payable,
or in the event the Mortgagor fails
to perform any other covenant or obligation
under the Mortgage Loan and such
failure continues beyond any applicable
grace period, the Master Servicer shall
take such action as it shall deem to be in
the best interest of the
Certificateholders. With respect to any
defaulted Mortgage Loan, the Master
Servicer shall have the right to review the
status of the related forbearance
plan and, subject to the second paragraph
of Section 3.01, may modify such
forbearance plan; including extending the
Mortgage Loan repayment date for a
period of one year or reducing the Mortgage
Interest Rate up to 50 basis points.
In connection with a foreclosure or other conversion, the
Master
Servicer shall exercise such rights and
powers vested in it hereunder and use
the same degree of care and skill in its
exercise as prudent mortgage servicers
would exercise or use under the
circumstances in the conduct of their own
affairs and consistent with Applicable
Regulations and the Servicing Standards,
including, without limitation, advancing
funds for the payment of taxes and
insurance premiums.
Notwithstanding the foregoing provisions of this Section 3.03,
with
respect to any Mortgage Loan as to which
the Master Servicer has received actual
notice of, or has actual knowledge of, the
presence of any toxic or hazardous
substance on the related Mortgaged
Property, the Master Servicer shall not
either (i) obtain title to such Mortgaged
Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise
acquire possession of, or take any
other action with respect to, such
Mortgaged Property if, as a result of any
such action, the Trust would be considered
to hold title to, to be a
mortgagee-in-possession of, or to be an
owner or operator of such Mortgaged
Property within the meaning of the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
amended from time to time, or any
comparable law, unless the Master Servicer
has also previously determined, based
on its reasonable judgment and a prudent
report prepared by a Person who
regularly conducts environmental audits
using customary industry standards,
that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it
would be in the best economic interest of
the Certificateholders to take such actions
as are necessary to bring the
Mortgaged Property into compliance
therewith; and
B. there are no circumstances present at such Mortgaged
Property
relating to the use, management or disposal
of any hazardous substances,
hazardous materials, hazardous wastes, or
petroleum-based materials for which
investigation, testing, monitoring,
containment, clean-up or remediation could
be required under any federal, state or
local law or regulation, or that if any
such materials are present for which such
action could be required, that it
would be in the best economic interest of
the Certificateholders to take such
actions with respect to the affected
Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.03 shall be advanced by the
Master Servicer, subject to the Master
Servicer's right to be reimbursed therefor
from the Collection Account as
provided in Section 3.05(iv).
If the Master Servicer determines, as described above, that it is
in
the best economic interest of the
Certificateholders to take such actions as are
necessary to bring any such Mortgaged
Property into compliance with applicable
environmental laws, or to take such action
with respect to the containment,
clean-up or remediation of hazardous
substances, hazardous materials, hazardous
wastes, or petroleum-based materials
affecting any such Mortgaged Property, then
the Master Servicer shall take such action
as it deems to be in the best
economic interest of the
Certificateholders. The cost of any such compliance,
containment, clean-up or remediation shall
be advanced by the Master Servicer,
subject to the Master Servicer's right to
be reimbursed therefor from the
Collection Account as provided in Section
3.05.
Section 3.04 Collection Account, Distribution Account and
Reserve
Account.
(a) The Master Servicer shall segregate and hold all funds
collected
and received pursuant to each Mortgage Loan
separate and apart from any of its
own funds and general assets and shall
establish and maintain one or more
Collection Accounts. Each Collection
Account shall be an Eligible Account.
The Master Servicer shall deposit or cause to be deposited on a
daily basis and in no event more than one
Business Day after receipt thereof in
the clearing account (which must be an
Eligible Account) in which it customarily
deposits payments and collections on
mortgage loans in connection with its
mortgage loan servicing activities, and
shall thereafter deposit in the
Collection Account, in no event more than
one Business Day after deposit of such
funds in the clearing account, and retain
therein, the following payments and
collections received or made by it after
the Cut-off Date with respect to the
Mortgage Loans (other than in respect of
principal and interest due on or before
the Cut-off Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted
to the Mortgage Interest Rate less the Servicing Fee Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited
pursuant to Section 3.10, other than proceeds to be held in the
Escrow
Account and applied to the restoration or repair of the
Mortgaged
Property
or released to the Mortgagor in accordance with the Master
Servicer's
normal servicing procedures, the loan documents or applicable
law;
(v) all Condemnation Proceeds affecting any Mortgaged Property
which
are not
released to the Mortgagor in accordance with the Master
Servicer's
normal
servicing procedures, the loan documents or applicable law;
(vi) any amounts required to be deposited by the Master Servicer
in
connection
with any REO Property pursuant to Section 3.13;
(vii) all Prepayment Charges collected by the Master Servicer
in
connection
with the voluntary Principal Prepayment in full of any Mortgage
Loan, all
Originator Prepayment Charge Payment Amounts paid by the
Originator
and all Servicer Prepayment Charge Payment Amounts required to
be paid by
the Master Servicer pursuant to Section 3.01 in connection with
any such
Principal Prepayment; and
(viii) all amounts required to be deposited by the Master
Servicer
pursuant
to Section 2.03.
Any interest paid on funds deposited in the Collection Account,
subject to Section 3.25, shall accrue to
the benefit of the Master Servicer and
the Master Servicer shall be entitled to
retain and withdraw such interest from
the Collection Account pursuant to Section
3.05(v). The foregoing requirements
for deposit from the Collection Account
shall be exclusive, it being understood
and agreed that, without limiting the
generality of the foregoing, payments in
the nature of late payment charges, bad
check fees, prepayment charges that are
not Prepayment Charges, Originator
Prepayment Charge Payment Amounts or Servicer
Prepayment Charge Payment Amounts,
assumption fees and other similar fees need
not be deposited by the Master Servicer in
the Collection Account. Amounts
deposited in the Collection Account in
error may be withdrawn by the Master
Servicer at any time.
(b) On behalf of the Trust Fund, the Trustee shall establish
and
maintain one or more accounts (such account
or accounts, the "Distribution
Account"), held in trust for the benefit of
the Certificateholders. On behalf of
the Trust Fund, the Master Servicer shall
deliver to the Trustee in immediately
available funds for deposit in the
Distribution Account by 1:00 p.m. New York
time on the Servicer Remittance Date, (i)
that portion of the Available Funds
(calculated without regard to the
references in the definition thereof to
amounts that may be deposited to the
Distribution Account from a different
source as provided herein) then on deposit
in the Collection Account, (ii) the
amount of all Prepayment Charges collected
by the Master Servicer in connection
with the voluntary Principal Prepayment in
full of any of the Mortgage Loans
then on deposit in the Collection Account
(other than any such Prepayment
Charges received after the related
Prepayment Period) and (iii) any Originator
Prepayment Charge Payment Amount or any
Servicer Prepayment Charge Payment
Amount. Amounts in the Distribution Account
shall be deemed to be held on behalf
of the related REMICs and the Grantor Trust
in accordance with the REMIC
distributions set forth in Section 4.08.
The Trustee shall be entitled to
withdraw from the Distribution Account any
amounts owing to it pursuant to
Section 8.05 and Section 9.01(c) prior to
the distribution of any amounts on
deposit to the Certificateholders;
provided, however, in the case of amounts
owing to it other than the Trustee Fee, the
Trustee shall provide the Depositor
and the Master Servicer with a written
account of such amounts five Business
Days prior to withdrawing such funds. In
connection with any failure by the
Master Servicer to make any remittance
required to be made by the Master
Servicer to the Distribution Account on the
day and by the time such remittance
is required to be made under the terms of
this Section 3.04(b) (without giving
effect to any grace or cure period), the
Master Servicer shall pay to the
Trustee for the account of the Trustee
interest at the prime rate of United
States money center commercial banks as
published in The Wall Street Journal on
any amount not timely remitted from and
including the day such remittance was
required to be made to, but not including,
the day on which such remittance was
actually made.
(c) Funds in the Collection Account and the Distribution Account
may
be invested in Eligible Investments in
accordance with the provisions set forth
in Section 3.25. The Master Servicer shall
give notice to the Trustee of the
location of the Collection Account
maintained by it when established and prior
to any change thereof. The Trustee shall
give notice to the Master Servicer and
the Depositor of the location of the
Distribution Account when established and
prior to any change thereof.
(d) In the event the Master Servicer shall deliver to the
Trustee
for deposit in the Distribution Account any
amount not required to be deposited
therein, it may at any time request that
the Trustee withdraw such amount from
the Distribution Account and remit to the
Master Servicer any such amount, any
provision herein to the contrary
notwithstanding. In addition, the Master
Servicer shall deliver to the Trustee from
time to time for deposit, and the
Trustee shall so deposit, in the
Distribution Account in respect of REMIC 1:
(i) any Advances, as required pursuant to Section 4.07;
(ii) any Stayed Funds, as soon as permitted by the federal
bankruptcy
court having jurisdiction in such matters;
(iii) any amounts required to be deposited in the Distribution
Account by
the Master Servicer pursuant to Sections 2.03, 3.04, 3.13,
3.15,
3.16, 3.23, 3.24, 4.07 or 10.01; and
(iv) any amounts required to be deposited by the Master
Servicer
pursuant
to Section 3.11 in connection with the deductible clause in any
blanket
hazard insurance policy, such deposit being made from the
Master
Servicer's
own funds, without reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from the
Master Servicer, a trustee in bankruptcy,
or federal bankruptcy court or other
source, the Trustee shall notify the Master
Servicer of such receipt and deposit
such funds in the Distribution Account,
subject to withdrawal thereof as
permitted hereunder. In addition, the
Trustee shall deposit in the Distribution
Account any amounts required to be
deposited pursuant to Section 3.25(b) in
connection with losses realized on Eligible
Investments with respect to funds
held in the Distribution Account.
(f) Any Prepayment Charges, Originator Prepayment Charge
Payment
Amounts and Servicer Prepayment Charge
Payment Amounts deposited pursuant to
Section 3.04(a)(vii) shall not be assets of
any REMIC created hereunder, but
shall be considered assets of the Grantor
Trust held by the Trustee for the
benefit of the Class P
Certificateholders.
(g) (i) The Trustee shall establish and maintain the Reserve
Account, held in trust for the benefit of
the Holders of the Offered
Certificates. The Trustee shall deposit in
the Reserve Account on the date
received by it, any Yield Maintenance
Agreement Payment received from the Yield
Maintenance Agreement Provider for the
related Distribution Date. On each
Distribution Date, the Trustee shall
withdraw from the Reserve Account any Yield
Maintenance Agreement Payment and apply it
in the following order of priority:
(A) to the Offered Certificates, any remaining unpaid Cap
Carryover Amounts for such Classes for such Distribution Date
(after
distributions pursuant to Section 4.02(b)(xxv) hereof), in each
case
only up to the Cap Amount for the related Class, distributed in
the
following order of priority:
(1) concurrently, to the Class A Certificates, pro rata,
based on the Cap Amount for each such Class; and
(2) sequentially, to the Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5 and Class M-6 Certificates, in that
order; and
(B) to the Offered Certificates, any remaining unpaid Cap
Carryover Amounts for such Classes for such Distribution Date
(after
distributions pursuant to Section 4.02(b)(xxv) hereof and clause
(A)
above) distributed in the following order of priority:
(1) concurrently, to the Class A Certificates, pro rata,
based on the related unpaid Cap Carryover Amount for each such
Class; and
(2) sequentially, to the Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5 and Class M-6 Certificates, in that
order; and
(C) to the Class CE Certificates, any remaining amount on
deposit in the Reserve Account.
(ii) The Trustee shall account for the Reserve Account as an
asset
of a
grantor trust under subpart E, part I of subchapter J of the Code
and
not an
asset of any REMIC created pursuant to this Agreement. The
beneficial
owner of the Reserve Account is the Class CE Certificateholder.
For all
federal tax purposes, amounts transferred or reimbursed by REMIC
2
to the
Reserve Account shall be treated as distributions by the Trustee
to
the Class
CE Certificateholder.
(iii) Any Cap Carryover Amounts paid by the Trustee pursuant to
this
Section
3.04(g) to the Offered Certificates shall be accounted for by
the
Trustee as
amounts paid first to the Class CE Certificates and then to the
respective Class or
Classes of Offered Certificates from the Grantor
Trust. In
addition, the Trustee shall account for the Offered
Certificates' rights to receive payments of Cap Carryover Amounts
as
rights in
limited recourse interest rate cap contracts written by the
Class CE
Certificates in favor of each Class of Offered Certificates.
(iv) For federal tax return and information reporting, the right
of
the
Holders of the Offered Certificates to receive payments under
the
Yield
Maintenance Agreement in respect of any Yield Maintenance
Agreement
Payments
shall be assigned a value of zero.
Section 3.05 Permitted Withdrawals From the Collection Account.
The Master Servicer may, from time to time, withdraw from the
Collection Account for the following
purposes:
(i) to remit to the Trustee for deposit in the Distribution
Account
the
amounts required to be so remitted pursuant to Section 3.04(b)
or
permitted
to be so remitted pursuant to the first sentence of Section
3.04(d);
(ii) to reimburse itself for (a) any unreimbursed Advances to
the
extent of
amounts received which represent Late Collections (net of the
related
Servicing Fees) of Monthly Payments, Liquidation Proceeds and
Insurance
Proceeds on Mortgage Loans with respect to which such Advances
were made
in accordance with the provisions of Section 4.07; (b) any
unreimbursed Advances with respect to the final liquidation of a
Mortgage
Loan that
are Nonrecoverable Advances, but only to the extent that Late
Collections, Liquidation Proceeds and Insurance Proceeds received
with
respect to
such Mortgage Loan are insufficient to reimburse the Master
Servicer
for such unreimbursed Advances; or (c) subject to Section
4.07(b),
any unreimbursed Advances to the extent of funds held in the
Collection
Account for future distribution that were not included in
Available
Funds for the preceding Distribution Date;
(iii) to reimburse itself for (a) any unpaid Servicing Fees, (b)
any
unreimbursed Servicing Advances with respect to each Mortgage Loan,
but
only to
the extent of any Late Collections, Liquidation Proceeds,
Insurance
Proceeds and condemnation proceeds received with respect to
such
Mortgage
Loan, and (c) any Servicing Advances with respect to the final
liquidation of a Mortgage Loan that are Nonrecoverable Advances,
but only
to the
extent that Late Collections, Liquidation Proceeds and
Insurance
Proceeds
received with respect to such Mortgage Loan are insufficient to
reimburse
the Master Servicer for Servicing Advances;
(iv) to reimburse itself for any amounts paid or expenses
incurred
pursuant
to Section 3.03 (and not otherwise previously reimbursed);
(v) to pay to itself as servicing compensation (a) any interest
earned on
funds in the Collection Account (all such interest to be
withdrawn
monthly not later than each Servicer Remittance Date), (b) the
Servicing
Fee from that portion of any payment or recovery as to interest
to a
particular Mortgage Loan to the extent not retained pursuant to
Section
3.04(a)(ii) and (c) any Prepayment Interest Excess;
(vi) to pay or reimburse itself for any amounts payable or paid
pursuant
to Section 6.03 (and not otherwise previously reimbursed); and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement.
The foregoing requirements for withdrawal from the Collection
Account shall be exclusive. In the event
the Master Servicer shall deposit in
the Collection Account any amount not
required to be deposited therein, it may
at any time withdraw such amount from the
Collection Account, any provision
herein to the contrary notwithstanding.
Section 3.06 Establishment of Escrow Accounts; Deposits in
Escrow
Accounts.
The Master Servicer shall segregate and hold all funds collected
and
received pursuant to each Mortgage Loan
which constitute Escrow Payments
separate and apart from any of its own
funds and general assets and shall
establish and maintain one or more Escrow
Accounts, in the form of time deposit
or demand accounts. A copy of such letter
agreement shall be furnished to the
Trustee upon request. The Escrow Account
shall be an Eligible Account.
The Master Servicer shall deposit or cause to be deposited on a
daily basis and in no event more than one
Business Day after receipt thereof in
the clearing account (which must be an
Eligible Account) in which it customarily
deposits payments and collections on
mortgage loans in connection with its
mortgage loan servicing activities, and
shall thereafter deposit in the Escrow
Account or Accounts, in no event more than
one Business Day after deposit of
such funds in the clearing account, and
retain therein, (i) all Escrow Payments
collected on account of the Mortgage Loans,
for the purpose of effecting timely
payment of any such items as required under
the terms of this Agreement, and
(ii) all Insurance Proceeds which are to be
applied to the restoration or repair
of any Mortgaged Property. The Master
Servicer shall make withdrawals therefrom
only to effect such payments as are
required under this Agreement, and for such
other purposes as shall be set forth in, or
in accordance with, Section 3.07.
The Master Servicer shall be entitled to
retain any interest paid on funds
deposited in the Escrow Account by the
depository institution other than
interest on escrowed funds required by law
to be paid to the Mortgagor and, to
the extent required by the related Mortgage
Loan or Applicable Regulations, the
Master Servicer shall pay interest on
escrowed funds to the Mortgagor
notwithstanding that the Escrow Account is
non-interest bearing or that interest
paid thereon is insufficient for such
purposes.
Section 3.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Master
Servicer (i) to effect timely payments of
ground rents, taxes, assessments,
water rates, fire, flood and hazard
insurance premiums and comparable items in a
manner and at a time that assures that the
lien priority of the Mortgage is not
jeopardized (or, with respect to the
payment of taxes, in a manner and at a time
that avoids the loss of the Mortgaged
Property due to a tax sale or the
foreclosure as a result of a tax lien),
(ii) to reimburse the Master Servicer
for any Servicing Advance made by the
Master Servicer with respect to a related
Mortgage Loan but only from amounts
received on the related Mortgage Loan which
represent late payments or Late Collections
of Escrow Payments thereunder with
respect to taxes and assessments and with
respect to hazard insurance, (iii) to
refund to the Mortgagor any funds as may be
determined to be overages, (iv) for
transfer to the Collection Account in
accordance with the terms of this
Agreement, (v) for application to
restoration or repair of the Mortgaged
Property, (vi) to pay to the Master
Servicer, or to the Mortgagor to the extent
required by the related Mortgage Loan or
Applicable Regulations, any interest
paid on the funds deposited in the Escrow
Account, (vii) to clear and terminate
the Escrow Account on the termination of
this Agreement, or (viii) to transfer
to the Collection Account any insurance
proceeds. As part of its servicing
duties, the Master Servicer shall pay to
the Mortgagor interest on funds in the
Escrow Account, to the extent required by
the related Mortgage Loan or
Applicable Regulations, and to the extent
that interest earned on funds in the
Escrow Account is insufficient, shall pay
such interest from its own funds,
without any reimbursement therefor.
In the event the Master Servicer shall deposit in the Escrow
Account
any amount not required to be deposited
therein, it may at any time withdraw
such amount from the Escrow Account, any
provision herein to the contrary
notwithstanding.
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each Mortgage Loan that provides for Escrow
Payments, the Master Servicer shall
maintain accurate records reflecting the
status of ground rents, taxes, assessments,
water rates and other charges which
are or may become a lien upon the Mortgaged
Property and the status of fire,
flood and hazard insurance coverage and
shall obtain, from time to time, all
bills for the payment of such charges
(including renewal premiums) and shall
effect payment of taxes, assessments,
hazard insurance premiums, and comparable
items in a manner and at a time that
assures that the lien priority of the
Mortgage is not jeopardized (or, with
respect to the payment of taxes, in a
manner and at a time that avoids the loss
of the Mortgaged Property due to a tax
sale or the foreclosure as a result of a
tax lien). To the extent that the
Mortgage does not provide for Escrow
Payments, the Master Servicer shall use its
best efforts to determine that any such
payments are made by the Mortgagor at
the time they first become due. If any such
payment has not been made and the
Master Servicer receives notice of a tax
lien with respect to the Mortgage being
imposed, the Master Servicer will, within
10 business days of such notice,
advance or cause to be advanced funds
necessary to discharge such lien on the
Mortgaged Property.
Section 3.09 Transfer of Accounts.
The Master Servicer may transfer the Collection Account and the
Escrow Account to a different depository
institution from time to time. Upon
such transfer, the Master Servicer shall
deliver to the Trustee and the
Depositor, a certification or letter
agreement, as the case may be, as required
pursuant to Sections 3.04 and 3.06.
Section 3.10 Maintenance of Hazard Insurance.
The Master Servicer shall cause to be maintained for each
Mortgage
Loan fire and hazard insurance with
extended coverage as is customary in the
area where the Mortgaged Property is
located in an amount which is at least
equal to the lesser of (i) the amount
necessary to fully compensate for any
damage or loss to the improvements which
are a part of such property on a
replacement cost basis or (ii) the
Principal Balance of the Mortgage Loan, in
each case in an amount not less than such
amount as is necessary to prevent the
Mortgagor and/or the Mortgagee from
becoming a co-insurer. If the Mortgaged
Property is in an area identified in the
Federal Register by the Flood Emergency
Management Agency as having special flood
hazards and flood insurance has been
made available, the Master Servicer will
cause to be maintained a flood
insurance policy meeting the requirements
of the current guidelines of the
Federal Insurance Administration with a
generally acceptable insurance carrier,
in an amount representing coverage not less
than the least of (i) the Principal
Balance of the Mortgage Loan, (ii) the
maximum insurable value of the
improvements securing such Mortgage Loan or
(iii) the maximum amount of
insurance which is available under the
National Flood Insurance Act of 1968, as
amended. The Master Servicer shall also
maintain on the REO Property for the
benefit of the Certificateholders, (x) fire
and hazard insurance with extended
coverage in an amount which is at least
equal to the lesser of (i) 100% of the
maximum insurable value of the improvements
securing the Mortgage Loan and (ii)
the outstanding Principal Balance of the
Mortgage Loan at the time it became an
REO Property, (y) public liability
insurance and, (z) to the extent required and
available under the National Flood
Insurance Act of 1968, as amended, flood
insurance in an amount as provided above.
Any amounts collected by the Master
Servicer under any such policies other than
amounts to be deposited in the
Escrow Account and applied to the
restoration or repair of the Mortgaged
Property or REO Property, or released to
the Mortgagor in accordance with the
Master Servicer's normal servicing
procedures, shall be deposited in the
Collection Account, subject to withdrawal
pursuant to Section 3.05. It is
understood and agreed that no earthquake or
other additional insurance is
required to be maintained by the Master
Servicer or the Mortgagor or maintained
on property acquired in respect of the
Mortgage Loan, other than pursuant to
such Applicable Regulations as shall at any
time be in force and as shall
require such additional insurance. All such
policies shall be endorsed with
standard mortgagee clauses with loss
payable to the Master Servicer and shall
provide for at least thirty days prior
written notice of any cancellation,
reduction in the amount of or material
change in coverage to the Master
Servicer. The Master Servicer shall not
interfere with the Mortgagor's freedom
of choice in selecting either his insurance
carrier or agent, provided, however,
that the Master Servicer shall not accept
any such insurance policies from
insurance companies unless such companies
currently reflect a general policy
rating of B:III or better in Best's Key
Rating Guide and are licensed to do
business in the state wherein the property
subject to the policy is located.
Section 3.11 Maintenance of Mortgage Impairment Insurance
Policy.
In the event that the Master Servicer shall obtain and maintain
a
blanket policy issued by an insurer that
has a general policy rating of B:III or
better in Best's Key Rating Guide insuring
against hazard losses on all of the
Mortgage Loans, then, to the extent such
policy provides coverage in an amount
equal to the amount required pursuant to
Section 3.10 and otherwise complies
with all other requirements of Section
3.10, it shall conclusively be deemed to
have satisfied its obligations as set forth
in Section 3.10, it being understood
and agreed that such policy may contain a
deductible clause, in which case the
Master Servicer shall, in the event that
there shall not have been maintained on
the related Mortgaged Property or REO
Property a policy complying with Section
3.10, and there shall have been a loss
which would have been covered by such
policy, deliver to the Trustee for deposit
in the Distribution Account the
amount not otherwise payable under the
blanket policy because of such deductible
clause, which amount shall not be
reimbursable to the Master Servicer from the
Trust Fund. In connection with its
activities as servicer of the Mortgage Loans,
the Master Servicer agrees to prepare and
present, on behalf of the Trustee,
claims under any such blanket policy in a
timely fashion in accordance with the
terms of such policy. Upon request of the
Trustee, the Master Servicer shall
cause to be delivered to the Trustee a
certified true copy of such policy and a
statement from the insurer thereunder that
such policy shall in no event be
terminated or materially modified without
thirty days prior written notice to
the Trustee.
Section 3.12 Fidelity Bond, Errors and Omissions Insurance.
The Master Servicer shall maintain, at its own expense, a
blanket
fidelity bond (the "Fidelity Bond") and an
errors and omissions insurance
policy, with broad coverage with
financially responsible companies on all
officers, employees or other persons acting
in any capacity with regard to the
Mortgage Loans to handle funds, money,
documents and papers relating to the
Mortgage Loans. The Fidelity Bond and
errors and omissions insurance shall be in
the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the
Master Servicer against losses, including
forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of
such persons. Such Fidelity Bond
shall also protect and insure the Master
Servicer against losses in connection
with the failure to maintain any insurance
policies required pursuant to this
Agreement and the release or satisfaction
of a Mortgage Loan without having
obtained payment in full of the
indebtedness secured thereby. No provision of
this Section 3.12 requiring the Fidelity
Bond and errors and omissions insurance
shall diminish or relieve the Master
Servicer from its duties and obligations as
set forth in this Agreement. The minimum
coverage under any such bond and
insurance policy shall be at least equal to
the corresponding amounts required
by Fannie Mae in the Fannie Mae MBS Selling
and Servicing Guide or by Freddie
Mac in the Freddie Mac Servicer's Guide.
Upon request of the Trustee, the Master
Servicer shall cause to be delivered to the
requesting party a certified true
copy of the Fidelity Bond and errors and
omissions insurance policy and a
statement from the surety and the insurer
that such Fidelity Bond and errors and
omissions insurance policy shall in no
event be terminated or materially
modified without thirty days' prior written
notice to the Trustee.
Section 3.13 Title, Management and Disposition of REO Property.
(a) In the event that title to a Mortgaged Property is acquired
in
foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power
of attorney to be provided by the
Trustee to the Master Servicer) in the name
of the Trustee or its nominee, on
behalf of the Certificateholders, or in the
event the Trustee is not authorized
or permitted to hold title to real property
in the state where the REO Property
is located, or would be adversely affected
under the "doing business" or tax
laws of such state by so holding title, the
deed or certificate of sale shall be
taken in the name of such Person or Persons
as shall be consistent with an
Opinion of Counsel obtained by the Master
Servicer from an attorney duly
licensed to practice law in the state where
the REO Property is located. Any
Person or Persons holding such title other
than the Trustee shall acknowledge in
writing that such title is being held as
nominee for the benefit of the Trustee.
(b) In the event that the Trust Fund acquires any REO Property
as
aforesaid or otherwise in connection with a
default or imminent default on a
Mortgage Loan, the Master Servicer shall
dispose of such REO Property before the
end of the third taxable year beginning
after the year of its acquisition by the
Trust Fund for purposes of Section
860G(a)(8) of the Code unless the Master
Servicer has received a grant of extension
from the Internal Revenue Service of
the above-mentioned grace period such that
the holding by the Trust Fund of such
REO Property subsequent to such period will
not: (i) result in the imposition of
any tax on "prohibited transactions" as
defined in Section 860F of the Code; or
(ii) cause any REMIC constituting any part
of the Trust Fund to fail to qualify
as a REMIC at any time that any
Certificates are outstanding, in which case the
Trust Fund may continue to hold such REO
Property.
Subject to compliance with applicable laws and regulations as
shall
at any time be in force, and
notwithstanding any other provisions of this
Agreement, no REO Property acquired by the
Trust Fund shall be rented (or
allowed to continue to be rented) or
otherwise used by or on behalf of the Trust
Fund in such a manner or pursuant to any
terms that would: (i) cause such REO
Property to fail to qualify as "foreclosure
property" within the meaning of
Section 860G(a)(8) of the Code; or (ii)
subject any REMIC constituting part of
the Trust Fund to the imposition of any
federal income taxes on the income
earned from such REO Property, including
any taxes imposed by reason of Sections
860F or 860G(c) of the Code, unless the
Master Servicer has agreed to indemnify
and hold harmless the Trust Fund with
respect to the imposition of any such
taxes.
The Master Servicer shall manage, conserve, protect and operate
each
REO Property for the Certificateholders and
the Trust Fund solely for the
purpose of its prompt disposition and sale
in a manner which does not cause such
REO Property to fail to qualify as
"foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in
the receipt by the related REMIC of
any "income from non-permitted assets"
within the meaning of Section
860F(a)(2)(B) of the Code, or any "net
income from foreclosure property" which
is subject to taxation under the REMIC
Provisions. The Master Servicer shall
cause each REO Property to be inspected
promptly upon the acquisition of title
thereto and shall cause each REO Property
to be inspected at least annually
thereafter. The Master Servicer shall make
or cause to be made a written or
electronic report of each such inspection.
Such reports shall be retained in the
Mortgage File and copies thereof shall be
forwarded by the Master Servicer to
the Trustee upon request. The Master
Servicer shall attempt to sell the same
(and may temporarily rent the same) on such
terms and conditions as the Master
Servicer deems to be in the best interest
of the Certificateholders and the
Trust Fund.
With respect to each REO Property, the Master Servicer shall
account
separately for each REO Property with
respect to all funds collected and
received in connection with the operation
of such REO Property.
The Master Servicer shall deposit or cause to be deposited, on
a
daily basis, within one Business Day of
receipt, in the Collection Account, all
revenues received with respect to each REO
Property and shall withdraw therefrom
funds necessary for the proper operation,
management and maintenance of the
related REO Property, including the cost of
maintaining any hazard insurance
pursuant to Section 3.10 hereof and the
fees of any managing agent acting on
behalf of the Master Servicer.
The Master Servicer shall furnish to the Trustee, on each
Servicer
Remittance Date, an operating statement for
each REO Property covering the
operation of each REO Property for the
previous month. Such operating statement
shall be accompanied by such other
information as the Trustee shall reasonably
request.
The Master Servicer shall use its best efforts to dispose of the
REO
Property as promptly as is practically
consistent with protecting the
Certificateholders' interests.
Each REO Disposition
shall be carried out by the Master Servicer at
such price and upon such terms and
conditions as the Master Servicer deems to be
in the best interest of the
Certificateholders. If as of the date title to any
REO Property was acquired by the Master
Servicer there were outstanding
unreimbursed Servicing Advances, Servicing
Fees and Advances with respect to the
REO Property, the Master Servicer, upon an
REO Disposition of such REO Property,
shall be entitled to reimbursement for any
related unreimbursed Servicing
Advances, Servicing Fees and Advances from
proceeds received in connection with
such REO Disposition. The proceeds from the
REO Disposition, net of any payment
to the Master Servicer as provided above,
shall be deposited in the Collection
Account for transfer to the Distribution
Account on the succeeding Servicer
Remittance Date in accordance with Section
3.04(a)(vi).
Any REO Disposition shall be for cash only (unless changes in
the
REMIC Provisions made subsequent to the
Startup Day allow a sale for other
consideration and an Opinion of Counsel is
obtained by the Master Servicer to
the effect that such sale shall not cause
any REMIC constituting part of the
Trust Fund to fail to qualify as a
REMIC).
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Mortgaged Property has been or is about to be conveyed by
the
Mortgagor, the Master Servicer shall, to
the extent it has knowledge of such
conveyance or prospective conveyance,
exercise its rights to accelerate the
maturity of the related Mortgage Loan under
any "due-on-sale" clause contained
in the related Mortgage or Mortgage Note;
provided, however, that the Master
Servicer shall not exercise any such right
if the "due-on-sale" clause, in the
reasonable belief of the Master Servicer,
is not enforceable under applicable
law. In such event, the Master Servicer
shall make reasonable efforts to enter
into an assumption and modification
agreement with the Person to whom such
property has been or is about to be
conveyed, pursuant to which such Person
becomes liable under the Mortgage Note and,
unless prohibited by applicable law
or the Mortgage, the Mortgagor remains
liable thereon. If the foregoing is not
permitted under applicable law, the Master
Servicer is authorized to enter into
a substitution of liability agreement with
such Person, pursuant to which the
original Mortgagor is released from
liability and such Person is substituted as
Mortgagor and becomes liable under the
Note; provided that no such substitution
will be permitted unless such person
satisfies the underwriting criteria of the
Master Servicer and has a credit score at
least equal to that of the original
Mortgagor. The Mortgage Loan, as assumed,
shall conform in all respects to the
requirements, representations and
warranties of this Agreement. The Master
Servicer shall not take or enter into any
assumption and modification agreement,
however, unless (to the extent practicable
under the circumstances) it shall
have received confirmation, in writing, of
the continued effectiveness of any
applicable hazard insurance policy. The
Master Servicer shall notify the Trustee
that any such assumption or substitution
agreement has been completed by
forwarding to the Trustee the original copy
of such assumption or substitution
agreement (indicating the Mortgage File to
which it relates) which copy shall be
added by the Trustee to the related
Mortgage File and which shall, for all
purposes, be considered a part of such
Mortgage File to the same extent as all
other documents and instruments
constituting a part thereof. The Master Servicer
shall be responsible for recording any such
assumption or substitution
agreements. In connection with any such
assumption or substitution agreement,
the Monthly Payment on the related Mortgage
Loan shall not be changed but shall
remain as in effect immediately prior to
the assumption or substitution, the
stated maturity or outstanding principal
amount of such Mortgage Loan shall not
be changed nor shall any required monthly
payments of principal or interest be
deferred or forgiven. Any fee collected by
the Master Servicer for consenting to
any such conveyance or entering into an
assumption or substitution agreement
shall be retained by or paid to the Master
Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision
of
this Agreement, the Master Servicer shall
not be deemed to be in default, breach
or any other violation of its obligations
hereunder by reason of any assumption
of a Mortgage Loan by operation of law or
any assumption which the Master
Servicer may be restricted by law from
preventing, for any reason whatsoever.
Section 3.15 Notification of Adjustments.
On each Adjustment Date, the Master Servicer shall make
Mortgage
Interest Rate adjustments for each
Adjustable-Rate Mortgage Loan in compliance
with the requirements of the related
Mortgage and Mortgage Note and Applicable
Regulations. The Master Servicer shall
execute and deliver the notices required
by each Mortgage and Mortgage Note and
Applicable Regulations regarding Mortgage
Interest Rate adjustments. Upon the
discovery by the Master Servicer or the
Trustee that the Master Servicer has failed
to adjust or has incorrectly
adjusted a Mortgage Interest Rate or a
Monthly Payment pursuant to the terms of
the related Mortgage Note and Mortgage, the
Master Servicer shall deliver to the
Trustee for deposit in the Distribution
Account from its own funds the amount of
any interest loss caused thereby without
reimbursement therefor; provided,
however, the Master Servicer shall be held
harmless with respect to any Mortgage
Interest Rate adjustments made by any
servicer prior to the Master Servicer.
Section
3.16 Optional Purchases of Mortgage Loans by Master
Servicer.
The Master Servicer may, at its option, purchase a Mortgage Loan
or
REO Property which becomes 90 or more days
Delinquent or for which the Master
Servicer has accepted a deed in lieu of
foreclosure. Prior to purchase pursuant
to this Section 3.16, the Master Servicer
shall be required to continue to make
monthly advances pursuant to Section 4.07.
The Master Servicer shall not use any
procedure in selecting Mortgage Loans to be
purchased which is materially
adverse to the interests of the
Certificateholders. The Master Servicer shall
purchase such Delinquent Mortgage Loan or
REO Property at a price equal to the
Purchase Price. The Master Servicer will
not be entitled to any Servicing Fee
with respect to any such purchased Mortgage
Loan. Any such purchase of a
Mortgage Loan or REO Property pursuant to
this Section 3.16 shall be
accomplished by delivery to the Trustee for
deposit in the Distribution Account
of the amount of the Purchase Price. The
Trustee shall immediately effectuate
the conveyance of such delinquent Mortgage
Loan or REO Property to the Master
Servicer to the extent necessary, including
the prompt delivery of all
documentation to the Master Servicer.
Section 3.17 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including
any
liquidation of such Mortgage Loan through
foreclosure or otherwise, or the
receipt by the Master Servicer of a
notification that payment in full will be
escrowed in a manner customary for such
purposes), the Master Servicer shall
deliver to the Trustee, in written form
(with two executed copies) or electronic
form, of a completed "Request for Release"
in the form of Exhibit E. Upon
receipt of such Request for Release of
Documents, the Trustee shall promptly
release the related Mortgage File within
three (3) Business Days via overnight
mail delivery (at the expense of the Master
Servicer), in trust, to (i) the
Master Servicer, or (ii) such other party
identified in the related Request for
Release. The Trustee agrees to indemnify
the Master Servicer, out of its own
funds, for any loss, liability or expense
(other than special, indirect,
punitive or consequential damages which
will not be paid by the Trustee)
incurred by the Master Servicer as a direct
result of the negligence or willful
misconduct by the Trustee in releasing the
Mortgage File as provided above. Upon
any such payment in full, or the receipt of
such notification that such funds
have been placed in escrow, the Trustee
hereby authorizes and empowers the
Master Servicer to execute an instrument of
satisfaction (or assignment of
Mortgage without recourse) regarding the
Mortgaged Property relating to such
Mortgage, which instrument of satisfaction
or assignment shall be delivered to
the Person or Persons entitled thereto
against receipt therefor of payment in
full, it being understood and agreed that
no expense incurred in connection with
such instrument of satisfaction or
assignment, as the case may be, shall be
chargeable to the Collection Account.
(b) From time to time and as appropriate in the servicing of
any
Mortgage Loan, including, without
limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection
under any insurance policy relating
to a Mortgage Loan, the Trustee shall
(except in the case of the payment or
liquidation pursuant to which the related
Mortgage File is released to an escrow
agent or an employee, agent or attorney of
the Trustee), upon written request of
the Master Servicer and delivery to the
Trustee, in written form (with two
executed copies) or electronic form, of a
"Request for Release" in the form of
Exhibit E signed by a Servicing Officer,
release the related Mortgage File to
the Master Servicer within three (3)
Business Days and shall execute such
documents as shall be necessary to the
prosecution of any such proceedings,
including, without limitation, an
assignment without recourse of the related
Mortgage to the Master Servicer. Such
receipt shall obligate the Master Servicer
to return the Mortgage File to the Trustee
when the need therefor by the Master
Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which
case, upon receipt of a Request for Release
evidencing such liquidation, the
receipt shall be released by the Trustee to
the Master Servicer.
(c) Subject to Section 3.01, the Master Servicer shall have the
right to accept applications of Mortgagors
for consent to (i) partial releases
of Mortgages, (ii) alterations, (iii)
removal, demolition or division of
properties subject to Mortgages, (iv)
modifications, and (v) second mortgage
subordination agreements. No application
for approval shall be considered by the
Master Servicer unless: (w) it has received
an Opinion of Counsel, addressed to
the Trustee (which opinion shall not be an
expense of the Trustee or the Trust
Fund) that such sale, disposition,
substitution, acquisition or contribution
will not affect adversely the status of any
REMIC constituting part of the Trust
Fund as a REMIC or cause any REMIC
constituting part of the Trust Fund to be
subject to a tax on "prohibited
transactions" or "contributions" pursuant to the
REMIC Provisions; (x) the provisions of the
related Note and Mortgage have been
complied with; (y) the Combined
Loan-to-Value Ratio and debt-to-income ratio
after any release does not exceed the
maximum Combined Loan-to-Value Ratio and
debt-to-income ratio established in
accordance with the underwriting standards
of the Mortgage Loans; and (z) the lien
priority of the related Mortgage is not
affected. Upon receipt by the Trustee of a
Servicing Officer's certificate
setting forth the action proposed to be
taken in respect of a particular
Mortgage Loan and certifying that the
criteria set forth in the immediately
preceding sentence have been satisfied, the
Trustee shall execute and deliver to
the Master Servicer the consent or partial
release so requested by the Master
Servicer. A proposed form of consent or
partial release, as the case may be,
shall accompany any Servicing Officer's
certificate delivered by the Master
Servicer pursuant to this paragraph.
