================================================================================
FINANCIAL ASSET SECURITIES CORP.,
Depositor
SAXON MORTGAGE SERVICES, INC.
Servicer
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 2005
___________________________
Meritage Mortgage Loan Trust 2005-2
Asset-Backed Certificates, Series 2005-2
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS
SECTION 1.02. ACCOUNTING
SECTION 1.03. ALLOCATION OF CERTAIN INTEREST
SHORTFALLS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. CONVEYANCE OF MORTGAGE LOANS
SECTION 2.02. ACCEPTANCE BY TRUSTEE
SECTION 2.03. REPURCHASE OR SUBSTITUTION OF
MORTGAGE LOANS BY THE ORIGINATOR
OR THE SELLER
SECTION 2.04. INTENTIONALLY OMITTED
SECTION 2.05. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE SERVICER
SECTION 2.06. REPRESENTATIONS AND WARRANTIES OF
THE DEPOSITOR
SECTION 2.07. ISSUANCE OF CERTIFICATES
SECTION 2.08. CONVEYANCE OF SUBSEQUENT MORTGAGE
LOANS
SECTION 2.09. CONVEYANCE OF REMIC REGULAR
INTERESTS AND ACCEPTANCE OF
REMIC 2, REMIC 3, REMIC 4 AND REMIC 5 BY THE TRUSTEE;
ISSUANCE OF CERTIFICATES
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
SECTION 3.01. SERVICER TO ACT AS SERVICER
SECTION 3.02. SUB-SERVICING AGREEMENTS BETWEEN
SERVICER AND SUB-SERVICERS
SECTION 3.03. SUCCESSOR SUB-SERVICERS
SECTION 3.04. LIABILITY OF THE SERVICER
SECTION 3.05. NO CONTRACTUAL RELATIONSHIP
BETWEEN SUB-SERVICERS AND
THE TRUSTEE OR CERTIFICATEHOLDERS
SECTION 3.06. ASSUMPTION OR TERMINATION OF
SUB-SERVICING AGREEMENTS BY TRUSTEE
SECTION 3.07. COLLECTION OF CERTAIN MORTGAGE
LOAN PAYMENTS
SECTION 3.08. SUB-SERVICING ACCOUNTS
SECTION 3.09. COLLECTION OF TAXES, ASSESSMENTS
AND SIMILAR ITEMS;
ESCROW ACCOUNTS
SECTION 3.10. COLLECTION ACCOUNT AND
DISTRIBUTION ACCOUNT
SECTION 3.11. WITHDRAWALS FROM THE COLLECTION
ACCOUNT AND
DISTRIBUTION ACCOUNT
SECTION 3.12. INVESTMENT OF FUNDS IN THE
COLLECTION ACCOUNT, THE DISTRIBUTION
ACCOUNT, THE PRE-FUNDING ACCOUNTS AND THE INTEREST
COVERAGE ACCOUNTS
SECTION 3.13. [RESERVED]
SECTION 3.14. MAINTENANCE OF HAZARD INSURANCE
AND ERRORS AND OMISSIONS AND
FIDELITY COVERAGE
SECTION 3.15. ENFORCEMENT OF DUE-ON-SALE
CLAUSES; ASSUMPTION AGREEMENTS
SECTION 3.16. REALIZATION UPON DEFAULTED
MORTGAGE LOANS
SECTION 3.17. TRUSTEE TO COOPERATE; RELEASE OF
MORTGAGE FILES
SECTION 3.18. SERVICING COMPENSATION
SECTION 3.19. REPORTS TO THE TRUSTEE; COLLECTION
ACCOUNT STATEMENTS
SECTION 3.20. STATEMENT AS TO COMPLIANCE
SECTION 3.21. INDEPENDENT PUBLIC ACCOUNTANTS'
SERVICING REPORT
SECTION 3.22. ACCESS TO CERTAIN DOCUMENTATION;
FILING OF REPORTS BY TRUSTEE
SECTION 3.23. TITLE, MANAGEMENT AND DISPOSITION
OF REO PROPERTY
SECTION 3.24. OBLIGATIONS OF THE SERVICER IN
RESPECT OF PREPAYMENT
INTEREST SHORTFALLS
SECTION 3.25. [RESERVED]
SECTION 3.26. OBLIGATIONS OF THE SERVICER IN
RESPECT OF MORTGAGE RATES AND
MONTHLY PAYMENTS
SECTION 3.27. [RESERVED]
SECTION 3.28. [RESERVED]
SECTION 3.29. ADVANCE FACILITY
ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. DISTRIBUTIONS
SECTION 4.02. RESERVED
SECTION 4.03. STATEMENTS
SECTION 4.04. REMITTANCE REPORTS; ADVANCES
SECTION 4.05. THE PRE-FUNDING ACCOUNTS
SECTION 4.06. THE INTEREST COVERAGE ACCOUNTS
SECTION 4.07. NET WAC RATE CARRYOVER RESERVE
ACCOUNT
SECTION 4.08. DISTRIBUTIONS ON THE REMIC 1
REGULAR INTERESTS
SECTION 4.09. ALLOCATION OF REALIZED LOSSES
ARTICLE V
THE CERTIFICATES
SECTION 5.01. THE CERTIFICATES
SECTION 5.02. REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES
SECTION 5.03. MUTILATED, DESTROYED, LOST OR
STOLEN CERTIFICATES
SECTION 5.04. PERSONS DEEMED OWNERS
SECTION 5.05. APPOINTMENT OF PAYING AGENT
ARTICLE VI
THE SERVICER AND
THE DEPOSITOR
SECTION 6.01. LIABILITY OF THE SERVICER AND THE
DEPOSITOR
SECTION 6.02. MERGER OR CONSOLIDATION OF, OR
ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER OR THE DEPOSITOR
SECTION 6.03. LIMITATION ON LIABILITY OF THE
SERVICER AND OTHERS
SECTION 6.04. SERVICER NOT TO RESIGN
SECTION 6.05. DELEGATION OF DUTIES
SECTION 6.06. RESERVED
SECTION 6.07. INSPECTION
ARTICLE
VII DEFAULT
SECTION 7.01. SERVICER EVENTS OF TERMINATION
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF
SUCCESSOR
SECTION 7.03. WAIVER OF DEFAULTS
SECTION 7.04. NOTIFICATION TO
CERTIFICATEHOLDERS
SECTION 7.05. SURVIVABILITY OF SERVICER
LIABILITIES
ARTICLE
VIII THE TRUSTEE
SECTION 8.01. DUTIES OF TRUSTEE
SECTION 8.02. CERTAIN MATTERS AFFECTING THE
TRUSTEE
SECTION 8.03. TRUSTEE NOT LIABLE FOR
CERTIFICATES OR MORTGAGE LOANS
SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES
SECTION 8.05. TRUSTEE FEE AND EXPENSES
SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR
TRUSTEE
SECTION 8.07. RESIGNATION OR REMOVAL OF
TRUSTEE
SECTION 8.08. SUCCESSOR TRUSTEE
SECTION 8.09. MERGER OR CONSOLIDATION OF
TRUSTEE
SECTION 8.10. APPOINTMENT OF CO-TRUSTEE OR
SEPARATE TRUSTEE
SECTION 8.11. LIMITATION OF LIABILITY
SECTION 8.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF CERTIFICATES
SECTION 8.13. SUITS FOR ENFORCEMENT
SECTION 8.14. WAIVER OF BOND REQUIREMENT
SECTION 8.15. WAIVER OF INVENTORY, ACCOUNTING
AND APPRAISAL REQUIREMENT
ARTICLE IX
REMIC ADMINISTRATION
SECTION 9.01. REMIC ADMINISTRATION
SECTION 9.02. PROHIBITED TRANSACTIONS AND
ACTIVITIES
SECTION 9.03. INDEMNIFICATION WITH RESPECT TO
CERTAIN TAXES AND LOSS OF
REMIC STATUS
ARTICLE X
TERMINATION
SECTION 10.01. TERMINATION
SECTION 10.02. ADDITIONAL TERMINATION
REQUIREMENTS
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. AMENDMENT
SECTION 11.02. RECORDATION OF AGREEMENT;
COUNTERPARTS
SECTION 11.03. LIMITATION ON RIGHTS OF
CERTIFICATEHOLDERS
SECTION 11.04. GOVERNING LAW;
JURISDICTION
SECTION 11.05. NOTICES
SECTION 11.06. SEVERABILITY OF
PROVISIONS
SECTION 11.07. ARTICLE AND SECTION
REFERENCES
SECTION 11.08. NOTICE TO THE RATING
AGENCIES
SECTION 11.09. FURTHER ASSURANCES
SECTION 11.10. BENEFITS OF AGREEMENT
SECTION 11.11. ACTS OF
CERTIFICATEHOLDERS
<PAGE>
EXHIBITS:
Exhibit A-1 Form of Class I-A1
Certificates
Exhibit A-2 Form of Class II-A1
Certificates
Exhibit A-3 Form of Class II-A2
Certificates
Exhibit A-4 Form of Class II-A3
Certificates
Exhibit A-5 Form of Class M-1
Certificates
Exhibit A-6 Form of Class M-2
Certificates
Exhibit A-7 Form of Class M-3
Certificates
Exhibit A-8 Form of Class M-4
Certificates
Exhibit A-9 Form of Class M-5
Certificates
Exhibit A-10 Form of Class M-6
Certificates
Exhibit A-11 Form of Class M-7
Certificates
Exhibit A-12 Form of Class M-8
Certificates
Exhibit A-13 Form of Class M-9
Certificates
Exhibit A-14 Form of Class M-10
Certificates
Exhibit A-15 Form of Class M-11
Certificates
Exhibit A-16 Form of Class B-1
Certificates
Exhibit A-17 Form of Class B-2
Certificates
Exhibit A-18 Form of Class C
Certificates
Exhibit A-19 Form of Class P
Certificates
Exhibit A-20 Form of Class R
Certificates
Exhibit A-21 Form of Class R-X
Certificates
Exhibit B
[Reserved]
Exhibit C Form of
Mortgage Loan Purchase Agreement
Exhibit D Mortgage
Loan Schedule
Exhibit E Request
for Release
Exhibit F-1 Form of Trustee's
Initial Certification
Exhibit F-2 Form of Trustee's
Final Certification
Exhibit F-3 Form of Receipt of
Mortgage Note
Exhibit G Form of
Compliance Certificate
Exhibit H Form of
Lost Note Affidavit
Exhibit I
[Reserved]
Exhibit J Form of
Investment Letter
Exhibit K Form of
Transfer Affidavit for Residual Certificates
Exhibit L Form of
Transferor Certificate
Exhibit M Form of
ERISA Representation Letter
Exhibit N-1 Form of Depositor's
Certification
Exhibit N-2 Form of Trustee's
Certification
Exhibit N-3 Form of Servicer's
Certification
Exhibit O Form of
Cap Contract
Exhibit P Form of
Addition Notice
Exhibit Q Form of
Subsequent Transfer Instrument
Schedule I Prepayment
Charge Schedule
<PAGE>
This Pooling and
Servicing Agreement is dated as of June 1,
2005 (the "Agreement"), among FINANCIAL
ASSET SECURITIES CORP., as depositor
(the "Depositor"), SAXON MORTGAGE SERVICES,
INC., as servicer (the "Servicer")
and DEUTSCHE BANK NATIONAL TRUST COMPANY,
as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be
issued hereunder in multiple classes,
which in the aggregate will evidence the
entire beneficial ownership interest in
the Trust Fund created hereunder. The
Certificates will consist of twenty-one
classes of certificates, designated as (i)
the Class I-A1 Certificates, (ii) the
Class II-A1 Certificates, (iii) the Class
II-A2 Certificates, (iv) the Class
II-A3 Certificates, (v) the Class M-1
Certificates, (vi) the Class M-2
Certificates, (vii) the Class M-3
Certificates, (viii) the Class M-4
Certificates, (ix) the Class M-5
Certificates, (x) the Class M-6 Certificates,
(xi) the Class M-7 Certificates, (xii) the
Class M-8 Certificates, (xiii) the
Class M-9 Certificates, (xiv) the Class
M-10 Certificates, (xv) the Class M-11
Certificates, (xvi) the Class B-1
Certificates, (xvii) the Class B-2
Certificates, (xviii) the Class C
Certificates, (xix) the Class P Certificates,
(xx) the Class R Certificates and (xxi) the
Class R-X Certificates.
<PAGE>
REMIC 1
-------
As provided herein, the Trustee will make an election to treat
the segregated pool of assets consisting of
the Group I Mortgage Loans, the
Group II Mortgage Loans and certain other
related assets subject to this
Agreement (exclusive of the Pre-Funding
Accounts, the Interest Coverage
Accounts, any Subsequent Mortgage Loan
Interest, the Net WAC Rate Carryover
Reserve Account, any Servicer Prepayment
Charge Payment Amounts and the Cap
Contract) as a real estate mortgage
investment conduit (a "REMIC") for federal
income tax purposes, and such segregated
pool of assets will be designated as
"REMIC 1." The Class R-1 Interest will
represent the sole class of "residual
interests" in REMIC 1 for purposes of the
REMIC Provisions (as defined herein)
under federal income tax law. The following
table irrevocably sets forth the
designation, the Uncertificated REMIC 1
Pass-Through Rate, the initial
Uncertificated Principal Balance, and for
purposes of satisfying Treasury
Regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for
each of the REMIC 1 Regular Interests. None
of the REMIC 1 Regular Interests
will be certificated.
<TABLE>
<CAPTION>
UNCERTIFICATED REMIC 1 INITIAL UNCERTIFICATED
ASSUMED FINAL
DESIGNATION
PASS-THROUGH RATE
PRINCIPAL BALANCE
MATURITY DATE(1)
-----------
---------------------- ----------------------
----------------
<S>
<C>
<C>
<C>
LT1
Variable(2)
$
221,539,875.49 November
2035
LT2
Variable(2)
$
154,040,673.02 November
2035
LT1PF
Variable(2)
$
161,868,979.78 November
2035
LT2PF
Variable(2)
$
112,550,371.71
November 2035
LTP
Variable(2)
$
100.00 November
2035
</TABLE>
________________
(1) For purposes of Section
1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution
Date in the month immediately following the maturity date
for the Mortgage
Loan with the latest possible maturity date has been
designated as
the "latest possible maturity date" for each REMIC 1 Regular
Interest.
(2) Calculated in accordance with the
definition of "Uncertificated REMIC 1
Pass-Through
Rate" herein.
<PAGE>
REMIC 2
-------
As provided herein, the Trustee will make an election to treat
the segregated pool of assets consisting of
the REMIC 1 Regular Interests as a
REMIC for federal income tax purposes, and
such segregated pool of assets will
be designated as "REMIC 2." The Class R-2
Interest will represent the sole class
of "residual interests" in REMIC 2 for
purposes of the REMIC Provisions (as
defined herein) under federal income tax
law. The following table irrevocably
sets forth the designation, the
Uncertificated REMIC 2 Pass-Through Rate, the
initial Uncertificated Principal Balance,
and for purposes of satisfying
Treasury Regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity
date" for each of the REMIC 2 Regular
Interests. None of the REMIC 2 Regular
Interests will be certificated.
<TABLE>
<CAPTION>
UNCERTIFICATED REMIC 2 INITIAL UNCERTIFICATED
ASSUMED FINAL
DESIGNATION
PASS-THROUGH RATE
PRINCIPAL BALANCE
MATURITY DATE(1)
-----------
---------------------- ----------------------
----------------
<S>
<C>
<C>
<C>
LTAA
Variable(2)
$
636,999,902.00 November
2035
LTA1
Variable(2)
$
2,841,270.00 November
2035
LTA2
Variable(2)
$
910,780.00 November
2035
LTA3
Variable(2)
$
971,380.00 November
2035
LTA4
Variable(2)
$
193,820.00 November
2035
LTM1
Variable(2) $
260,000.00 November
2035
LTM2
Variable(2)
$
230,750.00 November
2035
LTM3
Variable(2)
$
143,000.00 November
2035
LTM4
Variable(2)
$
136,500.00 November
2035
LTM5
Variable(2)
$
110,500.00 November
2035
LTM6
Variable(2)
$
110,500.00 November
2035
LTM7
Variable(2)
$
107,250.00 November
2035
LTM8
Variable(2)
$
71,500.00 November
2035
LTM9
Variable(2)
$
87,750.00 November
2035
LTM10
Variable(2)
$
55,250.00 November
2035
LTM11
Variable(2)
$
81,250.00 November
2035
LTB1
Variable(2)
$
78,000.00 November
2035
LTB2
Variable(2)
$
78,000.00
November 2035
LTZZ
Variable(2)
$
6,532,498.00 November
2035
LTP
Variable(2)
$
100.00 November
2035
</TABLE>
________________
(1) For purposes of Section
1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution
Date in the month immediately following the maturity date
for the Mortgage
Loan with the latest possible maturity date has been
designated as
the "latest possible maturity date" for each REMIC 2 Regular
Interest.
(2) Calculated in accordance with the
definition of "Uncertificated REMIC 2
Pass-Through
Rate" herein.
<PAGE>
REMIC 3
-------
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets
consisting of the REMIC 2 Regular Interests
as a REMIC for federal income tax purposes,
and such segregated pool of assets
will be designated as "REMIC 3." The Class
R-3 Interest represents the sole
class of "residual interests" in REMIC 3
for purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class
designation, Pass-Through Rate and Original
Class Certificate Principal Balance
for each Class of Certificates that
represents one or more of the "regular
interests" in REMIC 3 created hereunder and
REMIC 3 Regular Interests C and P:
<TABLE>
<CAPTION>
ORIGINAL CLASS
CLASS
CERTIFICATE
ASSUMED FINAL
DESIGNATION
PRINCIPAL BALANCE
PASS-THROUGH RATE MATURITY DATE(1)
------------------- --------------------
----------------- ----------------
<S>
<C>
<C>
<C>
Class I-A1 ........ $ 284,127,000.00
Variable(2)
November 2035
Class II-A1 ....... $
91,078,000.00
Variable(2)
November 2035
Class II-A2 ....... $
97,138,000.00
Variable(2)
November 2035
Class II-A3 ....... $
19,382,000.00
Variable(2)
November 2035
Class M-1 ......... $
26,000,000.00
Variable(2)
November 2035
Class M-2 ......... $ 23,075,000.00
Variable(2)
November 2035
Class M-3 ......... $
14,300,000.00
Variable(2)
November 2035
Class M-4 ......... $
13,650,000.00
Variable(2)
November 2035
Class M-5 ......... $ 11,050,000.00
Variable(2)
November 2035
Class M-6 ......... $
11,050,000.00
Variable(2)
November 2035
Class M-7 ......... $
10,725,000.00
Variable(2)
November 2035
Class M-8 ......... $ 7,150,000.00
Variable(2)
November 2035
Class M-9 ......... $
8,775,000.00
Variable(2)
November 2035
Class M-10 ........ $
5,525,000.00
Variable(2)
November 2035
Class M-11 ........ $ 8,125,000.00
Variable(2)
November 2035
Class B-1 ......... $
7,800,000.00
Variable(2)
November 2035
Class B-2 ......... $
7,800,000.00
Variable(2)
November 2035
Class C Interest .. $
3,249,900.00
Variable(2)
November 2035
Class P Interest .. $
100.00
N/A(4)
November 2035
</TABLE>
________________
(1) For purposes of Section
1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution
Date in the month immediately following the maturity date
for the Mortgage
Loan with the latest maturity date has been designated as
the "latest
possible maturity date" for each Class of Certificates that
represents one
or more of the "regular interests" in REMIC 3.
(2) Calculated in accordance with the
definition of "Pass-Through Rate" herein.
(3) The Class C Interest will accrue
interest based only on clause (i) of the
then applicable
Pass-Through Rate on the Notional Amount of the Class C
Interest
outstanding from time to time which shall equal the aggregate
of
the
Uncertificated Principal Balances of the REMIC 2 Regular
Interests
(other than
REMIC 2 Regular Interest LTP) and at the Net WAC Rate on
$100.00. The
Class C Interest will not accrue interest on its Certificate
Principal
Balance. (4) The Class P Interest will not accrue interest.
<PAGE>
REMIC 4
-------
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets
consisting of the Class C Interest as a
REMIC for federal income tax purposes, and
such segregated pool of assets will
be designated as "REMIC 4." The Class R-4
Interest represents the sole class of
"residual interests" in REMIC 4 for
purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class
designation, Pass-Through Rate and Original
Class Certificate Principal Balance
for the indicated Class of Certificates
that represents a "regular interest" in
REMIC 4 created hereunder:
<TABLE>
<CAPTION>
INITIAL AGGREGATE
CLASS
CERTIFICATE
ASSUMED FINAL
DESIGNATION
PRINCIPAL BALANCE
PASS-THROUGH RATE MATURITY DATE(1)
-------------------- --------------------
----------------- ----------------
<S>
<C>
<C>
<C>
Class C Certificates $
3,249,900.00
Variable(2)
November 2035
</TABLE>
_______________
(1) For purposes of Section
1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution
Date immediately following the maturity date for the
Mortgage Loans
with the latest maturity date has been designated as the
"latest possible
maturity date" for the Class C Certificates.
(2) The Class C Certificates will
receive 100% of amounts received in respect
of the Class C
Interest. The Class C Certificates will also be entitled to
Subsequent
Mortgage Loan Interest, as a right with respect to a component
of the Class C
Certificates that will not be treated as a REMIC regular
interest but
rather as separate interest strips from the Subsequent
Mortgage Loans
for a specified period of time.
<PAGE>
REMIC 5
-------
As provided herein, the Trustee shall make an election to
treat the segregated pool of assets
consisting of the Class P Interest as a
REMIC for federal income tax purposes, and
such segregated pool of assets will
be designated as "REMIC 5." The Class R-5
Interest represents the sole class of
"residual interests" in REMIC 5 for
purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class
designation, Pass-Through Rate and Original
Class Certificate Principal Balance
for the indicated Class of Certificates
that represents a "regular interest" in
REMIC 5 created hereunder:
<TABLE>
<CAPTION>
INITIAL AGGREGATE
CLASS
CERTIFICATE
ASSUMED FINAL
DESIGNATION
PRINCIPAL BALANCE
PASS-THROUGH RATE MATURITY DATE(1)
-------------------- --------------------
----------------- ----------------
<S>
<C>
<C>
<C>
Class P Certificates
$ 100.00
Variable(2)
November 2035
</TABLE>
_______________
(1) For purposes of Section
1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution
Date immediately following the maturity date for the
Mortgage Loans
with the latest maturity date has been designated as the
"latest possible
maturity date" for the Class P Certificates.
(2) The Class P Certificates will
receive 100% of amounts received in respect
of the Class P
Interest.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary
Statement, the following words and phrases,
unless the context otherwise
requires, shall have the meanings specified
in this Article. Unless otherwise
specified, all calculations in respect of
interest on the Class A Certificates,
the Mezzanine Certificates and the Class B
Certificates shall be made on the
basis of the actual number of days elapsed
and a 360-day year and all other
calculations of interest described herein
shall be made on the basis of a
360-day year consisting of twelve 30-day
months. The Class P Certificates and
the Residual Certificates are not entitled
to distributions in respect of
interest and, accordingly, will not accrue
interest.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Either of the Collection Account or the
Distribution Account.
"Accrual Period": With respect to the Class A Certificates,
the Mezzanine Certificates and the Class B
Certificates and each Distribution
Date, the period commencing on the
preceding Distribution Date (or in the case
of the first such Accrual Period,
commencing on the Closing Date) and ending on
the day preceding the current Distribution
Date. With respect to the Class C
Certificates and each Distribution Date,
the calendar month prior to the month
of such Distribution Date.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust Fund pursuant
to Section 2.08, a notice of the
Depositor's designation of the Subsequent
Mortgage Loans to be sold to the Trust
Fund and the aggregate principal balance of
such Subsequent Mortgage Loans as of
the Subsequent Cut-off Date. The Addition
Notice shall be given not later than
three Business Days prior to the related
Subsequent Transfer Date and shall be
substantially in the form attached hereto
as Exhibit P.
"Adjustable-Rate Mortgage Loan": A first lien Mortgage Loan
which provides at any period during the
life of such loan for the adjustment of
the Mortgage Rate payable in respect
thereto.
"Adjusted Net Maximum Mortgage Rate": With respect to any
Mortgage Loan (or the related REO
Property), as of any date of determination, a
per annum rate of interest equal to the
applicable Maximum Mortgage Rate for
such Mortgage Loan (or the Mortgage Rate in
the case of any Fixed-Rate Mortgage
Loan) as of the first day of the month
preceding the month in which the related
Distribution Date occurs minus the
Servicing Fee Rate.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage Loan, each adjustment date on
which the Mortgage Rate of such
Adjustable-Rate Mortgage Loan changes
pursuant to the related Mortgage Note. The
first Adjustment Date following the Cut-off
Date as to each Adjustable-Rate
Mortgage Loan is set forth in the Mortgage
Loan Schedule.
"Advance": As to any Mortgage Loan or REO Property, any
advance made by the Servicer in respect of
any Distribution Date pursuant to
Section 4.04.
"Advance Facility": As defined in Section 3.29 hereof.
"Advance Facility Trustee": As defined in Section 3.29 hereof.
"Advancing Person": As defined in Section 3.29 hereof.
"Advance Reimbursement Amounts": As defined in Section 3.29
hereof.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common
control with such Person. For
purposes of this definition, "control"
means the power to direct the management
and policies of a Person, directly or
indirectly, whether through ownership of
voting securities, by contract or otherwise
and "controlling" and "controlled"
shall have meanings correlative to the
foregoing.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements
hereto.
"Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of
Mezzanine Certificates or the Class B
Certificates, the sum of (i) any Realized
Losses allocated to such Class of
Certificates on such Distribution Date and
(ii) the amount of any Allocated
Realized Loss Amounts for such Class of
Certificates remaining unpaid from the
previous Distribution Date and reduced by
the amount of any Subsequent
Recoveries added to the Certificate
Principal Balance of such Class of
Certificates.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form,
which is sufficient under the laws of
the jurisdiction wherein the related
Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of
Certificates, the date set forth as such in
the Preliminary Statement.
"Available Funds": With respect to any Distribution Date, an
amount equal to the excess of (i) the sum
of (a) the aggregate of the related
Monthly Payments received on the Mortgage
Loans on or prior to the related
Determination Date, (b) Net Liquidation
Proceeds, Insurance Proceeds, Principal
Prepayments, Subsequent Recoveries,
proceeds from repurchases of and
substitutions for such Mortgage Loans and
other unscheduled recoveries of
principal and interest in respect of the
Mortgage Loans received during the
related Prepayment Period, (c) the
aggregate of any amounts received in respect
of a related REO Property withdrawn from
any REO Account and deposited in the
Collection Account for such Distribution
Date, (d) the aggregate of any amounts
deposited in the Collection Account by the
Servicer in respect of related
Prepayment Interest Shortfalls for such
Distribution Date, (e) the aggregate of
any Advances made by the Servicer for such
Distribution Date in respect of the
Mortgage Loans, (f) the aggregate of any
related advances made by the Trustee in
respect of the Mortgage Loans for such
Distribution Date pursuant to Section
7.02; (g) the amount of any Prepayment
Charges collected by the Servicer in
connection with the full or partial
prepayment of any of the Mortgage Loans and
any Servicer Prepayment Charge Payment
Amount; (h) with respect to the
Distribution Date in the month following
the end of the Funding Period, any
amounts in the Pre-Funding Accounts
(exclusive of any investment income therein)
after giving effect to any purchase of
Subsequent Mortgage Loans and (i) with
respect to each Distribution Date during
the Funding Period and on the two
Distribution Dates immediately following
the end of the Funding Period, any
amounts withdrawn by the Trustee from the
Interest Coverage Accounts for
distribution on the Certificates on such
Distribution Date over (ii) the sum of
(a) amounts reimbursable or payable to the
Servicer pursuant to Section 3.11(a)
or the Trustee pursuant to Section 3.11(b),
(b) amounts deposited in the
Collection Account or the Distribution
Account pursuant to clauses (a) through
(g) above, as the case may be, in error,
(c) the amount of any Prepayment
Charges collected by the Servicer in
connection with the full or partial
prepayment of any of the Mortgage Loans and
any Servicer Prepayment Charge
Payment Amount, (d) [reserved] and (e) any
indemnification payments or expense
reimbursements made by the Trust Fund
pursuant to Section 6.03 or Section 8.05.
"Balloon Mortgage Loan": A Fixed-Rate Mortgage Loan that
provides for the payment of the unamortized
Stated Principal Balance of such
Mortgage Loan in a single payment at the
maturity of such Fixed-Rate Mortgage
Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": A payment of the unamortized Stated
Principal Balance of a Fixed-Rate Mortgage
Loan in a single payment at the
maturity of such Fixed-Rate Mortgage Loan
that is substantially greater than the
preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Base Rate": For any Distribution Date and the Class A
Certificates, the Mezzanine Certificates
and the Class B Certificates, the sum
of (i) LIBOR plus (ii) the related
Certificate Margin.
"Book-Entry Certificates": Any of the Certificates that shall
be registered in the name of the Depository
or its nominee, the ownership of
which is reflected on the books of the
Depository or on the books of a Person
maintaining an account with the Depository
(directly, as a "Depository
Participant", or indirectly, as an indirect
participant in accordance with the
rules of the Depository and as described in
Section 5.02 hereof). On the Closing
Date, the Class A Certificates, the
Mezzanine Certificates and the Class B
Certificates shall be Book-Entry
Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings
institutions in the State of Delaware, the State
of New York, the State of California or in
the city in which the Corporate Trust
Office of the Trustee is located are
authorized or obligated by law or executive
order to be closed.
"Cap Amount": The Cap Amount for the Class A Certificates, the
Mezzanine Certificates and the Class B
Certificates is equal to (i) the
aggregate amount received by the Trust from
the Cap Contract multiplied by (ii)
a fraction equal to (a) the Certificate
Principal Balance of such Class
immediately prior to the applicable
Distribution Date divided by (b) the
aggregate Certificate Principal Balance of
the Class A Certificates, the
Mezzanine Certificates and the Class B
Certificates immediately prior to the
applicable Distribution Date.
"Cap Contract": The Cap Contract between the cap counterparty
and the Trustee, a form of which is
attached hereto as Exhibit O.
"Certificate": Any Regular Certificate or Residual
Certificate.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the
Certificate Register, except that a
Disqualified Organization or non-U.S.
Person shall not be a Holder of a Residual
Certificate for any purpose hereof and,
solely for the purposes of giving any
consent pursuant to this Agreement, any
Certificate registered in the name of
the Depositor or the Servicer or any
Affiliate thereof shall be deemed not to be
outstanding and the Voting Rights to which
it is entitled shall not be taken
into account in determining whether the
requisite percentage of Voting Rights
necessary to effect any such consent has
been obtained, except as otherwise
provided in Section 11.01. The Trustee may
conclusively rely upon a certificate
of the Depositor or the Servicer in
determining whether a Certificate is held by
an Affiliate thereof. All references herein
to "Holders" or "Certificateholders"
shall reflect the rights of Certificate
Owners as they may indirectly exercise
such rights through the Depository and
participating members thereof, except as
otherwise specified herein; provided,
however, that the Trustee shall be
required to recognize as a "Holder" or
"Certificateholder" only the Person in
whose name a Certificate is registered in
the Certificate Register.
"Certificate Margin": With respect to each of the
Certificates, the following percentage:
MARGIN
-----------------------------
CLASS
(%)(1)
(%)(2)
-----
------
------
I-A1
0.240%
0.480%
II-A1
0.120%
0.240%
II-A2
0.250%
0.500%
II-A3
0.390%
0.780%
M-1
0.460%
0.690%
M-2
0.500%
0.750%
M-3
0.530%
0.795%
M-4
0.650%
0.975%
M-5
0.690%
1.035%
M-6
0.710%
1.065%
M-7
1.230%
1.845%
M-8
1.350%
2.025%
M-9
1.750%
2.625%
M-10
3.000%
4.500%
M-11
3.000%
4.500%
B-1
3.000%
4.500%
B-2
3.000%
4.500%
__________________
(1) On or
prior to the Optional Termination Date. (2) After the Optional
Termination Date.
"Certificate Owner": With respect to each Book-Entry
Certificate, any beneficial owner
thereof.
"Certificate Principal Balance": With respect to any Class of
Regular Certificates (other than the Class
C Certificates) immediately prior to
any Distribution Date plus any Subsequent
Recoveries added to the Certificate
Principal Balance of such Certificate
pursuant to Section 4.01, will be equal to
the Initial Certificate Principal Balance
thereof reduced by the sum of all
amounts actually distributed in respect of
principal of such Class and, in the
case of a Mezzanine Certificate or a Class
B Certificate, Realized Losses
allocated thereto on all prior Distribution
Dates. With respect to the Class C
Certificates as of any date of
determination, an amount equal to the excess, if
any, of (A) the then aggregate
Uncertificated Principal Balance of the REMIC 2
Regular Interests over (B) the then
aggregate Certificate Principal Balance of
the Class A Certificates, the Mezzanine
Certificates, the Class B Certificates
and the Class P Certificates then
outstanding.
"Certificate Register" and "Certificate Registrar": The
register maintained and registrar appointed
pursuant to Section 5.02 hereof.
"Class": Collectively, Certificates which have the same
priority of payment and bear the same class
designation and the form of which is
identical except for variation in the
Percentage Interest evidenced thereby.
"Class A Certificates": Any Class I-A1 Certificate, Class
II-A1 Certificate, Class II-A2 Certificate
or Class II-A3 Certificate.
"Class B Certificates": Any Class B-1 Certificate or Class B-2
Certificate.
"Class B-1 Certificate": Any one of the Class B-1 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-17,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class B-1 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the distribution
of the Class M-6 Principal
Distribution Amount on such Distribution
Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates
(after taking into account the
distribution of the Class M-7 Principal
Distribution Amount on such Distribution
Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates
(after taking into account the distribution
of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the
distribution of the Class M-9 Principal
Distribution Amount on such Distribution
Date), (xi) the Certificate Principal
Balance of the Class M-10 Certificates
(after taking into account the distribution
of the Class M-10 Principal
Distribution Amount on such Distribution
Date), (xii) the Certificate Principal
Balance of the Class M-11 Certificates
(after taking into account the
distribution of the Class M-11 Principal
Distribution Amount on such
Distribution Date) and (xiii) the
Certificate Principal Balance of the Class B-1
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 96.60% and (ii) the
aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of
the related Due Period (after giving
effect to scheduled payments of principal
due during the related Due Period, to
the extent received or advanced, and
unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due
Period (after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced, and unscheduled
collections of principal received during
the related Prepayment Period) minus
the related Overcollateralization
Floor.
"Class B-2 Certificate": Any one of the Class B-2 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-18,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class B-2 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the distribution
of the Class M-6 Principal
Distribution Amount on such Distribution
Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates
(after taking into account the
distribution of the Class M-7 Principal
Distribution Amount on such Distribution
Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates
(after taking into account the distribution
of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the
distribution of the Class M-9 Principal
Distribution Amount on such Distribution
Date), (xi) the Certificate Principal
Balance of the Class M-10 Certificates
(after taking into account the distribution
of the Class M-10 Principal
Distribution Amount on such Distribution
Date), (xii) the Certificate Principal
Balance of the Class M-11 Certificates
(after taking into account the
distribution of the Class M-11 Principal
Distribution Amount on such
Distribution Date), (xiii) the Certificate
Principal Balance of the Class B-1
Certificates (after taking into account the
distribution of the Class B-1
Principal Distribution Amount on such
Distribution Date) and (xiv) the
Certificate Principal Balance of the Class
B-2 Certificates immediately prior to
such Distribution Date over (y) the lesser
of (A) the product of (i) 99.00% and
(ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last
day of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced, and unscheduled collections of
principal received during the
related Prepayment Period) minus the
related Overcollateralization Floor.
"Class C Certificates": Any one of the Class C Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-19,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
4.
"Class C Interest": An uncertificated interest in the Trust
Fund held by the Trustee on behalf of the
Holders of the Class C Certificates,
evidencing a Regular Interest in REMIC 3
for purposes of the REMIC Provisions.
"Class I-A1 Certificate": Any one of the Class I-A1
Certificates executed by the Trustee, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-1,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class II-A1 Certificate": Any one of the Class II-A1
Certificates executed by the Trustee, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-2,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class II-A2 Certificate": Any one of the Class II-A2
Certificates executed by the Trustee, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-3,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class II-A3 Certificate": Any one of the Class II-A3
Certificates executed by the Trustee, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-4,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-5, representing
the right to distributions as set forth
herein and therein and evidencing a
regular interest in REMIC 3.
"Class M-1 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date) and (ii) the Certificate
Principal Balance of the Class M-1
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 59.30% and (ii)
the Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect to
scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced, and unscheduled collections of
principal received during the
related Prepayment Period) minus the
related Overcollateralization Floor.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-6, representing
the right to distributions as set forth
herein and therein and evidencing a
regular interest in REMIC 3.
"Class M-2 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date) and (iii) the Certificate Principal
Balance of the Class M-2 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 66.40% and (ii) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal received
during the related Prepayment Period) and
(B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the
last day of the related Due Period
(after giving effect to scheduled payments
of principal due during the related
Due Period, to the extent received or
advanced, and unscheduled collections of
principal received during the related
Prepayment Period) minus the related
Overcollateralization Floor.
"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-7, representing
the right to distributions as set forth
herein and therein and evidencing a
regular interest in REMIC 3.
"Class M-3 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date) and (iv) the Certificate
Principal Balance of the Class M-3
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 70.80%% and (ii)
the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day
of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced, and unscheduled collections of
principal received during the
related Prepayment Period) minus the
related Overcollateralization Floor.
"Class M-4 Certificate": Any one of the Class M-4 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-8, representing
the right to distributions as set forth
herein and therein and evidencing a
regular interest in REMIC 3.
"Class M-4 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date) and (v) the Certificate Principal
Balance of the Class M-4 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 75.00% and (ii) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal received
during the related Prepayment Period) and
(B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the
last day of the related Due Period
(after giving effect to scheduled payments
of principal due during the related
Due Period, to the extent received or
advanced, and unscheduled collections of
principal received during the related
Prepayment Period) minus the related
Overcollateralization Floor.
"Class M-5 Certificate": Any one of the Class M-5 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-9, representing
the right to distributions as set forth
herein and therein and evidencing a
regular interest in REMIC 3.
"Class M-5 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date) and (vi) the Certificate
Principal Balance of the Class M-5
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 78.40% and (ii)
the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day
of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced, and unscheduled collections of
principal received during the
related Prepayment Period) minus the
related Overcollateralization Floor.
"Class M-6 Certificate": Any one of the Class M-6 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-10,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class M-6 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date) and (vii) the Certificate Principal
Balance of the Class M-6 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 81.80% and (ii) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal received
during the related Prepayment Period) and
(B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the
last day of the related Due Period
(after giving effect to scheduled payments
of principal due during the related
Due Period, to the extent received or
advanced, and unscheduled collections of
principal received during the related
Prepayment Period) minus the related
Overcollateralization Floor.
"Class M-7 Certificate": Any one of the Class M-7 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-11,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class M-7 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the distribution
of the Class M-6 Principal
Distribution Amount on such Distribution
Date) and (viii) the Certificate
Principal Balance of the Class M-7
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 85.10% and (ii)
the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day
of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced, and unscheduled collections of
principal received during the
related Prepayment Period) minus the
related Overcollateralization Floor.
"Class M-8 Certificate": Any one of the Class M-8 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-12,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class M-8 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the distribution
of the Class M-6 Principal
Distribution Amount on such Distribution
Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates
(after taking into account the
distribution of the Class M-7 Principal
Distribution Amount on such Distribution
Date) and (ix) the Certificate Principal
Balance of the Class M-8 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 87.30% and (ii) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal received
during the related Prepayment Period) and
(B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the
last day of the related Due Period
(after giving effect to scheduled payments
of principal due during the related
Due Period, to the extent received or
advanced, and unscheduled collections of
principal received during the related
Prepayment Period) minus the related
Overcollateralization Floor.
"Class M-9 Certificate": Any one of the Class M-9 Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-13,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class M-9 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the distribution
of the Class M-6 Principal
Distribution Amount on such Distribution
Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates
(after taking into account the
distribution of the Class M-7 Principal
Distribution Amount on such Distribution
Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates
(after taking into account the distribution
of the Class M-8 Principal
Distribution Amount on such Distribution
Date) and (x) the Certificate Principal
Balance of the Class M-9 Certificates
immediately prior to such Distribution
Date over (y) the lesser of (A) the product
of (i) 90.00% and (ii) the aggregate
Stated Principal Balance of the Mortgage
Loans as of the last day of the related
Due Period (after giving effect to
scheduled payments of principal due during
the related Due Period, to the extent
received or advanced, and unscheduled
collections of principal received during
the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day
of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of principal
received during the related Prepayment
Period) minus the related
Overcollateralization Floor.
"Class M-10 Certificate": Any one of the Class M-10
Certificates executed by the Trustee, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-14,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class M-10 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the distribution
of the Class M-6 Principal
Distribution Amount on such Distribution
Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates
(after taking into account the
distribution of the Class M-7 Principal
Distribution Amount on such Distribution
Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates
(after taking into account the distribution
of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the
distribution of the Class M-9 Principal
Distribution Amount on such Distribution
Date) and (xi) the Certificate Principal
Balance of the Class M-10 Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 91.70% and (ii) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal received
during the related Prepayment Period) and
(B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the
last day of the related Due Period
(after giving effect to scheduled payments
of principal due during the related
Due Period, to the extent received or
advanced, and unscheduled collections of
principal received during the related
Prepayment Period) minus the related
Overcollateralization Floor.
"Class M-11 Certificate": Any one of the Class M-11
Certificates executed by the Trustee, and
authenticated and delivered by the
Certificate Registrar, substantially in the
form annexed hereto as Exhibit A-15,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
3.
"Class M-11 Principal Distribution Amount": The excess of (x)
the sum of (i) the aggregate Certificate
Principal Balance of the Class A
Certificates (after taking into account the
distribution of the Senior Principal
Distribution Amount on such Distribution
Date), (ii) the Certificate Principal
Balance of the Class M-1 Certificates
(after taking into account the
distribution of the Class M-1 Principal
Distribution Amount on such Distribution
Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates
(after taking into account the distribution
of the Class M-2 Principal
Distribution Amount on such Distribution
Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates
(after taking into account the
distribution of the Class M-3 Principal
Distribution Amount on such Distribution
Date), (v) the Certificate Principal
Balance of the Class M-4 Certificates
(after taking into account the distribution
of the Class M-4 Principal
Distribution Amount on such Distribution
Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates
(after taking into account the
distribution of the Class M-5 Principal
Distribution Amount on such Distribution
Date), (vii) the Certificate Principal
Balance of the Class M-6 Certificates
(after taking into account the distribution
of the Class M-6 Principal
Distribution Amount on such Distribution
Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates
(after taking into account the
distribution of the Class M-7 Principal
Distribution Amount on such Distribution
Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates
(after taking into account the distribution
of the Class M-8 Principal
Distribution Amount on such Distribution
Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates
(after taking into account the
distribution of the Class M-9 Principal
Distribution Amount on such Distribution
Date), (xi) the Certificate Principal
Balance of the Class M-10 Certificates
(after taking into account the distribution
of the Class M-10 Principal
Distribution Amount on such Distribution
Date) and (xii) the Certificate
Principal Balance of the Class M-11
Certificates immediately prior to such
Distribution Date over (y) the lesser of
(A) the product of (i) 94.20% and (ii)
the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day
of the related Due Period (after giving
effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of principal
received during the related Prepayment
Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as
of the last day of the related Due Period
(after giving effect to scheduled
payments of principal due during the
related Due Period, to the extent received
or advanced, and unscheduled collections of
principal received during the
related Prepayment Period) minus the
related Overcollateralization Floor.
"Class P Certificate": Any one of the Class P Certificates
executed by the Trustee, and authenticated
and delivered by the Certificate
Registrar, substantially in the form
annexed hereto as Exhibit A-19,
representing the right to distributions as
set forth herein and therein and
evidencing a regular interest in REMIC
5.
"Class P Interest": An uncertificated interest in the Trust
Fund held by the Trustee on behalf of the
Holders of the Class P Certificates,
evidencing a Regular Interest in REMIC 3
for purposes of the REMIC Provisions.
"Class R Certificate": The Class R Certificate executed by the
Trustee, and authenticated and delivered by
the Certificate Registrar,
substantially in the form annexed hereto as
Exhibit A-20 and evidencing the
ownership of the Class R-1 Interest, the
Class R-2 Interest and the Class R-3
Interest.
"Class R-1 Interest": The uncertificated Residual Interest in
REMIC 1.
"Class R-2 Interest": The uncertificated Residual Interest in
REMIC 2.
"Class R-3 Interest": The uncertificated Residual Interest in
REMIC 3.
"Class R-4 Interest": The uncertificated Residual Interest in
REMIC 4.
"Class R-5 Interest": The uncertificated Residual Interest in
REMIC 5.
"Class R-X Certificate": The Class R-X Certificate executed by
the Trustee, and authenticated and
delivered by the Certificate Registrar,
substantially in the form annexed hereto as
Exhibit A-21 and evidencing the
ownership of the Class R-4 Interest and the
Class R-5 Interest.
"Close of Business": As used herein, with respect to any
Business Day, 5:00 p.m. (New York
time).
"Closing Date": June 22, 2005.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The segregated account or accounts
created and maintained by the Servicer
pursuant to Section 3.10(a), which shall
be entitled "Saxon Mortgage Services, Inc.,
as servicer for Deutsche Bank
National Trust Company, as Trustee, in
trust for registered Holders of Meritage
Mortgage Loan Trust 2005-2, Asset-Backed
Certificates, Series 2005-2," which
must be an Eligible Account.
"Compensating Interest": As defined in Section 3.24 hereof.
"Corporate Trust Office": The principal corporate trust office
of the Trustee at which at any particular
time its corporate trust business in
connection with this Agreement shall be
administered, which office at the date
of the execution of this instrument is
located at 1761 East St. Andrew Place,
Santa Ana, CA 92705-4934, Attention: Trust
Administration GC05M2 or at such
other address as the Trustee may designate
from time to time by notice to the
Certificateholders, the Depositor, the
Servicer, the Originator and the Seller.
"Corresponding Certificate": With respect to each REMIC 2
Regular Interest set forth below, the
corresponding Regular Certificate set
forth in the table below:
REMIC 2 REGULAR INTEREST
REGULAR CERTIFICATE
------------------------
-------------------
LTA1
Class I-A1
LTA2
Class II-A1
LTA3
Class II-A2
LTA4
Class II-A3
LTM1
Class M-1
LTM2
Class M-2
LTM3
Class M-3
LTM4
Class M-4
LTM5
Class M-5
LTM6
Class M-6
LTM7
Class M-7
LTM8
Class M-8
LTM9
Class M-9
LTM10
Class M-10
LTM11
Class M-11
LTB1
Class B-1
LTB2
Class B-2
LTP
Class P
"Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction,
the numerator of which is the sum of
the aggregate Certificate Principal Balance
of the Mezzanine Certificates, the
Class B Certificates and the Class C
Certificates, and the denominator of which
is the sum of (x) the aggregate Stated
Principal Balance of the Mortgage Loans
and (y) any amounts remaining on deposit in
the Pre-Funding Accounts (exclusive
of any investment income therein),
calculated prior to taking into account
payments of principal on the Mortgage Loans
and distribution of the Group I
Principal Distribution Amount and the Group
II Principal Distribution Amount to
the Holders of the Certificates then
entitled to distributions of principal on
such Distribution Date.
"Custodian": Deutsche Bank National Trust Company, as
custodian of the Mortgage Files, or any
successor thereto.
"Cut-off Date": With respect to each Initial Mortgage Loan,
the later of (i) the date of origination of
such Mortgage Loan or (ii) the Close
of Business on June 1, 2005.
"Cut-off Date Principal Balance": With respect to any Mortgage
Loan, the unpaid Stated Principal Balance
thereof as of the Cut-off Date of such
Mortgage Loan (or as of the applicable date
of substitution with respect to a
Qualified Substitute Mortgage Loan), after
giving effect to scheduled payments
due on or before the Cut-off Date, whether
or not received.
"DBRS": Dominion Bond Ratings Service, Inc., or its successor
in interest.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment
for such Mortgage Loan by a court of
competent jurisdiction in a proceeding
under the Bankruptcy Code, except such a
reduction resulting from a Deficient
Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property
by a court of competent jurisdiction
in an amount less than the then outstanding
Stated Principal Balance of the
Mortgage Loan, which valuation results from
a proceeding initiated under the
Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c)
hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Qualified
Substitute Mortgage Loans.
"Delinquency Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the
aggregate Stated Principal Balance of
Mortgage Loans that are Delinquent 60 days
or more, that are in foreclosure, in
bankruptcy (and Delinquent 60 days or more)
or that are REO Properties, as of
the last day of the previous calendar month
by (y) the sum of (i) the aggregate
Stated Principal Balance of the Mortgage
Loans, as of the last day of the
previous calendar month and (ii) any
amounts remaining on deposit in the
Pre-Funding Accounts.
"Delinquent": With respect to any Mortgage Loan and related
Monthly Payment, the Monthly Payment due on
a Due Date which is not made by the
Close of Business on the next scheduled Due
Date for such Mortgage Loan. For
example, a Mortgage Loan is 60 or more days
Delinquent if the Monthly Payment
due on a Due Date is not made by the Close
of Business on the second scheduled
Due Date after such Due Date.
"Depositor": Financial Asset Securities Corp., a Delaware
corporation, or any successor in
interest.
"Depository": The initial Depository shall be The Depository
Trust Company, whose nominee is Cede &
Co., or any other organization registered
as a "clearing agency" pursuant to Section
17A of the 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. Upon request, the
Depository may also be Clearstream
Banking Luxembourg and the Euroclear
System.
"Depository Participant": A broker, dealer, bank or other
financial institution or other person for
whom from time to time a Depository
effects book-entry transfers and pledges of
securities deposited with the
Depository.
"Determination Date": With respect to any Distribution Date,
the 15th day of the calendar month in which
such Distribution Date occurs or, if
such 15th day is not a Business Day, the
Business Day immediately preceding such
15th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the
tenants thereof, the management or
operation of such REO Property, the holding
of such REO Property primarily for
sale to customers, the performance of any
construction work thereon or any use
of such REO Property in a trade or business
conducted by the REMIC other than
through an Independent Contractor;
provided, however, that the Trustee (or the
Servicer on behalf of the Trustee) shall
not be considered to Directly Operate
an REO Property solely because the Trustee
(or the Servicer on behalf of the
Trustee) establishes rental terms, chooses
tenants, enters into or renews
leases, deals with taxes and insurance, or
makes decisions as to repairs or
capital expenditures with respect to such
REO Property.
"Disqualified Organization": A "disqualified organization"
under Section 860E of the Code, which as of
the Closing Date is any of: (i) the
United States, any state or political
subdivision thereof, any foreign
government, any international organization,
or any agency or instrumentality of
any of the foregoing, (ii) any organization
(other than a cooperative described
in Section 521 of the Code) which is exempt
from the tax imposed by Chapter 1 of
the Code unless such organization is
subject to the tax imposed by Section 511
of the Code, (iii) any organization
described in Section 1381(a)(2)(C) of the
Code or (iv) an "electing large
partnership" within the meaning of Section 775
of the Code. A corporation will not be
treated as an instrumentality of the
United States or of any state or political
subdivision thereof, if all of its
activities are subject to tax and, a
majority of its board of directors is not
selected by a governmental unit. The term
"United States", "state" and
"international organizations" shall have
the meanings set forth in Section 7701
of the Code.
"Distribution Account": The segregated trust account or
accounts created and maintained by the
Trustee pursuant to Section 3.10(b) which
shall be entitled "Distribution Account,
Deutsche Bank National Trust Company,
as Trustee, in trust for the registered
Certificateholders of Meritage Mortgage
Loan Trust 2005-2, Asset-Backed
Certificates, Series 2005-2" and which must be
an Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if
such 25th day is not a Business Day, the
Business Day immediately following such
25th day, commencing in July 2005.
"Due Date": With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar
month in which such Distribution Date
occurs on which the Monthly Payment for
such Mortgage Loan was due (or, in the
case of any Mortgage Loan under the terms
of which the Monthly Payment for such
Mortgage Loan was due on a day other than
the first day of the calendar month in
which such Distribution Date occurs, the
day during the related Due Period on
which such Monthly Payment was due),
exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the
month preceding the month in which
such Distribution Date occurs and ending on
the first day of the month in which
such Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts
maintained with a federal or state
chartered depository institution or trust
company the short-term unsecured debt
obligations of which (or, in the case of a
depository institution or trust company
that is the principal subsidiary of a
holding company, the short-term unsecured
debt obligations of such holding
company) are rated A-1 by S&P, F-1 by
Fitch and P-1 by Moody's (or comparable
ratings if S&P, Fitch and Moody's are
not the Rating Agencies) at the time any
amounts are held on deposit therein, (ii)
an account or accounts the deposits in
which are fully insured by the FDIC (to the
limits established by such
corporation), the uninsured deposits in
which account are otherwise secured such
that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each
Rating Agency, the Certificateholders will
have a claim with respect to the
funds in such account or a perfected first
priority security interest against
such collateral (which shall be limited to
Permitted Investments) securing such
funds that is superior to claims of any
other depositors or creditors of the
depository institution with which such
account is maintained, (iii) a trust
account or accounts maintained with the
trust department of a federal or state
chartered depository institution, national
banking association or trust company
acting in its fiduciary capacity or (iv) an
account otherwise acceptable to each
Rating Agency without reduction or
withdrawal of their then current ratings of
the Certificates as evidenced by a letter
from each Rating Agency to the
Trustee. Eligible Accounts may bear
interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Escrow Payments": The amounts constituting ground rents,
taxes, assessments, water rates, fire and
hazard insurance premiums and other
payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to
any Mortgage Loan.
"Excess Overcollateralized Amount": With respect to the Class
A Certificates, the Mezzanine Certificates
and the Class B Certificates and any
Distribution Date, the excess, if any, of
(i) the Overcollateralized Amount for
such Distribution Date, assuming that 100%
of the Principal Remittance Amount is
applied as a principal payment on such
Distribution Date over (ii) the
Overcollateralization Target Amount for
such Distribution Date.
"Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (x) the
Monthly Interest Distributable Amount
payable on the Class C Certificates on such
Distribution Date as reduced by
Realized Losses allocated thereto with
respect to such Distribution Date
pursuant to Section 4.08 and (y) the
Overcollateralization Deficiency Amount for
such Distribution Date.
"Fannie Mae": Federal National Mortgage Association or any
successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other
than a Mortgage Loan or REO Property
purchased by the Seller, the Originator or
the Servicer pursuant to or as
contemplated by Section 2.03, 3.16(c) or
10.01), a determination made by the
Servicer that all Insurance Proceeds, Net
Liquidation Proceeds and other
payments or recoveries which the Servicer,
in its reasonable good faith
judgment, expects to be finally recoverable
in respect thereof have been so
recovered. The Servicer shall maintain
records, prepared by a Servicing Officer,
of each Final Recovery Determination made
thereby.
"Fitch": Fitch Ratings, or its successor in interest.
"Fixed-Rate Mortgage Loan": A first or second lien Mortgage
Loan which provides for a fixed Mortgage
Rate payable with respect thereto.
"Formula Rate": For any Distribution Date and the Class A
Certificates, the Mezzanine Certificates
and the Class B Certificates, the
lesser of (i) the Base Rate and (ii) the
Maximum Cap Rate.
"Freddie Mac": The Federal Home Loan Mortgage Corporation, or
any successor thereto.
"Funding Period": The period beginning on the Closing Date and
ending on the earlier to occur of the date
upon which (i) the amount on deposit
in the Pre-Funding Accounts (exclusive of
any investment income therein) has
been reduced to $10,000 or less or (ii)
September 22, 2005.
"Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan, the fixed percentage set forth in the
related Mortgage Note that is added
to the Index on each Adjustment Date in
accordance with the terms of the related
Mortgage Note used to determine the
Mortgage Rate for such Adjustable-Rate
Mortgage Loan.
"Group I Allocation Percentage": With respect to any
Distribution Date, the percentage
equivalent of a fraction, the numerator of
which is (i) the Group I Principal
Remittance Amount for such Distribution Date,
and the denominator of which is (ii) the
Principal Remittance Amount for such
Distribution Date.
"Group I Basic Principal Distribution Amount": With respect to
any Distribution Date, the excess of (i)
the Group I Principal Remittance Amount
for such Distribution Date over (ii) the
product of (a) the
Overcollateralization Release Amount, if
any, for such Distribution Date and (b)
the Group I Allocation Percentage.
"Group I Certificates": Class I-A1 Certificates.
"Group I Interest Coverage Account": The account established
and maintained pursuant to Section 4.06,
which account contains an amount, to be
paid by the Depositor to the Trustee on the
Closing Date, that equals $0.00.
"Group I Interest Remittance Amount": With respect to any
Distribution Date, that portion of the
Available Funds for such Distribution
Date attributable to interest received or
advanced with respect to the Group I
Mortgage Loans or amounts withdrawn from
the Group I Interest Coverage Account.
"Group I Mortgage Loan": A Fixed-Rate Mortgage Loan or
Adjustable-Rate Mortgage Loan assigned to
Loan Group I with a Stated Principal
Balance at origination that conforms to
Fannie Mae and Freddie Mac loan limits.
"Group I Pre-Funding Account": The account established and
maintained pursuant to Section 4.05.
"Group I Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Group
I Basic Principal Distribution
Amount for such Distribution Date and (ii)
the product of (a) the Extra
Principal Distribution Amount for such
Distribution Date and (b) the Group I
Allocation Percentage.
"Group I Principal Remittance Amount": With respect to any
Distribution Date, that portion of
Available Funds equal to the sum of (i) each
scheduled payment of principal collected or
advanced on the Group I Mortgage
Loans by the Servicer that was due during
the related Due Period, (ii) the
principal portion of all Principal
Prepayments of the Group I Mortgage Loans
applied by the Servicer during the related
Prepayment Period, (iii) the
principal portion of all related Net
Liquidation Proceeds, Insurance Proceeds
and Subsequent Recoveries received during
the related Prepayment Period with
respect to the Group I Mortgage Loans, (iv)
that portion of the Purchase Price,
representing principal of any repurchased
Group I Mortgage Loan, deposited in
the Collection Account during the related
Prepayment Period, (v) the principal
portion of any related Substitution
Adjustments deposited in the Collection
Account during the related Prepayment
Period with respect to the Group I
Mortgage Loans, (vi) with respect to the
Distribution Date in the month
following the end of the Funding Period,
any remainder amount in the Group I
Pre-Funding Account (exclusive of any
investment income therein) after giving
effect to the purchase of any Subsequent
Group I Mortgage Loans and (vii) on the
Distribution Date on which the Trust Fund
is to be terminated pursuant to
Section 10.01, that portion of the
Termination Price, in respect of principal on
the Group I Mortgage Loans.
"Group I Senior Principal Distribution Amount": The excess of
(x) the aggregate Certificate Principal
Balance of the Group I Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 51.30% and (ii) the
aggregate Stated Principal Balance of the
Group I Mortgage Loans as of the last day
of the related Due Period (after
giving effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of
principal received during the related
Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group I
Mortgage Loans as of the last day of the
related Due Period (after giving effect to
scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal
received during the related Prepayment
Period) minus the related
Overcollateralization Floor.
"Group II Allocation Percentage": With respect to any
Distribution Date, the percentage
equivalent of a fraction, the numerator of
which is (i) the Group II Principal
Remittance Amount for such Distribution
Date, and the denominator of which is (ii)
the Principal Remittance Amount for
such Distribution Date.
"Group II Basic Principal Distribution Amount": With respect
to any Distribution Date, the excess of (i)
the Group II Principal Remittance
Amount for such Distribution Date over (ii)
the product of (a) the
Overcollateralization Release Amount, if
any, for such Distribution Date and (b)
the Group II Allocation Percentage.
"Group II Certificates": Collectively, the Class II-A1
Certificates, the Class II-A2 Certificates
and the Class II-A3 Certificates.
"Group II Interest Coverage Account": The account established
and maintained pursuant to Section 4.06,
which account contains an amount, to be
paid by the Depositor to the Trustee on the
Closing Date, that equals $0.00.
"Group II Interest Remittance Amount": With respect to any
Distribution Date, that portion of the
Available Funds for such Distribution
Date attributable to interest received or
advanced with respect to the Group II
Mortgage Loans or amounts withdrawn from
the Group II Interest Coverage Account.
"Group II Mortgage Loan": A Fixed-Rate Mortgage Loan or
Adjustable-Rate Mortgage Loan assigned to
Loan Group I with a Stated Principal
Balance at origination that may or may not
conform to Fannie Mae and Freddie Mac
loan limits.
"Group II Pre-Funding Account": The account established and
maintained pursuant to Section 4.05.
"Group II Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Group
II Basic Principal Distribution
Amount for such Distribution Date and (ii)
the product of (a) the Extra
Principal Distribution Amount for such
Distribution Date and (b) the Group II
Allocation Percentage.
"Group II Principal Remittance Amount": With respect to any
Distribution Date, that portion of
Available Funds equal to the sum of (i) each
scheduled payment of principal collected or
advanced on the Group II Mortgage
Loans by the Servicer that was due during
the related Due Period, (ii) the
principal portion of all Principal
Prepayments of the Group II Mortgage Loans
applied by the Servicer during the related
Prepayment Period, (iii) the
principal portion of all related Net
Liquidation Proceeds, Insurance Proceeds
and Subsequent Recoveries received during
the related Prepayment Period with
respect to the Group II Mortgage Loans,
(iv) that portion of the Purchase Price,
representing principal of any repurchased
Group II Mortgage Loan, deposited in
the Collection Account during the related
Prepayment Period, (v) the principal
portion of any related Substitution
Adjustments deposited in the Collection
Account during the related Prepayment
Period with respect to the Group II
Mortgage Loans, (vi) with respect to the
Distribution Date in the month
following the end of the Funding Period,
any remainder amount in the Group II
Pre-Funding Account (exclusive of any
investment income therein) after giving
effect to the purchase of any Subsequent
Group II Mortgage Loans and (vii) on
the Distribution Date on which the Trust
Fund is to be terminated pursuant to
Section 10.01, that portion of the
Termination Price, in respect of principal on
the Group II Mortgage Loans.
"Group II Senior Principal Distribution Amount": The excess of
(x) the aggregate Certificate Principal
Balance of the Group II Certificates
immediately prior to such Distribution Date
over (y) the lesser of (A) the
product of (i) 51.30% and (ii) the
aggregate Stated Principal Balance of the
Group II Mortgage Loans as of the last day
of the related Due Period (after
giving effect to scheduled payments of
principal due during the related Due
Period, to the extent received or advanced,
and unscheduled collections of
principal received during the related
Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group II
Mortgage Loans as of the last day of
the related Due Period (after giving effect
to scheduled payments of principal
due during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal
received during the related Prepayment
Period) minus the related
Overcollateralization Floor.
"Highest Priority": As of any date of determination, the Class
of Mezzanine Certificates or Class B
Certificates then outstanding with a
Certificate Principal Balance greater than
zero, with the highest priority for
payments pursuant to Section 4.01, in the
following order: Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7, Class M-8, Class M-9,
Class M-10, Class M-11, Class B-1 and Class
B-2 Certificates.
"Indenture": An indenture relating to the issuance of notes
secured by the Class C Certificates, the
Class P Certificates and/or the Class R
Certificates (or any portion thereof).
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact
independent of the Depositor, the Servicer
and their respective Affiliates, (b) does
not have any direct financial interest
in or any material indirect financial
interest in the Depositor or the Servicer
or any Affiliate thereof, and (c) is not
connected with the Depositor or the
Servicer or any Affiliate thereof as an
officer, employee, promoter,
underwriter, trustee, partner, director or
Person performing similar functions;
provided, however, that a Person shall not
fail to be Independent of the
Depositor or the Servicer or any Affiliate
thereof merely because such Person is
the beneficial owner of 1% or less of any
class of securities issued by the
Depositor or the Servicer or any Affiliate
thereof, as the case may be.
"Independent
Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent
contractor" with respect to any of
the REMICs created hereunder within the
meaning of Section 856(d)(3) of the Code
if such REMIC were a real estate investment
trust (except that the ownership
tests set forth in that section shall be
considered to be met by any Person that
owns, directly or indirectly, 35% or more
of any Class of Certificates), so long
as each such REMIC does not receive or
derive any income from such Person and
provided that the relationship between such
Person and such REMIC is at arm's
length, all within the meaning of Treasury
Regulation Section 1.856-4(b)(5), or
(ii) any other Person (including the
Servicer) if the Trustee has received an
Opinion of Counsel to the effect that the
taking of any action in respect of any
REO Property by such Person, subject to any
conditions therein specified, that
is otherwise herein contemplated to be
taken by an Independent Contractor will
not cause such REO Property to cease to
qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the
Code (determined without regard to the
exception applicable for purposes of
Section 860D(a) of the Code), or cause any
income realized in respect of such REO
Property to fail to qualify as Rents from
Real Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan
and with respect to each related Adjustment
Date, the index as specified in the
related Mortgage Note.
"Initial Certificate Principal Balance": With respect to any
Regular Certificate, the amount designated
"Initial Certificate Principal
Balance" on the face thereof.
"Initial Group I Mortgage Loan": Any of the Group I Mortgage
Loans included in the Trust Fund as of the
Closing Date. The aggregate principal
balance of the Initial Group I Mortgage
Loans as of the Cut-off Date is equal to
$221,539,975.49.
"Initial Group II Mortgage Loan": Any of the Group II Mortgage
Loans included in the Trust Fund as of the
Closing Date. The aggregate principal
balance of the Initial Group II Mortgage
Loans as of the Cut-off Date is equal
to $161,868,979.78.
"Initial Mortgage Loan": Any of the Initial Group I Mortgage
Loans or Initial Group II Mortgage Loans
included in the Trust Fund as of the
Closing Date.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a
Mortgage Loan, to the extent such
proceeds are received by the Servicer and
are not to be applied to the
restoration of the related Mortgaged
Property or released to the Mortgagor in
accordance with the procedures that the
Servicer would follow in servicing
mortgage loans held for its own account,
subject to the terms and conditions of
the related Mortgage Note and Mortgage.
"Interest Coverage Accounts": The Group I Interest Coverage
Account and the Group II Interest Coverage
Account.
"Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates
and the Class B Certificates and each
Accrual Period, the second LIBOR Business
Day preceding the commencement of such
Accrual Period.
"Late Collections": With respect to any Mortgage Loan, all
amounts received subsequent to the
Determination Date immediately following any
related Due Period, whether as late
payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or
otherwise, which represent late payments or
collections of principal and/or interest
due (without regard to any acceleration
of payments under the related Mortgage and
Mortgage Note) but delinquent on a
contractual basis for such Due Period and
not previously recovered.
"LIBOR": With respect to each Accrual Period, the rate
determined by the Trustee on the related
Interest Determination Date on the
basis of the London interbank offered rate
for one-month United States dollar
deposits, as such rate appears on the
Telerate Page 3750, as of 11:00 a.m.
(London time) on such Interest
Determination Date. If such rate does not appear
on Telerate Page 3750, the rate for such
Interest Determination Date will be
determined on the basis of the offered
rates of the Reference Banks for
one-month United States dollar deposits, as
of 11:00 a.m. (London time) on such
Interest Determination Date. The Trustee
will request the principal London
office of each of the Reference Banks to
provide a quotation of its rate. On
such Interest Determination Date, 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, 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 1/16
of
1%); and
(ii)
If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the
related
Accrual Period shall be the higher of (i) LIBOR as determined on
the
previous Interest Determination Date and (ii) the Reserve
Interest
Rate.
"LIBOR Business Day": Any day on which banks in London,
England and The City of New York are open
and conducting transactions in foreign
currency and exchange.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the
Servicer has determined, in its reasonable
judgment, as of the end of the related
Prepayment Period, that all Liquidation
Proceeds which it expects to recover with
respect to the liquidation of the
Mortgage Loan or disposition of the related
REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage
Loan is paid in full, (ii) a Final
Recovery Determination is made as to such
Mortgage Loan or (iii) such Mortgage
Loan is removed from the Trust Fund by
reason of its being purchased, sold or
replaced pursuant to or as contemplated by
Section 2.03, Section 3.16(c) or
Section 10.01. With respect to any REO
Property, either of the following events:
(i) a Final Recovery Determination is made
as to such REO Property or (ii) such
REO Property is removed from the Trust Fund
by reason of its being sold or
purchased pursuant to Section 3.23 or
Section 10.01.
"Liquidation Proceeds": The amount (other than amounts
received in respect of the rental of any
REO Property prior to REO Disposition)
received by the Servicer in connection with
(i) the taking of all or a part of a
Mortgaged Property by exercise of the power
of eminent domain or condemnation,
(ii) the liquidation of a defaulted
Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise or (iii) the
repurchase, substitution or sale of a
Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03,
Section 3.16(c), Section 3.23 or Section
10.01.
"Loan-to-Value Ratio": As of any date and as to any Mortgage
Loan, the fraction, expressed as a
percentage, the numerator of which is the
Stated Principal Balance of the Mortgage
Loan and the denominator of which is
the Value of the related Mortgaged
Property.
"Loan Group": Either Loan Group I or Loan Group II, as the
context requires.
"Loan Group I": The group of Mortgage Loans identified in the
Mortgage Loan Schedule as having been
assigned to Loan Group I.
"Loan Group II": The group of Mortgage Loans identified in the
Mortgage Loan Schedule as having been
assigned to Loan Group II.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to
which the original Mortgage Note has been
permanently lost, misplaced or
destroyed and has not been replaced, an
affidavit from the Originator certifying
that the original Mortgage Note has been
lost, misplaced or destroyed (together
with a copy of the related Mortgage Note)
and indemnifying the Trust against any
loss, cost or liability resulting from the
failure to deliver the original
Mortgage Note in the form of Exhibit H
hereto.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting
Rights.
"Marker Rate": With respect to the Class C Interest and any
Distribution Date, a per annum rate equal
to two (2) times the weighted average
of the Uncertificated REMIC 2 Pass-Through
Rates for REMIC 2 Regular Interest
LTA1, REMIC 2 Regular Interest LTA2, REMIC
2 Regular Interest LTA3, REMIC 2
Regular Interest LTA4, REMIC 2 Regular
Interest LTM1, REMIC 2 Regular Interest
LTM2, REMIC 2 Regular Interest LTM3, REMIC
2 Regular Interest LTM4, REMIC 2
Regular Interest LTM5, REMIC 2 Regular
Interest LTM6, REMIC 2 Regular Interest
LTM7, REMIC 2 Regular Interest LTM8, REMIC
2 Regular Interest LTM9, REMIC 2
Regular Interest LTM10, REMIC 2 Regular
Interest LTM11, REMIC 2 Regular Interest
LTB1, REMIC 2 Regular Interest LTB2 and
REMIC 2 Regular Interest LTZZ, with the
rate on each such REMIC 2 Regular Interest
(other than REMIC 2 Regular Interest
LTZZ) subject to a cap equal to the lesser
of (i) LIBOR plus the Certificate
Margin for the Corresponding Certificate
and (ii) the related Net WAC Rate for
the purpose of this calculation; and with
the rate on REMIC 2 Regular Interest
LTZZ subject to a cap of zero for the
purpose of this calculation; provided,
however, that for this purpose,
calculations of the Uncertificated REMIC 2
Pass-Through Rate and the related caps with
respect to each such REMIC 2 Regular
Interest (other than REMIC 2 Regular
Interest LTZZ) shall be multiplied by a
fraction, the numerator of which is the
actual number of days elapsed in the
related Accrual Period and the denominator
of which is 30.
"Maximum Cap Rate": For any Distribution Date, a per annum
rate equal to the product of (x) the
weighted average of the Adjusted Net
Maximum Mortgage Rates of the Mortgage
Loans, weighted on the basis of the
outstanding Stated Principal Balances of
the Mortgage Loans as of the first day
of the month preceding the month of such
Distribution Date and (y) a fraction,
the numerator of which is 30 and the
denominator of which is the actual number
of days elapsed in the related Accrual
Period.
"Maximum Uncertificated Accrued Interest Deferral Amount":
With respect to any Distribution Date, the
excess of (a) accrued interest at the
Uncertificated REMIC 2 Pass-Through Rate
applicable to REMIC 2 Regular Interest
LTZZ for such Distribution Date on a
balance equal to the Uncertificated
Principal Balance of REMIC 2 Regular
Interest LTZZ minus the REMIC 2
Overcollateralization Amount, in each case
for such Distribution Date, over (b)
the sum of the Uncertificated Accrued
Interest on REMIC 2 Regular Interest LTA1,
REMIC 2 Regular Interest LTA2, REMIC 2
Regular Interest LTA3, REMIC 2 Regular
Interest LTA4, REMIC 2 Regular Interest
LTM1, REMIC 2 Regular Interest LTM2,
REMIC 2 Regular Interest LTM3, REMIC 2
Regular Interest LTM4, REMIC 2 Regular
Interest LTM5, REMIC 2 Regular Interest
LTM6, REMIC 2 Regular Interest LTM7,
REMIC 2 Regular Interest LTM8, REMIC 2
Regular Interest LTM9, REMIC 2 Regular
Interest LTM10, REMIC 2 Regular Interest
LTM11, REMIC 2 Regular Interest LTB1
and REMIC 2 Regular Interest LTB2 with the
rate on each such REMIC 2 Regular
Interest subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate
Margin for the Corresponding Certificate
and (ii) the related Net WAC Rate for
the purpose of this calculation; provided,
however, that for this purpose,
calculations of the Uncertificated REMIC 2
Pass-Through Rate and the related
caps with respect to each such REMIC 2
Regular Interest shall be multiplied by a
fraction, the numerator of which is the
actual number of days elapsed in the
related Accrual Period and the denominator
of which is 30.
"Maximum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in
the related Mortgage Note as the
maximum Mortgage Rate thereunder.
"MERS": Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under
the laws of the State of Delaware, or
any successor thereto.
"MERS(R) System": The system of recording transfers of
Mortgages electronically maintained by
MERS.
"Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate, Class M-3 Certificate, Class
M-4 Certificate, Class M-5
Certificate, Class M-6 Certificate, Class
M-7 Certificate, Class M-8
Certificate, Class M-9 Certificate, Class
M-10 Certificate or Class M-11
Certificate.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R)
System.
"Minimum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in
the related Mortgage Note as the
minimum Mortgage Rate thereunder.
"MOM Loan": MERS acting as the mortgagee of such Mortgage
Loan, solely as nominee for the originator
of such Mortgage Loan and its
successors and assigns, at the origination
thereof.
"Monthly Interest Distributable Amount": With respect to the
Class A Certificates, the Mezzanine
Certificates, the Class B Certificates and
the Class C Certificates and any
Distribution Date, the amount of interest
accrued during the related Accrual Period
at the related Pass-Through Rate on
the Certificate Principal Balance (or at
the related Pass-Through Rate in the
case of the Class C Certificates) of such
Class immediately prior to such
Distribution Date, in each case, reduced by
any Net Prepayment Interest
Shortfalls and Relief Act Interest
Shortfalls allocated to such Certificate as
provided in Section 1.03.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and
interest on such Mortgage Loan which
is payable by the related Mortgagor from
time to time under the related Mortgage
Note, determined: (a) after giving effect
to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such
Mortgage Loan and (ii) any reduction
in the amount of interest collectible from
the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to
any extension granted or agreed to by
the Servicer pursuant to Section 3.07; and
(c) on the assumption that all other
amounts, if any, due under such Mortgage
Loan are paid when due.
"Moody's": Moody's Investors Service, Inc., or its successor
in interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on, or
first or second priority security
interest in, a Mortgaged Property securing
a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan
and any additional documents required
to be added to the Mortgage File pursuant
to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee pursuant to Section 2.01 or
Section 2.03(d) as from time to time
held as a part of the Trust Fund, the
Mortgage Loans so held being identified in
the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement among the
Originator, the Seller and the Depositor,
regarding the transfer of the Mortgage
Loans by the Seller to or at the direction
of the Depositor, substantially in
the form attached hereto as Exhibit C.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC 1 on such date,
separately identifying the Group I
Mortgage Loans and the Group II Mortgage
Loans, attached hereto as Exhibit D, as
supplemented by each schedule of Subsequent
Mortgage Loans. The Mortgage Loan
Schedule shall be prepared by the Seller
and shall set forth the following
information with respect to each Mortgage
Loan, as applicable:
(1) the
Mortgage Loan identifying number;
(2)
[reserved];
(3) the state
and zip code of the Mortgaged Property;
(4) a code
indicating whether the Mortgaged Property was
represented by the borrower, at the time of origination, as
being
owner-occupied;
(5) the type
of Residential Dwelling constituting the
Mortgaged Property;
(6) the
original months to maturity;
(7) the stated
remaining months to maturity from the
Cut-off Date (or Subsequent Cut-off Date, with respect to a
Subsequent
Mortgage Loan) based on the original amortization schedule;
(8) the
Loan-to-Value Ratio at origination;
(9) the
Mortgage Rate in effect immediately following the
Cut-off Date (or Subsequent Cut-off Date, with respect to a
Subsequent
Mortgage Loan);
(10)
the date on which the first Monthly Payment was due
on the Mortgage Loan;
(11)
the stated maturity date;
(12)
the amount of the Monthly Payment at origination;
(13)
the amount of the Monthly Payment due on the first
Due Date after the Cut- off Date (or Subsequent Cut-off Date,
with
respect to a Subsequent Mortgage Loan);
(14)
the last Due Date on which a Monthly Payment was
actually applied to the unpaid Stated Principal Balance;
(15)
the original principal amount of the Mortgage Loan;
(16)
the Stated Principal
Balance of the Mortgage Loan as
of the Close of Business on the Cut-off Date (or Subsequent
Cut-off
Date, with respect to a Subsequent Mortgage Loan);
(17)
a code indicating the purpose of the Mortgage Loan
(i.e., purchase financing, rate/term refinancing, cash-out
refinancing);
(18)
the Mortgage Rate at origination;
(19)
a code indicating the documentation program (i.e.,
full documentation, limited income verification, no income
verification, alternative income verification);
(20)
the risk grade;
(21)
the Value of the Mortgaged Property;
(22)
the sale price of the Mortgaged Property, if
applicable;
(23)
the actual unpaid Stated Principal Balance of the
Mortgage Loan as of the Cut-off Date (or Subsequent Cut-off Date,
with
respect to a Subsequent Mortgage Loan);
(24)
the type and term of the related Prepayment Charge;
(25)
with respect to any Adjustable-Rate Mortgage Loan,
the rounding code, the minimum Mortgage Rate, the maximum
Mortgage
Rate, the Gross
Margin, the next Adjustment Date and the Periodic Rate
Cap; and
(26)
the program code.
The Mortgage Loan Schedule shall set forth the following
information, with respect to the Mortgage
Loans in the aggregate and for each
Loan Group as of the Cut-off Date (or
Subsequent Cut-off Date, with respect to a
Subsequent Mortgage Loan): (1) the number
of Mortgage Loans (separately
identifying the number of Group I Mortgage
Loans and Group II Mortgage Loans);
(2) the current Stated Principal Balance of
the Mortgage Loans; (3) the weighted
average Mortgage Rate of the Mortgage Loans
and (4) the weighted average
remaining term to maturity of the Mortgage
Loans. The Mortgage Loan Schedule
shall be amended from time to time by the
Servicer in accordance with the
provisions of this Agreement. With respect
to any Qualified Substitute Mortgage
Loan, Cut-off Date shall refer to the
related Cut-off Date for such Mortgage
Loan, determined in accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of indebtedness evidencing the indebtedness
of a Mortgagor under a Mortgage
Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibit D from time to time, and any REO
Properties acquired in respect thereof
and as supplemented by any Subsequent
Mortgage Loans identified on each schedule
of Subsequent Mortgage Loans attached to a
Subsequent Transfer Instrument.
"Mortgage Rate": With respect to each Fixed-Rate Mortgage
Loan, the rate set forth in the related
Mortgage Note. With respect to each
Adjustable-Rate Mortgage Loan, the annual
rate at which interest accrues on such
Mortgage Loan from time to time in
accordance with the provisions of the related
Mortgage Note, which rate (A) as of any
date of determination until the first
Adjustment Date following the Cut-off Date
(or Subsequent Cut-off Date, with
respect to a Subsequent Mortgage Loan)
shall be the rate set forth in the
Mortgage Loan Schedule as the Mortgage Rate
in effect immediately following the
Cut-off Date (or Subsequent Cut-off Date,
with respect to a Subsequent Mortgage
Loan) and (B) as of any date of
determination thereafter shall be the rate as
adjusted on the most recent Adjustment
Date, to equal the sum, rounded to the
next highest or nearest 0.125% (as provided
in the Mortgage Note), of the Index,
determined as set forth in the related
Mortgage Note, plus the related Gross
Margin subject to the limitations set forth
in the related Mortgage Note. With
respect to each Mortgage Loan that becomes
an REO Property, as of any date of
determination, the annual rate determined
in accordance with the immediately
preceding sentence as of the date such
Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property,
consisting of a fee simple estate in
a parcel of real property improved by a
Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note. "Net Liquidation
Proceeds": With respect to any Liquidated
Mortgage Loan or any other disposition
of related Mortgaged Property (including
REO Property), the related Liquidation
Proceeds and Insurance Proceeds net of
Advances, Servicing Advances, Servicing
Fees and any other accrued and unpaid
servicing fees or ancillary income
received and retained in connection with
the liquidation of such Mortgage Loan
or Mortgaged Property.
"Net Monthly Excess Cashflow": With respect to each
Distribution Date, the sum of (a) any
Overcollateralization Release Amount for
such Distribution Date and (b) the excess
of (x) Available Funds for such
Distribution Date over (y) the sum for such
Distribution Date of (A) the Monthly
Interest Distributable Amounts for the
Class A Certificates, the Mezzanine
Certificates and the Class B Certificates,
(B) the Unpaid Interest Shortfall
Amounts for the Class A Certificates and
(C) the Principal Remittance Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property), as of any date of
determination, a per annum rate of
interest equal to the then applicable
Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.
"Net Prepayment Interest Shortfall": With respect to any
Distribution Date, the excess, if any, of
any Prepayment Interest Shortfalls for
such date over the related Compensating
Interest.
"Net WAC Rate": For any Distribution Date, a per annum rate
equal to the product of (a) a fraction,
expressed as a percentage, the numerator
of which is the amount of interest which
accrued on the Mortgage Loans in the
prior calendar month for such Distribution
Date minus the the aggregate
Servicing Fees accrued for the Mortgage
Loans and the denominator of which is
the sum of (i) the aggregate Principal
Balance of the Mortgage Loans as of the
first day of the month preceding the month
of such Distribution Date (or as of
the Cut-off Date with respect to the first
Distribution Date) and (ii) any
amounts on deposit in the Pre-Funding
Accounts and (b) a fraction, the numerator
of which is 360 and the denominator of
which is the actual number of days in the
related Accrual Period. For federal income
tax purposes, the economic equivalent
of such rate shall be expressed as the
weighted average of the Uncertificated
REMIC 2 Pass-Through Rates on the REMIC 2
Regular Interests, weighted on the
basis of the Uncertificated Principal
Balances of such REMIC 2 Regular
Interests.
"Net WAC Rate Carryover Amount": With respect to the Class A
Certificates, the Mezzanine Certificates
and the Class B Certificates and any
Distribution Date, the sum of (A) the
positive excess of (i) the amount of
interest accrued on such Class of
Certificates on such Distribution Date
calculated at the related Formula Rate,
over (ii) the amount of interest accrued
on such Class of Certificates at the Net
WAC Rate for such Distribution Date and
(B) the Net WAC Rate Carryover Amount for
the previous Distribution Date not
previously paid, together with interest
thereon at a rate equal to the related
Formula Rate for such Class of Certificates
for such Distribution Date and for
such Accrual Period.
"Net WAC Rate Carryover Reserve Account": The account
established and maintained pursuant to
Section 4.06.
"New Lease": Any lease of REO Property entered into on behalf
of the Trust, including any lease renewed
or extended on behalf of the Trust if
the Trust has the right to renegotiate the
terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in
respect of a Mortgage Loan or REO
Property that, in the good faith business
judgment of the Servicer, will not be
ultimately recoverable from Late
Collections, Insurance Proceeds, Liquidation
Proceeds or condemnation proceeds of such
Mortgage Loan or REO Property as
provided herein.
"Notional Amount": Immediately prior to any Distribution Date
with respect to the Class C Interest, the
aggregate Uncertificated Principal
Balance of the REMIC 2 Regular Interests
(other than REMIC 2 Regular Interest
LTP).
"Officers'
Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the
Board, the President or a vice president
(however denominated), and by the
Treasurer, the Secretary, or one of the
assistant treasurers or assistant
secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be a salaried counsel
for the Depositor or the Servicer,
acceptable to the Trustee, except that any
opinion of counsel relating to (a)
the qualification of any REMIC as a REMIC
or (b) compliance with the REMIC
Provisions must be an opinion of
Independent counsel.
"Optional Termination Date": The first Distribution Date on
which the Terminator may opt to terminate
the Trust Fund pursuant to Section
10.01.
"Original Class Certificate Principal Balance": With respect
to the Regular Certificates, the Class C
Interest and the Class P Interest, the
corresponding amounts set forth opposite
such Class above in the Preliminary
Statement.
"Original Group I Pre-Funded Amount": The amount deposited by
the Depositor in the Group I Pre-Funding
Account on the Closing Date, which
amount is $154,040,673.02.
"Original Group II Pre-Funded Amount": The amount deposited by
the Depositor in the Group II Pre-Funding
Account on the Closing Date, which
amount is $112,550,371.71.
"Original Notional Amount": With respect to the Class C
Interest, $650,000,000.00.
"Original Pre-Funded Amounts": The Original Group I Pre-Funded
Amount and the Original Group II Pre-Funded
Amount.
"Originator": Meritage Mortgage Corporation, an Oregon
corporation, or its successor in
interest.
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by
which the Overcollateralization Target
Amount exceeds the Overcollateralized
Amount on such Distribution Date (assuming
that 100% of the Principal Remittance
Amount is applied as a principal
distribution on such Distribution
Date).
"Overcollateralization Floor": With respect to the Group I
Certificates, $1,877,903. With respect to
the Group II Certificates, $1,372,097.
With respect to the Mezzanine Certificates
and the Class B Certificates,
$3,250,000.
"Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the
Principal Remittance Amount for such
Distribution Date and (y) the Excess
Overcollateralized Amount.
"Overcollateralization Target Amount" means with respect to
any Distribution Date, 0.50% of the sum of
the aggregate Principal Balance of
the Mortgage Loans as of the Cut-off Date
and the Original Pre-Funded Amounts
(the "Overcollateralization Floor").
Notwithstanding the foregoing, on and after
any Distribution Date following the
reduction of the aggregate Certificate
Principal Balance of the Class A
Certificates, Mezzanine Certificates and Class
B Certificates to zero, the
Overcollateralization Target Amount shall be zero.
"Overcollateralized Amount": For any Distribution Date, the
amount equal to (i) the sum of (a) the
aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the
related Due Period (after giving effect
to scheduled payments of principal due
during the related Due Period, to the
extent received or advanced, and
unscheduled collections of principal received
during the related Prepayment Period) and
(b) any funds on deposit in the
Pre-Funding Accounts as of the related
Determination Date (exclusive of any
investment income therein) minus (ii) the
sum of the aggregate Certificate
Principal Balance of the Class A
Certificates, the Mezzanine Certificates, the
Class B Certificates and the Class P
Certificates as of such Distribution Date
after giving effect to distributions to be
made on such Distribution Date.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate,
including any interest in such
Certificate as the Holder thereof and any
other interest therein, whether direct
or indirect, legal or beneficial, as owner
or as pledgee.
"Pass-Through Rate": With respect to the Class A Certificates,
the Mezzanine Certificates and the Class B
Certificates and any Distribution
Date, the lesser of (x) the related Formula
Rate for such Distribution Date and
(y) the related Net WAC Rate for such
Distribution Date. With respect to the
Class C Interest and any Distribution Date,
(i) a per annum rate equal to the
percentage equivalent of a fraction, the
numerator of which is (x) the interest
on the Uncertificated Principal Balance of
each REMIC 2 Regular Interest listed
in clause (y) below at a rate equal to the
related Uncertificated REMIC 2
Pass-Through Rate minus the Marker Rate and
the denominator of which is (y) the
aggregate Uncertificated Principal Balance
of REMIC 2 Regular Interests LTAA,
LTA1, LTA2, LTA3, LTA4, LTM1, LTM2, LTM3,
LTM4, LTM5, LTM6, LTM7, LTM8, LTM9,
LTM10, LTM11, LTB1, LTB2 and LTZZ and (ii)
100% of the interest on REMIC 2
Regular Interest LTP, expressed as a per
annum rate.
With respect to the Class C Certificates, 100% of the interest
distributable to the Class C Interest,
expressed as a per annum rate.
"Paying Agent": Any paying agent appointed pursuant to Section
5.05.
"Percentage Interest": With respect to any Certificate (other
than a Residual Certificate), a fraction,
expressed as a percentage, the
numerator of which is the Initial
Certificate Principal Balance represented by
such Certificate and the denominator of
which is the Original Class Certificate
Principal Balance of the related Class.
With respect to a Residual Certificate,
the portion of the Class evidenced thereby,
expressed as a percentage, as stated
on the face of such Certificate; provided,
however, that the sum of all such
percentages for each such Class totals
100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage Loan and any Adjustment Date
therefor, the fixed percentage set forth
in the related Mortgage Note, which is the
maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or
decrease (without regard to the
Maximum Mortgage Rate or the Minimum
Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately
prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a
purchase price of not greater than par,
regardless of whether issued or managed by
the Depositor, the Servicer, the
Trustee or any of their respective
Affiliates or for which an Affiliate of the
Trustee, serves as an advisor:
(i) direct
obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by,
the
United States or any agency or instrumentality thereof, provided
such
obligations are backed by the full faith and credit of the
United
States;
(ii)
(A) demand and time deposits in, certificates of
deposit of, bankers' acceptances issued by or federal funds sold by
any
depository institution or trust company (including the Trustee or
its
agent acting in their respective commercial capacities)
incorporated
under the laws of the United States of America or any state thereof
and
subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or
contractual
commitment providing for such investment, such depository
institution
or trust company (or, if the only Rating Agency is S&P, in the
case of
the principal depository institution in a depository
institution
holding company, debt obligations of the depository institution
holding
company) or its ultimate parent has a short-term uninsured debt
rating
in one of the two highest available ratings of Moody's and the
highest
available rating category of Fitch and S&P and provided that
each such
investment has an original maturity of no more than 365 days;
and
provided further that, if the only Rating Agency is S&P and if
the
depository or trust company is a principal subsidiary of a bank
holding
company and the debt obligations of such subsidiary are not
separately
rated, the applicable rating shall be that of the bank holding
company;
and, provided further that, if the original maturity of such
short-
term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the
short-term
rating of such institution shall be A-1+ in the case of S&P if
S&P is
the Rating Agency; and (B) any other demand or time deposit or
deposit
which is fully insured by the FDIC;
(iii)
repurchase obligations with a term not to exceed 30
days with respect to any security described in clause (i) above
and
entered into with a depository institution or trust company (acting
as
principal) rated F-1+ or higher by Fitch, P-1 by Moody's and rated
A-1+
or higher by S&P, provided, however, that collateral
transferred
pursuant to such repurchase obligation must be of the type
described in
clause (i) above and must (A) be valued daily at current market
prices
plus accrued interest, (B) pursuant to such valuation, be equal, at
all
times, to 105% of the cash transferred by the Trustee in exchange
for
such collateral and (C) be delivered to the Trustee or, if the
Trustee
is supplying the collateral, an agent for the Trustee, in such a
manner
as to accomplish perfection of a security interest in the
collateral by
possession of certificated securities;
(iv)
securities bearing interest or sold at a discount
that are issued by any corporation incorporated under the laws of
the
United States of America or any State thereof and that are rated by
a
Rating Agency in its highest long-term unsecured rating category at
the
time of such investment or contractual commitment providing for
such
investment;
(v) commercial
paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand
or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by a Rating Agency in its
highest
short-term unsecured debt rating available at the time of such
investment;
(vi)
units of money market funds, including those money
market funds managed or advised by the Trustee or its Affiliates,
that
have been rated "AAA" by Fitch (if rated by Fitch), "Aaa" by
Moody's
and "AAA" by S&P; and
(vii) if
previously confirmed in writing to the Trustee,
any other demand, money market or time deposit, or any other
obligation, security or investment, as may be acceptable to the
Rating
Agencies in writing as a permitted investment of funds backing
securities having ratings equivalent to its highest initial rating
of
the Class A Certificates;
provided, that no instrument described
hereunder shall evidence either the right
to receive (a) only interest with respect
to the obligations underlying such
instrument or (b) both principal and
interest payments derived from obligations
underlying such instrument and the interest
and principal payments with respect
to such instrument provide a yield to
maturity at par greater than 120% of the
yield to maturity at par of the underlying
obligations.
"Permitted Transferee": Any transferee of a Residual
Certificate other than a Disqualified
Organization or a non-U.S. Person.
"Person": Any individual, corporation, limited liability
company, partnership, joint venture,
association, joint stock company, trust,
unincorporated organization or government
or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including
individual retirement accounts and annuities,
Keogh plans and bank collective investment
funds and insurance company general
or separate accounts in which such plans,
accounts or arrangements are invested,
that are subject to ERISA or Section 4975
of the Code.
"Pool Balance": As of any date of determination, the aggregate
Stated Principal Balance of the Mortgage
Loans in all of the Loan Groups as of
such date.
"Pre-Funding Accounts": The Group I Pre-Funding Account and
the Group II Pre-Funding Account.
"Prepayment Assumption": As defined in the Prospectus
Supplement.
"Prepayment Charge": With respect to any Mortgage Loan, the
charges or premiums, if any, due in
connection with a full or partial Principal
Prepayment of such Mortgage Loan in
accordance with the terms thereof (other
than any Servicer Prepayment Charge Payment
Amount).
"Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans
included in the Trust Fund on such
date, attached hereto as Schedule I
(including the Prepayment Charge Summary
attached thereto). The Prepayment Charge
Schedule shall set forth the following
information with respect to each Prepayment
Charge:
(i) the
Mortgage Loan identifying number;
(ii)
a code indicating the type of Prepayment Charge;
(iii) the
state of origination of the related Mortgage
Loan;
(iv)
the date on which the first monthly payment was due
on the related Mortgage Loan;
(v) the term
of the related Prepayment Charge; and
(vi)
the Stated Principal Balance of the related Mortgage
Loan as of the Cut-off Date (or Subsequent Cut-off Date, with
respect
to a Subsequent Mortgage Loan).
The Prepayment Charge Schedule shall be amended from time to
time by the Servicer in accordance with the
provisions of this Agreement and a
copy of such amended Prepayment Charge
Schedule shall be furnished by the
Servicer.
"Prepayment Interest Excess": With respect to any Distribution
Date, for each Mortgage Loan that was the
subject of a Principal Prepayment in
full during the portion of the related
Prepayment Period occurring between the
first day and the 15th day of the calendar
month in which such Distribution Date
occurs, an amount equal to interest (to the
extent received) at the applicable
Net Mortgage Rate on the amount of such
Principal Prepayment for the number of
days commencing on the first day of the
calendar month in which such
Distribution Date occurs and ending on the
date on which such prepayment is so
applied.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan
that was the subject of a Principal
Prepayment in full during the portion of
the related Prepayment Period occurring
from the first day of the related
Prepayment Period through the last day of the
calendar month preceding the month in which
such Distribution Date occurs, an
amount equal to interest on the amount of
such Principal Prepayment for the
number of days commencing on the date such
Principal Prepayment was applied and
ending on the last day of the calendar
month preceding the month in which such
Distribution Date occurs.
"Prepayment Period": With respect to any Distribution Date and
Principal Prepayments, the period
commencing on the 16th day of the calendar
month preceding the month in which the
related Distribution Date occurs and
ending on the 15th day of the calendar
month in which such Distribution Date
occurs.
"Principal Balance": As to any Mortgage Loan other than a
Liquidated Mortgage Loan, and any day, the
related Cut-off Date Principal
Balance, minus all collections credited
against the Cut-off Date Principal
Balance of any such Mortgage Loan. For
purposes of this definition, a Liquidated
Mortgage Loan shall be deemed to have a
Principal Balance equal to the Principal
Balance of the related Mortgage Loan as of
the final recovery of related
Liquidation Proceeds and a Principal
Balance of zero thereafter. As to any REO
Property and any day, the Principal Balance
of the related Mortgage Loan
immediately prior to such Mortgage Loan
becoming REO Property minus any REO
Principal Amortization received with
respect thereto on or prior to such day.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is
received in advance of its scheduled Due
Date and which is not accompanied by an
amount of interest representing the full
amount of scheduled interest due with
respect to such principal on any Due Date
in any month or months subsequent to the
month of prepayment.
"Principal Remittance Amount": With respect to any
Distribution Date, the sum of (x) the Group
I Principal Remittance Amount and
(y) the Group II Principal Remittance
Amount.
"Prospectus Supplement": That certain Prospectus Supplement
dated January 26, 2005 relating to the
public offering of the Class A
Certificates and the Mezzanine
Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as
contemplated by Section 2.03, Section
3.16(c) or Section 10.01, and as confirmed
by an Officers' Certificate from the
party purchasing the Mortgage Loan to the
Trustee, an amount equal to the sum of
(i) 100% of the Stated Principal Balance
thereof as of the date of purchase (or
such other price as provided in Section
10.01), (ii) in the case of (x) a
Mortgage Loan, accrued interest on such
Stated Principal Balance at the
applicable Mortgage Rate in effect from
time to time from the Due Date as to
which interest was last covered by a
payment by the Mortgagor or an advance by
the Servicer, which payment or advance had
as of the date of purchase been
distributed pursuant to Section 4.01,
through the end of the calendar month in
which the purchase is to be effected, and
(y) an REO Property, the sum of (1)
accrued interest on such Stated Principal
Balance at the applicable Mortgage
Rate in effect from time to time from the
Due Date as to which interest was last
covered by a payment by the Mortgagor or an
advance by the Servicer through the
end of the calendar month immediately
preceding the calendar month in which such
REO Property was acquired, plus (2) REO
Imputed Interest for such REO Property
for each calendar month commencing with the
calendar month in which such REO
Property was acquired and ending with the
calendar month in which such purchase
is to be effected, net of the total of all
net rental income, Insurance
Proceeds, Liquidation Proceeds and Advances
that as of the date of purchase had
been distributed as or to cover REO Imputed
Interest pursuant to Section 4.04,
(iii) any unreimbursed Servicing Advances
and Advances and any unpaid Servicing
Fees allocable to such Mortgage Loan or REO
Property, (iv) any amounts
previously withdrawn from the Collection
Account in respect of such Mortgage
Loan or REO Property pursuant to Section
3.23 and (v) in the case of a Mortgage
Loan required to be purchased pursuant to
Section 2.03, expenses reasonably
incurred or to be incurred by the Servicer
or the Trustee in respect of the
breach or defect giving rise to the
purchase obligation, including any costs and
damages incurred by the Trust Fund in
connection with any violation by such loan
of any predatory or abusive lending
law.
"Qualified Insurer": Any insurance company acceptable to
Fannie Mae.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan
pursuant to the terms of this Agreement
or the Mortgage Loan Purchase Agreement
which must, on the date of such
substitution, (i) have an outstanding
Stated Principal Balance (or in the case
of a substitution of more than one mortgage
loan for a Deleted Mortgage Loan, an
aggregate Stated Principal Balance), after
application of all scheduled payments
of principal and interest due during or
prior to the month of substitution, not
in excess of, and not more than 5% less
than, the outstanding Stated Principal
Balance of the Deleted Mortgage Loan as of
the Due Date in the calendar month
during which the substitution occurs, (ii)
have a Mortgage Rate not less than
(and not more than one percentage point in
excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) if the
Qualified Substitute Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have a
Maximum Mortgage Rate not less than the
Maximum Mortgage Rate on the Deleted
Mortgage Loan, (iv) if the Qualified
Substitute Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have a Minimum
Mortgage Rate not less than the Minimum
Mortgage Rate of the Deleted Mortgage
Loan, (v) if the Qualified Substitute
Mortgage Loan is an Adjustable-Rate
Mortgage Loan, have a Gross Margin equal to
or greater than the Gross Margin of
the Deleted Mortgage Loan, (vi) if the
Qualified Substitute Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have a next
Adjustment Date not more than two
months later than the next Adjustment Date
on the Deleted Mortgage Loan, (vii)
[reserved], (viii) have a remaining term to
maturity not greater than (and not
more than one year less than) that of the
Deleted Mortgage Loan, (ix) be current
as of the date of substitution, (x) have a
Loan-to-Value Ratio as of the date of
substitution equal to or lower than the
Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (xi) have a
risk grading determined by the
Originator at least equal to the risk
grading assigned on the Deleted Mortgage
Loan, (xii) have been underwritten or
reunderwritten by the Originator in
accordance with the same underwriting
criteria and guidelines as the Deleted
Mortgage Loan, (xiii) [reserved]; and (xiv)
conform to each representation and
warranty set forth in Section 3.01 of the
Mortgage Loan Purchase Agreement
applicable to the Deleted Mortgage Loan. In
the event that one or more mortgage
loans are substituted for one or more
Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be
determined on the basis of aggregate
Stated Principal Balances, the Mortgage
Rates described in clauses (ii) through
(vi) hereof shall be satisfied for each
such mortgage loan, the risk gradings
described in clause (x) hereof shall be
satisfied as to each such mortgage loan,
the terms described in clause (viii) hereof
shall be determined on the basis of
weighted average remaining term to maturity
(provided that no such mortgage loan
may have a remaining term to maturity
longer than the Deleted Mortgage Loan),
the Loan-to-Value Ratios described in
clause (x) hereof shall be satisfied as to
each such mortgage loan and, except to the
extent otherwise provided in this
sentence, the representations and
warranties described in clause (xiv) hereof
must be satisfied as to each Qualified
Substitute Mortgage Loan or in the
aggregate, as the case may be.
"Rating Agency or Rating Agencies": Moody's, S&P, Fitch and
DBRS or their successors. If such agencies
or their successors are no longer in
existence, "Rating Agencies" shall be such
nationally recognized statistical
rating agencies, or other comparable
Persons, designated by the Depositor,
notice of which designation shall be given
to the Trustee and Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan,
the amount of loss realized equal to the
portion of the Stated Principal Balance
remaining unpaid after application of all
Net Liquidation Proceeds in respect of
such Mortgage Loan. If the Servicer
receives Subsequent Recoveries with respect
to any Mortgage Loan, the amount of the
Realized Loss with respect to that
Mortgage Loan will be reduced to the extent
such recoveries are applied to
principal distributions on any Distribution
Date.
"Record Date": With respect to (i) the Class A Certificates,
the Mezzanine Certificates and the Class B
Certificates, the Close of Business
on the Business Day immediately preceding
the related Distribution Date and (ii)
the Class C Certificates and the Residual
Certificates, the Close of Business on
the last Business Day of the calendar month
preceding the month in which the
related Distribution Date occurs; provided,
however, that following the date on
which Definitive Certificates for any of
the Class A Certificates, the Mezzanine
Certificates or the Class B Certificates
are available pursuant to Section 5.02,
the Record Date for such Certificates that
are Definitive Certificates shall be
the last Business Day of the calendar month
preceding the month in which the
related Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place
of business in London, England, (ii) not
controlling, under the control of or
under common control with the Originator or
the Servicer or any affiliate
thereof and (iii) which have been
designated as such by the Trustee after
consultation with the Depositor; provided,
however, that if fewer than two of
such banks provide a LIBOR rate, then any
leading banks selected by the Trustee
after consultation with the Depositor which
are engaged in transactions in
United States dollar deposits in the
international Eurocurrency market.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related
Mortgaged Property.
"Regular Certificate": Any of the Class A Certificates,
Mezzanine Certificates, Class B
Certificates, Class C Certificates or Class P
Certificates.
"Reimbursement Amount": As defined in Section 3.29.
"Relief Act": The Servicemembers Civil Relief Act, as amended,
or any similar state or local laws.
"Relief Act Interest Shortfall": With respect to any
Distribution Date, for any Mortgage Loan
with respect to which there has been a
reduction in the amount of interest
collectible thereon for the most recently
ended Due Period as a result of the
application of the Relief Act, the amount by
which (i) interest collectible on such
Mortgage Loan during such Due Period is
less than (ii) one month's interest on the
Stated Principal Balance of such
Mortgage Loan at the Mortgage Rate for such
Mortgage Loan before giving effect
to the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the
Code.
"REMIC 1": The segregated pool of assets subject hereto,
constituting the primary trust created
hereby and to be administered hereunder,
with respect to which a REMIC election is
to be made consisting of: (i) such
Mortgage Loans as from time to time are
subject to this Agreement, together with
the Mortgage Files relating thereto, and
together with all collections thereon
and proceeds thereof, (ii) any REO
Property, together with all collections
thereon and proceeds thereof, (iii) the
Trustee's rights with respect to the
Mortgage Loans under all insurance policies
required to be maintained pursuant
to this Agreement and any proceeds thereof,
(iv) the Depositor's rights under
the Mortgage Loan Purchase Agreement
(including any security interest created
thereby) and (v) the Collection Account,
the Distribution Account (subject to
the last sentence of this definition) and
any REO Account and such assets that
are deposited therein from time to time and
any investments thereof, together
with any and all income, proceeds and
payments with respect thereto.
Notwithstanding the foregoing, however, a
REMIC election will not be made with
respect to the Pre-Funding Accounts, the
Interest Coverage Accounts, any
Subsequent Mortgage Loan Interest, the Net
WAC Rate Carryover Reserve Account,
the Cap Contract or any Servicer Prepayment
Charge Payment Amounts.
"REMIC 1 Regular Interest": One of the separate
non-certificated beneficial ownership
interests in REMIC 1 issued hereunder and
designated as a Regular Interest in REMIC
1. Each REMIC 1 Regular Interest shall
accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto. The following is a list
of each of the REMIC 1 Regular
Interests: REMIC 1 Regular Interest LT1,
REMIC 1 Regular Interest LT1PF, REMIC 1
Regular Interest LT2, REMIC 1 Regular
Interest LT2PF and REMIC 1 Regular
Interest LTP.
"REMIC 2": The segregated pool of assets consisting of all of
the REMIC 1 Regular Interests and conveyed
in trust to the Trustee, for the
benefit of REMIC 3, as holder of the REMIC
2 Regular Interests, and the Class R
Certificateholders, as Holders of the Class
R-2 Interest, pursuant to Article II
hereunder, and all amounts deposited
therein, with respect to which a separate
REMIC election is to be made.
"REMIC 2 Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a)
the product of (i) the aggregate
Stated Principal Balance of the Mortgage
Loans and related REO Properties then
outstanding and (ii) the Uncertificated
REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LTAA minus the Marker
Rate, divided by (b) 12.
"REMIC 2 Overcollateralization Target Amount": 1.00% of the
Overcollateralization Target Amount.
"REMIC 2 Overcollateralization Amount": With respect to any
date of determination, (i) 1.00% of the
aggregate Uncertificated Principal
Balance of the REMIC 2 Regular Interests
minus (ii) the aggregate Uncertificated
Principal Balance of REMIC 2 Regular
Interest LTA1, REMIC 2 Regular Interest
LTA2, REMIC 2 Regular Interest LTA3, REMIC
2 Regular Interest LTA4, REMIC 2
Regular Interest LTM1, REMIC 2 Regular
Interest LTM2, REMIC 2 Regular Interest
LTM3, REMIC 2 Regular Interest LTM4, REMIC
2 Regular Interest LTM5, REMIC 2
Regular Interest LTM6, REMIC 2 Regular
Interest LTM7, REMIC 2 Regular Interest
LTM8, REMIC 2 Regular Interest LTM9, REMIC
2 Regular Interest LTM10, REMIC 2
Regular Interest LTM11, REMIC 2 Regular
Interest LTB1, REMIC 2 Regular Interest
LTB2 and REMIC 2 Regular Interest LTP, in
each case as of such date of
determination.
"REMIC 2 Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to
the product of (i) the aggregate
Stated Principal Balance of the Mortgage
Loans and related REO Properties then
outstanding and the amounts on deposit in
the Group I Pre-Funding Account and
the Group II Pre-Funding Account and (ii) 1
minus a fraction, the numerator of
which is the aggregate Uncertificated
Principal Balance of REMIC 2 Regular
Interest LTA1, REMIC 2 Regular Interest
LTA2, REMIC 2 Regular Interest LTA3,
REMIC 2 Regular Interest LTA4, REMIC 2
Regular Interest LTM1, REMIC 2 Regular
Interest LTM2, REMIC 2 Regular Interest
LTM3, REMIC 2 Regular Interest LTM4,
REMIC 2 Regular Interest LTM5, REMIC 2
Regular Interest LTM6, REMIC 2 Regular
Interest LTM7, REMIC 2 Regular Interest
LTM8, REMIC 2 Regular Interest LTM9,
REMIC 2 Regular Interest LTM10, REMIC 2
Regular Interest LTM11, REMIC 2 Regular
Interest LTB1 and REMIC 2 Regular Interest
LTB2 and the denominator of which is
the aggregate Uncertificated Principal
Balance of REMIC 2 Regular Interest LTA1,
REMIC 2 Regular Interest LTA2, REMIC 2
Regular Interest LTA3, REMIC 2 Regular
Interest LTA4, REMIC 2 Regular Interest
LTM1, REMIC 2 Regular Interest LTM2,
REMIC 2 Regular Interest LTM3, REMIC 2
Regular Interest LTM4, REMIC 2 Regular
Interest LTM5, REMIC 2 Regular Interest
LTM6, REMIC 2 Regular Interest LTM7,
REMIC 2 Regular Interest LTM8, REMIC 2
Regular Interest LTM9, REMIC 2 Regular
Interest LTM10, REMIC 2 Regular Interest
LTM11, REMIC 2 Regular Interest LTB1,
REMIC 2 Regular Interest LTB2 and REMIC 2
Regular Interest LTZZ.
"REMIC 2 Regular Interest": One of the separate
non-certificated beneficial ownership
interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC
2. Each REMIC 2 Regular Interest shall
accrue interest at the related
Uncertificated REMIC 2 Pass-Through Rate in
effect from time to time, and shall be
entitled to distributions of principal,
subject to the terms and conditions hereof,
in an aggregate amount equal to its
initial Uncertificated Principal Balance as
set forth in the Preliminary
Statement hereto. The following is a list
of each of the REMIC 2 Regular
Interests: REMIC 2 Regular Interest LTAA,
REMIC 2 Regular Interest LTA1, REMIC 2
Regular Interest LTA2, REMIC 2 Regular
Interest LTA3, REMIC 2 Regular Interest
LTA4, REMIC 2 Regular Interest LTA5, REMIC
2 Regular Interest LTM1, REMIC 2
Regular Interest LTM2, REMIC 2 Regular
Interest LTM3, Regular Interest LTM4,
REMIC 2 Regular Interest LTM5, REMIC 2
Regular Interest LTM6, REMIC 2 Regular
Interest LTM7, REMIC 2 Regular Interest
LTM8, REMIC 2 Regular Interest LTM9,
REMIC 2 Regular Interest LTM10, REMIC 2
Regular Interest LTM11, REMIC 2 Regular
Interest LTB1, REMIC 2 Regular Interest
LTB2, REMIC 2 Regular Interest LTZZ and
REMIC 2 Regular Interest LTP.
"REMIC 3": The segregated pool of assets consisting of all of
the REMIC 2 Regular Interests conveyed in
trust to the Trustee, for the benefit
of the Holders of the Regular Certificates
and the Class R Certificates (in
respect of the Class R-3 Interest),
pursuant to Article II hereunder, and all
amounts deposited therein, with respect to
which a separate REMIC election is to
be made.
"REMIC 4": The segregated pool of assets consisting of all of
the Class C Interest conveyed in trust to
the Trustee, for the benefit of the
Holders of the Regular Certificates and the
Class R-X Certificate (in respect of
the Class R-4 Interest), pursuant to
Article II hereunder, and all amounts
deposited therein, with respect to which a
separate REMIC election is to be
made.
"REMIC 5": The segregated pool of assets consisting of all of
the Class P Interest conveyed in trust to
the Trustee, for the benefit of the
Holders of the Regular Certificates and the
Class R-X Certificate (in respect of
the Class R-5 Interest), pursuant to
Article II hereunder, and all amounts
deposited therein, with respect to which a
separate REMIC election is to be
made.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment
conduits which appear at Section
860A through 860G of Subchapter M of
Chapter 1 of the Code, and related
provisions, and regulations and rulings
promulgated thereunder, as the foregoing
may be in effect from time to time.
"REMIC Regular Interests": The REMIC 1 Regular Interests, the
REMIC 2 Regular Interests, the Class C
Interest and the Class P Interest.
"Remittance Report": A report prepared by the Servicer and
delivered to the Trustee pursuant to
Section 4.04.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in
Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the
Servicer in respect of an REO Property
pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO
Property was at any time part of the Trust
Fund, one month's interest at the
applicable Net Mortgage Rate on the Stated
Principal Balance of such REO Property (or,
in the case of the first such
calendar month, of the related Mortgage
Loan if appropriate) as of the Close of
Business on the Distribution Date in such
calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the
excess, if any, of (a) the aggregate of
all amounts received in respect of such REO
Property during such calendar month,
whether in the form of rental income, sale
proceeds (including, without
limitation, that portion of the Termination
Price paid in connection with a
purchase of all of the Mortgage Loans and
REO Properties pursuant to Section
10.01 that is allocable to such REO
Property) or otherwise, net of any portion
of such amounts (i) payable pursuant to
Section 3.23 in respect of the proper
operation, management and maintenance of
such REO Property or (ii) payable or
reimbursable to the Servicer pursuant to
Section 3.23 for unpaid Servicing Fees
in respect of the related Mortgage Loan and
unreimbursed Servicing Advances and
Advances in respect of such REO Property or
the related Mortgage Loan, over (b)
the REO Imputed Interest in respect of such
REO Property for such calendar
month.
"REO Property": A Mortgaged Property acquired by the Servicer
on behalf of the Trust Fund through
foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.23.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E attached
hereto.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that
the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if
necessary to the nearest whole
multiple of 1/16 of 1%) of the one-month
United States dollar lending rates
which banks in The City of New York
selected by the Depositor are quoting on the
relevant Interest Determination Date to the
principal London offices of leading
banks in the London interbank market or
(ii) in the event that the Trustee can
determine no such arithmetic mean, in the
case of any Interest Determination
Date after the initial Interest
Determination Date, the lowest one-month United
States dollar lending rate which such New
York banks selected by the Depositor
are quoting on such Interest Determination
Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a
detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a
Fannie Mae eligible condominium project,
(iv) a manufactured home, or (v) a detached
one-family dwelling in a planned
unit development, none of which is a
co-operative or mobile home.
"Residual Certificate": Any Class R Certificates or Class R-X
Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section
860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any director, any vice president, any
assistant vice president, the Secretary,
any assistant secretary, the Treasurer, any
assistant treasurer or any other
officer of the Trustee customarily
performing functions similar to those
performed by any of the above designated
officers and, with respect to a
particular matter, to whom such matter is
referred because of such officer's
knowledge of and familiarity with the
particular subject.
"S&P": Standard & Poor's Ratings Services, a division of
The
McGraw-Hill Companies, Inc., or its
successor in interest.
"Seller": Greenwich Capital Financial Products, Inc., a
Delaware corporation, in its capacity as
Seller under the Mortgage Loan Purchase
Agreement.
"Senior Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Group
I Senior Principal Distribution
Amount and (ii) the Group II Senior
Principal Distribution Amount.
"Servicer": Saxon Mortgage Services Inc., a Texas corporation,
or any successor servicer appointed as
herein provided, in its capacity as
Servicer hereunder.
"Servicer Certification": As defined in Section 3.22(b)
hereof.
"Servicer Event of Termination": One or more of the events
described in Section 7.01.
"Servicer Prepayment Charge Payment Amount": The amounts
payable by the Servicer in respect of any
waived Prepayment Charges pursuant to
Section 2.05 or Section 3.01.
"Servicer Remittance Date": With respect to any Distribution
Date, the third Business Day prior to such
Distribution Date.
"Servicer Termination Test": The Servicer Termination Test
will be failed with respect to any
Distribution Date if the aggregate amount of
Realized Losses incurred since the Cut-off
Date through the last day of the
related Due Period (reduced by the
aggregate amount of Subsequent Recoveries
received from the Cut-off Date through the
last day of the related Due Period)
divided by aggregate Stated Principal
Balance of the Mortgage Loans as of the
Cut-off Date exceeds the applicable
percentages set forth below with respect to
such Payment Date:
PAYMENT DATE OCCURRING IN:
PERCENTAGE:
--------------------------
-----------
July 2005 through June
2010........................
10.00%
July 2010 and
thereafter...........................
12.25%
"Servicing Advance Reimbursement Amount": As defined in
Section 3.29.
"Servicing Advances": All customary, reasonable and necessary
"out of pocket" costs and expenses
(including reasonable attorneys' fees and
expenses) incurred by the Servicer in the
performance of its servicing
obligations, including, but not limited to,
the cost of (i) the preservation,
restoration, inspection and protection of
the Mortgaged Property, (ii) any
enforcement or judicial proceedings,
including foreclosures, (iii) the
management and liquidation of the REO
Property and (iv) compliance with the
obligations under Sections 3.01, 3.09,
3.14, 3.16, and 3.23. Servicing Advances
also include any reasonable "out-of-pocket"
costs and expenses (including legal
fees) incurred by the Servicer in
connection with executing and recording
instruments of satisfaction, deeds of
reconveyance or Assignments of Mortgage in
connection with any foreclosure in respect
of any Mortgage Loan to the extent
not recovered from the related Mortgagor or
otherwise payable under this
Agreement. The Servicer shall not be
required to make any Servicing Advance that
would be a Nonrecoverable Advance.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to the
Servicing Fee Rate accrued for such
month (or in the event of any Principal
Prepayment in full made by the Mortgagor
during such month, the Servicing Fee Rate
accrued for the number of days covered
by the payment of interest accompanying the
Principal Prepayment in full), on
the same principal amount on which interest
on such Mortgage Loan accrues for
such month. A portion of such Servicing Fee
may be retained by any Sub-Servicer
as its servicing compensation.
"Servicing Fee Rate":
0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and
servicing of Mortgage Loans, whose
name and specimen signature appear on a
list of servicing officers furnished by
the Servicer to the Trustee and the
Depositor on the Closing Date, as such list
may from time to time be amended.
"Servicing Standard": Shall mean the standards set forth in
Section 3.01.
"Servicing Transfer Costs": Shall mean all reasonable
out-of-pocket costs and expenses incurred
by the Trustee in connection with the
transfer of servicing from a predecessor
servicer, including, without
limitation, any reasonable out-of-pocket
costs or expenses associated with the
complete transfer of all servicing data and
the completion, correction or
manipulation of such servicing data as may
be required by the Trustee to correct
any errors or insufficiencies in the
servicing data or otherwise to enable the
Trustee (or any successor servicer
appointed pursuant to Section 7.02) to
service the Mortgage Loans properly and
effectively.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to
but not including the Distribution
Date on which the proceeds, if any, of a
Liquidation Event with respect to such
Mortgage Loan would be distributed, the
outstanding Stated Principal Balance of
such Mortgage Loan as of the Cut-off Date
as shown in the Mortgage Loan
Schedule, minus the sum of (i) the
principal portion of each Monthly Payment due
on a Due Date subsequent to the Cut-off
Date to the extent received from the
Mortgagor or advanced by the Servicer and
distributed pursuant to Section 4.01
on or before such date of determination,
(ii) all Principal Prepayments received
after the Cut-off Date to the extent
distributed pursuant to Section 4.01 on or
before such date of determination, (iii)
all Liquidation Proceeds and Insurance
Proceeds to the extent distributed pursuant
to Section 4.01 on or before such
date of determination, and (iv) any
Realized Loss incurred with respect thereto
as a result of a Deficient Valuation made
during or prior to the Due Period for
the most recent Distribution Date
coinciding with or preceding such date of
determination; and (b) as of any date of
determination coinciding with or
subsequent to the Distribution Date on
which the proceeds, if any, of a
Liquidation Event with respect to such
Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of
any date of determination up to but
not including the Distribution Date on
which the proceeds, if any, of a
Liquidation Event with respect to such REO
Property would be distributed, an
amount (not less than zero) equal to the
Stated Principal Balance of the related
Mortgage Loan as of the date on which such
REO Property was acquired on behalf
of the Trust Fund, minus the aggregate
amount of REO Principal Amortization in
respect of such REO Property for all
previously ended calendar months, to the
extent distributed pursuant to Section 4.01
on or before such date of
determination; and (b) as of any date of
determination coinciding with or
subsequent to the Distribution Date on
which the proceeds, if any, of a
Liquidation Event with respect to such REO
Property would be distributed, zero.
"Stepdown Date": The earlier to occur of (i) the first
Distribution Date on which the aggregate
Certificate Principal Balance of the
Class A Certificates has been reduced to
zero and (ii) the later to occur of (x)
the Distribution Date occurring in July
2008 and (y) the first Distribution Date
on which the Credit Enhancement Percentage
(calculated for this purpose only
after taking into account payments of
principal on the Mortgage Loans but prior
to distribution of the Group I Principal
Distribution Amount and the Group II
Principal Distribution Amount to the
Certificates then entitled to distributions
of principal on such Distribution Date) is
equal to or greater than 48.70%.
"Sub-Servicer": Any Person with which the Servicer has entered
into a Sub- Servicing Agreement and which
meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements
set forth in Section 3.08 and is
otherwise acceptable to the Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub- Servicer relating to
servicing and administration of certain
Mortgage Loans as provided in Section
3.02.
"Subsequent Cut-off Date": With respect to those Mortgage
Loans sold to the Trust Fund pursuant to a
Subsequent Transfer Instrument, the
earlier of (i) the first day of the month
following the month in which the
related Subsequent Transfer Date occurs
(before application of scheduled
payments received with respect to the
Subsequent Mortgage Loans on such date)
and (ii) the date specified in the related
Subsequent Transfer Instrument.
"Subsequent Group I Mortgage Loan": A Mortgage Loan sold by
the Depositor to the Trust Fund pursuant to
Section 2.08 to be included in Loan
Group I, such Mortgage Loan being
identified on the Mortgage Loan Schedule
attached to a Subsequent Transfer
Instrument.
"Subsequent Group II Mortgage Loan": A Mortgage Loan sold by
the Depositor to the Trust Fund pursuant to
Section 2.08 to be included in Loan
Group II, such Mortgage Loan being
identified on the Mortgage Loan Schedule
attached to a Subsequent Transfer
Instrument.
"Subsequent Mortgage Loan": Any Subsequent Group I Mortgage
Loan or Subsequent Group II Mortgage
Loan.
"Subsequent Mortgage Loan Interest": Any amount constituting a
monthly payment of interest received or
advanced at the Net Mortgage Rate with
respect to a Subsequent Mortgage Loan
during the Due Period relating to the
first three Distribution Dates in excess of
0.00% per annum. The Subsequent
Mortgage Loan Interest shall be
distributable to the Class C Certificates. The
Subsequent Mortgage Loan Interest shall not
be an asset of any REMIC.
"Subsequent Mortgage Loan Purchase Agreement": The agreement
between the Depositor and the Seller,
regarding the transfer of the Subsequent
Mortgage Loans by the Seller to the
Depositor.
"Subsequent Recoveries": As of any Distribution Date,
unexpected amounts received by the Servicer
(net of any related expenses
permitted to be reimbursed pursuant to
Section 3.11) specifically related to a
Mortgage Loan that was the subject of a
liquidation or an REO Disposition prior
to the related Prepayment Period that
resulted in a Realized Loss.
"Subsequent Transfer Date": With respect to each Subsequent
Transfer Instrument, the date on which the
related Subsequent Mortgage Loans are
sold to the Trust Fund.
"Subsequent Transfer Instrument": Each Subsequent Transfer
Instrument, dated as of a Subsequent
Transfer Date, executed by the Trustee and
the Depositor substantially in the form
attached hereto as Exhibit Q, by which
Subsequent Mortgage Loans are transferred
to the Trust Fund.
"Substitution Adjustment": As defined in Section 2.03(d)
hereof.
"Tax Matters Person": The tax matters person appointed
pursuant to Section 9.01(e) hereof.
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate
Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto,
Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net
Loss Allocation, or any successor
forms, to be filed by the Trustee on behalf
of each REMIC, together with any and
all other information reports or returns
that may be required to be furnished to
the Certificateholders or filed with the
Internal Revenue Service or any other
governmental taxing authority under any
applicable provisions of federal, state
or local tax laws.
"Termination Price":
As defined in Section 10.01(a) hereof.
"Terminator": As
defined in Section 10.01(a) hereof.
"Trigger Event": A Trigger Event is in effect with respect to
any Distribution Date on or after the
Stepdown Date if:
(a) the
Delinquency Percentage exceeds 33.00% of the
Credit Enhancement Percentage; or
(b) the
aggregate amount of Realized Losses incurred
since the Cut-off Date through the last day
of the related Due Period (reduced
by the aggregate amount of Subsequent
Recoveries received since the Cut-off Date
through the last day of the related Due
Period) divided by the aggregate Stated
Principal Balance of the Mortgage Loans as
of the Cut-off Date and the Original
Pre-Funded Amounts exceeds the applicable
percentages set forth below with
respect to such Distribution Date:
<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN
PERCENTAGE
------------------------------
----------
<S>
<C>
July 2007 through June 2008
2.00% for the first month, plus an additional 1/12th of
2.25% for each month thereafter.
July 2008 through June 2009
4.25% for the first month, plus an additional 1/12th of
2.50% for each month thereafter.
July 2009 through June 2010
6.75% for the first month, plus an additional 1/12th of
1.75% for each month thereafter.
July 2010 through June 2011
8.50% for the first month, plus an additional 1/12th of
1.00% for each month thereafter
July 2011 and thereafter
9.50%.
</TABLE>
"Trust": Meritage Mortgage Loan Trust 2005-2, the trust
created hereunder.
"Trust Fund": All of the assets of the Trust, which is the
trust created hereunder consisting of REMIC
1, REMIC 2, REMIC 3, REMIC 4, REMIC
5, the Pre-Funding Accounts, the Interest
Coverage Accounts, any Subsequent
Mortgage Loan Interest, the Cap Contract
and the right to receive any amounts
from the Net WAC Rate Carryover Reserve
Account and any Servicer Prepayment
Charge Payment Amounts.
"Trustee": Deutsche Bank National Trust Company, a national
banking association, or any successor
trustee appointed as herein provided.
"Trustee Fee": Compensation consisting of the amount described
in Section 3.11(b)(vi), which compensation
shall be payable to the Trustee on
each Distribution Date pursuant to Section
8.05 as compensation for all services
rendered by it in the execution of the
trust hereby created and in the exercise
and performance of any powers and duties of
the Trustee hereunder.
"Uncertificated Accrued Interest": With respect to each REMIC
Regular Interest on each Distribution Date,
an amount equal to one month's
interest at the related Uncertificated
REMIC 1 Pass-Through Rate or
Uncertificated REMIC 2 Pass-Through Rate on
the Uncertificated Principal Balance
of such REMIC Regular Interest. In each
case, Uncertificated Accrued Interest
will be reduced by any Net Prepayment
Interest Shortfalls and Relief Act
Interest Shortfalls (allocated to such
REMIC Regular Interests based on their
respective entitlements to interest
irrespective of any Net Prepayment Interest
Shortfalls and Relief Act Interest
Shortfalls for such Distribution Date).
"Uncertificated Principal Balance": With respect to each REMIC
Regular Interest, the amount of such REMIC
Regular Interest outstanding as of
any date of determination. As of the
Closing Date, the Uncertificated Principal
Balance of each REMIC Regular Interest
shall equal the amount set forth in the
Preliminary Statement hereto as its initial
Uncertificated Principal Balance. On
each Distribution Date, the Uncertificated
Principal Balance of each REMIC
Regular Interest shall be reduced by all
distributions of principal made on such
REMIC Regular Interest on such Distribution
Date pursuant to Section 4.08 and,
if and to the extent necessary and
appropriate, shall be further reduced on such
Distribution Date by Realized Losses as
provided in Section 4.08, and the
Uncertificated Principal Balance of REMIC 2
Regular Interest LTZZ shall be
increased by interest deferrals as provided
in Section 4.08. With respect to the
Class C Interest as of any date of
determination, an amount equal to the excess,
if any, of (A) the then aggregate
Uncertificated Principal Balance of the REMIC
2 Regular Interests over (B) the then
aggregated Certificate Principal Balance
of the Class A Certificates, the Mezzanine
Certificates, the Class B
Certificates and the Class P Certificates
then outstanding. The Uncertificated
Principal Balance of each REMIC Regular
Interest that has an Uncertificated
Principal Balance shall never be less than
zero.
"Uncertificated REMIC 1 Pass-Through Rate": With respect to
REMIC 1 Regular Interest LT1 and REMIC 1
Regular Interest LTP, and (i) the first
three Distribution Dates, the weighted
average of the Adjusted Net Mortgage
Rates of the Initial Group I Mortgage Loans
and (ii) thereafter, the weighted
average of the Adjusted Net Mortgage Rates
of the Group I Mortgage Loans. With
respect to REMIC I Regular Interest LT2,
and (i) the first three Distribution
Dates, the weighted average of the Adjusted
Net Mortgage Rates of the Initial
Group II Mortgage Loans and (ii)
thereafter, the weighted average of the
Adjusted Net Mortgage Rates of the Group II
Mortgage Loans. With respect to
REMIC 1 Regular Interest LT1PF and (i) the
first three Distribution Dates, 0.00%
and (ii) thereafter, the weighted average
of the Adjusted Net Mortgage Rates of
the Group I Mortgage Loans. With respect to
REMIC 1 Regular Interest LT2PF and
(i) the first three Distribution Dates,
0.00% and (ii) thereafter, the weighted
average of the Adjusted Net Mortgage Rates
of the Group II Mortgage Loans.
"Uncertificated REMIC 2 Pass-Through Rate": For any
Distribution Date and REMIC 2 Regular
Interest LTAA, REMIC 2 Regular Interest
LTA1, REMIC 2 Regular Interest LTA2, REMIC
2 Regular Interest LTA3, REMIC 2
Regular Interest LTA4, REMIC 2 Regular
Interest LTM1, REMIC 2 Regular Interest
LTM2, REMIC 2 Regular Interest LTM3, REMIC
2 Regular Interest LTM4, REMIC 2
Regular Interest LTM5, REMIC 2 Regular
Interest LTM6, REMIC 2 Regular Interest
LTM7, REMIC 2 Regular Interest LTM8, REMIC
2 Regular Interest LTM9, REMIC 2
Regular Interest LTM10, REMIC 2 Regular
Interest LTM11, REMIC 2 Regular Interest
LTB1, REMIC 2 Regular Interest LTB2, REMIC
2 Regular Interest LTP and REMIC 2
Regular Interest LTZZ, the weighted average
of the Uncertificated REMIC 1
Pass-Through Rates on the REMIC 1 Regular
Interests, weighted on the basis of
the Uncertificated Principal Balance of
each such REMIC I Regular Interest.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such
property is not fully reimbursable by
the hazard insurance policies required to
be maintained pursuant to Section
3.14.
"United States Person" or "U.S. Person": A citizen or resident
of the United States, a corporation,
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, any state
thereof, or the District of Columbia
(except in the case of a partnership, to
the extent provided in Treasury
regulations) provided that, for purposes solely
of the restrictions on the transfer of
Residual Certificates, no partnership or
other entity treated as a partnership for
United States federal income tax
purposes shall be treated as a United
States Person unless all persons that own
an interest in such partnership either
directly or through any entity that is
not a corporation for United States federal
income tax purposes are required by
the applicable operative agreement to be
United States Persons, or an estate the
income of which from sources without the
United States is includible in gross
income for United States federal income tax
purposes regardless of its
connection with the conduct of a trade or
business within the United States, or
a trust if a court within the United States
is able to exercise primary
supervision over the administration of the
trust and one or more United States
persons have authority to control all
substantial decisions of the trust. The
term "United States" shall have the meaning
set forth in Section 7701 of the
Code or successor provisions.
"Unpaid Interest Shortfall Amount": With respect to the Class
A Certificates, the Mezzanine Certificates
and the Class B Certificates and (i)
the first Distribution Date, zero, and (ii)
any Distribution Date after the
first Distribution Date, the amount, if
any, by which (a) the sum of (1) the
Monthly Interest Distributable Amount for
such Class for the immediately
preceding Distribution Date and (2) the
outstanding Unpaid Interest Shortfall
Amount, if any, for such Class for such
preceding Distribution Date exceeds (b)
the aggregate amount distributed on such
Class in respect of interest pursuant
to clause (a) of this definition on such
preceding Distribution Date, plus
interest on the amount of interest due but
not paid on the Certificates of such
Class on such preceding Distribution Date,
to the extent permitted by law, at
the Pass-Through Rate for such Class for
the related Accrual Period.
"Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as
determined by an appraisal made for
the originator of the Mortgage Loan at the
time of origination of the Mortgage
Loan by an appraiser who met the minimum
requirements of Fannie Mae and Freddie
Mac, and (b) the value thereof as
determined by a review appraisal conducted by
the Originator in the event any such review
appraisal determines an appraised
value ten percent or more lower than the
value thereof as determined by the
appraisal referred to in clause (i)(a)
above and (ii) the purchase price paid
for the related Mortgaged Property by the
Mortgagor with the proceeds of the
Mortgage Loan, provided, however, in the
case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is
based solely upon the lesser of (1) the
value determined by an appraisal made for
the Originator of such Refinanced
Mortgage Loan at the time of origination of
such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements
of Fannie Mae and Freddie Mac and (2)
the value thereof as determined by a review
appraisal conducted by the
Originator in the event any such review
appraisal determines an appraised value
ten percent or more lower than the value
thereof as determined by the appraisal
referred to in clause (ii)(1) above.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any
Certificate. At all times the Class A
Certificates, the Mezzanine Certificates,
the Class B Certificates and the Class
C Certificates shall have 98% of the Voting
Rights (allocated among the Holders
of the Class A Certificates, the Mezzanine
Certificates, the Class B
Certificates and the Class C Certificates
in proportion to the then outstanding
Certificate Principal Balances of their
respective Certificates), the Class P
Certificates shall have 1% of the Voting
Rights and the Residual Certificates
shall have 1% of the Voting Rights. The
Voting Rights allocated to any Class of
Certificates (other than the Class P
Certificates and the Residual Certificates)
shall be allocated among all Holders of
each such Class in proportion to the
outstanding Certificate Principal Balance
of such Certificates, and the Voting
Rights allocated to the Class P
Certificates and the Residual Certificates shall
be allocated among all Holders of each such
Class in proportion to such Holders'
respective Percentage Interest; provided,
however that when none of the Regular
Certificates are outstanding, 100% of the
Voting Rights shall be allocated among
Holders of the Residual Certificates in
accordance with such Holders' respective
Percentage Interests in the Certificates of
such Class.
SECTION 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any
definition or calculation, whenever amounts
are required to be netted,
subtracted or added or any distributions
are taken into account such definition
or calculation and any related definitions
or calculations shall be determined
without duplication of such functions.
SECTION 1.03. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A
Certificates, the Mezzanine Certificates,
the Class B Certificates and the Class C
Certificates for any Distribution Date,
(1) the aggregate amount of any Net
Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in
respect of the Mortgage Loans for any
Distribution Date shall be allocated first,
to the Class C Interest based on,
and to the extent of, one month's interest
based only on clause (i) of the then
applicable Pass-Through Rate on the
Notional Amount of the Class C Interest and,
thereafter, among the Class A Certificates,
the Mezzanine Certificates and the
Class B Certificates on a pro rata basis
based on, and to the extent of, one
month's interest at the then applicable
respective Pass-Through Rate on the
respective Certificate Principal Balance of
each such Certificate and (2) the
aggregate amount of any Realized Losses and
Net WAC Rate Carryover Amounts
incurred for any Distribution Date shall be
allocated to the Class C Interest
based on, and to the extent of, one month's
interest based only on clause (i) of
the then applicable Pass-Through Rate on
the Notional Amount of the Class C
Interest.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class C
Certificates for any Distribution Date, the
aggregate amount of any Net Prepayment
Interest Shortfalls and any Relief Act
Interest Shortfalls allocated to the Class
C Interest shall be allocated to the
Class C Certificates.
For purposes of calculating the amount of Uncertificated
Accrued Interest for the REMIC 1 Regular
Interests for any Distribution Date,
the aggregate amount of any Net Prepayment
Interest Shortfalls and any Relief
Act Interest Shortfalls incurred in respect
of the Mortgage Loans for any
Distribution Date shall be allocated (i)
with respect to the Group I Mortgage
Loans, to REMIC 1 Regular Interest LT1 and
REMIC 1 Regular Interest LT1PF, in
each case to the extent of one month's
interest at the then applicable
respective Uncertificated REMIC 1
Pass-Through Rate on the respective
Uncertificated Principal Balance of each
such Uncertificated REMIC 1 Interest;
provided, however, with respect to the
first Distribution Date, such amounts
relating to the Initial Group I Mortgage
Loans shall be allocated to REMIC 1
Regular Interest LT1 and such amounts
relating to the Subsequent Group I
Mortgage Loans shall be allocated to REMIC
1 Regular Interest LT1PF and (ii)
with respect to the Group II Mortgage
Loans, to REMIC 1 Regular Interest LT2 and
REMIC 1 Regular Interest LT2PF, in each
case to the extent of one month's
interest at the then applicable respective
Uncertificated REMIC 1 Pass-Through
Rate on the respective Uncertificated
Principal Balance of each such
Uncertificated REMIC 1 Interest; provided,
however, with respect to the first
three Distribution Dates, such amounts
relating to the Initial Group II Mortgage
Loans shall be allocated to REMIC 1 Regular
Interest LT2 and such amounts
relating to the Subsequent Group II
Mortgage Loans shall be allocated to REMIC 1
Regular Interest LT2PF.
For purposes of calculating the amount of Uncertificated
Accrued Interest for the REMIC 2 Regular
Interests for any Distribution Date,
the aggregate amount of any Net Prepayment
Interest Shortfalls and any Relief
Act Interest Shortfalls incurred in respect
of the Mortgage Loans for any
Distribution Date shall be allocated among
REMIC 2 Regular Interest LTAA, REMIC
2 Regular Interest LTA1, REMIC 2 Regular
Interest LTA2, REMIC 2 Regular Interest
LTA3, REMIC 2 Regular Interest LTA4, REMIC
2 Regular Interest LTM1, REMIC 2
Regular Interest LTM2, REMIC 2 Regular
Interest LTM3, REMIC 2 Regular Interest
LTM4, REMIC 2 Regular Interest LTM5, REMIC
2 Regular Interest LTM6, REMIC 2
Regular Interest LTM7, REMIC 2 Regular
Interest LTM8, REMIC 2 Regular Interest
LTM9, REMIC 2 Regular Interest LTM10, REMIC
2 Regular Interest LTM11, REMIC 2
Regular Interest LTB1, REMIC 2 Regular
Interest LTB2 and REMIC 2 Regular
Interest LTZZ on a PRO RATA basis based on,
and to the extent of, one month's
interest at the then applicable respective
Uncertificated REMIC 2 Pass-Through
Rate on the respective Uncertificated
Principal Balance of each such REMIC 2
Regular Interest.
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set
over and otherwise convey in trust to
the Trustee without recourse for the
benefit of the Certificateholders all the
right, title and interest of the Depositor,
including any security interest
therein for the benefit of the Depositor,
in and to (i) each Mortgage Loan
identified on the Mortgage Loan Schedule,
including the related Cut-off Date
Principal Balance, all interest accruing
thereon on and after the Cut-off Date
and all collections in respect of interest
and principal due after the Cut-off
Date; (ii) property which secured each such
Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of
foreclosure; (iii) its interest in
any insurance policies in respect of the
Mortgage Loans; (iv) the rights of the
Depositor under the Mortgage Loan Purchase
Agreement, (v) the right to receive
any amounts payable under the Cap Contract
(vi) all other assets included or to
be included in the Trust Fund and (vii) all
proceeds of any of the foregoing.
Such assignment includes all interest and
principal due and collected by the
Depositor or the Servicer after the Cut-off
Date with respect to the Mortgage
Loans.
The Depositor hereby directs the Trustee to execute, deliver
and perform its obligations under the Cap
Contract on the Closing Date and
thereafter on behalf of the Holders of the
Class A Certificates, the Mezzanine
Certificates and the Class B Certificates.
The Seller, the Depositor, the
Servicer and the Holders of the Class A
Certificates, the Mezzanine Certificates
and the Class B Certificates by their
acceptance of such Certificates
acknowledge and agree that the Trustee
shall execute, deliver and perform its
obligations under the Cap Contract and
shall do so solely in its capacity as
Trustee of the Trust Fund and not in its
individual capacity.
In connection with such transfer and assignment, the
Depositor, does hereby deliver to, and
deposit with the Trustee, or its
designated agent (the "Custodian"), the
following documents or instruments with
respect to each Initial Mortgage Loan so
transferred and assigned and shall, in
accordance with Section 2.08, deliver or
caused to be delivered to the Trustee
with respect to each Subsequent Mortgage
Loan, the following documents or
instruments (with respect to each Mortgage
Loan, a "Mortgage File"):
(i) the
original Mortgage Note, endorsed either (A) in
blank, in which case the Trustee shall cause the endorsement to
be
completed or (B) in the following form: "Pay to the order of
Deutsche
Bank National Trust Company, as Trustee, without recourse" or
with
respect to any lost Mortgage Note, an original Lost Note
Affidavit
stating that the original mortgage note was lost, misplaced or
destroyed, together with a copy of the related mortgage note;
provided,
however, that such substitutions of Lost Note Affidavits for
original
Mortgage Notes may occur only with respect to Mortgage Loans,
the
aggregate Cut-off Date Principal Balance of which is less than or
equal
to 1.00% of the Pool Balance as of the Cut-off Date;
(ii)
the original Mortgage, noting the presence of the MIN
of the Mortgage Loan and language indicating that the Mortgage Loan
is
a MOM Loan if the Mortgage Loan is a MOM Loan, with evidence of
recording thereon, and the original recorded power of attorney, if
the
Mortgage was executed pursuant to a power of attorney, with
evidence of
recording thereon or, if such Mortgage or power of attorney has
been
submitted for recording but has not been returned from the
applicable
public recording office, has been lost or is not otherwise
available, a
copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original submitted
for
recording;
(iii)
unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment, in form and substance acceptable
for
recording. The Mortgage shall be assigned either (A) in blank or
(B) to
"Deutsche Bank National Trust Company, as Trustee, without
recourse";
(iv)
an original copy of any intervening assignment of
Mortgage showing a complete chain of assignments (or to MERS, if
the
Mortgage Loan is registered on the MERS(R) System and noting
the
presence of the MIN);
(v) the
original or a certified copy of lender's title
insurance policy; and
(vi)
the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any.
The Depositor herewith also delivers to the Trustee an
executed copy of the Mortgage Loan Purchase
Agreement.
If any of the documents referred to in Section 2.01(ii), (iii)
or (iv) above has as of the Closing Date
(or Subsequent Transfer Date, with
respect to Subsequent Mortgage Loans) been
submitted for recording but either
(x) has not been returned from the
applicable public recording office or (y) has
been lost or such public recording office
has retained the original of such
document, the obligations of the Depositor
to deliver such documents shall be
deemed to be satisfied upon (1) delivery to
the Trustee or the Custodian no
later than the Closing Date (or Subsequent
Transfer Date, with respect to
Subsequent Mortgage Loans), of a copy of
each such document certified by the
Originator in the case of (x) above or the
applicable public recording office in
the case of (y) above to be a true and
complete copy of the original that was
submitted for recording and (2) if such
copy is certified by the Originator,
delivery to the Trustee or the Custodian,
promptly upon receipt thereof of
either the original or a copy of such
document certified by the applicable
public recording office to be a true and
complete copy of the original. If the
original lender's title insurance policy,
or a certified copy thereof, was not
delivered pursuant to Section 2.01(v)
above, the Depositor shall deliver or
cause to be delivered to the Trustee or the
Custodian, the original or a copy of
a written commitment or interim binder or
preliminary report of title issued by
the title insurance or escrow company, with
the original or a certified copy
thereof to be delivered to the Trustee or
the Custodian, promptly upon receipt
thereof. The Servicer or the Depositor
shall deliver or cause to be delivered to
the Trustee or the Custodian promptly upon
receipt thereof any other documents
constituting a part of a Mortgage File
received with respect to any Mortgage
Loan, including, but not limited to, any
original documents evidencing an
assumption or modification of any Mortgage
Loan.
Upon discovery or receipt of notice of any materially
defective document in, or that a document
is missing from, a Mortgage File, the
Trustee shall notify the Servicer and shall
enforce the obligations of the
Seller or the Originator, as applicable,
under the Mortgage Loan Purchase
Agreement to cure such defect or deliver
such missing document to the Trustee or
the Custodian within 90 days. If the Seller
or the Originator, as applicable,
does not cure such defect or deliver such
missing document within such time
period, the Trustee shall enforce the
obligations of the Seller or the
Originator, as applicable, to either
repurchase or substitute for such Mortgage
Loan in accordance with Section 2.03. If
the Seller or the Originator, as
applicable, fails to either repurchase or
substitute for such Mortgage Loan in
accordance with its respective obligations
under the Mortgage Loan Purchase
Agreement, the Trustee and the Depositor
shall consult on further actions to be
taken against the Originator or the Seller,
as applicable. In connection with
the foregoing, it is understood that the
Trustee shall have no duty to discover
any such defects except in the course of
performing its review of the Mortgage
Files to the extent set forth herein.
Except with respect to any Mortgage Loan for which MERS is
identified on the Mortgage or on a properly
recorded assignment of the Mortgage
as the mortgagee of record, the Trustee
shall enforce the obligations of the
Originator under the Mortgage Loan Purchase
Agreement to cause the Assignments
which were delivered in blank to be
completed and to record all Assignments
referred to in Section 2.01(iii) hereof
and, to the extent necessary, in Section
2.01(iv) hereof. The Trustee shall enforce
the obligations of the Originator
under the Mortgage Loan Purchase Agreement
to deliver such assignments for
recording within 180 days of the Closing
Date (or Subsequent Transfer Date, with
respect to Subsequent Mortgage Loans). In
the event that any such Assignment is
lost or returned unrecorded because of a
defect therein, the Trustee shall
enforce the obligations of the Originator
under the Mortgage Loan Purchase
Agreement to promptly have a substitute
Assignment prepared or have such defect
cured, as the case may be, and thereafter
cause each such Assignment to be duly
recorded.
In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the
Depositor further agrees that it will
cause, within 30 Business Days after the
Closing Date (or Subsequent Transfer
Date, with respect to Subsequent Mortgage
Loans), the MERS(R) System to indicate
that such Mortgage Loans have been assigned
by the Depositor to the Trustee in
accordance with this Agreement for the
benefit of the Certificateholders by
including (or deleting, in the case of
Mortgage Loans which are repurchased in
accordance with this Agreement) in such
computer files (a) the code in the field
which identifies the specific Trustee and
(b) the code in the field "Pool Field"
which identifies the series of the
Certificates issued in connection with such
Mortgage Loans. The Depositor further
agrees that it will not, and will not
permit the Servicer to, and the Servicer
agrees that it will not, alter the
codes referenced in this paragraph with
respect to any Mortgage Loan during the
term of this Agreement unless and until
such Mortgage Loan is repurchased in
accordance with the terms of this
Agreement.
In the event that any Mortgage Note is endorsed in blank as of
the Closing Date, promptly following the
Closing Date, the Trustee shall cause
(at the Seller's expense) to be completed
such endorsements "Pay to the order of
Deutsche Bank National Trust Company, as
Trustee, without recourse."
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification,
consolidation or extension of any
Mortgage Loan entered into in accordance
with this Agreement within two weeks of
their execution; provided, however, that
the Servicer shall provide the
Custodian with a certified true copy of any
such document submitted for
recordation within two weeks of its
execution, and shall provide the original of
any document submitted for recordation or a
copy of such document certified by
the appropriate public recording office to
be a true and complete copy of the
original within 365 days of its submission
for recordation. In the event that
the Servicer cannot provide a copy of such
document certified by the public
recording office within such 365 day
period, the Servicer shall deliver to the
Custodian, within such 365 day period, an
Officers' Certificate of the Servicer
which shall (A) identify the recorded
document, (B) state that the recorded
document has not been delivered to the
Custodian due solely to a delay caused by
the public recording office, (C) state the
amount of time generally required by
the applicable recording office to record
and return a document submitted for
recordation, if known and (D) specify the
date the applicable recorded document
is expected to be delivered to the
Custodian, and, upon receipt of a copy of
such document certified by the public
recording office, the Servicer shall
immediately deliver such document to the
Custodian. In the event the appropriate
public recording office will not certify as
to the accuracy of such document,
the Servicer shall deliver a copy of such
document certified by an officer of
the Servicer to be a true and complete copy
of the original to the Custodian.
The parties hereto understand and agree that it is not
intended that any Mortgage Loan be included
in the Trust that is a "High-Cost
Home Loan" as defined by the Homeownership
and Equity Protection Act of 1994 or
any other applicable predatory or abusive
lending laws.
SECTION 2.02. Acceptance by Trustee.
Subject to the provisions of Section 2.01 and subject to the
review described below and any exceptions
noted on the exception report
described in the next paragraph below, the
Trustee acknowledges receipt of the
documents referred to in Section 2.01 above
and all other assets included in the
definition of "Trust Fund" and declares
that it holds and will hold such
documents and the other documents delivered
to it constituting a Mortgage File,
and that it holds or will hold all such
assets and such other assets included in
the definition of "Trust Fund" in trust for
the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees to execute and deliver (or cause the
Custodian to execute and deliver) to the
Depositor and the Servicer on or prior
to the Closing Date (or Subsequent Transfer
Date, with respect to Subsequent
Mortgage Loans) an acknowledgment of
receipt of the related original Mortgage
Note for each Mortgage Loan (with any
exceptions noted), substantially in the
form attached as Exhibit F-3 hereto.
The Trustee agrees, for the benefit of the Certificateholders,
to review, or that it has reviewed pursuant
to Section 2.01 (or to cause the
Custodian to review or that it has caused
the Custodian to have reviewed) each
Mortgage File on or prior to the Closing
Date (or, with respect to any document
delivered after the Startup Day, within 45
days of receipt and with respect to
any Qualified Substitute Mortgage, within
45 days after the assignment thereof).
The Trustee further agrees, for the benefit
of the Certificateholders, to
certify to the Depositor and the Servicer
in substantially the form attached
hereto as Exhibit F-1, within 45 days after
the Closing Date (or, with respect
to any document delivered after the Startup
Day, within 45 days of receipt and
with respect to any Qualified Substitute
Mortgage, within 45 days after the
assignment thereof) that, as to each
Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid
in full or any Mortgage Loan
specifically identified in the exception
report annexed thereto as not being
covered by such certification), (i) all
documents required to be delivered to it
pursuant Section 2.01 of this Agreement are
in its possession, (ii) such
documents have been reviewed by it and have
not been mutilated, damaged or torn
and appear on their face to relate to such
Mortgage Loan and (iii) based on its
examination and only as to the foregoing,
the information set forth in the
Mortgage Loan Schedule that corresponds to
items (1) and (3) of the Mortgage
Loan Schedule accurately reflects
information set forth in the Mortgage File. It
is herein acknowledged that, in conducting
such review, the Trustee (or the
Custodian, as applicable) is under no duty
or obligation to inspect, review or
examine any such documents, instruments,
certificates or other papers to
determine that they are genuine, legally
enforceable, valid or binding or
appropriate for the represented purpose or
that they have actually been recorded
or that they are other than what they
purport to be on their face.
Prior to the first anniversary date of this Agreement the
Trustee shall deliver (or cause the
Custodian to deliver) to the Depositor and
the Servicer, a final certification in the
form annexed hereto as Exhibit F-2,
with any applicable exceptions noted
thereon.
If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the
certifications referred to above, the
Trustee (or the Custodian, as applicable)
finds any document or documents
constituting a part of a Mortgage File to
be missing or not to conform with
respect to any characteristics which are
within the scope of the Trustee's (or
the Custodian's, as applicable) review as
provided herein, at the conclusion of
its review, the Trustee shall so notify the
Seller, the Depositor, the
Originator and the Servicer. In addition,
upon the discovery by the Depositor,
or the Servicer (or upon receipt by the
Trustee of written notification of such
breach) of a breach of any of the
representations and warranties made by the
Originator in the Mortgage Loan Purchase
Agreement in respect of any Mortgage
Loan which materially adversely affects
such Mortgage Loan or the interests of
the related Certificateholders in such
Mortgage Loan, the party discovering such
breach shall give prompt written notice to
the other parties to this Agreement.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a
sale of the Mortgage Loans, the
related Mortgage Notes and the related
documents, conveying good title thereto
free and clear of any liens and
encumbrances, from the Depositor to the Trustee
in trust for the benefit of the
Certificateholders and that such property not be
part of the Depositor's estate or property
of the Depositor in the event of any
insolvency by the Depositor. In the event
that such conveyance is deemed to be,
or to be made as security for, a loan, the
parties intend that the Depositor
shall be deemed to have granted and does
hereby grant to the Trustee a first
priority perfected security interest in all
of the Depositor's right, title and
interest in and to the Mortgage Loans, the
related Mortgage Notes and the
related documents, and that this Agreement
shall constitute a security agreement
under applicable law.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
the Originator or the Seller.
(a) Upon
discovery or receipt of written notice of any
materially defective document in, or that a
document is missing from, a Mortgage
File or of the breach by the Originator or
the Seller of any representation,
warranty or covenant under the Mortgage
Loan Purchase Agreement in respect of
any Mortgage Loan which materially
adversely affects the value of such Mortgage
Loan or the interest therein of the
Certificateholders, the Trustee shall
request that the Originator or the Seller,
as applicable, deliver such missing
document or that the Originator or the
Seller, as applicable, cure such defect
or breach within 90 days from the date the
Originator or the Seller, as
applicable, was notified of such missing
document, defect or breach, and if the
Originator or the Seller, as applicable,
does not deliver such missing document
or if the Originator or the Seller, as
applicable, does not cure such defect or
breach in all material respects during such
period, the Trustee shall enforce
the Originator's obligation under the
Mortgage Loan Purchase Agreement and cause
the Originator to repurchase such Mortgage
Loan from the Trust Fund at the
Purchase Price on or prior to the
Determination Date following the expiration of
such 90 day period (subject to Section
2.03(e)). If the Originator or the
Seller, as applicable fails to repurchase
or substitute for such Mortgage Loan
in accordance with its obligations under
the Mortgage Loan Purchase Agreement,
the Trustee and the Depositor shall consult
on further actions to be taken
against the Originator or the Seller, as
applicable. The Purchase Price for the
repurchased Mortgage Loan shall be remitted
to the Servicer for deposit in the
Collection Account, and the Trustee, upon
receipt of written certification from
the Servicer of such deposit, shall release
to the Originator or the Seller, as
applicable, the related Mortgage File and
shall execute and deliver such
instruments of transfer or assignment, in
each case without recourse, as the
Originator or the Seller, as applicable,
shall furnish to it and as shall be
necessary to vest in the Originator or the
Seller, as applicable, any Mortgage
Loan released pursuant hereto and the
Trustee shall have no further
responsibility with regard to such Mortgage
File (it being understood that the
Trustee shall have no responsibility for
determining the sufficiency of such
assignment for its intended purpose). In
lieu of repurchasing any such Mortgage
Loan as provided above, the Originator or
the Seller, as applicable, may cause
such Mortgage Loan to be removed from the
Trust Fund (in which case it shall
become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to
the limitations set forth in Section
2.03(d); provided, however, neither the
Originator nor the Seller, as
applicable, may substitute a Qualified
Substitute Mortgage Loan for any Deleted
Mortgage Loan that violates any predatory
or abusive lending law. It is
understood and agreed that the obligation
of the Originator or the Seller, as
applicable, to cure or to repurchase (or to
substitute for) any Mortgage Loan as
to which a document is missing, a material
defect in a constituent document
exists or as to which such a breach has
occurred and is continuing shall
constitute the sole remedy against the
Originator or the Seller, as applicable,
respecting such omission, defect or breach
available to the Trustee on behalf of
the Certificateholders.
(b) Within 90
days of the earlier of discovery by the
Depositor or receipt of notice by the
Depositor of the breach of any
representation, warranty or covenant of the
Depositor set forth in Section 2.06,
which materially and adversely affects the
interests of the Certificateholders
in any Mortgage Loan, the Depositor shall
cure such breach in all material
respects.
(c) Within 90
days of the earlier of discovery by the
Servicer or receipt of notice by the
Servicer of the breach of any
representation, warranty or covenant of the
Servicer set forth in Section 2.05
which materially and adversely affects the
interests of the Certificateholders
in any Mortgage Loan, the Servicer shall
cure such breach in all material
respects.
(d) Any
substitution of Qualified Substitute Mortgage
Loans for Deleted Mortgage Loans made
pursuant to Section 2.03(a) must be
effected prior to the last Business Day
that is within two years after the
Closing Date. As to any Deleted Mortgage
Loan for which the Originator or the
Seller, as applicable, substitutes a
Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected
by the Originator or the Seller, as
applicable, delivering to the Trustee, for
such Qualified Substitute Mortgage
Loan or Loans, the Mortgage Note, the
Mortgage and the Assignment to the
Trustee, and such other documents and
agreements, with all necessary
endorsements thereon, as are required by
Section 2.01, together with an
Officers' Certificate providing that each
such Qualified Substitute Mortgage
Loan satisfies the definition thereof and
specifying the Substitution Adjustment
(as described below), if any, in connection
with such substitution. The Trustee
shall acknowledge receipt for such
Qualified Substitute Mortgage Loan or Loans
and, within 45 days thereafter, shall
review such documents as specified in
Section 2.02 and deliver to the Depositor
and the Servicer, with respect to such
Qualified Substitute Mortgage Loan or
Loans, a certification substantially in
the form attached hereto as Exhibit F-1,
with any applicable exceptions noted
thereon. Within one year of the date of
substitution, the Trustee shall deliver
to the Depositor and the Servicer a
certification substantially in the form of
Exhibit F-2 hereto with respect to such
Qualified Substitute Mortgage Loan or
Loans, with any applicable exceptions noted
thereon. Monthly Payments due with
respect to Qualified Substitute Mortgage
Loans in the month of substitution are
not part of the Trust Fund and will be
retained by the Originator or the Seller,
as applicable. For the month of
substitution, distributions to
Certificateholders will reflect the
collections and recoveries in respect of
such Deleted Mortgage Loan in the Due
Period preceding the month of substitution
and the Originator or the Seller, as
applicable, shall thereafter be entitled to
retain all amounts subsequently received in
respect of such Deleted Mortgage
Loan. The Servicer shall give or cause to
be given written notice to the
Trustee, who shall forward such notice to
the Certificateholders, 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 Qualified
Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage
Loan Schedule to the Trustee. Upon such
substitution by the Originator or the
Seller, as applicable, such Qualified
Substitute Mortgage Loan or Loans shall
constitute part of the Mortgage Pool and
shall be subject in all respects to the
terms of this Agreement and the Mortgage
Loan Purchase Agreement, including all
applicable representations and warranties
thereof included in the Mortgage Loan
Purchase Agreement as of the date of
substitution.
For any month in which the Originator substitutes one or more
Qualified Substitute Mortgage Loans for one
or more Deleted Mortgage Loans, the
Servicer will determine the amount (the
"Substitution Adjustment"), if any, by
which the aggregate Purchase Price of all
such Deleted Mortgage Loans exceeds
the aggregate, as to each such Qualified
Substitute Mortgage Loan, of the Stated
Principal Balance thereof as of the date of
substitution, together with one
month's interest on such Stated Principal
Balance at the applicable Mortgage
Rate. On the date of such substitution, the
Originator or the Seller, as
applicable, will deliver or cause to be
delivered to the Servicer for deposit in
the Collection Account an amount equal to
the Substitution Adjustment, if any,
and the Trustee, upon receipt of the
related Qualified Substitute Mortgage Loan
or Loans and certification by the Servicer
of such deposit, shall release to the
Originator or the Seller, as applicable,
the related Mortgage File or Files and
shall execute and deliver such instruments
of transfer or assignment, in each
case without recourse, as the Originator or
the Seller, as applicable, shall
deliver to it and as shall be necessary to
vest therein any Deleted Mortgage
Loan released pursuant hereto.
In addition, the Originator or the Seller, as applicable,
shall obtain at its own expense and deliver
to the Trustee an Opinion of Counsel
to the effect that such substitution will
not cause (i) any federal tax to be
imposed on the Trust Fund, including
without limitation, any federal tax imposed
on "prohibited transactions" under Section
860F(a)(I) of the Code or on
"contributions after the startup date"
under Section 860G(d)(I) of the Code or
(ii) any REMIC to fail to qualify as a
REMIC at any time that any Certificate is
outstanding. If such Opinion of Counsel can
not be delivered, then such
substitution may only be effected at such
time as the required Opinion of
Counsel can be given.
(e) Upon
discovery by the 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 within two Business Days give written
notice thereof to the other parties
hereto. In connection therewith, the
Originator or the Depositor, as the case
may be, shall repurchase or, subject to the
limitations set forth in Section
2.03(d), substitute one or more Qualified
Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of
the earlier of discovery or receipt of
such notice with respect to such affected
Mortgage Loan. Such repurchase or
substitution shall be made (i) by the
Originator if the affected Mortgage Loan's
status as a non-qualified mortgage is or
results from a breach of any
representation, warranty or covenant made
by the Originator under the Mortgage
Loan Purchase Agreement or (ii) the
Depositor, if the affected Mortgage Loan's
status as a non-qualified mortgage is a
breach of any representation or warranty
of the Depositor set forth in Section 2.06,
or if its status as a non-qualified
mortgage is a breach of no representation
or warranty. Any such repurchase or
substitution shall be made in the same
manner as set forth in Section 2.03(a) or
2.03(d), if made by the Originator, or
Section 2.03(b), if made by the
Depositor. The Trustee shall reconvey to
the Depositor or the Originator, as the
case may be, the Mortgage Loan to be
released pursuant hereto in the same
manner, and on the same terms and
conditions, as it would a Mortgage Loan
repurchased for breach of a representation
or warranty.
SECTION 2.04. Intentionally Omitted.
SECTION 2.05. Representations, Warranties and Covenants of the
Servicer.
The Servicer
hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the
Trustee and the Certificateholders and
to the Depositor that as of the Closing
Date or as of such date specifically
provided herein:
(i) The
Servicer is duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its
formation
and has all licenses necessary to carry on its business as now
being
conducted and is licensed, qualified and in good standing in the
states
where the Mortgaged Property is located (or is otherwise exempt
under
applicable law from such qualification) if the laws of such
state
require licensing or qualification in order to conduct business of
the
type conducted by the Servicer or to ensure the enforceability
or
validity of each Mortgage Loan; the Servicer has the power and
authority to execute and deliver this Agreement and to perform
in
accordance herewith; the execution, delivery and performance of
this
Agreement (including all instruments of transfer to be
delivered
pursuant to this Agreement) and all documents and instruments
contemplated hereby which are executed and delivered by the
Servicer
and the consummation of the transactions contemplated hereby have
been
duly and validly authorized; this Agreement and all documents
and
instruments contemplated hereby which are executed and delivered by
the
Servicer, assuming due authorization, execution and delivery by
the
other parties hereto, evidences the valid, binding and
enforceable
obligation of the Servicer, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting
the enforcement of creditors' rights generally; and all
requisite
corporate action has been taken by the Servicer to make this
Agreement
and all documents and instruments contemplated hereby which are
executed and delivered by the Servicer valid and binding upon
the
Servicer in accordance with its terms;
(ii)
The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the
Servicer
and will not result in the breach of any term or provision of
the
charter or by-laws of the Servicer or result in the breach of any
term
or provision of, or conflict with or constitute a default under
or
result in the acceleration of any obligation under, any
agreement,
indenture or loan or credit agreement or other instrument to which
the
Servicer or its property is subject, or result in the violation of
any
law, rule, regulation, order, judgment or decree to which the
Servicer
or its property is subject;
(iii) The
execution and delivery of this Agreement by the
Servicer and the performance and compliance with its obligations
and
covenants hereunder do not require the consent or approval of
any
governmental authority or, if such consent or approval is required,
it
has been obtained;
(iv)
[Reserved];
(v) The
Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and
every
covenant contained in this Agreement;
(vi)
There is no action, suit, proceeding or investigation
pending or, to its knowledge, threatened against the Servicer
that,
either individually or in the aggregate, (A) may result in any
change
in the business, operations, financial condition, properties or
assets
of the Servicer that might prohibit or materially and adversely
affect
the performance by such Servicer of its obligations under, or
the
validity or enforceability of, this Agreement, or (B) may result in
any
material impairment of the right or ability of the Servicer to
carry on
its business substantially as now conducted, or (C) would draw
into
question the validity or enforceability of this Agreement or of
any
action taken or to be taken in connection with the obligations of
the
Servicer contemplated herein, or (D) would otherwise be likely
to
impair materially the ability of the Servicer to perform under
the
terms of this Agreement;
(vii)
Neither this Agreement nor any information,
certificate of an officer, statement furnished in writing or
report
delivered to the Trustee by the Servicer in connection with the
transactions contemplated hereby contains any untrue statement of
a
material fact;
(viii) The
Servicer will not waive any Prepayment Charge
unless it is waived in accordance with the standard set forth
in
Section 3.01;
(ix)
The Servicer has accurately and fully reported, and
will continue to accurately and fully report on a monthly basis,
its
borrower credit files to each of the credit repositories in a
timely
manner; and
(x) The
Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and
procedures
of MERS in connection with the servicing of the Mortgage Loans that
are
registered with MERS.
It is understood and agreed that the representations,
warranties and covenants set forth in this
Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee and
shall inure to the benefit of the
Trustee, the Depositor and the
Certificateholders. Upon discovery by any of the
Depositor, the Servicer or the Trustee of a
breach of any of the foregoing
representations, warranties and covenants
which materially and adversely affects
the value of any Mortgage Loan, Prepayment
Charge or the interests therein of
the Certificateholders, the party
discovering such breach shall give prompt
written notice (but in no event later than
two Business Days following such
discovery) to the Servicer and the Trustee.
Notwithstanding the foregoing,
within 90 days of the earlier of discovery
by the Servicer or receipt of notice
by the Servicer of the breach of the
representation or covenant of the Servicer
set forth in Section 2.05(x) above which
materially and adversely affects the
interests of the Holders of the Class P
Certificates in any Prepayment Charge,
the Servicer must pay the amount of such
waived Prepayment Charge, for the
benefit of the holders of the Class P
Certificates, by depositing such amount
into the Collection Account. The foregoing
shall not, however, limit any
remedies available to the
Certificateholders, the Depositor or the Trustee on
behalf of the Certificateholders, pursuant
to the Mortgage Loan Purchase
Agreement respecting a breach of the
representations, warranties and covenants
of the Originator made in its capacity as a
party to the Mortgage Loan Purchase
Agreement.
SECTION 2.06. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust, the
Servicer and the Trustee on behalf of the
Certificateholders as follows:
(i) This
agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor
in
accordance with its terms, except as enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium or
other
similar laws now or hereafter in effect affecting the enforcement
of
creditors' rights in general and except as such enforceability may
be
limited by general principles of equity (whether considered in
a
proceeding at law or in equity);
(ii)
Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Mortgage
Loan,
the Depositor had good and marketable title to each Mortgage
Loan
(insofar as such title was conveyed to it by the Seller) subject to
no
prior lien, claim, participation interest, mortgage, security
interest,
pledge, charge or other encumbrance or other interest of any
nature;
(iii) As
of the Closing Date, the Depositor has transferred
all right, title and interest in the Mortgage Loans to the Trustee
on
behalf of the
Trust;
(iv)
The Depositor has not transferred the Mortgage Loans
to the Trustee on behalf of the Trust with any intent to hinder,
delay
or defraud any of its creditors;
(v) The
Depositor has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of
Delaware, with full corporate power and authority to own its assets
and
conduct its business as presently being conducted;
(vi)
The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or
observance
of any material obligation, agreement, covenant or condition
contained
in any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Depositor is a party or by which it
or
its properties may be bound, which default might result in any
material
adverse changes in the financial condition, earnings, affairs
or
business of the Depositor or which might materially and
adversely
affect the properties or assets, taken as a whole, of the
Depositor;
(vii) The
execution, delivery and performance of this
Agreement by the Depositor, and the consummation of the
transactions
contemplated thereby, do not and will not result in a material
breach
or violation of any of the terms or provisions of, or, to the
knowledge
of the Depositor, constitute a default under, any indenture,
mortgage,
deed of trust, loan agreement or other agreement or instrument to
which
the Depositor is a party or by which the Depositor is bound or to
which
any of the property or assets of the Depositor is subject, nor
will
such actions result in any violation of the provisions of the
articles
of incorporation or by-laws of the Depositor or, to the best of
the
Depositor's knowledge without independent investigation, any
statute or
any order, rule or regulation of any court or governmental agency
or
body having jurisdiction over the Depositor or any of its
properties or
assets (except for such conflicts, breaches, violations and
defaults as
would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement);
(viii) To the
best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order,
registration or qualification of or with any court or
governmental
agency or body of the United States or any other jurisdiction
is
required for the issuance of the Certificates, or the consummation
by
the Depositor of the other transactions contemplated by this
Agreement,
except such consents, approvals, authorizations, registrations
or
qualifications as (a) may be required under State securities or
Blue
Sky laws, (b) have been previously obtained or (c) the failure of
which
to obtain would not have a material adverse effect on the
performance
by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement; and
(ix)
There are no actions, proceedings or investigations
pending before or, to the Depositor's knowledge, threatened by
any
court, administrative agency or other tribunal to which the
Depositor
is a party or of which any of its properties is the subject: (a)
which
if determined adversely to the Depositor would have a material
adverse
effect on the business, results of operations or financial
condition of
the Depositor; (b) asserting the invalidity of this Agreement or
the
Certificates; (c) seeking to prevent the issuance of the
Certificates
or the consummation by the Depositor of any of the transactions
contemplated by this Agreement, as the case may be; or (d) which
might
materially and adversely affect the performance by the Depositor of
its
obligations under, or the validity or enforceability of, this
Agreement.
SECTION 2.07. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it of the
Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02, together with the
assignment to it of all other assets
included in the Trust Fund, receipt of
which is hereby acknowledged.
Concurrently with such assignment and
delivery and in exchange therefor, the
Trustee, pursuant to the written request of
the Depositor executed by an officer
of the Depositor, has executed,
authenticated and delivered to or upon the order
of the Depositor, the Certificates in
authorized denominations. The interests
evidenced by the Certificates constitute
the entire beneficial ownership
interest in the Trust Fund.
&nb
