J.P. MORGAN ACCEPTANCE CORPORATION
I
Depositor
J.P. MORGAN MORTGAGE ACQUISITION
CORP.
Seller
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION
Securities
Administrator
LITTON LOAN SERVICING LP
Servicer
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
_________________________________________
POOLING AND SERVICING
AGREEMENT
Dated as of November 1, 2005
_________________________________________
J.P. MORGAN MORTGAGE ACQUISITION CORP.
2005-FRE1
ASSET BACKED PASS-THROUGH CERTIFICATES,
SERIES 2005-FRE1
Table of Contents
Page
ARTICLE I DEFINITIONS
Section 1.01
Defined Terms.
3
Section 1.02
Allocation of Certain Interest
Shortfalls.
44
Section 1.03
Designation of Interests in
REMIC.
44
Section 1.04
Rights of the NIMS Insurer.
49
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL
ISSUANCE OF CERTIFICATES
Section 2.01
Conveyance of Mortgage Loans.
50
Section 2.02
Acceptance of REMIC I by the
Trustee.
53
Section 2.03
Repurchase or Substitution of Mortgage
Loans by the Originator, the
Seller or the Depositor; Payment of
Prepayment Premiums in the
Event of Breach.
54
Section 2.04
Representations and Warranties of the
Depositor.
58
Section 2.05
Representations, Warranties and Covenants
of Litton.
60
Section 2.06
Representations and Warranties as to the
Mortgage Loans.
62
Section 2.07
[Reserved]
62
Section 2.08
[Reserved]
62
Section 2.09
Issuance of the R-I Residual
Interest.
62
Section 2.10
Conveyance of Uncertificated Regular
Interests; Acceptance by the
Trustee.
63
ARTICLE III ADMINISTRATION AND SERVICING
OF THE
MORTGAGE LOANS
Section 3.01
Servicer to Act as Servicer.
63
Section 3.02
Sub-Servicing Agreements Between the
Servicer and Sub-Servicers.
65
Section 3.03
Successor Sub-Servicers.
67
Section 3.04
Liability of the Servicer.
67
Section 3.05
No Contractual Relationship Between
Sub-Servicers and NIMS
Insurer, Trustee, Securities
Administrator or Certificateholders.
67
Section 3.06
Assumption or Termination of
Sub-Servicing Agreements by Trustee.
68
Section 3.07
Collection of Certain Mortgage Loan
Payments.
68
Section 3.08
Sub-Servicing Accounts.
69
Section 3.09
Collection of Taxes, Assessments and
Similar Items; Servicing
Accounts.
69
Section 3.10
Collection Account and Distribution
Account.
70
Section 3.11
Withdrawals from the Collection Account
and Distribution Account.
73
Section 3.12
Investment of Funds in the Collection
Account, the REO Account and
the Distribution Account.
75
Section 3.13
Superior Liens.
75
Section 3.14
Maintenance of Hazard Insurance and
Errors and Omissions and
Fidelity Coverage.
76
Section 3.15
Enforcement of Due-On-Sale Clauses;
Assumption Agreements.
77
Section 3.16
Realization Upon Defaulted Mortgage
Loans.
78
Section 3.17
Trustee to Cooperate; Release of Mortgage
Files.
81
Section 3.18
Servicing Compensation.
82
Section 3.19
[Reserved].
83
Section 3.20
Statement as to Compliance.
83
Section 3.21
Independent Public Accountants’
Servicing Report.
83
Section 3.22
Access to Certain
Documentation.
84
Section 3.23
Title, Management and Disposition of REO
Property.
84
Section 3.24
Obligations of the Servicer in Respect of
Prepayment Interest Shortfalls.
87
Section 3.25
Obligations of the Servicer in Respect of
Mortgage Rates and Monthly
Payments.
88
Section 3.26
Net WAC Reserve Fund; Yield Maintenance
Agreement.
88
Section 3.27
[Reserved].
90
Section 3.28
Advance Facility.
90
ARTICLE IV PAYMENTS TO
CERTIFICATEHOLDERS
Section 4.01
Distributions.
92
Section 4.02
Statements to
Certificateholders.
102
Section 4.03
Remittance Reports; P&I
Advances.
106
Section 4.04
Allocation of Realized Losses.
108
Section 4.05
Compliance with Withholding
Requirements.
108
Section 4.06
Tax Returns; Commission
Reporting.
109
ARTICLE V THE CERTIFICATES
Section 5.01
The Certificates.
111
Section 5.02
Registration of Transfer and Exchange of
Certificates.
113
Section 5.03
Mutilated, Destroyed, Lost or Stolen
Certificates.
118
Section 5.04
Persons Deemed Owners.
118
Section 5.05
Certain Available Information.
119
ARTICLE VI THE DEPOSITOR, THE SELLER
AND
THE SERVICER
Section 6.01
Liability of the Depositor, the Seller
and the Servicer.
119
Section 6.02
Merger or Consolidation of the Depositor,
the Seller or the Servicer.
119
Section 6.03
Limitation on Liability of the Depositor,
the Seller, the Servicer and
Others.
120
Section 6.04
Limitation on Resignation of the
Servicer.
121
Section 6.05
Rights of the Depositor, the Seller, the
Securities Administrator and
the Trustee in Respect of the
Servicer.
122
ARTICLE VII DEFAULT
Section 7.01
Servicer Events of Default.
123
Section 7.02
Securities Administrator to Act;
Appointment of Successor.
125
Section 7.03
Notification to
Certificateholders.
127
Section 7.04
Waiver of Servicer Events of
Default.
128
ARTICLE VIII CONCERNING THE TRUSTEE AND
THE
SECURITIES ADMINISTRATOR
Section 8.01
Duties of Trustee.
128
Section 8.02
Certain Matters Affecting the
Trustee.
129
Section 8.03
Trustee not Liable for Certificates or
Mortgage Loans.
131
Section 8.04
Trustee May Own Certificates.
131
Section 8.05
Fees and Expenses of Trustee.
132
Section 8.06
Eligibility Requirements for
Trustee.
132
Section 8.07
Resignation and Removal of
Trustee.
132
Section 8.08
Successor Trustee.
133
Section 8.09
Merger or Consolidation of
Trustee.
134
Section 8.10
Appointment of Co-Trustee or Separate
Trustee.
134
Section 8.11
Duties of Securities
Administrator.
135
Section 8.12
Certain Matters Affecting the Securities
Administrator.
137
Section 8.13
Securities Administrator not Liable for
Certificates or Mortgage
Loans.
138
Section 8.14
Securities Administrator May Own
Certificates.
139
Section 8.15
Fees and Expenses of Securities
Administrator.
139
Section 8.16
Eligibility Requirements for Securities
Administrator.
139
Section 8.17
Resignation and Removal of Securities
Administrator.
140
Section 8.18
Successor Securities
Administrator.
141
Section 8.19
Merger or Consolidation of Securities
Administrator.
141
ARTICLE IX TERMINATION
Section 9.01
Termination Upon Repurchase or
Liquidation of All Mortgage Loans.
142
Section 9.02
Additional Termination
Requirements.
144
ARTICLE X REMIC PROVISIONS
Section 10.01
REMIC Administration.
145
Section 10.02
Prohibited Transactions and
Activities.
148
Section 10.03
Servicer and Securities Administrator
Indemnification.
148
ARTICLE XI MISCELLANEOUS
PROVISIONS
Section 11.01
Amendment.
149
Section 11.02
Recordation of Agreement;
Counterparts.
150
Section 11.03
Limitation on Rights of
Certificateholders.
151
Section 11.04
Governing Law.
151
Section 11.05
Notices.
151
Section 11.06
Severability of Provisions.
152
Section 11.07
Notice to Rating Agencies and the
Counterparty.
152
Section 11.08
Article and Section
References.
153
Section 11.09
Third Party Rights.
153
Section 11.10
Grant of Security Interest.
153
Section 11.11
Protection of Assets.
154
Section 11.12
Non-Solicitation
154
Exhibits
Exhibit A-1
Form of Class A
Certificate
Exhibit A-2
Form of Mezzanine Certificate
Exhibit A-3
Form of Class C
Certificate
Exhibit A-4
Form of Class P Certificate
Exhibit A-5
Form of Class R
Certificate
Exhibit B
[Reserved]
Exhibit C-1
Form of Trust Receipt and Initial
Certification
Exhibit C-2
Form of Trustee Receipt and Final
Certification
Exhibit D
Form of Mortgage Loan Purchase
Agreement
Exhibit E-1
Form of Request for Release
Exhibit E-2
[Reserved]
Exhibit F-1
Forms of Transferor/Transferee
Representation Letter
Exhibit F-2
Form of Transfer Affidavit and
Agreement
Exhibit G
Form of ERISA Certification
Exhibit H
Form of Depositor
Certification
Exhibit I
Form of Trustee Certification
Exhibit J
Form of Servicer Certification
Exhibit K
Form of Power of Attorney
Schedules
Schedule 1
Mortgage Loan Schedule
Schedule 2
Prepayment Premium Schedule
This Pooling and Servicing Agreement, is
dated as of November 1, 2005 (the “Agreement”), by and
among J.P. MORGAN ACCEPTANCE CORPORATION, a Delaware corporation,
as Depositor (the “Depositor”), J.P. MORGAN MORTGAGE
ACQUISITION CORP., a Delaware corporation, as Seller (the
“Seller”) for purposes of Section 2.03 and 2.05,
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Securities
Administrator (the “Securities Administrator”), LITTON
LOAN SERVICING LP, as a servicer (a “Servicer”) and
U.S. BANK NATIONAL ASSOCIATION, as Trustee (the
“Trustee”).
PRELIMINARY STATEMENT:
The Depositor intends to sell
pass-through certificates (collectively, the
“Certificates”), to be issued hereunder in multiple
classes, which in the aggregate will evidence the entire beneficial
ownership interest in multiple REMICs (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool
of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement.
As of the Cut-off Date, the Mortgage
Loans had an aggregate Stated Principal Balance equal to
$961,410,208.
Set forth below are designations of
Classes of Certificates to the categories used herein.
|
Book-Entry Certificates
|
All Classes of Certificates other than the Physical
Certificates.
|
|
Class A Certificates
|
Class AI, Class AII-F-1, Class AII-F-2, Class AII-F-3, Class
AII-F-4, Class AII-V-1, Class AII-V-2 and Class AII-V-3
Certificates.
|
|
Class P Certificates
|
Class P Certificates.
|
|
ERISA-Restricted Certificates
|
Non-Offered Certificates and any Certificates that do not satisfy
the applicable ratings requirement under the Underwriter’s
Exemption.
|
|
Fixed Rate Certificates
|
Class AII-F-1, Class AII-F-2, Class AII-F-3, Class AII-F-4, Class
M-10 and Class M-11 Certificates.
|
|
Group II-F Certificates
|
Class AII-F-1, Class AII-F-2, Class AII-F-3 and Class AII-F-4
Certificates.
|
|
Group II-V Certificates
|
Class AII-V-1, Class AII-V-2 and Class AII-V-3 Certificates.
|
|
LIBOR Certificates
|
Class AI, Class AII-V-1, Class AII-V-2, Class AII-V-3 and Mezzanine
Certificates.
|
|
Mezzanine Certificates
|
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 Certificates and Class
M-11 Certificates.
|
|
Non-Offered Certificates
|
Class M-10, Class M-11, Class C, Class P and Residual
Certificates.
|
|
Offered Certificates
|
Class A and Offered Subordinate Certificates.
|
|
Offered Subordinate Certificates
|
Mezzanine Certificates (other than the Class M-10 and Class M-11
Certificates).
|
|
Physical Certificates
|
Class C, Class P and Residual Certificates.
|
|
Regular Certificates
|
All Classes of Certificates other than the Residual
Certificates.
|
|
Residual Certificates
|
Class R Certificates and Class R-X.
|
|
Senior Certificates
|
Class A Certificates.
|
|
Subordinate Certificates
|
Class C and Mezzanine Certificates.
|
In consideration of the mutual agreements
herein contained, the Depositor, the Seller, the Servicer, the
Securities Administrator and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01
Defined Terms.
The following words and phrases, unless
the context otherwise requires, shall have the following
meanings:
“Accepted Servicing
Practices”: With respect to any Mortgage Loan, those mortgage
servicing practices employed by the Servicer in servicing similar
mortgage loans for its own portfolio giving due consideration to
customary and usual standards of practice of prudent mortgage
lending institutions which service mortgage loans of the same type
as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located.
“Adjustable Rate Mortgage
Loan”: Each of the Mortgage Loans identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is subject to
adjustment.
“Adjustable Rate PPC”: A CPR
of 4.00% per annum of the then unpaid principal balance of such
Mortgage Loans in the first month of the life of such Mortgage
Loans and an additional approximately 1.3478% (precisely 31/23%)
per annum in each month thereafter until the 24th month.
Beginning in the 24th month and in each month thereafter
during the life of such Mortgage Loans, a CPR of 35%.
“Adjustment Date”: With
respect to each Adjustable Rate Mortgage Loan, the day of the month
on which the Mortgage Rate of such 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 Facility”: As
defined in Section 3.28(a) herein.
“Advance Facility Notice”: As
defined in Section 3.28(b) herein.
“Advance Facility Trustee”:
As defined in Section 3.28(b) herein.
“Advance Reimbursement
Amounts”: As defined in Section 3.28(a) herein.
“Advancing Person”: As
defined in Section 3.28(a) herein.
“Affiliate”: With respect to
any specified Person, any other Person controlling or controlled by
or under common control with such specified Person. For the
purposes of this definition, “control” when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the
foregoing.
“Aggregate Collateral
Balance”: As of any date of determination will be equal to
the aggregate Stated Principal Balance of the Mortgage Loans and
any REO Properties owned by the Trust.
“Agreement”: This Pooling and
Servicing Agreement and all amendments hereof and supplements
hereto.
“Applicable Regulations”: As
to any Mortgage Loan, all federal, state and local laws, statutes,
rules and regulations applicable thereto.
“Allocated Realized Loss
Amount”: With respect to any Distribution Date and any Class
of Mezzanine Certificates, the amount by which (A) any Realized
Losses allocated to such Class of Certificates on any Distribution
Date pursuant to Section 4.04 exceeds the sum of (B) (i) any
additions to the Class Principal Amount pursuant to Section 4.04(d)
on such Distribution Date or any previous Distribution Date and
(ii) the aggregate of the amounts paid in respect of
reimbursement of Allocated Realized Loss Amounts pursuant to
Section 4.01(a)(3) on previous Distribution Dates.
“Assignment”: An assignment
of Mortgage, notice of transfer or equivalent instrument, in
recordable form (excepting therefrom, if applicable, the mortgage
recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder’s
office and/or the assignee’s name), which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property
is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in
the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county, if
permitted by law.
“Assignment and Assumption
Agreement”: That certain assignment, assumption and
recognition agreement dated as of the Closing Date by and among the
Seller, the Depositor and Fremont and related to the Mortgage Loan
Purchase Agreement.
“Available Funds”: With
respect to any Distribution Date, an amount equal to (1) the sum of
(a) the aggregate of the amounts on deposit in the Collection
Account and Distribution Account as of the close of business on the
related Determination Date, (b) the aggregate of any amounts
received in respect of an REO Property withdrawn from any REO
Account and deposited in the Distribution Account for such
Distribution Date pursuant to Section 3.23, (c) the aggregate of
any amounts deposited in the Distribution Account by the Servicer
in respect of Compensating Interest for such Distribution Date
pursuant to Section 3.24 and (d) the aggregate of any P&I
Advances made by the Servicer for such Distribution Date pursuant
to Section 4.03 reduced (to not less than zero) by (2) the portion
of the amount described in clause (1)(a) above that represents (i)
Monthly Payments on the Mortgage Loans received from a Mortgagor on
or prior to the Determination Date but due during any Due Period
subsequent to the related Due Period, (ii) Principal Prepayments on
the Mortgage Loans received after the related Prepayment Period
(together with any interest payments received with such Principal
Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the
related Prepayment Period), (iii) Liquidation Proceeds, Insurance
Proceeds and proceeds from repurchases of and substitutions for
Mortgage Loans, if any, received in respect of such Mortgage Loans
after the calendar month preceding the month of such Distribution
Date, (iv) amounts reimbursable or payable to the Depositor, the
Originator, the Servicer, the Securities Administrator, the
Trustee, the Custodian or any Sub-Servicer pursuant to Section 3.11
or Section 3.12 or otherwise payable in respect of Extraordinary
Trust Fund Expenses, (v) amounts deposited in the Collection
Account or the Distribution Account in error, and (vi) the amount
of any Prepayment Premiums collected by the Servicer in connection
with the voluntary Principal Prepayment in full of any of the
Mortgage Loans or the Servicer Prepayment Premium Payment
Amount.
“Balloon Loan”: Any
Mortgage Loan which, by its terms, does not fully amortize the
principal balance thereof by its stated maturity and thus requires
a payment at the stated maturity larger than the monthly payments
due thereunder.
“Bankruptcy Code”: The
Bankruptcy Reform Act of 1978 (Title 11 of the United States Code),
as amended.
“Bankruptcy Loss”: With
respect to any Mortgage Loan, a Realized Loss resulting from a
Deficient Valuation (i.e. “principal cramdown”) or Debt
Service Reduction (i.e. “interest
cramdown”).
“Book-Entry Certificate”: As
specified in the Preliminary Statement.
“Book-Entry Custodian”: The
custodian appointed to Section 5.01 herein.
“Business Day”: Any day other
than a Saturday, a Sunday or a day on which banking or savings and
loan institutions in the City of New York, New York, the State of
Texas, the State of Minnesota or the cities 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”: With respect to
any Class of Senior Certificates and any Distribution Date, an
amount equal to the product of (i) the aggregate amount received
under the Yield Maintenance Agreement and (ii) a fraction, the
numerator of which is the Class Principal Amount of such Class and
the denominator which is the aggregate Class Principal Amount of
the Senior Certificates.
“Certificate”: Any one of the
certificates issued under this Agreement in substantially the forms
attached hereto as Exhibit A-1 through Exhibit A-5.
“Certificate Factor”: With
respect to any Class of LIBOR Certificates as of any Distribution
Date, a fraction, expressed as a decimal carried to six places, the
numerator of which is the aggregate Class Principal Amount of such
Class of Certificates on such Distribution Date (after giving
effect to any distributions of principal and allocations of
Realized Losses in reduction of the Class Principal Amount of such
Class of Certificates to be made on such Distribution Date), and
the denominator of which is the initial aggregate Class Principal
Amount of such Class of Certificates as of the Closing
Date.
“Certificate Margin”: As to
any Class of LIBOR Certificates, the respective amount set forth
below:
|
Class
|
Certificate Margin
|
|
(1)
|
(2)
|
|
|
|
|
|
AI
|
0.230%
|
0.460%
|
|
AII-V-1
|
0.080%
|
0.160%
|
|
AII-V-2
|
0.220%
|
0.440%
|
|
AII-V-3
|
0.330%
|
0.660%
|
|
M-1
|
0.410%
|
0.615%
|
|
M-2
|
0.430%
|
0.645%
|
|
M-3
|
0.450%
|
0.675%
|
|
M-4
|
0.580%
|
0.870%
|
|
M-5
|
0.660%
|
0.990%
|
|
M-6
|
0.750%
|
1.125%
|
|
M-7
|
1.400%
|
2.100%
|
|
M-8
|
1.800%
|
2.700%
|
|
M-9
|
2.500%
|
3.750%
|
(1)
To and including the Optional Termination
Date.
(2)
After the Optional Termination
Date.
“Certificate Owner”: With
respect to a Book-Entry Certificate, the Person who is the
beneficial owner of such Certificate as reflected on the books of
the Depository or on the books of a Depository Participant or on
the books of an indirect participating brokerage firm for which a
Depository Participant acts as agent.
“Certificate Register” and
“Certificate Registrar”: The register maintained and
the registrar appointed pursuant to Section 5.02 herein.
“Certificateholder” or
“Holder”: The Person in whose name a Certificate is
registered in the Certificate Register, except that a Disqualified
Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes 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 Securities
Administrator 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 Securities Administrator shall be required to
recognize as a “Holder” or
“Certificateholder” only the Person in whose name a
Certificate is registered in the Certificate Register.
“Charged-off Mortgage Loan”:
As defined in Section 3.01 herein.
“Class”: All of the
Certificates bearing the same class designation as set forth in the
Preliminary Statement.
“Class AII-F-4 Lockout Distribution
Amount”: For any Distribution Date, an amount (not
greater than the Principal Distribution Amount for that
Distribution Date allocable to the Group II-F Certificates) the
product of (x) the Class AII-F-4 Lockout Distribution Percentage
for that Distribution Date and (y) the Class AII-F-4 Pro Rata
Distribution Amount for that Distribution Date.
“Class AII-F-4 Lockout Distribution
Percentage”: For any Distribution Date in any period
listed in the table below, the applicable percentage listed
opposite such period:
|
Distribution Dates
|
Lockout Percentage
|
|
December 2005 through and including November 2008
|
0%
|
|
December 2008 through and including November 2010
|
45%
|
|
December 2010 through and including November 2011
|
80%
|
|
December 2011 through and including November 2012
|
100%
|
|
December 2012 and thereafter
|
300%
|
“Class AII-F-4 Pro Rata
Distribution Amount”: For any Distribution Date, an
amount equal to the product of (x) a fraction, the numerator of
which is the Class Principal Amount of the Class AII-F-4
Certificates immediately prior to that Distribution Date and the
denominator of which is the aggregate Class Principal Amount of the
Group II-F Certificates immediately prior to that Distribution Date
and (y) the portion of the Senior Principal Distribution Amount
allocated to the Group II-F Certificates for that Distribution
Date.
“Class A Principal
Distribution Amount”: For any Distribution Date, is an amount
equal to the excess of (x) the aggregate Class Principal Amount of
the Senior Certificates immediately prior to such Distribution Date
over (y) the lesser of (A) the product of (1) 52.40% and (2) the
Pool Principal Balance as of the last day of the related Due Period
and (B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class C Distribution
Amount”: With respect to any Distribution Date the sum of
(i) the Overcollateralization Release Amount for that
Distribution Date, if any, and (ii) the product of (x) a
notional amount, equal to the aggregate Stated Principal Balance of
the Mortgage Loans as of the first day of the month of such
Distribution Date (after giving effect to Monthly Payments of
principal due on such date), and (y) the Pass-Through Rate for
the Class C Interest for such Distribution Date as set forth
in footnote (2) to “REMIC II” under Section 1.03
herein, less (iii) distributions made pursuant to Section
4.01(a)(3)(i)-(xxxv) on such Distribution Date.
“Class Exemption”: A class
exemption granted by the U.S. Department of Labor, which provides
relief from certain of the prohibited transaction provisions of
ERISA and the related excise tax provisions of the Code.
“Class M-1 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date) and (ii) the Class Principal Amount of the
Class M-1 Certificates immediately prior to such Distribution Date
over (y) the lesser of (A) the product of (i) 59.10%
and (ii) the Pool Principal Balance as of the last day of the
related Due Period and (B) the Pool Principal Balance as of
the last day of the related Due Period minus the
Overcollateralization Floor.
“Class M-2 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the related Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date) and (iii) the Class Principal Amount of the Class M-2
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 65.60% and
(ii) the Pool Principal Balance as of the last day of the
related Due Period and (B) the Pool Principal Balance as of
the last day of the related Due Period minus the
Overcollateralization Floor.
“Class M-3 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date) and
(iv) the Class Principal Amount of the Class M-3 Certificates
immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 70.20% and (ii) the
Pool Principal Balance as of the last day of the related Due Period
and (B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class M-4 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date) and (iv) the
Class Principal Amount of the Class M-4 Certificates immediately
prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 73.80% and (ii) the Pool
Principal Balance as of the last day of the related Due Period and
(B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class M-5 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Class
Principal Amount of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount
on such Distribution Date) and (vi) the Class Principal Amount
of the Class M-5 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product
of (i) 77.30% and (ii) the Pool Principal Balance as of
the last day of the related Due Period and (B) the Pool
Principal Balance as of the last day of the related Due Period
minus the Overcollateralization Floor.
“Class M-6 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Class
Principal Amount of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount
on such Distribution Date), (vi) the Class Principal Amount of
the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution
Date) and (vii) the Class Principal Amount of the Class M-6
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 80.40% and
(ii) the Pool Principal Balance as of the last day of the
related Due Period and (B) the Pool Principal Balance as of
the last day of the related Due Period minus the
Overcollateralization Floor.
“Class M-7 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Class
Principal Amount of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount
on such Distribution Date), (vi) the Class Principal Amount of
the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Class Principal Amount of the Class M-6
Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date) and
(viii) the Class Principal Amount of the Class M-7
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 83.60% and
(ii) the Pool Principal Balance as of the last day of the
related Due Period and (B) the Pool Principal Balance as of
the last day of the related Due Period minus the
Overcollateralization Floor.
“Class M-8 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Class
Principal Amount of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount
on such Distribution Date), (vi) the Class Principal Amount of
the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Class Principal Amount of the Class M-6
Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date),
(viii) the Class Principal Amount of the Class M-7
Certificates (after taking into account the payment of the Class
M-7 Principal Distribution Amount on such Distribution Date) and
(ix) the Class Principal Amount of the Class M-8 Certificates
immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 86.00% and (ii) the
Pool Principal Balance as of the last day of the related Due Period
and (B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class M-9 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Class
Principal Amount of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount
on such Distribution Date), (vi) the Class Principal Amount of
the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Class Principal Amount of the Class M-6
Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date),
(viii) the Class Principal Amount of the Class M-7
Certificates (after taking into account the payment of the Class
M-7 Principal Distribution Amount on such Distribution Date), (ix)
the Class Principal Amount of the Class M-8 Certificates (after
taking into account the payment of the Class M-8 Principal
Distribution Amount on such Distribution Date) and (x) the
Class Principal Amount of the Class M-9 Certificates immediately
prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 88.50% and (ii) the Pool
Principal Balance as of the last day of the related Due Period and
(B) the Pool Principal Balance as of the last day of the
related Due Period minus the Overcollateralization
Floor.
“Class M-10 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Class
Principal Amount of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount
on such Distribution Date), (vi) the Class Principal Amount of
the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Class Principal Amount of the Class M-6
Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date),
(viii) the Class Principal Amount of the Class M-7
Certificates (after taking into account the payment of the Class
M-7 Principal Distribution Amount on such Distribution Date), (ix)
the Class Principal Amount of the Class M-8 Certificates (after
taking into account the payment of the Class M-8 Principal
Distribution Amount on such Distribution Date), (x) the Class
Principal Amount of the Class M-9 Certificates (after taking into
account the payment of the Class M-9 Principal Distribution Amount
on such Distribution Date) and (xi) the Class Principal Amount
of the Class M-10 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product
of (i) 91.80% and (ii) the Pool Principal Balance as of
the last day of the related Due Period and (B) the Pool
Principal Balance as of the last day of the related Due Period
minus the Overcollateralization Floor.
“Class M-11 Principal Distribution
Amount”: With respect to any Distribution Date, the excess of
(x) the sum of (i) the aggregate Class Principal Amount
of the Senior Certificates (after taking into account the payment
of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Class Principal Amount of the
Class M-1 Certificates (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Class Principal Amount of the Class M-2
Certificates (after taking into account the payment of the Class
M-2 Principal Distribution Amount on such Distribution Date),
(iv) the Class Principal Amount of the Class M-3 Certificates
(after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Class
Principal Amount of the Class M-4 Certificates (after taking into
account the payment of the Class M-4 Principal Distribution Amount
on such Distribution Date), (vi) the Class Principal Amount of
the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Class Principal Amount of the Class M-6
Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date),
(viii) the Class Principal Amount of the Class M-7
Certificates (after taking into account the payment of the Class
M-7 Principal Distribution Amount on such Distribution Date), (ix)
the Class Principal Amount of the Class M-8 Certificates (after
taking into account the payment of the Class M-8 Principal
Distribution Amount on such Distribution Date), (x) the Class
Principal Amount of the Class M-9 Certificates (after taking into
account the payment of the Class M-9 Principal Distribution Amount
on such Distribution Date), (xi) the Class Principal Amount of the
Class M-10 Certificates (after taking into account the payment of
the Class M-10 Principal Distribution Amount on such Distribution
Date) and (xii) the Class Principal Amount of the Class M-11
Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 94.30% and
(ii) the Pool Principal Balance as of the last day of the
related Due Period and (B) the Pool Principal Balance as of
the last day of the related Due Period minus the
Overcollateralization Floor.
“Class Principal Amount”:
With respect to any Class of Certificates, other than the Residual
and Class C Certificates, as of any Distribution Date, the
Class Principal Amount thereof on the Closing Date (the
“Original Class Principal Amount”) reduced by the sum
of (a) all amounts actually distributed in respect of principal of
such Class and (b) with respect to the Mezzanine Certificates, any
reductions in their respective Class Principal Amounts deemed to
have occurred in connection with allocations of Realized Losses on
all prior Distribution Dates pursuant to Section 4.04(b) plus any
increase to a Class Principal Amount pursuant to Section 4.04(d).
“Closing Date”: November 29,
2005.
“Code”: The Internal Revenue
Code of 1986, including any successor or amendatory
provisions.
“Collection Account”: The
account or accounts created and maintained by the Servicer pursuant
to Section 3.10(a), which shall be entitled “Litton Loan
Servicing, LP, in trust for U.S. Bank National Association, as
Trustee, for J.P. Morgan Mortgage Acquisition Corp.
2005-FRE1”. The Collection Account must be an Eligible
Account.
“Commission”: The Securities
and Exchange Commission.
“Compensating Interest”: As
defined in Section 3.24 herein.
“Controlling Person”: The
Holders of the majority Percentage Interest of the Class C
Certificates.
“Corporate Trust Office”: The
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 offices at the date of the execution
of this instrument is located 209 S. LaSalle Street, Suite 300,
Chicago, IL 60604, Attention: JPMAC-FRE1, or at such other
address as the Trustee may designate from time to time by notice to
the Certificateholders, the Securities Administrator, the Depositor
and the Servicer. With respect to the Securities
Administrator, 4 New York Plaza, 6th Floor, New York, New York
10004, Attention: Worldwide Securities Services/Structured
Finance Services – JPMAC 2005-FRE1 or at such other address
as the Securities Administrator may designate from time to time by
notice to the Certificateholders, the Trustee, the Depositor and
the Servicer. For purposes of presenting Certificates for
final payment at 2001 Bryan Street, 9th Floor, Dallas, Texas 75201,
Attention: Worldwide Securities Services/Structured Finance
Payment Area – JPMAC 2005-FRE1.
“Corresponding Classes of
Certificates”: With respect to each REMIC I Regular Interest,
any Class of Certificates appearing opposite such REMIC Regular
Interest in Section 1.03 hereof.
“Counterparty”: The Bank of
New York, or any successor in interest thereto under the Yield
Maintenance Agreement.
“CPR”: A prepayment
assumption that represents an annualized constant assumed rate of
prepayment each month of a pool of mortgage loans relative to its
outstanding principal balance for the life of such pool.
“Credit Repositories”: Each
of Equifax, Transunion, and Experian, or their respective
successors in interest.
“Custodial Agreement”: Any
custodial agreement between the Trustee and the related Custodian
providing for the safekeeping of any documents or instruments
referred to in Section 2.01 on behalf of the
Certificateholders.
“Custodial File”: A Mortgage
File held by a Custodian on behalf of the Trustee.
“Custodian”: A custodian that
is appointed pursuant to a Custodial Agreement. Any Custodian
so appointed shall act as agent on behalf of the Trustee, and shall
be compensated pursuant to Section 4.01 hereof. The initial
Custodian shall be J.P. Morgan Trust Company, N.A.
“Custodian Fee”: As to
any Distribution Date and each Mortgage Loan, an amount equal to
the product of the Custodian Fee Rate and the outstanding Stated
Principal Balance of such Mortgage Loan as of the first day of the
related Due Period.
“Custodian Fee Rate:”
0.002% per annum.
“Cut-off Date”: With respect
to each Mortgage Loan (other than a Qualified Substitute Mortgage
Loan), the close of business on November 1, 2005. With
respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the
“Cut-off Date,” when used with respect to more than one
Mortgage Loan, shall be to the respective Cut-off Dates for such
Mortgage Loans.
“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 principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the
Bankruptcy Code.
“Definitive Certificates”: As
defined in Section 5.01(b) herein.
“Deleted Mortgage Loan”: A
Mortgage Loan replaced or to be replaced by a Qualified Substitute
Mortgage Loan.
“Delinquency Percentage”:
With respect to the last day of a Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate
Stated Principal Balance of all Mortgage Loans that, as of the last
day of the previous calendar month, are 60 or more days Delinquent,
are in foreclosure, have been converted to REO Properties or have
been discharged by reason of bankruptcy, and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage
Loans and REO Properties as of the last day of the previous
calendar month.
“Delinquent”: A Mortgage Loan
is “Delinquent” if any Monthly Payment due on a Due
Date is not made by the close of business on the next scheduled Due
Date for that Mortgage Loan (including all foreclosures,
bankruptcies and REO Properties). A Mortgage Loan is
“30 days Delinquent” if the Monthly Payment has not
been received by the close of business on the corresponding day of
the month immediately succeeding the month in which that Monthly
Payment was due or, if there was no corresponding date (e.g., as
when a 30-day month follows a 31-day month in which the payment was
due on the 31st day of that month), then on the last day of that
immediately succeeding month; and similarly for “60 days
Delinquent” and “90 days Delinquent,” etc.
“Depositor”: J.P. Morgan
Acceptance Corporation I, a Delaware corporation having its
principal place of business in New York, or its successors in
interest.
“Depository”: The Depository
Trust Company, or any successor Depository hereafter named.
The nominee of the initial Depository, for purposes of
registering those Certificates that are to be Book-Entry
Certificates, is CEDE & Co. The Depository shall at all
times be a “clearing corporation” as defined in Section
8-102(a)(5) of the Uniform Commercial Code of the State of New York
and a “clearing agency” registered pursuant to the
provisions of Section 17A of the Exchange Act.
“Depository Institution”: Any
depository institution or trust company, including the Trustee,
that (a) is incorporated under the laws of the United States of
America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term
unsecured debt obligations that are rated F-1 by Fitch, A-1 by
S&P and P-1 by Moody’s (or comparable ratings if Fitch,
S&P and Moody’s are not the Rating Agencies).
“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 each Distribution Date, the 15th day of the calendar
month in which such Distribution Date occurs or, if such 15th day
is not a Business Day, the Business Day immediately preceding such
15th day.
“Directly Operate”: With
respect to any REO Property, the furnishing or rendering of
services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon
or any use of such REO Property in a trade or business conducted by
the Trust Fund 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”:
Any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are
subject to tax and, except for Freddie Mac, a majority of its board
of directors is not selected by such governmental unit), (ii) any
foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers’ cooperatives described in
Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric
and telephone cooperatives described in Section 1381(a)(2)(C) of
the Code, (v) an “electing large partnership” within
the meaning of Section 775 of the Code and (vi) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Certificate by such
Person may cause any REMIC created hereunder, or any Person having
an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed under the
Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a Residual Certificate to such Person.
The terms “United States,” “State”
and “international organization” shall have the
meanings set forth in Section 7701 of the Code or successor
provisions.
“Distribution Account”: The
trust account or accounts created and maintained by the Securities
Administrator pursuant to Section 3.10(b) which shall be entitled
“Distribution Account, U.S. Bank National Association, as
Trustee, in trust for the registered holders of J.P. Morgan
Mortgage Acquisition Corp. 2005-FRE1. The Distribution
Account must be an Eligible Account.
“Distribution Date”: The 25th
day of any month, or if such 25th day is not a Business Day, the
Business Day immediately following such 25th day, commencing in
December 2005.
“Due Date”: With respect to
each Distribution Date and each Mortgage Loan (a) that has a
Monthly Payment due on the first day of the month, the first day of
the month and (b) that has a Monthly Payment due on a day other
than the first day of the month, such Mortgage Loan will be treated
as if the Monthly Payment is due on the first day of the
immediately succeeding month, in each case, exclusive of any days
of grace in the related Due Period.
“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.
“EDGAR”: The
Commission’s Electronic Data Gathering and Retrieval
System.
“Eligible
Account”: Either (1) an account or accounts maintained with a
federal or state-chartered Depository Institution or trust company
acceptable to the Rating Agencies and shall be: (a) commercial
paper, short-term debt obligation, or other short-term deposits
rated at least “A-1+” by S&P and F-1+ by Fitch if
the deposits are to be held in the account for less than 30 days;
or (b) long term unsecured debt obligations rated at least
“AA-” by S&P and “A+” by Fitch if the
deposits are to be held in the account more than 30 days; following
a downgrade, withdrawal, or suspension of such institution’s
rating, each account should promptly (and in any case within not
more than 10 calendar days) be moved to a qualifying institution or
to one or more segregated trust accounts in the trust department of
such institution, if permitted; or (2) a segregated trust account
or accounts maintained with the corporate trust department of a
federal depository institution or state-chartered depository
institution subject to regulations regarding fiduciary funds on
deposit similar to Title 12 of the Code of Federal Regulation
Section 9.10(b), which, in either case, has corporate trust powers,
acting in its fiduciary capacity. Eligible Accounts may bear
interest.
“ERISA”: The Employee
Retirement Income Security Act of 1974, as amended.
“ERISA-Qualifying
Underwriting”: A best efforts or firm commitment underwriting
or private placement that meets the requirements (without regard to
the ratings requirements) of an Underwriter’s
Exemption.
“ERISA-Restricted
Certificate”: The Class M-10, Class M-11, Class C,
Class P, Class R and Class R-X Certificates, and any
Certificate that does not satisfy the applicable rating requirement
under the Underwriter’s Exemption.
“Estate in Real Property”: A
fee simple estate in a parcel of land.
“Excess Overcollateralized
Amount”: With respect to 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.
“Exchange Act”: The
Securities Exchange Act of 1934, as amended.
“Extraordinary Trust Fund
Expense”: Any amounts payable or reimbursable to the
Securities Administrator, the Trustee, the Custodian or any
director, officer, employee or agent of the Securities
Administrator, the Trustee or the Custodian, from the Trust Fund
pursuant to Sections 2.02, 2.03, 7.01(c), 8.05 or 8.15 herein, or
Section 25 of the Custodial Agreement and any amounts payable from
the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii), any amounts payable from the Distribution Account in
respect of any REMIC administration pursuant to Section
10.01(c).
“Fannie Mae”: Fannie Mae,
formerly known as Federal National Mortgage Association, or any
successor thereto.
“FDIC”: Federal Deposit
Insurance Corporation or any successor thereto.
“Federal Funds Rate”: The
interest rate at which depository institutions lend balances at the
Federal Reserve to other depository institutions
overnight.
“Final Distribution Date”:
The Distribution Date in September 2035.
“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 Depositor or the Servicer, as the case
may be, pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, as applicable), a determination made by
the Servicer that all Insurance Proceeds, Liquidation Proceeds and
other payments or recoveries which the Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain
records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
“First Lien”: With respect to
any second lien Mortgage Loan, the mortgage loan relating to the
corresponding Mortgaged Property having a first priority
lien.
“Fitch”: Fitch Ratings, or
its successor in interest thereto.
“Fixed Rate Certificates”:
As specified in the Preliminary Statement.
“Fixed Rate Mortgage Loan”:
Each of the Mortgage Loans identified in the Mortgage Loan Schedule
as having a Mortgage Rate that is fixed.
“Fixed Rate PPC”: A CPR of
4.00% per annum of the then unpaid principal balance of such
Mortgage Loans in the first month of the life of such Mortgage
Loans and an additional approximately 1.4545% (precisely 16/11%)
per annum in each month thereafter until the 12th month.
Beginning in the 12th month and in each month thereafter
during the life of such Mortgage Loans, a CPR of 20%.
“Formula Rate”: As to any
Class of LIBOR Certificates and any Distribution Date, the lesser
of (x) the sum of One-Month LIBOR and the applicable Certificate
Margin and (y) the Maximum Rate Cap. As to any Fixed Rate
Certificate, the fixed rate of interest set forth next to its name
in the table below:
|
|
Formula Rate
|
|
|
|
|
|
|
|
|
AII-F-1
|
5.375%
|
5.875%
|
|
AII-F-2
|
5.224%
|
5.724%
|
|
AII-F-3
|
5.627%
|
6.127%
|
|
AII-F-4
|
5.488%
|
5.988%
|
|
M-10
|
6.000%
|
6.500%
|
|
M-11
|
6.000%
|
6.500%
|
(1)
To and including the Optional Termination
Date.
(2)
After the Optional Termination
Date.
“Freddie Mac”: Freddie Mac,
formerly known as Federal Home Loan Mortgage Corporation, or any
successor thereto.
“Fremont”: Fremont Investment
& Loan, a California Corporation or its successor in
interest.
“Group”: Either Group I or
Group II, as applicable.
“Group I”: Those certain
Mortgage Loans identified as belonging to Group I on the Mortgage
Loan Schedule.
“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 Percentage.
“Group I Certificates”: The
Class AI Certificates.
“Group I Interest Remittance
Amount”: With respect to any Distribution Date is that
portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the
Group I Mortgage Loans and Compensating Interest paid by the
Servicer with respect to the Group I Mortgage Loans.
“Group I Mortgage Loans”: The
Mortgage Loans relating to Group I.
“Group I Percentage”: An
amount equal to, with respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the
Group I Principal Remittance Amount for such Distribution Date and
the denominator of which is the Principal Remittance Amount for
such Distribution Date.
“Group I Principal Distribution
Amount”: With respect to any Distribution Date is the sum of
(i) the Group I Basic Principal Distribution Amount for such
Distribution Date and (ii) the product of (a) the
Overcollateralization Increase Amount for such Distribution Date
and (b) the Group I Percentage.
“Group I Principal Remittance
Amount”: Means, with respect to any Distribution Date, the
portion of the Principal Remittance Amount for such Distribution
Date derived from the Group I Mortgage Loans.
“Group I Senior Principal
Distribution Amount”: with respect to any Distribution Date,
is an amount equal to the Class A Principal Distribution
Amount multiplied by the Group I Percentage.
“Group II”: Those certain
Mortgage Loans identified as belonging to Group II on the Mortgage
Loan Schedule.
“Group II Basic Principal
Distribution Amount”: With respect to any Distribution Date
is 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 Percentage.
“Group II Certificates”: The
Class AII-F-1, Class AII-F-2, Class AII-F-3, Class AII-F-4, Class
AII-V-1, Class AII-V-2 and Class AII-V-3 Certificates.
“Group II Interest Remittance
Amount”: With respect to any Distribution Date is that
portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the
Group II Mortgage Loans and Compensating Interest paid by the
Servicer with respect to the Group II Mortgage Loans.
“Group II Mortgage Loans”:
The Mortgage Loans relating to Group II.
“Group II Percentage”: Is an
amount equal to, with respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the
Group II Principal Remittance Amount for such Distribution Date and
the denominator of which is the Principal Remittance Amount for
such Distribution Date.
“Group II Principal Distribution
Amount”: With respect to any Distribution Date is the sum of
(i) the Group II Basic Principal Distribution Amount for such
Distribution Date and (ii) the product of (a) the
Overcollateralization Increase Amount for such Distribution Date
and (b) the Group II Percentage.
“Group II Principal Remittance
Amount”: Means, with respect to any Distribution Date,
the portion of the Principal Remittance Amount for such
Distribution Date derived from the Group II Mortgage
Loans.
“Group II Senior Principal
Distribution Amount”: with respect to any Distribution
Date, is an amount equal to the Class A Principal Distribution
Amount multiplied by the Group II Percentage.
“Group II-F Certificates”:
As specified in the Preliminary Statement.
“Group II-V Certificates”:
As specified in the Preliminary Statement.
“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 Mortgage
Loan.
“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, the
Servicer or any Affiliate thereof, and (c) is not connected with
the Depositor, 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, the
Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any Class of securities issued by
the Depositor or the Servicer or any Affiliate thereof, as the case
may be.
“Independent Contractor”:
Either (i) any Person (other than the Servicer) that would be an
“independent contractor” with respect to the Trust Fund
within the meaning of Section 856(d)(3) of the Code if the Trust
Fund were a real estate investment trust (except that the ownership
tests set forth in that section shall be considered to be met by
any Person that owns, directly or indirectly, 35% or less of any
Class of Certificates), so long as the Trust Fund does not receive
or derive any income from such Person and provided that the
relationship between such Person and the Trust Fund is at
arm’s length, all within the meaning of Treasury Regulation
Section 1.856-4(b)(5), or (ii) any other Person (including the
Servicer) if the Securities Administrator 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 each related Adjustment Date, the
index as specified in the related Mortgage Note.
“Insurance Proceeds”:
Proceeds of any title policy, hazard policy or other insurance
policy covering a Mortgage Loan or related Mortgaged Property, to
the extent such proceeds are not to be applied to the restoration
of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Servicer would follow in
servicing Mortgage Loans held for its own account, subject to the
terms and conditions of the related Mortgage Note and
Mortgage.
“Interest Accrual Period”:
For any Distribution Date and the LIBOR Certificates, will be the
actual number of days (based on a 360-day year) included in the
period commencing on the immediately preceding Distribution Date
(or, in the case of the first such Interest Accrual Period,
commencing on the Closing Date) and ending on the day immediately
preceding such Distribution Date. For any Distribution Date
and the Fixed Rate Certificates, will be the calendar month
preceding the month in which the Distribution Date occurs,
calculated on the basis of a 360-day year consisting of twelve
30-day months.
“Interest Determination
Date”: With respect to the LIBOR Certificates and any
Interest Accrual Period therefor, the second London Business Day
preceding the commencement of such Interest Accrual
Period.
“Interest Remittance Amount”:
With respect to any Distribution Date, the sum of the Group I
Interest Remittance Amount and the Group II Interest Remittance
Amount.
“Late Collections”: With
respect to any Mortgage Loan and any Due Period, all amounts
received subsequent to the Determination Date immediately following
such 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 for such Due
Period and not previously recovered.
“LIBOR Certificates”: As
specified in the Preliminary Statement.
“Litton”: Litton Loan
Servicing LP.
“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; (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), Section 3.23 or Section 9.01; or (iv) such Mortgage Loan
becomes a Charged-off Mortgage Loan. 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
purchased pursuant to Section 9.01.
“Liquidation Proceeds”: The
amount (other than Insurance Proceeds, Recoveries or 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 (but only to the extent not
required to be released to a Mortgagor pursuant to the related
Mortgage Loan Documents or to the holder of a first lien pursuant
to the mortgage loan documents relating to the first lien), (ii)
the liquidation of a defaulted Mortgage Loan through 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 9.01.
“Loan-to-Value Ratio” or
“LTV”: With respect to any first lien Mortgage Loan and
as of any date of determination, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the
related Mortgage Loan at such date and the denominator of which is
the Value of the related Mortgaged Property. With respect to
any second lien Mortgage Loan and as of any date of determination,
the fraction, expressed as a percentage, the numerator of which is
the sum of (a) the principal balance of the related Mortgage Loan
at the date of origination plus (b) the principal balance of the
related First Lien at the date of origination of such mortgage loan
and the denominator of which is the Value of the related Mortgaged
Property.
“London Business Day”: Any
day on which banks in the City of London and The City of New York
are open and conducting transactions in United States
dollars.
“Master REMIC”: As defined in
Section 1.03 of this Agreement.
“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.
“Maximum Rate Cap”: A per
annum rate (subject to adjustment based on the actual number of
days elapsed in the Interest Accrual Period) equal to the
difference between (A) the weighted average Maximum Mortgage Rates
of the Mortgage Loans as of the first day of the month preceding
the month of such Distribution Date weighted on the basis of the
related Stated Principal Balances as of such date (subject to
adjustment for prepayments received and distributed in the month
prior to that Distribution Date) and (B) the sum of (1) the
Servicing Fee Rate, (2) the Securities Administrator Fee Rate and
(3) the Custodian Fee Rate.
“Minimum Mortgage Rate”: With
respect to each Adjustable Rate Mortgage Loan, the greater of (a)
the Gross Margin set forth in the related Mortgage Note and (b) the
percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
“Monthly Interest Distributable
Amount”: With respect to any Distribution Date and each Class
of Certificates, other than the Class P, Class R and
Class C Certificates, an amount equal to the amount of
interest accrued during the related Interest Accrual Period at the
related Pass-Through Rate on the Class Principal Amount of such
Class of Certificates immediately prior to such Distribution Date,
in each case, reduced by any Net Prepayment Interest Shortfalls
allocated to such Class of Certificates and any Relief Act Interest
Shortfalls allocated to such Class of Certificates, in each such
case, as such shortfalls are allocated pursuant to Section 1.02
herein.
“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(a); 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 with all applicable riders
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(c) of this Agreement, as held from
time to time as a part of the Trust Fund, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule, including each
REO Property unless the context otherwise requires.
“Mortgage Loan Purchase
Agreement”: The agreement between Fremont Investment &
Loan and J.P. Morgan Mortgage Acquisition Corp., regarding the sale
of the Mortgage Loans to the Seller.
“Mortgage Loan Schedule”: As
of any date, the list of Mortgage Loans included in the Trust Fund
on such date, attached hereto as Schedule 1. The Mortgage
Loan Schedule shall set forth the following information with
respect to each Mortgage Loan:
(i)
the Mortgagor’s name and the
Originator’s Mortgage Loan identifying number;
(ii)
the street address of the Mortgaged
Property including the state and zip code;
(iii)
a code indicating whether the Mortgaged
Property is owner-occupied;
(iv)
the type of Residential Dwelling
constituting the Mortgaged Property;
(v)
the original months to
maturity;
(vi)
the Loan-to-Value Ratio, at
origination;
(vii)
the Mortgage Rate in effect immediately
following the Cut-off Date;
(viii)
the date on which the first Monthly
Payment was due on the Mortgage Loan;
(ix)
the stated maturity date of such Mortgage
Loan and of the related First Lien, if applicable;
(x)
the amount of the Monthly Payment (a) at
origination and (b) due on the first Due Date after the Cut-off
Date;
(xi)
the last Due Date on which a Monthly
Payment was actually applied to the unpaid Stated Principal
Balance;
(xii)
the original principal amount of the
Mortgage Loan and the original principal balance of the related
First Lien, if applicable, as of the date of
origination;
(xiii)
the Stated Principal Balance of the
Mortgage Loan and the Stated Principal Balance of the related First
Lien, if applicable, as of the close of business on the Cut-off
Date;
(xiv)
with respect to each Adjustable Rate
Mortgage Loan, the Applicable Index and Gross Margin;
(xv)
a code indicating the purpose of the
Mortgage Loan (i.e., purchase financing, rate/term refinancing,
cash-out refinancing);
(xvi)
with respect to each Adjustable Rate
Mortgage Loan, the Maximum Mortgage Rate;
(xvii)
with respect to each Adjustable Rate
Mortgage Loan, the Minimum Mortgage Rate;
(xviii)
the Mortgage Rate at
origination;
(xix)
with respect to each Adjustable Rate
Mortgage Loan, the Periodic Rate Cap and the maximum first
Adjustment Date Mortgage Rate adjustment;
(xx)
a code indicating the documentation
program;
(xxi)
with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date immediately following the
Cut-off Date and the Adjustment Date frequency;
(xxii)
the Value of the Mortgaged
Property;
(xxiii)
the sale price of the Mortgaged Property,
if applicable;
(xxiv)
the Originator’s risk grade and the
FICO or other credit score of the Mortgagor;
(xxv)
the actual interest “paid to
date” of the Mortgage Loan as of the Cut-off Date;
(xxvi)
the number of years any Prepayment
Premium is in effect;
(xxvii)
the loan type (i.e., fixed, adjustable;
2/28, 3/27, 15/15, etc.);
(xxviii)
the actual unpaid principal balance
of the Mortgage Loan as of the Cut-off Date;
(xxix)
a code indicating whether such Mortgage
Loan is a Group I Mortgage Loan or a Group II Mortgage
Loan;
(xxx)
a code indicating whether the Mortgage
Loan is a second lien Mortgage Loan; and
(xxxi)
a code indicating whether the Mortgage
Loan is subject to a Prepayment Premium, if any.
The Mortgage Loan Schedule shall set
forth the following information with respect to the Mortgage Loans
in the aggregate as of the Cut-off Date: (1) the number of Mortgage
Loans; (2) the current principal balance of the Mortgage Loans; (3)
the weighted average Mortgage Rate of the Mortgage Loans; and (4)
the weighted average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall set forth the aggregate Stated
Principal Balance of the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With
respect to any Qualified Substitute Mortgage Loan, the 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 with all applicable riders or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
“Mortgage Pool”: The pool of
Mortgage Loans, identified on Schedule 1 from time to time, and any
REO Properties acquired in respect thereof.
“Mortgage Rate”: With respect
to each Mortgage Loan, the annual rate at which interest accrues on
such Mortgage Loan from time to time in accordance with the
provisions of the related Mortgage Note. 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 an Estate in Real Property or a leasehold
interest improved by a Residential Dwelling.
“Mortgagor”: The obligor on a
Mortgage Note.
“Net Liquidation Proceeds”:
With respect to any liquidation of a Mortgage Loan or any other
disposition of related Mortgaged Property (including REO Property),
the related Liquidation Proceeds, net of P&I Advances,
Servicing Advances, Servicing Fees and any other fees, received and
retained in connection with the liquidation of such Mortgage Loan
or Mortgaged Property in accordance with the terms of this
Agreement.
“Net Monthly Excess
Cashflow”: With respect to any Distribution Date, an amount
equal to the sum of (i) any Overcollateralization Release Amount
for such Distribution Date and (ii) the positive excess of (x) the
Available Funds for such Distribution Date over (y) the sum for
such Distribution Date of (A) the Monthly Interest Distributable
Amounts for the Senior Certificates and Mezzanine Certificates,
each pursuant to Section 4.01(a)(1), (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
sum of Servicing Fee Rate, the Custodian Fee Rate and the
Securities Administrator 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”: A per annum
rate (subject to adjustment based on the actual number of days
elapsed in the Interest Accrual Period) equal to the difference
between (A) the weighted average Mortgage Rates of the Mortgage
Loans as of the first day of the month preceding the month of such
Distribution Date weighted on the basis of the related Stated
Principal Balances as of such date (subject to adjustment for
prepayments received and distributed in the month prior to that
Distribution Date) and (B) the sum of (1) the Servicing Fee Rate,
(2) the Securities Administrator Fee Rate and (3) the Custodian Fee
Rate.
“Net WAC Rate Carryover
Amount”: For any Distribution Date on which the Pass-Through
Rate for any Class of LIBOR Certificates is equal to the related
Net WAC Rate, an amount equal to the sum of (i) the excess of (x)
the amount of interest such Class accrued for such Distribution
Date at the related Formula Rate, over (y) the amount of interest
such Class accrued for such Distribution Date at the related Net
WAC Rate and (ii) the unpaid portion of any Net WAC Rate Carryover
Amount from the prior Distribution Date together with interest
accrued on such unpaid portion for the most recently ended Interest
Accrual Period at the Formula Rate applicable for such Class for
such Interest Accrual Period.
“Net WAC Reserve Fund”: The
Eligible Account established pursuant to Section 3.26.
“New Lease”: Any lease of REO
Property entered into on behalf of the Trust Fund, including any
lease renewed or extended on behalf of the Trust Fund, if the Trust
Fund has the right to renegotiate the terms of such
lease.
“NIMS Insurer”: Any
insurer that is guaranteeing certain payments under notes secured
by collateral which includes all or a portion of the Class C
Certificates, the Class P Certificates and/or the Residual
Certificates.
“Nonrecoverable P&I
Advance”: Any P&I 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 using Accepted
Servicing Practices, will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
“Nonrecoverable Servicing
Advance”: Any 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 using Accepted
Servicing Practices, will not or, in the case of a proposed
Servicing Advance, would not be ultimately recoverable from related
Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.
“Non-United States Person”:
Any Person other than a United States Person.
“Offered Certificates”: As
defined in the Preliminary Statement.
“Offered Subordinate
Certificates”: As specified in the Preliminary
Statement.
“Officers’
Certificate”: With respect to the Depositor and the Seller, a
certificate signed by the Chairman of the Board, the Vice Chairman
of the Board, the President, a vice president (however denominated)
or an authorized agent, and by the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor or Seller, as applicable. With respect to the
Servicer, any officer who is authorized to act for the Servicer in
matters relating to this Agreement, and whose action is binding
upon the Servicer, initially including those individuals whose
names appear on the list of authorized officers delivered at the
closing.
“One-Month LIBOR”: With
respect to the LIBOR Certificates and any Interest Accrual Period
therefor, the rate determined by the Securities Administrator on
the related Interest Determination Date (or with respect to the
initial Interest Accrual Period, on the Closing Date based on
information available on the related Interest Determination Date)
on the basis of the offered rate for one-month U.S. dollar
deposits, as such rate appears on Telerate Page 3750 as of 11:00
a.m. (London time) on such Interest Determination Date; provided
that if such rate does not appear on Telerate Page 3750, the rate
for such date will be determined on the basis of the offered rates
of the Reference Banks for one-month U.S. dollar deposits, as of
11:00 a.m. (London time) on such Interest Determination Date.
In such event, the Securities Administrator will request the
principal London office of each of the Reference Banks to provide a
quotation of its rate. If on such Interest Determination
Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Accrual Period shall be
the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If on such
Interest Determination Date, fewer than two Reference Banks provide
such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the higher of (i) LIBOR as determined on
the previous Interest Determination Date and (ii) the Reserve
Interest Rate. Notwithstanding the foregoing, if, under the
priorities described above, LIBOR for an Interest Determination
Date would be based on LIBOR for the previous Interest
Determination Date for the third consecutive Interest Determination
Date, the Depositor shall select an alternative comparable index
(over which the Depositor has no control), used for determining
one-month Eurodollar lending rates that is calculated and published
(or otherwise made available) by an independent party.
“Operative Documents”: This
Agreement, the Mortgage Loan Purchase Agreement, the Custodial
Agreement, the Assignment and Assumption Agreement and any other
documents related hereto or thereto.
“Opinion of Counsel”: A
written opinion of counsel, who may, without limitation, be
salaried counsel for the Depositor or the Servicer and which shall
be acceptable to the Securities Administrator and the Trustee
(which acceptance shall not be unreasonably withheld), except that
any opinion of counsel relating to (a) the qualification of any
REMIC created hereunder or (b) compliance with the REMIC Provisions
must be an opinion of Independent counsel.
“Optional Termination Date”:
The first Distribution Date that the Servicer shall be permitted to
purchase the Mortgage Loans and REO Properties pursuant to Section
9.01(b).
“Originator”: Fremont or its
successor in interest.
“Overcollateralization Deficiency
Amount”: With respect to any Distribution Date, the excess,
if any, of (a) the Overcollateralization Target Amount applicable
to such Distribution Date over (b) the Overcollateralized Amount
applicable to such Distribution Date (assuming that 100% of the
Principal Remittance Amount is applied as a payment of principal on
such Distribution Date).
“Overcollateralization
Floor”: With respect to any Distribution Date, 0.50% of
the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.
“Overcollateralization Increase
Amount”: With respect to any Distribution Date, the lesser of
(a) the Overcollateralization Deficiency Amount as of such
Distribution Date and (b) Net Monthly Excess Cash Flow available
for distribution on that Distribution Date pursuant to Section
4.01(a)(3)(i).
“Overcollateralization Release
Amount”: With respect to any Distribution Date, an amount
equal to the lesser of (a) the Excess Overcollateralized Amount and
(b) the Principal Remittance Amount for such Distribution
Date.
“Overcollateralization Target
Amount”: With respect to any Distribution Date (1) prior
to the Stepdown Date, 2.85% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, (2) on
or after the Stepdown Date provided a Trigger Event is not in
effect, the greater of (x) 5.70% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the
related Due Period and (y) the Overcollateralization Floor,
and (3) on or after the Stepdown Date if a Trigger Event is in
effect, the Overcollateralization Target Amount for the immediately
preceding Distribution Date.
“Overcollateralized Amount”:
As of any Distribution Date, the excess, if any, of (a) the
aggregate Stated Principal Balances of the Mortgage Loans and REO
Properties as of the last day of the related Due Period for such
Distribution Date over (b) the sum of the aggregate Class Principal
Amounts of the Class A, Mezzanine and Class P Certificates as of
such Distribution Date (assuming 100% of the Principal Remittance
Amount is applied as a principal payment on such Distribution
Date). On the Closing Date, the Overcollateralized Amount
will be 2.85% of the Pool Principal Balance as of the Cut-off Date,
which is $27,400,191.
“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.
“P&I Advance”: As to any
Mortgage Loan or REO Property, any advance made by the Servicer in
respect of any Distribution Date representing the aggregate of all
payments of principal and interest, net of the Servicing Fee, that
were due during the related Due Period on the related Mortgage
Loans and that were Delinquent on the related Determination Date,
plus certain amounts representing assumed payments not covered by
any current net income on the Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure as determined pursuant
to Section 4.03. The Servicer will not be required to make
any Nonrecoverable P&I Advances as described in Section
4.03.
“Pass-Through Rate”: For any
Distribution Date and any Class of LIBOR Certificates or Fixed Rate
Certificates, the lesser of (i) the related Formula Rate and (ii)
the Net WAC Rate for such Distribution Date. For any
Distribution Date and the Class C Certificates, the rate set
forth for the Class C Certificates in footnote (2) to
“REMIC II” under section 1.03 herein.
“Percentage Interest”: As to
any Certificate, either the percentage set forth on the face
thereof or the percentage obtained by dividing the initial Class
Principal Amount represented by such Certificate by the aggregate
initial Class Principal Amount of all of the Certificates of such
Class.
“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 by the Depositor, the Servicer, the Securities
Administrator, the Trustee or any of their respective
Affiliates:
(a)
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;
(b)
demand and time deposits in, certificates
of deposit of, or bankers’ acceptances (which shall each have
an original maturity of not more than 90 days and, in the case of
bankers’ acceptances, shall in no event have an original
maturity of more than 365 days or a remaining maturity of more than
30 days) denominated in United States dollars that are rated at
least “F1+” by Fitch and “A-1” by S&P
(if rated by S&P), and issued by any Depository
Institution;
(c)
repurchase obligations with respect to
any security described in clause (a) above entered into with a
Depository Institution (acting as principal);
(d)
securities bearing interest or sold at a
discount that are issued by any corporation incorporated under the
laws of the United States of America or any state thereof and that
are rated by each Rating Agency that rates such securities in its
highest long-term unsecured rating at the time of such investment
or contractual commitment providing for such investment;
(e)
commercial paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than
30 days after the date of acquisition thereof) that is rated by
each Rating Agency that rates such securities in its highest
short-term unsecured debt rating available at the time of such
investment;
(f)
units of money market funds, including
money market funds sponsored, managed or advised by the Trustee,
the Securities Administrator or an Affiliate of either thereof and
from which the Trustee or the affiliate may receive compensation,
that have been rated “AAA” by Fitch, “Aaa”
by Moody’s (if rated by Moody’s) and “AAAm”
by S&P (if rated by S&P); and
(g)
if previously confirmed in writing to the
Trustee and the Securities Administrator, any other demand, money
market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies as a
permitted investment of funds backing securities having ratings
equivalent to its highest initial rating of the Class A
Certificates; provided, however, that any Permitted Investment
pursuant to this clause (g) which solely contains a short-term
rating shall be a Permitted Investment rated in the highest
category for such short-term rating;
provided, however, 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 Non-United States Person.
“Person”: Any individual,
corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
“Plan”: Any employee benefit
plan (as defined in Section 3(3) of ERISA) or other plan as defined
in Section 4975(e)(1) of the Code that is subject to Title I of
ERISA or Section 4975 of the Code, or any entity deemed to hold the
plan assets of the foregoing.
“Pool Principal Balance”: As
of any Distribution Date, the aggregate Stated Principal Balance of
the Mortgage Loans.
“PPC”: Either of the Fixed
Rate PPC or the Adjustable Rate PPC.
“Prepayment Assumption”: With
respect to the Adjustable Rate Mortgage Loans, the Adjustable Rate
PPC. With respect to the Fixed Rate Mortgage Loans, the Fixed
Rate PPC. The Prepayment Assumption is used solely for
determining the accrual of original issue discount on the
Certificates for federal income tax purposes.
“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 of the calendar month in which such
Distribution Date occurs and the Determination Date in the calendar
month in which such Distribution Date occurs, an amount equal to
interest (to the extent received) at the applicable Mortgage Rate
(net of the Servicing Fee Rate, the Securities Administrator Fee
Rate and Custodian Fee Rate) on the amount of such Principal
Prepayment for the number of days from and including the first day
of the calendar month in which such Distribution Date occurs to and
including the last date through which interest is collected from
the related Mortgagor. To the extent not otherwise retained
by the Servicer, the Servicer may withdraw such Prepayment Interest
Excess from the Collection Account.
“Prepayment Interest
Shortfall”: With respect to any Distribution Date, for each
Mortgage Loan that was during the related Prepayment Period (other
than prepayments received in the month of such Distribution Date)
subject to a Principal Prepayment in full, an amount equal to
interest at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the date
on which the prepayment is applied and ending on the last day of
the calendar month preceding the month of such Distribution Date.
The obligations of the Servicer in respect of any Prepayment
Interest Shortfall are set forth in Section 3.24.
“Prepayment Period”: With
respect to any Distribution Date and any Principal Prepayment in
full received on a Mortgage Loan, is the period that
(a) commences on and includes the day immediately following
the Determination Date falling in the month immediately preceding
the month in which such Distribution Date occurs and (b) ends
on and includes the Determination Date falling in the month in
which such Distribution Date occurs. With respect to any
Distribution Date and any Principal Prepayment in part received on
a Mortgage Loan, is the calendar month preceding such Distribution
Date.
“Prepayment Premium”: With
respect to any Mortgage Loan and the related Prepayment Period, any
prepayment premium, penalty or charge collected by the Servicer
from a Mortgagor in connection with any voluntary Principal
Prepayment and held from time to time as a part of the Trust Fund.
The Servicer shall calculate, in good faith using Accepted
Servicing Practices, the amount of any Prepayment Premium solely
pursuant to the terms of the related Mortgage Note.
“Prime Rate”: The rate of
interest equal to the prime rate as reported in The Wall Street
Journal .
“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 (without regard to any
Prepayment Premium that may have been collected by the Servicer in
connection with such payment of principal) representing the full
amount of scheduled interest due on any Due Date in any month or
months subsequent to the month of prepayment.
“Principal Remittance
Amount”: With respect to any Distribution Date, that portion
of the Available Funds equal to the sum of (i) all scheduled
payments of principal collected or advanced on the Mortgage Loans
by the Servicer that were due during the related Due Period, (ii)
the principal portion of all Principal Prepayments of the Mortgage
Loans, if any, applied by the Servicer during the related
Prepayment Period, (iii) the principal portion of all related Net
Liquidation Proceeds, Insurance Proceeds and Recoveries received
during the calendar month preceding the month of such Distribution
Date, (iv) that portion of the Purchase Price representing
principal of any purchased or repurchased Mortgage Loan, deposited
to the Collection Account during the calendar month preceding the
month of such Distribution Date, (v) the principal portion of the
amount of any shortfall deposited in the Collection Account in
connection with the substitution of a Deleted Mortgage Loan
pursuant to Section 2.03 during the calendar month preceding the
month of such Distribution Date and (vi) on the Distribution Date
on which the Trust is to be terminated in accordance with this
Agreement, that portion of the Termination Price in respect of
principal.
“PTCE”: A Prohibited
Transaction Class Exemption.
“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 9.01, and as calculated and confirmed in an Officers’
Certificate from the Servicer to the Securities Administrator, 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 9.01), (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 a
P&I Advance by the Servicer 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 P&I Advances that as of the
date of purchase had been distributed as or to cover REO Imputed
Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing
Advances and P&I Advances and any unpaid Servicing Fees
allocable to such Mortgage Loan or REO Property and any P&I
Advances previously reimbursed to the Servicer pursuant to Section
3.11(a)(vi) (except in the case of a purchase by the Servicer,),
(iv) any amounts previously withdrawn from the Collection
Account in respect of such Mortgage Loan or REO Property pursuant
to Section 3.11(a)(ix) and Section 3.16(b), (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, the
Trustee, the Custodian or the Securities Administrator in respect
of the breach or defect giving rise to the purchase obligation and
(vi) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, any costs and damages actually incurred
and paid by or on behalf of the Trust in connection with any
violation by such Mortgage Loan of (i) the representation and
warranties set forth in Section 2.05(b)(i), (ii) or (iii) of this
Agreement, (ii) Section 7.01(f) of the Mortgage Loan Purchase
Agreement or (iii) the representations and warranties made in
connection with “high-cost” home loans or any predatory
or abusive lending laws in the Mortgage Loan Purchase Agreement, as
applicable.
“Qualified Substitute Mortgage
Loan”: A Mortgage Loan substituted for a Deleted Mortgage
Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal
and interest due during or prior to the month of substitution, not
in excess of and not more than 5% less than the 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)
with respect to each Adjustable Rate Mortgage Loan have a Maximum
Mortgage Rate not less than the Maximum Mortgage Rate on the
Deleted Mortgage Loan, (iv) with respect to each Adjustable Rate
Mortgage Loan have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) with
respect to each Adjustable Rate Mortgage Loan have a Gross Margin
equal to or greater than the Gross Margin of the Deleted Mortgage
Loan, (vi) with respect to each Adjustable Rate Mortgage Loan,
adjust in accordance with the Index and have a next Adjustment Date
not more than two months later than the next Adjustment Date on the
Deleted Mortgage Loan, and have the same intervals between
Adjustment Dates as the Deleted Mortgage Loan, (vii) have a
remaining term to maturity not greater than (and not more than one
year less than) that of the Deleted Mortgage Loan, (viii) have the
same Due Date as the Due Date on the Deleted Mortgage Loan, (ix)
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, (x) have a risk grading certified by the Seller at
least equal to the risk grading assigned on the Deleted Mortgage
Loan, (xi) have been underwritten or reunderwritten by the
Originator in accordance with the same underwriting criteria and
guidelines as the Mortgage Loans being replaced, (xii) be of the
same or better credit quality as the Mortgage Loan being replaced,
(xiii) have a lien priority equal to or superior to that of the
Deleted Mortgage Loan, (xiv) be secured by the same property type
as the Deleted Mortgage Loan and (xv) conform to each
representation and warranty in the applicable Mortgage Loan
Purchase Agreement. 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 principal balances, the Mortgage Rates described
in clause (ii) hereof shall be determined on the basis of weighted
average Mortgage Rates, the Loan-to-Value Ratios described in
clause (ix) hereof shall be satisfied as to each such Mortgage
Loan, the risk gradings 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 (xv) 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”: S&P, Moody’s and Fitch 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, the Securities
Administrator and the Servicer.
“Realized Loss”: With respect
to each Mortgage Loan as to which a Final Recovery Determination
has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery
Determination was made, plus (ii) accrued interest from the Due
Date as to which interest was last paid by the Mortgagor through
the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar
month during such period (A) at an annual rate equal to the annual
rate at which interest was then accruing on such Mortgage Loan and
(B) on a principal amount equal to the Stated Principal Balance of
such Mortgage Loan as of the close of business on the Distribution
Date during such calendar month, plus (iii) any amounts previously
withdrawn from the Collection Account in respect of such Mortgage
Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(iv) the proceeds, if any, received in respect of such Mortgage
Loan during the calendar month in which such Final Recovery
Determination was made, net of amounts that are payable therefrom
to the Servicer with respect to such Mortgage Loan pursuant to
Section 3.11(a)(iii).
With respect to any REO Property as to
which a Final Recovery Determination has been made, an amount (not
less than zero) equal to (i) the unpaid principal balance of the
related Mortgage Loan as of the date of acquisition of such REO
Property on behalf of the Trust Fund, plus (ii) accrued interest
from the Due Date as to which interest was last paid by the
Mortgagor in respect of the related Mortgage Loan through the end
of the calendar month immediately preceding the calendar month in
which such REO Property was acquired, calculated in the case of
each calendar month during such period (A) at an annual rate equal
to the annual rate at which interest was then accruing on the
related Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of the related Mortgage Loan as of the
close of business on the Distribution Date during such calendar
month, plus (iii) 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 Final Recovery Determination was made, plus (iv) any
amounts previously withdrawn from the Collection Account in respect
of the related Mortgage Loan pursuant to Section 3.11(a)(ix) and
Section 3.16(b), minus (v) the aggregate of all P&I Advances
made by the Servicer in respect of such REO Property or the related
Mortgage Loan for which the Servicer has been or, in connection
with such Final Recovery Determination, will be reimbursed pursuant
to Section 3.23 out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property,
minus (vi) the total of all net rental income, Insurance Proceeds
and Liquidation Proceeds received in respect of such REO Property
that has been, or in connection with such Final Recovery
Determination, will be transferred to the Distribution Account
pursuant to Section 3.23.
With respect to each Mortgage Loan that
has become the subject of a Deficient Valuation, the difference
between the principal balance of such Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal
balance of such Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan that
has become the subject of a Debt Service Reduction, the portion, if
any, of the reduction in each affected Monthly Payment attributable
to a reduction in the Mortgage Rate imposed by a court of competent
jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly
Payment.
“Record Date”: With respect
to any Distribution Date, the Fixed Rate Certificates and any
Definitive Certificates, other than the Class C Certificates,
and the first Distribution Date, the close of business on the last
Business Day of the month immediately preceding the month in which
such applicable Distribution Date occurs. With respect to any
Distribution Date and the LIBOR Certificates (other than any
Definitive Certificates), the Business Day prior to such
Distribution Date.
“Recovery”: With respect to
any Liquidated Mortgage Loan, an amount received in respect of
principal on such Mortgage Loan which has previously been allocated
as a Realized Loss to a Class or Classes of Certificates net of
reimbursable expenses.
“Reference Banks”: Deutsche
Bank, Barclays Bank PLC, The Tokyo Mitsubishi Bank and National
Westminster Bank PLC and their successors in interest; provided,
however, that if any of the foregoing banks are not able to serve
as a Reference Bank, then any leading banks selected by the
Depositor which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established
place of business in London, (ii) not controlling, under the
control of or under common control with the Depositor or any
Affiliate thereof, and (iii) which have been designated as such by
the Depositor.
“Refinanced Mortgage Loan”: A
Mortgage Loan the proceeds of which were not used to purchase the
related Mortgaged Property.
“Regular Certificate”: As
specified in the Preliminary Statement.
“Regular Interest”: A
“regular interest” in a REMIC within the meaning of
Section 860G(a)(1) of the Code.
“Relief Act”: The
Servicemembers Civil Relief Act, as amended, or any similar state
or local law.
“Relief Act Interest
Shortfall”: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest collectible
on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
“REMIC”: A “real estate
mortgage investment conduit” within the meaning of Section
860D of the Code.
“REMIC I”: 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 each of the Mortgage Loan
Purchase Agreement and the Assignment and Assumption Agreement
(including any security interest created thereby) and (v) the
Collection Account (other than any amounts representing any
Servicer Prepayment Premium Payment Amount), the Distribution
Account (other than any amounts representing any Servicer
Prepayment Premium Payment Amount) 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, REMIC I specifically excludes all payments and other
collections of principal and interest due on the Mortgage Loans on
or before the Cut-off Date and all Prepayment Premiums payable in
connection with Principal Prepayments made on or before the Cut-off
Date, the Net WAC Reserve Fund and the Yield Maintenance
Agreement.
“REMIC C”: As set forth in
Section 1.03 hereof.
“REMIC I Regular Interest”:
As set forth in Section 1.03 hereof.
“REMIC I Accretion Directed
Class”: As set forth in the Section 1.03 hereof.
“REMIC II”: As set forth in
Section 1.03 hereof.
“REMIC M-9”: As set forth in
Section 1.03 hereof.
“REMIC M-10”: As set forth in
Section 1.03 hereof.
“REMIC M-11”: As set forth in
Section 1.03 hereof.
“REMIC P”: As set forth in
Section 1.03 hereof.
“REMIC Provisions”:
Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at Section 860A through
860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
“Remittance Report”: A report
in form mutually agreed to between the Securities Administrator and
the Servicer on a magnetic disk or tape or in electronic format
prepared by the Servicer pursuant to Section 4.03 with such
additions, deletions and modifications as agreed to by the
Securities Administrator and the Servicer.
“Rents from Real Property”:
With respect to any REO Property, gross income of the character
described in Section 856(d) of the Code as being included in the
term “rents from real property.”
“REO Account”: Each of the
accounts maintained, or caused to be 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 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 9.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.23(c) 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(d)
for unpaid Servicing Fees in respect of the related Mortgage Loan
and unreimbursed Servicing Advances and P&I 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, or in a mutually agreeable
electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer, in the form of Exhibit E-1
attached hereto.
“Required Net WAC Reserve Fund
Deposit”: With respect to any Distribution Date, the excess,
if any, of (i) $1,000 over (ii) the amount of funds on deposit in
the Net WAC Reserve Fund prior to deposits thereto on such
Distribution Date. The Depositor shall cause the deposit of
$1,000 to the Net WAC Reserve Fund on the Closing Date.
“Reserve Interest Rate”: With
respect to any Interest Determination Date, the rate per annum that
the Securities Administrator determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which
New York City banks 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 Securities Administrator can determine no such
arithmetic mean, the lowest one-month U.S. dollar lending rate
which New York City banks selected by the Depositor are quoting on
such Interest Determination Date to leading European
banks.
“Residential Dwelling”: Any
one of the following: (i) an attached or detached one-family
dwelling, (ii) an attached or detached two- to four-family
dwelling, (iii) an attached or detached one-family dwelling unit in
a condominium project or (iv) an attached or detached one-family
dwelling in a planned unit development, none of which is a
cooperative or mobile home.
“Residual Certificates”: As
specified in the Preliminary Statement.
“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 Securities Administrator, any vice
president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, any
trust officer or assistant trust officer, the Controller and any
assistant controller or any other officer of the Securities
Administrator 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. When used with respect to the Trustee,
any vice president, any assistant vice president or any assistant
trust officer charged with direct responsibility for the
administration of this Agreement.
“S&P”: Standard and
Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.
“Securities Administrator
Fee”: As to any Distribution Date and each Mortgage
Loan, an amount equal to the product of the Securities
Administrator Fee Rate and the outstanding Stated Principal Balance
of such Mortgage Loan as of the first day of the related Due
Period, provided, however, such amount shall not be less than
$500.00 per month.
“Securities Administrator Fee
Rate”: 0.003% per annum, and as adjusted to reflect the
minimum monthly payment of $500.
“Seller”: J.P. Morgan
Mortgage Acquisition Corp. or its successor in interest, in its
capacity as seller.
“Senior Enhancement
Percentage”: For any Distribution Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Class
Principal Amount of the Mezzanine Certificates (after giving effect to the distribution of the
Group I Principal Distribution Amount and the Group II
Principal Distribution Amount on such Distribution Date) and (ii)
the Overcollateralized Amount (after giving effect to the
distribution of the Principal Distribution Amount on such
Distribution Date) by (y) the Pool Principal Balance as of the last
day of the related Due Period.
“Servicer”: Litton, or any
successor servicer appointed as herein provided, in its capacity as
servicer hereunder.
“Servicer Event of Default”:
One or more of the events described in Section 7.01(a).
“Servicer Prepayment Premium
Payment Amount”: The amounts payable by the Servicer in
respect of any waived Prepayment Premiums pursuant to Section
2.03(b)(ii).
“Servicer Remittance Date”:
With respect to any Distribution Date, 4:00 p.m. New York time on
the Business Day preceding such Distribution Date.
“Servicing Account”: The
account or accounts created and maintained pursuant to Section
3.09.
“Servicing Advances”: The
reasonable “out-of-pocket” costs and expenses incurred
by the Servicer in the performance of its servicing obligations
(including the reasonable fees of counsel) in connection with a
default, delinquency or other unanticipated event, including, but
not limited to, the cost of (i) the inspection, preservation,
restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, in
respect of a particular Mortgage Loan, (iii) the reasonable fees in
connection with the management and liquidation of any REO Property
(including default management and similar services, appraisal
services and real estate broker services), (iv) the performance of
its obligations under Section 3.01, Section 3.09, Section 3.13,
Section 3.14, Section 3.16 and Section 3.23, and (v) locating
documents missing from Servicing File. Servicing Advances
also include any reasonable “out-of-pocket” cost 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 to
the extent not recovered from the Mortgagor or otherwise payable
under this Agreement. The Servicer shall not be required to
make any Nonrecoverable Servicing Advances.
“Servicing Fee”: With respect
to each Mortgage Loan and for any calendar month, an amount equal
to one month’s interest at the Servicing Fee Rate on the same
principal amount on which interest on such Mortgage Loan accrues
for such calendar month, subject to reduction as provided in
Section 3.24. A portion of such Servicing Fee may be retained
by any Sub-Servicer as its servicing compensation.
“Servicing Fee Rate”: 0.50%
per annum on the Stated Principal Balance of each Mortgage
Loan.
“Servicing File”: With
respect to each Mortgage Loan, the Servicing File for such Mortgage
Loan shall consist of copies of each item required to be in the
Mortgage File (for the avoidance of doubt, the original of each
such document shall be maintained in the Mortgage File for such
Mortgage Loan unless otherwise permitted to be released in
accordance with this Agreement) and the following documents listed
below.
(i)
Residential loan application.
(ii)
Mortgage Loan closing
statement.
(iii)
Verification of employment and income, if
applicable.
(iv)
Verification of acceptable evidence of
source and amount of downpayment.
(v)
Credit report on Mortgagor.
(vi)
Residential appraisal report.
(vii)
Photograph of the Mortgaged
Property.
(viii)
Survey of the Mortgaged
Property.
(ix)
Copy of each instrument necessary to
complete identification of any exception set forth in the exception
schedule in the title policy, i.e., map or plat, restrictions,
easements, sewer agreements, home association declarations,
etc.
(x)
All required disclosure
statements.
(xi)
If required in an appraisal, termite
report, structural engineer’s report, water potability and
septic certification.
(xii)
Sales Contract, if applicable.
“Servicing Officer”: Any
employee of the Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loans, whose names
appear on a list of Servicing Officers furnished by the Servicer to
the Trustee, the Securities Administrator and the Depositor on the
Closing Date, as such list may from time to time be
amended.
“Servicing Rights Pledgee”:
One or more parties selected by the Servicer to which the
Servicer will pledge and assign all of its right, title and
interest in, to and under this Agreement (other than rights with
respect to P&I Advances and Servicing Advances herein),
including JPMorgan Chase Bank, N.A. as the representative of
certain lenders.
“Servicing Transfer Date”:
December 31, 2005.
“Single Certificate”: With
respect to any Class of Certificates (other than the Class P
Certificates and the Residual Certificates), a hypothetical
Certificate of such Class evidencing a Percentage Interest for such
Class corresponding to an initial Class Principal Amount of $1,000.
With respect to the Class P Certificates and the Residual
Certificates, a hypothetical Certificate of such Class evidencing a
20% Percentage Interest in such Class.
“Special Servicer”: As
defined in Section 3.16(e) herein.
“Startup Day”: With respect
to each REMIC formed hereby, the day designated as such pursuant to
Section 10.01(b) hereof.
“Stated Principal Balance”:
With respect to any Mortgage Loan and as to any date of
determination, the principal balance of such Mortgage Loan as of
the Cut-off Date, as shown in the Mortgage Loan Schedule, minus all
amounts previously distributed pursuant to Section 4.01
representing payments or recoveries of principal, or advances in
lieu thereof.
“Stepdown Date”: The earlier
to occur of (1) the Distribution Date on which the aggregate Class
Principal Amount of the Class A Certificates has been reduced
to zero and (2) the later to occur of (x) the Distribution Date
occurring in December 2008 and (y) the first Distribution Date on
which the Senior Enhancement Percentage is greater than or equal to
47.60% (for the purpose of this definition only, Senior Enhancement
Percentage shall be calculated prior to the distribution of
Principal Distribution Amounts on the Mezzanine
Certificates).
“Subordinate Certificates”:
As defined in the Preliminary Statement.
“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
Eligible 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.
“Substitution Shortfall
Amount”: As defined in Section 2.03(c) herein.
“Tax Returns”: Each 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 REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of the Trust Fund due to its
classification as multiple REMICs under the REMIC Provisions,
together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed
with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or
local tax laws.
“Telerate Page 3750”: The
display designated as page “3750” on the Moneyline
Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London
interbank offered rates of major banks).
“Termination Price”: As
defined in Section 9.01 herein.
“Transfer”: Any direct or
indirect transfer, sale, pledge, hypothecation, or other form of
assignment of any Ownership Interest in a Certificate.
“Transferee”: Any Person who
is acquiring by Transfer any Ownership Interest in a
Certificate.
“Transferor”: Any Person who
is disposing by Transfer of any Ownership Interest in a
Certificate.
“Trigger Event”: A Trigger
Event has occurred with respect to any Distribution Date on or
after the Stepdown Date if (i) the Delinquency Percentage exceeds
29.00% of the Senior Enhancement Percentage for such Distribution
Date or (ii) the cumulative Realized Losses (after reduction for
all Subsequent Recoveries received through the end of the related
Due Period) as a percentage of the original aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date is
greater than the percentage set forth in the following
table:
|
Range of Distribution Dates
|
Percentage
|
|
December 2007 – November 2008
|
1.55%
|
|
December 2008 – November 2009
|
3.45%
|
|
December 2009 – November 2010
|
5.40%
|
|
December 2010 – November 2011
|
6.95%
|
|
December 2011 and thereafter
|
7.75%
|
The percentages set forth in the table
above are the percentages applicable for the first Distribution
Date in the corresponding range of Distribution Dates. The
percentage for each succeeding Distribution Date in a range
increases incrementally by 1/12 of the positive difference between
the percentage applicable to the first Distribution Date in that
range and the percentage applicable to the first Distribution Date
in the succeeding range.
“Trust”: J.P. Morgan Mortgage
Acquisition Corp. 2005-FRE1, the trust created under this
Agreement.
“Trust Fund”: The corpus of
the trust created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto
after the related Cut-off Date, other than such amounts which were
due on the Mortgage Loans on or before the related Cut-off Date,
(ii) the Collection Account, the Distribution Account and the Net
WAC Reserve Fund and all amounts deposited therein pursuant to the
applicable provisions of this Agreement (including, without
limitation, amounts received from the Seller on the Closing Date
which shall be deposited by the Securities Administrator in the
Distribution Account pursuant to Section 2.01), (iii) the
Depositor’s rights under the Mortgage Loan Purchase Agreement
and the Assignment and Assumption Agreement, (iv) the Trust’s
rights under the Yield Maintenance Agreement, (v) property that
secured a Mortgage Loan and has been acquired by foreclosure,
deed-in-lieu of foreclosure or otherwise and (vi) all present and
future claims, demands, causes and choses in action in respect of
the foregoing, (vii) all other property of the Trust from time to
time, and (viii) all additions to, distributions on and proceeds of
the foregoing of every kind and nature whatsoever, including all
proceeds of the conversion, voluntary or involuntary, of any of the
foregoing.
“Trustee”: U.S. Bank National
Association, a national banking association, not in its individual
capacity, but solely in its capacity as Trustee for the benefit of
the Certificateholders under this Agreement, or its successor in
interest, or any successor trustee appointed as herein
provided.
“Underwriter”: J.P. Morgan
Securities Inc.
“Underwriter’s
Exemption”: Prohibited Transaction Exemption 2002-19, or any
substantially similar administrative exemption granted by the U.S.
Department of Labor.
“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”: A
“United States person” within the meaning set forth in
Section 7701(a)(30) of the Code.
“Unpaid Interest Shortfall
Amount”: For (i) the first Distribution Date and with respect
to the Senior Certificates and the Mezzanine Certificates, zero,
and for such Class of Certificates and 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
of Certificates for the immediately preceding Distribution Date and
(2) the outstanding Unpaid Interest Shortfall Amount, if any, for
such Class of Certificates for such preceding Distribution Date
exceeds (b) the aggregate amount distributed on such Class of
Certificates in respect of interest on such preceding Distribution
Date, plus interest on the amount of interest due but not paid on
the Class of Certificates on such preceding Distribution Date, to
the extent permitted by law, at the Pass-Through Rate on such
Distribution Date for such Class of Certificates for the related
Accrual Period.
“Value”: With respect to any
Mortgaged Property related to a Mortgage Loan, 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 more than ten percent (10%) lower than the value
thereof as determined by the appraisal referred to in clause (i)(a)
above in the case of a Mortgage Loan with an LTV less than or equal
to eighty-five percent (85%), or more than five percent (5%) lower
than the value thereof as determined by the appraisal referred to
in clause (i)(a) above, in the case of a Mortgage Loan with an LTV
greater than eighty-five percent (85%) up to and including an LTV
equal to ninety-five percent (95%), or more than three percent (3%)
lower than the value thereof as determined by the appraisal
referred to in clause (i)(a) above, in the case of a Mortgage Loan
with an LTV greater than ninety-five percent (95%), as determined
by an appraisal referred to in clause (i)(a), and (ii) the purchase
price paid for the related Mortgaged Property by the Mortgagor with
the proceeds of the Mortgage Loan, provided, however, (A) in the
case of a Refinanced Mortgage Loan, such value of the Mortgaged
Property is based solely upon the value thereof as determined by
the appraisal referred to in clause (i) above, and (B) in the case
of a Mortgage Loan originated in connection with a
“lease-option purchase”, such value of the Mortgaged
Property is based on the lower of the value determined by an
appraisal made for the originator of such Mortgage Loan at the time
or origination or the sale price of such Mortgaged Property if the
“lease option purchase price” was set less than 12
months prior to origination, and is based on the value determined
by an appraisal made for the originator of such Mortgage Loan at
the time of origination if the “lease option purchase
price” was set 12 months or more prior to
origination.
“Voting Rights”: The portion
of the voting rights of all of the Certificates that is allocated
to any Certificate. With respect to any date of
determination, 97% of all voting rights will be allocated among all
Holders of the Offered Certificates in proportion to their then
outstanding Class Principal Amounts, 1% of all voting rights will
be allocated among the Holders of the Class C Certificates; 1%
of all voting rights will be allocated among the Holders of the
Class P Certificates, and 1% of all voting rights will be allocated
among Holders of the Residual Certificates. Voting Rights
allocated to a Class shall be allocated among the Certificates of
such Class in proportion to the outstanding Percentage Interests
evidenced by their respective Certificates.
“Whole Loan Sale Date”:
September __, 2005.
“Yield Maintenance
Agreement”: The interest rate yield maintenance agreement
relating to the Class A and Mezzanine Certificates consisting
of an ISDA Master Agreement and a Schedule dated as of the Closing
Date and the related Confirmation thereto, between the Trustee on
behalf of the Trust and the Counterparty, as such agreement may be
amended and supplemented in accordance with its terms and any
replacement interest yield maintenance agreement acceptable to the
Depositor and the Trustee.
“Yield Maintenance Agreement
Notional Amount”: The lesser of (i) the notional amount
indicated on Schedule II to the Yield Maintenance Agreement and
(ii) the Class Principal Amount of the Class A and Mezzanine
Certificates not held by an affiliate of the Seller or the
Depositor.
Section 1.02
Allocation of Certain Interest
Shortfalls.
For purposes of calculating the amount of
the Monthly Interest Distributable Amount for the Senior and
Mezzanine Certificates for any Distribution Date, the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicer pursuant to Section 3.24) and
any Relief Act Interest Shortfall incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated to the
Class C Certificates in reduction of the Class C
Distribution Amount and thereafter, among the Class A
Certificates and the other Classes of Subordinate Certificates on a
pro rata basis based on such Monthly Interest Distributable Amount
prior to giving effect to any such reduction.
Section 1.03
Designation of Interests in REMIC.
The Securities Administrator shall elect
that each of REMIC I, REMIC II, REMIC M-9, REMIC M-10, REMIC M-11,
REMIC C, and REMIC P be treated as a REMIC under Section 860D of
the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of this Agreement shall be
resolved in a manner that preserves the validity of such REMIC
elections. The assets of REMIC I shall include the Mortgage
Loans, the accounts (other than the Net WAC Reserve Fund and the
Yield Maintenance Agreement), any REO Property, and any proceeds of
the foregoing. The REMIC I Regular Interests shall constitute
the assets of REMIC II (the “Master REMIC”). The
Class M-9 Interest in REMIC II shall constitute the assets of REMIC
M-9. The Class M-10 Interest in REMIC II shall constitute the
assets of REMIC M-10. The Class M-11 Interest in REMIC II
shall constitute the assets of REMIC M-11. The Class C
Interest in REMIC II shall constitute the assets of REMIC C.
The Class P Interest in REMIC II shall constitute the assets
of REMIC P.
The Class R Certificate shall
represent the sole class of residual interest in each of REMIC I
and REMIC II. The Class R-X Certificate shall represent the
sole class of residual interest in each of REMIC M-9, REMIC M-10,
REMIC M-11, REMIC C, and REMIC P.
REMIC I:
The following table sets forth the
designations, principal balances, and interest rates for each
interest in REMIC I, each of which (other than the R-I interest) is
hereby designated as a regular interest in REMIC I (the
“REMIC I Regular Interests”):
|
REMIC
Interests
|
Initial
Balance
|
Interest
Rate
|
Corresponding Class of Certificates
|
|
T-AI
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-I
|
|
T-AIIF1
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-II-F-1
|
|
T-AIIF2
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-II-F-2
|
|
T-AIIF3
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-II-F-3
|
|
T-AIIF4
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-II-F-4
|
|
T-AIIV1
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-V-1
|
|
T-AIIV2
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-V-2
|
|
T-AIIV3
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
A-V-3
|
|
T-M1
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-1
|
|
T-M2
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-2
|
|
T-M3
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-3
|
|
T-M4
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-4
|
|
T-M5
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-5
|
|
T-M6
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-6
|
|
T-M7
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-7
|
|
T-M8
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-8
|
|
T-M9
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-9
|
|
T-M10
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-10
|
|
T-M11
(1)
|
½
Corresponding Class balance
|
Net WAC
Rate
|
M-11
|
|
T-Accrual
Interest (2)
|
(4)
|
Net WAC
Rate
|
N/A
|
|
R-I
|
(3)
|
(3)
|
N/A
|
(1)
This interest is a REMIC
I Accretion Directed Class.
(2)
This interest shall also
be entitled to all Prepayment Premiums received in respect of the
Mortgage Loans.
(3)
The R-I interest shall
not have a principal amount and shall not bear interest. The
R-I interest is hereby designated as the sole class of residual
interest in REMIC I.
(4)
This interest shall have
an initial principal balance equal to the aggregate principal
balance of all the Mortgage Loans as of the Cut-off Date minus the
aggregate initial principal balance of each other regular interest
in REMIC I.
On each Distribution Date, interest shall
be distributed with respect to the interests in REMIC I based on
the above-described interest rates, provided however , that
interest that accrues on the T-Accrual Interest shall be deferred
to the extent necessary to make the distributions of principal
described below. Any interest so deferred shall itself bear
interest at the interest rate for the T-Accrual
Interest.
On each Distribution Date, the principal
distributed on the REMIC I interests (together with an amount equal
to the interest deferred on the T-Accrual Interest for such
Distribution Date) shall be distributed, and Realized Losses shall
be allocated, among the interests in REMIC I in the following order
of priority:
(a)
First, to each interest in REMIC I having
a Corresponding Class of Certificates until the outstanding
principal amount of each such interest equals one-half of the
outstanding principal amount of the Corresponding Class of
Certificates for such interest immediately after such Distribution
Date; and
(b)
Second, to the T-Accrual Interest, any
remaining amounts.
REMIC II:
The following table sets forth
characteristics of the Certificates (other than the Class M-9,
Class M-10, Class M-11, Class C, Class P, and Class R-X
Certificates), each of which, except for the Class R
Certificates, along with the Class M-9, Class M-10, Class M-11,
Class C, and Class P Interests is hereby designated as a
“regular interest” in the REMIC II:
|
Class
|
Original Class
Principal Amount
|
Pass-Through Rate
|
|
Class AI
|
$274,516,000
|
(1)
|
|
Class AII-F-1
|
$96,881,000
|
(1)
|
|
Class AII-F-2
|
$80,718,000
|
(1)
|
|
Class AII-F-3
|
$20,201,000
|
(1)
|
|
Class AII-F-4
|
$21,978,000
|
(1)
|
|
Class AII-V-1
|
$105,046,000
|
(1)
|
|
Class AII-V-2
|
$119,316,000
|
(1)
|
|
Class AII-V-3
|
$13,939,000
|
(1)
|
|
Class M-1
|
$32,207,000
|
(1)
|
|
Class M-2
|
$31,246,000
|
(1)
|
|
Class M-3
|
$22,112,000
|
(1)
|
|
Class M-4
|
$17,305,000
|
(1)
|
|
Class M-5
|
$16,825,000
|
(1)
|
|
Class M-6
|
$14,902,000
|
(1)
|
|
Class M-7
|
$15,383,000
|
(1)
|
|
Class M-8
|
$11,537,000
|
(1)
|
|
Class M-9 Interest
|
$12,018,000
|
(1)
|
|
Class M-10 Interest
|
$15,863,000
|
(1)
|
|
Class M-11 Interest
|
$12,018,000
|
(1)
|
|
Class C
Interest
|
(2)
|
(2)
|
|
Class P Interest
|
$100
|
(3)
|
|
Class R (4)
|
N/A
|
N/A
|
(1)
The lesser of the
related Formula Rate and the Net WAC Rate. Any entitlement to
Net WAC Rate Carryover Amounts shall not be an obligation of any
REMIC created hereunder.
(2)
The Class C
Interest shall represent ownership of a REMIC regular interest (the
“Class C Interest”), which shall have a notional
balance equal to the aggregate Stated Principal Balance of the
Mortgage Loans. The initial interest rate of the Class C
Interest shall be a rate sufficient to cause all net interest from
the Mortgage Loans to accrue on the Class C Interest that is
in excess of the amount of interest that accrues on the
Class A Certificates and the Mezzanine Certificates. For
any Distribution Date, the Pass-Through Rate in respect of the
Class C Interest shall be the excess of: (i) the Net WAC Rate
over (ii) the product of: (A) two and (B) the weighted average
Pass-Through Rate of the REMIC I Accretion Directed Classes and the
LT-Accrual Interest, where the LT-Accrual Interest is subject to a
cap equal to zero and each REMIC I Accretion Directed Class is
subject to a cap equal to the Pass-Through Rate on its
Corresponding Class. The Class C Interest shall also be
entitled to principal equal to the excess of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date
(less $100.00) over the aggregate Class Principal Amount of the
Class A Certificates and Class M Certificates as of the
Closing Date. Such principal balance shall not bear
interest.
(3)
The Class P Interest
shall not be entitled to payments of interest, but shall be
entitled to receive all Prepayment Premiums in respect of the
Mortgage Loans.
(4)
The Class R
Certificate shall not have a principal amount and shall not bear
interest. REMIC II shall also issue the Class R-II interest,
which is hereby designated as the sole class of residual interest
in REMIC II.
The foregoing REMIC structure is intended
to cause all of the cash from the Mortgage Loans to flow through to
REMIC II as cash flow on a REMIC regular interest, without creating
any shortfall, actual or potential (other than for credit losses),
to any REMIC regular interest. To the extent that the
structure is believed to diverge from such intention, the party
identifying any ambiguity or drafting error shall notify the other
parties hereto, and the parties hereto shall attempt to resolve
such ambiguity or correct such drafting error in accordance with
Section 11.01 to accomplish such intention.
REMIC M-9:
The following table sets forth
characteristics of the Class M-9 Certificates which are hereby
designated as a “regular interest” in REMIC
M-9:
|
|
Original Class
Principal Amount
|
|
|
|
|
|
|
Class M-9
|
(1)
|
(1)
|
|
Class R-M9 (2)
|
N/A
|
N/A
|
(1)
The lesser of the
related Formula Rate and the Net WAC Rate. Any entitlement to
Net WAC Rate Carryover Amounts shall not be an obligation of any
REMIC created hereunder.
(2)
The Class R-M9 interest
shall not have a principal amount and shall not bear interest.
The Class R-M9 interest is hereby designated as the sole
class of residual interest in REMIC M-9.
REMIC M-10:
The following table sets forth
characteristics of the Class M-10 Certificates which are hereby
designated as a “regular interest” in REMIC
M-10:
|
|
Original Class
Principal Amount
|
|
|
|
|
|
|
Class M-10
|
(1)
|
(1)
|
|
Class R-M10 (2)
|
N/A
|
N/A
|
(1)
The lesser of the
related Formula Rate and the Net WAC Rate. Any entitlement to
Net WAC Rate Carryover Amounts shall not be an obligation of any
REMIC created hereunder.
(2)
The Class R-M10 interest
shall not have a principal amount and shall not bear interest.
The Class R-M10 interest is hereby designated as the sole
class of residual interest in REMIC M-10.
REMIC M-11:
The following table sets forth
characteristics of the Class M-11 Certificates which are hereby
designated as a “regular interest” in REMIC
M-11:
|
|
Original Class
Principal Amount
|
|
|
|
|
|
|
Class M-11 Interest
|
(1)
|
(1)
|
|
Class R-M11 (2)
|
N/A
|
N/A
|
(1)
The lesser of the
related Formula Rate and the Net WAC Rate. Any entitlement to
Net WAC Rate Carryover Amounts shall not be an obligation of any
REMIC created hereunder.
(2)
The Class R-M11 interest
shall not have a principal amount and shall not bear interest.
The Class R-M11 interest is hereby designated as the sole
class of residual interest in REMIC M-11.
REMIC C:
The following table sets forth
characteristics of the Class C Certificates which are hereby
designated as a “regular interest” in REMIC
C:
|
|
Original Class
Principal Amount
|
|
|
Class C
|
(1)
|
(1)
|
|
Class R-C (2)
|
N/A
|
N/A
|
(1)
The Class C Certificates
shall be entitled to receive all amounts distributed with respect
to the Class C Interest in REMIC II.
(2)
The Class R-C interest
shall not have a principal amount and shall not bear interest.
The Class R-C interest is hereby designated as the sole class
of residual interest in REMIC C.
REMIC P:
The following table sets forth
characteristics of the Class P Certificates which are hereby
designated as a “regular interest” in REMIC
P:
|
|
Original Class
Principal Amount
|
|
|
|
|
|
|
Class P
|
(1)
|
(1)
|
|
Class R-P (2)
|
N/A
|
N/A
|
(1)
The Class P Certificates
shall be entitled to receive all amounts distributed with respect
to the Class P Interest in REMIC II.
(2)
The Class R-P interest
shall not have a principal amount and shall not bear interest.
The Class R-P interest is hereby designated as the sole class
of residual interest in REMIC P.
CERTIFICATES:
The following table sets forth
characteristics of the Certificates:
|
|
Original Class
Principal Amount
|
|
|
|
|
|
|
Class AI
|
$274,516,000
|
(1)
|
|
Class AII-F-1
|
$96,881,000
|
(1)
|
|
Class AII-F-2
|
$80,718,000
|
(1)
|
|
Class AII-F-3
|
$20,201,000
|
(1)
|
|
Class AII-F-4
|
$21,978,000
|
(1)
|
|
Class AII-V-1
|
$105,046,000
|
(1)
|
|
Class AII-V-2
|
$119,316,000
|
(1)
|
|
Class AII-V-3
|
$13,939,000
|
(1)
|
|
Class M-1
|
$32,207,000
|
(1)
|
|
Class M-2
|
$31,246,000
|
(1)
|
|
Class M-3
|
$22,112,000
|
(1)
|
|
Class M-4
|
$17,305,000
|
(1)
|
|
Class M-5
|
$16,825,000
|
(1)
|
|
Class M-6
|
$14,902,000
|
(1)
|
|
Class M-7
|
$15,383,000
|
(1)
|
|
Class M-8
|
$11,537,000
|
(1)
|
|
Class M-9
|
$12,018,000
|
(1)
|
|
Class M-10
|
$15,863,000
|
(1)
|
|
Class M-11
|
$12,018,000
|
(1)
|
|
Class C
|
(2)
|
(2)
|
|
Class P
|
$100
|
(3)
|
|
Class R (4)
|
N/A
|
N/A
|
|
Class R-X (5)
|
N/A
|
N/A
|
(1)
The lesser of the
related Formula Rate and the Net WAC Rate. Any entitlement to
Net WAC Rate Carryover Amounts shall not be an obligation of any
REMIC created hereunder.
(2)
The Class C
Certificates shall represent ownership of the Class C
Interest, as described under footnote (2) under the heading
“REMIC II” above.
(3)
The Class P Certificates
shall not be entitled to payments of interest, but shall be
entitled to receive all Prepayment Premiums in respect of the
Mortgage Loans.
(4)
The Class R
Certificate shall not have a principal amount and shall not bear
interest. The Class R Certificate shall represent
ownership of the Class R-I and Class R-II interests.
(5)
The Class R-X
Certificate shall not have a principal amount and shall not bear
interest. The Class R-X Certificate shall represent ownership
of the Class R-M9, Class R-M10, Class R-M11, Class R-C and Class
R-P interests.
Section 1.04
Rights of the NIMS Insurer.
Each of the rights of the NIMS Insurer
set forth in this Agreement shall exist so long as (i) the NIMS
Insurer has undertaken to guarantee certain payments of notes
issued pursuant to an indenture and (ii) any series of notes issued
pursuant to one or more indentures remain outstanding or the NIMS
Insurer is owed amounts in respect of its guarantee of payment on
such notes; provided, however, that the NIMS Insurer shall not have
any rights hereunder so long as (i) the NIMS Insurer has not
undertaken to guarantee certain payments of notes issued pursuant
to the indenture or (ii) any default has occurred and is continuing
under the insurance policy issued by the NIMS Insurer with respect
to such notes.
The Seller shall notify the Servicer, the
Securities Administrator and the Trustee in writing of the
appointment of a NIMS Insurer immediately following such
appointment. The Servicer, the Securities Administrator and
the Trustee shall not be under any obligation to provide notice or
to deliver any document hereunder to the NIMS Insurer unless it has
received notice of the appointment of a NIMS Insurer
hereunder.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01
Conveyance of Mortgage Loans.
(a)
The Depositor, concurrently with the
execution and delivery hereof, does hereby establish the Trust and
transfer, assign, set over and otherwise convey 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 the
Mortgage Loans identified on the Mortgage Loan Schedule, the rights
of the Depositor under the Assignment and Assumption Agreement and
the Mortgage Loan Purchase Agreement, and all other assets included
or to be included in the Trust Fund. Such assignment includes
all interest and principal received by the Seller, the Depositor or
the Servicer on or with respect to the Mortgage Loans (other than
payments of principal and interest due on such Mortgage Loans on or
before the Cut-off Date). The Depositor herewith delivers to
the Trustee and the Securities Administrator an executed copy of
the Assignment and Assumption Agreement. In addition, on or
prior to the Closing Date, the Trustee shall execute the Yield
Maintenance Agreement and the Depositor hereby directs the Trustee
to do so. With respect to any Mortgage Loan that does not
have a first payment date during the Due Period related to the
first Distribution Date, the Depositor shall deposit into the
Distribution Account on or before the Servicer Remittance Date
relating to the first Distribution Date, an amount equal to one
month’s interest at the related Net Mortgage Rate on the
Cut-off Date Principal Balance of such Mortgage Loan.
If the assignment and transfer of the
Mortgage Loans and the other property specified in this Section
2.01 from the Depositor to the Trustee pursuant to this Agreement
is held or deemed not to be a sale or is held or deemed to be a
pledge of security for a loan, the Depositor intends that the
rights and obligations of the parties shall be established pursuant
to the terms of this Agreement and that, in such event, (i) the
Depositor shall be deemed to have granted and does hereby grant to
the Trustee, for the benefit of the Certificateholders, as of the
Closing Date a perfected, first priority security interest in the
entire right, title and interest of the Depositor in and to the
Mortgage Loans and all other property conveyed to the Trust Fund
pursuant to this Section 2.01 and all proceeds thereof,
substitutions therefor and accessions thereto, and (ii) this
Agreement shall constitute a security agreement under applicable
law.
In connection with such transfer and
assignment, the Depositor does hereby deliver to, and deposit with
the Custodian a copy of the related Mortgage Loan Schedule in an
electronic, machine readable medium, and the following documents or
instruments with respect to each Mortgage Loan so transferred and
assigned (each, a “Mortgage File”):
(i)
the original Mortgage Note with all
applicable riders, endorsed in blank or in the following form:
“Pay to the order of U.S. Bank National Association, as
Trustee under the applicable agreement, without recourse,”
with all prior and intervening endorsements showing a complete
chain of endorsement from the originator to the Person so endorsing
to the Trustee or a copy of such original Mortgage Note with an
accompanying lost note affidavit executed by the Seller;
(ii)
the original Mortgage with all applicable
riders with evidence of recording thereon, and a copy, certified by
the appropriate recording office, of the recorded power of
attorney, if the Mortgage was executed pursuant to a power of
attorney, with evidence of recording thereon;
(iii)
an original Assignment of the Mortgage in
blank;
(iv)
the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment
from the originator to the Person assigning the Mortgage to the
Trustee or in blank;
(v)
the original or copies of each
assumption, modification, written assurance or substitution
agreement, if any; and
(vi)
with respect to any first lien Mortgage
Loan, the original lender’s title insurance policy, if
available, together with all endorsements or riders which were
issued with or subsequent to the issuance of such policy, insuring
the priority of the Mortgage as a first lien on the Mortgaged
Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is
unavailable, a written commitment or uniform binder or preliminary
report of title issued by the title insurance or escrow company, if
available.
Notwithstanding the foregoing, the
Trustee, if applicable, acknowledges receipt of items listed under
clause (v) above only to the extent that it has received a written
schedule of the items to be delivered to the Custodian pursuant to
such clause (v).
The Depositor hereby represents that, on
the Closing Date (i) no more than 1% of the Mortgage Loans by
Stated Principal Balance as of the Cut-off Date may have lost note
affidavits in lieu of the original Mortgage Notes and (ii) the
Depositor shall cause the Originator to deliver to the Custodian,
on behalf of the Trustee, a copy of the original Mortgage Note for
each Mortgage Loan with respect to which a lost note affidavit is
delivered.
The Depositor shall cause the Originator,
at its expense, to promptly (and in no event later than thirty (30)
Business Days, subject to extension upon a mutual agreement among
the Depositor, the Servicer and the Trustee, following the later of
the Closing Date and the date of receipt by the Servicer or the
Trustee, as the case may be, of the recording information for a
Mortgage) submit or cause to be submitted to the Custodian, as
applicable, for recording, at no expense to the Trust Fund, the
Servicer, the Trustee or the Custodian, as applicable, in the
appropriate public office for real property records, each
Assignment referred to in clauses (iii) and (iv) above in this
Section 2.01(a) and shall execute each original Assignment in the
following form: “U.S. Bank National Association, as Trustee
under the applicable agreement, without recourse.” In the
event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Depositor shall or shall cause the
Originator to promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case
may be, and thereafter cause each such Assignment to be duly
recorded. Notwithstanding the foregoing, in lieu of recording
such Assignments, the Depositor may provide to the Trustee and the
Securities Administrator an Opinion of Counsel to the effect that
such recording is not required to evidence the Trust’s
interest in the related Mortgage Loan.
In the event that any Assignment of
Mortgage is not recorded or is improperly recorded the Servicer
shall have no liability for any failure to receive or act on
notices related to such Assignment of Mortgage.
If any of the documents referred to in
clauses (ii), (iii), (iv) or (v) above in this Section 2.01(a) has
as of the Closing Date been submitted for recording but either (x)
has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained
the original of such document, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon (1)
delivery to the Custodian 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 or delivery to 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 was not delivered
pursuant to clause (vi) above in this Section 2.01(a), the
Depositor shall deliver or cause to be delivered to the Custodian
promptly after receipt thereof, the original lender’s title
insurance policy, if available. The Depositor shall deliver
or cause to be delivered to the Custodian promptly upon receipt
thereof any other original 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.
All original documents relating to the
Mortgage Loans that are not delivered to the Custodian are and
shall be held by or on behalf of the Depositor or the Servicer, as
the case may be, in trust for the benefit of the Trustee on behalf
of the Certificateholders. In the event that any such
original document is required pursuant to the terms of this Section
to be a part of a Mortgage File, such document shall be delivered
promptly to the Custodian. Any such original document
delivered to or held by the Depositor that is not required pursuant
to the terms of this Section to be a part of a Mortgage File, shall
be delivered promptly to the Servicer.
The Depositor shall deliver or cause the
Originator or the Custodian to deliver to the Servicer copies of
all trailing documents required to be included in the Servicing
File at the same time the originals or certified copies thereof are
delivered to the Custodian which documents shall include, but are
not limited to, the mortgagee policy of title insurance and any
Mortgage Loan documents upon return from the recording office.
The Servicer shall not be responsible for any custodial fees
other than costs incurred in obtaining such documents, and the
Servicer shall be entitled to reimbursement from the Seller for any
reasonable costs incurred in obtaining such documents.
(b)
It is agreed and understood by the
Depositor, the Seller, the Servicer and the Trustee that it is not
intended that any Mortgage Loan be included in the Trust Fund that
is a high-cost home loan as defined by the HOEPA or any other
applicable predatory or abusive lending laws.
Section 2.02
Acceptance of REMIC I by the
Trustee.
Subject to the provisions of Section 2.01
and subject to any exceptions noted on the exception report
described in the next paragraph below, and pursuant to the
Custodial Agreement, in an initial certification to the Trustee,
the Custodian has acknowledged receipt of the documents referred to
in Section 2.01 (other than such documents described in Section
2.01(a)(iv)) above and the Trustee acknowledges receipt of all
other assets included under clauses (i), (iii), (iv) and (v) (other
than the Collection Account) of the definition of “REMIC
I” (to the extent of amounts deposited into the Distribution
Account) and declares that the Trustee or the Custodian, as
applicable, holds and will hold such documents and the other
documents delivered to it constituting the Mortgage File on behalf
of the Trust, and that it holds or will hold all such assets and
such other assets included in the definition of “REMIC
I” in trust for the exclusive use and benefit of all present
and future Certificateholders. The Securities Administrator also
acknowledges receipt of the amounts on deposit in the Net WAC
Reserve Fund in trust for the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees on or before the
Closing Date, for the benefit of the Certificateholders, to cause
the Custodian to review, each Mortgage File and to cause the
Custodian to deliver a certification to the Depositor, the Seller,
the Servicer, the Securities Administrator and the Trustee in
substantially the form attached hereto as Exhibit C-1. It is
herein acknowledged that, in conducting such review, neither the
Trustee nor the Custodian was under any duty or obligation (i) to
inspect, review or examine any such documents, instruments,
certificates or other papers to determine whether they are genuine,
enforceable, or appropriate for the represented purpose (including
with respect to Section 2.01(a)(vi), whether such title insurance
policy insures the priority of the Mortgage as a first lien) or
whether they have actually been recorded or that they are other
than what they purport to be on their face or (ii) to determine
whether any Mortgage File should include any of the documents
specified in Section 2.01(a)(v).
Prior to the first anniversary date of
this Agreement, the Trustee shall cause the Custodian to deliver to
the Depositor, the Trustee, the Seller and the Servicer a final
certification in the form annexed hereto as Exhibit C-2 evidencing
the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the
Mortgage Files and making or preparing, as the case may be, the
certifications referred to above, the Custodian finds any document
or documents constituting a part of a Mortgage File to be missing
or defective in any material respect, at the conclusion of its
review the Custodian shall so notify the Depositor, the Seller, the
Securities Administrator, the Trustee and the Servicer. In
addition, upon the discovery by the Depositor, the Servicer, the
Custodian or the Trustee of a breach of any of the representations
and warranties made by the Originator or the Seller in the Mortgage
Loan Purchase Agreement or this Agreement, respectively, 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.
Enforcement of each Mortgage Loan
Purchase Agreement or this Agreement against the Originator or the
Seller, respectively, shall be effected by the Securities
Administrator on behalf of the Trustee. The Securities
Administrator on behalf of the Trustee shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor
only (i) from a general recovery resulting from such enforcement,
to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys’ fees against the
Person against which such enforcement is directed; provided,
however, if the sources of reimbursement described in clauses (i)
and (ii) are insufficient, the Securities Administrator on behalf
of the Trustee may seek reimbursement for any remaining
unreimbursed costs of such enforcement from the Trust Fund as an
Extraordinary Trust Fund Expense.
Section 2.03
Repurchase or Substitution of Mortgage
Loans by the Originator, the Seller or the Depositor; Payment of
Prepayment Premiums in the Event of Breach.
(a)
(i)Upon discovery by any of the parties
hereto or receipt of notice by a Responsible Officer in the
Corporate Trust Office of the Trustee and the Securities
Administrator of any materially defective document in, or that a
document is missing from, the Mortgage File or of the breach by the
Originator of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or the Assignment and Assumption
Agreement in respect of any Mortgage Loan that materially adversely
affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, such party or the Trustee shall promptly
notify the Seller and the Servicer of such defect, missing document
or breach and cause the Originator to deliver such missing document
or cure such defect or breach within 90 days from the date the
Originator was notified of such missing document, defect or breach;
provided that such missing document was not previously delivered by
the Originator under the Mortgage Loan Purchase Agreement and the
Assignment and Assumption Agreement. Notwithstanding the
foregoing, if applicable, any breach by the Originator of the
Freddie Mac Representations (as defined and set forth in the
Mortgage Loan Purchase Agreement) shall be deemed to materially and
adversely affect the interests of the Certificateholders in that
Mortgage Loan. If the Originator does not deliver such
missing document or cure such defect or breach in all material
respects during such period, the Securities Administrator on behalf
of the Trustee shall enforce the obligations of the Originator
under the Mortgage Loan Purchase Agreement and the Assignment and
Assumption Agreement to repurchase such Mortgage Loan from the
Trust Fund at the Purchase Price, to the extent that the Originator
is obligated to do so under the Mortgage Loan Purchase Agreement
and the Assignment and Assumption Agreement. In the event
that the Originator shall fail to cure the applicable breach or
repurchase a Mortgage Loan in accordance with the preceding
sentence, the Depositor shall do so. The Purchase Price for
the repurchased Mortgage Loan shall be deposited in the
Distribution Account, and the Securities Administrator on behalf of
the Trustee, upon receipt of such deposit, shall release or cause
the Custodian to release to the Originator or the Depositor, as the
case may be, the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment, in
each case without recourse, (provided, however, that in the
instruments of transfer or assignment, the Trustee shall represent
and warrant to the Originator or the Depositor, as applicable, that
the repurchased Mortgage Loan is free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest created by
the Trustee and its successors, assigns and transferees), as the
Originator or the Depositor, as applicable, shall furnish to it and
as shall be necessary to vest in the Originator or the Depositor,
as the case may be, any Mortgage Loan released pursuant hereto, and
the Securities Administrator and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so
provided in the Mortgage Loan Purchase Agreement, the Assignment
and Assumption Agreement or this Agreement, the Originator or the
Depositor, 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(c). It is understood
and agreed that the obligation of the Originator or the Depositor,
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
respecting such omission, defect or breach available to the
Securities Administrator and the Trustee on behalf of the
Certificateholders.
(ii)
Upon discovery by any of the parties
hereto or receipt of notice by a Responsible Officer in the
Corporate Trust Office of the Trustee of any breach by the Seller
of any representation, warranty or covenant made by the Seller in
Section 2.05(b)(i), (ii) and (iii) in respect of any Mortgage Loan
that materially adversely affects the value of such Mortgage Loan
or the interest therein of the Certificateholders (in the case of
any such representation or warranty made to the knowledge or the
best of knowledge of the Seller as to which the Seller has no
knowledge, without regard to the Seller’s lack of knowledge
with respect to the substance of such representation or warranty
being inaccurate at the time it was made), such party or the
Trustee shall promptly notify the Seller and the Servicer of such
breach and cause the Seller to cure such breach within 90 days from
the date the Seller was notified of such breach. If the
Seller fails to cure such breach in all material respects during
such period, the Seller shall repurchase such Mortgage Loan from
the Trust Fund at the Purchase Price. In the event that the
Seller shall fail to cure the applicable breach or repurchase a
Mortgage Loan in accordance with the preceding sentence, the
Depositor shall do so. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Distribution Account, and
the Securities Administrator, upon receipt of such deposit, shall
release or cause the Custodian to release to the Seller or the
Depositor, as the case may be, the related Mortgage File and the
Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, (provided, however, that
in the instruments of transfer or assignment, the Trustee shall
represent and warrant to the Originator or the Depositor, as
applicable, that the repurchased Mortgage Loan is free and clear of
any encumbrance, equity, lien, pledge, charge, claim or security
interest created by the Trustee and its successors, assigns and
transferees), as the Seller or the Depositor, as applicable, shall
furnish to it and as shall be necessary to vest in the Seller or
the Depositor, as the case may be, any Mortgage Loan released
pursuant hereto, and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so
provided in the Mortgage Loan Purchase Agreement, the Assignment
and Assumption Agreement or this Agreement, the Seller or the
Depositor, 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(c). It is understood
and agreed that the obligation of the Seller or the Depositor, as
applicable, to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such breach
available to the Trustee on behalf of the
Certificateholders.
(b)
(i)
As promptly as practicable (and no later
than 90 days) after 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(a) which materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the
Servicer shall cure such breach in all material
respects.
(ii)
If the covenant made by the
Servicer in Section 2.05(a)(vii) is breached and remains uncured,
the Servicer shall pay into the Collection Account the amount of
the waived Prepayment Premium. If the Servicer shall fail to
make any payment required pursuant to this Section 2.03(b)(ii),
either the Trustee or the Seller may enforce such
obligation.
(c)
Any substitution of Qualified Substitute
Mortgage Loans for Deleted Mortgage Loans made pursuant to Section
2.03(a) must be effected prior to the date that is two years after
the Closing Date for the Trust Fund.
As to any Deleted Mortgage Loan for which
the Originator, the Seller or the Depositor substitutes a Qualified
Substitute Mortgage Loan or Loans, such substitution shall be
effected by the Originator, the Seller or the Depositor, as the
case may be, delivering to the Custodian on behalf of the Trustee,
for such Qualified Substitute Mortgage Loan or Loans, the Mortgage
Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary endorsements thereon,
as are required by Section 2.01, together with an Officers’
Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the
Substitution Shortfall Amount (as described below), if any, in
connection with such substitution. The Custodian shall
acknowledge receipt for such Qualified Substitute Mortgage Loan or
Loans and, within ten Business Days thereafter, review such
documents as specified in Section 2.02 and deliver to the Trustee,
the Depositor, the Seller, the Securities Administrator and the
Servicer, with respect to such Qualified Substitute Mortgage Loan
or Loans, a certification substantially in the form attached hereto
as Exhibit C-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Custodian
shall deliver to the Trustee, the Securities Administrator, the
Depositor, the Seller and the Servicer a certification
substantially in the form of Exhibit C-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, the Seller or the Depositor, as the case may be.
For the month of substitution, distributions to
Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of
substitution, and the Originator, the Seller or the Depositor, as
the case may be, shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan.
The Servicer 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 Securities Administrator and the
Trustee in an electronic format. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall constitute part
of the Mortgage Pool and part of the related Group and shall be
subject in all respects to the terms of this Agreement, including,
in the case of a substitution effected by the Originator or the
Seller, all applicable representations and warranties thereof
included in the Mortgage Loan Purchase Agreement or this Agreement,
respectively, and in the case of a substitution effected by the
Depositor, all applicable representations and warranties thereof
set forth in Section 2.04.
For any month in which the Originator,
the Seller or the Depositor substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the Seller will determine the amount (the “Substitution
Shortfall Amount”), if any, by which the aggregate Purchase
Price of all such Deleted Mortgage Loans exceeds the aggregate of,
as to each such Qualified Substitute Mortgage Loan, 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 Net Mortgage Rate, plus all outstanding P&I
Advances and Servicing Advances and any costs and damages actually
incurred and paid by or on behalf of the Trust in connection with
any violation by such Mortgage Loan of (i) the representations and
warranties set forth in Section 2.05(b)(i), (ii) or (iii) of this
Agreement, (ii) Section 7.01(f) of the Mortgage Loan Purchase
Agreement or (iii) the representations and warranties made in
connection with “high-cost” home loans or any predatory
or abusive lending laws in the Mortgage Loan Purchase Agreement, as
applicable. On the date of such substitution, which shall be
on or prior to the next succeeding Determination Date, the
Originator, the Seller or the Depositor, as the case may be, will
deliver or cause to be delivered to the Servicer for deposit in the
Collection Account an amount equal to the Substitution Shortfall
Amount, if any, and the Custodian, upon receipt of the related
Qualified Substitute Mortgage Loan or Loans, shall release to the
Originator or the Depositor, as the case may be, the related
Mortgage File or Files and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without
recourse, as the Originator, the Seller or the Depositor, as the
case may be, shall deliver to it and as shall be reasonably
necessary to vest therein any Deleted Mortgage Loan released
pursuant hereto.
In addition, the Originator, the Seller
or the Depositor, as the case may be, shall obtain at its own
expense and deliver to the Trustee an Opinion of Counsel to the
effect that such substitution will not cause (a) any federal tax to
be imposed on any of the REMICs created hereunder, including
without limitation, any federal tax imposed on “prohibited
transactions” under Section 860F(a)(1) of the Code or on
“contributions after the startup date” under Section
860G(d)(1) of the Code, or (b) any REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificate is
outstanding.
(d)
Upon discovery by the Depositor, the
Servicer, the Securities Administrator or the Trustee that any
Mortgage Loan does not constitute a “qualified
mortgage” within the meaning of Section 860G(a)(3) of the
Code, the party discovering such fact shall within two Business
Days give written notice thereof to the other parties. In
connection therewith, the Originator, the Seller or the Depositor,
as the case may be, shall repurchase or, subject to the limitations
set forth in Section 2.03(c), 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. The Depositor shall
cause such repurchase or substitution to be made by (i) 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 applicable Mortgage Loan Purchase Agreement, (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 2.04, or if its
status as a non-qualified mortgage is a breach of any
representation or warranty (other than a representation and
warranty of the Originator or the Seller) or (iii) the Seller, if
the affected Mortgage Loan’s status as a non-qualified
mortgage is a breach of any representation or warranty of the
Seller set forth in Section 2.05(b)(i), (ii) and (iii), or if its
status as a non-qualified mortgage is a breach of any
representation or warranty (other than a representation and
warranty of the Originator or the Depositor). Any such
repurchase or substitution shall be made in the same manner as set
forth in Section 2.03(a). The Trustee shall reconvey to the
Originator, the Seller or the Depositor, 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
Representations and Warranties of the
Depositor.
The Depositor hereby represents, warrants
and covenants to the Trustee, Litton and the Securities
Administrator that as of the Closing Date:
(i)
the Depositor is a corporation duly
organized, validly existing and in good standing under the laws
governing its creation and existence and has full corporate power
and authority to own its property, to carry on its business as
presently conducted, to enter into and perform its obligations
under this Agreement, and to create the trust pursuant
hereto;
(ii)
the execution and delivery by the
Depositor of this Agreement have been duly authorized by all
necessary corporate action on the part of the Depositor; neither
the execution and delivery of this Agreement, nor the consummation
of the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on
the Depositor or its properties or the certificate of incorporation
or bylaws of the Depositor;
(iii)
the execution, delivery and performance
by the Depositor of this Agreement and the consummation of the
transactions contemplated hereby do not require the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any state, federal or
other governmental authority or agency, except such as has been
obtained, given, effected or taken prior to the date
hereof;
(iv)
this Agreement has been duly executed and
delivered by the Depositor and, assuming due authorization,
execution and delivery by the Trustee, the Servicer, the Seller and
the Securities Administrator, constitutes a valid and binding
obligation of the Depositor enforceable against it in accordance
with its terms except as such enforceability may be subject to (A)
applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally and
(B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at
law;
(v)
there are no actions, suits or
proceedings pending or, to the knowledge of the Depositor,
threatened or likely to be asserted against or affecting the
Depositor, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to
any other matter which in the judgment of the Depositor will be
determined adversely to the Depositor and will if determined
adversely to the Depositor materially and adversely affect it or
its business, assets, operations or condition, financial or
otherwise, or adversely affect its ability to perform its
obligations under this Agreement;
(vi)
immediately prior to the transfer and
assignment of the Mortgage Loans to the Trustee, the Depositor was
the sole owner of record and holder of each Mortgage Loan, and the
Depositor had good and marketable title thereto, and had full right
to transfer and sell each Mortgage Loan to the Trustee free and
clear, subject only to (1) liens of current real property taxes and
assessments not yet due and payable and, if the related Mortgaged
Property is a condominium unit, any lien for common charges
permitted by statute, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of
the date of recording of such Mortgage acceptable to mortgage
lending institutions in the area in which the related Mortgaged
Property is located and specifically referred to in the
lender’s title insurance policy or attorney’s opinion
of title and abstract of title delivered to the originator of such
Mortgage Loan, and (3) such other matters to which like properties
are commonly subject which do not, individually or in the
aggregate, materially interfere with the benefits of the security
intended to be provided by the Mortgage, of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or
security interest, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party,
to sell and assign each Mortgage Loan pursuant to this
Agreement;
(vii)
This Agreement creates a valid and
continuing security interest (as defined in the applicable Uniform
Commercial Code (the “UCC”)), in the Mortgage Loans in
favor of the Trustee, which security interest is prior to all other
liens, and is enforceable as such against creditors of and
purchasers from the Depositor;
(viii)
The Mortgage Loans constitute
“instruments” within the meaning of the applicable
UCC;
(ix)
Other than the security interest granted
to the Trustee pursuant to this Agreement, the Depositor has not
pledged, assigned, sold, granted a security interest in, or
otherwise conveyed any of the Mortgage Loans. The Depositor
has not authorized the filing of and is not aware of any financing
statement against the Depositor that includes a description of the
collateral covering the Mortgage Loans other than a financing
statement relating to the security interest granted to the Trustee
hereunder or that has been terminated. The Depositor is not
aware of any judgment or tax lien filings against the
Depositor;
(x)
None of the Mortgage Loans have any marks
or notations indicating that such Mortgage Loans have been pledged,
assigned or otherwise conveyed to any Person other than the
Trustee; and
(xi)
The Depositor has received all consents
and approvals required by the terms of the Mortgage Loans to convey
the Mortgage Loans hereunder to the Trustee.
Section 2.05
Representations, Warranties and Covenants
of Litton.
(a)
Litton hereby represents, warrants and
covenants to the Trustee, the Seller, the Securities Administrator
and the Depositor that as of the Closing Date or as of such date
specifically provided herein:
(i)
Litton is a Delaware limited partnership
duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly authorized and qualified
to transact any and all business contemplated by this Agreement to
be conducted by Litton in any state in which a Mortgaged Property
related to a Mortgage Loan is located or is otherwise not required
under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such
State, to the extent necessary to ensure its ability to enforce
each Mortgage Loan serviced and to service the Mortgage Loans in
accordance with the terms of this Agreement;
(ii)
Litton has the full power and authority
to service each Mortgage Loan which Litton is required to service
hereunder, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and
has duly authorized by all necessary action on the part of Litton
the execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery
thereof by the Depositor, the Seller, Fremont, the Securities
Administrator and the Trustee, constitutes a legal, valid and
binding obligation of Litton, enforceable against Litton in
accordance with its terms, except to the extent that (a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to
creditors’ rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be
brought;
(iii)
The execution and delivery of this
Agreement by Litton, the servicing of the Mortgage Loans by Litton
hereunder, the consummation by Litton of any other of the
transactions herein contemplated, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of
business of Litton and will not (A) result in a breach of any term
or provision of the organizational documents of Litton or (B)
conflict with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material
agreement or instrument to which Litton is a party or by which it
may be bound, or any statute, order or regulation applicable to
Litton of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Litton; and Litton is
not a party to, bound by, or in breach or violation of any
indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to
Litton’s knowledge, would in the future materially and
adversely affect, (x) the ability of Litton to perform its
obligations under this Agreement or (y) the business, operations,
financial condition, properties or assets of Litton taken as a
whole;
(iv)
Litton is an approved seller/servicer for
Fannie Mae and an approved servicer for Freddie Mac in good
standing and is a HUD-approved non-supervised mortgagee pursuant to
Section 203 and Section 211 of the National Housing Act, and no
event has occurred, including but not limited to a change in
insurance coverage, that would make Litton unable to comply with
HUD, Fannie Mae or Freddie Mac eligibility requirements;
(v)
No litigation is pending or, to the best
knowledge of Litton, threatened against Litton that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of Litton to
service the Mortgage Loans or to perform any of its other
obligations hereunder in accordance with the terms
hereof;
(vi)
No consent, approval, authorization or
order of any court or governmental agency or body is required for
the execution, delivery and performance by Litton of, or compliance
by Litton with, this Agreement or the consummation by Litton of the
transactions contemplated by this Agreement, except for such
consents, approvals, authorizations or orders, if any, that have
been obtained prior to the Closing Date;
(vii)
Litton will not waive any Prepayment
Premium or part of a Prepayment Premium unless such waiver would,
in the reasonable opinion of Litton, maximize recovery of total
proceeds taking into account the value of such Prepayment Premium
and related Mortgage Loan and doing so is standard and customary in
servicing mortgage loans similar to the Mortgage Loans (including
any waiver of a Prepayment Premium in connection with a refinancing
of a Mortgage Loan that is related to a default or an imminent
default), and in no event will it waive a Prepayment Premium in
connection with a refinancing of a Mortgage Loan that is not
related to a default or an imminent default. Notwithstanding
the previous sentence, if Litton determines that any Prepayment
Premium is not legally enforceable under the circumstances in which
the related Principal Prepayment occurs, then Litton shall not be
required to attempt to collect the applicable Prepayment Premium,
and shall have no liability or obligation with respect to such
Prepayment Premium pursuant to Section 2.03(b)(ii) hereof. In
the event that Litton does not receive sufficient information to
enable it to collect a Prepayment Premium such Prepayment Premium
may be waived. Litton shall review the Mortgage Loan
documents in accordance with its customary servicing procedures to
verify the existence of all documents necessary to enforce any
Prepayment Premiums. If Litton cannot verify the existence of
such documents it shall immediately notify the Originator, the
Seller, the Trustee, the Securities Administrator and the
Depositor. Upon receipt of such notice, the Originator shall
provide Litton with any outstanding documents required to verify
the existence of the Prepayment Premium. In the event Litton
is unable to verify the existence of Prepayment Premium, Litton
shall not be obligated to pay such Prepayment Premiums into the
Collection Account;
(viii)
For each Mortgage Loan, Litton will
accurately, fully and in a timely manner report its borrower credit
files to each of the Credit Repositories; and
(ix)
this Agreement has been duly executed and
delivered by the Servicer and, assuming due authorization,
execution and delivery by the Trustee, the Depositor, the Seller
and the Securities Administrator, constitutes a valid and binding
obligation of the Servicer enforceable against it in accordance
with its terms except as such enforceability may be subject to (A)
applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally and
(B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at
law.
(b)
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 Seller (with respect to
Section 2.05(a)), the Trustee, the Securities Administrator and the
Depositor. Upon discovery by any of the Depositor, the
Seller, the Servicer, the Securities Administrator 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 Premium or the interests therein of the
Certificateholders, the party discovering such breach shall give
prompt written notice (but in no event later than two Business Days
following such discovery) to the other such parties. The
obligation of the Servicer set forth in Section 2.03(b) to cure
breaches (or, in the case of Section 2.05(a)(vii), to pay the
amount of the waived Prepayment Premium) shall constitute the sole
remedy against the Servicer available to the Certificateholders,
the Depositor, the Seller, the Securities Administrator or the
Trustee on behalf of the Certificateholders respecting a breach of
the representations, warranties and covenants contained in this
Section 2.05.
Section 2.06
Representations and Warranties as to the
Mortgage Loans.
(a)
Representations and Warranties of the
Depositor as to the Mortgage Loans.
(i)
With respect to the Mortgage Loans and
the period from the original sale date from Fremont to the Seller
to and including the Closing Date, the Depositor hereby makes the
representations and warranties contained in clauses (a), (b), (d),
(e), (l), (p), (x), (ll) and (oo) of Section 7.02 of the Mortgage
Loan Purchase Agreement with respect to each of the Mortgage Loans
to and for the benefit of the Trustee and the Trust
Fund.
Section 2.07
[Reserved]
Section 2.08
[Reserved]
Section 2.09
Issuance of the R-I Residual
Interest.
The Trustee acknowledges the assignment
to it of the Mortgage Loans and the delivery to it or to the
Custodian on its behalf, as applicable, of the Mortgage Files,
subject to the provisions of Section 2.01 and Section 2.02,
together with the assignment to the Trustee of all other assets
included in REMIC I, receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in
exchange therefor, the Securities Administrator, 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 R-I residual interests in an authorized
denomination. The R-I residual interest, together with the
REMIC I Regular Interests, constitute the entire beneficial
ownership interest in REMIC I.
Section 2.10
Conveyance of Uncertificated Regular
Interests; Acceptance by the Trustee.
The Depositor, concurrently with the
execution and delivery hereof, does hereby transfer, assign, set
over and otherwise convey to the Trustee without recourse all the
right, title and interest of the Depositor in and to the
uncertificated REMIC regular interests created hereby for the
benefit of the Certificateholders. The Trustee acknowledges
receipt of such Uncertificated REMIC interests and declares that it
holds and will hold each such uncertificated Regular Interest in
trust for the exclusive use and benefit of the REMIC holding such
uncertificated Regular Interest as set forth in Section
1.03.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01
Servicer to Act as Servicer.
Prior to the Servicing Transfer
Date, the Mortgage Loans will be serviced and administered by
Fremont in accordance with the terms and provisions of the Mortgage
Loan Purchase Agreement. In addition, in connection with the
November and December 2005 Distribution Dates, Fremont will make
all remittances and prepare all reports required to be prepared
with respect to the Mortgage Loans listed on Schedule 8 attached
hereto in accordance with the terms and provisions of the Mortgage
Loan Purchase Agreement. On or after the Servicing Transfer
Date, the Servicer shall service and administer the Mortgage Loans,
as independent contract servicer, on behalf of the Trust Fund and
in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in accordance
with Accepted Servicing Practices) in accordance with the terms of
this Agreement, the Mortgage Loans and Accepted Servicing Practices
but without regard to:
(i)
any relationship that the Servicer, any
related Sub-Servicer or any Affiliate of the Servicer or any
related Sub-Servicer may have with the related
Mortgagor;
(ii)
the ownership or non-ownership of any
Certificate by the Servicer or any Affiliate of the
Servicer;
(iii)
the Servicer’s obligation to make
P&I Advances or Servicing Advances; or
(iv)
the Servicer’s or any related
Sub-Servicer’s right to receive compensation for its services
hereunder or with respect to any particular transaction.
Notwithstanding anything to the contrary
contained in this Agreement, the Servicer shall have no obligations
with respect to any Mortgage Loans subject to this Agreement until
from and after the Servicing Transfer Date.
To the extent consistent with the
foregoing, the Servicer shall seek to maximize the timely and
complete recovery of principal and interest on the Mortgage Notes.
Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans,
the Servicer shall have full power and authority, acting alone or
through a Sub-Servicer or Sub-Servicers, as the case may be, as
provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration which
it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer in the name of the Trust
is hereby authorized and empowered when the Servicer believes it
appropriate in its best judgment in accordance with the servicing
standards set forth above, to execute and deliver, on behalf of the
Certificateholders and the Trust Fund, any and all instruments of
satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to
the Mortgage Loans and the Mortgaged Properties and to institute
foreclosure proceedings or obtain a deed-in-lieu of foreclosure so
as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Trust
Fund and Certificateholders. Subject to Section 6.03, the
Servicer shall represent and protect the interests of the Trust
Fund in the same manner as it protect its own interests in mortgage
loans in its own portfolio with respect to any claim, proceeding or
litigation regarding the Mortgage Loans. The Servicer shall
service and administer the Mortgage Loans in accordance with
applicable law and shall provide to the Mortgagors any reports
required to be provided to them thereby. The Servicer shall
also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any
standard hazard insurance policy. Promptly upon request, but
subject to Section 3.17, the Trustee shall execute and furnish to
the Servicer and any Sub-Servicer such documents as are necessary
or appropriate to enable the Servicer or any Sub-Servicer to carry
out their servicing and administrative duties hereunder, and the
Trustee hereby grants to the Servicer and each Sub-Servicer a
special or limited power of attorney to carry out such duties
including a power of attorney in the form of Exhibit K
attached hereto for each county in which a related Mortgaged
Property is located to enable the Servicer to take title and
dispose of the related Mortgaged Properties after foreclosure on
behalf of the Trustee and the Certificateholders. The Trustee
shall execute a separate power of attorney in the form of
Exhibit K attached hereto in favor of the Servicer to the
extent furnished to the Trustee by the Servicer and/or each
Sub-Servicer for the purposes described herein to the extent
necessary or desirable to enable the Servicer to perform its duties
hereunder. The Trustee shall not be liable for the actions of
the Servicer or any Sub-Servicer under such powers of
attorney.
Subject to Section 3.09 hereof, in
accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.11. Any cost incurred by the
Servicer or by a Sub-Servicer in effecting the timely payment of
taxes and assessments on a Mortgaged Property shall not, for the
purpose of calculating distributions to Certificateholders, be
added to the unpaid principal balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so
permit.
Notwithstanding anything in this
Agreement to the contrary, the Servicer may not make any future
advances with respect to a related Mortgage Loan (except as
provided in Section 4.03) nor shall the Servicer (i) except as
provided in Section 3.07, when the related Mortgagor is in default
with respect to such Mortgage Loan or such default is, in the
ju
