FIRST HORIZON ASSET SECURITIES INC.
Depositor
FIRST HORIZON HOME LOAN CORPORATION
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
-----------------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2005
-----------------------------------------------------
FIRST HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2005-AA9
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-AA9
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.............................................................................................5
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND
WARRANTIES.........................................34
SECTION 2.1 Conveyance of
Mortgage
Loans......................................................................34
SECTION 2.2 Acceptance by
Trustee of the Mortgage
Loans.......................................................38
SECTION 2.3 Representations
and Warranties of the Master Servicer; Covenants of the
Seller...................40
SECTION 2.4 Representations
and Warranties of the Depositor as to the Mortgage
Loans..........................42
SECTION 2.5 Delivery of
Opinion of Counsel in Connection with
Substitutions...................................43
SECTION 2.6 Execution and
Delivery of
Certificates............................................................43
SECTION 2.7 REMIC
Matters.....................................................................................44
SECTION 2.8 Covenants of the
Master
Servicer..................................................................47
ARTICLE III ADMINISTRATION AND SERVICING OF
MORTGAGE
LOANS.......................................................47
SECTION 3.1 Master Servicer
to Service Mortgage
Loans.........................................................47
SECTION 3.2 Subservicing;
Enforcement of the Obligations of
Servicers.........................................48
SECTION 3.3 Rights of the
Depositor and the Trustee in Respect of the Master
Servicer.........................49
SECTION 3.4 Trustee to Act
as Master
Servicer.................................................................49
SECTION 3.5 Collection of
Mortgage Loan Payments; Certificate Account; Distribution
Account...................50
SECTION 3.6 Collection of
Taxes, Assessments and Similar Items; Escrow
Accounts...............................53
SECTION 3.7 Access to
Certain Documentation and Information Regarding the Mortgage
Loans......................54
SECTION 3.8 Permitted
Withdrawals from the Certificate Account and Distribution
Account.......................54
SECTION 3.9 Maintenance of
Hazard Insurance; Maintenance of Primary Insurance
Policies........................56
SECTION 3.10 Enforcement of
Due-on-Sale Clauses; Assumption
Agreements........................................57
SECTION 3.11 Realization
Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
Loans..................59
SECTION 3.12 Trustee to
Cooperate; Release of Mortgage
Files..................................................61
SECTION 3.13 Documents
Records and Funds in Possession of Master Servicer to be Held for
the Trustee..........62
SECTION 3.14 Master
Servicing
Compensation....................................................................62
SECTION 3.15 Access to
Certain
Documentation..................................................................63
SECTION 3.16 Annual
Statement as to
Compliance................................................................63
SECTION 3.17 Annual Independent
Public Accountants' Servicing Statement; Financial
Statements.................63
SECTION 3.18 Errors and
Omissions Insurance; Fidelity
Bonds...................................................64
SECTION 3.19 Notification of
Adjustments......................................................................64
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY
THE MASTER
SERVICER.....................................................65
SECTION 4.1
Advances..........................................................................................65
SECTION 4.2 Priorities of
Distribution........................................................................65
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SECTION 4.3 Method of
Distribution............................................................................70
SECTION 4.4 Allocation of
Losses..............................................................................71
SECTION 4.5
[RESERVED]........................................................................................72
SECTION 4.6 Monthly
Statements to
Certificateholders..........................................................72
ARTICLE V THE
CERTIFICATES.......................................................................................74
SECTION 5.1 The
Certificates..................................................................................74
SECTION 5.2 Certificate
Register; Registration of Transfer and Exchange of
Certificates.......................75
SECTION 5.3 Mutilated,
Destroyed, Lost or Stolen
Certificates.................................................81
SECTION 5.4 Persons Deemed
Owners.............................................................................81
SECTION 5.5 Access to List
of Certificateholders' Names and
Addresses.........................................82
SECTION 5.6 Maintenance of
Office or
Agency...................................................................82
ARTICLE VI THE DEPOSITOR AND THE MASTER
SERVICER.................................................................82
SECTION 6.1 Respective
Liabilities of the Depositor and the Master
Servicer...................................82
SECTION 6.2 Merger or
Consolidation of the Depositor or the Master
Servicer...................................82
SECTION 6.3 Limitation on
Liability of the Depositor, the Master Servicer and
Others..........................83
SECTION 6.4 Limitation on
Resignation of Master
Servicer......................................................83
ARTICLE VII
DEFAULT..............................................................................................84
SECTION 7.1 Events of
Default.................................................................................84
SECTION 7.2 Trustee to Act;
Appointment of
Successor..........................................................86
SECTION 7.3 Notification to
Certificateholders................................................................87
ARTICLE VIII CONCERNING THE
TRUSTEE..............................................................................87
SECTION 8.1 Duties of
Trustee.................................................................................87
SECTION 8.2 Certain Matters
Affecting the
Trustee.............................................................89
SECTION 8.3 Trustee Not
Liable for Certificates or Mortgage
Loans.............................................91
SECTION 8.4 Trustee May Own
Certificates......................................................................91
SECTION 8.5 Trustee's Fees
and
Expenses.......................................................................91
SECTION 8.6 Eligibility
Requirements for
Trustee..............................................................92
SECTION 8.7 Resignation and
Removal of
Trustee................................................................92
SECTION 8.8 Successor
Trustee.................................................................................93
SECTION 8.9 Merger or
Consolidation of
Trustee................................................................93
SECTION 8.10 Appointment of
Co-Trustee or Separate
Trustee....................................................93
SECTION 8.11 Tax
Matters......................................................................................95
SECTION 8.12 Periodic
Filings.................................................................................97
ARTICLE IX
TERMINATION...........................................................................................97
SECTION 9.1 Termination upon
Liquidation or Purchase of all Mortgage
Loans....................................97
SECTION 9.2 Final
Distribution on the
Certificates............................................................98
SECTION 9.3 Additional
Termination
Requirements...............................................................99
ARTICLE X
[RESERVED]............................................................................................100
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ARTICLE XI MISCELLANEOUS
PROVISIONS.............................................................................100
SECTION 11.1
Amendment.......................................................................................100
SECTION 11.2 Recordation of
Agreement;
Counterparts..........................................................101
SECTION 11.3 Governing
Law...................................................................................101
SECTION 11.4 Intention of
Parties............................................................................102
SECTION 11.5
Notices.........................................................................................102
SECTION 11.6 Severability of
Provisions......................................................................103
SECTION 11.7
Assignment......................................................................................103
SECTION 11.8 Limitation on
Rights of
Certificateholders......................................................104
SECTION 11.9 Inspection and
Audit
Rights.....................................................................104
SECTION 11.10 Certificates
Nonassessable and Fully
Paid......................................................105
SECTION 11.11 Limitations on
Actions; No
Proceedings.........................................................105
SECTION 11.12 Acknowledgment
of
Seller.......................................................................105
SCHEDULES
Schedule I:
Mortgage Loan Schedule
S-I-1
Schedule II:
Representations and Warranties of the Master Servicer
S-II-1
Schedule III:
Form of Monthly Master Servicer Report
S-III-1
EXHIBITS
Exhibit A:
Form of Senior Certificate
A-1
Exhibit B:
Form of Subordinated Certificate
B-1
Exhibit C:
Form of Residual Certificate
C-1
Exhibit D:
Form of Reverse of Certificates
D-1
Exhibit E:
Form of Initial Certification
E-1
Exhibit F:
Form of Delay Delivery Certification
F-1
Exhibit G:
Form of Subsequent Certification of Custodian
G-1
Exhibit H:
Transfer Affidavit
H-1
Exhibit I:
Form of Transferor Certificate
I-1
Exhibit J:
Form of Investment Letter [Non-Rule 144A]
J-1
Exhibit K:
Form of Rule 144A Letter
K-1
Exhibit L:
Request for Release (for Trustee)
L-1
Exhibit M:
Request for Release (Mortgage Loan)
M-1
</TABLE>
iii
<PAGE>
THIS
POOLING AND SERVICING AGREEMENT, dated as of September 1, 2005,
among
FIRST HORIZON ASSET SECURITIES INC., a
Delaware corporation, as depositor (the
"Depositor"), FIRST HORIZON HOME LOAN
CORPORATION, a Kansas corporation, as
master servicer (the "Master Servicer"),
and THE BANK OF NEW YORK, a banking
corporation organized under the laws of the
State of New York, as trustee (the
"Trustee").
WITNESSETH THAT
In
consideration of the mutual agreements herein contained, the
parties
hereto agree as follows:
PRELIMINARY STATEMENT
The
Depositor is the owner of the Trust Fund that is hereby conveyed
to
the Trustee in return for the Certificates.
The Trust Fund for federal income
tax purposes will consist of two separate
REMICs. The Certificates will
represent the entire beneficial ownership
interest in the Trust Fund. The
Regular Certificates will represent
"regular interests" in the Upper REMIC. The
Class I-A-R Certificates will represent the
residual interests in the Lower
REMIC and Upper REMIC, as described in
Section 2.7. The "latest possible
maturity date" for federal income tax
purposes of all REMIC regular interests
created hereby will be the Latest Possible
Maturity Date.
The
following table sets forth characteristics of the Certificates,
together with the minimum denominations and
integral multiples in excess thereof
in which such Classes shall be issuable
(except that one Certificate of each
Class of Certificates may be issued in a
different amount and, in addition, one
Residual Certificate representing the Tax
Matters Person Certificate may be
issued in a different amount):
[Remainder of Page Intentionally Left Blank]
1
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<TABLE>
<CAPTION>
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Initial Class
Initial
Integral Multiples
Class Designation
Certificate Balance Pass Through
Rate
Minimum Denomination in Excess Minimum
-------------------------
----------------------- ---------------------
---------------------- ---------------------
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Class I-A-1
$
22,502,000.00
5.6784% (1) $
25,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class I-A-R
$
100.00
5.6784% (1) $
100 $
N/A
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class II-A-1
$
214,030,000.00
5.6870% (2) $
25,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class III-A-1
$
255,468,000.00
5.6895% (3) $
25,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class B-1
$
12,837,000.00
5.6879% (4) $
100,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class B-2
$
6,288,000.00
5.6879% (4) $
100,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class B-3
$
4,977,000.00
5.6879% (4) $
100,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class B-4
$
3,144,000.00
5.6879% (4) $
100,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class B-5
$
2,620,000.00
5.6879% (4) $
100,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
Class B-6
$
2,096,134.57
5.6879% (4) $
100,000 $
1,000
-------------------------
----------------------- ---------------------
---------------------- ---------------------
</TABLE>
(1) The Pass-Through Rates for the Class
I-A-1 and Class I-A-R Certificates for
each subsequent Distribution Date will
equal the Weighted Average Adjusted Net
Mortgage Rate for Pool I, as of the first
day of the month immediately prior to
the month in which the relevant
Distribution Date occurs, after taking into
account scheduled payments of principal on
that date and any Principal
Prepayments received on or after such date
and distributed to Certificateholders
on the prior Distribution Date.
(2) The Pass-Through Rates for the Class
II-A-1 Certificates for each subsequent
Distribution Date will equal the Weighted
Average Adjusted Net Mortgage Rate for
Pool II, as of the first day of the month
immediately prior to the month in
which the relevant Distribution Date
occurs, after taking into account scheduled
payments of principal on that date and any
Principal Prepayments received on or
after such date and distributed to
Certificateholders on the prior Distribution
Date.
(3) The Pass-Through Rates for the Class
III-A-1 Certificates for each
subsequent Distribution Date will equal the
Weighted Average Adjusted Net
Mortgage Rate for Pool III, as of the first
day of the month immediately prior
to the month in which the relevant
Distribution Date occurs, after taking into
account scheduled payments of principal on
that date and any Principal
Prepayments received on or after such date
and distributed to Certificateholders
on the prior Distribution Date.
(4) The Pass-Through Rates for the
Subordinated Certificates for each subsequent
Distribution Date will equal the weighted
average of the Weighted Average
Adjusted Net Mortgage Rates for each
Mortgage Pool, weighted on the basis of the
Group Subordinate Amount for each Mortgage
Pool, as of the first day of the
month immediately prior to the month in
which the relevant Distribution Date
occurs, after taking into account scheduled
payments of principal on that date
and any Principal Prepayments received on
or after such date and distributed to
Certificateholders on the prior
Distribution Date.
2
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Accretion Directed Certificates.......
None.
Accrual Certificates..................
None.
Accrual Components....................
None.
Book-Entry Certificates...............
All
Classes of Certificates other than the Physical Certificates.
Certificate Group.....................
With
respect to Pool I, the Group I Senior Certificates; with respect
to
Pool II, the Group II Senior Certificates; and with respect to Pool
III,
the Group III Senior Certificates. The Subordinated Certificates
correspond to each Mortgage Pool.
COFI Certificates.....................
None.
Component Certificates................
None.
Components............................
None.
Delay Certificates....................
All
interest-bearing Classes of Certificates other than the
Non-Delay
Certificates, if any.
ERISA-Restricted Certificates.........
The
Residual Certificates, Private Certificates and Certificates of
any
Class that no longer satisfy the applicable rating requirement of
the
Underwriters' Exemption.
Floating Rate Certificates............
None.
Group I Senior Certificates...........
The
Class I-A-1 and Class I-A-R Certificates.
Group II Senior Certificates..........
The Class II-A-1
Certificates.
Group III Senior Certificates.........
The
Class III-A-1 Certificates.
Insured Retail Certificates...........
None.
Inverse Floating Rate Certificates....
None.
LIBOR Certificates....................
None.
Non-Delay Certificates................
None.
Notional Amount Components............
None.
Notional Amount Certificates..........
None.
Offered Certificates..................
All
Classes of the Certificates other than the Private
Certificates.
Physical Certificates.................
The
Residual Certificates and the Private Certificates.
Planned Principal Classes.............
None.
Principal Only Certificates...........
None.
Private Certificates..................
The
Class PO Certificates and the Class B-4, Class B-5 and Class
B-6
Certificates.
Rating Agencies.......................
Fitch and Moody's; except that, for the purposes of the Class B-1,
Class
B-2, Class B-3, Class B-4 and Class B-5 Certificates, Fitch shall
be the
sole Rating Agency. The Class B-6 Certificates will not be
rated.
Regular Certificates..................
All
Classes of Certificates, other than the Residual Certificates.
</TABLE>
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Residual Certificates.................
The
Class I-A-R Certificates.
Scheduled Principal Classes...........
None.
Senior Certificates...................
The
Group I Senior Certificates, the Group II Senior Certificates and
the
Group III Senior Certificates, collectively.
Senior Mezzanine Certificates.........
None.
Subordinated Certificates.............
The
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class
B-6
Certificates.
Super Senior Certificates.............
None.
Support Classes.......................
None.
Targeted Principal Classes............
None.
Underwriters..........................
Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Citigroup Global
Markets Inc.
</TABLE>
With
respect to any of the foregoing designations as to which the
corresponding reference is "None," all
defined terms and provisions herein
relating solely to such designations shall
be of no force or effect, and any
calculations herein incorporating
references to such designations shall be
interpreted without reference to such
designations and amounts. Defined terms
and provisions herein relating to
statistical rating agencies not designated
above as Rating Agencies shall be of no
force or effect.
4
<PAGE>
ARTICLE I
DEFINITIONS
Whenever
used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have
the following meanings:
Accrued
Certificate Interest: For any Class of Certificates for any
Distribution Date, the interest accrued
during the related Interest Accrual
Period at the applicable Pass-Through Rate
on the Class Certificate Balance of
such Class of Certificates immediately
prior to such Distribution Date, less
such Class' share of any Net Interest
Shortfall, allocable among the outstanding
Classes of Senior Certificates of the
related Certificate Group based on the
Accrued Certificate Interest otherwise
distributable thereto, and allocable to
the Subordinated Certificates based on
interest accrued on their related
Apportioned Principal Balances.
Adjusted
Mortgage Rate: As to each Mortgage Loan, and at any time, the
per
annum rate equal to the Mortgage Rate less
the Master Servicing Fee Rate.
Adjusted
Net Mortgage Rate: As to each Mortgage Loan, and at any time,
the
per annum rate equal to the Mortgage Rate
less the related Expense Fee Rate.
Adjustment Date: A date
specified in each Mortgage Note as a date on which
the Mortgage Rate on the related Mortgage
Loan will be adjusted.
Advance:
The payment required to be made by the Master Servicer with
respect to any Distribution Date pursuant
to Section 4.1, the amount of any such
payment being equal to the aggregate of
payments of principal and interest (net
of the Master Servicing Fee and net of any
net income in the case of any REO
Property) on the Mortgage Loans that were
due on the related Due Date and not
received as of the close of business on the
related Determination Date, less the
aggregate amount of any such delinquent
payments that the Master Servicer has
determined would constitute a
Nonrecoverable Advance if advanced.
Aggregate
Senior Percentage: For any Distribution Date, the percentage
equal to (x) the sum of the Class
Certificate Balances of the Senior
Certificates of all Certificate Groups,
divided by (y) the aggregate Pool
Principal Balance for all Mortgage Pools on
such Distribution Date, in each case
prior to giving effect to any distributions
on such Distribution Date.
Aggregate
Subordinated Percentage: For any Distribution Date, the
percentage equal to (x) the sum of the
Class Certificate Balances of the
Subordinated Certificates on such
Distribution Date, divided by (y) the
aggregate Pool Principal Balance for all
Mortgage Pools on such Distribution
Date, in each case prior to giving effect
to any distributions on such
Distribution Date.
Agreement:
This Pooling and Servicing Agreement and all amendments or
supplements hereto.
5
<PAGE>
Allocable
Share: With respect to any Class of Subordinated Certificates
on
any Distribution Date, such Class' pro rata
share (based on the Class
Certificate Balance of each Class entitled
thereto) of the Subordinated Optimal
Principal Amount for each Mortgage Pool;
provided, that, except as provided in
this Agreement, no Subordinated
Certificates (other than the Class of
Subordinated Certificates with the highest
priority of distribution) shall be
entitled on any Distribution Date to
receive distributions pursuant to clauses
(2), (3) and (5) of the definition of
Subordinated Optimal Principal Amount
unless the Class Prepayment Distribution
Trigger for such Class is satisfied for
such Distribution Date.
Alternative Title Product: Any one of the following: (i) Lien
Protection
Insurance issued by Integrated Loan
Services or ATM Corporation of America, (ii)
a Mortgage Lien Report issued by EPN
Solutions/ACRAnet, (iii) a Property Plus
Report issued by Rapid Refinance Service
through SharperLending.com, or (iv)
such other alternative title insurance
product that the Seller utilizes in
connection with its then current
underwriting criteria.
Amount
Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the applicable
subaccount of the Certificate Account at
the close of business on the related
Determination Date on account of (i)
Principal Prepayments on the related
Mortgage Pool received after the related
Prepayment Period and Liquidation Proceeds
in the related Mortgage Pool received
in the month of such Distribution Date and
(ii) all Scheduled Payments in the
related Mortgage Pool due after the related
Due Date.
Apportioned Principal Balance: For any Class of Subordinated
Certificates
and any Distribution Date, an amount equal
to the Class Certificate Balance of
such Class immediately prior to that
Distribution Date multiplied by a fraction,
the numerator of which is the applicable
Group Subordinate Amount for such
Distribution Date and the denominator of
which is the sum of the Group
Subordinate Amounts for such Distribution
Date.
Appraised
Value: With respect to any Mortgage Loan, the Appraised Value
of
the related Mortgaged Property shall be:
(i) with respect to a Mortgage Loan
other than a Refinancing Mortgage Loan, the
lesser of (a) the value of the
Mortgaged Property based upon the appraisal
made at the time of the origination
of such Mortgage Loan and (b) the sales
price of the Mortgaged Property at the
time of the origination of such Mortgage
Loan; (ii) with respect to a
Refinancing Mortgage Loan other than a
Streamlined Documentation Mortgage Loan,
the value of the Mortgaged Property based
upon the appraisal made at the time of
the origination of such Refinancing
Mortgage Loan; and (iii) with respect to a
Streamlined Documentation Mortgage Loan,
(a) if the loan-to-value ratio with
respect to the Original Mortgage Loan at
the time of the origination thereof was
90% or less, the value of the Mortgaged
Property based upon the appraisal made
at the time of the origination of the
Original Mortgage Loan and (b) if the
loan-to-value ratio with respect to the
Original Mortgage Loan at the time of
the origination thereof was greater than
90%, the value of the Mortgaged
Property based upon the appraisal (which
may be a drive-by appraisal) made at
the time of the origination of such
Streamlined Documentation Mortgage Loan.
Available
Funds: For each Mortgage Pool, with respect to any Distribution
Date, an amount equal to the sum of:
o
all
scheduled installments of interest, net of the Master Servicing
Fee and the Trustee Fee, and all scheduled installments of
principal
due in respect of the Mortgage Loans in such Mortgage Pool on
the
Due Date in the month in which the Distribution Date occurs and
received before the related Determination Date, together with
any
Advances in
respect thereof;
6
<PAGE>
o
all
Insurance Proceeds, Liquidation Proceeds and Unanticipated
Recoveries received in respect of the Mortgage Loans in such
Mortgage Pool during the calendar month before the Distribution
Date, which in each case is net of unreimbursed expenses incurred
in
connection with a liquidation or foreclosure and unreimbursed
Advances, if any;
o
all
Principal Prepayments received in respect of the Mortgage Loans
in such Mortgage Pool during the related Prepayment Period,
plus
interest received thereon, net of any Prepayment Interest
Excess;
o
any
Compensating Interest in respect of Principal Prepayments in
Full received in respect of the Mortgage Loans in such Mortgage
Pool
during the related Prepayment Period (or, in the case of the
first
Distribution Date, from the Cut-off Date); and
o
any
Substitution Adjustment Amount or the Purchase Price for any
Deleted Mortgage Loan in the related Mortgage Pool or a
Mortgage
Loan in the related Mortgage Pool repurchased by the Seller or
the
Master Servicer as of such Distribution Date, reduced by amounts
in
reimbursement for Advances previously made and other amounts
that
the Master Servicer is entitled to be reimbursed for out of the
Certificate Account pursuant to this Agreement.
Bankruptcy
Code: The United States Bankruptcy Reform Act of 1978, as
amended.
Bankruptcy
Coverage Termination Date: The date on which the Bankruptcy
Loss Coverage Amount is reduced to
zero.
Bankruptcy
Loss: With respect to any Mortgage Loan, a Deficient Valuation
or Debt Service Reduction; provided,
however, that a Bankruptcy Loss shall not
be deemed a Bankruptcy Loss hereunder so
long as the Master Servicer has
notified the Trustee in writing that the
Master Servicer is diligently pursuing
any remedies that may exist in connection
with the related Mortgage Loan and
either (A) the related Mortgage Loan is not
in default with regard to payments
due thereunder or (B) delinquent payments
of principal and interest under the
related Mortgage Loan and any related
escrow payments in respect of such
Mortgage Loan are being advanced on a
current basis by the Master Servicer, in
either case without giving effect to any
Debt Service Reduction or Deficient
Valuation.
Bankruptcy
Loss Coverage Amount: As of any Determination Date, the
Bankruptcy Loss Coverage Amount shall equal
the Initial Bankruptcy Coverage
Amount as reduced by (i) the aggregate
amount of Bankruptcy Losses allocated to
the Certificates since the Cut-off Date and
(ii) any permissible reductions in
the Bankruptcy Loss Coverage Amount as
evidenced by a letter of each Rating
Agency to the Trustee to the effect that
any such reduction will not result in a
downgrading of the then current ratings
assigned to the Classes of Certificates
rated by it. As of any Distribution Date on
or after the Cross-over Date, the
Bankruptcy Loss Coverage Amount will be
zero.
7
<PAGE>
Blanket
Mortgage: The mortgage or mortgages encumbering the Cooperative
Property.
Book-Entry
Certificates: As specified in the Preliminary Statement.
Business
Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day
on which banking institutions in the City
of Dallas, or the State of Texas or
the city in which the Corporate Trust
Office of the Trustee is located are
authorized or obligated by law or executive
order to be closed.
Certificate: Any one of the Certificates executed by the Trustee
in
substantially the forms attached hereto as
exhibits.
Certificate Account: The separate Eligible Account or Accounts
created and
maintained by the Master Servicer pursuant
to Section 3.5 with a depository
institution in the name of the Trustee for
the benefit of the Trustee on behalf
of Certificateholders and designated "First
Horizon Home Loan Corporation in
trust for the registered holders of First
Horizon Asset Securities Inc. Mortgage
Pass-Through Certificates, Series
2005-AA9."
Certificate Group: As specified in the Preliminary Statement.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person
who is the beneficial owner of such
Book-Entry Certificate.
Certificate Principal Balance: With respect to any Certificate and
as of
any Distribution Date, the Certificate
Principal Balance on the date of the
initial issuance of such Certificate, as
reduced by:
(a)
all amounts
distributed on previous Distribution Dates on such
Certificate on account of principal,
(b)
the principal
portion of all Realized Losses previously allocated to
such Certificate, and
(c)
in the case of a
Subordinated Certificate, such Certificate's pro
rata share, if any, of the Subordinated Certificate Writedown
Amount
for
previous Distribution Dates.
Certificate Register: The register maintained pursuant to Section
5.2
hereof.
Certificateholder or Holder: The person in whose name a Certificate
is
registered in the Certificate Register,
except that, solely for the purpose of
giving any consent pursuant to this
Agreement, any Certificate registered in the
name of the Depositor or the Seller or any
affiliate or agent of the Depositor
or the Seller shall be deemed not to be
Outstanding and the Percentage Interest
evidenced thereby shall not be taken into
account in determining whether the
requisite amount of Percentage Interests
necessary to effect such consent has
been obtained; provided, however, that if
any such Person (including the
Depositor) owns 100% of the Percentage
Interests evidenced by a Class of
Certificates, such Certificates shall be
deemed to be Outstanding for purposes
of any provision hereof that requires the
consent of the Holders of Certificates
of a particular Class as a condition to the
taking of any action hereunder. The
Trustee is entitled to rely conclusively on
a certification of the Depositor or
any affiliate of the Depositor in
determining which Certificates are registered
in the name of an affiliate of the
Depositor.
8
<PAGE>
Class: All
Certificates bearing the same class designation as set forth in
the Preliminary Statement.
Class
Certificate Balance: With respect to any Class of Certificates
and
as of any Distribution Date the aggregate
of the Certificate Principal Balances
of all Certificates of such Class as of
such date, plus the amount of any
Unanticipated Recoveries added to the Class
Certificate Balance of such Class of
Certificate pursuant to Section 4.2(h).
Class
Prepayment Distribution Trigger: For a Class of Subordinated
Certificates (other than the Class of
Subordinated Certificates with the highest
priority of distribution), a trigger that
is satisfied on any Distribution Date
on which a fraction (expressed as a
percentage), the numerator of which is the
aggregate Class Certificate Balance of such
Class and each Class subordinate
thereto, if any, and the denominator of
which is the aggregate Pool Principal
Balance for the Mortgage Pools with respect
to such Distribution Date, equals or
exceeds such percentage calculated as of
the Closing Date.
Closing
Date: September 30, 2005.
Code: The
Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COFI: Not
applicable.
COFI
Certificates: Not applicable.
Compensating Interest: As to any Distribution Date and any
Principal
Prepayment in respect of a Mortgage Loan
that is received during the period from
the sixteenth day of the month (or, in the
case of the first Distribution Date,
from the Cut-off Date) prior to the month
of such Distribution Date through the
last day of such month, an additional
payment to the related Mortgage Pool made
by the Master Servicer, to the extent funds
are available from the Master
Servicing Fee, equal to the amount of
interest at the Adjusted Net Mortgage Rate
for that Mortgage Loan from the date of the
prepayment to the related Due Date;
provided that the aggregate of all such
payments as to the Mortgage Loans in a
Mortgage Pool shall not exceed 0.0083% of
the Pool Principal Balance of such
Mortgage Pool as of the related
Determination Date, and provided further that if
a partial Principal Prepayment is applied
on or after the first day of the month
following the month of receipt, no
additional payment is required for such
Principal Prepayment.
Component:
Not applicable.
Component
Balance: Not applicable.
9
<PAGE>
Component
Certificates: Not applicable.
Cooperative Corporation: The entity that holds title (fee or an
acceptable
leasehold estate) to the real property and
improvements constituting the
Cooperative Property and which governs the
Cooperative Property, which
Cooperative Corporation must qualify as a
Cooperative Housing Corporation under
Section 216 of the Code.
Coop
Shares: Shares issued by a Cooperative Corporation.
Cooperative Loan: Any Mortgage Loan secured by Coop Shares and
a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by
the
Cooperative Corporation, including the
allocation of individual dwelling units
to the holders of the Coop Shares of the
Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a
Cooperative
Property.
Corporate
Trust Office: The designated office of the Trustee in the State
of New York at which at any particular time
its corporate trust business with
respect to this Agreement shall be
administered, which office at the date of the
execution of this Agreement is located at
The Bank of New York, 101 Barclay
Street, 8W, New York, New York 10286 (Attn:
Corporate Trust Mortgage-Backed
Securities Group, First Horizon Asset
Securities Inc. Series 2005-AA9),
facsimile no. (212) 815-3986, and which is
the address to which notices to and
correspondence with the Trustee should be
directed.
Corresponding Classes: As to any Lower REMIC Interest identified
in
Section 2.7, the Class or Classes that are
identified in Section 2.7 as
corresponding to such Lower REMIC
Interest.
Cross-over
Date: The Distribution Date on which the respective Class
Certificate Balances of each Class of
Subordinated Certificates have been
reduced to zero.
Custodial
Agreement: The Custodial Agreement dated as of September 30,
2005 by and among the Trustee, the Master
Servicer and the Custodian.
Custodian:
First Tennessee Bank National Association, a national banking
association, and its successors and
assigns, as custodian under the Custodial
Agreement.
Cut-off Date: September 1,
2005.
Cut-off
Date Pool Principal Balance: With respect to Pool I,
$23,964,704.88; with respect to Pool II,
$227,933,564.51; and with respect to
Pool III, $272,063,965.18.
Cut-off
Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close
of business on the Cut-off Date.
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<PAGE>
Debt
Service Reduction: With respect to any Mortgage Loan, a reduction
by
a court of competent jurisdiction in a
proceeding under the Bankruptcy Code in
the Scheduled Payment for such Mortgage
Loan which became final and
non-appealable, except such a reduction
resulting from a Deficient Valuation or
any reduction that results in a permanent
forgiveness of principal.
Defective
Mortgage Loan: Any Mortgage Loan which is required to be
repurchased pursuant to Section 2.2 or
2.3.
Deficient
Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the
Mortgaged Property in an amount less than
the then-outstanding indebtedness under the
Mortgage Loan, or any reduction in
the amount of principal to be paid in
connection with any Scheduled Payment that
results in a permanent forgiveness of
principal, which valuation or reduction
results from an order of such court which
is final and non-appealable in a
proceeding under the Bankruptcy Code.
Definitive
Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in
lieu of a Book-Entry Certificate
pursuant to Section 5.2(e).
Delay
Certificates: As specified in the Preliminary Statement.
Delay
Delivery Mortgage Loans: The Mortgage Loans for which all or a
portion of a related Mortgage File is not
delivered to Trustee on the Closing
Date. The number of Delay Delivery Mortgage
Loans shall not exceed 25% of the
aggregate number of Mortgage Loans as of
the Closing Date.
Deleted
Mortgage Loan: As defined in Section 2.3(b) hereof.
Denomination: With respect to each Certificate, the amount set
forth on
the face thereof as the "Initial
Certificate Balance of this Certificate" or the
Percentage Interest appearing on the face
thereof.
Depositor:
First Horizon Asset Securities Inc., a Delaware corporation, or
its successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company,
the nominee of which is CEDE & Co., as
the registered Holder of the Book-Entry
Certificates. 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.
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: As to any Distribution Date, the earlier of (i)
the
third Business Day after the 15th day of
each month, and (ii) the second
Business Day prior to the related
Distribution Date.
Distribution Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 3.5 in
the name of the Trustee for the
benefit of the Certificateholders and
designated "The Bank of New York, in trust
for registered Holders of First Horizon
Asset Securities Inc. Mortgage
Pass-Through Certificates, Series
2005-AA9." Funds in the Distribution Account
shall be held in trust for the
Certificateholders for the uses and purposes set
forth in this Agreement.
11
<PAGE>
Distribution Account Deposit Date: As to any Distribution Date,
1:30 p.m.
Central time on the Business Day
immediately preceding such Distribution Date.
Distribution Date: The 25th day of each calendar month after the
initial
issuance of the Certificates, or if such
25th day is not a Business Day, the
next succeeding Business Day, commencing in
October 2005.
Due Date:
With respect to any Distribution Date, the first day of the
month in which the related Distribution
Date occurs.
Eligible
Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository
institution or trust company the
short-term unsecured debt obligations of
which (or, in the case of a depository
institution or trust company that is the
principal subsidiary of a holding
company, the debt obligations of such
holding company) have the highest
short-term ratings of each Rating Agency at
the time any amounts are held on
deposit therein, or (ii) an account or
accounts in a depository institution or
trust company in which such accounts are
insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF,
as applicable) and the uninsured
deposits in which accounts are otherwise
secured such that, as evidenced by an
Opinion of Counsel delivered to the Trustee
and to each Rating Agency, the
Certificateholders have a claim with
respect to the funds in such account or a
perfected first priority security interest
against any collateral (which shall
be limited to Permitted Investments)
securing such funds that is superior to
claims of any other depositors or creditors
of the depository institution or
trust company in which such account is
maintained, or (iii) a trust account or
accounts maintained with (a) the trust
department of a federal or state
chartered depository institution or (b) a
trust company, acting in its fiduciary
capacity or (iv) any other account
acceptable to each Rating Agency. Eligible
Accounts may bear interest, and may
include, if otherwise qualified under this
definition, accounts maintained with the
Trustee.
ERISA: The
Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: With respect to any
ERISA-Restricted
Certificate, a best efforts or firm
commitment underwriting or private placement
that meets the requirements of the
Underwriters' Exemption.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow
Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.6(a)
hereof.
Event of
Default: As defined in Section 7.1 hereof.
Excess
Loss: The amount of any (i) Fraud Loss realized after the Fraud
Loss Coverage Termination Date, (ii)
Special Hazard Loss realized after the
Special Hazard Coverage Termination Date or
(iii) Deficient Valuation realized
after the Bankruptcy Coverage Termination
Date.
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<PAGE>
Excess
Proceeds: With respect to any Liquidated Mortgage Loan, the
amount,
if any, by which the sum of any Liquidation
Proceeds, Insurance Proceeds and/or
Unanticipated Recoveries in respect of such
Mortgage Loan received in the
calendar month in which such Mortgage Loan
became a Liquidated Mortgage Loan,
net of any amounts previously reimbursed to
the Master Servicer as
Nonrecoverable Advance(s) with respect to
such Mortgage Loan pursuant to Section
3.8(a)(iii), exceeds (i) the unpaid
principal balance of such Liquidated
Mortgage Loan as of the Due Date in the
month in which such Mortgage Loan became
a Liquidated Mortgage Loan plus (ii)
accrued interest at the Mortgage Rate from
the Due Date as to which interest was last
paid or advanced (and not reimbursed)
to Certificateholders up to the Due Date
applicable to the Distribution Date
immediately following the calendar month
during which such liquidation occurred.
Expense
Fee Rate: As to each Mortgage Loan, the sum of the related
Master
Servicing Fee Rate and the Trustee Fee
Rate.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The
Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States
created and existing under Title III of the
Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
FIRREA:
The Financial Institutions Reform, Recovery, and Enforcement
Act
of 1989.
First
Horizon: First Horizon Home Loan Corporation, a Kansas
corporation
and an indirect wholly owned subsidiary of
First Horizon National Corporation, a
Tennessee corporation.
Fitch:
Fitch Ratings and its successors and/or assigns. If Fitch is
designated as a Rating Agency in the
Preliminary Statement, for purposes of
Section 11.5(b) the address for notices to
Fitch shall be Fitch, Inc., One State
Street Plaza, New York, New York 10004,
Attention: Residential Mortgage
Surveillance Group, or such other address
as Fitch may hereafter furnish to the
Depositor and the Master Servicer.
FNMA: The
Federal National Mortgage Association, a federally chartered
and
privately owned corporation organized and
existing under the Federal National
Mortgage Association Charter Act, or any
successor thereto.
Fraud
Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has
occurred.
Fraud Loss
Coverage Amount: As of the Closing Date, $10,479,244. As of any
Distribution Date from the first
anniversary of the Cut-off Date and prior to
the fifth anniversary of the Cut-off Date,
the Fraud Loss Coverage Amount will
equal $5,239,622 minus the aggregate amount
of Fraud Losses that would have been
allocated to the Subordinated Certificates
in the absence of the Loss Allocation
Limitation since the Cut-off Date. As of
any Distribution Date on or after the
earlier of the Cross-over Date or the fifth
anniversary of the Cut-off Date, the
Fraud Loss Coverage Amount shall be
zero.
13
<PAGE>
Fraud Loss
Coverage Termination Date: The date on which the Fraud Loss
Coverage Amount is reduced to zero.
Fraud
Losses: Realized Losses on Mortgage Loans as to which a loss is
sustained by reason of a default arising
from fraud, dishonesty or
misrepresentation in connection with the
related Mortgage Loan, including a loss
by reason of the denial of coverage under
any related Primary Insurance Policy
because of such fraud, dishonesty or
misrepresentation.
Group I
Senior Certificates: As specified in the Preliminary Statement.
Group II
Senior Certificates: As specified in the Preliminary Statement.
Group III
Senior Certificates: As specified in the Preliminary Statement
Group
Subordinate Amount: For a Mortgage Pool and any Distribution
Date;
the excess of (a) the Pool Principal
Balance of such Mortgage Pool for the
immediately preceding Distribution Date,
over (b) the aggregate Class
Certificate Balance of the Senior
Certificates of the related Certificate Group
immediately prior to that Distribution
Date.
Index: Not
applicable.
Indirect
Participant: A broker, dealer, bank or other financial
institution or other Person that clears
through or maintains a custodial
relationship with a Depository
Participant.
Initial
Bankruptcy Coverage Amount: $150,000.
Initial
Component Balance: Not applicable.
Insurance
Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all
riders and endorsements thereto in
effect, including any replacement policy or
policies for any Insurance Policies.
Insurance
Proceeds: Proceeds paid by an insurer pursuant to any Insurance
Policy, in each case other than any amount
included in such Insurance Proceeds
in respect of Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the
Mortgage Loans.
Insured
Retail Certificates: Not applicable.
Interest
Accrual Period: With respect to each Class of Delay
Certificates
and any Distribution Date, the calendar
month prior to the month of such
Distribution Date. With respect to any
Non-Delay Certificates and any
Distribution Date, the one month period
commencing on the 25th day of the month
preceding the month in which such
Distribution Date occurs and ending on the
24th day of the month in which such
Distribution Date occurs.
14
<PAGE>
Interest
Determination Date: Not applicable.
Latest
Possible Maturity Date: As to each Class of Subordinated
Certificates, each Class of Senior
Certificates and each Lower REMIC Interest,
the Distribution Date following the third
anniversary of the scheduled maturity
date of the Mortgage Loan having the latest
scheduled maturity date as of the
Cut-off Date.
Lender PMI
Mortgage Loan: Not applicable.
LIBOR: Not
applicable.
LIBOR
Certificates: Not applicable.
Liquidated
Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO
Property) which was liquidated in the
calendar month preceding the month of such
Distribution Date and as to which the
Master Servicer has determined (in
accordance with this Agreement) that it has
received all amounts it expects to receive
in connection with the liquidation of
such Mortgage Loan, including the final
disposition of an REO Property.
Liquidation Proceeds: All cash amounts, other than Insurance
Proceeds and
Unanticipated Recoveries, received in
connection with the partial or complete
liquidation of defaulted Mortgage Loans,
whether through trustee's sale,
foreclosure sale or otherwise or amounts
received in connection with any
condemnation or partial release of a
Mortgaged Property and any other proceeds
received in connection with an REO
Property, less the sum of related
unreimbursed Master Servicing Fees,
Servicing Advances and Advances.
Loan-to-Value Ratio: With respect to any Mortgage Loan and as to
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 of
determination and the denominator of which
is the Appraised Value of the related
Mortgaged Property.
Loss
Allocation Limitation: As defined in Section 4.4(g).
Lost
Mortgage Note: Any Mortgage Note the original of which was
permanently lost or destroyed and has not
been replaced.
Lower
REMIC: The segregated pool of assets consisting of the Trust
Fund
but excluding the Lower REMIC Interests,
the RL Interest and the RU Interest.
Lower
REMIC Interests: The REMIC regular interests, within the meaning
of
the REMIC Provisions, issued by the Lower
REMIC as set forth in Section 2.7.
Maintenance: With respect to any Cooperative Unit, the rent paid by
the
Mortgagor to the Cooperative Corporation
pursuant to the Proprietary Lease.
15
<PAGE>
Majority
in Interest: As to any Class of Regular Certificates, the
Holders
of Certificates of such Class evidencing,
in the aggregate, at least 51% of the
Percentage Interests evidenced by all
Certificates of such Class.
Master
Servicer: First Horizon Home Loan Corporation, a Kansas
corporation, and its successors and
assigns, in its capacity as master servicer
hereunder.
Master
Servicer Advance Date: As to any Distribution Date, 1:30 p.m.
Central time on the Business Day
immediately preceding such Distribution Date.
Master
Servicing Fee: As to each Mortgage Loan and any Distribution
Date,
an amount payable out of each full payment
of interest received on such Mortgage
Loan and equal to one-twelfth of the Master
Servicing Fee Rate multiplied by the
Stated Principal Balance of such Mortgage
Loan as of the Due Date in the month
of such Distribution Date (prior to giving
effect to any Scheduled Payments due
on such Mortgage Loan on such Due Date),
subject to reduction as provided in
Section 3.14.
Master
Servicing Fee Rate: A per annum rate equal to 0.371%.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of
the State of Delaware, or any successor
thereto.
MERS
Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS
System.
MERS(R)
System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The
Mortgage Identification Number for any MERS Mortgage Loan.
MLPA: The
Mortgage Loan Purchase Agreement dated as of September 30,
2005,
by and between First Horizon Home Loan
Corporation, as seller, and First Horizon
Asset Securities Inc., as purchaser, as
related to the transfer, sale and
conveyance of the Mortgage Loans.
MOM Loan:
Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of
such Mortgage Loan and its successors
and assigns.
Monthly
Statement: The statement delivered to the Certificateholders
pursuant to Section 4.6.
Moody's:
Moody's Investors Service, Inc., and its successors and/or
assigns. If Moody's is designated as a
Rating Agency in the Preliminary
Statement, for purposes of Section 11.5(b)
the address for notices to Moody's
shall be Moody's Investors Service, Inc.,
99 Church Street, New York, New York
10007, Attention: Residential Pass-Through
Monitoring, or such other address as
Moody's may hereafter furnish to the
Depositor or the Master Servicer.
Mortgage:
The mortgage, deed of trust or other instrument creating a
first
lien on an estate in fee simple or
leasehold interest in real property securing
a Mortgage Note.
16
<PAGE>
Mortgage
File: The mortgage documents listed in Section 2.1(b) hereof
pertaining to a particular Mortgage Loan
and any additional documents delivered
to the Trustee to be added to the Mortgage
File pursuant to this Agreement.
Mortgage Loan
Schedule: The list of Mortgage Loans (as from time to time
amended by the Master Servicer to reflect
the addition of Substitute Mortgage
Loans and the deletion of Deleted Mortgage
Loans pursuant to the provisions of
this Agreement) transferred to the Trustee
as part of the Trust Fund and from
time to time subject to this Agreement,
attached hereto as Schedule I, setting
forth the following information with
respect to each Mortgage Loan:
(1) the loan
number;
(2) the
Mortgagor's name and the street address of the Mortgaged
Property, including the zip code;
(3) the maturity
date;
(4) the original
principal balance;
(5) the Cut-off
Date Principal Balance;
(6) the first
payment date of the Mortgage Loan;
(7) the
Scheduled Payment in effect as of the Cut-off Date;
(8) the
Loan-to-Value Ratio at origination;
(9) a code
indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(10) a code indicating
whether the residential dwelling is either
(a) a detached single family dwelling (b) a dwelling in a de
minimis PUD, (c) a condominium unit or PUD (other than a de
minimis PUD), (d) a two-to-four unit residential property or
(e) a Cooperative Unit;
(11) the Mortgage
Rate;
(12) the purpose for
the Mortgage Loan;
(13) the type of
documentation program pursuant to which the
Mortgage Loan was originated;
(14) the Master
Servicing Fee for the Mortgage Loan; and
(15) a code indicating
whether the Mortgage Loan is a MERS Mortgage
Loan.
17
<PAGE>
Such
schedule shall also set forth the total of the amounts
described
under (4) and (5) above for all of the
Mortgage Loans.
Mortgage
Loans: Such of the mortgage loans transferred and assigned to
the
Trustee pursuant to the provisions hereof
as from time to time are held as a
part of the Trust Fund (including any REO
Property), the mortgage loans so held
being identified in the Mortgage Loan
Schedule, notwithstanding foreclosure or
other acquisition of title of the related
Mortgaged Property.
Mortgage
Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of
a Mortgagor under a Mortgage Loan.
Mortgage
Pool: Either Pool I, Pool II or Pool III.
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note from
time to time, net of any insurance premium
charged by the mortgagee to obtain or
maintain any Primary Insurance Policy.
Mortgaged
Property: The underlying property securing a Mortgage Loan,
which, with respect to a Cooperative Loan,
is the related Coop Shares and
Proprietary Lease.
Mortgagor:
The obligor(s) on a Mortgage Note.
National Cost of Funds Index: The
National Monthly Median Cost of Funds
Ratio to SAIF-Insured Institutions
published by the Office of Thrift
Supervision.
Net
Interest Shortfall: For any Distribution Date and each Mortgage
Pool,
the sum of (a) the amount of interest which
would otherwise have been received
for any Mortgage Loan in such Mortgage Pool
that was the subject of (x) a Relief
Act Reduction or (y) a Special Hazard Loss,
Fraud Loss, or Deficient Valuation,
after the exhaustion of the respective
amounts of coverage for those types of
losses provided by the Subordinated
Certificates; and (b) any Net Prepayment
Interest Shortfalls in respect of such
Mortgage Pool.
Net
Prepayment Interest Shortfalls: As to any Distribution Date and
each
Mortgage Pool, the amount by which the
aggregate of Prepayment Interest
Shortfalls in respect of the Mortgage Loans
or such Mortgage Pool during the
related Prepayment Period exceeds an amount
equal to the Compensating Interest
paid in respect of such Mortgage Loans, if
any, for such Distribution Date.
Non-Delay
Certificates: As specified in the Preliminary Statement.
Non-Excess
Loss: Any Realized Loss other than an Excess Loss.
Nonrecoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Master Servicer
that, in the good faith judgment of
the Master Servicer, will not be ultimately
recoverable by the Master Servicer
from the related Mortgagor, related
Liquidation Proceeds or otherwise.
18
<PAGE>
Notice of
Final Distribution: The notice to be provided pursuant to
Section 9.2 to the effect that final
distribution on any of the Certificates
shall be made only upon presentation and
surrender thereof.
Notional
Amount: Not applicable.
Notional
Amount Component: Not applicable.
Notional
Amount Certificates: Not applicable.
Offered
Certificates: As specified in the Preliminary Statement.
Officer's
Certificate: A Certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the
President, a Managing Director, a
Vice President (however denominated), an
Assistant Vice President, the
Treasurer, the Secretary, or one of the
Assistant Treasurers or Assistant
Secretaries of the Depositor or the Master
Servicer, or (ii), if provided for in
this Agreement, signed by a Servicing
Officer, as the case may be, and delivered
to the Depositor and the Trustee, as the
case may be, as required by this
Agreement.
Opinion of
Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Master Servicer,
including, in-house counsel, reasonably
acceptable to the Trustee; provided,
however, that with respect to the
interpretation or application of the REMIC
Provisions, such counsel must (i) in
fact be independent of the Depositor and
the Master Servicer, (ii) not have any
direct financial interest in the Depositor
or the Master Servicer or in any
affiliate of either, and (iii) not be
connected with the Depositor or the Master
Servicer as an officer, employee, promoter,
underwriter, trustee, partner,
director or person performing similar
functions.
Optional
Termination: The termination of the trust created hereunder in
connection with the purchase of the
Mortgage Loans pursuant to Section 9.1(a)
hereof.
Original
Subordinated Principal Balance: The aggregate Class Certificate
Balance of the Subordinated Certificates as
of the Closing Date.
Original
Mortgage Loan: The Mortgage Loan refinanced in connection with
the origination of a Refinancing Mortgage
Loan.
OTS: The
Office of Thrift Supervision.
Outside
Reference Date: Not applicable.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore
executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
19
<PAGE>
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the
Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a
Stated Principal Balance greater than zero
which was not the subject of a
Principal Prepayment in Full prior to such
Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due
Date.
Ownership
Interest: As to any Residual Certificate, any ownership
interest
in such Certificate including any interest
in such Certificate as the Holder
thereof and any other interest therein,
whether direct or indirect, legal or
beneficial.
Pass-Through Rate: For any Class of Certificates, the per annum
rate set
forth or calculated in the manner described
in the Preliminary Statement.
Percentage
Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required
to be made on the related Class,
such percentage interest being set forth on
the face thereof or equal to the
percentage obtained by dividing the
Denomination of such Certificate by the
aggregate of the Denominations of all
Certificates of the same Class.
Permitted
Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit
of
the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving
the
highest long-term debt rating of each Rating Agency;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating
of
each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers'
acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of
any
state thereof and subject to supervision and examination by
federal
and/or state banking authorities, provided that the commercial
paper
and/or long term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the
commercial
paper or long-term unsecured debt obligations of such holding
company, but only if Moody's is not a Rating Agency) are then
rated
one of the two highest long-term and/or the highest short-term
ratings of each Rating Agency for such securities;
20
<PAGE>
(v) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the
extent
that such deposits are fully insured by the FDIC and receiving
the
highest short-term debt rating of each Rating Agency;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation and receiving the
highest
short-term debt rating of each Rating Agency and containing, at
the
time of the issuance of such agreements, such terms and
conditions
as will not result in the downgrading or withdrawal of the
rating
then assigned to the Certificates by either Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered
into
with a depository institution or trust company (acting as
principal)
described in clause (iv) above;
(viii) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of
the
face amount thereof) bearing interest or sold at a discount
issued
by any corporation incorporated under the laws of the United
States
or any state thereof which, at the time of such investment, have
one
of the two highest ratings of each Rating Agency (except if the
Rating Agency is Moody's or S&P, such rating shall be the
highest
commercial paper rating of Moody's or S&P, as applicable, for
any
such securities);
(ix) units of a taxable money-market portfolio having the
highest rating assigned by each Rating Agency (except if Fitch is
a
Rating Agency and has not rated the portfolio, the highest
rating
assigned by Moody's) and restricted to obligations issued or
guaranteed by the United States of America or entities whose
obligations are backed by the full faith and credit of the
United
States of America and repurchase agreements collateralized by
such
obligations; and
(x) such other investments bearing interest or sold at a
discount acceptable to each Rating Agency as will not result in
the
downgrading or
withdrawal of the rating then assigned to the
Certificates by either Rating Agency, as evidenced by a signed
writing delivered by each Rating Agency;
provided that no such instrument shall be a
Permitted Investment if such
instrument evidences the right to receive
interest only payments with respect to
the obligations underlying such
instrument.
21
<PAGE>
Permitted
Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, or
any agency or instrumentality of any
of the foregoing, (ii) a foreign
government, International Organization or any
agency or instrumentality of either of the
foregoing, (iii) an organization
(except certain farmers' cooperatives
described in section 521 of the Code)
which is exempt from tax imposed by Chapter
1 of the Code (including the tax
imposed by section 511 of the Code on
unrelated business taxable income) on any
excess inclusions (as defined in section
860E(c)(l) of the Code) with respect to
any Residual Certificate, (iv) rural
electric and telephone cooperatives
described in section 1381(a)(2)(C) of the
Code, (v) an "electing large
partnership" as defined in section 775 of
the Code, (vi) a Person that is not
(a) a citizen or resident of the United
States, (b) a corporation, partnership,
or other entity created or organized in or
under the laws of the United States,
any state thereof or the District of
Columbia, (c) an estate whose income from
sources without the United States is
includible in gross income for United
States federal income tax purposes
regardless of its connection with the conduct
of a trade or business within the United
States or (d) a trust if a court within
the United States is able to exercise
primary supervision over the
administration of the trust and one or more
United States persons have the
authority to control all substantial
decisions of the trust, unless such Person
has furnished the transferor and the
Trustee with a duly completed Internal
Revenue Service Form W-8ECI or any
applicable successor form, and (vii) any
other Person so designated by the Depositor
based upon an Opinion of Counsel
that the Transfer of an Ownership Interest
in a Residual Certificate to such
Person may cause any REMIC created
hereunder to fail to qualify as a REMIC at
any time that the Certificates are
outstanding; provided, however, that if a
person is classified as a partnership under
the Code, such person shall only be
a Permitted Transferee if all of its
beneficial owners are described in
subclauses (a), (b), (c) or (d) of clause
(vi) and the governing documents of
such person prohibits a transfer of any
interest in such person to any person
described in clause (vi). The terms "United
States," "State" and "International
Organization" shall have the meanings set
forth in section 7701 of the Code or
successor provisions. A corporation will
not be treated as an instrumentality of
the United States or of any State or
political subdivision thereof for these
purposes if all of its activities are
subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation,
a majority of its board of directors
is not selected by such government
unit.
Person:
Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust,
unincorporated organization or
government, or any agency or political
subdivision thereof.
Physical
Certificate: As specified in the Preliminary Statement.
Planned
Balance: Not applicable.
Planned
Principal Classes: Not applicable.
Pool I:
The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool
I.
Pool II:
The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool
II.
Pool III:
The aggregate of the Mortgage Loans identified on the Mortgage
Loan Schedule as being included in Pool
III.
Pool
Principal Balance: For a Mortgage Pool, with respect to any
Distribution Date, the aggregate of the
Stated Principal Balances of the
Mortgage Loans in such Mortgage Pool which
were Outstanding Mortgage Loans on
the Due Date in the month preceding the
month of such Distribution Date, and for
the first Distribution Date, as of the
Closing Date, less any Principal
Prepayments received on or after such Due
Date and distributed to
Certificateholders on the prior
Distribution Date.
22
<PAGE>
Prepayment
Interest Excess: As to any Principal Prepayment received by the
Master Servicer from the first day through
the fifteenth day of any calendar
month (other than the calendar month in
which the Cut-off Date occurs), all
amounts paid by the related Mortgagor in
respect of interest on such Principal
Prepayment. All Prepayment Interest Excess
shall be paid to the Master Servicer
as additional master servicing
compensation.
Prepayment
Interest Shortfall: As to any Distribution Date, Mortgage Loan
and Principal Prepayment received (a)
during the period from the sixteenth day
of the month preceding the month of such
Distribution Date (or, in the case of
the first Distribution Date, from the
Cut-off Date) through the last day of such
month, in the case of a Principal
Prepayment in Full, or (b) during the month
preceding the month of such Distribution
Date, in the case of a partial
Principal Prepayment, the amount, if any,
by which one month's interest at the
related Adjusted Mortgage Rate on such
Principal Prepayment exceeds the amount
of interest actually paid by the Mortgagor
in connection with such Principal
Prepayment.
Prepayment
Period: (a) With respect to any Principal Prepayments in Full
and any Distribution Date, the period from
the sixteenth day of the month
preceding the month of such Distribution
Date (or, in the case of the first
Distribution Date, from the Cut-off Date)
through the fifteenth day of the month
of such Distribution Date, and (b) with
respect to any other Principal
Prepayments and any Distribution Date, the
month preceding the month of such
Distribution Date.
Primary
Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy
therefor with respect to any Mortgage Loan.
Principal
Balance Schedules: Not applicable.
Principal Prepayment: Any
payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance
of its scheduled Due Date and is not
accompanied by an amount representing
scheduled interest due on any date or
dates in any month or months subsequent to
the month of prepayment. Partial
Principal Prepayments shall be applied by
the Master Servicer in accordance with
the terms of the related Mortgage Note.
Principal
Prepayment in Full: Any Principal Prepayment made by a
Mortgagor
of the entire principal balance of a
Mortgage Loan.
Private
Certificate: As specified in the Preliminary Statement.
Proprietary Lease: With respect to any Cooperative Unit, a lease
or
occupancy agreement between a Cooperative
Corporation and a holder of related
Coop Shares.
PUD:
Planned Unit Development.
Purchase
Price: With respect to any Mortgage Loan required to be
purchased
by the Seller pursuant to Section 2.2 or
2.3 hereof or purchased at the option
of the Master Servicer pursuant to Section
3.11, an amount equal to the sum of
(i) 100% of the unpaid principal balance of
the Mortgage Loan on the date of
such purchase, (ii) accrued interest
thereon at the applicable Mortgage Rate (or
at the applicable Adjusted Mortgage Rate if
the purchaser is the Master
Servicer) from the date through which
interest was last paid by the Mortgagor to
the Due Date in the month in which the
Purchase Price is to be distributed to
Certificateholders, and (iii) any costs and
damages incurred by the Trust in
connection with the noncompliance of such
Mortgage Loan with any specifically
applicable predatory or abusive lending
law.
23
<PAGE>
Qualified
Insurer: A mortgage guaranty insurance company duly qualified
as
such under the laws of the state of its
principal place of business and each
state having jurisdiction over such insurer
in connection with the insurance
policy issued by such insurer, duly
authorized and licensed in such states to
transact a mortgage guaranty insurance
business in such states and to write the
insurance provided by the insurance policy
issued by it, approved as a
FNMA-approved mortgage insurer and having a
claims paying ability rating of at
least "AA" or equivalent rating by a
nationally recognized statistical rating
organization. Any replacement insurer with
respect to a Mortgage Loan must have
at least as high a claims paying ability
rating as the insurer it replaces had
on the Closing Date.
Rating
Agency: Each of the Rating Agencies specified in the
Preliminary
Statement. If any such organization or a
successor is no longer in existence,
"Rating Agency" shall be such nationally
recognized statistical rating
organization, or other comparable Person,
as is designated by the Depositor,
notice of which designation shall be given
to the Trustee. References herein to
a given rating category of a Rating Agency
shall mean such rating category
without giving effect to any modifiers.
Realized
Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated
Principal Balance of the Mortgage
Loan) as of the date of such liquidation,
equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as
of the date of such liquidation, plus
(ii) interest at the Adjusted Net Mortgage
Rate from the Due Date as to which
interest was last paid or advanced (and not
reimbursed) to Certificateholders up
to the Due Date in the month in which
Liquidation Proceeds are required to be
distributed on the Stated Principal Balance
of such Liquidated Mortgage Loan
from time to time, minus (iii) any
Liquidation Proceeds, Insurance Proceeds
and/or Unanticipated Recoveries received
during the month in which such
liquidation occurred (or during the
calendar month preceding the related
Distribution Date, as applicable), to the
extent applied as recoveries of
interest at the Adjusted Net Mortgage Rate
and to principal of the Liquidated
Mortgage Loan. With respect to each
Mortgage Loan which has become the subject
of a Deficient Valuation, if the principal
amount due under the related Mortgage
Note has been reduced, the difference
between the principal balance of the
Mortgage Loan outstanding immediately prior
to such Deficient Valuation and the
principal balance of the Mortgage Loan as
reduced by the Deficient Valuation.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement
between the Cooperative Corporation and the
originator of such Mortgage Loan
which establishes the rights of such
originator in the Cooperative Property.
Record
Date: With respect to any Distribution Date, the close of
business
on the last Business Day of the month
preceding the month in which such
Distribution Date occurs.
Reference
Bank: Not applicable.
24
<PAGE>
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with
the refinancing of an existing mortgage
loan.
Regular
Certificates: As specified in the Preliminary Statement.
Relief
Act: The Servicemembers Civil Relief Act, or any similar state
or
local legislation or regulations.
Relief Act
Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a
reduction in the amount of interest
collectible thereon for the most recently
ended calendar month as a result of
the application of the Relief Act, the
amount, if any, by which interest
collectible on such Mortgage Loan for the
most recently ended calendar month is
less than interest accrued thereon for such
month pursuant to the Mortgage Note.
REMIC: A
"real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC
Change of Law: Any proposed, temporary or final regulation,
revenue
ruling, revenue procedure or other official
announcement or interpretation
relating to REMICs and the REMIC Provisions
issued after the Closing Date.
REMIC
Pool: Either the Lower REMIC or the Upper REMIC.
REMIC
Provisions: Provisions of the federal income tax law relating
to
real estate mortgage investment conduits,
which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the
Code, and related provisions, and
regulations promulgated thereunder, as the
foregoing may be in effect from time
to time as well as provisions of applicable
state laws.
REO
Property: A Mortgaged Property acquired by the Trust Fund
through
foreclosure or deed-in-lieu of foreclosure
in connection with a defaulted
Mortgage Loan.
Request
for Release: The Request for Release submitted by the Master
Servicer to the Trustee, substantially in
the form of Exhibits L and M, as
appropriate.
Required
Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be
maintained from time to time under this
Agreement.
Required
Recordation States: The states of Florida, Maryland and
Mississippi.
Residual
Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any
Vice
President, any Assistant Vice President,
the Secretary, any Assistant Secretary,
any Trust Officer or any other officer of
the Trustee customarily performing
functions similar to those performed by any
of the above designated officers and
having direct responsibility for the
administration of this Agreement and also
to whom, with respect to a particular
matter, such matter is referred because of
such officer's knowledge of and familiarity
with the particular subject.
25
<PAGE>
RL
Interest: The REMIC residual interest, within the meaning of the
REMIC
Provisions, issued by the Lower REMIC,
which shall be represented by the Class
I-A-R Certificate.
RU
Interest: The REMIC residual interest, within the meaning of the
REMIC
Provisions, issued by the Upper REMIC,
which shall be represented by the Class
I-A-R Certificate.
Scheduled
Balances: Not applicable.
Scheduled
Certificates: Not applicable.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due
on
any Due Date allocable to principal and/or
interest on such Mortgage Loan which,
unless otherwise specified herein, shall
give effect to any related Debt Service
Reduction and any Deficient Valuation that
affects the amount of the monthly
payment due on such Mortgage Loan.
Scheduled
Principal Classes: Not applicable.
Securities
Act: The Securities Act of 1933, as amended.
Security
Agreement: The security agreement with respect to a Cooperative
Loan.
Seller:
First Horizon Home Loan Corporation, a Kansas corporation, and
its
successors and assigns, in its capacity as
seller of the Mortgage Loans pursuant
to the MLPA.
Senior
Certificates: As specified in the Preliminary Statement.
Senior
Final Distribution Date: For each Certificate Group, the
Distribution Date on which the Class
Certificate Balance of each Class of
related Senior Certificates has been
reduced to zero.
Senior
Mezzanine Certificates: As specified in the Preliminary
Statement.
Senior
Optimal Principal Amount: As to a Mortgage Pool and with respect
to
each Distribution Date, an amount equal to
the sum of:
(1) the related Senior Percentage of all Scheduled Payments of
principal due on each Mortgage Loan in such
Mortgage Pool on the first day of
the month in which the Distribution Date
occurs, as specified in the
amortization schedule at the time
applicable thereto after adjustment for
previous principal prepayments and the
principal portion of Debt Service
Reductions after the Bankruptcy Loss
Coverage Amount has been reduced to zero,
but before any adjustment to such
amortization schedule by reason of any other
bankruptcy or similar proceeding or any
moratorium or similar waiver or grace
period;
(2) the related Senior Prepayment Percentage of the Stated
Principal
Balance of each Mortgage Loan in such
Mortgage Pool which was the subject of a
Principal Prepayment in Full received by
the Master Servicer during the
applicable Prepayment Period;
26
<PAGE>
(3) the related Senior Prepayment Percentage of the sum of (a)
all
partial Principal Prepayments in respect of
each Mortgage Loan in such Mortgage
Pool received during the applicable
Prepayment Period and (b) all Unanticipated
Recoveries received in respect of each
Mortgage Loan in the related Mortgage
Pool during the calendar month prior to
such Distribution Date;
(4) the lesser of:
(a) the related Senior Prepayment Percentage of the sum of (x)
the Liquidation Proceeds allocable to principal on each
Mortgage
Loan in such Mortgage Pool which became a Liquidated Mortgage
Loan
during the related Prepayment Period, other than Mortgage Loans
described in clause (y), and (y) the principal balance of each
Mortgage Loan in such Mortgage Pool that was purchased by a
private
mortgage insurer during the related Prepayment Period as an
alternative to paying a claim under the related Insurance
Policy;
and
(b)(i) the related Senior Percentage of the sum of (x) the
Stated Principal Balance of each Mortgage Loan in such Mortgage
Pool
which became a Liquidated Mortgage Loan during the related
Prepayment Period, other than Mortgage Loans described in
clause
(y), and (y) the Stated Principal Balance of each Mortgage Loan
in
such Mortgage Pool that was purchased by a private mortgage
insurer
during the related Prepayment Period as an alternative to paying
a
claim under the related Insurance Policy minus (ii) the related
Senior Percentage of the principal portion of Excess Losses
(other
than Debt Service Reductions) for such Mortgage Pool during the
related Prepayment Period; and
(5) the related Senior Prepayment Percentage of the sum of (a)
the
Stated Principal Balance of each Mortgage
Loan in such Mortgage Pool which was
repurchased by the seller in connection
with such Distribution Date and (b) the
difference, if any, between the Stated
Principal Balance of a Mortgage Loan in
such Mortgage Pool that has been replaced
by the seller with a Substitute
Mortgage Loan pursuant to this Agreement in
connection with such Distribution
Date and the Stated Principal Balance of
such Substitute Mortgage Loan.
Senior
Percentage: On any Distribution Date for a Certificate Group,
the
lesser of 100% and the percentage (carried
to six places rounded up) obtained by
dividing the aggregate Class Certificate
Balances of all Classes of Senior
Certificates of such Certificate Group
immediately preceding such Distribution
Date by the Pool Principal Balance of the
related Mortgage Pool for the
immediately preceding Distribution
Date.
Senior
Prepayment Percentage: On any Distribution Date occurring
during
the periods set forth below, and as to each
Certificate Group, the Senior
Prepayment Percentages, described
below:
27
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------
----------------------------------------------------------------------
Period (Dates Inclusive)
Senior Prepayment Percentage
---------------------------------------
----------------------------------------------------------------------
Period (Dates Inclusive)
Senior Prepayment Percentage
---------------------------------------
----------------------------------------------------------------------
<S>
<C>
October 2005 - September 2012
100%
---------------------------------------
----------------------------------------------------------------------
The related Senior Percentage plus 70% of the related
Subordinated
October 2012 - September 2013
Percentage
---------------------------------------
----------------------------------------------------------------------
The related Senior Percentage plus 60% of the related
Subordinated
October 2013 - September 2014
Percentage
---------------------------------------
----------------------------------------------------------------------
The related Senior Percentage plus 40% of the related
Subordinated
October 2014 - September 2015
Percentage
---------------------------------------
----------------------------------------------------------------------
The related Senior Percentage plus 20% of the related
Subordinated
October 2015 - September 2016
Percentage
---------------------------------------
----------------------------------------------------------------------
October 2016 and thereafter
The related Senior Percentage
---------------------------------------
----------------------------------------------------------------------
</TABLE>
provided however, (i) if on any
Distribution Date, the Aggregate Senior
Percentage exceeds such percentage
calculated as of the Closing Date, the Senior
Prepayment Percentage for all Certificate
Groups for such Distribution Date will
equal 100%, (ii) if on any Distribution
Date prior to the October 2008
Distribution Date, the Aggregate
Subordinated Percentage is greater than or
equal to twice such percentage calculated
as of the Closing Date, then the
Senior Prepayment Percentage for each
Certificate Group for such Distribution
Date will equal the Senior Percentage for
such Certificate Group plus 50% of the
Subordinated Percentage for such
Certificate Group and (iii) if on or after the
October 2008 Distribution Date, the
Aggregate Subordinated Percentage is greater
than or equal to twice such percentage
calculated as of the Closing Date, then
the Senior Prepayment Percentage for each
Certificate Group for such
Distribution Date will equal the Senior
Percentage for such Certificate Group.
The
reductions in the Senior Prepayment Percentage for each
Certificate
Group described above will not occur, and
the Senior Prepayment Percentage or
each Certificate Group for such prior
period will be calculated without regard
to clause (ii) or (iii) of the paragraph
above, unless both of the following
step-down conditions are satisfied with
respect to each Mortgage Pool as of the
last day of the month preceding the
Distribution Date:
(1)
the aggregate
Stated Principal Balance of Mortgage Loans in all the
Mortgage Pools delinquent 60 days or more (including for this
purpose any Mortgage Loans in foreclosure or subject to
bankruptcy
proceedings and Mortgage Loans with respect to which the
related
Mortgaged Property, including REO Property, has been acquired by
the
Trust Fund) does not exceed 50% of the aggregate Class
Certificate
Balances of the Subordinated Certificates as of that date; and
(2)
cumulative
Realized Losses on the Mortgage Loans in all the Mortgage
Pool do not exceed:
(a) 20% of the Original Subordinated Principal Balance if such
Distribution Date occurs between and including October 2005 and
September 2008; and
(b) 30% of the Original Subordinated Principal Balance if such
Distribution Date occurs on or after October 2008.
28
<PAGE>
Servicing
Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the
performance by the Master Servicer of
its servicing obligations, including, but
not limited to, the cost of (i) the
preservation, restoration and protection of
a Mortgaged Property, (ii) any
expenses reimbursable to the Master
Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings,
including foreclosures, (iii) the
management and liquidation of any REO
Property and (iv) compliance with the
obligations under Section 3.9.
Servicing
Agreement: The servicing agreement, dated as of November 26,
2002 by and between First Horizon Asset
Securities Inc. and its assigns, as
owner, and First Tennessee Mortgage
Services, Inc., as servicer.
Servicing
Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and
servicing of the Mortgage Loans whose
name and facsimile signature appear on a
list of servicing officers furnished to
the Trustee by the Master Servicer on the
Closing Date pursuant to this
Agreement, as such list may from time to
time be amended.
Servicing
Rights Transfer and Subservicing Agreement: The servicing
rights
transfer and subservicing agreement, dated
as of November 26, 2002, by and
between First Horizon Home Loan
Corporation, as transferor and subservicer, and
First Tennessee Mortgage Services, Inc., as
transferee and servicer.
Special
Hazard Coverage Termination Date: The date on which the Special
Hazard Loss Coverage Amount is reduced to
zero.
Special
Hazard Loss: Any Realized Loss suffered by a Mortgaged Property
on
account of direct physical loss but not
including (i) any loss of a type covered
by a hazard insurance policy or a flood
insurance policy required to be
maintained with respect to such Mortgaged
Property pursuant to Section 3.9 to
the extent of the amount of such loss
covered thereby, or (ii) any loss caused
by or resulting from:
(1) normal wear and tear;
(2) fraud, conversion or other dishonest act on the part of
the Trustee, the Master Servicer or any of
their agents or employees (without
regard to any portion of the loss not
covered by any errors and omissions
policy);
(3) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a
part thereof ensues and then only for
the ensuing loss;
(4) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all
whether controlled or uncontrolled,
and whether such loss be direct or
indirect, proximate or remote or be in whole
or in part caused by, contributed to or
aggravated by a peril covered by the
definition of the term "Special Hazard
Loss";
(5) hostile or warlike action in time of peace and war,
including action in hindering, combating or
defending against an actual,
impending or expected attack:
29
<PAGE>
(i) by any government or sovereign power, de jure or de
facto, or by any authority maintaining or using military,
naval or air forces;
(ii) by military, naval or air forces;
(iii) by an agent of any such government, power,
authority
or forces; or
(6) any weapon of war employing nuclear fission, fusion or
other radioactive force, whether in time of
peace or war; or
(7) insurrection, rebellion, revolution, civil war, usurped
power or action taken by governmental
authority in hindering, combating or
defending against such an occurrence,
seizure or destruction under quarantine or
customs regulations, confiscation by order
of any government or public authority
or risks of contraband or illegal
transportation or trade.
Special
Hazard Loss Coverage Amount: Upon the initial issuance of the
Certificates, $5,239,622. As of any
Distribution Date, the Special Hazard Loss
Coverage Amount will equal the greater
of
(a) 1.00% (or if greater than 1.00%, the highest percentage of
Mortgage Loans by principal balance secured
by Mortgaged Properties in any
single California zip code) of the
outstanding principal balance of all the
Mortgage Loans as of the related
Determination Date; and
(b) twice the outstanding principal balance of the Mortgage
Loan
which has the largest outstanding principal
balance as of the related
Determination Date,
less, in each case, the aggregate amount of
Special Hazard Losses that would
have been previously allocated to the
Subordinated Certificates in the absence
of the Loss Allocation Limitation. As of
any Distribution Date on or after the
Cross-over Date, the Special Hazard Loss
Coverage Amount will be zero.
Special
Hazard Mortgage Loan: A Liquidated Mortgage Loan as to which a
Special Hazard Loss has occurred.
S&P:
Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., and
its successors and/or assigns. If S&P
is designated as a Rating Agency in the
Preliminary Statement, for purposes of
Section 11.5(b) the address for notices
to S&P shall be Standard & Poor's,
55 Water Street, 41st Floor, New York, New
York 10041, Attention: Mortgage
Surveillance Monitoring, or such other address
as S&P may hereafter furnish to the
Depositor and the Master Servicer.
Startup
Day: The Closing Date.
Stated
Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid
principal balance of such Mortgage Loan as
of such Due Date as specified in the
amortization schedule at the time relating
thereto (before any adjustment to
such amortization schedule by reason of any
moratorium or similar waiver or
grace period) after giving effect to any
previous partial Principal Prepayments
and Liquidation Proceeds allocable to
principal (other than with respect to any
Liquidated Mortgage Loan) and to the
payment of principal due on such Due Date
and irrespective of any delinquency in
payment by the related Mortgagor.
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Streamlined Documentation Mortgage Loan: Any Mortgage Loan
originated
pursuant to the Seller's Streamlined Loan
Documentation Program then in effect.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated Certificate Writedown Amount: As of any Distribution
Date,
the amount by which (a) the sum of the
Class Certificate Balances of all of the
Certificates, after giving effect to the
distribution of principal and the
allocation of Realized Losses in reduction
of the Class Certificate Balances of
all of the Certificates on such
Distribution Date, exceeds (b) the aggregate of
the Pool Principal Balances for each
Mortgage Pool on the first day of the month
of such Distribution Date less any
Deficient Valuations occurring before the
Bankruptcy Loss Coverage Amount has been
reduced to zero.
Subordinated Optimal Principal Amount: With respect to each
Mortgage Pool
and each Distribution Date, an amount equal
to the sum of the following (but in
no event greater than the aggregate Class
Certificate Balances of the
Subordinated Certificates immediately prior
to such Distribution Date):
(1) the related Subordinated Percentage of all Scheduled Payments
of
principal due on each outstanding Mortgage
Loan in the related Mortgage Pool on
the first day of the month in which the
Distribution Date occurs, as specified
in the amortization schedule at the time
applicable thereto, after adjustment
for previous principal prepayments and the
principal portion of Debt Service
Reductions after the Bankruptcy Loss
Coverage Amount has been reduced to zero,
but before any adjustment to such
amortization schedule by reason of any other
bankruptcy or similar proceeding or any
moratorium or similar waiver or grace
period;
(2) the related Subordinated Prepayment Percentage of the
Stated
Principal Balance of each Mortgage Loan in
the related Mortgage Pool which was
the subject of a Principal Prepayment in
Full received by the Master Servicer
during the related Prepayment Period;
(3) the related
Subordinated Prepayment Percentage of the sum of (a)
all partial Principal Prepayments received
in respect of each Mortgage Loan in
the related Mortgage Pool during the
related Prepayment Period, (b) all
Unanticipated Recoveries received in
respect of each Mortgage Loan in the
related Mortgage Pool during the calendar
month prior to such Distribution Date,
and (c) on the Senior Final Distribution
Date, 100% of any related Senior
Optimal Principal Amount remaining
undistributed on such date;
(4) the amount, if any, by which the sum of (a) the net
Liquidation
Proceeds allocable to principal received
during the related Prepayment Period in
respect of each Liquidated Mortgage Loan in
the related Mortgage Pool, other
than Mortgage Loans described in clause
(b), and (b) the principal balance of
each Mortgage Loan in the related Mortgage
Pool that was purchased by a private
mortgage insurer during the related
Prepayment Period as an alternative to
paying a claim under the related Insurance
Policy exceeds (c) the sum of the
amounts distributable to the Senior
Certificateholders under clause (4) of the
definition of applicable Senior Optimal
Principal Amount on such Distribution
Date; and
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(5) the related Subordinated Prepayment Percentage of the sum of
(a)
the Stated Principal Balance of each
Mortgage Loan in the related Mortgage Pool
which was repurchased by the seller in
connection with such Distribution Date
and (b) the difference, if any, between the
Stated Principal Balance of each
Mortgage Loan in the related Mortgage Pool
that has been replaced by the seller
with a Substitute Mortgage Loan pursuant to
this Agreement in connection with
such Distribution Date and the Stated
Principal Balance of each such Substitute
Mortgage Loan.
Subordinated Percentage: For any Distribution Date and each
Certificate
Group, 100% minus the related Senior
Percentage.
Subordinated Prepayment Percentage: For any Distribution Date, 100%
minus
the Senior Prepayment Percentage.
Subservicer: Any person to whom the Master Servicer has contracted
for the
servicing of all or a portion of the
Mortgage Loans pursuant to Section 3.2
hereof.
Substitute
Mortgage Loan: A Mortgage Loan substituted by the Seller for a
Deleted Mortgage Loan which must, on the
date of such substitution, as confirmed
in a Request for Release, substantially in
the form of Exhibit L, (i) have a
Stated Principal Balance, after deduction
of the principal portion of the
Scheduled Payment due in the month of
substitution, not in excess of, and not
more than 10% less than the Stated
Principal Balance of the Deleted Mortgage
Loan; (ii) have an Adjusted Net Mortgage
Rate not lower than the Adjusted Net
Mortgage Rate of the Deleted Mortgage Loan,
provided that the Master Servicing
Fee for the Substitute Mortgage Loan shall
be equal to or greater than that of
the Deleted Mortgage Loan; (iii) have a
maximum mortgage rate not more than 1%
per annum higher or lower than the maximum
mortgage rate of the Deleted Mortgage
Loan; (iv) have a minimum mortgage rate
specified in its related Mortgage Note
not more than 1% per annum higher or lower
than the minimum mortgage rate of the
Deleted Mortgage Loan; (v) have the same
mortgage index, reset period and
periodic rate as the Deleted Mortgage Loan
and a gross margin not more than 1%
per annum higher or lower than that of the
Deleted Mortgage Loan (vi) be
accruing interest at a rate no lower than
and not more than 1% per annum higher
than, that of the Deleted Mortgage Loan;
(iv) have a Loan-to-Value Ratio no
higher than that of the Deleted Mortgage
Loan; (vii) have a remaining term to
maturity no greater than (and not more than
one year less than that of) the
Deleted Mortgage Loan; (viii) not be a
Cooperative Loan unless the Deleted
Mortgage Loan was a Cooperative Loan and
(ix) comply with each representation
and warranty set forth in Section 2.3
hereof.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant
to Section 2.3.
Super
Senior Certificates: As specified in the Preliminary Statement.
Super Senior Support Certificates: Not
applicable.
Support
Classes: Not applicable.
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Targeted
Balances: Not applicable.
Targeted
Principal Classes: Not applicable.
Tax
Matters Person: The person designated as "tax matters person" in
the
manner provided under Treasury regulation
ss. 1.860F-4(d) and Treasury
regulation ss. 301.6231(a)(7)-1. Initially,
the Tax Matters Person shall be the
Trustee.
Tax
Matters Person Certificate: The Class I-A-R Certificates with a
Denomination of $0.01.
Transfer:
Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
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 Cut-off Date to the
extent not applied in computing the
Cut-off Date Principal Balance thereof;
(ii) all of the Depositor's rights as
purchaser under the MLPA; (iii) the
Certificate Account and the Distribution
Account and all amounts deposited therein
pursuant to the applicable provisions
of this Agreement; (iv) property that
secured a Mortgage Loan and has been
acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise; and (v) all
proceeds of the conversion, voluntary or
involuntary, of any of the foregoing.
Trustee:
The Bank of New York and its successors and, if a successor
trustee is appointed hereunder, such
successor.
Trustee
Fee: As to any Distribution Date and a Mortgage Pool, an amount
equal to one-twelfth of the Trustee Fee
Rate multiplied by the applicable Pool
Principal Balance with respect to such
Distribution Date.
Trustee
Fee Rate: With respect to each Mortgage Loan, the per annum
rate
agreed upon in writing on or prior to the
Closing Date by the Trustee and the
Depositor.
Two Times
Test: A test that is satisfied with respect to a Certificate
Group and any Distribution Date if the
related Senior Prepayment Percentage for
such Distribution Date is determined in
accordance with clause (ii) and (iii) of
the proviso in the definition of "Senior
Prepayment Percentage."
Unanticipated Recovery: As defined in Section 4.2(h).
Undercollateralization Distribution: As defined in Section
4.2(i).
Undercollateralized Group: With respect to any Distribution Date,
the
Senior Certificates of any Certificate
Group as to which the aggregate
Certificate Principal Balance thereof,
after giving effect to distributions
pursuant to Section 4.2(a) on such date, is
greater than the Pool Principal
Balance of the related Mortgage Pool for
such Distribution Date.
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<PAGE>
Underwriter: As specified in the Preliminary Statement.
Underwriters' Exemption: An individual administrative exemption
granted by
the U.S. Department of Labor to the
Underwriter providing exceptions from some
of the prohibited transaction rules of
ERISA with respect to the initial
purchase, the holding and the subsequent
resale by employee benefit plans in
certificates in pass-through trusts having
assets and meeting conditions
described therein, as amended by Prohibited
Transaction Exemption 2000-58 (65
Fed. Reg. 67765, November 13, 2000), as
amended, and Prohibited Transaction
Exemption 2002-41 (67 Fed. Reg. 54487,
August 22, 2002), as amended (or any
successor thereto), or any substantially
similar administrative exemption
granted by the U.S. Department of
Labor.
Upper
REMIC: The segregated pool of assets consisting of the Lower
REMIC
Interests.
Voting
Rights: The portion of the voting rights of all of the
Certificates
which is allocated to any Certificate. As
of any date of determination, (a)
99.0% of all Voting Rights will be
allocated among all Holders of the
Certificates, other than the Class I-A-R
Certificates, in proportion to their
then outstanding Class Certificate Balance;
and (b) 1.0% of all Voting Rights
will be allocated to the Holders of the
Class I-A-R Certificates (such Voting
Rights to be allocated among the Holders of
Certificates of each such Class in
accordance with their respective Percentage
Interests).
Weighted
Average Adjusted Net Mortgage Rate: For a Mortgage Pool, the
average of the Adjusted Net Mortgage Rates
of the Mortgage Loans in the related
Loan Group, weighted on the basis of the
Stated Principal Balances thereof.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Conveyance of Mortgage Loans.
(a)
The Depositor,
concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys
to
the Trustee for the benefit of the Certificateholders, without
recourse, all the right, title and interest of the Depositor in
and
to the Trust Fund together with (i) the Depositor's right to
(A)
require the Seller to cure any breach of a representation or
warranty made by the Seller pursuant to the MLPA, or (B)
repurchase
or substitute for any affected Mortgage Loan in accordance
herewith,
and (ii) all right, title and interest of the Depositor in, to
and
under the Servicing Agreement, which right has been assigned to
the
Depositor pursuant to the MLPA.
(b)
In connection
with the transfer and assignment set forth in clause
(a) above, the Depositor has delivered or caused to be delivered
to
the Trustee or the Custodian on its behalf (or, in the case of
the
Delay Delivery Mortgage Loans, will deliver or cause to be
delivered
to the Trustee or the Custodian on its behalf within thirty
(30)
days following the Closing Date) for the benefit of the
Certificateholders the following documents or instruments with
respect to each Mortgage Loan so assigned:
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<PAGE>
(i) (A) the
original Mortgage Note endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of
________________, without recourse," with all intervening
endorsements showing a complete chain of endorsement from the
originator to the Person endorsing the Mortgage Note (each
such
endorsement being sufficient to transfer all right, title
and interest of the party so endorsing, as noteholder or
assignee thereof, in and to that Mortgage Note); or
(B) with respect to any Lost Mortgage Note, a lost note
affidavit from the Seller stating that the original Mortgage
Note was lost or destroyed, together with a copy of such
Mortgage Note;
(ii) except as
provided below and for each Mortgage Loan, the
original recorded Mortgage or a copy of such Mortgage
certified by the Seller as being a true and complete copy of
the Mortgage, and in the case of each MERS Mortgage Loan, the
presence of the MIN of the Mortgage Loans and either language
indicating that the Mortgage Loan is a MOM Loan if the
Mortgage Loan is a MOM Loan or if the Mortgage Loan was not a
MOM Loan at origination, the original Mortgage and the
assignment thereof to MERS, with evidence of recording
indicated thereon;
(iii) in the case of each Mortgage Loan, a duly executed
assignment
of the Mortgage, or a copy of such assignment certified by the
Seller as being a true and complete copy of the assignment, in
blank (which may be included in a blanket assignment or
assignments), together with, except as provided below, all
interim recorded assignments, or copies of such interim
assignments certified by the Seller as being true and complete
copies of the interim assignments, of such Mortgage (each such
assignment, when duly and validly completed, to be in
recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which
the assignment relates); provided that, if the related
Mortgage has not been returned from the applicable public
recording office, such assignment of the Mortgage may exclude
the
information to be provided by the recording office;
(iv) the original or
copies of each assumption, modification,
written assurance or substitution agreement, if any;
(v) either the
original or duplicate original title policy, or a
copy of such title policy certified by the Seller as being a
true and complete copy of the title policy, (including all
riders thereto) with respect to the related Mortgaged
Property, if available, provided that the title policy
(including all riders thereto) will be delivered as soon as it
becomes available, and if the title policy is not available,
and to the extent required pursuant to the second paragraph
below or otherwise in connection with the rating of the
Certificates, a written commitment or interim binder or
preliminary report of the title issued by the title insurance
or escrow company with respect to the Mortgaged Property, or,
in lieu thereof, an Alternative Title Product or a copy of
such Alternative Title Product certified by the Seller as
being a true and complete copy of the Alternative Title
Product, and
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<PAGE>
(vi) in the case of a
Cooperative Loan, the originals of the
following documents or
instruments:
(A) The Coop
Shares, together with a stock power in blank;
(B) The executed
Security Agreement;
(C) The executed
Proprietary Lease;
(D) The executed Recognition
Agreement;
(E) The executed
UCC-1 financing statement with evidence of
recording thereon which have been filed in all places
required to perfect the Seller's interest in the Coop
Shares and the Proprietary Lease; and
(F) Executed
UCC-3 financing statements or other appropriate
UCC financing statements required by state law,
evidencing a
complete and unbroken line from the
mortgagee to the Trustee with evidence of recording
thereon (or in a form suitable for recordation).
In the
event that in connection with any Mortgage Loan that is not a
MERS
Mortgage Loan the Depositor cannot deliver
(a) the original recorded Mortgage or
(b) all interim recorded assignments
satisfying the requirements of clause (ii)
or (iii) above, respectively, concurrently
with the execution and delivery
hereof because such document or documents
have not been returned from the
applicable public recording office, the
Depositor shall promptly deliver or
cause to be delivered to the Trustee or the
Custodian on its behalf such
original Mortgage or such interim
assignment, as the case may be, with evidence
of recording indicated thereon upon receipt
thereof from the public recording
office, or a copy thereof, certified, if
appropriate, by the relevant recording
office, but in no event shall any such
delivery of the original Mortgage and
each such interim assignment or a copy
thereof, certified, if appropriate, by
the relevant recording office, be made
later than one year following the Closing
Date; provided, however, in the event the
Depositor is unable to deliver or
cause to be delivered by such date each
Mortgage and each such interim
assignment by reason of the fact that any
such documents have not been returned
by the appropriate recording office, or, in
the case of each such interim
assignment, because the related Mortgage
has not been returned by the
appropriate recording office, the Depositor
shall deliver or cause to be
delivered such documents to the Trustee or
the Custodian on its behalf as
promptly as possible upon receipt thereof
and, in any event, within 720 days
following the Closing Date. The Depositor
shall forward or cause to be forwarded
to the Trustee or the Custodian on its
behalf (a) from time to time additional
original documents evidencing an assumption
or modification of a Mortgage Loan
and (b) any other documents required to be
delivered by the Depositor or the
Master Servicer to the Trustee. In the
event that the original Mortgage is not
delivered and in connection with the
payment in full of the related Mortgage
Loan and the public recording office
requires the presentation of a "lost
instruments affidavit and indemnity" or any
equivalent document, because only a
copy of the Mortgage can be delivered with
the instrument of satisfaction or
reconveyance, the Master Servicer shall
execute and deliver or cause to be
executed and delivered such a document to
the public recording office. In the
case where a public recording office
retains the original recorded Mortgage or
in the case where a Mortgage is lost after
recordation in a public recording
office, the Depositor shall deliver or
cause to be delivered to the Trustee or
the Custodian on its behalf a copy of such
Mortgage certified by such public
recording office to be a true and complete
copy of the original recorded
Mortgage.
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<PAGE>
In
addition, in the event that in connection with any Mortgage Loan
the
Depositor cannot deliver or cause to be
delivered the original or duplicate
original lender's title policy (together
with all riders thereto), satisfying
the requirements of clause (v) above,
concurrently with the execution and
delivery hereof because the related
Mortgage has not been returned from the
applicable public recording office, the
Depositor shall promptly deliver or
cause to be delivered to the Trustee or the
Custodian on its behalf such
original or duplicate original lender's
title policy (together with all riders
thereto) upon receipt thereof from the
applicable title insurer, but in no event
shall any such delivery of the original or
duplicate original lender's title
policy be made later than one year
following the Closing Date; provided,
however, in the event the Depositor is
unable to deliver or cause to be
delivered by such date the original or
duplicate original lender's title policy
(together with all riders thereto) because
the related Mortgage has not been
returned by the appropriate recording
office, the Depositor shall deliver or
cause to be delivered such documents to the
Trustee or the Custodian on its
behalf as promptly as possible upon receipt
thereof and, in any event, within
720 days following the Closing Date;
provided further, however, that the
Depositor shall not be required to deliver
an original or duplicate lender's
title policy (together with all riders
thereto) if the Depositor delivers an
Alternative Title Product in lieu thereof.
Notwithstanding the preceding, in
connection with any Mortgage Loan for which
either the original or duplicate
original title policy has not been
delivered to the Trust, if at any time during
the term of this Agreement the parent
company of the Seller does not have a long
term senior debt rating of A- or higher
from S&P and A- or higher from Fitch (if
rated by Fitch), then the Depositor shall
within 30 days deliver or cause to be
delivered to the Trustee or the Custodian
on its behalf (if it has not
previously done so) a written commitment or
interim binder or preliminary report
of the title issued by the title insurance
or escrow company with respect to the
Mortgaged Property.
Subject to the immediately
following sentence, as promptly as practicable
subsequent to such transfer and assignment,
and in any event, within thirty (30)
days thereafter, the Master Servicer shall
(i) complete each assignment of
Mortgage, as follows: "First Horizon
Mortgage Pass-Through Certificates, Series
2005-AA9, The Bank of New York, as trustee
for the holders of the Certificates",
(ii) cause such assignment to be in proper
form for recording in the appropriate
public office for real property records and
(iii) cause to be delivered for
recording in the appropriate public office
for real property records the
assignments of the Mortgages to the
Trustee, except that, with respect to any
assignments of Mortgage as to which the
Master Servicer has not received the
information required to prepare such
assignment in recordable form, the Master
Servicer's obligation to do so and to
deliver the same for such recording shall
be as soon as practicable after receipt of
such information and in any event
within thirty (30) days after receipt
thereof. Notwithstanding the foregoing,
the Master Servicer need not cause to be
recorded any assignment which relates
to a Mortgage Loan in any state other than
the Required Recordation States.
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<PAGE>
In the
case of Mortgage Loans that have been prepaid in full as of the
Closing Date, the Depositor, in lieu of
delivering the above documents to the
Trustee or the Custodian on its behalf,
will deposit in the Certificate Account
the portion of such payment that is
required to be deposited in the Certificate
Account pursuant to Section 3.8 hereof.
Notwithstanding anything to the contrary in this Agreement, within
thirty
days after the Closing Date, the Depositor
shall either (i) deliver or cause to
be delivered to the Trustee or the
Custodian on its behalf the Mortgage File as
required pursuant to this Section 2.1 for
each Delay Delivery Mortgage Loan or
(ii) (A) substitute or cause to be
substituted a Substitute Mortgage Loan for
the Delay Delivery Mortgage Loan or (B)
repurchase or cause to be repurchased
the Delay Delivery Mortgage Loan, which
substitution or repurchase shall be
accomplished in the manner and subject to
the conditions set forth in Section
2.3 (treating each Delay Delivery Mortgage
Loan as a Deleted Mortgage Loan for
purposes of such Section 2.3), provided,
however, that if the Depositor fails to
deliver a Mortgage File for any Delay
Delivery Mortgage Loan within the
thirty-day period provided in the prior
sentence, the Depositor shall use its
best reasonable efforts to effect or cause
to be effected a substitution, rather
than a repurchase of, such Deleted Mortgage
Loan and provided further that the
cure period provided for in Section 2.2 or
in Section 2.3 shall not apply to the
initial delivery of the Mortgage File for
such Delay Delivery Mortgage Loan, but
rather the Depositor shall have five (5)
Business Days to cure or cause to be
cured such failure to deliver. At the end
of such thirty-day period, the Trustee
or the Custodian, on its behalf shall send
a Delay Delivery Certification for
the Delay Delivery Mortgage Loans delivered
during such thirty-day period in
accordance with the provisions of Section
2.2. Notwithstanding anything to the
contrary contained in this Agreement, none
of the Mortgage Loans in the Trust
Fund is or will be Delay Delivery Mortgage
Loans.
SECTION 2.2 Acceptance by Trustee of the Mortgage Loans.
The
Trustee or the Custodian, on behalf of the Trustee,
acknowledges
receipt of the documents identified in the
Initial Certification in the form
annexed hereto as Exhibit E and declares
that it or the Custodian holds and will
hold such documents and the other documents
delivered to it or the Custodian, as
applicable, constituting the Mortgage
Files, and that it or the Custodian, as
applicable, holds or will hold such other
assets as are included in the Trust
Fund, in trust for the exclusive use and
benefit of all present and future
Certificateholders. The Trustee
acknowledges that the Custodian will maintain
possession of the Mortgage Notes in the
State of Texas, unless otherwise
permitted by the Rating Agencies.
The
Trustee agrees to execute and deliver or to cause the Custodian
to
execute and deliver on the Closing Date to
the Depositor and the Master Servicer
an Initial Certification in the form
annexed hereto as Exhibit E. Based on its
or the Custodian's review and examination,
and only as to the documents
identified in such Initial Certification,
the Custodian, on behalf of the
Trustee, acknowledges that such documents
appear regular on their face and
relate to such Mortgage Loan. Neither the
Trustee nor the Custodian shall be
under any duty or obligation to inspect,
review or examine said documents,
instruments, certificates or other papers
to determine that the same are
genuine, enforceable or appropriate for the
represented purpose or that they
have actually been recorded in the real
estate records or that they are other
than what they purport to be on their
face.
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<PAGE>
On or
about the thirtieth (30th) day after the Closing Date, the
Trustee
shall deliver or shall cause the Custodian
to deliver to the Depositor and the
Master Servicer a Delay Delivery
Certification in the form annexed hereto as
Exhibit F, with any applicable exceptions
noted thereon. Notwithstanding
anything to the contrary contained in this
Agreement, none of the Mortgage Loans
in the Trust Fund is or will be Delay
Delivery Mortgage Loans.
Not later
than 90 days after the Closing Date, the Trustee shall deliver
or shall cause the Custodian to deliver to
the Depositor and the Master Servicer
a Subsequent Certification in the form
annexed hereto as Exhibit G, with any
applicable exceptions noted thereon.
If, in the
course of such review, the Trustee or the Custodian, on behalf
of the Trustee, finds any document
constituting a part of a Mortgage File which
does not meet the requirements of Section
2.1, the Trustee shall list or shall
cause the Custodian to list such as an
exception in the Subsequent
Certification; provided, however that
neither the Trustee nor the Custodian
shall make any determination as to whether
(i) any endorsement is sufficient to
transfer all right, title and interest of
the party so endorsing, as noteholder
or assignee thereof, in and to that
Mortgage Note or (ii) any assignment is in
recordable form or is sufficient to effect
the assignment of and transfer to the
assignee thereof under the mortgage to
which the assignment relates. The Seller
shall promptly correct or cure such defect
within 90 days from the date it was
so notified of such defect and, if the
Seller does not correct or cure such
defect within such period, the Seller shall
either (a) substitute for the
related Mortgage Loan a Substitute Mortgage
Loan, which substitution shall be
accomplished in the manner and subject to
the conditions set forth in Section
2.3, or (b) purchase such Mortgage Loan
from the Trustee within 90 days from the
date the Seller was notified of such defect
in writing at the Purchase Price of
such Mortgage Loan; provided, however, that
in no event shall such substitution
or purchase occur more than 540 days from
the Closing Date, except that if the
substitution or purchase of a Mortgage Loan
pursuant to this provision is
required by reason of a delay in delivery
of any documents by the appropriate
recording office, and there is a dispute
between either the Master Servicer or
the Seller and the Trustee over the
location or status of the recorded document,
then such substitution or purchase shall
occur within 720 days from the Closing
Date. The Trustee shall deliver or shall
cause the Custodian to deliver written
notice to each Rating Agency within 270
days from the Closing Date indicating
each Mortgage Loan (a) which has not been
returned by the appropriate recording
office or (b) as to which there is a
dispute as to location or status of such
Mortgage Loan. Such notice shall be
delivered every 90 days thereafter until the
related Mortgage Loan is returned to the
Trustee or the Custodian on its behalf.
Any such substitution pursuant to (a) above
or purchase pursuant to (b) above
shall not be effected prior to the delivery
to the Trustee of the Opinion of
Counsel required by Section 2.5 hereof, if
any, and any substitution pursuant to
(a) above shall not be effected prior to
the additional delivery to the Trustee
of a Request for Release substantially in
the form of Exhibit L. No substitution
is permitted to be made in any calendar
month after the Determination Date for
such month. The Purchase Price for any such
Mortgage Loan shall be deposited by
the Seller in the Certificate Account on or
prior to the Distribution Account
Deposit Date for the Distribution Date in
the month following the month of
repurchase and, upon receipt of such
deposit and certification with respect
thereto in the form of Exhibit M hereto,
the Trustee shall cause the Custodian
to release the related Mortgage File to the
Seller and shall execute and deliver
at the Seller's request such instruments of
transfer or assignment prepared by
the Seller, in each case without recourse,
as shall be necessary to vest in the
Seller, or a designee, the Trustee's
interest in any Mortgage Loan released
pursuant hereto. If pursuant to the
foregoing provisions the Seller repurchases
a Mortgage Loan that is a MERS Mortgage
Loan, the Master Servicer shall either
(i) cause MERS to execute and deliver an
assignment of the Mortgage in
recordable form to transfer the Mortgage
from MERS to the Seller and shall cause
such Mortgage to be removed from
registration on the MERS(R) System in
accordance with MERS' rules and regulations
or (ii) cause MERS to designate on
the MERS(R) System the Seller as the
beneficial holder of such Mortgage Loan.
39
<PAGE>
The
Trustee shall retain or shall cause the Custodian to retain
possession
and custody of each Mortgage File in
accordance with and subject to the terms
and conditions set forth herein. The Master
Servicer shall promptly deliver to
the Trustee or the Custodian on its behalf,
upon the execution or receipt
thereof, the originals of such other
documents or instruments constituting the
Mortgage File as come into the possession
of the Master Servicer from time to
time.
It is
understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage
Loan which does not meet the
requirements of Section 2.1 above shall
constitute the sole remedy respecting
such defect available to the Trustee, the
Depositor and any Certificateholder
against the Seller.
The
mortgage loans permitted by the terms of this Agreement to be
included
in the Trust Fund are limited to (i) the
Mortgage Loans (which the Depositor
acquired pursuant to the MLPA, which
contains, among other representations and
warranties, a representation and warranty
of the Seller that no Mortgage Loan is
a "high cost loan" as defined by the
specific applicable local, state or federal
predatory and abusive lending laws, and
(ii) Substitute Mortgage Loans (which,
by definition as set forth in this
Agreement and referred to in the MLPA, are
required to conform to, among other
representations and warranties, a
representation and warranty of the Seller
set forth in the MLPA that no
Substitute Mortgage Loan is a "high cost
loan" as defined by the specific
applicable local, state or federal
predatory and abusive lending laws). It is
therefore understood and agreed by the
parties hereto that it is not intended
that any Mortgage Loan be included in the
Trust Fund that is a "high cost loan"
as defined in the by the specific
applicable local, state or federal predatory
and abusive lending laws.
SECTION 2.3 Representations and Warranties of the Master
Servicer;
Covenants
of the Seller.
(a)
The Master
Servicer hereby makes the representations and warranties
set forth in Schedule II hereto and by this reference
incorporated
herein, to the Depositor and the Trustee, as of the Closing Date,
or
if so specified therein, as of the Cut-off Date.
40
<PAGE>
(b)
Upon discovery
by any of the parties hereto of a breach of a
representation or warranty made pursuant to Schedule B to the
MLPA
that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering
such
breach shall give prompt notice thereof to the other parties.
The
Seller hereby covenants that within 90 days of the earlier of
its
discovery or its receipt of written notice from any party of a
breach of any representation or warranty made pursuant to Schedule
B
to the MLPA which materially and adversely affects the interests
of
the Certificateholders in any Mortgage Loan, it shall cure such
breach in all material respects, and if such breach is not so
cured,
shall, (i) if such 90-day period expires prior to the second
anniversary of the Closing Date, remove such Mortgage Loan (a
"Deleted Mortgage Loan") from the Trust Fund and substitute in
its
place a Substitute Mortgage Loan, in the manner and subject to
the
conditions
set forth in this Section; or (ii) repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at
the
Purchase Price in the manner set forth below; provided,
however,
that any such substitution pursuant to (i) above shall not be
effected prior to the delivery to the Trustee of the Opinion of
Counsel required by Section 2.5 hereof, if any, and any such
substitution pursuant to (i) above shall not be effected prior
to
the additional delivery to the Trustee or the Custodian on its
behalf of a Request for Release substantially in the form of
Exhibit
M and the Mortgage File for any such Substitute Mortgage Loan.
The
Seller shall promptly reimburse the Master Servicer and the
Trustee
for any expenses reasonably incurred by the Master Servicer or
the
Trustee in respect of enforcing the remedies for such breach.
With
respect to the representations and warranties described in this
Section which are made to the best of the Seller's knowledge, if
it
is discovered by either the Depositor, the Seller or the
Trustee
that the substance of such representation and warranty is
inaccurate
and such inaccuracy materially and adversely affects the value
of
the related Mortgage Loan or the interests of the
Certificateholders
therein, notwithstanding the Seller's lack of knowledge with
respect
to the substance of such representation or warranty, such
inaccuracy
shall be deemed a breach of the applicable representation or
warranty.
With
respect to any Substitute Mortgage Loan or Loans, the Seller
shall
deliver to the Trustee or the Custodian on
its behalf for the benefit of the
Certificateholders the Mortgage Note, the
Mortgage, the related assignment of
the Mortgage, and such other documents and
agreements as are required by Section
2.1, with the Mortgage Note endorsed and
the Mortgage assigned as required by
Section 2.1. No substitution is permitted
to be made in any calendar month after
the Determination Date for such month.
Scheduled Payments due with respect to
Substitute Mortgage Loans in the month of
substitution shall not be part of the
Trust Fund and will be retained by the
Seller on the next succeeding
Distribution Date. For the month of
substitution, distributions to
Certificateholders will include the monthly
payment due on any Deleted Mortgage
Loan for such month and thereafter the
Seller shall be entitled to retain all
amounts received in respect of such Deleted
Mortgage Loan. The Master Servicer
shall amend the Mortgage Loan Schedule for
the benefit of the Certificateholders
to reflect the removal of such Deleted
Mortgage Loan and the substitution of the
Substitute Mortgage Loan or Loans and the
Master Servicer shall deliver the
amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, the
Substitute Mortgage Loan or Loans shall be
subject to the terms of this
Agreement in all respects, and the Seller
shall be deemed to have made with
respect to such Substitute Mortgage Loan or
Loans, as of the date of
substitution, the representations and
warranties made pursuant to Schedule B to
the MLPA with respect to such Mortgage
Loan. Upon any such substitution and the
deposit to the Certificate Account of the
amount required to be deposited
therein in connection with such
substitution as described in the following
paragraph, the Trustee shall release or
shall cause the Custodian to release the
Mortgage File held for the benefit of the
Certificateholders relating to such
Deleted Mortgage Loan to the Seller and
shall execute and deliver at the
Seller's direction such instruments of
transfer or assignment prepared by the
Seller, in each case without recourse, as
shall be necessary to vest title in
the Seller, or its designee, the Trustee's
interest in any Deleted Mortgage Loan
substituted for pursuant to this Section
2.3.
41
<PAGE>
For any
month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted
Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the
aggregate principal balance of all
such Substitute Mortgage Loans as of the
date of substitution is less than the
aggregate Stated Principal Balance of all
such Deleted Mortgage Loans (after
application of the scheduled principal
portion of the monthly payments due in
the month of substitution). The amount of
such shortage (the "Substitution
Adjustment Amount") plus an amount equal to
the aggregate of any unreimbursed
Advances with respect to such Deleted
Mortgage Loans shall be deposited in the
Certificate Account by the Seller on or
before the Distribution Account Deposit
Date for the Distribution Date in the month
succeeding the calendar month during
which the related Mortgage Loan became
required to be purchased or replaced
hereunder.
In the
event that the Seller shall have repurchased a Mortgage Loan,
the
Purchase Price therefor shall be deposited
in the Certificate Account pursuant
to Section 3.5 on or before the
Distribution Account Deposit Date for the
Distribution Date in the month following
the month during which the Seller
became obligated hereunder to repurchase or
replace such Mortgage Loan and upon
such deposit of the Purchase Price, the
delivery of the Opinion of Counsel
required by Section 2.5 and receipt of a
Request for Release in the form of
Exhibit M hereto, the Trustee shall release
or shall cause the Custodian to
release the related Mortgage File held for
the benefit of the Certificateholders
to such Person, and the Trustee shall
execute and deliver or shall cause the
Custodian to execute and deliver at such
Person's direction such instruments of
transfer or assignment prepared by such
Person, in each case without recourse,
as shall be necessary to transfer title
from the Trustee. It is understood and
agreed that the obligation under this
Agreement of the Seller to cure,
repurchase or replace any Mortgage Loan as
to which a breach has occurred and is
continuing shall constitute the sole remedy
against the Seller respecting such
breach available to Certificateholders, the
Depositor or the Trustee on their
behalf.
After
giving effect to the sale of the Certificates by the Depositor
to
the Underwriter, and thereafter, so long as
any Certificates remain outstanding,
the Seller, its affiliates and agents,
collectively, shall not beneficially own
Certificates the aggregate fair value of
which would represent 90% or more of
the beneficial interests in the Trust
Fund.
The
representations and warranties made pursuant to this Section 2.3
shall
survive delivery of the respective Mortgage
Files to the Trustee or the
Custodian for the benefit of the
Certificateholders.
SECTION 2.4 Representations and Warranties of the Depositor as
to
the
Mortgage Loans.
The
Depositor hereby represents and warrants to the Trustee with
respect
to each Mortgage Loan as of the date hereof
or such other date set forth herein
that as of the Closing Date, and following
the transfer of the Mortgage Loans to
it pursuant to the MLPA and immediately
prior to the conveyance of the Mortgage
Loans by it to the Trustee pursuant to
Section 2.1(a) hereof, the Depositor had
good title to the Mortgage Loans and the
Mortgage Notes were subject to no
offsets, defenses or counterclaims.
42
<PAGE>
It is
understood and agreed that the representations and warranties
set
forth in this Section 2.4 shall survive
delivery of the Mortgage Files to the
Trustee. Upon discovery by the Depositor or
the Trustee of a breach of any of
the foregoing representations and
warranties set forth in this Section 2.4
(referred to herein as a "breach"), which
breach materially and adversely
affects the interest of the
Certificateholders, the party discovering such
breach shall give prompt written notice to
the others and to each Rating Agency.
SECTION 2.5 Delivery of Opinion of Counsel in Connection with
Substitutions.
(a)
Notwithstanding
any contrary provision of this Agreement, no
substitution pursuant to Section 2.2 or Section 2.3 shall be
made
more than 90 days after the Closing Date unless the Depositor
delivers to the Trustee an Opinion of Counsel, which Opinion of
Counsel shall not be at the expense of either the Trustee or
the
Trust Fund, addressed to the Trustee, to the effect that such
substitution will not (i) result in the imposition of the tax
on
"prohibited transactions" on the Trust Fund or contributions
after
the Startup Date, as defined in Sections 860F(a)(2) and 860G(d)
of
the Code, respectively, or (ii) cause any REMIC created hereunder
to
fail to qualify as a REMIC at any time that any Certificates
are
outstanding.
(b)
Upon discovery
by the Depositor, the Master Servicer or the Trustee
that any Mortgage Loan does not constitute a "qualified
mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within
five
(5)
Business Days of discovery) give written notice thereof to the
other parties. In connection therewith, the Trustee shall
require
the Depositor to cause the Seller, pursuant to the MLPA and at
the
Seller's option, to either (i) substitute, if the conditions in
Section 2.3(b) with respect to substitutions are satisfied, a
Substitute Mortgage Loan for the affected Mortgage Loan, or
(ii)
repurchase the affected Mortgage Loan within 90 days of such
discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty made pursuant to Section
2.3.
The Trustee shall reconvey or shall cause the Custodian to
reconvey
to the Seller the Mortgage Loan to be released pursuant hereto
in
the same manner, and on the same terms and conditions, as it would
a
Mortgage Loan repurchased for breach of a representation or
warranty
contained in Section 2.3.
SECTION 2.6 Execution and Delivery of Certificates.
The
Trustee acknowledges the transfer and assignment to it of the
Trust
Fund and, concurrently with such transfer
and assignment, has executed and
delivered to or upon the order of the
Depositor, the Certificates in authorized
denominations evidencing directly or
indirectly the entire ownership of the
Trust Fund. The Trustee agrees to hold the
Trust Fund and exercise the rights
referred to above for the benefit of all
present and future Holders of the
Certificates and to perform the duties set
forth in this Agreement to the best
of its ability, to the end that the
interests of the Holders of the Certificates
may be adequately and effectively
protected.
43
<PAGE>
SECTION 2.7 REMIC Matters.
The
Preliminary Statement sets forth the "latest possible maturity
date"
for federal income tax purposes of all
REMIC regular interests created hereby.
The assets
of the Lower REMIC shall be as set forth in the definition
thereof. Each interest identified in the
first table below by a designation
beginning with "L" shall be a "regular
interest" in the Lower REMIC and a Lower
REMIC Interest, and the RL Interests shall
be the sole class of residual
interest in the Lower REMIC. The Lower
REMIC Interests shall be uncertificated
and shall be held by the Trustee as assets
of the Upper REMIC.
The assets
of the Upper REMIC shall be as set forth in the definition
thereof. The Regular Certificates shall
represent "regular interests" in the
Upper REMIC. The RU Interest shall be the
sole class of residual interest in the
Upper REMIC. The Class I-A-R Certificate
shall represent ownership of the RL
Interest and RU Interest.
The "Startup Day" for
purposes of the REMIC Provisions for each REMIC
hereunder shall be the Closing Date. The
Tax Matters Person with respect to each
REMIC hereunder shall be the Trustee and
the Trustee shall hold the Tax Matters
Person Certificate. Each REMIC's taxable
year shall be the calendar year and its
accounts shall be maintained using the
accrual method.
<TABLE>
<CAPTION>
------------------ ----------------------
--------------------------
----------------------------------------
Lower REMIC
Interest or Lower REMIC
Interest Lower
REMIC Interest Rate Corresponding Class of
Upper REMIC
Residual
Balance
Interests
------------------ ----------------------
--------------------------
----------------------------------------
Interest
Principal
------------------ ----------------------
-------------------------- ------------------------
---------------
<S>
<C>
<C>
<C>
<C>
L-I-A-1
$
13,163.44
(2)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
L-I-A-2
$
1,462.60
(2)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
L-I-A-ZZZ
$
23,950,078.84
(2)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
RL
$
0.00
N/A
N/A
N/A
------------------ ----------------------
-------------------------- ------------------------
---------------
L-II-A-1
$
125,132.08
(3)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
L-II-A-2
$
13,903.56
(3)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
L-II-A-ZZZ
$ 227,794,528.86
(3)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
L-III-A-1
$
149,363.69
(4)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
L-III-A-2
$
16,595.97
(4)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
L-III-A-ZZZ
$ 271,898,005.53
(4)
(1)
(1)
------------------ ----------------------
-------------------------- ------------------------
---------------
Total
------------------ ----------------------
-------------------------- ------------------------
---------------
</TABLE>
(1) The Lower REMIC Interest L-I-A-1, Lower
REMIC Interest L-I-A-2 and Lower
REMIC Interest L-I-A-ZZZ shall be
Corresponding Classes to these Classes of
Certificates: I-A-1, I-A-R, B-1, B-2, B-3,
B-4, B-5 and B-6 (provided that with
respect to B-1, B-2, B-3, B-4, B-5 and B-6,
such Lower REMIC Interests shall
only correspond to the portion supported by
Pool I). The Lower REMIC Interest
L-II-A-1, Lower REMIC L-II-A-2 and Lower
REMIC Interest L-II-A-ZZZ shall be
Corresponding Classes to these Classes of
Certificates: II-A-1, B-1, B-2, B-3,
B-4, B-5 and B-6 (provided that with
respect to B-1, B-2, B-3, B-4, B-5 and B-6,
such Lower REMIC Interests shall only
correspond to the portion supported by
Pool II). The Lower REMIC Interest
L-III-A-1, Lower REMIC L-III-A-2 and Lower
REMIC Interest L-III-A-ZZZ shall be
Corresponding Classes to these Classes of
Certificates: III-A-1, B-1, B-2, B-3, B-4,
B-5 and B-6 (provided that with
respect to B-1, B-2, B-3, B-4, B-5 and B-6,
such Lower REMIC Interests shall
only correspond to the portion supported by
Pool III).
44
<PAGE>
(2) The Lower REMIC Interest Rate for the
Lower REMIC Interest L-I-A-1, L-I-A-2
and L-I-A-ZZZ will equal the Weighted
Average Adjusted Net Mortgage Rate for
Pool I.
(3) The Lower REMIC Interest Rate for the
Lower REMIC Interest L-II-A-1,
L-II-A-2 and L-II-A-ZZZ will equal the
Weighted Average Adjusted Net Mortgage
Rate for Pool II.
(3) The Lower REMIC Interest Rate for the
Lower REMIC Interest L-III-A-1,
L-III-A-2 and L-III-A-ZZZ will equal the
Weighted Average Adjusted Net Mortgage
Rate for Pool III.
"L1
Interests" refers to the L-I-A-1 Lower REMIC Interest, the
L-II-A-1
Lower REMIC Interests and L-III-A-1 Lower
REMIC Interests. "L2 Interests" refers
to the L-I-A-2 Lower REMIC Interest,
L-II-A-2 Lower REMIC Interest and L-III-A-2
Lower REMIC Interest. "LZZZ Interests"
refers to L-I-A-ZZZ Lower REMIC Interest,
L-II-A-ZZZ Lower REMIC Interest and
L-III-A-ZZZ Lower REMIC Interest. Each L1
Interest shall have a principal balance
initially equal to 0.9% of the Group
Subordinate Amount of its corresponding
Mortgage Pool. Each L2 Interest shall
have a principal balance initially equal to
0.1% of the Group Subordinate Amount
of its corresponding Mortgage Pool. The
initial principal balance of each LZZZ
Interest shall equal the excess of the Pool
Principal Balance of its
corresponding Mortgage Pool over the sum of
the initial principal balances of
the L1 Interests and L2 Interests
corresponding to such Mortgage Pool.
Unless a
Cross-over Situation (as defined below) exists, principal and
Realized Losses arising with respect to
each Mortgage Pool shall be allocated
first to cause the L1 and L2 Interests
corresponding to such Mortgage Pool to
equal 0.9% and 0.1% of the Group
Subordinate Amount of such Mortgage Pool as of
such Distribution Date (after distributions
of principal and allocation of
Realized Losses are made) and all excess
principal and Realized Losses shall be
allocated to the LZZZ Interest
corresponding to such Mortgage Pool. A L1, L2 or
LZZZ Interest that is allocated principal
on any Distribution Date shall receive
such principal, and have its principal
balance reduced by the amount of such
principal, on such Distribution Date.
Similarly, a L1, L2 or LZZZ Interest that
is allocated a Realized Loss on any
Distribution Date shall have its principal
balance reduced by the amount of such
Realized Loss on such Distribution Date.
45
<PAGE>
A
"Cross-over Situation" exists if on any Distribution Date (after
taking
into account distributions of principal and
allocations of Realized Losses on
such Distribution Date) the L1 and L2
Interests corresponding to any Mortgage
Pool are in the aggregate less than 1% of
the Group Subordinate Amount of the
corresponding Mortgage Pool. If a
Cross-over Situation exists on any
Distribution Date, and the weighted average
interest rate of the outstanding L1
and L2 Interests is less than the
Pass-Through Rate for any Class of Subordinate
Certificates for the following Distribution
Date, a Principal Reallocation
Payment (as defined below) shall be made
proportionately to the outstanding L1
Interests prior to any other distributions
of principal from each such Mortgage
Pool so that the Calculation Rate equals
the Pass-Through Rate for each Class of
Subordinate Certificates. If a Cross-over
Situation exists on any Distribution
Date, and the weighted average rate of the
outstanding L1 and L2 Interests is
greater than the Pass-Through Rate for any
Class of Subordinate Certificates for
the following Distribution Date, a
Principal Reallocation Payment shall be made
proportionately to the outstanding L2
Interests prior to any other distributions
of principal from each such Mortgage Pool
so that the Calculation Rate equals
the Pass-Through Rate for each Class of
Subordinate Certificates. A "Principal
Reallocation Payment" is a distribution of
the minimum amount of principal that
causes the Calculation Rate (as defined
below) with respect to the outstanding
L1 and L2 Interests to equal the
Pass-Through Rate for each Class of Subordinate
Certificates. The "Calculation Rate" shall
equal the product of (i) 10 and (ii)
the weighted average interest rate of the
outstanding L1 and L2 Interests,
treating each L1 Interest as capped at zero
or reduced by a fixed percentage of
100% of the interest accruing on such
class. Principal Reallocation Payments
shall be made from principal received on
the Mortgage Loans from a Mortgage Pool
and shall also consist of a proportionate
allocation of Realized Losses from the
Mortgage Loans of a Mortgage Pool. For
purposes of making Principal Reallocation
Payments, to the extent that the principal
received during the applicable
collection period from the related Mortgage
Pool and related Realized Losses are
insufficient to make the necessary
reduction of principal, then interest shall
accrue on the LZZZ Interest (and be added
to its principal balance) of the
related Mortgage Pool to allow the
necessary Principal Reallocation Payment to
be made. The Calculation Rate is designed
to always equal the Pass-Through Rate
of each Class of Subordinated
Certificates.
If a
Cross-over Situation exists, the aggregate principal balances of
the
outstanding L1 and L2 Interests of all of
the Mortgage Pools shall not be
reduced below one percent of the aggregate
Pool Principal Balance of all of the
Mortgage Pools for the following
Distribution Date in excess of the Senior
Certificates as of the related Distribution
Date (after taking into account
distributions of principal and allocations
of Realized Losses on such
Distribution Date). To the extent this
limitation prevents the distribution of
principal to the L1 and L2 Interests of a
Mortgage Pool and the related LZZZ
Interest has already been reduced to zero,
such excess principal from such
Mortgage Pool shall be paid proportionately
to the LZZZ Interests of the
Mortgage Pool or Pools whose aggregate L1
and L2 Interests are less than one
percent of the Group Subordinate Amount.
Any such shortfall as a result of the
Mortgage Pool receiving the extra payment
having a Weighted Average Adjusted Net
Mortgage Rate lower than the Weighted
Average Adjusted Net Mortgage Rate of the
Mortgage Pool from which the payment was
reallocated shall be treated as a
Realized Loss and if excess arises as
result of the Mortgage Pool receiving the
extra payment having a Weighted Average
Adjusted Net Mortgage Rate higher than
the Mortgage Pool from which the payment
was reallocated it shall reimburse the
Upper REMIC for prior Realized Losses. If
on any Distribution Date, the L1
Interest or L2 Interest remains outstanding
after the related Pool Principal
Balance is at zero as of the beginning of
the Accrual Period corresponding to
such Distribution Date, their Lower REMIC
Interest Rate shall be the Weighted
Average Adjusted Net Mortgage Rate of the
Mortgage Pool with the lowest Weighted
Average Adjusted Net Mortgage Rate that
remains outstanding and the excess of
interest at the Pass-Through Rate for the
Subordinated Certificates over
interest at such Weighted Average Adjusted
Net Mortgage Rate shall be treated as
paid from Lower REMIC to the Upper REMIC as
reimbursement for prior Realized
Losses.
The
foregoing REMIC structure is intended to cause all of the cash
from
the Mortgage Loans to flow through to the
Upper REMIC 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 Trustee shall resolve
ambiguities to accomplish such result and
shall to the extent necessary rectify
any drafting errors or seek clarification
to the structure without
Certificateholder approval (but with
guidance of counsel) to accomplish such
intention.
46
<PAGE>
SECTION 2.8 Covenants of the Master Servicer.
The Master
Servicer hereby covenants to the Depositor and the Trustee as
follows:
(a)
the Master
Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance
Policy;
and
(b)
no written
information, certificate of an officer, statement
furnished in writing or written report delivered to the
Depositor,
any affiliate of the Depositor or the Trustee and prepared by
the
Master Servicer pursuant to this Agreement will contain any
untrue
statement of a material fact or omit to state a material fact
necessary to make such information, certificate, statement or
report
not misleading.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.1 Master Servicer to Service Mortgage Loans.
For and on
behalf of the Certificateholders, the Master Servicer shall
service and administer the Mortgage Loans
in accordance with the terms of (i)
the Servicing Rights Transfer and
Subservicing Agreement, pursuant to which
First Tennessee Mortgage Services, Inc.
engaged the Master Servicer to
subservice the Mortgage Loans, (ii) this
Agreement and (iii) the customary and
usual standards of practice of prudent
mortgage loan servicers; provided that if
there is a conflict between the terms of
the Servicing Agreement and the
Servicing Rights Transfer and Subservicing
Agreement, on the one hand, and this
Agreement, on the other hand, the terms of
this Agreement shall prevail. In
connection with such servicing and
administration, the Master Servicer shall
have full power and authority, acting alone
and/or through Subservicers as
provided in Section 3.2 hereof, to do or
cause to be done any and all things
that it may deem necessary or desirable in
connection with such servicing and
administration, including but not limited
to, the power and authority, subject
to the terms hereof (i) to execute and
deliver, on behalf of the
Certificateholders and the Trustee,
customary consents or waivers and other
instruments and documents, (ii) to consent
to transfers of any Mortgaged
Property and assumptions of the Mortgage
Notes and related Mortgages (but only
in the manner provided in this Agreement),
(iii) to collect any Insurance
Proceeds and other Liquidation Proceeds,
and (iv) to effectuate foreclosure or
other conversion of the ownership of the
Mortgaged Property securing any
Mortgage Loan; provided that the Master
Servicer shall not take any action that
is inconsistent with or prejudices the
interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or
the rights and interests of the
Depositor, the Trustee and the
Certificateholders under this Agreement. The
Master Servicer shall represent and protect
the interests of the Trust Fund in
the same manner as it protects its own
interests in mortgage loans in its own
portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan, and
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shall not make or permit any modification,
waiver or amendment of any Mortgage
Loan which would cause any REMIC created
hereunder to fail to qualify as a REMIC
or result in the imposition of any tax
under Section 860F(a) or Section 860G(d)
of the Code. Without limiting the
generality of the foregoing, the Master
Servicer, in its own name or in the name of
the Depositor and the Trustee, is
hereby authorized and empowered by the
Depositor and the Trustee, when the
Master Servicer believes it appropriate in
its reasonable judgment, to execute
and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or
any of them, any and all instruments of
satisfaction or cancellation, or of
partial or full release or discharge and
all other comparable instruments, with
respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held
for the benefit of the Certificateholders.
The Master Servicer shall prepare and
deliver to the Depositor and/or the Trustee
such documents requiring execution
and delivery by either or both of them as
are necessary or appropriate to enable
the Master Servicer to service and
administer the Mortgage Loans to the extent
that the Master Servicer is not permitted
to execute and deliver such documents
pursuant to the preceding sentence. Upon
receipt of such documents, the
Depositor and/or the Trustee shall execute
such documents and deliver them to
the Master Servicer. The Master Servicer
further is authorized and empowered by
the Trustee, on behalf of the
Certificateholders and the Trustee, in its own
name or in the name of the Subservicer,
when the Master Servicer or the
Subservicer as the case may be, believes it
appropriate in its best judgment to
register any Mortgage Loan on the MERS(R)
System, or cause the removal from the
registration of any Mortgage Loan on the
MERS(R) System, to execute and deliver,
on behalf of the Trustee and the
Certificateholders or any of them, any and all
instruments of assignment and other
comparable instruments with respect to such
assignment or re-recording of a Mortgage in
the name of MERS, solely as nominee
for the Trustee and its successors and
assigns.
In
accordance with the standards of the preceding paragraph, the
Master
Servicer shall advance or cause to be
advanced funds as necessary for the
purpose of effecting the payment of taxes
and assessments on the Mortgaged
Properties, which advances shall be
reimbursable in the first instance from
related collections from the Mortgagors
pursuant to Section 3.6, and further as
provided in Section 3.8. The costs incurred
by the Master Servicer, if any, in
effecting the timely payments of taxes and
assessments on the Mortgaged
Properties and related insurance premiums
shall not, for the purpose of
calculating monthly distributions to the
Certificateholders, be added to the
Stated Principal Balances of the related
Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so
permit.
SECTION 3.2 Subservicing; Enforcement of the Obligations of
Servicers.
(a)
The Master
Servicer may arrange for the subservicing of any Mortgage
Loan by a Subservicer pursuant to a subservicing agreement;
provided, however, that such subservicing arrangement and the
terms
of the related subservicing agreement must provide for the
servicing
of such Mortgage Loans in a manner consistent with the
servicing
arrangements contemplated hereunder. Unless the context
otherwise
requires, references in this Agreement to actions taken or to
be
taken by the Master Servicer in servicing the Mortgage Loans
include
actions taken or to be taken by a Subservicer on behalf of the
Master Servicer. Notwithstanding the provisions of any
subservicing
agreement, any of the provisions of this Agreement relating to
agreements or
arrangements between the Master Servicer and a
Subservicer or reference to actions taken through a Subservicer
or
otherwise, the Master Servicer shall remain obligated and liable
to
the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in
accordance
with the provisions of this Agreement without diminution of
such
obligation or liability by virtue of such subservicing agreements
or
arrangements or by virtue of indemnification from the
Subservicer
and to the same extent and under the same terms and conditions as
if
the Master Servicer alone were servicing and administering the
Mortgage Loans. All actions of each Subservicer performed
pursuant
to the related subservicing agreement shall be performed as an
agent
of the Master Servicer with the same force and effect as if
performed directly by the Master Servicer.
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(b)
For purposes of
this Agreement, the Master Servicer shall be deemed
to have received any collections, recoveries or payments with
respect to the Mortgage Loans that are received by a
Subservicer
regardless of whether such payments are remitted by the
Subservicer
to the Master Servicer.
SECTION 3.3 Rights of the Depositor and the Trustee in Respect
of
the Master
Servicer.
The
Depositor may, but is not obligated to, enforce the obligations of
the
Master Servicer hereunder and may, but is
not obligated to, perform, or cause a
designee to perform, any defaulted
obligation of the Master Servicer hereunder
and in connection with any such defaulted
obligation to exercise the related
rights of the Master Servicer hereunder;
provided that the Master Servicer shall
not be relieved of any of its obligations
hereunder by virtue of such
performance by the Depositor or its
designee. Neither the Trustee nor the
Depositor shall have any responsibility or
liability for any action or failure
to act by the Master Servicer nor shall the
Trustee or the Depositor be
obligated to supervise the performance of
the Master Servicer hereunder or
otherwise.
SECTION 3.4 Trustee to Act as Master Servicer.
In the
event that the Master Servicer shall for any reason no longer
be
the Master Servicer hereunder (including by
reason of an Event of Default), the
Trustee or its successor shall thereupon
assume all of the rights and
obligations of the Master Servicer
hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses
of the Master Servicer pursuant to
Section 3.9 hereof or any acts or omissions
of the predecessor Master Servicer
hereunder), (ii) obligated to make Advances
if it is prohibited from doing so by
applicable law, (iii) obligated to
effectuate repurchases or substitutions of
Mortgage Loans hereunder including, but not
limited to, repurchases or
substitutions of Mortgage Loans pursuant to
Section 2.2 or 2.3 hereof, (iv)
responsible for expenses of the Master
Servicer pursuant to Section 2.3 or (v)
deemed to have made any representations and
warranties of the Master Servicer
hereunder). Any such assumption shall be
subject to Section 7.2 hereof. If the
Master Servicer shall for any reason no
longer be the Master Servicer (including
by reason of any Event of Default), the
Trustee or its successor shall succeed
to any rights and obligations of the Master
Servicer under each subservicing
agreement.
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The Master
Servicer shall, upon request of the Trustee, but at the expense
of the Master Servicer, deliver to the
assuming party all documents and records
relating to each subservicing agreement or
substitute subservicing agreement and
the Mortgage Loans then being serviced
thereunder and an accounting of amounts
collected or held by it and otherwise use
its best efforts to effect the orderly
and efficient transfer of the substitute
subservicing agreement to the assuming
party.
SECTION 3.5 Collection of Mortgage Loan Payments; Certificate
Account;
Distribution Account.
(a)
The Master
Servicer shall make reasonable efforts in accordance with
the customary and usual standards of practice of prudent
mortgage
servicers to collect all payments called for under the terms
and
provisions of the Mortgage Loans to the extent such procedures
shall
be consistent with this Agreement and the terms and provisions
of
any related Required Insurance Policy. Consistent with the
foregoing, the Master Servicer may in its discretion (i) waive
any
late payment charge or any prepayment charge or penalty interest
in
connection with the prepayment of a Mortgage Loan and (ii)
extend
the due dates for payments due on a Mortgage Note for a period
not
greater than 180 days; provided, however, that the Master
Servicer
cannot extend the maturity of any such Mortgage Loan past the
date
on which the final payment is due on the latest maturing
Mortgage
Loan as of the Cut-off Date. In the event of any such
arrangement,
the Master Servicer shall make Advances on the related Mortgage
Loan
in accordance with the provisions of Section 4.1 during the
scheduled period in accordance with the amortization schedule
of
such Mortgage Loan without modification thereof by reason of
such
arrangements. The Master Servicer shall not be required to
institute
or join in litigation with respect to collection of any payment
(whether under a Mortgage, Mortgage Note or otherwise or against
any
public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the
provision
of the Mortgage or other instrument pursuant to which such
payment
is required is prohibited by applicable law.
(b)
The Master
Servicer shall establish and maintain the Certificate
Account. The Certificate Account shall consist of three
separate
subaccounts, each of which shall relate to a particular
Mortgage
Pool. The Master Servicer shall deposit or cause to be
deposited
into the appropriate subaccount of the Certificate Account no
later
than two Business Days after receipt, except as otherwise
specifically provided herein, the following payments and
collections
remitted by Subservicers or received by it in respect of the
Mortgage Loans subsequent to the Cut-off Date (other than in
respect
of principal and interest due on the Mortgage Loans on or before
the
Cut-off Date) and the following amounts required to be
deposited
hereunder:
(i) all payments
on account of principal on the Mortgage Loans in
the related Mortgage Pool, including Principal Prepayments;
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(ii) all payments on
account of interest on the Mortgage Loans in
the related Mortgage Pool, net of the related Master Servicing
Fee and any Prepayment Interest Excess;
(iii) all Insurance Proceeds and Liquidation Proceeds in respect
of
the related Mortgage Loans in the related Mortgage Pool, other
than proceeds to be applied to the restoration or repair of
the Mortgaged Property or released to the Mortgagor in
accordance with the Master Servicer's normal servicing
procedures;
(iv) any amount
required to be deposited by the Master Servicer in
respect of the related Mortgage Pool pursuant to Section
3.5(c) in connection with any losses on Permitted Investments;
(v) any amounts
required to be deposited by the Master Servicer in
respect of the related Mortgage Pool pursuant to Section
3.9(b) and 3.9(d);
(vi) all Substitution
Adjustment Amounts in respect of the related
Mortgage Pool;
(vii) all Advances in respect of the related Mortgage Pool made
by
the Master Servicer pursuant to Section 4.1; and
(viii) any other amounts required to be deposited hereunder in
respect of the related Mortgage Pool.
In
addition, with respect to any Mortgage Loan that is subject to
a
buydown agreement, on each Due Date for
such Mortgage Loan, in addition to the
monthly payment remitted by the Mortgagor,
the Master Servicer shall cause funds
to be deposited into the applicable
subaccount of the Certificate Account in an
amount required to cause an amount of
interest to be paid with respect to such
Mortgage Loan equal to the amount of
interest that has accrued on such Mortgage
Loan from the preceding Due Date at the
related Adjusted Mortgage Rate on such
date.
The
foregoing requirements for remittance by the Master Servicer shall
be
exclusive, it being understood and agreed
that, without limiting the generality
of the foregoing, payments in the nature of
prepayment penalties, late payment
charges, assumption fees or amounts
attributable to reimbursements of Advances,
if collected, need not be remitted by the
Master Servicer. In the event that the
Master Servicer shall remit any amount not
required to be remitted, it may at
any time withdraw or direct the institution
maintaining the Certificate Account
to withdraw such amount from the
Certificate Account, any provision herein to
the contrary notwithstanding. Such
withdrawal or direction may be accomplished
by delivering written notice thereof to the
Trustee or such other institution
maintaining the Certificate Account which
describes the amounts deposited in
error in the Certificate Account. The
Master Servicer shall maintain adequate
records with respect to all withdrawals
made pursuant to this Section. All funds
deposited in the Certificate Account shall
be held in trust for the
Certificateholders until withdrawn in
accordance with Section 3.8.
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(c)
The Trustee
shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Distribution
Account shall consist of three separate subaccounts, each of
which
shall relate to a particular Mortgage Pool. The Trustee shall,
promptly upon receipt, deposit in the Distribution Account and
retain therein the following:
(i) the
aggregate amount remitted by the Master Servicer to the
Trustee in respect of a Mortgage Pool pursuant to Section
3.8(a)(ix);
(ii) any amount
deposited by the Master Servicer pursuant to this
Section 3.5(c) in connection with any losses on Permitted
Investments; and
(iii) any other amounts deposited hereunder which are required to
be
deposited in the Distribution Account.
In the
event that the Master Servicer shall remit any amount not
required
to be remitted, it may at any time direct
the Trustee to withdraw such amount
from the applicable subaccount of the
Distribution Account, any provision herein
to the contrary notwithstanding. Such
direction may be accomplished by
delivering an Officer's Certificate to the
Trustee which describes the amounts
deposited in error in the Distribution
Account. All funds deposited in the
Distribution Account shall be held by the
Trustee in trust for the related
Certificateholders until disbursed in
accordance with this Agreement or
withdrawn in accordance with Section 3.8.
In no event shall the Trustee incur
liability for withdrawals from the
Distribution Account at the direction of the
Master Servicer.
(iv)
The institutions at
which the Certificate Account and the
Distribution Account are maintained shall invest funds as
directed by the Master Servicer in Permitted Investments which
in both cases shall mature not later than (i) in the case of
the Certificate Account, the second Business Day next
preceding the related Distribution Account Deposit Date
(except that if such Permitted Investment is an obligation of
the institution that maintains such account, then such
Permitted Investment shall mature not later than the Business
Day next preceding such Distribution Account Deposit Date) and
(ii) in the case of the Distribution Account, the Business Day
next preceding the Distribution Date (except that if such
Permitted Investment is an obligation of the institution that
maintains such fund or account, then such Permitted Investment
shall mature not later than such Distribution Date) and, in
each case, shall not be sold or disposed of prior to its
maturity. If the Master Servicer does not provide such prior
written investment direction, the funds in such accounts will
be held uninvested. All such Permitted Investments shall be
made in the name of the Trustee, for the benefit of the
Certificateholders. All income and gain net of any losses
realized from any such investment of funds on deposit in the
Certificate Account shall be for the benefit of the Master
Servicer as servicing compensation and all income and gain net
of any losses realized from any such investment of funds on
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deposit in the Distribution Account shall be for the benefit
of the Trustee. The amount of any Realized Losses in the
Certificate Account in respect of any such investments shall
promptly be deposited by the Master Servicer in the
Certificate Account and the amount of any Realized Losses in
the Distribution Account in respect of any such investments
shall promptly be deposited by the Trustee into the
Distribution Account. All reinvestment income earned on
amounts on deposit in the Distribution Account shall be for
the benefit of the Trustee. The Trustee in its fiduciary
capacity shall not be liable for the amount of any loss
incurred in respect of any investment or lack of investment of
funds held in the Certificate Account and made in accordance
with this Section 3.5.
(v) The Master
Servicer shall give notice to the Trustee, the
Seller, each Rating Agency and the Depositor of any proposed
change of the location of the Certificate Account prior to any
change thereof. The Trustee shall give notice to the Master
Servicer, the Seller, each Rating Agency and the Depositor of
any proposed change of the location of the Distribution
Account prior to any change thereof.
SECTION 3.6 Collection of Taxes, Assessments and Similar Items;
Escrow
Accounts.
(a)
To the extent
required by the related Mortgage Note and not
violative of current law, the Master Servicer shall establish
and
maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors
(or
advances by the Master Servicer) for the payment of taxes,
assessments, hazard insurance premiums or comparable items for
the
account of the Mortgagors. Nothing herein shall require the
Master
Servicer to compel a Mortgagor to establish an Escrow Account
in
violation of applicable law.
(b)
Withdrawals of
amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments,
hazard
insurance premiums, condominium or PUD association dues, or
comparable items, to reimburse the Master Servicer out of
related
collections for any payments made pursuant to Sections 3.1
hereof
(with respect to taxes and assessments and insurance premiums)
and
3.9 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums determined to be overages, to pay interest,
if
required by law or the terms of the related Mortgage or
Mortgage
Note, to Mortgagors on balances in the Escrow Account or to
clear
and terminate the Escrow Account at the termination of this
Agreement in accordance with Section 9.1 hereof. The Escrow
Accounts
shall not be a part of the Trust Fund.
(c)
The Master
Servicer shall advance any payments referred to in
Section 3.6(a) that are not timely paid by the Mortgagors on
the
date when the tax, premium or other cost for which such payment
is
intended is due, but the Master Servicer shall be required so
to
advance only to the extent that such advances, in the good
faith
judgment of the Master Servicer, will be recoverable by the
Master
Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise.
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SECTION 3.7 Access to Certain Documentation and Information
Regarding
the Mortgage Loans.
The Master
Servicer shall afford the Depositor and the Trustee reasonable
access to all records and documentation
regarding the Mort
