EXHIBIT 4.1
-----------
6
<PAGE>
=================
EXECUTION VERSION
==============================================================================
BOND SECURITIZATION, L.L.C.,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
LITTON LOAN SERVICING LP,
Servicer
and
U.S.
BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2005
2005-CB1 Trust
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2005-CB1
==============================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS........................................................8
Section 1.01 Defined
Terms..................................................8
Section 1.02
Accounting....................................................49
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF
CERTIFICATES................................................................49
Section 2.01 Conveyance of Mortgage
Loans..................................49
Section 2.02 Acceptance by
Trustee.........................................51
Section 2.03 Repurchase or Substitution of
Mortgage Loans by the
Seller........................................................53
Section 2.04 Representations and Warranties of
the Seller with Respect
to the Mortgage
Loans.........................................56
Section 2.05 Representations, Warranties and
Covenants of the Servicer.....57
Section 2.06 Representations and Warranties of
the Depositor...............59
Section 2.07 Issuance of
Certificates......................................60
Section 2.08 Representations and Warranties of
the Seller..................61
Section 2.09 Covenants of the
Seller.......................................62
ARTICLE III ADMINISTRATION AND SERVICING OF
THE TRUST FUND..................63
Section 3.01 Servicer to Act as
Servicer...................................63
Section 3.02 Collection of Mortgage Loan
Payments..........................65
Section 3.03 Realization Upon Defaulted
Mortgage Loans.....................65
Section 3.04 Collection Account and
Distribution Account...................66
Section 3.05 Permitted Withdrawals From the
Collection Account.............68
Section 3.06 Establishment of Escrow Accounts;
Deposits in Escrow
Account.......................................................69
Section 3.07 Permitted Withdrawals From Escrow
Account.....................70
Section 3.08 Payment of Taxes, Insurance and
Other Charges;
Collections
Thereunder........................................70
Section 3.09 Transfer of
Accounts..........................................71
Section 3.10 Maintenance of Hazard
Insurance...............................71
Section 3.11 Maintenance of Mortgage Impairment
Insurance Policy...........72
Section 3.12 Fidelity Bond, Errors and
Omissions Insurance.................72
Section 3.13 Title, Management and Disposition
of REO Property.............73
Section 3.14 Due-on-Sale Clauses; Assumption
and Substitution
Agreements....................................................75
Section 3.15 Notification of
Adjustments...................................76
Section 3.16 Optional Purchases of Mortgage
Loans by Servicer..............76
Section 3.17 Trustee to Cooperate; Release of
Files........................77
Section 3.18 Servicing
Compensation........................................78
Section 3.19 Annual Statement as to
Compliance.............................78
Section 3.20 Annual Independent Certified
Public Accountants' Reports......79
-i-
<PAGE>
Section 3.21 Access to Certain Documentation
and Information Regarding
the Mortgage
Loans............................................79
Section 3.22 Obligations of the Servicer in
Respect of Compensating
Interest......................................................79
Section 3.23 Obligations of the Servicer in
Respect of Mortgage
Interest Rates and Monthly
Payments...........................80
Section 3.24 Obligations of the Servicer in
Respect of Credit
Reporting.....................................................80
Section 3.25 Investment of Funds in the
Collection Account and the
Distribution
Account..........................................80
Section 3.26 Liability of Servicer;
Indemnification........................81
Section 3.27 Reports of Foreclosure and
Abandonment of Mortgaged
Properties....................................................82
Section 3.28 Protection of
Assets..........................................82
Section 3.29 Periodic
Filings..............................................83
ARTICLE IV FLOW OF
FUNDS....................................................84
Section 4.01 Interest
Distributions........................................84
Section 4.02 Distributions of Principal and
Monthly Excess Cashflow
Amounts.......................................................86
Section 4.03 Allocation of
Losses..........................................92
Section 4.04 Method of
Distribution........................................92
Section 4.05 Distributions on Book-Entry
Certificates......................93
Section 4.06
Statements....................................................93
Section 4.07 Remittance Reports;
Advances..................................96
Section 4.08 Basis Risk Reserve
Fund.......................................97
ARTICLE V THE
CERTIFICATES..................................................99
Section 5.01 The
Certificates..............................................99
Section 5.02 Registration of Transfer and
Exchange of Certificates........100
Section 5.03 Mutilated, Destroyed, Lost or
Stolen Certificates............105
Section 5.04 Persons Deemed
Owners........................................105
Section 5.05 Appointment of Paying
Agent..................................106
ARTICLE VI THE SELLER, THE SERVICER AND THE
DEPOSITOR......................106
Section 6.01 Liability of the Seller, the
Servicer and the Depositor......106
Section 6.02 Merger or Consolidation of, or
Assumption of the
Obligations of, the Seller, the Servicer or the
Depositor....106
Section 6.03 Limitation on Liability of the
Servicer and Others...........107
Section 6.04 Servicer Not to
Resign.......................................107
Section 6.05 Delegation of
Duties.........................................108
ARTICLE VII SERVICER EVENTS OF
TERMINATION.................................111
Section 7.01 Servicer Events of
Termination...............................111
Section 7.02 Trustee to Act; Appointment of
Successor.....................113
Section 7.03 Waiver of
Defaults...........................................114
Section 7.04 Notification to
Certificateholders...........................114
Section 7.05 Survivability of Servicer
Liabilities........................114
-ii-
<PAGE>
ARTICLE VIII THE
TRUSTEE...................................................114
Section 8.01 Duties of
Trustee............................................114
Section 8.02 Certain Matters Affecting the
Trustee........................116
Section 8.03 Trustee Not Liable for
Certificates or Mortgage Loans........117
Section 8.04 Trustee May Own
Certificates.................................118
Section 8.05 Seller to Pay Trustee Fees and
Expenses......................118
Section 8.06 Eligibility Requirements for
Trustee.........................119
Section 8.07 Resignation or Removal of
Trustee............................119
Section 8.08 Successor
Trustee............................................120
Section 8.09 Merger or Consolidation of
Trustee...........................121
Section 8.10 Appointment of Co-Trustee or
Separate Trustee................121
Section 8.11 Limitation of
Liability......................................122
Section 8.12 Trustee May Enforce Claims Without
Possession of
Certificates.................................................122
Section 8.13 Suits for
Enforcement........................................123
Section 8.14 Waiver of Bond
Requirement...................................123
Section 8.15 Waiver of Inventory, Accounting
and Appraisal Requirement....123
Section 8.16 Compliance with National Housing
Act of 1934.................123
ARTICLE IX REMIC
ADMINISTRATION............................................123
Section 9.01 REMIC
Administration.........................................123
Section 9.02 Prohibited Transactions and
Activities.......................127
Section 9.03 Indemnification with Respect to
Certain Taxes and Loss of
REMIC
Status.................................................127
ARTICLE X
TERMINATION......................................................128
Section 10.01
Termination..................................................128
Section 10.02 Additional Termination
Requirements..........................129
ARTICLE XI MISCELLANEOUS
PROVISIONS........................................130
Section 11.01
Amendment....................................................130
Section 11.02 Recordation of Agreement;
Counterparts.......................131
Section 11.03 Limitation on Rights of
Certificateholders...................132
Section 11.04 Governing Law;
Jurisdiction..................................133
Section 11.05
Notices......................................................133
Section 11.06 Severability of
Provisions...................................133
Section 11.07 Article and Section
References...............................134
Section 11.08 Notice to the Rating
Agencies................................134
Section 11.09 Further
Assurances...........................................135
Section 11.10 Benefits of
Agreement........................................135
Section 11.11 Acts of
Certificateholders...................................135
-iii-
<PAGE>
EXHIBITS
--------
Exhibit A-1 Form of Class AV-1
Certificates
Exhibit A-2 Form of Class AV-2
Certificates
Exhibit A-3 Form of Class AV-3
Certificates
Exhibit A-4 Form of Class AF-1
Certificates
Exhibit A-5 Form of Class AF-2
Certificates
Exhibit A-6 Form of Class AF-3
Certificates
Exhibit A-7 Form of Class AF-4
Certificates
Exhibit B-1 Form of Class M-1
Certificates
Exhibit B-2 Form of Class M-2
Certificates
Exhibit B-3 Form of Class M-3
Certificates
Exhibit C-1 Form of Class B-1
Certificates
Exhibit C-2 Form of Class B-2
Certificates
Exhibit C-3 Form of Class B-3
Certificates
Exhibit C-4 Form of Class B-4
Certificates
Exhibit C-5 Form of Class B-5
Certificates
Exhibit C-6 Form of Class N
Certificates
Exhibit C-7 Form of Class X
Certificates
Exhibit C-8 Form of Class XR
Certificates
Exhibit C-9 Form of Class R
Certificates
Exhibit D 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-1 Form of Non-Rule 144A
Investment Letter
Exhibit J-2 Form of Rule 144A
Investment Letter
Exhibit K Form of
Residual Certificate Transfer Affidavit
Exhibit L Form of
Transferor Certificate
Exhibit M
[Reserved]
Exhibit N
[Reserved]
Exhibit O
[Reserved]
Exhibit P Monthly
Information Provided by Servicer
Exhibit Q Form of
Officer's Certificate with Respect to Prepayments
Exhibit R Form of
Class AF-1 Confirmation
Exhibit S
[Reserved]
Exhibit T
[Reserved]
Exhibit U
[Reserved]
Exhibit V Form of
Certification
Exhibit W Form of
Certification to be Provided to the Servicer by the
Trustee
Exhibit X Form of
Power of Attorney
-iv-
<PAGE>
Schedule I Prepayment
Charge Schedule
-v-
<PAGE>
This Pooling and Servicing Agreement is dated as of January 1,
2005 (the "Agreement"), among BOND
SECURITIZATION, L.L.C., as depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING
AND SECURITIZATION LLC, as seller
(the "Seller"), LITTON LOAN SERVICING LP,
as servicer (the "Servicer"), and
U.S. BANK NATIONAL ASSOCIATION, as trustee
(the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be
issued hereunder in multiple
Classes, which in the aggregate will
evidence the entire beneficial ownership
interest in the Trust Fund created
hereunder. The Certificates will consist of
nineteen Classes of Certificates,
designated as (i) the Class AV-1, Class
AV-2, Class AV-3 Class AF-1, Class AF-2,
Class AF-3 and Class AF-4
Certificates, (ii) the Class M-1, Class M-2
and Class M-3 Certificates, (iii)
the Class B-1, Class B-2, Class B-3, Class
B-4 and Class B-5 Certificates,
(iv) the Class N Certificates, (v) the
Class X Certificates, (vi) the Class R
Certificates and (vii) the Class XR
Certificates.
The Depositor hereby assigns to the Trustee, acting on behalf
of
the Certificateholders its interests and
rights in the Mortgage Loans. As
provided herein, for federal income tax
purposes, the Trustee will elect to
treat the segregated pools of assets
subject to this Agreement as nine real
estate mortgage investment conduits (each,
a "REMIC"): the Subsidiary REMIC,
the Intermediate REMIC, the Master REMIC,
the Class X REMIC and the five Class
B REMICs. The Subsidiary REMIC will consist
of (a) all of the assets
constituting the Group 1 Mortgage Loans and
all of the assets constituting the
Group 2 Mortgage Loans. The Subsidiary
REMIC will issue (1) the REMIC regular
interests (the "Subsidiary REMIC Regular
Interests") and (2) the SR Interest.
The Subsidiary REMIC Regular Interests will
be uncertificated and will
represent the "regular interests" in the
Subsidiary REMIC and the SR Interest
will represent the single class of
"residual interest" in the Subsidiary
REMIC.
The
Trustee will hold the Subsidiary REMIC Regular Interests for
the benefit of the Intermediate REMIC. The
assets of the Intermediate REMIC
will consist of the Subsidiary REMIC
Regular Interests and the interests in
the Intermediate REMIC will be evidenced by
(i) the Intermediate REMIC Regular
Interests, which will be uncertificated and
will represent the "regular
interests" in the Intermediate REMIC and
(ii) the IR Interest, which will
represent the single class of "residual
interest" in the Intermediate REMIC.
The Trustee will hold the Intermediate REMIC Regular Interests
for
the benefit of the Master REMIC. The assets
of the Master REMIC will consist
of the Intermediate REMIC Regular Interests
and the interests in the Master
REMIC will be evidenced by (i) the Regular
Certificates (other than the Class
X and Class B Certificates), the Class XM
Interest and the five Class BM
Interests, which will represent the
"regular interests" in the Master REMIC
and (ii) the Class MR Interest, which will
represent the single class of
"residual interest" in the Master
REMIC.
The Trustee will hold the Class XM Interest in the Master REMIC
for the benefit of the Class X REMIC. The
assets of the Class X REMIC will
consist of the Class XM Interest in the
Master REMIC and interests in the
Class X REMIC will be evidenced by (i) the
Class XN
-1-
<PAGE>
Interest, which will represent the "regular
interests" in the Class X REMIC
and (ii) the Class XR Interest, which will
represent the single class of
"residual interest" in the Class X REMIC.
As discussed in section 9.01 of the
Agreement, the Class N and Class X
Certificates will represent the beneficial
interest in the Class XN Interest.
The Trustee will hold each Class BM Interest in the Master
REMIC
for the benefit of a separate Class B
REMIC. The assets of each Class B REMIC
will consist of a single Class BM Interest
in the Master REMIC and interests
in each Class B REMIC will be evidenced by
(i) a separately numbered Class B
Certificate, which will represent the
"regular interest" in that Class B REMIC
and (ii) a separately numbered,
uncertificated Class BR Interest, which will
represent the single class of "residual
interest" in that Class B REMIC.
The Class R Certificates will represent the Class SR, Class IR
and
Class MR Interests, and the Class XR
Certificates will represent the Class XR
Interests and the residual interest in each
of the five Class B REMICs. The
"latest possible maturity date" for federal
income tax purposes of all REMICs,
and regular and residual interests created
hereunder will be the Latest
Possible Maturity Date.
The Subsidiary REMIC
--------------------
The Subsidiary REMIC Interests, each of which (except for the
Class SR Interests) is hereby designated a
REMIC regular interest for federal
income tax purposes, will have the
principal balances, pass-through rates and
Corresponding Loan Groups as set forth in
the following table:
<TABLE>
<CAPTION>
Pass-Through
Corresponding
Subsidiary REMIC Interests
Initial Balance
Rate
Loan Group
----------------------------------
----------------- --------------- ----------------
<S>
<C>
<C>
<C>
<C>
A-1 (0.9% of SCB Group 1).... ..
(1)
(2)
1
B-1 (0.1% of SCB Group 1)....
(1)
(2)
1
C-1 (Excess of Group 1)......
(1)
(2)
1
A-2 (0.9% of SCB Group 2).... ..
(1)
(2)
2
B-2 (0.1% of SCB Group 2)....
(1)
(2)
2
C-2 (Excess of Group 2)......
(1)
(2)
2
1-$100........................
$100
(3)
N/A
SR............................
$0 (4)
N/A
N/A
</TABLE>
---------------
(1) Each Class A Interest will
have a principal balance initially equal to
0.9% of
the Subordinate Component Balance ("SBC") of its Corresponding
Loan
Group. Each Class B Interest will have a principal balance
initially
equal to 0.1% of the Subordinate Component Balance of its
Corresponding Loan Group. The initial principal balance of each
Class C
Interest
will equal the excess of its corresponding Loan Group over the
initial
aggregate principal balances of the Class A and Class B
Interests
corresponding to such Loan Group.
(2) A Rate equal to the weighted
average of the Adjusted Net Mortgage Rates
of the
Mortgage Loans of the Corresponding Loan Group.
-2-
<PAGE>
(3) The Class 1-$100 Interest
does not pay any interest.
(4) The Class SR Interest is the
sole class of residual interest in the
Subsidiary
REMIC. It has no principal balance and pays no principal or
interest.
On any Distribution Date:
(1)
Interest will be payable according to the rates or formulas
described above.
(2) If no
Cross-Over Situation exists with respect to any Class of
Interests, then Principal Reductions
arising with respect to each Loan Group
will be allocated first to cause the Loan
Group's corresponding Class A and
Class B Interests to equal, respectively,
0.9% of the Subordinate Component
Balance ("SCB"), and 0.1% of the SCB as of
such Distribution Date, and second
to the Loan Group's corresponding Class C
Interest;
(2) If a
Cross-Over Situation exists then:
(a)
if the Calculation Rate in respect of the outstanding Class A
and
Class B Interests is less than the
Subordinate Cap, Principal Relocation
Payments will be made proportionately to
the outstanding Class A Interests
prior to any other Principal Distributions
from each such Loan Group; and
(b) if the
Calculation Rate in respect of the outstanding Class A and
Class B Interests is greater than the
Subordinate Cap, Principal Relocation
Payments will be made proportionately to
the outstanding Class B Interests
prior to any other Principal Distributions
from each such Loan Group.
In each
case, Principal Relocation Payments will be made so as to cause
the Calculation Rate in respect of the
outstanding Class A and Class B
Interests to equal the Subordinate Cap.
With respect to each Loan Group, if
(and to the extent that) the sum of (a) the
principal payments comprising the
Principal Remittance Amount received during
the Due Period and (b) the
Realized Losses, are insufficient to make
the necessary reductions of
principal on the Class A and Class B
Interests, then interest will be added to
the Loan Group's other Interests that are
not receiving Principal Relocation
Payments, in proportion to their principal
balances.
(c) The
outstanding aggregate Class A and Class B Interests will not be
reduced below 1 percent of the excess of
(i) the aggregate outstanding
Principal Balances of such Loan Groups as
of the end of any Due Period over
(ii) the Certificate Balance of the Senior
Certificates related to such Loan
Group as of the related Distribution Date
(after taking into account
distributions of principal on such
Distribution Date).
If (and to
the extent that) the limitation in paragraph (c) prevents the
distribution of principal to any of the
Class A and Class B Interests, and if
the Loan Group's Class C Interest has
already been reduced to zero, then the
excess principal from that Loan Group will
be paid to the Class C Interests of
the other Loan Group if the aggregate Class
A and Class B Interests of such
Loan Group are less than one percent of the
SCB. Such payment will be made in
proportion to the principal balances of
such Class C Interests. If the Loan
Group of the Class C Interest that receives
such payment has a Group Cap below
the Group Cap of the Loan Group
-3-
<PAGE>
making the payment, then the payment will
be treated by Subsidiary REMIC as a
Realized Loss. Conversely, if the Loan
Group of the Class C Interest that
receives such payment has a Group Cap above
the Group Cap of the Loan Group
making the payment, then the payment will
be treated by Subsidiary REMIC as a
reimbursement for prior Realized
Losses;
The Intermediate REMIC
----------------------
The
following table sets forth Class Designation, the Initial
Principal
Balance, the Pass-Through Rate, and the
Corresponding Master REMIC Class for
each Intermediate REMIC Regular Interest
each of which is hereby designated a
REMIC regular interest for federal income
tax purposes:
<TABLE>
<CAPTION>
==================================================================================================
Certificate
Pass-
Principal
Through
Allocation of Allocation
of
Balance
Rate
Principal
Interest
--------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
<C>
Class AV-1
$161,180,000.00 (1)
Class AV-1
Class AV-1, XM
--------------------------------------------------------------------------------------------------
Class AV-2
$81,247,000.00
(1)
Class AV-2
Class AV-2, XM
--------------------------------------------------------------------------------------------------
Class AV-3
$6,373,000.00
(1)
Class AV-3
Class AV-3, XM
--------------------------------------------------------------------------------------------------
Class AF-1
$40,230,000.00
(2)
Class AF-1
Class AF-1, XM
--------------------------------------------------------------------------------------------------
Class AF-2
$14,120,000.00
(2)
Class AF-2
Class AF-2, XM
--------------------------------------------------------------------------------------------------
Class AF-3
$11.533,000.00
(2)
Class AF-3
Class AF-3, XM
--------------------------------------------------------------------------------------------------
Class AF-4
$7,320,000.00
(2)
Class AF-4
Class AF-4, XM
--------------------------------------------------------------------------------------------------
Class M-1
$26,851,000.00
(3)
Class M-1
Class M-1, XM
--------------------------------------------------------------------------------------------------
Class M-2
$20,702,000.00
(3)
Class M-2
Class M-2, XM
--------------------------------------------------------------------------------------------------
Class M-3
$6,354,000.00
(3)
Class M-3
Class M-3, XM
--------------------------------------------------------------------------------------------------
Class B-1
$5,534,000.00
(3)
Class B-1
Class BM-1, XM
--------------------------------------------------------------------------------------------------
Class B-2
$5,124,000.00
(3)
Class B-2
Class BM-2, XM
--------------------------------------------------------------------------------------------------
Class B-3
$4,714,000.00
(3)
Class B-3
Class BM-3, XM
--------------------------------------------------------------------------------------------------
Class B-4
$5,534,000.00
(3)
Class B-4
Class BM-4, XM
--------------------------------------------------------------------------------------------------
Class B-5
$4,099,000.00
(3)
Class B-5
Class BM-5, XM
--------------------------------------------------------------------------------------------------
Class1-$100
$100.00
(4)
R
N/A
--------------------------------------------------------------------------------------------------
Class IR
$0
N/A
N/A
N/A
==================================================================================================
</TABLE>
--------------
1) The Group 1 Rate Cap.
2) The Group 2 Rate Cap.
3) The Subordinate Cap.
4) The Class 1-$100 Interest does not pay
any interest.
5) The Class IR Interest is the sole class
of residual interest in the
Intermediate REMIC. It has
no principal balance and pays no principal or
interest.
On any Distribution Date:
-4-
<PAGE>
(1)
Interest will be payable according to the rates or formulas
described above.
(2)
Principal will be payable on each Class of Intermediate REMIC
Intrerest in the same manner that principal
is payable on the corresponding
Class or Classes of Certificates.
The Master REMIC
----------------
The following table sets forth characteristics of the
Certificates, together with the minimum
denominations and integral multiples
in excess thereof in which such Classes
shall be issuable (except that one
Certificate of each Class of Certificates
may be issued in a different amount
and, in addition, one Residual Certificate
representing the Tax Matters Person
Certificate may be issued in a different
amount):
<TABLE>
<CAPTION>
==================================================================================================
Pass-
Integral Multiples
Certificate
Through
Minimum
in Excess of
Principal Balance Rate
Denomination
Minimum
--------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
<C>
Class 1-AV-1
$161,180,000.00
Floating(1)
$25,000
$1.00
--------------------------------------------------------------------------------------------------
Class 1-AV-2
$81,247,000.00
Floating(2)
$25,000
$1.00
--------------------------------------------------------------------------------------------------
Class 1-AV-3
$6,373,000.00
Floating(3)
$25,000
$1.00
--------------------------------------------------------------------------------------------------
Class 2-AF-1
$40,230,000.00
Fixed (4)
$25,000
$1.00
--------------------------------------------------------------------------------------------------
Class 2-AF-2
$14,120,000.00
Fixed(5)
$25,000
$1.00
--------------------------------------------------------------------------------------------------
Class 2-AF-3
$11.533,000.00
Fixed(6)
$25,000
$1.00
--------------------------------------------------------------------------------------------------
Class 2-AF-4
$7,320,000.00
Fixed(7)
$25,000
$1.00
--------------------------------------------------------------------------------------------------
Class M-1
$26,851,000.00
Floating (8) $25,000
$1.00
--------------------------------------------------------------------------------------------------
Class M-2
$20,702,000.00
Floating (9) $25,000
$1.00
--------------------------------------------------------------------------------------------------
Class M-3
$6,354,000.00
Floating(10) $25,000
$1.00
--------------------------------------------------------------------------------------------------
Class BM-1
$5,534,000.00
Floating(11) N/A
N/A
--------------------------------------------------------------------------------------------------
Class BM-2
$5,124,000.00
Floating(12) N/A
N/A
--------------------------------------------------------------------------------------------------
Class BM-3
$4,714,000.00
Floating(13) N/A
N/A
--------------------------------------------------------------------------------------------------
Class BM-4
$5,534,000.00
Floating(14) N/A
N/A
--------------------------------------------------------------------------------------------------
Class BM-5
$4,099,000.00
Floating(15) N/A
N/A
--------------------------------------------------------------------------------------------------
Class MR(17) $100.00
N/A
$100.00
N/A
--------------------------------------------------------------------------------------------------
Class XM(16) (18)
(18)
N/A
N/A
==================================================================================================
</TABLE>
--------------
(1)
The lesser of (a) the Class AV-1 Pass-Through Rate and (b) the
Group 1 Rate Cap.
(2)
The lesser of (a) the Class AV-2 Pass-Through Rate and (b) the
Group 1 Rate Cap.
(3)
The lesser of (a) the Class AV-3 Pass-Through Rate and (b) the
Group 1 Rate Cap.
(4)
The lesser of (a) the Class AF-1 Pass-Through Rate and (b) the
Group 2 Rate Cap.
(5)
The lesser of (a) the Class AF-2 Pass-Through Rate and (b) the
Group 2 Rate Cap.
(6)
The lesser of (a) the Class AF-3 Pass-Through Rate and (b) the
Group 2 Rate Cap.
-5-
<PAGE>
(7) The
lesser of (a) the Class AF-4 Pass-Through Rate and (b) the
Group
2 Rate Cap.
(8) The lesser of (a) the
Class M-1 Pass-Through Rate and (b) the Sub
Rate Cap.
(9) The
lesser of (a) the Class M-2 Pass-Through Rate and (b) the Sub
Rate Cap.
(10) The
lesser of (a) the Class M-3 Pass-Through Rate and (b) the Sub
Rate Cap.
(11) The
lesser of (a) the Class B-1 Pass-Through Rate and (b) the Sub
Rate Cap.
(12) The
lesser of (a) the Class B-2 Pass-Through Rate and (b) the Sub
Rate Cap.
(13) The
lesser of (a) the Class B-3 Pass-Through Rate and (b) the Sub
Rate Cap.
(14) The
lesser of (a) the Class B-4 Pass-Through Rate and (b) the Sub
Rate Cap.
(15) The
lesser of (a) the Class B-5 Pass-Through Rate and (b) the Sub
Rate Cap.
(16) This
regular interest will be uncertificated and held by the
trustee in the manner described below.
(17) The
Class SR, IR, and MR Interests are represented by the Class R
Certificates.
(18) As to
any Distribution Date, the Class XM Interest will have a
Notional Balance equal to the aggregate
Stated Principal Balance of the
Intermediate Regular Interests (excluding
the Class 1-$100 Interest) and a
Pass Through Rate equal to the excess of:
(i) the weighted average Pass
Through Rate in respect of each such
Interest over (i) the weighted average
Pass Through Rate in respect of the
Certificates, excluding the Class XR,
Class R, Class X and Class N Certificates.
The Class Master X Interest will
also be entitled to all Prepayment
Charges.
The Class X REMIC
-----------------
The Class XM Master REMIC Interest will be the sole asset of
the
Class X REMIC. The following table sets
forth characteristics of the Class XN
Interest and the Class XR Interest,
together with the minimum denominations
and integral multiples in excess
thereof:
================================================================
Class
Certificate Balance
Pass-Through Rate
----------------------------------------------------------------
Class XN
(1)
(1)
----------------------------------------------------------------
Class XR
$0
N/A
================================================================
--------------
(1) The
Class XN Interest will have a notional balance equal to the
notional balance of the Class XM Master
REMIC Interest, and a rate equal to
100% of the Pass Through Rate on the Class
XM Master REMIC Interest. The Class
X Certificates and Class N Certificates
will represent the beneficial
ownership of the Class XN Interest. As
described more fully in section 9.01 of
the Agreement, the Class X Certificates and
Class N Certificates when owned by
two
-6-
<PAGE>
separate entities will be treated as a
partnership for federal income tax
purposes. As described more fully in
section 9.01 of the Agreement, (a) the
Class X Certificate will have a notional
balance equal to the notional balance
of the Class XN Interest, and a rate equal
to 100% of the Pass Through Rate on
the Class XN Interest less the amount
payable on the Class N Certificate, and
(b) the Class N Certificates will have an
original notional amount equal to
$14,650,000 and a pass through rate of
4.500% per annum.
The Five Class B REMICs
-----------------------
The following table sets forth the
characteristics of each Class B REMIC and
the characteristics of its corresponding
regular interest and residual
interest.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Corresponding
Designated Regular
Designated Residual
Corresponding Master
REMIC
Interest
Interest
REMIC Interest
-------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
Class B-1
Class B-1 Certificate Class B-1R
Class BM-1
(uncertificated)
-------------------------------------------------------------------------------------------------------
Class B-2
Class B-2 Certificate Class B-2R
Class BM-2
(uncertificated)
-------------------------------------------------------------------------------------------------------
Class B-3
Class B-3 Certificate Class B-3R
Class BM-3
(uncertificated)
-------------------------------------------------------------------------------------------------------
Class B-4
Class B-4 Certificate Class B-4R
Class BM-4
(uncertificated)
-------------------------------------------------------------------------------------------------------
Class B-5
Class B-5 Certificate Class B-5R
Class BM-5
(uncertificated)
-------------------------------------------------------------------------------------------------------
</TABLE>
Each
Designated Regular Interest will represent a REMIC regular
interest
in its Corresponding REMIC, will have a
principal balance and interest rate
identical to the principal balance and
interest rate of its corresponding
Class BM Master REMIC Interest and will
have a minimum denomination of $25,000
and additional amounts in $1.00 increments.
Each Designated Regular Interest
will be entitled to all amounts payable
with respect to its corresponding
Class BM Master REMIC Interest. Each
Designated Residual Interest will
represent the sole class of REMIC residual
interest in its Corresponding REMIC
and will not be entitled to any amounts
payable with respect to its
corresponding Class BM Master REMIC
Interest or otherwise.
The
following provisions in the Preliminary Statement are intended
to
cause net interest and principal
collections in respect of the Mortgage Loans
to be distributed from the Subsidiary REMIC
to the Intermediate REMIC, from
the Intermediate REMIC to the Master REMIC,
from the Master REMIC to each
Class of Certificates (other than the Class
B and Class X Certificates) and to
the Class X REMIC and five Class B REMICs,
from the Class X REMIC to the Class
XN Interest and from the Class XN Interest
to the Class N and Class X
Certificates, respectively and
-7-
<PAGE>
from each Class B REMIC to the Class B
Certificate that represents the
Designated Regular Interest in that Class B
REMIC. The Preliminary Statement
will be interpreted and applied
consistently with such intent.
For any
purpose for which the pass-through rates is calculated, the
interest rate on the Mortgage Loans shall
be appropriately adjusted to account
for the difference between the monthly day
count convention of the Mortgage
Loans and the monthly day count convention
of the regular interests issued by
each of the REMICs. For purposes of
calculating the pass-through rates for
each of the interests issued by the
Subsidiary REMIC, the Intermediate REMIC,
the Master REMIC and the Class X REMIC,
such rates shall be adjusted to equal
a monthly day count convention based on the
actual number of days in the
preceding Due Period and a 360-day year so
that the Mortgage Loans and all
regular interests will be using the same
monthly day counting convention.
ARTICLE I
DEFINITIONS
Section 1.01 Defined
Terms.
Whenever used in this Agreement or in the Preliminary
Statement,
the following words and phrases, unless the
context otherwise requires, shall
have the meanings specified in this
Article. Unless otherwise specified,
interest on the Floating Rate Certificates
will be calculated on the basis of
the actual number of days in the related
Interest Accrual Period and a 360-day
year. Interest on the Fixed Rate
Certificates and the Class N and Class X
Certificates will be calculated on the
basis of a 360-day year consisting of
twelve 30-day months.
"1933 Act": The
Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": On any date of determination, each
Mortgage Loan with respect to which any
portion of a Monthly Payment is, as of
the last day of the related Collection
Period, two months or more past due,
each Mortgage Loan in foreclosure, all REO
Property and each Mortgage Loan for
which the Mortgagor has filed for
bankruptcy after the Closing Date.
"Account": Any
of the Collection Account, the Distribution
Account and the Basis Risk Reserve
Fund.
"Accrued Certificate Interest": With respect to each
Distribution
Date and each Class of Offered Certificates
and Class B-4, Class B-5 and Class
N Certificates, an amount equal to the
interest accrued at the applicable rate
set forth or described opposite such Class
in the table in the Preliminary
Statement during the related Interest
Accrual Period on the Certificate
Principal Balance or Notional Amount of
such Class of Certificates immediately
prior to such Distribution Date, reduced by
(except with respect to the Class
N Certificates) such Class' Interest
Percentage of Relief Act Interest
Shortfalls for such Distribution Date.
-8-
<PAGE>
"Adjustable-Rate Mortgage Loan": A Mortgage Loan which has a
rate
at which interest accrues that adjusts
based on an Index plus a related Gross
Margin, as set forth and subject to the
limitations in the related Mortgage
Note.
"Adjusted Net Maximum Mortgage Interest Rate": For each
Mortgage
Loan, the applicable Maximum Loan Rate (or
the applicable Mortgage Interest
Rate if such Mortgage Loan is a Fixed-Rate
Mortgage Loan) less the sum of (i)
the Servicing Fee Rate and (ii) the rate at
which the Trustee Fee accrues.
"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 Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance
made by the Servicer in respect of any
Distribution Date pursuant to Section
4.07.
"Advance Facility": As
defined in Section 6.05(b) hereof.
"Advance Facility Notice": As defined in Section 6.05(c)
hereof.
"Advance Financing Person": As defined in Section 6.05(b)
hereof.
"Advance Reimbursement
Amounts": As defined in Section 6.05(c)
hereof.
"Adverse REMIC Event":
As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common
control with such Person. For
purposes of this definition, "control"
means the power to direct the
management and policies of a Person,
directly or indirectly, whether through
ownership of voting securities, by contract
or otherwise and "controlling" and
"controlled" shall have meanings
correlative to the foregoing.
"Agreement":
This Pooling
and Servicing Agreement and all
amendments and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and
regulations applicable thereto,
including with respect to each FHA Loan,
the FHA Regulations and the related
FHA Insurance Contract, and with respect to
each VA Loan, the VA Regulations
and the related VA Guaranty.
"Applied Realized
Loss Amount": As defined in Section 4.03(a)
hereof.
"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 of record the sale of the
Mortgage.
-9-
<PAGE>
"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 and
collected during the related Collection
Period and received by the Trustee one
Business Day prior to the related
Distribution Date, (b) any unscheduled
recoveries of principal and interest and
Principal Prepayments (excluding
Prepayment Charges), Insurance Proceeds and
Liquidation Proceeds in respect of
the Mortgage Loans during the related
Prepayment Period and any Subsequent
Recoveries, (c) the aggregate of any
Advances made by the Servicer for such
Distribution Date and any Compensating
Interest for such Distribution Date,
(d) the Purchase Price for any repurchased
Mortgage Loan deposited to the
Collection Account during the related
Prepayment Period, (e) any Substitution
Adjustment Amounts deposited in the
Collection Account during the related
Prepayment Period, and (f) on the
Distribution Date on which the Trust is to
be terminated pursuant to Section 10.01
hereof, the Termination Price, over
(ii) the sum of (a) amounts reimbursable or
payable to the Servicer pursuant
to Section 3.05, (b) Stayed Funds, (c) the
Servicing Fee, and (d) amounts
deposited in the Collection Account or the
Distribution Account, as the case
may be, in error.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal
balance of such Mortgage Loan in a single
payment at the maturity of such Mortgage
Loan that is substantially greater
than the preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal
balance
of a Mortgage Loan in a single payment at
the maturity of such Mortgage Loan
that is substantially greater than the
preceding Monthly Payment.
"Bankruptcy Code":
Title 11 of the United States Code, as
amended.
"Basis Risk Reserve Fund Deposit": With respect to each
Distribution Date, an amount equal to the
lesser of: (1) the sum of (a) the
sum of any Net Rate Carryover Amounts for
such Distribution Date that remain
unpaid and (b) the Required Basis Risk
Reserve Fund Deposit; and (2) any
Monthly Excess Cashflow Amount remaining on
such Distribution Date following
the distributions pursuant to Section
4.02(b)(i)-(xxv).
"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 AV-1, Class AV-2,
Class AV-3, Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2,
Class B-3, Class B-4 and Class B-5
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 New
York, the State of Texas or
in the city in which the
-10-
<PAGE>
Corporate Trust Office of the Trustee is
located are authorized or obligated
by law or executive order to be closed.
"Calculation Rate": For each Distribution Date, in the case of
the
Class A and Class B Interests, the product
of (i) 10 and (ii) the weighted
average rate of the outstanding Class A and
Class B Interests, treating each
Class A Interest as capped at zero or
reduced by a fixed percentage of 100% of
the interest accruing on such Class.
"Certificate": Any
Regular Certificate or Residual Certificate.
"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 X, Class
N and Residual Certificates) and
any Distribution Date, the Original Class
Certificate Principal Balance plus
any increases in the Certificate Principal
Balance of such Certificate
pursuant to Section 4.03 due to the receipt
of Subsequent Recoveries reduced
(but not below zero) by the sum of (i) all
amounts actually distributed in
respect of principal of such Class on all
prior Distribution Dates and (ii)
with respect to any class of Subordinate
Certificates, Applied Realized Loss
Amounts from previous Distribution Dates
allocated thereto. The Class X, Class
N and Residual Certificates do not have a
Certificate Principal Balance. With
respect to any Certificate (other than a
Class X, Class N or a Residual
Certificate) of a Class and any
Distribution Date, the portion of the
Certificate Principal Balance of such Class
represented by such Certificate
equal to the product of the Percentage
Interest evidenced by such Certificate
and the Certificate Principal Balance of
such Class.
"Certificate Register" and "Certificate Registrar": The
register
maintained and registrar appointed pursuant
to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the
Certificate Register, except that a
Disqualified Organization or non-U.S.
Person shall not be a Holder of a
Residual Certificate for any purpose
hereof.
"Class": Collectively, Certificates or REMIC Regular Interests
which have the same priority of payment and
bear the same class designation
and the form of which is identical except
for variation in the Percentage
Interest evidenced thereby.
"Class AF Certificates": The Class AF-1, Class AF-2, Class AF-3
and Class AF-4 Certificates.
"Class AF-4 Principal Distribution Amount": With respect to any
Distribution Date, the product of (x) the
percentage equivalent of a fraction,
the numerator of which is (A) the
Certificate Principal Balance of the Class
AF-4 Certificates immediately prior to such
Distribution Date, and the
denominator of which is (B) the Certificate
Principal Balance of the Class AF
Certificates immediately prior to such
Distribution Date, (y) the principal
allocable to the Class AF Certificates for
such Distribution Date, and (z) the
applicable percentage for the Distribution
Date set forth in the following
table.
-11-
<PAGE>
-----------------------------------------------------------------
Distribution Date Occurring In
Percentage
------------------------------
----------
-----------------------------------------------------------------
February 2005 through January
0%
2008
-----------------------------------------------------------------
February 2008 through January
45%
2010
-----------------------------------------------------------------
February 2010 through January
80%
2011
-----------------------------------------------------------------
February 2011 through January
100%
2012
-----------------------------------------------------------------
February 2012 and thereafter
300%
-----------------------------------------------------------------
"Class AF
Pass-Through Rate": For each Distribution Date and each Class
of Class AF Certificates, the lesser of (x)
rate set forth in the table below
and (y) and (ii) the applicable Net Rate
Cap for such Distribution Date.
Rate On and Prior to the Rate After
the
Optional Termination
Optional
Class
Date
Termination Date
--------------------
--------------------------- --------------------
Class AF-1
3.686%
4.186%
Class AF-2
4.090%
4.590%
Class AF-3
4.974%
5.474%
Class AF-4
4.615%
5.115%
"Class AF Principal Allocation Percentage": With respect to any
Distribution Date, the percentage
equivalent of a fraction, the numerator of
which is (x) the Group 2 Principal
Remittance Amount for such Distribution
Date, and the denominator of which is (y)
the Principal Remittance Amount for
such Distribution Date.
"Class AF 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 product of (1) the Class AF
Principal Allocation Percentage and
(2) the excess of (x) the Certificate
Principal Balance of the Senior
Certificates immediately prior to such
Distribution Date over (y) the lesser
of (A) the product of (i) approximately
57.10% and (ii) the Pool Balance as of
the last day of the related Collection
Period and (B) the excess of the Pool
Balance as of the last day of the related
Collection Period over the product
of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class AV Certificates": The Class AV-1, Class AV-2 and Class
AV-3
Certificates.
-12-
<PAGE>
"Class AV Principal Allocation Percentage": With respect to any
Distribution Date, the percentage
equivalent of a fraction, the numerator of
which is (x) the Group 1 Principal
Remittance Amount for such Distribution
Date, and the denominator of which is (y)
the Principal Remittance Amount for
such Distribution Date.
"Class AV 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 product of (1) the Class AV
Principal Allocation Percentage and
(2) the excess of (x) the Certificate
Principal Balance of the Senior
Certificates immediately prior to such
Distribution Date over (y) the lesser
of (A) the product of (i) approximately
57.10% and (ii) the Pool Balance as of
the last day of the related Collection
Period and (B) the excess of the Pool
Balance as of the last day of the related
Collection Period over the product
of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class AV-1 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.120% per annum, and (ii)
following the Optional Termination Date,
0.240% per annum.
"Class AV-1 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) the
sum of (i) LIBOR as of the related
LIBOR Determination Date and (ii) the Class
AV-1 Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date.
"Class AV-2 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.220% per annum, and (ii)
following the Optional Termination Date,
0.440% per annum.
"Class AV-2 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) the
sum of (i) LIBOR as of the related
LIBOR Determination Date and (ii) the Class
AV-2 Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date.
"Class AV-3 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.340% per annum, and (ii)
following the Optional Termination Date,
0.680% per annum.
"Class AV-3 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) the
sum of (i) LIBOR as of the related
LIBOR Determination Date and (ii) the Class
AV-3 Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date..
"Class B Certificate": Any one of the Certificates with an "B"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-1, Exhibit C-2, Exhibit C-3,
Exhibit C-4 and Exhibit C-5, executed
by the Trustee on behalf of the Trust and
authenticated and delivered by the
Certificate Registrar, representing the
right to distributions as set forth
herein and therein.
-13-
<PAGE>
"Class B-1 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
1.30% per annum, and (ii) following
the Optional Termination Date, 1.950% per
annum.
"Class B-1 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) the
sum of (i) LIBOR as of the related
LIBOR Determination Date and (ii) the Class
B-1 Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date..
"Class B-1 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balance of
the Senior 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 Balances of the B-1
Certificates immediately prior to
such Distribution Date over (y) the lesser
of (A) the product of (i)
approximately 86.10% and (ii) the Pool
Balance as of the last day of the
related Collection Period and (B) the
excess of the Pool Balance as of the
last day of the related Collection Period
over the product of (i) 0.50% and
(ii) the Pool Balance on the Cut-off
Date.
"Class B-2 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
1.40% per annum, and (ii) following
the Optional Termination Date, 2.10% per
annum.
"Class B-2 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) sum
of (i) LIBOR as of the related LIBOR
Determination Date and (ii) the Class B-2
Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date.
"Class B-2 Principal
Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balance of
the Senior 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
B-1 Certificates (after taking into
account the payment of the Class B-1
Principal Distribution Amount on such
Distribution Date) and (vi) the Certificate
Principal Balances of the B-2
Certificates immediately prior to such
Distribution Date over (y) the lesser
-14-
<PAGE>
of (A) the product of (i) approximately
88.60% and (ii) the Pool Balance as of
the last day of the related Collection
Period and (B) the excess of the Pool
Balance as of the last day of the related
Collection Period over the product
of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class B-3 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
2.300% per annum, and (ii)
following the Optional Termination Date,
3.450% per annum.
"Class B-3 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) sum
of (i) LIBOR as of the related LIBOR
Determination Date and (ii) the Class B-3
Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date.
"Class B-3 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balance of
the Senior 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
B-1 Certificates (after taking into
account the payment of the Class B-1
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class B-2
Certificates (after taking into account the
payment of the Class B-2 Principal
Distribution Amount on such Distribution
Date) and (vii) the Certificate
Principal Balances of the B-3 Certificates
immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) approximately
90.90% and (ii) the Pool Balance as of the
last day of the related Collection
Period and (B) the excess of the Pool
Balance as of the last day of the
related Collection Period over the product
of (i) 0.50% and (ii) the Pool
Balance on the Cut-off Date.
"Class B-4 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x)
6.000% and (y) the applicable Net Rate
Cap for such Distribution Date.
"Class B-4 Principal Distribution Amount": As of any
Distribution
Date on or after the Stepdown Date and as
long as a Trigger Event is not in
effect, the excess of (x) the sum of (i)
the Certificate Principal Balance of
the Senior 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
B-1 Certificates (after taking into
account the payment of the Class B-1
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance
-15-
<PAGE>
of the Class B-2 Certificates (after taking
into account the payment of the
Class B-2 Principal Distribution Amount on
such Distribution Date), (vii) the
Certificate Principal Balance of the Class
B-3 Certificates (after taking into
account the payment of the Class B-3
Principal Distribution Amount on such
Distribution Date) and (viii) the
Certificate Principal Balances of the B-4
Certificates immediately prior to such
Distribution Date over (y) the lesser
of (A) the product of (i) approximately
93.60% and (ii) the Pool Balance as of
the last day of the related Collection
Period and (B) the excess of the Pool
Balance as of the last day of the related
Collection Period over the product
of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class B-5 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x)
6.000% and (y) the applicable Net Rate
Cap for such Distribution Date.
"Class B-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 Certificate Principal Balance of
the Senior 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
B-1 Certificates (after taking into
account the payment of the Class B-1
Principal Distribution Amount on such
Distribution Date), (vi) the Certificate
Principal Balance of the Class B-2
Certificates (after taking into account the
payment of the Class B-2 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate
Principal Balance of the Class B-3
Certificates (after taking into account the
payment of the Class B-3 Principal
Distribution Amount on such Distribution
Date), (viii) the Certificate Principal
Balance of the Class B-4 Certificates
(after taking into account the payment of
the Class B-4 Principal Distribution
Amount on such Distribution Date) and (ix)
the Certificate Principal Balances
of the B-5 Certificates immediately prior
to such Distribution Date over (y)
the lesser of (A) the product of (i)
approximately 95.60% and (ii) the Pool
Balance as of the last day of the related
Collection Period and (B) the excess
of the Pool Balance as of the last day of
the related Collection Period over
the product of (i) 0.50% and (ii) the Pool
Balance on the Cut-off Date.
"Class M Certificate": Any one of the Certificates with an "M"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit B-1, Exhibit, B-2 and Exhibit B-3,
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 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.480% per annum, and (ii)
following the Optional Termination Date,
0.720% per annum.
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"Class M-1 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) the
sum of (i) LIBOR as of the related
LIBOR Determination Date and (ii) the Class
M-1 Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date.
"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 Balance of
the Senior 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)
approximately 70.20% and (ii) the Pool
Balance as of the last day of the
related Collection Period and (B) the
excess of the Pool Balance as of the
last day of the related Collection Period
over the product of (i) 0.50% and
(ii) the Pool Balance on the Cut-off
Date.
"Class M-2 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.730% per annum, and (ii)
following the Optional Termination Date,
1.095% per annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of the (x)
the sum of (i) LIBOR as of the
related LIBOR Determination Date and (ii)
the Class M-2 Certificate Margin for
such Distribution Date and (y) the
applicable Net Rate Cap for such
Distribution Date.
"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 Balance of
the Senior 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
Balances of the M-2 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) approximately 80.30% and
(ii) the Pool Balance as of the last
day of the related Collection Period and
(B) the excess of the Pool Balance as
of the last day of the related Collection
Period over the product of (i) 0.50%
and (ii) the Pool Balance on the Cut-off
Date.
"Class M-3 Certificate Margin": For each Distribution Date (i)
on
or prior to the Optional Termination Date,
0.830% per annum, and (ii)
following the Optional Termination Date,
1.245% per annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, a
per
annum rate equal to the lesser of (x) the
sum of (i) LIBOR as of the related
LIBOR Determination Date and (ii) the Class
M-3 Certificate Margin for such
Distribution Date and (y) the applicable
Net Rate Cap for such Distribution
Date.
"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
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of (i) the Certificate Principal Balance of
the Senior 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 Balances of the M-3
Certificates immediately prior to such
Distribution Date over (y) the lesser
of (A) the product of (i) approximately
83.40% and (ii) the Pool Balance as of
the last day of the related Collection
Period and (B) the excess of the Pool
Balance as of the last day of the related
Collection Period over the product
of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class N Certificate": Any one of the Certificates with an "N"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-6, executed by the Trustee on
behalf of the Trust and authenticated
and delivered by the Certificate Registrar,
representing the right to
distributions as set forth herein and
therein.
"Class R Certificate": Any one of the Class R and Class XR
Certificates.
"Class R Certificate": Any one of the Certificates with an "R"
designated on the face thereof
substantially in the form annexed hereto as
Exhibit C-9, 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 XR Certificate": Any one of the Certificates with an
"XR"
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 X Certificate": Any one of the Certificates with an "X"
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 X Distributable Amount": With respect to any
Distribution
Date, the excess of (i) the aggregate of
amounts distributable on the Class X
Interest for such Distribution Date as
provided in the Preliminary Statement,
over (ii) the aggregate of amounts
distributable to the Class N Certificates
pursuant to Section 4.02(b).
"Class X Interest": As defined in the Preliminary Statement.
"Closing Date":
February 8, 2005.
"Code": The Internal
Revenue Code of 1986,
as it may be
amended
from time to time.
"Collection
Account": The
account or accounts created and
maintained by the Servicer pursuant to Section 3.04,
which shall be
entitled
"Collection Account, Litton Loan
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Servicing LP, as Servicer for the C-BASS
Mortgage Loan Asset-Backed
Certificates, Series 2005-CB1," and which
must be an Eligible Account.
"Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar
month preceding the month in which
such Distribution Date occurs through the
first day of the month in which such
Distribution Date occurs.
"Combined Loan-to-Value Ratio": As of any date and Mortgage
Loan,
the fraction, expressed as a percentage,
the numerator of which is the
Principal Balance of the Mortgage Loan plus
the principal balance of any
related senior mortgage loan or loans, and
the denominator of which is the
Value of the related Mortgaged
Property.
"Compensating Interest": As defined in Section 3.22
hereof.
"Condemnation
Proceeds": All awards
or settlements in respect of
a taking of a Mortgaged Property by exercise of the power of
eminent domain
or condemnation.
"Conventional Mortgage
Loan": Any Mortgage Loan that is not an
FHA Loan or VA Loan.
"Corporate
Trust Office": With respect to the Trustee, the
principal corporate trust office of the
Trustee at which at any particular
time its corporate trust business in
connection with this Agreement shall be
administered, which office at the date of
the execution of this instrument is
located at 60 Livingston Avenue, St. Paul,
Minnesota 55107, Attention:
Structured Finance, C-BASS 2005-CB1, or at
such other address as the Trustee
may designate from time to time by notice
to the Certificateholders, the
Depositor, the Servicer and the Seller.
"Cross-Over Situation": For any Distribution Date and for each
Loan Group (after taking into account
principal distributions on such
Distribution Date) with respect to the
Class A Interest and Class B Interests,
the Class A and Class B Interests
corresponding to any Loan Group are in the
aggregate less than 1% of the Subordinate
Component Balance of the Loan Group
to which they correspond.
"Custodial Agreement": The Custodial Agreement, dated as of
January 1, 2005, among the Trustee, the
Servicer and the Custodian, as the
same may be amended or supplemented
pursuant to the terms thereof.
"Custodian": The Bank of New York, a New York banking
corporation,
or any successor custodian appointed
pursuant to the terms of the Custodial
Agreement.
"Cut-off Date":
January 1, 2005.
"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).
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<PAGE>
"DBRS": Dominion Bond Rating Service, Inc. and its successors,
and if such company shall for any reason no
longer perform the functions of a
securities rating agency, "DBRS" 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.
"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, the Monthly Payment due on a
Due
Date with respect to which such monthly
payment is not made by the close of
business on the next scheduled Due Date for
such Mortgage Loan.
"Depositor": Bond
Securitization,
L.L.C., a Delaware limited
liability company, or any successor in
interest.
"Depository": The initial depository shall be The Depository
Trust
Company, whose nominee is Cede & Co.,
or any other organization registered as
a "clearing agency" pursuant to Section 17A
of the Securities Exchange Act of
1934, as amended. The Depository shall
initially be the registered Holder of
the Book-Entry Certificates. The Depository
shall at all times be a "clearing
corporation" as defined in Section 8-102(3)
of the Uniform Commercial Code of
the State of New York.
"Depository Participant": A broker, dealer, bank or other
financial institution or other person for
whom from time to time a Depository
effects book-entry transfers and pledges of
securities deposited with the
Depository.
"Determination Date": With respect to any Distribution Date,
the
10th day of the calendar month in which
such Distribution Date occurs or, if
such 10th day is not a Business Day, the
Business Day immediately preceding
such 10th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the
tenants thereof, the management or
operation of such REO Property, the holding
of such REO Property primarily for
sale to customers, the performance of any
construction work thereon or any use
of such REO Property in a trade or business
conducted by the Trust other than
through an Independent Contractor;
provided, however, that the Trustee (nor
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the Servicer under this Agreement) shall
not be considered to Directly Operate
an REO Property solely because the Trustee
(or the Servicer under this
Agreement) establishes rental terms,
chooses tenants, enters into or renews
leases, deals with taxes and insurance, or
makes decisions as to repairs or
capital expenditures with respect to such
REO Property.
"Disproportionate Holder": As defined in Section 9.01(n)
hereof.
"Disqualified Organization": A "disqualified organization"
under
Section 860E of the Code, which as of the
Closing Date is any of: (i) the
United States, any state or political
subdivision thereof, any possession of
the United States, any foreign government,
any international organization, or
any agency or instrumentality of any of the
foregoing, (ii) any organization
(other than a cooperative described in
Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of
the Code unless such organization
is subject to the tax imposed by Section
511 of the Code, (iii) any
organization described in Section
1381(a)(2)(C) of the Code, or (iv) any other
Person so designated by the Trustee based
upon an Opinion of Counsel provided
by nationally recognized counsel to the
Trustee that the holding of an
ownership interest in a Residual
Certificate by such Person may cause the
Trust Fund or any Person having an
ownership interest in any Class of
Certificates (other than such Person) to
incur liability for any federal tax
imposed under the Code that would not
otherwise be imposed but for the
transfer of an ownership interest in a
Residual Certificate to such Person. A
corporation will not be treated as an
instrumentality of the United States or
of any state or political subdivision
thereof if all of its activities are
subject to tax and a majority of its board
of directors is not selected by a
governmental unit. The term "United
States," "state" and "international
organization" shall have the meanings set
forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created
and
maintained by the Trustee pursuant to
Section 3.04(b) which shall be entitled
"Distribution Account, U.S. Bank National
Association, as Trustee, in trust
for the registered Holders of 2005-CB1
Trust, C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2005-CB1"
and which must be an Eligible
Account.
"Distribution Date": The 25th day of any calendar month, or if
such 25th day is not a Business Day, the
Business Day immediately following
such 25th day, commencing on February 25,
2005.
"Distribution Information": The items calculated and reported
by
the Trustee pursuant to Section 4.06(a)(i),
(ii), (iii) and (xiv) through
(xxii) and any other information included
in the Monthly Statement aggregated
or calculated by the Trustee from (a)
information contained in the Remittance
Report or (b) other information furnished
to the Trustee by the Servicer
pursuant to Section 4.07.
"Due Date": With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar
month in which such Distribution
Date occurs on which the Monthly Payment
for such Mortgage Loan was due,
exclusive of any grace period.
"Eligible Account":
Any of (i) an account
or accounts maintained
with a federal or state chartered
depository institution
or trust company the
short-term unsecured debt
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<PAGE>
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 in one of the
top three rating categories by each of the
Rating Agencies at the time any
amounts are held on deposit therein, (ii)
an account or accounts the deposits
in which are fully insured by the FDIC (to
the limits established by such
corporation), the uninsured deposits in
which account are otherwise secured
such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and
to each Rating Agency, the
Certificateholders will have a claim with respect
to the funds in such account or a perfected
first priority security interest
against such collateral (which shall be
limited to Permitted Investments)
securing such funds that is superior to
claims of any other depositors or
creditors of the depository institution
with which such account is maintained,
(iii) a trust account or accounts
maintained with the trust department of a
federal or state chartered depository
institution, national banking
association or trust company acting in its
fiduciary capacity or (iv) an
account otherwise acceptable to each Rating
Agency without reduction or
withdrawal of their then current ratings of
the Certificates as evidenced by a
letter from each Rating Agency to the
Trustee. Eligible Accounts may bear
interest.
"Eligible Substitute Mortgage Loan": A mortgage loan
substituted
for a Defective Mortgage Loan pursuant to
the terms of this Agreement which
must, on the date of such substitution, (i)
have an outstanding principal
balance, after application of all scheduled
payments of principal and interest
due during or prior to the month of
substitution, not in excess of, and not
more than 5% less than, the outstanding
principal balance of the Defective
Mortgage Loan as of the Due Date in the
calendar month during which the
substitution occurs, (ii) have a Mortgage
Interest Rate, with respect to a
Fixed-Rate Mortgage Loan, not less than the
Mortgage Interest Rate of the
Defective Mortgage Loan and not more than
1% in excess of the Mortgage
Interest Rate of such Defective Mortgage
Loan, (iii) if an Adjustable-Rate
Mortgage Loan, have a Maximum Loan Rate not
less than the Maximum Loan Rate
for the Defective Mortgage Loan, (iv) if an
Adjustable-Rate Mortgage Loan,
have a Minimum Loan Rate not less than the
Minimum Loan Rate of the Defective
Mortgage Loan, (v) if an Adjustable-Rate
Mortgage Loan, have a Gross Margin
equal to or greater than the Gross Margin
of the Defective Mortgage Loan, (vi)
have the same Due Date as the Defective
Mortgage Loan; (vii) 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, (viii) have a remaining term to
maturity not greater than (and not more
than one year less than) that of the
Defective Mortgage Loan, (ix) be current as
of the date of substitution, (x)
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, (xi) have a risk grading
determined by the Seller at least equal
to the risk grading assigned on the
Defective Mortgage Loan, (xii) have been
reunderwritten by the Seller in accordance
with the same underwriting criteria
and guidelines as the Defective Mortgage
Loan, and (xiii) conform to each
representation and warranty set forth in
Section 2.04 hereof applicable to the
Defective Mortgage Loan. In the event that
one or more mortgage loans are
substituted for one or more Defective
Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on
the basis of aggregate principal
balances, the Mortgage Interest Rates
described in clause (ii) hereof shall be
determined on the basis of weighted average
Mortgage Interest Rates, the risk
gradings described in clause (xi) hereof
shall
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<PAGE>
be satisfied as to each such mortgage loan,
the terms described in clause
(viii) hereof shall be determined on the
basis of weighted average remaining
term to maturity, the Combined
Loan-to-Value Ratios described in clause (x)
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 (xiii) hereof must be
satisfied as to each Eligible
Substitute Mortgage Loan or in the
aggregate, as the case may be.
"ERISA": The Employee
Retirement Income
Security Act of 1974, as
amended.
"ERISA-Restricted Certificate": Any of the Class M-1, Class
M-2,
Class M-3, Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5, Class N,
Class X, Class XR and Class R Certificates,
and any Certificates of any other
Class that has ceased to satisfy the
requirements of Prohibited Transaction
Exemption 2002-41, 67 Fed. Reg. 54487
(August 22, 2002), or any substantially
similar exemption.
"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.
"Expense Fee Rate": With respect to each Mortgage Loan and any
Distribution Date, the sum of (i) the
Trustee Fee Rate and (ii) the Servicing
Fee Rate.
"Extended Period": As
defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any Distribution
Date, the lesser of (x) the Monthly Excess
Interest Amount for such
Distribution Date and (y) the
Overcollateralization Deficiency for such
Distribution Date.
"FDIC": Federal
Deposit Insurance Corporation or any successor
thereto.
"FHA": The Federal
Housing Administration, an agency within HUD.
"FHA Approved
Mortgagee": Those
institutions which are
approved
by FHA to act as servicer and mortgagee of
record pursuant to FHA Regulations.
"FHA Insurance Contract" or "FHA Insurance": The contractual
obligation of FHA respecting the insurance
of an FHA Loan pursuant to the
National Housing Act, as amended.
"FHA Loan": A Mortgage Loan which is the subject of an FHA
Insurance Contract as evidenced by a
Mortgage Insurance Certificate.
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"FHA Regulations": Regulations promulgated by HUD under the
National Housing Act, codified in 24 Code
of Federal Regulations, and other
HUD issuances relating to FHA Loans,
including the related handbooks,
circulars, notices and mortgagee
letters.
"Fidelity Bond":
Shall have the meaning assigned thereto in
Section 3.12.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other
than a Mortgage Loan or REO Property
purchased by the Seller or the Servicer
pursuant to or as contemplated by
Section 2.03 or 10.01), a determination
made by the Servicer that all
Insurance Proceeds, Liquidation Proceeds
and other payments or recoveries
which the Servicer, in its reasonable good
faith judgment, expects to be
finally recoverable in respect thereof have
been so recovered. The Servicer
shall maintain records, prepared by a
Servicing Officer, of each Final
Recovery Determination made thereby.
"Fitch": Fitch, Inc. 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
Certificates":
The Class AF Certificates and the
Class B-4 and Class B-5 Certificates.
"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.
"Floating Rate Certificates": The Class AV Certificates and the
Subordinate Certificates (other than the
Class B-4 and Class B-5
Certificates).
"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.
"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 Balance": With respect to any Distribution Date, the
aggregate Principal Balance of the Group 1
Mortgage Loans.
"Group 1 Interest Remittance Amount": With respect to any
Distribution Date, that portion of the
Available Funds for such Distribution
Date attributable to interest received or
advanced with respect to the Group 1
Mortgage Loans or to Compensating Interest
paid by the Servicer with respect
to the Group 1 Mortgage Loans.
"Group 1 Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) (x) the
Group 1 Principal Remittance Amount
for such Distribution Date minus (y) the
amount of any Overcollateralization
Release Amount for such Distribution Date
multiplied
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by the Class AV Principal Allocation
Percentage for such Distribution Date,
and (ii) the Extra Principal Distribution
Amount for such Distribution Date
multiplied by the Class AV Principal
Allocation Percentage for such
Distribution Date.
"Group 1 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
Group 1 Mortgage Loan due during the
related Collection Period and received by
the Servicer on or prior to the
related Determination Date, and any
Advances with respect thereto, (ii) all
full and partial Principal Prepayments
received by the Servicer on the Group 1
Mortgage Loans during the related
Prepayment Period, (iii) the Net Liquidation
Proceeds allocable to principal actually
collected by the Servicer on the
Group 1 Mortgage Loans during the related
Prepayment Period, (iv) with respect
to Defective Mortgage Loans that are Group
1 Mortgage Loans repurchased with
respect to such Prepayment Period, the
portion of the Purchase Price allocable
to principal, (v) any Substitution
Adjustment Amounts received with respect to
Group 1 Mortgage Loans on or prior to the
previous Determination Date and not
yet distributed 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
on the Group 1 Mortgage Loans.
"Group 1 Rate Cap":
With respect to the Class AV Certificates and
any Distribution Date is the lesser of (i)
the Group Cap for Loan Group 1 for
such Distribution Date and (ii) the Maximum
Cap for Loan Group 1 for such
Distribution Date.
"Group 1 Share": (i) Generally, as of any Distribution Date, a
fraction whose numerator is the aggregate
Stated Principal Balance of the
Group 1 Mortgage Loans (as of the first day
of the related Collection Period)
and whose denominator is the aggregate
Stated Principal Balance of the
Mortgage Loans (as of the first day of the
related Collection Period).
(ii) Notwithstanding the above, if the sum of (a) the
Certificate
Principal Balance of the Class AV
Certificates for such Distribution Date
(prior to any actual distributions on such
Distribution Date but assuming that
distributions are made in accordance with
each Group Share as determined in
paragraph (i) of the definition of such
Group Share), and (b) the Group 1
Share multiplied by the Certificate
Principal Balance of the Subordinate
Certificates for such Distribution Date
(prior to any actual distributions on
such Distribution Date but assuming that
distributions are made in accordance
with each Group Share as determined in
paragraph (i) of the definition of such
Group Share) exceeds the aggregate Stated
Principal Balance of the Group 1
Mortgage Loans as of the last day of the
related Collection Period, the Group
1 Share will be reduced (and as described
in paragraph (iii) of the definition
of Group 2 Share and Group 3 Share, the
Group 2 Share and Group 3 Share,
respectively, will be increased) by a
fraction equal to the amount of such
excess divided by the aggregate Stated
Principal Balance of the Mortgage Loans
as of the last day of the related
Collection Period.
(iii) Furthermore, if the sum of (x) the Certificate Principal
Balance of the Class AF Certificates for
such Distribution Date (prior to any
actual distributions on such Distribution
Date but assuming that distributions
are made in accordance with each Group
Share as determined in paragraph (i) of
the definition of such Group Share) and (y)
the Group 2 Share
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multiplied by the Certificate Principal
Balance of the Subordinate
Certificates for such Distribution Date
(prior to any actual distributions on
such Distribution Date but assuming that
distributions are made in accordance
with each Group Share as determined in
paragraph (i) of the definition of such
Group Share) exceeds the aggregate Stated
Principal Balance of the Group 2
Mortgage Loans as of the last day of the
related Collection Period, the Group
1 Share will be increased by a fraction
equal to the amount of such excess
divided by the aggregate Stated Principal
Balance of the Mortgage Loans as of
the last day of the related Collection
Period. An increase resulting from this
paragraph (iii) will be allocated
proportionately to the Group 1 Share and
Group 2 Share based on their relative
values. Notwithstanding the preceding
sentence, the amount increased in this
paragraph (iii) will be subject to a
reduction under paragraph (ii) of this
definition.
(iv) On any Distribution Date, the sum of the Group 1 Share and
Group 2 Share for such Distribution Date
shall equal 1.00.
"Group 2 Balance": With respect to any Distribution Date, the
aggregate Principal Balance of the Group 2
Mortgage Loans.
"Group 2 Interest Remittance Amount": With respect to any
Distribution Date, that portion of the
Available Funds for such Distribution
Date attributable to interest received or
advanced with respect to the Group 2
Mortgage Loans or to Compensating Interest
paid by the Servicer with respect
to the Group 2 Mortgage Loans.
"Group 2 Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) (x) the
Group 2 Principal Remittance Amount
for such Distribution Date minus (y) the
amount of any Overcollateralization
Release Amount for such Distribution Date
multiplied by the Class AF Principal
Allocation Percentage for such Distribution
Date, and (ii) the Extra Principal
Distribution Amount for such Distribution
Date multiplied by the Class AF
Principal Allocation Percentage for such
Distribution Date.
"Group 2 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
Group 2 Mortgage Loan due during the
related Collection Period and received by
the Servicer on or prior to the
related Determination Date, and any
Advances with respect thereto, (ii) all
full and partial Principal Prepayments
received by the Servicer on the Group 2
Mortgage Loans during the related
Prepayment Period, (iii) the Net Liquidation
Proceeds allocable to principal actually
collected by the Servicer on the
Group 2 Mortgage Loans during the related
Prepayment Period, (iv) with respect
to Defective Mortgage Loans that are Group
2 Mortgage Loans repurchased with
respect to such Prepayment Period, the
portion of the Purchase Price allocable
to principal, (v) any Substitution
Adjustment Amounts received with respect to
Group 2 Mortgage Loans on or prior to the
previous Determination Date and not
yet distributed 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
on the Group 2 Mortgage Loans.
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<PAGE>
"Group 2 Rate Cap": With respect to the Class AF Certificates
and
any Distribution Date is the lesser of (i)
the Group Cap for Loan Group 2 for
such Distribution Date and (ii) the Maximum
Cap for Loan Group 2 for such
Distribution Date.
"Group 2 Share": (i) Generally, as of any Distribution Date, a
fraction whose numerator is the aggregate
Stated Principal Balance of the
Group 2 Mortgage Loans (as of the first day
of the related Collection Period)
and whose denominator is the aggregate
Stated Principal Balance of the
Mortgage Loans (as of the first day of the
related Collection Period).
(ii) Notwithstanding the above, if the sum of (a) the
Certificate
Principal Balance of the Class AF
Certificates for such Distribution Date
(prior to any actual distributions on such
Distribution Date but assuming that
distributions are made in accordance with
each Group Share as determined in
paragraph (i) of the definition of such
Group Share), and (b) the Group 2
Share multiplied by the Certificate
Principal Balance of the Subordinate
Certificates for such Distribution Date
(prior to any actual distributions on
such Distribution Date but assuming that
distributions are made in accordance
with each Group Share as determined in
paragraph (i) of the definition of such
Group Share), exceeds the aggregate Stated
Principal Balance of the Group 2
Mortgage Loans as of the last day of the
related Collection Period, the Group
2 Share will be reduced (and as described
in paragraph (iii) of the definition
of Group 1 Share, the Group 1 Share will be
increased) by a fraction equal to
the amount of such excess divided by the
aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of
the related Collection Period.
(iii) Furthermore, if the sum of (x) the Certificate Principal
Balance of the Class AF Certificates for
such Distribution Date (prior to any
actual distributions on such Distribution
Date but assuming that distributions
are made in accordance with each Group
Share as determined in paragraph (i) of
the definition of such Group Share) and (y)
the Group 2 Share as of the last
day of the related Collection Period
multiplied by the Certificate Principal
Balance of the Subordinate Certificates for
such Distribution Date (prior to
any actual distributions on such
Distribution Date but assuming that
distributions are made in accordance with
each Group Share as determined in
paragraph (i) of the definition of such
Group Share) exceeds the aggregate
Stated Principal Balance of the Group 2
Mortgage Loans as of the last day of
the related Collection Period, the Group 1
Share will be increased by a
fraction equal to the amount of such excess
divided by the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related
Collection Period. An increase resulting
from this paragraph (iii) will be
allocated proportionately to the Group 2
Share and Group 1 Share based on
their relative values. Notwithstanding the
preceding sentence, the amount
increased in this paragraph (iii) will be
subject to a reduction under
paragraph (ii) of this definition.
(iv) On any Distribution Date, the sum of the Group 1 Share and
Group 2 Share. for such Distribution Date
shall equal 1.00.
"Group Balance": With respect to Loan Group 1 and Loan Group 2,
the Group 1 Balance and the Group 2
Balance, respectively.
"Group Cap": With respect to any Loan Group and Distribution
Date,
a per annum rate equal to the weighted
average Net Mortgage Interest Rate for
the Mortgage Loans in
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<PAGE>
such Loan Group (weighted on the basis of
the principal balances of the
related Mortgage Loans as of the first day
of the related Collection Period);
such result to be adjusted as necessary to
an effective rate reflecting the
accrual of interest on an actual/360 basis
with respect to the Class AV
Certificates and on a 30/360 basis with
respect to the Class AF Certificates.
"Group Share": Any of the Group 1 Share or Group 2 Share, as
applicable.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto and
including the Federal Housing
Commissioner and the Secretary of Housing
and Urban Development where
appropriate under the FHA Regulations.
"Independent": When used with respect to any specified Person,
any
such Person who (i) is in fact independent
of the Depositor, the Servicer and
their respective Affiliates, (ii) does not
have any direct financial interest
in or any material indirect financial
interest in the Depositor or the
Servicer or any Affiliate thereof, and
(iii) is not connected with the
Depositor or the Servicer or any Affiliate
thereof as an officer, employee,
promoter, underwriter, trustee, partner,
director or Person performing similar
functions; provided, however, that a Person
shall not fail to be Independent
of the Depositor or the Servicer or any
Affiliate thereof merely because such
Person is the beneficial owner of 1% or
less of any Class of securities issued
by the Depositor or the Servicer or any
Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent
contractor" with respect to the Trust
Fund within the meaning of Section
856(d)(3) of the Code if the Trust Fund
were a real estate investment trust (except
that the ownership tests set forth
in that section shall be considered to be
met by any Person that owns,
directly or indirectly, 35 percent or more
of any Class of Certificates), so
long as the Trust Fund does not receive or
derive any income from such Person
and provided that the relationship between
such Person and the Trust Fund is
at arm's length, all within the meaning of
Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person
(including the Servicer) if the
Trustee has received an Opinion of Counsel,
which Opinion of Counsel shall be
an expense of the Trust Fund, to the effect
that the taking of any action in
respect of any REO Property by such Person,
subject to any conditions therein
specified, that is otherwise herein
contemplated to be taken by an Independent
Contractor will not cause such REO Property
to cease to qualify as
"foreclosure property" within the meaning
of Section 860G(a)(8) of the Code
(determined without regard to the exception
applicable for purposes of Section
860D(a) of the Code), or cause any income
realized in respect of such REO
Property to fail to qualify as Rents from
Real Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and
with respect to each related Adjustment
Date, the index as specified in the
related Mortgage Note.
"Initial Certificate Principal Balance": With respect to any
Certificate other than a Class N, Class X
or Residual Certificate, the amount
designated "Initial Certificate Principal
Balance" on the face thereof.
"Initial Notional Amount": With respect to any Class N
Certificate, the amount designated "Initial
Notional Amount" on the face
thereof.
"Initial Overcollateralization Amount": $9,018,390.62.
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<PAGE>
"Insurance Proceeds": Proceeds of any title policy, hazard
policy
or other insurance policy covering a
Mortgage Loan to the extent such proceeds
are not to be applied to the restoration of
the related Mortgaged Property or
released to the Mortgagor in accordance
with the procedures that the Servicer
would follow in servicing mortgage loans
held for its own account, subject to
the terms and conditions of the related
Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date
and (i) with respect to the Floating Rate
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 25, 2005), and (ii)
with respect to (x) the Fixed Rate
Certificates and the Class N and Class X
Certificates, the calendar month
immediately preceding the month in which
such Distribution Date occurs.
"Interest Carry Forward Amount": With respect to any Class of
Offered Certificates and the Class B-4 and
Class B-5 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) (1) with respect to the
Floating Rate Certificates, interest on
such excess at the applicable
Pass-Through Rate for the actual number of
days elapsed on the basis of a
360-day year since the prior Distribution
Date, and (2) with respect to the
Fixed Rate Certificates, 30 days' interest
on such excess at the applicable
Pass-Through Rate 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 and without taking into
account any Relief Act Interest
Shortfalls for such Distribution Date.
"Intermediate REMIC Regular Interest": As defined in the
Preliminary Statement.
"Late Collections": With respect to any Mortgage Loan, all
amounts
received subsequent to the Determination
Date immediately following any
related Collection Period, whether as late
payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds or
otherwise, which represent late
payments or collections of principal and/or
interest due (without regard to
any acceleration of payments under the
related Mortgage and Mortgage Note) but
delinquent on a contractual basis for such
Collection Period and not
previously recovered.
"Lender": As defined
in Section 6.05(b) hereof.
"LIBOR": With respect to each Interest Accrual Period, the rate
determined by the Trustee on the related
LIBOR Determination Date on the basis
of the offered rate for one-month United
States dollar deposits, as such rate
appears on the Telerate Page 3750, as of
11:00 a.m. (London time) on such
LIBOR Determination Date. If no such
quotations are available on an LIBOR
Determination Date, LIBOR for the related
Interest Accrual Period will be
established by the Trustee as follows:
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<PAGE>
(i) If on such LIBOR Determination Date two or more Reference
Banks
provide such offered quotations, LIBOR for the related Interest
Accrual
Period shall be the arithmetic mean of such offered quotations
(rounded
upwards if necessary to the nearest whole multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two
Reference
Banks
provide such offered quotations, LIBOR for the related Interest
Accrual
Period shall be the arithmetic mean of the rates quoted by one
or more
major banks in New York City, selected by the Trustee after
consultation with the Depositor, as of 11:00 A.M., New York City
time,
on such
date for loans in U.S. Dollars to leading European banks for a
period of
one month in amounts approximately equal to the aggregate
Certificate
Principal Balance of the Offered Certificates and the Class
B-4 and
Class B-5 Certificates; and
(iii) If no such quotations can be obtained, LIBOR for the
related
Interest
Accrual Period shall be LIBOR for the prior Distribution Date.
"LIBOR Business Day": Any day on which banks in London, England
and The City of New York are open and
conducting transactions in foreign
currency and exchange.
"LIBOR Determination Date": With respect to the Floating Rate
Certificates, (i) for the first
Distribution Date, the second LIBOR Business
Day preceding the Closing Date and (ii) for
each subsequent Distribution Date,
the second LIBOR Business Day prior to the
immediately preceding Distribution
Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the
Servicer has determined, in accordance
with the servicing procedures specified
herein, as of the end of the related
Prepayment Period, that all Liquidation
Proceeds and Insurance Proceeds which
it expects to recover with respect to the
liquidation of the Mortgage Loan or
disposition of the related REO Property
have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of
the
following events: (i) such Mortgage Loan is
paid in full; (ii) a Final
Recovery Determination is made as to such
Mortgage Loan; or (iii) such
Mortgage Loan is removed from the Trust
Fund by reason of its being purchased,
sold or replaced pursuant to or as
contemplated by Section 2.03 or Section
10.01. With respect to any REO Property,
either of the following events: (i) a
Final Recovery Determination is made as to
such REO Property; or (ii) such REO
Property is removed from the Trust Fund by
reason of its being sold or
purchased pursuant to Section 3.13 or
Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received
in
respect of the rental of any REO Property
prior to REO Disposition) received
by the Servicer in connection with (i) the
taking of all or a part of a
Mortgaged Property by exercise of the power
of eminent domain or condemnation
or (ii) the liquidation of a defaulted
Mortgage Loan by means of a trustee's
sale, foreclosure sale or otherwise.
"Liquidation Report": As to any Distribution Date, the report
with
respect to any Liquidated Mortgage Loans
for such Distribution Date in such
form and containing such information as is
agreed to by the Servicer and the
Trustee.
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<PAGE>
"Loan Group": Any of
Loan Group 1 or Loan Group 2, as applicable.
"Loan Guaranty
Certificate":
The certificate evidencing a VA
Guaranty.
"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.
"Master REMIC Regular
Interest":
As defined in the
Preliminary
Statement.
"Maximum Cap": With respect to (i) any Loan Group, the Senior
Certificates and any Distribution Date will
be a per annum rate equal to the
weighted average Adjusted Net Maximum
Mortgage Interest Rate for the Mortgage
Loans in such Loan Group (weighted on the
basis of the principal balances of
the related Mortgage Loans as of the first
day of the related Collection
Period); such result to be adjusted as
necessary to an effective rate
reflecting the accrual of interest on an
actual/360 basis with respect to the
Class AV Certificates and on a 30/360 basis
with respect to the Class AF
Certificates, and (ii) the Subordinate
Certificates and any Distribution Date
will equal the weighted average of the
Maximum Caps (each adjusted as
necessary to an effective rate reflecting
the accrual of interest on an
actual/360 basis) for Loan Group 1 and Loan
Group 2 and such Distribution Date
(weighted on the basis of the excess of the
Group Balance of each such Loan
Group as of the first day of the related
Collection Period over the
Certificate Principal Balance of the Senior
Certificates related to such Loan
Group on such Distribution Date (prior to
all distributions to be made on such
Distribution Date)).
"Maximum Loan Rate": With respect to each Adjustable-Rate
Mortgage
Loan, the percentage set forth in the
related Mortgage Note as the maximum
Mortgage Interest Rate thereunder.
"Minimum Loan 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": With respect to each
Distribution Date, the sum of the Monthly
Excess Interest Amount for such
Distribution Date, the
Overcollateralization Release Amount for such
Distribution Date and (without duplication)
any portion of the Principal
Distribution Amount remaining after all
distributions have been made pursuant
to Section 4.02(a) hereof on such
Distribution Date.
"Monthly Excess
Interest
Amount":
With
respect
to each
Distribution Date, the amount, if any, by
which the Group 1 Interest
Remittance Amount and Group 2 Interest
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<PAGE>
Remittance Amount for such Distribution
Date exceed the aggregate amount
distributed on such Distribution Date
pursuant to paragraphs (a) through (c)
under Section 4.01 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; (b)
without giving effect to any
extension granted or agreed to by the
Servicer pursuant to Section 3.01; and
(c) on the assumption that all other
amounts, if any, due under such Mortgage
Loan are paid when due.
"Moody's": Moody's Investors Service, Inc. and its successors,
and
if such company shall for any reason no
longer perform the functions of a
securities rating agency, "Moody's" shall
be deemed to refer to any other
"nationally recognized statistical rating
organization" as set forth on the
most current list of such organizations
released by the Securities and
Exchange Commission.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first 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 Insurance
Certificate": The
certificate evidencing
an
FHA Insurance Contract.
"Mortgage Interest Rate": With respect to each Mortgage Loan,
the
annual rate at which interest accrues on
such Mortgage Loan from time to time
in accordance with the provisions of the
related Mortgage Note, which rate (i)
in the case of each Fixed-Rate Mortgage
Loan shall remain constant at the rate
set forth in the Mortgage Loan 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 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 to the nearest
0.125% as provided in the Mortgage
Note, of the Index, determined as set forth
in the related Mortgage Note, plus
the related Gross Margin subject to the
limitations set forth in the related
Mortgage Note. With respect to each
Mortgage Loan that becomes an REO
Property, as of any date of determination,
the annual rate determined in
accordance with the immediately preceding
sentence as of the date such
Mortgage Loan became an REO Property.
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<PAGE>
"Mortgage Loan": Each mortgage loan transferred and assigned to
the Trustee pursuant to Section 2.01 or
Section 2.03(d) as from time to time
held as a part of the Trust Fund, the
Mortgage Loans so held being identified
in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the
Seller and the Depositor, dated as of
February 8, 2005, regarding the transfer
of the Mortgage Loans by the Seller to or
at the direction of the Depositor.
"Mortgage Loan Schedule": As of any date (i) with respect to
the
Mortgage Loans, the list of such Mortgage
Loans included in the Trust Fund on
such date, separately identifying the
Fixed-Rate Mortgage Loans and the
Adjustable-Rate Mortgage Loans, attached
hereto as Exhibit D. The Mortgage
Loan Schedule shall be prepared by the
Seller and shall set forth the
following information with respect to each
Mortgage Loan:
(1)
the Seller's
Mortgage Loan identifying number;
(2)
the city, state,
and zip code of the Mortgaged Property;
(3)
the type of Residential Dwelling constituting the Mortgaged
Property or a designation that the Mortgaged Property is a multi-family
property;
(4)
the occupancy
status of the Mortgaged Property at origination;
(5)
the original
months to maturity;
(6)
the date of
origination;
(7)
the first
payment date;
(8)
the stated
maturity date;
(9)
the stated
remaining months to maturity;
(10)
the original principal
amount of the Mortgage Loan;
(11)
the Principal Balance of each Mortgage Loan as of the Cut-off
Date;
(12)
the Mortgage
Interest Rate of the
Mortgage Loan as of the Cut-off
Date;
(13)
the current
principal and interest payment of the Mortgage Loan
as of the Cut-off Date;
(14)
the contractual
interest paid to date of the Mortgage Loan;
(15)
if the Mortgage Loan is not owner-financed, the Combined
Loan-to-Value Ratio at origination;
(16)
a code indicating the loan performance status of the Mortgage
Loan as of the Cut-off Date;
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(17)
a code indicating
whether the Mortgaged
Property is in bankruptcy
or in its forbearance period as of the
Cut-off Date;
(18)
a code indicating whether the Mortgage Loan is
conventional
or
insured by the FHA;
(19)
a code indicating the Index that is
associated with such Mortgage
Loan;
(20)
the Gross Margin;
(21)
the Periodic Rate
Cap;
(22)
the Minimum Loan
Rate;
(23)
the Maximum Loan
Rate;
(24)
a code indicating whether the Mortgage Loan has a Prepayment
Charge and the type of Prepayment
Penalty;
(25)
the first Adjustment
Date immediately following the Cut-off Date;
(26)
the rate adjustment
frequency;
(27)
the payment adjustment
frequency;
(28)
a code indicating
whether the Mortgage Loan is owner-financed;
(29)
a code indicating whether the Mortgage Loan is subject to
negative amortization;
(30)
a code indicating
whether the Mortgage Loan is a second lien;
(31)
a code indicating whether the Mortgage Logan is a fixed-rate or
adjustable rate Mortgage Loan; and
(32) the
Mortgage Identification Number for Mortgage Loans registered
with
MERS.
The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date, with
respect to the Mortgage Loans in the
aggregate, for 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 Schedule shall be
amended from time to time by the
Seller in accordance with the provisions of
this Agreement. With respect to
any Eligible Substitute Mortgage Loan,
Cut-off Date shall refer to the related
Cut-off Date for such Mortgage Loan,
determined in accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of
indebtedness evidencing the indebtedness of
a Mortgagor under a Mortgage Loan.
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"Mortgage Pool":
The pool of Mortgage Loans, identified on
Exhibit D from time to time, and any REO Properties acquired in respect
thereof.
"Mortgaged Property": The underlying property securing a
Mortgage
Loan, including any REO Property,
consisting of an Estate in Real Property
improved by a Residential Dwelling or
multi-family dwelling.
"Mortgagor": The
obligor on a Mortgage Note.
"Net Excess Spread": With respect to any Distribution Date, a
fraction, expressed as a percentage, the
numerator of which is equal to the
product of (i) the excess of (x) the Pool
Balance as of the last day of the
related Collection Period, multiplied by
1/12th of the Weighted Average Net
Mortgage Rate over (y) the sum of Accrued
Certificate Interest for the Offered
Certificates and the Class B-4 and Class
B-5 Certificates for such
Distribution Date, and (ii) 12, and the
denominator of which is the Pool
Balance as of the last day of the related
Collection Period.
"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 Mortgage Interest Rate": With respect to any Mortgage Loan
and any Collection Period, the Mortgage
Interest Rate borne by such Mortgage
Loan minus the Expense Fee Rate for such
Mortgage Loan and such Collection
Period.
"Net Rate Cap": With respect to the Class AV and Class AF
Certificates and any Distribution Date, the
Group Rate Cap for Loan Group 1
and Loan Group 2, respectively, and such
Distribution Date. With respect to
each class of Subordinate Certificates and
any Distribution Date, the Sub Rate
Cap for such Distribution Date.
"Net Rate Carryover Amount": If on any Distribution Date, the
Accrued Certificate Interest for any of the
Class AV or the Subordinate
Certificates is based upon the applicable
Net Rate Cap, the excess of (i) the
amount of interest such Certificate would
have been entitled to receive on
such Distribution Date based on its
Pass-Through Rate, over (ii) the amount of
interest such Certificate received on such
Distribution Date based on the
applicable Net Rate 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).
"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
Servicer, will not or, in the case of
a proposed Advance or Servicing
Advance,
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would not be ultimately recoverable from
Late Collections on such Mortgage
Loan as provided herein.
"Notional Amount": With respect to the Class N Certificates, an
amount equal to the Original Class N
Notional Amount reduced by the aggregate
distributions made to the Class N
Certificates pursuant to Section
4.02(b)(xxi).
"Offered Certificates": The Class AV-1, Class AV-2, Class AV-3,
Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class M-1, Class M-2, Class
M-3, Class B-1, Class B-2 and Class B-3
Certificates.
"Officers' Certificate": A certificate signed by the Chairman
of
the Board, the Vice Chairman of the Board,
the President or a vice president
(however denominated), or by the Treasurer,
the Secretary, or one of the
assistant treasurers or assistant
secretaries of the Servicer, the Seller or
the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be a salaried counsel
for the Depositor or the Servicer
except that any opinion of counsel relating
to (a) the qualification of any
REMIC as a REMIC or (b) compliance with the
REMIC Provisions must be an
opinion of Independent counsel.
"Optional Termination
Date": The first Distribution Date on
which the Servicer (or an Affiliate) 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 the Class N, Class X
and Residual Certificates, which
have an Original Class Certificate
Principal Balance of zero.
"Original Class N Notional Amount": $14,650,000.
"Overcollateralization Amount": As of any Distribution Date,
the
excess, if any, of (x) the Pool Balance as
of the last day of the immediately
preceding Collection Period over (y) the
aggregate Certificate Principal
Balances of all Classes of Offered
Certificates and the Class B-4 and Class
B-5 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 Balance of
all Classes of Certificates resulting from
the distribution of the Principal
Distribution Amount (but not the Extra
Principal Distribution Amount) on such
Distribution Date, but prior to taking into
account any Applied Realized Loss
Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date
on which a Trigger Event is not in
effect, the lesser of (x) the Principal
Remittance Amount for such
Distribution Date and (y) the excess, if
any, of (i) the
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Overcollateralization Amount for such
Distribution Date, assuming that 100% of
the Principal Remittance Amount is applied
as a principal payment on the
Offered Certificates and the Class B-4 and
Class B-5 Certificates on such
Distribution Date, over (ii) the Targeted
Overcollateralization Amount for
such Distribution Date.
"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 AV-1 Pass-Through Rate,
the
Class AV-2 Pass-Through Rate, the Class
AV-3 Pass-Through Rate, the Class AF-1
Pass-Through Rate, the Class AF-2
Pass-Through Rate, the Class AF-3
Pass-Through Rate, the Class AF-4
Pass-Through Rate, the Class M-1
Pass-Through Rate, the Class M-2
Pass-Through Rate, the Class M-3 Pass-Through
Rate, the Class B-1 Pass-Through Rate, the
Class B-2 Pass-Through Rate, the
Class B-3 Pass-Through Rate, the Class B-4
Pass-Through Rate and the Class B-5
Pass-Through Rate. With respect to the
Class N Certificates, the Pass-Through
Rate is 4.500% per annum.
"Paying Agent":
Any paying agent
appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other
than
a Class N or Class X or Residual
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
N Certificate, the undivided
percentage interest obtained by dividing
the Initial Notional Amount evidenced
by such Certificate by the Original Class N
Notional Amount. With respect to a
Class X or Residual Certificate, the
portion of the Class evidenced thereby,
expressed as a percentage, as stated on the
face of such Certificate;
provided, however, that the sum of all such
percentages for each such Class
totals 100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage
Loan and any Adjustment Date therefor, the
fixed percentage set forth in the
related Mortgage Note, which is the maximum
amount by which the Mortgage
Interest Rate for such Mortgage Loan may
increase or decrease (without regard
to the Maximum Loan Rate or the Minimum
Loan Rate) on such Adjustment Date
from the Mortgage Interest Rate in effect
immediately prior to such Adjustment
Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a
purchase price of not greater than
par, regardless of whether issued or
managed by the Depositor, the Servicer,
the Trustee or any of their respective
Affiliates or for which an Affiliate of
the Trustee serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as
to
timely
payment of principal and interest by, the United States or any
agency or
instrumentality thereof, provided such obligations are backed
by the
full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit
of,
bankers'
acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents
acting
in its
commercial capacity)
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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 DBRS and provided that each such investment has an original
maturity
of no more than 365 days and (B) any other demand or time
deposit or
deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with
respect to any security described in clause (i) above and
entered
into with
a depository institution or trust company (acting as
principal)
rated A or higher by S&P and Fitch and rated A2 or higher
by
Moody's,
provided, however, that collateral transferred pursuant to such
repurchase
obligation must be of the type described in clause (i) above
and must
(A) be valued daily at current market prices plus accrued
interest
or (B) pursuant to such valuation, be equal, at all times, to
105% of
the cash transferred by the Trustee in exchange for such
collateral
and (C) be delivered to the Trustee or, if the Trustee is
supplying
the collateral, an agent for the Trustee, in such a manner as
to
accomplish perfection of a security interest in the collateral
by
possession
of certificated securities;
(iv) securities bearing interest or sold at a discount that are
issued by
any corporation incorporated under the laws of the United
States of
America or any State thereof and that are rated by each Rating
Agency in
its highest long-term unsecured rating categories at the time
of such
investment or contractual commitment providing for such
investment;
(v) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified
date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency in its highest short-term
unsecured
debt rating available at the time of such investment;
(vi) units of money market funds registered under the
Investment
Company
Act of 1940 including funds managed or advised by the Trustee
or
Affiliates
thereof having the highest rating category by the applicable
Rating
Agency; and
(vii) if previously confirmed in writing to the Trustee, any
other
demand,
money market or time deposit, or any other obligation, security
or
investment, as may be acceptable to the Rating Agencies in writing
as
a
permitted investment of funds backing securities having ratings
equivalent
to its highest initial rating of the Class A Certificates;
provided, that no instrument described
hereunder shall evidence either the
right to receive (a) only interest with
respect to the obligations underlying
such instrument or (b) both principal and
interest payments derived from
obligations underlying such instrument and
the interest and principal payments
with respect to such instrument provide a
yield to maturity at par greater
than 120% of the yield to maturity at par
of the underlying obligations.
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"Permitted
Transferee": Any
transferee of a Residual Certificate
other than a Disqualified Organization or a
non-U.S. Person.
"Person": Any individual, corporation, partnership, joint
venture,
association, joint stock company, trust,
limited liability company,
unincorporated organization or government
or any agency or political
subdivision thereof.
"Pool Balance": As of any date of determination, the aggregate
Principal Balance of the Mortgage
Loans.
"Prepayment Charge": With respect to any Prepayment Period, any
prepayment premium, fee or charge payable
by the a Mortgagor in connection
with any Principal Prepayment pursuant to
the terms of the related Mortgage
Note.
"Prepayment Charge Schedule": As of the Cut-off Date, a list
attached hereto as Schedule I (including
the Prepayment Charge summary
attached thereto), setting forth the
following information with respect to
each prepayment penalty:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv)
the date on which the first monthly payment was due on the
related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as of
the
Cut-off Date.
The Prepayment Charge Schedule shall be amended from time to
time
by the Servicer in accordance with the
provisions of this Agreement and a copy
of each related amendment shall be
furnished by the Servicer to the Trustee
and the Class N and Class X
Certificateholders.
"Prepayment Interest Shortfall": With respect to any
Distribution
Date, for each Mortgage Loan that was
during the related Prepayment Period the
subject of a Principal Prepayment in full
that was applied by the Servicer to
reduce the outstanding principal balance of
such loan on a date preceding the
related Due Date, an amount equal to
interest at the applicable Mortgage
Interest Rate (net of the Servicing Fee
Rate) on the amount of such Principal
Prepayment for the number of days
commencing on the date on which the
prepayment is applied and ending on the
last day of the related Prepayment
Period.
"Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the month in which
such Distribution Date occurs.
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"Primary Insurance Policy": Each policy of primary guaranty
mortgage insurance issued by a Qualified
Insurer in effect with respect to any
Mortgage Loan, or any replacement policy
therefor obtained by the Servicer
pursuant to Section 3.08.
"Principal Balance": As to any Mortgage Loan and any day, other
than a Liquidated Mortgage Loan, the
related Cut-off Date Principal Balance,
minus all collections credited against the
principal balance of any such
Mortgage Loan and the principal portion of
Advances plus, Deferred Interest,
if any. For purposes of this definition, a
Liquidated Mortgage Loan shall be
deemed to have a Principal Balance equal to
the Principal Balance of the
related Mortgage Loan as of the final
recovery of related Liquidation Proceeds
and a Principal Balance of zero thereafter.
As to any REO Property and any
day, the Principal Balance of the related
Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property
minus any REO Principal Amortization
received with respect thereto on or prior
to such day.
"Principal Distribution Amount": As to any Distribution Date,
the
sum of (i) the Principal Remittance Amount
minus, for Distribution Dates
occurring on and after the Stepdown Date
and for which a Trigger Event is not
in effect, the Overcollateralization
Release Amount, if any, and (ii) the
Extra Principal Distribution Amount, if
any.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is
received in advance of its scheduled Due
Date and which is not accompanied by an
amount of interest representing the
full amount of scheduled interest due on
any Due Date in any month or months
subsequent to the month of prepayment.
"Principal Relocation Payment": A payment from any Loan Group to
a
REMIC 1 Regular Interest other than a
Regular Interest corresponding to that
Loan Group as provided in the Preliminary
Statement. Principal Relocation
Payments shall be made of principal
allocations comprising the Principal
Remittance Amount from a Loan Group and
shall include a proportionate
allocation of Realized Losses from the
Mortgage Loans of such Loan Group.
"Principal Remittance
Amount": With respect to any
Distribution
Date, the sum of the Group 1 Principal Remittance Amount and the Group 2
Principal Remittance Amount.
"Private
Certificates": Any of
the Class B-4, Class
B-5, Class
N, Class X and Residual Certificates.
"Property Insurance Proceeds": Proceeds of any title policy,
hazard policy or other insurance policy
covering a Mortgage Loan, to the
extent such proceeds are received by the
Servicer and are not to be applied to
the restoration of the related Mortgaged
Property or released to the Mortgagor
in accordance with the Servicer's servicing
procedures, subject to the terms
and conditions of the related Mortgage Note
and Mortgage.
"Proportionate Holder": As defined in Section 9.01(n)
hereof.
"Prospectus
Supplement":
That certain
Prospectus
Supplement
dated February 3, 2005 relating to the public offering of the Offered
Certificates.
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"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as
contemplated by Section 2.03 or
10.01, and as confirmed by an Officers'
Certificate from the Servicer to the
Trustee, an amount equal to the sum of (i)
100% of the Principal Balance
thereof as of the date of purchase (or such
other price as provided in Section
10.01), (ii) in the case of (x) a Mortgage
Loan, accrued interest on such
Principal Balance at the applicable
Mortgage Interest Rate in effect from time
to time from the Due Date as to which
interest was last covered by a payment
by the Mortgagor or an Advance by the
Servicer, which payment or Advance had
as of the date of purchase been distributed
pursuant to Sections 4.01 and
4.02, through the end of the calendar month
in which the purchase is to be
effected, and (y) an REO Property, its fair
market value, determined in good
faith by the Servicer, (iii) any
unreimbursed Servicing Advances and Advances
and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property,
(iv) any amounts previously withdrawn from
the Collection Account in respect
of such Mortgage Loan or REO Property
pursuant to Section 3.13, and (v) in the
case of a Mortgage Loan required to be
purchased pursuant to Section 2.03,
expenses reasonably incurred or to be
incurred by the Servicer or the Trustee
in respect of the breach or defect giving
rise to the purchase obligation
including any costs and damages incurred by
the Trust in connection with any
violation by such Mortgage Loan of any
predatory or abusive lending law.
"Qualified Insurer": Any insurance company acceptable to Fannie
Mae or Freddie Mac.
"Rating Agency" or "Rating Agencies": DBRS, Fitch, Moody's and
S&P, or their respective successors. If
such agencies or their successors are
no longer in existence, "Rating Agencies"
shall be such nationally recognized
statistical rating organizations as set
forth on the most current list of such
organizations released by the Securities
and Exchange Commission and
designated by the Depositor, notice of
which designation shall be given to the
Trustee and the Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan,
the
amount by which the remaining unpaid
principal balance of the Mortgage Loan
exceeds the amount of Net Liquidation
Proceeds applied to the principal
balance of the related Mortgage Loan. To
the extent the Servicer receives
Subsequent Recoveries with respect to any
Liquidated Mortgage Loan, the amount
of the Realized Loss with respect to that
Liquidated Mortgage Loan will be
reduced by such Subsequent Recoveries.
"Record Date": With respect to all of the Floating Rate
Certificates and any Distribution Date, 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
such Distribution Date occurs. With respect
to the Fixed Rate Certificates and
the Class N, Class X and Residual
Certificates and any Distribution Date, the
last Business Day of the month immediately
preceding the month in which such
Distribution Date occurs (or the Closing
Date, in the case of the first
Distribution Date).
"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
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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 LIBOR rate, then
any lending banks selected by the
Trustee (after consultation with the
Servicer) 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-4 Certificates, the Class B-5 Certificates,
the Class N
Certificates
and the Class X Certificates.
"Related Documents":
With respect to any Mortgage Loan, the
related Mortgage Notes, Mortgages and other
related documents.
"Relief Act": The
Servicemembers Civil Relief Act, as amended.
"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, 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.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"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 of the Master REMIC Regular
Interests, the Intermediate REMIC Regular
Interests, the Subsidiary REMIC
Regular Interests and the Class X
Interest.
"Remittance Report": A report prepared by the Servicer and
delivered to the Trustee pursuant to
Section 4.07, containing the information
attached hereto as Exhibit P.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in
Section 856(d) of the Code.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.
"REO Principal Amortization": With respect to any REO Property,
for any calendar month, the aggregate of
all amounts received in respect of
such REO Property during such calendar
month, whether in the form of rental
income, sale proceeds (including, without
limitation, that portion of the
Termination Price paid in connection with a
purchase of all of the Mortgage
Loans and REO Properties pursuant to
Section 10.01 that is allocable to such
REO
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Property) or otherwise, net of any portion
of such amounts (i) payable
pursuant to Section 3.13 in respect of the
proper operation, management and
maintenance of such REO Property or (ii)
payable or reimbursable to the
Servicer pursuant to Section 3.13 for
unpaid Servicing Fees in respect of the
related Mortgage Loan and unreimbursed
Servicing Advances and Advances in
respect of such REO Property or the related
Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Servicer
on
behalf of the Trust Fund through
foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.13.
"Request for Release": A release signed by a Servicing Officer,
in
the form of Exhibit E attached hereto.
"Required Basis Risk Reserve Fund Amount": With respect to any
Distribution Date on which the related Net
Excess Spread is less than 0.25%,
an amount equal to the lesser of (x)
$15,000 and (y) the product of (i) 0.50%
and (ii) the Pool Balance as of the last
day of the related Collection Period.
With respect to any Distribution Date on
which the Net Excess Spread is equal
to or greater than 0.25%, an amount equal
to $5,000.
"Required Basis Risk Reserve Fund Deposit": With respect to any
Distribution Date, the excess, if any, of
(i) the Required Basis Risk Reserve
Fund Amount over (ii) the amount of funds
on deposit in the Basis Risk Reserve
Fund as of the close of business on the
Business Day immediately preceding
such Distribution Date.
"Residential Dwelling": Any one of the following: (i) a
one-family
dwelling, (ii) a two- to four-family
dwelling, (iii) a one-family dwelling
unit in a Fannie Mae eligible condominium
project, (iv) a one-family dwelling
in a planned unit development, which is not
a co-operative, or (v) a mobile or
manufactured home (as defined in 42 United
States Code, Section 5402(6)).
"Residual Certificates": The Class R and Class XR
Certificates.
"Residual Interest":
The sole Class of
"residual interests"
in
each REMIC within the meaning of Section
860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any
officer assigned to the Corporate Trust
Division (or any successor thereto),
including any Vice President, Assistant
Vice President, Trust Officer, any
Assistant Secretary, any trust officer or
any other officer of the Trustee
customarily performing functions similar to
those performed by any of the
above designated officers and in each case
having direct responsibility for
the administration of this Agreement.
"S&P": Standard & Poor's Ratings Services, 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.
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"Seller": Credit-Based
Asset Servicing and
Securitization
LLC,
or its successor in interest, in its capacity as seller under
the Mortgage
Loan Purchase Agreement.
"Senior Certificate": Any one of the Certificates with an "A"
designated on the face thereof
substantially in the form annexed hereto as
Exhibits A-1, A-2, A-3, A-4, A-5, A-6 and
A-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.
"Senior
Certificateholders":
Collectively, the
Holders of the
Senior Certificates.
"Senior Principal Distribution Amount": With respect to any
Distribution Date, the sum of the Class AV
Principal Distribution Amount and
the Class AF Principal Distribution Amount
for such Distribution Date.
"Senior Credit Support Depletion Date": The Distribution Date
on
which the aggregate Certificate Principal
Balances of the Subordinate
Certificates has been reduced to zero.
"Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum
of (i) the aggregate Certificate
Principal Balances of the Subordinate
Certificates and (ii) the
Overcollateralization Amount, in each case
after taking into account the
distribution of the Principal Distribution
Amount on such Distribution Date by
(y) the Pool Balance as of the last day of
the related Collection Period.
"Senior Specified
Enhancement
Percentage":
On any date of
determination thereof, 42.90%.
"Servicer":
Litton Loan
Servicing
LP, a Delaware limited
partnership, or any successor servicer
appointed as herein
provided, in its
capacity as Servicer hereunder.
"Servicer Affiliate": A Person (i) controlling, controlled by
or
under common control with the Servicer or
which is 50% or more owned by the
Servicer and (ii) which is qualified to
service residential mortgage loans.
"Servicer Event of Termination": One or more of the events
described in Section 7.01.
"Servicer Remittance Date": With respect to any Distribution
Date,
the Business Day immediately preceding such
Distribution Date.
"Servicer's Assignee":
As defined in Section 6.05(c) hereof.
"Servicing Advances": All customary, reasonable and necessary
"out
of pocket" costs and expenses incurred by
the Servicer in the performance of
its servicing obligations, including, but
not limited to, the cost of (i) the
preservation, restoration and protection of
the Mortgaged Property, (ii) any
enforcement or judicial proceedings,
including foreclosures, (iii) the
management and liquidation of the REO
Property, (iv) compliance with the
obligations under Section 3.08, and (v)
rebating any points and fees that are
to be reimbursed to a Mortgagor due to a
Principal Prepayment.
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"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,
0.507%
per annum.
"Servicing Officer": Any officer of the Servicer involved in,
or
responsible for, the administration and
servicing of Mortgage Loans, whose
name and specimen signature appear on a
list of servicing officers furnished
by the Servicer to the Trustee and the
Depositor on the Closing Date, as such
list may from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by
the
Servicer, to which the Servicer may pledge
and assign all of its right, title
and interest in, to and under this
Agreement, including Wachovia Bank,
National Association, as the representative
of certain lenders.
"Servicing Standard":
Shall mean the standards set forth in
Section 3.01.
"Special Hazard Losses": Realized Losses that result from
direct
physical damage to Mortgaged Properties
caused by natural disasters and other
hazards (i) which are not covered by hazard
insurance policies (such as
earthquakes) and (ii) for which claims have
been submitted and rejected by the
related hazard insurer and any shortfall in
insurance proceeds for partial
damage due to the application of the
co-insurance clauses contained in hazard
insurance policies.
"SPV": As defined in
Section 6.05(b) hereof.
"Startup Day": As
defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms
of
the Certificates and this Agreement but
which is not remitted by the Servicer
because the Servicer is the subject of a
proceeding under the Bankruptcy Code
and the making of such remittance is
prohibited by Section 362 of the
Bankruptcy Code.
"Stepdown Date": The earlier to occur of (x) the later to occur
of
(A) the Distribution Date in February 2008
and (B) the first Distribution Date
on which the Senior Enhancement Percentage
(after taking into account
distributions of principal on such
Distribution Date) is greater than or equal
to the Senior Specified Enhancement
Percentage, and (y) the Distribution Date
on which the aggregate Certificate
Principal Balance of the Senior
Certificates is reduced to zero.
"Sub Rate Cap": With respect to each Class of Subordinate
Certificates and any Distribution Date is
the lesser of (i) the Subordinate
Cap for such Distribution Date and (ii) the
Maximum Cap with respect to the
Subordinate Certificates for such
Distribution Date.
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"Subordinate Cap": For any Distribution Date, the weighted
average
of the Group Caps (each adjusted as
necessary to an effective rate reflecting
the accrual of interest on an actual/360
basis) for Loan Group 1 and Loan
Group 2 and such Distribution Date
(weighted on the basis of the excess of the
Group Balance of each such Loan Group as of
the first day of the related
Collection Period over the Certificate
Principal Balance of the Senior
Certificates related to such Loan Group on
such Distribution Date (prior to
all distributions to be made on such
Distribution Date)).
"Subordinate Certificates": The Class M-1, Class M-2, Class
M-3,
Class B-1, Class B-2, Class B-3, Class B-4
and Class B-5 Certificates.
"Subordinate Component Balance": For any Distribution Date and
for
each Loan Group, the excess of the
principal balance of such Loan Group as of
the first day of the related Due Period
over the Certificate Principal Balance
of the Senior Certificates related to such
Loan Group on such Distribution
Date (prior to all distributions to be made
on such Distribution Date)(each
adjusted as necessary to an effective rate
reflecting the accrual of interest
on an actual/360 basis for Loan Group 1 and
on a 30/360 basis for Loan Group
2).
"Subsequent Recoveries": As to any Distribution Date, with
respect
to a Liquidated Mortgage Loan that resulted
in a Realized Loss in a prior
calendar month, unexpected amounts received
by the Servicer (net of any
related expenses permitted to be reimbursed
pursuant to Section 3.09)
specifically related to such Liquidated
Mortgage Loan.
"Subsidiary REMIC Regular Interest": As defined in the
Preliminary
Statement.
"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, 2.20%
of the initial Pool Balance and
(y) on and after the Stepdown Date, (A) so
long as a Trigger Event is not in
effect as of such Distribution Date, the
greater of (i) 0.50% of the initial
Pool Balance and (ii) 4.40% of the Pool
Balance as of the last day of the
related Collection Period, or (B) if a
Trigger Event is in effect as of such
Distribution Date, the Targeted
Overcollateralization Amount as of the
immediately preceding Distribution Date.
The Targeted Overcollateralization
Amount will equal zero if Certificate
Principal Balances of each of the
Offered Certificates and the Class B-4 and
Class B-5 Certificates have been
reduced to zero.
"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 eight 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.
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"Telerate Page 3750": The display page currently so designated
on
the Bridge 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.
"Transfer": Any direct
or indirect transfer or sale of any
Ownership Interest in a Certificate.
"Trigger Event": With respect to any Distribution Date, if (i)
the
six-month rolling average of 60+ Day
Delinquent Loans equals or exceeds 43.00%
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 (reduced by the aggregate
amount of Subsequent Recoveries
received through the last day of such
Collection Period) divided by the
initial Pool Balance exceeds the applicable
percentages set forth below with
respect to such Distribution Date:
Distribution Date Occurring In
Percentage
------------------------------
----------
February 2007 through January 2008
1.80%
February 2008 through January 2009
3.25%
February 2009 through January 2010
5.25%
February 2010 through January 2011
6.75%
February 2011 through January 2012
7.50%
February 2012 and thereafter
7.70%
"Trust": 2005-CB1
Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created
hereby and to be administered
hereunder, with respect to a portion of
which nine REMIC elections are to be
made, such entire Trust Fund consisting of:
(i) such Mortgage Loans as from
time to time are subject to this Agreement,
together with the Mortgage Files
relating thereto, and together with all
collections thereon and proceeds
thereof, (ii) any REO Property, together
with all collections thereon and
proceeds thereof, (iii) the Trustee's
rights with respect to the Mortgage
Loans under all insurance policies required
to be maintained pursuant to this
Agreement and any proceeds thereof, (iv)
the Depositor's rights under the
Mortgage Loan Purchase Agreement (including
any security interest created
thereby), and (v) the Collection Account,
the Distribution Account, the Basis
Risk Reserve Fund and any REO Account and
such assets that are deposited
therein from time to time and any
investments thereof, together with any and
all income, proceeds and payments with
respect thereto.
"Trustee": U.S. Bank
National Association, a national banking
association, or any successor Trustee
appointed as herein provided.
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"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,
0.0065% per annum.
"United States Person" or "U.S. Person": (i) A citizen or
resident
of the United States, (ii) a corporation,
partnership or other entity treated
as a corporation or partnership for United
States federal income tax purposes
organized in or under the laws of the
United States or any state thereof or
the District of Columbia (unless, in the
case of a partnership, Treasury
regulations provide otherwise) or (iii) an
estate the income of which is
includible in gross income for United
States tax purposes, regardless of its
source, or (iv) a trust if a court within
the United States is able to
exercise primary supervision over the
administration of the trust and one or
more United States persons have authority
to control all substantial decisions
of the trust. Notwithstanding the preceding
sentence, to the extent provided
in Treasury regulations, certain Trusts in
existence on August 20, 1996, and
treated as United States persons prior to
such date, that elect to continue to
be treated as United States persons will
also be a U.S. Person.
"Unpaid Realized Loss Amount": With respect to each Class of
Subordinate Certificates and any
Distribution Date, the excess of (x) the
cumulative amount of Applied Realized Loss
Amounts allocated to such class
pursuant to Section 4.03 for all
Distribution Dates over (y) the cumulative
amount of payments in respect of Unpaid
Realized Loss Amounts to such Class
for all prior Distribution Dates pursuant
to Section 4.02(b) and any
reductions applied thereto as specified in
Section 4.03 due to the receipt of
Subsequent Recoveries.
"VA Approved Lender": Those institutions that are approved by
the
VA to act as servicer and mortgagee of
record pursuant to the VA Regulations.
"VA Guaranty": The obligation of VA respecting the guaranty of
a
VA Loan pursuant to the Servicemen's
Readjustment Act of 1944, as amended.
"VA Regulations" Any and all regulations promulgated by the VA
under the Servicemen's Readjustment Act of
1944, as amended.
"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; except that, with respect to any
Mortgage Loan that is a purchase
money mortgage loan, the lesser of (i) the
value thereof as determined by an
independent appraisal made at the time of
the origination of such Mortgage
Loan, if any, and (ii) the sales price of
the related Mortgaged Property.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any
Certificate. The Voting Rights
allocated among Holders of the Offered
Certificates and the Class B-4 and
Class B-5 Certificates shall be 98%. Such
Voting Rights 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 of the Certificates then
outstanding. The Voting Rights allocated to
each such
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Class of Certificates shall be allocated
among all Holders of each such Class
in proportion to the outstanding
Certificate Principal Balance of such
Certificates; provided, however, that any
Certificate registered in the name
of the Servicer, the Depositor, the Trustee
or any of their respective
Affiliates shall not be included in the
calculation of Voting Rights;
provided, further, that only such
Certificates as are known by a Responsible
Officer of the Trustee to be so registered
will be so excluded. The percentage
of all the Voting Rights allocated among
the Holders of the Class N and Class
X Certificates shall be 2%. The Residual
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, expressed as an annual rate and
calculated on the basis of twelve months
consisting of 30 days each and a
360-day year.
"Written Order to Authenticate": A written order by which the
Depositor directs the Trustee to execute,
authenticate and deliver the
Certificates.
Section
1.02
Accounting.
Unless otherwise specified herein, for the purpose of any
definition or calculation, whenever amounts
are required to be netted,
subtracted or added or any distributions
are taken into account such
definition or calculation and any related
definitions or calculations shall be
determined without duplication of such
functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance
of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set
over and otherwise convey to the
Trustee, on behalf of the Trust, without
recourse for the benefit of the
Certificateholders all the right, title and
interest of the Depositor,
including any security interest therein for
the benefit of the Depositor, in
and to (i) each Mortgage Loan identified on
the Mortgage Loan Schedule,
including the related Cut-off Date
Principal Balance, all interest accruing
thereon after the Cut-off Date and all
collections in respect of interest and
principal due after the Cut-off Date; (ii)
the Mortgage File for each such
Mortgage Loan; (iii) property which secured
each such Mortgage Loan and which
has been acquired by foreclosure or deed in
lieu of foreclosure; (iv) its
interest in any insurance policies in
respect of the Mortgage Loans and all
rights under the related FHA Insurance
Contracts and VA Guaranties; (v) all
proceeds of any of the foregoing; (vi) the
rights of the Depositor under the
Mortgage Loan Purchase Agreement; and (vii)
all other assets included or to be
included in the Trust Fund; provided,
however, so long as the Servicer is an
FHA Approved Mortgagee, the Commissioner of
HUD shall have no obligation to
recognize or deal with any person other
than
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the Servicer with respect to FHA Insurance.
Such assignment includes all
interest and principal due to the Depositor
or the Servicer after the Cut-off
Date with respect to the Mortgage
Loans.
In connection with such transfer and assignment, the Seller, on
behalf of the Depositor, does hereby
deliver or cause to be delivered to, and
deposit with the Trustee, or its designated
agent (the "Custodian"), the
following documents or instruments with
respect to each Mortgage Loan (a
"Mortgage File") so transferred and
assigned:
(i)
the original
Mortgage Note, endorsed either (A) in blank or (B) in
the following form: "Pay to the order of U.S. Bank National
Association, as Trustee for the C-BASS Mortgage Loan
Asset-Backed
Certificates, Series 2005-CB1, without recourse," or with
respect
to any lost Mortgage Note, an original Lost Note Affidavit,
together with a copy of the related Mortgage Note;
(ii)
the original Mortgage
with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was
executed
pursuant to a power of attorney, with evidence of recording
thereon or, if such Mortgage or power of attorney has been
submitted for recording but has not been returned from the
applicable public recording office, has been lost or is not
otherwise available, a copy of such Mortgage or power of
attorney,
as the case may be, certified to be a true and complete copy of
the original submitted for recording;
(iii) an
original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned either
(A) in blank or (B) to "U.S. Bank National Association, as
Trustee
for the C-BASS
Mortgage Loan Asset-Backed Certificates, Series
2005-CB1, without recourse";
(iv)
an original, or a
certified copy thereof, 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;
(vi)
the original or copies
of each assumption, modification, written
assurance or substitution agreement, if any;
(vii) for
each FHA Loan, the original Mortgage Insurance Certificate;
and
(viii) for each
VA Loan, the Loan Guaranty Certificate.
The Trustee agrees to execute and deliver (or cause the
Custodian
to execute and deliver) to the Depositor on
or prior to the Closing Date an
acknowledgment of receipt of the original
Mortgage Note (with any exceptions
noted), substantially in the form attached
as Exhibit F-3 hereto.
The Servicer shall cause the Assignments of Mortgage which were
delivered in blank to be completed and
shall cause all Assignments referred to
in Section 2.01(iii) hereof and, to the
extent necessary, in Section 2.01(iv)
hereof to be recorded. The Servicer shall
be required to deliver such
assignments for recording within 30 days of
the Closing Date. The Servicer
shall
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furnish the Trustee, or its designated
agent, with a copy of each Assignment
of Mortgage submitted for recording. In the
event that any such Assignment is
lost or returned unrecorded because of a
defect therein, the Servicer shall
promptly have a substitute Assignment
prepared or have such defect cured, as
the case may be, and thereafter cause each
such Assignment to be duly
recorded.
If any of the documents referred to in Section 2.01(ii), (iii)
or
(iv) above has as of the Closing Date been
submitted for recording but either
(x) has not been returned from the
applicable public recording office or (y)
has been lost or such public recording
office has retained the original of
such document, the obligations of the
Seller to deliver such documents shall
be deemed to be satisfied upon (1) delivery
to the Trustee or the Custodian no
later than the Closing Date, of a copy of
each such document certified by the
Seller in the case of (x) above or the
applicable public recording office in
the case of (y) above to be a true and
complete copy of the original that was
submitted for recording and (2) if such
copy is certified by the Seller,
delivery to the Trustee or the Custodian,
promptly upon receipt thereof of
either the original or a copy of such
document certified by the applicable
public recording office to be a true and
complete copy of the original. The
Seller shall deliver or cause to be
delivered to the Trustee or the Custodian
promptly upon receipt thereof any other
documents constituting a part of a
Mortgage File received with respect to any
Mortgage Loan, including, but not
limited to, any original documents
evidencing an assumption or modification of
any Mortgage Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing
from, a Mortgage File, the Seller
shall have 120 days to cure such defect or
150 days following the Closing
Date, in the case of missing Mortgages or
Assignments or deliver such missing
document to the Trustee or the Custodian.
If the Seller does not cure such
defect or deliver such missing document
within such time period, the Seller
shall either repurchase or substitute for
such Mortgage Loan in accordance
with Section 2.03.
In the event that any Mortgage Note is endorsed in blank as of
the
Closing Date, promptly following the
Closing Date the Seller shall cause to be
completed such endorsements "Pay to the
order of U.S. Bank National
Association, as Trustee for the C-BASS
Mortgage Loan Asset-Backed
Certificates, Series 2005-CB1, without
recourse."
The Depositor herewith delivers to the Trustee executed copies
of
the Mortgage Loan Purchase Agreement.
The Depositor and the Trustee on behalf of the Trust understand
and agree that it is not intended that any
mortgage loan be included in the
Trust that is a high-cost home loan as
defined by HOEPA or any other
applicable predatory or abusive lending
laws.
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
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holds or will hold all such assets and such
other assets included in the
definition of "Trust Fund" in trust for the
exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders,
to
review (or cause the Custodian to review)
each Mortgage File within 60 days
after the Closing Date (or, with respect to
any document delivered after the
Startup Day, within 60 days of receipt and
with respect to any Qualified
Substitute Mortgage, within 60 days after
the assignment thereof) and to
certify, or cause the Custodian to certify,
in substantially the form attached
hereto as Exhibit F-1 that, as to each
Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan
specifically identified in the exception
report annexed thereto as not being
covered by such certification), (i) all
documents required to be delivered to
it pursuant to Section 2.01 of this
Agreement are in its possession, (ii) such
documents have been reviewed by it and have
not been mutilated, damaged or
torn and relate to such Mortgage Loan,
(iii) based on its examination and only
as to the foregoing, the information set
forth in the Mortgage Loan Schedule
that corresponds to items (1), (2), (3),
(5), (13) and (26) (in the case of
(26), only as to whether there is a
Prepayment Charge) of the Mortgage Loan
Schedule accurately reflects information
set forth in the Mortgage File, (iv)
all Assignments of Mortgage or intervening
assignments of mortgage, as
applicable, have been submitted for
recording and (v) each Mortgage Note has
been endorsed as provided in Section
2.01(i) of this Agreement and each
Mortgage has been assigned in accordance
with Section 2.01(iii) of this
Agreement. It is herein acknowledged that,
in conducting such review, the
Trustee (or the Custodian, as applicable)
is under no duty or obligation to
inspect, review or examine any such
documents, instruments, certificates or
other papers to determine that they are
genuine, enforceable, or appropriate
for the represented purpose or that they
have actually been recorded or that
they are other than what they purport to be
on their face.
Prior to the first anniversary date of this Agreement the
Trustee
shall deliver (or cause the Custodian to
deliver) to the Depositor and the
Servicer a final certification in the form
annexed hereto as Exhibit F-2
evidencing the completeness of the Mortgage
Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the
certifications referred to above, the
Trustee (or the Custodian, as applicable)
finds any document or documents
constituting a part of a Mortgage File to
be missing or defective in any
material respect, at the conclusion of its
review the Trustee, upon its
notification by the Custodian, if
applicable, shall so notify the Seller, the
Depositor and the Servicer. In addition,
upon the discovery by the Seller,
Depositor, or the Servicer (or upon receipt
by the Trustee of written
notification of such breach) of a breach of
any of the representations and
warranties made by the Seller in the
related Mortgage Loan Purchase Agreement
in respect of any Mortgage Loan which
materially adversely affects such
Mortgage Loan or the interests of the
related Certificateholders in such
Mortgage Loan, the party discovering such
breach shall give prompt written
notice to the other parties.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a
sale of the Mortgage Loans and the
Related Documents, conveying good title
thereto free and clear of any liens
and encumbrances, from the Depositor to the
Trustee and that such property not
be part of the Depositor's estate or
property of the Depositor in the
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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 this
Agreement shall constitute a security
agreement under applicable law and 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 (i) each
Mortgage Loan identified on the Mortgage
Loan Schedule, including the related
Cut-off Date Principal Balance, all
interest accruing thereon after the
Cut-off Date and all collections in respect
of interest and principal due
after the Cut-off Date; (ii) the Mortgage
File for each such Mortgage Loan;
(iii) property which secured each such
Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of
foreclosure; (iv) its interest in
any insurance policies in respect of the
Mortgage Loans and all rights under
the related FHA Insurance Contracts and VA
Guaranties; (v) all proceeds of any
of the foregoing; (vi) the rights of the
Depositor under the Mortgage Loan
Purchase Agreement; and (vii) all other
assets included or to be included in
the Trust Fund.
Section 2.03 Repurchase
or Substitution of Mortgage Loans by
the Seller.
(a) Upon discovery or receipt of written notice of any
materially
defective document in, or that a document
is missing from, a Mortgage File or
of the breach by the Seller of any
representation, warranty or covenant under
the Mortgage Loan Purchase Agreement or in
Section 2.04 in respect of any
Mortgage Loan which materially adversely
affects the value of such Mortgage
Loan or the interest therein of the
Certificateholders, the Trustee (or the
Custodian, as applicable) shall promptly
notify the Seller and the Servicer of
such defect, missing document or breach and
request that the Seller deliver
such missing document or cure such defect
or breach within 120 days or 150
days following the Closing Date, in the
case of missing Mortgages or
Assignments from the date the Seller was
notified of such missing document,
defect or breach, and if the Seller does
not deliver such missing document or
cure such defect or breach in all material
respects during such period, the
Trustee, shall enforce the Seller's
obligation under the Mortgage Loan
Purchase Agreement and inform the Seller of
its obligation to repurchase such
Mortgage Loan from the Trust Fund at the
Purchase Price on or prior to the
Determination Date following the expiration
of such 120 day period (subject to
Section 2.03(e)); provided that, in
connection with any such breach that could
not reasonably have been cured within such
120 day or 150 day period, if the
Seller shall have commenced to cure such
breach within such 120 day or 150 day
period, the Seller shall be permitted to
proceed thereafter diligently and
expeditiously to cure the same within the
additional period provided under the
Mortgage Loan Purchase Agreement. The
Purchase Price for the repurchased
Mortgage Loan shall be deposited in the
Collection Account, and the Trustee,
upon receipt of written certification from
the Servicer of such deposit, shall
release to the Seller the related Mortgage
File and shall execute and deliver
such instruments of transfer or assignment,
in each case without recourse, as
the Seller shall furnish to it and as shall
be necessary to vest in the Seller
any Mortgage Loan released pursuant hereto
and the Trustee shall have no
further responsibility with regard to such
Mortgage File. In lieu of
repurchasing any such Mortgage Loan as
provided above, the Seller may cause
such Mortgage Loan to be removed from the
Trust Fund (in which case it shall
become a Defective Mortgage Loan) and
substitute one or more Eligible
Substitute Mortgage Loans in the manner and
subject to the limitations set
forth in Section 2.03(d). In addition to
the foregoing, in case of a breach of
the Seller's representation set forth in
Section 3.01(f) of the Mortgage Loan
Purchase Agreement, the Seller shall
reimburse the Trust for all costs or
damages incurred by the Trust as a result
of a violation of any predatory or
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abusive lending laws referred to therein
(such amount, the "Reimbursement
Amount"). The Reimbursement Amount shall be
delivered to the Servicer for
deposit into the Collection Account within
10 days from the date the Seller
was notified by the Trustee of the amount
of all costs and damages. It is
understood and agreed that the obligation
of the Seller to pay the
Reimbursement Amount for deposit into the
Collection Account and either to
cure or to repurchase (or to substitute
for) any Mortgage Loan as to which a
document is missing, a material defect in a
constituent document exists or as
to which such a breach has occurred and is
continuing shall constitute the
sole remedy against the Seller respecting
such omission, defect or breach
available to the Trustee, on behalf of the
Certificateholders.
(b) [Reserved].
(c) Within 90 days of the earlier of discovery by the Servicer
or
receipt of notice by the Servicer of the
breach of any representation,
warranty or covenant of the Servicer set
forth in Section 2.05 which
materially and adversely affects the
interests of the Certificateholders in
any Mortgage Loan, the Servicer shall cure
such breach in all material
respects.
(d) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to
Section 2.03(a) must be effected
prior to the last Business Day that is
within two years after the Closing
Date. As to any Defective Mortgage Loan for
which the Seller substitutes an
Eligible Substitute Mortgage Loan or Loans,
such substitution shall be
effected by the Seller delivering to the
Trustee, for such Eligible Substitute
Mortgage Loan or Loans, the Mortgage Note,
the Mortgage, the Assignment to the
Trustee, and such other documents and
agreements, with all necessary
endorsements thereon, as are required by
Section 2.01, together with an
Officers' Certificate providing that each
such Eligible Substitute Mortgage
Loan satisfies the definition thereof and
specifying the Substitution
Adjustment Amount (as described below), if
any, in connection with such
substitution. The Trustee shall acknowledge
receipt for such Eligible
Substitute Mortgage Loan or Loans and,
within ten Business Days thereafter,
shall review such documents as specified in
Section 2.02 and deliver (or cause
the Custodian to deliver) to the Servicer,
with respect to such Eligible
Substitute Mortgage Loan or Loans, a
certification substantially in the form
attached hereto as Exhibit F-1, with any
applicable exceptions noted thereon.
Within one year of the date of
substitution, the Trustee shall deliver (or
cause the Custodian to deliver) to the
Servicer a certification substantially
in the form of Exhibit F-2 hereto with
respect to such Eligible Substitute
Mortgage Loan or Loans, with any applicable
exceptions noted thereon. Monthly
Payments due with respect to Eligible
Substitute Mortgage Loans in the month
of substitution are not part of the Trust
Fund and will be retained by the
Seller. For the month of substitution,
distributions to Certificateholders
will reflect the collections and recoveries
in respect of such Defective
Mortgage Loan in the Collection Period
preceding the month of substitution and
the Depositor or the Seller, as the case
may be, shall thereafter be entitled
to retain all amounts subsequently received
in respect of such Defective
Mortgage Loan. The Seller shall give or
cause to be given written notice to
the Certificateholders that such
substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the
removal of such Defective Mortgage Loan
from the terms of this Agreement and the
substitution of the Eligible
Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended
Mortgage Loan Schedule to the Trustee. Upon
such substitution, such Eligible
Substitute Mortgage Loan or Loans shall
constitute part of the Mortgage Pool
and shall be subject in all respects to the
terms of this Agreement and, in
the case
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of a substitution effected by the Seller,
the Mortgage Loan Purchase
Agreement, including, in the case of a
substitution effected by the Seller all
applicable representations and warranties
thereof included in the Mortgage
Loan Purchase Agreement and all applicable
representations and warranties
thereof set forth in Section 2.04, in each
case as of the date of
substitution.
For any month in which the Seller substitutes one or more
Eligible
Substitute Mortgage Loans for one or more
Defective Mortgage Loans, the
Servicer will determine the amount (the
"Substitution Adjustment Amount"), if
any, by which the aggregate Purchase Price
of all such Defective Mortgage
Loans exceeds the aggregate, as to each
such Eligible Substitute Mortgage
Loan, of the principal balance thereof as
of the date of substitution,
together with one month's interest on such
principal balance at the applicable
Net Mortgage Interest Rate. On the date of
such substitution, the Seller will
deliver or cause to be delivered to the
Servicer for deposit in the Collection
Account an amount equal to the Substitution
Adjustment Amount, if any, and the
Trustee, upon receipt of the related
Eligible Substitute Mortgage Loan or
Loans and certification by the Servicer of
such deposit, shall release to the
Seller the related Mortgage File or Files
and shall execute and deliver such
instruments of transfer or assignment, in
each case without recourse, as the
Seller shall deliver to it and as shall be
necessary to vest therein any
Defective Mortgage Loan released pursuant
hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of
Counsel to the effect that such
substitution will not cause (a) any federal
tax to be imposed on the Trust
Fund, including without limitation, any
federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of
the Code or on "contributions after
the startup date" under Section 860G(d)(l)
of the Code, or (b) any REMIC to
fail to qualify as a REMIC at any time that
any Certificate is outstanding. If
such Opinion of Counsel can not be
delivered, then such substitution may only
be effected at such time as the required
Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Servicer or the Trustee
that
any Mortgage Loan does not constitute a
"qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code,
the party discovering such fact
shall within two Business Days give written
notice thereof to the other
parties. In connection therewith, the
Seller shall repurchase or, subject to
the limitations set forth in Section
2.03(d), substitute one or more Eligible
Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the
earlier of discovery or receipt of such
notice with respect to such affected
Mortgage Loan. In addition, upon discovery
that a Mortgage Loan is defective
in a manner that would cause it to be a
"defective obligation" within the
meaning of Treasury regulations relating to
REMICs, the Seller shall cure the
defect or make the required purchase or
substitution no later than 90 days
after the earlier of the discovery of the
defect and receipt of notification
of the defect. Any such repurchase or
substitution shall be made in the same
manner as set forth in Section 2.03(a), if
made by the Seller. The Trustee
shall reconvey to the Seller the Mortgage
Loan to be released pursuant hereto
in the same manner, and on the same terms
and conditions, as it would a
Mortgage Loan repurchased for breach of a
representation or warranty.
Notwithstanding anything to the contrary contained herein, the
parties hereto acknowledge that the
functions of the Trustee, with respect to
the custody, acceptance, inspection and
release of the Mortgage Files pursuant
to Sections 2.01, 2.02 and 2.03 and
preparation and
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delivery of the certifications in the form
of Exhibit F-1 and Exhibit F-2
shall be performed by the Custodian
pursuant to the terms and conditions of
the Custodial Agreement. The fees and
expenses of the Custodian shall be paid
by the Servicer.
Section 2.04 Representations and Warranties of the Seller with
Respect to the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for
the
benefit of the Certificateholders that as
of the Closing Date or as of such
other date specifically provided
herein:
(a) The
representations and warranties made by the Seller pursuant
to Section 3.01 of the Mortgage Loan
Purchase Agreement are hereby being made
to the Trustee and are true and correct as
of the Closing Date.
(b) Any written agreement between the Mortgagor in respect of a
Mortgage Loan and the Servicer modifying
such Mortgagor's obligation to make
payments under the Mortgage Loan (such
modified Mortgage Loan, a "Modified
Mortgage Loan") involved the application of
some assessment of the Mortgagor's
ability to repay the Modified Mortgage
Loan.
With respect to the representations and warranties set forth in
this Section 2.04 that are made to the best
of the Seller's knowledge or as to
which the Seller has no knowledge, if it is
discovered by the Depositor, the
Seller, the Servicer, the Custodian or the
Trustee that the substance of such
representation and warranty is inaccurate
and such inaccuracy materially and
adversely affects the value of the related
Mortgage Loan or the interest
therein of the Certificateholders then,
notwithstanding the Seller's lack of
knowledge with respect to the substance of
such representation and warranty
being inaccurate at the time the
representation or warranty was made, such
inaccuracy shall be deemed a breach of the
applicable representation or
warranty.
Upon discovery by the Depositor, the Seller, the Servicer or
the
Trustee of a breach of any of the
representations and warranties contained in
this Section that materially and adversely
affects the value of any Mortgage
Loan or the interest therein of the
Certificateholders, the party discovering
the breach shall give prompt written notice
to the others and in no event
later than two Business Days from the date
of such discovery. Within ninety
days of its discovery or its receipt of
notice of any such missing or
materially defective documentation or any
such breach of a representation or
warranty, the Seller shall promptly deliver
such missing document or cure such
defect or breach in all material respects,
or in the event such defect or
breach cannot be cured, the Seller shall
repurchase the affected Mortgage Loan
or cause the removal of such Mortgage Loan
from the Trust Fund and substitute
for it one or more Eligible Substitute
Mortgage Loans, in either case, in
accordance with Section 2.03.
It is understood and agreed that the representations and
warranties set forth in this Section 2.04
shall survive delivery of the
Mortgage Files to the Trustee and shall
inure to the benefit of the
Certificateholders notwithstanding any
restrictive or qualified endorsement or
assignment. It is understood and agreed
that the obligations of the Seller set
forth in this Section 2.04 to cure,
substitute for or repurchase a Mortgage
Loan pursuant to the Mortgage Loan
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Purchase Agreement constitute the sole
remedies available to the Depositor and
to the Certificateholders or to the Trustee
on their behalf respecting a
breach of the representations and
warranties contained in this Section 2.04.
Section 2.05
Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the
Trustee and the Certificateholders and
to the Depositor that as of the Closing
Date or as of such date specifically
provided herein:
(i) The Servicer is duly organized, validly existing, and in
good
standing
under the laws of the jurisdiction of its formation and has all
licenses
necessary to carry on its business as now being conducted,
except for
such licenses, certificates and permits the absence of which,
individually or in the aggregate, would not have a material
adverse
effect on
the ability of the Servicer to conduct its business as it is
presently
conducted, and is licensed, qualified and in good standing in
the states
where the Mortgaged Property is located if the laws of such
state
require licensing or qualification in order to conduct business
of
the type
conducted by the Servicer or to ensure the enforceability or
validity
of each Mortgage Loan; the Servicer has the power and authority
to execute
and deliver this Agreement and to perform in accordance
herewith;
the execution, delivery and performance of this Agreement
(including
all instruments of transfer to be delivered pursuant to this
Agreement)
by the Servicer and the consummation of the transactions
contemplated hereby
have been duly and validly authorized; this
Agreement
evidences the valid, binding and enforceable obligation of the
Servicer,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium
or other similar laws affecting the enforcement of creditors'
rights
generally; and all requisite corporate action has been taken by
the
Servicer to make this Agreement valid and binding upon the
Servicer
in
accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement
are in the ordinary course of business of the Servicer and
will not
result in the breach of any term or provision of the
certificate of formation or the partnership agreement of the
Servicer or
result in
the breach of any term or provision of, or conflict with or
constitute
a default under or result in the acceleration of any
obligation
under, any agreement, indenture or loan or credit agreement
or other
instrument to which the Servicer or its property is subject, or
result in
the violation of any law, rule, regulation, order, judgment or
decree to
which the Servicer or its property is subject;
(iii) The Servicer is an approved seller/servicer of
conventional
mortgage
loans for Fannie Mae, is an FHA Approved Mortgagee and a VA
Approved
Lender in good standing to service mortgages, and has not been
suspended
as a mortgagee or servicer by the FHA or VA and has the
facilities, procedures and experienced personnel necessary for the
sound
servicing
of mortgage loans of the same type as the Mortgage Loans. The
Servicer
is, and shall remain for as long as it is servicing the
Mortgage
Loans hereunder, in good standing as a FHA Approved Mortgagee
and a VA
Approved Lender and to service mortgage loans for HUD, Fannie
Mae or
Freddie Mac, and no event has occurred, including but not
limited
to a
change in insurance coverage, which would make the
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Servicer
unable to comply with HUD, Fannie Mae, Freddie Mac, FHA or VA
eligibility requirements or which would require notification to any
of
HUD,
Fannie Mae, Freddie Mac or FHA or VA;
(iv) This Agreement, and all documents and instruments
contemplated hereby which are executed and delivered by the
Servicer,
constitute
and will constitute valid, legal and binding obligations of
the
Servicer, enforceable in accordance with their respective
terms,
except as
the enforcement thereof may be limited by applicable
bankruptcy
laws and general principles of equity;
(v) The Servicer does not believe, nor does it have any reason
or
cause to
believe, that it cannot perform each and every covenant
contained
in this Agreement;
(vi) There is no action, suit, proceeding or investigation
pending
or, to its
knowledge, threatened against the Servicer that, either
individually or in the aggregate, may result in any material
adverse
change in
the business, operations, financial condition, properties or
assets of
the Servicer, or in any material impairment of the right or
ability of
the Servicer to carry on its business substantially as now
conducted,
or in any material liability on the part of the Servicer, or
that would
draw into question the validity or enforceability of this
Agreement
or of any action taken or to be taken in connection with the
obligations of the Servicer contemplated herein, or that would be
likely
to impair
materially the ability of the Servicer to perform under the
terms of
this Agreement;
(vii) No consent, approval or order of any court or
governmental
agency or
body is required for the execution, delivery and performance
by the
Servicer of or compliance by the Servicer with this Agreement
or
the
consummation of the transactions contemplated by this
Agreement,
except for
such consents, approvals, authorizations and orders, if any,
that have
been obtained;
(viii) Neither this Agreement nor any information, certificate
of
an
officer, statement furnished in writing or report delivered to
the
Trustee by
the Servicer in connection with the transactions contemplated
hereby
contains or will contain any untrue statement of a material
fact
or omits
or will omit to state a material fact necessary in order to
make the
statements contained therein, in light of the circumstances
under
which they were made, not misleading; and
(ix) The Servicer has fully furnished in accordance with the
Fair
Credit
Reporting Act and its implementing regulations, accurate and
complete
information (e.g., favorable and unfavorable) on its borrower
credit
files to Equifax, Experian and Trans Union Credit Information
Company
(three of the credit repositories), on a monthly basis.
It is understood and agreed that the representations,
warranties
and covenants set forth in this Section
2.05 shall survive delivery of the
Mortgage Files to the Trustee and shall
inure to the benefit of the Trustee,
the Depositor and the Certificateholders.
Upon discovery by any of the
Depositor, the Servicer, the Seller or the
Trustee of a breach of any of the
foregoing representations, warranties and
covenants which materially and
adversely affects the value of any Mortgage
Loan or the interests therein of
the Certificateholders, the party
discovering such
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breach shall give prompt written notice
(but in no event later than two
Business Days following such discovery) to
the other parties hereto.
Section 2.06
Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the
Trustee
on behalf of the Certificateholders as
follows:
(i) This agreement constitutes a legal, valid and binding
obligation
of the Depositor, enforceable against the Depositor in
accordance
with its terms, except as enforceability may be limited by
applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar
laws now or hereafter in effect affecting the enforcement of
creditors'
rights in general and except as such enforceability may be
limited by
general principles of equity (whether considered in a
proceeding
at law or in equity);
(ii) Immediately prior
to the sale and assignment by the Depositor
to the
Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor
had good and marketable title to each Mortgage Loan (insofar
as such
title was conveyed to it by the Seller) subject to no prior
lien,
claim, participation interest, mortgage, security interest,
pledge,
charge or other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right,
title interest in the Mortgage Loans to the Trustee on behalf
of
the
Trust;
(iv) The Depositor has not transferred the Mortgage Loans to
the
Trustee on
behalf of the Trust with any intent to hinder, delay or
defraud
any of its creditors;
(v) The Depositor has been duly formed solely under the laws of
the State
of Delaware and is validly existing as a limited liability
company 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
formation
of limited liability agreement 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
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certificate of formation, limited liability agreement 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) 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.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it (or the
Custodian, as bailee and Custodian of the
Trustee) of the Mortgage Files, subject to
the provisions of Sections 2.01 and
2.02, and the Trustee acknowledges the
assignment to it of all other assets
included in the Trust Fund, receipt of
which is hereby acknowledged.
Concurrently with such assignment and
delivery and in exchange therefor, the
Trustee, pursuant to the Written Order to
Authenticate executed by an officer
of the Depositor, has executed, and the
Certificate Registrar has
authenticated and delivered to or upon the
order of the Depositor, the
Certificates (other than the Class X and
Residual Certificates) in minimum
dollar denominations or $25,000 and
integral dollar multiples of $1 in excess.
The Class X Certificates and the Residual
Certificates are issuable only in
minimum Percentage Interests of 10%. The
interests evidenced by the
Certificates constitute the entire
beneficial ownership interest in the Trust
Fund.
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Section 2.08
Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and the
Trustee on behalf of the Certificateholders
that as of the Closing Date or as
of such date specifically provided
herein:
(i) The Seller is duly organized, validly existing and in good
standing
as a limited liability company under the laws of the State of
Delaware
and has the power and authority to own its assets and to
transact
the business in which it is currently engaged. The Seller is
duly
qualified to do business and is in good standing in each
jurisdiction in which the character of the business transacted by
it or
properties
owned or leased by it requires such qualification and in
which the
failure to so qualify would have a material adverse effect on
(a) its
business, properties, assets or condition (financial or other),
(b) the
performance of its obligations under this Agreement, (c) the
value or
marketability of the Mortgage Loans, or (d) its ability to
foreclose
on the related Mortgaged Properties.
(ii) The Seller has the power and authority to make, execute,
deliver
and perform this Agreement and to consummate all of the
transactions contemplated hereunder and has taken all necessary
action
to
authorize the execution, delivery and performance of this
Agreement.
When
executed and delivered, this Agreement will constitute the
Seller's
legal,
valid and binding obligations enforceable in accordance with
its
terms,
except as enforcement of such terms may be limited by (1)
bankruptcy, insolvency, reorganization, receivership, moratorium
or
similar
laws affecting the enforcement of creditors' rights generally
and by the
availability of equitable remedies, (2) general equity
principles
(regardless of whether such enforcement is considered in a
proceeding
in equity or at law) or (3) public policy considerations
underlying
the securities laws, to the extent that such policy
considerations limit the enforceability of the provisions of
this
Agreement
which purport to provide indemnification from securities laws
liabilities.
(iii) The Seller holds all necessary licenses, certificates and
permits
from all governmental authorities necessary for conducting its
business
as it is presently conducted, except for such licenses,
certificates and permits the absence of which, individually or in
the
aggregate,
would not have a material adverse effect on the ability of
the Seller
to conduct its business as it is presently conducted. It is
not
required to obtain the consent of any other party or any
consent,
license,
approval or authorization from, or registration or declaration
with, any
governmental authority, bureau or agency in connection with
the
execution, delivery, performance, validity or enforceability of
this
Agreement,
except for such consents, licenses, approvals or
authorizations, or registrations or declarations as shall have
been
obtained
or filed, as the case may be, prior to the Closing Date.
(iv) The execution, delivery and performance of this Agreement
by
the Seller
will not conflict with or result in a breach of, or
constitute
a default under, any provision of any existing law or
regulation
or any order or decree of any court applicable to the Seller
or any of
its properties or any provision of its Limited Liability
Company
Agreement, or constitute a material breach of, or result in the
creation
or imposition of
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any lien,
charge or encumbrance upon any of its properties pursuant to
any
mortgage, indenture, contract or other agreement to which it is
a
party or
by which it may be bound.
(v) No certificate of an officer, written statement or report
delivered
pursuant to the terms hereof by the Seller contains any untrue
statement
of a material fact or omits to state any material fact
necessary
to make the certificate, statement or report not misleading.
(vi) The transactions contemplated by this Agreement are in the
ordinary
course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be made
insolvent
by the transfer of the Mortgage Loans to the Depositor, nor is
the Seller
aware of any pending insolvency.
(viii) The Seller is not in violation of, and the execution and
delivery
of this Agreement by it and its performance and compliance with
the terms
of this Agreement will not constitute a violation with respect
to any
order or decree of any court, or any order or regulation of any
federal,
state, municipal or governmental agency having jurisdiction,
which
violation would materially and adversely affect the Seller's
condition
(financial or otherwise) or operations or any of the Seller's
properties, or materially and adversely affect the performance of
any of
its duties
hereunder.
(ix) There are no actions or proceedings against, or
investigations of, the Seller pending or, to its knowledge,
threatened,
before any
court, administrative agency or other tribunal (i) that, if
determined
adversely, would prohibit the Seller from entering into this
Agreement,
(ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or (iii) that, if
determined
adversely,
would prohibit or materially and adversely affect the
Seller's
performance of any of its respective obligations under, or the
validity
or enforceability of, this Agreement.
(x) The Seller did not transfer the Mortgage Loans to the
Depositor
with any intent to hinder, delay or defraud any of its
creditors.
(xi) The Seller acquired title to the Mortgage Loans in good
faith,
without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the Mortgage
Notes and
the Mortgages by the Seller to the Depositor are not subject
to the
bulk transfer laws or any similar statutory provisions in
effect
in any
applicable jurisdiction.
Section 2.09 Covenants
of the Seller.
(a) The Seller hereby covenants that except for the transfer to
the Depositor, the Seller will not sell,
pledge, assign or transfer to any
other Person, or grant, create, incur,
assume or suffer to exist any lien on
any Mortgage Loan, or any interest therein;
the Seller will notify the
Trustee, as assignee of the Depositor, of
the existence of any lien on any
Mortgage Loan immediately upon discovery
thereof, and the Seller will defend
the right, title and interest of the
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Trust, as assignee of the Depositor, in, to
and under the Mortgage Loans,
against all claims of third parties
claiming through or under the Seller;
provided, however that nothing in this
Section 2.09 shall prevent or be deemed
to prohibit the Seller from suffering to
exist upon any of the Mortgage Loans
any liens for municipal or other local
taxes and other governmental charges if
such taxes or governmental charges shall
not at the time be due and payable or
if the Seller shall currently be contesting
the validity thereof in good faith
by appropriate proceedings and shall have
set aside on its books adequate
reserves with respect thereto.
(b) The Seller hereby covenants that neither it nor any
Affiliate
of the Seller will directly solicit any
Mortgagor hereunder to refinance the
related Mortgage Loan. For the purposes of
the foregoing, neither the Seller
nor any Affiliate of the Seller shall be
deemed to directly solicit any
Mortgagor if the Seller responds to a
request from a Mortgagor regarding a
refinancing or if the Mortgagor receives
marketing materials which are
generally disseminated.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer
to Act as Servicer.
The Servicer, as independent contract servicer, shall service
and
administer the Mortgage Loans in accordance
with this Agreement and the normal
and usual standards of practice of prudent
mortgage servicers, and shall have
full power and authority, acting alone, to
do or cause to be done any and all
things in connection with such servicing
and administration which the Servicer
may deem necessary or desirable and
consistent with the terms of this
Agreement including, in the case of FHA
Loans and VA Loans, taking all actions
that a mortgagee is permitted or required
to take by the FHA or the VA, as
applicable (the "Servicing Standards").
Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any
Mortgage Loan or consent to the
postponement of strict compliance with any
such term or in any manner grant
indulgence to any Mortgagor if in the
Servicer's reasonable and prudent
determination such waiver, modification,
postponement or indulgence is not
materially adverse to the
Certificateholders; provided, however that the
Servicer shall not make future advances and
(unless the Mortgagor is in
default with respect to the Mortgage Loan
or such default is, in the judgment
of the Servicer, reasonably foreseeable)
the Servicer shall not permit any
modification with respect to any Mortgage
Loan that would (i) change the
Mortgage Interest Rate, defer or forgive
the payment thereof of any principal
or interest payments, reduce the
outstanding principal amount (except for
actual payments of principal) or extend the
final maturity date with respect
to such Mortgage Loan, (ii) in the case of
FHA Loans, affect the FHA Insurance
Contract with respect to any such Mortgage
Loan and in the case of VA Loans,
affect the VA Guaranty with respect to such
Mortgage Loan, (iii) affect
adversely the status of any REMIC as a
REMIC or (iv) cause any REMIC to be
subject to a tax on "prohibited
transactions" or "contributions" pursuant to
the REMIC Provisions. Notwithstanding the
foregoing, the S
