<PAGE>
Exhibit: 4.1
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
Depositor
LITTON LOAN SERVICING LP,
Servicer
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
Trustee
----------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
----------
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2005-BC1
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
........................................................
1
ARTICLE II CONVEYANCE OF MORTGAGE
LOANS; REPRESENTATIONS AND WARRANTIES ....... 46
SECTION 2.01. Conveyance of Mortgage Loans
.................................. 46
SECTION 2.02. Acceptance by Trustee of the
Mortgage Loans ................... 48
SECTION 2.03. Representations, Warranties and
Covenants of the Depositor .... 50
SECTION 2.04. Representations and Warranties of
the Servicer ................ 53
SECTION 2.05. Substitutions and Repurchases of
Mortgage Loans Which Are
Not "Qualified Mortgages" ..................................
54
SECTION 2.06. Authentication and Delivery of
Certificates ................... 54
SECTION 2.07. REMIC Elections
............................................... 54
SECTION 2.08. Covenants of the Servicer
..................................... 59
SECTION 2.09. [RESERVED]
.................................................... 59
SECTION 2.10. [RESERVED]
.................................................... 59
SECTION 2.11. Permitted Activities of the Trust
Fund ........................ 59
SECTION 2.12. Qualification Special Purpose
Entity .......................... 59
ARTICLE III ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS ..................... 59
SECTION 3.01. Servicer to Service Mortgage Loans
............................ 59
SECTION 3.02. Servicing and Subservicing;
Enforcement of the Obligations of
Servicer ...................................................
61
SECTION 3.03. Rights of the Depositor and the
Trustee in Respect of the
Servicer ...................................................
61
SECTION 3.04. Trustee to Act as Servicer
.................................... 61
SECTION 3.05. Collection of Mortgage Loan
Payments; Collection Account;
Certificate Account ........................................
62
SECTION 3.06. Collection of Taxes, Assessments
and Similar Items;
Escrow Accounts ............................................
65
SECTION 3.07. Access to Certain Documentation
and Information Regarding the
Mortgage Loans .............................................
66
SECTION 3.08. Permitted Withdrawals from the
Collection Account and
Certificate Account ........................................
66
SECTION 3.09. [RESERVED]
.................................................... 68
SECTION 3.10. Maintenance of Hazard Insurance
............................... 68
SECTION 3.11. Enforcement of Due-On-Sale
Clauses; Assumption Agreements ..... 69
SECTION 3.12. Realization Upon Defaulted
Mortgage Loans; Determination of
Excess Proceeds ............................................
70
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SECTION 3.13. Trustee to Cooperate; Release of
Mortgage Files ............... 73
SECTION 3.14. Documents Records and Funds in
Possession of Servicer to be
Held for the Trustee .......................................
74
SECTION 3.15. Servicing Compensation
........................................ 74
SECTION 3.16. Access to Certain Documentation
............................... 75
SECTION 3.17. Annual Statement as to Compliance
............................. 75
SECTION 3.18. Annual Independent Public
Accountants' Servicing Statement;
Financial Statements .......................................
75
SECTION 3.19. Rights of the NIM Insurer
..................................... 76
SECTION 3.20. Periodic Filings
.............................................. 76
SECTION 3.21. Annual Certificate by Trustee
................................. 76
SECTION 3.22. Annual Certificate by Servicer
................................ 77
SECTION 3.23. Prepayment Penalty Reporting
Requirements ..................... 78
SECTION 3.24. Statements to Trustee
......................................... 78
SECTION 3.25. Indemnification
............................................... 78
SECTION 3.26. Nonsolicitation
............................................... 79
SECTION 3.27. Existing Servicing Agreement
.................................. 79
ARTICLE IV DISTRIBUTIONS
...................................................... 79
SECTION 4.01. Advances
...................................................... 79
SECTION 4.02. Reduction of Servicing
Compensation in Connection with
Prepayment Interest Shortfalls .............................
80
SECTION 4.03. Distributions on the REMIC
Interests .......................... 80
SECTION 4.04. Distributions
................................................. 81
SECTION 4.05. Monthly Statements to
Certificateholders ...................... 86
ARTICLE V THE CERTIFICATES
................................................... 89
SECTION 5.01. The Certificates
.............................................. 89
SECTION 5.02. Certificate Register; Registration
of Transfer and Exchange
of Certificates ............................................
90
SECTION 5.03. Mutilated, Destroyed, Lost or
Stolen Certificates ............. 93
SECTION 5.04. Persons Deemed Owners
......................................... 94
SECTION 5.05. Access to List of
Certificateholders' Names and Addresses ..... 94
SECTION 5.06. Book-Entry Certificates
....................................... 94
SECTION 5.07. Notices to Depository
......................................... 95
SECTION 5.08. Definitive Certificates
....................................... 95
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SECTION 5.09. Maintenance of Office
or Agency ............................. 95
ARTICLE VI THE DEPOSITOR AND THE
SERVICER ..................................... 96
SECTION 6.01. Respective Liabilities
of the Depositor and the Servicer .... 96
SECTION 6.02. Merger or
Consolidation of the Depositor or the Servicer .... 96
SECTION 6.03. Limitation on
Liability of the Depositor, the Servicer and
Others ...................................................
96
SECTION 6.04. Limitation on
Resignation of Servicer ....................... 97
SECTION 6.05. Errors and Omissions
Insurance; Fidelity Bonds .............. 97
ARTICLE VII DEFAULT; TERMINATION OF SERVICER
................................... 97
SECTION 7.01. Events of Default
........................................... 97
SECTION 7.02. Servicer Trigger Event
...................................... 99
SECTION 7.03. Trustee to Act;
Appointment of Successor .................... 100
SECTION 7.04. Notification to
Certificateholders .......................... 101
ARTICLE VIII CONCERNING THE TRUSTEE
............................................. 101
SECTION 8.01. Duties of Trustee
........................................... 101
SECTION 8.02. Certain Matters
Affecting the Trustee ....................... 102
SECTION 8.03. Trustee Not Liable for
Mortgage Loans ....................... 104
SECTION 8.04. Trustee May Own
Certificates ................................ 104
SECTION 8.05. Trustee's Fees
.............................................. 104
SECTION 8.06. Indemnification of
Trustee; Expenses ........................ 104
SECTION 8.07. Eligibility
Requirements for Trustee ........................ 105
SECTION 8.08. Resignation and
Removal of Trustee .......................... 106
SECTION 8.09. Successor Trustee
........................................... 106
SECTION 8.10. Merger or
Consolidation of Trustee .......................... 107
SECTION 8.11. Appointment of
Co-Trustee or Separate Trustee ............... 107
SECTION 8.12. Tax Matters
................................................. 108
ARTICLE IX TERMINATION
........................................................
110
SECTION 9.01. Termination upon
Liquidation or Repurchase of all Mortgage
Loans ....................................................
110
SECTION 9.02. Final Distribution on
the Certificates ...................... 112
SECTION 9.03. Additional Termination
Requirements ......................... 113
ARTICLE X MISCELLANEOUS
PROVISIONS ........................................... 113
SECTION 10.01. Amendment
................................................... 113
SECTION 10.02. Counterparts
................................................ 115
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SECTION 10.03. Governing Law
............................................... 115
SECTION 10.04. Intention of Parties
........................................ 115
SECTION 10.05. Notices
..................................................... 116
SECTION 10.06. Severability of Provisions
.................................. 117
SECTION 10.07. Assignment
.................................................. 117
SECTION 10.08. Limitation on Rights of
Certificateholders .................. 117
SECTION 10.09. Inspection and Audit Rights
................................. 118
SECTION 10.10. Certificates Nonassessable
and Fully Paid ................... 118
SECTION 10.11. Third Party Rights
.......................................... 118
SECTION 10.12. Additional Rights of the NIM
Insurer ........................ 118
SECTION 10.13. [RESERVED]
.................................................. 119
SECTION 10.14. Assignment; Sales; Advance
Facilities ....................... 119
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EXHIBIT A FORMS OF OFFERED
CERTIFICATES
EXHIBIT B MORTGAGE LOAN
SCHEDULE
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE
CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER
AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S
AFFIDAVIT
EXHIBIT F FORM OF
TRANSFEROR CERTIFICATE FOR CLASS P AND CLASS C
CERTIFICATES
EXHIBIT G FORM OF
INVESTMENT LETTER
EXHIBIT H FORM OF RULE
144A INVESTMENT LETTER
EXHIBIT I REQUEST FOR
RELEASE OF DOCUMENTS
EXHIBIT J FORM OF POWER OF
ATTORNEY
EXHIBIT K FORM OF
OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L FORM OF
OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M FORM OF
TRANSFEREE'S LETTER
EXHIBIT N FORM OF AUCTION
PROCEDURES
EXHIBIT O FORM OF CAP
CONTRACT
EXHIBIT P ONE MONTH LIBOR
CAP TABLE - CAP CONTRACT
</TABLE>
v
<PAGE>
POOLING AND
SERVICING AGREEMENT, dated as of March 1, 2005, among MERRILL
LYNCH MORTGAGE INVESTORS, INC., a Delaware
corporation, as depositor (the
"Depositor"), LITTON LOAN SERVICING LP, a
Delaware limited partnership, as
servicer (the "Servicer") and JPMORGAN
CHASE BANK, N.A., a national banking
association, as trustee (the
"Trustee").
The Depositor is
the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The
Trust Fund for federal income tax
purposes will consist of (i) two real
estate mortgage investment conduits in a
tiered structure, (ii) the right to receive
the payments distributable to the
Class P Certificates pursuant to Section
4.04(b)(i) hereof, (iii) the grantor
trusts described in Section 2.07 hereof and
(iv) the Cap Contract and the Cap
Contract Account. The Lower Tier REMIC will
consist of all of the assets
constituting the Trust Fund (other than the
assets described in clauses (ii),
(iii) and (iv) above and the Lower Tier
REMIC Interests) and will be evidenced
by the Lower Tier REMIC Regular Interests
(which will be uncertificated and will
represent the "regular interests" in the
Lower Tier REMIC) and the Class LTR
Interest as the single "residual interest"
in the Lower Tier REMIC. The Trustee
will hold the Lower Tier REMIC Regular
Interests. The Upper Tier REMIC will
consist of the Lower Tier REMIC Regular
Interests and will be evidenced by the
REMIC Regular Interests (which will
represent the "regular interests" in the
Upper Tier REMIC) and the Residual Interest
as the single "residual interest" in
the Upper Tier REMIC. The Class R
Certificate will represent beneficial
ownership of the Class LTR Interest and the
Residual Interest. The "latest
possible maturity date" for federal income
tax purposes of all interests created
hereby will be the Latest Possible Maturity
Date.
All covenants
and agreements made by the Seller in the Sale Agreement and
by the Depositor and the Trustee herein
with respect to the Mortgage Loans and
the other property constituting the Trust
Fund are for the benefit of the
Holders from time to time of the
Certificates and, to the extent provided
herein, the NIM Insurer.
In consideration
of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Whenever used in
this Agreement, the following words and phrases, unless
the context otherwise requires, shall have
the following meanings:
Accepted
Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage
servicing practices of prudent mortgage
lending institutions which service for
their own account mortgage loans of the
same type as the Mortgages Loans in the
jurisdictions in which the related
Mortgaged Properties are located.
Accrual Period:
With respect to each Class of Certificates and the Lower
Tier REMIC Regular Interests and any
Distribution Date, the period commencing on
the immediately preceding Distribution Date
(or, in the case of the first
Distribution Date, the Closing Date) and
ending on the day immediately preceding
such Distribution Date. All calculations of
interest on each Class of
Certificates and the Lower Tier REMIC
Regular Interests will be made on the
basis of the actual number of days elapsed
in the related Accrual Period and a
360 day year.
Adjustable Rate
Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate
which is adjustable.
1
<PAGE>
Adjustment Date:
As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject
to adjustment, as provided in the
related Mortgage Note.
Advance: The
aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date
pursuant to Section 4.01, the amount of
any such advances being equal to the sum of
the aggregate of payments of
principal and interest (net of the
Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due
Period and not received as of the close
of business on the related Determination
Date, less the aggregate amount of any
such Delinquent payments that the Servicer
has determined would constitute a
Non-Recoverable Advance were an advance to
be made with respect thereto;
provided, however, that with respect to any
Mortgage Loan that is (x) a second
lien Mortgage Loan or (y) has been
converted to an REO Property, the obligation
to make advances shall only be to payments
of interest.
Advance
Facility: A financing or other facility as described in Section
10.14(a).
Advance Facility
Notice: As defined in Section 10.14(b).
Advance
Financing Person: As defined in Section 10.14(a).
Advance
Reimbursement Amounts: As defined in Section 10.14(a).
Affiliate: With
respect to any specified Person, any other Person
controlling, controlled by or under common
control with such Person. For the
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 the terms "controlling" and
"controlled" have meanings correlative to
the foregoing.
Aggregate
Certificate Principal Balance: For any date of determination,
the
sum of the Class A-1A Certificate Principal
Balance, the Class A-1B Certificate
Principal Balance, the Class A-1C
Certificate Principal Balance, the Class R
Certificate Principal Balance, the Class
M-1 Certificate Principal Balance, the
Class M-2 Certificate Principal Balance,
the Class M-3 Certificate Principal
Balance, the Class M-4 Certificate
Principal Balance, the Class B-1 Certificate
Principal Balance, the Class B-2
Certificate Principal Balance and the Class B-3
Certificate Principal Balance in each case
as of such date of determination.
Agreement: This
Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance
with the terms herein.
Applied Realized
Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the sum of (i)
the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate
Principal Balance after distributions
of principal on such Distribution Date
exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such
Distribution Date.
Appraised Value:
With respect to a Mortgage Loan the proceeds of which were
used to purchase the related Mortgaged
Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the
appraised value based on an
appraisal made for the Seller by an
independent fee appraiser at the time of the
origination of the related Mortgage Loan,
and (2) the sales price of such
Mortgaged Property at such time of
origination. With respect to a Mortgage Loan
the proceeds of which were used to
refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of
the Mortgaged Property based upon
the appraisal obtained at the time of
refinancing.
2
<PAGE>
Assignment of
Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable
form, sufficient under the laws of the
jurisdiction where the related Mortgaged
Property is located to reflect of
record the sale and assignment of the
Mortgage Loan to the Trustee, which
assignment, notice of transfer or
equivalent instrument may, if permitted by
law, be in the form of one or more blanket
assignments covering Mortgages
secured by Mortgaged Properties located in
the same county.
Auction
Termination: The termination of the Trust Fund hereunder
pursuant
to Section 9.01(a)(i) hereof.
Auction
Termination Amount: The purchase price received by the Trustee
in
connection with any purchase of all of the
Mortgage Loans pursuant to Section
9.01(a) (i).
Auction
Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage
Loans is equal to or less than 10% of
the aggregate Stated Principal Balance of
the Mortgage Loans as of the Cut-off
Date.
Auction Termination
Price: In the case of an Auction Termination, as of the
initial Distribution Date on or after the
Auction Termination Date, an amount
equal to the sum of (A) the aggregate
Stated Principal Balance of each Mortgage
Loan (other than any Mortgage Loan that has
become an REO Property), plus
accrued interest thereon at the applicable
Mortgage Rate through the Due Date
preceding distribution of the proceeds, the
fair market value of any REO
Property, plus accrued interest thereon,
(B) any unreimbursed out-of-pocket
costs and expenses owed to the Trustee
(including any costs and expenses
incurred in connection with the Auction
Termination) or the Servicer and any
unreimbursed Servicing Fees, Advances and
Servicing Advances, (C) all interest
accrued on, as well as amounts necessary to
retire the principal balance of, the
notes guaranteed by the NIM Insurer, (D)
any and all amounts then owed to the
NIM Insurer and (E) any costs and damages
incurred by the Trust Fund (or the
Trustee on behalf of the Trust Fund) in
connection with any violation of any
anti-predatory or anti-abusive lending
laws.
Available Funds
Cap: With respect to a Distribution Date, the per annum
rate equal to the product of (i) 12, (ii)
the quotient of (x) the total
scheduled interest on the Mortgage Loans
based on the Net Mortgage Rates in
effect on the related Due Date divided by
(y) the Aggregate Certificate
Principal Balance for such Distribution
Date and (iii) a fraction, the numerator
of which is 30, and the denominator of
which is the actual number of days in the
related Accrual Period.
Balloon Loan: A
Mortgage Loan having an original term to stated maturity of
approximately 15 years which provides for
level monthly payments of principal
and interest based on a 30-year
amortization schedule, with a balloon payment of
the remaining outstanding principal balance
due on such Mortgage Loan at its
stated maturity.
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
5.06). As of the Closing Date, each of
the Class A-1A, Class A-1B, Class A-1C,
Class M-1, Class M-2, Class M-3, Class
M-4, Class B-1, Class B-2 and Class B-3
Certificates constitutes a Class of
Book-Entry Certificates.
3
<PAGE>
Business Day:
Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State
of Texas, State of Delaware, and in
the City of New York, New York are
authorized or obligated by law or executive
order to be closed.
Cap Contract:
The amended confirmation and agreement and any related
confirmation thereto, between the Trust
Fund or Trustee and Credit Suisse First
Boston International (in the form of
Exhibit O hereto).
Cap Contract
Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(j)
in the name of the Trustee for the
benefit of the Trust Fund and designated
"JPMorgan Chase Bank, N.A., as trustee,
in trust for registered holders of
Specialty Underwriting and Residential
Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-BC1." Funds
in the Cap Contract Account shall be held
in trust for the Trust Fund for the
uses and purposes set forth in this
Agreement.
Cap Contract
Notional Balance: With respect to any Distribution Date, the
Cap Contract Notional Balance set forth for
such Distribution Date in the
One-Month LIBOR Cap Table attached hereto
as Exhibit P.
Cap Contract
Termination Date: The day after the Distribution Date in
October 2007.
Certificate: Any
one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in
substantially the forms attached
hereto as Exhibits A.
Certificate
Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(f)
in the name of the Trustee for the
benefit of the Certificateholders and
designated "JPMorgan Chase Bank, N.A., as
trustee, in trust for registered holders of
Specialty Underwriting and
Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series
2005-BC1." Funds in the Certificate Account
shall be held in trust for the
Certificateholders for the uses and
purposes set forth in this Agreement.
Certificate
Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such
Book-Entry Certificate.
Certificate
Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate
Principal Balance of such Certificate
less the sum of (1) all amounts distributed
with respect to such Certificate in
reduction of the Certificate Principal
Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any
Applied Realized Loss Amounts
allocated to such Certificate on previous
Distribution Dates pursuant to Section
4.04(h). On each Distribution Date, after
all distributions of principal on such
Distribution Date, a portion of the Class C
Interest Carry Forward Amount in an
amount equal to the excess of the
Overcollateralization Amount on such
Distribution Date over the
Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the
first Distribution Date, the initial
Overcollateralization Amount (based on the
Stated Principal Balance of the
Mortgage Loans as of the Cut-Off Date))
will be added to the aggregate
Certificate Principal Balance of the Class
C Certificates (on a pro rata basis).
Notwithstanding the foregoing on any
Distribution Date relating to a Due Period
in which a Subsequent Recovery has been
received by the Servicer, the
Certificate Principal Balance of any Class
of Certificates then outstanding for
which any Applied Realized Loss Amount has
been allocated will be increased, in
order of seniority, by an amount equal to
the lesser of (i) the Unpaid Realized
Loss Amount for such Class of Certificates
and (ii) the total of any Subsequent
Recovery distributed on such date to the
Certificateholders (reduced by the
amount of the
4
<PAGE>
increase in the Certificate Principal
Balance of any more senior Class of
Certificates pursuant to this sentence on
such Distribution Date).
Certificate
Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate
is
registered in the Certificate Register
(initially, Cede & Co., as nominee for
the Depository) in the case of any Class of
Regular Certificates or the Class R
Certificate, except that solely for the
purpose of giving any consent pursuant
to this Agreement, any Certificate
registered in the name of the Depositor or
any Affiliate of the Depositor shall be
deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall
not be taken into account in
determining whether the requisite amount of
Percentage Interests necessary to
effect such consent has been obtained;
provided, however, that if any such
Person (including the Depositor) owns 100%
of the Percentage Interests evidenced
by a Class of Certificates, such
Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that
requires the consent of the Holders of
Certificates of a particular Class as a
condition to the taking of any action
hereunder. The Trustee and the NIM Insurer
are entitled to rely conclusively on
a certification of the Depositor or any
Affiliate of the Depositor in
determining which Certificates are
registered in the name of an Affiliate of the
Depositor.
Class: All
Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A
Certificates: Any of the Class A-1A, Class A-1B and Class A-1C
Certificates.
Class A
Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any
Distribution Date on which a Stepdown
Trigger Event exists, 100% of the Principal
Distribution Amount for such
Distribution Date and (2) on or after the
Stepdown Date where a Stepdown Trigger
Event does not exist, the excess of (A) the
Certificate Principal Balance of the
Class A and Class R Certificates
immediately prior to such Distribution Date
over (B) the lesser of (1) 57.10% of the
Stated Principal Balances of the
Mortgage Loans as of the end of the
immediately preceding Due Period, and (2)
the excess of the Stated Principal Balances
of the Mortgage Loans as of the end
of the immediately preceding Due Period
over the Minimum Required
Overcollateralization Amount; provided,
however, that in no event will the Class
A Principal Distribution Amount with
respect to any Distribution Date exceed the
aggregate Certificate Principal Balance of
the Class A and Class R Certificates.
Class A-1A
Certificate: Any Certificate designated as a "Class A-1A
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class A-1A
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class A-1A Certificates.
Class A-1A
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class A-1A Pass-Through Rate on
the Class A-1A Certificate Principal
Balance as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class A-1A
Current Interest or a Class A-1A Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class A-1A
Certificates.
Class A-1A
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1A
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
A-1A Certificates with respect to Current
Interest or Interest
5
<PAGE>
Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such
excess (to the extent permitted by
applicable law) at the Class A-1A
Pass-Through Rate for the related Accrual
Period.
Class A-1A
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 0.11% per annum and, as of any
Distribution Date after the Auction
Termination Date, 0.22% per annum.
Class A-1A
Pass-Through Rate: For the first Distribution Date, 2.85563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class A-1A Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class A-1B
Certificate: Any Certificate designated as a "Class A-1B
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class A-1B
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class A-1B Certificates.
Class A-1B
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class A-1B Pass-Through Rate on
the Class A-1B Certificate Principal
Balance as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class A-1B
Current Interest or a Class A-1B Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class A-1B
Certificates.
Class A-1B
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1B
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
A-1B Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class A-1B Pass-Through Rate for the
related Accrual Period.
Class A-1B
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 0.23% per annum and, as of any
Distribution Date after the Auction
Termination Date, 0.46% per annum.
Class A-1B
Pass-Through Rate: For the first Distribution Date, 2.97563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class A-1B Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class A-1C
Certificate: Any Certificate designated as a "Class A-1C
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class A-1C
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class A-1C Certificates.
Class A-1C
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class A-1C Pass-Through Rate on
the Class A-1C Certificate Principal
Balance as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class A-1C
Current Interest or a Class A-1C Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class A-1C
Certificates.
6
<PAGE>
Class A-1C
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1C
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
A-1C Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class A-1C Pass-Through Rate for the
related Accrual Period.
Class A-1C
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 0.35% per annum and, as of any
Distribution Date after the Auction
Termination Date, 0.70% per annum.
Class A-1C
Pass-Through Rate: For the first Distribution Date, 3.09563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class A-1C Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class B-1
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class B-1 Certificates.
Class B-1
Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class B-1
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class B-1 Certificates.
Class B-1
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class B-1
Current Interest or a Class B-1 Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class B-1
Certificates.
Class B-1
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
B-1 Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class B-1 Pass-Through Rate for the
related Accrual Period.
Class B-1
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 1.20% per annum and, as of any
Distribution Date after the Auction
Termination Date, 1.80% per annum.
Class B-1
Pass-Through Rate: For the first Distribution Date, 3.94563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class B-1
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the
Certificate Principal Balances of the Class A,
Class R and Class M Certificates have been
reduced to zero and a Stepdown
Trigger Event exists, or as long as a
Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the sum of the
Certificate Principal Balances of
the Class A and Class R Certificates (after
taking into account distributions of
the Class A Principal Distribution Amount
on such Distribution Date),
7
<PAGE>
(B) the Class M-1 Certificate Principal
Balance (after taking into account
distributions of the Class M-1 Principal
Distribution Amount on such
Distribution Date), (C) the Class M-2
Certificate Principal Balance (after
taking into account distributions of the
Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class
M-3 Certificate Principal Balance
(after taking into account distributions of
the Class M-3 Principal Distribution
Amount on such Distribution Date), (E) the
Class M-4 Certificate Principal
Balance (after taking into account
distributions of the Class M-4 Principal
Distribution Amount on such Distribution
Date) and (F) the Class B-1 Certificate
Principal Balance immediately prior to such
Distribution Date over (2) the
lesser of (A) 91.40% of the Stated
Principal Balances of the Mortgage Loans as
of the end of the immediately preceding Due
Period and (B) the excess of the
Stated Principal Balances of the Mortgage
Loans as of the end of the immediately
preceding Due Period over the Minimum
Required Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any
Distribution Date prior to the
Stepdown Date on which the Certificate
Principal Balance of each Class of the
Class A Certificates, Class R Certificates
and Class M Certificates has been
reduced to zero, the Class B-1 Principal
Distribution Amount will equal the
lesser of (x) the outstanding Certificate
Principal Balance of the Class B-1
Certificates and (y) 100% of the Principal
Distribution Amount remaining after
any distributions on such Class A, Class R
and Class M Certificates and (II) in
no event will the Class B-1 Principal
Distribution Amount with respect to any
Distribution Date exceed the Class B-1
Certificate Principal Balance.
Class B-1 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class B-1
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class B-2
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class B-2 Certificates.
Class B-2
Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class
B-2-Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance
of the Class B-2 Certificates.
Class B-2
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class B-2
Current Interest or a Class B-2 Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class B-2
Certificates.
Class B-2
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
B-2 Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class B-2 Pass-Through Rate for the
related Accrual Period.
Class B-2
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 1.30% per annum and, as of any
Distribution Date after the Auction
Termination Date, 1.95% per annum.
8
<PAGE>
Class B-2
Pass-Through Rate: For the first Distribution Date, 4.04563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class B-2 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class B-2
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the
Certificate Principal Balances of the Class A,
Class R, Class M and Class B-1 Certificates
have been reduced to zero and a
Stepdown Trigger Event exists, or as long
as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the
sum of the Certificate Principal
Balances of the Class A and Class R
Certificates (after taking into account
distributions of the Class A Principal
Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate
Principal Balance (after taking into
account distributions of the Class M-1
Principal Distribution Amount on such
Distribution Date), (C) the Class M-2
Certificate Principal Balance (after
taking into account distributions of the
Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class
M-3 Certificate Principal Balance
(after taking into account distributions of
the Class M-4 Principal Distribution
Amount on such Distribution Date), (E) the
Class M-4 Certificate Principal
Balance (after taking into account
distributions of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (F) the Class B-1 Certificate
Principal Balance (after taking into
account distributions of the Class B-1
Principal Distribution Amount on such
Distribution Date) and (G) the Class B-2
Certificate Principal Balance immediately
prior to such Distribution Date over
(2) the lesser of (A) 93.40% of the Stated
Principal Balances of the Mortgage
Loans as of the end of the immediately
preceding Due Period and (B) the excess
of the Stated Principal Balances of the
Mortgage Loans as of the end of the
immediately preceding Due Period over the
Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I)
on any Distribution Date prior to the
Stepdown Date on which the Certificate
Principal Balance of each Class of the
Class A Certificates, Class R Certificates,
Class M Certificates and Class B-1
Certificates has been reduced to zero, the
Class B-2 Principal Distribution
Amount will equal the lesser of (x) the
outstanding Certificate Principal
Balance of the Class B-2 Certificates and
(y) 100% of the Principal Distribution
Amount remaining after any distributions on
such Class A, Class R, Class M and
Class B-1 Certificates and (II) in no event
will the Class B-2 Principal
Distribution Amount with respect to any
Distribution Date exceed the Class B-2
Certificate Principal Balance.
Class B-2 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class B-2
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class B-3
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class B-3 Certificates.
Class B-3
Certificate: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class
B-3-Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance
of the Class B-3 Certificates.
Class B-3
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class B-3
Current Interest or a Class B-3 Interest
Carry Forward Amount that is recovered
as a voidable preference
9
<PAGE>
by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class B-3
Certificates.
Class B-3
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
B-3 Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class B-3 Pass-Through Rate for the
related Accrual Period.
Class B-3
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 1.98% per annum and, as of any
Distribution Date after the Auction
Termination Date, 2.97% per annum.
Class B-3
Pass-Through Rate: For the first Distribution Date, 4.72563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class B-3 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class B-3
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the
Certificate Principal Balances of the Class A,
Class R, Class M, Class B-1 and Class B-2
Certificates have been reduced to zero
and a Stepdown Trigger Event exists, or as
long as a Stepdown Trigger Event does
not exist, the excess of (1) the sum of (A)
the sum of the Certificate Principal
Balances of the Class A and Class R
Certificates (after taking into account
distributions of the Class A Principal
Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate
Principal Balance (after taking into
account distributions of the Class M-1
Principal Distribution Amount on such
Distribution Date), (C) the Class M-2
Certificate Principal Balance (after
taking into account distributions of the
Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class
M-3 Certificate Principal Balance
(after taking into account distributions of
the Class M-3 Principal Distribution
Amount on such Distribution Date), (E) the
Class M-4 Certificate Principal
Balance (after taking into account
distributions of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (F) the Class B-1 Certificate
Principal Balance (after taking into
account distributions of the Class B-1
Principal Distribution Amount on such
Distribution Date), (G) the Class B-2
Certificate Principal Balance (after taking
into account distributions of the
Class B-2 Principal Distribution Amount on
such Distribution Date) and (H) the
Class B-3 Certificate Principal Balance
immediately prior to such Distribution
Date over (2) the lesser of (A) 95.40% of
the Stated Principal Balances of the
Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the
excess of the Stated Principal Balances of
the Mortgage Loans as of the end of
the immediately preceding Due Period over
the Minimum Required
Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown
Date on which the Certificate Principal
Balance of each Class of the Class A
Certificates, Class R Certificates, Class M
Certificates, Class B-1 and Class B-2
Certificates has been reduced to zero, the
Class B-3 Principal Distribution Amount
will equal the lesser of (x) the
outstanding Certificate Principal Balance
of the Class B-3 Certificates and (y)
100% of the Principal Distribution Amount
remaining after any distributions on
such Class A, Class R, Class M, Class B-1
and Class B-2 Certificates and (II) in
no event will the Class B-3 Principal
Distribution Amount with respect to any
Distribution Date exceed the Class B-3
Certificate Principal Balance.
Class B-3 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class B-3
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
10
<PAGE>
Class C Applied
Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with
respect to the Mortgage Loans which
have been applied to the reduction of the
Certificate Principal Balance of the
Class C Certificates.
Class C
Certificate: Any Certificate designated as a "Class C
Certificate"
on the face thereof, in the form of Exhibit
A hereto, representing the right to
distributions as set forth herein.
Class C
Certificate Principal Balance: As of any date of determination,
the
aggregate Certificate Principal Balance of
the Class C Certificates.
Class C Current
Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the
Class C Distributable Interest Rate on
a notional amount equal to the aggregate
principal balance of the Lower Tier
REMIC Regular Interests immediately prior
to such Distribution Date, plus the
interest portion of any previous
distributions on such Class that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class C
Certificates.
Class C
Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on
the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of
the interest rates on the Lower Tier
REMIC Regular Interests (treating for
purposes of this clause (b) the interest
rate on each of the Lower Tier REMIC Marker
Classes as being capped at the
interest rate of its Related Certificates
and treating the Class LTX Interest as
being capped at zero). The averages
described in the preceding sentence shall be
weighted on the basis of the respective
principal balances of the Lower Tier
REMIC Regular Interests immediately prior
to any date of determination.
Class C Interest
Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest
with respect to prior Distribution
Dates over (B) the amount actually
distributed to the Class C Certificates with
respect to interest on such prior
Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class
C Certificates.
Class C Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized
Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
C Unpaid Realized Loss Amount on all
previous Distribution Dates and (y) all
increases in the Certificate Principal
Balance of such Class C Certificates
pursuant to the last sentence of the
definition of "Certificate Principal
Balance."
Class LTA-1A
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificates and an
interest rate equal to the Net Rate.
Class LTA-1B
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTA-1C
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTB-1
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
11
<PAGE>
Class LTB-2
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTB-3
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTM-1
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTM-2
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTM-3
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTM-4
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to 1/2 of the initial principal
balance of its Related Certificate and an
interest rate equal to the Net Rate.
Class LTR
Interest: The sole class of "residual interest" in the Lower
Tier
REMIC.
Class LTX
Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance
equal to the excess of (i) the aggregate
Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the aggregate
initial principal balance of the Lower Tier
REMIC Marker Classes, and with an
interest rate equal to the Net Rate.
Class M
Certificates: Any of the Class M-1, Class M-2, Class M-3 and
Class
M-4 Certificates.
Class M-1
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class M-1 Certificates.
Class M-1
Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class M-1
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class M-1 Certificates.
Class M-1
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class M-1
Current Interest or a Class M-1 Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class M-1
Certificates.
12
<PAGE>
Class M-1
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
M-1 Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class M-1 Pass-Through Rate for the
related Accrual Period.
Class M-1
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 0.47% per annum and, as of any
Distribution Date after the Auction
Termination Date, 0.705% per annum.
Class M-1
Pass-Through Rate: For the first Distribution Date, 3.21563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class M-1
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the
Certificate Principal Balances of the Class A
and Class R Certificates have been reduced
to zero and a Stepdown Trigger Event
exists, or as long as a Stepdown Trigger
Event does not exist, the excess of (1)
the sum of (A) the sum of the Certificate
Principal Balances of the Class A and
Class R Certificates (after taking into
account distributions of the Class A
Principal Distribution Amount on such
Distribution Date) and (B) the Class M-1
Certificate Principal Balance immediately
prior to such Distribution Date over
(2) the lesser of (A) 67.40% of the Stated
Principal Balances of the Mortgage
Loans as of the end of the immediately
preceding Due Period and (B) the excess
of the Stated Principal Balances for the
Mortgage Loans as of the end of the
immediately preceding Due Period over the
Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I)
on any Distribution Date prior to the
Stepdown Date on which the Certificate
Principal Balance of each Class of the
Class A Certificates and Class R
Certificates has been reduced to zero, the
Class M-1 Principal Distribution Amount
will equal the lesser of (x) the
outstanding Certificate Principal Balance
of the Class M-1 Certificates and (y)
100% of the Principal Distribution Amount
remaining after any distributions on
such Class A Certificates and Class R
Certificates and (II) in no event will the
Class M-1 Principal Distribution Amount
with respect to any Distribution Date
exceed the Class M-1 Certificate Principal
Balance.
Class M-1 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class M-1
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class M-2
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2
Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class M-2
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class M-2 Certificates.
Class M-2
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class
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M-2 Current Interest or a Class M-2
Interest Carry Forward Amount that is
recovered as a voidable preference by a
trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated
on such Distribution Date to the
Class M-2 Certificates.
Class M-2
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
M-2 Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class M-2 Pass-Through Rate for the
related Accrual Period.
Class M-2
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 0.50% per annum and, as of any
Distribution Date after the Auction
Termination Date, 0.75% per annum.
Class M-2
Pass-Through Rate: For the first Distribution Date, 3.24563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class M-2
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the
Certificate Principal Balances of the Class A,
Class R and Class M-1 Certificates have
been reduced to zero and a Stepdown
Trigger Event exists, or as long as a
Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the sum of the
Certificate Principal Balances of
the Class A and Class R Certificates (after
taking into account distributions of
the Class A Principal Distribution Amount
on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance
(after taking into account distributions
of the Class M-1 Principal Distribution
Amount on such Distribution Date) and
(C) the Class M-2 Certificate Principal
Balance immediately prior to such
Distribution Date over (2) the lesser of
(A) 74.20% of the Stated Principal
Balances of the Mortgage Loans as of the
end of the immediately preceding Due
Period and (B) the excess of the Stated
Principal Balances of the Mortgage Loans
as of the end of the immediately preceding
Due Period over the Minimum Required
Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown
Date on which the Certificate Principal
Balance of each Class of Class A
Certificates, Class R Certificates and the
Class M-1 Certificates has been reduced to
zero, the Class M-2 Principal
Distribution Amount will equal the lesser
of (x) the outstanding Certificate
Principal Balance of the Class M-2
Certificates and (y) 100% of the Principal
Distribution Amount remaining after any
distributions on such Class A, Class R
and Class M-1 Certificates and (II) in no
event will the Class M-2 Principal
Distribution Amount with respect to any
Distribution Date exceed the Class M-2
Certificate Principal Balance.
Class M-2 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class M-2
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class M-3
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class M-3 Certificates.
Class M-3
Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
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<PAGE>
Class M-3
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class M-3 Certificates.
Class M-3
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class M-3 Pass-Through Rate on
the Class M-3 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class M-3
Current Interest or a Class M-3 Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class M-3
Certificates.
Class M-3
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-3
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
M-3 Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class M-3 Pass-Through Rate for the
related Accrual Period.
Class M-3
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 0.72% per annum and, as of any
Distribution Date after the Auction
Termination Date, 1.08% per annum.
Class M-3
Pass-Through Rate: For the first Distribution Date, 3.46563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class M-3 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class M-3
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the
Certificate Principal Balances of the Class A,
Class R, Class M-1 and Class M-2
Certificates have been reduced to zero and a
Stepdown Trigger Event exists, or as long
as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the
sum of the Certificate Principal
Balances of the Class A and Class R
Certificates (after taking into account
distributions of the Class A Principal
Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate
Principal Balance (after taking into
account distributions of the Class M-1
Principal Distribution Amount on such
Distribution Date), (C) the Class M-2
Certificate Principal Balance (after
taking into account distributions of the
Class M-2 Principal Distribution Amount
on such Distribution Date) and (D) the
Class M-3 Certificate Principal Balance
immediately prior to such Distribution Date
over (2) the lesser of (A) 85.20% of
the Stated Principal Balances of the
Mortgage Loans as of the end of the
immediately preceding Due Period and (B)
the excess of the Stated Principal
Balances for the Mortgage Loans as of the
end of the immediately preceding Due
Period over the Minimum Required
Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date
prior to the Stepdown Date on which
the Certificate Principal Balance of each
Class of the Class A Certificates, the
Class R Certificates, the Class M-1
Certificates and the Class M-2 Certificates
has been reduced to zero, the Class M-3
Principal Distribution Amount will equal
the lesser of (x) the outstanding
Certificate Principal Balance of the Class M-3
Certificates and (y) 100% of the Principal
Distribution Amount remaining after
any distributions on such Class A, Class R,
Class M-1 and Class M-2 Certificates
and (II) in no event will the Class M-3
Principal Distribution Amount with
respect to any Distribution Date exceed the
Class M-3 Certificate Principal
Balance.
Class M-3 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-3 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
M-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class M-3
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
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<PAGE>
Class M-4
Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts
with respect to the Mortgage Loans
which have been applied to the reduction of
the Certificate Principal Balance of
the Class M-4 Certificates.
Class M-4
Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the
form of Exhibit A hereto, representing
the right to distributions as set forth
herein.
Class M-4
Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance
of the Class M-4 Certificates.
Class M-4
Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period
at the Class M-4 Pass-Through Rate on
the Class M-4 Certificate Principal Balance
as of such Distribution Date plus
the portion of any previous distributions
on such Class in respect of Class M-4
Current Interest or a Class M-4 Interest
Carry Forward Amount that is recovered
as a voidable preference by a trustee in
bankruptcy, less any Non-Supported
Interest Shortfall allocated on such
Distribution Date to the Class M-4
Certificates.
Class M-4
Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-4
Current Interest with respect to
prior Distribution Dates over (B) the
amount actually distributed to the Class
M-4 Certificates with respect to Current
Interest or Interest Carry Forward
Amounts on such prior Distribution Dates
and (2) interest on such excess (to the
extent permitted by applicable law) at the
Class M-4 Pass-Through Rate for the
related Accrual Period.
Class M-4
Margin: As of any Distribution Date up to and including the
Auction Termination Date for the
Certificates, 0.78% per annum and, as of any
Distribution Date after the Auction
Termination Date, 1.17% per annum.
Class M-4
Pass-Through Rate: For the first Distribution Date, 3.52563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class M-4 Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class M-4
Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of
the Principal Distribution Amount
for such Distribution Date if the
Certificate Principal Balances of the Class A,
Class R, Class M-1, Class M-2 and Class M-3
Certificates have been reduced to
zero and a Stepdown Trigger Event exists,
or as long as a Stepdown Trigger Event
does not exist, the excess of (1) the sum
of (A) the sum of the Certificate
Principal Balances of the Class A and Class
R Certificates (after taking into
account distributions of the Class A
Principal Distribution Amount on such
Distribution Date), (B) the Class M-1
Certificate Principal Balance (after
taking into account distributions of the
Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class
M-2 Certificate Principal Balance
(after taking into account distributions of
the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the
Class M-3 Certificate Principal
Balance (after taking into account
distributions of the Class M-3 Principal
Distribution Amount on such Distribution
Date) and (E) the Class M-4 Certificate
Principal Balance immediately prior to such
Distribution Date over (2) the
lesser of (A) 88.80% of the Stated
Principal Balances of the Mortgage Loans as
of the end of the immediately preceding Due
Period and (B) the excess of the
Stated Principal Balances for the Mortgage
Loans as of the end of the
immediately preceding Due Period over the
Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I)
on any Distribution Date prior to the
Stepdown Date on which the Certificate
Principal Balance of each Class of the
Class A Certificates, the Class R
Certificates, the Class M-1 Certificates, the
Class M-2 and the Class M-3 Certificates
has been reduced to zero, the Class M-4
Principal Distribution Amount will equal
the lesser of (x) the outstanding
Certificate Principal Balance of the Class
M-3 Certificates and (y) 100% of the
Principal Distribution
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<PAGE>
Amount remaining after any distributions on
such Class A, Class R, Class M-1,
Class M-2 and Class M-3 Certificates and
(II) in no event will the Class M-4
Principal Distribution Amount with respect
to any Distribution Date exceed the
Class M-4 Certificate Principal
Balance.
Class M-4 Unpaid
Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-4 Applied
Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class
M-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all
increases in the Certificate
Principal Balance of such Class M-4
Certificates pursuant to the last sentence
of the definition of "Certificate Principal
Balance."
Class P
Certificate: Any Certificate designated as a Class P Certificate
on
the face thereof, executed by the Trustee
and authenticated by the Trustee in
substantially the form set forth in Exhibit
A, representing the right to
distributions as set forth herein.
Class R
Certificate: The Class R Certificate executed by the Trustee
and
authenticated by the Trustee in
substantially the form set forth in Exhibit A.
Class R
Certificate Principal Balance: As of any date of determination,
the
aggregate Certificate Principal Balance of
the Class R Certificate.
Class R Current
Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the
Class R Pass-Through Rate on the Class
R Certificate Principal Balance as of such
Distribution Date plus the portion of
any previous distributions on such Class in
respect of Class R Current Interest
or a Class R Interest Carry Forward Amount
that is recovered as a voidable
preference by a trustee in bankruptcy, less
any Non-Supported Interest Shortfall
allocated on such Distribution Date to the
Class R Certificate.
Class R Interest
Carry Forward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R
Current Interest with respect to prior
Distribution Dates over (B) the amount
actually distributed to the Class R
Certificate with respect to Current
Interest or Interest Carry Forward Amounts
on such prior Distribution Dates and (2)
interest on such excess (to the extent
permitted by applicable law) at the Class R
Pass-Through Rate for the related
Accrual Period.
Class R Margin:
As of any Distribution Date up to and including the Auction
Termination Date for the Certificates,
0.11% per annum and, as of any
Distribution Date after the Auction
Termination Date, 0.22% per annum.
Class R
Pass-Through Rate: For the first Distribution Date, 2.85563%
per
annum. As of any Distribution Date
thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Maximum
Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Clean Up Call:
The termination of the Trust Fund hereunder pursuant to
Section 9.01(a)(ii).
Clean Up Call
Date: The second Distribution Date immediately following the
Auction Termination Date.
Clean Up Call
Price: An amount equal to the sum of (a) the aggregate Stated
Principal Balance of each Mortgage Loan
(other than any Mortgage Loan that is an
REO Property), plus accrued interest
thereon at the applicable Mortgage Rate
through the Due Date preceding distribution
of the proceeds, the fair market
value of any REO Property, plus accrued
interest thereon, (b) any unreimbursed
out-of-pocket
17
<PAGE>
expenses owed to the Trustee (including the
costs and expenses of conducting the
auction described in Section 9.01(a)) or
the Servicer and any unreimbursed
Servicing Fees, Advances or Servicing
Advances, (c) all interest accrued on, as
well as amounts necessary to retire the
principal balance of the notes
guaranteed by the NIM Insurer, (d) any
amounts owed to the NIM Insurer at the
time the Clean Up Call is exercised and (e)
any costs and damages incurred by
the Trust Fund (or the Trustee on behalf of
the Trust Fund) in connection with
any violation by the affected Mortgage Loan
of any anti-predatory or
anti-abusive lending laws.
Closing Date:
March 7, 2005.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection
Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to
Section 3.05(d) in the name of the
Trustee for the benefit of the
Certificateholders and designated "Litton Loan
Servicing LP, in trust for registered
holders of Specialty Underwriting and
Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series
2005-BC1". Funds in the Collection Account
shall be held in trust for the
Certificateholders for the uses and
purposes set forth in this Agreement.
Combined
Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a
percentage, the numerator of which is the
sum of (1) the original principal balance
of the related Mortgage Loan and (2)
any outstanding principal balances of
Mortgage Loans the liens on which are
senior to the lien on such related Mortgage
Loan (such sum calculated at the
date of origination of such related
Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of
the related Mortgaged Property and
(B) the sales price of the related
Mortgaged Property at time of origination.
Compensating
Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the
portion of any Prepayment Interest
Shortfalls required to be deposited in the
Collection Account by the Servicer
pursuant to Section 4.02 hereof.
Current
Interest: Any of the Class A-1A Current Interest, the Class
A-1B
Current Interest, the Class A-1C Current
Interest, the Class R Current Interest,
the Class M-1 Current Interest, the Class
M-2 Current Interest, the Class M-3
Current Interest, the Class M-4 Current
Interest, the Class B-1 Current
Interest, the Class B-2 Current Interest,
the Class B-3 Current Interest and the
Class C Current Interest.
Cut-off Date:
March 1, 2005.
Cut-off Date
Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close
of business on the calendar day
immediately preceding the Cut-off Date
after application of all payments of
principal due on or prior to the Cut-off
Date, whether or not received, and all
Principal Prepayments received prior to the
Cut-off Date, but without giving
effect to any installments of principal
received in respect of Due Dates on and
after the Cut-off Date.
Definitive
Certificates: As defined in Section 5.06.
Deleted Mortgage
Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A
Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such
Mortgage Loan by the close of business on
the day such payment is scheduled to be
18
<PAGE>
due. A Mortgage Loan is "30 days
delinquent" if such payment has not been
received by the close of business on the
corresponding day of the month
immediately succeeding the month in which
such payment was due, or, if there is
no such corresponding day (e.g., as when a
30-day month follows a 31-day month
in which a payment was due on the 31st day
of such month), then on the last day
of such immediately succeeding month.
Similarly for "60 days delinquent," "90
days delinquent" and so on.
Denomination:
With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Principal
Balance of this Certificate."
Depositor:
Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or its successor in
Depository: The
initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede &
Co., or any other organization
registered as a "clearing agency" pursuant
to Section 17A of the Securities
Exchange Act of 1934, as amended. The
Depository shall initially be the
registered Holder of the Book-Entry
Certificates. The Depository shall at all
times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New
York.
Depository
Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the
initial Depository.
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.
Designated
Transaction: A transaction in which the assets underlying the
Certificates consist of single-family
residential, multi-family residential,
home equity, manufactured housing and/or
commercial mortgage obligations that
are secured by single family residential,
multi-family residential, commercial
real property or leasehold interests
therein.
Determination
Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if
such 15th day is not a Business Day,
the immediately preceding Business Day.
Disqualified
Organization: (1) the United States, any state or political
subdivision thereof, any foreign
government, any international organization, or
any agency or instrumentality of any of the
foregoing, (2) any organization
(other than a cooperative described in
Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of
the Code unless such organization is
subject to the tax imposed by Section 511
of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the
Code.
Distribution
Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such
25th day is not a Business Day, the
next succeeding Business Day, commencing in
April 2005.
Due Date: With
respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which
a Scheduled Payment is due.
Due Period: With
respect to any Distribution Date, the period beginning on
the second day of the calendar month
preceding the calendar month in which such
Distribution Date occurs and ending on the
first day of the month in which such
Distribution Date occurs.
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<PAGE>
Eligible
Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt
obligations of which are rated by each
Rating Agency in one of its two highest
rating categories, or (ii) maintained
with the corporate trust department of a
bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either
the Depositor or the corporate trust
department of a national bank or banking
corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or
(iii) an account or accounts the deposits in
which are fully insured by the FDIC, or
(iv) an account or accounts, acceptable
to each Rating Agency without reduction or
withdrawal of the rating of any Class
of Certificates, as evidenced in writing,
by a depository institution in which
such accounts are insured by the FDIC (to
the limit established by the FDIC),
the uninsured deposits in which accounts
are otherwise secured such that, as
evidenced by an Opinion of Counsel
delivered to and acceptable to the Trustee,
the NIM Insurer and each Rating Agency, the
Certificateholders have a claim with
respect to the funds in such account and a
perfected first security interest
against any collateral (which shall be
limited to Permitted Investments)
securing such funds that is superior to
claims of any other depositors or
creditors of the depository institution
with which such account is maintained,
or (v) maintained at an eligible
institution whose commercial paper, short-term
debt or other short-term deposits are rated
at least A-1+ by S&P and F-1+ by
Fitch, or (vi) maintained with a federal or
state chartered depository
institution the deposits in which are
insured by the FDIC to the applicable
limits and the short-term unsecured debt
obligations of which (or, in the case
of a depository institution that is a
subsidiary of a holding company, the
short-term unsecured debt obligations of
such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time
any deposits are held on deposit therein,
or (vii) a segregated trust account or
accounts maintained with a federal or
state chartered depository institution or
trust company acting in its fiduciary
capacity, that is acceptable to the Rating
Agencies, or (viii) otherwise
acceptable to each Rating Agency, as
evidenced by a letter from each Rating
Agency to the Trustee and the NIM
Insurer.
ERISA: The
Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying
Underwriting: A best efforts or firm commitment
underwriting or private placement that
would satisfy the requirements of any
applicable underwriter's exemption granted
by the United States Department of
Labor, except, in relevant part, for the
requirement that the certificates have
received a rating at the time of
acquisition that is in one of the three (or
four, in the case of a "designated
transaction") highest generic rating
categories by at least one of the Rating
Agencies.
ERISA Restricted
Certificate: The Class C, Class P and Class R Certificate
and any other Certificate, unless the
acquisition and holding of such other
Certificate is covered by and exempt under
any applicable underwriter's
exemption granted by the United States
Department of Labor.
Event of
Default: As defined in Section 7.01 hereof.
Excess Interest:
On any Distribution Date, for the Class A-1A Certificates,
Class A-1B Certificates, Class A-1C
Certificates, Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class
M-3 Certificates, Class M-4
Certificates, Class B-1 Certificates, Class
B-2 Certificates and Class B-3
Certificates, the excess, if any, of (1)
the amount of interest such Class of
Certificates is entitled to receive on such
Distribution Date at its
Pass-Through Rate over (2) the amount of
interest such Class of Certificates
would have been entitled to receive on such
Distribution Date had the
Pass-Through Rate for such Class been the
REMIC Pass-Through Rate.
Excess Proceeds:
With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of
(1) the unpaid principal balance of
such Liquidated Loan as of the date of such
liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which
interest was last paid or advanced
to Certificateholders (and not reimbursed
to the Servicer) up to the Due Date in
the month in
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<PAGE>
which such Liquidation Proceeds are
required to be distributed on the unpaid
principal balance of such Liquidated Loan
outstanding during each Due Period as
to which such interest was not paid or
advanced.
Exchange Act:
The Securities Exchange Act of 1934, as amended.
Existing
Servicing Agreement: The Sub-Servicing Agreement between
Merrill
Lynch Mortgage Lending, Inc., as Owner and
Litton Loan Servicing LP, as
Servicer, dated as of September 1, 2002, as
at any time amended and in effect.
Extra Principal
Distribution Amount: Prior to the Stepdown Date, the excess
of (A) the sum of (i) the Aggregate
Certificate Principal Balance immediately
preceding such Distribution Date reduced by
the Principal Funds with respect to
such Distribution Date and (ii)
$18,068,567.23 over (B) the Pool Stated
Principal Balance of the Mortgage Loans as
of such Distribution Date and (2) on
and after the Stepdown Date, (A) the sum of
(i) the Aggregate Certificate
Principal Balance immediately preceding
such Distribution Date, reduced by the
Principal Funds with respect to such
Distribution Date and (ii) the greater of
(a) 4.60% of the Pool Stated Principal
Balances of the Mortgage Loans and (b)
the Minimum Required Overcollateralization
Amount less (B) the Pool Stated
Principal Balance of the Mortgage Loans as
of such Distribution Date; provided,
however, that if on any Distribution Date a
Stepdown Trigger Event is in effect,
the Extra Principal Distribution Amount
will not be reduced to the applicable
percentage of the then-current Stated
Principal Balance of the Mortgage Loans as
of the Due Date immediately prior to the
Stepdown Trigger Event until the next
Distribution Date on which the Stepdown
Trigger Event is not in effect.
Fannie Mae: A
federally chartered and privately owned corporation organized
and existing under the Federal National
Mortgage Association Charter Act, or any
successor thereto.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
FIFO: As defined
in Section 10.14(e).
Fitch: Fitch,
Inc., or its successor in interest.
Fixed Rate
Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is
fixed.
Floating Rate
Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for
a class of Offered Certificates is
based upon the Available Funds Cap or the
Maximum Rate Cap, the excess of (1)
the amount of interest that such Class
would have been entitled to receive on
such Distribution Date had the Pass-Through
Rate for that Class not been
calculated based on the Available Funds Cap
or the Maximum Rate Cap, up to but
not exceeding greater of (x) the Maximum
Rate Cap or (y) the Upper Collar, over
(2) the amount of interest such class was
entitled to receive on such
Distribution Date based on the lesser of
(a) the Available Funds Cap or (b) the
Maximum Rate Cap, together with (i) the
unpaid portion of any such excess from
prior Distribution Dates (and interest
accrued thereon at the then applicable
Pass-Through Rate, without giving effect to
the applicable Available Funds Cap)
and (ii) any amount previously distributed
with respect to Floating Rate
Certificate Carryover for such class that
is recovered as a voidable preference
by a trustee in bankruptcy.
Freddie Mac: A
corporate instrumentality of the United States created and
existing under Title III of the Emergency
Home Finance Act of 1970, as amended,
or any successor thereto.
Grantor Trusts:
The grantor trusts described in Section 2.07 hereof.
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Gross Margin:
The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans
which is to be added to the
applicable index for use in determining the
Mortgage Rate on each Adjustment
Date, and which is set forth in the
Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Indenture: An
indenture relating to the issuance of notes guaranteed by the
NIM Insurer.
Initial
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first
Adjustment Date following the origination
of such Mortgage Loan.
Initial
Certificate Principal Balance: With respect to any Certificate
(other than the Class P Certificates), the
Certificate Principal Balance of such
Certificate or any predecessor Certificate
on the Closing Date as set forth in
Section 5.01 hereof.
Initial Mortgage
Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment
Date.
Insurance
Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all
riders and endorsements thereto in
effect with respect to such Mortgage Loan,
including any replacement policy or
policies for any insurance policies.
Insurance
Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant
to any Insurance Policy or any other
insurance policy covering a Mortgage Loan,
to the extent such proceeds are payable to
the mortgagee under the Mortgage, the
Servicer or the trustee under the deed of
trust and are not applied to the
restoration of the related Mortgaged
Property or released to the Mortgagor in
accordance with the procedures that the
Servicer would follow in servicing
mortgage loans held for its own account, in
each case other than any amount
included in such Insurance Proceeds in
respect of Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the
Mortgage Loans.
Interest Carry
Forward Amount: Any of the Class A-1A Interest Carry Forward
Amount, the Class A-1B Interest Carry
Forward Amount, the Class A-1C Interest
Carry Forward Amount, the Class R Interest
Carry Forward Amount, the Class M-1
Interest Carry Forward Amount, the Class
M-2 Interest Carry Forward Amount, the
Class M-3 Interest Carry Forward Amount,
the Class M-4 Interest Carry Forward
Amount, the Class B-1 Interest Carry
Forward Amount, the Class B-2 Interest
Carry Forward Amount or the Class B-3
Interest Carry Forward Amount, as the case
may be.
Interest
Determination Date: With respect to the Certificates, for any
Accrual Period, the second LIBOR Business
Day preceding the commencement of such
Accrual Period.
Interest Funds: With respect to
any Distribution Date, the sum, without
duplication, of (1) all scheduled interest
due during the related Due Period and
received before the related Servicer
Remittance Date or advanced on or before
the related Servicer Remittance Date less
the Servicing Fee, (2) all Advances
relating to interest with respect to the
Mortgage Loans, (3) all Compensating
Interest with respect to the Mortgage
Loans, (4) Liquidation Proceeds with
respect to the Mortgage Loans (to the
extent such Liquidation Proceeds relate to
interest) collected during the related
Prepayment Period, (5) proceeds of any
purchase pursuant to Sections 2.02, 2.03 or
9.01 (to the extent such proceeds
relate to interest) and (6) prepayment
penalties received with respect to the
Mortgage Loans during the related
Prepayment Period (A) all Non-Recoverable
Advances relating to interest and (B) other
amounts reimbursable to the Servicer
and the Trustee pursuant to this Agreement
and allocable to interest.
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Last Scheduled
Distribution Date: With respect to any Class of
Certificates, the Distribution Date in
December 2035.
Latest Possible
Maturity Date: The first Distribution Date following the
third anniversary of the scheduled maturity
date of the Mortgage Loan in the
Trust Fund having the latest scheduled
maturity date as of the Cut-off Date.
Lender: As
defined in Section 10.14(a).
LIBOR Business
Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and
conducting transactions in foreign
currency and exchange.
Liquidated Loan:
With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated
through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other
realization as provided by applicable
law governing the real property subject to
the related Mortgage and any security
agreements and as to which the Servicer has
certified (in accordance with
Section 3.12) in the related Prepayment
Period that it has received all amounts
it expects to receive in connection with
such liquidation.
Liquidation
Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete
liquidation of Mortgage Loans, whether
through trustee's sale, foreclosure sale,
sale by the Servicer pursuant to this
Agreement or otherwise or amounts received
in connection with any condemnation
or partial release of a Mortgaged Property
and any other proceeds received in
connection with an REO Property, less the
sum of related unreimbursed Advances,
Servicing Fees, Servicing Advances and any
other expenses related to such
Mortgage Loan.
Loan-to-Value
Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of
which is the original principal
balance of the related Mortgage Loan and
the denominator of which is the lesser
of (x) the Appraised Value of the related
Mortgaged Property and (y) the sales
price of the related Mortgaged Property at
the time of origination.
Losses: Any
losses, claims, damages, liabilities or expenses collectively.
Lower Tier
REMIC: As described in the Preliminary Statement and Section
2.07.
Lower Tier REMIC
Interests: Each of the Class LTA-1A Interest, the Class
LTA-1B Interest, the Class LTA-1C Interest,
the Class LTM-1 Interest, the Class
LTM-2 Interest, the Class LTM-3 Interest,
the Class LTM-4 Interest, the Class
LTB-1 Interest, the Class LTB-2 Interest,
the Class LTB-3 Interest, the Class
LTX Interest and the Class LTR
Interest.
Lower Tier REMIC
Marker Classes: Each of the Lower Tier REMIC Regular
Interests other than the Class LTX
Interest.
Lower Tier REMIC
Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
Maximum Mortgage
Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as
such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage
Loan, the rate of interest set forth in
the related Mortgage Note.
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<PAGE>
Maximum Rate
Cap: With respect to a Distribution Date, 12 times the
quotient of (x) the aggregate scheduled
interest that would have been due on the
Mortgage Loans during the related Due
Period had the Adjustable Rate Mortgage
Loans provided for interest at their
maximum lifetime Net Mortgage Rates and the
Fixed Rate Mortgage Loans provided for
interest at their Net Mortgage Rates,
divided by (y) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the preceding Distribution Date. With
respect to the Class A, Class R, Class
M and Class B Certificates, such rate is
multiplied by 30 and divided by the
actual number of days in the related
Accrual Period.
MERS: Mortgage
Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of
the State of Delaware, or any successor
thereto.
MERS Loan: Any
Mortgage Loan registered with MERS on the MERS System.
MERS System: The
system of recording transfers of mortgage electronically
maintained by MERS.
MIN: The loan
number for any MERS Loan.
Minimum Mortgage
Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as
such in the related Mortgage Note.
Minimum Required
Overcollateralization Amount: The product of (x) 0.50% and
(y) the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date.
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: Moody's
Investors Service, Inc. or its successor in interest.
MOM Loan: Any
Mortgage Loan as to which MERS is acting as mortgagee, solely
as nominee for the originator of such
Mortgage Loan and its successors and
assigns.
Mortgage: With
respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument creating a first lien or a
first priority ownership interest in
an estate in fee simple in real property
securing a Mortgage Note.
Mortgage File:
The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan
and any additional documents delivered
to the Trustee to be added to the Mortgage
File pursuant to this Agreement.
Mortgage Loans:
Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof
as from time to time are held as a
part of the Trust Fund (including any REO
Property), the mortgage loans so held
being identified in the Mortgage Loan
Schedule, notwithstanding foreclosure or
other acquisition of title of the related
Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to
be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule
which is in fact not so transferred for
any reason shall continue to be a Mortgage
Loan hereunder until the Purchase
Price with respect thereto has been paid to
the Trust Fund.
Mortgage Loan
Schedule: The lists of Mortgage Loans (as from time to time
amended by the Seller to reflect the
deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans
pursuant to the provisions of this
Agreement) transferred to the Trustee as
part of the Trust Fund and from
24
<PAGE>
time to time subject to this Agreement,
attached hereto as Exhibits B-1, B-2,
B-3 and B-4, setting forth the following
information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) the unpaid principal balance of the Mortgage Loans;
(iii) the Initial Mortgage Rate;
(iv) the maturity date and the months remaining before maturity
date;
(v) the original principal balance;
(vi) the Cut-off Date Principal Balance;
(vii) the first payment date of the Mortgage Loan;
(viii) the Loan-to-Value Ratio at origination with respect to a
first
lien Mortgage
Loan, or the Combined Loan-to-Value Ratio with respect to a
second lien
Mortgage Loan;
(ix) a code indicating whether the residential dwelling at the time
of
origination was
represented to be owner-occupied;
(x) a code indicating the property type;
(xi) with respect to each Adjustable Rate Mortgage Loan:
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin;
(xiii) location of the related Mortgaged Property; and
(xiv) a code indicating whether a prepayment penalty is
applicable
and, if so, the
term of such prepayment penalty.
Mortgage Note:
The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor
under a Mortgage Loan and all
amendments, modifications and attachments
thereto.
Mortgage Pool:
The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
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<PAGE>
Mortgage Rate:
The annual rate of interest borne by a Mortgage Note from
time to time.
Mortgaged
Property: The underlying property securing a Mortgage Loan.
Mortgagor: The
obligor on a Mortgage Note.
Net Mortgage
Rate: As to each Mortgage Loan, and at any time, the per annum
rate equal to the then current Mortgage
Rate less the Servicing Fee Rate.
Net Rate: With
respect to any Distribution Date, the product of (x) the
weighted average Net Mortgage Rate for the
Mortgage Loans calculated based on
the Net Mortgage Rates and the Stated
Principal Balances of the Mortgage Loans
as of the preceding Distribution Date, (or,
in the case of the first
Distribution Date, as of the Cut-off Date)
and (y) a fraction, the numerator of
which is 30 and the denominator of which is
the actual number of days in the
related Accrual Period.
NIM Notes: The
notes to be issued pursuant to the Indenture.
NIM Insurer: Any
of the one or more insurers that is guaranteeing certain
payments under any NIM Notes.
NIM Insurer
Default: A default by each of the NIM Insurers as such default
is defined in the Indenture.
Non-Recoverable
Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that,
in the good faith judgment of the
Servicer, will not or, in the case of a
current delinquency, would not, be
ultimately recoverable by the Servicer from
the related Mortgagor, related
Liquidation Proceeds or otherwise with
respect to the related Mortgage Loan.
Non-Recoverable
Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by
the Servicer that, in the good faith
judgment of the Servicer, will not or, in
the case of a current Servicing
Advance, would not, be ultimately
recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or
otherwise with respect to the related
Mortgage Loan.
Non-Supported
Interest Shortfall: As defined in Section 4.02.
Offered
Certificates: The Class A-1A, Class A-1B, Class A-1C, Class
M-1,
Class M-2, Class M-3, Class M-4, Class B-1,
Class B-2, Class B-3 and Class R
Certificates.
Officer's
Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the
President, a vice president (however
denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one
of the assistant treasurers or assistant
secretaries of the Depositor, the
Servicer (or any other officer customarily
performing functions similar to those
performed by any of the above designated
officers and also to whom, with respect
to a particular matter, such matter is
referred because of such officer's
knowledge of and familiarity with a
particular subject) or (2), if provided for
in this Agreement, signed by a Servicing
Officer, as the case may be, and
delivered to the Depositor, the Servicer or
the Trustee, as the case may be, as
required by this Agreement.
One-Month LIBOR:
With respect to any Accrual Period, the rate determined by
the Trustee on the related Interest
Determination Date on the basis of (a) the
offered rates for one-month United States
dollar deposits, as such rates appear
on Telerate page 3750, as of 11:00 a.m.
(London time) on such Interest
Determination Date or (b) if such rate does
not appear on Telerate Page 3750 as
of 11:00 a.m.
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(London time), the offered rates of the
Reference Banks for one-month United
States dollar deposits, as such rates
appear on the Reuters Screen LIBO Page, as
of 11:00 a.m. (London time) on such
Interest Determination Date. If One-Month
LIBOR is determined pursuant to clause (b)
above, on each Interest Determination
Date, One-Month LIBOR for the related
Accrual Period will be established by the
Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks
provide such
offered quotations, One-Month LIBOR for the related Accrual
Period shall be
the arithmetic mean of such offered quotations (rounded
upwards if
necessary to the nearest whole multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference
Banks provide
such offered quotations, One-Month LIBOR for the related
Accrual Period
shall be the higher of (i) One-Month LIBOR as determined on
the previous
Interest Determination Date and (ii) the Reserve Interest
Rate.
Opinion of
Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably
acceptable to each addressee of such
opinion; provided, however, that with
respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC
Provisions, such counsel must (1) in
fact be independent of the Depositor and
the Servicer, (2) not have any direct
financial interest in the Depositor or the
Servicer or in any affiliate of
either, and (3) not be connected with the
Depositor or the Servicer as an
officer, employee, promoter, underwriter,
trustee, partner, director or person
performing similar functions.
OTS: The Office
of Thrift Supervision.
Outstanding:
With respect to the Certificates as of any date of
determination, all Certificates theretofore
executed and authenticated under
this Agreement except: (1) Certificates
theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
and (2) Certificates in exchange for
which or in lieu of which other
Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to
this Agreement.
Outstanding
Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater
than zero that was not the subject of a
Principal Prepayment in full, and that did
not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the
excess
of (1) the Stated Principal Balance of the
Mortgage Loans over (2) the
Certificate Principal Balance of the
Certificates (other than the Class P
Certificates and the Class C
Certificates).
Ownership
Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such
Certificate as the Holder thereof and
any other interest therein, whether direct
or indirect, legal or beneficial.
Pass-Through
Rate: With respect to the Class A-1A Certificates, the Class
A-1A Pass-Through Rate; with respect to the
Class A-1B Certificates, the Class
A-1B Pass-Through Rate; with respect to the
Class A-1C Certificates, the Class
A-1C Pass-Through Rate; with respect to the
Class M-1 Certificates, the Class
M-1 Pass-Through Rate; with respect to the
Class M-2 Certificates, the Class M-2
Pass-Through Rate; with respect to the
Class M-3 Certificates, the Class M-3
Pass-Through Rate; with respect to the
Class M-4 Certificates, the Class M-4
Pass-Through Rate; with respect to the
Class B-1 Certificates, the Class B-1
Pass-Through Rate; with respect to the
Class B-2 Certificates, the Class B-2
27
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Pass-Through Rate; with respect to the
Class B-3 Certificates, the Class B-3
Pass-Through Rate; and, with respect to the
Class R Certificate, the Class R
Pass-Through Rate.
Percentage
Interest: With respect to:
(i) any Class, the percentage interest in the undivided
beneficial
ownership
interest evidenced by such Class which shall be equal to the
Certificate
Principal Balance of such Class divided by the aggregate
Certificate
Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby of
the
related Class
shall equal the percentage obtained by dividing the
Denomination of
such Certificate by the aggregate of the Denominations of
all Certificates
of such Class; except that in the case of any Class P
Certificates,
the Percentage Interest with respect to such Certificate
shown on the
face of such Certificate.
Periodic Rate
Cap: As to each Adjustable Rate Mortgage Loan and the related
Mortgage Note, the provision therein that
limits permissible increases and
decreases in the Mortgage Rate on any
Adjustment Date.
Permitted
Activities: The primary activities of the trust created
pursuant
to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor and
other
assets of the
Trust Fund, including the Cap Contract and any credit
enhancement and
passive derivative financial instruments that pertain to
beneficial
interests issued or sold to parties other than the Depositor,
its Affiliates,
or its agents;
(ii) issuing Certificates and other interests in the assets of
the
Trust Fund;
(iii) receiving collections on the Mortgage Loans and the Cap
Contract
and making
payments on such Certificates and interests in accordance with
the terms of
this Agreement; and
(iv) engaging in other activities that are necessary or incidental
to
accomplish these
limited purposes, which activities cannot be contrary to
the status of
the Trust Fund as a qualified special purpose entity under
existing
accounting literature.
Permitted
Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided
such obligations
are backed by the full faith and credit of the United
States;
(ii) general obligations of or obligations guaranteed by any state
of
the United
States or the District of Columbia receiving the highest
long-term debt
rating of each Rating Agency rating the Certificates;
(iii) commercial or finance company paper, other than commercial
or
finance company
paper issued by the Depositor, the Trustee or any of its
Affiliates,
which is then receiving the highest commercial or finance
company paper
rating of each such Rating Agency;
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(iv) certificates of deposit, demand or time deposits, or
bankers'
acceptances
(other than banker's acceptances issued by the Trustee or any
of its
Affiliates) issued by any depository institution or trust
company
incorporated
under the laws of the United States or of any state thereof
and subject to
supervision and examination by federal and/or state banking
authorities,
provided that the commercial paper and/or long term unsecured
debt obligations
of such depository institution or trust company are then
rated one of the
two highest long-term and the highest short-term ratings
of each such
Rating Agency for such securities;
(v) demand or time deposits or certificates of deposit issued by
any
bank or trust
company or savings institution to the extent that such
deposits are
fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance
company or other
corporation rated in the two highest long-term or the
highest
short-term ratings of each Rating Agency containing, at the time
of
the issuance of
such agreements, such terms and conditions as will not
result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by
any such Rating Agency as evidenced by a letter from each
Rating
Agency;
(vii) repurchase obligations with respect to any security described
in
clauses (i) and
(ii) above, in either case entered into with a depository
institution or
trust company (acting as principal) described in clause (v)
above;
(viii) securities (other than stripped bonds, stripped coupons
or
instruments sold
at a purchase price in excess of 115% of the face amount
thereof) bearing
interest or sold at a discount issued by any corporation,
other than the
Trustee or any of its Affiliates, incorporated under the
laws of the
United States or any state thereof which, at the time of such
investment, have
one of the two highest long term ratings of each Rating
Agency;
(ix) interests in any money market fund (including those managed
or
advised by the
Trustee or its affiliates) which at the date of acquisition
of the interests in such
fund and throughout the time such interests are
held in such
fund has the highest applicable long term rating by each such
Rating Agency;
and
(x) short term investment funds sponsored by any trust company
or
national banking
association incorporated under the laws of the United
States or any
state thereof, other than the Trustee or any of its
Affiliates,
which on the date of acquisition has been rated by each such
Rating Agency in
their respective highest applicable rating category;
provided, that no such instrument shall be
a Permitted Investment if such
instrument (i) evidences the right to
receive interest only payments with
respect to the obligations underlying such
instrument, (ii) is purchased at a
premium or above par or (iii) is purchased
at a deep discount; provided,
further, that no such instrument shall be a
Permitted Investment (A) if such
instrument evidences principal and interest
payments derived from obligations
underlying such instrument and the interest
payments with respect to such
instrument provide a yield to maturity of
greater than 120% of the yield to
maturity at par of such underlying
obligations, or (B) if it may be redeemed at
a price below the purchase price (the
foregoing clause (B) not to apply to
investments in units of money market funds
pursuant to clause (ix) above); and
provided, further, (I) that no amount
beneficially owned by any REMIC
(including, without limitation, any amounts
collected by the Servicer but not
yet deposited in the Collection Account)
may be invested in investments (other
than money market funds) treated as equity
interests for Federal income tax
purposes, unless the Servicer and/or the
Trustee, shall receive an Opinion of
Counsel acceptable to the Servicer
29
<PAGE>
and/or the Trustee, at the expense of the
party requesting that such investment
be made, to the effect that such investment
will not adversely affect the status
of the any REMIC provided for herein as a
REMIC under the Code or result in
imposition of a tax on the Trust Fund or
any REMIC provided for herein and (II)
any such investment must be a "permitted
investment" within the meaning of
Section 860G(a)(5) of the Code. Permitted
Investments that are subject to
prepayment or call may not be purchased at
a price in excess of par.
Permitted
Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or
any agency or instrumentality of any
of the foregoing, (ii) a foreign
government, International Organization or any
agency or instrumentality of either of the
foregoing, (iii) an organization
(except certain farmers' cooperatives
described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of
the Code (including the tax imposed
by section 511 of the Code on unrelated
business taxable income) on any excess
inclusions (as defined in section
860E(c)(1) of the Code) with respect to a
Certificate, (iv) rural electric and
telephone cooperatives described in section
1381(a)(2)(C) of the Code, and (v) a Person
that is not a citizen or resident of
the United States, a corporation or
partnership (or other entity treated as a
corporation or partnership for United
States federal income tax purposes)
created or organized in or under the laws
of the United States or any State
thereof or the District of Columbia or an
estate whose income from sources
without the United States is includable in
gross income for United States
federal income tax purposes regardless of
its connection with the conduct of a
trade or business within the United States,
or a trust if a court within the
United States is able to exercise primary
supervision over the administration of
the trust and one or more United States
persons have authority to control all
substantial decisions of the trust, unless,
in the case of this clause (v), such
Person has furnished the transferor, the
Trustee with a duly completed Internal
Revenue Service Form W-8ECI or applicable
successor form. The terms "United
States," "State" and "International
Organization" shall have the meanings set
forth in section 7701 of the Code. A
corporation will not be treated as an
instrumentality of the United States or of
any State thereof for these purposes
if all of its activities are subject to tax
and, with the exception of the
Federal Home Loan Mortgage Corporation, a
majority of its board of directors is
not selected by such government unit.
Person: Any
individual, corporation, partnership, limited liability
company, joint venture, association,
joint-stock company, trust, unincorporated
organization or government, or any agency
or political subdivision thereof.
Pool Stated
Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balance, as of such
Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans
as of such date.
Preference
Claim: The meaning set out in Section 4.04(l) hereof.
Prepayment
Assumption: A rate of prepayment, as described in the
Prospectus
Supplement in the definition of "Modeling
Assumptions," relating to the
Certificates.
Prepayment
Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of
a partial Principal Prepayment or a
Principal Prepayment in full (other than a
Principal Prepayment in full
resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or
9.01 hereof), the amount, if any, by which
(i) one month's interest at the
applicable Net Mortgage Rate on the Stated
Principal Balance of such Mortgage
Loan as of the preceding Distribution Date
or in the case of a partial Principal
Prepayment on the amount of such prepayment
exceeds (ii) the amount of interest
paid or collected in connection with such
Principal Prepayment.
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Prepayment
Period: As to any Distribution Date, the period beginning with
the opening of business on the first day of
the calendar month preceding the
month in which such Distribution Date
occurs (or in the case of the first
Distribution Date, beginning with the
opening of business on the Cut-off Date)
and ending on the close of business on the
last day of such month.
Principal
Distribution Amount: With respect to each Distribution Date,
the
sum of (1) the Principal Funds for such
Distribution Date and (ii) any Extra
Principal Distribution Amount for such
Distribution Date.
Principal Funds:
With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1)
the scheduled principal due during
the related Due Period and received before
the related Servicer Remittance Date
or advanced on or before the related
Servicer Remittance Date, (2) prepayments
collected in the related Prepayment Period,
(3) the Stated Principal Balance of
each Mortgage Loan that was purchased by
the Depositor or the Servicer during
the related Prepayment Period or, in the
case of a purchase pursuant to Section
9.01, on the Business Day prior to such
Distribution Date, (4) the amount, if
any, by which the aggregate unpaid
principal balance of any Replacement Mortgage
Loan is less than the aggregate unpaid
principal of the related Deleted Mortgage
Loans delivered by the Seller in connection
with a substitution of a Mortgage
Loan pursuant to Section 2.03(c), (5) all
Liquidation Proceeds collected during
the related Prepayment Period (to the
extent such Liquidation Proceeds related
to principal), (6) Subsequent Recoveries
received during the related Due Period
and (7) all other collections and
recoveries in respect of principal during the
related Prepayment Period less (A) all
Non-Recoverable Advances relating to
principal with respect to the Mortgage
Loans and (B) other amounts reimbursable
to the Servicer and the Trustee pursuant to
this Agreement and allocable to
principal.
Principal
Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a
Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections
2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due
Date and is not accompanied by an
amount as to interest representing
scheduled interest due on any date or dates
in any month or months subsequent to the
month of prepayment. Partial Principal
Prepayments shall be applied by the
Servicer in accordance with the terms of the
related Mortgage Note.
Prospectus
Supplement: The Prospectus Supplement dated March 3, 2005
relating to the public offering of the
Class A-1A, Class A-1B, Class A-1C, Class
R, Class M-1, Class M-2, Class M-3, Class
M-4, Class B-1, Class B-2 and Class
B-3 Certificates.
PUD: A Planned
Unit Development.
Purchase Price:
With respect to any Mortgage Loan required to be
repurchased by the Seller, pursuant to
Section 2.02 or 2.03 hereof, or purchased
by the Servicer pursuant to Section 3.12(c)
hereof, an amount equal to the sum
of (i) 100% of the unpaid principal balance
of the Mortgage Loan as of the date
of such purchase together with any
unreimbursed Servicing Advances, (ii) accrued
interest thereon at the applicable Mortgage
Rate from (a) the date through which
interest was last paid by the Mortgagor to
(b) the Due Date in the month in
which the Purchase Price is to be
distributed to Certificateholders and (iii)
any costs and damages incurred by the Trust
Fund (or the Trustee on behalf of
the Trust Fund) in connection with any
violation by the affected Mortgage Loan
of any anti-predatory or anti-abusive
lending laws. With respect to any REO
Property purchase by the Servicer pursuant
to Section 3.12(c) hereof, an amount
equal to the fair market value of such REO
Property, as determined in good faith
by the Servicer.
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Rating Agency:
Either of Moody's or S&P . If either such organization or
its successor is no longer in existence,
"Rating Agency" shall be a nationally
recognized statistical rating organization,
or other comparable Person,
designated by the Depositor, notice of
which designation shall be given to the
Trustee. References herein to a given
rating category of a Rating Agency shall
mean such rating category without giving
effect to any modifiers.
Realized Loss:
With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and
accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually
recovered by the Servicer with respect
thereto (net of reimbursement of Advances
and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan
or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any
amount of principal that the Mortgagor
is no longer legally required to pay
(except for the extinguishment of debt that
results from the exercise of remedies due
to default by the Mortgagor).
Record Date:
With respect to any Distribution Date, the close of business
on the last Business Day of the month
preceding the month in which the
applicable Distribution Date occurs.
Reference Banks:
Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A., and NatWest, N.A.; provided that if
any of the foregoing banks are not
suitable to serve as a Reference Bank, then
any leading banks selected by the
Trustee with the consent of the NIM Insurer
which are engaged in transactions in
Eurodollar deposits in the international
Eurocurrency market (i) with an
established place of business in London,
England and (ii) whose quotations
appear on the Reuters Screen LIBO Page on
the relevant Interest Determination
Date.
Regular
Certificate: Any one of the Class A-1A, Class A-1B, Class A-1C,
Class M-1, Class M-2, Class M-3, Class M-4,
Class B-1, Class B-2 and Class B-3
Certificates.
Related
Certificates: With respect to the Class LTA-1A Interest, the
Class
A-1A and Class R Certificates. With respect
to the Class LTA-1B Interest, the
Class A-1B Certificates. With respect to
the Class LTA-1C Interest, the Class
A-1C Certificates. With respect to the
Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class
LTM-2 Interest, the Class M-2
Certificates. With respect to the Class
LTM-3 Interest, the Class M-3
Certificates. With respect to the Class
LTM-4 Interest, the Class M-4
Certificates. With respect to the Class
LTB-1 Interest, the Class B-1
Certificates. With respect to the Class
LTB-2 Interest, the Class B-2
Certificates. With respect to the Class
LTB-3 Interest, the Class B-3
Certificates.
Relief Act: The
Servicemembers Civil Relief Act.
REMIC: A "real
estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein
to "the REMICs" or "a REMIC" shall
mean any of or, as the context requires,
both of the Lower Tier REMIC and the
Upper Tier REMIC.
REMIC
Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing
"Available Funds Cap" in such definition
with "Net Rate."
REMIC
Provisions: Provisions of the federal income tax law relating to
real
estate mortgage investment conduits, which
appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code,
and related provisions, and proposed,
temporary and final regulations and
published rulings, notices and announcements
promulgated thereunder, as the foregoing
may be in effect from time to time as
well as provisions of applicable state
laws.
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<PAGE>
REMIC Regular
Interests: (i) any of the rights under any of the
Certificates (other than the Class P
Certificates, the Class R Certificate and
the Class C Certificates) other than the
rights in interest rate cap contract
described in Section 2.07 and (ii) the
Uncertificated Class C Interest.
Remittance
Report: The meaning specified in Section 4.04(k) hereof.
REO Property: A
Mortgaged Property acquired by the Servicer, on behalf of
the Trustee for the benefit of the
Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection
with a defaulted Mortgage Loan.
Replacement
Mortgage Loan: A Mortgage Loan substituted by the Depositor for
a Deleted Mortgage Loan, which must, on the
date of such substitution, as
confirmed in a Request for Release,
substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after
deduction of the principal portion of the
Scheduled Payment due in the month of
substitution, not in excess of, and not
less than 90% of the Stated Principal
Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage
Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than
the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any
Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per
annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan;
(B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than
the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same
index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross
Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage
Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed
Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per
annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar
or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4)
have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case
of the Mortgage Loans in a second lien
position) no higher than that of the
Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not
more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for
a prepayment charge on terms
substantially similar to those of the
prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien
priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the
Deleted Mortgage Loan; and (9) comply
with each representation and warranty set
forth in Section 2.03 hereof.
Request for
Release: The Request for Release of Documents submitted by the
Servicer to the Trustee, substantially in
the form of Exhibit I hereto.
Required
Insurance Policy: With respect to any Mortgage Loan, any
insurance
policy that is required to be maintained
from time to time under this Agreement.
Required
Percentage: Means on any Distribution Date following a Stepdown
Date, the quotient of (1) the excess of (A)
the aggregate Stated Principal
Balance of the Mortgage Loans as of such
Distribution Date, over (B) the
Certificate Principal Balance of the most
senior Class of Certificates
outstanding as of such Distribution Date,
prior to giving effect to
distributions to be made on such
Distribution Date and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as
of such Distribution Date.
Reserve Interest
Rate: With respect to any Interest Determination Date, the
rate per annum that the Trustee determines
to be (1) the arithmetic mean
(rounded upwards if necessary to the
nearest whole multiple of 0.03125%) of the
one-month United States dollar lending
rates which New York City banks selected
by the Trustee are quoting on the relevant
Interest Determination Date to the
principal London offices of leading banks
in the London interbank market or (2)
in the event that the Trustee can
determine
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<PAGE>
no such arithmetic mean, the lowest
one-month United States dollar lending rate
which New York City banks selected by the
Trustee are quoting on such Interest
Determination Date to leading European
banks.
Residual
Certificate: The Class R Certificate.
Residual
Interest: An interest in the Upper Tier REMIC that is entitled
to
all distributions of principal and interest
on the Class R Certificate other
than (i) distributions in respect of the
Class LTR Interest, and (ii)
distributions on the Class R Certificate in
respect of Excess Interest.
Responsible
Officer: When used with respect to the Trustee or Servicer, any
officer of the Trustee or Servicer with
direct responsibility for the
administration of this Agreement and also
means any other officer to whom, with
respect to a particular matter, such matter
is referred because of such
officer's knowledge of and familiarity with
the particular subject.
Reuters Screen
LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or
such other page as may replace such LIBO
page on that service for the purpose of
displaying London interbank offered
rates of major banks.
S&P:
Standard & Poor's Ratings Services, a Division of The
McGraw-Hill
Companies, Inc., or its successor in
interest.
Sale Agreement:
The Mortgage Loan Sale and Assignment Agreement dated as of
March 1, 2005 between the Depositor and the
Seller.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due
on
any Due Date allocable to principal and/or
interest on such Mortgage Loan.
Section 302
Requirements: Any rules or regulations promulgated pursuant to
the Sarbanes-Oxley Act of 2002 (as such may
be amended from time to time).
Securities Act:
The Securities Act of 1933, as amended.
Seller: Merrill
Lynch Mortgage Lending, Inc., a Delaware corporation, or
its successor in interest.
Servicer: Litton
Loan Servicing LP, a Delaware limited partnership, or its
successor in interest.
Servicer Advance
Date: As to any Distribution Date, the related Servicer
Remittance Date.
Servicer
Remittance Date: With respect to any Distribution Date, the
18th
day (or if such day is not a Business Day,
the next succeeding Business Day) of
the month in which the related Distribution
Date occurs.
Servicer Trigger
Event: As defined in Section 7.02 hereof.
Servicer's
Assignee: As defined in Section 10.14(a).
Servicing
Advances: All customary, reasonable and necessary "out of
pocket"
costs and expenses incurred in the
performance by the Servicer of its servicing
obligations hereunder, including, but not
limited to, the cost of (1) the
preservation, restoration and protection of
a Mortgaged Property, including
without limitation advances in respect of
real estate taxes and assessments, (2)
any collection, enforcement or judicial
proceedings, including without
limitation foreclosures, collections
and
34
<PAGE>
liquidations, (3) the conservation,
management, sale and liquidation of any REO
Property and (4) compliance with the
obligations under Section 3.10.
Servicing Fee:
As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the
Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as
of the preceding Distribution Date
or, in the event of any payment of interest
that accompanies a Principal
Prepayment in full made by the Mortgagor,
interest at the Servicing Fee Rate on
the Stated Principal Balance of such
Mortgage Loan as of the preceding
Distribution Date for the period covered by
such payment of interest.
Servicing Fee
Rate: 0.500% per annum.
Servicing
Officer: Any officer of the Servicer involved in, or
responsible
for, the administration and servicing of
the Mortgage Loans whose name and
facsimile signature appear on a list of
servicing officers furnished to the
Trustee by the Servicer on the Closing Date
pursuant to this Agreement, as such
lists 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, N.A., as the
representative of certain lenders.
Servicing
Transfer Costs: In the event that the Servicer does not
reimburse
the Trustee under the this Agreement, all
costs associated with the transfer of
servicing from the predecessor Servicer,
including, without limitation, any
costs or expenses associated with the
termination of the predecessor Servicer,
the appointment of a successor servicer,
the complete transfer of all servicing
data and the completion, correction or
manipulation of such servicing data as
may be required by the Trustee or any
successor servicer to correct any errors
or insufficiencies in the servicing data or
otherwise to enable the Trustee or
successor servicer to service the Mortgage
Loans properly and effectively.
SFAS 140:
Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial
Assets and Extinguishments of
Liabilities dated September 2000, published
by the Financial Accounting
Standards Board of the Financial Accounting
Foundation.
SPV: As defined
in Section 10.14(a).
Startup Day: As
defined in Section 2.07 hereof.
Stated Principal
Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the
Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such
Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the
Scheduled Payments (x) due with
respect to such Mortgage Loan during each
Due Period ending prior to such
Distribution Date and (y) that were
received by the Servicer as of the close of
business on the Determination Date related
to such Distribution Date or with
respect to which Advances were made on the
Servicer Advance Date prior to such
Distribution Date and (B) all Principal
Prepayments with respect to such
Mortgage Loan received on or prior to the
last day of the related Prepayment
Period, and all Liquidation Proceeds to the
extent applied by the Servicer as
recoveries of principal in accordance with
Section 3.12 with respect to such
Mortgage Loan, that were received by the
Servicer as of the close of business on
the last day of the related Due Period.
Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated
Loan shall be deemed to be zero.
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<PAGE>
Stepdown Date:
The later to occur of (1) the Distribution Date in April
2008 or (2) the first Distribution Date on
which (A) the Class A Certificate
Principal Balance and Class R Certificate
Principal Balance (reduced by the
Principal Funds with respect to such
Distribution Date) are less than or equal
to (B) 57.10% of the aggregate Stated
Principal Balance of the Mortgage Loans as
of such Distribution Date.
Stepdown
Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution
Date set forth in the following
table:
<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS
PERCENTAGE
------------------------------
---------------------------------
<S>
<C>
April 2008 - March 2009
3.00% with respect to April 2008, plus an additional 1/12th of
1.75% for
each month thereafter
April 2009 - March 2010
4.75% with respect to April 2009, plus an additional 1/12th of
1.25% for
each month thereafter
April 2010 - March 2011
6.00% with respect to March 2010, plus an additional 1/12th of
0.75% for
each month thereafter
April 2011 and thereafter
6.75%
</TABLE>
Stepdown Trigger
Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which
(1) the quotient of (A) the
aggregate Stated Principal Balance of all
Mortgage Loans which are 60 or more
days Delinquent measured on a rolling three
month basis (including, for the
purposes of this calculation, Mortgage
Loans in foreclosure, REO Properties and
Mortgage Loans with respect to which the
applicable Mortgagor is in bankruptcy)
and (B) the Stated Principal Balance of the
Mortgage Loans as of the preceding
Servicer Advance Date, equals or exceeds
the product of (i) 35.00% and (ii)
Required Percentage or (2) the quotient
(expressed as a percentage) of (A) the
aggregate Realized Losses incurred from the
Cut-off Date through the last day of
the calendar month preceding such
Distribution Date and (B) the aggregate
principal balance of the Mortgage Loans as
of the Cut-off Date exceeds the
Stepdown Required Loss Percentage.
Subordinated
Certificates: The Class M-1, Class M-2, Class M-3, Class M-4,
Class B-1, Class B-2 and Class B-3
Certificates.
Subsequent
Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Loan with respect
to which a Realized Loss has been
incurred after liquidation and disposition
of such Mortgage Loan.
Subservicing
Agreement: As defined in Section 3.02(a).
Substitution
Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).
Tax Matters
Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation
Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any
direct or indirect transfer or sale of any Ownership Interest
in a Certificate.
Trust Fund: The
corpus of the trust (the "Specialty Underwriting and
Residential Finance Trust, Series
2005-BC1") created hereunder consisting of (i)
the Mortgage Loans and all interest and
principal
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<PAGE>
received on or with respect thereto on and
after the Cut-off Date to the extent
not applied in computing the Cut-off Date
Principal Balance thereof, exclusive
of interest not required to be deposited in
the Collection Account; (ii) the
Collection Account and the Certificate
Account and all amounts deposited therein
pursuant to the applicable provisions of
this Agreement; (iii) property that
secured a Mortgage Loan and has been
acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (iv) the
mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loans
and/or the related Mortgaged
Properties; (v) all proceeds of the
conversion, voluntary or involuntary, of any
of the foregoing into cash or other liquid
property; and (vi) the Cap Contract
and the Cap Contract Account.
Trustee:
JPMorgan Chase Bank, N.A., a national banking association, not
in
its individual capacity, but solely in its
capacity as trustee for the benefit
of the Certificateholders under this
Agreement, and any successor thereto, and
any corporation or national banking
association resulting from or surviving any
consolidation or merger to which it or its
successors may be a party and any
successor trustee as may from time to time
be serving as successor trustee
hereunder.
Uncertificated
Class C Interest: An uncertificated interest having (i) the
same rights to payments as the Class C
Certificates, other than the rights to
payments of amounts with respect to the Cap
Contract, and (ii) the rights to the
payments treated as distributed to the
Class C Certificates under Section
2.07(d), provided, however, that such
interest shall have no obligation to make
any payments treated as paid by the Class C
Certificates pursuant to interest
rate cap agreements under Section
2.07(d).
Unpaid Realized
Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount,
Class M-3 Unpaid Realized Loss Amount,
Class M-4 Unpaid Realized Loss Amount,
Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount,
Class B-3 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount,
collectively.
Upper Collar:
With respect to each Distribution Date with respect to which
payments are received on the Cap Contract,
a rate equal to the lesser of
One-Month LIBOR and 9.260% per annum.
Upper Tier
REMIC: As described in the Preliminary Statement and Section
2.07.
USAP Report: A
report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in
accordance with Section 3.18.
Voting Rights:
The portion of the voting rights of all the Certificates
that is allocated to any of the
Certificates for purposes of the voting
provisions hereunder. Voting Rights
allocated to each Class of Certificates
shall be allocated 98% to the Offered
Certificates, 2% to the Class C and Class
P Certificates, with the allocation among
the Offered Certificates to be in
proportion to the Class Certificate
Principal Balance of each Class relative to
the Class Certificate Principal Balance of
all other Classes. Voting Rights will
be allocated among the Certificates of each
such Class in accordance with their
respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
SECTION 2.01.
Conveyance of Mortgage Loans.
The Depositor,
concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and
convey to the Trustee without
recourse all the right, title and interest
of the Depositor in and to the assets
of the Trust Fund. Such assignment includes
all interest and principal received
on or
37
<PAGE>
with respect to the Mortgage Loans on or
after the Cut-off Date (other than
Scheduled Payments due on the Mortgage
Loans on or before the Cut-off Date).
In connection
with such assignment, the Depositor does hereby deliver to,
and deposit with, the Trustee the following
documents or instruments with
respect to each Mortgage Loan so
assigned:
(A) The Original
Mortgage Note, together with all riders thereto, endorsed,
"Pay to the order of JPMorgan Chase Bank,
N.A., as trustee - SURF 2005-BC1,
without recourse" together with all riders
thereto. The Mortgage Note shall
include all intervening endorsements
showing a complete chain of the title from
the originator to the Seller.
(B) Except as
provided below and for each Mortgage Loan that is not a MERS
Loan, the original recorded Mortgage
together with all riders thereto, with
evidence of recording thereon, or, if the
original Mortgage has not yet been
returned from the recording office, a copy
of the original Mortgage together
with all riders thereto certified by the
Seller to be a true copy of the
original of the Mortgage that has been
delivered for recording in the
appropriate recording office of the
jurisdiction in which the Mortgaged Property
is located and in the case of each MERS
Loan, the original Mortgage together
with all riders thereto, noting the
presence of the MIN of the Loan and either
language indicating that the Mortgage Loan
is a MOM Loan or if the Mortgage Loan
was not a MOM Loan at origination, the
original Mortgage and the assignment
thereof to MERS, with evidence of recording
indicated thereon, or a copy of the
Mortgage certified by the public recording
office in which such Mortgage has
been recorded.
(C) In the case
of each Mortgage Loan that is not a MERS Loan, the original
Assignment of each Mortgage, to "JPMorgan
Chase Bank, N.A., as trustee - SURF
2005-BC1."
(D) The original
policy of title insurance (or a preliminary title report,
commitment or binder if the original title
insurance policy has not been
received from the title insurance
company).
(E) Originals of
any intervening assignments of the Mortgage, with evidence
of recording thereon or, if the original
intervening assignment has not yet been
returned from the recording office, a copy
of such assignment certified to be a
true copy of the original of the assignment
which has been sent for recording in
the appropriate jurisdiction in which the
Mortgaged Property is located.
(F) Originals of
all assumption and modification agreements, if any.
If in connection
with any Mortgage Loan, the Depositor cannot deliver the
Mortgage, Assignments of Mortgage or
assumption, consolidation or modification,
as the case may be, with evidence of
recording thereon, if applicable,
concurrently with the execution and
delivery of this Agreement solely because of
a delay caused by the public recording
office where such Mortgage, Assignments
of Mortgage or assumption, consolidation or
modification, as the case may be,
has been delivered for recordation, the
Depositor shall deliver or cause to be
delivered to the Trustee written notice
stating that such Mortgage or
assumption, consolidation or modification,
as the case may be, has been
delivered to the appropriate public
recording office for recordation.
Thereafter, the Depositor shall deliver or
cause to be delivered to the Trustee
such Mortgage, Assignments of Mortgage or
assumption, consolidation or
modification, as the case may be, with
evidence of recording indicated thereon,
if applicable, upon receipt thereof from
the public recording office. To the
extent any required endorsement is not
contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall
make or cause such endorsement to be
made.
With respect to
any Mortgage Loan, none of the Depositor, the Servicer or
the Trustee shall be obligated to cause to
be recorded the Assignment of
Mortgage referred to in this Section 2.01.
In the
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event that any Assignment of Mortgage is
not recorded or is improperly recorded,
the Servicer shall have no liability for
its failure to receive or act on
notices related to such Assignment of
Mortgage.
The ownership of
each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the
Trustee. Neither the Depositor nor the
Servicer shall take any action inconsistent
with such ownership and shall not
claim any ownership interest therein. The
Depositor and the Servicer shall
respond to any third party inquiries with
respect to ownership of the Mortgage
Loans by stating that such ownership is
held by the Trustee on behalf of the
Certificateholders. Mortgage documents
relating to the Mortgage Loans not
delivered to the Trustee are and shall be
held in trust by the Servicer, for the
benefit of the Trustee as the owner
thereof, and the Servicer's possession of
the contents of each Mortgage File so
retained is for the sole purpose of
servicing the related Mortgage Loan, and
such retention and possession by the
Servicer is in a custodial capacity only.
The Depositor agrees to take no action
inconsistent with the Trustee's ownership
of the Mortgage Loans, to promptly
indicate to all inquiring parties that the
Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage
Loans.
It is the
intention of this Agreement that the conveyance of the
Depositor's right, title and interest in
and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and
sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the
Depositor is characterized as a pledge
and not a sale, then the Depositor shall be
deemed to have transferred to the
Trustee all of the Depositor's right, title
and interest in, to and under the
obligations of the Seller deemed to be
secured by said pledge; and it is the
intention of this Agreement that the
Depositor shall also be deemed to have
granted to the Trustee a first priority
security interest in all of the
Depositor's right, title, and interest in,
to and under the obligations of the
Seller to the Depositor deemed to be
secured by said pledge and that the Trustee
shall be deemed to be an independent
custodian for purposes of perfection of the
security interest granted to the Depositor.
If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is
characterized as a pledge, it is the
intention of this Agreement that this
Agreement shall constitute a security
agreement under applicable law, and that
the Depositor shall be deemed to have
granted to the Trustee a first priority
security interest in all of the
Depositor's right, title and interest in,
to and under the Mortgage Loans, all
payments of principal of or interest on
such Mortgage Loans, all other rights
relating to and payments made in respect of
the Trust Fund, and all proceeds of
any thereof. If the trust created by this
Agreement terminates prior to the
satisfaction of the claims of any Person in
any Certificates, the security
interest created hereby shall continue in
full force and effect and the Trustee
shall be deemed to be the collateral agent
for the benefit of such Person.
In addition to
the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey,
assign and set over to the Trustee for
the benefit of the Certificateholders its
rights and interests under the Sale
Agreement, including the Depositor's right,
title and interest in the
representations and warranties contained in
the Sale Agreement and the benefit
of the repurchase obligations and the
obligation of the Seller contained in the
Sale Agreement to take, at the request of
the Depositor or the Trustee, all
action on its part which is reasonably
necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts
such assignment, and shall be
entitled to exercise all rights of the
Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor.
The foregoing sale, transfer,
assignment, set-over, deposit and
conveyance does not and is not intended to
result in creation or assumption by the
Trustee of any obligation of the
Depositor, the Seller, or any other Person
in connection with the Mortgage Loans
or any other agreement or instrument
relating thereto.
The parties
hereto agree and understand that it is not intended that any
mortgage loan be included in the Trust Fund
that is either (i) a "High-Cost Home
Loan" as defined in the New Jersey Home
Ownership Act effective November 27,
2003, (ii) a "High-Cost Home Loan" as
defined in the New Mexico Home Loan
Protection Act effective January 1, 2004 or
(iii) a "High Cost Home Mortgage
Loan"
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as defined in the Massachusetts Predatory
Home Loan Practices Act effective
November 7, 2004 and the Indiana High Cost
Home Loan Law effective January 1,
2005.
SECTION 2.02.
Acceptance by Trustee of the Mortgage Loans.
Except as set
forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the
Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and
delivery of a Mortgage File (but does
not acknowledge receipt of all documents
required to be included in such
Mortgage File) with respect to each
Mortgage Loan and declares that it holds and
will hold such documents and any other
documents constituting a part of the
Mortgage Files delivered to it in trust for
the use and benefit of all present
and future Certificateholders. The
Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material
exception was taken in the Exception
Report unless such exception is cured to
the satisfaction of the Trustee within
45 Business Days of the Closing Date.
The Trustee acknowledges receipt
of the Cap Contract (a form of which is
attached hereto as Exhibit O), Transfer
Agreement and the Sale Agreement.
The Trustee
agrees, for the benefit of Certificateholders and the NIM
Insurer, to review each Mortgage File
delivered to it within 60 days after the
Closing Date to ascertain and to certify,
within 70 days of the Closing Date, to
the NIM Insurer, the Depositor and the
Servicer that all documents required by
Section 2.01 have been executed and
received, and that such documents relate to
the Mortgage Loans identified in Exhibit B
that have been conveyed to it. If the
Trustee finds any document or documents
constituting a part of a Mortgage File
to be missing or defective (that is,
mutilated, damaged, defaced or unexecuted)
in any material respect, the Trustee shall
promptly (and in any event within no
more than five Business Days) after such
finding so notify the Servicer, the
Seller, the Depositor and the NIM Insurer.
In addition, the Trustee shall also
notify the Servicer, the Seller, the
Depositor and the NIM Insurer, if the
original Mortgage with evidence of
recording thereon with respect to a Mortgage
Loan is not received within 70 days of the
Closing Date; if it has not been
received because of a delay caused by the
public recording office where such
Mortgage has been delivered for
recordation, the Depositor shall deliver or
cause to be delivered to the Trustee
written notice stating that such Mortgage
has been delivered to the appropriate
public recording officer for recordation
and thereafter the Depositor shall deliver
or cause to be delivered such
Mortgage with evidence of recording thereon
upon receipt thereof from the public
recording office. The Trustee shall request
that the Seller correct or cure such
omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant
to the provisions of Section 2.03(c),
within 90 days from the date the Seller
was notified of such omission or defect
and, if the Seller does not correct or
cure such omission or defect within such
period, that the Seller purchase such
Mortgage Loan from the Trust Fund within 90
days from the date the Trustee
notified the Seller of such omission,
defect or other irregularity at the
Purchase Price of such Mortgage Loan. The
Purchase Price for any Mortgage Loan
purchased pursuant to this Section 2.02
shall be paid to the Servicer and
deposited by the Servicer in the Collection
Account promptly upon receipt, and,
upon receipt by the Trustee of written
notification of such deposit signed by a
Servicing Officer, the Trustee, upon
receipt of a Request for Release, shall
promptly release to the Seller the related
Mortgage File and the Trustee shall
execute and deliver such instruments of
transfer or assignment, without
recourse, representation or warranty, as
shall be necessary to vest in the
Seller or its designee, as the case may be,
any Mortgage Loan released pursuant
hereto, and the Trustee shall have no
further responsibility with regard to such
Mortgage Loan. It is understood and agreed
that the obligation of the Seller to
purchase, cure or substitute any Mortgage
Loan as to which a material defect in
or omission of a constituent document
exists shall constitute the sole remedy
respecting such defect or omission
available to the Trustee on behalf of
Certificateholders and the NIM Insurer. The
preceding sentence shall not,
however, limit any remedies available to
the Certificateholders, the Depositor,
the Trustee or the NIM Insurer pursuant to
the Sale Agreement. The Trustee shall
be under no
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duty or obligation to inspect, review and
examine such documents, instruments,
certificates or other papers to determine
that they are genuine, enforceable,
recordable or appropriate to the
represented purpose, or that they have actually
been recorded, or that they are other than
what they purport to be on their
face. The Trustee shall keep confidential
the name of each Mortgagor and the
Trustee shall not solicit any such
Mortgagor for the purpose of refinancing the
related Mortgage Loan. It is understood and
agreed that all rights and benefits
relating to the solicitation of any
Mortgagors and the attendant rights, title
and interest in and to the list of
Mortgagors and data relating to their
Mortgages shall be retained by the
Servicer.
Within 70 days
of the Closing Date, the Trustee shall deliver to the
Depositor, the Servicer and the NIM Insurer
the Trustee's Certification,
substantially in the form of Exhibit D
attached hereto, evidencing the
completeness of the Mortgage Files, with
any exceptions noted thereto.
SECTION 2.03.
Representations, Warranties and Covenants of the Depositor.
(a) The
Depositor hereby represents and warrants to the Servicer, the
Trustee and the NIM Insurer as follows, as
of the date hereof
(i) The Depositor is duly organized and is validly existing as
a
corporation in
good standing under the laws of the State of Delaware and
has full power
and authority (corporate and other) necessary to own or hold
its properties
and to conduct its business as now conducted by it and to
enter into and
perform its obligations under this Agreement and the Sale
Agreement.
(ii) The Depositor has the full corporate power and authority
to
execute, deliver
and perform, and to enter into and consummate the
transactions
contemplated by, this Agreement and the Sale Agreement and has
duly authorized,
by all necessary corporate action on its part, the
execution,
delivery and performance of this Agreement and the Sale
Agreement; and
this Agreement and the Sale Agreement, assuming the due
authorization,
execution and delivery hereof by the other parties hereto,
constitutes a
legal, valid and binding obligation of the Depositor,
enforceable
against the Depositor in accordance with its terms, subject, as
to
enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and
other similar laws affecting creditors' rights generally and
(ii) general
principles of equity, regardless of whether enforcement is
sought in a
proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the
Depositor, the consummation of the transactions
contemplated by
this Agreement and the Sale Agreement, and the fulfillment
of or compliance
with the terms hereof are in the ordinary course of
business of the
Depositor and will not (A) result in a material breach of
any term or
provision of the charter or by-laws of the Depositor or (B)
materially
conflict with, result in a violation or acceleration of, or
result in a
material default under, the terms of any other material
agreement or
instrument to which the Depositor is a party or by which it
may be bound or
(C) constitute a material violation of any statute, order
or regulation
applicable to the Depositor of any court, regulatory body,
administrative
agency or governmental body having jurisdiction over the
Depositor; and
the Depositor is not in breach or violation of any material
indenture or
other material agreement or instrument, or in violation of any
statute, order
or regulation of any court, regulatory body, administrative
agency or
governmental body having jurisdiction over it which breach or
violation may
materially impair the Depositor's ability to perform or meet
any of its
obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's
knowledge,
threatened, against the Depositor that would materially and
adversely affect
the execution, delivery or
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enforceability
of this Agreement and the Sale Agreement or the ability of
the Depositor to
perform its obligations under this Agreement and the Sale
Agreement in
accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court
or
governmental
agency or body is required for the execution, delivery and
performance by
the Depositor of, or compliance by the Depositor with, this
Agreement and
the Sale Agreement or the consummation of the transactions
contemplated
hereby, or if any such consent, approval, authorization or
order is
required, the Depositor has obtained the same. The Depositor
hereby
represents and warrants to the Trustee with respect to each
Mortgage
Loan as of the
Closing Date, and following the transfer of the Mortgage
Loans to it by
the Seller, the Depositor had good title to the Mortgage
Loans and the
Mortgage Notes were subject to no offsets, claims, liens,
mortgage,
pledge, charge, security interest, defenses or counterclaims.
(b) To the
extent that any fact, condition or event with respect to a
Mortgage Loan constitutes a breach of a
representation or warranty of the Seller
under the Sale Agreement, the only right or
remedy of the Trustee, the NIM
Insurer or of any Certificateholder shall
be the Trustee's right to enforce the
obligations of the Seller under any
applicable representation or warranty made
by it. The Trustee acknowledges that the
Depositor shall have no obligation or
liability with respect to any breach of any
representation or warranty with
respect to the Mortgage Loans (except as
set forth in Section 2.03(a)(v)) under
any circumstances.
(c) Upon
discovery by any of the Depositor, the Servicer, the NIM
Insurer,
or the Trustee of a breach of any of
representations and warranties set forth in
the Sale Agreement that adversely and
materially affects the value of the
related Mortgage Loan, prepayment charges
or the interests of the
Certificateholders, the party discovering
such breach shall give prompt written
notice to the other parties. Within 90 days
of the discovery of a breach of any
representation or warranty given to the
Trustee by the Depositor, the Seller and
assigned to the Trustee, the Depositor, or
the Seller shall either (a) cure such
breach in all material respects, (b)
repurchase such Mortgage Loan or any
property acquired in respect thereof from
the Trustee at the Purchase Price or
(c) within the two year period following
the Closing Date, substitute a
Replacement Mortgage Loan for the affected
Mortgage Loan. In the event of
discovery of a breach of any representation
and warranty of the Seller or the
Depositor, the Trustee shall enforce its
rights under the Sale Agreement or
thereunder for the benefit of
Certificateholders and the NIM Insurer. If a
breach of the representations and
warranties set forth in the Sale Agreement
hereof exists solely due to the
unenforceability of a prepayment charge, the
Trustee shall notify the NIM Insurer
thereof and not seek to enforce the
repurchase remedy provided for herein
unless directed in writing to do so by the
NIM Insurer. In the event of a breach of
the representations and warranties with
respect to the Mortgage Loans set forth in
a Sale Agreement, the Trustee shall
at the request of the NIM Insurer enforce
the right of the Trust Fund and the
NIM Insurer to be indemnified for such
breach of representation and warranty. In
the event that such breach relates solely
to the unenforceability of a
prepayment charge, amounts received in
respect of such indemnity up to the
amount of such prepayment charge shall be
distributed pursuant to Section
4.04(b)(i)(B). As provided in the Sale
Agreement, if the Seller substitutes for
a Mortgage Loan for which there is a breach
of any representations and
warranties which adversely and materially
affects the value of such Mortgage
Loan and such substitute mortgage loan is
not a Replacement Mortgage Loan, under
the terms of the Sale Agreement, the Seller
will, in exchange for such
substitute Mortgage Loan, (i) provide the
applicable Purchase Price for the
affected Mortgage Loan or (ii) within two
years of the Closing Date, substitute
such affected Mortgage Loan with a
Replacement Mortgage Loan. Any such
substitution shall not be effected prior to
the additional delivery to the
Trustee of a Request for Release
substantially in the form of Exhibit I and
shall not be effected unless it is within
two years of the Startup Day. As
provided in the Sale Agreement, the Seller
indemnifies and holds the Trust Fund,
the Trustee, the Depositor, the NIM
Insurer, the Servicer and each
Certificateholder harmless against any and
all
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taxes, claims, losses, penalties, fines,
forfeitures, reasonable legal fees and
related costs, judgments, and any other
costs, fees and expenses that the Trust
Fund, the Trustee, the Depositor, the NIM
Insurer, the Servicer and any
Certificateholder may sustain in connection
with any actions of the Seller
relating to a repurchase of a Mortgage Loan
other than in compliance with the
terms of this Section 2.03 and the Sale
Agreement, to the extent that any such
action causes (i) any federal or state tax
to be imposed on the Trust Fund or
any REMIC provided for herein, including
without limitation, any federal tax
imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on
"contributions after the startup day" under
Section 860G(d)(1) of the Code, or
(ii) any REMIC created hereunder to fail to
qualify as a REMIC at any time that
any Certificate is outstanding.
With respect to any Mortgage Loan
repurchased by the Depositor pursuant to
this Agreement or by the Seller pursuant to
the Sale Agreement, the principal
portion of the funds received by the
Servicer in respect of such repurchase of a
Mortgage Loan will be considered a
Principal Prepayment and shall be deposited
by the Servicer in the Certificate Account
pursuant to Section 3.05. The
Trustee, upon receipt of the full amount of
the Purchase Price for a Deleted
Mortgage Loan, or upon receipt of the
Mortgage File for a Replacement Mortgage
Loan substituted for a Deleted Mortgage
Loan, shall release or cause to be
released and reassign to the Depositor or
the Seller, as applicable, the related
Mortgage File for the Deleted Mortgage Loan
and shall execute and deliver such
instruments of transfer or assignment, in
each case without recourse,
representation or warranty, as shall be
necessary to vest in such party or its
designee or assignee title to any Deleted
Mortgage Loan released pursuant
hereto, free and clear of all security
interests, liens and other encumbrances
created by this Agreement, which
instruments shall be prepared by the Trustee,
and the Trustee shall not have any further
responsibility with respect to the
Mortgage File relating to such Deleted
Mortgage Loan.
With respect to
each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this
Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor or the
Seller, as applicable, must deliver to
the Trustee the Mortgage File for the
Replacement Mortgage Loan containing the
documents set forth in Section 2.01 along
with a written certification
certifying as to the delivery of such
Mortgage File and containing the granting
language set forth in the first sentence of
Section 2.01; and (ii) the Depositor
will be deemed to have made, with respect
to such Replacement Mortgage Loan,
each of the representations and warranties
made by it with respect to the
related Deleted Mortgage Loan. The Trustee
shall review the Mortgage File with
respect to each Replacement Mortgage Loan
and certify to the NIM Insurer and the
Depositor that all documents required by
Section 2.01 have been executed and
received.
For any month in
which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted
Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate
principal balance of all such
Replacement Mortgage Loans as of the date
of substitution and the aggregate
prepayment penalties with respect to such
Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance
(after application of the principal
portion of the Scheduled Payment due in the
month of substitution) and aggregate
prepayment penalties of all such Deleted
Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in
the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall
be delivered by the Seller to the
Servicer for deposit into the Collection
Account on the Determination Date for
the Distribution Date relating to the
Prepayment Period during which the related
Mortgage Loan became required to be
purchased or replaced hereunder.
The Seller shall
give or cause to be given written notice to the
Certificateholders and the NIM Insurer that
such substitution has taken place,
shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted
Mortgage Loan from the terms of this
Agreement and the substitution of the
Replacement Mortgage Loan or Replacement
Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to
the NIM Insurer and the Trustee. Upon
such substitution by the Seller, such
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Replacement Mortgage Loan or Replacement
Mortgage Loans shall constitute part of
the Mortgage Pool and shall be subject in
all respects to the terms of this
Agreement and the Sale Agreement, including
all applicable representations and
warranties thereof included in the Sale
Agreement as of the date of
substitution.
In addition, the
Seller shall obtain at its own expense and deliver to the
Trustee and the NIM Insurer an Opinion of
Counsel addressed to the Trustee and
the NIM Insurer to the effect that such
substitution will not (a) cause any
federal tax to be imposed on the Trust Fund
or any REMIC provided for herein,
including without limitation, any federal
tax imposed on "prohibited
transactions" under Section 860F(a)(1) of
the Code or on "contributions after
the startup day" under Section 860G(d)(1)
of the Code or (b) adversely affect
the status of any REMIC provided for herein
as a REMIC. If any such Opinion of
Counsel can not be delivered, then such
substitution may only be effected at
such time as the required Opinion of
Counsel can be given.
(d) It is
understood and agreed that the representations, warranties and
indemnification (i) set forth in this
Section 2.03 and (ii) of the Seller and
the Depositor set forth in the Sale
Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive
delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage
Loan to the Trustee and shall continue
throughout the term of this Agreement.
SECTION 2.04.
Representations and Warranties of the Servicer.
The Servicer
hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date
hereof
(i) The Servicer is a duly formed limited partnership and is
validly
existing and in
good standing under the laws of the state of its formation
and is duly
authorized and qualified to transact any and all business
contemplated by
this Agreement to be conducted by the Servicer in any state
in which a
Mortgaged Property is located or is otherwise not required
under
applicable law
to effect such qualification and, in any event, is in
compliance with
the doing business laws of any such state, to the extent
necessary to
ensure its ability to enforce each Mortgage Loan, to service
the Mortgage
Loans in accordance with the terms of this Agreement and to
perform any of
its other obligations under this Agreement in accordance
with the terms
hereof.
(ii) The Servicer has the power and authority to service each
Mortgage
Loan, and to
execute, deliver and perform, and to enter into and consummate
the transactions
contemplated by this Agreement and has duly authorized by
all necessary
corporate action on the part of the Servicer the execution,
delivery and
performance of this Agreement; and this Agreement, assuming
the due
authorization, execution and delivery hereof by the other
parties
hereto,
constitutes a legal, valid and binding obligation of the
Servicer,
enforceable
against the Servicer in accordance with its terms, except that
(a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium,
receivership and other similar laws relating to creditors'
rights generally
and (b) the remedy of specific performance and injunctive
and other forms
of equitable relief may be subject to equitable defenses
and to the
discretion of the court before which any proceeding therefor
may
be brought.
(iii) The execution and delivery of this Agreement by the
Servicer,
the servicing of the
Mortgage Loans under this Agreement, the consummation
of any other of
the transactions contemplated by this Agreement, and the
fulfillment of
or compliance with the terms hereof are in the ordinary
course of
business of the Servicer and will not (A) result in a material
breach of any
term or provision of the charter or by-laws of the Servicer
or (B)
materially conflict with, result in
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a material
breach, violation or acceleration of, or result in a material
default under,
the terms of any other material agreement or instrument to
which the
Servicer is a party or by which it may be bound, or (C)
constitute a
material violation of any statute, order or regulation
applicable to
the Servicer of any court, regulatory body, administrative
agency or
governmental body having jurisdiction over the Servicer; and
the
Servicer is not
in breach or violation of any material indenture or other
material
agreement or instrument, or in violation of any statute, order
or
regulation of
any court, regulatory body, administrative agency or
governmental
body having jurisdiction over it which breach or violation may
materially
impair the Servicer's ability to perform or meet any of its
obligations
under this Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for
Fannie
Mae and is an
approved seller of seasoned mortgage loans and servicer of
all types of mortgage
loans for Freddie Mac.
(v) No litigation is pending or, to the best of the Servicer's
knowledge,
threatened, against the Servicer that would materially and
adversely affect
the execution, delivery or enforceability of this
Agreement or the
ability of the Servicer to service the Mortgage Loans or
to perform any
of its other obligations under this Agreement in accordance
with the terms
hereof.
(vi) No consent, approval, authorization or order of any court
or
governmental
agency or body is required for the execution, delivery and
performance by
the Servicer of, or compliance by the Servicer with, this
Agreement or the
consummation of the transactions contemplated hereby, or
if any such
consent, approval, authorization or order is required, the
Servicer has
obtained the same.
(vii) The Servicer has fully furnished and will fully furnish (for
the
period it
serviced the Mortgage Loans), 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 on a
monthly
basis.
SECTION 2.05.
Substitutions and Repurchases of Mortgage Loans Which Are Not
"Qualified Mortgages".
Upon discovery
by the Depositor, 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 promptly
(and in any event within 5 Business Days of
discovery) give written notice
thereof to the other parties. In connection
therewith, the Depositor shall, at
the Depositor's option, either (i)
substitute, if the conditions in Section
2.03(c) with respect to substitutions are
satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii)
repurchase the affected Mortgage Loan
within 90 days of such discovery in the
same manner as it would a Mortgage Loan
for a breach of representation or warranty
contained in Section 2.03. The
Trustee shall reconvey to the Depositor the
Mortgage Loan to be released
pursuant hereto in the same manner, and on
the same terms and conditions, as it
would a Mortgage Loan repurchased for
breach of a representation or warranty
contained in Section 2.03.
SECTION 2.06.
Authentication and Delivery of Certificates.
The Trustee
acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer
and assignment, the Trustee has caused
to be authenticated and delivered to or
upon the order of the Depositor, in
exchange for the Mortgage Loans,
Certificates duly authenticated by the
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Trustee in authorized denominations
evidencing ownership of the entire Trust
Fund. The Trustee agrees to hold the Trust
Fund and exercise the rights referred
to above for the benefit of all present and
future Holders of the Certificates
and to perform its duties set forth in this
Agreement in accordance with the
provisions hereof.
SECTION 2.07.
REMIC Elections.
(a) The
Depositor hereby instructs and authorizes the Trustee to make
an
appropriate election to treat each of the
Lower Tier REMIC and the Upper Tier
REMIC as a REMIC. The Trustee shall sign
the returns providing for such
elections and such other tax or information
returns which are required to be
signed by the Trustee under applicable law.
This Agreement shall be construed so
as to carry out the intention of the
parties that each of the Lower Tier REMIC
and the Upper Tier REMIC be treated as a
REMIC at all times prior to the date on
which the Trust Fund is terminated.
(b) The
Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income
tax purposes of all interests created
hereby. The "Startup Day," as defined in
Section 860G(a)(9) of the Code, for
purposes of the REMIC Provisions shall be
the Closing Date. Each REMIC's fiscal
year shall be the calendar year.
The Lower Tier
REMIC shall consist of all of the assets of the Trust Fund
(other than (i) the right to receive the
payments distributable to the Class P
Certificates pursuant to Section 4.04(b)(i)
hereof, (ii) the interests issued by
the Lower Tier REMIC, (iii) the grantor
trusts described in this Section 2.07
and (iv) the Cap Contract and the Cap
Contract Account). The Lower Tier REMIC
shall issue the Lower Tier REMIC Regular
Interests which shall be designated as
regular interests of such REMIC and shall
issue the Class LTR Interest that
shall be designated as the sole class of
residual interest in the Lower Tier
REMIC. Each of the Lower Tier REMIC Regular
Interests shall have the
characteristics set forth in its
definition.
The assets of
the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The REMIC Regular Interests
shall be designated as the regular
interests in the Upper Tier REMIC and the
Residual Interest shall be designated
as the sole class of residual interest in
the Upper Tier REMIC. For federal
income tax purposes, the pass-through rate
on each REMIC Regular Interest (other
than the Uncertificated Class C Interest)
and on the sole class of residual
interest in the Upper Tier REMIC shall be
subject to a cap equal to the Net
Rate.
The beneficial
ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class
R Certificate. The Class LTR Interest
shall not have a principal balance or bear
interest.
(c) The "tax
matters person" with respect to each REMIC for purposes of the
REMIC Provisions shall be the beneficial
owner of the Class R Certificate;
provided, however, that the Holder of a
Class R Certificate, by its acceptance
thereof, irrevocably appoints the Trustee
as its agent and attorney-in-fact to
act as "tax matters person" with respect to
each such REMIC for purposes of the
REMIC Provisions. If there is more than one
beneficial owner of the Class R
Certificate, the "tax matters person" shall
be the Person with the greatest
percentage interest in the Class R
Certificate and, if there is more than one
such Person, shall be determined under
Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section
301.6231(a)(7)-1.
(d) It is
intended that the rights of the Class A-1A Certificates, Class
A-1B Certificates, Class A-1C Certificates,
Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class
M-3 Certificates, Class M-4
Certificates, Class B-1 Certificates, Class
B-2 Certificates and Class B-3
Certificates to receive payments of Excess
Interest shall be treated as a right
in interest rate cap contracts
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written by the Class C Certificateholders
in favor of the holders of the Class
A-1A Certificates, Class A-1B Certificates,
Class A-1C Certificates, Class R
Certificate, Class M-1 Certificates, Class
M-2 Certificates, Class M-3
Certificates, Class M-4 Certificates, Class
B-1 Certificates, Class B-2
Certificates and Class B-3 Certificates,
and such shall be accounted for as
property held separate and apart from the
regular interests in the Upper Tier
REMIC held by the holders of the Class A-1A
Certificates, Class A-1B
Certificates, Class A-1C Certificates,
Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class
M-4 Certificates, Class B-1
Certificates, Class B-2 Certificates and
Class B-3 Certificates and the residual
interest in the Upper Tier REMIC held by
the holder of the Class R Certificate.
This provision is intended to satisfy the
requirements of Treasury Regulations
Section 1.860G-2(i) for the treatment of
property rights coupled with REMIC
interests to be separately respected and
shall be interpreted consistently with
such regulation. On each Distribution Date,
to the extent that any of the Class
A-1A Certificates, Class A-1B Certificates,
Class A-1C Certificates, Class R
Certificate, Class M-1 Certificates, Class
M-2 Certificates, Class M-3
Certificates, Class M-4 Certificates, Class
B-1 Certificates, Class B-2
Certificates and Class B-3 Certificates
receive payments in respect of Excess
Interest, such amounts, to the extent not
derived from payments on the Cap
Contract, will be treated as distributed by
the Upper Tier REMIC to the Class C
Certificates pro rata in payment of the
amounts specified in Section 4.04(f) and
then paid to the relevant Class of
Certificates pursuant to the related interest
cap agreement.
(e) The parties
intend that the portion of the Trust Fund consisting of the
Uncertificated Class C Interest, the Cap
Contract Account, the Cap Contract and
the obligation of the holders of the Class
C Certificates to pay amounts in
respect of Excess Interest to the holders
of the Class A-1A Certificates, Class
A-1B Certificates, Class A-1C Certificates,
Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class
M-3 Certificates, Class M-4
Certificates, Class B-1 Certificates, Class
B-2 Certificates and Class B-3
Certificates shall be treated as a "grantor
trust" under the Code, for the
benefit of the holders of the Class C
Certificates, and the provisions hereof
shall be interpreted consistently with this
intention. In furtherance of such
intention, the Trustee shall (i) furnish or
cause to be furnished to the holders
of the Class C Certificates information
regarding their allocable share, if any,
of the income with respect to such grantor
trust, (ii) file or cause to be filed
with the Internal Revenue Service Form 1041
(together with any necessary
attachments) and such other forms as may be
applicable and (iii) comply with
such information reporting obligations with
respect to payments from such
grantor trust to the holders of Class A-1A
Certificates, Class A-1B
Certificates, Class A-1C Certificates,
Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class
M-3 Certificates, Class M-4
Certificates, Class B-1 Certificates, Class
B-2 Certificates, Class B-3
Certificates and Class C Certificates as
may be applicable under the Code.
(f) The parties intend
that the portion of the Trust Fund consisting of the
right to receive the payments distributable
to the Class P Certificates pursuant
to Section 4.04(b)(i) hereof shall be
treated as a "grantor trust" under the
Code, for the benefit of the holders of the
Class P Certificates, and the
provisions hereof shall be interpreted
consistently with this intention. In
furtherance of such intention, the Trustee
shall (i) furnish or cause to be
furnished to the holders of the Class P
Certificates information regarding their
allocable share of the income with respect
to such grantor trust and (ii) file
or cause to be filed with the Internal
Revenue Service Form 1041 (together with
any necessary attachments) and such other
forms as may be applicable.
(g) The parties
intend that the portion of the Trust Fund consisting of the
Class R Certificate and the right of the
Class C Certificates to receive the
amounts described in Section 9.01(f) hereof
shall be treated as a "grantor
trust" under the Code, for the benefit of
the holders of the Class R
Certificates and the Class C Certificates,
and the provisions hereof shall be
interpreted consistent with this intention.
In furtherance of this intention,
the Trustee shall (i) furnish or cause to
be furnished to the holders of the
Class R Certificate and the Class C
Certificates information regarding their
allocable share of the income
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with respect to such grantor trust, (ii)
file or cause to be filed with the
Internal Revenue Service Form 1041
(together with any necessary attachments) and
such other forms as may be applicable and
(iii) comply with such information
reporting obligations with respect to
payments from such grantor trust as may be
applicable under the Code.
(h) All payments
of principal and interest at the Net Mortgage Rate on each
of the Mortgage Loans (other than payments
distributable to the Class P
Certificates pursuant to Section 4.04(b)(i)
hereof) received from the Mortgage
Loans shall be paid to the Lower Tier REMIC
Regular Interests until the
principal balance of all such interests
have been reduced to zero and any losses
allocated to such interests have been
reimbursed. Any excess amounts shall be
distributed to the Class LTR Interest. On
each Distribution Date, an amount
equal to 50% of the increase in the
Overcollateralization Amount shall be
payable as a reduction of the principal
amounts of the Lower Tier REMIC Marker
Classes (with such amount allocated among
the Lower Tier REMIC Marker Classes so
that each Lower Tier REMIC Marker Class
will have its principal reduced by an
amount equal to 50% of any increase in the
Overcollateralization Amount that
results in a reduction in the principal
balance of its Related Certificates) and
will be accrued and added to the principal
balance of the Class LTX Interest.
All payments of scheduled principal and
prepayments of principal on the Mortgage
Loans shall be allocated 50% to the Class
LTX Interest and 50% to the Lower Tier
REMIC Marker Classes (with principal
payments allocated to each of the Lower
Tier REMIC Marker Classes in an amount
equal to 50% of the principal amounts
distributed to the Related Certificates in
reduction of their principal
amounts). Notwithstanding the preceding
sentence, an amount equal to the
principal payments that result in a
reduction in the Overcollateralization
Amount shall be treated as payable entirely
to the Class LTX Interest. Realized
Losses that are allocated to the
Certificates shall be applied to the Lower Tier
REMIC Marker Classes and the Class LTX
Interest so that after all distributions
have been made on each Distribution Date
(i) the principal balance of each of
the Lower Tier REMIC Marker Classes is
equal to 50% of the principal balance of
the Related Certificates and (ii) the
principal balance of the Class LTX
Interest is equal to the sum of (x) 50% of
the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50%
of the Overcollateralization Amount.
Each Lower Tier REMIC Marker Class shall be
entitled to receive an amount equal
to 50% of all amounts distributed to the
Related Certificates in respect of
unreimbursed amounts of Realized Losses.
The Class LTX Interest shall be
entitled to receive all other amounts
distributed to the Certificates in respect
of unreimbursed amounts of Realized
Losses.
If on any
Distribution Date the Certificate Principal Balance of any
Class
of Certificates is increased pursuant to
the last sentence of the definition of
"Certificate Principal Balance", then there
shall be an equivalent increase in
the principal amounts of the Lower Tier
REMIC Regular Interests, with such
increase allocated (before the making of
distributions and the allocation of
losses on the Lower Tier REMIC Regular
Interests on such Distribution Date)
among the Lower Tier REMIC Regular
Interests so that (i) each of the Lower Tier
Marker Classes has a principal balance
equal to 50% of the principal balance of
the Related Certificates, (ii) the Class
LTX Interest has a principal balance
equal to the sum of (x) 50% of the
aggregate Stated Principal Balance of the
Mortgage Loans and (y) 50% of the
Overcollateralization Amount.
(i) In the event
that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or
incurs federal, state or local taxes as a
result of a prohibited transaction or
prohibited contribution under the REMIC
Provisions due to the negligent performance
by the Servicer of its duties and
obligations set forth herein, the Servicer
shall indemnify the NIM Insurer, the
Trustee and the Trust Fund against any and
all Losses resulting from such
negligence; provided, however, that the
Servicer shall not be liable for any
such Losses attributable to the action or
inaction of the Trustee, the Depositor
or the Holder of the Class R Certificate,
as applicable, nor for any such Losses
resulting from misinformation provided by
the Holder of the Class R Certificate
on which the Servicer has relied. The
foregoing shall not be deemed to limit or
restrict the rights and remedies of the
Holder of the Class R
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Certificate now or hereafter existing at
law or in equity. Notwithstanding the
foregoing, however, in no event shall the
Servicer have any liability (1) for
any action or omission that is taken in
accordance with and in compliance with
the express terms of, or which is expressly
permitted by the terms of, this
Agreement, (2) for any Losses other than
arising out of a negligent performance
by the Servicer of its duties and
obligations set forth herein, and (3) for any
special or consequential damages to
Certificateholders (in addition to payment
of principal and interest on the
Certificates).
(j) In the event
that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or
incurs federal, state or local taxes as a
result of a prohibited transaction or
prohibited contribution under the REMIC
Provisions due to the negligent performance
by the Trustee of its duties and
obligations set forth herein, the Trustee
shall indemnify the NIM Insurer and
the Trust Fund against any and all Losses
resulting from such negligence;
provided, however, that the Trustee shall
not be liable for any such Losses
attributable to the action or inaction of
the Servicer, the Depositor or the
Holder of the Class R Certificate, as
applicable, nor for any such Losses
resulting from misinformation provided by
the Holder of the Class R Certificate
on which the Trustee has relied. The
foregoing shall not be deemed to limit or
restrict the rights and remedies of the
Holder of the Class R Certificate now or
hereafter existing at law or in equity.
Notwithstanding the foregoing, however,
in no event shall the Trustee have any
liability (1) for any action or omission
that is taken in accordance with and in
compliance with the express terms of, or
which is expressly permitted by the terms
of, this Agreement, (2) for any Losses
other than arising out of a negligent
performance by the Trustee of its duties
and obligations set forth herein, and (3)
for any special or consequential
damages to Certificateholders (in addition
to payment of principal and interest
on the Certificates).
SECTION 2.08.
Covenants of the Servicer.
The Servicer
hereby covenants to each of the other parties to this
Agreement as follows:
(a) the Servicer
shall comply in the performance of its obligations under
this Agreement with all reasonable rules
and requirements of the insurer under
each Required Insurance Policy;
(b) no written
information, certificate of an officer, statement furnished
in writing or written report delivered to
the Depositor, the Trustee or the NIM
Insurer, any affiliate of the Depositor,
the Trustee or the NIM Insurer and
prepared by the Servicer pursuant to this
Agreement will be inaccurate in any
material respect, provided, however, that
the Servicer shall not be responsible
for inaccurate information provided to it
by third parties.
SECTION 2.09.
[RESERVED].
SECTION 2.10.
[RESERVED].
SECTION 2.11.
Permitted Activities of the Trust Fund. The Trust Fund is
created for the object and purpose of
engaging in the Permitted Activities. In
furtherance of the foregoing, the Trustee
is hereby authorized and directed to
execute and deliver, on behalf of the Trust
Fund, the Cap Contract, and to
execute and deliver on behalf of the Trust
Fund, and to perform the duties and
obligations of the Trustee under an
insurance and indemnity agreement with a NIM
Insurer and any other agreement or
instrument related thereto, in each case in
such form as the Depositor shall direct or
shall approve, the execution and
delivery of any such agreement by the
Depositor to be conclusive evidence of its
approval thereof.
SECTION 2.12.
Qualification of Special Purpose Entity. For purposes of SFAS
140, the parties hereto intend that the
Trust Fund shall be treated as a
"qualifying special purpose entity" as such
term is
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used in SFAS 140 and any successor rule
thereto and its power and authority as
stated in Section 2.11 of this Agreement
shall be limited in accordance with
paragraph 35 of SFAS 140.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01.
Servicer to Service Mortgage Loans.
For and on
behalf of the Certificateholders, the Servicer shall service
and
administer the Mortgage Loans in accordance
with Accepted Servicing Practices.
In connection with such servicing and
administration, the Servicer shall have
full power and authority, acting alone
and/or through subservicers as provided
in Section 3.02 hereof, to do or cause to
be done any and all things that it may
deem necessary or desirable in connection
with such servicing and
administration, including but not limited
to, the power and authority, subject
to the terms hereof (i) to execute and
deliver, on behalf of the
Certificateholders and the Trustee,
customary consents or waivers and other
instruments and documents, (ii) to consent
to transfers of any Mortgaged
Property and assumptions of the Mortgage
Notes and related Mortgages (but only
in the manner provided in this Agreement),
(iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and
(iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion
of the ownership of the Mortgaged
Property securing any Mortgage Loan;
provided that, subject to Section 6.03, the
Servicer shall not take any action that is
inconsistent with or prejudices the
interests of the Trust Fund or the
Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the
rights and interests of the other
parties to this Agreement except as
otherwise required by this Agreement or by
law. The Servicer shall represent and
protect the interest of the Trust Fund in
the same manner as it currently protects
its own interest in mortgage loans in
its own portfolio in any claim, proceeding
or litigation regarding a Mortgage
Loan, but in any case not in any manner
that is a lesser standard than that
provided in the first sentence of this
Section 3.01. Notwithstanding anything in
this Agreement to the contrary, the
Servicer shall not make or permit any
modification, waiver or amendment of any
term of any Mortgage Loan which would
cause any of the REMICs provided for herein
to fail to qualify as a REMIC or
result in the imposition of any tax under
Section 860G(a) or 860G(d) of the
Code. Without limiting the generality of
the foregoing, the Servicer, in its own
name or in the name of the Depositor and
the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee,
when the Servicer believes it
appropriate in its reasonable judgment, to
execute and deliver, on behalf of the
Trustee, the Depositor, the
Certificateholders or any of them, any and all
instruments of satisfaction or
cancellation, or of partial or full release or
discharge and all other comparable
instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged
Properties held for the benefit of the
Certificateholders. The Servicer shall
prepare and deliver to the Depositor
and/or the Trustee such documents requiring
execution and delivery by any or all
of them as are necessary or appropriate to
enable the Servicer to service and
administer the Mortgage Loans. If
reasonably required by the Servicer, the
Trustee shall furnish the Servicer with a
power of attorney in the form attached
hereto as Exhibit J and execute such other
documents delivered to it by the
Servicer that are necessary or appropriate
to enable the Servicer to carry out
its servicing and administrative duties
under this Agreement. Upon receipt of
such documents, the Depositor and/or the
Trustee shall execute such documents
and deliver them to the Servicer. The
Trustee shall have no liability with
respect to any misuse of such power of
attorney and shall be indemnified by the
Servicer for any costs, liabilities or
expenses incurred by the Trustee in
connection therewith.
In accordance
with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds
as necessary for the purpose of
effecting the payment of taxes and
assessments on the Mortgaged Properties,
which advances shall be reimbursable in the
first instance from related
collections from the Mortgagors pursuant to
Section 3.06, and further as
provided in Section 3.08. To the
